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2013-2014
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
FAIR WORK AMENDMENT (BARGAINING PROCESSES) BILL 2014
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Employment, Senator the Honourable Eric Abetz)
Outline
FAIR WORK AMENDMENT (BARGAINING PROCESSES) BILL 2014
OUTLINE
The Fair Work Amendment (Bargaining Processes) Bill 2014 (the Bill) makes amendments to
the Fair Work Act 2009 (Fair Work Act) to implement elements of The Coalition's Policy to
Improve the Fair Work Laws.
The Bill will give effect to the Government's commitment to promote harmonious, sensible and
productive enterprise bargaining. This is intended to be achieved by making discussions about
improving workplace productivity a feature of the enterprise bargaining framework.
The Bill will amend the Fair Work Act to provide a new additional approval requirement for
enterprise agreements that are not greenfields agreements in Part 2-4 of the Fair Work Act. The
new requirement will ensure that when approving an enterprise agreement, the Fair Work
Commission (FWC) must be satisfied that productivity improvements at the workplace were
discussed during bargaining for the agreement. All of the existing enterprise agreement approval
requirements under the Fair Work Act will be retained.
The Bill will also amend the Fair Work Act to provide further guidance and ensure greater
transparency regarding the circumstances in which a protected action ballot order can be made.
Section 443 of the Fair Work Act provides that the FWC must make a protected action ballot
order if it is satisfied that an application for a protected action ballot order has been made and
that the applicant has been, and is, genuinely trying to reach an agreement with the employer of
the employees who are to be balloted.
The Bill amends section 443 to require the FWC to have regard to a range of non-exhaustive
factors to guide its assessment of whether an applicant for a protected action ballot order is
genuinely trying to reach an agreement.
Further, the Bill will provide that the FWC must not make a protected action ballot order where
it is satisfied that the claims of an applicant for a protected action ballot order are manifestly
excessive or would have a significant adverse impact on productivity at the workplace.
Fair Work Amendment (Bargaining Processes) i House of Representatives
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Financial Impact Statement
FINANCIAL IMPACT STATEMENT
Nil
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Bill 2014
Statement of Compatibility with Human Rights
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Fair Work Amendment (Bargaining Processes) Bill 2014
The Fair Work Amendment (Bargaining Processes) Bill 2014 (the Bill) is compatible with the
human rights and freedoms recognised or declared in the international instruments listed in
section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Bill
The object of the Fair Work Act 2009 (Fair Work Act) is to provide a balanced framework for
cooperative and productive workplace relations that promotes national economic prosperity and
social inclusion for all Australians.
The Bill amends Part 2-4 of the Fair Work Act to provide a new additional approval requirement
for enterprise agreements that are not greenfields agreements. The new requirement will ensure
that the Fair Work Commission (FWC) must be satisfied that productivity improvements at the
workplace were discussed during bargaining for the agreement. The existing enterprise
agreement approval requirements under the Fair Work Act will be retained.
The Bill will also amend the Fair Work Act to provide further guidance and ensure greater
transparency regarding the circumstances in which the FWC can make a protected action ballot
order. The Bill amends section 443 of the Fair Work Act to require the FWC to have regard to a
range of non-exhaustive factors to guide its assessment of whether an applicant for a protected
action ballot order is genuinely trying to reach an agreement. Further, the FWC will not be able
to make a protected action ballot order if it is satisfied that the claims of an applicant, over which
it seeks the protected action ballot order, are manifestly excessive or would have a significant
adverse impact on productivity at the workplace.
Human rights implications
The definition of `human rights' in the Human Rights (Parliamentary Scrutiny) Act 2011 relates
to the core seven United Nations human rights treaties.
The Bill engages the right to freedom of association under Article 8(1) of the International
Covenant on Economic, Social and Cultural Rights (ICESCR) and Article 22 of the
International Covenant on Civil and Political Rights (ICCPR), and the right to strike under
Article 8(1) of the ICESCR.
In addition, the Bill engages rights protected by the International Labour Organisation (ILO)
Freedom of Association and Protection of the Right to Organise Convention 1948 (No. 87),
which protects the right to organise and the Right to Organise and Collective Bargaining
Convention, 1949 (No. 98), which protects the right of employees to collectively bargain for
terms and conditions of employment.
Collective bargaining
The ILO Right to Organise and Collective Bargaining Convention, 1949 (No. 98) protects the
right of employees to collectively bargain for terms and conditions of employment. It requires,
amongst other things, that appropriate measures are taken to encourage and promote machinery
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Statement of Compatibility with Human Rights
for voluntary negotiation between employers or employers' organisations and workers'
organisations, with a view to the regulation of terms and conditions of employment by means of
collective agreements.
