Appeal by Ausdrill Pty Ltd

[2022] FWCFB 223

[2022] FWCFB 223

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.604—Appeal of decision

Appeal by Ausdrill Pty Ltd

(C2022/6868)

DEPUTY PRESIDENT GOSTENCNIK

DEPUTY PRESIDENT MASSON

DEPUTY PRESIDENT MILLHOUSE

MELBOURNE, 7 DECEMBER 2022

Appeal against decision [2022] FWC 2539 of Deputy President Saunders at Newcastle on 21 September 2022 in matter number AG2022/1886

1. The appellant, Ausdrill Pty Ltd applied under s 185 of the Fair Work Act 2009 (Act) for approval of the Ausdrill Pty Ltd Black Coal Agreement 2022 (Agreement). The Agreement covers employees of Ausdrill throughout Australia engaged in drilling and blasting, exploration and associated maintenance roles in surface operations in the black coal mining industry employed in one of the classifications for which the Agreement provides. The respondent, the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) was a bargaining representative for the Agreement and opposed the approval of the Agreement on several grounds. The Agreement covers all the employees who are covered by the Black Coal Mining Industry Award 2020 (BCMI Award), who may be grouped into three categories by reference to various industrial instruments that had application to these employees in their employment with the appellant at the time of the vote.

1. The first category comprises employees to whom the BCMI Award applied at the time of the vote because they fell within the BCMI Award’s coverage and were not covered by an enterprise agreement which was in operation. The second category comprises employees whose employment contracts with the appellant incorporated the terms and conditions of an enterprise agreement known as the Brandrill East Coast Coal Agreement 2009 (Brandrill EA). The Brandrill EA did not otherwise apply to these employees as an enterprise agreement. The BCMI Award applied to these employees in their employment with the appellant at the time of the vote. Employees in this category were entitled, at the time of the vote, to the benefits conferred and were subject to the obligations imposed by the BCMI Award and the Brandrill EA. The third category comprises only one employee whose contract of employment with the appellant incorporated the Brandrill EA but to whom that agreement applied in any event by force of the transfer of business provisions of the Act. Consequently, the BCMI Award did not apply.

1. By decision published on 19 August 2022 (first decision), Deputy President Saunders was not satisfied the appellant had complied with the requirements of s 180(5) and so was not satisfied that the relevant employees had genuinely agreed to the Agreement.[1] The Deputy President allowed the appellant time to provide any undertaking it may wish to provide to address his concern that the genuinely agreed approval requirement had not been met.[2]

1. Subsequently, the appellant informed the Deputy President that it was prepared to offer an undertaking to the effect of option 1 or 2 (which we set out below), or some amendment thereto if requested by the Commission:

“Option 1

The Company will continue to apply to any Employee, any more beneficial term of the Black Coal Mining Industry Award 2020, than a term of this Agreement, as it applied at the date of approval of this Agreement.

Option 2

The Company will continue to apply to any Employee, the following more beneficial terms of the Black Coal Mining Industry Award 2020, to the extent that they provide are (sic) more beneficial than a term of this Agreement, as it applied at the date of approval of this Agreement:

(a)   Clause 15.1, 15.2 and 15.4 – Hours of Work

(b)   Clause 15.5 – Change to Rosters (less than 1 week’s notice)

(c)   Clause 29.2, 29.5 and 29.6 – Public Holidays

(d) Clause 29.3 – Public Holiday Payment.”

1. By decision published on 21 September 2022 (second decision), the Deputy President concluded that the undertakings proffered by the appellant do not meet his concerns and that the appellant’s failure to comply with s 180(5) of the Act was not a minor procedural or technical error within the meaning of s 188(2), and so the genuinely agreed approval requirement had not been met.[3] The application for the approval of the Agreement was consequently dismissed.[4]

1. By its amended notice of appeal,[5] the appellant applies for permission to appeal and if granted, appeals both decisions.

Consideration

The Decisions

1. In the first decision the Deputy President begins with an introduction and discussion of the relevant principles concerning the operation of s 180(5) of the Act (at [1]-[9]) which are not challenged on appeal. Next, the Deputy President sets out the steps taken by the appellant to explain the terms of the Agreement and the effect of those terms to relevant employees (at [10]-[28]), and save for the identification of some typographical errors in the extract of a power point presentation slide at [25],[6] are also not challenged on appeal. The Deputy President summarises the submissions of the CFMMEU at [29]-[43] and those of the appellant at [44]-[54], and then he addresses the particular concern about whether the approval requirement in s 186(2)(a) had been met, as follows:

“[55] It is apparent from the evidence to which I have referred above that the consistent message given by Ausdrill to employees covered by the Enterprise Agreement was that their current terms and conditions were sourced from either the BC Award or the Brandrill EA. That was incorrect. Employees in category two had their current terms and conditions of employment sourced from both the BC Award and the Brandrill EA.

[56] The employees in category two were told that the Enterprise Agreement would apply to the exclusion of the Brandrill EA and the BC Award, but they were not told that the BC Award applied to them at the time of the vote and would continue to apply to them if the Enterprise Agreement was not approved by a majority of employees who voted on it. I do not accept Ausdrill’s submission that all employees covered by the Enterprise Agreement, including those in category two, were informed, or would be capable of understanding from the information provided by Ausdrill, that the BC Award applied to them at the time of the vote.

