AJS Electrical Contracting Pty Ltd T/A AJS Electrical Contracting

[2023] FWC 3343

[2023] FWC 3343

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.185—Enterprise agreement

AJS Electrical Contracting Pty Ltd T/A AJS Electrical Contracting

(AG2023/3340)

COMMISSIONER TRAN MELBOURNE, 15 DECEMBER 2023

Application for approval of the AJS Electrical Contracting Pty Ltd Single Enterprise Agreement 2023 - application not approved

1. AJS Electrical Contracting Pty Ltd T/A AJS Electrical Contracting (the Applicant) made an application for approval of an enterprise agreement under s 185.

1. The Applicant indicated in its application Form F17B that:

-     The notification time for the Agreement was 28 July 2023; and

-     The Agreement was made on 12 September 2023.

1. I do not approve the proposed Agreement because I am not satisfied that the Employer complied with s 174 of the Act and I do not consider that the failure to comply was a minor error that could be disregarded under s 188(5) of the Act. My detailed reasons follow.

1. I also deal with other matters raised during the approval process relating to whether employees genuinely agreed to the agreement for reasons other than those relating to the Notice of Employee Representational Rights, concerns about how the agreement interacted with the National Employment Standards and whether the Agreement would pass the Better Off Overall Test.

Background

1. After a review of the application, proposed Agreement, supporting documents and the Commission’s Agreements Team checklist, I raised various concerns with the Employer by email on 4 October 2023.

1. The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (the Union) was not a bargaining representative for the Agreement. The Union requested a copy of the approval application and supporting documents from the Commission on 4 October 2023. In accordance with rule 40A(a) of the FWC Rules, I provided the application and supporting documents to the Union, with employee names redacted.

1. The Union then provided submissions to the Commission seeking the opportunity to be heard and outlining its objections to the approval of the Agreement, which included concerns about:

-   material before the Commission;

-   coverage of the Agreement;

-   whether the Agreement had been genuinely agreed to; and

-   whether the Agreement would pass the Better Off Overall Test.

1. The Employer replied to my concerns by email on 6 October 2023. The reply did not fully address my concerns and nor had the Employer had the opportunity to respond to the Union’s correspondence. I issued Directions to allow the Employer to provide its own submissions and any other materials. I listed the matter for hearing on 10 November 2023.

1. The Employer filed submissions, witness statements and replies. The Employer, through Ms Jasmine Bunyan, also provided an undertaking dated 10 October 2023. The Union filed submissions and replies prior to the hearing date.

1. The hearing was via Teams. During the hearing, I raised a concern regarding the cover email with the NERR and provided the Employer with a further opportunity to provide submissions.

1. After the hearing, I also received further submissions from the Union, providing an excel spreadsheet with calculations to supplement its oral submissions and in response to my questions during the hearing.

1. The Employer also provided further submissions and a second undertaking, through Mr Anthony Stockman, dated 27 November 2023. In these submissions, the Employer responded to the further calculations provided by the Union.

I gave the Union the opportunity to be heard

1. The Union sought to be heard under s 590 of the Act and relied on the Commission’s wide discretion under that section, as the Full Bench observed in CFMEU v Collinsville Coal Operations Pty Ltd.[1]

1. The Union did not assert a right to be heard and indicated that it did not have members who were covered by the Agreement. The Union however asserted its interest on the basis that it had eligibility to represent members covered by the Agreement and had membership with other employers within the classifications contained in the Agreement. The Union further asserted that its presence as a contradictor who was familiar with and knowledgeable of relevant modern awards would assist the Commission and relied on Mr Irving Warren.[2] The Union also made submissions that the Employer had misled the Commission in its application materials.

1. The Employer opposed the intervention of the Union in this Agreement approval matter. It stated that the Union was not a bargaining representative for the Agreement (which was not in dispute). The Employer submitted that allowing a third party to appear and make submissions on matters which the Commission was required by the Act to consider for itself was inconsistent with the Act’s objects, noting that the intervention of the Union would unnecessarily delay the approval of the Agreement. The Employer made submissions that the Union’s submissions with respect to the Agreement were inaccurate and misleading.

1. Section 171 of the Act details the objects of Part 2-4 of the Act relating to Enterprise Agreements:

“The objects of this Part are:

(a)   to provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits; and

(b)   to enable the FWC to facilitate good faith bargaining and the making of enterprise agreements, including through:

(i)making bargaining orders; and

(ii)dealing with disputes where the bargaining representatives request assistance; and

(iii)ensuring that applications to the FWC for approval of enterprise agreements are dealt with without delay.”

1. At the hearing, I indicated to the parties that I would hear from the Union, pursuant to my powers under s 590 to inform myself. The Union has extensive membership within the classifications contained in the Agreement.[3] I formed the view that the Union could assist me, particularly in relation to the Better Off Overall Test. The Commission has internal resources and a dedicated team who analyse Agreements and provide initial information to Commission members to assist them in their decision regarding whether to approve an Agreement. Even so, the Union identified a number of matters that the Commission team had not.

1. Both parties submitted that the other had provided misleading or inaccurate information to the Commission. Hearing from the Union would enable me to fully consider the matters raised.[4] The Employer was, of course, given the opportunity to respond.

