Enterprise bargaining refers to the process of negotiations that takes place between an employee, an employer, and their bargaining representatives. The discussions are driven by the goal of coming up with an agreement (Fair Work Ombudsman 2015). Through the Fair Work Act of 2009, a set of rules and obligations about how enterprise bargaining should be carried out have been documented in the Australian workplace. In effect, the application of this Act during the bargaining process ensures that both the employer and the employees can bargain over critical issues in good faith and come up with an agreement. Enterprise bargaining has transformed the Australian workplace. However, the current challenges in the workplace call for a relook at the role and relevance of enterprise bargaining in Australia to keep up with the changes.
Why Was It Introduced?
Before the 1990s, most of the Australian workers operated under a highly protected labor law system. The system was governed by key regulations whose aim was to regulate issues arising in the industrial tribunals. The system at the time had the powers to mediate on matters between the employees and their employers, as well as trade unions (Australian Bureau of Statistics 2013). Other powers that the tribunals possessed were that they had the mandate to offer awards, which included stipulating the conditions and rights of the workers at the workplace. Thus, the guidelines drafted by these tribunals were the main determinants of employment standards in respect to working hours per week, wages, leave provisions, termination, severance benefits, and work classification, among other issues (Briggs 2001). While the Australian mandatory arbitration system was a thorough system based on principles of both fairness and equity, it lacked the clear limits concerning managerial prerogative and failed to operate a free labor market (Lansbury 2000). Nonetheless, a critical decision that informed the need to start to develop the Australian industrial relations was the government’s decision to open up the country’s economy to respond to the increase in global competition. In effect, the general system through which the labor operations of the country operated were viewed as one characterized by rigid job classification features, a centered award regulation system, and a depiction of rigid labor use characteristics, which meant that the country could not effectively compete with the global economy. Thus, it was necessary that the labor system in the country be amended to place the country in a more competitive position locally and internationally.
The Significance of Enterprise Bargaining in the Australian Employment Relations System
For the better part of the 19th century, the efforts of both the state and the federal government encouraged unionism through enforcing industrial relations regulations. One of the major aims of the Conciliation and Arbitration Act formed in 1994 was to encourage and facilitate the operations of the employee and employer bodies, as well as to encourage the submission of industrial disputes to the court through organizations (Marshall & Mitchell 2006). In effect, the role of trade unions was very pivotal as parties could request dispute settlement on the premise that they were registered organizations. Also, unions were granted preference clauses for unionists in matters of retrenchment and engagement. Thus, non-union members desired to join these organizations to enjoy such benefits (Briggs 2001). However, the recent emphasis on decentralized bargaining, as well as the creation of individual and collective bargaining for workers that were initially only for trade union members have significantly reduced the role played by the unions, especially in matters of wage negotiation (Blake 1996). Further, the restriction of content issued by federal awards to given issues further encouraged workers to bargain for better employment conditions and wages outside the stipulations of the awards.
With the development of enterprise bargaining agreements, the level of industrial disputes in the country has reduced. There are also minimal lockout activities and strikes at workplaces since the 1980’s (Russell & Timo 2007). Traditionally, industrial tribunals applied the use of awards as a means to settle and prevent the occurrence of various disputes. This means that trade unions would present these disputes to the tribunals in a bid to negotiate for better employee wages and favorable work conditions. However, with the onset of the bargaining agreements, such instances have become very minimal. In effect, such decentralized bargaining ensures that industrial action is only enforceable during the bargaining period as long as the present actions are in support of the claims purported by the enterprise bargaining and if the enforceable agreements have already gone beyond the agreed date (Lansbury & Isaac 2005). In effect, the employer and the employee are not allowed to engage in industrial action when an agreement is still taking place, except in matters concerning health and occupational safety.
