Business Studies - Employment Relations 9.

4 HSC topic 4: Employment Relations 20% of indicative time The focus of this topic is to understand the nature of effective employment relations and their importance to business operation and society. Outcomes The student: H2.1 describes and analyses business functions and operations and their impact on business success H2.2 evaluates processes and operations in global business H3.2 evaluates the effectiveness of management in the organisation and operations of business and its responsiveness to change H3.3 analyses the impact of management decision-ma ing on sta eholders H!.1 critically analyses the social and ethical responsibilities of management H!.2 evaluates management strategies in response to internal and e"ternal factors H#.1 selects$ organises and evaluates information and sources for usefulness and reliability H#.2 plans and conducts an investigation into business to present the findings in an appropriate business format H#.3 communicates business information$ ideas and issues$ using relevant business terminology and concepts in appropriate forms H#.! applies mathematical concepts appropriately in business situations Content %tudents learn to: use existing business case studies to investigate and communicate ideas and issues related to employment relations. The focus of these case studies will be to: & analyse ho' conflict and change are managed in a business & prepare and (ustify possible 'ays of resolving conflicts in the selected business organisations.

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%tudents learn about: the nature of employment relations & sta eholders in the employment relations process 0 employers$ employees$ employer associations$ unions$ government organisations & managing the employment relations function

1 line management and specialist

key influences on employment relations & & & & social influences 0 changing 'or patterns$ population shifts legal influences 0 overvie' of ma(or employment legislation ne' organisational behavioural influences 0 flat management and team structures economic influences 0 economic cycle$ globalisation

effective employment relations & & & & & & role of employment relations communications systems 0 grievance procedures$ 'or er participation$ team briefings re'ards 0 financial$ non-financial training and development 0 induction fle"ible 'or ing conditions 0 family-friendly programs measures of effectiveness 0 levels of staff turnover$ absenteeism$ disputation$ 2uality$ benchmar ing

legal framework of employment & the employment contract 0 common la' *rights and obligations of employers and employees+$ statutes$ a'ards$ agreements & types of employment contract 0 casual3part-time3fle"ible$ permanent$ casual

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industrial conflict & & & & & & definition and causes 0 'age demands$ 'or ing conditions$ management policy$ political goals and social issues perspectives on conflict 0 unitary$ pluralist$ radical & types of industrial action 1 overt 0 loc outs$ pic ets$ stri es$ bans$ 'or -to-rule 1 covert 0 absenteeism$ sabotage$ turnover$ e"clusion from decisionma ing in business roles of sta eholders in resolving disputes dispute resolution processes 0 conciliation$ arbitration$ grievance procedures$ negotiation$ mediation$ common la' action$ business3division closure costs and benefits of industrial conflict

&

1 financial$ personal$ social$ political$ international ethical and legal aspects & & & & & & & issues in the 'or place 'or ing conditions 4ccupational Health and %afety *4H5%+ 'or ers6 compensation 0 state and3or federal agencies and common la' redress anti-discrimination 72ual 7mployment 4pportunities *774+ unfair dismissal.

The nature of employment relations: 7mployment relations refer to the total relationship bet'een employee and employer. %ta eholders in the 7mployment -elations 8rocess: 7mployers: 7mployers6 responsibilities are increasing$ as recent legislation today encourages them to negotiate agreements and resolve disputes at an individual employee level. 7mployees: 7mployees today are on average more highly educated than in the past. They become bored more 2uic ly and demand more challenging$ interesting 'or .

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Trade 9nions: ,re organisations formed by employees in an industry$ trade or occupation to represent them in efforts to improve 'age and the 'or ing conditions of their members. 7mployer ,ssociations: ,re essentially counters to trade unions. They protect employers in the ma ing of a'ards and other industrial issues and disputes. :overnments and :overnment 4rganisations: Their ey roles are as follo's:

;egislator: 4ur elected representatives pass la's in parliaments 'hich provide the legal frame'or for industrial relations. /ederal and %tate governments are employers of almost one third of ,ustralian 'or ers$ such as nurses and police officers. -esponsible economic manager. ,dministrator of government policies on industrial relations.

