Jurisdiction - Australia
Australia – Considering Majority Support By Employees To Bargain For An Enterprise Agreement: Top 10 Issues.

20 July, 2012


Legal News & Analysis – Asia Pacific – Australia – Labour & Employment


In brief


  • Employers may be faced from time to time with the prospect of defending an application made by a bargaining representative for a majority support determination (MSD).
  • This article sets out the top 10 issues to be considered when facing such an application and can serve as a checklist of legal and factual issues to be considered in the context of any broader industrial relations strategy to ensure majority support is obtained properly and fairly.


1. A MSD starts the good faith bargaining process


Under section 236 of the Fair Work Act 2009 (Cth) (Act), a bargaining representative of an employee who will be covered by a proposed single-enterprise agreement may apply to Fair Work Australia (FWA) for a determination that a majority of the employees who will be covered by the agreement want to bargain with the employer, or employers, that will be covered by the agreement.


A MSD is one method by which bargaining under the Act starts and the good faith bargaining obligations start to apply. The good faith bargaining obligations will otherwise start to apply to all bargaining representatives where the employer has agreed to bargain or a scope order is in operation.


A MSD is a popular (but not the only) method for employee bargaining representatives to force an employer to the bargaining table where there is a reluctance to bargain, including in some cases because the employer does not believe that a substantial part of the workforce want to bargain (ie there is more enthusiasm for bargaining from relevant unions than the employees themselves) or because there is reluctance to have an enterprise agreement apply at all (for example, to a part of a workforce not historically covered by an enterprise agreement).


Another method to compel an employer to start bargaining is for employees to take protected industrial action. Recently, in J.J. Richards & Sons Pty Ltd v Fair Work Australia [2012] FCAFC 53 (20 April 2012) the Full Court of the Federal Court confirmed that protected industrial action can occur even where a MSD has not been obtained and bargaining under the Act has not commenced. Unions will often prefer a MSD to making an application for a protected action ballot order because, while both kinds of application require majority employee approval to be successful, it is often easier for unions agitating for a collective agreement to convince employees to vote in support of bargaining commencing, rather than pursuing protected industrial action which, if taken, will mean that employees cannot be paid in relation to the industrial action taken.


A protected action ballot order can be made where less than half of employees on the roll of voters approve the action. A protected action ballot order will be made where, amongst other things, 50% of the employees on the roll of voters for the ballot voted in the ballot, and more than 50% of the valid votes were votes approving the action: see section 459(1) of the Act. The same rules do not apply to an MSD. An MSD will be made where, amongst other things, more than 50% of the employees on the roll of voters indicate they wish to bargain.


2. Consider which employees are to be covered by any prospective collective agreement


The coverage of a prospective collective agreement is often contentious. Where there is an issue as to scope, consider whether the group of employees was “fairly chosen”. If the agreement will not cover all of the employees or employers to be covered by the agreement, FWA must take into account whether the employees to be covered are a geographically, operationally or organisationally distinct group. If FWA determines that the group was not fairly chosen a MSD cannot be made (see section 237(2)(c) of the Act). 


3. Be careful not to unintentionally start the bargaining process and be wary of unions “jump-starting” the process


Employers should take care to avoid accidentally starting to bargain (for example, by accepting an invitation to a bargaining meeting) or starting to bargain in respect of a small group which is not fairly chosen.


The union tactic of “jump starting” bargaining is sometimes employed where the union cannot prove majority support across a large group, and involves initiating bargaining for an agreement to cover a smaller group in which the union could demonstrate majority support. Plan A might then be to bargain about scope and to bring more employees within scope as bargaining progresses. Alternatively, plan B is sometimes to claim in bargaining that the employer must provide identical terms and conditions to employees outside the scope of bargaining.


In making the latter claim unions rely on a longstanding High Court ruling which provides that it is a matter pertaining to the employment relationship for employees to claim in bargaining that all employees in a particular workplace should be paid the same rates, in order to protect the job security of the employees making the claim. Accordingly, industrial action in pursuit of such a claim is protected under the Act, and a term about equivalent pay rates for all employees can be included in an enterprise agreement approved under the Act.


4. Is a scope order the appropriate next step?


It is now well established by case law that the scope of an agreement can be the subject matter of bargaining, and that a failure to agree on scope at the outset does not mean that good faith bargaining cannot start. If the scope of the prospective agreement is likely to be an ongoing issue consider whether a scope order application prior to bargaining commencing is the appropriate next step. Often it will be, and will avoid negotiations becoming a “moving feast” of negotiations over terms and conditions applying to disparate parts of the workforce that do not logically belong together.


Unions are well aware of the issues that arise in relation to the interaction between scope and majority support issues. Where an employer has agreed to bargain over a narrower scope than that desired by relevant unions, typically a scope order application will be made. A MSD will not be available because the employer has agreed to bargain, albeit in circumstances where there is no agreement about scope.


Where the employer has not agreed to bargain (at all or subject to agreement about scope) typically an application will be made for a MSD. In deciding whether to make an application for a MSD a union will often consider the support they have in the workplace to initiate bargaining by examining issues such as union membership density in the particular workgroup, historical support for a collective agreement, and feedback from members about desired terms and conditions of employment.


