Because of a staple, the agreement was lost - The need for a proper notice of employee representational rights

5 May 2014

In this In Brief, we examine the Fair Work Commission (FWC) Full Bench decision in Peabody Moorvale Pty Ltd v Construction, Forestry, Mining and Energy Union [2014] FWCFB 2042 (2 April 2014).

The decision illustrates how important it is for employers to comply strictly with section 174(1A) of the Fair Work Act 2009 (Cth) (FW Act), relating to the form of bargaining representation notices which must be issued to employees at the commencement of agreement negotiations. Otherwise, the FWC will not approve a proposed agreement, requiring the employer to start the process all over again.

Bargaining Notice Requirements

Section 173 of the FW Act requires that an employer that will be covered by a proposed enterprise agreement (other than a greenfields agreement) take all reasonable steps to give notice of the right to be represented by a bargaining representative, to each employee who will be covered by the agreement (Notice).

The required form and content of the Notice are prescribed in section 174 of the FW Act. Under section 174(2)-(4), the Notice must inform the employee that:

the employee may appoint a bargaining representative to represent them in bargaining, and in any FWC matter relating to the bargaining; and
if the employee is a union member then the union will be their bargaining representative (the default position), unless the employee appoints another person as their bargaining representative.

Section 174(1A) provides that the Notice must contain the content, and be in the form, prescribed by the Fair Work Regulations 2009 (Cth) (FW Regulations). Importantly, section 174(1A) further states that the Notice must not contain any other content than that which is prescribed by the FW Regulations – regulation 2.05 of which designates the notice in Schedule 2.1 as the prescribed form of the Notice.[1]

Section 174(1A) was inserted in the FW Act by the Fair Work Amendment Act 2012 (Cth), with effect from 1 January 2013. This amendment implemented a recommendation of the 2012 Fair Work Act Review Panel, aimed at addressing union concerns that some employers had been modifying the content of the prescribed Notice in order to undermine employees’ representational rights.

Background to the Full Bench Decision

In this case, the employer (Peabody Moorvale) had provided three pages – stapled together – to each employee who was to be covered by the agreement. The first page was the Schedule 2.1 form; the second page was a bargaining representative nomination form (employer’s copy); and the third page was also a bargaining representative nomination form (employee’s copy).

After some time spent bargaining, an agreement was made. On submission of the agreement to the FWC for approval, the employer attached the three pages referred to above in one PDF document as part of the material in support of the application.

When the issue was raised whether the employer had issued a Notice as required by the FW Act and FW Regulations,[2] Peabody Moorvale asked that the matter be determined by a Full Bench as it intended to challenge a number of first instance FWC decisions applying section 174(1A).

The Full Bench Decision

The Full Bench (Ross P, Hatcher VP, Asbury DP, Gostencnik DP and Simpson C) concluded that, as a matter of fact, the stapled ‘pack’ of three pages purported to be the Notice.[3] Consequently, because of the attachment of pages 2 and 3, it contained ‘other content’ in non-compliance with section 174(1A).[4]

The Full Bench observed that:

... where additional material accompanies a document which contains the content, and is in the form, prescribed in the Regulations, the issue to be determined is what purports to be the Notice.[5]

The Full Bench highlighted that the language of section174(1A) of the FW Act is in mandatory form, which goes to some length to make it clear that there can be no departure from the content or form of the Notice prescribed in the FW Regulations.[6] The Full Bench cited the Explanatory Memorandum to the Fair Work Amendment Bill 2012, which states that:

... a notice must contain only the content prescribed by the regulations and no other content except that which the regulations require an employer to insert or omit.[7]

The Full Bench concluded that the language of section 174(1A) of the FW Act, the context and the legislative purpose supported the conclusion that a failure to comply with the provision invalidates a Notice.[8]

The Consequences of an Invalid Notice

The consequences of these findings were profound for the employer. First, by section 181(2) of the FW Act, an employer must not request its employees to approve an agreement until 21 days after the last Notice is given. Secondly, in order to be able to approve an agreement, the FWC must be satisfied (amongst other things) that the employees genuinely agreed to the agreement: section 186(2)(a).

In this regard, the FWC must be satisfied of a number of matters including that the employer complied with section 181(2): see section 188(a)(ii). As the Notice in this matter was invalid for non-compliance with section 174(1A), the Full Bench held that the FWC could not be satisfied as required. Therefore, the Commission could not approve the agreement,[9] with the consequence that the employer had to begin the agreement-making process again.

Lessons for Employers

The Full Bench decision is a highly technical one. It vividly demonstrates how sensitive the FWC will be to any departure from the mandatory requirements for the form and content of a Notice, under section 174(1A) of the FW Act and Schedule 2.1 of the FW Regulations.
The decision accords with the notion that an employee who is to be covered by an agreement is entitled, by section 174(1A), to receive notice of their right to be represented by whomever they wish – free from any influence by the employer.
If an employer does wish to provide additional information when issuing a Notice to employees, it must ensure that there is no basis for concluding that the additional information forms part of the Notice.[10]
This can be accomplished by, for instance, sending the Notice as a stand-alone document strictly in compliance with the Schedule 2.1 form – with any additional information to be sent separately, a reasonable period of time after sending the Notice.
Where an employer provides information in addition to the Notice, it must be careful to ensure that the additional material is not misleading or intimidatory[11] – for example, it must not misrepresent the true position as to employees’ rights to representation in bargaining under the FW Act.
A failure to comply with section 174(1A) will taint the whole process of bargaining for an agreement. In effect, it will mean that whatever agreement is made will be incapable of being approved by the Commission. Much time and effort will then have been wasted. A fresh Notice will need to be issued, and the process will need to be recommenced.
One danger is that, by then, the employer might have lost goodwill with employees and their bargaining representatives, provoking them to re-visit matters agreed the first time, and prompting claims for backpay if none had been made before.
Therefore, employers would be well-advised to be careful to ensure strict compliance with section 174(1A) and, indeed, all other requirements of the FW Act when bargaining for an agreement.

[1]Click here to view Schedule 2.1 Notice of employee representational rights

[2] A matter to be considered as part of the approval of an agreement under sections 181(2), 186(2)(a) and (188(a)(ii); see below.

[3][2014] FWCFB 2042 at [83].

[4][2014] FWCFB 2042 at [85].

[5][2014] FWCFB 2042 at [69].

[6][2014] FWCFB 2042 at [18].

[7][2014] FWCFB 2042 at [27].

[8][2014] FWCFB 2042 at [46]-[47].

[9][2014] FWCFB 2042 at [103].

[10][2014] FWCFB 2042 at [67].

[11][2014] FWCFB 2042 at [70].

The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.