The SRC Report: The Art of Enterprise Agreement Bargaining

Welcome, everybody, to another SRC Report. Today I'm joined by James Christensen, our employment relations partner up in Brisbane. Thanks for joining us today, James.

Thanks, Athena. Thanks for having me.

Not a problem. James and I today are going to talk about enterprise bargaining in an APS construct. Most agencies would be aware that there's APS-wide bargaining going on and there's certainly some decisions being made in relation to pay offers and pay fragmentation, and a lot of other agencies are also at the same time entering into their own bargaining processes. And so James and I wanted to talk today and just talk about some top tips for HR in relation to bargaining, what it is, how it works. And I'm going to end with my number one clause that I want everybody to include in their enterprise agreement, where you hopefully already have it. James may disagree with me for sure on that. So James, let's get the ball in motion. I'll start by asking, how do you recommend employers, and particularly government agencies, approach enterprise bargaining?

Thanks, Athena. Obviously, when the issue of enterprise bargaining first arises, I'm sure there's a lot of managers and organizations and agencies there that immediately have staff with their blood pressure rising and slashes of disputes and things running through their minds.

You get their minds.

Yeah. So we sit down with the employer, or in this case the government agency, and we really try to focus their mind around what is at the heart of enterprise agreements and EBA negotiations. And that really is an organization sitting down and trying to reach an agreement and negotiate an agreement with their most important stakeholder: their employees. And so for a start, we try to set that scene for the employer or the agency to say, "This isn't you trying to negotiate with someone who you are in dispute with or someone you're at odds at. You are really trying to negotiate with someone who is the most important person and people to your organization: your staff."

We then try to talk to them about the importance of the EBA negotiation to their employees in order to provide some balance to the picture, in that in our view, an enterprise agreement or employment contract is outside of potentially a person's mortgage the most important contract those individuals will enter into. It's the contract they most rely upon. It's the contract that provides their remuneration, their salary, their entitlements, effectively how they live and work. So we try to speak to employers about that and really focus them around those key issues before we even step foot into looking at what an enterprise agreement might look like.

Because if you go into contract... I mean, it's just a contract negotiation at the end of the day, in a combative way, you're never going to get the best out of anybody. What would you end up with if you'd gone into combat with your employees? I can imagine.

Well, I think we see it in the news and the media-

We do.

... a fair bit whereby people are at loggerheads, productivity obviously goes down, workplace culture is significantly affected whereby if you're talking to employers at the start and you are really setting the scene to say, "Look, these are the most important people in your organization. Throughout this process, whilst there might be disagreement and there might be limits on what people can offer or what can be agreed upon, I think you need to not lose focus on who you're actually negotiating with." That's the fundamental point or the anchor that we try to provide to employers when commencing upon the EBA journey.

What do you want out of the agreement? What should agencies be trying to get out of them, I suppose? Noting that it is about negotiating with their most important stakeholder, and obviously they're going to be negotiating for some kind of a future document that looks into the future and a document that will support them to meet, I guess, the goals or the objectives that the government has set out for them. What should they be looking at? What do they need? What should they be doing?

Definitely. Obviously a lot of organizations will focus upon things like productivity and flexibility and have discussions around all those different points. And that's obviously important and crucial and things like that as part of your business planning, but if we want to boil it down to what should an agency be looking to do or what should every employer be looking to do in regards to their enterprise agreement, another one of those anchor points we press on employers is really at the end of the day, once an agreement is reached, what we want is an agreement which is certain. So it provides certainty for the employer and certainty for the employee, and the clauses within that agreement have been well-thought out, they're certain. And it's not an agreement which is going to promote future dispute between the parties. So that's the key from our perspective, leaving aside flexibility, productivity, and what you are going to put in different enterprise agreements for your organizational business. At the end of the day, what's critical to both parties is just making sure that the document itself is absolutely certain in order to avoid future disputes during the life of the agreement.

How would you look to do that? Is there a process that you recommend people follow?

It probably kicks into what we'd consider to be the key tips for a successful negotiation. Once we feel that a business or an employer has an appreciation and those levels of understanding of what the key objectives are around the enterprise bargaining processes, certainty and things like that, in order to have the best bargaining experience and achieve those objectives, it really comes down to preparation, planning and, separately, communication. Specifically in regards to the question around how can we ensure certainty between the parties and ensure that we get a document which is certain, for mine, it comes down to preparation. Now, where we've seen it go awry or be done badly is where the parties have negotiated wording potentially at the end of a long day between advocates who are lay advocates potentially in that they've agreed on wording which hasn't, I suppose, had a legal review for the purposes of certainty. And then we get two years down the track and people are saying, "Well, what does this clause mean? What were we intending here?" when a circumstances arise that doesn't clearly deal with it.

