C&H Acquisition Pty Ltd

[2017] FWC 4405

[2017] FWC 4405

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

C&H Acquisition Pty Ltd
(AG2017/2099)

COMMISSIONER SIMPSON BRISBANE, 29 AUGUST 2017

Application for approval of the C&H Employee Agreement 2017 – Agreement not genuinely agreed – Application dismissed.

[1] C&H Acquisition Pty Ltd (the Applicant) made an application under section 185 of the Fair Work Act 2009 (the Act) for approval of the C&H Employee Agreement 2017 (the Agreement). The matter was allocated to me on 21 July 2017 and was listed for hearing on 10 August 2017.

[2] The Form F17 described the date the Agreement was made as being 7 June 2017. The Agreement covered four employees at the time of the ballot, and all four employees voted in favour of the agreement.

[3] The Applicant provided the following information under the heading of “Agreement genuinely approved” in the Form F17 application.

“2.4 What steps were taken by the employer and on what date were they taken to ensure that the relevant employees were either:

a. Given a copy of the written text of the agreement and any other material incorporated by reference into the agreement (must be provided during the 7 days before the start of the voting process),or

b. Had access to the above materials (must have access throughout the whole 7 day period)?

See section 180(2)(c) of the Fair Work Act 2009.

Describe the steps taken	Date
Employees were given a copy of the proposed Enterprise Agreement by email.	30 May 2017
All employees were provided with a range of information in the Notice of Ballot including links to the relevant awards on the fwc.gov.au website with an explanation that they could access the awards there. They were also provided with a link to the National Employment Standards.	30 May 2017
Employees were given an explanation document that explained the terms of the Agreement and a ballot notice detailing the method, time and place the vote was to occur. At all times, employees had access to someone in order to ask questions about the enterprise agreement.	30 May 2017

2.5 When did you notify the relevant employees of the date and place at which the vote was to occur and the voting method to be used?

Please state the date of the notification and describe the steps taken to notify the relevant employees. See section 180(3) of the Fair Work Act 2009.

All employees were provided a Notice of Ballot and voting instructions on 30 May 2017. The document specified that the vote was a secret ballot that was to occur on 7 June 2017 and the voting method was to occur via SMS and email.

2.6 What steps were taken by the employer to explain the terms of the agreement, and the effect of those terms, to the relevant employees? See section 180(5) of the Fair Work Act 2009.

The terms of the Agreement were detailed in plain language in the explanation document, which all employees received an electronic copy of on 30 May 2017. This document also explained the effect that those terms of the Agreement would have on the employees. The full text of the Agreement was also given to all employees on this date.

At all stages, management negotiating the Agreement on behalf of the company made themselves available via email or phone to discuss any aspect of the Agreement that may concern the Employees.

2.7 When you explained the terms of the agreement to the employees, what did you do to take into account the particular circumstances and needs of the relevant employees?

Examples of employees who have ‘particular circumstances and needs’ include employees from non-English speaking backgrounds, young employees, employees who don’t have a bargaining representative, etc.

Upon issuing the Notice of Representational Rights, Notice of Ballot and access documents, it was noted that there were no employees from a non-English speaking background, under 21 years of age or with a disability. The employees did not nominate a bargaining agent, therefore Management ensured that those staff were able to ask questions freely and provide feedback on the terms of the Agreement. Information about access support services was provided where an employee might have a literacy issue, hearing, speech or visual impairment, to assist them in the process. 1

[4] The Form F17 responded to the question at 3.1 as follows;

“3.1 List the modern award(s), if any, that currently cover the employer and any of the employees covered by this agreement.”

[5] The Form F17 listed the following awards:

“Aluminium Industry Award 2010;

Cleaning Services Award 2010;

Clerks Private Sector Award 2010;

Electrical, Electronic and Communications Contracting Award 2010;

Gardening and Landscaping Services Award 2010;

Gas Industry Award 2010;

Quarrying Industry Award 2010;

Rail Industry Award 2010;

Security Service Industry Award 2010;

Vehicle Manufacturing, Repair, Services and Retail Award 2010.” 2

[6] The Applicant’s response to question 3.1 on the Form F17 Statutory Declaration was incorrect. Only two of the list of 10 awards provided in the Form F17 Statutory Declaration covered the employer and any employees covered by the agreement when the Statutory Declaration was completed.

