In brief - Plan ahead to navigate enterprise agreement danger zones
Decisions from the Fair Work Commission
and anecdotal feedback from employers suggest it is becoming more difficult for employers to negotiate enterprise agreements with unions and have them approved. Acknowledging the challenges of the current industrial landscape, former Vice President of the Fair Work Commission, Graeme Watson, recently described the Australian workplace relations system as a “danger zone” for businesses.
Employers who have expiring enterprise agreements should pay careful attention to the nominal expiry date in agreements, and plan re-negotiation strategies around industrial danger zones to minimise adverse industrial consequences.
Protected industrial action process
Under the Fair Work Act 2009 (Cth)
, enterprise agreements nominally expire up to four years from their approval date. Once the nominal expiry date passes, the agreement remains operative, but employees are able to take protected industrial action in support of a new enterprise agreement, provided that action is authorised by a protected action ballot. Unions may also apply pressure to an employer and seek orders from the Fair Work Commission. This requires the employer to bargain in good faith for a new enterprise agreement.
from the Australian Bureau of Statistics
indicates a slight increase in days lost to industrial disputes, which are at their highest levels since December 2013. The construction industry accounts for 42% of total working days lost due to industrial action. This is largely as a consequence of campaigns by the Construction, Forestry, Mining and Energy Union (CFMEU).
Four considerations for employers when planning for enterprise bargaining negotiations
We recommend that employers plan at least six months in advance for enterprise bargaining negotiations. During this period, there are four things employers should consider:
- anticipated wage increases
- the implication of penalty rates arising from the Fair Work Commission decision to reduce Sunday and public holiday penalty rates in the modern awards
- changes to the agreement aimed at maximising organisational efficiencies and productivity
- employers with limited experience bargaining with unions may also wish to consider appointing a specialist industrial relations expert as the company's bargaining representative, to ensure a level playing field during the negotiations
Three danger zones that need to be considered in enterprise bargaining
The following “danger zones” under the Fair Work Act, often overlooked by employers, will need to be considered strategically to maximise industrial outcomes in bargaining:
- 90 days before the nominal expiry date: Unions can seek "bargaining orders" from the Fair Work Commission 90 days out from the nominal expiry date of an enterprise agreement, or once the employer has asked employees to vote on a new enterprise agreement, whichever is earlier. These orders require employers to comply with good faith bargaining requirements. Unions can also seek a "majority support determination" to require the employer to negotiate an enterprise agreement
- 30 days before the nominal expiry date: Unions can obtain a "protected action ballot" at least 30 days before the nominal expiry date. This will determine whether employees are willing to undertake protected industrial action to support and advance claims in the proposed enterprise agreement
- after nominal expiry date: If the nominal expiry date passes, employees can take protected industrial action to support or advance claims in respect of an agreement that will cover them. The action may be in the form of strikes, a ban on overtime, or a ban on performing certain tasks
Potential consequences of failure to prepare to bargain for new enterprise agreements
Employers who fail to make preparations to bargain for a new enterprise agreement before the nominal expiry dates passes are likely to suffer industrial consequences. These consequences may include disruption due to strikes and other forms of industrial action, or an enterprise agreement containing union centric clauses that stifle productivity.
This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2020.