ACI Operations Pty Ltd T/A O-I Melbourne

[2013] FWC 3294

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

ACI Operations Pty Ltd T/A O-I Melbourne
(AG2013/1130)

Manufacturing and associated industries
COMMISSIONER RYAN	MELBOURNE, 24 MAY 2013

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

[1] Application for approval of the O-I Melbourne - Maintenance Workplace Agreement 2013 (the Agreement) was filed with the Commission on 9 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 Agreement, if approved, will replace the O-I Melbourne - Maintenance Workplace Agreement 2010 which was approved by the then FWA on 6 September 2010. I am aware that during the life of the 2010 Agreement that there have been a number of disputes which have come to the Commission for resolution in accordance with the dispute settling procedure of the 2010 Agreement. Some of those disputes concerned competing interpretations about the meaning and operation of clauses of the 2010 Agreement. I am aware that the employer and the two unions all have easy access to competent legal advice when matters have been brought to the Commission.

[14] 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

[15] 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;

[16] 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 maintenance trade employees that are covered by the agreement at least 7 days prior to the ballot. A circular invited all maintenance 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 2 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.”

[17] 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)

[18] 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).

[19] 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.

[20] The Agreement provides at clause 3 that, inter alia:

“The Metal and Engineering & Associated Industry Award 1998 Part 1 & 4 (the Award) is incorporated into this agreement.

[21] 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. The award referred to in clause 3 of the Agreement is not a modern award but is part of an award made under the Workplace Relations Act 1996. 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.

[22] There is an additional difficulty with the incorporated award. Clause 3 does not make clear which version of the award is incorporated. This difficulty may have been resolvable if either a specific version of the award was given to employees or employees were provided access to a specific version of the award.

[23] 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.

[24] 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)

[25] 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.

[26] In the context of this Agreement the last Notice of Employee Representational Rights was issued by the employer to employees on 23 April 2012. Employees were then informed on 2 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 the period 30 April 2013 and 2 May 2013.

[27] 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 week after the last Notice of Employee Representational Rights was issued to employees.

Section 180(5)

[28] 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.

[29] 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.

[30] 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.”

[31] 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.”

[32] 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.

[33] 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

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

[35] 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:

[36] 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.”

[37] 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)).

[38] 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.

[39] 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.”

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

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

[42] Clause 23 opens with the following:

“Personal Leave is comprised of a combination of sick leave, bereavement leave and carer's leave. Provisions of the Metal, Engineering and Associated Industries Award 1998, sub clause 7.2 (refer Attachment A) shall apply excepting:”

[43] It is clear that clause 7.2 of the Metal, Engineering and Associated Industries Award 1998 is incorporated into the Agreement. Referring to Attachment A of the Agreement does not assist in interpreting or applying the provisions of clause 7.2 of the Metal, Engineering and Associated Industries Award 1998. Attachment A to the Agreement which is entitled Serverance(sic) Agreement only deals with entitlements of employees who have been dismissed due to redundancy.

[44] Clause 7.2 of the Metal, Engineering and Associated Industries Award 1998 as it stood as at 30 September 2008 contains three provisions (clause 7.2.7(b), 7.2.7(c) and 7.2.8(a)) which are less beneficial to employees than the entitlements provided under the NES.

[45] Clause 23.1 and 23.2 of the Agreement are as follows:

“23.1 There is no maximum number of personal leave hours which may be accrued in accordance with the NES.

23.2 An employee who is absent from work because of personal illness or injury, other than that covered by workers' compensation, shall be entitled to personal/ carers leave (including sick leave) of 10 days paid leave which will be accrued after 12 months service. This leave will be cumulative and a maximum of 10 days a year can be used as carer's leave.” (emphasis added)

[46] 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.”

[47] It appears that the sole purpose of the emphasised words in clause 23.2 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.

[48] Clause 23.5 of the Agreement is as follows (note the incorrect numbering within clause 23.5):

“23.5 Personal Leave may be granted during a period of Annual Leave providing:

22.5.1 Illness must be a minimum of(5) days.

22.5.2 A medical certificate must be provided.

22.5.3 Notification of illness must be given as soon as practicable.

22.5.4 Illness outside Australia is excluded.

22.5.5 Sick Leave taken will be deducted from accrued entitlements.”

[49] The interaction between annual leave and personal carers leave is dealt with in the Act.

