Mine owner's hard bargaining line was allowed, walking away was not

The Association of Professional Engineers, Scientists and Managers, Australia v Peabody Energy Australia Coal Pty Ltd [2015] FWCFB 1451

Decided by
Fair Work Commission (Full Bench)
Date
3 March 2015
Outcome
Bargaining order made on appeal
Result
Employee succeeded
An empty meeting room at a coal mine office with a single letter left on the table.
Illustrative image. It does not show the people in this case.

After staff at a NSW coal mine won the right to bargain for an enterprise agreement, the employer offered a draft that mirrored the award, at pay well below what staff actually earned. The Fair Work Commission first held that this hard line was allowed. On appeal, a Full Bench left that finding undisturbed, but found the company broke the good faith bargaining rules when it refused to meet about the union's much-reduced offer and withheld salary-range information, and it made a bargaining order.

Key points

  • Section 228 of the Fair Work Act sets out the good faith bargaining requirements, but it does not require anyone to make concessions or to reach agreement.
  • An employer may take a hard position, including an opening offer at award rates, without breaching good faith bargaining rules.
  • Answering a substantially revised proposal only by letter and refusing to meet about it can be a breach.
  • Salary ranges and how pay is spread across them are not automatically "confidential or commercially sensitive" information that can be withheld.

What happened

The Wambo coal mine, near Singleton in New South Wales, had long employed its salaried staff on individual written contracts, sitting on top of the Black Coal Mining Industry Award 2010. The employer, Peabody, liked that model and did not want an enterprise agreement, which is a collective agreement approved by the Fair Work Commission.

The professional engineers' union, APESMA, wanted one for about 52 of the 132 salaried staff at the mine. On 6 December 2013 the Commission made a majority support determination: a finding that most of the affected staff wanted to bargain. That obliged the company to bargain, and the parties met about ten times.

The offer and the dispute

In March 2014 the company tabled its own draft agreement. Its pay rates matched the award, and it would have ended the staff's existing contracts. The general manager accepted that those rates were around one third to one half of what staff were actually paid. The union said the offer would cut each staff member's pay by about $100,000 on average, and called the company's approach "sham or 'surface' bargaining".

The company said it had no plan to cut anyone's actual pay, and invited the union to put forward its own pay rates. The union did not. It also asked for the salary range for each job classification and how staff were spread across it, without names. The company refused, saying salaries were confidential.

In June 2014 the union put a much smaller proposal, dropping its claim for a pay rise. The company replied by letter on 4 July that it did not agree and did not intend to meet to discuss it further.

The legal test

Section 228 of the Fair Work Act 2009 (Cth) lists the good faith bargaining requirements. They include attending and taking part in meetings at reasonable times, disclosing relevant information (other than confidential or commercially sensitive information) in a timely manner, responding to proposals in a timely manner, and giving genuine consideration to the other side's proposals with reasons for any response.

Section 228(2) adds that none of this requires a party to make concessions or to reach agreement. If a bargaining representative is not meeting the requirements, the Commission can make a bargaining order under s 230 telling it what to do, provided the complaint was first raised in writing and it is reasonable in all the circumstances.

The first decision

On 4 September 2014 Senior Deputy President Hamberger dismissed the union's application. He found there is no obligation to put a position that might be acceptable to the other side, nor to act against your own interests. The company's position was "certainly a 'hard' one", but it was entitled to take it, and its offer was a genuine one.

He also accepted that the salary information was confidential and commercially sensitive, and found the company had attended and participated in ten meetings.

The appeal

The union appealed to a Full Bench of the Commission. It was not persuaded that the first decision was wrong about the hard line the company took up to late June 2014. Where it parted ways was on what happened next. It described the union's June proposal as a potential "game changer", because the union seemed to have conceded many of the points the company had raised. The first decision had barely dealt with it.

The Full Bench held that the good faith bargaining requirements required the company to do more than reply by letter to a significantly revised proposal. At least, it had to meet, discuss the proposal and explain whether it, or a changed version of it, might be acceptable. The company still did not have to accept it.

The Full Bench also disagreed about the salary information. The union wanted ranges and spreads, not individual salaries, and the company seemed willing to release them if staff consented. That was not "confidential or commercially sensitive information" under s 228(1)(b).

The Full Bench set aside the first decision and decided the application itself. It ordered the company to meet the union to discuss its proposal, to provide a genuine proposal setting out what it might accept, and to provide the salary information. It declined two other orders the union sought, and it did not decide whether the company's overall stance amounted to sham bargaining.

What this means for you

If you are an employer bargaining for an enterprise agreement, this case suggests a low opening offer and a firm line can be consistent with good faith. Stopping engagement is a different matter: when the other side moves substantially, it is worth meeting and giving its offer genuine consideration, even if the answer is still no. Think carefully before refusing to share pay information that does not identify anyone.

If you are an employee or bargaining representative, a written complaint setting out your concerns is the first step towards a bargaining order. Consider getting advice early on what the employer must disclose.

The takeaway

Hard bargaining is lawful, but walking away from a substantially revised offer without meeting to discuss it can breach the good faith bargaining requirements. Good faith means continuing to engage, even when you expect to say no.

Note: This story was first published in 2014 as a win for the employer. A Full Bench of the Commission overturned that decision on 3 March 2015, and the Full Bench decision is the one that stands; no further appeal was found. Section 228 still reads as it did. Since the Secure Jobs, Better Pay changes of 2022–23, a bargaining order can also be made after a request to bargain for a replacement agreement under s 173(2A), or where a supported bargaining or single interest employer authorisation is in operation. And where bargaining has failed after the Commission has dealt with the dispute, a bargaining representative can now apply for an intractable bargaining declaration (ss 234–235), which can lead to the Commission setting the terms itself in a workplace determination.

Bargaining order made on appealFor employersContracts

Fair Work Commission (Full Bench) · 3 March 2015

The Association of Professional Engineers, Scientists and Managers, Australia v Peabody Energy Australia Coal Pty Ltd [2015] FWCFB 1451, Justice Boulton (Senior Deputy President), Senior Deputy President Drake and Commissioner Cambridge. Read the full decision

This is a plain-English summary of the published decision, for general information. It is not legal advice, and every case turns on its own facts.

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