[7] It should also be noted that in answer to question 2.1 of the F16 Application Form which asks, “What is the industry of the employer(s)?” the Applicant answered:

“The employer provides a range of services in sectors covered by employees engaged under the relevant underpinning awards.”

This answer is also incorrect as it became clear the Applicant provided services in sectors covered by employees engaged under the relevant underpinning awards (see clause 1.3 of the Agreement) in only two of the 10 awards listed in the Agreement.

[8] Section 186(2)(a) of the Act reads as follows:

“(2) The FWC must be satisfied that:

(a) if the agreement is not a greenfields agreement – the agreement has been genuinely agreed to by the employees covered by the agreement;…”

[9] Section 188 of the Act reads as follows:

“188 When employees have genuinely agreed to an enterprise agreement

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 deals 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.”

[10] Prior to a Fair Work Commission (FWC) Hearing conducted on 10 August 2017, correspondence was sent from my chambers to the Applicant’s representative Theresa Moltoni of IRIQ Pty Ltd setting out matters to be raised at the hearing. These matters included:

(i) Steps taken to explain the terms of the awards to employees;

(ii) Satisfaction of s.188(c) in circumstances where the agreement covers a wide range of classifications that may not be performed by the four employees who voted for the agreement;

(iii) Clarification concerning clause 1.5 ‘Relationships to Award;

(iv) Clarification concerning the coverage of the Vehicle, Manufacturing, Repair, Services and Retail Award 2010;

(v) Clarification concerning overtime arrangements found in appendix 1 and minimum engagement times;

(vi) Clause 8.1 deductions concerning the probationary period;

(vii) Hours of work provisions in appendix 1 excluding requirement for majority agreement to work maximum hours;

(viii) Clerks Private Sector Award span of hours is Monday to Friday, Agreement as per appendix 1 is Monday to Sunday;

(ix) Clarification concerning award allowances included and award allowances excluded;

(x) 3 hour minimum engagement for casuals at Clause 3.2(iii), however Security Services Industry Award and Cleaning Services Award specify 4 hour minimums;

(xi) Clarification concerning weekend and public holiday loadings. Appendix 1 expresses loadings under different Awards in different ways. Some Awards are expressed as numerical percentages and some as for example “time and a half for the first two hours and double time thereafter”.

(xii) Clarification concerning shift penalties;

(xiii) Market clause.

[11] At the hearing on 10 August 2017 I explained to the Applicant that my primary concern in regard to the application related to the requirements of s.188, and specifically s.188(c). I referred the Applicant to a FWC Full Bench decision in KCL Industries Pty Ltd 3 and in particular paragraph 36 of that decision4 that reads as follows:

“[36] In summary, the position is that the Agreement covers a wide range of classifications most of which have no relevance to the work performed by KCL’s three existing employees, encompasses industries in which KCL does not currently operate, and contains rates of pay which, even in respect of those classifications relevant to the current employees, are not to apply to those employees. In those circumstances we do not consider that any authenticity could attach to the agreement of the two employees to the rates and conditions in the Agreement. The employees had no “stake” in the Agreement’s rates of pay, since they were assured that their existing, higher rates of pay would remain in place (subject to “operational needs and satisfactory performance”) and they could not have given informed consent in relation to occupation and industries in which they did not work and presumably had no experience.”

[12] At the hearing on 10 August the Applicant handed up a copy of a document titled “Explanation of the Terms of the C&H Employee Agreement 2017” 5 which I marked document 1, and a separate bundle of documents to be known as “Supporting Ballot Notice and Material” 6 which I marked document 2. Document 2 included a covering letter, the notice of the ballot explaining the ballot process, and further information including hyperlinks to the 10 modern awards, the NES, the FWC and Fair Work Ombudsman (FWO) websites.

[13] Document 1 provides a brief explanation about a range of clauses in the agreement, however with the exception of one reference to the Gardening Award 2010, does not provide any detail about how the Agreement impacts on the conditions in different ways under the 10 awards.