1. My powers to inform myself under s 590 are broad and discretionary. A consistent theme in the authorities is that hearing from a contradictor at first instance can assist.[5] In the matter of Mr Irving Warren,[6] Cambridge C observed:

“In circumstances where a registered organisation with industry or occupational coverage for work that would be comprehended and regulated by the Agreement seeks to be heard at first instance proceedings, particularly in respect to the BOOT, it would seem logical and expedient to permit standing and invite a contradictor.”

1. Further, that contradictor is likely to have a right to be heard on appeal, which it may not at first instance.[7] No assertion was made by the Union here that it has such a right.

1. I restricted the Union to making submissions with respect to coverage and the Better Off Overall Test, and submissions relating to the law about genuine agreement. The Union did not provide witness statements nor call witnesses, and I did not permit the Union to cross-examine the Employer’s witnesses.

Legislative Requirements

1. Section 186 of the Act sets out the general requirements for the approval of an enterprise agreement. In summary, in relation to a non-greenfields single enterprise agreement, s 186 requires that the Commission must be satisfied that:

-   the agreement has been genuinely agreed to by the employees covered by the agreement: s 186(2)(a);

-   the terms of the agreement do not contravene s 55 (which deals with interaction between the National Employment Standards and enterprise agreements: s 186(2)(c);

-   the agreement passes the better off overall test: s 186(2)(d);

-   the group of employees covered by the agreement is fairly chosen, taking into account geographic, operational or organisational characteristics: ss 186(3) and (3A);

-   the agreement does not contain unlawful terms or designated outworker terms: ss 186(4) and (4A);

-   the agreement has a nominal expiry date that complies with s 186(5); and

-   there is a term about settling disputes: s 186(6).

1. There are additional matters of which the Commission must be satisfied as provided for in s 187, which are not relevant considerations for this Agreement. In brief, the additional requirements are:

-   Approving the Agreement would not be inconsistent with good faith bargaining where there is a scope order

-   That notice was provided for a variation where required by s 184

-   Requirements relating to particular kinds of employees, being shiftworkers (s 196), pieceworkers (ss 197 & 198), school-based apprentices and trainees (s 199) and outworkers (s 200); and

-   Requirements relating to greenfields agreement.

Which tests apply?

1. The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (the Amending Act) made changes to enterprise agreement approval processes in Part 2-4 of the FW Act. The changes commenced operation on 6 June 2023.

1. The notification time for the Agreement was 28 July 2023,[8] which is after the commencement of operation of the Amending Act. Therefore, the genuine agreement test to be applied is as set out in Part 14 of Schedule 1 to the Amending Act.

1. The time that the Agreement was made was 12 September 2023,[9] which is after the commencement of operation of the Amending Act. Therefore, the better off overall test to be applied is as set out in Part 16 of Schedule 1 to the Amending Act.

1. The genuine agreement test in Part 14 of Schedule 1 to the Amending Act, provides as follows:

“188 Determining whether an enterprise agreement has been genuinely agreed to by employees

Statement of principles

(1)   The FWC must take into account the statement of principles made under section 188B in determining whether it is satisfied that an enterprise agreement has been genuinely agreed to by the employees covered by the agreement.

Sufficient interest and sufficiently representative

(2)   The FWC cannot be satisfied that an enterprise agreement has been genuinely agreed to by the employees covered by the agreement unless the FWC is satisfied that the employees requested to approve the agreement by voting for it:

(a)have a sufficient interest in the terms of the agreement; and

(b)are sufficiently representative, having regard to the employees the agreement is expressed to cover.

Note: In One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FCAFC 77 (2018) 262 FCR 527, a Full Court of the Federal Court observed that whether an agreement has been genuinely agreed involves consideration of the authenticity of the agreement of the employees, including whether the employees who voted for the agreement had an informed and genuine understanding of what was being approved.

Agreement of bargaining representatives that are employee organisations

(2A) The FWC cannot be satisfied that an enterprise agreement to which section 180A applies has been genuinely agreed to by the employees covered by the agreement unless the FWC is satisfied that the employer complied with section 180A in relation to the agreement.

Where notice of employee representational rights was required

(3) Subsection (4) applies in relation to an enterprise agreement if an employer was 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.

(4) The FWC 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).

Explanation of terms of the agreement

(4A) The FWC 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 subsection 180(5) in relation to the agreement.

Minor errors may be disregarded

(5) In determining whether it is satisfied that an enterprise agreement has been genuinely agreed to by the employees covered by the agreement (including determining whether it is satisfied that an employer complied with the provisions mentioned in subsection (2A) or (4) or (4A)), the FWC may disregard minor procedural or technical errors made in relation to the following requirements if it is satisfied that the employees were not likely to have been disadvantaged by the errors:

(a) section 173 or 174 (which deal with notices of employee representational rights for certain agreements);

(aa) subsection 180(5) (which requires employers to explain the terms of agreements);

(ab) section 180A (which deals with agreement of certain bargaining representatives);

(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);

(c) subsection 182(1) or (2) (which deal with the making of different kinds of enterprise agreements by employee vote).

Regulations

(6) The FWC cannot be satisfied that an enterprise agreement has been genuinely agreed to by the employees covered by the agreement unless the FWC is satisfied that the requirements (if any) prescribed by the regulations for the purposes of this subsection are met.”

1. The better off overall test in Part 16 of Schedule 1 to the Amending Act is as follows:

“193A Applying the better off overall test

(1)   This section applies for the purposes of determining whether an enterprise agreement passes the better off overall test under section 193.

