Australia: Enterprise Bargaining

Last Updated: 25 September 2009
Article by Karl Luke

The FWA provides a new framework for enterprise bargaining which does not use any concept of union or non-union agreements. Instead, an agreement is made when approved by a valid majority of the employees to whom it will apply. A union that acted as a bargaining representative during the negotiations may apply to be covered by the agreement.

The new framework for Enterprise Agreements is premised on "good faith bargaining". The FWA empowers Fair Work Australia to make orders to ensure compliance with the "good faith bargaining" requirements.

Bargaining For Single Interest Employers

The principal category of bargaining is for "single interest employers" at the level of the enterprise. "Single interest employers" include joint ventures, common enterprises, related bodies corporate and employers specified in a single interest employer authorisation or declaration. A single interest employer authorisation or declaration can be made to bring certain very limited types of employers with a strong commonality of interest (such as franchisees of the same franchisor, or employers who receive substantial public funding) into this stream, but only where those employers seek to be allowed to bargain together.

In the single interest bargaining stream, employees have the right to take protected industrial action. Employees may only take protected industrial action where they are genuinely trying to make agreements at the enterprise level. Pattern bargaining is not permitted.

Fair Work Australia is empowered to make certain kinds of orders as part of its oversight of the bargaining process.

Majority Support Orders

The FWA provides that where an employer refuses to bargain with its employees, an employee bargaining representative can ask Fair Work Australia to determine if there is majority employee support for negotiating an Enterprise Agreement. If so, the employer will be required to bargain collectively with its employees in "good faith".

Scope Orders

The FWA provides that Fair Work Australia may make a scope order if it is satisfied that bargaining for a proposed Enterprise Agreement is not proceeding efficiently or fairly because the group of employees to whom a proposed agreement will apply has not been fairly chosen.

Good Faith Bargaining Orders

The FWA sets out good faith bargaining requirements that a bargaining representative for a proposed Enterprise Agreement must meet, including:

  • Attending, and participating in, meetings at reasonable times;
  • Disclosing relevant information;
  • Responding to proposals;
  • Giving genuine consideration to the proposals of others and giving reasons for responses to those proposals; and
  • Refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining.

The FWA specifies that the good faith bargaining requirements do not require a bargaining representative to make concessions during bargaining or to reach agreement on the terms that are to be included in the agreement. Parties are entitled to take a tough stance in negotiations.

Where a negotiating party ignores good faith bargaining orders, the other party may apply to Fair Work Australia to intervene and to make a workplace determination. This is said to ensure that there is no advantage to be gained by flouting the law.

Multi-Employer Bargaining

The FWA provides that where employees or employers genuinely wish to bargain on a multi-employer basis, they will be free to do so. Protected industrial action and good faith bargaining orders are not available in these circumstances.

The FWA provides that it is unlawful to coerce an employer to make a multi-employer agreement or to discriminate against the employer if they have not made a multi-employer agreement.

Bargaining For The Low Paid

The FWA provides a new scheme of bargaining for low paid employees. The FWA provides for a special low paid bargaining stream. Protected industrial action is not available, but Fair Work Australia will have the obligation to facilitate the making of agreements and will play a hands on role to get parties bargaining. For example, Fair Work Australia has the discretionary power to convene and chair conferences, to help identify productivity improvements to underpin an agreement and generally guide the parties through the negotiating process.

The FWA provides for the possibility of a workplace determination in the low paid stream in two circumstances:

  • By agreement; or
  • If there is no reasonable prospect of an agreement being made the subject to strict criteria including that there is no Enterprise Agreement in place and that the employment conditions of the employees are substantially those set out in the safety net. When making a determination, Fair Work Australia must consider how productivity in the business may be improved and the need to maintain the competitiveness of the employer.

Representation In Bargaining

The FWA provides that employees are entitled to have their union represent them in bargaining or appoint another person, such as a colleague. Employers may also appoint their bargaining representative.

The FWA requires employers to give written notice to all employees of their right to be represented in the bargaining process when the employer initiates bargaining or if a majority support determination, low paid authorisation or a scope order is made. (Refer to default position where employees who are members of a union are deemed to be seeking for their union to be a bargaining representative in the absence of an express request to the contrary.)

Agreement Content

The FWA provides that all matters pertaining to the relationship between the employer and its employees as well as the relationship between the employer and a union representing those employees will be the subject of bargaining.

Agreements can deal with the deduction of wages for any purpose authorised by the employee and contain terms dealing with how the agreement will operate. This means salary-sacrifice and payroll deduction arrangements and terms setting out how the parties agree to conduct negotiations for a replacement agreement can now be included in agreements.

The FWA provides that only terms that are about the relationship between the employer and the employee will be able to be the subject of protected industrial action. For example, employees will not be permitted to take protected industrial action in pursuit of a claim that the employer should make a donation to a charity or should start to manufacture a particular product.

Required Agreement Content

The FWA provides that in order to be approved by Fair Work Australia, an Enterprise Agreement must contain:

  • A flexibility term that allows individual flexibility arrangements (subject to specified protections);
  • A dispute settlement process that must involve either Fair Work Australia or another person or body independent of the parties and that provides for the representation of employees in the process; and
  • A term providing for consultation with employees about major workplace changes and that provides for the representation of employees in that process.

Approval Of Agreements

The FWA provides that Fair Work Australia must not approve an agreement that includes terms that are inconsistent with unfair dismissal, right of entry, the NES and the general protection provisions of the Act. Fair Work Australia must also be satisfied that:

  • The employer and a valid majority of the employees to whom the agreement will apply genuinely agree to the agreement; and
  • Each employee would be better off overall (BOOT) under the agreement in comparison to the relevant modern Award.

Donaldson Walsh will be running a series of Workplace Relations & Employment Law Seminars, during August and September 2009. For further information or to register please go to What's on at DW section of the Donaldson Walsh website.

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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