[57] In answer to the question “Where can I find the terms that apply to me?”, the Key Terms Explained document states, “The Agreement will apply to the exclusion of the Black Coal Mining Industry Award”. That was a correct answer to the question posed. But contrary to Ausdrill’s submission, this statement did not only make sense if the BC Award applied to the employees’ employment. Ausdrill’s employees were aware from earlier communications that they were covered by the BC Award. They were also aware from Ausdrill’s communications that the BC Award was “important because the proposed Agreement must be better off overall than the [BC] Award in order for the Fair Work Commission to be able to approve the Agreement”. Having regard to that context, it was important for Ausdrill’s employees to understand that the BC Award would not apply to them in the future if the Enterprise Agreement was made and approved by the Commission. That information was important to understand whether or not the BC Award applied to particular employees at the time of the vote.

[58] The project entitlement letters did not state that the BC Award applied to the employee to whom the letter was sent. The letters state that “the table also confirms the reference classification in the Black Coal Mining Industry Award 2020 (Award) that is applicable to your employment”. The “reference classification”, such as “Mineworker”, was “applicable” to the employee in the sense that it accurately described the classification of the employee. That classification did not change between the BC Award, Enterprise Agreement and the Brandrill EA, since each of those instruments uses the same classification structure. It was also relevant for an employee to understand their classification under the BC Award so that they could compare benefits under the BC Award with benefits under the Enterprise Agreement for the purpose of assessing whether the Enterprise Agreement passed the better off overall test. Further, the Composite Hourly Rate of Pay for the employee’s “reference classification”, as set out in the table in the project entitlements letter, was “subject to” the Enterprise Agreement being approved by the Commission.

[59] The project entitlements letters also explained to each employee that their Composite Hourly Rate of Pay and other benefits were intended to comply with, and be able to be set off against, “the requirements of any employment legislation or instrument that applies to you including … the Award; any applicable enterprise agreement; or any other industrial instrument which may apply” [emphasis added]. It is clear from the use of the disjunctive “or” between the final two items in the list of employment legislation and instruments that the letter was not stating or representing that the BC Award did in fact apply to the particular employee who received the project entitlements letter.

[60] The message given to Ausdrill’s employees that their conditions were sourced from the Brandrill EA or the BC Award is consistent with what appears to have been Mr Flynn’s understanding of the position. So much is apparent from Mr Flynn’s F17 declaration, where he declares that Ausdrill’s employees at sites in Queensland “are either covered by the Black Coal Mining Industry Award 2020 or the Brandrill East Coast Coal Agreement 2009” [emphasis original].

[61] In my view, it would have been a reasonable step, in the period leading up to the vote on the Enterprise Agreement, for Ausdrill to accurately explain to employees the source of their current terms and conditions of employment. Absent a correct understanding about the source and therefore the content of their current entitlements (and obligations), employees were not in a position to understand how their terms and conditions of employment might be affected by voting in favour of the Enterprise Agreement.

[62] The present case is distinguishable from the facts of my earlier decision in CoreStaff NSW Pty Ltd. In CoreStaff, the BC Award did not apply to the employees at the time of the vote because an earlier enterprise agreement applied to the employees. In those circumstances, I determined that it was more important for employees to understand the differences between the proposed new enterprise agreement and the earlier enterprise agreement than the differences between the new enterprise agreement and the BC Award. That was because the previous enterprise agreement was the source of the employees’ terms and conditions of employment at the time they voted on the new enterprise agreement. In the present case, unless and until the second category of employees understood that they were entitled to the benefits of the Brandrill EA and the BC Award, they were not in a position to make an informed choice about the Enterprise Agreement. Contrary to Ausdrill’s submissions, it does not matter that Ausdrill applied the terms and conditions of the Brandrill EA to the second category of employees as that were the sole source of their entitlements. They were entitled to the benefits of the Brandrill EA and the BC Award. The additional benefits to which the second category of employees were entitled under the BC Award, over and above the Brandrill EA, were significant. By way of example:

(a)   under clause 16.1 of the Brandrill EA, employees are entitled to “four weeks’ (the equivalent of 152 hours) annual leave” and, in the case of shift workers, “an additional weeks’ leave (in total 240 hours)”. Under clause 24.2(a) of the BC Award, “An employee is entitled to annual leave, in addition to the amount provided for in the NES, such that the employee’s total entitlement to annual leave pursuant to the NES and this award for each year of employment is a cumulative total of 175 ordinary hours (5 weeks)”. Further, shift workers who meet certain requirements are entitled to “an additional 35 ordinary hours (one week) of annual leave” pursuant to clause 24.2(b) of the BC Award; and

(b)   clause 25 of the Brandrill EA confines redundancy entitlements to the payment of retrenchment pay (two weeks’ pay per year of service) under the Coal Mining Industry (Production and Engineering) Consolidated Award. Pursuant to clause 34 of the BC Award, an employee who has been made redundant is entitled to one week’s severance pay per year of service and two weeks’ retrenchment pay per year of service up to a maximum of 30 weeks’ retrenchment pay.

[63] Further, the fact that employees in the second category attended, or were invited to attend, face to face meetings or webinars where Mr Flynn gave a PowerPoint presentation in which he explained differences between the Enterprise Agreement and the BC Award, but not differences between the Enterprise Agreement and the Brandrill EA, is of limited significance in circumstances where the script from which Mr Flynn read explained that some employees had “their terms and conditions sourced currently sourced from the terms of the Black Coal Mining Industry Award 2020” and “for another group of employees their terms and conditions are currently sourced from an older Enterprise Agreement called the Brandrill East Coast Enterprise Agreement 2009”. This explanation maintained the “segmented” approach taken by Ausdrill to the different categories of employees covered by the Enterprise Agreement. In addition, Mr Flynn explained to the employees who attended those meetings that the BC Award was “important because the proposed Agreement must be better off overall than the [BC] Award in order for the Fair Work Commission to be able to approve the Agreement”. Mr Flynn’s explanation of the differences between the Enterprise Agreement and the BC Award must be understood in this context.

