Negotiation principles

Unions show skill in Essential Energy job cuts proposal

Experienced workplace relations practitioner, Ni Gao, provides some illumination into the dark arts of industrial relations negotiations.

The recent Essential Energy saga gives employers good insight into the tactics unions will employ to bring an unwilling employer to the negotiation table. The unions demonstrated the effectiveness of three key negotiation principles in their actions, being:

  1. Make sure the other party has some skin in the game;
  2. Understand the other party’s interests (which may be hidden); and
  3. Identify the real decision maker.

On 3 July 2019 it was reported Essential Energy had announced it planned to cut 182 jobs from its regional workforce in order to “drive efficiencies” and “deliver a better service at lower cost”. It planned to offer redundancies to employees after a short consultation period. In making its announcement, Essential Energy was clearly indicating its position and that it was not open to negotiation on its decision.

The unions’ response, led by the Electrical Trades Union, was swift. The first thing the unions did was make sure Essential Energy had some skin in the game. They did this by immediately lodging a dispute with the Fair Work Commission (FWC) in relation to the proposed redundancies and short consultation period. This forced Essential Energy to defend its decision and approach taken. Before the FWC, the unions were successful in obtaining a concession from Essential Energy to extend the consultation period for approximately 6 weeks and agree that there would be no redundancies until mid-August 2019.

The additional period gave the unions time to mobilise a campaign against the proposed job cuts through garnering media attention and rallying a number of regional MPs, including the prominent support of Nationals leader and Deputy Premier John Barilaro. In doing this, the unions targeted Essential Energy’s hidden interests in its reputation as an employer in regional areas.

Their actions also showed the unions understood the dynamics between the NSW Government and Essential Energy as a one hundred per cent publicly owned company. Whilst Essential Energy management can make decisions relating to its employees, the NSW Government has power to influence those decisions. This led the unions to target the NSW Government’s interests in protecting the jobs of regional workers and being seen as supporting local communities. The NSW Government proved itself to be the real decision maker when the Energy Minister, Matt Kean, announced a halt to the proposed job cuts at Essential Energy on 20 August 2019.

The unions tactics were successful in halting the proposed 182 job cuts and bringing Essential Energy to the negotiation table to discuss alternatives to redundancies. Whilst it has yet to be seen how this matter will ultimately play out, the principles of negotiation demonstrated by the unions in this example provides an instructive lesson for any party to a negotiation.

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