[14] The primary submission of the Applicant at the hearing on 10 August in regard to the question of whether the Agreement was genuinely agreed was that the employee’s understood how the Applicant’s business worked, that being that it goes out looking for contract work and when it wins a contract, hires people to perform that work. 7

[15] It was submitted that the employees knew and understood that the intention of having the additional awards within the scope of the Agreement was to seek to grow the business by tendering for and winning work in these industries that the Agreement would cover. 8

[16] In the course of the hearing on 10 August I invited the Applicant to file any further submissions it wished to regarding both the genuinely agreed issue, and the BOOT issues raised with the Applicant in correspondence from the FWC. 9

[17] The Applicant subsequently filed a four page submission that was accompanied by two statements from two of the four employees who voted on the Agreement. The Applicant filed another document setting out four proposed undertakings as follows;

“We provide the following undertakings in relation to the above application:

1. A four hour minimum engagement will apply to casual staff otherwise covered by the Security Services Industry Award 2010 or the Cleaning Services Award 2010.

2. The penalties at Appendix 1 for Weekend Work – Ordinary Hours and Penalties-Shiftworkers apply in addition to ordinary time paid.

3. The penalties for Shiftworkers at Appendix 1 for Electrical Award employees working short term shift work will be paid at time and half for first two hours then Double Time thereafter from Monday to Saturday, Double Time for Sundays and Double time and a half for Public Holidays. These penalties include ordinary time.

4. An Early morning shift loading of 13.23% will apply to Rail Industry Award employees.”

[18] The Applicant’s written submission referred to the Explanatory Memorandum for the Fair Work Bill 2008 which addresses section 188(c) as follows:

“796. Paragraph 188(c) provides that FWA must approve an agreement if there are no other reasonable grounds to believe that the agreement was not genuinely agreed to by the employees. FWA can refuse to approve an agreement where there are reasonable grounds to believe that the agreement has not been genuinely agreed to by the employees who will be covered by it.

797. In determining whether there are reasonable grounds for believing that the agreement has not been genuinely agreed to by employees, FWA may consider whether the agreement has been validly made in accordance with clause 182 (see, e.g Construction Forestry Mining and Energy Union v Australian Industrial Relations Commission (1999) 93 FCR 317 and the decision of the AIRC in Grocon Pty Ltd Enterprise Agreement (Victoria) (2003) 127 IR 13).”

[19] The Federal Court decision in CFMEU v AIRC 10 referred to in the Explanatory Memorandum, included the following within the reasons for judgement of Wilcox and Madgwick JJ:

“126. Section 170LT(6) requires that a “valid majority of persons employed at the time whose employment would be subject to the agreement must have genuinely made the agreement”. This plainly betokens a concern with the authenticity and, as it were, the moral authority of the agreement. It is perfectly understandable – indeed, one might reasonably think, plainly necessary – this be so..”

[20] A majority Full Bench in Ostwald Bros Pty Ltd v Construction, Forestry, Mining and Energy Union 11 said as follows in regard to section 188:

“[78] Fourth, the nature and terms of s.188 of the Act – When employees have genuinely agreed to an enterprise agreement – supports the construction we have applied. “Genuinely agreed”, in s.188 is expressed in terms of satisfaction that particular bargaining provisions within the Act have been complied with (ss.188(a) and (b)) and satisfaction of a more general criterion in s.188(c), rather than in terms of a general consideration of whether in the circumstances of a particular agreement a member is satisfied that the agreement has been genuinely agreed to by the employees.

[79] As the Full Bench in Galintel noted “Section 188 establishes a set of requirements, each of which must be satisfied if the necessary finding is to be made under s186(2)(a)”.

[80] Section 188 of the Act does not provide a wide general discretion for determining whether employees have genuinely agreed to an enterprise agreement focussed at the point of approval. Rather it requires specific actions to have been undertaken (in ss. 188(a) and (b) at specified times in advance of approval), with s.188(c) then requiring satisfaction that there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees. Section 188(c) of the Act, although itself a broad discretionary consideration, is an additional matter about which [the Commission] needs to be satisfied and relates to grounds other than those arising in relation to the ss.188(a) and (b) matters.”

[21] The Applicant in its written submissions seeks to distinguish its application from the circumstances in KCL I referred it to. The Applicant has argued that in KCL, the FWC Full Bench was not satisfied that the employees understood the consequence of their vote, and therefore could not have genuinely agreed to the enlarged scope envisaged by the proposed agreement in that matter. Further it was submitted in KCL the proposed agreement had significant BOOT issues and a lack of evidence as to whether employees had been informed of the effect of the wider coverage of the agreement in that matter. 12

[22] The Applicant submitted that this is C&H’s second agreement, the first being the C&H Employee Agreement 2015 13, and that its first agreement encompassed seven awards and was premised on the same approach.