[50] Section 89(2) provides as follows:

“Other periods of leave

(2) If the period during which an employee takes paid annual leave includes a period of any other leave (other than unpaid parental leave) under this Part, or a period of absence from employment under Division 8 (which deals with community service leave), the employee is taken not to be on paid annual leave for the period of that other leave or absence.”

[51] The operation of s.89(2) requires that where an employee is claiming to be sick, ill or injured during a period of annual leave the first issue to be determined is whether the employee is entitled pursuant to the NES, an award or enterprise agreement to personal leave. If the answer is yes then the employee is paid in accordance with their entitlement to personal leave and is not treated as being on annual leave.

[52] Each of paragraphs 22.5.1 and 22.5.4 operate to represent to employees that there are limits on their ability to access their personal leave entitlements. The restrictions in paragraphs 22.5.1 and 22.5.4 are directly inconsistent with the terms of s.97 of the Act.

[53] Whilst the second paragraph of clause 3 of the Agreement protects the employer from any allegation that clause 23.5 contravenes s.55, the representations made within clause 23.5 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 23.5 and the NES and whether the employer explained to employees where the NES provided more beneficial entitlements than clause 23.5. 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

[54] 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”.

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

[56] 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:

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

[57] Clause 43.2.9 of the Agreement deals with Summary Dismissal and is as follows:

“43.2.9 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)

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

[59] 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 14 Dispute Resolution Procedure.

[60] 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.

[61] 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.

[62] If the second possible interpretation is the intention behind the underlined words in clause 43.2.9 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.

[63] This second possible interpretation of clause 43.2.9 leads to the conclusion that the term would be an objectionable term in that clause 43.2.9 requires or permits the employer to contravene Part 3-1 of the Act which includes s.345 of the Act.

[64] The issue of having possible competing interpretations of clause 43.2.9 should be resolvable by having regard to what explanation the employer gave to employees about the operation of clause 43.2.9. In this matter the statutory declaration of Mr Minniti makes clear that no such explanations were given to employees.

The BOOT

[65] Part 3 of the Form F17 asks a series of questions the answers to which permit the Commission to determine if it can be satisfied, as required by s.186(2)(d), that the Agreement passes the better off overall test (BOOT). The BOOT is dealt with in s.193 of the Act and the BOOT is applied against the modern award that applies to the employees.

[66] Question 3.1 of the Form F17 asks the employer to list the relevant modern award(s) for the BOOT. Mr Minniti in his statutory declaration did not list any relevant modern award.

[67] Prima facie the statutory declaration of Mr Minniti should be accepted as declaring that there are no modern awards which cover the employer in relation to the employees to be covered by the Agreement. Given the Commission’s own knowledge of the nature of the work performed by the employees to be covered by the Agreement Mr Minniti’s non answer to question 3.1 appears to be a false declaration by omission.

The Terms of the Agreement

Who is Covered by the Agreement?

[68] Clause 3 of the Agreement opens with the words “This Agreement shall apply to all mechanical and electrical maintenance employees who are engaged within the classifications at 0-1 Melbourne, Booker Street, Spotswood Victoria.”

[69] Clause 4.2 of the Agreement identifies that one of the “parties” to the Agreement are “All mechanical and electrical maintenance employees who perform work at the company's Spotswood plant”.

[70] I understand the purpose of the clauses to be the means of identifying which employees of the employer are covered by the Agreement. The practical difficulty that arises from the wording used in clause 3 and clause 4.2 is that it is not clear which employees are covered by the Agreement.

[71] The language of clause 4.2 suggests that by using the word “all” that supervisors and managers who are part of the group of mechanical and electrical maintenance employees are covered by the Agreement.

[72] The language of the first paragraph of clause 3 suggests that the group of employees to be covered by the agreement are limited to those “engaged in the classifications at O-I Melbourne, Booker Street, Spotswood Victoria.”

[73] Unfortunately it is not clear what is meant by the phrase “engaged in the classifications at O-I Melbourne, Booker Street, Spotswood Victoria.”

[74] The Agreement does not contain a specific term which sets out the classification structure for employees to be covered by the Agreement. However the third paragraph of clause 3 provides as follows:

“The Metal and Engineering & Associated Industry Award 1998 Part 1 & 4 (the Award) is incorporated into this agreement. The terms and conditions in the Award will apply where this agreement is silent. At all other times the agreement and Award must be read together to the extent that is possible.”

