Caledonia Scaffolding Services Pty Ltd

[2016] FWCA 1645

[2016] FWCA 1645

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.210—Enterprise agreement

Caledonia Scaffolding Services Pty Ltd
(AG2015/3822)

CALEDONIA SCAFFOLDING SERVICES PTY LTD ENTERPRISE AGREEMENT 2013

Building, metal and civil construction industries
DEPUTY PRESIDENT KOVACIC	SYDNEY, 17 MARCH 2016

Application for variation of the Caledonia Scaffolding Services Pty Ltd Enterprise Agreement 2013 – application approved.

[1] An application has been made Caledonia Scaffolding Services Pty Ltd (Caledonia – the Applicant) to vary the Caledonia Scaffolding Services Pty Ltd Enterprise Agreement 2013 1 (the Agreement). The Agreement was approved by the Fair Work Commission (the Commission) on 1 May 2013. The application to vary the Agreement was made pursuant to s.210 of the Fair Work Act 2009 (Act) and was opposed by the Construction, Forestry, Mining and Energy Union (CFMEU). The CFMEU is not covered by the Agreement.

[2] The application was the subject of a preliminary hearing by Senior Deputy President O’Callaghan on 4 August 2015, with the application substantively heard by the Commission on 27 August 2015. At that hearing, Mr David Putland appeared with permission for the Applicant, while Ms Liz Dooley appeared for the CFMEU. Mr David Stephen, Caledonia’s General Manager, and Mr Rohan Mogridge, an employee of Caledonia, both gave evidence for the Applicant. Ms Esther Van Arend, an Organiser with the CFMEU’s South Australian Divisional Branch, gave evidence for the CFMEU.

[3] For the reasons set out below, I am satisfied that each of the requirements of ss.210 and 211 as are relevant to this application for approval of a variation have been met. Accordingly, the variation to the Agreement is approved and, in accordance with s.216 of the Act, will operate on and from 17 March 2016. The variations can be found at Attachment A to this decision.

Background

[4] Caledonia had in mid-May 2015 made an application 2 (the first application) to vary the Agreement. The CFMEU had previously advised the Commission that wished to be heard on that application as it had concerns that the variation may not have genuinely been agreed to by employees. The first application was heard by Senior Deputy President O’Callaghan on 28 May 2015, with the hearing concluding after Caledonia advised the Senior Deputy President that it was withdrawing its application.

[5] In subsequent developments Caledonia made a further application (the second application) on 3 July 2015 seeking to vary the Agreement. The variation, among other things, seeks to reduce the wage rates and leading hand rates specified in clause 4.1 of the Agreement to those which applied from 12 months after the operation of the Agreement (i.e. 9 May 2014) and for those rates to apply for the remainder of the life of the Agreement (the Agreement has a nominal expiry date of 8 May 2017).

[6] The CFMEU advised the Commission on 9 July 2015 that it wished to be heard on the second application as it again had concerns that the variation may not have genuinely been agreed to by employees.

[7] A chronology of events drawn from the material before the Commission and the Form F23A – Employer’s statutory declaration in support of variation of an enterprise agreement is as follows.

• 23 and 24 April 2015 – employees notified of proposed variation in a series of site meetings;



• 10 June 2015 – Caledonia met with CFMEU representatives to discuss the proposed variation;



• 17 June 2015 – the CFMEU met with interested Caledonia employees (only one employee attended);



• 18 June 2015 – employees were provided with a copy of the variation agreement and ready access to the agreement as varied and any documents incorporated by reference into the agreement by written notice and also notified of the date and place of the ballot and that they are voting method to be used; and



• 29 June 2015 – voting for the variation to the agreement commenced with the variation made.

[8] The notice provided to employees on 18 June 2015 states, inter alia, that:

“We recently balloted you about a variation to the agreement, however, due to technical issues we have decided to hold a new ballot. We therefore advise you that we are proposing to vary the agreement to revert rates of pay in the agreement to the second year rate for the remainder of the agreement, as follows:

Scaffolder	Labourer	Yard Hand	Truck Driver
$25.10	$23.45	$21.00	$24.15

With all allowances remaining the same, other than leading hand allowance, which will also revert to the second-year rate.