(2)   To avoid doubt, the FWC must undertake a global assessment of whether each employee concerned would be better off having regard to:

(a)the terms of the agreement which would be more beneficial to the employee if the agreement applied to the employee than if the relevant modern award applied to the employee; and

(b)the terms of the agreement which would be less beneficial to the employee if the agreement applied to the employee than if the relevant modern award applied to the employee.

(3)   The FWC must give consideration to any views relating to whether the agreement passes the better off overall test that have been expressed by any of the following:

(a)the employer or employers that are covered by the agreement;

(b)if the agreement is not a greenfields agreement—the award covered employees for the agreement;

(c)in any case—a bargaining representative for the agreement.

(4)   The FWC must give primary consideration to a common view (if any) relating to whether the agreement passes the better off overall test expressed by all of the following:

(a)the bargaining representative or bargaining representatives of the employer or employers that are covered by the agreement;

(b)the bargaining representative or bargaining representatives of award covered employees for the agreement (other than a bargaining representative that is not an employee organisation).

(5)   Subsection (4) does not apply if the agreement is a greenfields agreement.

(6)   The FWC may only have regard to patterns or kinds of work, or types of employment, if they are reasonably foreseeable at the test time. In considering what is reasonably foreseeable, the FWC must have regard to the nature of the enterprise or enterprises to which the agreement relates.

(6A) The FWC must determine whether a particular pattern or kind of work, or type of employment, is reasonably foreseeable for the purposes of subsection (6) if a view is expressed by any of the following that it is, or is not, reasonably foreseeable:

(a)the employer or employers that are covered by the agreement;

(b)if the agreement is not a greenfields agreement—the award covered employees for the agreement;

(c)in any case—a bargaining representative for the agreement.

(7) If a class of employees to which a particular employee belongs would be better off if the agreement applied to that class than if the relevant modern award applied to that class, the FWC is entitled to assume, in the absence of evidence to the contrary, that the employee would be better off overall if the agreement applied to the employee.”

Concerns with the Agreement

1. I deal with the issues relating to the approval of the Agreement in the following order:

-   Concerns about the Notice of Employee Representational Rights;

-   Genuine Agreement Concerns other than the Notice; and

-   Other matters that were raised:

o   Whether the Agreement passes the better off overall test

o   Various concerns about the interaction with the National Employment Standards

o   A concern that the Agreement clause 3.4 may be unenforceable due to the operation of s 326 of the Act.

Genuine Agreement – Notice of Employee Representational Rights

1. I raised the following concerns with the Employer in my initial concerns email of 4 October 2023:

-     That the Employer had used an earlier version of the Notice; and

-     That the Coverage on the Notice stated ‘2023-2028’.

1. I was also concerned with how the potentially non-compliant Notice interacted with the Agreement itself, which did not appear to have a coverage clause, and drew the Employer’s attention to s 53 of the Act. This concern was raised with the Employer during the hearing.[10]

1. During the hearing on 10 November 2023, I raised the additional concern that the email of 28 July 2023 which provided the Notice to employees indicated that employees must appoint a bargaining representative within 14 days from the date of the Notice.[11] I provided the Employer with an opportunity to put in further submissions after the hearing to address this concern.

Use of superseded Notice

1. In relation to the use of the pre-6 June 2023 Notice, the Employer submitted that it had complied with the substantial requirements of s 173 by notifying the employees who will be covered by the Agreement and who were employed at the notification time.

1. The differences between the template pre-6 June 2023 Notice and the current Notice are:

-     The Current Notice describes the agreement as a single enterprise agreement in various places, where the pre-6 June 2023 Notice did not include the word ‘single’ before ‘enterprise agreement’;

-     The options in the pre-6 June 2023 Notice relating to low paid authorisations are removed from the Current Notice;

-     The final words “or you revoke the union’s status as your representative” in the fifth paragraph of the pre-6 June 2023 Notice is not included in the Current Notice; and

-     The wording relating to certain transitional instruments has changed, so that the Current Notice refers to sunsetting of instruments in accordance with Schedules 3 and 3A of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009.

1. The Employer did not address these differences but did submit that the use of the pre-6 June 2023 Notice was a minor error that did not disadvantage employees who otherwise genuinely agreed to the Agreement.

How coverage was expressed in the Notice

1. The opening paragraph on the Notice has blank fields that require an employer to insert the following details:

-     Name of the employer;

-     Name of the proposed enterprise agreement; and

-     Proposed coverage.

1. The relevant paragraph of the Employer’s Notice is (emphasis added):

“AJS Electrical Contracting Pty Ltd gives notice that it is bargaining in relation to an enterprise agreement (AJS Electrical Contracting Pty Ltd Single Enterprise Agreement) which is proposed to cover employees that 2023-2028.”

1. The Agreement does not have a coverage clause.

Cover email - Time limit for Appointing Bargaining Representatives

1. The Employer emailed the Notice to all employees whom it said were proposed to be covered by the Agreement. The email was from Ms Jasmine Bunyan, Administration Manager,[12] and said:

“Please find attached Schedule 2.1 – Notice of employee representation rights in relation to the AJS Electrical Contracting Pty Limited Single Enterprise Agreement 2023-2028.

