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REGULATORY IMPACT STATEMENT

TITLE OF REGULATORY PROPOSAL: Industrial Relations (General) Regulation 2015

PROPONENT: NSW Industrial Relations

NSW Treasury

RESPONSIBLE MINISTER: Gladys Berejiklian

Treasurer

Minister for Industrial Relations

RELEVANT ACT: Industrial Relations Act 1996

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CONTENTS

1. WHY IS THE REGULATORY IMPACT STATEMENT REQUIRED? ................................ 3

2. APPROACH TAKEN IN THIS REGULATORY IMPACT STATEMENT ........................... 4

3. NSW REGULATORY CONTEXT – INDUSTRIAL RELATIONS ACT 1996 ..................... 4

4. CONSULTATION.................................................................................................................... 6

5. THE CURRENT INDUSTRIAL RELATIONS (GENERAL) REGULATION 2001 ............. 7

6. CHANGES MADE TO THE CURRENT REGULATION SINCE 2001 ............................... 7

7. CHANGES MADE BY THE PROPOSED REGULATION .................................................. 8

8. REGULATORY OPTIONS ................................................................................................... 10

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1. WHY IS THE REGULATORY IMPACT STATEMENT REQUIRED?

Before a principal statutory rule such as the proposed Industrial Relations (General)

Regulation 2015 (the proposed Regulation) is made, the responsible Minister is required

under s5 (1) of the Subordinate Legislation Act 1989 (SL Act) to ensure that, as far as is

reasonably practicable, a regulatory impact statement (RIS) is prepared.

The RIS is required under the SL Act to address the following:

identify the objectives sought to be achieved through a proposed Regulation and the

reasons supporting those objectives

identify alternative options to achieving those objectives

assess costs and benefits of the proposed Regulation and alternative options

determine which course of government action involves the greatest benefit or least

net cost to the community (section 5 and schedule 2 SL Act).

The RIS has been prepared for the proposed Regulation (attached) which is to be made

under the Industrial Relations Act 1996 (IR Act) for the purpose of giving effect to certain of

its provisions. The Regulation remakes (with certain amendments) and replaces the existing

2001 Regulation which will be repealed on 1 September 2015 under s10 (2) of the SL Act.

The provisions of the proposed Regulation are made pursuant to various provisions of the IR

Act including s83 (2) (unfair dismissal exemptions), s208 (4) (functions of Industrial

Registrar) and ss249, 282 and 291 (provisions dealing with the regulation of State industrial

organisations).

There is also a general regulation making power under s407 of the IR Act. This provision

permits regulations to be made not inconsistent with the IR Act with respect to any matter

that is required or permitted to be prescribed under the Act (or that is necessary or

convenient to be prescribed for carrying out or giving effect to the Act).

Submissions about the proposed Industrial Relations (General) Regulation 2015 can be

made to:

Executive Director

NSW Industrial Relations

GPO Box 5469

Sydney NSW 2001

or by email to: review@industrialrelations.nsw.gov.au

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2. APPROACH TAKEN IN THIS REGULATORY IMPACT STATEMENT

The RIS provides a brief overview of the Industrial Relations (General) Regulation 2001 (the

existing Regulation) and a brief outline of the objects and key provisions of the IR Act.

The objectives of the proposed Regulation are canvassed and the alternative options for

achieving the stated objectives considered. This is followed by an assessment of the

proposed Regulation and a consideration of the relative merits of the alternative options in

terms of costs and benefits involved. Consultations relating to the development of the RIS

and the program for future consultation with stakeholders and other members of the

community are outlined in the RIS.

Making the proposed Regulation (Option 1) with the amendments described is the preferred

regulatory option. Alternative options to be considered for achieving the objectives of the

Regulation are as follows:

Option 2 - remaking the 2001 Regulation without changes

Option 3 - not proceeding with a new Regulation (No regulation)

Option 4 - dealing with the matters in the proposed Regulation exclusively by way of

formal amendments to the IR Act.

The costs and benefits associated with the making of the proposed Regulation and the

alternative options are discussed below at Section 8.

