Application
This Policy applies to all departments and public sector bodies of the State of Victoria and their non-executive level employees, as defined under the Public Administration Act 2004 (Vic) (PA Act) and other Victorian legislation.
Overview
This policy provides the framework for enterprise bargaining in the Victorian public sector and outlines the expectations of Government of all public sector entities in seeking to reach agreement on terms and conditions of employment for public sector employees.
Bargaining Principles
All Victorian Public Sector Departments and Agencies must conduct themselves in accordance with the below principles during enterprise bargaining.
All Victorian Public Sector Departments and Agencies are expected to negotiate in good faith and seek to resolve enterprise bargaining in a collaborative, open and accountable manner with affected employees and the relevant public sector union/s. The Victorian Government expects all public sector entities to accord with the following principles for bargaining:
- Negotiations should be:
- approached in a collaborative and problem-solving manner
- focused as far as practicable on common interests, objectives and long-term gain for all parties as well as improved service delivery for the Victorian community
- conducted in a manner that is timely, constructive and avoids unnecessary disputation
- be consistent with the good faith bargaining requirements set out in the Fair Work Act 2009 (Cth) (FW Act) and
- based on integrity, honesty, courtesy and information sharing.
- Where enterprise agreements include leave provisions above the minimum requirements outlined in the National Employment Standards (NES) in the FW Act, the Government expects that these leave entitlements are maintained and not reduced during bargaining for new enterprise agreements without equivalent compensation being provided to employees through enterprise bargaining.
- Enterprise bargaining must be conducted with the appropriate authority and in a manner consistent with the Victorian Government Wages Policy and the Enterprise Bargaining Framework.
- Enterprise agreements must contain a renegotiation period to commence at least six months prior to the nominal expirer date of the current agreement.
- Where issues arise during enterprise bargaining the parties must seek to resolve these locally in the first instance. Bargaining parties may also wish to contact Industrial Relations Victoria, via the portfolio department, to discuss or seek guidance on resolution of these issues.
- Where parties are unable to resolve enterprise bargaining at the local level, they may seek the assistance of the Fair Work Commission (FWC) or other agreed independent third party to resolve negotiation deadlocks.
- Enterprise agreements must not contain any retrospective payments. This means that the first pay increase in any agreement must be forward looking and cannot be prior to the date when bargaining parties reach in-principle agreement.
- Although Government seeks to avoid industrial disputation wherever possible, the Government respects the rights of unions and employees to engage in, and to take, protected industrial action.
- While enterprise agreements are being considered and voted on by employees, departments and agencies must ensure the integrity of the ballot process is maintained at all times.
- Actual pay increases cannot be made until the agreement is approved by Government and the FWC and the agreement has commenced operation.
- Enterprise agreements must not include performance-based bonuses or incentive payments.
Wages Policy and the Enterprise Bargaining Framework
The Government’s Wages Policy and Enterprise Bargaining Framework sets out Government’s collaborative approach to enterprise agreement negotiations and establishes the parameters within which public sector employers may bargain and reach enterprise agreements. The Wages Policy and Enterprise Bargaining Framework also sets out the approval requirements that public sector agencies must meet before commencing bargaining, during bargaining and before seeking employee approval of final enterprise agreements. The framework sets out different requirements for major and non-major agreements.
All public sector entities must conduct enterprise bargaining with the appropriate authority and in a manner consistent with these obligations.
The full text of the Wages Policy and the Enterprise Bargaining Framework can be found at: https://www.vic.gov.au/wages-policy-and-enterprise-bargaining-framework
Types of Enterprise Agreements and required Approvals
Division 2, Part 2-4 of the FW Act sets out the types of enterprise agreements that can be made. Broadly, there are three main types of enterprise agreements that can be made and are within the scope of this policy:
- Single employer enterprise agreements – made between a single employer and some or all of the employer’s employees.
- Multi-enterprise agreements, which include:
- Single-interest employer agreements – made between two or more employers that have common interests, or between certain franchisees. The FWC may compel employers to bargain under this stream in certain circumstances.
- Cooperative workplace agreements – made between two or more employers that are not single-interest employers and some or all of their employees. Bargaining under this stream is voluntary.
- Supported bargaining agreements – made between two or more ‘reasonably comparable’ groups of employers and employees, and generally operating in relation to workers in lower paid industries.
- Greenfields agreements – is an enterprise agreement relating to a genuinely new enterprise (including a new business, activity, project or undertaking) which is made at a time when the employer or employers have not yet employed any of the employees.
