Ballestrin Construction Services Pty Ltd
[2024] FWCA 1220
•5 APRIL 2024
| [2024] FWCA 1220 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
Ballestrin Construction Services Pty Ltd
(AG2023/5340)
BALLESTRIN CONSTRUCTION SERVICES PTY LTD ENTERPRISE AGREEMENT 2023
| Building, metal and civil construction industries | |
| DEPUTY PRESIDENT ROBERTS | SYDNEY, 5 APRIL 2024 |
Application for approval of the Ballestrin Construction Services Pty Ltd Enterprise Agreement 2023
Ballestrin Construction Services Pty Ltd (Applicant) has applied to the Fair Work Commission (Commission) for the approval of an enterprise agreement known as the Ballestrin Construction Services Pty Ltd Enterprise Agreement 2023 (Agreement, or proposed agreement). The application is made under s.185 of the Fair Work Act 2009 (Act). The Agreement is a single enterprise agreement.
The application is opposed by the Construction, Forestry and Maritime Employees Union (CFMEU).
Background
The notification time for the Agreement was 2 June 2023. Voting on the approval of the Agreement occurred on 7 December 2023. On that date 27 of the 28 employees covered by the Agreement cast a valid vote and of those, 22 employees voted to approve the Agreement. If approved, the Agreement would supersede the Ballestrin Construction Services Enterprise Agreement 2019 (2019 Agreement).
The Commission identified some initial issues with the Agreement and provided the Applicant with an opportunity to respond to those concerns. Written submissions were provided by the Applicant in response.
On 24 January 2024 directions were made requiring the CFMEU to file written submissions detailing its objections to the application and for the Applicant to respond to those objections in writing. The Applicant provided an affidavit from Mr. Clifford Byrne, the Applicant’s construction manager, in support of the application. Written draft undertakings were also provided by the Applicant.
As a result of discussions between the parties, the CFMEU’s objections were narrowed and the matter was listed for hearing on 15 March 2024. The remaining CFMEU objections dealt with on that day were as follows:
(i)That the Commission could not be satisfied that the Agreement had been genuinely agreed because the Applicant had not complied with the requirement to provide material incorporated by reference, as required by s.180(2) of the Act. The material referred to was the Code for Tendering and Performance of Building Work 2016 (Code) and four employer policy documents relating to health and safety, drug and alcohol policy and the supply of clothing and footwear.
(ii)That the Commission could not be satisfied that the Agreement had been genuinely agreed because the requirements of the Act relating to the Notice of Employee Representational Rights (NERR) had not been met (sections 173, 174 and 181(2)).
(iii)That the Commission could not be satisfied that the Agreement had been genuinely agreed because the requirements of the Act relating to the explanation of the Agreement and its terms had not been met (s.180(5)).
(iv)That the Commission could not be satisfied that the Agreement passed the ‘better off overall test’ (BOOT)(s.186(2)(d)).
Legislative Requirements
The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (the Amending Act) made changes to enterprise agreement approval processes in Part 2-4 of the Act. The changes commenced operation on 6 June 2023.
The transitional arrangements in relation to the amendments made by Part 14 of Schedule 1 to the Amending Act provide that the ‘genuine agreement’ provisions in Part 2-4 of the Act, as it was just before 6 June 2023, continue to apply in relation to agreement approval applications where the notification time for the agreement was before 6 June 2023. Those provisions therefore apply to the present application.
The transitional arrangements for Part 16 of Schedule 1 to the Amending Act in relation to the BOOT requirements for agreement approval applications mean those amendments apply where the agreement was made on or after 6 June 2023. As the Agreement was made after 6 June 2023, the BOOT provisions to be applied in this case are those set out in Part 16 of Schedule 1 to the amending Act.
The relevant ‘genuine agreement’ provisions are contained in s.188 of the Act as it was just before 6 June 2023. That section provided as follows:
188 When employees have genuinely agreed to an enterprise agreement
(1) An enterprise agreement has been genuinely agreed to by the employees covered by the agreement if the FWC is satisfied that:
(a) the employer, or each of the employers, covered by the agreement complied with the following provisions in relation to the agreement:
(i) subsections 180(2), (3) and (5) (which deal with pre‑approval steps);
(ii) subsection 181(2) (which requires that employees not be requested to approve an enterprise agreement until 21 days after the last notice of employee representational rights is given); and
(b) the agreement was made in accordance with whichever of subsection 182(1) or (2) applies (those subsections deal with the making of different kinds of enterprise agreements by employee vote); and
(c) there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.
(2) An enterprise agreement has also been genuinely agreed to by the employees covered by the agreement if the FWC is satisfied that:
(a) the agreement would have been genuinely agreed to within the meaning of subsection (1) but for minor procedural or technical errors made in relation to the requirements mentioned in paragraph (1)(a) or (b), or the requirements of sections 173 and 174 relating to a notice of employee representational rights; and
(b) the employees covered by the agreement were not likely to have been disadvantaged by the errors, in relation to the requirements mentioned in paragraph (1)(a) or (b) or the requirements of sections 173 and 174.
Genuine Agreement – NERR Issue
Evidence and Submissions
The CFMEU argued that the Commission could not be satisfied that the Agreement had been genuinely agreed unless it was satisfied that the employer had complied with s.181(2).[1] They said that for compliance to have occurred, there had to be a NERR that was validly issued to employees under s.173, that is, a NERR that complied with the content and form requirements of s.174(1A). They argued that the requirements of that section and regulation 2.05 and Sch 2.1 of the Fair Work Regulations 2009 meant that a valid NERR had to include the proposed coverage of the agreement and that “when bargaining commences the employer is … obliged to identify what it is then intending to be the coverage of the proposed enterprise agreement”.[2]
The relevant part of the NERR issued by the Applicant on 2 June 2023 says:
Ballestrin Construction Services Pty Ltd gives notice that it is bargaining in relation to an enterprise agreement Ballestrin Construction Services Pty Ltd Enterprise Agreement 2023 which is proposed to cover employees of Ballestrin Construction Services Pty Ltd who perform work as described in the classifications listed in the agreement which may include but is not limited to General Construction work (including demolition) and Civil Construction work. (emphasis added)
The CFMEU said that the NERR issued to employees on 2 June 2023 and the covering email were not accompanied by a draft copy of the Agreement, the classification structure contained in it or any description of the classification structure. They said the consequence of this was that the NERR was defective because it is “not knowable” from the NERR who will be covered by the Agreement and, as the coverage was not properly described, the content requirements of s.174(1A) had not been met.
