Australian Municipal, Administrative, Clerical and Services Union v Essential Energy

[2015] FWC 33

[2015] FWC 33

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.238—Scope order

Australian Municipal, Administrative, Clerical and Services Union
v
Essential Energy
(B2014/1038)

SENIOR DEPUTY PRESIDENT HAMBERGER SYDNEY, 14 JANUARY 2015

Application for scope order; giving notice of concerns to other bargaining representatives; promotion of fair and efficient conduct of bargaining.

[1] The Australian Municipal, Administrative, Clerical and Services Union (ASU 1), the Construction, Forestry, Mining and Energy Union (CFMEU), and the Broken Hill Town Employees Union (TEU) (collectively, the unions) have been negotiating since March 2013 with Essential Energy for an enterprise agreement (the new agreement) to replace the Essential Water Enterprise Agreement 2011 (the 2011 agreement). The 2011 agreement has a nominal expiry date of 30 June 2013. The agreement covers Essential Energy’s (the respondent’s) Essential Water business. This business provides water and sewer and trade waste services in Broken Hill and surrounding areas. It has approximately 76 employees, all of whom, with the sole exception of Mr Guy Chick (the Manager, Far West and Water operations) are covered by the 2011 agreement.

[2] During the negotiation process the respondent proposed that the new agreement cover those employees employed by Essential Water on a rate of pay equivalent to pay point 40 or below. This represents a reduction in scope from the 2011 agreement which covers employees up to and including those on pay point 44. The effect would be that four senior employees who are currently covered by the 2011 agreement would be excluded from the scope of the new agreement.

[3] On 2 September 2014 the ASU applied for a scope order that would provide that the coverage clause in the new agreement be the same as that in the 2011 agreement. The matter was heard in Sydney on 27 November 2014. The ASU was represented by Mr M Dunstan, and the respondent by Ms A DeBoos, from K&L Gates.

[4] The following filed written statements on behalf of the ASU:

● Mr Joel Conomos (Organiser with the ASU);
● Mr Stephen Bastian (Manager, Planning and Design, Water); and
● Mr Kym Maddern (Manager, Operations, Water).

[5] Neither Mr Bastian nor Mr Maddern made themselves available for cross-examination, with the result that their statements were not accepted into evidence.

[6] The following gave evidence on behalf of the respondent:

● Mr Peter Smith (the respondent’s Manager, Industrial Relations); and
● Mr Guy Chick.

Statutory context

[7] Section 238 of the Fair Work Act 2009 (the FW Act) 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.’

Factual Background

[8] The respondent commenced negotiations with the unions for the new agreement in April 2013. On 29 May 2013 the respondent tabled a draft enterprise agreement which included its proposed coverage clause. The four employees who are covered by the 2011 agreement who would not be covered by the new agreement are classified as Managers & Specialists under the 2011 agreement (and are all classified at the highest pay point in that agreement). 2 These employees are covered by the ASU. They would, under the respondent’s proposed approach, be offered individual contracts.

[9] On 12 September 2013 Essential Energy wrote to the unions with an offer which included its proposed coverage clause. The offer also included a 2.7% pay increase backdated to 1 July 2013 (conditional on that the unions giving an undertaking to recommend the offer to their members), maintaining the employer contribution to superannuation at 15% (in other words, absorbing any increase in the rate of the SGC) and a range of changes covering consultation, work practice change, dispute and grievance resolution, minimum payment for recall to work overtime and domestic violence.

[10] By 3 October 2013 Essential Energy had reached an in-principle agreement with the CFMEU and the TEU regarding the contents of the new agreement, which included acceptance of Essential Energy’s proposed coverage clause (and a commitment that any contractual arrangements would be by mutual agreement). The ASU did not support the terms of the proposed agreement.

[11] The proposed agreement was put to the employees in a ballot conducted from 30 October 2013 to 13 November 2013. The ASU actively campaigned against the proposal. It circulated a notice to its members urging them to vote no, identifying three issues in particular: ‘no forced redundancy, no super roll up into wages, maintain agreement scope/coverage.’ A document was also circulated that focussed on the alleged losses to employees that would result from the proposed maintenance of superannuation contributions at 15%. The proposed agreement was rejected by 11 to 47 votes.

[12] At the same time as the unsuccessful ballot was conducted for the new Essential Water agreement, a successful ballot was conducted for the Essential Energy Far West (Electricity) Enterprise Agreement 2013. This agreement has the same coverage clause as that in the respondent’s proposed new Essential Water agreement. This agreement was approved by the Fair Work Commission on 4 January 2014.

[13] Negotiations recommenced at a meeting on 6 March 2014. The respondent indicated that the offer of back pay was withdrawn. The TEU and the CFMEU subsequently proposed a two year agreement with a 2.5% pay increase, with no changing to the wording of the superannuation clause. They indicated they were willing to accept the respondent’s proposed coverage clause.

