Good faith bargaining: more information, so less faith now required?


Good faith bargaining: more information, so less faith now required?

Previous articles have discussed the 'good faith bargaining' provisions proposed for the new workplace relations legislation and raised some questions regarding its meaning and procedures. This article examines the Fair Work Bill to determine whether those questions are now answered.


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Previous articles have discussed the 'good faith bargaining' provisions proposed for the new workplace relations legislation and raised some questions regarding its meaning and procedures. This article examines the Fair Work Bill to determine whether those questions are now answered.
The text of Bill and the explanatory memoranda can be accessed online.
What is good faith bargaining?
Part 2-4, Div 8 of the Bill sets out the following 'good faith bargaining requirements' that bargaining representatives must meet:
  • 'attending, and participating in, meetings at reasonable times
  • disclosing relevant information (other than confidential or commercially sensitive information) in a timely manner
  • responding to proposals made by other bargaining representatives for the agreement in a timely manner
  • giving genuine consideration to the proposals of other bargaining representatives for the agreement, and giving reasons for the bargaining representative’s response to those proposals
  • refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining.' (cl 228 of Bill)
The Bill further adds that good faith bargaining does NOT require:
  • 'a bargaining representative to make concessions during bargaining for the agreement; or
  • a bargaining representative to reach agreement on the terms that are to be included in the agreement.'
The above requirements are basically what was announced by the Government in its September 2008 Fact Sheet.
Differing views
Commentators have differed in their predictions as to the practical impact of the disclosure provisions. Some believe that an employer will only be required to disclose information that is reasonably necessary to enable discussions and consultation to occur, and to justify its position on an issue. Others, however, take the view that disputes over disclosure will focus on whether an issue really is confidential or commercially sensitive, rather than whether it is actually relevant. Clarification will probably have to await the legislation coming into operation.
Some commentators have also suggested that any reluctance by one party to answer every issue raised in a detailed submission by the other party may result in the latter applying to Fair Work Australia (FWA) for a bargaining order on the basis that 'good faith' obligations have not been met. This could have the potential to make the bargaining process much more protracted, but will depend to a large extent upon how FWA chooses to exercise its discretion in relation to issuing orders.
Note: awards, existing agreements or employment contracts may have separate provisions regarding consultation with employees, and must be complied with.
Who can be bargaining representatives?
Div 3 of Pt 2-4 of the Bill covers bargaining representatives. For negotiating an agreement that is not a greenfields agreement, the following can be bargaining representatives:
  • an employer to be covered by the proposed agreement, or a person nominated by the employer
  • any person appointed in writing by the employee, which may include the employee him/herself or the employee’s union
  • a union, where the employee(s) are members of it and do not formally nominate a bargaining representative — in which case the union becomes the representative by default
  • in the case of a multi-enterprise agreement where a low-paid authorisation also operates, and a union applied for the authorisation, that union may be the representative unless the employee either nominates someone else or belongs to another union that also applied for the authorisation.
An employee can also appoint him/herself to be a bargaining representative.
A union cannot be a bargaining representative of an employee unless it is entitled to represent the industrial relations interests of the employee in relation to the work to be performed under the agreement.
The Bill notes that Regulations may prescribe matters relating to the qualifications or appointment of bargaining representatives.
The notification process
Div 3 of Pt 2-4 of the Bill also covers notification and representation issues.
An employer must be notified in writing of who an employee’s bargaining representative will be, either by the employee or the representative. However, this only applies where the employee formally nominates a bargaining representative, it does not apply where a union is an employee’s bargaining representative by default. The employer is only required to provide written notification of its representative (which may be the employer itself) to an employee bargaining representative if requested to do so.
There is no specific requirement for either party to notify the other in writing of a wish to commence bargaining, but in practice it is recommended to do so. For instance, should a dispute over bargaining later arise, it is advisable to have documented all events in the process up to date.
FWA’s role in the process
The Bill also clarifies the role of FWA in the bargaining process. FWA will have the function of supervising bargaining generally, but will not become involved unless it is either approached by one of the parties, or an agreement is submitted for approval. FWA has the power to make orders and determinations in relation to bargaining, which can be enforced via the court system if necessary.
