Adam Broome v GWA Group Limited T/A GWA Bathrooms & Kitchens

[2014] FWC 4307

[2014] FWC 4307

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.238—Scope order

Michael Voet; Adam Broome
v
GWA Group Limited T/A GWA Bathrooms & Kitchens
(B2014/883)

SENIOR DEPUTY PRESIDENT O’CALLAGHAN ADELAIDE, 1 JULY 2014

Application for a scope order - jurisdiction - time for recognition of bargaining representatives.

[1] On 18 June 2014 Mr Voet and Mr Broome (the applicants) lodged an application pursuant to s.238 of the Fair Work Act 2009 (the FW Act). In that application, the applicants advised they are employees of the GWA Group Ltd (GWA) and that they are bargaining representatives relative to a proposed agreement: namely the GWA Bathroom and Kitchens South Australia Enterprise Agreement 2014. They sought a Scope Order so as to include them in this proposed agreement.

[2] The application was the subject of an initial hearing on 24 June 2014. The applicants were represented by Mr Wilson, of counsel, pursuant to a grant of permission made under s.596(2)(a) of the FW Act. GWA was represented by Mr Abrams, as agent, again pursuant to a grant of permission under s.596(2)(a).

[3] There is no dispute that the applicants are supervisors engaged by GWA. GWA is in the process of negotiating an agreement with its employees in its Bathrooms and Kitchens Division who perform work in the manufacturing, supply and distribution operations in South Australia, but excluding employees engaged in a managerial, supervisory or professional capacity. I am advised that those employees are represented by the Australian Workers Union (AWU).

[4] At the commencement of the proceedings on 24 June 2014 GWA argued that the Fair Work Commission (FWC) did not have the jurisdiction to consider the application as the applicants were not persons who could seek such a Scope Order.

[5] Section 238 states:

“238 Scope orders

Bargaining representatives may apply for scope orders

(1) A bargaining representative for a proposed single-enterprise agreement may apply to the FWC for an order (a scope order) under this section if:

(a) the bargaining representative has concerns that bargaining for the agreement is not proceeding efficiently or fairly; and

(b) the reason for this is that the bargaining representative considers that the agreement will not cover appropriate employees, or will cover employees that it is not appropriate for the agreement to cover.

No scope order if a single interest employer authorisation is in operation

(2) Despite subsection (1), the bargaining representative must not apply for the scope order if a single interest employer authorisation is in operation in relation to the agreement.

Bargaining representative to give notice of concerns

(3) The bargaining representative may only apply for the scope order if the bargaining representative:

(a) has taken all reasonable steps to give a written notice setting out the concerns referred to in subsection (1) to the relevant bargaining representatives for the agreement; and

(b) has given the relevant bargaining representatives a reasonable time within which to respond to those concerns; and

(c) considers that the relevant bargaining representatives have not responded appropriately.

When the FWC may make scope order

(4) The FWC may make the scope order if the FWC is satisfied:

(a) that the bargaining representative who made the application has met, or is meeting, the good faith bargaining requirements; and

(b) that making the order will promote the fair and efficient conduct of bargaining; and

(c) that the group of employees who will be covered by the agreement proposed to be specified in the scope order was fairly chosen; and

(d) it is reasonable in all the circumstances to make the order.

Matters which the FWC must take into account

(4A) If the agreement proposed to be specified in the scope order will not cover all of the employees of the employer or employers covered by the agreement, the FWC must, in deciding for the purposes of paragraph (4)(c) whether the group of employees who will be covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.

Scope order must specify employer and employees to be covered

(5) The scope order must specify, in relation to a proposed single-enterprise agreement:

(a) the employer, or employers, that will be covered by the agreement; and

(b) the employees who will be covered by the agreement.

Scope order must be in accordance with this section etc.

(6) The scope order:

(a) must be in accordance with this section; and

(b) may relate to more than one proposed single-enterprise agreement.

Orders etc. that the FWC may make

(7) If the FWC makes the scope order, the FWC may also:

(a) amend any existing bargaining orders; and

(b) make or vary such other orders (such as protected action ballot orders), determinations or other instruments made by the FWC, or take such other actions, as the FWC considers appropriate.”

[6] GWA asserted that s.176 establishes the persons who are bargaining representatives for a proposed enterprise agreement that is not a Greenfields agreement in the following terms:

“176 Bargaining representatives for proposed enterprise agreements that are not greenfields agreements

Bargaining representatives

(1) The following paragraphs set out the persons who are bargaining representatives for a proposed enterprise agreement that is not a greenfields agreement:

....