Enterprise agreement approval requirements
Part 2-4 of the Fair Work Act provides a legislative framework for the making of enterprise
agreements through a process of collective bargaining in good faith. Sections 186 and 187 of the
Fair Work Act set out the general requirements for when the FWC must approve an enterprise
agreement.
Item 1 of Schedule 1 to the Bill amends the enterprise agreement making framework by inserting
new subsection 187(1A) to provide an additional requirement that must be met before an
enterprise agreement (that is not a greenfields agreement) is approved under section 186. It
requires the FWC to be satisfied that during bargaining for the agreement, improvements to
productivity at the workplace were discussed. It does not require the parties to agree to terms,
nor to include terms in an agreement about improving productivity.
This requirement is intended to put the issue of productivity improvements on the agenda of
enterprise agreement negotiations.
These amendments are intended to enhance collective bargaining by promoting discussions
about improving productivity at the workplace level. To the extent that requiring bargaining
parties to hold a discussion over productivity improvement is said to limit the right to
collectively bargain, the requirement is reasonable, necessary and proportionate to achieving the
legitimate objectives of the Bill.
Right to Freedom of Association
Article 22 of the ICCPR and Article 8 of the ICESCR protect the right to freedom of association.
Article 8 of the ICESCR also protects the right to strike, provided it is exercised in conformity
with the laws of the particular country. These rights are supported by the ILO Freedom of
Association and Protection of the Right to Organise Convention 1948 (No. 87).
Industrial action
The right of employees to take protected industrial action to support or advance claims for an
enterprise agreement is provided for under the Fair Work Act, with its emphasis on enterprise-
level collective bargaining underpinned by simple good faith bargaining obligations, clear rules
governing industrial action (paragraph 3(f)) and the establishment of a fair, simple and
democratic process to determine whether employees wish to engage in protected industrial action
(section 436).
The Fair Work Act permits employers and employees to engage in protected industrial action in
support of claims for an enterprise agreement provided that certain requirements are satisfied.
One of these requirements is that protected industrial action must be authorised by a protected
action ballot of employees. Protected industrial action is immune from civil liability in relation to
such action (unless the action involves personal injury or damage or the destruction or taking of
property).
Subsection 443(1) requires the FWC to make an order authorising a protected action ballot if it is
satisfied that an application for a protected action ballot order has been made and that the
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Statement of Compatibility with Human Rights
applicant has been, and is, genuinely trying to reach an agreement with the employer of the
employees who are to be balloted.
Item 3 of Schedule 1 to the Bill inserts new subsection 443(1A) to provide that when considering
whether an applicant for a protected action ballot order has been, and is, genuinely trying to
reach an agreement, the FWC must have regard to all relevant circumstances, including a non-
exhaustive list of matters which are drawn from principles of a Full Bench of Fair Work
Australia decision in Total Marine Services Pty Ltd v Maritime Union of Australia
[2009] FWAFB 368. The matters are:
the steps taken by each applicant to try to reach an agreement;
the extent to which each applicant has communicated its claims in relation to the agreement;
whether each applicant has provided a considered response to proposals made by the
employer; and
the extent to which bargaining for the agreement has progressed.
To the extent that the amendments limit the right to strike, they are reasonable, necessary and
proportionate to achieving the legitimate objectives of encouraging genuine and meaningful
discussions between bargaining representatives before protected industrial action is engaged,
providing greater certainty as to the circumstances when protected industrial action can be
authorised, and providing greater transparency in relation to FWC decision making regarding the
making of protected action ballot orders.
Item 4 of Schedule 1 to the Bill inserts new subsection 443(2) to provide that the FWC must not
make a protected action ballot order in relation to a proposed enterprise agreement if it is
satisfied that an applicant's claims are manifestly excessive, having regard to the conditions at
the workplace and the industry in which the employer operates, or that the claims would have a
significant adverse impact on productivity at the workplace.
While this requirement may limit access to protected industrial action over certain claims, these
restrictions are reasonable, necessary and proportionate to achieving the legitimate objectives of
encouraging sensible and realistic bargaining claims. The amendments achieve this objective by
ensuring that a bargaining representative cannot obtain a protected action ballot order where its
bargaining claims are fanciful, exorbitant or excessive when considering the circumstances of the
workplace and the industry in which the employer operates, or which would significantly affect
workplace productivity.
Conclusion
The amendments are compatible with human rights and freedoms recognised or declared in the
international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny)
Act 2011. To the extent that the amendments may limit human rights and freedoms, those
limitations are reasonable, necessary and proportionate.
Minister for Employment, Senator the Hon. Eric Abetz
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Notes on Clauses
NOTES ON CLAUSES
In these notes on clauses, the following abbreviations are used:
Fair Work Act Fair Work Act 2009
FWC Fair Work Commission
the Bill Fair Work Amendment (Bargaining Processes) Bill 2014
Clause 1 - Short title
1. This is a formal provision specifying the short title.
Clause 2 - Commencement
2. The table in this clause sets out when the provisions of the Bill commence.
Clause 3 - Schedule(s)
3. Clause 3 of the Bill provides that legislation that is specified in a Schedule is amended or
repealed as set out in that Schedule, and any other item in a Schedule operates according to its
terms.
