Major new projects in Australia are often delayed
because of lengthy disputes between unions and employers on
employment conditions. This was recognised by the Panel that last
year reviewed the Fair Work Act.
In a March announcement, the government pledged to amend
the Act to do something about this. However, in an about-turn, the
government has failed to deliver on this promise in its new Fair
Work Amendment Bill 2013.
This is another blow for major new enterprises in this
country and does nothing to improve Australia's reputation as
an attractive investment destination.
Greenfields agreements are made between a union and a new
employer, that doesn't yet have employees.
They determine the terms and conditions of employment that will
apply and can only be negotiated with a union or unions that have
coverage of a majority of the prospective employees.
Importantly, greenfields agreements must involve a genuinely new
enterprise; an existing business cannot re-badge its activity and
use this as grounds to negotiate a greenfields agreement.
Greenfields agreements benefit employers because they can
establish terms and conditions for employees in a new enterprise
before employing them.
Employers claim that the requirement to bargain with a union
about the terms and conditions on a project gives unions an unfair
advantage and allows them to hold employers to
Employers say that unions know the longer negotiations drag on,
project costs increase and start dates are threatened, and
eventually employers have to make significant concessions.
The 2012 Review of the Act supported this view, finding
that some of the bargaining practices and outcomes associated with
greenfields agreements potentially threaten future investment in
major projects in Australia.
It observed that the FW Act allows unions with coverage
of a majority of prospective workers to frustrate the making of an
appropriate greenfields agreement at all, or at least in a timely
The situation is exacerbated by the fact that the good faith
bargaining requirements contained in the FW Act do not
apply to greenfields agreements.
This is because those requirements only apply to a
"bargaining representative for a proposed agreement".
Section 176 prescribes who are bargaining representatives but
only for enterprise agreements that are not
The 2012 Review Panel recommended the FW Act be amended
so that the good faith bargaining obligations apply to negotiations
for a greenfields agreement.
At the same time, section 240 of the FW Act would then
also apply to allow bargaining disputes about the negotiations of
greenfields agreements to be dealt with by the Commission (that
provision does not currently apply because the applicant must be a
bargaining representative for a proposed enterprise agreement, a
greenfields agreement not being included in this).
The Review Panel also recommended the FW Act be amended
so that, when negotiations for a greenfields agreement have reached
an impasse, a specified time period has expired and conciliation
has failed, the Commission may, on its own motion or on application
by a party, conduct a limited form of arbitration, including
'last offer' arbitration to determine the content of the
On 8 March, the Federal government announced it would amend the
FW Act to provide access to the Commission for arbitration
when bargaining for a greenfields agreement reaches an impasse and
in "other limited circumstances where bargaining had become
However, when the Fair Work Amendment Bill 2013 was
introduced a mere two weeks later it omitted any changes relating
to the application of the good faith bargaining requirements or
arbitration of greenfields agreements.
The Minister simply noted the Review's recommendation
concerning arbitration of greenfields agreements and said he will
continue to work with employers and unions with a view to
introducing further reforms during Parliament's Winter
As the Federal election is just a few months away, it is
doubtful there will be time for further changes in this area before
then. Whether the Opposition will deal with it if it gains power
and, if so, how it might do so, is unclear.
In the meantime, the mischief identified by the Review will
continue in respect of greenfields agreements and threaten
investment in major projects in Australia.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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