Should you wish to nominate a bargaining representative, you have 14 days from this notice to do so.

In line with this notice, the vote to approve the agreement will not occur until at least 22 days after this notice has been issued to employees.

If you have any questions regarding this bargaining process at any point, please contact me via return email.”

1. In response to an enquiry from an employee who indicated they were confused, wanted to know when they get to view the new agreement and if each of them must nominate themselves to view and vote on the agreement, Ms Bunyan replied:[13]

“You do not need to nominate anyone to be a representative, nor do you need to nominate yourself for the bargaining process to commence. This notification is simply a requirement of Fair Work that if you would like to nominate a representative, that you have 14 days from Friday to do so.”

Consideration relating to the Notice and cover email

1. Section 173 provides the requirements for how and when to provide the Notice and s 174 provides the requirements in relation to the content of the Notice.

1. The content requirements of the Notice in s 174(1A) are explicit:

“The notice must:

(a)contain the content prescribed by the regulations; and

(b)not contain any other content; and

(c)be in the form prescribed by the regulations.”

1. The Employer submitted that the errors of the Notice are minor procedural or technical errors that I could disregard for the purposes of deciding whether the Agreement was genuinely agreed to under s 188(5). The Employer further submitted that the Notice was compliant in that it contained the prescribed wording and no other wording.

1. I agree with the Employer that the substantive content of the Notice was as prescribed and did not contain other content.

1. The Full Bench decision in Huntsman Chemical Company Australia Pty Ltd T/A RMAX Rigid Cellular Plastics & Others[14] comprehensively considered the proper construction of then s 188(2), which is now s 188(5). The Full Bench stated that the consideration for ‘genuine agreement’ as defined in s 188 is to be approached sequentially. The genuine agreement test at the time that Huntsman was decided was the pre-6 June 2023 test. However, both provide that an agreement is genuinely agreed to if the Commission is satisfied of certain matters. The new genuine agreement test further provides that the Commission must take into account the Statement of Principles. The sequential approach endorsed in Huntsman can be equally applied to the new genuine agreement test.

1. I note that the wording of s 188(2) as considered in Huntsman is not the same as the wording in s 188(5). Section 188(2) as considered in Huntsman was:

“An enterprise agreement has also been genuinely agreed to by the employees covered by the agreement if the FWC is satisfied that:

(a)   the agreement would have been genuinely agreed to within the meaning of subsection (1) but for minor procedural or technical errors made in relation to the requirements mentioned in paragraph (1)(a) or (b), or the requirements of sections 173 and 174 relating to a notice of employee representational rights; and

(b)   the employees covered by the agreement were not likely to have been disadvantaged by the errors in relation to the requirements mentioned in paragraph (1)(a) o or (b) or the requirements of sections 173 and 174.”

1. The current s 188(5) is:

“In determining whether it is satisfied that an enterprise agreement has been genuinely agreed to by the employees covered by the agreement (including determining whether it is satisfied that an employer complied with the provisions mentioned in subsection (2A) or (4) or (4A)), the FWC may disregard minor procedural or technical errors made in relation to the following requirements if it is satisfied that the employees were not likely to have been disadvantaged by the errors:

(a)   section 173 or 174 (which deal with notices of employee representational rights for certain agreements);

(aa) subsection 180(5) (which requires employers to explain the terms of agreements);

(ab) section 180A (which deals with agreement of certain bargaining representatives);

(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);

(c)   subsection 182(1) or (2) (which deal with the making of different kinds of enterprise agreements by employee vote).”

1. The key differences between the old s 188(2) and current s 188(5) are that the old s 188(2) provided that the Commission may be satisfied that the agreement has been genuinely agreed but for minor procedural or technical errors, whereas the current s 188(5) provides for a discretion to disregard minor procedural or technical errors. The requirement that employees were not likely to have been disadvantaged by the errors remains the same. The requirement that the errors relate to particular requirements (the Notice, explanation of terms, timing of the request to vote) relevantly remains the same.

1. From my reading of Huntsman and applying that decision to the new s 188, I understand my task in relation to single enterprise agreements to be this:

1. Overall, take into account the Statement of Principles;

1. Ascertain whether I am satisfied of each of the matters in s 188;

1. If I am not satisfied, I may disregard minor procedural or technical errors relating to specific requirements, being:

a.The Notice requirements in s 173 and 174;

b.Explanation of terms in s 180(5); and

c.Matters relating to the request to vote in s 181 and 182.

if I am also satisfied that employees were not likely to have been disadvantaged by those errors.

1. In relation to the Notice, the Full Bench in Australian Maritime Officers Union v Harbour City Ferries Pty Ltd[15]  found that:

“the whole of the document … including the fields to be populated by the employer, constitutes the prescribed notice and must therefore comply with the constraints in s 174(1A).”

1. I find that the use of the pre-6-June 2023 Notice and the inclusion of the date range in the blank field intended for the Agreement’s proposed coverage means that I cannot be satisfied that the Employer has complied with the Notice requirements of s 174(1A).

1. I agree with the Employer that these are errors. I find that these errors are technical errors, within the meaning as discussed in Huntsman, in that they relate to the content of the Notice and not to a particular process or course of action.[16]

1. While the error of using the pre-6 June Notice may be a minor error, I am of the view that the error relating to the proposed coverage of the Agreement cannot be a minor error. The Full Bench in Harbour City Ferries[17] discussed the requirement to insert accurate words into the blank fields and specifically the field intended for proposed coverage. The principle from that case is that:

“any non-trivial misdescription of coverage will render a NERR invalid with the consequence that any subsequent enterprise agreement will be incapable of approval.”

