Application by CPSU, the Community and Public Sector Union

[2020] FWC 265

[2020] FWC 265

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.238 - Application for a scope order

Application by CPSU, the Community and Public Sector Union
(B2018/1183)

DEPUTY PRESIDENT KOVACIC CANBERRA, 21 JANUARY 2020

Application for a scope order – application dismissed.

[1] On 13 December 2018 the Community and Public Sector Union (CPSU – the Applicant) lodged an application with the Fair Work Commission (the Commission) under s.238 of the Fair Work Act 2009 (the Act) for a scope order. The application was made in circumstances where the CPSU had been bargaining with the Commonwealth Superannuation Corporation (CSC – the Respondent) for an enterprise agreement since late 2017 with the issue of scope yet to be resolved. CSC opposed the CPSU’s application.

[2] The scope proposed by the CPSU is that the proposed agreement cover:

“The Commonwealth Superannuation Corporation and all employees other than employees in the following business units:

•  CEO’s Office

•  Investments

•  Investment Operations” 1

[3] In the alternative, the CPSU proposed that the proposed agreement cover the CSC and all employees other than employees at the Executive Manager level and above.

[4] At the hearing on 13 March 2019 the CPSU sought to amend its application such that both of its proposed scope orders did not cover employees at the Heads of … and Executive Manager level and above. CSC did not oppose the CPSU’s application to amend. Having regard to s.586 of the Act, I will amend the application as requested by the CPSU.

[5] The CPSU’s application was heard on 12 and 13 March 2019. At the hearing Mr Joel Fetter of Counsel appeared with permission for the CPSU and Mr Bilal Rauf of Counsel appeared with permission for CSC.

[6] Evidence for the CPSU was given by:

•  Mr Aidan Nash, an Industrial Officer with the CPSU;

•  Ms Anne Platts, a CPSU workplace delegate in CSC and member of the CPSU bargaining team; and

•  Ms Serhan Mackey, a CSC employee.

[7] Evidence for CSC was given by Ms Catharina Armitage, CSC’s Head of People, and Ms Sanja Hodgson, an employee bargaining representative for the proposed agreement.

[8] For the reasons set out below, I find that the CPSU’s application does not meet all the considerations set out in s.238(4) of the Act. Accordingly, I decline to make the scope order sought by the CPSU and dismiss the application.

Background

[9] CSC was established on 1 July 2011 by the Governance of Australian Government Superannuation Schemes Act 2011 (Cth). CSC is the trustee for five regulated public sector and military superannuation schemes and also administers six exempt public sector and military superannuation schemes. CSC’s primary function is to administer and manage these schemes and ensure the funds are managed and invested in the best interests of all their members. 2

[10] On 1 July 2015 ComSuper was merged into CSC. By way of background, prior to the merger ComSuper provided administrative services to CSC in respect of the superannuation schemes administered by CSC. Specifically, ComSuper undertook scheme administration for the defined benefit superannuation schemes administered by CSC and outsourced to a private sector entity the administration of the accumulation schemes administered by CSC. 3

[11] At the time of the merger, the ComSuper Enterprise Agreement 2015-2018 (the ComSuper Agreement) 4 covered “… the CEO, for and on behalf of the Commonwealth of Australia as the employer and all APS employees of ComSuper who are employed under the provisions of the Public Service Act 1999, but it does not cover any Senior Executive Service employee or any employee whose salary is not paid by ComSuper.”5 The ComSuper Agreement passed its nominal expiry date on 26 June 2018.

[12] The legislation which gave effect to the merger, i.e. Governance of Australian Government Superannuation Schemes Legislation Amendment Act 2015 (Cth), provided that the transfer of ComSuper staff to CSC was a transfer of business for the purposes of the Act and that the ComSuper Agreement was the only transferable instrument in relation to the transfer of business [Item 14 of Schedule 2].

[13] The merger saw 385 ComSuper employees transfer to CSC. 6

[14] Since the merger there have been two streams of employees within CSC:

(i) employees whose employment is governed by a common law contract underpinned by the relevant modern award; and

(ii) employees who were previously employees of ComSuper and transferred to CSC and who perform transferring work and therefore remain covered by the ComSuper Agreement.

[15] As to bargaining for an enterprise agreement to replace the ComSuper Agreement, on 20 December 2017 CSC issued a Notice of Employee Representational Rights (NERR) to relevant employees. The NERR provided as follows:

“Commonwealth Superannuation Corporation gives notice that it is bargaining in relation to an enterprise agreement (CSC Enterprise Agreement 2018-2021) which is proposed to cover employees that who [sic] are covered by the ComSuper Enterprise Agreement 2015-2018.” 7

[16] The parties met on ten occasions during 2018 (15 February; 2,15 and 27 March; 10 and 24 April; 8 and 22 May; 24 October and 26 November) 8 in an effort to negotiate an agreement. The issue of scope was also the subject of a New Approaches application by CSC and the CPSU on the issue of scope9, with conferences convened by the Commission in respect of that application on 19 July and 31 August 2018.

[17] In other developments, on 31 August 2018 the CPSU wrote to CSC (the correspondence was copied to Ms Hodgson) expressing concern that bargaining was not proceeding fairly or efficiently. The letter included the following:

“The CPSU has concerns that bargaining for the new CSC agreement is not proceeding efficiently or fairly because neither the original scope proposed by CSC nor CSC's revised position will cover appropriate employees.

The CPSU believes that there are preferable scopes that have been proposed that comply with the 'fairly chosen' requirement and would be approved by the Commission. These include the all-inclusive scope and the scope that excludes pre-merger CSC areas that are traditionally Award covered. These are set out below:

1. This Agreement covers the CSC and all employees other than employees at the General Manager level and above.

2. This Agreement covers the CSC and all employees other than:

− Employees in the following business units:

•  CEO's Office

•  Investments

•  Investment Operations

− Employees at the General Manager level and above.

We note that the second scope above originally excluded the People and Risk business units when we originally proposed it. However, after discussions in the Fair Work Commission it is clear that both of these business units are traditionally Agreement covered areas that were part of ComSuper and should be included in this scope.

The CPSU proposes the two above scopes and we would like to arrange a meeting to discuss these proposals. It is important that this issue resolved as quickly as possible, there for [sic] we suggest meeting late next week.

The CPSU has shown a willingness to work with CSC to arrive at a mutually satisfactory position on scope and we continue to approach this matter with the same attitude. However, CSC has shown less willingness to shift in its position. If CSC continues to proceed with its current proposal, the CPSU will have no other choice that to seek a scope order to resolve this matter.

Please advise of CSC's availability to meet to discuss this further late next week.” 10

[18] The CPSU wrote to CSC again on 20 November 2108 reiterating its concern that bargaining was not proceeding fairly or efficiently. The following is an extract from that letter:

“The CPSU maintains our position that bargaining is not proceeding fairly because the proposed agreement would not cover appropriate employees and we are notifying these concerns in accordance with clause 238(3)(a) of the Fair Work Act 2009. I include further details about the concerns below.

…

Bargaining for a new enterprise agreement is not proceeding fairly or efficiently:

•  As the NERR only applies to employees who are currently covered by the ComSuper enterprise agreement, there are a large number of people who could potentially be covered by the new enterprise agreement who currently are not entitled to be represented at the bargaining table. Therefore, decisions about their conditions of employment and whether they are covered by the enterprise agreement are being made without them.