More information on the types of enterprise agreements can be found on the Fair Work Commission website at https://www.fwc.gov.au/benchbook/enterprise-agreements-benchbook.
All public sector employers must ensure that they have the necessary approvals and authorisations from Government for any proposed enterprise agreement in accordance with this Policy and the Enterprise Bargaining Framework. While for most public sector employers, a single employer enterprise agreement will be the most appropriate approach, the Victorian Government supports the use of multi-enterprise agreements where they are suitable for the effective setting of terms and conditions of employment for a class or group of related public sector entities. Employers considering the use of multi-enterprise agreements, including single interest employer agreements or cooperative workplace agreements, must take note of the specific approval requirements outlined below.
Single-interest enterprise agreements covering multiple public sector bodies, cooperative workplace or Greenfields agreements
Victorian Public Service Departments and Agencies may consider or receive union/s requests for the making of a single-interest enterprise agreement covering multiple public sector bodies or a cooperative workplace enterprise agreement. Likewise, public sector employers may consider whether a single-interest enterprise agreement, cooperative workplace or Greenfields agreement would be an appropriate approach to bargaining for a class or group of public sector employees, not yet employed by the employer, who will be covered by the agreement. Public Sector Departments and Agencies must comply with the following requirements when seeking authorisation to make one of the abovementioned agreements.
Employer initiated proposals
Victorian Public Sector Departments or Agencies who are considering making a single-interest enterprise agreement covering multiple public sector bodies, a cooperative workplace agreement, or a Greenfields agreement, must seek Government’s approval prior to the commencement of bargaining under one of these streams. In any submission seeking the relevant approval for an employer proposal to make such an agreement, Victorian Public Sector Departments and Agencies are expected, at a minimum, to specify:
- the employers who will be covered by the proposed agreement,
- the employees who will be covered by the proposed agreement, and
- the reasoning which supports their preferred bargaining stream.
The submission must be provided to Industrial Relations Victoria (IRV) via the relevant portfolio department. In considering an employer initiated proposal IRV, will in conjunction with the relevant employers, consider whether the proposal would be in the interests of efficient and effective bargaining and whether the request is or would likely be, supported by affected unions.
Union initiated proposals
Where public sector employers receive a union request for the making of a single-interest enterprise agreement covering multiple public sector bodies or a cooperative workplace agreement, they must first discuss the request with their portfolio department and IRV prior to formally responding to the request. In considering the request, IRV will, in conjunction with the relevant employers, consider the Employers’ preferred response to the request as well as whether the proposal would be in the interests of efficient and effective bargaining and an appropriate approach to bargaining for the relevant class or group of related public sector employees.
Direct applications to the Fair Work Commission
Single-interest enterprise agreements can only be made on application to the FWC, by a union or a public sector employer, for a single interest employer authorisation. When public sector employers wish to apply for a single interest employer authorisation, they are required to seek Government approval (through to IRV via their portfolio department) in accordance with the above process (‘employer-initiated proposals’), prior to making an application to the FWC.
Where a union or other employee bargaining representative applies directly to the FWC for a single interest employer authorisation, the responsible portfolio department and agency are required to provide details of the application, proposed response, and any subsequent single interest employer authorisation made by the FWC to Government (through IRV) as soon as they become aware of the application and prior to formalising or submitting a response to the application.
Variation or termination of an existing enterprise agreement
The FW Act provides for the variation and termination of enterprise agreements on application to the Fair Work Commission. Public Sector Employers must seek Government approval through their portfolio department before applying to the Fair Work Commission for the variation of the terms of an enterprise agreement or the termination of an existing enterprise agreement.
In seeking Government approval, Public sector employers, at a minimum, are expected to provide:
- a summary of the change being sought
- the need for, and the purpose of, the variation or the termination, and
- the current industrial context of the workplace/workplaces where the variation or termination is relevant, including the view of the public sector union(s) on the proposed variation or termination.
Information on variation of enterprise agreements can be found at the FWC’s website at: https://www.fwc.gov.au/varying-enterprise-agreements.
Information on termination of enterprise agreements can be found at the FWC’s website at: https://www.fwc.gov.au/terminating-enterprise-agreements
Government expectations for the content of public sector enterprise agreements
The Government requires that Victorian Public Sector Departments and Agencies include a range of terms in public sector enterprise agreements. Approval of proposed enterprise agreements submitted to Government will be conditional on the inclusion of the terms outlined in Attachment A of this Policy.
