Good Faith Bargaining/ Enterprise Bargaining


Chapter 2, Part 2-4, Division 8 of the Fair Work Act (“FW Act”) introduces the concept of good faith bargaining. In particular the FW Act provides that bargaining representatives must bargain in good faith where a majority of employees want to bargain collectively. The requirements of good faith bargaining includes the following:

  • attending, and participating in, meetings at reasonable times;
  • disclosing relevant information (other than confidential or commercially sensitive information) in a timely manner;
  • responding to proposals by other bargaining representatives for the agreement;
  • giving genuine consideration to the proposals of the other bargaining representatives for the agreement, and giving reasons for the bargaining representatives responses to those proposals;
  • refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining.


In addition an employer must not refuse to recognise or bargain with another bargaining representative (such as a union/union rep)

However Good Faith Bargaining requirements do not require:

  • a bargaining representative to make concessions during bargaining for the agreement; or
  • a bargaining representative to reach agreement on the terms that are to be included in the agreement.


In short the bargaining parties must have a free exchange of ideas and must treat each other with professional courtesy but are not obliged to make or reach agreement on issues upon which they disagree.


Enterprise bargaining can take place under the FW Act from 1 July 2009. Enterprise agreements made before 1 January 2010 will be assessed by FWA against the no-disadvantage test using an appropriate reference instrument, for example, an unmodernised award. From 1 January 2010, agreements will be assessed against any applicable modern award and must pass the ‘better off overall test’ (“BOOT”) – that is, the employee must be better off overall under the agreement than he or she would be under the modern award.

Importantly, enterprise bargaining or protected industrial action carried out under the WR Act will not be carried over to bargaining under the FW Act. In effect, this means that bargaining participants either have to complete their bargaining under the WR Act prior to 1 July 2009 or commence bargaining for a new enterprise agreement (including re-commencing any industrial action) in accordance with the FW Act. Fortunately, Fair Work Australia (“FWA”) may take into account the history of the bargaining participants, when exercising discretion, to make a bargaining order or determining the terms to be included in any workplace determination.

Good faith bargaining obligations will be imposed on parties seeking to negotiate an enterprise agreement. The bargaining process will now be overseen by FWA which can make bargaining orders to ensure parties act in good faith.


There are three main types of orders that FWA can make under the good faith bargaining provisions of the FW Act. These orders are:

  • bargaining orders –  these are given if the good faith bargaining requirements are not being met;
  • majority support determinations – these are given if the majority of employees want to bargain and the employer is not bargaining;
  • scope order – these are given if bargaining stalls because the group of workers to be covered by an agreement is unfairly selected.


Bargaining Orders

Bargaining orders can be made by a bargaining representative to Fair Work Australia. Bargaining orders can only be sought within a bargaining period (i.e. within 90 days before the nominal expiry date or any time after the employer has presented an agreement for approval by employees).

 A bargaining representative can only apply for a bargaining order if:

  • the bargaining representative is concerned that the bargaining is not proceeding in good faith or is not proceeding efficiently or fairly because there are multiple bargaining representatives for the agreement;
  • the bargaining representative is given written notice setting out the above concerns to the relevant bargaining representative; and
  • the relevant bargaining representative has not responded appropriately to those concerns within a reasonable time.

There are a wide range of orders which can be given under terms of a bargaining order including the action to be taken to prevent capricious or unfair conduct or to ensure that the purposes of good faith bargaining are met. FWA can make a “serious breach declaration” where a good faith bargaining order is breached.

 Majority Support Determinations

 Employers must bargain in good faith where a majority of employees want to bargain collectively. In order to determine whether a majority of employees want to bargain collectively, the FWA can make, on application, a majority support determination. In determining a majority support determination, FWA must be satisfied that:

a)       a majority of employees:

                               (i)            who are employed by the employer or employers at a time determined by FWA; and

                             (ii)            who will be covered by the agreement

want to bargain; and

b)       the employer or employers that will be covered by the agreement have not yet agreed to bargain, or initiated bargaining, for the agreement; and

c)       if the agreement will not cover all the employees of the employer or employers, and the group of employers that will be covered is not geographically, operationally or organisationally distinct – the group is fairly chosen; and

d)       it is reasonable in all the circumstances to make the determination

 Scope Orders

The Act provides that Fair Work Australia may make a scope order if it is satisfied that bargaining for a proposed enterprise agreement is not proceeding effectively or fairly because the group of employees to whom a proposed agreement will apply has not been fairly chosen.