ACI Operations Pty Ltd T/A O-I Melbourne

[2013] FWC 3295

Note: An appeal pursuant to s.604 (C2013/4554) was lodged against this decision.

[2013] FWC 3295

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

ACI Operations Pty Ltd T/A O-I Melbourne
(AG2013/1066)

COMMISSIONER RYAN MELBOURNE, 24 MAY 2013

Application for approval of the O-I Melbourne Glassworkers Workplace Agreement 2013.

[1] Application for approval of the O-I Melbourne - Glassworkers Workplace Agreement 2013 (the Agreement) was filed with the Commission on 3 May 2013. The application was accompanied by a Form F17 Declaration of Employer in Support of Application which was sworn by Mr Mario Minniti, Employee Relations Manager for the applicant, ACI Operations Pty Ltd.

Notice of Employee Representational Rights - s.174

[2] Section 174 of the Act, as at the time the Notice of Employee Representational Rights was issued by the employer to relevant employees, was in the following form:

“174 Content and form of notice of employee representational rights

Application of this section

(1) This section applies if an employer that will be covered by a proposed enterprise agreement is required to give a notice under subsection 173(1) to an employee.

Content of notice—employee may appoint a bargaining representative

(2) The notice must specify that the employee may appoint a bargaining representative to represent the employee:

(a) in bargaining for the agreement; and

(b) in a matter before the FWC that relates to bargaining for the agreement.

Content of notice—default bargaining representative

(3) If subsection (4) does not apply, the notice must explain that:

(a) if the employee is a member of an employee organisation that is entitled to represent the industrial interests of the employee in relation to work that will be performed under the agreement; and

(b) the employee does not appoint another person as his or her bargaining representative for the agreement;

the organisation will be the bargaining representative of the employee.

Content of notice—bargaining representative if a low-paid authorisation is in operation

(4) If a low-paid authorisation in relation to the agreement that specifies the employer is in operation, the notice must explain the effect of paragraph 176(1)(b) and subsection 176(2) (which deal with bargaining representatives for such agreements).

Content of notice—copy of instrument of appointment to be given

(5) The notice must explain the effect of paragraph 178(2)(a) (which deals with giving a copy of an instrument of appointment of a bargaining representative to an employee’s employer).

Regulations may prescribe additional content and form requirements etc

(6) The regulations may prescribe other matters relating to the content or form of the notice, or manner in which employers may give notice to employees.”

[3] The Form F17 asks a series of questions which are all designed to have the deponent of the Statutory Declaration identify how the employer has complied with its statutory obligations in relation to making an enterprise agreement.

[4] In answer to question 2.4 in the Form F17, Mr Minniti declared as follows:

“2.4 Did the employer take all reasonable steps to give notice of the right to be

represented by a bargaining representative to each employee who will be

covered by the Agreement as required by s. 173?

[x] Yes

[ ] No

If "Yes", please attach a copy of the notice given to employees and explain the

steps taken:

Find attached notice of representational rights. The employer informed employees of their rights to be represented by the union or a representative of their choosing.”

[5] Attached to the Form F17 was the Notice of Employee Representational Rights issued to employees, appended hereto as Appendix A.

[6] The Notice did not contain any explanation that would meet the requirements of s.174(3) of the Act.

[7] The question as to whether a Notice of Employee Representational Rights is valid if it fails to include the explanation required by s.174(3) was considered by Booth C in declining to approve the Ostwald Bros Civil Pty Ltd Collective Agreement 2012  1, and by a Full Bench on appeal against that decision, [2012] FWAFB 9512. The majority of the Full Bench upheld the decision at first instance. The majority of the Full Bench said:

“59. Having regard to the statutory context within which it appears, we find that genuine agreement by employees in s.188(a)(ii) requires that the last notice under s.173(1) which must be given at least 21 days in advance of a request to vote is a notice of the type prescribed in s.173, including the content requirement in s.174(3). The Appellant contended that a failure to provide a notice in those terms is of no consequence unless the deficiency in the notice is found, on the relevant evidence, to have vitiated genuine agreement when considered as a broad discretionary judgement. We find that construction to be unsustainable in the context of the Act.

and

89. Properly construed, in the broader context of the Act, s.188(1)(b) of the Act requires the giving of notice of employee representational rights 21 days prior to a request to approve an enterprise agreement under s.181 in the terms required by s.174 of the Act, which includes advice of default representation in s.174(3). The notice given in this case, which omitted the information to employees required by s.174(3) was not a notice as required by s.188(1)(b).”