[64] The fact that employees were provided with a copy of the BC Award or a link to it did not, without more, inform the employees that they were entitled to the benefits of the BC Award. In circumstances where the Enterprise Agreement had to be compared against the BC Award for the purposes of the better off overall test, provision of the BC Award to employees is explicable on that basis. Similarly and for the same reason, references in Ausdrill’s communications to its employees to the BC Award and various entitlements under it in the context of communications about benefits under the Enterprise Agreement did not, without more, inform the employees that the BC Award applied to them.” [Footnotes omitted, italicised and underline words in the original]

1. As already noted, the Deputy President was not satisfied the appellant had complied with the requirements of s 180(5) of the Act and so was not satisfied that the relevant employees had genuinely agreed to the Agreement (at [70]) and he allowed the appellant time to provide any undertaking it may wish to provide to address his concern that the genuinely agreed approval requirement had not been met (at [75]).

1. We have earlier set out the undertakings proffered by the appellant directed to the Deputy President’s concern. In the second decision, the Deputy President did not accept the undertakings and dismissed the application. After setting out some background (at [1]-[3]), the nature of his approval requirement concern (at [4]), the appellant’s undertaking (at [5]) and summarising the parties’ submissions, the Deputy President detailed his reasons for not accepting the undertakings as follows:

“[23] I have set out in paragraph [4] above the relevant parts from my earlier decision in which I explain my concern in relation to ss 180(5) and 188 of the Act. Without repeating those paragraphs in full, the essence of my concern is that Ausdrill failed to provide information to the second category of employees to enable them to make an informed choice as to whether to vote in favour of or against the Enterprise Agreement. The missing information was the fact that the second category of employees were entitled to the benefits of the BC Award (because it applied to them) and would remain so entitled if the Enterprise Agreement was voted down. In the result, 52 of the 56 employees covered by the Enterprise Agreement cast a valid vote and 28 voted in favour of the Enterprise Agreement. The result was ‘tight’.

[24] If either of the undertakings offered by Ausdrill were accepted, the employees covered by the Enterprise Agreement would continue to enjoy the benefits of the BC Award where they are more beneficial to employees than terms of the Enterprise Agreement. However, providing such benefits to the employees would not overcome the fact that the second category of employees were not put in a position by their employer where they could make an informed choice about the Enterprise Agreement because they were not given accurate information about their current terms and conditions of employment. Had the second category of employees been told that they were entitled to the benefits of the BC Award, together with their contractual entitlement to the benefits of the Brandrill Agreement, some of them may w ell have decided to vote against the Enterprise Agreement so they could either (i) remain in a position where the BC Award applied to them and an enterprise agreement did not apply to their employment with Ausdrill or (ii) bargain for terms and conditions which were better than the BC Award. This is particularly the case in circumstances where the BC Award is a complex and generous award in a number of respects. By way of example:

(a)   the redundancy benefits under the BC Award are far superior to the Brandrill Agreement, the Enterprise Agreement and the NES;

(b)   the BC Award does not permit the employment of casual employees in production and engineering roles. The Enterprise Agreement does. Because the second category of employees were not told that they were entitled to the benefits of the BC Award, they were not given the opportunity to assess and consider, in an informed way, whether they should vote in favour of an industrial instrument which would permit the engagement of casual employees in production and engineering roles or against the instrument so that new production and engineering employees would not be able to be engaged as casual employees under the BC Award; and

(c)   clause 15 of the BC Award provides that the employer and the majority of affected employees must agree to rostering arrangements that include shift lengths of greater than 10 hours, the starting time for shifts by agreement if greater than 10 ordinary hours, and the starting and finishing location of shifts by agreement. The Enterprise Agreement does not contain any such restraints. Although Ausdrill does not currently operate shifts of longer than 10 hours, it could do so in the future. I am aware from my experience dealing with disputes in the black coal mining industry that employees often have strong opinions in relation to the aspects of clause 15 of the BC Award which I have identified in the first sentence of this subparagraph.

[25] Because the essence of my concern relates to a failure on the part of Ausdrill to provide accurate information as to the terms and conditions of employment that applied to the second category of employees such that they could make an informed choice about the Enterprise Agreement, an undertaking to provide the employees with the benefits of the BC Award does not meet my concern. Deputy President Masson reached a similar conclusion in Viridian Glass Pty Ltd.” [Footnotes omitted]

1. The Deputy President also considered and rejected the appellant’s submission that such failure to comply with s 180(5) was a minor procedural or technical error within the meaning of s 188(2) of the Act. The Deputy President’s reasons for doing so were as follows:

“[27] . . . Putting to one side whether the error was procedural or technical, I am not persuaded by Ausdrill’s arguments summarised in paragraph [11] above that its error was “minor”. The error meant that the second category of employees were not put in a position by their employer, as they should reasonably have been, to understand their current terms and conditions of employment and then assess and consider the offer which had been put to them in the form of the Enterprise Agreement. Such an outcome is inconsistent with the very purpose of the requirement in s 180(5), namely 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”. In my evaluative assessment, Ausdrill’s error was significant; it was not “minor”.” [Footnotes omitted]

Grounds of appeal

1. The grounds of appeal set out in the amended notice of appeal may be shortly stated. First, the appellant contends the Deputy President erred in concluding that it had not taken all reasonable steps to explain the terms of the Agreement and the effect of those terms to the relevant employees as required by s 180(5) of the Act. Second, that the Deputy President erred in concluding the undertakings offered by the appellant did not meet his concern. Third, (which, in substance, is a subset of the first appeal ground) the Deputy President erred in concluding that the appellant failed to provide accurate information concerning the terms and conditions that applied to certain employees described as “category two” employees. Fourth, the Deputy President erred in relying on the decision in Viridian Glass Pty Ltd[7] without raising that decision with the parties and giving them an opportunity to address the decision’s relevance, thereby denying the appellant procedural fairness. Fifth, the Deputy President erred in concluding that any failure to satisfy the requirements of ss 180(5) and 188 was not, in the circumstances, a minor procedural or technical error within the meaning of s 188(2).

