July 2010

A year in review: good faith bargaining under the Fair Work Act

It has now been a year since the good faith bargaining provisions in the Federal Fair Work Act 2009 commenced operation. For the most part, employers, employees and unions have embraced the obligation of good faith bargaining and successfully negotiated enterprise agreements at the workplace.

There have, however, been some disputes between bargaining representatives. Fair Work Australia has been required to interpret and apply the good faith bargaining obligations to various tactics adopted during bargaining. Overall, Fair Work Australia has been cautious and responsible in imposing obligations on bargaining representatives, choosing not to intervene and issue bargaining orders. Negotiations can be robust, and Fair Work Australia has demonstrated it will not intervene in the usual rough and tumble of negotiations.

In this bulletin we examine the development of the law concerning good faith bargaining.

Good faith bargaining - what is it?

Bargaining for an enterprise agreement is framed around the obligation to bargain in good faith. Under the Fair Work Act, the good faith bargaining requirements that a bargaining representative for a proposed enterprise agreement must meet are:

  • 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 responses to those proposals

  • refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining

  • recognising and bargaining with the other bargaining representatives for the agreement.

The good faith bargaining requirements do not require parties to make concessions during bargaining or to even reach agreement on the terms that are to be included in the enterprise agreement. With that in mind, we look at the application of those principles to actual cases.

Some case studies

The following examples provide a useful insight into the present scope of good faith bargaining obligations:

  • employer did not comply with good faith bargaining obligations when, in the early course of negotiations, it requested employees to vote on an enterprise agreement without first notifying their union

  • employer complied with its obligations when requesting employees to vote on an enterprise agreement after negotiations had sufficiently progressed and an impasse was reached. The employer was not required to obtain the union's agreement to the vote. In this case, there was no need for further negotiations to be ordered and industrial democracy would determine if more negotiations were required

  • union, by not disclosing at the commencement of negotiations all of the matters that it's member would seek, was not breaching its good faith bargaining obligations. Negotiations can ebb and flow

  • employer is entitled to refuse employees a paid meeting with their union to discuss a proposed enterprise agreement and protected industrial action

  • employer is entitled to communicate directly with its employees (even though they are represented by the union) about the enterprise agreement and can do so in the absence of the union

  • employer refusing to make a pay offer during negotiations for an enterprise agreement (purportedly because of the GFC) but then giving employees increases in pay under their contract was taking inconsistent positions undermining collective bargaining

  • employer (and union) can use emotive language and best spin on information when communicating about an enterprise agreement. However, the 'spin' cannot be misleading or deceptive

  • union can threaten industrial action, giving notices of industrial action to an employer, but not follow through. If this tactic is deployed too often it may be a breach of good faith obligations.

Ultimately, good faith bargaining requires common sense and open and regular communication. Taking this approach will minimise the risk of dispute.

Other developments

In coming bulletins, we will examine adverse action, content rules for enterprise agreements, paid parental leave and give a round up of unfair dismissal developments. In the meantime, it is important to note:

  • From the first full pay period on or after 1 July 2010, the national minimum wage is $15 per hour and default casual loading 21% for award/agreement free employees

  • From the first full pay period on or after 1 July 2010, all modern award minimum wages increase $26 per week, the time when the pay obligation otherwise commence

  • From 1 July 2010 the remuneration cap for unfair dismissals and the high income threshold is $113,800.

Author: James Mattson

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