Hall Payne Lawyers and our client, the NTEU, recently had an excellent outcome in relation to misrepresentations made during the approval process for an enterprise agreement at a large university. The Full Bench of the Fair Work Commission determined the enterprise agreement was not genuinely agreed.
The decision of the Full Bench in NTEU v Southern Cross University & Anor  FWCFB 200 is significant not only for our client but also in that it develops and clarifies the test for determining when an agreement has not been genuinely agreed within the meaning of s.188 of the Fair Work Act 2009 (Cth) (FW Act), due to a misrepresentation or material non-disclosure by an employer in the course of bargaining.
The decision also observes the importance of valuing and weighing the non-monetary impacts of a proposed agreement in considering whether the agreement passes the "better off overall test" (BOOT).
Enterprise bargaining proposal by Southern Cross University
Throughout 2022, Southern Cross University and bargaining representatives, including the NTEU (the Union), participated in negotiations for a replacement enterprise agreement. In November 2022, the University put an agreement it proposed to a vote of the employees.
The University's proposed agreement provided for a $750 one-off payment to employees "following commencement" of the agreement. Relevantly, between 1 and 4 November 2022 (immediately before and during the voting period), the University made several communications to staff regarding the $750 payment, including that it would be:
- paid to all current staff members, as opposed to those employed at the time of approval; and
- payable when the agreement was endorsed by a majority of staff, as opposed to when the agreement was approved by the Fair Work Commission (FWC).
The University's communications to staff regarding the $750 payment were:
- variously targeted at casual employees in circumstances where casual staff comprised more than 50% of persons on the roll of voters;
- made in the same communications in which the University encouraged persons to vote; and
- a financial inducement in the form of a sign-on bonus to vote in favour of the agreement.
1289 persons voted on the University's proposed agreement – 605 voted no, while a relatively small majority of 685 voted in favour of the University's proposed agreement.
Approval of the enterprise agreement sought by the university
On 15 November 2022, following the vote, the University applied to the FWC, under s.185, for approval of the agreement.
The Union opposed approval of the agreement on several grounds, including that the proposed agreement had not been genuinely agreed and that it did not pass the "better off overall test" (BOOT).
First instance: proceedings in the FWC
The agreement approval application was the subject of a two-day hearing in the Commission. Hall Payne acted for the Union in those proceedings.
Enterprise agreement not genuinely agreed
The Union opposed approval of the agreement on several grounds, including that the proposed agreement had not been genuinely agreed due to:
- the University making misleading statements (regarding the $750 payment) (Misleading Statements);
- a failure by the University to establish that casuals invited to vote were employed at the relevant time (Casual Eligibility); and
- a failure by the University to establish the validity of the voter roll (Voter Roll).
The Union argued that it could not be said that the agreement was genuinely agreed in light of misrepresentations made by the University immediately prior to and during the voting period regarding the $750 sign-on bonus.
The issue in dispute was whether the communications were misleading, particularly for casual employees to whom the communications were primarily directed, and whether the communications were a reasonable ground for believing there was no genuine agreement.
Casual employees made up a majority of employees invited to vote. At issue was whether the casual employees who voted were, pursuant to s.181(1) of the FW Act, "employed at the time" the University requested the vote and were therefore eligible to vote.
In opposing approval of the University's proposed agreement, the Union contended that the Commission could not be satisfied, based on the arrangements under which they were employed, that casual employees who voted were, in fact, employed at the relevant time within the meaning of s.181(1) of the FW Act and eligible to vote.
The Union also contended that the Commission could not be satisfied that the University established the validity of the voter roll in circumstances where there were errors in the voter roll. The University accepted and the Commission found that that the roll of voters contained various errors.
Better Off Overall Test (BOOT)
Section 186(2)(d) of the FW Act provides that the proposed agreement must pass the "better off overall test" – that is, that each employee would be better off under the agreement than the relevant modern award.
The relevant modern awards, in this case, contained terms restricting the use of fixed-term employment, as well as other beneficial conditions. The proposed agreement removed these restrictions, which meant that the University could use fixed-term employment for any position in any circumstance.
