[2022] FWC 1981

The attached document replaces the document previously issued with the above code on 2 August 2022.

In paragraph [106] “bargain” has been replaced with “bargaining”.

In paragraph [204] “remains” has been replaced with “remain”.

Associate to Deputy President Anderson

Dated 3 August 2022

Fair Work Act 2009
s.229—Bargaining order

Application by Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia; and
Application by Australian Municipal, Administrative, Clerical and Services Union
v
Utilities Management Pty Ltd
(B2022/661, B2022/662)

Application for bargaining orders – bargaining in wake of scope order – whether seeking replacement agreements on terms that vary from a scope order is a breach of good faith bargaining – whether balloting for a replacement agreement on terms that vary from a scope order is capricious or unfair bargaining conduct – breach of bargaining obligation found – recommendation made

[1] This decision concerns two bargaining order applications:

•  by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) on 7 July 2022 for a bargaining order under s 229 of the Fair Work Act 2009 (Cth) (FW Act) (B2022/661); and

•  by the Australian Municipal, Administrative, Clerical and Services Union (ASU) on 7 July 2022 for a bargaining order under s 229 of the FW Act (B2022/662).

[2] In this decision I refer to the CEPU and ASU as the applicant unions.

[3] Both applications are in the same form and, with one qualification, 1 seek the same relief.

[4] The applicant unions seek orders concerning bargaining, including interim orders. Despite two years of unresolved bargaining for a replacement agreement, the applications were promptly listed and heard as they had a degree of urgency given that orders sought concerned, inter alia, a ballot of employees to be conducted by the employer from 21 July 2022.

[5] The respondent to each of the applications is Utilities Management Pty Ltd (Utilities Management) trading as SA Power Networks (SAPN).

[6] The applications concern common issues relating to bargaining for an agreement (referred to as the replacement agreement) to replace the Utilities Management Pty Ltd Enterprise Agreement 2018 (the Agreement). By consent, I directed they be heard and determined concurrently.

[7] The Association of Professional Engineers, Scientists and Managers, Australia (Professionals Australia) is not an applicant, but is a union covered by the Agreement. It supports the applications.

[8] Each of the applicant unions and Professionals Australia are employee bargaining representatives, but are not the sole employee bargaining representatives, for the replacement agreement.

[9] Seven independent bargaining representatives representing employee interests also appeared in response to the applications (Mr Swan, Mr Oliver, Mr Hristopoulos, Mr Semmler, Mr Flynn, Mr Williams and Mr Cameron). Two other independent bargaining representatives (Ms Cranfield and Ms Nation) appeared at a directions hearing.

[10] I conducted a conference on 11 July 2022 and a conference and directions hearing on 14 July 2022.

[11] Utilities Management responded to the applications by filing a strike-out application under s 587 of the FW Act on the ground that the applications were frivolous or vexatious and had no reasonable prospects of success.

[12] Given the history of bargaining for a replacement agreement and a recently concluded s 240 bargaining dispute before me, 2 the applicant unions and Utilities Management agreed that conciliation on these applications would be fruitless. After exploring the conciliation option, and given the urgency, it was apparent that arbitration was required.

[13] I issued directions on 14 July 2022.

[14] Over the objection of the applicant unions, I granted permission for Utilities Management to be represented. 3

[15] I heard the applications on 20 July 2022.

[16] Prior to the hearing, Utilities Management discontinued its strike-out application whilst maintaining its opposition to the applications.

Background

[17] The applications arise in three contexts:

1. In the context of protracted bargaining for a replacement agreement since June 2020;

2. In the context of Utilities Management seeking, since 16 September 2021, separate agreements and separate terms and conditions of employment covering two business entities (SAPN and Enerven) currently covered singularly by the Agreement; and

3. In the wake of a decision by a full bench of the Commission on 25 March 2022 4 granting applications by the CEPU and Professionals Australia (supported by the ASU) for a scope order and bargaining orders (the full bench scope order decision), and a subsequent Statement issued by me on 29 June 20225 dealing with a bargaining dispute notified by Utilities Management concerning conduct following the full bench scope order decision.

[18] The aforementioned are not the only applications that have required conciliation or arbitration by the Commission in connection with bargaining for a replacement agreement. Other matters dealt with by the Commission include earlier applications for bargaining orders, dispute notifications, applications for protected action ballots (and extensions to such ballots), and applications to suspend protected action. 6

[19] For current purposes, the full bench scope order decision and the Statement are directly relevant.

Evidence

[20] In deciding this matter, I have regard to all evidence and submissions filed including the broader bargaining and litigation context. However, by agreement, I have not required the parties to re-present materials adduced in earlier proceedings unless they sought to do so.

[21] In respect to these applications, I received evidence from:

•  Benjamin Jewell, CEPU Branch Organiser South Australia and CEPU bargaining representative (called by CEPU) 7;

•  Max Mawby, Electrical Connect Officer and CEPU bargaining representative (called by CEPU) 8;

•  Michelle Vlachos, Field Technician (called by CEPU) 9;

•  David Manhood, Construction and Maintenance Officer (called by CEPU) 10;

•  Daniel Spencer, ASU Organiser and ASU bargaining representative (called by ASU) 11; and

•  Jake Goodwin, Workplace Relations Manager Utilities Management and bargaining representative (called by Utilities Management). 12

[22] Ms Vlahos was not required for examination.

[23] I received written submissions from the joint applicants 13 and Utilities Management14.

[24] I also received an oral submission from Professionals Australia in support of the union applicants.

[25] The independent bargaining representatives observed proceedings but did not make submissions. Mr Flynn asked a question in cross examination.

[26] Utilities Management objected to large portions of the statements of the union witnesses. These objections were based on the ground that material in the statements were irrelevant and, in many instances, opinion. Having considered the objections, I have decided to admit the statements in their entirety but to have only limited regard to hearsay unless otherwise corroborated or inherently plausible. I have regard to the opinions and speculative content expressed by the witnesses, but only in the context of that material being akin to part of the union submissions and not evidence that directly informs fact-finding.

[27] However, I do not consider the objections to relevance sustained. Necessarily in this matter views witnesses formed from participating in bargaining is relevant, albeit impressionistic. It is relevant at the least to conduct that subsequently followed, as that conduct was capable of being conditioned by impressions formed, and in certain instances was. This approach I take to the objected evidence is not dissimilar to aspects of Mr Goodwin’s evidence regarding opinions he formed (including the opinion that bargaining had reached an impasse), which I consider relevant but in that more limited context.

Orders sought

[28] The applications seek the following orders:

1. An interim order preventing the ballot of employees occurring;

2. A determination that an alternate scope to that contained in the scope orders has not been agreed by bargaining representatives in accordance with [paragraph] 789 of the explanatory memorandum;

3. An order restraining Utilities Management from requesting employees to vote on an Agreement with a scope inconsistent with the scope order; and

4. [An order] preventing Utilities Management from continuing to bargain for an enterprise agreement with a scope inconsistent with the Scope Order.

Interim orders

[29] At the conclusion of the hearing and having reserved my decision, the applicant unions sought the following interim orders:

1. an order preventing the conduct of a ballot of employees of Utilities Management working in its SAPN business for an agreement covering those employees only. The ballot was scheduled to commence on 21 July 2022 and conclude on 25 July 2022; and

2. an order restraining Utilities Management from requesting employees to vote on an agreement with a scope inconsistent with a scope order currently in operation.

[30] For reasons delivered on 20 July 2022 and published on 21 July 2022 I declined to make interim orders. 15

Facts

The employer

[31] Utilities Management operates in the electrical power industry in South Australia. It conducts two businesses via subsidiary corporate entities. The first, SA Power Networks (SAPN), is the monopoly distributor of electricity in South Australia and operates subject to regulation by the Australian Energy Regulator, the Essential Services Commission of South Australia and the Office of the Technical Regulator. The second business, Enerven, engages in electrical, telecommunications and renewable energy infrastructure development and maintenance, and operates in a non-regulated contestable market.

[32] Utilities Management is the employing entity for both businesses. A larger cohort of employees work in the SAPN business (approximately 1,700) compared to the Enerven business (approximately 400). By agreement between Enerven and SAPN, and where operationally required, from time to time employees are seconded to work across both businesses.

The Agreement

[33] The Utilities Management Pty Ltd Enterprise Agreement 2018 currently applies to employees of Utilities Management within the specified classifications in the Agreement. It operates without distinction in both the SAPN and Enerven businesses.

[34] The CEPU, ASU and Professionals Australia are employee organisations covered by the Agreement.

Bargaining for a replacement agreement

[35] The background facts relating to bargaining are not in dispute. The facts concerning the conduct of bargaining following the full bench scope order decision are, in part, in dispute.

[36] The background facts are those set out in paragraphs [3] to [18] of the full bench scope order decision and need not be repeated.

[37] Bargaining for a replacement agreement has been prolonged (two years to date). It has involved collective bargaining in which the three unions have formed a Single Bargaining Unit (SBU) representing their members in both the SAPN and Enerven businesses. Certain employee interests have also been represented through individual bargaining representatives. The employer coordinates its bargaining though a Company Bargaining Team (CBT).

