Australian Workers' Union, The v Forestry Corporation of NSW

[2020] FWC 3237

[2020] FWC 3237

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.229 - Application for a bargaining order

Australian Workers' Union, The
v
Forestry Corporation of NSW
(B2020/291)

DEPUTY PRESIDENT CROSS SYDNEY, 19 JUNE 2020

Forestry Corporation of NSW.

[1] On 28 May 2020 the Australian Workers Union (the “AWU”) applied to the Commission for a bargaining order under section 229 of the Fair Work Act 2009 (the “Act”) concerning bargaining for a new enterprise agreement (the “Agreement”) at the Forestry Corporation of NSW (“FC NSW”). The Community and Public Sector Union (State Public Service Federation) (the “CPSU”) were also a bargaining representative for the Agreement.

[2] The AWU’s application sought an order that “FC NSW put the proposed agreement to a vote within seven (7) days”. The grounds relied upon by the AWU in their application were as follows:

“1. The AWU and NSW FC have been bargaining an agreement since October 2019. The Community and Public Sector Union (State Public Service Federation NSW Branch) has also been a party in the bargaining process.

2. The AWU’s position in the log of claims for the agreement to be a three year agreement with a 2.5% increase each year. No significant changes to conditions were proposed.

3. This position was agreed between the parties. Some changes in the wording of the agreement were made. The rationale being to make the agreement more concise. However, the were no changes to conditions.

4. Under the NSW government policy, State Owned Corporations are required to obtain approval for the NSW government Wages Policy Taskforce (WPT). This is a committee of representatives from NSW Industrial Relations and NSW Treasury. They are required to approve any agreements and the bargaining parameters. WPT has this function due to the fact that the NSW Government, who is the shareholder, has a wages policy. However, the NSW government wages policy and processes around it are not recognised under the Fair Work Act. It is merely a process internal to the NSW Government.

5. NSW FC received approval form the wages policy for a 2.5% salary increase for three years on 28 November 2019. They then communicated this to the AWU that they had approval for a three year agreement for a 2.5% increase per year.

6. There were some outstanding issues regarding specific wording and such matters. These matters did not have an impact on conditions. A number of these issues related to changes that the WPT wanted to the Agreement. There was a delay in the bargaining due to the bushfires. However, the agreement was finalised between the parties on 10 March 2020. The agreement was to be put to a vote.

7. On 20 May 2020 NSWFC informed the AWU that the WPT will not allow the staff vote regarding the agreement to occur. This is despite the fact that the parties agreed. The NSW Forestry Corporation now has said that it cannot put the agreement to a vote. It has therefore reneged on the agreement.

8. It was the AWU’s understanding that the WPT had approved from agreement.

9. The AWU submits that the actions of the NSW FC are capricious and unfair conduct that undermines freedom of association and collective bargaining. This principal applies irrespective of whether the actions of the management or the shareholders.

10. The AWU is merely seeking that FCNSW adhere to its commitment to the parties and put the matter to a vote.”

[3] I listed the AWU’s application for hearing, and by consent that listing was varied to the afternoon of 15 June 2020. At that time, the Union indicated that it sought the order outlined in their application. FC NSW opposed the order and, through its legal representative, made submissions in opposition to the granting of the order. No objection was taken to FC NSW being legally represented, and I granted FC NSW permission to be so represented.

Facts

[4] On 11 June 2020, FC NSW filed a statement of Ms Helen Levers, the People Business Partner at FC NSW, dated 11 June 2020. On the 15 June 2020, the AWU filed an undated statement of Mr Paul Noack, the Assistant Secretary of the NSW Branch of the AWU. Although no Statement of Agreed Facts is before me, as the proceeding transpired it became evident that the factual narrative is not contested in any material way.

