Key Points:

On receiving a request to bargain, employers will need to carefully consider that request and their next steps.

In JJ Richards & Sons Pty Ltd v Transport Workers' Union [2011] FWAFB 3377, the Full Bench of Fair Work Australia considered what "genuinely trying to reach agreement" means in the context of an application for a protected action ballot order (PABO) under section 443 of the Fair Work Act (FW Act).

The Full Bench found that the FW Act does not require a bargaining representative to seek a majority support determination, good faith bargaining orders or a scope order before seeking a PABO where an employer refuses to commence bargaining.

The Full Bench also confirmed that:

  • whether an applicant for a PABO is "genuinely trying to reach agreement" will be determined having regard to all of the material before FWA; and
  • where a legitimate request by a bargaining representative to bargain for an enterprise is refused by an employer, it is likely to be found that the bargaining representative is "genuinely trying to reach agreement" unless there is material that demonstrates that the request was a sham.

The request for bargaining and draft enterprise agreement

JJ Richards provides waste management services, including to Canterbury City Council (CCC).

Relevantly:

  • on 24 December 2010 the TWU wrote to JJ Richards seeking to commence bargaining and providing a draft enterprise agreement for consideration;
  • on 7 January 2011 JJ Richards responded and asked the TWU to reconsider its request, stating that the contract with CCC would expire in February 2012 and CCC would not accept JJ Richards passing on increased wage costs;
  • on 17 January 2011 the TWU provided JJ Richards with an amended draft agreement;
  • on 24 January 2011 JJ Richards again rejected the TWU's request to bargain;
  • the TWU applied for a PABO under section 437 of the FW Act on 1 February 2011 without taking other steps in the bargaining process, including an application for a majority support determination.

Commissioner Harrison granted the PABO at first instance, so JJ Richards appealed to the Full Bench of Fair Work Australia.

The legislation

Under section 443, the FWA must make a PABO in relation to a proposed enterprise agreement if:

  • an application has been made under section 437 (ie. by a bargaining representative of an employee who will be covered by the proposed enterprise agreement); and
  • FWA is satisfied that each applicant has been, and is, genuinely trying to reach an agreement with the employer of the employees who are to be balloted.

The basis of the appeal

JJ Richards' primary argument was that there are two pre-conditions to an applicant "genuinely trying to reach agreement":

  • bargaining has commenced with the employer; and
  • if the employer is unwilling to bargain, the applicant has exhausted the steps available to it under the FW Act to force the employer to do so.

Relying on the Explanatory Memorandum, it argued it would be "inconvenient and absurd" if the FW Act permitted a PABO before these steps had been taken.

Further, it argued that if the construction of section 443 was permitted to stand, default bargaining representatives may be able to obtain a PABO despite unsuccessful applications for majority support determinations, in turn giving rise to the potential for "a small group of union members, without the support of the majority of the workforce" to disrupt work and affect the pay of others. This, it said, could not have been the intention of the legislature.

JJ Richards also argued that while it did not wish to engage in bargaining, it had believed that the parties were discussing whether negotiations should commence, and that JJ Richards never specifically refused to bargain.

When can a bargaining representative apply for a protected action ballot order?

The Full Bench confirmed that where an employer refuses to bargain, the FW Act does not require a bargaining representative to seek a majority support determination, good faith bargaining order or a scope order to be found to have been "genuinely trying to reach agreement" and successfully apply for a PABO.

It conceded that a default bargaining representative might obtain a PABO even though the bargaining representative had made an unsuccessful application for a majority support determination, but "it seems to us that the potential for a small group of union members to disrupt the work and affect the pay of other employees is equally present on the construction advanced by the appellants."

In relation to JJ Richards' argument that it had not "refused to bargain", the Full Bench found that, on the available material, it was clear that TWU had been genuinely trying to reach agreement with JJ Richards at the time the PABO application was made.

Lessons for employers

This is an important decision for employers in the context of enterprise bargaining and developing appropriate bargaining strategies. On receiving a request to bargain, employers will need to carefully consider that request and their next steps.

While the FW Act does place further restrictions on PABO applications that may impact on a bargaining representative's ability to make a PABO application, on the construction given to section 443 by the Full Bench in the JJ Richards decision:

  • agreeing to bargain will commit the employer to the enterprise bargaining process set out in the FW Act;
  • refusing to bargain will not only give rise to the possibility of majority support determinations and, possibly, good faith bargaining orders, but also give rise to the potential for protected industrial action; and
  • default bargaining representatives (unions) may make PABO applications where an employer's obligation to issue a Notice of Representational Rights has not yet been invoked. The issue of such a notice would defer the making of PABO applications for a period of at least 14 days, and until employees have had the opportunity to nominate their preferred bargaining representatives (if any).

An additional timing implication is that the FW Act prescribes a PABO application must be determined within two working days of the application being made, where practicable.

Given the short timeframes and the potentially significant implications for their business, employers are encouraged to seek advice at the earliest opportunity before responding to a request to bargain.