Good faith bargaining obligation not part of Federal legislation


Good faith bargaining obligation not part of Federal legislation

In an important ruling, a Full Bench of the AIRC has decided that parties involved in enterprise bargaining were not obliged by Federal legislation to bargain in good faith.


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In an important ruling, a Full Bench of the AIRC has decided that parties involved in enterprise bargaining were not obliged by Federal legislation to bargain in good faith.

The Full Bench emphasised that there was considerable discretion in the AIRC to assist the parties, but the primary responsibility for determining the terms of their relationship rested with the parties.


Commissioner Smith issued a decision in February 2003 in which he found there was a duty on those negotiating an agreement to do so in good faith. He ordered that bargaining cease for six months.

In April 2003, Commissioner Smith issued a decision in which he directed the employer, Sensis, to invite a CPSU representative to be present at all negotiations towards an agreement proposed by the company.The employer objected - and the matter came before the Full Bench.

Full Bench decision

The Full Bench contrasted the Australian law (Federal Workplace Relations Act 1996) with that in the United States where there was such an obligation:

'...the discretion [in the AIRC] to issue directions should, so far as practicable, be exercised so as to facilitate the making and certifying of agreements under the Act.

'It follows from these provisions that the power to issue directions should be exercised so as to give primacy to the object of ensuring the primary responsibility for determination of terms and conditions rests with employers and employees at the workplace or enterprise level and that the choice of the form of agreement is a matter for them.'

The Full Bench noted that the Commission's role is facilitative. In carrying out that role it should remain neutral about the form of agreement while attempting to protect the rights of each party.

'It is a part of the scheme that employees who so choose may be represented in negotiations by their union: s170LJ, s170LK(4) and s170LL(5) and s170LN. Any directions the Commission makes should protect that right.

'The Act also provides that an employer may seek to make an agreement directly with its employees. In making directions the Commission should also protect that right. The power to make directions should not be exercised so as to pre-empt the right of either party to seek the type of agreement which it prefers.

There is an additional consideration. In exercising its powers the Commission is required by s110(2)(c) to act according to equity, good conscience and the substantial merits of the case. In the present context the Commission is under a duty to act according to equity and fairly in issuing directions.

'...No party submitted that there is a legal duty to bargain in good faith pursuant to Part VIB. There clearly is no such duty. Such a duty is known to United States labour law. There are no equivalent provisions in the Workplace Relations Act 1996.

'...We have no doubt that in the circumstances outlined the Commission could summon the union and the employer to a conference and take other steps that might facilitate agreement.

'...While the Commission may make orders about the bargaining process, its role is facilitative. Directions requiring an employer to attend a conference in the Commission or to meet with a union may be seen as appropriate.

'The order in this case would prohibit Sensis from talking to its own employees about a proposed agreement without a representative of the CPSU being present. It is likely that such a direction goes beyond what might legitimately be directed because it tends to deprive the employer of its right to pursue its preferred form of agreement.

'We are not prepared to conclude that such an order would always be beyond jurisdiction. That would depend upon the circumstances, including the submissions of the parties. In this case, for the reasons we now give, this is a matter which we do not need to decide.'


'...the direction sought was based to a significant extent on the view that Sensis was under a legal duty to bargain in good faith. We have concluded that there is no such duty.

It does not follow that the Commissioner's decision as to jurisdiction was wrong. While we have real reservations about the particular direction sought, whether it can or should be made is a matter to be determined in light of all the circumstances. But because the Commissioner has indicated an intention to consider the merit arguments in the context of a duty to bargain in good faith it is necessary to ensure that does not occur and that the discretion is exercised having regard to the relevant statutory considerations.'

The Full Bench concluded that the appropriate course was to direct Commissioner Smith to take further action to deal with the CPSU's application in accordance with this decision.

See: Sensis Pty Ltd re CPSU, the Community and Public Sector Union v Sensis Pty Ltd - PR939704 - FB of AIRC - Guidice P, Marsh SDP and Grainger C - 28 October 2003.




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