Good faith collective bargaining

16 April 2009 Topics: Workplace relations and safety

Under the new Fair Work Act, the Government has introduced significant changes to the framework for collective bargaining.

“Good faith bargaining” is an integral part of these reforms.

The concept is designed to redress an apparent imbalance between the rights of employers and employees under the previous legislation, and to lessen the likelihood of industrial action in the event of stalled negotiations.

The Act regulates the process by advising employees of their right to be represented at the commencement of bargaining.
In addition, pursuant to s.228 of the Act (yet to commence), bargaining representatives must meet the good faith bargaining requirements:

  • Attending, and participating in, meetings at reasonable times;
  • Disclosing relevant information (other than confidential or commercially sensitive information) in a timely manner;
  • Responding to proposals made by other bargaining representatives for the agreement in a timely manner;
  • Giving genuine consideration to the proposals of other bargaining representatives for the agreement, and giving reasons for the bargaining representative’s responses to those proposals; and
  • Refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining.

Fair Work Australia (the Government “one stop shop” regulator) will have the power to test support among employees and if it determines that a majority of the employees want to bargain collectively, their employer will be required to bargain with them.

Further, if it is determined that bargaining representatives are not effectively bargaining together, Fair Work Australia will have the power to issue orders which require representatives to bargain in good faith. Orders will deal with procedural matters, rather than the content of agreements.

Before seeking orders of this kind, an aggrieved party must notify the other party of their concerns.

The regulator will not be empowered to make orders until 90 days before the nominal expiry date of an existing collective agreement if the employer has not offered employees a new agreement.

There is some confusion regarding the ability of the regulator to compulsorily determine an agreement. The parties’ options, where agreement cannot be reached are, apparently, to:

  • Walk away from negotiations;
  • Jointly request Fair Work Australia assist the parties reach agreement;
  • In certain circumstances, take protected industrial action.

However, it also appears that compulsory arbitration has returned in the form of bargaining related workplace determinations. They key pre-requisite is said to be a serious breach declaration by Fair Work Australia in relation to a proposed enterprise (collective) agreement.

A serious breach declaration can be made “when a bargaining representative has contravened a bargaining order and the contravention is serious and sustained and has significantly undermined bargaining for the agreement.”

Fair Work Australia can make a bargaining related workplace determination as quickly as possible after the end of the post-declaration negotiating period if a serious breach declaration has been made and the bargaining representatives have not settled all of the matters in issue. In order to make such a determination, the consent of the parties is not required.

A workplace determination is, in effect, an enterprise agreement, meaning that, under defined conditions a form of compulsory industrial arbitration has returned to Australian workplaces.



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