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Industrial Relations Case Study – Scope Dispute

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By Chao Ni, Associate, MST Lawyers

MST Lawyers recently acted on behalf of Interlloy Pty Ltd (Interlloy) to successfully dismiss an application by the National Union of Workers (NUW) for a scope order requiring Interlloy to bargain for a separate enterprise agreement with its warehouse workers.  The application was dismissed by the Fair Work Commission (FWC).

Interlloy’s 133 full-time employees, including officer workers, managers, sales staff and warehouse employees were covered by a collective agreement that expired in July 2012. Interlloy commenced bargaining for a new enterprise agreement with all of its employees in September 2012. The NUW became a bargaining representative for a number of Melbourne and Sydney based warehouse workers in February 2013.

The NUW sought a scope order under section 238 of the Fair Work Act 2009 for all warehouse workers to be covered by a separate agreement. It claimed that warehouse workers were bargaining with office and sales workers but they didn’t share a commonality of interest with them because of operational and organisational distinctions.

The NUW claimed that a failure to separate agreements would be unfair because a significant number of terms of the proposed agreement applied exclusively to warehouse workers, whose interests would be “overwhelmed” by other workers. The NUW submitted separate deals would also give warehouse workers a better ability to take protected industrial action.

Interlloy claimed warehouse, sales and office staff all worked together at the same facilities, and workers often performed a combination of warehouse and non-warehouse functions.  Interlloy also submitted the NUW had breached good faith bargaining provisions by distributing a flyer claiming wages and conditions “do not meet the same industry standard”.

Separate enterprise agreements ‘inefficient’ for small business

Commissioner Nick Wilson found the NUW’s flyer was not “capricious or unfair conduct”. However, he said it was “unfortunate” the NUW did not address Interlloy’s concerns the flyer was misleading because pay rates in the agreement were only a minimum that was varied by wage reviews.

Cmr Wilson accepted the NUW had a legitimate concern that bargaining was not proceeding “efficiently or fairly” because it considered the agreement would inappropriately cover some worker.  However, Cmr Wilson found a separate agreement would not be fairer, because the NUW could effectively represent the interests of its members in negotiations.

He said warehouse workers were “not uniform in their views”, since some were not represented by the NUW and 30 of the 58 warehouse workers had signed a petition indicating they were not in favour of the scope order application.  Even if a separate agreement was fairer, that would be outweighed by the “relative inefficiency” of having separate deals, since Interlloy was small and spread across seven branches.

Cmr Wilson found the group of workers was not “fairly chosen” since they were not “geographically, operationally or organisationally distinctive”. Since the group was not fairly chosen and separate agreements would not be fairer or more efficient, Cmr Wilson dismissed the NUW application for the scope order.

The full text of the case can be found at NUW v Interlloy Pty Ltd [2013] FWC 5479, 9/08/2013.

Take home message:

Where unions or legal representatives become involved in enterprise bargaining on behalf of employees, employers are advised to be cautious about the types of claims and demands being made.  It is not uncommon for claims to serve in the best interest of the union rather than the interests of employees. 

Where a claim, such as a scope order application, may have the effect of introducing additional administrative costs and cause disharmony amongst staff, employers should seek advice on how to reject the claim.

For more information on the content of this article, please contact our Workplace Relations team on (03) 8540 0200.