Construction, Forestry, Maritime, Mining and Energy Union v Square Ceilings Pty Ltd
[2021] FWCFB 398
•1 MARCH 2021
| [2021] FWCFB 398 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
Construction, Forestry, Maritime, Mining and Energy Union
v
Square Ceilings Pty Ltd
(C2020/8101)
DEPUTY PRESIDENT MASSON | MELBOURNE, 1 MARCH 2021 |
Appeal against decisions [2020] FWCA 5290 and [2020] FWCA 5431 of Commissioner Platt at Adelaide on 2 & 13 October 2020 in matter number AG2020/2033 – whether agreement ‘genuinely agreed’ and whether undertakings capable of acceptance - permission to appeal granted – appeal upheld – decision to approve agreement quashed – application to approve agreement to be re-determined by Full Bench.
Introduction
[1] The Construction, Forestry, Maritime, Mining and Energy Union (the Appellant) has applied for permission to appeal and has appealed against two decisions made by Commissioner Platt, those being a decision 1 on 2 October 2020 (the Preliminary Decision) and a further decision2 made on 13 October 2020 (the Approval Decision) to approve the Square Ceilings Pty Ltd Enterprise Agreement 2020 (the Agreement).
[2] Section 604(1) of the Act permits a “person aggrieved” to make an application for permission to appeal a decision of the Fair Work Commission (the Commission). We are satisfied that the Appellant is such a person in relation to the Preliminary Decision and Approval Decision.
[3] In the notice of appeal lodged on 3 November 2020, the Appellant set out the following substantive grounds of appeal:
1. The Commissioner erred in being satisfied that the requirements off ss 186, 187, 188 and 190 of the Fair Work Act 2009 (the Act) had been met in approving the Agreement in circumstances where he could not have been satisfied that;
(a) The employer had taken all reasonable steps to ensure that the terms of the Agreement were explained to the workers and in addition, or in the alternative that the explanation was provided in an appropriate manner taking into account the particular circumstances and needs of the relevant workers, as required by s 180(5) of the Act; and in addition, or in the alternative
(b) That the Agreement was genuinely agreed to by employees.
2. The Commissioner erred in being satisfied that the requirements off ss 186, 187, 188 and 190 of the Fair Work Act 2009 (the Act) had been met in approving the Agreement in circumstances where at paragraphs [5] & [6] of the Approval Decision he;
(a) Did not apply the correct test to determine whether an undertaking is capable of approval pursuant to s 190(3) of the Act; and in addition, or in the alternative
(b) Finding that undertakings met the requirements of s 190(3) of the Act, and by accepting those undertakings, in circumstances where the Commissioner could not be reasonably satisfied that the undertakings were not likely to cause financial detriment to any employee covered by the Agreement, and in addition or in the alternative result in substantial changes to the Agreement.
3. The Commissioner erred by not providing adequate reasons for his decision.
[4] The parties consented to the application for permission to appeal and the appeal to be dealt with by the Full Bench on the papers.
Background
[5] Square Ceilings Pty Ltd (Square Ceilings) is a wall and ceilings linings business that operates in the construction industry. It’s work is predominantly undertaken in the commercial building sector although it does undertake work in respect of residential construction and commercial fit outs. 3
[6] Prior to the approval of the Agreement, the terms, and conditions of employment of Square Ceilings’ employees were regulated by the Building and Construction General On-site Award 2010 4 (the Award).
[7] Square Ceilings issued a notice of representational rights (NERR) to its employees on 7 May 2020. 5 The Form F16 application identified that there were no union bargaining representatives or employee bargaining representatives involved in bargaining for the Agreement.6
[8] According to the Respondent’s Form F17 7, Square Ceilings took the following steps to explain the terms and the effect of the terms of the Agreement to employees;
• On 8 May 2020 it conducted a series of meetings with employees during which meetings employees present were provided with a copy of the proposed Agreement.
• The above-referred meetings were conducted in both English and Mandarin.
• Any employees not present at the 8 May 2020 meetings were sent copies of the proposed Agreement by email.
• On 17 June 2020 employees were provided with a written explanation (in English) of the terms and effect of the terms of the Agreement. 8
• On 17 June 2020, Square Ceilings also notified employees of its intention to conduct a ballot for approval of the Agreement between 9.00am and 5.00pm on 26 June 2020. The ballot was to be conducted via SMS. 9
• On 18 June 2020 Square Ceilings held a further series of meetings with employees to explain the terms and effect of the terms of the Agreement. These meetings were also conducted in English and Mandarin.
[9] The above-referred written explanation of the Agreement provided to employees was 11 pages in length. It contained an introductory page that outlined a number of matters including the effect of the Agreement in displacing the Award and the BOOT assessment between the Agreement and the Award that would be undertaken by the Commission. Employees were also provided with links to the Award and were encouraged to familiarise themselves with the Award. The explanatory document then went through the Agreement clause by clause and provided an explanation of each clause and included a link to the comparable Award clause.
[10] Mr Wenrong Zheng, who is a Director of Square Ceilings, provided a witness statement in the proceedings before the Commissioner which set out in greater detail the steps taken by Square Ceilings in explaining the terms and effects of the terms of the Agreement to employees. He relevantly stated as follows;
“…………….
19. On 18 June 2020, I attended each of the three sites that the relevant employees were working to discuss the term and effect of the proposed Agreement.
20. I do not now recall the specifics of exactly what I said at each meeting, but I recall that at each of these meetings, I:
20.1 gathered the employees and handed out physical copies of the Agreement and Explanation of terms that had been emailed to each employee the previous day.
20.2 asked the employees at each of the meetings to confirm they received the email dated 17 June 2020 and its attached documents. At all meetings all employees confirmed receipt of the 17 June 2020 email (at WZ-1).
20.3 read through the Agreement clause by clause and provided an explanation of the terms. The explanation included but was not limited to the contents of the Explanation of Terms. This was conducted in Mandarin and English at all meetings. As I went through the clauses, I also asked employees whether they had any questions regarding the proposed Agreement.
20.4 received and answered questions from the employees about the operation of the agreement. The only question I now recall was from an employee asking to the effect "What does the loaded up rate include?" I responded by explaining the difference between a loaded up rate employee and a non-loaded rate employee and the allowances that the loaded up rate included.
