Good faith bargaining

See Fair Work Act 2009 s.228

One of the objects of Part 2-4 of the Fair Work Act is to provide a framework that enables collective bargaining in good faith, particularly at the enterprise level.

The Fair Work Act sets out the good faith bargaining requirements in section 228.

228 Bargaining representatives must meet the good faith bargaining requirements

1. The following are the good faith bargaining requirements that a bargaining representative for a proposed enterprise agreement must meet:
   1. attending, and participating in, meetings at reasonable times;
   2. disclosing relevant information (other than confidential or commercially sensitive information) in a timely manner;
   3. responding to proposals made by other bargaining representatives for the agreement in a timely manner;
   4. giving genuine consideration to the proposals of other bargaining representatives for the agreement, and giving reasons for the bargaining representative’s responses to those proposals;
   5. refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining;
   6. recognising and bargaining with the other bargaining representatives for the agreement.
      Note:  See also section 255A (limitations relating to greenfields agreements)
2. The good faith bargaining requirements do not require:
   1. a bargaining representative to make concessions during bargaining for the agreement; or
   2. a bargaining representative to reach agreement on the terms that are to be included in the agreement.

The good faith bargaining requirements are generally self-explanatory.[1] They are designed to facilitate agreement making and assist bargaining representatives to bargain effectively.

The good faith bargaining system recognises that most employers and employees voluntarily and successfully bargain collectively in good faith and that most employers respect their employees' right to bargain collectively.[2]

In general, the legislative scheme might be described as one which seeks to promote agreement making but which does not compel parties to make concessions or to reach agreement. There is nothing inconsistent about encouraging parties to make agreements – and imposing an obligation upon them to try to do so – but at the same time not compelling parties to make concessions in bargaining. An agreement remains what the name implies.[3]

Good faith bargaining requirements aim to ensure that all bargaining representatives act in an appropriate and productive manner. The requirements also seek to facilitate improved communication between bargaining representatives, which is expected to reduce the likelihood of industrial action.[4]

The Fair Work Act emphasises that there is an obligation to bargain in good faith. Bargain means to discuss the terms of any transaction. Discuss means to engage in conversation, examine by argument – to debate. At its most fundamental, enterprise bargaining is about communication both before and during formal negotiations. Each requirement for good faith bargaining has as its aim, purposeful or meaningful communication.[5]

Determining whether a bargaining representative is meeting the good faith bargaining requirements requires an objective assessment of the actions of the bargaining representatives.[6]

The good faith bargaining requirements do not require a bargaining representative to make concessions. A bargaining representative can meet the good faith bargaining requirements, whilst also adopting a 'hard line'.

Equally, the good faith bargaining requirements do not imply moderation of demands. The good faith bargaining requirements imply a preparedness to genuinely consider offers and proposals made by other bargaining representatives and to take account of the bargaining representatives' reasons for their proposals. If, having done these things, a bargaining party is unmoved, it may still be bargaining in good faith. The inability of parties to reach an agreement is not evidence that either party is not meeting the good faith bargaining requirements.[7]

The requirement in section 228(1)(e) ('refraining from capricious or unfair conduct ...') is intended to cover a broad range of conduct. For example, conduct may be capricious or unfair if an employer:

• fails to recognise a bargaining representative
• does not permit an employee who is a bargaining representative to attend meetings or discuss matters relating to the terms of the proposed agreement with fellow employees
• dismisses or engages in detrimental conduct towards an employee because the employee is a bargaining representative or is participating in bargaining, or
• prevents an employee from appointing his or her own representative.[8]

Whether conduct is capricious or unfair can only be ascertained by an examination of all of the circumstances in a particular case.[9]

It is anticipated that most bargaining representatives will bargain voluntarily and cooperatively without the need for assistance or intervention from the Fair Work Commission. In the occasional cases where this is not occurring, the Fair Work Act provides mechanisms for the Commission to facilitate bargaining and, where necessary, make orders to ensure the integrity of the bargaining process.[11]

If bargaining representatives are not effectively bargaining together, an application can be made to the Commission for a bargaining order to be issued requiring bargaining representatives to bargain in good faith.[12]

Related information

• Bargaining orders

Parties NOT meeting good faith bargaining requirements

No real intention to negotiate

Endeavour Coal Pty Ltd v Association of Professional Engineers, Scientists and Managers, Australia (Collieries' Staff Division [2012] FWAFB 1891 (Boulton J, Harrison SDP, Deegan C, 22 March 2012) [(2012) 217 IR 131].

Endeavour Coal Pty Ltd v Association of Professional Engineers, Scientists and Managers, Australia and Another [2012] FCA 764 (19 July 2012), [(2012) 206 FCR 576].

Endeavour Coal conducts coal mining activities at the Appin Mine in New South Wales and employs a range of staff employees who are engaged in supervisory, professional, administrative, clerical or technical duties. APESMA represents the industrial interests of such employees and had been seeking to negotiate an enterprise agreement to cover those employees. A majority support determination was issued requiring Endeavour Coal to bargain for a proposed enterprise agreement covering the employees.

At least 12 bargaining meetings were held between Endeavour Coal and APESMA over a twelve month period. APESMA produced various draft agreements for discussion. An impasse was reached in the negotiations. APESMA submitted that the impasse arose because the real position of Endeavour Coal was that it was never going to agree to an enterprise agreement covering the staff employees and that it therefore did not matter what concessions or changes to proposals APESMA made in the negotiations. Endeavour Coal submitted that the impasse was the result of APESMA not changing its position on various issues so as to address the concerns and objections raised by Endeavour Coal.

APESMA made an application to the Commission for a bargaining order against Endeavour Coal. The grounds for the application included that the conduct and actions of Endeavour Coal did not meet the good faith bargaining requirements and undermined the collective bargaining process. At first instance and on appeal, the Commission was satisfied that Endeavour Coal was not meeting the good faith bargaining requirements. The unwillingness of Endeavour Coal to enter into enterprise agreement negotiations with APESMA had continued in modified form after the making of the majority support determination. In particular, it was noted that Endeavour Coal had refused during the bargaining process to make any substantive contribution to the possible content of an enterprise agreement or to put any proposals of its own.

The Commission concluded that Endeavour Coal was bargaining with APESMA with no real intention to negotiate an enterprise agreement and contrary to the good faith bargaining requirements, and made a number of bargaining orders. On appeal, the Full Bench agreed with the Commission's conclusion and adopted all but one of the orders. Endeavour Coal sought judicial review of the Full Bench's decision. The Federal Court agreed with the conclusion that Endeavour Coal was not meeting the good faith bargaining requirements in certain respects, but ultimately concluded that some of the orders made were outside the power of the Commission to make.

NOT capricious or unfair conduct

Parties unable to agree after very long period of negotiation

Construction, Forestry, Mining and Energy Union (Mining and Energy Division) v Tahmoor Coal Pty Ltd [2010] FWAFB 3510 (Giudice J, McCarthy DP, Larkin C, 5 May 2010), [(2010) 195 IR 58].

At first instance, the Commission refused an application by the CFMEU for a bargaining order directed to Tahmoor Coal.

The Commission found that the order as sought would limit Tahmoor's ability to communicate directly with its employees in relation to the matters which were the subject of bargaining. It would also stop Tahmoor putting a proposed enterprise agreement to the employees for a vote for 60 days unless the bargaining representatives agreed to the terms of the proposed agreement or the Commission had determined that the negotiations had reached an impasse.

The Full Bench found that the Commission was entitled to conclude that after a very lengthy period of negotiations the parties were simply unable to agree. In those circumstances, it was open to the Commission to conclude that it was not capricious or unfair conduct for the respondent to seek to explain its negotiating position to the employees directly, or to put its proposed agreement to the employees at a ballot. There was no error in the finding that Tahmoor Coal did not breach the good faith bargaining requirements.

Capricious or unfair conduct

Proposed agreement to be put to a vote

"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) v Ridders Fresh Pty Ltd T/A Tibaldi Smallgoods; Australasian Meat Industry Employees' Union, The-Victorian Branch v Ridders Fresh Pty Ltd T/A Tibaldi Smallgoods [2013] FWC 1250 (Roe C, 27 February 2013).

The employer commenced enterprise bargaining with employees and the AMEIU in late 2012. A number of meetings were held and some issues agreed upon.

On 7 February 2013, the employer was advised that a number of employees to be covered by the proposed enterprise agreement had joined the AMWU (there was no dispute regarding the eligibility of the employees to do so) and that those employees wished to be represented by the AMWU with respect to bargaining for the proposed enterprise agreement.

On 11 February 2013, an AMWU representative met with the employer to discuss the proposed enterprise agreement and it was agreed that the parties would meet again on 15 February 2013 to discuss the possibility of a separate enterprise agreement for maintenance employees (who were AMWU members) and the AMWU's log of claims.

At the meeting on 15 February 2013, the employer advised the AMWU that the proposed agreement would be put to a vote on 21 February 2013.

The AMWU made an application for bargaining orders to prevent the vote taking place before the AMWU had the opportunity to advance its log of claims and receive a response on those claims from the employer.

The Commission concluded that, in the circumstances, the employer's decision to proceed with the vote was capricious and unfair as it was directly inconsistent with the understanding of the AMWU and its members regarding the purpose of the meeting on 15 February 2013. The Commission concluded that the conduct of the employer effectively denied the AMWU recognition and any real opportunity for bargaining.

The Commission ordered that the employer refrain from holding a vote and that two further bargaining meetings be held.