[2010] FWAFB 3510

Download Word Document



Fair Work Act 2009
s.604—Appeal of decisions

Construction, Forestry, Mining and Energy Union-Mining and Energy Division
Tahmoor Coal Pty Ltd



Appeal – good faith bargaining requirements – capricious or unfair conduct that undermines freedom of association or collective bargaining – employee meetings – employer proposal put to a ballot without the agreement of the employee bargaining representative – Fair Work Act 2009 ss.228, 229 and 230.

[1] This is an appeal, for which permission is required, pursuant to s.604 of the Fair Work Act 2009 (the Fair Work Act) against a decision made by Commissioner Roberts on 12 February 2010. 1 In that decision the Commissioner refused an application by the Construction, Forestry, Mining and Energy Union (CFMEU) for a bargaining order directed at Tahmoor Coal Pty Ltd (Tahmoor). The CFMEU has appealed. The appeal raises for consideration some matters concerning important new statutory provisions which have not been considered at Full Bench level before. We are satisfied that it is in the public interest to grant permission to appeal and we do so.

The statutory context

[2] Section 229 of the Fair Work Act deals with the circumstances in which a bargaining representative may apply for a bargaining order. It is not necessary to set the section out. Section 230 confers a discretion to make a bargaining order in specified circumstances. In particular Fair Work Australia must be satisfied of a number of matters. The section reads:

[3] It can be seen that s.230(1) establishes three conditions for the making of an order. The first is that an application has been made. The second is that the requirements of the section have been met. The third is that the tribunal is satisfied that it is reasonable in all the circumstances to make the order. Each of these conditions must be present. In this appeal the CFMEU relies principally upon the way in which the Commissioner dealt with the second requirement as further set out in s.230(3)(a)(i). That section provides that before making a bargaining order Fair Work Australia must be satisfied that at least one of the bargaining representatives has not met, or is not meeting, the good faith bargaining requirements.

[4] The good faith bargaining requirements are specified in s.228. That section reads:

[5] The CFMEU submitted that Tahmoor had failed to observe the good faith bargaining requirements and that an order should be made. The Commissioner rejected the CFMEU’s application. His reasons for doing so are two-fold. Firstly, he was not satisfied that it was reasonable in all the circumstances to make the order. This amounted to a finding that the condition in s.230(1)(c) had not been met 2. Second, he was not satisfied that Tahmoor had not met the good faith bargaining requirements in s.228, as required by s.230(3)(a)(i). This amounted to a finding that the condition in s.230(1)(b) had not been met3.

The order sought

[6] The order sought by the CFMEU before the Commissioner contained 11 paragraphs. The order dealt with such things as punctual attendance at meetings, consistency in the persons who are management representatives, regulation of the number of claims, a procedure to keep track of the negotiating process and a number of other matters. For the purpose of the appeal, however, only four paragraphs of the order are pressed. The paragraphs are as follows:

[7] While not making any concessions in relation to the other paragraphs in s.228(1), the CFMEU relies only on the alleged breach by Tahmoor of the requirement in s.228(1)(e). It contends that the Commissioner fell into error in not concluding that Tahmoor was in breach of its obligations under s.228(1)(e). The terms of that provision require not only that conduct undermines freedom of association or collective bargaining but also that the conduct be capricious or unfair. Of course whether conduct is capricious or unfair can only be ascertained by an examination of all of the circumstances in a particular case. It can be seen from the terms of paragraphs 7 to 11 that the order would limit Tahmoor’s ability to communicate directly with its employees in relation to the matters which are the subject of bargaining and would also stop Tahmoor from putting a proposed enterprise agreement to the employees for a vote for 60 days unless the bargaining representatives have agreed to the terms of the proposed agreement or Fair Work Australia has determined that the negotiations have reached an impasse.