21. Meetings were conducted in Mandarin and English as all employees of Square Ceilings speak Mandarin as a first language. I recall asking at each of the meetings whether a written translation was required for the employees who were less confident in English. Square Ceilings employs approximately 6 onsite workers who are not confident in reading English.
22. I know that the majority of the employees read and speak English and are able to follow specifications and instructions at building sites. The onsite employees will often switch between English and Mandarin for convenience.
23. Square Ceilings offered to have a translator interpret the document or hold a meeting with an interpreter who could read the Agreement and all associated documents. In particular, at each meeting I asked employees whether they required translation. Most did not require it and some of them indicated that they wanted to have a family member read the documents and not a third-party translator.
24. I made myself available by phone or for further meetings to all employees covered by the Agreement. No employees contacted me to schedule a meeting. One employee spoke to me in person onsite after one of the meetings asking how the Agreement differs from a contract and what happens if an employee is terminated. I discussed the nature of enterprise agreements in respect to the employee's workplace entitlements and we discussed Part 8 of the Agreement "End of Employment".
25. Based on the matters set out in the above, I satisfied myself that each of the employees understood the terms and effect of the proposed agreement.
…………………..” 10
[11] A ballot for approval of the Agreement was conducted by SMS on 26 June 2020, at which time there were 13 employees that were eligible to vote. A valid majority of employees that participated in the ballot voted to approve the Agreement. 11 The Agreement was ‘made’ on 26 June 2020.
Statutory framework
[12] It is uncontroversial that an enterprise agreement only becomes legally effective if and when it is approved by the Commission. Section 186(1) of the FW Act establishes a “basic rule” that, where an application for approval of an enterprise agreement has been made, the Commission must approve the agreement if the requirements set out in ss 186 and 187 are met. One of those approval requirements, set out in s 186(2)(a) and applicable only to non-greenfields agreements, is that the Commission must be satisfied that the agreement has been “genuinely agreed to” by the employees covered by the agreement. Section 188 defines when employees may be considered to have genuinely agreed to an enterprise agreement as follows:
“188 When employees have genuinely agreed to an enterprise agreement
(1) An enterprise agreement has been genuinely agreed to by the employees covered by the agreement if the FWC is satisfied that:
(a) the employer, or each of the employers, covered by the agreement complied with the following provisions in relation to the agreement:
(i) subsections 180(2), (3) and (5) (which deal with pre-approval steps);
(ii) subsection 181(2) (which requires that employees not be requested to approve an enterprise agreement until 21 days after the last notice of employee representational rights is given); and
(b) the agreement was made in accordance with whichever of subsection 182(1) or (2) applies (those subsections deal with the making of different kinds of enterprise agreements by employee vote); and
(c) there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.
(2) An enterprise agreement has also been genuinely agreed to by the employees covered by the agreement if the FWC is satisfied that:
(a) the agreement would have been genuinely agreed to within the meaning of subsection (1) but for minor procedural or technical errors made in relation to the requirements mentioned in paragraph (1)(a) or (b), or the requirements of sections 173 and 174 relating to a notice of employee representational rights; and
(b) the employees covered by the agreement were not likely to have been disadvantaged by the errors, in relation to the requirements mentioned in paragraph (1)(a) or (b) or the requirements of sections 173 and 174.”
[13] The pre-approval step in s 180(5), which is an element of the “genuinely agreed” definition in s 188(1)(a)(i), is expressed as follows:
“Terms of the agreement must be explained to employees etc.
(5) The employer must take all reasonable steps to ensure that:
(a) the terms of the agreement, and the effect of those terms, are explained to the relevant employees; and
(b) the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.”
[14] If the Commission is not satisfied that a non-greenfields enterprise agreement meets the “genuinely agreed” requirement in s 186(2)(a) or a better off overall test (BOOT) concern under s 193, the agreement cannot be approved unless the Commission accepts an undertaking under s 190 that addresses the Commission’s concern about the requirement. Section 190 relevantly states as follows;
“190 FWC may approve an enterprise agreement with undertakings
Application of this section
(1) This section applies if;
(a) An application for approval of an enterprise agreement has been made under subsection 182(4) or section 185; and
(b) The FWC has a concern that the agreement does not meet the requirements set out in sections 186 and 187.
Approval of agreement with undertakings
(2) The FWC may approve the agreement under section 186 if the FWC is satisfied that an undertaking accepted by the FWC under subsection (3) of this section meets the concern.
Undertakings
(3) The FWC may only accept a written undertaking from one or more employers covered by the agreement if the FWC is satisfied that the effect of accepting the undertaking is not likely to:
(a) cause financial detriment to any employee covered by the agreement; or
(b) result in any substantial changes to the agreement.”
The Decisions
[15] Turning firstly to the Preliminary Decision, the Commissioner after setting out a brief background to the application before him, dealt with the Appellant’s request to be heard in respect of the application for approval of the Agreement. In doing so he noted the objections of Square Ceilings to the Appellant’s involvement but determined to hear from the Appellant, relevantly stating as follows;
“[7] The CFMMEU were not a bargaining agent in respect of the proposed Agreement, however I determined to receive a submission from Mr Russell, in accordance with s.590 of the Act, so as to inform myself of the relevant issues which may impact on the approval of the proposed Agreement.” 12
[16] The Commissioner then set out the Appellant’s concerns regarding the application for approval of the Agreement and summarised the evidence of Mr Zheng in respect of the explanation of the terms and effects of the terms of the Agreement to employees;
“[9] I have received an email from Mr Russell dated 29 July 2020 and Submissions dated 4 August 2020. The concerns raised in these documents are summarised as follows:
• Whether the terms of the proposed Agreement were properly explained to the employees.
• Whether the proposed Agreement met the BOOT.
• That the hours of work provisions and the classification structure represented a significant departure from the Award.
• The impact of loaded rates of pay on National Employment Standards (NES) entitlements.
• Terms which allowed deductions from monies owed to employees.
[10] The Applicant filed a sworn statement of Mr Zheng (Director) dated 11 August 2020 and written submissions.