•  The proposal would only apply to 163 out of 438 staff. Most of the people who would not be covered by the enterprise agreement, are not only outside the scope of the NERR, but they would not be given the opportunity to vote on a proposed enterprise agreement.

•  The unresolved scope of the agreement has also meant that definitive discussions about terms and conditions in the enterprise cannot take place. During the bargaining meeting on 15 March, and on many other occasions since then, CSC has stated that an extended scope may affect the terms and conditions that CSC was willing to include in the enterprise agreement due to the additional costs involved.

•  Despite the NERR being issued in December 2015 [sic 2017], disagreement in relation to the scope of the agreement is preventing bargaining from proceeding. CPSU and CSC have been discussing the scope of the agreement since 15 February 2018.

•  The last pay increase provided by the ComSuper Agreement was on 26 June 2015. It has now been more than 3 years since employees covered by the enterprise agreement received a pay increase. These employees are being disadvantaged by the delays in resolving the scope of the enterprise agreement that is out of their control.

If CSC adopts the scope proposed by the CPSU, these concerns would be addressed.

The CPSU requests that you respond to the concerns raised in this letter by COB Tuesday 27 November 2018. We also suggest that these concerns are discussed in the bargaining meeting scheduled for next Monday 26 November.” 11

[19] CSC responded to that letter on 27 November 2018 12 inter alia clarifying its position on the issue of scope and inviting the CPSU to reconsider its concerns in the light of that clarification.

[20] As previously noted, the CPSU on 13 December 2018 lodged its application for a scope order.

The Applicant’s case

[21] The CPSU submitted that it was a bargaining representative for the agreement as required by s.238(1) of the Act and that Mr Nash’s statement disclosed that the requirements of s.238(3) of the Act had been met. More particularly, the CPSU submitted that bargaining was not proceeding fairly or efficiently, highlighting that bargaining representatives had been discussing the scope of the proposed agreement since February 2018 and had reached irreconcilable positions on the issue. The CPSU further submitted that bargaining had stalled over the issue such that the parties were unable to agree on the terms and conditions of a new enterprise agreement until the issue of scope was resolved.

[22] The CPSU posited that the scope order which it sought would lead to fairer and more efficient bargaining because:

•  the impasse would be broken and bargaining would be able to resume;

•  who was to be covered by the proposed agreement would be clear allowing a new NERR to be issued such that all employees to be covered by the proposed agreement will be entitled to be represented at the bargaining table; and

•  employees covered by the ComSuper Agreement will have certainty that they will continue on the replacement agreement for its duration.

[23] The CPSU contended that the scope proposed by CSC as reflected in the NERR did not include a fairly chosen group of employees, adding that as the proposed agreement specified in its proposed scope order did not cover all employees the Commission must taken into account whether the group is geographically, operationally or organisationally distinct as per s.238(4A) of the Act. To that end, the CPSU added that the group of employees to be covered by its proposed scope order had been selected on the objective basis that employees in these roles had a history of enterprise agreement coverage as they performed work previously performed by ComSuper and were covered by the ComSuper Agreement. The CPSU further stated that the groups of employees excluded from the proposed agreement had never been covered by an enterprise agreement, meaning that. no employees would be removed from agreement coverage. The CPSU submitted that while the group of employees in its proposed scope order was fairly chosen should the Commission find otherwise it should grant its alternative proposed scope order.

[24] The CPSU submitted that it was reasonable to make the scope order it had proposed for a number of reasons including the following:

•  its witness evidence established that employees who would not be covered by the agreement proposed by CSC wanted to be covered by an enterprise agreement, highlighting that that the scope proposed by CSC would see the proposed agreement apply to 202 out of 449 employees;

•  its proposed scope order preserved the status quo in relation to the history of bargaining for employees who would be covered by the proposed agreement;

•  CSC’s proposed agreement did not apply to a fairly chosen group of employees as it related to specific employees based on the date they transferred to CSC, adding that some employees who would be covered by CSC’s proposed agreement were performing the exact same role as employees who would not be covered by the proposed agreement as a result of the scope proposed by CSC;

•  CSC’s scope was ambiguous given that it was based on an employee’s work being the ‘same’ or ‘substantially the same’ as the work they performed for ComSuper with no clear indication as to what was meant by the latter term;

•  CSC’s proposal undermined collective bargaining as the number of employees covered by the proposed agreement would continue to shrink as employees either left CSC or took on new roles with CSC; and

•  this was not a case where bargaining could continue for the parties to resolve the matter in the absence of a scope order being made.

[25] The CPSU in its submissions also refuted aspects of CSC’s submissions. Among other things, the CPSU posited that:

•  CSC’s contention that it would be costly to recommence negotiations should be rejected given Mr Nash’s evidence that bargaining had not progressed in any real sense; and

•  CSC had not shown through cogent evidence that there was any significant opposition to its proposed scope among CSC employees, including those employed on common law contracts.

[26] At the hearing the CPSU further submitted that:

•  the group reflected in its proposed scope order was organisationally distinct, acknowledging that there were good business reasons as to why the Investments and Investments Operations business units should not be covered by the proposed agreement and that its proposed scope was not arbitrary;

•  the Commission must make a scope order in this case because bargaining had proceeded down the “wrong track” as CSC’s proposed scope would result in an agreement that could not be approved because the group of employees covered by such an agreement would not have been fairly chosen as required by ss.186(3) and (3A) of the Act;

•  its proposed scope order would result in fairer bargaining because broadening the scope of the proposed agreement would result in a more democratic process given that nearly all employees would be involved in bargaining, highlighting that employees employed on common law contracts would constitute the majority of employees involved in bargaining thereby effectively enabling them to veto any agreement which impacted negatively on their terms and conditions of employment;

•  its proposed scope order would promote efficient bargaining given the impasse reached in bargaining and that a vote on the proposed agreement was unlikely to resolve the matter given the abovementioned ‘fairly chosen’ issue;

•  Ms Armitage’s evidence that CSC would do all that it could to ensure that bargaining proceeded efficiently were a scope order to be made supported its view that such an order would promote efficient bargaining;

•  it was reasonable to make the scope order it sought in circumstances where:

− doing so would not unduly delay bargaining, adding that the Commission should not accept Ms Armitage’s evidence that bargaining for an agreement based on the CPSU’s proposed scope could take up to 12 months and should note Mr Nash’s evidence that the CPSU would be able to ascertain the views of members and other employees promptly,

− the evidence before the Commission regarding the views of employees employed on common law contracts was limited, noting that CSC could have undertaken a survey of this cohort to seek their views but did not,

− the views of employees should be given due weight, adding that there was no clear evidence that employees employed on common law contracts did not want to be covered by an enterprise agreement, and

− bringing employees employed on common law contracts into the bargaining process offered potential advantages to those employees, e.g. enforceable terms and conditions of employment;

•  the evidence established that many employees worked side-by-side on the same job irrespective of the instrument governing their terms and conditions of employment; and

•  industrial history was not a determinative factor.

[27] In support of its application the CPSU relied on a number of authorities including the decisions in United Firefighters’ Union of Australia v Metropolitan Fire & Emergency Services Board (United Firefighters) 13, “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union; Australian Workers’ Union; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Qantas Airways Limited t/a Qantas (Qantas)14, Aerocare Flight Support Pty Ltd t/a Aerocare Flight Support v Transport Workers’ Union of Australia; Australian Municipal, Administrative, Clerical and Services Union (Aerocare)15 and Australian Workers’ Union v BP Refinery (Kwinana) Pty Ltd (BP Kwinana)16.