[8] Notwithstanding Mr Minniti’s answer to question 2.4 that the “employer informed employees of their rights to be represented by the union or a representative of their choosing”, such explanation does not cure the defect in that the Notice was required to contain a specific explanation in relation to default bargaining representatives.

[9] In the present matter the absence in the Notice of the explanation required by s.174(3) means that the employer did not give a valid Notice of Employee Representational Rights to the relevant employees.

[10] Where an employer has not issued a Notice of Employee Representational Rights which meets the requirement of S.174 then the employer cannot request employees to approve a proposed enterprise agreement. Even though, as in the present matter, the employer did request employees to approve the Agreement and the employees voted to approve the Agreement both the request and the vote are a nullity.

[11] On this matter alone the application must be, and is, dismissed.

Observations

[12] I take the opportunity to make a number of observations about other aspects of the process used by the employer to make an enterprise agreement and about the contents of the enterprise agreement. These observations do not form part of the decision I have made.

[13] The following observations are made on the basis that if the employer and its employees want to make an enterprise agreement and have it approved by the Commission regard must be had to the requirements of the Act in relation to making and approving enterprise agreements and regard should be had to constructing an enterprise agreement which is clear and easily understood. The observations hopefully will assist the employer and employees and their bargaining representatives in making an enterprise agreement and in getting such agreement approved.

Compliance with the Statutory Requirements of the Fair Work Act

[14] Section 180 of the Act sets out a number of requirements which the employer must meet before the employer is entitled to request employees to vote to approve an enterprise agreement. These requirements are additional to the requirement relating to the need to issue a valid Notice of Employee Representational Rights to the relevant employees.

“180 Employees must be given a copy of a proposed enterprise agreement etc.

Pre-approval requirements

(1) Before an employer requests under subsection 181(1) that employees approve a proposed enterprise agreement by voting for the agreement, the employer must comply with the requirements set out in this section.

Employees must be given copy of the agreement etc.

(2) The employer must take all reasonable steps to ensure that:

(a) during the access period for the agreement, the employees (the relevant employees) employed at the time who will be covered by the agreement are given a copy of the following materials:

(i) the written text of the agreement;

(ii) any other material incorporated by reference in the agreement; or

(b) the relevant employees have access, throughout the access period for the agreement, to a copy of those materials.

(3) The employer must take all reasonable steps to notify the relevant employees of the following by the start of the access period for the agreement:

(a) the time and place at which the vote will occur;

(b) the voting method that will be used.

(4) The access period for a proposed enterprise agreement is the 7-day period ending immediately before the start of the voting process referred to in subsection 181(1).

Terms of the agreement must be explained to employees etc.

(5) The employer must take all reasonable steps to ensure that:

(a) the terms of the agreement, and the effect of those terms, are explained to the relevant employees; and

(b) the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.

(6) Without limiting paragraph (5)(b), the following are examples of the kinds of employees whose circumstances and needs are to be taken into account for the purposes of complying with that paragraph:

(a) employees from culturally and linguistically diverse backgrounds;

(b) young employees;

(c) employees who did not have a bargaining representative for the agreement.”

[15] The Form F17 ask three questions which deal with the specific matters raised by s.180. Question 2.5 relates to s.180(2), question 2.6 relates to s.180(3) and question 2.7 relates to s.180(5). The statutory declaration of Mr Minniti contained the following:

“2.5 Please specify the steps taken by the employer to ensure that the relevant employees were given, or had access to, the written text of the Agreement and any other material incorporated by reference into the Agreement during the 7 day period ending immediately before the start of the voting process (s.180(2)(a)):

A copy of the agreement was providing (sic) to all production employees that are covered by the agreement at least 7 days prior to the ballot. A circular invited all production employees to attend joint union and company information sessions on the changes to the agreement and to answer any questions in regards to the changes to the agreement.

