Construction, Forestry, Maritime, Mining and Energy Union v Geocon Constructors (ACT) Pty Ltd
[2020] FWCFB 5208
•12 OCTOBER 2020
| [2020] FWCFB 5208 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604—Appeal of decision
Construction, Forestry, Maritime, Mining and Energy Union
v
Geocon Constructors (ACT) Pty Ltd
(C2020/5206)
DEPUTY PRESIDENT GOSTENCNIK | MELBOURNE, 12 OCTOBER 2020 |
Appeal against decision [2020] FWCA 3126 of Commissioner Johns at Sydney on 15 June 2020 in matter number AG2020/1337.
Introduction and background
[1] The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) applies for permission to appeal and if granted, appeals a decision of Commissioner Johns to approve a variation of the Geocon Constructors (ACT) Pty Ltd and Employees Enterprise Agreement 2018-2022 (Agreement) with undertakings. 1 The application to approve the variation was made by Geocon Constructors (ACT) Pty Ltd (Geocon), the respondent to the appeal. The variation approved purports to revert the base rates of pay under the Agreement to those which applied on 1 February 2019 and to remove a 5% increase in the base rates of pay scheduled to take effect from the first pay period after 1 February 2021.2
[2] The Agreement was approved on 29 August 2019. 3 Although [4] of the decision to approve the Agreement noted that it came into operation on 5 September 2019, the Agreement did not commence to apply to the employees it covered until 13 January 2020, the day on which the Geocon Constructors (ACT) Pty Ltd and Employees Enterprise Agreement 2015-2019 (2015 Agreement)passed its nominal expiry date. That is the effect of s.58(2)(d) of the Fair Work Act 2009 (Act).
[3] At all material times the Fair Work Regulations 2009 (Regulations) as amended by the Fair Work Amendment (Variation of Enterprise Agreements) Regulations 2020 (Cth) operated upon the circumstances leading to the making of the variation. Relevantly reg 2.09B altered the 7-day access period mentioned in ss.180(2), (3) and (4) of the Act as modified by s.211(3), to a 1-day period. Regulation 2.09B was expressed to have been made under s.211(6) but has since been repealed. Geocon sought approval of the proposed variation by the employees covered by the Agreement (relevant employees) by adopting a modified pre-approval process.
[4] Geocon sent an email to relevant employees on 11 May 2020 advising them that it wanted to vary the Agreement. 4 It proposed the variation because of the business impact of the COVID-19 pandemic which was said to have resulted in a considerable decrease in market demand and activity.5 Attached to the email was, inter alia, a copy of the proposed variation and a voting information sheet.6 The email also advised relevant employees that “voting will take place on Wednesday 13th May 2020 at each sites (sic) daily prestart by show of hands”.7 The voting information sheet attached to the email was to the same effect.8
[5] On 12 May 2020, following representations from some of the relevant employees about the voting method, Geocon decided to change the method from a show of hands to a ballot. 9 A further email sent to relevant employees on that day attached an “Updated Voting Information Form”.10 The form advised relevant employees that a vote for the proposed variation would “take place by way of”:
“Method: Ballot on Wednesday 13 May 2020.
Location: The ballot box will be located in the Geocon Lunch room.
Time: Eligible employees will be able to cast their vote prior to the daily prestart on each site.
No votes will be accepted after the ballot closes.” 11
[6] Relevant employees were also “verbally advised at pre-start” on 12 May 2020 “that a vote would occur on Wednesday 13 May 2020 by ballot at each site”. 12
[7] A vote to approve the proposed variation was conducted on 13 May 2020. 13 Relevant employees participating in the vote were each given a ballot paper on which was printed their name. Employees were required to complete the ballot paper and place it into a ballot box. The cohort of relevant employees eligible to vote numbered 46.14 Of these, 43 cast a valid vote and 35 voted to approve the variation.15
[8] The variation to clause 7 of the Agreement was as follows:
“Between the commencement of operation of this Agreement and its Nominal Expiry Date, the Base Rates in this Agreement will increase annually from the first pay period after 1 February 2019 by a minimum of 5%, with the exception of 1 February 2021 where the rate will not increase. Effective 1 June 2020, the Base Rates of Pay in this Agreement will revert to the 1 February 2019 pay rates until the next increase applies.” [Underlined text was added by the variation]
Approval Decision
[9] The Commissioner was satisfied the variation had been genuinely agreed to by the employees covered by the Agreement. 16 He concluded that Geocon had taken all reasonable steps to notify the relevant employees by the start of the access period for the variation of the time and place at which the vote will occur and of the voting method to be used. In so doing, the Commissioner reasoned:
“[25]Method: The notice given on 11 May 2020 indicated that the vote would be by “show-of-hands”. After employees expressed concerns about the same, on 12 May 2020 the method of vote was changed to ballot. There is no prescription in the FW Act about the method of voting. Having regard to the requirements of FW Act, I am satisfied that Geocon took “all reasonable steps” to notify the employees about the method of voting on 11 May 2020.
