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UpdatesNov 09, 2020

Enterprise bargaining during COVID-19

5 mins read

The next 12 months will be a unique and challenging environment in which to renegotiate an enterprise agreement (EA).

If your business has been hit hard by a downturn in sales, you will be left with very little to offer in terms of pay increases. You will have workers returning to work against a backdrop of heightened levels of psychological distress in the community. They are likely to have experienced increased personal financial pressure and social isolation. They are fearful of infection or losing their job. Returning to an uncertain working environment will worsen their personal distress, leading to increased absenteeism, workers’ compensation claims and low productivity.

An employer seeking to engage in collective bargaining in this environment, and carry the hearts and minds of the workforce to support what it wants in its EA, must appreciate the heightened sensitivity to change and the greater need for clear, consistent, transparent and empathetic messaging.

Employees need to believe their employer places a high priority on their health and safety. This will be enhanced if employers focus on working conditions supporting infection control and physical and mental health.

Some employers might consider that, amid all this uncertainty, it is better off just rolling over the current EA for a year to wait and see. Of course, this may be considered a lost opportunity to put in place a new framework to emerge from the pandemic.

The good faith bargaining framework created by the Fair Work Act 2009 (Cth) creates both opportunities and risks for an employer. The former will be maximised and the latter minimised with appropriate preparation and strategy.

Considering working from home 

Employers will need to review the experience of their employees working from home and assess whether that is something that is desirable in the long term. Similarly, provisions supporting health and wellbeing may come into greater focus in the next bargaining round.

Some employees and unions are concerned that working from home will lead to a push for a longer spread of ordinary hours and expanded use of individual flexibility arrangements. They are concerned that working from home results in unpaid overtime, with costs such as workstations, internet and electricity being shifted to employees. Working from home might make achieving a work and family balance even more difficult, with adverse consequences for mental health, and worse, heightened risks of family and domestic violence. There is also the challenge of keeping the home workplace safe and minimising ergonomic risks.

The Australian Council of Trade Unions (ACTU) is developing a template working from home log of claims and employers should expect to see this coming their way in bargaining rounds with unions.

Seeking EA provisions that support flexibility

It’s inevitable, given the economic uncertainty that employers face they will need to consider downsizing, organisational restructuring and outsourcing. Some employers will seek to avoid this by transferring staff temporarily between sites and roles. There will also be consideration of greater use of time-limited contracts to engage staff that would previously have been employed on an ongoing basis. This will lead to pressure to have EA provisions that support this flexibility.

Many union-negotiated EAs restrict the use of fixed-term engagements. If employers increase their use of maximum-term engagements and routinely renew these contracts over time, they will run into the principles identified in the Fair Work Commission in the 2017 Navitas decision. A series of back-to-back maximum-term contracts may morph into an ongoing employment relationship. If the maximum-term contracts do not represent the totality of the terms of the employment relationship, employers may face liability if they treat the employment as ending on the contract end date.

Providing evidence to support your claims

It is important to appreciate that the good faith bargaining rules of the Fair Work Act 2009 (Cth) are data-driven. If an employer advances a proposition that it cannot afford any pay increase, it will need to back-up this claim with relevant information and evidence. If it intends to demand good faith bargaining from other bargaining representatives, it needs to ensure its own house is in order.

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