In the recent decision of Compass Group (Australia) Pty Ltd T/A ESS [2021] FWCA 1234 (9 March 2021), the Fair Work Commission rewarded the candid approach of Compass Group in its attempt to vary its enterprise agreement, approving the variation and dismissing all objections raised by the Union.

Compass Group had sought the agreement of its employees to a variation to its enterprise agreement that would see a reduction in pay rates for new employees under the agreement. In pursuit of compliance with its obligations to explain the terms and effect of the proposed variation, the Compass Group issued employees with a document titled “General Information and FAQs”. The questions and answers in the document were quite candid about the Compass Group’s commercial reasons for seeking the variation.

In response to the question “what happens if there is a no vote?” the Compass Group explained that they would lose an important client contract. The client had informed them that if the variation was not approved they would end the contract, that demobilisation of staff would occur and that employees would not receive redundancy pay due to it being categorised as an ordinary and customary turnover of labour.

An overwhelming majority of affected employees voted to approve the variation.

The Union objected to the proposed variation on the basis that the General Information and FAQs document was coercive and left employees with no choice but to agree to the variation.

Deputy President Colman disagreed. In approving the variation and dismissing the objections of the Union, the Deputy President emphasised that the Compass Group had been informative and transparent, not threatening or coercive. Importantly, the responses given by the Compass Group were based on fact and/or adopted reasonable positions on the legal effect of the consequences of the variation being rejected.

Key lessons for employers

• Being candid with employees can be rewarded by those employees when seeking their agreement to proposed variations to enterprise agreements.
• However candid means just that – it doesn’t mean peddling half-truths to get a strategic win. The latter is coercion. It is possible to keep commercial in confidence materials confidential and still be transparent about commercial realities to employees.
• Negotiations on enterprise agreements do not need to be positional and there are benefits with employees and the approval process from transparency.

Written by Nina Hoang

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