ACE Citrus Pty Ltd as trustee for the Ashley Meyer Family Trust T/A ACE Citrus Pty Ltd

[2020] FWC 2092

[2020] FWC 2092

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

ACE Citrus Pty Ltd as trustee for the Ashley Meyer Family Trust T/A ACE Citrus Pty Ltd
(AG2018/6447)

COMMISSIONER HARPER-GREENWELL MELBOURNE, 23 APRIL 2020

Application for approval of the ACE CITRUS PTY LTD Enterprise Agreement 2018 - not approved.

[1] On 21 November 2018 an application was made for approval of an enterprise agreement known as the ACE CITRUS PTY LTD Enterprise Agreement 2018 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act). It has been made by ACE Citrus Pty Ltd as trustee for the Ashley Meyer Family Trust T/A ACE Citrus Pty Ltd (ACE Citrus). The Agreement is a single enterprise agreement.

[2] The Agreement was made with two casual employees, both of whom voted to approve the Agreement. On 17 May 2019, I issued a Decision 1 (quashed Decision) approving the Agreement as I was satisfied that each of the requirements of ss.186, 187 and 188 of the Act as are relevant to the application for approval of the Agreement had been met.

[3] The Australian Workers’ Union (AWU) lodged an appeal against that Decision. The Decision was overturned by a Full Bench of this Commission on appeal in The Australian Workers’ Union v ACE Citrus Pty Ltd as trustee for the Ashley Meyer Family Trust 2(the Appeal Decision) and the matter was remitted to me for rehearing.

[4] The AWU was not a bargaining representative in relation to the Agreement however it opposes approval of the Agreement. The matter was listed for rehearing and the AWU was provided with the opportunity to file submissions and give evidence in support of its contentions. It contends that the Agreement cannot be approved because it does not pass the better off overall test and has not been genuinely agreed. 3

[5] ACE Citrus made no submissions in relation to the AWU’s standing to be heard. It contends however that the Agreement passes the better off overall test and that the Agreement was genuinely agreed.

[6] By way of background, the Agreement was made at a time when changes to the Horticulture Award 2010 (the Award) were being considered as part of the 4-yearly review of modern awards 4 (the Award Review). It is not in dispute that on 2 April 2019 the Commission issued a determination to vary the Award5 resulting, in part, in the creation of new overtime entitlements for casual employees in certain circumstances. As observed by the Full Bench in the Appeal Decision the determination followed upon decisions of the Commission made on that same day and on 9 August 2018.6 Those changes had not been made at the time the application for approval of the Agreement was made.

[7] The determination inserted into the Award a new clause 22.2, which provides that the ordinary hours for casual employees other than shift workers will not exceed 304 hours over an eight week period or 12 hours per engagement on any one day, and that each hour of overtime will be paid at the rate of 175%, inclusive of casual loading, an issue at the heart of the AWU’s objection to the approval of the Agreement. The new clause also provides that ordinary hours worked by a casual between 8.31pm and 4.59am will attract a 15% penalty in addition to the 25% casual loading. 7

[8] In paragraph [4] of the quashed Decision I noted that the nominal expiry date in clause 3.2 of the Agreement was more than four years from the date of approval, contrary to s.186(5). ACE Citrus has provided an undertaking that the nominal expiry date of the Agreement is four years after the date of approval by the Commission, I am satisfied that the undertaking addresses my concern.

[9] The flexibility term in the Agreement does not comply with section 203(6) of the Act because the notice period required to terminate an individual flexibility arrangement is more than the maximum 28 day period. If the Agreement is approved, the model flexibility term will apply.

[10] At issue in this matter is the nature of the explanation provided to employees by ACE Citrus of the terms of the Agreement and the effect of those terms having particular regard to what were at the time impending changes to the Award in respect of the casual employee overtime entitlements, a matter considered by a Full Bench of this Commission in Australian Workers’ Union v Gray Australia & Ors 8 (Gray). That decision was published on 21 August 2019, some three months after the issuing of the quashed Decision. Both parties made submissions relevant to the decision in Gray and I address those submissions below.

Better Off Overall Test (BOOT)

[11] The AWU submits that the Agreement contains inferior conditions compared to the current Award conditions. They specifically submit that the rates of pay in the Agreement are below the current minimum Award rates. They further submit that under clause 14.1(c) of the Agreement casual employees are denied overtime entitlements which is inferior to the current terms of the Award. In light of the Full Bench decision in Gray, it appears from both the written and oral submissions of the AWU they do not press any other matters in relation to the BOOT other than those that I have dealt with below.

