Navigating enterprise bargaining: What HR leaders need to know

Enterprise bargaining can be complex and time-consuming. But with strong preparation, clear strategy and early engagement, employers can set the stage for more efficient and constructive outcomes, writes Charles Power.

The 2023 Secure Jobs, Better Pay amendments to the Fair Work Act were designed to reduce the barriers to collective bargaining and encourage greater coverage of single-enterprise agreements.

In the two years since the legislation was passed, the number of employees covered by a collective agreement has increased by 27 per cent – a clear signal that bargaining is once again a key focus for many workplaces.

But what must an employer planning to make or remake an enterprise agreement prepare for to ensure that the agreement supports both business objectives and employee wellbeing?

There are some practical tactics HR teams can adopt to manage bargaining effectively, recent legislative changes to be aware of, and tips on how to anticipate union claims and prepare for negotiations early.

Build your team

A clear, organisation-wide bargaining strategy is essential. It should be grounded in the outcomes the business wants to achieve from bargaining. To support this strategy, employers should consider establishing:

• A reference committee of line managers to supply relevant qualitative and quantitative data on claims and bargaining positions at short notice.
• A negotiating team with the skills, experience, and patience to represent the business effectively in meetings.
• A steering committee to oversee, adjust and endorse bargaining strategies and positions.
• Access to external industrial law expertise to ensure legal and strategic alignment.

Understand the relevant unions and stakeholders

Having insight into the competing interests of union bargaining representatives and their relations with workplace delegates and employees will assist in forming a bargaining strategy. Reviewing the union’s prior log of claims can help anticipate likely issues and motivations. Broader industry challenges, workplace trends and political context can also assist in predicting potential claims.

It is important for employers to understand how their own internal and external stakeholders – including investors, government, customers, and creditors – may be impacted by bargaining outcomes, particularly in the case of industrial action, consumer boycotts or social media campaigns.

Identify potential claims early

HR teams should anticipate the types of claims likely to be raised and assess their potential business impact early. This involves:

• Reviewing recent claims made across the sector.
• Analysing internal data such as workforce trends and existing agreements.
• Modelling the financial and operational implications of likely proposals.

Employers must be able to support their bargaining positions with relevant information and timely explanations, in line with the good faith bargaining requirements under the Fair Work Act. This makes it essential for a clear understanding of the cost of each union claim and enables the organisation to support its bargaining position with relevant information and reasons provided in a timely manner.

Understand the process – and its pitfalls

The Secure Jobs, Better Pay amendments have given the Fair Work Commission broader powers to push employers and bargaining representatives into concluded agreements. Employers should be aware of mechanisms such as the intractable bargaining provisions and compulsory conferences under a protected action ballot order (PABO). These options can be useful tools for unlocking stalled negotiations and should be factored into any comprehensive bargaining plan.

In the case of an employer renegotiating an enterprise agreement, a legal review should be undertaken at an early stage to identify the provisions that would need adjustment to be approved by the Commission in a future agreement.

Keep calm and collaborative

Employers should view bargaining as a collaborative process and always show respect during negotiations. Employers should set a clear bargaining schedule, participate, and ensure that meetings are set at reasonable times. Making things more difficult for unions will only prolong the process. Remember, when the deal is done, everyone has to work together.

Understand the legal framework

The Fair Work Act requirements for the making of enterprise agreements need to be understood and followed. Common errors arise in the issuing of the Notice of Employee Representational Rights (particularly when the employer agrees to bargain for an expanded scope of agreement mid-way through bargaining) and preparing explanatory material for the vote on the agreement. While the Fair Work Commission has more power to overlook technical irregularities, the Commission will not hesitate to refuse an approval application if warranted.

Never too early to start drafting

Elaborate compromises in bargaining can sometimes lead to complex agreements that foster disputes about their meaning and add to payroll compliance. This is often made more problematic by the rushed drafting of agreement clauses at the last minute. In our experience, it is never too early to put pen to paper for the proposed agreement.

Key takeaways for HR leaders

Enterprise bargaining can be complex and time-consuming. But with strong preparation, clear strategy and early engagement, employers can set the stage for more efficient and constructive outcomes.

Staying across legal changes, anticipating union claims, and understanding internal business drivers will support better decision-making and help mitigate risk throughout the bargaining process.

Charles Power is a partner at national law firm Holding Redlich.