Enterprise agreement – good faith bargaining for national system employers
Enterprise bargaining is the process of negotiation between an employer, the employees and bargaining representative(s) with the purpose of making an enterprise agreement.
From July 1, 2010 the Fair Work Act (Cth) 2009 (the Act) replaced collective agreements and individual agreements with enterprise agreements. Four types of enterprise agreements can be made at an enterprise level:
- Single-enterprise agreement made between a single employer
- Multi-enterprise agreement made between two or more employers
- Greenfields agreement which is made in relation to a new enterprise of the employer or employers before any employees are employed by the employer
- Low paid multi-employer.
When does bargaining commence?
Bargaining commences where the employer initiates or agrees to bargain with the employee or majority support.
The Act requires employers to inform their employees of their right to be represented by a bargaining representative. This notification should be given to any employee who will be covered by the agreement and should not be given any later than 14 days after the start of the bargaining process.
Who are bargaining representatives?
The Act specifies that the following person or body may be a bargaining representative:
- An employer covered by the agreement
- A trade union who has a member who would be covered by the agreement which it is eligible to represent
- A trade union that has made an application to the Fair Work Commission to be a low paid bargaining representative
- Any person identified in writing as a bargaining representative by an employee or employer covered by the agreement.
Unless an employee appoints themselves as a bargaining representative they will not automatically be their own default representative. If they are a member of a trade union, this organisation will be their default bargaining representative.
What is good faith bargaining?
The Act outlines good faith bargaining requirements that bargaining representatives must adhere to:
- 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
- recognising and bargaining with the other bargaining representatives for the agreement.
The good faith bargaining requirements outlined in the Act do not require:
- a bargaining representative to make concessions during bargaining for the agreement, or
- a bargaining representative to reach agreement on the terms that are to be included in the agreement.
The Fair Work Commission must be satisfied before approving an enterprise agreement that the bargaining representatives have not contravened the good faith bargaining requirements.
It is important to note that a bargaining representative must not be involved in pattern bargaining. This involves bargaining in two or more agreements to seek common agreement terms and conditions.
What happens if a party does not engage in good faith bargaining?
If a party does not engage in good faith bargaining a dispute may arise whereby one or more of the bargaining representatives can make an application to the Fair Work Commission to assist them in resolving the dispute. The Fair Work Commission can facilitate the bargaining process by issuing a bargaining order.
The Fair Work Commission will only issue a bargaining order if they are satisfied:
- one of more of the bargaining representatives are not meeting the good faith bargaining requirements
- the bargaining process is not proceeding efficiently or fairly because there are multiple bargaining representatives for the agreement
- the applicant has complied with the requirements of the Act including notifying relevant bargaining representatives of concerns.
Bargaining orders can impose certain actions, requirements and restrictions on bargaining representatives intended to promote good faith bargaining.
To uphold the integrity of existing agreements, the Fair Work Commission will not be able to make good faith bargaining orders until 90 days before the nominal expiry date of an existing collective agreement if the employer has not offered employees a new agreement.
If a bargaining representative contravenes a bargaining order the Fair Work Ombudsman can take legal action and impose penalties of up to $63,000 for a corporation and $12,600 for an individual. If the bargaining representatives fail to comply with a bargaining order issued by the Fair Work Commission, a serious breach declaration can be ordered.
If the agreement is not finalised within 21 days from when this order is issued the Fair Work Commission can make a workplace determination. This will only occur if the Fair Work Commission is satisfied that all other reasonable alternatives to reach agreement have been exhausted and that agreement will not be reached in the foreseeable future.
CCIWA can provide members with assistance in drafting agreements and information on the bargaining process. For more information please contact the CCI Employee Relations Advice Centre on (08) 9365 7660 or email email@example.com.