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Amendments ~ Schedule 1
SCHEDULE 1 - AMENDMENTS
Fair Work Act 2009
Item 1 - After subsection 187(1)
4. Section 187 of the Fair Work Act sets out additional requirements that must be met
before the FWC approves an enterprise agreement.
5. This item inserts new subsection 187(1A) which requires that where an enterprise
agreement that is not a greenfields agreement has been submitted for approval under section 185,
the FWC must be satisfied that improvements to productivity at the workplace were discussed
during bargaining for the agreement.
6. This item is intended to ensure that the enterprise bargaining framework requires, at a
minimum, discussions about improvements to productivity at the workplace or workplaces that
the agreement will cover to have occurred. Workplace and productivity are not defined terms and
are intended to take their ordinary meaning as it relates to the operation of the proposed
agreement.
7. Examples of improvements to productivity may include, but are not limited to:
elimination of restrictive or inefficient work practices;
initiatives to provide employees with greater responsibilities or additional skills directly
translating to improved outcomes; and
improvements to the design, efficiency and effectiveness of workplace procedures and
practices.
8. The new approval requirement does not require bargaining parties to agree to
productivity terms or to include terms in an agreement about improving productivity.
9. This item is also not intended to require the FWC to consider the merit of the
improvements to productivity that were discussed, the detail of the matters that were discussed,
the outcome of those discussions or whether it would be reasonable for certain provisions to be
included in an enterprise agreement. Further, the new requirement is not intended to modify or
delay the current timeframes for FWC consideration and finalisation of applications for
agreement approval.
Item 2 - Subsection 443(1)
10. Subsection 443(1) of the Fair Work Act provides that the FWC must make a protected
action ballot order if it is satisfied that an application for a protected action ballot order has been
made under section 437 and that each applicant has been, and is, genuinely trying to reach an
agreement with the employer of the employees who are to be balloted.
11. Item 2 amends subsection 443(1) to make clear that the FWC must only make a protected
action ballot order in the circumstances prescribed in subsection 443(1) and that it must not make
a protected action ballot order where those circumstances have not been satisfied.
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Amendments ~ Schedule 1
12. Existing subsection 443(2) will be repealed as a consequence of this amendment and
substituted with new subsection 443(2) which provides that despite subsection 443(1), the FWC
must not make a protected action ballot order in prescribed circumstances (item 4).
Item 3 - After subsection 443(1)
13. Subsection 443(1) of the Fair Work Act provides that the FWC must make a protected
action ballot order if an application has been made in accordance with section 437 (paragraph
443(1)(a)) and each applicant has been, and is, genuinely trying to reach an agreement with the
employer of the employees who are to be balloted (paragraph 443(1)(b)).
14. This item inserts new subsection 443(1A) to provide that when considering whether an
applicant for a protected action ballot order has been, and is, genuinely trying to reach an
agreement, the FWC must have regard to all relevant circumstances, including a non-exhaustive
list of matters which are drawn from principles of a Full Bench of Fair Work Australia decision
in Total Marine Services Pty Ltd v Maritime Union of Australia [2009] FWAFB 368. The
matters are:
the steps taken by each applicant to try to reach an agreement;
the extent to which each applicant has communicated its claims in relation to the
agreement;
whether each applicant has provided a considered response to proposals made by the
employer; and
the extent to which bargaining for the agreement has progressed.
15. This amendment is intended to provide for greater transparency in relation to how an
applicant for a protected action ballot order demonstrates it has been, and is, genuinely trying to
reach an agreement, having regard to all relevant circumstances of bargaining. It is not intended
to displace other considerations regarding whether an applicant is genuinely trying to reach an
agreement for the purposes of paragraph 443(1)(b). For example, the existing jurisprudence
regarding the prohibition on granting a protected action ballot order where an applicant is
seeking to advance claims that are not about permitted matters is not disturbed by the inclusion
of the matters listed at new subsection 443(1A). That is, seeking a `non-permitted' matter in an
agreement continues to demonstrate that an applicant is not `genuinely trying' and is not affected
by the amendment.
16. Consistent with current practice, the genuinely trying to reach an agreement test does not
require bargaining to have been exhausted or to have reached an impasse before a protected
action ballot order can be made.