[28] Mr Nash provided two witness statements 17 in which he provided among other things a comprehensive overview of the negotiations for the proposed agreement and disputed aspects of Ms Armitage’s and Ms Hodgson’s respective witness statements. Key aspects of Mr Nash’s witness statements included that:

•  all CSC employees engaged before the CSC/ComSuper merger on 1 July 2015 were employed on common law contracts underpinned by the Banking, Finance and Insurance Award 2010 (the Banking Award)  18;

•  immediately after the merger new employees performing work that was previously performed by ComSuper were employed on the ComSuper Agreement;

•  following the making of the Australian Government Industry Award 2016 (AGIA) 19 in August 2016 CSC began to engage all new employees on common law contracts underpinned by the AGIA;

•  former ComSuper employees had also been moved onto common law contracts when promoted or moved to different teams within CSC, with offers of promotion contingent on the employee moving off the ComSuper Agreement;

•  there had been no further bargaining meetings since 26 November 2018, adding that in his view it would be futile to have any further meetings without the issue of scope resolved;

•  the CPSU was concerned that bargaining was not proceeding efficiently or fairly because CSC’s proposed scope meant that the proposed agreement would not cover appropriate employees, highlighting that CSC’s proposal would only apply to 202 out of 449 staff with excluded employees often working side-by-side with employees who would be covered by the proposed agreement;

•  disagreement in relation to scope was preventing bargaining from proceeding, with his assessment that CSC and the CPSU had irreconcilable positions on the issue;

•  in November 2018 the CPSU conducted a survey of CSC staff seeking their views about their preferred scope of the proposed agreement, with 44 persons responding (42 of whom were covered by the ComSuper Agreement with the remaining two respondents employed on common law contracts);

•  40 survey respondents indicated that they would prefer that their terms and conditions were reflected in an enterprise agreement, while two respondents indicated that they preferred their employment conditions to be underpinned by the AGIA and two respondents were unsure;

•  the two survey respondents employed on common law contracts both said they would prefer to be covered by the proposed enterprise agreement;

•  Ms Armitage had told him in a briefing on 4 April 2018 that CSC sets remuneration by reference to the Finance Institutions Reference Group (FIRG) guidelines and that terms and conditions of employment were standard for employees employed on common law contracts as reflected in CSC policy;

•  he disagreed with Ms Armitage’s statement that the CPSU was unwilling to consider the alternative scope proposed by CSC, adding that the CPSU sought legal advice about the validity of the proposition;

•  he disagreed with Ms Hodgson’s statement that bargaining representatives had settled nearly all amendments to clauses of the proposed agreement and that scope appeared to be the only outstanding item, noting that both CSC and the CPSU had stated that the terms and conditions which they would be prepared to see reflected in an enterprise agreement depended on the scope of the agreement; and

•  the CPSU had 47 members employed by CSC and that to the best of his knowledge eight of those members were employed on common law contracts.

[29] Key aspects of Mr Nash’s oral evidence included that:

•  the ComSuper Agreement reflected APS conditions of employment and did not provide for the performance-based bonus payments;

•  currently 39 CPSU members were covered by the ComSuper Agreement;

•  across the 10 bargaining meetings considerable time was devoted to discussing a range of issues;

•  from the CPSU’s perspective everything was subject to scope, adding that the CPSU did not make a scope order application in early 2018 because it wanted to try and resolve the scope issue mutually with CSC;

•  the CPSU did not contend that CSC had not been bargaining in good faith;

•  the CPSU’s proposed scope order would if granted require the CPSU to seek the views of employees employed on common law contracts as well as CPSU members on issues such as different remuneration structures and bonus and incentive schemes;

•  he did not think that this needed to be a prolonged process, adding that the CPSU was willing to engage in the process efficiently;

•  employees employed on common law contracts may carry the vote on a proposed agreement reflecting the CPSU’s proposed scope;

•  the CPSU’s alternative proposed scope would require the parties to revisit issues canvassed in the negotiations to date, acknowledging that this was not a simple exercise without commenting on how long the process would take or how complex it would be;

•  one option was to have a two-tiered arrangement;

•  he acknowledged CSC wanted to put a proposed agreement to a vote, noting also that Ms Hodgson had deposed that the employees she represented also wanted an agreement to be put to a vote;

•  he believed that an agreement reflecting CSC’s proposed scope would not be approved by the Commission resulting in the parties being back where they currently are;

•  scope had been a feature of bargaining since the first meeting, with the parties at one stage getting close to agreement on the issue based on the agreement covering those business units where the majority of employees were covered by the ComSuper Agreement;

•  CSC had backed away from that approach;

•  to the extent that the terms and conditions of employment for those employees employed on common law contracts were better than those provided for in the ComSuper Agreement they were unlikely to change, though this depended on what was negotiated by way of an agreement;

•  no agreement had been reached on the issue of pay, with CSC to get back to the CPSU on the possible frontloading and timing of salary increases; and

•  were a scope order to be made, the CPSU would be able to consult with its members within a week and he envisaged the process of consulting non-members typically taking a week.

[30] Ms Platts also provided two witness statements. 20 In those witness statements Ms Platts deposed inter alia that:

•  CSC is divided into 11 business units each of which are further broken down into cost centres;

•  all business units except Investments, Investment Operations and the CEO’s office performed work that was previously performed at ComSuper by employees covered by the ComSuper Agreement, adding that the abovementioned business units were the only units whose work was never performed by employees covered by an enterprise agreement;

•  some business units performed work that did not exist before ComSuper merged with CSC on 1 July 2015;

•  all business units except Investments, Investment Operations, the CEO’s office, People and Risk employed a mix of people on the ComSuper Agreement and common law contracts;

•  in bargaining meetings she had proposed that the CPSU and CSC enter discussions about an enterprise agreement with two sets of conditions for different categories of employees, citing the AustralianSuper Pty Ltd Enterprise Agreement 2016-2019 (the AustralianSuper Agreement) 21 as an example of an agreement that provided different conditions of employment for employees earning over a certain amount;

•  CSC’s proposed scope would see different employees performing the same work in the same workplace continue to be covered by different instruments and would also lead to the slow death of the enterprise agreement as agreement covered employees left CSC and were replaced by employees employed on common law contracts;

•  at the bargaining meeting held on 22 May 2018 Ms Armitage proposed a new scope encompassing all of the work areas that were only involved in the administration of defined benefit superannuation schemes, adding that this was not a feasible way to separate parts of the organisation for agreement coverage as other than areas involved with the management and investment of funds the primary task undertaken by all of CSC was the administration of defined benefit funds;

•  scheme administration work could not be separated out as a distinct area of work for CSC to form the scope of the proposed agreement, adding that there was nothing inherently different about scheme administration work that would make it appropriate for employees performing this work to be covered by an enterprise agreement and others not to be;

•  the vast majority of employees that she had spoken with would prefer to be covered by an enterprise agreement, with approximately 10 employees having told her that they did not apply for promotion within CSC as it would have meant that they would no longer be covered by the ComSuper Agreement;

•  she and another CPSU staff representative at the bargaining table, Mr Rauf Rahim, had spoken to more than 20 employees employed on common law contracts, with those employees indicating that they would rather be engaged on an enterprise agreement;

•  no employees had approached her to say that they did not want to be covered by an enterprise agreement;

•  she had observed that staff satisfaction at CSC was deteriorating, adding that based on her discussions with staff she believed this was due to CSC’s two-tiered employment system and the need for staff to move to a common law contract if they wanted advancement; and

•  the approach taken by CSC on the issue of scope would not maintain the status quo in terms of the roles that were covered by the enterprise agreement.

