[2016] FWCA 7012

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s 185—Enterprise agreement

Australian Rail Track Corporation
(AG2016/5102)

AUSTRALIAN RAIL TRACK CORPORATION NEW SOUTH WALES (NSW) ENTERPRISE AGREEMENT 2016

Rail industry
DEPUTY PRESIDENT SAMS	SYDNEY, 7 OCTOBER 2016

Application for approval of the Australian Rail Track Corporation New South Wales (NSW) Enterprise Agreement 2016 – various objections by Union bargaining representatives to the Agreement’s approval – narrow second vote of employees approving the Agreement – Union’s vigorous ‘no’ campaign – objection as to scope of the Agreement – issuance of two Notices of Employee Representational Rights – incorporation of National Employment Standards – whether all employees ‘better off overall’ – compliance with Better Off Overall Test (BOOT) – undertakings – Agreement approved subject to s 190 of the Act being complied with.

THE APPLICATION

[1] This decision will determine an application, filed by the Australian Rail Track Corporation (the ‘applicant’ or the ‘Corporation’), pursuant to s 185 of the Fair Work Act 2009 (Cth) (the ‘Act’), which seeks the approval of the Fair Work Commission (the ‘Commission’) of a single-enterprise agreement to be known as the Australian Rail Track Corporation New South Wales (NSW) Enterprise Agreement 2016 (the ‘Agreement’). The Agreement was negotiated with the Australian Rail, Tram and Bus Industry Union (RTBU), the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU), the Australian Municipal, Administrative, Clerical and Services Union (ASU), the Association of Professional Engineers, Scientists and Managers, Australia (APESMA) (collectively the ‘Combined Unions’) and five employee nominated bargaining representatives (EBRs). It replaces the Australian Rail Track Corporation (NSW) Enterprise Agreement 2012 (the ‘2012 Agreement’), whose nominal term expired on 19 August 2015.

[2] The Corporation has four other in-term enterprise agreements for infrastructure maintenance employees in New South Wales, Victoria, South Australia and Western Australia, and a general agreement covering all other employees not covered by these four agreements or the Agreement presently before the Commission for approval.

[3] The Agreement is to cover 528 New South Wales employees of the Corporation, other than infrastructure maintainers, Executive General Managers, General Managers and Managers, as defined, who hold a managerial role at stratum 3 or higher in the Corporation structure (cl 1.1.3). The scope of the Agreement and the associated requirement for the Commission to be satisfied that the group of employees to be covered by the Agreement had been ‘fairly chosen’; see: s 186(3) of the Act, were the subject of contrary contentions by the Combined Unions, which I shall come back to later in this decision.

BACKGROUND

[4] At the outset, the Commission records that there is some history to the filing of this application. Bargaining between the parties for a new agreement began on 27 February 2015 and continued intermittently throughout 2015 and the first half of 2016. It is fair to say that the bargaining has been robust and protracted, highlighted by the Corporation’s insistence that it is bound by the Federal Government’s Workplace Bargaining Policy (WBP) and the Combined Unions’ insistence that it is not so bound. As a result, there have been a number of s 240 conferences convened by the Commission as presently constituted; protected industrial action; allegations of ‘bad faith’ bargaining; an unsuccessful employee approval vote in December 2015; a vigorous ‘no’ campaign waged by the Combined Unions when the Corporation decided to put the impasse in bargaining to a second vote of the employees; and a ‘last minute’ unsuccessful attempt by the Combined Unions to have the Commission order the cancellation of the second ballot of employees, the day before the ballot was to take place. Of the 486 employees who cast a valid vote between 11 and 15 August 2016, 252 voted to approve the Agreement (51.85%).

[5] In firstly dealing with some undisputed procedural matters, the Commission is satisfied that:

(a) The application to approve the Agreement was lodged within 14 days of the employees’ approval vote (s 185(3)(a));

(b) The Corporation provided a copy of the proposed draft Agreement to the employees by email or Express Post, and posted it on the Corporation’s intranet on 2 August 2016, which was more than the seven days’ access period required by ss 180(2) and (4) of the Act;

(c) By the same means as in (b) above, the Corporation provided the employees with details of the date and place at which voting was to take place and the voting method (via internet or phone conducted through a third party service, Corpvote) (s 180(3));

(d) The voting period was from 6:00 am on 11 August 2016 to 12:00 pm on 15 August 2016;

(e) The steps taken by the Corporation to explain the terms of the Agreement (s 180(5)) included the following:

(i) 27 briefing sessions attended by 350 employees;

(ii) An outline of the changes was provided to all employees on 2 August 2016 via the methods in (b) above;

(iii) A ‘marked up’ version of the Agreement was available on the Corporation’s intranet;

(iv) A nominated contact person was identified if employees required further information;

(f) The Agreement does not contain any discriminatory or unlawful terms (ss 186(4), 194 and 195);

(g) The Agreement provides for the mandatory flexibility and consultation terms at cl 9 and 8.1 respectively, and a dispute resolution procedure at cl 8.3 provides for conciliation and arbitration by the Commission or an agreed independent mediator (s 186(6));

(h) The relevant reference instrument for the purpose of the Better Off Overall Test (‘BOOT’) is the Rail Industry Award 2010 (the ‘Award’) (s 193); and

(i) The Agreement has a nominal term of three years from the date of the Commission’s approval (s 186(5)).

[6] When the matter came on for hearing on 23 August 2016, three of the Unions (the ASU, APESMA and CEPU) had each filed a Form F18 statutory declaration in which they indicated they did not support the Commission’s approval of the Agreement, but nevertheless wished to be covered by the Agreement. All of the Forms F18 were in identical terms and all three deponents of the Forms indicated that they had either not read the Corporation’s Form F17 statutory declaration, or did not disclose whether they had or not. None of the Forms F18 disclosed the Unions as disagreeing with the answers in the Corporation’s Form F17. At this point, I would say that given that some of the Unions’ criticisms of the Agreement were overly technical and ambiguous, they should in future be more careful and circumspect with their own documentation filed with the Commission.

[7] That said, the Combined Unions’ reasons for not supporting the Agreement’s approval went broadly to the following matters:

(a) Scope of the Agreement: It was said that during negotiations, the Corporation had reduced the scope of the Agreement by removing certain managerial classifications and then reissued the Notices of Employee Representational Rights (NERR), by not including these employees. The limited scope of the Agreement was relevant to whether the Agreement was ‘genuinely agreed’ to by the employees (s 188 of the Act).

(b) BOOT issues: The Combined Unions claim the Corporation has not explained how each employee will be ‘better off overall’ under the Agreement or explained how the mechanics of annualised salaries meet the BOOT (s 193 of the Act).

(c) National Employment Standards (NES): Unpaid carer’s leave is not provided for in the Agreement, in breach of ss 102-103 of the Act.

(d) Consultation term: cl 10.3.1 of the Agreement does not meet the requirements of s 205(1A) of the Act.

[8] The Commission directed the parties to file and serve any evidence and submissions upon which they relied and requested them to indicate whether the matter could be determined ‘on the papers’ or required a formal hearing. The Commission was subsequently advised that while witness statements were relied on by both parties, the application could be determined on the uncontested evidence and the parties’ respective submissions. I intend to proceed to determine the matter on that basis.

EVIDENCE

Case for the Corporation

[9] The Corporation relied on the uncontested statement evidence of:

Ms Jennifer McAuliffe, Executive General Manager (People); and

Ms Cassandra Carcary, Employment Relations Advisor (People).

[10] Ms McAuliffe believed that many of the Combined Unions’ objections were already included in the 2012 Agreement, which all of the Unions supported at the time. Ms McAuliffe said the first NERR for this Agreement, issued on 2 March 2015, proposed to cover the same employees which were covered by the 2012 Agreement. However, the Corporation later proposed that coverage of the Agreement be limited to employees who had a Total Remuneration Package (TRP) less than $150,000 per annum. This proposal was advised to all employees by email on 21 April 2015. It was justified as a common practice in many public and private organisations whose agreements typically have an upper salary limit for employees to be covered. Ms McAuliffe advised that there were nine bargaining meetings between 1 April and 22 October 2015.

