In JJ Richards & Sons v TWU  FWAFB 9963 (23 December 2010), a majority of a Full Bench of Fair Work Australia (FWA) confirmed that a union (on behalf of employees) can be ‘genuinely trying to reach agreement’ even where an employer refuses to bargain, without the need to obtain a majority support determination.
This case is a crucial decision in a line of FWA authorities which together provide guidance to employers on the enterprise bargaining strategies that may be used, particularly on the issue of when employers should commence bargaining with employees.
JJ Richards (JJR) holds a number of garbage collection contracts with NSW councils, including the Canterbury City Council. On 24 February 2010, the NSW Transport Workers Union (TWU) wrote to JJR advising that its NSW employees had requested that the TWU represent them in negotiations with JJR for an enterprise agreement. JJR responded to the NSW TWU and declined to enter into bargaining discussions for these employees.
On 23 September 2010, the Canterbury City Council passed a resolution that JJR should negotiate an enterprise agreement with its employees carrying out the contract work for the Council. On 4 November 2010, the Federal TWU made an application to FWA for a protected ballot order for the NSW employees. The order was granted by Harrison C at first instance.
One of the key requirements under the Fair Work Act for obtaining a protected action ballot order is that FWA must be satisfied that the applicant has been, and is, ‘genuinely trying to reach an agreement’ with the employer of the employees who are to be balloted. If the applicant has not been, and is not genuinely trying to reach agreement with the employer, FWA must not grant the order.
There are no set criteria for determining whether an applicant has been genuinely trying to reach agreement. FWA has consistently held that it is not appropriate or possible to establish ‘rigid rules’ for the required point of negotiations that must be reached.
On appeal, a majority of the Full Bench (Lawler VP and Bissett C), who were also on the Full Bench in MSS Security v LHMU  FWAFB 6519 (discussed below), upheld the appeal and quashed the decision of Harrison C, however not on the substantial argument made by JJR.
The majority endorsed the reasoning of the Full Bench in Stuartholme School and Others & the Corporation of the Trustees of the Roman Catholic Archdiocese of Brisbane t/a Brisbane Catholic Education Office and Others v IEAU  FWAFB 1714 that the scope of an agreement could itself be the subject of bargaining for an agreement. Consequently employees could be ‘genuinely trying to reach agreement’ and seek protected industrial action even where an employer refused to bargain with a particular group of employees and a majority support determination had not been obtained.
The majority held that ‘genuinely trying to reach agreement’ should have its ordinary meaning and not a narrower construction that would, for example, always require the applicant to have articulated its major claims at the time the ballot order was sought. Similarly, the majority considered that, for the purposes of obtaining a ballot order, ‘genuinely trying to reach agreement’ should not be limited to circumstances where the applicant is only pursuing permitted matters under the Act, or only where the employer has agreed to bargain.
The majority accepted that the NSW TWU’s efforts in attempting to correspond with JJR were genuine attempts by it to reach agreement with JJR.
The majority in the JJR case did not follow the majority decision of the Full Bench in Ford v AMWU & Ors  FWAFB 1240, which held that the earliest that bargaining can commence is the ‘notification time’ under section 173(2) of the Act, being when:
- the employer agrees to bargain, or initiates bargaining, for the agreement, or
- a majority support determination in relation to the agreement comes into operation, or
- a scope order in relation to the agreement comes into operation, or
- a low-paid authorisation in relation to the agreement that specifies the employer comes into operation.
Based on the rationale in Ford, a union could not be genuinely trying to reach agreement with the employer who refused to bargain unless one of the ‘notification time’ scenarios in section 173(2) applied, as bargaining could not have commenced. The notification time triggers the obligation for the employer to provide employees with notices of employee representational rights, and will also be the point at which good faith bargaining obligations will usually commence.
Notwithstanding the above, the majority in JJR upheld the appeal on a technical point – while the NSW TWU had been genuinely trying to reach agreement, it was the Federal TWU who had brought the application for the protected ballot order. The majority held that, whilst a point of little ‘industrial merit’, there was no evidence that the Federal TWU had ever genuinely tried to reach agreement with JJR and it was required to uphold the appeal and quash the original decision.
Minority decision of O’Callaghan SDP
In dissenting from the majority decision, O’Callaghan SDP held that the Fair Work Act, as a whole, requires bargaining to be occurring before a protected action ballot can be granted, and that the refusal of JJR to bargain could not itself be regarded as ‘bargaining’, which required an ‘agreement to bargain’ between the parties. His Honour held that the next most appropriate step by the union to require JJR to bargain should have been a majority support determination.
His Honour considered that access by employees to protected industrial action outside of this bargaining process, and before receiving a notice of employee representational rights, was contrary to the objects of the Fair Work Act.
Implications of JJR
Based on the majority in JJR, it appears that FWA will now consider ‘bargaining’ as a fluid concept which, for protected action ballots, is not limited by the agreement making provisions under the Fair Work Act and can commence without agreement or even acknowledgement by the employer, and without a majority support determination by employees. This seems to place industrial action in a separate, more accessible stream of bargaining than contemplated by Part 2-4 of the Fair Work Act.
This ‘dual’ bargaining stream could potentially create a situation where employees are able to obtain an order to take protected industrial action, in circumstances where the same employees may not be able to secure a majority support determination for an enterprise agreement, and where the employer has not provided the notice of employee representational rights.
Further, the decision in JJR means that where an employer refuses to bargain, unions may be more inclined to seek protected industrial action, rather than obtaining a majority support order and then pursuing good faith bargaining orders.
However employers should ensure that they meet their bargaining obligations if they agree to bargain with any employees in the workplace. In MSS Security v LHMU  FWAFB 6519, the Full Bench held that once an employer has agreed to bargain, even where there is a dispute as to the scope of the agreement, the employer is required to distribute the notice of employee representational rights to the broader group of employees, including the employees with whom it may not wish to bargain for an enterprise agreement.
This means that the notice will trigger the notification time under section 173(2) and good faith bargaining obligations for all employees, notwithstanding that the employer may not wish to bargain with all employees.
Lessons for employers
Employers who are preparing enterprise bargaining strategies need to be aware that in light of FWA decisions such as JJR, protected industrial action will still be accessible by employees and their unions, even where the employer refuses to bargain or where there is disagreement as to the scope of the agreement.
Employers should carefully consider their options before commencing any negotiations, to ensure that they are able to determine the best strategy moving forward. This may include:
- Commencing bargaining with the desired scope of employees before the expiry of the existing agreement, in order to minimise the risk of protected industrial action and avoid unnecessarily triggering good faith bargaining obligations to employees with who no enterprise agreement is sought, and/or
- Not entering into any form of bargaining until the scope of the agreement is agreed, in order to not unnecessarily trigger the requirement to provide the notice to all employees.