Class Electrical Services Pty Ltd
[2009] FWA 1541
•9 DECEMBER 2009
[2009] FWA 1541 |
|
DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
(AG2009/12658)
and
s.240 - Application to deal with a bargaining dispute
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia(B2009/10626)
COMMISSIONER CARGILL | SYDNEY, 9 DECEMBER 2009 |
Class Electrical Services Pty Ltd Enterprise Agreement 2009.
[1] This decision concerns two related matters: an application under section 185 of the Fair Work Act 2009 (the Act) for the approval of a single enterprise agreement; and, an application under section 240 of the Act to deal with a bargaining dispute.
[2] The section 185 matter is an application by Class Electrical Services Pty Ltd (Class or the company) for the approval of an agreement to be known as the Class Electrical Services Pty Ltd Enterprise Agreement 2009 (the Agreement). This application is opposed by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU or the union). The CEPU is the applicant in the section 240 matter.
[3] The matters were first heard on 21 September 2009. At that time an issue was raised about whether the CEPU had members who were employed by Class. A decision on this aspect was issued on 23 September 2009, [2009] FWA 362. In that decision I found that there was at least one person who is both a member of the union and an employee of Class. In arriving at that conclusion I excluded an individual who had provided a notice of revocation of the union’s status as a bargaining representative.
[4] Following a directions hearing on 24 September 2009 directions were issued for the filing and exchange of material in relation to both matters. The matters were heard in Sydney on 16 November 2009. At that hearing and in the earlier proceedings Class was represented by Mr McDonald, solicitor. The CEPU was represented by Mr Searle of counsel. Both representatives appeared with permission pursuant to section 596 of the Act.
[5] Evidence was given on behalf of Class by Mr Lucanus who is its General Manager and by Mr Alati, its Managing Director. In addition to his oral evidence Mr Lucanus provided a statutory declaration, Exhibit Class 1 and an affidavit, Exhibit Class 2. Exhibit Class 1 was provided to correct a technical defect in the original Form F17 which accompanied the application for approval of the Agreement. Mr Alati provided an affidavit, Exhibit Class 3. He also gave oral evidence.
[6] Three witnesses gave evidence on behalf of the CEPU. Mr Psaradellis, a former employee of Class and a member of the CEPU provided an affidavit, Exhibit CEPU 3. Mr Doust, an organiser with the CEPU, provided an affidavit, Exhibit CEPU 4. Mr McKinley, also an organiser with the CEPU, provided two affidavits, one sworn on 18 September 2009, Exhibit CEPU 5 and one sworn on 13 November 2009, Exhibit CEPU 6. Each of these witnesses also gave oral evidence although it should be noted that, ultimately, Mr Doust’s oral evidence went to the adoption of his affidavit only.
[7] On the day following the hearing and further to submissions made by Mr McDonald, Class provided a written undertaking pursuant to section 190 of the Act signed by Mr Lucanus. A copy was also sent to the CEPU. That undertaking would have the effect of preserving certain current employee entitlements.
BACKGROUND FACTS AND EVIDENCE
[8] On 5 September 2000 the Industrial Relations Commission of New South Wales approved an enterprise agreement between Class and the New South Wales counterpart of the CEPU, Exhibit CEPU 2 (the State agreement). That agreement had a nominal expiry date of 30 September 2002 but appears to have continued in force after that date. I understand that, although Class had not entered into any formal industrial instrument between the expiry of the State agreement and the making of this Agreement, it provided wage increases to its employees at various times during that period.
[9] Mr McKinley’s evidence is that he approached Mr Alati in early 2009 about the need to discuss a new agreement. Mr Alati disputes this.
[10] There were at least two telephone conversations in mid-August between Mr McKinley and Mr Alati, one round about 12 August and the other on or about 19 August. Both calls were initiated by Mr McKinley. Mr Alati says there was also an earlier telephone exchange between them about an unrelated matter. Mr McKinley says this exchange actually took place during the conversation on 12 August. The witnesses disagree as to exactly what was said and in which conversation.
[11] Mr Alati’s evidence is that, during the conversation on 12 August, there was a discussion about business in general as well as the rates being paid to tradesmen at Class. He says that, in the next conversation, Mr McKinley asked for his email address so that he could “email you across some comparative pay rates for you to have a look at”. Mr Alati’s evidence is that, at no time during either of these conversations did Mr McKinley mention an enterprise agreement nor did Mr Alati agree to meet with Mr McKinley to discuss such an agreement or the pay rates which were sent.
[12] Mr McKinley’s evidence is that, during the first August conversation, he told Mr Alati that it was time they had a serious talk about an agreement, to which Mr Alati responded that he should ring again in a couple of days to make a date to come over and have a chat. Mr McKinley denies that wages were discussed during this conversation.
[13] Mr McKinley’s evidence is that, during the 19 August telephone conversation, he and Mr Alati discussed current pay rates, hours of work and various allowances. Mr Alati indicated that the company would not be able to significantly lift rates of pay. Mr McKinley stated that he was prepared to consider incremental increases and would email his proposal to Mr Alati for him to consider.
[14] Mr McKinley’s evidence is that his mobile phone records show that the conversation of 19 August lasted 10 minutes and 18 seconds which is much longer than would have been needed to have spoken the words claimed by Mr Alati. The phone records are at Annexure DM 1 to Exhibit CEPU 6. Mr McKinley was not challenged on this material.
[15] On 20 August 2009 Mr McKinley emailed to Mr Alati a spreadsheet containing wage rates including a comparison with rates being paid at one of the company’s competitors. The email and attachment are at Annexure A to Exhibit CEPU 5. The email subject is “EBA Rates” and the attachment “Catch Up Agreement rates. x 15”. The spreadsheet sets out current indicative wage rates and rates at five points for both Class and its competitor.