[11] On 7 October 2015, a revised proposal was put to increase the TRP cut off to $180,000 per annum. This was advised to all employees by email that day and reaffirmed by email on 30 November 2015. Ms McAuliffe said that on 7 December 2015, a bargaining meeting was held and the next day the Corporation advised employees that the proposed Agreement was to be put to an employee vote. On 14 December 2015, letters were sent to all employees whose TRP was higher than $180,000 per annum, advising them that they were not entitled to vote. The vote was conducted between 16 and 20 December 2015. The proposed Agreement was not approved by the employees at that time.

[12] Ms McAuliffe said that the Corporation issued a second NERR to employees on 23 December 2015. Ms Rose from APESMA objected to the second NERR on the basis that the Combined Unions’ claim was to reject the Corporation’s proposal to exclude from coverage employees at a TRP of $180,000 per annum or higher. Ms Rose relied on a decision of the Full Bench of Fair Work Australia (as the Commission then was styled) in MSS Security Pty Ltd v Liquor, Hospitality and Miscellaneous Union[2010] FWAFB 6519 (‘MSS Security’). After discussions with Ms Rose, the Corporation agreed to withdraw the second NERR and rely on the first NERR, and bargaining continued.

[13] Ms McAuliffe observed that in March 2016, the Corporation arranged for presentations to employees on a proposal to have a classification based coverage proposal which differentiated between the ‘stratums’ of leadership in the Corporation’s hierarchy. These positions, numbering 42 at the time, included Executive General Manager, General Managers and certain other Managers. A complete list of these positions was provided to the Combined Unions on 24 March 2016. Ms McAuliffe referred to the Corporation’s Leave Policy, which provides for unpaid carer’s leave of two days per occasion. This policy was reconfirmed to the RTBU on 14 April 2016.

[14] Ms McAuliffe described the steps taken by the Corporation to provide employees with the proposed Agreement and the briefing sessions held between 3-10 August 2016, involving 350 employees, at 27 separate briefing sessions. These sessions advised of the following components of the Corporation’s offer and expressly advised that the 42 management positions would not be covered by the Agreement:

‘ARTC's offer maintains existing conditions in the current Agreement, including leave entitlements, classification structures and ARTCs commitment to training and development, whilst enhancing some others.

The offer includes:

2% salary increase per annum: with the first increase payable from the first full pay period on or after the commencement of the new Agreement.

3 year agreement: to provide certainty for employees in relation to pay rises and other entitlements.

Increased On-call allowance: A 20% increase in the allowance from $25 to $30 for a rostered shift and from $50 to $60 for a non-rostered shift (fixed for the term of the enterprise agreement). This aligns the rate to that payable under the ARTC (NSW) Infrastructure Maintenance Enterprise Agreement 2014.

Increased Overnight expenses: A 9% increase from $165 to $180 per overnight stay (fixed for the term of the enterprise agreement) which aligns the rate to that payable under the ARTC (NSW) Infrastructure Maintenance Enterprise Agreement 2014.

Increased flexibility provisions: this expands the flexibility arrangements that employees are able to request to beyond the current arrangements around when work is performed, to include overtime rates, allowances, remuneration and leave and leave loading.

Amendment to Network Control annual leave clause: to incorporate treatment of leave during public holidays. This outlines how leave will be debited in these circumstances, i.e., “Annual leave will not be debited for public holidays on days that the employee would have otherwise worked, if not for being on annual leave”.

Amendment of the Consultation term: inclusion of the model Consultation term which outlines arrangements for consultation in relation to major workplace change and rostering, as well as the simplification of consultative committee structures for ease of use and operation.

Amendment to the Coverage clause: amendment to the Coverage clause to remove coverage to (sic) Executive General Manager, General Manager and certain Manager positions, as defined in the Agreement. This is different to the proposal of December 2015, which proposed removal of coverage for those on a TRP of $180,000 or above.’

[15] Ms Carcary’s evidence dealt with her involvement in preparing and analysing comparisons between the payments under the Award and the TRP under the Agreement. She believed that the calculations for each classification demonstrated that employees were ‘better off’ under the Agreement and these differences were substantial. With two exceptions (Infrastructure Maintenance employees and Network Controllers), employees covered by the Agreement generally work 38 hours a week between 6:00 am and 6:00 pm Monday to Friday, and do not undertake work attracting a large number of penalty rates. This is because the employees are predominantly office based.

[16] Ms Carcary said that Infrastructure Maintenance employees may be rostered outside the hours of 6:00 am to 6:00 pm, but not usually on weekends. They can also be ‘on call’. Additional penalty rates apply in these circumstances, in addition to their TRPs. These penalty rates are equal to or greater than those in the Award.

[17] In respect to Network Controllers, Ms Carcary explained that these employees work from Broadmeadow and Junee and work a 24/7, four week rotating roster. Ms Carcary undertook an exercise of reviewing the shifts which attract the most penalties in any given week, and comparing the outcomes between the Agreement and the Award. Ms Carcary attached the calculations for this roster against the Award classification Level 6. In all cases, the comparison disclosed that the TRP rates are all higher than the comparable rate under the Award.

For the Combined Unions

[18] The Combined Unions relied on the uncontested statement evidence of:

Ms Alison Rose, Senior Industrial Officer, APESMA; and

Mr Gregory Cameron, Project Officer, RTBU.

[19] Ms Rose was involved in the negotiations for the Agreement from the outset on 1 April 2015 and had attended 11 bargaining meetings in 2015 and 10 bargaining meetings in 2016. Ms Rose believed the Corporation’s proposal to remove coverage of the Agreement for employees with a TRP of $150,000 or higher in December 2015 had the effect of unilaterally removing employees from the Agreement’s terms and conditions.

[20] Ms Rose said that the negotiations with the Combined Unions were ‘long and difficult’. The only item that was agreed was the term of the Agreement. 39 other items were not agreed. One of the main issues was the Corporation’s reliance on the Federal Government’s WBP to limit the wage increases sought by the Combined Unions. Ms Rose suggested that while many of the other matters would have little cost impact, the Corporation’s representatives were uncompromising. Ms Rose said that on 23 May 2016, the Corporation provided a list of items that can and cannot be negotiated under the WBP. Most of the Combined Unions’ claims were said to be not negotiable in terms of the WBP.

[21] Ms Rose said that a key issue for her members was the limitation on the scope of the Agreement. The Corporation’s proposal had been rejected by the Combined Unions. While only a small number of APESMA members were affected, those she had spoken to did not want to be removed from the Agreement and had told her that they had had no say in the decision. She understood most of the affected employees were not union members.

[22] It was Ms Rose’s evidence that most of the meetings in 2016 were about clarification of the parties’ positions with the Corporation confirming it would not change its position. After the Corporation proposed to take the Agreement to a vote, members of the Combined Unions took protected industrial action on 3 August 2016. Ms Rose said that she and the other union officials were surprised by the vote approving the Agreement. This was because member feedback both prior to, and during the vote, indicated that most would vote against the Agreement. She had expected the Agreement would be voted down and negotiations would continue.

[23] Ms Rose said that after the first listing of this application, Ms Wright from the ASU was authorised to contact Mr Tony Woods, solicitor for the Corporation, to negotiate to resolve the matter by the offering of undertakings to address the Combined Unions’ concerns. Mr Woods declined to do so.

[24] In a reply statement, Ms Rose said that when she became aware that the Corporation had issued a second NERR she raised her concerns that it did not comply with the requirements of s 173 of the Act. This resulted in the second NERR being withdrawn and the Corporation relying on the first NERR which had been issued in March 2015. However, it was Ms Rose’s belief that employees were not informed that the second NERR had been withdrawn. She had asked one member, who told her he had not seen any advice about it.

[25] Ms Rose said she had not seen a Network Controller’s roster during bargaining; only now in the annexure to Ms Carcary’s statement. Throughout 2015 and 2016, this had been a contentious issue. Ms Rose added that the Corporation’s proposal about the scope of the Agreement changed on three occasions.

[26] Mr Cameron has worked as a freight train operator for approximately 33 years, prior to his appointment to the RTBU in August 2015. Mr Cameron attended most of the bargaining meetings with the Corporation and had familiarised himself with the Agreement’s terms and conditions, the Combined Unions’ log of claims and the issues of concern to members.

