Determining the Terms and Conditions of Employment for Employees - Example

A Report on Determining the Terms and Conditions of Employment for Employees Students Name and Number: Lecturer’s Name: Institution: Course: Date of Submission: Executive Summary The intended purpose for this report is to give a detailed feedback concerning the requested advice from the Human Resource department on the best way to determine the terms and conditions of employment for employees. This report discusses the current situation and issues related to the company which include traditional assembly-line organization of work, strong centralized management control, strict seniority arrangements for pay, promotion and redundancies labor turnover and absenteeism. This report gives information of the options on the best way to determine the terms and conditions of employment for employees available to the company. The findings were national employment standards, modern award and enterprise agreement this report explains the advantages and disadvantages of each option, and explores the consequences of the various options for industrial relations and human resource management within the company. I recommend that the Chief Executive Officer adopt the options I have discussed and most preferably adopt National Employment Standards to determine terms and conditions of employment for employees. Table of Contents 1. Introduction 4 2. Current Situation and Issues Related to the Company 4 2.1 Traditional Assembly Line 5 2.2 Strong, Centralized Management Control 6 2.3 Strict Seniority Arrangements for Pay, Promotion and Redundancies 7 2.4 Labor Turnover and Absenteeism 7 3. Options Available to Determine Terms and Conditions of Employment 8 3.1 National Employment Standards 8 3.2 Modern Award 9 3.3 Enterprise Agreement 11 4. Conclusions 13 5. Recommendations 14 1. Introduction In many organizations, employees are increasingly being recognized as organization’s best assets. There has been a desire by many organizations to increase the contribution of the employees as well understand how an effective HR system operate. If an organization is able to attract and retain the right employees and be able to develop them through skills acquisition and training, then, they can use this knowledge as a competitive advantage over their rivals (Guy, 2003). The difficulty is in coming up with a system that will enable the organization and the employee a symbiotic relationship. A High involvement work systems (HIWS) usually enable the employees as well as the organization to maximize their abilities more effectively and efficiently. Through participation of employees, organizations are able to gain a better insight into their functionality and know whether there are improvements that need to be done (Guy, 2003). Currently, there are several issues being faced by Fresh First Canning Company that have reduced the chances of having a HIWS. This report aims at giving a detailed feed back to the CEO of Fresh canning Company on the best way to determine the terms and conditions of employment for employees at the new Queensland factory based on the Fair Work Act (2009). This report will first look at the current issues that are facing the already existing Factories of Fresh First canning Company and advise the CEO on some of the available option that can ensure a HIWS according to the Fair Work Act (2009). It will then give the advantages and disadvantages of using each option. 2. Current Situation and Issues Related to the Company Fresh First Canning Company has plans to open a new factory in the state of Queensland. Presently, the company has three other factories. Two are in Victoria and one is in New South Wales. However, with the opening of the new company, the CEO intends to achieve a High involvement work systems something that cannot be achieved in the prevailing situation. Below are some of the issues that are currently facing Fresh first canning company and which have contributed greatly to lack of a High involvement work systems. 2.1 Traditional assembly-line organization of work Fresh First Canning Company uses a traditional assembly-line organization of work as its job design. The Traditional assembly-line organization of work involves arranging machines, workers as well as equipment in which the commodity being assembled passes continuously from one operation to another until it is complete. This type of job design calls for division of labor as well as specialization. According to the Job Characteristics model that was developed by Hackman and Oldham (1980) the tasks, that an employee is assigned contributes to their motivation to conduct a task. In specific, if the job that the employee is given is monotonous and boring, this will reduce their motivation to perform well in their task. On the other hand, if the job that the employee is assigned is challenging, then they their motivation to work will be enhanced. Adding variety, decision-making authority and autonomy, job enrichment as well as job rotation is all ways of adding variety to the job. This model states that task identity, feedback, autonomy, task significance and skill variety, which are the key job characteristics, have a direct effect on experienced meaningfulness, as well as the knowledge of the actual results. This in turn affects the outcomes of work including labor turnover, absenteeism and work motivation. In the case of Fresh First Canning Company, the job of the employees is monotonous as they do the same task every day, which makes it boring and monotonous for the employees. This has lead to high levels of absenteeism and labor turn over and hence reduces the chances of having a High Involvement Work System. The diagram below is an illustration of Job Characteristics mode (Torraco, 2000) 2.2 Strong, Centralized Management Control Fresh First Canning Company uses a centralized management model, which is an approach where the top executives located at the main offices make most of the important decisions. This system has its own disadvantages, which may have actually led to the problem of reduced HIWS. To begin with, there is delay in work since even a quick decision will need to be done by the top executives. This will lead to reduced motivation to the employees who at times have to wait for further instructions while the top executives make the decision. This kind of system also brings about the problem of bureaucracy, which in turn leads to red tapism and discrimination. This system does not allow employees to make independent decision, which may in turn lead to mental reservation. The employees under this model are not allowed to take any initiative and they know too well that there are no opportunities of getting opportunities to go up the ladder. This will in turn lead to labor turn over as employees look for greener pastures. This then reduces the possibility of having a HIWS (Pooja & Renu, 2006). 