Bargain for your brand: Enterprise Agreements that protect your brand inside and out

As a business you invest a considerable amount of time, money and effort in order to build a strong brand and maintain its status. Commercial reputation takes years to develop but can be destroyed with a few poor decisions and bad luck. Enterprise bargaining presents a situation that can at worst damage your brand beyond repair and at best offer a chance to solidify the hard work put into creating goodwill. Most businesses recognise the possible risks associated with enterprise bargaining and work to merely manage it throughout the process. Others avoid them altogether and rely solely on modern awards and individual contracts to govern their employment relationships. Instead, we encourage businesses to embrace the opportunity of entering into an enterprise agreement as a way to strengthen and protect their brand.

For example, an enterprise agreement can form an important part of the recruitment, selection and retention strategy by showcasing the terms and conditions of employment offered by your business, especially if it contains innovative clauses. Not only do such terms potentially attract talented employees to come and work for your business, they also provide a competitive advantage over competitors who may be seeking to entice your employees away from your business. 

While enterprise agreements do offer an opportunity for creativity, the Fair Work Commission (“ FWC”) must approve them before they become operational. The FWC’s annual report shows that while only a relatively small number of enterprise agreement were not approved last year, there was still a two-thirds increase in the number of applications that were not approved. This highlights the need to understand all of the requirements under the Fair Work Act 2009 (Cth) (“FW Act”) before beginning negotiations. 

In addition to the stipulations around the content of an enterprise agreement contained in the FW Act there are several important rules that must be adhered to during the bargaining process. There is nothing more potentially detrimental to a business’ brand than when it appears that the employer does not, or is perceived to not, understand their own rights and obligations or respect the rights and obligations of other bargaining parties in that process. Issues such as employers giving employees notice of their representational rights, following good faith bargaining requirements and providing a proper access period and voting procedure can stall negotiations and reflect poorly on the employer even after an agreement is reached. 

If bargaining does hit a standstill, employers face the further risk of industrial action being taken by the employees which can be very public and very costly to the organisation, particularly if that industrial action is ongoing. Preventing protected industrial action largely depends on effectively managing the stakeholders involved in the process. 

The best way to ensure that your business is in a position to appropriately manage the stakeholders throughout the process is to know and understand your own position inside and out. There are a number of practical mechanisms that your business can also adopt, including through establishing bargaining protocols at the outset of the bargaining processes. These protocols are particularly important if there are a number of bargaining parties at the negotiating table. 

We often advise clients to consider and document their expectations about how negotiations will progress, including whether the parties are to exchange written logs of claims setting out their respective positions, whether draft enterprise agreements will be prepared from which the parties are to work from, how matters discussed at meetings are to be recorded (notes and/or transcription), expectations around timeliness of responses and how responses will be delivered. A further way of managing stakeholders is to develop an expansive communications strategy that is flexible, precise, concise and transparent. 

Enterprise agreements not only reduce administrative complexity and add commercial certainty to a business. They also represent a clear strategy for a business to improve its brand and to differentiate itself from its competitors. At PCS we work everyday to achieve these goals for our clients, and we would be happy to assist your business with implementing an enterprise agreement. 

Retrenched employees receive annual leave windfall

Last week Justice Robert Buchanan of the Federal Court clarified the meaning of section 90(2) of the Fair Work Act 2009 (Cth) (“FW Act”) in deciding that at termination employees must be paid their annual leave entitlements at the same rate that this entitlement would have been paid had the employees taken their annual leave during their employment regardless of whether this amount was in excess of the minimum annual leave entitlement required under section 90(1) of the FW Act.

Centennial Northern Mining Services Pty Ltd v Construction, Forestry, Mining and Energy Union (No 2) [2015] FCA 136 (27 February 2015)

In a dispute over the payment of annual leave entitlements under the Centennial Northern Mining Services Enterprise Agreement 2011 (“EBA”), Centennial Northern Mining Services (“Centennial”), a New South Wales coal mine operator and the Construction, Forestry, Mining and Energy (“CFMEU”) offered two competing interpretations of section 90(2) of the FW Act.

Section 90 of the FW Act provides as follows:

“Payment for annual leave

(1) If, in accordance with this Division, an employee takes a period of paid annual leave, the employer must pay the employee at the employee’s base rate of pay for the employee’s ordinary hours of work in the period.

(2) If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.”

Relevantly clauses 19.5 and 19.6 of the EBA provided for different payments for annual leave entitlements, with employees who took annual leave during their employment receiving a greater benefit than employees who had their annual leave paid out as a result of termination of employment. 

