5 December, 2022

Legislative amendments – Enterprise agreement bargaining and approval

Blog | Industry News

Comprehensive Fair Work Act 2009 (Cth) changes have been passed by Parliament in the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022. For a general summary of all changes and links to more detailed notes on each topic, please see our summary ,EMA Note.

This EMA Note focuses on the legislative changes related to bargaining for and approval of new enterprise agreements. The changes to enterprise agreement bargaining are among the most substantive (and voluminous) changes.

EDIT: The previous content in this EMA Note referring to employers needing to seek written agreement from unions before putting a proposed enterprise agreement to a vote applies only to multi-enterprise agreements. This requirement does not apply to singe enterprise agreements. We have updated this EMA Note’s content and apologise for any inconvenience this may have caused.

One of the most substantive amendments that has been the focus of the Labour Party has been to enterprise bargaining. The Bill looks at multiple aspects of this, including unions’ powers to begin the bargaining process, protected industrial action, and supported bargaining.

The overall effect of these changes gives considerable additional bargaining power to unions in the enterprise agreement negotiation and approval process.

What will change and when?

This note is not a comprehensive explanation of the changes and should not be relied on as advice. In summary:

• Employee bargaining representatives will be able to initiate bargaining for an enterprise agreement in writing provided a current enterprise agreement exists, that agreement has passed its nominal expiry date, the proposed agreement will cover the same or substantially the same group of employees, and no more than five years have passed since the enterprise agreement’s nominal expiry date. More information on this change is provided below.
• Before putting a multi-enterprise agreement to vote, employers must first seek written agreement from each employee organisation that is a bargaining representative.
• An employer’s ‘access period’ requirements relating to providing employees with a written text of the agreement and information about how employees can vote on the agreement have been removed. Instead, the Fair Work Commission will be required to publish a statement of principles which deals with matters including providing employees with a reasonable opportunity to consider and then vote on the enterprise agreement.
• Employers still have an obligation to take all reasonable steps to explain the effect of the terms of the agreement to employees.
• The Commission may make intractable bargaining declarations in circumstances where parties have been involved in a bargaining dispute and the Commission is of the view that, without making a declaration, the parties will not reach agreement. These provisions replace the current ‘bargaining related workplace determinations’ provisions.>
• The Commission must, in undertaking the better off overall test (“BOOT”), give primary consideration to a common view of bargaining representatives about whether the agreement passes the BOOT. The Commission will also have the power to specify an amendment if it considers an agreement does not pass the BOOT, which will form part of the agreement. More information on this is provided below.
• After the Commission makes a protected action ballot order, it must also direct parties to attend a conference to participate in mediation or conciliation in relation to agreements. The Commission may also express opinions and make recommendations. This should assist parties in resolving issues and minimise the impact of any proposed industrial actions (and potentially prevent the industrial action from occurring if parties can reach agreement with the Commission’s assistance).

Amendments related to initiating bargaining commence the day after the Bill receives royal assent. Other amendments described above will commence on a day to be proclaimed, but no later than six months after the Bill receives royal assent.

What should employers do now?

Initiating Bargaining

Employee bargaining representatives will be able to initiate bargaining by writing to the employer. The main practical effects of this amendment will be allowing employee bargaining representatives to commence bargaining or unions to commence bargaining without a majority support, provided the agreement has not gone beyond five years past its nominal expiry date.

However, the Bill has not removed majority support determination provisions, which suggests that unions may still be more inclined to seek a majority support determination to, in the least, get a feel for their members’ appetites for a new agreement before seeking to bargain for one.

Employers should begin to create a plan for how they intend to respond to requests to bargain, including for internal and external resources that will be needed to participate in the bargaining process. EMA Consulting can assist with preparing for such a plan, or responding to a bargaining request, as well as representation in enterprise agreement negotiations should it be needed.

Better Off Overall Test

The changes to the BOOT require the Commission to primarily consider a common view by bargaining representatives. The effect of this is that, if all bargaining representatives are of the genuine view that the agreement leaves all employees better off overall, the Commission will give considerable weight to that view. While the intention of this amendment was partly to reduce the administrative burden on the Commission, the amendments do not change the requirement for the Commission to undertake a global assessment and satisfy itself that each employee covered by the agreement is better off overall when compared to the award. It is therefore unclear on its face whether this amendment will have much practical impact.

A likely welcome change by employers is to address requirements for employers to give undertakings (or for agreements to be rejected) based on certain ‘worst case’ scenarios that are possible and that could leave individual employees worse off when compared to an award, but are unrealistic in practice. The Commission must only take such situations into account if ‘reasonably foreseeable’, taking into account the views of employers and employees.

The amendments also allow a party covered by the agreement to apply for the Commission to reconsider whether it passes the BOOT in relation to new patterns of work not originally considered by the Commission on approval or new types of employment engaged in under the agreement. The practical effect of this is that, where an employer is considering introducing a new pattern of work or type of employment into its business that is covered by an agreement, it will need to undertake an analysis to ensure the BOOT is met.

Employers in conducting BOOT assessments will, at least in theory, be in a better position to undertake the assessment on actual and likely work practices rather than endeavouring to account for every possible scenario. This should reduce some administrative burden both on employers and employees (and their bargaining representatives) in negotiating and drafting their agreements, and also on the Fair Work Commission in assessing agreements.

The Commission will also have the power to make amendments to enterprise agreements in certain circumstances. It remains to be seen how often this power is exercised, but it is likely that the Commission will still give preference to employers providing undertakings in the first instance, as this will allow for the agreement to be consistent with business needs while still satisfying the Commission of any concerns it has.

Given that most of these changes relate to how the Commission must undertake assessments, there is little for employers to do in the short term, as the first handful of agreements will likely involve a bit of trial and error from all parties involved, including the Commission, employers, and unions, as to how to approach the BOOT amendments.

Require further information/assistance?

This EMA Note is not comprehensive advice about your situation and does not cover all your obligations. If you require further information or advice, please contact your Consultant.>

EMA Consulting is not a law firm and therefore does not provide legal advice or services. The information contained within this document and associated material is general in nature and should not be relied upon. If you require specific advice on a particular matter, we recommend that you contact EMA Consulting on 08 8203 1700. Subject to the matter at hand, your EMAC Consultant may recommend that you obtain formal legal advice. If formal legal advice is required, upon your written instruction EMAC will brief your matter to a legal practitioner for this purpose. The contents of this document and associated materials do not represent legal advice.