Fair Work Commission refuses EA approval after uni misrepresents sign-on bonus to casuals

The Full Bench of the Fair Work Commission (FWC) has found that misrepresentations about benefits associated with enterprise agreements (EA) can lead to a finding that majority employee vote was not "genuine agreement" to the proposed EA (National Tertiary Education Industry Union v Southern Cross University, CPSU, the Community and Public Sector Union-SPSF Group [2023] FWCFB 200).

Employees at Southern Cross University voted on a proposed EA from 2-4 November 2022 that provided for various wage increases and a $750 sign-on bonus for casual employees with current contracts as at the date that the FWC approved the EA, should the agreement be endorsed by majority of staff.

The misrepresentations

In the day before and during the ballot period, the University sent employees two emails and a text message, along with displaying a notice on the University's human resources portal, that stated that all casual staff would receive a $750 bonus should the majority of University staff approve the EA.

To approve or not to approve?

The EA ultimately was voted for by a slim margin. There were 1,931 people on the roll of voters with a majority being casual employees. 1,289 employees voted on the proposed EA. 685 people voted in favour of the EA, with 604 voting against it.

Relevantly to the Full Bench's decision, after an employee ballot, the FWC must approve an EA before it comes into force. The FWC must be satisfied that the agreement has been "genuinely agreed to by the employees covered by the agreement". The National Tertiary Education Industry Union (NTEU) opposed the University's approval application on various grounds, including contesting whether the EA had been genuinely agreed to in light of alleged misrepresentations by the University immediately prior to and during the voting period.

At first instance, Commissioner Ryan approved the EA and found that:

• there was no evidence that any employee was misled or changed their vote; and
• even if some employees had changed their vote, Commissioner Ryan would not have concluded that the employees' agreement overall was not genuine.

On appeal, the Full Bench found that the communications were misleading on their face in two respects:

Firstly, because the requirement for the Commission to approve the EA prior to the sign-on bonus being paid meant that the trigger for the bonus was materially different to that stated by the University, being a majority vote in favour of the EA.

Secondly, there was a gap in time between the vote and the approval, which in this instance crossed academic years. This meant that the cohort of casual employees with a "current contract" was likely to differ between those two points in time.

The University argued that it had made multiple accurate representations in the weeks preceding the ballot, setting out that the sign-on bonus was payable upon commencement of the EA.

However, the Full Bench did not consider that earlier accurate representations cured the problem of later misrepresentations, highlighting the importance of carefully confirming the accuracy of all statements made to employees during the bargaining period, particularly during voting,

When will misrepresentations negate "genuine agreement"?

The Full Bench was careful to state that the fact there was a misrepresentation of itself, will not mean that the EA was not genuinely agreed. However, the Full Bench held that the Commissioner at first instance erred in concluding that it was not open to him to find that employees had been misled on the basis that was no evidence that any employee had been misled.

They quoted the relevant test (from the Full Bench in a previous decision, Appeal by Australian, Municipal, Administrative, Clerical and Services Union [2013] FWCFB 7453), as being whether:

"it could reasonably be expected to have the effect of deceiving those employees into voting for something which, if they had known the true position, they would not have voted for".

The facts and circumstances relevant to determining that, in this instance, the "misleading statements may have materially affected the outcome of the ballot" and therefore it could not be concluded that employees had "genuinely agreed" included that:

• the statements were made immediately prior to and during the voting period;
• the false statements were made in the same communications which encouraged persons to vote;
• one of the representations was directed exclusively to casual staff;
• casual staff comprised more than 50% of those entitled to vote;
• the subject matter of the representations was a financial inducement to vote in favour of the agreement;
• casual employees paid by the hour were likely to consider a financial inducement to be "material to their interests and relevant to their voting intention"; and
• employees voted in favour of the agreement "by a relatively slender margin".

The Full Bench concluded that the "University had inadvertently caused the voting period to be infected by misrepresentation which then reasonably called in question whether the EA had been genuinely agreed to by a majority of voters." They did not consider that the issue could be remedied by undertakings, because such undertakings could not "retrospectively alter established facts", in this case whether a majority of voters in the ballot genuinely agreed.