[14] On 9 May 2014, the Fair Work Commission, in a consent arbitration under s.240 of the FW Act, determined that the scope of the agreement to replace the Essential Energy Enterprise Agreement 2011 (the 2011 agreement) should be the same as that contained in the 2011 agreement, as sought by the unions in that case (that is that the agreement should cover employees up to and including pay point 44), rather than the scope proposed by Essential Energy (that is, that the agreement should only cover employees up to pay point 40). 3

[15] On 23 June 2014 the Independent Pricing and Regulatory Tribunal handed down its determination regarding the Essential Water business (IPART determination).

[16] Further negotiations took place, this time under the auspices of the Fair Work Commission. The parties remained apart on a number of issues including back pay, outsourcing and contracting out, the wage increase, superannuation and coverage.

[17] On 19 August 2014 there was a second vote in relation to the new agreement. Again the ASU opposed the terms of the proposed agreement, while the other two unions supported the agreement. The employees once more voted against the proposed agreement: 51 no votes to 11 yes votes.

[18] Negotiations recommenced on 12 November 2014. The respondent indicated that because of the need to take account of the IPART determination, its previous offer was off the table.

Jurisdiction

[19] It is not in contention that the ASU is a bargaining representative for a proposed single-enterprise agreement which has concerns that bargaining for the agreement is not proceeding efficiently or fairly because it considers that the agreement will not cover appropriate employees. Nor is there a single interest employer authorisation in operation in relation to the agreement.

[20] However the respondent has submitted that the ASU has failed to comply with the requirements of s.238 (3) of the FW Act concerning the requirement that notices be provided to and responses sought from ‘relevant bargaining representatives’.

[21] On 1 August 2014 the ASU sent a letter addressed to Peter Smith (the respondent’s Manager, Industrial Relations) outlining its issues with Essential Energy’s proposed coverage clause. 4 Copies of the letter were sent by e-mail to Rosslyn Ferry from the TEU and Greg Braes from the CFMEU. The letter included the following:

‘Our view is that the current coverage clause represents a fair scope for the EBA. Accordingly, we maintain our position that the coverage clause should not be altered. In particular, the USU holds that:

a) There is no fair reason to alter the coverage clause as it currently exists;

b) The EBA should cover those employees who seek to be covered by the agreement;

c) The coverage distinction promoted by Essential Water is arbitrary and unreasonable;

d) The primary EBA to which the organisation is a party contains coverage clause which reflects the USU’s position;

e) The current coverage clause, supported by the USU, gives the agreement scope to cover a group of employees who are fairly chosen.

Should the other agreement parties not respond appropriately and alter their stance in relation to the scope of the agreement within 7 days from the date of this letter, the USU will apply to the Fair Work Commission for a Scope Order pursuant to s.238 of the Fair Work Act 2009.

For the sake of clarity, this correspondence constitutes notice under s.238 (3) of the Act.’

[22] Mr Danny O’Connor, President of the Barrier Industrial Council (BIC) in a letter of 4 August 2014 to the respondent, specifically noted receipt of the USU’s letter of 1 August 2014, on behalf of the CFMEU and the TEU. 5 It did not however provide any comment on the issues with regard to coverage raised by the ASU in that letter. The 4 August letter asked that if the respondent was not willing to give further consideration to the BIC’s proposal in relation to the new agreement, then the respondent should put its own proposal to the vote as soon as possible, to allow the employees to decide.

[23] Ms DeBoos submitted that the 1 August letter did not constitute the notice required by s.238 (3) ‘because it’s a letter to Essential Energy. It is not a letter to the relevant bargaining representatives who I think are uncontestedly the other union, and we say the Full Bench has decided the issue in circumstances that are directly analogous.’ 6

[24] The Full Bench authority Ms DeBoos was referring to is Australian Meat Industry Employees Unionv Woolworths Limited (AMIEU) 7. In that decision the Full Bench dismissed an application to appeal a decision by Richards SDP to reject an application for a scope order.8 SDP Richards had dismissed the application on the grounds that the AMIEU in that case had failed to give the requisite notice of its concerns with regard to coverage of the proposed enterprise agreement to another relevant bargaining representative - in this case the SDA. While the AMIEU had written to Woolworths about its concerns, it had not written separately to the SDA - though it had sent a copy of its letter to Woolworths to the SDA.

[25] The background to that case is that the AMIEU had applied for a scope order in the context of bargaining for an enterprise agreement for Woolworths Ltd supermarkets. A draft agreement for the supermarkets was said to have been agreed in principle between Woolworths and the SDA. The SDA had 18 times the AMIEU membership in supermarkets and approximately double the AMIEU’s representation of employees in supermarket meat units.