[38] Bargaining has been contentious and litigious, though not disorderly. It has been characterised by claim, counter claim, accusations of good faith bargaining breaches, unsuccessful contested ballots and protected action.

[39] Until 16 September 2021 bargaining for a replacement agreement occurred in a single process pursuant to a Notice of Employee Representational Rights (NERR) issued by Utilities Management in June 2020. Until September 2021, coverage of the replacement agreement being negotiated by Utilities Management (including the coverage of agreements it unsuccessfully submitted to ballots) was the scope of the existing Agreement (all employees of Utilities Management under the Agreement).

[40] On 16 September 2021 Utilities Management notified a desire for separate agreements between its SAPN business and its Enerven business. It did so by issuing a second NERR. In doing so, it commenced a separate collective bargaining process specific to its Enerven business.

[41] Whilst participating in the bargaining process under the second NERR, the unions forming the SBU and their representatives continued to bargain for a singular replacement agreement covering both businesses.

[42] Some independent bargaining representatives in the bargaining process under the second NERR supported an Enerven-specific agreement and sought to bargain to that end.

[43] In October 2021 the unions forming the SBU applied to the Commission for bargaining orders under s 229 of the FW Act and for a scope order under s 238.

Full Bench scope order 25 March 2022

[44] The scope and bargaining order applications were the subject of a single member decision by me on 23 December 2021 wherein the applications were dismissed. 16 On appeal, on 25 March 2022, a full bench by majority granted the applications and made a scope order (the full bench scope order decision).17

[45] The nature of the scope and bargaining order applications are set out in the full bench 18 and first instance decisions.19 They need not be repeated.

[46] On the scope order applications, the full bench concluded:

“[108] We consider that the overall discretion should be exercised in favour of the scope order sought being made. The scope of the coverage to be specified in the order is fairly chosen, and is rational and functional since it accords with the position established by the current and past agreements, the consistent position of all parties up until 16 September 2021, and the view of the majority of employees. The order would support a return to a fair and efficient bargaining process while not determining the outcome of such a process. There is no identifiable reason, in the face of these considerations, not to make the order. Accordingly, the order will be made, effective from the date of this decision.”

[47] On the bargaining order applications, the full bench observed at [99]:

“…on paper at least, bargaining for an agreement that covers employees in the Enerven business is occurring simultaneously in two separate bargaining processes. The detrimental implications for efficiency and fairness arising from this situation are patently obvious. They have manifested themselves in the following way:

1. The union bargaining representatives have been forced to engage in two parallel bargaining processes to represent and protect the interests of their members. In respect of their members in the Enerven business, they are having to represent their interests simultaneously in both bargaining processes. The operation of the good faith bargaining requirements in the FW Act mean that the unions are simultaneously required to bargain in good faith for an agreement covering the entire Utilities Management workforce in one bargaining stream and bargain in good faith for a separate Enerven agreement in the other bargaining stream.

2. There are different bargaining representatives for employees in the Enerven business in the two bargaining processes, arising from the fact that some employees who have been served with the second NERR have nominated themselves, or been nominated, as bargaining representatives who are not bargaining representatives in respect of the bargaining arising from the first NERR.

3. Arising from the failure of Utilities Management to determine or “choose” the scope of coverage of the proposed Enerven agreement, there is necessarily doubt as to the employees who are encompassed by the bargaining pursuant to the second NERR and which employees are affected by one or both bargaining processes.

4. Notwithstanding the obligation upon Utilities Management to bargain in good faith for an agreement covering the whole of its workforce, it is clear from the evidence, and from its submissions in the appeal, that it is now treating the bargaining process arising from the first NERR as one for a SAPN-only agreement, notwithstanding that no NERR for such an agreement has ever been issued. For example, the passage from its submissions quoted at paragraph [57] above expressly distinguishes between the “SAPN negotiations”, which will proceed on the basis of the history of the negotiations since the first NERR was issued, and the Enerven negotiations, which are starting from a “blank page”. This places Utilities Management at cross-purposes with the union bargaining representatives, who continue to bargain for a single enterprise agreement consistent with the first NERR based on the history of bargaining to date.”

[48] The full bench made a scope order under s 238 of the FW Act in the following terms:

“ORDER

Further to the majority decision in [2022] FWCFB 42 issued on 25 March 2022 and pursuant to s 238 of the Fair Work Act 2009 (FW Act), it is ordered in relation to the single-enterprise agreement proposed in the notice of employee representational rights issued by Utilities Management Pty Ltd on or about 5 June 2020, and also in relation to the single-enterprise agreement proposed in the further notice of employee representational rights issued by Utilities Management Pty Ltd on 16 September 2021, that:

(1) the employer that will be covered by the agreement is Utilities Management Pty Ltd, and

(2) the employees who will be covered by the agreement are the employee of Utilities Management Pty Ltd in the classifications listed in Appendix 1A and Appendix 1B of Attachment 2 of the Utilities Management Pty Ltd Enterprise Agreement 2018.

This order comes into operation today, 25 March 2022, and will cease operation in accordance with s 239(b) of the FW Act.”

[49] Bargaining resumed following the 25 March 2022 full bench decision.

[50] Bargaining returned to a singular process (also referred to in these proceedings as a ‘single track’).

[51] Between 7 April 2022 and 4 July 2022 seven bargaining meetings were held (7 April, 19 May, 26 May, 9 June, 23 June and 4 July).

[52] Utilities Management continued to press its desire for separate agreements and separate terms and conditions governing its SAPN and Enerven businesses.

[53] The unions have maintained the view that a replacement agreement should be a singular agreement covering both businesses.

[54] Other bargaining representatives have expressed their individual views.

[55] Disagreement arose between the unions and Utilities Management as to whether Utilities Management was acting consistently with the scope order in continuing to press for separate agreements, and on representations made by each side with respect to the other’s conduct.

Commission Statement 29 June 2022

[56] On 7 June 2022 Utilities Management notified a bargaining dispute under s 240 of the FW Act. Utilities Management sought a recommendation from the Commission that the CEPU “cease the promotion and publication of misleading and incorrect statements” concerning the full bench scope order decision and Utilities Management’s conduct in the wake of that decision.

[57] After conducting three conferences, and giving the parties an opportunity to express views on a draft Statement, on 29 June 2022 I issued the following: 20

“STATEMENT

Background

[1] On 7 June 2022 a bargaining dispute was notified by Utilities Management Pty Ltd (UM) trading as SA Power Networks (SAPN). UM claims that the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) has published misleading and incorrect statements about UM’s stance on bargaining following a Commission full bench decision on 25 March 2022.

[2] This current dispute arises in the context of protracted bargaining for a new agreement between UM and its employees. Employee interests are represented by the Unions and other bargaining representatives. This is the latest in a series of bargaining disputes.

[3] The Commission conducted conferences on 17, 22 and 28 June 2022. The Commission also heard from the Australian Services Union (ASU) and Professionals Australia (PA) which, with the CEPU, form part of a three-union Single Bargaining Unit (SBU).

[4] Although many disagreements exist between UM and the Unions, what is agreed is that a statement should be issued by the Commission and made available to at least all bargaining representatives. The purpose of the statement is to guide future bargaining in the wake of the Commission decision.

[5] The parties to the dispute have agreed that the statement should be expressed in plain English. I have done so, noting that simplicity in language sometimes oversimplifies legal provisions. Ultimately, rights and obligations are drawn from the Fair Work Act 2009 (FW Act).

[6] Whilst the parties agreed that a statement be issued, this is the Commission’s statement. It is not a joint statement.

Disputed issues

[7] I have reviewed the material which UM believes contains misleading and incorrect statements about its stance on bargaining following the Commission decision.

[8] I agree with UM that some aspects of the published material do not correctly state the effect of the Commission decision and may mislead a reader into believing that UM is ignoring that decision. However, some of the other material objected to by UM simply represents opinions by the CEPU or SBU and are not contrary to the FW Act or the decision.

[9] UM ask that the CEPU publish corrective material. I will not require that for two reasons.

[10] Firstly, this Statement expresses an independent view that some but not all of the material objected to by UM is incorrect and may mislead.

[11] Secondly, as this Statement is intended to assist future bargaining, it is forward-looking. Recommending corrections of material already published is necessarily looking in the rear vision mirror. UM has other avenues to pursue rights over past events if it wishes to do so.

[12] I note that in the course of conferences on the dispute, the CEPU countered that UM had, in its view, made misleading statements during bargaining. I have not been asked to rule on those matters and have not done so. However, the guidance I provide below is directed to all parties.

Commission decision

[13] On 25 March 2022, a Commission full bench made what is known as a scope order under the FW Act. A scope order is an order that a proposed agreement cover a particular group of employees. In its decision, the Commission ordered that a proposed agreement arising from current bargaining include all persons covered by the currently operating Enterprise Agreement.

[14] The order was made in the context of UM having sought (in 2021) to establish a separate bargaining process with representatives of one of its businesses, Enerven. That separate bargaining process was challenged by the Unions. The Unions succeeded in that challenge.