[11] Mr Zheng’s statement provided information about the structure of the Applicant’s business, the usual hours of work and the two ballot processes undertaken before the proposed Agreement was made. The first ballot result was not relied upon owing to concerns about the failure to provide employees with a copy of a document explaining the terms of the Agreement. The second ballot process was preceded by the distribution of the proposed Agreement, and explanation of terms and a ballot letter. Mr Zheng attended meetings with employees at each of the three work sites, read through the Agreement and provided an explanation of the terms verbally and in writing. The meetings were conducted in Mandarin and English as six employees were not confident in English. Employees asked questions which included seeking core information about what was included in the loaded rates. Mr Zheng invited employees to contact him directly if there were additional questions. One person availed himself of this opportunity.” 13
[17] Having received submissions and undertakings from Square Ceilings on 11 August 2020, the Commissioner outlined in the Preliminary Decision the steps then taken by him to have modelling undertaken by the Commission’s Agreements Team. That modelling, which was shared with Square Ceilings and the Appellant on 24 August 2020, revealed that the Agreement with the proposed undertakings did not meet the better off overall test (the BOOT). Square Ceilings were then invited to review their undertakings and respond by the close of business on 26 August 2020 following which the Appellant was invited to provide a response by 9.00am on 31 August 2020. 14 Revised undertakings were provided by Square Ceilings in accordance with the Commissioner’s directions. The Appellant, despite being granted an extension of time did not file any submissions within the time permitted and the Commissioner declined to receive late submissions from the Appellant.15
[18] The Commissioner then proceeded to consider submissions in respect of aspects of the Commission’s modelling. The various issues traversed by the Commissioner included;
• the assumption in the modelling that all work was undertaken in the commercial construction sector whereas Mr Zeng’s evidence was that Square Ceilings also undertook work in the residential sector from time to time;
• a BOOT failure was indicated when an 11.5 hour day was worked;
• a 50 Hour Week pattern which had been modelled also revealed a BOOT failure;
• Square ceilings contended that modelling in respect of models 5 & 6 were incorrect in respect of meal allowances and crib times;
• Square Ceilings contended that the modelling did not account for Superannuation and that some incorrect classification matching at the CW1(d) level had occurred; and
• Square Ceilings contended that an undertaking provided to increase hourly rates by $1.00 ameliorated the modelling concerns and that for every typical work week employees were better off overall. 16
[19] Having been satisfied that there were no other issues that would prevent approval of the Agreement the Commissioner then focussed on whether the BOOT was met, relevantly stating as follows;
“[32] The section of the construction industry in which the Applicant will be engaged in over the year is difficult to predict and I note that that the majority of work will be performed in the construction sector. In my view, it is appropriate to model the impact of the Agreement presuming that all work is in the construction sector.
[33] Whilst the base rates of pay exceed the Award by some margin, the Agreement provides for lesser entitlements compared to the Award in the areas of:
• Compensation for loss of tools/clothes
• Multi-storey allowance
• First Aid Allowance
• Distant from work
• Redundancy entitlements (Redundancy is paid as per the NES rather than the industry specific redundancy scheme. This results in employees in years 1 to 3 receiving less than they would under the Award. However, after 4 years, employees are paid higher under the agreement. The Award definition of redundancy is broader than the NES definition at s.119 of the Act. Employees would receive redundancy in more circumstances under the Award than the NES)
• Superannuation is payable for both personal and sick leave and work related injuries or illness under clause 32.5 of the Award which the Agreement does not provide for
[34] Whilst the rates of pay in the Agreement as supplemented by the undertaking now passes the 11.5 hour days test and the 50 hour week (Allstyle test), I am not yet persuaded that the improved wages remove the adverse impact of the removal of the entitlements detailed above. I am not satisfied that the proposed Agreement passes the BOOT test. This concern could be addressed by additional undertakings including a Shop, Distributive and Allied Association v Beechworth Bakery Employee Co Pty Ltd T/A Beechworth Bakery style undertaking.” 17
[20] Square Ceilings were then provided until 4.00pm on 7 October 2020 to provide a revised undertaking to address the Commissioner’s concern. The Commissioner also foreshadowed that if an undertaking was not provided that addressed his concern the application for approval of the Agreement would be dismissed.
[21] Turning now to the Approval Decision, the Commissioner set out the background to the matter and then summarised the revised undertakings provided by Square Ceilings on 8 October 2020. 18
[22] The Commissioner then recorded in the Approval Decision that a copy of the undertakings was provided to the Appellant and that it had objected to the undertakings on the basis that the undertakings would cause financial detriment to employees and further that they constituted a substantial change. The Commissioner then stated that he was not “persuaded by the submissions of the CFMMEU”. 19
[23] The Commissioner then stated as follows in respect of statutory approval requirements;
“[6] The undertaking appears to meet the requirements of s.190(3) of the Act and I have accepted it. As a result, the undertakings are taken to be a term of the Agreement.
[7] I am satisfied that each of the requirements of ss.186, 187, 188 and 190 of the Act as are relevant to this application for approval have been met.
[8] The Agreement is approved and, in accordance with s.54 of the Act, will operate from 7 days after the date of approval of the Agreement. The nominal expiry date is 12 October 2024.” 20
[24] In approving the Agreement, the Commissioner accepted the following undertakings from Square Ceilings;
1. Employees (other than loaded up rate employees) will be paid the daily fares and travel allowance on each day they attend work unless:
a. the Company offers to provide transport to/from the construction site, or
b. the Company offers to a vehicle for the employee to travel to/from the construction site, or
c. the employee reports for duty to the Company's yard.
2. The maximum ordinary hours worked on any one day will be eight (8).
3. Where a loaded-up rate employee works shift work, they will be paid the higher of the loaded up rate or the rate of pay (inclusive of shift loading) that would be applicable to a non-loaded up rate employee for the time worked.
4. To avoid any doubt, where there are references to deductions from an employee's pay (e.g. clauses 35.3 and/or 39.5) these will be read as only being permitted in a manner consistent with ss324 and/or 326 of the Fair Work Act 2009.
5. The rates of pay in Appendix A will each be read as being $1.00 per hour higher for all employees.
6. The rates of pay in Appendix A will be read as being a further $1.25 per hour higher in the case of full-time or part-time employees (i.e.. $2.25 in total when combined with undertaking 5). This additional payment is in lieu of the industry specific redundancy scheme in the Building and Construction On-site Award 2010 (the Award).
7. To avoid doubt, the test time rates for the purpose of conducting the Better Off Overall Test, are the rates applicable to the first year of operation of the Agreement.