1. We turn to examine the grounds of appeal.

Grounds 1 and 3

1. It is convenient to consider grounds 1 and 3 together.

1. By ground 1 the appellant contends the Deputy President erred in his conclusion that the appellant had not taken all reasonable steps to explain the terms of the Agreement and the effect of the terms to the relevant employees as required by s 180(5) of the Act. Relatedly, by ground 3, the appellant contends the Deputy President erred in concluding that it failed to provide accurate information to category two employees concerning the terms and conditions that applied. In short compass, the appellant contends the Deputy President incorrectly assessed the material that it provided to the “category two” employees and the context under which that information was provided. The appellant says that the Deputy President’s findings at [55]-[56] of the first decision that “the consistent message given by Ausdrill to employees covered by the Enterprise Agreement was that their current terms and conditions were sourced from either the BC Award or the Brandrill EA”, and that the appellant did not inform category two employees that the BCMI Award applied to them at the time of the voted, were incorrect having regard to the evidence.

1. In this regard the appellant points to the following matters:

·     The notice of employee representational rights (NERR) which sets out coverage of the proposed agreement by reference to the coverage of the BCMI Award;[8] and

·     Correspondence to employees which referred to the process of bargaining which had been undertaken “with all relevant stakeholders who are covered by the” BCMI Award.[9]

1. The appellant further contends that the Deputy President erred:

·     by applying technical distinctions between “covers” and “applies” within the meaning of the Act to the appellant’s communications with employees when there was no justification for doing so. The appellant says there was no basis for determining that employees would have understood the reference to them being “covered” by the BCMI Award as a reference to it “covering” them on the one hand but not being relevant to the determination of their terms and conditions on the other;

·     by conflating the clear terms of the “Key Terms Explained” document and the terms of the “Project Entitlement Letters” with other communications provided to employees concerning the better off overall test where the terms of the documents do not draw such a connection; and so overlooking the strong contextual support for a conclusion that “category two” employees understood that the BCMI Award applied to them in addition to the Brandrill EA;

·     by concluding that the information provided to the “category two” employees which referenced the BCMI Award would have been understood by employees as being provided for the purpose of their satisfaction that the Agreement passed the better off overall test;

·     by concluding that the term “sourced” in the explanatory material as being a reference to “covers” and “apply” within the meaning of the Act; and

·     by dismissing the fact that no employee asked a question or raised a lack of understanding as being relevant to whether the category two employees understood the BCMI Award applied to their employment.

1. The appellant’s contentions are rejected for the following reasons.

1. First, the appellant points to no appealable error. This is an appeal against a discretionary decision and to succeed it must be shown that in reaching the decision the Deputy President acted on a wrong principle; allowed extraneous or irrelevant matters to guide him; mistook the facts; failed to take into account a material consideration; or that, although the reasoning does not disclose error, upon the facts the result is unreasonable or plainly unjust. The appellant’s contentions in support of grounds 1 and 3, in our view, amount to little more than a plea that we give a different complexion – one that is more favourable to the appellant – to the materials communicating information to relevant employees than did the Deputy President.

1. Second, the concern raised by the Deputy President was about the adequacy of the explanation given to the category two employees as to their existing terms and conditions of employment. There is no dispute that the summary and text of documents highlighted by the Deputy President as underscoring his concern at [55]-[60] of the first decision is accurate, albeit the appellant contends that other documents also add relevant context. The Deputy President reasoned that “the consistent message given by Ausdrill to employees covered by the Enterprise Agreement was that their current terms and conditions were sourced from either the BC Award or the Brandrill EA,” and that this was incorrect. This was plainly a correct conclusion. It is not in dispute that the category two employees were entitled to the benefits of the BCMI Award because it applied to them, and the Brandrill EA by reason of its incorporation into their contracts of employment. That a contrary message was given to these employees is plain and reference need only be made to two documents to make good this point.

1. The first is a document circulated by email to employees on 30 May 2022[10] titled “Ausdrill Pty Ltd Black Coal Agreement 2022”[11] and opens with the following:

“Why are my conditions currently sourced from the Brandrill Agreement?

Or

Why are my conditions currently sourced from the Black Coal Mining Industry Award 2020?”[12] [Underlining added]

1. The first two substantive paragraphs provide:

“Ausdrill has sent out some information to employees as part of the Access Period that was specific to either employees whose current conditions were sourced from the Brandrill East Coast Coal Agreement 2009 (Brandrill Agreement) or employees whose current conditions were sourced from the Black Coal Mining Industry Award 2020 (Black Coal Award).

To help employees better understand why they received the specific information that referenced either the Brandrill Agreement or the Black Coal Award, Ausdrill has prepared this document.”[13] [Bold in original, underlining added]

1. The next paragraph deals with the circumstances of the category two employees and provides:

“Why is the Brandrill Agreement the source of my current terms and conditions?

