Key Points:

Where bargaining representatives disagree about the scope of an enterprise agreement, employers have bargaining obligations in respect of all employees who fall within the widest proposed scope, even if the employer has not agreed to bargain in respect of some of those employees.

It is clear that employers will not be able to restrict the scope of a proposed enterprise agreement by simply failing to issue a notice of representational rights to certain employees, following the recent Fair Work Australia Full Bench decision in MSS Security Pty Ltd v Liquor, Hospitality and Miscellaneous Union [2010] FWAFB 6519.

The case involved an appeal from a decision of Commissioner Cloghan in June 2010, who granted a protected action ballot order application in respect of employees of MSS who worked as ticket inspectors on Perth's public transport network.

The bargaining for a new enterprise agreement

Since March 2010, MSS and the Union had been bargaining for a new enterprise agreement to cover certain employees who worked on MSS' contract to provide services to the Western Australian Public Transport Authority. The Union was seeking an agreement to cover the following groups of employees:

  • Revenue Protection Officers;
  • Patrol Officers; and
  • Aboriginal Liaison Officers.

MSS, however, only agreed to bargain for an agreement to cover Revenue Protection Officers, and accordingly, only issued a notice of representational rights to those Officers.

The application to Fair Work Australia

The Union applied to Fair Work Australia for a protected action ballot order pursuant to section 437 of the Fair Work Act, in respect of all three categories of employees, on the basis that they would be covered by the Union's "proposed agreement" for the purposes of section 437. Commissioner Cloghan granted the Union's application and made the order.

MSS immediately appealed Commissioner Cloghan's decision, noting that:

  • MSS had not agreed to bargain in relation to Patrol Officers and Aboriginal Liaison Officers; and
  • no notice of representational rights had been issued to those classes of employees.

MSS argued that the Union was therefore not a bargaining representative for those employees, and as such it did not have the requisite standing to apply for the protected action ballot order, required by section 437 of the Act.

The Full Bench's decision

The Full Bench upheld Commissioner Cloghan's decision, holding that he:

"was correct to proceed on the basis that the failure to issue these notices was not an impediment to the granting of the LHMU's application for a protected action ballot order extending to the Patrol Officers and Aboriginal Liaison Officers, irrespective of whether MSS had agreed to bargain in relation to those categories of employee or issued a notice of representational rights to all employees".

Issuing a notice of representational rights is not a prerequisite to the existence of bargaining representatives

The Full Bench clarified that a group of employees can in fact be represented in bargaining for a proposed enterprise agreement by a bargaining representative, notwithstanding that a notice of representational rights has not been issued by the employer to those employees in accordance with the employer's obligation to do so under section 173(1) of the Act.

This is of particular relevance not only in relation to applications for protected action ballot orders, but also applications for a majority support determination pursuant to section 236 of the Act.

Where there is a dispute as to scope, a notice of representational rights must be issued to the broadest proposed group of employees

The Full Bench then confirmed that, where an employer has agreed to bargain in relation to a group of employees within the scope of an agreement proposed by another bargaining representative, the employer is required to issue a notice of representational rights to all employees who would be covered by the broadest scope proposed by any bargaining representative.

Merely issuing a notice of representational rights to the sub-group of employees in respect of which the employer wishes to bargain is not enough to discharge the employer's obligation under section 173(1) of the Act.

Bargaining is to proceed on the basis of the broader proposed scope while bargaining representatives remain in disagreement as to scope

It follows that bargaining (which must be undertaken in good faith by all bargaining representatives) must proceed in respect of the broadest proposed scope until the scope dispute is resolved (either by agreement as a result of continued bargaining, or by Fair Work Australia issuing a scope order pursuant to section 238 of the Act).

What does this mean for employers?

If an employer agrees to bargain with a Union and/or other bargaining representative(s) in respect of a group of employees proposed to be covered by the Union or other bargaining representative(s), the employer must meet its bargaining obligations towards the broadest group of employees proposed to be covered by the agreement, until scope issues are resolved. This includes the issuing of notices of representational rights and bargaining in good faith.

Failure to meet these obligations could result in an application for approval of an enterprise agreement by Fair Work Australia being rejected, because of failure of the employer to meet certain pre-approval requirements contained in the Act. It could also lead to applications for bargaining orders being lodged against the employer and bargaining orders being made by Fair Work Australia against the employer.