A recent decision to issue an intractable bargaining declaration (IBD) against an employer demonstrates the requirement for employers to engage in meaningful and genuine bargaining, and to consider making compromises they can live with to avoid risk later on.

The decision was made following over 12-months of bargaining without reaching agreement.

The Fair Work (Secure Jobs, Better Pay) Amendment Act introduced the power for the Fair Work Commission (FWC) to make intractable bargaining declarations (IBD) under section 235 of the Fair Work Act.

The FWC’s power may be exercised where:

• the parties have been negotiating for a new enterprise agreement (EA) for at least nine-months, with no agreement;
• the applicant took part in s 240 proceedings to resolve the dispute before the FWC;
• there is no reasonable prospect of agreement being reached without the IBD; and
• it is reasonable in all circumstances to make the IBD, taking into account the views of all bargaining representatives.

If the FWC issues an IBD, it pressures the parties – including the employer – to reach agreement with the other side, within the negotiating period specified in the order. If the parties still don’t reach agreement, a Full Bench can proceed to issue an intractable bargaining workplace determination.

In TWU of Aust v Cleanaway Operations Pty Ltd T/A Cleanaway Operations Pty Ltd, the FWC determined on 7 March 2024 to issue an IBD on the Transport Workers’ Union of Australia’s (TWU’s) application.

Background to the application

The TWU applied to the FWC for an IBD in relation to employees of Cleanaway Operations Pty Ltd (Cleanaway) at its Unanderra depot. Cleanaway, a waste and recycling service, opposed the making of the IBD.

The TWU was a bargaining representative in relation to bargaining for an EA to replace the Unanderra EA. As a bargaining representative for the proposed EA, the TWU had standing to make an application for an IBD.

Length of bargaining period

The FWC was satisfied that a valid application had been made and the nominal expiry date of the EA was 1 July 2022, with bargaining commencing in November 2022. The nine-month minimum bargaining period ending in August 2023.

Other issues including whether no reasonable prospect of agreement being reached

The FWC then considered whether:

(a) the FWC had dealt with the dispute (s 235(2)(a);

(b) there was no reasonable prospect of agreement being reached if the declaration wasn’t made (s 235(2)(b)); and

(c) it was reasonable in all the circumstances to make the declaration, taking into account the views of bargaining representatives (s 235(2)(c)).

The sticking point between the parties was Cleanaway’s proposal to change ordinary hours, with ordinary hours to be worked from Monday to Sunday. Cleanaway said that it would permit weekend collections and allow it to attract new customers.

Protected action ballot order and protected industrial action

On 5 April 2023, the TWU applied for a protected action ballot (PAB) order. The FWC issued the order on 11 April. On 21 April, as a result of the PAB, a majority of the bargaining employees voted to take protected industrial action.

On 11 May, the TWU issued Cleanaway with a notice of intention to take protected industrial action on 17–18 May. This action was then taken by bargaining employees on the advised dates.

Cleanaway’s proposed EA

On 20–21 July 2023, Cleanaway asked bargaining employees to vote on a proposed EA. The proposed EA included a provision for ordinary hours to be worked Monday to Sunday. It was rejected by a majority.

Union seeks FWC to resolve bargaining dispute

The TWU filed an application for the FWC to deal with a bargaining dispute on 3 August. The disputed matters were ordinary hours, the spread of hours and a seven-day roster without overtime.

On 10 August, the FWC conducted a conference and Commissioner Riordan requested that the parties have two further bargaining meetings. These meetings were held on 17 and 24 August with no progress. On 28 September, Commissioner Riordan conducted a further conference where the parties exchanged position descriptions identifying their respective positions.

The TWU seeks an IBD

On 16 October, the TWU filed its application for an IBD. Two days later, Commissioner Riordan conducted a conference in relation to the application. Cleanaway agreed to review its position on outstanding matters and respond to the TWU by 30 October.

In Cleanaway’s response, it submitted that during the 18 October conference it had suggested a further bargaining meeting take place. It stated that the TWU refused in favour of proceeding with its IBD application. The FWC didn’t accept this evidence.

On 31 October, Cleanaway updated the bargaining employees, proposing a revised offer of maximum daily ordinary hours for employees working a 5:2 roster at 7.6 hours. The TWU advised Cleanaway that it didn’t consent to the clause on 1 November.

On 8 November, Cleanaway sought clarification from the TWU on the outstanding bargaining claims. The TWU discontinued its s 240 application on 13 November on the grounds that bargaining had become intractable.

Cleanaway requests employees to vote on revised EA

On 22 December, Cleanaway requested that employees vote on a proposed EA. The proposed EA grandfathered hours of work provisions, allowing new employees to work ordinary hours Monday to Sunday. The EA was rejected in the vote. Cleanaway informed the TWU on 28 December that due to the rejection, it withdrew from its position in its entirety and that all matters remained “on the table.”

Cleanaway seeks FWC to resolve bargaining dispute

On 24 January 2024, Cleanaway filed a s 240 application in relation to bargaining for an EA. It noted that one of the main disputed matters was ordinary hours of work. It also alleged the TWU had refused to provide reasons for rejecting the grandfathering arrangement – a claim refuted by the TWU.

