Have you under-estimated the risk of multi-employer enterprise bargaining

One of the key changes made to the Fair Work Act 2009 (FW Act) by the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 was the introduction of the multi-employer enterprise bargaining streams.

These changes were designed (along with other changes made at the time) to increase the prevalence of enterprise bargaining and get wages moving after an extended period of stagnate wage growth.

There are now two avenues available for unions to access multi-employer enterprise bargaining (i.e. bargaining for an enterprise agreement which will cover two or more employers) – (1) the supported bargaining stream and (2) the single interest employer bargaining stream. Both these streams require the Fair Work Commission (FWC) to make an order authorising the start of multi-employer enterprise bargaining.

Supported bargaining stream

A union can apply to the FWC for a supported bargaining authorisation for a multi-employer enterprise agreement and the FWC must grant the authorisation if it is satisfied that it is appropriate for the relevant employers and employees to bargain together having regard to:

• the prevailing pay and conditions within the relevant industry or sector including whether low rates of pay prevail in the industry or sector;
• whether the employers have clearly identifiable common interests including having regard to their geographic location, the nature of their enterprises and the terms and conditions of employment in those enterprises, and being substantially government funded;
• whether the likely number of bargaining representatives would be manageable; and
• any other matters the FWC considers appropriate.

Importantly, under the supported bargaining stream it is not necessary for a union to establish that a majority of employees of each of the relevant employers support bargaining for the multi-employer enterprise agreement. Historically, employers could not be compelled to bargain for an enterprise agreement unless there was such majority support of employees for bargaining.

At the time the changes were introduced to Parliament there were serious concerns raised by employer groups about the potential breadth of the supported bargaining stream and the circumstances in which a union could seek to engage the supported bargaining stream. Employers at the time were comforted by various statements made by the Government including:

• the supporting bargaining stream is intended to assist those employees and employers who may have difficulty bargaining at the single enterprise level e.g. those in low paid industries such as aged care, disability care and early childhood education and care who lack the necessary skills, resources and power to bargain effectively. The supported bargaining stream will also assist employees and employers who may face barriers to bargaining, such as employees with a disability and first nations employees (taken from the Explanatory Memorandum (EM) to the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill).
• the Bill intends to assist workers who require support to bargain. This might include those in low paid occupations, government funded industries, and female dominated sectors, as well as employees with a disability, employees who are culturally and linguistically diverse and first nations employees who may be employed in such sectors and face additional hurdles (taken from the EM).
• the Bill will remove barriers to access to the existing low paid bargaining stream with the intention of closing the gender pay gap and improving wages and conditions in sectors such as community services, cleaning and early childhood education and care, which have not been able to successfully bargain at the enterprise level (taken from the Second Reading Speech for the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill).

Until the application in relation to McDonald’s (see below), the union movement has only invoked the supported bargaining stream in cases where the relevant employers were reliant on government funding – early childhood education and care, community and social welfare services, and disability service providers. And, in all these cases the relevant employers consented to the granting of the authorisation by the FWC.

In the McDonald’s case¹, the SDA seeks to invoke the supported bargaining stream in the case of several McDonald’s franchise stores in South Australia. The union claims that the predominantly young, casualised workforce, who are reliant on award wages (and, in particular, junior rates) fit the criteria for the supported bargaining stream. Not surprisingly, the employers have opposed the application. The case was heard in February before a Full Bench of the FWC and represents a test case on the breadth of the supported bargaining stream.

The union has picked its target (McDonald’s franchisees) carefully given it has ample evidence to support the claim that the relevant employers (McDonald’s franchisees) have clearly identifiable common interests given the standardisation of their operations under a franchise arrangement. Although, the employers are running a case that there are no such common interests given the differences in their operations. In addition, the employers are claiming that the supported bargaining stream should not be available to the union because there are no barriers to enterprise bargaining as evidenced by the relevant employers being previously covered by enterprise agreements.

