Bargaining under the Fair Work Act – 12 months on: A Freehills retrospective

Introduction

The Fair Work Act 2009 (Cth) (Act) brought significant change to Australia’s collective bargaining regime. It introduced new concepts (majority support determinations (MSDs), scope orders, proposed agreements) and re-introduced the obligation to bargain in good faith.

Accordingly, bargaining participants have grappled with the changes, and decisions of Fair Work Australia (FWA) have been met with great interest.

A comprehensive paper is available to Freehills clients on request. 

A summary of that paper is provided below.

Commencement of bargaining

• ‘Inadvertent’ commencement of bargaining
• What is the ‘proposed enterprise agreement’?

The compulsion to bargain and its effect on employers

• Establishing whether the employer has ‘initiated’ bargaining or ‘agreed’ to bargain
• Establishing whether a majority of employees want to bargain

The importance of employers taking the lead

• What is ‘fair and efficient’?
• ‘Shelving’ disputes over the scope of the agreement

Good faith bargaining

• Putting an agreement to vote without Bargaining Representative (BR) approval
• Negotiating tactics
• Union agendas
• Provision of paid union meetings
• Dealing directly with employees
• Disclosure of information

Approval requirements

Permitted matters

Commencement of bargaining

The complexity surrounding the commencement of bargaining can, in some cases, lead to the question of whether or not bargaining has commenced.

‘Inadvertent’ commencement of bargaining

What is sure to be fertile ground for disputes going forward (most likely in the good faith bargaining or industrial action contexts) is whether an employer has ‘agreed’ to bargain or ‘initiated’ bargaining for a proposed enterprise agreement.

What is the ‘proposed enterprise agreement’?

A related issue that has received some airplay is a phrase that appears in the Act no less than 119 times—the ‘proposed enterprise agreement’. The phrase is important—it is relevant to when bargaining commences, when the good faith bargaining requirements apply, when a protected action ballot can be obtained, and when employees can take protected industrial action. However, ‘proposed enterprise agreement’ is not defined and its meaning is not always clear.

The compulsion to bargain and its effect on employers

Establishing whether the employer has ‘initiated’ bargaining or ‘agreed’ to bargain

This concept creates some difficulty where an employer has commenced bargaining for an agreement to cover some, but not all, employees of a particular enterprise. Currently, FWA’s approach to this issue is that MSDs are not available where an employer has agreed to bargain for an enterprise agreement under the Act.

Establishing whether a majority of employees want to bargain

A number of employers have taken issue with evidence led by unions to establish majority support. To date, it appears that union petitions and the like will be sufficient unless there is evidence to suggest that employees were coerced or otherwise misled into signing the petition, or there is other evidence that establishes doubt as to the veracity of the survey. On this basis, opposing applications for MSDs has proven difficult for employers.

However, FWA has been willing to apply the provisions strictly and refuse to make a MSD where there has been insufficient evidence of a ‘majority’.

The importance of employers taking the lead

Once bargaining has commenced, a BR can apply to FWA for an order that specifies who the proposed agreement is to cover (a ‘scope order’). Such an application may be made where a disagreement over the scope of a proposed agreement arises.

What is ‘fair and efficient’?

The first 12 months has seen a number of decisions that have highlighted the complexity of this requirement. There is some uncertainty over whether the scope order must result in bargaining being ‘more’ fair and efficient or simply fair and efficient in and of itself.

‘Shelving’ disputes over the scope of the agreement

Prior to commencement of the Act, it was common for employers, unions and employees to delay negotiating scope where immediate consensus on the issue was not reached. ‘Shelving’ such a dispute was often seen as a preferable alternative to delaying negotiations on the substance of the agreement.

FWA decisions to date have shown that ‘shelving’ such disputes under the Act is generally undesirable. Rather, taking control of the negotiations and setting scope at commencement is important for a number of reasons.

Good faith bargaining

There have been relatively few published bargaining order decisions to date and we are yet to see the true breadth of potential orders and their capacity to be used by both employers and unions to enhance their respective bargaining positions. For example, whilst unsuccessful, an employer has sought a bargaining order to prevent further picketing at their site. We expect to see more employer-initiated applications of this nature in the future.

