“Coming, ready or not!” When can employers be forced to commence enterprise bargaining?

Enterprise bargaining

In July this year, the Fair Work Commission halted an attempt by the Retail and Fast Food Workers’ Union (RAFFWU) to force Coles Supermarkets Australia to the bargaining table for a new enterprise agreement. RAFFWU did so by applying to the Fair Work Commission (FWC) for a ‘majority support determination’, that is an order that can compel an unwilling employer to commence enterprise bargaining.

Many employers are understandably concerned about the prospect of negotiating an enterprise agreement amidst the uncertainty of the pandemic. Once enterprise bargaining begins the parties must ensure they comply with the ‘good faith bargaining requirements’ which can place a significant strain upon the resources of a business. This article examines the circumstances in which the FWC will make a majority support determination.

 

What is an ‘enterprise agreement’?

An enterprise agreement is an agreement between an employer and one or more ‘classes’ of its employees that provides for those employees’ pay and working conditions. Unless an agreement expressly provides otherwise, it will apply exclusively to the classes of employees covered, and any modern award that would otherwise cover those employees will no longer apply.

Enterprise agreements apply to classes of employees and not necessarily to the entire workforce, so it is common to have both agreement-covered and award-covered employees within one organisation or workplace.

 

How does bargaining for an enterprise agreement begin?

The formal bargaining process begins in one of three ways:

  • The employer offers to bargain;
  • the employees request to bargain and the employer agrees; or
  • the FWC makes a ‘majority support determination’ requiring the employer to bargain.

Bargaining commences when one of these events occurs. This is called the ‘notification time’ because the employer has 14 days from the commencement of bargaining to notify its employees of their right to appoint bargaining representatives.

 

What is a “majority support determination’?

A ‘majority support determination’ (MSD) is a determination made by the FWC to commence bargaining when it is satisfied that a majority of employees who will be covered by a proposed enterprise agreement want to bargain. Any employee who would be covered by a proposed agreement, or their appointed representative, can apply for a MSD.

Once a MSD is made, bargaining representatives must comply with the ‘good faith bargaining requirements’ set out in the Fair Work Act, including:

  • attending and participating in meetings at reasonable times;
  • disclosing relevant information, other than confidential or commercially sensitive information, in a timely manner;
  • responding to proposals made by other bargaining representatives in a timely manner;
  • genuinely considering the proposals of other bargaining representatives, and giving reasons for the responses to those proposals;
  • refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining; and
  • recognising and bargaining with the other bargaining representatives.

If these requirements are breached, a bargaining representative can apply to the FWC for a ‘bargaining order’ making more detailed prescriptions for how bargaining is to proceed.

 

When will an MSD be approved?

The FWC must make the determination if it is satisfied that:

  • a majority of employees who will be covered by the agreement want to bargain;
  • the employer has not yet agreed to bargain or initiated bargaining for the agreement;
  • the group of employees who will be covered was ‘fairly chosen’; and
  • it is ‘reasonable in all the circumstances’ to make the determination.

The FWC can use ‘any method it considers appropriate’ to decide whether a majority of employees who will be covered by the agreement want to bargain.  Often applicants will submit employee petitions, which the FWC will compare with complete staff lists.

For example, in AMWU v Iveco Trucks Australia Ltd,[1] the applicant submitted a petition signed by sixty-two employees, and the employer submitted a staff list of 139 employees. However, the applicant successfully argued that managerial staff who would not be covered by the agreement should be excluded from the lists, and a MSD was made on the basis that, of the remaining ninety-eight non-management employees, a majority of fifty-two had signed the petition.

To resolve questions about whether employee petitions demonstrate the necessary majority, the FWC can order a ballot, normally with the agreement of the parties.

For example, in AWU v F Laucke Pty Ltd,[2] employee petitions showing a slim majority in favour of bargaining were queried, and with the agreement of the parties, the FWC ordered a ballot to be conducted by the Australian Electoral Commission. Of the thirty-nine employees to be covered, twenty-five voted, nineteen supported bargaining, and one vote was declared informal. The FWC declined to order a further ballot and did not make a MSD.

The aforementioned decision of RAFFWU v Coles Supermarkets Australia illustrates that applicants must establish at least a ‘prima facie case’ that an actual majority of employees want to bargain.[3] In this case, the applicant argued that majority support could be inferred from a survey of 2,100 store workers, in which 99% indicated they wanted to bargain for a proposed agreement covering some 106,300 employees. The applicant argued that the FWC was therefore required to order a ballot to ‘satisfy itself’ that such a majority in fact existed. The Full Bench held that the power to use ‘any appropriate means’ to work out whether majority support exists is discretionary and does not oblige the FWC to take any positive steps. No ballot was ordered because the applicant had failed to establish a prima facie case of actual majority support, and the application was dismissed.

 

What should employers do if they receive a request to bargain from employees or a union representative?

Since the enterprise bargaining landscape is complex for employers to navigate on their own, it is recommended that they seek strategic legal advice before responding to any request to commence bargaining.

 

If you require assistance in respect of any of the matters raised above contact NRA Legal on 1800 572 679.

 

[1]  “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Iveco Trucks Australia Ltd [2013] FWC 5106 (Gooley DP, 29 July 2013).

[2] The Australian Worker’s Union v F. Laucke Pty Ltd T/A Laucke Mills [2013] FWC 4632 (Hampton C, 12 July 2013).

[3] Retail and Fast Food Workers Union Incorporated v Coles Supermarkets Australia Pty Ltd t/a Coles Supermarkets [2021] FWCFB 4414 (Hatcher VP, Cross DP and Spencer C, 23 July 2021).

 

By Nicholas Edwards and Andrew Piper

 

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