australian manufacturing workers' union · web viewthe “automotive, food, metals,...

AUSTRALIAN MANUFACTURING WORKERS' UNION

Submission to the Fair Work Act Review Panel Post-Implementation Review

February 2012

AMWU Submission to Fair Work Act Post-Implementation Review

The context of workplace and industrial regulation

1.1. The “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” is

known as the Australian Manufacturing Workers’ Union (AMWU). The AMWU represents

over 100,000 members working across major sectors of the Australian economy, in

manufacturing including in the printing, automotive and food industries, in building and

construction, in the mining industry and metals manufacturing. The AMWU has members

across all skills, classifications, and occupations, and the vast majority of them are employed

by private corporations. The AMWU is an affiliate of the ACTU, and supports the submission

of the ACTU to the Fair Work Review Panel.

1.2. It is the view of the AMWU that it is in the interests of its members and the industries in

which they work that the industrial relations legislation that regulates their employment and

their working lives:

is fair and enforceable for all workers equally;

allows for representation and for the voices of workers to be heard;

fits the purpose of regulating work throughout the Australian economy;

is enforceable;

is reliable and stable in its form and the institutional framework that supports it.

1.3. It is the view of the AMWU that the Fair Work Act 2009 (“the Act”) is a vast improvement on

the legislation that preceded it, brought about particularly by the WorkChoices amendments

to the Workplace Relations Act 1996 (“WorkChoices”), which, amongst other things:

stripped awards of much their content, including classification structures and wage rates;

removed unfair dismissal protection from the vast majority of Australian workers;

denied employers and employees to make agreements about a list of “prohibited matters” made under Regulation;

allowed employers to impose individual AWAs and employer-determined “greenfields agreements” on workforces; and

removed arbitration and minimum-wage determination powers from the Australian Industrial Relations Commission.

1.4. The Act began the job of restoring an independent umpire in Fair Work Australia, restoring

Awards as an effective safety net for workers nationally, restoring rights to be protected

2


from unfair dismissal and returned bargaining to being a conducted between employers and

groups of workers rather than corporations imposing “individual agreements” on workers

with no bargaining power, or corporations making agreements with themselves on

greenfield sites.

1.5. That said, this submission will focus primarily on the areas where we think the Act should do

better. To do better, several themes emerge in the following submission. Amendments to

the Act are required so that improvements are achieved in terms of its provision for the:

A. capacity to bargain;

B. capacity to represent employees and for employees to be represented;

C. enforceability of standards; and

D. arbitration of disputes where agreement cannot be reached.

1.6. The Act can do better to achieve its stated aims, and it must do better, if it is to provide

Australian workers with fairness in their working lives in a dynamic Australian economy: to

be fairer, more easily enforceable, allow for better representation, be supported by a

reliable framework and institutions and be fit for purpose overall.

3


2. The Productivity Question

2.1. The AMWU accepts the role that productivity growth plays in driving economic growth, and

the material standards of living of society, and potentially workers. When the impact of

particular legislation on “Australian productivity” is considered, however, it is important to

ensure that people are debating the same concept. When we discuss productivity, the

concept we describe is productivity as a measure of economic output relative to inputs.

Productivity is increased if the same output can be generated with fewer inputs, or if the

same quantity of inputs can be used to generate more outputs.1

2.2. Labour productivity describes the value of total output produced during a period of time

divided by the number of hours of labour spent producing that output during that period. 2 In

the context of labour productivity, more outputs might be generated from fewer hours

worked, or more output might be generated from the same hours worked. What labour

productivity is not is simply producing the same output for less money. What that might do

is increase the profits that a corporation might make from their workers, but not the

productivity of their labour.

2.3. We accept that low productivity growth is a challenge which Australia and Australian

industries must work to overcome. We do not accept that industrial legislation designed to

increase profits made from workers is the answer. The continuing decline in Australia’s

labour productivity since at least 2002 is testament to that, with that period encompassing

the operation of WorkChoices

2.4. In the context of the review of the Act, it is the view of the AMWU that the Australian

national industrial legislation for the last twenty years has been obsessed with bargaining

being only at the enterprise level. It is also our view that this slavish adherence to an

enterprise-level bargaining orthodoxy has been to the detriment of labour productivity

growth in Australia, for at least the last decade.

2.5. The object of the Act at s.3(f) is:

“achieving productivity and fairness through an emphasis on enterprise-level collective bargaining

underpinned by simple good faith bargaining obligations and clear rules governing industrial action;”

1 Australian Council of Trade Unions, “Working By Numbers, Separating rhetoric and reality on Australian productivity,” ACTU Working Australia Paper 11/2011, October 2011, p.32 Hancock, Keith, “IR offers no panacea for productivity,” Australian Financial Review, 16 February 2012, p.63.

4


2.6. It is our contention, however, that the very “emphasis on enterprise-level collective

bargaining” constrains the productivity for which the Act purports to aim. Multi-factor

productivity is a problem beyond an individual employer squeezing greater economic output

from unit labour costs. What eventuates there is the same output for the number of hours

worked, but just with the worker taking home less at the end of the day, with reduced real

wages, no penalty rates, and less job security. The employer gets increased profits, but not

increased productivity. This was the story of WorkChoices. The economy certainly doesn’t

get increased productivity in this scenario, and that’s why WorkChoices continued to see a

downward trend in labour productivity.

2.7. When employers call for a return to the “flexibility” of WorkChoices for the sake of increased

labour productivity, we submit that those assertions should be interrogated for what they

are. Whilst is could be expected to be in the interests of employers to reduce labour costs to

increase profits, the link from increased profit to increased productivity is simply illusory.

Productivity and enterprise agreement making

2.8. Labour productivity is a measure to be used with caution, as “output is influenced by many

factors that are outside of workers' influence - including the nature and amount of capital

equipment that is available, the introduction of new technologies, management practices

and so on.”3 When productivity depends on matters such as:

multi-factor productivity;

training, including apprenticeships;

consistent classification structures;

innovation;

investment in research and development; and

infrastructure and government procurement

it is folly to suggest that a framework of industrial regulation can “achieve productivity”

when negotiations, agreements and bargaining are limited to the enterprise level alone.

3 Productivity Commission, Productivity Primer, at http://www.pc.gov.au/research/productivity/primer/measures

5


2.9. Multi-factor productivity (or “total factor productivity”) divides the value of output by both

labour and capital combined.4 What multi-factor productivity needs is:

investment in infrastructure, including along supply chains;

investment in skills, including in transferable skills that other parts of an industry or

economy can use when a project or a business rotates its workforce into different

skill sets;

training of managers, so that they know how to work smarter, not just cheaper;

consideration of workplace design and organisation;

examination of industry sectors and supply chains, beyond the individual business.

2.10. How are any of these matters resolvable in an individual employer’s enterprise agreement?

If the legislative framework for industrial and workplace relations is to have any positive

impact on “achieving productivity” for the Australian economy, then in our submission the

constraints imposed by the legislation on improving multi-factor productivity must be

addressed.

2.11. At s.172(1), the Act provides for the making of agreements that are about one or more of

the following matters:

(a) matters pertaining to the relationship between an employer that will be covered by the agreement and that employer’s employees who will be covered by the agreement;

(b) matters pertaining to the relationship between the employer or employers, and the employee organisation or employee organisations, that will be covered by the agreement;

(c) deductions from wages for any purpose authorised by an employee who will be covered by the agreement;

(d) how the agreement will operate.

2.12. The constraints on bargaining, particularly at s.172(1)(a) and (b) prevent participants in

bargaining being able to bargain about the matters that must be bargained about in order to

address Australia’s productivity. This is a fundamental disjunction which, in our submission,

means that the object of the Act at s.3(f) cannot be achieved.

4 Hancock, ibid at note 2; Productivity Commission, id.

6


2.13. Section 172(1)(b) continues the line of confusing authority which was inherited from the

constitutional constraints which led to the drafting of the Conciliation and Arbitration Act

1904 (Cth). This concept of “matters that pertained to the relationship between employers

and employees” was used to determine the extent of the powers to settle industrial

disputes, and making awards, that could be exercised by the Conciliation and Arbitration

Commission.5 This concept was imported into the agreement-making function of the then

Australian Industrial Relations Commission,6 maintained through WorkChoices, and is now

found at s.172(1)(a).

2.14. Section 172(1)(b) is novel to federal industrial regulation in Australia. It broadens the

previous constraint on agreement making that is embodied at s.172(1)(a), but again

constrains itself to the immediate employer and the unions covered by that employer’s

immediate agreement. This provision has been little considered,7 but the examples provided

in the Explanatory Memorandum to the Fair Work Bill 2008 (“the Explanatory

Memorandum”) confirm the view that s.172(1)(b) is not intended to authorise agreement

terms that deal with matters beyond the concerns of the individual employer.8

2.15. The point of understanding this history is to realise that there is no constitutional constraint

any longer which requires the maintenance of the legislative constraint at s.172(1)(a). The

constitutional constraint was found in the Conciliation and Arbitration power, not the

Corporations power under which the Act is made. There is no similar constraint that confines

the terms of s.172(1)(b).

2.16. So if the Act fails to provide for bargaining that can address the multi-factor productivity

requirements of the Australian economy, then it is a failure which is amenable to legislative

reform. This reform is crucial. Without it, all the Act allows is to bargain to squeeze

economy-wide or industry-wide issues into a format digestible to the individual employer

and an agreement made under the Act.

2.17. An issue such as training, including apprenticeships, is essential for industry-wide or

economy-wide productivity. Good training means that workers work smarter, with more

skills. But training needs can’t be achieved by an individual employer in the short term.

5 See, inter alia, Re Manufacturing Grocers’ Employees Federation (1986) 160 CLR 341; R v Coldham; Ex parte Fitzsimons (1976) 137 CLR 153; Wesfarmers [2004] FCA 1737.6 s.170LI Workplace Relations Act 1996; See Electrolux Home Products Pty Ltd v Australian Workers Union (2004 221 CLR 309.7 See however AMWU v Bitzer Australia Pty Ltd t/as Buffalo Trident [2009] FWA 962.8 Explanatory Memorandum to the Fair Work Bill 2008, at paragraph 676.

7


2.18. As an example, the resources sector has dramatically increased its demands for a labour

force in recent years. There is an inadequate supply of tradespersons due to a long period of

underinvestment in apprentice training. The annual average apprentice training rate over

the eleven years between 1982 and 1992 was 13%; between 1993 and 2003 it declined to

11%. The recent discussion paper by the National Resource Sector Task Force (“NRSET”)

shows a fall in trade apprenticeship commencements of 23.2% for the year to the March

quarter 2009.9

2.19. A further critical factor is the declining completion rate for apprenticeships which has been

tracking down for some considerable time. Completion rates for trade apprenticeships are

between 55 and 70% depending on the trade which is a serious decline. Increasing

commencements is a wasted effort if the result is they do not complete. Any lift in

commencements must translate into qualified tradespeople hitting the market through

completions. We note with alarm the research cited in the NRSET discussion paper indicating

only a 47% completion rate for apprenticeships commenced in 200210

2.20. Also endemic to the resources industry in recent years is a drawing away of tradespersons

trained in other parts of the economy (and other geographical locations) to work as

tradespersons in the resources sector. High wages provide a strong incentive for employees.

This reduces the incentive for the resources sector to train its own tradespeople, and the

rest of the economy suffers again from a lack of skilled tradespeople available elsewhere.

2.21. An industry-wide problem requires industry-level solutions. Enterprise-level solutions are

solutions only for the enterprise. These are concerns integral to the labour productivity of

the nation, but they are not resolvable at individual workplaces. If training is bargained for

with an employer, often “workplace-specific” training is on the agenda, not training for a

broad skillset that will be useful to the worker and the wider economy once the job or the

project is done.

2.22. One employer will train its workers to increase that employer’s profits. The more short term

the employment of the worker by that employer, the less interested the employer will be in

the formation of skills that will be transferable outside that employer’s business. Project

work in the mining sector is a prime example of this, but its not the only example. Labour

9 National Resources Sector Employment Taskforce (“NRSET”), Resourcing The Future - National Resources Sector Employment Taskforce Discussion Paper, March 2010, p.9.10 id.

8


hire work, casual work and other precarious employment reduces skill-sets, and reduces our

productivity.

2.23. The implication of agreements with only job-specific training is a depletion of the amount of

trained workers in the economy, so that other sectors’ productivity decreases. The

implication of a legislative prohibition on terms of agreements that seek to control the use

of contractors is another constraint on achieving productivity-improving skill-sets

throughout industries and the economy.

2.24. The Explanatory Memorandum intends to constrain the types of clauses regulating

contracting which may be included in an agreement under s.172(1)(a)11. The extent to which

that constraint applies continues to be the subject of FWA and judicial proceedings. 12

Certainly, without making an agreement on similar terms with every employer (including

subcontractor or labour hire employer) in an industry, it is difficult to see how consistent

standards about matters such as industry-wide training requirements, or matters that

influence productivity along supply chains, can be agreed in individual enterprise

agreements. Further, if an employer maintains the capacity to contract out of their

employment of employees under such an agreement to a labour hire provider which is not

bound by the same terms and conditions relating to training, then productivity-enhancing

industry standards are again lost. Another potential limitation would be the prohibition on

pattern bargaining contained in the Act.13

The multi-enterprise agreement option

2.25. There is provision for the making of multi-enterprise agreements in the Act. Unfortunately,

the procedures providing for the negotiation and making of such agreements is a faint

shadow of the mechanisms available for the making of enterprise-level agreements.

2.26. A multi-enterprise agreement can be made under s.172(3) of the Act by two or more

employers. Multi-enterprise agreements can involve employers who do not have any

obvious relationship to one another or a common enterprise. For example, the employers

may simply operate in the one industry.

11 Explanatory Memorandum at paragraph 673.12 See for example, Federal Court appeal filed by Australian Industry Group v Fair Work Australia and Ors (VID1388/2011), from Australian Industry Group v ADJ Contracting Pty Ltd [2011] FWAFB 6684.13 ss.412 and 422.

9


2.27. There are distinct limitations on the procedures for making such an agreement, however.

Good faith bargaining orders are specifically prohibited from being made (s.229(2)). Neither

protected action ballots and nor protected industrial action are available during negotiations

for such a proposed multi-employer agreement (s.413).

2.28. For these reasons, employee bargaining representatives would only enter such a negotiation

where positive outcomes were assured, because they are not entitled to good faith

bargaining, and cannot use the economic pressure of protected industrial action to achieve a

multi-employer agreement that is interests of the employees whom they represent.

2.29. Where a multi-employer agreement is made, such an agreement must be approved by

employees on an employer by employer basis. That is, if only employees of a particular

employer vote up the agreement will they and their employer become covered by it. The

potential for consistent standards to address industry-wide concerns is further weakened.

