Construction, Forestry, Maritime, Mining and Energy Union
[2022] FWC 2078
•4 AUGUST 2022
[2022] FWC 2078
The attached document wholly replaces the document previously issued with the code [2022] FWCA 2588 on 4 August 2022 to correct document referencing and formatting; and to correct a minor typographical error at paragraph 5.
Associate to Commissioner McKinnon
Dated 5 August 2022
| [2022] FWC 2078 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
s.222—Enterprise agreement
Construction, Forestry, Maritime, Mining and Energy Union
(AG2022/2285; AG2022/2286)
| Building, metal and civil construction industries | |
| COMMISSIONER MCKINNON | SYDNEY, 4 AUGUST 2022 |
Application for termination of the Vari Civil (NSW) Pty Ltd / CFMEU Collective Agreement 2019-2023; application for approval of the Vari Civil (NSW) Pty Ltd / CFMEU Collective Agreement 2019-2023.
On 5 July 2022, the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) lodged applications under s.185 and s.222 of the Fair Work Act 2009 (Act) in relation to the proposed termination of the Vari Civil (NSW) Pty Ltd / CFMEU Collective Agreement 2019-2023 (existing Agreement) and its replacement with a new enterprise agreement of the same name (proposed Agreement).
The existing Agreement has a nominal expiry date of 31 December 2023. The CFMMEU is covered by the existing Agreement and the proposed Agreement.
I have decided to dismiss the applications. These are my reasons.
Application to terminate the existing Agreement
Section 220 of the Act permits an employer covered by an enterprise agreement to request the employees who are covered by the agreement to approve its termination.
Section 221 of the Act sets out when the proposed termination of an enterprise agreement is “agreed to”. In the case of a single-enterprise agreement, a termination is agreed to when a majority of the employees who cast a valid vote approve the termination.
Section 222 then provides as follows:
“222 Application for the FWC’s approval of a termination of an enterprise agreement
Application for approval
(1) If a termination of an enterprise agreement has been agreed to, a person covered by the agreement must apply to the FWC for approval of the termination.
Material to accompany the application
(2) The application must be accompanied by 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 termination is agreed to; or
(b) if in all the circumstances the FWC considers it fair to extend that period—within such further period as the FWC allows.”
Under section 223, the Commission must approve a termination of an enterprise agreement if the conditions set out in that section are met. These are that:
“(a) the FWC is satisfied that each employer covered by the agreement complied with subsection 220(2) (which deals with giving employees a reasonable opportunity to decide etc.) in relation to the agreement; and
(b) the FWC is satisfied that the termination was agreed to in accordance with whichever of subsection 221(1) or (2) applies (those subsections deal with agreement to the termination of different kinds of enterprise agreements by employee vote); and
(c) the FWC is satisfied that there are no other reasonable grounds for believing that the employees have not agreed to the termination; and
(d) the FWC considers that it is appropriate to approve the termination taking into account the views of the employee organisation or employee organisations (if any) covered by the agreement.”
The termination of an enterprise agreement comes into operation from the day specified in the decision to approve the termination (section 224).
There is no dispute that the CFMMEU is covered by the existing Agreement and that its application to terminate the existing agreement was accompanied by the relevant declarations prescribed by the Fair Work Commission Rules 2013. The application was made within 14 days after the termination is said to have been agreed to. The difficulty is that employees who voted to terminate the existing Agreement were not covered by it.
Coverage of the existing Agreement
Clause 3 of the existing Agreement sets out the parties and persons who are covered by its terms. It provides as follows:
3. PARTIES AND PERSONS BOUND AND COVERED
a) The Company in respect of its employees:
(i) Engaged in Regional New South Wales (excluding the Counties of Cumberland, Camden and Northumberland) where work is performed on general building, construction, civil and mechanical work as defined by the Award, including site excavation; or
(ii) Engaged in civil, mechanical and related work in the Counties of Northumberland and Camden (excluding Cumberland).
b) This Agreement has no application in respect to construction of single dwellings, and maintenance work.
c) The Construction, Forestry, Maritime, Mining and Energy Union.
d) Employees of the Company who are eligible to be members of the Construction, Forestry, Maritime, Mining and Energy Union.
e) This Agreement applies in New South Wales only
The two employees who voted on the proposed termination were paid a base hourly rate of pay of $34. A third employee (who was not employed at the time) was paid a base hourly rate of pay of $36.87. These rates of pay correspond to the rates of pay contained in Appendix B1 of the existing Agreement, in the table that applies from 1 March 2022. No other base rates of pay under the existing Agreement are for the same.
