Fair Work Commission enforces strict approach to enterprise bargaining procedure

The Full Bench of the Fair Work Commission (FBFWC) has taken a non-negotiable stance on compliance with the procedural requirements of enterprise bargaining in the Fair Work Act 2009 (Cth) (FWA).

In Uniline Australia Limited [2016] FWCFB 4969, the FBFWC upheld the FWC’s decision to reject an enterprise agreement on the basis that Uniline failed to comply with the obligation to issue a Notice of Employee Representational Rights (NERR) to employees within the required time limits.

Section 173(3) of the FWA requires an employer to issue an NERR to each employee covered by the enterprise agreement as soon as practicable, and not later than 14 days, after the notification time for bargaining has commenced.

Uniline commenced negotiating with employees in early 2014 as the nominal expiry date of their existing enterprise agreement was in mid-2014. During 2014 and 2015, the negotiations stalled. In February 2016, negotiations recommenced and Uniline issued an NERR on 11 February 2016 (almost two years after the bargaining process commenced).

On 9 March 2016, the enterprise agreement was made following approval by a majority of the employees who voted (25 out of 30). The enterprise agreement was made more than 21 clear days after the issue of the NERR in accordance with section 181 of the FWA.

On 13 May 2016, Uniline applied to the FWC for approval of the enterprise agreement. Commissioner Roe rejected the enterprise agreement on the basis that Uniline failed to establish that genuine agreement had been reached, as Uniline did not issue the NERR within the 14 day time limit of commencing bargaining in early 2014.

Appeal

Uniline appealed to the FBFWC, arguing that the failure to issue the NERR in accordance with section 173(3) of the FWA was not a valid reason to refuse to approve the enterprise agreement.

The majority of the FBFWC upheld Commissioner Roe’s decision. They held that, despite the majority of employees voting to approve the enterprise agreement, as the NERR had not been issued within the 14 day time limit, the employees could not have genuinely agreed.

Vice President Watson strongly dissented on the basis that a ‘common sense approach’ should be adopted in considering compliance with procedural requirements to prevent the rejection of otherwise genuinely agreed enterprise agreements. Vice President Watson held that a common sense approach supported the objectives of the FWA of enterprise bargaining being ‘a simple, flexible and fair framework for agreement making and the facilitation of enterprise agreements’.

AiG Group, on behalf of Uniline, is considering applying to the Federal Court to review the FBFWC decision.

Implications

This decision demonstrates the FWC’s strict interpretation of the procedural requirements of enterprise bargaining. The FWC’s non-negotiable stance means:

• employers need to show they have complied with the 14 day period for issuing NERRs to establish that the enterprise agreement has been genuinely agreed to by the employees;
• employers who have failed to comply with the 14 day period for issuing NERRs will need to restart the entire bargaining process; and
• employers currently undertaking bargaining need to review their bargaining process and remedy any technical deficiencies.