[8] Before dealing with the CFMEU’s submissions in more detail, we point out that the appeal as finally advanced deals with only one of the two bases for the Commissioner’s decision. The CFMEU contends that the Commissioner should have found that Tahmoor had not met the good faith bargaining requirements. That contention is advanced in relation to the condition in s.230(1)(b). No direct challenge is made to the Commissioner’s conclusion pursuant to s.230(1)(c) that it would not be reasonable to make the order. As we have indicated, all three conditions in s.230(1) must be fulfilled for an order to be made. The conclusion under s.230(1)(c) was on its own a sufficient basis for declining to make the order sought. We shall return to this point.

The CFMEU’s submissions

[9] The CFMEU’s submissions can be dealt with in two parts. The first part concerns the evidence relevant to the question of whether Tahmoor had refrained from, in the words of s.228(1)(e), “capricious or unfair conduct that undermines freedom of association or collective bargaining.” The second part concerns the proper application of s.228(1)(e) and includes some analysis of the Commissioner’s reasoning with a view to demonstrating that it is erroneous.

[10] Tahmoor’s production and engineering employees work under two enterprise agreements, the Tahmoor Washery Workplace Agreement 2006, which reached its nominal expiry date on 1 April 2009 and the Tahmoor Colliery Enterprise Agreement 2006, which reached its nominal expiry date on 3 April 2009. 4 The CFMEU is the bargaining agent for the employees and proposes there be a new agreement to cover all relevant employees. It is not contested that there were approximately 50 bargaining meetings involving the CFMEU representatives and Tahmoor between 16 October 2008 and 19 January 2010. There was a hiatus in bargaining in the middle of 2009 associated with Tahmoor’s response to the extraordinary market conditions prevailing at that time. During this period Tahmoor reduced its workforce by 35% through a restructuring exercise which resulted in 100 employees and 70 contractors being made redundant. It is also common ground that the employees took extensive protected individual action in the period from 23 October 2009 to 18 January 2010.

[11] At all meetings prior to 16 November 2009 Tahmoor was represented by a management team led by a Mr Baker. Mr Baker gave evidence that the parties sought to reach agreement in principle on all issues but that final agreement was subject to agreement on detailed drafting. In seeking to reach agreement in principle remuneration would be dealt with last in light of all the other matters which had been agreed. The new leader of the Tahmoor negotiating team, Mr Nicholls, introduced a new approach at the meeting of 16 November. That approach involved a proposal for agreement on all matters, including rates of pay. He presented two versions of such a proposed agreement at a meeting on 27 November 2009. These two versions were known as option 1 and option 2. Option 1 contained fewer alterations in conditions than option 2 but lower wage rates. Mr Nicholls explained the difference on the basis that the higher rates in option 2 were achievable because option 2 also provided greater flexibility for management. Two of the CFMEU representatives who attended the meeting on 27 November testified that both options “undid the common ground reached over the entire course of the negotiations.”

[12] Following a 24 hour protected action stoppage on 30 November 2009 there was another negotiating meeting on 9 December 2009 at which the CFMEU negotiators presented a response to Tahmoor’s proposals. On the following day the CFMEU presented Tahmoor’s negotiators with a document that included all of the matters which it believed had been agreed to that point together with a list of the CFMEU’s remaining claims. The next meeting was scheduled for 15 December 2009.

[13] Between 14 and 23 December 2009 Mr Nicholls conducted some 14 meetings with groups of employees. At the meetings he provided employees with copies of option 1 and option 2 and explained Tahmoor’s position in the negotiations. The meetings ranged in number up to 30 people. The CFMEU alleges that the briefings given at the meetings were more comprehensive than the briefing given to the CFMEU at the negotiating meeting on 27 November. Tahmoor also sent a package of material to each of the employee’s homes providing further information about its position in the negotiations and the reasons for it. The CFMEU negotiators were not given advance notice of these actions, nor was the CFMEU invited to the meetings. Tahmoor submitted, however, that of the 5 to 7 lodge officials who regularly participated in negotiating meetings, 5 attended the briefings conducted by Mr Nicholls along with the other employees in their work group.

