24 Aug 2010

Who is in? Who is out? Scope orders under the Fair Work Act

by Bryan Mueller

Scope orders are a way for Fair Work Australia to resolve coverage disputes in collective bargaining.

The history of collective bargaining shows that it has not been unusual for the bargaining parties involved to disagree about the scope of coverage that a particular collective agreement should have, such as the classes or groups of employees to be covered.

Coverage disputes have revolved around a number of issues, such as:

  • the appropriateness of covering in the one agreement both non-management employees and employees with significant management functions;
  • whether all operational employees should be covered by a single enterprise agreement regardless of geographical or operational separateness or whether several agreements based on geographical or operational separateness is appropriate.

Until the enactment of the Fair Work Act 2009 there was no specific and purpose built mechanism that enabled the Federal workplace relations tribunal to conclusively resolve such disputes by decision and order.

However, this situation has been remedied by the inclusion in that legislation of section 238, which gives Fair Work Australia (FWA) the power to make a "scope order", on the application of a bargaining representative of either employees or an employer involved in bargaining for a enterprise agreement. As such it constitutes one of the three main means by which FWA can exercise a type of compulsory control over the actual process of enterprise bargaining. (The other two such means are "majority support determinations" and "bargaining orders".)

What is a scope order?

A scope order specifies the employer(s) and employees who will be covered by a single enterprise agreement over which bargaining is happening. A scope order can relate to more than one proposed single-enterprise agreement.

Its apparent purpose is to specify in a compulsory way those employees who will be covered by the proposed agreement for which bargaining is taking place and to dictate that from the time the scope order is made further bargaining will be over the terms and conditions to be included in an agreement that covers all those employees.

The purpose is described as "apparent" because, rather curiously, the legislation does not go so far as saying explicitly that this is the effect of a scope order once made, or that a failure to bargain on a basis that is consistent with a scope order is a breach of a good faith bargaining requirement that would justify the making of a bargaining order under section 230 or provide any other specific mode of enforcement.

However, it is noted that if FWA makes a scope order it may also amend existing bargaining orders, make or vary other orders such as protected action ballot orders, determinations or other instruments of FWA or take such other actions as FWA considers appropriate.

Obtaining a scope order

The process leading up to an application for a scope order must involve the following steps.

A bargaining representative involved in bargaining for a single enterprise agreement decides that:

  • they have "concerns" that bargaining for the agreement is not proceeding efficiently or fairly; and
  • the reason for this is that they consider the agreement will not cover appropriate employees or will cover employees that it is not appropriate for the agreement to cover.[1]
  • the bargaining representative gives written notice setting out those concerns to the relevant bargaining representatives for the agreement and gives those bargaining representatives a reasonable time within which to respond to those concerns.

The bargaining representative decides that the response from the relevant bargaining representatives (or lack of response) is not satisfactory.

The bargaining representatives applies to FWA for a scope order.

In addition, the bargaining representative making the application has to be ready to establish to FWA's satisfaction each of the following four matters:

  • they have been meeting the good faith bargaining requirements;
  • the making of the particular scope order sought will promote the fair and efficient conduct of bargaining;
  • the group of employees who will be covered by the agreement in consequence of the making of the scope order sought is a group that was "fairly chosen"; and
  • it is reasonable in all the circumstances to make the order.

These are matters that require the bargaining representative to make out a case by evidence and argument anchored in the circumstances of the case.

What is a "fairly chosen" matter?

For the purposes of satisfying FWA of the "fairly chosen" matter, unless the agreement is to cover all of the employees of the employer, this will mean satisfying FWA that the employees covered are fairly chosen taking into account (amongst other matters that FWA considers it relevant to take into account) whether the group of employees who will be covered are geographically, operationally or organisationally distinct.

The implication of this would seem to be that if the proposed employee coverage of an agreement is related to the geographical, operational or organisational distinctness of the employees, that is a matter that tends to support the conclusion that the coverage group is fairly chosen. It also may conversely imply that in some circumstances where the proposed agreement employee coverage ignores such distinctions, the conclusion that group has not been fairly chosen will be more readily reached. (Those notions receive support from the FWA Full Bench decision reviewed below.)

While satisfaction of those four matters is necessary, it will not automatically mean that a scope order of the kind sought must be made by FWA, as its power is discretionary. Thus other matters of industrial relations significance, particularly those that can be related to the objects of the Act, can be advanced as considerations against the making of a scope order.

