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Fair Work Commission—General Manager’s reports—Developments in making enterprise agreements under the Fair Work Act 2009 for 2012-15


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General Manager’s report into developments in making enterprise agreements under the Fair Work Act 2009 (Cth)

2012-2015

Bernadette O’Neill, General Manager

November 2015

The contents of this paper are the responsibility of the author and the research has been conducted without the involvement of members of the Fair Work Commission.

ISBN 978-0-9942664-4-6

© Commonwealth of Australia 2015

This work is copyright. Apart from any use as permitted under the Copyright Act 1968, all other rights are reserved. Requests and inquiries concerning reproduction and rights should be addressed to:

Diana Lloyd, Manager, Media and Communications

GPO Box 1994

Melbourne VIC 3001

Phone: 03 8656 4848

Email: Diana.Lloyd@fwc.gov.au

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Table of contents List of tables................................................................................................................................

List of charts ...............................................................................................................................

List of abbreviations ...................................................................................................................

Executive summary ................................................................................................................ vii

1 Introduction ........................................................................................................................ 1

1.1 Overview of resources used in the report ...................................................................................... 2

1.1.1 Australian Bureau of Statistics data ............................................................................... 2

1.1.2 Fair Work Commission administrative data .................................................................... 3

1.1.3 Australian Workplace Relations Study ........................................................................... 3

1.1.4 Workplace Agreements Database .................................................................................. 5

1.1.5 Other commissioned research........................................................................................ 5

1.1.6 Case law ......................................................................................................................... 6

1.1.7 Issues of comparability between the 2012 and 2015 reports ......................................... 6

2 Bargaining for an enterprise agreement .......................................................................... 7

2.1 Legislative changes affecting bargaining ....................................................................................... 7

2.2 Significant decisions in relation to bargaining ................................................................................ 7

2.2.1 Notice of employee representational rights .................................................................... 7

2.2.2 Good faith bargaining provisions .................................................................................... 7

2.3 Reasons for making an enterprise agreement indicated by quantitative data ............................... 8

3 Disputes arising during the bargaining process ........................................................... 11

3.1 Quantitative summary of bargaining applications ........................................................................ 12

3.2 Bargaining orders ......................................................................................................................... 13

3.2.1 Significant decisions in relation to bargaining orders ................................................... 13

3.3 Serious breach declarations ........................................................................................................ 13

3.4 Majority support determinations ................................................................................................... 14

3.4.1 Significant decisions in relation to majority support determinations ............................. 14

3.5 Scope orders ................................................................................................................................ 14

3.5.1 Significant decisions in relation to scope orders .......................................................... 15

3.6 Bargaining disputes ..................................................................................................................... 15

3.7 Low-paid authorisations ............................................................................................................... 16

3.7.1 Significant decisions dealing with a low paid authorisation .......................................... 16

3.8 Single-interest employer authorisations ....................................................................................... 16

3.9 Protected action ballot orders ...................................................................................................... 17

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3.10 Low-paid workplace determinations ............................................................................................. 19

3.11 Industrial action related workplace determinations ...................................................................... 19

3.12 Bargaining related workplace determinations .............................................................................. 19

3.13 Dispute prevention initiatives and new approaches ..................................................................... 19

4 The approval and processing of enterprise agreements .............................................. 23

4.1 Changes and developments in approval and processing of enterprise agreements indicated by quantitative data ...................................................................................................... 23

4.2 Enterprise agreement triage pilot ................................................................................................. 25

5 The coverage of enterprise agreements ........................................................................ 27

5.1 Legislative changes in the coverage of enterprise agreements ................................................... 27

5.1.1 Employees fairly chosen ............................................................................................... 27

5.2 Developments in coverage indicated by quantitative data ........................................................... 28

5.2.1 Coverage by method of setting pay .............................................................................. 28

5.2.2 Overall coverage of enterprise agreements ................................................................. 29

5.3 Effect on designated groups ........................................................................................................ 33

5.3.1 Coverage of designated groups ................................................................................... 34

5.4 Enterprise agreements by business size ..................................................................................... 35

6 The content of enterprise agreements ........................................................................... 36

6.1 Developments in the permitted content of enterprise agreements .............................................. 36

6.1.1 Significant decisions regarding permitted matters ........................................................ 36

6.1.2 Productivity and innovation in enterprise agreement clauses ...................................... 36

6.2 Wage and condition developments for designated groups .......................................................... 37

6.2.1 Wage developments for approved enterprise agreements in designated groups ........ 37

6.2.2 Conditions developments for designated groups ......................................................... 41

6.3 Developments in the mandatory content of enterprise agreements ............................................ 43

6.3.1 Legislative developments to mandatory content in enterprise agreements ................. 43

6.3.2 Significant decisions regarding mandatory content ...................................................... 44

6.3.3 Use of model terms in enterprise agreements ............................................................. 45

6.4 Developments in relation to unlawful content in enterprise agreements ..................................... 46

6.4.1 Legislative changes to unlawful content in enterprise agreements .............................. 46

6.4.2 Significant decisions regarding unlawful content .......................................................... 47

References .............................................................................................................................. 48

Appendix 1 - Enterprise agreements - lodgment by industry, 1 July 2012 to 30 June 2015 .................................................................................................................................. 51

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Appendix 2 - Bargaining applications - lodgments, 1 July 2009 to 30 June 2012 ............. 54

Appendix 3 - Overview of Enterprise Agreement Triage Process ...................................... 55

Appendix 4 - Schedule 2.2 Model flexibility term .............................................................. 56

Appendix 5 - Schedule 2.3 Model consultation term ........................................................ 58

Appendix 6 - Schedule 6.1 Model term for dealing with disputes for enterprise agreements ....................................................................................................................... 61

Appendix 7 - Technical notes ................................................................................................ 63

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List of tables Table 2.1: Reasons why enterprises use an enterprise agreement by predominant gender of enterprise, per cent of enterprises with an enterprise agreement ......................................................... 9

Table 2.2: Reasons why enterprises do not use an enterprise agreement by predominant gender of enterprise, per cent of enterprises without an enterprise agreement .............................................. 10

Table 3.1: Bargaining applications - lodgments, 2012-15 ........................................................................ 12

Table 3.2: Bargaining applications - finalisations, 2012-15 ...................................................................... 12

Table 3.3: Protected action - lodgments, 2012-15 .................................................................................... 17

Table 3.4: Protected action - finalisations, 2012-15 ................................................................................. 18

Table 4.1: Enterprise agreement - lodgment and approval, 1 July 2012 to 30 June 2013 ....................... 23

Table 4.2: Enterprise agreement - lodgment and approval, 1 July 2013 to 30 June 2014 ....................... 24

Table 4.3: Enterprise agreement - lodgment and approval, 1 July 2014 to 30 June 2015 ....................... 24

Table 4.4: Median processing times 1 July 2012 to 30 June 2015 ............................................................ 25

Table 5.1: Number of enterprise agreements approved per reporting period, by industry, 2009-10 to 2014-15 ........................................................................................................................................... 30

Table 5.2: Number of employees covered by enterprise agreements approved per reporting period, by industry, 2009-10 to 2014-15 ............................................................................................ 31

Table 5.3: Enterprise agreements approved by industry and type, 1 July 2012 to 30 June 2015 .............. 32

Table 5.4: Average numbers of employees covered by an enterprise agreement by industry, 2012- 13 to 2014-15 ...................................................................................................................................... 33

Table 5.5: Employment levels for designated groups, June 2012 and June 2015 .................................... 34

Table 5.6: Selected characteristics of employees by method of setting pay, May 2014, per cent ............ 34

Table 5.7: Employees who spoke a language other than English at home by method of setting pay, per cent ................................................................................................................................................ 35

Table 5.8: Proportion of enterprises using an enterprise agreement by business size ............................. 35

Table 6.1: Comparison of enterprise agreement wage amounts to awards by predominant gender, per cent of enterprises with an enterprise agreement ......................................................................... 38

Table 6.2: AAWI (%) in enterprise agreements by gender and by proportion of women, 2009-10 to 2014-15 ............................................................................................................................................... 39

Table 6.3: AAWI (%) in enterprise agreements by type of employment and by proportion of part-time, 2009-10 to 2014-15 ................................................................................................................... 40

Table 6.4: AAWI (%) in enterprise agreements by non-English speaking background status and by proportion of non-English speaking background employees, 2009-10 to 2014-15 ........................... 40

Table 6.5: AAWI (%) in enterprise agreements for young and mature age workers and by proportion of employees, 2009-10 to 2014-15 ................................................................................... 41

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Table 6.6: Coverage of designated group employees by core provisions in enterprise agreements, 2012-13 to 2014-15 ............................................................................................................................ 42

Table 6.7: Model dispute resolution clause in enterprise agreements 1 July 2012 to 30 June 2015, per cent of approved enterprise agreements ...................................................................................... 45

Table 6.8: Model consultation clause in enterprise agreements 1 July 2012 to 30 June 2015, per cent of approved enterprise agreements ............................................................................................. 45

Table 6.9: Types of flexibility terms in enterprise agreements 1 July 2012 to 30 June 2015, per cent of approved enterprise agreements ..................................................................................................... 46

List of charts Chart 5.1: Workplace pay-setting arrangements, May 2012 and May 2014 .............................................. 28

Chart 5.2: Number of agreements approved and number of employees covered per quarter, 2009-10 to 2014-15 ................................................................................................................................... 29

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List of abbreviations

AAWI Average Annualised Wage Increase

ABS Australian Bureau of Statistics

AMWU Australian Manufacturing Workers’ Union

ANZSIC Australian and New Zealand Standard Industrial Classification

APESMA The Association of Professional Engineers, Scientists and

Managers, Australia

AWIRS Australian Workplace Industrial Relations Survey

AWRS Australian Workplace Relations Study

BOOT Better Off Overall Test

CFMEU Construction, Forestry, Mining and Energy Union

CMS Case Management System

EEH Employee Earnings and Hours

Explanatory Memorandum Explanatory Memorandum to the Fair Work Bill 2008 (Cth)

Fair Work Act Fair Work Act 2009 (Cth)

Fair Work Commission Commission

Federal Court of Australia Federal Court

IFA Individual flexibility arrangement

NES National Employment Standards

NOERR Notice of Employee Representational Rights

WAD Workplace Agreements Database

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Executive summary The General Manager of the Fair Work Commission (the Commission) is required every three years under s.653(1) of the Fair Work Act 2009 (Cth) (Fair Work Act) to:

• review the developments in enterprise agreement making in Australia;

• conduct research into the extent to which individual flexibility arrangements (IFAs) under modern awards and enterprise agreements are being agreed to, and the content of those arrangements; and

• conduct research into the operation of the provisions of the National Employment Standards (NES) relating to employee requests for flexible working arrangements and extensions to unpaid parental leave.

This report presents findings for the 26 May 2012-25 May 2015 period from the review into the developments in enterprise agreement making in Australia. Pursuant to s.653(3) this report is due to the Minister for Employment within six months from the end of the reporting period, i.e. by 25 November 2015.

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Key legislative developments in enterprise agreement making

During the reporting period the Australian Parliament passed the Fair Work Amendment Act 2012, the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Act 2012 and the Fair Work Amendment Act 2013 to amend the Fair Work Act. The amendments:

• provide the Commission with a new function of ‘promoting cooperative and productive workplace relations and preventing disputes’; 2

• prohibit the making of an enterprise agreement with only one employee; 3

• require enterprise agreements to include a consultation term that requires employers to consult with employees in relation to changes to their regular rosters or ordinary hours of work; 4

• make opt-out clauses an unlawful term; 5 and

• provide that a term of an enterprise agreement that requires or permits superannuation contributions to be made to a specified fund for the benefit of a default fund employee is an unlawful term, unless the fund meets certain criteria. 6

1 Section 653(1A) of the Fair Work Act provides that the General Manager is required to review and undertake research for the three-year period from commencement of the provision and each later three-year period. Section 653 commenced operation on 26 May 2009 (see s.2 of the Fair Work Act). The initial reporting period concluded 25 May 2012. The initial General Manager’s report presented results which included data up to 30 June 2012 as a result of data collection periods. This report includes data from 1 July 2012 to 30 June 2015 for the same reason. 2

Fair Work Act, s.576(2)(aa). 3 Fair Work Act, s.172(6). 4

Fair Work Act, s.205(1)(a). 5 Fair Work Act, s.194(ba). 6

Fair Work Act, s.194(h).

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Key findings from the quantitative data about enterprise agreement making

During the reporting period, a total of 19 763 applications for approval of enterprise agreements were lodged and 18 656 were approved. The number of enterprise agreements approved each year has fluctuated, trending downwards over the reporting period. The number of employees covered by enterprise agreements has also declined over the reporting period. The largest amount of enterprise agreements approved over the reporting period by industry were in construction and manufacturing, which together accounted for almost half of all enterprise agreements approved. The average number of employees who were covered by an enterprise agreement was 135, slightly higher than in the previous reporting period.

Representatives of employers were asked why, or why not, enterprise agreements had been made at their enterprise. Their main reasons for making enterprise agreements were employee organisation demands, to reward employees, and because the terms and conditions of awards were not suitable or flexible enough for their enterprise. The main reasons enterprises gave for not making enterprise agreements were that they considered award rates and conditions adequate, they preferred to negotiate with individual employees and/or they considered the enterprise bargaining process too difficult to implement.

Key findings from the quantitative data about designated groups

Section 653(2) provides that the General Manager must consider the effect of enterprise bargaining on the following groups:

• women;

• part-time employees;

• persons from a non-English speaking background;

• mature age persons;

• young persons; and

• any other persons prescribed by the regulations. 7

For the reporting period, the most common method of setting pay for the designated groups was by an award. Enterprise agreements were the second most common method of setting pay for all designated groups except young people, where ‘other’ methods of setting pay were more prevalent.

In terms of wage developments in approved enterprise agreements over the reporting period, there was no consistent trend relating to female Average Annualised Wage Increases (AAWIs) compared with male AAWIs. Part-time employee AAWIs were lower than AAWIs for full-time employees. Non-English speaking background employee AAWIs were broadly similar to English speaking background AAWIs. Young employees exhibited lower AAWIs than both employees aged between 21 and 45 and mature age employees.

7 Fair Work Act, s.653(2). The regulations do not prescribe any other persons.

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Key innovations at the Commission in enterprise agreement making

The Commission, through its Future Directions program, implemented two initiatives which relate to enterprise agreement making during the reporting period. Its enterprise agreement triage pilot sought to improve timeliness, cost effectiveness and consistency in the approval of enterprise agreements and the New Approaches initiative responded to the Commission’s new statutory obligation of promoting cooperative and productive workplace relations and preventing disputes.

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1 Introduction The Fair Work Commission (the Commission) is the national workplace relations tribunal. It is established by the Fair Work Act 2009 (Cth) (Fair Work Act). The Commission carries out a range of functions including maintaining a safety net of modern award wages and conditions; facilitating enterprise bargaining and approving enterprise agreements; administering the taking of protected industrial action and settling industrial disputes; granting remedies for unfair dismissal; and regulating industrial organisations.

The Commission is comprised of Members who are appointed by the Governor-General under statute, headed by a President. 8 The President is assisted by a General Manager,

9 also a statutory

appointee, who oversees the administration of Commission staff. Commission staff are engaged to provide support to the tribunal and its Members. Further information about the Commission can be found on its website, www.fwc.gov.au.

Under s. 653(1) of the Fair Work Act the General Manager must:

• review the developments in enterprise agreement making;

• conduct research into the extent to which individual flexibility arrangements (IFAs) under modern awards and enterprise agreements are being agreed to, and the content of those arrangements; and

• conduct research into the operation of the provisions of the National Employment Standards (NES) relating to employee requests for flexible working arrangements and extensions to unpaid parental leave.

The review and research must also consider the effect that these matters have had on the employment (including wages and conditions of employment) of the following persons:

• women;

• part-time employees;

• persons from a non-English speaking background;

• mature age persons;

• young persons; and

• any other persons prescribed by the regulations. 10

The Fair Work Act specifies that the research must be conducted in relation to the first three years following the commencement of s.653 and each subsequent three-year period, 11 and a written

report of the review and research must be provided to the Minister within six months after the end of the relevant reporting period. 12

8 Fair Work Act, ss. 575 and 626. 9 Fair Work Act, s.656. 10

Fair Work Act, s.653(2). The regulations do not prescribe any other persons. 11 Fair Work Act, s.653(1A). 12

Fair Work Act, s.653(3).