[16] One of those points for Class is headed “Agreement”. The spreadsheet also sets out the difference between the two sets of rates at the different points. Mr McKinley’s evidence is that, as far as he was concerned, this was the beginning of bargaining.
[17] Mr Alati’s evidence is that he didn’t know why Mr McKinley had sent him the spreadsheet. He denied that this was to be part of a potential agreement with the union. Mr Alati also denies that Mr McKinley ever mentioned that he wanted to bargain.
[18] Mr McKinley’s evidence is that he telephoned Mr Alati on 21 August 2009 and left a message on his mobile phone message bank asking him to return the call. He received no response. Then on 1 September he was contacted by a member employed at Class who informed him that a vote had taken place for a new agreement. Mr McKinley’s evidence is that this was the first time the CEPU became aware that the company intended to make an agreement with its workforce without union involvement.
[19] Mr Alati’s evidence is that he first thought about entering into a new agreement with his employees around the time that the new workplace laws commenced. He said he believed this to be around 1 August 2009. His evidence is that he understood that Mr Lucanus received a draft agreement from the National Electrical Contractors Association (NECA), an employer organisation of which, presumably, Class is a member. Mr Alati’s evidence is that, although he didn’t remember making any changes to the draft, Mr Lucanus may have made some.
[20] Mr Alati’s evidence is that he didn’t inform Mr McKinley that the company was dealing directly with its employees as he believed he did not need to. Mr Alati’s evidence is that, prior to and at the time the agreement was made, he understood that there was only one CEPU member among the employees. His evidence is that he had been told that that particular employee had revoked the union’s authority to bargain on their behalf.
[21] Mr Lucanus’s evidence is that he attended a meeting with NECA on 6 August 2009 and was provided with documents concerning procedures for making agreements. His evidence is that he drafted the Agreement in conjunction with NECA.
[22] Mr Lucanus gave evidence that, on 7 August 2009, he attended each of the sites at which the company was working and held meetings with employees. His evidence is that he told the employees that the company intended to start negotiations for a new agreement. He handed each employee a notice of employee representational rights and explained that union members had the right to have their union involved in the process. Mr Lucanus also informed employees that they could revoke the union’s right to represent them. His evidence is that, after the meeting, one employee informed him that they didn’t want the union to represent them and provided a notice of revocation.
[23] Mr Lucanus’s evidence is that each of these meetings lasted about an hour.
[24] Mr Psaradellis gave evidence that he was working at the Campbelltown site on 7 August. His evidence is that he was not told of any meeting on that day, did not attend any meeting on that day and did not receive any notice from the company. Mr Psaradellis’s evidence is that all the employees were working together on that day and no one went to a meeting. He says that if other employees had attended any such meeting they would have talked about it with him and they hadn’t done so.
[25] Mr Psaradellis’s evidence is that, in these proceedings, he has been shown a copy of the notice of employee representational rights. His evidence is that he was not given this notice by the company. Mr Lucanus’s evidence is that he found this surprising as he checked with other employees who confirmed that they had received the document.
[26] Mr Lucanus’s evidence is that, on 21 August 2009, he again visited each of the sites at which the company was working. He says that he issued each of the employees with an information sheet “How and When for Approval - Enterprise Agreement”, Attachment RL1 to Exhibit Class 2. That document noted that there would be a “Discussion Meeting” on that same day at which the company would explain the contents of the enterprise agreement. It also informed employees that there would be an “Approval Meeting” held on 28 August at which a vote for the Agreement would be taken.
[27] Mr Lucanus’s evidence is that, also on 21 August 2009, he issued one copy of the Agreement for each site. He says that employees were told to keep the Agreement together with other documentation in the site office at each location. Mr Lucanus testified that employees could have asked for extra copies of the Agreement as there was a photocopier at each site. His evidence is that he didn’t tell employees that they could or could not have additional copies.
[28] Mr Lucanus’s evidence is that, at each of the meetings on 21 August, he explained the terms of the proposed agreement and the effect of those terms. He also pointed out differences between the State agreement and the new Agreement and discussed pay rates and increments. His evidence is that he read through the Agreement and explained the terms. He asked if employees had questions but no one raised any.
[29] Under cross-examination Mr Lucanus conceded that he hadn’t explained to employees that there were differences between the redundancy provisions in the two agreements. He also conceded that he hadn’t explained that the new Agreement did not require the company to pay top-up income protection insurance for employees. Mr Lucanus’s evidence was that he didn’t know why such a provision was not in the new Agreement and testified that the company wouldn’t be able to go on to building sites without the insurance.
[30] Mr Lucanus also agreed that he hadn’t explained to employees that, unlike the State agreement, the new Agreement didn’t oblige the company to make payments into the Mechanical Electrical Redundancy Trust (MERT) or that the new Agreement didn’t require any such payments to be maintained at any particular level. Mr Lucanus’s evidence is that, in his explanation to employees, he informed them that the company had been paying $75 per week per employee to MERT and would continue to make payments at that rate. His evidence is that the company would not choose to reduce those payments as it would lose employees.
[31] Mr Lucanus’s evidence is that, although the information sheet referred to earlier noted that the vote for the Agreement was to be held on 28 August, employees were informed at the meeting on 21 August that the vote would actually be conducted on 1 September 2009. This was to enable all employees to be present at the one site so as to allow for employees to discuss the Agreement together and hold a ballot.
[32] Mr Psaradellis was made redundant on 21 August. This took place around lunch time and prior to the meeting Mr Lucanus held to discuss the proposed Agreement with the employees at that site. Mr Psaradellis says that he was not notified of or invited to the meeting neither did he ever receive the information sheet referred to in paragraph 26 above. His evidence is that the only time he saw the Agreement was before he left the site that day when one of the other employees showed him the copy Mr Lucanus had left.
[33] Mr Lucanus’s evidence is that the reason Mr Psaradellis did not receive a copy of the information sheet, was not shown the proposed Agreement and was not invited to the meeting on 21 August was that his employment ceased before the meeting was held.
