Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Perigon Qld Pty Ltd (B2016/326)

[2016] FWC 1695

[2016] FWC 1695

The attached document replaces the document previously issued with the above code on 18 March.

Typographical error in para 31 changed.

Brendan Pearce

Associate to Senior Deputy President Richards

Dated 18 March 2016.

[2016] FWC 1695

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.437 - Application for a protected action ballot order

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
v
Perigon Qld Pty Ltd
(B2016/326);

Nilsen Qld Pty Ltd
(B2016/327);

Fredon Qld Pty Ltd
(B2016/328)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 18 MARCH 2016

Summary: Protected Action Ballot application – s.443(1)(b) - whether genuinely trying to reach agreement – consideration of factual context – non-permitted content not decisive as to finding- specialised skills (and apprentices) not employed directly but on contract basis – no nexus between job security of existing employees and contractors (and apprentices)

[1] On 29 February 2016 three protected action ballot applications under s.437 of the Fair Work Act 2009 (“the Act”) were made by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (“CEPU”). The application is concerned three different employers within the electrical contracting industry. The three employers were:

● Nilsen Qld Pty Ltd
● Perigon Qld Pty Ltd; and
● Fredon Qld Pty Ltd. (“the employers”)

[2] The applications were heard on 17 March 2016 following a compacted directions timetable. I have expedited this decision given the statutory context of the application (see the object of Division 8, Part 3-3 of the Act.

[3] The CEPU pressed the same proposed agreement to each of the three employers on the basis that the agreement, as Mr Peter Ong, the Divisional Branch Assistant Secretary for the CEPU put it in his evidence, was a framework agreement and capable of customisation at the enterprise level. The employers argued generally that the CEPU was pursuing claims through its proposed enterprise agreement that were not about “permitted matters” for purposes of s.172 (1) of the Act, and thus could not satisfy the requirement that s.443(1)(b) of the Act.

[4] I add at this point that the scope of the employers’ objections was modified significantly before such time as the hearing commenced. At the hearing, the employer contended, more specifically, that clauses 3.8.1.1 and 3.8.2 of the proposed agreement (notwithstanding agreed amendments thereto) place a restriction on the employers’ engagement of specialised subcontractors, and Training Company apprentices in some instances.

[5] The restrictions arise for reason that the employers claimed not to directly employ employees to perform the work performed by the contractors’ employees and therefore there was no lawful scope for the union’s claims to regulate that employment for the particular purpose of s.172(1)(a) of the Act. s.172(1)(a) of the Act relevantly provides as follows;

(1) An agreement (an enterprise agreement) that is about one or more of the following matters (the permitted matters) may be made in accordance with this Part:

(a) matters pertaining to the relationship between an employer that will be covered by the agreement and that employer’s employees who will be covered by the agreement;

[…].

[6] I will expand on this argument further below.

The relevant clauses in contest

[7] Clause 3.8.1 of the Agreement as amended relevantly provides that:

3.8.1 Consultation

3.8.1.1 Before the employer engages contractors for electrical and\or data work, or labour hire companies to do work covered by this agreement the employer must consult with the Union. For the purpose of the consultation the employer must inform the Union of:

• the name of the proposed contractor(s), labour hire company or companies;



• the type of work proposed to be given to the contractor(s), labour hire company or companies;



• the number of persons and qualifications of the persons the proposed contractor(s) or labour hire company or companies may engage;



• and the likely duration.

[…]

3.8.2 The employer must ensure the wages and conditions of employees of contractors, employees of labour hire companies, and Group Training Scheme employees engaged to do work covered by this agreement are no less favourable than the wages and conditions provided for in this agreement for the equivalent or similar work.

[8] It is these amended claims that are the subject of the controversy.

[9] The evidence led by the employers’ in each instance establishes that each of the employers engages subcontractors for specialist work in various facets of their businesses, and will not or does not (currently at least) intend to perform any of these works, or otherwise does not employ apprentices directly.

[10] It was further submitted that the “fact that an employee of a subcontractor or employee of a Group Training Company performs work covered by a proposed enterprise agreement does not itself establish any matter pertaining to the relationship between an employer (who will be covered by the agreement) an employee (who will be covered by the agreement)”. Rather, the employers contended that the nature of the relationship is a matter of particular construction in the relevant context.

[11] The employer held generally that the above terms of the proposed enterprise agreement impose a restriction on the employers’ use of specialised subcontractors in circumstances where the employers do not employ employees who perform the same work. It was further argued that the relevant clauses do not pertain to the requisite relationship because of a genuine concern about the job security of the employees covered by the agreement. This is because the specialised contractors will not be performing work that will be covered by any of the employees. Thus, there are no employees whose employment could be made less secure because of the engagement of the subcontractors.

[12] It was suggested that Mr Ong, having very considerable experience in enterprise bargaining in the electrical contracting industry, should have known or else have reasonably inferred that the above clauses in the context of the employment profile of the employers (about which he was familiar) were not permitted matters under the Act, and should not have pressed them as a claim upon the employer.

