How to approach renegotiating enterprise agreements

While modernising agreements can be very challenging, it is achievable with the right approach and strategy

How to approach renegotiating enterprise agreements

Instead of significant reforms like 'a living wage' and legislative changes to broaden the powers of the Fair Work Commission, it looks likely to be the status quo in the industrial relations space with a low chance of significant reform over the next three years.

That’s according to Principal Consultant at Adelhelm & Associates, Deborah Lindemann.

"If anything, there are some bills that the Coalition is likely to continue to push that enhance union accountability and transparency,” said Lindermann.

“Employers will be feeling relieved, but they may also be emboldened – leading to concerns that 'employers may try to screw employees over', or even delay or refuse to bargain."

Lindermann added that any attempt to make employees accept an unfair low wage increase, or to resist or refuse to engage with employees on enterprise bargaining will come back to bite employer.

"When employees feel they are unfairly dealt with over wages or not being heard, you get lower productivity, disengaged staff, low morale, higher absenteeism, greater turnover and more disputes,” said Lindemann.

According to Lindemann, the Coalition government “puts employers in the driving seat when it comes to enterprise bargaining”, but she encourages them to instead use this as an opportunity to focus on the future, and look at modernising agreements, not driving wages further down or avoiding bargaining.

"Some of the agreements I have seen, where employers have to seek agreement with employees and unions to implement significant change, are causing heartache for companies who are struggling to stay competitive

Lindemann said that while modernising agreements can be very challenging, it is achievable with the right approach and strategy.

READ MORE: HR Director taken hostage in IR dispute

"Generally, to remove significant content out of an agreement, you have to bargain it out by offering more attractive wages. In the long run, though, getting rid of restrictive practices is probably going to save you a fair bit of money.

“Employers need to be looking at the big picture and considering how much these restrictive practices are costing them.”

Lindemann offers the following advice to companies on how to approach renegotiating their enterprise agreements:

Communicate early and strategically
Employers who want to modernise their agreement should begin to communicate their intent, and the reasons for their intentions, far in advance of negotiations as part of normal buisness communcations and updates to employees.

"Tell your employees the type of flexiblity you need and why; how you need to be more responsive to market demands. Explain how that will benefit everybody.

“When bargaining commences, continue the same narrative. Then there will be no surprises when you explain why you are seeking to renegotiate a restrictive term. Waiting for negotiations to begin before you start communicating is too late. You will be pushing a rock up a hill."

READ MORE: Future Work Commission proposed to deal with automation

Begin relationship building now
Lindemann said management negotiators should know which unions and union officials they will be dealing with and who the key internal influencers on the ground in the workplace are.

“Aim to build rapport and cultivate relationships that help the union and employees understand your point of view in an informal context. A chat or two over a cup of coffee long before bargaining should be on everybody’s radar and goes a long way,” added Lindemann.

“Having that relationship credit early on will hold you in good stead and increase the likelihood of a more collaborative bargaining experience."

Offer fair wage increases
Employees who feel they have received a fair wage increase will be more receptive to renegotiating working arrangements if those changes are well justified.

“Do your research. For example, what's happening in your industry, where wage offers are sitting and what you can afford for the next three to four years. Explain or justify your offer with real data and sound reasoning,” said Lindemann.

"Employees might not like it, but most people will be more likely to accept it if they feel they're getting a fair wage, and they understand why it is in everybody's best interests.”

Lindemann said employers have the upper hand in the national consciousness and that is a significant advantage.

"Now is the time to get rid of legacy content and modernise those agreements," she said.

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