2.30. It is possible for an employer to be party to negotiations for the multi-employer agreement

where that employer is already covered by an extant enterprise-level agreements for which

the nominal expiry date has not passed. However, for the negotiated and approved multi-

employer agreement to come into effect, the extant agreement would need to be

terminated by agreement of covered employees under ss.219-220 and this termination

would need to be approved by FWA (ss.222-223). This could happen simultaneously with

approval of the multi-employer agreement, or afterwards, but may again undermine the

achievement and enforceability of industry-wide standards under a multi-employer

agreement made under the Act.

Conclusions and recommendations

2.31. When productivity depends on industry-wide concerns, or economy-wide concerns, to have

enterprise level answers alone is simply too shallow an approach. This state of affairs is

ensured when the Act limits the subject matter of collective agreements, limits the parties to

collective agreements and undermines the achievement of multi-employer agreements

through the absence of good faith bargaining or protected industrial action during their

negotiation, and a prohibition on “pattern bargaining”.

2.32. To address the serious decline in Australia’s productivity growth, it is therefore the

recommendation of the AMWU to the Panel that the Act be amended so that:

10


A. the limitations on the subject matter of agreements at s.172 are removed;

B. multi-employer agreements may be negotiated under the same good faith bargaining and protected action principles and negotiations for enterprise agreement;

C. appropriate industry-wide agreements may be made and enforced;

D. prohibitions on “pattern bargaining” are removed.

11


3. Bargaining under the Act

3.1. The AMWU has no difficulty with the principles behind the “good faith bargaining

requirements” at s.228(1) of the Act. However, we do submit that the Act must be amended

to reduce the capacity of employers to avoid bargaining under those principles, and to

undermine those principles whilst bargaining to render them meaningless. To address this

manipulation of the legislation, the principles must be enunciated more clearly and must

apply consistently to all negotiations, and FWA must be given a greater ability to intervene in

bargaining where employers are preventing progress being made towards negotiation of a

collective agreement capable of approval under the Act.

Avoiding good faith bargaining - Timing

3.2. The most obvious way that the AMWU has experienced avoidance of good faith bargaining

in negotiations under the Act is with employer manipulation of the timing of bargaining.

3.3. Bargaining may commence at any stage. An employer simply has to decide to bargain, and

give employees a notice of representational rights under s.173, for bargaining to commence

at the instigation of an employer under the Act. This contrasts with the situation where an

employer does not wish to commence bargaining. Bargaining representatives of employees

must apply to FWA for a majority support determinations under s.236, which is subject to

FWA’s discretion as to the reasonableness of any determination.

3.4. Importantly though, commencement of bargaining does not trigger the commencement of

the ability to enforce good faith bargaining obligations. Section 229(3) provides:

(3) The application may only be made at whichever of the following times applies:

(a) if one or more enterprise agreements apply to an employee, or employees, who will be covered by the proposed enterprise agreement:

(i) not more than 90 days before the nominal expiry date of the enterprise agreement, or the latest nominal expiry date of those enterprise agreements (as the case may be); or

(ii) after an employer that will be covered by the proposed enterprise agreement has requested under subsection 181(1) that employees approve the agreement, but before the agreement is so approved;

(b) otherwise—at any time.

12


3.5. So whilst the obligations at s.228 might be thought to apply to a bargaining representative at

any time that they are acting in that capacity, such obligations are unenforceable until the

“90 day trigger” is activated.

3.6. Many enterprise agreements negotiated by the AMWU replace earlier collective agreements

made under the Act or previous legislation. Unsurprisingly then, the AMWU on several

occasions has found itself forced to commence bargaining which has been instigated by an

employer well before the AMWU is able to enforce the good faith bargaining obligations

which s.228(1) purport to require of that employer.

Case Study – Coates Hire

3.7. In the case of Coates Hire, the employer advised the AMWU in May 2011 that it intended to

commence bargaining in July 2011, despite the nominal expiry date for the existing

agreement not being until the end of March 2012. This would give the employer more than

nine months to bargain without the risk of good faith bargaining enforcement proceedings!

Case Study – ALS

3.8. On 23 May 2011, AMWU members at Australian Laboratory Services Pty Ltd (“ALS”) received

a notice of representational rights under s.178 of the Act, almost six months prior to the

nominal expiry date of the existing agreement, and that ALS would be forming a

“Negotiating Committee” comprising ALS human resources department representatives, and

an employee representatives nominated and elected at each site. In June 2011, the AMWU

was informed that bargaining meetings would commence on 6 July 2011, more than five

months prior to the nominal expiry date. This would be a meeting of the “Negotiation

Committee” to which the AMWU could choose to attend or not. AMWU had concerns that

this “Negotiation Committee” structure was contrary to the good faith bargaining provisions

of the Act, failed to provide for the appropriate appointment of employee bargaining

representatives under the Act, and failed to properly recognise the existing employee

bargaining representative, being the AMWU. But the timing of the negotiations meant our

concerns could not be tested or remedied in the making of any bargaining order.

3.9. In each of the above examples, it is true that a bargaining order application may be brought

after an employer has invited employees to approve an agreement under s.181(1). However,

the period between the invitation to approve the agreement and the actual vote to approve

the agreement in only seven days. After perhaps months of trying to bargain in the face of

13


an employer ignoring their good faith bargaining obligations, an employee’s bargaining

representative has only seven days to commence proceedings at FWA to apply for an order

for the employer to comply with s.229(1). Unless a bargaining order to revoke the invitation

to employees to approve the agreement is made by FWA, the agreement may be

nonetheless approved by employees, notwithstanding the breaches of good faith bargaining

obligations that may have taken place throughout the preceding months.

3.10. Our submission is not that all employers will intend to abuse the good faith bargaining

framework by “bargaining early”, but that the prohibition on applying for a bargaining order

prior to the “90 day period” needlessly undermines the general application of good faith

bargaining, for no discernable reason. Particularly where an employer has commenced

bargaining, it is our submission that there is no reason why they should not owe the same

enforceable good faith bargaining obligations as any other bargaining representative.

3.11. Where bargaining commences because of a majority support determination, the employee

bargaining representative has already made an application to FWA for the determination.

FWA retains a wide discretion at s.237(2)(d) to not issue a majority support determination.

If, for example, there were an allegation that a bargaining representative made the majority

support determination vexatiously, just to tie the employer up in good faith bargaining

obligations, then FWA could be directed to such an allegation during the application hearing

for the majority support determination, and could find that a determination should not issue

for that reason.

3.12. Similarly, where a scope order commences bargaining, it is made only where FWA has

determined that the scope order “…will promote the fair and efficient conduct of

bargaining…”, and it is reasonable in all the circumstances.14 A scope order may also be

revoked at any time.15A low paid authorisation, which may also commence bargaining, is also

only made after a clear determination by FWA, and no doubt extensive submissions on its

merits.16

3.13. It is the submission of the AMWU that good faith bargaining obligations must be enforceable

throughout bargaining. If an employer commences bargaining, there is no reason why they

should be excused from bargaining in good faith simply because they “go early”. If an

employee bargaining representative commences bargaining, FWA can take into account the

14 s.238(4)(b), (d)15 s.239(b).16 s.243.

14


timing of application in determining whether to issue a majority support determination,

scope order or low paid bargaining authorisation. To meet the objects of Part 2-4 of the Act,

to enable FWA to facilitate good faith bargaining and the making of enterprise agreements

by making bargaining orders, dealing with disputes, and ensuring that agreement-making

and approval proceeds without delay,17 the ninety day requirement for making a bargaining

order application at s.229(3) must be removed.

3.14. Conciliation at FWA is available where a s.240 bargaining dispute has been filed, without a

similar “90 day” qualifying requirement. The option for conciliation where parties are in

dispute is to be welcomed. The utility of FWA only having the capacity to conciliate can,

however, be highly frustrating. Particularly where bargaining orders are unavailable, due to

the time that bargaining is taking place, conciliation will achieve little where one or more

parties to the dispute to not want to resolve the dispute.

Avoiding good faith bargaining – ignoring s.240 conciliation

Case Study – Schneider Electric

3.15. In the case of Schneider Electric (“Schneider”), the AMWU filed a s.240 bargaining dispute.

The circumstances of the bargaining were that the AMWU informed Schneider in writing

that it wished to bargain for an enterprise agreement. Immediately after receiving this

correspondence, Schneider agreed to meet with the AMWU only under the following

conditions:

The meeting would only be only over the phone

It would be with a Sydney-based Partner of a large corporate law firm.

The AMWU were not allowed to talk to other bargaining representatives

The AMWU were not allowed to know the identities of other bargaining representatives

Schneider dictated a strict bargaining timetable according to the minimum statutory period.

3.16. A bargaining dispute before Senior Deputy President Richards resulted in a recommendation

that the relevant AMWU Organiser be allowed to attend meetings in person – after all,

Schneider was located only ten minutes away from the AMWU office! Nonetheless,

17 s..171

15


Schneider retained a hostile attitude to the AMWU’s position in bargaining, and an

agreement drafted by Schneider was put to the workforce close to the bare minimum time

provided in the Act. The entire bargaining process took little more than 28 days.

3.17. A s.240 recommendation is unenforceable. It bears little persuasive value when a bargaining

representative does not have a reason to comply with it. In the case where bargaining has

“commenced early”, the threat of an application for a bargaining order in similar terms

being made does not exist until 7 days prior to the vote by employees to approve an

agreement.

Avoiding good faith bargaining – weakened protection for industrial action

3.18. A second issue which might give an employer pause against ignoring good faith bargaining

obligations, or s.240 recommendations, is the threat of protected industrial action. Quite

plainly, this is only of persuasive value where a workplace is organised and workers have the

economic capacity to bear the impact of the industrial action. But the bargaining framework

also limits the capacity of workers to take protected industrial action during bargaining.

3.19. Section 438(1) of the Act provides that an application for a protected action ballot (“PAB”)

order “must not be made earlier than 30 days before the nominal expiry date of [the]

enterprise agreement.” This is notwithstanding that bargaining may have commenced much

earlier than 30 days prior to the previous agreement’s nominal expiry date. Where

bargaining has commenced, the AMWU is of the view that there should be no reason why an

application for a PAB order could not be made. Where the employer has commenced

bargaining, employees should not be denied the opportunity to use the only economic

pressure which they have against that employer to robustly bargain for the enterprise

agreement which the employer has proposed. Where employee bargaining representatives

have commenced bargaining, as noted above, FWA has a discretion to order the issue of any

order which would commence bargaining at the employee bargaining representative’s

instigation.

3.20. Below, we make further submissions about technical confusion in provisions of the Act

relating to taking protected industrial action. Each of these technical issues undermines the

legitimate right of employees to take industrial action with the reassurance that s.415 of the

16


Act provides them immunity from suit. We therefore make further recommendations below

as to how such technical confusion may be addressed.

17


Avoiding good faith bargaining – Not relevant to FWA approval.

3.21. Good faith bargaining requirements at s.228, in the absence of the threat of industrial action

or bargaining orders being made, can be little more than hollow aspirations of employee

bargaining representatives. If an agreement is approved by the employees within its scope,

in circumstances where an employer has not complied with s.228(1) throughout the period

of “bargaining”, the Act again frustrates the ability of other bargaining representatives to

bring this to the attention of FWA.

Case Study – Philmac

3.22. In the case of the Philmac Production, Distribution and Maintenance Enterprise Agreement

2010 (South Australia), on the basis of the evidence before him, Senior Deputy President

O’Callaghan made the following findings in his decision of 16 March 2011:

“[38] I do not consider that the employee feedback process can be taken to usurp or replace the continuing requirement for consultation to be available to all the employee bargaining representatives. I am not satisfied that the process applied by Philmac provided an opportunity for all of the employee bargaining representatives to be made aware of Philmac’s revised proposals that may have been put by other bargaining representatives both before and after the employee survey. Further, the advice to employees suggests consultation with employee bargaining representatives, which in fact, is not entirely accurate.

[39] As a consequence, I am unable to conclude that the good-faith bargaining requirements have been met so as to enable the agreement to be

approved.”18

In doing so, O’Callaghan SDP relied upon s.187(2) of the Act as requiring him to be satisfied as to the requirements of s.187(2) before he could approve an enterprise agreement:

“187 When FWA must approve an enterprise agreement—additional requirements

Additional requirements

(1) This section sets out additional requirements that must be met before FWA approves

an enterprise agreement under section 186.

Requirement that approval not be inconsistent with good faith bargaining etc.

18 [2011] FWA 1639

18


(2) FWA must be satisfied that approving the agreement would not be inconsistent with

or undermine good faith bargaining by one or more bargaining representatives for a

proposed enterprise agreement, or an enterprise agreement, in relation to which a

scope order is in operation.” (emphasis added).19

3.23. On appeal, however, the decision of O’Callaghan SDP was overturned. Quite properly, the

Full Bench found that s.187(2) only applied in circumstances where a scope order

operated.20 We do not doubt that the Full Bench was correct in its interpretation of s.187(2),

but we must ask why the operation of s.187(2) is so limited. The Full Bench did not find that

O’Callaghan SDP’s findings as to whether the employer’s good faith bargaining obligations

had been met were incorrect, simply that these findings were legally irrelevant in the

absence of a scope order.

3.24. In the view of the AMWU, there is no reason that s.187(2) should not apply to all

applications for approval of an enterprise agreement. If good faith bargaining obligations

have not been met, then to deny FWA the opportunity to consider whether approving the

agreement is inconsistent with or undermines good faith bargaining again renders hollow

the obligations at s.228(1). When good faith bargaining obligations can be avoided in

circumstances that the application for good faith bargaining orders are prohibited, it is even

more essential that there is an opportunity to raise with FWA an employer’s conduct

contrary to s.228(1). The AMWU therefore recommends that s.187(2) be amended to

remove the words “in relation to which a scope order is in operation”.

Undermining good faith bargaining

3.25. Even when bargaining takes place at a time when the requirements at s.228(1) may be

enforced, decisions of FWA have allowed employer behaviour to undermine the integrity of

those requirements.

3.26. Much was made at the time that the Act came into operation, that employers could no

longer “refuse to bargain” when their employees wanted them to bargain. Unfortunately,

the intervening two and a half years have seen a tick-the-box approach to bargaining

permitted even where employers, according to the Act, “must bargain”. In the view of the

AMWU, this is for four primary reasons:

19 ibid at paragraph [21].20 [2011] FWAFB 2668 at paragraph [4]

19


A. the absence of a requirement to reach agreement;

B. the absence of a requirement to bargain in a manner reflecting a genuine intention

to reach agreement;

C. the capacity of an employer to stop bargaining and put a proposed agreement to the

workforce for a vote at a time determined by the employer apart from minimal

statutory requirements;

D. absence of a defined framework for communications and consultation with

employees, so that employers can effectively directly communicate and negotiate

with employees to undermine good faith bargaining negotiations and the prospects

of reaching agreement.