3. NSW REGULATORY CONTEXT – INDUSTRIAL RELATIONS ACT 1996

The IR Act provides the principal framework for the regulation of the NSW industrial relations

system.

The IR Act provides for the regulation of industrial matters including the following:

Providing a framework for industrial parties to make awards and agreements with the

assistance of the Industrial Relations Commission (IRC)

Conciliation and arbitration of industrial disputes by the IRC with powers to make

dispute orders resolving the relevant dispute

Unfair dismissal remedies for certain employees and the rights of public sector

employees to appeal against the appealable decisions of their employer

Entitlement to unpaid leave for victims of violent crime

Protection of employment conditions of outworkers in the clothing trades

The membership, organisation and appeals processes of the IRC

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Provisions securing freedom of association rights in relation to membership of

industrial organisations, including anti-victimisation protections

Registration of State industrial organisations covering matters such as the conduct of

elections, duties and liabilities of officers and audit/accounting requirements

Remedial powers of the IRC to declare industrial organisations dysfunctional, appoint

an administrator and/or approve a scheme to reconstitute an organisation or branch if

such declaration is made

Jurisdiction of the IRC in relation to contracts of carriage or bailment (taxis) regulating

carriers/drivers and their principal contractors in order to secure employment-like

conditions through contract determinations/agreements

Penalty and enforcement provisions that facilitate general compliance with the IR Act,

the functions of industrial inspectors, the recovery of unpaid remuneration and the

authority of persons prescribed under the Regulation to prosecute offences under the

IR Act.

Changes to the NSW jurisdiction

It is important to note the significantly reduced scope and coverage of the industrial relations

jurisdiction in NSW since the current Regulation was made in 2001. This is a highly relevant

contextual consideration for any assessment of the matters that are required to be dealt with

in the RIS, including the overall regulatory impact of the proposed Regulation.

The NSW industrial relations framework essentially no longer regulates employers and

employees in the private sector. Rather, it makes provision for industrial relations matters

pertaining to the public sector and local government sector and eligible employers under

s14(2) of Fair Work Act 2009 declared to be non-national system employers under s 9A of

the IR Act by the NSW Minister for Industrial Relations and endorsed as such by the

relevant Commonwealth Minister.

The reduced scope of the jurisdiction is a consequence of developments in the federal

industrial relations system since 2006. In March 2006, as a result of the commencement of

the Work Choices amendments to the then Workplace Relations Act 1996 (Cth) an

estimated 2.2 million NSW employees employed by approximately 300,000 incorporated

employers were transferred from the NSW industrial relations jurisdiction to the federal

industrial relations system.1

This was followed, in 2010, by a series of referrals to the Commonwealth Parliament of the

industrial relations legislative powers of State parliaments, including NSW,2 in relation to the

regulation of unincorporated employers. As a result of the NSW referral and its legislative

acceptance by the Commonwealth Parliament3 an estimated additional 550,000 employees

1 ABS, Cat No. 6306.0: Employees, Earnings and Hours, May 2006 and Australian Taxation Office 2005 – Unpublished data:

Australian Business Register 2 Industrial Relations (Commonwealth Powers) Act 2009, commenced 1 January 2010

3 Fair Work (State Referral and Consequential and Other Amendments) Act 2009 (Cth)

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employed by approximately 200,000 unincorporated employers in NSW were transferred into

the federal system at that time.4

Since 2006, this represents in total the removal of some 2.75 million private sector

employees from the NSW jurisdiction and the scope of the IR Act.

Presently, it is estimated there are approximately 290,000 FTE public sector employees and

56,000 employees in the local government sector that have remained in the state industrial

relations system.5

As previously noted the reduced scope and coverage of the NSW industrial relations

jurisdiction is a relevant factor in assessing the potential regulatory impact of the proposed

Regulation - particularly in relation to employers and employees in the private sector.

The broad conclusion of such an assessment is that, when compared to the existing

Regulation as it applied prior to 2006, the proposed Regulation will have negligible direct

cost impacts on private sector employers operating in NSW since they have practically all

been transitioned into the federal system.

