Tag Archives: Introduction to Enterprise Bargaining and Agreement Making

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

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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. 

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

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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).

Innovation in Enterprise Agreements: How to stay ahead of the game

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Erin Lynch, Senior Associate

Enterprise agreements (in a variety of forms) and their use has ebbed and owed over time, swaying one way or the other depending on the persuasion of the Government of the time. Not only is the use of enterprise agreements, particularly versus the use of statutory or common law individual contracts of employment, a source of debate in Australia, but also the content in enterprise agreements has come under significant scrutiny.

Consequently, clauses in enterprise agreements must evolve and change to reflect varied legislative requirements as well as changing needs in the economy. As such, it is important that, rather than simply “rolling over” employers consider the productivity improvements that can be gained through innovative use of enterprise agreement terms.

As we come to the end of the fifth year since the commencement of the Fair Work Act 2009 (Cth) with many enterprise agreements having a nominal expiry date of not more than four years and the advance release of the Building and Construction Industry (Fair and Lawful Building Sites) Code 2014 it is timely to reflect generally on the use and content of enterprise agreements and look forward to what we expect in the future.

Consistent with this theme the Fair Work Commission is establishing a database of model enterprise agreement clauses adopting one of the themes under the Commission’s Future Directions of “productivity and engaging with industry”, as detailed in Future Directions 2014–15: Continuing the Change Program.

It is important that employers regularly review their enterprise agreements as there can be times where Award conditions may be in fact be more beneficial to employees, as is the current case with a national retailer. Enterprise bargaining negotiations failed between the national retailer and the Shop, Distributive and Allied Employees’ Association, with the union convincing the Fair Work Commission to terminate the retailer’s first ever collective agreement that had a nominal expiry date of September 2012. As a result of the failed negotiations and taking a hard line stance, the retailer must now follow the conditions set out in the Modern Award, giving the retailer less flexibility and control in determining the terms and conditions of employment for employees.

Construction industry clients be aware – building and construction industry (fair and lawful building sites) code 2014

On 17 April 2014, the Minister for Employment, Senator Eric Abetz, published an advance release of the Building and Construction Industry (Fair and Lawful Building Sites) Code 2014 (the “Code”). The Code provides the Commonwealth Government’s expected standards of conduct for all building industry participants that seek to be, or are, involved in Commonwealth funded building work.

The Minister announced that the Code will come into effect when the Building and Construction Industry (Improving Productivity) Bill 2014 commences and has said that enterprise agreements and other “procedures” will no longer be able to contain “restrictive work practices” or “discriminatory provisions”.

Once the Code commences then entities covered by it that have enterprise agreements made after 24 April 2014 that do not meet the Code will not meet the key criteria for eligibility to tender for, and be awarded, Commonwealth funded building work.

For example, clauses and practices that will not be permitted by the new Code include:

  • an agreement or practice that prohibits or limits the employment of casual or daily hire employees;
  • an amount paid that nominally incorporates payment for ordinary time and other matters such as overtime and allowances in one loaded rate;
  • an arrangement or practice whereby employees are selected for redundancy based on length of service alone; and
  • “one in, all in” clauses where, if one person is offered overtime, all the other workers must be offered overtime whether or not there is enough work.

PCS recommends that any employer in the construction industry that intends or may bid at any time for Commonwealth projects or other work, carefully consider the terms of any agreements about which they are bargaining with their employees.

“It is important that employers regularly review their enterprise agreements as there can be times where Award conditions may be in fact more beneficial to employees.”

Beneficial leave provisions

An employer recently had an enterprise agreement approved which allows employees access to six days of compassionate leave per year. The clause is said to recognise that when this type of leave is taken it usually requires employees to travel long distances. The provision of six days’ compassionate leave is three times the statutory standard for compassionate leave.

In addition to the increased flexibility around compassionate leave the enterprise agreement also allows long-serving employees to cash out personal leave if they retain at least 30 days of accrued personal leave. After completing ten years of service an employee will be able to cash out ten days of personal leave and a further five days after 15 years’ service and then every five years thereafter.

With the recognition of domestic violence as a reason for requesting flexible working arrangements we may also see an increase in clauses entitling victims of domestic violence to paid leave. In 2010 a Victorian employer agreed on a groundbreaking clause entitling victims of domestic violence to 20 days’ paid leave each year. Since then Sydney University’s Professor Marian Baird who has undertaken a study says that similar rights had been included in more than 100 agreements or state public service awards covering more than one million workers.1

Increases in pay

The Department of Employment’s “Trends in Federal Enterprise Bargaining”2 report shows that the agreements approved by the Fair Work Commission in the December 2013 and March 2014 quarter paid an average 3.6% increase to employees.

On an industry basis construction (4.7%) and education (3.7%) increased the average and health and community services (3%) and finance and insurance services (3.3%) pushed the private sector average down.

What does this mean for us?

PCS encourages those employers with enterprise agreements or those thinking about adopting an enterprise agreement to use clauses such as the ones described above as a way to have terms and conditions of employment that suit their operation and give employees something more beneficial than the award. Clauses such as the ones discussed above can also be used to attract and retain key staff.