2.3 Strict Seniority Arrangements for Pay, Promotion and Redundancies The centralized management control system has led to very strict seniority arrangements for pay, promotion and redundancies. This means that it takes a very long procedure for employees to request for an increase in payment or an advance payment or request for a promotion opportunity. This could have also contributed to the problem of increased labor turnover as employees seek for better jobs with better policies (Pooja & Renu, 2006). 2.4 Labor Turnover and Absenteeism The overall result of all the above issues discussed above is increased labor turnover and absenteeism. The diagram below is a summary of the unfolding employee turnover by Lee and Mitchell (Erich et al,2009). 3. Options Available to Determine Terms and Conditions of Employment Terms and conditions of employment are the fundamentals of a contract that aims to define the relation between an employer and an employee. 3.1 National Employment Standards The Fair Work Act 2009 provides an employee with work security through terms and conditions of employment that are the National Employment Standards. These standards increase worker commitment by doing the following: It sets maximum hours of work per week to 38 hours and there are reasonable additional hours of work with pay. The standard seeks working arrangements that allows parents and guardians of a child under school age or a disable child, to ask for an amendment in working arrangements to assist with the child’s care. This will reduce absenteeism. Parents are entitled to a leave of up to twelve months but unpaid leave plus a right to request other forms of maternity, paternity and adoption related leave. Employees have an annual four weeks paid leave and an additional week for workers on shift. This will motivate them to avoid absenteeism. Employees are also offered a personal leave of ten days paid personal and two days unpaid leave. In order to achieve a low turnover a community service leave which is unpaid is availed for voluntary emergency activities. With all these employees are expected to be motivated more and work to achieve the organizations goals. The standard also has a provision for long service leave. This is an intermediary privilege for workers who had certain privileges awaiting the maturity of a consistent national leave standard. During public holidays, employees get a paid day off and work except when reasonably requested to do so. Prior to termination of contract, employees will receive a notice of termination four weeks before followed by sixteen weeks redundancy pay, both based on their length of service. This will in turn reduce employee turnover since they will be aware of what is expected of them concerning termination of duty. The standard stipulates terms of reasonable employment information. Employers ought to avail this information to all new staff since it entails information about the standards of work. This will in turn boost staff morale hence performance will be high (Guest, 2011). Advantages National Employment Standards may possibly carry over to the new employer if there is a transfer or auction of the company from the current owner. The employees will benefit from this, as they will not have to renew their terms of contract hence motivating them to keep working improve on their performance. The policies, which may be carried over, include personal leave, the right to request flexible working environment and parental leave. Disadvantages The system does not cover every member of staff from every state. Those who are not covered by the national employment standards are covered by the state industrial relations system. Some of these states not covered by the standard include Tasmania, New South Wales and Western Australia. Recruits who remain covered by a state industrial relations system receive national entitlements to unpaid parental leave and notice of termination or payment in lieu of notice, as well as cover from illegal termination of employment. 3.2 Modern Award An award is a document that is legally binding and it contains the least terms and conditions of employment that are added to any legislated minimum terms. Based on Sambrook (2012), an award applies to the workforce in a given organization and benchmarks assessment of enterprise agreements before approval. There are different kinds of awards. There are awards in the national workplace relations system that comprises two types: modern awards, and award-based transitional instruments of which the latter is currently under review. Modern awards were developed under the national workplace relations system to specific businesses. The initial modern awards were part of a widespread evaluation conducted by Fair Work Australia's precursor, the Australian Industrial Relations Commission to assess employment conditions that would conform to employee requirements and reduce employee turnover and absenteeism. Previously, the award system was only applicable to single business entities and companies that had their own constitution and based on their performance. Currently, the state now awards employers who are not constitutional corporations and this has in turn encouraged employers to motivate their employees to work hard and maintain or improve their performance (Tammy, 2011). An award also includes terms that a trade committee sets the state of affairs regulating the employees and their activities in the particular occupation or industry to which the award relates. Modern awards are ‘common rule’ meaning the award applies every employee and employer described in the ‘coverage’ clause of the award. Under section 139 of the Fair Work Act (2009), a modern award includes minimum income, skill-based clusters and career structures; and incentive-based payments, piece rates and bonuses type of employment, such as full-time employment, part-time employment, casual employment and shift work. These terms usually are in favor or employees, which eliminates turnover, absenteeism and poor performance of organizations. Provision of supple working plans, arrangements when work should be performed including hours of work, fostering notice periods, rest breaks and variations to working hours on overtime rates penalty rates, inclusion of shift for workers are other terms accounted for in the award which has a positive effect on employee performance. As indicated by Kleynhans et al. (2011), Other terms stipulated in the award include: shift workers, salary provision and allowances, inclusion for expenses incurred during employment, responsibilities and skills that are not taken into account in rates of pay, disabilities associated with the performance