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									        Fair Work Act Review



           FEBRUARY 2012
Australian Retailers Association
Level 10, 136 Exhibition Street
Tel: 1300 368 041

Russell Zimmerman Executive Director

Date: 17 February 2012

Australian Retailers Association

- Voice of the Retail Industry

For over 100 years, the Australian Retailers Association (ARA) has been the peak industry body in
Australia’s $240 billion retail sector which employs over 1.2 million people. As an incorporated employer
body under the Fair Work (Registered Organisations) Act 2009 and with a range of member services
including employment relations, policy development, advocacy and education, the ARA promotes and
protects over 5000 independent and national retailers throughout Australia.

The ARA provides leadership and solutions to improve the long-term viability, productivity and visibility of
the retail industry by proactively dealing with government, media and other regulatory bodies on behalf of
our members. ARA members comprise a diversity of sizes and types of retailers reflecting the profile of the
retail industry, ranging from large national chain retailers to one-person operators throughout the nation.

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Australian Retailers Association                1300 368 041                     
Retailers in Australia are facing an increasingly difficult operating environment. In the last ten years, the
structure of the retail sector has shifted and evolved as a result of globalisation, advances in the digital
economy, and changes to business practice policies (such as employment). In addition, the retail sector has
experienced various economic environments with the Global Financial Crisis and fluctuating Australian
dollar having a significant effect on the performance of the industry. The ARA offers support, information,
and representation to around 5500 retailers across the nation, and works closely with Government and other
industry participants to ensure the long-term viability and position of the retail sector as a leading contributor
to Australia’s economy.

The ARA and its members have a strong vision for the retail industry – based on well regulated markets and
growth, productive and innovative businesses, responsible collective initiative supported by Government
where appropriate but removing Government burden where possible and appropriate.

We are committed to promoting retail as a viable and exciting career choice for young people, and to
retaining and developing the highest standards of practice within individuals and groups at all levels of our
industry while advocating and assisting members to deal with new technologies and a changing trading

We are focused on providing members with the information, knowledge and skills necessary to operate
more effectively in Employment Relations and skills growth in an increasingly competitive retail environment.

Our Members range from small sole operator enterprises to medium, large, independent, chain and
franchise stores of all types and sizes. Over 80% of our membership consists of businesses ranging from
one to five stores with most of that number employing less than 200 staff.

ARA membership and retailers in general have experienced significant compliance issues regarding Fair
Work Act implementation. Larger retailers have been working with your employment relations and training
team to improve their skills and knowledge however we are experiencing significant education and
knowledge issues within the small to medium retailer category based on our own evidentiary work and
also backed up by work done by Fair Work Australia.

Given the tight timeframe for the submission process we intend on identifying the main areas of difficulty
and possible solutions in a way where industry can work with Government and stakeholders to achieve
desirable outcomes which match the Government’s objectives within the outline of its National Platform.



The Fair Work Ombudsman National Retail Industry Campaign Report showed three quarters of the
retailers surveyed were compliant, which shows retailers are trying their very best to comply with the laws

However, the remaining 26 percent being non compliant shows there is still confusion, especially for smaller
retailers who don’t have access to in house Employment Relations specialists. This is why they turn to their
industry associations to make sure they are compliant and government needs to support industry
associations to educate retailers.

Wage and penalty rates have changed every year since the introduction of the General Retail Industry
Award 2010 (GRIA) and will continue to do so until 2014 when the transition between pre-modern and
modern awards is completed. As a result, there is a need to provide ongoing education for retailers to
ensure they understand and are able to meet their obligations. Retailers are also communicating to the
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Australian Retailers Association                1300 368 041                     
ARA their lack of understanding of various aspects of the Fair Work Act 2009 (FW Act). Retailers are asking
for information that helps them manage their business in an efficient and compliant manner. ARA stands
ready to provide that information, however we are limited in our ability to deliver this information and
education in a broad ranging manner.

The ARA is asking government to support continued education. The ARA has been assisting our members
with our 35 Employment Relations experts to answer member questions about their employer obligations.
The ARA also has conducted seminars, briefings and webinars since 2009 to help educate retailers on the
FW Act and modern awards.. This has required the allocation of significant resources, as it would for any
industry association, and while our larger members have the ability to participate many smaller retailers do

The ARA is asking for support to continue educating Small to Medium Enterprise (SME) Retailers from the
Government. ARA is asking for Government support to continue this education campaign targeted at SME
Retailers. There is a clear information and education gap regarding the FW Act among SME Retailers and
ARA is uniquely positioned to close that gap given our continual and close contact with our broad SME

Nicholas Wilson, the Fair Work Ombudsman said that “many employers underpay as the result of a lack of
information or they make mistake interpreting the information they have”.

The Fair Work Ombudsman’s (FWO) release of a report into audits conducted in the retail sector over the
last year carried a clear message that there is a level of confusion over 'modern awards' two years after
implementation. The report also carried a clear message that of those found to be non-compliant most are
inadvertently getting it wrong, and then having to find money to make back payments to employees in a very
tough retail climate.

FWA’s report figures clearly identify where the issues lie within the retail sector. The lowest contravention
rate was recorded in the retail sector of ‘department stores’ with just over 2.5% of employers in
contravention. The highest rate was found in the pharmaceutical and other store-based retailing sector
(33.6%) followed by the electrical and electronic goods sector (30.2%) clearly indicating which employers
struggle with the meeting compliance.

