Submission 167 Australian Council of Trade Unions Workplace Relations Framework Public inquiry

Ensuring every employee is “better off”

An enterprise agreement is ‘approved’ when a majority of the employees who will be covered by the agreement cast a valid vote to approve the agreement (section 182 of the FW Act). This means that only 50% +1 of eligible employees need vote in favour of an agreement for it to be approved. For this reason, it is theoretically possible for an enterprise agreement to be ‘approved’ even where some employees are worse off than under a modern award. The BOOT operates as a safeguard to prevent this sort of outcome – to ensure objectively the collective welfare of the group of employees who will be covered by it..

Whilst the objective of enterprise bargaining is to “provide a simple, flexible and fair framework³⁶⁴” it must not allow for flexibility at the expense of the derogation of minimum standards. A safety net has no work to do if it can be undermined by enterprise bargaining. In circumstances where an employee is left worse off under a collective agreement, even where the majority of employees may be better off, the objectives of collective bargaining cannot be said to be have been achieved.

The BOOT requires that each award covered employee and prospective award covered employee would be better off overall. However this does not mean that the FW Commission cannot apply the BOOT to relevant classes of employees. As stated in the explanatory memorandum, “it does not require FWA to enquire into each employee’s individual circumstances”. The relevant provision is section 193(7), which provides:

“For the purposes of determining whether an enterprise agreement passes the better off overall test, if a class of employees to which a particular employee belongs would be better off if the agreement applied to that class than if the relevant modern award applied to that class, the FWC is entitled to assume, in the absence of evidence to the contrary, that the employee would be better off overall if the agreement applied to the employee.”

As such, the requirement that all employees be better off does not impede on the efficiency of the FWC to assess enterprise agreements.

Mutual benefit

The recommendation of the Fair Work Review Panel that flexibility terms give more explicit acknowledgement to non-monetary benefits in exchange for other benefits was in reference to IFA’s and not collective agreements.

In the collective agreement sense, for the reasons that we give above, the BOOT does not inhibit flexibility in the workplace simply because it does not permit safety net conditions to be traded off for non-monetary compensation.

The BOOT operates so that enterprise agreements do ‘not need to comply with every condition in the relevant award’ but could be approved by FWA ‘as long as the agreement means employees are better off overall against the safety net’.³⁶⁵³⁶⁶

The essential problem with adopting a lesser test for IFAs comes from the fact they are individual negotiations (and so inherently more susceptible to the types of power dynamics that the system itself was erected to combat) and from the fact that the BOOT is unsupervised. They are thus already predisposed in fundamental ways to delivering poorer outcomes for workers. Opening them up to the trade of monetary for non-monetary entitlements could only make a bad situation worse. The issues associated with individual arrangements are explored more fully in chapter 17.

The recent FW Commission report, Productivity and innovation in enterprise agreement clauses: an overview of literature, data and case studies at the workplace level³⁶⁷, demonstrates various practical examples of flexibilities that employers have negotiated with their employees that in their view, promote productivity. The report looked at clauses in three broad categories;

• 
  flexibility and leave (flexibility as to how and when work is performed)
  
• 
  skills (development and deployment of skill)
  
• 
  incentives and engagement
  

The case studies show that the flaw is not the system itself, but the skills and effectiveness of the negotiating parties. Effective negotiators, with a view to solving problems through workplace innovation and engagement are in no way inhibited by the BOOT. There is also a strong connection between workplace culture and policies and the resulting focus of enterprise agreement content. In some instances, the enterprise agreement is a means by which beneficial workplace practices are formalised because the employer would be inclined to do it anyway.

Ultimately, a collective agreement must be voted on by the employees who will be covered by it. This is essentially their endorsement of the deal that has been struck. There is little, if any evidence, that in these circumstances, the BOOT prevents the formal approval of agreements where a deal has been done. The views of the negotiating parties rightly carry significant weight in the approval process. Typically any concerns that arise with respect to BOOT issues are dealt with efficiently with the use of undertakings pursuant to section 190 of the FW Act.

Threats to the consensus

Every element of the award safety net is capable of modification through bargaining, and many are open to modification either through individual flexibility arrangements or facilitative provisions in Awards. Many important aspects about how business conducts itself, such as the manner in which work is actually performed, are not touched upon in the award system itself other than the requirement that if a work reorganisation might cost somebody their job or preclude them from attending work, an employer should at least consult about it before implementing their final decision³⁶⁸. Collective agreements offer an alternative path for workers who seek better conditions and for employers who seek greater flexibility and who are content with the notion that their workers are worth more than the bare minimum.

The only minimum standards left that are not up for negotiation in the current framework are the NES. The fact that we were able to weather the storm of the GFC while maintaining each element of the system including these base standards - such as annual leave (itself introduced by consensus during the recovery of the great depression), sick leave, paid public holidays and severance and redundancy pay - tells strongly that the calls for further flexibility by industry are ambit claims of dubious merit.

14	Collective Bargaining: (1) Making an agreement.