Changes to the Enterprise Bargaining System
Subscribers operating under or considering an Enterprise Agreement (Agreement) should be aware of recent changes made by the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022. With these changes outlined below, members may decide to start implementing their own single Agreements to avoid being possibly compelled into bargaining by employee bargaining representatives in the future. Negotiating this with employees on a single Agreement basis can assist your company with regulating the terms and conditions of employment that best suit your operational requirements.
Better off Overall Test (BOOT)
Since an Agreement normally sets out an employee’s entitlements in place of an applicable modern Award, the Fair Work Commission (FWC) must be satisfied that employees are “better off overall” under a proposed Agreement when compared to the Award. The changes to the BOOT are aimed at streamlining this process and reducing the need for undertakings and include:
- requiring the FWC to conduct the BOOT as a global assessment rather than a line-by-line comparison with the relevant Award;
- requiring the FWC to consider reasonably foreseeable patterns or kinds of work in a certain industry, rather than considering hypothetical arrangements that aren’t reasonably foreseeable at the time;
- allowing the FWC to amend an Agreement for BOOT purposes.
Initiating Bargaining (Single Agreements)
Previously, bargaining representatives were required to seek a majority support determination from the FWC with evidence that most employees wanted to bargain for a new Agreement to compel an employer to commence bargaining for a new Agreement.
Under the changes that came into effect on 7 December 2022, unions or other bargaining representatives may compel an employer to commence bargaining for a new Agreement if:
- a written request to bargain is given to an employer;
- the nominal date of an existing Agreement has passed and by no more than 5 years;
- the proposed Agreement covers substantially the same workforce.
Multi-Enterprise Bargaining (Single Interest Bargaining Stream)
Barriers to multi-enterprise bargaining have been reduced; instead of the previous requirement for a Ministerial declaration, employers sharing a common interest can be required to bargain with other employers for a multi-enterprise agreement that covers all their workforces. The FWC will consider:
- the nature of their enterprises and terms and conditions of employment in those industries;
- geographical location;
- whether the operations and business activities of common interest employers are “reasonably comparable” to each other.
There are further requirements for at least some of the employees to be covered by a registered employee organisation, and a determination that it won’t be contrary to the public interest for such employers to bargain together.
However, note that small businesses of less than 20 employees and employees covered under “general building and construction work” are excluded from the single interest bargaining stream. Electrical contractors are not covered by this general exclusion.
Multi-Enterprise Bargaining (Supported Bargaining Stream)
This stream is targeted at industries which have traditionally been low paid. A supported bargaining authorisation can be made by the FWC after considering prevailing pay terms and employment conditions, including low pay, and identifiable employer common interests such as geographic location, the receipt of substantial government funding and any other matters considered appropriate.
Sunsetting of “Zombie” Agreements
From 7 December 2023, all operational Agreements made before the commencement of the Fair Work Act in 2009 will automatically terminate on 7 December 2023. Employers have a choice of applying to the FWC for an extension. If your company has such an Agreement, then you will need to give written notification to employees about this termination date and extension option before 7 June 2023 or penalties may apply.