8. Within one week of the conclusion of each four-weekly period of operation of this Agreement (commencing on operation of this Agreement), the Company will conduct a comparison of the total remuneration received by each employee during that four-weekly period, and the total amount they would otherwise have been entitled to if they were paid under the Award (save and except any entitlement under clause 17 of the Award, which is compensated by undertaking 6, above).
9. Any shortfall in the total amount which would otherwise have been payable under the Award plus an additional amount equal to 2% of the total shortfall, will be paid to the employee in the next pay period.
10. If the employee and the Company cannot reach agreement on the total amount which should be paid by the operation of undertakings 8 or 9, the amount calculated by the Company will be paid and the Dispute Resolution Procedure in clause 8 of the Agreement will be followed.
Principles governing an appeal under s. 604 of the Act
[25] An appeal under s 604 of the Act is an appeal by way of rehearing and the Commission’s powers on appeal are only exercisable if there is error on the part of the primary decision maker. 21 There is no right to appeal and an appeal may only be made with the permission of the Commission. Subsection 604(2) requires the Commission to grant permission to appeal if satisfied that it is in the public interest to do so. Permission to appeal may otherwise be granted on discretionary grounds.
[26] The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment. 22 The public interest is not satisfied simply by the identification of error, or a preference for a different result.23 In GlaxoSmithKline Australia Pty Ltd v Makin a Full Bench of the Commission identified some of the considerations that may attract the public interest:
“... the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters...” 24
[27] Other than the special case in s 604(2), the grounds for granting permission to appeal are not specified. Considerations which have traditionally been treated as justifying the grant of permission to appeal include that the decision is attended with sufficient doubt to warrant its reconsideration and that substantial injustice may result if leave is refused. 25
[28] It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of appealable error. 26 However, as earlier stated, the fact that the Member at first instance made an error is not necessarily a sufficient basis for granting permission to appeal.
[29] We consider that permission to appeal should be granted, because the appeal raises issues of general application regarding the assessment of ‘genuine agreement’ and in what circumstances undertakings are capable of acceptance.
Consideration
Ground 1- whether genuinely agreed
[30] There are two limbs to the Appellant’s first ground of appeal. The Appellant firstly contends that the Commissioner could not have been reasonably satisfied that Square Ceilings took all reasonable steps to explain the terms and effects of the terms of the Agreement as to the substantive content of the explanation. The second limb of ground 1 is that the manner of the explanation failed to have regard to the particular needs and circumstances of employees, that being the non-English speaking background and English language limitations of a number of employees.
[31] According to the Appellant, Square Ceilings’ failure to take ‘all reasonable steps’ means that it failed to comply with the requirements of s 180(5) of the Act and that the deficiencies in the content and manner of explanation are such that they cannot be cured either by acceptance of undertakings or through the Commission’s exercise of discretion pursuant to s. 188(2) of the Act. The Appellant pointed to the following matters in support of its submission;
• the evidence before the Commissioner of Mr Zheng as to the explanation of the terms and the effect of the terms of the Agreement was limited to a read through of the Agreement and further, Mr Zheng could not recall the specifics of his responses to questions from employees;
• on the basis of Mr Zheng’s evidence, the only probative evidence available to the Commissioner of the explanation of the terms and effects of the terms of the Agreement was that of the written explanation provided to employees on 17 June 2020 at the commencement of the access period;
• Mr Zheng’s statement provided no basis for the Commissioner to reach the requisite satisfaction that all reasonable steps were taken to explain the terms and effects of the terms of the Agreement;
• the explanation of clause 33 ‘ordinary hours of work’ was misleading, inaccurately reflected the terms of the Agreement and wrongly suggested that overtime would be payable after 7.6 ordinary hours of work;
• the explanation provided for the hours of work provisions in the Agreement also failed to address other material changes that were made to the hours of work provisions that would have otherwise applied under the terms of the Award, including the variation of the span of ordinary hours;
• there was no explanation provided in respect of the Agreement meal break provisions relative to the Award provisions;
• the explanation of clause 8 ‘Dispute Resolution’ in the Agreement asserted that the clause is “consistent with current practices under the Current Agreement” when no agreement was in place at the time of the explanation and where the Agreement clause substantially altered the Award dispute resolution clause;
• the explanation in relation to clause 40 ‘Redundancy’ provides no explanation as to how the NES entitlement provided by the Agreement varies from the redundancy entitlement provided by the Award;
• no explanation was provided as to the “BOOT calculation system’ which the Agreement provided for to reconcile wages for employees in receipt of ‘loaded rates’;
• no explanation was provided in respect of the classification structure differences and the requirement at Appendix A of the Agreement that reclassification to a higher classification than an employee was initially engaged requires “written approval from the Company”; and
• while the meetings conducted by Square Ceilings with employees to explain the terms and effects of the terms of the Agreement were conducted in both English and Mandarin, Mr Zheng acknowledged that several employees “are not confident in English” yet Square Ceilings failed to take all reasonable steps to ensure the explanation provided had regard to the needs and circumstances of employees.
[32] The Commissioner was required to evaluate whether Square Ceilings took all reasonable steps to ensure the term of the Agreement and the effects of the terms were explained to employees. In doing so, section 188(1) of the Act makes clear that Square Ceilings’ compliance with s. 180(5) of the Act need only be established to the satisfaction of the decision maker. Actual compliance is not a jurisdictional fact and does not need to be objectively proven. However, reaching a state of satisfaction as to compliance with s 180(5) is a jurisdictional fact and in order to reach that requisite state of satisfaction there must have been material before the Commissioner to support his reaching the requisite state of satisfaction in respect of compliance with s 180(5). As made clear by the Federal Court in One Key Workforce Pty Ltd v CFMEU27, an absence of material or an insufficiency of material relied on in reaching the state of satisfaction is no evaluation at all and will not found a sufficient basis for being satisfied as to Square Ceilings’ compliance with s 180(5).
