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Bargaining and protected industrial action: Three key decisions you need to know about

Submitted By Firm: Corrs Chambers Westgarth

Contact(s): John Tuck


By Jack de Flamingh (Partner), Janine Young (Partner), John Tuck (Partner) & Anthony Forsyth (Consultant)

Date Published: 4/11/2015

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The first quarter of 2015 has seen a number of key decisions relating to bargaining and industrial action under the Fair Work Act 2009 (Cth) (FW Act).

We summarise and analyse three of the more important decisions in this In Brief, highlighting their implications for employers.

Good Faith Bargaining - ‘Surface bargaining’ considered

In APESMA v Peabody Energy Australia Coal Pty Ltd [2015] FWCFB 1451 (3 March 2015), a Full Bench of the Fair Work Commission (FWC) addressed the issue of what level of engagement with the bargaining process is required of an employer.

The union, APESMA, appealed against a decision of Hamberger SDP, finding that Peabody Coal had not breached the good faith bargaining requirements in section 228(1) of the FW Act. Peabody Coal had participated in meetings with the union, but negotiations had stalled when the company rejected a revised offer from the union and indicated it did not see any benefit in entering into an agreement.

The Full Bench (Boulton J, Drake SDP and Cambridge C) determined that Peabody Coal was required “to do more than simply respond by letter to the significantly revised proposal put by APESMA. At least, there was an obligation to meet and discuss the proposal and to explain ... whether the proposal or a modified form of it might be acceptable to the company.” ([2015] FWCFB 1451 at [26])

In addition, the Full Bench found that Peabody Coal should have provided information sought by the union relating to the salary range for the classifications covered by the proposed agreement. This information would assist APESMA in putting forward salary proposals in the negotiations, and was not confidential or commercially sensitive within section 228(1)(b) of the FW Act.

Orders were therefore imposed by the Full Bench, requiring Peabody Coal to:

  • meet with APESMA to discuss its revised proposal;
  • provide the union with a genuine proposal which includes the matters that the company may be prepared to accept in an enterprise agreement (this order seems to have been carefully framed to avoid the prohibition in section 228(2), i.e. parties are not to be compelled to make concessions in bargaining);[1] and
  • provide information relating to the spread of salaries for the relevant employees to APESMA.

The Full Bench decision is significant in addressing “hard bargaining” or “surface bargaining” tactics. However, employers should note that indicating what they may be prepared to include in an agreement is not the same as actually committing to those terms – the former will comply with section 228(1), while the latter cannot be forced upon an employer by virtue of section 228(2).

Employer Bargaining Representatives

In ANMF v Kaizen Hospitals (Essendon) Pty Ltd [2015] FCAFC 23 (5 March 2015), the Full Federal Court upheld a Full Bench FWC decision to approve a number of enterprise agreements despite some uncertainty as to the status of the employer’s bargaining representative.

A group of Melbourne private hospitals engaged a Corporate Manager to oversee certain business activities, who subsequently conducted negotiations with the ANMF for new enterprise agreements covering the hospitals. Following approval of the agreements by the required majority of employees, and by the FWC, the board of the Kaizen group challenged their approval on the basis that the Corporate Manager had not been formally appointed as the employers’ bargaining representative under section 176 of the FW Act.

Two separate decisions of FWC Full Benches established that, although the Corporate Manager was not a validly appointed bargaining representative (therefore the agreements should not have been approved by the FWC), the Corporate Manager had acted with apparent or ostensible authority on behalf of each employer hospital corporation (therefore the agreements should stand).

The Full Federal Court (Buchanan and Jagot JJ; Greenwood J agreeing) held that the hospitals’ appointment of the Corporate Manager invested him with an apparent authority such that his actions bound them in accordance with section 793 of the FW Act:

“Furthermore, it is obvious enough that both the [ANMF], and the employees who voted, relied upon the circumstance that the relevant employer, by its various employees and agents, was engaged in bargaining and had proposed specific written terms for acceptance.” ([2015] FCAFC 23 at [108])

And although the Corporate Manager had proceeded without actual authority in purporting to sign the enterprise agreements on behalf of the hospitals, his apparent authority extended to that act of signing. This constituted:

“... the final step in the process upon which each of the [hospitals] had embarked (with his participation) ...

It was too late for the [hospitals] to deny [the Corporate Manager’s] agency when the bargain was complete and only the completion of the statutory procedure remained.” ([2015] FCAFC 23 at [131]-[132])

The Full Federal Court’s decision reinforces the importance for employers of making it very clear, from the commencement of negotiations, precisely who their bargaining representatives are. The employer itself is automatically a bargaining representative. Any doubt about the status of others involved in agreement negotiations can be avoided by using written instruments of appointment of bargaining representatives under section 178 of the FW Act.

Protected Industrial Action and “Genuinely Seeking Agreement”

In Esso Australia Pty Ltd v AMWU, CPU and AWU [2015] FWCFB 210 (10 February 2015), a Full Bench of the FWC clarified a long-running question as to whether unions seeking non-permitted terms in a proposed agreement are “genuinely trying to reach agreement” – a prerequisite for taking protected industrial action under the FW Act.

The unions in this case were attempting to have certain restrictions on the engagement of contractors included in new enterprise agreements (it was clear that the proposed contractor provisions were not permitted matters within section 172(1) of the FW Act). The question then arose whether in seeking the inclusion of the proscribed clauses, the unions were precluded from obtaining a protected action ballot order (PABO), because they did not meet the requirement in section 443(1)(b) that they must be genuinely trying to reach agreement.

The Full Bench (Ross P, Hatcher VP and Simpson C) held that the pursuit of non-permitted claims is relevant to the test set out in section 443(1)(b), but is not determinative of the issue:

“A range of factual considerations may potentially be relevant in that context, including but not limited to the subject matter of the claim, the timing of the advancement of the claim, the basis upon which the claim is advanced, the significance of the claim in the course of the negotiations, the claimant’s belief as to whether the claim is about a non-permitted matter or not, where there is legal clarity about the permitted status of the claim, whether the other party has placed in contest whether the claim is about a permitted matter, and whether such a claim has been withdrawn and, if so, when and in what circumstances. The diversity of the factual circumstances and nuances which will be found in different cases means that it is not possible to say that any particular factor or consideration will always be determinative of the result.” ([2015] FWCFB 210 at [59])

In this case, according to the Full Bench, the unions had not pushed hard on the proposed contractor restrictions and in fact had formulated an alternative claim which was capable of including only permitted content. The unions therefore met the section 443(1)(b) requirement for obtaining a PABO.

As it opens up the prospect of unions taking protected industrial action in support of non-permitted agreement content, the Full Bench’s decision is important in the context of the Fair Work Amendment (Bargaining Processes) Bill currently before federal Parliament (this Bill was passed by the House of Representatives on 10 February 2015).[2]

The Bill proposes to impose new restrictions on protected industrial action, including that bargaining claims not be excessive or adversely affect productivity. Following the Esso Australia decision, Australian Industry Group is lobbying the Government to have a new provision inserted in the Bill precluding the taking of protected industrial action in support of claims for non-permitted matters in an agreement.

[1] See the Federal Court of Australia decision in Endeavour Coal Pty Ltd v APESMA [2012] FCA 764.

[2] See here.


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