The Federal Labor Government’s Fair Work Act 2009 commenced operation on 1 July 2009. It requires employers’ and employees’ bargaining representatives negotiating a proposed enterprise agreement to meet good faith bargaining requirements. The inclusion of this statutory obligation is a new requirement in Australian industrial relations, and just how the obligation will be applied remains to be seen. This article briefly discusses the good faith requirements in the Fair Work Act 2009 and how they have been applied so far.

Section 228 of the Fair Work Act 2009 provides that bargaining representatives negotiating a proposed enterprise agreement must meet good faith bargaining requirements including:

  • recognising and bargaining with other representatives to the agreement
  • attending and participating in meetings held at reasonable times
  • disclosing relevant information (but not confidential or commercially sensitive information)
  • responding to proposals in a timely manner
  • giving genuine consideration to proposals and providing reasons when responding to proposals

refraining from capricious or unfair conduct which would undermine freedom of association or collective bargaining, such as failing to allow a bargaining representative to attend meetings or discuss matters with employees, engaging in detrimental conduct towards an employee because the employee is a bargaining representative, or preventing an employee from appointing a representative.

Good faith bargaining however does not require the making of concessions during bargaining.

  • Fair Work Australia (the successor to the Australian Industrial Relations Commission) is empowered to make “bargaining orders” to compel parties to comply with the new legislation.

In a recent decision by Senior Deputy President Richards of Fair Work Australia, it was found that an employer failed to recognise a union bargaining representative over a course of discussions and meetings when it was clear that the union representative was entitled to enter negotiations as a legitimate bargaining representative. The union had provided the employer with a log of claims but there were no scheduled meetings proposed by either the union or the employer. The employer sought to conduct a ballot on a proposed agreement without consulting the union. The union wrote to the employer and requested that the ballot be abandoned so that there could be discussions about the union’s log of claims.

Senior Deputy President Richards found that good faith bargaining requirements had not been met, and ordered that the employer not conduct the scheduled ballot, and that four meetings be conducted over the ensuing two weeks for the parties to discuss the proposed enterprise agreement.

In another matter, the union alleged that the employer’s endeavour to restructure part of its operations was capricious or unfair conduct which undermined freedom of association. The employer was seeking to restructure a small part of its operations and transfer some of the testing and quality positions to new technical specialist positions which would be salaried and not covered by the enterprise agreement that was the subject of the negotiations.

The union forwarded a letter to the employer advising that it considered the restructure to be a breach of the employer’s good faith obligations and issued an application to Fair Work Australia on the same day. The union’s claim was that the employer was excluding employees who were the subject of the restructure from the negotiation process and the capacity to vote. It was alleged that this was capricious and unfair conduct.

The employer subsequently responded to the union and advised that it was discharging its consultative obligations under the relevant award and invited the union to provide its feedback regarding the restructure. It also referred to a scheduled enterprise bargaining meeting and indicated that concerns could also be raised at the meeting. Further correspondence and information was exchanged between the parties prior to the matter being heard by Fair Work Australia.

Senior Deputy President O’Callaghan found that the application by the union was made prematurely as it did not provide the employer with an adequate opportunity to respond to the allegation. Further, the employer had provided undertakings that it would continue to negotiate the enterprise agreement in relation to all of its employees, that it would consult in relation to the restructure and provide information, and that it had invited further discussion and feedback. It was found that the employer’s conduct was not inconsistent with good faith bargaining and did not constitute unfair conduct. Therefore no bargaining order was made.

In another case, Senior Deputy President Watson determined that an order delaying a ballot should only be made if it is clearly necessary to ensure compliance with good faith bargaining obligations. In this matter the employer commenced negotiations with its employees. The union become involved in the negotiations very late in the bargaining process and was not a bargaining representative. The union only became involved when a few employees joined the union two weeks before a scheduled ballot on the agreement. Senior Deputy President Watson noted that specific limitations and important pre-conditions must be met before Fair Work Australia can make a good faith bargaining order, none of which existed in this case.

Finally, in a matter determined by Commissioner Whelan, the employer had allegedly failed to provide the union with relevant information on at least two occasions or to respond to the union’s log of claims or draft agreement in a “direct way”. The employer argued that it had addressed some of the matters raised in the log of claims and two other matters raised by the union by incorporating them into the employer’s draft of the enterprise agreement. However, there was no direct response from the employer to the union in relation to their proposals or concerns.

The employer then sought to circulate a draft agreement to employees for their vote without notifying the union bargaining representatives or giving the union an opportunity to propose any amendments. The employer’s conduct was found to have undermined freedom of association and collective bargaining and was not conduct in good faith.

Although we await a comprehensive determination on good faith requirements, some clear guidelines are emerging. Employers should ensure when negotiating enterprise agreements that:

  • expansive and well documented notes are taken at all stages of the negotiation
  • all proposals, bargaining positions and concessions are clearly put to bargaining representatives
  • proposals received are genuinely considered and reasons for rejecting or accepting are clearly documented and communicated
  • due consideration is given to the scheduling of a ballot, taking into consideration the extent and content of negotiations to date.