Multi-employer bargaining: why the hubbub?

As the dust begins to settle on the Albanese Government's Jobs and Skills Summit, attention turns to the next steps in Labor's industrial relations agenda.

One of the most contentious ideas to come out of the Summit is multi-employer bargaining, which has been championed by the ACTU, variously supported or deplored by the business community to differing degrees, and committed to by the Government.

Of all the reforms flagged in the Summit, this concept has attracted the most attention and the most optimism and pessimism (depending on your viewpoint) from stakeholders. But why?

WHAT IS MULTI-EMPLOYER BARGAINING?

At its most basic level, multi-employer bargaining is the ability for multiple businesses to be covered by the same enterprise agreement.

While it is theoretically possible for this to occur under the current provisions of the Fair Work Act 2009 (Cth) (FW Act), specifically under "low-paid bargaining" and "single interest employer" authorisations, these processes are complicated, rarely attempted, and seldom successful. Outside of these, entities within a joint venture or common enterprise can be covered by a single agreement, but these tend to be project-based and largely reserved for the largest employers.

WHY IS BUSINESS IN A STIR?

The concern for businesses is that there is no clarity, as yet, around how the parties to a multi-employer agreement under any new regime would be determined.

At the moment, multi-employer agreements can only occur by consent, and usually with limited reach (such as members of the same corporate group). What has been mooted at the Summit, in particular by the ACTU, is industry-wide collective bargaining.

There are two key issues that arise out of this, the first being the relevance of the agreement negotiated to industry as a whole and the second being the risk of industrial action.

CAN A WHOLE INDUSTRY BARGAIN AS ONE?

It may be generally accepted that industry-wide terms and conditions may not necessarily be suitable or practical for all operators within the industry - this is, after all, why enterprise agreements are permitted to override the terms of any relevant modern award.

Where an industry-wide agreement does not suit a particular operator within the industry, there would appear to be no alternative for that operator but to conform or perish.

It therefore comes down to the ability of the two sides of the bargaining equation - employers and employees - to bargain in their respective common interests. Unfortunately for businesses, employees (through their unions) are far better at this.

While it may be relatively easy for employees in an industry to agree on what they want in terms of wages and conditions, it can be a lot more difficult for employers within the industry to reach the same consensus. The divide on this very issue between the Council of Small Businesses of Australia (COSBOA) and the Business Council of Australia (BCA) on the one hand and the Australian Chamber of Commerce and Industry (ACCI) and AI Group on the other is a case in point.

THE SPECTRE OF INDUSTRIAL ACTION

The other concern for businesses that arises out of industry-wide bargaining is the prospect of widespread industrial action, as voiced very early on in the Summit by AI Group's Innes Willox.

Industrial action suffered a status of dubious legality up until 1993 and the introduction of the Industrial Relations Reform Act 1993 (Cth) (IR Reform Act), which for the first time set out the circumstances in which industrial action was permitted and, by extension, when it was not permitted.

In particular, the IR Reform Act tied the taking of industrial action to the making of collective agreements; previously, disputes between employers and employees had been settled by the making of industrial "awards" which were often the subject of strike action.

The effect of the IR Reform Act was almost immediate, with the average number of work days lost to industrial action per year plummeting from 1,942 in the 1980s to 825 in the 1990s, and further still to 268 in the 2000s.

The fear of employers is that if the right to strike is tied (as it currently is) to the negotiation of enterprise agreements, and the enterprise agreement in question is an industry-wide agreement, then industrial action could shut down whole sectors of the economy.

Industrial action is, however, dependent on the ability of workers to organise and is heavily driven by unions. In this respect, RMIT professor Anthony Forsythe recently opined that industry-wide bargaining will not see a return to the strikes of the 1970s (when the average number of work days lost to industrial action per year peaked at 3,146) simply because union membership is nowhere near the level it was during that period.

DETAIL IS THE DEVIL, AND THE DEVIL'S IN THE DETAIL

Ultimately, it is too early to predict what effect multi-employer bargaining will have on the industrial landscape.

Material published by the ACTU in the lead-up to the Summit suggests that their focus in this respect is on the care sector and other industries in which women are dominant, with multi-employer bargaining being one of the tools to address the gender pay gap.

Whether this specific focus will be replicated in any legislation, or whether all industries will be opened up to industry-wide bargaining, remains to be seen.

FLOW-ON EFFECTS

If industry-wide bargaining is introduced, it will likely have significant but subtle flow-on effects for the industrial relations landscape.

One of these is the prospect of greater unionisation among those industries opened up to industry-wide bargaining, as unions gain greater relevance as bargaining representatives. Tied to this is a likely increase in the use of rights of entry to hold discussions with workers.

One may well expect there to be supplementary changes to the laws around industrial action, namely when and how it can be taken and rights to payment while it is being taken. The Rudd Government, in the FW Act, made it unlawful to pay an employee on strike; given that unpaid strikes can turn into a game of brinkmanship (with the "brink" being bankruptcy) it will be curious to see if there are any proposals to change this rule.

CONCLUSION

For the moment, employers should be alert but not alarmed at the prospect of multi-employer bargaining. The detail of any proposed legislation is not yet known, so any panic or alarm is still premature.

Employers should nevertheless brush up on their "right of entry" knowledge in anticipation of an increase in industrial activity, and make sure they keep a weather eye on any announcements coming out of the Industrial Relations Minister's office.

Editorial credits:

Ben Matthews

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