18 September, 2016
MMA Offshore Logistics Pty Ltd T/A MMA Offshore Logistics [2016] FWC 4868
What you need to know
- There is no guaranteed right for a union to be the bargaining representative in all bargaining involving its members or potential members.
- The fact that a bargaining representative is more senior than most of the employees that person represents does not mean that the bargaining representative is aligned with the employer and cannot be an employee representative.
- It is a legitimate business interest to pursue bargaining avenues that are unable to be achieved in bargaining with a union. In this case, the employer was able to make an agreement with a small number of employees in a separate entity because there were legitimate business reasons for pursuing this approach and the group was fairly chosen.
- If an employer meets the legislative requirements for an enterprise agreement, it is the duty of the Fair Work Commission to approve it.
What you need to do
- The scheme of the Fair Work Act 2009 (Cth) is directed towards an employer being the one who chooses the employees to be covered by an enterprise agreement. Review your strategy against this. Consider what alternative bargaining options may be available by engaging different corporate entities, and with different employees.
- Be proactive in engaging with employees during enterprise bargaining.
Keeping the MUA at bay
In MMA Offshore Logistics Pty Ltd T/A MMA Offshore Logistics [2016] FWC 4868, MMA Offshore Logistics Pty Ltd made an application to the Fair Work Commission to approve the MMAOL Pty Ltd Enterprise Agreement 2016. MMAOL made the Agreement with the five employees on the platform supply vessel, The Plover. Both MMAOL and MMA Vessel Operations Pty Ltd were separate subsidiaries of MMA Ltd. MMAVO is a full service logistics contractor. MMAOL is a labour hire company that recently extended its business to include marine personnel.
The Maritime Union of Australia tried to prevent the Agreement because it was a "whole of fleet agreement". The MUA's evidence was that "no [other] whole of fleet agreements have been approved by employees". The previous practice had instead been to separately bargain with officers, engineers and integrated ratings. The MUA claimed that MMAOL was using the Agreement to then transfer or re-employ MMAVO employees across to MMAOL at lesser conditions.
Fairly chosen
The Commissioner considered that the starting point for whether a group of employees is fairly chosen depends upon the scope of the agreement. Ultimately, it is the employer who employs and chooses the employees to be covered by a proposed agreement.
The MUA sought to argue that the Commission could not be satisfied that the group of employees covered by the Agreement was fairly chosen. The MUA claimed 'without equivocation' that it had evidence to support its contention. Despite this, it failed to provide any material in support and as such, there was no evidence that MMAOL had exploited or manipulated the employees that voted for the Agreement, so as to avoid meeting the 'Better Off Overall Test'.
The MUA claimed that there were "no legitimate business reasons" for making the Agreement. Yet, Commissioner Cloghan noted that MMAVO had been bargaining with the MUA for nearly three and a half years, and was unable to reach agreement. He said that 'it is a legitimate business rationale to exercise an option which is unable to be achieved in bargaining with the unions'.
Commissioner Cloghan also said that, if an employer meets the legislative requirements for an enterprise agreement, it is the duty of the FWC to approve it.
The Commissioner would not restrict MMAOL's ability to make the Agreement simply because the MUA alleged that the work should be carried out by MMAVO.
This decision follows on from CFMEU v John Holland Pty Ltd [2015] FCAFC 16, which clarified when a group of employees is fairly chosen (our Employment Alert for that decision is available here). In particular, in John Holland the Full Federal Court found that, in approving an enterprise agreement, the focus of the inquiry is the nature of the work rather than the number of employees that may be covered. The fact that employees engaged after the commencement of the enterprise agreement were not involved in collective bargaining is also not relevant to the making of the agreement.
Was the MUA a bargaining representative?
There is no guaranteed right for a union to be the bargaining representative in all bargaining involving its members. According to section 176 of the FW Act, if an employee is a member of a union, and does not either:
- appoint another person as their bargaining representative; or
- revoke the status of the union as their bargaining representative;
- then the union will be their 'default bargaining representative'.
Although employees covered by the Agreement were eligible to be MUA members, these employees had appointed one of their own to be their bargaining representative. Therefore the MUA was not a bargaining representative at the relevant time.
Standing before the FWC
A union does not have a right to be heard in an application for approval of an agreement unless it is a bargaining representative for the agreement. Commissioner Cloghan indicated that if a union is not a bargaining representative the Commission may still allow the union to be heard:
- if it has "a right, interest or legitimate expectation that would be adversely affected by a decision", or
- under section 590, which allows the FWC to inform itself of any matter it considers appropriate.
In this case the Commissioner had found that the MUA was not a bargaining representative. He also decided that it did not have a relevant "right, interest or legitimate expectation" but he nevertheless decided to hear the union's submissions exercising the FWC's power under section 590. Having given the MUA the opportunity to participate in the proceeding, the Commissioner determined he could proceed to consider approval of the agreement without further participation by the MUA.
Choice of bargaining representative
Despite potentially covering MUA members, one of the reasons the MUA was not involved in the bargaining was that all five current employees had appointed a non-union bargaining representative. The Commissioner stated that this is not 'denying' collective bargaining, but instead exercising a choice under the FW Act. The likelihood of employees appointing a non-union bargaining representative might depend on the number of employees involved. For employers, this requires a proactive approach to engage with employees when proposing an enterprise agreement. Employees must actively appoint a bargaining representative.
Approval of the agreement
In approving the Agreement in a separate decision, the Commissioner held:
- there was no evidence that the agreement was not genuinely made because the bargaining representative was a Master and of senior rank on a vessel. This did not make the Master aligned with the employer and unable to be an employee representative;
- the group of employees was fairly chosen. The employer had legitimate business reasons for the choice of employees to be covered.
MAKING THE CASE: Insights from Geoff Giudice
The MUA's primary argument was that the group was not fairly chosen because:
- employees of a related corporation were covered by enterprise agreements which the MUA had been bargaining to renew for more than three years
- the MMAOL Agreement would cover employees covered by the two existing agreements should they be offered and accept agreement with MMAOL
- the MMAOL Agreement had been made with five employees; and
- the work being performed by the five employees should be covered by the existing agreements.
In rejecting this argument the Commissioner noted that the five employees had chosen a bargaining representative other than the MUA and MMAOL had bargained with that representative in accordance with the Act. In the circumstances, previous agreement coverage of the same or similar work by employees of a related company did not mean the group was not fairly chosen.
For further information, please contact:
Marie-Claire Foley, Partner, Ashurst
marie-claire.foley@ashurst.com
