Case Study: State intervention in Pig Out restaurant chain
Ned Sangster is a budding American entrepreneur who has decided to expand his Pig Out all-you-can-eat restaurant chain to Australia. In the USA, Sangster pays his staff around $8 per hour and, given the large number of migrant workers and overseas students looking for work in Australia, he figures that he'll be able to employ staff here for a flat $10-$12 per hour. After all, Australia, like the USA, has a market capitalist economy, and if people are prepared to work for low wages, then Sangster is prepared to provide the work for them.
Sangster is keen to employ his staff on individual common law contracts to avoid having to deal with trade unions. In the USA, his restaurant chain has always operated in a non-union environment, so he's keen to do the same in Australia - although he knows that unions have a stronger presence here.
Much to his shock, even before opening his first restaurant in Australia, Sangster is advised that there are National Employment Standards (NES) in Australia, which are mandatory. Furthermore, there is a Hospitality Award that sets out the minimum terms and conditions of employment in the hospitality industry, including a minimum wage of about $18 per hour, with penalty rates for working late at night, on weekends and on public holidays. As well, these workers are entitled to employer contributions to their superannuation and long service leave. The NES and the Hospitality Award are legally enforceable.
But this is not all. Sangster is even more taken aback when he discovers that after a few months of employment, his employees have access to unfair dismissal laws, making it an offence to summarily dismiss them except under stringent conditions.
'This is madness' cries Ned Sangster. 'Americans would never let the government have so much power over what employers can or can't do with their employees.'
Abbott, K, Hearn Mackinnon, B & Fallon, P 2016, Understanding employment relations, Oxford University Press, South Melbourne, VIC, pp. 125-126.
Case Study Questions -
Question 1: Describe the current role of government in the employment relationship in Australia (3). How might the current level of government intervention influence Ned Sangster's plans to commence operations in Australia (2)? Evaluate the potential positive and negative impact on workers and/or job seekers, of the entitlements provided to Australian workers, including Award wages and conditions, unfair dismissal laws and other minimum standards and conditions (5).
Question 2: Describe both the unitarist and pluralist perspectives of industrial relations (4). Which perspective does Ned Sangster demonstrate throughout the case? Use examples from the case to support your answer (2). Evaluate the potential impact this approach could have on employees of Pig Out restaurants (4).
Question 3: In Australia, employers have a legal obligation to provide equal employment opportunities (EEO). Describe the requirements of Australian EEO legislation (3). Does Ned Sangster's identification of migrant workers and overseas students as his primary pool of job seekers present any issues in light of the EEO requirement in Australia (3)? Evaluate two possible outcomes for Pig Out restaurants of this recruitment approach (4).
Question 4: Explain the various employment contracts available to businesses currently operating in Australia (2). What are the implications of Ned Sangster's intentions to employ workers in Australia under individual common law contracts (3)? Evaluate the impact of individual and collective employment contracts on employees and employers (5).