Australian Offshore Solutions Pty Ltd
[2023] FWC 1894
•1 AUGUST 2023
| [2023] FWC 1894 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
Australian Offshore Solutions Pty Ltd
(AG2023/1881)
| DEPUTY PRESIDENT BEAUMONT | PERTH, 1 AUGUST 2023 |
Application for approval of the Australian Offshore Solutions (AOS) Pty Ltd and The Australian Maritime Officers Union (AMOU) Propelled Dredging Enterprise Agreement 2023
Australian Offshore Solutions Pty Ltd (the Applicant) has made an application for the approval of an enterprise agreement known as the Australian Offshore Solutions (AOS) Pty td and The Australian Maritime Officers Union (AMOU) Propelled Dredging Enterprise Agreement 2023 (the Agreement). The application was made under s 185 of the Fair Work Act 2009 (Cth) (the Act). The Agreement is a single enterprise agreement.
The Applicant is a specialist marine and offshore service provider delivering a range of services, from vessel chartering and ship management, to the provision of dredging and marine manning services. It is noted that the Applicant was represented by the Australian Resources & Energy Employer Association, which had also assisted it with respect to matter AG2023/1847.[1] Issues that arose in the application in AG2023/1847 similarly afflicted this application. It follows that my decision in AG2023/1847 mirrors much of what is said here.
The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (the Amending Act) made a number of changes to enterprise agreement approval processes in Part 2-4 of the Act, which commenced operation on 6 June 2023.
Under transitional arrangements, amendments made by Part 14 of Schedule 1 to the Amending Act in relation to genuine agreement requirements for agreement approval applications apply where the notification time for the agreement was on or after 6 June 2023. The genuine agreement provisions in Part 2-4 of the Act, as it was before 6 June 2023, continue to apply in relation to agreement approval applications where the notification time for the agreement was before 6 June 2023. The notification time for the Agreement was 16 March 2023.[2]
It is uncontroversial that The Australian Maritime Officers’ Union (AMOU) was a bargaining representative for the Agreement and filed a Form F18.[3] It supported the approval of the Agreement and provided notification pursuant to s 183 of the Act that it wanted the Agreement to cover it.
The matter was allocated to my Chambers on Tuesday, 20 June 2023, and the following day, directions were sent to the parties identifying issues with the application and the Agreement. It is uncontroversial that the Agreement passed the better off overall test and there were no issues with respect to the Agreement excluding the National Employment Standards (NES).
The Notice of Employee Representational Rights (NERR) was provided more than 14 days after the notification time, therefore initially rendering the Commission unable to conclude that the Agreement had been genuinely agreed to. However, a failure to comply with a procedural requirement will constitute a ‘procedural error’ within the meaning of s 188(2)(a) (as it was prior to 6 June 2023) – such as the issue before me now. The underlying purpose of s 173(3) is ensure that the relevant employees understand their representational rights within a reasonable period before bargaining commences thus allowing them to exercise those rights in a timely manner. Insofar as this procedural deficit is concerned, it was evident that the eligible employees were provided with a reasonable period before bargaining commenced to exercise their representational rights given their representation by the AMOU. It follows that the eligible employees were unlikely to have been disadvantaged by such error, and it did not stand in the way of the Agreement’s approval.
Nevertheless, one of the issues concerned the coverage clause of the Agreement and the voting cohort, and that issue has stood in the way of the Agreement’s approval for the reasons that follow.
The voting cohort, the coverage clause, and the amendment/correction sought
The coverage clause of the Agreement is set out in the following terms:
5. SCOPE OF THE AGREEMENT
5.1 This Agreement covers the Employer, the Union (subject to s 183 of the FW Act) and Employees who are engaged in the classifications in this Agreement to work on vessels crewed by the Employer in or in connection with:
5.1.1 Dredging in Australia, including travelling to or form a dumping area;
5.1.2 while travelling from port to port.
5.2 This Agreement does not cover rock-dumping vessels or work in or in association with such vessels (unless that work is covered by clause 5.1 above).
The word ‘Employee’ is defined in the Agreement at clause 3 as follows:
“Employee” means an employee who is employed to work on or in connection with a dredging project and whose employment is of a casual nature. (italics my emphasis)
The NERR set out:
Australian Offshore Solutions Pty Ltd (AOS) gives notice that it is bargaining in relation to an enterprise agreement (Australian Offshore Solutions (AOS) Pty Ltd and The Maritime Officers Union (AMOU) Propelled Dredging Enterprise Agreement) which is proposed to cover employees that Deck Officers in the Dredging Industry.
At question 4 of the Form F17, the Applicant identified that the Agreement did not cover all employees of the employer and clarified:
The Agreement will cover all future employees engaged in the following classifications for work on dredging vessels:
·Senior Master
·Master
·Chief Mate
·2nd Mate
·Master of Split Hopper Barge
·Tug Master
The above employees are operationally distinct from the remainder of the AOS workforce as only they work in the dredging industry.
In respect of the employees covered by the Agreement, the Form F17 identified that there were zero casual employees.[4] It therefore followed that the directions issued on 21 June 2023 required the Applicant to file submissions in respect of s 181(1) of the Act, noting that this section allows an employer to request the employees employed at the time who will be covered by the Agreement to vote to approve the Agreement. It was observed that if the voting cohort comprised of employees who were not employees who were to be covered by the Agreement, then this would appear to be a fatal deficiency in the application (see ss 182(1) and 188(1)(b) of the Act (as it was prior to 6 June 2023)).
