Australia: Planning For Bargaining – Avoid The Pitfalls, Reap The Benefits

Last Updated: 10 February 2009

Article by Sonia Millen, Michael Serong and Rohan Doyle

The effects of a bad bargain can resonate for longer than the life of the agreement. Saying and doing nothing is not a strategy.

It is not an easy task, but planning and preparing for your next bargaining round well in advance will help you achieve a successful bargaining outcome.

Deciding when and how to bargain is an important and often difficult business decision. A number of factors need to be taken into account including changes to industrial relations legislation proposed by the Fair Work Bill 2008 (Cth) as well as employee perception to reduce the "us" and "them" mentality.

As a general rule, planning should commence at least six months before you expect to begin bargaining and in some cases this may need to be at least twelve months before the expiry dates of existing agreements.

Why plan?

Failing to plan may result in accepting a commercially undesirable bargain, the cost of which will generally far outweigh any additional cost associated with planning. Failing to plan may result in:

  • disruptive and costly industrial action;
  • substantial wage increases;
  • operational inflexibilities;
  • significant restrictions on an employer's ability to manage its business and implement operational changes (e.g. through intrusive facilitative, consultative and/or change clauses);
  • the creation or continuation of an "us" and "them" mentality; and
  • erosion of your position in future bargaining rounds.

What to consider when planning?

Bargaining is not a 'one size fits all' process. The appropriate bargaining strategy will vary between employers and industries. However, addressing the following matters in the planning phase should assist in the development of a suitable strategy1:

  • Review the terms and impact of current agreements or other industrial instruments (e.g. award) to determine:
    • what is negotiable, including any relevant restrictions (e.g. financial constraints) to such negotiation; and
    • what is not negotiable – what must be included and what must be removed;
  • assess the financial impact of potential wage increases, including the timing of increases;
  • communicate with your employees: – how and when (see below);
  • facilitate efficient bargaining by:
    • establishing a suitable timetable for bargaining;
    • determining who is going to bargain on the employer's behalf and why;
    • being aware of your obligations under the current and proposed industrial relations legislation;
    • being able to explain why each action is being taken, why each position is adopted and why certain proposals may be unacceptable; and
  • establish a plan for responding to industrial action if and when it occurs.
    Communicating with your employees
    An effective communication strategy is an essential part of any successful bargaining strategy. Communicating effectively with employees both before and during bargaining is fundamental in promoting a focused approach to bargaining.

Communication with employees should:

  • be clear, concise, informative and accurate;
  • usually begin before bargaining commences;
  • inform employees of the status of bargaining, including:
    • whether bargaining will occur;
    • when bargaining will occur (e.g. proposed timetable); and
    • the reasons for the employer's approach (e.g. to explain why bargaining may be delayed); and
  • where possible, demonstrate the pursuit of common goals between the employer and employee.

An effective communication strategy should also identify how the employer will respond to communications issued by other participants such as unions. The strategy should also include ways in which employees can be proactively involved in the bargaining process (for example, a suggestion box or dedicated point/line of communication, etc).


1 Note that all documents (e.g. strategy papers, emails, etc) created during the planning and bargaining process may ultimately be subject to discovery/production orders. Employers should also develop appropriate protocols for the creation and retention of documents.

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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