Enterprise agreements are a necessary part of the workplace relations framework. This is how to make them work
By Duncan Fletcher, Partner, Kingston Reid
I remember feeling a sense of optimism when Prime Minister Scott Morrison announced in May that the Government would appoint five working groups directed to achieving consensus for workplace relations changes. Unfortunately, I now think that I was wrong.
Enterprise agreement making is one of the five areas that the working groups were appointed to consider.
As a test for the level of co-operation within the working groups, this is the area where we would find out whether better workplace relations policy for everyone would outweigh the vested interests of unions and employer associations. Unfortunately, it did not.
Just before the completion of the confidential working group process, a split developed between employer groups and the union position hardened against any attempt to make enterprise bargaining easier for everyone.
This is all about market share and relevance for those organisations. Because enterprise bargaining is currently strangled by a time consuming and expensive Fair Work Commission approval process, unions can increase their relevance (and their low density of membership) by becoming the gate keepers for fast-tracked approval.
Some employer groups like this because they can afford to pay a premium on wages and use a fast-track, union-controlled process while lower paying competitors are taken out of the market. Other employer associations oppose this because they want to minimise union membership density or eradicate them entirely, thus increasing their own relevance in the workplace.
Read more: FWA approves McDonald’s enterprise agreement
Enterprise bargaining is still important
There are some, mainly in the eradicate unions camp, who say that enterprise bargaining is broken and should be allowed to wither on the vine. This ignores the fact that enterprise agreements are a necessary part of the workplace relations framework.
There are two reasons for this necessity. First, enterprise agreements allow employers and employees to vary terms and conditions in awards to make them better suited to their businesses, provided employees are better off overall as a result. Second, enterprise agreements prevent employees from taking protected industrial action (i.e. no strikes) for their nominal term of up to four years from the date of commencement.
While awards fail to meet the needs of a business, and businesses need protection from strikes, there will always be a need for enterprise agreements. I believe that a small change can be made to the Fair Work Act that neutralises the impact of organisations seeking to protect their market share and simplifies the agreement making process for everyone.
Read more: Pizza chain finalises enterprise agreement
Stop interference in other people’s business
I have been involved in enterprise agreement making for 20 years and have noticed that the nature of union intervention in the process has changed. Union challenges to enterprise agreement approval are less about better outcomes for employees and more about unions wishing to destroy enterprise agreements where they were not involved.
Once again, this is driven by unions wanting to preserve market share. If the union does not have a presence in a business, they believe the business does not deserve to have an enterprise agreement.
This is wrong. The Fair Work Act establishes that employers and employees can make agreements. Unions are given the privilege of being default bargaining representatives if they have at least one member in the group of employees that will be covered by the agreement. If they do not exercise this privilege and have nothing to do with the negotiation process, why should they be allowed to challenge any agreement that is made?
The Fair Work Act supports this view by making it clear that the only people who should be heard in an application to approve an enterprise agreement are the bargaining representatives that prevents a “busy-body” union from getting involved.
However, unions use the broad Fair Work Commission power to “inform itself” about any application as a back door to be heard on appeal. The implied threat of an appeal is often justification enough for unions to be allowed to interfere in the initial approval application even if they cannot prove that they have any members among the employees that have negotiated the agreement.
The problem can be fixed
A simple fix to this problem is to limit the ability for the union to use this back door to circumstances where they participated in negotiations as a bargaining representative and represent an employee that would be adversely affected if the enterprise agreement is approved.
There is a precedent in the Fair Work Act for limiting certain appeal rights in unfair dismissal matters that shows this can be done. Anecdotal information suggests that these limitations have reduced the workload of the Fair Work Commission on unfair dismissal appeals that lack merit. A reduced workload means more enterprise agreements approved in a faster timeframe.
None of this prevents a proper application being made for review of an enterprise agreement by the Federal Court if it does not meet the requirements of the Fair Work Act; it just frees up the Fair Work Commission to get enterprise agreements approved without interference when that is what employers and employees want.
