Are you arriving empty-handed at the bargaining table?

Kelly

2 hours ago

9 min read

In our experience, most enterprise bargaining problems do not start when the parties to an enterprise agreement (EA) gather at the bargaining table. They start months earlier, when an employer decides to send out the Notice of Employee Representational Rights (the NERR) without having undertaken the pre-work to fully understand their current position.

The three gaps we see most often are:

The wrong industrial instrument
Employers often assume that because some managers are excluded from the enterprise agreement, they are also outside the award. Exclusion from your agreement does not remove award coverage. If a manager’s role falls within an award classification, an individual or common law contract that gives them less than the award is not worth the paper it is written on, however senior the title. The exception is an employee earning above the high income threshold (currently $190,100 p.a.) who has a written guarantee of annual earnings.
Incorrect classifications and rates of pay
Employees classified on job titles or historical decisions, rather than the duties they actually perform, and paid at the wrong level or pay point as a result.
Casual employees paid incorrectly
Flat hourly rates that miss the penalty rates and overtime the agreement or award requires for evenings, weekends, public holidays and extra hours.

A current state snapshot finds all three, and each one is far cheaper to fix before bargaining than after someone else finds it.

Start here: Preparing for enterprise bargaining

Employee bargaining representatives, often supported by their unions, usually arrive at the first bargaining meeting with a log of claims (employees/union wish list) built on member surveys, delegate feedback sessions, bargaining trends, frequent issues history, sector comparisons, common interpretation confusions, and a clear view of their priorities.

If you arrive with a copy of your current agreement and a rough idea of the forecast wages budget, you are not negotiating. You are reacting in the moment, which puts your decision-makers at a disadvantage.

Developing your current state snapshot is internal pre-work. External consultants supporting your negotiations will expect it to be done before bargaining starts. If it hasn’t been done, add it to their agreed scope of work and ask for help.

What is a current state snapshot?

A current state snapshot is an evidence-based, data-driven picture of where your organisation stands today, completed and analysed before bargaining begins. It is the foundation on which your own log of claims (management’s wish list) should be built.

Without it, every position you take rests on untested assumptions and unreliable budget modelling.

Why skipping it puts you on the wrong foot

Good faith bargaining assumes you already know your own position

Under section 228 of the Fair Work Act 2009, every bargaining representative must meet the good faith bargaining requirements. These include disclosing relevant information (other than confidential or commercially sensitive information) in a timely manner, responding to proposals in a timely manner, and giving genuine consideration to the other side’s proposals, with reasons for your responses.

You cannot give a reasoned response to a claim you have not costed, and you cannot disclose information you have not gathered. An employer who answers every claim with “we will need to look into that” loses credibility quickly, and time with it.

To put a number on it, take a SCHADS Award community services organisation with 80 employees (60 FTE) covered under the EA and average wages of $85,000 per FTE, a wages bill of about $5.1 million. With on-costs of 25%, each 1% wage increase costs an additional $63,750 a year, or roughly $800 per employee, and that cost compounds in every following year of the agreement. It also lifts the value of every hour of banked annual and long service leave, which is generally paid at the rate current when it is taken. Without those figures, the difference between a 3% and a 4% claim is a guess, not a negotiation. We often encourage our clients to work through the financial modelling for each 0.5% increase.

The better off overall test is measured against the award, not your last agreement

Before the Fair Work Commission (FWC) approves an agreement, it must be satisfied the agreement passes the better off overall test (BOOT). Employees and prospective employees must be better off overall under your EA than they otherwise would be under the relevant award.

Since the 2023 changes, the FWC makes a global assessment and considers only patterns of work that are reasonably foreseeable for your enterprise.

If you do not know today where your current agreement sits above the award, at the award, or behind a recently varied award rate, you cannot know whether your proposed agreement will pass. You also risk the union and employees knowing more about your current EA than you do.

The award floor keeps moving

Section 206 of the Fair Work Act means the base rate of pay under an enterprise agreement can never be less than the base rate for the employee’s classification in the relevant modern award. More generous conditions elsewhere in your agreement cannot be used to offset a base rate that falls below the award. The award rate is the floor and cannot be contracted out of, even by agreement. Annual wage review increases and award variations made during the life of your agreement may also apply regardless of what your agreement says.

An agreement priced against an out-of-date picture of the award can fall below the floor within its first year and the gap may not surface until the FWC applies the BOOT. If the FWC has concerns, it can approve the agreement only once you give written undertakings that resolve them, or it can specify amendments to the agreement itself. Either way, you are committing to pay or provide more than you budgeted for, long after employees have voted.

You will need to document the comparison at the end anyway

Before employees vote, section 180(5) of the Fair Work Act requires you to take all reasonable steps to explain the terms of the proposed agreement and their effect.

For a replacement agreement, the FWC’s Statement of Principles on Genuine Agreement says this will generally mean explaining the differences between the proposed and existing agreements, and any award provisions varied since the existing agreement was made (the nexus of your comparative analysis).

Your snapshot produces that comparison at the start, when it can still inform every decision, rather than at the end, when it may expose problems you have already agreed to carry forward. Backtracking late in the process damages trust at the table. Last-minute changes can also add costs that were not in the budget when employees have already voted. Neither scenario is good news for anyone. Nothing damages workplace morale more than an organisation that goes from the bargaining table into a redundancy process because it agreed to an enterprise agreement it cannot afford.

Bargaining is where old errors surface

Pay errors based on incorrect classifications tend to run quietly for years, then surface when someone finally compares the agreement with the award and the current payroll. All it takes is one person to notice an anomaly and ask questions for your errors to be exposed.

