BSH Electrical Pty Ltd

[2019] FWCA 5633

[2019] FWCA 5633

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

BSH Electrical Pty Ltd
(AG2019/1240)

BSH ELECTRICAL PTY LTD ENTERPRISE AGREEMENT 2018

Building, metal and civil construction industries
DEPUTY PRESIDENT COLMAN	SYDNEY, 20 AUGUST 2019

Application for approval of the BSH Electrical Pty Ltd Enterprise Agreement 2018 – union objection – ‘over agreement’ wages explained to one group but not others – genuine agreement – alleged adverse action – approval requirements met – agreement approved

[1] This decision concerns an application under s 185 of the Fair Work Act 2009 (the Act) by BSH Electrical Pty Ltd (BSH) for approval of an enterprise agreement known as the BSH Electrical Pty Ltd Enterprise Agreement 2018 (the Agreement), a single enterprise agreement.

[2] The Agreement applies to all employees of BHS who are employed in the ten grade classification structure which aligns with occupations covered in the Electrical, Electronic and Communications Contracting Award 2010 (Award). The scope of the Agreement covers employees in the state of Tasmania, where the company’s operations are grouped by regions known as Northern Tasmania, North West Tasmania and Southern Tasmania.

[3] The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU), a bargaining representative for the Agreement, filed an F18 statutory declaration stating that it does not support the approval of the Agreement. In further correspondence with the Commission the union submitted that the company had failed adequately to explain the Agreement to employees and that the Agreement was not genuinely agreed to by employees. It contended that the requirements of sections 180(2)(a), 180(5)(a) and 188 of the Act had not been met and that the Agreement could therefore not be approved by the Commission.

[4] The focus of the union’s concerns relate to a statement made by the company’s managing director, Mr Mark Bayles, to a meeting of employees in Southern Tasmania shortly before the vote on 3 April 2019 that the company would pay wages in excess of those in the Agreement. The union says that employees in the other two regions were not involved in this discussion and that they were not told about the higher wages.

[5] The vote on the Agreement proceeded to take place that day in all three regions. According to the company’s F17 statutory declaration filed in support of the application for approval of the Agreement, all 41 employees covered by the Agreement cast a valid vote and 21 voted to approve it.

[6] On 9 April 2019, Mr Bayles sent a letter to all employees advising that the company would from the next pay period pay rates exceeding those in the Agreement, in order to align company rates with those of a particular competitor. The letter also stated that the company would provide an undertaking to the Commission to pay the higher rates under the Agreement. He said that the company was implementing wage increases even though there was no requirement for it to do so until the Agreement was approved by the Commission. The letter noted that the CEPU was opposing the approval of the Agreement by the Commission, and that if the Commission did not approve the Agreement wages would revert to the current rates.

[7] The union says that Mr Bayles’ statement to Southern region employees on 3 April 2019 that the company would pay higher wages effectively reopened negotiations and changed the Agreement. It says that the explanation of the terms of the Agreement to employees was deficient because employees in the Northern and North West areas knew nothing about it. The union also contends that the company engaged in adverse action by threatening to remove the over agreement payments if the Agreement was not approved by employees or the Commission, and that this provides reasonable grounds to conclude that the Agreement was not genuinely agreed to by employees.

[8] In response to the union’s objections the company filed a brief submission and a witness statement from Mr Bayles, as well as statements from Ms Bernadette Doyle and Mr William Porter, employees who attended the meeting on 3 April 2019 at which Mr Bayles spoke to employees in the Southern region. The company’s position, consistent with the statement of Mr Bayles, was that at the meeting on 3 April 2019, some employees said that they believed the rates of pay in the Agreement were marginally lower than those of a particular competitor and that they believed the company should match those rates. Mr Bayles then told employees at the meeting that the company would pay the difference by way of an ‘over agreement’ payment in the event the enterprise agreement was voted up. Mr Bayles explained to the employees that the vote that day related to the Agreement as provided during the access period. Ms Doyle and Mr Porter confirmed in their statements that they were present at the meeting and that Mr Bayles said these things. They stated that, after the Agreement was voted up, they were told that the higher rates of pay reflecting those of the competitor would be paid to all employees. The content of these statements meets no contradiction from the union. I accept them as true accounts of what occurred at the meeting.