  1. An equality bargaining breakthrough: Paid domestic violence leave Marian Baird, Ludo McFerran and Ingrid Wright, JIR published online 23 January 2014
  2. “Trends in federal enterprise bargaining December quarter 2013”, http://employment.gov.au/trends-federal-enterprise- bargaining

 

 

 

Unions now able to force employers to bargain through fear of industrial action: the impact of the JJ Richards & Sons case on enterprise bargaining

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Kathryn Dent, Director and Dimi Baramili, Graduate Associate

Bargaining under the Fair Work Act

The Fair Work Act 2009 (Cth) (“FW Act”) provides a specific process which must be followed in order for industrial action to be “protected”. The requirements for protected action are quite rigid, with any action taken outside this process deemed “unprotected” thus exposing individuals to liability.

In order for industrial action by employees to be protected the first step is for a protected action ballot, which requires a vote to be held as to the form of industrial action before it can be legally commenced. Section 443 of the FW Act further provides that Fair Work Australia (“FWA”) can order a protected action ballot once an application has been made under s437 and the applicant has been “genuinely trying to reach an agreement” with the relevant employer. In practice, it had been commonly held that attempts to “genuinely reach an agreement” could only occur once formal bargaining had commenced.

However, as the recent case of TWU v JJ Richards & Sons Pty Limited [2012] FWA 5609 (“JJ Richards & Sons”) demonstrates, bargaining need not be commenced before a protected action ballot order can be obtained.

In effect, the lowered threshold of what is “genuinely trying to reach an agreement” means that it will be easier for “applicants”, such as unions, to successfully obtain a protected action ballot which, in theory, makes it easier for protected industrial action to take place.

The background to the JJ Richards & Sons case

In this case, the Transport Workers Union (“TWU”) initially wrote a letter to the relevant employer, JJ Richards & Sons, requesting that it enter into negotiations for a relevant enterprise agreement. JJ Richards & Sons refused to enter negotiations as it deemed the entitlements under the existing enterprise agreement to be sufficient. Several months later the TWU applied to FWA for a protected action ballot which was successfully granted.

JJ Richards & Sons appealed this decision on the basis that s443(1)(b) of the FW Act only allows a protected action ballot order to be made where the applicant has “genuinely tried to reach an agreement.”

Therefore, JJ Richards & Sons argued that in order to be deemed to have attempted to “genuinely reach an agreement” bargaining had to have actually commenced between itself and the TWU. JJ Richards & Sons argued that as bargaining had not commenced this element was not satisfied, and in addition, no majority support determination had been made. A majority support determination is available to employees to force an employer to bargain if they refuse. Therefore, it was expected that in line with common practice, the TWU would seek a majority support determination prior to taking industrial action so as to formally commence the bargaining process.

The full bench decision of Fair Work Australia

On appeal, the Full Bench of FWA upheld the initial decision and protected action ballot order. It held that s443 (the discretion to issue a protected action ballot order) is focused on whether the applicant was “genuinely trying to reach an agreement”, which was based upon an interpretation of the ordinary words used and did not impose a requirement that bargaining already be commenced. The Full Bench looked at the FW Act more generally and agreed with the first instance decision that the “genuinely trying to reach agreement” requirement is a broad requirement, and that to establish parties was not “genuinely trying to reach an agreement” is a question of fact to be determined by the relevant circumstances. The Full Bench held that there was no legislative intention to require bargaining to be commenced before seeking an order, as otherwise the legislature would have used words to that effect in the section.

The Federal Court decision

JJ Richards & Sons and the Australian Mines and Metals Association (“AMMA”) appealed for a judicial review of the Full Bench decision. They argued that when looking at the FW Act more broadly, s443 (the ability to issue a protected action ballot order) was crucial to the bargaining process, therefore bargaining needs to have been commenced for an order to be available.

The Federal Court dismissed this argument, instead, upholding FWA’s interpretation of s443, and the order. The Federal Court was of the view that bargaining was not required to have commenced before a protected action ballot order could be made, as it was not a specifically stated pre-condition in the FW Act. The Federal Court was of the view that if this were a pre- condition it would have been stated explicitly in the section, therefore, they were not willing to imply this extra condition. The only two pre-conditions as to the making of a protected action ballot order are that an application under s 437 had been made and that the FWA was satisfied that each applicant has been and is genuinely trying to reach agreement with the employer of the employees who are to be balloted. They also noted that other provisions in the FW Act could be used to force an employer to bargain.

Lessons for employers

This case represents a fundamental shift away from the commonly held belief as to when the enterprise bargaining process under the Act has commenced and therefore, the point of time in the process when an employee or a bargaining representative on their behalf can more forcefully agitate claims based on a threat of industrial action. The consequence of this decision is that industrial action can potentially be taken where negotiations have not yet commenced, or at a minimum be threatened so as to force employers to come to the table. Employers need to be prepared to seriously entertain requests to bargain and to ensure if they are of the view that the attempts to reach an agreement are not genuine they have the evidence ready to demonstrate this in order to oppose the granting of a protected action ballot.