United Firefighters' Union of Australia v Metropolitan Fire & Emergency Services Board and United Firefighters' Union of Australia [2010] FWAFB 3009

This was a decision of the Full Bench of FWA on competing applications under section 238 made by both by the relevant employer Metropolitan Fire & Emergency Services Board (MFB) and by United Firefighters' Union of Australia (UFU).

The parties were in dispute as to the scope of coverage of the enterprise agreement for which they were bargaining.

The UFU position in bargaining was that there should be a single agreement covering all operational employees including Commanders and Assistant Chief Fire Officers. The UFU was the bargaining representative for both operational employees below the rank of Commanders and Assistant Chief Fire Officers and for employees of that rank and almost all of them supported the making of a single agreement covering them all.

The MFB in bargaining maintained that the proposed agreement should not cover Commanders and Assistant Chief Fire Officers. Its position was that that latter two classes of employees should be covered by a further two separate agreements. In its application it sought a scope order that provided that the proposed enterprise agreement for which bargaining was taking place should be limited to operational employees below the rank of Commander and Assistant Chief Fire Officer.

The Full Bench decided that a scope order in the terms sought by MFB should be made.

The Full Bench made a number of significant findings and observations in its decision:

While some weight should be given to the views of employees affected, it may be that as a result of a consideration of the matters referred to in sections 238(4) and (4A), it is nevertheless appropriate to make a scope order that is contrary to those views. ( The Full Bench did so in the case at hand)

FWA needs to be positively satisfied that making the scope order will make bargaining fairer and/or more efficient than it would be if no order was made. This is the implication of section 238(4)(b).

In a particular case it may be that a number of employee groupings would be fair but the immediate issue on a scope order application is whether the group specified in the proposed scope order is fairly chosen.

No presumption should be made that an agreement that covers as much of an enterprise as possible is to be preferred.

The fact that a proposed employee group is not distinct by reference to geographical, operational or organisational can be an indicator that it is not fairly chosen, but this is not a necessary conclusion in all circumstances.

Employees of MFB who were in the ranks of Commanders and Assistant Chief Fire Officers were employees who constituted a distinct organisational group for the purposes of section 238(4A) and equally operational employees below those ranks were a distinct organisational group were organisationally distinct. The relevant point of distinction was the level of managerial responsibility in the case of Commanders and Assistant Chief Fire Officers and the extent of operational responsibilities of the operational employees below those ranks.

Given the nature of that point of distinction it was likely that the negotiating interests of Commanders and Assistant Chief Fire Officers as management employees would be very difficult to reconcile with those of operational employees generally. It was therefore likely that the negotiations over the employment conditions of those employees would be more productive if they were confined to that group of employees and not intermingled with negotiations for operational employees generally.

The making of the order had the potential to break the cycle of disputation over the extent of agreement coverage and in that way promote the fair and efficient conduct of bargaining in terms of section 238(4)(b).

Coverage of both groups in a single agreement would produce situations in which Commanders and Assistant Chief Fire Officers would face a conflict of interest because their management responsibilities in relation to discipline and dispute resolution, may collide with a view they or their representative may wish to take as to the manner in which the agreement regulated those matters.

Making of the MFB scope order was supported also by the circumstance that it would support attempts to improve organisational efficiency and productivity.

Three bases for the Full Bench decision

The decision of the Full Bench:

  • was based on a detailed analysis of the evidence presented particularly as to the functions and responsibilities of the Commanders and Assistant Chief Fire Officers and of the other operational employees.
  • emphasised that its decision in the case was bound up in the findings it made on the evidence and was not intended to represent a statement of general principle
  • by this FWA can be taken to be saying that it was not meaning to establish any general principle that employees with management responsibilities or designated managers ought not to be subject to the same agreement coverage as another group of employees

[1] It may be said that it was both unnecessary and undesirable for the legislation to provide that the bargaining representative making the application has to have the particular state of mind stipulated in section 238(1) before they may apply for a scope order. It implies that the possession of that subjective state of mind is a matter that goes to the competence of the application and/or constitutes a jurisdictional fact that must be established by evidence, that in every case FWA should satisfy itself of that matter and that any finding on that matter is appealable. It certainly opens the door to a contention that the bargaining representative did not make the application in that state of mind. For example, it may be not far-fetched in some cases to contend that the application is made not so much out of concerns of the type mentioned in section 238(1) but out of a concern to advance industrial interests of a bargaining representative that are quite distinct from considerations of efficiency or fairness of bargaining or appropriateness of coverage.


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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.