In change of not more than one person	$0.51
In charge of 2 and not more than 5 persons	$1.11
In charge of 6 and not more than 10 persons	$1.41
In charge of more than 10 persons	$1.87

We will be holding a ballot on Monday, 29^th June 2015. The ballot will be a combination of a secret attendance ballot and a confidential SMS ballot.

We will be holding secret attendance ballot at 7:00am at our yard at 44 Aldershot Road, Lonsdale, South Australia.

For anyone who was unable to attend for the secret ballot, you will be provided with an opportunity to vote by SMS. If you have not lodged a ballot at the secret ballot, you will receive a text message from Scott Salmon asking if you would like to vote.

The SMS will provide instructions to you and ask whether you agree to the variation or not. If you agree, you should reply with “yes” or “I agree” or words that clearly indicate your agreement. If you do not agree, you should reply with “no” or “I do not agree” or words that clearly indicate your disagreement. You will have until 4:00pm on that date to respond.

You do not have to vote but if you do not vote, your vote will not be counted one way or the other.

Please note: your SMS ballot will be confidential between you and the Company. Any attempts to observe another employee’s ballots or pressure and employee to agree or disagree will be treated extremely seriously.

If you would like a copy of the variation agreement, the proposed agreement as varied, or any document incorporated by reference, please contact me and I will arrange them for you.

…

If you have any queries about the proposed variation or the ballot, please contact me to discuss.” 3 (Underlining added)

[9] Of the 38 employees covered by the Agreement, 32 employees cast a valid vote with 22 of those employees voting to approve the variation.

The Applicant’s case

[10] Caledonia submitted that it had met the pre-approval requirements specified in the Act and that there were no public interest considerations warranting the variation not being approved. More specifically, Caledonia submitted that:

• there was no evidence before the Commission that employees did not understand what was being asked of them or what they had agreed to or that they did not receive sufficient explanation of the proposed variation;



• the evidence relied upon by the CFMEU regarding its allegations of employees being threatened or pressured to vote yes was hearsay evidence, adding that Mr Stephen’s unchallenged evidence rebuts that allegation particularly as on both occasions 86 per cent of regionally located employees voted in favour of the proposed variation;



• there was no evidence to support the CFMEU’s contention that employees had lost hours or jobs after voting no in the first ballot;



• there was a lack of logic to the CFMEU’s argument that voters had been induced to vote yes by the promise of work in Western Australia given Mr Stephen’s evidence that transfers to Western Australia had been occurring for a significant period of time and that three of the six employees who had moved to Western Australia after the second ballot were known to have voted no;



• a genuine majority of employees had made an informed decision to agree to the proposed variation;



• the CFMEU had been involved in the second ballot process and, based on Ms Van Arend’s evidence, had communicated with its members throughout the process; and



• there were no serious public interest considerations warranting refusal of the application.

[11] Mr Stephen deposed in his witness statement 4 that following withdrawal of the first application that he and Mr Jim Cunningham, Caledonia’s Managing Director, met with Mr Darren Roberts and Mr Ben Murphy of the CFMEU on 10 June 2015 to discuss the proposed variation. Specifically, Mr Stephen deposed that Mr Roberts indicated the CFMEU’s desire for a secret ballot to be held regarding the proposed variation and that the CFMEU sought to address employees about the proposed variation. Mr Stephen stated that Caledonia agreed to both requests, with the meeting with employees arranged for 17 June 2015 and Caledonia informing employees of that meeting on 15 June 2015.

[12] In his witness statement, Mr Stephen also deposed, among other things, that:

• Mr Scott Salmon, Caledonia’s Operations Manager at the time (Mr Salmon has since left Caledonia), went from site to site to discuss the fact that the first application had been withdrawn and Caledonia’s intention to hold a new ballot;



• the abovementioned notice was emailed to all but one employee (who did not have an email address) on 18 June 2015, with that employee receiving a hand delivered copy of the notice on the same day;



• with regard to the second ballot, the CFMEU was invited to attend the ballot and act as a scrutineer, with Messrs Roberts and Murphy both attending;



• Mr Mogridge was the returning officer for the second ballot, with the result agreed with the CFMEU;



• the result was 22 votes in favour of the proposed variation, 10 votes against, one spoiled voting paper and five employees declining to vote, with 19 employees present at the secret ballot and 14 employees voting remotely via SMS;



• Caledonia denied making any improper inducements to employees or victimising employees because they voted against the proposed variation in the first ballot; and



• the movement of staff from Caledonia to its Western Australian arm, Caledonia Scaffolding Australia Pty Ltd (CSA), had been occurring for about eighteen months.