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This report presents developments in enterprise agreement making in Australia for the three-year review period from 26 May 2012 to 25 May 2015. 13

The report is divided into six sections dealing with developments in enterprise agreement making:

• Section 1 — overview of resources used in the report;

• Section 2 — bargaining for an enterprise agreement;

• Section 3 — disputes arising during the bargaining process;

• Section 4 — the approval and processing of enterprise agreements;

• Section 5 — the content of enterprise agreements; and

• Section 6 — the coverage of enterprise agreements.

No significant developments in the termination of enterprise agreements occurred during the reporting period.

1.1 Overview of resources used in the report

A range of data and resources have informed the report. These include:

• survey data from Australian Bureau of Statistics (ABS) collections;

• administrative data collected by the Commission;

• data drawn from the Australian Workplace Relations Study (AWRS) conducted by the Commission, which links employer data with employee data collected for the period;

• data from the Workplace Agreements Database (WAD), compiled and maintained by the Department of Employment;

• other commissioned research; and

• case law.

1.1.1 Australian Bureau of Statistics data

ABS data sources that are used in this report include the Employee Earnings and Hours (EEH) and Labour Force surveys.

1.1.1.1 Employee Earnings and Hours survey

The EEH survey is an employer-based survey conducted biennially. It measures weekly and hourly earnings of employees. In addition, it provides detailed information about the characteristics of

13 Section 653(1A) of the Fair Work Act provides that the General Manager is required to review and undertake research for the three-year period from commencement of the provision and each later three-year period. Section 653 commenced operation on 26 May 2009 (see s.2 of the Fair Work Act). The initial reporting period concluded 25 May 2012. The initial General Manager’s report presented results which included data up to 30 June 2012 as a result of data collection periods. This report includes data from 1 July 2012 to 30 June 2015 for the same reason.

The Fair Work Amendment Bill 2014 was passed by both Houses of the Australian Parliament on 11 November 2015. As this report presents developments in enterprise agreement making in Australia for the three years from 26 May 2012 to 25 May 2015, amendments made to the Fair Work Act in relation to greenfields enterprise agreements and protected action ballot orders passed by the Australian Parliament, are outside the reporting period for this report have not been addressed.

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employers and their employees, allowing for an analysis by gender, industry, occupation, state, firm size, type of employee and method of setting pay.

1.1.1.2 Labour Force survey

The monthly Labour Force survey is the primary source for official ABS estimates of employment and other labour market activity in the Australian civilian population aged 15 years and over. It collects comprehensive labour market information cross-referenced by detailed demographic data on a monthly basis. The data provide information on the employment of designated groups.

1.1.2 Fair Work Commission administrative data

The Commission used administrative data sources in this report. CMS plus is the Commission’s case management system. It is used by Commission staff to record and maintain its business processes and records. Data on applications to the Commission are recorded in CMS plus by staff from the point of lodgment through the application’s life cycle. The Commission uses CMS plus to meet its statutory and business reporting requirements. CMS plus contains data relevant to the approval of enterprise agreements, such as:

• name of the new enterprise agreement;

• enterprise agreement type;

• party names;

• industry;

• prior enterprise agreements;

• lodgment date and location of lodgment;

• enterprise agreement approval processing time;

• lodgment documents and other related documents, including approval documents, application for approval, employer and employee declarations of support;

• location of the hearing and the Member dealing with the matter;

• the decision; and

• any correspondence between the Commission and the parties.

CMS plus records similar information in relation to bargaining and other applications.

1.1.3 Australian Workplace Relations Study

The AWRS is the first Australia-wide statistical data set linking employer data with employee data since the 1995 Australian Workplace Industrial Relations Survey (AWIRS).

The AWRS provides an additional set of data for the Commission on matters related to enterprise agreements that are not ordinarily reported on by the Commission, or any agency. This includes data on why enterprise agreements are or are not entered into by workplaces, as well as data in relation to designated groups.

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1.1.3.1 AWRS design

The AWRS is representative of employers and employees in the national jurisdiction of workplace relations (i.e., covered by the Fair Work Act). 14

Although the AWRS was designed to produce statistically reliable population estimates for the Australian economy, there were some business units excluded. These included:

• businesses with fewer than five employees;

• businesses in the Agriculture, forestry and fishing industry 15 and in the Defence industry; 16

and

• certain public sector and private sector businesses that are not ‘national system’ employers. 17

The AWRS is a resource for producing population estimates of Australian enterprises and their employees in relation to workplace relations matters and enables analysis of employment and workplace relations matters that are not canvassed by other national surveys.

1.1.3.2 AWRS sample and data collection methodology

Data were collected from enterprises between February and July 2014.

A total of 3057 enterprises participated in the AWRS by responding to the Employee Relations (HR) questionnaire. This was the first questionnaire component (of five employer survey components) to be administered and had to be completed in order for the enterprise to be considered as recruited. Data collection methods included computer assisted telephone interviews and online questionnaires.

The employee survey was conducted at enterprises that participated in the AWRS. All employees of enterprises with 521 employees were invited to participate (i.e., the study coordinator and up to 20 employees) as was a random selection of 20 employees from enterprises with more than 21 employees. Data were collected through a questionnaire that could be completed online or in hard copy format.

A total of 7883 employees completed the employee survey, from 1384 of the 3057 enterprises.

The data collected through the AWRS surveys have been weighted up to population estimates sourced from ABS catalogues. All data presented for analysis have been weighted using the appropriate weight from each survey.

1.1.3.3 Further information about the AWRS

Further information about the research design and process, survey instruments, sampled population and units of analysis, sample characteristics and survey weights, and recruitment and response outcomes is available in the AWRS Technical notes.

14 Certain private sector non-incorporated businesses in Western Australia and public sector organisations that are not constitutional corporations (ie some local councils and state government departments) were not in the sample. 15

As defined by the Australian and New Zealand Standard Industrial Classification (ANZSIC) industry division. 16 As defined by the ANZSIC sub-division 76: Defence; Businesses with fewer than five employees and those in the Agriculture and Defence industries are commonly excluded from industrial relations surveys. See, for example, AWIRS 1990 and 1995. 17

See s.14 of the Fair Work Act.

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1.1.4 Workplace Agreements Database

The WAD is a census database that contains information about federal enterprise agreements that have been certified or approved since the introduction of enterprise bargaining in October 1991. On average, about 8000 enterprise agreements are added to the WAD each year with around 200 separate data fields coded.

The WAD contains data on enterprise agreements such as industry (based on the Australian and New Zealand Standard Industrial Classification (ANZSIC) 2006 classification), sector, duration of an enterprise agreement and number of employees covered. Other key characteristics such as the title of the enterprise agreement, the section of the Act under which the enterprise agreement was approved and the parties involved in the bargaining process are also entered. Where available, the database includes wage information (including quantum and timing of increases).

1.1.5 Other commissioned research

This report refers to a research report undertaken by the Fair Work Commission, Productivity and innovation in enterprise agreement clauses: an overview of literature, data and case studies at the workplace. 18

As part of the research, employers, employees and their representatives were invited to nominate enterprise agreement clauses they believed were innovative or productivity enhancing. These nominations, together with an overview of relevant literature and data, aim to provide a resource for those with an interest in identifying or developing clauses in enterprise agreements that may contribute to workplace productivity and innovation, and provide a source of information to guide any future work seeking to explore the development of more targeted resources in this area.

The report refers to findings made in Buchanan et al Report No. 7/2013—Minimum wages and their role in the process and incentives to bargain. 19 This commissioned research examines how

minimum wage increases impact on over award wages and the incentives to bargain. The study included enterprise case studies, a content analysis of enterprise agreements, and the generation and statistical analysis of workplace survey data. This multi-method approach was used to investigate the motivations, processes and outcomes of wage setting at the workplace level, and examine the role that the minimum wages increases play in shaping enterprise agreement making and over award wage determination.

The report also considers findings made in the study Fair Work Australia's influence in the enterprise bargaining process. 20 The study examined the influence of the Commission through its

supervisory role in the enterprise bargaining process, and the consequences of the Commission's involvement for the way that employers, employees and employee organisations manage industrial relations at the workplace level. It provided the Commission with empirical data relevant to the reporting requirement in s.653(1)(a), to 'review the developments, in Australia, in making enterprise agreements'.

18 Fair Work Commission, Future Directions 2014-15: Initiative 29, Productivity and innovation in enterprise agreement clauses: an overview of literature, data and case studies at the workplace level. 19

Workplace Research Centre (University of Sydney) Report No. 7/2013—Minimum Wages and their role in the process and incentives to bargain, Fair Work Commission 2013. 20

Associate Professor Anthony Forsyth (RMIT University), Professor Peter Gahan and Associate Professor John Howe (University of Melbourne), Fair Work Australia’s influence in the enterprise bargaining process, Fair Work Commission 2012.

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1.1.6 Case law

This report discusses decisions related to making enterprise agreements where the cases demonstrated legal developments.

1.1.7 Issues of comparability between the 2012 and 2015 reports

Some results for this 2012-2015 report, such as those relying on data from the Labour Force survey and the WAD, are directly comparable with those in the 2009-2012 report as the method of data collection and the definitions have not changed over time. Where appropriate, comparisons are drawn between the previous and current reporting periods.

Results in relation to other quantitative data, such as the EEH and AWRS, are not directly comparable with similar results presented for the 2009-2012 report. While there are some similarities in the way that data was generated, the differences between the data sets and their method of collection should ensure caution is exercised when comparing data sets from the two different periods.

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2 Bargaining for an enterprise agreement This chapter deals with developments in bargaining for an enterprise agreement during the reporting period and considers:

• legislative changes affecting bargaining;

• significant decisions in relation to bargaining; and

• reasons for making an enterprise agreement indicated by quantitative data.

2.1 Legislative changes affecting bargaining

The 2013 amendments to the Fair Work Act conferred a new role on the Commission of ‘promoting cooperative and productive workplace relations’. 21 The Commission’s initiatives developed in

response to these amendments are dealt with separately in Section 3.

2.2 Significant decisions in relation to bargaining

The following cases discuss developments in case law in enterprise agreement making during the reporting period.

2.2.1 Notice of employee representational rights

In Peabody Moorvale Pty Ltd v Construction, Forestry, Mining and Energy Union (CFMEU), 22 a Full

Bench of the Commission considered whether a Notice of Employee Representational Rights (NOERR) contained ‘other content’ prohibited by s.174(1A)(b). The Full Bench concluded that an employer had breached the notice requirements set out in s.174(1A) when it stapled additional information to the NOERR. The Full Bench determined that it could not approve the enterprise agreement because s.174(1A) required strict compliance and it had no discretion to waive a procedural defect in the presentation of the NOERR, the content of which was prescribed by the Fair Work Regulations 2009 (Cth). The Full Bench also noted that s.174(1A) did not preclude an employer giving additional material to employees at the same time as providing the NOERR, as long as it was provided separately.

2.2.2 Good faith bargaining provisions

In Endeavour Coal Pty Ltd v Association of Professional Engineers, Scientists and Managers, Australia and Another, 23 the Federal Court of Australia (Federal Court) held that, despite the Fair

Work Act not explicitly requiring employers to take any positive steps to satisfy good faith bargaining requirements, an employer who ‘sits “mute” and merely reject[s] proposals or terms which are being advanced for its consideration’ may not be bargaining in good faith. 24

The Federal

Court said a party bargaining under the Act ‘cannot adopt the role of a disinterested suitor, only rejecting offers and proposals made by other “bargaining representatives”.’ 25

21 Fair Work Act, s.576(2)(aa). 22 [2014] FWCFB 2042. 23

(2012) 206 FCR 576. 24 (2012) 206 FCR 576, 588. 25

(2012) 202 FCR 576, 588.

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However, while the Federal Court confirmed that persistent surface bargaining may breach the good faith bargaining requirements, it overturned some of the Commission’s bargaining orders (including on the basis that the Commission is not empowered to issue orders that would have the effect of requiring a party to make a concession).

2.3 Reasons for making an enterprise agreement indicated by quantitative data

Table 2.1 presents AWRS data showing reasons why organisations had made an enterprise agreement. The data are also presented by comparing enterprises on the basis of the predominant gender of the enterprise.

For all enterprises, the main reasons given for using an enterprise agreement were: employee organisation or employee association demands (23 per cent), to reward employees with a higher wage relative to award rates (22 per cent) and because the terms and conditions of awards are not suitable or flexible enough (21 per cent).

This data is consistent with findings from research conducted in the previous reporting period. Data from the award reliance survey was used by Buchanan et al to analyse the factors associated with enterprises relying on awards or enterprise agreements for their wage setting. Buchanan et al found that employers with an enterprise agreement in place reported the main reason for paying above award rates was that the award was not suitable or flexible enough for the enterprise.

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The AWRS data was further disaggregated to enable a comparison of enterprises based on the dominant gender at the enterprise. Using the AWRS data, enterprises were classified as predominantly male/female if more than half of their workforce was male/female.

When considered by gender, enterprises with a predominantly male workforce were more likely to report that they used an enterprise agreement due to a preference for negotiating directly with employees rather than to follow amounts determined by the Commission (16 per cent compared to 6 per cent) and to reduce the complexity of using multiple awards (25 per cent compared to 15 per cent).

26 Buchanan et al. Minimum wages and their role in the process and incentive to bargain, Fair Work Commission 2013, p. 33.

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Table 2.1: Reasons why enterprises use an enterprise agreement by predominant gender of enterprise, per cent of enterprises with an enterprise agreement

Predominant gender of enterprise

Male (%) Female (%) Total (%)

Employee organisation/employee association demands/log of claims 23.6 12.3 22.9

Want to reward employees with higher wage than award rates 19.7 23.9 22.0

Award terms and conditions not suitable or flexible enough (e.g. allowances, penalty rates, hours of work, overtime rates, etc.) 23.6 26.9 20.9

To reduce complexity - would otherwise be using multiple awards 24.9 14.8 17.7

Prefer to negotiate directly with our employees than follow amounts determined by the Fair Work Commission 16.0 5.5 13.7

Applicable award wages are not competitive for attracting and retaining workers 14.2 7.5 13.3

Predictability of wage increases 9.5 9.0 8.0

For payroll and/or rostering convenience 9.8 7.2 7.7

Head office/franchisor requirement (i.e., no choice of wage-setting practice) 5.0 11.1 7.4

Some employees/jobs performed are not covered by an award (‘award-free’) 3.5 1.4 3.0

Other 27.5 30.2 26.8

Note: Data on the predominant gender of the enterprise is based on a smaller sample than the total. Respondents could

select multiple responses and therefore proportions may not add up to 100. Enterprises were classified as predominantly

male/female if more than half of their workforce is male/female. All data are weighted using an enterprise weight.

Source: Fair Work Commission, Employer survey, Australian Workplace Relations Study 2014.

Table 2.2 presents data from the AWRS on why enterprises without an enterprise agreement have not put one in place. The main reasons reported by these enterprises are that award rates and conditions are adequate (32 per cent), that they prefer to negotiate with individual employees than a collection of employees (19 per cent) or that they find the enterprise bargaining process too difficult to implement (13 per cent). There were few differences between enterprises with a predominantly male or predominantly female workforce on reasons why the enterprise does not use an enterprise agreement.

10

Table 2.2: Reasons why enterprises do not use an enterprise agreement by predominant gender of enterprise, per cent of enterprises without an enterprise agreement

Predominant gender of enterprise

Male (%) Female (%) Total (%)

Award rates and conditions are adequate 30.6 30.6 31.8

Prefer to negotiate with individual employees than a collection of employees 19.6 16.9 19.2

Too difficult to implement (i.e., too much red tape and legal work) 12.9 16.5 12.7

The diversity of operations and roles across the business/organisation would require more than one enterprise agreement 6.1 7.1 6.9

The financial cost of negotiating an enterprise agreement would outweigh any performance/productivity benefits 4.7 4.9 3.8

Do not have the management resources to initiate negotiations with employees (e.g. do not have the legal and/or facilitation expertise within the business/organisation)

2.5 2.0 2.3

Concern about negative effects of negotiations on employee relations (i.e., potential to disrupt stability and lead to industrial action) 2.4 np 1.6

Concern about the financial cost of meeting employee demands/expectations 1.3 np 1.1

Wages and conditions pre-set by controlling/owning company or franchisor 1.2 0.7 1.1

Other 19.6 19.8 19.9

Note: Data on the predominant gender of the enterprise is based on a smaller sample than the total.

