Home - Why make an enterprise bargaining agreement?

UpdatesSep 26, 2018

Why make an enterprise bargaining agreement?

As at May 2016, just over one-third of Australian employees were covered by a collective or enterprise bargaining agreement (EBA).

EBAs are more likely to exist in the public sector compared with the private sector and not surprisingly, are more common in larger organisations with high union density, because they are easier to organise and tend to pay higher wages.

By Charles Power

As at May 2016, just over one-third of Australian employees were covered by a collective or enterprise bargaining agreement (EBA).

EBAs are more likely to exist in the public sector compared with the private sector and not surprisingly, are more common in larger organisations with high union density, because they are easier to organise and tend to pay higher wages.

EBAs delivered, on average, annual pay increases of 2.7% in March quarter 2018 (up from 2.5% in the December quarter 2017). The average pay increase for EBA workforces where no unions are present was 2.3%.

EBAs delivered higher annual pay increases in Construction (5.5%), Administrative and Support Services (3.9%) and Accommodation and Food Services (3.2%) in March quarter 2018. Compare this with Agriculture, Forestry and Fishing (2.1%), Transport, Postal, Warehousing (2.2%), and Information, Media, Telecommunication Services (2.2%).

EBAs can benefit employers too

Today, unions are seeking provisions in EBAs dealing with job security, union rights, consultation, redundancy and limitations on casual employment.

The primary reason an employer might seek to make an EBA is to ‘tailor’ modern award conditions so they align with the needs of your organisation and its workforce.

While modern awards may not present problems or issues for your organisation and its workforce, flexibility can be achieved in other ways. However, your organisation might not be big enough to justify the expense and fuss of making an EBA.

An EBA will enable you to secure common terms and conditions of employment in an instrument that is transparent and enforceable by statute.

If you operate in a large organisation, an EBA can be a more efficient means to regulate employment, rather than having a myriad of individual employment agreements. But EBAs aren’t the only way.

You can easily regulate ‘across the board conditions’ in policies and standard terms and conditions in employment agreements. Also, your employees might value keeping the pay and benefits they have achieved through individual negotiation privately.

Employees might feel that they can better secure ‘across the board’ wage increases and enhanced conditions (e.g. redundancy benefits) through collective bargaining rather than through individual negotiations though.

However, if there is no union presence, there may be no means to organise employees collectively.

Union density in Australia is declining. In August 2016 only 13.2% of all employed persons were union members. Low union density and employee disinterest will mean that an EBA process is less likely to deliver real benefits for employees.

EBAs negotiated with unions will usually secure rights for unions and union members (e.g. paid leave for union delegates to receive training and rights of entry). They will also lead to strengthened dispute resolution procedures (which might give, for example, the Fair Work Commission power to arbitrate disputes) and consultation rights and obligations where major operational changes impact on the workforce.

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