Shane Daly Business Studies Employment Relations

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Employment Relations (ER)

The nature of ER
Employment relations (ER) Refers to the total relationship between an employer and employee which incorporates all the issues in the workplace including recruitment, training and development. Sees an employee as an asset that adds value to the business rather than a cost and encourages open communication and goal orientation. Includes: planning HR, acquiring people with the right skills, training & development and performance mgt.

ER

HR(human) + IR(legal/contract)

Industrial relations (IR) The relationship between mgt and labour, and the processes for negotiating employment conditions

Stakeholders in the ER process

Employers Provide work for employees Critical part of initialising ER Responsible for working conditions of employees Objectives: Increase profit, minimise costs to be competitive, expand business Employees An individual that provides their skills to a business for income Very important for businesss survival, growth, profitability, quality, competitiveness. Objectives: better wages and working conditions, meaningful jobs, job security, participation in decisions Employer associations Organisations that support employers by formulating policies/ strategies, dealing with employee unions, negotiation and employment contracts. Unions Organisations that aim to support the interest of employees in the workplace Less evident now due to change of laws Government organisations Most influential stakeholder Establishes legal framework in which all other stakeholders must abide by in relations to ER Fair Work Australia (FWA) (2009) o Replaced the Workplace Relations act (1996)

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o Ensures a safety net of minimum conditions, facilitates the making of enterprise agreements, regulates industrial actions, and resolves collective/ individual workplace disputes through conciliation, mediation and in some cases arbitration. Fair Work Ombudsman o Investigates workplace complaints and enforces compliance with Aus. workplace laws

Managing the ER function

Has become more complex due to workers rights and phycology developments Includes: Human resource planning, recruitment, identification/ selection of competent employees, orientation, training employees with up-to-date knowledge, performance appraisal and career development The way these functions are carried out depends on biz culture, goals, technology, size etc. Line managers In charge of other employees with focus on managing staff to contribute to the prime function of the biz Take care of routine employment matters such as recruitment, wages, training and other functions. Specialist ER/HR manager Undertakes a strategic role at the top level of biz that provides the vision and overall ER strategies. Provides expert assistance to line managers on ER matters such as recruitment and selection, and negotiation Usually only large bizs have these as they are usually in the HR department

Key influences on ER
Social influences
Changing work patterns Increase of female participation Casualization of workforce - trend in part-time work Increase use of contract labour and agency workers Increase in white collar work (sales, professionals) and decrease in blue collar work (labourers, trades people) Well educated workforce = want challenging work and increased responsibility Growth of outsourcing Population shifts Ageing pop = increased jobs in age care

Legal influences
Contacts between stakeholders (mainly employees and employers)

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Awards (centralised) o Formal agreements that cover workers in a whole industry o Provide workers with a safety net of 10 national employment standards Certified agreements (decentralised) o Made collectively but only in a specific workplace Aus. Workplace agreements (very decentralised) o Negotiated individually Legislation Anti-discrimination legislation o Prohibits workplace discrimination e.g. gender, ethnicity, disability etc. OH + S Act 2000 (NSW) Workers Compensation Act 1926 (NSW)

New organisational behavioural influences

Flat mgt and team structures ER function focuses on staff training and development, the individual and team, career development, intrinsic rewards. Employees have a greater role in the direction of biz and working conditions Team building discussion/ direction from mgt, shared sense of purpose, commitment, stability, trust, open communication, ongoing training and recognition Includes job enlargement, job rotation and job enrichment

Economic influences
Economic cycle Demand for labour determined by demand for goods and services in the economy Change in taxation affects cash flow Bust = less bargaining power for employees Boom = more bargaining power for employees Globalisation Results in greater choice and lower prices for consumers Some Aus. Bizs struggle to compete due to Aus. work practises (multi-skilling, flexible working hours) that affect efficiency and productivity Lead to an increase in multicultural workforce which challenges ER mgt

Effective ER
Role of ER
To manage the relationship between employer and employees effectively in order to develop competent, flexible and productive employees committed to bizs function The coordination of line manager, ER manager and sometimes external consultants Analysing the internal (goals, costs, stability) and the external (economic conditions, competition, social, legal) environment constantly Recruitment, selection and placement

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o o o o o o o o

Recruitment (locating + attracting the right quantity + quality staff at right $) Selection (screening + sifting process (gathering info)) Placement (putting employee in relevant position that utilises their skills) Training and development (offering opportunities e.g. TAFE) Rewards mgt (monetary/ non-monetary) Conflict resolution, mgt of agreements Legal compliance Separation

