- Industrial relations is squarely back on the political agenda in the long lead up to the next federal election. The platform for this emotive topic has been bolstered by a number of recent high profile bargaining disputes, the ongoing enquiry into the Health Services Union, and the review of the Fair Work Act 2009 (the Act) commissioned by the Federal Government (Fair Work Act Review).
- In advance of the public release of the Fair Work Act Review panel’s report and recommendations, Freehills has published our third paper which highlights the complexity and risks for employers under the Act’s bargaining regime by reference to a comprehensive review of recent decisions.
- Three things remain clear from the analysis of current case law set out in this paper: First, enterprise bargaining is now far more a threat than an opportunity for the majority of employers. Second, employers continue to be at a disadvantage without a detailed knowledge of the bargaining framework. Third, the complexity in the bargaining framework is ever apparent.
- 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.
Shortly after each of its first two anniversaries, Freehills published separate papers which summarised key developments relating to the operation of the Act’s 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 three review confirms many of our predictions relating to the impact of the Act's bargaining regime for employers.
We set out below a summary (and reiteration) of some of the key observations made in this year’s bargaining paper.
Three things continue to be clear from the analysis of current case law set out in this paper.
First, enterprise bargaining is far more a threat than an opportunity for the majority of employers. This is to be contrasted with the objective of enterprise bargaining when initially introduced into the Australian industrial relations system in the early 1990’s.
Second, employers remain 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 or subvert the policy position underpinning the concept of a MSD by accessing the protected action regime prior to the commencement of bargaining, and
- extend the capacity to take protected industrial action by obtaining orders to extend the '30-day period'.
Given high thresholds, it is relatively difficult for employers to: •obtain orders suspending or terminating protected industrial action
- oppose an application for a protected action ballot order
- set and maintain its preferred scope of the proposed agreement, and
- oppose an application for a MSD.
Third, the reported decisions continue to demonstrate a framework grounded in legal complexity. This is borne out by the continuing uncertainty surrounding the ‘boundaries’ of permitted matters, the reach of bargaining orders to regulate unlawful conduct in bargaining, the legitimacy of ‘opt-out’ arrangements and their relationship to the ‘fairly chosen’ approval requirement, and the capacity for an employer to set the scope of a proposed agreement.
Whilst the bargaining regime under the Act continues to show some signs of settling, it is clear from the decisions that continue to be handed down by Fair Work Australia 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. Indeed, without such an understanding and knowledge of case developments, what opportunities there are in the Act for employers to utilise to achieve their bargaining objectives will be lost.
Whilst it is remains difficult to generalise in respect of such matters, we are continuing to see employers:
- invest more heavily in their enterprise negotiations
- increase their level of preparation
- work hard on contingency planning, and their strategic ‘response’ options to protected industrial action
- understand the importance of employee engagement, and
- be more savvy around the economics of the negotiation, and their use of the media to achieve balance in the public reporting of protracted or high profile disputes.
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 continuing to see some employers attempt to press hard for productivity offsets as part of any outcome. Whether or not the Federal Government's review process will deliver any benefits in this regard remains to be seen. Either way, employers will continue to grapple with the complexities and challenges of the existing bargaining regime, and need to devise strategies that are aligned to the achievement of their bargaining objectives.