FAIR WORK ACT REVIEW 2012
SUBMISSION OF THE COLLIERIES’ STAFF DIVISION OF THE ASSOCIATION OF
PROFESSIONAL ENGINEERS, SCIENTISTS AND MANAGERS, AUSTRALIA
INTRODUCTION
The Minister for Employment and Workplace Relations, the Hon Bill Shorten MP, has appointed the
Fair Work Act Review Panel to conduct a review of the Fair Work Act (“the Act”) in accordance with
the Federal Government’s best practice requirements. Terms of reference have been established
and the Review is to be an evidence based assessment of the operation of the legislation in the
context of the Object as set out in Section 2 of the Act.
Section 3 Objects of this Act states that:
“The object of this Act is to provide a balanced framework for cooperative and productive
workplace relations that promotes national economic prosperity and social inclusion for all
Australians by:
(a) providing workplace relations laws that are fair to working Australians, are flexible for
businesses, promote productivity and economic growth for Australia’s future economic prosperity
and take into account Australia’s international labour obligations; and
(b) ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and
conditions through the National Employment Standards, modern awards and national
minimum wage orders; and
APESMA Collieries' Staff Division
Level 1/491 Kent St, Sydney NSW 2000.
Phone (02) 92690688
infocsd@apesma.com.au
1
(c) ensuring that the guaranteed safety net of fair, relevant and enforceable minimum
wages and conditions can no longer be undermined by the making of statutory individual
employment agreements of any kind given that such agreements can never be part of a
fair workplace relations system; and
(d) assisting employees to balance their work and family responsibilities by providing for
flexible working arrangements; and
(e) enabling fairness and representation at work and the prevention of discrimination by
recognising the right to freedom of association and the right to be represented,
protecting against unfair treatment and discrimination, providing accessible and
effective procedures to resolve grievances and disputes and providing effective
compliance mechanisms; and
(f) achieving productivity and fairness through an emphasis on enterprise-level collective
bargaining underpinned by simple good faith bargaining obligations and clear rules
governing industrial action; and
(g) acknowledging the special circumstances of small and medium-sized businesses.”
The Minister has also directed the Review to examine the extent to which the Fair Work legislation is
operating as intended, including in the following seven areas:
1. the creation of a clear and stable framework of rights and obligations which is simple and
straightforward to understand;
2. the emphasis on enterprise-level collective bargaining underpinned by simple good faith
bargaining obligations and related powers of Fair Work Australia;
3. the promotion of fairness and representation at work;
4. effective procedures to resolve grievances and disputes;
5. genuine unfair dismissal protection;
6. the creation of a new institutional framework and a single and accessible compliance regime;
and
7. any differential impacts across regions, industries, occupations and groups of workers
including (but not limited to) women, young workers and people from non-English speaking
backgrounds.
In addition, the Review is asked to examine and report on areas where the evidence indicates that
the operation of the Fair Work legislation could be improved consistent with the objects of the
legislation. Finally in order to assist interested parties who may wish to make a submission to the
APESMA Collieries' Staff Division
Level 1/491 Kent St, Sydney NSW 2000.
Phone (02) 92690688
infocsd@apesma.com.au
2
Review Attachment B of the Fair Work Act Review background paper contains outlines a series of
questions.
BACKGROUND
The Collieries’ Staff Division of The Association of Professional Engineers, Scientists and Managers,
Australia (“APESMA”) represents supervisory, professional, administrative, clerical and technical
employees in the Coal mining Industry (collectively known as “Staff”) located across Australia in the
coalfields of the Illawarra, Western District, the Hunter and Newcastle in New South Wales,
Tasmania, the Bowen Basin, Surat Basin and Ipswich in Queensland and in Western Australia.
APESMA is an organisation registered under the Australian Fair Work Act 2009 (the Act).
Staff in the Coal Mining Industry are mostly employed under common-law contracts, underpinned
by the relevant modernised Award. Staff at some mine sites have attempted to achieve an
enterprise agreement with their employer, and their experiences provide a useful insight into where
the Act is operating as intended, and whether it could be improved consistent with the with the
objects of the legislation in relation to good-faith bargaining.
REVIEW AREA 2.