The Applicant submitted that the NERR must be drafted in a manner that “(t)he employee reading the notice must be able to understand who it is “who would be covered” by the proposed agreement”[3] and that an inconsequential misdescription would not render the NERR invalid.[4] The Applicant said the employees to be covered by the Agreement know each other and work under an existing agreement. They submitted that there had been no change to the coverage of the Agreement. They referred to the evidence of Mr. Byrne which was that the work group itself had sought to bargain, that employees were aware of their right to representation, that they unanimously endorsed the appointed bargaining representatives and that the CFMEU also participated in bargaining. The Applicant contended that the recipients of the NERR would have and did understand to whom the agreement applied and that to the extent there was any error or deficiency with the NERR, it was minor and should not prevent the Agreement from being approved.
Consideration - NERR
I am of the view that there was an error in the content of the NERR in that it referred to a document – ‘the agreement’ – to describe the coverage of the proposed agreement when the Agreement itself, or at least an extract relating to classifications or other information from which the coverage could be discerned, was not provided. The reference to ‘the agreement’ in the NERR must be read as a reference to the proposed agreement. Even though there was an agreement in place at the time the NERR was issued and there was no argument that there was a material difference between the scope of the 2019 agreement and the proposed agreement, this is not a situation where, as was the case in AMOU,[5] the coverage of the proposed agreement was being defined in the NERR by reference to a pre-existing agreement. The error or omission in the NERR cannot therefore be cured by seeking to rely on the scope of 2019 Agreement. Even though the coverage of that agreement was ‘knowable’ to all employees, it did not set the parameters of the coverage of the proposed agreement.
The statutory purpose of the NERR is to ensure that employees receive timely advice, in a prescribed form, concerning the rights conferred by s.176 of the Act for them to be represented by a bargaining representative in bargaining for a proposed agreement.[6] In this instance I do not think that the error in the NERR has meant that employees were deprived of advice about their representational rights and were unable to effectively participate in the bargaining process.[7] The employees covered by the Agreement received the NERR and were made aware of their right to be represented in prescribed terms save for the error referred to above. They exercised their representational rights by appointing bargaining representatives. The CFMEU were aware of and participated in bargaining. Further, I think the history of the negotiations and the fact that there was an agreement in place with the same or substantially similar coverage are relevant factors which tell against a conclusion that the representational rights in this instance were adversely affected by the error. The evidence also showed that the employees had received a copy of the proposed agreement by 21 July 2023 and that any doubt about coverage would have been removed by that point. The Agreement was not ultimately approved by a ballot of employees until 7 December 2023 following further negotiation. There was ultimately, “no evidence that the representational rights of any employee were in any practical sense diminished as a result of the error in the NERR.”[8]
The error of failing to describe the coverage of the Agreement as required by s.174 was in this case a minor procedural defect within the meaning of s.188(2)(a). It is not likely that the error disadvantaged employees covered by the Agreement and it did not detract from the genuine agreement that had been reached with the employees.[9]
Genuine Agreement – Material Incorporated by Reference
Section 180 of the Act relevantly provides:
180 Employees must be given a copy of a proposed enterprise agreement etc.
Pre‑approval requirements
(1) Before an employer requests under subsection 181(1) that employees approve a proposed enterprise agreement by voting for the agreement, the employer must comply with the requirements set out in this section.
Employees must be given copy of the agreement etc.(2) The employer must take all reasonable steps to ensure that:
(a) during the access period for the agreement, the employees (the relevant employees) employed at the time who will be covered by the agreement are given a copy of the following materials:
(i) the written text of the agreement;
(ii) any other material incorporated by reference in the agreement; or
(b) the relevant employees have access, throughout the access period for the agreement, to a copy of those materials.
(3) The employer must take all reasonable steps to notify the relevant employees of the following by the start of the access period for the agreement:
(a) the time and place at which the vote will occur;
(b) the voting method that will be used.
(4) The access period for a proposed enterprise agreement is the 7‑day period ending immediately before the start of the voting process referred to in subsection 181(1).
…..
Terms of the agreement must be explained to employees etc.
(5) The employer must take all reasonable steps to ensure that:
(a) the terms of the agreement, and the effect of those terms, are explained to the relevant employees; and
(b) the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.
(6) Without limiting paragraph (5)(b), the following are examples of the kinds of employees whose circumstances and needs are to be taken into account for the purposes of complying with that paragraph:
(a) employees from culturally and linguistically diverse backgrounds;
(b) young employees;
(c) employees who did not have a bargaining representative for the agreement.
Evidence and Submissions
The CFMEU argued that the following clauses incorporated policies into the Agreement and that these policies were not given to the relevant employees during the access period, or that the employees did not have access to that material throughout the access period, as required by s 180(2):
(i)Clause 8.3.2(c) (said to incorporate the Applicant’s Health and Safety Policy (as amended))
When considering redundancies due to work availability consideration will be given to [among other things] The employee's attitude to Occupational Health, Safety and Welfare, particularly in regard to the Company's Health and Safety Policy (as amended) …
(ii)Clauses 11.3.1.1 and 11.3.1.2 (said to incorporate company policy in relation to the supply of clothing and footwear)
An employee, when working on site, is required to wear all footwear and clothing supplied [in] accordance with the Employer policy, as amended from time to time.
The supplied footwear and clothing will be replaced on a “fair wear and tear” basis in accordance with the company's policy on the supply of footwear and clothing.
(iii)Clause 11.1.9 (said to incorporate the Occupational Health and Safety and Welfare Policy (as amended))
The requirements of the Company's Occupational Health, Safety and Welfare Policy (as amended) will be observed at all times.
