Intractable Bargaining Workplace Determinations

Enterprise bargaining is a negotiation between employers, workers, and representatives such as unions, on enterprise-level issues such as salary and conditions. The heart of Australia’s workforce law is the assumption that employers and employees have the freedom to bargain for pay and conditions within the limits and protections created by legislation. However, these negotiations often stall as the parties are not always willing to compromise on certain issues. The Fair Work (Secure Jobs, Better Pay) Amendment Act 2022 gave the Fair Work Commission (FWC) greater power to make Intractable Bargaining Declarations (IBD) and Intractable Bargaining Workplace Determinations to break deadlocks in enterprise agreement negotiations. This article looks at the nature of Intractable Bargaining Workplace Determinations with reference to the first IBWD handed down by the FWC.

Intractable bargaining

When enterprise bargaining reaches a true stalemate, with no real prospect of reaching an agreement, the situation can be described as ‘intractable’. In such cases, either party can apply to the FWC for an Intractable Bargaining Declaration. Upon receiving such an application, the FWC will try to help the parties to reach an agreement. Section 269 of the Fair Work Act 2009 states that the Full Bench must make an intractable bargaining workplace determination if the parties fail to come to an agreement. Similarly, the FWC must make an intractable bargaining workplace determination after the end of any unsuccessful negotiating period specified in an intractable bargaining declaration. This IBWD will establish the terms and conditions of employment in the absence of an enterprise agreement. Essentially the freedom for the parties to negotiate has a limit, in that if they cannot reach an agreement, the FWC will step in and take the decision out of the hands of the employer and employees.

Determination not less favourable

The FWC is obliged to abide by sections 270A and 275 of the Fair Work Act in making an IBWD. In accordance with section 270A, the FWC may not include any terms in the Determination that are less favourable to the workers than were established by the previous enterprise agreement (except wage increase terms). In accordance with section 275, the FWC must consider other discretionary factors when making an Intractable Bargaining Workplace Determination, such as:

• the merits of the case
• the interests of both employers and employees
• arrangements and benefits under the previous enterprise agreement
• public interest
• productivity
• good faith bargaining requirements
• the conduct of the bargaining representatives
• incentives to continue bargaining in the future

Case study

In Transport Workers’ Union of Australia v Cleanaway Operations Pty Ltd [2024] (Cleanaway), the Full Bench of the Fair Work Commission made their first intractable bargaining workplace determination. TWU and Cleanaway were in enterprise negotiations to cover a Cleanaway site between October 2022 and August 2023. When the parties were intractably deadlocked in a dispute over hours of work (including weekend ordinary hours and penalty rates) and pay rises, the TWU filed a bargaining dispute application with the FWC. After several member-assisted conferences, the FWC made an intractable workplace declaration, with a post declaration negotiating period ending in January 2024. During this period, the parties met for several more member-assisted conferences, but could not reach agreement on matters.

The Full Bench of the FWC gave consideration to all the relevant factors in making the Intractable Bargaining Workplace Determination. In summary, the Full Bench emphasised that their role is to assess the different perspectives in an enterprise bargaining scenario. The role of the Court is to use statutory factors and objective evidence to arrive at an appropriate conclusion. Importantly, the FWC aims to reach the conclusion that the parties might have come to if they had successfully reached an agreement. In this particular case, the Full Bench gave particular weight to the:

• particular facts of the situation
• evidence of the personal impact on employees and their general circumstances
• cost of living, particularly the increases in costs since the last enterprise bargain
• evidence of the profitability of Cleanaway’s business

For instance, the Full Bench agreed that Cleanaway was already paying its employees more than some competitors, but gave more weight to evidence of Cleanaway’s profitability and ability to pay wage increases.

The Full Bench established five matters in the IBWD, adhering closely to Cleanaway’s compromise position on weekend hours, and with the employees on the need for a wage increase. Notably, the Full Bench found that the employees were not acting unreasonably by refusing bargaining proposals that they thought left them worse-off. This suggests that the FWC will not judge employees harshly for bargaining hard for their position in an enterprise bargaining proceeding.

Enterprise bargaining is one of the contexts most likely to give rise to bullying complaints if poorly handled. Employers should ensure that there are policies and procedures in place to monitoring the well-being of staff and others during enterprise bargaining. For further information about Intractable Bargaining Workplace Determinations, please contact Go To Court Lawyers on 1300 636 846.