[12] ACE Citrus submit that the AWU’s submission refers to inferior conditions in the Agreement compared to the current Award conditions. They submit that it is only the terms of the Award that are known at test time that are relevant to the BOOT.

[13] The “test time” referred to in s.193(1) is defined in s.193(6) of the Act as the time the application for approval of the agreement by the Commission was made. It is not in dispute that the test time in this matter was 21 November 2018, the date on which the application was lodged in the Commission, and that this date fell before the date on which the variation to the Award took effect.

[14] ACE Citrus submit that the BOOT is to be performed by comparing only the Award conditions that are known and “anchored” at the test time with all of the terms of the Agreement that will apply over its nominal life. In support of this submission they rely on the decision in Australian Nursing and Midwifery Federation v Domain Aged Care (QLD) Pty Ltd T/A Opal Agreed Care (Domain). 9

[15] In Domain the Full Bench stated:

“[27] Section 193 provides than an enterprise agreement passes the better off overall test if the Commission is satisfied, as at the test time, that each award covered employee and each prospective award covered employee would be better off overall if the agreement applied to the employee than if the relevant award applied to the employee. Although test time is the date the application was lodged, the Commission is required to conduct an overall comparison, for each existing and prospective employee, of agreement and award conditions. This necessarily requires a consideration of the rates of pay under the agreement and under the award that apply to existing and prospective award covered employees assessed ‘as at the test time’. A ‘point-in-time test’ is necessary because the award benchmark may change over the nominal life of the agreement, although its base rate of pay would always be the relevant minimum because of s 206. To our mind, this is the anchoring work of the ‘test-time’. The BOOT analysis occurs at this time, taking account of all that is known at this time, including all of the terms of the agreement that will apply over its nominal life. In our view, the ‘test-time’ does not confine the BOOT analysis to provisions of an agreement that are applicable only at its inception; employees must be better off overall under the agreement, not just better off at ‘test-time’.”

[16] ACE Citrus submit the decision in Domain is that the BOOT requires consideration of future wage changes provided for in an agreement during its life (and, arguably, future changes to an award) that are known at the test time. They submit the critical point is that for any future agreement and/or award changes to be considered under the BOOT they have to be known at the test time. (emphasis added)

[17] The decision in Domain is consistent with the Loaded Rates Agreements 10 decision (Loaded Rates Decision) in which a five member Full Bench clarified a number of matters going to the application of the BOOT. The Full Bench considered the requirement to assess the BOOT at ‘test time’, taking into account existing and prospective employees. That Full Bench held;

“[111] ……….

The statutory purpose of the requirement to assess the BOOT as at the test time is, we consider, to permit rates of pay and other conditions of employment in the agreement and the relevant award to be compared at a fixed point of time when the terms of both are known. Absent such a temporal requirement, the application of the BOOT would require speculation about future changes to the provisions of the award, in circumstances where the agreement to be assessed may also involve agreed changes such as increases in rates of pay at defined intervals, and would involve the impossible task of making multiple comparisons for the whole of the period in which the agreement remains in operation.”

[18] In Gray the Full Bench stated:

“[89] In this appeal, the first matter to be determined is whether the Agreements were genuinely agreed to under s 188 of the Act and fundamental to determining this matter are consideration of the forthcoming changes to the Award and the explanation of such changes to employees under s 180(5) of the Act. Genuine agreement is separate to issues relating to the BOOT, and award changes generally are not to be looked upon as BOOT issues as they are not operative at test time. However, with the forthcoming changes to the Award known in precise detail, the changes are ones that would be part of the obligation on employers to inform employees about how the proposed Agreements modify the Award changes and explain its terms and effects accordingly. The forthcoming changes to the Award should, in our view, go to the matter of explanation under s 180(5) of the Act for the purposes of satisfying the question of genuine agreement under s 188 of the Act.