(iv)Clause 2.1.5 (said to incorporate the Drug and Alcohol Policy)
An employee will not present for work whilst under the influence of alcohol or drugs or have any alcohol or non-prescription drugs in their possession while in the workplace. Employees are required to comply with the Company's Drug and Alcohol Policy. The Policy does not form part of this Agreement. (emphasis added)
(v)Clauses 1.7.5 and 1.10.4 (said to incorporate the Code)
The provisions of this Agreement will be consistent with [the Code].
and
Any decision determined by the FWC, [dealing with a dispute under the dispute settlement procedure in Agreement cl 1.10], must be consistent with [the Code].
The Applicant’s primary position was that the express terms of the Agreement made it clear that none of these policies formed part of the Agreement. They referred to clause 2.1 of the Agreement. That clause appears at the commencement of Part 2 of the Agreement which is titled ‘Obligations and Responsibilities’. Clause 2.1 itself is titled ‘Company Requirements’. The introductory paragraph to the clause provides as follows:
All employees are required to adhere to the following requirements for the purposes of ensuring that the Company is able to operate in a safe, efficient and productive manner. The following procedures and practices should be observed at all times and are complimentary to other workplace requirements as set out in this Agreement, the Company's policies and procedures (as amended) and the Company's Occupational Health, Safety and Welfare Policy (as amended). Company policies do not form part of this Agreement (emphasis added).
Consideration – Incorporation by Reference
The circumstances in which policies are incorporated by reference into an agreement were recently considered by Perica C in the matter of McMahon Services Australia Pty Ltd[10] (McMahon). There, the Commission restated the principles expounded by Gostencnik DP in BGC Contracting:[11]
The question whether the policies referred to in each of the abovementioned clauses of the Agreement are incorporated into the Agreement by reference may, for present purposes, be answered by asking whether the provisions of these clauses of the Agreement impose any obligation on employees who are covered by the Agreement to comply with the policies to which reference is made … [and]
…A document that is incorporated by reference in an agreement is a term of the agreement and is enforceable as a term. Where a document is incorporated by reference because an agreement creates an obligation to comply with the document, the obligation to comply is enforceable because it is expressed as such in the agreement. There must be an obligation created by the terms of the agreement to comply with the terms of the document mentioned.
The Commission in McMahon also referred to the reasoning of the Full Bench in CFMEU v. Sparta Mining Services Pty Ltd as follows:
It is plain that those particular provisions of the Agreement establish entitlements or obligations which operate by reference to documents external to the Agreement… It was not submitted that in either case the provision was merely of an “aspirational”, “descriptive”, “advisory”, “informational” or “promissory” nature. The content of those entitlements or obligations can only be understood by reference to the external documents referred to. While at least cl.6.2 might, insofar as it refers to “instructions” and “decisions”, be read as referring to such management instructions and decisions as may be made from time to time in the future, the reference in both clauses to policies of a specific nature are clearly intended to import the obligations of those policies into the Agreement. That included policies extant at the time the Agreement was made.[12]
The drafting of the clauses in question here is problematic. Clearly the wording of the clauses makes reference to external policies in different ways and the effect of the clauses in that case will vary depending on the wording used. I do not think it can be reasonably argued that the effect of clause 8.3.2(c) is to incorporate the Applicant’s Health and Safety Policy into the Agreement. The clause does no more than refer to an employee’s attitude to health and safety matters, including the policy, as a consideration in determining redundancies. It does not impose an obligation to comply with the policy and does not seek to import the terms of the policy into the Agreement. It is little more than a reference point for consideration in a redundancy situation. I note that Perica C came to a similar view in relation to a clause with similar wording in McMahon.[13]
The obligation imposed on employees by clause 11.3.1.1 is to wear certain clothing and footwear supplied in accordance with an external policy. Clause 11.3.1.2 obliges the employer to supply those items (and entitles employees to receive them) on a fair wear and tear basis as provided for in that policy. I am of the view that the wording of these provisions, considered by itself, would be sufficiently clear to create rights and obligations that are derived from and are dependent upon the content of policy referred to. The obligations (and entitlements) in the clauses can only be given effect to by reference to the policy. In this case, subject to what is said below, I think that the policy would be incorporated into the Agreement by these clauses.
The incorporation of the Occupational Health and Safety and Welfare Policy by operation of clause 11.1.9 alone, is clearer still. Read in isolation, that clause and the second sentence of clause 2.1.5, expressly require obedience to the terms of the respective policies by the employees, as a term of the Agreement. However, an apparent inconsistency arises because of the terms of clauses 2.1 and 2.1.5. The last two sentences of the latter clause say, “Employees are required to comply with the Company's Drug and Alcohol Policy. The Policy does not form part of this Agreement.” The last sentence of clause 2.1 says “Company policies do not form part of this Agreement.” On the face of the Agreement then there are clauses that appear to impose obligations to comply with external policies and on the other hand, there is an express general term that says company policies are not a part of the Agreement and another term which says a specific policy does not form part of the Agreement.
The Full Bench in Airservices Australia v. Crouch[14] considered inconsistency between terms of an enterprise agreement and made the following observations:
Inconsistency between provisions of an enterprise agreement may be identified in several ways. A provision of an agreement may be directly inconsistent with another provision, for example where there cannot be compliance with both or where a right or benefit is conferred by one provision which the other would take away. Provisions of an enterprise agreement may be inconsistent because, for example, one provision has the effect of altering, impairing or detracting from another or other provisions of the agreement in a way that would create a burden that amounts to inconsistency. Provisions may be inconsistent if one operates in a way that is repugnant to another. Indirect inconsistency might arise when a provision of an agreement so comprehensively deals with a subject matter that on its proper construction it leaves no room for the operation of other provisions touching the subject atter. In this sense, the first mentioned agreement provision is said to “cover the field” in relation to the subject matter.[15]
There is on one view, a direct inconsistency between the terms of the Agreement in the sense that there are clauses that seek to import obligations and entitlements from external policies into the Agreement (clauses 11.3, 11.1 and 2.1.5) but two other clauses that then seek to remove those obligations and entitlements. At the very least the clauses create an ambiguity as to their proper construction. Viewed as a whole, I think the better reading of these provisions is that the terms of company policies are not incorporated into the Agreement. I am of this view because the text of clause 2.1 is in clear terms and applies expressly to all company policies. That wording must be given effect to. Whilst the term would have been better placed as a stand-alone provision, I think it appropriate to make some allowance for the fact that instruments of this kind are not usually drafted with an eye to legal niceties.[16] I also think the wording of the introductory paragraph to clause 2.1 makes a distinction between the requirements set out in that clause which are terms of the Agreement and other requirements that are provided for elsewhere in the Agreement as terms, and those which are dealt with in company policies. After drawing the distinction, the clause immediately makes clear that company policies do not form part of the Agreement. I think the objective intention of the clauses and their ultimate effect is that to the extent the policies are referred to in the Agreement and compliance with those policies is mentioned, these are references to obligations that may arise as additional terms of the contracts of employment of employees covered by the Agreement, but they are not imposed by, or enforceable through, the Agreement itself. That conclusion is also consistent with clause 1.7 Conditions of Employment and Interaction with Other Instruments, subclause 1 of which provides:
Employees will comply with Employer policy as issued from time to time. Employer policy does not form part of this Agreement.
