Australian Workers' Union v Wagners Industrial Services Pty Ltd
[2019] FWCFB 1731
•2 APRIL 2019
| [2019] FWCFB 1731 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
Australian Workers' Union
v
Wagners Industrial Services Pty Ltd
(C2019/786)
VICE PRESIDENT HATCHER | SYDNEY, 2 APRIL 2019 |
Appeal against decision [2019] FWCA 220 of Commissioner Bissett at Melbourne on 16 January 2019 in matter number AG2018/5175.
[1] The Australian Workers’ Union (AWU) has lodged an appeal, for which permission to appeal is required, against a decision issued by Commissioner Bissett on 16 January 2019 1 (Decision). In the Decision, the Commissioner approved the Wagners Industrial Services Pty Ltd Precast Employee Enterprise Agreement 2018 (Agreement). In its notice of appeal the AWU contends that the Commissioner erred in approving the Agreement on the following five grounds:
(1) the Agreement did not pass the better off overall test (BOOT) as required by s 186(2)(d) of the Fair Work Act 2009 (FW Act);
(2) the Agreement excluded the National Employment Standards (NES) in contravention of s 186(2)(c);
(3) the employer did not take all reasonable steps to ensure that the terms of the Agreement and their effect were explained to employees as required by s 180(5);
(4) there were reasonable grounds for believing within the meaning of s 188(1)(c) that the Agreement had not been genuinely agreed to; and
(5) the Agreement contained unlawful terms within the meaning of s 194.
[2] In its outline of submissions dated 25 February 2019 the AWU advised that it did not press the fifth ground of appeal, relating to unlawful terms. It continued to press the first four grounds and sought disposition of the appeal by orders being made to grant permission to appeal, allow the appeal, quash the approval decision and dismiss the approval application. In relation to appeal grounds 3 and 4, the AWU submitted (footnotes omitted):
“49. Section 180(5) of the Act requires that an employer must take all reasonable steps to ensure that the terms of an agreement, and the effect of those terms, are explained to the relevant employees prior to the request to approve the agreement.
50. The only evidence before the Commission of the employer’s compliance with the requirement in s 180(5) was the Form F17 declaration, the email response to the Commission’s concerns and the attached summary sheet. In answer to question 2.6 of the Form F17 (which asked what steps were taken to explain the terms of the Agreement and their effect) the employer stated:
▪ Summary sheets were provided to all employees that gave an overview of the key changes, with a question and answer session afterwards.
▪ Site meetings were coordinated through employees’ representatives. Any queries in relation to the EA from employees were then fed back to staff via representatives and management, and answers provided.
▪ One employee who annual leave [sic] was given a telephone call and all the changes were explained over the phone along with his questions and answers at the same time.
51. The summary sheet referred to appears to only compare the Agreement with its predecessor. It does not compare the Agreement to the reference instruments. The email response, which states that the “changes and their affect [sic] were personally explained to all employees” does not indicate that the reference instruments were mentioned as part of those discussions.
52. In response to question 3.5 of the Form F17 (which asked whether the Agreement contained any less beneficial terms than the equivalent terms and conditions in the Award and/or omit any entitlements conferred by the reference instruments) the employer stated it did not.
53. The only available inference which can be drawn from the declaration is that the employer’s explanation of the terms of the Agreement and their effect was predicated on a view that the Agreement contained no less beneficial terms than the Award.
54. A failure to draw to employees’ attention the less beneficial conditions of an agreement relative to the reference instrument is a basis to conclude those employees could not have genuinely agreed to the agreement because the employer did not take all reasonable steps to explain the effect of the terms of the agreement, as required by s 188(1)(a)(i).
55. The Federal Court in One Key Workforce Pty Ltd v CFMEU endorsed a similar conclusion in relation to s 188(1)(c), noting that “the provision of misleading information or an absence of full disclosure” were circumstances which “could logically bear on the question of whether the agreement of the relevant employees was genuine”.
56. For the reasons given above in relation to appeal ground 1, the Agreement contained a substantial number of less beneficial terms than the Award.
