Can workers demand an enterprise agreement?


Can workers demand an enterprise agreement?

What happens if employees want an enterprise agreement, but you don't? Can employers refuse to negotiate?


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If employees want to be covered by an enterprise agreement, what happens if we refuse to negotiate or attempt to exclude unions from the process?

This question was recently sent to our Ask an Expert service. 

Q Our company employs staff under the applicable modern award, in conjunction with an individual employment contract. Several employees have approached management to enter into negotiations to introduce an enterprise agreement. The employees have threatened to take the matter to the relevant union in pursuit of their demands.

If the company would prefer to observe the status quo, at what stage can a union or employees commence bargaining? If this threat transpires, is the company required to negotiate with the union or employees? And if most employees want an agreement, does it have to involve a union?
A In some cases, it can be difficult to determine whether or not bargaining has actually commenced. There are three ways bargaining can commence for an enterprise agreement:
  1. An employer initiates bargaining – the employer approaches employees or the relevant union and proposes negotiations for a new enterprise agreement.
  2. An employer agrees to bargain – the employees or the relevant union propose negotiations for a new enterprise agreement, and the employer agrees. Previously, (then) Fair Work Australia held that employees were able to take protected industrial action before an employer had agreed to commence bargaining, however the Fair Work Act was amended late last year to reverse the effect of this decision.
  3. A majority support determination comes into operation – the employees or the relevant union approach the employer and propose negotiations for a new enterprise agreement, and the employer refuses. In this case, the union can make application for a determination which will, if made, effectively force the employer to bargain. While the determination does not have force of itself, the Fair Work Commission may make a bargaining order against the employer if it refuses to bargain after a determination is made. The Fair Work Commission must make the determination if satisfied that a majority of the employees to be covered by the agreement want to bargain. The union would need to provide evidence to the Fair Work Commission that a majority of employees want to bargain for the purposes of a majority support determination.
The Fair Work Act (s237(2)) specifies matters the Fair Work Commission must be satisfied about before making a majority support determination. These matters are:
  • a majority of the employees to be covered by the agreement want to bargain
  • the employer and employees have not yet agreed to bargain, or initiate bargaining
  • the group of employees to be covered by the agreement was fairly chosen, and
  • it is reasonable in all the circumstances to make a determination.
The employer cannot be required to make concessions or reach an agreement as a result of the Fair Work Act’s good faith bargaining requirements. 

Must a union be involved in bargaining?

 A union that has valid members who will be covered by a proposed enterprise agreement has the right to participate in negotiations with the employer as a default bargaining representative. It is also entitled to be covered by the agreement.

A union must be covered by an enterprise agreement before the agreement can apply to the union. If an enterprise agreement applies to a union, that union has the right to take legal proceedings to enforce its terms. This means that a non-union agreement is only possible:
  • in workplaces where there are no union members and the employees do not appoint a union as their bargaining representative, and
  • where all union members at the workplace choose to appoint a bargaining representative other than their union.
See Appeal by Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union Re: Inghams Enterprises Pty Ltd [2011] FWAFB 6106.

Good faith bargaining

The Fair Work Act provides six good faith bargaining requirements that all bargaining representatives must follow. These requirements relate to:
  • attending and participating in meetings at reasonable times
  • disclosing relevant information
  • responding to proposals made by other bargaining representatives
  • giving genuine consideration to the proposals and providing reasons for the responses to those proposals
  • refraining from capricious or unfair conduct, and
  • recognising and baragining with bargaaining representatives.
The employer is not required to reach an agreement as a result of the good faith bargaining requirements.

The bottom line: Due to the complexity of the bargaining stage of any enterprise agreement negotiations, particularly where the employer is an unwilling participant, the employer should seek legal advice with respect to the matter.
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