Respondents could select multiple responses and therefore, proportions may not add up to 100. Enterprises were classified

as predominantly male/female if more than half of their workforce is male/female. Missing or ‘don’t know’ responses are

excluded. np = not published due to the estimate having a relative standard error of greater than 50 per cent. All data are

weighted using an enterprise weight.

Source: Fair Work Commission, Australian Workplace Relations Study 2014.

11

3 Disputes arising during the bargaining process The Commission’s powers to facilitate bargaining and resolve disputes that arise during the bargaining process include:

• making a bargaining order; 27

• making a serious breach declaration; 28

• making a majority support determination; 29

• making a scope order; 30

• dealing with a bargaining dispute; 31

• making a low-paid authorisation; 32

• making a single-interest employer authorisation; 33

• making an order for a protected action ballot; 34

• making a low-paid workplace determination; 35

• making an industrial action related workplace determination; 36

• making a bargaining related workplace determination. 37

In addition to these specific powers, the Commission must also perform its functions and exercise its powers in a manner that promotes harmonious and cooperative workplace relations.

This chapter deals with developments in disputes arising during the bargaining process over the reporting period and considers, where appropriate for each of the specific powers mentioned above:

• quantitative data on bargaining disputes; and

• significant decisions in relation to bargaining disputes.

27 Fair Work Act, s.230. 28 Fair Work Act, s.235. 29

Fair Work Act, s.236. 30 Fair Work Act, s.238. 31

Fair Work Act, s.240. 32 Fair Work Act, s.243. 33

Fair Work Act, s.248. 34 Fair Work Act, s.443. 35

Fair Work Act, s.261; s.262. 36 Fair Work Act, s.266. 37

Fair Work Act, s.269.

12

3.1 Quantitative summary of bargaining applications

The Commission retains data on the number of applications made by parties under each of the bargaining provisions described above. Table 3.1 reports the total number of bargaining applications and types of applications lodged with the Commission during the reporting period. Table 3.2 reports the total number of bargaining applications and types of applications finalised by the Commission during the reporting period.

Table 3.1: Bargaining applications - lodgments, 2012-15

Type of application 2012-13 2013-14 2014-15

s.229 - Application for a bargaining order 78 96 87

s.236 - Application for a majority support determination 74 77 96

s.238 - Application for a scope order 15 24 12

s.240 - Application to deal with a bargaining dispute 231 208 270

s.242 - Application for a low-paid authorisation 0 1 0

s.248 - Application for a single interest employer authorisation 8 16 11

Total 406 422 476

Source: Fair Work Commission, Fair Work Commission Annual Report 2012-2013; Fair Work Commission Annual Report

2013-14; Fair Work Commission Annual Report 2014-15. 38

Note: Applications lodged reflect the number of applications lodged within the year. Matters may continue to be finalised

from the preceding year, which is reflected in the disparity between the two figures. Finalised applications may include other

ancillary procedural applications linked to the substantive matter, such as applications for costs or other orders. This is

reflected in the disparity between applications lodged and applications finalised.

Table 3.2: Bargaining applications - finalisations, 2012-15

s.229 - Application for a bargaining order 92 82 114

s.236 - Application for a majority support determination 72 74 115

s.238 - Application for a scope order 12 30 15

s.240 - Application to deal with a bargaining dispute 247 197 277

s.242 - Application for a low-paid authorisation 1 3 1

s.248 - Application for a single interest employer authorisation 10 16 11

Total 434 402 533

Source: Fair Work Commission, CMS plus.

Note: Applications lodged reflect the number of applications lodged within the year. Matters may continue to be finalised

from the preceding year, which is reflected in the disparity between the two figures. Finalised applications may

include other ancillary procedural applications linked to the substantive matter, such as applications for costs or other

orders. Again, this is reflected in the disparity between applications lodged and applications finalised.

38 Appendix 2 reproduces the number of bargaining applications from the 2009-2012 reporting period.

Type of application 2012-13 2013-14 2014-15

13

Over the reporting period, a total of 1304 bargaining applications were made. This represents an average of 36 per month. 39

The data show the numbers of applications made for bargaining orders, majority support determinations and applications for the Commission to deal with bargaining disputes have increased since the beginning of the current reporting period.

The following sections discuss the developments and trends in each type of bargaining application.

3.2 Bargaining orders

Section 229 sets out who may apply for and what must be included in an application for a bargaining order.

Table 3.1 shows that the number of applications for a bargaining order has fluctuated from 78 applications in 2012-13 to 96 in 2013-14.

3.2.1 Significant decisions in relation to bargaining orders

In The Association of Professional Engineers, Scientists and Managers, Australia (APESMA), v Peabody Energy Australia Coal Pty Ltd, 40 a Full Bench of the Commission considered whether the

employer had breached the good faith bargaining provisions in circumstances where the employer refused to engage in discussions with APESMA after APESMA had put a significantly revised proposal to it.

The Full Bench outlined the obligations of the good faith bargaining provisions as follows:

[W]e consider that the good faith bargaining requirements required the company to do more than simply

respond by letter to the significantly revised proposal put by APESMA. At least, there was an obligation

to meet and discuss the proposal and to explain in such meeting or meetings whether the proposal or a

modified form of it might be acceptable to the company. This is not to say that the company would be

obliged to accept the proposed agreement, only that there was an obligation to give further consideration

in the bargaining process and through a meeting or meetings with APESMA to put and explain its

position and response to a substantially revised proposal which would seem to have addressed the main

concerns previously expressed by the company. 41

The Full Bench issued a bargaining order.

3.3 Serious breach declarations

No applications were made for a serious breach declaration in the reporting period.

39 Forsyth et al., p. 34. 40 [2015] FWCFB 1451. 41

[2015] FWCFB 1451 at para. 26.

14

3.4 Majority support determinations

A bargaining representative of an employee who will be covered by a proposed single-enterprise agreement may apply to the Commission for a majority support determination. 42 The Commission

must make the majority support determination where it is satisfied that:

• a majority of the employees who will be covered by the enterprise agreement want to bargain; • the employer, or employers, who will be covered by the enterprise agreement have not yet agreed to bargain, or initiated bargaining, for the enterprise agreement; • the group of employees who will be covered by the enterprise agreement was fairly

chosen; and • it is reasonable in all the circumstances to make the determination. 43

Table 3.1 shows that the number of applications for a majority support determination during the reporting period has ranged from 74 in 2012-13 to 96 in 2014-15.

3.4.1 Significant decisions in relation to majority support determinations

In ResMed Limited v The Australian Manufacturing Workers’ Union, 44 a Full Bench of the

Commission considered whether an employee organisation could apply for a majority support determination which would apply to all employees where the Commission had found at first instance that only one employee at the workplace was eligible to be a member of the organisation.

The Full Bench found that an employee organisation does not need to be eligible to cover all classes of employees to whom the enterprise agreement would apply in order to apply for a majority support determination. This decision was upheld by the Federal Court in an application for judicial review.

45

In Cotton On Group Services Pty Ltd v National Union of Workers, 46 a Full Bench of the

Commission refused an employer permission to appeal against a finding at first instance that a group of employees covered by a majority support determination had been fairly chosen. The Full Bench endorsed the Member’s approach in determining that the employees were geographically, operationally or organisationally distinct on the basis that the concept of distinctness ‘was more a matter of degree’,

47 and that the group did not have to be unique within the corporation to be distinct for the purposes of the Act.

3.5 Scope orders

A scope order enables the Commission to resolve disputes arising during bargaining concerning the group of employees that a proposed enterprise agreement is intended to cover. 48

42 Fair Work Act, s.236. 43 Fair Work Act, s.237. 44

[2014] FWCFB 2418. 45 ResMed Limited v The Australian Manufacturing Workers’ Union (AMWU) [2015] FCA 360. 46

Cotton On Group Services Pty Ltd v National Union of Workers [2014] FWCFB 8899. 47 [2014] FWCFB 8899, para. 8. 48

Fair Work Act, s.238.

15

Table 3.1 above shows that the number of applications for scope orders has ranged from 12 in 2014-15 to 24 in 2013-14. In total, 51 applications for scope orders were lodged in the reporting period.

3.5.1 Significant decisions in relation to scope orders

The approach of the Commission in addressing scope order applications was considered by a Full Bench in The Australian Workers’ Union v BP Refinery (Kwinana) Pty Ltd. 49 This case examined

whether operations employees and laboratory employees at a refinery should bargain for separate enterprise agreements or bargain for one enterprise agreement as one group. At first instance, a scope order was made that the two groups of employees bargain for separate enterprise agreements. On appeal, the Full Bench quashed this order and made a scope order that the operations employees and laboratory employees bargain for and be covered by the one enterprise agreement. The Full Bench observed, in relation to whether a group is fairly chosen, that ‘the weight to be attached to the geographical, operational or organisational distinctness of groups with a broader group will be neutral in determining whether an order ought be made, unless there are particular features of, or circumstances associated with, that distinctness that render the broader group one that is not fairly chosen.’

50

The Full Bench went on to say that: ‘It is implicit in the right to bargain collectively that the preferences of employees as to the appropriate collective should be respected unless there is some good reason under the legislation to decide otherwise - a reason that relates to the conduct and efficiency of bargaining or to the efficient operation of the employer's business. It is, after all, the employees who are in the best position to determine the collective that best suits their legitimate interests.’

51

3.6 Bargaining disputes

A bargaining representative may apply to the Commission to deal with a bargaining dispute. 52 The

Commission may deal with a bargaining dispute in a number of ways, including by mediation or conciliation, or by making a recommendation or expressing an opinion. Further, the Commission may arbitrate with the agreement of the parties. 53

Applications for the Commission to deal with a bargaining dispute remained the predominant form of bargaining application made to the Commission over this reporting period.

Table 3.1, above, shows that 54.3 per cent of all bargaining related applications lodged in the reporting period were applications for the Commission to deal with a bargaining dispute. Relatively few decisions followed these applications, as such matters are generally dealt with by way of conference or mediation.

49 The Australian Workers’ Union v BP Refinery (Kwinana) Pty Ltd [2014] FWCFB 1476. 50 The Australian Workers’ Union v BP Refinery (Kwinana) Pty Ltd [2014] FWCFB 1476 at para. 16. 51

The Australian Workers’ Union v BP Refinery (Kwinana) Pty Ltd [2014] FWCFB 1476 at para. 29. 52 Fair Work Act, s.240(1). 53

Fair Work Act, s.240(4).

16

Findings from research conducted into the 2009-12 reporting period suggested that ‘this provision constitutes an important avenue for parties to access the assistance of the tribunal during bargaining’. 54

Parties interviewed as part of the research into the 2009-12 trends reported that they placed particular importance on the skill of Commission Members in conciliating matters and supported Commission Members taking a ‘proactive’ approach to resolving bargaining disputes. 55

The proactive approach of the Commission is particularly relevant to the Commission’s dispute prevention initiatives under the New Approaches framework.

3.7 Low-paid authorisations

A low paid authorisation is intended to assist low-paid employees, who have not had access to collective bargaining or who face substantial difficulties in bargaining at the enterprise level, to engage in enterprise-level collective bargaining. 56

In the current reporting period only one

application for a low paid authorisation was lodged with the Commission and this was refused.

3.7.1 Significant decisions dealing with a low paid authorisation

In this one matter, United Voice, 57 Deputy President Gostencnik refused to issue a low-paid

authorisation to facilitate multi-employer bargaining for employees of five private sector security companies. The Deputy President accepted that many of the relevant employees were ‘low-paid’, but took the view that as employees of two of the companies had been (or were) covered by enterprise agreements, they had not encountered substantial difficulty accessing enterprise bargaining. The Deputy President also indicated the application was premature, as there were opportunities on foot to continue to bargain collectively, and ‘[d]ifficulties or barriers to bargaining at the enterprise level will usually only be realised once bargaining for an agreement at that level has been attempted’.

58

In the current reporting period, the Commission also considered and dismissed an application, made in the previous period, for a low-paid authorisation to facilitate bargaining for nurses employed in general practice clinics. The Commission held that ‘the case for the authorisation is not strong and several important factors indicate that multi-employer bargaining may be undesirable or less appropriate than genuine enterprise-based bargaining’.

59 Therefore, it was not

in the public interest to make the authorisation.

3.8 Single-interest employer authorisations

A single-interest employer authorisation allows two or more employers to bargain for a single-enterprise agreement. 60 The employers must have genuinely agreed to bargain together and must

carry on similar business activities under a franchise. During the reporting period there was a total of 35 applications made for a single-interest employer authorisation.

54 Forsyth et al., p. 126. 55 Forsyth et al., p. 160. 56

Explanatory Memorandum to the Fair Work Bill 2008 at para. 992. 57 United Voice [2014] FWC 6441 at para. 131-134. 58

[2014] FWC 6441 at para. 66 and 131. 59 Australian Nursing Federation v IPN Medical Centres Pty Limited and Others [2013] FWC 511 at para. 162. 60

Fair Work Act, s.248, or the employers must be specified in a Ministerial declaration made under s.247.

17

Table 3.1 shows that eight applications were made in 2012-13, increasing to 16 in 2013-14, before declining again to 11 in 2014-15. No significant Full Bench decisions of the Commission were made during the reporting period as to the substance of the single-interest employer authorisation provisions in the Fair Work Act.

3.9 Protected action ballot orders

A protected action ballot is a process by which employees may decide, by means of a secret ballot, whether or not to authorise protected industrial action for a proposed enterprise agreement.

Table 3.3 shows the applications made for protected action ballot orders, and related orders, over the reporting period. In addition to an application for a protected action ballot order, parties may apply to vary or revoke the protected action ballot order, or the employees may apply to extend the period within which the authorised protected industrial action may be taken by a further 30 days.

61

Table 3.4 shows the applications finalised for protected action ballot orders, and related orders, over the reporting period. 62

Table 3.3: Protected action - lodgments, 2012-15

Type of application 2012-13 2013-14 2014-15

s.437 - Application for a protected action ballot order 915 627 641

s.447 - Application for variation of a protected action ballot order 12 12 6

s.448 - Application for revocation of a protected action ballot order 38 54 44

s.459 - Application to extend the 30-day period in which industrial action is authorised by protected action ballot 115 124 133

Total 1080 817 824

Source: Fair Work Commission, Fair Work Commission Annual Report 2012-2013; Fair Work Commission Annual Report

2013-14; Fair Work Commission Annual Report 2014-15.

61 Applications lodged reflect the number of applications lodged within the year. Matters may continue to be finalised from the preceding year, which is reflected in the disparity between the two figures. 62

Finalised applications may include other ancillary procedural applications linked to the substantive matter such as applications for costs or other orders. This is also reflected in the disparity between applications lodged and applications finalised.

18

Table 3.4: Protected action - finalisations, 2012-15

Type of application and method of finalisation 2012-13 2013-14 2014-15 Total

s.437 - Application for a protected action ballot order

Adjourned indefinitely 10 8 0 18

Application dismissed (s.587) 0 0 1 1

Application withdrawn 64 36 50 150

Ballot order not issued 4 7 0 11

Ballot order issued (s.443) 847 560 574 1981

Ballot order not issued (s.443) 0 0 19 19

Ballot order not required (matter concluded) 0 0 3 3

Ballot order not required (parties negotiating) 0 0 1 1

Ballot order varied 0 1 0 1

Decision issued: interim or procedural (s.589) 0 0 9 9

Decision issued: procedural 1 4 0 5

FWC order varied or revoked 0 2 0 2

Order issued 0 0 1 1

Order issued (interim or procedural s.589) 0 0 5 5

Order issued (procedural) 0 1 0 1

Recommendation issued (procedural) 2 0 0 2

Total 928 619 663 2210

s.447 - Application for variation of protected action ballot order

Application withdrawn 1 0 1 2

Ballot order varied 11 12 0 23

Ballot order varied (s.447) 0 0 5 5

Total 12 12 6 30

s.448 - Application for revocation of protected action ballot order

Application adjourned indefinitely 2 0 0 2

Application withdrawn 1 0 1 2

Ballot order revoked 34 52 0 86

Ballot order revoked (s.448) 0 1 43 44

FWC order varied or revoked 3 0 0 3

Total 40 53 44 137

s.459 - Application to extend the 30 day period in which industrial action is authorised by protected action ballot

Application withdrawn 4 2 1 7

Extension granted 113 119 0 232

Extension granted (s.459) 0 0 136 136

Order issued (interim or procedural s.589) 0 0 2 2

Total 117 121 139 377

19

Source: Fair Work Commission, CMS plus.

