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The new IR laws, a threat for employers

The consensus for Employers seems to be, if employers want to avoid participating in multi-employer bargaining, they will be required to disclose their business model to the Fair Work Commission. Effective this coming June (2023), multi-employer bargaining will be implemented. This is a...

April 26, 2023

The consensus for Employers seems to be, if employers want to avoid participating in multi-employer bargaining, they will be required to disclose their business model to the Fair Work Commission.

Effective this coming June (2023), multi-employer bargaining will be implemented. This is a pivotal and contentious component of the Secure Jobs, Better Pay Act. It permits unions to pursue multiple employers to adhere to the same agreement. Additionally, employers who were not part of the bargaining process or are in disagreement with the terms can still be included in the agreement.

As with any rushed-in and/or complex legislation, unintended consequences are bound to arise, and the newly passed Secure Jobs, Better Pay Act is a perfect case scenario.

This will entangle employers in a complex legal process that could prove, not only industrially frustrating, but downright commercially dangerous and a genuine risk for employers that played no role in negotiations for multi-employer bargaining agreements.

Why?

Once multi-employer bargaining commences (June 2023), a significant issue will be the extent to which an employer’s competitors can be drawn into the bargaining process.

Essentially, an employer’s inclusion in multi-employer bargaining will depend on whether they share a common interest with any other employers in the same industry or sector and whether there is reasonable comparability between them.

The most frustrating element for employers will be this:

If an employer has 50 or more employees, there is a presumption of a common interest and reasonable comparability unless they can prove otherwise. What that means is an employer who does not agree with the unions about their definition of ‘common interest’ and ‘similarity’ with their competitors, must engage in potentially costly legal procedures to prove their position.

There is no other option for an employer to remove themselves from coverage of an agreement they didn’t negotiate or want.

Here’s why employers should be worried.

Australian Manufacturing Workers Union national secretary, Steve Murphy, says that “a common interest is the skills that workers have or the trade that they have.”

Whether the Fair Work Commission and no doubt the High Court (soon enough) agree with that statement is irrelevant. The legislation damns employers to face the cost of legal procedures, just because a union makes a claim of common interest or similarity with another business that has a bargaining agreement.

Unions will make all kinds of claims of common interests for 50+ employee businesses, because they don’t have any requirement to prove the common interest or similarity exists.

Without having ever spoken to an employer or their employees, customers, or stakeholders and knowing nothing about the operations, methods and processes, a union can drag any business into proceedings or forced multi-employer agreement coverage.

How can an employer fight the unions’ claims?

Employers will have one option. I don’t believe matters like, location, turnover, clientele types, nor industry will be robust enough arguments to prove similarity or common interests don’t exist.

Employers will most likely need to disclose technical differences in their business operations to the Fair Work Commission, which would also reveal these details to competitors.

That means intellectual property that determines how a business competes in the market will need to be provided and subjected to examination and cross examination in a tribunal.

This is frightening, and it ought to be subject to Non-Disclosure Agreements – however, its incredibly difficult to see how a Commissioner may have any ability to disclose a Decision without revealing sensitive, confidential information and intellectual property that proves or disproves common interests and similarities between competing businesses.

We’ll probably see weaponising of multi-employer agreements:

We know it is heavily suspected that unions and businesses already strike off the record agreements to make life difficult for employers on some projects in exchange for a free pass on others. The construction industry unions and principal contractors are mostly accused of this type of rubbish.

So, shouldn’t we also expect to see unions and businesses conspiring to use multi-employer bargaining laws to target particular competitors? They’d certainly have plenty of motive to do so, and would force one of two outcomes:

  1. The targeted competitor who is lawfully competing (and winning) on headcount cost is forced to (legally) price-fix the wage/cost component of their work with competitors, removing their competitive advantage over the other; or
  2. The targeted competitor is forced to disclose intellectual property in a legal process, providing confidential information that is likely the differentiator between itself and its competitors.

This is not what industrial relations laws were intended to be used for, and these amendments are overstepping.

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