May 25, 2023
6 June 2023 heralds more change in workplace relations for business.
Revamped and much expanded multi-employer bargaining will commence, employees may be dragged into enterprise agreements whether willing or not, employees seeking flexibility and parental leave get ramped up rights, and pay secrecy prohibitions will be expanded and penalties for non-compliance are applied.
Business is reeling under this onslaught of change. We will tell you what it means.
What are the changes to bargaining disputes procedures (intractable bargaining disputes) and PABOs?
Do I have to bag a bargain even if I don’t want one?
Enterprise bargaining is where terms and conditions of employment are set at an individual enterprise level, rather than through an industry or occupation level award.
In the new world, it’s much easier for employee organisations (unions) to start the process of bargaining with an employer for a single-enterprise agreement without the employer’s agreement. In particular, they’ll be able to force an employer to bargain where:
- the proposed single-employer agreement replaces an earlier single-employer agreement;
- it has been less than five years since the earlier agreement’s nominal expiry date; and
- the proposed agreement will cover the same, or substantially the same, employees that were covered by the earlier agreement.
These changes operate alongside new provisions about bargaining orders which enable unions to apply to the FWC for bargaining orders if they have made a written request to an employer to bargain for a single-enterprise agreement.
So does the FWC have more power to impose decisions on the parties?
Under the old system, the FWC had limited power to arbitrate disputes. This was mainly confined to circumstances where there was a serious and sustained breach of good faith bargaining in respect of which a serious breach declaration has been made, or protected industrial action was terminated by the FWC.
The FWC now has beefed up powers to arbitrate bargaining disputes, with intractable bargaining declarations replacing serious breach declarations and determinations.
In the new world, any bargaining representative can apply for an intractable bargaining declaration except in relation to a proposed cooperative multi-enterprise agreement (which we explain below).
The FWC will make the declaration where:
- the FWC has dealt with a bargaining dispute;
- the applicant participated in the dispute;
- there is no reasonable prospect of agreement; and
- it is reasonable in all the circumstances to do so.
The FWC may order a post-declaration negotiation period for a specified time.
The Full Bench of the FWC may make an intractable bargaining workplace determination if there are outstanding disputes after a declaration is made, or if there is post-declaration negotiation period, after that period. The FWC will determine the outstanding issues in dispute, with the FWC determination becoming part of the determination and binding on the employer and employees.
This means unions and employers have an alternative source of leverage and bargaining strategies will need to adapt to address this.
What about industrial action?
Before 6 June, a protected action ballot order (PABO) pressed the button for employees to vote up protected industrial action. Protected industrial action then usually commenced within 30 days of the ballot approval result.
However, in the new world those bargaining for single enterprise agreements will be forced back to the table before the PABO closes for a mandatory conciliation conference. A “no show – big stick” will punish bargaining representatives who fail to attend where any subsequent industrial action will be unprotected.
This mandatory conciliation may present an opportunity to resolve bargaining. It will also take resources away from a business at a time when contingency planning may be occurring.
If the conciliation is not successful, employees still have 30 days from PABO results to commence industrial action. They must provide either three days’ notice (for single enterprise agreements) or 120 hours’ notice (for multi enterprise agreements) or up to seven days’ notice (if ordered by the FWC).
What does this mean for employers?
The balance of power between employees and employers when conducting negotiations on enterprise agreements has been changed. We suggest employers review their bargaining strategies and make necessary changes to plans to take these changes into account (including by contingency planning in advance).
What are the changes to the Enterprise Agreement approval process and Better Off Overall Test and why should I care?
Is the approval process simpler?
The process for FWC approval of enterprise agreements has been ‘simplified’ for employers and focuses on whether there is genuine agreement between the parties.
The FWC’s decision about “genuine agreement” will align with the Statement of Principles on Genuine Agreement.
Broadly speaking, genuine agreement requires employers to demonstrate an authentic exercise in agreement-making, including:
- by giving employees information about bargaining and their right to be represented by a bargaining representative;
- by providing employees with a reasonable opportunity to consider a proposed agreement and become informed about it prior to a vote;
- by explaining the proposed agreement terms and their effects to employees; and
- by providing employees with a reasonable opportunity to vote on an agreement.
