Collective bargaining update

Collective bargaining update

Australian employers now have 8 months’ experience of the framework for making collective agreements under the Fair Work Act. In this article, we highlight some key aspects of the scheme that distinguish it from the Work Choices laws that operated prior to 1 July 2009.

Employers make enterprise agreements with their employees not unions

The Act abolished the distinction between union and non-union collective agreements. An employer proposing to make a collective agreement can only make that agreement with some or all of its employees 1.

However, unlike the Work Choices model, the Act attaches rights and obligations to the employer and other bargaining representatives about the way they treat each other in the process of “bargaining” for the agreement. If one or more bargaining representatives do not behave in a way that is consistent with these obligations, the other bargaining representatives can get orders from the tribunal – Fair Work Australia (FWA) – remedying the situation.

This means that before an employer embarks on the task of developing and making a proposed agreement, it needs to know whom the other bargaining representatives are. The bargaining representatives are the “players” in the bargaining “contest” and have the benefit of the bargaining “rules”.

Who are the bargaining representatives?

For the purposes of the Act, the bargaining process begins when the employer issues a notice of employee representational rights to the employees who will be covered by the proposed agreement. An employer cannot request the employees to vote on the agreement until at least 3 weeks has elapsed since this notice was issued. The notice informs those employees of various matters relating to the bargaining process, including the right to appoint a bargaining representative. If employees are members of a union the union will be their bargaining representative, unless the employees appoint another bargaining representative. 

This means that employers should not respond to logs of claims or positions put by unions or employees about a proposed enterprise agreement until the notice of employee representational rights has been issued and the bargaining representatives are identified.  It also means that the employer should not have two processes of simultaneous bargaining, one with the union about the union’s proposed agreement and one directly with their employees about the employer’s proposed agreement. Early decisions of Fair Work Australia suggest this may amount to a breach of the good faith bargaining requirements 2.

Another important requirement for the notice of employee representational rights is to define the group of employees who will be covered by the proposed agreement. A recent FWA decision suggests that if employees seek to take protected industrial action in support of an agreement with a different scope than that specified in the notice, either the employer will need to agree to that change or the employee’s bargaining representatives will need to obtain an order from FWA (a scope order) requiring that the scope be altered 3.

Good faith bargaining requirements

The good faith bargaining requirements imposed on bargaining representatives can be summarised as follows:

• the obligation to meet promptly at reasonable times with other bargaining representatives  to discuss what each wants contained (and not contained) in the proposed agreement;
• the obligation to participate (and allow other bargaining representatives to participate) in those meetings. That means bargaining representatives need to be willing to explain their positions regarding the agreement, and back up those positions with relevant information 4. It also means that the representatives must genuinely consider and respond to proposals made by other bargaining representatives for the agreement in a timely manner, giving reasons for the bargaining representative’s responses to those proposals; and
• the obligation not to use capricious or unfair tactics to prevent other bargaining representatives from participating in the bargaining process.

Power of FWA to intervene in bargaining

If a bargaining representative believes that there is a breach of the good faith bargaining requirements by other representatives, the aggrieved representative can seek a bargaining order from the FWA to remedy the situation. The early decisions emerging from the FWA indicate that the tribunal is hesitant to intervene unless it is apparent that the bargaining process is not working effectively or efficiently.

The FWA’s approach is highlighted in two recent decisions dealing with a situation where an employer is seeking to put its preferred agreement to employees for a vote in circumstances where agreement has not been reached with the union representative of some of those employees.

In the Defries case, the employer requested a vote without telling the union bargaining representative of those employees, without giving them a reasonable time to propose any amendments to the document and without responding to the proposals they had put through their bargaining representative concerning the content of such an agreement. FWA ruled that these actions amounted to unfair conduct undermining freedom of association and collective bargaining. The tribunal made an order preventing the employer from putting the agreement to a vote until the union representatives had a reasonable opportunity to consider the document and respond to it 5.

Contrast this with the Chep case where the company had met with the union, given it a copy of its proposed agreement, offered to meet again and consider any matter the union put forward. In that case, the FWA rejected the union’s application for an order deferring the vote, because the union had not taken up the employer’s invitation to bargain 6.

The hesitation of the tribunal in granting bargaining orders reflects the serious implications flowing from a breach of such orders. If the FWA is satisfied that one or more bargaining representatives for the agreement is responsible for serious and sustained breaches of bargaining orders with the effect of significantly undermining bargaining for the agreement, and the other bargaining representatives for the agreement have exhausted all other reasonable alternatives to reach agreement, the tribunal can grant a serious breach declaration. The consequence of this is that FWA may, in certain circumstances, make a bargaining related workplace determination in relation to the agreement – in effect compulsorily arbitrating the sticking points.

End notes

1 A greenfields agreement is one made to regulate employment in a new business or project that is yet to be established. This kind of agreement can only be made with a union that is eligible to represent employees that perform the kind of work to be performed in the ‘greenfields’ business prior to employing any of those persons.

2 Alphington Aged Care [2009] FWA 301.

3 Ford Motor Company v AFMEPKIU [2009] FWAFB 1240.

4 Good faith bargaining does not require a representative to disclose confidential or commercially sensitive information.

5 NUW v Defries Industries Pty Ltd [2009] FWA 88.

6 NUW v CHEP Australia Limited [2009] FWA 202.