[34] Mr Lucanus’s evidence is that, on 1 September, the employees all met at the Campbelltown site to discuss the Agreement. Nobody from management was on site at the time. Mr Lucanus says that he arrived at the site about an hour later and told the employees that the vote would be by secret ballot. The employees elected one of their number as their representative. That representative collected and counted the ballot papers and announced that there were 15 employees present and 15 yes votes.
[35] The Agreement was sent to NECA for lodgement for approval. On 4 September the company received, via NECA, confirmation from the Department of Education, Employment and Workplace Relations that the Agreement was compliant with the National Code and Guidelines for the Construction Industry, Annexure RL2 to Exhibit Class 2.
[36] On 4 September 2009 Mr McKinley telephoned Mr Alati to inform him that the union intended to oppose the approval of the Agreement. There is some difference in the recollection of each of them as to exactly what was said, but the two versions of the conversation are not dissimilar. Both agree that there was some discussion about Class providing the union with paperwork which had been given to the employees as well as an exchange about whether or not the company had been negotiating with the union. Mr McKinley informed Mr Alati that there was more than one union member among the employees. Mr Alati responded that he hadn’t known that.
[37] The telephone connection was lost and, after both witnesses attempted to make further contact with each other, Mr McKinley sent Mr Alati a text message to call him the following Monday. Mr Alati’s evidence is that he did not contact Mr McKinley because the employees had voted for the Agreement and he didn’t want any delays.
[38] A curious feature of the evidence is that, although this telephone conversation took place on 4 September, as ultimately agreed by both witnesses and supported by the mobile telephone records at Annexure DM1 to Exhibit CEPU 6, the documents which were sent to Mr McKinley supposedly as a result of the conversation, were faxed on 3 September, Attachment B to Exhibit CEPU 5 and Attachment A to Exhibit CEPU 4.
[39] On 7 September Mr Lucanus received correspondence from Mr McKinley including an entry notice concerning suspected contraventions relating to wages and other payments to Mr Psaradellis. After discussion with NECA Mr Lucanus faxed Mr McKinley a letter stating that the company was not required to provide access to the CEPU as Mr Psaradellis was no longer an employee. However the company agreed to provide the union with any relevant documentation.
[40] On 9 September Mr McKinley telephoned Mr Lucanus. There was some discussion about access to the site and inspection of records. Mr Lucanus says that during the conversation Mr McKinley said “I’m going to burn Class Electrical. I am going to hit you whenever I can”. Mr Lucanus sent an email to NECA setting out the conversation, Annexure RL4 to Exhibit Class 2.
[41] Mr McKinley denies using the word “burn”. He testifies that this is not a term he uses. Mr McKinley’s evidence is that he said “I am going to target your company at every opportunity, I am going to get at you whenever I can”. Mr McKinley’s evidence is that this statement related to the company’s compliance with occupational health and safety regulations as well as adherence to any agreement.
[42] Mr Doust gave evidence of telephone contact which he had with three unnamed employees of the company. His evidence is that those employees made various allegations about the agreement making process. Those allegations included: not receiving the notice of employee representational rights until 21 August; no negotiations between the company and employees to develop the Agreement; only one copy of the Agreement at each site; and, the disappearance of the copy at one site after 21 August so that the employees didn’t have access to the document for seven days. Mr Doust also gave evidence that the employees asserted that they had voted in favour of the Agreement as they had felt intimidated by the termination of Mr Psaradellis’s employment and the fact that other employees had been spoken to about their union involvement. The employees advised Mr Doust that they had concerns about the content of the Agreement.
[43] Mr Doust telephoned Mr Lucanus on 17 September and informed him that he had received complaints about the Agreement from three employees. Mr Doust told Mr Lucanus that the employees had not complained to the company because they feared losing their jobs. Mr Lucanus responded that he had not seen anything like that during his time with Class.
[44] On 30 September Mr Doust visited one of the company’s sites. Mr Lucanus’s evidence is that Mr Doust telephoned him to say that the employees would not meet him on site. He requested that Mr Lucanus contact the foreman and advise the employees to meet with him. Mr Lucanus said that he would get the foreman to ask employees if they wished to speak to Mr Doust however it was up to the employees themselves.
[45] Mr McKinley’s evidence is that approval of the Agreement would result in a reduction in a number of conditions of employment. There would be a wage freeze of over twelve months; the redundancy entitlements would be less; there would be no legal requirement for the company to make payments to MERT or to maintain any such payments at a particular level; and, there would be no requirement for top-up income protection insurance to be paid by Class.
SUBMISSIONS ON BEHALF OF CLASS
[46] A written outline of submissions was lodged prior to the hearing. Mr McDonald also made oral submissions.
[47] Class submits that it does not know that any of its employees are members of the CEPU. In any event any such membership is small in number. Class submits that, from the time the “bargaining notice” was issued to the making of the Agreement there was no contact from the CEPU and apparently no contact between the CEPU and its purported members. Further it appears that there was no contact at all with the CEPU from those members about the Agreement.
[48] Class notes that the CEPU opposes the approval of the Agreement even though every employee, including its purported members, voted in favour of the Agreement. Class submits that its employees won’t speak to the CEPU and the union has asked the company to help in this regard.
[49] Class notes that Fair Work Australia (FWA) cannot make orders which would prevent employees voting on a proposed agreement nor can it make orders which would have the effect of changing the content of an agreement. Once the employees had voted for the Agreement the company could not negotiate a different agreement with the CEPU. Class submits that, usually, an application and employer declaration are sufficient to satisfy the statutory requirements. Reference is made to paragraph 768 of the Fair Work Bill 2008 Explanatory Memorandum.
