Reasons for the Introduction of Employee Bargaining Agreements in Australia

Enterprise bargaining, in Australia, refers to the negotiation of working conditions and remunerations of employees at all of the stages of individual companies. Once the terms are established regarding these facts both employers and employees are liable to follow. This study is focusing on past and present states of enterprise bargaining in Australia. Additionally, the reasons for declining EAs are being discussed.  

The introduction of enterprise bargaining depends upon some reasons that can be explained from an employee’s perspective. Enterprise bargaining was incorporated in Australia under prices and incomes accord in the year of 1991.

Discrimination with employees regarding wage distribution is one of the main reasons behind introduction of enterprise bargaining process. Irreverent and improper wage distribution results in the exploitation of employees. This agreement between employees and employers secure that employees are paid according to the modern award system by fair work Australia. Discrimination in wage distribution impacts on economic condition of employees (Andersen et al. 2017). This bargaining process provides employees an essential opportunity to join together and collectively bargain their demands (keyba.com.au, 2016).

Retrenchment of employees is another reason that influenced the introduction of employee bargaining agreements. Lack of job security occurs without any proper agreement between employees and employers (keyba.com.au, 2016). However, after the introduction of this agreement, employees got a chance to do collective bargaining through forms of unions. Retrenchment of employees is a part of unfair labor practices, which hampers both employees and their families. In addition, to this, enterprise bargaining helps both parties to avoid this kind of unfair labor practices. This agreement is totally under the monitoring of fair work Australia. Hence, they will not approve any agreement unless “Better off overall’ (BOOT) is satisfied. Boot means that an employee is positioned in a better position through the help of this bargaining agreement.  

Unhealthy work environment is another main reason that influenced the incorporation of this agreement. Enterprise bargaining provides an opportunity for employees to protect their rights in a workplace collectively through union formation. Improper work environment is a factor that impacts employees both physically and mentally. Overexploitation of employees is a great problem that was faced mainly by private-sector employees in this country. However, by the introduction of this agreement, they can collectively place their demands and gain benefits. As said by Pekarek et al. (2017), negotiation of enterprise bargaining agreement provides an opportunity to increase transparency in business process. This tool can be used by employees to bargain regarding working hours and types of work. Hence, exploitation can be eliminated in and business.

The Proportion of Employees and Workplaces Covered by Enterprise Agreement (EA)

These reasons influenced the introduction of this agreement process, which has increased ability of employees to demand and fulfill their needs collectively. Moreover, government control is also exerted as the agreement is closely monitored by the concerned department. Lack of transparency in the employer-employee relationship has caused many problems for employees such as exploitation.

The proportions of employees and workplace currently being covered by Enterprise Agreement (EA)

Enterprise agreement refers to the legal paper that includes the terms and conditions under which a person will serve for a company. Current state of enterprise bargaining has changed over time. At present, significant changes are there between EA of private and public sectors. This change has great impact on all of the stakeholders and the economy of Australia. It has been found that approximately one-third of the employees that are covered by EA are in the public sector (Pennington, 2018). However, this number is lesser in terms of private sector of Australia. The following figure shows that approximately 527 EAs are present in the Public sector and near about 12305 EAs are present within the private sector. On the other hand, it has been reported that around 13 million workers of private sector are being covered by EA. only

According to the trends in federal enterprise bargaining report, different private and public sectors have different statistics of EAs and employees covered by EAs. According to the following figure, healthcare and community service sector is the most efficient industry with near about 1051 EAs and a total of 391581 employees are being covered by this agreement while serving for a company. On the other hand, the real estate, rental and hiring services are experiencing the lower statistics regarding EAs and employees covered by it.

On the other hand, it has been found that EA coverage varies with the size of the agreement. Pennington (2018) have mentioned that different size of EAs is covering different numbers of employees. For example, the Workplace Agreements Database (WAD) has found that in small companies, only 7 employees are being covered by Single EA. however, another category of EAs is covering an average of 31 employees. In this way, the number of employees with the size of EA changes in different sectors.