1. I further adopt the view of Commissioner Roe in Application by Perth Access Scaffolding Pty Ltd[18] where he said, “there is nothing more fundamental in an agreement than its coverage.”

1. The Employer drew to my attention the matter of Mawson Lakes Community Early Learning Incorporated,[19] where Commissioner Lee found that a Notice which expressed the proposed coverage of the agreement to include the log of employees’ claims was a minor technical error and that employees covered by the agreement were not disadvantaged by the error. That matter is materially different from this one.

1. In Mawson Lakes, the proposed agreement had a coverage clause at Clause 1.5 of the Agreement. There is no coverage clause in this Agreement. The employees in Mawson Lakes were covered by an enterprise agreement and understood the proposed agreement would replace the old one with no changes in coverage. In its F17B, the Employer in this matter stated that no collective agreement currently applies to the employees who may be covered by this Agreement.

1. In my view, Harbour City Ferries[20] is more apposite to this Agreement. In that matter the relevant notice had no description of the proposed coverage of the agreement. The Notice for this Agreement had a date range, which the Employer submitted was an error relating to the operational period of the Agreement. The requirement for the information in the proposed coverage field is so that:

“The employee reading the notice must be able to understand who it is “who would be covered” by the proposed agreement.”[21]

1. In Mawson Lakes, the employees could know. They were all the employees who were covered by an enterprise agreement that would be replaced by the current agreement, and the incorrect information inserted was their log of claims for the replacement agreement.

1. This Agreement does not cover all employees of the Employer. The Employer submits that the employees who were proposed to be covered by the Agreement knew that they were covered because they were the ones provided with the Notice. Others knew they were not covered because a different award applied to them, or they were managerial employees.[22] However, the fact that the Agreement simply does not have a coverage clause is problematic.

1. Section 53(1) of the Act provides:

“An enterprise agreement covers an employee or employer if the agreement is expressed to cover (however described) the employee or the employer.”

1. The Employer submitted that the coverage of the Agreement can be ascertained by:

-  Clause 3.3.4 which names the Electrical, Electronic and Communications Contracting Award 2020 by expressly excluding it; and

-  The classifications in Schedule A which align exactly with the Award.

1. I find this submission difficult to reconcile. It cannot be the case that where an Agreement expressly excludes an Award, that the Commission is then asked to look to the excluded document’s terms to interpret a fundamental term of the Agreement itself. The classifications in the Agreement exactly aligning with the Award exist because the Award cannot be used, by the terms of the Agreement. While the exclusion clause might assist the Commission to identify what is the relevant Award for the purposes of the Better Off Overall Test, the Award cannot otherwise be used to interpret the Agreement itself.

1. Further, nowhere does the Agreement express that it covers the employee or the Employer. Employees are defined by reference to performing work in certain classifications in the Agreement, but the Agreement does not include any clause that has words such as – This Agreement covers employees (howsoever defined) and the employer. As a result of this omission and my view that coverage is a fundamental term of an agreement, I cannot conclude that the proposed coverage error in the Notice is minor and can be disregarded under s 188(5).

1. The Employer offered an undertaking on 27 November 2023 to include into the Agreement a coverage clause. For the same reasons (that coverage is a fundamental term of an agreement) I find that I cannot accept the undertaking that was offered by the Employer. For the same reason that I find the omission to not be minor, I am of the view that the undertaking would lead to a substantial change in the Agreement, contrary to s 190(3)(b).[23]

Were employees likely to be disadvantaged by the errors?

1. While I am of the view that I do not need to consider whether employees were likely to be disadvantaged by the errors, I will deal with this element of s 188(5) for completeness.

1. In Huntsman,[24] the Full Bench stated that:

“The word ’disadvantaged’ suggests a deprivation which manifests in the employees covered by the agreement being prevented from substantively exercising their rights within the bargaining regime in Part 2-4 of the Act.”

1. The Employer submitted that employees were not disadvantaged by the errors as:

-  All employees who were to be covered by the Agreement understood they would be covered as it had been communicated personally to all employees via email;

-  All employees were informed and had a genuine understanding of the Agreement;

-  Employees were at all times advised of their representational rights to nominate a bargaining representative;

-  The Employer complied with the legislative pre-approval steps; and

-  Employees knew that the Agreement had a 4-year maximum term and not a 5-year term, which is what the error of the date range inserted into the blank field of the Notice intended for proposed coverage may have suggested.

1. Because of the information provided with the approval application, I am satisfied that procedural pre-approval steps regarding when the Notice was provided, the relevant access period, provision of materials and when employees were requested to vote were complied with.

1. I do not consider the issue regarding the term of the Agreement to be relevant. I cannot be satisfied that the Notice was compliant because it had a date range in the blank field of the Notice intended for proposed coverage. I am of the view that I do not need to consider whether employees were likely to be disadvantaged with respect to what the incorrect information conveyed, but rather with how employees are likely to be disadvantaged because the correct information was not conveyed. The result of the error is that there was simply no way for employees to know with certainty that the Agreement was intended to cover only the employees who did receive the Notice, because the Notice does not say so and neither does the Agreement.

