Murdoch University offers a lesson on mastering IR

If you wonder why our higher education sector seems lacklustre, a recent decision from the Fair Work Commission provides valuable insight.

In April last year, the National Tertiary Education Union sent a log of claims to Murdoch University. The union sought a new enterprise bargaining agreement for more than 3500 employees.

The union wanted some amazing things, including an increase to salaries of 15 per cent by October 2020; employer superannuation contributions at 17 per cent; up to 20 days’ domestic violence leave per employee; enhanced job security for staff who were already almost impossible to dismiss; and retention of conditions and entitlements built up through years of traditional union bargaining. There were privileges sought such as having 50 per cent of the local union president’s time paid for.

The log of claims might seem wild but the improvements sought were only building on conditions already won. These types of demands are standard in the sector and often are agreed to by management. If universities appear cumbersome, expensive and inefficiently run, it is because they are, and their EBAs set this out in detail.

The Fair Work Act is crafted to ensure that when making agreements, employers bargain directly with their employees. Employees can nominate a bargaining agent in writing if they want to, and that agent can be any person, such as a union person or even a friend. The bargaining agent represents only the employee who nominated them in writing and no one else.

Unions are the bargaining agents of workers by default where the worker is known to be a union member by the employer and has failed to nominate anyone else. Therefore, in law, unions are only hired guns, in a limited capacity. Their presence can be sidelined and influence neutralised. In fact, during bargaining, the employer does not need to meet the union at all.

An employer can send their own bargaining agent offsite to meet the union while they focus on consulting with their employees. When the agreement goes to the vote, it can be done by text message, sent to the employees in non-working hours, so they can vote in privacy without being influenced.

Due to the general absence of industrial relations leadership since the Fair Work Act was introduced, businesses, including universities, have failed to take advantage of its benefits. Instead, companies have continued traditional union bargaining, where they blindly accept the unions as the representatives of their workforce, turn up and meet them for months or even years, and engage in legal battles, all the while resembling lambs being led to the slaughter.

In its bargaining process, Murdoch did exactly that. After the log of claims was received, more than 24 meetings were held with the union. The meetings resulted in nothing but exasperation and legal bills, and by December last year the union led its members into industrial action. The next day, Murdoch dropped a virtual bomb on them all; it applied to the Fair Work Commission to terminate the agreement and put staff back on the two relevant awards.

Employers can apply to terminate agreements easily. Once the EBA has expired, a two-page form is filled out and lodged. The agreement can be terminated automatically, in a matter of weeks, or there may be a few hoops to jump through and it can take longer. In the case of Murdoch, there was union opposition and a 10-day trial.

The two relevant awards for Murdoch, combined, contained 61 clauses over 127 pages. However, its EBA was 188 pages long, with 110 clauses. The university had falling profitability and 24 of the EBA clauses caused it big problems. Costs were out of control and red tape was tying it in knots. Staff members were almost impossible to get rid of and any workplace change was virtually impossible to implement.

The commission found the EBA imposed “significant inefficiencies and costs” and “in some circumstances, impose significant constraints on how Murdoch operates and manages its employees”. Several of the clauses were described as “overly prescriptive and unwieldy” and bound to “cause practical difficulties in the workplace”.

The commission found that Murdoch had been affected by market conditions, government decisions, corporate governance failures, poor strategic decisions, some employee resistance to change and at times poor management. The commissioner accepted “that the constraints and limitations the agreement imposes on Murdoch, whatever their merit, has contributed to Murdoch’s current financial circumstances”.

On August 29, by order of the commission, Murdoch’s EBA was terminated with an effective date of September 26. Staff will be placed back on the relevant award, although there is nothing stopping the university from voluntarily preserving individuals on above-award rates of pay or making a collective or even individual agreements.

The taxpayer has been funding poor management and poor industrial relations practices in the higher education sector for too long. Students are being let down badly and overcharged for the privilege.

Other universities should look to Murdoch for inspiration. Agreements in the sector are absurd and outdated, and need to be terminated. If they were detailed in this column the public would be horrified, the government outraged and the signatories embarrassed. Even a 10-day termination trial might prove less painful and damaging.