The Code is not a company policy. It had a separate life as a statutory instrument. By the time the Agreement was made, the Code no longer had any legal effect. It would nonetheless have been possible to give a document like that a legal life through incorporation into the Agreement. The Applicant argued that the Code was not incorporated by reference. Alternatively, it was put that the provisions of the Agreement referring to the Code were a nullity because by the time the Agreement was made, the Code had been repealed and not replaced. There was, in that case, nothing for the clauses to incorporate. In response to concerns expressed by the Commission, the Applicant provided an undertaking in relation to the Code clauses in question. The undertaking provided that the clauses were to be of no effect. I consider that the undertaking dispenses with any argument about potential non-compliance with s.180(2) in relation to the Code.
Reasonable Steps to Provide Material during/throughout the Access Period.
Evidence, Submissions and Findings
The Applicant argued that all employees had access to the Agreement and any policy incorporated by reference throughout the access period. They said such material was provided in the ballot cover letter, the explanation document and during an earlier unsuccessful ballot process in October 2023. Further, the evidence of Mr. Byrne was said to confirm that employees had access to policies ‘in the palm of their hand’ throughout the access period because:
(i)Each employee was under an obligation to familiarise themselves with company policies.
(ii)Each employee is inducted into the location of the policies and the requirement to comply with them.
(iii)The policies are readily accessible including via the employees’ mobile phone via a dedicated app or a QR code on the ‘SLAM’ (stop, look, assess, manage) card.
The CFMEU said that the ballot cover letter and the explanation document did not show that employees had access to relevant material but rather that if they wanted access, they had to request it. They said that a requirement for employees to familiarise themselves with policies was not relevant to whether employees had access to them during the access period. They said that it was not clear which policies were accessible via the SLAM card or QR code and that none of the explanatory material made reference to the possibility of obtaining access to these documents by those means. Rather, they said that the evidence showed that those wanting the material would have to request it which suggested that they were not accessible electronically.
Mr. Byrne’s evidence was not the subject of cross-examination. On the basis of his evidence, I am satisfied that the Applicant’s policies were accessible to employees electronically at the relevant time through a mobile phone and the ‘Safety 2.0’ app. Further, that evidence shows that all employees were issued with a SLAM card that contained a QR code that takes employees to the applicable policies. Mr. Byrne’s evidence also shows that each employee is inducted as to the location of the policies and that access to physical copies of any incorporated material was open to employees who wanted it throughout the access period. The proposed Agreement was provided with the ballot cover letter.
Even if I am wrong about the effect of the clauses referring to company policies, and some policies are incorporated by reference, I am satisfied that the employer took all reasonable steps to ensure that employees had access throughout the access period to the text of the Agreement and any materials incorporated by reference in accordance with s.180(2)(b).
Genuine Agreement – Reasonable Steps to Explain Terms
The Applicant argued that all reasonable steps had been taken to explain the terms of the Agreement and the effect of the terms, to employees. They relied on the Form F17A filed with the application in which Mr. Byrne attested to the following:
(i)The Applicant provided a detailed explanation of the differences between the 2019 Agreement and the proposed agreement in writing (explanation document) which was issued to employees on 29 November 2023.
(ii)A representative of the Applicant attended each site to answer any further questions (none were asked) between 29 November and 6 December 2023.
(iii)The Applicant confirmed in writing that staff were available to answer questions and on multiple occasions the Applicant advised employees that they could contact a staff member, including in the ballot cover letter and the covering email of 29 November 2023.
The Applicant also referred to the previous discussions in relation to the agreement that was voted on but not accepted by the employees in October 2023. They provided evidence in the F17A that there had been an earlier explanation document provided to employees that explained the differences between the October agreement and the 2019 document and that there were verbal explanations given about the differences between the October agreement and the underlying award. The Applicant said it was relevant to note that the proposed agreement was a ‘roll-over’ agreement with terms that were ‘largely identical’ to the pre-existing agreement. They said that where there is an existing agreement in place and there were relatively few changes, it was likely that an explanation of the award was not required although it was provided in any event.
The CFMEU said the explanation document contains no information about less favourable terms and that the Applicant took no steps, let alone all reasonable steps, to explain the less favourable terms. They said that there was no evidence to support the submission that an explanation was provided in relation to the October version of the agreement. They said that there was no explanation about the impact of the remaking of the award since the 2019 agreement was entered into and that in the circumstances, the Commission could not be satisfied that the requirements of s.180(5) had been met.