<anaging 7mployment -elations /unction: The scope of the employment relations function depends on not only the si=e but also the nature of the business$ the level of industrial action and involvement of unions in the industry or business. >n larger enterprises$ line managers are also increasingly trained in general employment relations issues$ including legal compliance in such areas as 4H%$ e2ual employment opportunity and 'or place resolution of conflict. <ost specialist managers are responsible for :

-ecruitment and selection >nduction and training %eparation <anaging the implementation of e2ual employment opportunity and affirmative legal action legalisation.

Key influences on Employment Relations: %ocial >nfluences: ?hanging 'or 8atterns:

<any people today have periods as full time employees follo'ed by periods of casual$ part time or contract 'or . <any changes appear to be driven by business6 need to reduce costs and improve productivity. %ome changes include:
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The rapid gro'th of concentrating or outsourcing. , preference of many businesses is to have a smaller permanent 'or force and casual employees as a fle"ible 'or force to meet demand at pea times. /le"ible 'or ing hours 8opulation %hifts:

There is increased female participation in the 'or force and early retirement from full time 'or is popular today. ?hanging ,ttitudes

The 'or force today is 'ell educated and employees increasingly 'ant challenging 'or $ greater responsibility and anatomy. ;egal >nfluences: <a(or employment legislation: ?hanging community and 'or er e"pectations on social (ustice *e2ual employment opportunity$ anti discrimination+ have become an influence to 7-. @e have also moved further a'ay from a centralised 'age determination system to a decentralised 'age determination system influencing 7- as 7managers3employers must no' spend time negotiating 'ages. Ae' 4rganisational Behavioural >nfluences: @ith the possible issue of diminishment of promotional opportunities 7managers have developed the follo'ing motivational strategies for staff:

Cob enrichment: involves increasing the breath of the tas s in (ob. Cob rotation: involves moving staff from one tas to another over a period of time. Cob enrichment: involves increasing the responsibilities of a staff member.

7conomic >nfluences: During times of increased economic gro'th goods and services are demanded more and there for the demand for labour increases. %tructural change in the economy has led to rapid gro'th in the employment sector. :lobalisation has increased the level of international competition. >n such an environment$ there is an increased need to attract and retain motivated and effective staff$ and ma e continuous improvements in productivity$ costs$ innovation$ and 2uality and customer service. Training in the management of multicultural 'or forces 'ith differing approaches to po'er$ authority and the role of groups3 individuals is increasing 'ith the globalisation of business.
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4ther influences: Technological change 1 is a ma(or source of improvements in productivity$ communication and competition bet'een firms. >t is causing the nature of production and services to change$ resulting in the need for ongoing training programs. ?ompetitors 1 >f supply of labour is limited it can lead to poaching problems. -etention of staff is improved through good management of the employment relationships$ and not (ust financial incentives. Effective Employment Relations: The role of 7mployment -elations: 7mployees are often the only point of difference bet'een some firms. <ost organisations that are successful in the long term maintain a balance bet'een concern for success and regard for their employees. Better 'or and employment relationships begin 'ith an understanding of ho' people interact. Human relations covers all types of interaction among people: conflicts$ cooperative efforts and interpersonal and group relationships. The employment relations function aims to manage the relationship bet'een employer and employee effectively in order to develop competent$ fle"ible$ productive employees committed to the organisation. ,spects of H- <anagement:

Human resource planning- involves setting out 'hat needs to be achieved through analysing internal and e"ternal factors. -ecruitment$ selection and placement Training and development -e'ards <anagement ?onflict resolution and management of industrial agreements ;egal compliance 1 4H% and %ocial Custice. %eparation

?ommunication %ystems: :rievance procedures: ,re formal procedures that an employer and employees have agreed to use to deal 'ith issues or conflict in the 'or place. 7"amples use a letter of reprimand or a letter of praise. @or er 8articipation: /irms 'ill benefit from creating meaningful$ interesting roles for employees allo'ing them a sense of responsibility. Coint consultative committees provide management 'ith employee vie's on a range of issues and company trends.

