All for one, but not one for all: multi-employer bargaining

There was a legitimate fear amongst employers that, under the amendments introduced by the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth), it would be all too easy for unions to apply for, and too hard for employers to resist, multi-employer enterprise bargaining.

The Secure Job, Better Pay legislation did make it easy for unions to rope in an array of different employers to bargain for a multi-employer enterprise agreement. Employers who objected were given the onus to prove they should not be included in the bargaining. But many questions were left unanswered as to how the new laws would operate in practice.

Would it be simply enough that employers were in the same industry or geographic area? What level of analysis would the Fair Work Commission undertake to determine whether employers will be ordered to bargain together with the union? What level of differentiation between employers would be needed to avoid being ordered to bargain in multi-employer bargaining?

The Full Bench of the Fair Work Commission delivered an important decision in Association of Professional Engineers, Scientists and Managers, Australia v Great Southern Energy Pty Ltd T/A Delta Coal, Whitehaven Coal Mining Ltd, Peabody Energy Australia Coal Pty Ltd, Ulan Coal Mines Ltd [2024] FWCFB 253, answering these (and many other) questions. As the Full Bench said, the case was "the first significant contested application of this particular kind since the legislative amendments to the FW Act". The matter was heard over six hearing days.

We acted for Delta Coal, the only employer successful in avoiding an order to bargain with APESMA for a multi-employer enterprise agreement. In this article, we examine Delta Coal's successful defence.

APESMA's application

APESMA sought under s.248 of the Fair Work Act 2009 (Cth), an authorisation in respect of bargaining for a proposed multi-enterprise agreement to cover certain employees (the SIEA Employees) engaged by a small number of employers operating in the black coal mining industry in New South Wales. The SIEA Employees were Control Room Operators, Shift Engineers, Undermanagers and Deputies.

The employers sought to be covered by the authorisation were:

1. Peabody Energy Australia Coal Pty Ltd at Wambo Underground Coal Mine;
2. Ulan Coal Mines Ltd at Ulan No.3 Underground Coal Mine (outside of Mudgee);
3. Whitehaven Coal Mining Ltd at Narrabri Coal Mine; and
4. Great Southern Energy Pty Ltd T/A Delta Coal at Chain Valley Colliery (near Mannering Park at Lake Macquarie).

Is being a black coal miner enough to be caught?

APESMA argued that the employers were all the same in that they each:

1. operate underground coal mines (i.e. mine black coal);
2. conduct their operations in New South Wales;
3. employ workers for the operation of those coal mines who are all covered by the same modern award, the Black Coal Award;
4. are regulated in respect of the employment by common statutes, namely the FW Act and the Coal Mining Industry (Long Service Leave) Administration Act 1992 (Cth);
5. have a common industry regulator, namely the Secretary of the Department of Regional New South Wales;
6. must be licenced to, and comply with, the Mining Act 1992 (NSW) in order to operate their respective mines;
7. are covered by the Coal Industry Act 2001 (NSW) which requires employers in the coal industry to obtain and maintain workers compensation insurance for their employees; and
8. are subject to compliance obligations in relation to the management of health and safety like being statutorily required to engage and do employ SIEA employees under the WHS (Mines and Petroleum Sites) Regulation.

The employers each filed extensive evidence, including confidential evidence, as to the detailed nature of their operations and business circumstances.

For Delta Coal, it was emphasised that it:

1. has a single interest in solely supplying coal to its related company, the adjacent power station at Vales Point;
2. only mines the coal for the sole purpose of electricity generation (and not for steel making like the other employers);
3. has no interest or goal in producing, and exporting, a higher-quality thermal coal to customers overseas, like some of the other employers;
4. has no facilities and resources to market and transport coal other than to the power station;
5. has no interest in generating a profit for commercial gain, in fact, it operated at a loss;
6. has a different geographical location compared to the other employers, with it being located near a local community and as such, has an acute interest in minimising environmental impacts of surface subsidence;
7. uses significantly different machinery to extract coal compared to the other employers;
8. utilises the bord and pillar method of mining, rather than longwall like the other employers, which is less efficient and has less output; and
9. does not undertake any activities of washing extracted coal, including to produce and market a higher quality coal to international clients.

