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Enterprise Bargaining In Australian System

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Question:

Discuss about the Enterprise Bargaining In The Australian System Of Employment Relations.
 
 

Answer:

Introduction

Enterprise bargaining refers to the negotiation of working condition and wage structure at the individual level of organizations with specific focus in Australia. This essay will deal with the future of enterprise bargaining in the Australian system of employment relations. This process involves negotiation between the employees, employer, stakeholders and their bargaining representatives with the aim of making an enterprise agreement. The employers and employees are legally bound with the implementation of the enterprise bargaining agreement. The trade union is often involved in this process of enterprise bargaining to play the role of employer or employees (Financial Review 2018).

The collective agreements of enterprise bargaining is usually applied to the workers of one employer. The system of agreement is not similar to awards, which offer same standards for all workers in the whole industry under a specific category of reward. As per the history of enterprise bargaining, it can be said that the collective agreements benefit the employers by incorporating flexibility in terms of performance. However, collective agreements are beneficial for the workers because they increase the pay and allow additional leave (Amma.org.au 2018).

This particular essay on enterprise bargaining will focus on the history of enterprise bargaining in Australia and seek out the reasons behind its introduction. It will also highlight the importance of employment relations in Australia and the current threat faced by it to gather information about the future of this agreement. 

 

Discussion

Enterprise agreement is a deal made at the enterprise level among the employers, employees and trade union members regarding the norms of employment (Actu.org.au, 2018). This process can involve more than one employer making an agreement with a group of employees. There is minor difference between awards and enterprise bargaining. Awards consider fewer amounts of pay and other benefits within the structure of industry. However, enterprise bargaining include particular arrangement for a specific enterprise. In general, the content of award can be considered as a least standard of enterprise bargaining agreement. The latter one is not permitted to provide anything less than its basic standard as per the national Employment Standards (Financial Review, 2018).

There are two dominant stages of enterprise bargaining- the negotiation stage and the stage of contract administration. At the negotiation stage, few proposals are introduced to seek for the possibilities of the acceptance. It provides an opportunity for mutual agreement among the employers and employees after proper reflection and thoughtfulness.  It further involves the three steps of preparation, procedure and follow- up action.

At the stage of contract administration, the contract is signed by strict adherence from both the parties. The process of contract administration need not be ended with the award of a contract. However, it seeks legit knowledge and advice. The elements of contract administration include scheduled delivery, supervision of staffing, workplace safety rules, security clearance, site conditions and others.

According to International Labor Organization, enterprise or collective bargaining is a negotiation about working conditions and means of employment between an employer and a group of employees with a perspective of defining industrial relations with one another (Bray and Rasmussen 2018). Economic and political provisions are the two issues that play major role in collective or enterprise bargaining.

Hicks Bargaining Model can be referred to in association with enterprise bargaining. This particular model stresses on the length and cost of work strike. He suggested that trade union and the negotiators of management need to create stability between the costs and benefits of a work strike while negotiating. The prime focus of this theory was on the functional association of wage acceptance by one party and the extent of strike that will be followed to settle on that wage.

This bargaining model of Hicks was contradictory to the Bargaining range theory because the former one focuses on a fixed wage settlement unlike the latter one. Bargaining range theory of A. C. Pigou described the process of wage settlement between the labors and the employers with a final settlement. As per this theory, the fixed settlement point of wage will depend on the negotiation or bargaining skills and the potential of the management negotiators. 

Enterprise bargaining was first introduced in Australia as per the Prices and Income accord in 1991. It was later on revised in the year 1993 and became the major part of industrial relations system in Australia. The trade union act was passed during the 19th century, which permitted the workers to negotiate with the employers for their wages and working conditions by forming a group. The era of 1860s and 70s when trade unions began initiating in the Australian working environment which faced success in terms of negotiating specifically, during labor scarcity, or gold rush (Amma.org.au 2018).

 


The success of the enterprise bargaining act was first experienced by the stonemasons in Melbourne who won their demand for an eight hour shift. The severe depression of the 1890s let the employers take back the benefits of the trade union members which they have earned in the last 30 years. From the time of the Melbourne maritime dispute in 1890 let the employers of Australia put on a series of attacks on the trade union members. Membership was demolished and the union hardly got any favorable factors to negotiate with the employers (Financial Review, 2018).

