Failure to serve application on union means enterprise agreement approval quashed

A recent decision (Sigma Case)¹ of the Full Bench of the Fair Work Commission (Commission) provides yet another example of the difficulties the procedural requirements for enterprise bargaining under the Fair Work Act 2009 (Cth) (Act) can create.

In the Sigma Case, a union had been a bargaining representative for one employee for 19 days before the employee appointed himself as his bargaining representative and revoked his nomination of the union as a bargaining representative.

When the employer eventually lodged the enterprise agreement with the Commission for approval, it did not serve a copy of the application on the union. As the employer had not served a copy of the application on the union, the union did not know it had been lodged until after it had been approved.

The union appealed the approval of the agreement arguing that the employer was required to serve the application on it because it had been a bargaining representative.

The Full Bench agreed, finding that the rules requiring service of the application on a bargaining representative included current bargaining representatives and those who had been:

“….a bargaining representative at some point in the bargaining process but ceased to be a bargaining representative prior to the lodgement of the application for approval …”

Accordingly, the employer had been required to serve a copy of the application on the union, and because it had not, the decision to approve the agreement was quashed.

Line of cases

This is one more in a series of agreements failing to obtain Commission approval due to what many would identify as a ‘technical’ failure of compliance with the Act.

It follows numerous cases in which the Commission has rejected enterprise agreements because the Notice of Employee Representational Rights (NERR) issued by the employer did not comply with the Act’s requirements.

Examples of these cases include:

• an agreement rejected because the employer stapled a bargaining representative nomination form to the NERR². As the nomination form was attached to the NERR, it was found to be part of the NERR, which rendered the NERR invalid because adding content to the NERR (except in the very narrow circumstances provided for the NERR itself) is not permitted.
• agreements rejected because the NERR included the telephone number of the Fair Work Ombudsman rather than the Commission³ and
• an agreement that was rejected because the NERR was printed on the employer’s letterhead⁴.

Even larger employers with significant resources to assist them to negotiate the complexities of the procedural aspects of enterprise agreement making are voicing their frustration with the process, and the approach taken by the Commission to the approval process. Woolworths recently stated⁵ that a

“lack of clarity and inconsistency about how the ‘better off overall test’ (BOOT) is being applied has the potential to significantly lessen (and potentially removes entirely) incentives for bargaining and is a significant risk to the economy.”

So many enterprise agreements were rejected by the Commission because of issues with non-compliant NERRs that in February 2017, the Commonwealth Government issued a regulation, which came into force on 3 April 2017 simplifying the NERR.

However, the Government’s action has failed to cure the problem. In May this year, the Commission in a submission to the Senate Education and Employment Legislation Committee⁶ (Senate Committee) provided information which indicates that since 3 April 2017, there has been an increase in non-compliant NERRs being lodged (with 31% of NERRs being deficient, up from 18%).

In its submissions to the Senate Committee, the Commission requested that proposed changes to the law (which would allow Members of the Commission to exercise some discretion to approve enterprise agreements despite minor or technical errors in relation to some requirements) apply retrospectively to allow Members to exercise discretion in relation to applications that have already been made to the Commission.

In anticipation of its request being granted, where the Commission receives an application for approval of an enterprise agreement that has a deficient NERR, the employer is being offered the option of asking the Commission to ‘hold’ the application until no later than 31 August 2017. In making this offer, the Commission makes it clear that it is not able to predict the likelihood of the law changing by that date. It is also clear that any applications will need to be assessed on their own merits and may still end up being rejected.

It seems that certainty is still some way off.

¹National Union of Workers v Sigma Company T/A Sigma Healthcare [2017] FWCFB 3892 (Sigma Case)
²Peabody Moorvale Pty Ltd v Constructions, Forestry, Mining and Energy Union (CFMEU) [2014] FWCFB 2042
³For example The Maritime Union of Australia v MMV Offshore Logistics Pty Ltd t.a MMA Offshore Logistics; The The Maritime Union of Australia v DOF Management Australia Pty Ltd; The Maritime Union of Australia v Smit Lamnalco Australia Pty Ltd [2017’ FWCFB 660
⁴Application by DP World Brisbane Pty Ltd [2016] FWC 385
⁵Woolworths Group submission to the Senate Education and Employment References Committee https://s3-ap-southeast-2.amazonaws.com/cdn.workplaceexpress.com.au/files/2017/07Woolies.pdf
⁶https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Education_and_Employment/Four-YearlyReviews/Submissions