Consideration
In CFMMEU v. Ditchfield Mining Services[17] a Full Bench of the Commission summarised the principles derived from the Federal Court decision in One Key[18] in relation to the requirements of s.180(5). Relevantly, these were said to be, first,
whether an employer has complied with the obligation in s.180(5) depends on the circumstances of the case. Second, the focus of the enquiry as to whether an employer has complied with s.180(5) is first on the steps taken to comply, and then to consider whether (a) the steps taken were reasonable in the circumstances; and (b) these were all the reasonable steps that should have been taken in the circumstances. Third, the object of the reasonable steps that are to be taken is to ensure that the terms of the agreement, and their effect, are explained to relevant employees in a manner that considers their particular circumstances and needs. This requires attention to the content of the explanation given.[19]
The Full Bench in Ditchfield also said:
[71] Compliance with s.180(5) will not always require an employer to identify detriments in an agreement vis-à-vis the reference instrument, or for the employer to provide an analysis between the agreement and the relevant reference instrument, particularly in circumstances where an existing enterprise agreement, not a reference instrument, applies to the employees in their employment with the employer. The question of compliance with s.180(5) is to be judged against the circumstances that pertain at the time at which compliance was required. Section 57 of the Act makes clear that a modern award does not apply to an employee in relation to particular employment at a time when an enterprise agreement applies to the employee in relation to that employment. In the present case, when the explanations were given, no enterprise agreement applied to the employees and the Award did apply. An explanation of the effect of the terms of the Agreement vis-à-vis the Award was therefore capable of being relevant to the evaluative assessment of whether all reasonable steps were taken to explain the terms of the Agreement and the effect of those terms.
[72] The obligation under s.180(5) to take all reasonable steps to explain to relevant employees the terms of an enterprise agreement and the effect of those terms is an important function of the agreement-making scheme established by Part 2-4 of the Act. Its evident purpose, taking into account its role in assessing whether the employees who were asked to vote to approve an agreement genuinely agreed to the agreement, is to ensure that employees are as fully informed as practicable about the terms and effect of the terms of a proposed enterprise agreement before voting on whether to approve it. An employer’s discharge of its obligation under s.180(5) is intended to enable employees to know what they are being asked to agree to, and to understand how their wages and working conditions might be affected by voting in favour of an agreement.[20]
It is relevant to note the history of the negotiations for the Agreement which preceded the explanation provided by the employer of the terms of the Agreement and the effect of those terms. It was not in dispute that there had been an earlier unsuccessful attempt to have an agreement endorsed by the workforce. Nor was it in dispute that at the time of the explanation and ultimately the vote on the Agreement, the employees were covered by the 2019 Agreement. The latter point is relevant in taking account of the circumstances in which the explanation was given. The endorsement of the Agreement and its ultimate approval would have the effect that the terms of that agreement would apply, as opposed to the terms of the 2019 Agreement. Thus, in explaining the effect of the terms, it was reasonable to draw the comparison between the terms of the two agreements.
However, contrary to the submissions of the Applicant I do not consider it possible or appropriate to rely on the evidence in the Form F17A about the explanation provided prior to the vote on the October agreement in satisfaction of the requirements of s.180(5) for the proposed agreement. This is because there is little if any detail in that document about the content of the explanation provided but also because it was accepted that there were differences, albeit minor, between the terms of the two agreements. On one view, it might be said that in that situation additional care needs to be taken with the subsequent explanation to make sure employees are not confused about what they are voting for because of an explanation provided in respect of a previous agreement which has been rejected. I do not think that the evidence in the F17A about the first explanation is clear or detailed enough to be of assistance to the Applicant in satisfying the Commission that the requirements of s.180(5) have been met. Nor do I think it shows that the understanding of employees of the Agreement terms and the effect of them may have been impeded by the previous explanation. I do not consider the explanation to be useful in the consideration of whether s.180(5) has been met.
The explanation document provided to employees was lengthy and contained a considerable level of detail. Specifically, the document:
(i)noted the key benefits as between the 2019 agreement and the proposed agreement;
(ii)advised that if made, the Agreement would displace the 2019 agreement and said that the focus of the explanation would be on the differences between current conditions of employment and the conditions that would apply if the Agreement came into effect;
(iii)advised that a new award had been made since the making of the 2019 agreement;
(iv)provided electronic access to the 2019 agreement and the relevant award, or physical access via a contact person;
(v)confirmed that if made, the Agreement the award would continue to have no application to employees;
(vi)provided an explanation as to the operation of the ‘better off overall test’;
(vii)provided the details of a contact person in the event further information was required;
(viii)indicated that the written explanation was detailed but not exhaustive and encouraged the reader to contact the contact person if further explanation was required;
(ix)provided a table of Agreement terms and an explanation of the effect of some 32 clauses and subclauses over 10 pages, including changes that had no material effect, changes that were advantageous to employees and changes that were disadvantageous compared to the 2019 Agreement.
In Construction, Forestry, Maritime, Mining and Energy Union v. Square Ceilings Pty Ltd[21] the Full Bench considered whether certain steps taken by the company were adequate for the purposes of s.180(5). There the Bench concluded that a detailed written explanatory document that included references to Award clauses displaced by the proposed agreement, a ‘read through’ of the agreement and the opportunity to ask questions about the proposed agreement were among the reasonable steps taken to explain the agreement.[22] Whilst an opportunity to ask about the terms of the agreement by itself is unlikely to constitute all reasonable steps to ensure the terms and their effect are explained, I regard that step as relevant in circumstances where proactive steps in the form of a reasonably comprehensive written explanation has also been provided. I also note that that step was taken on each of the sites on which the employees were engaged and reinforced in the written explanation itself.
The F17A identifies one employee as being under 21 years of age and nine as being over 45 years of age. There are none from a non-English speaking background in which case no particular circumstances relating to the language-based comprehension of the explanation arise and the explanation in English can be regarded as a reasonable step.
Criticism of the content of the explanation was largely directed at the lack of explanation in relation to the effect of the references to the Code. The undertaking provided in relation to the Code addresses this point.
In Construction, Forestry, Maritime, Mining and Energy Union v Mechanical Maintenance Solutions Pty Ltd[23] the Full Court of the Federal Court reinforced the principle that satisfaction about what is “reasonable” does not require that every one of the steps in the “universe of reasonable steps” be taken but rather, the exercise involves an evaluative assessment of the steps taken as a whole.[24] Having regard to the evidence, I am satisfied that all reasonable steps have been taken by the Applicant in accordance with s.180(5) of the Act.
Better Off Overall Test
The relevant award for the purposes of the BOOT is the Building and Construction General On-Site Award 2020. The CFMEU raised a series of issues with the terms of the Agreement and argued that the Agreement did not pass the BOOT. The submissions were made in writing and supplemented orally at the hearing on 15 March 2024. The issues raised were as follows:
(i)Agreement cl 9.2.1 (“Travelling outside radial areas”) is less beneficial than the Award. Under the Agreement, employees are only entitled to payment for travelling time outside ordinary hours and expenses for travel from the 50-kilometre radius to the job, and from the job back to the radial area. Under Award cl 26.4(b), employees are entitled to payment for travelling time outside ordinary hours and expenses for all time reasonably spent in travel.