[19] Having consideration of the views of the Full Bench in the aforementioned decisions, to be satisfied that the Agreement passes the better off overall test I am obligated to consider whether each Award covered employee and each prospective Award covered employee would be better off overall if the Agreement applied rather than the relevant Award. This requires me to consider all the terms of the Agreement that will apply over its nominal life including the rates of pay under the Agreement and the Award that applied to those employees at test time. 11

[20] One of the issues raised by the AWU is that under the proposed changes to the Award employees would have been entitled to a 15% penalty in addition to the 25% casual loading for ordinary hours worked by a casual between 8.31pm and 4.59am.

[21] I have taken into consideration the findings in both the Loaded Rates Decision and Gray. Regarding the BOOT ‘at test time’ being 21 November 2018, the rates of pay in the Agreement for full-time, part-time and casual employees in each of the classifications in the Agreement were marginally higher than those in the Award and all other entitlements are identical to the Award.

[22] At the time of making the Agreement although ACE Citrus was somewhat aware of the proposed changes to the Award they had not come into effect, however ACE Citrus’ knowledge of the changes is a matter I deal with below when considering if there was a genuine agreement. In any case, during the hearing of the matter the AWU made the concession that should ACE Citrus provide a written undertaking that casual employees will be paid the 15% loading in addition to the casual loading for each ordinary hour worked between 8.31pm and 4.59am, this would go some way to resolving the BOOT issues. ACE Citrus has provided such an undertaking. I am satisfied that in the event the Agreement is approved, the additional 15% loading provided for by the undertaking which was not a feature of the Award at test time provides casual employees with conditions that would see them better off overall.

[23] The AWU submit the Agreement at clause 4.2 contains an unlawful opt-out clause pursuant to s.194(a) of the Act because it states that Agreement does not apply to an employee who commences receiving an annual salary.

[24] Clause 4.2 of the Agreement may operate as an ‘opt out term’ because it excludes from coverage “employees who are paid an annual salary”. ACE Citrus has provided an undertaking to delete clause 4.2 of the Agreement which addresses my concerns.

[25] With the provided undertakings, in the event I approve the Agreement I am satisfied that the agreement passes the “better off overall test”.

Genuine Agreement

[26] The AWU submits two separate grounds in support of their argument that the Agreement was not genuinely agreed. The Full Bench in the Appeal Decision identified a third ground. I deal with each of those grounds below.

Genuine Agreement Access Period

[27] The Full Bench in the Appeal Decision observed that there had been non-compliance with s.180(3) of the Act because the employees were provided with an access period of six clear days rather than seven clear days as required by the Act. 12

[28] The AWU did not make any submissions relevant to this matter.

[29] ACE Citrus submits that the procedural error was a minor error and that the employees covered by the Agreement both cast a valid vote and the employees were not likely to have been disadvantaged by the procedural error.

[30] ACE Citrus relies on the decision in Huntsman Chemical Company Australia Pty Limited T/A RMAX Rigid Cellular Plastics & Others 13(Huntsman). The Full Bench in Huntsman considered the proper construction of section 188(2) of the Act. The Full Bench found that in the circumstances where only 6 clear days’ notice of the voting process was given to employees, and 8 of the 10 employees covered by the agreement cast a valid vote, the procedural error could be characterised as a minor error because the employees covered by the agreement were not likely to have been disadvantaged by the procedural error.14

[31] Section 188(2) provides that an agreement has been genuinely agreed if the Commission is satisfied that the agreement would have been genuinely agreed but for minor procedural errors made in relation to s.180(3), and the employees were not likely to have been disadvantaged by the errors. In the circumstances, I am satisfied that the employees covered by the agreement were not likely to have been disadvantaged by the failure to provide seven clear days as required by the Act.

Misleading Statement clause 6.1

[32] The AWU submits that clause 6.1 of the Agreement provides a misleading statement about the better of overall test. They submit clause 6.1 indicates employees were provided with incorrect information about the effect of the terms of the Agreement. 15

[33] Clause 6.1 of the Agreement states as follows:

“6.1 For the purposes of complying with the Better Off Overall Test provisions under the Fair Work Act 2009 the terms of this Agreement, on balance, do not and would not result in any reduction in the overall terms and conditions of employment of the employees, subject to this Agreement in comparison to any applicable reference instrument relating to those employees.”

[34] The applicable reference instrument is defined in clause 6.2 as the Award.

[35] ACE Citrus submit that both the heading and the “purposes” of clause 6.1 refer to compliance with the BOOT. They submit the words “do not” refer to the time when the Agreement is made, and the words “and would not” refer to the future time of the BOOT. They further submit there is nothing to suggest that the clause makes any representation beyond the time of the BOOT for the entire life of the Agreement.

[36] A clause in the exact same terms was considered by Commissioner McKinnon in Packing Shed & Others 16. The Commissioner observed on a plain reading of the term, and in particular the assurance contained within the term that the agreement “would not” result in any reduction in overall terms and conditions of employment for employees, gives the impression that it will at least be equivalent to the Award for its duration.17 I concur with the Commissioner’s interpretation of the clause that is replicated in whole in the current Agreement. For casual employees, giving consideration to the Award amendments, the reference that those employees ‘would not’ under the Agreement be subject to terms that are less than the Award is plainly wrong, and is in my view misleading.

[37] ACE Citrus submit that any inference that any wrong impression was given that the Agreement would be at least equivalent to the Award for its duration, is negated by Mr Meyer’s explanation to the employees that if the Agreement was voted up, none of the Award terms including any entitlements of casual employees to overtime payments would apply. 18

[38] I will deal with the explanation of the terms provided to employees below.

Explanation of the terms of the Agreement

[39] The AWU submit the Agreement is in very similar terms to a large number of agreements that employers in the horticulture industry sought to have approved in 2018 and early 2019 to avoid the operation of casual overtime conditions that the Commission determined to include in the Award during the 4-yearly review. They submit that the minimum requirements identified by the Full Bench in Gray regarding the explanation of the imminent changes to the Award under s.180(5) have not been satisfied and therefore the Agreement has not genuinely been agreed.

[40] The AWU submits that Mr Ashley Meyer (Farm Owner) in his Form F17 statutory declaration did not indicate that the relevant employees were informed about the imminent changes to the Award. They further submit Mr Meyer later provided a declaration that the 15% night work loading element of the Award changes was not explained to employees and nor was the payment of overtime rates where more than 12 hours is worked per day. The AWU also submit that Mr Meyer’s explanation about the award changes was limited to the 8-week averaging period for weekly ordinary hours.

[41] Mr Meyer did file a further statutory declaration in support of his application. Mr Meyer submits that on 6 November 2018 he explained to the employees that changes to the Award were proposed and that, if accepted, would provide casual employees with an entitlement to overtime payments if they worked in excess of their ordinary hours averaged over 8 weeks. Mr Meyer also explained to employees that none of the Award terms including any entitlement of casual employee overtime payments would apply.

[42] In its submission ACE Citrus concedes that they did not explain all of the proposed changes to the Award regarding overtime entitlements to casual employees to the extent required under Gray to comply with s.180(5) of the Act. However, it submitted that this error does not mean that the Agreement was not genuinely agreed to in a more general sense. They submit that this error can be rectified under s.188(2), for reasons including:

a) Mr Meyer explained to the employees that pending changes to the Award that were proposed to include overtime for casuals;

b) Mr Meyer’s explanation to employees included the most significant and substantial proposed change to the Award of overtime to casual employees if they worked excess of their ordinary hours averaged over 8 weeks;

c) There was yet scope for change to the proposed variations to the Award;

d) Mr Meyer explained to the employees that if the Agreement was voted up, none of the Award terms including any entitlements of casual employees to overtime payments would apply;

e) Both employees have considerable experience in the Horticulture industry and as such were familiar with the Award and understood what the Agreement terms would mean for them;

f) In an approximately 20-minute telephone conference on 17 May 2019 the Commissioner questioned Mr Meyer and the bargaining representatives (who were also the 2 employees), and satisfied herself that:

i. The employer had taken all reasonable steps to ensure that:

1. The terms of the Agreement, and the effect of those terms (compared to the Award as it was at that time), had been explained to the employees;

2. At least some of the proposed variations to the Award regarding entitlements of casual employees to overtime had been explained;

3. The explanation was provided in an appropriate manner taking into account the particular circumstances and needs of the employees; and

ii. There were no other reasonable grounds for believing that the Agreement had not been genuinely agreed to by the employees.

[43] ACE Citrus submit that the employees were aware of the proposed Award changes to the overtime entitlements to casual employees and voted in favour of the Agreement in the full knowledge that any changes to the casual overtime payments regardless of what the actual changes may eventually be would not apply. (emphasis added)

[44] ACE Citrus submits that at the time of making the Agreement there was yet scope for change to the proposed variations to the Award and under these circumstances, the failure by the employer to fully comply with the explanation requirements in Gray was a minor procedural error. They further submit that employees were not likely to have been disadvantage by the error because they were aware that they would not be entitled to any Award entitlements if the Agreement was to be approved and they voluntarily chose to vote in favour of the Agreement.

[45] The AWU submit that the failure to properly explain the main effect of the agreement cannot be considered to be a “minor procedural error”. They submit the primary motivating factor for ACE Citrus wanting to make the Agreement was to avoid having to comply with the casual overtime conditions in the Award. They submit in that context, it was clearly critical to ensure that employees were fully informed about the relevant award review proceedings. 19

Consideration of the explanation of the terms of the Agreement

[46] The question that needs to be answered is was the information Mr Meyers provided to employees sufficient enough that the employees understood the terms they were agreeing to in order for there to be a genuine agreement. Further to this whether the failure to explain the proposed changes to the Award constitutes a minor procedural error that can be rectified through s.188(2) or by way of an undertaking.

[47] Section 186(2)(a) of the Act requires the Commission to be satisfied that the enterprise agreements have been genuinely agreed to by relevant employees.

[48] Section 188 deals with when an enterprise agreement has been “genuinely agreed” to by employees. In summary, it requires the Commission to be satisfied of three matters:

1. The employer must have complied with the pre-approval steps set out in sections 180(2), (3) and (5) and section 181(2) of the Act;

2. The Agreement must have been “made” in accordance with section 182 of the Act; and

3. There must be no other reasonable grounds for believing that the Agreement has not been genuinely agreed to by the employees.

[49] Section 180(5) of the Act requires that an employer must take all reasonable steps to ensure that the terms of an agreement, and the effect of those terms are explained to the relevant employees and that the explanation provided was appropriate having regard to the particular circumstances and needs of the relevant employees. All reasonable steps having been taken pursuant to s.180(5) is one of the necessary preconditions to the Commission being satisfied that an agreement has been genuinely agreed pursuant to s. 188(1) of the Act.

[50] On 7 May 2019 my chambers wrote to the ACE Citrus representative requesting how the terms of the Agreement were explained to the employees in order to be satisfied that the employees had genuinely agreed to the Agreement and that the information be provided by way of a Statutory Declaration. Mr Meyers complied with my direction and filed a statutory declaration on 9 May 2019. The statutory declaration provided states the following:

“A meeting was held with employees to explain the terms of the agreement and the effect of the terms in relation to the current award and including pending changes to the award that were proposed to include overtime for casuals.”

[51] On 13 May 2019 my Chambers once again sent correspondence to ACE Citrus advising that the statutory declaration did not adequately address my concerns as it contained insufficient detail as to what information was provided regarding the changes to the Award. Accordingly, the matter was listed for a telephone conference.

[52] ACE Citrus and the bargaining representatives made submissions during the conference. After considering the submissions and giving consideration to the requirements of section 180(5) I was initially satisfied that the test had been met in relation to genuine agreement. At the time of making my decision there were no other reasonable grounds before me to consider that the Agreement had not been genuinely agreed.

[53] I issued my Decision approving the Agreement on 17 May 2019. On 21 August 2019 in Gray a Full Bench of this Commission considered in more detail the requirements of section 180(5). The Full Bench considered the nature of the explanation provided to employees by various employers of the terms of the agreements and the effect of those terms having particular regard to what were at the time impending changes to the Award in respect of casual employee overtime entitlements. The Full Bench stated as follows;

“[92] Therefore, in this appeal, to satisfy ourselves that the Agreements were genuinely agreed to in accordance with s 188 of the Act, the explanation provided to employees in respect of the forthcoming changes to the Award must reflect the actual nature of the forthcoming changes. (emphasis added)

[93] We agree with the Appellant that in order to comply with s 180(5) of the Act in relation to the Agreements, the explanation to employees must have addressed, at the very least, the following:

•  the details of the decisions already made by the Full Bench concerning the Award and specifically that the Award will be varied to prescribe a maximum of 12 ordinary hours per day for casual employees and that maximum weekly ordinary hours would also be prescribed for casual employees but an averaging period will apply to ensure overtime rates are not payable when large amounts of hours are worked in a short period. The Full Bench’s provisional view was that an averaging period of eight weeks would apply and this had been agreed by the AWU, NUW, NFF and AIG;

