This article is the first in our enterprise bargaining article series. These articles, released monthly, will provide a comprehensive guide to enterprise bargaining.
The vast changes to the industrial relations landscape at the end of 2022 have caused some concern for employers. The need for both employers and employees to be aware of the enterprise bargaining process is critical now more than ever. This article seeks to introduce you to the concept of enterprise bargaining and kicks off our series of articles to provide you with the 'know-how' to bargain effectively.
What is all the fuss about enterprise bargaining?
With a raft of recent industrial relations reforms (and plenty more on the horizon), employers may be feeling uncertainty about what has changed and what this means for them and their industrial framework. Significant media reporting around the resurgence of bargaining, coupled with speculation about whether the Commonwealth will start requiring enterprise agreements among its funding recipients has caused at best confusion and at worst fear about bargaining.
The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (SJBP Act) made various changes to the industrial landscape, with one key area of change being the laws in relation to enterprise bargaining. The new legislation saw changes including employers being more easily compelled into bargaining, the termination of enterprise agreements pre-dating 1 January 2010 (also known as "zombie" agreements), and the initiation of bargaining streamlined through bargaining representatives.
What is "bargaining"?
Enterprise bargaining is the process of negotiating an enterprise agreement. The 'bargain' element arises from the requirement for employers to negotiate an agreement through consultation with employees and their bargaining representatives. The enterprise bargaining process is carefully regulated through provisions within the Fair Work Act 2009 (Cth).
There are three different types of enterprise agreements (explained below). There are also different types of bargaining methods, or 'streams', which parties can bargain in. Each stream leads to a different type of enterprise agreement. The streams have different features, including different ways to join bargaining and in some cases, different powers for the Fair Work Commission.
The SJBP Act altered the bargaining streams, in particular by broadening the streams of enterprise bargaining, contributing to media reporting around the rise of forced multi-employer bargaining. The enterprise bargaining streams are:
Employers have become increasingly concerned in relation to being forced into multi-employer bargaining with the changes made through the SJSB Act. We will further explore when employers can be compelled into multi-employer bargaining in a later article.
What are some examples of employers in each bargaining stream?
Employers may be questioning which bargaining stream they fit into. We have gathered some common scenarios below:
- Single-interest bargaining includes employers who have clearly identifiable common interest, which could include franchisees, or a business with related entities.
- Supported bargaining is targeted towards low-paid industries, such as disability, early education and aged care.
- Cooperative bargaining may be more suitable for small businesses that would otherwise have difficulty in bargaining for an agreement.
- Single-enterprise bargaining may be suitable for a variety of businesses, including government departments or single-entity small, medium or large businesses.
What is an enterprise agreement?
An enterprise agreement provides the terms and conditions of employment which have been negotiated between the employees and the employer. There are three different types of enterprise agreements that can be created: single-enterprise agreements, multi-enterprise agreements and greenfields agreements.
A single-enterprise agreement is made between one employer and their employees. However, a single-enterprise agreement can also be made between multiple employers and their employees where there is a single interest, or where authorisation under the Fair Work Act has been granted by the Fair Work Commission.
These enterprise agreements are made by two or more employers and their employees. These employers may wish to share common terms and conditions, such as independent schools or construction projects.
Greenfields agreements are created through the establishment of a "genuine new enterprise", which does not have any employees. A greenfields agreement can be created through either a single or multi-enterprise agreement. To facilitate effective bargaining, the employer (or employers for multi-enterprise agreements) must bargain with one or more relevant employee associations (unions).
Case study: Australian Public Service Commission
Around the same time as the introduction of the SJBP Act, the Australian Public Service Commission (APSC) announced that the Australian Public Service (APS) would undergo service-wide bargaining, resulting in common terms being established and used across all APS agencies. Service-wide bargaining differs from historical methods of APS bargaining, where employees would bargain with their own agency regarding terms and conditions specific to that agency. This process was then overseen by the APSC. Over the years, this approach has resulted in a large disparity in terms and conditions across the APS.
Service-wide common terms means that the APSC will negotiate core terms and conditions that will apply service-wide to all employees engaged under the Public Service Act 1999 (Cth). Examples of core terms include flexibility terms and various types of leave (including domestic and family violence, parental, and long service). After common terms and conditions have been negotiated by the APSC, each agency and their employees will have the opportunity to bargain separately for specific terms and conditions at their agency.
In recent years, and in lieu of the most recent round of bargaining, many Commonwealth agencies have used Agency Head Determinations to extend the life of their enterprise agreements. These Determinations allowed for pay rises to be passed onto APS employees without the need to renegotiate an entire enterprise agreement. A major change under the SJBP Act enables bargaining representatives to initiate bargaining through notification to the relevant Agency, in circumstances where that employer was covered by an enterprise agreement with a nominal expiry date within the past 5 years. The ability for bargaining representatives to initiate bargaining, in addition to service-wide bargaining, means that APS agencies can compelled into future bargaining process and brings into question the potential need for future Determinations to extend the life of APS agencies' enterprise agreements.