Enterprise Bargaining Update: Understanding Intractable Bargaining Declarations

As part of the Secure Jobs, Better Pay (SJBP) reforms to the Fair Work Act 2009 (Cth) (FW Act), section 235 now gives power to the Fair Work Commission (FWC) to make intractable bargaining declarations and determinations. What this means is that the FW Act now contains provisions that enable the FWC to intervene in enterprise bargaining disputes and make orders in respect of enterprise agreements when negotiations reach a stalemate (described as ‘intractable’ or difficult to resolve).

Under the current intractable bargaining scheme, where an enterprise agreement is not likely to be reached, bargaining representatives may apply for an “intractable bargaining declaration” and the FWC can grant a declaration if:

• an application has been made either after 9 months of unsuccessful negotiations or 9 months after the nominal expiry date for the prior agreement, whichever is later; and
• the FWC has dealt with the dispute in accordance with s.240 of the FW Act (that is via conciliation, mediation, the making of recommendations or opinion or via arbitration); and
• there are no reasonable prospects of the relevant enterprise agreement being reached if the FWC does not make a declaration; and
• it is reasonable for the FWC to make the declaration, taking into account the views of all parties.

Where an intractable bargaining declaration is made as a result of arbitration, the resulting determination made by the FWC means the FWC decides the terms of the enterprise agreement in dispute. While the FWC may make an independent determination on any disputed terms, the determination must include any terms already agreed upon by the parties.

On 12 June 2024, the Full Bench of the Fair Work Commission handed down its first-ever intractable bargaining workplace determination in Transport Workers’ Union of Australia v Cleanaway Operations Pty Ltd T/A Cleanaway Operations Pty Ltd [2024] FWCFB 287.

The dispute involved negotiations for a replacement enterprise agreement at Cleanaway’s Erskine Park site. The main issues in dispute were the quantum of pay increases, weekend penalty rates and the arrangement of ordinary hours at the site. Specifically:

• Cleanaway sought to maintain the ability to roster ordinary hours of work between Monday and Sunday whereas the Transport Works’ Union sought a determination to the effect that ordinary hours are worked between Monday and Friday only.
• In respect of pay increases, the Transport Workers’ Union sought increases of 6% per year for each of the four years from nominal expiry of the previous agreement to 23 September 2025. Cleanaway advanced an 11% increase over the 36-month term of the proposed agreement.

In determining the matter, the FWC had regard for the submissions and evidence of the parties and made general observations in respect of:

• the merits of the case;
• the interests of Cleanaway and the employees who will be covered by the determination;
• the significance, to Cleanaway and the employees, of any arrangements or benefits in an enterprise agreement that, immediate before the determination is made, applies;
• the public interest;
• how productivity might be improved in the enterprise concerned;
• the extent to which the conduct of the bargaining representatives for the proposed agreement was reasonable during bargaining;
• the extent to which the bargaining representatives for the proposed agreement have complied with good faith bargaining requirements; and
• any incentives to continue to bargain at a later time.

In respect of the arrangement of ordinary hours under the proposed agreement, the FWC adopted Cleanaway’s proposed hours of work compromise clause which provided for ordinary hours to be rostered across Monday to Sunday but with provision for permanent employees being able to elect to work Monday to Friday only due to personal or family circumstances. The Commission was satisfied that the compromise clause meets the caring and other responsibilities of employees which may arise on the weekends and that it was otherwise reasonable for Cleanaway and its employees to have some certainty in relation to rosters and so endorsed the limit on the number of occasions that an employee moves between ordinary hours Monday to Friday and ordinary hours Monday to Sunday to once per year.

In respect of the term of the agreement, the FWC found that it was in the interests of both the employees and Cleanaway for there to be certainty in relation to terms and conditions for some time in the future. The FWC agreed that the three-year period proposed by Cleanaway struck the right balance between providing incentives to bargain and the securing of benefits under the determination.

In respect of pay increases, the FWC determined that:

• having regard to the 21-month period between the last pay rise received by employees, a 6% pay increase will apply from 1 July 2023 and a 5% increase from 1 July 2024; and
• in respect of future increases, a 4% increase will apply annually from 1 September 2024 to 1 September 2026.

Further, the FWC determined that the Transport Workers’ Union claim for weekend penalty rates in line with the relevant award would be incorporated into the agreement, with some modification to clarify how the clause would interact with the ordinary hours of work clause in the agreement.

This precedent-setting outcome demonstrates the power of the FWC to set terms of proposed enterprise agreements when negotiations otherwise become intractable and bargaining representatives fail to come to an agreement. Employers who bargain, or are currently bargaining, ought to be aware of the FWC’s new capacity to make intractable bargaining declarations and strategically consider their approach to negotiations with this power in mind. A protracted bargaining process may be detrimental to employers if the FWC makes an intractable bargaining workplace determination that does not align with the employer’s preferred outcome.

If you require support with enterprise bargaining negotiations, please call NRA Legal on 1800 572 679.

Transport Workers’ Union of Australia v Cleanaway Operations Pty Ltd T/A Cleanaway Operations Pty Ltd.