[26] The AMIEU had written to Woolworths’ Corporate Workplace Relations Manager on 8 September 2009, giving notice of its concerns pursuant to s.238 (3) of the FW Act. The letter to Woolworths included the following:

‘...As required by [s.238 (3) of the FW Act], I set out for your response our concerns in relation to the proposed national agreement that will cover employees working in meat units.

Before outlining our concerns with the current bargaining process, it is necessary to set the recent context in which they have occurred.’

[27] The letter went on to allege that Woolworths had over a period of time sought deliberately to exclude the AMIEU from negotiations for any new enterprise agreements. It complained of Woolworths’ conduct and alleged that the draft national agreement represented a continuation of Woolworths’ approach to excluding the AMIEU and selecting SDA officials as its preferred bargaining unit.

[28] The letter disputed SDA’s ability to represent the industrial interests of meat unit employees and argued that Woolworths was not bargaining in good faith, and sought Woolworths’ response to this. The letter also sought Woolworths’ response to a number of other aspects of Woolworths’ conduct. The letter concluded:

‘The AMIEU holds the view that the only fair means to address our concerns are for meat unit employees to be covered by a separate enterprise agreement. However should you have any other proposal to address these concerns, we would welcome you detailing it for our consideration.

Please be advised that we seek this response within seven (7) days of the date of this correspondence. Should we not received anything by that date, we will consider ourselves at liberty to make an application to Fair Work Australia under s.238 of the Fair Work Act 2009 (Cth) for "scope" orders.’

[29] The letter was signed by the Federal Secretary of the AMIEU and copied respectively to the National Secretary of the SDA and the State Secretary of the AWU, Queensland.

[30] The Full Bench found:

‘As to whether the AMIEU did meet the requirements of s.238(3) in relation to the SDA, copying the SDA in on the letter of 8 September cannot be said in this case to have satisfied the requirements. It is a letter to Woolworths, raising concerns about Woolworths’ conduct and seeking Woolworths’ response on 3 matters, two of which were specific to the AMIEU and Woolworths. It could not reasonably be read as a notice given to the SDA setting out the AMIEU’s concerns to which the SDA could respond. The concerns in which the SDA was to have a reasonable time to respond are “those concerns” (s238 (3) (b)), that is, the concerns referred to in subsection (1) as set out in the notice. The concerns in the first of the 3 matters on which the AMIEU sought Woolworths’ response related to Woolworths’ conduct.

Because of the nature of the AMIEU’s letter of 8 September we do not need to address the broader question of whether ‘copying in’ one party on the notice given to another is sufficient compliance with s.238 (3) (a). As a general approach, we would be reluctant to adopt a pedantic approach to such matters. Suffice to say that in this case the AMIEU in sending a copy to the SDA of its letter to Woolworths did not meet the requirements of ss.238 (a) and (b). It had no basis for the consideration required by s.238 (3) (c).’ 9

[31] The Full Bench did not find that the notice requirements had not been met because the AMIEU had only ‘copied in’ the SDA on its letter to Woolworths. Rather its finding turned on the ‘nature’ of the letter the AMIEU had written to Woolworths. Indeed, the Full Bench warned against adopting a pedantic approach that sending a copy of a notice to other bargaining representatives would ipso facto be an insufficient method of fulfilling the notice requirements in relation to those bargaining representatives.

[32] The 8 September letter to Woolworths was directed to Woolworths alone. It sought only Woolworths’ response to the AMIEU’s concerns. The letter did not seek the SDA’s response to the AMIEU’s concerns. That is why it failed to meet the notice requirements set out in the FW Act.

[33] This is in contrast to the letter written by the ASU in the current case. Having outlined its concerns with the scope of the agreement proposed by the respondent, the letter explicitly sought responses from ‘the other agreement parties’ within seven days of the date of the letter. Whereas sending a copy of the letter written by the AMIEU to the SDA could reasonably be seen as no more than a courtesy, sending a copy of the ASU’s letter to the other two unions in this case provided them with notice about the ASU’s concerns and gave them an opportunity to provide a response to those concerns.

[34] I am satisfied that the requirements of s.238 (3) (c) have been met by the ASU and the jurisdictional objection is therefore dismissed. I will now turn to consider the merits of the application.

Should the Commission make a scope order?

[35] It is not in contention that the ASU has met, and is meeting, the good faith bargaining requirements. Nor is it in contention that both the group of employees that would be covered under the scope proposed by the respondent as well as that proposed by the ASU would be ‘fairly chosen.’ The key issue to be determined is therefore whether making the scope order proposed by the ASU would:

• ‘promote the fair and efficient conduct of bargaining’ and



• would be ‘reasonable in all the circumstances’.