That said, unions have demonstrated a much greater enthusiasm for pursuing bargaining orders than employers. Not surprisingly, the majority of decisions to date are centred around the very broad requirement to refrain from ‘capricious or unfair conduct that undermines freedom of association or collective bargaining’, rather than the other five good faith bargaining requirements.

Putting an agreement to vote without BR approval

FWA has demonstrated a willingness to make orders restraining employers from putting an agreement to vote where the good faith bargaining requirements have (or may have) been breached.

There is doubt whether bargaining orders can be obtained if employees have already voted in favour of the agreement. However, FWA has refused to approve an agreement where the employer did not tell a union BR that it was putting the agreement to vote.

Negotiating tactics

There has also been a raft of decisions dealing with particular negotiating tactics and determining whether they breach the good faith bargaining requirements. For example:

• aggressive tactics 
• industrial action 
• meeting with one BR over another, and
• misleading information.

Union agendas

It remains unclear to what extent BRs are entitled to pursue their own agenda. Being a representative of employees, it is expected that unions (for example) are to only act with the authority of their members. Whilst not directly relevant to the circumstances of the case, FWA has, on one occasion, expressed the view that it is up to each BR to ensure they are properly advocating the position of the employees that they are representing.

To the extent unions have pursued their own collective agendas rather than ensuring that they are accurately advancing the views of their members throughout the bargaining process, there is a question over the legitimacy of such behaviour.

Provision of paid union meetings

There is no express requirement under the Act that an employer provide unions or other BRs with the opportunity to meet with employees during paid work time. On this basis, a refusal of an employer to honour such a request will generally not breach the good faith bargaining requirements.

Dealing directly with employees

The good faith bargaining requirements prevent BRs from being by-passed in negotiations. This has called into question the capacity of an employer to communicate with its workforce during bargaining and to put an offer to employees without union endorsement. To what extent can an employer communicate with its workforce during bargaining? At what point does communication become ‘capricious or unfair’ in a way that undermines collective bargaining? These issues have all been the subject of FWA decisions as unions have, not surprisingly, relied on these provisions to better control the communication flow.

Disclosure of information

A surprising aspect of the first 12 months of bargaining under the Act has been the limited reliance on the good faith bargaining obligations in order to have BRs ‘disclose relevant information’. This particular requirement can be powerful for employers and unions alike if used properly.

At this stage it is clear that:

• FWA is unlikely to order that data be created where it does not already exist, and
• BRs are unlikely to be ordered to disclose their own private notes taken during bargaining meetings.

Approval requirements

FWA has been rigorous in its review of agreements and has refused to approve many due to their failure to meet procedural requirements, content requirements, or the better off overall test. In the early stages there also seems to have been little scope for the use of undertakings to rectify such deficiencies.

This approach has seemingly softened of late, with FWA demonstrating an increased propensity to accept undertakings in relation to these matters. In particular, a Full Bench has held that FWA has a facilitative role in relation to the approval of agreements and must therefore consider compliance with the requirements in a practical and non-technical manner. On this basis, FWA should make reasonable efforts to clarify matters with the parties and consider undertakings.

Permitted matters

There has already been much consideration of what is, and what is not, a permitted matter by FWA. All of these decisions have been in the context of whether a particular clause in an agreement is a matter pertaining to the relationship between employer and employee, or employer and union.

Looking forward

There is no doubt that the ‘evolutionary’ stage of the new bargaining regime will continue for some time. It is important that, during this stage, employers and unions alike remain cognisant of their obligations under the Act and keep up to date with developments in the law. Whilst this may prove difficult given the pace of change, those that prepare well and consider their strategy in advance will maximise their opportunities at the bargaining table.

Freehills’ comprehensive overview of the first 12 months of the Fair Work Act 2009 (Cth) bargaining regime is available to Freehills’ clients on request. If you would like a copy of this overview please contact a member of the Employee Relations team.

This article was written by Paul Burns, Partner, Chris Gardner, Partner, and Rohan Doyle, Solicitor.

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