The Applicant submitted that it currently employed five employees who were engaged in classifications in the Agreement to work on vessels crewed by the Applicant in, or in connection with, dredging operations in Australia.[5] Those same employees, the ones who had been asked to vote to approve the Agreement during the period of 4 June 2023 to 7 June 2023 and had voted to approve the Agreement, were initially purported to be permanent employees and, at a later point, were said to be engaged on permanent, fixed term, outer limit contracts, with a set roster pattern and leave accruals consistent with the Agreement (eligible employees).[6] The Applicant again said the reference to ‘casual employment’ in the definition of ‘Employee’ in the Agreement was a typographical error. Instead, said the Applicant, the definition of ‘Employee’ should be read as meaning ‘an employee who is employed to work in or in connection with a dredging project and whose employment is of a permanent nature’.
In response to the issue raised, the Applicant initially filed an application under s 188(5) of the Act, submitting that the definition of ‘Employee’ at clause 3 of the Agreement contained a typographical error, and seeking to correct the error. Having alerted the Applicant to the issues associated with such application, the Applicant indicated on 7 July 2023 that it did not wish to continue the application under s 188(5).
On 12 July 2023, the Applicant applied under s 586, or in the alternative s 190 of the Act, to address the issue.
The application under s 586 sought to correct the error in the coverage provision of the Agreement by replacing the word ‘casual’ with ‘permanent’. In the alternative, the Applicant proffered the following undertaking:
[The Applicant] undertakes to apply the Agreement on the basis that the definition of “Employee” listed in clause 3 of the Agreement reads: “Employee means an employee who is employed to work on or in connection with a dredging project and whose employment is of a permanent nature.”
On 14 July 2023, further directions were issued to the parties observing that whilst the Applicant had made an application under s 586 of the Act and had proffered an undertaking, the submissions filed did not appear to address the preliminary issue of whether there was a valid application before the Commission. The parties were informed that prior to the Commission making its decision in respect of the application, both the Applicant and the AMOU were provided with a final opportunity to file any further materials in support of the application and addressing the issue identified by no later than Friday, 21 July 2023. Further materials were submitted by the Applicant. Neither the Applicant nor the AMOU sought a hearing in respect of the matter.
2.1 Legislative framework and its application
An enterprise agreement may be either a single‑enterprise agreement or a multi‑enterprise agreement[7]. Section 172 stands at the forefront of Part 2‑4. It provides for the circumstances in which an enterprise agreement may be made. It deals with both single‑enterprise agreements and multi‑enterprise agreements. Of focus in this matter are the provisions concerning single-enterprise agreements, particularly those referred to in s 172(2)(a) of the Act.
Section 172 provides relevantly as follows:
(2) An employer, or 2 or more employers that are related employers, may make an enterprise agreement (a single-enterprise agreement):
(a) with the employees who are employed at the time the agreement is made and who will be covered by the agreement;….
Section 172(2)(a) contemplates agreements made in circumstances where the employer already employs employees who are not then, but will be, covered by the enterprise agreement then in contemplation. That is, s 172(2)(a) expressly contemplates that employees ‘will be covered’ by the proposed agreement.
The word ‘cover’ is of significance under the Act. Section 53(1) provides that ‘[a]n enterprise agreement covers an employee or employer if the agreement is expressed to cover (however described) the employee or the employer.’ Section 53(6) provides: ‘A reference in this Act to an enterprise agreement covering an employee is a reference to the agreement covering the employee in relation to particular employment.’
In addition to including s 53, Part 2-1 of the Act includes s 52, which addresses when an agreement applies to an employee. Section 52(1) sets out:
An enterprise agreement applies to an employee, employer or employee organisation if:
(a) the agreement is in operation; and
(b) the agreement covers the employee, employer or organisation; and
(c) no other provision of this Act provides, or has the effect, that the agreement does not apply to the employee, employer or organisation.
It is accepted that an enterprise agreement may ‘cover’ an employee even though it does not yet ‘apply’ to that employee in the sense of imposing obligations on the employee and the employer. An enterprise agreement imposes obligations on employees and employers covered by it only when it applies to such persons. Section 51 of the Act provides that an enterprise agreement does not give a person an entitlement, nor does it impose obligations on a person, unless the agreement ‘applies’ to the person.
In ALDI Foods Pty Ltd v Shop, Distributive and Allied Employees Association (Aldi),[8] the High Court observed:
[30] Because an employee may be covered by more than one agreement at one time, s 58(1) of the Act provides that only one enterprise agreement can apply to an employee at a particular time. That is because only one set of rights and obligations can be in operation in relation to the work actually performed by the employee at that time in relation to particular employment. Given the terms of ss 52 and 53, it is apparent that an employee may be covered by an agreement that applies to him or her, and by an agreement that does not, at that time, apply to him or her. Furthermore, an employee may be covered by more than one agreement at any one time. To speak of an employee being covered by an agreement is to speak of the agreement providing terms and conditions for the job performed by, or to be performed by, the employee.
[31] In this context, the natural meaning of the reference in s 53(6) to "particular employment" of an employee is to the description of the employee's job in the agreement. In this regard, the terms of cl 5 of the Agreement refer to the job descriptions of employees whose employment the Agreement will regulate when it comes into operation. It is a natural and ordinary use of language to speak of the Agreement as covering these employees.
The concepts of ‘coverage’ and ‘application’ in ss 52 and 53 of the Act provide the key to the interpretation of the phrase 'who will be covered by the agreement' in ss 172(2)(a) and 182(1). An enterprise agreement covers an employee if it is expressed to cover the employee. An enterprise agreement applies to an employee in relation to particular employment if the agreement covers them and the agreement is in operation.[9]
Where an agreement is made under s 172(2)(a) of the Act, the employees, being the employees referred to in sub‑s (2)(a), are entitled to representation under s 173.
Section 173(1) of the Act requires an employer that will be covered by a proposed enterprise agreement that is not a greenfields agreement to take all reasonable steps to give notice of the right to be represented by a bargaining representative to each employee who: (a) will be covered by the agreement and (b) is employed at the notification time for the agreement.