The FWC will also consider any other matters it considers are relevant. For example, it is likely the FWC will look at employees’ comparable rates of pay under the proposed enterprise agreement when deciding whether employees have sufficient interest in the agreement. This is consistent with Full Federal Court decision in One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union (2018) 262 FCR 527. In that case the Full observed that whether an agreement has been genuinely agreed involves consideration of the authenticity of the agreement of the employees, including whether the employees who voted for the agreement had an informed and genuine understanding of what was being approved.
What does this mean for employers?
The stated goal is simplification but the increased discretion given to the FWC means it is very important for employers to be aware of the Statement of Principles and monitor how it is applied in future decisions of the FWC.
Also, voting employees must have a “sufficient interest” and be “sufficiently representative” of employees who will be covered. This means the voter cohort must authentically represent employees in terms of size and industry, occupation and classification.
Businesses must ensure they avoid:
- a small cohort of employees (paid above the agreement) voting up an agreement that will cover more employees in the future; and
- employees engaged in one industry, occupation or classification voting up an agreement that covers employees across a substantially wider range of industries, occupations or classifications.
Are the changes to the Better Off Overall Test better?
The Better Off Overall Test (BOOT) provisions have been revised to make significant changes to:
- which employees need to be better off overall;
- how the FWC approaches the application of the BOOT (i.e. “reasonably foreseeable employees” rather than “prospective award covered employees” and reasonably foreseeable patterns or kinds of work or types of work); and
- the measures the FWC can take to address any BOOT concerns.
The post 6 June BOOT removes unnecessary complexity. The FWC will no longer conduct line-by-line assessments of a proposed enterprise agreement against the terms of the underlying Modern Award. This was a source of much frustration for employers.
Instead, the BOOT will be a global assessment, with the FWC having regard only to patterns or kinds of work, or types of employment, that are reasonably foreseeable at the time of the BOOT.
As a motivator for all parties, if the agreement does not satisfy the BOOT, the FWC can amend or remove terms so the agreement passes the BOOT. It is the FWC who decides these amendments and not the employers, employees or unions – although the FWC must consider their views. Most parties will wish to avoid this outcome, especially employers.
If the reasonably foreseeable employees or patterns or kinds of work, or types of work change after the test time, employers, employees and unions may apply to the FWC to reconsider whether the agreement continues to satisfy the BOOT. If it doesn’t, the FWC may accept an undertaking or amend the agreement. An amendment operates seven days after the Commission makes the amendment or another day specified in the amendment, which may be a day before the amendment is made.
What does this mean for employers?
It should be easier for employers to demonstrate that employees have genuinely agreed to a proposed agreement, and they are less likely to trip up on technicalities.
The FWC is less likely to raise BOOT issues for enterprise agreements especially if the employer and bargaining representatives share a common view. Employer undertakings may be less common as the FWC may amend an agreement on its own motion.
However, agreements are no longer “set and forget”. Employers covered by enterprise agreements will need to revisit BOOT assessments even after the agreement has been approved by the Commission to avoid applications for the BOOT to be reassessed where there has been a material change in working arrangements or the relevant circumstances were not properly considered during the approval process.
Of course, there is also the safeguard against agreements which are not the result of collective bargaining in good faith, including “unrepresentative” and “low voter cohort” agreements.
Businesses will be well advised to:
- undertake a proper analysis of voting cohorts to make sure they are representative;
- be familiar with Statement of Principles on genuine agreement; and
- proactively timetable reviews of BOOT.
What do the new supported bargaining and single interest authorisation bargaining streams do?
We will have three types of multi-enterprise agreements: cooperative workplace agreements, single interest employer agreements and supported bargaining agreements.
Bargaining for a multi-enterprise agreement must involve employee organisations.
The type of multi-enterprise agreement being bargained for will (at least initially) be determined by how the bargaining commenced. For example, if the bargaining commenced:
- by consent, it will be a cooperative workplace agreement;
- because of a single interest employer authorisation, it will be a single interest employer agreement; or
- because of a supported bargaining authorisation, it will be a supported bargaining agreement.