For a number of employees, their contracts of employment made specific reference to the Brandrill Agreement and indicated that the Brandrill Agreement formed part of the employees “Contract with the Company”. The language in the employee contracts that reflected this was: “the Letter of Offer, General Terms and Conditions, Brandrill East Coast Agreement 2009 an (sic) Schedule form your Contract of Employment (Contract) with the Company”. If your contract of employment had this term in it, then you received the Brandrill Agreement specific information.”[14] [Bold in original, underlining added]

1. The next paragraph begins with a question: “Why is the Black Coal Award the source of my current terms and conditions?” [Bold in original]. The answer commences with the words “For all other employees . . .”, which plainly means employees to whom the previous paragraph did not apply.

1. The second document is the appellant’s briefing session script[15] which provides, inter alia, as follows:

“The important point however, is that whatever is your current industrial instrument (the Brandrill Agreement or the Award) which are the source of your terms and conditions - if the proposed Ausdrill Agreement is approved by a majority of employees and then approved by the Fair Work Commission, it will become the source document for your terms and conditions of engagement.”[16] [Bold in original, underlining added]

1. The Deputy President identified the reasonable step that the appellant should have taken but did not take to comply with s 180(5) of the Act. The Deputy President said that:

“. . . it would have been a reasonable step, in the period leading up to the vote on the Enterprise Agreement, for Ausdrill to accurately explain to employees the source of their current terms and conditions of employment. Absent a correct understanding about the source and therefore the content of their current entitlements (and obligations), employees were not in a position to understand how their terms and conditions of employment might be affected by voting in favour of the Enterprise Agreement”.[17]

1. This underpins the Deputy President’s conclusion at [70] of the first decision. Given the Deputy President’s earlier finding which, as we have pointed out, was plainly correct, the identified reasonable step not taken and the conclusion which followed were both plainly open. The step identified is one that a reasonable person would regard as reasonable in the circumstances that applied – category two employees were not told that the sources of their existing entitlements was both the Brandrill EA (applying as a matter of contract) and the BCMI Award which applied according to its terms. It was not just a step that was reasonably open in some literal or theoretical sense.[18] The particular circumstances existing at the time the obligation arose necessitated the step be taken. It is to be remembered that the obligation under s.180(5) to take all reasonable steps to explain to relevant employees the terms of an enterprise agreement and the effect of those terms is an important function of the agreement-making scheme established by Part 2-4 of the Act. Its evident purpose, taking into account its role in assessing whether the employees who were asked to vote to approve an agreement genuinely agreed to the agreement, is to ensure that employees are as fully informed as practicable about the terms and effect of the terms of a proposed enterprise agreement before voting on whether to approve it. And that an employer’s discharge of its obligation under s.180(5) is intended to enable employees to know what they are being asked to agree to, and to understand how their wages and working conditions might be affected by voting in favour of an agreement.[19] Providing employees with clear and accurate information about their current entitlements and the source of those entitlements seems to us to have been a reasonable, indeed necessary step to be taken by the appellant to explain to employees the terms of the Agreement and the effect of those terms.

1. Third, the content of the NERR says nothing about existing entitlements and obligations. It speaks to the coverage of the proposed agreement by reference to coverage of the BCMI Award. An award’s coverage is important in determining whether it applies, but it is not the only consideration. As is evident from the factual matrix, the relevant employees covered by the Agreement are divided into different categories by reference to the variable application of the identified industrial instruments. Sometimes an instrument applies by its own force (Brandrill EA to the category three employee); sometimes an instrument applies by contract (Brandrill EA to the category two employees); sometimes an instrument’s application to an employee has the effect of rendering another (the BCMI Award) inoperative in relation to particular employment (category three employee); sometimes it does not (category two employees); and sometimes only the BCMI Award has any application to an employee (category one employees). That the coverage of the proposed agreement, expressed by reference to the BCMI Award in the NERR, does not necessarily mean the BCMI Award applies to those employees is sufficiently made out by reference to the category three employee, where the BCMI Award does not apply because the Brandrill EA applies according to its terms. Similarly, correspondence to employees which referred to the process of bargaining which had been undertaken “with all relevant stakeholders who are covered by the” BCMI Award[20] speaks to coverage of the proposed agreement not to the application of the BCMI Award to the “relevant stakeholders.”

1. Fourth, the Deputy President did not incorrectly conflate the “Key Terms Explained” document and the “Project Entitlement Letters” with other communications provided to employees concerning the better off overall test as the appellant contends. The Deputy President observed that “[i]t was also relevant for an employee to understand their classification under the BC Award so that they could compare benefits under the BC Award with benefits under the Enterprise Agreement for the purpose of assessing whether the Enterprise Agreement passed the better off overall test.”[21] The Deputy President earlier explained that:

   “[58] The project entitlement letters did not state that the BC Award applied to the employee to whom the letter was sent. The letters state that “the table also confirms the reference classification in the Black Coal Mining Industry Award 2020 (Award) that is applicable to your employment”. The “reference classification”, such as “Mineworker”, was “applicable” to the employee in the sense that it accurately described the classification of the employee. That classification did not change between the BC Award, Enterprise Agreement and the Brandrill EA, since each of those instruments uses the same classification structure.”[22] [Footnote omitted]

