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Enterprise bargaining is designed to encourage employers and employees to reach agreement through negotiation. But what happens when bargaining stalls and neither side is willing to move? When enterprise bargaining reaches a genuine deadlock, the Fair Work Act 2009 (Cth) provides an “intractable bargaining” mechanism that allows the Fair Work Commission to step in and ultimately impose a binding workplace determination.

Introduced in 2022 and expanded through the more recent Closing Loopholes [1] reforms, the intractable bargaining regime was intended to help parties resolve bargaining disputes that had genuinely reached an impasse.

However, a recent review conducted by former Commission Member Susan Booth (the Booth Review) of the Closing Loopholes legislative reforms has identified that some aspects of the regime may be producing unintended consequences in practice.

Before considering these emerging issues, here is a quick recap on how the intractable bargaining regime operates. It is a three-step process, each with their own legal and strategic considerations:

A bargaining representative may apply to the Commission to deal with a dispute about making the agreement, if the bargaining representatives cannot resolve the dispute between them.

The Fair Work Act does not limit the kinds of matters that can be in dispute. Really, they can be anything in relation to the bargaining process. Most often, it is where the parties cannot find a compromise on proposed terms (for example, pay conditions).

While the Commission can resolve the bargaining dispute in several ways, almost always it does so by way of conciliation, where a Commission member may make confidential observations or recommendations privately to parties to assist in guiding them to agreement.

If the dispute process in step one does not resolve the issue, then one of the parties can seek to escalate the matter and ask the Commission to issue an “Intractable Bargaining Declaration”. The Commission may make a declaration once the minimum bargaining period has passed (generally nine months after the nominal expiry of an existing agreement, or nine months after bargaining commenced where there is no prior agreement). The Commission must also be satisfied that:

• the party seeking the declaration has previously participated in a bargaining dispute process (i.e. the conciliation at step one);
• the Commission is satisfied that there is no reasonable prospect of agreement being reached without the declaration; and
• it is “reasonable in all the circumstances” to issue the declaration, having regard to the views of the bargaining parties.

Once the declaration is made, a Full Bench of the Commission must make a binding “Intractable Bargaining Workplace Determination” as quickly as possible after the declaration has been made (unless, in issuing the declaration, the Commission ordered the parties to negotiate for a further period).

In making the binding determination, the Commission must include:

• core and mandatory terms — including terms for the minimum period the determination will be in effect, settling disputes, consultation, delegates’ rights, and flexibility;
• “agreed terms” — being those terms already agreed through bargaining to date.

The terms not agreed are ultimately decided by the Commission through an arbitral process. The Commission must consider a range of factors, including the merits of the case, the parties’ interests, the significance of any benefits under an existing enterprise agreement, how productivity may be improved, the reasonableness of parties’ conduct during bargaining, and the public interest, among others. The confluence of these factors means any outcome is uncertain and largely subject to the circumstances of each case.

Like an enterprise agreement, a workplace determination must pass the better off overall test (BOOT) — a global assessment ensuring employees are better off overall compared to the relevant modern award.

Separately, the new ‘no less favourable’ test applies on a term-by-term basis: it prevents the Commission from including terms dealing with unagreed matters that are less favourable than corresponding terms in an existing enterprise agreement (excluding wage increase terms). In effect, the existing agreement conditions act as a floor for the determination, and terms cannot go backwards on individual matters unless the parties have agreed otherwise.

In May 2026, former Commission Member Susan Booth published a draft report on her review of the Closing Loopholes amendments to the Fair Work Act.

While much of the Booth Review suggests it is too early to draw conclusions on those amendments, it does acknowledge several issues with the intractable bargaining scheme:

One of the most significant issues identified relates to the “no less favourable” test, which broadly provides that the Commission cannot include terms dealing with unresolved matters that are less favourable than equivalent terms in an enterprise agreement (although there are some exceptions to this).

In short, the Booth Review observes that the “no less favourable” test may weaken the incentive to bargain. Employee bargaining representatives may perceive arbitration as a safer or preferable pathway, as the test prevents regression, and so the employees only have the potential to gain. It suggests more should be done to prioritise enterprise-level agreement making and reduce any incentive to utilise the intractable bargaining process.

The Review also notes concerns that some parties may be less motivated to reach agreement if they believe arbitration will ultimately provide a preferable outcome.

The Commission has considered the issue of parties “holding out” for arbitration, suggesting that disingenuous engagement with the bargaining process may weigh against issuing a declaration. The Booth Review recommends that more be done by codifying what should be considered before a declaration is made and considering mandatory factors such as whether the parties have genuinely engaged in bargaining, whether one has “held out” to engage the intractable bargaining process, and whether the parties’ conduct was consistent with the Fair Work Act’s objectives.

Observing that the inclusion of mandatory terms (such as consultation, dispute resolution, flexibility and delegates rights provisions) is not strictly included in the no less favourable test, the Booth Review suggests this may have been unintended by the parliament and that the provisions should be amended to include them.

From the current wording, a mandatory term does not need to meet the no less favourable test, and so any additional benefits negotiated in prior agreements may not make it over to a binding determination.

What does this mean for employers?

While the intractable bargaining regime remains relatively new, several practical lessons are emerging.

Employers should be aware that the ‘no less favourable’ test means existing enterprise agreement conditions act as a floor in any determination. Additionally, mandatory terms (consultation, delegates’ rights, flexibility, dispute resolution) may not currently be subject to the ‘no less favourable’ test, which the Booth Review recommends should be fixed.

However, it’s important to note that the Booth Review does not recommend abandoning the intractable bargaining regime, although it raises important questions about whether the current settings strike the right balance between encouraging negotiated outcomes and providing a pathway to resolve entrenched disputes.

For employers involved in enterprise bargaining, your bargaining strategy now extends beyond the negotiating table. Understanding when Commission intervention may arise, and how the current framework may affect bargaining behaviour, has become an increasingly important part of the enterprise bargaining landscape.

For more information about intractable bargaining, you can listen to Partner Lucy Shanahan in HR Leader’s The Legal Brief podcast episode (which you can access here).

References

[1] Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth)

The views expressed in this article are general in nature only and do not constitute legal advice. Please contact us if you require specific advice tailored to the needs of your organisation.

Photo by Pawel Czerwinski on Unsplash