Good ER = increased productivity + reliability of employees Good ER = Right people -> Right time -> Right skills
Communications systems
Allows worker input into the decision making process E.g. emails, performance appraisals, interviews, social functions and formal discussions Grievance procedures Series of steps which set out the process to be followed in the event of a dispute arising in the workplace. Aim to bring about a quick, effective and negotiated end to any issue. Awards also set out formal grievance procedures. Worker participation Empowers employees and improves quality, productivity and efficiency Can occur through: o Joint consultative committees groups of employees + mgt + sometimes unions that provide mgt with views of employees o Task forces o Employee representatives on boards of mgt/ directors o Make business reports available to employees for discussion Team briefings Meetings between employees and mgt where discussion can take place Can occur through: o Quality circles = voluntary resolves specific problems by reporting to mgt

Rewards
Attracts, motivates and retains employees Intrinsic Those that the individual derives from the task or job itself such as a sense of achievement Extrinsic

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Rewards given outside the job itself, they may be monetary or non-monetary Monetary = direct financial value such as a bonus or pay rise Non-monetary = Rewards such as employee satisfaction, decision making power and autonomy in the workplace

Training and development

Aims to seek a long term change and development of employees skills, knowledge and attitudes that ultimately leads to better performance Important for promotion and career development within organisation On the job training = Job rotation, apprenticing, coaching, mentoring Off the job training = lectures, simulation exercises, conferences, apprenticeship Interpersonal skills training = Listening, communicating, problem solving Induction The training of new employees when they start their employment; helps increase an employees commitment to the business and thus reduce turnover. Induction programs: o Give employees a positive attitude and confidence to the job and the firm o Inform the major safety policies, procedures and their application o Help establish good working relationships with co-workers and managers.

Flexible working conditions

Reasons for needing this include: Increasing number of women, and an increasingly multicultural population Diversity of family structures; changing role of men and women Aging population Flexible working hours Allow employees to work an agreed number of hours over a set period of time. To function effectively, businesses must structure each day with a common core. Flexible leave agreements Allow workers to care for family members in case of emergencies, illness and school holidays; includes time off in lieu, use of annual leave and career breaks. Family friendly programs Benefits: o Increased productivity, morale, commitment, staff retention and ability to attract new workers o Decreased absenteeism, lateness and stress Programs include: o Flexible working arrangements, family support, childcare, leave, job sharing, career breaks, home-based work, permanent part-time work.

Measures of effectiveness
Levels of staff turnover

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The rate at which employees leave an organisation Can be voluntary (resignation) or non-voluntary (dismissal) Very costly for business as new employees need to be recruited Absenteeism Indicator of overall moral and job satisfaction Increases labour costs, reduces productivity, stresses other employees Disputation The withdrawal from work by employees who are not happy about something. Stop-work meetings, overtime bans, work to rule, go slows and strikes. Generally about management policy, working conditions, pay issues, union rights Quality Good quality products/ services saves money Can be measured and quantified by the number of sales returns Benchmarking Involves measuring the organisations own practices against a set of other standards. Areas that can be benchmarked include: levels of customer service, number of warranty claims, labour productivity.

Legal framework of employment

The employment contract
An employment contract is a legally binding, formal agreement between employer and employee. Responsibility of employers Responsibility of employees Provide a safe and healthy work environment Work with due care and diligence Pay wages Follow reasonable orders/ directions Engage in discrimination free practises Act in good faith Repay expenses Protect trade secrets ER in the workplace is governed by: o Common law o Statues federal and state legislation o Awards and agreements determined by industrial tribunals Common law Sets the minimum standards of an employment relationship. Determines wages and working conditions Statutes Fair Work Act 2009 o New, modern awards that contain a safety net of 10 national employment standards (NES) o No-disadvantage test Fair Work Ombudsman o Ensures compliance with act

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o Persecutes breaches o Monitors/ inspects complaints Awards Legally enforceable documents made by industrial tribunals that set out the minimum wages and conditions in a whole industry or enterprise Cover matters of pay rates, overtime rates, and hours of work, sick leave and annual leave. Binding on employers, they generally remain in force unless they are varied or cancelled; industrial tribunals have the power to increase minimum wages or change certain conditions of employment. Can operate alongside agreements, or be replaced by them. Agreements Informal: o Oral or written agreements that are not registered or approved by any authority or tribunal. o Cannot take priority over terms/ conditions set out in an award or formal agreement. o Employee covered can take legal action under common law if there is a breach. Formal: o Written agreements made under legislation and are lodged with an authority such as Fair Work Australia or the Employment Advocate for registration or approval. o Under the Fair Work Act, employees can make enterprise agreements or ITEAs.