To support public sector employers to meet these expectations, model clauses have been provided in the relevant policies. While mandatory to include a clause on each of the topics listed, it is not mandatory that the model clauses be used and the model provisions may be tailored to the operational context of the entity during enterprise bargaining, although employers are encouraged to use the model clauses where appropriate. In the absence of using the model clause, public sector employers are responsible for ensuring agreed clauses reflect the minimum expectations outlined in the IR Policies and where relevant the FW Act.
The required terms are in addition to other compulsory terms imposed by the FW Act on enterprise agreements. It is the responsibility of each public sector entity to ensure their enterprise agreement complies with the minimum requirements of the FW Act.
Alternatives to performance-bonuses and incentive payments
Public sector enterprise agreements should not include performance-based bonuses or incentive payments. For the avoidance of doubt, performance-bonuses and incentive payments do not include progression payments linked to a classification structure and professional development plan, which may be legitimately included in an enterprise agreement.
When negotiating an enterprise agreement, and in accordance with Government’s Wages Policy and Enterprise Bargaining Framework, parties may consider alternatives to bonus or incentive payments, including:
- attraction and/or retention payments
- progression payments (linked to a professional development plan and framework)
- other allowances which have an objective criteria that provides all employees with equitable access to the payment.
Where existing public sector enterprise agreements contain performance-based bonuses or incentive payments, public sector employers are strongly encouraged to address these clauses through enterprise bargaining and seek agreement with bargaining representatives to remove them in a replacement agreement.
Agencies may wish to contact IRV, via their portfolio department, to discuss or seek guidance on resolution of these issues.
Employer bargaining representatives and consultants
Public sector employers may choose to engage an external consultant to assist resolving bargaining negotiations and/or formally appoint an external consultant as a bargaining representative in accordance with the Fair Work Act 2009 (Cth).
Prior to engaging an external consultant, departments and agencies are required to consider:
- whether the agency/department already has internal skills and knowledge to competently bargain without engaging a consultant, with consideration to the size of the organisation and the level of risk that the negotiations may present
- whether engaging an external consultant or bargaining representative is an appropriate and reasonable use of the employer’s budget
- whether appointing a bargaining representative or consultant would be an efficient and effective way to ensure bargaining is completed expeditiously and in a manner which is consistent with these policies
- the terms of engagement, including whether the external consultant will act in an advisory capacity or whether they will be appointed as a bargaining representative.
Agencies must notify IRV (through their portfolio department) as soon as practicable after engaging an external consultant to assist in the context of enterprise bargaining discussions.
Where a public sector employer chooses to engage an external consultant or bargaining representative, they must ensure that the external consultant or bargaining representative is made aware of the obligations under this policy. A public sector employer must ensure their representatives or external consultant conducts bargaining in a manner which is consistent with the obligations outlined in these Policies.
Steps for Making Enterprise Agreements
Notice of Employee Representational Rights
Single Enterprise Agreements
Section 173 of the FW Act requires departments and agencies to provide to employees (other than a Greenfields agreement) a notice of representational rights (NERR) before negotiations commence. This is a compulsory step which must be followed.
Public sector employers must not issue their NERR until they have received authority to commence bargaining from Government.
Further information and guidance on the NERR, its correct form and timeframes around its distribution can be found on the FWC’s Website at: https://www.fwc.gov.au/agreements-awards/enterprise-agreements/make-enterprise-agreement/start-bargaining/nerr-notice-0
The FWC also publishes a simple tool to assist employers to comply with their obligations pursuant to the NERR – all public sector employers are encouraged to use the tool at this link – https://www.fwc.gov.au/agreements-awards/enterprise-agreements/make-enterprise-agreement/start-bargaining/nerr-notice-1
Multi Enterprise Agreements (including single-interest employers)
Where Public sector employers enter into a Multi Enterprise Agreement, a NERR is not required to be issued in accordance with section 173. However, employers must still notify employees that they may nominate a bargaining representative in accordance with section 176 of the FW Act. Public sector employers may utilise the notification template at Attachment B.
Good faith bargaining
In addition to the bargaining principles set out in this policy, public sector employers and their bargaining representatives must comply with good faith bargaining requirements set out in the FW Act. The good faith bargaining requirements establish a set of principles designed to facilitate agreement making and assist bargaining representatives to bargain effectively, which all bargaining parties must follow.
For further information on the good faith bargaining principles see - https://www.fwc.gov.au/good-faith-bargaining
Communications with Employees
At a minimum, the Fair Work Act requires that an access period of seven days be provided prior to a voting process taking place. By the start of the access period, employees must be provided with access to the agreement, information on how, where and when they can vote and access to any incorporated material such as policies or awards that are being referred to. For further information on the access period see FWC Website. It is important that Departments and Agencies understand the requirements of the access period.