[9] The company contended that Mr Bayles’ statement about the over agreement payment in these circumstances does not call into question its compliance with any of the approval requirements in the Act. It said that the matter does not touch on the company’s explanation to employees of the terms of the Agreement because the Agreement remained unchanged, nor was it a matter that could cause the Commission to be concerned that there was any coercion, misrepresentation or non-disclosure that could affect the question of whether employees had genuinely agreed to the Agreement.

[10] In a brief reply to the company’s submissions and witness statements, the CEPU maintained its objection to the approval of the Agreement because employees in the Northern and North West regions were not involved in the discussions about the over agreement payments. It said that employees in these two regions did not have all relevant information connected to the Agreement.

[11] As a bargaining representative, the CEPU has a right to be heard. I listed the matter for mention on 14 August 2019 for the purpose of ascertaining whether the union sought to have the matter listed for hearing and to discuss any further programming with the parties. Both parties stated that they did not seek to lead further evidence or cross-examine witnesses. They requested me to determine the matter on the papers and I agreed to do so.

Consideration

[12] In my opinion the company’s agreement to pay wages in excess of those in the Agreement on an ‘over agreement’ basis does not pose any obstacle to the approval of the Agreement. I appreciate the union’s concern that employees in the Northern and North West regions voted on the Agreement without the knowledge that the company had undertaken to pay the higher rates. But this meant simply that there was an additional reason for those employees to vote in favour of the Agreement about which they were unaware. This matter is not something that might have caused employees to vote against approval of the agreement.

[13] Importantly, because the higher wages were offered on an over agreement basis, the Agreement itself remained unchanged. The company did not reopen negotiations or alter the Agreement. This would have triggered a new seven-day access period. Rather, Mr Bayles told employees that the vote on the Agreement, as provided during the access period, would go ahead, and that the company would make the additional payment on an over agreement basis.

[14] The union submits that the company offered an undertaking to the Commission that it would observe the over agreement rates of pay and that it can be said then that these higher rates are intended to form part of the Agreement and that for this reason they should have been the subject of discussions with and explanations to all employees to be covered by the Agreement. Section 180(5) requires an employer to take all reasonable steps to ensure that the ‘terms of the agreement, and the effect of those terms’, are explained to the relevant employees in an appropriate way. The undertaking to the Commission was offered after the Agreement had been approved by employees and lodged. An undertaking is not taken to be a term of an enterprise agreement until such time as it is accepted and the agreement is approved by the Commission (see s191).

[15] Further, I have advised the parties that I cannot accept the undertaking in relation to the higher rates of pay. I have no jurisdiction to do so, because the undertaking is not responsive to any concern I have about the relevant approval requirements, including the better off overall test (see s 190(1)(b)). Therefore the over agreement rates offered by the company will remain just that; higher rates that are paid on top of the Agreement, not under it.

[16] In my view the company took all reasonable steps to ensure that the terms of the Agreement, and the effect of those terms, were explained to the relevant employees and that the explanation was provided in an appropriate manner. The F17 statutory declaration notes that a document was provided to employees explaining differences between the Agreement and the Award. The document was attached to the F17. The fact that company told employees in the Southern region about the over agreement payment prior to the vote, but other employees only after the vote, does not affect the quality of its explanation of the terms of the Agreement and their effect on employees.

[17] I note that in its F18, the union said that the company was ‘aware that, following workers of the company rejecting the employer’s previous offers, a majority vote was contingent on acceptance by the Southern region’. At the mention, the union explained that by this it meant simply that, without support from employees in this region, it was unlikely that a majority of employees would approve the Agreement. The union did not imply that there was some understanding that there could be no concluded agreement without the approval of a majority of employees in the Southern region. The union said that the numerical significance of the Southern region for the prospect of majority approval was the reason why the company engaged with this group about the enhanced wages. That may be. But this does not affect the legal analysis.

