Many employers think their obligation to explain the effect of a proposed agreement is met when they set out the differences between a proposed agreement and the award(s) that would otherwise apply. But that’s not necessarily the whole story. Failing to explain the difference between an expired agreement and a new one as well, can bring an approval application unstuck as a large labour hire firm recently found out.
The company had relied on the fact that a very similar agreement with another group of employees had already been approved by the FWC, so its explanation of the terms was cursory. The FWC was unimpressed, pointing out that several key changes from the employees’ existing agreement were included and should have been discussed.
The critical problem about this is that the FWC then uses what it considers to be poor, or a lack of sufficient, explanation to find that the employees’ agreement can’t be genuine. The logic is that where the employer does not fully explain the effects of a proposed agreement, despite a positive vote, the employees’ agreement cannot be considered genuine.
As importantly, the FWC was critical of the employer’s record keeping of what consultation it did undertake. In this regard it said “(t)he mere fact that these information sessions and meetings occurred, in the absence of any knowledge of what it was that was explained or an indicative assessment of who attended these sessions, does not in all the circumstances of this case satisfy the Commission that the Applicant took all reasonable steps to explain the terms of the Agreement to employees.”.
Employers must attest to the steps taken to explain the effects of an agreement when filing for approval and the FWC makes it clear that simply stating ‘the terms of the agreement were explained’ is not enough. It wants to know how the employees made an informed decision.
The case underlines the necessity for employers to take the time to explain the effects of what it is they propose and to do that in ways that engender genuine understanding. And having done that, to make sufficient record of their efforts to meet the FWC’s concerns.