​Stay agile: Managing employment relations in the new economy

New economy employers need to be flexible and agile. They need to implement change quickly and efficiently to capitalise on market developments. This requires a high performing and creative workforce, that is engaged, and ready to adapt.

As we transition into a new economy, trade unions are searching for ways to stay relevant and to keep up with changing business and employment models. Employment law regulation in Australia is still based on an old economy model. It enshrines a role for trade unions as bargaining representatives in a framework that favours collective bargaining.

What does this mean for new economy employers, and what impact might it have on their business?

New economy challenges

The rise of new economy employers poses challenges for trade unions. They are searching for ways to remain relevant, with union membership having dropped to a record low of 15 per cent of the national workforce, and only 10 per cent in the private sector.

The rise of the new economy and new ways of working have been part of the reason for the fall in union membership. In response, unions have been considering or implementing a number of different initiatives. These include mergers or alliances with other unions to share resources, offering membership benefits such as discounts for goods and services, incentives for new members and provision of different tiers of membership.

Union representation

Some unions are seeking to expand their membership base into areas outside of old economy industries and occupations. They are doing this by:

• seeking to broadly interpret terms in their existing eligibility rules
• amending their rules to cover new industries and occupations; and
• amending their rules to specifically cover new economy employers.

The eligibility rules of a union are the reference point for determining whether a union is entitled to represent the industrial interests of an employee. Particularly in the context of new economy sectors where there has not traditionally been union coverage, eligibility is worth checking. New associations have also sought registration as an organisation of employees under the Fair Work (Registered Organisations) Act 2009 (Cth). For example, recently, the Korean Workers' Union has sought to be registered specifically to cover employees of Korean employers, including supervisory and management employees. If granted, the application may herald competition from unions seeking to cover other particular types of employers or industries.

These applications may not be visible to employers. Notice is required to be given of them, but only in certain ways. Unless an employer is specifically looking for these developments, it can be difficult to keep on top of them.

Right of entry

Subject to certain requirements, union officers may exercise "right of entry" to a new economy employer's premises under the Fair Work Act 2009 (Cth).

Even if a union does not have any members on the premises, a union official who is a permit holder has a right to enter premises for the purposes of holding discussions with employees whose industrial interests the union is entitled to represent and who wish to participate in those discussions.

Where a union has at least one member at a particular workplace, the union can enter the premises for the purpose of investigating a suspected contravention of the FW Act, an applicable modern award or enterprise agreement that relates to or affects that member.

A union official who is a permit holder also has a right of entry for certain work health and safety purposes.

Right of entry can be a gateway through which unions may seek to recruit employees as members.

Exercising right of entry is subject to certain requirements, which the union permit holder must comply with. To help manage right of entry, many employers have developed protocols, and trained their officers in their application, to ensure that right of entry is properly exercised.

To exercise right of entry, the union must be entitled to represent the industrial interests of the relevant employees. This will depend on the terms of the union's eligibility rule.

"Companies that embrace innovation, that are agile and prepared to approach change confidently and with a sense of optimism are more competitive, more able to grow market share and more likely to increase their employment."

Malcolm Turnbull, Prime Minister, Speech to launch National Innovation and Science Agenda, 7 December 2015

Modern awards

The employment framework established by the Fair Work Act provides a safety net of terms and conditions. This safety net includes modern awards which apply to particular industries and occupations.

As part of an overall employee relations strategy, employers should consider the coverage of potentially applicable modern awards. This is to ensure they comply with terms, conditions and processes contained in modern awards.

Modern awards contain dispute settling procedures that allow the Fair Work Commission to settle disputes about matters arising under the award and in relation to the National Employment Standards. Dispute settlement procedures include a role for employee representation – which includes a union with a right to represent the employee.

Disputes in the workplace may arise about compliance with particular provisions (for example, hours of work or payment for overtime). Unions can and do seek to represent employees under the dispute resolution procedures in modern awards.

Maintaining direct and regular communication with employees and providing easily accessible avenues for employees to raise issues and provide feedback will assist to avoid union representatives raising disputes under a modern award.

