An AUTHENTIC EXERCISE IN AGREEMENT-MAKING
Genuine Agreement
Genuine agreement refers to the requirement that the employees covered by an enterprise agreement have genuinely agreed to that agreement. But “genuine agreement” goes beyond mere consensus between employees and employers.
A “non-exhaustive” definition of genuine agreement is spread across the Fair Work Act, relevant case law and more recently, the Statement of Principles on Genuine Agreement.
The Statement of Principles includes 20 principles which the Fair Work Commission must take into account when determining an application for the approval of an enterprise agreement.
Employers must ensure that they can demonstrate genuine agreement when applying for the Fair Work Commission to approve an enterprise agreement - including that bargaining involved an authentic exercise in agreement-making.
Previous Meaning of Genuine Agreement
Prior to changes effective from 6 June 2023, genuine agreement could be established by meeting four requirements, which include:
1. taking all reasonable steps prior to the vote to provide the employees:
a) a copy of proposed agreement and relevant materials;
b) details of the time, place and method of the ballot; and
c) an explanation of the terms of the proposed agreement and their effect;
2. conducting the ballot no sooner than 21 days after the last notice of representational rights (NERR) is distributed;
3. the agreement was “made” by a simple majority of the employees casting a valid yes vote; and
4. the absence of any other reasonable grounds for believing that the agreement was not genuinely agreed.
Current Meaning of Genuine Agreement
The Secure Jobs, Better Pay amendments to the Fair Work Act introduced changes to the four requirements. Previously, the Commission was required to approve an agreement providing the four requirements of genuine agreement were met.
However, the Commission must now create and take into account the 20 principles contained in the Statement of Principles.
Further, the Fair Work Act now states that the Commission cannot be satisfied that an agreement is genuinely made (and must refuse to approve the agreement) unless three requirements are met, which include:
1. ensuring that the relevant employees have a “sufficient interest” in the terms of the agreement and are “sufficiently representative”, based on the cohort the agreement will cover;
2. complying with all requirements (other than minor technical or procedural errors which cause no disadvantage) including:
a) distributing the NERR;
b) requesting the employees to vote no sooner than 21 days after providing the NERR; and
c) explaining the terms of the agreement and their effect in an appropriate manner;
3. complying with any additional requirements prescribed in the Fair Work Regulations.
Given the Fair Work Act does not exhaustively define “genuine agreement”, it is still possible for the Commission to refuse to approve an agreement if it is not satisfied that there is genuine agreement on other grounds.
Building and Construction and the CFMEU
The administration of the CFMEU is a response to allegations impacting on genuine agreement in bargaining in the building and construction industry.
Among other things, the Commission announced additional measures which apply when considering applications for the approval of enterprise agreements in that industry.
These measures include providing interested parties with the opportunity to submit additional information for consideration during the application process and publishing a list of applications for approval on the CFMEU construction agreements in progress page of its website.
The Commission also published its report a concern page for those wishing to report an issue anonymously.
The allegations against the CFMEU include reports that employers have been “blackballed” because they do not have a CFMEU-endorsed enterprise agreement.
Further, the CFMEU commonly presents employers with a “pattern agreement” containing the same wages and conditions for two or more agreements involving more than one employer. This is known as pattern bargaining.
The Fair Work Act does not prohibit pattern bargaining. However, it does not protect industrial action taken in support of pattern bargaining and enables employers to obtain injunctions to prevent such action.
However, a “take it or leave it” approach is unlikely to amount to genuine agreement where employers or employees are deprived of the opportunity to bargain for conditions specific to their particular workplace.
Authentic Exercise in Agreement-Making
Principle 18 in the Statement of Principles states that:
An enterprise agreement will generally not have been genuinely agreed to by the employees covered by the agreement unless the agreement was the product of an authentic exercise in agreement-making between the employer(s) and employees in one or more enterprises, and the employees who voted for the agreement had an informed and genuine understanding of what was being approved.
The concept of an “authentic exercise in agreement-making” is a new expression which is yet to be extensively considered in decisions of the Commission.
How can we help?
Hennings Lawyers offers a wealth of multidisciplinary experience to ensure that you maximise the outcomes of bargaining and, among other things, satisfy the requirement that your bargaining is an authentic exercise in agreement making.