2.6 Please specify the steps taken by the employer (including the date of each such step) to notify all relevant employees of the time and place at which the vote was to occur and the voting method to be used (s.180(3)):

The employer informed employees of the ballot its date and the method of voting in the circular issued on 30 May 2012

2.7 Please specify the steps taken by the employer to explain the terms of the Agreement, and the effect of those terms, to relevant employees (s.l80(5)):

[Note: Your answer must include information on the manner in which the explanation took account of particular circumstances and needs of the relevant employees. (e.g., where the employees were from a non-English speaking background, were young employees or did not have a bargaining representative).]

The employer circulated the agreement to all relevant employees, all of whom are able to read and understand English. The employer invited all employees who may have specific questions or concerns to raise the issues with their supervisor or HR Manager or bargaining reps.”

[16] I turn to each of the requirements of s.180 and the respective answers provided by the statutory declaration of Mr Minniti.

Section 180(2)

[17] Section 180(2)(a) requires that the employer take reasonable steps to either give employees a copy of, or give employees access to, the proposed agreement and any incorporated documents. S.180(2)(b) requires that employees have access to those materials throughout the access period specified in s.180(4).

[18] The statutory declaration makes clear that the employer gave employees a copy of the proposed agreement and that the employer did so at least 7 days prior to the ballot. Prima facie I would accept that the employer has complied with the requirement imposed by the combined operation of s.180(2)(a)(i) and (b) of the Act.

[19] The Agreement provides at clause 7 that, inter alia:

“The Manufacturing and Associated Industries and Occupations Award 2010 (the Award) is incorporated into this agreement and the Award shall be applicablewhere this Agreement is silent.”

[20] The answer to question 2.5 of the F17 makes clear that employees were given access to the Agreement but no mention is made of employees being given access to a copy of the incorporated award. Whilst this award is available on the Fair Work Commission website there is no indication in the Form F17 that the employer either had copies of the award available at the workplace or provided employees with means to access an online version of the award.

[21] The only conclusion that would follow from the statutory declaration of Mr Minniti is that the employer did not comply with the requirement of s.180(2)(a)(ii) to take reasonable steps to ensure that employees were given a copy of the incorporated award or that employees had access to a copy of the incorporated award.

[22] Non compliance with s.180(2)(a)(ii) means that the employer was not entitled, notwithstanding compliance with any other provision of the Act, to request employees to approve the Agreement.

Section 180(3)

[23] Mr Minniti’s answer to question 2.6 in his statutory declaration should in the normal course of events be taken at face value as being truthful.

[24] In the context of this Agreement the last Notice of Employee Representational Rights was issued by the employer to employees on 20 April 2012. Employees were then informed on 30 May 2012, pursuant to s.180(3), of the time and place at which the vote was to occur and the voting method to be used. The vote was then conducted during on 1 May 2013.

[25] It seems implausible that the employer would give notice pursuant to s.180(3) a year before the actual voting took place and only a month after the last Notice of Employee Representational Rights was issued to employees.

[26] I note in this regard that the Form F17 identifies that there are 135 employees who will covered by the Agreement and one year after they were told of the time and place and method of ballot only 46 voted.

Section 180(5)

[27] Section 180(5) requires that the employer take reasonable steps to ensure that two separate actions occur. Firstly, that the employer explain to employees the terms of the Agreement and the effect of those terms. Secondly, that any explanation given is appropriate taking into account the particular circumstances and needs of employees.

[28] Mr Minniti’s answer to question 2.7 in his statutory declaration discloses that no explanation of the terms of the Agreement or the effect of the terms of the Agreement was provided to employees.

[29] All that the employer did was to invite “all employees who may have specific questions or concerns to raise the issues with their supervisor or HR Manager or bargaining reps.” An invitation to employees to raise issues with their supervisor or HR Manger or bargaining reps” would appear to fall far short of the requirement imposed on the employer by s.180(5) to take “all reasonable steps to ensure that the terms of the agreement, and the effect of those terms, are explained to the relevant employees; and that the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.”