[26]The fact that the method of voting changed does not mean that Geocon failed to take all reasonable steps to give notice about the method of voting. It is a matter that might go to genuine agreement (s.186), but it is not a concern in relation to the requirements of s.180(3). The evidence establishes that the change in the method was in response to concerns raised by employees. They did not want a show-of-hands vote in front of their co-workers. Geocon sensitively responded to that concern and changed the method of the vote.
[27]There was also another change to the method of voting. Mr Lewis was away on the day of the vote. Consequently, Mr Smith emailed Mr Lewis and provided him with an opportunity to vote by email. Mr Lewis chose to do so. No issue arises. It might be argued that Mr Lewis should not have been allowed to vote because he was unable to attend at the site of the pre-start meeting. However, the additional step taken by Mr Smith expanded the franchise. This was a good thing to do. Allowing increased participation enhances the majesty inherent in the democratic process.” 17
[10] The Commissioner also stated that if he was wrong in the above assessment, he “would have found that any irregularities were “minor procedural or technical errors” under s.188(2) of the FW Act.” 18
[11] As to other aspects relevant to the Commissioner’s conclusion that the variation was genuinely agreed to by the relevant employees, the Commissioner reasoned:
“[29]In order to be satisfied that the variation was genuinely agreed to, I must be satisfied that Geocon, took all reasonable steps to explain:
a) the terms of the variation; and
b) the effect of those terms.
[30]In the present matter, the “Proposed Variation” document clearly explains the terms of the variation. It is clear how the Agreement as varied will read if the variation is approved.
[31]In terms of the explanation of those terms, it is difficult to see how Geocon could have done more. The variation is simple in its terms and operation:
a) there will be no 5% pay increase on 1 February 2021;
b) base rates of pay under the Agreement will revert to the 1 February 2019 pay rates until the next increase applies (i.e. 1 February 2022).
[32] Noting that there was a 5% pay increase on 1 February 2020, it necessarily follows that the increase is lost if the variation is approved.
[33] Mr Fischer explored the employees’ understanding with the construction worker witnesses. I was impressed by their answers and their understanding of the effect of the variation on their pay. Mr Holt was incorrect in his evidence, referring to 2.5% decreases rather than 5%, but I am not confident that it meant he did not understand the effect of the variation. He was simply in error on the day.
[34] Lastly, I should address whether it is likely that the change in the method of voting impacted upon the genuine agreement of the employees. There is no evidence that it did.
[35] During the hearing, I expressed my concern about the identified ballots. It seemed to me an unnecessary thing to do as an administrative measure aimed at ensuring that employees only voted once. This could have been done a different way. Employees could have had their name marked off a list when given a ballot. That is what occurs in Australian elections. It would have been a better method.
[36] However, there is no evidence that the identified ballots affected the genuineness of the majority vote. In this regard, I was greatly assisted by the evidence presented by the CFMMEU concerning its petition. It was a useful way to gauge whether employees felt pressured to vote for the variation because they knew that their employer would know how they voted (because of the pre-population of the ballot paper with employees’ names). However, having reviewed the petition replies and compared them against the unredacted vote it is clear that, even if I deduct from the “yes” vote, those who indicated they only voted yes because their name was on the ballot, a majority vote remains the result. The identified ballots did not affect substantially the vote or the genuineness of it. In this respect, the evidence did not assist the CFMMEU. Therefore, it is to be commended for its candour in providing the evidence to the Commission in any case.
[37] For these reasons I am satisfied that the variation was genuinely agreed to by employees.” 19
[12] The Commissioner set Monday 15 June 2020 as the date on which the variation commences to operate because he was “advised that Applicant’s pay cycle runs from Monday – Sunday (paid in arrears) and that the most recent pay period was Monday, 8 – Sunday, 14 June 2020.” 20
Appeal grounds
[13] By its notice of appeal the CFMMEU advances six appeal grounds. The first contends error in approving the variation because reg 2.09B of the Regulations was beyond the regulation making power conferred by s.211(6) of the Act. The second contends error because the Commissioner failed to consider and to make any findings as to whether Geocon had complied with the pre-approval step in s.180(2). The third alleges the Commissioner erred in concluding there had been compliance by Geocon with s.180(3) because he:
➣ read and applied s.180(3) of the Act as not requiring Geocon to inform employees of the voting method to be used; and
➣ erred in deciding that Geocon had complied with s.180(3) when the voting method to be used and notified to employees by the start of the access period was different to the method actually used to conduct the vote to approve the variation.
[14] The fourth appeal ground takes issue with the Commissioner’s alternative conclusion that the voting method irregularity was a minor procedural or technical error within s.188(2) of the Act. The CFMMEU contends that the Commissioner erred because the voting irregularity was not a minor procedural or technical error within the meaning of s.188(2)(a) and because he did not consider nor make findings in respect of s.188(2)(b).
[15] The fifth appeal ground contends error in the conclusion that there were no other reasonable grounds for believing that the variation has not been genuinely agreed to by the relevant employees because the Commissioner:
➣ took into account whether the use of identified ballots affected whether there was a majority vote, and this was an irrelevant consideration; and
➣ failed to ask himself the correct question, namely whether there were no other reasonable grounds for believing that the variation has not been genuinely agreed to by the employees.
