In brief

  • The complexity and risk for employers under the Fair Work Act’s (Act) bargaining regime is highlighted by a comprehensive review of decisions from its second year.
  • Two things are clear from the analysis of current case law set out in this paper: First, employers are at a disadvantage without a detailed knowledge of the bargaining framework. Second, the Act has introduced a great deal of legal complexity into the bargaining framework. 
  • The full bargaining paper is available to clients of Freehills. Please contact a member of the Freehills Employee Relations team if you wish to receive a copy.

Introduction

Shortly after its first anniversary, Freehills published its first volume of ‘Bargaining under the Fair Work Act’ entitled ‘12 months on: A Freehills retrospective’1 which summarised the first year of the Fair Work Act bargaining regime. We reported that the Act had brought significant change to Australia’s collective bargaining regime by introducing new concepts (majority support determinations (MSDs), scope orders, proposed agreements) and reintroducing the obligation to bargain in good faith.

Our year two review further examines the impact of the Fair Work Act bargaining regime for employers.

We set out below a summary of some of the key observations made in this year’s bargaining paper.

Key observations

Two things are clear from the analysis of current case law set out in this paper.

First, employers are at a disadvantage without a detailed knowledge of the bargaining framework. In particular:

  • Given low thresholds, it is relatively easy for unions to:
    • organise protected industrial action by obtaining protected action ballot orders
    • force an employer to bargain by obtaining a MSD, and
    • extend the capacity to take protected industrial action by obtaining orders to extend the '30-day period'.
  • Given high thresholds, it is relatively hard for employers to:
    • oppose an application for a protected action ballot order
    • oppose an application for a MSD
    • set and maintain its preferred scope of the proposed agreement, and
    • obtain orders suspending or terminating protected industrial action.

Second, the Act has introduced a great deal of legal complexity into the bargaining framework. This is borne out by conflicting Full Bench decisions on key issues such as the capacity to obtain protected action ballot orders, and the capacity to set the scope of a proposed agreement.

Whilst the new bargaining regime under the Act is showing signs of settling, it is clear from the decisions that continue to be handed down by FWA and the courts that access to a detailed understanding of the bargaining regime, and its underpinning case law and practical application, is a necessary ingredient for success.

Whilst it is difficult to generalise in respect of such matters, we are seeing employers:

  • invest more heavily in its enterprise negotiations; and accordingly
  • increase its level of preparation
  • work hard on contingency planning
  • understand the importance of employee engagement, and
  • be more savvy around the economics of the negotiation.

We predicted that the Fair Work regime would inevitably drive a greater degree of sophistication from employers who:

  • recognise the significant cost impact of bargaining outcomes, and conversely
  • value the exponential impact of even small gains made.

Hence, we are seeing more employers press hard for productivity offsets as part of any outcome. With greater awareness amongst the employer community—this trend will continue.