Aerison Epc Pty Ltd T/A Aerison Epc Pty Ltd
[2024] FWCA 2628
•27 AUGUST 2024
| [2024] FWCA 2628 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
Aerison Epc Pty Ltd T/A Aerison Epc Pty Ltd
(AG2024/2409)
AERISON EPC PTY LTD ENTERPRISE AGREEMENT 2024
| Building, metal and civil construction industries | |
| DEPUTY PRESIDENT BEAUMONT | PERTH, 27 AUGUST 2024 |
Application for approval of the Aerison EPC Pty Ltd Enterprise Agreement 2024
Aerison Epc Pty Ltd T/A Aerison Epc Pty Ltd (the Applicant) has made an application for the approval of an enterprise agreement known as the Aerison EPC Pty Ltd Enterprise Agreement 2024 (the Agreement). The application was made under s 185 of the Fair Work Act 2009 (Cth) (the Act). The Agreement is a single enterprise agreement.
The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (Amending Act) made a number of changes to enterprise agreement approval processes in Part 2-4 of the Act, that commenced operation on 6 June 2023. The notification time for the Agreement under s 173(2) was 9 May 2024 and the Agreement was made on 29 June 2024. Accordingly, both the genuine agreement and the better off overall test requirements are those applying on and from 6 June 2023.
The primary activity of the Applicant is the maintenance and construction of mining and oil and gas fixed plant, whether onshore or onsite.
The Agreement covers 31 employees, 17 of whom are from a non-English speaking background and 18 are employed on a casual basis. The enterprise agreement that currently applies to the employees is the Aerison EPC Pty Ltd Enterprise Agreement 2020 (Current Agreement).[1] If the Current Agreement did not apply to the employees they would be covered by the Building and Construction General On-site Award 2020 (Award).[2]
The Agreement covers the Applicant and employees of the Applicant who are:
…employed in the classifications contained in clause 17 (“Classifications and Wage Rates”) of this Agreement performing preparatory work and on site construction work, on or in connection with a project, within Australia.[3]
There are five classifications set out in the Agreement under the heading of ‘Non-Trades’, and three that sit under the heading of ‘Trades’. The five classifications under ‘Non-Trades’ are CW1 to CW5 inclusive and under ‘Trades’ they are CW3 to CW5 inclusive.
Whilst the Communications Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) was a bargaining representative for the Agreement, they did not submit notification under s 183 of the Act that they sought coverage by the Agreement.
Several issues were identified with the Agreement. These issues included:
a) whether the employees who will be covered by the Agreement and who were requested to vote on the proposed Agreement to approve it were ‘employed at the time’;[4]
b) whether the Applicant had taken all reasonable steps to explain the terms of the Agreement and their effect to employees employed at the time who will be covered by the Agreement as required by ss 180(5) and 188(4A) of the Act and noting also principles [8] to [14] of the Fair Work (Statement of Principles on Genuine Agreement) Instrument 2023 (Statement of Principles);
c) whether the employees had a sufficient interest in the terms of the Agreement (see s 188(2)(a) of the Act and principle 17 of the Statement of Principles); and
d) whether the Agreement passed the better off overall test (BOOT).
The Applicant and the CEPU were provided with the opportunity to respond to those issues. The CEPU declined. Having received from the Applicant responsive materials to the issues, I considered it appropriate to determine the matter in the absence of a hearing. The Applicant was content with this course.
In addition to the abovementioned issues, there were issues with certain obligations or entitlements that appeared inconsistent with the National Employment Standards (NES). In this respect, I refer to clauses 49.6, 30.11 and 45 noting that the inclusion of clause 5.3 of the Agreement addressed, in my view, any NES issues with these clauses.
In summary, whilst issues arose with the Agreement and the pre-approval process, I am nevertheless satisfied that each of the requirements of ss 186, 187, 188, and 190 of the Act as are relevant to this application for approval have been met. My detailed reasons follow.
Casual employees and the voting cohort
An enterprise agreement requires approval by the Fair Work Commission in order to have legal effect under the Act. Section 186(1) of the Act establishes that where an application for approval of an enterprise agreement has been ‘made’, the Commission must approve the agreement if the requirements set out in ss 186 and 187 are met.