Types of employment contracts

Permanent Continuing contract of employment of unspecified duration Required to work a certain number of hours per week. Termination involves a period of notice as specified in the award, agreement or legislation. Fixed-term Employed to work on specific project/ replace employees who are absent on longservice or maternity leave. Employee has right to sue employer if the contract is terminated before the expiry date. Excluded from Federal unfair dismissal provisions. Part time Contract the same as permanent but with less hours

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Casual Usually hired for short-term, irregular or seasonal work. No access to permanent employment entitlements. Gain some entitlements if hired regularly over 12 months (unfair dismissal) High proportion of young students and females Flexible employment conditions Common feature in contracts Allows for job sharing Allows businesses to operate more intense shifts at peak times and allow longer holidays during slow times.

Conditions for part-time workers are generally on a pro rata basis. E.g. work 3 out of 5 days; entitled to 3/5th of annual leave Trend for this employment increasing in Aust.

Industrial conflict
Definition and Causes
Definition: A withdrawal from work by a group of employees, or a refusal by an employer to allow workers to work. Causes Wage demands o Demand by employees for an increase in their wage rate or changes to the way in which their wages are calculated or determined. o Awards set minimum standards; employers/ employees being encouraged to negotiate such matters. Working conditions o Refers to the organisational environment of the workplace including hours, amenities and the physical environment Management policy o Includes matters of terms/ conditions of employment, new awards/ agreements, promotion, disciplinary matters and disagreement with managerial decisions. Political goals and social issues

Perspectives on conflict
Unitary view: Assumes all employees within the business share the goals of the business as defined by senior management. This view likens the business to a team or unit. Pluralist view:

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Organisations are made of many parts and have a number of different stakeholders; as a result, not everyone will share identical interests. Conflict is expected; managers are challenged to develop an effective system to resolve it. Radical view: Focuses on the imbalance of power between employers and employees. Traditional view: Conflict had a negative impact on businesses. It was associated with violence and harm. Management had responsibility to rid the organisation of conflict. Human relations view: Conflict was a natural and inevitable occurrence; it cannot be eliminated, thus it must be accepted and there are times when it may benefit the organisation.

Types of industrial action

Overt action Lockouts o Workers are not permitted to enter the workplace unless they agree to follow management orders or work as directed. Pickets o Striking workers prevent entry into the workplace. Strikes o Employees withdraw their labour in order to enforce a demand or express a grievance. o More frequent in large enterprises; tend to have higher rates of unionism. Bans o Employees work their required number of ordinary hours but refuse to work any extra overtime hours. o Aims to promote employee demands by restricting output from their workplace. Work to rule o Union members work to the strict letter of any agreements or awards, refusing to do any extra duties. o Results in reduction of output and production disruption. Covert action Absenteeism o The percentage of employees, on an average day, who are away from work or on sick leave without leave being approved in advance. o Hard to distinguish genuine absence from a voluntary absence. Sabotage o Deliberate damaging of machinery and deliberate interference with products, systems and procedures. Labour turnover

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o Caused by voluntary resignations; indication of employee dissatisfaction. Exclusion from decision-making in business o Conflict arising when employees believe they have not been given the opportunity to have their say. o Managers/ professionals more likely to be consulted than labourers/ sales workers.

Roles of stakeholders in resolving disputes

5 key stakeholders: Employees: o Discussions/meetings may be held o If dispute is a more serious nature, employees may seek trade unions assistance and support Employers: o Like employees the employers role depends on the nature of the dispute, depends on management style e.g. behaviour/classic o Trend towards using line managers to resolve disputes Unions: o Represent the interest of their members. o Seek to negotiate a settlement with the employer o Can refer dispute to the FWA ombudsman Employer Associations: o Main objectives is to assist with the needs/concerns of employers Government: o Provide the institutions, policy and legislative framework for the resolution of conflict o Investigate breaches of legislation

Dispute resolution process

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Dispute arises

Grievance procedure

Mediation
Dispute resolved

Concilation

Arbitration
Common law action

Business closure

Grievance procedures A formal process to be followed once a conflict arises to ensure fairness Encouraged by FWA (previously AIRC) for preventing and settling industrial disputes. 1. Grievance discussed by employee and supervisor. 2. Negotiation 3. Mediation 4. Conciliation 5. Arbitration Negotiation Negotiation is a method of resolving disputes when discussions between parties result in a compromise A discussion between the parties concerned to try to mutually resolve a dispute, without intervention or assistance of authorities. Union may become involved if direct worker-management negotiations fail to resolve the issue. Collective bargaining o Negotiation between a union and management/ employer. o Union officials act on behalf of workers. o Representative from employer association likely to act on behalf of management. Employees/ employers increasingly encouraged to negotiate workplace agreements to assist in dispute resolution.

