Since 6 June 2023, the Fair Work Commission (FWC) has had the power to resolve so-called ‘intractable bargaining disputes’ by compulsory arbitration.

The FWC will only exercise these powers if satisfied that:

• conciliation has not resolved the dispute;
• at least 9 months have passed since the nominal expiry date of the previous enterprise agreement;
• there is no reasonable prospect of agreement being reached if the FWC does not intervene; and
• it is reasonable in all the circumstances to proceed to compulsory arbitration – or as it is called, issue an intractable bargaining workplace determination – taking into account the views of the parties.

The FWC may first issue an intractable bargaining declaration and provide the parties with a further period to negotiate (a post-declaration negotiation period). Following a post-declaration negotiation period, the FWC may make an intractable bargaining workplace determination to resolve any matters that have not been agreed by the parties.

In making a workplace determination, the FWC must take into account the significance to the employers and employees of any arrangements or benefits in an enterprise agreement that applies to any of the employers’ employees before the determination is made.

The terms and conditions of any determination cannot be less favourable to employees when compared against a term in an existing agreement that deals with the matter.

The first of these cases has been recently determined.

The dispute

The determination in Transport Workers' Union of Australia v Cleanaway Operations Pty Ltd T/A Cleanaway Operations Pty Ltd (2024) was made to resolve an intractable dispute involving a major provider in waste management and environmental services across Australia. The employer’s workforce at Erskine Park is covered by an enterprise agreement that expired in 2022.

The union applied for an intractable bargaining declaration in January 2023, which the FWC granted with a 2-week post-declaration negotiating period. During this period, three private conferences were held, but five unresolved issues remained:

• ordinary hours of work;
• weekend penalty rates;
• the agreement's expiry date;
• wage increases; and
• consultation procedures.

Therefore, the FWC proceeded with a hearing to determine an intractable bargaining workplace determination. The employer and the union adduced evidence and made submissions. The FWC then issued a decision and provided a draft determination to the parties involved based on its decision.

The FWC was required to consider the interests of employees and employers, public interest considerations like job security for employees, the merits of the case, productivity, and the significance of existing arrangements between the parties.

The resolution

The FWC resolved the issues in dispute as follows:

• Hours of work: The FWC reviewed the employer’s proposed hours of work clause and considered whether it made a less favourable provision than in previous agreements. The FWC accepted the employer’s proposal, with modifications allowing employees to opt for Monday to Friday work based on personal circumstances. The FWC acknowledged the employer’s operational needs and the expected rise in weekend work due to upcoming government mandates on waste collection. The decision permitted the employer to schedule ordinary weekend hours, while giving employees the option to decline weekend shifts.
• Weekend penalty rates: The FWC rejected the employer’s argument that the union's demand for higher weekend penalty rates would increase costs and reduce permanent employment opportunities. The FWC determination supported paying overtime rates for weekend work, clarifying that ordinary hours worked on weekends will be compensated at these higher rates. The determination included a clause ensuring that employees working on weekends or public holidays receive the appropriate rates, which are more favourable than standard shift loading rates.
• Term of agreement: The union sought an expiry date of 30 June 2026. The employer sought a date 1 year later, on grounds that it would provide stability, allow for adjustments to client demand and work arrangements, and align with its contract obligations. The FWC took into account the prolonged negotiation difficulties and the uncertainties during the COVID-19 pandemic, and decided on an expiry date of 30 June 2027.
• Pay increases: The employees had not received a pay increase since September 2021, despite significant inflation. The union proposed 6% annual pay rises from 2022 to 2025. The FWC considered various factors, including inflation and the time since the last pay increase, and determined the pay increase should be 6% from 1 July 2023, followed by 5% from 1 January 2024, and 4% annually from 1 September 2024 to 2026.
• Consultation: The employer and the union had agreed to the establishment of an Employee Consultative Committee comprising equal management and workforce representation, which would meet quarterly and oversee the implementation of the determination and business performance improvements. An issue in dispute was how this Committee would deal with proposals by the employer to change ordinary hours. The FWC rejected the employer’s proposed clause, which would prescribe how this would occur, noting that existing consultation requirements already mandated discussions on changes to employees' regular rosters or work hours.