As to whether a single-enterprise agreement has been made, s 182(1) sets out the following:
If the employees of the employer, or each employer, that will be covered by a proposed single enterprise agreement that is not a greenfields agreement have been asked to approve the agreement under subsection 181(1), the agreement is made when a majority of those employees who cast a valid vote approve the agreement.
Subsection 181(1) of the Act provides that an employer that will be covered by a proposed enterprise agreement may request the employees ‘employed at the time’ who will be covered by the agreement to approve the agreement by voting for it. Section 181 is set out in full below:
181 Employers may request employees to approve a proposed enterprise agreement
(1) An employer that will be covered by a proposed enterprise agreement may request the employees employed at the time who will be covered by the agreement to approve the agreement by voting for it.
(2) If the employer is required by subsection 173(1) (which deals with giving notice of employee representational rights) to take all reasonable steps to give notice in relation to the agreement, the request must not be made until at least 21 days after the day on which the last notice under subsection 173(1) in relation to the agreement is given.
(3) Without limiting subsection (1), the employer may request that the employees vote by ballot or by an electronic method. (bold my emphasis)
Under s 188(4) of the Act, the Commission cannot be satisfied that the agreement has been genuinely agreed to by the employees covered by the agreement unless the FWC is satisfied that the employer complied with the following provisions in relation to the agreement:
(a)sections 173 and 174 (which deal with giving notice of employee representational rights)
(b)subsection 181(2) (which requires that employees not be requested to approve certain enterprise agreements until 21 days after the last notice of employee representational rights is given).
Presumedly, the request as referred to in s 181(2) of the Act, refers to a request to approve certain enterprise agreements being provided to ‘employees employed at the time’.
It is uncontroversial that enterprise agreements were intended by the legislature to be capable of covering casual employees. However, a difficulty that has arisen is ascertaining when a casual employee ought to be regarded as an employee ‘employed at the time’ within the meaning of ss 181(1). In relation to permanent employees, it is of course a relatively straightforward exercise.
The Applicant’s Form F17B
[5]
In the decision of St John of God Health Care Inc (St John),[9] I traversed the authorities that have considered the phrase ‘employed at the time’. I do not intend to repeat what was said in St John. I simply add that in Woolworths Group Limited[10]
(Woolworths)the Full Bench expressed the following at paragraphs [27] and [28]:
[27] In Appeal by Kmart Australia Limited (Kmart), the Full Bench concluded that the ‘time’ at which employees covered by the agreement had to be employed in order to be requested to vote referred to in s 181(1) encompassed the whole of the access period in s 180(4) and was to be equated with the ‘time’ referred to in s 180(2)(a). The Full Bench in Kmart concluded that casual employees who had been engaged for the first time during the voting period had not been ‘employed at the time’ at which employees were requested to vote. The Full Bench did not say that existing casuals who did not work during the access period were ineligible to do so. In our view, Woolworths’ contention that category 2 casuals were eligible to vote has merit. These were not just casuals ‘on the books’ who might or might not have been given further shifts. The fact that these employees had been allocated shifts on the roster is evidence of the actuality and currency of their casual employment during the access period.
[28] However, it is not necessary for us to reach a concluded view on this matter. If ineligible employees were allowed to participate in a vote on an enterprise agreement, it is necessary to consider whether their votes could have affected the outcome. In Kmart, it was clear that they could not have done so…(footnotes omitted).
Voting on the Agreement commenced on 28 June 2024 and concluded on 29 June 2024. The Applicant was directed to file evidence in support of its contention that all employees included in the vote were ‘employed at the time’. The Applicant filed a statutory declaration from its HR Manager, Luke Bowker, in addition to an excel spreadsheet detailing the employees who had been included in the pay runs for pay periods 17 April to 3 May 2024, until 22 June 2204 to 28 June 2024. Having reviewed the excel spreadsheet and the evidence of Mr Bowker, it appears that at least 15 of the 18 casual employees were employed during the access period.