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Team Briefings: Fuality circles involve employees meeting voluntarily on a regular basis to discuss$ analyse and resolve specific problems. %emi 1 autonomous teams3 self managing 'or teams is 'here a group of employees assume a high level of responsibility for a (ob. -e'ards: -e'ards can either be intrinsic or e"trinsic. >ntrinsic re'ards are those re'ards gained by doing the actual (ob itself such a sense of achievement or satisfaction. 7"trinsic re'ards are those give or provided outside the (ob itself. They may be monetary or non monetary for e"ample incentive payments or fle"ible 'or schedules. Training and Development: >nduction training is a foundation for all employment relations 'ith that employee. >t is done to introduce the employee 'ith the (ob$ co 'or ers$ the organisation and its culture. Training programs are planned and are an integral part of the business strategy. The steps involved are:

%tep 1: access the needs of$ the individual$ the (ob and the business. %tep 2: Determine the ob(ective of the training program for the organisation$ (ob and individual. %tep 3: ?onsider internal and e"ternal influences. %tep !: Determine the content of training programs. %tep #: 7valuate the training program.

7ffective development plans ensure that all e"periences and talented staff are retained.

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/le"ible @or ing Hours: %ocial changes have led to an increased need for fle"ible 'or ing hours. The first area is the need for fle"ible remuneration agreements 'hich allo' employees to be more motivated and to become lin ed financially to the business6 success. 8ossible strategies are profit sharing and productivity sharing. The second is the need for fle"ible 'or ing hours and part time 'or 'hich allo's employee groups for e"ample students and mothers to 'or part time. Family friendly programs 'hich include (ob sharing$ fle"ible 'or ing hours3 conditions$ family leave$ planning for spouses3 children 'ithin overseas career postings and assistance 'ith child care or provision of child care facilities are vitally important as social changes have ta en place leading to often a mother and father 'or ing. <easures of effectiveness: Employment Relations Audits: This audit can be performed in a number of 'ays:

8erformance of one division of the firm itself against another is benchmar ed to determine areas of 'ea nesses. ,n outside consultant conducts research to analyse problems and suggest solutions. Gey performance indicators are evaluated by management. , legal compliance analysis may be underta en to determine areas of variance from la's and company

Measures of effectiveness include: - ;evels of staff turnover - ,bsenteeism - Disputation - Fuality - Benchmar ing

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Legal Framework of Employment: The 7mployment ?ontract: ,n employment contract is a legally binding$ formal agreement bet'een employers and employees. , contract is valid if:

The parties involved intend to create a legal relationship. 4ne party offers and another accepts the offer Both parties obtain a benefit Both parties have the capacity to contractI for e"ample they are old enough to ma e the contract. ?onsent in genuine and are not pressured. The offer does not contravene any public interest.

The employment contract is governed by common la'$ statues and a'ards. Common Law: The common la' is la' developed by courts and tribunals. 9nli e statutes$ it is not made by parliamentI it is made by prior (udge6s decision. 9nder common la' both employers and employees have basic obligations in any employment relationship. 7mployer -esponsibilities include the follo'ing:

8roviding 'or 1 7mployers are not allo'ed to stand do'n employees is there is no 'or . 8ayment of income and e"penses 1 7mployers are re2uired to pay the income stipulated in the a'ard$ enterprise agreement or contract. <eeting re2uirements of industrial legislation 1 'hich includes$ providing a 'or place and 'or practices 'hich are free of discrimination and ensuring that employees are protected against unfair dismissal. Duty of care 1 9nder 4H% legislation employers must ta e reasonable care of employees by: providing a safe 'or system 'ithout ris s to health$ providing and maintaining premises that do not unreasonably e"pose an employee to ris of in(ury$ providing resources and information necessary to ensure the health and safety and protecting 'or ers against ris s arising out of their 'or activities.