[50] Class makes a number of submissions in response to the CEPU’s allegations of non-compliance with the Act. It notes that the application for approval did not identify the CEPU as a bargaining representative because the company did not know it had such a status until the decision referred to in paragraph 2 above. Any failure to provide a union declaration of approval of the Agreement is the responsibility of the CEPU which in fact opposes approval. Further, the Fair Work Australia Rules permit the tribunal to dispense with compliance with the Rules.
[51] Class submits that, contrary to the CEPU submissions, it has provided sworn evidence of its compliance with relevant statutory requirements including sections 173, 180(2), (3) and (5) and 181(2). It submits that the sworn evidence of Mr Lucanus on these issues should be preferred to the assertions of the CEPU.
[52] Class refutes the CEPU submission that it did not bargain in good faith. It did not know the CEPU was a bargaining representative so could not have been expected to bargain with it. Further, the CEPU submissions that approval of the Agreement would be contrary to the provisions of section 187(2) are misguided as those provisions relate to situations where there is a scope order in operation.
[53] In his oral submissions Mr McDonald referred to Exhibit Class 1 and Mr Lucanus’s oral evidence attesting to the statutory requirements for approval. He submitted that this evidence was direct evidence of what had happened in contrast to the CEPU evidence of telephone conversations with unnamed persons.
[54] Mr McDonald submitted that the company evidence was forthright and honest. He also submitted that the CEPU evidence at its highest went only to the fact that certain conversations took place. Mr McDonald submitted that, even at that level, the union’s evidence lacked probative value.
[55] Mr McDonald submitted that there were two areas of difference in the evidence: whether there had been a proper explanation to employees of the redundancy arrangements; and, the question of whether the parties were ever bargaining.
[56] In relation to the first issue Mr McDonald submitted that the existing legal entitlement to redundancy is unclear. He submitted that the application clause of the State agreement refers to a parent award which no longer applies to Class employees as it has been overtaken by a notional agreement preserving a State award (a NAPSA). He also submitted that the position is further complicated by the fact that the redundancy clause of the State agreement actually refers to a separate State redundancy award which has since been rescinded. Mr McDonald noted that the NAPSA was the relevant instrument for the purposes of the no-disadvantage test.
[57] Mr McDonald submitted that, in any event, the payment of $75 to MERT is not ungenerous and, in most instances, means that employees will receive in excess of the standard redundancy scale of benefits. He noted that, from 1 January 2010, the relevant scale will be the Federal scale as reflected in the National Employment Standards.
[58] Mr McDonald noted that Mr Lucanus is not an industrial lawyer and submitted that his explanation to employees about the redundancy provisions was not deliberately misleading and should not detract from approval of the Agreement.
[59] In relation to the second issue Mr McDonald submitted that it is a remarkable coincidence that, after seven years of inactivity, the union commenced negotiations for a new agreement in the week that the notice of representational rights was issued.
[60] Mr McDonald submitted that Mr Alati’s evidence as to his discussions with Mr McKinley should be preferred to that of the latter. He submitted that Mr Alati was able to remember the conversations word for word whereas Mr McKinley did not have a good recollection. I note that Mr McDonald submits that Mr Alati did not concede that one of the discussions took place on 4 September. However, in paragraph 6 of Exhibit Class 3, Mr Alati specifically attests that the discussion occurred on that date. Indeed it is that attestation that appears to have caused Mr McKinley to revise his earlier statement that the conversation happened on 1 September.
[61] Mr McDonald submitted that it is of note that the union had not spoken to its members to develop a claim to put to the company. The union had also ignored the fact that all employees had voted in favour of the Agreement. Mr McDonald rejected any suggestion that the company should have called evidence from its employees and submitted that it had more than met the threshold for approval.
[62] Mr McDonald noted that the union submits that the company had not complied with the Act by failing to bargain with it. He rejected that argument and submitted that the union case at its highest is that, after the Agreement was made, it informed the company that it had members in addition to the one who had revoked the union’s authority to act on his behalf. Mr McDonald submitted that, in opposing approval of the Agreement, the CEPU is only representing itself.
[63] Mr McDonald submitted that the allegations of failure to bargain in good faith are not relevant as they relate to the period after the Agreement was made. Unless there is a scope order in operation, once an agreement is made, the issue of how the negotiations had been conducted was not relevant. In any event, there was no absence of good faith bargaining by Class. Further, the union’s actions in threatening the company were not consistent with good faith bargaining.
SUBMISSIONS ON BEHALF OF THE CEPU
[64] A written outline of submissions was lodged. Mr Searle also made oral submissions.
[65] The CEPU submits it has members employed at Class. It submits that the employment conditions of Class employees have been regulated for a number of years by State enterprise agreements negotiated between the company and the union. The State agreement is the most recent of those instruments. By operation of statute the State agreement became a federal instrument on 27 March 2006.
[66] The CEPU submits that it indicated to the company that it wished to negotiate a new agreement. Discussions commenced and the union provided some wage proposals to the company. Class never disclosed to the union that it intended to reach an agreement directly with its employees or that it was having discussions to that end.
[67] The CEPU submits that there were no negotiations between the company and its employees to develop the content of the Agreement. It also submits that the notice of employee representational rights was not provided to employees at least 21 days prior to the vote. Employees were not permitted to take the Agreement away to obtain advice; only one copy was provided per site. At one site this copy disappeared so employees did not have access to it for the requisite seven days.
[68] The CEPU submits that the company has failed to comply with the Act in a number of other respects: it failed to recognise the union as a bargaining representative; it lodged the application for approval without identifying the union as a bargaining representative; it failed to provide a union declaration of approval; it failed to provide a proper explanation of the Agreement to employees; and, it failed to properly notify employees of the time and place at which the vote would take place and the method of the vote.
