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An enterprise agreement was killed by the difference between ‘is’ and ‘was’

August 13, 2017

By Alexander Millman and Angela Szczepanski, NRA Legal 

National Union of Workers v Sigma Company Limited t/a Sigma Healthcare [2017] FWCFB 3892

Last week, retail pharmacy group Sigma Healthcare took an industrial relations blow when the approval of its Sigma (Berrinba) Enterprise Agreement 2017 on 30 May 2017 was overturned on appeal.

The National Union of Workers (NUW), who represented a single employee, Mr Lawrence, during the first part of the enterprise bargaining process, successfully argued that they should have been served with the application for approval, and Sigma’s failure to do so denied them the right to be heard.

Background

Mr Lawrence appointed NUW as his bargaining representatives with respect to the proposed agreement on 27 April 2017.

On 16 May 2017, before the agreement was voted on, he revoked this appointment and made himself his own bargaining representative.

The majority of workers voted to approve the proposed agreement on 19 May 2017. On 22 May 2017 Sigma lodged the application for approval of the agreement with the Fair Work Commission.

Sigma did not serve a copy of this application on the NUW, and on the application stated that there were no unions acting as bargaining representatives.

NUW was never informed that the application for approval had been made until the approval decision was handed down on 30 May 2017.

The appeal

NUW appealed the approval decision on five grounds, but the Full Bench only dealt with the first of these grounds, which was that:

  • the Commissioner had made an error in approving the agreement where the NUW was involved in the bargaining process but had not been informed of the application for approval.

The arguments advanced by the NUW and Sigma focussed on different aspects of the Fair Work Commission Rules 2013 (the Rules) regarding service of documents lodged with the Commission. Because the NUW was not a bargaining representative at the time of lodging the application, the argument fell substantially around the use of the words ‘is’ and ‘was’.

Sigma contended that the Rules needed to be considered in the context of all other rules, in particular r 24(3), which provides that:

“If the agreement is not a greenfields agreement, each employee organisation that is a bargaining representative and wants to advise the Commission about whether the organisation:

(a) supports approval of the agreement; or

(b) agrees with one or more statements in a declaration made by an employer under subrule (1);

must lodge a statutory declaration by an officer or authorised employee of the organisation before the Commission approves the agreement.”

Sigma contended that the use of the word ‘is’ in above provision provides that only unions who are bargaining representatives at the time of lodgement have a right to apply to be covered by the agreement. Because NUW was not a bargaining representative at the time of lodgement, it was not entitled under this provision to apply to be covered by the agreement, and therefore there was no utility in serving the application on it.

NUW argued that Schedule 1 of the Rules states quite clearly that a Form F16, being the application for approval for an enterprise agreement, must be served on:

each employee organisation that was a bargaining representative and any other employee bargaining representative of whom the applicant is aware.

The Full Bench, in a relatively short decision, agreed with the NUW’s argument.

Because the NUW was a bargaining representative for at least part of the bargaining process, it was entitled to be served with the application for approval, and the failure to do so had deprived it of the opportunity to be heard.

The fact that the NUW wasn’t a bargaining representative at the time of lodgement was completely irrelevant.

The Full Bench overturned the approval decision and the agreement is now to be considered anew, with the NUW having the chance to make submissions as to why it should be heard.

What this means for you

Above all else, this case highlights the need for professional legal advice in all stages of the enterprise bargaining process.  

Because of an error in interpreting the rules around service, Sigma failed to send a single email to serve the application for approval on the NUW.

The lack of this one communication resulted in a costly appeals process for which Sigma will now have to pay.


If you have, or are considering, an enterprise agreement and you have any questions or queries about the processes that attend these, please call NRA Legal on 1800 RETAIL (1800 738 245).


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