Research has also found that the making of a protected action ballot order, and any subsequent authorisation by employees of protected industrial action, does not necessarily result in industrial action being taken. The protected industrial action may be threatened, or employers may put in place measures to mitigate the loss of notified industrial action, which may result in administrative costs for employers sufficient to progress the claims of employees.

63

3.10 Low-paid workplace determinations

Over the current reporting period no applications were made for a low-paid workplace determination.

3.11 Industrial action related workplace determinations

Over the reporting period the Commission made four industrial action related workplace determinations. These related to: the State of Victoria in 2012-13; 64 Schweppes Australia in 2012-

13; 65 Parks Victoria in 2013-14; 66

and G4S Custodial Services in 2014-15. 67

3.12 Bargaining related workplace determinations

Over the reporting period no applications were made for a bargaining related workplace determination.

3.13 Dispute prevention initiatives and new approaches

During the reporting period the Commission launched a number of dispute prevention programs through its New Approaches initiative. The Commission’s New Approaches initiative is one way the Commission is responding to its new statutory obligation to promote cooperative and productive workplace relations.

68

A goal of this project is to assist employees and employers to communicate and solve problems together to prevent disputes that may otherwise lead to working days or productivity being lost, including before and during enterprise bargaining. As part of the New Approaches program, Commission Members are available to attend workplaces and provide specialised training in relation to enterprise bargaining and dispute resolution.

The Orora Fibre Packaging and Sydney Water case studies featured below provide an example of the preventative role the Commission can play in workplace relations.

63 Productivity Commission (2015), Draft Report into the Workplace Relations Framework, pp. 658-659; 667-668. 64 State of Victoria v CPSU, the Community and Public Sector Union [2012] FWAFB 6139. 65

Schweppes Australia Pty Ltd v United Voice - Victoria Branch [2012] FWAFB 8599. 66 Parks Victoria v The Australian Workers’ Union and others [2013] FWCFB 950. 67

CPSU, the Community and Public Sector Union v G4S Custodial Services Pty Ltd [2014] FWCFB 9044. 68 Fair Work Act, ss.3 and 576(2)(aa).

20

Case study: Orora Fibre Packaging 69

Collaborative problem solving, supported by the Commission, has helped turn around a business and keep manufacturing and jobs in Australia.

Orora Fibre Packaging supplies a range of corrugated cardboard boxes, packaging and displays to brands across Australia. But it was facing a crisis. The business was facing financial challenges which had the potential to significantly impact its workforce in Australia.

Drastic changes were needed to keep local manufacturing and jobs. But the company and employee organisation did not have the relationship or processes in place to constructively discuss options. Their relationship was adversarial and combative, reflecting the many years where neither side had trusted the other. This was evidenced by the number of disputes that had been referred to the Commission.

Today things are very different. There has not been an industrial dispute referred to the Commission in over 18 months. With some timely assistance from the Commission and expert facilitation by a consultant, the company, workforce and their employee organisation, the Australian Manufacturing Workers’ Union (AMWU), have adopted a new approach based on collaborative problem solving. They found the common ground of wanting to keep manufacturing and jobs in Australia, which helped them develop a relationship based around goodwill.

The Commission’s role was informal. There was no ongoing file and no formal matter was ever lodged. Instead, the company was aware of the Commission’s New Approaches initiatives promoting cooperative and productive workplaces. They worked with President Ross, Deputy President Booth and Commissioner Roe to support their new relationship.

On a number of occasions Commission Members facilitated a candid dialogue between the employee organisation, the company and its consultants where the situation of the business was laid bare. The parties met in joint conferences with the Members, but also used the individual Members as sounding boards during difficult moments. This latter role was particularly useful during the finalisation of an enterprise agreement and during a tricky period when there was the possibility of industrial action over an issue that was external to the company.

Assisted by this informal process a new approach has been developed based on openness, trust and collaboration. It is still a work in progress that depends heavily on the goodwill of the parties. But industrial disputes are now part of the parties’ history, while the business has moved onto a more sound financial footing. The business has been turned around and there has been a significant improvement in productive performance.

AMWU Print Division National Secretary Lorraine Cassin agrees with Group General Manager of Orora Fibre Packaging Rick Woods when he describes the change as one of the most rewarding initiatives he has been involved in, calling it a victory for collaboration. They both say that it could not have been achieved without the assistance of the Commission, which they say acted impartially as conscience for both sides.

69 Fair Work Commission, Fair Work Commission Annual Report 2013-2014, p. 53.

21

Case study: Sydney Water 70

An extraordinary turnaround in industrial relations has been achieved at Sydney Water. As touched on in the Commission’s 2013-2014 annual report, the relationship between the company and the employee organisation could have been described as hostile, with up to a dozen different disputes before the Fair Work Commission. Now, not a single dispute has been notified to the Commission in almost two and a half years.

It is morning at a water treatment plant in Sydney, where staff are in a meeting to discuss the challenges facing the business and ways to overcome them. In a scene that would have been unimaginable three years ago, Sydney Water Chief Executive Kevin Young and [then] Australian Services Union Branch Secretary Sally McManus are standing side by side answering questions.

‘It’s a remarkable thing considering the past, because I don’t think that ever occurred before. But it’s something we’re doing more and more,’ Mr Young said. Ms McManus agreed, saying ‘There’s no way whatsoever that would have happened three years ago - no way. It would have been me addressing the members and they would have been passing resolutions probably condemning the Managing Director and probably in another few hours be out on strike.’

The relationship has changed from one of distrust to openness. ‘The way it works now, it’s very different,’ Ms McManus said. ‘Management will come to us with changes that they want to make and they’ll be open and honest about why they want to do it, what’s driving it, what they’re trying to achieve. And we’ll be open and honest about what our interests are and what we would like to see out of that.’

Kevin Young describes the new relationship as consultative and honest. ‘It’s very transparent,’ Mr Young said. ‘If we’ve got major issues with any part of the business we sit down and we talk and we understand why we need to make some reform. We put some proposals together and we talk to people early and then we nut out the best way forward.’

The turnaround occurred after both parties sought the assistance of the Fair Work Commission to develop a new working relationship. Deputy President Booth instituted a year-long process that helped the parties ‘let go’ of their long-held hostilities and find common ground.

Ms McManus said, ‘It involved a lot of work by the Commission for us to put aside, not ignore but put aside, our previous grievances which in some circumstances would go back 50 years on both sides, to work from a position of “Okay, what do we agree on?” rather than what are we against.’

Deputy President Booth convened a two-day workshop involving management and the employee organisation that proved to be a turning point in the relationship.

‘It was one of the most honest two days that I’ve ever had,’ Mr Young said.

The new relationship has allowed new conversations to occur about how to improve the business and become more efficient.

‘So in our civil area we went depot by depot for the first time,’ Mr Young said, ‘and we said look, we’ve done benchmarking of how we’re going against what the typical costs are in the market and there’s a gap. We’re not sure what the answers are but we want to work with you and we want to

70 Fair Work Commission, Fair Work Commission Annual Report 2013-2014, p. 63.

22

close this gap and I think a fair time would be three years.’

There are now regular meetings between management, staff and the employee organisation where progress is discussed.

23

4 The approval and processing of enterprise agreements This chapter provides an overview of:

• changes and developments in approval and processing of enterprise agreements indicated by quantitative data, and

• the Commission’s enterprise agreement triage pilot program.

4.1 Changes and developments in approval and processing of enterprise agreements indicated by quantitative data

Tables 4.1, 4.2 and 4.3 show the number of enterprise agreements that were lodged and finalised between 1 July 2012 and 30 June 2015. In total 19 763 applications were lodged and 18 656 were approved in the three-year period. 71

The tables show that 7 087 enterprise agreements were lodged in the period 1 July 2012 to 30 June 2013, with 6 754 lodged from 1 July 2013 to 30 June 2014 and 5 922 lodged from 1 July 2014 to 30 June 2015.

Table 4.1: Enterprise agreement - lodgment and approval, 1 July 2012 to 30 June 2013

s.185 - Single-enterprise

s.185 -

Greenfields s.185 - Multi-enterprise

Total

Lodged 6333 712 42 7087

Finalised

Approved (s.186) 4614 574 25 5213

Approved (with undertakings - s.190) 1425 111 11 1547

Approved (exceptional circumstances - s.189)

12 --- --- 12

Not approved 59 3 1 63

Application withdrawn 281 29 4 314

Total finalised 6391 717 41 7149

Source: Fair Work Commission, Fair Work Commission Annual Report 2012-13, Table 4; CMS plus.

71 Applications lodged refer to the number of applications lodged within the year. Matters may continue to be finalised from the preceding year, which is reflected in the disparity between the two figures.

24

Table 4.2: Enterprise agreement - lodgment and approval, 1 July 2013 to 30 June 2014

s.185 - Single-enterprise

s.185 -

Greenfields s.185 - Multi-enterprise

Total

Lodged 5945 749 60 6754

Finalised

Approved (s.186) 4156 632 32 4820

Approved (with undertakings - s.190) 1445 113 24 1582

Approved (exceptional circumstances - s.189)

1 --- --- 1

Not approved 99 3 1 103

Application withdrawn 269 20 5 294

Total finalised 5970 768 62 6800

Source: Fair Work Commission, Fair Work Commission Annual Report 2013-14, Table 21; CMS plus.

Table 4.3: Enterprise agreement - lodgment and approval, 1 July 2014 to 30 June 2015

s.185 - Single-enterprise

s.185 -

Greenfields s.185 - Multi-enterprise

Total

Lodged 5449 407 66 5922

Finalised

Approved (s.186) 3433 351 29 3813

Approved (with undertakings - s.190) 1594 48 26 1668

Approved (exceptional circumstances - s.189)

0 --- --- 0

Not approved 114 2 1 117

Application withdrawn 382 17 8 407

Total finalised 5523 418 64 6005

Source: Fair Work Commission, Fair Work Commission Annual Report 2014-15, Table 25; CMS plus.

Appendix 1 provides a breakdown of agreements lodged and approved by industry.

25

The median number of days to process an enterprise agreement from lodgment to finalisation is reported in Table 4.4 by enterprise agreement type. Table 4.4 shows that greenfields agreements had the lowest mean number of processing days across all three years.

Table 4.4: Median processing times 1 July 2012 to 30 June 2015

Enterprise agreement type Median number of days

2012-13 2013-14 2014-15

s.185 - Single-enterprise 16 17 21

s.185 - Greenfields 14 14 14

s.185 - Multi-enterprise 22 26 34

Source: Fair Work Commission, Fair Work Commission Annual Report 2014-15, Table 26.

4.2 Enterprise agreement triage pilot

In 2014 the Commission introduced, as part of its Future Directions 2014-15 program, 72 an

enterprise agreement triage pilot to improve timeliness, cost effectiveness and consistency in approving enterprise agreements. This pilot ran from 6 October 2014 to 30 June 2015 and has been a key development in the processing and approval of enterprise agreements by the Commission.

The pilot involved assigning enterprise agreements lodged for approval to specially-trained staff to ensure compliance with each of the statutory obligations, including bargaining, voting and prescribed content and whether each enterprise agreement met the better off overall test (BOOT). Commission Members continue to make all decisions as to whether an enterprise agreement should be approved, assisted by the analysis of the administrative staff.

The pilot commenced with assessments of Victorian enterprise agreements in the building, metal and civil construction industry, some enterprise agreements from Western Australia and all enterprise agreements from Tasmania. It then expanded in December 2014 to incorporate all enterprise agreements from Western Australian and the Australian Capital Territory.

The pilot was independently reviewed in April 2015. Key findings of the review were:

• During the pilot there was a consistent improvement in timeliness for approvals. 73

• The pilot had facilitated more consistent treatment of enterprise agreement approval applications. Common issues affecting bargaining were also more easily observable, such as industries or types of employers where ‘mistakes’ occur. This provides the Commission with an opportunity to more actively assist parties to prepare enterprise agreements and avoid common pitfalls.

74

72 On 8 May 2014, the Fair Work Commission launched Future Directions—Continuing the Change Program, a publication setting out 30 initiatives that the Commission intended to implement over the following two years. The initiatives were a result of consultation with Commission Members, staff and key stakeholders. See https://www.fwc.gov.au/about-us/operations/strategy-vision-future-directions. 73

Inca Consulting, Enterprise Agreements Triage: A review of the pilot, May 2015, p. 7. 74 Inca Consulting, Enterprise Agreements Triage: A review of the pilot, May 2015, pp. 7-8.

26

• The pilot was cost effective, with Commission staff performing non-determinant work and freeing up Members for more complex matters. 75

• Commission staff can effectively and efficiently assess the compliance of enterprise agreements with the Fair Work Act, and to the satisfaction of the Commission Members overseeing the pilot. 76

From 1 July 2015, a greater range of enterprise agreement applications have been progressively referred to the triage process. It is anticipated that by early 2016, 80 per cent of enterprise agreement approval applications may be assessed under the triage process. 77

75 Inca Consulting, Enterprise Agreements Triage: A review of the pilot, May 2015, p. 10. 76 Inca Consulting, Enterprise Agreements Triage: A review of the pilot, May 2015, p. 13. 77

Fair Work Commission, Fair Work Commission Annual Report 2014-15, p. 101.

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5 The coverage of enterprise agreements This chapter deals with developments in the coverage of enterprise agreements over the reporting period. This chapter covers:

• legislative changes in the coverage of enterprise agreements;

• developments in coverage indicated by quantitative data;

• effect on designated groups; and

• enterprise agreements by business size.

5.1 Legislative changes in the coverage of enterprise agreements

The Fair Work Amendment Act 2012 amended the Fair Work Act to insert s.172(6), which prohibits the making of an enterprise agreement with only one employee, as follows:

Requirement that there be at least 2 employees

(6) An enterprise agreement cannot be made with a single employee.

The provision commenced on 1 January 2013. 78

5.1.1 Employees fairly chosen

In John Holland Pty Ltd re Western Region Agreement Western Australia 2012-2016, a single Member approved an enterprise agreement made with only three employees, finding they had been fairly chosen. 79

On appeal, a Full Bench quashed the approval of the enterprise agreement on the basis that the group of three employees was not geographically, operationally or organisationally distinct and had not been fairly chosen. 80

On application for judicial review to the Federal Court, the decision of the Full Bench was quashed, and it was held the three employees covered by the enterprise agreement were fairly chosen. The Federal Court held that an enterprise agreement can be valid even when it covered only a small number of employees and it covered work classifications other than those held by the covered employees, as an enterprise agreement can be made with the intention it will apply to a much broader group of employees over time.

81 On appeal, a Full Court of the Federal Court upheld the

Federal Court’s decision and the validity of the enterprise agreement. 82

78 Fair Work Amendment Act 2012, item 1 and item 1 of Schedule 4. 79 John Holland Pty Ltd re Western Region Agreement Western Australia 2012-2016 [2012] FWAA 4449. 80

Construction, Forestry, Mining and Energy Union v John Holland Pty Ltd [2012] FWAFB 7866 at para. 35. 81 John Holland Pty Ltd v Construction, Forestry, Mining and Energy Union and Fair Work Commission [2014] FCA 286 at paras 30-40. 82

Construction, Forestry, Mining and Energy Union v John Holland Pty Ltd [2015] FCAFC 16 at para. 85.

