How the election affects employers – Liberal or Labor
We are all waiting to see who actually wins this election. While we wait, employers can look at what the world might hold for them on the workplace relations front under each party.
Labor Government
If the Labor Party manages to form Government, the affect on employers will probably largely be the same whether the ALP forms government with a majority or as a minority relying on the cross-benches. Based on all current indications most likely there will be: –
No Australian Building and Construction Commission – Labor has vehemently opposed the reestablishment of the ABCC widely seen as a must if the CFMEU style industrial lawlessness of recent years is to come to a stop;
No Building Code – Similarly the ALP will not allow the Building Code which was designed to establish higher standards of workplace relations behaviour and improve flexibility and productivity in the building and construction industry, to stand. This will be welcomed by the unions who have been bitterly opposed to it and will now be able to argue that the “union friendly” clauses the code would prohibit as unfair or unreasonable to employers, should remain in Enterprise Agreements;
Big increase in employer penalties – ALP policy is to increase the civil penalty for an employer who underpays a worker from $10,800.00 to a minimum of $216,000.00 for an individual and $1,080,000.00 for a corporation. Not many businesses could withstand fines of that magnitude. Whilst there have been some recent high-profile cases where employers seem to have deliberately ripped off their employees, in our experience, the majority of employers who have been found to be underpaying their employees have done so inadvertently and without any intention to do the wrong thing. Similarly, if an employer is found to have been sham contracting (a practice very widespread in the contracting industry), Labor is looking to increase penalties to $43,200 for an individual and $216,000 for a company;
Prison terms for employers – Labor is also looking at criminalising these offences with sentences of two years prison for employers who underpay staff or engage in sham contracting;
Ban on directorship – Labor also proposes to bring in powers to disqualify directors of companies found guilty of underpaying an employee or of sham contracting; and
Tax reduction for micro-employers – The ALP supports the reduction of tax for companies with turnovers of $2 million or less but this is not going to be extended to small to medium size enterprises which employ the majority of non-government employees. As with the coalition proposal however, this will not come in this financial year as a budget would need to be passed before any such change could come in.
Liberal National Government
If the Turnbull Government retains power, again whether with a majority or as a minority government relying on the cross-benches, there is probably little difference. Firstly: –
No Australian Building and Construction Commission – Turnbull Government might be able, even if it has to rely on the crossbenches, to again pass the ABCC legislation in the lower House. If it does get it through the lower House, it is difficult to see how it will ever get through the new Senate. And, given the likely make-up of the Senate, it is unlikely that a Turnbull Government would be able to get that legislation through in a joint sitting of both Houses following the double dissolution. So, no matter what happens, Liberal or Labor, the ABCC looks like a dead duck;
No Building Code – The Building Code looks like it faces exactly the same prospects so the Building Code also looks like a dead duck;
New big penalties for employers – Whilst the Liberal Party is not looking at Labor’s increases to the existing civil penalties, it is looking at introducing very substantial penalties (“ten times the current maximum penalties”) for employers who deliberately and systematically underpay workers or fail to keep proper wage records. This is intended to catch employers who deliberately do the wrong thing such as in the recent 7-Eleven Case. Employers who merely make a mistake will not be caught as they would under the Labor proposals;
Franchisor and parent companies liable for conduct of franchisees and subsidiaries – Under announced Liberal Party policy, franchisors and parent companies will be liable for the misdeeds of their franchisees and subsidiaries where they should reasonably have been aware of the breaches and could reasonably have taken action to prevent them from occurring. Franchisors and parent companies which take reasonable steps to educate their franchisees or subsidiaries, which are separate and independent businesses, will not be captured by the new provisions. Labor has no published plan to introduce these new protections; and
Tax reduction for all corporate employers eventually – The Liberal and National parties’ proposed reduction of company tax are planned to come in gradually over the next 10 years with smaller companies receiving the tax cuts first and the bigger companies receiving them over the coming decade. The likelihood however of these measures being passed by the new Senate are slim.
Summary
A Labor government offers employers no improvement in terms of industrial lawlessness in the workplace. This plays out most seriously for those who have unionised Enterprise Agreements but the trickle-down effect means everybody is affected.
A Labor government will almost certainly also see substantial new penalties against employers who do the wrong thing whereas a Liberal National government is more likely only to punish those who deliberately and systematically do the wrong thing.
On a tax front, the Liberal National government proposed tax cuts look a lot more promising for all employers not just micro-businesses but the reality is they probably have little prospect of being passed into law.
For more information on how any of these proposed changes might impact on your business, call one of the Employment Lawyers today.