(ii)Agreement cl 3.1 (“Daily Hire”) and 8.1.1 (“Notice of Termination”) are less beneficial than the Award in some circumstances. Under Award cl 9.1, only tradespersons and labourers can be employed on a daily hire basis. Employees in other classifications can only be employed on a weekly hire or casual basis. Apart from casuals, those employees will be entitled to notice of termination in accordance with the more generous provisions of the National Employment Standards (NES). Even assuming that the above-Award rates of pay in the Agreement include a component for the follow the job loading, this will mean that employees other than tradespersons and labourers will be worse off under the Agreement than they would be under the Award where their NES notice entitlements are greater than the amount they have been paid by way of the follow the job loading.
(iii)The second paragraph of Agreement cl 8.1.1 (“Notice of Termination”) is also less beneficial than Award cl 9.1, which does not confer an equivalent right upon an employer to withhold or deduct monies due to a daily hire employee who fails to give notice of termination.
(iv)Agreement cl 8.3.3 (“Redundancy Pay”), which refers to the NES, is less beneficial than Construction Award cl 41.3, under which the conditions of eligibility for redundancy pay are less restrictive than the NES, and which provides for a greater entitlement to redundancy pay than the NES for employees with less than 4 years’ service. The effect of this clause is that the industry-specific redundancy scheme in the Award is not incorporated by reference in the Agreement. Accordingly, neither s 121(3) nor s 123(4)(c) of the Act apply to exclude the Employer’s obligation to pay redundancy pay in accordance with the NES or limit the coverage of the NES redundancy pay provisions. Therefore, to the extent that this clause provides for the Employer to offset its liability to pay redundancy pay by utilising a redundancy fund, it is contrary to the NES.
(v)Agreement cl 2.1.8 is silent as to whether employees are to be paid for the time spent “ensur[ing] that the workplace is left in a clean and safe manner” at “the completion of each day’s work”. If it is unpaid, this is a detriment compared to the Award.
(vi)Agreement cl 4.5 (“Overtime”) does not provide for employees to refuse to work overtime hours if they are unreasonable. This is less beneficial than Award cl 29.1(b).
(vii)The value of the overtime meal allowance under Agreement cl 6.3.3.1 may be wholly offset by the Employer providing “a meal or meals”. That is less beneficial than cl 21.2 of the Award, under which the overtime meal allowance cannot be offset by an employer providing meals unless the circumstances in cl 21.2(b) are met.
(viii)Agreement cl 6.3.3.2 provides that the overtime meal allowance “is not payable when an employee is provided with reasonable board and lodging or receiving a distant job allowance”. That is less beneficial than the Award, which only allows for the non-payment of the overtime meal allowance in those circumstances if the employee is provided with a suitable meal: cl 21.2(b).
(ix)Agreement cl 9.5.3 provides for the overtime meal allowance to be paid on forward journey travel days, but not for the return journey. That is less beneficial than the Award, which provides for an equivalent allowance for both the forward and the return journey: cl 25.6(a)(i) and (b)(i).
(x)The first aid allowance under Agreement cl 6.3.4 is $2.77 per day. That is less beneficial than the Award, which provides for an allowance of $3.58 per day, or $5.67 per day for an employee who holds a higher first aid certificate: cl 23.6(b).
(xi)Agreement cl 8.1 does not make any provision as to payment on termination. That is less beneficial than Award cl 20.6, which contains detailed provisions in this regard.
(xii)Agreement cl 6.4 is less beneficial than the Award as it makes no provision for voluntary employee contributions (unlike Award cl 28.3) or payment of superannuation while employees are absent due to work-related illness or injury and receiving workers compensation payments (unlike Award cl 28.5(b).
(xiii)The rostered day off (RDO) provisions of Agreement cl 4.2 are less beneficial than Award cl 16.6(b), as they do not provide for an employee working on a day rostered as an RDO to be paid Saturday penalties and retain the accrued RDO.
(xiv)There is no entitlement to wash up time under the Agreement cl 5.3, which is less beneficial than Award cl 16.11(b), which provides for 5 minutes’ washing time before lunch and before finishing time.
(xv)The timing of the meal break for day workers in Agreement cl 4.4.1 (“no later than six (6) hours after the commencement of work”) is less beneficial than Award cl 18.1(b) (five hours).
(xvi)The annual leave provisions of Agreement cl 7.1 are less beneficial than Award cl 31.8, as there is no provision for an employee with an annual leave balance of greater than eight weeks (or ten weeks, for a shiftworker) to require the Employer to grant annual leave.
(xvii)Agreement cl 7.1.5 (“Annual Leave Loading”) is less beneficial than Award cl 31.2(c), as it does not provide for the applicable shift loading to be paid where this is greater than 17.5%.
(xviii)Agreement cl 9.5.6 (“Rest and Recreation”) is less beneficial than the provisions of Award cl 25.6(f) and appears to be based on a previous version of the Award clause.
(xix)Agreement cl 11.2 (“Inclement weather”) is less beneficial than the Award insofar as it apparently excludes casuals from the entitlement to payment for time lost due to inclement weather.
(xx)The Agreement is also less beneficial than the Construction Award as it does not confer any of the following entitlements:
a. Presenting for work but not required (Award cl 19.4);
b. Higher duties (Award cl 19.10);
c. Accident pay (Award cl 27);
d. Compensation for clothes and tools (Award cl 21.3);
e. Computing quantities (Award cl 23.10(b));
f. Scaffolding or rigging certificate allowance (Award cl 23.10(c));
g. Payment for transporting tools (Award cl 25.6(a) and (b));
h. Weekend return home (Award cl 25.6(e)); and
i. Dispute resolution procedure training leave (Award cl 39.10).
(xxi)Clause 2.3 - The introduction of part-time employment for daily hire workers.
(xxii)Clause 3.4 – the introduction of fixed term employment where such employees are not entitled to notice of termination or redundancy entitlements.
