Fair Work Act 2009

s.229 - Application for a bargaining order

Application for a bargaining order - cancellation of ballot - jurisdiction to make orders - whether NUW is a bargaining representative - whether orders to cancel ballot within jurisdiction - good faith bargaining requirements - whether employer meeting good faith bargaining requirements - notice of employee representation rights - whether ballot request within 21 days of notice - Fair Work Act 2009, ss 173, 181, 229, 230, 255.

[1] This decision relates to an application under s 229 of the Fair Work Act 2009 (the Act) by the National Union of Workers, NSW Branch (NUW) for a bargaining order under s 230 of the Act concerning a proposed enterprise agreement at the Erskine Park Service Centre of CHEP Australia Limited (CHEP).

[2] The application was made on 25 August 2009. It sought orders in the following terms:

"1. CHEP ceases to conduct its agreement ballot scheduled to commence on 31 August 2009 and take no further action to put the agreement to a ballot at least until the company and the union schedule four meetings to be determined by the bargaining representatives.

2. The NUW may re-apply for purposes of further meetings if there is appropriate evidence that your company and the NUW have been unable to reach agreement on the same, and that such meetings have a real and apparent prospect for achieving an agreement."

[3] The NUW indicated that if the matter could not be heard and determined prior to Monday 31 August they would be seeking an interim order as follows:

"A. Until further hearing of this matter, Chep Australia Limited take no further step in the conduct of the ballot of employees at Erskine Park site with respect to the approval of the CHEP Erskine Park (NSW) Service Centre Enterprise Agreement 2009 ('the agreement').

[4] I heard the application on Friday 28 August 2009. Mr S Mueller represented the NUW. Mr J Donnelly, of counsel, represented CHEP. At the end of the matter I announced that I would not make the orders sought. I also agreed to a request by the NUW to permit it to file further written submissions on certain jurisdictional arguments raised in the proceedings. Further written submissions were subsequently filed by both parties. This decision deals with my conclusions and reasons for declining to make the orders sought.

[5] There are approximately 30 relevant employees engaged at the CHEP Erskine Park Service Centre. All but two are covered by Australian Workplace Agreements (AWAs) or Individual Transitional Employment Agreements (ITEAs). The employees are engaged to perform store work on a four crew 12 hour shift continuous rotating roster.

[6] Mr Craig Johnson, the Manager of the Service Centre gave evidence that he commenced negotiations for a proposed enterprise agreement on 8 April 2009 by convening a meeting between himself, representing the company, and an employee representative of each of four shift crews determined by way of nomination from each crew. At the time the company was not aware that any employees engaged at the site were members of a union. In fact none of the employees were union members.

[7] Mr Johnson gave evidence that on or about 3 July 2009 he handed a copy of a Notice of Employee Representation Rights as required by the Act to all employees and placed a copy of the Notice on the notice board in the lunchroom. He said that he handed out a second Notice of Employee Representation Rights between 5 and 14 August 2009 which contained references to forms which were missing from the first notice and to clarify that employee representatives had been nominated to bargain on behalf of employees.

[8] Mr Johnson stated that negotiations for an agreement progressed to the stage that he believed there was agreement in principle and began to distribute an agreement on 18 August 2009 to all employees on each shift, commencing with the crew rostered for day work on that day. He distributed the agreement during the morning on that day. He continued the distribution process for the A crew at approximately 6 pm on the same day.

[9] Mr Johnson said that he also distributed conditional termination agreements under cover of a letter dated 17 August 2009 to all employees covered by AWAs and ITEAs. The covering letter explained that returning a signed conditional termination agreement was necessary to enable employees to vote on the enterprise agreement. A vote on the enterprise agreement was scheduled for 31 August 2009.

[10] As at the date of hearing of this matter the company had received 14 signed conditional termination agreements and two employees were not covered by an instrument that could be subject to such an agreement. No evidence was led by the NUW to the effect that any of its members had signed such an agreement. Mr J Galea, the only union member to give evidence, stated that he had not.

