Focus: Workplace Relations
7 April 2010
In this issue: we look at dispute resolution clauses in enterprise agreements; when enterprise agreements will transfer with employees; the potential consequences of workplace harassment; and whether the scope of a proposed enterprise agreement is a proper subject for bargaining.
- Dispute resolution unresolved
- Transfer of enterprise agreements
- Employers beware: Hefty award for workplace harassment
- Scope of enterprise agreements part of bargaining
In brief: Dispute resolution procedures in enterprise agreements do not have to give Fair Work Australia the power to arbitrate unresolved disputes. Research Assistant Samantha Lord and Law Graduate Sally Davies report on Re Woolworths Ltd trading as Produce and Recycling Distribution Centre.1
How does it affect you?
- Employers can retain flexibility in dispute resolution, rather than handing power over to an independent umpire to impose an outcome.
- If parties wish to submit disputes to arbitration by Fair Work Australia (FWA), they must ensure that arbitration is expressly authorised by the enterprise agreement.
- Employers still need to ensure that their enterprise agreements provide for an independent dispute resolution procedure (eg via mediation) to comply with the requirements set out in section 186 of the Fair Work Act 2009 (Cth) (the FW Act).
At first instance, Commissioner Smith refused an application by Woolworths for approval of an enterprise agreement with the Shop, Distributive and Allied Employees Association (the SDA). One of the grounds on which Commissioner Smith refused the application was the lack of compulsory arbitration in the dispute resolution clause.
The dispute resolution clause in the agreement required arbitration only if both the parties agreed. Commissioner Smith considered this clause in light of s186(6) of the FW Act. Section 186(6) of the FW Act provides that FWA must be satisfied that the enterprise agreement in question provides a dispute resolution procedure that requires or allows FWA, or another independent third party, to settle disputes about matters arising under the agreement or in relation to the National Employment Standards. On Commissioner Smith's interpretation of this section, settlement of disputes must ensure a right of access to arbitration. Consequently, the Commissioner found that the dispute resolution clause did not contain one of the 'essential elements' of a dispute resolution clause under s186(6) of the FW Act.
In overturning the decision, the Full Bench found that:
- other relevant sections of the FW Act (including ss 595, 738 and 739) provide that FWA can arbitrate only if it has been specifically authorised to do so, and that arbitration by FWA is an optional process; and
- the model dispute resolution clause in the FW Act is only a guide as to the kind of clause that could be used. Therefore, the fact that the model clause provides for arbitration does not mean that it is a prerequisite to the approval of an enterprise agreement.
This decision ensures parties to an enterprise agreement retain greater freedom to tailor the dispute resolution procedure to their needs. While parties must take care to ensure that the dispute resolution clause meets the requirements of s186 of the FW Act by providing for some form of dispute resolution by an independent party, it need not involve arbitration. If arbitration is to be an essential ingredient of the dispute resolution procedure, this must be specified.
In brief: Despite wide transfer of business rules under the Fair Work Act 2009 (Cth), enterprise agreements will not always transfer with employees. Lawyer Louise Barnett reports on two recent decisions.2
How does it affect you?
- New employers may seek orders from Fair Work Australia (FWA) that enterprise agreements not transfer with transferring employees on a genuine transfer of business.
- When considering whether to grant the orders, FWA will endeavour to balance employer and employee interests.
An enterprise agreement covering an old employer will usually transfer with employees to a new employer when there is a transfer of business (s313 of the FW Act). However, a new employer, transferring employee or union may apply to FWA for an order that an enterprise agreement not transfer in certain circumstances (s318 of the FW Act).
In the first case, employees were provided to TESA Group Pty Ltd (TESA) to work at Whitehaven Coal Mining Ltd (Whitehaven) mine sites and wash plant. The employees were engaged on a casual basis and received an hourly rate of pay. Whitehaven was in the process of expanding its operations and wanted to offer direct employment. Whitehaven applied to FWA for an order that the transferring employees not be covered by the TESA agreement when they commenced employment with Whitehaven.
The second case concerned a proposed transfer of the business conducted at the Canberra Deep Space Communication Complex (the CDSCC) in the ACT, from Raytheon Australia Pty Ltd (Raytheon) to the Commonwealth Scientific and Industrial Research Organisation (the CSIRO). Two applications were filed. The first was filed by the CSIRO, seeking an order that the CSIRO enterprise agreement cover both transferring and new employees engaged at the CDSCC. The second application was filed by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (the CEPU), seeking an order that new employees be covered by the CDSCC enterprise agreement.
In assessing the applications in each case, FWA was required to balance the employer and employee interests by taking into account the matters set out in s318(3) of the FW Act.
In the first case, FWA noted the following conclusions in favour of granting the order:
- Whitehaven, the affected employees and their union were all in favour of the TESA agreement not transferring;
- the employees would suffer no disadvantage following transfer and would, in fact, be likely to benefit from the advantages of permanent employment; and
- there would be negative consequences if the TESA agreement continued to apply, such as the inefficiency of separate workplace agreements applying to different employees at the same sites.
In the second case, FWA did not grant either order. In relation to its refusal to grant the order sought by the CSIRO, FWA held that the CDSCC agreement should transfer with the transferring employees, noting that:
- the majority of the employees would rather maintain the CDSCC agreement; and
- it was in the public interest for the employees at the CDSCC to continue to receive the benefits of an enterprise agreement specifically negotiated for their needs at the CDSCC site.
