How a Memorandum of Understanding helps bridge the gaps in bargaining
This device is often used while the state and Catholic school sectors are bargaining, as independent schools wait to see the pay and conditions benchmarks those negotiations set.
A Memorandum of Understanding (MoU) is a short written agreement that records what the union and employer have agreed on – either specific issues (a pay rise, a pilot of a new workload model) or how they’ll run the bargaining (timelines, information-sharing, dispute steps).
An MoU isn’t approved by the Fair Work Commission and doesn’t replace statutory requirements. It’s used to lock in a shared understanding before (or alongside) the full Enterprise Agreement.
We asked an IEU Organiser who specialises in independent school bargaining to explain more.
When are MoUs used?
Generally, an MoU is used to secure a salary increase and/ or a small number of conditions that our members want. We sometimes use them in place of an Agreement when members want entitlement improvements, but a full Agreement is not justified.
Sometimes we use them to defer bargaining while we see where government and Catholic sector bargaining lands, to avoid the risk of locking in an inferior deal.
What are the main tasks involved in arranging an MoU?
It’s mainly around surveying members on whether they are happy to do one and what they would like included. Then there is negotiating with the employer and then when we get an offer to confirm our members are happy with it. Finally, there’s drafting and signing the MoU.
Generally, an MoU is used to secure a salary increase and/or a small number of conditions that our members want.
What are we trying to achieve with an MoU?
An MoU can be used to delay bargaining and get money in members’ pockets sooner. Both sides understand we’ll return to bargaining to secure parity with – or a premium above – industry rates once those benchmarks are clear.
Unlike an Agreement, an MoU doesn’t provide access to protected industrial action, so our leverage (and the scope of the deal) is limited. It’s not enforceable like an Agreement, but in practice MoUs are honoured – breaking one would be clear bad faith, breaking trust with employees and hindering reaching a proper deal when the time comes.
In situations where there is no Agreement in place, an MoU can improve a small range of entitlements for members without the need for pursuing a full Enterprise Agreement.
Employers are usually pleased to consider it and employees secure the most important gains in an environment where an Agreement is not a priority.
What are the most important things to achieve with an MoU?
It’s really all about securing an increase to members’ pay in a timely manner, but generally even that is then reviewed as both sides know that we will come back to either get parity or a premium above industry benchmarks.
When we bargain for an Agreement we can take protected industrial action, when necessary, so that means we have real bargaining power. This is not the case with an MoU, so outcomes are on the basis of mutual agreement being reached.
Typical contents
1. Parties who the MoU is formed by and represents
2. Commitments who will do what, by when
3. Duration e.g., until Agreement approval or a stated date
4. Interaction with Agreement/Award over-Award payments, no reduction of entitlements
5. Review & dispute step how issues are raised and resolved
6. Signatures authorised representatives.