Another change has been spotted in the current EA state in Australia. The average duration of EAs approved by non-union and union has been changed over the passage of time. For example, the non-union EA duration was 3.3 years in the year of 2017. This number has been changed since 2010. However, it has been found that the average duration of union approved union was 7 years in 2017.

Current State of Enterprise Bargaining in Australia

Decline in private-sector coverage and its reasons

At present, the EAs have been found in decreasing order. Since 2014, the number of EAs and employees covered by EAs are decreasing. According to Pennington (2018), several facts are there associated with this matter and these facts are influencing the decline in the number of EAs in private sector.

This decline can be seen more in the private sector than in the public sector. Pennington (2018) has mentioned that this decline has been found mostly in the retail and fast food industry. For example, Coles, Woolworths, and other retail organizations have tried to replace existing EAs but faced many challenges. The time and cost constraints are two most important reasons behind this declining state of EA in private sector. It takes lots of time and budget in negotiation, preparation of agreement and approval process with the Fair Work Australia. On the other hand, it is mandatory for employees to pay union fees if they want the coverage of EA, which is not preferred by modern workers in Australia. Enterprise bargaining is prone to inequality and it is affecting current employees and employers. The current staff is not satisfied with EA and enterprise bargaining as they found it biased to employers. As mentioned by Forsyth (2018), EA is not potent enough to provide benefits to employees with all levels of experience. It has been found that a gap is being created between the employers and the employees due to Ea in private sectors. These reasons are very strong and these are the causes of decline in EA in private sectors at present.

Implications of this decline on employers, employees, and companies

Decline of EAs affect all the stakeholders including employers, employees and the economy of Australia. It is preventing employers to have a simple remuneration system for employees. Besides, employers are not getting opportunities to tailor particular business needs. It is a long process to prepare and get approval for the EAs for employers. They are facing legal constraints during this process. It demands an investment of both time and budget from employers (Williamson et al. 2015). This issue can be avoided with the current declining state of EA.

Employees cannot get a secured payment structure as EAs are approved after getting BOOT satisfaction by the Fair Work Australia. It situation is providing less power in getting benefits from employers through collective bargaining. However, individual opinion can be granted at this situation. Many employees do not prefer to pay union fees. They can get rid of this mandate.

Impact of the Declining State of Enterprise Bargaining on Employees, Employers and the Economy

EAs reduce the number of worker strike incidents and it allows government to maintain a constant economic flow. However, decline of EA is damaging the relationship between employers and employees. This aspect may cause fluctuations in the economy of Australia.

It can be said that enterprise bargaining is not the best way forward in Australia for employees, employers and the overall economy. As discussed industries like real estate are facing a lower number of EAs. This is mainly due to some reasons like wage stagnation of employees. This has impacted on the membership of unions. Moreover, the current model of enterprise agreement has some limitations. The agreement done between employees and employer are only limited to a company and the whole industry is not impacted by the agreement.

There is another issue related to enterprise bargaining that impacts young people of gig economy. The current system of wage determination and enterprise bargaining does not impact the employees of gig economy. The employees of gig economy are generally represented by young individuals and immigrants. Workers of gig economy like immigrants and young employees are considered as vulnerable groups in the workforce (Nycinquiry.org.a, 2018). This staffs are generally considered independent contractors and not achieve the same protection as other employees. Hence, it is very essential to provide these advantages for them. Otherwise, different mentioned problems in section one like overexploitation, discrimination can impact them. The gig economy is growing and it is expected to grow in the future, which is decreasing the use of enterprise bargaining. Moreover, Orchiston et al. (2019) stated that the employers of small enterprises face a tough situation to confront big labor unions during enterprise bargaining. This weakens through force and causes an increase in production cost. Extreme terms and conditions of labor unions impact on small and medium businesses.  

