Overview of Enterprise Bargaining and BOOT changes in Secure Jobs, Better Pay Act

One of the biggest policy shifts in the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (Secure Jobs, Better Pay Act) was the change to the existing enterprise bargaining framework. As part of the policy drive to encourage enterprise bargaining, the Secure Jobs, Better Pay Act reduces barriers to multi-enterprise bargaining and expands the powers of the Fair Work Commission (FWC) to resolve bargaining disputes, up to and including by arbitration.

What Enterprise Bargaining and Better Off Overall Test (BOOT) changes are being made to the Secure Jobs, Better Pay Act? What does this mean for your organisation, and for any Employment lawyer?

This article comes from the experts behind the Employment Law Bulletin which examines changes both in the law and government policy, keeping readers at the forefront of new liabilities and legal procedures and helping them minimise the risk of non-compliance.

Subscribers to the Employment Law Bulletin can read the full bulletin article HERE.

What’s changed?

The biggest change around enterprise agreements (Agreements) themselves relates to the procedural requirements for approval of an Agreement with the significant reduction in prescriptive pre-approval requirements for Agreements, changes to unilateral termination of Agreements and changes to the Better Off Overall Test (BOOT).

In terms of bargaining for Agreements, the biggest change has been in relation to multi-employer bargaining and providing stronger powers for the FWC to resolve bargaining disputes, including quicker pathways to arbitration.

Other key changes include a new requirement with employers to obtain written consent from each union acting as a bargaining representative as part of multi-enterprise agreements prior to putting the agreements to employees to vote. This provides unions with an unprecedented veto power over multi-enterprise agreement voting.

Another significant change is the carve-out for the construction industry which (among other things) excludes some types of work by employees from being covered by a multi-enterprise agreement. Excluded work is defined as “general building and construction work” and includes work in the “civil construction” sector but does not include work in the asphalt industry.

Bargaining

The Secure Jobs, Better Pay Act reduces barriers to accessing existing multi-employer bargaining streams:

• Supported bargaining — this is a stream of multi-enterprise bargaining designed to assist industries with low agreement coverage. The administrative side of the new supported bargaining stream is not dissimilar to the low-paid bargaining stream (which it replaces). The Secure Jobs, Better Pay Act has sought to overcome the historical issues with the low-paid stream by removing the definition of low-paid, which was interpreted narrowly and precluded employees from accessing the stream, and replacing it with a broader common interest test. This allows the FWC to consider matters such as the prevailing pay and conditions in the industry and whether the employers have common interests.
• The intention is to make it easier for employees to access this stream than the previous low-paid bargaining stream. While employees can apply to the FWC to have themselves and their employer added to a supported bargaining authorisation without the employer’s consent, the vote is done by employer cohort, meaning that if employees of one named employer don’t vote in favour of the agreement, the agreement won’t apply to them.
• Single-interest employer authorisations — the Secure Jobs, Better Pay Act makes significant changes to the single interest employer authorisation scheme. One such change is that it repeals the term “single interest employers”, instead introducing “common interest employers” who can bargain together for a multi-enterprise agreement. Despite removing this term, the FWC may still issue a single-interest employer authorisation using updated criteria for assessing whether employers are common interest employers. The Secure Jobs, Better Pay Act clarifies that single interest employer agreements will now be a form of multi-enterprise agreement.
  • The Secure Jobs, Better Pay Act amends the Fair Work Act 2009 (Cth) to ensure employers with identifiable common interests can more easily bargain together. It provides that the operations and business activities of common interest employers must be reasonably comparable for the purposes of making or varying a single interest authorisation or Agreement. For employers with 50 or more employees, the onus is on the employer to establish it is not a common interest employer or its operations and business activities are not reasonably comparable with the other employers.
  • The changes also make it easier for employers to be added to an existing single enterprise agreement, or an existing single-interest employer authorisation, including without the employer’s consent (provided a majority of employees approve), with the following caveats:
  • — Employers who employ fewer than 20 employees may not be added to a single-interest employer agreement or authorisation without their agreement.
  • — The FWC will have the discretion to refuse an application to add a new employer to a single-interest employer agreement or authorisation if the FWC is satisfied that, on the day it will approve the relevant application, less than 9 months have passed since the most recent nominal expiry date of an Agreement.
• Cooperative workplaces — the new term for multi-enterprise agreements, the co-operative workplaces stream, will have some key differences, including the ability for employer and employees to become covered by an existing multi-enterprise agreement and to be added to a multi-enterprise agreement.

Replacement Agreements

The Secure Jobs, Better Pay Act reduces barriers to commence bargaining for replacement agreements which means that employers who have previously bargained with employees will have fewer options to resist bargaining for new Agreements.