[23] It was submitted that the employees who voted for this Agreement currently before the FWC had worked for C&H for some months prior to the negotiations commencing and were fully informed as to the nature of the C&H business.

[24] The Applicant explained in the course of the hearing on 10 August that of the four employees who voted for the Agreement, two employees worked under the Aluminium Industry Award 2010 and were currently based at Weipa in Far North Queensland. It was explained that C&H had won a contract to perform maintenance work on a project in Weipa. 14 The other 2 employees were based in Brisbane performing administrative work to manage contracts that have been won.15 It was clarified that one of two Brisbane based employees was doing induction training.16 It was also explained that some of the administrative work was performed to provide support to other related entities of the Applicant.

[25] Of the two statements provided, one was from Ms Taranvir Gill who said that she had been employed as a Level 2, Year 1 Admin and Compliance employee for the Applicant since 16 January 2017. Ms Gill said that in April it was explained to her by a representative of the Applicant that the Applicant wanted to make an Agreement and she would be covered by the Clerks Private Sector Award 2010. Ms Gill said this was confirmed to her in writing.

[26] Ms Gill said it was explained to her that the employer wished to put various other awards in the Agreement as had been done before so C&H could try and win work in other areas. 17 Ms Gill said it was explained to her that the Awards that would be included covered different industries and jobs, and she was given a copy of this to consider. Ms Gill said this made sense to her and she understood exactly what this meant when she voted for the Agreement.18

[27] A second statement was provided by Mr Douglas Coleman who said he had been employed as a full time Aluminium Grade 5 Advanced at C&H since 16 January 2017. He said he had read and understood the Agreement. He said that as the Agreement covers a wide range of industries he believes the agreement would potentially help C&H win work in the future.

[28] The Applicant’s submission rests on the premise that the four employees grasped the business objective of the employer that underpinned the reason the employer wanted to make the Agreement. That may well be so, and on the evidence it appears to be so.

[29] The evidence of Ms Gill and Mr Coleman in conjunction with the Applicant’s submission tends to support the view that the employees understood the reasons the Applicant had given them for wanting to make the Agreement, and in all likelihood may well have voted in favour of the Agreement, at least in part because they accepted the Applicant’s appeal to them that such an Agreement would assist in expanding the business.

[30] These statements and submissions are not however an answer to the matter for consideration in s.188(c), being whether or not employees had genuinely agreed to “the agreement”. The reference to “the agreement” is a reference to the Agreement itself and the terms contained within it, not whether the employees “agreement” was with their employer’s reasons for wanting to have such an agreement. There is a distinction between the two.

[31] The Applicant was given a reasonable opportunity to put its best case regarding my concerns. I have had regard to what was included in the Applicants Form F17 Statutory Declaration concerning the matter. My concern regarding genuine agreement was foreshadowed to the Applicant in correspondence from my chambers to the Applicant in advance of the hearing on 10 August 2017. The Applicant was invited to make submissions at the hearing on 10 August and in the course of the hearing was also invited to provide whatever further material it wished to in order to make its case. The Applicant subsequently provided the written summary, two statements from employees and other documentation. I have had regard to all of this material.

[32] In summary the material presents the facts as being as follows. A Notice of Employee Representational Rights was issued on 20 April 2017. On 30 May 2017 employees were given a copy of the proposed Enterprise Agreement and a set of information with the Notice of Ballot including hyperlinks to the 10 relevant awards, the NES and the explanation document. A voting guide was also given to employees that provided instructions on how to vote, either by SMS message or by email.

[33] No Employer, Union or Employee Bargaining Representatives were appointed. There is no evidence of any negotiation meetings as such, either before or after 30 May 2017 when the Agreement and accompanying material was provided to the four employees. The voting occurred on 7 June 2017.

[34] The approach of the Applicant appears to have been to explain to the employees the breadth of the scope of the Agreement and why the employer wanted that scope, and also to provide the four employees a copy of its proposed Agreement and all of the other relevant information required by the FW Act, or at least access to relevant information, and to provide the opportunity for the employees to ask questions if they so wished.

