A recent Full Bench decision of the Fair Work Commission (FWC) has emphasised the strict approach the FWC will take in assessing compliance with pre-approval steps for enterprise agreements under the Fair Work Act 2009 (Cth) (FW Act).
Section173(3) of the FW Act requires that an employer must give a Notice of Employee Representational Rights (Notice) as soon as possible after starting bargaining and within 14 days after starting bargaining.
Uniline Australia Limited (Uniline) applied to have its enterprise agreement approved by the FWC earlier this year. Uniline issued the Notice on 11 February 2016, nearly two years after it started bargaining with its employees. At first instance, Commissioner Roe determined he could not be satisfied the employees had genuinely agreed to Uniline’s proposed enterprise agreement given the non-compliance with s 173(3) of the FW Act. The FWC cannot approve an enterprise agreement unless it is satisfied it was genuinely agreed to by the employees.
Commissioner Roe’s decision was appealed. In a split decision, a majority of the Full Bench of the FWC (Deputy President Gostencnik and Commissioner Riordan) upheld Commissioner Roe’s decision.
While indicating they were not unsympathetic to employers in this position, the majority noted that the FW Act did not allow any discretion in relation to the assessment of the technical pre-approval requirements relating to the Notice, such as content and timing. .
Vice President Watson dissented and argued that upholding the original decision would lead to outcomes which were inconsistent with the aims of providing a simple, flexible and fair framework for the making of agreements. Vice President Watson indicated that upholding the original decision would, “apart from subjecting the workplace relations system to ridicule” result in an agreement not being approved and employers being required to go through a new process of agreeing to bargain, issuing a new Notice and seeking to re-make an agreement. This was described as “requiring the parties to enter the theatre of the absurd”.
Employers who have issued a Notice more than 14 days after starting bargaining or who realise after the 14 days that the Notice previously issued was non-compliant with the FW Act requirements will have their applications for approval of an enterprise agreement rejected.
The majority of the Full Bench commented that, although “artificial”, an employer that discovers it had issued an invalid Notice could:
- cease bargaining with employees,
- commence new bargaining; and
- issue a Notice in the correct form within the required time.
This decision demonstrates that there is a gap in the FW Act in that it does not expressly permit or prohibit the termination of enterprise agreement negotiations other than when an application is rejected by the FWC or the issuing of a majority support determination by the FWC.
Shortly after the decision was handed down, the AI Group (who appeared in the appeal) called on the government to change the FW Act to reflect the recommendation of the Productivity Commission in relation to the conferral of discretion on the FWC to overlook minor errors or defects regarding the content or issuing of a Notice.
In the absence of legislative changes conferring discretion on the FWC not to require compliance with technical pre-approval steps or a further appeal reversing the Full Bench decision, employers must ensure that they:
- use the correct form of the Notice found at Schedule 2.1 of the Fair Work Regulations 2009 (without any unauthorised amendments or modifications);
- issue the Notice within 14 days of agreeing to bargain or being subject to a majority support determination, scope order or low-paid authorisation; and
- otherwise satisfy the pre-approval steps from Part 2-4 of the FW Act.
As part of enterprise agreement negotiations, employers should:
- seek advice regarding the pre-approval steps required under the FW Act before commencing enterprise agreement negotiations; or
- if negotiations have already commenced, review the date the Notice was issued and confirm the content of the Notice is in the exact terms specified by Schedule 2.1 of the Fair Work Regulations; and
- if the Notice was issued late or the Notice is non-compliance with the FW Regulations, seek advice on the approach they should adopt to ensure the agreement can be approved.
Marion Cole | Senior Associate | +61 3 8080 3518 | firstname.lastname@example.org