“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)
[2012] FWA 9552
•14 NOVEMBER 2012
[2012] FWA 9552 |
|
DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)
(AG2012/8159)
COMMISSIONER GOOLEY | MELBOURNE, 14 NOVEMBER 2012 |
Structural Site Service’s Pty Ltd and AMWU Metal Engineering On-Site Construction Agreement 2011-2014.
[1] The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (the AMWU) applied pursuant to section 185 of the Fair Work Act 2009 (the FW Act) for approval of the Structural Site Service’s Pty Ltd and AMWU Metal and Engineering On-Site Construction Agreement 2011-2014 (the Agreement).
[2] Structural Site Service’s Pty Ltd (the employer) has two directors, Mr Darrel Butler and Ms Monique Butler. Ms Butler filed a statutory declaration in support of the application and in that declaration she attested that the employer has one employee. There are other references in the statutory declaration to employees but I assume those references are made by mistake.
[3] The AMWU was the bargaining representative for the employee. The employee is Mr Butler, a director of the employer.
[4] Clause 4 of the Agreement provides that it applies to employees of the employer performing metal engineering on site construction work in Victoria. It applies to employees within the classification structure in the Agreement which covers employees from trades assistants to special class tradespersons.
[5] On 1 October 2012, I wrote to the parties and referred them to the decisions of the Full Benches in AMWU v Inghams Enterprises Pty Ltd 1 and CFMEU v Queensland Bulk Handling Pty Ltd2 and the Federal Court in CFMEU v FWA3.
[6] The application was heard on 19 October 2012 and Mr Barry Terzic represented the AMWU. There was no appearance by the employer.
Submissions of the AMWU
[7] The AMWU canvassed the decisions in AMWU v Inghams Enterprises Pty Ltd (Inghams) and CFMEU v Queensland Bulk Handling Pty Ltd.
[8] The AMWU submitted that I was bound by the decision in Inghams which considered whether an agreement can be made with one employee. Whilst accepting that the comments were obiter the AMWU submitted that the decision of the Full Bench was directly on point. In that decision the Full Bench said as follows:
“[30] We add that we are not persuaded an enterprise agreement cannot be made with only one employee. There is nothing explicitly in the FW Act to suggest an enterprise agreement cannot be made with only one employee and it would not be consistent with the objects of the FW Act or Part 2-4 of the FW Act concerning enterprise agreements to so construe the FW Act. Such objects include “achieving productivity ... through an emphasis on enterprise-level collective bargaining” 16 and “to provide a ... framework that enables collective bargaining ..., particularly at the enterprise level, for enterprise agreements that deliver productivity benefits”.17 A conclusion that an enterprise agreement cannot be made with only one employee would mean that both an employer with only one employee and that employee would be deprived of a potential source of productivity benefits. Although an individual flexibility arrangement can be agreed between an employer and an employee pursuant to the flexibility term of a modern award, such an arrangement can be terminated by either party giving written notice of not more than 28 days.
[31] We were referred to the decision in Re Fourth Furlong Motel wherein a single member of FWA concluded an enterprise agreement could not be made with a single employee. With respect, we are unable to concur with the Commissioner’s conclusion.
[32] The Commissioner in the Fourth Furlong Motel case noted that s.23 of the Acts Interpretation Act 1901 (Cth) provides that in any statute, unless the contrary intention appears, words in the singular include the plural and vice versa. The Commissioner came to the view that a contrary intention appeared because the FW Act uses the word “employee” in some instances in its Part 2-4 concerning Enterprise Agreements and the word “employees” in other instances. We think it is apparent, however, that the word “employee” rather than the word “employees” is used in Part 2-4 when it is intended that the action concerned applies in respect of each employee. For example, s.172(1)(c) in Part 2-4 provides that an enterprise agreement may be made about deductions from wages authorised by an “employee”. It is understandable that the FW Act would provide that only the individual employee could authorise a deduction from their wages. The use of the word “employee” in that way is not sufficient to indicate a contrary intention with respect to the use of the word “employees” in Part 2-4.
