Intimidation, or just stating plain facts?

When a services company was faced with a mining operator’s ultimatum to reduce costs or lose the contract, it acted.  It decided that without a reduction in wage rates, penalties, and overtime entitlements (to apply only to new recruits), the contract would be lost.

The company proposed variations to a current agreement and put the variation to employees to consider. As part of the information about the effects of the proposed change, the company bluntly explained the situation – if this variation did not succeed, the contract would be lost.

A significant majority of voters were in favour of the changes, but the union objected to the FWC approving the change. The union argued the employer has gained approval of a variation to the agreement coercively. It said that the employer’s statements effectively gave employees no choice but to support the variation.

But the FWC disagreed, preferring to characterise the employer’s position as “informative, not threatening”. It went on to say that the employer’s “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. Part of the effect of the new terms of the Agreement was that they would enable the company to have its contract …. renewed. …. It does not call into question the genuineness of employees’ agreement to the variation.”.    

This decision identifies and debunks a common myth, that telling the unadorned truth to employees will be seen as coercion and offends the ‘reasonable steps’ requirements of the bargaining process. On the contrary, it is encumbent on an employer to clearly explain the effects of a proposal. 

As part of that process, the effect of the proposed changes in this case would be the preservation of the contract, and hence, the employees’ jobs. It followed that a ‘no’ vote would not do so, and the employer had every right to say so.

Compass Group (Australia) Pty Ltd T/A ESS [2021] FWCA 1234 (9 March 2021)