1. No employees who voted on the Agreement gave evidence to confirm the Employer’s submissions that employees had an informed and genuine understanding of the Agreement. The Employer’s submissions, evidence, witness statements (including sworn oral evidence) and materials provided with the approval application do not satisfy me that employees did have an informed and genuine understanding of the Agreement.

1. In relation to the Employer’s submissions that employees were at all times advised of their representational rights to nominate a bargaining representative, the evidence clearly shows that this was not accurate. The Employer’s cover email with the Notice and reply to at least one employee substantively misleads and restricts rights to nominate a bargaining representative to within 14 days of the provision of the Notice itself. This is not a requirement of the Act or regulations. Contrary to the Employer’s submissions, this aspect is one in which employees could have been disadvantaged.

1. The bargaining regime of Part 2-4 of the Act and the purpose of the Notice is to ensure employees are aware of their representational rights.[25] The information in the cover email is evidence that employees may have been prevented from substantively exercising their rights within the bargaining regime, and thus disadvantaged. While this is not a disadvantage by the errors of the Notice (as the information was in the cover email and reinforced in a later email), I cannot agree that employees were informed of their rights to nominate a bargaining representative when other evidence demonstrates that an unwarranted restriction was placed on that right which is at the very core of the Act’s bargaining regime.

The cover email

1. During the hearing, I raised my concern about the content of the cover email and provided the Employer with an opportunity to put further submissions in relation to that concern, specifically whether the additional words in the covering email (which attached the Notice) is considered part of the Notice and as such contravenes s 174. I drew the Employer’s attention to the Full Bench’s decision in Peabody Moorvale Pty Ltd v Construction, Forestry, Mining and Energy Union.[26]

1. The Employer made submissions that the cover email did not form part of the Notice. The Employer characterised the Full Bench’s decision as leading to a strict approach to the content of the notice and referred to the Productivity Commission’s recommendation that the Act be changed be counteract the decision. The Employer further submitted that “the strict approach in the Peabody decision has been largely negated by subsequent legislative amendments.” With respect, I disagree with these submissions.

1. In Peabody, the Full Bench dealt with an issue that is relevant to this matter:

“whether the notice of employee representational rights (the ‘Notice’), provided by Peabody to each employee who will be covered by the Agreement, complied with s.174(1A) of the Act and, if the Notice did not comply, was it necessarily invalid and of no effect.”

1. Section 174(1A) has not changed since the Peabody decision. What has changed is the insertion into the Act of s 188(2) in the Fair Work Amendment (Repeal of 4 Yearly Reviews and Other Measures) Act 2018, which has been re-numbered with further legislative changes in FairWork Legislation Amendment (Secure Jobs, Better Pay) Act 2022. It is the case that the Peabody decision came after legislative changes inserting s 174(1A) which relevantly made the Notice requirements mandatory.[27] The legislative changes since the Peabody decision allow the Commission to disregard minor procedural or technical errors but do not otherwise change the requirements of the Notice.

1. Of relevance to this matter is the Full Bench’s conclusions in relation to whether other material provided with a Notice forms part of the Notice. The Full Bench made the following three observations:

“First, s.174(1A) is not to be construed so as to preclude an employer from providing additional material to its employees at the same time as the Notice is given to them.

…
Secondly, where additional material accompanies a document which contains the content, and is in the form, prescribed in the Regulations, the issue to be determined is what purports to be the Notice. This is a question of fact.
…
Thirdly, where additional material is provided with the Notice and that material has the character of being, for example, misleading or intimidatory, then this will be relevant to the Commission’s assessment of whether the enterprise agreement had been ‘genuinely agreed’ by the employees. However, it is not a basis for finding that a Notice has not been given in accordance with the Act.”[28]

1. As part of the first observation, the Full Bench gave the specific example of a simple covering email with the Notice being acceptable additional material. Applying Peabody, I find that the cover email is therefore not part of the Notice, and therefore has no role to play in its validity.

1. The third observation is also relevant in this matter, and I deal with my concerns relating to the content of the cover email further below.

1. While my conclusions regarding the Notice means that I cannot approve the Agreement, for completeness I discuss other matters raised during the approval application process and hearing.

Genuine Agreement matters other than the Notice of Employee Representational Rights

Time period to appoint a bargaining representative

1. The Employer submitted the following with respect to the content of the covering email:

“The words in the covering email, which is attached to the NERR, did not mislead, confuse or lead to employees failing to understand exactly what their bargaining rights were. The covering email re-iterated some of the contents contained in the NERR, which does not misrepresent the true position as to employee’s rights to representation in bargaining under the FW Act.”

1. With respect, I disagree. The words in the cover email included the requirement that if an employee wished to appoint a bargaining representative, they had 14 days from the date of the Notice to do so. This was repeated in a reply email, but the Employer added further that it was a:

“requirement of Fair Work that if you would like to nominate a representative, that you have 14 days from Friday [the date when the Notice was given] to do so.”

1. The Act does not impose any time limits on when an employee may appoint a bargaining representative. Rather the 14-day time period relates to when an employer must give the Notice. Under s 173(3) this is 14 days after bargaining starts, which may be started in a number of ways and is called the Notification Time under s 173(2).