[14] The CFMEU submitted, by reference to the material presented by Tahmoor management at the meetings and in the package sent out to employees, that Tahmoor was arguing in support of the position it was taking in collective bargaining. It was also submitted that there was a “level of intimidation” in that the possibility of a lock out of employees and selective re-engagement had been raised. A number of the meetings went for some hours and one meeting lasted more than four hours. During the period of the employee meetings there were also negotiating meetings on 15 and 16 December. Little progress was made at those meetings. At a further meeting on 22 December the union negotiators provided the Tahmoor representatives with a notice under s.229(4) of the Fair Work Act that the CFMEU did not believe Tahmoor was meeting the good faith bargaining requirements. The giving of such a notice is a necessary preliminary step before an application may be made for a bargaining order under s.229.

[15] There were further bargaining meetings on 12 and 13 January 2010. At the end of the meeting on 13 January the Tahmoor representatives tabled another version of their proposed agreement. This became known as option 3. A meeting scheduled for 18 January was cancelled at Tahmoor’s instigation because protected industrial action was taking place. There was a meeting on 19 January, however, at which the CFMEU representatives requested more time to consider the terms of option 3. The Tahmoor representatives indicated that in their view negotiations had been exhausted, there was no point in scheduling further meetings and that Tahmoor intended to put option 3 to a vote of employees. It was conceded by Mr Nicholls that to that point there had been no negotiations with the CFMEU on wages or bonus.

[16] We point out for completeness that the proposed agreement was provided to the employees and the CFMEU on 9 February 2010 and an approval ballot was conducted on 18 and 19 February 2010.

[17] The CFMEU submitted, based on this evidence, that there had not been sufficient discussion on Tahmoor’s latest proposal and that negotiations had not reached an impasse when Tahmoor announced on 18 January that it would put the proposal to the employees in a ballot. It contended that from late November 2009 Tahmoor’s approach was “to produce its own positions reflected first in options 1 and 2 in mid-December and then option 3 on 13 January 2010 and invite the unions representatives to make concessions on what it saw as the key issues without negotiating at all on other items such as wages and bonus arrangements, which were key items for the employees.”

[18] The CFMEU also submitted that the Commissioner erred in a number of respects when considering whether the requirements of s.228(1)(e) had been met by Tahmoor. In particular it was contended that the Commissioner did not directly consider the terms of s.228(1)(e), took an approach that focused solely on the interests of Tahmoor, took into account irrelevant matters and failed to deal with the substance of the arguments based on the respondent’s direct communication with employees and seeking to put its proposed agreement to employees in a ballot.

[19] The CFMEU’s submission as to the correct application of s.228(1)(e) in the circumstances of this case are summarised in the following paragraphs from its written submissions before the Full Bench:

Additional matters

[20] Before turning to our conclusions we mention some other matters which appear to us to be relevant. It will be recalled that Tahmoor provided the CFMEU representatives with options 1 and 2 at the bargaining meeting on 27 November 2009. A meeting was scheduled for 3 December 2009 for the union representatives to respond to those proposals. Tahmoor gave the representatives a paid day off on 1 December to assist them in preparing a response. The meeting scheduled for 3 December was cancelled at the representatives’ instigation apparently to give further time to consider their response. The next bargaining meeting was on 9 December and Tahmoor provided the union representatives with access to administrative assistance and gave them the rest of the day off duty. The union responded to options 1 and 2 on the following day, 10 December. They made it clear that the employees rejected options 1 and 2. Mr Nicholls testified that the response “reflected the union representatives’ previous position and did not contain significant movement on the key issues.”

[21] Mr Nicholls also gave evidence that at the negotiating meeting on 12 January 2010 he expressed the view that little if any progress had been made on the key issues at the ten meetings which had taken place since he had been leading the negotiations and that all present had agreed with that assessment. Mr Nicholls also indicated to that meeting that if the four days of negotiations then scheduled did not produce agreement Tahmoor intended to put its position to a vote of the employees.

