OBJECTIVES of an ENTERPRISE AGREEMENT
INTRODUCTION
This article looks at the Objects or Objectives of an Enterprise Agreement without delving into the historical development of Enterprise Agreements.
On-going questions raised in relation to productivity have included Enterprise Agreements (“EAs”). Yet, how many Enterprise Agreements provide for productivity measures or methods and means of improving productivity? What measures and indicators appear in Enterprise Agreements to reward employees for their productive outcomes? Two areas that can play a role through EAs, provided they are applied, is the inclusion and actual implementation of both an Objectives clause and a productivity/performance clause. However, not every Enterprise Agreement (registered or unregistered; Union/non-union) contains a clause that sets out the Objectives (or the purpose or intent or aims). Yet, isn’t this an important part of the EA process?
In conjunction with the inclusion of an Objectives clause, how often is that Objectives clause referred to in applying an Enterprise Agreement? The importance of closely linking Objectives clauses with their respective EA clause details then becomes fundamental. Otherwise, why provide for such a relationship.
Looking beyond the Objects or Objectives of industrial instruments, as for example set out in the Fair Work Act 2009 (Cth) (“FW Act”), these Objectives provide a real commitment by the parties to comply with not only the content of that Enterprise Agreement, but also the principles behind the establishment of enterprise agreements.
ENTERPRISE AGREEMENTS
Section 171 (Part 2-4) of the FW Act sets out the Objects (of the FW Act) in relation to Enterprise Agreements.
Perhaps Subsection 171 (a) is the more immediately relevant provision in relation to this article:
(a) to provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits; and ….
This provision, at initial observation, considers the EA negotiating process, even though reference is made towards “productivity benefits”.
But what is the case if an Enterprise Agreement provides for specific Objectives or Intentions? What if an employee fails to comply with one or more of such Objectives or Intentions. Or, in the case of the Employer, the Employer does not comply?
It is accepted that looking at the objects of respective legislations, the same principle(s) would apply to an Enterprise agreement – what is the purpose of that Enterprise Agreement. Then if that purpose or objective is ignored, not complied with, disregarded, what if any course of action is available to the respective parties?
What then are the effects of inserting into an Enterprise Agreement, a clause setting out the intent of the Agreement or the Objects of the Agreement? What if the Agreement does not provide for an Objectives clause or provision? In such a case, is the purpose of the Agreement questionable? Most likely, not.
Does such an Agreement without a commitment or objectives clause or an Intent clause include, infer or imply, for instance, other commitments including the maintenance of a company’s reputation?
Yet, employees working to their daily set routines/work sheets, produce productive outcomes. Accordingly, one objective of an Enterprise Agreement, is met. Such commitments would hopefully have been within an environment of a good workplace and loyal culture.
A range of responses are invited to respond to the presence or absence of such provisions in an enterprise agreement as well as the obligations under an employee’s contract of employment.
In looking at the progression of EAs, the role of the Fair Work Commission (“FWC”) in relation to Enterprise Agreements – sub-section 576(2) (ab) (FW Act) includes the FWC function of “promoting good faith bargaining and the making of enterprise agreement”.
ENTERPRISE AGREEMENTS EXAMPLES
It is then probably appropriate to look at some examples of registered EAs which provide for Objectives clauses and demonstrate the scope and intentions of the respective parties.
The following examples of some EA Objectives clauses have been arbitrarily selected. It is clear that these are only a few of many even from a handful of EAs examined:
· clause 3.1 – Intention of the Parties (union EA): provide for an efficient, progressive and prosperous fire protection industry for the benefit of the Employer and its Employees; create a co-operative and productive industrial relations environment; maintain a safe working environment; maintain a stable and skilled workforce.
· clause 5 – Aims of the Agreement (non-Un EA): 5.1 – parties acknowledge the particular environment and challenges working in the horticultural business including: the work is labour intensive; product quality …; 5.2: sustainable permanent and seasonal employment to the benefit of both business and community; the profitable delivery of the highest quality products; the development and maintenance of a productive and harmonious working environment.
· clause 5 – Intent (non-Un EA): ensure this agreement … does not impede the process of ongoing change to continuously improve the viability, efficiency and productivity of the Company … adopt the world’s best practices; it is recognised by the employees that the employees role is to strive to deliver at all times the highest possible level of productivity and efficiency, flexibility, cost-effectiveness, technology based expertise, cargo/equipment care, stability and reliability.
· clause 4 – Commitments (Un EA): In order that the objectives of this Agreement are achieved, the parties are committed to ensuring that: the measures contained in this Agreement lead to real gains in productivity; a broad approach to productivity is adopted incorporating (but not being limited to) both management and labour efficiency, quality, training, maintaining high standards of occupational health an safety, improved working conditions, environmental concerns, quality of working life issues and equity issues; productivity measures will not be implements at the expense of health and safety standards and those standards will be improved.
· clause 3.6 – Performance Review (Un EA): 3.6.1 – the parties acknowledge that one of the objectives of this Agreement is to achieve and maintain high operational efficiency and productivity through effective Employee performance; 3.6.2 – to support this objective, the performance of each Employee shall be subject to reasonable levels of regular monitoring and review to recognise achievements and to provide feedback on areas where development or improvement is required.
· Clause 3 – Objectives and 4 – Commitments (non-Un EA): 3. The objectives of this agreement (include and) are to: 3.1. Increase the efficiency of the company by the effective utilisation of the skill and commitment of the Company's employees; 3.5. Promote the continued skills formation of employees; 3.9. To strive for customer satisfaction in the provision of services. 4. Commitments: In order that the objectives of this agreement are achieved, the parties are committed to ensuring that …. 21. Performance Measurement: An integral part of this Agreement is the requirement of the parties to develop and utilise productivity and efficiency indicators to be able to continually improve performance and the Company's market position.
· Clause 3 – Key Objectives (non-Un EA): (a) This Agreement has been jointly developed by the Company and its employees with the purpose of developing and implementing workplace reform strategies so as to produce an environment aimed directly at improving the competitiveness of the Company within the marketplace, thus delivering projects on time and within budget along with job satisfaction and job security for employees….
From these examples, it can be seen that commitments to particular Objectives have been established. It is hoped that through the combination of the Objectives and related EA provisions, that the parties achieve mutual outcomes and rewards for all and maintain good workplace culture.
To complete this article, let’s turn briefly to the legislation – the FW Act – which provides added direction on this subject. Whilst the focus in this article has been on productivity, it is clear that there are more than just productivity matters to be considered via an Objectives clause.
FAIR WORK ACT
The Fair Work Act 2009 (Cth) (“FW Act”) relevantly commences with Division 2 – Object of this Act and at section 3 sets out 6 areas summarised as follows:
· fair workplace relations laws across the Australian community
· provide a fair safety net for working conditions
· ensure that the guaranteed safety net cannot be undermined
· assist employees in balancing home and work responsibilities
· ensure protection against various forms of discrimination in the workplace and recognise employee rights
· achieve productivity through enterprise-level collective bargaining by the good faith processes
· recognise the size of businesses: small and medium-size.
And here we note the matter of productivity to be translated into industry and the workplace – or so it is hoped. Not often mentioned, but the Objects of the FW Act and related instruments, when applied, would lead to the achievement of these Objects.
MODERN AWARDS
Section 134 of the FW Act sets out the modern award objective. Based on the principles of providing “a fair and relevant minimum safety net of terms and conditions”, the Fair Work Commission must ensure that modern awards take into account, a number of important factors. Some ten (10) areas are set out. Without identifying all of these areas, the FWC must ensure that:
“(d) there be a need to promote flexible modern work practices and the efficient and productive performance of work;
(da) refers to employee remuneration across a number of areas;
(f) that modern awards take into account the likely effect of any exercise of the modern award powers on business, including productivity, employment costs and the regulatory burden; and
(h) what is the likely impact of any exercise of modern award powers on employment growth, inflation and the sustainability, performance and competitiveness of the nat0nal economy”.
Section 157 of the FW Act provides the FWC with powers. If necessary, to achieve the modern award objectives.
CONCLUDING COMMENTS
If legislation provides an Object to promote, to progress and deliver, for example, productivity does an industrial instrument such as an Enterprise Agreement, or even a modern award (which provides for Objectives), also deliver on these objectives (such as performance and productivity)? Even if an EA does not provide for an Objectives clause, what is the Objective of that Enterprise Agreement? Is it a document for things other than providing for productivity. It may be old fashioned and dated, but what is/are the reason(s) for introducing enterprise bargaining?
Further, if an employment contract provides for an objective concerning productivity and efficiency, how is that then managed should such objectives not be met even if an enterprise agreement (not including an Objectives clause) is in place at the same time?
Disclaimer: Richard Krajewski’s articles are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication.