Abigroup Contractors Pty Ltd
[2012] FWA 9755
•21 NOVEMBER 2012
[2012] FWA 9755 |
|
DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
Abigroup Contractors Pty Ltd
(AG2012/11393)
COMMISSIONER GOOLEY | MELBOURNE, 21 NOVEMBER 2012 |
Abigroup Southern Region Engineering Division Agreement 2012-2016.
[1] Abigroup Contractors Pty Ltd (Abigroup) made an application pursuant to section 185 of the Fair Work Act 2009 (the FW Act) for approval of the Abigroup Southern Region Engineering Division Agreement 2012-2016 (the Agreement).
[2] The Australian Workers’ Union (AWU) and the Construction, Forestry, Mining and Energy Union (CFMEU) were bargaining representatives for the Agreement and both unions supported the application for approval and both sought to be covered by the Agreement.
[3] The Agreement provided at clause 1.3 for the application of the Agreement as follows:
“This Agreement shall apply to work performed by Employees of the Company on projects performed by the Company’s Southern Region Engineering Division in the State of Victoria who are engaged in the classifications set out in Appendix A.
Projects performed by the Abigroup Southern Region Engineering Division includes engineering and civil construction works which includes, but is not limited to, roads, bridges, rail, water, waste water, mining infrastructure, marine, energy and non-farm dams.
This Agreement shall stand alone and will apply to the exclusion of any other industrial instrument. This Agreement does not apply to construction projects where a specific Agreement is made as an enterprise agreement.
For the purpose of this Clause, industrial instrument means/includes any modern award or enterprise agreement defined or described in the Fair Work Act 2009 (Cth), or award based transitional instruments or agreement based transitional instruments defined or described in the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth), or any unregistered industrial agreement.”
[4] On 3 October 2012 I wrote to the parties and advised that I had concerns about the application clause as it was not clear if it was intended that work currently within the scope of the Agreement could in future be covered by another agreement prior to the nominal expiry date of the Agreement that is the subject of this application.
[5] I also advised that the definition of immediate family in the Agreement was inconsistent with the definition in the FW Act and therefore the entitlement to some leave was inconsistent with the NES. This concern is not relevant to this decision as Abigroup advised that they would provide an undertaking about this matter to provide for consistency with the NES.
[6] The application was initially set down for hearing on 18 October 2012. That hearing was adjourned at the request of the parties. A final hearing was conducted on 29 October 2012.
[7] Mr Richard West a legal practitioner was given permission to appear for Abigroup and Mr Craig Winter appeared for the AWU. The CFMEU did not attend either hearings.
Submissions of the Applicant
[8] Abigroup submitted that the application clause does not permit other later agreements to override the Agreement prior to its nominal expiry date.
[9] Abigroup submitted that because of the exception in clause 1.3 “the Agreement will never cover, and therefore cannot apply to an employee employed pursuant to a site specific enterprise agreement” made under the FW Act. 1
[10] It was submitted that the application clause prevents a “conflict of agreements” from ever arising.
[11] The only site specific agreement currently in operation is the Abigroup, John Holland and the Australian Workers’ Union - Regional Rail Link Southern Cross Station to Footscray Junction Project 2012-2015 (the Regional Rail Agreement). 2
[12] Abigroup may, in future, make new project specific enterprise agreements. It was submitted that if such new agreements were made then the Agreement would not apply to those employees. Such new agreements could be made either after employees were employed on the new site in which case it would be made with them. It was accepted that these employees could not take protected industrial action to support a claim for a new agreement.
[13] Alternatively it was submitted if the circumstances met the requirements of the FW Act for a new project, a greenfields agreement may be made. 3
[14] Any such agreement would need to meet the requirements of the FW Act including the fairly chosen requirement and if application were made for a greenfields agreement then section 172(2)(b) would need to be considered at the time of the application. 4
[15] It was submitted that employees currently subject to the Regional Rail Agreement will not be covered by this Agreement and when that agreement expires on 30 November 2015 it will continue to apply until it is terminated or replaced. Those employees will be able to negotiate a replacement agreement and will be able to take protected industrial action to support a replacement agreement. 5
[16] Abigroup submitted that the group of employees was fairly chosen. 6 Further it was submitted that the Tribunal can be satisfied that “each project is itself geographically, operationally and organisationally distinct”7.
[17] It was submitted that allowing an exclusion for project specific enterprise agreements will not have the effect of undermining collective bargaining. 8 Further it was contended that it is desirable that there be provision for bargaining on future projects as each project is different and some have unique work requirements.9
[18] The exclusion of those covered by the Regional Rail Agreement is in the interest of those employees because they will be free to negotiate a replacement agreement. Unless they were excluded they would be covered by this Agreement after the Regional Rail Agreement passes its nominal expiry date. 10
[19] It was submitted that the decision of the Full Bench in CFMEU v John Holland Pty Ltd (John Holland) 11 does not prevent the Agreement from being approved.12
[20] In John Holland the coverage clause provided as follows:
“1.2 Any project or site specific agreement entered into by the Company or by any Joint Venture or similar business arrangement of which the Company is part, will cover and apply to the Company and any employees at that particular project or site to the exclusion of this Agreement.”
[21] In John Holland the Full Bench determined that it was unable to conclude that the group of employees was geographically, operationally or organisationally distinct. It was submitted that there were two key reasons for this conclusion:
(a) the ‘very broad exemption’ afforded by the coverage clause (which could include unregistered agreements and those made under state laws) meant that coverage could be determined on criteria other than those set out in s186(3A); and
(b) the material before the Tribunal in John Holland did not provide a basis for a finding that the employees to be covered were operationally or organisationally distinct. 13
[22] It was submitted that the Agreement here can be distinguished as any new agreement will need to be made under the FW Act and must satisfy the requirements in s186(3A) and the evidence in this case establishes that any existing or future project-specific agreement is geographically, operationally or organisationally distinct. 14
[23] Further it was submitted that the circumstances in this case can be distinguished from those in John Holland where that agreement was made with three employees but had potentially very wide application to many employees on many sites. 15 Further the Full Bench held that the agreement may apply to many employees who were not given the opportunity to bargain and/or take protected action and that this undermined collective bargaining.16
[24] It was submitted that by contrast, there had been a legitimate vote of 121 current employees of whom 113 cast a valid vote and 76 voted yes. The application for approval is also supported by the unions.
[25] Unlike the situation in John Holland the employees would be guaranteed the benefit of the better off overall test applying to any project agreement as well as the other safeguards under the FW Act. 17
[26] Abigroup also distinguished the Agreement from the agreement considered by the Full Bench in CFMEU v Queensland Bulk Handling Pty Ltd 18. That agreement provided that individual employees could opt out. The Full Bench determined that the group of employees covered by the agreement was not geographically, operationally or organisationally distinct because coverage of the agreement was ad hoc as it depended on individuals opting out.19
[27] The Agreement does not permit individuals to opt out. The provision under consideration here does not undermine collective bargaining because it requires there to be an enterprise agreement which is negotiated under the provisions of the FW Act. 20
Consideration
[28] The Agreement does not apply to all the employees of the employer. It applies to employees within the classifications set out in the Agreement who work on projects performed by Abigroup’s Southern Region Engineering Division in the State of Victoria who are not covered by an existing or future site specific agreement.
[29] While there are differences in the circumstances of this Agreement to that considered by the Full Bench in John Holland, the conclusions reached in John Holland are relevant to this application.
[30] In this matter, if Abigroup and its employees make a site specific agreement, it will exclude the employees from this Agreement. In John Holland it was held that the new agreement could be approved under federal or state legislation or not approved under any legislation. It was submitted that this was not the case here. However the Agreement here provides that the Agreement is displaced if a new enterprise agreement is made.
[31] Section 182 of the FW Act sets out when an enterprise agreement is made:
“182 When an enterprise agreement is made
Single-enterprise agreement that is not a greenfields agreement
(1) If the employees of the employer, or each employer, that will be covered by a proposed single-enterprise agreement that is not a greenfields agreement have been asked to approve the agreement under subsection 181(1), the agreement is made when a majority of those employees who cast a valid vote approve the agreement.
..........................
Greenfields agreement
(3) A greenfields agreement is made when it has been signed by each employer and each relevant employee organisation that the agreement is expressed to cover (which need not be all of the relevant employee organisations for the agreement).”
[32] Therefore before the new agreement is approved by Fair Work Australia and before it comes into operation, it displaces the Agreement. While I accept that the parties intend that the new agreement be approved by Fair Work Australia this is not what the Agreement requires.
[33] In John Holland the Full Bench found that the group of employees was not fairly chosen because it was not able to conclude that “the group of employees is geographically, operationally or organisationally distinct.
[34] Because the exclusion applies when the new agreement is made, as in John Holland, this Agreement permits the exclusion from the Agreement employees who may not be geographically, organisationally or operationally distinct 21 and therefore it is not possible to determine that the employees to be covered by the Agreement are geographically, operationally or organisationally distinct.
[35] If I accept that it was the intention of the parties that the reference to “made” in the application clause should be a reference to “approved” then what is put is that a group of employees which is currently geographically, organisationally or operationally distinct will remain so when a subset of those employees is extracted from coverage of the Agreement. This is because it is submitted that any new agreement approved by Fair Work Australia would itself have to cover a group of employees which was geographically, organisationally or operationally distinct.
[36] While I am satisfied that, but for the exclusion in the application clause, the group of employees is geographically, organisationally or operationally distinct I am not able to be satisfied that it will remain so once other projects are carved out. For example an agreement which applies to Victoria is geographically distinct. It may not remain geographically distinct if other sites are carved out.
[37] As in John Holland while the employees will be able to bargain for a new agreement they will not be able to take protected industrial action in support of such an agreement and this was identified in John Holland as “part of the bargaining scheme of the Act.” 22 Such a limitation undermines collective bargaining.
[38] For the reasons set out above I am unable to conclude that the group of employees was fairly chosen.
[39] However even if the group of employees was fairly chosen, section 58 of the FW Act is a significant barrier to the approval of the Agreement.
[40] Section 58 of the FW Act provides as follows:
“58 Only one enterprise agreement can apply to an employee
(1) Only one enterprise agreement can apply to an employee at a particular time.
General rule—later agreement does not apply until earlier agreement passes its nominal expiry date
(2) If:
(a) an enterprise agreement (the earlier agreement) applies to an employee in relation to particular employment; and
(b) another enterprise agreement (the later agreement) that covers the employee in relation to the same employment comes into operation; and
(c) subsection (3) (which deals with a single-enterprise agreement replacing a multi-enterprise agreement) does not apply;
then:
(d) if the earlier agreement has not passed its nominal expiry date:
(i) the later agreement cannot apply to the employee in relation to that employment until the earlier agreement passes its nominal expiry date; and
(ii) the earlier agreement ceases to apply to the employee in relation to that employment when the earlier agreement passes its nominal expiry date, and can never so apply again; or
(e) if the earlier agreement has passed its nominal expiry date—the earlier agreement ceases to apply to the employee when the later agreement comes into operation, and can never so apply again.”
[41] Abigroup submitted that “the rule in s58 of the Act is not relevant in these circumstances because the Agreement will never cover and therefore cannot apply to an employee employed pursuant to a project specific enterprise agreement made under the Act. The Agreement allows existing and future project agreements to operate prior to the nominated expiry date of the Agreement because it does not purport to cover employees who are subject to an existing project enterprise agreement or may be subject to a new project enterprise agreement in the future. The scope clause of the Agreement effectively prevents a ‘conflict of agreements’ issue arising by avoiding any overlap in the coverage of the Agreement and any existing or further project-specific enterprise agreement.” 23
[42] Abigroup accepts that the Agreement will, when approved, apply to all work performed by its employees engaged in the classifications in the Agreement in Victoria (except the work covered by the Regional Rail Agreement which is already in operation). Abigroup contends that a new agreement can be made covering a subset of these employees who perform work already covered by the Agreement and it can prevail over the Agreement.
[43] Abigroup accepts that, but for the making of a new agreement, this Agreement would apply to the employees. This is why Abigroup accepts that the employees to be covered by a new site specific agreement cannot take protected industrial action in support of the new site specific agreement until after the nominal expiry date of the Agreement because but for the making of the new agreement the employees are already covered by the Agreement.
[44] Let me illustrate this by way of an example. If Abigroup obtains a contract to work in Victoria on project X and wants to move some of its existing employees to work on project X, without the making of a new agreement, the work on project X would be covered by the Agreement. If the employees and Abigroup wish to negotiate a new agreement for project X then on the day before the new agreement was made the work would be covered by the Agreement and once the new agreement is made (or seven days after the new agreement was approved by Fair Work Australia), project X would be covered by the new agreement despite the fact that the Agreement has not passed its nominal expiry date.
[45] I do not accept that the parties are able to, by agreement, override the provisions of section 58 of the FW Act in the manner proposed by Abigroup.
[46] Because I do not accept these submissions of Abigroup, the question arises as to whether the employees genuinely agreed to the Agreement.
[47] The application clause of the Agreement was explained to employees and all parties understood that this Agreement permitted the parties to negotiate a new agreement for different locations or projects in Victoria. As Mr Winter on behalf of the AWU said:
“The scope of the agreement or the scope of this particular agreement is very important because I believe that when the employees voted they voted with the clear understanding that project-specific agreements could still be negotiated.” 24
[48] Section 187 of the FW Act provides for additional matters about which Fair Work Australia must be satisfied before approving the Agreement. Fair Work Australia must be satisfied that the employees have genuinely agreed to the agreement. In this case the relevant section of the FW Act is section 188(3) which provides as follows:
“(c) there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.”
[49] In this case I consider that there are reasonable grounds for believing that the Agreement was not genuinely agreed to by the employees because they were given information about the application of the Agreement which I have found was mistaken. Mr Winter stressed the importance to the employees of the application clause.
[50] At the hearing Abigroup reserved its right to reconsider offering an undertaking once the Tribunal’s reasons are published. I will provide Abigroup with seven days after the publication date of this decision to provide any undertakings it wishes to make. The AWU and CFMEU will be afforded an opportunity to respond to any such undertakings by 29 November 2012.
[51] If no undertakings are received, the application for approval of the Agreement will be dismissed.
COMMISSIONER
Appearances:
R West for Abigroup Contractors Pty Ltd
C Winter for The Australian Workers’ Union
No appearance for Construction, Forestry, Mining and Energy Union
Hearing details:
2012.
Melbourne:
18 and 29 October.
1 Exhibit A1 at [10]
2 Agreement ID AE891857
3 Exhibit A1 at [15]
4 Ibid at [16]
5 Ibid at [17]
6 See section 186(3) and Exhibit A1 at [27]
7 Exhibit A1 at [28]
8 Ibid at [34]
9 Ibid
10 Ibid at [37]
11 [2012] FWAFB 7866
12 Exhibit A1 at [38]
13 Ibid at [40]
14 Ibid at [41]
15 Ibid
16 Ibid at [42]
17 Ibid at [44]
18 [2012] FWAFB 7551
19 Exhibit A1 at [47]
20 Ibid at [50]
21 John Holland op cit at [28]
22 Ibid at [31]
23 Exhibit A1 at [10]-[11]
24 Transcript PN 29 and see PN 32
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