[15] The following guidance is provided on future bargaining over coverage.

1. The Commission decision was that a new agreement, if made, must (unless otherwise agreed by UM and a majority of employees) cover the same group of employees covered by the current Agreement (SAPN and Enerven).

2. The Commission decision required all bargaining to occur only through the bargaining process established in 2020 (not the separate 2021 process).

3. However, the Commission decision did not rule out continued bargaining over coverage or over separate terms and conditions in the two businesses.

4. Subject to the condition at point 5 below:

a. it is consistent with the Commission decision for the Unions to advance or maintain a view that a single agreement covering all SAPN and Enerven employees should be the bargaining outcome;

b. it is consistent with the Commission decision for UM to continue to try to persuade the Unions and bargaining representatives that separate agreements for SAPN and Enerven should be made or that a single agreement should be made with separate terms and conditions, provided UM does so inside the original bargaining process; and

c. it is consistent with the Commission decision for the Unions to disagree with UM if UM continues to seek separate agreements or separate terms and conditions in these businesses.

5. UM, the Unions and bargaining representatives must, when advancing or disagreeing with proposals, give genuine consideration to proposals by others and communicate reasons for agreement or disagreement in a respectful way. This is a part of ‘good faith bargaining’.

6. Where bargaining disagreements (including disagreements over coverage) become entrenched a stalemate arises. A bargaining stalemate is not unlawful but prolongs the dispute.

7. Both an agreement in the terms of the scope order in the Commission decision or an agreement (or agreements) covering a different scope are capable of future approval by the Commission but only if approval requirements in the FW Act are met. These include that the agreement was bargained for in good faith, is consistent with Commission decisions and is supported by a majority of employees.

Communication

[16] Views expressed by UM and the Unions need to be respectful and accurate. However, there is no rule against expressing opinions about bargaining claims or bargaining conduct provided they are not inaccurate.

[17] Communication will not be inaccurate if consistent with the FW Act, with decisions of the Commission and with this explanation of the Full Bench decision.

Concluding observation

[18] The Commission is an independent body with functions under the FW Act. The Commission oversees collective bargaining to ensure it is conducted in good faith. The Commission can approve but does not make agreements or (except in very rare cases) determine bargaining outcomes. Only employers and employees do that.

[19] Bargaining between UM and its employees for a new agreement has been protracted and heavily contested since 2020. The Commission continues to encourage UM, the Unions, and bargaining representatives to find pathways towards a bargaining outcome that ultimately has the support of the employer and its employees.”

Bargaining following the scope order and statement

[58] Neither the scope order nor the Statement resolved the dispute over scope.

[59] Bargaining remained contested. The dispute over coverage escalated.

[60] On 2 June 2022 the CEPU gave notice to Utilities Management under s 229 of the FW Act of concerns that Utilities Management “are not complying with the good faith bargaining requirements outlined in s 228 of the Fair Work Act”. 21

[61] The concern advised by the CEPU was that Utilities Management was allegedly failing to give genuine consideration to union proposals for a single agreement and acting unfairly and capriciously by continuing to advance proposals inside bargaining for a separate Enerven agreement.

[62] On 6 July 2022 Utilities Management formed the view that bargaining had reached a further impasse. Utilities Management decided to put a proposal for an agreement covering the SAPN business (only) to a ballot. It did this by notifying an access period under the FW Act. Only persons to be covered by the proposed agreement (that is, only persons working in the SAPN business) would be balloted. It notified unions and bargaining representatives of this on 6 July 2022: 22

“Status of the negotiation process and the most efficient next steps.

Over nearly a year of negotiating, we have considered and responded to all claims submitted by all bargaining representatives, including the SBU. We also note that over the course of this process we have revisited SBU proposals that are comprised of claims that we had previously and comprehensively rejected. Further, we note that we have considered two new claims from SBU that failed to meet our imperatives and therefore are unacceptable. We are satisfied that the bargaining representatives, including the SBU, have considered and provided responses to all of our claims in respect this proposed agreement.

Nonetheless, the parties have failed to reach agreement on a number of critical claims. With this in mind, please find the updated Activity Tracker attached to this email.

We note the SBU’s assertion that the negotiation process is “far from finished”. However, given the above, we are satisfied that the negotiation process has reached impasse, and are at a stalemate. We are disappointed that after nearly a year of negotiations since the previous vote, we have reached this point. Nonetheless, we remain committed to collective bargaining and achieving an enterprise agreement that meets our business imperatives. To this end, we have considered all options available in respect to the negotiation.

In view of the diametric opposition of the bargaining representatives’ positions, together with the unlikelihood of reaching agreement, we have concluded that the most effective and appropriate solution to this impasse is to provide employees who will be covered by the proposed new Utilities Management Pty Ltd Enterprise Agreement 2021 the opportunity to indicate their acceptance or rejection of it. To this end, we intend to distribute a proposed new enterprise agreement to the relevant employees for their consideration and vote.

We intend to commence this process on Thursday 7th July 2022, and will distribute the relevant information to the employees accordingly.” (emphasis in original)

[63] Utilities Management notified employees by letter dated 7 July 2022, attaching a copy of the proposed agreement and a ‘Terms and Conditions’ document. 23 The Terms and Conditions document included the following “rationale” for the proposed scope clause:

“Revised scope to reference SA Power Networks employees only (and exclude Enerven employees).”

[64] On 7 July 2022 the applicant unions responded by filing these s 229 applications for bargaining orders.

[65] On 7 July 2022 the SBU notified employees as follows: 24

“UMPL have released an EA for vote, Enerven has not been included in this vote. In effect, by doing this, UMPL are asking SAPN workers to vote on whether Enerven has a separate EA or not. A separate EA for Enerven will have the most impact on the Enerven workers, yet they do not get a say on the issue. This is completely unfair and we ask ALL SAPN workers to vote No – because you are voting on someone else’s future.

This whole arrangement is extremely unfair and may not be legal. The situation that UMPL has put everyone in is another test of “legal principles” as the vote is not in line with the FWC scope order. The SBU has applied to the Fair Work Commission for Bargaining Orders, but if the vote goes ahead we ask all workers to vote NO.” (emphasis in original)

[66] On 8 July 2022 Utilities Management responded to the CEPU’s letter of 6 June 2022 denying that it was failing to bargain in good faith.

[67] The ballot of employees working in the SAPN business was scheduled to commence on 21 July 2022 and conclude on 25 July 2022.

[68] I make further findings concerning the conduct of bargaining following the scope order in the body of this decision.

Submissions

CEPU, ASU (applicant unions) and Professionals Australia

[69] The union submissions and submissions in reply can be grouped into four grounds on which it is said that Utilities Management has not met and is not meeting good faith bargaining requirements.

[70] Firstly, it is said that Utilities Management is conducting parallel bargaining for two agreements despite the full bench having issued a scope order requiring bargaining to be conducted in a singular bargaining process. The unions say the bargaining process is singular in form only but not in substance. The unions submit this is a breach of good faith bargaining because it is conduct contrary to the full bench scope order decision, and because it is inefficient.

[71] Secondly, it is said that Utilities Management is engaging in differential bargaining treatment between bargaining representatives from the Enerven business compared to union bargaining representatives from the SAPN business. The unions submit this is a breach of good faith bargaining because it is conduct which results in a failure to give genuine consideration to the position and claims of union bargaining representatives from the SAPN business.

[72] Thirdly, it is said that Utilities Management is refusing to bargain for a replacement agreement covering its workforce as a whole and is only bargaining for two agreements (one to cover its SAPN business and one covering its Enerven business). The unions submit this is a breach of good faith bargaining because it is conduct contrary to the full bench scope order decision.

[73] Fourthly, it is said that Utilities Management is engaging in capricious or unfair conduct by seeking to bargain for two agreements and, in the absence of agreement amongst bargaining representatives, to unilaterally put a proposal for a SAPN specific agreement to a ballot of employees. The unions submit this is a breach of good faith bargaining because it is conduct contrary to the full bench scope order decision and the FW Act.

[74] On these grounds individually and collectively the unions press the orders sought.

Utilities Management

[75] Utilities Management submit as follows.

[76] Firstly, it has been conducting a singular process of bargaining following the full bench scope order decision and all bargaining is being conducted by that means (“under one roof”). Whilst Utilities Management has not withdrawn the second NERR, the singular process of bargaining is being conducted under the first NERR only. As such, Utilities Management says it is compliant with the full bench decision and order.

[77] Secondly, Utilities Management says that it is being responsive to claims and positions advanced by all bargaining representatives and denies that it is acting in a differential or discriminatory manner.

[78] Thirdly, Utilities Management is entitled to maintain a position in bargaining that its preference is for separate collective agreements between its SAPN and Enerven businesses. It says that the full bench scope order decision contemplated continued bargaining over scope.

[79] Fourthly, Utilities Management says that having formed the view that a further bargaining impasse had been reached, it is exercising a lawful right under the FW Act to put a proposed agreement to ballot for one of its preferred options. It says such conduct is not precluded by the scope order and, being the exercise of rights under the FW Act, cannot be said to be inconsistent with the Act.