[31] At the hearing Ms Platts attested that it took the parties a long time to have a genuine discussion regarding scope, acknowledging that the parties had worked through the ComSuper Agreement on a line-by-line basis despite the issues raised regarding scope. Ms Platts also attested that, were the Commission to make a scope order, discussions would need to occur with those employees employed on common law contracts to understand their preferences and views, acknowledging that the CPSU’s alternative scope option may entail the parties starting their discussions afresh should CSC wish to go that way. Beyond that, Ms Platts in her oral evidence:

•  acknowledged that she had no involvement in the process of employees moving from the ComSuper Agreement to a common law contract, though she had been told that if she wanted to be remunerated for the work she did she would have move to a common law contract;

•  her statement as to the reason why staff satisfaction had declined was based on feedback from three CPSU members and her responses to the particular survey;

•  she had discussed the AustraliaSuper Agreement with a Financial Services Union delegate at AustralianSuper, adding that the delegate had not been involved in the negotiation of that Agreement; and

•  agreements had been negotiated elsewhere covering both enterprise agreement covered employees and employees remunerated on a total remuneration package basis.

[32] In her witness statement 22 Ms Mackey deposed among other things that:

•  she had been employed by CSC since 1 November 2017 when CSC ‘insourced’ financial planning services previously provided on its behalf by Industry Fund Services (IFS);

•  her employment at IFS was covered by an enterprise agreement whereas at CSC she was employed on a common law contract;

•  her common law contract unlike the enterprise agreement that covered her employment at IFS did not provide for overtime, a paid Christmas closedown, annual leave loading, 11% superannuation and matched employee contributions up to $1,500, 5 days paid domestic violence leave and enhanced severance benefits, adding that her common law contract also provided 8 days less personal leave per annum than the enterprise agreement which covered her employment at IFS;

•  some of the abovementioned entitlements were bought out by CSC through an increase in her starting salary though not all of the entitlements were compensated for;

•  there was nothing involved in financial planning work that made it less suitable for coverage by an enterprise agreement than other areas of CSC;

•  based on her understanding of CSC’s proposed scope she would not be covered by the proposed agreement; and

•  she would prefer to be covered by the proposed agreement as she wanted to be able to collectively negotiate her terms and conditions of employment.

[33] In her oral evidence Ms Mackey attested inter alia that those former IFS employees who accepted employment with CSC did not oppose the non-transfer of the IFS enterprise agreement to CSC and that she had not looked at the ComSuper Agreement.

The Respondent’s case

[34] As previously mentioned, CSC opposed the CPSU’s application. In short, CSC submitted that:

•  the CPSU application did not satisfy the requirements of ss.238(4)(b) and (c) of the Act;

•  it was not reasonable in all the circumstances that a scope order be made having regard to:

− the current and historical industrial and organisational arrangements of CSC,

− the views of affected employees, and

− the progress of bargaining;

•  the scope orders sought by the CPSU would undermine the fair and efficient conduct of bargaining; and

•  the CPSU’s submissions regarding CSC’s proposed scope were misconceived and misconstrued CSC’s proposed scope.

[35] Other key aspects of CSC’s submissions included that:

•  its proposed scope was consistent with the coverage of the ComSuper Agreement;

•  it did not contend that the CPSU had not been bargaining in good faith;

•  the role of CSC was very different and far broader than that previously undertaken by ComSuper;

•  having regard to CSC’s organisational context, bargaining for an agreement reflecting the CPSU’s proposed scope would be a significantly more complex task than bargaining for an agreement with the scope reflected in the NERR;

•  the CPSU had failed to adduce any persuasive evidence demonstrating that employees employed on common law contracts wished to be covered by an enterprise agreement, noting that its evidence established that a number of employees employed on common law contracts had conveyed their concern about being covered by an enterprise agreement;

•  while the parties had been unable to negotiate a mutually acceptable agreement, this did not mean that bargaining was not proceeding fairly or efficiently;

•  the CPSU had failed to establish how bargaining would be more efficient or fairer were the Commission to make the scope order it sought;

•  the scope orders sought by the CPSU would undermine the bargaining which had occurred to date and would require the parties to commence bargaining afresh;

•  the Commission could not be satisfied that the group of employees captured by the CPSU’s proposed scope order were as a group geographically, operationally or organisationally distinct from those who would not be covered by an agreement reflecting that scope;

•  the making of a scope order would fundamentally alter the employment framework established by CSC and which applied to the majority of employees; and

•  the Commission should be satisfied that its proposed scope was fairly chosen and capable of forming the basis of the coverage of the proposed agreement.

[36] In its oral submissions CSC contended inter alia that:

•  bargaining had been proceeding fairly and efficiently;

•  the evidence established that bargaining had been progressing, highlighting that:

− it was not disputed that much time, energy and effort had been expended by the parties in bargaining,

− the parties had exchanged and considered proposals with changes agreed along the way,

− it was not suggested that either party had not been bargaining in good faith, and

− various options had been canvassed regarding the issue of scope;

• s.238(4)(a) was not at issue in this case;

•  the onus was on the CPSU to demonstrate that bargaining would be fairer and more efficient than if no scope order was made;

•  broadening the scope of the proposed agreement had significant implications given Ms Armitage’s evidence that it would bring between 225-260 employees employed on common law contracts into the bargaining process with some 200 of those employees not previously covered by the ComSuper Agreement;

•  the surveys referred to in the CPSU’s evidence did not support the inferences which the CPSU sought to draw from them, noting that of the four employees employed on common law contracts who responded to the CPSU’s May 2018 survey three expressed satisfaction with their current arrangements while the CPSU’s November 2018 elicited 44 responses with two respondents indicating that they preferred their terms and conditions to be underpinned by the AGIA and two respondents unsure as to whether they preferred their terms and conditions to be underpinned by an agreement or the AGIA;

•  there needed to be compelling evidence to disturb the longstanding status quo, adding that there was no such evidence before the Commission;

•  no weight should be attached to Ms Platts’ evidence regarding her discussions with employees covered by common law contracts, describing her evidence as “vague” and adding that Ms Armitage’s evidence regarding the feedback she received in team meetings was more reliable;

•  with the exception of Ms Mackey who attested that she had not looked at the ComSuper Agreement, the CPSU had not led any evidence from employees who were employed on common law contracts;

•  broadening the scope of the proposed agreement would require CSC to revisit everything discussed to date in bargaining;

•  the possibility of an agreement providing for two employment streams would not result in fair and efficient bargaining in circumstances where it entailed separate meetings with employees covered by the ComSuper Agreement and those employed on common law contracts;

•  if the Commission considered the group of employees covered by its proposed agreement was not fairly chosen it could suggest to the parties that they consider some other option(s)/path(s);

•  it did not consider the group of employees covered by either of the CPSU’s proposed scope orders to be fairly chosen, adding among other things that the Investments and Investment Operations business units had been arbitrarily carved out in the CPSU’s primary scope order given that both areas provided a corporate function across CSC;

•  industrial history and organisational context were relevant considerations in respect of s.238(4)(d) of the Act;

•  its proposed scope was not arbitrary as it was not based on when employees started work with CSC, adding that its proposal sought to continue the status quo by reference to whether the work was covered by the ComSuper Agreement; and

•  the CPSU’s application should be dismissed as the requirements in s.238(4) of the Act had not been satisfied.

