The landscape of Australian industrial relations has been continually evolving, with the introduction of multi-enterprise bargaining in 2023 standing as one of the most significant changes affecting small businesses in recent years.

Unlike single-enterprise agreements, where negotiations occur between a single employer and their employees, multi-enterprise bargaining involves multiple employers negotiating with a single union or employee group, typically within the same industry. This form of collective bargaining can present both opportunities and challenges for small businesses, and if a list of criteria is met, FairWork may compel similar businesses into a grouped agreement.

Impacts Of Multi-Enterprise Bargaining

The impacts of these changes can be broad and varied. One of the key effects is the potential for wage increases, as multi-enterprise agreements often lead to uniform wage standards across an industry. While this may enhance employee relations and contribute to a fairer playing field, it can also place significant financial strain on small businesses, which often operate on narrow profit margins. Furthermore, multi-enterprise bargaining can complicate the decision-making process for small businesses, as they must align with other employers within the negotiations, potentially leading to compromises that may not cater to their unique circumstances.

In addition to these immediate implications, multi-enterprise bargaining can also affect the long-term sustainability of small businesses. These agreements can limit the ability of small businesses to differentiate themselves from other businesses competing in their employee pool through their compensation packages, which might be a critical factor in attracting and retaining talent. For businesses in many affected industries, their expert staff are their key asset. This situation can pose a challenge to the growth and competitiveness of small businesses in the Australian market.

Avoiding Multi-Enterprise Bargaining Using Labour Rate Modelling

There are opportunities for businesses to avoid being captured in multi-enterprise bargaining through updating their current individual enterprise agreement, and ensuring they remain inside terms. This process will involve a management-led renegotiation with employees, which we believe should aim to balance the operating needs of the business with a rewarding and motivating remuneration package for key staff. We have observed these negotiations across a variety of client businesses and industries and seen the most positive outcomes for both staff and businesses when management uses the assistance of data and modelling in their labour agreement negotiations.

Labour Rate modelling involves using tools to anticipate the financial implications of changes to employee wages over time. An effective modelling strategy begins with comprehensive data collection. This includes gathering information about current wages and benefits, along with data about industry wage trends and economic forecasts. Using this data, businesses can build various scenarios to understand the potential impacts of wage changes on their operations.

Some scenarios might include annual wage increases, one-time bonuses, or additional benefits like healthcare and pension contributions. By modelling these scenarios, businesses can anticipate the financial implications of different outcomes in the bargaining process, enabling them to negotiate more effectively. Ultimately, effective wage modelling can support Australian small businesses in balancing the needs of their employees with the financial health of their operations, enabling them to thrive in a changing industrial relations landscape.

How We Can Help

We have worked with both Human Resources Professionals and directors within industry to develop customisable modelling specifically designed to assist in these sensitive employee negotiations. If you have concerns about your business’s employee agreements, please reach out, we are able to put you in contact with a Human Resources advisor and support any negotiations which result.

You can get in touch with us below or call us on (02) 4969 6600.