[27] Mr Cameron attended depot meetings from February 2016 at Narrabri, Gunnedah, Carrington and Broadmeadow Network Control and Administration Centre. Mr Cameron observed that these meetings were hostile, with employees angry and scathing over the small pay rise proposed, and the refusal of the Corporation to address issues such as privatisation, rostering call outs, rostered days off and fatigue issues.

[28] Mr Cameron criticised the format and outcomes of the bargaining meetings from May 2016. The Combined Unions had particularly rejected the scope limitation and had expected to negotiate a compromise. Mr Cameron agreed with Ms Rose’s evidence about the lack of progress with any of the Combined Unions’ claims and the taking of protected industrial action by employees. Mr Cameron identified the particular concerns of Network Controllers as to how their TRP was calculated and the fact that Consultative Committees set out in the 2012 Agreement had not been implemented. Field staff members were concerned about differing call out payments and had issues about fatigue between shifts. These members were frustrated that their concerns were being ignored by the Corporation.

[29] As to the failure to establish Consultative Committees, Mr Cameron said that some of the items in the Combined Unions’ log of claims could be dealt with through the Consultative Committees, but still had not been resolved. Mr Cameron believed that the general consultation clause (cl 8.1) did not apply to Network Controllers. Rather, Network Controllers had a lower level of consultation in cl 10.3.1, particularly regarding longstanding rostering issues. Mr Cameron added that the Corporation has been unable to properly explain the TRP for Network Controllers and had relied on an incorrect and historic document which did not reflect the rosters currently worked by them. Mr Cameron believed that there is no way of knowing if these employees are ‘better off overall’ when compared to the Award.

[30] Mr Cameron said he was ‘very surprised’ by the vote of employees, given the mood and attitude of the members had not changed since the first ‘no’ vote. Every member he spoke to indicated they intended to vote against the approval of the Agreement. Mr Cameron believed that non-union members who are largely managerial, professional and administrative employees outvoted the Unions’ members. He claimed the majority of members were extremely disheartened with the result, in that many issues of long time concern have not been resolved.

[31] In a reply statement, Mr Cameron said he had seen no evidence of Ms McAuliffe’s claim that the December 2015 NERR had been withdrawn.

[32] Mr Cameron rejected Ms Carcary’s calculations that the TRP for Network Controllers provided a substantial difference to the rates in the Award. Because the Agreement does not identify the span of hours or when day, afternoon or night shifts are worked, there was no way to make a true comparison of the roster. One week’s snapshot could not provide a basis for an accurate comparison. Mr Cameron provided a roster which demonstrated significant differences in weekend and shift work over a 68 line roster. Additionally, Ms Carcary did not include a component to recognise public holiday penalties or other Award allowances, such as meals, travel and first aid.

[33] Mr Cameron did accept that the Corporation had consulted with affected employees over their removal from the Agreement. However, the presentations to employees did not mention the removal of the second NERR. The presentations’ reference to 50 senior positions being removed, conflicted with what Ms McAuliffe had told the Combined Unions.

SUBMISSIONS

For the Combined Unions

[34] Ms Rose submitted that the Agreement does not comply with the requirements of the Act and can only be approved by the Commission if the Corporation provides additional information and then only with undertakings.

[35] Ms Rose submitted that the Agreement can only have been ‘genuinely agreed’ (ss 186(1) and (2) of the Act) where the employer has complied with ss 173 and 174 of the Act regarding the content and form of the NERR. Where the last NERR was not provided to each employee to be covered by the Agreement and the content does not state the employees who are proposed to be covered, then the NERR is not valid and the Agreement cannot be approved. Further, the Agreement must contain a consultation term which meets the requirements of s 205 of the Act. Where the term does not meet the requirement, the model consultation term applies to all employees.

[36] Ms Rose referred to her own statements and those of Mr Cameron and noted that the Combined Unions had anticipated the Agreement would be rejected by the employees, as it had been in December 2015. This was because the key issues had not been resolved and the Agreement contained only one agreed term – the duration of three years.

[37] Ms Rose identified the issues which were relevant to the Commission’s consideration of whether to approve the Agreement. In respect to scope, Ms Rose said that by issuing a second NERR, the Corporation purported to unilaterally exclude from coverage a group of employees 10 months after bargaining commenced. This was relevant to whether the group of employees covered by the Agreement was ‘fairly chosen’. Moreover, the Corporation’s Form F17 had not explained why this group had been excluded.

[38] Further, in respect to the second NERR, the Corporation had failed to issue the Notice to all employees covered by the proposed agreement. By limiting the scope, the Corporation had not complied with the content of the notice as required by s 174(1A) of the Act and reg 2.05 and Schedule 2.1 of the Fair Work Regulations 2009 (Cth) (the ‘Regulations’).

[39] In respect to the BOOT, Ms Rose submitted that the Corporation had failed to explain the basis upon which the Commission could be satisfied that each Award-covered employee would be ‘better off overall’, if the Agreement applied. The Corporation had not provided information explaining the components of the TRP for the purposes of satisfying the BOOT.

[40] Ms Rose contended that because the Agreement did not provide for two days of unpaid carer’s leave per approved occasion, this was contrary to the NES.

[41] Ms Rose referred to the vexed and difficult issue of consultation particularly affecting Network Controllers. She referred to s 205(1A) and the requirement to consult about changes to regular rosters. She said the Agreement sought to exclude Network Controllers from its general consultation clause (cl 8.1) by not obliging the Corporation:

‘ (a) to provide information to the employees about the change; and
(b) to invite the employees to give their views about the impact of the change (including any impact in relation to their family or caring responsibilities); and
(c) to consider any views given by the employees about the impact of the change.’

As the effect on Network Controllers is inconsistent with the model consultation term, the model consultation term must be deemed to apply to Network Controllers.

[42] Ms Rose set out the Combined Unions’ conclusions as follows:

‘The Combined Unions recognize that a majority of employees have voted to approve the Agreement. As a result, we respectfully submit that the Agreement should be approved, subject to the following:

a. In order for the Commission to be satisfied the Agreement meets the requirements of sections 186 and 187, the Commission must require ARTC to provide sufficient information on:

i. Whether the group of employees covered by the Agreement has been fairly chosen; and

ii. The components used to calculate employees’ TRPs, including the Network Controllers.

b. The Commission must require undertakings from ARTC, pursuant to section 190 of the Act, confirming that unpaid carer’s leave of two days per permissible occasion will be available to employees in addition to paid carer’s leave.

c. The Commission must deem that the model consultation term applies to the Network Controllers covered by the Agreement.’

For the applicant

[43] Mr T Woods, Solicitor, set out the background to the application and the matters raised by the Combined Unions as objections to the Commission’s approval of the Agreement. Mr Woods noted that the BOOT issue, the personal / carer’s leave and consultation provisions were in identical terms in the 2012 Agreement. No objection had been raised in its approval process, or since, of any compliance issue. Mr Woods opined that this raised concerns at the real reasons for the Combined Unions’ objections, in that they had anticipated the Agreement would not be voted up by the employees. Mr Woods submitted that the Combined Unions conflated three separate matters: the NERR, scope and ‘genuinely agreed’ issues. Mr Woods noted that it now appeared the ‘genuinely agreed’ objection was not seriously pressed.

[44] Mr Woods said that the submission that the second NERR contravened s 173(1) of the Act was incorrect in two respects. Firstly, it had been withdrawn. Secondly, the issuance of a NERR does not have the effect of excluding employees from the coverage of a proposed agreement, nor is it relevant to whether the group of employees was ‘fairly chosen’. Mr Woods put that the purpose of a NERR is not to create rights, but to inform employees of their rights; see: Ostwald Bros Pty Ltd v Construction, Forestry, Mining and Energy Union [2012] FWAFB 1512. In any event, there is no question the first NERR was issued in compliance with the Act, and it identified the full class of employees that could be covered; see: MSS Security. Mr Woods put that:

there was no trigger for the issuance of a second NERR;

bargaining was continuing;

bargaining had not concluded and recommenced; see: Uniline Australia Limited [2016] FWCFB 4969; and

there was no broadening of the proposed scope of the Agreement.

