AIRC decision to cost contractors: MBA

According to the Master Builders Association (MBA), new award modernisation rules introduced by the AIRC for the construction industry will translate to considerable increases in the overall cost of housing and commercial construction projects.The AIRC said award modernisation involves the creation of a system of modern awards to operate in conjunction with the new Australian workplace relations system foreshadowed for January 2010.Under a formal Australian government request, the AIRC was required to complete award modernisation in priority industries and occupations by December 31, 2008, and complete the whole of the award modernisation process by December 31, 2009.Each modern award must be made by an AIRC Full Bench and operate in conjunction with the National Employment Standards, and will not come into effect until January 1, 2010.MBA chief executive officer Wilhelm Harnisch said amendments to the redundancy provisions to be used in the building and construction industry modern awards, to a much broader definition of redundancy, were based on a mistake by the Full Bench.He said these modernised awards would increase the costs for building and construction industry consumers by millions of dollars, including the cost of new houses and commercial construction.“The issue of redundancy was once narrowly defined,” Harnisch told CIN. “This is in the true sense where someone is made redundant because of business collapse or downsizing. “It has now been expanded to cover someone leaving a job – which includes resignation. The problem with that is that in this industry, a worker may work on one project for two or three months, finish it and therefore technically resign.“Under the broader definition of redundancy, he is deemed to have been made redundant. That is an additional cost that a contractor has to factor in, where previously it was not.” Harnisch said if someone resigned in a white collar job and went to work for someone else, it was deemed a resignation and the person did not get a redundancy.“Once the work runs out and someone finishes a project or one part of a project, they go onto the next one – as all subcontractors do. Technically, they complete their term and resign, and that will be deemed a redundancy.“We see that as wrong, and secondly it doesn’t pass the cost neutral test that [Workplace Relations Minister] Julia Gillard has put as one of the fundamental criteria for the award modernisation,” Harnisch said. In its notes on the decision released on Friday, the AIRC acknowledged the MBA’s contention that the building industry arrangements could not constitute an industry-specific redundancy scheme. But in determining whether particular redundancy arrangements constitute an industry-specific redundancy scheme, the Commission says it may have regard to the following factors:When considered in totality whether the scheme is no less beneficial to employees in that industry than the redundancy provisions of the National Employment Standards (NES); and
Whether the scheme is an established feature of the relevant industry.
The AIRC said it was pointed out that the application of the scheme extends beyond redundancy as defined by the NES. The AIRC also said it had received submissions from other construction industry employer groups suggesting that the definition of redundancy in the current award provisions be modified to reflect the NES, but it said it did not accept those submissions. The AIRC’s reasons for not accepting those submissions are outlined at: www.airc.gov.au/awardmod/databases/general/decisions/2009aircfb345.htm

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