[22] After the document referred to as option 3 was provided to the union representatives at the bargaining meeting on 13 January, Tahmoor offered the bargaining representatives paid leave on 15 January to permit them to consider the document and contact the CFMEU’s legal representative. There was a scheduled quarterly CFMEU communications meeting on Saturday 16 January for which union members who attended were to be paid 4.5 hours pay by Tahmoor. Tahmoor offered to pay for a further 2 hours to facilitate discussion on its proposal. The union representative accepted the offer.


[23] We point out by way of introduction to our conclusions that while the Commissioner made a finding that Tahmoor had not failed to meet the good faith bargaining requirements, that was a general finding. He did not deal with the terms of s.228(1) at all and made no findings in relation to the allegations based on the terms of s.228(1)(e). For this reason, and also because Tahmoor disputed the main contentions advanced by the CFMEU on appeal, it is appropriate to deal with the submissions based on failure to meet the good faith bargaining requirements.

[24] Whether a party observes or fails to observe the good faith bargaining requirements set out in s.288(1) is to be determined in light of all of the relevant circumstances. While at one level this is stating the obvious, it is appropriate in view of the submissions in the appeal to indicate that the question will rarely be decided by reference to one action or series of actions. Equally it would be undesirable to read into the legislation concepts which do not already appear in it for the purpose of explaining its operation. That approach is likely to lead to error in the construction and application of the provisions.

[25] There are two principle matters upon which the CFMEU relies for the conclusion that Tahmoor has not met the requirement in s.228(1)(e) to refrain from capricious or unfair conduct that undermines freedom of association or collective bargaining. The first is the employee meetings Tahmoor conducted between 14 and 23 December 2009, including the mailing of material to the employees’ homes. The second is Tahmoor’s termination of bargaining meetings in January 2010 in order to put its proposed agreement to employees in a ballot. We deal with the employee meetings first.

[26] The Commissioner dealt with the significance of the employee meetings in the following paragraph:

[27] In concluding that Tahmoor’s actions were not “improper” the Commissioner referred to the fact that there had been 40 to 50 negotiating meetings with the CFMEU representatives. Further context is provided by some findings the Commissioner made earlier in his decision which do not appear to have been challenged in the appeal. These findings are in the following passage:

[28] The Commissioner found that the negotiations stalled in a serious way around the end of November 2009. That finding has not been shown to be affected by error. Although there had been a break between April and June 2009, negotiations had been going on since October 2008. It is also apparent that by 10 December the two versions of the proposed agreement, options 1 and 2, had been categorically rejected by the union. In addition, the union draft agreement had been rejected by Tahmoor. There is no basis for a conclusion that one side or the other is at fault. The Commissioner was entitled to conclude that after a very long period of negotiation the parties were simply unable to agree. In those circumstances the conclusion was open to the Commissioner that it was not capricious or unfair conduct for Tahmoor to seek to explain its negotiating position to the employees directly.

[29] The CFMEU also relied on the fact that the employee meetings were designed to encourage a view different from the one put forward by the bargaining agent. Tahmoor may have been trying to influence employee views, but it does not necessarily follow that its conduct undermined freedom of association or collective bargaining or that it acted capriciously or unfairly. The proposals put to the employees were the same as those put to the employee representatives at the bargaining meetings. The meetings themselves do not appear to have been oppressive for employees and the slides and other material used in the presentation were not deceptive or otherwise objectionable. Indeed, there is no evidence that any of the material provided to employees was misleading or that employees were threatened in any relevant way. Nor is there any reason to believe that the employee representatives did not themselves have adequate access to the workforce in relation to the bargaining process. It is also relevant that the bargaining meetings continued during and after the employee meetings and that Tahmoor took various steps, referred to above, to facilitate consideration of its proposals by the employee representatives. In the circumstances of this case holding the employee meetings and sending material to the employees’ homes was not capricious or unfair conduct that undermined freedom of association or collective bargaining.