[13] The employers argued that the union could not therefore, be said to have been and continue to be genuinely trying to reach agreement, as a consequence.

[14] I add at this point that each of the employers provided a deal of discrete evidence in respect of their interactions with the CEPU in respect of bargaining for a replacement enterprise agreement. Evidence in this same respect was led by the union. Ultimately, there was not a great deal of contest at the factual level, however, between the parties in this regard. More critical was the argument on submission.

Consideration

[15] The relevant Full Bench directive in respect of the approach to the relevance of the inclusion of non-permitted content in agreement negotiations in relation to protected action ballots in respect of a finding under s.443(1)(b) of the Act is Esso Australia Pty Ltd v AMWU, CEPU and AWU [2015] FWCFB 210.

[16] Generally speaking, the directive provided by the Full Bench is the fact that a union that might be pursuing a claim about non-permitted matter, is not in an abstracted context, a determinative factor as to whether the union has been or is genuinely trying to reach agreement. There is no decision rule, the Full Bench held, that a union which presses a term which is not about non permitted content has not been and is not genuinely trying to reach agreement:

“[59] There is no legislative warrant for the adoption of a decision rule such that if an applicant is, or has been, pursuing a substantive claim which is not about a permitted matter it is not generally trying to reach an agreement within the meaning of s.443(1)(b).”

[17] Rather, the directive of the Full Bench is that the Commission in exercising its discretion in respect of section 443 (1) (b) of the Act ( and determining whether it is satisfied to the requisite measure that the applicant union has been and is genuinely trying to reach agreement with the employer) is to consider all the relevant factual considerations potentially relevant in the particular context and not to fetter its broad discretion in relation to s.443(1)(b) of the Act by an exclusive consideration of whether any particular content is not permitted content.

[18] Though the Full Bench held that agreements should be about permitted matters (which is the very point of section 172(1) of the Act), it nonetheless held that the Commission was not directed by the statute to identify such content in any claims made by an applicant.

“[64] The adoption of a construction of s.443(1)(b) which would require the Commission to scrutinise each of the claims advanced by the applicant to determine whether they are about permitted matters is inconsistent with the object of division 8 of part 3-3 in the scheme of the FW Act.”

[19] In so concluding the Full Bench pointed largely to the timeliness imperatives around applications under s.437 of the Act (which are set out at s.441 of the Act) and partly drew upon the words of the Explanatory Memorandum to the Fair Work Bill 2008, which states that:

“[664] [...] it is not intended to that FWA will have to scrutinise each enterprise agreement to ensure that all its terms are about permitted matters as this would unduly delay the agreement approval process.”

[20] In the matter before it, the Full Bench concluded the a number of the relevant contractor sub clauses that had formed part of the union’s claims had been sub clauses which comprised non-permitted content, and further a further sub clauses comprised content which arguably was non-permitted content. The Full Bench held ultimately that the circumstances relating to the iterations between the bargaining representatives, including the point at which the employer’s concerns were raised and the relevant union’s response to those concerns when they were raised, were relevant considerations in support of a finding the applicant union had discharged its duty under s.443(1)(b) of the Act.

The particular context: the current case

[21] On 12 January 2016, the Divisional Branch Secretary of the CEPU corresponded with the employers in terms which included the following words:

“As we are seeking to negotiate an enterprise agreement under the Fair Work Act 2009 we will be seeking to ensure that any agreement contains the mandatory terms required by the Fair Work Act 2009 and does not contain any matters that would be unlawful or not permitted under the Fair Work Act 2009. If, during negotiations, you become concerned that matters are being proposed that are not consistent with the Fair Work Act 2009, please notify us as soon as possible so that we can consider your concerns and, when necessary, amend any proposals accordingly.”

[22] Thus the employers were put on notice that the issue of permitted content was an issue that could be addressed in responding to the CEPU’s claims.

[23] However, at no stage during any of the discussions with any of the three employers did the employers raise with Mr Ong their belief that the clauses cited above constituted non-permitted matters.

[24] True it is that there was reference in some instances to the coverage of the relevant agreement (to which I have made reference above). But that that matter was not raised on the employer’s own evidence in the context of non-permitted content or a concern about the lawfulness of the contractors clause. Equally, reference was made in one instance to the practical difficulties of giving effect to the wage equivalency provisions, but again that was not put in the context of the impermissibility of the term itself (for the purposes of s.172(1) of the Act).

[25] In actuality, the first occasion on which the employers raised their specific concerns in these respects with the CEPU (by correspondence dated 14 March 2016), the CEPU agreed (by reply correspondence dated 16 March 2016) to amendments in various respects (though not in respect of the two sub clauses cited above).

[26] Ultimately, the precise nature and scope of the objections by the employers were not articulated or disclosed fully until the day of hearing and in one particular instance (relating to the second paragraph in clause 3.8.2) until late in the proceeding itself.