3.27. What these phenomena mean is that employers do not have to actually engage in

bargaining with a view to reaching an agreement. This disempowers employees and their

bargaining representatives, and undermines the framework of good faith bargaining

established in the Act. A requirement to bargain for an enterprise agreement is meaningless

if there is no requirement for there to be a prospect of reaching agreement.

3.28. Subsection 228(2) makes it plain that the intention of the legislation is to allow for “hard

bargaining:

“(2) The good faith bargaining requirements do not require:

(a) a bargaining representative to make concessions during bargaining for the

agreement; or

(b) a bargaining representative to reach agreement on the terms that are to be

included in the agreement.

3.29. The AMWU disagrees with the absence of a requirement to reach agreement. We

recommend the deletion of s.228(2). We are of the view that the lack of such a requirement

is a key reason why negotiations can and have dragged over months and years without

reaching agreement, notwithstanding that employees have repeatedly indicated a desire to

reach agreement. We will make some recommendations below as to how to we believe the

Act should curtail bargaining tactics designed to unreasonably wear down the patience and

forbearance of employees and their bargaining representatives.

20


3.30. However, even if there remains a requirement that bargaining representatives do not have

to reach agreement, the AMWU believes that there should at least be a good faith

bargaining requirement for bargaining representatives to be genuinely trying to reach an

enterprise agreement made under the Act. This is a requirement of employee bargaining

representatives who make application for a protected action ballot order under the Act, 21 as

was the case under previous legislation.22

3.31. A key component of genuinely trying to reach agreement is making proposals for an

enterprise agreement that is capable of approval by employees and FWA under the Act.

Genuinely trying to reach agreement does not mean surface bargaining – of turning up to

meetings and exchanging correspondence until other bargaining representatives lose

interest. Also integral to genuinely trying to reach agreement is not taking steps to regulate

the terms and conditions of employment outside of an enterprise agreement to be made

under the Act. If a bargaining representative can ignore the bargaining and agreement

framework of the Act, then the Act does nothing to enforce the right of employees to

bargain for an agreement. Effectively, an employer can still “refuse to bargain”. The

invention of the “majority support determinations” is pointless if the Act allows surface

bargaining which denies good faith bargaining any integrity.

Undermining good faith bargaining - Single employee agreements

3.32. One way in which employers have manipulated the collective bargaining requirements of

the Act is to make agreements with just one employee. This contrasts quite dramatically

with the quite clear description of enterprise agreements in the Explanatory Memorandum:

“Part 2-4 provides for the making of enterprise agreements through collective bargaining…

Enterprise agreements are collective agreements that will cover a group of employees.”23

It is also resoundingly obvious at s.3(c) that statutory individual employment agreements are

inimical to the Act:

“(c) ensuring that the guaranteed safety net of fair, relevant and enforceable minimum

wages and conditions can no longer be undermined by the making of statutory individual

21 s.443(1)(b).22 See, for example s.461(1)(b) of the Workplace Relations Act 1996.23 Explanatory Memorandum at paragraphs 640-641.

21


employment agreements of any kind given that such agreements can never be part of a fair

workplace relations system;” (emphasis added).

3.33. Commissioner Gooley, correctly in our view, found that the Act did not permit collective

agreements to be made with an individual:

“[45] The Applicant contends that because an employee can appoint her or himself as a

bargaining representative an enterprise agreement can be made with a single employee. I do

not accept this submission. That an individual employee may appoint him or herself or

someone else as a bargaining representative does not support a conclusion that an

agreement can be made with a single employee. Enterprise agreements are not made with

bargaining representatives but with employees. It does not logically follow that because an

employee can appoint a bargaining representative that an enterprise agreement may be

made with a single employee.

[46] Further support for the conclusion that the FW Act did not intend that enterprise

agreements can be made with a single employee can be discerned by the context in which

the FW Act was enacted.

[47] Parliament, when it enacted the FW Act, repealed legislation which permitted an

employer to make a statutory agreement with a single employee. Prior to the enactment of

the FW Act the legislation permitted an employer to make an agreement with an employee

namely an Individual Transitional Employment Agreement and prior to that an Australian

Workplace Agreement. If Parliament had intended that an enterprise agreement could be

made with a single employee it would have made this explicit.”24

3.34. Surprisingly, then, a Full Bench in AMWU v Inghams25 found to the contrary:

“[30] We add that we are not persuaded an enterprise agreement cannot be made with only one employee. There is nothing explicitly in the FW Act to suggest an enterprise agreement cannot be made with only one employee and it would not be consistent with the objects of the FW Act or Part 2-4 of the FW Act concerning enterprise agreements to so construe the FW Act. Such objects include “achieving productivity ... through an emphasis on enterprise-level collective bargaining” and “to provide a ... framework that enables collective bargaining ..., particularly at the enterprise level, for enterprise agreements that deliver productivity benefits”. A conclusion that an enterprise agreement cannot be made with only one employee would mean that both an employer with only one employee and that employee would be deprived of a potential source of productivity benefits. Although an individual flexibility arrangement can be agreed between an employer and an employee pursuant to

24 Re Fourth Furlong Motel [2011] FWA 3256.25 AMWU v Inghams Pty Ltd Re Somerville Maintenance Enterprise Agreement 2011 [2011] FWAFB 6106.

22


the flexibility term of a modern award, such an arrangement can be terminated by either party giving written notice of not more than 28 days.

[31] We were referred to the decision in Re Fourth Furlong Motel wherein a single member of FWA concluded an enterprise agreement could not be made with a single employee. With respect, we are unable to concur with the Commissioner’s conclusion.” (references omitted).

3.35. With respect, to provide that a collective enterprise agreement can be made with a single

employee flies in the face of a structure of bargaining and agreement making in an Act

premised upon collective bargaining, that is, employees negotiating collectively with their

employer. The extensive public discussion, and phasing out of Australian Workplace

Agreements through the use of Individual Transitional Enterprise Agreements prior to the

commencement of the Act, together with the explicit provisions of the Explanatory

Memorandum make it abundantly clear that an individual agreement is not a collective

agreement, and collective agreement making provisions in the Act should not be able to be

manipulated in this way.

3.36. The ability to split and divide workforces into individual units that can make their own

“collective agreements” applying to only one worker must be addressed, in our submission.

It is difficult to see how an individual employee could be accommodated by the good faith

collective bargaining mechanisms of the Act – it is difficult to see how bargaining with an

individual would not mean an employer was engaging in unfair conduct which undermined

collective bargaining, as is prohibited at s.228(1)(e). It is very difficult to see how an

“individual” collective enterprise agreement could be made with a “fairly chosen” group, as

is required by ss.186(3) and (3A).

3.37. If individual “collective enterprise agreements” are enabled by the Act, then these

individuals will be denied their rights to good faith bargaining. Individual statutory

agreements were eliminated from federal industrial regulation because of the patent

inequality of bargaining strength between an individual worker and a corporate employer. In

the face of such inequality of bargaining power, the requirements at s.228 are empty

platitudes. If the Full Bench in Inghams was of the view that the Act lacked clarity about that

principle, then the Act must be made clear. The AMWU strongly recommends that a

definition of “group of employees”, for the purposes of s.186, is defined to be “more than

one employee who is to be covered by the proposed agreement.”

23


Undermining good faith bargaining – opting out of enterprise agreements

3.38. A similar manipulation of the intention of the legislation has emerged in decisions of FWA

which have held that an agreement which permits employees to “opt out” of an agreement.

In the scope clause of such an agreement, the agreement is expressed to cover a certain

group of employees, except for those who choose to opt out and be governed by some

other form of instrument outside the agreement.

Case Study – Newlands Coal

3.39. In June 2011, Katzmann J26 of the Federal Court quashed a FWA Full Bench decision in

Newlands Coal v CFMEU 27 which had approved an agreement that included an “opt out”

scope clause. As the Full Bench noted in a later decision:

“[5] On 24 June 2011, Katzmann J of the Federal Court of Australia issued writs quashing the

decision of the Full Bench for jurisdictional error and remitting the matter to Fair Work

Australia for determination according to law. The Court rejected the CFMEU’s principal

argument that FWA had no power to approve the agreement because it was not an

enterprise agreement within the meaning of the Fair Work Act 2009 (the Act). However it

accepted the alternative position put by the CFMEU that the majority of the Full Bench in

approving the agreement had erred in applying the “Better off Overall Test” (‘the BOOT’) and

constructively failed to exercise their jurisdiction when deciding whether the group of

employees covered by the agreement was fairly chosen, because they failed to have regard

to a mandatory consideration.”28

3.40. In short, her Honour found that the agreement could not pass the “BOOT” because an

employee who opted out of the agreement would no longer be “better off” than the

underlying award, because that award would now form the statutory underpinning of the

terms and conditions of their employment. That is, the opting-out employee would be “no

worse off” than the award, but not “better off” than it.

3.41. Subsequent to her Honour’s decision, the original Full Bench was reconstituted, and by a

majority of two to one approved the agreement again. Hamberger SDP approved the

agreement only on the basis of an undertaking provided by the employer:

26 CFMEU v FWA [2011] FCA 71927 [2010] FWAFB 7401.28 [2011] FWAFB 7325

24


“‘Newlands Coal Pty Ltd undertakes that in the event an employee elects to “opt out” of the Newlands Coal Surface Operations Agreement 2010 (Agreement) pursuant to clause 2.2, then that employee will receive pursuant to his or her common law contract of employment:

a) A Base Salary at least equal to the Base Salary for their employment level as provided for in Clause 9.1 of the Agreement; and

b) A Roster Allowance at least equal to the applicable Roster Allowance provided for in Clause 9.2 of the Agreement.’

[3] These rates are significantly in excess of those contained in the Black Coal Mining Award 2010. The applicant has also reaffirmed its commitment to an undertaking given to the Full Bench on 5 November 2010 in the following terms:

‘Newlands Coal Pty Ltd undertakes that prospective employees will not have their employment made conditional on agreeing to “opt out” of the Newlands Coal Surface Operations Agreement 2010. Employees will be given a free choice as to whether or not they wish to be covered by the Agreement.’”29

3.42. A first difficulty with the decision to accept this agreement arises: how can an employee who

opts out of the agreement so they are no longer covered by the agreement be protected by

an undertaking which forms part of that agreement? It is difficult to see how such an

employee could recover under the Act any entitlements pursuant to an undertaking that no

longer covers or applies to that employee.

3.43. But the point of greatest concern to the AMWU is the manner by which the facility of “opt-

out agreements” can lead to manipulation of bargaining and agreement making to

undermine good faith bargaining entirely, and it is perhaps the employees who do not opt

out who are most at risk from such manipulation.

3.44. In a simple hypothetical the manipulation that is facilitated by FWA’s approval of “opt-out

clauses” is made plain:

An employer proposes an agreement in a workplace with a group of line managers, a group

of tradespeople and a group of production workers.

The employer proposes a tough agreement, pleading that there are difficult economic

conditions which means that certain allowances are removed from the agreement for all

employees, but which particularly affect tradespeople.

29 Re Newlands Coal Pty Ltd [2012] FWAFB 721

25


The employer is therefore concerned that the tradespeople will not approve the agreement,

and the split between tradespeople and production workers is such that this would mean

that the agreement is not approved overall.

Under previous agreements, line managers were excluded from the scope of the agreement.

Line managers are covered by common law agreements which provide greater salaries and

more controls over their hours of work than applies to tradespeople and production workers

under the agreement.

Line managers are reluctant to be constrained by an enterprise agreement, and accept

worse terms and conditions than their current situation. However, the employer proposes

an opt-out clause for the agreement for line managers, and these line managers know that

they won’t truly be under the enterprise agreement at all.

Line managers all vote to approve the agreement, overwhelming the negative vote of the

tradespeople. The line managers all then opt-out of the agreement, leaving the reduced

terms and conditions to the tradespeople and production workers.

3.45. In such a scenario, which is now available to employers who wish to manipulate approval of

an agreement, the genuine agreement of employees who remain covered by the

agreement30 was never obtained, but the genuine agreement of those employees who were

covered at the day of the vote was obtained, because the line managers were then included

in the count.

3.46. Further, the group that was “genuinely chosen” at the vote to approve the agreement has

become a very different group. Even where an “opt out clause” is not restricted to a specific

classification or group, the ability of some employees to opt out and others to remain

covered by an agreement must mean that any geographical, operational or organisational

distinction which made the original group “fairly chosen”31 disintegrates further with every

opt-out.

3.47. In Re New Acland Coal,32 Lawler VP held that he was bound by the Full Bench in Newlands

Coal as to the effect of an opt-out clause on the “genuinely chosen test”. However, he

strongly disagreed with their decision:

30 Under s.188.31 Under s.186(3A).32 Re New Acland Coal Pty Ltd [2011] FWA 9075.

26


“[16] For myself, I consider that the reasoning of Roe C on this topic is correct. If employees in

a given group can opt-out of the coverage of an enterprise agreement then I do not see how

that group can properly be described as a “group of employees who will be covered by the

agreement” within the meaning of s.186(3). This language connotes certainty of coverage by

the agreement if an employee is employed in a particular role while the agreement is in

operation. If an employee who is otherwise within the scope of an enterprise agreement has

the right to elect not to be covered by the agreement then it cannot be said that the

employee will be covered by the agreement while it is in operation but only that they may be

covered by the agreement. That is not what s.186(3) requires. Further, in my view, the

objects, purpose and scheme of the FW Act in relation to enterprise bargaining is inconsistent

with an ”opt-out” clause permissibly forming part of an enterprise agreement.”

3.48. With respect, the views of Vice President Lawler are patently correct – an opt-out clause is

impermissible. When the good faith bargaining framework provided by the Act is premised

on a majority vote for an agreement following good faith negotiations with the group of

employees to be covered by that agreement, the facility of “opting out” of an agreement

renders the framework meaningless.

3.49. That an opt-out clause threatens the integrity of bargaining framework of the Act is made

obvious when consideration is given to the employees who have opted out of an agreement,

and are no longer covered by it. Those employees are able to negotiate a new enterprise

agreement. Those employees are able to seek approval to take protected industrial action in

support of a new enterprise agreement. Where whole groups of employees who were

covered by an agreement choose to opt out, then the prohibition at s.417 on industrial

action until the nominal expiry date of that agreement no longer applies to the negotiation

of a new agreement which only covers those employees.

3.50. In order that the “fairly chosen” requirement of a collectively bargained enterprise

agreement retains any integrity, and that s.417 retains relevance, the AMWU believes that

that the Act must be amended to provide at s.12 that the definition of “ objectionable term”

includes:

“(d) that one or more employees may choose to no longer be covered by an agreement.”

Such an amendment would preserve the ability to take steps under the Act to terminate an

enterprise agreement or vary an agreement. The prohibition would simply be on the

agreement providing for a “choice” to not be covered.

27


Undermining good faith bargaining - Railroading.