[36] The Full Bench in United Firefighters 10said(at paragraph 55):

‘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 is made.’

[37] It follows that the Commission should only make a scope order if it would have the effect of making the bargaining fairer and/or more efficient.

[38] I note that s.238 refers to ‘bargaining for the agreement not proceeding efficiently or fairly.’ I agree with Williams C who said, in Finance Sector Union of Australia v BWA Group Services Pty Ltd:

‘It is quite plain from the wording of the Act that is the conduct of bargaining which is to be considered and not the potential outcomes of bargaining.’  11

[39] I am also satisfied that the onus falls on the applicant - in this case the ASU - to persuade the Commission that an order should be made.

[40] The Full Bench in United Firefighters disagreed with the suggestion that as a matter of statutory construction preference ought to be given to agreements that cover as much of an enterprise as possible. 12 The Full Bench also generally agreed that in considering applications for scope orders, weight should be given to the views of employees potentially affected; however a proper consideration of all the factors specified in ss.238(4) and (4A) might make an outcome other than that preferred by the employees more appropriate.13

[41] As previously noted, only four employees, out of a total of 76 are directly affected by the coverage issue. Two of the four filed statements (Mr S Bastian and Mr K Maddern) in support of the ASU’s position; however neither made themselves available for cross examination. Mr Chick’s evidence is that two of the employees would be happy ‘to move to contract, one would be ‘OK’ and one ‘is not’. 14

[42] There is not enough evidence for the Commission to make any conclusions about the preference either way of the potentially affected employees, as a group.

[43] The ASU submitted that while there remained a number of issues in dispute between the parties, resolving the issue of scope by means of an order would - by taking one issue off the table - ‘allow the other issues to be more efficiently bargained’. I do not agree.

[44] The evidence does not suggest that resolving the coverage issue by itself would do much to increase the likelihood of the parties reaching an agreement. As previously noted, the coverage issue only directly affects four of the 76 employees at Essential Water. The evidence from Mr Chick is that while a small number of other employees are concerned about the coverage issue (out of a sense of ‘solidarity’) differences over superannuation and back pay were much more important reasons why the 19 August 2014 ballot was unsuccessful. 15

[45] Moreover, Mr Smith’s evidence indicates that since the IPART determination the respondent has withdrawn its previous offer, implying that the respondent might now take a ‘harder line.’ In this context, coverage should be seen as one issue which the parties can legitimately bargain over. One party might reasonably make a concession about one issue in return for obtaining its preferred position on another issue. In the circumstances of this case, taking one issue out of the equation may just as plausibly make reaching an agreement more, rather than less, difficult.

[46] The ASU submitted that an order would create ‘clarity in terms of costing between the parties as in how much the agreement is going to cost. It creates clarity in terms of for members knowing how they’re going to be dealt with in the future.’  16

[47] I do not find these propositions persuasive. There are clearly a number of issues still in dispute between the parties. Whether four employees are or are not covered by the agreement will have a negligible impact on the cost of any agreement that may eventually be reached.

[48] As for creating clarity for the members as to how they are to be treated, an order would not resolve this in any significant way. The uncertainty is due to the failure to finalise an agreement acceptable both to the respondent and the employees. The only way to resolve that uncertainty is for the parties to resume negotiations and reach a mutually acceptable outcome.

Conclusion

[49] I am not satisfied that making the order sought by the ASU would make the bargaining process any fairer or more efficient than if no order was made. The issue of whether it would be reasonable in all the circumstances to make the order does not therefore arise.

[50] The application for a scope order is dismissed.

SENIOR DEPUTY PRESIDENT

Appearances:

Mr M Dunstan, Ms S Foster and Mr J Conomos for Australian Municipal, Administrative, Clerical and Services Union

Ms A De Boos, Solicitor and Ms R Bevan, Solicitor for Essential Energy

Hearing details:

2014

Sydney

27 November

 1   Also known as the United Services Union or USU

 2   Exhibit E1, paragraphs 18-20

 3   Essential Energy and ors [2014] FWC 3065

 4   Annexure JC3 to Exhibit USU1

 5   Annexure II to Exhibit E2

 6   PN1496

 7   Australian Meat Industry Employees Union v Woolworths Limited [2010] FWAFB 1625

 8   [2009] FWA 849

 9   At paragraphs 17 and 18

 10   United Firefighters Union of Australia v Metropolitan Fire & Emergency Services Board [2010] FWAFB 3009

 11   [2014] FWC 919 at paragraph 55

 12   At paragraph 56

 13   At paragraph 53

 14   Exhibit E1, paragraph 32, PN649-663

 15   Exhibit E1, paragraph 30, PN617-625, PN664-693

 16   PN1401

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