[16] The final appeal ground concerns the proper construction of the variation and the Agreement as varied. By this ground the CFMMEU contends error in the Commissioner’s assessment whether the variation had been genuinely agreed to by the relevant employees because properly construed, the variation resulted in a 10% reduction in the base rates of pay in the Agreement. This is because the base rates of pay reverted to the rate applicable as at 1 February 2019, not the rate of pay which applied following the first pay period after 1 February 2019. This ground therefore contends error in the Commissioner’s conclusion that the variation was genuinely agreed to by the relevant employees.
[17] We consider these grounds in turn below.
Consideration
Ground 1
[18] The contention that reg 2.09B of the Regulations is beyond the regulation making power conferred by s.211(6) of the Act and therefore invalid was not advanced below. It is always concerning when arguments not advanced at first instance are raised for the first time on appeal. It is a trend that is ever more apparent in the sphere of enterprise agreements, their making, approval and variation and is one that ought strongly be discouraged. A party opposing the approval of an enterprise agreement or a variation thereto should run the whole of their case below. It is fundamental to the proper administration of justice that the substantial issues between the parties are ordinarily settled at the first instance proceeding. 21 On appeal a party will be held to its case at first instance, except in the most exceptional circumstances.22
[19] Ground 1 is concerned with the regulation making power in s.211(6) exercised by the Governor-General and cavils with the validity of a regulation which has now been repealed. It does so in circumstances where the CFMMEU had commenced and then discontinued (before judgment was delivered), a proceeding in the Federal Court of Australia which challenged the validity of reg 2.09B. 23 It now asks an administrative tribunal to do that which it had asked of, and then withdrew from, the Court. In these circumstances we do not consider that it is in the public interest or otherwise appropriate to grant permission to appeal on this ground. We also do not consider that the first appeal ground raises any matter of general importance in considering whether reg 2.09B, which is now repealed, was within the power of the Governor-General to make.
[20] But even if we were minded to grant permission to appeal on this ground we would not conclude reg 2.09B was not authorised by s.211(6) of the Act. Our reasons may be shortly stated.
[21] We accept that we can, as a step along the way in exercising our appellate jurisdiction, assess whether reg 2.09B is within power. 24 That is, we could decide the question of invalidity of the impugned regulation in the sense that we may express an opinion on it (one which does not have the effect of a binding pronouncement as to validity) for the purposes of determining this appeal. In so doing we would not be exercising judicial power, and any decision we make would not be declaratory in the sense that our decision would not be a binding or conclusive exposition as to the validly of the regulation.
[22] A tribunal exercising administrative and not judicial power should be very slow to express an opinion as to the validity of a regulation said to have been made in excess of power. In our view this should only occur in the clearest of cases, that is, where there is clear repugnancy of the regulation to the power and the purpose of the enactment under which it is purportedly made, or where it is otherwise clearly beyond the regulation making power conferred by an enactment.
[23] In the instant matter, it may be, but is not clearly the case, that reg 2.09B does not bring about a “modification” of approval requirements given the structure and content of s.211(3) and (4) of the Act. It is also arguable that the regulation is inconsistent with the objects of the Act and with the object and purpose of Part 2-4. However, it is also to be remembered that the only effect of the amendments made by the Fair Work Amendment (Variation of Enterprise Agreements) Regulations 2020 was to reduce the access period to a shorter time, with a sunset provision. Other pre-approval requirements continued to apply unaltered. These continued to operate as part of the framework governing pre-approval steps for variations to enterprise agreements whilst the regulation was in force. Regulation 2.09B reflected a need, in extraordinary circumstances caused by the COVID-19 pandemic, for a temporary flexible capacity for enterprise agreements to be varied more quickly. This was achieved by introducing a temporarily shortened access period. There is ultimately no magic in 7-days as compared to a 1-day access period, particularly in the context of a variation. Informed consent to a variation may still be given and be genuine by allowing consideration during a truncated access period. The capacity to more quickly consent does not, by itself, vitiate the consent given nor the genuineness of the agreement to the variation given by relevant employees. Thus, a shortened access period for a variation, of itself, is not clearly inconsistent with, nor repugnant to, the regulation making power, nor to the agreement making framework established by the Act.
[24] In our view, reg 2.09B of the Regulations is not clearly beyond power and the Commissioner committed no error by proceeding on the basis that it was valid and applying it to the circumstances before him.
[25] For these reasons ground one of the notice of appeal must fail.
Ground 2
[26] Sub-section 211(1)(a), read with ss.211(2)(a) and 211(3)(a), required the Commissioner to reach a state of satisfaction as to the genuineness of the relevant employees’ agreement to the variation. A matter requiring assessment was whether Geocon had complied with s.180(2) as modified, namely, whether Geocon had taken all reasonable steps to ensure that during the access period relevant employees were given a copy of the written text of the variation and materials incorporated by reference in the variation or had access to a copy of these materials throughout the period.
[27] The CFMMEU contends that the Commissioner made no finding about Geocon’s compliance with s.180(2). It says that the decision evinces that the Commissioner did not consider or turn his mind to compliance with s.180(2). It contends the error goes to jurisdiction, as it was a mandatory matter the Commissioner was required to consider under s.211(1).