[80] More generally, Utilities Management submit that good faith bargaining obligations do not compel it to agree to positions advanced by other bargaining representatives nor to agree terms (including scope terms) that it does not consider best meet its needs.

[81] Utilities Management submit that as it is and has been bargaining in good faith, there is no basis for making bargaining orders. The applications should be dismissed.

Independent bargaining representatives

[82] No independent bargaining representative made or filed submissions on the applications.

Consideration

The matters in issue

[83] The matters in issue concern Utilities Management’s compliance with the good faith bargaining obligations of the FW Act in the wake of the full bench scope order decision.

[84] In large measure, though not entirely, the determination of this matter concerns the effect on bargaining of a scope order under s 238 of the FW Act and the conduct of parties related thereto.

[85] More particularly, it concerns whether an employer is bargaining in good faith if it bargains for or ballots employees on a proposal for multiple replacement agreements covering subsets of its business in circumstances where a scope order has been issued for a replacement agreement covering its business as a whole.

Legislative context

[86] Division 8 of Pt 2-4 of the FW Act is concerned with the Commission’s role in facilitating bargaining for enterprise agreements. Subdivision A deals with bargaining orders. Section 228(1) prescribes a number of “good faith bargaining requirements” that a bargaining representative for a proposed enterprise agreement must meet as follows:

“228 Bargaining representatives must meet the good faith bargaining requirements

(1) The following are the good faith bargaining requirements that a bargaining representative for a proposed enterprise agreement must meet:

(a) attending, and participating in, meetings at reasonable times;

(b) disclosing relevant information (other than confidential or commercially sensitive information) in a timely manner;

(c) responding to proposals made by other bargaining representatives for the agreement in a timely manner;

(d) giving genuine consideration to the proposals of other bargaining representatives for the agreement, and giving reasons for the bargaining representative’s responses to those proposals;

(e) refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining;

(f) recognising and bargaining with the other bargaining representatives for the agreement.”

[87] Section 228(2) makes it clear that these requirements do not require a bargaining representative to make concessions during bargaining or to reach agreement on the terms to be included in the proposed agreement. Section 229(1) allows a bargaining representative to apply to the Commission for a “bargaining order”, subject to the prerequisites prescribed in s 229(2)-(4) being satisfied. Section 230(1) empowers the Commission to make a bargaining order upon application if the requirements of the section are met in relation to the proposed agreement and the Commission is satisfied that it is reasonable in all the circumstances to make the order. Section 230(2) provides:

“Agreement to bargain or certain instruments in operation

(2) The FWC must be satisfied in all cases that one of the following applies:

(a) the employer or employers have agreed to bargain, or have initiated bargaining, for the agreement;

(b) a majority support determination in relation to the agreement is in operation;

(c) a scope order in relation to the agreement is in operation;

(d) all of the employers are specified in a low-paid authorisation that is in operation in relation to the agreement.”

[88] Section 230(3) provides for further matters about which the Commission must be satisfied, including that one or more of the relevant bargaining representatives have not met, or are not meeting, the good faith bargaining requirements, or the bargaining process is not proceeding efficiently or fairly because there are multiple bargaining representatives for the agreement. Section 231(1) provides that a bargaining order must specify certain matters:

“231 What a bargaining order must specify

(1) A bargaining order in relation to a proposed enterprise agreement must specify all or any of the following:

(a) the actions to be taken by, and requirements imposed upon, the bargaining representatives for the agreement, for the purpose of ensuring that they meet the good faith bargaining requirements;

(b) requirements imposed upon those bargaining representatives not to take action that would constitute capricious or unfair conduct that undermines freedom of association or collective bargaining;

(c) the actions to be taken by those bargaining representatives to deal with the effects of such capricious or unfair conduct;

(d) such matters, actions or requirements as the FWC considers appropriate, taking into account subparagraph 230(3)(a)(ii) (which deals with multiple bargaining representatives), for the purpose of promoting the efficient or fair conduct of bargaining for the agreement.”

[89] Section 231(2) specifies in a non-exhaustive fashion the kinds of bargaining orders that the Commission may make. Section 232 prescribes when a bargaining order comes into, and ceases to be in, operation. Section 233, which is a civil remedy provision, provides that a person to whom a bargaining order applies must not contravene a term of the order.

[90] Subdivision C of Div 8 of Pt 2-4 deals with majority support determinations and scope orders. In respect of scope orders, s 238 provides:

“238 Scope orders

Bargaining representatives may apply for scope orders

(1) A bargaining representative for a proposed single-enterprise agreement (other than a greenfields agreement) may apply to the FWC for an order (a scope order) under this section if:

(a) the bargaining representative has concerns that bargaining for the agreement is not proceeding efficiently or fairly; and

(b) the reason for this is that the bargaining representative considers that the agreement will not cover appropriate employees, or will cover employees that it is not appropriate for the agreement to cover.

No scope order if a single interest employer authorisation is in operation

(2) Despite subsection (1), the bargaining representative must not apply for the scope order if a single interest employer authorisation is in operation in relation to the agreement.

Bargaining representative to give notice of concerns

(3) The bargaining representative may only apply for the scope order if the bargaining representative:

(a) has taken all reasonable steps to give a written notice setting out the concerns referred to in subsection (1) to the relevant bargaining representatives for the agreement; and

(b) has given the relevant bargaining representatives a reasonable time within which to respond to those concerns; and

(c) considers that the relevant bargaining representatives have not responded appropriately.

When the FWC may make scope order

(4) The FWC may make the scope order if the FWC is satisfied:

(a) that the bargaining representative who made the application has met, or is meeting, the good faith bargaining requirements; and

(b) that making the order will promote the fair and efficient conduct of bargaining; and

(c) that the group of employees who will be covered by the agreement proposed to be specified in the scope order was fairly chosen; and

(d) it is reasonable in all the circumstances to make the order.

Matters which the FWC must take into account

(4A) If the agreement proposed to be specified in the scope order will not cover all of the employees of the employer or employers covered by the agreement, the FWC must, in deciding for the purposes of paragraph (4)(c) whether the group of employees who will be covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.

Scope order must specify employer and employees to be covered

(5) The scope order must specify, in relation to a proposed single-enterprise agreement:

(a) the employer, or employers, that will be covered by the agreement; and

(b) the employees who will be covered by the agreement.

Scope order must be in accordance with this section etc.

(6) The scope order:

(a) must be in accordance with this section; and

(b) may relate to more than one proposed single-enterprise agreement.

Orders etc. that the FWC may make

(7) If the FWC makes the scope order, the FWC may also:

(a) amend any existing bargaining orders; and

(b) make or vary such other orders (such as protected action ballot orders), determinations or other instruments made by the FWC, or take such other actions, as the FWC considers appropriate.”

[91] Section 239 concerns when a scope order comes into, and ceases to be in, operation. It provides:

“239  Operation of a scope order

A scope order in relation to a proposed single-enterprise agreement:

(a) comes into operation on the day on which it is made; and

(b) ceases to be in operation at the earliest of the following:

(i) if the order is revoked—the time specified in the instrument of revocation;

(ii) when the agreement is approved by the FWC;

(iii) when a workplace determination that covers the employees that would have been covered by the agreement comes into operation;

(iv) when the bargaining representatives for the agreement agree that bargaining has ceased.”

[92] Division 4 of Pt 2-4 concerns the approval of enterprise agreements. Subdivision A of the Division prescribes requirements concerning the making of an enterprise agreement by way of the approval of a proposed agreement in a vote of relevant employees, and also requirements concerning the making of applications for approval of enterprise agreements by the Commission. Subdivision B concerns the requirements for approval of an enterprise agreement by the Commission. Section 186(1) requires the Commission, on application, to approve an agreement if the requirements in ss 186 and 187 are met.

[93] Relevantly, one of those requirements, in s 187(2), is as follows:

“Requirement that approval not be inconsistent with good faith bargaining etc.

(2) The FWC must be satisfied that approving the agreement would not be inconsistent with or undermine good faith bargaining by one or more bargaining representatives for a proposed enterprise agreement, or an enterprise agreement, in relation to which a scope order is in operation.” (emphasis added)

Formal requirements

[94] It is not in dispute that the formal requirements in s 230 for the making of bargaining orders have been met.

[95] An application has been made in proper form (s 230(1)(a)). Utilities Management has agreed to bargain, evidenced by the first NERR (s (2(a)). In any event, a scope order is in operation (s 230(2)(c)). Both applicant unions notified Utilities Management in advance of making applications of their concerns at Utilities Management’s conduct and provided a reasonable time for Utilities Management to reply. The reply by Utilities Management has not been considered appropriate by the unions (s 230(3)(b) and s 229(4)). The applications were made within the prescribed time (s 229(3)).

[96] I now deal with each of the grounds advanced by the union applicants.

[97] In doing so, and consistent with past Commission decisions, I adopt without repeating the principles and observations set out by Flick J in Endeavour Coal Pty Ltd v Association of Professional Engineers, Scientists and Managers, Australia 25 (Endeavour Coal) on the meaning and application of the good faith bargaining provisions of the FW Act.