[75] The difficulty with the language of the incorporation provision is that it is not clear which version of the Award is incorporated into the Agreement. Where as in this case the Award is not a modern award but is an award which no longer operates then it is usual to specify a particular version of the Award for incorporation. The most recent version of the Award which was in operation was as at 31 December 2009. That version did not contain any classifications or wage rates as they had been removed from the Award with the introduction of the Work Choices amendments to the Workplace Relations Act in March 2006.

Clause 5 - Date and Period of Operation

[76] 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.”

[77] 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.

[78] 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.

[79] 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.

[80] 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 6 - Flexibility Arrangement

[81] Clause 6 of the Agreement provides a term which purports to be the flexibility term required by s.202 and 203 of the Act. Clause 6.1 and 6.1.1 of the Agreement limit the employer and employees to making an individual flexibility arrangement to only one subject matter. Those clauses provide as follows:

“6.1 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:

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

[82] 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.

[83] However clause 22.1 of the Agreement provides as follows:

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

[84] The flexibility sought to be permitted by clause 6.1 through an individual flexibility arrangement is already specifically provided for in clause 22.1.

[85] Therefore clause 6.1 has nothing to do. This means that clause 6 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 6 was capable of effective operation.

Clause 12 - Consultation

[86] Clause 12 of the Agreement meets the requirements of s.205 of the Act.

[87] However, clause 12(b) contains the following proviso after the definition of “significant effects”.

“Provided that where the Attachment A makes provision for alteration of any of the matters referred to herein an alteration shall be deemed not to have significant effect.”

[88] On its face it would appear that the proviso is necessary because Attachment A to the Agreement may alter the definition of “significant effects”. Having carefully considered the wording of Attachment A it appears that Attachment A has nothing to do in altering the meaning of “significant effects”. It is simply not clear why the proviso has been added to clause 12(b), and this is so given that the employer did not explain the terms of the Agreement to employees.

Clause 14 - Dispute Resolution Procedure

[89] Clause 14 of the Agreement provides for a dispute resolution procedure as required by s.186(6) of the Act. The sub clauses of clause 14 are not numbered.

[90] The second paragraph of clause 14 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.”

[91] The third paragraph of clause 14 then identifies the type of disputes which will be dealt with under clause 14:

“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 includes issues, grievances or disputes concerning the following matters:

(a) the express terms of this agreement and any incorporated instrument;

(b) a matter that would fall within the scope of "permitted matters" as defined by the Fair Work Act 2009 (excluding "unlawful content" as defined by the Fair Work Act 2009); and

[92] On a plain reading of the third paragraph of clause 14 it is clear that dispute resolution procedure is to apply to disputes about “any matter between the parties”. The very fact that the list of inclusions is itself comprehensive then the intention behind the words “any matter between the parties” must be to 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.

[93] 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.

[94] 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.”

[95] There is nothing of concern in relation to this paragraph. However, the very presence of this paragraph draws attention to the fact that clause 14 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 14 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.

[96] The seventh and eighth paragraphs of clause 14 are as follows:

“If the dispute still remains unresolved, either party may refer the dispute to the Fair Work Commission agreed a private arbiter for conciliation and, if necessary arbitration.

The parties agree to be bound by the decision of the Fair Work Commission applicable the agreed private arbiter.”

[97] Neither paragraph makes sense. It may be that words are included in those paragraphs which should not be there or it may be that words are missing.

Clause 16 - Extended Sick Leave

[98] Clause 16 of the Agreement provides an additional benefit to employees by permitting employees to access extended paid sick leave. The difficulty in assessing the value of this benefit for BOOT purposes is that the second paragraph of clause 16 provides that “Payment will be based on standard hours of work” and the concept of “standard hours of work” is not used anywhere else in the Agreement and the term is not defined in the Agreement.

[99] Clause 16.6 creates a separate dispute resolution procedure for clause 16 disputes.

“16.6 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.”

[100] There appears to be a conflict between clause 16.6 and clause 14 and it is not clear from the language of the Agreement how this conflict is to be resolved.

Clause 17 - Reclassification/Career Paths

[101] Clause 17 of the Agreement provides as follows:

“Employee classifications will be based on the 'metal industry' competency standards and the agreed job models in each department. Skill shortfalls shall be identified and addressed through the Training Committee.