3.51. When an employer bargains within the time frame when bargaining orders can be made,

that is within the 90 days prior to the expiry of any existing agreement, there is little

protection in the Act where an employer wishes to adopt a steamroller mentality to pushing

through an agreement to a vote under s.181 of the Act without real consultation or

bargaining in good faith.

3.52. The minimum time frames from an employer deciding to negotiate for an agreement and

providing a notice of representational rights to inviting employees to vote to approve an

agreement is 21 days, including an “access period” to the written text of a proposed

agreement of seven days.33

3.53. The bargaining framework established by the Act allows only an employer to invite

employees to vote under s.181 – discussed further below. The only mechanism in the Act to

prevent an employer who intends to take this course is an urgent bargaining order.

Particularly in workplaces with little industrial organisation, satisfying the procedural and

jurisdictional requirements for an application for such an order are hurdles which are

beyond the capacity of most workforces.

3.54. In most instances, unorganised groups of employees will simply be unaware of whether an

employer has complied with the Act, let alone be in a position to articulate opposition to the

opportunity that have been provided to them to negotiate an agreement. In many

workplaces within the eligibility rules of the AMWU, a majority of workers will be from non-

English speaking backgrounds. In these and other workplaces, negotiating sophisticated legal

instruments is not the specialty of any non-management members of the workforce. To

expect such workforces to understand and co-ordinate a sophisticated legal response to an

employer’s carefully drafted and planned documentation and industrial strategy in just three

weeks is simply fanciful.

3.55. We therefore repeat our submission that an employer must be required to satisfy FWA, at

the time of seeking approval for an agreement, that good faith bargaining requirements

have been complied with, not just where a scope order operates.

33 Though there is a contrary view, expressed by a member of FWA that the invitation to vote must be made entirely separately from the “access period”. See Re Australia Char Pty Ltd [2011] FWA 1627; Re Boral Resources (Country) Pty Ltd [2011] FWA 6796, per Ryan C.

28


3.56. Further, it is the recommendation of the AMWU that more concrete steps must be instituted

in the Act, or Regulations, to provide for proper consultation with a workforce prior to an

request to approve an agreement being made under s.181. Without statutory requirements

for such steps, there is no hurdle to jump for an employer who wishes to railroad through an

agreement which is in the interests of that employer.

3.57. Below, we make a recommendation for a model code of good faith bargaining, to be

adopted as a Regulation to the Act. To avoid employees being railroaded by an employer-

drafted agreement, it is necessary to require of employers that they genuinely inform and

consult with employees about the process to reach, and content of, any proposed

agreement, and the rights of those employees in respect of these.

Undermining Good Faith Bargaining – Surface Bargaining

Case Study – Cochlear Limited

3.58. Where a bargaining representative does not want to reach any enterprise agreement, and

where that bargaining representative is not required to conduct itself with a view to trying

to actually reach any agreement, there is no disincentive in the Act to that bargaining

representative acting to avoid or undermine good faith bargaining. In such circumstances,

the requirement in the Act for an employer to bargain where a majority support

determination has been made, is just meaningless.

3.59. Cochlear Limited (“Cochlear”) is a successful Australian company. Since the mid 1990s, the

AMWU has had members employed by Cochlear at its manufacturing premises at Lane Cove

in Sydney. The Company plans to transfer some or all or its manufacturing operations from

Lane Cove to new premises at Macquarie University in Sydney’s North-West, over which

Cochlear has taken a lease for an extended period.

3.60. In January 2006, the “Cochlear Limited Enterprise Partnership Agreement 2005” was

approved by the NSW Industrial Relations Commission. This agreement has an expiry date of

30 June 2007, but remains in operation by virtue of the fact that it has not been lawfully

terminated, and is now a collective agreement-based transitional instrument under the Fair

Work (Transitional Provisions and Consequential Amendments Act) 2009 . Since 2007, the

AMWU has attempted to negotiate a collective agreement with Cochlear to replace the

expired 2005 agreement.

29


3.61. In February 2007 the AMWU held a ballot of workforce in which 195 out of 266 employees

participated. The result of the ballot was that 100% of ballot participants said that they

wanted the AMWU to negotiate an Enterprise Agreement on their behalf.

3.62. On 26 March 2007 Cochlear circulated a non-union agreement to all employees to be

balloted. The result of the ballot was that the majority of employees voted no to the

company offer.

3.63. On 29 May 2007 the AMWU sought endorsement by secret ballot for a draft collective

agreement. 201 employees participated in the ballot, with 198 endorsing the union

collective agreement.

3.64. On 22 June 2007 Cochlear circulated a second non-union agreement and held a ballot. A

vote of 75% of employees rejected the agreement.

3.65. In January 2009 the AIRC conducted a postal ballot of Cochlear employees as a part of

proceedings C2007/3736. 196 of 316 employees participated in the vote. The result of the

ballot was that 192 employees vote that they would prefer a union-negotiated collective

agreement and supported the AMWU’s actions in attempting to prevent the existing

collective agreement being terminated.

3.66. In July 2009, after the Act came into operation, Cochlear again refused to agree to negotiate

for an enterprise agreement. The AMWU applied for a majority support determination,

which Cochlear opposed (in matter B2009/10335). As part of these proceedings,

Commissioner Harrison ordered a further ballot of Cochlear employees. On 19 August 2009

the secret ballot was conducted by the AEC on the question of support for bargaining an

enterprise agreement. 312 employees voted in that ballot, with 185 employees (60%) voting

in favour of bargaining for a new enterprise agreement.

3.67. On 20 August 2009 a majority support determination was made by Commissioner Harrison

([2009] FWA 125).

3.68. Between the making of that determination and this submission, 30 months have passed. The

employees at Cochlear who repeatedly have indicated that they wish to negotiate a

collective agreement at Cochlear have not even had the opportunity to vote on any

proposed agreement.

30


3.69. Between August 2009 and November 2009, Cochlear would not have a meeting to discuss a

proposed agreement as they took time to appoint a bargaining representative on their

behalf. Between then and August 2010, Cochlear refused to meet to discuss the terms of any

proposed agreement until the AMWU agreed to the terms of a “bargaining protocol” to

frame negotiations. Despite arguing and negotiating for a more useful document which

would facilitate consultation with employees, and arrangements for negotiations which

would allow progress towards the making of an enterprise agreement, the AMWU agreed to

sign the “bargaining protocol” in August 2010. Any further delay before a substantive

bargaining meeting was seen as simply too much.

3.70. Between September 2010 and December 2011, the AMWU and Cochlear have met on

several occasions in formal “bargaining meetings”, together with two self-appointed non-

union employee bargaining representatives. At a bargaining meeting in November 2010, the

AMWU outlined to Cochlear its bargaining claim and provided a “bargaining issues”

document. In December 2010, the AMWU provided Cochlear with a draft agreement. In

March 2011, the AMWU provided Cochlear with an updated “bargaining issues” document,

further clarifying the source of each of its claims.

3.71. Throughout this period, the AMWU sought a response from Cochlear, further to the

company’s good faith bargaining requirements. At first, Cochlear stated that they would

respond to our claim and provide their own claims for a proposed enterprise agreement

once they had received “all of the claims of the bargaining representatives”. In July 2011, the

AMWU received a joint response to its claim from the two non-union bargaining

representatives. Neither made any claims of his own, but rejected the AMWU claim, stating

that neither believed that making an agreement was necessary.

3.72. At a bargaining meeting in August 2011, Cochlear gave a verbal response to the AMWU

claim. This was later confirmed in writing on 30 August 2011, some nine months after the

AMWU put its claim in writing to Cochlear. Cochlear rejected the bulk of the AMWU claim,

stating, inter alia:

matters which currently were dealt with in common law agreements would

remain in common law individual employee agreement and would not be dealt with in

any collective enterprise agreement;

the company would not accept any schedule of wage rates being included in the

agreement, and that Cochlear would retain a discretion to increase wage rates or not;

31


any enterprise agreement would be for a maximum of one year, and that the AMWU

must agree to not oppose the termination of the agreement after a year;

Cochlear would not be putting any “specific claims” for inclusion in an enterprise

agreement.

3.73. After thirty months of bargaining, despite being “required to bargain” by the majority

support determination made in August 2009, Cochlear refuses to propose any enterprise

agreement that would be capable of approval by FWA. In the least it must be said that an

enterprise agreement which included a capacity for the employer alone to determine wage

rates would not satisfy the “Better Off Overall Test”. We say that Cochlear is not bargaining

genuinely, or in good faith.

3.74. Further, it is the view of the AMWU that a failure to put any proposals for an enterprise

agreement makes a mockery of being “required to bargain”. it is our view that what

Cochlear has done is tick-the-boxes. It is the view of the AMWU that a bargaining

representative must accept that once bargaining has commenced, they must be required to

put proposals for an enterprise bargaining agreement. If the requirements at s.228 do not

require that, then they are insufficient and must be amended.

3.75. At the same time as rejecting the premise of the negotiations into which they were required

to enter by the employee vote for a majority support determination, Cochlear increased

wages of all employees by 4% on 1 November 2011. No notice of this was provided to the

AMWU, the bargaining representative of over a hundred of its employees. Cochlear

continues to regulate the terms and conditions of its employees on its own terms, without

recognition that a majority support determination means that those terms and conditions

must be negotiated within an enterprise agreement made under the Act.

3.76. The AMWU has made application for bargaining orders against Cochlear. This application is

yet to be heard. We will be making the argument that “surface bargaining”, such as has been

engaged in by Cochlear since a majority support determination was made, is contrary to the

Act, and that Cochlear must truly engage in bargaining for a collective enterprise agreement

as the majority support determination in August 2009 required of them.

3.77. But this must be made clear in the Act. The undermining of the requirements to bargain in

good faith, by an employer surface bargaining and actually choosing to regulate the terms

and conditions of employment entirely outside any proposed enterprise agreement, cannot

32


be permitted by an Act which has the object of “achieving productivity and fairness through

an emphasis on enter-prise level collective bargaining underpinned by simple good faith

bargaining obligations and clear rules governing industrial action.”

3.78. In this context, we are not saying that the parties must agree to the terms of an enterprise

agreement, given that s.228(2) excuses bargaining representatives from this. What we say is

that bargaining representatives, when they are bargaining under the Act, must properly

recognise that they are bargaining for an enterprise agreement to be made under the Act.

That is, a collective enterprise agreement that can be approved by its employees and by

FWA. This is the concept which, we say, is captured by the phrase “ genuinely trying to reach

agreement”. We therefore recommend, in the least, that this concept be made a

requirement of s.228.

3.79. An additional formulation of a similar concept is found in New Zealand’s “Code of Good Faith

in Collective Bargaining”, made in 2005 under the Employment Relations Act 2000. This code

includes a requirement that parties bargaining for an enterprise agreement have a “duty…to

conclude a collective agreement unless there is a genuine reason not to, based on reasonable

grounds”.34 Such a formulation, in addition or in alternative to the requirement to be

“genuinely trying to reach agreement” would again provide a legislative bulwark against

surface bargaining.

Undermining Good Faith Bargaining - Direct Communication

3.80. In the case of Cochlear, as noted above, the employer is able and has provided direct

variation to the terms and conditions of employment of employees to be covered by the

purported “proposed agreement” without any restriction to confine itself to bargaining for a

collective agreement. In addition, Cochlear has continued access to its workforce while they

are at work, when it may discuss terms and conditions of employment, but has refused the

AMWU any access during work time to meet with the employees we represent, to discuss

the claim for the proposed enterprise agreement or the conduct of the bargaining.

3.81. It is a feature of several overseas jurisdictions that true recognition of a bargaining

representative means that, during bargaining, any proposals about terms and conditions of

employment must be proposed through those representatives. After all, that is the nature of

34 “Code of Good Faith in Collective Bargaining” made under s.35 Employment Relations Act 2000 (New Zealand) at paragraph 3.1.

33


representation. By contrast, FWA has found that “recognising” a bargaining representative

under s.228(1)(f) does not prevent an employer putting bargaining proposals direct to the

employees represented by that bargaining representative.

3.82. In LHMU v Mingara, Vice President Watson rejected an application for a bargaining order,

finding:

“[17] The LHMU has not established that holding a preliminary information meeting with staff in the absence of a bargaining representative is inconsistent with the good faith bargaining requirements of the Act. Mingara has not refused to meet with the LHMU. It will be doing so shortly to specifically discuss an enterprise agreement. It has not denied the LHMU any relevant information. It has not denied the LHMU access to its staff. All it has done is refuse to allow an LHMU official to attend a particular meeting Mingara held with its staff prior to the commencement of negotiations.

[18] In my view, communicating with staff is good management practice. If such communications are not accompanied by a refusal to meet and communicate with a bargaining representative, then in my view there is no breach of the good faith bargaining requirements of the Act.

[19] The obligations under the Act relate to genuine recognition and genuine bargaining activities with other bargaining representatives. They do not preclude concurrent communication and discussions with the employees who may be requested to approve the agreement. In my view, an employer is free to meet with its employees to discuss employment issues, including matters relevant to enterprise bargaining in the absence of bargaining representatives. Widespread communication is to be encouraged – not regulated, diminished or monopolised.”35

3.83. It appears that this has now become a “well established principle” that it is important to

encourage communication between employers and employees both directly as well as

through their representative organisations”36 With respect, this position does not adequately

comprehend the capacity of employers, in meeting with employees outside of the

bargaining process, to undermine that bargaining process. If good faith bargaining principles

are held to allow an employee’s bargaining representative to not represent that employee in

discussions about their terms and conditions, then representation of that employee is

meaningless. The right to be represented, a further object of the Act at s.3(e), should not

stop when bargaining commences. To the contrary, if an employee nominates a bargaining

representative, including by joining a union, that employee is expressing their right and

desire to be represented. Employees are free, during bargaining, to withdraw their

35 Liquor, Hospitality and Miscellaneous Union v Mingara Recreation Club Ltd, [2009] FWA 1442, 1 December 2009.36 Liquor, Hospitality and Miscellaneous Union-Western Australian Branch v Hall & Prior Aged Care Organisation and Others [2010] FWA 1065 per Cloghan C referring to QNU v Lourdes Home Hostel (2009) FWA 1553, at paragraph [56], and LHMU v Mingara.

34


authorisation for bargaining representation at any time.37 Absent such a withdrawal,

allowing employers to take negotiations directly to those employees makes a mockery of the

ability of employees to nominate others to do their bargaining for them.

3.84. We do not advocate that employers would be prevented from communicating with their

workforce during bargaining. The strong view and recommendation of the AMWU is that

what a “requirement to collective bargain” requires is that communications which are

proposals about or variations to terms and conditions of employment of employees to be

covered by the proposed enterprise agreement must be made through the bargaining

representative of any such employee. Where an employee does not have a bargaining

representative, such communications could be made directly.

