Human Resource Management

Case study

A bargaining order requires the employer to make a genuine offer

Tuesday, March 03, 2015, 4:39 pm

A Fair Work Commission full bench has today ordered a mining goliath to provide a union with a 'genuine proposal' for a new enterprise agreement, after finding it failed to comply with the Fair Work Act's good faith bargaining requirements.

APESMA has been seeking an agreement to cover about 50 senior, technical and engineering employees at Peabody Coal's Wambo mine in NSW's Hunter Valley since October 2013. The company initially refused to negotiate an agreement, preferring that the employees remain on their individual contracts. APESMA obtained a majority support determination from Commissioner John Stanton in December 2013, and the union and the company sat down to negotiate an agreement during the first half of last year.

But after 10 or so meetings, the negotiations ground to a halt, prompting the union to ask the FWC for s. 229 bargaining orders on the basis that Peabody was engaging in 'surface bargaining'. Senior Deputy President Jonathan Hamberger refused the APESMA's bid in September, finding the company was entitled to take a 'hard' position in the negotiations and that it was meeting its good faith bargaining obligations under s. 228. Upholding the union's appeal, Justice Alan Boulton, Senior Deputy President Lea Drake and Commissioner Ian Cambridge said that in many respects Peabody had complied with the formal requirements by participating in meetings and responding to the union's proposals.

But they said this changed after APESMA put a 'substantially revised proposal' to the company on June 27 last year. 'The proposal removed a number of items from the negotiations, including a claim for increased pay, and, aside from some aspects of the process for retrenchment, did little more than reflect existing conditions at the mine site,' the bench said. APESMA's new proposal seemed to have 'conceded many of the matters raised by the company during the negotiations,' the full bench concluded. Peabody responded in writing on July 4, indicating that it did not see any benefit in entering into an enterprise agreement, that it didn't agree with the proposals and it did not intend to meet for further discussions. The full bench said Senior Deputy President Hamberger had glossed over these developments, and it was difficult to see how he could have concluded that 'the positions of both parties were so far apart' that an agreement was unlikely and that it was 'hard to see that there would be any benefit in any further negotiations'.

The company was obliged to explain its position The appeal bench said that under the good faith bargaining requirements, Peabody was required to do more than simply respond by letter to APESMA's revised proposal. 'At least, there was an obligation to meet and discuss the proposal and to explain in such meeting or meetings whether the proposal or a modified form of it might be acceptable to the company,' it said. 'This is not to say that the company would be obliged to accept the proposed agreement, only that there was an obligation to give further consideration in the bargaining process and through a meeting or meetings with APESMA to put and explain its position and response to a substantially revised proposal which would seem to have addressed the main concerns previously expressed by the company.' The bench said the senior deputy president was also wrong to find that salary information sought by the union from Peabody was 'commercially sensitive' under s. 228. It said APESMA was seeking salary 'ranges', rather than the salaries of particular employees, and it wanted the information to help it formulate its position. The employees' contracts prohibited them from divulging their salaries, but Peabody 'would not have considered the information to be commercially sensitive provided that staff employees gave their consent for it to be provided to APESMA', according to the bench. 'The company had prepared relevant consent forms although it would seem that these forms were never distributed to staff.' The bench ordered Peabody to meet with the union and give it 'a genuine proposal which includes the matters that it may be prepared to accept in an enterprise agreement'. It said nothing in the Federal Court's Endeavour Coal ruling indicating that such orders would be beyond the tribunal's power. The company is also required to provide the union with the salary range information it is seeking.

QUESTIONS

1. Should one party be forced to the negotiating table in a situation where they do not wish to bargain with the other party?

2. What are some of the key requirements for 'good faith bargaining under the Fair Work Act?

3. Does 'good faith bargaining' require parties to compromise or weaken their bargaining stance?

4. Which frame of reference best describes the attitude of the company to it having to bargain with the union?