Construction, Forestry, Mining and Energy Union v Shinagawa Refractories Australasia Pty Ltd

[2011] FWA 8304

[2011] FWA 8304

FAIR WORK AUSTRALIA

DECISION

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

Construction, Forestry, Mining and Energy Union
v
Shinagawa Refractories Australasia Pty Ltd
(B2011/3462)

COMMISSIONER MACDONALD SYDNEY, 16 DECEMBER 2011

Application for bargaining orders.

[1] This matter arises out of an application for bargaining orders lodged with Fair Work Australia on 22 November 2011, by the Construction, Forestry, Mining and Energy Union, NSW Branch (the Applicant). The bargaining orders application arises out of: enterprise agreement negotiations with Shinagawa Refractories Australia Pty Ltd (the Respondent).

[2] The application for bargaining orders sought to prevent a ballot for the approval of an enterprise agreement, from proceeding. The ballot had been called by the Respondent and set down for Wednesday, 23 November 2011, between 1.30 pm and 3.30 pm.

[3] The application for bargaining orders was heard in Sydney, on 23 November at 10.00 am. The Applicant was represented by Ms R Raju, Industrial Officer and Mr J Prentice, Union member/employee. The Respondent was represented by Mr J Kelleher of Australian Industry Group and Ms E Highland from the Company.

[4] The Applicant was seeking bargaining orders as follows:

“1. That the secret ballot in respect to the proposed agreement which does not reflect the bargaining negotiations over the past several months which is expected to occur on Wednesday 23 November 2011, to be delayed until after the redundancies.

2. That the company bargain in good faith, and ensure that it takes the following actions:

(a) Disclose relevant information to the other bargaining representatives in a timely manner;

(b) Give genuine consideration to the proposals of the CFMEU, and give reasons for their responses to the proposals;

(c) Refrain from capricious or unfair conduct that undermines freedom of association or collective bargaining and

(d) Recognise and bargain with the CFMEU for the agreement.”

THE APPLICANT’S CASE

[5] The application set out the grounds upon which the bargaining orders were sought as follows:

“1. The CFMEU and Shinagawa Refractories Australia Pty Ltd (the company) have been negotiating an enterprise agreement since March 2011.

2. In July 2011, an order was made by Fair Work Australia for a Protected Action Ballot to be held. Protected industrial action by the employees had taken place since.

3. The company recently advised that a majority of the employees will shortly be retrenched. We understand that the employees to be retrenched will be advised of this in late November 2011, and will not be required to work out their notice.

4. On 15 November 2011, the company issued the employees with a proposed enterprise agreement. This agreement does not reflect the bargaining negotiations over the past several months, and in particular, does not include previously agreed clauses.

5. The proposed agreement is vague and does not explain key concepts contained in the agreement, furthermore, the agreement has not been explained to the employees.

6. On 15 November 2011, the company advised the employees that it intends to conduct a secret ballot in respect of the proposed agreement on 23 November 2011.

7. The majority of employees who will participate in the ballot on 23 November 2011 will be retrenched shortly afterwards.

8. The CFMEU believes that the company is not complying with the good faith bargaining requirements of s.228 of the Fair Work Act 2009.”

[6] The Applicant expanded upon the grounds set out in the application in oral submissions. Ms Raju also advised that the Respondent had issued to employees a document setting out two comparative tables for the employees’ consideration. One of the comparative tables was misleading as it stated that the employees would gain the benefit of about $4000, by accepting the proposed enterprise agreement. However, this was not so, as the alleged benefit was payment for Notice in Lieu and this was a mandatory entitlement for the employees.

THE RESPONDENT’S CASE

[7] Mr Kelleher, for the Respondent, opposed the application for bargaining orders to halt today’s ballot.

[8] Mr Kelleher agreed with much of the chronology of events set out by the Applicant surrounding the enterprise bargaining negotiations between the parties. His client brought the negotiations to an end by calling for a ballot on its proposed enterprise agreement, because of changed circumstances. These changed circumstances were economic and competition in nature. As to the former, its business was affected by the decision of BlueScope Steel to close part of its Illawarra business operation. As to the latter, the business was being affected by sustained import competition. The consequence was the company’s announcement to restructure its business with a large number of redundancies. The company needed workplace arrangements, via its proposed enterprise agreement, for future viability.

[9] The Respondent, he said, had not engaged in any improper or misleading conduct during the enterprise agreement negotiations. The Applicant had the opportunity to approach Fair Work Australia (FWA) with the appropriate application on, or so soon thereafter, 15 November, when the Respondent advised of its intention to hold a secret ballot of the company’s proposed enterprise agreement. The Applicant did not do so. The applicant had the opportunity to seek a formal hearing, and present evidence in support of its opposition to the ballot, but did not do so. Instead, the Applicant seeks to achieve that goal through a conference before FWA. The two comparative tables are not the result of misleading conduct. His client had inadvertently left out of the first table, the reference to payment for Notice in Lieu.

[10] Mr Kelleher took FWA through the relevant sections of the Fair Work Act: Sections 229, 228, 255 and 230 and case law, to submit that the Applicant had not made out its case for the granting of bargaining orders to prevent the ballot from proceeding.