As per industry process/rules e.g. Competency Standards.”

[102] The classification of employees is an integral part of determining the correct rate of pay to be paid to the employees and the correct classification of employees is essential to avoid either overpayment or underpayment of an employee.

[103] The classification process is to be applied to “agreed job models in each department”. These agreed “job models” were not included with the Agreement. It would appear that the “agreed job models” are incorporated into the Agreement and I note that the employer did not take reasonable steps to ensure that employees had access to this incorporated material for the access period.

[104] The absence of the “agreed job models” prevents the Commission from accurately measuring the BOOT in relation to the Agreement.

[105] The reference in clause 17 to “the ‘metal industry’ competency standards” lacks certainty and clarity.

[106] In a recent dispute before the Commission over the classification of workers who would be covered by the Agreement and who are covered by the existing enterprise agreement, which in relation to clause 17 is in identical terms, the employer relied on a particular set of competency standards to support its arguments in that matter.

[107] If the employer, the employee bargaining representatives and the employees have a common understanding as to which competency standards are to apply for the purpose of classifying employees then it would be appropriate to specify those competency standards by reference to both the body which issued the competency standards and the name, date and version of the competency standards issued.

Clause 36 - Journey Accident Insurance

[108] Clause 36 of the Agreement is as follows:

“36. JOURNEY ACCIDENT INSURANCE

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

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

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

Thereafter

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

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

36.3 The pay rate for journey accidents where make up (top-up) applies will be consistent with the terms of make up pay as defined in clause 35.”

[109] Clearly clause 36 provides a benefit for employees which must be considered in applying the BOOT. The difficulty that arises is assessing the value of this benefit.

[110] From the plain language of clause 36 all journey accidents will be covered.

[111] Journey accidents which are covered under the TAC are dealt with under clause 36.1 and all other journey accidents are dealt with under clause 36.2. Clause 36.2 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.

Clause 48 - Policy of Workplace Drug and Alcohol

[112] Clause 48 of the Agreement is as follows:

“48. POLICY OF WORKPLACE DRUG AND ALCOHOL

The parties to this Agreement identify and agree that due to the nature of the task Workplace Drug and Alcohol management is necessary to ensure the integrity of an employee's safety at work. A Workplace Drug and Alcohol Policy and Procedure shall be negotiated, agreed, implemented and observed within the first 12 months of this agreement.”

[113] This clause is identical to clause 49 of the enterprise agreement which currently covers and applies to the employer and the relevant employees and which is sought to be replaced by the Agreement. I also note that the 2006 workplace agreement approved by the then Australian Industrial Relations Commission also contained a clause with the same title.

[114] Prima facie clause 48 must be considered as acting to set aside the existing Workplace Drug and Alcohol Policy and Procedure and creating an environment for a new Workplace Drug and Alcohol Policy and Procedure to be negotiated, agreed, implemented and observed.

[115] If each of the 2006 and 2010 agreements were complied with then a Workplace Drug and Alcohol Policy and Procedure was negotiated, agreed, implemented and observed within the first 12 months of the operation of the 2006 agreement (the 2006 WDAP). The 2006 WDAP was replaced by a Workplace Drug and Alcohol Policy and Procedure which was negotiated, agreed, implemented and observed within the first 12 months of the operation of the 2010 agreement (the 2010 WDAP). The current Agreement now proposes that the 2010 WDAP will be replaced by a new 2013 Workplace Drug and Alcohol Policy and Procedure.

[116] Whilst this scenario is not impossible it seems somewhat improbable.

[117] A more probable explanation may be that the Agreement simply contains a copied clause from an earlier enterprise agreement or workplace agreement and that there is in place a Workplace Drug and Alcohol Policy and Procedure and that there is no intention by the employer to set that aside and to negotiate, agree, implement and observe a new Workplace Drug and Alcohol Policy and Procedure.

[118] For BOOT purposes it is difficult to assess the value, either positive or negative, that clause 48 has.

Appendix A - Local Issues Spotswood

Clause 1 - Rostered Days Off

[119] Clause 1 of Appendix A deals with procedures around employees accessing rostered days off. The clause is as follows:

“1 ROSTERED DAYS OFF - (Day workers Monday - Friday 35 Hour Week)

All maintenance employees will work the same 9 day fortnight with the same RDO being taken by all day work maintenance employees. Existing agreement on flexibility of ROO's for the benefit of both management and employees shall remain. The existing arrangement of consultation between the Company and employees in regards to the annual ROO roster shall remain.