[11] Mr J Nero, an official of the NUW gave evidence of his involvement at the site. He said that he was initially contacted by an employee at the site, Mr Galea, on 17 August 2009. Mr Galea explained that a vote on an agreement was imminent and requested the union's assistance in the negotiations. Approximately five employees, including Mr Galea joined the union shortly thereafter. This number apparently increased to approximately 10 employees over subsequent days.

[12] Mr Nero attended the site on 18 August 2009 at around 6.30 pm. He was denied access to the site because he had not complied with the notice requirements for a right of entry visit. He returned to the site the following day, 19 August 2009, accompanied by another NUW official, Mr M Cochran. They spoke to Mr Johnson in the foyer of the building. After obtaining advice from his Head Office, Mr Johnson cancelled a meeting that he had organised to discuss overtime rosters and took the two officials and Mr Galea into the boardroom for further discussions.

[13] Mr Johnson handed the union representatives a copy of the proposed enterprise agreement. The union sought an opportunity to review the agreement and requested that the company not proceed with the scheduled vote of employees. Mr Johnson responded that he did not have any information which would justify putting a hold on the vote. The union sought time to go through the document and convene another meeting to discuss it.

[14] On Friday 21 August 2009 the NUW faxed a letter to the company. The letter asserted that the NUW was a bargaining agent of employees at Erskine Park. The letter gave notice of the union's concerns that the company was not meeting its good faith bargaining obligations. The NUW alleged in its letter that distributing the agreement to employees for a vote despite informing the NUW that negotiations were ongoing and to decline to agree that the vote not go ahead amounts to a failure to meet the good faith bargaining requirements in the Act. It sought an undertaking that the vote scheduled for 31 August 2009 not proceed and no further action be taken for a vote until the company and the union had at least four meetings to discuss the agreement.

[15] On 24 August 2009 the Company responded to the NUW by way of a letter of that date. It contended that the Company has fully complied with its good faith bargaining obligations. It declined to give the undertaking sought and extended an invitation to contact Mr Johnson to arrange a meeting at a mutually convenient time to discuss any concerns the union may have with the proposed enterprise agreement.

[16] CHEP raised a number of jurisdictional arguments which it said precluded the Tribunal from making the orders sought. First, it submitted that the NUW is not capable of making the application because it is not a bargaining representative of any employees who will be covered by the proposed enterprise agreement.

[17] Secondly, it submitted that s 255(1)(c) prevents the Tribunal from making the orders that a ballot not be held.

[18] On the merits of the application, the NUW submits that in the circumstances involved, particularly the refusal of the company to cancel the vote of employees, the company is not meeting its good faith bargaining requirements.

[19] It further submits that its case is strengthened because the scheduled vote cannot produce a valid agreement as the notice to employees required to be given under s 173(1) was not given at least 21 days prior to the vote of employees as required by s 181(2) of the Act.

[20] Each of these matters was fully argued before me and will be dealt with separately.

[21] The answer to this question depends on an analysis of the provisions of the Act and the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the FW (TPCA) Act).

[22] Under s 229 of the Act an application for a bargaining order can only be made by a bargaining representative for a proposed enterprise agreement.

[23] Section 176 provides that an employee organisation is a bargaining representative of an employee who will be covered by a proposed enterprise agreement if the employee is a member of the organisation.

[24] Item 2 of Schedule 13 of the FW (TPCA) Act states that for the purposes of the Act, an employee is considered to be an employee who will be covered by a proposed enterprise agreement if the nominal expiry date of their ITEA has passed or a conditional termination of their ITEA has been made. The Note to Item 2 states:

"Note: The main effect of this subitem is that an employee who is covered by an individual agreement-based transitional instrument will not be able to do any of the following until the nominal expiry date of the instrument passes or a conditional termination of the instrument is made under subitem 18(2) of Schedule 3:

(a) be represented in bargaining for an enterprise agreement;

(c) be in a group of employees covered by a protected action ballot order in relation to the agreement;

[25] CHEP submitted that because the members of the NUW employed at the Erskine Park site had not signed a conditional termination agreement at the time the matter was before the Tribunal, the NUW was not a bargaining representative for any of the employees who will be covered by the proposed enterprise agreement. Therefore it submitted that no valid application had been made and the jurisdictional requirement for an order under s 230(1) is not met.