At the same time, several colonial ministers, especially Charles Kingston who was a South Australian premiere started looking for the mandatory negotiation and reunion.  The idea behind this was that if the employers were unwilling to negotiate with the trade union members then as per the law, they would be able to avail an independent tribunal. If the supervisors and the sub- ordinates still failed to complete the negotiation process on a mutual outcome then the tribunal had the right to impose a mutual settlement.

The colonial legislation was first used as a model for the first federal act, the Conciliation and Arbitration Act of 1904 which designed the Commonwealth Court of Conciliation and Arbitration. In this way, the Parliament got the power to make regulations only for prevention and settlement of the industrial disputes that was spread to more than one state. The Conciliation and Arbitration Act of 1904 was followed by another case that resulted in the generation of Australia’s first minimum wage (Amma.org.au 2018). It was known as the Harvester case where Justice HB Higgins set the wages required for an unskilled laborer to support himself along with his family in economical comfort. In the year 1907, the wage was specified at 7 shillings per day or 42 shillings per week. It was regarded as a unique concept in terms of enterprise bargaining as it changed the notion of basic wage.

The concept of enterprise bargaining from 1993 provided underpinning as a safety requirement. In order to be approved by the Industrial Tribunal, the EBA required reflecting that it did not prove to be a failure for the employees with respect to the award offering. Initially the award system was represented as the referral point for the certified agreements. The approval of the agreement came to be known as the ‘no disadvantage test’ (Financial Review, 2018).  

The norm of enterprise bargaining was introduced to settle workplace disputes between employers, employees and the trade union members. The Australian Industrial Relations Commission was allowed to get involved only with the disputes which could not be resolved in other way. It was considered as the fundamental mechanism which determines the working condition and wages of the workers. There are different types of jobs in Australia which falls under the category of Industry Award. This specific award describes the minimum requirements of the employees in a specific industry. Low wage, yearly leave, strategies to resolve workplace disputes and sick leave fell under this industrial award category. An enterprise bargaining agreement is same as the industrial award only with a bit of difference (Fair Work Commission, 2018). For instance, weekend penalty rates or meal allowances fell under the category of enterprise bargaining.

The employees were benefitted from this agreement in comparison to award and therefore, it was introduced. It needed to pass the “better- off- overall” test in order to get approved by the international tribunal. Fair Work Commissioner conducts this test to calculate if this particular agreement is better than the prevailing award system in the industry (Bca.com.au, 2018). For instance, EBA might not provide meal or other allowance but it paid the workers higher wage overall. Under a specific award category a worker might get a minimum wage of $17.35 in an hour along with a 25% penalty rate for working on Saturday. Therefore his total wage for an hour on Saturday will be $21.69.

 

 

On the other hand, an enterprise bargaining agreement might not have a fixed rate of penalty for the workers on Saturday but their overall wage begins from $22.50 an hour. Therefore the introduction of this agreement provided better wage to the workers in comparison to the award system. It can be obvious that the worker is getting better paid even without the imposing of penalty rate. This is the basic cause of preference of EBA to industry award. The workers will also be interested in seeking this privilege than the prevailing system.                 

The enterprise bargaining holds a significant impact on the employment relations of Australia. It became an integral part since the time of industrial revolution (Townsend, Wilkinson and Burgess 2013). Under this agreement, if an employer tries to take control of the bargaining process then it provides additional benefits to the employees by simultaneously providing, flexibility and innovation at the workplace. It is important in the industrial relations of Australia because an EBA ensure compliance to enhance productivity and reduce the cost of administrative operation. It is important to be included in any kind of business to meet the requirements of not only the employees but also the employers. It paves the way for a long- term benefit of the enterprise and offers reward to everyone associated with it.    

There are other important factors associates with enterprise bargaining in Australian industrial relations. It decreases costs, makes the compliance better and helps the employees to attain the workplace rights that they deserve. It is effective in maintaining harmony at the workplace. Opportunity is provided for more flexible working hours and schedule for achieving proper operational requirements of the organization. Talent retention is improved with the effective use of enterprise bargaining agreement due to the ability of direct sourcing in accordance to the target employees (Shaw, McPhail and Ressia 2018).

