Wrong Explanation of EBA’s Effect Kills Deal

When a large mining operator made a new agreement with a small number of employees, it focussed almost entirely on explaining to them the differences between the new deal and the existing agreement. So much so that in answer to the crucial question about the proposed agreement, “Are there any terms less beneficial to the employees”, the employer answered “No”.

And in the end, that’s what brought them undone in the Fair Work Commission when the union intervened at the approval stage. The law is clear. When making an agreement, the employer is obliged to explain to the employees the terms of the agreement and their effect.

The company argued that this meant the employees would be more interested in knowing the differences between the existing agreement and the proposed one. But the union argued that is not what is meant and the FWC in this instance agreed. Rather it was necessary in order to comply with the rules for the employees to understand the difference between the proposed agreement and the award that would otherwise apply – just like the “better off overall test”.

The employer submitted that the small number of employees involved in this agreement were long-term employees and had only ever worked under agreements. Further it said, the agreement’s conditions were, overall, vastly superior to the award, so in reality, the award was virtually irrelevant to them.

But the FWC was unmoved by this argument, pointing out in detail the many award conditions that were either inferior to (or missing altogether from) the proposed agreement. And since the employer had claimed there were no lesser terms, how could the employer have properly discharged it obligations to explain the effects of the agreement? If the employer didn’t even recognise these less beneficial conditions existed, how could the employees be making an informed decision?

This case demonstrates that complacency has no part in the process. It is not good enough to rely on superior wages, or unanimous employee support, or a long history of agreement-making. The agreement should be better than the award for the employees and the employer has to show how that was explained to them so that they have genuinely agreed to the deal.

Downer EDI – Blasting Services NSW Coal Agreement 2018 [2018] FWCA 2888 (17 August 2018)