Negotiate in good faith, or be told to

APESMA v Peabody Energy Australia Coal Ltd [2015] FWCFB 1451 (3rd March 2015)

When a large energy company was approached by a union to make an enterprise agreement, the company made the mistake of saying it didn’t want an agreement of any sort, that the employment contracts it used with staff were enough regulation. As a result the union used a majority support application to force the employer into bargaining.

Once bargaining commenced, ‘negotiations’ dragged on for months, with absolutely no progress, especially from the employer’s side.

The union responded by seeking assistance from the Fair Work Commission on the grounds that the company was ‘surface bargaining’. Initially the FWC said it was obvious the parties were too far apart for there to be good prospects of a successful settlement, so declined to issue good faith bargaining orders. But on appeal, a FWC full bench decided the evidence showed the company never wanted an agreement no matter what the union put forward.

Given that the employees had expressed their desire to bargain via a majority support determination, the FWC ordered the company to meet with the union again and discuss the latest union proposal. It also ordered the company to provide details of salaries. Most critically for the company, FWC also ordered it “to provide (the union) with a genuine proposal which includes the matters that it may be prepared to accept in an enterprise agreement”.

Given the company did not want any sort of agreement, these obligations now placed on it makes its preferred position more difficult to sustain. The FWC made it clear the scheme of the legislation does not include forcing any party to accept an agreement (other than via specialist mechanisms such as in the Qantas case). But this set of steps the company must take as a result of the FWC orders, means employees and their union, will have raised expectations about a negotiated outcome. And that’s a potential morale issue if it drags on.

This case demonstrates two things. Firstly, a law exists which can be used to force a reluctant employer to put forward a “genuine proposal” for an enterprise agreement whether they like it or not. And secondly, the need for circumspection on the part of employers who have strong negative views about making an agreement of any kind. The employer in this case was very outspoken and upfront about not wanting an agreement. That made the union’s argument about surface (or sham) bargaining, that much easier for the FWC to accept.