1. I have regard to the Statement of Principles, and in particular Principle 3:

“An employer should not mislead employees (by words, action or otherwise) as to:

(a)   the employees’ right to be represented by a bargaining representative, or

(b)   the role of an employee organisation as the default bargaining representative of its members.”

1. The right to representation is underpinned and reinforced by the objects of the Act and the objects of Part 2-4, particularly the objects of:

-fairness and representation at work,

-right to freedom of association and the right to be represented, and

-collective bargaining in good faith at the enterprise level.

1. The High Court in Aldi Foods Pty Limited v SDA[29] observed that the provisions relating to the Notice and to bargaining representatives:

“Serve to ensure that employees … are able to call on the negotiating skills and bargaining strength of employee organisations should they so choose in order to minimise the inequalities of bargaining power that might otherwise adversely affect the outcome of their negotiations with their employer.”

1. I find that adding the time limit to when an employee may appoint a bargaining representative and reiterating this time limit as a ‘requirement of Fair Work’ does mislead an employee in relation to a matter that is integral to the bargaining regime of Part 2-4 of the Act, which is the right to be represented in bargaining.

Matters relating to explanation of terms and effect of the Agreement

1. Section 188(4A) requires that the employer complies with s 180(5), which is to take all reasonable steps to ensure that the terms of the agreement and the effect of those terms are explained to employees and that the explanation is provided in an appropriate manner, taking into account the particular circumstances and needs of the employees.

1. In the Form F17B, the Employer declared that it held meetings at each of its work locations to discuss the terms of the Agreement and the effect of those terms. The Employer’s Form F17B was made by Ms Jasmine Bunyan, Administration Manager. The Employer declared that it explained the contents of the Agreement. The Employer provided the minutes of two such meetings with its application. In response to the Union’s intervention and submissions, the Employer had the opportunity to provide further submissions and materials in support of its application. It provided 2 witness statements from Mr Anthony Stockman, Operations Manager, and one from Ms Bunyan, which included handwritten records of toolbox talks and meeting minutes. Both Mr Stockman and Ms Bunyan provided sworn oral evidence in support of their statements.

1. I accept the evidence of Mr Stockman and Ms Bunyan about the process that the employer engaged in. Mr Stockman attended the meetings and discussed various aspects of the Agreement. He gave evidence that he took notes of the meetings, but that his statement included his recollections and did not append his notes. Mr Stockman stated that he comprehensively explained various aspects of the Agreement including wages, allowances, ordinary hours, overtime, RDO, long service leave and the long service leave corporation. Mr Stockman did not depose to explaining the effect of the Agreement on employees’ terms and conditions in relation to their terms and conditions under the Award. Mr Stockman’s first statement stated that employees asked questions, what those questions were and the answers given.[30]

1. Ms Bunyan did not attend the meetings, but her statement appended documents called ‘Minutes of Meeting’ dated 8 September 2023 and also handwritten notes on a form headed, ‘Record of Toolbox Talks’ of various dates, the latest of which was 8 September 2023. Ms Bunyan answered in oral evidence that she “just did the administrative part of it [being the meetings]… the paperwork part of it.”

1. In response to questions, Ms Bunyan indicated that what was called the minutes of the meeting were prepared before the meeting and not actually a record of what was discussed at the meeting itself. Ms Bunyan described them as ‘more action items as of what was going to be discussed at the meeting’ – effectively an agenda. I asked whether any report was given to her about the meeting in order to type up the minutes. Ms Bunyan indicated that she only spoke with Anthony Stockman and Andrew Hulpert who conducted the meetings “just to check that everything had gone OK and [they] hadn’t received any negative feedback about it,” but did not confirm what occurred at the meetings themselves. Ms Bunyan stated that she received the handwritten notes, being the records of the toolbox talks, which presumably were not prepared by her as she did not attend them. She did not indicate that she referred to them to update the ‘minutes’.

1. Mr Stockman’s statement contradicts the record of toolbox talks as one such record for a talk held on 8 September 2023 indicates no questions were asked by employees, whereas Mr Stockman’s statement contains questions and answers that he provided. There were two meetings held to explain the terms of the Agreement, stated by both Mr Stockman and Ms Bunyan. I was not provided with ‘minutes’ nor record of toolbox talks for the meeting on 6 September 2023.

1. No employees who participated in the meetings or voted on the Agreement gave evidence.

1. All the above matters give rise to concerns about whether the Employer had discharged its obligation to take all reasonable steps to ensure that the terms and effect of the Agreement have been explained to employees. I have regard to the Statement of Principles in paragraph 8 which states that explaining the terms and effect of the Agreement:

“should include at a minimum explaining to employees how the proposed agreement will alter their existing minimum entitlements and other terms and conditions”

1. That is, the explanation required is more than an explanation as to the terms of the Agreement itself. There must be some explanation about differences between the Agreement and current conditions and how the Agreement may alter existing minimum conditions.[31]

1. All of the above may not have been fatal to the approval of the Agreement. Were it not for my findings about the invalidity of the Notice, I would make further enquiries of the Employer to satisfy myself about whether the employees had genuinely agreed to the Agreement.

Other concerns, including concerns with the BOOT

1. My other concerns about the Agreement included various concerns about the interaction with the National Employment Standards and a concern that the Agreement clause 3.4 may be unenforceable due to the operation of s 326 of the Act.