However, alternative methods can be implemented that can cover all segments of the workforce properly. Multiemployer bargaining can be implemented in the place of enterprise bargaining. In this process of negotiation, small and medium employers of an industry and labor unions can take part. As stated by Townsend and Loudoun (2016), multiemployer bargaining representatives from labor unions of industry and different employers meet to conduct bargaining in presence of an unbiased committee. Various topics of bargaining like payment of wages, other benefits of employees and others can be included. Hence, a whole industry can be included in the agreement and this can impact on the overall economy of Australia. Moreover, overall improvement of employer-employee relationships in an industry can be seen. Thus productivity of the industry will increase and the employees of gig economy will also get benefitted.

Analysis and Critique of the Academic Literature on Enterprise Bargaining in Australia

Small employers mostly get benefitted from multiemployer bargaining because they can conduct negotiation with workers union through forming an association. This helps them to build a united front against the worker union. However, in enterprise bargaining employers are unable to form any association against the labor union. On the other hand, employees will also get a big platform to place their needs and demands (Scholarship.law.upenn.edu, 2018). Hence, chance of different adverse impacts of negotiations like lockouts and strikes also reduces. Reducing the instances of strikes and lockouts can impact on overall productivity of the industry. Thus, the economy of the country can increase and competitive advantage can be gained by the industry. Hence, it can be said that multiemployer bargaining can impact on employees, employers and the overall economy. Moreover, enterprise bargaining cannot be considered as the best option to develop all essential stakeholders.

Conclusion 

From the above discussion, it can be concluded that enterprise bargaining is an essential tool that has helped to restore rights and needs of employees. However, with time the use of this tool has diminished in both private and public sectors of Australia. Different other tools like multiemployer bargaining can be implemented in future.

References

Andersen, S.K., Kaine, S. and Lansbury, R.D., 2017. Decentralised bargaining in Denmark and Australia: Voluntarism versus legal regulation. Australian Bulletin of Labour, 43(1), p.45.

Forsyth, A., 2018. Faculty Collective Bargaining in Australia. Journal of Collective Bargaining in the Academy, (13), p.44.

keyba.com.au (2016), Advantages of EBA, Available at:https://keyba.com.au/understanding-the-pros-and-cons-of-an-enterprise-bargaining-agreement/ [Accessed on 13^th October 2019]

Nycinquiry.org.au (2018), Future of enterprise bargaining, Available at:https://nycinquiry.org.au/what-is-the-future-of-enterprise-bargaining-at-work/ [Accessed on 13^th October 2019]

Orchiston, A., Creighton, B., Denvir, C., Johnstone, R. and McCrystal, S., 2019. Pre-strike ballots and enterprise bargaining dynamics: An empirical analysis. Melbourne University Law Review, 42(2), p.593.

Pekarek, A., Landau, I., Gahan, P., Forsyth, A. and Howe, J., 2017. Old game, new rules? The dynamics of enterprise bargaining under the Fair Work Act. Journal of Industrial Relations, 59(1), pp.44-64.

Pennington, A. 2018. On the Brink: The Erosion of Enterprise Agreement Coverage in Australia’s Private Sector, The Centre for Future Work, The Australia Institute. Available at https://d3n8a8pro7vhmx.cloudfront.net/theausinstitute/pages/2905/attachments/original/1544650280/On_the_Brink_Formatted.pdf?1544650280 [Accessed on 13^th October 2019]

Townsend, K. and Loudoun, R., 2016. Employee voice in enterprise bargaining: what managers miss when they fail to listen. Labour & Industry: a journal of the social and economic relations of work, 26(4), pp.266-280.

Williamson, S., O’Donnell, M. and Shingles, J., 2015. Can collective enterprise bargaining affect the psychological contract?: An analysis of the 2011 Australian public service negotiations. Australian Bulletin of Labour, 41(1), p.1.

Scholarship.law.upenn.edu (2018), multiemployer bargaining. Available at:https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=4702&context=penn_law_review   [Accessed on 13^th October 2019]