Peter Strong commends Graeme Watson’s calls for a “new approach” to enterprise bargaining

Council of Small Business Organisations Australia chief executive Peter Strong has welcomed a new approach to enterprise bargaining put forward by industrial relations expert and lawyer Graeme Watson, saying the recent failure of the government to overhaul industrial relations is a reminder that the “system is broken”.

“Anything we can do to employ people and do it safely and properly is welcomed,” Strong tells SmartCompany.

Strong was responding to views shared on Wednesday by Watson, who advised the Coalition government on its bid to reform the country’s industrial relations regime.

Despite a year of discussions between the government, industry groups and unions, the industrial relations legislation passed the Senate last week with only one of the five key provisions it first contained.

Measures related to enterprise bargaining, award simplification, underpayment and greenfield agreements were all dropped, leaving casual employment provision intact.

Watson said the reforms did not go to core of the system, which must be overhauled to keep pace with changes in the workplace since it was first established in the 1980s and ’90s.

In an opinion piece published by the Australian Financial Review Watson said businesses should pursue direct agreements with employees because a “revival of enterprise bargaining [was] unlikely anytime soon”.

The former vice-president of the Fair Work Commission is set to join law firm Corrs Chambers Westgarth to assist businesses strike direct agreements with employees outside of the enterprise bargaining system.

“Successful businesses often find a way to engage with their employees co-operatively without interference from the system,” Watson said.

Strong says despite the government’s best efforts in bringing industry and unions together to discuss the bill, meaningful reform will not be achieved until the groups trust each other.

“The biggest problem is the lack of trust between the business associations, the non-small business associations and the ACTU,” Strong says.

“We need something to change, and if Graeme Watson is trying to develop a new approach, well good on him.”

Strong says small businesses commonly use awards rather than enterprise bargaining agreements to determine employee wages and conditions, and these awards are also in dire need of updating.

Strong recently made a joint submission to the Fair Work Commission with the Master Grocers Association and the SDA to change the modern retail award.

“But that’s just for one award, there’s at least 11 other awards that need changes,” he says.

“The system is not working for employers and small business. And, if it’s not working for small business, it’s not working for their employees,” he says.

For Watson, the failure of the enterprise bargaining system is demonstrated in the steady decline of collective agreements in Australia.

In the year to December 2020, the number of employees covered by current agreements dropped 18%, leaving only 17.6% of the employed workforce covered by active collective agreements.

Many larger businesses are taking a direct approach to agreements and avoiding the enterprise bargaining system altogether, with McDonald’s, Bunnings and mid-size NSW construction companies listed as examples.

Watson’s return to a practising law comes after he provided advisory services to the federal government, and previously served as the vice-president of the Fair Work Commission until February 2017.

In a letter penned at the time of his resignation from the Commission, he was highly critical of what he said was the unbalanced workplace relations system.