3.85. In the very least, if “widespread communication is to be encouraged”, in Watson VP’s words,

then bargaining representatives must have equality of communication with employers. If

employers are to have meetings with employees about bargaining, notwithstanding that

those employees have bargaining representatives, then employee bargaining

representatives must have the opportunity to be present at such meetings and a right to

communicate at such meetings. It is the recommendation of the AMWU that good faith

bargaining requirements be amended to provide for equality of opportunity of bargaining

representatives to communicate with employees to be covered by a proposed agreement.

Concurrent communication without equality of communication has the capacity to sideline

the good faith bargaining for collective enterprise agreements which is provided for in the

Act.

Good faith bargaining circuit breakers

3.86. The framework of the Act also strengthens the hand of employers in any bargaining process

by providing employer with a self-determined circuit breaker for bargaining. At s.181, it is

the employer alone which may request employees to vote for a proposed agreement. FWA

has repeatedly found38 that after a period of bargaining and disagreement about the terms

of a proposed agreement, the employer has a “right” to put a proposed “final offer”

agreement to the workforce. This has been variously described as negotiations “reaching an

impasse”, of bargaining having “ended”.

37 s.178A38 For example, LHMU v Hall-Prior and Ors [2010] FWA 1065, AMWU and APESMA v DTS Food Laboratories [2009] FWA 1854.

35


3.87. The AMWU does not oppose the idea that a “circuit breaker” should be part of a good faith

bargaining process, particularly where parties are not required to reach agreement under

s.228(2)(b). We do oppose this circuit breaker being only in the hands of employer

bargaining representatives. We are of the firm view that employee bargaining

representatives also should be able to apply to FWA for a “circuit breaker” determination.

What such a determination could encompass would be a matter for FWA to determine in the

particular circumstances of bargaining.

3.88. Currently, such circuit breakers are heavily weighted in favour of employers. First, there is

the circuit breaker after surface bargaining for a period, to put a “final” proposal to a

workforce when the employer determines that there is an “impasse”. It is plain that such

circumstances encourage bargaining by attrition – wearing down employees and their

bargaining representatives until an employer’s proposal is accepted – or by railroading

before employees have a chance to bargain, rather than bargaining towards an enterprise

agreement in good faith.

3.89. Second, In the context of protected industrial action, the Act provides three different ways

to force a termination of industrial action which would allow a workplace determination to

be made by FWA. This is the Qantas example.

Case study - Qantas

3.90. It is now notorious that in the face of low-level industrial action by three unions who were

bargaining representatives for three separate enterprise agreements, Qantas grounded its

fleet and proposed a lockout of employees. This self-inflicted economic harm and resultant

damage to the Australian economy triggered an application by the relevant Minister for a

termination of the Qantas lockout and low-level industrial action of the Unions under s.424

of the Act.39 Following the termination of the industrial action, jurisdiction to make a

workplace determination under s.266 was enlivened.

3.91. The industrial tactics of Qantas demonstrated an employer who had decided that good faith

bargaining under the Act was not going to achieve the terms and conditions they desired in

an enterprise agreement. Pursuing arbitration, Qantas “brought matters to a head” by

grounding its fleet and locking out its workers. Clearly, for Qantas, enterprise-level

bargaining without third party intervention was not going to achieve the industrial ends they

desired. In the view of the AMWU, bargaining at Qantas was requiring the company to look

39 Minister for Tertiary Education, Skills, Jobs And Workplace Relations [2011] FWAFB 7444, 31 October 2011

36


at investing in their workforce, to look at long term productivity, not just profit. When so

challenged, enterprise bargaining did not appear the avenue to profit that it might have

been.

Case Study - Schweppes

3.92. Qantas is not alone in the tactic of creating an apparent crisis for the purpose of escaping

bargaining to jump straight to FWA arbitration. On 19 December 2011, Schweppes filed an

application under s.423 of the Act, that FWA terminate protected industrial action. The

supreme irony was that it was Schweppes’ own indefinite lockout that the company sought

to terminate. Schweppes’ pleaded the consequences of the lockout for employees’ incomes,

despite the source of that harm being the company’s own actions. Of course, Schweppes

could have withdrawn their lockout voluntarily at any time. Instead, to elevate the situation

they imposed the lockout in an attempt to attract FWA’s discretion to terminate all

protected industrial action. On the first occasion, this discretion was not exercised by FWA.40

It appears Schweppes have been more successful on a second occasion,41 after an eight

week lockout, with the power to arbitrate now enlivened.

3.93. It may be the case that certain employee bargaining representatives, with enough support

and enough industrial power, in certain parts of the economy, could engender as much

economic damage to the economy to spark a similar application by the Minister or an

employer for terminate industrial action and a consequent workplace determination. This

doesn’t make such a dramatic course of action any more fit-for-purpose as a bargaining

circuit breaker. Why should this be the only arbitration option available to employee

bargaining representatives, when it is of such limited availability and requires such industrial

action?

3.94. The third “circuit breaker” in the Act is arbitration of matters by agreement of bargaining

representatives under s.240. This provision has been used,42 but remains rare. In the context

of a bargaining framework where an employer can simply put their “last offer” to a vote of

employees without agreement, it is unsurprising that agreement is rarely reached on

allowing FWA to arbitrate disputed terms first.

40 Schweppes Australia Pty Ltd v United Voice – Victorian Branch [2011] FWA 9329.41 [PR520061], 10 February 2012 by Kaufman SDP42 For example TransAdelaide v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia and Another [2010] FWA 3849; Boral Resources (NSW) Pty Ltd T/A Boral Concrete V Transport Workers’ Union of Australia-New South Wales Branch [2010] FWA 6249.

37


3.95. The fourth possible “circuit breaker” has never been used to the knowledge of the AMWU.

This is where, following the making of bargaining orders, application is made for a serious

breach declaration – that there has been a serious and sustained contravention of one or

more bargaining orders that have significantly undermined the bargaining process are made.

The AMWU does not oppose the retention of such declarations or consequent

determinations, but notes that the lack of use indicates that this mechanism has not acting

as a bargaining circuit breaker – and has not promoted good faith bargaining.

3.96. For these reasons, the AMWU proposes that s.240 of the Act be amended to provide for

“circuit breaker” arbitration of a bargaining dispute, without the requirement for consent of

all bargaining representatives. As a corresponding mechanism to the intended role of a

majority support determination to require an employer to bargain, , we would propose the

introduction of majority support arbitration. That is, where bargaining is either prolonged

(for example, beyond 120 days), or where a bargaining representative has failed to bargain

in good faith, we propose that a majority of employees to be covered by an agreement can

vote to require FWA to arbitrate the content of a proposed agreement. As with a majority

support determination, we propose that FWA retains a discretion as to whether and to what

extent to arbitrate.

3.97. It may be that FWA forms the view that an application for majority support arbitration is

premature or without adequate grounds. It may be that a twenty-one day compulsory

conciliation period could be incorporated into this new mechanism, or ordered at the

discretion of FWA. This would be a similar provision to the compulsory 21 day negotiation

period required before a bargaining related workplace determination is made.

3.98. The AMWU firmly proposes that a majority vote of employees should trigger an application

for arbitration. Currently, a majority support determination is intended to force an employer

to bargain in good faith. The Cochlear example shows that, in reality, this is not the case. If

employers can avoid bargaining in good faith towards making a collective enterprise

agreement, despite a majority support determination, then that majority must be able to

ask FWA to determine the terms and conditions of their employment.

3.99. We make these proposals because the bargaining framework in the Act facilitates the

avoidance and undermining of the good faith bargaining principles at s.228(1). Bargaining

representatives require the “circuit breaker” of FWA to bring discipline to good faith

38


bargaining. If this discipline is still lacking, bargaining representatives require the

opportunity to apply for FWA to determine disputes between the parties.

3.100. The further recommendation of the AMWU is that a model code of good faith bargaining be

made by the Minister, as a Regulation under s.796 of the Act. In our view such a code should

provide for:

A. Bargaining representatives to exchange proposals for inclusion in an enterprise

agreement which can be made and approved under the Act;

B. The opportunity for joint communication meetings with all bargaining

representatives and employees to be covered by the proposed agreement every

thirty days or sooner by agreement;

C. Proposals in respect of terms and conditions of employment the subject of

bargaining to be put to bargaining representatives, and directly to employees with

consent;

D. The opportunity for employees to be covered by a proposed agreement to meet

and discuss a proposed agreement during the “access period” provided at s.180 of

the Act, prior to an request by an employer to employees to approve a proposed

enterprise agreement, with any employee bargaining representatives but in the

absence of employer representatives;

E. The opportunity for bargaining representatives for reasonable consultation with the

employees whom they represent during work time;

F. Proposals to be put to employees for approval by vote under s.181 of the Act to be

agreed by the bargaining representatives of a majority of employees to be covered

by a proposed agreement, with majority support arbitration available where matters

remain in dispute;

G. The above code to be varied as determined by FWA on application by one or more

bargaining representatives.

39


4. Protected Industrial Action – legislative confusion

4.1. The AMWU supports the submissions of the ACTU about the complicated and excessively

bureaucratic mechanisms required by the Act before employees to exercise their right to

strike without threat of prosecution or legal suit. We also wish to make specific submissions

about technical requirements of the Act which are confused and undermine the ability of

employees to use the economic persuasion of industrial action to bargain for fair terms and

conditions in enterprise agreements made under the Act. That legislative confusion

constrains the ability of employees to take protected action, even where they have complied

with all of the legislative hurdles which exist in the Act.

Case study – Department of Defence

4.2. Where industrial action is authorised by a protected action ballot, one might assume that

any action taken pursuant to the authorisation of that ballot will be clearly “protected

industrial action” under the Act. However, in the case of negotiations for the Department of

Defence, the AMWU and two other union bargaining representatives applied for a PAB order

on 1 June 2011, 30 days prior to the existing agreement’s nominal expiry date. That ballot

was declared on 22 June 2011, authorising the industrial action, eight days prior to the

nominal expiry date, and the first day which s.417 of the Act ceases to prohibit industrial

action being “organised or engaged in”.

4.3. However, s.414 provides that at least three clear days written notice of an intention to

engage in industrial action. The Act is unclear as to whether this giving of notice itself

constitutes “organising” industrial action. In the Department of Defence bargaining context,

this meant notice was not given until the actual nominal expiry date, and with the

intervention of a weekend, actual protected industrial action could not being until six days

after the date which s.417 would ostensibly be thought to authorise industrial action. Given

the often tight time frames in which bargaining for an agreement can operate, particularly if

it commences prior to a nominal expiry date, and given that a bargaining representative only

has thirty days in which to commence each form of industrial action authorised by a PAB, 43 a

six-day delay can be extremely significant.

4.4. To address this further frustration of the ability of employees to make properly authorised

protected industrial action, the AMWU recommends that the prohibition on “organising or

engaging in” industrial action in s.417 be returned to a simple prohibition on “engaging in”

43 s.459(d)(i)

40


industrial action that existed at s.170MN of the Workplace Relations Act 1996, prior to the

insertion of s.440 into that Act by WorkChoices. An additional subsection 459(3) also could

be added, to state:

“(3) Despite any other provision of this Act, organising industrial action which is

authorised by subsection 459(1) is protected industrial action and is not prohibited

by subsection 417(1).”

This would reflect similar wording at s.438(2) which specified that organising and making a

protected action ballot does not constitute “organising industrial action”.

Case study - Mammoet

4.5. In October 2011, the Federal Magistrates Court in CFMEU v Mammoet44 further undermined

the ability of employees to exercise their right to take protected industrial action. Under the

existing enterprise agreement, Mammoet was required to provide accommodation for its

employees to be covered by the proposed agreement about which negotiations were

occurring. The CFMEU made an application that Mammoet had contravened the general

protections provisions of the Act by not providing accommodation to its workers during

strike action and a lockout. In his reasons for dismissing the application, Federal Magistrate

Lucev found that the employer-provided accommodation "is a payment which Mammoet is

prohibited from making to [the striking employees] by reason of s.470(1)of the FW Act".

4.6. Section 470 prohibits an employer making a payment to an employee whenever an

employee takes industrial action that is not a partial work ban or an overtime ban. Section

473 prevents an employee or a union asking for a payment that would contravene s.470,

and prevents an employee accepting a payment that would contravene s.470.

Contraventions of these provisions leave employees are liable for penalties up to $6600, and

$33000 for unions and employers. In addition, s.474 mandates that the minimum non-

payment period for en employee who takes unprotected industrial action is 4 hours, with

prohibitions on asking for or accepting payment at s.475 (similar to s.473).

4.7. This decision has the far-reaching potential to require employees to be turned out of any

employer-provided accommodation which forms a “payment” for their services whenever

an employee taken industrial action. Where this did not happen, both employer and

employee would be liable for civil remedies. This is patently a ridiculous outcome that

44 Construction Forestry Mining and Energy Union v Mammoet Australia Pty Ltd [2011] FMCA 802

41


undermines the basic rights of any worker who receives accommodation or a living away

from home allowance as part of their remuneration.

4.8. The AMWU strenuously recommends that the Act be amended so that the definition of

“payment” for the purposes of Division 9 of Part 3-3 of the Act excludes accommodation-

related payments. Without such an amendment, employees are liable not only to be denied

their basic rights to shelter and accommodation, but further financial penalty should they be

prosecuted under the Act for simply accepting the provision of their accommodation for the

duration of any employee industrial action.

4.9. The capacity of employees to use the full array of industrial action at their disposal is also

undermined by provisions of the Act relating to partial work bans. This, somewhat ironically,

has the effect of increasingly the tenor and impact of industrial action than might otherwise

be desired by those engaging in employee industrial action.

4.10. This anomaly came to light in respect of a group of AMWU members at Bulwer Island in

Queensland. A two hour ban on paperwork was imposed, as part of authorised protected

industrial action.

4.11. Section 470(1) provides that an employer must not pay an employee who engages in

protected industrial action, for the duration of that industrial action on that day. However,

subsection 470(2) excludes a “partial work ban” from that rule. The two hour paperwork

ban in question here is included in the definition of “partial work ban” at s.470(3):

“(3) A partial work ban is industrial action that is not:(a) a failure or refusal by an employee to attend for work; or(b) a failure or refusal by an employee who attends for work to perform any work at all; or(c) an overtime ban.”

This means that a complete cessation of work for two hours would be covered by the rules

regarding payment at s.470, but a particle work ban for the same 2 hour period would not.

4.12. Section 471 deals with payments for partial work bans. This section gives an employer the

option to provide a that the employee’s payment will be reduced by a proportion judged by

the employer to be appropriate to the reduction in work done because of the partial work

ban. Under s.417(4), the employer also has the ability to issue a “notice of non-payment”.

That is, the employer refuses to accept any work from the employee for the period of the

partial work ban. After the employer gives this notice of non-payment, this refusal extends

42


from the start of the day on which the partial ban was to occur to the end of the last day

upon which the partial work ban occurs.

