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IR Reform Series: Multi-Employer Bargaining

IR Reform Series: Multi-Employer Bargaining

Published: 12 Sep 2022

IR Reform Series: Multi-Employer Bargaining
Written by
Ed Austin-Woods
Ed Austin-Woods
Senior Associate

IR Reform Series: Multi-Employer Bargaining

Published: 12 Sep 2022

Whilst the Australian Labor Party (ALP) did not mention its proposal to introduce multi-employer bargaining during its federal election campaign, in its 2021 National Policy Platform it nevertheless clearly foreshadowed that:

“The Fair Work Act has not adequately facilitated multi-employer collective bargaining. This is a particular issue for those industries where employees are low paid and where they lack industrial power. Labor will improve access to collective bargaining, including where appropriate through multi-employer collective bargaining.”

The ALP’s promotion of the merits of multi-employer bargaining was further advanced during the recent Jobs and Skills Summit where it squarely put this issue at the front and centre of the agenda.

What is multi-employer bargaining?

As the name suggests, multi-employer bargaining involves bargaining by employees employed by multiple employers for an enterprise agreement that will have coverage over them as a group as well as each of their respective employers. 

This is in contrast to employees negotiating a separate enterprise agreement with each of their separate respective employers. 

Currently, the Fair Work Act 2009 (Cth) (FW Act) provides that multi-employer bargaining can take place where two or more employers voluntarily agree to bargain together.

Under the FW Act, unions and employee bargaining representatives can also compel separate employers to bargain together through an application to the Fair Work Commission for a ‘low paid authorisation’. This mechanism provides employees with this option in circumstances where bargaining has not been traditionally utilised or has failed to achieve wage outcomes noticeably above the minimum rates set out in awards.  

However, and notwithstanding the current provisions, the ALP and the ACTU have indicated that they do not want the imposition of multi-employer bargaining to be restricted to the ‘low paid’ and consider that employees who do not fall within this category should have similar rights.

What are the advantages of multi-employer bargaining?

Multi-employer bargaining has long been pursued by unions and is seen by them as a mechanism to increase employees’ terms and conditions of employment. 

The ability for employees employed by multiple employers to negotiate collectively (and possibly across a whole industry) provides them with greater leverage and bargaining power and, as such, helps them obtain more favourable terms and conditions such as increased wages. 

This strategy is likely to be particularly effective in industries such as childcare, cleaning, aged care and disability services where wages have traditionally been constrained.

What are the disadvantages of multi-employer bargaining?

The key disadvantage of multi-employer bargaining is that there is a strong suggestion that separate employers will be compelled to bargain together whether they wish to do so or otherwise. 

Additionally, another major disadvantage of multi-employer bargaining is that because employees employed by different employers will be bargaining in relation to one agreement, depending on the legislation to be enacted it may be possible for all of these employees to take industrial action at the same time to increase the pressure on the employers to make concessions. 

This is a major concern. Particularly if multi-employer bargaining is implemented across a whole industry, it becomes possible that industry-wide strikes could bring businesses to a standstill, evoking memories of bygone eras.

Furthermore, multi-employer bargaining (and the potential of even broader industry-wide bargaining) by its very nature fails to take into account the needs of a specific business and its employees, and instead seeks to implement minimum standard terms and conditions across multiple employers and potentially particular industries. This makes it difficult to secure productivity gains for employers through bargaining, given that the ultimate bargaing may not be specific to a particular employer’s enterprise.

In the event that industry-wide bargaining is imposed, industry enterprise agreements would in effect largely replace awards which currently set minimum terms and conditions for workers in particular occupations and industries. 

Where to from here?

The ALP has flagged that it will introduce legislation into the Parliament this year in respect of multi-employer bargaining. However, it has not announced yet whether it will support the imposition of industry-wide bargaining.

During the Jobs and Skills Summit, the Workplace Relations Minister Tony Burke stated that the government was “ready for action” on a number of amendments to the federal industrial relations system, and that there was “enough of agreement on the concept of opening up to multi-employer bargaining that we’re willing to go forward on it … Everybody agrees that the current low-paid bargaining stream has failed and that proof that it’s failed is how rarely it’s been used.”

In light of the Minister’s comments, it appears that legislation on multi-employer bargaining (as well as other industrial matters) will be placed before the Parliament to consider imminently.

 Whilst the specific details of the proposed legislation will be finalised in due course, legislative reform might include the following:

  1. Employees having a greater ability to bargain with more than one employer in specific circumstances and that some level of coercion may be placed on employers to do so (by way of example, this might possibly be done through the expansion of majority support determinations - which do not currently apply to multi-employer bargaining)

  2. There may be a particular focus on traditionally lower paid industries where bargaining is not as common (childcare, cleaning, aged care and disability services).

Whilst this has not been ruled out by the Government, it would ultimately be surprising if the ability to take industry-wide industrial action was introduced. The prospect of industry-wide strikes may concern the cross-bench senators (one of whose support is required to pass any bill) and should likely also concern Minister Burke, as if industry-wide strikes do eventuate it could significantly turn the electorate against the Government in its first term in power for a considerable time.

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