The centrepiece of the new Fair Work legislation is the changes surrounding collective bargaining. At the heart of these new laws is the obligation to bargain in good faith.
The United States has had a good faith bargaining law since 1935. So what can we learn from the United States? I recently travelled to the United States to talk with experts in the area.1 The US provision is cast in quite general terms. The Australian provision is quite specific. It is as follows (to paraphrase):
- attending, and participating, in meetings at reasonable times
- timely disclosure of information
- responding to proposals in a timely manner
- genuine consideration to the proposals of the other bargaining representatives and providing reasons for responses
- no capricious or unfair conduct that undermines freedom of association or collective bargaining, and
- recognising and bargaining with other bargaining representatives.2
These requirements are exhaustive but potentially broad in their application. So what lessons are there from the US experience?
Beware of ‘Direct Dealing’
In the US, an employer that deals directly with its employees in a negotiation can fall foul of the good faith bargaining requirement. So too in Australia where there is an obligation to recognise and bargain with the bargaining representatives. Indeed, the first good faith bargaining order made by Fair Work Australia bears this out. In the Queensland Tertiary Admissions Centre limited case, the employer was ordered to stop putting an agreement to a ballot of employees. This was because the employer did not involve the relevant union, the ASU, in meetings and discussions about the proposed agreement.3
So when employers are bargaining, they will need to be mindful of the way in which they engage with their workforce. In some circumstances, such engagement will amount to them not bargaining in good faith. The capacity for Fair Work Australia to intervene and impact ‘direct dealing’ is further illustrated by the recommendations of Senior Deputy President Drake in Transfield.4
You must intend to agree
As is the case in the United States, there is no obligation to make concessions or agree. That said, good faith bargaining is likely to dictate that you approach bargaining with an open mind and with the aim of reaching agreement. This is certainly the case in the United States and was the interpretation given to Australia’s previous incarnation of good faith bargaining in the 1990s.5
So once the obligation kicks in there needs to be the requisite intent.
In the US the failure to exhibit this intent is called ‘surface bargaining’. This occurs where a party is ‘going through the motions’ of bargaining. As with the US law there is an inherent tension between a law which on the one hand requires bargaining, but on the other hand does not require agreement or concessions. It raises the question, at what point does the failure to make concessions amount to an absence of good faith bargaining? Put another way when does hard bargaining become surface bargaining? Is the tactic of ‘goal post shifting’ acceptable? How about a take it or leave it approach? All the circumstances of the bargaining will be analysed to make this assessment. What is clear is that such tactics will be open to scrutiny as will others – such as communication to a workforce about what is happening at the negotiating table. It needs to be remembered that these obligations apply to unions as well as employers.
Positioning claims and defending claims is vital
Good faith bargaining demands that proper consideration be given to claims and responses provided.
Employers may need to explain and attempt to justify why claims cannot be met. If the reasons provided are without proper foundation concessions are probably inevitable.
In the United States, finance experts are often called upon to analyse claims by respective parties to support or challenge them. If an employer ‘cannot afford’ to meet a wage claim – this can be open to challenge and may need to be supported by documentary evidence. Data is important here. In the United States, a lot of the wrangling over good faith bargaining centres on the request by unions of employers to produce documents relating to the bargaining. Expect to see such wrangling here as well. Invariably there will be questions about the relevance of certain documents requested and the use of those documents.
Preparation is paramount
We now have a law which effectively scrutinises what happens in the negotiating room. Negotiators will need to work hard in advance on what will be said when, and how. Of course any negotiation demands this. But the need is elevated in an environment which is open to regulatory scrutiny: here the potential for Fair Work Australia to be involved in the negotiation and test and challenge the respective positions of the parties.
Bargaining is more sophisticated
The high level of regulation dictates a high level of sophistication from negotiators. As a general observation, employers in the United States tend to spend more time planning their negotiation strategy and tend to have more resources on hand than is often the case in Australia. Australian employers will invariably increase the time and investment made in collective bargaining. Greater controls over the negotiation process (through the good faith bargaining requirements) and bargaining generally (through the capacity for parties to seek majority support determinations, scope orders and, potentially, arbitrated outcomes) underscore this inevitability.
Chris Gardner is a Partner in the Employee Relations area at Freehills. He is one of Australia’s leading enterprise bargaining and workplace change lawyers.
This article featured in the September issue of Human Capital Magazine.
Endnotes
1. With Henry Skene, Arnold Bloch Leibler and Stuart Wood, Barrister.
2. See section 228(1) Australian Fair Work Act 2009.
3. ASU v Queensland Tertiary Admissions Centre Ltd [2009] FWA 53. There is a question mark over the power to make such an order in light of s.255(1)(c) Australian Fair Work Act 2009 (which does not appear to have been raised in this case).
4. Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Transfield (Australia) Pty Ltd [2009] FWA 93
5. Public Sector, Professional, Scientific, Research, Technical, Communications, Aviation and Broadcasting Union (Australian Broadcasting Corporation) (AIRC, Full Bench), unreported decision, 31 August 1994, Print L4605.
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