On 15 February, Commissioner Ryan conducted a conference. Cleanaway offered a new proposal which was rejected by the TWU.

Cleanaway provides a new EA to the Union

On 21 February, Cleanaway provided the TWU with a new proposed EA. The essential elements of this package had already been rejected by the TWU at the FWC conference in February.

On 23 February, the TWU advised Cleanaway that the package was rejected, noting that the ordinary hours clause was unacceptable. Employees remained concerned about the potential to lose the opportunity to work weekend overtime if new employees could be rostered to work ordinary hours on weekends.

Commissioner Ryan conducted a further conference on the same day. During this, the TWU said that its members wouldn’t accept a Monday to Sunday ordinary hours of work clause. Cleanaway wanted to continue with the s 240 process however, the TWU said it had a hearing the following week where the Full Bench would decide if bargaining was intractable. Commissioner Ryan said that he would keep the s 240 file open and requested Cleanaway to provide a report back by 4 March.

Consideration of the IBD application by the Full Bench

The Full Bench was satisfied that the FWC had dealt with the dispute about the proposed EA under s 240. The Full Bench stated that having regard to all of the circumstances, it was satisfied that by 13 November 2023 the FWC had dealt with the dispute by holding three conferences.

It was also satisfied that the FWC had dealt with the dispute and the TWU had participated in relation to Cleanaway’s s 240 application made on 24 January 2024. Two conferences were held and the parties exchanged positions and information. The Full Bench noted that Commissioner Ryan had invited Cleanaway to request a further conference, suggesting that the FWC may have future dealings with the dispute under s 240, but that did not alter the position that the FWC had dealt with the dispute under s 240.

The TWU contended that there was no reasonable prospect of agreement being reached on the new EA if the FWC did not make an IBD.

Cleanaway submitted that consistent with the statutory objects of emphasising, enabling and facilitating enterprise-level collective bargaining, the state of satisfaction required by s 235(2)(b) should not be too lightly reached.

Cleanaway also submitted that the employee’s petitions weren’t managed in the same way as a secret ballot would be when a proposed EA is put for employee approval.

Further, it stated that in circumstances where it had recently indicated it would put a further revised EA containing a grandfathering provision for ordinary hours of work with enhanced weekend penalty rates and wage increases to a vote, the FWC could not be satisfied that there was no reasonable chance of an agreement being made.

However, the Full Bench was satisfied that there was no reasonable prospect of agreement being reached without the declaration for the following reasons:

• The parties had been bargaining since November 2022, with 15 bargaining meetings and five conferences before two FWC members. Nothing had been agreed upon;
• Two different EAs put to the bargaining members were voted down;
• Whilst Cleanaway may have reached agreements at other sites, and be led by this to believe that it may reach an agreement at the Unanderra site, the facts and circumstances of this case and the likelihood of agreement must be the focus;
• Whilst the employer’s feedback indicated there may be some support for changing the ordinary hours, all bargaining employees had voted against this in December 2023;
• A significant number of employees signed petitions in favour of retaining the ordinary hours provisions of the current EA. The Full Bench considered it appropriate to give some weight to the petitions;
• It is rationally improbable that the parties would change their positions on ordinary hours because the company wanted to move to a seven-day a week span of ordinary hours. Equally, the employees don’t want existing employees on one form of conditions and new employees on another.
• The Full Bench considered that it was rationally improbable that the most recent proposal foreshadowed by Cleanaway on 27 February would break the impasse.

The Full Bench also considered whether it was reasonable in all the circumstances to make the declaration (s 235(2)(c)). The TWU contended that it was reasonable for the FWC to do so. Cleanaway contended that the FWC shouldn’t because the TWU was inflexible during bargaining and engaged in unreasonable conduct, weighing against a conclusion that making the proposed declaration was reasonable.

The Full Bench was satisfied that it was reasonable in all the circumstances to make the declaration. It didn’t accept that the TWU had been uncooperative during bargaining. Both parties had engaged in a meaningful way in the FWC’s processes in relation to both s 240 applications.

Cleanaway’s contention that the TWU refused to provide reasons for rejecting the grandfathering proposal or that it had acted inappropriately in relation to the applications was rejected. TWU’s decision to discontinue its s 240 application as it perceived bargaining to have reached an impasse was a reasonable view to have taken.

The broader history of collective bargaining between the parties doesn’t add weight against a conclusion that it is reasonable in all circumstances to make the declaration sought by the TWU. If an IBD is not made, the TWU submitted and the Full Bench accepted, that the only real option available to the employees would be to take further protected industrial action. The FWC also considered it relevant that given the bargaining employees hadn’t received a pay rise since July 2021, during a period of relatively high inflation. It concluded that it is reasonable in all circumstances, including the current impasse, to make the declaration.

Considering the residual discretion under s 235, the Full Bench couldn’t identify any matter which would weigh against it exercising its residual discretion to make an IBD.

The Full Bench was satisfied that a 21-day post-declaration negotiating period should be ordered.

For more information, please contact Coleman Greig’s Employment Law team