[69] The CEPU submits that, because of the various failures identified above, FWA could not be satisfied that the employees had genuinely agreed to the Agreement. Further, the company has not complied with the good faith bargaining provisions of the Act and, in particular, has not met the requirements of paragraphs (a) to (f) of section 228(1). It has also engaged in conduct that undermines collective bargaining and freedom of association. The CEPU submits that such failures and conduct prevent approval of the Agreement; section 187(2).
[70] In his oral submissions Mr Seale noted that the relevant State award had become a NAPSA which in turn had become a transitional instrument under the Act. He further noted that the State agreement had never been formally rescinded and, hence, had continued in force. Mr Searle submitted that both the NAPSA and the State agreement are bench marks for the no-disadvantage test for the Agreement.
[71] Mr Searle submitted that the company had the onus of establishing that the statutory requirements had been met and its failure to bring employees to give evidence on this point gives rise to a Jones v Dunkel inference. He noted that Mr Lucanus’s evidence did not go to the actual ballot process as he was not present at the time of the vote.
[72] Mr Searle submitted that Mr Lucanus’s evidence in Exhibits Class 1 and Class 2 as to the steps he took to explain the Agreement to employees is not very expansive. He submitted that this “global, non-specific” evidence should be considered in the context of Mr Lucanus’s testimony of four clear examples of where an explanation had not been given. Mr Seale submitted that, if a proper explanation had been provided, the outcome of the vote may have been different. He also submitted that it is possible that the absence of questions from employees about the Agreement may have been because they did not understand what was being put before them.
[73] Mr Searle submitted that it is clear that the redundancy benefits in the Agreement are less generous than those in the NAPSA and the State agreement. He submitted that there is no requirement in the Agreement for the Company to pay top-up income insurance for employees. Mr Searle also submitted that the Agreement does not legally oblige the company to make any payments to MERT. Further, if the company does make payments to MERT, the Agreement does not require that they be maintained at the present level of $75 or set out any criteria for determining the level at which they should be set. In addition, Mr Seale submitted that Mr Lucanus had conceded that he had not explained to employees that their wages would, in effect, be frozen for two years under the Agreement.
[74] Mr Searle submitted that Mr Lucanus had agreed that he had not explained these four areas of difference to employees. Mr Searle noted Mr Lucanus’s evidence that the company had no intention of ceasing MERT payments at the present rate or not paying the top-up insurance. He submitted that, whilst that might be the case, the question is whether there is a lesser standard of protection which is legally enforceable.
[75] Mr Searle also noted the evidence of Mr Doust and Mr McKinley about other issues that they and the employees wished to raise if there had been more time for such consideration.
[76] Mr Searle referred to the competing evidence of Mr McKinley and Mr Alati as to the discussion between them. He submitted that, even if Mr Alati had misunderstood Mr McKinley, it would a risible proposition that a union official would send an email proposing new pay rates for an employer without there being an intention to enter into negotiations for a new agreement. He noted that there was no statutory requirement that the union provide a complete draft agreement for bargaining to begin.
[77] Mr Searle submitted that, even on Mr Alati’s version of events, the company had unreasonably failed to engage in bargaining with the union. Such a situation was covered by section 228 of the Act.
[78] Mr Searle submitted that, on the basis of the fact that Class had received advice from NECA, it was reasonable to assume it knew that, if the union had members there, then it was a bargaining representative for those members subject to revocation of that right. He submitted that, even if the company did not know as a matter of fact that the union had members, it would have been reasonable to assume that it did. Mr Searle submitted that no union would take the steps which the CEPU had unless it had members.
[79] Mr Searle noted Mr Alati’s evidence that, before the vote, he knew there was one union member and, after the vote he had been informed by the union that there was more than one member. Mr Searle submitted that Mr Alati’s failure to make inquiries about this issue was not prudent and he had treated the union’s rights in a cavalier fashion. He submitted that the company should have returned to the bargaining table with the union.
[80] Mr Searle submitted that the evidence demonstrates that the employees were not involved in the development of the Agreement. There was only one copy of the document at each site and no proper explanation to employees of at least four features of the Agreement. Three of these features were also relevant to the application of the no-disadvantage test.
[81] Mr Searle disputed the company’s submissions that Mr McKinley had threatened it. He submitted that the words used were merely an example of the “rough and tumble” of industrial parlance.
[82] Mr Seale referred to and relied on the decision of Whelan C in the matter of Alphington Aged Care [2009] FWA 301 (Alphington).
[83] Mr Seale rejected the company’s submission that, once an agreement has been voted on by employees, the good faith bargaining provisions of the legislation were no longer relevant. He submitted that, as a matter of discretion, the Agreement should not be approved. Further a direction should be issued that the company bargain in good faith with the union.
SUBMISSIONS IN REPLY
[84] Mr McDonald submitted that Mr Seale had attempted to put a nice face on ugly union behaviour. He submitted that, even if Mr McKinley’s evidence was accepted, which it shouldn’t be, his words amounted to a threat to the company. Mr McDonald submitted that the union’s opposition to approval of the Agreement was part of its retribution.
[85] Mr McDonald submitted that, if there was any issue about the redundancy benefits, MERT payments and the payment of the top-up insurance, a written undertaking would be provided stating that existing arrangements would be maintained.
[86] Mr McDonald submitted that there was no actual need for that undertaking as the Agreement met the no-disadvantage test in any event. He reiterated his earlier submission that the relevant instrument for the application of this test was NAPSA, not the State agreement,
[87] Mr McDonald referred to paragraph 57 of Alphington and noted that, in this case, the company had not been aware that it had union members among its employees other than the one who had revoked the union’s authority. He submitted that the matters were distinguishable on the facts.
[88] Mr McDonald submitted that, once an agreement was made, the legislation did not require regard to be had to the good faith bargaining provisions unless there was a scope order in place.
