The new workplace laws coming into effect next week will facilitate a ‘maturing’ of collective bargaining in Australia and require employers to be much more sophisticated in their approach to negotiations, according to workplace lawyer Chris Gardner.
The legislation potentially provides an opportunity for collective bargaining in Australia to ‘move to a much more mature footing’, he says, ‘which is free of a lot of the bad behaviour which is often present, and also focus the parties' minds on identifying the interests which drive the various positions and on solutions to points of disagreement.’
Gardner, a partner at Freehills, recently travelled to the United States with barrister Stuart Wood and Arnold Bloch Liebler partner Henry Skene to better understand how good faith bargaining works there and what the implications might be for Australia, under its new laws.
US legislation requires, as will be the case here, parties to approach negotiations with an open mind and a genuine desire to reach an agreement, Gardner notes. While the US laws are far less prescriptive than Australia's, ‘there have been many years of interpretations and case law which has given light to what good faith bargaining is, and what it isn't’.
More sophistication required
One of the key things Gardner discovered in the US is that the high degree of regulation and scrutiny surrounding negotiation of agreements – ‘which is what we are facing’ – has resulted in bargaining that is ‘much more sophisticated’.
‘There is greater investment made in the bargaining process than is, typically, made here. There's more time put into preparation and more resources applied to preparation and the actual negotiation.’
For example, he says, if an employer puts forward unaffordability as its reason for not agreeing to a particular union claim, that reason will be open to scrutiny. ‘And potentially the employer will be put to proof on that issue of whether they can afford it.’
In the US, both employers and unions go so far as bringing in finance experts, to either support or ‘dismantle’ a proposition around affordability, Gardner says. ‘That's not something we've really seen here because in Australia they've been able to say 'we just don't want to pay and that's it'.
‘[But] we're moving to an environment where it's going to be 'well why aren't you able to pay?' and so there's got to be a sound basis [for rejecting a claim]. If that basis is undermined - if it's shown that there is that capacity to pay or if that rationale that's been put up has been dismantled - then the bargaining position of that party will be compromised… and that's going to shift the power balance in the negotiation quite significantly.’
The greater scrutiny over what happens in the negotiating room means it's ‘very common’ for employers to record negotiations or have a transcriber present, Gardner adds.
Another distinctive feature of US bargaining is that lawyers often do the negotiating on both sides. Gardner, however, says that trend probably won't take hold here, where people are ‘more reluctant to deal with lawyers’.
New concepts, ‘levers’
Good faith bargaining in Australia is going to have both a tactical influence (‘what you say, how you say it and how you support what you say’) and a broader strategic influence (the ‘big picture’ of who the agreement will cover, at how many sites, who the bargaining representatives will be, and so on) on negotiations, Gardner says.
This is because the new laws contain ‘a number of new concepts and levers that parties can push or pull’, including scope orders and majority support determinations, which have not been a feature of our bargaining landscape to date.
A ‘higher degree of rigour’ will be needed when drafting agreements because a new feature of the laws is a judicial power to prevent breaches of agreements and to order compensation for breaches.
‘If for instance a party has a shift change arrangement or outsourcing and it is alleged that that is in breach of the collective agreement, the union can go to a court and seek to prevent that through injunctive relief - effectively an order to stop it. That means that words matter a whole lot more than they perhaps have in the past - they take on a greater importance because of that serious potential.’
Direct dealing ‘limited’
One of the more ‘surprising’ revelations from the US trip is the limited capacity of employers to influence their workforce once bargaining begins. ‘Once you're in bargaining the relationship is with the bargaining representatives. An employer's capacity to deal directly with a workforce is potentially limited because that is potentially undermining bargaining’.
Gardner says this will limit the extent to which an employer can simply break away from bargaining and attempt to directly engage with the workforce.
‘Whether we will see in Australia the extremes of America remains to be seen. But certainly there is a requirement in Australia that you don't engage in capricious or unfair conduct that undermines freedom of association or collective bargaining. It's a question of how broadly 'unfair conduct' will be interpreted.’
Grey areas
There are numerous grey areas in the Australian laws that will need to be tested before employers can be assured of clarity, according to Gardner.
For example, the Australian law says there is no requirement to make concessions during negotiations. Gardner says there is ‘tension’ in the US – and there will be here – because ‘the question arises: at what point does the failure to make concessions amount to not bargaining in good faith?’
What constitutes bad faith bargaining is also open to interpretation, Gardner says. In the US, for example, misleading communication to a workforce by a union during negotiations - often ‘a real bugbear’ for Australian employers - does not amount to bad faith bargaining.
Nor, he says, does aggressive negotiating tactics such as the use of insults, personal taunts, hostile demeanour, table thumping, or swearing constitute bad faith.
‘In the US it's OK to do those things. [But] there might be room for difference in Australia. If one side is faced with a degree of hostility from the other side which makes the negotiation untenable, that might amount to bad faith bargaining. It might. It remains to be seen.’
Get ready
Any employer that is currently bargaining or will be bargaining after 1 July needs to be preparing now to be ready for the changes, Gardner says.
‘We are still in a relatively embryonic stage of understanding how this legislation will actually play out; how it works in practice.’ So, he says, employers should consider the scenarios they are likely to face and ‘look at the various forks in the road to see how these scenarios might actually play out in practice’.
Specific grey areas he's identified include what might happen when, for instance, multiple unions cover employees at a workplace. He questions whether one union will have the capacity to break away from negotiations to make its own agreement; whether the employer can have separate negotiations with individual unions; whether it can force a single-site agreement as opposed to a whole-of-operations agreement; and whether specific employees, for example team leaders, can be excluded from an agreement.
‘That's the sort of thinking that needs to be done to be properly prepared.’
This article appeared in HR Daily1 on 22 June 2009.
Endnotes
- The article can be accessed via the HR Daily website.