Fair Work Act 2009

Collective bargaining under the Fair Work Act

Collective bargaining regulates the terms under which employers hire employees and the future treatment of future employees. Collective bargaining is a mechanism which allows employees, employers and representation parties to express their objectives with respect to work.

On 1 July 2010, the new bargaining arrangements under the Fair Work Act became operational. Contrary to the individual arrangements that were dominant under the previous coalition Work Choices legislation, the new regulations put a stronger emphasis on enterprise based bargaining with the removal of individual Australian Workplace Agreements. The Act continues to outlaw pattern bargaining and removes the distinction between union and non-union agreements.

Good-faith bargaining

Good-faith bargaining, in which each party 'makes a sincere effort' in negotiations, is at the core of the Fair Work Act.

The Fair Work Act sets out what is meant by good-faith bargaining: attending, and participating in, meetings at reasonable times; disclosing relevant information (other than confidential or commercially sensitive information) in a timely manner; responding to proposals made by other bargaining representatives for the agreement in a timely manner; giving genuine consideration to the proposals of other bargaining representatives for the agreement, and giving reasons for the bargaining representative's responses to those proposals; refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining; and recognizing and bargaining with the other bargaining representatives for the agreement.

Parties may seek bargaining orders from FWC if they believe the other party has failed to comply with these good-faith bargaining obligations. Good faith bargaining does not require a bargaining representative to make concessions during bargaining for the agreement, nor does it require a bargaining representative to reach agreement on the terms that are to be included in the agreement.

Bargaining orders

According to the Act, if one or more of the bargaining parties does not meet the good-faith requirements, the concerned party should first provide the party allegedly not bargaining in good faith with a written notice setting out those concerns to the relevant bargaining representatives, and a reasonable time within which to respond to those concerns. However, Section 229 of the Act states it may not be necessary to comply with the notice requirements should the Fair Work Commission be 'satisfied that it is appropriate in all the circumstances to do so'.

If the party does not respond appropriately to the written notice, the Fair Work Commission has the capacity to make a bargaining order. Should the relevant party continue to ignore the good-faith requirements following this order, the Fair Work Commission can issue a serious breach declaration.

If the bargaining representatives have not settled the issue of non-compliance by the end of the post-declaration negotiating period (generally 21 days), the Fair Work Commission can issue a bargaining related workplace determination.

Bargaining agents

The Fair Work Act 2009 stipulates that employers must take all reasonable steps to notify employees of their right to a bargaining agent not later than 14 days after the notification time of the agreement. The notification time is the time when the employer agrees to bargain or initiates bargaining, when the FWC determines that there is majority support among employees for collective bargaining, or when a scope order (an FWC-issued order to resolve questions about the employees covered by an agreement) comes into operation. The notice must specify that the employee may appoint a bargaining representative to represent the employee in bargaining for the agreement and in a matter before FWC that relates to bargaining for the agreement. An employee organization cannot be a bargaining representative of an employee unless the organization is entitled to represent the industrial interests of the employee. A person may revoke their bargaining agent in writing. Bargaining agents are described in Division 3 of the Fair Work Act 2009, and can be the employer, a person the employer appoints in writing, the employee, or a person an employee appoints in writing.

If the employee is a member of an employee organization that is entitled to represent the industrial interests of the employee and the employee does not appoint another person as their bargaining representative, the organization will be the bargaining representative of the employee. Instruments for appointing a bargaining representative are also set out in Division 3. An appointment of a bargaining representative comes into force on the day specified in the instrument of appointment. The employer must be given the instrument of appointment of the bargaining agent. For an appointment made by an employer, a copy of the bargaining instrument must be given, on request, to a bargaining representative of an employee who will be covered by the agreement.

Mandatory terms

Mandatory terms in an enterprise agreement are set out in Division 5 of the Fair Work Act 2009. Agreements must include a flexibility term, that is, a mechanism for allowing variations in the agreement to meet needs of individual employees while still preserving basic entitlements and protections. They must include the obligation for the employer to consult with covered employees about major workplace changes that are likely to have a significant effect on the employees, and allow for the representation of those employees for the purposes of that consultation. The agreed-on base rate of pay cannot be below that set by the relevant modern award.

Equality bargaining

According to Colling and Dickens (as cited in Baird, Frino & Williamson, 2009) equality bargaining ‘encompasses the collective negotiation of provisions that are of particular interest or benefit to women and/or are likely to facilitate gender equality’. Heery (2006, p. 521; as cited in Baird et al., 2009) refers to ‘equality bargaining’ as ‘bending the bargaining agenda to serve the needs of women workers’.