[33] Reaching the requisite state of satisfaction as to compliance with s 180(5) depends on the circumstances of the case. The nature of the requirement was helpfully summarised by a Full Bench in The Australian Workers Union v Rigforce Pty Ltd28 (Rigforce) as follows;
“[35] In considering the “genuinely agreed” ground of appeal, it is necessary for reasons which will become apparent to consider in detail only the question of compliance with the pre-approval step in s 180(5). The nature of the requirement in s 180(5) was analysed in detail by the Federal Court (Flick J) in CFMEU v One Key Workforce Pty Ltd. We adopt the summary of that analysis set out in CFMMEU v Ditchfield Mining Services Pty Limited, which reduced it to the following four propositions:
(1) whether an employer has complied with the obligation in s 180(5) depends on the circumstances of the case;
(2) the focus of the enquiry whether an employer has complied with s 180(5) is first on the steps taken to comply, and then to consider whether:
• the steps taken were reasonable in the circumstances; and
• these were all the reasonable steps that should have been taken in the circumstances;
(3) the object of the reasonable steps that are to be taken is to ensure that the terms of the agreement, and their effect, are explained to relevant employees in a manner that considers their particular circumstances and needs. This requires attention to the content of the explanation given; and
(4) an employer does not fall short of complying with the obligation in s 180(5) of the FW Act merely because an employee does not understand the explanation provided.
[36] Additionally, we also adopt the analysis of Gostencnik DP in BGC Contracting Pty Ltd concerning the nature of a statutory obligation to take “all reasonable steps” as follows (footnote omitted):
“[43] A requirement or obligation to take “all reasonable steps” seems to me to require the identification of the steps a reasonable person would regard as reasonable in the circumstances that apply. Whether particular steps are reasonable will depend on the particular circumstances existing at the time the obligation arises. A requirement to take all reasonable steps does not extend to all steps that are reasonably open in some literal or theoretical sense…”
[34] It is also established that the question of whether Square Ceilings complied with s 180(5) requirements depends on the particular circumstances and the focus of the enquiry is whether the steps taken were reasonable and whether they were all the reasonable steps that could have been taken.
[35] As set out above, the explanation of the Agreement terms and the effects of those terms took the following form. An 11 page explanatory document was provided to employees at the commencement of the “access period” which included links to the Award and relevant award clauses. Information sessions with the 13 employees were conducted prior to and during the access period. At the information sessions Mr Zheng read through the Agreement clause by clause, took questions from and offered to receive any follow-up questions from employees prior to the ballot. The sessions were conducted in both English and Mandarin and the Respondent offered to arrange for translators if required by employees. Employees were also asked if they required the documents to be translated into Mandarin.
[36] Putting aside the alleged inaccuracy or deficiencies of the Agreement terms explanation, to which we will return, we do not accept the Appellant’s submission that the information before the Commissioner was insufficient to permit him to form a conclusion concerning compliance with s 180(5). The steps outlined above are in our view all reasonable steps in the circumstances. We hold this view for the following reasons. Firstly, Square Ceilings is a small employer that had only 13 employees at the time of the ballot for the Agreement. The explanatory document is extensive, being 11 pages in length and provides a summary of each of the 44 clauses, provides a hyperlink to the relevant Award clauses and, when fairly read rather than with a forensic eye, explains the effects of the relevant Agreement clauses. The explanation in the explanatory document is, where relevant, by reference to the Award which was the reference instrument prior to operation of the Agreement. Importantly, the explanation acknowledges and identifies certain Award clauses displaced by the operation of the Agreement. 29
[37] In our view the provision of written explanatory material, the information sessions conducted prior to and during the access period, the clause by clause read through by Mr Zheng and the opportunity afforded to employees to ask questions of Mr Zheng both during and following the information sessions were all the reasonable steps required to be taken by Square Ceilings necessary to satisfy the requirements of s 180(5). While there may have been further conceivable steps that could have been taken, that does not mean that such conceivable steps were reasonable steps in the circumstances.
[38] It is of course also necessary to consider the accuracy and quality of the explanation of the terms and effect of the terms of the Agreement to employees to properly assess whether the requirements of s 180(5) were met. We turn to that now.
[39] The Appellant correctly contends that the explanation of clause 33 ‘ordinary hours of work’ in the explanatory document was misleading in that it inaccurately reflected the terms of the Agreement and wrongly suggested that overtime would be payable after 7.6 ordinary hours of work. 30 The explanation of the ordinary hours of work and relevant overtime thresholds are a substantive matter, and the failure to provide an accurate explanation goes to whether Square Ceilings has taken “all reasonable steps”. The Agreement does not include a provision specifying maximum daily ordinary daywork hours therefore the statement made in the explanatory document to the effect that overtime is paid after 7.6 hours was incorrect.
[40] We disagree with the Appellant that a s 180(5) concern is unable to be remedied by an undertaking. It is plainly apparent under s 190 that an undertaking may be accepted that addresses a concern under s 186 and s 187. See also for example CFMMEU v Specialist People 31 (Specialist People). In the present matter an undertaking was provided by Square Ceilings. While undertaking 2 fixes the maximum daily ordinary hours at 8 hours the operative effect of the undertaking falls short of remedying the error in the explanation provided to employees which stated that overtime was payable after 7.6 hours of work.
[41] The Appellant also submits that the explanation provided for the hours of work provisions in the Agreement also failed to address other material changes that were made to the hours of work provisions that would have otherwise applied under the terms of the Award, including the variation of the span of ordinary hours. It is correct that the span of ordinary daywork hours under the Agreement is from 6.00am to 6.00pm whereas the Award provides for a span of hours from 7.00am to 6.00pm at clause 33.1(a). It is noted however that the Award also allows at clause 33.5(a) for the span of hours to be extended to provide for a 6.00am start by agreement without penalty payment for such variation. In these circumstances we are not persuaded that the omission of an explanation of the change in the span of hours under the Agreement rendered the explanation inadequate or could be said to have called into question whether the Agreement was genuinely agreed.
[42] The Appellant’s complaint that there was no explanation provided in respect of the Agreement meal break provisions relative to the Award provisions appears to proceed on the basis that every difference between the Agreement and the Award must be explained. We reject such a proposition. It is the substantive provisions and differences with the reference instrument that are in our view relevant for the purposes of the explanation of the terms and effects of those terms. In any case the explanatory document referred to the meal break entitlement under the Agreement in a summary form and also drew attention to a key difference between the Agreement and the Award where it stated as follows;
“Clause 26: Breaks
This clause provides for breaks. Employees will typically receive a 10 minute paid break and a half hour unpaid lunch break. Employees required to work more than 12 hours are also entitled to a ten minute paid rest break.