[30] Prima facie the statutory declaration of Mr Minniti discloses that the employer did not comply with the requirement in s.180(5) of the Act.

[31] Non compliance with s.180(5) means that the employer was not entitled, notwithstanding compliance with any other provision of the Act, to request employees to approve the Agreement.

Interaction with the NES

[32] Questions 2.10 and 2.11 of the F17 ask questions to explore the interaction between the terms of the Agreement and the NES.

[33] Question 2.11 is as follows:

2.11 Please identify any terms of the Agreement that are detrimental to an employee in any respect when compared to the National Employment Standards:

[34] Question 2.11 addresses the issue raised by s.55 and s.56 of the Act which provide as follows:

“55 Interaction between the National Employment Standards and a modern award or enterprise agreement

National Employment Standards must not be excluded

(1) A modern award or enterprise agreement must not exclude the National Employment Standards or any provision of the National Employment Standards.

Terms expressly permitted by Part 2-2 or regulations may be included

(2) A modern award or enterprise agreement may include any terms that the award or agreement is expressly permitted to include:

(a) by a provision of Part 2-2 (which deals with the National Employment Standards); or

(b) by regulations made for the purposes of section 127.

Note: In determining what is permitted to be included in a modern award or enterprise agreement by a provision referred to in paragraph (a), any regulations made for the purpose of section 127 that expressly prohibit certain terms must be taken into account.

(3) The National Employment Standards have effect subject to terms included in a modern award or enterprise agreement as referred to in subsection (2).

Note: See also the note to section 63 (which deals with the effect of averaging arrangements).

Ancillary and supplementary terms may be included

(4) A modern award or enterprise agreement may also include the following kinds of terms:

(a) terms that are ancillary or incidental to the operation of an entitlement of an employee under the National Employment Standards;

(b) terms that supplement the National Employment Standards;

but only to the extent that the effect of those terms is not detrimental to an employee in any respect, when compared to the National Employment Standards.

Note 1: Ancillary or incidental terms permitted by paragraph (a) include (for example) terms:

(a) under which, instead of taking paid annual leave at the rate of pay required by section 90, an employee may take twice as much leave at half that rate of pay; or

(b) that specify when payment under section 90 for paid annual leave must be made.

Note 2: Supplementary terms permitted by paragraph (b) include (for example) terms:

(a) that increase the amount of paid annual leave to which an employee is entitled beyond the number of weeks that applies under section 87; or

(b) that provide for an employee to be paid for taking a period of paid annual leave or paid/personal carer’s leave at a rate of pay that is higher than the employee’s base rate of pay (which is the rate required by sections 90 and 99).

Note 3: Terms that would not be permitted by paragraph (a) or (b) include (for example) terms requiring an employee to give more notice of the taking of unpaid parental leave than is required by section 74.”

Enterprise agreements may include terms that have the same effect as provisions of the National Employment Standards

(5) An enterprise agreement may include terms that have the same (or substantially the same) effect as provisions of the National Employment Standards, whether or not ancillary or supplementary terms are included as referred to in subsection (4).

Effect of terms that give an employee the same entitlement as under the National Employment Standards

(6) To avoid doubt, if a modern award includes terms permitted by subsection (4), or an enterprise agreement includes terms permitted by subsection (4) or (5), then, to the extent that the terms give an employee an entitlement (the award or agreement entitlement) that is the same as an entitlement (the NES entitlement) of the employee under the National Employment Standards:

(a) those terms operate in parallel with the employee’s NES entitlement, but not so as to give the employee a double benefit; and

(b) the provisions of the National Employment Standards relating to the NES entitlement apply, as a minimum standard, to the award or agreement entitlement.

Note: For example, if the award or agreement entitlement is to 6 weeks of paid annual leave per year, the provisions of the National Employment Standards relating to the accrual and taking of paid annual leave will apply, as a minimum standard, to 4 weeks of that leave.

Terms permitted by subsection (4) or (5) do not contravene subsection (1)

(7) To the extent that a term of a modern award or enterprise agreement is permitted by subsection (4) or (5), the term does not contravene subsection (1).