[35] The evidence of Ms Gill and Mr Coleman concerning the extent to which they understood the terms of the Agreement itself is unconvincing. Ms Gill’s statement does not squarely address the extent of her understanding of the terms of the Agreement, except that she understood other awards would be covered by the Agreement. Ms Gill said she was given a copy of this (which I took to refer to the list of the awards) to consider, and that this made sense to her and she understood it. Mr Coleman said he read and understood the Agreement, the Agreement would help the Applicant win work, and he had a fairly good understanding of the industries and types of work covered by the list of Awards.

[36] The problem on the particular facts of this case is that the Agreement itself is a complex document. This starts to become apparent when considering the issues that the FWC wrote to the Applicant about in advance of the Hearing on 10 August 2017, and also the nature of the proposed undertakings the Applicant offered to resolve a number of the concerns raised by the FWC. It should be noted that a range of the issues raised by the FWC pertained to awards that none of the four employees worked under, and further some of the undertakings proposed by the Applicant pertained to issues arising under awards that no employees who voted, worked under. The submissions and statements indicate the employees did not go further than examining the list of the 10 named awards and appear not to have compared the terms of the Agreement and the terms of the 10 awards themselves.

[37] Further, the Applicant’s business is currently confined to operations in the aluminium industry and the clerical industry however it has balloted its four employees currently working in those two industries for an Agreement to apply in many other industries that neither the employer or its employees are currently engaged in. The list of industries includes the cleaning industry, the electrical, electronic and communications contracting industries, gardening and landscaping industries, gas industry, quarrying industry, rail industry, security service industry and vehicle manufacturing, repair, services and retail industry.

[38] The employees were asked by their employer to make an Agreement that might potentially, at some point in the future apply in these other industries that the employer wants to in the future be engaged in, and compete in. The employer and the employees did not know, and could not know when they voted for the Agreement, whether the Agreement would actually ever apply in these other industries in addition to aluminium and clerical.

[39] I am satisfied there are reasonable grounds for believing that the agreement, given the breadth of its scope, and complexity if its terms, was not genuinely agreed to by the 2 employees employed under the Aluminium Industry Award, and the 2 employees employed under the Clerks Private Sector Award.

[40] Similar to the circumstances in KCL, this Agreement covers a wide range of awards and classifications with no relevance to the work performed by the four employees covered, and encompasses industries in which the Applicant does not operate. I adopt the reasons in KCL and find that the four employees could not give informed consent in relation to the occupations and industries in which they did not work and did not have experience. Their evidence does not support a view that they had particular, or any regard to the specific impacts the Agreement would have in areas of award coverage that they did not work, and no bargaining representatives were involved to provide advice on such issues.

[41] I also adopt the reasoning in CFMEU v AIRC to conclude that on the facts of this matter the Agreement as proposed lacks authenticity and moral authority.

[42] A Full Bench of the FWC determined in CEPU v Main People Pty Ltd 19that an undertaking which sought to confine the coverage of an enterprise agreement in a significant way could not be accepted because it would result in a significant change to the Agreement contrary to s.190(3)(b). For that reason there is no utility in exploring such a course with the Applicant to remedy the problem.

[43] At the conclusion of the Hearing on 10 August I invited the Applicants further material and foreshadowed a possibility the matter may be called on again, 20however given my conclusions concerning s.188(c) I cannot be satisfied of the requirements relating to s.186(2)(a) and there is nothing to be gained by considering other matters including related to the BOOT. On that basis I have decided to dismiss the application.

COMMISSIONER

Appearances:

Ms T. Moltoni of IRIQ Law for the Applicant

Hearing details:

2017,

Brisbane:

August 10

 1   Form F17 – Employer’s statutory declaration in support of an application for approval of an enterprise agreement at 2.4 – 2.7.

 2   Form F17 – Employer’s statutory declaration in support of an application for approval of an enterprise agreement at 3.1.

 3   [2016] FWCFB 3048

 4   Transcript PN 121

 5   Document 1

 6   Document 2

 7   Transcript PN 156-164

 8   Transcript PN 182-188

 9   PN 189-194, and PN 281-289

 10 (1999) 93 FCR 317

 11   [2012] FWAFB 9512

 12   Applicants written submissions paragraph 6

 13   [2016] FWCA 755

 14   Transcript PN 28, PN 39

 15   Transcript PN 56

 16   Transcript PN 71

 17   Statement of Taranvir Gill paragraph 5

 18   Statement of Taranvir Gill paragraph 7

 19   [2015] FWCFB 4467

 20   Transcript PN 287

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