(xxiii)Clause 5.1 shift work – the payment of shift penalties for standalone night shifts as opposed to overtime penalty rates.
(xxiv)Clause 6.1.1.3 – training rates of pay.
(xxv)Clause 7.1.8 – unscheduled shutdowns.
The Applicant relied on the matters referred to in the F17A documents which identified the more and less beneficial terms, two affidavits sworn by Mr. Byrne and various submissions relating to the matters raised by the CFMEU, including modelling to demonstrate that employees were better off. The Applicant said that the CFMEU had done little more than identify a series of items that were potentially less beneficial than the award without undertaking the necessary evaluative exercise to show that employees were not better off.
The Commission’s own modelling shows that the Agreement rates of pay are between 22.08% and 51.01% higher than the Award. The modelling also shows that the Agreement passes the 50-hour week test, a labourer classification being 22.04% better off under the terms of the Agreement.
The Applicant provided brief written submissions in relation to a number of the issues highlighted by the CFMEU in its oral submissions.
In relation to the issue of travel outside radial areas, the Applicant provided modelling to approximate the scenario posited by the CFMEU. That modelling demonstrated that for a single travel event outside of a radial area, employees remained better off under the Agreement, although in some instances only marginally, compared to the award. Where overtime is worked on such a day, the employee would be considerably better off under the Agreement. The Applicant pointed out that a ‘static’ analysis involving a single instance of travel was not the balancing exercise that the Commission is required to undertake and that consideration would need to be given to the impact of such a scenario over a more extended period and the ‘real world’ likelihood that employees would not be required to travel such extended distances each day and would instead stay in closer proximity to the worksite throughout the week and be provided with meals and accommodation by the employer. On this basis the Applicant’s modelling showed that the employees would be better off.
Because extended commuting distances are not uncommon in the industry and because the amounts involved in the payment of extended travel entitlements in the industry under the award can be considerable, I had a residual concern that in some circumstances, employees working on distant jobs may not necessarily be better off under the Agreement. However, the Applicant’s written undertaking addresses this concern.
In relation to rest and recreation and living away from home clauses, the CFMEU said that the Agreement provisions were based on a superseded version of the award and were inferior to the current provisions. In particular, they said that for work on a distant job which extended for 5 months, under the Agreement an employee would only be entitled to one weekend at home and would not be paid for travel time spent between home and the work site. Under the award, such an employee would be entitled to at least three five-day periods at home and paid travel time.
The Applicant said the practice was that the company paid for travel time (and a per kilometre allowance) for jobs where employees are living away from home, even where this occurs on weekends rather than in the more limited instances of rest and recreation leave. Modelling was provided. The Applicant said that it was prepared to formalise the arrangement and provided an undertaking to address the issue. An undertaking was also provided in relation to unpaid rest and recreation leave. As to paid rest and recreation leave, the Applicant submitted that under the award the entitlement only arises after 12 weeks and that on any scenario an employee would receive more than the equivalent of two days’ pay through the hourly rates provided for in the Agreement over a much shorter period than 12 weeks. I accept that to be the case. To the extent that the matters raised under this heading present residual concerns as to whether the Agreement as a whole satisfies the BOOT, the undertakings provided remove those concerns.
As to daily hire employees, the Agreement provides for termination on one day’s notice in all cases. This is the same as the award. Redundancy provisions apply to all daily hire employees. I hold no concerns that the part-time provision weighs against the interests of employees in the overall assessment insofar as notice or redundancy entitlements are concerned.
Clause 3.4.2 of the Agreement provides that where an employee’s fixed term contract reaches its nominated expiry date the employment will come to an end automatically and the employee will not be entitled to notice of termination or redundancy pay. The Agreement further provides that redundant employees (other than casuals) will receive redundancy payments in accordance with the NES.[25] It also provides for a contribution of $85 per week to an industry redundancy fund for each ‘eligible employee’. The CFMEU points out that there are no fixed term provisions in the award and that each employee is entitled to some form of notice and redundancy payments. In relation to notice, I note the exclusion only applies at the expiry of the term and that in other circumstances the ordinary daily hire provisions would apply. As to redundancy payments, to the extent that the Agreement excludes fixed term employees from payments, the Applicant has provided an undertaking to the effect that all fixed term employees will receive weekly contributions to the industry redundancy scheme. Whilst I think it unlikely that fixed term employment would be availed of in circumstances where daily hire employment prevails, this undertaking removes any residual concern I have that the redundancy provisions may result in some employees not being better off.
The CFMEU argued that some employees who are not daily hire employees may not be better off as a result of the operation of the notice of termination provisions in the Agreement and the follow the job loading provisions of the award. There are at least two difficulties with the argument. The first is that the Agreement classifications in clause 6 refer to labouring and formworking classifications. These are daily hire classifications under the award. No weekly hire classifications are referred to. Second, the follow the job loading is only applicable to daily hire classifications. There is no disadvantage to non-daily hire workers as asserted.
I also do not consider that the capacity for the employer to ‘offset’ its liability to pay redundancy pay by using a redundancy fund to be contrary to the NES. Clause 8 provides that an employee shall receive redundancy payments equivalent to those required by the NES. Contributions to a fund as required by the Agreement are available to meet this entitlement and to the extent that the contributions exceed the NES obligation and are payable in accordance with the terms of the fund, employees would receive those amounts. I also note that clause 1.6 provides that the NES will apply in the event of any inconsistency between the Agreement and the NES where the NES provides the greater benefit.