•  the changes to the Award arise from an award review process whereby the Commission independently assesses what constitutes a fair and relevant safety net of minimum conditions for employers and employees working in the industry. The Commission received detailed evidence from employers and their representatives about the nature of the industry and potential responses to the imposition of casual overtime conditions and was taking this into account in assessing the appropriate award conditions, and

•  the effect of approving the Agreements is that casual employees will receive less beneficial hours of conditions than the minimum applying under the Award from when the award variation take effect until at least the end of the nominal four-year term of each Agreement.” 20

[54] The Agreement was made shortly before the peak season was due to commence in mid-December and more than four months before the Award was varied to introduce overtime for casual employees. The Agreement was made with two employees both casual.

[55] The Agreement was made in similar terms to those considered in Gray, there is no entitlement to overtime for casual employees.

[56] It is clear from the evidence that ACE Citrus did not clearly explain to the terms of the proposed changes to the Award to the requisite level outlined in Gray. ACE Citrus gave submissions to conceding that they had not explained those changes to the extent required in Gray. However, can this failure be considered a “minor procedural error” that can be rectified through s188(2).

[57] Huntsman considered the definition of minor procedural or technical errors. The Full Bench found the following:

“[117] ….

1. The adjective ‘minor’ qualifies both ‘procedural’ errors and ‘technical’ errors, such that the expression reads ‘minor procedural errors or minor technical errors’. The word ‘minor’ is a limitation upon the type of errors contemplated by s.188(2)(a).

2. A failure to comply with a procedural requirement will constitute a ‘procedural error’ within the meaning of s.188(2)(a). A procedural requirement is one which requires an employer to follow a particular process or course of action eg. Providing employees with the NERR as soon as practicable, and not later than 14 days after the notification time (s.173(3)), or ensuring there are at least 7 clear days between notifying employees of the voting process and the commencement of that process (s.180(3)).

3. A failure to comply with a technical requirement will constitute a ‘technical error’ within the meaning of s.188(2)(b). A technical requirement includes an obligation to comply strictly with the form and content of an instrument, such as the NERR.

4. A single error may have both procedural and technical components.

5. The impact of the errors is to be assessed by reference to the objects of the requirements in ss.188(2)(a), 188(1)(b), 173 or 174.

6. What constitutes a ‘minor’ error calls for an evaluative judgment having regard to the underlying purpose of the relevant procedural or technical requirement which has not been complied with and the relevant circumstances. Table 2 at [74] above examines each of the procedural or technical requirements, considers the underlying purpose of these requirements and outlines some ways in which employees might be disadvantaged by a minor technical or procedural error.

7. Generally speaking, the lower the level of non-compliance the more likely it is to be characterised as a ‘minor error’. For example, informing the employees of the matters in ss.180(3)(a) and (b) just after the start of the 7 day access period (say 6 days before the start of the voting process) is likely to be a ‘minor error’ in most cases. But it will depend on the circumstances. If it is the first agreement at the enterprise; the bargaining representatives are inexperienced and the employees are predominantly from a non-English speaking background, then it may not be a ‘minor error’. Conversely, only informing the employees of the time and place at which the vote will occur some 4 days before the voting process starts may be a ‘minor error’ where there is a history of bargaining at the enterprise; the agreement is, in effect, a ‘roll over’ agreement; the employer takes further active steps to remind employees of the time and date of the vote; and a high proportion of employees actually vote.

8. Whether an incidence of non-compliance is characterised as a ‘minor error’ also depends on the nature of the requirement which has not been complied with. For example, the need to inform employees of the time and date of the vote (s.180(3)(a)) is more significant than informing them of the ‘voting method’ (s.180(3)(b)) – the first requirement may impact on the employees’ capacity to participate in the voting process, the second may not.

9. Some species of error are unlikely to be classified as ‘minor’, for example the deletion of the prescribed text of the NERR which deals with an employee’s right to appoint a bargaining representative and the role of the unions as the default bargaining representatives. But, again, it may depend on the circumstances (see paragraphs [77] - [78] above).

10. The test in s.188(2)(b) is whether the employees covered by the agreement were ‘not likely to have been disadvantaged by the errors, in relation to the requirements mentioned in paragraph (1)(a) or (b) or the requirements of sections 173 and 174’(emphasis added). The impact of the errors is to be assessed by reference to the objects of those requirements and not by reference to any more general sense of ‘genuine agreement’.

