Australia: Breaking up is not so easy: The employer/ union relationship during bargaining

Last Updated: 3 September 2017
Article by Christy Miller

Most Read Contributor in Australia, October 2017

In the absence of the "cut and run" option, business must engage and work with all employees and bargaining representatives (including unions) to secure beneficial outcomes for both employer and employee.

Industrial relations has long been in the political limelight and the recent article in The Australian ( Management can ignore unions and deal directly with staff; paywalled) again draws focus to the "boxing arena" that is said to be enterprise bargaining negotiations. In this scenario, the employers are the losers because they have failed to realise they don't have to bargain or engage with unions.

The article suggests that:

  • employers don't have to involve unions in the bargaining process;
  • employers don't have to "make" any deal;
  • employers can refuse to meet with unions;
  • expired agreements can be early terminated;
  • and·on the "rare" occasion when an employer is forced to bargain, they can simply send an external bargaining agent offsite to meet with the union.

But we fear this approach over-simplifies the realm of enterprise bargaining and is simply incorrect.

This interpretation of bargaining under the Fair Work Act 2009 (Cth) ignores the strong principles of good faith bargaining embedded in the Act, the technical compliance rules that add cost / expense / time to an already complex process, the public interest test or consent required to move to terminate expired agreements and a system that is fundamentally cyclical in nature, where the looming expiry date of the agreement causes unions to place pressure on business to start the dance again.

A better (and perhaps more humorous) analogy for enterprise bargaining may be a pre-school tee-ball match. Here, both teams have been forced to play by their parents, extra rules have been introduced to ensure players don't get too hurt and there is no winner (only participation ribbon recipients).

Within Australia's complex regulatory system it is just not possible for business to "break up" with the unions and refuse to participate in enterprise bargaining.

Business can only navigate the difficulties of enterprise bargaining under the Act by better understanding their rights and obligations under Part 2-4 of the Act and by creating and executing both a clear bargaining strategy and communication strategy before negotiations begin.

Break up with unions and make up with staff?

While the sentiment of encouraging business to further develop their relationship with employees is key, communication with workers cannot, unfortunately, replace negotiating with appointed union representatives and any strategy in place must include union communication.

Whether an employer ultimately agrees to bargain with employees or not, it is impossible and in fact foolish to simply ignore unions.

Agrees to bargain?

When an employer has already agreed to bargain, it commits itself to the enterprise bargaining process as set out in the Act. As part of this process, the employer must, within 14 days of agreeing to bargain, send employees a copy of the Notice of Employee Representational Rights which explains that an employee has a statutory right to be represented in the bargaining process by a person or organisation (ie. union).

Where a union is already party to the current enterprise agreement, it will become the default bargaining representative for employees.

Once the parties have agreed to bargain, employers are bound to negotiate in good faith with unions that have been appointed bargaining representatives. A failure to engage with unions during this process or subjecting union representatives to a different bargaining process (by meeting offsite away from the joint consultative meetings) is likely to be found to be a breach of the employer's good faith bargaining obligations under section 228 of the Act and potentially discriminatory. For example, the following conduct has been found to be "capricious and unfair conduct" and a breach of the good faith bargaining obligations:

  • failure to recognise a bargaining representative;
  • not permitting bargaining representatives to attend meetings; and
  • preventing an employee from appointing his or her own representatives.

In such circumstances a union and/or employee will have standing to apply to the Fair Work Commission for a "bargaining order" that, if successfully obtained, would force the employer to negotiate in good faith with unions.

Refuses to bargain?

If an employer refuses to bargain at all, unions (as bargaining representatives) will have standing to seek a majority support determination in the Commission to commence the bargaining process without the employer's consent. The Commission will grant such an order in circumstances where it is satisfied that:

  • a majority of the employees to be covered by the agreement want to bargain;
  • the employer and employees have not yet agreed to bargain, or initiate bargaining;
  • that the group of employees to be covered has been fairly chosen; and
  • it is reasonable in the circumstances to make a determination.

Once a majority support determination has been granted, employers will again be bound by its good faith bargaining obligations to negotiate with union bargaining representatives.

The Commission can also award bargaining orders to force employers to commence the bargaining process in certain circumstances.

Once a majority support determination has been granted, union bargaining representatives can seek a protected action ballot that will enable the use of protected industrial action during the bargaining process.

What should employers be doing instead?

Unilateral termination of enterprise agreements is difficult for employers without the support of employees or passing a public interest test (which will in any event consider the employee's views). Murdoch University has only just succeeded in the termination of its expired enterprise agreement after 11 days of hearing and extensive witness evidence as to impact.

In the absence of the "cut and run" option, business must engage and work with all employees and bargaining representatives (including unions) to secure beneficial outcomes for both employer and employee.

When faced with the prospect of enterprise bargaining, employers shouldn't be so quick to throw the baby out with the bathwater, but should:

  • seek advice on their rights and obligations under the Act (including when they must consult and engage with bargaining representatives and what bargaining representatives can and cannot do during the bargaining process); and
  • carefully implement and execute a bargaining strategy that focuses on:
    • clear communication with the entirety of the workforce; and
    • engagement, where necessary, with the employees' appointed bargaining representatives to ensure statutory obligations are met and union triggers to move the Commission are avoided.

That said, employers don't need to:

  • have all the meetings demanded by unions;
  • meet with the unions at the time, date and place demanded by unions; or
  • accede to any or all union demands as part of the process.

Employers need to put themselves in the best position to, not cut and run during the bargaining process, but put an agreement to the vote (with or without union support) and get a "yes" at the ballot box.

The process by which to file your hard-won agreement is another story entirely.


Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

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