Submission 167 Australian Council of Trade Unions Workplace Relations Framework Public inquiry

Case studies: surface bargaining in first agreement contexts

The current limitations in the GFB framework that applies in Australia are highlighted by the litigation surrounding attempts by employees of three employers, Cochlear Ltd, ResMed Ltd and Endeavour Coal Pty Ltd to achieve a collective agreement.

Contained below are summaries of the course of “bargaining” engaged in by the relevant employers – conduct that would appear on any objective analysis to conflict with GFB obligations in the FW Act. Yet to this day, two of the employers concerned have successfully avoided entering into a mutually acceptable enterprise agreement with their employees – notwithstanding their majority support for collective bargaining.

Cochlear Limited (“Cochlear”) is a high profile manufacturer of implantable hearing devices. The company employs hundreds of employees at its production facility in Macquarie Park in Sydney.

In 2007, following the expiry of a non-union collective agreement,³⁹⁴ the Australian Manufacturing Workers’ Union (“the AMWU”) sought to negotiate a new collective agreement with Cochlear under the WR Act. Cochlear refused to negotiate with the AMWU despite the union representing a majority of the workers.

Two years later, when the FW Act commenced, AMWU members at Cochlear were no closer to obtaining a collective agreement. At the time, the workers’ plight had become a high profile industrial issue and the dispute was specifically referred to in the explanatory memorandum to Fair Work Bill 2009.³⁹⁵

On 17 July 2009, the AMWU applied to FWA for a majority support determination. On 20 August 2009, FWA issued the determination, finding that a majority of Cochlear’s employees wanted to bargain.³⁹⁶ The determination effectively enlivened the good faith bargaining obligations under the FW Act. Cochlear and the AMWU agreed on a protocol to cover the bargaining and some bargaining meetings ensued.

On 15 December 2009, the AMWU (having earlier given Cochlear notice that it considered Cochlear was not bargaining in good faith), applied to have bargaining orders made against Cochlear. The application was vigorously contested over 17 days of hearing. The proceedings involved thousands of pages of written submissions and other documentary material.

On 3 August 2010, FWA made good faith bargaining orders against Cochlear.³⁹⁷ The issuing of the orders did not fundamentally alter the stance of Cochlear in relation to entering into a collective agreement with the AMWU.

The AMWU has continued to press for an agreement. However, the reality remains that five and half years after the making of the majority support determination, Cochlear still refuses to enter into a collective agreement with the union that represents the majority of its workforce and there appears to be little that the employees or AMWU can do to make the employer change its stance.

ResMed Limited is also an established manufacturer of medical equipment for the diagnosis, treatment and management of sleep disordered breathing and other respiratory disorders. Interestingly, the Chief Executive Officer of Cochlear, Chris Roberts, is also a Director of ResMed.³⁹⁸

In 2012, the AMWU sought to bargain with ResMed for an enterprise agreement to cover workers at ResMed’s Bella Vista site in Western Sydney. ResMed refused to bargain with the AMWU. By February 2013, more than two-thirds of the production workers at ResMed had signed a petition appointing the AMWU as their bargaining representative.

In March 2013, the AMWU applied to the FW Commission for a majority support determination. ResMed strongly opposed the making of such a determination on the basis of a jurisdictional objection, contesting that the AMWU’s eligibility rules did not allow it to represent the employees covered by the propose agreement.

Commissioner Bull of the FW Commission dealt with the matter in conference in March, April and May 2013. The matters at issue were not resolved and the FW Commission heard ResMed’s jurisdictional objections over four days in September and issued a decision in December 2014.³⁹⁹ The decision found that the AMWU was able to represent the industrial interest of some, but not all, of the employees within the scope of the proposed agreement. The decision went on to indicate that the matter could now be listed so that the merits of the application could be dealt with.

Both ResMed and the AMWU appealed the decision at first instance. A Full Bench of the FW Commission handed down a decision in April 2014 dismissing ResMed’s appeal.⁴⁰⁰ On 17 July 2014, the same Full Bench handed down a decision upholding the AMWU’s appeal.⁴⁰¹ The Full Bench found that Commissioner Bull erred in finding that the AMWU was not able to represent workers within the scope of the proposed agreement. The Full Bench went on to find that the AMWU did have coverage over all but one of the contested categories of workings. The Full Bench referred the question of the remaining category of workers to a single member of the FW Commission to take further evidence and have that issued determined.

To date, two years after the AMWU made an application for a majority support determination, no determination has been made. ResMed continues to refuse to bargain with the AMWU. ResMed and the AMWU remain locked in litigation concerning representational rights before FW Commission and the Federal Court. As of the date of this submission, it is unclear how long the present proceedings are likely to continue, but the prospect of a negotiated collective agreement seems very distant indeed.⁴⁰²

Endeavour Coal Pty Ltd is a subsidiary of BHP Billiton that operates the Appin Coal mine in the Illawarra region in New South Wales.

In April 2010, the Association of Professional Engineers, Scientists and Managers, Australia (“APESMA”) sought to bargain on behalf of a small group of supervisory, technical and administrative staff at the Appin Coal Mine. Endeavour Coal refused to bargain. APESMA made use of the bargaining provisions of the FW Act and applied to FWA for a majority support determination.

On 8 July 2010, Vice President Lawler of FWA issued a determination finding that a majority of employees covered by the proposed agreement wanted to bargain with Endeavour Coal.⁴⁰³

On 19 August 2011, after at least 12 meetings with Endeavour Coal, APESMA applied for good faith bargaining orders. The matter was heard in November 2011 and on 4 January 2012, Commissioner Roberts made orders against Endeavour Coal. In making the orders, Commissioner Roberts found that “Endeavour is ‘bargaining’ with APESMA with no real intention to negotiate an enterprise agreement”.⁴⁰⁴

Endeavour Coal appealed Commissioner Robert’s decision and order. On 22 March 2012, the Full Bench issued its decision.⁴⁰⁵ The Full Bench found that while in many respects Endeavour Coal complied with the formal requirements of the bargaining process by participating in meetings and responding to proposals put by APESMA, it was open to the FW Commission to find that Endeavour Coal’s conduct was not such that it demonstrated a genuine endeavour to negotiate an agreement with APESMA. In particular, Endeavour did not make any substantive contribution to the possible content of an enterprise agreement or put forward any proposals of its own. Identifying a technical error in the decision of Commission Roberts, the Full Bench went on to make its own orders which, in the most part, reflected the substance of those made by the Commissioner.

Endeavour Coal sought writs of certiorari to quash the decision of the Commissioner and the Full Bench. On 19 July 2012, Justice Flick of the Federal Court issued a decision quashing all but one of the orders made by the Full Bench on the basis that they went beyond the power of the FW Commission.⁴⁰⁶ Importantly however, the Court agreed with the Full Bench’s finding that it was open to Commissioner Roberts to find that Endeavour Coal had not been bargaining in good faith.

Following the decision of the Federal Court, APESMA and Endeavour Coal participated in a further 6 months of conciliation before Commissioner Spencer of the FW Commission. Ultimately, this led to an enterprise agreement being put to employees for approval and agreement was reached. Finally, on 5 November 2013, the Appin Mine Staff Agreement 2013 was approved by the FW Commission.

Although ultimately successful in obtaining an enterprise agreement, three years after commencing bargaining, the Endeavour Coal case study is no less a powerful commentary on the inadequacies of the current GFB framework in dealing with employers who simply refuse to bargain.