[33] Further the Commissioner referred to an International Labour Organisation publication on collective bargaining. However, that publication defines collective bargaining quite differently to the manner in which bargaining can take place under the FW Act.
[34] The Commissioner also relied on the use of the word “group” in ss.186(3) and (3A) of the FW Act and noted that a group denotes more than one employee. We are not persuaded, however, that this prevents an enterprise agreement being made with one employee, so long as the enterprise agreement covers a group of employees. For example, an enterprise agreement may be made with the one employee who is a fitter employed by the employer at the time the enterprise agreement is made, so long as the enterprise agreement covers employees of the employer in the position of fitter. With such coverage although the enterprise agreement is made with the one employee employed at the time who is a fitter, it also covers future employees of the employer employed as fitters.
[35] Accordingly, we dismiss this ground of appeal having regard to the basis on which it was made. We add that it has not been unusual for FWA, on the application of a union or otherwise, to approve an enterprise agreement made with only one employee.”
[9] In CFMEU v Queensland Bulk Holdings the Full Bench when considering an opt out clause in an agreement said as follows:
“[63] It seems to us that an ‘opt out’ clause of the type in clause 1 of the Agreement is inconsistent with the purpose or policy of the Act, in three important respects.
[64] First, the Act is directed at the provision of a fair framework that enables collective bargaining in good faith and sets clear rules governing industrial action. The Act gives effect to these objectives by providing certainty around bargained outcomes. While an agreement is in operation it can only be varied or terminated in limited circumstances and those covered by an agreement may not take protected industrial action, before the expiry date of that agreement.
[65] An ‘opt out’ clause undermines bargaining certainty. Employees who elect to opt out of the Agreement will no longer be covered by the Agreement and may take protected industrial action. Indeed, such protected industrial action may be organised by an employee organisation provided that organisation is not covered by the Agreement.
[66] Further, if all of the employees covered by the Agreement elected to ‘opt out’ then the Agreement would have no practical effect. For the purpose of bargaining, the taking of protected industrial action and the making of a new enterprise agreement it would be as if the Agreement had been terminated, albeit by the unilateral action of the employees covered by the Agreement. Such an outcome is inconsistent with the clear legislative intent that agreements may only be terminated within their nominal term by mutual consent (i.e. consent of a majority of the employees and by the employer, covered by the agreement).
[67] Second, such a provision may facilitate an outcome whereby the Agreement only covers one employee. The facilitation of such an outcome would be contrary to the clear legislative preference for the promotion of collective bargaining as opposed to individual employment agreements. As her Honour Katzmann J observed in CFMEU v FWA, ‘The Act was designed to bring about the demise of statutory individual employment agreements and to encourage enterprise level collective bargaining’. [my emphasis]
[68] Third, the Act gives effect to the objective of providing a flexible framework, by mandating the inclusion of ‘flexibility terms’ in enterprise agreements. It seems to us that ‘opt out’ clauses provide for a form and degree of flexibility not contemplated by the statutory framework and without the legislative protections afforded to individual flexibility arrangements entered into pursuant to the flexibility term mandated by the Act.”
[10] The AMWU submitted that the decision of this Full Bench and the decision of Her Honour Katzmann J were not on point as the matters before the Tribunal and the Court did not involve an agreement made with one employee and therefore any seeming inconsistency with the decision in Inghams should be disregarded.
[11] Further the AMWU submitted that there is no reason to consider section 186(3A) of the FW Act because the Agreement covers all employees. So regard need only be had to section 186(3) namely whether the group of employees was fairly chosen.
[12] The AMWU submitted that the group of employees was fairly chosen. The AMWU submitted that regard could be had to its role in the negotiations as Mr Butler’s bargaining representative. It was submitted that there could be no suggestion of employee exploitation. The Agreement is materially identical to many AMWU agreements. The AMWU submitted that it is its role that gives the Agreement legitimacy because the AMWU has endorsed the Agreement and seeks to be covered by the Agreement.