57. On the evidence before the Commission, the employer’s explanation could not amount to the taking of all reasonable steps to explain the terms of the Agreement and their effect to employees as required by s 188(1)(a)(i) and there were reasonable grounds to believe the employees did not genuinely agree to the Agreement as required by s 188(1)(c).”
[3] On 11 March 2019 Wagners Industrial Services Pty Ltd (Wagners), the employer to which the Agreement applies, filed its outline of submissions in respect of the appeal. In respect of grounds 3 and 4 of the appeal, Wagners relevantly submitted (footnotes omitted):
“2. The reference instruments for the Agreement, for the purposes of the better off overall test, are the Concrete Products Award 2010 (Concrete Award) and the Manufacturing and Associated Industries and Occupations Award 2010 (Manufacturing Award).
3. The Respondent concedes that there are a number of terms within the Agreement that are less beneficial for employees than related terms in the reference instruments, both in the Concrete Award as highlighted by the Applicant in their Outline of Submissions filed on 25 February 2019 (Applicant’s Outline of Submissions) and in the Manufacturing Award. It should be noted that the Respondent maintains that the Agreement as drafted and originally approved, on an overall basis, would leave employees better than they would be if the Agreement did not apply to them.
4. For example, as identified in paragraph 37(b) of the Applicant’s Outline of Submissions, the span of hours provided for in the Agreement is wider than the span of hours provided for in the Concrete Award. Further, as identified in paragraph 43 of the Applicant’s Outline of Submissions, the Meal Allowance and the First Aid Allowance in the Agreement are less than the corresponding benefits in the Concrete Award. The Respondent emphasises that a number of clauses in the Agreement, which are significantly more beneficial to employees than the relevant Award, more than offset the small number of matters where particular benefits are, viewed in isolation, less beneficial to employees than the relevant Award.
5. The Respondent concedes that these clauses containing less beneficial terms than the relevant Award were inadvertently not mentioned in its Form F17 lodged with its application to the Fair Work Commission (Commission) for approval of the Agreement and not explained to employees as being less favourable than the relevant reference instrument. As such, the Respondent concedes that the Commission could not be satisfied that the Respondent took all reasonable steps to ensure that the terms of the Agreement (and their effect) were explained to relevant employees.
6. Given the cases highlighted in the Applicant’s Outline of Submissions, and other recent decisions of the Full Bench of the Commission1, the Respondent concedes that the Commission will be unable to satisfy itself that the Respondent took all reasonable steps to ensure that the terms of the Agreement (and their effect) were explained to relevant employees as required by section 180(5) of the Fair Work Act 2009 (Cth) (Act) have been fulfilled. Accordingly, the Commission will be unable to satisfy itself that the relevant employees genuinely agreed to the Agreement in accordance with section 188 of the Act.”
[4] On the basis of the identified concessions, Wagners did not oppose the orders sought by the AWU.
[5] Both the AWU and Wagners have agreed to the matter being determined without a hearing, pursuant to s 607(1)(b) of the FW Act. The two individual bargaining representatives in relation to the Agreement have not sought to make submissions in the appeal. We consider, pursuant to s 607(1)(a), that the appeal can be adequately determined without the need for oral submissions. Accordingly we will determine the appeal on the basis of the written outlines of submissions filed by the parties.
[6] Although the AWU and Wagners agree as to the orders to be made in respect of the appeal, and there is no indication of any opposition to the course they propose on the part of the individual bargaining representatives, that is not by itself a sufficient basis for us to make those orders. It remains necessary for us to be satisfied that the proposed orders are within power and appropriate, 2 which will necessarily require us to consider whether there was any error in the Commissioner’s decision to approve the Agreement.3 That is particularly the case given that this is not simply an inter partes matter as between the AWU and Wagners; rather, the appeal necessarily and directly affects the legal entitlements of the employees of Wagners who are covered by the Agreement, a majority of whom voted to approve the Agreement. If the Agreement satisfied the approval requirements in ss 186 and 187 of the FW Act, there would be no basis to make the orders proposed.4
[7] In this case, the position is that a number of the provisions of the Agreement were less beneficial than the equivalent provisions in the relevant modern awards. Wagners, despite giving written and oral explanations of the terms of the Agreement to its employees before they voted upon it, never disclosed this fact to them. Nor did it disclose this in its Form F17 statutory declaration supporting its application for approval of the Agreement; rather, where the Form F17 required the deponent to indicate “yes” or “no” to the question of whether the Agreement contained any terms or conditions of employment that were less beneficial than the reference modern awards, the answer “no” was indicated.
