In brief

  • A Full Bench of the Fair Work Commission recently considered the meaning of the expression 'genuinely trying to reach agreement' and clarified that:
    • the question of whether a bargaining representative is genuinely trying to reach an agreement will depend on all of the relevant circumstances,
    • there is no single factor that will automatically lead to a finding that a union is not genuinely trying to reach an agreement, and
    • the fact that a union is pursuing claims for non-permitted content to be included in a new enterprise agreement does not automatically mean that the union is not genuinely trying to reach agreement.
  • This means that it is likely to become even more difficult for employers to challenge applications for protected action ballot orders (and possibly the taking of any protected industrial action) on the basis that the relevant employee bargaining representative is not genuinely trying to reach agreement.
  • Should employers wish to run these challenges in the future, preparation will be crucial. Depending on the status of the bargaining process, the challenge should, as a general rule, be developed well in advance of the nominal expiry date of the agreement. This is because protected action ballot order applications can be made 30 days prior to an agreement’s nominal expiry date and employers will generally have less than 2 days’ notice of a hearing.

Permitted matters and protected industrial action

A term of an enterprise agreement is only enforceable to the extent that it is about a permitted matter.1 Clauses in enterprise agreements that seek to regulate matters that go beyond the relationship between the employer and employees (such as terms imposing a general prohibition on the use of external labour) are often found to be non-permitted matters.

It is not uncommon for employers to challenge the ability for a union to lawfully organise protected industrial action where the union is pursuing claims for non-permitted content. This is because there has been a number of cases in the Fair Work Commission (Commission) that have ruled that a union is not genuinely trying to reach an agreement in circumstances where it is pursuing claims that clearly constitute non-permitted content.

The recent Full Bench decision in Esso Australia Pty Ltd v AMWU, CEPU and AWUhas provided further guidance to the way in which the Commission will seemingly now approach this issue.

Esso Australia Pty Ltd v AMWU, CEPU and AWU

At first instance in this matter,3 Commissioner Cribb found that the unions were genuinely trying to reach agreement. The Commission made this finding notwithstanding that the unions had:

  • only attended a small number of bargaining meetings,
  • refused to attend a number of other bargaining meetings (and the Commission had previously made good faith bargaining orders against the unions for this conduct), and
  • (perhaps most importantly) advanced claims that included a non-permitted matter.

Accordingly, a protected action ballot order was made by the Commission (which is the first stage towards employees being able to take protected industrial action).

Esso appealed this decision. In particular, Esso asserted that it was not open to the Commissioner to find that the unions were genuinely trying to reach agreement in circumstances where they:

  • were advancing claims that would have the effect of prohibiting the company from engaging external labour (the Security of Employment Clause), and
  • knew, or at least ought to have known, that the Security of Employment Clause contained non-permitted content.

This position was supported by a number of previous Full Bench authorities.

The Full Bench, constituted by by Ross J, Hatcher VP and Simpson C, undertook an extensive analysis of the previous authorities and confirmed that there is no single factor that will automatically lead to a finding that a union is not genuinely trying to reach an agreement. Instead, all relevant factors must be considered. Importantly, contrary to the approach adopted in a number of previous Commission decisions, the fact a union is making a claim that is clearly not a permitted matter will not necessarily preclude a protected action ballot order from being made.

In this case, the Full Bench noted that the following facts were each relevant to whether the unions were genuinely trying to reach agreement:

  • the Security of Employment Clause was merely a draft and there was evidence that the unions were not absolutely fixed on their proposed wording of the clause,
  • the proposed clause did not feature prominently in the discussions between the parties prior to the hearing for the protected action ballot order application, and
  • the company had not proposed that the Security of Employment Clause be modified, nor had it raised any concern that the proposed clause contained non-permitted content until the hearing.

This evidence, the Full Bench said, provided a sufficient basis for the Commissioner to find that the unions were genuinely trying to reach agreement.

The importance of planning

At first glance, this decision suggests there is little point for employers to oppose protected action ballot order applications. However, this is certainly not the case. The Full Bench has left the door ajar for employers to successfully argue that a union is not genuinely trying to reach an agreement.

To do so, however, employers must be well prepared and have a strategy in place well before the protected action ballot application arrives in order to satisfy the Commission that a union is not genuinely trying to reach agreement.

The application for a protected action ballot order is also an important opportunity for employers to:

  • confine the types of industrial action proposed,
  • obtain orders extending notification periods for the taking of the action, and
  • defeat the application in its entirety and prevent the ballot taking place.4

The Esso case is yet another reminder that employers need to be ready for a potential ballot order application, and must be prepared to act quickly if they wish to challenge any such application or to leverage an outcome that better protects the business in the event that protected industrial action is ultimately taken.5

This article was written by Rohan Doyle, Senior Associate, and Adam Lambert, Solicitor, Melbourne.