Conclusion
[13] Had it not been for the decision in CFMEU v Queensland Bulk Holdings and CFMEU v FWA I would consider myself bound by Inghams.
[14] Those decisions, which post dated Inghams, stand for the proposition that an agreement covering one employee is contrary to the clear legislative preference for the promotion of collective bargaining as opposed to individual employment agreements. Consistent with this conclusion, an agreement made with one employee which will cover all prospective employees is not an enterprise agreement contemplated by the FW Act.
[15] In the event that I am wrong about this I need to consider whether the group of employees to be covered by the Agreement was fairly chosen. 4
[16] Here an employee who is a director of the employer has made an agreement with the employer which will bind all prospective employees. It is not to the point that the AMWU is the bargaining representative for the employee. The FW Act does not set two different tests for approval of agreements, one which applies when a union is involved and one when there is no union involved.
[17] While I accept that the employer and Mr Butler are separate legal identities, what occurred here was that Mr Butler in his capacity as an employee has made an agreement with Mr Butler and Ms Butler in their capacities as directors of the employer. The interposing of the AMWU as a bargaining representative does not change the nature of the agreement.
[18] I do not consider that the group of employees to be covered by the Agreement was fairly chosen. The Full Bench in Cimeco Pty Ltd v CFMEU and Ors 5 discussed the approach to be taken to section 186(3). They said for example that “selection based on criteria which would have the effect of undermining collective bargaining or other legislative objectives would also be unlikely to be fair.”
[19] Here the Applicant has made an agreement with a director of the company who is also an employee which will mean that prospective employees will be denied the opportunity to bargain about their terms and conditions until 30 June 2014. This has the effect of undermining collective bargaining.
[20] Further, as was discussed by the Full Bench in CFMEU v John Holland Pty Ltd 6, when considering “the potential for the selection of the group to undermine collective bargaining” consideration needed to be given to “the provisions in the Act regarding the making and approval of greenfields agreements.” The Full Bench said:
If it were possible to make an agreement with such a limited number of employees on one site with potential application to many sites and employees in a large geographical area such as Western Australia, this would mean that it is possible to make an agreement with similar effect to a greenfields agreement for possibly a very large number of employees, without meeting the requirements of s.182(3).” 7
[21] While this employer is a small business which is unlikely to employ a large number of employees the concerns outlined by the Full Bench are apposite here. If a director/employee can make an agreement with themselves, albeit in a separate legal capacity, which can cover all prospective employees then this in effect would permit a greenfield type agreement to be made without the involvement of a trade union and without the requirements in s.182(3) being met. It is no answer to this to say the AMWU was involved in the Agreement. As I have stated earlier the FW Act does not apply a different test when a union in involved.
[22] This application is also distinguishable from that considered in Inghams and in Fourth Furlong Motel. 8 In Fourth Furlong Motel that Applicant made an agreement with a motel manager who had no relationship with the Applicant apart from the employment relationship. Further that agreement would only have applied to future motel managers and not to all employees. That is not the case here. In Inghams there was no suggestion that the employees were not independent of the employer.
[23] In reaching the conclusion that the Agreement cannot be approved I do not question the bona fides of the employer, Mr Butler or the AMWU. The Agreement would have been approved but for the determination that an agreement made with a single employee who is a director of the employer is not an enterprise agreement as contemplated by the FW Act. Alternatively, but for my decision that I am not satisfied that the group of employees to be covered by the Agreement has been fairly chosen, the Agreement would have been approved.
[24] For these reasons the application for approval of the Agreement is dismissed.
COMMISSIONER
1 [2011] FWAFB 6106
2 [2012] FWAFB 7551
3 [2011] FCA 719
4 See section 186(3)
5 [2012] FWAFB 2206
6 [2012] FWAFB 7866
7 Ibid at [32]
8 [2011] FWA 3256
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