July 25, 2024


The Legal System

Multi-employer bargaining under “Secure Jobs, Better Pay” – 10 implications for employers

Across a range of disciplines, the Fair Work Amendment (Secure Jobs, Better Pay) Act 2022 will bring a paradigm shift. Indeed, on our count, there are thirteen new civil penalty laws aimed at employers arising from new obligations.

But the most profound change will be in the area of workplace bargaining as our previous blogs, which you can read here and here, have highlighted. Not surprisingly, it’s where we are seeing much thinking done by many of our clients.

In this blog, we share 10 implications for workplace bargaining arising from the Secure Jobs, Better Pay Act. Our focus here is on the changes that have strategic impact rather than the process-related changes (such as those to the better off overall test or requirements to secure genuine employee agreement).

The 10 strategic implications of the new legislation are:

  1. There are three streams covering “multi-employer agreements”. Two of the three, the “supported bargaining agreement” and “single-interest employer agreement” will change the workplace bargaining landscape over the medium term by shifting away from enterprise based terms and conditions to industry based arrangements. We say medium term (say, two years or so) because there is a nine month grace period before these changes commence operating, and because there will be a rush to secure single-enterprise agreements to keep out of the new streams. But it is only a matter of time before the new streams bite, and when they do they will bite hard.
  2. That change to industry based terms will arise because of the capacity of unions to effectively “rope-in” employers to such agreements, which will essentially be made along industry lines. Of course, the idea of being “roped-in”, even by a majority employee vote, is counter to the idea of “agreement”. In many cases there will be no negotiation and the terms will already be set.
  3. The ability of employers to resist these agreements will depend on the desire of their employees and the ability to convince the Fair Work Commission otherwise, based on various legal tests including one which examines whether there are “common interests” and (only for the single-interest stream) a reasonably comparable position as between employers based on their “operations and business activities”. The hearts and minds of the 50% plus 1 will dominate – this is perhaps one stable feature of the system.
  4. It follows that the Fair Work Commission will have a profound impact on the scope of industry based agreements in the same way it has done in respect of industry based Modern Awards and their predecessors.
  5. The prospect of arbitration to resolve “intractable bargaining disputes” involving such agreements at the outset (where there is an “authorisation” in place) will see the Fair Work Commission also shape the content of such agreements.
  6. A single-enterprise agreement (being the most common type of agreement made today) affords some protection against multi-employer agreements. For this reason, many employers will want to renew their current single agreements or make a first such agreement. But where a union is involved, and influential in the workplace, the employer will be at the mercy of union desires for a multi-employer agreement. So unions will seek a premium from employers for the making of a single-enterprise agreement where the alternative for an employer (a multi) is less attractive.
  7. Where a multi-enterprise agreement exists, and an employer is facing a “roping-in” application to bind it, obvious challenges arise where the existing terms (such as hours of work, rostering) are very different to the multi-employer agreement. The prospect of employers raising arguments based on such a scenario to defend against a roping-in might see multi-agreements made in relatively generic terms, much like Modern Awards.
  8. The prospect of rivalry as between unions, and employers seeking to distinguish themselves from others in an industry (arguing no “common interests” or reasonable comparability exists) will give rise to multiple processes involving multiple unions and employers. In turn, the bargaining equation will get more complex and require a deeper skill set.
  9. For some employers, particularly more established and larger enterprises, a multi-employer agreement will be attractive, particularly where the company seeks a level playing field of terms and conditions to take labour out of the competition equation. But just how two or more leading employers do this, who might have very different terms and conditions albeit with similar rates of pay, is another point of complexity, as is the possible intersect with competition laws.
  10. For these reasons and more, this legislation has galvanised the interest of boards and the C-suite. Workplace strategy will again become centre stage for many.

A few other points of interest:

First, and paradoxically, the Government has, with a single minded focus, brought about these changes with the objective of “getting wages moving”. At the same time, the Reserve Bank of Australia is quickly raising nominal interest rates in order to deter spending and break a major inflation spike. In other words, the Government is hitting the accelerator at the same time the RBA is pulling back the hand brake. We cannot remember a time when the objectives of fiscal and monetary policy ran directly counter to each other in this way.

Second, we predict that multi-enterprise agreements in time will cover thousands of employers (particularly those with more than 20 staff but who are not large, household names) who have to date stayed out of the enterprise bargaining system. These agreements will form the new minimum standards for those employers rather than the award system, which has been the bedrock for minimum standards since Australia’s first conciliation and arbitration system was enacted in 1901. We say this because the bread and butter union work of making agreements under the single-enterprise system was much less efficient than making multi-employer agreements and roping-in applications. The new system creates scale efficiencies for unions that are unprecedented.

Third, our hunch (at this early stage) is that there will be a lot in the specific amendment brought about by Senator David Pocock which provides for a “reasonably comparable” test applicable to the single-interest stream, requiring an employer with 50 or more employees to prove that their “operations and business activities” are not reasonably comparable to other employers to resist a roping-in application. The reverse onus means that unions would normally have to prove this element but instead the employer has a legal responsibility to disprove it. The operations and business activities will probably need to be linked to their employment terms, such that being roped-in will be problematic for the business model. This appears to be a test resulting in a binary outcome: the employer is roped-in or they are not. If they are, the terms and conditions are common. There is the legal possibility of transitional arrangements being made given the effect on some employers roped-in, but that is not an obvious or certain outcome and the Commission will need some convincing that such arrangements are consistent with the policy objectives underlying these changes.

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