What impact has the Fair Work Act had?

Analysis

What impact has the Fair Work Act had?

Agreements take longer to reach, unions are getting smarter, there is less industrial action and less incentive to make variations from standard award provisions – these are the main trends since the Fair Work Act 2009 commenced.

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Agreements take longer to reach, unions are getting smarter but with fewer resources, there is less industrial action and less incentive to make variations from standard award provisions – these are the main trends since the Fair Work Act 2009 commenced, according to a recent Australian Human Resources Institute (AHRI) seminar.

Peter Steimach, general manager employee relations at Broadspectrum (formerly Transfield), has had a 30-year career in workplace relations. It started with the Victorian government’s Wageline service and has since included the Metal Trades Industry Association (now AI Group), Crown Casino, Bupa and BHP Billiton.

At Broadspectrum, he has to oversee about 130 enterprise agreements covering 12,000 employees. He described workplace relations as a “roller coaster” career – there are some massive highs, such as when a major agreement is finally signed off, and some equally massive lows.

Impact of the Fair Work Act


Steimach said the Fair Work Act amounted to a substantial re-regulation of workplace relations compared to the previous Workplace Relations Act. Examples include the requirements of good faith bargaining, more complex representation procedures, general protections and adverse action provisions.

As a result, the following trends have emerged:
  • Bargaining processes for enterprise agreements tend to be a lot longer and more complex than, say, 20 years ago. This is mainly because there is a bigger gap between what each side wants to achieve.
  • Despite agreements and disputes taking longer to settle, strikes have become very rare. The incidence of expired agreements is much greater because parties believe having no current agreement is better than having one they don’t like. However, this means the potential threat of industrial action can be constant (even if it seldom actually happens), so employers need to have contingency plans in place.
  • Employers are applying much more pressure to compress pay increases and/or implement pay freezes or even reductions. This is in contrast to past expectations of regular annual increases. Employers are generally willing to hold out for longer than before to achieve this.
  • Another factor that delays the negotiation of agreements is the mantra of “never accept their first offer”. “No” votes in the first employees’ ballot are commonplace, as the preference is to test the other side’s willingness to negotiate.
Steimach’s opinion is that it is better to avoid going to the Fair Work Commission (FWC) if possible, because there is less predictability in the way it handles matters and therefore a wider range of potential outcomes.

However, he acknowledged that commissioners are sometimes able to provide a fresh perspective and offer useful suggestions, and can also exert influence on the other party to “behave”. 

BOOT test can wrongfoot employers


Steimach said the FWC tended to adopt a line-by-line interpretation of the BOOT (Better Off Overall Test). This was not the original intention of the test, but is the result of administrative decisions. If this approach continues, many employers may decide there is no advantage having their own enterprise agreement provisions and simply adopt the standard award provisions.

The importance of preparation and communication


The longer and more complex nature of agreement negotiations means that both sides need to spend a lot of time on preparation and communicating with employees.

Despite a substantial decline in their membership over the years and fewer resources, Steimach said that unions were now “smarter than they have ever been”.

For example, they can make widespread use of social media to attack an organisation and damage its reputation. This is a global issue – if an overseas parent company or subsidiary gets into trouble over something, there is likely to be publicity and fallout for the Australian organisation as well. For these reasons, it is essential for employers to have robust communication strategies to ensure employees are well aware of their viewpoints as well as the unions’. 

Organisations that maintain regular contact with employees – such as via engagement surveys, focus groups and regular catch-up meetings between individual employees and line managers  – can collect useful data about what employees’ priorities and aspirations are, and assess what they might hope to gain in a new agreement.

Preparation includes the following steps:

  • Start by analysing what each side wants to gain and calculate the costs of both agendas
  • Predict how the other side will respond to your proposals
  • Prepare contingency plans in case there are setbacks, eg delays, current agreement expires, industrial action.
  • Prepare and implement a strategy for communicating regularly with employees.
Further information about this seminar is available from AHRI
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