Commencing bargaining
Good faith bargaining
Bargaining disputes
Approval of enterprise agreements
Part 2–4 of the Fair Work Act 2009 (Cth) (FW Act) provides a legislative framework for the making of enterprise agreements between national system employers and employees (or their representatives). Broadly speaking, an enterprise agreement is a collective agreement made at the enterprise level which deals with some (but not necessarily all) of the terms and conditions of employment of the employees to whom they apply.
The bargaining process for an enterprise agreement commences when:
- •the employer initiates or agrees to a request from the employees or their unions to bargain
- •a majority support determination comes into effect
- •a scope order comes into effect; or
- •a low-paid authorisation that specifies the employer comes into operation.
See Majority support determinations, Scope orders and Low-paid authorisations and FWC involvement in low-paid bargaining.
Each of these events triggers what is known as a notification time. As soon as practicable, and not later than 14 days after the notification time, the employer must take all reasonable steps to notify the employees who will be covered by the proposed agreement of their right to be represented by a bargaining representative. Such notice must be given in the form of a notice of employee representational rights (NERR).
See Notice of employee representational rights.
Bargaining representativesEmployees and employers may appoint bargaining representatives to represent them during the bargaining process.
Bargaining representatives play a key role in the collective bargaining framework operating under the FW Act.
Part 2–4 contains provisions relating to the appointment and revocation of appointment of bargaining representatives.
These provisions allow for a considerable degree of choice as to whom employers and employees may appoint as their bargaining representative, while also providing that a union is the default representative of any of its members who will be covered by an agreement (unless they appoint someone else).
See Bargaining representatives.
Bargaining representatives for a proposed greenfields agreement are subject to special rules as a result of the unique circumstances in which such agreements are made. See Bargaining representatives for a greenfields agreement.
Bargaining representatives for an enterprise agreement must meet the good faith bargaining requirements set out in s 228 of the Fair Work Act 2009 (Cth) (FW Act).
These obligations relate mainly to the process of bargaining, including requirements to meet with other bargaining representatives, disclose information, give genuine consideration and respond to proposals made by other bargaining representatives.
Going more to the substantive conduct of the parties in negotiations, bargaining representatives must also recognise and bargain with other representatives — and not engage in capricious or unfair conduct that undermines collective bargaining or freedom of association.
However, the good faith bargaining requirements do not require bargaining representatives to make concessions or reach agreement on terms to be included in an agreement.
The good faith bargaining requirements do not apply to a multi-enterprise agreement that is a greenfields agreement.
See Good faith bargaining requirements.
Bargaining ordersNon-compliance with the good faith bargaining requirements may result in the making of a bargaining order by the Fair Work Commission (FWC).
See Bargaining orders.
Serious breach declarationsRepeated breaches of bargaining orders may give rise to the making of a serious breach declaration by the FWC — which could in turn lead to the making of a bargaining related workplace determination (in effect, an arbitrated outcome).
See Serious breach declarations.
Bargaining related workplace determinationsCivil penalties may also be imposed by a court in respect of breaches of bargaining orders, and injunctions or other orders may be granted to ensure compliance.
While the good faith bargaining requirements apply to all agreements (other than multi-enterprise greenfields agreements), the enforcement mechanisms are only available in relation to a single enterprise agreement, or a multi-enterprise agreement for which a low-paid authorisation is in operation.
The Fair Work Commission (FWC) has several dispute resolution roles in relation to collective bargaining under Pt 2-4 of the Fair Work Act 2009 (Cth) (FW Act). These include the FWC’s powers to deal with applications by a bargaining representative for:
- •bargaining orders, to address alleged breaches of the good faith bargaining obligations (see Bargaining orders);
- •majority support determinations, to address an employer’s refusal to bargain for an enterprise agreement (see Majority support determinations);
- •scope orders, to resolve disputes about the proposed coverage of an agreement (see Scope orders); and
- •low-paid authorisations, which enable the FWC to play a significant role in assisting parties with the negotiation of an agreement in the low-paid bargaining stream (see Low-paid authorisations).
In addition, s 240 of the FW Act confers broad powers on the FWC to deal with a bargaining dispute that the parties are unable to resolve themselves.
Where the negotiations relate to a proposed single-enterprise agreement or a multi-enterprise agreement in the low-paid bargaining stream, any one bargaining representative may apply for the FWC’s assistance under s 240 (regardless of whether the other bargaining representatives support the application).
In any other instance (for example, where the proposed agreement is a multi-enterprise agreement not in the low-paid stream), all of the bargaining representatives would need to agree to apply to the FWC for assistance under s 240.
The FWC is able to deal with a dispute under s 240 in any way that it considers appropriate, including by mediating, conciliating, making a recommendation or expressing an opinion.
See Resolution of bargaining disputes in the Fair Work Commission.
Once the employer has negotiated a draft agreement with the other bargaining representatives it may ask the employees who will be covered by the agreement to vote to approve it under s 181 of the Fair Work Act 2009 (Cth) (FW Act).
See Voting process.
An employer cannot request employees to vote on a proposed agreement until at least 21 days after the last Notice of Employee Representational Rights was issued.
Further, prior to a vote taking place, the employer must take reasonable steps to provide employees with a copy of the proposed agreement and information on the terms and effects of the agreement, as well as the voting process. Employees must be given time to consider this information (the access period).
See Preparing for a vote.
Approval application, process and requirementsIf a vote on an agreement is passed with the support of the requisite majority of employees, a bargaining representative for the agreement has 14 days to apply to the Fair Work Commisison (FWC) for its approval. Agreements cannot take effect until they have been approved by the FWC.
The FWC must approve an agreement if a number of detailed requirements set out in ss 186 and 187 of the FW Act are satisfied. There are also certain grounds on which the FWC may refuse to approve an agreement.
An agreement will take effect seven days after approval by the FWC (unless the agreement specifies a later date).
Better off overall testThe most significant safeguard that applies to the approval of an enterprise is that each employee to be covered by the agreement will be better off overall under the agreement than under a relevant modern award: ss 186(2)(d).
The better off overall test (or BOOT) requires the FWC to conduct an analysis of the advantages and disadvantages of the proposed agreement and underling award(s) in order to make a judgment ‘as to whether, taken as a whole, all the benefits provided under [the] agreement more than make up for any loss of award conditions and entitlements’.
Genuine agreementAnother important approval requirement is that the agreement has been genuinely agreed to by the employees covered by it: ss 186(2)(a). This requires consideration of whether:
- •the employer(s) covered by the agreement have complied with the pre-approval requirements in ss 180(2), (3) and (5), and s 181(2)
- •the agreement was made with the requisite majority for approving a single or multi-enterprise agreement; and
- •there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.
- See Genuine agreement.
Among other requirements, the FWC must also be satisfied that the group of employees covered by the agreement was fairly chosen: s 186(3).
An agreement which covers all of the employees of the employer(s) will plainly satisfy the fairly chosen requirement. If coverage does not extend to all of the employees in an enterprise, the FWC will consider, among other relevant considerations, whether the group of employees covered by the agreement is s 186(3A):
- •geographically,
- •operationally, or
- •organisationally distinct.
See Fairly chosen requirement.
Approval of enterprise agreements with undertakingsIf the FWC considers that an agreement does not meet any of the requirements set out in ss 186 and 187, it may still approve the agreement on the basis of an undertaking (or undertakings) provided by the employer under s 190.