In relation to the order sought by the CEPU, the FWA held that the default position under the FW Act should apply and that no order should be made to declare that effect in relation to future employees.
The success of an application to FWA that an enterprise agreement not transfer to a new employer will be significantly affected by whether:
- the new employer is able to obtain the agreement of the transferring employees and their union; and
- it can demonstrate the employees will be no worse off as a result of the transfer.
In brief: Damages in excess of $500,000 have been awarded to compensate an employee for loss of earning capacity following a sustained campaign of harassment and bullying by her former supervisor.3 Senior Associate Nicholas Fletcher and Lawyer Sarah Hampton report.
How does it affect you?
- Employers should monitor the behaviour of their managers towards employees to ensure a safe place of work for all employees.
- Any workplace harassment or bullying should be addressed quickly, and appropriate treatment and support mechanisms put in place.
Ms Bailey worked as a bar steward for Peakhurst Bowling and Recreation Club Ltd (the club) for several years. Following Mr Riley's promotion to club chairman, he became Ms Bailey's supervisor. From that time, Mr Riley subjected her to a sustained campaign of intimidation, bullying and harassment. This conduct included:
- repeated indications that her job was precarious and that her employer would 'get rid of her';
- use of vulgar language, both directly to her and in her presence;
- placing her in untenable situations, where, as her direct supervisor, he pressured her and required her to bend or break the liquor licensing rules regarding the service of alcohol, gaming and accounting for sales;
- demanding that she resign her membership of the union to which she belonged;
- causing her to panic needlessly, and become anxious and upset, when he wrongfully implied that she was responsible for a $2000 shortfall in the cash float when none existed; and
- effecting a change in her work classification from casual to permanent part-time, with a lesser hourly rate of pay and loss of seniority.
Justice Levy of the NSW District Court found that as a result of Mr Riley's treatment of her, Ms Bailey had been left with a serious and chronic generalised anxiety disorder, with panic and agoraphobia together with features of post-traumatic stress disorder. As a result, Ms Bailey was unlikely ever to return to remunerative employment because of her disabling and ongoing psychiatric problems.
Justice Levy awarded Ms Bailey over $500,000 in damages for past and future loss of earning capacity and superannuation.
The intimidatory, harassing and bullying behaviour that led to the substantial damages award had been going on for nearly two years. It is important to ensure that mechanisms are in place to detect such behaviour and once identified, to address it quickly.
In brief: Fair Work Australia has ruled that the scope of proposed enterprise agreements need not be resolved at the outset of the bargaining process.4 Lawyer Suzie Fraser reports.
How does it affect you?
- The scope of proposed enterprise agreements can be a proper subject of bargaining when the parties cannot agree which employees should be included.
- Disputation over the scope of an agreement does not mean that the bargaining representative is not genuinely trying to reach an agreement or is not bargaining in good faith.
Two groups of employers in the Catholic sector of the education industry in Queensland (the employers) were engaged in negotiations with the Independent Education Union of Australia (the IEUA). On 9 November 2009, Fair Work Australia (FWA) made two single interest employer authorisations in relation to each group of employers.
The employers brought several appeals against FWA decisions to issue protected action ballot orders under s443 of the Fair Work Act 2009 (Cth) (the Act). Section 443 states that before a ballot order in relation to a proposed enterprise agreement can be issued, FWA must be satisfied that the applicant (in this case, the IEUA) is 'genuinely trying to reach an agreement' with the employer.
The employers and the IEUA disagreed as to the number and scope of enterprise agreements that should be made in relation to the relevant employees. The employers were seeking two agreements, while the IEUA was seeking 23 separate agreements to cover each separate employer. The employers submitted that:
- because the parties were in disagreement as to the number of agreements, the IEUA was not genuinely trying to reach an agreement with the employers;
- once a single interest employer authorisation has been issued, the only bargaining that may take place is for an agreement applying to those employees covered by the authorisation; and
- bargaining cannot commence until the scope of employees to be covered by an agreement is settled.
A Full Bench of FWA disagreed with the employers and found:
- a single interest authorisation does not define the scope of bargaining between parties;
- there is no reason why questions of scope cannot be included in bargaining; and
- the mere fact that a bargaining representative puts scope at issue does not mean the bargaining representative is not genuinely trying to reach an agreement.
On the basis of these conclusions, the Full Bench ruled that protected action could be pursued and the appeals against the protected ballot orders were rejected.
There will often be strategic reasons for one party to negotiations wanting the scope to be limited or extended by reference to calling or location. This decision means that scope is like any other claim under the proposed agreement and can be pressed with the full support of protected action. This may make it less easy for employers to control which classes of employees are included and which are not.
-  FWAFB 1464.
- Whitehaven Coal Mining Ltd  FWA 1142; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v The Commonwealth Scientific and Industrial Research Organisation (CSIRO)  FWA 1171.
- Bailey v Peakhurst Bowling and Recreation Club Ltd  NSWDC 284 (3 November 2009).
- Stuartholme School & Ors v Independent Education Union of Australia  FWAFB 1714.
- Tim FrostPartner,
Ph: +61 2 9230 4930
- Peter ArthurPartner,
Ph: +61 2 9230 4728
- Jamie WellsPartner,
Ph: +61 7 3334 3268