Unpacking the UWU enterprise bargaining application – What does it mean for ECEC?

On 6 June 2023 a group of unions with substantial membership bases in the early childhood education and care (ECEC) sector lodged an application with the Fair Work Commission to commence negotiations (known as enterprise bargaining) on behalf of their members with a group of designated employers.

 

The lodgement marks the first application of its kind allowed under the new Secure Jobs, Better Pay legislation, and may also herald the beginning of a long awaited reset in ECEC educator wages. 

 

This piece will explore this important development and attempt to provide context to inform the ECEC sector, and to allow ECEC professionals to make their own judgements about the developments. 

 

Please note the piece is relatively long given the complexity of developments in the space and need to ensure information is imparted in a balanced and judicious manner. 

 

What actually happened on the 6 June? – what was lodged and why?

 

Three unions, the United Workers Union, the Australian Education Union – Victorian Branch and the Independent Education Union of Australia (the applicants) jointly submitted a request to commence wage negotiations with the Fair Work Commission. 

 

The submission highlighted that due to a relatively high degree of award dependence in the ECEC sector, and low rates of pay prevailing in this sector, that it was appropriate for employers and employees to come together and address these matters. 

 

These statements underpin the rationale for the application with a group of designated bargaining representatives namely; the Australian Child Care Alliance, Community Child Care Association and Community Early Learning Australia (who collectively will be representing 61 individual employers) and G8 Education, a large national ECEC provider included. 

 

The submission will provide the Fair Work Commission with enough information to decide on whether enterprise bargaining is an appropriate course of action, and ifthe number of bargaining representatives is consistent with a manageable collective bargaining process. 

 

If the FWC agrees to the application what happens? 

 

If the FWC agrees with the application two decisions will need to be made: 

 

1. When the wage negotiations will begin and; 
2. Whether the Government, as a key funder of the ECEC sector, will be directed to participate

 

So assuming negotiations are given the green light, when will they begin?

 

Most likely in or around September 2023. 

 

And will the Government be directed to participate?

 

Yes, the probabilities are very high that the Government will be directed to participate. 

 

The Secure Jobs, Better Pay Bill gives special power to the FWC to direct a third party “who exercises significant control over the terms and conditions of employees” in a given sector to participate. 

 

Given the Federal Government is responsible for the Child Care Subsidy (CCS), and the CCS is central to the ongoing existence of the sector, the test that the Government “exercises significant control over the terms and conditions of employees” will very likely be met. 

 

So the scene is set for the ECEC stakeholders to commence bargaining but will this actually lead to an increase in wages?

 

Unfortunately it’s not as simple as that.

 

The first step is for all parties to agree that an increase is merited, and then to agree the amount. 

 

Assuming they agree, then the next step is to agree who is actually going to fund it. 

 

Assuming then that the Government agrees to fund the increase, which is essential to keep affordability anchored for parents, a new ECEC sector “enterprise agreement” that incorporates the agreed funded pay and conditions terms will be created. 

 

The 61 employers listed in the application will then be a party to the agreement from the operative date and their educators would receive whatever has been agreed as part of the bargaining process.

 

Ok, so initially assuming a deal is struck, only those employers participating in the bargaining will be impacted? 

 

Yes, that’s right.

 

However, once the enterprise agreement has been formally launched any other provider can elect to sign up. 

 

Given the benefits for educators and its funded nature, it is expected the vast majority of the sector will transition across to it. 

 

But what if an employer doesn’t want to opt in?

 

Any employer is entirely within their rights to not participate in the new enterprise agreement BUT ultimately the decision does not lie with them, but their employees. 

 

In these circumstances, due to what is known as the “roping in” provisions, it is highly likely, and entirely legal, that a Union will approach employees independently, share the benefits of participating in the agreement and organise a vote. 

 

If the vote returns more than 51 per cent in favour of being in the agreement, then the employer is compelled to transition to the Award. 

 

Ok, so how much might the wage increase be?

 

This is unknowable right now. 

 

Ultimately the amount that parties are likely to agree on is dependent on a Government funding commitment.

 

Some stakeholders have been calling for 25 per cent increases but it is too early to know with certainty what the negotiation outcomes will yield. 

 

We do know that aged care workers received a 15 per increase in the end, but the initial increase requests were closer to 25 per cent. 

 

Ok, so could anything go wrong and derail the process?

 

Yes. 

 

The key to this entire process is Government support. If the Federal Government does not agree to fund the increases it will make an agreement very difficult to reach. 

 

There is likely to be a degree of uncertainty around this issue for some time.

 

That being said, we do know that the Government is very engaged and committed to addressing low wages in female dominated sectors, and they are also very focused on ensuring the cost of education and care is anchored. 

 

We also know that the Government recognises that if wages were increased but not funded, providers would immediately pass the increase on in the form of higher fees, which would then impact the cost of care. 

 

So against that backdrop it seems likely that the Government will support a funded wage increase, but we do not know for sure, and won’t know for a while. 

 

Is there anything else that needs to be considered?

 

Yes, one more thing is worth noting here is to what degree the Government will look to impose conditions on the receipt of wage increase funding for participating providers. 

 

Of course, we are getting into real detail now, but regardless it is important to recognise that in exchange for tax payers money it is very possible that the Government insists on some form of concession, whether it be governance related or perhaps fee related. 

 

Perhaps once the ACCC and Productivity Commission have completed their inquiries the “ability” for the employer community to shoulder additional costs will be clearer and enable the Government to calibrate any requirements accordingly. 

 

Finally on timing, how will this likely unfold? 

 

If negotiations begin in September, and assuming a three month negotiation process, it’s likely that the ECEC sector will start getting indications of the extent of wage uplifts and whether the Government is willing to support the increases toward the start of 2024 with the whole process wrapped up within the next twelve months. 

 

The factors supporting a relatively fast resolution are:

 

1. Ongoing acute educator shortages remain an important challenge for the sector. The sooner a resolution on wages is finalised the quicker new entrants will join.  
2. The ACCC and Productivity Commission inquiries will have been completed by the end of this year providing plenty of additional material to base any decisions on. 
3. With the earliest the next federal election can be called in August 2024 there is a relatively defined window for the Government to deliver on this initiative. 

 

With these types of incentives in place it is therefore likely that the process should culminate at some point within the next 12 months.