As we enter a period of brief reprieve from the Federal Government’s wave of reforms to the Fair Work Act 2009 (Cth) (FW Act), it is time to start looking at how the new provisions are being applied, and what the Fair Work Commission’s (FWC) decisions and commentary tell us about the real-world operation of the legislative reforms.
Likely to be of particular interest to many employers is the Commission’s treatment of supported bargaining authorisations (SBA) in relation to proposed multi-enterprise agreements.
To date, the FWC has already considered and approved one application for a supported bargaining authorisation, bought by the United Workers Union, the Australian Education Union and the Independent Education Union on 6 June 2023 (the same day the relevant reforms took effect), in applying to 64 employers across the childhood education and care sector (Childcare Application).
There is every reason to believe that the Childcare Application is just the tip of the iceberg.
Less than two months after the Commission rendered its decision in the Childcare Application, the Health Services Union and the Australian Education Union followed suite with an application seeking to bring 19 disability services employers in Victoria to the bargaining table.
So, what can employers expect if they are dragged into the orbit of multi-enterprise bargaining via a supported bargaining authorisation?
What is supported bargaining?
Introduced as part of the Government’s 2023 Secure Jobs Better Pay (SJBP) reforms and replacing the former low-paid bargaining scheme, supported bargaining works to assist employers and employees in undertaking collective bargaining.
The Explanatory Memorandum to the SJBP reform bill states that the supported bargaining stream is targeted at employers and industries who lack the skills, resources and power to bargaining effectively, with the focus being low paid industries including aged care, disability care and early childhood education.
Once an SBA is in force, an employer must participate in the bargaining process and cannot seek to commence independent bargaining.
The FWC is obliged to make a SBA if:
- an application has been made; and
- the FWC has considered the matters outlined in section 243(1)(b) of the FW Act and is satisfied that the matters support the application; and
- at least some of the employees are represented by an employee organisation.
The factors for which the FWC must consider in accordance with section 243(1)(b) of the FW Act are:
- the prevailing pay and conditions within the relevant industry or sector;
- whether the employers have clearly identifiable common interests;
- whether the likely number of bargaining representatives for the agreement would be consistent with a manageable collective bargaining process;
- any other matters the FWC considers appropriate.
The FWC’s approach
As the provisions pertaining to SBAs have altered as a result of the SJBP changes, the Childcare Application provides a useful insight as to how the criteria in section 243(1)(b) are expected to be applied.
Pay / conditions in relevant sector
In the Childcare Application, the FWC considered that the meaning of ‘prevailing pay and conditions within the relevant industry or section’ indicated that the required assessment extended beyond the pay and conditions of the employees to whom the SBA will apply and includes an assessment of the entire relevant sector. As such, an applicant can be expected to provide evidence concerning the prevailing pay and conditions within the relevant sector.
The Childcare Application outlined the difference between the old expression, ‘the low paid’, and the new expression, ‘low rates of pay’ in the FW Act. The FWC considered that the difference in these expressions indicates that there is a distinction in the meanings intended. The expression ‘low paid’ refers to the general earnings of employees, while ‘low rates of pay’ refers to the payment for a defined period of work, or for pieceworkers, each completed task or unit of work.
It considered that ‘low rates of pay’ prima facie refers to the circumstance that employees are paid close to the relevant Award rates of pay for their classification, since this is the lowest legal rate of pay applicable to the employee. It further noted that it is likely a wage will not be considered a ‘low rate of pay’ where the award rate is relatively high.
In assessing the relevant pay and conditions in the Childcare Application, the FWC considered data about the average pay within the entire relevant sector. The FWC ascertained the average pay rates within the sector and compared this to the applicable award. Since a large proportion of the sector was paid close to, or at, the award rate, the FWC found that low rates of pay prevailed in the sector.
This indicates that in its assessment, the FWC will rely on generalised data and trends within a relevant sector regarding rates of pay as opposed to the rate of pay provided by the employer subject to the application.
As such, an employer who is contractually paying in excess of the award, or the entity operates in a manner such that the employee receives significant allowances and are therefore well above the minimum wage, may still be subject to an application.
Therefore, the FWC has indicated that, when conducting its assessment, it is not primarily concerned with pay and conditions provided by the employers subject to the application, rather it is concerned with the overall industry standard.
Common interests
The term ‘common interests’ was interpreted to have a wide application which extends to any joint, shared, related or like characteristics, qualities, undertakings or concerns as between the relevant employers in the Childcare Application decision.
Many factors may be deemed to be a common interest, however, they must be clearly discernible or recognisable in order to be ‘clearly identifiable’.
For example, in the Childcare Application, the overriding common interest was the fact that the employers all operated the same business, that being long day care businesses. The way in which an employer conducts themselves, and the type of operation of the business, therefore may be a relevant consideration in determining a common interest.
Other common interests may include the type of award and regulatory frameworks applicable to the employers, and the funding arrangements.
Since the FWC does not necessarily look towards the revenue streams or the financial performance of the bargaining entities as a common interest, smaller profiting entities can be subject to a SBA with a business who has greater profit margins.
Bargaining representatives
The third factor which the FWC will consider under section 243(1)(b) is the likely number of bargaining representatives and whether this is consistent with a manageable bargaining process.
The FWC considered that a ‘manageable’ bargaining process is one which is workable or tractable in the Childcare decision. The term ‘likely’ was interpreted to mean what is ‘probable’ to occur. This is because it is unlikely that the choice of bargaining representatives will be known at the time an SBA is made.
Relevant factors for the assessment include historical bargaining attempts, past bargaining representation at an application hearing, and similarities or diversity in views between the employers and employees regarding the prospect of multi-employer bargaining.
Any other matters
This requirement operates as a catch-all to allow the FWC to take into account any other relevant matters it deems appropriate.
In the Childcare case, a number of additional matters were taken into account.
Firstly, all the affected employers supported the application and did not raise any objections to the SBA sought.
Secondly, one of the objects to the FW Act is concerned with the promotion of gender equality. The FWC found that given that over 90% of the workforce in the early childcare education sector are female, and low rates of pay prevail in the sector, a SBA would improve the rates of pay of a female dominated workforce, thereby promoting gender equality.
The support required by the employers to engage in effective bargaining was another relevant matter.
The FWC considered that the lack of bargaining was a result of a large proportion of long day care operations being small, and thus did not have the management capacity or other resources, such as funding, to be able to engage in the bargaining process.
Since the employers required extra support in order to effectively bargain, and the FWC is empowered to assist pursuant to section 246 of the FW Act, this weighed in favour of the granting of a SBA.
What is to be expected?
Given that since July 2023 two applications have already been filed, (one of which has already been granted), it is reasonable to expect that SBAs will be utilised significantly in the future. This is a stark contrast to the previous scheme. In the 14 years the low-paid bargaining scheme was in operation, only 5 applications were made, with only one being successful.
What will be interesting is not just the number of further applications, but the extent to which the Commission exercises its powers to direct funding providers to attend bargaining meetings. In the disability and aged care sectors, many operators are often caught between the log of claims and grant funding outcomes. To ensure the outcome of the new bargaining stream delivers its stated objects, exercising this step will likely be necessary.
It is this aspect of the new bargaining stream which will be one to watch and an important lever for employers operating in sectors within the scope of the supported bargaining system to achieve reasonable outcomes whilst managing the pool of funds available to deliver the much needed services in these sectors.
To keep up with the latest developments across employment, workplace relations and workplace health and safety law, sign up to our e-newsletter, Kingston Reidable by emailing [email protected].
The views expressed in this article are general in nature only and do not constitute legal advice.
Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.