11. Cost or inconvenience to the employer and employee covered by an agreement associated with a delay in the approval of the agreement is not relevant to the question of whether the employees covered by the agreement ‘were not likely to be disadvantaged by the errors’.

12. The test posited by s.188(2)(b) is whether ‘the employees covered by the agreement were not likely to have been disadvantaged by the errors’.

13. The word ‘likely’ in s.188(2(b) means ‘probable’ in the sense that there is an odds-on chance of it happening, rather than merely being some possibility of it happening. The word ‘disadvantaged’ suggests a deprivation which manifests in the employees covered by the agreement being prevented from substantively exercising their rights within the bargaining regime in Part 2-4 of the Act.

14. In assessing whether employees were not likely to have been disadvantaged by an error, it may be necessary to consider the particular circumstances of the employees concerned at the time the error occurred and the impact of the error on the subsequent course of bargaining. This may include considering any steps taken by the employer to address the adverse impact of the non-compliance. 21

[58] The issue of whether the failure to explain the proposed changes to the Award was dealt with in Gray. The Full Bench stated:

“[101] The genuine agreement deficiency identified in each of the Agreements is one that cannot be rectified by provisions in the Act that afford the power to rectify minor procedural or technical errors or by way of an undertaking. In a recent decision of this Full Bench, we noted:

“[17] It should be noted that the power to rectify minor procedural or technical errors in s 188(2) does not apply to all matters in ss 180, 186 and 188. Section 188(2) has no application in circumstances where the Commission is not satisfied that an agreement was genuinely agreed to in a general sense, as might arise in considering s 188(1)(c).

…

Section 188(2) provides a limited discretion to deal with some ‘minor procedural or technical errors’ relating to the procedural requirements for agreements, and s 190 provides the limited circumstances in which undertakings may satisfy the Commission that particular concerns are met, namely where the undertaking is not likely to cause financial detriment to any employee covered by the agreement or result in substantial changes to the agreement.”. (references omitted)

[59] I have taken into account what was in the public domain in relation to the proposed Award variations at the time that the Agreement and the effect of its terms were explained to the two employees. That information is set out in the Appeal Decision and I do not intend to repeat all of that information. However, I note that on 9 August 2018 the Full Bench in its decision 22 outlined in some detail that broadly consensus had been reached by the parties for the proposal for the implantation of the principal decision and the details of the elements of that proposal which included inter alia that a requirement for the ordinary hours of casual employees not to exceed 304 hours over an 8 week period, and that any time worked in excess of 12 hours per day or 304 hours over an 8-week period is overtime and will be paid at the rate of 175% of the employee’s ordinary hourly rate (inclusive of casual loading), the ordinary hours of a casual employee to be worked between 5:00am and 8:30pm on any day of the week, and paid at the employee’s minimum hour wage plus the casual loading of 25% and a maximum of 12 ordinary hours is able to be worked on any one day.

[60] As I have previously stated the details provided in the Application and Mr Meyer’s additional statutory declaration filed on 9 May 2019 did not satisfy my concerns about genuine agreement. On a rehearing of the application, ACE Citrus filed a further statutory declaration in which Mr Meyer’s provides his recollection of the details he provided at the conference before the Commission by phone on 17 May 2019.

[61] In their submission ACE Citrus concedes that Mr Meyer had acknowledged that the 15% night work loading element of the Award changes was not explained to the two employees even though Mr Meyer had some knowledge of some of the details of the proposed changes to the Award. Mr Meyer’s explanation on this matter to his employees is most relevant in that at the time of the making of the Agreement the information about the proposed changes had been expressed in a decision issued by the Full Bench on 9 August 2018.

[62] ACE Citrus submits that although it is conceded they did not explain all the proposed changes to the Award regarding overtime entitlements to casual employees to the extent required in Gray to comply with s180(5), this error does not mean that the Agreement was not “genuinely agreed to in a more general sense”, and any deficiency can be rectified under s.188(2) for the reasons outlined in paragraph [42] of this decision.