[37] CSC relied on a number of authorities including the decisions in Qantas, BRB Modular Pty Ltd v “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) (BRB Modular) 23, The Maritime Union of Australia v Qube Logistics (SB) Pty Ltd24, Theiss Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union25 and Transport Workers’ Union of Australia v Chubb Security Services Limited26.

[38] Ms Armitage in her witness statement 27 covered a range of issues, including CSC’s operations, the merger of ComSuper into CSC, the terms and conditions of employment of CSC employees, bargaining for an agreement to replace the ComSuper Agreement and the issue scope. Key aspects of Ms Armitage’s witness statement included that:

•  since 1 July 2015 there have been two streams of employees at CSC, i.e. employees employed on common law contracts and former ComSuper employees who continue to perform transferring work and therefore continued to be covered by the ComSuper Agreement;

•  as at January 2019 there were 187 employees covered by the ComSuper Agreement, with the remaining 260 CSC employees being employed on common law contracts;

•  the key differences between the employment conditions of those employees employed on common law contracts and those employees covered by the ComSuper Agreement included:

− salary rates for employees employed on common law contracts were benchmarked against FIRG survey data whereas salary rates under the ComSuper Agreement were based on the classification structure contained in the Agreement,

− employees employed on common law contracts did not receive a guaranteed salary increase whereas employees covered by the Agreement received salary increases provided for in the Agreement subject to meeting relevant criteria,

− employees employed on common law contracts had the opportunity to receive performance pay/bonuses whereas the Agreement provided for incremental progression based on satisfactory performance,

− employees employed on common law contracts typically received salaries far in excess of the rates specified in the AGIA to compensate them for any additional hours worked, adding that these employees were not otherwise entitled to time off in lieu and overtime,

− flextime only applied to those employees employed on common law contracts providing a salary of less than $66,830 per annum in accordance with the AGIA, and

− employees employed on common law contracts did not receive higher duties allowance and had to apply for leave over the Christmas-New Year period as CSC does not shut-down over this period whereas ComSuper did;

•  the ability to have private-sector terms underpinning CSC’s general employment framework was critical to ensuring that it could attract and retain the best talent and flexibly manage its workforce to meet customer needs;

•  when ComSuper employees transferred to CSC in July 2015, CSC committed to renegotiate an enterprise agreement with those employees to replace the ComSuper Agreement;

•  feedback she and her People Business Partners had received prior to the commencement of bargaining indicated that the majority of employees covered by the ComSuper Agreement wished to have their terms and conditions set by way of an enterprise agreement, adding that over the preceding 2 ½ years no such wish had been expressed to her on behalf of any employee(s) employed on common law contracts;

•  CSC’s key principle going into bargaining for the proposed agreement was to maintain, so far as possible, the status quo with respect to agreement coverage and terms and conditions of employment;

•  CSC had negotiated for the proposed agreement on the basis that the scope of the agreement would be that reflected in the NERR;

•  there had been no further bargaining meetings since 26 November 2018;

•  CSC considered that bargaining was close to being finalised and wished to put the proposed agreement to a vote of employees;

•  on 12 February 2019 the Board of CSC approved a 2% pay increase from 21 February 2019 for those employees covered by the ComSuper Agreement;

•  Ms Platts was not correct when she deposed that the primary task undertaken by CSC was the administration of defined benefit funds;

•  with regard to the CPSU’s proposed scope, she did not consider it appropriate for any enterprise agreement to cover senior managers in CSC given that those employees’ duties were more closely aligned to those of a Senior Executive Service officer in the Australian Public Service;

•  as Head of People she had attended eight team meetings with different business units to discuss bargaining and the implications of the CPSU’s scope order application, adding that the overwhelming feedback at those meetings from employees employed on common law contracts was to the effect that they did not wish to be covered by an enterprise agreement and from former ComSuper employees was that their primary motivation was to obtain a pay increase promptly and have an opportunity to vote on the proposed agreement; and

•  based on her experience in the bargaining to date, she estimated that it would take more than 12 months to bargain for an agreement based on the CPSU’s proposed scope and that there would be a need to confer with approximately 225 employees employed on common law contracts regarding such a proposed agreement.

[39] Under cross-examination Ms Armitage was taken to each of CSC’s business units with a view to ascertaining the work performed by those business units as well as data showing the number of employees covered by the ComSuper Agreement and employees employed on common law contracts in each of those business units. 28 The gist of Ms Hodgson’s evidence in respect of those business units where there was a mix of Agreement covered and employees employed on common law contracts was that the work of those units went across CSC. Other keys aspects of Ms Armitage’s oral evidence included that:

•  Ms Platts’ statement that CSC had proposed to move employees from the ComSuper Agreement to a common law contract for very minor changes to their role was incorrect, adding that her team analysed the relevant job description to see if the role was substantially the same or different to that covered by the ComSuper Agreement and that she had oversight of when someone’s role changed;

•  CSC’s Remuneration Policy 29 provided that “all staff may be entitled to a bonus”, acknowledging that “anything is possible” in response to the proposition that it was possible to include this form of regulation in an enterprise agreement;

•  attrition was a factor in the decline of the number of employees covered by the ComSuper Agreement from around 385 as at 1 July 2015 to 187 as at 6 March 2018, adding that 14 employees had moved from coverage under the Agreement to a common law contract over the same period;

•  as a general principle it was undesirable to have people in the same area doing the same work on a different industrial instrument and different terms and conditions of employment, adding that it was difficult but not impossible to manage different terms and conditions of employment;

•  unless stated otherwise in her witness statement, Mr Nash’s and Ms Platts’ description of what occurred at various bargaining meetings was accurate;

•  CSC had not put a proposed agreement to a vote of employees, adding that CSC’s letter of 25 August 2018 to the CPSU 30 was intended to prompt the CPSU into setting out its proposed scope;

•  the bargaining group had made a deliberate decision that the minutes of bargaining meetings might be circumspect on some issues, e.g. scope, to avoid creating unnecessary angst among employees;

•  it was clear at the end of 2018 that the parties were at an impasse on the issue of scope;

•  the CPSU had never agreed a proposed pay outcome;

•  the eight team meetings referred to in her witness statement 31 were convened to provide employees with an update on the status of bargaining, adding that if she was asked about the issue of scope she directed employees to have a look at the material available on CSC’s intranet regarding the CPSU’s position;

•  extensive consultation would be required were the Commission to make a scope order as up to 260 TRP employees may be covered by an agreement with most of those employees never covered by an enterprise agreement, adding that this was likely to be a complex, protracted and lengthy process;

•  she did not consider her estimate that it would take more than 12 months to bargain for such an agreement to be unduly pessimistic, adding that employees were very interested in what an agreement would mean for them and while a shorter timeframe was possible she did not consider it to be probable; and

•  CSC would need to work through and cost an approach which saw an enterprise agreement establish a floor for employees employed on common law contracts, describing this is a complex matter and adding that it would still result in two employment streams within CSC.

[40] Ms Hodgson deposed in her witness statement 32 among other things that:

•  at the time of the final bargaining meeting on 26 November 2018 the only significant outstanding item appeared to be scope of the proposed agreement, adding that from her perspective the other clauses had been settled;

•  the 23 employees she represents were happy with the proposed agreement, including the scope as proposed by CSC;

•  if the scope of the proposed agreement was to be changed to align with the CPSU’s preference she was concerned that this would result in significant delays in bargaining as the parties would need to start bargaining again to cover a larger group of employees;

•  none of the employees she represents had indicated that they were concerned with the scope proposed by CSC or that they wished to broaden the scope of the proposed agreement to include employees employed on common law contracts; and

•  no employee employed on common law contract (including those she supervised) had approached her to indicate that they wished to be covered by an enterprise agreement.