[5] There relevant facts are as follows:

(a) FC NSW, is a State-Owned Corporation (“SOC”). It is regulated by the State Owned Corporations Act 1989 (NSW) (SOC Act). It is governed by a Board of Directors. Under the Forestry Act2012 (NSW), the Board of Directors is appointed by the voting shareholders. FC NSW has two voting shareholders; the NSW Treasurer and the NSW Minister for Finance and Small Business. Board accountability to its shareholders is set out in the FC NSW Constitution and the SOC Act.

(b) Under the SOC Act, FC NSW's accountability obligations include that it must publish a Statement of Corporate Intent (the “Statement”) in relation to its business affairs every 2 years. Since 2012, the FC NSW's Statements have specified, as an accounting and financial governance policy, compliance with the NSW Premier's Memorandum M2012-04 Application of NSW Public Sector Wages Policy 2011 to State Owned Corporations (the “NSW Wages Policy”).

(c) The AWU, the CEPU and FC NSW have been formally bargaining since November 2019. Bargaining paused during the bush fire season and resumed in March 2020.

(d) On 20 November 2019, the NSW Wages Policy Taskforce (the “WPT”) met and approved bargaining parameters for the new enterprise agreement subject to final approval. Those parameters included the following:

“[F]or employees with a total remuneration of up to $312,267 (Level 8) to include increases to total remuneration (inclusive of superannuation) of up to:

•  2.5 per cent from 1 July 2020,

•  2.5 per cent from 1 July 2021, and

•  2.5 per cent from 1 July 2022.”

(e) While the AWU did not consider itself to be bound to the NSW Wages Policy, the AWU took the approach in negotiations that it would not seek more than 2.5% salary increase per annum which was consistent with the NSW Wages Policy. If at any point in time the NSW government sought to change the NSW Wages Policy to reduce the wage cap further, the AWU reserved the right to pursue a higher salary increase at any bargaining round.

(f) In March 2020, the parties had come to an agreement in principal, and FC NSW informed the AWU that the Agreement was consistent with the NSW Wages Policy. FC NSW indicated to the AWU that they would send the Agreement to WPT again. The changes subsequently proposed by the WPT related to wording, not wages.

(g) On 27 April 2020, an amended Agreement which incorporated the changes proposed by the Senior Management Team of FC NSW was sent to the AWU and the CPSU for further review. The AWU And CEPU requested additional changes to the Agreement on 28 and 29 April 2020.

(h) The Senior Management Team of FC NSW approved the revised Agreement on 11 May 2020, subject to final amendments to the long service leave provisions. At 2:00 pm on 12 May 2020, Ms Levers met with representatives from the AWU and the CPSU to discuss the next steps in the bargaining and voting process. The Agreement was again sent to the WPT for review

(i) On 13 May 2020, Ms Levers emailed a copy of the revised Agreement to Mr Andrew White, Department of Premier and Cabinet, for final approval.

(j) On 15 May 2020, Mr Noake received an e-mail from Ms Levers stating that FC NSW were about to inform all of their employees that they were about to put the Agreement to a vote. FC NSW had intended to finalise the Agreement sooner, however the COVID-19 pandemic and the Australian government's response to it caused significant delay and disruption to FC NSW's workforce and operations.

(k) On 18 May 2020, Ms Levers was advised by Mr White from the Department of Premier and Cabinet that:

•  A decision is yet to be made by NSW Government on NSW Wages Policy.

•  Until this occurs, as it is possible that change in Wages Policy may occur, and that a vote on the proposed Agreement could not take place.

•  Public Sector Industrial Relations was not aware of the timing of any decision by the NSW Government on Wages Policy.

(l) On 20 May 2020, FC NSW met with their AWU and CEPU delegates to advise that the vote on the Agreement could not proceed as scheduled as the NSW Wages Policy needed to be reviewed. That position was confirmed in an email to the AWU and CEPU.