4. CONSULTATION

NSW IR has met and held discussions with officers from the Industrial Registry to consult

about a range of matters, including matters relating to the effective operation of the IRC and

the functions of the Industrial Registrar, as well as Chapter 6 requirements relating to

contract carriers and drivers.

Internal discussions within NSW IR have drawn on the knowledge of the Public Sector

Industrial Relations Branch regarding the exemptions from unfair dismissals provisions and

its practical application in the NSW public sector, whilst the Compliance Branch were

consulted about provisions relating to the issuance of pay slips to employees and the

keeping of time and wages records by employers.

Proposed public consultation

Public consultation is an important aspect of the development of regulatory proposals.

Section 5 of the SL Act requires that consultation is to take place with appropriate

representatives of consumers, the public, relevant interest groups, and any sector of industry

or commerce, likely to be affected by the proposed statutory rule or regulation.

A notice under s5 (2) (a) of the SL Act was published in the Sydney Morning Herald and

Daily Telegraph and the Government Gazette 10 June 2015. The RIS and the draft

Regulation has also been uploaded on to the NSW Industrial Relations website at

http://www.industrialrelations.nsw.gov.au with an invitation to provide comments.

All the comments and submissions received as the result of this process will be given

appropriate consideration. The time frame for making submissions regarding this proposal is

not less than 21 days. Submissions must be received no later than 1 July 2015.

4 ABS, Cat No. 6306.0: Employees, Earnings and Hours, August 2008 and Australian Taxation Office 2005 – Unpublished data:

Australian Business Register 5 Public Service Commission Workforce Profile Report 2014 and ABS Cat No. 6248.0.55.002 Employment and Earnings, Public

Sector, Australia, 2013-14

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5. THE CURRENT INDUSTRIAL RELATIONS (GENERAL) REGULATION 2001

The 2001 Regulation contains a number of provisions that support in part the operation of

the IR Act. Among other matters, the existing Regulation provides for the following:

prescribing various functions of the Industrial Registrar which include notifying

affected persons in relation to a proposed enterprise agreement and measures

designed to streamline proceedings before the Registrar and protect their integrity

specifying the classes of employees exempt from the unfair dismissal provisions and

the remuneration threshold for exemption

the particulars of pay slips and record keeping requirements for employers

nomination rights governing employer and employee representation on Industrial

Committees

various matters concerning the administration and organisation of the IRC, including

payment of fees in respect of the conduct of its business

matters relating to the jurisdiction conferred on the IRC by Chapter 6 of the IR Act

including the registration and recognition of associations of contract carriers/drivers

prescribing particular industrial organisations as persons with authority to prosecute

offences under the IR Act and Regulation

the governance of State registered industrial organisations, including the conduct of

the election of officers.

6. CHANGES MADE TO THE CURRENT REGULATION SINCE 2001

The following amendments have been made to the Regulation since 2001. These do not

include those relating to annual increases for fees charged by the IRC and a number of

consequential technical amendments:

2006 - updating clause 5 references dealing with exemptions of classes of

employees from unfair dismissal provisions to equivalent provisions in the Workplace

Relations Regulations 2006

2006 - increasing from $10,000 to $20,000 the maximum amount that the IRC or an

Industrial Magistrate may order an employer to pay in relation to small claims

applications under s379 of the IR Act

2010 - to make transitional provisions that preserve certain leave, superannuation

and other entitlements of certain former Chairpersons of the Government and

Related Employees Appeal Tribunal

2013 - to prescribe the Emergency Medical Service Protection Association (NSW) as

a body that is capable of registration as a State organisation of employees

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2014 - to provide for the most senior judicial member of the IRC to be the Acting

President in certain circumstances.