Separately and in addition to the access period, employers must also consult with relevant Unions on the sufficient time required for them to communicate and discuss with employees on any proposed enterprise agreement or variation to an existing agreement.
Voting Process
The voting process is an important part of the enterprise bargaining and agreement making process. The voting process is an opportunity for all employees covered by the proposed enterprise agreement to indicate whether they agree or disagree with the negotiated changes to the terms and conditions of employment.
Victorian Public Sector Departments and Agencies can only commence a vote for a new enterprise agreement or to vary an existing enterprise agreement after the proposed enterprise agreement has been approved by government. Under no circumstances can an enterprise agreement or a variation to an existing enterprise agreement be offered to employees for approval after in-principle agreement is reached but before it receives government endorsement.
Information on the voting process and employer obligations can be found on the Fair Work Commission website at: https://www.fwc.gov.au/voting-process. It is important that Departments and Agencies understand the requirements of the voting process and comply with their obligations in undertaking a vote for any proposed agreements.
Approval of Enterprise Agreements by the Fair Work Commission
After an enterprise agreement is made via a successful vote by covered employees, the proposed Enterprise Agreement must be lodged with the Fair Work Commission for approval before it can commence operation. Information on the Fair Work Commission’s approval process can be found on the Fair Work Commission website at: <https://www.fwc.gov.au/commission-approval-process>.
In reviewing the agreement, the Fair Work Commission will, amongst other things, ensure the agreement passes the Better Off Overall Test (BOOT) and does not contain unlawful terms. Further information on the BOOT can be found at - https://www.fwc.gov.au/better-off-overall-test.
Departments and Agencies have responsibility for ensuring that enterprise agreements submitted meet the approval requirements of the Fair Work Commission, including passing the BOOT. It is recommended agencies undertake an assessment of their current enterprise agreement for potential BOOT issues as part of their preparations for bargaining. Where BOOT issues are identified these should be rectified through the bargaining processes, in consultation with the relevant portfolio department and IRV, and prior to lodging the enterprise agreement for approval (portfolio departments, on behalf of bargaining parties, may also discuss or seek guidance on BOOT issues from IRV, after local resolution has been attempted).
As part of the approval process, the Fair Work Commission may make further enquiries of the bargaining parties to seek clarification about the operation of the enterprise agreement or its compliance with the legislative requirements, Departments and Agencies must respond transparently and promptly to both the Fair Work Commission, unions and any other bargaining representatives.
Intractable Bargaining
The FW Act empowers the Fair Work Commission to resolve intractable bargaining disputes through an intractable bargaining declaration. To make an intractable bargaining declaration, the FWC must first satisfy itself that:
- it has dealt with a bargaining dispute (where the parties are unable to resolve a dispute about the agreement)
- that there is no reasonable prospect that agreement will be reached by the parties, and
- at least nine months has passed since the nominal expiry date of the current enterprise agreement or bargaining commenced.
After making an intractable bargaining declaration, the FWC will consider whether to provide the parties with a further period to negotiate (a post- declaration negotiation period). Following a post-declaration negotiation period, the Fair Work Commission may make an intractable bargaining workplace determination to resolve any matters not agreed by the parties.
Victorian Public Sector departments and agencies must inform their portfolio department and IRV if they have been served with an application or wish to lodge an application for an intractable bargaining declaration. Departments and agencies must seek guidance from IRV before lodging an application.
Information on intractable bargaining powers of the Fair Work Commission can be found at its website: https://www.fwc.gov.au/about-us/new-laws/secure-jobs-better-pay-act-whats-changing/bargaining-support-6-june-2023/changes
Further Information
For further information and advice employees and public sector union representatives should contact the local Human Resources or People and Culture Unit (or equivalent) of the relevant entity for further assistance in the first instance.
People and Culture Representatives of Public Sector Entities should contact their Portfolio Department for further assistance in the first instance.
People and Culture Representatives of Portfolio Departments should contact their usual IRV portfolio contact for further assistance in the first instance.
Related Policies or Documents
- Public Sector Industrial Relations Principles
- Consultation and Cooperation in the Workplace
- Gender Equality
- Personal, Carers and Compassionate Leave
- Leave and other supports for expectant and new parents
- Family Violence Leave
- Leave and Other Supports for First Nations Employees
- Gender Affirmation Leave
- Secure Employment
- Flexible Work
- Industrial Action
Attachment A
Attachment B
Updated