[18] I also note the union’s contention that other bargaining meetings had involved telephone conferences with all three regions. However the meeting on 3 April 2019 was not a bargaining meeting. The terms of the Agreement were settled and to be voted on. It would have been appropriate for the employees in the other regions to be advised of the over agreement payments. However nothing in the Act required this to occur.

[19] The union submitted that the company took adverse action against employees by threatening to remove the over agreement payments and revert to previous rates of pay if the Agreement were not approved. This is said to have affected the genuineness of employees’ agreement. I understand that this contention relates to alleged threats that the over agreement rates would only be paid if the Agreement was voted up, and that if the Agreement was not approved by the Commission, employees would revert to their previous rates of pay.

[20] I see no basis for the contention that the company made threats to employees. These were simply statements of fact. The employer has no obligation under the Act to observe rates of pay in an enterprise agreement prior to the commencement of the Agreement’s operation. As to the over agreement payments, these were clearly to be ‘over agreement’ rates. In the event the Agreement had not been approved by employees, the higher rates of pay in the Agreement itself would have been rejected by employees and would not apply. Clearly then the over agreement rates that sat on top of these would also have fallen away. The same would be the case if the Commission did not approve the Agreement. Moreover, there is nothing to suggest that the company’s statement that it would make the over agreement payments was binding on the company under the general law. Even if it had been a legally binding commitment it was one subject to clear conditions. Had the Agreement not been approved by employees or the Commission, there could be no legal obligation to make the payments, and hence in my view no adverse action in this case. In any event, I do not see how any adverse action would have occurred for a proscribed reason.

[21] I have not identified any other reasonable ground for concluding that the Agreement was not genuinely agreed to by employees. Although the Agreement was approved by a narrow majority, there is no persuasive contention that there are reasonable grounds for believing that the Agreement was not genuinely agreed to by employees. It would have been different if the over agreement rates were offered only to employees in the Southern region, in which case there would have been a question as to whether they had been improperly induced to approve the Agreement, and whether employees in the other regions were deprived of information that might have affected their vote, for they too might then have sought additional benefits from the employer. But the fact is that the over agreement rates applied to all employees, not just those in the Southern region.

[22] As part of its challenge to the genuineness of the employees’ agreement, the union contended that s 180(2)(a) has not been satisfied. There is no substantiation of this. The contention may relate to the proposition that the Agreement was changed by the company’s statement concerning the over agreement payment, which I have rejected. However, for completeness, I note that s 180(2)(a) requires the employer to take all reasonable steps to ensure that, during the access period for the agreement, the employees employed at the time who will be covered by the agreement are given a copy of the written text of the agreement and incorporated material. The company’s F17 attached a copy of its letter to employees confirming the start of the ‘access period’ for the Agreement. The terms of this letter, together with the content of the F17, satisfy me that the company complied with this provision.

[23] Finally, although I have no jurisdiction to accept the company’s undertaking to pay the over agreement wage rates as a term of the Agreement, I note that the company has said that it will continue to pay these rates, which employees have been receiving since mid-April 2019.

Conclusion

[24] Based on the material contained in the application and accompanying statutory declaration, I am satisfied that each of the relevant requirements of ss 186, 187, 188 and 190 have been met.

[25] The company has provided written undertakings in response to concerns raised by the Commission (see Annexure A). I am satisfied that the undertakings will not cause financial detriment to any employee and that they will not result in substantial changes to the Agreement.

[26] The CEPU, being a bargaining representative for the Agreement, has given notice under s 183 of the Act that it wants the Agreement to cover it. In accordance with s 201(2) and based on the statutory declaration provided by the CEPU, I note that the Agreement covers the organisation.

[27] The Agreement was approved on 20 August 2019 and, in accordance with s 54, will operate from 27 August 2019. The nominal expiry date of the Agreement is 1 July 2021.

DEPUTY PRESIDENT

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Annexure A