[27] It is true that Mr Ong has very considerable experience in bargaining on behalf of the CEPU and its members. It was put to me that Mr Ong, therefore, should have reasonably known that the contactor clauses cited above comprised non-permitted content and had no relationship to the security of employment of the members of the CEPU. In this regard it was contended that Mr Ong was acting not for the purpose is Mr Ong expressed it in his evidence but for an ulterior reason (which was to regulate the commercial relationships between the employers and their suppliers).

[28] The difficulty with this claim is that it is not able to be construed within the evidence. Mr Ong gave evidence about his motivation in agreement making and his state of belief about the content of the framework agreement. That evidence was not challenged substantively.

[29] The argument that the sub clauses the agreement ought to have been reasonably recognisable on their face as not being permitted content for purposes of s.172(1) of the Act by a person who is an experienced negotiator for enterprise agreements (such as Mr Ong) is not readily capable of demonstration. Had the sub clause been raised on their own terms (and without reference to the absence of any nexus with a genuine concerns about job security) neither the consultation or wage equivalency conditions in the contractor clause in agreements are recognisable as a matter of routine as non-permitted content for purposes of s.172(1) of the Act. There is authority that in some contexts such clauses are permissible content (see Asurco Contracting. Pty Ltd v CFMEU [2010] FWAFB 6180[2010] FWAFB 6180 and The Australian Industry Group v ADJ Contracting Pty Ltd [2011] FWAFB 6684).

[30] Again, not only did the employer’s not raise the particular contractors clause sub clauses as a non-permitted content with Mr Ong, the full context in which the sub clauses was to be construed (which concerned the coverage of the proposed agreement and the absence of any nexus with a genuine concern about job security of the employees who perform work under the agreement) was never put to Mr Ong at any relevant time either.

[31] Indeed, the day of the hearing of these applications was the first occasion on which the scope of the employers’ argument was articulated in detail.

[32] I add finally that the evidentiary case in respect of the employers’ argument became less decisive following the examination procedure conducted at the hearing. This is because while the employers each argued in their written statements that they did not employ various classes of employees whose specialised work fell under the classifications of the proposed agreement (and whose job security could be threatened by engagement of contractors), their viva voce evidence was more ambiguous.

[33] Under examination, each employer suggested that the composition of their workforce could alter from contract to contract (depending on such matters as market conditions and their principals’ requirements). The evidence of each of the employers was not clarified by re-examination as to whether the coverage exclusions previously maintained also altered in these circumstances. A point of comparison can here be made with the decision in CFMEU v Brookfield Multiplex Australasia Pty Ltd (2012) 221 IR 15). In that decision, which considered the nexus between a claim for job security through a contractors clause and the employment profile of the employer’s workforce, the evidentiary case was certain; there were particular classifications the employer never intended to employ.

[34] Thus, in the circumstances before me, the underlying evidence to the employers’ claim was made more ambiguous following examination. A contested issue subsequently arose as to whether the employee classifications employed by the employers (for purposes of the job security argument above) were to be considered as they were at the time of the hearing or on the basis of the probability of future change.

[35] By this point, the argument had become remote from the immediate circumstances relating to the conduct of Mr Ong in the bargaining process, and his evidenced motivations.

[36] I add that reference was made in the course of the hearing to agreement approval decisions of the Commission that had approved agreements with terms of a similar kind as those before me. But little turns on this: generally the Commission no longer makes any comment in its approval decisions regarding non-permitted content, and undertakes no investigation to identify such content for the approval processes. The fact an approval decision contains a particular term is no validation of the term itself.

Conclusion

[37] On the basis of the factual circumstances set out immediately above, it is not apparent to me that the CEPU had not been and is not genuinely trying to reach agreement with each of the three employers for the purposes of s.443(1)(b) of the Act. Conversely, as a positive finding, the same circumstances indicate to me that CEPU, notwithstanding any characterisation of the contractor clause that may now be pressed, has been and is trying (noting its willingness to amend the contractor clauses to various degrees prior to the hearing) to reach agreement with the employers.

[38] In so concluding, it is not necessary for me to make a definitive finding in respect of the contractor sub clauses cited above. In any event, further bargaining (given the negotiations are hardly at an advanced level) may see modification to the existing terms. Equally, s.253 of the Act may have effect ultimately, should the employers form the view that the clauses do not create legal obligations.

[39] It is a matter for the CEPU itself to manage its risks as to whether any prospective industrial action it may take in support of its claims attracts the immunity for purposes of s. 409(1) of the Act. This is despite being granted the means to seek a ballot to take protected industrial action.

[40] These observations aside, in all respects the applications have each met the required statutory requirements under Division 8 of Part 3-3 of the Act, and no objections are pressed in this regard. The three orders for each of the three applications for a protected action ballot will issue shortly after the publication of this decision.

SENIOR DEPUTY PRESIDENT

Appearances:

Mr Tiley and Mr White for the Applicant

Mr Jervis and Mr Boyce for the Respondent

Hearing details:

9am

Thursday 17 March

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