The Senate yesterday passed amendments to the Fair Work Amendment Bill 2014 (Bill) that, if accepted by the Government in the House of Representatives, will establish a new process for negotiating single-enterprise greenfields agreements, and give employers a "circuit-breaker" to side-step stalemates in negotiations.

The Bill also seeks to address a number of outstanding recommendations from the Fair Work Review Panel's 2012 review into the operation of the Fair Work Act 2009 (Cth) (Act).

What are Greenfields Agreements?

Greenfields agreements are a form of enterprise agreement made between a prospective employer establishing a genuinely new enterprise with no current employees, and the union(s) entitled to represent a majority of the enterprise's prospective employees. Greenfields agreements are used in large scale construction and resources projects, and are often necessary to secure finance and other approvals for a project.

The problem with negotiating Greenfields Agreements

Employers have raised concerns that some unions exploit their role under the Act in negotiating greenfields agreements, often seeking excessive wage claims and delaying project start dates. Delaying tactics can create immediate costs implications for employers, while staff are tied up in bargaining rather than more productive work. Long and onerous negotiations can lead to projects being abandoned, and worse, can jeopardise future investment in other major Australian projects.

For those reasons, the key policy objectives for regulating greenfields agreements are to ensure:

  • realistic timeframes for negotiating greenfields agreements;
  • that negotiations do not delay or jeopardise investment in major projects; and
  • that prospective employees' interests are protected.

The Fair Work Amendment Bill 2014

Originally the Bill was introduced into Parliament in February 2014. In its original form, the Bill sought to establish a new process for the efficient negotiation of single-enterprise greenfields agreements by providing an optional three-month negotiation timeframe for the parties to reach agreement.

In the Senate yesterday, the Bill was amended to extend the optional negotiation period to six months. Effectively, if the Bill becomes law, where greenfields negotiations cannot be finalised within six months of the commencement of negotiations, an employer may apply to have the Fair Work Commission (Commission) approve its proposed agreement. Existing approval tests under the Act will be retained, including the "better off overall test". The amendments also require the Commission to be satisfied that the agreement provides for pay and conditions that are consistent with prevailing industry standards.

Bargaining representatives will not simply be able to 'wait out' the six-month negotiation period. The Bill also extends the good faith bargaining requirements to greenfields negotiations. This will require bargaining representatives to:

  • attend and participate in meetings at reasonable times;
  • disclose relevant information;
  • give genuine consideration to proposals, provide timely responses and give reasons for responses;
  • recognise and bargain with other bargaining representatives; and
  • not engage in capricious or unfair conduct.

The proposed greenfields agreement provisions will be subject to a two-year review. Whether these amendments will ensure greenfields agreements are negotiated expeditiously, and in a manner appropriate to protect the interests of prospective employees and encourage future investment in Australian projects, will need to be determined over time.

Other amendments to the Act

The Bill passed by the Senate also introduced other amendments to the Act to include:

  • a new requirement for protected action ballot order applications, so that employees' right to strike would be conditional on majority agreement from all employees (rather than just those employees proposing to take action). This would mean that if, for example, an employer refused to engage in bargaining, the ability of employees to engage in industrial action would depend on a majority of the bargaining employees agreeing to that action;
  • a new obligation for employers to give employees a reasonable opportunity to discuss requests to extend parental leave, where that extension is beyond the initial 12 month period as already provided for in the Act; and
  • a new requirement for the Fair Work Ombudsman to pay interest on unclaimed monies.

Previously proposed amendments to the Act

The original Bill contained other extensive amendments to the Act, however the Government could not garner sufficient crossbench support for further amendments. Those amendments would have:

  • amended the right of entry framework in the Act to limit the requirements for employers to facilitate transport and accommodation arrangements for permit-holders' discussions with employees in remote locations, introduce stricter entry requirements, and expand the Commission's power to deal with right of entry disputes;
  • increased flexibility around the content and application of individual flexibility agreements;
  • clarified that untaken annual leave must be paid out as provided by any applicable industrial instrument; and
  • ensured employee-initiated transfers to related entities need not comply with transfer of business requirements under the Act.

The Bill will need to go back before the House of Representatives for voting.