of particular tasks and leave allocations. These provide employees with security, and this will encourage them to be always present at their work places. Advantages The provision of a flexibility term permits an employer and employee to concur to an individual flexibility arrangement to meet the needs of both employer and employee. This may contrast the result of certain terms of a modern award but may yield positive results. If you work for an employer who sells or transfers their business to a new owner, some of the terms in the award may carry over to the new employer, which include the different types of leave and the right to alter working plans. Disadvantages The modern award may not secure a manager or an employee earning a high salary. The modern award that covers a business or a means of livelihood may not apply to an individual. Measures that are in amid to bring in the modern award system may have an effect on the execution or entitlements under a modern award. Awards also cannot be easily tailored to meet the needs of particular enterprises 3.3 Enterprise Agreement Enterprise agreements are pacts made at an enterprise level between employers and employees about terms and conditions of employment. The Fair Work Act (2009) assists in giving guidelines to the process of making such accords. The agreement provides terms and conditions that can deal with disputes arising under the terms of agreements. Enterprise agreements formulated amongst employers and employees in the case of Greenfields industries and one or more relevant unions can be tailored to meet the needs of particular enterprises. Enterprise agreements can include a broad range of matters such as remuneration, terms of employment, methods of counseling, ways of solving arguments, and processes of salary deductions authorized by an employee (Stroh & Reilly, 2011). Enterprise agreements can exist in the form of Greenfields agreements, which are guidelines that encompass an authentic new venture employers are prospecting to launch or propose to establish and who have not yet employed personnel essential for the standard performance of the enterprise. Endorsement procedures for enterprise agreements contrast depending on the type of the agreement. The three types are Single-enterprise agreements, which constitute one or more employers collaborating in what is a single enterprise, multi-enterprise agreement, which encompass two or more employers that are not all single interest employers. Continuous operation of agreements under the Fair Work Act (2009), are accords that maintain operations even after their nominal expiry date until they are replaced or terminated by application to Fair Work Australia. Through provisions in the Fair Work Act 2009, agreements made under previous legislation continue to have effect as agreement-based transitional instruments. An employee may be involved in an enterprise bargaining process where the employer or representative such as a union negotiates for an enterprise agreement. Once approved it is enforceable and provides for changes in the terms and conditions of employment that apply at the workplace. Based on Thomas (2007), some of the precise sets of laws relating to the enterprise bargaining process are about conciliation, voting, issues that can and cannot be integrated in an enterprise agreement, and how the agreement can be approved thus, with all this terms provided for in the agreement, there will be low turnover, absenteeism and high ranks of performance. Advantages An employee and employer have the right to be represented by a bargaining representative and must bargain in good faith when negotiating an enterprise agreement. There are also strict rules for taking industrial action. Employers and employees negotiate enterprise agreements together, often with the help of bargaining representatives such as unions and leave employees better off than they would be if the modern award covered them. The provision of a flexibility term allows both an employer and employee to come to common terms to meet both their needs and affairs irregular to individual workplaces are accommodated for. It is effortless to associate earnings escalation with rise in output. The individuals directly implicated in negotiations are not obligated to a third party. Disadvantages A lot of time to negotiate awards handled takes place even outside the workplace and it is more expensive to implement enterprise agreements than awards. It also offers less job security for employees since they ought to pass "no disadvantage" or similar tests for ratification by industrial tribunals. 4. Conclusion National Employment Standards provides an employee with work security through terms and conditions of employment. These standards increase worker commitment. The standard seeks working arrangements. The standard stipulates terms of reasonable employment information. This would be the best and most effective way to determine terms and conditions of employment for employees at the new Queensland Factory. An award is a document that is legally binding and it contains the least terms and conditions of employment that are added to any legislated minimum terms. Modern awards were developed under the national workplace relations system to specific businesses. An award also includes terms that a trade committee sets. Modern awards are ‘common rule’ meaning the award applies every employee and employer described in the ‘coverage’ clause of the award. Enterprise agreements are pacts made at an enterprise level between employers and employees about terms and conditions of employment. The agreement provides terms and conditions that can deal with disputes arising under the terms of agreements. Enterprise agreements formulated amongst employers and employees in the case of Greenfields industries can be tailored to meet the needs of particular enterprises. 5. Recommendation In order to achieve a High Involvement Work System, I recommend that the Chief Executive Officer adopt the options I have discussed and most preferably adopt National Employment Standards to determine terms and conditions of employment for employees. Increasing the High Involvement Work System will increase employee performance and decrease employee turnover and absenteeism. This can present financial benefits and organizational stability together. Decline in employee turnover allows an organization to hold on to combined information that may be lost by the organization and gained by competitors. It also diminishes the sum of funds required for employment and education while providing and attractive culture to possible recruits who yearn to secure employment. References Armstrong, M., 2008 Strategic Human Resource Management: A Guide to Action. 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