Ending an expired agreement is a threat a one-plant town remembers

For many years an application to terminate an expired enterprise agreement was one of the strongest tools an Australian employer held in a long dispute. If the Fair Work Commission ended the agreement, employees fell back to the minimum terms of the relevant award, and the union came back to the table under pressure. Changes to the federal bargaining rules made in 2022 have since narrowed the circumstances in which the Commission will do that, and any employer considering it should take advice on the present test. My argument does not depend on the law. In a town where one plant provides a large share of the jobs, I believe an employer should not use termination as a bargaining threat even when it is available, because the workforce learns something from the threat that no later agreement can unteach.

The application we drafted and did not file

In early 2022 our Ferrison foundry was eighteen months into bargaining to replace its 2016 agreement. The plant employs 790 people, about 640 of them covered by the agreement, in a town of roughly 9,800. From March, after a protected action ballot, the workforce ran rolling four-hour stoppages and an overtime ban. By May we had lost about 2,100 tonnes of castings and roughly A$13 million of revenue, and two mining customers had moved liner orders to imported products. Not all of that work came back.

Our external lawyers and our chief operating officer recommended applying to terminate the expired agreement. The arithmetic was persuasive. Award rates for some of our trades sat as much as a quarter below the agreement rates, and the prospect of a pay cut would very probably have ended the stoppages within weeks. The application was drafted and ready.

I argued against filing it, and our managing director decided not to. We settled in July on a three-year agreement with wage increases above our budget, a simpler classification structure and a new dispute procedure. It passed with 82% support. The plant has lost no time to industrial action since, and the 2025 agreement settled in seven weeks.

I cannot prove that the application would have produced a worse result. It might have ended the dispute sooner and saved money in the short run. What I can describe is what I expected it to cost, and why I judged that cost to be larger.

What a termination teaches the people who keep working

An enterprise agreement in a regional plant is not a one-off contract. It is one round in a relationship that lasts decades, often between the same families. The senior delegate across the table from us in 2022 had been an apprentice when I was a shift superintendent, and her father had worked beside mine. People who bargain against each other in a town like Ferrison meet again at the school gate, the football club and the hospital waiting room, and bargain again three years later.

A termination application tells every employee covered by the agreement that the company is prepared to cut their pay in order to prevail. It makes little difference that the company might never have applied the lower rates, or meant the application only as pressure. The people who receive it learn that their pay rests on the company's restraint rather than on an agreement they voted for. I have watched what that does in other plants. It does not end conflict. It moves the conflict into the following years: into reluctant overtime, rejected change proposals, grievances that a conversation would once have settled, and the next round of bargaining, which begins from mistrust.

There is a simpler cost as well. Companies describe their workforce as the business itself and then, in a dispute, threaten to take a quarter of some of those people's pay. The workforce notices the distance between the two statements. It weakens everything the company later says about safety, training or change, because it shows which statement the company meant.

Bargain over the structure early

The fair criticism of my position is that it leaves an employer with less pressure to apply in a long dispute. I accept that a company has to be able to refuse a claim, absorb industrial action and hold its ground. We did all three in 2022. What I reject is the idea that the only way through a deadlock is to threaten the floor beneath people's pay.

Our dispute ran for eighteen months partly because of a mistake I made. We spent the first year arguing over wage percentages while the real problem, fourteen classifications built up under three owners with progression mostly by time served, sat untouched. The delegates wanted a path for process workers to reach pay close to trade rates by gaining skills. We wanted people who could move between moulding, core-making and fettling. Those interests fitted together. When we finally tabled a seven-level structure with progression by certified competency, the dispute began to move within weeks. We paid more in wages than we had planned, about A$4.6 million over three years, and gained a structure that has lifted output per production employee by 9%.

I would offer three suggestions to any employer facing a stalled agreement in a regional plant. Put the structural question on the table in the first month, not the twelfth, because a wage number is easier to settle when people can see what else is changing. Share enough of the plant's position on volumes, costs and customers for delegates to test your claims, while protecting what must stay confidential. And before considering a termination application, ask who will still be working at the plant in ten years, and what they will remember about how the company behaved under pressure.

None of this makes bargaining easy, and none of it ensures a settlement. It does stop a dispute about the terms of an agreement from turning into a dispute about whether the company can be trusted, which is a far harder thing to settle.