FWC Makes First Determination Under New Intractable Bargaining Scheme

Under recent reforms introduced through the ‘Closing Loopholes’ amendments to the Fair Work Act 2009 (Cth), the Fair Work Commission (FWC) now has the power to make intractable bargaining declarations and determinations.

This change repealed the ‘serious breach declaration’ provisions that had been unused and ineffective in assisting bargaining parties to reach agreement.

Instead, the new scheme allows bargaining representatives (such as an employer, employee, or union) to apply, after 9 months of unsuccessful negotiations, for a determination from the FWC where it is satisfied that that there is no reasonable prospect of an enterprise agreement being reached.

The FWC may set a post-declaration negotiation period before making a determination. Within this period (and any extensions), the FWC may assist the parties in resolving any disputes and coming to an agreement.

If a declaration is made and bargaining representatives still cannot come to an agreement with FWC assistance, the FWC must make an intractable bargaining workplace determination, which establishes the terms and conditions of employment in place of an enterprise agreement.

This means that the FWC, rather than the negotiating parties, will decide on the terms and conditions of employment at that workplace under the enterprise agreement. The determination must include any terms already agreed upon by the parties, but the FWC may make an independent determination on any disputed terms.

Earlier this month, the Full Bench of the Fair Work Commission exercised its new powers to hand down its first-ever intractable bargaining workplace determination in Transport Workers’ Union of Australia v Cleanaway Operations Pty Ltd T/A Cleanaway Operations Pty Ltd.

The Case

Cleanaway is an industrial and environmental management and transportation company. Employees at Cleanaway’s Erskine Park depot were covered by the Cleanaway Erskine Park Drivers Enterprise Agreement 2020, which had passed its nominal expiry date. Bargaining began to replace this agreement on 20 October 2022 with the Transport Workers’ Union (TWU) acting as a bargaining representative.

17 meetings were conducted between Cleanaway and the TWU, with bargaining representatives unable to come to an agreement. The main areas of dispute around the proposed enterprise agreement were pay rises and the arrangement of ordinary hours.

Cleanaway proposed an enterprise agreement with its preferred position, which was unanimously rejected by employees. After it became clear that the terms of the proposed enterprise agreement were not going to be agreed upon, the FWC issued an intractable bargaining declaration on 12 January 2024.

Terms of the Determination

At the conclusion of the post-declaration negotiating period on 25 January 2024, the FWC issued a statement setting out several matters that were still in issue, including the ordinary hours of work, weekend penalty rates and wage increases.

In its determination on 12 June 2024, the Full Bench of the FWC awarded Cleanaway’s employees wage increases of 6% from 2023, 5% from 1 January 2024, and 4% from 1 September in each of 2024, 2025, and 2026.

The FWC specifically sought to ensure that future pay rises be set marginally higher than projected CPI and wage price index in order to ensure that employees would be better off in those periods following the effects of inflation.

Lessons for Employers

This groundbreaking decision demonstrates the power of the FWC to set terms of employment conditions where bargaining representatives fail to come to an agreement themselves.

In this new landscape, a strategic approach to enterprise bargaining is mort important than ever, as a drawn-out and lengthy enterprise bargaining process may result in potentially detrimental consequences if the FWC makes an intractable bargaining workplace determination that does not align with the employer’s preferred outcome.

It is therefore more important than ever that employers seek advice in managing new enterprise bargaining negotiations.

Case Reference: Transport Workers’ Union of Australia (179V) v Cleanaway Operations Pty Ltd T/A Cleanaway Operations Pty Ltd [2024] FWCFB 287. (Determination)