19 September, 2016
A late Notice of Employee Representational Rights will prevent an enterprise agreement being approved
What you need to know
- The Fair Work Act 2009 (Cth) requires an employer to issue its employees with a Notice of Representational Rights within 14 days of the start of bargaining.
- A two member majority of the Fair Work Commission found in Uniline Australia Limited [2016] FWCFB 4969 that a NERR which is issued late is invalid and of no effect. This means that even if a majority of employees vote in favour of the agreement, the FWC cannot approve the agreement because no valid NERR has been issued in accordance with the FW Act.
- The effect of the decision is that if a NERR has been issued late, or is defective in its content, bargaining needs to be re-commenced, and a valid NERR issued within 14 days.
- The FWC adopts a strict approach to deficiencies in NERRs. The Uniline decision makes clear that it is critical for employers to issue a NERR correctly the first time, on time.
What you need to do
- If you are currently bargaining for an enterprise agreement, check that you have issued a valid NERR to the employees to be covered by the proposed agreement within 14 days of the start of bargaining. If not, you will need to take steps to re-commence bargaining and issue a valid NERR.
- If you are not currently bargaining but will be in the future, make sure a valid NERR is issued within 14 days of bargaining being commenced.
Implications and lessons for employers
Does the NERR have to be issued within 14 days of bargaining?
Yes. Under section 173(3) of the FW Act an employer must issue to employees to be covered by the proposed agreement, a NERR within 14 days of the "notification time". The "notification time" is when either the employer agrees to bargain, or initiates bargaining, or a majority support determination, scope order or low-paid authorisation comes into effect. The Uniline decision means that a NERR issued after the 14 day period will be invalid and that the FWC is unable to approve a proposed enterprise agreement based on an invalid NERR.
Are there specific requirements for the form and content of a NERR?
Yes, the form and content must be in the specified form set out in the Fair Work Regulations (Schedule 2.1). The form may not be altered, except by inserting details in the form where expressly provided for. The Full Bench decision in Peabody Moorvale Pty Ltd v CFMEU [2014] FWCFB 2042 confirmed that any defect in the NERR means that it is invalid. Errors in preparing the NERR are commonly made, for example, by inserting additional words into the form (other than where expressly provided for), deleting words from the form (other than words the form expressly provides for as options), attaching additional documents behind the form, or printing the form on company letterhead. Such errors will make the NERR invalid.
What if I have not issued a valid NERR within 14 days after bargaining started?
It was commonly considered that if an employer made an error in the original NERR, a new (compliant) NERR could be issued and the enterprise agreement could still be approved. The Uniline decision means that taking this course is not available, because any new NERR issued outside the 14 day notification time will be invalid. The majority in Uniline has held that for an agreement to have been "genuinely agreed" under 188(a)(ii), a valid NERR must have been issued as required by section 181(2), being a notice issued within 14 days of the "notification time". The majority of the Full Bench considered it had no discretion to waive this requirement.
What steps can an employer take to address a late or defective NERR?
The only way to deal with a late or defective NERR is for the employer to "recommence" the bargaining process by re-agreeing to bargain or initiating bargaining afresh. As stated by Vice President Watson in his dissenting decision in Uniline, this requires the bargaining parties to enter the "theatre of the absurd". There is no other apparent way, however, to deal with the issue.
What could be the effect of "recommencing" bargaining?
Recommencing bargaining would affect the appointment of bargaining representatives, which would be reset and therefore need to be re-instituted. It may also provide an opportunity for bargaining representatives to re- agitate issues already agreed during the initial bargaining or to make new claims. The Uniline decision also leaves open a number of ways in which bargaining and the agreement approval process could be frustrated by bargaining representatives. The recommencing of bargaining could also affect protected action.
Further developments in this area should be closely monitored. The Productivity Commission Report into the FW Act recommended that the FW Act be amended to allow the FWC to overlook such errors or defects relating to NERR (recommendation 20.1). No reform on this point has been proposed by the current Government to date.
MAKING THE CASE: Insights from Geoff Giudice
This case extends the strict approach to defects in a NERR, established in Peabody Moorvale Pty Ltd, to a NERR which is without defect but served later than required. In the result, any defect in the NERR or in the time of its service means the parties must recommence bargaining, even if they have reached agreement – an artificial and potentially highly disruptive requirement. This unsatisfactory situation is the result of an amendment to the Fair Work Act 2009 (Cth) in January 2013. That amendment was intended to eliminate confusion about whether employers could modify the content or form of the NERR. However, the removal of the FWC's discretion in relation to technical or trivial departures from what is prescribed has had unintended, but perhaps predictable, consequences.
For further information, please contact:
Vince Rogers, Partner, Ashurst
vince.rogers@ashurst.com