Section 176 sets out the persons who are the bargaining representatives for a proposed enterprise agreement that is not a greenfields agreement. In this case this was the AMOU.
In Aldi, it was said that these provisions serve to ensure that the employees referred to in s 172(2)(a) are able to call upon the negotiating skills and bargaining strength of employee organisations should they so choose in order to minimise the inequalities of bargaining power that might otherwise adversely affect the outcome of their negotiations with their employer.[10]
For a valid application to be made, pursuant to s 185 of the Act, it is a statutory prerequisite that an enterprise agreement be ‘made’ under s 185(1). That section is expressed as follows:
185 Bargaining representative must apply for the FWC’s approval of an enterprise agreement
Application for approval
(1) If an enterprise agreement is made, a bargaining representative for the agreement must apply to the FWC for approval of the agreement.
Section 182(1) sets out the circumstances in which a single-enterprise agreement is ‘made’:
182 When an enterprise agreement is made
Single-enterprise agreement that is not a greenfields agreement
(1) If the employees of the employer, or each employer, that will be covered by a proposed single-enterprise agreement that is not a greenfields agreement have been asked to approve the agreement under subsection 181(1), the agreement is made when a majority of those employees who cast a valid vote approve the agreement.
Section 181 provides that the employer may request that employees approve a proposed enterprise agreement subject to certain conditions. It is expressed as follows:
181 Employers may request employees to approve a proposed enterprise agreement
(1) An employer that will be covered by a proposed enterprise agreement may request the employees employed at the time who will be covered by the agreement to approve the agreement by voting for it.
(2) The request must not be made until at least 21 days after the day on which the last notice under subsection 173(1) (which deals with giving notice of employee representational rights) in relation to the agreement is given.
(3) Without limiting subsection (1), the employer may request that the employees vote by ballot or by an electronic method.
However, prior to requesting employees to approve a proposed enterprise agreement, the employer must take all reasonable steps to ensure that ‘the employees…employed at the time who will be covered by the agreement’ are given a copy of the agreement and certain other material.[11]
It can be seen that an agreement that is not a greenfields agreement is made upon approval by the employees who will be covered by the agreement. When it is made, those employees are accurately described as being covered by it, even though it does not yet apply to them in the sense of being in operation so as to create rights and liabilities in relation to work actually performed under it.
In the case of a non-greenfields agreement, by the time an applicant submits its application under s 185 of the Act to the Commission for approval of the agreement, the agreement will have already been made by the employees who made it under s 182(1) of the Act.
Section 186(1) of the Act requires the Commission, on an application for approval of an enterprise agreement under s 182(4) or s 185, to approve the agreement ‘if the requirements set out in this section and section 187 are met.’
Under s 186(2), the Commission must be satisfied relevantly that: ‘(a) if the agreement is not a greenfields agreement – the agreement has been genuinely agreed to by the employees covered by the agreement’. Such an agreement is, as has been seen from s 182(1), an agreement that has been made.
Section 186(3) provides, in relation to non‑greenfields agreements, that the Commission must be satisfied that the group of employees ‘covered by’ the agreement was fairly chosen. In this regard, s 186(3A) provides:
If the agreement does not cover all of the employees of the employer…covered by the agreement, the [Commission] must, in deciding whether the group of employees covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.
Section 188 of the Act, as it was prior to 6 June 2023, states the circumstances in which the Commission may be satisfied that an enterprise agreement ‘has been genuinely agreed to by the employees covered by the agreement’.
In circumstances where there has been an application for the approval of an enterprise agreement under s 185 of the Act and the Commission has a concern that the agreement does not meet the requirements set out in ss 186 and 187, the Commission may still approve the agreement under s 186 by accepting an undertaking that addresses the concern (as provided in accordance with s 190(3)). However, in doing so the Commission must be satisfied that the effect of accepting the undertaking is not likely to: (a) cause financial detriment to any employee covered by the agreement; or (b) result in substantial changes to the agreement.
Part 5-1 of the Act is also relevant. Division 3 of that Part is concerned with the conduct of matters before the Commission. Subdivision A of Division 3 is concerned with applications to the Commission. Section 586 sets out that the Commission may:
(a) allow a correction or amendment of any application, or other document relating to a matter before the FWC, on any terms that it considers appropriate; or
(b) waive an irregularity in the form or manner in which an application is made to the FWC.
2.2 The Applicant’s submissions
By way of background, the Applicant emphasises that a NERR was issued to ‘eligible’ employees on 24 April 2023 and by 25 May 2023, an in-principal agreement was reached between the Applicant and the AMOU.[12] The Applicant sent communications to the ‘eligible’ employees on 26 May 2023, advising that an in-principal agreement for the proposed agreement had been reached with the AMOU and informing the eligible employees of the proposed Agreement voting timeline.[13] A majority of those eligible employees that voted supported the making of the Agreement.[14]
The Applicant submits that the Agreement was and is intended to cover permanent employees, which would include the eligible employees. In this respect, the Applicant seeks to amend the Agreement under s 586 of the Act to correct the error in the definition of ‘Employee’ listed in clause 3 ‘Definitions’.
In support of its argument that the reference to ‘casual nature’ in the Agreement was a typographical error, the Applicant observed that s 15A of the Act defines a casual employee as an employee who has no firm advance commitment of ongoing and indefinite work based on the agreed pattern of work, and where the employer offers work, a casual employee can elect to accept or decline the offer. The Applicant highlighted that the following clauses in the Agreement were inconsistent with the definition in s 15A of the Act:
11.11 Leave
11.11.2 The swing cycle on Capital Works Projects will be four weeks or three weeks or as otherwise agreed.
11.11.4 If the Employer believes that it is unable to establish a four week cycle on a particular project because of customer requirement, it will confer with the Union.
