Low-paid authorisations: A landmark ruling
June 8, 2011
On 5 May 2011, the Full Bench of Fair Work Australia issued a landmark judgement in ordering its first low-paid bargaining authorisation. The Full Bench, in a precedent that may encourage applications in a variety of industries, ordered the initiation of a multi-enterprise bargaining process which would cover approximately 60,000 employees in the residential aged care sector.
The authorisation was made pursuant to an application by United Voice (previously LHMU) and the Australian Workers’ Union, who sought to utilise the low-paid bargaining provisions of the Fair Work Act 2009 (‘the Act’) to significantly raise wages for employees covered by the Aged Care Award 2010.
What is a low-paid authorisation?
A low-paid authorisation is an order which permits a bargaining representative or relevant employee organisation to negotiate with two or more employers for an enterprise agreement. According to s242 of the Act, Fair Work Australia (‘FWA’) must make a low-paid authorisation when an application has been made, and FWA is “satisfied it is in the public interest to make the authorisation”.
What factors will be taken into account?
In determining whether a low-paid authorisation is in the public interest, FWA is required to take into account a number of factors specified in s243(2)-(3) of the Act.
The “historical and current matters relating to collective bargaining” that FWA must take into account include:
- whether the authorisation would assist low-paid employees who have previously lacked access to collective bargaining;
- the history of bargaining in the relevant industry;
- the relative bargaining strength of the employers and employees;
- the current terms/conditions of employment as compared to relevant industry and community standards;
- the degree of commonality in the nature of the enterprises to which the agreement relates.
In addition to these considerations, FWA is required to consider “matters relating to the likely success of collective bargaining”, including:
- whether the authorisation would assist in identifying improvements to productivity and service delivery;
- whether, given the number of bargaining representatives involved, a collective bargaining process would be manageable;
- the views of employers and employees who would be covered by the agreement;
- the extent to which employment conditions are controlled, directed or influenced by a person other than the relevant employers;
- this ‘person’ may include a government agency that exercises control through funding;
- the extent to which the applicant/s for the authorisation (employee bargaining representative/s) is prepared to consider and reasonably respond to claims made by a particular employer named in the application where that employer seeks to bargain for its own separate agreement.
The decision and its broader implications
The decision to grant the authorisation was motivated by a number of factors particular to the aged care industry. However, it is likely to have flow-on effects for other industries, sectors or groups of similarly constituted employers.
The following factors were key to the FWA decision and their presence in a particular industry may indicate a risk of a low-paid bargaining application being made:
- significant proportion of employees paid at or close to the award rate under the lowest classifications in the award;
- minimum terms/conditions in the modern award tend to be the actual terms and conditions in the sector;
- employees face barriers to bargaining at enterprise level and employers are traditionally in a stronger bargaining position;
- Barriers may include wage increases being controlled by the level of government funding and the existence of a large number of small enterprises
- employee earnings tend to be lower than sectors where bargaining is more common;
- employers in the sector are fairly similar in terms of their operations and the duties they assign to their employees
The authorisation may encourage low-paid applications in analogous personal services sectors such as childcare. Ultimately, however, applications may be made in relation to any sector or group of employers who fit the criteria listed above, which could include employers in retail or hospitality.
The exception for agreement-covered employees
The Full Bench made one important qualification in granting the application. Namely, FWA excluded from the authorisation those employees to whom enterprise agreements already apply. This exclusion was not made because all agreement-covered employees were not low-paid, but because it would be very difficult to individually analyse the terms of those agreements.
If you would like to discuss low-paid authorisations and whether your workplace might be covered by an application for a low-paid bargaining order, please do not hesitate to contact Nathan Lindsay, Research Consultant.
