On 12 May 2023, the Fair Work Commission (Commission) released the Statement of Principles on Genuine Agreement Instrument 2023 (Statement of Principles) following significant changes to the enterprise bargaining framework under the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022(Amending Act). The Statement of Principles will come into effect on 6 June 2023 and will guide the Commission in determining whether employees have genuinely agreed to a proposed enterprise bargaining agreement (EBA).
The Amending Act introduced various amendments in the enterprise bargaining space, including substantial amendments to multi-employer bargaining, Commission arbitration and approval processes for EBAs. One of these changes was the introduction of a new section 188B to the Fair Work Act 2009 (Cth) (FW Act), requiring the Commission to consider the Statement of Principles as part of its determination of an employee’s genuine agreement to an EBA.
In summary (of the Statement of Principles), employers must:
- advise employees that the employer is bargaining for an EBA and inform them of their right to representation
- afford employees with a reasonable time period, prior to voting, to consider the proposed EBA and its effect
- explain the terms of the proposed EBA and their effect on employees, and provide guidance on how the proposed EBA differs from the existing EBA (if any) and applicable modern awards
- provide employees with a reasonable opportunity to vote on the proposed EBA in a free and informed manner
- ensure that they engage in an “authentic exercise in agreement-making”with the employee and that the employee has an informed and genuine understanding of what is being approved.
Right to representation
An employer must ensure that employees who will be covered by the proposed EBA and are employed at the notification time are advised that:
- the employer is bargaining for an EBA
- the proposed coverage of the EBA
- their right to be represented in bargaining and how they can exercise those rights.
This information must be given at a time and in a manner which allows the employees to have a reasonable opportunity to be represented in bargaining for the EBA.
The same rule applies to an employer that will be covered by a proposed single-enterprise agreement (other than a greenfields agreement) unless the employer has already given the employee notice within a reasonable period before the notification time for the EBA.
Employers must not mislead employees (by words, actions or otherwise) as to their right to be represented by a bargaining representative or the role of an employee organisation as the default bargaining representative of its members.
Reasonable opportunity to consider the proposed agreement
Employees should be given a reasonable opportunity to consider a proposed EBA before voting on it to ensure informed voting by participants. An employer can be seen to satisfy this requirement when it provides employees (who are entitled to vote) with a full copy of the proposed EBA and any other material incorporated by reference to the agreement.
This may be done using hard copy material, electronic means or a combination of both, provided the employee can access and read the material.
The material should be provided at least seven full calendar days before the voting begins or at another reasonable time period as is agreed with one or more employee organisation(s) acting as bargaining representative(s) for a significant portion of employees covered by the proposed EBA.
Explanation of proposed terms and effect
Section 180(5)(a) of the FW Act requires the employer to take all reasonable steps to explain the terms of the proposed EBA and their effect on those covered by it. At a minimum, employers should address how the proposed agreement will impact an employee’s existing minimum entitlements and other terms and conditions of employment.
In assessing compliance with this provision, the Commission may consider explanations given by the employer about the proposed agreement to employees or their bargaining representative(s). An employer may deliver this explanation by providing the employee with access to a hard copy, by electronic means, orally or a combination of these methods. The employee must be afforded a reasonable opportunity to consider the explanation, regardless of the communication method.
The explanation must be given in an appropriate manner. The Commission will determine if this has occurred by considering the location of the employees, the work environment, available facilities at the workplace, hours of work or rosters, the needs of employees absent from the workplace and the nature of the work performed.
Under the Statement of Principles, where the proposed agreement will replace an existing agreement, it is sufficient for the employer to explain the differences in entitlements and other terms and conditions between the existing and proposed EBAs, as well as any applicable modern award provisions which have been varied since the commencement of the existing agreement. Where a proposed agreement will not replace an existing agreement, it will generally be necessary to explain the differences in entitlements and other terms and conditions between the proposed agreement and any applicable modern award.
Trivial differences which have no effect on the employee’s entitlements or obligations generally do not need to be explained by the employer.
If an employer makes an incorrect representation or misleads employees about a significant term or its effect, this generally will not satisfy section 180(5) of the FW Act.
Reasonable opportunity to vote on the proposed agreement
Employees should be given a reasonable opportunity to vote on a proposed EBA in a free and informed manner. The voting process should ensure that each vote is not disclosed to or ascertainable by the employer and that the method and period of voting provides all employees who are entitled to vote with a fair and reasonable opportunity to do so.
Employees should be informed of the time, place and method for the vote at least seven full calendar days before voting begins or at such other reasonable time prior to voting commencing as agreed with the one or more employee organisation(s) acting as bargaining representative(s) for a significant portion of the employees covered by the proposed EBA.
When determining whether an employee has a sufficient interest in the terms of the proposed EBA and whether they are sufficiently represented under section 188(2) of the Amending Act, the Commission may consider the following:
- whether the voting employees are to be paid at the rates contained in the proposed EBA
- the extent to which voting employees are employed across a full range of the agreement classifications, types of employment, geographic locations, industries and occupations as covered by the proposed EBA.
The agreement must be a product of an authentic exercise in agreement-making between the employer and employees. Voting employees should vote with an informed and genuine understanding of what is being approved.
In cases where one or more employee organisation(s), acting as bargaining representative(s) for a significant portion of covered employees, support the approval of the proposed EBA and don’t raise any concerns as to its genuine agreement by the covered employees, the Commission should give this significant weight in determining whether the agreement has been genuinely agreed to.
In the coming months, the Commission intends to release further information in relation to the operation of the Amending Act and the Statement of Principles. This will include the release of an updated Form F17 (Employer’s declaration in support of an application for approval of an enterprise agreement) and Form F16 (Application for approval of an enterprise agreement (other than a Greenfields agreement)), as well as changes to the date calculator and the ‘Create the NERR’ tool. Further information about these changes can be found on the Commission’s website.
Transitional provisions under the Amending Act will also apply to enterprise bargaining processes that straddle the operation of the two Acts. Notably, section 66 of the Amending Act provides that for any propped EBAs with a notification time prior to commencement of Part 14 of that Schedule, or for any variation of an EBA which the employer has requested a vote on occurs prior to this commencement, Part 2-4 of the FW Act applies as if the amendments had not been made.
For further information on how the Amending Act will affect the enterprise bargaining framework, see our previous article: ‘How will the Secure Jobs, Better Pay Act impact industrial strategy?’.