[28] Geocon contends that appeal ground two unfairly and technically attacks the Commissioner’s decision by seeking to suggest that he did not consider, or was not satisfied as to compliance with, s.180(2). It contends that there was no argument of any substance raised below as to the application of this provision. It also contends that if there be error of the kind alleged, there was nonetheless clear compliance with s.180(2). For this proposition Geocon relies on material in evidence before the Commissioner, specifically a statutory declaration of Mr Damon Smith, Geocon’s General Manager of construction. 25 Relevantly Mr Smith declared that he had sent an email to all relevant employees on 11 May 2020 which attached, inter alia, a copy of the variation, the applicable modern award and voting information.26 Mr Smith also declared that on the same day he contacted by email the site managers of the three sites advising them of the voting details and instructing them to print the attached material and place it on the site notice boards.27
[29] It is the case that during the proceedings before the Commissioner the CFMMEU joined issue with Geocon’s compliance with s.180(2) of the Act. It did so first during the hearing on 5 June 2020 as follows:
“MR FISCHER: Yes, absolutely, Commissioner. My contention, and I would be keen for my colleague to seek instruction on it, is that as a result of the evidence there is no real prospect now of the agreement being approved under section 188(1) as we have reasonably clear and straightforward evidence of issues with section 182 (sic), section 183(sic) and section 185(sic), and thus we should be focusing our submissions, any further submissions that come out on section 188(2) and whether this agreement is approvable under that clause. As we have already put on submissions in relation to both I am obviously happy to put on submissions on a wider basis.” 28
[30] The CFMMEU also dealt with the issue in subsequently filed written submissions:
“In relation to s180(2), the evidence of Mr McInerney at PN146-148 and Mr Holt at PN244 raises a previously unknown issue – an apparently faulty email system. Both workers give evidence that they did not receive emails over the period, raising a concern over whether all workers received a copy of the agreement by the commencement of the access period.” 29
[31] Both Mr McInerney and Mr Holt gave evidence to the effect that they had each experienced email difficulties and either did not receive (in the case of Mr McInerney) or could not recall receiving (in the case of Mr Holt) the email attaching the variation. 30 Mr McInerney also said that the variation was “inside our lunch sheds . . . in plain sight so everyone could read it”.31
[32] Although the Commissioner set out the CFMMEU’s submission noted above in the decision 32 he did not expressly engage with it, save for the generic conclusion at [39] of the decision, that he was “satisfied that each of the requirements in ss.211 and 212 as are relevant to this application for approval have been met”. Even on a fair reading of the decision we are not persuaded that the Commissioner engaged with the submission or made a finding about whether he was satisfied that Geocon had complied with s.180(2) of the Act.
[33] Though there is error, it does not follow that we would uphold the appeal on this ground. It should be evident from the material above and which was in evidence before the Commissioner, that Geocon sent a copy of the variation by email to each of the relevant employees and there is no evidence that at the time it did so it was aware of any difficulty experienced by any employee in receiving emails. In addition, it took the step of placing the variation and related materials on the site notice boards at each site. Mr McInerney’s evidence was that the documents were in plain sight for all employees to read. Section 180(2) requires an employer take all reasonable steps to ensure the matters set out therein. It does not require the employer to take all steps that are possible. In the circumstances of a truncated access period allowed by reg 2.09B of the Regulations and the pursuit of a variation to respond to the impact on Geocon’s business of the COVID-19 pandemic, we would be satisfied that Geocon complied with its obligation under s.180(2). Consequently, there was sufficient material before the Commissioner upon which he could comfortably conclude that Geocon had complied with s.180(2). It follows in our view that it is not in the public interest that permission to appeal on this ground be granted because, although there was error, the ultimate result would not have been affected. Even if we granted permission we would not uphold the appeal ground on the same basis.
Ground 3
[34] To begin, we reject Geocon’s contention that ground 3 of the notice of appeal is a new argument and one not advanced before the Commissioner. The ground is concerned with the construction of s.180(3) of the Act said to have been adopted by the Commissioner but ultimately cavils with his conclusion that there was compliance. This was the issue raised by the CFMMEU in its submissions dated 4 June 2020. 33
[35] In furtherance of this ground of appeal, the CFMMEU contends that s.180(3)(b) of the Act requires the Commission to be satisfied that the employer has taken all reasonable steps to notify relevant employees of the voting method that will be used. It says that the auxiliary verb ‘will’ means ‘expected or required’, so that the obligation under s.180(3) is to tell employees the method of voting that will actually be used. It says that it is irrelevant to a proper understanding of s.180(3), contrary to the Commissioner’s view, that under s.181(3) (and s.208(2)) the voting method which may be used is at large.
[36] The CFMMEU contends that the purpose of s.180(3)(b) is to ensure that the relevant employees are informed at least by the requisite period prior to the vote for the agreement (or variation) about how and when the vote will occur. It says that in holding that the failure by Geocon to notify relevant employees of the voting method that would be used ‘was not a concern in relation to s 180(3)’, the Commissioner erred in law and misconstrued s.180(3).