“ The emphasis on enterprise level collective bargaining underpinned by simple good-faith
bargaining obligations and related powers of Fair Work Australia.”
A recent decision of Fair Work Australia concerning an application by the Collieries’ Staff Division of
APESMA for a bargaining order under section 230 of the Act brings to light the difficulties
encountered by the parties when trying to negotiate an enterprise-level collective agreement, and
whether the Act is operating as intended . In the Association of Professional Engineers, Scientists
and Manager, Australia, the Collieries’ Staff Division v Endeavour Coal Pty Limited, the Tribunal
found that Endeavour Coal, a subsidiary company of BHP, had not met the good-faith bargaining
requirements of the Act ((2012) FWA 13), referring specifically to the requirements of s228(1)(b),(d)
and (e). This decision is currently under appeal.
APESMA submits that the facts of this case and the facts of the Cochlear case demonstrate that
where an employer, notwithstanding a Majority Support Determination and the good-faith
bargaining laws that flow once a Majority Support Determination has been made, approach
APESMA Collieries' Staff Division
Level 1/491 Kent St, Sydney NSW 2000.
Phone (02) 92690688
infocsd@apesma.com.au
3
negotiations with a view that the Act does not require the employer to actually "bargain", then the
employer can maintain a refusal to enter into an enterprise agreement, and can refuse to even list
what subject matter it could agree to in an enterprise agreement.
In the appeal of the decision of Commissioner Roberts the employer, Endeavour Coal, contends that
the good-faith bargaining provisions in the Act do not include an obligation to "negotiate" and
submit that the laws have not changed since the legislative position was considered by the former
Australian Industrial Relations Commission in the Aashi Diamond Industrial Australia Pty Limited V
Automotive, Food Metals and Engineering Union (1995) 59 IR .
Whilst the question is before the appeal bench, if the contention of Endeavour Coal is accepted, that
would in our submission mean that there is a major flaw in the legislation. Namely that while the
parties are required to bargain in "good faith" that requirement does not extend to putting any
position, and doesn't extend to an obligation to make reasonable steps to make an agreement.
The question of whether the good-faith bargaining laws should include an obligation to make
reasonable steps to make an agreement has been considered in other jurisdictions. Interestingly, the
New Zealand jurisdiction does have such an obligation at Section 33 of the New Zealand Act . In a
book which reviews the operation of Australia's good-faith bargaining laws "Promoting Good-Faith
Bargaining under Australia's Fair Work Act 2009 - lessons from the collective bargaining experience
in Canada and New Zealand,” the authors Alex Bukarica and Andrew Dallas point out that:
“The Fair Work Act does not have an explicit requirements such as section 33 of New
Zealand's ER Act, section 17 of Ontario’s LR Act or section 50 of the CLC, that has the effect of
creating an expectation that the parties will reach a collective agreement. Although
expressed somewhat differently, the three provisions referred to are important in that they
not only require that the parties to a collective negotiation conduct themselves in a manner
consistent with GFB obligations, but also that they strive to achieve finality in negotiations.
This is a significant expectation that potentially limits the ability of employers to engage in
interminable bargaining as an alternative to actually concluding an agreement. The
expectation of finality, in other words, is an additional safeguard against the pernicious
practice of surface bargaining.
APESMA Collieries' Staff Division
Level 1/491 Kent St, Sydney NSW 2000.
Phone (02) 92690688
infocsd@apesma.com.au
4
Whilst the Fair Work Act does not explicitly include such provision requiring the parties to
conclude an agreement, it can properly be argued that the structure and provisions of part 24 of the Fair Work Act are intended to have that effect. Such a conclusion would be
consistent with the stated purpose in section 171 (b) of the Fair Work Act of facilitating
"good-faith bargaining and the making of an enterprise agreements" (emphasis added). That
is, it hardly seems credible that Parliament intended the specific processes or good-faith
obligations provided in the FW Act were intended to be an end in themselves. Accordingly, a
purposive approach to construing the good-faith obligations of the FW Act would lead to an
interpretation that the intended effect of the legislation is that negotiating parties would
normally be expected to reach an enterprise agreement." (at p 88).