2. Although the ultimate responsibility for assessing whether an enterprise agreement passes the better off overall test rests with the Commission, it is plainly relevant to an employee’s understanding of how their wages and working conditions might be affected by voting in favour of the Agreement to understand, relevantly, that the BCMI Award applies to their employment and the classification under that award which applies. It is also relevant for the employee to be able to assess whether voting for the Agreement would affect their wages and working conditions in a way that would leave them better off overall. The appellant’s briefing session script[23] alerts employees to the fact that the BCMI Award “is important because the proposed Agreement must be better off overall than the Award in order for the Commission to be able to approve the Agreement.”[24]

1. Fifth, the Deputy President did not incorrectly conclude that the information provided to the “category two” employees referencing the BCMI Award would have been understood by employees as being provided for the purpose of their satisfaction that the Agreement passed the better off overall test. The Deputy President assessed the provision of information referencing the BCMI Award in the context of other information which suggested to category two employees that the BCMI Award was not a source of their existing entitlements. The Deputy President reasoned, correctly in our view, that “[t]he fact that employees were provided with a copy of the BC Award or a link to it did not, without more, inform the employees that they were entitled to the benefits of the BC Award.”[25] The Deputy President then found that:

“In circumstances where the Enterprise Agreement had to be compared against the BC Award for the purposes of the better off overall test, provision of the BC Award to employees is explicable on that basis. Similarly and for the same reason, references in Ausdrill’s communications to its employees to the BC Award and various entitlements under it in the context of communications about benefits under the Enterprise Agreement did not, without more, inform the employees that the BC Award applied to them.”[26]

1. Having regard to the appellant’s written communications with employees earlier discussed, these conclusions were plainly open and do not disclose appealable error.

1. Sixth, enterprise agreements are made in a statutory context. The coverage and application of an enterprise agreement and a modern award is also determined in part by reference to the coverage and application provisions of the statute applicable to those industrial instruments. The Deputy President made no appealable error by applying the distinction between “covers” and “applies” found in the Act to the appellant’s communications with employees. The Deputy President’s assessment that employees would have understood the reference to them being “covered” by the BCMI Award as a reference to it “covering” them but not necessarily that the BCMI award applied was plainly open given some of the written communication with employees which suggested to “category two” employees that the BCMI Award was not a source of their employment entitlements.

1. Seventh, the Deputy President did not incorrectly conclude the term “sourced” in the explanatory material as being a reference to “covers” and “apply” within the meaning of the Act. We need not repeat what is said in [32] above but we rely on it. But, in any event, we do not accept that the Deputy President limited “sourced” in this way. Clearly, he viewed sourced as including contractual incorporation for “category two” employees whose employment entitlements were sourced, inter alia, from the Brandrill EA, not because of the operation of the Act, but as a matter of contract. The Deputy President construed, correctly in our view, the use of the word “sourced” in the materials as being a reference to a source of employee entitlements. So much is plain from [62] of the first decision where the Deputy President concludes that the “category two” employees:

“…were entitled to the benefits of the Brandrill EA and the BC Award. The additional benefits to which the second category of employees were entitled under the BC Award, over and above the Brandrill EA, were significant” [Italicised text in original].

1. Eighth, the Deputy President did not err in dismissing the fact that no employee asked a question or raised a lack of understanding as being relevant to whether the category two employees understood the BCMI Award applied to their employment. The Deputy President did not dismiss the issue. He assessed it but ascribed it little weight. So much is clear from the following passage in the first decision:

“[65] That no employee asked a question that identified a lack of understanding as to the relevance of the BC Award to their terms and conditions of employment is not surprising in circumstances where Ausdrill did not explain to the second category of employees that they were entitled to the benefits (and subject to the obligations) in both the BC Award and the Brandrill EA. The absence of such a question does not satisfy me in all the circumstances that employees in the second category were provided with information such that they could make an informed choice when they voted on the Enterprise Agreement or that they were aware of their existing terms and conditions at the time they voted on the Enterprise Agreement.”

1. The Deputy President considered the issue in the context of other evidence and assigned the matter little weight. The assignment of weight to a particular matter was a matter for the Deputy President and there is nothing in the appellant’s contentions to suggest that the Deputy President’s assessment as to weight was wholly inappropriate. No appealable error is disclosed, and we agree with the Deputy President’s assessment.

1. For these reasons, grounds 1 and 3 of the appellant’s amended notice of appeal are not made out.

Ground 2

1. By ground 2 the appellant contends the Deputy President erred in concluding the undertakings offered by the appellant did not meet his concern. It contends the Deputy President failed to take into account the decisions in Construction, Forestry, Maritime, Mining and Energy Unionv Specialist People Pty Ltd[27] and Construction, Forestry, Maritime, Mining and Energy Union v Mechanical Maintenance Solutions.[28] It says that these decisions approved undertakings that reinstated the benefits of these underlying awards, noting that the undertakings had the “protective purpose of ensuring that employees are not disadvantaged by the failure to adequately explain the relationship between the Agreement and the instruments it will displace” in circumstances where there had been a failure to provide a number of important explanations to employees in the lead up to the vote for an enterprise agreement. The appellant contends that despite the submissions it made about these decisions, it is not apparent that the Deputy President turned his mind to them beyond the general observation that matters turn on their own facts.

1. The appellant also contends that the Deputy President instead seemed to have placed reliance on Viridian Glass Pty Ltd[29] which was not analogous to the circumstances before the Deputy President. The appellant contends that to the extent that there was any deficiency in the explanation provided to the “category two” employees, it was a deficiency of omission (of the kind identified in MMS and Specialist People), and the “category two” employees were at no time told that the BCMI Award did not apply to them or that it was not relevant to their terms and conditions of employment. The appellant says that the Deputy President’s conclusion that the Agreement could not be approved with undertakings was therefore erroneous.