In February 2025, the Fair Work Ombudsman (FWO) announced an enforceable undertaking with a social and community services provider that back-paid about $5.64 million to 980 current and former employees. The underpayments ran from December 2014 to April 2023 and included incorrect pay points applied when employees moved from one enterprise agreement to the next. Intentional underpayment of wages has been a criminal offence since 1 January 2025.

It is far better that your snapshot finds errors like these before you begin bargaining, and while they are still yours to fix, rather than someone else’s discovery.

Six areas to cover before enterprise bargaining starts

Your snapshot answers questions in six areas:

Workforce analytics. Headcount, FTE, contract types, employment modes, length of service and turnover.
Wages data and costs. Hourly rates, banked leave liability, on-costs per employee, and the full cost of your current agreement.
Industrial instruments. Which instrument covers each employee, the minimum conditions under the award and the NES, and a clause-by-clause comparison showing how much better off employees are under your agreement.
Market position. How your pay and conditions compare with the award, the market and your peers, and what conditions your employees value most.
Environmental scan. Your organisation’s stage, the changes coming in your sector and the law, labour market pressures, and whether your policies support decision-making.
Current agreement assessment. Readability, the clauses that must be updated before lodgement, the questions and disputes it generates, what belongs in policy, what works well, and the contentious issues likely to surface during negotiations.

Our free enterprise bargaining checklist, the Current State Snapshot Checklist, breaks each area into the specific questions to answer, on two pages. Download the checklist.

Hot Tip!

There is nothing more frustrating for employee and union representatives than sitting at the bargaining table with organisational representatives who are unprepared to answer questions or are unable or unauthorised to make decisions. Decide who will lead your negotiations and who will support the administration and recordkeeping, and check they are available for every meeting. Identify the subject matter experts who may need to attend, or to prepare written material on the policies, processes and ways of working likely to be discussed. Agree your bargaining parameters with your board or CEO before the first meeting: your opening position, your limits, and who has the authority to settle.

Only when you can answer these questions, and have considered, costed, and planned your organisation’s claims, are you ready to present your opening position and send out the NERR.

Remember that the timing is not always yours to choose.

If an employee bargaining representative asks you to bargain for a replacement agreement, that request starts the clock whether you are ready or not, and the NERR must be issued within 14 days. As a guide, we recommend you start your snapshot assessment at least six months before your agreement’s nominal expiry date, so the decision of when bargaining commences stays with you.

While you are at it: Good practice checks

A current state review is also the right time to confirm your other employment arrangements are compliant and considered.

Fixed-term contracts. Test each contract against the limits that apply from 6 December 2023 (generally no more than two consecutive contracts or two years in total) and confirm whether any employee should now be treated as ongoing. Check the Fixed Term Contract Information Statement was given.
Casual employees. Check each casual engagement still fits the statutory definition, that the Casual Employment Information Statement was given, and that requests to convert to permanent employment are being managed.
High income earners. For employees outside the agreement who earn above the high income threshold, check that a written guarantee of annual earnings is in place, and review it each time the threshold is indexed on 1 July.
Pay point progression. Check that each employee’s pay point reflects the service, qualifications and progression criteria your agreement requires.
Position descriptions. Confirm they are current and describe the duties actually performed. They are your classification evidence.
Individual flexibility arrangements. List every arrangement in place and confirm each still leaves the employee better off overall. Remember, not every condition can be included in an IFA and exclusions apply.
Higher duties and allowances. Check that employees acting in higher roles, and employees entitled to allowances, are paid correctly.
Records. Check your time and wages records meet the record-keeping requirements of the Fair Work Regulations 2009.

From snapshot to your log of claims

With the snapshot complete, your log of claims stops being a reply to the other side’s wish list and becomes a statement of your organisation’s interests. You will know which provisions need fixing, what you can genuinely afford, which claims you are likely to receive, and what each would cost.

You can also prepare a short information pack for all bargaining representatives before your first meeting (a snapshot of your snapshot). It supports your good faith obligations and gives every party a shared, factual point of reference to start from. The document can do some of the education piece and heavy lifting to manage expectations before you enter the room.

SCHADS Award employers: You have more to do before your next round of EA negotiations

If your agreement is underpinned by the SCHADS Award, the new Final Classification Structure that starts on 1 October 2027 adds five extra pieces of work to your current state snapshot: qualification audits, industry experience records, position description reviews, classification mapping, and costing and progression design. Read our companion article for SCHADS employers.

How Resources for Humans can help

Resources for Humans Pty Ltd supports Australian employers to prepare for enterprise bargaining with a clear, evidence-based current state review, including coverage mapping, agreement and award comparisons, classification reviews, costing and log of claims development. We help you arrive at the first meeting prepared, credible, confident, and ready to negotiate. We can also help you prepare to have difficult and uncomfortable conversations, so you are ready to respond at the time, without losing your nerve.

Our CHRO, Kelly Maher, brings more than 35 years of human resources and employment relations experience, including enterprise bargaining, and has made formal submissions to the FWC on SCHADS Award matters that affect our clients.

Download our free checklist, Enterprise Bargaining Representatives: Log of Claims, or contact us at info@resourcesforhumans.com.au to talk through your next agreement.

This article provides general information about the federal workplace relations system. It is not legal advice. Check the Fair Work Commission and Fair Work Ombudsman websites for current requirements, and seek advice about your own circumstances.

Resources for Humans

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