A majority of a Full Bench of Fair Work Australia (FWA) has upheld a decision at first instance which found that an enterprise agreement could not be approved because the notice of representational rights issued to employees failed to advise that the unions were default bargaining representatives, as required by the Fair Work Act.

Implications for employers

When issuing the mandatory notice of employment representational rights during bargaining for an enterprise agreement, employers should use the prescribed notice of employee representational rights contained in Schedule 2.1 of the Fair Work Regulations 2009 (Cth) (FW Regulations) and seek legal advice before making any alterations to that prescribed format.

Background: legislation

Section 173 of the Fair Work Act (2009) (Cth) (FW Act) requires that, when bargaining for an agreement commences, an employer must issue employees with a “notice of representational rights”. This notice essentially advises employees that they may appoint a bargaining representative and that, if they are a union member, the relevant union will be the employee’s bargaining representative unless the employee advises otherwise (section 174). A model format for the notice is set out in the FW Regulations.

Among other things, when deciding whether or not to approve an enterprise agreement, FWA must consider whether the agreement has been genuinely agreed to by the employees to be covered by it (section 186).

Background: facts

Ostwald Bros applied to FWA for approval of an enterprise agreement.

The Construction, Forestry, Mining and Energy Union (CFMEU) opposed the application on the basis that the notice of representational rights did not strictly comply with the content requirements in section 174 of the FW Act. In this case, the notice failed to explain to employees that their unions would be their bargaining representatives for the agreement, unless they appointed another person. The CFMEU argued that this meant that there was no “genuine agreement” for the purposes of section 186.

Ostwald Bros argued that the defect did not invalidate the notice for the purpose of genuine agreement and determination of whether or not an enterprise agreement has been genuinely agreed to by the employees requires an assessment as to whether the defect did, in fact, affect genuine agreement in the circumstances of a particular case.

Decision at first instance

Commissioner Booth agreed with the CFMEU and declined to approve the agreement. The Commissioner found that:

  • Parliament’s intent in including the default representation requirement was to ensure that employees not only have representation rights, but that they are aided in exercising those rights by a notice that is required as part of the statutory scheme.
  • Giving notice of the position as to default representation is essential to giving a valid notice that meets the requirements in the FW Act for genuine agreement.
  • Even if her the above conclusions were wrong, the deficiency in the notice was such that she could not be satisfied that the agreement had actually been genuinely agreed to by the employees. This was due to the history of the matter, including contested representation rights by the CFMEU, a relatively close ballot in approving the agreement and the fact that the agreement covered a large workforce represented by multiple unions.

Ostwald Bros appealed to a Full Bench of FWA.

Decision on appeal

The appeal was heard by Vice President Watson, Senior Deputy President Watson, and Commissioner Gooley.

Majority decision: Senior Deputy President Watson and Commissioner Gooley

The majority held that Commissioner Booth’s decision not to approve the agreement was correct, on the basis that the representation notice requirements are “clearly intended to ensure that employees not only have a right of representation” but that they are also “fully informed as to their right of representation - default representation or to otherwise nominate a bargaining representative - and the means of affecting that right”.

They did not accept Ostwald Bros proposition that “a failure to meet a specific requirement in the FW Act could not have been intended to prevent approval in circumstances where genuine agreement otherwise exists”, as such a proposition “would have an extremely broad application beyond the omission of advice of default representation…[and] allow the provision of partial information, which would mislead employees as to their rights in relation to bargaining representation”.

Dissenting decision: Vice President Watson

Vice President Watson dissented, preferring the position taken by Ostwald. He described the approach contended by for the CFMEU as “overly technical” and “inconsistent with the scheme of the Act”.