[37] The CFMMEU contends there was not compliance with s.180(3), as Geocon notified employees that the voting method, prior to commencement of the access period, was to be a show of hands. The voting method used was a written ballot on which the voter’s name was printed.
[38] Section 180(3) of the Act (as modified) is concerned with the reasonable steps an employer took to notify relevant employees by the start of the access period for the variation of “the voting method that will be used”. It is not concerned with the steps that were taken afterwards, although these may be relevant. Geocon’s preferred and notified method of voting was a show of hands. This was the method Geocon intended to use. There is no dispute that it notified relevant employees of this method of voting by the start of the access period. The change in the voting method was responsive to concerns raised by several employees that they did not want to vote by a show of hands because this would disclose the manner in which they voted to other employees. As Mr Smith explained in his oral evidence:
“. . . the employees were saying that they were reluctant to show their hands in front of a number of co-workers that they feared they would - would have retribution from, depending on the way they voted. That was the concern that was tabled to me and that's why we went to a ballot so they didn't - didn't have to show their hands in front of their co-workers.
But they didn't have concerns about showing their hands to the employer?---Not from what I received, no, and we have conducted ballots in that fashion before. In fact the EBA that we're seeking to amend was voted up by a show of hands. So we've had that in the past, but in this instance concerns were raised and brought before me. I took it on board.” 34
[39] The circumstances surrounding the method change were also the subject of oral evidence from Mr Holt:
“Fair enough. Now, when you talked to - you had conversations with workers?---Yes.
And then you put their concerns to Adam Urbaniak, is that right?---Yes. I actually run into him, he come past the job, and it just happened to be good timing because the vote was the next day and I just happened to mention to him a lot of - a few of the boys weren't happy about the way the vote was getting conducted with a raise of hands.
You said a moment ago that you personally had concerns about that as well?---Yes, I just don't think it's right to be singled out like that in front of everyone.
So when you talked to - - -?---And in saying that - in saying that I mean it can work both ways, you know, for and against obviously, but - yes, I think it's fair if people feel comfortable, you know, to do a vote, and I don't think a lot of people did with the raise of hands.
In terms of your own view on it, your discomfort with it, you thought the problem was that you might be singled out, is that right?---Well, yes, and that's - that's for me to pay, that's from your mates that you work next to each day or vice versa, with the person employs you.
Sure. So when you talked to Mr Urbaniak about changing the vote method what did you ask him to change it to?---I just said it was probably a good idea if we don't do a raise of hands, maybe we just write something on a bit of paper, yes or not. That's - that were my words. Yes.
When you asked him that was the purpose of asking that to make sure everyone could vote privately?---It was just - I wasn't - I wasn't necessarily say that he was going to let that happen, but I just tried to - yes, tried to get it to go that way, I guess you could say. Yes.
So when did you find out that the method of vote was changing?---I didn't know until the next morning until we actually went to vote.
So you have turned up on the day - - -?---Yes. I was given a bit of paper - - -
And you found out - - -?---Yes, found out that morning we had a vote and it was going to go, and there was a bit of paper with your name on it, yes or no.
Were you surprised to see your name on the paper?---Well, yes, I must say I was, because that to me is almost the same as putting your hand up.
Indeed?---Only - only your workmates don't see it.
Yes, quite so. Did you raise that with anybody at the time?---No, I didn't, I did not. I was more concerned about the raising hands, so that - that didn't, obviously didn't happen, but, yes.
Understood, more concerned about raising of hands?---Yes.” 35
[40] As we have already indicated there is no dispute that Geocon took all reasonable steps to notify relevant employees by the start of the access period that voting for the variation would be by show of hands. There is no suggestion that Geocon did not have a genuine intention to conduct the vote by way of a show of hands at the time it took those reasonable steps. That the voting method it subsequently adopted in response to employee concerns changed from that initially notified does not negate the reasonable steps taken. Different or additional considerations might apply if the original notice was of a written secret ballot and on attending the method was changed to a show of hands. A change of this kind may give rise to a serious question as to whether there are reasonable grounds for believing that the agreement (or variation) has not been genuinely agreed to by the employees (s.188(1)(c)). But that is not this case. Whether there was compliance depends on a consideration of all the circumstances. Given the truncated access period, Geocon could not take any further step, beyond delaying the vote, to further comply. It had complied but then proceeded with a more private method of voting at the behest of a number of employees. Nothing else changed. Geocon did not notify employees that it would conduct a secret ballot. It notified employees of a show of hands vote, where the vote of each employee would be known to Geocon. The method it ultimately adopted had the same effect but addressed concerns that had been expressed about possible retribution against employees by colleagues, who would also have known how each employee had voted. The Commissioner was on the evidence comfortably able to conclude that he was satisfied there had been compliance with s.180(3).
[41] This appeal ground fails.
Ground 4
[42] Whilst we accept that the Commissioner failed to consider any disadvantage as required by s.188(2)(b), this appeal ground fails because it was not necessary for the Commissioner to consider s.188(2) at all.