Parallel bargaining

[98] The unions submit that Utilities Management is conducting parallel bargaining for two agreements despite the Commission scope order requiring bargaining to be conducted in a singular bargaining process.

[99] In response, Utilities Management submit that it is conducting all bargaining in a singular process under the first (June 2020) NERR.

[100] In reply, the unions say the bargaining process is singular in form only but not in substance.

[101] The unions submit this is a breach of good faith bargaining because it is conduct contrary to the full bench scope order decision, and because it is inefficient.

[102] The full bench scope order decision required bargaining to return to a “single bargaining track”. 26 It did so by requiring all bargaining to be conducted under the terms of the NERR issued in June 2020. It observed that the union bargaining representatives had been “forced to engage in two parallel bargaining processes”27 and that bargaining in separate streams was, amongst other considerations, inefficient.

[103] The evidence establishes that a singular bargaining track has operated since the full bench scope order decision. There is no evidence that Utilities Management is now meeting with or bargaining with representatives outside this singular stream.

[104] The obligation on Utilities Management to now bargain in a singular stream is necessarily an obligation that combined two processes into one. In and of itself, Utilities Management’s conduct in abandoning a second stream of bargaining and conducting all of its bargaining in this singular track is consistent with the full bench decision. It is necessarily a change of form.

[105] The union proposition is that the scope order also requires a change of substance. In essence, the proposition is that the manner in which bargaining is being conducted in this stream remains akin to dual processes. The unions consider it inefficient for union bargaining representatives to observe or participate in discussions between Utilities Management and some independent bargaining representatives concerning the merit or terms of a separate agreement in the Enerven business.

[106] Leaving aside the important question whether bargaining for a separate agreement remains permissible in light of the scope order (considered below), I do not agree.

[107] It is a natural consequence of bargaining being conducted in a single stream that all bargaining representatives from across Utilities Management’s workforce (that is, both businesses) will be present (or at least be invited to be present) at the one time. All will be entitled to participate. All will be entitled to be heard. It necessarily follows that some issues raised by some bargaining representatives may be of little or no concern to other bargaining representatives. In a large bargaining cohort involving both businesses, that would not be surprising. The employer has not imposed inefficiency in bargaining as a consequence of receiving views that may be considered irrelevant or inapplicable by other bargaining representatives. It may be tedious. It may be time consuming. It is not however a breach of good faith bargaining.

Differential bargaining treatment

[108] It is said that Utilities Management is engaging in differential bargaining treatment between bargaining representatives from the Enerven business compared to union bargaining representatives from the SAPN business (noting that union bargaining representatives are also representing some employees in the Enerven business).

[109] As a result, the unions submit that Utilities Management is failing to give genuine consideration to the position and claims of union bargaining representatives from the SAPN business.

[110] Utilities Management responds by indicating that it is considering and responding to all positions put by all representatives.

[111] The evidence 28 clearly indicates that Utilities Management is responding to claims and positions put in bargaining meetings. It does so in part orally (during meetings) and in part in writing (after meetings).

[112] The evidence is that, in the bargaining meetings held since the full bench decision, discussion between Utilities Management and positions put by some independent bargaining representatives concerning a separate Enerven agreement have been more extensive (at least quantitatively) when compared to the more limited “back and forth” (in the words of Mr Jewell 29) between Utilities Management and union bargaining representatives over claims advanced by the unions for a singular replacement agreement. Mr Spencer described his impression of recent bargaining as a “short circuit discussion” of union claims.30

[113] I draw an inference in general terms from the evidence of Mr Jewell, Mr Mawby and Mr Spencer that quantitatively at least there has been more time spent during recent bargaining meetings in “back and forth” discussion involving Enerven issues than issues concerning union claims for the workforce as a whole or relating to the SAPN business.

[114] I also find that to a certain extent this is the product of Utilities Management more commonly advising union bargaining representatives that it will respond in writing or responding in short form by indicating that a union position being put is or has already been considered or rejected, than it generally does with issues raised by some independent bargaining representatives.

[115] However this does not necessarily mean that Utilities Management is not bargaining in good faith.

[116] I accept Mr Goodwin’s evidence that a reasonable explanation exists for when this occurs. As bargaining with union bargaining representatives has been occurring for two years, many (but not all) of the claims being advanced by the unions remain those first advanced in September 2020. They have been responded to over at least an eighteen month period. It is not unreasonable that Utilities Management, when faced with the repetition of a claim already made and responded to, repeats its position in short form without re-debating its position, resulting in less “back and forth”. It is also not unreasonable that Utilities Management would in that situation, if it has more to say, make reference to the previous written record and confirm or reconfirm a position in writing.

[117] In contrast, Mr Goodwin’s evidence suggests that some of the issues raised by independent bargaining representatives are newer or have not been extensively canvassed in earlier bargaining meetings.

[118] Further, Utilities Management maintains and circulates a reckoner of all bargaining claims or positions put, which it updates following bargaining meetings (called an activity tracker). That document is in evidence. 31 It provides, amongst other detail, the status of claims and positions including Utilities Management’s position on all claims.

[119] The evidence also clearly establishes that Utilities Management corresponds extensively with the union bargaining representatives on its response to claims and does so in a timely manner and in clear terms. 32

[120] In these circumstances, whilst there is some differential treatment of issues raised by representatives in bargaining meetings and in the mode of communication by Utilities Management, it is not differential treatment that is dismissive of the positions or views of union bargaining representatives.

[121] I do not consider this ground of objection to Utilities Management’s conduct to be made out.

Bargaining for separate agreements

[122] It is submitted by the unions that Utilities Management is continuing to bargain for two agreements (one to cover its SAPN business and one covering its Enerven business) and is refusing to bargain for a replacement agreement covering its workforce as a whole and is only bargaining for two agreements (one to cover its SAPN business and one to cover its Enerven business).

[123] The unions submit this is a breach of good faith bargaining because it is conduct contrary to the full bench scope order decision.

[124] There are two limbs to this ground; that Utilities Management is continuing to bargain for two agreements; and that Utilities Management is refusing to bargain for a single agreement covering its two businesses.

[125] As a matter of fact, the evidence clearly establishes that Utilities Management has continued to bargain for two agreements to replace the existing agreement that covers both businesses. Utilities Management made this position known to the unions at the first bargaining meeting that followed the full bench decision.

[126] Is continuing to bargain for separate agreements in and of itself a breach of good faith bargaining in circumstances where a scope order has been issued for an agreement covering the workforce as a whole?

[127] There are circumstances where the continued insistence of a claim or demand, in the face of known and well established opposition by other bargaining representatives, can undermine good faith bargaining giving rise to a bargaining order if the continued insistence is designed to avoid or delay an enterprise agreement being made. 33

[128] In this matter, for the following reasons, the answer to this question is no.

[129] Firstly, the evidence establishes that meaningful bargaining on the employer proposal or versions of the employer proposals did occur following the full bench scope order decision, not just with independent bargaining representatives, but also by exchanges of views between Utilities Management and members of the SBU. 34 Sufficient common ground was not found so as to avoid the subsequent bargaining impasse. However, I find that despite the continued insistence by Utilities Management of its position it has continued to consider potential pathways to an agreement or agreements, and its conduct in this respect was not designed to avoid or delay making an agreement.

[130] Secondly, the scope of an agreement is a term of an agreement. All terms, including scope, can only be determined by those who make the agreement, being the employer and employees. A scope order compels the bargaining process to be conducted by reference to that order but does not make the terms of a replacement agreement.

[131] Thirdly, good faith bargaining requirements do not require Utilities Management to reach agreement on the terms of an agreement (including scope). A failure to reach agreement results in stalemate, with the consequences (practical and industrial) of stalemate for all concerned.

[132] Fourthly, good faith bargaining requirements do not preclude a representative (in this instance, the employer) from advocating its preferred position as to the outcome of collective bargaining, so long as it explains its position and considers alternate (non-preferred) positions in a meaningful and timely way. 35 Utilities Management’s current (post September 2021) preferred position on scope is that, in this bargaining round, the historical position whereby a singular agreement has applied across its workforce should change, and that two agreements should hereafter apply given the changes to its regulatory and operational circumstances. Irrespective of whether this view has merit or is industrially realistic or whether other methods exist to achieve its needs inside a singular scope or singular agreement, the employer is entitled to hold and bargain for this view.

[133] Fifthly, the full bench decision contemplated bargaining for alternate scopes by Utilities Management inside the singular bargaining process:

“[107] It is important to note that the making of the scope order would not prevent Utilities Management seeking Enerven-specific conditions of employment within the bargaining process established by the first NERR. Nor would it prevent Utilities Management, in the context of that bargaining process, advancing proposals for two enterprise agreements and seeking to persuade the other bargaining representatives of the merit of that proposal. The purpose of the making of the scope order would be to overcome the unfairness and inefficiency in bargaining which has arisen as a result of Utilities Management pursuing its scope proposal through a separate “bargaining track” in order to attempt to produce a fait accompli. The scope order would not dictate the outcome of a fair and efficient good faith bargaining process, and thus would be reasonable from the perspective of Utilities Management’s interests.” (emphasis added)

[134] That being so, bargaining inside the singular process for separate scopes and separate agreements is not in and of itself inconsistent with the full bench scope order decision. Nor do I consider it to have been a breach of good faith bargaining obligations.