The Secure Jobs, Better Pay Act:

• removes the requirement for a notice of employee representational rights to be issued to commence bargaining for a replacement Agreement
• defines a replacement Agreement as being one which will replace an existing Agreement which had a nominal expiry date within the last 5 years, and which covers a substantially similar scope of employees
• allows bargaining in the above circumstance to commence on written request from an employee bargaining representative, (a simpler and less procedural approach to commencing bargaining)
• removes opportunities for employers to resists bargaining for existing expired Agreements as a majority support determination is no longer required to force an employer to commence bargaining

Enhanced bargaining dispute powers

Complementing the reduced barriers to bargaining, and enhanced access to multi-employer bargaining, are stronger powers for the FWC to assist in resolving bargaining disputes, including a simpler and quicker pathway to arbitration:

• Intractable bargaining declarations — these new declarations are an alternative to the serious breach declaration scheme, which sanctioned bargaining representatives who breached a bargaining order requiring them to comply with the good faith bargaining requirements.
• The new intractable bargaining scheme shifts the focus from individual bargaining representatives’ compliance to the overall progress of the dispute. Where negotiations have become “intractable”, the FWC will now have the power to issue an intractable bargaining declaration and, after an optional period of time for the parties to continue negotiating, proceed to issue a workplace determination. The Secure Jobs, Better Pay Act provides for a minimum bargaining period which is the later of 9 months after the nominal expiry date of any existing Agreement, or the day that is 9 months after the day bargaining starts. This minimum period must have passed before the parties can be issued an intractable bargaining declaration.
• Fewer barriers to arbitration — as part of the intractable bargaining declaration scheme, the FWC can arbitrate bargaining disputes by issuing a workplace determination after they’ve issued an intractable bargaining declaration. The process to arbitration therefore has fewer steps (no need to get a bargaining order, then a serious breach declaration), which may lead to more arbitration. The Secure Jobs, Better Pay Act also reduces the requirements for all parties to consent to FWC assistance with a bargaining dispute, making access to FWC intervention easier than before.
• Reducing intractable disputes — the Secure Jobs, Better Pay Act also provides that no party can unreasonably withhold agreement for a proposed Agreement being put to a vote, and the FWC is able to resolve any associated disputes. This amendment may reduce the number of disputes which make it to the “intractable disputes” process as an alternative strategy may be to put the proposed Agreement to a vote.

Better Off Overall Test

The Secure Jobs, Better Pay Act also changes the BOOT to address some of the concerns that have been raised about its application. In particular, the changes require the FWC to undertake the BOOT as a global assessment, instead of a line-by-line comparison. The FWC also only needs to apply the BOOT to reasonably foreseeable patterns or types of work under the Agreement, reducing the risk of a hypothetical scenario bringing down an entire Agreement.

Another significant change is that the FWC is now able to amend proposed Agreement itself, to amend or remove terms which do not meet the BOOT. This means that the proposed Agreement will not need to be voted on again by employees.

While this change is a welcome one, it may have unintended consequences with the ability for bargaining representatives to have a much more significant influence on the outcome of what any Agreement may look like — after it has been approved by employees.

Employers need to consider the BOOT process carefully before they submit an Agreement to reduce the risk of changes being made to the Agreement during the approval process.

A key change in the BOOT area is a new requirement for the FWC to seek the views of the parties who will be covered by the agreement if the FWC proposes to make an amendment to the agreement to address a concern about the BOOT.

A new pathway for reconsideration of the application of the BOOT has also been added. This is to ensure that new employees who are engaged after an Agreement has already been assessed for BOOT compliance can apply for reconsideration. If they do so, the BOOT will be applied as at the time the original application for the Agreement to be approved or varied was made.

What do these changes mean for employers?

BOOT

• The modified BOOT is simpler, and the ability for the FWC to amend the Agreement without employees having to vote on it again is beneficial for all parties to an Agreement. Considered with the reduced procedural pre-approval requirements, the overall process for the FWC to approve an Agreement may be simpler, faster, and less likely to be brought down by minor administrative errors.

Bargaining

• Expect more pressure to bargain, and if you have an expired Agreement, expect to be required to bargain.
• If you are an employer in an industry targeted by the supported bargaining and simple interest streams, it is likely you will face an increased risk of being included in multi-enterprise bargaining.
• Target industries include those with high proportions of First Nations employees, employees with disabilities and those which traditionally pay at or close to Award wages including aged care, disability care and early childhood education.
• If you are a small business owner, there is some relief as you are exempt from being added to a single interest employer authorisation without providing consent. The Secure Jobs, Better Pay Act has also amended the definition of small business owner in these circumstances to be increased to 20 employees (including casuals).
• For employers who are less at risk of being co-opted into multi-employer bargaining, the renewed focus on collective bargaining makes it more likely that your employees will seek to bargain.

Next steps for employers

The Secure Jobs, Better Pay Act has passed as law, with amendments commencing by proclamation, or 6 months after the Secure Jobs, Better Pay Act receives royal assent (on 6 June 2023). The BOOT changes commence by proclamation, meaning 6 June 2023.

If you have an Agreement which has passed its nominal expiry date, carefully consider if it would be worth negotiating a replacement Agreement before the significant changes to bargaining commence in June 2023.

All employers with expired Agreements should be considering their industrial strategy now. Employers likely to commence bargaining in the next six months should also get advice on their industrial strategy.

For employers with out-of-date Agreements but not in a position to bargain, you should consider whether there should be a move to termination as soon as possible, to make sure any termination action is considered under the current requirements (noting there are new termination requirements under the Secure Jobs, Better Pay Act which tighten the conditions for unilateral termination).

For employers who are concerned about administrative compliance in an existing bargaining process, as the changes will soon take effect, it would be worth considering your overall strategy and whether to put your Agreement up for approval when the changes to approval considerations come into effect.

In summary, employers should carefully consider their industrial strategy and seek advice on how these new changes may impact you and/or how you can best take advantage of any changes.

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