IN A CONTENTIOUS decision involving a major oil and gas employer, the Fair Work Commission (FWC) has ruled that three trade unions were ‘genuinely trying to reach an agreement’ and therefore could organise Protected Industrial Action (PIA), despite the employer’s strong argument that a ‘job security’ claim was a smokescreen for non-permitted matters.

Heard before a Full Bench of the FWC, Esso Australia was appealing the protected action ballot order (PABO) granted to the CEPU, AMWU and the AWU, in negotiations toward new agreements for upstream oil and gas employees in Victoria.

Throughout the proceedings, Esso had consistently argued that the unions were seeking claims for non-permitted matter under section 172 of the Fair Work Act 2009. Specifically, this involved a union-drafted contractor clause, common across all four agreements, which sought to control not only the engagement of contractors but also to impose Esso terms and conditions on any approved contractor’s employment conditions.

The employer argued that due to the unlawfulness of this claim, the unions were not ‘genuinely trying to reach an agreement’ as required for a PABO under section 443 of the Act.

In the initial single-member hearing for the PABO, Commissioner Anna Lee Cribb ruled that because the unions had revised their claims to refer instead to ‘job security’ clauses, the matter was in fact permitted in enterprise bargaining.

On appeal before the Full Bench, which comprised President Justice Iain Ross, Vice President Adam Hatcher and Commissioner Chris Simpson, Esso Australia argued the Commissioner had erred in her ruling. The employer said that while the trade unions had amended their logs of claims, the revised versions ‘remained the same in substance’, thus continued to pursue the non-permitted matter under a different guise.

The Full Bench ruled in favour of the unions, finding that Commissioner Cribb made no error in determining the unions had been genuinely trying to reach an agreement when its logs of claims were revised to focus on job security in place of contractor restrictions.

The decision to grant the PABO was upheld.

‘Disconformity’ in bargaining interpretations

During Esso Australia’s latest appeal, the Full Bench said it was ‘in the public interest’ to clarify what constitutes ‘genuinely trying to reach an agreement’.

“There is a degree of disconformity between the various Full Bench decisions dealing with the interpretation of s.443(1)(b). It is appropriate that these issues be ventilated on appeal and that further guidance be given on this issue,” the Full Bench said.

“The fact that an applicant is, or has been, pursuing a claim about a non-permitted matter is relevant to whether the test posited by s.443(1)(b) has been met, but it is not determinative of the issue.”

Compiling findings from a broad range of precedent decisions, the Full Bench determined that ‘a range of factual considerations may potentially be relevant’ in deciding whether a trade union was genuinely trying to reach an agreement while also making a non-permitted claim.

Specifically, the Bench included a list of factual considerations:

  • the subject matter of the claim;
  • the timing of the advancement of the claim;
  • the basis upon which the claim was advanced;
  • the significance of the claim in the course of the negotiations;
  • the claimant’s belief as to whether the claim was about a non-permitted matter or not where there is legal clarity about the permitted status of the claim;
  • whether the other party had placed in contest whether the claim is about a permitted matter; and
  • whether such a claim had been withdrawn and, if so, when and in what circumstances.

The Full Bench used this criteria to rule that in this case, the three unions were indeed genuinely trying to reach an agreement with Esso Australia and should be allowed to organise strike action.

Implications for Employers

Despite the Full Bench using this case to apparently clarify the criteria for determining how non-permitted matters can impact the concept of ‘genuinely trying to reach an agreement’, the practical implications for resource employers and other areas of the business community are very concerning.

This ruling reinforces another recent Full Bench of just one week prior involving Coles Supermarkets (click here for decision). Both cases defy a precedent that ordinarily sees the test of ‘genuinely trying to reach an agreement’ applied as at the time of the application. Any problems with the application could then not later be rectified. This would have seen the unions’ PABO application rejected once pursuit of a non-permitted matter as at the time of the application was identified.  However, by entrenching this new precedent, trade unions may be free to tailor applications for PABOs throughout proceedings to increase the likelihood of success and fix any bad conduct once raised by an employer.

A further risk in this latest interpretation is that it may better place trade unions to pursue non-permitted matters during bargaining under the guise of ‘job security’ claims or other loosely-worded clauses to apparently pass the ‘genuinely trying’ test. Employers are already reporting to AMMA that this endorsement of a ‘fluid’ approach to bargaining could keep parties further away from actually reaching an agreement, by encouraging them to be less specific about their claims.

AMMA’s clear position on these complex bargaining issues is that any union bargaining strategy that appears to pursue a non-permitted matter or other unlawful content under any guise must not be tolerated by our workplace system. The Fair Work Commission should simply refuse any union application to strike unless it is unambiguously clear that the union has genuinely been trying to reach an agreement and that the trade union has strictly adhered to section 172 and all other parts of the Act.

AMMA’s Legal Services professionals are on hand to discuss the implications of this decision in full and provide advice, information and guidance on avoiding such issues when negotiating a new enterprise agreement.

Contact your local AMMA office for more information.