‘Nuclear option’ will have a big fallout in Australian universities

The recent termination of Murdoch University’s enterprise agreement will likely lead to substantial cuts in many Australian universities’ employment conditions. Enterprise agreements are multi-year industrial agreements between an employer and its employees. On 29 August, the Fair Work Commission accepted Murdoch’s application to terminate its agreement, which has been in effect since 2014.

It did so to contribute to repairing what Murdoch described as its “dire” financial position, and because only limited progress had been made in negotiating a new enterprise agreement, despite a year of efforts. “The parties are apart on multiple matters that are fundamental issues to them,” the commission wrote.

In the absence of an enterprise agreement, employment conditions are governed by a national industry award that covers all employers and employees in that particular industry. The higher education industry awards for academic staff and for general staff have substantially lower conditions than enterprise agreements.

The awards’ minimum pay rates are from 20 to 39 per cent lower than those in Murdoch’s enterprise agreement, for instance. Pension contributions are 4.5 per cent lower, and redundancy payments are 33 per cent lower for academics and 80 per cent lower for professional staff. There is no provision for paid parental leave and regulating academic workloads, nor any substantial procedural protections around changing the organisation of the university, transferring or sacking staff and managing misconduct and unsatisfactory performance.

The enterprise agreement will terminate on 26 September and the university has undertaken to maintain many of its terms and conditions for six months thereafter. However, as the commission observed, termination will favour the university in future enterprise negotiations.

Simon Birmingham, the minister for education and training, “backed and welcomed” the termination, saying that the opportunity it offered “should be seized, and hopefully can be replicated elsewhere” in the university sector. He argued that there is ample scope for universities to cut costs and thus absorb the funding cuts that the government seeks to impose on them.

There is a suggestion – or perhaps threat – that if universities don’t seize this “opportunity”, the government will intervene more closely in their management (a previous federal Conservative government imposed higher education workplace relations requirements on universities in 2006).

Most Australian universities are negotiating their enterprise agreements over a similar time period as Murdoch, and have made similar progress. They seem likely to follow the pattern of previous bargaining rounds: quickly concluding agreements once a few universities have established benchmarks.

The commission accepted that Murdoch’s financial position was partly due to poor strategic decisions, poor management at times and corporate governance failures. Indeed, in 2016, the Western Australian Corruption and Crime Commission found that the university’s former vice-chancellor had engaged in “serious misconduct”.

A few other Australian universities are also in difficult financial circumstances. But employers do not have to meet very high standards to persuade the commission to terminate their enterprise agreement. Perhaps all Australian universities could argue that theirs hamper their ability to compete internationally, respond strongly to changes in student demand, adopt new technologies and implement modern management techniques.

An indication of this thinking was given by Murdoch’s director of people and culture, Michelle Narustrang, who argued: “We need an agreement that reduces administrative burden and allows us to manage our business more effectively.”

Over the next few years, Australian universities are likely to use the threat of terminating their enterprise agreements to cut the procedural checks to relocating and terminating staff and to shifting them to short-term contracts and teaching-intensive duties. Australian academics do not enjoy tenure, and enterprise agreements are sometimes used to protect them better than is possible under the award.

I doubt that most universities will trigger what shadow minister Brendan O’Connor called the “nuclear option” of terminating their enterprise agreement. This would be a form of zero-based bargaining, returning the parties to the bare conditions of an industry award that staff would want to augment extensively, taking considerable time. But the threat of terminating enterprise agreements greatly weakens staff’s bargaining positions, forcing them to concede to management much more – and much more quickly – than they have needed to previously.

Gavin Moodie is adjunct professor of education at RMIT University, Melbourne, and the University of Toronto.