Can I Vary my EBA because of COVID’s Economic Impact?

As a result of the COVID-19 pandemic and the implications this has had on businesses, many employers have been left wondering what they can do about enterprise agreements negotiated pre-COVID.

Unsurprisingly, most current agreements were made at a time when strict lockdowns and the impact these would have on businesses and individuals was inconceivable. As a result, many have businesses have found themselves struggling to meet the employment conditions under their existing enterprise agreement.

Fortunately, for those hit most severely by this crisis (or any other unforeseen economic change which makes adhering to an existing agreement unviable), there is an avenue to amend or update current enterprise agreements to provide flexibility in the workplace and to protect businesses from economic armageddon.

Process for Varying and EBA

The process for varying an enterprise agreement under the Fair Work Act 2009 (Cth) (FW Act) is similar to the process for making an agreement. This includes:

1. Drafting an agreement with the desired amendments;
2. Announcing a vote (this must include date, time, location and the method of the vote) ;
3. Commencing a seven day’ access period’ before the vote;
4. Taking all reasonable steps to explain the nature of the proposed variation and how it will impact your employee’s employment;
5. Upon conducting a successful vote, lodging the varied agreement with the Fair Work Commission (FWC), accompanied with a:

NOTE – The access period for an agreement is the period ending immediately before the start of the voting process. During the access period, employees must have access to a copy of a proposed variation of an enterprise agreement and any other relevant documents (i.e. the relevant modern award or the National Employment Standards). Employees must be notified by the start of the access period of the details of the vote.

Subsequently, after following the above steps, the FWC will review the proposed variation and determine whether it should be approved. However, in making this assessment, the FWC will need to be satisfied that the varied agreement will pass the Better Off Overall Test (BOOT). That is, the varied agreement must result in employees being better off overall if employed under the varied agreement compared to the applicable modern award.

What if the varied agreement does not pass the BOOT?

Despite the above, s 189(2) of the FW Act contains a provision which allows an agreement to be approved even if it does not pass the BOOT if, “because of exceptional circumstances, approval of the agreement would not be contrary to the public interest“.

An example of a case in which the FWC may be satisfied exceptional circumstances exist is where the agreement is part of a reasonable strategy to deal with a short-term crisis in (i.e. COVID-19) to allow a business to ‘get back on its feet’.

When must the application for approval be made?

An application to the FWC to approve the variation of an agreement must be lodged within 14 days after a successful vote.

When does the variation commence operation?

The variation will operate from the date specified by the FWC as part of the approval decision.

Procedural Considerations

In the recent decision of Geocon Constructors (ACT) Pty Ltd T/A Geocon [2020] FWCA 3126 (15 June 2020), the CFMMEU contested the application for a variation of Geocon’s EBA because:

• Geocon changed the method of the vote from a ‘show of hands’ to and identified ballot at the last minute; and
• Geocon had supposedly failed to meet the procedural requirements as it did not give the required notice to employees after changing the method of vote.

In his decision, Commissioner Johns noted that a deidentified voting process (such as those used in Australian electoral practices) are generally preferable, especially where employees have concerns about casting an identified vote.

However, despite the employee’s concerns and late change in the voting method, the Commissioner found there was no evidence suggesting this impacted the genuineness of the vote because:

• 93% of employees participated in the vote; and
• Even if the votes of those employees who said they only supported the agreement because of the identified ballot were discounted, the result would have remained the same.

Therefore, the Commissioner concluded that there was no breach of the notice requirements. However, even if he was wrong in this conclusion, he would have found that any irregularities to be “minor procedural or technical errors” under s188(2) of the FW Act.

Need Specialist Help?

Varying an enterprise agreement can be a reasonably involved process, especially if faced with union objections. However, if you have the support of your employees and the viability of the business is at stake, it can be a very effective measure to ensure your business can effectively navigate uncertain and difficult economic times.

Should you have any questions or need assistance with varying an enterprise agreement, please contact our team on 03 9087 6949 or via email at support@workplacewizards.com.au for a free, no-obligation chat.