[89] Mr McDonald rejected the submission that a Jones v Dunkel inference should be drawn about the absence of employee evidence. He noted that there was no issue about the fact that all employees had voted for the Agreement. Mr McDonald noted that the legislation required that employees be given access to a proposed agreement rather than be given a copy each. He also noted that Mr Lacanus had made his very best attempts at explaining the Agreement to employees.
[90] Mr McDonald submitted that, if contrary to his submissions, the Agreement was not approved, the company would resist any order or direction that it bargain in good faith with the CEPU.
CONCLUSIONS
[91] As stated earlier, this decision concerns two matters: an application under section 185 for the approval of the Agreement; and, an application under section 240 to deal with a bargaining dispute. To some extent the second application has been subsumed into the first as the CEPU’s allegations of an absence of good faith bargaining and related matters are put forward as grounds on which approval of the Agreement should be refused. In the circumstances I intend to consider the section 185 matter first.
[92] The CEPU has put into question whether various pre-approval steps have been taken, whether there has been genuine approval of the Agreement by employees and whether it passes the no-disadvantage test. The union also raises issues about good faith bargaining and alleges that the company has failed to provide relevant documentation to FWA.
[93] In view of the manner in which the proceedings developed, it is probably most convenient if I address the objections raised by the CEPU by reference to the relevant statutory provisions in order. It should be remembered however, that the legislation also requires satisfaction of a number of other matters before approval of an agreement can be given.
[94] The first issue to be considered is whether the company has complied with the requirements of section 173. Section 173(1) imposes an obligation on an employer to take all reasonable steps to give a notice of representational rights complying with the content requirements in section 174 to “each employee who will be covered by the agreement” and “who is employed at the notification time”.
[95] Section 173(5) provides that the Regulations may prescribe how such notices may be given. Regulation 2.04 prescribes a number of methods by which such notices may be provided including by being given “to the employee personally”. This was the method adopted in this case.
[96] There appears to be a conflict in the evidence of Mr Lucanus and Mr Psaradellis on this point. Mr Lucanus says that, during the site meeting on 7 August 2009, “all employees present were handed” the notice. Mr Psaradellis was very firm in his evidence, especially under cross-examination, that he was on site that day, he was not asked to attend any meeting and he did not receive any such notice.
[97] In paragraph 45 of Exhibit Class 2 Mr Lucanus specifically responds to Mr Psaradellis’s evidence in Exhibit CEPU 3 about this point. It is interesting to note that he says there was no requirement to provide the notice to Mr Psaradellis because he ceased employment with the company prior to the making of the Agreement. He also says that he checked with other, unnamed, employees who confirmed that they had received the notice. It is unclear from this whether Mr Lucanus was conceding that Mr Psaradellis hadn’t been given the notice because there was no requirement to provide it to him.
[98] I disagree that there was no requirement to provide Mr Psaradellis with a notice. As indicated earlier, the Act requires that a notice is to be given to “each employee who will be covered by the agreement” and “who is employed at the notification time”. Mr Psaradellis was an employee of the type who would have been covered by the Agreement and he was employed at the notification time. That he was made redundant prior to the making of the Agreement does not mean that he was not entitled to receive a notice of representational rights.
[99] I accept Mr Psaradellis’s evidence that he did not receive such a notice. I am therefore not satisfied the company has complied with its obligations under section 173.
[100] A number of issues are raised as to whether the company has met its obligations under section 180. These concern the provision of the Agreement, the explanation of its terms and effect and the notification of the time, place and method of the vote.
[101] Section 180(2) provides that an employer must take all reasonable steps to ensure that employees are given a copy of the written text of the proposed agreement, as well as other material not presently relevant, or that employees have access to a copy of the agreement and other material throughout the access period. Subsection (4) defines the access period as the seven day period ending immediately before the start of the voting process.
[102] It is not suggested that each employee was given a copy of the Agreement. The question is whether the company took all reasonable steps to provide access to the Agreement during the access period. The evidence of Mr Lucanus is that, on 21 August 2009, one copy of the Agreement was left at each of the three sites at which the company was working. His evidence is that he told employees to keep the Agreement in the site office with other important documentation. It should be noted also that the evidence is that there are 15 employees who will be covered by the Agreement.
[103] That a copy was left at the Campbelltown site is supported by Mr Psaradellis whose evidence is that he was shown the document by one of the other employees. There is an allegation that the copy which had been left at one of the Wollongong sites disappeared at some point during the access period. However, there is no evidence that the company or its officers were responsible for any such disappearance. Perhaps it was taken away by one of the employees or perhaps it was simply mislaid. There is no suggestion that Mr Lucanus, or any other company representative, was asked for and refused to provide a replacement.
[104] I am satisfied in the circumstances that the company has met its obligations under section 180(2).
[105] Section 180(3) provides that an employer must take all reasonable steps to notify employees of the time and place of the vote for an agreement as well as the voting method to be used. This information is to be provided by the start of the access period.
[106] The evidence of Mr Lucanus is that, on 21 August 2009, he issued employees with an information sheet, Attachment RL1 to Exhibit Class 2. This document referred to a vote taking place on 28 August. However, this date was changed and so, during the meetings on 21 August, Mr Lucanus informed employees that the vote would be conducted at the Campbelltown site on 1 September and that it would be by secret ballot. The evidence as to the notification of the time of the vote is a little less precise. However, Mr Lucanus says that employees were told to leave their various sites at 12 noon on the day and meet at the Campbelltown site to discuss the Agreement among themselves and then vote.
[107] Despite the absence of notification of an exact time for the vote, in the circumstances, I am satisfied that the company has complied with its obligations under section 180(3). It should be noted that the Act does not require that the information concerning the vote be provided in writing; it merely requires “notification”.
[108] The third issue concerning section 180 is whether the company has met the requirements of subsection (5). That provides that an employer must take all reasonable steps to ensure that the terms of an agreement and the effect of those terms are explained to employees. There is no suggestion in this case that the employees had particular circumstances or needs such that subsection (5)(b) or subsection (6) might be relevant.