1. The Employer provided information in relation to the above concerns.

1. In relation to my concern that clause 3.4 may be an unenforceable deduction, the Employer submitted that the employer should have an avenue to recover overpayments, that it was only fair and just that an employee is held liable for motor vehicle accidents where they are at fault, and that an apprentice would not have training fees deducted under the concerning clause. These submissions miss the point. My concern would not prevent the employer from seeking return of overpayments or contribution to insurance excess or recoupment of training fees in the listed circumstance. My concern was that the Agreement allowed the Employer to deduct money from wages in particular circumstances which appeared inconsistent with s 326 and would therefore be unenforceable.

1. The Union’s concerns relating to whether the Agreement passed the Better Off Overall Test included:

-Whether and which allowances the Agreement included;

-Various matters relating to shift-workers, including lack of the Award protections when employees are working 12-hour shifts and paid rest breaks;

-Excess annual leave; and

-Direction to attend training including outside of work hours.

1. Again, all the above matters may not have been fatal to the approval of the Agreement.

1. My concerns regarding the Agreement’s interaction with the NES could have been addressed by either the Agreement’s NES precedence clause at clause 5.8 or through undertakings, subject to s 190.

1. The matters relating to the BOOT may also have been able to be addressed through undertakings, subject to s 190 and whether such undertakings cause a financial detriment or result in substantial changes. The Employer did offer two sets of undertakings and would have been given a further opportunity to consolidate or offer further undertakings if necessary.

1. The Union and the Employer raised matters relating to particular patterns or kinds of work or type of work needs. While this matter would need to be determined in order for the Agreement to be approved, I decline to do so as it is not necessary for this decision.

1. Other matters could have been addressed in the approval decision itself.

Conclusion

1. I have found that the Notice of Representational Rights provided to employees was invalid, as it used a pre-6 June 2023 version and did not contain the prescribed information in the blank field for proposed coverage. I find that the second of these errors is not a minor procedural error or technical error, and I cannot disregard it and cannot take into account whether employees were not likely to have been disadvantaged by the error. As a result, I am not satisfied of the requirements under s 186 and do not approve the Agreement.

COMMISSIONER

Appearances:

G Jervis, Consultant at The National Electrical Contractors Association, for AJS Electrical Contracting Pty Ltd T/A AJS Electrical Contracting.
A Kentish, for the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia.

Hearing details:

2023.

Melbourne with videolink to Sydney via Microsoft Teams.
11 November.

Final written submissions:

Lisa Carey: 25 November 2023.

[1] [2014] FWCFB 7940 at [75].

[2] [2017] FWC 4787 at [39]-[40].

[3] See Application by Perth Access Scaffolding Pty Ltd [2016] FWC 8042 at [2].

[4] See OGS Project Services Pty Ltd [2022] FWC 2501 per Asbury DP at [15] – [16].

[5] Application by One Key Coal QLD Ptyt Ltd [2018] FWC 256; Application by Neptune Diving Services Pty Ltd [2017] FWC 5955.

[6] [2017] FWC 4787 at [39].

[7] See Mr Irving Warren [2017] FWC 4787 [30]-[35]; Inco Ships Pty Ltd v Australian Institute of Marine and Power Engineers, The (009V) & Australian Maritime Officers' Union, The (001N) [2016] FWCFB 3370 at [15]; CFMEU v Collinsville Coal Operations Pty Ltd[2014] FWCFB 7940 at [15]; CEPU and AMWU v Main People Pty Ltd[2014] FWCFB 8429 at [7].

[8] Employer’s Form F17B declared by Ms Jasmine Bunyan, Administrative Manager at Q18.

[9] Ibid at Q28.2.

[10] Transcript of Proceedings at PN12.

[11] Ibid.

[12] Digital Hearing Book at 98-99.

[13] Ibid at 97.

[14] [2019] FWCFB 318.

[15] [2015] FWCFB 3337 at [27].

[16] Huntsman Chemical Company Australia Pty Ltd T/A RMAX Rigid Cellular Plastics & Others[2019] FWCFB 318 at [117].

[17] [2015] FWCFB 3337, as summarised in Australian Maritime Officers' Union v Harbour City Ferries Pty Ltd[2016] FWCFB 1151 at [40].

[18] [2016] FWC 8042 at [17].

[19] [2022] FWCA 1962.

[20] [2015] FWCFB 3337.

[21] Ibid at [29].

[22] Transcript of Proceedings at PN119 - 120; PN244 - 245.

[23] Application by Perth Access Scaffolding Pty Ltd [2016] FWC 8042 at [18].

[24] Huntsman Chemical Company Australia Pty Ltd T/A RMAX Rigid Cellular Plastics & Others[2019] FWCFB 318 at [117].

[25] Ostwald Bros Pty Ltd v CFMEU[2012] FWAFB 9512 at [62]-[65] as quoted in Hunstman at [83].

[26] [2014] FWCFB 2042.

[27] Ibid at [19], [46].

[28] Ibid at [68]-[70].

[29] [2017] FCA 53 at [38].

[30] Witness Statement of Mr Stockman (Exhibit 5) at [15].

[31] See also Re Toys “R” Us (Australia) Pty Limited Enterprise Flexibility Agreement 1994 Print L9066 C No 23663 of 1994, as summarised in Re Central Queensland Services Pty Ltd [2015] FWC 1554 per Asbury DP at [66].

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