Note: A term of a modern award has no effect to the extent that it contravenes this section (see section 56). An enterprise agreement that includes a term that contravenes this section must not be approved (see section 186) and a term of an enterprise agreement has no effect to the extent that it contravenes this section (see section 56).

56 Terms of a modern award or enterprise agreement contravening section 55 have no effect

A term of a modern award or enterprise agreement has no effect to the extent that it contravenes section 55.”

[35] The essence of s.55 is that the Agreement cannot exclude any provision of the NES (s.55(1)) nor can an Agreement contain terms which are “detrimental to an employee in any respect, when compared to the” NES (s.55(4)).

[36] Mr Minniti did not answer question 2.11 in the Form F17. Prima facie, by not answering question 2.11, Mr Minniti is declaring that there are no terms of the Agreement which “are detrimental to an employee in any respect when compared to the” NES.

[37] Clause 3 of the Agreement contains the following paragraph:

“It is agreed that a term of the National Employment Standards (“NES”) will apply where it is more favourable to the employee than the corresponding term, whether express or incorporated, in this Agreement.”

[38] This paragraph within clause 3 ensures that the no term of the Agreement could be in contravention of s.55(1).

[39] Having said that there is a residual matter which arises from the contents of the Agreement.

[40] Clause 32 of the Agreement are as follows:

“32.1.2 Carers leave

• to be accessed in line with the Award, ie Immediate family/ household

• access to Carers leave will be via accrued sick leave to a maximum of (8) days p.a.

• the following 'immediate family' definition to apply.

Spouse, parent, sibling, child, grandparents, parents in law, sibling in law, grandchild For the purpose of this clause the word "spouse" shall include de facto spouse and the word parent shall include foster parent or step parent.

32.2 Bereavement leave

Accessible on a per occasion basis, non cumulative, as follows

32.2.1 Deaths within Australia - 3 days per occasion

32.2.2 Deaths outside Australia

• Attending funeral

3 days per occasion

• Not attending funeral

1 day per occasion

32.3 Bereavement leave payment to include shift loading for shift workers.

32.4 The following 'immediate family' definition to apply.

Spouse, parent, sibling, child, grandparents, parents in law, sibling in law, grandchild

For the purpose of this clause the word "spouse" shall include de facto spouse and the

word parent shall include foster parent or step parent.”

[41] Section 97 of the Act places no limit on employees accessing personal/carers leave if they have an accrued entitlement. Section 97 is as follows:

“97 Taking paid personal/carer’s leave

An employee may take paid personal/carer’s leave if the leave is taken:

(a) because the employee is not fit for work because of a personal illness, or personal injury, affecting the employee; or

(b) to provide care or support to a member of the employee’s immediate family, or a member of the employee’s household, who requires care or support because of:

(i) a personal illness, or personal injury, affecting the member; or

(ii) an unexpected emergency affecting the member.

Note: The notice and evidence requirements of section 107 must be complied with.”

[42] It appears that the sole purpose of the second dot point in clause 32.1.2 is to represent to employees that their entitlement to access carer’s leave is less than what they would be entitled to access under s.97 of the NES.

[43] The third dot point of clause 32.1.2 and clause 32.4 both provide an exhaustive definition of “immediate family” for the purposes of the Agreement. This exhaustive definition does not include relationships which are included under the Act’s definition of “immediate family”.

[44] It appears that the consequence flowing from the exhaustive definition of “immediate family” is that it represents to employees that their entitlement to access carers leave or compassionate leave is less than what they would be entitled to access under the NES.

[45] Having considered the same matter in numerous enterprise agreements I have previously always been satisfied (having regard to the explanation given by the employer to employees of the terms of the agreement) that such misrepresentation is unintentional and can easily be cured by the employer offering an undertaking.

[46] The issue invariably arises because those drafting an enterprise agreement will often copy the definition of “immediate family” from an earlier agreement or from the definitions in the Act.

[47] Section 12 of the Act defines “objectionable term” as follows:

“immediate family of a national system employee means:

(a) a spouse, de facto partner, child, parent, grandparent, grandchild or sibling of the employee; or

(b) a child, parent, grandparent, grandchild or sibling of a spouse or de facto partner of the employee.”

