1 November 2015
Alison Spivey, Associate Director and David Weiler, Associate
The enterprise bargaining process is a minefield of legal, financial and reputational risks. However, if done properly, it can also be a very effective way of reflecting and enhancing your business’ brand. What can your business do to manage the risks and get the most out of the bargaining process in terms of branding?
Employers and employees have been engaging in enterprise bargaining at the workplace level for more than 20 years. For some, it has become the norm, the way in which their employment rights and obligations are formed. For others, it is a relatively new process, and one they may not have engaged in voluntarily.
Irrespective of a business’ relative experience in enterprise bargaining, what often gets overlooked is that the way that employers engage in bargaining, and the resulting enterprise agreement (particularly if the terms and conditions in that agreement are unique or innovative), form an important part of the recruitment, selection and retention strategy for a business.
This article explores:
- why an employer might engage in enterprise bargaining, as opposed to choosing another way of regulating the employment relationship with its employees; and
- what steps an employer can take to manage the risks posed to their brand by enterprise bargaining and how they may use the enterprise agreement process to enhance their business’ brand.
There are a number of means available to employers to regulate their relationship with their employees including individual employment contracts, or reliance on award terms and individual flexibility agreements, and enterprise agreements, to name a few.
The reasons as to why employers bargain for an enterprise agreement will differ from business to business. What sets an enterprise agreement apart from the other options from an industrial perspective is that an enterprise agreement:
- allows you to tailor the terms and conditions of employment that you apply to your employees to your business needs;
- showcases the terms and conditions of employment offered by your business in a way that is not typically possible in a job advertisement or interview;
- provides consistency and certainty for your business for the life of the agreement, not only in terms of employee costs, but also in an industrial sense, because parties are prevented from taking industrial action prior to the nominal expiry date of the agreement;
- encourages employee engagement, as employees are provided with an opportunity to have their say about their terms and conditions of employment, whether they actively participate in the bargaining process or choose only to vote on the agreement;
- can be a vehicle of organisational change, if change is on the horizon for your business; and
- can be used to promote a business’ values and culture.
How can your business manage its risk and enhance its brand through enterprise bargaining? There are a myriad ways that an employer can manage the risks posed to their brand by enterprise bargaining and best ensure that the process is as effective from a branding perspective as it is from an industrial one. Of critical importance are:
- the proposed content of the enterprise agreement; and
- the manner in which the employer conducts itself during the bargaining process – not only in terms of how the employer interacts with stakeholders (including its employees and their representatives), but also the commitment of the employer to that process demonstrated by the level of planning the employer has engaged in.
Each of these is discussed further below.
USING THE CONTENT OF THE ENTERPRISE AGREEMENT TO BUILD YOUR BRAND
In recent times, we have witnessed a growing acknowledgement of the enterprise agreement as a potential branding tool, together with an increasing sophistication in how enterprise bargaining and enterprise agreements are used by businesses to meet their strategic objectives. In addition to providing certainty in relation to terms and conditions of employment for the life of the agreement, by including certain terms in an enterprise agreement, an employer can shape and maintain the culture of its business. The terms of the enterprise agreement are in themselves a public statement of what a business stands for and are a reflection of how they intend to treat their employees. This can be a powerful recruitment tool, enticing prospective employees to come and work for your business. These terms can also provide a competitive advantage against competitors seeking to entice employees away from your business whom you otherwise may wish to retain. Another way of building your brand through the content of your enterprise agreement is to include new or innovative terms in that agreement. For the most part, inclusion of these terms tends to be driven by what is happening in society at large when bargaining is occurring. A number of enterprise agreements, particularly those negotiated for large well-known organisations, have sought to introduce additional benefits in relation to such matters as workplace flexibility, parental leave and, more recently, domestic violence leave, as these issues increasingly gain public awareness and understanding.
PROTECTING YOUR BRAND DURING THE BARGAINING PROCESS
Knowing each party’s rights and obligations in the enterprise bargaining process plays a key role in protecting and potentially enhancing your business’ brand. From the outset, it is the employer’s approach to the bargaining process that sets the tone for the negotiations.
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 the rights and obligations of other bargaining parties in that process. Nothing will undermine an employer’s stated commitment to the bargaining process more than poor planning and preparation.
So what do you need to do? In essence, your business needs good planning and preparation before it engages in enterprise bargaining.
Firstly, it is important that you take steps on behalf of your business to understand the enterprise agreement process and the rights and obligations of the parties in connection with that process.
By way of summary, in order for the Fair Work Commission (“FWC”) to approve an enterprise agreement, each of the following requirements must be met:
- all mandatory pre-approval steps must be taken (for example, notification of representational rights and an appropriate access period); • the group of employees covered by the agreement must be “fairly chosen”;
- the FWC must be satisfied that the parties have reached “genuine agreement”;
- no terms of the agreement may contravene the National Employment Standards;
- mandatory terms must be included (see below for further detail);
- unlawful terms are to be excluded;
- additional requirements relating to shift workers, piece workers, school-based apprentices and trainees and outworkers under the FW Act must be met (if applicable); and
- the agreement must pass the “Better Off Overall Test” (BOOT).
In addition, the parties are obliged to bargain in good faith throughout the enterprise bargaining process, as provided for in the legislation.
Secondly, the business must take steps to put in place mechanisms that will allow it to maintain control of the bargaining process to the extent that it possibly can and within the confines of the legislation. Managing the expectations of the stakeholders in the bargaining process, including those of the bargaining representatives at the bargaining table, is crucial to this aspect of your strategy.
There are a number of practical mechanisms that a business can adopt in practice to manage stakeholder expectations, including:
- 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. These commitments may deal with issues such as logs of claims, meeting times and places and the rules of engagement between the parties; and
- developing and committing to an expansive communications strategy. It is preferable that this strategy be developed and in place to the extent reasonably practicable prior to commencing bargaining. However, that strategy will also need to be flexible in order to respond appropriately to developments during the bargaining process, and, above all, ensure precise, concise and transparent communications with stakeholders to avoid any suggestion that the employer is not bargaining in good faith.
Lastly, your business needs to identify its bargaining position – the “yes”, “no” and “maybe” of what will be included in the enterprise agreement – and commit to that position. This includes undertaking appropriate financial modelling to ensure that your business can afford what it is proposing to commit to by way of the enterprise agreement.
While this may seem like a simplistic model, the enterprise bargaining requirements in the legislation are highly technical and can be difficult to navigate for those unfamiliar with the requirements. Failure to adhere to the requirements may ultimately prove to be expensive, with the parties having to potentially renegotiate aspects of the enterprise agreement and then undertake the access and voting periods again.
Whatever your company’s size, an enterprise agreement can provide you with benefits. Building a brand through effective bargaining can set companies apart from the competition while also improving or solidifying an organisation’s culture.
PCS works with its clients to navigate the entire enterprise agreement process in order to ensure that the bargaining benefits both the brand and the business.
Mandatory Terms of an Enterprise Agreement: