The good, the bad and the dodgy: what you should know about enterprise bargaining
Collective bargaining over decades has delivered pay and conditions for coal miners well above legal minimums. But now, labour hire companies use sham bargaining to drive conditions down. Here’s your guide to how the system works – and where it is failing.
1. Collective bargaining gives workers a chance to get a fairer share of profits
A boss and an individual worker don’t have equal bargaining power, especially in the mining industry where the employers are often big multinationals. That’s why having the right bargain collectively through unions is recognised under international conventions as essential to giving workers the opportunity to achieve a fair deal at work.
Under Australia’s Fair Work Act, enterprise bargaining is a way for workers to band together to get a fairer share of the profits of a business, beyond the legal minimums in industry Awards and National Employment Standards.
Decades of collective bargaining in the coal industry has delivered EAs with substantially better pay and conditions than the Black Coal Industry Award, with pay rates about a third higher and improved protections in areas from shift penalties, allowances and leave arrangements to rostering, notice and termination.
Collective bargaining allows workers stand together through their union, assert their rights and apply pressure – through industrial action if necessary – to get a better deal.
2. Labour hire companies use ‘sham bargaining’ to game the system
Mining companies have sought to get around union collective bargaining by undercutting permanent workers with labour hire. Many labour hire companies simply want an Enterprise Agreement to lock in low rates so they can bid for contracts and undercut permanent workers – all at the direction of the mining companies who hire them. Once a valid EA is in place, workers can’t take any lawful industrial action to improve their conditions for the term of the agreement, which is usually four years.
The minimum conditions for an enterprise agreement are that there are at least two employees covered by it and it passes a Better Off Overall Test (BOOT) and some procedural steps.
Labour hire companies often game the system by setting up a new company, hiring a couple of workers and saying to them ‘there’s a job for you but we need this Enterprise Agreement, and we’d prefer not to have the union involved, keep it quiet’. The workers are given documentation that they’ve had no input into and told they will be asked to vote for it in 21 days, which is the minimum ‘consultation’ period.
Once the boxes are ticked and the Fair Work Commission (FWC) approves it, the Enterprise Agreement voted on by just two, five or ten people can be used to employ many hundreds or even thousands of workers.
This tactic is used not only by fly-by-night contractors. BHP’s in-house labour hire outfit Operations Services had two agreements voted on by a few non-union iron ore mineworkers in the Pilbara, which were intended to cover thousands of coal miners on the east coast.
The union has successfully challenged many of these dodgy non-union EAs in the mining industry – like BHP Operations Services agreements. There is a small window after they have been lodged when the Commission is considering whether it meets the BOOT and procedural requirements, where we are able to challenge them. The Mining and Energy Division has made this a priority and had considerable success in knocking off EAs or making employers go away and improve them.
3. Many Enterprise Agreements are deeply unfair, but still legal
However, there are many EAs in the mining industry which don’t breach any laws but still lead to very unfair outcomes.
The BOOT only requires EAs to ensure workers are better off than the Award, not industry standard pay and conditions which are much higher due to successful union collective bargaining. This is a failure of the system that leads to workers doing the same job but with vastly different pay and conditions, because they’re employed on different EAs.
Further, the FWC regularly approves EAs that allow for casual work, even though casual work is not allowed for under the Black Coal Award. While EAs must be better off ‘overall’ than the Award, under the Fair Work Act they don’t need to contain every Award provision. So by paying an hourly rate slightly above the Award minimum with a 25% casual loading, the FWC can and regularly does decide that workers would be better off overall than the Award and give their stamp of approval. This is despite strong arguments from the Union about the detrimental nature of casual work and the fact that workers have the double whammy of precarious work and pay well below industry standards.
We have pursued different legal strategies to address the ‘permanent casual’ rort.
4. The Union can’t veto EAs we don’t like
The Union can challenge EAs we believe don’t meet legal requirements (although the IR Omnibus Bill is trying to remove this right). We have successfully challenged well over 50 EAs in the mining industry, mostly labour hire companies, which don’t meet requirements in terms of content or proving workers genuinely understood what they were voting on.
However, if EAs are voted up by a majority of workers and meet the legal requirements set out by the Fair Work Commission, then generally the Agreement is made and it is valid. The Union can’t veto it, even if we believe it is unfair and shouldn’t be approved because it is well below industry standards.
Sometimes the Union is named in labour hire EAs so that we have the right to represent union members covered by it. We may negotiate on behalf of members, or recommend a vote for or against. However, EAs only become valid by being voted up by a majority of employees and approved by the Fair Work Commission – the Union plays no role in their approval.
5. We need fairer workplace laws
To stamp out sham enterprise bargaining in the labour hire sector, we need fairer workplace laws. Industry Awards should be more closely aligned to industry standards so that businesses aren’t able to exploit the discrepancy in industries like coal mining. The Better Off Overall Test should reflect going rates in the industry.
‘Same job same pay’ laws for labour hire workers, as Federal Labor has recently committed to, would stamp out the business model where workers side by side can receive vastly different pay and conditions.
And we need a definition of casual in the Fair Work Act that reflects the actual nature of work performed, not just the label in the contract.
6. Higher union density delivers better outcomes in bargaining
The benefits of collective bargaining aren’t automatic. Big companies don’t just automatically decide to share their profits fairly with workers. The best outcomes are achieved when more workers are in the union – that’s because they have the solidarity and support they need to assert their rights, which may sometimes include taking protected industrial action.
For a great story about union members standing together or a better enterprise agreement, listen to our podcast: The Battle for Boggabri.