[26] In its final written submissions filed on 3 September 2009, the NUW accepted this position. It sought to discontinue the application by filing a notice of discontinuance and submitted that if the matter is not regarded as discontinued, it should be dismissed as the application does not satisfy the legislative requirements.

[27] I agree that the jurisdictional requirement of a valid application is not met in the circumstances involved in this matter and for that reason Fair Work Australia does not have the power to make the orders sought.

Does s 255 prevent the orders sought in this matter being made?

[28] Counsel for CHEP, Mr Donnelly submitted that s 255(1)(c) of the Act precluded the Tribunal from issuing the orders sought in this matter. Section 255 provides:

"255 Part does not empower FWA to make certain orders

(1) This Part does not empower FWA to make an order that requires, or has the effect of requiring:

(a) particular content to be included or not included in a proposed enterprise agreement; or

(b) an employer to request under subsection 181(1) that employees approve a proposed enterprise agreement; or

(c) an employee to approve, or not approve, a proposed enterprise agreement.

(2) Despite paragraph (1)(a), FWA may make an order that particular content be included or not included in a proposed enterprise agreement if the order is made in the course of arbitration undertaken when dealing with a dispute under section 240.

Note: FWA may only arbitrate a dispute under section 240 if arbitration has been agreed to by the bargaining representatives for the agreement (see subsection 240(4))."

[29] Mr Donnelly submitted that s 255(1)(c) prevents the Tribunal from making an order the effect of which would be to prevent or postpone a scheduled approval of an enterprise agreement by deferring a vote scheduled for that purpose. He said that the bargaining order sought by the NUW would stop the company from holding the vote and hence had the effect of requiring employees not to approve the agreement.

[30] Mr Donnelly submitted that the use of the word "approve" in the subsection is not confined only to an outcome of an approval vote. Rather, he submitted that properly construed, the use of the words "approve" and "not approve" refers to both the process of approving and the outcome of that process. He submitted that the use of the words "employees approve" in s 255(1)(b) clearly refers to the process and it is difficult to envisage the use of the words "employee to approve, or not approve" in subsection (c) to refer only to the outcome of that process.

[31] In support of this interpretation Mr Donnelly referred to ss 180(1), 181(1) and 182(1)-(2) of the Act. He submitted that each use of the word "approve" in these subsections is a reference to the process of employee participation in the approval vote for a proposed enterprise agreement. If the legislature intended the use of the word "approve" in s 255(1)(c) to refer only to an outcome this would have been made clear given the words regular use throughout Part 2 - 4 of the Act in a manner referring to process.

[32] Mr Donnelly further submitted that s 172(2)(a) makes it clear that enterprise agreements are ultimately made between an employer and their employees. The Act gives an employer the ultimate right to make or not make an enterprise agreement. Under s 181(1) an employer may request their employees who will be covered by the agreement to approve the agreement by voting for it. This process is initiated solely by the employer. Once the employer has initiated the process, each employee is to then determine whether they participate in the approval vote (the process) and how they will exercise that vote (the outcome). He said that there is nothing in the Act which gives the Tribunal the right to determine whether an employer and their employees make an enterprise agreement.

[33] Mr Donnelly submitted that the intended operation of s 255(1)(b) is to prevent circumstances where the Tribunal can initiate this process. If not for s 255(1)(b) the Tribunal would be able to make an order requiring an employer to request their employees to participate in an approval vote under s 181 the effect of which could see employers entering into enterprise agreements contrary to their liking.