1. Further, the appellant contends that the Deputy President erred in taking into account the close result in the ballot in assessing whether to accept the undertakings.

1. These contentions are also rejected.

1. First, save for the proposition that a concern about whether the genuine agreement requirement in s 186(2)(a) may be met with an undertaking, the decisions to which the appellant refers do not set out a decision rule about when a member of the Commission must accept an undertaking to meet a genuine agreement concern. A decision to exercise the discretion to accept an undertaking is to be made by reference to the matters in s 190 of the Act, taking into account the nature of the concern and the circumstances of the particular application for approval of an enterprise agreement under consideration. The Deputy President’s summary as to the exercise of the discretion to accept an undertaking at [22] of the decision, which we set out below, is accurate:

“[22] The Commission has a discretion to accept an undertaking to resolve a concern that an employer did not take all reasonable steps to ensure that the terms of an enterprise agreement or the effect of those terms were explained as required by s 180(5) of the Act. The Commission must be satisfied that the undertaking meets the concern. In that regard, it is important to recognise that each case will turn on its own facts and caution must be exercised in considering undertakings given in other cases with different facts and concerns. Further, the Commission must be satisfied that the undertaking is not likely to cause financial detriment to any employee covered by the agreement or result in substantial changes to the agreement.” [Footnotes omitted]

1. The third sentence in the passage above explains, in our view correctly, why the Deputy President has not embarked upon an analysis of the circumstances which led to the acceptance of undertakings in the decisions on which the appellant relies. Nothing more needed to be said and no appealable error is evident.

1. Second, the Deputy President’s reference to Viridian Glass at the end of [25] of the second decision is not an application of that decision to the circumstances confronting the Deputy President. The Deputy President had already clearly reached the conclusion that the undertakings did not meet his concern. The reference to Viridian Glass was an aside. No appealable error is disclosed.

1. Third, it is important to understand the nature of the Deputy President’s concern. His overarching concern was that the approval requirement in s 186(2)(a) (having regard to s 188(1)(a) and s 180(5)) had not been met. It was a concern about whether the appellant had taken all reasonable steps to explain the terms of the agreement and the effect of those terms to relevant employees. His was not a concern that employees were misled as to the entitlements that would pertain if the Agreement was approved. His concern was that by reason of some of the explanations as to the current terms and conditions (specifically the application of the BCMI Award to category two employees), the “category two” employees were effectively deprived of the choice of remaining on the BCMI Award and to continue bargaining for a better outcome by voting against the Agreement. This was because the “category two” employees were not told that the BCMI Award applied to them in their employment with the appellant. So much is clear from [24] of the second decision wherein the Deputy President observes that:

“[24] . . . Had the second category of employees been told that they were entitled to the benefits of the BC Award, together with their contractual entitlement to the benefits of the Brandrill Agreement, some of them may well have decided to vote against the Enterprise Agreement so they could either (i) remain in a position where the BC Award applied to them and an enterprise agreement did not apply to their employment with Ausdrill or (ii) bargain for terms and conditions which were better than the BC Award. This is particularly the case in circumstances where the BC Award is a complex and generous award in a number of respects.”

1. The deprivation of the choice to continue bargaining by reason of the failure to take the reasonable step identified, which infected the genuineness of the agreement, is not cured by the undertakings proffered. It is unsurprising that the Deputy President concluded that the undertakings did not meet the concern. The conclusion was plainly open, and no appealable error is disclosed.

1. Fourth, we do not accept that the Deputy President erred in taking into account the close result in the ballot in assessing whether to accept the undertakings. The Deputy President reasoned:

“[23] I have set out in paragraph [4] above the relevant parts from my earlier decision in which I explain my concern in relation to ss 180(5) and 188 of the Act. Without repeating those paragraphs in full, the essence of my concern is that Ausdrill failed to provide information to the second category of employees to enable them to make an informed choice as to whether to vote in favour of or against the Enterprise Agreement. The missing information was the fact that the second category of employees were entitled to the benefits of the BC Award (because it applied to them) and would remain so entitled if the Enterprise Agreement was voted down. In the result, 52 of the 56 employees covered by the Enterprise Agreement cast a valid vote and 28 voted in favour of the Enterprise Agreement. The result was ‘tight’.”[30]

1. Given the concern expressed – incorrect or inadequate explanations as to existing entitlements of “category two” employees resulting in a deprivation of choice to remain on the BCMI Award and continue to bargain; and the failure to take the reasonable step identified –, taking into account the close result of the vote was relevant, at least to an assessment whether an informed no vote by “category two” employees would have made a difference to the result. This in turn informs the utility of rejecting an undertaking and is relevant to the discretion. Moreover, as the concern related to the “category two” employees having the capacity to make an informed choice, the close outcome of the ballot is plainly relevant to the Deputy President’s assessment whether the undertaking met his concern. No appealable error is disclosed.

1. In any event, even if we are wrong, the other reasons given by the Deputy President discussed above for concluding that the undertakings did not meet his concern provide a sufficient basis to reject the undertakings.

1. Fifth, we do not accept that the deficient explanatory material provided to employees was “a deficiency of omission” as the appellant contends. As the Deputy President observed, “the consistent message given by Ausdrill to employees covered by the Enterprise Agreement was that their current terms and conditions were sourced from either the BC Award or the Brandrill EA. That was incorrect.”[31] That is, the explanatory material was itself incorrect. The extracts from the explanatory material we have earlier set out make good this point. The appellant did not merely omit to tell “category two” employees that the BCMI Award applied to them. The material it provided clearly suggested that it did not.