The lack of understanding, particularly among SME retailers, of their obligations is compounded by errors
and inconsistencies in advice provided by FWO, both through its telephone advice line and its online pay
calculator tool. FWO has admitted that between July and December last year the online pay calculator had
to be amended 40 times. FWO has further admitted that incorrect information provided on its website may
have caused some employers to underpay staff.

On top on this FWO cannot tell who accessed the website during this period and therefore cannot contact
people individually to tell them about the issues while those dealing with industry specific matters are able to
verify clients before giving information.

Ombudsman Nicholas Wilson admitted reasons behind the mistakes, included a lack of information or
misunderstanding requirements. ARA suggests this is at least in part due to a lack of understanding of:

    1. the retail industry

    2. the history of the pre-modern award system; and

    3. the Award Modernisation process under which modern awards were created.

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Australian Retailers Association                1300 368 041                     
In addition to the issues with compliance with awards, retailers are also communicating to ARA that they are
struggling to understand other key aspects of the FW Act, including unfair dismissal laws, enterprise
agreement making, general protections provisions, National Employment Standards (NES) entitlements and
transfer of business obligations. We expand on these in more detail below.



Small to medium retailers do not have a clear understanding about their obligations and rights when it
comes to termination of employment. This is leading to more terminations which are contested by retail
employees. One in five calls to the ARA advice line relates to termination of employment. This represents
more than 2000 calls a year. Members are confused about:

        the procedural requirements for counseling and terminating employees;
        how to use and comply with the Small Business Fair Dismissal Code;
        consultation requirements in relation to redundancies;
        the application of the Minimum Employment Period, including where employees are absent from
         work during that period;
        how to identify which employees have unfair dismissal protection;
        demotion as an alternative to termination; and
        the process Fair Work Australia implements when a claim is made;

An example of this is a small business owner who took over an existing business that was struggling
financially. They sat down with the three employees of the business and explained that they were committed
to the success of the business but were not sure whether they would be able to sustain all three employees
in the long term. They explained that they would spend the first three months implementing steps aimed at
improving sales and would then monitor how things were tracking. At the end of five months they
determined that they could only sustain two positions. As a result they made one employee redundant.
This business owner thought that because the employees were within their first six months of employment
with him that he could safely terminate their employment. He was not aware that their previous service with
the failed business counted towards their Minimum Employment Period (MEP). While he had spoken to
them about what might happen in the future he could only “reset the clock” on the MEP by notifying them in
writing and which he hadn’t done.

To further compound his problems, while he understood he had an obligation to consult with the redundant
employee he had no understanding of the practical implementation of those obligations. He thought he had
met his obligations, but the employee made an unfair dismissal claim and, at conciliation, he was the subject
of criticism about the level of consultation he provided, and therefore paid money to the employee to avoid
the matter going further.

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Australian Retailers Association                1300 368 041                     

Setting aside issues of increased labour costs imposed on the retail industry which are attributable to
modern awards, which can be dealt with through the Award Review, there is a high level of confusion, borne
out by the Fair Work Ombudsman audit of the retail industry and errors made by the Fair Work Ombudsman
in their published wage information, about the obligations imposed on employers under awards. The most
significant is the incredibly complex application of transitional provisions, which determine how the
difference between pre-modern and modern award conditions phase in and out. Retailers are confused

        Determination of which transitional provisions apply – based on business commencement and
         incorporation status;
        Classification of employees;
        Allowances;
        Hours of work and rostering;
        Part time arrangements.

ARA has experienced a substantial number of examples where businesses, in particular small businesses,
have been paying incorrectly due to their lack of understanding. Approximately 40-45% of calls to the ARA
advice line are about award and NES entitlements. This includes both retailers who are paying their
employees less than their entitlements and those who are paying more than their entitlements. The
consistent reason for this is a lack of understanding, in particular in relation to the impact that the structure
of their business and the date on which they commenced employing employees has on their obligations to
their employees.


Retailers who do not have a history of enterprise level bargaining are reluctant to take the plunge due to a
lack of understanding of the agreement making process and uncertainty about the application of the Better
Off Overall Test. This is undermining a fundamental object of the Act. Retailers have expressed confusion

        How and when bargaining commences
        Procedural requirements when bargaining commences
        Practical requirements to ensure good faith bargaining
        Voting process
        Lodgment and approval

The FW Act is squarely directed to the promotion of enterprise level bargaining. Retailers are telling ARA
that they are reluctant to explore this option due to a perception that the process is too complex and
technically and administratively demanding. This is impeding the achievement of a fundamental objective of
the FW Act.


Retailers have expressed concerns about the scope of the General Protections provisions of the Act and
how they apply to the operation of their business. These concerns include a fear of initiating performance
management processes for fear of being seen to infringe these provisions, and a lack of understanding
about how to manage employee absenteeism in a manner that is fair to both the employee and employer
without leading to a claim in this area.

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Australian Retailers Association                1300 368 041                     

Retailers are telling ARA that they do not understand their obligations when they buy or sell a business.
The areas of confusion include:

    1.   Carry over of employee entitlements;
    2.   Liability for redundancy payments;
    3.   Identification of applicable terms and conditions of employments;
    4.   Recognition of service; and
    5.   Termination of employment.

These issues arise for a large number of ARA members, particularly amongst franchise chains where
transfer of business situations regularly arise.

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Australian Retailers Association                1300 368 041                     

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