[11] Mr Kelleher submitted that the Applicant had not made out its case that the Respondent had breached the Good Faith Bargaining requirements of the Fair Work Act. The issues, he said, being raised by the Applicant were issues for consideration by FWA when the enterprise agreement comes up for approval by FWA - if the agreement is voted up today by the employees. That is, Mr Kelleher characterised the applicant’s issues as going to the enterprise agreement approval process and not Good Faith Bargaining requirements.

[12] Mr Kelleher also addressed the Grounds set out in the application.

[13] Ms Highland, of the Company, gave submissions in support of Mr Kelleher.

APPLICANT IN REPLY

[14] Ms Raju in reply for the Applicant reiterated that the failure to list the Notice in Lieu entitlement in the first comparative table of monetary entitlements and to then insert it in the second comparative table of entitlements, was misleading. The Applicant had not delayed in acting on the Company’s advice of 15 November. The Applicant gave written notice on 18 November of its opposition to the Company’s tactic of 15 November of announcing a ballot of its proposed enterprise agreement.

[15] Ms Raju said there were flaws in the proposed agreement (disadvantages to the employees who have not been retrenched) and clauses agreed to during the negotiations had not been included in the proposed enterprise agreement being put to the employees today. The 4% wage increase being offered by the Company was an inducement for the about to be retrenched employees to vote up the proposed agreement, because that 4%, would improve their payout entitlement. However, the remaining employees would be disadvantaged by the proposed agreement because it excluded conditions of employment, currently enjoyed by all employees - such as the picnic day.

[16] Mr John Prentice, Union delegate, gave submissions in support of the submissions of Ms Raju.

THE RELEVENT STATUTORY PROVISIONS

[17] In considering the competing submissions, FWA needs to have regard to the statutory provisions governing Good Faith Bargaining.

[18] Section 228 of the Fair Work Act sets out the Good Faith Bargaining requirements:

“228 Bargaining representatives must meet the good faith bargaining requirements.

(1) The following are the good faith bargaining requirements that a bargaining representative for a proposed enterprise agreement must meet:

(a) attending, and participating in, meetings at reasonable times;

(b) disclosing relevant information (other than confidential or commercially sensitive information) in a timely manner;

(c) responding to proposals made by other bargaining representatives for the agreement in a timely manner;

(d) giving genuine consideration to the proposals of other bargaining representatives for the agreement, and giving reasons for the bargaining representative’s responses to those proposals;

(e) refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining;

(f) recognising and bargaining with the other bargaining representatives for the agreement.

(2) The good faith bargaining requirements do not require:

(a) a bargaining representative to make concessions during bargaining for the agreement; or

(b) a bargaining representative to reach agreement on the terms that are to be included in the agreement.”

[19] Section 229 of the Act relevantly provides:

“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 FWA for an order (a bargaining order) under section 230 in relation to the agreement.

(2) …

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.

(5) … ”

[20] I am satisfied that the relevant requirements of s.229 have been met, pursuant to the Applicant’s letter of 16 November 2011 to the Respondent, which replied by letter of 17 November. The Respondent’s letter did not raise as an issue that it did not understand the concerns raised in the Applicant’s letter (see s.229(4)(b)).

[21] Section 230 of the Act sets out the requirements for the making of a bargaining order.

“230 When FWA may make a bargaining order

Bargaining orders

(1) FWA 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) FWA is satisfied that it is reasonable in all the circumstances to make the order.

Agreement to bargain or certain instruments in operation

(2) FWA 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) FWA 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 the requirements of sub-sections 230(1)(a) and (b) and 230(3)(b) have been met.

CONSIDERATION

[23] Having considered the submissions of the parties as to the application for bargaining orders by the Applicant, I decline to grant the application so sought.

[24] I decline to do so, as the Applicant has not established that the Respondent has engaged in conduct that offends the elements contained in s.228 of the Fair Work Act. In particular, the Applicant has not established that the Respondent breached s.228(1)(e): that the Respondent had engaged in capricious or unfair conduct.

[25] The Good Faith Bargaining requirements of the Fair Work Act, do not impose an obligation on a party to take a particular approach to negotiations or prescribe the use of tactics. There is no prescription against say, the withdrawal by one party of previously agreed terms, clauses or conditions - as was alleged by the Applicant against the Respondent, who denied the allegation.

[26] The Good Faith Bargaining requirements do not say that the parties should adopt a particular ethical approach to negotiations.

[27] The ballot process that was to take place in a few hours (as at the time of the conference before FWA) will determine whether the Respondent’s proposed enterprise agreement will be accepted or rejected by the employees.

[28] If the proposed enterprise agreement is approved, then the applicant is free to raise its objection(s) to the enterprise agreement approval process.

[29] The application is dismissed.

COMMISSIONER

Appearances:

Ms Raju, Industrial Officer for the Applicant, with Mr Prentice

Mr Kelleher, of Australian Industry Group for the Respondent, with Ms Highland

Hearing details:

2011
Sydney
November 23

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