C Centralised V Decentralised Flashcards
Centralised employee relations system
Australia has a centralised employee relations system from 1904 until the early 1990s. A centralised system is where the government and their tribunals set the wages and working conditions for an entire industry. The agreement created from these tribunals was called an award and it covered an entire industry. An Award was determined as a result of unions and employer organisations presenting submissions to the Conciliation and Arbitration Commission.
Conciliation
A third party participates the resolution of a dispute and attempts to help resolve the differences through discussion. The final decision is still made between the disputing parties.
Arbitration
A judge or panel of judges head arguments from both disputing parties in a formal setting and determines the outcome of the dispute. The final decision is made by the judge and is binding by law.
3 advantages of the centralised employee relations system
Equality for workers
Government has greater control over wages which helps in the management of the economy.
Sustainability and predictability as same rules are applied to all organisations in an industry.
3 disadvantages of the centralised employee relations system
Less flexibility
Productivity gains at individual workplaces cannot be rewarded with better conditions.
Large industrial disputes as an entire industry is fighting for better pay and conditions.
Decentralised employee relations system
Where wages and conditions are negotiated at workplace level through enterprise bargaining. Enterprise bargaining is where the employer and employees are able to negotiate their wages and conditions. These agreements are called enterprise bargaining agreements (EBA). Awards still exist in a decentralised system but they are only used as a safety net for employees within a particular industry. An EBA is negotiated above the award and cannot undercut the award.
3 advantages of the decentralised employee relations system
Increased flexibility
Enhanced communication between employer and employees.
Productivity gains can be rewarded.
3 disadvantages of the decentralised employee relations system.
Greater inequality of wages between skilled and unskilled as unskilled workers may struggle to bargain well.
Government has less control over wages and the economy.
Disputes may last longer
4 similarities between the two systems
Both systems relate to how wages and conditions of employment are determined.
Both systems use awards.
The government still sets the minimum wage.
Government body (fair work commission) can still be involved in conciliation and arbitration.
4 Differences between the two systems
Centralised uses awards as a primary form of wages and conditions whereas decentralised uses awards as a safety net.
Centralised has industrial courts and tribunals heavily involved whereas decentralised has limited third part involvement
Centralised has awards determined by the government and their tribunals to determine wages and conditions of employment whereas decentralised uses enterprise bargaining to determine wages at a workplace level. This uses awards, collective agreements and individual contracts.
Centralised system has a lack of flexibility for the organisation whereas decentralised has increased flexibility where productivity can be negotiated.
How were awards made c&a
An Award was determined as a result of unions and employer organ- isations presenting submissions to the Conciliation and Arbitration Commission. Where possible, agreement between the parties was reached through a process of conciliation. When agreement could not be reached, a process of arbitration would result in the commission making a ruling which was legally binding on all parties.
Explain the similarities and differences between the centralised and decentralised approaches to employee relations.
Up until the 1990’s a centralised system was used which involved governments and tribunals setting the wage determination for different industries. In recent times the approach to employee relations has become more decentralised with individual organisations bargaining and negotiating with employees at an enterprise level. Similarities between the two approaches to employee relations include that both make use of Awards, which set out the minimum pay and working conditions of different industries. However, in a centralised system these awards were industry-wide and were used as the main type of wage determination and contract. However, in a decentralised system the awards are essentially a ‘safety net’, acting as minimum standards, yet ultimately they are superseded by other contracts such as enterprise bargaining approaches. Another similarity is that in both systems unions have played a vital role. In the centralised system unions were the catalyst to improving working conditions and wages. The decentralised system also incorporates unions as key players in enterprise bargaining, however, their power has diminished to a degree as contracts are now made on an enterprise level.
Y Box is a computer software design company with 250 staff. The work is all done on short-term contracts, with individuals working on a wide variety of team-based projects of a short duration, before then moving onto new projects with new teams. The company operates a flexitime policy and has tried to reward individual staff for good performance. However, this approach has caused problems for the company as it has resulted in conflict among the staff, who are divided over whether the reward system is fair.
Analyse the effectiveness of choosing to use a centralised approach to employee relations in this company.
Using a centralised approach would be quite effective for this company.
A centralised approach is when the business uses the industry wife awards for the conditions of employment, all employees receive the wage listed in the award and the business does not go above award level pay.
It would be effective as staff are perfuming a wide variety of different jobs, some may be easier to deplete than others. Therefore the centralised approach would ensure all employees are receiving the same wage and there is equality so that what job an employee is assigned to would not effect their pay.
The staff are divided over whether the reward system is fair. Some staff may be paid bonuses for being productive which could be much easier to achieve on an easier task. Using a centralised approach will ensure equality for all the employees.
A disadvantage is there is much less flexibility using a decentralised approach. The business pays what is listed in the award which may feel too low for that specific organisation which could result in decreased staff satisfaction as staff may feel that they deserve more money.