7. CHANGES MADE BY THE PROPOSED REGULATION

The amendments to the existing Regulation which are contained in the proposed Regulation

are:

Clause 5 – unfair dismissals - updating reference to repealed legislation (in Part 3 of

the Regulation)

Clause 9 – contents of records (general) - updating reference to repealed legislation

(Part 4)

Clause 12 – contents of records (superannuation contributions) - inserting certain

definitions from a Commonwealth transitional regulation as current reference has

been repealed (Part 4)

Clause 29A – excision of clause relating to the Emergency Medical Service

Protection Association (NSW) (Part 6)

Clause 30 – excision of clause relating to the status of non-industrial organisations

under the repealed Industrial Relations Act 1991 as it is not necessary due to the

application of the Interpretation Act 1987 (Part 6)

Clause 43A – subcontractor’s statement about payment of employees – excision of

clause due to overriding Commonwealth legislation (Part 10).

Clause 5 – Exemptions from unfair dismissals

The proposed change is of a machinery nature to remove and replace a reference to a

repealed Commonwealth Regulation. The amendment would give effect to the current

Commonwealth Regulation that determines the maximum annual remuneration of

employees not set by an industrial instrument and helps clarify the intended scope and

purpose of the statutory unfair dismissal protections. These protections essentially cover

non-managerial employees other than short-term casuals and those engaged for a fixed

period.

Clause 9 – Contents of employer records

The proposed change is also of a machinery nature to remove and replace a reference to

repealed State legislation to enable the provisions to validly apply. The clause relates to the

content of an employer’s time and wages records and would refer to the definition of an

employee who is an apprentice or trainee within the meaning of the Apprenticeship and

Traineeship Act 2001. The current reference is to the Industrial and Commercial Training Act

1989 (now repealed).

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Clause 12 – Contents of employer records – superannuation contributions

This clause prescribes particulars about any superannuation contributions that the employer

must make for the benefit of the employee under an industrial instrument. These include the

amount of the contributions made, the period, the applicable fund and the basis of the

employer’s liability to make the contribution.

Currently the clause refers to a Regulation that has subsequently been repealed for the

definition of a ‘defined benefit superannuation fund’. To allow the provision to validly operate

it is proposed to extract the relevant definitions from a Commonwealth transitional regulation.

Clause 29A – Emergency Medical Service Protection Association (NSW)

This clause ensured the Emergency Medical Service Protection Association (NSW)

(EMSPA) was capable of registration as a State organisation of employees as a

consequence of the passage of the Industrial Relations Amendment (Industrial

Representation) Bill 2012. The Bill, which amended the IR Act, provided certain employees

with greater choice when deciding on their union membership.

Following the passage of the amended Bill, EMSPA successfully applied before the IRC, for

registration as a State organisation of employees and therefore the regulation is no longer

required.6

Clause 30 – Former non-industrial organisations

This clause preserved the continuity of former non-industrial organisations which were

incorporated under the Industrial Relations Act 1991 upon its repeal. This provision is

proposed to be excised as it is unnecessary given that s30 (2) (d) of the Interpretation Act

1987 read with clause 30 (1) of the existing Regulation provides that the operation of a

transitional provision of this kind is not affected by the repeal of a statutory rule such as the

2001 Regulation.

Furthermore, the Industrial Registry has advised that there are no such organisations

registered in the NSW industrial system.

Clause 43A – Subcontractor’s statement about payment of employees

It is proposed that clause 43A, which is authorised by s127 of the IR Act, be deleted. Section

127 is a regulatory mechanism for fixing responsibility for the payment of remuneration up

the chain of contracting. A principal contractor is liable for the remuneration of a

subcontractor’s employees unless a statement has been received by the principal from the

subcontractor that the relevant remuneration has been paid.

The Regulation provides that, without limiting the form in which the statement may be given,

the relevant statement may be in a form approved by the Director-General of the Department

of Commerce (now Secretary of Treasury). There is no current approved form.

6 The Industrial Relations (General) Amendment (Registration) Regulation 2013 was made in February 2013. In June that year,

Haylen J of the IRC issued a decision noting that having been satisfied that EMSPA had met all the statutory requirements for

registration determined EMSPA be registered as a State organisation of employees under the IR Act.