Centennial argued that the entitlement in section 90(2) is an guarantee of the minimum obligation to annual leave under section 90(1) (i.e. base rate of pay for the employee’s ordinary hours of work in the period) and that this did not prevent Centennial from differentiating between the annual leave paid at termination of employment and annual leave during the course of the employment provided both were above the minimum entitlement in section 90(1) of the FW Act.

Conversely the CFMEU asserted that “the amount that would have been payable” in section 90(2) of the FW Act was not just a re-statement of the minimum obligations under section 90(1) but instead required a payment of whatever was payable if the annual leave was taken during the employment. This meant that rather than the ordinary rate of pay in section 90(1) Centennial employees who had their employment terminated should have their remaining annual leave paid at their ordinary rate of pay plus the greater of either a 20% loading OR rostered overtime, shift allowance, weekend penalty rates and bonus (which was consistent with the leave payments they would have been entitled to under clause 19.6 of the EBA had they taken their annual leave during their employment).

Justice Buchanan agreed with the CFMEU stating at [34] that:

“…s 90 (2) (unlike s 90 (1) is not confined to a statement of a minimum obligation, but is a statement to the effect that an employee should not suffer a reduction in the value of unpaid leave if employment comes to an end while paid annual leave remains untaken.”

What does this mean for employers?

This interpretation of section 90 of the FW Act means that employers should:

  • review their current EBAs, contracts and policies and consider the enforceability of clauses that provide a lesser entitlement to annual on termination of employment;
  • not offer increased annual leave payments during an employee’s employment if they are not prepared to pay the same entitlements at termination; and
  • consider seeking legal advice if they are concerned about previous payments of annual leave under a mistaken interpretation of section 90(2) of the FW Act.

Looking forward

The confusion associated with section 90(2) of the FW Act will hopefully be resolved once the Fair Work Amendment Bill 2014 (which is currently stalled in the Senate) is passed. The proposed bill aims to repeal section 90(2) of the FW Act to enable employers the flexibility to offer different rates of pay for annual leave during employment and at termination. 

Bargaining for your brand: Enterprise Agreements that protect your brand inside and out

A properly negotiated enterprise agreement can bring about significant productivity improvements and flexibility to your workforce as well as protecting your brand and organisation. Almost half a decade on from the approval of the first batch of enterprise agreements under the Fair Work regime, we look back at some key trends as well as what you can do to negotiate an agreement that works for your organisation.

This webinar explores:

  • trends in enterprise agreements;
  • how to introduce productivity improvement and flexibility into your agreement;
  • the Enterprise Bargaining process – key steps and common mistakes; and
  • how to effectively manage the relationship with bargaining representatives (including unions).

International Women’s Day: Make It Happen

International Women’s Day is celebrated internationally on 8 March each year. It is a day for recognising women’s achievements but also for acknowledging barriers that women face in achieving “gender equality”. From the workplace perspective, goals for gender equality for women include:

  • Increasing participation generally, but also across particular industries;
  • Achieving pay equity;
  • Ensuring the number of women in leadership positions increases; and
  • Eradicating discrimination and harassment against women.

The 2015 International Women’s Day theme is “Make It Happen”. It is timely to reflect on practical ways in which we can make gender equality happen in the workplace:

  1. Make it a goal – the most senior levels of management can consciously recognise gender equality as part of corporate strategy. This applies equally for both larger organisations and smaller organisations. Depending on the management structure of an organisation, it may require enlisting men to positively champion the rights of women in the workforce.
  2. Be proactive – identify actual instances of and risk factors for gender inequality in the workplace. This could be achieved in a number of ways such as through targeted reviews, staff surveys or workgroup meetings. Once problem areas are identified, remedial action can be taken.
  3. Review recruitment and promotion processes – are they fair and equitable? Consider indirect or “hidden” requirements that may discriminate against women.
  4. Carefully consider how flexible work practices can be achieved – this is relevant not only to women returning to work from parental leave or who have individuals to care for, but also to their partners who may have carer responsibilities while women work. It is also relevant to women who may be discriminated against for other reasons, such disability.
  5. Aim to eliminate all forms of discrimination and sexual harassment in the workplace – discrimination against women can be based on a range of grounds, including sex, family/carer responsibilities, age, domestic violence, disability, race and pregnancy. An organisation can guard against discrimination and harassment through a combination of measures including policies, procedures, employment contracts, training and taking remedial action when an issue does arise.
  6. Think outside the square – there are always different ways to do things and just because they haven’t been done that way before, it doesn’t mean they shouldn’t.