On the 2nd of December 2022, the ALP bill on what amounts to the biggest changes to the Fair Work Act since its commencement in 2009 has become law. Due to the scope of these changes, this will be broken into 2 blogs, with this current segment focusing on changes to industrial relations, not limited to enterprise agreements and multi-employer bargaining.
Expansion of Multi-Employer Bargaining
Before delving into the more palatable changes to the Fair Work Act, it is important to address the elephant in the room on the biggest change to industrial relations. The Fair Work Act now expands on multi-employer bargaining, much to the chagrin of the various employer associations due to its potential to strengthen the powers of unions. Before going into why this change is the most controversial aspect of the amendments to the Fair Work Act, it is important to note what these changes aim to do.
The premise of multi-employer bargaining is for workers across multiple employers in the same industry to have the potential to form a collective enterprise agreement that covers all of the select employers. Such an enterprise agreement now operates on the premise that it is either: a ‘single interest’ employer, which has been argued to be an issue in determining the scope and whether any limits would be placed, or; ‘supported bargaining’, which is limited to those in workplaces that find it difficult to ‘bargain’, such as government-funded sectors such as disability and aged care, in which it would be up to the Fair Work Commission to determine its merit. When determining the merit of ‘supported bargaining’, the Fair Work Commission must consider factors, including whether there is a prevalence of low pay in the industry.
Arguably the most controversial aspect of multi-employer bargaining is the changes to the ‘single interest’ test. This is due to it being able to impact all sectors of the Australian economy, albeit with an explicit exception for the construction industry. Rather than ‘single interest’ bargaining being optional, provided the majority of employees across the multiple employers agree to such bargaining, unions, and other employee representatives can initiate multi-employer bargaining albeit with some caveats.
If an employer has under 20 employees, multi-enterprise bargaining would only be able to commence with the employer’s written permission. When calculating the number of employees an employer has, it relies on the same method used in calculating small business employers, that is all employees are included with the exception of casuals that are not ‘regular’. Secondly, for ‘single interest’ bargaining to occur, the employers must have ‘reasonably comparable’ operations and business activities. Thirdly, if there is an application to either vary the agreement to add an employer and their employees or the application for ‘single interest’ bargaining applies to an employer with more than 50 employees, the employer has the responsibility to prove they are not a ‘single interest’ employer. Finally, the Fair Work Commission has the discretion to refuse a request by a bargaining representative to add a new employer to the ‘single interest’ agreement if it is determined that: they are bargaining in ‘good faith’ in relation to an enterprise agreement that substantially covers the same group of employees; the parties involved have a history of effective bargaining when it comes to enterprise agreements, and; less than 9 months have occurred since the expiry of the nominal enterprise agreement.
Other Changes to Enterprise Agreements
In addition to the expansion of multi-employer agreements, there has been a raft of changes aimed to simplify the process of making enterprise agreements as well as ensuring that they are fair. Firstly, the existence of strict pre-approval requirements has either been removed or simplified under the overarching requirement for the Fair Work Commission to consider whether the EA had been ‘genuinely agreed’ to by the employees. As part of this requirement, the Fair Work Commission aims to publish a statement of principles to provide guidance on what a ‘genuine agreement’ is and would be considered when approving an EA. Additionally, the FWC must be satisfied that the employees who were requested to vote on the agreement had an interest in it as well as being representative of the employees the agreement was aimed to cover.
Secondly, the ‘Better Off Overall Test’ (‘BOOT’) is being overhauled with a line-by-line comparison being replaced by a ‘global assessment’. Additionally, the Fair Work Commission can no longer rely on hypothetical working patterns and as a result, must only regard work patterns and types of employees that are ‘reasonably foreseeable’.
When it comes to bargaining disputes, if the Fair Work Commission is satisfied there are no ‘reasonable prospects’ of the parties coming to an agreement, they have the power to exercise discretion to extend the negotiation period and if not resolved, decide on the matters in dispute. In determining this, the Fair Work Commission must consider the views of all the bargaining representatives involved.
There is a change to the process for terminating an enterprise agreement that has nominally expired. Under the amendments to the Fair Work Act, the Fair Work Commission must be satisfied that one of the following applies as well as being appropriate to do so in all the circumstances:
the agreement does not and is not likely to cover any employees;
the continued operation of the agreement would be unfair to the employees it covers, or;
the continued operation of the agreement would pose a significant threat to the viability of the employer's business; terminating the agreement would likely reduce the risk of terminations, and; the employer gives a guarantee that it will maintain termination entitlements under the agreement.
The changes to the Fair Work Act aim to result in the abolishment of transitional agreements, commonly known as ‘Zombie Agreements’, and be replaced with a new enterprise agreement or applicable modern award, albeit with some exceptions. To apply for an exception, an application must be lodged to the Fair Work Commission, which can be granted to extend the ‘zombie agreement’ by up to 4 years if it has been satisfied that it is reasonable to do so in the circumstances, as well as whether:
relevant bargaining for a new enterprise agreement is occurring, or;
the affected employee or employees (as the case may be) would be better off overall under the agreement as opposed to the award.
Ignite hold a strong background in supporting organisations to interpret, and understand the effect and obligations of existing agreements, and when these agreements have expired, working collaboratively to develop, support, and implement the new agreement from review, to approval at the Fair Work Commission. For more information, please email email@example.com