,ll employees are obliged to observe the follo'ing:

4bey la'ful and reasonable commands made by the employer. 9se care and s ill in the performance of their 'or activities 1 that is they must not behave in a negligent manner. ,ct in good faith and in the interests of the employer.
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Statutes: ,re la's passed in state and federal parliament$ for e"ample la's relating to employment conditions$ 'age and salary determination and dispute resolution. The statutory frame'or in ,ustralia today: /air @or 200J *A%@+The act reflects a government trying to incorporate principles of 'or place fairness 'ith principles designed to consolidate 'or place fle"ibility$ productivity and efficiency. To the satisfaction of unions fair 'or ,ustralia replaces 'or choices. The role of fair 'or ,ustralia 'ill be the po'er to vary a'ards$ ma e minimum 'ages$ approve agreements$ determine unfair dismissal claims and ma e orders on Kgood faith6 bargaining and industrial action. /air 'or ,ustralia provides a 'age based Ksafety net6 for employees. Awards: ,re a means of a centralised 'age determination system and are often replaced by enterprise agreements 'hich are agreements bet'een an individual firm and its employees. Agreements: 7nterprise agreements are made bet'een the employer and employees and often better conditions are reached through the use of enterprise agreements. Types of 7mployment ?ontract: ?asual 7mployment: ,re employees that are employed in irregular$ uncertain conditions and are not entitled to sic leave or holiday leave. <any employers prefer casual staff$ as it reduces recruitment and dismissal costs and other on costs. ?asual employees ho'ever are entitled to casual loading. 8art Time 7mployment: 8art time employees have an employment contract but 'or less than 3# hours a 'ee . 8art time employees do have access to employment entitlements offered to full time employees. /le"ible 7mployment ?onditions: /le"ible 'or ing hours are a common feature of enterprise agreements and individual contracts$ as they allo' firms to operate shifts at more intensive levels during pea seasons. The fle"ibility offered by (ob sharing involves t'o employees voluntarily sharing one permanent full time (ob. This arrangement has been very popular 'ith 'omen returning to the 'or force after having children.

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8ermanent ?ontracts: - -egular or continuing employees: -egular or continuing employees can be full time or part time. They can e"pect that they have a continuing contract of employment and are re2uired to 'or a specified number of hours per 'ee . - /i"ed term employees: ,re employed on a contract for a specific period. They may be employed to replace staff absent for a period of time or on a pro(ect basis. >ssues ,rising from the gro'th of part time and casual 'or : /or many casual employment reflects a lac of full time employment$ rather than a long term preference for casual 'or . ?asuals often find it difficult to access full time or permanent (obs$ particularly if they miss out on training and development opportunities available to full time staff. <any e"ist on lo' or uncertain incomes$ and are unable to obtain credit to purchase cars or homes. Industrial Conflict: Definition and ?auses of >ndustrial ?onflict: ?onflict refers to disputes$ disagreements or dissatisfaction bet'een individuals or groups. 8ossible causes of industrial disputes:

<anagerial 8olicy- is the single most common cause of disputes$ disputes may arise from a'ard restructuring$ terms and conditions of employment$ enterprise bargaining$ production limits of 2uotas$ promotion$ discipline$ personal disagreements and changing 'or practices. @age Demands- /or e"ample a demand for greater output of employees. @or ing conditions- ?onditions can include leave pensions$ compensation$ hours of 'or and physical 'or ing conditions. 8olitical goals or social issues- This has become more uncommon as la's have been placed to prevent industrial discrimination.

4verall and mainly due to the decentralisation of the 'age determination system industrial disputes are minimising. 8erspectives on ?onflict: 9nitary: is a team based approach to conflict and all employees opinions are considered.

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8luralist approach: -ecognises the active roles played by unions and 'or s to'ards a resolution that suits all. -adical 8erspective: >s an Kus versus them6 approach and recognises conflict as inevitable. Types of >ndustrial ,ction: There are t'o types of >ndustrial action: 4vert: are those industrial conflicts seen by the public. ?overt: ,re those industrial conflicts not seen by the public. 4vert 4perations: ;oc outs: occurs 'hen employers close the entrance to the 'or place and refuse admission to employees. 8ic ets: ,re protests that ta e place outside the 'or place generally associated 'ith a stri e. %tri es: -efer to situations in 'hich 'or ers 'ithdra' their labour. They are the most overt form of industrial action and aim to attract publicity and support for the employees6 case. @or bans: is a refusal to 'or overtime$ handle a product$ piece of e2uipment$ process or even a refusal to 'or 'ith particular individuals. Boycotts are a type of ban in 'hich employees refuse to carry out part of their duties. , secondary boycott occurs 'hen employees of firm L lace a ban on conduction business 'ith firm M. @or to -ule: @or ers refuse to perform any duties additional to the 'or they normally are re2uired to perform. ?overt 4perations: ,bsenteeism: high levels of absenteeism or lateness may indicate that 'or ers are dissatisfied or that there is conflict 'ithin a 'or place. %abotage: >t may involve employees ta ing action to harm or destroy the image of the firm. Turnover: is the resignation of employees lin ed 'ith dissatisfaction 'ith the 'or place. 7"clusion from decision ma ing in the business: includes not inviting employees to meetings etc. >s often used 'hen an employee has spo en out against the business that may practice unethically or illegally. -oles of sta eholders in resolving disputes: 7mployers and managers: use grievance procedures and negotiate agreements 'ith employees to resolve disputes. 7mployees: use grievance procedures and negotiate agreements 'ith employers$ 'ith or 'ithout unions on a collective or individual basis. Trade unions: represents employees in disputes from the shop floor to the national level.