[13] Mr Stephen reiterated much of the above in his oral evidence. In addition, he attested that:

• in the last financial year, Caledonia had incurred a financial loss of $17,000 which was its worst since 1999 when Caledonia was established;



• at the start of 2015, Caledonia employed around 60 employees with that number reduced to around 40 at the time of the second ballot;



• there was no relationship between how employees voted in the first ballot and their hours of work;



• a document 5 prepared by Caledonia’s Human Resources Manager, Ms Erin Harris, indicated that an employee who voted no in the first ballot was rostered to work 30 hours in the week of the first ballot and 56 and 66 hours respectively in the following two weeks while an employee who voted yes in the first ballot was rostered to work 16 hours in the week of the first ballot and 35 and 38 hours respectively in the following two weeks;

any reduction in hours of work was due to a downturn in work;

there was a regular movement of employees between Caledonia and CSA, with about thirty employees having moved to CSA over the past two years;

he disputed much of Ms Van Arend’s witness statement;

if Caledonia continued to incur losses it was likely that the company would be “mothballed”;

he could not attest as to what Mr Salmon told employees when he met with them to explain the proposed variation;

he disputed that Caledonia did not inform employees of the CFMEU meeting on 17 June 2015; and

the CFMEU attended the second ballot as scrutineers, counting the votes with Mr Mogridge.

[14] Key aspects of Mr Mogridge’s oral evidence were that:

• he was not covered by the Agreement;



• Messrs Roberts and Murphy of the CFMEU who attended the second ballot did not express any concerns about the ballot process and agreed with the Returning Officer Statement 6;

on the day of the second ballot, employees participating in the secret ballot were provided with a further explanation of the proposed variation prior to the ballot, primarily by Mr Salmon, to ensure that employees were clear as to what they were about to vote on, adding that Messrs Roberts and Murphy of the CFMEU did not say anything about the proposed variation;

copies of the Agreement were available for employees;

with SMS votes, when the vote was received a ballot paper was marked reflecting the vote and put aside for the count;

he considered the ballot to be a fair, open and transparent process and was confident in the ballot outcome; and

he was not aware of any perception among employees that if anyone voted in a particular way that they would be rewarded with the opportunity to transfer to Western Australia or of any complaints from employees about reduced hours of work following the first ballot.

The CFMEU’s case

[15] The CFMEU opposed the application on the following three grounds – the notification to employees was deficient, the Commission could not be satisfied that employees had genuinely agreed to the variation and on public interest grounds.

[16] With regard to the issue of notification, the CFMEU contended that the evidence regarding the notification provided to employees was vague and incomplete, adding that it was not clear that employees at remote sites had been provided an explanation of the variation or that they had in fact received the notification.

[17] As to the issue of genuine agreement, the CFMEU contended that Caledonia had inappropriately sought to influence how employees voted in the ballot by suggesting that employees may be offered work in Western Australia on the Gorgon project, referring to Mr Stephen’s evidence that six people had transferred to Western Australia after the second ballot. The CFMEU also contended that following the first ballot a number of employees who voted no had their hours reduced, suggesting that this influenced how employees voted in the second ballot. At the hearing, the CFMEU acknowledged that it had not provided any payslips to substantiate this allegation.

[18] Finally, in respect of the public interest, the CFMEU pointed to the reduction in wages which the variation entailed and highlighted what it described as the lack of hard data to substantiate the claims made by Mr Stephen as to Caledonia’s financial position and the competitive pressures in the marketplace.

[19] Against that background, the CFMEU submitted that the application should be dismissed.