11.12 Late Crew Change
11.2.1 Where a crew change occurs on day 30 on a four-week cycle (or day 23 on a three-week cycle a penalty will apply:…
The Applicant further submitted that various terms of the Agreement demonstrated that the Agreement was intended to apply to permanent employees, which would include the eligible employees, in particular the following clauses:
17 SEVERANCE AND REDUNDANCY
17.2 The Employer’s severance contribution provided for in this clause will be set off against the redundancy entitlements that would otherwise apply under the NES, provided that where the Employer has not made sufficient contributions into the Employee to satisfy these obligations, the Employer shall make up the difference and pay the said Employee at the time of termination.
(Section 123(1)(c) of the Act provides casual employee are not covered by the division of the Act that provides redundancy entitlements.)
19 LEAVE ACCRUAL
19.1 An Employee will accrue an entitlement to one day’s leave for each day on which the Employee is on duty.
20 PERSONAL/CARER’S LEAVE
20.1 Employees, other than casual Employees, are entitled to 10 days’ paid personal/carer’s leave in accordance with the NES. This leave is cumulative from year to year.
22 TERMINATION OF EMPLOYMENT
22.3 An Employer or a non-casual Employee will give notice of termination in accordance with the following table…
The Applicant observed that in Retail and Fast Food Workers Union Incorporated v Hungry Jack’s Australia Pty Ltd (Hungry Jack’s),[15] the Full Bench referred to the potential for an application to be made under s 586 of the Act to correct the error in name of the employer in the agreement the subject of the approval application in that matter. The Applicant further notes other cases where the Commission has been prepared to correct an error in the coverage provisions of an agreement relying on s 586 of the Act.[16] Having perhaps observed that the cases referred to concern the misidentification of the employer, the Applicant submitted that a misdescription of the employees covered by an agreement (supported by evidence regarding the intended coverage) is analogous with a misdescription of the employer covered by an agreement.
In its concluding submissions, the Applicant noted that it had conferred with the AMOU and they had agreed that the definition of ‘Employee’ in clause 3 could be better corrected by substituting the word ‘full-time’ for the word ‘casual’ (instead of ‘permanent’).[17] It is observed that whilst provided with the opportunity to file materials in respect to the issues identified, no response was forthcoming from the AMOU.
Consideration
Turning first to the approval requirements in ss 186 and 187 of the Act and the competency of the application. The Commission is obliged to approve an agreement made under s 185 if the requirements of ss 186 and 187 are met. Those provisions are predicated on there having been an application for the approval of an enterprise agreement under s 185 of the Act.
However, the foundational provision is s 172(2), which authorises an employer to make a single enterprise agreement ‘with employees who are employed at the time the agreement is made and who will be covered by the agreement’.
An application under s 185 is one that is made in accordance with s 185,[18] and it requires that an enterprise agreement has been made. That is, for a valid application to be made pursuant to s 185 of the Act, it is a statutory prerequisite that an enterprise agreement be ‘made’ under s 185(1).
As already mentioned, s 182(1) provides when a single enterprise agreement is ‘made’, setting out that if the employees of the employer that will be covered by a proposed single-enterprise agreement have been asked to approve the agreement under s 181(1), the agreement is of course ‘made’ when a majority of those employees who cast a valid vote approve the agreement.
Section 181(1) allows an employer that will be covered by a proposed enterprise agreement to request the employees employed at the time who will be covered by the agreement to approve the agreement by voting on it.
The pre-bargaining step of the employer providing notice to employees of the right to be represented by a bargaining representative, is a step taken with respect to employees who will be covered by the agreement and are employed at the notification time of the agreement.[19] Furthermore, the pre-approval requirements in s 180 (as it was prior to 6 June 2023) are premised on the relevant employees being those employees who are employed at the time and who will be covered by the agreement (see ss 180(2), (3) and (5)).
It is uncontroversial that the five employees who were requested to vote on the proposed Agreement, and did in fact vote in support of the Agreement, were employees who were either permanent employees or employees who were full-time and engaged on a fixed term or outer limit contract. Further, it is not in dispute that the coverage clause of the Agreement extended to employees whose employment was of a casual nature. The employment type of the eligible employees did not fall within the scope of clause 5 of the Agreement. That is, the Agreement was not expressed to cover the eligible employees.
It is observed that a ‘proposed agreement’ was not submitted into evidence. However, I accept that the enterprise agreement filed was the Agreement that was voted on by the eligible employees.
The Applicant drew upon various clauses of the Agreement to demonstrate that at all times the Agreement was only ever intended to cover permanent or full-time employees on a fixed term or outer limit contract. Those clauses are detailed at paragraph [46] of this decision.
However, the Applicant did not draw attention to the point that the leave accrual under the Agreement made no reference to the leave constituting ‘annual leave’ albeit it is further observed that incorporated into the annual salary was allowance for ‘annual leave’. Perhaps more significantly that annual salaries were provided for under the Agreement which incorporated, included, or consolidated into the annual salary ‘casual loading’ (see Appendix A, A.1(d)).
It is not unreasonable to surmise that whilst some clauses reflected entitlements of a permanent employee, others, such as the provision of casual loading within the annual salary, indicated employment of a casual nature. Furthermore, with the exception of the reference to ‘casual nature’ in the definition of ‘Employee’ at clause 3, the Agreement itself is silent on the types or nature of employment.
As observed, the NERR did not refer to employment type stating only that the proposed agreement was proposed ‘to cover employees that Deck Officers engaged by AOS in the Dredging Industry.’ Similarly, the Form F17 again made no mention of employment type. The explanatory material that the Applicant had purportedly provided to the five employees did not refer to employment type. In respect to ‘leave’, the explanatory material set out that ‘one days leave for every day worked’ and all other leave was payable in accordance with the NES.