The CFMEU also argued that the shift work provisions in the Agreement were inferior to the award. They said that unlike the award, there was no requirement in the Agreement that there be a preceding shift where work is undertaken in the civil construction sector in order for the shift work provisions to apply. They said that the Agreement provided for a 50% penalty for such a night shift compared to a standalone night shift worked under the award in equivalent circumstances which would attract penalty rates of time and a half for the first two hours and double time thereafter. Reliance was placed on the Full Bench decision in D&D Traffic Management Pty Ltd v Australian Workers’ Union[26] (D&D) where it was said:
The Building Award definition of “shiftwork” in clause 34.2(a) required the continuation of operations by a group of employees upon work which another group of employees had engaged in previously. This connotes, at the least, a two-shift system of operations. However, the “night shift” definition in clause 8(c) of the Agreement does not contain this requirement for the continuation of work at all. Rather, it simply provides that any work shift starting on or after 6.00pm and finishing on or before 6.00am is a night shift. Thus, it would permit a “stand-alone” night shift worked within those temporal parameters to be paid at the 30 percent shift loading even if there is no preceding shift worked anywhere in the enterprise in question. A shift of this nature worked in respect of civil construction Monday-Friday would not fall within the Building Award definition of “shiftwork” and would be payable at the higher overtime penalty rates prescribed by clause 36.2 of the Building Award. It is not necessary to engage in any exercise in the construction of 34.2(a) in order to reach this conclusion. The Agreement did not on any view pass the BOOT for this reason alone.[27]
The Applicant argued that such working arrangements were improbable but provided further modelling on what it described as a ‘worst case scenario’ of 8 hours worked under the competing arrangements. The Applicant said that 8 hours was an appropriate assessment because all work in excess of 8 hours would be paid for at double time under the Agreement and anything less would mean the employee would be working a reduced number of hours at 150%, as opposed to 200% (of the award rates) payable under the award. The modelling showed that in all cases, employees remained better off, although at the lowest classification level, the difference was marginal.
Whether these shift work arrangements for work in the civil sector present a disadvantage to employees depends largely on the rates payable under the proposed agreement and the award, and the applicable penalties. Where, as here, the agreement rates are significantly higher than the award, the likelihood of disadvantage is reduced. I also note that the penalty payable for shift work under this Agreement is higher than was the case in D&D. Having regard to the modelling provided by the Applicant and the terms of the Agreement, I am satisfied that even in the circumstances described, the shift work provisions would not result in a net detriment to employees.
The CFMEU identified a deficiency in the rates of pay payable to certain trainee employees under the Agreement. They said the rates payable to trainees for the first 26 weeks was less than the award. The Applicant said that s.206 of the Act would have the effect of lifting base rates to no less than the relevant award base rate and that the provisions were unlikely to be used. To the extent the terms of the Agreement expressly provide for rates of pay this group of employees that are below award rates this raises a concern as to whether the BOOT has been met. The Applicant proffered an undertaking which address the concern and removes any doubt in relation to trainee employees.
I have considered the terms of the Agreement in totality. I have taken into account those terms which are more beneficial and those which are less beneficial than the award, including all the matters raised by the CFMEU, and the views expressed by the CFMEU in relation to the BOOT. I have also taken into account the terms of the undertakings that have been provided. On the basis of these matters, my evaluative assessment is that the BOOT has been satisfied in this case.
The Applicant has provided undertakings (Annexure A). The views of the bargaining representatives have been sought as to these undertakings. I note that the first proposed undertaking deals with the coverage of the Agreement. It was provided in response to a Commission concern as to whether the employees covered by the Agreement had been fairly chosen, a point that had been raised by the CFMEU in written submissions. As a consequence of the undertaking, the union did not press this point in final submissions. The undertaking narrows the proposed coverage and, having regard to the circumstances as a whole, I do not think it results in substantial changes in the relevant sense.[28] I am satisfied that the undertakings will not cause financial detriment to employees or result in substantial changes to the Agreement. The undertakings, other than undertaking 3 in respect of clause 3.2, are taken to be terms of the Agreement.
I am satisfied that each of the requirements of ss.186, 187 and 188 has been met.
The Agreement is approved and will commence in accordance with the terms of the Agreement and s.54 of the Act and continue until its nominal expiry date, being 4 years from the date of approval, on 5 April 2028.
DEPUTY PRESIDENT
Annexure A
[1] See s.188(1)(a)(ii) above.
[2] AMOU v Harbour City Ferries Pty Ltd [2016] FWCFB 3337 (Harbour City Ferries), [30].
[3] Australian Maritime Officers’ Union v Harbour City Ferries Pty Ltd & Ors [2015] FWCFB 3337 at [29].
[4] Ibid at [33].
[5] AMOU v. Harbour City Ferries Pty Ltd[2016] FWCFB 1151.
[6] CFMMEU v. FWS Group Pty Ltd t/as Field Mining Services Group[2022] FWCFB 18 at [27], citing Peabody Moorvale Pty Ltd v Construction, Forestry, Mining and Energy Union[2014] FWCFB 2042, 242 IR 210 at [20]-[22]; RFFWUI v Woolworth Group Limited & Ors[2019] FWCFB 2355, 289 IR 214 at [33]. See also Huntsman Chemical Company Australia Pty Ltd /t/as RMA Rigid Cellular Plastics an Ors [2019] FWCFB 318 at [74].
[7] Huntsman ibid.
[8] CFMMEU v FWS Group ibid at [27].
[9] See McMahon Services Australia Pty Ltd [2024] FWCA 934 at [45].
[10] [2024] FWCA 934.
[11] BCG Contracting Pty. Ltd [2018] FWC 1466 at [58], [64].
[12] [2016] FWCFB 7057 at [16].
[13] Op cit at [59].
[14] [2023] FWCFB 21.
[15] Ibid at [19].
[16] Workpac Pty Ltd v Skene [2018] FCAFC 131 at [197], cited in Shop Distributive and Allied Employees’ Association v. Target Australia Pty Ltd [2021] FCA 1038 at [20].
[17] [2019] FWCFB 4022. See also The Australian Workers' Union v Rigforce Pty Ltd [2019] FWCFB 6960.
[18] Construction, Forestry, Mining and Energy Union v One Key Workforce Pty Ltd (One Key Workforce (No 1)) (2017) 270 IR 410.
[19] Ditchfield op cit at [63] to [67].
[20] Cited in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v DDP Electrical Services Pty Ltd T/A DDP Electrical Services [2020] FWCFB 18 at [31].
[21] [2021] FWCFB 398.
[22] Ibid at [36] and [37].
[23] [2022] FCAFC 15.
[24] Ibid at 169].
[25] Clause 8.3.3.
[26] [2021] FWCFB 4197.
[27] Ibid at [24].
[28] See CFMMEU v. C & H Acquisition Pty Ltd[2020] FWCFB 3134 at [35] and following.
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