Enterprise Bargaining Agreements

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Why Enterprise Bargaining Agreement’s?

When we talk with our clients about the documentation that they use to engage their employees, we go through the pros and cons of enterprise bargaining agreements (EBA’s) and compare them to a simple common law contract.In our experience, EBA’s generally assist businesses who:

1. pay above Award rates;

2. have a complex Award which applies to their workplace or a number of Awards which apply to their workplace;

3. are a new business with few employees which is expecting rapid growth in the short term (which is often the case with our mining support clients);

4. have a workforce which desires flexibility;

5. work on government or large industry based contracts (particularly building) when sometimes a condition of tender is that an EBA is in place.

A lawyer’s involvement in the process typically focuses on three areas:

1. Bargaining process;

2. Drafting the enterprise agreement; and

3. Approval process.

Bargaining process

The key to successful bargaining outcomes is preparation. Consideration should be given to factors such as:

1. What are the ‘must haves’ for the business from the bargaining?

2. What does the company want to achieve from this?

3. Make sure that you clearly understand the breadth of the bargaining laws and the rights and obligations that go with them.

4. The nature of the relationship between management and the workforce and the level of union involvement in the business and their level of influence on employees.

5. Contingency planning. If the negotiations breakdown and employees seek to pursue protected industrial action, how will the company maintain supply to its customers and clients?

6. Prior knowledge of likely claims by employees and their representatives allows companies to prepare appropriate responses for the negotiations.

Once the employer, the employees and their respective representatives agree to bargain (or are compelled to bargain by an order of Fair Work Australia), then an employer should first notify employees of their right to be represented by way of a notice of representational rights. This notification should be provided within 14 days.

Typically, employees who are members of the union will appoint the union to be their bargaining representatives.

The Fair Work Act requires the negotiating parties to bargain in good faith. The good faith bargaining requirements state that parties must:

(a) attend and participate in meetings at reasonable times;

(b) disclose relevant information in a timely manner;

(c) respond to proposals made by other bargaining representatives in a timely manner;

(d) give genuine consideration to the proposals of other bargaining representatives and give reasons for any responses to those proposals;

(e) refrain from capricious or unfair conduct that undermines freedom of association or collective bargaining;

(f) recognise and bargain with the other bargaining representatives.

However, parties are not obliged to make concessions during bargaining or reach an agreement on terms that are to be included.

Brief examples of conduct which constitutes a breach of the good faith bargaining requirements are:

1. unilaterally withdrawing from bargaining;

2. excluding the union from negotiations when employees are union members;

3. offering to give employees a 3% pay rise and additional overtime if they revoked the status of the AMWU as their bargaining representative or resign as a member of the AMWU.

If either party has breached the good faith bargaining requirements, then an application can be made to FWA which has the power to make certain orders if various conditions have been met.

Drafting

The Fair Work Act requires that:

1. mandatory content be included – coverage term (explains who agreement covers), nominal expiry date (maximum 4 years), dispute resolution clause, flexibility terms (allows employee and employer to agree on IFA) and consultation term (requires employers to consult with employee about major workplace changes likely to have a significant effect on employees and allow for representation).

2. terms be about permitted matters – generally matters that pertain to the employment relationship, the employee organisations, deductions from wages if authorised. Generally terms will cover rates of pay, penalties, allowances, working hours, leave, etc.

3. the agreement contains no unlawful or objectionable terms – no discriminatory terms, terms that protect employees from unfair dismissal in the first 6 months, terms that attempt to exclude the unfair dismissal protections, terms inconsistent with industrial action provisions or terms providing for union right of entry other than in accordance with the Fair Work Act, terms that require bargaining services to be paid

4. the agreement not exclude the National Employment Standards

Vote

There are obligations on the employer to inform employees of the details of the proposed agreement. The access period begins 7 days before the vote. Before the start of the access period, the employer must take all reasonable steps to inform the employees of the time and place where the vote will occur and the voting method.

The employer must explain the agreement in an appropriate manner to the employees. This could involve a meeting or correspondence. Remember to take into account employees from cultural and linguistic diverse backgrounds and young employees. The employer must also ensure employees are given a copy of the proposed agreement and any other material incorporated by reference in the agreement.

A vote has to occur prior to requesting FWA to approve the EBA. The vote cannot be held until at least 21 days after the last notice of employee representational rights is provided. There is no prescribed method for voting – it can be ballot, electronic or other means.

An agreement is made when a majority of employees who cast a valid vote approve the agreement. Within 14 days, the EBA must be lodged with FWA for approval.

Approval

To make a single enterprise agreement, the following must be lodged:

1. a copy of the agreement;

2. any conditional terminations of AWA’s or ITEA’s;

3. Form 16 (completed by lodger of forms);

4. Form 17 (by employer);

5. Form 18 (by employee bargaining representatives).

In order to be approved, FWA must be satisfied that the agreement:

1. has been genuinely agreed to by the employees who will be covered by the Agreement;

2. complies with the NES;

3. passes the BOOT test. The group of employees covered must be fairly chosen – geographically, operationally or organisationally distinct.

4. contains no unlawful terms.

5. specifies the nominal expiry date;

6. contains a dispute resolution clause.

If the EBA does not meet these requirements, FWA may request the employer to provide an undertaking. FWA can only accept that undertaking if the agreement will not cause financial detriment to any employee covered by the agreement and if the undertaking will not result in substantial changes to the agreement.

For further information or assistance regarding enterprise bargaining agreements, please contact Christie Howson on 4925 2077.

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