This clause differs from the Award. The Award provides for a 20 minute paid rest break to employee who are required to work more than ten hours (see subclause 35.2(b) of the Award).” 32
[43] We are not persuaded that the explanation of the meal break in the explanation document was a significant error or omission or that that it would have misled employees as to their entitlements under the Agreement versus the Award.
[44] The Appellant also submits that the explanation of clause 8 ‘Dispute Resolution’ in the Agreement asserted (wrongly) that the clause is “consistent with current practices under the Current Agreement” when no agreement was in place at the time of the explanation and where the Agreement clause substantially altered the Award dispute resolution clause. The following may be said of the contended error. While it is true that no agreement was in place prior to approval of the Agreement, the Dispute Resolution clause in the Agreement does not “substantially alter” the Award dispute resolution clause. If it does alter the Award clause at all, it only does so in a beneficial way in that the Agreement provides for referral of a dispute to the Commission for both conciliation and/or arbitration whereas the Commission has no such arbitral power conferred to it under the Award dispute resolution clause unless consented to by the parties. In our view the error in the explanatory document was not of a type that could be said to have called into question whether the Agreement was genuinely agreed.
[45] Turning now to the explanation provided in relation to the Redundancy clause we accept that the explanation in relation clause 40 ‘Redundancy’ was economical. It simply states that the NES entitlement will apply and provides a link to the displaced Award clause. 33 While no explanation is provided as to how the NES entitlement provided by the Agreement varies from the redundancy entitlement provided by the Award, it is relevant to observe that the Award entitlement is similar to the NES entitlement between 1- 4 years’ service, save for a prorated calculation for each partially completed year under the Award. After 4 year service the NES entitlement is more beneficial than the Award. In these circumstances the omission of a more detailed explanation was not a significant matter.
[46] We now turn to the alleged absence of an explanation of the “BOOT calculation system’ which is provided for at clause 24.4 and which provides for a reconciliation of the wages of employees in receipt of ‘loaded rates’ in circumstances where such employees work particular overtime arrangements as set out at clause 24.3. As stated earlier, Mr Zheng, gave unchallenged evidence in the proceedings before the Commissioner, that he “read through the Agreement clause by clause.” 34 From that evidence it can be reasonably inferred that clause 24.3 & 24.4 were covered in Mr Zheng’s explanation. He also referred in his evidence to his recollection of a specific question as to what was included in the “loaded rate”.
[47] Putting aside the obvious point that clause 24.4 is clear on a plain reading, what is not made clear by the Appellant is how an inadequate explanation of clause 24.4 misled or deprived employees of information which, had it been provided to employees, would have likely led to a different outcome in terms of approval of the Agreement, particularly in circumstances where the “BOOT calculation” acted to protect employees on “loaded rates”. This was not a significant error in the explanation of the type identified by the Full Bench in Rigforce where the employer had made a clearly inaccurate statement in its explanation of a key term of the agreement, that being pay rates. 35
[48] The Appellant also complains that no proper explanation was provided in respect of the classification structure including the requirement at Appendix A of the Agreement that reclassification to a higher classification requires “written approval from the Company”. This submission again appears premised on a presumption that every difference between the Agreement and Award must be explained. It is self-evident that the scope of the Agreement was limited to three classifications, that being Labourer, Gyprocker and Experienced Gyprocker, definitions for which are provided in Appendix A. The classification structure is made clear in the explanatory document 36. It is entirely unclear to us what utility would have been served by a detailed explanation of the differences between a simple 3 level classification structure that Square Ceilings required versus the Award classification structure.
[49] As to the Appellant’s complaint that promotion from one classification level to another must be in writing and that this requirement ought to have been distinguished from the Award in the explanation, this issue is of no moment in our view. Moreover, the Appellant failed to articulate how the difference between the Award and the Agreement in respect of the classification structure could have borne upon the question of employee’s having genuinely agreed to the Agreement.
[50] Having regard to the length of the explanatory document which summarised all 44 clauses in the Agreement and the information meetings conducted by Square Ceilings with employees, the Appellant’s complaints regarding the accuracy and quality of the explanation, do not rise above the identification of some minor errors and omissions, with the exception of the daily maximum ordinary hours to which we have referred above.
[51] We now turn to the second limb of appeal Ground 1, that being that the explanation of the terms and effects of the terms of the Agreement was not provided in an appropriate manner having regard to the particular circumstances and needs of employees.
[52] The provision of an explanatory document at the commencement of the access period, the conduct of information sessions at which Mr Zheng went through the Agreement and answered questions in both English and Mandarin, the offers made to employees for translation of the documents and/or arranging for translators, were in our view all reasonable steps. As to the Appellant’s complaint that more steps ought to have been taken in circumstances where the workforce was from a Mandarin speaking background and where some employees were, on Mr Zheng’s evidence, less confident in English, we disagree for the following reasons.
[53] The reasonableness of a step must be considered in the context of the particular circumstances of the employer and its workforce. While the entire workforce was from a non-English speaking background (i.e., Mandarin was their first language), Mr Zheng was fluent in Mandarin and was consequently able to communicate effectively in both English and Mandarin at the information sessions. Further, Square Ceilings is not a large employer, with only 13 employees entitled to participate in the ballot for approval of the Agreement.
[54] While preparation of translated documents may be a reasonable step in some circumstances, such as for example in the case of a large employer with multiple sites, a large culturally diverse workforce and significant internal and external resources, it does not follow that it will be a reasonable step in all circumstances. In our view the reasonableness of the step cannot be assessed without regard to the size and capacity of the organisation, as well as the needs of employees. The Respondent was alive to the issue of whether a translation of written material or if translators were required. Both were offered too and declined by employees. In our view, the offers made by Square Ceilings of document translation and access of employees to translators were reasonable steps in circumstances where an explanation of the terms of the Agreement had already been provided by Mr Zheng in both English and Mandarin in the information sessions and where he remained available to answer any further questions employees may have had. In our view, no error is disclosed in the Commissioner having been satisfied that the explanation of the terms and effects of the terms of the Agreement was appropriate having regard to the circumstances and needs of the employees.
[55] While we are not otherwise persuaded any error is disclosed in the Commissioner’s conclusion that Square Ceilings had taken all reasonable steps to explain the terms and effect of the terms of the Agreement both in the form and content of the explanation, the error in relation to the explanation of the maximum ordinary hours per day and the overtime threshold is a matter of substance.