For reasons that I will traverse shortly, I am not persuaded that an agreement has been ‘made’ as that term is understood by reference to s 182(1) of the Act. However, if I am wrong on this point, it is relevant to refer to the Applicant’s application to correct an error with the Agreement pursuant to s 586(a) of the Act or to otherwise address the issue identified by the undertaking proffered.
In Deicorp Pty Ltd (Deicorp),[20] Commissioner Lee faced a not dissimilar circumstance where the employees who voted on the agreement were a type of employee not covered by the employment. In that case the employees who had voted on the agreement were all daily hire employees, a type of employment that was not covered by the agreement. Whilst the applicant in Deicorp sought to correct the agreement to include daily hire employees on the basis that the omission of this type of employment was an error, the Commissioner considered that such an amendment was not permissible under s 586(a) of the Act. In arriving at this conclusion, the Commissioner referred to the reasoning of Commissioner Roe in Visy Paper Pty Ltd where the Commissioner stated:
… I do not consider that it would be appropriate or consistent with the scheme of the Act to use the power to correct or amend a document under Section 586(a) to change the substance of an agreement. To do so would be to undermine the protections in the Act which limit the capacity to vary an agreement. The cases referred to by Visy where the Commission has utilised Section 586 have been to correct administrative or obvious errors or to rectify procedural failings. It is possible that this might extend to correcting some minor error in the name of a party or the wording of a classification or job title in a scope clause but I doubt that it could extend to a substantial change to the scope of an agreement even if the problem with the scope clause was unintended.[21]
Whilst the Commissioner in Deicorp appeared to proceed on the basis that the agreement in that case had been ‘made’, he nevertheless concluded that he could not be satisfied that all reasonable steps had been taken to explain the terms of the agreement:
In this case, the group of employees who voted for the Agreement are daily hire employees, however, those employees voted on an Agreement which is not expressed to cover daily hire employees. This raises the question as to whether they voted on an Agreement that does not cover them, or as the Applicant put it, they understood it was the same Agreement as the existing Agreement. The Applicant states that a document outlining the summary of the changes to the Agreement was provided to each employee during the negotiation period, which indicated the changes to the Agreement. The summary document includes relevant wage rates and increases and changes to the classification structure. The document makes no reference to daily hire employment and includes the words “all other terms and conditions of employment remain unchanged”. The fact of the matter is that the terms and conditions of employment did change in the Agreement as it no longer contemplates daily hire employment. This suggests that the Applicant has not taken all reasonable steps to ensure that the terms of the agreement, and the effect of those terms, were explained to the relevant employees pursuant to s.180(5) of the Act.[22]
At this juncture, the decision of the Full Bench in Hungry Jack’s warrants attention. First, with regard to its reasoning as to whether an agreement had been ‘made’ in that case, second with respect to its consideration of the application of s 586(a), and third, its response to the undertaking proffered to remedy the issue.
In Hungry Jack’s, the Full Bench addressed circumstances where the applicant for the approval of the agreement was Hungry Jack’s Australia Pty Ltd (HJA) whilst the entity that had been referred to on the NERR was Hungry Jack’s Pty Ltd (HJ). The coverage clause of the agreement referred to HJA of which HJ was a subsidiary. It was not in dispute that HJA, to which the agreement was said to apply, was not the employer of anybody employed in the Hungry Jack’s restaurants. Furthermore, it was also not in dispute that no NERR was ever sent to any employees of any entity other than HJ. It followed that the reference in the agreement to ‘subsidiaries, licensees and their associated companies’ in the coverage clause, had no effective work to do. The Full Bench expressed it was not a case of an agreement that was intended to apply to employees of several single interest employers – it was evident that coverage extended only to HJ.
Turning to the operation of ss 182(1) and 181(1) of the Act, the Full Bench addressed the Retail and Fast Food Workers Union Incorporated’s (RFFWUI) argument that there was never any enterprise agreement capable of approval by the Commission. The Full Bench disagreed with the RFFWUI’s proposition, expressing:
[55]…Section 182(1) provides when a single enterprise agreement is “made” as follows:
“(1) If the employees of the employer, or each employer, that will be covered by a proposed single-enterprise agreement that is not a greenfields agreement have been asked to approve the agreement under subsection 181(1), the agreement is made when a majority of those employees who cast a valid vote approve the agreement.”
[56] It is important to note that the above provision operates by reference to the outcome of a voting process in which the employees of the employer(s) that will be covered by a proposed enterprise agreement that is a single-enterprise agreement are requested to participate. The RFFWUI, and the Deputy President’s statement, proceed on the presumption that the proposed agreement and the text of the agreement voted on are necessarily identical concepts under the statutory scheme. We do not accept that this is the case. The expression “proposed enterprise agreement” is used in respect of various stages of the bargaining process in Div 3 of Pt 2-4 of the FW Act, including at stages where it is likely that no text of a final agreement has been formulated. For example, s 173(2) describes when the notification time, which is the initiating point for the process, arises for a “proposed enterprise agreement”. The notification time itself may, under s 173(2), be when a majority support determination, a scope order or a low-income authorisation comes into operation; each of these are orders of the Commission which, under ss 236, 238 and 242 respectively are made by reference to a “proposed enterprise agreement” (in the former two cases, a proposed single-enterprise agreement and, in the last case, a proposed multi-enterprise agreement). Bargaining representatives for the relevant “proposed enterprise agreement” in each case may apply for the order. The NERR, which under s 173(3) is required to be issued within 14 days of the notification time by the employer to be covered by the “proposed enterprise agreement” to all employees who will be covered by that agreement, must by virtue of by s 174(1A) of the FW Act and reg 2.05 and Schedule 2.1 of the Fair Work Regulations 2009 (FW Regulations) commence with the following:
“[Name of employer] gives notice that it is bargaining in relation to an enterprise agreement ([name of the proposed enterprise agreement]) which is proposed to cover employees that [proposed coverage].”