[48] Additionally, there are three words used in that definition which are themselves separately defined in the Act. Spouse and de facto partner are defined in s.12 as follows:

“spouse includes a former spouse

de facto partner of a national system employee:

(a) means a person who, although not legally married to the employee, lives with the employee in a relationship as a couple on a genuine domestic basis (whether the employee and the person are of the same sex or different sexes); and

(b) includes a former de facto partner of the employee.”

[49] Child is separately defined by s.17 of the Act as follows:

17 Meaning of child of a person

(1) A child of a person includes:

(a) someone who is a child of the person within the meaning of the Family Law Act 1975; and

(b) an adopted child or step-child of the person.

It does not matter whether the child is an adult.

(2) If, under this section, one person is a child of another person, other family relationships are also to be determined on the basis that the child is a child of that other person.

Note: For example, for the purpose of leave entitlements in relation to immediate family under Division 7 of Part 2-2(which deals with personal/carer’s leave and compassionate leave):

(a) the other person is the parent of the child, and so is a member of the child’s immediate family; and

(b) the child, and any other children, of the other person are siblings, and so are members of each other’s immediate family.”

[50] Whenever an enterprise agreement seeks to define the term “immediate family” it must do so having regard to all of the above definitions. It is often simpler to use the term “immediate family” without defining the term as this means that the term has the same meaning as it has in the Fair Work Act.

[51] The second dot point of 32.2.2 also represents to employees that their entitlement to access compassionate leave is less than what they would be entitled to under the NES.

[52] Whilst the second paragraph of clause 3 of the Agreement protects the employer from any allegation that clause 32 contravenes s.55, the representations made within clause 32 are clearly misrepresentations of employees’ entitlements and may be misrepresentations which contravene s.345 of the Act. Whether or not such misrepresentations occurred should be resolvable by having regard to what explanation the employer gave to employees about the operation of clause 32 and the NES and whether the employer explained to employees where the NES provided more beneficial entitlements than clause 32. In this matter the statutory declaration of Mr Minniti makes clear that no such explanations were given to employees.

Requirement that there be no Unlawful Terms in the Agreement

[53] Section 186(4) requires that before the Commission can approve an enterprise agreement the Commission “must be satisfied that the agreement does not include any unlawful terms”.

[54] Section 194 of the Act defines an “unlawful term” and a term which is an “objectionable term” is an unlawful term.

[55] Section 12 of the Act defines “objectionable term” as follows:

“objectionable term means a term that:

(a) requires, has the effect of requiring, or purports to require or have the effect of requiring; or

(b) permits, has the effect of permitting, or purports to permit or have the effect of permitting;

either of the following:

(c) a contravention of Part 3-1 (which deals with general protections);

(d) the payment of a bargaining services fee.”

[56] Clause 17.3 of the Agreement deals with Summary Dismissal and is as follows:

“17.3 Summary Dismissal

Unfortunately, there may be circumstances where the breach of rules is severe enough to warrant instant dismissal. In such circumstances, the steps involved in counselling and disciplining an employee do not apply.

The Company has the right to dismiss any employee without notice for serious or wilful misconduct.

Some examples of serious or wilful misconduct may include fighting at work, drunkenness, vandalism and gross insubordination. ·

In a situation where serious misconduct is alleged it may be inappropriate for the employee to continue working which may require suspension on pay whilst the matter is investigated.

If the investigation and subsequent information gathered is determined to be serious enough to warrant instant dismissal, the employee may be summarily dismissed, any such termination of employment shall not be harsh, unjust or unreasonable.” (underlining added)

[57] There are two possible interpretations of the underlined words.

[58] The first possible interpretation is that the Agreement operates so that where the employer intends to dismiss an employee for serious misconduct the employer will not do so if such dismissal would be harsh, unjust or unreasonable. If this is the intention behind these words then it would appear that the issue of whether such an intended dismissal would be harsh, unjust or unreasonable, or would be fair, just and reasonable would need to be dealt with under clause 16 Avoidance of Dispute Procedure.

