Enterprise Bargaining Agreement And Key Business

Enterprise Bargaining

Discuss about the Enterprise Bargaining Agreement and Key Business.

In the modern society and economy, work is work is a key piece; daily labour’s productivity, the work quality, and the job availability levels are core factors of the economic health of any country. Taking this into consideration, this is the reason that the workplace and the laws that govern it therein are Australia’s central focus. Being the case, enterprise agreements have to pass the BOOT (better off overall test) to be permitted by Australia’s Fair Work Commission (FWC). Therefore, for an agreement to be approved, it has to pass the BOOT to satisfy FWC’s requirements of all award covered employees as well as the prospective award covered employees would be in a better position generally if they were to be hired under the agreement as opposed to the relevant modern award (Productivity Commission, 2015).

FWC will have the ability to look at different employees’ classes in applying the BOOT. In the absence of proof to the contrary, FWC will work under the assumption that all award covered employees, as well as the prospective award covered employees would be in a better position generally if they were to be hired under the agreement as opposed to the relevant modern award.

Being a point in time test, BOOT necessitates all award covered employees and the prospective award covered employees to be better off overall at the test time. The test time is the time whereby a bargaining representative seeks the agreement approval from the FWC through an application. Although the agreement’s approval is made based on passing the BOOT, FWC has the ability to approve an agreement regardless of failing the BOOT under the condition of circumstances considered to be exceptional and that the agreement’s approval would not be conflicting to the public interest (Productivity Commission, 2015). 

Due to the fact that BOOT is a point in time test, after a while, it is likely for the base rate of pay of an employee under an agreement to be lesser than the national minimum wage or relevant modern award base rate. In such a case, the employee has the right of getting paid under the agreement at a pay rate that is equal to the national minimum wage or award order rate.

Enterprise bargaining as established by the FWC was aimed at ensuring the implementation of standard conditions and wages, which would address the individual circumstances of both employers and employees while also sustain the benefits of the employees’ overall actions. Conceivably, the core factor in central bargaining is that employers, employees, and their representatives ought to be involved by sitting down and analyzing the current circumstances. In this case, it becomes rather easier determining the best cause of actions to be taken towards employees and deciding what is good for the firm to finally come to a collective agreement.  It has been said that enterprise bargaining reduces the control employees have in the operations of a firm. Consequently, the major concerns continue to be the means through which both employers and employees can participate in the actual negotiations over the enterprise agreement’s set conditions and terms (Enterprise Bargaining, 2017).

Fair Work Commission (FWC)

The FWC began operating in 2009, which is when it was established after the manifestation on Industrial Relations was started by Ruud’s Government. The FWC is the national relations tribunal for Australia’s workplace. Before it changed to Fair Work Commission, it was first called Fair Work Australia (Australia’s national workplace relations tribunal, 2017). Given that it is an independent body, FWC has numerous responsibilities and roles that relate to “the safety net of minimum wages and employment conditions; enterprise bargaining; industrial action; dispute resolution; termination of employment and other workplace matters” (James & Ombudsman, 2015).

The FWC provides assistance to employees, employers, and the community in recognizing and acting in accordance with the set systems. As such, it educates by ways through which it advises and administers information as well as aids in resolving disputes that occur in the workplaces. In brief, the FWC tries to come up with a national system through which industrial relations can be controlled. The FWC ascertains that industrial actions interlinked with the process of bargaining together with the entire process happen in accordance with the laws of a workplace appropriately. The bargaining representatives or union of workers who would like to take an industrial action towards an employer or who would want to support the claims they have ought to seek approval for protection, which authorizes their intended industrial action, from the commission. After the FWC has considered the key issues of the application seeking approval, they either accept, decline, or suspend the proposed protection industrial action. FWC has the authority to stop industrial actions that are unprotected. Due to its authority, power, and recognition, the FWC are enforceable even in courts (Productivity Commission, 2015).

Being an independent body, the FWC has been delegated with both the authority and power to impose, control, and oversee the regulations relating to employment conditions and minimum wages, mechanical and industrial action, termination and employment, and resolution of disputes. In addition, the FWC is anticipated to provide both helpful and useful information in regards to the workplace relations systems in Australia, create an awareness on sensible practices responsibilities and rights in the workplace, actively participate in the resolution of issues occurring in the workplaces, and observing as well as ensuring consistence with outbursts related with enrolled understandings, rewards, and laws in the workplace. Also, the FWC ensures the proper implementation of environmental laws in the workplace while searching disciplines for the outbursts of workplace laws (Stewart et al., 2014).

Roles of the FWC

In FWC, there are two different types of agreements; agreement based instruments and enterprise agreements. The agreement based instruments are usually on the basis of individual transitional employment and collective agreements. In addition, they consists of individual state and preserved collective agreements. Since the process by the FWC to implement an agreement is direct, the bargaining representative of the employer has to be certain that content in the agreement is appropriate to be approved. In an enterprise agreement, the conditions and terms are outlined clearly stating the employment requirements between an employer and the employee.

