Annual Workforce Conference How good faith bargaining is playing out in workplaces: the manufacturing sector

1. Annual Workforce Conference How good faith bargaining is playing out in workplaces: the manufacturing sector Stephen Smith, Director – National Workplace Relations, Ai Group

2. Background • Around 1300 agreements expire in the manufacturing sector this year • Unions delayed the renegotiation until after 1 July • A lot of bargaining is now going on but few agreements in unionised workplaces have yet been settled

3. Background (contd) • Sectors like automotive components have been targeted in previous bargaining rounds but it would be crazy for the unions to pursue costly claims this time around • If media reports are correct and the AMWU intends to engage upon a campaign of strikes to secure concessions, this will be very damaging for employers and employees in the manufacturing sector • So far, the priority in manufacturing workplaces has been the preservation of jobs – It is everyone’s interests to maintain this approach, and to maintain harmonious workplace relations

4. Methods used to avoid employment losses Australian Industry Group / American Express Survey Looking Towards the Upturn, August 2009

5. Wage outcomes in agreements which Ai Group was involved in - 1 March to 30 June • For the 38 agreements analysed: • 19 of the agreements were reached with a union • 19 were reached directly with employees • 13 of the agreements contained a nil wage increase in the first year • The average annualised wage increase was approximately 2.4 per cent The number of agreements finalised during the period was lower than normal given the unions’ strategy of delaying negotiations

6. Background (contd) • Too early to say how the Fair Work system will take shape – Some sensible decisions of FWA and some worrying ones • Employers are uncertain about their rights and obligations • Unions are pressing the boundaries of what “good faith bargaining” means, but companies are rejecting the unions’ “creative” interpretations

7. Areas to watch • The requirement to bargain in good faith – general principles: • Important to preserve Australia’s unique IR system rather than importing overseas bargaining approaches • Essential that parties cannot be forced to make concessions – enterprise bargaining was not meant to be easy • NUW v ACCO [2009] FWA 226, 7 Sept 09, Thatcher C: • Parties are entitled to engage in “hard bargaining” • Hard bargaining is fine, but not where pattern bargaining is occurring

8. Areas to watch (contd) • Prohibition on industrial action in pursuit of pattern bargaining: • NTU v University of QLD, [2009] FWA 90, 18 August 09, SDP Richards: • Definition of pattern bargaining in FW Act is not significantly different to definition in WR Act • 13 August decision re. Tyco Australia, SDP O’Callaghan declined to issue a protected action ballot order which the CEPU had applied for – evidence that the union was pattern bargaining

9. Areas to watch (contd) • The good faith bargaining requirement to “disclose relevant information (other than confidential or commercially sensitive information) in a timely manner”: • AMWU letter • Very little AIRC case law • Total Marine Services v MUA, 2009 FWA 290, 16 Sept 09, Thatcher C: “Written detail …..in respect of each of the 119 items seems excessive and oppressive” • AMWU’s approach is equally excessive and oppressive

10. Areas to watch (contd) • The good faith bargaining requirement to refrain from “capricious or unfair conduct that undermines freedom of association or collective bargaining”: • Introduction of changes during a period when bargaining is occurring: • LHMU v Coca-Cola Amatil [2009] FWA153, SDP O’Callaghan, 31 August 2009 • Restructuring of Syrup Room during bargaining did not breach good faith bargaining obligations. Company’s consultation process was appropriate

11. Areas to watch (contd) • The use by unions of bargaining orders to frustrate or delay ballots to approve agreements: • 3 orders issued in two week period by SDP Richards, SDP Watson and C Whelan • Ai Group intervention in Abigroup matter • SDP Drake Recommendation re. Transfield • NUW v CHEP, [2009] FWA 202, 11 Sept 09, VP Watson: • “Whether a particular order is contrary to s255 depends on the nature of the order, and the effect of the order in the circumstances of the case” • "The better interpretation of the provisions is that an order that delays a vote, provided it be only for a short time and does not in substance deny employees the opportunity to vote for an agreement, is not precluded by s255. • "In a given case the facts will need to be considered to determine whether intervention of this nature by deferring a vote has the effect precluded by s255”

12. Areas to watch (contd) • The requirement to be genuinely trying to reach agreement when a protected action ballot order is issued: • If unions are not bargaining in good faith, industrial action cannot be taken • MUA v Total Marine Services, [2009] FWA 187, 1 Sept 09, Thatcher C: • “Without doubt there is a close relationship between genuinely trying to reach agreement and bargaining in good faith” • In considering whether a party is genuinely trying to reach agreement it is relevant to take into account whether the relevant union is meeting the good faith bargaining requirements of the Act • Decision is being appealed by the company.

13. Areas to watch (contd) • Majority support determination: • In three of the cases determined so far secret ballots have been ordered (Cochlear, Virgin Tech and TRUEnergy) • Scope orders: • “Fair group” provisions – important issue • Melbourne Fire Board - parties have sought that the matter be dealt with by a Full Bench

14. Areas to watch (contd) • “Permitted matters” and “unlawful terms” in agreements: • Few cases so far • Federal Court decision on income protection insurance - Australian Maritime Officers Union v Sydney Ferries Corporation • Income protection insurance can be included in an agreement, but cannot be the subject of industrial action • If a union is still pursuing an income protection insurance claim when it takes industrial action, the action is unlawful • Industrial action must only be in pursuit of permitted matters

15. Areas to watch (contd) • Dispute settling terms in agreements: • All agreements must include a dispute settling term • Model clause in Regs but no deeming provision • Union claims: • Arbitration powers to FWA • Arbitration over any disputes which arise • Right to request under NES • Company’s would be unwise to agree to the unions’ claims

16. Areas to watch (contd) • Flexibility terms in agreements: • Concept arose from the debate about the abolition of AWAs and the need for flexibility • Clause in Regs is the Government’s clause - Not drafted by employers • Numerous protections – BOOT, employee can cancel arrangement at any time by giving notice • Based on AIRC’s standard clause for modern awards

17. Areas to watch (contd) Flexibility terms in agreements (contd): • Most agreements approved so far have used model clause (75%), including various agreements negotiated with AMWU • A further 5% have used model clause but omitted leave loading as an area where flexibility can be obtained (perhaps because leave loading is incorporated in rate of pay and not paid separately in that workplace) • The others have either had a more flexible clause or a less flexible clause

18. Areas to watch (contd) Flexibility terms in agreements (contd): • AMWU Clause: The terms that may be subject to an individual flexibility arrangement are: (a) a 15 minute tea break, paid at the rate prevailing at the time, will be granted 2 hours after the start of an employee’s ordinary hours; and (b) up to 5 rostered days off (“RDOs”) may be banked in a 12 month period—the banked RDOs may be taken at a time of the employee’s choice on the giving of 4 weeks’ notice to the employer • Both (a) and (b) are less flexible than the award provisions, so where is the flexibility!?

19. Areas to watch (contd) Flexibility terms in agreements (contd): • AMWU’s intent is to circumvent the Government’s policy intent • Union wants flexibility allowed only where: • The AMWU agrees (its preferred position) • The majority of employees agree • The flexibilities needed by a young mother may not be supported by the majority of workers in male dominated workplaces

20. Conclusion • Undoubtedly the FW Act increases union power • Over the months ahead, decisions of Fair Work Australia and the Federal Court will shape the new workplace relations system • Unions need to be responsible in the use of the new laws or risk damaging Australia’s recovery • The jury is still out on whether the new system will prove to be fair, flexible and productive