employment relations - notes
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8/4/2019 Employment Relations - NOTES
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Business Studies – Employment Relations
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 business’s 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, dealingwith 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 Ombudsmano 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 biz’s 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 influencesContacts 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. Biz’s 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 biz’s 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 Recruitment (locating + attracting the right quantity + quality staff at right $)
o Selection (screening + sifting process (gathering info))
o Placement (putting employee in relevant position that utilises their skills)
o Training and development (offering opportunities e.g. TAFE)
o Rewards mgt (monetary/ non-monetary)o Conflict resolution, mgt of agreements
o Legal compliance
o 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 anemployee’s 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 organisation’s 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 Ombudsmano 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 long-
service 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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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.
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.
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 withmanagerial 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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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 agreementsto assist in dispute resolution.
Dispute arises
Grievance procedure
Mediation
Concilation
Arbitration
Business closure
Dispute
resolved
Common law
action
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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 Benefits of industrial conflict Costs of industrial conflict
Financial - Increases empowerment = Increased
productivity, fewer disputes, reduced
absenteeism and labour turnover
- Cost cutting measures = conflict but can
ensure a firms competitiveness and survival
- Lost production & sales = affects firms
incomes and debt
- Reputation may be damaged
- Relocation or closure of biz
- Legal representation and fines imposed =
financial burden
Personal - Helps workers gain mgt attention on major
issues that have caused dissatisfaction and
stress
- Better work place relations = clearer
understanding
- Stress created by more work and lots of
changes due to restructuring
- Rumours/ threats of downsizing = fear,
insecurity, absenteeism
Social - Employee and community welfare can be
enhanced in changed work practises- Intro of multiskilling, career paths benefit
- Community bitterness can be directed at
particular stakeholders if disputes affectthe general public
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individuals and society
- OH&S problems can be reduced
- Demonstrations can affect/ disrupt
communities
Political - Gov. may be encouraged to change
policies in response to the conflict
- Disputes draw public attention for theneed to protect workers entitlements
- Entire industries may be restructured to
improve economy
- Frequent, disruptive conflict = impact
policies particularly around elections,
affect national income, affect economicgrowth
- Bitterness between unions and Gov. =
political conflict = large scale civil unrest
International - Changes to work practises = may improve
a biz’s international competitiveness
- may present opportunities for
international expansion
- 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