The resurgence of enterprise bargaining 05: when bargaining goes wrong

Jennifer Wyborn, Nicholas West-Foy and Kate James
31 Aug 2023
Time to read: 3 minutes

No one ever said bargaining was easy, so it's important for employers and employees to be aware of the range of options available to keep bargaining on track.

In our last two articles, we explored how bargaining should be conducted, including how to comply with the good faith bargaining obligations and to prepare for and conduct bargaining meetings. But what happens if it all falls apart? Here, we'll take a look at the various mechanisms to resolve bargaining disputes in the Fair Work Commission (FWC).

Bargaining orders: when you need one, and how you get one

In general, the good faith bargaining (GFB) requirements aim to ensure that bargaining discussions proceed effectively and include things such as: attending meetings, responding to proposals, and refraining from capricious or unfair conduct that undermines collective bargaining. It's important to note that the GFB requirement do not require parties to agree on any given proposal.

Where a bargaining representative is not complying with their GFB obligations, for example, by not providing substantive contributions to bargaining discussions, another party may apply to the FWC to make a bargaining order. A bargaining order will usually require a bargaining representative to do or refrain from doing something. These can be useful to bring a representative to the table or stop a bargaining representative from taking certain conduct, since a contravention can result in a civil penalty.

The process for applying for a bargaining order and their consequences are summarised below:

Bargaining image

As you can see, bargaining orders are designed to stop particular conduct that is preventing bargaining from proceeding effectively. However, it may not be suitable where the parties are unable to agree on a particular issue. In those cases, it may be more appropriate to apply to the FWC to resolve a bargaining dispute.

Resolving bargaining disputes

Where the bargaining representatives are unable to agree on a particular issue, or resolve a disagreement, the parties may apply to the FWC to resolve the bargaining dispute. Where the agreement being negotiated is:

  • a single enterprise agreement;
  • a multi-enterprise agreement; or
  • a supported bargaining agreement,

one bargaining representative may apply for the FWC's assistance without the consent of the others. In all other cases, all the bargaining representatives will need to agree to the application.

The FWC may assist in resolving the dispute in any way it considers appropriate, including by mediating, conciliating, making a recommendation or expressing an opinion. The FWC can also arbitrate a bargaining dispute, which will result in a binding decision about the particular issue - however all of the bargaining representatives must agree for this to occur.

The flexibility offered by this dispute resolution option means it can be used for a variety of disputes, from disagreements relating to the bargaining process, to the actual content of the agreement, for example:

  • coming up with practical options for managing negotiations where there are many bargaining representatives involved;
  • arbitrating a dispute over the remuneration increases under the agreement.

The bargaining dispute process is summarised below:

Bargaining image

Deal or no deal: Intractable bargaining declarations

If, following assistance from the FWC, the parties are still not able to resolve a dispute, then the FWC may make an intractable bargaining declaration. Intractable bargaining declarations are a new feature of the Fair Work Act following reforms made by the Secure Jobs, Better Pay Act. The provisions are likely to have a significant impact on bargaining, as they can allow the FWC to step in and make a decision about the terms and conditions of employment that apply to the relevant enterprise.

Before making an intractable bargaining declaration, the FWC must be satisfied that:

  • the parties have been bargaining for at least 9 months;
  • the parties have already tried to resolve the bargaining dispute by making an application to the FWC (see above); and
  • there is no reasonable prospect of the dispute being resolved.

If a declaration is made, the FWC may give the parties a final opportunity to agree on a deal before proceeding to make an intractable bargaining determination, which will set the terms and conditions for employees in the relevant enterprise. The determination will include any terms the parties have agreed, the mandatory terms, plus any terms the FWC considers appropriate to resolve a matter still in issue. This process is summarised below.

Bargaining image

The potential for the FWC to step in and make an intractable bargaining declaration is likely to incentivise both employers and unions to come to an agreement sooner rather than later. This effect is already becoming apparent since the provisions came into operation on 6 June 2023. Two days after the provision came into effect, Virgin Airlines filed an intractable bargaining declaration, which it ultimately discontinued following further information being provided by the relevant union, allowing negotiations to progress.

The United Fire Fighters' Union of Australia also recently made an intractable bargaining declaration, seeking to hurry along a pay offer from the Victorian Government eight months in the making. Despite the pay offer being tabled, the Union has indicated its willingness to press the application, with the hearing scheduled for next month.

Key takeaways for resolving disputes in enterprise bargaining

Bargaining for a new enterprise agreement can be tricky, but the FWC is there to help with a range of options to assist in finding a resolution. Parties should however be cautious of options which may allow the FWC to arbitrate an outcome or determine the terms and conditions that apply to employees in the enterprise.

If they don't want to go to the FWC, unions and workers can also use a number of self-help strategies to try and force an outcome in their favour. Usually this takes the form of industrial action, which we will explore in our next article.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.