The bargaining representatives for both parties often participate in the proposed enterprise agreement bargaining process. In an enterprise agreement, the employer has to clearly indicate the roles of his or her employees, which is where the bargaining representatives play a part in when representing the parties during an enterprise agreement bargaining process. The information is provided to all employees present who are to take part in the enterprise agreement. During this process, the bargaining representatives are to act in good faith while bargaining an enterprise agreement that is proposed (Angwin, 2017).

During the enterprise agreement bargaining process, a bargaining representative does not have to undertake franchises. This is because the FWC ascertains that parties meet particular agreement thresholds by means of a test. The workers’ default bargaining representative are usually trade union members unless another person is appointed to represent them.

Being a vital aspect and particularly at the level of the enterprise, collective bargaining ensures both an efficient and effective employment relations, which involves regulations providing for an employee’s choice over representation. As such, the Fair Work Act policies amendments by the government ought to emphasize in other ways of the good faith bargaining system and especially by being planned in ways that would enable greater productivity benefits in delivery.

There are numerous weaknesses and strengths of the BOOT process as taken by the FWC while making agreements. To begin with, the process is effective given that it ascertains equal opportunities are awarded to all the enterprises to increase productivity. Secondly, new career and training opportunities are awarded to each enterprise employee seeking to sign the proposed agreement. Thirdly, the process is less costly and direct as opposed to government enacted regulatory policies. Lastly, the process of enterprise agreement allows for firms to gains in efficiency such as new production targets and reductions in waste (Bray et al., 2014).

The Approval Agreement Process By the FWC

Some of the disadvantages of the BOOT as applied by the FWC affects employers by the total cost and time required to negotiate the enterprise agreement go through the approval process. Given that there are strict timeframes and processes, this negatively affects the employers as they have to adhere to the conditions set failure to which the proposed agreement can be rejected.  Secondly, for the FWC to approve a proposed agreement, a majority, not unanimous, has to vote and agree on the BOOT (Bland, 2016). Thirdly, the BOOT is quite challenging to apply, which as a result reduces the chance of beneficial trade-offs effectiveness that leads to exposing employers to compliance risks. Fourthly, the agreement process can prevent firms from participating in the enterprise bargaining process because of the time taken for the approval of an agreement (Forsyth, Gahan, & Howe, 2011).

In regards to the decision made on Coles Supermarkets, the entire panel of FWC declined the approval of Coles Supermarkets enterprise agreement based on the fact that it did not pass the BOOT test. As a result, the decision has major implications to the employers, and especially when seeking and negotiating agreements to be approved to cover a disparate and a large workforce. According to Duncan Hart, who won the case against his employer, the victory is celebrated by retail workers all over Australia, and not just Coles’ employees (Abc.net.au, 2016).

The H&M Swedish fashion giant enterprise agreement was failed by the FWC in an attempt to a bill intended to cut its wages at its workers’ expense. Their application was turned down due to the fact that it had not passed the BOOT test, which would have left several employees worse off compared to if they were to be paid under the award. For this reason, H&M among numerous other major corporations have learned that they are not in a position to pay lesser than the award rates set in Australia (Catie low, 2017).

Although in principle the BOOT is not defective, it has from time to time and especially in practice used the approach referred to as ‘line by line’ that entails evaluating if the category of employees in question are made worse or better off by any of the agreement’s individual term when placed in comparison with the award’s relevant term (Mijic, 2017).

Initially, the BOOT was intended to become a test used globally, whereby the sum of all the agreement’s benefits are taken into account while testing those that are contrary to the award’s overall benefits. Therefore, changing to a new ‘no-disadvantage’ test has a higher possibility of aiding to support that intention. In addition, it would equally ascertain that employees are not disadvantaged as put in comparison with the award, which is vital requisite, where both employers and employees are given a chance to come up with agreements representing win-win situations for the parties. Shifting to the test ought to be supplemented by practical guidance that is more precise from the FWC on the new no-disadvantage test (Productivity Commission, 2015).

Also, the BOOT creates an uncertainty at the time stages where the process of bargaining and the agreement approval occurs. For this reason, the no-disadvantage test would be better off replacing the BOOT, and guidelines issued by the FWC to its members on the way through which to apply for the test so as to decrease the gap between practice and legislative intent. This because the BOOT entails workplace mechanisms that make it possible for flexibility to be achieved. For instance, it permits the base rates of pay to increase as compensation of the rates of penalties (Productivity Commission, 2015).