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5.2 Developments in coverage indicated by quantitative data

This section outlines trends and developments in the coverage of enterprise agreements over the reporting period, noting changes to the number of individuals covered and the industries covered. This part includes discussion of:

• coverage by method of setting pay; and

• overall coverage of enterprise agreements.

5.2.1 Coverage by method of setting pay

Chart 5.1 presents data on the methods used to set pay for employees with respect to May 2012 and May 2014. 83 It contains additional detail on the jurisdictional coverage of collective and

individual agreements. The data show that collective and individual agreements were the most common instruments used to set pay for employees in each period. 84

The most common form of collective agreements were those registered at the federal level, with almost one-third of employees covered by a federally-registered collective agreement in May 2012 and May 2014.

The largest single category of pay-setting arrangements in both periods was unregistered individual agreements. The proportion of employees covered by unregistered individual agreements fell slightly from 38 per cent in May 2012 to 36 per cent in May 2014.

Chart 5.1: Workplace pay-setting arrangements, May 2012 and May 2014

Source: ABS, Employee Earnings and Hours, expanded CURF, various, Catalogue No. 6306.0.55.001

83 The most recent available data. 84 The ABS data uses the term ‘collective agreement’.

16.1

32.0

9.8

0.2 0.3 0.1

38.3

3.3

18.8

32.6

8.6

0.1 0.1 0.0

36.3

3.4

0

5

10

15

20

25

30

35

40

45

Award Collective agreement (federally registered)

Collective agreement (state registered)

Collective agreement (unregistered)

Individual agreement (federally registered)

Individual agreement (state registered)

Individual agreement (unregistered)

Owner managers of incorporated business

Per cent of employees

May-2012 May-2014

29

5.2.2 Overall coverage of enterprise agreements

The WAD reported that a total of 18 659 enterprise agreements were approved over the reporting period (1 July 2012 to 30 June 2015). The number of enterprise agreements approved each year has fluctuated while trending downwards over the three years, peaking in the September quarter of 2013. The number of employees covered by enterprise agreements exhibited more volatility (peaking in December 2012), though it too trended downwards.

85

In the current reporting period, there were fewer enterprise agreements approved than in the previous reporting period (18 659 compared with 21 993) and fewer employees covered (2 526 688 compared with 2 917 522) (Chart 5.2).

Chart 5.2: Number of enterprise agreements approved and number of employees covered per quarter, 2009-10 to 2014-15

Source: Department of Employment, Workplace Agreements Database, June 2015 Agreement making by industry

Table 5.1 shows the number of enterprise agreements approved over the last two reporting periods by industry. The largest numbers of enterprise agreements approved over the reporting period by industry were in Construction and Manufacturing, which together accounted for around half of all enterprise agreements approved.

85 Not all enterprise agreements in the WAD contain employee data provided by the employer. For these enterprise agreements, a modified mean method is used to estimate the number of employees that the enterprise agreement covers (refer to Appendix 7 for additional details). Further, data about the number of employees covered by each enterprise agreement is obtained from the statutory declaration that an employer must lodge with the enterprise agreement. These are required to be accurate at the time the enterprise agreement is approved but do not necessarily accurately reflect the employee coverage of the enterprise agreement at any point in time after lodgment.

0

70 000

140 000

210 000

280 000

350 000

420 000

0

1000

2000

3000

4000

5000

6000

Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15

Agreements (LHS) Employees (RHS)

Number of agreements Number of employees

30

Table 5.1: Number of enterprise agreements approved per reporting period, by industry, 2009-10 to 2014-15

2009-10 to 2011-12 2012-13 to 2014-15

Agriculture, forestry and fishing 396 152

Mining 517 465

Manufacturing 3830 3200

Electricity, gas, water and waste services 441 415

Construction 7244 5830

Wholesale trade 509 604

Retail trade 769 309

Accommodation and food services 736 439

Transport, postal and warehousing 1546 1432

Information media and telecommunications 169 153

Financial and insurance services 213 155

Rental, hiring and real estate services 373 332

Professional, scientific and technical services 448 504

Administrative and support services 683 663

Public administration and safety 764 603

Education and training 804 683

Health care and social assistance 1788 2066

Arts and recreation services 287 185

Other services 476 469

Source: Department of Employment, Workplace Agreements Database, June 2015.

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Table 5.2 shows the number of employees covered by enterprise agreements approved over the last two reporting periods by industry.

A substantial number of employees were covered by enterprise agreements approved in Education and training and Health care and social assistance, accounting for 32 per cent of all employees covered by enterprise agreements approved over the reporting period.

Table 5.2: Number of employees covered by enterprise agreements approved per reporting period, by industry, 2009-10 to 2014-15

2009-10 to 2011-12 2012-13 to 2014-15

Agriculture, forestry and fishing 12 817 7689

Mining 41 443 54 733

Manufacturing 244 650 207 908

Electricity, gas, water and waste services 63 087 63 463

Construction 129 278 116 820

Wholesale trade 49 108 41 366

Retail trade 348 932 284 943

Accommodation and food services 167 547 151 567

Transport, postal and warehousing 191 556 181 660

Information media and telecommunications 45 754 49 640

Financial and insurance services 221 393 187 307

Rental, hiring and real estate services 7812 10 023

Professional, scientific and technical services 34 885 42 149

Administrative and support services 51 142 56 234

Public administration and safety 449 950 160 432

Education and training 345 569 411 660

Health care and social assistance 424 438 409 090

Arts and recreation services 53 448 45 726

Other services 34 713 44 278

Source: Department of Employment, Workplace Agreements Database, June 2015.

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Table 5.3 shows the industry distribution of enterprise agreements by type over the reporting period. Of the enterprise agreements approved during the reporting period, the single-enterprise non-greenfields agreement was the highest approved instrument across all industries, accounting for more than 90 per cent of enterprise agreements approved for most industries.

Table 5.3: Enterprise agreements approved by industry and type, 1 July 2012 to 30 June 2015

Single

enterprise non-greenfields Multi enterprise non-greenfields

Single enterprise greenfields

Multi enterprise greenfields

(%) (%) (%) (%)

Agriculture, forestry and fishing 96.7 1.3 2.0 0.0

Mining 89.5 0.2 10.3 0.0

Manufacturing 96.5 0.1 3.4 0.0

Electricity, gas, water and waste services 94.7 0.5 4.8 0.0

Construction 79.5 0.1 20.4 0.0

Wholesale trade 96.4 0.5 3.1 0.0

Retail trade 96.4 2.3 1.3 0.0

Accommodation and food services 97.0 0.2 2.7 0.0

Transport, postal and warehousing 91.7 0.1 8.2 0.0

Information media and telecommunications 95.4 1.3 3.3 0.0

Financial and insurance services 100.0 0.0 0.0 0.0

Rental, hiring and real estate services 87.7 0.0 12.3 0.0

Professional, scientific and technical services 83.7 0.4 15.9 0.0

Administrative and support services 80.7 0.5 18.7 0.2

Public administration and safety 98.3 0.0 1.7 0.0

Education and training 97.7 2.2 0.1 0.0

Health care and social assistance 98.7 0.9 0.3 0.0

Arts and recreation services 92.4 0.5 7.0 0.0

Other services 92.8 0.6 6.6 0.0

Source: Department of Employment, Workplace Agreements Database, June 2015.

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Table 5.4 shows that the average number of employees who were covered by an enterprise agreement across all industries over the reporting period was 135, which is slightly higher than in the previous reporting period. The industry with the highest average number of employees covered by an enterprise agreement was Financial and insurance services, while the smallest average number of employees covered by an enterprise agreement was in the Construction industry.

Almost all industries experienced an increase in average numbers of employees covered by an enterprise agreement relative to the previous reporting period.

Table 5.4: Average numbers of employees covered by an enterprise agreement by industry, 2012-13 to 2014-15

Average numbers of employees covered

2009-10 to 2011-12 2012-13 to 2014-15

Agriculture, forestry and fishing 32 50

Mining 80 117

Manufacturing 63 64

Electricity, gas, water and waste services 143 152

Construction 17 20

Wholesale trade 96 68

Retail trade 453 922

Accommodation and food services 227 345

Transport, postal and warehousing 123 126

Information media and telecommunications 270 324

Financial and insurance services 1039 1208

Rental, hiring and real estate services 20 30

Professional, scientific and technical services 77 83

Administrative and support services 74 84

Public administration and safety 588 266

Education and training 429 602

Health care and social assistance 237 198

Arts and recreation services 186 247

Other services 72 94

All industries 132 135

Source: Department of Employment, Workplace Agreements Database, June 2015.

5.3 Effect on designated groups

Section 653(2) of the Fair Work Act requires that the General Manager give consideration to the effect of enterprise agreement-making on the employment (including wages and conditions of employment) of the following persons:

• women;

• part-time employees;

• persons from a non-English speaking background;

• mature age persons; and

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• young persons.

The Fair Work Act does not define young persons and mature age persons. As ABS data on age groups are presented as categories, data for young persons are presented within the ranges of 15 to 19 years, and 45 years and over for mature age persons. ABS data is used to show the number of employees for each designated group at June 2012 and June 2015 (Table 5.5).

Table 5.5: Employment levels for designated groups, June 2012 and June 2015

Female Part-time

Non-English speaking background

Aged 15 to 19 Aged 45 and over

'000 '000 '000 '000 '000

Jun-12 5168.8 3376.1 1980.1 666.2 4410.2

Jun-15 5396.1 3602.9 2179.7 641.1 4615.9

Percentage change

4.4 6.7 10.1 -3.8 4.7

Note: Data are seasonally adjusted for female employees, part-time employees and employees aged 15 to 19 years. Data

are expressed in original terms for employees from a non-English speaking background and employees aged 45 years and

over.

Source: ABS, Labour Force, Australia, September 2015, Catalogue No. 6202.0; ABS, Labour Force, Australia, Detailed -

Electronic Delivery, September 2015, Catalogue No. 6291.0.55.001.

5.3.1 Coverage of designated groups

Table 5.6 shows the coverage of designated groups (except non-English speaking background) by method of setting pay from the EEH. The table shows that the most common method of setting pay for the designated groups was by collective agreement. This was followed by individual agreements for female and employees aged 55 years or over. Part-time employees and employees aged under 21 years had higher coverage under an award compared with an individual agreement.

Table 5.6: Selected characteristics of employees by method of setting pay, May 2014, per cent

Collective

agreement

Award

Individual agreement

Owner-manager of incorporate enterprise

Total

(%) (%) (%) (%) (%)

Female 45.2 21.4 31.4 2.0 100.0

Part-time 46.2 27.9 24.1 1.8 100.0

Aged under 21 years 44.5 37.9 17.5 np 100.0

Aged 55 years or over 47.7 14.8 31.0 6.5 100.0

Note: All data are weighted.

Source: ABS, Employee Earnings and Hours, expanded CURF, May 2014, Catalogue No. 6306.0.55.001.

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Table 5.7 presents data for the proportion of employees who spoke a language other than English at home by the method of setting pay. Half of these employees indicated that they negotiated the wage amount with their employer.

Table 5.7: Employees who spoke a language other than English at home by method of setting pay, per cent

(%)

Negotiated amount with my employer 50.3

My employer offered me an amount that was more than the award/standard rate, and I accepted

22.8

Award-reliant 13.9

Enterprise agreement 12.3

Other 0.7

Total 100.0

Note: The method of setting pay variable has been cross-checked between the employees’ responses and their

employers’, and any discrepancy has been excluded. All data are weighted using the employee weight.

Source: Fair Work Commission, Australian Workplace Relations Study 2014.

5.4 Enterprise agreements by business size

Table 5.8 shows the proportion of enterprises using an enterprise agreement by business size. The table shows that large enterprises have the highest proportion of enterprise agreements (72 per cent) followed by medium sized enterprises (27 per cent) then small enterprises (8.8 per cent).

Table 5.8: Proportion of enterprises using an enterprise agreement by business size

Small (5-19

employees) Medium (20-199 employees)

Large (200+ employees)

Overall

Yes 8.8 27.0 72.0 14.0

No 91.2 73.0 28.0 86.0

Total 100.0 100.0 100.0 100.0

Source: Fair Work Commission, Australian Workplace Relations Study 2014.

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6 The content of enterprise agreements This chapter deals with developments in the permitted content, mandatory content and unlawful terms of enterprise agreements over the reporting period. It contains the following sections:

• Developments in the permitted content of enterprise agreements

• Developments in the mandatory content of enterprise agreements

• Developments in the unlawful terms of enterprise agreements

6.1 Developments in the permitted content of enterprise agreements

6.1.1 Significant decisions regarding permitted matters

The Commission has dealt with issues in relation to permitted matters in considering the approval of enterprise agreements. In Construction, Forestry, Mining and Energy Union 86 the Commission

was required to consider the validity of clauses in two proposed enterprise agreements, including a clause that purported to provide that the agreement would continue beyond its nominal expiry date until replaced by another agreement with, or which covered, the employee organisation. The Commission held that this clause did not appear to be a permitted matter under section 172(1), but that this would not prevent the approval of the enterprise agreement. However, if the clause was not permitted, s.253 of the Fair Work Act would provide that it was of no legal effect.

87

In Toyota Motor Corporation Australia Limited v Marmara, 88 the Full Federal Court considered the

operation of a ‘no extra claims’ clause in an enterprise agreement. The Court held that where a no extra claims clause purports to prevent the parties from agreeing to vary the agreement, it is invalid as it is inconsistent with the statutory rights of an employer and employees to agree to variations under Division 7 of Part 2-4 of the Fair Work Act.

6.1.2 Productivity and innovation in enterprise agreement clauses

In 2014, the Commission conducted research into productivity and innovation in enterprise agreement clauses. 89 The Commission’s research found that 48.1 per cent of registered enterprise

agreements contain clauses that include ‘commitments to improving productivity’ and 38.4 per cent contain clauses on ‘specific productivity measures’. 90

The Commission’s research also examined enterprise agreement clauses that employers, employees and their representatives considered to be productivity enhancing or innovative in their enterprises, workplaces or work roles. The research included a number of case studies that illustrated the operating context of the nominated productivity enhancing or innovative clauses and indicated some of the factors outside of the clauses that may contribute to perceived productivity

86 [2013] FWC 1462. 87 [2013] FWC 1462 at paras. 28-31. 88

(2014) 222 FCR 152. 89 Fair Work Commission, Future Directions 2014-15: Initiative 29, Productivity and innovation in enterprise agreement clauses: an overview of literature, data and case studies at the workplace level. 90

Fair Work Commission, Future Directions 2014-15: Initiative 29, Productivity and innovation in enterprise agreement clauses: an overview of literature, data and case studies at the workplace level, pp.18-19.

37

enhancement. In addition, the case studies highlighted that productivity enhancing or innovative clauses were often closely tied to particular operations, roles or workplaces within an enterprise.

The case studies in the research demonstrated that some employers, employees and their representatives considered certain clauses to be productivity enhancing or innovative in their workplace. In such cases, three broad clause content themes were identified:

• clauses perceived as providing increased workplace flexibility, including around when work was performed or attendance for work;

• clauses perceived to play a part in developing a more highly skilled workforce, including through incentives or links with classification structures; and

• clauses perceived to engage employees in identifying, formulating and/or implementing improved workplace practices through consultation structures and/or incentives.

6.2 Wage and condition developments for designated groups

This section includes discussion of wage developments in enterprise agreements, conditions developments in enterprise agreements, and their effects on the groups designated in s.653(2) of the Fair Work Act. It also includes data on workplace productivity and profitability as linked to enterprise agreement making.

This section is structured as follows:

• Wage developments for approved enterprise agreements for designated groups

− Women

− Non-English speaking background employees

− Young and mature aged persons

• Conditions developments for approved enterprise agreements for designated groups

− Women

− Part-time employees

− Persons from a non-English speaking background

− Young persons

− Mature age persons

For the remainder of this section, analysis of enterprise agreement coverage for employees in the designated groups listed under s.653(2) of the Fair Work Act was undertaken using data from the AWRS and the WAD.

