The enterprise bargaining process has been criticised for its failure to deliver productivity improvements to business.  Whilst enterprise bargaining is premised on the idea that employers and employees will make enterprise agreements that deliver such benefits, in return for other trade-offs, often the process can be an inflationary one for employers who end up only with an increased cost base.

The Fair Work Amendment (Bargaining Processes) Bill 2014 (Bill) introduced into Parliament on 27 November 2014 (i.e. not yet passed) makes improvements to the processes associated with the bargaining of enterprise agreements in the workplace.

In short, the Bill:

  • requires the Fair Work Commission (Commission) to be satisfied before approving an enterprise agreement  that discussions about productivity improvements were raised during the bargaining processes.  “Productivity improvements” includes (for example) the elimination of restrictive or inefficient work practices, initiatives for training or skills development, or improvements to the business’ operations, structure, design or effectiveness of its practices and procedures;
  • provides the Commission with a non-exhaustive list of factors (largely taken from case law) to be considered before it makes an order to permit protected industrial action to be taken.  Factors include steps taken to reach agreement, communication of claims, responses to proposals and the extent to which bargaining has progressed; and
  • precludes the Commission from making an order to permit protected industrial action where the applicant’s claims are manifestly excessive or will have an adverse impact on productivity at the workplace.

The Bill puts productivity back in the forefront of the minds of the bargaining representatives by making it a prerequisite to the Commission approving an enterprise agreement.  The Bill also provides a disincentive for a bargaining representative to press ambit claims or claims that, if accepted, would have a detrimental effect on workplace productivity.

While the amendments provide modest tweaks to the current bargaining and agreement approval processes, they are expected to have a significant impact on discussions around the negotiating table.  For some, the changes will not go far enough.  But they are certainly a step in the right direction.

See also the Explanatory Memorandum to the Bill.