What is the name of a group that is allowed to go into negotiations on behalf of the worker?

'Enterprise agreements' (or enterprise bargaining agreements) are agreements made at an enterprise level between employers and employees about terms and conditions of employment.

'Enterprise bargaining' is the name given to the voluntary process of negotiation between management and employees or their representatives (usually unions), the purpose of which is to reach agreement regarding terms and conditions of employment. These are known as 'enterprise agreements'.

To become legally enforceable, agreements need to be approved, by affected employees and by Fair Work Commission  (FWC) by passing the ‘better off overall test’ against the underlying award.  Once approved agreements fully replace the award provisions the terms of the agreement can allow for the Agreement to incorporate or be read in conjunction with the underlying award.

What is the process?

Commencement of bargaining and good faith bargaining

Bargaining under the Fair Work Act 2009 usually commences when the employer initiates bargaining with the employees or their representatives, which in the public sector is usually a relevant union. The employer must provide the employees with a notice of representational rights within 14 days of initiating bargaining, advising them of their rights to be nominate a representative to bargain on their behalf if they so choose.

The Fair Work Act 2009 sets down a number of requirements for the conduct of bargaining, these include:

• Attending and participating in meetings at reasonable times
• Disclosing relevant information in a timely manner
• Responding to proposals made by other bargaining representatives in a timely fashion
• Giving genuine consideration to proposals and reasons for representatives responses to proposals
• Refraining from capricious of unfair conduct that undermines freedom of association or collective bargaining
• Recognising and bargaining with the other representatives for an agreement.

Failure to abide by the above principles exposes a bargaining representative to orders from FWA. However these requirements do not require bargaining representatives to make concessions or reach agreement.

Once the bargaining is concluded and agreement is reached between the employer and the employees, normally represented by a union, steps can be taken that will lead to the approval and lodgement of the agreement.

Limited protection for industrial action in the course of negotiations

The Fair Work Act 2009 protects employees' rights to take protected industrial action during the course of negotiating an agreement, but only if the nominal expiry date of the current agreement has past and genuine attempts to reach a new agreement have been made. 

Certain steps and notice periods, including the approval of the industrial action by secret ballot, are required to obtain such protection. Industrial action which is not protected because the abovementioned prerequisites have not been met exposes participants to statutory and common law legal action.

Role of Fair Work Australia in bargaining

Where agreement cannot be reached the parties to enterprise bargaining negotiations can request the assistance of Fair Work Australia (FWA) to help them reach agreement. This assistance is normally limited to conciliation to assist the parties in coming to agreement.

FWA is empowered only to arbitrate a bargaining dispute where FWA have suspended or terminated protected action, for example because the industrial action is endangering community health/welfare or damaging the Australian economy.  Suspension or termination of protected action can only obtained after submissions to FWA and if granted ends the bargaining representatives' right to engage in protected industrial action.

Approval of an enterprise agreement by employees

Once agreement is reached with the nominated representatives employers must take reasonable steps to ensure that every person whose employment will be subject to the proposed agreement has the proposed agreement in writing or has access to the proposed agreement at least seven days before any approval is given. The employer must also take reasonable steps to explain the terms of the agreement and the effect of those terms to the relevant employees.

Once employees have had at least seven days to consider the agreement (and any incorporated materials) the employer may request the employees approve the agreement by voting on it. And within 14 days of the vote being taken either the employer or the nominated employee representatives may apply to FWA for formal approval of the agreement.

Approval of an enterprise agreement by Fair Work Australia

To attain approval of an enterprise agreement FWA must be satisfied that the procedural elements briefly mentioned above have been complied with and that the agreement passes the “better off overall test.” This test considers the effect of the agreement against the relevant modern award to ensure each employee would better off than they would have been had the terms of the modern award applied.

Operational period

An enterprise agreement commences on approval by FWA and must include a nominal expiry date which cannot be more than four years after the day on which the agreement was approved by FWA.  However, an enterprise agreement will remain in force after the nominal expiry date of the agreement until it is replaced by another agreement.

Uniting Church in Australia Property Trust (Q) T/A Blue Care and Wesley Mission Brisbane v Queensland Nurses’ Union of Employees [2014] FWCFB 1447 (Acton SDP, Drake SDP C, Booth C, 24 March 2014).

The employer engaged two types of employees, nurses and support and care employees, covered by two separate enterprise agreements. During bargaining for a new enterprise agreement in relation to care and support employees, the Commission made a bargaining order following an application from the Queensland Nurses' Union of Employees (QNU).

The employer appealed the decision to make the order on the basis the Commission had erred in finding that QNU was a bargaining representative for the proposed enterprise agreement.

At first instance, the Commission undertook an analysis of QNU's eligibility rules and concluded that the work performed by the two employees who were members of the QNU was of a type that entitled QNU to represent those employee's industrial interests..