[8] The position here is, we consider, relevantly indistinguishable to that considered by the Full Bench in Construction, Forestry, Mining and Energy Union v Shamrock Civil Pty Ltd: 5
“[36] … it is apparent that there are in fact a number of significant reductions in the Award entitlements. In light of the concession, it is apparent that the explanation to employees was quite simply, wrong. We accept that an explanation of the terms of the Agreement and the effect of those terms to employees may not be perfect and may, depending on the circumstances, still satisfy the requirement of s.180(5) of the Act. However, an explanation which is clearly misleading (as in this case) cannot possibly meet the requirement. We note that the Commissioner did not have the benefit of the additional submissions and the concession.
[37] Where the Commission is provided with a statutory declaration which is at odds with the real position in important respects, a number of practical difficulties can be raised in determining an application for approval. The applicant stated in its application that there were no reductions on the award when in fact there were, which gradually became apparent during the proceedings at first instance. Such an employer understanding would presumably lead it to provide the same misleading explanation to employees, and it is now conceded by the employer that this was the case. As in this present matter this may well have implications in many proceedings for the question of whether or not there was genuine agreement within s.186(2)(a), and therefore whether the agreement can be approved, which the Commission must endeavour to examine in greater detail as the real facts become apparent.
[38]In the circumstances we conclude that the Commissioner erred in concluding that the requirements of s.180(5) of the Act were met. Satisfaction of the requirements under s.186(2)(a) is a jurisdictional prerequisite for the approval of any enterprise agreement. If s.180(5) is not satisfied, then the Commission cannot be satisfied of the requirements of s.188(a)(i). Consequently the Commission cannot attain satisfaction of the requirement at s.186(2)(a). For these reasons we uphold this ground of appeal.”
[9] We think the same reasoning and conclusion are applicable here. There was constructive error on the part of the Commissioner in being satisfied that the requirement for genuine agreement in s 186(2)(a) was met. Wagners could not be said to have taken all reasonable steps to ensure that the terms of the Agreement and the effect of those terms were explained to the relevant employees in accordance with s 180(5)(a) in circumstances where employees were not told that the Agreement contained terms that were less beneficial than their equivalents in the relevant modern awards. Consequently the element of genuine agreement prescribed in s 188(1)(a)(i) could not be satisfied.
[10] We have characterised the Commissioner’s error as “constructive” because the Commissioner did not have the benefit of the concessions which Wagners has made in the appeal, and accordingly did not have the information necessary to make the correct decision. No explanation has been given as to why those concessions could not have been made in the proceedings before the Commissioner. Nonetheless with the benefit of the correct information having now been supplied by Wagners, it is clear that the Agreement was incapable of approval. Accordingly the orders proposed by the AWU and not opposed by Wagners should be made.
[11] We order as follows:
(1) Permission to appeal is granted.
(2) The appeal is upheld.
(3) The Decision ([2019] FWCA 220) is quashed.
(4) The application for approval of the Wagners Industrial Services Pty Ltd Precast Employee Enterprise Agreement 2018 (AG2018/5175) is dismissed.
VICE PRESIDENT
Final written submissions:
Australian Workers' Union, 25 February 2019.Wagners Industrial Services Pty Ltd, 11 March 2019.
Printed by authority of the Commonwealth Government Printer
<PR705917>
1 [2019] FWCA 220
2 See Telstra Corporation Ltd v Minister for Broadband, Communications and the Digital Economy [2008] FCAFC 7, 166 FCR 64 at [47]-[50]
3 See CFMEU v Levent Painting Pty Ltd t/a Levent Altintas [2017] FWCFB 3911 at [3]
4 Ibid
5 [2018] FWCFB 1772
3
4
0