In effect, it was argued that Delta Coal was the corner store or small supermarket and not a Woolworths or Coles. As Peabody submitted, "Delta Coal is an outlier because it supplies coal directly to its parent company and it does not sell coal to any other customer".

The legislative provisions

Under s 249 of the FW Act, the Commission "must make [an] authorisation in relation to a proposed enterprise agreement if" several criteria are satisfied.

Two critical criteria include:

1. the employers have clearly identifiable common interests: s 249(3)(a) of the FW Act; and
2. the operations and business activities of each of those employers are reasonably comparable with those of the other employers that will be covered by the agreement: s 249(1)(b)(vi) of the FW Act.

For the purposes of determining if there are clearly identifiable common interests, the legislation sets out matters that may be relevant include the following:

1. geographical location;
2. regulatory regime; and
3. the nature of the enterprises to which the agreement will relate, and the terms and conditions of employment in those enterprises: s 249(3A) of the FW Act.

Importantly, under the legislation, it is presumed if an employer is above a threshold of number of employees, that the 'clearly identifiable common interests' and 'reasonably comparable' requirements are met, unless the contrary is proved. This means "there is an onus on the Respondent Employers, to establish that the relevant test in each case has not been met".

As the Full Bench observed, if an authorisation is issued, the employers named in the authorisation would, in effect, be obligated to bargain together for a period of at least 12 months, or until an enterprise agreement to which the authorisation relates is made.

Common interests

A key issue in the proceedings was whether each of the employers have clearly identifiable common interests.

On behalf of Delta Coal, we submitted that the phrase 'common interests' requires that the Commission considers in a detailed way the factual circumstances (including by reference to the specified relevant matters) of at least the goals, principles and concerns of the employers the subject of the application (as opposed to merely the operations and business activities of the employers).

Unfortunately, and reflective of poor legislative drafting, it was found that the matters in s.249(3A) may not be an 'interest'. The Full Bench observed that "geographical location is not necessarily an interest but a matter relevant to determining whether the employers have a common interest". Further, the Full Bench observed that the matters in s.249(3A) "may be relevant to determining whether the employers have a common interest" but may not be. The Full Bench held:

1. the common interests must be 'clearly identifiable', that is, plainly discernible or recognisable, but need not be self-evident;
2. the interests of each employer are not limited to the specific mine (workplace) where the employees work;
3. the focus ought to be on those common interests relevant to enterprise bargaining; and
4. the test is whether the employers have joint, shared, related or like characteristics, qualities, undertakings or concerns that will impact or influence them in relation to bargaining for an enterprise agreement.

The Full Bench further explained:

"It is likely that when notionally identifying interests amongst employers subject to an application of this kind, some interests will be common and some interests will not be common. It is possible that an employer will have some highly specific interests which are shared by no other employer. Similarly, the same employer may have, at least at the conceptual level, very broad interests which may be shared across many employers in a range of vastly different industries and circumstances. There is also no guidance in s.249(3) as to whether the identification of different interests negates such a finding."

So, when are there common interests? The Full Bench said:

"We consider that the mere existence of more than one common circumstance that could be relevant to an interest held between the relevant employers would not be sufficient to meet the terms of s.249(3)(a) of the FW Act. The requirement for the existence of common interests is intended to be a qualifier in the context of provisions that may result in multiple employers being required to bargain together under [an] authorisation and it should be applied in a manner that gives effect to its purpose. It would, for example, not be intended that the consideration of 'common interests' was applied in a purely mathematical way... In that light, it cannot have been contemplated, for example, that the fact of all employers being in the same industry and covered by the same modern award would be enough in itself to constitute 'common interests' for the purposes of making an authorisation of the nature sought in this application.

... This task extends beyond considerations at the macro or conceptual level and warrants close consideration of what the discernible interests of the parties are at the level of the enterprise, particularly those that are directly relevant to the proposed bargaining."