[41] In her oral evidence Ms Hodgson attested that 35 people worked in the unit which she led, with 24 of those employees covered by the ComSuper Agreement and the remaining employees employed on a common law contract, adding that there was no difference in the way those employees worked or performed. Ms Hodgson further attested that those employees sit side-by-side and did the same kind of work. Beyond that, Ms Hodgson also attested that:

•  agreement had been reached on the issue of pay, i.e. a 6% salary increase over three years based on annual increases of 2%;

•  the two-tier enterprise agreement proposal had not been put to her, adding that it was similar to CSC’s current arrangements; and

•  while the urgency of getting an agreement had lessened as a result of the 2% salary increase passed on administratively by CSC in February 2019, another primary focus for employees was the certainty of having an enterprise agreement with no change to existing terms and conditions of employment in place.

Relevant Statutory Framework

[42] Section 238 of the Act deals with scope orders and provides as follows:

“238 Scope orders

Bargaining representatives may apply for scope orders

(1) A bargaining representative for a proposed single-enterprise agreement may apply to the FWC for an order (a scope order) under this section if:

(a) the bargaining representative has concerns that bargaining for the agreement is not proceeding efficiently or fairly; and

(b) the reason for this is that the bargaining representative considers that the agreement will not cover appropriate employees, or will cover employees that it is not appropriate for the agreement to cover.

No scope order if a single interest employer authorisation is in operation

(2) Despite subsection (1), the bargaining representative must not apply for the scope order if a single interest employer authorisation is in operation in relation to the agreement.

Bargaining representative to give notice of concerns

(3) The bargaining representative may only apply for the scope order if the bargaining representative:

(a) has taken all reasonable steps to give a written notice setting out the concerns referred to in subsection (1) to the relevant bargaining representatives for the agreement; and

(b) has given the relevant bargaining representatives a reasonable time within which to respond to those concerns; and

(c) considers that the relevant bargaining representatives have not responded appropriately.

When the FWC may make scope order

(4) The FWC may make the scope order if the FWC is satisfied:

(a) that the bargaining representative who made the application has met, or is meeting, the good faith bargaining requirements; and

(b) that making the order will promote the fair and efficient conduct of bargaining; and

(c) that the group of employees who will be covered by the agreement proposed to be specified in the scope order was fairly chosen; and

(d) it is reasonable in all the circumstances to make the order.

Matters which the FWC must take into account

(4A) If the agreement proposed to be specified in the scope order will not cover all of the employees of the employer or employers covered by the agreement, the FWC must, in deciding for the purposes of paragraph (4)(c) whether the group of employees who will be covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.

Scope order must specify employer and employees to be covered

(5) The scope order must specify, in relation to a proposed single-enterprise agreement:

(a) the employer, or employers, that will be covered by the agreement; and

(b) the employees who will be covered by the agreement.

Scope order must be in accordance with this section etc.

(6) The scope order:

(a) must be in accordance with this section; and

(b) may relate to more than one proposed single-enterprise agreement.

Orders etc. that the FWC may make

(7) If the FWC makes the scope order, the FWC may also:

(a) amend any existing bargaining orders; and

(b) make or vary such other orders (such as protected action ballot orders), determinations or other instruments made by the FWC, or take such other actions, as the FWC considers appropriate.”

Consideration

[43] As can be seen from paragraphs [17] and [18] above, the CPSU wrote to CSC and Ms Hodgson on 31 August 2018 and to CSC again on 20 November 2018 setting out its concerns that bargaining for the agreement is not proceeding efficiently or fairly. I note that the latter correspondence was discussed at the bargaining meeting of 26 November 2018 33 and that CSC did not contend that the CPSU had not written to it setting out its concerns in this regard.

[44] Having regard to the above, I am satisfied that the CPSU has complied with s.238(3)(a) of the Act and is therefore able to make an application for a scope order.

[45] Accordingly, I now turn to consider each of the considerations set out in s.238(4) of the Act which deals withwhen the Commission may make a scope order.

s.238(4)(a) – the bargaining representative who made the application has met, or is meeting, the good faith bargaining requirements

[46] It was not disputed that the CPSU had met the good faith bargaining requirements. This consideration is therefore satisfied.

s.238(4)(b) – making the order will promote the fair and efficient conduct of bargaining

[47] The test in respect of this consideration was set out by the Full Bench in United Firefighters which stated that:

“The relevant consideration under s.238(4)(b) is whether the order will promote the fair and efficient conduct of bargaining. The implication is that the tribunal should be satisfied that if an order is made the bargaining will at least be fairer or more efficient or both than it would be if no order were to be made.” 34 (Underlining added)

[48] The requirements of s.238(4)(b) were further considered by Commissioner Hampton in The Association of Professional Engineers, Scientists and Managers, Australia v Australian Red Cross Blood Service and others 35. In that decision Commissioner Hampton considered the approach on which the assessment required in s.238(4)(b) should be based, stating as follows:

“[65] It is not necessary that the present bargaining be considered to be unfair or inefficient however findings to that affect would clearly be relevant and would be conducive to a finding that the requirements of this provision may be met by an alternative scope for bargaining.

[66] The applicant for a scope order must demonstrate that the making of the order would promote, that is encourage and facilitate, bargaining that is fairer and more efficient than if no order was made. That assessment is to take into account the interests of all relevant parties who are subject to the bargaining process, not just those who are seeking the order, and involve the weighing up of the relevant considerations touching upon the issue.” 36

[49] The CPSU contended that its proposed scope order would result in fairer bargaining because it would result in a more democratic process by involving a greater number of employees and would promote efficient bargaining by breaking the current impasse regarding the issue of scope. The CPSU also contended that making the scope order would not unduly delay bargaining.

[50] CSC on the other hand posited among other things that the inability of the parties to negotiate an agreement did not mean that bargaining had not proceeded fairly or efficiently and that the CPSU had failed to establish how bargaining would be more efficient or fairer were the Commission to make the scope order it sought. CSC also posited that broadening the scope of the proposed agreement would require CSC to revisit the matters discussed to date in bargaining.

[51] It is clear from the material before the Commission bargaining has stalled over the issue of the scope of the proposed agreement and that across the ten bargaining meetings held in 2018 the parties canvassed a range of issues relevant to employees covered by the ComSuper Agreement. In other words, despite the gulf between the parties’ respective positions on the issue of scope, there is nothing before the Commission which would support a finding that the negotiations had not been proceeding fairly or efficiently. However, that is not the issue to which s.238(4)(b) is directed. The test is, as stated in United Firefighters, whether “bargaining will at least be fairer or more efficient or both than it would be if no order were to be made.”

