How intractable bargaining determinations will serve employers

Amid a changing industrial relations landscape, one regime established as part of the Secure Jobs, Better Pay Act is anticipated to be highly favourable to employers caught in prolonged disputes.

In a recent episode of The Legal Brief, Kingston Reid partner Lucy Shanahan discussed the increasing frequency of intractable bargaining workplace determinations and offered tips for organisations looking to mitigate their risk through proactive strategy.

Shanahan explained that the value of these determinations for employers lies in the prevention of further industrial action and faster resolution of matters that would otherwise be heard in a hearing.

She said: “When parties have been bargaining for a period of nine months, there’s been a bargaining dispute and the Fair Work Commission is satisfied that there’s no reasonable prospects of agreement being reached, an application can be made to the Fair Work Commission to determine what the terms and conditions of employment will be.”

While workplace determinations existed in past industrial legislation, they previously only arose where bargaining was terminated and required a serious breach declaration, with the party having to prove severe or repeated breaches of bargaining obligations. In this vein, where there may have been only two or three over a decade, Shanahan estimated 12 determinations in the last financial year alone.

In this way, she urged employers to be aware of the possibilities and the new potential for resolution these determinations provide, because “there’s quite a lot of value for an employer in that declaration being made”.

Addressing the concern that the process almost provides a get-out-of-jail-free card for bargaining with employers, Shanahan said: “When they’re bargaining, they can sort of hold out; they still bargain in good faith, but maybe not make the concessions that you might have made in the past, because after nine months, you can go to the full bench of the Fair Work Commission and get a decision made.”

However, she added that these concerns only make the case for a proactive strategy stronger.

Shanahan explained that the determinations are becoming more widely known and are increasingly being seen as a viable option, but they are not without their challenges. Outcomes are not fast, and because it’s litigation before the full bench of the Fair Work Commission, it costs money.

She said: “And bear in mind that it means that that third party, that independent arbitrator, is determining what the terms and conditions are for, where a bargain is just that we negotiate and agree on what we want for our business”.

On the other hand, Shanahan noted that the model consultation provisions, whereby if a custom agreement isn’t reached between the parties, then the FWC inserts the statutory model terms into its final determination, which she identified as streamlined compared to more complicated consultation provisions.

In this way, she explained that the FWC has to balance the merits of the case for both parties and public interest, and at the same time make determinations that don’t prevent bargaining.

“If there is protected industrial action that can have, depending on the industry, an impact upon the consumer or members of the public, there could be safety concerns,” she said.

“Sometimes you need to get expert evidence about the economic impact of a particular percentage wage increase, because there will be not only the impact upon the employee who’s on the receiving end of that wage increase, but also the cost of the business and what it means in terms of the service or the good that it provides.”

Regarding the development of a strategy for bargaining or setting out a plan for future bargaining, Shanahan said the most important question to ask oneself concerns the employer’s relationship with their staff.

She said: “You only get to an intractable bargaining workplace determination once everybody is deep in the depths of despair and has been fighting for a long time and are in very entrenched positions … so it’s not a good position to actually get to after an extended period of bargaining”.

In this way, she urged employers to consider this possibility and not to look at the determinations as a goal but as a safety net to be used as a last resort.

Similarly, she said the establishment of a culture of transparency and communication is important to focus on, so “if someone has a complaint, they can come to you. Not to go to an external party.”

In this case, the proactive approach almost works backwards, whereby employers consider why people are or may want to take protected industrial action in the first place.

Shanahan said: “Is it because they’re annoyed with their manager … or is it because actually the union is telling them to?”

“If you can understand where that drive is coming from, then you can often address the issue.”

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