(c) a person is a bargaining representative of an employee who will be covered by the agreement if the employee appoints, in writing, the person as his or her bargaining representative for the agreement;

(d) a person is a bargaining representative of an employer that will be covered by the agreement if the employer appoints, in writing, the person as his or her bargaining representative for the agreement.”

[7] GWA asserts that the applicants were not included in the notice of employee representational rights advice it issued to employees which initiated the bargaining process and, as such, the applicants could not regard themselves as bargaining representatives of any employee who will be covered by the agreement. Accordingly, GWA assert that s.238 can only be initiated by a bargaining representative or employee who will be covered by the agreement.

[8] The applicants asserted that the FW Act should not be read in this manner and that, as the applicants contend that they are employees who should be covered by the proposed agreement, they have the capacity to pursue an application of this nature.

[9] Before considering this initial issue, I note that a further factor was identified at the hearing on 24 June 2014. GWA provided a copy of the notice of employee representational rights which it issued to employees on 28 March 2014. 1 This notice relevantly stated:

“GWA Group Ltd trading as GWA Bathrooms and Kitchens (“GWA”) gives notice that it is bargaining in relation to an enterprise agreement, to be known as the GWA Bathrooms & Kitchens South Australian Enterprise Agreement 2014, which is proposed to cover:

• all employees of GWA Group Ltd in its Bathrooms and Kitchens Division performing work in the manufacturing, supply and distribution operations in South Australia excluding employees engaged in a managerial, supervisory or professional capacity.”

[10] The applicants provided a copy 2 of an earlier notice of employee representational rights which, they asserted had been generally issued on 19 February 2014. This notice relevantly stated:

“GWA Group Ltd trading as GWA Bathrooms and Kitchens (“GWA”) gives notice that it is bargaining in relation to an enterprise agreement, to be known as the GWA Bathrooms & Kitchens South Australian Enterprise Agreement 2014, which is proposed to cover all employees of GWA performing work as described in the classifications at Schedule 1 of the proposed Agreement (see Attachment 1 to this notice) and employed in the Company’s manufacturing, supply and distribution operations in South Australia.”

[11] In submissions provided after the hearing of this matter the applicants confirmed that the earlier notice of employee representational rights had been provided to them. In its subsequent written submissions GWA conceded that the earlier notice of representational rights 3 may have been issued to employees without the referenced Schedule. Accordingly, GWA contended that this notice was not in the prescribed form in that it failed to identify the employees to be covered by the proposed agreement and hence the revised, 28 March 2014 notice was then issued.

Findings

[12] In general terms the 19 February 2014 notice of employee representational rights meets the requisite requirements consistent with s.174(1A) which states:

“174 Content and form of notice of employee representational rights

....

Notice requirements

(1A) The notice must:

(a) contain the content prescribed by the regulations; and

(b) not contain any other content; and

(c) be in the form prescribed by the regulations.”

[13] To the extent that this notice did not identify the employees proposed to be covered, sufficient particularity may render the notice fundamentally deficient such that this deficiency was properly addressed by the 28 March 2014 notice. However, for the purposes of the jurisdictional objection argued by GWA, I think this issue is of no relevance.

[14] Properly read, the provisions of ss.176 and 178 establish that a person who is a bargaining representative or employee who will be covered by an agreement when they are appointed as such in writing. I do not consider that the reference in s.176(1)(c) to the proposed agreement can be taken as anything other than a general reference to an agreement which may be sought by either an employer or by employees. This is consistent with the reference to “a proposed enterprise agreement” in s.176(1). It is also consistent with the capacity for bargaining representatives to seek to initiate an agreement negotiation process through a Majority Support Determination under s.236 of the FW Act. This section relevantly states:

“236 Majority support determinations

(1) A bargaining representative of an employee who will be covered by a proposed single-enterprise agreement may apply to the FWC for a determination (a majority support determination) that a majority of the employees who will be covered by the agreement want to bargain with the employer, or employers, that will be covered by the agreement.”

[15] If the FW Act had intended that the only persons who could initiate a majority support determination were persons with whom the employer had already agreed would be covered by an agreement, then the provisions of this section would then be rendered ineffectual.

[16] Further support for this approach may be found in the Full Bench decision in MSS Security Pty Ltd v Liquor, Hospitality and Miscellaneous Union 4 in the following terms:

“8 The Fair Work Act (FW Act) uses the expression “proposed enterprise agreement”, “proposed single-enterprise agreement” and “proposed agreement” in a number of places. An agreement may be “proposed” by an employer or it may be “proposed” by a bargaining representative of employees or there may be different and competing agreements “proposed” by both. Where a person makes an application under the FW Act in their capacity as a bargaining representative for a “proposed enterprise agreement” or “proposed single enterprise agreement”, the bargaining representative is entitled to rely on the agreement it has proposed or it may choose to make the application in relation to an agreement proposed by another bargaining representative. In this case, it was the LHMU that first “proposed” an agreement and it was the agreement proposed by the LHMU that was the “proposed single enterprise agreement” for purposes of the LHMU's application for a protected action ballot order under s 437.”