The type of agreement ultimately made will be determined by the authorisation (if any) in place immediately before the agreement was made. For example, if a single interest employer authorisation was in place immediately before the agreement was made, it will be a single interest employer agreement.
Also, the FWC cannot approve a cooperative workplace agreement unless it is satisfied that at least some of the employees covered by the agreement were represented by a union in bargaining.
Which industries are likely to see supported bargaining authorisations?
The supported bargaining authorisation replaces the low-paid bargaining provisions. It is intended to assist employees who have difficulty bargaining at the single-enterprise level. This new authorisation is easier to access and has less stringent criteria.
For example, supported bargaining is likely to feature in low-paid industries such as childcare, aged care etc.
When an application for a supported bargaining authorisation is made, the FWC will assess whether it is appropriate for the parties to bargain together. It will look at prevailing pay and conditions in the relevant industry, whether employers have clearly identifiable common interests (eg, location, nature of enterprise and terms and conditions) and whether the number of bargaining representatives would be consistent with a manageable collective bargaining process and other matters the FWC sees as relevant. For example, imagine what it might be if you had more than 100 employee representatives as is the case in the Apple bargaining dispute. This required the Deputy President of the FWC, DP Hamptom, to make a statement and recommendations on how such difficulties may be managed.
If an employer is specified in a supported bargaining authorisation, the employer cannot bargain for a different type of agreement. That is, they’re locked into making a supported bargaining agreement. The only means of avoiding this is to make an application to vary the authorisation on the basis that the employer’s circumstances have changed.
An employer specified in a supported bargaining authorisation may apply to the Commission for a variation to remove its name from the authorisation. The Commission must vary the authorisation to remove the employer’s name if it is satisfied that, because of a change in the employer’s circumstances, it is no longer appropriate for the employer to be specified in the authorisation. An employer, an employee bargaining representative or a union entitled to represent the industrial interests of an employee in relation to work to be performed under that agreement, may also apply to have an employer’s name added to the authorisation.
What do these changes to multi-employer bargaining mean for employers?
Bargaining will be a reality even for the unwilling or, indeed, the unaware.
The new provisions are designed to make it easier for employees (and their representatives) to bargain for multi-enterprise agreements. The broader eligibility and relaxed preconditions for making authorisations mean employers are much more likely to be compelled to bargain for a multi-enterprise agreement. Moreover, once they’re locked in, it will be extremely difficult for them to extricate themselves from the process. This stream of bargaining will be particularly relevant for medium-sized employers that have traditionally “fallen under the radar”.
What about the single interest authorisation?
Before 6 June, two or more employers who would be covered by a proposed enterprise agreement could apply for a single interest employer authorisation. However, this was limited to certain employers such as franchisees or employers who had obtained a ministerial declaration based on their common interests. This meant it had limited application.
In the new world, the existing limits on access to single interest employer authorisations have been removed and the application process has been simplified so:
- employers with common interests (who are not franchisees) no longer need to obtain a ministerial declaration before applying for a single interest employer authorisation;
- employee bargaining representatives can apply for a single interest employer authorisation, subject to majority support of the relevant employees; and
- both employers and employee bargaining representatives can apply to vary a single interest employer authorisation to add or remove employers.
This is of much wider application and should be on an employer’s radar.
A single interest employer authorisation ceases operation when the relevant enterprise agreement is made or after 12 months (or a longer period, if extended by the FWC). The FWC may extend the period if it is satisfied:
- there are reasonable prospects that the agreement will be made if the authorisation is in operation for a longer period; and
- it is appropriate in all the circumstances to extend the period.
What does this mean for business?
If an employer thinks a single interest employer authorisation or a supported bargaining authorisation will likely be made by the FWC (i.e. the employer will be required to bargain), the best approach may be to consent to that bargaining.
This has two significant upsides:
- employees cannot take protected industrial action; and
- the FWC will not be able to arbitrate the terms and conditions by making an intractable bargaining workplace determination.
So, what about Flexible Working Requests?
More employees are now able to request flexible working arrangements, including those who are experiencing family domestic violence and pregnant employees.