4.13. In addition, whilst a dispute over an employer notifying a partial deduction of pay could be

the subject of determination by FWA under s.472, a complete “notice of non-payment”

cannot be subject to an order made under s.472.

4.14. The implication of this for the “two hour paperwork ban” was that the minor ban was

escalated to a complete cessation of work for each entire day on which the paperwork ban

was to occur. This compares with the institution of a total ban on work for two hours which,

under s.470, would only lead to a cessation, and non-payment for the notified two hours.

Indeed, unprotected industrial action taken for two hours would only lead to a four hour

deduction in pay.45

4.15. The entirety of Division 9 of Part 3-3 appears confused. In the least, the AMWU recommends

that the ability of an employer to give a “notice of non-payment” under s.471(4) be revoked.

The ability to give a notice proportional deduction under s.471(1) is sufficient, and is subject

to the supervisory jurisdiction of FWA under s.472.

45 s.474(1)(a)

43


5. Enabling representation at work

5.1. The AMWU supports the submissions of the ACTU with respect to the rights of delegates.

We support the need for the Act to provide for a clear statement of positive rights of

workplace delegates – access to the workforce, email, time to do their job of representation,

the opportunity to consult with their union and training to do that job more effectively. We

note the freedom from discrimination which is currently being challenged by employers in

the High Court in Bendigo TAFE v Barclay.46 We support the AEU in that matter – if there is

no general protection from the real reason of adverse action taken against a workplace

delegate, then that real reason can be too easily shielded behind ostensible but false

reasons. Victimisation of delegates is real, and the Act must be held to protect delegates in

their role.

5.2. It is also crucial that workers have access to their representatives. The Act has come along

way in providing for arbitration of disputes about the exercise of right of entry by union

representatives. However, decisions by FWA have supported the antagonistic position of

many employers to union representatives attempts to have discussion with employees and

investigating suspected contraventions of industrial laws and instruments.

5.3. Entry to have discussions with employees eligible to be a member of a Union is limited at

s.490 of the Act to discussions during “mealtimes or other breaks”. This restriction limits

discussion at most AMWU workplaces to the 30 minutes meal break during a shift during

which employees must attend to their personal needs, prepare their meals and eat.

5.4. it is crucial, therefore, that Union officials be accessible to eligible employees during that

meal break. Logically, it is in the main meal or break room of most premises that union

officials need to be available.

Case study - Somerville

5.5. In AMIEU v Somerville47, a dispute had arisen over whether right of entry meetings could be

conducted in a lunchroom, or in a training room which the employer preferred. Access to

the training room was only available to employees after informing their supervisor that they

wished to attend the union meeting, and a supervisor accompanied each employee through

46 Case M128/2011, Board of Bendigo Regional Institute of Technical and Further Education v Barclay and Anor, to be heard on 29 March 2012, appealing [2011] FCAFC 14.47 The Australasian Meat Industry Employees Union, v Somerville Retail Services [2010] FWA 6737.

44


a secure door into an administration area in which the training room was located. As Roe C

noted in his decision:

“[38] There is no evidence of inconvenience to the employer in this situation particularly

given the history of professional conduct by the AMIEU organiser over a number of years and

the fact that the use of neither of the two alternative locations is regarded by the employer

as causing inconvenience to the business. So in this case the reasonableness should be judged

against the extent to which it enables the first two objectives in Section 480 of the Act

concerning the rights of the AMIEU and the rights of employees to have representation. For

these reasons and for the reasons set out below, in the circumstances of this case, I am

satisfied that the AMIEU has established that the request to use the training room is not a

reasonable request in that it has the effect of discouraging eligible employees and making it

unnecessarily difficult for eligible employees who wish to participate in those discussions and

that in the circumstances of this case that is contrary to the objectives of Part 3-4 of the Act

as set out in Section 480.

[39] In reaching this conclusion I have considered the requirement of Section 484(c). That

provision makes it clear that the rights under Section 484 can only be exercised for the

purposes of holding discussions with those who wish to participate in those discussions. As

raised earlier the Employer argued that this meant that the meal room was unsuitable

because it was possible that, as a result of the actions of the AMIEU organiser, employees

who did not wish to participate in discussions may not be able to enjoy their meal

undisturbed and may not have a real choice as to whether or not to participate in

discussions. The Employer argued that the training room was reasonable because it

overcame this problem for those employees who did not wish to participate in discussions.

[40] An apprehension by the Employer that some employees may be inconvenienced if the

discussions take place in a particular location is unlikely to be a relevant consideration unless

it caused undue inconvenience to the capacity of the employer to go about its business.

Further the fact that some employees who did not wish to take place in discussions were

present in the location that the discussions were taking place would not of itself make that

location inappropriate unless it could be shown that the objective of the permit holder was

not to hold discussions with those who wish to participate in those discussions.

[41] The right of entry for the purpose of discussions with those who wish to participate is a

right of the AMIEU permit holder. It cannot be reduced to a right of employees to be able to

45


request to hold discussions with the permit holder. An organiser approaching an employee to

participate in discussions is not contrary to the legislative scheme unless that organiser

unreasonably persists after that employee has made it clear that they don’t wish to

participate in discussions. Such persistence it could be argued might bring into question the

purpose of holding the discussions and might in some circumstances lead to disruption to the

business.

5.6. However, on appeal, the reasoning of Roe C was rejected by the majority of a Full Bench:48

“[32] In our view, the scheme of the Act is that occupiers of premises have the right to

request permit holders to conduct interviews or hold discussions with employees in a

particular room or area of the premises provided the request is reasonable. When a dispute

arises as to the reasonableness of the request, all of the circumstances must be considered.

An applicant can only succeed if it establishes that the employer request is objectively

unreasonable. The mere preference of permit holders for a different room is insufficient.”

…

[41] The Commissioner’s conclusion that Somerville’s request was otherwise unreasonable is

based on his finding that the effect of the its request hampers the AMIEU’s ability to exercise

its rights and achieve the objects of Part 3—4 of the Act and the ability of employees who

wish to have discussions to effectively do so. The reasoning for this conclusion is contained in

paragraphs [32]-[42].

[42] In our view, that reasoning is flawed in several respects.”

5.7. In AMIEU v Dardanup,49 McCarthy DP similarly held:

“[32] Much of the evidence of the AMIEU seemed to be directed at endeavouring to establish

that the lunch room is more convenient and more suitable. They seemed to be arguing that a

more reasonable decision would be to allocate the lunch room at the location for interviews

of employees. However that is not the test the FW Act requires me to apply . The test in the

FW Act is one of reasonableness on the part of the occupier and deemed unreasonableness if

certain intention of the occupier is established.” (emphasis added)

48 Somerville Retail Services Pty Ltd v The Australasian Meat Industry Employees Union [2011] FWAFB 120, per Watson VP, Sams DP; Deegan C dissenting.49 The Australasian Meat Industry Employees' Union v Dardanup Butchering Unit Trust T/A Dardanup Butchery Company [2010] FWA 9197.

46


This was upheld on appeal.50

5.8. Commissioner Lewin has remarked on the lack of utility of provisions in which an union

application for a dispute, about the “reasonableness of the request” by an employer that

union officials use a particular room, must attempt to prove the subjective intention of the

employer, without the benefit of the reverse onus of proof which is included in other parts

of the legislation in which an applicant must prove the subjective intention of others:

“[23] In various employment law contexts both statutory and jurisprudential where an

employer’s subjective intention forms a critical nexus for the purpose of constituting the pre

condition to a legal consequence it has been considered appropriate to impose specific

procedural or presumptive provisions in relation to the onus in a proceeding.

[24] This is because it will always be difficult for a party claiming the existence of a subjective

motivation or intention on the part of another to affirmatively establish the alleged intention

or motivation. Such an intention may be indicated by facts and circumstances, however,

short of some extraordinary telepathic talent, knowledge of what was on an employer’s mind

when acting in a particular manner, in this case making the disputed request, will essentially

be within the employer’s domain.

[25] However, the provisions of Part 3-4 provide no basis upon which the type of presumption

provided for in s.361 of the Act, for example, can be made in a proceeding for an order in

relation to a disputed request the subject of s.492 of the Act. Nor, in my view, has the

Tribunal given specific consideration to the issues of procedural and substantive onus raised

above in cases where such intentions have been alleged.

[26] While I consider an approach which imposes an appropriate procedural onus to reflect

the considerations I have identified has compelling logic, which may be applied where a

permit holder’s organisation alleges an intention of the kind contemplated by s.492(2), I

intend to deal with the application on the basis that the procedural and substantive onus to

establish an intention proscribed by s.492(2) rests with the AWU. I do so primarily because of

the absence of an indication of any presumption in the statutory provisions and any clear Full

Bench authority for a different procedure.

[27] As an observation, however, I would go so far as to say that without presumptive

provisions or an appropriate modulation of procedural onus in relation to the operation of

50 The Australasian Meat Industry Employees’ Union, v Dardanup Butchering Company Pty Ltd [2011] FWAFB 3847

47


the provisions of s.492(2)(b) it would be difficult to judge the practical vitality of the statutory

provisions highly.”51

5.9. With respect, we must agree. If the Full Bench in Somerville is correct, the provisions of the

Act do not provide for the most appropriate room to be available for employees to consult

with their union officials or officials of unions of which they are eligible to be members. The

objects of the Act include at s.3(e):

“(e) enabling fairness and representation at work and the prevention of discrimination by

recognising the right to freedom of association and the right to be represented, protecting

against unfair treatment and discrimination, providing accessible and effective procedures to

resolve grievances and disputes and providing effective compliance mechanisms.

Not only does the relatively unfettered ability of employers to determine which rooms are

reasonable undermine freedom of association of workers, and their right to be represented,

the legislative framework available to resolve grievances and disputes is, in the words of

Lewin C, is not of high “practical vitality” – in reality it is useless.

Case studies – Right of Entry

5.10. Our concerns about reasonable access to employees whilst exercising right of entry are real

and continuing:

.At Rio Tinto in the Northern Territory, an AMWU organiser is allowed access to one

room across a site that is three kilometres long. That means that members and

those eligible to be members must walk up to three kilometres to meet with the

organiser during a twenty minute break. Rio Tinto previously allowed access to

multiple crib huts across the site, but this has subsequently been revoked.

Another employer in Queensland divides his office in two using a petition. On one

side of the petition he sits, on the other is the purported “reasonable room” for

meeting.

At Cochlear’s site at Lane Cove, referred to above, there are two lunch rooms, one of

which seats over a hundred employees, the other of which seats about thirty.

Cochlear does not permit access to either of these lunch rooms, instead providing a

meeting room, located in an administration area of the premises, that fits

approximately six employees;51 The Australian Workers' Union v Rio Tinto Aluminium (Bell Bay) Limited [2011]FWA 3878.

48


Weir Minerals in Artarmon in Sydney has a workplace of over 250 employees. The

workplace is segmented over more than 6 different work areas with multiple shift

and meal break patterns operating in each. Most work areas have a separate lunch

area. Weir only allows AMWU officials to meet employees in a room called the

“Foundry Training Room”, which seats only 30 employees and is a five minute walk

from some parts of the workplace. An application for FWA to determine a dispute

about Weir’s determination that the AMWU use this room has not been made

because of FWA’s limited capacity to determine the best room for a meeting during

the exercise of a right of entry under the Act.

5.11. Another example demonstrates that the exercise of right of entry continues to be frustrated

in its practical application at workplaces across Australia. In January 2012, At Rio Tinto’s

Cape Lambert site in the Pilbara region in WA, AMWU and AWU officials conducted a joint

meeting in a meeting room to which they were escorted. This room was a different location

to the room where previous meetings had taken place.

5.12. In February 2012, AMWU, CEPU and AWU officials provided corresponding right of entry

notifications to Rio Tinto in respect of their Dampier, 7Mile and Cape Lambert sites. On

arriving at the Dampier site, and attempting to exercise right of entry, human resources

managers informed the three union officials that the company would be splitting up the

intended joint meeting so that each union official could only speak with those employees

who were eligible to be members of that officials’ union.

5.13. Setting aside issues in respect of joint coverage of many employees by the relevant unions,

such bureaucratic obstruction delayed and prevented the employees at the site easily and

simply having discussions with union officials representing workers at that site. The unions

are not hopeful about curtailing the employers conduct in relation to the other two Rio Tinto

sites.

5.14. Continuing debates and disputes about access to particular rooms are intended to be

resolvable by FWA under s.505. Indeed, the Explanatory Memorandum provides:

“FWA is able to make orders that a specific room be used for a meeting as this may be the

only means of effectively resolving the dispute.”52

In practice, however, through its interpretation of s.492, FWA has made it impossible to

practically show the unreasonableness of an occupier’s request that a union use a particular 52 Explanatory Memorandum at paragraph 2104.

49


room. Because of this, in reality FWA is never actually empowered to make any orders that a

specific room be used for a meeting.

5.15. For these reasons, the AMWU proposes that the provisions at s.492 of the Act be amended

to provide that:

A. The main room in which relevant employees spend the mealtime or other break

referred to at s.490 will be provided as a meeting room for the purposes of s.492,

unless an employer or occupier can show that the room is unreasonable;

B. Any dispute over access to premises and relevant employees during the exercise of

right of entry under s.492 may be dealt with under s.505;

C. In determining a dispute under s.505, in respect of the location of a meeting

pursuant to the exercise of right of entry under s.492, FWA must to be satisfied as to

the most reasonable and practical location for eligible employees to meet with the

union official exercising right of entry, and may determine the location of that room

and the circumstances of its use.

50


6. Ensuring and enforcing a guaranteed safety net

Constraints on the exercise of FWA functions – making modern awards

6.1. The object of the Act at s.3(b) provides:

“ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and

conditions through the National Employment Standards, modern awards and national

minimum wage orders;”.

It is integral to any safety net provision, whether directly legislated, or made or approved by

FWA in awards or enterprise agreements, that the provisions are enforceable and that gaps

do not open up in the net. Unfortunately, the approach to certain safety net provisions has

meant that, in our view, the intent in the Act to provide a safety net is undermined.

6.2. In its approach to Award Modernisation, FWA adopted a position of not providing for

matters in awards that were already dealt with in the National Employment Standards

(“NES”). This treatment of the NES as a code providing the only regulation of matters dealt

with by the NES is directly contrary to the Act. Certainly, a modern award cannot exclude

any provision of the NES,53 however at s.55(4) the Act provides that :

“A modern award or enterprise agreement may also include the following kinds of terms:

(a) terms that are ancillary or incidental to the operation of an entitlement of an employee under the National Employment Standards;

(b) terms that supplement the National Employment Standards;

but only to the extent that the effect of those terms is not detrimental to an employee in any respect, when compared to the National Employment Standards.” (emphasis added)

6.3. Nonetheless, in many cases during Award Modernisation proceedings, FWA (and the AIRC

before it) held that a modern award should not provide for a matter because that subject

matter was already dealt with in the NES. To the dismay of many employees covered by such

awards, this entailed a reduction in a term or condition of employment from that which

applied under a previously-applicable award or instrument.