(m) Later on 20 May 2020, Mr Noack e-mailed Mr Heuston, the Acting Executive Director- Employee Relations NSW Department of Premier and Cabinet and the chair of the WPT. In that email Mr Noack asked Mr Heuston:

“Can you please inform me:

1. When did you contact FCNSW regarding this matter?

2. What was the reason for this decision?

3. Under whose authority where you acting under.”

Mr Heuston responded by return email to Mr Noack stating “Employee Relations does not have any decision making role within the Corporation”

(n) By email on 25 May 2020, Mr Noack advised FC NSW as follows:

“We refer to the decision of Forestry Corporation NSW (FCNSW) not to put the proposed enterprise agreement to a vote.

This is despite the fact that the parties had an agreement to do so. Furthermore FCNSW had clearance from the NSW Wages Policy Taskforce to do so.

The AWU submits that the actions of Forestry Corporation NSW are capricious and unfair conduct that undermines freedom of association and collective bargaining. This principal applies irrespective of whether the actions of the management or the shareholders. The NSW government being the shareholders of FCNSW.

We seek that you reverse your position and agree to put the agreement to a vote. We seek this commitment (including a timeframe) within twenty four hours.

Otherwise we will be forced to seek orders from the Fair Work Commission.”

p) On 27 May 2020, the NSW Premier announced that NSW Public Service pay raises would not be implemented for a period of 12 months (the “Wages Freeze”). The NSW Legislative Council subsequently disallowed the Wages Freeze. The NSW Wages Policy and the Wages Freeze are still being considered in the Industrial Relations Commission of New South Wales in respect of the NSW Government Sector workforce.

q) On 29 May 2020, Ms Levers provided employees with a further update regarding the voting process by email.

Submissions of the AWU

[6] The AWU submit that the actions of FC NSW, in withdrawing from the voting process after reaching the Agreement and advising employees that a vote would occur, were capricious.

[7] It submited that the parties came to an agreement, which is consistent with the existing NSW Wages Policy. The NSW Wages Policy is given no recognition under the Act.

[8] The emails from Ms Levers of 15 and 18 May 2020, stated that the Agreement was to be put to a vote. It contained a bulletin to employees informing them of this. Neither e-mail mentioned any caveat relating to the WPT. Both e-mails were sent after the e-mail of 12 May 2020, which mentioned the WPT.

[9] The AWU stated that FC NSW’s submissions seem to treat the NSW Government as a third party. In fact it is a shareholder of FC NSW. Therefore, it is part of the corporate entity itself. The fact that the shareholder changed its position is no defence. The actions challenged are the actions of the Respondent changing its position and doing so in a capricious manner.

[10] In the hearing of the matter, the AWU submitted that FC NSW could not separate the actions of their shareholders, being the two State Ministers, from themselves. The AWU submitted that “They are one corporate entity” and if the NSW Government wanted to change its wages policy they had ample opportunity to do so before 18 May 2020, which was well after the devastating bushfires and the COVID 19 emergency.

[11] As to the gateway provision of s.229(4) of the Act, the AWU submitted that Mr Noack’s email of 25 May 2020, constituted written notice, and noted that FC NSW “called Mr Noack to inform him that they could not change”.

Submissions of FC NSW

[12] FC NSW noted that The SOC Act requires SOCs to prepare the Statement each financial year 1. As part of that Statement, the Respondent is required to specify “the accounting policies to be applied in the financial reports of the corporation and of its subsidiaries” 2. FC NSW, as part of its Statement agrees to comply with the requirements of certain Premier’s Memoranda, including the NSW Wages Policy.

[13] The NSW Wages Policy applies to the government sector as defined in the Government Sector Employment Act 2013 (NSW), and to government owned entities that adopt it, such as FC NSW by way of its Statement.

[14] It was reasonable and responsible for FC NSW to pause the planned voting process as soon as it did, knowing that the Agreement could not be approved in accordance with the altered NSW Wages Policy and therefore could not be funded in its current form. Section 228 of the FW Act is concerned with the process of bargaining for an enterprise agreement, not the mechanics of the conduct of a balloting process. 3

[15] While the proposed Wages Freeze was not expected, and FC NSW was just as surprised as the other bargaining parties when it was announced by the NSW Government, it has always been known by the bargaining parties that final approval on the Agreement must comply with NSW Government Wages Policy.