1. For the foregoing reasons ground 2 of the appellant’s amended notice of appeal is not made out.

Ground 4

1. By ground 4 the appellant contends the Deputy President erred in relying on the decision in Viridian Glass Pty Ltd[32] without raising that decision with the parties and giving them an opportunity to address the decision’s relevance, thereby denying the appellant procedural fairness. This ground was not seriously pressed during oral argument,[33] but in any event for the reasons given in our discussion of Viridian Glass earlier, we do not consider the Deputy President relied on or applied the decision. No procedural fairness was thereby denied and ground 4 of the appellant’s amended notice of appeal is not made out.

Ground 5

1. By ground 5 the appellant contends the Deputy President erred in concluding that any failure to satisfy the requirements of ss 180(5) and 188(1) was not in the circumstances, a minor procedural or technical error within the meaning of s 188(2). The appellant contends the Deputy President misconstrued the nature of the exercise required by s 188(2) and overstated the actual impact of the error. It says that the appellant’s error was ‘minor’ in the broader context of the reasonable steps that were taken and points to extensive efforts undertaken to explain the terms of the Agreement, and the effect of the terms of the Agreement. It says the Deputy President failed to have regard to the circumstances surrounding the error and, as such, made a material error of law in finding that the appellant’s error was not a minor error.

1. At [27] of the second decision the Deputy President explains why he did not consider the failure to comply with s 180(5) of the Act in the circumstances to be “minor.” The Deputy President reasoned that:

“[the] error meant that the second category of employees were not put in a position by their employer, as they should reasonably have been, to understand their current terms and conditions of employment and then assess and consider the offer which had been put to them in the form of the Enterprise Agreement”. And further that such an outcome was “inconsistent with the very purpose of the requirement in s 180(5), namely 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”“ [Footnote omitted].

1. There is nothing in the Deputy President’s reasons which suggests that he misconstrued the nature of the exercise required by s 188(2) of the Act. His evaluation of the impact of the error did not overstate the actual impact. It is plainly the case that the failure to tell category two employees that the BCMI Award applied to their employment, coupled with the information provided which suggested the contrary, did not put “category two” employees in a position to understand their current terms and conditions of employment and how these would change by voting for the Agreement. In the circumstances, the Deputy President made an evaluative assessment which was clearly open, and one with which we agree. Moreover, no error of law is thereby disclosed. The error undermined the purpose of the requirement to take all reasonable steps to explain. An error which so undermines is not readily described as minor.

1. For these reasons ground 5 of the appellant’s amended notice of appeal is not made out.

Permission to appeal

1. Absent any discernible appealable error, the appeal cannot succeed and so permission on discretionary grounds should be refused. Nor are we persuaded that the appeal raises important questions about the operation of s.180(5) of the Act or the circumstances in which undertakings are available to remedy perceived errors in the process of explanation of the terms of enterprise agreements as the appellant contends, and there is no other basis on which it might be concluded that it is in the public interest to grant permission to appeal. Consequently, permission to appeal will be refused.

Order

1. Permission to appeal in C2022/6868 is refused.

DEPUTY PRESIDENT

Appearances:

Mr D. Fletcher, Mr M. Mead and Mr L. Moctezuma as solicitors for the appellant
Ms E. Sarlos as solicitor employed by the respondent

Hearing details:

2022
Sydney
23 November

[1] Ausdrill Pty Ltd [2022] FWCA 2205 at [70]

[2] Ibid at [75]

[3] Ausdrill Pty Ltd [2022] FWC 2539 at [28]

[4] Ibid

[5] Transcript PN9-PN16

[6] Transcript PN48

[7] [2022] FWC 2384

[8] Appeal Book 212

[9] Appeal Book 563

[10] Appeal Book 432

[11] Appeal Book 433

[12] Ibid

[13] Ibid

[14] Ibid

[15] Appeal Book 403

[16] Ibid

[17] Ausdrill Pty Ltd [2022] FWCA 2205 at [61]

[18] See BGC Contracting Pty Ltd  [2018] FWC 1466 at [43]; The Australian Workers' Union v Rigforce Pty Ltd[2019] FWCFB 6960 at [35]-[36]

[19] See One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FCAFC 77, (2018) 262 FCR 527 at [115]; Construction, Forestry, Maritime, Mining and Energy Unionv Ditchfield Mining Services Pty Limited[2019] FWCFB 4022 at [72]

[20] Appeal Book 563

[21] Ausdrill Pty Ltd [2022] FWCA 2205 at [58]

[22] Ibid

[23] Appeal Book 403

[24] Appeal Book 403-4

[25] Ausdrill Pty Ltd [2022] FWCA 2205 at [64]

[26] Ibid

[27] [2019] FWCFB 7919

[28] Construction, Forestry, Maritime, Mining and Energy Unionv Mechanical Maintenance Solutions Pty Ltd[2019] FWCA 8471; Construction, Forestry, Maritime, Mining and Energy Unionv Mechanical Maintenance Solutions Pty Ltd[2019] FWCA 6801; Construction, Forestry, Maritime, Mining and Energy Unionv Mechanical Maintenance SolutionsPty Ltd[2020] FWCFB 1918

[29] [2022] FWC 2384

[30] Ausdrill Pty Ltd [2022] FWCA 2539 at [23]; Ausdrill Pty Ltd [2022] FWCA 2205 at [55]

[31] Ausdrill Pty Ltd [2022] FWCA 2539 at [4]; Ausdrill Pty Ltd [2022] FWCA 2205 at [55]

[32] [2022] FWC 2384

[33] Transcript PN158-PN160

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