08 Nov 2011

"All reasonable steps" and bargaining rights under the Fair Work Act - how far do you have to go?

The Fair Work Act in section 173(1) says that employers must take all reasonable steps to give notice to their employees who will be covered by a proposed enterprise agreement about their right to be represented by a bargaining representative – but what are all reasonable steps? And can the enterprise agreement still be approved by Fair Work Australia if they don't?

The decision in Bland v CEVA Logistics (Australia) Pty Ltd [2011] FWAFB 7453 gives some important answers and guidance to employers (Clayton Utz acted for CEVA).

What did Mr Bland say was wrong about the enterprise agreement?

Mr Bland is an employee of CEVA Logistics (Australia) Pty Ltd, and is covered by a new enterprise agreement made earlier this year. He says that he was not given notice of his right to be represented by a bargaining representative. He said that in those circumstances the enterprise agreement was wrongly approved by Fair Work Australia.

What did the employer do?

As part of the process of making an enterprise agreement, the General Manager of CEVA's Human Resource Services took the following steps:

  • he emailed a copy of the notice of employees’ representational rights in the prescribed form to each manager at each business unit at each of CEVA’s 35 sites around Australia;
  • in the same email he asked them to place a copy on notice boards at each site and give a copy to each employee;
  • he then followed this up at least twice; and
  • he undertook a random survey of approximately 25% of the managers in various locations to confirm compliance with his request.

He did not talk with Mr Bland’s direct manager about this issue, but he did confirm that his instructions had been followed with the manager who had overall line management responsibility for that, and some other work areas.

Unfortunately, the direct manager at Mr Bland's workplace did not follow through with those instructions with the result that CEVA could not establish that notice of representational rights had been given to employees at Mr Bland's workplace.

All reasonable steps had been taken

On appeal by Mr Bland from a decision to approve the agreement the Full Bench of Fair Work Australia considered both the question of whether the evidence about what CEVA had done satisfied the obligation on the employer to take all reasonable steps to give notice to their employees and whether a failure to satisfy that obligation was fatal to obtaining FWA approval of the agreement.

The Full Bench emphasised that section 173(1) "does not require that the employer give notice of the right to be represented by a bargaining representative to each employee. It only requires that the employer take all reasonable steps to do so."

In this case, the majority decision of the Full Bench held that CEVA through its General Manager of Human Resource Services had taken all reasonable steps to give notice of the right. Granted, the process he designed and followed failed at one of 35 sites, but that does not mean all reasonable steps were not taken.

What if all reasonable steps had not been taken?

As to the second question of whether failure to satisfy the section 173(1) obligation was fatal to approval, the majority said the arguments that were advanced by CEVA on this issue had force and it doubted that compliance with section 173(1) was a mandatory requirement for approval.

On the other hand, they did observe that on an approval application Fair Work Australia does need to be satisfied that an agreement was genuinely agreed to by employees before it can approve it. A breach of the notice requirement in some circumstances may mean that there are reasonable grounds for believing that the agreement had not been genuinely agreed to by the employees.

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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.