Application by SGS Australia Pty Ltd

[2015] FWC 1302

[2015] FWC 1302

DECISION

Fair Work Act 2009
s.185—Enterprise agreement
SGS Australia Pty Ltd
(AG2014/8554)
DEPUTY PRESIDENT GOSTENCNIK	MELBOURNE, 27 FEBRUARY 2015

Application for approval of the SGS Australia Pty Ltd Enterprise Agreement 2014; not

satisfied employees genuinely agreed as employer did not comply with s. 180(2); application

for approval dismissed.

Introduction

[1]        On 7 August 2014 SGS Australia Pty Ltd (SGS) made an application pursuant to s.

185 of the Fair Work Act 2009 (Act) for the approval of a single enterprise agreement titled

“SGS Australia Pty Ltd Enterprise Agreement 2014” (Agreement). A statutory declaration

completed by Mr Steve McCartney the WA Secretary of the Automotive, Food, Metals,

Engineering, Printing and Kindred Industries Union (AMWU) supporting the application for

approval was also filed with the application.

[2]        By correspondence dated 17 October 2014 the National Office of the AMWU advised

my Chambers that despite the statutory declaration filed in support of the application, the

AMWU had a number of concerns about the Agreement relating to its scope and whether the

Agreement passed the better off overall test. Consequently I convened a number of hearings

to deal with the issues raised by the AMWU. SGS and the AMWU have also exchanged

correspondence about the issues raised and SGS has provided certain undertakings to the

Commission designed to meet the issues raised by the AMWU. Pursuant to directions issued

by me, the parties also filed written submissions concerning the issues raised. It is

unnecessary for me to canvass each issue that was raised and it is sufficient for present

purposes to indicate that many of the issues raised by the AMWU have been resolved by

agreement.

[3]        I have also found it unnecessary to resolve each of the outstanding issues raised by the

AMWU for the purposes of determining whether the Agreement can be approved because I

am not satisfied that each of the preapproval requirements has been satisfied and consequently

I am not satisfied that the Agreement has been genuinely agreed (within the meaning of

section 188) to by the employees covered by the Agreement for the purposes of s. 186(2).

This is because SGS as the employer covered by the Agreement has not complied with s.

180(2). These are my reasons for that conclusion.

Consideration

[2015] FWC 1302

Relevant legislative provisions

[4]        Section 180 of the Act sets out some of the preapproval steps that must be completed

before employees are asked to vote to approve an agreement. Relevantly s. 180(2) provides as

follows:

Employees must be given copy of the Agreement etc.

(2) The employer must take all reasonable steps to ensure that:

(a) during the access period for the Agreement, the employees (the relevant employees)

employed at the time who will be covered by the Agreement are given a copy of the following

materials:

(i) the written text of the Agreement;

(ii) any other material incorporated by reference in the Agreement; or

(b) the relevant employees have access, throughout the access period for the Agreement, to a

copy of those materials.

[5]        Section 186 of the Act deals with some of the matters about which the Commission

must be satisfied before being required to approve an agreement. Relevantly section 186

(2)(a) provides the following:

Requirements relating to the safety net etc.

(2) The FWC must be satisfied that:

(a) if the Agreement is not a greenfields agreement—the Agreement has been genuinely agreed

to by the employees covered by the Agreement; and

[6]        The meaning of genuinely agreed is dealt with in section 188 of the Act, which

relevantly provides the following:

188 When employees have genuinely agreed to an enterprise agreement

An enterprise agreement has been genuinely agreed to by the employees covered by the Agreement if

the FWC is satisfied that:

(a) the employer, or each of the employers, covered by the Agreement complied with the

following provisions in relation to the Agreement:

(i) subsections 180(2), (3) and (5) (which deal with pre-approval steps);

[7]        As is apparent from the above provisions, among the various steps that must be taken

before employees are asked to vote to approve the Agreement, the employer must take all

reasonable steps to ensure that the employees that will be covered by the Agreement have

been given a copy of both the written text of the Agreement and any material incorporated by

reference into the Agreement, or that the employees have access to the Agreement and

incorporated material throughout the access period. The failure to take reasonable steps to do

so means that the employees covered by the Agreement cannot be said to have genuinely

agreed to the Agreement within the meaning of s. 188 of the Act, with the consequence that

the Commission cannot be satisfied as required by s. 186(2) of the Act.