Employment proposition

It is critical for a new economy employer to be able to offer an attractive employment proposition to potential new employees. The strategic advantage of new economy employers often resides in the quality of their employees and the terms of their engagement. Employment terms can have a significant impact on productivity and competitiveness.

Employers in the new economy may ask – how does bargaining for an enterprise agreement fit with its employment proposition?

Enterprise bargaining

The FW Act places an emphasis on enterprise‑level collective bargaining. The outcome of bargaining is often an enterprise agreement that sets out terms and conditions of employment to apply to classes of employees. Individual employment arrangements may not be less generous than these terms.

Under the enterprise bargaining regime, unions are provided a key role. For union members, the relevant union is the default bargaining representative. For other employees who are entitled to become members, the union can be expressly appointed by the employee to bargain on their behalf. In the good faith bargaining regime, employers must recognise and meet good faith bargaining requirements with any bargaining representatives.

"[Unions] can develop a new, unified narrative for the future which we need to do to match the new work in a new economy."

Ged Kearney, ACTU President, Speech to ACTU Leadership Forum, 4 February 2016

Good faith bargaining

If bargaining is triggered, in addition to the requirement to recognise and bargain with other bargaining representatives, other requirements are imposed. These requirements include:

• attending and participating in meetings
• disclosing relevant information
• giving genuine consideration to and responding to proposals with reasons; and
• refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining.

While the good faith bargaining requirements do not require an employer to make concessions or reach agreement, if an employer only rejects offers and proposals which are being advanced for its

consideration without doing anything further, it could be alleged that it is "surface bargaining" and not meeting the good faith bargaining requirements. A bargaining representative could seek "bargaining orders" requiring the employer to do more.

Triggering enterprise bargaining

Bargaining may be triggered by an employer agreeing to bargain or initiating bargaining itself.

An additional mechanism unions use to commence bargaining is an application for a majority support determination (MSD). A union bargaining representative may apply to the Fair Work Commission for an MSD. If the MSD is made, it compels an employer to meet the good faith bargaining requirements towards other bargaining representatives (such as the union bargaining representative who applied for the MSD).

If an MSD is made, the employer must issue to employees a notice of employee representational rights. This notice advises employees that they may appoint a bargaining representative. This has the potential to introduce into the workplace a number of different bargaining representatives, which may include different unions.

The right of a union bargaining representative to make an MSD application depends on the ability of the union to represent the industrial interests of employees under its eligibility rule. An application may fail if the union applying for the MSD is not entitled to represent the relevant employees.

Unions have used MSD applications in relation to new economy employers and also in relation to particular groups of employees, such as staff, who have traditionally not been involved in a collective bargaining environment.

An MSD could also be used to "jump start" bargaining - where a union cannot establish majority support across a larger group, and uses an MSD to initiate bargaining for a smaller sub-set of employees where majority support can be demonstrated. A union could later seek to expand the coverage of the agreement once bargaining has commenced, either as a term of the bargaining or by making an application to the FWC to order a broader scope (called a "scope order").

Flexibility and managing change

Implementing workplace change quickly and efficiently can often be a source of concern for employees. There are requirements under the FW Act and modern awards in relation to major workplace change. This is another area where unions can and do play a role.

Modern awards include consultation provisions that require the employer to consult with employees and their representatives, if any, about major workplace change which is likely to have a significant effect on employees or changes to employees' regular rosters or ordinary hours of work.

In addition, where an employer has decided to dismiss 15 or more employees for reasons of an economic, technological, structural or similar nature, the employer is required to notify and consult with each union of which any of the employees is a member, provided that the union is entitled to represent the industrial interests of the employee and the employer could reasonably be expected to have known that one or more employees was a member of the union.

When contemplating a business restructure or major workplace change, employers should undertake a review of consultation provisions under the FW Act and any applicable modern award as well as their own policies, procedures and employment contracts. Employers should carefully plan their approach to employee communications and engagement for any major change. It is critical to consider when consultation obligations in awards or legislation might be triggered, and if so, how they will be met.

Unions can and do seek to represent employees in consultation processes. They may also commence legal actions, for example, seeking an injunction to delay a business restructure so as to allow consultation to occur.