Good faith bargaining decision provides guidance on employer obligations

A recent decision from the Fair Work Commission provides a cautionary tale for employers when bargaining and serves as a handy case study on the reach of the good faith bargaining obligations. 

The decision is also one of few decisions where an employer has been found to have breached the good faith bargaining obligations. 

Background

On 25 January 2021, Deputy President Saunders of the Fair Work Commission (Commission) issued a range of bargaining orders to Mt Arthur Coal (a BHP subsidiary), in relation to the negotiation of a new enterprise agreement to cover its supervisors at its Mt Arthur coal mine.

The path to agreement-making was fraught from the outset. The company was initially resistant to bargaining at all, agreeing to do so only after a majority support determination application was filed by APESMA.

After negotiations eventually commenced in September 2018, the bargaining process itself was afflicted by further delay. After a series of meetings and believing the parties to have reached an impasse, Mt Arthur refused to convene a further bargaining meeting between July and December 2019. In October 2019, no meeting having occurred, APESMA filed an application for the Commission to deal with a bargaining dispute.

The matter was conciliated in November 2019 and a further draft agreement subsequently circulated. At a meeting in December 2019, APESMA advised that if the draft reflected the ‘final offer’ then the agreement should be put out to vote. Mt Arthur declined to do so, advising they required feedback from the CFMMEU and the supervisors themselves indicating a ‘yes’ vote was likely before the process would commence.

APESMA proceeded to file an application in the Commission for bargaining orders, which was the subject of conciliation. An updated draft was issued by the company in May 2020, which included new and substantively different clauses for both stand down and shut down, along with changes that limited employees’ rights to be represented in workplace disputes. APESMA asserted the changes were not only unnecessary but amounted to capricious and unfair conduct.

Also in this period (in June 2020) the General Manager of the mine held meetings with the supervisors without APESMA representatives. During these discussions, he made certain representations about making provision for accident pay and redundancy pay in employment contracts. These items were included on the list of employee claims but had not been agreed during the negotiations.

By September, the matter remained unresolved, despite having been the subject of further conciliation by the Commission (which had made certain recommendations regarding the content of the proposed enterprise agreement).  As such, the matter proceeded to hearing in December 2020.

Outcome

APESMA asserted that Mt Arthur contravened the good faith bargaining obligations by:

• Failing to attend and participate in meetings at reasonable times;
• Engaging in capricious or unfair conduct that undermines freedom of association or collective bargaining; and
•  Failing to recognise and bargain with the bargaining representatives.

Deputy President Saunders ultimately found that Mt Arthur had indeed contravened its obligations, though not to the extent alleged by APESMA. In particular:

• Mt Arthur “unreasonably refused” further bargaining meetings with APESMA between July-December 2019, even after being notified there were new positions on outstanding matters to be discussed.
• It was ‘unfair and capricious’ of Mt Arthur to advise it would not put the agreement to vote unless it was assured that it had the support and agreement of all bargaining representatives, given that its Employee Relations Manager already knew the CFMMEU would not support the proposal.
• Mt Arthur was aware from a ballot conducted by the Commission in April 2020 that there was strong support for the EA amongst the supervisors.

The draft circulated in May 2020 contained new and different clauses, some of which it knew would not be accepted, which prevented or at least delayed the making of the agreement.

The Commission made a number of orders, including by directing Mr Arthur to:

• Provide written reasons why it did not intend to put the latest version of the agreement to a vote;
• Advise whether there is an agreement it is prepared to consider making;
• Meet with APESMA and the other bargaining representatives, facilitated by the Commission;
• Cease:
  • (a) delaying the EA making process;
  • (b) bargaining in a capricious or unfair manner;
  • (c) raising new issues or barriers to the making of an EA with the purpose of frustrating or delaying the making of an agreement; and
• In response to the meeting held with the General Manager in June 2020, to refrain from altering standard terms contained in contracts of employment outside of the enterprise bargaining process where those terms have been the subject of bargaining.

Takeaways

Being forced to the table may not be a desired outcome for employers, but once bargaining has commenced, care should be taken to ensure that the business complies with its good faith bargaining requirements during the rough and tumble of the process.

If this article has raised any concerns or questions about bargaining for your business, get in touch with our workplace and employment team.