6.2.1 Wage developments for approved enterprise agreements in designated groups

This section focuses on the wage outcomes by designated group employees covered by enterprise agreements approved during the reporting period. Wage outcomes are reported with reference to the findings of the AWRS, where relevant, and using the AAWI measure. Where the AAWI

38

measure is used, the wage outcomes can only be calculated for enterprise agreements where a percentage wage increase could be quantified. 91

6.2.1.1 Women

Table 6.1 presents results from employers surveyed for the AWRS on how wage amounts in their enterprise agreements compare with the applicable modern award. Most employers indicated that the wage amounts set in their enterprise agreement are ‘well above’ the applicable award rate (62 per cent). A further 29 per cent indicated that the wage amounts in their enterprise agreement are ‘just above’ the corresponding award rate; and a further 10 per cent that the enterprise agreement wages replicated amounts in the applicable award.

Table 6.1 also shows a substantive difference in results depending on the predominant gender of the enterprise. A considerably higher proportion of predominantly male enterprises than predominantly female enterprise had rates that were ‘well above’ the applicable award rates - approximately 73 per cent and 52 per cent, respectively.

Table 6.1: Comparison of enterprise agreement wage amounts to awards by predominant gender, per cent of enterprises with an enterprise agreement

Predominant gender of enterprise

Male (%) Female (%) All (%)

Replicate award wage rates 4.9 16.3 9.5

Sit just above the award wage rates (for example, within $2 of applicable award rates) 23.1 31.0 28.5

Sit well above the award wage rates (for example, more than $2 above applicable award rates) 72.5 51.6 61.5

Enterprise agreement wages have not been compared to award wage rates np np 1.3

Note: Missing or ‘don’t know’ responses are excluded. Enterprises are classified as predominantly male/female if more than

half of their workforce is male/female. Data on the predominant gender of the enterprise is based on a smaller sample than

the total. np = not published due to estimate having a relative standard error of greater than 50 per cent. All data are

weighted using an enterprise weight.

Source: Fair Work Commission, Australian Workplace Relations Study 2014.

Table 6.1 provided data from the AWRS. However, the Department of Employment’s WAD provides more direct data on wage outcomes from collective agreements by the gender at the workplace. Table 6.2 shows that female AAWIs did not exhibit a clear pattern relative to male AAWIs over the previous and current reporting periods. Nor was there a consistent trend between AAWIs in workplaces with higher proportions of female workers (more than 60 per cent) than workplaces with lower proportions of female workers.

92

91 For more information on AAWIs, refer to Appendix 7 - Technical notes. 92 Note that these two measures presented in the table are different. Male and female AAWIs represent the average AAWIs paid to male and female employees, respectively. In comparison, the AAWIs for agreements with different proportions of women are presenting the AAWIs for agreements that have lower/higher proportions of women. Both measures are presented as they provide different ways of analysing the designated groups.

39

Table 6.2: AAWI (%) in enterprise agreements by gender and by proportion of women, 2009-10 to 2014-15

Overall 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

(%) (%) (%) (%) (%) (%)

Male AAWI 4.0 4.0 3.4 3.6 3.5 2.5

Female AAWI 3.9 3.9 3.7 3.3 3.5 3.5

Share of women employees in agreements <40 per cent women 4.0 3.9 3.8 3.5 3.4 2.9

40-60 per cent women 4.4 3.8 3.6 3.3 3.5 3.8

>60 per cent women 3.7 4.0 3.7 3.2 3.5 3.5

Source: Department of Employment, Workplace Agreements Database, June 2015.

Enterprises with a substantial proportion of part-time employees (greater than or equal to 20 per cent of the workforce) had lower AAWIs than full-time employees over the reporting period, which is consistent with trends exhibited in the previous reporting period (Table 6.3).

AAWIs for workplaces with low proportions of part-time employees (less than 20 per cent) exhibited higher AAWIs over the reporting period than workplaces with higher proportions of part-time employees, consistent with trends shown in the previous reporting period.

40

Table 6.3: AAWI (%) in enterprise agreements by type of employment and by proportion of part-time, 2009-10 to 2014-15

Overall 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

(%) (%) (%) (%) (%) (%)

Full-time AAWI 3.8 3.9 3.8 3.5 3.5 3.4

Part-time AAWI 3.8 3.8 3.6 3.2 3.4 3.3

Share of part-time employees in enterprise agreements

<20 per cent part-time 4.2 3.8 3.6 3.3 3.5 3.4

≥20 per cent part-time 3.6 3.7 3.6 3.1 3.3 3.3

Source: Department of Employment, Workplace Agreements Database, June 2015.

6.2.1.2 Non-English speaking background employees

Table 6.4 shows AAWIs for non-English speaking background employees were broadly similar to those of employees with an English speaking background over the reporting period, consistent with the previous reporting period.

Table 6.4: AAWI (%) in enterprise agreements by non-English speaking background status and by proportion of non-English speaking background employees, 2009-10 to 2014-15

Overall 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

(%) (%) (%) (%) (%) (%)

Non-English speaking background AAWI 3.8 3.7 3.6 3.5 3.3 3.3

English speaking background AAWI 3.8 3.8 3.7 3.3 3.4 3.3

Share of non-English speaking background employees in enterprise agreements

<20 per cent 3.8 3.9 3.6 3.3 3.4 3.2

≥20 per cent 3.8 3.6 3.7 3.6 3.3 3.4

Source: Department of Employment, Workplace Agreements Database, June 2015.

6.2.1.3 Young and mature age persons

Table 6.5 shows young employees (under 21) exhibited lower AAWIs than both employees aged between 21 and 45 and mature age employees (45 and over) over the reporting period, consistent with trends exhibited in the previous reporting period. AAWIs for mature age employees and employees aged between 21 and 44 were broadly similar over the two reporting periods.

AAWIs for workplaces with low proportions of young employees (less than 20 per cent) exhibited higher AAWIs over the reporting period than workplaces with 20 per cent of young employees or more, consistent with trends exhibited in the previous reporting period. AAWIs for workplaces with

41

low proportions of mature age employees (less than 20 per cent) exhibited lower AAWIs than for workplaces with higher proportions of mature age employees (Table 6.5).

Table 6.5: AAWI (%) in enterprise agreements for young and mature age workers and by proportion of employees, 2009-10 to 2014-15

Overall 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

(%) (%) (%) (%) (%) (%)

Young (under 21) AAWI 3.6 3.8 3.7 3.1 3.2 3.2

≥21 and ≤44 AAWI 3.8 3.8 3.7 3.4 3.5 3.4

Mature (45 and over) 3.9 3.8 3.7 3.4 3.4 3.3

Share of young employees in enterprise agreements

<20 per cent 3.8 3.9 3.9 3.5 3.4 3.3

≥20 per cent 3.6 3.6 3.6 3.0 3.1 3.1

Share of mature employees in enterprise agreements

<20 per cent 3.4 3.8 3.9 3.1 3.3 3.2

≥20 per cent 3.9 3.8 3.7 3.4 3.4 3.3

Source: Department of Employment, Workplace Agreements Database, June 2015.

6.2.2 Conditions developments for designated groups

This section focuses on the developments in the range of conditions of employment by designated groups in enterprise agreements approved over the reporting period. An analysis of the core provisions coverage by designated groups shown in Table 6.6 is provided below.

42

Table 6.6: Coverage of designated group employees by core provisions in enterprise agreements, 2012-13 to 2014-15

Female (%) Part-time (%)

Non-English speaking background (%)

Under 21s (%)

Over 45s (%) All (%)

Long service leave 97.4 97.8 96.6 97.2 96.2 95.6

Annual leave 99.0 99.5 98.5 99.0 98.7 98.6

Personal/carer's leave 98.7 99.1 98.8 98.9 98.3 98.2

Public holidays 96.1 97.1 96.5 98.9 95.2 95.5

Termination change and redundancy 91.7 93.3 95.5 98.3 91.0 92.7

Occupational health and safety 80.8 82.0 82.6 88.5 82.0 82.7

Equity issues 85.2 87.2 73.6 89.7 78.1 78.3

Superannuation 98.0 98.7 95.6 99.1 97.1 97.4

Parental leave 98.0 98.5 94.2 98.0 95.1 95.2

Type of employment 99.4 99.5 97.4 99.4 98.1 98.4

Hours of work 97.9 98.5 97.1 99.2 97.1 97.3

Shift work 77.0 82.1 87.1 57.9 82.0 80.1

Training 91.1 91.5 88.8 85.1 91.6 90.2

Note: ‘Type of employment’ is any reference to casual employment, part-time employment, fixed-term employment, home-based work/telework, or temporary employment. ‘Equity issues’ are any provisions for non-English speaking background

workers, extended definition of family, Aboriginal and Torres Strait Islander cultural/ceremonial leave, special needs

employees and mature age workers.

Source: Department of Employment, Workplace Agreements Database, June 2015.

6.2.2.1 Women

Relative to all employees, women were more likely to be covered by enterprise agreements with equity issues and parental leave provisions, but were less likely to be covered by enterprise agreements with shift work and occupational health and safety provisions.

6.2.2.2 Part-time employees

Relative to all employees, part-time employees were more likely to be covered by enterprise agreements with equity issues, parental leave and long service leave provisions, but were less likely to be covered by enterprise agreements with occupational health and safety provisions.

6.2.2.3 Persons from a non-English speaking background

Relative to all employees, non-English speaking background employees were more likely to be covered by enterprise agreements with termination change and redundancy provisions, but were less likely to be covered by enterprise agreements with equity issues, superannuation and training provisions.

43

6.2.2.4 Young persons

Relative to all employees, employees under the age of 21 were more likely to be covered by enterprise agreements with equity issues, occupational health and safety, termination change and redundancy and public holidays provisions. However, they were significantly less likely to be covered by enterprise agreements with shift work and training provisions.

6.2.2.5 Mature age persons

Relative to all employees, employees over the age of 45 were slightly more likely to be covered by enterprise agreements with shift work provisions and slightly less likely to be covered by enterprise agreements with termination change and redundancy provisions.

6.3 Developments in the mandatory content of enterprise agreements

This section deals with developments in the mandatory content of enterprise agreements including:

• legislative developments in the mandatory content of enterprise agreements;

• significant decisions regarding mandatory content; and

• use of model consultation terms in enterprise agreements.

6.3.1 Legislative developments to mandatory content in enterprise agreements

The Fair Work Amendment Act 2013 amended the content of mandatory consultation terms in enterprise agreements. Consultation terms in enterprise agreements must now provide that employers must consult with employees in relation to changes to regular rosters or ordinary working hours and must consider any views given by the employees about the impact of the change.

Section 205(1)(a) of the Fair Work Act was amended as follows: 93

20 Paragraph 205(1)(a)

Repeal the paragraph, substitute:

(a) requires the employer or employers to which the agreement applies to consult the employees to

whom the agreement applies about:

(i) a major workplace change that is likely to have a significant effect on the employees; or

(ii) a change to their regular roster or ordinary hours of work; and

21 After subsection 205(1)

Insert:

(1A) For a change to the employees’ regular roster or ordinary hours of work, the term must require the

employer:

(a) to provide information to the employees about the change; and

93 Fair Work Amendment Act 2013, Schedule 1 item 20.

44

(b) to invite the employees to give their views about the impact of the change (including any impact

in relation to their family or caring responsibilities); and

(c) to consider any views given by the employees about the impact of the change.

The model consultation term in Schedule 2.3 of the Fair Work Regulations 2009 was amended to reflect these changes to the legislation. 94 The amendments to the Fair Work Act and the Fair Work Regulations commenced on 1 January 2014.

95

This amendment was introduced with a package of amendments to implement recommendations made by the Fair Work Act Review Panel in the Towards more productive and equitable workplaces: An evaluation of the Fair Work legislation report, a post-implementation review of the Fair Work Act. The specific intention of amending the consultation clause was to: ‘promote discussion between employers and employees who are covered by a modern award or who are party to an enterprise agreement about the likely impact of a change to an employee’s regular roster or ordinary hours of work, particularly in relation to the employee’s family and caring arrangements, by requiring employers to genuinely consult employees about such changes and consider the impact of the change in making such changes raised by employees.’

96

6.3.2 Significant decisions regarding mandatory content

In the reporting period a Full Bench of the Commission made a significant decision in relation to the incorporation of the model consultation term into enterprise agreements. In Construction, Forestry, Mining and Energy Union v St John of God Health Care Inc; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia; ‘Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers' Union (AMWU)

97 a Full Bench of the Commission held that a

consultation clause that excluded certain employees from consultation and did not allow for employees’ representation for the purposes of consultation did not comply with s.205(1). As the enterprise agreement for which approval was being sought did not include a consultation term that complied with s.205(1), under s.205(2) the model consultation term was taken to be a term of the enterprise agreement.

98

The Full Bench held, if a Member of the Commission has come to the conclusion that a consultation term does not meet the requirements of the Fair Work Act, then the Member must note in the decision approving the enterprise agreement that the model consultation term applies. 99

In

addition, the Full Bench concluded that undertakings may only be made for issues arising under ss.186-187 of the Fair Work Act in relation to the approval of enterprise agreements, and they could not remedy a defect under s.205. 100

94 Fair Work Amendment Regulation 2013 (No. 2). 95 Fair Work Amendment Act 2013, s.2. 96

Explanatory Memorandum to the Fair Work Amendment Bill 2013. 97 [2014] FWCFB 4011. 98

[2014] FWCFB 4011 at para. 23. 99 [2014] FWCFB 4011 at para. 23. 100

[2014] FWCFB 4011 at para 25.

45

In Gladstone Ports Corporation Ltd, 101 the consultation clause in question was held not to comply

with s.205 as it limited representation to representation by employee organisation delegates. 102

The Commission held that to comply with s205(1), a consultation clause must provide for employee representation but cannot limit or prescribe the form this representation must take. 103 The model

consultation term was taken to form part of the enterprise agreement.

Following the amendments to s.205, which came into effect on 1 January 2014, many parties did not vary the consultation provisions in their existing enterprise agreements, with the effect that the consultation provisions failed to comply with s.205. As a result, the model consultation term was taken to be a term of many enterprise agreements from that period. In Fairbrother Pty Ltd [Facility Management] Tasmanian Enterprise Agreement 2014,

104 when considering an application for

approval of an enterprise agreement, the Commission found that the consultation provision in the enterprise agreement did not specify that consultation must occur regarding a change to regular rosters as required by ss. 205(1)(a)(ii) and 205(1A) of the Fair Work Act. As a result, the model consultation term was taken to be a term of the enterprise agreement.

6.3.3 Use of model terms in enterprise agreements

The following extracts from the WAD show the incidents of use of the model dispute resolution term in enterprise agreements over the reporting period:

Table 6.7: Model dispute resolution clause in enterprise agreements 1 July 2012 to 30 June 2015, per cent of approved enterprise agreements

(%)

Model dispute resolution clause 10.3

Non-model dispute resolution clause 89.7

Source: Department of Employment, Workplace Agreements Database, June 2015.

The following extracts from the WAD show the incidents of use of the model consultation and flexibility terms in enterprise agreements over the reporting period:

Table 6.8: Model consultation clause in enterprise agreements 1 July 2012 to 30 June 2015, per cent of approved enterprise agreements

(%)

Model consultation clause 30.0

Model consultation clause incorporated in decision 7.9

No model consultation clause 62.2

Source: Department of Employment, Workplace Agreements Database, June 2015.

101 [2013] FWC 305. 102 [2013] FWC 305 at para. 9. 103

[2013] FWC 305 at para. 9. 104 [2014] FWCA 2491.

46

Table 6.9: Types of flexibility terms in enterprise agreements 1 July 2012 to 30 June 2015, per cent of approved enterprise agreements

Type of flexibility term (%)

Model flexibility term: the flexibility term is the model term 30.9

Model flexibility term incorporated: the Fair Work Commission Member's decision incorporates the model flexibility term into the enterprise agreement 3.7

No flexibility clause: model flexibility term taken to be a term of the enterprise agreement 2.9

Flexibility - specific: the flexibility term differs from the model flexibility term, and specifies which term can be varied 60.0

Flexibility - general: the flexibility term allows any term of the enterprise agreement to be varied 3.3

Source: Department of Employment, Workplace Agreements Database, June 2015.

6.4 Developments in relation to unlawful content in enterprise agreements

This section addresses relevant developments in relation to unlawful content in enterprise agreements during the reporting period with reference to:

• legislative changes to unlawful content in enterprise agreements; and

• significant decisions regarding unlawful content in enterprise agreements.

