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Employee Relations Management

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|Executive Pay Cuts |
|Newspaper |Date |Article Number |
|The Age |23 July 2009 |A1 |
|The Age |10 August 2009 |A2 |
|The Australian Financial Review |26 August 2009 |A3 |
|The Age |26 August 2009 |A4 |
|The Australian Financial Review |2 September 2009 |A5 |
|The Australian Financial Review |8 September 2009 |A6 |
|The Australian Financial Review |8 September 2009 |A7 |
|The Australian Financial Review |8 September 2009 |A8 |
|The Australian |9 September 2009 |A9 |
|The Australian |9 September 2009 |A10 |
|The Australian |9 September 2009 |A11 |
|The Australian |10 September 2009 |A12 |
|The Australian Financial Review |14 September 2009 |A13 |
|The Australian |15 September 2009 |A14 |
|The Australian |23 September 2009 |A15 |
|The Age |1 October 2009 |A16 |
|The Age |1 October 2009 |A17 |
|The Age |1 October 2009 |A18 |
|The Age |1 October 2009 |A19 |
|The Age |1 October 2009 |A20 |
|The Age |1 October 2009 |A21 |
|Women At Workplace |
|Newspaper |Date |Article Number |
|The Australian Financial Review |1 September 2009 |B1 |
|The Age |7 September 2009 |B2 |
|The Australian Financial Review |8 September 2009 |B3 |
|The Australian |9 September 2009 |B4 |
|The Australian |9 September 2009 |B5 |
|The Australian |10 September 2009 |B6 |
|The Australian |10 September 2009 |B7 |
|The Australian |10 September 2009 |B8 |
|mx News |16 September 2009 |B9 |
|The Australian |21 September 2009 |B10 |
|The Australian |23 September 2009 |B11 |
|Employment Rights |
|Newspaper |Date |Article Number |
|The Age |4 August 2009 |C1 |
|The Age |5 August 2009 |C2 |
|The Age |10 August 2009 |C3 |
|The Australian Financial Review |2 September 2009 |C4 |
|The Australian Financial Review |8 September 2009 |C5 |
|The Australian |10 September 2009 |C6 |
|The Australian |15 September 2009 |C7 |
|The Australian |15 September 2009 |C8 |
|The Australian |15 September 2009 |C9 |
|The Australian |22 September 2009 |C10 |
|The Australian |22 September 2009 |C11 |
|The Australian |23 September 2009 |C12 |
|The Australian |23 September 2009 |C13 |
|The Age |24 September 2009 |C14 |
|The Age |1 October 2009 |C15 |

The following analysis seek to explore the various aspects of Industrial Relations as means of maintaining harmonious employee relations and its role as a regulatory measure to provide solutions for disputes.

Employee Relations (ER) concerns the direct relationship between the employer and the employees whereas Industrial Relations (IR) ‘consist of the whole gamut of relationships between employees and employers which are managed by the means of conflict and cooperation.’ (www.industrialrelations.naukrihub.com 2007, para 1)

There are three main actors in the IR system: Employee, Employer and the Government. In the tug-of-war between employers and employees the government plays the all important role of influencing and regulating industrial relations through laws, rules, agreements etc. (www.industrialrelations.naukrihub.com 2007)

‘A sound industrial relations system is one in which relationships between management and employees (and their representatives) on the one hand, and between them and the State on the other, are more harmonious and cooperative than conflictual and creates an environment conducive to economic efficiency and the motivation, productivity and development of the employee and generates employee loyalty and mutual trust’ (www.industrialrelations.naukrihub.com 2007, para 2).

This portfolio would be discussing the interrelation between ER and IR and role of Government. Issue No. 1 is the new regulations on the Executive Pay Cuts imposed by the government currently awaiting the reviews of Productivity Commission which was the forefront of media focus recently.

The new legislation proposes to subject the Company CEOs termination packages to be limited to one year' base pay and be subject to the vote of the shareholders if the amount is any higher. (A12, A13, A7) The bill was introduced in June to amend the Corporations Act (A14) accommodating the above. This move has raised much debate among the businesses, economists, public, Directors and CEOs, average employees, investor community and specific Government Regulatory Bodies bringing about opposing viewpoints and varied perspectives.