Also dispute resolution has been made available to employees with flexible working arrangements entitlements. Previously only modern award covered employees could seek dispute resolution from the FWC.
Refusal is no longer a slam dunk for award free employees and employers must:
- discuss the request and genuinely try to reach agreement with the employee about other changes that can be made to accommodate their circumstances;
- consider the consequences of the refusal for the employee;
- refuse only on reasonable business grounds; and
- provide the refusal in writing, including the details of the reasons for refusal and any other changes the employer would be willing to make that could accommodate the employee’s circumstances.
Only after taking these steps may an employer refuse a request, on account of reasonable business grounds (which are unchanged). The decision must also have regard to the consequences of the refusal for the employee.
If the dispute is referred to the FWC, the FWC will mediate to try and come to an agreed outcome or may make a recommendation or express an opinion. In some circumstances, the FWC may also arbitrate and issue an order to affirm the refusal, grant the employee’s request or make other changes to accommodate the employee. Employers must comply with this otherwise they may be fined.
For employers already dealing with Modern Award based flexible working requests, this is more of the same. Of course, this may change too after the FWC reviews modern awards regarding this NES entitlement and makes necessary consequential amendments.
The President of the FWC, Justice Hatcher, has issued a Statement providing guidance on how the FWC will deal with this new entitlement.
So, what does this mean for business?
Yoga may be an option. At a minimum there needs to be genuine thought to whether an arrangement of some kind can be permitted for eligible employees.
The President’s Statement should also be a doorstop for HR practitioners.
If a flexible arrangement is agreed, give careful thought to what additional policies or contractual arrangements may be appropriate to ensure that the arrangement aligns with performance and conduct management and is safe.
What about unpaid parental leave extensions?
What do I do with a request to spend more time with their child?
Similar to requests for flexible working arrangements, employers must now give more regard to requests to extend unpaid parental leave. It is no longer a question of simple technical compliance accompanied by a refusal.
When an employee makes a request to extend a period of unpaid parental leave, employers must discuss the request with them, and if they refuse the request, must provide the reasons for refusal in writing. If there is a different extension period that the employer can agree to or is willing to consider, the employee should be informed of this in the written notice.
As is the case for requests for flexible working, the FWC can deal with disputes about refusing to extend unpaid parental leave, including by conciliation, mediation or arbitration. If the FWC arbitrates and an order is issued, a failure to comply may mean a fine.
What does this mean for employers?
The President’s Statement provides excellent guidance on how the FWC will approach requests to extend unpaid parental leave.
Employers must give genuine consideration about whether to agree to an extension. If agreeing, employers would likely benefit from some agreed keeping in touch incentive to ensure that the parent remains embedded in the workforce.
What about pay secrecy?
Pay secrecy prohibitions started on 7 December 2022 for employment contracts entered into after that date and older contracts without pay secrecy provisions. However, those provisions did not apply to older contracts with pay secrecy provisions, unless the contract was varied. In the new world, it is now unlawful for employers to enter new contracts (or other written agreements) with employees that contain pay secrecy clauses. The prohibition does not, however, extend to contractor/consulting arrangements.
Employees will also have a workplace right to ask other employees about, and disclose their own, remuneration and relevant conditions of employment, such as hours of work (i.e. except for older contracts with existing pay provisions). Employees may use this information to determine if their remuneration is fair and comparable to others in the same workplace and/or industry.
Employees cannot be compelled to disclose information about their remuneration and retain the right not to share this information if they do not want to. An employer will breach the general protections provisions of the FW Act if they take adverse action against employees who ask for pay information or employees who wish to keep it secret.
What does this mean for employers?
The only permissible pay secrecy provisions are those in contracts made before 7 December 2022. This exception continues until the contract is varied by agreement. In practice though, the exception will have negligible impact save for the extent of liability if there is widespread non-compliance, in which case it only applies to eligible contracts or instruments.
If an employer is applying a discretionary approach to bonus or incentive awards it may pay to have a structured approach to discrimination. Otherwise, an employee getting a lower award who also has a protected attribute may allege discrimination.