[56] An accurate explanation of the maximum ordinary hours per day and the threshold at which overtime would be payable was a reasonable step that ought to have been taken by Square Ceilings. In these circumstances we are not satisfied that Square Ceilings has taken all reasonable steps to explain the terms and effects of the terms of the Agreement. The undertaking provided to the Commissioner failed to remedy the incorrect explanation. Consequently, there was insufficient material before the Commissioner necessary for him to reach the requisite satisfaction as to Square Ceilings’ compliance with s 180(5) and that the Agreement was ‘genuinely agreed’. We uphold ground 1 of the appeal.
Ground 2 – the undertakings ground
[57] The Appellant firstly contends in respect of its second ground of appeal that the Commissioner failed to apply the correct test in assessing whether the requirements of s. 190(3) of the Act were met, that is whether the undertakings provided by Square Ceilings were capable of acceptance. Further, the Appellant contends that the reasons provided by the Commissioner were limited to two sentences at paragraphs [5] & [6] of the Approval Decision and do not reveal the Commissioner’s reasoning as to his finding that the requirements of s 190(3) were met.
[58] As regards the Commissioner being satisfied that the undertakings did not cause financial detriment or result in substantial change to the Agreement, the Appellant also contends in the second limb of this ground of appeal that the findings were not open to the Commissioner in the following circumstances;
• The concern which Undertaking 7 is intended to address is not apparent on the face of the undertakings and therefore if no concern exists the undertaking is unable to be accepted. Moreover, there is nothing in the Agreement that limits or conditions the BOOT calculation at a particular point in time which would detrimentally impact employees in the context of clause 24.4 which provides for an ongoing process of reconciliation of Agreement earnings against the Award.
• The proposed Undertakings 3 & 8, which provide for reconciliation of Agreement earnings versus Award entitlements in a particular period, effectively requires the application of the Award to employees in circumstances where the Agreement sought to displace a number of Award provision. The intended exclusion of certain Award terms under the Agreement gave it (the Agreement) a particular character which the undertakings referred to fundamentally alters, thus leading to substantial change.
[59] An analysis of s 190(3) of the Act, which is set out above at [14], was undertaken in a recent Full Bench decision in CFMMEU v C&H Acquisition Pty Ltd 37 (C&H Acquisitions). The relevant requirements for accepting undertakings were set out in the Full Bench’s decision as follows;
“[32] The Commission may only accept an undertaking, in the context of approving an enterprise agreement, if the following conditions are satisfied:
• the Commission has a concern that the agreement does not meet the requirements set out in ss.186 and 187 (s.190(1)(b) of the Act);
• the Commission is satisfied that the undertaking meets the concern that the agreement does not meet the requirements set out in ss.186 and 187 (s.190(2) of the Act);
• the Commission is satisfied that the effect of accepting the undertaking is not likely to cause financial detriment to any employee covered by the agreement (s.190(3)(a) of the Act);
• the Commission is satisfied that the effect of accepting the undertaking is not likely to result in substantial changes to the agreement (s.190(3)(a) of the Act). Put another way, the Commission may not accept an undertaking if the effect of accepting it is likely to result in substantial changes to the agreement; and
• the Commission has sought the views of each person who it knows is a bargaining representative for the agreement (s.190(4) of the Act).
[33] The undertakings must also meet any requirements relating to the signing of undertakings that are prescribed by the regulations (s.190(5) of the Act).
[34] The nature of ‘concerns’ which may trigger the giving of an undertaking to support an application for approval of an enterprise agreement are both broad and potentially significant for employees covered by the agreement. For example, the Commission may have a concern that:
• the terms of the agreement contravene s.55 (which deals with the interaction between the National Employment Standards and enterprise agreements) (s.186(2)(c)). An undertaking which resolves such a concern may result in a term of an agreement having no effect or the National Employment Standards prevailing over one or more terms to the extent such terms provide a less beneficial entitlement to employees;
• the agreement does not pass the better off overall test (s.186(2)(c)). An undertaking which resolves such a concern will often take the form of varying the operation of the agreement, for example, by increasing pay rates or other benefits or entitlements under an agreement or undertaking that a term of the agreement which provides a disadvantage compared to the relevant modern award will not apply or will apply in a particular way;
• the group of employees covered by the agreement was not fairly chosen (s.186(3)). An undertaking which resolves such a concern may result in a change to the scope of those covered by the agreement;
• the agreement includes unlawful terms or designated outworker terms (s.186(4) & (4A)). An undertaking which resolves such a concern may result in a term of an agreement having no effect or a different effect; and
• the dispute settlement term in the agreement does not meet the requirements of s.186(6). Such a concern may be resolved by accepting an undertaking that the range of disputes which may be dealt with in accordance with the dispute settlement term is broader than that which is provided for by the dispute settlement term in the agreement.” 38
[60] Turning to the Approval Decision, we accept that the Commissioner’s consideration of the s 190(3) requirements and the Appellant’s objection to the proposed undertakings was undertaken in a shorthand manner. The Commissioner refers to the CFMMEU’s objections to the undertakings at paragraph [5] of the Approval Decision and simply states he is “not persuaded by the submissions of the CFMMEU.” The Commissioner then states at paragraph [6] that the undertaking appears to meet the requirements of s 190(3). It is not apparent on reading the Approval Decision that the Commissioner has applied the correct approach as set out in C&H Acquisitions in his consideration of the undertakings. In these circumstances we accept that the Commissioner fell into error but for the reasons that follow below we decline to grant permission to appeal in respect of this ground of appeal.
[61] Turning to the second limb of ground 2, that is the specific concerns raised in relation to the undertakings, the CFMMEU submits that the Commissioner could not have been satisfied that undertakings 3, 7 & 8 were capable of acceptance and as a consequence the Commissioner fell into error by accepting them. It is primarily in respect of whether the accepted undertakings resulted in financial detriment and/or would result in substantial change to the Agreement that the Appellant says the Commissioner erred. In our view the CFMMEU’s contentions regarding the Commissioner’s acceptance of the above-referred undertakings are misconceived for the reasons that follow.