[45] Mr Woods submitted that the purpose of the NERR is to give employees notice of their right to appoint a bargaining representative. When a wider range of employees were provided with the first NERR than those who ultimately were covered by the Agreement, it must mean the issuance of the second NERR is of no consequence and is irrelevant to the question of compliance with s 173 of the Act. There is no authority which suggests a new NERR should be issued each time the proposed scope of the Agreement is narrowed. Indeed, the scope of the Agreement can be, and was, the subject of bargaining. Scope can be settled by an agreement, a scope order or when the Agreement is made; see: Maritime Union of Australia v Maersk Crewing Australia Pty Ltd [2016] FWCFB 1954. There is no requirement for consensus between employer and employee bargaining representatives as to scope; see: Cimeco Pty Ltd v Construction, Forestry, Mining and Energy Union[2012] FWAFB 2206 (‘Cimeco’).

[46] Mr Woods set out the history of negotiations as it dealt with the issue of the scope of the Agreement. It began on 21 April 2015 when the TRP cut off of $150,000 per annum was put, then on 27 October 2015 when the cut off was revised to $180,000 per annum, and then on 8 March 2016 when it was based on certain management classifications; see paragraph [13] above.

[47] Mr Woods noted that the Combined Unions’ are ‘no strangers’ to scope order applications and could have sought scope orders at any time during the bargaining process, but did not. It was not a unilateral decision of the Corporation, but a matter for good faith bargaining. By failing to make an application for a scope order and relying on (and expecting) the Agreement being voted down, the Combined Unions left the scope order issues in the hands of the employees who voted. The Combined Unions cannot now seek to reagitate the scope of the Agreement. There is no proper basis to do so.

[48] To the extent it is related to the ‘fairly chosen’ point, the matters to be considered were set out in Cimeco. The managerial-level employees are clearly organisationally distinct for the purposes of ss 186(3) and (3A) of the Act. The Commission must have regard to the intentions of the employer and the employees. It was clear from Ms McAuliffe’s evidence that the Corporation clearly communicated its reasons for the exclusion of management staff from the coverage of the Agreement. In any event, those excluded employees who were covered by the 2012 Agreement remain covered by the 2012 Agreement by virtue of s 58 of the Act.

[49] Mr Woods submitted that the Combined Unions’ claim that the Agreement was not ‘genuinely agreed’ to by the employees was not supported by any evidence as to how it was said this claim has been made out. The only complaint appears to be the absence of an organisational structure, which is irrelevant to s 188 of the Act. Ms McAuliffe’s evidence makes clear that s 188 has been satisfied. It was simply wrong to suggest the details of the positions to be excluded from the Agreement were not provided to employees. This information had been provided on numerous occasions.

[50] As to the BOOT, Mr Woods said that in its Form F17, the Corporation clearly set out the more beneficial terms and the less beneficial terms. As to the Network Controllers and the Combined Unions’ assertion that there was no information provided to explain how their TRPs compare to the Award, Mr Woods said this was factually incorrect. The explanation was set out in the Corporation’s Form F17 and is well known. TRP includes annual leave loading, superannuation contribution guarantee contributions, and shift, weekend and public holiday penalties.

[51] Mr Woods submitted that the complaint about the lack of information about the specific components of the TRP is a misapplication of the BOOT. Section 193 of the Act requires the Commission to be satisfied that each employee would be ‘better off overall’ if the Agreement applied, rather than the Award. This direct comparison was made in the Corporation’s Form F17. The Combined Unions were invited to undertake their own comparison, but chose not to do so and produced no evidence to substantiate an alleged breach of the BOOT. As the Combined Unions’ focus was on Network Controllers, Ms Carcary’s calculations:

were made by reference to the weeks in the roster which incurred the highest penalties in any given four week period;

demonstrate that employees would earn less under the Award across the whole year if they only ever worked that week in the roster, which they do not;

demonstrate that for all other categories of employees, the difference between the Award rate and the TRP under the Agreement is substantial; and

were at all times available to the Combined Unions.

It was Mr Woods’ submission that there is no doubt that employees are ‘better off overall’ under the Agreement.

[52] In applying the approach in Australasian Meat Industry Employees Union v Golden Cockerel Pty Limited[2014] FWCFB 7447 (‘Golden Cockerel’), Mr Woods said the assertion that the Agreement excluded the provision for unpaid carer’s leave as set out in the NES was erroneous. Mr Woods set out the provisions of ss 102 and 103 of the Act and put that the Agreement does not exclude unpaid leave, but is simply silent on the subject. In these circumstances, the NES by law, will apply. Even so, the Corporation’s Leave Policy confirms that employees are entitled to unpaid carer’s leave.

[53] Mr Woods submitted that the Combined Unions’ view that the consultation clause for Network Controllers was not compliant with s 205(1A) of the Act was incorrect. Notwithstanding the interaction of cl 8.1 and 10.1.1 of the Agreement, cl 10.1.1 states that ‘if you are a Network Control employee who is covered by this Agreement, the provisions in this section also apply to you’. This means the provision of cl 10 work in conjunction with, rather than exclusive of, the other provisions of the Agreement. The provisions do not prescribe how consultation is to occur – merely that there will be consultation about rosters. This is to be contrasted with the exclusion of general overtime provisions for Network Control employees. Mr Woods added:

‘A clause which confirms a right to be consulted (clause 10.3.1) is clearly not inconsistent with a clause which prescribes the process by which the consultation is to take place (clause 8.1). Rather, the correct view is that the clauses operate together to achieve the same end.

This interpretation is wholly consistent with the principles of interpretation.’

Mr Woods said that interpreting cl 10.3.1 to generate a conflict where none exists, distorts the simple meaning of the text.

[54] In summary, Mr Woods put:

‘ARTC submits that the Enterprise Agreement should be approved.

In ARTC's submission, the FW Commission ought to be satisfied that all requirements for approval of the Enterprise Agreement have been met.

Section 186(1) of the FW Act states that in these circumstances, the FW Commission must approve an enterprise agreement.

In ARTC's submission, undertakings are not necessary as there are no grounds for a concern regarding sections 186 and 187 of the FW Act.’

[55] In reply submissions, Ms Rose for the Combined Unions advised that they did not intend to press the objection as to whether the employees had ‘genuinely agreed’ to the Agreement.

[56] Ms Rose said it was incorrect to suggest the Combined Unions had not raised compliance issues during the negotiations, as her letter to the Corporation of January 2016 disclosed. Ms Rose added that in any event, Union officials involved in the negotiations for the 2016 Agreement had not been involved in the negotiations for the 2012 Agreement.

[57] Ms Rose stressed that while the Corporation had agreed to withdraw the second NERR, it was not actually withdrawn, because the employees were not informed. It had a direct effect on employees whose TRP was more than $180,000 per annum.

[58] Ms Rose noted that the Corporation had withdrawn its scope proposal twice and it was reasonable to expect it would be subject to further negotiation. In any event, the Corporation had not provided sufficient information as to which ‘managerial’ staff were excluded from the coverage of the Agreement.

[59] In respect to the BOOT and Network Controllers’ rosters, Ms Rose contended that Ms Carcary had not provided detailed calculations across a 64 week roster compared to a 16 week / 12 month roster under the Award. She had only looked at the Award rates in comparison to one week taken from the current Broadmeadow roster. Ms Rose denied that this information had been available to the Combined Unions during negotiations. The roster was only made available through Ms Carcary’s evidence in this case.

[60] Ms Rose submitted that there was no ambiguity in respect to the NES or the model consultation term; see: Golden Cockerel. Clause 5.2.1 dealing with personal / carer’s leave makes no reference at all to unpaid leave. There is no ambiguity or uncertainty, so reliance on extrinsic material – the Corporation’s policy – is not warranted. As to the consultation term, Ms Rose restated that there is an inconsistency between clauses 10.3.1, dealing with Network Controllers, and 8.1.1(b), such as to result in inferior consultation provisions applying to them.

