A Full Bench of the Fair Work Commission (Commission) granted an application for a bargaining order by the Association of Professional Engineers, Scientists and Managers Australia (APESMA) against Peabody Energy Coal Pty Ltd.1

The decision in APESMA v Peabody serves as a useful reminder to employers of what the obligation to bargain in “good faith” requires. It also highlights that this obligation can be quite onerous.

Good faith bargaining- the legislative framework

The Fair Work Act 2009 (Cth) (FW Act) sets out a number of “good faith bargaining requirements” (GFB Requirements) with which bargaining representatives must comply during enterprise agreement negotiations. While the GFB Requirements do not require parties to make concessions or reach agreement, they impose a number of obligations, including:

  • the disclosure of relevant information (other than confidential or commercially sensitive information);
  • attending and participating in meetings;
  • responding to proposals in a timely manner; and
  • giving genuine consideration to the proposals of other bargaining representatives.

While a failure to comply with the GFB Requirements will not amount to a contravention of the FW Act, it can lead to the Commission making a good faith bargaining order (GFB Order). A GFB Order is generally designed to facilitate the resumption of bargaining, such as setting  a timetable for negotiations or requiring the disclosure of specific information. Failure to comply with a GFB Order exposes parties to the risk of the Commission making a serious breach declaration, with the potential consequence of a bargaining- related workplace determination.

Background

APESMA sought to enter into negotiations with Peabody for an enterprise agreement covering certain salaried staff employed at Peabody’s Wambo coal mine site (Salaried Staff).

Peabody did not wish to engage in negotiations for an enterprise agreement  to cover the Salaried Staff, who were all on individual employment contracts. APESMA therefore sought and obtained a majority support determination, which forced Peabody to the bargaining table.

In the initial bargaining meeting, APESMA put forward a draft agreement which included the Salaried Staff within its  coverage. Peabody responded that it had no interest in having the terms and conditions of the Salaried Staff covered both by employment contracts and an enterprise agreement.

Peabody subsequently put forward a proposed agreement, which included a clause that would have the effect of terminating the Salaried Staff’s existing contractual arrangements and providing them with rates of pay that were significantly lower than the rates they were currently receiving.

APESMA wrote to Peabody outlining that it believed Peabody had failed to put a genuine bargaining position and was not meeting the GFB Requirements. It then applied to the Commission for GFB Orders. A conciliation conference was conducted, however the parties were unable to reach an agreement.

In response to concerns raised during the negotiations by Peabody, APESMA provided a third draft agreement (Third Proposal). In the Third Proposal, APESMA abandoned a number of earlier claims, including its claim for a pay increase for the Salaried Staff. Peabody then provided APESMA  with a written response, rejecting the Third Proposal and stating that it did not believe there was any benefit to be gained from conducting further bargaining meetings.

By this time, the parties had participated in 10 bargaining meetings over the course of six months. Throughout these meetings, Peabody had refused APESMA’s request to provide information relating to employees’ salary ranges, asserting that the information was confidential and commercially sensitive, and as such it was not required to be disclosed.

APESMA subsequently made an application to the Commission for a GFB Order.

In dismissing APESMA’s application for a GFB Order, Senior Deputy President Hamberger made the following findings:

  • whilst the position adopted by Peabody was a “hard one”, the GFB Requirements did not impose an obligation on bargaining representatives to put a position that might be acceptable to the other side, nor to act against their own interests;
  •  the fact that Peabody had participated in 10 meetings with APESMA was evidence that it had met its obligation to attend and participate in meetings at reasonable times; and
  •  Peabody was not required to disclose the salary information as this was confidential and commercially sensitive in nature.

APESMA appealed this decision.

Full Bench Decision

A Full Bench of the Fair Work Commission found that Peabody’s conduct prior to the Third Proposal was consistent with the GFB Requirements, as shown by the company’s participation in meetings with, and response to proposals put by, APESMA.

By contrast, however, the Full Bench found that Peabody had failed to comply with the GFB Requirements after the Third Proposal. It commented that the Third Proposal was a substantially revised proposal aimed at addressing the main concerns Peabody had raised previously in the negotiations. While Peabody was not required to accept the Third Proposal, the Full Bench held that Peabody was at least required to keep an “open mind” and to, for example, give further consideration to the Third Proposal during bargaining, and to consider modifications if APESMA’s proposal was not in a form acceptable to Peabody.

The Full Bench further held that Peabody was required to disclose the salary information sought by APESMA. As this information related to the spread across the salary ranges, rather than the specific salary of individual employees, the Full Bench was not satisfied that the salary information was as confidential and commercially sensitive as Peabody claimed.

The Full Bench issued GFB Orders requiring Peabody to:

  • meet with APESMA to discuss the Third Proposal;
  •  put forward a “genuine proposal” for an agreement of its own; and
  • disclose the salary information requested by APESMA.

Bottom line for employers

  • The GFB Requirements require bargaining representatives to keep an “open mind” and give genuine consideration to proposals put forward by the other party.
  • Employers should give genuine consideration to proposals and ensure that proposals are not simply dismissed without consideration. Staying silent and rejecting proposals, especially where concerns or issues you have raised previously have been addressed, may expose you to a risk of breaching the GFB Requirements.
  • Employers should be prepared to respond directly to the substance of employee bargaining representatives’ proposals. Where possible, parties should agree to physically meet to discuss their position rather than just responding to proposals in writing.
  • While confidential or commercially sensitive information is not required to be disclosed, it is important that employers give proper consideration as to whether information requested is actually confidential or commercially sensitive before refusing to disclose it on this basis.