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Section 127 of the IR Act is largely inoperative because of the operation of the IC Act when

read with s109 of the Commonwealth Constitution. The latter provision renders state laws

inoperative to the extent of any inconsistency with a law of the Commonwealth.

Section 7(1) (b) of the IC Act excludes a State law from applying to a party to a services

contract which imposes obligations or liabilities (or confers rights and entitlements) on such

persons in a matter that would be, in an employment context, a workplace relations matter.

Section 127 of the IR Act is a State law of this kind and is therefore an excluded law as it

imposes responsibility or an obligation upon principal contractors in respect of the unpaid

remuneration of the employees of their contractors. For the IC Act provision to apply in

relation to the State law one of the relevant contracting parties must be a trading corporation,

which is likely to be the case in most instances.

As clause 43A only operates in so far as s127 is operable, there is no longer any need for

this clause.

8. REGULATORY OPTIONS

Four Options are considered by this RIS for achieving the statutory objectives set out in the

IR Act.

Option 1 is the recommended (preferred) option as it provides a greater net benefit for the

community when compared to the other options.

Option 1 (Preferred)

The proposed Regulation is made with the following principles in mind:

to provide, in part, machinery and other provisions supporting the operation of the IR

Act but imposing only the degree of regulation required to achieve the stated

regulatory objectives in line with better regulation principles and practice

meeting the specific regulatory needs of the users of the NSW industrial relations

system while taking into account the greatly reduced scope and coverage of the IR

Act and Regulation.

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The following table provides a summary of the costs and benefits of the proposed Regulation.

Costs and benefits of proposed 2015 Regulation

Proposed provisions Costs Benefits

Part 2 – Enterprise agreements

The Act requires the Industrial Registrar to notify persons or bodies as prescribed of a proposed enterprise agreement; the regulation prescribes who must be notified.

Administrative costs are borne by the IRC in relation to notifying persons of a proposed enterprise agreement. Since the Work Choices amendments in 2006 transferred corporate entities into the federal system there has been a steep decline in the use of enterprise agreements in the state system.7 There are no additional administrative costs as the clause will not be amended.

Supports and expedites the enterprise agreement bargaining process and the ability of employers and employees to make industrial arrangements which suit their interests.

Part 3 – Unfair dismissals

Exemptions of specified classes of employees from unfair dismissal provisions and the setting of a remuneration limit for accessing the unfair dismissal remedy.

Administrative costs involved for the IRC in terms of screening unfair dismissal claims to determine exempt employees. However, the exemptions help streamline the process and may reduce overall transaction costs incurred by employers and other participants in the jurisdiction. There are, however, no additional costs involved as the requirements are unchanged.

Ensures unfair dismissal remedial measures can be used only by those employees who are intended to be within the scope of the provision and its protections. Defines the ambit of the unfair dismissal provisions to enable proper and orderly administration of the unfair dismissal laws by the IRC. The exemptions are broadly consistent with those outlined in the federal jurisdiction.

Part 4 – Pay slips and employers’ records

Requirements relating to particulars of payslips such as all deductions, any overtime and the gross and net amount of remuneration. The required content of employers’ time and wages

There are compliance costs for employers but the vast majority of them are in the local government and public sectors. There has only been one substantive change to the requirements since 1996 (inclusion of ABN of

Setting out the manner and form requirements for the keeping of employer records, including leave details, and specifying payslip particulars assists in the management of compliance with industrial relations laws. It also provides employers

7 Industrial Relations Commission Annual Reports – 2005-2013 indicate 359 enterprise agreements were made in 2005

compared with 8 in 2013 – this represents a 98% decrease

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Proposed provisions Costs Benefits

records is also specified – which includes the period of employment and terms of engagement. An employer must also maintain leave records which include matters such as leave taken, the entitlement from time to time and accrual of leave.

