We are now starting to see a flow of substantive decisions considering the operation of the intractable bargaining framework.
These new provisions represent one of the most fundamental shifts to the industrial relations landscape in decades, as there is now a realistic alternative to impasse or agreement – with a readily accessible pathway for the Fair Work Commission to determine bargaining outcomes. The Commission’s approach to its new powers is important for all employers who engage in enterprise bargaining to be across.
Special Counsel Brad Popple, Senior Associate Emily Strachan and Associate Marcus Topp consider these early developments and offer their predictions as to how they are likely to impact employers moving forward.
Intractable bargaining workplace determination provisions
The new intractable bargaining framework allows the Fair Work Commission to make an intractable bargaining declaration, in effect bringing bargaining to an end and setting the stage for the Commission to arbitrate bargaining outcomes, where it is satisfied that:
- it has dealt with the dispute through the existing bargaining dispute resolution processes under s.240 of the Fair Work Act 2009 (Cth) (the Act);
- that there is nevertheless no reasonable prospect of the parties reaching an agreement; and
- it is reasonable in all the circumstances to make the declaration.
Having done so, the Commission must substantively resolve bargaining by making an intractable bargaining workplace determination ‘as quickly as possible’ – although some post-declaration negotiating period can be afforded to the parties.
The “post negotiating period” assumes some significance, given that the workplace determination ultimately made by the Commission must include any “agreed terms” between the bargaining representatives as defined in section 274(3) of the Act.
Moreover, following the passage of the second tranche of “Closing Loopholes” reforms, an intractable bargaining workplace determination cannot include any term which is less favourable to any employee (or employee organisation) than a term of the existing enterprise agreement dealing with the same matter.
Early indications as to the Commission’s approach
There are some important questions of strategic significance in this framework, which the Commission is starting to grapple with.
- When is bargaining “intractable”, and does this necessitate industrial action?
Again, the absence of any reasonable prospect of agreement being reached requires an evaluative assessment of all of the relevant facts leading to a rational improbability of agreement. These matters might, for example, include the duration of bargaining and number of meetings, the extent of any progress made, previous unsuccessful votes, and evidence by the parties as to their preparedness to make concessions.
As to the last of these matters, the Commission (at least to an extent) accepted that for bargaining to be intractable, it takes two to tango.
In Ventia[1], the Commission considered that an indication made by the union (which was resisting a declaration) that it may moderate its position on an important issue was relevant – even where this was only communicated in closing submissions at the hearing of the application.
In the same case, the Commission also considered it relevant that the union had not fully flexed the muscle of industrial action, with employees having engaged in only moderate forms. This was said to support the view that bargaining could not yet be regarded as intractable.
That said, a Full Bench in an application for declarations involving Cleanaway Operations Pty Ltd (Cleanaway) was prepared to conclude that bargaining was intractable, despite only 2 days of industrial action having been taken by employees[2]. The union there submitted that absent a declaration, there would be no alternative to further action.
In practical terms, employers are unlikely to defend an application for a declaration on the basis that further industrial action may test its resolve. Accordingly, it may be that this is a point only taken by union applicants, such that a de-facto requirement for substantive industrial action to have occurred exists only when declarations are sought by an employer.
Finally, the making of a declaration is subject to a statutory requirement that the Commission has dealt with “the dispute” (that is, the substantive issues at play in bargaining) through its dispute resolution powers. However, the Full Bench in Cleanaway was clear that this process need not have reached its conclusion (meaning that an ongoing s.240 process does not offer lasting protection against the making of a declaration).
- When is a term agreed? And can terms be “un-agreed”?
The Act provides that an “agreed term” is one that the bargaining representatives agreed should be included in the agreement at any of 3 points in time:
- when the application for the declaration is filed;
- when the declaration is made; and
- at the end of any post-declaration negotiating period.
When will such an agreement have been reached?
This is of course a fact-dependent inquiry, noting that bargaining participants will commonly indicate or agree that an individual “line-item” is resolved, whilst also acknowledging that bargaining is ultimately concerned with an interdependent package of terms such nothing is truly agreed until everything is agreed.
