Business Studies
Topic 4:
Section 4.2:
HSC Course
Employment Relations
Key Influences on Employment Relations
Section Overview:
4.2.1
Social influences — changing work patterns, population shifts
4.2.2
Legal influences — overview of major employment legislation
4.2.3
New organisational behavioural influences — flat management and team structures
4.2.4
Economic influences — economic cycle, globalisation
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Section 4.2
Key Influences on Employment Relations
4.2.1 Social Influences – Changing Work Patterns, Population Shifts
Various changes in our society have had an influence on employment relations. There are
people from a greater range of ethnic backgrounds in our workforce, there are more women
in the workforce, more people are juggling families and work, union membership is declining
and people are increasingly focused on issues such as discrimination, unfair work practices
and the environment. Social issues like these, in turn, impact on the rules we make in order
to regulate our working environment and the way individual businesses go about carrying
out their employment relations function.
A)
Changing Work Patterns
Some of the key factors in the change to work in Australia include:
B)


The increasing number of females in the workforce
The increasing mobility of workers


The increasing use by employers of contract labour
The increase in employees in white-collar work

The hours per week required for work have increased


The decrease in blue-collar workers
The growth in part-time work


The growing division between skilled and unskilled workers
Skills are becoming obsolete far more quickly
Population Shifts
In an increasingly globalised world, we are seeing people from all over the world
making up our workforce. As these people come to work in Australia, the
implications for managers are great. Problems such as discrimination and racial
harassment can easily occur when employees misunderstand others from different
cultural backgrounds. Training programs for managers and employees that deal with
cultural awareness, etiquette, handling people with tact and diplomacy are recent
innovations that have been devised to eradicate some of these problems.
In the last decade especially, there have been significant changes to the populations
in country towns as business closures took place – particularly closures of abattoirs
and banks. These changes have caused people to move from the country to the city
in search of employment.
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Section 4.2
Key Influences on Employment Relations
4.2.2 Legal Influences – Overview of Major Employment Legislation
Most employees are covered by a formal contract – such as an Award, an Enterprise
Agreement or an Australian Workplace Agreement. An AWARD is a legally binding
document setting out the minimum pay and conditions for employment. An
ENTERPRISE AGREEMENT is an agreement made between an employer and the
employees at a particular enterprise – a business or workplace. The AUSTRALIAN
WORKPLACE AGREEMENT is an agreement that is reached between an employer and
an individual employee.
A)
Overview of Major Employment Legislation
The Federal government’s power to pass legislation (make laws) about industrial
relations is limited to its powers set out in the constitution. Under Section 51
(XXXV) of the constitution the Commonwealth Government can only pass laws for
conciliation and arbitration for dispute resolution at a national level, but cannot
regulate wage levels directly.
The main legislation in this area is the Workplace Relations Act 1996. This Act
was passed in November 1996, and replaced the Industrial Relations Act 1988.
One of the main aims of the Workplace Relations Act is to encourage a more direct
relationship between employers and employees with less intervention by a third party
in settling disputes. This means employers and employees are encouraged to make
direct agreements about the terms and conditions of employment that will apply at
their workplace without intervention by industrial tribunals.
Changes under the Workplace Relations Act 1996



Reduced the role of awards
Introduced individual contracts
Reduced the role of employment relations institutions such as tribunals
and unions.
Other relevant legislation that can affect employment relations includes:
Workers’ Compensation Act 1926, Racial Discrimination Act 1975,
Occupational Health and Safety Act 1983, Sex Discrimination Act 1984, Equal
Employment Opportunity Act 1987, Disability Discrimination Act 1992, and
Equal Opportunity for Women in the Workplace Act 1999.
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Section 4.2
Key Influences on Employment Relations
4.2.3 New Organisational Behavioural Influences
– Flat Management and Team Structures
in business
Recently, there has been a shift away from hierarchical structures to those that foster a closer
relationship between employers and employees.
A)
Flat Management
In the past, organisational structures were based on the belief that there should be a
strict division of labour such that employees undertook narrow, specialised tasks.
This was used primarily as a control technique for management, resulting in a
hierarchical structure. This structure has been criticised for creating a sharp division
between the employer and the employees.
Hierarchical structures can mean that employees do not feel responsible for the
outcomes of their work, reducing motivation and productivity. Furthermore, it is
believed that flat management structures can result in efficiency gains by decreasing
the chain of command.
Possible benefits of flat management