[57] Thus the NERR must set out the proposed coverage of the proposed agreement prior to the commencement of bargaining. The employer that will be covered by a “proposed enterprise agreement” may under s 181(1) request that the employees who will be covered by it approve it, but under s 181(2) this cannot occur less than 21 days after the last NERR in relation to the agreement is given. The effect of this provision is that the class of employees which is asked to vote in relation to the proposed agreement cannot be larger than the class of employees to which the NERR is issued, because otherwise the condition in s 181(2) will not be capable of satisfaction.
[58] Section 180 sets out a number of steps which an employer must take before requesting a vote under s 181(1) to approve a “proposed agreement”. One of these (in s 180(2)(a)(i)) is to take all reasonable steps to provide employees with “the written text of the agreement” within the period of the seven days immediately prior to the day the vote commences. The use of this distinct expression at this late stage of the process suggests that while the text is undoubtedly intended to effectuate the proposed agreement and give certainty as to what is to be voted upon, the concept of the “proposed agreement” exists prior to and independently of the ultimate text.
[59] In this case, as demonstrated by the NERR, the proposed agreement was a single enterprise one which would only cover Hungry Jack’s and its employees in its fast food restaurants. There is no evidence that, during the extensive negotiations in respect of the proposed agreement, there was ever any agreement or intention to change that position, nor was a scope order altering that position ever made or sought. The documents provided to employees prior to the vote confirm that the proposed agreement was only ever intended to cover Hungry Jack’s and its restaurant employees. Under s 181, Hungry Jack’s was entitled to seek that employees who would be covered by the proposed agreement (so described) and were within the class that had been provided with the NERR, and those employees only, vote upon the proposed agreement, and this is what it did. The coverage clause in the written text of the agreement provided pursuant to s 180(2)(a)(i) did not accurately reflect the coverage of the proposed agreement, for reasons which remain unexplained, but that does not alter the fact that a valid request was made under s 181 for a vote upon the proposed agreement. Once a majority voted in favour, the Agreement was made in accordance with s 182(1).
It is timely to draw attention to the point that in Hungry Jack’s there was an error in the identification of the proper employer in clause 4.1 of the agreement and in the application for approval of the agreement. There was no issue that the employees who had been requested to approve the agreement by voting for it were not covered by the agreement.
With that context in mind, the Full Bench expressed the following at paragraphs [17]–[19]:
[17]…While the existence of the anomaly might not perhaps have been obvious, it was eminently detectible from a diligent reading of the file, because the NERR had identified Hungry Jack’s Pty Ltd as the employer, and each of the existing collective agreements that applied to the employees in question (all of which were listed in the Form F17 statutory declaration) stated that the employer covered by the agreement was Hungry Jack’s Pty Ltd. The Deputy President could therefore have identified the anomaly, raised it with the parties, dealt with what was a curable defect (as we explain below) and determined the application. However, this did not happen.
…
[18]…The submission consisted of eight pages of text and 50 paragraphs. The very last paragraph read as follows:
“Clarification 50. The employer of employees to be covered by the Agreement is Hungry Jack’s Pty Ltd (ACN 008 747 073; ABN 25 008 747 073) which is a subsidiary of Hungry Jack’s Australia Pty Ltd.”
[19] It is apparent that Hungry Jack’s had by this time realised the error in the identification of the proper employer in clause 4.1 of the Agreement and in the application for approval of the Agreement. It did not make a formal application pursuant to s 586(a) of the FW Act to correct the name of the applicant in the application for approval of the Agreement in order to ensure that there was a competent application before the Commission. It may have expected the Deputy President to dispense with the requirements of the Rules or waive an irregularity in the manner in which the application had been made. However, it should have made an express application to this effect. The matter was not raised again at any subsequent point in the proceedings prior to the decision although, from this point, the company’s correspondence with the Deputy President referred to Hungry Jack’s Pty Ltd.
In addition, HJ proffered an undertaking (Undertaking 3) that read:
Clause 4 Coverage 3. In relation to clause 4.1 of the Agreement, the Employer undertakes that the Agreement will apply only to employees of Hungry Jack’s in the classifications listed at clause 17 of the Agreement.
The Full Bench considered that the proposed Undertaking 3 was effective to resolve the problem earlier identified in the coverage provision of the agreement, noting however that the submissions of HJ never explained that it would have that purpose, nor was any such explanation provided prior to the decision being issued. In respect of Undertaking 3 being effective to resolve the problem, the Full Bench stated:
[90] We are satisfied that acceptance of the undertakings identified above would not be likely to cause financial detriment to any employee covered by the Agreement or result in substantial changes to the Agreement. In relation to previous undertaking 3, that conclusion requires brief elaboration. In CEPU and AMWU v Main People Pty Ltd, a Full Bench determined that the acceptance of an undertaking which had the effect of narrowing the coverage of an enterprise agreement was in error in that it would be likely to cause a significant change to the agreement. In this respect, the Full Bench said:
“[34] We consider that in two respects the Deputy President erred in approving the Agreement on the basis of the undertaking proposed by Main People. First, we consider that acceptance of paragraph 1 of the undertaking, which confined the coverage of the Agreement to work covered by the Metals Award, resulted in a significant change to the Agreement contrary to the requirement in s.190(3)(b) of the FW Act. It may be accepted that an undertaking which clarifies an ambiguous provision of an agreement for which approval is sought in accordance with the intention of the parties will not be likely to cause a significant change in that agreement. However, this was not a case of ambiguity. The breadth of the classifications in the Agreement, and the geographical scope of its coverage, made it apparent that it had application beyond work covered by the Metals Award. The first Full Bench made a clear finding to that effect in the Appeal Decision with which we agree.