Incorporated Material

[2015] FWC 1302

[8]        Clause 31 of the Agreement deals with leave entitlements and provides that the leave

entitlements provisions of the Agreement are “to be read in conjunction with the SGS

Australia Leave Policy”.

[9]        Clause 33 of the Agreement deals with an employee’s health and safety obligations

and provides that employees must, inter alia, “comply with Fitness for Work and Drug and

Alcohol Policies, including Rules for Life”.

[10]      Clause 36 of the Agreement deals with fitness for work and provides, inter alia, that

employees are required to “comply with any health and safety policies, requirements or the

like of clients or customers of the Company when working on any of their sites or projects”.

[11]      The question whether the policies referred to in each of the above-mentioned clauses

of the Agreement are incorporated into the Agreement by reference may, for present purposes,

be answered by asking whether the provisions of these clauses of the Agreement impose any

obligation on employees who are covered by the Agreement to comply with the policies to

which reference is made. I have not been provided with a copy of the SGS Australia Leave

Policy and it is therefore not clear to me what effect reading the leave provisions of the

Agreement in conjunction with the policy will have, and for reasons which follow it is

unnecessary for me to express a view about whether or not the SGS Australia Leave Policy is

incorporated by reference into the Agreement.

[12]      The provisions of clause 33 and 36 of the Agreement seem to me to make clear that

employees covered by the Agreement, when it is in operation, are obliged by the terms of the

Agreement to comply with the terms of the policies mentioned in each of clauses 33 and 36.

A breach of any mentioned policy by an employee will amount to a breach of the Agreement.

I am therefore satisfied that the terms of the policies mentioned in clauses 33 and 36 of the

Agreement are incorporated by reference into the Agreement.

Reasonable steps

[13]      I am satisfied based on the material set out in the employer’s statutory declaration filed

in support of its application to approve the Agreement that the employer took all reasonable

steps to either provide copies of the Agreement to employees and to make the Agreement

readily accessible to employees during the access period.

[14]      However I am not satisfied that the employer took any step, let alone all reasonable

steps, to ensure that the employees were either given a copy of the incorporated policies or

had access to those policies during the access period. In correspondence dated 27 November

2014 (and reiterated in correspondence dated 15 December 2014) SGS accepts that it did not

issue employees with the policies as part of the preapproval process, but says that the policies

apply to the employees nonetheless and do so irrespective of whether employees are covered

by the Agreement or not.

[15]      That may be the case, but there is no material before me which would suggest that

employees were alerted to the fact that these policies were now incorporated into the

Agreement with the consequence that a breach of an incorporated policy by an employee will

constitute a breach of the Agreement. There is not material before me suggesting that

employees were advised that policies may be viewed at a particular location, for example, on
[2015] FWC 1302

an intranet site. Moreover there is no material from which it may be concluded that particular

client or customer policies that operate at particular sites were identified by SGS to employees

or that any information was given to any employee about how such policies could be accessed

or reviewed.

[16]      By incorporating the policies of SGS and of others into the Agreement with the

consequence that a failure to comply with a policy would become a breach of the Agreement,

the Agreement creates substantial obligations on employees about which they should not only

be aware but become familiar. There is simply no material from which it can be concluded

that the employer took all reasonable steps to provide employees with a copy of the

incorporated material or to ensure that the employees had ready access to that material during

the access period. Consequently I cannot be satisfied that the employees covered by the

Agreement genuinely agreed to it.

[17]      It seems to me that it is wholly unnecessary to incorporate into an agreement policies

of the kind identified in clauses 33 and 36 of the Agreement. By doing so, an employer is

simply placing additional and unnecessary compliance burdens on itself in order to have an

agreement approved. Policies of the kind identified in clauses 33 and 36 of the Agreement

seem to me more than able to be dealt with by a direction to comply given to employees by

the employer or by including a requirement to comply in an employee’s employment contract.

[18]      For completeness I should note that the AMWU suggested in its written material that

the issue of policy incorporation might be dealt with by an undertaking given to the

Commission by SGS. No undertaking was proffered and as the point was not argued it is

unnecessary for me to express a view about whether any such undertaking could be accepted

as curing the defect identified above.

Conclusion

[19]      For the reasons given the application to approve the Agreement is dismissed. An order

to that effect is separately issued in PR561405.

DEPUTY PRESIDENT

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