[59] The second possible interpretation is that the Agreement operates to predetermine that any dismissal for serious misconduct is fair just and reasonable. If this is the intention behind these words then the Agreement intends to act to predetermine any application which an employee may make under s.394 of the Act to challenge the fairness of a dismissal for alleged serious misconduct.

[60] The Agreement simply cannot prevent an employee making an application under s.394 for an unfair dismissal remedy nor can the Agreement limit the jurisdiction of the Commission to deal with an application under s.394.

[61] If the second possible interpretation is the intention behind the underlined words in clause 17.3 then it would appear that the Agreement misrepresents to employees their entitlements under the Act. Such a misrepresentation would appear to be a contravention of s.345 of the Act.

[62] This second possible interpretation of clause 17.3 leads to the conclusion that the term would be an objectionable term in that clause 17.3 requires or permits the employer to contravene Part 3-1 of the Act which includes s.345 of the Act.

[63] The issue of having possible competing interpretations of clause 17.3 should be resolvable by having regard to what explanation the employer gave to employees about the operation of clause 17.3. In this matter the statutory declaration of Mr Minniti makes clear that no such explanations were given to employees.

The Terms of the Agreement

Clause 5 - Date and Period of Operation

[64] Clause 5 provides that:

“This Agreement shall operate from the beginning of the first pay period to commence on or after the date this Agreement is approved by Fair Work Australia and shall continue in force until 14 February 2016.”

[65] Section 54 of the Act specifically provides that an enterprise agreement approved by the Commission operates from:

(a) 7 days after the agreement is approved; or

(b) if a later day is specified in the agreement—that later day.

[66] There is nothing in the Act which would prevent the Agreement from providing that terms and conditions of employment which are better than, and not inconsistent with, the legal minimum terms and conditions of employment could be applied from an earlier date than the date of commencement of the Agreement. This however is very different from specifying that the Agreement commences from a date earlier than provided for in s.54.

[67] As there is a real possibility a pay period could commence on the date of approval of the Agreement then clause 5 cannot by virtue of s.54 determine the commencement of operation of the Agreement.

[68] Where the intention of an enterprise agreement is to have any terms apply from a date before the commencement of the enterprise agreement it is necessary to make special provision for this within the enterprise agreement. This most commonly happens in relation to backdated wage increases.

Clause 7 - Flexibility Arrangement

[69] Clause 7 of the Agreement provides a term which purports to be the flexibility term required by s.202 and 203 of the Act. Clause 7.1 and 7.1.1 of the Agreement limit the employer and employees to making an individual flexibility arrangement to only one subject matter. Those clauses provide as follows:

“7.1 O-I - Melbourne and an employee covered by this Agreement may agree to make an individual flexibility arrangement to vary the effect of terms of the Agreement so far as:

7.1.1 the Agreement deals with the taking of annual leave in the form of single days, up to a maximum of 5 (5) days in any year of service;”

[70] There is nothing wrong with having a flexibility term which limits the making of individual flexibility arrangements to only one very specific issue. The very language of s.203 permits this.

[71] However clause 31 of the Agreement provides as follows:

“31 By mutual agreement, the existing annual leave entitlement may include the taking of up to a maximum of five (5) single days.”

[72] The flexibility sought to be permitted by clause 7.1 through an individual flexibility arrangement is already specifically provided for in clause 31.

[73] Therefore clause 7.1 has nothing to do. This means that clause 7 is not a flexibility term as required by s.202 and 203 of the Act. Had this application been capable of being dealt with by the Commission I would have applied the same approach that I adopted in [2012] FWAA 7720 and would have sought an undertaking from the employer so that clause 7 was capable of effective operation.

Clause 16 - Avoidance of Disputes Procedure

[74] Clause 16 of the Agreement provides for a dispute resolution procedure as required by s.186(6) of the Act. The sub clauses of clause 16 are not numbered.

[75] The second paragraph of clause 16 is both very clear and very strong in its message:

“It is a fundamental requirement of this Agreement that this Clause be observed in its entirety by all parties to this Agreement.”

[76] The third paragraph of clause 16 then identifies the type of disputes which will be dealt with under clause 16:

“On all occasions, any issue, grievance or dispute over any matter between the parties to this Agreement shall be settled in accordance with this procedure without resorting to any industrial action. This shall apply whether the matter in dispute relates directly to a matter dealt with by this Agreement, or not.”