APESMA Collieries Staff Division concurs with the analysis by Bukarica and Dallas quoted
above.
Recommendation: APESMA Collieries' Staff Division submits that consistent with the
Objects of the Act, the Act should be improved to provide a obligation to make
reasonable steps to make an agreement .
GOOD FAITH BARGAINING AND ENTERPRISE AGREEMENT TEMINATION PROVISIONS
It is APESMA’s submission that the FWA does not provide sufficient protection of the terms and
conditions achieved by employees through bargaining. Employers may, with relative ease, obtain an
order to terminate existing agreements with the approval of a bare majority of the workforce before
(or after) their nominal expiry date. As a consequence, in each round of bargaining the employer
has the capacity to easily eliminate above-award terms and conditions, tipping the balance in
bargaining substantially in the employer’s favour. APESMA submits that greater weight should be
given to the status quo; existing terms and conditions should be protected for sufficient time to allow
bargaining to take place without the removal of existing conditions. Further, the capacity to terminate
existing agreements should be made contingent upon it being demonstrated by the employer that it
is bargaining in good faith for a replacement agreement.
Subdivision C and D of Division 7 of Part 2-4 of the Act provide two circumstances in which an
enterprise agreement may be terminated.
APESMA Collieries' Staff Division
Level 1/491 Kent St, Sydney NSW 2000.
Phone (02) 92690688
infocsd@apesma.com.au
5
Subdivision C provides, broadly, for termination of enterprise agreements, where the employer and
employees covered by the agreement jointly agree to that course: s219(1). That provision has not
been frequently used, as a review of the decisions of FWA under the new legislation reveals.
Subdivision D provides for termination of enterprise agreements where the nominal expiry date of
the agreement has passed: s225.
In the latter circumstance, FWA is obliged to terminate the agreement in response to such an
application provided it is satisfied that:
(a)
it is not contrary to the public interest to do so; and
(b)
FWA considers that it is appropriate to terminate the agreement, taking into account all
the circumstances, including the views of the employees, employers and organizations
covered by the agreement.
The public interest test in section 225 does not frequently present a barrier to the termination of an
agreement which passes its nominal expiry date, as a review of the decisions of Fair Work Australia
and the Australia Industrial Relations Commission would reveal. The occasions where the
Commission or Fair Work Australia have declined applications to terminate are few and very far
between.
No such public interest filter limits the exercise of FWA’s power to terminate an agreement pursuant
to Subdivision C. As well as being satisfied as to the legitimacy of the voting process, FWA need
only be satisfied that it is “appropriate” to approve the termination.
As the Review might appreciate, such a standard is decidedly unclear. As Vice President Lawler
bemoaned in Tahmoor Coal Pty Ltd [2010] FWA 6468 (at [32]):
“Appropriateness” is a broad discretionary standard. Reasonable minds may differ, indeed,
differ sharply, on what is appropriate in any given set of circumstances. The power to
terminate an agreement turns on what is effectively an exercise of a broad discretion.
APESMA is currently defending two applications by companies in the Centennial Coal Group to
terminate enterprise agreements applying to the employment of managerial, supervisorial, technical
and administrative staff in the coal mines in New South Wales, and to which it is a party. The
agreements have not yet passed their nominal expiry dates. Notwithstanding the commitment given
APESMA Collieries' Staff Division
Level 1/491 Kent St, Sydney NSW 2000.
Phone (02) 92690688
infocsd@apesma.com.au
6
in each agreement by the employer, to undertake negotiations with APESMA for a replacement
agreement, the employer companies have declined to engage in any enterprise bargaining with
APESMA. The vote approving the termination was achieved after management made it clear to
employees that pay increases would only be available under common law contracts, and not through
enterprise bargaining.
It is not currently clear how FWA is likely to interpret the requirement that it be “appropriate” to
approved the termination of an agreement. As Vice President Lawler bemoaned in Tahmoor Coal
Pty Ltd [2010] FWA 6468 (at [32]), in relation to the “appropriateness” test in section 226 of the Act:
“Appropriateness” is a broad discretionary standard. Reasonable minds may differ, indeed,
differ sharply, on what is appropriate in any given set of circumstances. The power to
terminate an agreement turns on what is effectively an exercise of a broad discretion.