53 s.55(1).

51


6.4. For example, in the case of parental leave, multiple “old awards” provided for concurrent

parental leave for parents extendable for up to eight weeks.54 The NES provides at s.72(5)

that concurrent leave may only extend up to six weeks. Following Commission decisions,

several modern awards now provide for the lesser period of leave in accordance with the

NES.55 The curious disinclination of the AIRC Full Bench to adhere to the supplementation

permitted by s.55(4) is displayed In their decision in relation to “priority awards” in 2008:

“Parental leave

[94] We received some submissions which urged us to supplement the entitlement to

concurrent parental leave which is provided for in the NES. We have decided not to do so.

This appears to be an area in which it would be necessary to supplement the NES in all

awards and the result would therefore be the creation of a new minimum standard rather

than mere supplementation.”56

In our view, there is no cause for the Full Bench to curtail the ability to supplement the NES

under s.55(4) through the limiting factor of “not creating a new minimum standard”.

6.5. Similarly, in dealing with “community service leave” and “jury service leave”, the Full Bench

found:

“Community service leave

[103] We have given further consideration to whether modern awards should supplement

the NES in relation to the amount of jury service leave to which an employee is entitled. The

NES provides that jury service leave should be limited to 10 days. So far as we know jury

54 cl.27.6A.1(a) Confectioners Award 2002 [AP818086CRV]; cl.20A(3) Confectioners (State) Award (NSW) [AN120156]; cl.7.3.4(a)(i) Country Publishing and Printing Award 2002 [AP819465CAV]; cl.7.4.4(a)(i) Draughting, Production Planners and Technical Workers Award 1998; cl.29.6A.1(a) Food Preservers Award 2000 [AP781106]; cl.23(3)(a)(i) Food Preservers (State) Award (NSW) [AN120212]; cl.7.3.4(a)(i) Graphic Arts – General - Award 2000 [AP782505CR]; cl.20A(3) Ice Cream Makers (State) Award (NSW)[AN120257]; Part I cl.7.4.4(a)(i) Metal, Engineering and Associated Industries Award 1998 [AP789529CRV]; cl.35.3.1(a) Metal Trades (Australian Capital Territory) Award 2000 [AP787983CRA]; cl.7.6(3) Metal, Engineering and Associated Industries (State) Award (NSW) [AN120334]; cl.7.4.4(a)(i) Metal Industry (Northern Territory) Award 2003 [AP82513CRN]; Part VI cl.4(k) Metal and Engineering Industry Award (Tasmania) [AN170120]; cl.23(3)(a)(i) Printing Industries (State) Award (NSW) [AN120432]; cl.19(k) Printers Award (Tasmania) [AN170081]; cl.7.5.4(a)(i) Regional Daily Newspapers (Printing) Award 2001 [AP811502CRV].

55 Manufacturing and Associated Industries and Occupations Award 2010 [MA000010]; Building and Construction General On-site Award 2010 [MA000020]; Graphic Arts, Printing and Publishing Award 2010 [MA000026]; Food, Beverage and Tobacco Manufacturing Award 2010 [MA000073].

56 [2008] AIRCFB 1000.

52


service leave provisions in awards and NAPSAs are not subject to any cap at all. If we were to

maintain an unlimited entitlement it would be necessary to supplement the NES in every

modern award. Such a course would be inconsistent with the NES and tend to undermine it.

[104] A similar consideration arises in relation to the rate of pay while on jury service leave.

For similar reasons we shall not make general provision for a rate of pay other than the base

rate as defined in the NES. It follows that the standard community service leave clause will

simply refer to the NES.

Several modern awards have now adopted the NES cap of 10 days for jury service,57 despite

predecessor awards having no such cap.58

6.6. It is the firm view of the AMWU that given the approach of the AIRC and FWA to s.55(4) that

this provision must be amended to provide absolute clarity. For example, the content of

legislative note 1 beneath s.136(1) could be usefully included at s.136(1)(c) where the

interaction between awards and the NES is described, so that the ability for awards to

include terms supplementary to the NES is made explicit. Further, we propose that the

modern awards objective at s.134(1) be amended to include a new paragraph:

“(i) the need for modern awards to supplement National Employment Standards

as appropriate for Australian industries and occupations.”

It appears that such an explicit provision is necessary to provide clarity for FWA in respect of

the application of s.55(4) and s.136(1) to the exercise of its functions under Part 2-3 of the

Act. This is necessary in respect of both the objective of the Act at s.3(b) and the modern

awards objective to provide “a fair and relevant minimum safety net standard.”

57 For example Manufacturing and Associated Industries and Occupations Award 2010 [MA000010]; Building and Construction General On-site Award 2010 [MA000020]; Graphic Arts, Printing and Publishing Award 2010 [MA000026]; Food, Beverage and Tobacco Manufacturing Award 2010 [MA000073]..58 Compare cl.29 Confectioners Award 2002 [AP818086CRV]; cl.22 Confectioners (State) Award (NSW) [AN120156]; cl.7.3 Draughting, Production Planners and Technical Workers Award 1998; cl.30 Food Preservers Award 2000 [AP781106]; cl.7.4 Graphic Arts – General - Award 2000 [AP782505CR]; cl.35 Food Preservers (State) Award (NSW) [AN120212]; cl.22 Ice Cream Makers (State) Award (NSW)[AN120257]; cl.33 National Metal and Engineering On-site Construction Industry Award 2002 [AP816828CRV]; cl.7.3 Metal, Engineering and Associated Industries Award 1998 [AP789529CRV]; cl.7.5 Metal, Engineering and Associated Industries (State) Award (NSW) [AN120334]; cl.7.5 Metal Industry (Northern Territory) Award 2003 [AP82513CRN]; cl.25 Printing Industries (State) Award (NSW) [AN120432]; cl.27 Printing Award (WA) [AN160261].

53


FWA constraints on the guarantee of a safety net – cashing out annual leave

6.7. At s.87, the Act provides quite clearly that an employee is entitled to four weeks of paid

annual leave for each year of service, or five weeks in the case of certain shiftworkers.

Section 93 of the Act then provides for a narrow range of circumstances in which a modern

award or an enterprise agreement may provide that such annual leave may be “cashed out”

under the relevant instrument. There is a prohibition on cashing out if it would leave the

employee an annual leave entitlement of less than four weeks, a requirement that each

cashing out instance must be by a separate written agreement between employer and

employee (ie there cannot be some sort of “standing agreement to cash out”), and a

requirement that the employee must be paid in full the amount that the employee would

have received had the employee taken the leave.

6.8. The Explanatory Memorandum provides that these safeguards are “in recognition of the

importance of employees taking leave for the purposes of rest and recreation”, and that the

“effect of cashing out paid annual leave is that the payment the employee receives for

cashing out paid annual leave is in addition to the payment that the employee would be

entitled to receive for working during the period covered by the cash out.”59

6.9. Quite surprisingly then, the majority of a Full Bench of FWA in Re Mr Irving Hull; Hull-Moody

Finishes; Mr Romano Sidotti60 found that an all-up wage rate provided in an enterprise

agreement, incorporating “payment in advance for annual, long service and personal leave”

was not contrary to the provisions of s.93 and did not attempt to exclude the NES. The

agreement then provided that annual leave would be taken, but it would be unpaid at the

time of taking the leave. Workers were obliged to take two weeks annual leave a year, but

could take up to four weeks at the time provided in the NES.

6.10. Such a finding is particularly insidious in its impact upon the public and personal benefits

which taking paid annual leave provides. If there was ever a disincentive to taking annual

leave, the fact that it is unpaid at the time of taking the leave would be it. As noted by

Cambridge C in his dissenting judgement:

“[52] The words in Division 6 need to be approached having cognisance of the context in

which they appear. The terms form part of national legislative minimum entitlements which

provide basic benefits to employees. The statutory interpretation exercise therefore involves

59 Explanatory Memorandum at paragraphs 378-379.60 [2011] FWAFB 6709, per Watson VP and Hamberger SDP; Cambridge C dissenting.

54


provisions which operate as a safety net. Inherently there are issues involving the

preservation and protection of minimum employment conditions. In this particular analysis

the protected benefit is of four weeks paid annual leave and the impact on that benefit by

arrangements described as cashing out.

[53] In my view the approach adopted by the majority has not, with respect, had sufficient

regard for the beneficial, protective context of the provisions under examination. In

particular there has not been proper appreciation and weight given to the indisputable fact

that “... the matters in s.93 (2) are in the nature of protections for employees and could be

described as safeguards.”

[54] When properly considered as underlying safeguards, the words of subsection 93(2) (a) of

the Act should be construed in the context of the purpose for which the Standards prescribed

by Division 6 of Part 2-2 are made. Division 6 establishes various minimum terms for paid

annual leave such that subsection 93(2) is a safeguard which intends that no terms in a

modern award or enterprise agreement which deal with payments made in connection with

annual leave, however described or configured, are to create an arrangement whereby it

“...would result in the employee’s remaining accrued entitlement to paid annual leave being

less than 4 weeks.” [emphasis added]

[55] The fundamental notion of paid annual leave is defeated if at around the

commencement of or during the period of actual leave, there is no payment provided in

respect of the period of absence from work. The redirection of the payment into an hourly

rate creates such disconnection with the period of absence from work so as to effectively

make the period of absence a period of unpaid leave. The obvious practical outcome is to

establish financial disincentive for the taking of the period of leave. Thus the rationale for the

establishment of paid annual leave involving annual rest and recuperation away from work is

impugned and the protected benefits and safeguards intended by Division 6 are violated.”

(emphasis added).

6.11. For these reasons, the AMWU overwhelmingly recommends that the legislative prohibition

against cashing out leave be strengthened so that the connection between taking leave and

being paid for leave is made clear. It is this connection which provides comfort to allow

employees to take leave without financial detriment being incurred by the actual taking of

the leave. One legislative amendment to achieve this might be to insert clarification at s.90:

55


“(1) If, in accordance with this Division, an employee takes a period of paid annual leave, the employer must pay the employee at the employee’s base rate of pay for the employee’s ordinary hours of work in the period at, during or immediately prior to the time of taking the leave.”

Legislative constraints on the exercise of FWA functions – arbitration and awards

6.12. A modern award is able to include “procedures for consultation, representation and dispute

settlement”,61 and in particular a modern award must include a term that provides for the

settling of disputes about any matters arising under the award or in relation to the National

Employment Standards.62

6.13. In that context, modern awards typically provide that:

10.2 If a dispute about a matter arising under this award or a dispute in relation to the NES is unable to be resolved at the workplace, and all appropriate steps under clause 10.1 have been taken, a party to the dispute may refer the dispute to Fair Work Australia.

10.3 The parties may agree on the process to be utilised by Fair Work Australia including mediation, conciliation and consent arbitration.

10.4 Where the matter in dispute remains unresolved, Fair Work Australia may exercise any method of dispute resolution permitted by the Act that it considers appropriate to ensure the settlement of the dispute.63

6.14. Notwithstanding the ability to exercise any method of dispute resolution that FWA considers

appropriate, the Act provides a limitation on the method of arbitration being adopted, even

where it may overwhelmingly be the only option that would resolve a dispute between

parties. Section 739(4) provides:

“(4) If, in accordance with the term, the parties have agreed that FWA may arbitrate (however described) the dispute, FWA may do so.

Note: FWA may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)).

6.15. So, it is only by agreement with the parties to a dispute that FWA is empowered to

determine a dispute by arbitration. Where there is an intractable dispute, such agreement is

61 s.139(1)(j)62 s.146.63

From MA000010, Manufacturing and Associated Industries and Occupations Award 2010.

56


unlikely to be forthcoming. This is shown in the example of disputes in relation to the

application of casual conversion clauses in awards.

Case Study – Christie Tea

6.16. At Christie Tea, a South Australian tea packing company which has been in operation for

approximately 20 years workers wished to use their right, which exists at clause 13.4 of the

Food, Beverage and Tobacco Manufacturing Award 2010 [MA000073] to convert from casual

employment to permanent full-time or part-time employment after six months. These

workers blend and mix tea for ALDI, IGA and other supermarket brands and are mainly

migrant , female and Filipino. There are 24 workers, 17 of whom are engaged as casuals. One

worker has been engaged as a casual for 20 years, one person for 13 years with the majority

of casuals having 5-6 years of casual service. Most workers are paid at the minimum award

rate.

6.17. During 2011 four employees informed the AMWU that they wished to convert to permanent

employment. These four 4 employees had 4, 4.5, 7.5 and 8 years’ service as casuals

respectively. Despite there only being a six month qualifying requirement to request

conversion under the Act, the employer refused to meet the request on the grounds that

they had always employed casuals and that “the other casuals would not like it” if the four

became permanent.

6.18. The matter has been before FWA twice for conciliation under the dispute settlement

procedure of the Award. On the first occasion64 Commissioner Hampton recommended that

the “parties consider their positions in the light of the above observations”. The

Commissioner observed that “it is the policy of modern award to encourage and facilitate

the conversion of eligible casuals to full and part-time positions”65 and :

“[15] I would observe that given the relative size of the business, the fact that the employees

concerned have several years of regular and systematic employment, and the fact that the

nature of the supply contracts is not in itself unusual, Christie would need to demonstrate

something well beyond inconvenience and the need to introduce some additional

administrative structure in order to justify its position.”66

64 [2010]FWA 1012165 Ibid, paragraph 1066 Ibid, paragraph 15

57


6.19. On the second occasion67 Commissioner Hampton recommended that the parties:

1. Resolve the matter by the employees accepting Christie’s refusal to allow the conversion.

2. Resolve the matter by Christie accepting the requested conversions to full/part-time

employment as sought by the employees.

3. Undertake further discussions and exchange of information (concerning hours of work and

production schedules etc) designed to reach an agreed outcome.

4. Submit the matter, by agreement, to Fair Work Australia for arbitration.

5. One or both parties to submit the matter to a Court of competent jurisdiction to determine

whether the refusal to convert complies with the modern award requirements.”

6.20. In the face of Christie Tea’s continued refusal to accept the employee’s conversion request ,

and in the absence of a capacity to arbitrate the dispute, these award-dependent workers

have been forced to accept that their entitlement to convert from casual to permanent in

their award is simply meaningless. Without arbitration, there exists no mechanism to test

the “reasonableness” or otherwise of Christie Tea’s refusal outside of expensive, time

consuming Federal Court proceedings which can be particularly intimidating for employees

who are already in insecure employment. The employer determines their own

reasonableness, without arbitration.