Ground 5
[43] This ground is concerned with whether the Commissioner erred in concluding there were no other reasonable grounds for believing that the variation had not been genuinely agreed to by the relevant employees.
[44] It must be accepted that the formation of the opinion required by s.188(1)(c) is both mandatory and is informed by the context and purpose of the provision, read in light of the Act as a whole, including the scheme of collective bargaining effected by the Act. Consequently, matters capable of logically bearing on whether employees’ consent was genuine are relevant and should be considered in exercise of the statutory task under s.188(1)(c). 36
[45] The CFMMEU contends that the Commissioner misconstrued s.188(1)(c) by directing his attention solely to whether or not the petition presented by the CFMMEU would have changed the majority vote. In so doing, he took into account an irrelevant consideration and asked the wrong question.
[46] On our reading of the CFMMEU’s contentions before the Commissioner, the only matter advanced by it under this head of objection was that of the impact of the ballot identifying employees on the genuineness of the agreement to the variation. Contrary to the submissions of the CFMMEU on appeal, the Commissioner was entitled to take into account the petition. It plainly was relevant to the question of whether the agreement to the variation was genuine. Also relevant was the fact that there was no other evidence about any other ground for believing that the relevant employees did not genuinely agree to the variation. In any event the petition was not the only consideration. The Commissioner had earlier noted that there was no prescription in the Act about the method of voting. 37 This is a factor that was also relevant in assessing the reasonable ground said to exist by reason of the ballot method.
[47] Except for the matter raised by ground 6, to which we will shortly turn, as there are no other reasonable grounds identified by the CFMMEU beyond the method of the ballot, this ground of appeal fails. The Commissioner committed no error in concluding as he did.
Ground 6
[48] Ground 6 concerns the proper construction of the variation and the Agreement as varied.
[49] The CFMMEU contends that when the Agreement commenced operating, a 5% increase was applied to base rates retrospectively by clause 7, which required rates to increase by 5% from the first pay period after 1 February 2019. At the time of the variation vote, rates had increased a further 5% on and from the first pay period after 1 February 2020. Consequently, there had been a 10% increase on base rates since the Agreement came into operation and the relevant employees could not be said in these circumstances to have genuinely agreed to the variation.
[50] The CFMMEU contends that the variation application proceeded on the basis that the effect of the variation was to reduce base rates by 5%. It contends however that this is not what the varied clause 7 provided. It says that clause 7 of the Agreement as varied reduced base rates on and from 1 June 2020 to the level they were ‘as at 1 February 2019’. Consequently, the base rate was reduced by 10%. The CFMMEU contends that the language of clause 7 as varied is intractable and operates to reduce employee base rates by 10%.
[51] The CFMMEU accepts that this was not raised below 38 but says that the proper construction of clause 7 of the Agreement as varied is one of law and concerns the Commission’s jurisdiction in relation to its satisfaction of the prerequisites to approval under ss.180(5) and 188(1)(c) of the Act.
[52] Geocon contends that in January 2020 when the Agreement commenced to operate it did not operate to apply retrospectively a 5% pay increase from February 2019. It contends that from 13 January 2020 base rates in the Agreement increased by a 5% pay rise as this was the first pay period after 1 February 2019 since the Agreement commenced operating. 39 It operated as the first pay increase under the Agreement. A further 5% increase was applied to the base rates in the pay period commencing 27 January 2020 and ending 2 February 2020.40 Geocon says the variation in June 2020 had the effect that that second pay rise was reversed. It says that in so far as the CFMMEU suggests a 10% difference, it is incorrect because it was only 5%.
[53] Geocon contends that the rates of pay which applied to employees from the first pay period after 1 February 2019, were those as reflected by the first mentioned 5% increase under the Agreement. It says those were the base rates that were being paid to relevant employees at the time the variation was made. Those rates were payable under the 2019 Agreement which was in operation at that time and applied to the employees.
[54] Before it was varied clause 7 of the Agreement provided:
“7 Annual wage increases
Between the commencement of operation of this Agreement and its Nominal Expiry Date, the Base Rates in this Agreement will increase annually from the first pay period after 1 February 2019 by a minimum of 5%.”