6.4.1 Legislative changes to unlawful content in enterprise agreements

Section 194 of the Fair Work Act was amended on 1 January 2013 by the Fair Work Amendment Act 2012, 105 to insert an additional unlawful term, s.194(ba), as follows:

a term that provides a method by which an employee or employer may elect (unilaterally or otherwise)

not to be covered by the agreement.

The Explanatory Memorandum indicated that this amendment was intended to implement recommendations made by the Fair Work Act Review Panel in the Towards more productive and equitable workplaces: An evaluation of the Fair Work legislation report, a post-implementation review of the Fair Work Act.

106

This provision applies to enterprise agreements made before or after 1 January 2013, but does not apply to a person who elected to opt out of an enterprise agreement before that date. 107

The Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Act 2012 amended the Fair Work Act to insert an additional unlawful term, s.194(h), as follows:

(h) a term that has the effect of requiring or permitting contributions, for the benefit of an employee (the relevant employee) covered by the agreement who is a default fund employee, to be made to a superannuation fund or scheme that is specified in the agreement but does not satisfy one of the following:

105 Fair Work Amendment Act 2012, s. 2; Fair Work Amendment Proclamation 2012 (F2012L02450). 106 Explanatory Memorandum to the Fair Work Amendment Bill 2012. 107

Fair Work Act 2009, Item 6 of Part 3 to Schedule 4.

47

(i) it is a fund that offers a MySuper product;

(ii) it is a fund or scheme of which the relevant employee, and each other default fund employee in relation to whom contributions are made to the fund or scheme by the same employer as the relevant employee, is a defined benefit member;

(iii) it is an exempt public sector superannuation scheme.

This provision makes it unlawful for an enterprise agreement to include a term that requires or permits superannuation contributions to be made to a specified fund for the benefit of a default fund employee, unless the fund meets certain criteria.

This term commenced on 1 January 2014 and applies to enterprise agreements approved by the Commission on or after that date. 108

6.4.2 Significant decisions regarding unlawful content

In Re The University of Melbourne, 109 the Commission found that a parental leave clause providing

for a return to work bonus in an enterprise agreement was not discriminatory. It was argued by a number of employee organisations that the parental leave clause discriminated against birth fathers returning from partner leave as they were not entitled to the return to work bonus.

In approving the enterprise agreement, however the Commission held that the bonus was not discriminatory and not an unlawful term as it was objectively reasonable that the bonus was paid to those returning from maternity leave or adoption and permanent care leave, and not those returning from partner leave.

110

108 Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Act 2012, s. 2; Item 12 of Part 2 to Schedule 4. 109

[2014] FWCA 1133. 110 [2014] FWCA 1133 at paras 62 to 66.

48

References Data references

ABS, Employee Earnings and Hours, expanded CURF, various, Catalogue No. 6306.0.55.00.

ABS, Labour Force, Australia, September 2015, Catalogue No. 6202.0.

ABS, Labour Force, Australia, Detailed - Electronic Delivery, September 2015, Catalogue No. 6291.0.55.001.

Case Management System Plus, Fair Work Commission administrative data.

Department of Employment, Workplace Agreements Database, June 2015.

Fair Work Commission, Fair Work Commission Annual Report 2012-13.

Fair Work Commission, Fair Work Commission Annual Report 2013-14.

Fair Work Commission, Fair Work Commission Annual Report 2014-15.

Fair Work Commission, Australian Workplace Relations Study 2014.

Legislation/Legislative instruments

Explanatory Memorandum to the Fair Work Bill 2008.

Explanatory Memorandum to the Fair Work Amendment Bill 2012.

Explanatory Memorandum to the Fair Work Amendment Bill 2013.

Explanatory Memorandum to the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012.

Fair Work Act 2009 (Cth).

Fair Work Amendment Act 2012.

Fair Work Amendment Act 2013.

Fair Work Amendment Proclamation 2012 (F2012L02450).

Fair Work Amendment Regulation 2013 (No. 2).

Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Act 2012.

Cases/Decisions/Determinations

Australian Nursing Federation v IPN Medical Centres Pty Limited and Others [2013] FWC 511 (17 June 2013).

Construction, Forestry, Mining and Energy Union [2013] FWC 1462.

Construction, Forestry, Mining and Energy Union v John Holland Pty Ltd [2012] FWAFB 7866 (13 September 2012).

Construction, Forestry, Mining & Energy Union v John Holland Pty Ltd [2015] FCAFC 16 (24 February 2015).

49

Construction, Forestry, Mining and Energy Union v St John of God Health Care Inc; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia; ‘Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers' Union (AMWU) [2014] FWCFB 4011.

Cotton On Group Services Pty Ltd v National Union of Workers [2014] FWCFB 8899.

Endeavour Coal Pty Ltd v Association of Professional Engineers, Scientists and Managers, Australia and Another (2012) 206 FCR 576.

Fairbrother Pty Ltd [Facility Management] Tasmanian Enterprise Agreement 2014 [2014] FWCA 2491.

Gladstone Ports Corporation Ltd [2013] FWC 305.

John Holland Pty Ltd re Western Region Agreement Western Australia 2012-2016 [2012] FWAA 4449 (22 May 2012)

John Holland Pty Ltd v Construction, Forestry, Mining and Energy Union and Fair Work Commission [2014] FCA 286.

Parks Victoria v The Australian Workers’ Union and others [2013] FWCFB 950 (11 February 2013).

Peabody Moorvale Pty Ltd v Construction, Forestry, Mining and Energy Union (CFMEU) [2014] FWCFB 2042.

Re The University of Melbourne [2014] FWCA 1133.

ResMed Limited v The Australian Manufacturing Workers’ Union (AMWU) [2015] FCA 360.

ResMed Limited v The Australian Manufacturing Workers’ Union [2014] FWCFB 2418.

Schweppes Australia Pty Ltd v United Voice - Victoria Branch [2012] FWAFB 8599 (8 October 2912).

State of Victoria v CPSU, the Community and Public Sector Union [2012] FWAFB 6139 (23 July 2012).

The Association of Professional Engineers, Scientists and Managers, Australia (APESMA), v Peabody Energy Australia Coal Pty Ltd [2015] FWCFB 1451.

The Australian Workers’ Union v BP Refinery (Kwinana) Pty Ltd [2014] FWCFB 1476.

The Community and Public Sector Union v G4S Custodial Services Pty Ltd [2014] FWCFB 9044.

Toyota Motor Corporation Australia Limited v Marmara (2014) 222 FCR 152.

United Voice [2014] FWC 6441(29 September 2014).

Other Sources

Fair Work Act Review Panel, Towards more productive and equitable workplaces: An evaluation of the Fair Work legislation report, a post-implementation review of the Fair Work Act.

50

Fair Work Australia’s influence in the enterprise bargaining process, Associate Professor Anthony Forsyth (RMIT University), Professor Peter Gahan and Associate Professor John Howe (University of Melbourne).

Future Directions 2014-15 program: See https://www.fwc.gov.au/about-us/operations/strategy-vision-future-directions

Fair Work Commission, Future Directions 2014-15: Initiative 29, Productivity and innovation in enterprise agreement clauses: an overview of literature, data and case studies at the workplace level.

Inca Consulting, Enterprise Agreements Triage: A review of the pilot, May 2015.

Productivity Commission (2015), Draft Report into the Workplace Relations Framework.

Report No. 7/2013—Minimum Wages and their role in the process and incentives to bargain, Workplace Research Centre (University of Sydney).

51

Appendix 1 - Enterprise agreements - lodgment by industry, 1 July 2012 to 30 June 2015 Table A.1: Enterprise agreements - lodgment by industry, 1 July 2012 to 30 June 2015

s.185 -

Single-enterprise s.185 - Multi-enterprise

s.185 - Greenfields Total

Aged care industry 545 5 1 551

Agricultural industry 82 1 83

Airline operations 156 3 159

Airport operations 16 16

Aluminium industry 17 17

Ambulance and patient transport 9 9

Amusement, events and recreation industry 56 1 2 59

Animal care and veterinary services 9 9

Aquaculture 4 4

Asphalt industry 64 1 65

Banking finance and insurance industry 132 2 134

Broadcasting and recorded entertainment industry 19 5 24

Building services 17 1 18

Building, metal and civil construction industries 4039 19 1232 5290

Business equipment industry 21 21

Cement and concrete products 145 1 3 149

Cemetery operations 12 1 13

Children's services 560 11 571

Christmas Island 1 1

Cleaning services 45 2 3 50

Clerical industry 210 1 211

Clothing industry 23 23

Coal export terminals 6 1 7

Coal industry 127 2 10 139

Commercial sales 15 15

Commonwealth employment 34 34

Contract call centre industry 13 13

Corrections and detentions 17 1 18

Diving services 18 2 20

Dredging industry 31 59 90

Dry cleaning and laundry services 10 10

Educational services 698 24 722

Electrical contracting industry 721 109 830

Electrical power industry 95 1 2 98

Fast food industry 146 146

Fire fighting services 11 11

Food, beverages and tobacco manufacturing industry 373 2 4 379

Funeral directing 10 10

Gardening services 29 29

Grain handling industry 20 20

Graphic Arts 135 135

52

s.185 -

Single-enterprise s.185 - Multi-enterprise

s.185 - Greenfields Total

Hair and Beauty 5 5

Health and welfare services 809 15 12 836

Hospitality industry 158 1 12 171

Indigenous organisations and services 6 6

Industries not otherwise assigned 1 1

Journalism 31 1 32

Licensed and registered clubs 79 79

Live performance industry 36 13 49

Local government administration 240 240

Mannequins and modelling industry 1 1

Manufacturing and associated industries 2468 15 108 2591

Marine tourism and charter vessels 13 13

Maritime industry 106 1 32 139

Market and business consultancy services 1 2 3

Meat Industry 100 1 3 104

Mining industry 207 3 6 216

Miscellaneous 19 2 21

Nursery industry 5 5

Oil and gas industry 142 9 151

Passenger vehicle transport (non rail) industry 144 1 6 151

Pet food manufacturing 4 4

Pharmaceutical industry 63 63

Pharmacy operations 5 1 6

Plumbing industry 596 5 15 616

Port authorities 103 5 108

Postal services 2 2

Poultry processing 46 46

Publishing industry 18 18

Quarrying industry 93 3 96

Racing industry 30 30

Rail industry 75 1 15 91

Real estate industry 75 1 76

Restaurants 111 111

Retail industry 192 9 1 202

Road transport industry 575 11 5 591

Rubber, plastic and cable making industry 2 2

Salt industry 7 7

Scientific services 16 1 17

Seafood processing 6 6

Security services 178 2 1 181

Social, community, home care and disability services 238 4 242

Sporting organisations 8 8

State and Territory government administration 50 1 1 52

Stevedoring industry 55 2 5 62

Storage services 508 4 22 534

53

s.185 -

Single-enterprise s.185 - Multi-enterprise

s.185 - Greenfields Total

Sugar industry 21 21

Technical services 18 18

Telecommunications services 23 1 24

Textile industry 39 39

Timber and paper products industry 182 1 1 184

Tourism industry 21 21

Vehicle industry 226 226

Waste management industry 158 5 163

Water, sewerage and drainage services 67 1 68

Wine industry 54 54

Wool storage, sampling and testing industry 6 6

Total lodged 17 133 162 1717 19 012

Note: Industries are classified by Commission industry schedule.

Source: CMS plus.

54

Appendix 2 - Bargaining applications - lodgments, 1 July 2009 to 30 June 2012

Table A: 2 Bargaining applications - lodgments 1 July 2009 to 30 June 2012

Number of applications

2009-10 2010-11 2011-12

s.229 - Application for a bargaining order 121 96 99

s.236 - Application for a majority support determination 111 93 62

s.238 - Application for a scope order 48 31 30

s.240 - Application to deal with a bargaining dispute 506 221 307

s.242 - Application for low-paid authorisation 2 1 1

s.248 - Application for a single interest employer authorisation 22 22 31

Total 810 464 530

Source: General Manager’s report into enterprise agreement-making in Australia under the Fair Work Act 2009 (Cth.) Fair

Work Australia, November 2012 Table 4.1.

55

Appendix

3 -

Overview of

Enterprise

Agreement Triage Process

Lodgment

Registry enters application into CMS. No physical file is made up. CMS allocates to Agreement Triage

Team

Agreement Triage Team reviews application

Agreement Triage Team allocates application t

o Commission Member.

Agreement Triage Team attends Chambers to discuss application and course of

action

Application satisfies pre

-approval requirements and ‘Better off Overall’

test

Application may

not

satisfy pre

-approval requirement and/or ‘Better off Overall’ test

Agreement Triage Team lists matter for E

-Hearing (non

-attendance

hearing)

Agreement approved with or without undertakings

Agreement Triage Team dispatches decision and decision filed for

publication on website

Agreement Triage Team communicates with parties (via telephone or email) and requests undertakings to remedy deficiencies if necessary

Atte

ndance Hearing held

Application Withdrawn

Agreement Triage Team attends Chambers for further discussion

Application dismissed or not

Agreement Triage Team closes matter. Electronic file is archived

internally. There is no hardcopy file

Please note:

This model illustrates an overview

of the agreement triage process, however applications may differ in complexity and the process would be supplemented with additional steps.

56

Appendix 4 - Schedule 2.2 Model flexibility term (regulation 2.08)

Model flexibility term

(1) An employer and employee covered by this enterprise agreement may agree to make an individual flexibility arrangement to vary the effect of terms of the agreement if:

(a) the agreement deals with 1 or more of the following matters:

(i) arrangements about when work is performed;

(ii) overtime rates;

(iii) penalty rates;

(iv) allowances;

(v) leave loading; and

(b) the arrangement meets the genuine needs of the employer and employee in relation to 1 or more of the matters mentioned in paragraph (a); and

(c) the arrangement is genuinely agreed to by the employer and employee.

(2) The employer must ensure that the terms of the individual flexibility arrangement:

(a) are about permitted matters under section 172 of the Fair Work Act 2009; and

(b) are not unlawful terms under section 194 of the Fair Work Act 2009; and

(c) result in the employee being better off overall than the employee would be if no arrangement was made.

(3) The employer must ensure that the individual flexibility arrangement:

(a) is in writing; and

(b) includes the name of the employer and employee; and

(c) is signed by the employer and employee and if the employee is under 18 years of age, signed by a parent or guardian of the employee; and

(d) includes details of:

(i) the terms of the enterprise agreement that will be varied by the arrangement; and

(ii) how the arrangement will vary the effect of the terms; and

(iii) how the employee will be better off overall in relation to the terms and conditions of his or her employment as a result of the arrangement; and

(e) states the day on which the arrangement commences.

(4) The employer must give the employee a copy of the individual flexibility arrangement within 14 days after it is agreed to.

57

(5) The employer or employee may terminate the individual flexibility arrangement:

(a) by giving no more than 28 days written notice to the other party to the arrangement; or

(b) if the employer and employee agree in writing — at any time.

58

Appendix 5 - Schedule 2.3 Model consultation term (regulation 2.09)

Model consultation term

(1) This term applies if the employer:

(a) has made a definite decision to introduce a major change to production, program, organisation, structure or technology in relation to its enterprise that is likely to have a significant effect on the employees; or

(b) proposes to introduce a change to the regular roster or ordinary hours of work of employees.

Major change

(2) For a major change referred to in paragraph (1)(a):

(a) the employer must notify the relevant employees of the decision to introduce the major change; and

(b) subclauses (3) to (9) apply.

(3) The relevant employees may appoint a representative for the purposes of the procedures in this term.

(4) If:

(a) a relevant employee appoints, or relevant employees appoint, a representative for the purposes of consultation; and

(b) the employee or employees advise the employer of the identity of the representative; the employer must recognise the representative.

(5) As soon as practicable after making its decision, the employer must:

(a) discuss with the relevant employees:

(i) the introduction of the change; and

(ii) the effect the change is likely to have on the employees; and

(iii) measures the employer is taking to avert or mitigate the adverse effect of the change on the employees; and

(b) for the purposes of the discussion—provide, in writing, to the relevant employees:

(i) all relevant information about the change including the nature of the change proposed; and

(ii) information about the expected effects of the change on the employees; and

(iii) any other matters likely to affect the employees.