The employer argued that the Commission had mischaracterised the work performed by the two QNU employees and that it could not meet the definition of the relevant work within the QNU's eligibilty rules. On that basis, the employer argued, QNU was not entitled to represent the industrial interests of the two employees

In finding that QNU was entitled to represent the industrial interests of the two employees, the Full Bench considered the work to be performed by the employees under the proposed enterprise agreement. The Commission was satisfied that the classification structure in the proposed agreement provided enough flexibility that the work to be performed by the two employees would include work that met the relevant definition in QNU's eligibility rules. QNU was therefore a bargaining representative for the proposed enterprise agreement.

NOT able to act as a bargaining representative

Employer bargaining representative not validly appointed

First application – Appeal: Kaizen Hospitals (Essendon) Pty Ltd v Australian Nursing Federation [2012] FWAFB 8866 (Boulton J, Kaufman SDP, Cribb C, 18 October 2012), [(2012) 224 IR 400].

Second application – Approval decisions: Re Australian Nursing Federation [2012] FWAA 10420, [2012] FWAA 10505, [2012] FWAA 10511 (Hamilton DP, 20 December 2012).

Appeal: Re Kaizen Hospitals (Malvern) Pty Ltd T/A Malvern Private Hospital and Others [2013] FWCFB 1846 (Watson SDP, Hamberger SDP, Cargill C, 26 March 2013).

Judicial review: Judicial review: Kaizen Hospitals (Essendon) Pty Ltd v Australian Nursing and Midwifery Federation [2014] FCA 428 (2 May 2014).

Full Court appeal: Australian Nursing and Midwifery Federation v Kaizen Hospitals (Essendon) Pty Ltd [2015] FCAFC 23 (5 March 2015).

The Commission, at first instance, approved three enterprise agreements covering nurses at the Essendon Private Hospital, Malvern Private Hospital and Melbourne Eastern Private Hospital in Victoria. In relation to the original applications, each application:

• was made in the name of the employing company at the relevant hospital
• identified SIAG Pty Ltd as the applicant’s representative
• stated that the applicant company appointed SIAG as its bargaining representative, and
• was signed by a representative of SIAG in the capacity/position as "Employer Bargaining Representative".

The appellants contended that the Commission erred in approving the agreements, because the hospitals did not agree to the terms of the relevant agreements, did not appoint the employer bargaining representative (SIAG) which made the applications for the approval of the agreements, and did not authorise the company representative who made the statutory declarations in support of approval to do so.

The Full Bench found that the applications for approval were not validly made. If the applications were made by an employer bargaining representative, then they were made by one who was not validly appointed in accordance with the Fair Work Act. There was no instrument of appointment or other written document or any other evidence produced in the appeal proceedings to show that SIAG had been appointed as the employer bargaining representative for the agreements. The mere lodgement of an application in the name of an employing entity but without authorisation to do so is not sufficient to meet the requirements of the Fair Work Act. Accordingly permission to appeal was granted in each matter, the appeals were allowed and the approval of the agreements set aside.

The Australian Nursing and Midwifery Federation (ANMF) made a second application, on the basis that the employers were acting as their own bargaining representatives. These were again approved at first instance. A Full Bench of the Commission denied the hospitals' permission to appeal. The hospitals then applied to the Federal Court for a judicial review which found an absence of authority for the agent to sign agreement on behalf of the employers, the approval by the Commission at first instance was quashed.

A subsequent appeal was made to the Full Court of the Federal Court by the ANMF. The Full Court found that the employer bargaining representative was acting within the scope of his ‘apparent authority’ and as a consequence each agreement could be considered signed by the employer as a matter of law. The Full Court upheld the appeal and set aside the orders made by the judge in the judicial review.

Union had no member who would be covered by the agreement

"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) v Inghams Enterprises Pty Ltd [2011] FWAFB 6106 (Acton SDP, Hamilton DP, Simpson C, 8 September 2011), [(2011) 212 IR 351].

The AMWU gave notice to Inghams of its intention to make an enterprise agreement with Ingham Enterprises Pty Ltd in respect of employees at Grant Road, Somerville covered by the Metal, Engineering and Associated Industries Award. Inghams replied to the AMWU advising that it only had two employees in its maintenance department and both employees were covered by individual agreement-based transitional instruments with nominal expiry dates that had not yet passed. Inghams went on to advise it did not agree to commence bargaining for an enterprise agreement.

Some time subsequently Inghams initiated bargaining with two of its employees employed to conduct engineering maintenance and repairs at its Somerville plant. The two employees each appointed a person other than the AMWU as a bargaining representative. The Somerville Agreement was made as a result of the two employees voting to approve it. The application for approval was accompanied by a conditional termination instrument.

The AMWU submitted it had a right to be notified of and/or appear in the proceedings before the Commissioner for approval of the Somerville Agreement and it was not notified of or given the opportunity to appear in those proceedings.

To be a bargaining representative, the AMWU had to have at least one member who would be covered by the agreement. Evidence indicated the AMWU had no such member. As a result the Commission was not satisfied the AMWU was a bargaining representative.