[16] In the absence of the AWU establishing that FC NSW has failed to engage in good faith bargaining, the Commission is not able to make the requested orders. Further, the AWU has not complied with s.229(4) of the FW Act. In particular the email of 25 May 2020 from Mr Noack gave the Respondent only 24 hours to provide a response.

[17] FC NSW submitted that the NSW Wages Policy and the Wages Freeze are still being considered in the Industrial Relations Commission of New South Wales in respect of the NSW Government Sector workforce. The resolution of those proceedings may assist the parties in these proceedings to finalise bargaining and the voting process. As such it is not appropriate in all the circumstances for the Commission to exercise its discretion in respect of the application for relief sought.

Consideration

[18] Section 229 provides as follows:

229 Applications for bargaining orders

Persons who may apply for a bargaining order

(1) A bargaining representative for a proposed enterprise agreement may apply to the FWC for an order (a bargaining order) under section 230 in relation to the agreement.

Multi-enterprise agreements

(2) An application for a bargaining order must not be made in relation to a proposed multi-enterprise agreement unless a low-paid authorisation is in operation in relation to the agreement.

Timing of applications

(3) The application may only be made at whichever of the following times applies:

(a) if one or more enterprise agreements apply to an employee, or employees, who will be covered by the proposed enterprise agreement:

(i) not more than 90 days before the nominal expiry date of the enterprise agreement, or the latest nominal expiry date of those enterprise agreements (as the case may be); or

(ii) after an employer that will be covered by the proposed enterprise agreement has requested under subsection 181(1) that employees approve the agreement, but before the agreement is so approved;

(b) otherwise—at any time.

Note: An employer cannot request employees to approve the agreement under subsection 181(1) until 21 days after the last notice of employee representational rights is given.

Prerequisites for making an application

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

(a) has concerns that:

(i) one or more of the bargaining representatives for the agreement have not met, or are not meeting, the good faith bargaining requirements; or

(ii) the bargaining process is not proceeding efficiently or fairly because there are multiple bargaining representatives for the agreement; and

(b) has given a written notice setting out those concerns to the relevant bargaining representatives; and

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

(d) considers that the relevant bargaining representatives have not responded appropriately to those concerns.

Non-compliance with notice requirements may be permitted

(5) The FWC may consider the application even if it does not comply with paragraph (4)(b) or (c) if the FWC is satisfied that it is appropriate in all the circumstances to do so.

[19] The power to make orders under s.229 is a discretionary power, but a discretion guided by statute. In particular the prerequisites in subsections (2) and (3), and by each of subsections (a), (b) and (c) of section 230(1), being made out.

[20] I am satisfied that the AWU has met the formal requirements of section 229, and as such consider that I have an application lawfully before me. It is a bargaining representative (ss (1)), it is not a proposed multi-enterprise agreement (ss (2)), the application has been made not more than 90 days before the nominal expiry date of the existing agreement on 30 June 2020 (ss (3)), and the Union considers that the employer has not appropriately responded to its concerns (ss(4)). While I note that a 24 hour timeline for response to the AWU’s concerns was a very short period of time, due to the very limited scope of the issue between the parties I do not consider that time limit to have been unreasonable.

[21] Section 230 provides as follows:

230 When the FWC may make a bargaining order

Bargaining orders

(1) The FWC may make a bargaining order under this section in relation to a proposed enterprise agreement if:

(a) an application for the order has been made; and

(b) the requirements of this section are met in relation to the agreement; and

(c) the FWC is satisfied that it is reasonable in all the circumstances to make the order.

Agreement to bargain or certain instruments in operation

(2) The FWC must be satisfied in all cases that one of the following applies:

(a) the employer or employers have agreed to bargain, or have initiated bargaining, for the agreement;

(b) a majority support determination in relation to the agreement is in operation;

(c) a scope order in relation to the agreement is in operation;

(d) all of the employers are specified in a low-paid authorisation that is in operation in relation to the agreement.