[109] As stated earlier, the evidence of Mr Lucanus is that, during each of the meetings he held with the employees on 21 August 2009, he explained the terms of the Agreement and the effect of those terms. He says that he pointed out differences between the State agreement and the Agreement. He also discussed pay rates and pay rate increments. However, under cross-examination he conceded that he hadn’t explained the differences between the two agreements concerning redundancy entitlements, payments to MERT and top-up income protection insurance.
[110] Section 180(5) does not in its terms require an employer to explain differences between the proposed agreement and any relevant existing agreement. It does however require an explanation of “the terms” and “the effect of those terms” of a proposed agreement. In my view any proper explanation of the effect of a term would necessarily involve some comparison with existing arrangements.
[111] In this case the evidence is that, in respect of at least redundancy entitlements and MERT payments, such an explanation was not given. The situation concerning the top-up income protection insurance is perhaps more problematic. The question is whether the Act requires an explanation to be given about a term which is not in a proposed agreement. I would suggest that the answer is “no”.
[112] I note that the CEPU also submit that there was no explanation to employees about a “wage freeze”. However, the evidence was not clear on this point and, in any event, Mr Lucanus’s evidence is that he discussed pay rates and increments with employees. I reject the CEPU’s submission on this point.
[113] Nevertheless I am not satisfied that the company had discharged its obligations under section 180(5) in respect of the explanation to employees concerning redundancy entitlements and payments to MERT.
[114] Before leaving this issue I wish to make three comments. First, in arriving at the conclusion set out in the immediately preceding paragraph, I have considered the evidence and submissions as to the company’s intentions in relation to MERT and the top-up insurance. However, regardless of what an employer might intend to do over and above the requirements of an enterprise agreement, the Act provides that the explanation that is given to employees is as to the terms and effect of those terms of the agreement.
[115] Secondly, my conclusion should not be taken as a finding that Mr Lucanus deliberately misled employees. He did not understand that there were differences in the scales of redundancy benefits and did not realise the legal effect of the use of the word “may” rather than “will” in the clause relating to MERT payments.
[116] Thirdly, the company has provided a written undertaking which, if accepted, would have the effect of reinstating the redundancy benefits, MERT payments and top-up income insurance payments which are in the State agreement. This undertaking is relevant for consideration of the no-disadvantage test, however, it cannot retrospectively correct the company’s failings in relation to compliance with section 180(5).
[117] The next issue concerns the application of section 181(2). That section requires that employees not be requested to approve an agreement until at least 21 days after the last notice of employee representational rights under section 173(1) is given.
[118] There are two points to be considered in relation to this issue. First, there is an allegation that some unnamed employees did not receive their notices until 21 August or sometime during the previous week, thereby not having the notice for the requisite time. However, whilst I accept Mr Doust’s evidence that this is what he was told, none of the employees have come forward to give evidence and be cross-examined about the allegation.
[119] The second point to be considered is my earlier finding that Mr Psaradellis was not given such a notice at all. On one view, such a failing means that the company could never have made a request under section 181(2). However, it needs to be remembered that, by the time the company made the request, Mr Psaradellis was no longer an employee. Whilst on this point, I note that Mr Psaradellis’s evidence is that he did not receive the information sheet issued on 21 August neither was he invited to or attend any meeting on that day. However the evidence is that he was dismissed prior to the meeting being held so it must follow that he no longer had any entitlement to be involved in the agreement making process.
[120] On balance I am satisfied that the company has met the requirements of section 181(2).
[121] The next concern raised by the CEPU relates to compliance with section 185(2)(b). That provision requires that an application for approval of an agreement must be accompanied by any declarations that are required by the “procedural rules”. The CEPU submit that the provision has been breached because the company did not request and lodge a Form F18 - Declaration of Employee Organisation in Support of Application for Approval of Enterprise Agreement. It also submits that the company has further failed in its obligations by not identifying the union as a bargaining representative in the application.
[122] It would be difficult to see how the company could have lodged a Form F18 with its application. Apart from the fact that such a declaration can only be made by an employee organisation, in this case the organisation is opposing approval of the Agreement. I can only presume that, if a request had been made to it to provide such a declaration, it would have been refused.
[123] The company has not identified the CEPU as a bargaining representative in the application. It was of the view that the union did not have such a status. As it happens this view was based upon a mistaken opinion as to union membership among its employees.
[124] In the particular circumstances I do not consider that there has been any breach of section 185.
[125] Section 186 provides that, if an application for the approval of an enterprise agreement is made, FWA must approve it if various requirements in both that section and section 187 are met. The requirements in section 186 include that the agreement has been genuinely agreed to by the relevant employees, about which section 188 is relevant, and that the agreement passes the “better off overall test”.
[126] It should be noted that, because of the operation of Item 1, Division 1, Part 2 of Schedule 7 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Provisions Act), for agreements made during the bridging period which this one has been, the reference in section 186 to the “better off overall test” is replaced by the “no-disadvantage test”. I return to this requirement later.
[127] It should be also noted that section 186 contains a number of other requirements about which FWA must be satisfied before approving an agreement. However, those requirements have not been put in issue in relation to the Agreement.
[128] Section 187 sets out additional requirements which must be met before an agreement is approved. The CEPU has submitted that subsection (2) is relevant in this matter. That subsection requires FWA satisfaction that approving the agreement would not be inconsistent with or undermine good faith bargaining. However it only applies to an agreement, or proposed agreement, in relation to which there is a scope order in operation. There is no such order in relation to the Agreement so this subsection is not relevant to my determination. Likewise none of the remaining requirements of section 187 are relevant in this case.
[129] As noted above, the requirement in section 186(2) that FWA be satisfied that employees have genuinely agreed to an agreement also brings in the provisions of section 188. That section provides that an agreement has been genuinely agreed to if FWA is satisfied that: the employer has complied with sections 180(2), (3) and (5) and subsection 181(2); the agreement was made in accordance with, in this case, section 182(1); and, there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.