[34] Once the process has been initiated, Mr Donnelly submits that s 255(1)(c) then prevents the Tribunal from determining whether an employee will participate in the approval vote (the process) and how they will exercise that vote (the outcome). Sections 255(1)(b)-(c) of the Act aim to ensure that it is the employer and their employees who ultimately determine whether they enter into an enterprise agreement or not. It is submitted by Mr Donnelly that such an interpretation is consistent with the intentions of the legislature in that employers and employees are ultimately in control of entering into or not entering into an enterprise agreement.

[35] Mr Donnelly submitted that CHEP has initiated the process under s 181 for a proposed enterprise agreement. It is therefore not within the Tribunal's jurisdiction to make an order that would require or have the effect of requiring employees not to have the right to determine themselves whether they participate in the vote (the process) and how they will exercise that vote (the outcome).

[36] Mr Donnelly also drew attention to s 231(2) which prescribes the kinds of bargaining orders the Tribunal may make in relation to a proposed enterprise agreement. He said that it is not prescribed that an order preventing an employer from conducting an approval vote or an order of that type can be made. He said that given the operation of s 255(1)(c), if such an order was intended to be within the Tribunal's jurisdiction an express power would have been inserted, similar to those powers in s 231(2).

[37] The NUW submitted that consideration of the operation of s 255(1)(c) in the proceedings before the Tribunal may constitute an advisory opinion. It submitted that as the application for a bargaining order was not granted and the NUW subsequently accepted that the application was not valid, a consideration of the section is unnecessary.

[38] The NUW also relies on the explanatory memorandum and the examples of orders that could not be made because of the operation of s 255 contained therein to support its contention that s 255 is concerned with limitations on the substantive decision on a vote, not a process issue. It says that the section prevents an order to hold a ballot but, pointedly does not, in terms, prevent an order to stop or delay a ballot. The NUW says that s 255 is directed to ensuring that Fair Work Australia does not impose content on parties but otherwise creates a broad discretion on the kinds of bargaining orders it can make. The good faith bargaining requirements require a practical and fair approach to bargaining and central to this purpose is meetings and the timing of actions in the bargaining process.

[39] The nature of powers under Part 2 - 4 of the Act has not been considered by a Full Bench of Fair Work Australia. Clearly the powers need to be exercised with caution and subject to the powers and limitations contained in the Act while endeavouring to give effect to the intention of the legislature. In my view there is overlap between the jurisdictional limitations on the Tribunal's powers and the factors which impinge upon the discretion of the Tribunal. I acknowledge the strength of the arguments of both the NUW and the employer in this case.

[40] Within the scheme of Part 2 - 4 there are good faith bargaining requirements (s 228(1)), limitations on those requirements (s 228(2)), jurisdictional pre-requisites for applications and orders (ss 229 and 230), a broad discretion as to orders that can be made (s 230(1)), requirements that the Tribunal be satisfied as to certain matters (s 230(3)), requirements for orders (s 231) and consequences of an order being made (ss 232 and 233). In addition to good faith bargaining orders, Part 2 - 4 also deals with serious breach declarations, majority support determinations, scope orders, facilitating agreements, arbitrating a bargaining dispute, low paid bargaining and single issue employer authorisations.

[41] Section 255 is contained in a general division of Part 2 - 4 which deals with "Other Matters". In my view s 255 is an overarching limitation on making orders that require or have the effect of requiring certain conduct, processes or outcomes. The words of the section should be read in the context of the provisions of the Part and be given their ordinary and natural meaning.

[42] Section 255 clearly prevents the Tribunal from requiring an employee to vote against a proposed enterprise agreement. An order that would have the same effect is also not available. I do not believe that the limitation is necessarily confined to orders which relate to the outcome of bargaining. In some cases orders may infringe the section if they deal merely with process issues. Whether a particular order is contrary to s 255 depends on the nature of the order, and the effect of the order in the circumstances of the case.

[43] In my view, the better interpretation of the provisions is that an order that delays a vote, provided it be only for a short time and does not in substance deny employees the opportunity to vote for an agreement, is not precluded by s 255. In a given case the facts will need to be considered to determine whether intervention of this nature by deferring a vote has the effect precluded by s 255.