Good faith bargaining requirements not met

(3) The FWC must in all cases be satisfied:

(a) that:

(i) one or more of the relevant bargaining representatives for the agreement have not met, or are not meeting, the good faith bargaining requirements; or

(ii) the bargaining process is not proceeding efficiently or fairly because there are multiple bargaining representatives for the agreement; and

(b) that the applicant has complied with the requirements of subsection 229(4) (which deals with notifying relevant bargaining representatives of concerns), unless subsection 229(5) permitted the applicant to make the application without complying with those requirements.

Bargaining order must be in accordance with section 231

(4) The bargaining order must be in accordance with section 231 (which deals with what a bargaining order must specify).

[22] I am satisfied that section 230(2) is made out. The employer has agreed to bargain or initiated bargaining (ss (2)(a)). However, for the reasons that follow, I do not consider that the AWU has made out subsections (b) and (c) of section 230(1).

[23] Subsection (b) of section 230(1) is not made out because I am not satisfied that either of the requirements in section 230(3)(a) are satisfied. In particular I am not satisfied that FC NSW is not meeting or has not met the good faith bargaining requirements of the FW Act or that bargaining is not proceeding efficiently or fairly because of the multiple bargaining representatives involved.

[24] Up until 18 May 2020, bargaining proceeded smoothly and successfully. Subject to WPT review the Agreement would proceed to a vote. The reason that the Agreement has not been, and FC NSW submits cannot be, put to a vote is the sudden proposed change in the NSW Wages Policy and the proposed Wages Freeze.

[25] The AWU submission is that the actions of the NSW FC are capricious. In Liquor, Hospitality and Miscellaneous Union v Foster’s Australia Ltd, 4 SDP Kaufmann observed that “The New Shorter Oxford English Dictionary defines ‘capricious’ as “guided by caprice; readily swayed by whim or fancy; inconstant” and ‘caprice’ as “an unaccountable change of mind or conduct…”.”

[26] The relevant decision of FC NSW has been to not put the Agreement to a vote. That decision was based on the advice from the Department of Premier and Cabinet on 18 May 2020, that a change in the NSW Wages Policy may occur, and that a vote on the proposed Agreement could not take place. The NSW Wages Policy applies to FC NSW by way of its Statement.

[27] The decision of FC NSW not to put the Agreement to a vote was not based on whim or fancy. It was based upon a sudden, unexpected proposed change in NSW Government policy that materially affects the ability to make the Agreement. That the proposed change to the NSW Wages Policy has not been implemented due to Legislative Council intervention is irrelevant. Proceedings regarding the NSW Wages Policy and the proposed Wages Freeze are still proceeding in the Industrial Relations Commission of New South Wales, and the result of those proceedings may materially affect the ability to make the Agreement.

[28] Further, there was no unaccountable change of mind on the part of FC NSW. It is abundantly clear that FC NSW were “blindsided” by the sudden proposed change in the NSW Wages Policy and the proposed Wages Freeze. I reject the AWU’s proposition that FC NSW and the NSW Government are one corporate entity. The simple fact that FC NSW had no prior knowledge of the proposed change in the NSW Wages Policy clearly indicates that FC NSW has a separate corporate mind to the NSW Government.

[29] For the above reasons, the AWU’s application for a bargaining order is dismissed. An order giving effect to this decision will be issued in conjunction with its publication.

DEPUTY PRESIDENT

Appearances:

J Shaw and P Noack, for the Australian Workers’ Union

D Gardner, for the Forestry Corporation of NSW

L Nelson, for the Community and Public Service Union

Printed by authority of the Commonwealth Government Printer

<PR720352>

 1   S.22 SOC Act.

 2   S.22(d) of the SOC Act

 3   Transport Workers' Union of Australia v Transit (NSW) Services Pty Ltd [2016] FWCFB 997 at [15].

 4   [2009] FWA 750.