AUSTRALIAN GREENS' DISSENTING REPORT
The Greens do not support the Fair Entitlements Guarantee Amendment Bill
2014 (bill) because it will make life harder for employees at the very time
they need support: when their employer organisation fails.
We note that before the election, the Coalition reassured voters that it
would not change the Fair Entitlements Guarantee. The current Minister for
Employment, Senator the Hon. Eric Abetz, said in July 2013 that 'you can be
assured that the Coalition would not seek to do anything that would water down
these important protections for Australian workers.' This was yet another
broken promise and unarguably deceived voters.
The Prime Minister, the Hon. Tony Abbott, MP, has no mandate to change
the Fair Entitlements Guarantee Act 2012 (Act) and especially not to
reduce employees’ redundancy payouts, but that is exactly what he is seeking to
The bill seeks to unfairly shift the financial responsibility onto
employees, who have been or are just about to be made redundant, despite the
fact that they are not responsible for running the business that has failed and
are paid less as a result. The bill would sacrifice the rightfully earned
benefits of employees thanks to the actions of others, which may have
contributed to or caused the failure of their employer organisation. This means
that employees could have their benefits curtailed through no fault of their
The Greens do not believe that this is right in principle or in
We believe that the bill will weaken the safety net that protects
workers when their employer becomes bankrupt or insolvent. In turn, this will
make it harder for people to get back into the workforce and that is plainly
not in the national interest.
We also believe that this bill would not only potentially compound the
impact of redundancy on retrenched employees, but would also hit older employees
hardest of all, as they will usually have the highest potential payouts and
thus stand to lose the most from a cap that reduces their payout. These are
people who have worked medium to long periods with the failed employer yet
could pay the highest price for their loyalty and hard work.
The ability of older employees to recover from the impact of being made
redundant will already be harder than for younger employees. We know that it is
often much harder for older employees to find work, for example. With the government
seeking to raise the age that older people can claim their pension, reducing
their redundancy benefits would be particularly egregious. This is grounds
alone to reject this bill, although there are plenty more.
Cutting redundancy payments
The Greens believe that a fair day’s pay for a fair day’s work is
fundamental to Australia’s way of life. This bill weakens that historic
It is equally fundamental and reasonable for employees to expect their
entitlements, which are part of their employment contract, to be legally
enforceable rights, enshrined in law. It is a continuing affront to basic
workplace rights and to employees’ workplace rights that, in 21st century
Australia, their accrued and rightfully earned benefits can simply vanish when
a business fails.
The bill proposes capping the maximum payout that a redundant employee
can receive at 16 weeks’ pay. We believe this could mean that an employee is
not paid the full amount to which they are entitled. This could therefore impinge
one of the fundamentals of fair work, that of being paid what you have
rightfully earned. This amounts to institutional theft.
Reasonable steps to pursue a debt
The bill also proposes potentially reducing a retrenched employee’s
rightfully earned entitlements if they do not take 'reasonable steps,' before
their employer’s insolvency, to be paid their debts relating to their unpaid
employment entitlements. Even the committee’s report concedes that what
constitutes 'reasonable steps' will depend on the individual’s unique
It is unclear why the onus should be on the employee to recover what is
rightfully theirs, earned by their own hard work, and none of the onus is
shared by the employer, whose actions may have contributed to or even caused
the failure of the employing organisation.
The Hon. Christopher Pyne MP, Minister for Education, second reading
speech suggests this amendment is technical and aimed at ensuring employees
aren’t excluded from eligibility but merely may have their payments reduced.
However, it is not clear that the current provision has resulted in unfairness
in its operation.
We note the Textile Clothing and Footwear Union of Australia's (TCFUA)
submission that 'most workers' in the textile industry work week to week, have
few resources, little discretionary income, may be enduring long-held injuries,
may have a low education threshold and poor language skills. This bill would
make it harder, not easier, for them to claim what is rightfully theirs when
their employer organisation fails. We believe that it is simply unrealistic to
put the burden of claiming their rightful benefits on the employee, who for
these reasons may find it impossible to demand their benefits from an exploitative
or unsympathetic boss. Vulnerable employees deserve additional protections to
guarantee their benefits, not have what protections they do have watered down
Phantom moral hazard
We note that the government has tried to make the argument that the
current Act creates a 'moral hazard.' By this it apparently means that the Act
creates an overly generous redundancy payout regime that is open to
exploitation by employees and unions. We note, in equal terms, that the government
has failed to provide any evidence for this apparent 'moral hazard' and that
the government’s own department said in its submission that it did 'not have
evidence of the exact cause and effect' of this apparent risk.
In reality, the government has created a phantom risk as a pretext to
reduce the rights of people at work, while reducing the payouts that company
managers and owners may have to pay out.
The Greens understand that fair work depends on mutual respect between
employers and employees, to which a fair day’s work for a fair day’s pay is fundamental.
We believe that the government tilting the playing field against employees is
counter-productive and will only result in long-term damage to workplace
relations, which is in no one’s interests.
The real moral hazard is trying to shift the burden of responsibility
onto retrenched employees when they are at their most vulnerable, despite them
having no fiduciary, managerial or legal responsibility for the fate of the
company. If those running and claiming higher, often significantly higher,
remuneration are not answerable to company law that is commensurate with their
level of responsibility, this creates inherent risk. When this happens, we
agree with the Ai Group that, in these circumstances, '[i]t is a matter of
having the appropriate level of protection.'
Making the country less prosperous
This bill would subtly shift the responsibility for income support from
the commonwealth to the social security system. This would simply be counterproductive.
The funds that the government claims would be saved by cutting people’s
hard-earned redundancy payouts may be offset by the cost of NewStart Allowance and
for other support payments. This is particularly true of older workers.
Fair redundancy payouts are much more beneficial because they help
retrenched workers make ends meet until they get back into work. But just like
the flawed logic of making young jobseekers look for work without any income
support, cutting redundancy payouts makes the country worse off because it makes
it harder for people to find work. The Greens oppose this bill.
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