[135] However, an important qualification exists.

[136] Whilst bargaining for separate scopes in the wake of a scope order is not in and of itself a breach of good faith bargaining, it would be a breach of good faith bargaining if Utilities Management was engaging in such bargaining to the exclusion of bargaining for a replacement agreement with the scope the subject of the scope order; in other words, if Utilities Management was failing to bargain for a single agreement covering its workforce in both businesses. I do not accept the submission by Utilities Management that no such requirement exists. 36

[137] This much is clear on the face of the full bench scope order decision: 37

“…as an example, if the employer refused to meet and bargain with bargaining representatives for an agreement with the specified scope, that would be likely to constitute non-compliance with the good faith bargaining requirements in s 228(1)(a), (c), (d) and/or (f).”

[138] In respect to scope, the evidence indicates that there are three potential agreements currently being bargained for. One, a replacement agreement is being sought by the unions in the terms of the scope order (covering Utilities Management employees in both businesses). Two, a replacement agreement being sought by Utilities Management covering employees in the SAPN business only. Three, a replacement agreement being sought by Utilities Management and some independent bargaining representatives covering the Enerven business only.

[139] If Utilities Management is bargaining for options two and three only but not option one, then it is not bargaining in good faith given that the union bargaining representatives continue to bargain for option one and given that the Commission has made a scope order in the terms of option one.

[140] The full bench found this to have been Utilities Management’s bargaining posture when separate bargaining streams operated following September 2021. That finding was material to the scope order being made. 38

[141] There is some evidence to inferentially support the union position that Utilities Management’s focus in bargaining since the full bench decision has continued to be on options two and three alone, and that it has not kept an “open mind” (in the words of Flick J in Endeavour Coal 39) to the prospect of reaching agreement on option one. The evidence of Mr Jewell, Mr Mawby and Mr Spencer is that, whilst formal agendas have not been prepared, bargaining meetings organised by Utilities Management have tended to divide themselves between discussions concerning the SAPN business and a SAPN agreement, and discussions concerning the Enerven business and an Enerven agreement, but not expressly a single agreement covering all.

[142] It is readily understandable why the union bargaining representatives view Utilities Management’s conduct in this light. Immediately prior to the scope order being made Utilities Management had structurally divided its bargaining process between the first NERR and the second NERR. Utilities Management came to treat the process under the first NERR as relevant to its SAPN business alone. Following the scope order Utilities Management did not expressly inform the unions or other bargaining representatives that bargaining on a replacement agreement in the (resumed) singular bargaining track included all three options. It allowed an impression to linger that, at least from its perspective, positions advanced by union bargaining representative were mostly relevant to the SAPN business only.

[143] However, the evidence of Mr Goodwin, supported by the Activity Tracker, is that positions advanced by the SBU have not in fact been treated as positions only relevant to the SAPN business. 40 The SBU’s position on particular clauses or terms and conditions have been responded to by Utilities Management in the context of the SBU’s overarching claim that a single replacement agreement should be the bargaining outcome. That the SBU’s position has also been regarded by Utilities Management as relevant to the union position should a separate SAPN agreement be negotiated (or proposed) does not detract from the fact that Utilities Management has continued to recognise and respond to the unions preferred position on both scope and on agreement terms. It has responded to the union position on scope by outlining the arguments why it considers its operational and regulatory circumstances no longer warrant a single agreement covering both its businesses.41 It has continued to respond to the union claims and done so recognising that those claims are for a single replacement agreement.

[144] In this respect, Utilities Management’s action in responding to claims for a single replacement agreement but rejecting a single replacement agreement in preference for separate agreements has led to a continued impasse over scope.

[145] Utilities Management’s bargaining conduct with respect to a replacement agreement with a scope the subject of the scope order (a replacement agreement covering its workforce in both businesses) has been almost entirely defensive; that is, Utilities Management has not advanced propositions to conclude an agreement on those terms but rather responded to views put by the SBU for an agreement with that scope.

[146] Is this a breach of good faith bargaining?

[147] The obligation to bargain in good faith requires active not passive conduct. Alternate and non-preferred positions put by others need to be actively considered and responded to, and not just passed by. 42

[148] However, whilst good faith bargaining requires a party to maintain an “open mind” on making an agreement, it does not require a bargaining representative to advocate a non-preferred position. Nor does a scope order require a representative to advocate for an agreement in those terms. There is nothing in ss 229, 238 or 239 which provide that to be the effect of a scope order. That being so, good faith bargaining requires a bargaining representative to bargain for an outcome that includes an agreement in the terms of a scope order but does not require that representative to advocate for one. Defensive bargaining for a non-preferred scope, even one the subject of a scope order, provided it is genuinely responsive, is a subset of bargaining and is not of itself a breach of good faith bargaining obligations.

[149] Given that defensive but responsive bargaining is capable of being characterised as bargaining in good faith and given that Utilities Management’s conduct has been accompanied by explanations and been timely, I do not find that it has, since the full bench decision, been bargaining on its preferred position to the exclusion of a single agreement sought by the unions that is the subject of the scope order.

[150] I conclude that Utilities Management’s hard bargaining for separate agreements has led to a continued impasse over scope. Its conduct is open to legitimate criticism for allowing an impression to linger that bargaining remains framed around its preferences. However, its conduct does not meet the threshold required to conclude that it is not bargaining in good faith for a single agreement covering its workforce in both businesses. It is bargaining on that issue only in a defensive manner, but it is bargaining in good faith, nevertheless.

[151] This ground is not made out.

Submitting an agreement to ballot with a scope different to the scope order

[152] The unions submit that, in the context of a scope order being operative, Utilities Management is engaging in capricious or unfair conduct by seeking to bargain for two agreements and, in the absence of agreement amongst bargaining representatives, by unilaterally putting a proposal for a SAPN-only replacement agreement to a ballot that necessarily excludes employees working in the Enerven business.

[153] The unions submit this conduct is contrary to the full bench scope order decision and the FW Act and a breach of good faith bargaining obligations.

[154] This is a substantive issue requiring determination. It concerns the relationship between an operative scope order and bargaining conduct in which a replacement agreement on different terms is balloted. It is not an issue that appears to have been determined in earlier matters before the Commission under the bargaining regime established by the FW Act.

[155] As a matter of fact, it is not disputed that Utilities Management took action to conduct a ballot of employees working in the SAPN business only for a proposed agreement covering the SAPN business alone. It did so whilst a scope order was in operation, the terms of which provided for a replacement agreement to cover its workforce in both the SAPN and Enerven businesses and in circumstances where the full bench expressly found that to be a fairly chosen scope and that it was reasonable for a scope order to be made in those terms.

[156] Utilities Management submit that doing so was the exercise of a statutory right to put a proposed agreement to ballot in circumstances where it had formed a view that a bargaining stalemate had arisen. It says, correctly, that under the FW Act the only employees entitled to vote in a ballot are those who would be covered by a proposed agreement. Hence, necessarily, it says that only employees working in the SAPN business could be allowed to vote.

[157] It submits that the scope order regulated the process of bargaining only and could not and did not eliminate its right under the FW Act to notify an access period and submit proposals to ballot as a mechanism to try to resolve a bargaining impasse.

[158] In order to determine whether the right to ballot for an agreement covering a subset of employees in circumstances where the terms of an operative scope order cover more than that subset, it is necessary to consider the effect of a scope order in the context of the legislative scheme.

[159] A scope order, in the words of the full bench decision, it intended to “support a return to a fair and efficient bargaining process while not determining the outcome of such a process”. 43

[160] I accept the union submission that for the purposes of the FW Act a relationship exists between a scope order and good faith bargaining obligations. This much is clear from s 187(2) which provides that, in approval proceedings, any agreement made must not be inconsistent with or undermine good faith bargaining obligations for an agreement to which a scope order is in operation.

[161] It is clear from the statutory scheme that scope orders condition bargaining conduct in relevant ways. I have concluded that they do so by compelling bargaining in good faith over a replacement agreement in the terms of the scope order, whilst not excluding bargaining for separate scopes or for replacement agreements with differing scopes. I have concluded that Utilities Management has not breached its obligation to bargain for a replacement agreement in the terms of the scope order.

[162] I have also concluded that the scope order required Utilities Management to resume bargaining in a single bargaining track, and I have concluded that that Utilities Management has done so by resuming bargaining with all bargaining representatives “under one roof”.

[163] In at least these ways the scope order has conditioned bargaining and the bargaining process.

[164] However, the additional question arising in this matter is whether the scope order also qualified what otherwise operates as lawful bargaining conduct to submit for ballot a replacement agreement with a scope reflecting a bargaining preference.

[165] The unions submit that a replacement agreement with a scope different to an operative scope order can only be put to ballot if all of the bargaining representatives agree. Otherwise, it is said, the scope order determines the scope of any agreement that can be put to ballot.