It follows that I am satisfied that the Agreement was made in accordance with s 182(1). Although it transpired that three voting casuals may not have been engaged to work during the access period and were not therefore employees ‘employed at the time who will be covered by the agreement’ (see s 181(1) and Noorton[11]), this did not affect the outcome of the vote (see Kmart[12] at [43]). Even if the three casuals voted to approve the Agreement, such that the ‘yes’ vote should be reduced by three, the Agreement was still approved by a majority of employees who cast a valid vote.
Explaining the terms of the proposed Agreement and their effect
Section 186(2)(a) of the Act requires that the Commission be satisfied that the enterprise agreement was genuinely agreed. Section 188 goes on to set out certain matters that the Commission must take into account or be satisfied of in determining whether an agreement has been genuinely agreed. Relevantly for present purposes, s 188(1) of the Act requires the Commission to take into account the Statement of Principles made under section 188B in determining whether it is satisfied that the agreement was genuinely agreed.
Section 188(4A) of the Act has the effect that the Commission cannot be satisfied that the Agreement has been genuinely agreed to by the employees covered by it, unless the Commission is satisfied that the Applicant complied with s 180(5).
Section 180(5) requires that the Applicant has taken all reasonable steps to ensure that:
(1) the terms of the Agreement, and the effect of those terms, have been explained to the employees employed at the time who will be covered by the Agreement; and
(2) the explanation was provided in an appropriate manner taking into account the particular circumstances and needs of those employees.
Principles 8-14 of the Statement of Principles provide guidance in relation to the requirement in s 180(5). It is, however, important to understand that although the Commission is required to take into account the Statement of Principles in determining whether an agreement has been genuinely agreed, it does not operate as a set of mandatory rules that must be complied with by an employer absent which the Commission cannot be satisfied that an agreement has been genuinely agreed.[13] Where an employer follows pre-approval steps that are consistent with the Statement of Principles, that weighs in favour of a conclusion that an agreement has been genuinely agreed. The converse is also true.
The purpose of the requirement in s 180(5) is to ‘enable the relevant employees to cast an informed vote: to know what it is they are being asked to agree to and to enable them to understand how wages and working conditions might be affected by voting in favour of the agreement’.[14]
Reaching the requisite state of satisfaction as to compliance with s 180(5) depends on the circumstances of the case. The nature of the requirement was helpfully summarised by a Full Bench in The Australian Workers’ Union v Rigforce Pty Ltd,[15] and is uncontroversial.
In its Form F17B the Applicant states that a face-to-face meeting was conducted with all employees on 10 May 2024, with those unable to attend receiving follow up phone calls. There was an explanation of the coverage of the agreement as well as the explanation provided in accordance with the ‘Aerison Agreement Guide’, which included a Filipino translated version to cater for the Applicant’s Filipino employees. The Applicant submits that employees were encouraged to ask questions. Further, the Applicant states that to ensure that all Filipino employees understood the proposed Agreement, a nominated employee bargaining representative was present during bargaining who spoke Filipino.
Regarding the steps taken by Aerison to explain the differences between the Current Agreement and the proposed Agreement, it was first submitted that the majority of amendments to clauses contained in the Current Agreement in comparison with the proposed Agreement simply involved rewording of these clauses to ensure that they are modernised and were compliant with legislative changes since the Current Agreement was drafted.
Mr Bowker explained that during the meetings on 10 May 2024, the Applicant explained the differences between the Current Agreement and the proposed Agreement which would have a material impact on the employees. In particular, during this meeting key or substantive differences between the Current Agreement and the proposed Agreement were discussed at length and employees were afforded an opportunity to ask any questions they had in relation to these differences. Specifically, it was explained that:
a) the rates of pay included in the Classification and Wage Rate clause of the proposed Agreement were base rates of pay which had been increased from the rates of pay set out in the Current Agreement;
b) the rates of pay had been calculated to incorporate an industry allowance, tool allowance and annual leave loading and that these allowances were also incorporated into the minimum hourly rates of pay set in the Current Agreement;
c) the proposed Agreement specified a number of additional allowances not incorporated into the minimum hourly rates of pay, which were either previously incorporated in the minimum hourly rates of pay in the Current Agreement or were new entitlements altogether, in particular a rope access allowance, electrical licence allowance and a living away from usual place of residence allowance;
d) the classification structure set out in Schedule 1 of the proposed Agreement had significantly changed in comparison to the classification structure set out in the Current Agreement, including a different description of the skills and experience required for each of the classification levels, the removal of ‘CW6’ and ‘CW7’ classification levels and the inclusion of trades classifications; and
e) the inclusion of a new mobilisation and demobilisation clause in the proposed Agreement and the differences between this clause and the distant employees leave clause contained in the Current Agreement.
