Stalemate: Is bargaining working for you?

Nigel Ward, CEO and Director, Australian Business Lawyers & Advisors (ABLA)

To a fly on the wall, enterprise bargaining in Australia often resembles a blood sport – the players jockey for position and aim to land as many hits on the other side as they can, with the ultimate goal being a “knock out” blow through getting an enterprise agreement (EA) over the line, or alternatively killing a deal stone dead.

But observing the state of bargaining in 2018, one is struck by a more fitting analogy: a game of chess locked in a stalemate.

Nobody seems to be “winning” this game and employers and employees alike appear to be equally aggrieved at the state of affairs.

What is going on? And how did we get to this point?

Where is the system falling down?

The key issues driving the debate relate to whether the enterprise bargaining system is achieving appropriate outcomes in relation to improving flexibility and driving productivity, employment and wage growth. Both employers and employees claim the system is failing them.

On the employer side of the coin, businesses have pointed to:

• An unduly restrictive ‘line by line’ interpretation by the Fair Work Commission of the Better Off Overall Test, which is defeating the purpose of enterprise bargaining as a way to drive productivity, flexibility and sustain wage growth.
• Overly technical procedural requirements which are resulting in delays, uncertainty and excessive cost.
• Union tactics in certain industries in which bargaining power is used to impose what the average person would call “pattern agreements” backed by supposedly prohibited industrial action undertaken with relative impunity. 
• On the employee side of the coin, unions have pointed to:
• Increasing claims to terminate EA’s where bargaining reaches an impasse.
• Poor wage growth outcomes, with the award system increasingly resembling a “ceiling”, rather than a “floor” for employment terms and conditions.

So where are we now?

While enterprise bargaining was ostensibly designed as a means to empower employers and employees to reach a bargain suited to their mutual interests we seem to have reached a position where:
1. Small business can secure necessary flexibility without using bargaining.
2. Businesses with progressive workplace culture are unlikely to need to start bargaining or have found ways to evolve bargaining to a relational level where it ‘does not get in the way’ of the direct relationship with employees and business performance.
3. Unionised businesses that are not export exposed are increasingly unhappy with the damage sustained through industrial action during bargaining, driving up uncompetitive conditions.
4. Employers in some sectors have to sign union agreements or find their forward order book disappear.

The net effect of this is a significant decline in the utilisation of EA’s dropping by 25% since 2014.

25 years on - Key insights

• Don’t rush into bargaining if you have not started. You need a material business reason to start.
• Don’t assume bargaining will improve your workplace culture. There are much better ways to do this.
• Consider your broader labour sourcing strategy before you start bargaining, maybe the flexibility you need can come from the mix of sourcing.
• If you are bargaining try not to industrialise things you need to keep fluid, such as safety and policies.
• Learn how to map your workplace culture and union relations to understand what bargaining environment you are likely to be in and then plan how to evolve this to not undermine your workplace culture.
• Try and achieve the longest agreement length you can get to give yourself time to work on your direct engagement strategies outside of bargaining.
• Understand that your objective must be to move bargaining to a relational basis where you and your employees place your on-going relationship ahead of any transactional bargaining gain.

Australian Business Lawyers & Advisors (ABLA), which specialises in employment law, workplace investigations and HR consulting, has been voted 1# Employment and Workplace law firm of the year. Call Associate Director Sina Zevari on 1800 565 846 if you have any questions raised by this article.