And we're saying, "Oh, well, it was negotiated on a Friday afternoon after a long day of bargaining." And we put this wording in, and it all gets a little bit too difficult. So what we're really saying is it's all about preparation. When you are ready to commence bargaining with your employees and their representatives, your agreement that you prepared and you are ready to put on the table has been well-thought out and certain so that both you and your employees and their representatives can clearly see what you are proposing. So preparation around your document is critical, and there similar-

And probably... Sorry to interrupt. But it's probably more. I think what you're saying is it's more than just preparation around the feels of what you want your employees to feel while you're doing the negotiation and while you're communicating with them. It's really important that there's real thought to the words that are used and the words that are actually in the EA because they're the ones that will either save you from disputes or the opposite.

Yeah. Yes, definitely. There's no point, in our view, having words in there which are intended to evoke emotion or create, as you said, a feeling if those words then aren't clear as to how they should be applied in a particular situation. Because we always bring it back to, an employer or employee, you don't want to be in dispute, you want a harmonious relationship. So therefore, you want your agreement to be as clear as possible as to who's going to do what in what circumstances and what the employees can expect. And if your agreement isn't clear, it's just going to promote future dispute, which is what all parties want to avoid.

The agencies and employers should have a pretty good idea about where their risky provisions are in their enterprise agreement because those will be the ones which over the last three to five years have ended up in the Fair Work Commission in dispute or ended up in multiple complaints or had the union banging on the door complaining or wanting it to be reviewed. So I think you have this great resource of, "Okay, well these are the clauses that we know are problematic for whatever reason," and then hopefully there's been a bit of an analysis done. Obviously we've got the Commonwealth Bargaining which will help when it's finished, but there must be some kind of a work done over the years to identify, "Okay, here's some gaps, here's some things we do need to fix and we want it fix," and we've got some words that we're going to propose. Is that kind of how...

Yeah, definitely.

... it might work.

There'll be clauses which on review won't be certain, and there'll also be clauses which have caused dispute previously across the life of that particular agreement. It'll be the opportunity to clean up those clauses. Where the ball bounces in regards to those clauses often then follows along where the decisions are being made. So you are looking to clean up a clause to ensure that it's consistent with where the existing position may be acknowledged between the parties. But what we're trying to do is avoid any further future interpretation disputes.

Because you contract, you want it to speak on its face, don't you? You don't want to have to...

Yeah, that's exactly right. If we were to look at, I suppose, more of a commercial negotiation where you've got commercial parties negotiating an ordinary commercial document, often those parties will start with a heads of agreement whereby you agree upon the big ticket items that you want to see, or in this case it'll be a list of claims or a particular bargaining position. But then you really want the clause which is distilled from those positions to be certain. So that's where we see the real work of, I suppose, the legal team or the HR team in regards to negotiations being. One of the key points we press on them not to lose focus around, so let's not get sidetracked with productivity, flexibility, all those operational issues because underpinning all of that is that we want to ensure that what we have agreed upon in regards to bargaining points have been clearly distilled so that there isn't any future dispute as to what was agreed or how should it be interpreted in regards to certain situations.

I think one of the things that I guess I'd never really thought about until I guess more recently in my career is that an EA is a contract. It's part of your employment contract. It's not just a... I don't know what I used to think it was, but I didn't really think of it in that way. And so really at the end of the day, we put up an EA. Obviously we want to make it certain and all those things, it gets voted on, it gets voted in by majority, it's approved by the Fair Work Commission, which could be sometimes is contested by unions and sometimes not. The most important thing in EA is that they're certain, not that every single person is in love with it.

Yeah, we just leave it with certainty because once we get into who agrees with it, who doesn't because everyone needs to reach agreement eventually, and that's where it starts getting a bit of angst where people can't reach agreement.

So we've got our clauses and we've at least got a draft that we want to put forward in negotiation. Usually it's HR or people and culture who are responsible for the negotiation. The legal advisors are not usually at that table. It's really the bargainers, the CPSU and any other relevant party that's part of that bargaining group and the employer. And so where do the lawyers fit in? Well, do we even have a role?

Yeah, that's correct. My experience is that lawyers don't usually sit at the bargaining table. We really are vibe killers. At the end of the day, we always go back to that first point in that this is a negotiation between an organization and their most important stakeholder: their employees. And so whilst the employees might feel more comfortable by having their nominated representatives at the bargaining table, and they'll also be accompanied by employee representatives usually, and any person can nominate themselves to be an employee representative and represent themselves at the bargaining, I've found it much more productive where the organization takes the lead in regards to those negotiations. Because at the end of the day, it's an agreement between those two persons.

Whilst the lawyers can play an important part in planning for a successful negotiations, in assisting to ensure that those negotiations are successful, I don't really see a role for lawyers and in particular external lawyers sitting at the bargaining table. Where I'd see lawyers being of assistance is in regards to potentially preparation process, reviewing the enterprise agreement for issues around certainty interpretation. The biggest issue I suppose as an IR practitioner and specialist is when we get sent an enterprise agreement from a client that says, "We're having some trouble interpreting/implying this clause. What does it mean?" And we're sitting there going, "Well, it means what the parties intended at the time that they were negotiating it." When it's a bit unclear, it creates difficulties and sometimes... Yes, it creates difficulties.