CONSIDERATION

[61] To the objective interested onlooker, it might appear that the driving motivation behind the Combined Unions’ objections to the approval of the Agreement, is not some altruistic concern for the effects of the Agreement on employees, but rather a manifestation of the Combined Unions’ disappointment with the unexpected unsuccessful result of its vigorous ‘no’ campaign against the Agreement’s approval – albeit only narrowly. This seems obvious from the evidence of both Ms Rose and Mr Cameron. Ms Rose said that she and the other Union officials had been surprised by the outcome, as their feedback prior to, and during the vote was that most of the employees would vote against the Agreement. Mr Cameron went further and also expressed his surprise in that all of the employees he had spoken to were unhappy with the Agreement and told him they intended to vote against it.

[62] With this in mind, perhaps the thinking and strategy was that if the Agreement’s approval is refused on some technicality or that the limited scope of the Agreement meant it did not meet the ‘fairly chosen’ test, this would trigger a new ballot and present a further opportunity to put pressure on the Corporation to improve its offer.

[63] It must be stressed that these musings are not based on any evidentiary foundation. Accordingly, it would be inappropriate and unfair to make findings on the likely assumptions of the objective onlooker. However, I do intend to make the following observations. An agreement’s approval process under the Act should not be used by bargaining representatives as an ex post facto device to obtain terms and conditions which were not able to be achieved during bargaining after the employees have agreed to approve the Agreement. Nor should the approval process be used to belatedly limit or expand the scope of an Agreement in circumstances where sophisticated and experienced bargaining representatives failed to apply, for over 15 months, for scope orders under s 238 of the Act. To me, this is an improper and impermissible abuse of the approval process.

[64] That said, I now propose to consider each of the Combined Unions’ objections under their respective headings, save for the objection concerning whether the Agreement was ‘genuinely agreed’ to by the employees to be covered by it, as this objection was ultimately not pressed in the Combined Unions’ final submissions.

The issuance of two NERRs

[65] Section 173 of the Act deals with the Notice of Employee Representational Rights to be provided to employees to be covered by a proposed agreement. The section reads as follows:

‘173 Notice of employee representational rights

Employer to notify each employee of representational rights

(1) An employer that will be covered by a proposed enterprise agreement that is not a greenfields agreement must 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.

Note: For the content of the notice, see section 174.

Notification time

(2) The notification time for a proposed enterprise agreement is the time when:

(a) the employer agrees to bargain, or initiates bargaining, for the agreement; or

(b) a majority support determination in relation to the agreement comes into operation; or

(d) a low paid authorisation in relation to the agreement that specifies the employer comes into operation.

Note: The employer cannot request employees to approve the agreement under section 181 until 21 days after the last notice is given (see subsection 181(2)).

When notice must be given

(3) The employer must give the notice as soon as practicable, and not later than 14 days, after the notification time for the agreement.

Notice need not be given in certain circumstances

(4) An employer is not required to give a notice to an employee under subsection (1) in relation to a proposed enterprise agreement if the employer has already given the employee a notice under that subsection within a reasonable period before the notification time for the agreement.

How notices are given

(5) The regulations may prescribe how notices under subsection (1) may be given.’

[66] As will be seen by the note reference to sub-s (2) above, there must be at least 21 days between the issuance of the last NERR and the date on which the employer requests the employees to approve the agreement. A failure to provide the minimum period of 21 days will result in the Agreement being unable to be approved by the Commission. There is no doubt that 21 days had elapsed between the issuance of the first NERR (2 March 2015) and the second (23 December 2015) (assuming it had not been withdrawn) and the date the employees began to vote a second time on the approval of the Agreement (11 August 2016).

[67] Section 173(3) requires the NERR to be given to the employees no later than 14 days after the notification time for the Agreement. I do not apprehend there to be any issue that sub-s (3) has been complied with.

[68] Section 174 deals with the mandatory content and form of the NERR, which is to be found at Sch 2.1 of the Regulations. The opening stanza to the NERR requires reference to the name of the employer, the name of the proposed agreement and the proposed coverage of the agreement. There are no express or implied words in the statute or the Regulations which require the coverage of the agreement set out in the NERR to be the same as is ultimately covered by the agreement.

[69] This reflects the practical proposition that there is no limitation on the number of NERRs which may be issued to employees during the course of the negotiations for an agreement, and it is not uncommon for more than one NERR to be issued by the employer. The only relevant requirement is that the last NERR is given to the employees to be covered by the agreement, at least 21 days before the employees vote on the agreement. That this is so, reflects the statutory and policy intention of the NERR to inform the relevant employees of their right to appoint a bargaining representative in the negotiations (including to nominate themselves). The NERR does not of itself create rights.

[70] When viewed in this way, it becomes irrelevant whether there was a second, third, fourth or fifth NERR, or whether some of them were withdrawn. The crucial statutory test is when the last NERR was issued, so that employees who may not end up even being covered by the Agreement, are able to appoint a bargaining representative in bargaining for the new agreement, including in respect to coverage. There can be no doubt that the first NERR was issued to a broader range of classifications and employees than were ultimately covered by the Agreement. This does not invalidate the NERR. All of the broader cohort were either represented by the Combined Unions or had an opportunity to appoint a bargaining representative to represent them in bargaining. It is not the point that there was a second NERR, irrespective of whether it was withdrawn or not. I do not understand there to be any contest that all of the employees who voted to approve the Agreement on 15 August 2016 had received the NERR on 2 March 2015. Accordingly, the statutory requirements of ss 173 and 174 have been complied with.

[71] It is patently obvious why the Combined Unions have sought to impugn the issuance of the second NERR and their reliance on the first NERR. This was because the second NERR had been provided to management employees whose TRP was up to $180,000 per annum and the Combined Unions were strongly opposed to this limitation. However, such criticism does not advance the Combined Unions’ case very far. The fact that a NERR is first issued to a wider group of employees than those who ultimately vote in support of the agreement is entirely unremarkable. This is the effect of MSS Security and the scenario painted at paragraph [19] of that decision. The scope of the Agreement is that which is set out in the terms of the Agreement, as has been agreed in bargaining or determined by a scope order under s 238 of the Act. Of course, this is subject to any expansion of the scope of the Agreement requiring a further NERR to be issued to the wider cohort of employees than previously envisaged. Thus, the position would be entirely different if the first NERR had been provided to a limited number of employees, and there was a wider coverage of employees who voted for the Agreement, but who had not been provided with a NERR prior to the 21 days before the vote or at all.

[72] Accordingly, I can find no invalidity with the issuance of the NERR on 2 March 2015. It was provided to all those employees who ultimately voted to approve the Agreement and were covered by the terms of the Agreement approved by them. The issuance and withdrawal of the second NERR is irrelevant. Although also not relevant, I note that the Combined Unions brought no direct evidence from any employee that they had either not been advised, or were unaware of the withdrawal of the second NERR.

Scope of the Agreement

[73] A major objection to the Commission's approval of the Agreement was the Combined Unions’ disagreement with its scope. This is also linked to the earlier consideration of the issuance of the NERR. Section 186 of the Act sets out a number of general requirements of which the Commission must be satisfied, before approving an enterprise agreement. Subsection (3) requires the Commission to be satisfied that the group of employees covered by the agreement was ‘fairly chosen’. Sub-s (3A) identifies the factors to be taken into account in determining that requirement. The subsection reads:

‘(3A) If the agreement does not cover all of the employees of the employer or employers covered by the agreement, the FWC must, in deciding whether the group of employees covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.’

[74] As earlier mentioned, the scope of the Agreement, as the authorities make plain, is that which is set out in the terms of the Agreement as

agreed to in bargaining; or

determined by a scope order under s 238 of the Act.

[75] Section 238 of the Act reads as follows:

‘238 Scope orders

Bargaining representatives may apply for scope orders

(1) A bargaining representative for a proposed single-enterprise agreement (other than a greenfields 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

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.’

[76] Section 238 of the Act was considered in MSS Security. There, the Full Bench said at paragraphs [18] and [19]:

‘[18] As the Full Bench in Stuartholme noted, “[t]he terms of [s.237] unambiguously suggest that bargaining may have commenced under the Fair Work Act even though the parties to the bargaining process are in disagreement about the scope of the proposed agreement.” Where there is a continuing disagreement between the bargaining parties as to the scope of the proposed enterprise agreement, the remedy for the party who wants a narrower scope is to seek a scope order pursuant to s.238. In the absence of such an order, bargaining will proceed on the basis of the broader scope, save that the parties are entitled to continue bargaining over the scope itself until such time as the scope of the proposed agreement is settled through bargaining or by the making of a scope order.