Obligations on former employer to transfer employment records to a successor employer (who must maintain the records for a prescribed period) where there is a transfer of business under the IR Act.

employer) and the obligations are therefore well known to participants in the system. There are no additional costs involved as the requirements are unchanged.

with certainty in relation to their standard record-keeping obligations for the purposes of ensuring the effective and equitable enforcement of the IR Act and Regulation. Employees are also provided with the type of prescribed information which enables them to determine their correct leave entitlements and remuneration. This also supports the civil penalty recovery processes under the IR Act and assists in the enforcement of the Long Service Leave Act 1955.

It also helps protect and clarify employee entitlements where there is a transfer of business regulated under the IR Act. Supports a more effective compliance regime which in turn assists in a reduction of the numbers of industrial complaints made to NSW IR thereby leading to a more optimal use of resources in proactive compliance campaigns.

Part 5 Industrial Relations Commission

Provisions dealing with the organisation and conduct of the business of the Industrial Relations Commission and the functions of the Industrial Registrar.

Administrative costs for the IRC and the Industrial Registrar are involved but there are no additional costs imposed by the proposed Regulation as the requirements are unchanged.

Provisions assist in ensuring the efficient and effective conduct of the business of the IRC. Specific recognition given to the Hunter and Illawarra areas as regional locations for the IRC can assist in the expeditious settlement of local disputes through local knowledge and experience.8 The payment of reasonable

8 Industrial Relations Commission Annual Report – 2013 notes there were a total of 233 sitting days in Newcastle and

Wollongong

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Proposed provisions Costs Benefits

expenses to persons required to attend before the IRC is equitable and in line with current practice of other courts.

Part 5A – Commission fees

Provisions dealing with fees in relation to proceedings of the IRC including sittings as the Industrial Court.

Transaction costs are involved for users of the processes of the IRC. Fees are reviewed annually and in recent years have been increased in line with the NSW Public Sector Wages Policy index (2.5%). It is intended to commence administrative arrangements to review the scale of fees. If an increase to fees is approved, it is likely the new fee structure will be included in the proposed new Regulation.

Income derived from fees charged helps maintain the efficient and effective administration of IRC tribunal processes and the way the IRC conducts its business. The Industrial Registrar has a statutory discretion to waive or postpone fees in circumstances of hardship which builds equity into the fee administration process.

Part 6 – Industrial organisations

Provisions dealing with rules for elections and other matters relating to industrial organisations. Elections of officers

Clause 31 provides that the provisions of ss 442-451of the IR Act 1991(and the regulations under those

provisions) apply. Elections for office are compulsory and the cost of election to be borne by the organisation. Application to be made to the Industrial Registrar for the authorisation of an election and to arrange for a person to be appointed to conduct an election.

There are 86 registered organisations in the NSW system. Of these 45 are unions, while 41 are employer organisations. Currently it is estimated there are 566,000 trade union members in NSW, although not all of this number would be members of organisations registered under the IR Act.9 There are compliance costs for industrial organisations in relation to the election requirements and approval processes. The ability to manage the costs will depend on the relative size and assets of the organisation affected. There are also administrative costs incurred by the Industrial Registrar in carrying out relevant inquiries, or if the IRC has cause to conduct an inquiry

The provisions support the regulation of industrial organisations under the IR Act. They protect the interests of members of such organisations and the broader public interest by ensuring the proper governance and transparency in the conduct of the affairs of such organisations. Given the recent examples of financial misconduct within registered organisations it is particularly important that their management is accountable and contributions of members are being used for proper purposes.

9 ABS Cat No. 6310.0: Employee Earnings, Benefits and Trade Union Membership, Australia, August 2013

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Proposed provisions Costs Benefits

into alleged electoral regularities. There are no additional costs involved as there are no new obligations imposed.

Part 7 – Public vehicles and carriers

Regulation in relation to public vehicles and carriers and providing for the registration and recognition of associations of contract carriers and drivers.

Compliance costs are involved for associations which wish to be registered under the IR Act or alternatively have their registration withdrawn. There are also administrative costs involved in the Industrial Registrar carrying out the obligation to notify persons in relation to a proposed contract agreement involving a group of carriers. There is, however, no increase in current regulatory costs as requirements are unchanged.

