Unions now able to force employers to bargain through fear of industrial action: the impact of the JJ Richards & Sons case on enterprise bargaining

Kathryn Dent, Director and Dimi Baramili, Graduate Associate

Bargaining under the Fair Work Act

The Fair Work Act 2009 (Cth) (“FW Act”) provides a specific process which must be followed in order for industrial action to be “protected”. The requirements for protected action are quite rigid, with any action taken outside this process deemed “unprotected” thus exposing individuals to liability.

In order for industrial action by employees to be protected the first step is for a protected action ballot, which requires a vote to be held as to the form of industrial action before it can be legally commenced. Section 443 of the FW Act further provides that Fair Work Australia (“FWA”) can order a protected action ballot once an application has been made under s437 and the applicant has been “genuinely trying to reach an agreement” with the relevant employer. In practice, it had been commonly held that attempts to “genuinely reach an agreement” could only occur once formal bargaining had commenced.

However, as the recent case of TWU v JJ Richards & Sons Pty Limited [2012] FWA 5609 (“JJ Richards & Sons”) demonstrates, bargaining need not be commenced before a protected action ballot order can be obtained.

In effect, the lowered threshold of what is “genuinely trying to reach an agreement” means that it will be easier for “applicants”, such as unions, to successfully obtain a protected action ballot which, in theory, makes it easier for protected industrial action to take place.

The background to the JJ Richards & Sons case

In this case, the Transport Workers Union (“TWU”) initially wrote a letter to the relevant employer, JJ Richards & Sons, requesting that it enter into negotiations for a relevant enterprise agreement. JJ Richards & Sons refused to enter negotiations as it deemed the entitlements under the existing enterprise agreement to be sufficient. Several months later the TWU applied to FWA for a protected action ballot which was successfully granted.

JJ Richards & Sons appealed this decision on the basis that s443(1)(b) of the FW Act only allows a protected action ballot order to be made where the applicant has “genuinely tried to reach an agreement.”

Therefore, JJ Richards & Sons argued that in order to be deemed to have attempted to “genuinely reach an agreement” bargaining had to have actually commenced between itself and the TWU. JJ Richards & Sons argued that as bargaining had not commenced this element was not satisfied, and in addition, no majority support determination had been made. A majority support determination is available to employees to force an employer to bargain if they refuse. Therefore, it was expected that in line with common practice, the TWU would seek a majority support determination prior to taking industrial action so as to formally commence the bargaining process.

The full bench decision of Fair Work Australia

On appeal, the Full Bench of FWA upheld the initial decision and protected action ballot order. It held that s443 (the discretion to issue a protected action ballot order) is focused on whether the applicant was “genuinely trying to reach an agreement”, which was based upon an interpretation of the ordinary words used and did not impose a requirement that bargaining already be commenced. The Full Bench looked at the FW Act more generally and agreed with the first instance decision that the “genuinely trying to reach agreement” requirement is a broad requirement, and that to establish parties was not “genuinely trying to reach an agreement” is a question of fact to be determined by the relevant circumstances. The Full Bench held that there was no legislative intention to require bargaining to be commenced before seeking an order, as otherwise the legislature would have used words to that effect in the section.

The Federal Court decision

JJ Richards & Sons and the Australian Mines and Metals Association (“AMMA”) appealed for a judicial review of the Full Bench decision. They argued that when looking at the FW Act more broadly, s443 (the ability to issue a protected action ballot order) was crucial to the bargaining process, therefore bargaining needs to have been commenced for an order to be available.

The Federal Court dismissed this argument, instead, upholding FWA’s interpretation of s443, and the order. The Federal Court was of the view that bargaining was not required to have commenced before a protected action ballot order could be made, as it was not a specifically stated pre-condition in the FW Act. The Federal Court was of the view that if this were a pre- condition it would have been stated explicitly in the section, therefore, they were not willing to imply this extra condition. The only two pre-conditions as to the making of a protected action ballot order are that an application under s 437 had been made and that the FWA was satisfied that each applicant has been and is genuinely trying to reach agreement with the employer of the employees who are to be balloted. They also noted that other provisions in the FW Act could be used to force an employer to bargain.

Lessons for employers

This case represents a fundamental shift away from the commonly held belief as to when the enterprise bargaining process under the Act has commenced and therefore, the point of time in the process when an employee or a bargaining representative on their behalf can more forcefully agitate claims based on a threat of industrial action. The consequence of this decision is that industrial action can potentially be taken where negotiations have not yet commenced, or at a minimum be threatened so as to force employers to come to the table. Employers need to be prepared to seriously entertain requests to bargain and to ensure if they are of the view that the attempts to reach an agreement are not genuine they have the evidence ready to demonstrate this in order to oppose the granting of a protected action ballot.