An increase in communication between employers and employees
Greater employee autonomy, flexibility and commitment
Management is brought closer to the front line of business, and
employees are closer to the goals of the firm
Closer communication links through the flattening of the hierarchy can lead to
greater cooperation at the workplace so that employment relations can be more
harmonious, reducing conflict and increasing flexibility.
B)
Team Structures
The departments or sections of a business can also be transformed into teams
consisting of members and leaders to create a culture of teamwork. The focus is on
everyone being on the same ‘team’ and in some cases, having equal authority. This
can motivate people, increase employee autonomy and lead to a degree of selfmanagement. Team structures can also improve employment relations.
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Section 4.2
Key Influences on Employment Relations
The restructuring of the workplace must have strong commitment from both
employers and employees if it is to prove successful and foster closer employment
relations. In Australia, flatter management structures have often been adopted
primarily to cut costs rather than improve employee relations, and the examples of
successful team-based structures are relatively limited.
4.2.4 Economic Influences – Economic Cycle, Globalisation
All businesses are influenced by the state of the economy, which in turn affects employment
relations. Some of the ways that the economy can affect employment relations are:

The pace of economic growth can affect employment levels, types of employment
and recruitment policies

Changes in the structure of the economy can affect the skills required by employees
and the training programs of businesses

An economic need to increase productivity growth may lead to changes to the
structure of the employment relations system (wage determination and the role of
industrial tribunals)
The two key economic influences that have affected Australian employment relations
recently are the economic cycle and globalisation.
A)
Economic Cycle
Although economies grow over time, rates of growth have a cyclical nature
characterised by recessions and recoveries. This economic cycle reflects changes in
demand for goods and services and can affect employment relations in a number of
ways:
A downturn in the level of economic activity will be associated with a reduction in
consumer spending and business investment. In such a situation, a business may not
need as many employees. Managers often decide that a reduction in full-time staff is
necessary in order to cut costs and maintain profit margins or reduce losses.
However, there are some businesses that attempt to hold their long-term
employment even during times of economic recession. They realise that the costs of
recruiting and training are often much higher than the costs of keeping good people.
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Section 4.2
Key Influences on Employment Relations
In times of strong economic growth, businesses may be required to change their
recruitment and remuneration policies in order to attract and maintain high quality
staff. They may need to assess skill levels and possibly consider expanding training
programs to overcome any skills shortages. During periods of high economic
growth and high employment there has usually been an increase in the bargaining
power of employees and the unions that represent them. Industrial action is
common at these times.
B)
Globalisation
Globalisation has resulted in the following:


An increasing number of people being employed outside of their home country.
Greater pressure on Australian businesses to match the efficiencies of overseas
competitors.

An increased need for managers to adopt world best practices in terms of
employment relations.

Many top managerial positions have been advertised globally in an attempt to
attract the best possible person.
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Section 4.2
Key Influences on Employment Relations
DEFINITIONS:
Aust. Workplace Agreement
An agreement that is reached between an employer and an
individual employee.
Award
A legally binding document setting out the minimum pay and
conditions for employment.
Enterprise Agreement
An agreement made between an employer and the employees
at a particular enterprise – a business or workplace.
HOMEWORK ACTIVITIES:
Activity 1:
Read and Complete the Case Study “The Workplace Relations Act 1996”
on P.309/310 of the text.
Activity 2:
Read and Complete the Case Study “Teamwork of SIA for passenger
handling” on P.313/314 of the text.
Activity 3:
How have organizational structures changed in recent years and what impact
have these changes had on employment relations?
Activity 4:
How can economic change affect employment relations?
Activity 5:
Consider the following situations and identify whether they involve a change
in social, legal, organizational, behavioural or economic influences.
(a)
People spending more time in education and not being available for
work
(b) Workplaces using teams to accomplish tasks rather than just having
individual job assignments
(c) A downturn in business conditions that discourages people from
looking for work
(d) More people choosing to work beyond retirement
(e) A government decision to abolish the compulsory retirement age of 65
(f) An increase of jobs available in Queensland because of growth in the
tourism industry
Activity 6:
‘The focus of employment relations has been shifting towards the
workplace.’ Do you agree with this statement? Illustrate your answer with
examples of and reasons for any changes that have been occurring.
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