These provisions support the processes of the Chapter 6 jurisdiction of the IRC. They enable contract carriers/drivers to have their working conditions determined through bargaining arrangements (contract agreements) and contract determinations conferring employment type benefits.

Part 8 – Enforcement Facilitating and supporting the enforcement of the IR Act including the prescribing of penalty notice offences. Since the referral of industrial relations powers to the Commonwealth in 2010 and the expiration of the contract with the Commonwealth in June 2013 to investigate complaints in the national system, the majority of compliance operations have focussed on long service leave and taxi industry matters. Also an industrial organisation concerned in the relevant industry is prescribed as a person authorised to prosecute offences under the IR Act

There are some administrative costs incurred by NSW IR relating to the issuance of penalty notices. However, since the NSW jurisdiction was further reduced in 2010 the numbers of penalty notices issued to employers has dramatically reduced.10 There is no additional regulatory impact on persons through the imposition of increased penalties or additional obligations.

These provisions contribute to an effective, flexible and efficient compliance management system and to the effective enforcement of the IR Act. Penalty notices can be used in compliance targeting campaigns, particularly in cases where the severity of the detected offence is of a minor nature. The use of penalty notices in appropriate circumstances is an alternative sanction to often costly prosecution action.

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Since July 2013 there have been 6 penalty notices issued to employers for breaches of the IR Act.

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Proposed provisions Costs Benefits

and Regulation. An industrial organisation that initiates proceedings for an offence must inform the Secretary within three days of doing so.

Part 9 – Additional persons deemed to be employees

Additional persons can be prescribed by regulation as employees under the IR Act. Specifically, a security industry worker is deemed to be an employee regardless of their common law classification. Commonwealth laws mean the application of this clause is likely to have minimal, if any coverage in the NSW jurisdiction. However, to be abundantly cautious, the clause will be retained.

If the clause has practical application in the NSW jurisdiction there would be costs to the person engaging the contractor in complying with the Security Industry (State) Award.

Should the clause have any practical coverage, protections are afforded by conferring deemed employment status upon the individual and the terms and conditions of the Security Industry (State) Award.

Part 10 – Miscellaneous

The provision regarding a subcontractor’s statement about payment of employees to be removed.

There would be a minor administrative/labour cost to Government associated with removing the Regulation.

There would be efficiency savings as the administration of the Regulation is streamlined to remove a provision which no longer has any valid operation.

Costs

The regulatory impact of costs associated with the proposed Regulation should be assessed

in part by taking into account the important consideration that costs imposed on private

sector employers by the proposed Regulation will be almost negligible when compared with

the position prior to 2006. This is for the reasons stated earlier in the RIS that almost all

incorporated and non-corporate employers previously operating in the State jurisdiction are

now covered by the national industrial relations system.

In assessing compliance costs generally it should be noted that usually the differential

regulatory impact of the relevant requirements must be acknowledged and that this will

depend on the size of the affected employer’s enterprise/organisation and the dedicated

human resources available to meet the regulatory requirement involved. Larger enterprises

may be better able to absorb the compliance costs imposed by the proposed Regulation.

However, this is not generally the case with the proposed Regulation (outside the area of

regulation of industrial organisations), as the requirements will fall mainly on public sector

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employing agencies and employing entities in the local government sector which will have

the capacity and dedicated administrative resources to meet the compliance costs.

Generally, the costs involved will not significantly increase under the proposed Regulation.

The main changes to the existing Regulation do not involve additional obligations but the

removal of spent provisions and those with little valid operation for practical purposes as well

as the updating of references to Commonwealth and State legislation.

As the above Table shows, there are clearly some compliance costs associated with

meeting the requirements of the proposed Regulation and administrative costs incurred by

the IRC (including the Industrial Registrar) in carrying out prescribed functions. There are

also transaction costs incurred by users and participants in the NSW industrial relations

jurisdiction in accessing the services and tribunal processes offered by the IRC. However,

any cost impacts are marginal, largely predictable and should be seen in the light of the

benefits that accrue to the community.

