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In a significant development, the Fair Work Act 2009 (Cth) (FW Act) has recently been amended to afford the Fair Work Commission (FWC) discretion to overlook potential non-compliance with prescriptive procedural requirements for establishing enterprise agreements. This is intended to address the possibility of the bargaining process being invalidated due to minor errors that would have previously precluded approval.

The Full Bench of the FWC has also weighed in and provided clarification around the operation of this new power. The decision in Huntsman Chemical Company Australia Pty Limited T/A RMAX Rigid Cellular Plastics & Others [2019] FWCFB 245 (Huntsman) has confirmed that a more practical approach may now be taken when determining whether to approve an agreement that otherwise would have been rejected for inadvertent and minor non-compliance with certain technical requirements.

Technical aspects of the bargaining process

The agreement-making regime under the FW Act prescribes a number of mandatory steps from the start of bargaining through to approval.

Until recently, this overly technical approach and lack of discretion afforded under the relevant provisions of the FW Act has seen the FWC reject agreements due to slight discrepancies in adhering to prescribed steps in the bargaining process.

Previous cases have illustrated that non-compliance can be fatal to enterprise agreements, for example:

  • in DP World Brisbane Pty Ltd [2016] FWC 385 and Peabody Moorvale Pty Ltd v Construction, Forestry, Mining and Energy Union [2014] FWCFB 2042, the FWC declined to approve enterprise agreements as the employers had failed to strictly comply with the prescribed form and content of the template Notice of Employee Representational Rights (NERR) at the start of the bargaining process. In both instances, this alleged non-compliance was (arguably) relatively minor as it involved issuing the NERR (as required) but with minor alterations such as:
    • presenting the NERR on a company letterhead, and
    • stapling a bargaining representative nomination form to the NERR
  • in Civica BPO Pty Ltd [2018] FWC 4376, an enterprise agreement was also considered ineligible for approval after the employer failed to provide the required seven days’ notice in relation to the conduct of the employee vote. In an unfortunate turn of events, the employer had relied on the “Date Calculator” tool on the FWC website, which indicated the proposed schedule was acceptable but this tool failed to ensure the schedule was seven clear calendar days.

Over recent years, there have been numerous similar decisions where employers have been effectively required to restart the bargaining process from scratch, even in circumstances where the employees have reiterated their acceptance of the submitted enterprise agreement, the employer has the support of the relevant union and there is no apparent prejudice to the parties.

The FWC’s new discretion

In December 2018, the Fair Work Amendment (Repeal of 4 Yearly Reviews and Other Measures) Act 2018 was enacted and, in part, amended s 188(2) of the FW Act, creating a discretionary power where the FWC may find that an agreement was genuinely agreed despite minor procedural or technical errors.

Importantly, the new discretion does not allow employers to circumvent the essential procedural aspects of the bargaining process prescribed under the FW Act, but provides the ability for the FWC to overlook errors that:

  • are minor or technical, and
  • do not disadvantage employees as a whole.

In Huntsman, an application was submitted to the FWC for approval of an enterprise agreement, but was subsequently referred to the Full Bench of the FWC (FWCFB) for determination. FWC staff had identified various other applications that involved apparent failures to satisfy s 188(1) of the FW Act, to which s 188(2) may apply—and the applications were referred to the FWCFB to provide some clarity around the operation of the new discretion.

In the Huntsman case, the relevant employees were notified of the place and method of voting on 9 July 2018, but were told that the specific date of the vote was yet to be confirmed. Two days later, the employees were informed that the vote would be held on 18 July 2018.

As the employer separated the delivery of the relevant information to the employees, it had not technically complied with the requirements of s 180(3) of the FW Act to afford seven clear calendar days between confirmation of the date, place and method of voting and conduct of the vote itself. Upon receiving confirmation of the vote date, the employees were only left with six clear calendar days before the vote.

Despite the employer’s technical non-compliance, the FWCFB confirmed the operation of the new discretion. They were ultimately satisfied this constituted a minor procedural error on the employer’s part and approved the enterprise agreement primarily because it was shown that eight out of ten employees that were to be covered by the agreement cast a valid vote. This was accepted as demonstrating that the employees were not disadvantaged as a whole by the error and the FWCFB was satisfied the discretion could be exercised to approve the enterprise agreement.

Employers still need to be careful

It is apparent that the FWC can now overlook potential minor procedural or technical errors that do not cause a disadvantage to the relevant employees. However, employers should not proceed on the misapprehension that they can bypass or neglect prescribed steps in the bargaining process as required under the FW Act.  

There remains a risk that an error may not be considered minor by the FWC and this could ultimately undermine or impact the validity of the entire bargaining process. Accordingly, the enterprise bargaining process should still be approached vigilantly with a commitment to ensuring rigorous compliance with the relevant procedural requirements.

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