The industrial relations get improved due to wider job categories and job role that can fit the proper business performance. EBA permits the employers and employees to achieve beneficial gains such as enhanced productivity and waste reduction. The importance is also found out in the form of efficient service delivery to provide superior customer service. It is also helpful in enhancing the procedures for dealing with the employee grievance or discussing about workplace issues.   

With the increasing diversity in the working environment of Australia there is a tendency that the employees will move towards different varieties of job and the EBA will help them in operating under different award categories. It offers an opportunity to the organization to set up own structure instead of restricting employees to a fixed work structure or a fixed award coverage. ­­It helps in making the compliance procedure easy (Pekarek et al. 2017). It was observed that most of the workplace disputes emerged from low wage and due to indefinite award structure. It often becomes tough for the employees and the employers to co-ordinate between the general award category and the few roles carried out in the business environment. Therefore, enterprise bargaining agreement played an important role in this respect of resolving workplace hurdle. The employee experience has focused on the value added to the workplace culture due to the introduction of the agreement and the negotiation process.

At present, the situation of enterprise bargaining is not anything noteworthy. There are only few sectors which have still clung to the enterprise bargaining agreement, such as construction and the public sector. It is seen that there is a huge decline in the new agreements and the workforce covered under those are also falling. Again, there are some companies whose enterprise agreement was seized by the Fair Work Commission which posed threat to the union officials and ACTU (Australian Council of Trade Unions).

The scenario of enterprise is changing in the recent days due to the increasing population of the employees who were covered under the award category. Within a gap of 6 years there was an increase of employees covered under the award category from 15% to 24% (Bca.com.au, 2018). It was a remarkable amendment when the initial assumption was focused on the irrelevance of award system. The Fair Work Act as intended at the attainment of productivity and fairness in work by stressing on the industrial bargaining. However, the decreasing popularity of the enterprise bargaining agreement was explained with the instance of Coles supermarket in Australia. It was noted that the “better off overall” test was a precondition for the inappropriate certification of the agreement in the case of Coles. A lot of Coles’ employees were paid a lower wage by putting the virtue of loss of award penalty rates transparent (Townsend, Wilkinson and Burgess 2013).

The system of enterprise bargaining was put at stake when the companies did an agreement to make significant decrease in the wage of the employees. The workers realized that there was no option for superannuation along with other conditions in the industry. The trade union agreed to limit such an agreement only to certain companies instead of opening it to all the competitors. The workers understood that they were not being treated properly when the union should have taken care of their best possible interests.  

 


The system of collective bargaining became an integral part of industrial relations in Australia. However, due to current financial crisis, it is being targeted by domestic and foreign authorities for obstructing flexibility in the labor market. The crisis has come brought in a complex situation in the emergence of collective bargaining in the organization (Pekarek et al. 2017). The issue was divided into the two categories between employers and the employees on one hand, and the trade union and the employers on the other. The flexibility of collective bargaining as an integral part of industrial relations depended on the feature of more of employer organization and less of union organization to ensure higher workforce coverage.

The future of enterprise bargaining in Australia can be considered bleak because of the varied reactions of the employers to the recent change in trends. The modification in the employment relations is central to the economic and political debate in Australia from the last 20 years. There are certain employers who have tried to develop non- union agreements against a strong opponent of the current workforce whereas others have tried the cooperative ways to bring the change. These variations among the functions of the employers will create a disruption in the future of Australian working environment which will give rise to organizational disputes (Actu.org.au, 2018).

Change and innovation in the collective bargaining of workplace can be considered as dependent on two different dimensions- individualism to collectivism and high trust or commitment to low commitment or trust. In the future of working environment in Australia, the changes can be considered to integrate collective arrangements. Most of the growth and development in the employment relations has been considered as casual and the employees do not get the accessibility to protection of full- time standard payment. In the long run, the employee security rights will not be applicable to the casual employees and thus they will not get the benefits (Wright 2017).

The enterprise bargaining in Australia could not bridge the gap of industrial democracy created due to the decline of union movement. In Australia, the growth in casual jobs outruns the development of fixed jobs by a minor range. It might result in restricting the workers to join a trade union or indulge in the process of enterprise bargaining. However, it can be contradicted that union movement is not as bad as it might sound. As long as there is no work scarcity, the future of workers and unions rights is bright. The future of this system in Australia might vary to a great extent from the current scenario of industrial relations (Financial Review, 2018).