While the case involved the unique circumstance associated with public sector wage policy, the Full Bench in an application by the United Firefighters Union (UFU) acknowledged this industrial reality (along with the challenges in ascertaining the extent of “agreed terms” in the intractable bargaining framework)[3].
It stated that:
- “agreement” in this context is a looser concept than contractual commitments, and is akin to the notions of “arrangements or understandings” well known in competition law, and that as a consequence, parties are free to resile from these types of consensual dealings;
- it is “self-evident in industrial bargaining” that parties make concessions through “give and take” before a final package is approved, and this may not of itself indicate that all terms addressed up until a particular point should be included in the final agreement;
- where terms are conditionally agreed (that is, subject to a satisfactory overall package), they are not likely to be agreed for the purposes of the intractable bargaining framework; and
- the question of whether a term is conditionally agreed must be determined objectively by reference to the totality of the evidence of the bargaining process – and that an express statement that a term is agreed “in principle” or “subject to” the overall package will be strong evidence – but will not always preclude – a finding that the relevant term is agreed.
The UFU is currently seeking a judicial review of the decision in the Federal Court and so judicial guidance on these issues will be forthcoming.
A Full Bench of the Commission will also need to grapple with the extent to which bargaining representatives can resile from agreed terms, following the making of an intractable bargaining declaration in a different Cleanaway matter to that referred to above[4].
In that case, Deputy President Wright was prepared to permit a post-declaration negotiating period as a possibility to narrowing areas of dispute, after the employer put a proposed agreement out to vote on the basis that if it was not successful, all negotiated items would be withdrawn and up for renegotiation, meaning it would effectively start bargaining afresh without any agreed terms.
- Can an enterprise agreement be made, even following a declaration?
What happens if, following an intractable bargaining declaration being made but prior to the making of a workplace determination, the employer puts an agreement to a vote of employees, who then endorse that agreement?
A recent Full Bench decision in ATRC[5] concluded (by majority) that this does not relieve the Commission of the responsibility to make a workplace determination – which will then supersede the freshly made enterprise agreement.
It must be observed that this decision involved the making of an industrial action related (rather than intractable bargaining) workplace determination, and the provisions are not identical. However, it would certainly be open for the Commission to take a consistent approach across both streams.
Given the statutory edict that intractable bargaining workplace determinations can only involve compromises on the employee side of the ledger if the bargaining representatives (as distinct from a majority of employees) agree, this may be highly significant for employees needing workplace change.
What does this all mean in practical terms?
Of course, a carefully considered bargaining strategy is fundamental.
But now more than ever, IR and ER practitioners need to ensure that these strategies are optimised for the circumstances at play. Very different approaches will be appropriate depending on (among other things) whether the business:
- requires existing restrictions or conditions to be moderated to suit operational requirements, as opposed to where the question is simply what additional benefits are to be offered;
- has productive working relationships with relevant union officials, as opposed to more fractured dynamics to navigate;
- is particularly susceptible to industrial action, or can “weather the storm” for a short or even moderate period; and
- is able to objectively demonstrate particular and compelling need for restrained outcomes, or simply needs to achieve the most commercially favourable outcomes possible.
Each of these matters will inform the formulation of a log of claims, the manner in which bargaining is conducted, how matters are to be agreed (or otherwise) along the way and what might be a trigger for escalation (including to the Commission for dispute resolution or declarations).
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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.
[1] Ventia Australia Pty Ltd v United Firefighters’ Union of Australia [2023] FWC 3041.
[2] Transport Workers’ Union of Australia v Cleanaway Operations Pty Ltd T/A Cleanaway Operations Pty Ltd [2024] FWCFB 127.
[3] Application by United Firefighters’ Union of Australia (259V) [2024] FWCFB 43.
[4] Transport Workers Union v Cleanaway Operations Pty Ltd [2024] FWC 91.
[5] Australian Rail, Tram and Bus Industry Union, Australian Municipal, Administrative, Clerical and Services Union v Australian Rail Track Corporation Limited [2024] FWCFB 152.