403 Words of Wisdom

The War Report – Part 1

Industrial Relations is turning into a theatre of war. But in this war, there are no clear sides. Mr Howard always thought that it would be the unions versus the rest of the civilised world. But he is now discovering that he cannot change the system without treading on the tows of some of his traditional allies.

Take the farmers. These are the traditional support base for Country Liberals and Nationals. You’d expect the farmers to be right behind the Howard reforms. And they are. Except that to be part of any federal system, farmers might have to incorporate.

According to figures quoted in the Australian Financial Review on 3 August 2005, around 90% of our 130,000 farming entities are unincorporated. Apart from increased paperwork and incidental expenses, incorporation also takes away some key tax benefits for farmers. In times of drought, with many farmers suffering heavy losses, these benefits represent perhaps the only chance of survival on the land.

Now, the National Farmers Federation (which gave the Liberal Party such political heavyweights as Ian McLaughlin) has signalled that it won’t support any reports which leave farmers worse off.

Farmers are not the only ones screaming. Caterers and restaurant owners are also upset with being forced to incorporate. One third of the members of Restaurants and Catering Australia (RCA), an employer group representing the catering industry, are sole traders or partnerships.

Federal Workplace Relations Minister Kevin Andrews confirmed on 2 August that any new workplace relations legislation would find its legislative basis in the corporations power, not just in the conciliation and arbitration power. Basically that means that, to benefit from the federal system, an employer will need to be incorporated.

Incorporation is not cheap. There is added paperwork, accountant’s fees, auditing fees and others extra work to be done. Companies pay a lower tax rate, but in many industries employers are better off staying sole traders or partnerships. These businesses would be most keen to participate in the new federal system. But refusal to incorporate may mean they are locked out.

It is pleasing to see employer organisations not blindly towing the line of the Coalition. Sadly, when it comes to unfair dismissal, some employers still haven’t realised that keeping current legal arrangements is probably more in their interests than forcing workers to use remedies that will prove much more expensive for employers in the long run.

© Sydney Lawyers Pty Limited 2005