Where a maintenance employee works a rostered day off, the employee can elect one of the following options:

(a) Receive payment at the appropriate overtime rate for the time worked.

(b) Substitute another day off for the rostered day off

If option (b) is elected, the substitute day shall be taken at the employee's discretion within the current work cycle.

Note: This means work the RDO for no pay and take a substitute day off with pay.

Under no circumstances will an employee be permitted to bank more than (5)1 rostered days off.

Note: This means:

Work the RDO for no pay and

Take a substitute day(s) off with pay at a mutually agreeable time.

Note:

The claimed practice of working an RDO with pay and taking a substitute/banked day off with pay is no longer applicable.”

[120] Two issues of concern arise from clause 1 of Appendix A.

[121] The second sentence of the first paragraph is as follows:

“Existing agreement on flexibility of ROO's for the benefit of both management and employees shall remain.”

[122] The terms of the “existing agreement’ were not included within the Agreement and so it is not possible to consider whether the first paragraph of clause 1 of Appendix A to the Agreement has a positive or negative value for BOOT purposes.

[123] The second paragraph of clause 1 of Appendix A raises a possible concern. There is nothing in the Agreement including Appendix A which makes clear how the RDO system is applied. That is, are employees paid for hours worked or are employees paid for a 35 hour week with additional hours being banked for the purpose of creating the RDO entitlement? If the former applies then clause 1 of Appendix A does not appear to be of concern. However, if the latter applies then clause 1 of Appendix A appears to operate to penalise an employee who works on the RDO and takes a substitute RDO at a later time.

[124] The lack of clarity in the Agreement and in the second paragraph clause 1 of Appendix A means that it is not possible to consider whether the second paragraph of clause 1 of Appendix A to the Agreement has a positive or negative value for BOOT purposes.

Clauses 5 and 7

[125] Clauses 5 and 7 of Appendix A both include a reference to an employee being “paid as a Trainer/Supervisor/Coordinator level 1”. However, given that the only classification structure in the Agreement is that incorporated from the Metal, Engineering and Associated Industries Award 1998 it is not possible to determine what is meant by the title “Trainer/Supervisor/Coordinator level 1” or what rate of pay applies. It is not possible to consider whether clauses 5 and 7 of Appendix A to the Agreement have a positive or negative value for BOOT purposes.

Clause 8 - Mould Shop

[126] Clause 8 of Appendix A is in the following terms:

“8 MOULD SHOP

8.1 O-I will during 2006 restructure the Mould Shop.

8.2 The parties will continue to discuss improving efficiency of the Mould Shop. These discussions will include such issues as the work structure, work roster and work flow.

8.3 Employees are classified according to competencies held and will work through the full range of their competencies.

8.4 The parties note that there; are two trades assistants who wish to continue their employment. When new technology is introduced into the mould shop, the two Trades Assistants will have the option to take redundancy or be trained to a higher skilled classification.”

[127] As is suggested by the terms of clause 8 of Appendix A this clause has been in previous enterprise or workplace agreements. The very same clause in the 2010 Agreement was the subject of a dispute before the Commission in 2012 and 2013.

[128] In the context of an enterprise agreement made in 2013 it is difficult to see what effect this term has on employees or the employer. At one level the term is a nonsense in that the term cannot create a time warp so as to permit the employer to go back to 2006 and commence a restructure of the Mould Shop. If the restructure of the Mould Shop occurred in 2006 then at the very least clause 8.1 of Appendix A is otiose. If the restructure of the Mould Shop has never taken place then the clause does not permit the employer to commence a restructure of the Mould Shop now.

Cross Referencing Errors

[129] There are a number of clauses in the Agreement and in Appendix A to the Agreement which have cross references to clauses which simply do not make sense. In the case of each of these clauses it is not possible to consider the clause for BOOT purposes as the actual operation of the clause is not clear.

[130] The clauses are: 27 and 49 of the Agreement and clauses 3.2, 12.1, 12.4 and 21 of Appendix A.

COMMISSIONER

APPENDIX A

1 [ 2012] FWA 6450

Printed by authority of the Commonwealth Government Printer

[2013] FWC 3294

24 MAY 2013