Employers should carefully consider when a scope order would be useful. The application could be made by the employer where all relevant preliminary steps (notifying other bargaining representatives of concerns, giving them a reasonable time to respond, etc) have been taken (see section 238(3) of the Act).  Alternatively, an employer may wait for or invite an application from other bargaining representatives and respond appropriately.


5. There are a number of means by which majority support can be proven


Section 237(3) of the Act provides that FWA “may work out whether a majority of employees want to bargain using any method FWA considers appropriate”. To date a number of means of proving majority support have been used including phone surveys, petitions, individual pledge cards and perhaps the most popular – a ballot conducted by the Australian Electoral Commission (AEC).


Often, which of these methods is chosen will depend on the format that the bargaining representative applying for a MSD considers will be most effective. It will also depend on other factors such as the geographical dispersion of the workforce (in which case a method such as a phone survey will be more efficient than a signed petition that must be circulated amongst all affected employees).


6. Consider whether the process chosen to prove majority support is reliable


Where a petition, survey or other similar method is utilised in a majority support proceeding, FWA should be “fully satisfied” that the relevant methodology can reasonably withstand the scrutiny required for the purposes of the determination sought (see AMWU v Cochlear Limited [2009] FWA 67 at [1]).  FWA has stated on a number of occasions that unfair tactics to procure majority support such as the application of duress or making misleading representations, or presenting a confusing petition or other document, may be grounds for dismissing an application for a MSD. As was stated by SDP O’Callaghan in AMWU v Kinkaid Pty Ltd t/a Cadillac Printing [2009] FWA 1123:


[13] It is conceivable that there may be circumstances where a petition could not be relied upon as an appropriate device to determine majority support for bargaining. If, for instance, there was some evidence that the petition had been falsely derived or that the signatures had been achieved by duress, an alternative means of establishing employee views would need to be considered.


Further, in AMWU v Edlyn Foods Pty Ltd [2011] FWA 7928 Lee C made some similar observations:


[7] Circumstances may arise where a petition cannot be relied upon as a means for Fair Work Australia to determine whether or not there is majority support for bargaining. One example may be duress or coercion of employees. Another example of a circumstance where it would not be proper for Fair Work Australia to accept a petition may be where the proposition that was put to employees was in some way confusing or not clear.


Depending on the particular methodology used to prove majority support, consider the following:


  • The validity of the document recording majority support. For example, do the records of the phone survey, petition, etc indicate that those participating in the survey did not understand what was being asked or were mislead or confused about some aspect of the process? Are the documents dated (indicating the point in time at which each participant supported bargaining) and all signatures valid?
  • Whether those conducting the survey etc have accurately described to employees the process of obtaining majority support and the consequences of their vote. The overriding question is: Has there been a fair and objective explanation such that employees know what they are voting for? Where there are misleading statements which have induced employees to indicate support for bargaining this will be a means by which the credibility of the process can be tested.
  • The time taken to conduct the process. Where, for example, a petition has been signed over a number of months, it may be that employees who signed the petition when it commenced circulation have changed their minds about whether they wish to pursue an agreement. In these circumstances, the petition may be poor evidence that there is majority support at a particular point in time.
  • The precise form of the questions asked in the petition, survey, etc. The weight to be afforded to survey evidence will depend on various factors, including whether questions are non-leading and objective rather than framed in a way which will produce a particular outcome (see for example Customglass Boats Ltd & Anor v Salthouse Bros Ltd & Anor [1976] 1 NZLR 36 at 42, Arnotts v TPC (1990) 97 ALR 555 at 603.25). Consider whether the questions used in the survey etc are objective or whether they are loaded or unfair questions which are ambiguous.


Where there is doubt about the veracity of the process used, this should be raised with other bargaining representatives and FWA at the appropriate time.


7. Majority support is decided at the time of FWA’s determination


It is now uncontroversial that the issue of whether a majority of employees want to bargain must be decided at the time of the Tribunal’s determination (NUW v Corporate Express Pty Ltd [2009] FWA 1642 at [21] per SDP Richards, NUW v CMC Coil Steels Pty Ltd [2010] FWA 410 at [26] per SDP Kaufman). The timing of the determination will often call into question whether the evidence put forward as demonstrating majority support is current and reliable. Evidence collected months beforehand may not demonstrate majority support at the time the determination is made. In these circumstances, an employer might consider leading its own evidence about:


  • the changed composition of the workforce since the survey etc was conducted, which may indicate that employees who indicated their support previously are no longer employed;
  • employees who have changed their mind about whether they wish to bargain; and 
  • imminent changes to the composition of the workforce or other relevant considerations which affect the question of majority support at the point in time of the Tribunal’s determination.


8. Collect evidence about the process used to obtain majority support if some aspect of the process is to be challenged


If employers are to challenge any aspect of the process used to obtain majority support, whether it be the validity of a petition or the unduly lengthy period of time over which apparent majority support was obtained, it is critical to collect and prepare good quality evidence that can be presented to FWA. This evidence could include:


  • statements from supervisors, managers or human resource personnel who have observed union officials and delegates in the process of obtaining majority support;
  • where possible, evidence from employees about representations made to them by union officials or delegates about the reasons they should support bargaining for an agreement (for example, where misleading representations have been made to employees); 
  • documents circulated by union officials or delegates such as any petition or flyer; and
  • internal documents used by union officials or documents such as survey scripts, speaking notes, notes of meetings, etc, which often are required to be obtained under subpoena.