Case study - Cerebos

6.21. This pattern was repeated at Cerebos. The site in question has a preserved state

agreement68 underpinned by both the modern Food, Beverage and Tobacco Manufacturing

Award 2010, including the casual conversion clause at 13.4 and the Manufacturing and

Associated Industries and Occupations Award 2010, including the casual conversion

provisions at Clause 14.

6.22. This matter involved an employee directly engaged by Cerebos as a casual in the occupation

of fitter/fabricator. He had been engaged as a casual for more than 3 years when he

requested permanent employment in November 2011. He had worked an average of at least

42 hours a week for the last 3 years, at a site which works a 36 hour week. Permanency had

recently become more important to this employee when he was refused a home loan on the

basis of his insecure employment.

67 [2011] FWA 90568 AG870053 PR984069

58


6.23. Whilst they had not implemented the casual conversion provisions in the Modern

Manufacturing Award, Cerebos did concede that casual conversion provisions applied at the

site. Nonetheless, this particular employee was said by Cerebos to be excluded because he

had been employed on a “special project” and the project was now finished.

6.24. The employee requested conversion to permanent employment in November 2011. In early

December, Cerebos advised him that his hours were being reduced. An application was

made under the general protections provisions for FWA conciliation proceedings under

s.372. Cerebos has refused the Union’s request that the matters at issue be arbitrated, and

has ignored requests made by the AMWU that seven further production employees on

“temporary contracts” be permitted to convert their employment.

6.25. It is the view of the AMWU that Cerebos is in breach of the casual conversion provisions in

the relevant awards. However, the Union’s and the affected employees’ only option is to

begin several expensive and time-consuming proceedings in the Federal Court or Federal

Magistrates Court. Without a requirement to arbitrate, any recommendation of FWA has no

effect on an award entitlement.

Case study - Foxteq

6.26. In 2010, Foxteq employed around 120 casuals through a labour hire agency. Employees were

paid on the award rate with a 25% casual loading. Employees at Foxteq had an average of

more than 4 years’ service. Employees, for the entire time they worked at Foxteq would not

know until the afternoon before the next day’s shift whether they would be required the

next day. Employees would receive a text message, usually around 4pm or 5pm, although

sometimes as late as 8pm, stating they were required to attend work the next day at

6.30am.

6.27. Employees were never informed of how many hours they were required - sometimes they

worked the minimum daily hours and were then sent home, sometimes a full shift and

sometimes they were required to work overtime. If employees could not attend their shift

for whatever reason including illness or caring responsibilities they were dropped from the

pool of Foxteq casuals. Due to the nature of their employment, some employees had

worked at the Foxteq site for up to 8 years without a holiday. Award-dependent employees

deserve at least as much right to arbitration as those covered by enterprise agreements.

6.28. After 20 years of enterprise bargaining in Australia, 55% of AMWU members are still covered

by an award, rather than an agreement. 55% of AMWU members, and countless other

employees throughout Australia are employed under terms and conditions in which disputes

59


over those award and NES terms and conditions can never be arbitrated in FWA. As in the

case of casual conversion, noted above, the only option for these workers – often the

lowest paid workers, is to take costly and time consuming court action to remedy a breach

of their conditions of employment.

6.29. It is the strong recommendation of the AMWU that s.146 of the Act be varied to provide:

“Without limiting paragraph 139(1)(j), a modern award must include a term that provides a procedure for settling disputes by mediation, conciliation and arbitration :

(a) about any matters arising under the award; and

(b) in relation to the National Employment Standards.”

6.30. Further, we strongly recommend that s.739(4) be amended correspondingly to read:

“If, in accordance with the term, FWA may arbitrate (howsoever described) or the parties

have agreed that FWA may arbitrate (howsoever described) the dispute, FWA may do so.”

Legislative inadequacy – arbitration and agreements

6.31. For similar reasons to those discussed in the context of awards which are legislatively denied

dispute resolution by arbitration, enterprise agreements do not require arbitration to be

included. This was confirmed by a Full Bench of FWA in 2010.69

6.32. Nonetheless, the Commonwealth’s Fair Work Principles, which apply to suppliers covered by

the Commonwealth Government’s procurement policy, must include a “genuine dispute

resolution process”. This is defined in the Fair Work Principles User Guide 70to be:

“5.2.5 For a procedure to be considered a “genuine dispute resolution procedure” it must

include as a minimum:

• the ability for employees to appoint a representative in relation to the dispute;

• in the first instance procedures to resolve the dispute at the workplace level;

69 Woolworths Ltd t/as Produce and Recycling Distribution Centre [2010] FWAFB 1464.70 Fair Work Principles User Guide January 2010, Revised November 2011, available at http://www.deewr.gov.au/WorkplaceRelations/Policies/FairWorkPrinciples/Documents/FWPUserGuide.pdf

60


• if a dispute is not resolved at the workplace level, the capacity for a party to the

dispute to refer the matter to an independent third party for mediation or

conciliation; and

• if the dispute is still not resolved, the capacity for an independent third party to

settle the dispute via a decision binding on the parties.” (emphasis added).

6.33. The Commonwealth also provides reasons why dispute resolution procedures under the

Principles require the capacity for a third party, such as FWA, to make a binding decision,

irrespective of the “consent” of a party to the arbitration:

“5.2.1 The Fair Work Act fosters effective dispute resolution which can help employers to

maintain good relationships with their employees by dealing with workplace issues at an

early stage. Employees are likely be more cooperative and productive if they know that their

grievances will be taken seriously by the employer and there is the opportunity for an

independent party to assist in resolving the dispute if it cannot be resolved at the workplace.

5.2.2 A good dispute resolution process with a focus on effective resolution at the workplace

level may also help to avoid the costs of resolving a claim externally; for instance, via Courts

or Tribunals.”

6.34. These are the reasons why we argue that arbitration must be available for award-covered

workers, and why are of the view that dispute resolution terms in agreements must also

provide for arbitration. If there is a dispute as to the term of an agreement, parties are

either left with their dispute unresolved, promoting resentment and disharmony, or facing

the costly and time consuming path of seeking judicial determination of rights. For most

employees, and most unions, the latter is rarely an option.

6.35. For these reasons, the AMWU recommends that the requirements at s.186(6) of the Act be

amended to provide:

“(6) FWA must be satisfied that the agreement includes a term:

(a) that provides a procedure that requires or allows FWA, or another person who is independent of the employers, employees or employee organisations covered by the agreement, to settle disputes by mediation, conciliation and arbitration:

(i) about any matters arising under the agreement; and

(ii) in relation to the National Employment Standards; and

61


(b) that allows for the representation of employees covered by the agreement for the purposes of that procedure.

6.36. Without simple and straight-forward procedures to resolve disputes about agreement

entitlements, such entitlements are simply words on a page. The ability of an employer to

ignore a dispute over an entitlement, absent expensive and time consuming judicial

enforcement, allows the abuse of agreement entitlements, particularly for workforces

without the industrial organisation and resources to pursue them.

Legislative and procedural constraints on the exercise of FWA functions – unfair dismissal

6.37. Further legislative constraints are placed upon the recovery by employees, of their safety

net and agreement entitlements under the unfair dismissal framework established in the

Act. To be sure, the AMWU supports the significant reforms of the Act from the battered

husk that the unfair dismissal regime had become under WorkChoices. We also note the

submission of the ACTU recognises that although the Act tripled the size of the unfair

dismissal jurisdiction compared with WorkChoices, unfair dismissal claims have not even

doubled from WorkChoices levels since the Act commenced.

6.38. Despite our general support, there are elements of the Act which deny the ability of

employees to achieve their enforcement of the right to protection from unfair dismissal, and

we would urge vigilance against this undermining of the safety net of Australian workers.

Case Study – Workers unfairly dismissed prior to redundancy

6.39. In a recent example of an unfairly dismissed worker, whose claim of unfairness would almost

certainly have been upheld by the Tribunal, reinstatement was strenuously opposed by the

employer, meaning that compensation may well have been the only option at the arbitration

of the claim. This compensation is capped at 26 week’s pay for an applicant at s.392.

6.40. In this particular case, at a food manufacturer in Victoria, four long-serving employees were

terminated for misdemeanours that were relatively minor, and did not warrant dismissal as

FWA indicated during conciliation. Shortly after the workers were terminated, the

maintenance work which these workers had been undertaking before their dismissal was

outsourced to the employees of a subcontractor. In the ordinary course, had the four

workers been still employed, they would either have been transferred to the subcontractor

under their current terms and conditions, or they would have been made redundant. One

62


particular worker was a very long standing employee who had accrued 80 weeks of

redundancy, amounting to $200,000.

6.41. In conciliation, the employer was strenuous in its submission that trust and confidence had

broken down, so that reinstatement of the workers would not be an option. The employer’s

representative was also very quick to offer 24 weeks’ pay by way of settlement of the unfair

dismissal application – a most extraordinary offer, particularly at a conciliation stage. Of

course, the offer is not extraordinary when the saving of 56 weeks’ redundancy pay is

considered – the employer removed effectively redundant employees very cheaply indeed.

6.42. As it stands, the 26 week cap for compensation for unfairly dismissed employees prevents

the unfair dismissal regime bearing any coercive influence on unfair practices by employers

dismissing long-standing employees. For this reason, the AMWU recommends that the 26

week cap at s.392 of the Act be amended to account for accrued entitlements beyond the 26

week cap. Otherwise, unfair dismissal can be nothing but a cheap option for long-standing

employees, undermining the termination of employment and redundancy pay provisions of

the Act, and of instruments made under the Act.

6.43. The procedures that have been adopted by FWA in respect of unfair dismissal applications

also risk employees being unable to properly pursue the enforcement of their unfair

dismissal protections under the Act. In FWA in all States, AMWU officers repeatedly

experience an inflexibility in the arrangement and programming of unfair dismissal

proceedings. Notwithstanding that unions have limited staff – most often one or two

industrial officers per State, and often despite consent arrangements being made by both

parties to an application, FWA will not tolerate any deviation from a pre-determined

timetable for hearing that may bear no relationship to the availability of applicants,

respondents or their representatives. This is a common complaint, and one that undermines

the integrity of the unfair dismissal framework of the Act. The merits of a matter become

irrelevant if a party cannot prosecute that case with their given resources.

6.44. For these reasons we recommend that the requirement in the Act at s.398(4) be

strengthened. This provision currently states:

“(4) FWA must take into account the wishes of the parties to the matter as to the way in which FWA:

(a) considers the application; and

63


(b) informs itself in relation to the application.”

To this end, we would recommend that s.397 of the Act be amended to add a new paragraph (2):

“397 Matters involving contested facts

(1) FWA must conduct a conference or hold a hearing in relation to a matter arising under this Part if, and to the extent that, the matter involves facts the existence of which is in dispute.

(2) FWA must take into account the wishes of the parties to the matter as to the way in which FWA determines the procedures to be adopted under subsection 397(1) and the conduct of a matter arising under this Part . ”

64


7. Conclusions and recommendations

7.1. The AMWU makes a series of recommendations to the Review Panel in this submission, and

each is made in order that the Act better achieve the objects which it sets out to achieve,

and which it proclaims at s.3. We do not resile from our support for the Act, or its role in

improving the fairness and respect with which workers in Australia are now treated,

compared with the insidious and dehumanising race to the bottom which was the

motivation and momentum of Australian industrial legislation during the time of

WorkChoices.

7.2. At the same time, we do recognise that the Act could do better. It could do better in

promoting productivity, providing for fairness, providing for better representation and a

more secure safety net. If the Act is to maintain its integrity, and move closer to the

achievement of those objects at s.3, then we strongly commend the following proposed

amendments to the review Panel.

7.3. We thank the Panel for the opportunity to make our submission, and look forward to further

consultation as the Review progresses.

65


Subject matter Recommendation Paragraph

Reference

Productivity That the limitations on the subject matter of agreements at s.172 be removed;

2.32

Productivity That multi-employer agreements may be negotiated under the same good faith bargaining and protected action principles and negotiations for enterprise agreement;

2.32

Productivity That appropriate industry-wide agreements may be made and enforced;

2.32

Productivity That prohibitions on “pattern bargaining” are removed 2.32

Good faith bargaining Removing the “ninety day” requirement at s.229(3) so that

good faith bargaining principles are enforceable throughout

bargaining

3.13

Protected Industrial Action

Amending s.483(1) so that industrial action is available

throughout bargaining

3.19

Good faith bargaining Amending s.187(2) so that good faith bargaining is

considered by FWA at the time any application for approval

of an agreement is made

3.24

Good faith bargaining Deleting s.228(2) so that bargaining representatives are

required to reach an agreement

3.29

Good faith bargaining That bargaining representatives being required to be

“genuinely trying to reach agreement” and/or have a duty

to conclude an enterprise agreement unless there is a

genuine agreement not to on reasonable grounds.

3.30, 3.78,

3.79

Good faith bargaining That the definition of “group of employees” be amended

under s.186 to be “more than one employee who is to be

covered by the proposed agreement.

3.37

Good faith bargaining Provide that the definition of objectionable term at s.12

include a term that allows one or more employees to “opt

out” of an agreement

3.50

66


Good faith bargaining That communications which are proposals about or

variations to terms and conditions of employment of

employees to be covered by the proposed enterprise

agreement must be made through the bargaining

representative of any such employee.

3.84

Good faith bargaining That good faith bargaining requirements provide for

equality of communication for bargaining representatives

3.85

Good faith bargaining That majority support arbitration be introduced. 3.96

Good faith bargaining That a model code of good faith bargaining be made as a

Regulation.

3.100


That s.417 be amended and s.459(3) be amended to

prohibit only engaging in industrial action.

4.4


Amend the definition of “payment” for the purposes of

Division 9 of Part 3-3 to exclude “accommodation-related

payments”.

4.8


That s.471(4) be revoked so that a notice for complete non-

payment cannot be made in the case of a partial work ban.

4.15

Right of Entry That s.492 be amended so that employees main meal break

area is the default meeting place for the purposes of s.492,

and that disputes over such rooms be determined by FWA

on the basis of the most reasonable and practical location

for employees to meet with an official exercising right of

entry.

5.15

Guaranteed safety net That s.134(1) be amended to provide that modern awards

should supplement the NES as appropriate for Australian

industries and occupations.

6.6

Guaranteed safety net That s.90 be clarified so that payment for annual leave is

made at, during or immediately prior to the taking of the

annual leave.

6.11

67


Guaranteed safety net That s.146 and s.739(4) be varied to provide that modern

awards must include a procedure for settling disputes by

mediation, conciliation and arbitration.

6.29, 6.30

Guaranteed safety net That s.186(6) be amended to provide that enterprise

agreements must include a procedure for settling disputes

by mediation, conciliation and arbitration.

6.35

Guaranteed safety net That the 26 week cap at s.392 be amended to allow for an

award reflecting accrued entitlements beyond that cap.

6.42

Guaranteed safety net That s.397 be amended so that the wished of the parties

are taken into account in the programming and conduct of

matter under Part 3-2.

6.44

68