[77] On a plain reading of the third paragraph of clause 16 it is clear that dispute resolution procedure is to apply to disputes about “any matter between the parties”. I note that s.186(6) requires that the Commission be satisfied that the term about settling disputes provides for a dispute settling procedure in relation to both “matters arising under the agreement” and “in relation to the NES”. The very breadth of language in the third paragraph of clause 16 clearly satisfies the requirements of s.186(6). It is clear that the intention behind the words used in the third paragraph of clause 16 was to ensure that the clause had very wide application. On its face the phrase “any matter between the parties” must include disputes about matters between the parties which are matters that have nothing to do with the employer/employee relationship or the employer/union relationship. This means that the phrase “any matter between the parties” could include matters pertaining to a debtor/creditor relationship or a social relationship.

[78] As an enterprise agreement can only deal with permitted matters it is clear that an enterprise agreement cannot create a dispute resolution procedure to be applied to disputes between a debtor and creditor simply because the debtor and creditor have a separate employer/employee relationship.

[79] The sixth paragraph of clause 14 provides as follows:

“Notification of an employee grievance shall be made in the first instance in writing. Such written notification shall be dated, briefly describe the grievance and copies of such notice shall be given to the Supervisor.”

[80] There is nothing of concern in relation to this paragraph. However, the very presence of this paragraph draws attention to the fact that clause 16 does not contain a similar requirement in relation to a grievance raised by a union or a grievance raised by the employer. This observation is important given the wording of the second paragraph of clause 16 and the lack of any explanation having been given to employees about the terms of the Agreement and the effect of the terms of the Agreement.

Clause 23 - Extended Sick Leave

[81] Clause 23 of the Agreement provides an additional benefit to employees by permitting employees to access extended paid sick leave.

[82] Clause 23.4.6 creates a separate dispute resolution procedure for clause 23 disputes.

“23.4.6 Any dispute over the application of this policy will be referred to a dispute arbiter agreed to by the parties on a site-by-site basis.”

[83] There appears to be a conflict between clause 23.4.6 and clause 16 and it is not clear from the language of the Agreement how this conflict is to be resolved

Clause 46 - Journey Accident Insurance

[84] Clause 46 of the Agreement is as follows (note the incorrect numbering within the clause):

“46. JOURNEY ACCIDENT INSURANCE

The parties agree that all journey accidents will be covered on the following basis:

47.1 Those journey accidents covered under the Transport Accident Commission will attract:

47.1.1 Payment on a "top-up" or made up basis for a period of twenty six (26) weeks

Thereafter

47.1.2 Payment will be in line with the prevailing TAC provision.

47.2 Journey accident(s) (excluding those covered under TAC) will be covered consistent with the terms of the 0-I Melbourne current workers compensation.

47.3 The pay rate for journey accidents where make up (top-up) applies will be consistent with the terms of accident pay defined in the Victorian Metal Trades Accident Pay Agreement. Labour hire employees engaged to work for the company shall be afforded terms and conditions no less favourable that(sic) those contained in the agreement except as follows:”

[85] Clearly clause 46 provides a benefit for employees which must be considered in applying the BOOT. The difficulty that arises is assessing the value of this benefit.

[86] From the plain language of clause 46 all journey accidents will be covered.

[87] Journey accidents which are covered under the TAC are dealt with under clause 47.1 and all other journey accidents are dealt with under clause 47.2. Clause 47.2 makes clear that non TAC journey accidents will be covered consistent with the terms of the O-I Melbourne current workers compensation. The Commission simply has no idea what benefit, if any, may be provided to employees by this provision. This lack of detail impacts on the application of the BOOT.

Appendices and Attachments to the Agreement

[88] Several of the Appendices and Attachments to the Agreement refer to actions which will occur prospectively from a specified date which has already long past or refer to “current” practices which may in fact have already changed. It appears that much of the material has simply been rolled over from previous agreements without regard to its relevance for an enterprise agreement which commences in 2013.

COMMISSIONER

APPENDIX A

 1  [ 2012] FWA 6450

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