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05 Nov 2009

Genuinely trying to reach agreement: the relationship with good faith bargaining

by Glen Bartlett

In this case a possible lack of professional conduct in handling the matter and the negotiations did not prevent the conclusion that the union was genuinely trying to reach an agreement.

The expression "genuinely trying to reach an agreement" is relevant when Fair Work Australia is deciding whether to make a protected action ballot order. It was also used in the Workplace Relations Act 1996 (Cth). The question now is: is "genuinely trying to reach an agreement" the same as "good faith bargaining", which is now a bargaining requirement contained in the Fair Work Act 2009 (Cth)? A recent Fair Work Australia decision on 8 October 2009 has indicated that the two concepts are different.

Legislative framework for "genuinely trying to reach" agreement

Section 443 of the Fair Work Act provides that Fair Work Australia ("FWA") must make a protected ballot order in relation to a proposed enterprise agreement if:

  • an application has been made under section 437; and
  • FWA is satisfied that each applicant has been, and is, genuinely trying to reach an agreement with the employer of the employees who are to be balloted [emphasis added].

Interaction of good faith bargaining and genuinely trying to reach agreement

In Transport Workers' Union of Australia v CRT Group Pty Ltd [2009] FWA 425, Hamberger SDP of the FWA considered an application by the Transport Workers Union of Australia ("TWU") for a protected action ballot. He ruled that:

"While there is a relationship between ‘genuinely trying to reach an agreement’ and ‘bargaining in good faith’ it would be wrong simply to conflate the two terms. Even if I had found that the TWU was not bargaining in good faith – something I have not done – that would not necessarily mean that the TWU was not genuinely trying to make an agreement."

He sought further support from the Explanatory Memorandum to the Fair Work Bill 2008 which stated when dealing with the "genuinely trying to reach an agreement" expression:

“…The question whether a person is genuinely trying to reach an agreement requires a subjective assessment of the actual intention of the person and the overall circumstances. It is not limited to an assessment of whether the person is complying with the good faith bargaining requirements”.

Effect of possible unprofessional conduct in negotiations

In the case before him, Hamberger SDP decided:

"The evidence suggests that the negotiations have not been handled as well as they might have been by the TWU. CRT may have been led to believe that certain issues had been resolved when this was not in fact the case. Moreover, [the senior negotiator for the TWU’s] failure to properly assess the CRT draft, identify any concerns and convey them to the company prior to the meeting on 22 September 2009 was unfortunate, and possibly even unprofessional, but I do not consider it was indicative of a lack of good faith."

He concluded that the applicant (TWU) "was both prior to, and at the time the application was made, genuinely trying to reach an agreement under the Act with CRT". He granted the order for a protected action ballot.

Implications of decision

In this instance a possible lack of professional conduct in handling the matter and the negotiations did not prevent the conclusion that the union was genuinely trying to reach an agreement. It seems that the FWA in this decision was acknowledging that the process might not be perfect, but that does not convert otherwise genuine negotiations into negotiations where the party is not trying to reach an agreement. In any case it will depend on the facts and the assessment by the FWA.

Over time, it is likely there will be more decisions made about the significant issue of the interrelationship between "genuinely trying to reach agreement" and "good faith bargaining". In this case the view was that they are not exactly the same. How different they are remains to be seen.

Thanks to Marilyn Pittard for her help in writing this article.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.