On 20 March, we published the first in this two-part series about the legal developments being watched closely by resource sector businesses in 2025 that could significantly impact their labour strategies. With margins continuing to be squeezed due to the costs of non-labour inputs continuing to rise, labour cost will come under pressure as 2025 rolls on.
In that blog, we looked at two strategies used by employers facing these pressures – the use labour hire and workforce reductions. Relevant to those strategies, our blog examined the BHP / OS Production / OS Maintenance case and its potential impacts on the same job, same pay jurisdiction and a case before the High Court dealing with whether an employer must look to reduce contractor workforce numbers before implementing direct employee redundancies.
Occasionally, in times of cost constraint, bargaining with a workforce can be utilised to achieve commercial outcomes that allow an employer to stabilise its labour cost while maintaining its workforce. This is likely to be more achievable when negotiating as a single employer as opposed to with multiple other employers, where the highest common outcomes can be difficult to avoid.
Earlier this month, the Full Court of the Federal Court heard a challenge against a Fair Work Commission decision in which three resources companies – Whitehaven Coal, Peabody Energy and Ulan Coal Mines, a subsidiary of Glencore – were ordered to engage in a joint bargaining process for a pay deal covering Deputies, Undermanagers, Shift Engineers and Control Room Operators (together, Statutory Staff Positions) at their underground mines in New South Wales. The companies argue that the Commission was wrong to find that they had "clearly identifiable common interests" and that their operations and business activities were "reasonably comparable." Both of these findings are necessary for the Commission to order multi-employer bargaining (formally known as "single interest employer" bargaining).
The Commission found that the companies had "clearly identifiable common interests" due to a range of factors. These included a common approach to employment terms and conditions, including a desire to negotiate individually with the Statutory Staff Positions on annual remuneration, performance incentives, and shift work rosters and their location in New South Wales, which means that they are subject to the same health and safety regulations and regulator.
The Commission also found that the operations and business activities of the companies were "reasonably comparable" because they all:
- operate underground coal mines in New South Wales (despite being located in different regions and on different coal seams) and face common industry regulation
- compete in international export thermal coal markets, and primarily sell to customers in Asia
- share similar job descriptions for the Statutory Staff Positions, which are mandated by mining safety legislation or perform essential functions
- based in regional inland areas of New South Wales, where they encounter difficulties in attracting and retaining staff, and
- use longwall mining methods.
Despite the commonalities identified by the Commission, these companies argue that separate bargaining would better address the unique needs of their individual business operations, including differing geological challenges, anticipated life of mine and mine operating margin. One of the companies made the seemingly very sensible submission that, if the differences between the employers are significant enough that separate negotiations around wages and conditions were likely even in a multi-employer bargaining situation, bargaining may not proceed efficiently (which is a central object of the Fair Work Act 2009 (Cth)). Although the Commission mentioned this submission, it did not specifically engage with it in its decision.
Employers are concerned that the necessary degree of "commonality" required by the Commission was no more or less than exists between many competitive businesses in the resources and other sectors, potentially leading to unions pursuing many more multi-employer agreements. For instance, resources companies are worried that there may be little to distinguish this case from other cohorts, such as similar statutory roles in Queensland coal mines.
The outcome of this case is likely to determine whether and how far multi-employer bargaining will spread beyond its initial take-up. If the Federal Court upholds the Commission's decision, it could lead to a new push by unions for more multi-employer agreements, impacting how companies manage their labour cost and workforce productivity.
Employers, particularly those in the resources sector, remain concerned that multi-employer bargaining will inevitably lead to 'highest common denominator' outcomes, where the labour cost of all affected employers is increased to the high-water mark of those businesses. This is accentuated by the possibility that unions can seek other employers, not involved in the actual bargaining process for the multi-employer agreement, to be effectively "roped into" the coverage of the multi-employer agreement once it is made by the Commission.
The bargaining will almost certainly involve less concentration on measures to improve workforce productivity at the individual enterprises at the bargaining table and concentrate more on broader, industry or sector-wide conditions. In this sense, multi-employer bargaining will look less like the enterprise bargaining initially introduced in the early 1990s which was designed to address and effect productivity improvements based on the specific needs of individual workplaces and more like the making of industry-wide safety net awards.
If a business is already covered by, or it has agreed with a union to bargain for, an in-term single enterprise agreement, the Commission is unable to order it to bargain for a multi-employer agreement. Therefore, having an in-term single enterprise agreement offers some protection (until its expiry) from being required to bargain with your competitors. This option at least allows a business to negotiate specifically for terms and conditions which suit it and its workforce, rather than bargaining with its competitors for conditions that will apply across multiple enterprises experiencing different commercial constraints. On the downside, as my colleagues at Seyfarth, Chris Gardner and Michael Tamvakologos opined in their blog post Multi-employer bargaining under "Secure Jobs, Better Pay" – 10 implications for employer in December 2022, unions may seek a premium from employers for making a single enterprise agreement.
The Commission is also unable to order a business to bargain for a multi-employer agreement if a majority of its employees who would be covered by the proposed multi-employer agreement do not want to be covered by the multi-employer agreement. This emphasises the primary importance of maintaining the best possible relationship with employees and ensuring – to the extent possible – that the business is a trusted "source of truth" on employment conditions and benefits. The alternative, a union becoming that source of truth, is a sure pathway to bargaining with one's competitors for a multi-employer agreement.
Whatever the outcome of this case, resources sector employers will be at the forefront of the bedding down of the recent workplace reforms and will need to stay on top of developments to ensure they can protect their businesses and obtain any possible competitive advantage in the labour market.
Originally published 31 March 2025
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