Successful Vote Decisive Despite Absence of Good Faith Bargaining – For Now

In Application by SDA for a bargaining order re Sephora Australia Pty Ltd [2024] FWC 1225 (Deputy President Bell, 13 May 2024), despite finding that Sephora had not met the good faith bargaining requirements, the FWC decided not to make the bargaining orders sought by the SDA.  

In doing so, the FWC noted that the vote had concluded, and bargaining had stopped, and the agreement was already the subject of an application of the FWC for its approval. 

The SDA had sought an order requiring Sephora to notify employees about its failure to meet the good faith bargaining requirements. The FWC declined to make this order because this is a matter for the Member of the FWC to whom the approval application is allocated, and the SDA can invite its own members to make submissions about this. 

The SDA had sought orders about various bargaining steps, on the assumption that Sephora’s application for approval of the agreement will fail. In declining to make these orders, the FWC considered it unreasonable to speculate on the outcome of the approval application, and that its findings in the present case would deter Sephora from repeating its conduct in any future bargaining. 

The FWC also observed that of the 616 employees of Sephora, around 15 were SDA members. The FWC, in considering ‘proportionality’, considered it disproportionate to make orders affecting 616 employees when the vast majority were not represented by the SDA. 

The FWC also declined to make an order sought by the SDA tantamount to a declaration, because its written reasons for decision were sufficient to record its disapproval of Sephora’s conduct. 

This case illustrates how it may be improper to rely on the apparent lack of interest of another bargaining representative as a reason to not attempt to include them in bargaining, however it remains to be seen whether there are any practical implications for the Employer’s Approval Application which is yet to be considered. 

Key Takeaways 

This case shows the importance of understanding the status of employee organisations (unions) as default bargaining representatives in enterprise bargaining processes. Employers should take pause to consider whether their employees covered by a proposed agreement might be members of a union. If this is a possibility, those unions must be recognised as bargaining representatives, and kept in the loop on bargaining processes. 

This case also shows that even if it can be proven that a party has not met the good faith bargaining requirements, there may be reasons weighing against the FWC making bargaining orders, depending on the circumstances. 

Background: 

During enterprise bargaining, problems sometimes occur where one party is not meeting the good faith bargaining requirements.¹ In these situations a bargaining representative (e.g. a union) may apply to the Fair Work Commission (FWC) for a bargaining order under s.229 of the Fair Work Act 2009 (Cth) (Act).  

A bargaining order is an order of the FWC about procedural matters only, not about the actual contents of an enterprise agreement. The FWC can make orders about how bargaining will be conducted going forward to resolve disputes and assist the bargaining parties with issues such as: sharing information, scheduling meetings, and requiring detailed responses to rejected claims. 

In a recent decision of the FWC, The Shop, Distributive and Allied Employees Association (SDA) sought bargaining orders against Sephora Australia Pty Ltd (Sephora). The FWC found that Sephora had failed to meet good faith bargaining requirements, but did not make any bargaining orders. 

Note for practitioners: 

Before dealing with the issues, the FWC clarified that when making bargaining orders, it’s not enough that there’s a ‘prima facie’ case or ‘serious question to be tried’ about whether a bargaining representative is not meeting the good faith bargaining requirements. The FWC needs to actually be satisfied that s.230(3) of the Act is met. An applicant must produce some evidence on which the FWC can rely. In this case, this was achieved by someone with personal knowledge of the facts (e.g. a bargaining representative) giving a signed witness statement attaching relevant documents, and being made available at any hearing for cross-examination about their statement.  

From commencement of bargaining to FWC application: 

The SDA used a recently introduced mechanism to commence bargaining,² where an employee bargaining representative makes a written request to the employer to commence bargaining for a new agreement to replace an existing enterprise agreement, provided no more than 5 years have passed since the current agreement’s nominal expiry date.  

The SDA made its request on 22 January 2024, and they also asked for a number of other steps to be taken in relation to bargaining for a new agreement, including engagement with SDA delegates, meetings, surveys, feedback sessions and the preparation of a log of claims. 

The SDA’s request counted as a notification time under the Act, meaning that Sephora had to issue a NERR³ within 14 days. However, Sephora failed to issue the NERR by 5 February 2024. 

On 7 March 2024, a month after the NERR was due, Sephora told the SDA it was “still working through the detail”, but committed to informing the SDA of the NERR and “time frames in the weeks to come”. 

A further month later, on 4 April 2024, Sephora issued the NERR. Sephora posted a physical copy of the NERR to the SDA, but did not provide it any other way, for example by email. Despite the SDA’s request letter bearing a Melbourne address, Sephora sent the hard copy of the NERR to an address of the SDA in NSW. The SDA’s evidence, which the FWC accepted, was that although the NERR may have been delivered to the NSW address, the hardcopy of the NERR never actually made it into the hands of any relevant person for the purpose of bargaining. 

The relevant officers of the SDA in communication with Sephora received no further updates or timeframes from Sephora about bargaining after 7 March 2024, until around 3 May 2024, when the SDA learned that Sephora had in that time: 

• Received and recognised the appointment of 32 employee bargaining representatives (staff representatives); 
• Held 5 bargaining meetings in April, without notifying the SDA; 
• Sent a draft copy of the agreement to the staff representatives; 
• Commenced the access period; and 
• Issued a notice of ballot for 6 May 2024. 

On Friday, 3 May 2024, the SDA applied to the FWC for a bargaining order, and a hearing was held on Monday, 6 May 2024, the day of the ballot. The hearing was adjourned for the SDA to consider its position after the ballot closed with 80% of employees casting a valid vote, and 79% of voters voting to approve the agreement. The SDA chose to press on with its application. 

The FWC’s findings about the good faith bargaining requirements: 

The FWC found that when Sephora issued the NERR, it knew or believed that the SDA had members who would be covered by the proposed agreement.  

This meant that the SDA was their bargaining representative, and Sephora had obligations to the SDA throughout bargaining. 

The FWC found that Sephora failed to meet the good faith bargaining requirements of “recognising and bargaining with the other bargaining representatives” and “refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining” because: 

• Sephora failed to notify SDA of bargaining meetings, or arrange to meet separately with the SDA; 
• Sephora showed a lack of curiosity toward the SDA’s involvement in bargaining in contrast with its diligence towards the involvement of its own store managers; 
• Sephora didn’t provide any timeframe for bargaining to the SDA as it promised, instead only providing a hard copy NERR, which even if received, would not have given any dates for meetings; 
• Sephora sent various documents throughout bargaining, including a draft proposed agreement, to every bargaining representative except the SDA; 
• The SDA had made it clearly known from the beginning that it wished to participate in bargaining. 

The FWC considered it relevant that the only reason bargaining was occurring was because the SDA itself initiated the process on 22 January 2024. 

¹ The good faith bargaining requirements for a bargaining representative in s.228 of the Act are: 
(a) attending, and participating in, meetings at reasonable times; 
(b) disclosing relevant information (other than confidential or commercially sensitive information) in a timely manner; 
(c) responding to proposals made by other bargaining representatives for the agreement in a timely manner; 
(d) giving genuine consideration to the proposals of other bargaining representatives for the agreement, and giving reasons for the bargaining representative’s responses to those proposals; 
(e) refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining; 
(f) recognising and bargaining with the other bargaining representatives for the agreement. 

² In ss.173(2)(aa) and (2A) of the Act. These new provisions were introduced by the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth).

³ Notice of Employee Representational Rights.