When bargaining ‘in good faith’ means not bargaining at all


When bargaining ‘in good faith’ means not bargaining at all

The requirement under Labor new IR laws to ‘bargain in good faith’ should include the right not to bargain at all, according to a leading employers’ body.


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The requirement under Labor new IR laws to ‘bargain in good faith’ should include the right not to bargain at all, according to a leading employers’ body.

In a speech to the Industrial Relations Society of Queensland, Heather Ridout, chief executive of the Australian Industry Group (Ai Group), said the preferred position is that the Government retains an entirely voluntary bargaining system as has been in place since the Keating Government introduced enterprise bargaining in 1993.

‘Employees should have the right to seek a collective agreement if they want one; to take industrial action in pursuit of one; and to be protected by a fair safety net whether or not they have one — but employers should not be legally compelled to bargain,’ she said.


Ridout described the proposed gateway to good faith bargaining obligations as ‘a very rickety one!’

She said that under Labor’s policy evidence that employees wanted a collective bargain included evidence of union membership, petitions or a secret ballot.

‘If the Government proceeds with this approach, what will stop a union official on a recruitment drive making unrealistic claims to employees about what is achievable in bargaining and then asking the employees to sign a petition in support of a collective agreement?’ Ridout asked.

‘The employees will not need to join the union or make any investment in time or money. If the majority sign the petition, Fair Work Australia will almost certainly order the company to bargain over a collective agreement.’

Who is covered?

Ridout also questioned how it would be decided which groups of employees would be covered by a collective agreement.

She asked whether the relevant population of employees would include, for example:

  • only those employees who have been covered under any previous collective agreements in the workplace;
  • only award-covered employees; or
  • all of the employees that the union pursing bargaining rights would like to be covered by the proposed collective agreement (including, say, blue-collar staff plus admin, professional and managerial staff)?

‘In heavily unionised workplaces the vast majority of employees are often blue-collar,’ Ridout said.

‘In such circumstances it would be very easy for a union to gain majority support for a collective agreement covering both blue- and white-collar workers - even if none of the managers, professionals, supervisors, administrative or technical staff wants to be bound by a collective agreement.’

Ridout said that in Ai Group’s view, the easiest approach would be to simply use the phrase 'genuinely try to reach agreement' in the substantive legislation, rather than introduce a new term called 'good faith bargaining'.

‘The two concepts are essentially the same thing but the big difference is that the existing term is woven into many vital current legislative provisions,’ she said.


Ridout also questioned the use of arbitration if the two sides failed to reach agreement.

She said arbitration (other than by agreement between the parties) should only be available in extremely limited circumstances and only where the interests of the community outweigh the interests of the bargaining parties, such as where a dispute is threatening to damage the economy, or the welfare of the Australian population.

‘If a negotiating party is aware that arbitration is available, there is less incentive for the party to make concessions in order to reach agreement,’ she said.

‘A union would be able to make a series of excessive claims which no company would agree to, organise industrial action in pursuit of those claims, organise financial support for the workers, and then wait for a “compromise” position to be arbitrated.'

Ambit claims

‘This would represent a return to the old days of arbitration around ambit claims. Arbitrated outcomes (particularly those favourable to unions) would undoubtedly flow-on across industries.'

‘This would occur as a result of unions pressing other employers to accept the arbitrated outcome and also through other similar outcomes being arbitrated by Fair Work Australia and the doctrine of precedent.’

Ridout said Labor’s policy is to allow arbitration to be accessed:

  • if ‘protracted industrial action’ is occurring; and
  • if the industrial action is ‘causing significant harm to the bargaining parties’.

Protracted action

Ridout said this raised four questions:

  1. What does ‘protracted’ mean?
  2. Will the significant harm need to be occurring to both parties or just one?
  3. What does ‘significant’ mean?
  4. How will Fair Work Australian assess whether significant harm is occurring?

She also asked whether conciliation or mediation will be required before arbitration occurs.


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