Briefing

Multi‑employer bargaining is here: How employers can stay ahead

After coming to power the Federal Labor Government changed workplace laws in June 2023 to make it much easier for unions to initiate enterprise bargaining. The rationale was to address a decade of stagnant wage growth by encouraging enterprise bargaining which had stalled. The Federal Labor Government argued that enterprise bargaining leads to higher wage outcomes for employees.

One of these changes involved giving unions the right to initiate bargaining for enterprise agreements that cover more than one employer – this is called ‘multiemployer’ bargaining. Previously, the scope for multi-employer bargaining was very limited. That has changed radically. While unions were initially slow to take up multiemployer bargaining, they have now accelerated their efforts.

So far, unions have initiated multi-employer bargaining in the following sectors: (1) early childhood education and care; (2) community/social welfare and disability services; (3) franchise fast food networks (McDonald’s); (4) franchise retail networks (Chemist Warehouse); (5) educational institutions (private schools); (6) local councils; (7) group training organisations (apprentices); (8) coal mining; and (9) air conditioning contractors.

Where a multi-employer bargaining authorisation is made by the Fair Work Commission (FWC), employers are required to bargain in good faith for a multi-employer enterprise agreement, and employers are precluded from making (or initiating bargaining to make) a single-employer enterprise agreement.

For unions, the threat of multiemployer bargaining (and the associated downstream risks for employers – protracted bargaining with several other sector participants at the bargaining table, claims for improved wages and other terms and conditions of employment, the prospect of sector wide industrial action and an intractable bargaining determination being made by the FWC), can be leveraged to encourage an employer to bargain for a single-employer enterprise agreement.

Given the current political and industrial relations landscape, with the Federal Labor Government having more than two years still to serve in the current parliamentary term and likely to be re-elected for a further three year term given its significant majority, stubborn inflation and cost of living pressures with larger than historical wage outcomes in enterprise bargaining negotiations, employers should be alert to (not alarmed by) the risk multi-employer bargaining presents for their businesses over at least the next five years.

Multi-employer enterprise agreements

There are two authorisations which can be obtained from the FWC compelling employers to bargain for multi-employer enterprise agreements: (1) a supported bargaining authorisation; and (2) a single interest authorisation.

Supported bargaining authorisation

To make this authorisation, the FWC must consider that it is appropriate for employers to bargain together for an enterprise agreement having regard to (amongst other things):

pay and conditions – what the usual pay and conditions in the industry are, including whether low rates of pay are usual;
common interests – whether the employers have clearly identifiable common interests, such as: (1) a geographical location; (2) the type of enterprises and the current terms and conditions of employment in those enterprises; and (3) being substantially funded by government; and
representation – whether the likely number of bargaining representatives will be manageable for a collective bargaining process.

Importantly, the FWC does not need to be satisfied that there is majority employee support for bargaining at each employer to make a supported bargaining authorisation.

The FWC cannot make a supported bargaining authorisation where employers are covered by a single-employer enterprise agreement that is within its nominal term – unless the FWC is satisfied that the main intention of an employer in making that agreement was to avoid being included in the authorisation.

Once an employer is named in a supported bargaining authorisation, it can only make a supported bargaining agreement and cannot bargain for any other kind of enterprise agreement.

Single interest authorisation

To make this authorisation, the FWC must be satisfied that (amongst other things):

employers have clearly identifiable common interests, and it is not contrary to the public interest to make the authorisation – matters relevant to whether there are common interests include: (1) geographic location; (2) regulatory regime; and (3) the nature of the enterprises and the terms and conditions of employment in those enterprises;
employers’ operations and business activities are reasonably comparable;
a majority of employees of each employer want to bargain for the enterprise agreement;
an employer is not covered by an enterprise agreement which is within its nominal term; and
an employer and the union have not already agreed in writing to bargain for a single-employer agreement.
The FWC has a discretion to exclude an employer from a single interest authorisation if:
the employer is bargaining in good faith for an enterprise agreement that will cover the same (or substantially the same) employees;
there is a history of effective bargaining in relation to one or more enterprise agreements that have covered the same (or substantially the same) employees; and
less than nine months have passed since the most recent nominal expiry date of such an enterprise agreement.

Employers are vulnerable to being caught up in a supported bargaining authorisation where they have common interests because they conduct similar businesses and operations and their employees are paid award wages and afforded award terms and conditions of employment, and enterprise bargaining has not been successfully pursued by the relevant union.

McDonald’s test case

The SDA obtained a supported bargaining authorisation naming all of McDonald’s franchisees in South Australia, after McDonald’s ignored the union’s invitation to bargain.

Key to obtaining the authorisation was that employees were predominantly reliant on award pay rates, there were clearly identifiable common interests between franchisees – they all operated under a standardised licence agreement, adopting a standardised business model, the work performed by employees was fundamentally the same – standardised positions, position descriptions and remuneration arrangements, and unless the authorisation was made it was unlikely that bargaining would progress.

After securing the authorisation, the SDA applied to extend the authorisation nationally across the entire McDonald’s franchise network. This application is currently before the FWC and so too is an appeal against the making of the authorisation before the Federal Court.

Until this application for a supported bargaining authorisation, unions had only invoked the supported bargaining stream for multi-employer bargaining in cases where the relevant employers were reliant on government funding.

The experience of McDonald’s demonstrates that all employers operating in non-government funded sectors are vulnerable to being caught up in a supported bargaining authorisation where they have common interests because they conduct similar businesses and operations and their employees are paid award wages and afforded award terms and conditions of employment and enterprise bargaining has not been successfully pursued by the relevant union.

Chemist Warehouse test case

The SDA obtained a single interest authorisation naming six employers operating Chemist Warehouse stores as franchisees in South Australia, covering 13 stores. It was not disputed that the employers carried on reasonably comparable business activities.

As the SDA used the single interest authorisation stream, they were required to show that a majority of employees of each employer wanted to bargain for the enterprise agreement. This was a contested matter before the FWC, with the employers challenging the legitimacy of the SDA’s staff petition which was used as evidence of majority support from the employees. The FWC found that the SDA’s petition and explainer were sufficiently clear, and there were no apparent material misrepresentations. The employers have lodged an appeal of this decision, which is pending.

What employers should look out for in 2026?

Whilst the focus of unions is currently on national franchise networks, we consider that an employer not actively bargaining for an enterprise agreement which:

does not have an enterprise agreement in place within nominal term;
affords its employees terms and conditions of employment broadly in line with a modern award;
operates in a sector where the union is active; and
conducts a business that is similar to those of other employers in the sector (also affording employees terms and conditions of employment broadly in line with the award),
are vulnerable to being caught up in a multi-employer bargaining campaign.

These employers should monitor developments in the McDonald’s and Chemist Warehouse test cases and explore the options available to them now to take pre-emptive steps to minimise the risk of being caught up in multi-employer bargaining.

Even if such pre-emptive steps are not taken after they are carefully assessed, these employers should develop contingency plans in case they are approached by a union in relation to multi-employer bargaining.

Employers caught flat footed may end up with fewer (and more costly) options!