The overall objectives of the legislation are to hold the companies accountable to the shareholders, make directors accountable for the decisions made plus block huge remuneration packages being handed to undeserving CEOs. It would help prevent the companies suffer losses and even the threat of bankruptcy (A1) i.e. Verticon Group paying its CEO a cash bonus which approximates to half the value of the company’s share market value while the company $17.5 million loss for the year This regulation intervenes the companies’ employee relations and HRM policies in order to stop adverse effects that may arise for the greater good of the companies’ as well as the employees.

Merhebi et al (2006, p. 481) ‘document CEO pay–performance association as positive and statistically significant’. However Merhebi et al further state that Australian observations differ the world trends except the study of Matolcsy. ‘Studies examining the CEO pay–performance relationship for Australian firms report findings inconsistent with most international studies. So far, Australian research has found either a negative pay–performance relationship or no association, with the exception of Matolcsy (2000)’ (Merhebi 2006, p.482). It states that CEO pay sensitivity decreases with increasing risk and that CEO pay increases in correlation to firm size. It is also observed that CEO pay increases 1.16% to every 10% of shareholder wealth (Merhebi 2006, p.482). The Politicians however are concerned about the new legislation that the link of the limitation being linked to the base pay would result in increased base pay resulting ‘multimillion payouts would go to undeserving CEOs’ which would nullify the desired effect. (A14) It is the view of shareholders that this would make the directors more accountable for and consider consequences of their actions hence the concern that the base pay may rise is not valid. (A14) They are also of the opinion that shareholder approval would not have any affect the attraction of good quality leadership talent to the companies contrary to the view point of the businesses (A14, A13). While the Senate Economic Committee and Lower House of the Parliament find no issue with the proposed legislation, the businesses argue that this would make it hard for them to recruit talented executives, that it would affect the middle managers and cause the long serving employees to suffer while negatively affecting genuine retirement payments (A13).

Opposition Spokesman for financial services, superannuation and corporate law offers a balanced view on this issue. While he believes that this would promote good corporate governance through better disclosure, empowered shareholder and alignment of executive and shareholder interests (A12), he indicates that the threat of increased base pay would in turn result in fixed incomes that do not correlate to performance putting no compulsion on the executives to perform so that the companies generate more income. Hence his recommendation was to consider the limitation on the executive payouts to be annual total remuneration instead of it becoming one year’s base pay.

Amid all the above varied opinions and recommendations the public view of this issue was highlighted by the recent survey conducted by The Australian (A15) which revealed that the ‘9 out of 10 Australians believe that CEOs get paid too much and 79% believe that executive salaries should be capped. …….. four in five Australians believe high executive salaries do not increase company performance and that almost two thirds of people believe high executive pay lead to higher risk taking.’

Through the analysis of the above issue we see how IR relates to ER, its interconnection and the implications of ER and IR on each other. It clearly demonstrates the Government’s role in attempting to ‘create an environment conducive to economic efficiency and motivation’ (www.industrialrelations.naukrihub.com 2007, para 2).

The next issue brought to focus in this portfolio is the much talked about and debated topic of ‘women at workplace’. Currently the Federal government is considering a series of changes to equal opportunity legislation, merging of Equal Opportunity for Women in the Workplace Agency (EOWA) with another body (B1). This new move by the government was initiated by the recent reports by EOWA exposing that Australia was far behind in terms of women’s pay and progress into the senior ranks of business despite a decade of economic growth. (B1) the issues paper put forward by the govt. highlights that gender pay gap improvement is rather slow over the past 25 yrs, indicating only a 1.1% decrease between May 1984 to May 2009 (B1). Australia has the fifth largest pay gap among the countries with similar tertiary education level when compared with Countries of the ‘Organisation for Economic Cooperation and Development Countries’ (B1).

At the recent ‘Women on Boards’ conference held in Sydney (B3) the importance of the gender equality in the workplace was discussed at length. Federal Discrimination Officer stated that ‘there is a strong connection between how women are treated in corporate and business life and how women are treated in everywhere across the country and internationally’ (B3). She further stated that women’s leadership is a reflection on Australia’s progress towards gender equality just as the statistics on violence on women, sexual harassment, gender pay gap and gap in retirement savings, adding that the current poor record of the Australian businesses on promoting women is simply lack of will (B3).