[52] Dealing first with the question of whether bargaining would be more efficient than if no scope order were to be made, it was not disputed that granting the scope order sought by the CPSU would require the parties to consider issues which hitherto do not appear to have been the subject of bargaining other than to the extent they relate to the issue of scope, e.g. if and how the remuneration arrangements applying to those employees employed on common law contracts should be reflected and/or dealt with in an agreement. What was disputed however was the time that this would involve, with Mr Nash suggesting that the CPSU would be able to consult with members and other employees promptly while Ms Armitage’s evidence was that that it would take more than 12 months to bargain for an agreement based on the CPSU’s proposed scope. Having regard to the material before the Commission I am inclined to the view that were the CPSU’s scope order application to be granted the negotiations will be more complex in several respects. Firstly, the issues to be considered in the negotiations, particularly the different remuneration arrangements which currently apply in CSC and how they might be dealt with in an agreement, are potentially complex and may have significant cost implications for CSC. Secondly, the requirement to reissue the NERR is likely to result in an increased number of bargaining representatives being involved in the negotiations, particularly given Mr Nash’s evidence which indicated that the CPSU represents only a small number of employees employed on common law contracts.

[53] While I note the CPSU’s contention bargaining had proceeded down the “wrong track” as CSC’s proposed scope would result in an agreement that could not be approved because the group of employees covered by such an agreement would not have been fairly chosen as required by ss.186(3) and (3A) of the Act, that view is predicated on that scope being reflected in an agreement negotiated by the parties. Such an outcome would not of itself result in the negotiations for an agreement being more efficient given the above conclusion that the negotiations are likely to be more complex in several respects.

[54] The above analysis does not support a finding that bargaining would be more efficient than if no scope order was made.

[55] As to whether the negotiations would be fairer were the scope order sought by the CPSU to be made, while I note the CPSU’s contention that the process would be more democratic that view appears to be premised on a view that the employees employed on common law contracts wish to be covered by an enterprise agreement. The evidence in that regard is limited, disputed and not particularly compelling. For instance, granting the scope order in circumstances where the majority of employees employed on common law contracts did not wish to be covered by an enterprise agreement would not be fairer because it carries with it the risk that those employees will veto any agreement that might be negotiated thereby potentially disadvantaging those employees currently covered by the ComSuper Agreement. The converse also applies. However, in the absence of more probative evidence regarding the views of employees employed on common law contracts any such conclusion is nothing more than speculative. Beyond that, I note Ms Hodgson’s evidence that the 23 employees she represents were happy with the proposed agreement and n the absence of persuasive probative evidence as to the views of employees employed on common law contracts. Against that background, I am unable to conclude that the negotiations would be fairer than if no scope order was made.

[56] In summary, I am not satisfied that granting the scope order sought would promote the fair and efficient conduct of bargaining.

s.238(4)(c) – the group of employees who will be covered by the agreement proposed to be specified in the scope order was fairly chosen

[57] The Full Bench in United Firefighters stated as follows in respect of this consideration:

“The relevant consideration under s.238(4)(c) is whether the specified group is fairly chosen. It may be that a number of groupings might be fair – what this criterion requires is that the group which is included in the scope order is fairly chosen. This issue is also dealt with in s.238(4A), which we discuss shortly.” 37

[58] More recently, the Full Bench in Aerocare summarised the principles which could be drawn from earlier decisions regarding ss.186(3) and (3A) of the Act which deal with the fairly chosen requirement in the context of agreement approvals as follows:

“[26] The following principles may be gleaned from earlier decisions concerning s 186(3)-(3A):

•  the expression “the group of employees covered by the agreement” in s 186(3) refers to the whole class of employees to whom the agreement might in future apply, not the group of employees who actually voted on whether to make the agreement;

•  the references in s 186(3) and (3A) to whether “the group of employees covered by the agreement was fairly chosen” are, in the case of a non-greenfields agreement made with a group of employees, particularly a small group, references to a choice made by the employer;

•  a Member’s decision as to whether or not they are satisfied that the group of employees covered by an agreement was “fairly chosen” involves a degree of subjectivity and the exercise of a very broad judgment or value judgment, and in a broad sense can be characterised as a discretionary decision;

•  in an appeal from a decision of that nature, it will be necessary for the appellant to demonstrate error in the decision-making process of the type identified in the House v The King in order for the Full Bench to set aside the decision;

•  once it has been determined that an agreement does not cover all of the employees of the employment, it is necessary for the Commission to make a finding as to whether the group of employees who are covered is geographically, operationally or organisationally distinct, and then take that matter into account and give it due weight, having regard to all other factors;

•  if the group of employees covered by the agreement is geographically, operationally or organisationally distinct then that would be a factor telling in favour of a finding that the group of employees was fairly chosen; conversely, if the group of employees covered by the agreement was not geographically, operationally or organisationally distinct then that would be a factor telling against a finding that the group was fairly chosen;

•  however while the question of whether the group of employees covered is geographically, operationally or organisationally distinct must be evaluated and given due weight having regard to all other relevant considerations, that is not a determinative consideration in that it is not necessary to make a finding that the group is geographically, operationally or organisationally distinct in order to be satisfied that it was fairly chosen;

•  the selection of the group of employees to be covered on some objective basis, as opposed to an arbitrary or subjective basis, is likely to favour a conclusion that the group was fairly chosen;

•  the relevant considerations will vary from case to case, but the word “fairly” suggests that the selection of the group covered was not arbitrary or discriminatory, so that for example selection based upon employee characteristics such as date of employment, age or gender would be likely to be unfair; and

•  it is appropriate to have regard to the interests of the employer, such as enhancing productivity, and the interests of both the employees included in the agreement’s coverage and the employees excluded.” 38 (Endnotes not included)

[59] The CPSU submitted that the group of employees covered by its proposed scope order had been selected on the objective basis that they had a history of enterprise agreement coverage as they performed work previously performed by ComSuper and were covered by the ComSuper Agreement, with those employees excluded never having been covered by an enterprise agreement.

[60] CSC contended that it did not consider the group of employees covered by either of the CPSU’s proposed scope orders to be fairly chosen, adding among other things that the Investments and Investment Operations business units had been arbitrarily carved out in the CPSU’s primary scope order given that both areas provided a corporate function across CSC.

[61] As stated by the Full Bench in Aerocare “it is not necessary to make a finding that the group is geographically, operationally or organisationally distinct in order to be satisfied that it was fairly chosen”. I note that it is not uncommon for enterprise agreements to exclude senior executives from coverage. There is nothing subjective in my view about Heads of and Executive Managers and above being excluded from the CPSU’s proposed scope order. As to the carve out of the Investments and Investment Operations business units, the material before the Commission does not point to either of those units being geographically, operationally or organisationally distinct as per s.238(4A). However, in circumstances where the material before the Commission does not point to either of these units performing work previously performed by ComSuper or having previously been covered by an enterprise agreement and in the absence of any material pointing to employees in either of the units having expressed a desire to be covered by an enterprise agreement, I do not consider their exclusion to be arbitrary.

[62] The above analysis supports a finding that the group of employees who will be covered by the agreement proposed to be specified in the scope order was fairly chosen.

s.238(4)(d) – it is reasonable in all the circumstances to make the order

[63] The Full Bench in BRB Modular said the following in respect of this consideration:

“[53] The scope of an agreement is an open question in many enterprise bargaining exercises. It is frequently a topic of competing claims, discussion and negotiation. Rarely will it be possible to say that one scope proposal is wrong and another correct. There may be justifications for a preference one way or another. Hence it is usually the case that the scope is left to the bargaining parties to determine in the context of the overall enterprise bargaining framework. The reasonableness of making a scope order should be considered against that background.

