What multi-employer bargaining means for business

What multi-employer bargaining means for business

Bargaining across employers hasn’t been done on a significant scale since the 1980s, after which the Keating government made the move to enterprise bargaining.

The only remnants of the practice left are voluntary multi-employer deals – opt-in for employers – and the largely unused industry bargaining stream for the low paid.

The government’s bill not only significantly expands the scope for sector-wide deals but introduces strike rights across unconnected employers for the first time.

At stake is the economy’s productivity, wage growth, competitiveness and stability.

How does it work?

At the heart of the Secure Jobs, Better Pay Bill are two paths to multi-employer bargaining.

First is the revamped low-paid industry bargaining under the new badge of “supported bargaining”.

This lowers the threshold for multi-employer deals to cover workplaces that find it difficult to bargain at the enterprise level, whether because they lack the power or the resources. But it largely leaves the commission to decide whether that’s appropriate as long as it considers pay and common interests.

Government-funded sectors like aged care, disability care and early childhood education are at the top of the list. But contractors such as cleaners or security guards are likely to be covered.

This is the least controversial of the changes. That’s because, conceptually at least, the section already exists, although not in practice due to its high technical hurdles. Even the Business Council of Australia supports this stream as a way to boost pay in feminised industries.

While sector-wide strike rights are new, there have already been wildcat and coordinated industry strikes by both childcare and aged care workers in protest over low pay in the past few years.

The real controversy lies with the so-called “single-interest” multi-employer bargaining. It’s this stream which theoretically exposes much of the economy to sector agreements.

To be covered, employers would only need to have “clearly identifiable common interests” – that “may” include geography, shared regulatory regimes or the nature of the work – and coverage would have to be “in the public interest”. Much of this will be at the commission’s discretion within the broad confines of the Fair Work Act’s objectives.

The only carve-outs are micro businesses of fewer than 15 employees, commercial construction labourers and those employers with current enterprise agreements.

To force unwilling employers to the table or to rope them into an existing multi-employer deal, unions will have to prove a majority of each workforce supports an agreement.

Who’s it cover?

Great question. And maybe the million-dollar one.

University of Adelaide law professor Andrew Stewart, who is a supporter of multi-employer bargaining, says that the single-interest stream is so ill-defined it should be withdrawn and reworked.

“If I can’t answer a simple question about who this will cover – if I can’t answer that as a technical expert – then that seems to be a problem with the legislation,” he told a Senate inquiry into the bill last week.

University of Adelaide law professor Andrew Stewart says the bill could allow for bargaining up and down a supply chain. James Brickwood

Burke has said the stream is for all those employees or employers who want to bargain across firms but whose pay is higher than the supported bargaining allows.

He’s opposed to further clarification, however, arguing “if we go down that path we will end up where we started, with so much red tape that the stream becomes impenetrable”.

However, Stewart asks how much broader is it intended to apply: “is it for sector-wide agreements, or bargaining up and down supply chains, or enterprises which have outsourced some or all of their labour requirements to contractors or agencies?”

“Does it matter that the employers concerned are capable of negotiating single-EAs or that some of them have done so in the past?” he says.

Even the bill’s exemption of construction does not prevent civil contractors, electrician and plumbing trades and material suppliers from using the stream.

Major airline Qantas is particularly worried.

Qantas CEO Alan Joyce said there would be no Jetstar with multi-employer bargaining. Louie Douvis

Its submission argues the stream will pressure sectors to make deals with “high watermark terms and conditions that will inevitably test the financial viability of many enterprises”.

CEO Alan Joyce warned if multi-employer bargaining was around two decades ago there would be no Jetstar. That was because the low-budget airline was set up with a new agreement that brought in “market competitive terms and conditions” for new staff.

The airline has good reason to be concerned. Unions are all but explicit that they will use the multi-employer laws to target the airline and its outsourced services.

The Transport Workers Union’s submission on the bill is entirely about Qantas “splintering” its workforce into 17 subsidiaries and 21 contractors as it progressively outsources baggage handlers, cabin crew, engineers and caterers in what it calls a “race to the bottom”.

