Higher wages compensate for complex work agreements

Ewin Hannan
SEPTEMBER 09, 2014
THE AUSTRALIAN
SMALL businesses have little confidence in the convoluted and complex system of modern awards, prompting many firms to pay higher wages as insurance against potential prosecution for award breaches.
A survey of small business ­operators by the Fair Work Commission found some actively avoided using modern awards, complaining the documents were unwieldy, difficult to understand and written for the benefit of ­bureaucrats and lawyers.
“The common expectation ­expressed by the small-business ­operators in relation to using modern awards was largely negative,’’ the survey of small businesses in Victoria and NSW found.
“The expected experience was characterised as a time-intensive, difficult process that would fail to yield genuine confidence in any outcomes.
“Consequently, for many of these participants the modern awards did not act as a tool to ­facilitate constructive business ­solutions or conversation.
“In fact, most participants ­described actively avoiding ­engagement with the modern awards despite being conscious that not acting in the appropriate manner could put them at risk.’’
To manage their apprehension, most small businesses said they simply paid above modern award pay rates “as a form of insurance, so they didn’t get caught out’’.
While providing basic holiday and leave entitlements, many employers relied on reaching some understanding with staff about many of the other award provisions for breaks and penalties.
“Some participants were changing their employment practices in order to avoid dealing with the modern awards, i.e. not hiring or moving towards contract ­labour,’’ it found.
Small businesses surveyed ­responded more positively to a ­so-called exemplar award, a document prepared by the commission that seeks to address some of the structural issues in awards.
James Howe, 25, owner of Westons Barbershop in Perth’s Northbridge, engages staff as ­independent contractors, taking a 50 per cent cut from their earnings at the end of each working day.
Mr Howe, who started barbering in London before opening the Perth shop in July, said he did not pay penalty rates or different rates for younger or less experienced workers.
“All of them are finding that they’re earning more this way than they would be on a wage,” he said.
“In England they do a fair bit of that, especially in the barber trade. It’s all done on a commission base so the harder you work the more you get.
“For example, if they do 10 haircuts a day and each haircut is at $50, and overall in a day they took $500, out of that $500 we minus their GST and then they get 50 per cent.”
Employees are treated equally and forced to take responsibility in working as a team, Mr Howe said.
“We manage the place but there’s no kind of hierarchy or anything like that. Everyone’s equal and just runs themselves basically,’’ he said.
“They also do their own advertising and promote themselves on social media and sort of try and get more guys for themselves, which helps promote our business as well.
“Because they’re self-employed they can take as much time or as little time off as they want. When they’re not here they’re not working.
“If they need a day off here or there then it’s a lot easier for them to do it that way than if they were on a wage.’’