The Union contended that the use of fixed-term employment is inferior to ongoing employment and that the removal of fixed-term restrictions and entitlements would increase the use of fixed-term employment at the University and cause job insecurity.
On 18 August 2023, the Commission concluded that the University's proposed agreement passed the BOOT test and that the requirements for approval, including that the agreement had been genuinely agreed, had been met.
On the issue of misrepresentations, the Commission was not satisfied that the communications made by the University were misleading or that there was any evidence of any employee being misled by them, such as to affect the outcome of the vote.
Whilst the Commission accepted there were errors in the voter roll, it determined that a majority of employees who would be covered by the proposed agreement cast a valid vote to approve it. The Commission also found that the casual employees were "employed at the time".
The Commission considered that rates of pay under the proposed agreement were significantly higher than those in awards and that this meant that employees under the proposed agreement would be better off overall, notwithstanding removal of restrictions on the use of fixed-term employment and other entitlements.
Appeal: proceedings before the Full Bench of the FWC
The Union appealed the Commission's decision to approve the agreement. Hall Payne acting for the Union at the appeal.
The appeal focused on:
- whether casual employees were "employed at the time";
- whether the agreement had been genuinely agreed in light of communications regarding the sign-on bonus; and
- whether the agreement passed the BOOT test in light of provisions concerning fixed-term employees.
The Full Bench found that the communications were misleading.
 These representations, in their various forms over this three day period, were misleading. They incorrectly stated that the sign-on bonus was payable upon endorsement of the Agreement by a majority of staff (that is, should the Agreement be voted up by a majority of persons voting) whereas in fact the Agreement provided for a sign-on bonus of $750 upon approval by the Commission (that is, should it be approved).
In doing, the Full Bench agreed with the Union's submission that it adopt the approach taken by the Courts in competition law – specifically observing that:
 The Commissioner erred by applying the wrong test, by imposing a requirement for such evidence. Rather, in assessing the matter, the Commission should have considered whether it could reasonably be expected, including by common sense, and taking into account the context of the vote, that a sufficient number of employees would have changed their vote because of the misleading communications. The answer to that question is yes.
 ...The test is not whether evidence from a particular voter or voters [of being misled] is before the Commission. The test is whether the evidence taken as a whole, when considered objectively, leads to such a conclusion.
The Full Bench considered that the misleading communications by the University meant that it was not satisfied that the requirements of s 186(2)(a) of the FW Act had been met (that the agreement was genuinely agreed) and that the Commission's earlier decision to approve the agreement was made in error.
On that point, the Commission observed (emphasis added):
 ...The decision to approve the Agreement was made in error because the University had inadvertently caused the voting period to be infected by misrepresentation which then reasonably called in question whether the Agreement had been genuinely agreed by a majority of voters.
Full Bench quashes original approval of the enterprise agreement
The Full Bench quashed the approval of the agreement due to the University's misrepresentations. It did not consider it necessary to deal with the BOOT issue or whether casuals were "employed at the time", given that the decision was affected by appealable error, which meant that Full Bench was not satisfied the agreement was genuinely agreed.
On the issue of casuals, the Full Bench did, however, remark that this ground raised:
"substantive and important questions concerning when a casual is "employed at the time" within the meaning of s 181 particularly in the light of the somewhat discordant Full Bench decisions in McDermott and Noorton, and the subsequent High Court decision in Rossato."
On the BOOT issues raised by the Union at first instance and on appeal, the Full Bench acknowledged the Union's argument that removal of restrictions on the use of fixed-term employment in the proposed agreement would result in greater job insecurity. On that point, the Full Bench observed the Commission's failure to deal with the Union's submission at first instance and highlighted the importance of weighing the non-monetary impacts of a proposed agreement in considering whether the agreement passes the BOOT test.
Hall Payne Lawyers was proud to achieve this important outcome for the Union and its members.
Get help from an employment lawyer
This is an excellent case study for all unions and workers participating in enterprise bargaining. The win demonstrates the importance of seeking advice if you are not satisfied that your employer is participating in genuine bargaining or if there are any other concerns during the bargaining process.
At Hall Payne, our team of award-winning employment lawyers have significant experience in enterprise bargaining matters and are able to assist you no matter what stage of the process you are in.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.