Enterprise bargaining agreements

Context

Enterprise agreements are collective agreements made by employers and their employees under the Fair Work Act.

The objectives of the Act set out in section 3 include “achieving productivity and fairness through an emphasis on enterprise‐level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action.”

There are also objectives set out in section 171 of the Act which apply specifically to Part 2‐4 Enterprise Agreements. One objective is “to provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits”. The other objective is for the Fair Work Comission (FWC) to facilitate good faith bargaining and the making of enterprise agreements.


Position

Unions have exploited the enterprise bargaining provisions in the Act, bypassing the objectives of good faith bargaining and delivery of productivity benefits.

In addition, Better Off Overall Test (BOOT) has also prevented employers from achieving workplace flexibility and productivity. The new BOOT has effectively taken productivity out of the equation in negotiating an enterprise agreement. This is contrary to the objectives at the beginning of the Act and in section 171. There is no scope for an employer to negotiate flexible pay arrangements and working arrangements that suit the nature of the business.


Recommendations

  • That protected industrial action should be precluded if a union has not obtained a majority support determination, conducted good faith bargaining and discussed productivity gains with the employer
  • Productivity offsets must be included in the good faith bargaining process. If not, then a union should be precluded from taking protected action under the Act
  • Union officials should not be able to act as a bargaining agent for employees outside their union’s coverage
  • Consideration be given to return to the previous system, in which an employer could negotiate with a union or directly with employees
  • Review the process and procedures to approve an Enterprise Agreement. Presently, set-up is too complex for small to medium size businesses to consider using such agreements. The review should also aim to reduce the workload of FWC members, allowing for private agreements between employers and employees
  • Consideration should also be given to returning to a ‘no disadvantage test’ rather than the BOOT, which is too restrictive and prevents employers from achieving flexible arrangements appropriate to their workplace. A simpler cancellation process takes account of changed economic or business operating circumstances.

18 June 2015