All of the above mentioned issues are concerns relating to a situation where the relationships between the employer and female employees have become strained. The Government initiatives to update the legislations and the conference both are Industrial Relations that seek to create a fair work environment through restrictions and awareness. Even the push towards removing gender as criteria in selecting personnel for specialised categories of the Military services by the Defence Personnel & Science Minister is demonstration of the govt’s policy to improve and retain women in the Australian Defence Force (B5). Such actions send a clear signal to the corporate world of the standards they need to adhere to in the workplace in relation to gender equality plus take an active stance in creating a level playing field for both male and female workers thus removing the inequality of opportunities (B5, B6).

The issue of equal treatment in the workplace for women goes further into how imposed dress codes can be used to oppress women (B9). The scenario was one where UK worker’s union had to defend the right of women to wear flats to work. Shedding light on much unnoticed dress code requirements such as air hostesses and shop girls being required to wear high heels (B9). It opens our eyes towards the ways in which inequality can go unnoticed. In cases where direct employee-employer relations do not pay the due attention to matters of concern the unionised employee efforts seek to bring about the desired changes.

Yet another aspect of the above stated issue is sexual harassment in the workplace. Recent case of a Bank’s executive’s sexual advances on a female staff member (B8) brings this to light once again adding to the statistics of such cases. The case is currently at the Courts which is yet another body involved in settling disputes within the IR framework. Providing and maintaining a safe, harassment free work environment is an obligation of the employer towards the employee. When this is breached and no proper grievance procedures are not in place, the issue extends to the IR system where dispute settlement has to take place externally (Bromberg & Irving, 2007).

Thus it brings us to the final issue contained in this Media Portfolio, ‘Employment Rights’. ‘Protecting the vulnerable and respecting the dignity of the workers’ are the key objectives of Australian Charter of Employment Rights (Bromberg & Irving, 2007, p.30). In broader context, creating a workplace free from discrimination and harassment, which promotes individual well-being, improve productivity and contribute towards shaping a community that challenges inappropriate behaviour is targeted through this (Bromberg & Irving, 2007, p.30).

The aspects covered under the Charter are, good faith performance, work with dignity, freedom from discrimination and harassment, a safe and healthy workplace, workplace democracy, union membership and representation, protection from unfair dismissal, fair minimum standards, fairness and balanced industrial bargaining and effective dispute resolution (Bromberg & Irving, 2007, pp. 146-147).

The reported incident of five Chinese building workers being paid less than $3 a day (C1) is an example of violation of the employment right on fair minimum standards as well as freedom from discrimination. The workers were subject to disadvantage due to their lack of awareness of employment rights and language barrier (C1). Paramedics stood up demanding their in between shift break to be extended to 10 hrs from the current 8 hrs and refusing to work on their days off to spend time with families (C2). This action pertains to the workers’ right to workplace democracy and fairness and balance in industrial bargaining. As and when similar issues as the two stated above arise in the workplace, the IR system facilitates dispute resolution through the Fair Work Australia – the Tribunal set up for such interventions as an independent body. Fair Work Ombudsman is yet another party that can be approached in such cases. ‘The role of the Fair Work Ombudsman is to work with employees, employers, contractors and the community to promote harmonious, productive and cooperative workplaces. We investigate workplace complaints and enforce compliance with Australia's workplace laws’ (http://www.fwo.gov.au/Pages/default.aspx 2009, para 1). The importance of the IR system to maintain the workplace relations is clearly demonstrated in these situations. The importance of the two bodies – Fair Work Australia and Fair Work Tribunal – is even more highlighted by employers campaign to be launched requesting to grant more powers to them (C3).

The Unions win over the amendments to national OHS (Occupational Health & Safety) reforms marks a milestone in Australian IR system while it opens the way towards greater protection for employees, especially for industries that involve dangerous manual labour (C5). Under this the workers are also given ‘greater rights to be involved in monitoring workplace safety’ (C5). The new changes uphold the employment rights in the workplace and indicate the correlation between the IR and ER much stronger. They illustrate the focus of the Government to ensure fairness in the workplace through standardising the IR setting.