For the future of Australia, a work council model can be proposed where the employers and the employees negotiate and correlate labor and business relations within the organization. There is a doubt about the effectiveness of this specific model for the future of industrial relations in Australia. This is because in the past 20 years it was reflected that employers and the government have strongly tipped the balance of work structure towards the employers (Shaw, McPhail and Ressia 2018).

Conclusion

It can be concluded from this essay that enterprise bargaining plays an important role in the industrial relations of Australia. The history of this agreement was reviewed to find put a comparison between the existing awards system and the recent agreement. The agreement varied among the trade union members, employers and the employees. The entire discussion about the union strategies in Australia and the union movement has focused on the organization of trade union structure in the organization. The history and the current trends o enterprise bargaining have also considered the threats faced by it due to financial crisis and increase in workforce population. The future of this agreement is still under question due to the issues faced by it and the low rate of awareness. It was overviewed that the trend is on the verge of losing its popularity. Therefore it is dubious if the future employees or employers can connect to each other with a single thread.

 

References

Actu.org.au. (2018). Australian Council of Trade Unions ACTU. [online] Available at: https://www.actu.org.au/ [Accessed 8 Apr. 2018].

Actu.org.au. (2018). Sally McManus Speech to AIRAANZ February 2018. [online] Available at: https://www.actu.org.au/actu-media/speeches-and-opinion/sally-mcmanus-speech-to-airaanz-february-2018 [Accessed 8 Apr. 2018].

Amma.org.au. (2018). Enterprise bargaining looks irrelevant. [online] Available at: https://www.amma.org.au/wp-content/uploads/2017/07/enterprise-bargaining-looks-irrelevant-AFR.pdf [Accessed 8 Apr. 2018].

Bca.com.au. (2018). The Business Council of Australia researches and promotes economic growth policies for the benefit of the nation and all Australians.. [online] Available at: https://www.bca.com.au/ [Accessed 8 Apr. 2018].

Bca.com.au. (2018). The current state of enterprise bargaining typifies the cracks appearing in our workplace relations system – a system that is becoming increasingly adversarial and regulated, and ultimately disempowering workers and employers, writes Jennifer Westacott.. [online] Available at: https://www.bca.com.au/media/enterprise-bargaining-on-the-brink-of-failure [Accessed 18 Apr. 2018].

Bray, M. and Rasmussen, E., 2018. Developments in comparative employment relations in Australia and New Zealand: reflections on ‘Accord and Discord’. Labour & Industry: a journal of the social and economic relations of work, pp.1-17.

Fair Work Commission. (2018). Fair Work Commission | Australia's national workplace relations tribunal. [online] Available at: https://www.fwc.gov.au/ [Accessed 8 Apr. 2018].

Financial Review. (2018). Business has reason for losing faith in the bargaining system, Bill. [online] Available at: https://www.afr.com/opinion/columnists/business-has-reason-for-losing-faith-in-the-bargaining-system-bill-20180131-h0r5q9 [Accessed 8 Apr. 2018].

Financial Review. (2018). EBAs are slowly becoming a productivity roadblock. [online] Available at: https://www.afr.com/opinion/columnists/ebas-are-slowly-becoming-a-productivity-roadblock-20170213-gubfnn [Accessed 8 Apr. 2018].

Financial Review. (2018). Enterprise bargaining on brink of failure. [online] Available at: https://www.afr.com/opinion/columnists/enterprise-bargaining-on-brink-of-failure-20170201-gu37e4 [Accessed 8 Apr. 2018].

Financial Review. (2018). Why enterprise bargaining is on life support. [online] Available at: https://www.afr.com/opinion/columnists/bill-shorten-is-right-and-wrong-on-the-death-of-enterprise-bargaining-20180130-h0qps7 [Accessed 8 Apr. 2018].

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

Shaw, A., McPhail, R. and Ressia, S., 2018. Employment Relations. Cengage AU.

Townsend, K., Wilkinson, A. and Burgess, J., 2013. Is enterprise bargaining still a better way of working?. Journal of Industrial Relations, 55(1), pp.100-117.

Wright, C.F., 2017. Australian industrial relations in 2016. Journal of Industrial Relations, 59(3), pp.237-253.

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