17. These new matters are not intended to require the FWC to establish fixed thresholds that
must be met in relation to all applications for a protected action ballot order. The FWC must
continue to have regard to all relevant circumstances in bargaining for a particular agreement and
the weight to be given to each of the matters provided in paragraphs 443(1A)(a) to (d) will
similarly be guided by the particular circumstances. For example, depending on the
circumstances, this may include having regard to the duration of the negotiations before the
application is made, the extent of bargaining in the number of meetings that have been scheduled
and held, and the degree of actual communication between the bargaining representatives. It is
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Amendments ~ Schedule 1
intended that the focus of this consideration is the conduct of the applicant for the order rather
than other bargaining representatives or the conduct of the employer. That is, it is not intended
that where an employer has not engaged in the bargaining process, an applicant is required to
seek and obtain good faith bargaining orders to demonstrate that bargaining has progressed or
that the applicant is genuinely trying to reach an agreement. However, an applicant's failure to
make genuine and reasonable attempts to engage with an employer, or an applicant's failure to
communicate the major aspects of its claims, such as wages, would be relevant and could
indicate that the protected action ballot application is premature and the applicant is not
genuinely trying to reach an agreement.
18. This item is also not intended to affect the meaning of genuinely trying to reach an
agreement where the phrase occurs elsewhere in the Fair Work Act (for example,
subsection 413(3)).
Item 4 - Subsection 443(2)
19. Item 4 repeals and substitutes subsection 443(2) to provide that despite subsection
443(1), which sets out the circumstances in which the FWC must make a protected action ballot
order, the FWC must not make a protected action ballot order in relation to a proposed enterprise
agreement if the FWC is satisfied that the bargaining claims of an applicant:
are manifestly excessive, having regard to the conditions at the workplace and the
industry in which the employer operates; or
would have a significant adverse impact on productivity at the workplace.
20. It is intended that where the FWC is called upon to consider whether the claims of an
applicant are manifestly excessive or would have a significant adverse impact on productivity,
the FWC can have regard to the bargaining claims on an `overall' basis or on an individual claim
approach, whichever approach the FWC considers appropriate in the circumstances. Further, it is
intended that the assessment is only relevant to bargaining claims that continue to be pursued by
the applicant at the time of the application for the protected action ballot order. That is,
abandoned bargaining claims that had been, but that are no longer, advanced by an applicant for
inclusion in the proposed enterprise agreement are not relevant for the purposes of new
subsection 443(2).
21. When considering whether the bargaining claims of an applicant are manifestly
excessive, the FWC will retain discretion about the matters it takes into consideration. The
phrase `manifestly excessive' is intended to be directed at claims that are evidently or obviously
out of range or above and beyond what is necessary, reasonable, proper or capable of being met
by the employer, when compared to the conditions at the workplace and the industry in which
the employer operates. The requirement for the FWC to assess the claims of an applicant having
regard to the conditions at the workplace is intended to be interpreted broadly and encompasses
both the terms and conditions of employment at the workplace, and other matters, such as the
financial situation of the workplace or the relevant industry, or matters of logistics or operational
capacity.
22. When considering whether bargaining claims will have a significant adverse impact on
productivity at the workplace, the FWC is not limited in relation to the matters that it takes into
consideration. For example, it may have regard to whether the claims will have a substantial or
deleterious effect on the output of the workplace relative to its labour, time or cost inputs.
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Amendments ~ Schedule 1
Whether a claim will have a significant adverse impact on productivity will depend on the
characteristics and capabilities of the workplace, which would be established on the facts and
circumstances surrounding the protected action ballot application.
23. Where the FWC is called upon to consider the bargaining claims of applicants to a joint
application for a protected action ballot order, the FWC will need to separately consider the
bargaining claims of each of the applicants. For example, where a protected action ballot
application is made by two applicants and one of the applicants is pursuing a claim that would
have a significant adverse impact on productivity, the FWC could not make the protected action
ballot order in respect of that joint application, whether or not another joint applicant is pursuing
the same claim.
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Amendments ~ Schedule 2
SCHEDULE 2 - APPLICATION AND TRANSITIONAL PROVISIONS
24. Schedule 2 inserts a new Schedule 6 at the end of the Fair Work Act to make
application and transitional provisions.
Fair Work Act 2009
Item 1 - At the end of the Act
25. This item inserts a new schedule in the Fair Work Act (Schedule 6).
New item 1 - Definition
26. New item 1 defines amending Act for the purpose of new Schedule 6.
New item 2 - Item 1 of Schedule 1 to the amending Act
27. New item 2 of new Schedule 6 provides that the amendment made by item 1 of
Schedule 1 to the amending Act applies in relation to an enterprise agreement that is made
after the commencement of that item. An enterprise agreement that is not a greenfields
agreement is made under subsections 182(1) or 182(2) of the Fair Work Act.
New item 3 - Items 2 to 4 of Schedule 1 to the amending Act
28. New item 3 of new Schedule 6 provides that the amendment made by items 2 to 4 of
Schedule 1 to the amending Act applies in relation to an application for a protected action
ballot order that is made to the FWC under section 437 after the commencement of those
items.
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