The WorkChoices reforms in March 2006 introduced a requirement that the protected industrial action that a union or employees proposed to undertake had to be approved by a majority of the employees in a secret ballot.

Before a ballot could be conducted, a “protected action ballot order” had to be obtained from the Australian Industrial Relations Commission (AIRC). The legislation provided that such an order had to be granted if the employees had been, and were continuing to, genuinely try to reach agreement with the employer in relation to the proposed new enterprise agreement.

Substantially the same provisions exist in the Fair Work Act 2009 (Cth) (the FW Act) – with the difference being that the job of issuing protected action ballot orders now rests with Fair Work Australia (FWA) and not the AIRC.

Prior to the introduction of the FW Act it was not uncommon for employers to appear at the hearing (usually through legal counsel) to resist the making of the protected action ballot order. Most of these cases involved an allegation by the employer that the union was not genuinely trying to reach agreement because it was pushing for the inclusion of prohibited content within the proposed workplace agreement. Following the Country Fire Authority case (a decision of a full bench at the AIRC in 2007), it was accepted that any agitation for prohibited content by a union or employees automatically meant that they were not genuinely trying to reach agreement and, consequently, no protected action ballot order would be granted. This would prevent the employee/union from commencing protected industrial action.

Relatively few cases ever addressed a situation where it was alleged that the union was not genuinely trying to reach agreement because it was simply refusing to consider an employer’s alternative proposal for disputed provisions in the proposed enterprise agreement. Such a situation is not uncommon in reality – more often than not, protected action is resorted to in circumstances where the union has failed to concede to, or compromise, on a particular issue (for example, the pay increases that will apply during the life of the proposed agreement).

The main reason why this situation did not commonly result in employers claiming that the union was not genuinely trying to reach agreement (in order to resist the making of a ballot order) is that the legal test in the area was fairly unfavourable.

The often-cited case on this subject (Australian Meat Industry Employees Union v G&K O’Connor Pty Limited) made it clear that bargaining in good faith (which is regarded as synonymous with “genuinely trying to reach agreement”) does not require a willingness to make concessions or imply moderation of demands. It does imply a preparedness to consider seriously offers and proposals made by the other side and to take account of arguments – but if, having done these things, a bargaining party is unmoved, it may still be bargaining in good faith.

New bargaining rules

The introduction of significant new bargaining rules under the FW Act has the potential to change this position. In particular, employers now have the option, rather than appearing at the protected action ballot hearing and seeking to resist the making of an order, to apply to FWA for a bargaining order. A bargaining order is granted by FWA in circumstances where one of the parties to a negotiation is not bargaining in good faith according to the standards of conduct defined in the FW Act. FWA has substantial discretion as to the content of a bargaining order. It is clear following some very recent cases that a bargaining order can include an order that has the effect of preventing the conduct of a ballot. The bargaining order can also lay out, in considerable detail, the steps that the parties have to take in order to bargain in good faith. This includes setting down dates and times for meetings, requiring that parties exchange information and so on.

The first use of a bargaining order in these circumstances actually occurred at the instigation of a union rather than an employer.

In the recent case of NUW v Defries a union successfully obtained a bargaining order which prevented the employer from going ahead with a ballot for the approval of a proposed enterprise agreement. The NUW applied for a bargaining order on the basis that the company had failed to bargain in good faith because it had refused to conduct further meetings with the NUW. Apart from prohibiting the ballot, the bargaining order requires the company to schedule four meetings with the NUW to be conducted over two weeks at an agreed time and place.

There seems to be no reason in principle why an employer could not seek such an order in circumstances where the order cuts across the holding of a protected action ballot. In the future, it is possible that bargaining orders will be a common means by which employers seek the opportunity of further discussions with the union in order to address a negotiation impasse, and to forestall the taking of protected industrial action.

Potential limitation to the new bargaining rules

Contrary to the decision in NUW v Defries, the recent case of CFMEU v Australian Precast Solutions and Abigroup Contractors (the Companies) indicates that FWA may in certain circumstances refuse or be willing to overturn a bargaining order which prevents the employer from proceeding with a ballot for the approval of a proposed enterprise agreement. In this case the CFMEU was granted an interim bargaining order prohibiting the ballot from going ahead until the Companies had met with the union as a bargaining representative. The Companies then sought to overturn the interim bargaining order and were ultimately successful. They argued that FWA should not interpret the FW Act as giving FWA the power to prevent or delay an employee vote on a proposed agreement.

This decision has great implications for employers and overturns the foundation of recent case law in which employers have been restrained from balloting their employees on proposed agreements on the basis that an employer who bypasses the union when putting its offers directly to employees is in breach of the good faith bargaining requirements under the FW Act.

Lessons learned

Employers should in certain circumstances give consideration to taking a proactive approach and seek a bargaining order from FWA during negotiations with a union which are not progressing efficiently. Bargaining orders granted by FWA which prevent the holding of a protected action ballot may be an avenue of protection for employers against protected industrial action.

Following the CFMEU decision, there may now be an opportunity for employers to successfully argue against a union seeking a bargaining order on the basis that the employer has failed to bargain in good faith due to its direct negotiations with employees. Whether or not the CFMEU decision was a oneoff decision will likely be tested over the next couple of months.