– Naomi Wilson, Founding Director
Banning non-compete clauses for workers earning less than $175,000 is a misguided initiative.
While I recognise the Federal Government’s efforts, as part of their budget announcement, to remove barriers causing productivity issues and suppressed wage growth, it’s not the right solution for the modern workplace.
Yes, people should be allowed to choose where they work and when. But equally, a business should be able to protect their intellectual copyright, client relationships and branding that they have spent countless dollars and hours building.
However, banning non-compete clauses is not the answer for either party. Let me explain.
Businesses rely on these clauses when they hire an employee, train them for six months (let’s face it, any role that is worth having a non-compete clause is likely to take at least six months before the person is starting to deliver a ROI), introduce them to clients, share their knowledge and learnings, invest in professional development and help them build their personal brand … the list goes on.
Let us not forget, Australian employers aren’t all big corporates. The backbone of our economy is made up of small to medium business owners.
This means most business owners are trying to earn a living, support their family, and potentially have their house on the line – all so they can run a business that they love and provide employment to others.
As key advisors on matters relating to People, Leadership and Strategy, we talk with owners every day, and with every government initiative release, they tell us: ‘that’s one more reason not to employ people’.
The more the government makes it difficult to employ people, the more productivity is stifled in our economy.
We see it first hand. Businesses either don’t grow to their full potential because employing people feels too hard and risky; or they look to seemingly easier, safer and more reliable option – automation, robotics and AI.
Further to this, I suspect this initiative will see employers reducing employee access to only a ‘need to know’, limiting their people’s ability to form relationships with their customers, perhaps even moving to more offshoring options for customer support.
All of these options will see the reduction of jobs, decrease the inflationary pressure on remuneration, and drive employment opportunities away from small business towards large corporates where employees have even less power or influence.
No-one wins in this scenario – not the business, the employee, the customer, and not Australia’s GDP.
If the government is serious about increasing productivity, they should be looking at reducing barriers to employment, not increasing them.
What’s the alternative to increase productivity?
First step, allow genuine flexibility and collaboration between employers and employees.
Flexible work hours and working from home scenarios can create awesome win-win arrangements for both employers and employees. Except that they can’t, because the legislation says ‘no’.
Let me walk you through a very real scenario.
A single parent has their children every second week. They request to work a 76-hour fortnight from Saturday to Friday and be off work the whole next week when with their children. A perfectly understandable request and one which an employer may be happy to work around.
Except they are under a Modern Award, which prescribes 150-200% penalty rates on Saturdays and Sundays and limits consecutive workdays to only 5 in every 7; plus, ordinary hours cannot exceed 8 hours a day.
If the employer were to allow the employee to work the roster that suits them, on top of the additional logistical and operational complications they need to manage, they may end up paying upwards of 30% more than a standard 9-5pm, Monday-to-Friday employee. The equation simply does not stack up for the employer who, let’s face it, is only considering a 7-on-7-off roster because they want to help their employee see their children.
And heaven forbid that the same employee wants to perform some of those hours from home. If they did, the employer would need to consider the WHS of a home office that they have never visited, are not able to sight each day, and where there may be uncounted hazards unwittingly created by the employee themselves, which the employer will then be held liable for.
So, because of the restricting legislation, and because of the huge risk, unfortunately the answer to the employee is, no, sorry. That valued and productive employee will most likely start looking for part-time or casual alternatives, with lesser working conditions. Outcome? Lower productivity.
As seen by the example above, we need to shift the mindset when it comes to society welfare such as supporting parental leave, family & domestic leave, diversity and inclusion etc.
When this is at the cost of the employer, it only increases the barrier to employing people and often creates a conscious or subconscious bias against individuals who an employer may perceive to present a risk of additional costs with no corresponding productivity gain.
The other mindset shift we need is around equality.
Simply put, fair and equal does not mean same-same. Those who argue for equality on the basis of everyone being treated the same is missing the glaring truth that we are actually all different. And isn’t that great!
Fair and equal means applying standards, conditions and benefits to people based on their individual skills, abilities and situation.
Just like George Reavis’ fable about judging every animal on their ability to climb trees, we cannot apply the same criteria to every human being. This means we cannot necessarily apply the same standards, nor the same entitlements to everyone.
Unfortunately, blanket rules, especially those written by large bureaucracy, will rarely give the room for flexibility and common sense that is needed to accommodate what is the incredibly diverse workforce of today’s society.
Where do we go from here?
Our employment system should create an environment of genuine collaboration. It should be built on choice. Choice to employ people, choice to work for an employer, choice on what to offer and what to accept.
We should be removing the barriers to flexibility, removing the barriers to employing people and removing barriers to recognising individuality in those we employ.
Our system needs to make employing people easier, not scary.