[35] The scope of coverage of an enterprise agreement is one of its fundamental features. The coverage provision of an agreement serves to identify the class of persons who will be entitled to its benefits while it is in operation. The importance of an agreement’s coverage is signified by the fact that, under the FW Act, s.186(3) requires the group of employees covered by the agreement to be fairly chosen. For that reason an undertaking which purports to alter the coverage of an enterprise agreement by excluding classes of persons who, on the face of the agreement, would be covered by it, will always be likely to be a significant change.”
[91] In determining to accept undertaking 3, we do not intend to depart from the general principle established in Main People. However, as we have been at pains to describe earlier in our decision, this case involves unusual circumstances which place it far outside the normal position discussed in Main People in that the coverage clause of the Agreement does not reflect the coverage of the proposed agreement that was identified in the NERR and upon which the bargaining between Hungry Jack’s, the SDA and the AWU proceeded, nor does it reflect what was explained to the employees or the composition of the cohort of employees who were requested to vote to approve the Agreement. Undertaking 3 does no more than give effect to what was always intended to be the coverage of the Agreement.
The decision of Australian Nursing and Midwifery Federation v Domain Aged Care (Qld) Pty Ltd (ANMF v Domain) saw the Full Bench again consider an amendment to a coverage clause under s 586.[23]
One of the grounds of appeal advanced by the Australian Nursing and Midwifery Federation (ANMF) in ANMF v Domain was that the Commissioner had, at first instance, erred by extending coverage of the agreement when, on application by Opal Aged Care (Opal) under 586 of the Act, she amended clause 4, such that after the amendment the agreement stated it would apply to employees described in Schedules A and B of the agreement.
The majority of the Full Bench observed at paragraph [50] that the agreement did not explicitly state which employees it covered. It stated however that it covered Opal and its facilities in Queensland, a related company and its facilities in Queensland, and any aged care facilities in the state acquired or commissioned by Opal. The agreement also contained a classification structure, but the coverage clause did not specifically state that the agreement covered employees in the classification. It was on that basis that the ANMF argued that the Commissioner erred when she amended the agreement under s 586 by impermissibly extending its coverage.
Whilst finding that the Commissioner did not err, the Full Bench observed that the agreement was plainly intended to cover the employees in the classifications in the agreement.[24] The Full Bench expressed that it could not conceive of what other purpose the attachment of the classification structure might have had, noting that the intended coverage was so abundantly clear it rendered the ANFM’s argument unsustainable, having been founded on a literal and uncontextualized reading of the instrument. The Full Bench continued, observing:
…It was not necessary for the Agreement to be amended under s 586. In our view, corrections or amendments to agreements should be made sparingly. The Commission should not concern itself with infelicities of drafting in enterprise agreements…[25]
At the conclusion of the proceedings in ANFM v Domain, the Full Bench identified that an additional change had been made to the coverage clause of the agreement that had not been brought to the Commissioner’s attention. New text had been inserted at clause 4(b), the words ‘and North Lakes’ after the words ‘trading facilities in Queensland including Ashmore, Kirra Beach, Leamington, Caloundra, Nambour and Kawana’. This change was not marked-up. The Full Bench invited the parties to make submissions on this matter. Opal contended that this was an oversight that arose because its solicitors amended a different version of the clause from the one that was actually voted on. The ANMF sought leave to amend its notice of appeal to include a new ground, contending that the Commissioner erred by amending the Agreement to include this change. The Full Bench responded to the issue by accepting that the inclusion of the additional words was inadvertent but that the locations referred to in clause 4(b) were inclusive so the addition of the words did not change the coverage of the agreement. The Full Bench further expressed that the additional words were not brought to the Commissioner’s attention and there was nothing to suggest she decided to amend the agreement to include them. Relevantly, the Full Bench continued:
This is the type of obvious error that would be amendable to correction under s 586. However, as we have determined to quash the Approval Decision, it is not necessary for us to correct this error and remove the words ‘and North Lakes’.[26]
The Applicant contends that the circumstances in this case are analogous to those cases where the employer has been misidentified in the employer. That is a misdescription of the employees covered by an agreement (supported by evidence regarding the intended coverage) is analogous with a misdescription of the employer covered by an agreement. However, in the current circumstances, I am unconvinced this case is analogous to those relied upon by the Applicant.
First, the NERR simply provides that the Agreement ‘is proposed to cover employees that Deck Officers engaged by AOS in the Dredging Industry.’ The Form F17 expresses at question 4 that ‘[t]he Agreement will cover all future employees engaged in the following classification for work on dredging vessels:’ Senior Master, Master, Chief Mate, 2nd Mate, Master of Split Hopper Barge, and Tug Master. Neither document refers to employment type. Furthermore, the Agreement itself makes no reference to employment type, with the exception of the reference in the definition of ‘Employee’ at clause 3 of the Agreement. Thereafter, that defined term – ‘Employee’ – is specifically referenced in the coverage clause at clause 5, limiting the coverage of the Agreement to employees whose employment is of a casual nature. It is not the case that the NERR or the Form F17 demonstrate that what was in the contemplation of the parties was an agreement that covered all employment types; the type of employment is simply not mentioned in those documents. This contrasts to the circumstances in Hungry Jack’s where there was reference to the correct employing entity in the NERR.