[44] In the circumstances of this case, the application for and order to cancel the ballot was made when the union became involved very late in the process. The union did not take up the limited opportunities to participate in negotiations. It did not have legitimate standing as a bargaining representative. It did not represent a majority of employees. Yet it sought to prevent a vote and the culmination of a bargaining process directly with employees in favour of an indefinite bargaining process between the company and itself.

[45] In my view it is strongly arguable that the order sought in the circumstances of this case can be described as having the effect of requiring employees not to approve the agreement. However I do not express a concluded view on this question given the other conclusions I have reached in the matter.

Has CHEP not met or is CHEP not meeting the Act's good faith bargaining requirements?

[46] I turn now to consider the discretionary factors relevant to this application. Discretionary factors will bear heavily on orders such as those sought in this matter.

[47] The discretion conferred on Fair Work Australia to issue orders under Part 2-4 is not broad and unrestricted so as to cause bargaining to occur in a manner deemed appropriate by a member of the Tribunal. The discretion must be exercised subject to the specific limitations on its powers and consistent with the scheme of the Part which requires important preconditions to be met before an order can be made and limitations on the nature of orders available.

[48] There is no doubt that an order deferring a ballot will have an impact on the bargaining dynamics of a particular agreement making process. The scheme of Part 2 - 4 appears to guard against such an impact unless the order is clearly necessary to ensure compliance with good faith bargaining requirements or other requirements of the Part.

[49] The essence of the NUW case was that in failing to defer a vote, the company was in breach of those requirements. At the conclusion of the hearing of this matter on 28 August 2009 I indicated my view that the NUW had not established that CHEP had not met or was not meeting the good faith bargaining requirements in the Act.

[50] In my view, the criticisms of the company by the NUW lack substance. CHEP had legitimately commenced a negotiation process with its employees. It progressed negotiations with employee representatives to a point that it wished to put the agreement to a ballot. At about the same time as the company was distributing copies of the proposed enterprise agreement, some employees joined the NUW and sought to obtain its assistance in negotiating changes to the agreement.

[51] The company met with the NUW and gave it a copy of the agreement. It offered to meet again and consider any matter the union put forward. The NUW decided to put all of its efforts into seeking a deferral of the vote. It did not seek to discuss the agreement at the meeting at which it was handed the agreement. It did not seek a further meeting. Nor did it advance any positions or make any claims in relation to the agreement. Its time for doing so was limited, but it was open to it to do so and it decided not to follow that path.

[52] Apart from a general assertion that proceeding with the ballot was inconsistent with the good faith bargaining requirements, the NUW did not explain which requirement had not been met and how it was not met. In my view the case presented by the NUW did not establish the necessary precondition for an order, or a case that any orders be made let alone the orders sought in this matter.

[53] I also consider the NUW's arguments concerning the issuing of a Notice of Employee Representation Rights to be misconceived. The evidence establishes that the company distributed such a notice and posted it on a notice board on 3 July, some eight weeks in advance of the vote. It distributed a further copy about 5 weeks later.

[54] The requirement in s 181(2) that the request for employee approval be made at least 21 days after the last notice of employee representation rights is given is in my view a reference to the common circumstance that the notice may be given to each of the employees over a period of some days as they attend work. The 21 day period commences when the necessary reasonable efforts are made with respect to the last employee to be notified. The subsequent notice was not required to be given - especially given the terms of s 173(4). It would be artificial to interpret the additional notification as having the effect of restarting the waiting period before a ballot can be conducted. Such an interpretation flies in the face of reason.

[55] In any event this matter is not a matter which bears upon this application. The substance of the complaint may be considered further when and if an agreement is submitted for approval. Suffice to say the argument of the NUW concerning s 181 does not in my view advance its case in the application before me.

[56] For the reasons above, the application by the NUW is not valid.

[57] In any event the NUW has not made out a case that the company has not met or is not meeting any good faith bargaining requirement.

[58] I indicated on 28 August that I would not issue orders sought by the NUW. The application is dismissed.

Mr J Donnelly, of counsel, for CHEP Australia Limited

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