[19] It follows from the scheme of the FW Act that the obligation under s.173 is to issue a notice of representational rights to the broader class of employees even though the employer does not wish to have an agreement that extends that far. If it were otherwise, it would mean that an employer could always prevent an agreement having a broader scope than it desired by simply refusing or failing to issue notices of representational rights outside its desired scope. Such an outcome is inconsistent with the scheme of the FW Act.’ [endnotes omitted]

[77] Given that the Combined Unions:

(a) as early as 21 April 2015 (some 16 months before the Agreement was voted on by the employees) were well aware that the Corporation intended to limit the scope of the Agreement;
(b) had strenuously opposed the Corporation’s three proposals to limit the scope of the Agreement by:

(i) excluding employees with a TRP of $150,000 per annum (21 April 2015);

(ii) raising the limit to $180,000 per annum TRPs (27 October 2015); and

(iii) then excluding 42 senior management positions (8 March 2016), some five months before the Agreement was voted on;

(c) were not unfamiliar with applications to the Commission for scope orders during bargaining;
(d) claim that the negotiations were not ‘proceeding efficiently or fairly’ (with only one agreed item);

it is extraordinary and utterly inexplicable why one or more of the Combined Unions, as bargaining representatives for the employees, did not apply for a scope order at any time during the 16 months of negotiations. Moreover, it was not without a touch of irony that the Combined Unions had during the early stages of bargaining, proposed to limit the scope of the Agreement by excluding Network Control and Infrastructure Maintenance employees, Work Leaders, Team Leaders and Signal Electricians, because these groups wanted separate agreements and did not want to be covered by this Agreement.

[78] In my view, the motivation of the Combined Unions in this respect by now opposing the scope of the Agreement, must be seriously questioned. Notwithstanding these observations, the Commission must still be satisfied that the group of employees to be covered by the Agreement was ‘fairly chosen’. Guidance in this respect is to be found in the decision of Fair Work Australia in Cimeco, in which the Full Bench said at paragraphs [15]-[22]:

‘ [15] Section 186(3A) is also relevant. In circumstances where an agreement does not cover all of the employees of the employer(s) covered by the agreement s.186(3A) imposes an obligation on FWA, in deciding whether the employees were ‘fairly chosen’, to ‘take into account’ whether the group of employees covered by the agreement is geographically, operationally or organisationally distinct. To take a matter into account means that the matter is a ‘relevant consideration’ in the Peko-Wallsend sense of matters which the decision maker is bound to take into account. As Wilcox J said in Nestle Australia Ltd v Federal Commissioner of Taxation:

“To take a matter into account means to evaluate it and give it due weight, having regard to all other relevant factors. A matter is not taken into account by being noticed and erroneously discarded as irrelevant.”

[16] Curiously the Act does not specify how the matters in s.186(3A) are to be taken into account. The context and legislative history are relevant. In terms of the context each of the characteristics identified in s.186(3A) has a degree of objectivity about them. The selection of the group of employees to be covered by an agreement on some objective basis (as opposed to an arbitrary or subjective basis) is likely to favour a conclusion that the group was fairly chosen.

[17] The legislative history of these provisions is also instructive. For example, the Workplace Relations Act 1996 (the 1996 Act) provided that collective agreements could be made covering a ‘single business’ or ‘part of a single business’. Section 322(3) of that act provided that ‘part of a single business’ included:

“(a) a geographically distinct part of the single business; or
(b) a distinct operational or organisational unit within the single business.”

[18] Hence, under the 1996 Act an agreement could be made in relation to a part of a business that was geographically, operationally or organisationally distinct, without any separate consideration of whether the group of employees covered by the agreement were fairly chosen.

[19] Given the context and the legislative history it can reasonably be assumed that if the group of employees covered by the agreement are geographically, operationally or organisationally distinct then that would be a factor telling in favour of a finding that the group of employees was fairly chosen. Conversely, if the group of employees covered by the agreement was not geographically, operationally or organisationally distinct then that would be a factor telling against a finding that the group was fairly chosen.

[20] It is important to appreciate that whether or not the group of employees covered by the agreement is geographically, operationally or organisationally distinct is not decisive, rather it is a matter to be given due weight, having regard to all other relevant considerations.

[21] It is not appropriate to seek to exhaustively identify what might be the other relevant considerations. They will vary from case to case and will need to be demonstrated to the satisfaction of the tribunal. The word ‘fairly’ suggests that the selection of the group was not arbitrary or discriminatory. For example, selection based upon employee characteristics such as date of employment, age or gender would be unlikely to be fair. Similarly, selection based on criteria which would have the effect of undermining collective bargaining or other legislative objectives would also be unlikely to be fair. It is also appropriate to have regard to the interests of the employer, such as enhancing productivity, and the interests of employees in determining whether the group of employees was fairly chosen. In this regard, it is not only the interests of the employees covered by the agreement that are relevant; the interests of those employees who are excluded from the coverage of the agreement are also relevant. We note that there is a suggestion to the contrary in the oral submissions put on behalf of Cimeco when counsel submitted that:

“It was an erroneous approach to introduce the identification of the persons who were relevantly employed at the time of the making of the agreement for the purposes of testing the group chosen.”

[22] To the extent that it is suggested that the interests of the excluded employees are irrelevant we reject that submission. In evaluating whether the group to be covered by the agreement has been fairly chosen it is entirely appropriate to have regard to the consequences of that choice, that is, which employees have been excluded from the agreement.’ [endnotes omitted]

See also: United Firefighters Union of Australia v Metropolitan Fire & Emergency Services Board (2010) 193 IR 293 (‘UFU’).

[79] I intend to apply the approach adopted by these Full Benches to my consideration of this topic. The question of whether the group of employees is geographically, operationally or organisationally distinct only requires one of these distinctions to be established. It requires consideration of both the group of employees proposed to be covered and in this case, those who are proposed to be excluded; namely, 42 senior manager classifications. While it is obvious that the 42 senior managers are not geographically distinct and it may be arguable that they are not operationally distinct, in my opinion, they are certainly organisationally distinct. I come to this view because it is trite to observe that it is very common for senior management employees not to be covered by enterprise agreements. A review of any number of approved enterprise agreements will serve to make this clear. These employees are often covered by individual contracts of employment which include terms and conditions which are not usually applicable to employees who are not classified as managers or senior staff, such as annual salaries, bonuses, no overtime pay and no restrictions on hours of work, no penalty rates and no allowances.

[80] This distinction was neatly summarised in UFU when the Full Bench of Fair Work Australia said at paragraph [70]:

‘[70] On the material and submissions in this case a great deal of weight should be attached to the fact that the Commanders and ACFOs occupy senior management positions in the MFESB and for that reason their interests are distinct from, and in some respects in conflict with, the interests of the ranks below them. Despite the views expressed by and on behalf of all ranks up to ACFO, we have concluded that a scope order specifying a group comprised of employees in the ranks from Recruit to Senior Station Officer would promote the fair and efficient conduct of bargaining and that it would be more likely to be effective in that regard than a scope order specifying a group comprised of employees in the ranks from Recruit to ACFO. A group comprised of the ranks from Recruit to Senior Station Officer would also be fairly chosen. Such a group has distinct interests related to the primarily operational nature of their roles. Senior management employees, such as Commanders and ACFOs, have many interests in common with the other ranks and enjoy many of the same conditions, but the principal differentiating characteristic of their roles, rendering them a distinct group in the sense provided for in s.238(4A), is its senior management character. Given the troubled history surrounding the negotiation of conditions for Commanders and ACFOs and the negative effect that it is having on attempts to negotiate a new agreement, it is desirable that Fair Work Australia exercise its powers under s.238 and make an appropriate order. Such an order would also support attempts by the MFESB, referred to in the evidence, to improve organisational efficiency and productivity by promoting better understanding of managerial roles.’ [my emphasis]

[81] As the decision in Cimeco alsomakes plain; see: paragraphs [21]-[22] above, the views of the employees proposed to be excluded from the coverage of the Agreement is a relevant matter for the Commission to take into account. Regrettably, the Combined Unions brought no evidence of any employee of the excluded group of managers, who wished to be covered by the Agreement. Not a petition or an email or letter from anyone. The highest the evidence got was the hearsay evidence of Ms Rose that a small number of her members were affected by the exclusion and in telephone conversations ‘some of them’ (no names) had expressed opposition to being excluded from the Agreement. This is not sufficient and certainly not persuasive as to the Commission giving due weight to the views of the affected employees. This consideration must be a neutral one in this case.