[130] I have already dealt with sections 180(2), (3) and (5) and 181(2). Section 182(1) provides that an agreement is made when a majority of those employees who cast a valid vote approve the agreement. I accept the evidence of Mr Lucanus that he had been informed by the elected employee representative that the result of the ballot was 15 yes votes and nil no votes. Clearly the provisions of section 182(1) have been met.
[131] The CEPU submits that there are other reasonable grounds for believing that the employees have not genuinely agreed to the Agreement. The union submits that the evidence casts doubt upon whether the Agreement was the result of any real bargaining between the company and the employees. It submits that this is compounded by the fact that employees weren’t able to take a copy of the Agreement away from the worksite to obtain advice as well as the absence of a proper explanation of the terms of the Agreement.
[132] The evidence is clear that the employees had no direct input into the Agreement. The document was developed between Mr Lucanus and NECA. However, that does not mean that the employees did not genuinely agree to the Agreement. The employees had the opportunity to ask questions about the document during the meetings on 21 August and then of course they voted on it on 1 September.
[133] It may have been preferable if the employees had been provided with additional copies of the Agreement to take away and obtain advice. However, the fact that the Act permits “access to” rather than necessarily “possession of” a proposed agreement indicates that the absence of a copy to take away from the workplace does not mean that there has been a lack of genuine agreement.
[134] I am satisfied in all of the circumstances that there are no other reasonable grounds for believing that the Agreement has not been genuinely agreed to by the employees.
[135] I now return to the question of the no-disadvantage test. The basis of this test became a matter of debate during proceedings and so needs to be addressed in some detail. Subitem 4(1), Division 2, Part 2 of Schedule 7 of the Transitional Provisions Act provides as follows:
“An enterprise agreement passes the no-disadvantage test if FWA is satisfied that the agreement does not, or would not result, on balance, in a reduction in the overall terms and conditions of employment of the employees who are covered by the agreement under any reference instrument relating to one or more of the employees.”
[136] Subitem 5(1) relevantly provides that a reference instrument is any “relevant general instrument”. Subitem 5(2) defines a “relevant general instrument” as an “award-based transitional instrument” that regulates the work performed or applies to the employer.
[137] Part 2 of Schedule 3 of the Transitional Provisions Act deals with the continued existence of “WR Act instruments” as transitional instruments. Subitem 2(2) lists the types of instruments which are “WR Act instruments”. Included in that list are “a notional agreement preserving State awards” (a NAPSA) and “a preserved State agreement”. Subitem (5) provides:
“Transitional instruments are classified as follows:
(a) awards, State reference transitional awards or common rules, and notional agreements preserving State awards, are
award-based transitional instruments;
(b) all other kinds of transitional instruments are
agreement-based transitional instruments;
…….”
[138] An analysis of these provisions discloses that the NAPSA is a reference instrument for the purposes of the no-disadvantage test but the State agreement is not. I am satisfied that the Agreement would not result, on balance, in a reduction in the overall terms and conditions of employment of employees covered by it when compared with the NAPSA. Further, any concern that I may have had about the Agreement passing the no-disadvantage test is met by the terms of the written undertaking.
[139] In summary, my conclusions in relation to the section 185 application for approval of the Agreement are as follows:
• I am not satisfied that the company has met its obligations under section 173 and section 180(5);
• I am satisfied that the company has met its other statutory obligations;
• I am satisfied that the Agreement passes the no-disadvantage test.
[140] As a result of my finding that the company has not complied with section 180(5) I am unable to be satisfied that the Agreement was genuinely agreed to by the employees: section 188(a). Section 186 provides that this is one of the requirements for approval. Consequently I am unable to approve the Agreement. The section 185 application is dismissed.
[141] I now turn to the section 240 application. There is clearly a difference between Mr Alati and Mr McKinley as to the exchanges between them. Whether they were simply at cross-purposes or whether Mr Alati was deliberately ignoring Mr McKinley’s overtures I accept that at no time did Mr Alati agree to bargain with the union. Mr Alati believed that the only union member among his company’s employees had revoked the union’s status as a bargaining representative and consequently he was not obliged to bargain with the CEPU. I accept Mr Alati’s evidence that it was only after the employees had voted on the Agreement that he was informed that the union had additional members among the employees.
[142] In hindsight it might perhaps have been prudent for the union to have communicated with the company in writing to inform it that the union had members among the employees and that, as a result, it had certain rights as a bargaining representative under the Act. The issue of the membership could have been decided then and an orderly process of bargaining commenced.
[143] I do not intend to issue any direction or order as requested by the CEPU. If either or both the company and the union wish to bargain for a new enterprise agreement they can take whatever steps are available to them under the Act.
[144] There are however two points which should be noted. First, the company needs to recognise that the CEPU has certain rights as a bargaining representative for its members. The Act does not require those members to nominate the union as their representative. The union, in effect, is a “default” bargaining representative for those members, subject of course, to any revocation of its status or the appointment of another person or persons as bargaining representatives.
[145] Secondly, there is the question of Mr McKinley’s comment to Mr Lucanus and whether this is an impediment to any future good faith bargaining between the parties. Whether he used the word “burn” or “target” probably does not really matter. He was clearly aggrieved at the time. I note that Mr Lucanus told Mr Doust that the company was not worried about the comment “as people say things they don’t mean in the heat of the moment”.
[146] I trust that both parties will approach their future relationship in a mature and professional manner.
COMMISSIONER
Appearances:
T. McDonald solicitor, with O. Judd of The National Electrical Contractors Association for Class Electrical Services Pty Ltd.
A. Searle of Counsel, with A. McKinnon of the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
Hearing details:
Sydney.
September 21, 24.
November 16.
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