05 May Company found not to have coerced workers by warning they would not have a job if they did not approve a pay cut for new employees

In Compass Group (Australia) Pty Ltd T/A ESS [2021] FWCA 1234, a large catering company made an application to the Fair Work Commission to vary an Enterprise Agreement (“Agreement”) which resulted in a pay cut for new employees engaged by the Company, after  a majority of employees overwhelmingly voted to vary the Agreement.  The Australian Workers Union, who were bound by the Agreement, objected to the application on a number of grounds including that they asserted the statements provided to employees ahead of a vote on the Agreement were coercive.

Specifically, prior to conducting the vote for approval of the variation, the Company provided a “Frequently Asked Questions” document to employees which asked “What happens if there is a ‘No’ vote?”.  In response, the document stated that “ESS will not retain the contract at Cannington and demobilisation of staff will begin” (“First Statement”). It further stated that employees, “will not be entitled to redundancy pay as this is categorised as ordinary and customary turnover of labour due to the client contract ending” (“Second Statement”).

The Australian Workers Union argued the statements were not “appropriate” as they were coercive in nature and gave employees no option but to vote for the variation.  The Company responded that the statements were “simply a candid statement of the sequence of events that would take place if the company lost its contract with its client, South 32”. 

The Fair Work Commission agreed with the Company and approved the application.  Deputy President Coleman found the First Statement not to be coercive but rather “it was informative, not threatening” nor was it “inappropriate”.  The Deputy President said that:

• the answer to the First Statement contained “highly relevant information that was properly conveyed to employees as part of the explanation of the terms of the variation to the agreement and the effect of those terms“; and

• “constituted a reasonable step that the company took in order to meet the requirements of s 180(5). It does not call into question the genuineness of employees’ agreement to the variation.”

The Deputy President further said the Second Statement contained, “important information that employees were entitled to receive. It assisted them to make an informed and genuine decision about whether to vote to approve the variation to the Agreement.”

Practical Implications

The decision highlights the importance of employers ensuring that any statements made to employees prior to a vote to vary or otherwise approve a new enterprise agreement, are not coercive. If statements are coercive then this may result in difficulties having an application approved.

If you require any assistance with ensuring you follow a fair bargaining process, please get in touch with the team at HR Law for advice.