Appendix B1 applies to work done under clause 3(a)(i) of the existing Agreement. That is, to employees who are “Engaged in Regional New South Wales (excluding the Counties of Cumberland, Camden and Northumberland) where work is performed on general building, construction, civil and mechanical work as defined by the Award, including site excavation.” The employees who voted to terminate the existing Agreement were not engaged in Regional New South Wales. Oral submissions from the Director of Vari Civil, Mr Richard Makdessi, confirm that at present the business is only operating out of Sydney and its only contract is for civil construction in Sydney. Letters of employment confirm that the two employees were both engaged in Sydney.
The employees were also not covered by the existing Agreement under clause 3(a)(ii). They were not engaged in civil, mechanical and related work in the Counties of Northumberland and Camden (excluding Cumberland). They may have been engaged in civil work, but it was in Sydney – that is, in the County of Cumberland.
For these reasons, the termination of the Agreement was not “agreed to” in accordance with section 221 of the Act. It could not have been, because the employees who voted by show of hands to terminate the existing Agreement were not covered by the existing Agreement.
Further, there are reasonable grounds for believing that the employees did not understand the full circumstances of what they were being asked to do. The employees were told there was a need to change their “current EBA” and that this was because of “confusion in the scope” of the existing Agreement “about what rates and conditions apply”, including in Sydney. They were told that the purpose of termination was to “get rid of the confusion”. In explaining the proposal to terminate the existing Agreement, both Vari Civil and the CFMMEU gave employees the impression that the existing Agreement applied to them. There is no evidence that employees were told that the existing Agreement did not cover or apply to the work in Sydney that they were engaged to perform.
The employees were also told that there was a need to terminate the existing Agreement so that the proposed Agreement could take effect. This was partly incorrect. The proposed Agreement covers work in the County of Cumberland that is not covered by the existing Agreement. It covers the employees in relation to their employment by Vari Civil in Sydney. If it were approved, it would also apply to them in relation to their particular employment, whether the existing Agreement is terminated or not.
Conclusion in relation to termination of the existing Agreement
Termination of the existing Agreement is not approved.
Application for approval of the proposed Agreement.
Section 186 of the Act provides that on application, the Commission must approve an enterprise agreement made under section 182(4) or section 185 if it meets the requirements set out in sections 186 and 187 of the Act.
The proposed Agreement was made under section 185 of the Act. It is similar to the existing Agreement, but its scope has been expanded to cover works in the County of Cumberland (including Sydney) and changes related to the expanded scope have been made. There are other changes to tidy up numbering errors, update program names and increase or adjust certain rates and allowances.
The scope of the proposed Agreement is set out in clause 3:
“3. PARTIES AND PERSONS BOUND AND COVERED
a) The Company in respect of its employees:
(i) Engaged in regional NSW only (excluding the Counties of Cumberland, Camden and Northumberland) for general building construction, civil construction and mechanical engineering construction as defined by the BCGOA.
(ii) Engaged in the Counties of Northumberland and Camden only (excluding the County of Cumberland) in general building construction, civil construction and mechanical engineering construction as defined by the BCGOA.
(iii) Engaged in the County of Cumberland only in civil construction, mechanical engineering construction and site preparation only in general building and construction.
b) This Agreement has no application in respect to construction of single dwellings, and maintenance work.
c) The Construction, Forestry, Maritime, Mining and Energy Union.
d) Employees of the Company who are eligible to be members of the Construction, Forestry, Maritime, Mining and Energy Union.
e) This Agreement applies in New South Wales only.”
The proposed Agreement incorporates the Building and Construction General On-site Award 2020 but prevails to the extent of inconsistency unless expressly stated otherwise. The proposed Agreement is read and interpreted in conjunction with the National Employment Standards. As the applicant, the CFMMEU supports the application and wishes to be covered by the proposed Agreement.
Like the existing Agreement, the proposed Agreement is largely in the form of a CFMMEU template agreement for the NSW construction industry. It contains many more beneficial terms than those that would apply under the Award, including rates of pay that are above the Award by a margin of 39.13% - 50.91%. I am satisfied that the Agreement passes the better off overall test.
