Greater clarity is needed on how good faith bargaining should be approached under the new Fair Work Act if our workplaces are to fully contribute to lifting the nation’s productivity growth, BCA Chief Executive Katie Lahey says.

The BCA discussion paper, Embedding Workplace Collaboration: Good Faith Bargaining, was launched today. It is the second in a series of discussion papers exploring more collaborative approaches to workplace relations.

The paper calls for the federal government to consider a code of practice to provide formal guidance on what the good faith bargaining requirements in the new Act should entail. Without this it could take several years of experience before the new laws deliver the workplace productivity benefits envisaged by the government.

“The new Fair Work Act seeks to improve fairness and productivity through collective agreements arrived at by good faith bargaining negotiations. But what will be required under good faith bargaining is not entirely clear,” Ms Lahey said.

“It is not clear, for example, how much information must be provided by employers to parties in a negotiation, or what specifically will be regarded as capricious or unfair behaviour.

“It will not help the nation to lift its productivity growth, as the Prime Minister has called for, if negotiations between employers and employees are constantly before the workplace umpire because of disagreements about what the laws require.

“The government should provide more formal guidance on how it expects good faith bargaining to be applied in a way that meets Australian needs and imperatives.

“Without further clarity, good faith bargaining could easily become leap of faith bargaining. This will do nothing to help our workplaces make the contribution to productivity growth that will be required to meet the Prime Minister’s objectives,” she said.

Embedding Workplace Collaboration: Good Faith Bargaining incorporates a paper by Professor Breen Creighton, an adviser to the BCA and a well-known industrial relations expert.

It argues we need a good faith bargaining model that is tailored to meet Australian conditions, and not a model that is imported from another country.

It says the Fair Work Act represents an attempt to learn from past experiences internationally and domestically to provide legislative support for collaborative workplace relations. As such it is more sophisticated than previous attempts to give legislative effect to the good faith principle in Australia.

The paper argues that legislation can play only a limited role in developing a more collaborative workforce culture. The real key is the commitment of the parties.

The paper notes that overseas experience and International Labour Organization standards offer only limited assistance in guiding good faith bargaining in Australia.

While many consider the United States to be an international benchmark in understanding what good faith bargaining means, in practice there are several reasons why this should not provide the template for Australia, it argues.

This is because good faith bargaining in the United States is excessively complex, highly litigious and has insufficient focus on producing timely outcomes. Collective bargaining in the United States also applies only to a small proportion of the workforce.

“Our paper highlights that legislation by itself cannot produce constructive relationships in the workplace. Productivity will be determined by how the parties in good faith bargaining negotiations approach the task,” Ms Lahey said.

“Ultimately, the test of the new workplace relations laws will be their contribution to productivity growth as well as to greater fairness.

“Fair Work Australia has a vital role in making determinations in good faith bargaining disputes that over time will show what is acceptable in the Australian context.

“But lifting Australia’s productivity to the levels envisaged by the Prime Minister must not be held back by a long period of uncertainty about how best to achieve collectively agreed outcomes.

“The government has a clear role and investment in providing formal guidance now that will minimise any misunderstanding in how to approach good faith bargaining. Taking a leap of faith in negotiations is not the best way to achieve productivity growth.”

Embedding Workplace Collaboration: Good Faith Bargaining