When the Coalition released its industrial relations platform in May, it touched on enterprise bargaining in three areas: access to flexibility arrangements, negotiations for Greenfields agreements and enterprise bargaining processes.
While wholesale amendments aren’t proposed, it is clear that the Coalition intends to start a process to address perceived issues with Fair Work (FW).
Under enterprise agreements IFAs have proven, to a large extent, to be an ineffective tool for employers and employees alike to secure meaningful individual arrangements.
This is because the FW Act permits bargaining parties to restrict the subject matter of IFAs and they are terminable within one month. Fair Work Australia reported that of the enterprise agreements made between 1 January 2010 and 30 June 2012, 51.3 per cent contained a flexibility term that was different to the FW Act’s model clause; just 5.6 per cent permitted any term of the agreement to be varied by an IFA.
The government proposes to remove the ability to restrict the items that can be covered in an IFA. In doing so, it hopes to allow employees and employers to reach agreements that permit them to ‘work innovatively or to suit their personal situation’.
This will include considering non-monetary benefits when conducting the Better Off Overall Test (BOOT). The government proposes that the monitory benefit foregone must be specified in writing and must be appropriate and proportionate to the value of the non-monetary benefit conferred by the IFA.
The Coalition proposes to alter regulation of the making of Greenfields agreements, both in the negotiation and approval phases, proposing that good-faith bargaining rules should apply to Greenfields agreements.
It suggests that an employer may take a proposed Greenfields agreement to the FWC for approval if it has been the subject of negotiations for at least three months; meets the BOOT and the ‘public interest test’; and provides for pay and conditions consistent with industry standards.
The introduction of good-faith bargaining rules will, among other things, require employers to provide relevant information to unions other than confidential or commercially sensitive information. This will require careful consideration of what is confidential and what is commercially sensitive in relation to the new business or undertaking.
The utility of providing jurisdiction to the FWC to rule on a Greenfields agreement when negotiations have been underway for at least three months is to be determined.
This is particularly so in the context of employers who are attempting to implement something that is innovative or different to the industry standard terms and conditions.
Access to industrial action
In the lead up to the recent Federal election, the Coalition criticised the FW Act’s protected industrial action regime, which it claimed allowed ‘unscrupulous union bosses’ to ‘strike first, talk later’.
This followed the Full Federal Court’s decision in JJ Richards & Sons Pty Ltd v Fair Work Australia (2012) FCAFC 53 and recommendations from the Fair Work Review Panel to restrict access to protected industrial action until later in the bargaining process.
It now proposes to address these shortcomings by requiring that the employees’ claims are ‘reasonable and sensible’ and genuine, meaningful discussions between the parties have already occurred.
These additional requirements have the potential to significantly restrict access to industrial action during bargaining. This in part will be dependent on how the par- ties conduct themselves in negotiations and the discipline they require of themselves and others in justifying their claims.
Employers should consider how these requirements might be utilised to ensure more constructive negotiations and outcomes.
Enterprise agreement approval requirements
As part of the FWC’s considerations in the enterprise agreement approval process, the government proposes to: amend the BOOT to expressly permit an IFA to confer non-monetary benefits on an employee in exchange for a monetary benefit, and to require the FWC to satisfy itself that the parties have discussed productivity gains during enterprise bargaining if it is to approve an enterprise agreement.
Productivity at the workplace level is one of the core objects of enterprise bargaining.
The amendments proposed address some key areas of concern for employers and employees without implementing substantive structural change to the Fair Work regime. However, they do not provide all the answers.
The most successful bargaining strategies develop over time and with a detailed understanding of the business needs, workforce issues and the legislative regime. Bargaining strategies should be developed well before negotiations commence. The amendments only serve to emphasise this.