[20] Ms Van Arend deposed in her witness statement 7 that she had been told by union members employed with Caledonia that following the first ballot employees who voted against the variation lost out on working in the days that followed the ballot whilst employees who supported the variation and who did not usually get rostered on to regular hours received extra work. Ms Van Arend further deposed that following the second ballot that three members reported to her in separate conversations that about twenty employees, including themselves, had been told about a week before the vote that if the variation was successful that there was work on the Gorgon project in Western Australia for employees. Ms Van Arend also stated in her witness statement that one member had told her that he was promised work in Western Australia if he voted yes but that he told her after the vote that the work in Western Australia never eventuated. Ms Van Arend was understandably reluctant to reveal the identity of those members who had raised their concerns with her.

[21] In her oral evidence, Ms Van Arend accepted, among other things, that a secret ballot was a fairer process relative to a show of hands and acknowledged that there had been a downturn in work in the industry in Adelaide. Significantly, Ms Van Arend also attested that she considered that employees knew what they were voting for at the time of the second ballot.

The statutory framework

[22] Subdivision A of Division 7 of Part 2-4 of the Act deals with the variation of enterprise agreements. The key provisions are set out below.

“210 Application for the FWC’s approval of a variation of an enterprise agreement

Application for approval

(1) If a variation of an enterprise agreement has been made, a person covered by the agreement must apply to the FWC for approval of the variation.

Material to accompany the application

(2) The application must be accompanied by:
(a) a signed copy of the variation; and
(b) a copy of the agreement as proposed to be varied; and
(c) any declarations that are required by the procedural rules to accompany the application.

When the application must be made

(3) The application must be made:
(a) within 14 days after the variation is made; or
(b) if in all the circumstances the FWC considers it fair to extend that period—within such further period as the FWC allows.

Signature requirements

(4) The regulations may prescribe requirements relating to the signing of variations of enterprise agreements.

211 When the FWC must approve a variation of an enterprise agreement

Approval of variation by the FWC

(1) If an application for the approval of a variation of an enterprise agreement is made under section 210, the FWC must approve the variation if:
(a) the FWC is satisfied that had an application been made under subsection 182(4) or section 185 for the approval of the agreement as proposed to be varied, the FWC would have been required to approve the agreement under section 186; and
(b) the FWC is satisfied that the agreement as proposed to be varied would not specify a date as its nominal expiry date which is more than 4 years after the day on which the FWC approved the agreement;
unless the FWC is satisfied that there are serious public interest grounds for not approving the variation.

Note: The FWC may approve a variation under this section with undertakings (see section 212).

Modification of approval requirements

(2) For the purposes of the FWC deciding whether it is satisfied of the matter referred to in paragraph (1)(a), the FWC must:
(a) take into account subsections (3) and (4) and any regulations made for the purposes of subsection (6); and
(b) comply with subsection (5); and
(c) disregard sections 190 and 191 (which deal with the approval of enterprise agreements with undertakings).

(3) The following provisions:
(a) section 180 (which deals with pre-approval steps);
(b) subsection 186(2) (which deals with the FWC’s approval of enterprise agreements);
(c) section 188 (which deals with genuine agreement);
have effect as if:
(d) references in sections 180 and 188 to the proposed enterprise agreement, or the enterprise agreement, were references to the proposed variation, or the variation, of the enterprise agreement (as the case may be); and
(e) references in those provisions to the employees employed at the time who will be covered by the proposed enterprise agreement, or the employees covered by the enterprise agreement, were references to the affected employees for the variation; and
(f) references in section 180 to subsection 181(1) were references to subsection 208(1); and
(g) the words “if the agreement is not a greenfields agreement—” in paragraph 186(2)(a) were omitted; and
(h) paragraph 186(2)(b) were omitted; and
(ha) references in paragraphs 186(2)(c) and (d) to the agreement were references to the enterprise agreement as proposed to be varied; and
(hb) subparagraph 188(a)(ii) were omitted; and
(j) the words “182(1) or (2)” in paragraph 188(b) were omitted and the words “209(1) or (2)” were substituted.