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7mployer associations: 8rovide information and support to employers$ assist in negotiations 'ith unions and represent employers in tribunals.

Dispute resolution procedures: :rievance procedures: are useful in reducing the ris of an issue rapidly becoming a serious dispute. %ince the introduction of enterprise bargaining and the unfair dismissal legislation introduced in the industrial relation reform act 1JJ3. Aegotiation: is a method of resolving disputes 'hen discussion bet'een the parties result in compromise and a formal or informal agreement about the dispute. ?onciliation: , conciliation commissioner hears both arguments and helps a decision be made. The parties involved may ob(ect to a particular commissioner and as that another be appointed. ,rbitration: Done 'hen conciliation fails$ a (udge or a panel of (udges hear both arguments in a dispute in a more formal court li e setting. ,n order is then handed do'n 'hich is legally binding. <ediation: is a confidential discussion of issues in a non threatening environment. ?ommon la' action: is open to any party involved or affected by industrial action. Business division3 closure: may be a resolution or outcome of a dispute. %ome firms outsource role believing that it 'ill reduce dispute levels. Benefits and costs of industrial dispute: /inancial: Benefits: increases empo'erment of all parties 'ho o'n an agreement. 7mpo'erment can lead to increased productivity$ fe'er disputes and reduced absenteeism and labour turnover. ?osts: ;ost production and sales and firms reputation may be damaged. %ome firms may reallocate or close. 8ersonal: Benefits: ?onflict helps 'or er to gain management6s attention on ma(or issues that may have caused dissatisfaction and stress for a long time. Better 'or relationships may result from a clearer understanding of 'or problems. ?osts: %tress can be created through intensification of 'or and changes due to restructuring of the 'or place. -umours or threats of do'nsi=ing cause fear$ insecurity and lo'ering staff morale. %ocial: Benefits: >ntroduction of multis illing$ ne' training opportunities and career paths benefit individuals and society. 4H% problems may be reduced.
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?osts: community bitterness may be directed at unions$ employees or employers in industries 'here disputes affect the general public. Nerbal and physical abuse can occur. 8olitical: Benefits: :overnments can change their policies in response to 'or place conflict. Disputes can dra' public attention to the need to protect 'or er entitlements ?osts: /re2uent and disruptive conflict has an impact on government or opposition policies$ particularly at election times. Bitterness bet'een unions and governments can lead to political conflict. 7"tended disputes can affect economic gro'th. >nternational: Benefits: ?hanges to 'or practices follo'ing conflict can improve a business6s international competitiveness. ?osts: ;oss of e"port income and mar ets can occur after periods of disruption. The nations reputation for stability may be lost and overseas customers or investors may turn else'here. Ethical and Legal Aspects of Employment Relations Issues: 7thical and responsible behaviour: 7thical business practices are those that are socially responsible$ morally right$ honourable and fair. @or ing conditions: ,n ethical employer can be e"pected to achieve safe and fair 'or ing conditions that improve the 'elfare of employees. This is achieved through:

?ompliance 'ith social (ustice and industrial legislation. 8roviding a safe and healthy 'or ing environment$ safe 'or ing practices and e2uipment$ appropriate supervision and training in safety and health. 4ffering fle"ible 'or ing hours and conditions that promote a balance bet'een 'or and life. 7stablishing a code of practice to sho' customers$ employees and suppliers the organisation6s commitment to e2uity and ethical business practices.