[166] Utilities Management submit that the scope order conditions bargaining processes only, such as the resumption of bargaining amongst bargaining representatives in a single track and does not and cannot preclude an employer from exercising rights provided for in the FW Act to submit ballots to employees for replacement agreements.

[167] There is no express provision in the FW Act which requires agreement of all bargaining representatives, or any combination of bargaining representatives, as a precondition to the exercise of the right to notify an access period for a ballot.

[168] However, in order to determine if a breach of good faith bargaining obligations has occurred it is not necessary that conduct be expressly prohibited by the FW Act. If it is capricious or unfair conduct undermining freedom of association or collective bargaining it is a breach of good faith bargaining obligations (s 228(1)(e)).

[169] The unions place emphasis on the observation in the full bench scope order decision that Utilities Management is not prevented from “seeking to persuade the other bargaining representatives” of the merit of its proposal for separate agreements in the wake of a scope order. 44 This observation, whilst not specific to balloting conduct and whilst silent on the position absent persuasion, supports in part the union position.

[170] The unions also rely on the Explanatory Memorandum to the Fair Work Bill 2008. It provides some guidance to the statutory intent:

“Clause 187 - When FWA must approve an enterprise agreement – additional requirements

787. This clause sets out additional requirements that must be met before FWA approves an enterprise agreement (subclause 187(1)).

788. Subclause 187(2) provides for an additional approval requirement where a scope order is in operation in relation to a proposed enterprise agreement, or enterprise agreement. This subclause is intended to deal with the situation where a bargaining representative has made an application for FWA approval of an enterprise agreement that is not expressed to cover all the employees and employers specified in a scope order issued by FWA in relation to that agreement. FWA may approve an enterprise agreement in that situation provided that it is satisfied that the approval of the agreement would not be inconsistent with or undermine good faith bargaining by one or more of the bargaining representatives.

789. If (despite a scope order) the bargaining representatives have subsequently all agreed to make an agreement of a different scope, this may not undermine good faith bargaining. However, if the employer has obtained employee approval for an agreement despite a scope order against the wishes of a group of employees who should have been covered (or excluded) as a result of the scope order, then this clause is likely to be triggered.”

[171] The explanatory memorandum in part supports the union proposition. The commentary at paragraphs 788 and 789 is relevant because s 187(2), as enacted, draws a relationship between a scope order and good faith bargaining obligations. However, the explanatory memorandum does not deal with the circumstance where fewer than “all” representatives agree to a different scope. Moreover, as extrinsic material it is a relevant guide to interpretation but non-binding. Nonetheless, it contemplates a “likely” barrier to approval if a group of employees included in the scope order are not in fact balloted.

[172] This is the scenario currently before the Commission. Rather than ballot its workforce in both businesses, Utilities Management has elected to ballot only its workforce in the SAPN business.

[173] The effect of putting an agreement to ballot for a subset of employees in circumstances where a scope order is operating across a wider cohort can clearly be unfair to persons outside that voting subset.

[174] The circumstances of Mr Manhood who gave evidence in these proceedings are illustrative. He is employed to work in the Enerven business. He does not support a separate Enerven agreement. Although not formally a bargaining representative, in recent months he has participated in protected action initiated by the CEPU in support of a replacement agreement covering both businesses. He opposes an SAPN-only agreement. Yet, he has no right to vote against Utilities Management’s current ballot proposal.

[175] It is not difficult to see why a person in Mr Manhood’s situation would believe that his collective bargaining rights have been prejudiced by the conduct of Utilities Management. Mr Jewell in his evidence referred to similar feedback from other employees. 45 Mr Manhood has not only been disenfranchised from the ballot but, should the agreement proposed by Utilities Management be made he would be denied the right (either directly or through his bargaining representatives) to continued collective bargaining for a replacement agreement in the terms of the scope order. Clearly, in that circumstance, there would be no utility in further bargaining on those terms as his employer and a subset of that cohort would have made an agreement on different terms.

[176] Further, given that bargaining for a replacement agreement in the terms of the scope order would not likely continue, the possibility of employees working in the Enerven business voting on such an agreement would be extinguished. The only vote for a replacement agreement they could reasonably expect to exercise would be for a separate Enerven agreement, an outcome sought by their employer. That bargaining cohort would, in practice, have been presented with a fait accompli. Mr Manhood put it this way: 46

“If the EA gets voted up then the decision to have a split EA has been answered without my input.”

[177] To prevent this scenario, Mr Manhood would simply be left with the option of seeking to intervene in approval proceedings for an SAPN-only agreement in an attempt to have the agreement struck down under s 187(2).

[178] Is the obvious unfairness visited on employees such as Mr Manhood a basis for an objective conclusion of capricious or unfair conduct within the meaning of s 229(1)(e) of the FW Act?

[179] It has been held that if an employer puts a proposed agreement to ballot without informing bargaining representatives it may have breached good faith bargaining obligations to disclose all relevant information. 47 In this matter, the evidence is that Utilities Management informed bargaining representatives prior to giving notice.48

[180] Although in Construction, Forestry, Mining and Energy Union v Tahmoor Coal Pty Ltd 49 it was held that there is no absolute requirement for the agreement of bargaining representatives prior to the conduct of a ballot, it has been held that it is fundamentally unfair to impose a condition which allows an individual or a bargaining representative which represents a minority of employees in the cohort to effectively have a right of veto as to whether a proposed enterprise agreement goes to a vote.50 Here a majority of employees are entitled to participate in a ballot, to the exclusion of a minority.

[181] It has also been held that it is a breach of good faith bargaining obligations for an employer to impose a condition that is capable of preventing the will of the majority of its employees from determining whether they want a particular enterprise agreement. 51

[182] Conduct by Utilities Management is capable of having that effect. A bare majority voting in support of its proposal would not necessarily equate to a majority of its employees covered by the scope order.

[183] The unions also rely on the terms of the scope order. The terms of the scope order support the union position. The order provides that:

“the employees who will be covered by the agreement are the employee of Utilities Management Pty Ltd in the classifications listed in Appendix 1A and Appendix 1B of Attachment 2 of the Utilities Management Pty Ltd Enterprise Agreement 2018.”

[184] I conclude that Utilities Management’s unilateral decision to conduct a ballot of employees working in the SAPN business only has the effect of undermining collective bargaining. Utilities Management did so despite a material cohort of employees the subject of an operative scope order (the approximately 400 employees working in the Enerven business) not being entitled to vote on that proposal. Further, should an agreement be made in the terms of the ballot proposal, bargaining representatives would thereafter be denied a right to continued collective bargaining for a single replacement agreement in the terms of the scope order. Further still, employees of Utilities Management would thereafter be denied the opportunity to vote for a single replacement agreement as one could no longer be proposed if the SAPN-only agreement were made and approved.

[185] This was unfair conduct because it has these effects, actual and contingent, on existing and future collective bargaining rights. It undermined collective bargaining in circumstances where a scope order for a replacement agreement covering both the SAPN and Enerven businesses was in operation. It was more than hard bargaining. It was objectively unfair given the operation of a scope order and the potential nugatory effect of its conduct on ongoing collective bargaining rights for a single replacement agreement covering both of its businesses the subject of the scope order.

[186] Whilst unfair, I do not conclude that Utilities Management’s conduct was capricious within the meaning of the FW Act. Its timing loosely followed the unions giving formal notice of alleged non-compliance with good faith bargaining obligations but not immediately so. I do not conclude it was conduct designed to thwart potential s 229 applications. Three bargaining meetings were subsequently held (9 June, 23 June and 4 July), including a response (on 30 June and 4 July) to SBU claims of 9 June. A further claim by the SBU on 5 July 2022 for a “full audit of current resourcing” was responded to. Only then did Utilities Management (on 6 July) notify an intention to go to ballot. The employer had continued to identify a reasoned operational basis for seeking separate agreements. Whilst its view that bargaining had reached another impasse came in the face of the SBU repeating (on 5 July) that the unions “are not ‘fundamentally’ opposed to two (or more) enterprise Agreements” 52, the seven bargaining meetings since the scope order was made had not produced a breakthrough on that threshold question.

[187] I reject Utilities Management’s submission that the union submission would have the effect of giving bargaining representatives a veto over its proposals or its decision to ballot. It is the effect of the scope order on collective bargaining rights and not the veto of any bargaining representative individually or collectively that render Utilities Management’s conduct in balloting for an SAPN-only agreement unfair.

[188] I do not need to decide whether Utilities Management’s conduct would have been compliant with its good faith bargaining obligations if prior agreement had been reached for that course from amongst some or all of the bargaining representatives. That is not what occurred. I do not speculate on whether agreement amongst bargaining representatives, or what level of agreement, may have not rendered Utilities Management’s conduct unfair. Without deciding that point, a full bench of the Commission in Tahmoor posited that there may be circumstances where balloting absent agreement amongst bargaining representatives may not be unfair, such as where an impasse in bargaining has been reached. 53

[189] Exploration of those issues is unnecessary because, unlike Tahmoor and other previously decided matters involving unilateral balloting of employees, the overriding consideration in this matter is that the employer’s action was taken whilst an operative scope order was in place. Absent the existence of the scope order, an objective finding of a bargaining impasse may well be sufficient to not render resort to a unilateral ballot of employees unfair notwithstanding opposition from some or all bargaining representatives.

