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What is Collective Bargaining?

What is Collective Bargaining?

Collective bargaining involves groups of people or businesses that use their numbers to increase their bargaining power. In some instances it can be good and others, illegal.

11th September 2019
Reading Time: 3 minutes

As the number of businesses globally increases, there also comes an increase in the struggle for power. Collective bargaining involves groups of people or businesses coming together to use their numbers to increase their bargaining power. There are many ways that collective bargaining can be considered beneficial. In fact, international law considers it a fundamental human right. However, it can also be used to exploit people and in these circumstances, it is illegal to do so. Continue reading to find out what the differences are and how to avoid legal trouble by expanding your knowledge.

When Collective Bargaining Benefits

There is a very fine line between when collective bargaining is good and when it is illegal. This becomes a lot clearer when you look at who is using this power. In international law, convention 87 of the Freedom of Association and Protection of the Right to Organise (1948) makes sure that workers have the right to form an independent union and governments cannot stop them from doing so. Similarly, convention 98 in the Right to Organise and Collective Bargaining (1949) makes sure that workers are allowed to collectively bargain with their employers.

Australia, as parties to these agreements, looks to these conventions when interpreting our own law. We do this to make sure that there is a better balance of power between workers and their employers. Otherwise, the businesses that pay us our wages would hold all the power! This kind of collective bargaining is good for everyone. It means that when a business has not increased wages for their employees for many years, workers can collectively bargain with their employers for a better deal. Statistics from the Australian Bureau of Statistics has suggested that workers on individual contracts receive an average of 2% less than workers on collective agreements.

When Collective Bargaining is Illegal

When it comes to businesses, the Competition and Consumer Act generally requires businesses to act independently of one another when making decisions. Sometimes, businesses can genuinely act in good faith when bargaining together. This can happen when smaller companies negotiate with bigger companies for the benefit of the public. There are protections for these businesses that are provided in the law. However, there are many instances when collective bargaining is illegal and can result in heavy punishment.

Generally, businesses are acting illegally when their arrangements are considered ‘cartel provisions’. This is defined in the Competition and Consumer Act. Cartel provisions refer to an arrangement that involves fixing or controlling prices in goods and services. It also applies to arrangements that have the effect of restricting supply or production of goods and services, too. This law applies to trade within Australia as well as between Australia and other countries.

Avoiding Illegal Practice

To avoid dealing in illegal collective bargaining, an application needs to be made to the Australian Competition and Consumer Commission (ACCC). This is regardless of the purpose or intent of arrangements. Even if you believe your business is acting with good intentions, competitors who act collectively risk breaking the law. There are two ways to make sure that your dealings are lawful.

The first is ‘authorisation‘. If you’re unsure about whether your business is breaking the law, you may apply to have it reviewed and authorised by the ACCC. The ACCC will simply consider two things. First, whether your business is harming competition. Second, whether there is more public benefit than detriment from the conduct.

The second is ‘notification‘. If your business wants to bargain collectively for good reason, you may apply to notify the ACCC. In this case, the ACCC will mainly consider what the public benefit will be if they allow this practice.


The purpose of these laws is to make sure that there is a fair balance of power in the business world. It is very important that your business avoids this type of behaviour in the marketplace. If you need advice on to how you can do so, get in contact with a business lawyer here.

Don’t know where to start? Contact us on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest lawyer marketplace.

Michael Hoyle

Michael is a legal intern at Lawpath working with the content team. With an interest in contracts, intellectual property, and constitutional law, Michael is currently completing a Bachelor of Laws with a Bachelor of Commerce at Macquarie University.