The core problem with worker entitlements is the very use of the term entitlements which confuses the focus of the debate and policy options. Worker entitlements are in fact forced loans from employees to their employers. A person on a wage of say $500 a week has about $90 a week or 18% of their wage not paid to them. Every week $90 is held by the employer, accumulates and is returned to the employee when they take holidays or leave. In a year a minimum paid worker loans their employer over $4,000 on which no interest is paid.
Seen within this reality of forced loans the problems and solutions become clearer. Where employees are forced to maker a loan they should have an automatic right to security from the employer and whoever enforces the loan.
The problem afflicts the 5.2 million permanent employees in Australia but could spread to the entire workforce if protections are not considered. The 1.5 million casuals employed and the 1.6 million independent contractors engaged do not suffer from forced loans. They receive their full payment regularly with nothing withheld. However campaigns to stop casualisation and independent contracting will remove the security of payment enjoyed by these Australians.
Three groups force the loans and permanent employees are powerless as are many employers to prevent the enforcement.
The first enforcer is government through the instrument of industrial relations acts. Under awards and other industrial instruments the Industrial Relations Commission is required to force employers to withhold money from permanent employees. The reasons are historical but the idea is illogical! If the law mandates worker loans to employers, on principles of equity taxpayers must secure forced loans in the event of employer insolvency. This has been achieved under the Federal Governments employee entitlements and redundancy scheme (GEERS) but which has been limited to amounts that must be withheld under minimum award requirements. Quite reasonably where an employer, for example Ansett agreed to redundancy amounts above the award minimums the Federal Government has refused to use the taxpayer as guarantor.
The second enforcer is usually assumed to be businesses that want worker loans, both to gain access to free credit but also as a management tool. The need to withhold money for holidays and leave has traditionally been an employer control mechanism to ensure employees work at the employers managerial convenience. But tradition has given way to more sophisticated management demonstrated by the use of casuals and independent contractors. Where employers choose or are required to withhold workers money they should be required to provide security. The current debate is excessively focused on this single issue of trust accounts and other possible financial security mechanisms. The problem with Manusafe type ideas, is suspicion that they would be rorted like some superannuation and long service leave funds as career and income sources for special interest groups.
The final enforcer of employee loans to employers are unions. Some influential unions believe membership can only be secured through permanent employment. The moral posturing and campaigning against casualisation and independent contracting smokescreens union motivation for its own business survival. But this union campaigning puts workers money at risk when enforced loans come with permanency.
To be fair many unions guard employee security interest by accepting and accommodating casualisation. The retail sector is an example.
If, for example as is often alleged, unions coercively "negotiated" redundancy entitlements at the defunct Ansett way beyond the capacity of the company to pay, those unions should at least admit some responsibility to secure workers lost money. This idea may appear politically fanciful but the principle is sound! For future reference, employers faced with coercion from unions should consider placing requests for union supplied, asset security on the negotiation table.
Eventually through the problem needs to be addressed at it root. It's a human rights issue. Permanent employees don't have a choice. They are forced to give employers interest free, unsecured loans. They should have a right to choose. Casual employment and independent contracting should be available to them without hindrance. Even if permanent employment is the choice employees should have the right to decide if and how much money is withheld from them and how and where it is secured.
The political reality however, is that the solution of worker choice is too radically simple to attract universal support either from employers, unions or political parties. The idea challenges too many entrenched institutional and economic interests. Instead employees are likely to continue to find their money used as a bargaining tool in complex political and commercial games over which they have no control. That's the normal fate of employees!
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