Big Business Is Losing At The Bargaining Table. Small Business Should Be Terrified.

A new report has confirmed what a lot of employers already suspect: the enterprise bargaining system in Australia is not working in their favour, and the new powers handed to unions under Labor’s IR reforms are making things worse, not better.

Herbert Smith Freehills Kramer surveyed 65 senior IR and HR leaders from close to 60 large organisations, across manufacturing, education, transport, banking, mining and more. These are businesses with thousands of staff, dedicated IR teams and lawyers on speed dial. And even they are saying the system is stacked against them.

So here’s the question every small business owner should be asking: if the big end of town can’t win at the bargaining table, what chance does a 20-person business with no HR department have?

Employers Have Lost Faith In The System

The numbers are stark:

• 75% say the bargaining system is overly technical and prescriptive
• 70% say unions and employees have been handed too much bargaining power
• Only 9% think the system strikes a fair balance between employers and employees
• Only 8% think enterprise bargaining is actually a good way to engage employees and lift productivity

That is not a system with a few rough edges. That is a system employers have almost entirely lost confidence in.

What “New Powers” Actually Means

This isn’t just employers whinging. There are two specific changes from the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 doing the damage.

Intractable bargaining arbitration. If bargaining drags on for nine months, and the old agreement has been expired for nine months too, unions or employees can ask the Fair Work Commission to step in and arbitrate an outcome. That means the business loses control of the result. Someone else decides your wage increases and your conditions.

You’d think that threat would push both sides to settle faster. It hasn’t. 74% of employers disagree that intractable bargaining has reduced industrial action or sped anything up. 56% say the threat of it is used as a straight-up negotiating tactic, not a genuine last resort. It’s a lever, and unions are pulling it.

Multi-enterprise bargaining. Unions can now push to bundle separate, unrelated businesses into the one bargaining agreement. 60% of employers are concerned or extremely concerned this will be used against them, and retail, hospitality, transport and logistics, the sectors packed with smaller operators, are the most worried of all. If you’re a smaller business sitting inside a supply chain or sector with a strong union presence, this is the one to watch. You don’t need to be the target to get dragged into someone else’s fight.

The System Is Punishing Preparation, Not Rewarding It

Here’s the part that should really worry small business owners. This isn’t a one-off bad experience. It’s a pattern:

• 50% of employers say they’ve had to pour in more resources just to reach agreement
• 44% have spent more time in front of the Fair Work Commission than they should have needed to
• 40% say they’ve achieved less productivity improvement through bargaining than they otherwise would have
• 38% of employers have had unions seek access to confidential business information during bargaining

These are organisations with 5,000, 10,000, sometimes 25,000-plus employees. They have internal legal counsel. They have IR managers whose entire job is this. And they are still bleeding time, money and control. A small business owner running the show themselves, with no in-house HR or legal team, is not walking into a fairer fight. They’re walking into the same fight with none of the armour.

Why This Matters Even If You’ve Never Run An EBA

Most small businesses aren’t deep into formal enterprise bargaining yet. But three things make this relevant regardless:

1. Union tactics tested on big employers don’t stay there. The playbook, using the arbitration threat as leverage, pushing multi-enterprise claims, targeting sectors rather than single businesses, gets refined at the big end and applied wherever it works next.
2. Multi-enterprise bargaining is designed to pull smaller operators in. You don’t need your own union campaign to end up bound by someone else’s agreement.
3. The broader signal is what matters. When 75% of well-resourced employers say the system is technical, prescriptive and stacked against them, that tells you where the regulatory environment is heading for everyone, not just the businesses making headlines.

What Employers Say Would Actually Help

It’s not all doom. The report also asked what would make bargaining fairer and faster, and the answers are refreshingly practical:

• Better training in negotiation skills for whoever is representing the business (62%)
• Moving to interest-based bargaining instead of digging into fixed positions (55%)
• Clearer, earlier communication of what the business can and can’t afford (43%)

None of that requires a change in government. It requires businesses to prepare properly, know their numbers, and go into any negotiation, big or small, formal or informal, with a clear strategy instead of hoping goodwill carries the day.

Frequently Asked Questions

We’re a small business with no formal enterprise agreement. Does any of this actually affect us?
Potentially yes, mostly through multi-enterprise bargaining. Unions can push to bundle separate, unrelated businesses into one agreement, and smaller operators in sectors like retail, hospitality, transport and logistics are the most exposed. You don’t need to run your own bargaining process or have a union campaign targeting you directly to end up pulled into someone else’s dispute.

What is intractable bargaining arbitration, and why does it matter?
It’s a mechanism that lets the Fair Work Commission step in and arbitrate an outcome if bargaining drags on for nine months with an expired agreement. In theory it exists to break genuine deadlocks. In practice, more than half of surveyed employers say the threat of it is being used as a negotiating tactic rather than a last resort. If you’re ever in a bargaining situation, be aware this lever exists and that it can shift control of the outcome away from the business entirely.

If large organisations with legal teams and IR specialists are struggling with this system, what chance does a small business have?
Realistically, less protection, not more. Big employers are absorbing more resources, more time at the Commission, and less productivity gain from bargaining than expected, despite having dedicated expertise on hand. A smaller business without in-house HR or legal support faces the same system with fewer resources to manage it, which is exactly why getting advice before a bargaining situation lands is more important, not less.

What can we actually do to prepare, rather than just hoping this doesn’t affect us?
Employers surveyed pointed to three practical things: better negotiation training for whoever represents the business, moving toward interest-based bargaining rather than digging into fixed positions, and communicating clearly and early about what the business can and can’t afford. None of that requires new legislation. It requires knowing your numbers and having a clear strategy before you’re sitting across the table from anyone.

The Bottom Line

If organisations with the deepest pockets and the best advice in the country are saying the system is stacked against them, small business owners have every right to be nervous. The difference is you don’t have a floor of lawyers to fall back on when it gets technical.

That’s exactly the gap HR Gurus exists to close. We help small and medium businesses get their industrial relations and bargaining position sorted before it becomes a problem, not after the Fair Work Commission gets involved. No jargon, no fluff, just a plan that actually protects you.

Worried about where your business stands if bargaining or a union claim landed on your desk tomorrow? Get in touch with HR Gurus and let’s cut through the BS before it costs you.