9. Consider whether it is reasonable for FWA to make the majority support determination


Under the Act, it is possible that a MSD will not be made even where majority support exists for bargaining, because it is not “reasonable” to make a MSD in the circumstances. Reasonableness in making the order is an independent and mandatory ground that needs to be satisfied before FWA can make a MSD under section 237(2)(d) of the Act.


A number of circumstances may affect whether it is reasonable for a MSD to be made. For example, where there are imminent changes to the structure of the relevant business or work group, or where additional employees will be brought in to the work group. Both issues have the potential to affect the total population of employees to be covered by the collective agreement and whether a majority of such employees support the commencement of bargaining.


10. Where the AEC will conduct a secret ballot – consider how and when the ballot should occur


FWA has on many occasions ordered a private AEC ballot to test the issue of majority support. Such an approach sidesteps many of the legal and factual issues set out above, such as the necessity to test the veracity of a petition or other chosen means of proving majority support. An AEC ballot is a secret, anonymous process where employees included in the roll of voters may cast a vote indicating whether they wish to bargain with their employer for a collective agreement. Voting in an AEC ballot of this kind is not compulsory. The AEC can run either a postal or electronic ballot.


When will the ballot occur?


The timing of the ballot must be considered in light of the time it will take to prepare the roll of voters, communicate with the AEC about the necessary arrangements, and give employees a reasonable opportunity to make a decision. In a number of cases the ballot has been open for a period of between one and two weeks.


Cost of the ballot?


Generally, either the applicant for the MSD will pay for the ballot or the employer and relevant unions will share the cost. FWA will not pay for the costs of a privately contracted AEC ballot to test majority support.


Information to employees about the process


A number of MSD decisions to date have considered the issue of what employees should be told about the ballot process. It is important that employees understand the ballot process and are provided with some information about the bargaining process that may start if an MSD is made. This information could be provided by the employer or by way of a document that is approved by FWA and forms part of the ballot order. For an example of the latter, in AWU v Bluescope Steel Limited T/A Bluescope Lysaght [2011] FWA 7525 Senior Deputy President O’Callaghan stated:


Employees should appreciate that any majority support determination, if made, simply reflects FWA’s conclusion that a majority of employees want to bargain with BlueScope for an enterprise agreement under the FW Act. It does not require nor mandate the content of any such agreement which ultimately depends on negotiations and on employee and employer agreement, but it does establish bargaining rights available to both parties. Further information can be obtained from the Fair Work Ombudsman’s office on 131 394 or www.fairwork.gov.au


I have reproduced this minimum information as Attachment B with the expectation that BlueScope will provide a copy to each employee sought to be covered by the majority support determination in a timely manner.


The relevant Attachment stated in part:


I have today issued a decision in this matter. That decision is available on the Fair Work Australia (FWA) website at www.fwa.gov.au


The decision provides for a secret postal ballot to be conducted by the Australian Electoral Commission of all employees that would be covered by a majority support determination. I have requested the AEC to conduct the secret ballot so that I can satisfied as to whether or not a majority of production and maintenance employees want to bargain for an enterprise agreement. You will shortly receive information about the ballot direct from the Australian Electoral Commission


In the meantime, I have requested the following minimum information be made available to employees.


Employees should be aware that the FW Act provides processes for the making of enterprise agreements between employers and their employees, and for the approval by FWA of those agreements. An enterprise agreement approved under the FW Act is enforceable under that Act. Any such agreement must not exclude the minimum National Employment Standards which are also set out in the FW Act.


Employees should be aware that, in the absence of an enterprise agreement which has been approved by FWA, those National Employment Standards and any relevant award will have application. There is no impediment to common law arrangements but those arrangements cannot override the minimum employment standards or relevant award. Enforcement of common law agreements is a matter for the civil courts rather than the enforcement provisions which are established by the FW Act.


Employees should appreciate that any majority support determination, if made, simply reflects FWA’s conclusion that a majority of employees want to bargain with BlueScope for an enterprise agreement under the FW Act. It does not require nor mandate the content of any such agreement which ultimately depends on negotiations, and on employee and employer agreement, but it does establish bargaining rights available to both parties.


Protecting the integrity of the ballot process


Section 462 of the Act contains a long list of provisions aimed at ensuring that there is no interference with a protected action ballot. For example, a person would contravene a civil remedy provision by hindering or obstructing the holding of the ballot, using any form of intimidation to influence a vote, or counselling a person to refrain from voting or forging a ballot paper.


No similar provision exists in the legislation in relation to ballots conducted to test majority support. However, FWA may make an order replicating some, or all of the protections contained in section 462 of the Act. It may be prudent to apply for such an order depending on the circumstances.



For further information, please contact:

Michael Tamvakologos, Partner, Ashurst


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