Mr Bowker said that following the 10 May 2024 meetings, any additional amendments made to the proposed Agreement were discussed at length with employee representatives at all four of the bargaining meetings. Mr Bowker explained that the Applicant would revert to the Current Agreement to consider the employees’ current entitlements and explain to the employee bargaining representatives how the amendments would alter them, reminding the employee bargaining representatives at the end of each of the bargaining meetings to ensure the matters discussed during those meetings were communicated to all employees covered by the proposed Agreement. In addition, Mr Bowker said that he issued to employee bargaining representative ‘Enterprise Agreement Bargaining FAQs documents’ (attached to Mr Bowker’s witness statement at LB-4, LB-5 and LB-6).
The Commission must be satisfied that ‘all reasonable steps’ were taken to ensure that the terms of the proposed Agreement and their effect were explained to the relevant employees. Often, a requirement to take all reasonable steps to achieve a particular outcome may be met in different ways.[16] As was said by Justices O’Callaghan and Wheelahan in respect of s 180(5), the fact that one reasonable path is chosen over others need not result in a conclusion that all reasonable steps were not taken. Essentially, the legislation contemplates that there be flexibility.[17]
Perhaps peculiarly, the Applicant in this case decided to provide a detailed exposition of the proposed Agreement at the commencement of bargaining. Generally speaking, this is not the usual course. However, it is apparent that the proposed Agreement that was explained to the relevant employees at the meetings on 10 May 2024, differed to their Current Agreement in some key respects. Mr Bowker details in his evidence those differences and how they were explained, further noting that for six employees not in attendance at the meetings, he telephoned them individually.
Following on from the meetings on 10 May 2024, adjustments to the proposed Agreement were explained to the employee bargaining representatives who were in attendance, including an employee bargaining representative who could converse in Filipino. Those employee bargaining representatives were, in part, then relied upon by the Applicant to explain the adjustments to the terms of the proposed Agreement. However, in addition, the Applicant provided further explanation as to the adjustments to the proposed Agreement that had been presented in the meetings on 10 May 2024, by the provision of an FAQ that was sent to all employees covered by the proposed Agreement after the third bargaining meeting (see Annexure LB-6 of Mr Bowker’s witness statement).
Mr Bowker said that on 25 June 2024, he sent to all relevant employees an email confirming the Applicant was progressing through the seven-day access period and provided an attached updated ‘Agreement Guide’ which explained the clauses of the proposed Agreement.[18]
Having considered the circumstances and needs of the employees, the nature of the work they performed, and Mr Bowker’s evidence, I am satisfied, taking into account the Statement of Principles, that the steps taken by the Applicant to explain the proposed Agreement and the effect of its terms, to the employees covered by the proposed Agreement were reasonable, and the explanation was provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.
Sufficient interest in the terms of the Agreement
Section 188(2)(a) of the Act provides that the Commission cannot be satisfied that an enterprise agreement has been genuinely agreed to by the employees covered by the agreement unless the Commission is satisfied that the employees requested to approve the agreement by voting for it have a sufficient interest in the terms of the agreement.
The Statement of Principles provides, at principle 17, that in considering whether employees have sufficient interest in the terms of the agreement as required by s 188(2)(a), the Commission may take into account whether the employees entitled to vote on the enterprise agreement are paid the rates of pay in the enterprise agreement.