[55] When the Agreement was approved and when it commenced operation the “Base Rates” of pay were set out in clause 2 of Appendix A to the Agreement and were as follows:
“2 Base Rates of pay
2.1 For hours worked, the Base Rates of pay for Employees (other than Apprentices) are as indicated in the table below:
Classification criteria | Base Rates |
CASUAL Construction Worker Level 1(a) Duties: performs casual general labouring duties as directed Time Served: As for Construction Worker Level 1(a) | $24.81 plus 25% casual loading |
Unskilled Worker • New entrant to the industry up to 12 months experience | $28.00 |
Construction Worker Level 1(a) Duties: performs general labouring duties as directed Time served: Upon engagement with the Employer At least 12 months experience in building and construction | $37.52 |
Construction Worker Level 2 Upon demonstration of productivity and competency, at the discretion of the Employer | $41.97 |
Construction Worker Level 3 Upon demonstration of productivity and competency, at the discretion of the Employer | $44.30 |
Construction Worker Level 4 Upon demonstration of productivity and competency, at the discretion of the Employer | $46.26 |
Construction Worker Level 5 Upon demonstration of productivity and competency, at the discretion of the Employer | $48.21 |
Construction Worker Level 6 Upon demonstration of productivity and competency, at the discretion of the Employer | $50.16 |
Construction Worker Level 7 Upon demonstration of productivity and competency, at the discretion of the Employer | $52.13 |
Construction Worker Level 8 Upon demonstration of productivity and competency, at the discretion of the Employer | $54.09 |
[56] We do not accept that on a proper construction of the Agreement, clause 7 had the effect of retrospectively adjusting the rates of pay in Appendix A to the Agreement to the first pay period after 1 February 2019. The increases required by clause 7 are to be made between “the commencement of operation of this Agreement and its Nominal Expiry Date”. The reference in clause 7 to base rates increasing “annually from the first pay period after 1 February 2019” sets the time from which the rates will increase once a year when the Agreement is in operation. The first pay period after 1 February 2019 when the Agreement was in operation was the pay period commencing 2 September 2019 and ending on 8 September 2019, the Agreement having commenced to operate on 5 September 2019. Though Geocon contends that the Agreement commenced operating in January 2020 and so the first increase applied from 13 January 2020 we do not think this is correct. The first increase in the base rates in the Agreement after it commenced to operate (on 5 September 2019) was in the pay period commencing 2 September 2019 and ending on 8 September 2019. At that time the rates did not apply to employees covered by the Agreement because the Agreement did not apply to them as they were still covered by the in term 2015 Agreement. These rates commenced to apply to employees once the 2015 Agreement passed its nominal expiry date (13 January 2020). However, the base rates were increased as a term of the Agreement at the earlier time in September 2019. The practical effect on employees is however the same.
[57] The next scheduled increase in the base rates under the Agreement was in the pay period commencing 27 January 2020 and ending on 2 February 2020. The construction we adopt of clause 7 of the Agreement (putting to one side the precise date of the first increase) is a construction that Geocon also adopts. 41
[58] We accept Geocon’s contention that the reference to the “first pay period after” includes a pay period that begins before 1 February but ends after 1 February. 42 The words may comfortably be read this way. It is in any event a more beneficial reading than one which would exclude the pay period in which 1 February fell. When the first increase occurred after the Agreement commenced to operate, the base rate of pay for a Construction Worker Level 1(a) increased from $37.52 per hour to $39.40 per hour. The second increase took that rate to $41.37.
[59] The consequence of the construction above is that the Agreement does not fix or contain base rates of pay as at 1 February 2019. The more difficult issue is to identify the base rates of pay under the Agreement which applied on 1 February 2019 because those are the base rates to which employees covered by the Agreement revert after the variation commenced to operate. Geocon contends that the base rates to which the Agreement reverts are those which were being paid to relevant employees at the time the variation was made. It says that the effect of the variation was to incorporate into the Agreement the rates of pay which were being paid to employees on 1 February 2019 and since that date under the 2015 Agreement. 43
[60] It is necessary to examine how base rates of pay were progressively increased under the 2015 Agreement in order to ascertain the base rates that applied as at 1 February 2019. The 2015 Agreement was approved on 13 January 2016 and commenced operation on 21 February 2016. 44 Clause 7 of the 2015 Agreement was substantially the same at its counterpart in the pre-variation Agreement and provided:
“7 Annual wage increases
Between the commencement of operation of this Agreement and its Nominal Expiry Date, the Base Rates in this Agreement will increase annually from the first pay period after 1 February 2016 by:
(a) a minimum of 5% in February of each year.”
[61] This clause operates in the same way as the construction which we adopted earlier for clause 7 of the Agreement. It is convenient hereafter to refer simply to the base rate which pertained to the classification Construction Worker Level 1(a) (CW1(a)) under the 2015 Agreement. When the 2015 Agreement commenced operating the base rate was $34.03 per hour. 45 The first pay period after 1 February 2016 (when the 2015 Agreement was operating) was the pay period commencing 15 February 2016 and ending on 21 February 2016. The Base rates under the 2015 Agreement increased in the period as required by clause 7 by 5%.
[62] During the operation of the 2015 Agreement and until its nominal expiry date passed, the base rate for CW1(a) progressively increased as follows:
Period | Increase in rate | Rate per hour |
On commencement | Nil | $34.03 |
First pay period after 1 February 2016 (15 February 2016 to 21 February 2016) | 5% | $35.73 |
First pay period after 1 February 2017 (30 January 2017 to 5 February 2017) | 5% | $37.52 |
First pay period after 1 February 2018 (29 January 2018 to 4 February 2018) | 5% | $39.40 |
First pay period after 1 February 2019 (28 January 2019 to 3 February 2019) | 5% | $41.37 |
[63] Geocon contends that the reference in clause 7 of the 2015 Agreement to “1 February 2016” is a typographical error and that it was the common intention of “the parties” that the date should be “1 February 2017”. 46 For present purposes this proposition cannot be accepted. No step has been taken to vary the 2015 Agreement to correct the date either by vote or by applying to the Commission to remove the uncertainty. But it does seem that Geocon has proceeded on the basis the base rates under the 2015 Agreement would not start to increase until “from the first pay period after 1 February 2017”. Thus, at 1 February 2019 a CW1(a) employee was being paid an hourly base rate of $39.40 rather than $41.37.47
[64] We cannot accept the contention that the actual base rates paid to employees as at 1 February 2019 were incorporated into the Agreement by the variation if those rates were less than the legal minimum fixed by the 2015 Agreement at that time. If the effect of the variation was to incorporate bases rates as at 1 February 2019, then those were the bases rates that applied at that time under the 2015 Agreement.