[30] We deal now with the ballot of employees. Although there may be circumstances in which the conduct of a ballot without the agreement of other bargaining agents constitutes a breach of the good faith bargaining requirements, it will not always be so. There is no absolute requirement for the agreement of the bargaining agents prior to the conduct of a ballot. In this case the Commissioner and the parties all referred to the notion of “impasse” as the touchstone by which to judge whether an employer who puts a proposed agreement to a ballot without the agreement of the other bargaining agent thereby fails to observe the good faith bargaining requirements. There was some debate about whether “impasse” had been reached at the relevant time. The Commissioner found that “negotiations for an enterprise agreement have reached a stalemate, or using Tahmoor’s words: “an impasse”. 6 Another way of approaching the matter, as the CFMEU intimated in its submissions, might be to ask whether there had been a reasonable opportunity to discuss Tahmoor’s latest proposal. Yet another formulation might be to ask whether negotiations had reached such a stage that the employer was entitled to put its proposal to a ballot in order to see if progress could be made. However it is put, we are satisfied that in arranging to put its proposed agreement to the employees in a ballot, Tahmoor was not acting capriciously or unfairly in the circumstances prevailing at the time.

[31] A number of other matters were advanced by the CFMEU as indicating that Tahmoor acted capriciously or unfairly. These included Tahmoor sending material to the employees’ homes, the fact that the CFMEU was not given notice of the employee meetings and allegations that Mr Nicholls and other management employees had engaged in aggressive and intimidating behaviour. As already indicated, the material sent to the employees does not appear to have been misleading or inconsistent with anything said in the bargaining meetings. While it might have been better if the CFMEU had been given formal notice of the employee meetings, it is hard to imagine that the CFMEU did not become aware of them almost as soon as the employees did. We are also inclined to accept Tahmoor’s assertion that most of the members of the CFMEU bargaining team attended one of the employee meetings. The third of these matters also requires comment. The Commissioner accepted that Mr Nicholls adopted a very aggressive approach in the employee meetings and that he “probably crossed the line of what is reasonable in such circumstances”, but he commented that aggressive tactics appear to be the norm in the coal industry.  7 We take this to be finding that while Mr Nicholls’ behaviour might have been unreasonable in most industries, it was not inconsistent with normal behaviour in coal industry negotiations. Aggression is to be deprecated. But given some of the evidence of employee responses to Tahmoor’s proposals, taken with the Commissioner’s familiarity with the industry, the finding was open to him. We do not regard the fact that Mr Nicholls had referred to the possibility of employees being locked-out as significant. It appears that this statement was made in the context of a response to the taking of protected action by the employees.

[32] These matters, even in combination with the employee meetings and the ballot, do not provide a sound basis for concluding that Tahmoor breached the good faith bargaining requirement in s.228(1)(e).

[33] The CFMEU’s appeal, as finally argued, was based squarely on the Commissioner’s decision as it relates to the requirements of s.228(1)(e). For the reasons we have given the decision was not affected by any material error in that respect.

[34] We reiterate the point drawn to attention earlier in these reasons, that the CFMEU’s appeal does not directly challenge the separate and independent ground for the Commissioner’s decision, namely, that he was not satisfied that it would be reasonable to make the order under s.230(1)(c). If the Commissioner’s decision in relation to the good faith bargaining requirements was affected by error, his finding on the question of reasonableness might have been called into question. In light of our conclusions in relation to s.228(1)(e) it is unnecessary to explore that matter further. In the circumstances, however, it is appropriate that we indicate that in our view the Commissioner’s decision that he was not satisfied that it would be reasonable to make the order was not affected by error.

[35] We dismiss the appeal and confirm the decision.



S. Crawshaw, SC with T. Slevin of counsel for the Construction, Forestry, Mining and Energy Union (Mining and Energy Division).

J.E. Murdoch SC for Tahmoor Coal Pty Ltd.

Hearing details:

March 25.

 1   [2010] FWA 942.

 2   Ibid at para 55.

 3   Ibid at paras 43 and 44.

 4   AC307072 and AG848124.

 5   Ibid at para 17.

 6   Ibid at para 54.

 7   Ibid at para 50.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR996730>