The ‘Aerison Agreement 2024 Detailed Agreement Guide’ provided:
17. CLASSIFICATIONS AND WAGE RATES
The “Classifications and Wage Rates” clause sets the minimum hourly pay rates for employees, excluding apprentices, at various levels from CW1 to CW5 for both full-time/part-time and casual workers. These rates are established at the start of the agreement, with casual employees receiving a higher hourly rate to compensate for the lack of certain benefits.
Employee classifications are detailed in Schedule 1 of the agreement, ensuring pay rates correspond to the employee’s level of responsibility and role within the organisation. The listed pay rates are considered the minimum, indicating employees could be paid more based on Aerison’s discretion or additional agreements.
Indeed, the Applicant submitted that it was correct to say that employees were unlikely to be paid the minimum terms and conditions set out in the Agreement, although it was explained to employees that this was possible. The Applicant pressed that whilst employees in the main were paid higher rates of pay than those included in the Agreement, this was due to the nature of the Applicant’s business as an organisation that tendered for work on various projects and therefore had employees earning different rates of pay based on the particular project-specific conditions.
The Applicant submitted that although employees being paid higher rates of pay than those provided in the proposed Agreement was a factor the Commission may take into account, as articulated in Principle 17 of the Statement of Principles, this was not, of itself, indicative that employees did not have a sufficient stake in the Agreement. The Applicant said that this was because the rates of pay in the Agreement were relevant to, and had bearing on, the rates of pay that could actually be paid to the employees covered by the Agreement. Elaborating on this point, the Applicant submitted that at the meetings on 10 May 2024, the employees were informed that the wage rates in the proposed Agreement, could, in some cases, result in wage increases, if the existing rates paid on the particular projects fell below the minimum rates that would be payable under the proposed Agreement, but could also result in no change if the existing rates paid in respect of that project were already sufficiently higher than the proposed Agreement rates.
In RE LAF Contracting (NSW) Pty Ltd[19] (LAF) the Commissioner considered circumstances where it was said that the employees who were to be covered by the agreement would not have their rates of pay affected by the rates of pay in the enterprise agreement upon which they voted. The Commissioner observed that it is common practice in the construction industry for employees to be paid rates when working on particular sites that may be higher than those that would be paid under the instrument that covers them.[20]
However, the Commissioner found that if the circumstances of the employer were to change, the higher rates of contractual pay may well be impacted resulting in reversion to the rates of pay in the agreement. It was in these circumstances that the Commissioner was satisfied that the employees in question had an actual stake in the terms of the agreement. The situation in LAF is similar to the circumstances before me.
In my view, the employees had an obvious stake in the Agreement. It does not strike me that this is the case of an agreement being an ‘artifice designed to serve as an instrumental Trojan horse, one in which a small few would vote into existence a framework soon to apply to a large and disparate group’.[21] The voting group was covered by the Current Agreement that had existed for a number of years and was now voting on a proposed Agreement with similar coverage over which they had a vested interest notwithstanding that the pay rates provided for in the Agreement provided baseline rates of pay within the business. As had been explained by Mr Bowker to the employees, the rates of pay in the Agreement were minimum rates that they could be paid dependent on any change to their project base rate of pay.
BOOT
As observed, the Agreement was made on 29 June 2024. Under transitional arrangements, amendments made by Part 16 of Schedule 1 to the Amending Act in relation to the BOOT requirements for agreement approval applications apply where the agreement was made on or after 6 June 2023.
I must be satisfied that the Agreement passes the BOOT before I can approve it.[22] Section 193(1) of the Act provides that an enterprise agreement passes the BOOT if the Commission is satisfied, as at the test time, that each award covered employee, and each reasonably foreseeable employee, for the enterprise agreement would be better off overall if the enterprise agreement applied to the employee than if the relevant modern award applied to the employee. The ‘test time’ is when the application for approval of the enterprise agreement is made.[23]
In short, the BOOT requires an overall assessment to be made. This requires identification of the terms which are more beneficial for an employee, the terms which are less beneficial and an overall assessment of whether an employee would be better off under the agreement.[24] Section 193A(2) of the Act now reflects this principle.