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4ccupational health and %afety *4H%+: 4H% la' covers employees$ employers and the self employed. The follo'ing are re2uired: 7mployers must ensure the health and safety and 'elfare at 'or of all employees by providing a safe system of 'or . ,ll employers must ta e out 'or ers compensation insurance. 7mployers must ta e steps to ensure that people on site 'ho are not employees are not e"posed to ris s arising from 'or being underta en. 7mployees are re2uired to ta e reasonable care for the health and safety of others$ to cooperate 'ith employers and comply 'ith 4H% re2uirements. 7mployees 'ho engage in bullying or interfering 'ith machinery are breaching their duties and could be fined. Health and safety committees must be established at 'or places 'ith more than 20 employees or if re2uested by a ma(ority of employees. @or cover inspectors may inspect the 'or place$ collect information and issue improvement and prohibition notices. @or cover must be notified in the event of death or serious in(ury.

@or ers ?ompensation: 8rovides a range of benefits to an employee suffering from an in(ury or disease related to their 'or . >t is also provided to families of in(ured employees 'hen in(ury3 disease 'as caused by or related to 'or . ,ll employers must:

Ta e out a policy 'ith a licensed insurer. Geep time and 'age records$ a register of in(uries and complete accident forms. Aotify insurers of in(uries 'ithin !H hours. 8ass on compensation to the person entitled as soon as possible.

@or cover 'hich is run by the A%@ government develops policies in each of these areas and supervises the 'or place to ensure these policies are carried out. The federal government *,%??+ coordinates national efforts to prevent 'or place death$ in(ury and disease$ improve 'or place compensation agreements and improve the rehabilitation of in(ured 'or ers.

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@hen in(ured 'or ers forgo their rights to 'or ers compensation to purse a negligence claim against their employer in the common la' courts they are ta ing a certain ris . ?ompensation is less certain that gained in statute la'. Ho'ever the benefit is that if 'on the payout could be larger than that of statute la'. ,nti Discrimination: Discrimination occurs 'hen a policy or a practice disadvantages a person because of a personal characteristic that is irrelevant to the performance of 'or . 7mployers must:

?omply 'ith legislation ,udit all policies and practices to ensure they do not discriminate.

9nder discrimination la's it is illegal to discriminate on the grounds of a person6s:

%e"$ colour or age. 8hysical or mental disability -eligious faith pr political opinion. %ocial origin <arital status or pregnancy or potential pregnancy.

%trategies are increasingly used by business including:

?ommitting to a business free from discrimination through use of a core of conduct. <a ing all policies and procedures clearly documented and accessible. Training managers and staff ho' to not discriminate and to accommodate various groups$ etc.

72ual 7mployment 4pportunities: 774 refer to e2uitable policies and practices in recruitment$ selection$ training and promotion. 8rivate sector employers 'ith more than 100 staff are obligated to develop an affirmative action program 'hich refers to measures ta en to eliminate direct and indirect discrimination. The report must:

7stablish the 'or place profile and analyse the issues in the specific 'or place -eport on the actions ta en by the employer to address priority issues Describe action plans for the follo'ing period and evaluate strategies used.

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The e2ual opportunity for 'omen in the 'or place agency recommends that businesses focus on si" areas to improve e2uity 'ithin their organisation: recruitment$ promotion and separation$ access to all occupations and areas$ e2uitable total remuneration$ training and career development$ 'or and life balance$ se"ual harassment and 'or ing relationships. 9nfair Dismissal: 9nfair dismissal is 'hen 'or er has been dismissed or threatened 'ith dismissal from their (ob and the 'or er believes that this action is un(ust. 9nfair dismissal is supported by the industrial relations act. The A%@ industrial relations commission may determine 'hether:

There 'as a reason for the dismissal There 'as an opportunity for the employee to (ustify or e"plain 'hy they should be reinstated or compensated There 'as notification of unsatisfactory performance by the employee

The fair 'or act resolved the act of unfair dismissal. This is a state and federal legislation.

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