Even Labor Senator Tony Sheldon, a former TWU leader, described Qantas as a “textbook case” for multi-employer bargaining ahead of last month’s Jobs and Skills Summit.

Other unions say they will use the laws to target rapidly growing sectors like the non-university higher education providers – who are not covered by enterprise agreements and have been accused of offering poor pay – or the solar farms and renewable energy projects set to dominate the next decade.

The union-dominated but increasingly fractured manufacturing sector is also likely to be targeted. NSW commercial air conditioning companies have even welcomed multi-employer bargaining as a way to stop competitors undercutting wages and quality, which they blame for forcing businesses to close shop in the past 12 months.

Supply chains could also be targeted. The union that is one of the bill’s biggest supporters is the United Workers Union, one of the largest unions in the country. The UWU represents all the key low-paid workers who will use multi-employer bargaining, such as cleaners, security guards, caterers, childcare and aged care workers and even horticulture workers. But it also represents much of the supply chain, through warehouse and production workers, that is often divided into direct and outsourced employees, and could well make the move to multi-employer deals.

Will employers be forced into sector agreements?

That all depends. Unions don’t love the bill – they see it as still presenting a lot of hurdles. As much as some believe it has a “real chance” of succeeding other unionists privately believe it won’t be used much due to the hurdles and resources needed.

For unwilling employers, unions will have to get a majority support before they can even start bargaining. That’s no easy task. Especially in an economy where union membership has declined to less than 11 per cent of the private sector workforce.

Take the case of Amazon, which employs 2200 warehouse workers. Despite four years and three major unions trying to organise the workers, Amazon still has no enterprise agreement and there is no majority support petition to force it to the table.

The bigger the workforce becomes or the more fractured it is the harder this gets.

The Commonwealth Bank, for example, was able to secure a majority of its 33,000 workforce to vote for its non-union enterprise agreement last year, dwarfing the finance union’s 5000 members.

In the case of the west-coast resources sector – which largely has avoided enterprise agreements – Woodside has for the last six months been fighting an AWU petition showing a majority of its offshore oil and gas platforms want to bargain. Eight legal objections later and there is still no determination.

The ACTU’s McManus has been emphatic that “nothing will happen” to small business because unions have never had high membership in small businesses, even when they had 60 per cent union membership.

But it remains to be seen how this will play out. When all a union has to do to include an unwilling small business into an already existing multi-enterprise agreement is to get a majority support of workers, that may not be as difficult as it once was.

Will there be more strikes?

This will be a real test of the system.

Days lost to industrial action in the private sector remain at historic lows. Within sector-wide bargaining, union members will be the only ones allowed to strike and so the proportion of workers who stop work are likely to be an even smaller minority than enterprise bargaining.

But unions can still command a lot of power and cause significant damage with just a few hundred members in key choke points in the supply chain.

Witness the stevedores and tugboat workers in the maritime industry, vessel suppliers and gas workers in the resources sector or truck drivers in the parcel delivery sector. The proviso is these choke points – with the key exceptions of the west-coast resources sector – are usually already covered by enterprise agreements and so would be exempt.

Some academics also note that multi-employer bargaining already exists in other countries, such as Denmark, where there is 65 per cent union membership but where there has been fewer days lost to industrial disputes than Australia.

The government has also introduced extra measures to curb strikes including arbitration of intractable disputes and compulsory conciliation before a union can take industrial action.

This is on top of measures that terminate industrial action if it threatens to cause significant damage to the economy or to the welfare of the population.

What could happen?

As much as the government is accusing employers of launching a scare campaign on multi-employer bargaining, that may be the entire point.

Both McManus and Burke have in recent weeks expressed the position that the mere threat of multi-employer bargaining may actually encourage employers into enterprise agreements.

“There will be some businesses that don’t want to have anything to do with multi-employer bargaining and will know that if you have a single enterprise agreement then you are not affected,” Mr Burke told the National Press Club on Wednesday.

Which way the economy shifts – enterprise or multi-employer bargaining – may be the real question for business in the end.

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