That said, ultimately the application of the BOOT is a matter that involves the exercise of discretion, and it involves a degree of subjectivity or value judgment.[25]
The percentage difference between the Award rates of pay and those provided in the Agreement ranged between 10 to 16.13%. When modelled for a 50-hour week based on the CW1 classification, the percentage difference between the Award rates and the Agreement was 8.3% above the Award.
Clause 18.8 of the Agreement provides a living away from home allowance of no less than $72.00 per day. However, the Award under clause 25.3(a)(i) provides a living away from home allowance of no less than $100.22 per day.
Clause 11 of the Agreement states that where an employee is engaged for more than 50% of their allocated working hours during one day on duties carrying a higher rate than the employee’s ordinary classification, they will be paid at the higher rate of pay for the whole day. However, clause 19.10 of the Award provides a similar benefit where the employee is engaged for more than two hours. The Agreement provides a less favourable term in this respect.
However, the Applicant has provided written undertakings that address the aforementioned issues. A copy of the undertakings is attached in Annexure A. I am satisfied that the undertakings will not cause financial detriment to any employee covered by the Agreement and that the undertakings will not result in substantial changes to the Agreement.
In compliance with s 190(4) of the Act, the bargaining representative’s views regarding the undertakings proffered were sought. They were provided with the opportunity to raise and address any objections they had to the undertakings proffered by the Applicant. No objection was raised.
Conclusion
Subject to the undertakings referred to above, and on the basis of the material contained in the application, accompanying declarations, and witness statements, I am satisfied that each of the requirements of ss 186, 187, 188, and 190 of the Act as are relevant to this application for approval have been met.
The Agreement was approved on 27 August 2024 and, in accordance with s 54, will operate from 3 September 2024. The nominal expiry date of the Agreement is 27 August 2028.
DEPUTY PRESIDENT
Printed by authority of the Commonwealth Government Printer
<AE525455 PR777031
Annexure A
[1] [2020] FWCA 5262.
[2] MA000020.
[3] Clause 3.1 of the Agreement.
[4] Fair Work Act 2009 (Cth) s 181(1).
[5] Form F17B – Employer’s declaration in support of an application for approval of a single enterprise agreement (other than a greenfields agreement) – notification time on or after 6 June 2023, question 6.
[6] Form F17B – Employer’s declaration in support of an application for approval of a single enterprise agreement (other than a greenfields agreement) – notification time on or after 6 June 2023, question 29.
[7] Form F17B – Employer’s declaration in support of an application for approval of a single enterprise agreement (other than a greenfields agreement) – notification time on or after 6 June 2023, question 6.
[8] Fair Work Act 2009 (Cth) s 182(1).
[9] [2023] FWCA 87.
[10] [2024] FWCFB 314.
[11] CFMMEU v Noorton Pty Ltd[2018] FWCFB 7224.
[12] Appeal by Kmart Australia Limited [2019] FWCFB 7599.
[13] SDA v Allen Family Pty Ltd[2024] FWCFB 48 [76].
[14] CFMMEU v Ditchfield Mining Services Pty Ltd[2019] FWCFB 4022 [69], applying One Key Workforce Pty Ltd v CFMEU [2018] FCAFC 77 [115].
[15] [2019] FWCFB 6960.
[16] CFMMEU v Mechanical Maintenance Solutions Pty Ltd FN 6 [169].
[17] CFMMEU v Mechanical Maintenance Solutions Pty Ltd FN 6 [169].
[18] Witness Statement of Luke Bowker dated 8 August 2024 at Annexure LB-7.
[19] [2024] FWC 631.
[20] [2024] FWC 631.
[21] Australian Workers’ Union v Moag Pty Ltd[2024] FWCFB 259 [18].
[22] Fair Work Act 2009 (Cth) 186(2)(d).
[23] Ibid s 193(6).
[24] Armacell Australia Pty and Others [2010] FWAFB 9985 [41].
[25] TU v Jarman Ace Pty Ltd [2014] FWCFB 7097 [28].
Printed by authority of the Commonwealth Government Printer
<AE525455 PR777031
11
0