Limitation periods for the recovery of penalties

22 August 2012

State limitation and Federal legislation both have a role to play in the enforcement of workers' entitlements and penalties when it comes to bargaining.

In the recent Fair Work Ombudsman v Toyota Material Handling (NSW) Pty Limited [2012] FMCA 122 (TMH) the Federal Magistrates Court of Australia discussed the issue of limitation periods for civil penalty proceedings under the pre-reform Workplace Relations Act 1996 and the Work Choices Workplace Relations Act 1996.

The FWO alleged TMH had breached several provisions of the Workplace Relations Act concerning the making of Australian Workplace Agreements and duress in connection with the making of these agreements.  The FWO sought declaratory orders and pecuniary penalties in respect of the alleged contraventions.  Importantly, the breaches were alleged to have occurred in May 2009 and the proceeding commenced on 28 June 2011.

TMH sought to have the application in as far as the FWO sought penalty orders summarily dismissed on the basis that the court did not have jurisdiction to order a penalty.  TMH's submission was that the Act placed a six-year limitation period on the recovery of wages (see s 720), but no such limitation period existed in the Act for seeking the imposition of a penalty.  TMH argued that s 18 of the Limitation Act 1969 (NSW) prevents an action on a cause of action to recover a penalty if brought after the expiration of a limitation period of two years, commencing from the date on which the cause of action first occurred.

Federal Magistrate Raphael acknowledged that the limitation legislation may differ from state to state, and that this may cause some perceived unfairness, but ultimately held that since the Workplace Relations Act 1996 is silent on the issue, then the Limitation Act 1969 (NSW) applies and accordingly the orders in the application seeking penalties are dismissed.

The FWO have appealed the decision of FM Raphael, and the matter is set down for hearing before the Full Court of the Federal Court of Australia.

The Fair Work Act contains penalty provisions similar to those in the Workplace Relations Act.  If the Full Court upholds the decision of the Federal Magistrates Court, the decision has two important consequences for trade unions and their members.

On one hand, when unions initiate prosecutions for the underpayment of entitlements, in order to claim a penalty the prosecution must be brought within the period specified by the limitation legislation of the state in which the alleged contravention occurred.  On the other hand, if a union was being prosecuted by an employer for a penalty, then it may be possible for the union to avoid having a financial penalty applied against it if the prosecution commenced after the state limitation period for penalties had expired.

Federal Court reviews bargaining under the Fair Work Act

In a recent decision of Justice Flick in Endeavour Coal Pty Limited v Association of Professional Engineers, Scientists and Managers, Australia [2012] FCA 764, the Federal Court of Australia examined the bargaining regime under the Fair Work Act 2009 generally, and the notion of 'surface bargaining' in particular.

APESMA had sought an enterprise agreement with Endeavour Coal in respect of its members at the Appin Mine in New South Wales since April 2010.  In July 2010, FWA made a majority support determination, and between August 2010 and August 2011, there were 12 meetings held between APESMA and Endeavour Coal.  By mid-2011 an impasse had been reached.  APESMA alleged that that Endeavour Coal had engaged in surface bargaining, not genuine bargaining aimed at attempting to reach an enterprise agreement.

To surmount the impasse, APESMA applied to FWA seeking bargaining orders under s 230 of the Fair Work Act to the effect that:

  1. Endeavour Coal provide APESMA with a list of subject matter for inclusion in the enterprise agreement
  2. Endeavour Coal not alter present work arrangements for APESMA's members
  3. Endeavour Coal attend bargaining meetings with APESMA, represented by individual who have the capacity to make decisions on behalf of the company, and
  4. Bargaining commence within 21 days of the order.

Endeavour Coal appealed to the Full Bench of FWA, which proceeded to uphold the decision of Commissioner Roberts at first instance.  Consequently, Endeavour Coal applied to the Federal Court of Australia for judicial review of the decision of the Full Bench of FWA.

Endeavour Coal advanced two arguments before the Court.  Firstly, it submitted that the Full Bench had erred in constructing s 228 by effectively imposing an obligation to 'try to conclude an agreement'.  Secondly, Endeavour Coal held that s 228(2) prohibited the form of orders made by FWA.

The Court partially upheld the application of Endeavour Coal, rejecting its construction of s 228.  Justice Flick commented that whilst bargaining representatives have no express obligation to abide by the good faith bargaining requirements, should they fail to do so it may provide a basis for a bargaining order to be made against the defaulting bargaining representative.  Further, Justice Flick observed that "once a 'majority support determination' has been made, Endeavour Coal must thereafter approach 'bargaining' with [APESMA] with a genuine…objective or intention of concluding an 'enterprise agreement' - if possible".  Justice Flick held, however, that "Endeavour Coal is certainly not required to put self-interest to one side" in the process of bargaining.

While Justice Flick did not detail a set course on which all bargaining must follow, His Honour did state that a bargaining representative 'cannot adopt the role of a disinterested suitor, only rejecting offers and proposals made by other 'bargaining representatives'" and that during bargaining "there may come a time when the combined effect of the 'good faith bargaining requirements' requires the proffering of a counter-proposal".

Endeavour Coal did, however, succeed in its application to have a number of the bargaining orders made by FWA set aside.  Central to the Court's decision was the operation of s 228(2), which states that the good faith bargaining requirements do not require a representative to make concessions during bargaining, nor do they require any consensus as to the content of the agreement.  Justice Flick found that the orders in the terms made by FWA required Endeavour Coal to make concessions in respect of the subject matter of any future agreement.  Further, the order concerning Endeavour Coal's representation in bargaining was found not to be supported by any power conferred on FWA.  The order to preserve current employment entitlements, however, was upheld by the Court on the basis that it maintained the integrity of the bargaining process.

This decision highlights two important aspects of the Fair Work Act's good faith bargaining regime.  Firstly, it considers that surface bargaining that takes the form of passive and persistent rejection of bargaining proposals can be the basis for a bargaining order to be made by FWA.  Further, the decision also contemplates that the good faith bargaining requirements may, in certain circumstances, require a bargaining representative to make counter-offers.  Secondly, it emphasises that orders that FWA makes must not include any direct or indirect form of compromise in relation to the bargaining.

New members of Maurice Blackburn Lawyers' Employment and Industrial Law Section

Maurice Blackburn recently expanded our employment and industrial law team, with  Sharon De Silva and Amanda Threlfall joining our Melbourne office as solicitors.

Before working at Maurice Blackburn, Sharon was a Senior Legal Policy Advisor at the Department of Business and Innovation in Victoria.  Sharon also spent a number of years as a solicitor at the Australian Services Union's Victorian Private Sector Branch.

Amanda joins us from the Queensland Branch of the Mining and Energy Division of the CFMEU, where she worked as a solicitor since 2007.  Amanda has broad experience in industrial and employment law, as well as a thorough understanding of the trade union movement.

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