Good Faith Bargaining: Change or Chance?

Abstract

Australia’s latest federal labour law statute, the Fair Work Act 2009, bolsters the shift towards enterprise level bargaining and decentralization of the Australian industrial relations system. The shift comports with the ‘third way’ ideology that embraces enterprise-sensitive outcomes as a way to increase productivity and international competitiveness while, at the same time, promoting cooperative partnerships in the workplace. However, decentralisation and direct negotiations over wages and conditions of employment between parties at the workplace level have traditionally led to concerns about the bargaining asymmetry between parties, use of capricious or unfair conduct during bargaining, and the possibility of bargaining relationships becoming uncooperative or breaking down resulting in protracted disputes. These concerns were most tangible under the Work Choices legislation that did not afford regulation for a fair and effective bargaining process. To address these concerns and with a view to further collective bargaining in the overall agreement-making regime, Fair Work Act re-introduced the requirement to bargain in good faith and has entrusted a new administrative body, Fair Work Australia, with the ability to make orders backing that requirement. The extent to which the Good Faith Bargaining(“GFB”) provisions can act as a means of encouraging a culture of genuine bargaining for new agreements will determine how effective they are in addressing the typically adversarial nature of enterprise bargaining.

This article examines the effectiveness of the new GFB regime in four parts. The first part sets out the policy rationale and key objectives of the GFB regime. The second part of the article scrutinizes the new statutory framework for GFB and the recent Fair Work Australia decisions on the regime in order to identify the scope of rights and obligations that the new provisions create. This assists in analyzing, in the concluding part, how the provisions are inept in achieving their policy objective. It is argued that the new GFB regime only marginally improves fairness of the bargaining processes and the quality of bargaining outcomes. Substantive workplace reforms may only result when GFB regime is supplemented with a change in bargaining culture.

Keywords: Good Faith Bargaining, Fair Work Australia, Fair Work Act, Work Choices Legislation

JEL Classification: J50, J51, J58