(6) However, the employer is not required to disclose confidential or commercially sensitive information to the relevant employees.

59

(7) The employer must give prompt and genuine consideration to matters raised about the major change by the relevant employees.

(8) If a term in this agreement provides for a major change to production, program, organisation, structure or technology in relation to the enterprise of the employer, the requirements set out in paragraph (2)(a) and subclauses (3) and (5) are taken not to apply.

(9) In this term, a major change is likely to have a significant effect on employees if it results in:

(a) the termination of the employment of employees; or

(b) major change to the composition, operation or size of the employer’s workforce or to the skills required of employees; or

(c) the elimination or diminution of job opportunities (including opportunities for promotion or tenure); or

(d) the alteration of hours of work; or

(e) the need to retrain employees; or

(f) the need to relocate employees to another workplace; or

(g) the restructuring of jobs.

Change to regular roster or ordinary hours of work

(10) For a change referred to in paragraph (1)(b):

(a) the employer must notify the relevant employees of the proposed change; and

(b) subclauses (11) to (15) apply.

(11) The relevant employees may appoint a representative for the purposes of the procedures in this term.

(12) If:

(a) a relevant employee appoints, or relevant employees appoint, a representative for the purposes of consultation; and

(b) the employee or employees advise the employer of the identity of the representative; the employer must recognise the representative.

(13) As soon as practicable after proposing to introduce the change, the employer must:

(a) discuss with the relevant employees the introduction of the change; and

(b) for the purposes of the discussion—provide to the relevant employees:

(i) all relevant information about the change, including the nature of the change; and

(ii) information about what the employer reasonably believes will be the effects of the change on the employees; and

60

(iii) information about any other matters that the employer reasonably believes are likely to affect the employees; and

(c) invite the relevant employees to give their views about the impact of the change (including any impact in relation to their family or caring responsibilities).

(14) However, the employer is not required to disclose confidential or commercially sensitive information to the relevant employees.

(15) The employer must give prompt and genuine consideration to matters raised about the change by the relevant employees.

(16) In this term:

relevant employees means the employees who may be affected by a change referred to in subclause (1).

61

Appendix 6 - Schedule 6.1 Model term for dealing with disputes for enterprise agreements (regulation 6.01)

Model term

(1) If a dispute relates to:

(a) a matter arising under the agreement; or

(b) the National Employment Standards;

this term sets out procedures to settle the dispute.

(2) An employee who is a party to the dispute may appoint a representative for the purposes of the procedures in this term.

(3) In the first instance, the parties to the dispute must try to resolve the dispute at the workplace level, by discussions between the employee or employees and relevant supervisors and/or management.

(4) If discussions at the workplace level do not resolve the dispute, a party to the dispute may refer the matter to Fair Work Commission.

(5) The Fair Work Commission may deal with the dispute in 2 stages:

(a) the Fair Work Commission will first attempt to resolve the dispute as it considers appropriate, including by mediation, conciliation, expressing an opinion or making a recommendation; and

(b) if the Fair Work Commission is unable to resolve the dispute at the first stage, the Fair Work Commission may then:

(i) arbitrate the dispute; and

(ii) make a determination that is binding on the parties.

Note: If Fair Work Commission arbitrates the dispute, it may also use the powers that are available to it under the Act.

A decision that Fair Work Commission makes when arbitrating a dispute is a decision for the purpose of Div 3 of Part 5.1 of the Act. Therefore, an appeal may be made against the decision.

A decision that Fair Work Commission makes when arbitrating a dispute is a decision for the purpose of Div 3 of Part 5.1 of the Act. Therefore, an appeal may be made against the decision.

(6) While the parties are trying to resolve the dispute using the procedures in this term:

(a) an employee must continue to perform his or her work as he or she would normally unless he or she has a reasonable concern about an imminent risk to his or her health or safety; and

(b) an employee must comply with a direction given by the employer to perform other available work at the same workplace, or at another workplace, unless:

62

(i) the work is not safe; or

(ii) applicable occupational health and safety legislation would not permit the work to be performed; or

(iii) the work is not appropriate for the employee to perform; or

(iv) there are other reasonable grounds for the employee to refuse to comply with the direction.

(7) The parties to the dispute agree to be bound by a decision made by Fair Work Commission in accordance with this term.

63

Appendix 7 - Technical notes Data used in this report

The data sources used in this report include:

• Department of Employment, Workplace Agreements Database (WAD); • Fair Work Commission, Case Management System Plus (CMS plus), Fair Work Commission administrative data; • Australian Bureau of Statistics (ABS), Microdata: Employee Earnings and Hours, Australia,

May 2014, Catalogue No. 6306.0.55.001; and • ABS, Labour Force, Australia, Catalogue No. 6202.0.

Workplace Agreements Database

Accuracy

Because the WAD is a census database rather than drawing on a sample of agreements, issues of sampling error are not relevant.

Non-sampling error, on the other hand, is an issue in any data. Non-sampling error refers to the inaccuracy in the data provided because of imperfections in recording data or inaccuracies in data provided to the Department of Employment. The Commission understands that efforts have been made to reduce non-sampling error by careful quality control of data.

Employee coverage

The number of employees covered by an enterprise agreement is generally specified in the employer’s declaration form (Form 17) that supports the initial application for the approval of that agreement lodged with the Fair Work Commission. In addition, the Department of Employment may refer to Fair Work Commission decisions and transcripts, as well as establish contact with employer and/or employee organisations.

In the WAD, actual employee numbers are known for the vast majority of agreements approved over the reporting period. Where an agreement’s employee coverage is unknown, and the agreement replaces an earlier agreement where employee coverage is known, then the number of employees from the earlier agreement is used. In cases where the agreement is still lacking employee coverage data, the number of employees is estimated by using a type of trimmed mean. The method employed by the Department of Employment is to exclude the largest and smallest 5 per cent of agreements for each industry group in the preceding year, and then to calculate the average number of employees from the remaining agreements by industry.

Employment numbers are not specified under greenfields agreements. All employee coverage numbers for greenfields agreements used in the report have been estimated by the Department of Employment using the modified mean method described above.

Measuring agreement coverage

Enterprise and collective agreements contain the terms and conditions of employment for a group of employees. Both the number of agreements and the number of employees they cover can be examined.

64

Average Annualised Wage Increases

Estimates of Average Annualised Wage Increases (AAWIs) are calculated for those agreements that provide a quantifiable wage increase over the life of the agreement. AAWI data examine increases to the base rate of pay only and do not take into account payments such as allowances and bonuses.

There are two stages to calculating the AAWI for agreements with quantifiable wage increases.

• Summing the percentage wage increases to give a total percentage wage increase for each agreement. For agreements where the percentage wage increase is compounded, then the effective rate of interest is taken into account.

− For example, for an agreement that contains three 5 per cent increases compounded over three years, then the total percentage wage increase would be the sum of 5 per cent, 5.25 per cent and 5.51 per cent. Flat dollar increases are converted to a percentage using average weekly ordinary time earnings drawn from ABS, Average Weekly Earnings, Australia, Catalogue No. 6302.0.

• Annualising the total percentage wage increase by dividing it by the effective duration (in years).

AAWI per agreement provides an unweighted average and tends to overstate the average wage increases received by employees. AAWI per agreement weighted by the number of employees covered by that agreement calculates the employee weighted AAWI, which is a more reliable estimate.

Wage increases for which an average percentage increase could not be quantified, or are inconsistently applied for each employee covered by the agreement, are excluded from estimates of AAWI. This generally excludes increases linked to productivity or which are paid in the form of one-off bonuses, profit-sharing or share acquisition. This will tend to underestimate the average wage increase. Wage increases also cannot be quantified for agreements where base rates of pay have not been provided, and where wages are adjusted automatically by the Consumer Price Index or by annual wage review decisions.

Agreement size

The composition of employees within and across all industries can also vary significantly from reporting period to reporting period. Employment conditions may vary significantly between small and large agreements, in part reflecting the different needs of such workplaces. In particular, larger agreements tend to be more comprehensive, with a greater number of provisions than small agreements.

Survey of Employee Earnings and Hours

Definitions of method of setting pay arrangements

The ABS define method of setting pay arrangements as follows:

Award only

Awards are legally enforceable determinations made by federal or state industrial tribunals that set the

terms of employment (pay and/or conditions), usually in a particular industry or occupation.

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An award may be the sole mechanism used to set the pay and/or conditions for an employee or group of

employees, or may be used in conjunction with an individual or collective agreement. Employees are

classified to the Award only category if they are paid at the rate of pay specified in the award, and are not

paid more than that rate of pay. 111

Collective agreement

An agreement between an employer (or group of employers) and a group of employees (or one or more

unions or employee associations representing the employees). A collective agreement sets the terms of

employment (pay and/or conditions) for a group of employees, and is usually registered with a Federal or

State industrial tribunal or authority.

Employees are classified to the Collective agreement category if they had the main part of their pay set

by a collective agreement (registered or unregistered) or enterprise award. 112

Individual arrangement

An arrangement between an employer and an individual employee on the terms of employment (pay

and/or conditions) for the employee. Common types of individual arrangements are individual contracts,

letters of offer and common law contracts. Employees are classified to the Individual arrangement

category if they have their pay set by an individual contract, individual agreement registered with a

Federal or State industrial tribunal or authority (e.g. Australian Workplace Agreement), common law

contract (including for award or agreement free employees), or if they receive over-award payments by

individual agreement.

However, the Fair Work Act 2009 does not allow the making of new individual employee agreements.

Collective enterprise agreements contain a provision which allows flexibility in the workplace to be

achieved by agreement between an employer and individual employee. Agreements which existed under

the Workplace Relations Act will continue in existence under the Fair Work Act 2009 as ‘agreement-based transitional instruments’. These are defined by the Fair Work (Transitional and Consequential

Amendments) Act 2009. 113

Owner manager of incorporated enterprise

A person who works in their own incorporated enterprise - that is, a business entity which is registered as

a separate legal entity to its members or owners (also known as a limited liability company). 114

Employee coverage

The EEH survey sample is weighted to account for most employing organisations in Australia, including both public and private sectors, with a few exceptions. Enterprises that are primarily engaged in the Agriculture, forestry and fishing industry are outside the scope of the survey, as are foreign embassies, and private households employing staff. The employees of employers covered in the survey are in scope if they received pay for the reference period, with the exception of

111 ABS, Employee Earnings and Hours, Australia, May 2014, Catalogue No. 6306.0, glossary. 112 ABS, Employee Earnings and Hours, Australia, May 2014, Catalogue No. 6306.0, glossary. 113

ABS, Employee Earnings and Hours, Australia, May 2014, Catalogue No. 6306.0, glossary. 114 ABS, Employee Earnings and Hours, Australia, May 2014, Catalogue No. 6306.0, glossary.

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members of the Australian Defence Force, employees based outside Australia and employees on workers’ compensation who are not paid through the payroll. 115

The EEH survey includes information determining whether the main part of an employee’s pay was set by an award, individual agreement or collective/enterprise agreement. The EEH survey’s Confidentialised Unit Record File (CURF) provides additional detail of an employee’s method of pay with data for individual and collective/enterprise agreements and agreements identified as either registered or unregistered. Information on the jurisdiction (federal or state) of registered agreements is also provided from the survey’s CURF.

Employee earnings

Average weekly earnings for all employees and the average weekly earnings for full-time adult employees are key series produced from the EEH survey. Average hourly earnings measures can in turn be derived from data on average weekly earnings by dividing these measures by paid hours of work. This report primarily accounts for average weekly and hourly total cash earnings. These measures incorporate remuneration paid to employees on a regular basis for time worked (including overtime payments) and also for time not worked (such as long-service leave and recreation). The ‘cash earnings’ component are gross amounts (that is, before tax) and are inclusive of amounts salary sacrificed.

Accuracy of data

The EEH survey collects information from a sample of employers about their employees. The advantage of an employer survey is that employers may be able to refer directly to their employees’ payroll and other records to coordinate a response to the survey questionnaire.

Imperfections in reporting by respondents still result in non-sampling errors. Non-sampling errors are pertinent to all types of surveys, however they are minimised by the careful design of the questionnaire, detailed checking of returns and the quality control of processing.

Because the results of the EEH survey are based on a sample of the population, this survey is also subject to sampling error. This means that the estimates in this sample may differ from the figures that would have been produced had the data been obtained from a full examination of all employers and employees. To minimise the risk of inaccuracy, the ABS employs a two-stage selection approach for the EEH survey. A random sample of around 9000 employer units are selected in order to adequately represent employers across different industries, states/territories, sectors and employee sizes. The employer sample culminates in data for around 60 000 employees who are randomly selected from the selected employers’ payrolls.

116

The EEH survey is not specifically designed to produce estimates of the number of employees in the workforce. The Labour Force, Australia publication is referred to by the ABS as the primary source for official estimates of employment. 117

115 ABS (2010), Employee Earnings and Hours, Australia, Catalogue No. 6306.0, p. 25. 116 ABS (2010) Employee Earnings and Hours, Australia, Catalogue No. 6306.0, p. 25. 117

ABS (2010) Employee Earnings and Hours, Australia, Catalogue No. 6306.0, p. 28.

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Labour Force survey

Accuracy

The Labour Force survey is a household survey that collects information from the occupants of selected dwellings by specially trained interviewers using computer-assisted interviewing.

Sampling error and non-sampling error are issues to consider with all sample surveys. Sampling error occurs because a sample, rather than the entire population, is surveyed. The risk of sampling error can be reduced by increasing the size of the sample. Non-sampling error is caused by human error or made by false information provided by respondents. Non-sampling error also arises because not all information can be obtained from all persons selected for the survey. However, the Labour Force survey has a high rate of cooperation from persons in selected dwellings.

118

Employee coverage

The Labour Force survey includes all persons aged 15 years and over except members of the permanent defence forces, certain diplomatic personal of overseas governments, overseas residents in Australia and members of non-Australian defence forces stationed in Australia. 119

Australian Workplace Relations Study

Accuracy

The AWRS is the first Australia-wide statistical data set linking employer data with employee data since the 1995 Australian Workplace Industrial Relations Survey. The AWRS surveyed both employers and their employees to collect information about a range of workplace relations and employment matters. The ability to link these data greatly enhances the extent of analysis that can be performed compared with data sets that only contain information from either employers or households.

As the AWRS is conducted by surveying a sample of the population, sampling and non-sampling errors can affect the analysis (refer to the discussion above for further information on sampling and non-sampling error).

Employee and employer coverage

The AWRS surveyed national system employers and employees within the private sector, public sector, non-government organisations and not-for-profit organisations.

The following sets out the coverage of the national system:

• In New South Wales, Queensland and South Australia the national system includes ALL employees (except most government and local government employees). • In the Northern Territory the national system includes ALL employees (except members of the police force). • In Tasmania the national system includes private enterprise and local government. It does

not include state government. • In Victoria and the Australian Capital Territory the national system includes ALL employees (except law enforcement officers or executives in the public sector in Victoria).

118 ABS (2012) Labour Force, Australia, Catalogue No. 6202.0, p. 31. 119 ABS (2012) Labour Force, Australia, Catalogue No. 6202.0, p. 28.

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• In Western Australia the national system includes constitutional corporations. It does not include state government or non-constitutional corporations.

Enterprises with fewer than five employees were not included within the scope of the AWRS. Consequently, workers employed by enterprises with fewer than five employees were not within the scope of the AWRS. Enterprises classified into the Agriculture, fishing and forestry ANZSIC 2006 industry division were not included in the scope of the AWRS, with their employees consequently also excluded.

As noted above, public sector enterprises in the national system of workplace relations were included in the scope of the study, except for enterprises in the Defence industry (ANZSIC sub-division 76: Defence), which are commonly excluded from survey research. Consequently, public sector employees working in the Defence industry were also not included in the scope of the AWRS.

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120 Australian Workplace Relations Study, Population: National System Employers & Employees, https://www.fwc.gov.au/creating-fair-workplaces/research/australian-workplace-relations-study/awrs-technical-notes/resear-0 (accessed 15 October 2015).