Conclusion

[190] For these reasons, I conclude that Utilities Management’s conduct in submitting to ballot a proposed agreement covering employees in the SAPN business only in terms different to the scope order, whilst not capricious, was unfair and a breach of good faith bargaining obligations in that such conduct undermined collective bargaining rights.

[191] I have not concluded that Utilities Management breached good faith bargaining obligations by continuing to bargain inside a single bargaining track for an enterprise agreement (or agreements) with a scope different from the scope order or by maintaining a preference for separate agreements.

Bargaining orders

[192] Having concluded that Utilities Management has breached a good faith bargaining obligation and having further concluded that the formal requirements in s 230 for the making of bargaining orders have been met, I am required by s 230(1)(c) to be satisfied “that it is reasonable in all of the circumstances to make the order”.

[193] For the following reasons I do not consider it reasonable to make the orders sought.

[194] Order one sought an interim order preventing the ballot of employees occurring. That matter was determined at the conclusion of proceedings.

[195] Order two seeks a determination that an alternate scope to that contained in the scope order has not been agreed by bargaining representatives in accordance with paragraph 789 of the explanatory memorandum. It is inappropriate for two reasons.

[196] Firstly, there is no utility in doing so. I make relevant findings of fact in this decision. Those findings are publicly available. They include a finding that not all bargaining representatives currently agree to alternatives to the scope set out in the scope order decision. Secondly, the order sought may confuse if not mislead bargaining representatives. An explanatory memorandum does not create legal rights or obligations. I have expressly not ruled on whether agreement is needed amongst bargaining representatives to conduct a ballot on different terms to an operative scope order.

[197] Order three seeks an order restraining Utilities Management from balloting employees on agreements with a scope inconsistent with the scope order. The breach of good faith bargaining I have found concerns the conduct of a ballot (and its effects) and not more. The conduct of that ballot has concluded. There is no utility in making an order to prevent the conduct of a ballot that has taken place. Nor is there utility in injuncting future ballots. There is no evidence that future ballots are commissioned or planned. In light of this decision, unilateral conduct of that type taken outside the framework of an operative scope order runs a risk of breaching good faith bargaining obligations. The particular circumstances applying to a future ballot, if any, would need to be considered before any orders could be made if any breach is found.

[198] Order four seeks an order restraining Utilities Management from bargaining for an agreement with a scope inconsistent with the scope order. Such an order would be inconsistent with this decision because I have not concluded that Utilities Management breached good faith bargaining obligations by continuing to bargain inside a single bargaining track for an enterprise agreement with a scope different from the scope order.

[199] That I have declined to make the orders sought does not however mean that this decision does not have utility.

[200] If the ballot that has been conducted is not successful, bargaining in the wake of the scope order continues. Clearly the Commission’s decision provides insight into the rights and obligations of bargaining representatives in the wake of a scope order. In this proceeding and in the earlier s 240 application (B2022/541) that clarity was sought.

[201] If the ballot is successful, this decision is available to the employer and to relevant employees and their representatives and is capable of use (albeit not binding) in approval proceedings, if any, arising from the ballot.

Recommendation

[202] Given the long history of contested and litigious bargaining for a replacement agreement, there is a continuing risk that disputed views amongst bargaining representatives over scope, important as those views are, distracts from if not impedes bargaining over future terms and conditions of employment.

[203] In the period since the scope order was made, Utilities Management and the SBU in particular have held firm to their positions though each have considered (but rejected) the position of the other.

[204] The risk is that as bargaining positions over scope remain entrenched, discussion of alternatives or compromises can be seen, wrongly, as weakness. There is also a risk of deepened and damaging impacts to industrial relations in an important sector of the South Australian economy.

[205] To this end, I recommend that all bargaining representatives (the employer, the SBU and independent bargaining representatives) include for specific discussion at a forthcoming bargaining meeting a compromise option wherein a single replacement agreement is made in the terms of the scope order of 25 March 2022 but where terms and conditions of employment, to the extent appropriate, vary between the SAPN and the Enerven businesses taking into account the circumstances of those businesses and persons working in those businesses. This could be achieved by separate schedules or other structures inside a proposed replacement agreement.

[206] A benefit of this approach would be that bargaining could return to a primary focus on appropriate future terms and conditions of employment in a replacement agreement applicable to persons working in the SAPN and Enerven businesses or working across both businesses.

[207] I do not go so far as to recommend that a replacement agreement be made on such terms as the merit of this proposal is a matter for the bargaining representatives. However, I recommend that the proposal be bargained for in good faith, amongst other options or preferences.

[208] I recommend that bargaining on this proposal take place in an environment where all bargaining representatives have reserved but not abandoned their preferred position whilst also recognising that the preferred position of others is reserved.

[209] As a replacement agreement in such terms, if any, would be voted on by all employees of Utilities Management covered by any such proposal, balloting would not likely encounter the good faith bargaining obstacles found by this decision to exist in the wake of the scope order.

[210] I will not issue this recommendation as an order or direction given that the future course of bargaining in the wake of the ballot conducted between 21 and 25 July 2022 may be affected by the results of that ballot. If the ballot is unsuccessful then the recommendation I make is that this proposal should be the subject of discussion without delay.

Disposition

[211] I grant applications B2022/661 and B2022/662 in the terms of this decision but not the relief sought. I make the aforementioned recommendation. I publish my reasons.

DEPUTY PRESIDENT

Appearances:

Ms J Rogers with Mr J Harrison and Mr B Jewell, of and on behalf of the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia

Mr S Cowen with Mr D Spencer, of and on behalf of the Australian Municipal, Administrative, Clerical and Services Union

Mr D Mugavin, of and on behalf of The Association of Professional Engineers, Scientists and Managers, Australia

Mr C Swan, Mr D Oliver, Mr G Hristopoulos, Mr J Semmler, Mr M Flynn, Mr P Williams and Mr R Cameron as Individual Bargaining Representatives

Mr M Minucci of counsel with Mr J Love, with permission, on behalf of Utilities Management Pty Ltd T/A SA Power Networks

Hearing details:

2022
Adelaide (by video)
20 July

Printed by authority of the Commonwealth Government Printer

<PR744223>

 1   The applications as filed were in the same form. On 20 July 2022 the CEPU was granted permission to amend the relief sought (F32 item 2.5). The ASU did not formally amend its application but supported the amended relief sought by the CEPU

 2   B2022/541

 3   Transcript directions hearing 11.7.22

 4   [2022] FWCFB 42 (by majority)

 5   [2022] FWC 1673

 6   For example [2021] FWC 1080 1 March 2021; [2021] FWC 1130 3 March 2021; [2021] FWC 6471 26 November 2021

 7   CEPU3

 8   CEPU2

 9   CEPU4

 10   CEPU1

 11   ASU1

 12   UM1

 13   CEPU Submissions (revised) 18 July 2022; ASU Submissions 18 July 2022

 14   Utilities Management Submissions 19 July 2022

 15   [2022] FWC 1918

 16   [2021] FWC 6608

 17   [2022] FWCFB 42

 18   At [16]

 19   At [37] to [40]

 20   [2022] FWC 1673

 21   JG14

 22   JG30

 23   JG32

 24   JG30

 25   (2012) 206 FCR 576

 26   At [105]

 27   At [99]

 28   UM1

 29   Audio 20 July 2022 12.22pm

 30   Audio 20 July 2022 12.38pm

 31   JG31

 32   JG5, JG18, JG24, JG26, JG27, JG29 and JG30

 33   Association of Professional Engineers, Scientists and Managers, Australia v Mt Arthur Coal Pty Ltd [2021] FWC 36 at [139]

 34   UM1 paragraphs 34, 36 and 48; CEPU3 paragraphs 7 and 22

 35   Endeavour Coal at [35] and [43]; see also Association of Professional Engineers, Scientists and Managers, Australia, The (215V) v Peabody Energy Australia Coal Pty Ltd [2015] FWCFB 1451 at [146]

 36   Outline of Submissions of the Respondent paragraph 30

 37   At [34]

 38   At [99] point 4: “it is now treating the bargaining process arising from the first NERR as one for a SAPN-only agreement, notwithstanding that no NERR for such an agreement has ever been issued”

 39   [2012] FCA 764 at [34]

 40   For example, JG27

 41   For example, JG26

 42   Endeavour Coal at [35] and [43]

 43   At [108]

 44   At [107]

 45   CEPU3 paragraph 238 and BJ5

 46   CEPU1 paragraph 12

 47   Re Alphington Aged Care [2009] FWA 301

 48   UM1 paragraph 112 and JG30

 49   [2010] FWAFB 3510 at [30]. See also CFMEU v Workpac [2017] FWC 1995 at [47]

 50   Association of Professional Engineers, Scientists and Managers, Australia v Mt Arthur Coal Pty Ltd [2021] FWC 36 at [105]

 51   Ibid

 52   JG28

 53   [2010] FWAFB 3510 at [30]