(4) Section 193 (which deals with passing the better off overall test) has effect as if:
(a) the words “that is not a greenfields agreement” in subsection (1) were omitted; and
subsection (3) were omitted; and
(b) the words “the agreement” in subsection (6) were omitted and the words “the variation of the enterprise agreement” were substituted; and
(c) the reference in subsection (6) to subsection 182(4) or section 185 were a reference to section 210.

(5) For the purposes of determining whether an enterprise agreement as proposed to be varied passes the better off overall test, the FWC must disregard any individual flexibility arrangement that has been agreed to by an award covered employee and his or her employer under the flexibility term in the agreement.

Regulations may prescribe additional modifications

(6) The regulations may provide that, for the purposes of the FWC deciding whether it is satisfied of the matter referred to in paragraph (1)(a), specified provisions of this Part have effect with such modifications as are prescribed by the regulations.”

Consideration of the issues

[23] I deal first with the requirements set out in s.210 of the Act. The only issue which arose at the hearing concerning these requirements was whether the agreement variation satisfied the signature requirements set out in s.210(4) of the Act and Regulation 2.09A of the Fair Work Regulations 2009. By way of background, Reg 2.09A requires, inter alia, that a copy of the variation be signed by “at least 1 representative of the employees covered by the agreement as varied” (Reg 2.09A(2)(a)(ii)) and includes “an explanation of the person’s authority to sign” (Reg 2.09A(2)(b)(ii)). The agreement variation was signed by Mr Stephen on behalf of Caledonia and Mr Craig Richardson as “an employee of the Company”. I note that no bargaining representatives were appointed for the purposes of agreeing the proposed variation, further noting that there is no requirement for bargaining representatives to be appointed in these circumstances. Against that background, I am satisfied that the description of Mr Richardson’s authority to sign the variation satisfies the requirements of Reg 2.09A. This supports a finding that the requirements set out in s.210 of the Act have been satisfied. I note also that the Agreement as approved by the Commission on 1 May 2013 was signed by another employee as “an employee of Caledonia Scaffolding Services Pty Ltd”.

[24] I turn now to deal with each of the CFMEU’s three objections.

The notification to employees

[25] The notice sent to employees on 18 June 2015 (see above) is clear as to what the proposed variation entails and the time and place and method of voting regarding the proposed variation. Mr Stephen’s evidence was that that notice was emailed to all but one employee who did not have an email address, with a copy of the notice hand delivered to that employee on the same day and that Mr Salmon followed the notice up with site visits to explain the proposed variation to employees. While the CFMEU raised questions as to whether all employees had received the notice, the voter turnout at the second ballot in which 32 of the 38 employees covered by the agreement cast a valid vote suggests that employees did receive the notice.

[26] Beyond this, I note that:

• copies of the Agreement and documents incorporated into the Agreement were made available to employees;



• the notice sent to employees invited employees to contact Mr Cunningham if they had any queries about the proposed variation or ballot;



• the CFMEU had the opportunity to meet with Caledonia employees on 17 June 2015 to discuss the proposed variation, though only one employee attended that meeting; and



• Ms Van Arend’s evidence that she considered that employees knew what they were voting for at the time of the second ballot.

[27] The above analysis supports a finding that, as required by s.211(3) of the Act, the pre-approval requirements specified in s.180 of the Act have been satisfied.

Genuine agreement

[28] As noted above, the CFMEU contended that Caledonia had inappropriately sought to influence how employees voted in the ballot by suggesting that employees may be offered work in Western Australia and that following the first ballot a number of employees who voted no had their hours reduced. This was disputed by Caledonia, with Mr Stephen’s evidence being that around thirty employees had transferred from Caledonia and CSA in the past two years and that since the second ballot six employees had transferred to CSA, with three of those employees being known to have voted no in the second ballot.

[29] Beyond this I note that:

• Ms Van Arend’s evidence drew almost entirely on her conversations with members and, while I understand the potential sensitivities, her evidence in this regard amounts to little more than hearsay evidence;



• Ms Van Arend’s evidence was that she considered that employees knew what they were voting for at the time of the second ballot.



• the CFMEU acknowledged that it had not provided any payslips to substantiate its allegation that employees who voted no in the first ballot had their hours reduced after that ballot;



• Caledonia accepted a CFMEU suggestion that the second ballot be a secret ballot;



• the CFMEU observed the second ballot and did not raise any concerns regarding its integrity at the time.

