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HR Connect Australia – Volume 1, Issue 4, 2011
OHS harmonisation update
The introduction of new occupational health and safety (OHS) harmonisation legislation is now formalised across most of Australia, effective 2012.
On 9 November 2011, the Federal Minister for Workplace Relations, Senator Chris Evans, formally announced that 'seven out of nine jurisdictions have now approved the model regulations and codes of practice and have committed to meeting the COAG deadline of
1 January 2012'.
All state and territory governments with the exception of the Victoria and Western Australia have signed and agreed to the inter-governmental agreement. It is expected that both these states will introduce the model laws over the ensuing 12-18 months.
Mr Evans confirmed that this reform and timetable have the support of the Australian Industry Group, the Australian Chamber of Commerce and Industry, the Business Council of Australia as well as the Australian Council of Trade Unions.
Transitional arrangements for the model OHS laws have been developed by Safe Work Australia. Under these arrangements eligible industries will have at least 12 months to adhere to the new requirements. These eligible industries could include:
- South Australian construction companies
- Tasmanian construction companies
- employers engaged in electrical and diving operations.
Safe Work Australia has confirmed that a formal guide to the transitional principles will be released shortly.
The Shadow Workplace Relations Minister, Eric Abetz, has welcomed the arrangements and announced 'nearly every business would need to make significant changes under harmonisation'.
As a priority activity Aon Hewitt recommends that all businesses should undertake an OHS due diligence review. This is a new obligation and the existing OHS framework cannot be relied upon.
For more information, please contact Aon Hewitt via your existing account manager or contact Steven Cakaric at steven.cakaric@aonhewitt.com or phone +61 3 9211 3220.
Is size a big deal?
There is a common misconception that the size of an organisation affects the level of employee engagement. However, all organisations face the same challenges associated with resourcing, managing internal and external change, and operating in a multi-speed economy.
Aon Hewitt's research confirms that size has little relationship to the ability of an organisation to motivate and engage its employees.
James Rutherford, a senior consultant at Aon Hewitt, identifies the ability of an organisation to change its engagement level quickly as the key point of differentiation, regardless of the organisation's size. 'There are advantages and disadvantages for both small and large organisations when it comes to improving engagement. Success will come from identifying the strengths you have as an organisation and playing to those,' says Rutherford.
Rutherford believes that because of the scale of small companies, the impacts of changes can be felt more immediately and are therefore far more obvious to employees. In larger companies, processes involved with the implementation and communication of change can dilute the impact. Conversely, larger organisations are in a better position to make changes due to the availability of funds and resources.
Aon Hewitt has conducted research on employee engagement in over 3,400 companies and 4 million employees. For information on how to improve engagement in your company please contact James Rutherford on +61 2 9253 7100 or email james.rutherford@aonhewitt.com.
Australian employers not laughing about changes to LAFHA
The treasurer, Wayne Swan, recently announced that there would be a significant crackdown on the popular living away from home allowance (LAFHA) in order to plug the holes in the 2012 budget. It is likely that the allowance will no longer be available to overseas workers or those on a 457 visa. This will have a very significant impact on the attractiveness of Australia as a destination for foreign workers.
With a relatively strong economy, low unemployment, high living standards and a strong dollar, Australia has become an attractive place to work for internationally mobile executives. Historically, the Australian market has been somewhat reliant on attracting expatriates by offering incentives such as sign-on bonuses, salaries above the market rate, health benefits, spousal support, relocation packages and the generous LAFHA provisions. While demand for international workers remains strong, many Australian employers are now less willing to pay large incentives to entice foreign or returning talent.
In the last ten years, companies have attempted to reduce the cost of employing expatriates by moving from a 'best of everything' approach to a more balanced one. Salary packages today commonly consist of a competitive local salary and then 'on-top-of package' adjustments to compensate for personal circumstances (eg tax and pension equalisation, cost of living allowances and insured benefits). More often than not, however, these packages are still relatively expensive for employers.
As a result, there is a shift towards hiring local talent wherever possible. While international talent was once a common and sustainable long-term strategy, it is now increasingly seen as a short-term solution to transfer knowledge. The changes to LAFHA will only accelerate this trend.
Overcoming underinsurance
Research has shown that Australia is one of the most underinsured nations in the developed world, ranking 16th for life insurance penetration1.
Currently, many families would find themselves in financial distress should the main income earner be unable to work due to injury or death. The national tendency for households to carry high amounts of debt and relatively low levels of savings mean most are unprepared for the unthinkable.
Many Australians rely on the default level of death and total and permanent disablement (TPD) insurance provided within their superannuation funds. While super funds like the Aon Master Trust have recently offered members a special opportunity to easily increase their insurance without a health check, there are still many people who don't have adequate cover.
Common reasons given for Australians' lack of insurance include – people thinking they already have enough cover, believing they don't need insurance or thinking that it's too expensive. However, recent research by Aon Hewitt on the costs of cover for clients of its financial advice service found that insurance costs have reduced substantially in the last couple of years. For example, we found that many clients could save up to 25% on their old policies.
A report2 commissioned by the Investment and Financial Services Association, now the Financial Services Council (FSC), made recommendations to industry and government on how to address the level of underinsurance. The key recommendations were that the government should run a public education campaign and that the advantages of members increasing their insurance cover within their superannuation fund should be promoted. The FSC has taken on board its own advice and launched Lifewise, an education and awareness campaign aimed at addressing the issue of underinsurance.
1 Baez, M.S. and Staib, D. 2007, 'World insurance in 2006: Premiums came back to "life"', sigma, No 4/27, Swiss Reinsurance Company Economic Research & Consulting, Switzerland.
2 McRae, G. and Dunsford, G. 2005, 'Investment and Financial Services Association Cost of Underinsurance Project - Analysis of Life Insurance Needs' p. 3
Aon Hewitt has taken care in the production of this document and the information contained in it has been obtained from sources that Aon Hewitt believes to be reliable. Aon Hewitt does not make any representation as to the accuracy of this document and accepts no liability for any loss incurred by anyone who relies on it. The recipient of this document is responsible for their use of it.
