A Bargaining Order decision of Commissioner Yilmaz in Victorian Ambulance Union Incorporate v Health Select Pty Ltd T/A Health Select has shed a light into employer’s obligations under s 228 of the Fair Work Act (FW Act) relating to Good Faith Bargaining (link).

The matter serves as a reminder that where employers enter into the bargaining process, they should tread carefully, endeavour to engage with employee representatives in a genuine, fair, and reasonable manner, and to document those endeavours during enterprise bargaining processes.

Background

The respondent, Health Select, a non-emergency patient transport company, established an internal working group in mid 2018 to modernise and update their expired enterprise agreement. Employees were invited to contribute to the process, and between April 2019 and October 2019, 12 phone conferences were held as part of the process.

A Notice of Employee Representational Rights (NERR) was issued to all employees in October 2019. In November 2019, an employee notified Health Select that they had appointed the Victorian Ambulance Union (VAU), the applicant, as their bargaining representative. At all times, the VAU represented no more than eight of their 176 employees.

In the subsequent four months, Health Select and the VAU were involved in five bargaining meetings. Both parties described the other’s conduct as combative, with the events marred by contradicting employee communications, a lack of trust between the employer and employee bargaining representatives, and interim bargaining orders being issued by the Fair Work Commission (FWC).

Following the fourth meeting the VAU made a s 240 application to the FWC to “improve the efficiency of bargaining” – this file was closed in April 2020 after Health Select confirmed it did not agree to arbitration.

On 28 April 2020, the VAU served on Health Select a notice of concerns. Health Select responded to the notice on 5 May 2020 that their decision as to bargaining had not changed – they were to cease bargaining and remain operating under the expired EA.

Health Select rejected that it had breached its good faith bargaining obligations on the grounds that after months of bargaining the parties had reached an impasse and given the economic impact of the bushfires and pandemic, it was “nonsensical” the parties continue to bargain. On 22 June 2020, the VAU made the application for bargaining orders.

Consideration

The VAU’s application for good faith bargaining orders rests on the grounds that Health Select failed to meet the good faith bargaining requirements under s 228(1)(a), (d), (e) and (f) of FW Act.

Health Select submitted that a bargaining order could not be made under s 230, as they revoked the Notice of Employee Representational Rights (NERR) on 5 March 2020, and no majority support determination (MSD) had been made.

Commissioner Yilmaz expressed a preliminary view that no capacity to revoke a NERR exists under the FW Act but did not make a determination on this novel point of law. She further expressed a view that no MSD was required, as Health Select had initiated bargaining.

Health Select sought to rely on s 228(2) of the FW Act, which does not require a bargaining representative to make concessions, or to reach agreement. Commissioner Yilmaz, however, distinguished this from not bargaining at all.

Attending, and participating in, meetings at reasonable times

In relation to Health Select’s obligations under s228(1)(a), some concerns were raised on the following matters:

  • expressing a reluctance to bargaining at meetings three, four, and five,
  • agreeing to follow up on items on the agenda and that another meeting would be scheduled but subsequently confirming they were not bargaining,
  • confirming they were no longer bargaining after meeting five,
  • not adequately taking notes

Commissioner Yilmaz determined the VAU did not take a proactive position in bargaining to have their claims addressed and to obtain a further meeting, which hindered the bargaining process.

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

In relation to Health Select’s obligation under s228(1)(d), some concerns were raised on the following matters:

  • issuing a one line refusal to consider the VAU’s proposals on the basis of costs
  • not considering BOOT issues relating to overtime, availability allowance, shift allowance, and rest/ meal breaks

In her consideration, Commissioner Yilmaz expressed that the VAU failed to ensure efficiency of process by not providing Health Select with a log of claims at the first bargaining meeting, and not submitting a complete log of claims over the course of the process.

Refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining;

In relation to Health Select’s obligation under s228(1)(e), some concerns were raised on the following matters:

  • Health Select referring to the VAU’s actions as “legal manoeuvring” and “legal games” which Commissioner Yilmaz considered was unfair conduct
  • language used by Health Select’s Managing Director in employee updates misrepresented the VAU’s involvement in bargaining

Commissioner Yilmaz considered that these statements were made to denigrate the VAU and to undermine their legitimacy, and were actions that undermined freedom of association and the bargaining process.

Recognising and bargaining with the other bargaining representatives for the agreement.

In relation to Health Select’s obligation under s228(1)(f), some concerns were raised on the following matters:

  • continuing to question the VAU’s legitimacy as a bargaining representative
  • raising that the VAU represented only seven employees

Commissioner Yilmaz reiterated that the VAU were validly appointed bargaining representatives who were entitled to represent their member’s interests.

Ultimately, Health Select were subject to good faith bargaining orders requiring they work through each party’s claims, distribute notes, and attend at a further 4 meetings.

Implications for Employers

This matter affirms that the process of bargaining can be subject to delays, which can be frustrating and costly as evidenced by Health Select’s situation. Employers should determine at the first instance whether it is in the business’s best interests to commence bargaining in the first place, or if they have other options (such as relying only on common law employment contracts, Company policies and Modern Awards to govern the employment relationship). Once a NERR is issued, it cannot be retracted, and it immediately imposes an obligation on the employer to adhere faithfully to the rules of good faith bargaining.

Employers should bargain and deal with validly appointed employee representatives in a genuine, fair, and reasonable manner. Employers should address any claims an employee representative may make in a way that demonstrates they in fact assessed and considered the claim. This can include the taking and distributing of notes and ensuring responses to claims are sufficiently detailed and clear. This is especially important when BOOT matters are contested.

Should negotiations reach an impasse, parties should not rush to close down negotiations. All attempts made to continue to negotiate should be documented and ready to present as evidence of good faith bargaining should a party need to walk away from the bargaining table.

Should an application be made, an employer must be able to provide evidence to support any defences: records of consultations with employees will be helpful.  It is important to note that Commissioner Yilmaz preferred the employee representative’s evidence to Health Select’s on issues such as whether employees were consulted with, or what the employees wished to do, as Health Select provided no evidence in this regard.

Finally, employers should seek advice from an experienced industrial relations specialist at each stage of the bargaining process and especially before entering bargaining. As evidenced by the VAU v Health Select saga, the process can be fraught, prone to litigation and involved, so having a good team behind you to ensure the process goes smoothly is a prudent choice.

To discuss the implications of this decision or for advice regarding union coverage claims please contact your local AMMA office.