Taking into consideration the fact that the no-disadvantage test (NDT) and the BOOT ought to be in theory marginal, the NDT has a higher possibility of becoming workable in practice (Merlo, 2000). For instance, in the case where the BOOT is applied, the FWC has to be satisfied in a positive way that an agreement will ascertain that each employee is made better off as compared to the relevant award for an agreement to be approved. As a result, this makes it easier for the rejection of agreements during the approval stage when put in comparison with a NDT, which would need the FWC to find the way that an agreement makes a category of employees in overall worse off so that they can turn down an agreement (Productivity Commission, 2015).

Being a concept that is well established, a no-disadvantage test has been used extensively under both state and federal jurisdictions, although in forms that are quite different. However, any additional information is sought from inquiry participants by the Productivity Commission ways through which a new NDT should be articulated. However, regardless of whether it is a no-disadvantage or a BOOT test being used, a major concern is the ways through which the FWC applies the test at the approval stage of an agreement. According to McCallum, Moore, and Edwards (2012), there are several participants who through an evaluation indicated the way FWC preferred using the BOOT as opposed to the NDT. Similar concerns arose at the time of the FW Act review in the year 2012.

Taking into consideration the fact that the Australian Fair Work Bill indicates that BOOT requires for each employee who is award covered to be better off overall, it is anticipated that the application of BOOT by the FWC be used to employee classes since the FWC is not allowed to evaluate any individual circumstances of an employee (Mourell & Cameron, 2009).

The government of Australia ought to make some amendments to the Fair Work Act to remove the BOOT and enterprise agreements to be approved, and instead, use the new no-disadvantage test. In addition, the test used to approve a new agreement ought to be used in a series of employee classes for an enterprise agreement. The FWC ought to issue guidelines to its members on the way the new test ought to be applied.

For numerous years before the Fair Work Act was introduced, national election campaigns were focused on issues of industrial relations. However, since it was enacted, the Act has attempted to improve both the protection and rights awarded to Australia’s workplace employees. NES (National Employment Standards) was among the several articles designed for this cause (Sutherland & Riley, 2010). In total, there are ten NES that were as part of the Fair Work Act introduced including a maximum of the hours of worked weekly and the right to flexible working hours among others (Gollan, 2009). In addition, the FWA entailed industrial action, causes of unfair dismissal, and enterprise agreements introduced to provide employees a say as well as flexibility in their employment (Chapman, 2009).

Under the new Fair Work Act, employees have been provided with a right to organize as opposed to the former legislation, which was especially strict on workplace and union interactions thus discouraging industrial relations employers and law (Cooper, 2010). However, since the Fair Work Act was effected in 2009, union involvement is supported through the right to organize and enterprise agreements. As a result, this has had a significantly positive impact on the participation of unions.

Since it was introduced, the Fair Work Act has also protected employees from unfair dismissal and particularly towards the disabled, elders, and female employees on the grounds that are unjust. Another legislation impact of the act is the removal of AWA’s (Australian Workplace Agreement) and the introduction of good faith bargaining and enterprise agreements (McCallum, Moore, & Edwards, 2012).

Conclusion

In conclusion, the introduction of the Fair Work Act in the year 2009, has had numerous significant changes towards both the protection and the rights afforded to the entire workforce in Australia. To be more specific, it has been positive in terms of action without the fear of reprimand and the participation of unions. However, despite all the significant changes that have today been positive in the reestablishment of power imbalance, there is still more that the Australia’s industrial law needs to develop to ensure that the workforce gets all the support it needs.

The FWC has an obligation of making a workplace determination for recommending the regulation and rules of each employee it applies to. However, the FWC can make a strict declaration in severe conditions and contravention of the BOOT of bargaining an agreement that is substantially undermined. As such, it is essential to note that though employees have the ability of starting an industrial action in the bargaining process of a proposed enterprise agreement, the BOOT test should apply the necessary changes, or be replaced by the NDT test.

As is evident in both the Coles and H&M decisions, even the agreements entered into by unions and employers in good faith aimed at benefiting a majority of the average workers faces a threat of being turned down through an appeal of a number of employees. Although, a huge percentage of the employees voted in favour of the agreement, the outcome of the conditions and wages were undertaken by a tribunal instead of a collective decision making. Being the case, it is highly inappropriate for a workplace relation system that is modern. If the case would have been however different at the time the current test was legislated, this would not have been intended. As a result, the current interpretation and the construction of the BOOT test presently makes agreements risky, challenging, and cumbersome for enterprises with massive workforces (Westacott, 2017).

References

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Westacott, J. (2017). The current state of enterprise bargaining typifies the cracks appearing in our workplace relations system – a system that is becoming increasingly adversarial and regulated, and ultimately disempowering workers and employers, writes Jennifer Westacott.. Bca.com.au. Retrieved 7 May 2017, from https://www.bca.com.au/media/enterprise-bargaining-on-the-brink-of-failure