[65] However, for the purposes of disposing with this appeal ground it makes little difference. If we are correct that the rate as at 1 February 2019 for a CW1(a) employee under the 2015 Agreement was $41.37 per hour, the variation’s purpose of reducing the rates of pay by 5% was ineffective because it is uncontroversial that under the Agreement, at the time the variation was made, the base rate for a CW1(a) employee was $41.37 per hour. The variation had the effect of reverting the rate to the existing rate. If we are wrong and the base rate for a CW1(a) employee was $39.40 per hour as at 1 February 2019, then the reduction from $41.37 per hour to $39.40 is a 5% reduction and not 10% as the CFMMEU contend.
[66] Whether or not the variation is effective to achieve its purpose is not a matter that we ultimately need to determine but in any event the appeal ground does not disclose appealable error as the foregoing analysis shows. It may be prudent for Geocon to take steps available under the Act to remove from the Agreement any ambiguity or uncertainty created by the variation.
Conclusion
[67] We are not persuaded that it is in the public interest to grant permission to appeal nor are we persuade there are any discretionary grounds on which permission to appeal should be granted. If we were minded to grant permission to appeal we would dismiss the appeal for the reasons we have given.
DEPUTY PRESIDENT
Appearances:
P Boncardo of counsel for the Appellant
J Tracey of counsel for the Respondent
Hearing details:
2020
Melbourne (via video)
15 September and 2 October
Final written submissions:
Appellant, 19 August 2020
Respondent, 8 September 2020
Printed by authority of the Commonwealth Government Printer
<PR723163>
1 Re Geocon Constructors (ACT) Pty Ltd and Employees Enterprise Agreement 2018-2022 [2020] FWCA 3126
2 Appeal Book at p 43
3 Re Geocon Constructors (ACT) Pty Ltd and Employees Enterprise Agreement 2018-2022 [2019] FWCA 6001
4 Appeal Book at p 114
5 Ibid
6 Ibid
7 Ibid
8 Appeal Book at p 115
9 Appeal Book at p 140 [6]-[8]
10 Appeal Book at p 144
11 Appeal Book at p 116
12 Appeal Book at p 105
13 Appeal Book at p 107
14 Ibid
15 Ibid
16 Re Geocon Constructors (ACT) Pty Ltd and Employees Enterprise Agreement 2018-2022 [2020] FWCA 3126 at [37]
17 Ibid at [25]-[27]
18 Ibid at [28]
19 Ibid at [29]-[37]
20 Ibid at [41]
21 Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 at 7
22 University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481 at 483
23 NSD499/2020 - Construction, Forestry, Maritime, Mining and Energy Union v Minister for Industrial Relations & Anor
24 Re Jonsson and Marine Council (No 2) (1990) 12 AAR 323 at 340-342; Saitta Pty Ltd v Commonwealth [2000] FCA 1546; 106 FCR 554 at [103]
25 Appeal Book at p 140
26 Appeal Book at p 140 [4]; Appeal Book at p 145
27 Appeal Book at p 140 [5]; Appeal Book at p 143
28 Appeal Book at p 266, PN435; It is accepted that the transcript references to “section 182, section 183 and section 185” are incorrect and should read as “section 180(2), section 180(3) and section 180(5)”
29 Appeal Book at p 211 [7]
30 Appeal Book at p 240, PN147-8; Appeal Book at p 248, PN244
31 Appeal Book at p 240, PN149
32 [2020] FWCA 3126 at [20]
33 Appeal Book at p 128, [27]
34 Appeal Book at p 259, PN365-6
35 Appeal Book at pp 249-250; PN255-268
36 One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FCAFC 77; 262 FCR 527 at [142]
37 [2020] FWCA 3126 at [25]
38 Appellant’s outline of submissions at [47]
39 Respondent’s Note as to Rates of Pay, 22 September 2020; Transcript (2 October 2020) PN12-PN20
40 Ibid
41 Transcript (2 October 2020) PN27-PN28
42 Transcript (15 September 2020) PN332-PN335
43 Transcript (2 October 2020) PN79-PN84
44 Re Geocon Constructors Pty Ltd[2016] FWCA 202 at [6] and Geocon Constructors (ACT) Pty Ltd and Employees Enterprise Agreement 2015-2019, clause 4
45 Geocon Constructors (ACT) Pty Ltd and Employees Enterprise Agreement 2015-2019, Appendix A clause 2
46 Transcript (2 October 2020) PN34-PN47
47 Transcript (2 October 2020) PN126
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