Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Hansard source

I do not want to delay the debate too long, but I am astounded that the good Senator Xenophon tells us this morning that his amendment in fact covers broader grounds, because I thought last night the argument against our amendment was that it went too far and his was cast more narrowly and was therefore more acceptable to the government. It is amazing what a good night’s sleep can do to us in the Senate chamber! Senator Xenophon, you have not convinced me with your logic, but you still have my vote.

Question agreed to.

I move opposition amendment (4) on sheet 5817:

(4)    Schedule 5, page 66 (after line 11), at the end of the Schedule, add:

Part 4—Relief from increased labour costs

14  Part 10A award modernisation process is not intended to result in an increase in labour costs

(1)    The Part 10A award modernisation process is not intended to result in an increase in labour costs for employers.

(2)    An employer’s labour costs in respect of an employee or outworker is the actual cost to the employer to employ the employee or engage the outworker:

             (a)    including wages and incentive-based payments, and additional amounts such as allowances and overtime; and

             (b)    disregarding the effect of any deductions that are made as permitted by section 324 of the FW Act.

Note:                Deductions permitted by section 324 of the FW Act may (for example) include deductions under salary sacrificing arrangements.

(3)    An employer suffers a modernisation-related increase in labour costs in respect to any employee or outworker if, and only if:

             (a)    a modern award made in the Part 10A award modernisation process starts to apply to the employer when the award comes into operation; and

             (b)    the employer’s labour costs are higher after the modern award comes into operation than the employer’s labour costs were immediately before the modern award came into operation; and

             (c)    the increase in labour costs is attributable to the Part 10A award modernisation process.

15  Orders remedying an increase in labour costs

(1)    If FWA is satisfied that an employer, or a class of employers, to whom a modern award applies has suffered a modernisation-related increase in labour costs, FWA may make an order (a relief from increased labour costs order) varying particular terms of the modern award as they relate to the employer or the class of employers that FWA considers appropriate to remedy the situation.

(2)    FWA may make a relief from increased labour costs order on application by:

             (a)    an employer who has suffered a modernisation-related increase in labour costs; or

             (b)    an organisation that is entitled to represent the industrial interests of such employer.

(3)    FWA must not make a relief from increased labour costs order in relation to an employer or a class of employers if:

             (a)    FWA considers that the modernisation-related increase in labour costs is minor or insignificant; or

             (b)    FWA is satisfied that the employer or employers have been adequately compensated in other ways for the increase, such as through increased productivity or flexibility.

(4)    FWA must ensure that a relief from increased labour costs order is expressed so that it does not apply to an employer unless the employer has actually suffered a modernisation-related increase in labour costs.

16  Relief from increased labour costs order continues to have effect as long as modern award continues to cover the employer or employers

A relief from increased labour costs order in relation to an employer or a class of employers to whom a particular modern award applies continues to have effect (subject to the terms of the order) for so long as the modern award continues to cover the employer or employers, even if it stops applying to the employer or employers because an enterprise agreement starts to apply.

17  Inconsistency with modern awards and enterprise agreements

A term of a modern award or an enterprise agreement has no effect in relation to an employer to the extent that it is less beneficial to the employer than a term of a relief from increased labour costs order that applies to the employer.

18  Application of provisions of FW Act to relief from increased labour costs orders

The FW Act applies as if the following provisions of that Act included a reference to a relief from increased labour costs order:

             (a)    subsection 675(2);

             (b)    subsection 706(2).

This amendment is to add a part. The amendment seeks to insert a new provision that provides the equivalent employer version of the take-home pay orders outlined in the preceding part of the legislation. The provision recognises and seeks to enshrine a provision within the existing award modernisation request that promises no increase in costs of labour. The provision details what a labour cost may include and describes the circumstances under which an employer may suffer an increase in labour costs related to the transition to a modern award. When Fair Work Australia finds that an employer has suffered a modernisation related increase in labour costs, it is empowered to vary the particular instrument as it applies to that particular employer. Such an order remains in effect while the modern award continues to cover the employer.

I will just indicate how this amendment might work. Where a particular business can demonstrate that it will suffer an increased cost as a result of transitioning to a modern award, it may seek assistance from Fair Work Australia. Fair Work Australia must be satisfied that any costs are due to the operation of the modern award and that no other compensation exists for that increased cost—for example, more flexibility. Fair Work Australia may vary the modern award as it relates to the business in a manner that it deems appropriate. This is similar in nature to the incapacity-to-pay provisions relating to redundancy pay that have previously existed in many awards and other state industrial legislation.

It is expected that this avenue will be rarely used and will therefore not impinge on the universal rollout of common rule federal awards. However, where business viability is jeopardised, an avenue can exist for relief. This allows further relief from increased costs in addition to the five-year default phase-out of state based differences, as will be sought by our amendment (6).