[54] As we have said above, a consideration of reasonableness requires a full consideration of all of the circumstances and a level of satisfaction that the order requiring the parties to adopt a particular scope of an enterprise agreement in their ongoing bargaining is objectively justified. We are not satisfied that the applicant has established that it is reasonable in all the circumstances to make the scope order. We are satisfied that bargaining can continue and it remains open to the parties to continue to consider the scope of the agreement in the overall context.” 39

[64] In this case the CPSU submitted that it was reasonable to make the scope order it sought in circumstances where doing so would not unduly delay bargaining, there was no clear evidence that employees employed on common law contracts did not want to be covered by an enterprise agreement and the evidence established that many employees were working side-by-side on the same job irrespective if the instrument governing their terms and conditions of employment.

[65] CSC on the other hand submitted that it was not reasonable in all the circumstances that a scope order be made having regard to the current and historical industrial and organisational arrangements of CSC, the views of affected employees and the progress of bargaining.

[66] I have dealt with aspects of the CPSU’s submissions regarding this consideration above in the context of dealing with the other aspects of s.238(4). I would however reiterate a point previously made, i.e. the evidence in this case regarding the views of employees employed on common law contracts regarding the issue of scope is limited, disputed and not particularly compelling. Beyond that I note Ms Hodgson’s oral evidence that her area comprised a mix of employees covered by the ComSuper and common law contracts with those employees sitting side-by-side and doing the same kind of work. While that evidence supports a finding that it is reasonable in all the circumstances to make the scope order sought by the CPSU, I note that it only relates to the 35 employees working in Ms Hodgson’s area. More particularly, there is little in the way of evidence indicating that this is the case in other areas of CSC, with Ms Armitage’s oral evidence not going to a comparison of the work performed by employees employed under the ComSuper Agreement and common law contracts but rather simply indicating that the work of many if not most business units went across CSC’s operations.

[67] As to the issue of industrial history, in many ways this is perhaps at the nub of the difference between the parties on the issue of scope. This is because CSC prior to 1 July 2015 solely utilised common law contracts underpinned by the Banking Award whereas ComSuper had a history of negotiating enterprise agreements which covered all employees but senior executives. Against that background, I observe that in this case industrial history as a consideration lies somewhat in the eyes of the beholder and is likely to reflect which side of the business an employee commenced work with. In short, I consider industrial history to be of limited relevance in this case because at best it can be characterised as a relatively short history for the merged entity.

[68] As previously noted, bargaining had been underway for around 12 months prior to the CPSU lodging its scope order application, with the parties having made progress on a range of issues during that time. An important consideration in that regard in my view was Mr Nash’s evidence that at one stage the parties got close to agreement on the issue of scope before CSC backed away from the approach under consideration. The approach entailed an agreement covering those business units where the majority of employees were covered by the ComSuper Agreement. That evidence suggests that agreement on the issue of scope is not impossible, though it would require both parties to consider making appropriate concessions. This in my views tells against the reasonableness of making a scope order at this stage of the process.

[69] On balance, having regard to the above analysis, I am not satisfied that it is reasonable in all the circumstances to make the order sought by the CPSU.

Summary

[70] In summary, while I am satisfied that the considerations at ss. 238(4)(a) and (c) of the Act are met, I am not satisfied that granting the scope order sought would promote the fair and efficient conduct of bargaining [s.238(4)(b)] or that it is reasonable in all the circumstances to make the order sought by the CPSU [s.238(4)(d)].

[71] Deputy President Sams in Qantas set out the general principles that had been developed in the jurisprudence dealing with scope order applications. The principles including the following:

“1. By the inclusion of the word ‘may’ in the heading to s 238(4) of the Act, the Commission is to exercise its discretionary powers after determining whether all of the criteria in ss (a)-(d) are satisfied. As all of the criteria must be satisfied (by use of the disjunctive word ‘and’ separating each criterion), it must follow that if one of the criterion is not met, then a scope order cannot be made. The converse is true; that is, if all of the ss (4) criteria are met, the Commission may make a scope order.” 40 (Underlining added)

[72] As in this case not all the considerations in s.238(4) have been met, the CPSU’s scope order application must therefore fail.

Conclusion

[73] For the reasons outlined above, I find that the CPSU’s application does not meet all the considerations set out in s.238(4) of the Act. Accordingly, I decline to make the scope order sought by the CPSU and dismiss the application. An Order to that effect will be issued in conjunction with this decision.

[74] Despite declining to make the scope order sought the CPSU, I would make the following suggestions/observations in the hope that they may be of some assistance to the parties in seeking to negotiate an agreement:

•  the objects of the Act include “an emphasis on enterprise-level collective bargaining” [s.3(f)];

•  to inform their discussions regarding the issue of scope the parties may wish to consider a more structured approach to seeking or establishing the views of employees employed on common law contracts on the question of whether they wish to be covered by an enterprise agreement, as a minimum I would encourage CSC to consider undertaking this exercise;

•  while the views of employees are not determinative, as noted by the Full Bench in BP Kwinana “the views of the employees become significant and prima facie carry greater weight than the subjective views of the employer” 41;

•  the AGIA is the modern award which applies to CSC meaning that public sector conditions of employment underpin CSC’s employment arrangements;

•  it is arguable that CSC’s proposed scope may not satisfy the requirements in s.186(3) and (3A) of the Act given that it does not appear to be premised on employees being geographically, operationally or organisationally distinct – as this was not an issue which the Commission had to decide in determining the CPSU’s scope application, the view expressed is not intended to be nor should it be interpreted as a considered or definitive view on the matter; and

•  by virtue of the Act, the ComSuper Agreement only applies to “transferring employees” [s.311(2)] while they perform “transferring work” [s.311(1)(c)].

[75] Finally, I note that it is open to either of the parties to make an application under s.240 of the Act seeking the Commission’s assistance in progressing bargaining.

Appearances:

J. Fetter of Counselfor the Applicant.

B. Rauf of Counselfor the Respondent.

Hearing details:

Canberra.

2019

March 12 and 13.

Printed by authority of the Commonwealth Government Printer

<PR716006>

 1   Applicant’s Outline of Submissions at paragraph 1

 2   Exhibit 8 at paragraphs 5-8

 3   Ibid at paragraph 17

 4   AE414386

 5   Ibid at clause 3.1

 6   Exhibit 8 at paragraph 25

 7   Ibid at Annexure CA3

 8   MFI#3

 9   NA2018/14

 10   Exhibit 1 at Attachment AN9

 11   Ibid at Attachment AN13

 12   Ibid at Attachment AN14

 13   [2010] FWAFB 3009

 14   [2017] FWC 1526

 15   [2017] FWCFB 5826

 16   [2014] FWCFB 1476

 17   Exhibits 1 and 2

 18   MA000019

 19   MA000153

 20   Exhibits 4 and 5

 21   AE422792

 22   Exhibit 6

 23   [2015] FWCFB 1440

 24   [2018] FWC 1688

 25   [2018] FWCFB 2405

 26   [2012] FWA 2226

 27   Exhibit 8

 28   Exhibit 4 at Attachment AP3

 29   Exhibit 8 at Annexure CA2

 30   Ibid at Annexure CA32

 31   Ibid at paragraph 132

 32   Exhibit 7

 33   Exhibit 8 at Annexures CA40 and CA41

 34   [2010] FWAFB at paragraph [55]

 35   [2011] FWA 2914

 36   Ibid at [65]-[66]

 37   [2010] FWAFB at paragraph [55]

 38   [2017] FWCFB 5826 at [26]

 39   [2015] FWCFB 1440 at [53]-[54]

 40   [2017] FWC 1526 at [166]

 41   [2014] FWCFB 1476 at [31]