[30] Based on the above analysis, I am satisfied that employees genuinely agreed to the proposed variation.

Public interest grounds

[31] The CFMEU relied upon the decision of Commissioner Hampton in Community Support Incorporated 8(CSI) in which the Commissioner observed:

“[33] Public interest considerations arise as the application reduces an otherwise agreed benefit and in my view this requires careful consideration given the scheme of the Act. Equally, the fact that CS Inc is a relatively large scale provider of services to many disabled and care-dependent clients in the community raises considerations that also touch upon the public interest.”

[32] In CSI the variation sought to reduce the minimum engagement period for casual employees from two hours to one hour, with the variation approved by Commissioner Hampton. This application also involved a reduction in benefits under the Agreement. The circumstances relied upon by Caledonia as underpinning the reductions in wages rates and leading hand rates were the downturn in work in the industry in South Australia, that it was losing money and general competitive pressures in the industry. More specifically, Mr Stephen attested that Caledonia had lost $17,000 in 2014-2015 and employee numbers had fallen from around 60 at the beginning of 2015 to 38 at the time of the second ballot. While the CFMEU disputed aspects of Mr Stephen’s evidence, I note that Ms Van Arend acknowledged in her oral evidence that there had been a downturn in work in the industry in Adelaide.

[33] The Act not only deals with the making of enterprise agreements but also provides for the variation and termination of enterprise agreements. As to the variation of agreements, while the Act sets specific requirements relating to variations to remove ambiguity or uncertainty or upon referral by the Australian Human Rights Commission, it does not otherwise limit the circumstances in which an enterprise agreement can be varied subject to the statutory requirements set out in Subdivision A of Division 7 of Part 2-4 of the Act being met. One obvious possible reason for seeking to vary an agreement is to respond to changed business circumstances. In this case, Caledonia relies on its unprofitability together with market pressures as the rationale for the proposed variation. While I am not satisfied that all of the so called competitive pressures cited by Mr Stephen in his oral evidence were substantiated, drawing on Ms Van Arend’s evidence, it was not disputed that there had been a downturn in work in the industry in Adelaide. This is reflected in the reduced number of employees employed by Caledonia. The CFMEU submitted that Caledonia had not produced financial statements or other documentation regarding its financial position, but did not directly challenge Mr Stephen’s evidence as to the loss incurred by Caledonia in 2014-2015 or that were Caledonia to continue to incur a loss that the company was likely to be “mothballed”. Against that background, I am not satisfied that that there are serious public interest grounds for not approving the variation.

Other considerations

[34] The ballot result indicates that a clear majority of employees who cast a valid vote agreed to the proposed variation. Further, it was not submitted that the proposed variation did not meet the better off overall test or that it would result in the Agreement as varied having a nominal expiry date which is more than four years after the day on which the Commission approved the Agreement. Based on a comparison of the rates of pay and leading hand rates provided for in the proposed variation against the underpinning modern awards, I am satisfied that the proposed variation meets the better off overall test. This, together with the above findings in respect of the CFMEU’s objections, support a finding that the requirements of s.211 of the Act are satisfied. As a result, in accordance with S.211(1) of the Act the Commission must approve the variation.

Conclusion

[35] For all the above reasons, I am satisfied that each of the requirements of ss.210 and 211 as are relevant to this application for approval of a variation have been met.

[36] The variation to the Agreement is approved and a copy of the varied Agreement is attached to this Decision and, in accordance with s.216 of the Act, will operate on and from 17 March 2016.

Appearances:

D. Putland for Caledonia Scaffolding Services Pty Ltd.

L. Dooley for the Construction, Forestry, Mining and Energy Union.

Hearing details:

2015.

Adelaide:

August 27.

ATTACHMENT A

 1   AE401003

 2   AG2015/2728

 3   Exhibit P1 at Annexure DS1

 4   Exhibit P1

 5   Exhibit P2

 6   Exhibit P1 at Annexure DS2

 7   Exhibit D1

 8   [2010] FWA 9145

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<Price code J, AE401003  PR578021>