That leads into something that I wanted to really impress upon any listeners here today is that one of the things I think is really important in enterprise bargaining is that that corporate knowledge is held by the employees who conduct it, it's not outsourced. I know sometimes employers, and that can include agencies or private sector agencies, will outsource their enterprise bargaining to HR professionals or whatever. I think that's a really dangerous thing because you lose that knowledge about what was discussed at the table. This is your document. It's just so important that you understand it and you've lived with it and it's owned by the agency, the actual employees of the agency.

The other thing is record keeping. It's just imperative that negotiations and those notes and the understandings of the explanatory memorandum, I would see it as, is recorded and then saved in a file and not lost. Because in some EAs that are still in operation at the moment, they're five years old, they're pretty old. No matter how much you work, there will be uncertainty in a clause. I can pretty much guarantee it because nobody ever gets it perfect. If you've got some records, five years down the track, you've got no idea what people said, people have moved on. If you've got those records, that's really going to assist everybody in resolving those disputes as quickly as possible because it's spending time in dispute after an EA that probably sucks the most life out of an organization.

Yeah, most definitely. With enterprise agreements, often the clauses which are in it are from negotiations which might've been 12, 15, 16, 20 years ago in that a clause-

Inherited from different departments, usually.

Inherited from different departments, inherited from former EBA negotiation processes, and the clause may have not being utilized or the circumstances may have changed, which then results in questions around how does the clause actually apply today? And when we ask people, "When was this inserted?" it was from a negotiation 20 years ago and the records are lost, and the understanding around the history and the purpose of that particular clause isn't available anymore. So record keeping and ensuring that there's a level of in-house knowledge retained is very important to ensuring that there isn't a future dispute. And if there is, we can at least point back to and identify what the intention was the clause was in order to seek to resolve those disputes early.

Yeah. I think one final thing is my wishlist of clauses in an enterprise agreement, and this is because I think listeners would not deal with probably the more complex employees, managing ill and injured employees in government departments, and that is a clause that allows agencies to prefer their own medical evidence over medical evidence provided by employees. What I mean by that is having some flexibility so that an employer can prefer their IME report, their fitness for duty report over a fitness for duty report or a medical certificate provided by an employee. What do you think about that, James? Do you think that's a good one or do you have another one or do you completely disagree?

I've probably got a [inaudible] you need a camp here because when we talk to employers, we do sit there and say, "What issues and topics and areas do you want to include in your enterprise agreement? Are we just looking to cover off on pay entitlements, remuneration type measures, or are we going to look to delve deeper into the employment relationship and the day-to-day operations?" So including clauses which affect your day-to-day operations, I am always cautioning employers around. However, that being said, if it's a particular issue which is causing you to have regular disputes with your employees and with your workforce, then definitely using the enterprise bargaining process as a mechanism in which to set down the ground rules and an agreement as to how we're going to deal with that particular topic brings us right back to point one, which is we want something which stops future disputes or at least doesn't promote it. So if that's a particular issue in regards to how to handle employees on long-term medical absences, then definitely having an agreement in place around how that's handled creates certainty for all parties, therefore eliminating future disputes.

I think it's important to point out that it's the EA that's the contract and the policies that hang off it are not part of that contract. Is that right, James? But we do have to follow them. They are an important part, but then not-

Yes, definitely.

... [inaudible], the Fair Work Act and then it's your EA, then your contract of employment, then policies. Would that be right in the hierarchy of what's important?

Yes, definitely in regards to which particular document takes precedence over the other, because obviously the Fair Work Act and the provision set under it have legislative force being a statute passed by parliament, therefore it carries with it the authority that comes from that. Enterprise agreement is an industrial instrument negotiated between the employer/employee under that statutory regime, and therefore has the appropriate certainty and enforceability, which is tied to the Fair Work Act. Whereas when we get down to policies and procedures, they are, unless agreed to be contractually binding, which most policy and procedures these days aren't, are nothing more than the employer relying upon its ability to set out and enforce reasonable lawful directions in regards to how its business operates. So in regards to the hierarchy of what takes precedence, we quite clearly look at the Fair Work Act as a statute of parliament, the industrial instrument, which is a industrial instrument agreed under that statute between the parties to provide certainty. Otherwise, we're seeking to rely upon our policies and procedures.

And our contract of employment.

Yes.

Which should hopefully not be inconsistent with any of these things.

You'd hope not.

I'd hope not. Well, thank you so much for your time, James. That was incredibly informative. I think enterprise agreements and bargaining is something that comes around regularly for everybody, so I'm sure this will be of assistance to you when you are in this process. I want to remind everybody of our bespoke CLE platform, LawFlix. Please check it out, sign up, and that's where you can find some great continuing legal education webinars that we have. It's all searchable and easy to access. So thank you so much, James, for your time today.

No, thank you for inviting me on.

No worries, anytime. Bye now.