This meant that ultimately, the Full Bench found that despite some common characteristics with the other employers, Delta Coal did not have clearly identifiable common interests with the other employers because it:

1. had a different commercial purpose, namely "its sole commercial purpose is not to make profits but to cover its costs of providing a reliable supply of thermal coal to Delta Electricity which is comprehensibly different to the commercial purpose of" the other employers;
2. is not subject to the same cost and price pressures experienced by the other employers arising from selling coal on the competitive international market for the purpose of making profit;
3. had a different approach to employment conditions than the other employers; and
4. had a geographical location which meant it did not have an "interest to overcome particular attraction and retention challenges ... which can be expected to influence their respective approaches in a bargaining context".

Reasonably comparable

Another key issue in the proceedings was whether the operations and business activities of each of the employers are reasonably comparable with those of the other employers that will be covered by the agreement.

APESMA relied on the same factors for satisfying the common interests and reasonably comparable tests. But as the Full Bench observed, these tests "invoke different considerations based on a different level of analysis" (and "requires more detailed analysis").

The Full Bench examined the concept of reasonably comparable operations and business activities and said:

1. the terms 'operations' and 'business activities' are discrete yet intrinsically linked concepts;
2. the term 'operations' should be taken to mean 'how' that employer operates, in terms of its industrial activity, work and production processes;
3. the term 'business activities' should be taken to mean 'what' that employer does in terms of the goods and services it provides or sells, or its trading activities;
4. in order for two or more things to be 'capable of being compared', they need to be of a similar 'type' while not needing to be the same and it follows that the 'operations' and 'business activities' of the employers need to be sufficiently similar; and
5. the word 'reasonably' is a qualifier and requires an objective assessment as to whether the employers' operations and business activities are 'reasonably' comparable.

As the Explanatory Memorandum to the Secure Jobs, Better Pay Act stated:

"Employers of very different size, scope and scale might, depending on all the circumstances, be found to have clearly identifiable common interests for the purpose of bargaining together. This amendment would ensure that the FWC must also be satisfied that the operations and business activities of an employer are reasonably comparable with the other employers. It may be open to the Fair Work Commission to conclude that despite two employers of a similar size, scope and scale operating in the same industry, they are not 'reasonably comparable' once the full extent of their business activities and operations are considered."

And that was the outcome here for Delta Coal. Delta Coal was "materially different from that of the other" employers because it:

1. had principal business and commercial purpose that was distinct and different to the other employers;
2. did not export coal rather it was used almost immediately at the power station after extraction;
3. does not have customers other than the power station (and therefore does not compete in either the domestic or global marketplace);
4. had a method of production that was distinct from the other employers, using the bord and pillar mining method, not longwall;
5. used different miners at a different cost base to the other employers;
6. produces a lower quality thermal coal (and it is not washed) and extracts far less coal;
7. would cease operations when the power station life comes to an end, presently 2029, but could be 2033; and
8. operates at a loss (relying on subsidy from the parent company).

The other employers: All in

In respect of the other three employers, the Full Bench found, in addition to all the key similarities all the businesses shared, there were the following similarities:

1. the work being performed by the SIEA Employees is similar;
2. they are all in the competitive international export thermal coal markets and their product is predominately sold to customers overseas;
3. they are all based in regional inland areas within New South Wales and confront similar challenges in attracting and retaining staff; and
4. they all use longwall mining methods.

These four similarities meant that the Full Bench considered that Ulan and Whitehaven had not rebutted the presumption that they are reasonably comparable.

In respect of Peabody, while the Wambo mine had unique characteristics impacting size and scale driven by its anticipated life, the Full Bench found that Peabody was still, as with Ulan and Whitehaven, a large, sophisticated business that exported to international markets, with substantial similarities in the work activities performed at each site.

As such, the operations and business activities at Wambo were not so different that they were not reasonably comparable with Ulan and Whitehaven, so Peabody was also found to not have displaced the presumption.

Conclusion

Contested cases to resist being part of multi-employer bargaining will require detailed evidence and analysis of the business, interests and operations to distil material differences to rebut the presumptions.

With the onus being on employers, there remains an inherent difficulty in resisting these applications. But this decision confirms that there is an out for some employers through the two qualifiers of 'common interest' and 'reasonably comparable operations and business activities'.

Despite being in the same industry or region, there may be material and significant differences between employers that mean bargaining for a multi-employer enterprise agreement is not desirable. Indeed, it may be counter-productive to efficient and effective bargaining.

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.