There was a notification time for the proposed Agreement on 26 May 2022 when four employees were emailed a copy of the Notice of Employee Representational Rights and a copy of the proposed Agreement. The covering email stated that “The CFMEU have updated the Civil EBA and the current EBA will be replaced”. The email provided details of where and when a vote on the proposed Agreement would be conducted.
There was no substantive bargaining or discussion in relation to the proposed Agreement between Vari Civil and the employees either before or during the access period. To the extent that there were discussions about the proposed Agreement, these occurred between Vari Civil and the CFMMEU. By email of 26 May 2022, four employees had been told that the existing Agreement would be replaced without acknowledging that this was subject to their agreement. On 24 June 2022, Mr Richard Makdessi, Director of Vari Civil and CFMMEU Organiser, Mr Anthony Burke met with the two employees. Mr Makdessi made some brief general comments about the reason for the meeting and its purpose, being “to vote up” the proposed Agreement. He spoke of the need for employees to first agree to terminate the existing Agreement. He then handed over to CFMMEU Organiser, Mr Anthony Burke, to explain the contents of the proposed Agreement. Mr Makdessi left the meeting at the end of the explanation and Mr Burke remained with the two employees. He asked them to show their support for the proposed Agreement in front of him and they did so.
The Form F17 declaration lodged in support of the application for approval made by Mr Makdessi declares that four employees were covered by the proposed Agreement at the time of the vote to approve it. However, payroll records indicate that only three employees were employed by Vari Civil in the period from 26 May 2022 to 24 June 2022. While one was employed on a permanent basis until 12 June 2022, he appears not to have performed any work during the period.
The other two employees were employed on a casual basis as general labourers, which corresponds to the lowest classification in the proposed Agreement. In the period from 26 May 2022 to 24 June 2022, one worked for 5 hours (in the week ending 5 June 2022) and the other worked for 7 hours (in the week ending 19 June 2022). In each case, the engagements must have been for a single day because there is a minimum four‑hour engagement for casual employees in clause 23(c) of the existing Agreement. While the existing Agreement does not apply to the employees, Mr Makdessi confirmed that it is applied to them in practice.
The only other work performed by employees of Vari Civil in the month to 24 June 2022 was participation in the vote itself. The two employees attended head office on 24 June 2022 where they met with Vari Civil and the CFMMEU for approximately two hours. They were paid for four hours for their attendance, consistent with the minimum engagement period discussed above. The content of the proposed Agreement and its effect was explained to the employees for the first time.
Regrettably, the explanation was misleading because it proceeded from the premise that employees were covered by the existing Agreement (referred to in the meeting as “the current EBA” or “your current EBA”). Employees were led to believe that the existing Agreement applied to them. They were told that it was necessary for the existing Agreement to be terminated so that the proposed Agreement could take effect. On both these points, the information provided to employees was incorrect. A consequence of the error was that there was no discussion about differences between the Award and the proposed Agreement other than to the effect that “all rates and conditions are better than the Award”. This was also not correct. Some of the Award terms and conditions apply as terms of the Agreement without modification.
Of the two casual employees who participated in the voting process, at least one may not have been employed at the time of the vote. They had last worked approximately three weeks earlier and then only for a single day. The purpose of their employment on 24 June 2022 was to participate in the voting process to approve the proposed Agreement and terminate the existing Agreement. Submissions made by Mr Makdessi at the hearing reinforce this concern by indicating that the employees may not have worked for the business since.
In the circumstances, there are reasonable grounds for believing that the proposed Agreement was not genuinely agreed to by the employees in the sense that they did not have an “informed and genuine understanding of what is being approved”.[1] As a result, the proposed Agreement was not genuinely agreed to by the employees. The concern is not of a kind that could be cured by undertaking under section 190 of the Act.
Conclusion in relation to approval of the proposed Agreement
As I am not satisfied that each of the requirements of ss.186, 187, 188 and 190 as are relevant to this application for approval have been met, the proposed Agreement is not approved.
Disposition
The applications in AG2022/2286 and AG2022/2285 are dismissed.
COMMISSIONER
Appearances:
R Mallia for the applicant.
R Makdessi for the respondent.
Hearing details:
2022.
Sydney (by video):
July 25.
[1] One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FCAFC 77.
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