Last week in The Australian newspaper, Chief Executive of Australian Resources & Energy Group AREEA Steve Knott penned this op-ed on the dwindling number of enterprise agreements in Australia – and what can be done to fix the slide.
Enterprise bargaining is at crisis levels
By Steve Knott AM
Enterprise agreement making in Australia is officially at crisis point.
Data released by the Attorney-General’s Department in July shows a collapse in the use of enterprise agreements (EAs) under the Fair Work regime to its lowest level in more than 20 years.
As of March 2019, there were 10,571 in-term enterprise agreements, compared to almost 25,000 in 2011.
In the same period, the number of Australians whose employment is covered by an EA has dropped by 500,000, despite an additional 1.6 million people joining the national workforce. In total only 12% of Australia’s private sector workforce is presently covered by an EA.
Collective agreement making at the enterprise level has supposedly been the cornerstone of productive and mutually-rewarding workplace relations since the early 1990s.
The fact you need to go back to 1998 to find the last time there were less than 11,000 in-term EAs shows why this area must be the first cab off the rank when Attorney General and Minister for Industrial Relations, Christian Porter, begins his anticipated review of Australia’s IR system.
So what has caused this rapid decline in the number of employers and employees utilising enterprise agreements?
The first problem is the bargaining framework is far too complex for all but the most legal resource-heavy employers to navigate.
Employers must comply with a myriad of complicated and costly procedures, many of which promote third party involvement in business management and/or operational matters, but none that encourage productivity gains.
The framework also allows for bargaining over matters of direct management prerogative, such as provisions requiring an employer to agree with (as opposed to consult) unions over any changes to working hours or rosters; and restrictions on the use of casuals, contractors or labour hire.
The second, and arguably more frustrating problem, is the overly-technical and highly inefficient approach of the Fair Work Commission (FWC) to approving agreements.
There are numerous reports of FWC members going on ‘fishing exercises’ to uncover anything that hadn’t been explained to employees, and requiring that every single item that is potentially less beneficial than the relevant award to be minutely detailed, despite the legislation not requiring this level of prescription.
One AREEA member company, which provided a 10-page summary of each individual EA clause and its effect, had its application rejected by the FWC which found the employer was required to explain exactly which provisions of the EA were better than the award and which were not.
The award in question was the Building and Construction Award – comprising 146 pages and more than 80 allowance categories.
To further demonstrate the absurdity of this approach, consider the average weekly wage in the resources and energy sector is $2,670. The minimum wage for the highest classifications in the Mining Industry Award and Hydrocarbons Industry Award are $1,102 and $1,069 respectively.
Surely in an industry that pays, on average, two and a half times award rates, such an extreme level of comparison between EA terms and Award provisions is unnecessary in most cases.
There are also many reports of FWC members applying the “better off overall test” in overly-strict, impractical ways, and requiring undertakings about hypothetical, highly unlikely scenarios.
For example one AREEA member, which does not employ any casuals, was required by the FWC to include a casual clause in its EA in case an employee exercised their right to make a request for flexibility; and then was later required to provide undertakings about casual employment.
Other employers are routinely asked to provide an undertaking they would comply with the National Employment Standards, meaning that they won’t break the law.
In short, until Australia’s national IR tribunal begins to take a sensible approach to reviewing and approving agreements, enterprise bargaining will continue its steep decline.
The FWC is already falling embarrassingly short of its 32-day benchmark for approval times – averaging 76 days at the last reporting period, despite being given additional resources at the end of 2018.
It is not uncommon for employers and employees to be waiting more than six months for their agreement to be approved.
Such delays reflect a poorly-managed, overly bureaucratic public service light years behind modern business practices in the 21st Century. When you can order a part from Europe and have it delivered and installed in Australia within a week, surely a well-resourced administrative body like the FWC could assess and approve an EA in the same timeframe.
If the Minister is to address areas of productivity-stifling bureaucracy, the type of which is delaying employees from receiving pay rises and eroding competitive advantage of Australian businesses, the performance of the FWC must be up for serious review.
Enterprise agreement making is not dead in Australia, but it does need resuscitation.
