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Employment Law Alert: Protected industrial action can be taken before bargaining commences - 18 Aug 2011

The Business Council of Australia is lobbying the Federal Government to change the Fair Work legislation following a series of decisions by Fair Work Australia that allow employees to initiate protected industrial action before enterprise bargaining has commenced.

Against this backdrop, the Australian Mines and Metals Association, which intervened as a party to the most recent appeal before Fair Work Australia, has talked about seeking a further review of the latest decision by the High Court. This decision involved a refusal by JJ Richards, a waste management disposal company, to bargain with the Transport Workers Union for an enterprise agreement.

Here, Partner Andrew Tobin outlines the background to this decision and its impact on Australian employers.

What you need to know

  • Where an employer refuses to commence bargaining, a union does not have to seek a majority support determination, good faith bargaining orders or scope orders before seeking authorisation from Fair Work Australia to conduct a protected action ballot.
  • However, this is highly controversial, and is inconsistent with at least one recent decision of a Full Bench of Fair Work Australia.
  • Employers who are faced with protected industrial action before bargaining has commenced need to consider the appropriate responses available to protect their interests.

Background information: JJ Richards and the Transport Workers Union

The Transport Workers Union wrote to JJ Richards in late December 2010 seeking to begin bargaining, and attached a draft agreement. JJ Richards asked the Union to reconsider its request.

The Union wrote to JJ Richards again in mid-January 2011, providing an amended version of the draft agreement. JJ Richards replied, restating its position.

When appearing before Fair Work Australia, JJ Richards said that while it did not directly refuse to bargain, it did not want to engage in the bargaining process at that time.

The Union applied to Fair Work Australia for a protected action ballot order, which would permit it to take protected industrial action. The application was made without a majority support determination. Only 14 of the 25 employees were members of the Union, and only nine of these members supported the application.

JJ Richards argued that the Union was prevented from making the application because bargaining had not begun.

The initial decision of Commissioner Harrison

Commissioner Harrison said that there was nothing in the Fair Work Act which expressly precluded the Union from applying for a protected action ballot order, the only precondition being that they were genuinely trying to reach agreement. In deciding this, all of the relevant circumstances of the application had to be considered.

In this instance, Commissioner Harrison was satisfied that the Union had been and was genuinely trying to reach an agreement with JJ Richards.

Commissioner Harrison said that the Fair Work Act did not require the Union to seek a majority support determination, good faith bargaining orders or scope orders before seeking a protected action ballot where JJ Richards refused to commence bargaining. He therefore granted the protected action ballot order.

The decision was appealed to the Full Bench of Fair Work Australia.

On appeal: The Full Bench's decision

The Full Bench of Fair Work Australia upheld the decision of Commissioner Harrison, and:

  • rejected the assumption that bargaining must commence before an order for protected action can be obtained. It said that if Parliament had intended this to be the case, it would have made that clear in the Fair Work Act;
  • found that there was nothing in the Fair Work Act to suggest that the Union should not be permitted to organise protected industrial action to persuade JJ Richards to bargain. There was nothing to suggest that where a union is genuinely trying to reach an agreement for its members, but cannot get the employer to agree to bargain, it should not be able to organise protected action unless it has the support of the majority of employees;
  • said that in a case in which a bargaining representative legitimately requests an employer to bargain, and it is clear the employer does not agree to do so, it is likely that the representative will be found to be genuinely trying to reach an agreement, unless there is material from which it could be concluded that the request to bargain is a sham;
  • rejected JJ Richards' argument that if the Union genuinely wanted to reach an agreement, the course most likely to produce that result was an application for a majority support determination. While it acknowledged that pursuing a majority support determination might be seen as equally effective, or even more effective, in getting an employer to agree to bargain, the fact that the Union chose one approach over another was found not to necessarily indicate a lack of genuineness; and
  • concluded that the Union was genuinely trying to reach agreement with JJ Richards. The Union had served an outline of its main demands on the company and sought its agreement to bargain. After JJ Richards resisted this attempt, the Union repeated its request, which was again rejected.

Key points for employers

While the decision in this case has been hailed as a "triumph of common sense" by the union movement, employer associations are labelling it as a "return to industrial chaos".

In their approach to the Government, the Business Council of Australia is arguing that the Act should be amended to make clear that Fair Work Australia cannot grant a protected action ballot application where bargaining hasn't commenced, unless the employees or union involved have first obtained a majority support determination.

Unless and until the Act is amended, or the most recent decision in JJ Richards is overturned in further proceedings, the decision of the Full Bench means that:

  • refusing to bargain gives rise not only to the possibility of a majority support determination and good faith bargaining orders, but also protected industrial action;
  • a union may organise protected industrial action in workplaces where only a small minority of employees want to bargain for an enterprise agreement, in order to pressure an employer to commence bargaining; and
  • employers who are faced with protected industrial action before bargaining has commenced need to consider the appropriate responses available to protect their interests, taking into account that some response action is only available if the employer is genuinely trying to reach an agreement.

For more information, please contact HopgoodGanim's Industrial and Employment Law team.