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Mediation Voluntary negotiation process where a neutral third person assists the parties to resolve their dispute. Third party does not act on state or federal legislation. Conciliation Formal type of mediation where a third party, experienced in the area of the biz, makes suggestions to assist in a resolution. Either party informs the industrial registrar of dispute, and requests FWA to call a compulsory hearing. Arbitration Formal judge like process Parties in dispute present their views to an arbitrator. Arbitrator = evaluates the arguments of both parties and comes to a legally binding decision. Ratification Once resolved solution sent to the relevant authority for official recognition (FWA) Common law action If practises are illegal parties affected can sue for recovery costs, losses and damages Include these matters: o Breach of duty of care o Vicarious liability (actions of employee make employer liable of tort) o Breach of contract If breach concerns a tort (civil wrong), legal action results in compensation. If breach concerns a contract, legal action results in common law remedy of damages. Business/ division closure Disputes cost money in lost working time and legal expenses.

Costs and benefits of industrial conflict

Types Financial Benefits of industrial conflict - Increases empowerment = Increased productivity, fewer disputes, reduced absenteeism and labour turnover - Cost cutting measures = conflict but can ensure a firms competitiveness and survival Costs of industrial conflict - Lost production & sales = affects firms incomes and debt - Reputation may be damaged - Relocation or closure of biz - Legal representation and fines imposed = financial burden - Helps workers gain mgt attention on major - Stress created by more work and lots of issues that have caused dissatisfaction and changes due to restructuring stress - Rumours/ threats of downsizing = fear, - Better work place relations = clearer insecurity, absenteeism understanding - Employee and community welfare can be - Community bitterness can be directed at enhanced in changed work practises particular stakeholders if disputes affect - Intro of multiskilling, career paths benefit the general public

Personal

Social

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Political

International

individuals and society - OH&S problems can be reduced - Gov. may be encouraged to change policies in response to the conflict - Disputes draw public attention for the need to protect workers entitlements - Entire industries may be restructured to improve economy - Changes to work practises = may improve a bizs international competitiveness - may present opportunities for international expansion

- Demonstrations can affect/ disrupt communities - Frequent, disruptive conflict = impact policies particularly around elections, affect national income, affect economic growth - Bitterness between unions and Gov. = political conflict = large scale civil unrest - Loss of export income and mkts = after long periods of conflict - Nations reputation for stability = lost = overseas investors become uncertain

Ethical and legal aspects

Issues in the workplace
Introduction A wide range of ER issues arise in the workplace and, if they are not handles in an ethical, legal or socially responsible manner, they can lead to poor morale, low productivity, heavy costs and industrial disputes Ethical business practises = those practises that are socially responsible, morally right, honourable and fair. Ethical framework = may include ensuring equity in the workplace, legal compliance and commitment to customers. Framework includes: o A code of conduct = A statement of acceptable and unacceptable behaviours in a biz o A code of ethics = A statement of a firms values and principles o Best practise = Biz practises that are regarded as the best or of the highest standard in the industry Working conditions An ethical employer can be expected to achieve safe and fair working conditions that improve the welfare of employees. This is achieved through: o Compliance with industrial legislation including OH&S, anti-discrimination and equity in all aspects of the employment relationship o Providing a safe and healthy working environment o Creating challenging, interesting and meaningful work o Improving communication, and fostering teamwork and empowerment of staff OH&S Growing worker and community awareness of safety, along with increasing compensation costs = prompted Gov. to improve workplace OH&S. Employers are responsible for providing a safe and healthy working environment

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Workers compensation Workers compensation = provides a range of benefits to an employee (and family) suffering from an injury or disease related to their work. Anti-discrimination Ensures that no practise disadvantages a person or group because of a personal characteristic which is irrelevant to the performance of work Equal employment opportunities (EEO) Refers to equitable practises in recruitment and selection Unfair dismissal Occurs when dismissal was harsh, unjust or unconscionable Reinstatement = returning employee to their old job Compensation = payment to employee not exceeding 6 months wages