While this would be welcoming change for employees, an Opposition politician maintains a negative view of the said changes by the Government stating ‘industrial flexibility’ must be maintained in order for Australia to continue on the road of economic prosperity and calling the new the reforms a ‘great leap backwards’ (C7). In this atmosphere that promotes the unionised actions the individual rights of the workers may be ignored is a question raised by the concerned public (C8). Hence there is a fear that worker democracy may be weakened in the process (C8).

Recent Industrial disputes of Visy Food Packaging and Campbell Soups over casualisation and new enterprise agreement reported a situation of total of 250 workers being locked out their manufacturing plants (C9). The Australian Manufacturing Workers Union (AMWU) claim that the new clause added to the Fair Work Act ‘undermines pay and work conditions’ (C9). The AMWU further said that the company intends to ‘introduce flexibility arrangements that could be used to diminish people’s right to entitlements’ through the Fair Work Laws (C9). The dispute occurred over union seeking a 5% pay rise, guarantees about casual labour, shift structures and concerns on workplace safety while the company was seeking to reduce crew levels (C9). Similar situations are rather common in the Industrial relations sphere where the employee demands are not met by the employers, giving way to huge disagreements that at times require intervention by Independent bodies. It often seems that laws are never good enough when both supporting and opposing views are considered. Worsening the situation further Western Australia has refused to accept the new workplace safety laws leave room for manipulation through back room deals (C11). This makes one wonder whether the laws can ever be tailor made to address all situations that may arise in relation to industrial disputes and whether regulations are the best answer to dispute resolution. It is fair to conclude that both employers and employees as main stakeholders in this, they should have collective interest in resolving the issues in manner reasonable to both ends. As specified by the Employment Rights Charter ‘Every worker and every employer has the right to have their agreed terms of employment performed by them in good faith. They have an obligation to cooperate with each other and ensure a “faith go all round”’( Bromberg & Irving, 2007, p. 146), is a good basis to abide by in such situations.

The overview of all three issues explored in the above analysis, derives the conclusion that the ER and IR go hand in hand and often complement and benefit each other in managing workplace relations. The protection of the interest of both employer and employee along with the progressive economic activity are the expected outcomes of this. However the measure taken in the IR system towards better managing the ER need to dynamic and constantly updated while addressing the needs of the hour rather than approached with the mindset of ‘one size fits all’.

Reference list

Bromberg, M & Irving, M (eds.) 2007, Australian charter of employment rights, The Australian Institute for Employment Rights, Australia, Melbourne.

Industrial relations-Naukrihub.com, 2007, Industrial relations system, Industrial relations-Naukrihub.com, viewed 2 October 2009,

Merhebi, R, Pattenden, K, Swan, PL & Zhou, X 2006, Australian chief executive officer remuneration: pay and performance, Accounting and Finance, vol.46, pp. 481–497

Fair work Ombudsman.com.gov.au, 2009, Fair work ombudsman, Fair work Ombudsman.com.gov.au, viewed 4 October 2009,

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...Introduction To Industrial Relations |   | | Industrial relations has become one of the most delicate and complex problems of modern industrial society. Industrial progress is impossible without cooperation of labors and harmonious relationships. Therefore, it is in the interest of all to create and maintain good relations between employees (labor) and employers (management). | | Concept of Industrial Relations: The term ‘Industrial Relations’ comprises of two terms: ‘Industry’ and ‘Relations’. “Industry” refers to “any productive activity in which an individual (or a group of individuals) is (are) engaged”. By “relations” we mean “the relationships that exist within the industry between the employer and his workmen.” The term industrial relations explains the relationship between employees and management which stem directly or indirectly from union-employer relationship. Industrial relations are the relationships between employees and employers within the organizational settings. The field of industrial relations looks at the relationship between management and workers, particularly groups of workers represented by a union. Industrial relations are basically the interactions between employers, employees and the government, and the institutions and associations through which such interactions are mediated. The term industrial relations has a broad as well as a narrow outlook. Originally, industrial relations was broadly defined to include the relationships...

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