The development of the enterprise bargaining system was largely overseen by the Australian Industrial Relations Commission (AIRC). Among the main responsibilities of the enterprises were to ensure that there were reduced rigidities in award classification, making labor use flexible, and ensuring effective work scheduling. Further, there was the need to ensure that these enterprises could negotiate flexible agreements without the involvement of trade unions (Marshall & Mitchell 2006). However, the election of the Liberal party in 1996 sought to ensure that the role of the AIRC in the bargaining agreements was minimal as possible and that employees and employers could negotiate freely. In effect, when the coalition government was elected, it sought to promote the agenda of bargaining agreements through the Workplace Relations Act of 1996 (WRA) (Marshall & Mitchell 2006). Among the various stipulations proposed in the policy were a reduction of awards, scrapping off the arbitration role of the AIRC in wage matters, and making negotiations between employees and their employers possible. This implied that the AIRC powers in the negotiation process were significantly reduced as the influence of trade unions was cut off at the workplace.
Various employee- employer agreements were established under the Workplace Reforms Act. One such agreement was the Australian Workplace Agreement (AWA). One characteristic of the AWA is that it is non-collective in nature and it is aimed at the protection of both employees and their employer, with the ability for each party to contract out of the set labor conditions as provided through industrial awards (Marshall & Mitchell 2006). In effect, AWAs are a primary source of employment flexibility due to their support for ideal labor practices and work conditions. One of the ways that this is possible is that employees can get better working hours through the elimination of customary working hours, which are attained by dividing them through weekends and public holidays. As regards flexible pay, AWAs stipulate that employees should receive pay variations like yearly salaries that include overtime and penalty rates (Martin 2014). However, the issues of wage increases are still under managerial discretion. There has been a recent development of functional flexibility about AWAs. The truth of the matter is that even though awards have been tremendously simplified over the past years, they are still highly influential when it comes to the classification of work. This continues to act as a hindrance to the employees as they are required to act by stipulated requirements, their job content, and level of skill. However, AWAs are trying to introduce flexibility in labor functionality through suggesting that labor should be used in discretional ways, posing a challenge to job control. In effect, AWAs help in the provision of outcomes consistent with flexibility, which in turn leads to better productivity.
What is the Future of Enterprise Bargaining in the Australian System of Employment Relations?
The Australian Industrial Relations Commission, now termed as the Fair Work Australia, sought to establish the first set of guidelines for trade unions and employers in a bid to negotiate wage agreement matters. It is this decision that has since marked a strategic shift in the Australian industrial relations since 1991 from a centralized wage bargaining option to a decentralized wage bargaining option (Marshall & Mitchell 2006). However, years later, the value of enterprise bargaining and its rules have become a major contentious issue. In fact, there is growing unrest over the FWA arrangements and whether they are adequate in providing a balanced framework that is fair, efficient, and with an objective of ensuring industrial cooperation among parties.
Specifically, the future of enterprise bargaining in Australia is at stake as most employers seek reform. Businesses are facing a myriad of challenges from multiple directions, among them being the rise in the Australian dollar, which places financial and competitive pressures on companies, skills shortages owing to the minimum boom, as well as problems resulting from the two-speed economy (Fair Work Ombudsman 2015). At the same time, there is no guarantee that the decentralized wage bargaining agreements can deliver the required productivity growth that Australia requires in maintaining a competitive outlook.
Even though individual contracts are an alternative to collective bargaining, employees on individual bargaining tend to receive inferior terms and conditions as compared to employees who are on collective bargaining (Craig & Clarke 1993). In Australia, collective bargaining is a means through which employees can achieve most gains after shifting away from arbitration (Russell & Timo 2007). Even though employees on individual contracts do not get most of the benefits compared to their counterparts represented through collective bargaining, some gain by having the ability to wield considerable labor power, based on the labor market they belong. For such employees, individual contracts are the way to go as they have the necessary position to achieve lucrative careers. Thus, the employees are not willing to compromise their status in a bid to embrace collectivism. Overall, employees in individual contracts experience weaker bargaining positions than their counterparts who embrace collectivism. It is to this effect that the prominence of bargaining agreements is likely to flourish, with employees seeking better terms and conditions, as well as more power. In conclusion, bargaining agreements are likely to go on for long. Despite their prevalence, there is a need to ensure that bargaining agreements are equitable, free, and fair to make the Australian workplace favorable.
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Martin, J 2014, The Australian obsession with productivity and the labor market, Web.
Russell, B & Timo, N 2007, Enterprise bargaining and union recognition: Australian Canadian and American paths, Griffith University. Queensland, Australia.