Implications for employers – supported bargaining stream

Employers conducting businesses in sectors outside the anticipated target area of the supported bargaining stream – aged care, disability care and early childhood education and care – should look out for the outcome of the McDonald’s case and consider the implications for their IR strategy carefully.

These employers may need to reassess the risk of being caught up in a supported bargaining authorisation where it is not necessary for a union to establish that a majority of their employees support bargaining for the multi-employer enterprise agreement.

If an employer is not actively bargaining for an enterprise agreement, is affording its employees award terms and conditions, is in a sector where the union is active and where their business is objectively similar to that of other employers in the sector, they may be vulnerable to being caught up in a supported bargaining authorisation.

Single interest employer bargaining stream

A union can apply to the FWC for a single interest employer authorisation for a multi-employer enterprise agreement and the FWC must grant the authorisation if it is satisfied (amongst other things) that:

• a majority of employees of each of the relevant employers support bargaining for the multi-employer enterprise agreement;
• the relevant employers and their employees are not covered by an existing enterprise agreement that is within its nominal term or the relevant employers and the union have not agreed in writing to bargain for a single enterprise agreement;
• the relevant employers have clearly identifiable common interests with relevant considerations including geographical location, the applicable regulatory regime and the nature of the enterprises and the terms and conditions of employment in those enterprises;
• the operations and business activities of each of the relevant employers are reasonably comparable;
• the relevant employers have at least 20 employees; and
• it would not be contrary to the public interest to grant the authorisation.

Unions have invoked the single interest bargaining stream in a range of sectors with the consent of the relevant employers. These employers have included Catholic Schools, TAFE, various government agencies and employees in the HVAC (heating, ventilation and air conditioning) sector.

To date, there has been one contested application made by a union² in relation to four mining companies in New South Wales for a multi-employer enterprise agreement that would cover underground coal mine supervisors, shift engineers and control room operators.

The FWC granted the authorisation as against three out of the four employers and carefully considered the tests to be applied in determining whether the relevant employers have clearly identifiable common interests and the operations and business activities of each of the employers are reasonably comparable after considering a lot of evidence put on by the relevant employers about the nature of their operations, activities, commercial interests and employment and industrial arrangements.

The employer which escaped inclusion in the authorisation was able to satisfy the FWC that their operations and business activities were not comparable to the other employers and that there were not identifiable common interests. The matters of significance included that unlike the other relevant employers, the employer operated as a sole supplier to a single power station customer and was not competing in export markets to sell their coal and did not generate a profit or commercial gain from their operations.

Again, the union movement picked its target to explore the breadth of the single interest employer bargaining stream carefully – a unionised workforce, operating in the same geographic location (New South Wales), largely operating same business (a coal mine). The decision is on appeal to the Federal Court.

Implications for employers – single interest employer bargaining stream

Employers should consider the implications of this case for their IR strategy and look out for the results of the appeal. Employers may need to reassess the risk of being caught up in a single interest employer authorisation.

If an employer does not have in place an existing enterprise agreement within nominal term, is not actively bargaining for an enterprise agreement, is in a sector where the union is active and where their business is similar to that of other employers in the sector, they may be vulnerable to being caught up in a single interest employer authorisation.

These employers have at least the added protection of the union needing to establish that a majority of their employees support bargaining for the multi-employer enterprise agreement which is not the case under the supported bargaining stream. Employers will have an opportunity to work with their employees directly to put a case as to why a multi-employer enterprise agreement may not be in their best interests and why they should not support the obtaining of a single interest employer authorisation.

Furthermore, if the Government is returned after the upcoming Federal election (due before May 2025), further amendments to the FW Act may be on the cards to broaden the reach of single interest employer bargaining stream. A number of unions have proposed that the requirement for a majority of employees of each of the relevant employers to support bargaining for a multi-employer enterprise agreement be removed, giving unions easier access to this stream of enterprise bargaining. Keep an eye out for that!

Footnotes

1. B2024/992 – Application by the SDA for a supported bargaining authorisation.
2. Association of Professional Engineers, Scientists and Managers, Australia v. Great Southern Energy Pty Ltd and Ors [2024] FWCFB 253.