[82] As to the interests of the Corporation, namely, the enhancement of productivity, while little evidence was brought about the enhancement of productivity by the exclusion of senior managers, it is safe to assume that the fact the senior managers are so excluded will not limit the capacity of both the managers and the Corporation to negotiate arrangements which are best suited to management personnel.

[83] Finally, on this subject, I wish to make the following observation. Mr Cameron’s evidence was that the employees he spoke to had a negative attitude to the Corporation’s offers and had told him they intended to vote against approving the Agreement. He then said it was his belief that Union members had been ‘outvoted’ by non-Union members who were largely managerial, professional and administrative employees. If this belief is correct, it is curious and difficult to understand the logic behind the Combined Unions’ objection to the Agreement being approved, because 42 managers were excluded from the Agreement’s coverage and did not vote. It seems entirely likely, that had the 42 senior managers voted to approve the Agreement, as Mr Cameron believes other managers had, then the ‘yes’ vote would have been much greater than the 18 person majority obtained in the vote on 15 August 2016.

[84] For the reasons earlier expressed, I am satisfied the group of employees to be covered by the Agreement was ‘fairly chosen’ for the purposes of ss 186(3) and (3A) of the Act.

Unpaid carer’s leave

[85] Sections 102 and 103 of the Act deal with unpaid carer’s leave under the Act’s NES. The provisions read as follows:

‘102 Entitlement to unpaid carer's leave

An employee is entitled to 2 days of unpaid carer's leave for each occasion (a permissible occasion) when a member of the employee's immediate family, or a member of the employee's household, requires care or support because of:

(a) a personal illness, or personal injury, affecting the member; or

(b) an unexpected emergency affecting the member.

103 Taking unpaid carer's leave

(1) An employee may take unpaid carer's leave for a particular permissible occasion if the leave is taken to provide care or support as referred to in section 102.

(2) An employee may take unpaid carer's leave for a particular permissible occasion as:

(a) a single continuous period of up to 2 days; or

(b) any separate periods to which the employee and his or her employer agree.

(3) An employee cannot take unpaid carer's leave during a particular period if the employee could instead take paid personal/carer's leave.

Note: The notice and evidence requirements of section 107 must be complied with.’

[86] Sections 51 and 55 of the Act deal with the interaction of the NES and the terms of a modern award or enterprise agreement. Those provisions are as follows:

’51 The significance of an enterprise agreement applying to a person

(1) An enterprise agreement does not impose obligations on a person, and a person does not contravene a term of an enterprise agreement, unless the agreement applies to the person.
(2) An enterprise agreement does not give a person an entitlement unless the agreement applies to the person.

[…]

55 Interaction between the National Employment Standards and a modern award or enterprise agreement

National Employment Standards must not be excluded

(1) A modern award or enterprise agreement must not exclude the National Employment Standards or any provision of the National Employment Standards.

Terms expressly permitted by Part 2-2 or regulations may be included

(2) A modern award or enterprise agreement may include any terms that the award or agreement is expressly permitted to include:

(a) by a provision of Part 2-2 (which deals with the National Employment Standards); or

(b) by regulations made for the purposes of section 127.

Note: In determining what is permitted to be included in a modern award or enterprise agreement by a provision referred to in paragraph (a), any regulations made for the purpose of section 127 that expressly prohibit certain terms must be taken into account.

(3) The National Employment Standards have effect subject to terms included in a modern award or enterprise agreement as referred to in subsection (2).

Note: See also the note to section 63 (which deals with the effect of averaging arrangements).

Ancillary and supplementary terms may be included

(4) A modern award or enterprise agreement may also include the following kinds of terms:

(a) terms that are ancillary or incidental to the operation of an entitlement of an employee under the National Employment Standards;

(b) terms that supplement the National Employment Standards;

but only to the extent that the effect of those terms is not detrimental to an employee in any respect, when compared to the National Employment Standards.

Note 1: Ancillary or incidental terms permitted by paragraph (a) include (for example) terms:

(a) under which, instead of taking paid annual leave at the rate of pay required by section 90, an employee may take twice as much leave at half that rate of pay; or

(b) that specify when payment under section 90 for paid annual leave must be made.

Note 2: Supplementary terms permitted by paragraph (b) include (for example) terms:

(a) that increase the amount of paid annual leave to which an employee is entitled beyond the number of weeks that applies under section 87; or

(b) that provide for an employee to be paid for taking a period of paid annual leave or paid/personal carer's leave at a rate of pay that is higher than the employee's base rate of pay (which is the rate required by sections 90 and 99).

Note 3: Terms that would not be permitted by paragraph (a) or (b) include (for example) terms requiring an employee to give more notice of the taking of unpaid parental leave than is required by section 74.

Enterprise agreements may include terms that have the same effect as provisions of the National Employment Standards

(5) An enterprise agreement may include terms that have the same (or substantially the same) effect as provisions of the National Employment Standards, whether or not ancillary or supplementary terms are included as referred to in subsection (4).

Effect of terms that give an employee the same entitlement as under the National Employment Standards

(6) To avoid doubt, if a modern award includes terms permitted by subsection (4), or an enterprise agreement includes terms permitted by subsection (4) or (5), then, to the extent that the terms give an employee an entitlement (the award or agreement entitlement) that is the same as an entitlement (the NES entitlement) of the employee under the National Employment Standards:

(a) those terms operate in parallel with the employee's NES entitlement, but not so as to give the employee a double benefit; and

(b) the provisions of the National Employment Standards relating to the NES entitlement apply, as a minimum standard, to the award or agreement entitlement.

Note: For example, if the award or agreement entitlement is to 6 weeks of paid annual leave per year, the provisions of the National Employment Standards relating to the accrual and taking of paid annual leave will apply, as a minimum standard, to 4 weeks of that leave.

Terms permitted by subsection (4) or (5) do not contravene subsection (1)

(7) To the extent that a term of a modern award or enterprise agreement is permitted by subsection (4) or (5), the term does not contravene subsection (1).

Note: A term of a modern award has no effect to the extent that it contravenes this section (see section 56). An enterprise agreement that includes a term that contravenes this section must not be approved (see section 186) and a term of an enterprise agreement has no effect to the extent that it contravenes this section (see section 56).’

[87] Importantly, the term of an enterprise agreement has no effect to the extent it contravenes the NES. True it is that the Agreement does not provide for unpaid carer’s leave as set out in s 102 of the Act, or at all. I note in any event, that the Corporation’s own policy not only provides for two days’ unpaid carer’s leave, but the provisions generally in respect to personal / carer’s leave entitlements are more beneficial than the NES. However, while it is arguable that cls 5.2.1 and 5.2.2 of the Agreement contravene s 55 of the Act and therefore do not comply with s 186 of the Act, the matter can be nimbly addressed with little fuss, by the giving of a simple undertaking under s 190 of the Act to the effect of ‘the provisions of the Corporation’s unpaid carer’s leave policy are taken to be a term of the Agreement’.

Consultation provisions for Network Controllers

[88] Clauses 10.1.1 and 10.3.1 of the Agreement are in the following terms:

‘10.1.1 Who is covered by this section?

If you are a Network Control Employee who is covered by this Agreement, the provisions in this section also apply to you.

If there is an inconsistency between the General section of this Agreement and this Network Control section, this section will apply.

[…]

10.3.1 Will I be consulted about my roster?

Yes. ARTC will draft, discuss and implement your roster through consultation at a local level prior to the posting of your roster. You will be consulted about any changes to your roster.’

[89] The substantive consultation clause is set out in cl 8.1 and reflects the requirements of the Model Consultation Clause in reg 2.09 of the Regulations. There was no suggestion that cl 8.1 does not meet the requirements of the Act. However, the Combined Unions argued that the reference to consultation in cl 10.3.1 was inconsistent with the general consultative clause and provided less beneficial arrangements for Network Controllers. I do not agree.