His Honour referred to the judgment in the Federal Court of Australia in Chambers v James Cook
University [1995] IRCA 442, where Spender J opined:
The word “inappropriate” might be in current fashion, but one thing that might be said about its
use is that it covers a wide range of possible conduct, from conduct proscribed by the criminal
law made, conduct unlawful by statute which may result in civil penalties, to conduct which is
merely in bad taste or contrary to the prevailing sense of fashion, like wearing brown shoes
with a navy suit or drinking red win The word “inappropriate” might be in current fashion, but
one thing that might be said about its use is that it covers a wide range of possible conduct,
from conduct proscribed by the criminal law made, conduct unlawful by statute which may
result in civil penalties, to conduct which is merely in bad taste or contrary to the prevailing
sense of fashion, like wearing brown shoes with a navy suit or drinking red wine with fish. The
use of the word almost necessarily involves some obfuscation of meaning and does not
convey anything meaningful of the “nature of the acts or omissions” in “sufficient detail to
enable the person to know” the “precise nature of the allegations and to properly respond to
the allegations”, referring to the words contained in cl.9(d)(i)(1) of the Award later set out.
Recommendation : APESMA submits that consistent with the Objects of the Act, the Act
should be amended to provide that an employer’s unwillingness to engage in good faith
bargaining should be regarded as disentitling the employer from seeking the termination of
an existing enterprise agreement.
APESMA Collieries' Staff Division
Level 1/491 Kent St, Sydney NSW 2000.
Phone (02) 92690688
infocsd@apesma.com.au
7
REVIEW AREA 1
“The creation of a clear and stable framework of rights and obligations which is
simple and straightforward to understand”;
Guarantee of Annual Earnings
Division 3 of Part 2-9 of Chapter 2 of the Act provides for employers to give their employees a
“guarantee of annual earnings”. When such a guarantee is given and accepted by the employee,
the employee is a high income employee, as defined in the Division, and the provisions of any
modern award otherwise applicable to the employee will not have any application to the employee.
An undertaking will only be a guarantee of annual earnings if, amongst other things, the employee
accepts the undertaking, and such offer and acceptance are settled within 14 days of the
commencement of employment, or the commencement of a varied contract of employment
(s330(d)(ii)).
APESMA opposes the continued operation of the Division for the following reasons.
First, in the experience of APESMA, employment and promotion positions are being offered on
condition that the employee enter into a “guarantee of annual earnings” agreement with the
employer. Section 330 of the Act means that in order to be effective a guarantee of annual earnings
must be offered and accepted within 14 days of the commencement of employment, or variation of a
role. At that stage, new starters within the industry are often unfamiliar with award provisions and in
no position to make a judgment about whether the guarantee is sufficient to offset the award
protections. Because those employees are likely on a period of probation, their bargaining power is
limited. Accordingly, the legislative scheme risks undermining the important role of the modern
award in securing the terms and conditions of employment across the industry.
Second, whilst employers are required to maintain records of the giving of a guarantee of annual
earnings (Reg 3.39), there is no requirement upon the employer to disclose the award conditions
which are thereby compromised. In the Black Coal Mining Industry Award, redundancy and
severance payments total 3 weeks pay for every year of service. By way of contrast, the
redundancy provisions in the National Employment Standards, which become the safety net for
employees no longer covered by the award, limit redundancy benefits at 16 weeks pay.
APESMA Collieries' Staff Division
Level 1/491 Kent St, Sydney NSW 2000.
Phone (02) 92690688
infocsd@apesma.com.au
8
Recommendation : If the provisions are to operate and the employer is to obtain the benefit
of being released from its obligations under the award, the employer should be obliged to
disclose those award conditions which will be compromised as a result of entry into the
agreement.
Finally APESMA would welcome the opportunity to elaborate on the issues raised in its submission and to
provide the Fair Work Act Review Panel with any additional information.
Catherine Bolger
Director
Collieries' Staff Division
APESMA
17 February 2012
APESMA Collieries' Staff Division
Level 1/491 Kent St, Sydney NSW 2000.
Phone (02) 92690688
infocsd@apesma.com.au
9