In the recent case of Esso Australia Pty Ltd v AMWU, CEPU and AWU [2015] FWCFB 210, a Full Bench of the Fair Work Commission (FWC) considered the issue of whether unions that bargain for non permitted matters, such as some contractor clauses, were “genuinely trying to reach an agreement” in accordance with s.443(1)(b) of the Fair Work Act 2009 (Cth) (Act).

Under section 443(1)(b) of the Act, before making a protected action ballot order, the FWC must be satisfied the applicant for the order (usually a union), “has been, and is, genuinely trying to reach an agreement with the employer.”

Enterprise agreements may only be made about “permitted matters” (section 172). Permitted matters are:  

  • matters pertaining to the relationship between the employer and its employees;
  • matters pertaining to the relationship between the employer and the relevant union that will be covered by the agreement;
  • deductions from wages for a purpose authorised by an employee; and
  • how the agreement will operate.

This decision attempts to resolve previous conflicting FWC authority regarding whether or not a union can be said to be “genuinely trying to reach agreement” if it is pursuing non-permitted content in enterprise bargaining negotiations.

Background and Application

Last year, the AWU, CEPU, ASU and AMWU made an application to the FWC for protected action ballot orders.

One of Esso’s objections to FWC making the protected action ballot orders was that the four unions were not “genuinely trying to reach an agreement” given that they were seeking non-permitted content in the agreement. The non-permitted content was a claim by the unions which restricted Esso’s ability to use contractors.

The FWC at first instance rejected Esso’s argument that the unions were not “genuinely trying to reach an agreement” and granted the ballot applications.

Esso appealed this decision to the Full Bench of the FWC.

Appeal

The Full Bench upheld the primary decision and rejected Esso’s challenge to the FWC granting the protected action ballot applications.

While the Full Bench accepted Esso’s submission that the contractors clause in question was about non-permitted matters (in that it was a provision restricting or qualifying Esso’s right to use contractors), the Full Bench found that the following considerations meant the unions could still be found to be “genuinely trying to reach agreement”:  

  • the proposed clause was not part of the unions’ initial claim which was for “Security of employment (contractors)”;
  • the particular contractor clause was advanced some months after negotiations commenced in response to a request by Esso for detail about some of the union claims;
  • the proposed contractor clause was a draft proposal and that the “unions had not adopted a rigid position in relation to it” as demonstrated by the union evidence in which the clause was stated to be “a starting point” from which Esso could propose alternatives. The company evidence also accepted that the unions had never stated that the contractor clause must be accepted or that they would not negotiate the terms of the clause.
  • Esso raised the issue of the clause containing non-permitted content in the hearing at first instance after which (but before the end of the hearing), the unions withdrew the clause.

The Full Bench found that whether or not a union is pursuing a claim for a non permitted matter is relevant but not determinative of whether they can be said to be “genuinely trying to reach agreement.” The Full Bench set out a range of factors which are relevant to determining whether a party is “genuinely trying to reach an agreement”. These include:  

  1. the subject matter and timing of the claim;
  2. the basis upon which the claim is advanced;
  3. the significance of the claim in the negotiations;
  4. the claimant’s belief as to whether it is a permitted matter or not;
  5. whether there is legal clarity about the claim’s “permitted status“;
  6. whether the other party has disputed the claim’s status; and
  7. whether it has been withdrawn and, if so, when and in what circumstances.

The Full Bench held that the circumstances of each case must be examined which means that it is not possible to establish one particular factor which will determine whether an applicant is “genuinely trying to reach an agreement.”

A claim by a union for non-permitted content will not necessarily be fatal to that union’s application for a protected action ballot order. The range of circumstances above must be considered which reinforces the need for employers to understand whether or not a claim may be said to be about non-permitted content. The decision also reinforces the need for employers to make and retain detailed records of the negotiations.