[90] The first thing to observe is that both cl 10.1.1 and cl 10.3.1 are exactly the same provisions which are to be found in the 2012 Agreement. I understand it was not opposed by the Unions when that agreement was approved in August 2012.

[91] Secondly, given the brevity of cl 10.3.1 and that there is no definition of consultation in the clause, the submission of Mr Woods that cl 10.3.1 is to be read and applied in conjunction with cl 8.1, rather than exclusive of it, is soundly based and makes obvious sense. The clause merely states that consultation will occur, but not how it will occur. It must logically follow that consultation will occur in accordance with the process set out at cl 8.1. There can be no other interpretation. In any event, the Combined Unions did not explain how cl 10.3.1 was inconsistent with the general consultation clause. This is so, because unambiguously, it is not. Any plain reading of the provisions could not result in an interpretation that the two provisions are inconsistent; see: Golden Cockerel. In my view, the two provisions are to be read in conjunction with each other and no inconsistency arises, which requires clarification or interpretation by the Commission. I am fortified in this view by the distinction made between these provisions and the overtime provisions in the Agreement; see: paragraph [53] above.

The BOOT

[92] Section 193 of the Act deals with the BOOT. It is set out as follows:

‘ 193 Passing the better off overall test

When a non greenfields agreement passes the better off overall test

(1) An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.

FWC must disregard individual flexibility arrangement

(2) If, under the flexibility term in the relevant modern award, an individual flexibility arrangement has been agreed to by an award covered employee and his or her employer, the FWC must disregard the individual flexibility arrangement for the purposes of determining whether the agreement passes the better off overall test.

When a greenfields agreement passes the better off overall test

(3) A greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each prospective award covered employee for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.

Award covered employee

(4) An award covered employee for an enterprise agreement is an employee who:

(a) is covered by the agreement; and

(b) at the test time, is covered by a modern award (the relevant modern award) that:

(i) is in operation; and

(ii) covers the employee in relation to the work that he or she is to perform under the agreement; and

(iii) covers his or her employer.

Prospective award covered employee

(5) A prospective award covered employee for an enterprise agreement is a person who, if he or she were an employee at the test time of an employer covered by the agreement:

(a) would be covered by the agreement; and

(b) would be covered by a modern award (the relevant modern award) that:

(i) is in operation; and

(ii) would cover the person in relation to the work that he or she would perform under the agreement; and

(iii) covers the employer.

Test time

(6) The test time is the time the application for approval of the agreement by the FWC was made under section 185.

FWC may assume employee better off overall in certain circumstances

(7) For the purposes of determining whether an enterprise agreement passes the better off overall test, if a class of employees to which a particular employee belongs would be better off if the agreement applied to that class than if the relevant modern award applied to that class, the FWC is entitled to assume, in the absence of evidence to the contrary, that the employee would be better off overall if the agreement applied to the employee.’

[93] There is no dispute that the BOOT is to be applied by reference to the Rail Industry Award 2010. As I apprehend it, the Combined Unions, firstly argued generally that the Corporation has not explained the basis on which the Commission can be satisfied that each Award covered employee would be ‘better off overall’ if the Agreement applied rather than the Award. Secondly, more specifically, the Combined Unions assert that the Corporation has not provided information as to the base salary and other components of the TRP such as to satisfy the Commission that TRP employees are ‘better off overall’. The Combined Unions particularly criticise the analysis undertaken by Ms Carcary in respect to Network Controllers.

[94] At this juncture, a number of points need to be made.

(a) There is no statutory or regulatory requirement in the employer’s Form F17 for the Corporation to explain how the employees would be ‘better off overall’ under the Agreement rather than the Award. Questions 3.4 and 3.5 of the Form F17 require only that the employer identify what terms are more and less beneficial and identify the groups of employees relevant to those terms.

(b) As the From F17 is a sworn statutory declaration, it is not unreasonable to assume that the Corporation has undertaken the exercise of making the necessary BOOT comparisons and moreover, the deponent to the Form F17 is required to attest that the Agreement does meet the requirements of s 193 of the Act.

(c) The Commission is not so naïve as to believe that what is attested to in the employer’s Form 17 is always correct or that the answers given are not misleading by genuine error, design or omission. However, where the employer is a major Government corporation who is a regular litigant in Commission proceedings, one might start from the premise that the Corporation’s Form F17 is correct. Of course, the BOOT exercise is ultimately one which must be conducted by the Commission to satisfy itself that the BOOT has been met. The Commission is often assisted in this task by the employer or the bargaining representatives involved in the bargaining.

(d) The Corporation plainly set out the terms and conditions that are more beneficial and less beneficial under the Agreement in comparison to the Award.

(e) The BOOT exercise is not a line by line comparison between a term in the Agreement and its corresponding term in the Award. The Commission’s task is to consider the more beneficial and less beneficial terms and decide if employees are ‘better off overall’.

(f) Despite some prevailing contemporary opinion to the contrary, the Commission’s task in assessing the BOOT is not to examine and analyse each employee’s current or prospective roster or individual circumstances in order to be satisfied that the Agreement should be approved. To do so would be an illogical and impossible nightmare resulting in unacceptable delays in approving enterprise agreements. It is clearly not what was intended when one considers the Explanatory Memorandum to the Fair Work Bill 2008 at item 818. That item is as follows:

‘818. Although the better off overall test requires FWA to be satisfied that each award covered employee and each prospective award covered employee will be better off overall, it is intended that FWA will generally be able to apply the better off overall test to classes of employees. In the context of the approval of enterprise agreements, the better off overall test does not require FWA to enquire into each employee's individual circumstances.’ [my emphasis]

[95] In any event, there is no reason to doubt that Ms Carcary’s exercise in respect to Network Controllers is incorrect or misleading, or that the Corporation has not explained the components of a TRP. Clause 10.1.3 of the Agreement explains that the salaries of Network Control employees are inclusive of leave loading, superannuation and all allowances, including shift, weekend and public holiday penalty payments. The same explanation applies to Infrastructure Maintenance employees and other annualised salary employees. It is difficult to identify what further information the Corporation could supply which would add to those who dispute the Corporation’s analysis or the Agreement’s express terms. Indeed, the Combined Unions did not identify what information was required other than the rosters, which the individual employees would themselves be aware of, that would be necessary to undertake the BOOT exercise. There was no express evidence of any general or particular breach of the BOOT. It is not sufficient to make broad generalisations, without a sound basis for doing so. The Combined Unions have failed in this respect.

[96] From my own analysis and based on Ms Carcary’s methodology of comparing a week within a Network Controller’s roster where the most penalties would be paid if the Award applied, I am satisfied that the BOOT has been satisfied for this group of employees and for all other employees covered by the Agreement.

CONCLUSION

[97] In conclusion, the Commission is satisfied that, subject to the appropriate undertaking being given by the Corporation referred to at paragraph [87] above, I am satisfied that all of the statutory requirements for the approval of an enterprise agreement have been met in this case. That being so, the Commission must approve the Agreement in accordance with s 186(1) of the Act. Pursuant to s 201(2) of the Act, the Unions identified in paragraph [1] above are to be covered by the Agreement.

[98] The Corporation is directed to provide the undertaking referred to above to the Commission and the bargaining representatives by 4:00 pm on Monday 10 October 2016. In accordance with s 190(4) of the Act, the bargaining representatives will be asked for their views on the undertaking and convey such views to the Commission by 4:00 pm on Wednesday 12 October 2016. After consideration of the bargaining representatives’ views (should any be offered) and being otherwise satisfied that s 190 has been complied with, pursuant to s 54 of the Act, the Commission will nominate 19 October 2016 as the date of the commencement of the operation of the Agreement. The nominal expiry date of the Agreement will be 19 October 2019.

DEPUTY PRESIDENT

Written submissions:

Combined Unions: 6 September 2016, 16 September 2016 (in reply).

Australian Rail Track Corporation: 13 September 2016.

Printed by authority of the Commonwealth Government Printer

Australian Rail Track Corporation

[2016] FWCA 7012

7 OCTOBER 2016

DECISION