A number of factors have been identified as contributing to female-friendly provisions being included in collective bargaining agreements. These include social forces, the gender of negotiators, union bargaining priorities, managerial support and bargaining structures.

Dickens (2000, p. 203; as cited in Baird et al., 2009) found that when women are involved in bargaining, equality agendas tend to be longer, and women also place a higher priority on equality issues than do their male counterparts. Furthermore, when women are involved in the bargaining processes, equality measures are more likely to be included in final collective agreements (Dickens 1998, p. 34). Equality bargaining is important today because of the aging workforce, increased female workforce participation, and the need for retention of workers. Under a deregulated system, equality bargaining suffers and research shows unions rank family polices lowest in terms of their bargaining priorities.

Good-faith bargaining (as introduced through the Fair Work Act 2009) may result in a bargaining climate more conducive to bargaining for parental leave provisions than existed under previous legislation. Additionally, the introduction of a statutory government funded parental leave scheme combined with increased (but unpaid) parental leave entitlements via the National Employment Standards (Div 5, Fair Work Act 2009) has raised the community’s and union movement’s consciousness of the matter and is likely to mean that bargaining for improved parental leave will be on union bargaining agendas.

Low-paid bargaining stream

The low-paid bargaining stream creates an internationally unique stream allowing for multi-employer bargaining among previously award dependent employees. Its aim is to encourage low-paid employees and their employers to engage in enterprise bargaining.

The Fair Work Act highlights a number of differences that the low paid bargaining stream incorporates from "normal" bargaining. Multi-employer bargaining is permitted; the act allows, in effect, arbitration. FWC will decide, on application, whether particular employees are eligible. A 'low-paid authorisation' covering more than one employer may be made by FWC.

The Fair Work Act also states that in this stream there will be compulsory conferences, including with third parties; good-faith bargaining orders; dispute resolution; and binding determinations.

This initiative owes its origins to the debates over the impact of Work Choices and attempts to deal with the wider problem of endemic low pay.

Implications and conclusions

The Fair Work Act marked a substantive change in the nature of bargaining arrangements within the Australian industrial relations system. Bargaining will be based collectively at the enterprise level, in contrast to the emphasis on individual agreements, which was encouraged under the Howard government's WorkChoices. At the heart of the new legislation is the principle of 'good faith bargaining', which outlines the necessary behaviours of bargaining parties in negotiations. It could be argued that this framework will encourage greater equality bargaining. Furthermore, the Low Paid Bargaining Scheme is a new and innovative feature of the legislation, which seeks to address the issue of inequality among lower paid sectors of the economy.

More time is needed to truly evaluate the influence of the new bargaining framework. The Rudd Labor government has evidently departed from the individualized framework that was reinforced by the Coalition towards a more collective framework. Therefore, the future of bargaining in Australia will be truly tested in the next few years as test cases come to the forefront of debate.

Minimum standards

The Fair Work Act 2009 reconstitutes the industrial relations safety net. All employees are entitled to the ten National Employment Standards (NES), similar to the five Australian Fair Pay and Conditions Standards under WorkChoices. Additional occupation- or industry-specific conditions are protected through the new modern awards. There are 122 of these awards, compared to over 4000 under the previous system. Another change in the National Employment Standards under the Fair Work Act 2009 is the 'Requests for Flexible Working Arrangements'. This NES allows parents or carers of a child under school age, or of a child under 18 with a disability, the right to request a change in working arrangements to assist with the child's care.

The streamlining of the award system is one of the most significant aspects of the reforms. The government, motivated by a desire to streamline, simplify, and promote flexibility and productivity, set its goal as creating a new minimum standard that all parties in the employment relationship could understand, instead of the over-complicated system of decades past.

Not all commentators agree that the Rudd government struck the right balance between simplification and appropriate protection. Baird and Williamson, for example, argue that the new minimum standards are detrimental to certain groups, particularly women, because the new awards fail to adequately cover women working in social services, call centres and the health sector.

The safety net

Under the National Employment Standards, employees have certain minimum conditions. Together with pay rates in modern awards (which also generally took effect from 1 January 2010) and minimum wage orders, the NES makes up the safety net that cannot be altered to the disadvantage of the employee.

There are ten minimum conditions covered under the NES: a maximum number of hours in the working week, requests for flexible working arrangements, parental leave and related entitlements, annual leave, personal or carer's leave and compassionate leave, long service leave, community service leave, public holidays, notice of termination and redundancy pay, and a fair work information statement.