[17] The Full Bench continued:

“12 It goes without saying that ordinarily, if not invariably, where an employer has refused to bargain it will not have issued a notice of representational rights under s 173 to any of its employees. This is because, in the absence of a majority support determination, a scope order or a low paid authorisation, the obligation to issue such a notice does not arise until after the employer “agrees to bargain, or initiates bargaining”.

13 Thus, s 236 proceeds on the premise that a union or other person can be “a bargaining representative of an employee who will be covered by a proposed single enterprise agreement” where the employer has “not yet agreed to bargain, or initiated bargaining, for the agreement”, that is, before a notice of representational rights has been issued by an employer of employees who would be covered by that proposed agreement. It follows that a union or other person can be a bargaining representative of an employee who will be covered by a “proposed single enterprise agreement” prior to the issue of a notice of representation rights to the employee pursuant to s 173 of the FW Act.

14 In Stuartholme School v Independent Education Union of Australia (Stuartholme) a Full Bench of Fair Work Australia held that the scope of a proposed agreement is a matter than can itself be the subject of bargaining for the agreement. We respectfully endorse the reasoning and conclusion of the Full Bench in that regard.

15 Once it is accepted that the scope of a proposed agreement can itself be a matter for bargaining it follows that the employer's obligation under s 173(1) to issue a notice of representation rights in relation to a “proposed enterprise agreement” is to issue such a notice to all employees who would be covered by the broader scope of the agreement proposed by the union or the employer as the case may be.

16 An employer is not obliged to agree to bargain or to commence bargaining for an enterprise agreement in response to a union or other employee bargaining representative proposing an enterprise agreement. An employer can refuse to bargain for an enterprise agreement or can make its agreement to commence bargaining subject to a condition precedent as to the scope of any agreement. If the union or other employee bargaining representative does not accept that condition precedent as to scope, the employer is entitled to refrain from bargaining or agreeing to bargain and the employee bargaining representative's remedy is to seek a majority support determination under s 236 of the FW Act. When such a determination is made the employer is obliged to bargain in good faith for an agreement in accordance with the good faith bargaining requirements of the FW Act: see s 228(1). Of course, s 228(2) makes it plain that the employer is not required to make concessions during bargaining for the agreement or to reach agreement on the terms that are to be included in the agreement.

17 However, once an employer has agreed to bargain in relation to a group of employees within the scope of an agreement as proposed by a union or other employee bargaining representative, the employer is obliged to

• issue a notice of representational rights to the employees within the scope of the agreement proposed by the union or other employee bargaining representative; and

• bargain in good faith in accordance with s 228.

18 As the Full Bench in Stuartholme noted, “[t]he terms of [s 237] unambiguously suggest that bargaining may have commenced under the Fair Work Act even though the parties to the bargaining process are in disagreement about the scope of the proposed agreement.” Where there is a continuing disagreement between the bargaining parties as to the scope of the proposed enterprise agreement, the remedy for the party who wants a narrower scope is to seek a scope order pursuant to s 238. In the absence of such an order, bargaining will proceed on the basis of the broader scope, save that the parties are entitled to continue bargaining over the scope itself until such time as the scope of the proposed agreement is settled through bargaining or by the making of a scope order.

(references removed)

[18] That approach is supported by the provisions of the Explanatory Memorandum which state:

“716. There is no restriction on when a person may appoint a bargaining representative. This means, for example, that during bargaining, an employee who is a member of an employee organisation may appoint his or her own bargaining representative with the effect that the automatic appointment of the employee organisation as that employee‘s bargaining representative will cease to apply.”

[19] Consequently, I do not consider that the applicants are excluded from the capacity to pursue a Scope Order simply because they are excluded from the definition of the employees proposed by GWA to be covered by the agreement. I note that, whilst it has not been argued to me, s.176(4) confirms that any employee may appoint himself or herself as his or her bargaining representative but, advice to this effect must be provided consistent with the requirement for a formal instrument of appointment. There is nothing before me which establishes the existence of such instrument with respect to the applicants.

[20] Accordingly, and absent any further jurisdictional argument, the application will be listed for further consideration.

SENIOR DEPUTY PRESIDENT

Appearances:

D Wilson counsel for the applicants.

P Abrams agent for the respondent.

Hearing details:

2014.

Adelaide:

June 24.

 1   Exhibit G1

 2   Exhibit V1

 3   Exhibit V1

 4 (2010) 197 IR 294

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