[63] I do not agree with ACE Citrus’ submission that the genuine agreement issue regarding the first of the contentions being that ACE Citrus failed to adequately explain the proposed terms of the changes to the Award in regard to the 15% night work loading element, can be rectified under s188(2). I am constrained by the decision in Gray as to the requisite level required by ACE Citrus to explain the terms of the proposed changes given what information was available in the public domain at the time of making of the Agreement. I am not be satisfied on the evidence before me, being the oral evidence and Mr Meyers first, second and third statutory declaration that he explained in sufficient detail the proposed changes to the Award regarding the 15% night work loading element, which has been conceded by ACE Citrus in evidence and submissions. I do not consider such an omission to be a minor technical or procedural error. The two employees were clearly not fully informed of the impending amendments to the Award and therefore it cannot be determined that they would have willingly forgone those entitlements.

[64] Section 190(3) of the Act provides that the Commission may accept a written undertaking from one or more employers covered by the agreement if the Commission is satisfied that the effect of accepting the undertaking is not likely to:

a) Cause financial detriment to any employee covered by the agreement: or

b) Result in substantial changes to the agreement.

[65] Whilst the undertaking proposed by ACE Citrus to rectify this issue of genuine agreement may resolve the BOOT issue, it does not in my view resolve the genuine agreement issue. One cannot retrospectively seek to undo a genuine agreement issue where the information was not provided to employees prior to voting on an agreement. Had ACE Citrus been able to demonstrate that they had provided the information to employees and then provided the undertaking proposed then I may have been inclined to accept it on the basis that the information was already before the employees, however the evidence supports a finding that it was not. The undertaking proposed does not meet the principal concern being whether or not the employees were made aware of the imminent changes to the Agreement prior to voting in favour of the Agreement.

[66] I now turn to the second element of the genuine agreement issue, being the payment of overtime to casuals where more than 12 hours is worked. As previously stated in this decision, in Gray the nature of the explanation of the terms required to satisfy s.180(5) and s.188(1) requirements have been sufficiently articulated. I understand that the requirements may seem somewhat burdensome for a small employer such as ACE Citrus who lacks industrial relations expertise. However, against this backdrop I am not satisfied that the explanation of the overtime conditions was adequately explained to the employees. I have taken into account the additional material provided by ACE Citrus including the proposed undertaking that the maximum hours a casual employee may work per engagement, or on any day, is 12 ordinary hours. In my view the undertaking does not resolve the issue of genuine agreement. I cannot be certain that the employees, had they been aware of the full extent of the nature of the proposed conditions regarding casual employee overtime, would have voted in favour of the proposed agreement. Whilst I acknowledge the submission that the employees were aware that any proposed changes to the Award would not apply to them and voted in favour of the Agreement having that knowledge, it was incumbent on ACE Citrus to provide the details of those changes to the employees, as that information was in the public domain by way of a decision of the Full Bench and available to them at the time of making the Agreement. Further the employees were not fully aware of what those proposed changes were and the question remains that had they been aware, would the Agreement have been agreed to by those employees. As I cannot be satisfied that this would have been the case, I cannot be satisfied that there was a genuine agreement and therefore the application for approval of an enterprise agreement is dismissed.

COMMISSIONER

Appearances:

P Copeland of Copeland Workplace Law for the Applicant
S Crawford of The Australian Workers’ Union

Hearing details:

2019.
Melbourne (by telephone):
December 19.

Printed by authority of the Commonwealth Government Printer

<PR718469>

 1   [2019] FWCA 3443

 2   [2019] FWCFB 5722

 3   AWU Submissions

 4   4 yearly review of modern awards – Casual employment and Part-time employment [2017] FWCFB 3541; 4 yearly review of modern awards – Award stage – Group 3 [2018] FWCFB 1405 at [121] and [2018] FWCFB 6368.

 5   PR706485

 6   [2019] FWCFB 2108 and [2018] FWCFB 4695, 282 IR 135

 7    [2019] FWCFB 2108

 8   [2019] FWCFB 4253

 9   [2019] FWCFB 1716

 10   [2018] FWCFB 3610

 11   [2019] FWCFC 1716 at [27]

 12   [2019] FWCFB 5722 at [27]

 13   [2019] FWCFB 318

 14   Ibid, at [170]

 15   AWU Submissions, 10

 16   [2019] FWC 6905

 17   Ibid, at [62]

 18   Applicant Submissions, at [19]

 19   AWU Reply Submissions

 20   [2019] FWCFB 4253 at [92]-[93]

 21   [2019] FWCFB 318 at [117]

 22   [2018] FWCFB 4695, 282 IR 135