Benefits

Any costs arising from obligations imposed by the proposed Regulation are significantly

outweighed by the benefits it provides to the community. These include savings derived from

the removal of spent or largely inoperative provisions which will achieve efficiencies gained

from streamlining the administration of the IR Act by excising regulatory requirements with

no practical utility or contemporary application.

The proposed Regulation in broad terms also helps ensure that the NSW industrial relations

system is in line with contemporary community expectations and harmonises with federal

requirements where relevant to provide consistency with the requirements and practice of

the national workplace relations system.

The making of the proposed Regulation also provides general support for the regulatory

objectives of section 3 of the IR Act and contributes in particular to the achievement of the

following statutory objects:

an industrial relations framework that is fair and just (s3(a))

to promote efficiency and productivity in the economy of the State (s3(b))

encouraging responsible management and democratic control of organisations and

employees (s3(d)) particularly through regulation of industrial organisations and their

electoral processes

to facilitate appropriate regulation of employment through awards, enterprise

agreements and other industrial instruments (s3(e))

encouraging innovative, equitable and productive workplace relations (particularly in

relation to the Chapter 6 jurisdiction (s3(h))

Supporting government action which promotes the furtherance of these regulatory goals is of

significant benefit to the community. In more specific terms the proposed Regulation

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prescribes the functions of the Industrial Registrar which supports the effective

administration of the IRC and its remedial tribunal processes.

The proposed Regulation also prescribes record keeping requirements for employers that

promote compliance with IR Act requirements and provides, through the prescription of

penalty notice offences, a flexible enforcement and compliance framework as an alternative

to often costly court proceedings.

The provisions for the conduct of elections of officers of industrial organisations are to the

benefit of the members of such organisations and the broader community as they contribute

to proper governance and help prevent abuses and organisational dysfunction of the kind

that has been publicly reported in recent times.

As discussed earlier a number of the provisions are of a machinery nature with no additional

cost impacts to those flowing from the existing Regulation. They clarify the intent and

operation of the related provisions in the IR Act which contributes to the efficient and

effective administration of the NSW industrial relations system.

Option 2 - remaking the regulation with no changes

Costs

There would be costs incurred in terms of loss of community protection and

efficiencies/savings if the current Regulation is remade without amendment. There is also a

cost in retaining provisions which have no utility. It is in the public interest to update

regulation by removing and updating statutory references to give provisions practical and

legal operation.

Benefits

Any benefits such as savings in administrative costs of making the Regulation would be

minor and significantly outweighed by the benefits discussed above.

Option 3 – No Regulation Costs

Proceeding with this option would mean that no Regulation would be made under the IR Act

and the current 2001 Regulation would lapse. The cost of this option is that the machinery to

implement important provisions of the IR Act would not be in place and the regulatory

purpose of the IR Act not fully realised.

This in turn, would have the potential to frustrate the intention of Parliament and bring the

NSW legislative process into public disrepute.

Benefits

Any benefits such as savings in the administrative costs of making the Regulation would be

significantly outweighed by the costs associated with having no regulation to ensure

important provisions of the IR Act operate effectively.

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Option 4 - proceeding only by amendments to the IR Act

Costs

Addressing regulatory matters through the IR Act rather than in the Regulation would result

in additional costs being incurred when future amendments are required. These include the

use of Parliamentary sitting time and the significantly higher administrative costs associated

with amending the Act compared with amending a Regulation, as well as the loss of flexibility

to address emerging issues in a timely manner.

Benefits

There may be a small reduction in the amount of subordinate legislation, and opportunities

for more comprehensive Parliamentary scrutiny of the provisions as part of the IR Act.

However, the Legislation Review Committee examines and reports on subordinate

legislation. An additional layer of scrutiny is provided by Parliament itself which has the

ability to pass a resolution disallowing a Regulation that has been made.

Conclusion

After considering the relative merits of the above regulatory Options it is recommended that

Option 1 be adopted and that the proposed Regulation be made. This Option provides the

greatest net benefit for the community taking into account the costs and benefits entailed.