A bargaining representative may apply to FWA for a bargaining order. Clause 230 of the Bill sets out the timing requirements to do so.
The representative may apply to FWA if:
  • he/she believes that another bargaining representative is not meeting the 'good faith' requirements
  • the bargaining process is not running efficiently or fairly because there are multiple bargaining representatives
  • he/she has already given written notice of the concerns to the other representative(s) plus a reasonable time period to respond to the notice, and believes there has not been an adequate response to it.
A bargaining representative may also apply to FWA for a 'scope order' if:
  • he/she believes the bargaining process is not proceeding fairly because certain employees are not being included in the process, or certain employees who are included should be excluded.
Note: even if those conditions are not met, FWA can on its own initiative issue an order to resolve a dispute, if it is satisfied that the circumstances justify it. FWA must be satisfied that:
  • the employer has agreed to bargain, and/or commenced bargaining
  • a majority support determination in relation to the agreement exists (see below)
  • a scope order in relation to the agreement exists
  • all the employers are specified in a low-paid authorisation in relation to the agreement
  • the concerns expressed in the application to FWA (see above) are valid.
FWA can also issue a 'majority support determination' in cases where an employer refuses to bargain and a majority of employees wants to collectively bargain. This would require the employees’ bargaining representative to apply to FWA.
What a bargaining order will specify
A FWA bargaining order may specify all or any of the following:
  • requirements and actions for bargaining representatives to take in order to meet the good faith bargaining requirements
  • requirements that will prevent capricious or unfair conduct that would undermine freedom of association and the bargaining process, plus actions the representative(s) can take to prevent such conduct
  • other matters considered relevant by FWA.
Regulations may specify other factors that FWA must take into account.
Types of orders
FWA may issue orders that cover the following:
  • to exclude one or more bargaining representatives from bargaining
  • to require bargaining representatives to appoint one of themselves to represent certain employees
  • to prevent an employer from terminating an employee’s employment, if doing so would amount to capricious or unfair conduct by a bargaining representative in relation to bargaining
  • to reinstate an employee in the above circumstances if employment is already terminated
  • scope order, to include or exclude certain employees in/from the bargaining process (see above)
Regulations may specify other factors that FWA must take into account.
Declarations and determinations
The Bill also contains provision for FWA to make a 'serious breach declaration' if a bargaining order is contravened in a serious way that undermines the whole process, and a bargaining representative applies for such an order. This may eventually result in the issue of a 'bargaining-related workplace determination' of the matter by FWA.
FWA can also make a determination if, at the end of a post-declaration negotiating period, the bargaining representatives have not resolved matters that were at issue during the bargaining process.
Workplace determinations are essentially arbitrated resolutions of the matters in dispute between the bargaining parties and when made operate similarly to an agreement.
Part 2-5 of the Bill covers FWA workplace determinations in general.
Application for FWA to dealwith a dispute
Although the good faith bargaining requirements do not actually require the parties to reach an agreement — they only require that they bargain in good faith — bargaining representatives can, by agreement, apply to FWA to deal with a dispute over bargaining. For some types of agreement a single bargaining representative may apply.
FWA may eventually arbitrate the dispute if all the bargaining representatives agree to this.
Penalties for non-compliance
If a person or corporation covered by a bargaining order contravenes any term of the order, a civil remedy may apply, which may be a financial penalty of up to $6600 for an individual or $33,000 for a corporation. Breaches of FWA determinations attract similar penalties.
What FWA can’t do
FWA cannot make orders in relation to the following:
  • particular content that may or may not be included in an enterprise agreement — except when FWA is arbitrating a dispute (as above)
  • an employer requesting that employees approve an enterprise agreement
  • employees to approve, or not approve, an agreement.
Implications for HR
A previous article discusses the implications for HR practitioners of good faith bargaining.
A fundamental issue with good faith bargaining is that it only covers the PROCESS of bargaining, it does not require the parties to actually reach an agreement by following its requirements. For the latter, they may still need other resources, which may include FWA intervention.
The Bill clarifies the operation of good faith bargaining to a certain extent but, as noted in other articles, FWA appears to have quite a wide scope to determine how it conducts its own operations, and how it will exercise that discretion will only become clearer after it starts operating.
Source: Mike Toten, HR writer.
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