Australia: New Bargaining Rights For Employees In Low-Paid Industries

Does your business operate in the child care, aged care, community services, security, or cleaning industry?

If it does, then as part of the changes contained in the Fair Work Bill introduced into parliament on 25 November 2008, chances are you may be forced to bargain collectively with not just your own employees but also unions representing employees of other businesses within your industry as part of Labor's overhaul of the Howard Government's WorkChoices legislation.

To make matters worse, if you are unable to reach an agreement after being required to meet the ALP's new good faith bargaining obligations, the employees that you were bargaining with will be able to have their wage claims arbitrated by the new industrial umpire, Fair Work Australia.

Initially, compulsory arbitration was not intended "to be a feature of good-faith bargaining" according to government fact sheets issued just a few months ago. However, on 14 November 2008, Julia Gillard revealed that she had been persuaded that low-paid workers needed access to arbitration when bargaining with employers breaks down.

While the general prohibition on industry wide "pattern bargaining" will be retained (in an attempt to encourage bargaining at the enterprise level) one important exception will be a new found capability for employees in industries in the "low-paid stream" to bargain collectively with their employers at a limited industry level, rather than just at the enterprise level.

The initiative was originally outlined by Minister Julia Gillard in her address to the National Press Club on 17 September 2008. At that stage, bargaining in the low-paid stream was not intended to be underpinned by compulsory arbitration. Under the new system, Fair Work Australia will be able to facilitate multiple-employer bargaining for employees who work for specified employers in such industries.

Outcomes of multi-employer bargaining in the low-paid stream could include:

  • a single agreement that applies to a number of named employers, which may have identical terms or some variations for different employers;
  • a number of agreements with different terms applying to different employers; or
  • a combination of the above.

The rationale for this change stems from the perceived historical inability on the part of employees in traditionally low-paid industries to bargain collectively with their employers and to receive wages that exceed basic award entitlements. The measure is also a response to a union argument that many low-paid employees are unable to negotiate for more than minimum wages and conditions because they lack the necessary bargaining clout or negotiating skills, or are employed by external contractors.

Interestingly, this is a new development that did not exist under the Keating Government enterprise bargaining system, and it remains to be seen the extent to which the new arrangements will incorporate an element of compulsion against parties that do not want multi-employer bargaining.

In any event, Fair Work Australia is now expected to have a hands-on role in getting parties to talk and arbitrate if negotiations break down.

How will multi-employer bargaining work in practice?

Under Part 2.4, Division 9 of the Bill, a bargaining representative or a union with coverage of employees working in the relevant industry would be able to apply to Fair Work Australia for a "low-paid authorisation" for employees of specified employers to gain entry into the low-paid stream. If it grants such an application, Fair Work Australia would then assist the union in negotiating a multi-employer agreement.

This would enable a group of employees working for various employers within the same industry to bargain not just with their own employer but with a specified list of employers. If the bargaining breaks down, Fair Work Australia will be able to arbitrate the wage claims of these employees.

Instead of specifically defining what it means by "low-paid employees", section 243(2) of the Bill sets out an extensive list of considerations Fair Work Australia must take into account in deciding whether to grant a low-paid authorisation, including:

  • as an overarching principle, if it is in the public interest;
  • if it would assist low-paid employees who have not had access to enterprise bargaining;
  • the history of bargaining in the industry in which the employees work;
  • the current wages and conditions of the employees compared to industry and community standards;
  • whether it would improve productivity and service delivery at the enterprises involved; and
  • the views of the employers and employees that would be covered by any agreement.

Individual employers will be able to seek an exemption from the process if they believe they should not be included. Decisions by Fair Work Australia that allow multi-employer bargaining will be subject to appeal. Factors that will be relevant in determining whether a particular employer should be exempted will include:

  • whether that employer has over-award terms and conditions of employment in place for its employees; and
  • the degree to which existing terms and conditions of employment were developed with employee consultation.

Fair Work Australia's powers

Once an application for multi-employer bargaining is granted, Fair Work Australia will have powers to assist employees and employers to reach agreement through mediation and conciliation. In what looks like an attempt to allay employer concerns about a more general return to pattern bargaining, parties who bargain in the low-paid bargaining stream will be unable to take protected industrial action in support of their bargaining claims. Protected action will remain available only in support of single employer (enterprise level) bargaining.

Once specified employers are designated to be in the low-paid stream, Fair Work Australia will be able to intervene to help negotiate the making of a multi-employer agreement in respect of such employers. Its powers will include:

  • bringing the bargaining participants together to assist in facilitating the negotiations and bringing about an agreement;
  • requiring a third party (such as a head contractor who has the ability to influence terms and conditions on which the employees are employed) to attend a conference where this is necessary to advance negotiations;
  • mediating, conciliating and making recommendations;
  • compulsory arbitration where a negotiated outcome cannot be reached; and
  • settling other matters that parties involved in the negotiations are unable to agree on at the request of the parties.

Importantly, Fair Work Australia will also be able to order that the bargaining process be conducted in good faith in accordance with the ALP's new good faith bargaining framework outlined in section 228(1) of the Bill. These obligations include attending and participating in meetings with employees mediated by Fair Work Australia, giving "genuine consideration" and providing reasons for responses to proposals made by employees or unions, and refraining from conduct deemed to be "capricious".

Implications for employers

Employers in the child care, aged care, community services, security, and cleaning industry (and other industries that may be considered as being part of the "low-paid stream") should be aware that there is a significant likelihood that they may be subjected to multi-employer bargaining as part of the new industrial relations regime.

This may have particularly adverse consequences in circumstances where the number of employers involved in a round of multi-employer bargaining is large. The mere fact that employers are part of the same industry does not necessarily mean that their specific operational requirements will be the same or similar. Indeed, they may differ dramatically. Naturally, this difference will be reflected in the terms and conditions on which they employ their staff. Having an agreement negotiated by reference to conditions being sought across a range of workplaces could therefore present a number of operational and costs pressures for employers.

These pressures would be exacerbated by the threat of arbitration hanging over employers' heads where they are unable to reach agreement after bargaining collectively in the low paid stream.

Further, unions may seek to promote entry into the low-paid bargaining stream in an attempt to force businesses to sign up to standard template agreements which provide for industry wide pay increases and entitlements (albeit limited to a specified list of employers). Any template is unlikely to address enterprise-specific issues of importance to the relevant employer and its employees. The prospect of arbitration following unsuccessful rounds of forced collective bargaining would no doubt be a powerful incentive to get employers to do a deal first.

The substantive elements of the new industrial relations regime are intended to commence from 1 July 2009.

Deacons advises that businesses operating in the child care, aged care, community services, security, or cleaning industry who currently employ staff on minimum award conditions consider taking steps to:

  • implement a common law contract of employment that provides for over-award terms and conditions and is developed with employee input; or
  • implement a collective agreement.

Deacons can assist employers in these industries to reduce the risks of being roped in to multi-employer collective bargaining underpinned by compulsory arbitration by advising on all aspects relating to the development, preparation and implementation of appropriate employment agreements.

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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