Second, in Hungry Jack’s, evidence was provided that notwithstanding the applicant of the application being HJA and the agreement covering HJA, all employees working within the restaurants of Hungry Jack’s were undeniably employees of HJ, as described in the NERR. The evidence before me concerning the nature of the ‘eligible’ employees’ employment is equivocal. On first blush, having informed the Applicant that there were no casual employees who voted on the Agreement notwithstanding the coverage clause extending only to employees whose employment is of a casual nature, the Applicant confirmed that was correct – there were no casual employees. The eligible employees who voted on the Agreement were not employed on a casual basis and there was no indication that their employment under the Agreement would be of a casual nature. It may well have been that at the time of the vote the eligible employees were not employed on a casual basis, but under the Agreement they would be so, hence bringing them within coverage. However, the evidence does not suggest that. The Applicant then submitted that the eligible employees were permanent employees, and after purportedly conferring with the AMOU it was thought that the cohort could be better described as full-time employees. No contractual evidence was provided in respect of the eligible employees’ employment type.
Third, as detailed above, the pre-approval requirements in Part 2-4 focus on employees of the employer who ‘will be covered’ by the Agreement. The eligible employees were not employees ‘who will be covered’ by the Agreement, and on that basis it cannot be said that an agreement has been ‘made’. In this respect, the Applicant has not met the preconditions to the exercise of power to approve an agreement, namely that there has been an application under s 185 to approve an agreement and that the Commission is satisfied that the requirements under ss 186 and 187 have been met.
If wrong on this point and those preconditions have been met, I am of the view that the Applicant’s reliance upon s 586 of the Act is misplaced. First, I am unconvinced that an error was made in respect to the content of the Agreement. It appears to me that the Agreement, whilst referring to some entitlements that might usually be afforded to permanent employees, clearly contemplates employment on a casual basis, hence the inclusion of casual loading within the annualised salary. It is not the case that the written text of the Agreement simply fails to reflect the actual proposed or intended agreement.
Second, I do not consider the purported error a mere ‘typographical error’ requiring correction. The purported error has arisen in circumstances where the only type or nature of employment contemplated by the Agreement is expressed in the clause 3 of the Agreement (definition of ‘Employee’) and thereafter in clause 5 by use of the term ‘Employees’. As was the case in Visy Paper Pty Ltd, I do not consider that it would be appropriate or consistent with the scheme of the Act to use the power to correct or amend a document under s 586(a) to change the substance of an agreement. Effecting the change proposed would fundamentally alter the coverage of the Agreement, and whilst the problem with the scope clause may have been unintended, the amendment proposed substantially changes the scope of the Agreement.
It therefore follows that the undertaking proffered is also of no utility. This is so because the undertaking, like the correction sought under s 586 of the Act, substantially changes the scope or coverage of the Agreement and therefore cannot be accepted.
The Applicant was invited to provide further evidence as to how the terms of the Agreement and the effect of those terms were explained to employees. The Applicant sought to assuage concerns regarding the steps taken to explain the Agreement and the effect of its terms. In doing so, the Applicant detailed that an information letter was provided with the proposed Agreement and voting instructions. That same letter was said to have contained detailed information regarding the proposed Agreement terms that would apply to the eligible employees should it be approved. Whilst the letter detailed wage increases, and provided information on a project completion bonus, superannuation contribution, allowances (excluding casual loading) and leave (one days leave for every day worked and other leave payable in accordance with the NES), that same letter did not refer to the coverage of the Agreement, employment type or provide explanation as to why the annualised salary included loading for casual engagement. I am not satisfied that the steps taken by the Applicant in this case constitute reasonable steps and as such I cannot be satisfied that the Applicant complied with s 180(5) of the Act. As s 180(5) is not satisfied, I cannot be satisfied that the Agreement has been genuinely agreed to pursuant to s 188(1) and consequently I cannot attain satisfaction of the requirement at s 186(2)(a). Further, in the circumstances and for reasons already provided, I am of the view an undertaking cannot remedy this issue.
Conclusion
For these reasons, the application for approval of the Agreement is refused, the application is dismissed and an Order[27] to the effect will be issued with this decision.
DEPUTY PRESIDENT
Matter determined on the papers.
[1] [2023] FWC 1888; PR764746.
[2] Form F17 – Employer’s declaration in support of an application for approval of an enterprise agreement (other than a greenfields agreement), question 17 (Form F17).
[3] Form F18 – Declaration of employee organisation in relation to an application for approval of an enterprise agreement (other than a greenfields agreement).
[4] Form F17 (n 2) question 6.
[5] Witness Statement of Daniel Sweetman, [6].
[6] Ibid [9]; Form F17 (n 2) question 25.
[7] Fair Work Act2009 (Cth) s 12.
[8] (2017) 262 CLR 593.
[9] Ibid 607 [48].
[10] Ibid 605 [38].
[11] Fair Work Act 2009 (Cth) s 180(2) (as it was prior to 6 June 2023).
[12] Outline of Submissions dated 12 July 2023, [7].
[13] Ibid [8].
[14] Ibid [9].
[15] (2020) 269 IR 1.
[16] Re Orora Packaging Australia Pty Ltd[2019] FWCA 2941, [3]; Re Aerocare Flight Support Pty Ltd[2017] FWC 4311, [190] (the decision was the subject of an appeal and then judicial review on other grounds).
[17] Further Submissions – Section 181(1) dated 21 July 2023, [13].
[18] Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Sustaining Work Pty Ltd[2015] FWCFB 4422, [30].
[19] Fair Work Act 2009 (Cth) s 173(1).
[20] [2018] FWC 6206 (Deicorp).
[21] [2017] FWCA 1395, [15].
[22] Deicorp (n 20) [31].
[23] [2019] FWCFB 1716.
[24] Ibid [52].
[25] Ibid.
[26] Ibid [54].
[27] PR764782.
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