Recently a large employer found to its cost that union bargaining representatives knew the employer was signing up to a deal it did not truly appreciate but did nothing to alert the employer to its error. The enterprise agreement (EA) has been approved and the employer’s mistake has become an enforceable condition that will operate for the life of the EA.
EA’s under the Fair Work Act 2009 are complex documents where a mistaken understanding of conditions can run into real money. Professional union negotiators generally have a seat at the bargaining table for these EA’s, and they can bring an unforgiving “take no prisoners” attitude to misunderstandings by employers about what they are signing up to.
Just like any commercial negotiation, employer representatives need to have a full understanding of the conditions that are being negotiated. If a mistake occurs, an employer can be fixed with the consequences for the whole of the life of the EA, up to four years.
In CJ Mansfield v CEPU  FWAFB 3534 the employer, CJ Mansfield, was experienced in enterprise agreement negotiations and engaged with the CEPU (as the relevant union) in negotiations for a new agreement to support renewal of contracting work which required it to move to a 10-hour shift roster. The negotiations were conducted over a period of some months, and there were many informal exchanges of views as well as “out of session” exchanges of proposed clauses by email.
In an early draft of the proposed enterprise agreement, a meal breaks clause proposed by the CEPU was inserted into the EA after being accepted by the employer’s industrial representatives. It reads innocently enough and an inattentive eye can easily skip over it as “agreement boilerplate”:
“an employee who is required to work 2 or more hours overtime shall be allowed a crib time of 20 minutes at the prevailing overtime rate. For every four hours of overtime worked after an employee is entitled to a further 20 minutes crib break at the prevailing overtime break.”
The EA was finalised, including this cause, and CJ Mansfield submitted its application for FWA to approve the EA. However, just prior to the approval occurring, CJ Mansfield realised that the words “two hours or more overtime” would apply to employees working 10-hour shifts, so that workers working standard shifts would become entitled to three paid breaks rather than two.
CJ Mansfield unilaterally discontinued its approval application on discovering its mistaken understanding of the EA condition, over the objections of the CEPU which had sought to keep CJ Mansfield to the letter of the EA conditions. FWA allowed CJ Mansfield to discontinue, but that was not the end of the story.
The CEPU as a bargaining representative is entitled to bring an application to have an EA approved, and they did so here, having been given permission in the circumstances to bring their application outside the usual timeframe.
CJ Mansfield objected to the CEPU’s approval application, including on the basis that it would perpetuate a mistake, but its objections were overruled. The industrial tribunal stated:
“The employer had the benefit of time and advice to consider the implications of the terms of the agreement it proposed to the workforce. … At most the conduct of the [CEPU] bargaining representatives could be described as opportunistic or hopeful, even if it could be said that they were themselves, fully aware of the implications of the clause”
- Employers cannot rely on other bargaining representatives to point out implications for the employer of an enterprise agreement. Union bargaining representatives will not cause an EA to fail tests for approval if they do not alert an employer to its own mistake.
- Employers need to know intimately the implications of each word in a proposed EA, and (for example) the discipline of practically costing each condition has to be undertaken to discover the true EA cost and implications, before the employer is fixed with its effect for the life of the agreement.