[62] As set out at [24] above, undertaking 7 seeks to remove doubt as to the rates that are to be applied at “test time” for the purpose of the Commission’s conduct of the statutory better off overall test (BOOT). As stated at s 193 of the Act, an assessment is to be made at “test time” as to whether an agreement passes the BOOT. Test time is defined at s. 193(6) of the Act as the date on which the application for approval of an agreement is made pursuant to either s. 182(4) or s. 185 of the Act. In the present matter the application for approval of the Agreement was made pursuant to s. 185 on 10 July 2020.
[63] Appendix A of the Agreement sets out wages and allowances payable under the Agreement. It sets out the rates of pay that will apply “on operation of the Agreement” and then provides for defined pay rate increases at 12 month intervals after “operation” of the Agreement over its 4 year term. As the Agreement came into operation 7 days after approval on 13 October 2020 it is apparent that the pay rates, to which we have referred in Appendix A, commenced to operate on 20 October 2020. Self-evidently, the Agreement did not contain applicable rates of pay at the “test time” date of 10 July 2020. This was the evident concern, with which we would agree, that the Commissioner held, and which resulted in him seeking an undertaking as to the applicable rates for the purposes of conducting the BOOT. We consequently do not accept that the doubt or concern held by the Commissioner was not apparent on a plain reading of the undertaking when regard is had to the terms of Appendix A of the Agreement and s 193 of the Act.
[64] As regards the CFMMEU submission that undertaking 7 operates so as to financially disadvantage employees, we reject that submission. The CFMMEU appears to conflate the effect of the undertaking provided to establish ‘test time rates’ for BOOT purposes with the effect of clause 24.4 which provides as follows;
“24.4 Where an employee works hours outside of the defined in clause 24.3b), the Company will ensure that the employee’s total gross earnings for that pay period is more than what the employee would have been entitled to under the Award. If an employee’s total gross earnings for that period is not at least equal to an employee’s entitlement under the Award, the Company will adjust the employee’s total gross earnings for that period to equal the total gross earnings that would otherwise be payable to the affected employee under the Award, plus $1.00. To avoid doubt, in considering whether a shortfall has arisen, the Company may apply any amounts that are in excess of the employee’s entitlement under the Award from any previous pay period, provided that such amounts have not been otherwise applied to a prior “BOOT Calculation”.”
[65] The clear purpose of clause 24.4 is to require Square Ceilings to conduct a regular reconciliation of earnings under the Agreement against the Award in circumstances where the Agreement contains “loaded rates”. The obligation to conduct such a reconciliation arises where particular overtime thresholds set out at clause 24.3(b) are exceeded. While clause 24.4 refers somewhat confusingly to the “BOOT Calculation” it seems clear enough to us that the reference is not to the statutory test required to be conducted by the Commission at “test time” which undertaking 7 addresses, but rather is a reference to the ongoing reconciliation of loaded rates earnings under the Agreement versus earnings that would otherwise apply under the Award in a particular pay period. In our view, acceptance by the Commissioner of undertaking 7 has no bearing whatsoever on the reconciliation process provided for by clause 24.4. We are consequently not persuaded that the Commissioner erred in accepting undertaking 7.
[66] Turning now to consider the Appellant’s submission that acceptance of undertakings 3 & 8 by the Commissioner was not open to him. Undertakings 3, 8 & 9 (which is also relevant) relevantly provide as follows;
“…………………
3. Where a loaded-up rate employee works shift work, they will be paid the higher of the loaded up rate or the rate of pay (inclusive of shift loading) that would be applicable to a non-loaded up rate employee for the time worked.
………
8. Within one week of the conclusion of each four-weekly period of operation of this Agreement (commencing on operation of this Agreement), the Company will conduct a comparison of the total remuneration received by each employee during that four-weekly period, and the total amount they would otherwise have been entitled to if they were paid under the Award (save and except any entitlement under clause 17 of the Award, which is compensated by undertaking 6, above).
9. Any shortfall in the total amount which would otherwise have been payable under the Award plus an additional amount equal to 2% of the total shortfall, will be paid to the employee in the next pay period.
………………”
[67] The gravamen of the Appellant’s submission is that acceptance of these undertakings deprived the Agreement of its particular character. That is said to arise from the undertakings which impose a requirement to conduct an ongoing reconciliation process, effectively reintroducing Award terms that were excluded by the Agreement. The following may be said about the Appellant’s arguments.
[68] Undertaking 3 relates to the working of shift work and clarifies that a ‘loaded rate employee’ receives whichever is higher when he or she is required to work shift work, that of the loaded rate or the base rate plus shift penalties. That undertaking needs to be read in conjunction with clause 25 which relevantly provides as follows;
………
25.2 Where shift work occurs, the employee (whether a loaded rate employee or not) will be paid in accordance with this clause for the shift work performed. To avoid any doubt, the calculation of the shift loadings is based on the base rate of pay and not the loaded up rate of pay.
25.3 If the Company requires an employee to work 38 or more consecutive ordinary hours as shift work, a shift loading of 50% will be paid for ordinary hours worked outside the span of ordinary hours.
…………”
[69] It is apparent that the effect of clause 25.2 & 25.3 is that, notwithstanding an employee may be engaged as a ‘loaded rate employee’ under the Agreement, the calculation of their earnings when undertaking shift work is driven by the base rate and shift penalties under the Agreement. The effect of undertaking 3 is simply to ensure that in circumstances where a ‘loaded rate’ employee works on shift; they will continue to receive the loaded rate if it is higher than the relevant shift work rate (based on the base rate plus shift penalty). We are not persuaded that this alters the character of the Agreement and that the Commissioner erred by accepting the undertaking.
[70] Undertakings 8 & 9 introduce an earnings reconciliation regime that ensures employees will continue to receive remuneration under the Agreement that is in excess of the earnings they would otherwise have received under the Award. Acceptance of such undertakings by the Commission is commonplace in circumstances where the terms of an agreement remove particular award provisions and, as in the present case for example, provides for loaded rates. The features of such reconciliation provisions that may be capable of acceptance was considered at length in Beechworth Bakery Employee Co Pty Ltd T/A Beechworth Bakery 39 (Beechworth). Undertakings 8 & 9 in essence provide for a monthly reconciliation and the payment of any Award shortfall plus 2%.
[71] The Appellant does not contend that undertakings 8 & 9 are deficient in a Beechworth sense but rather that the undertakings effectively reintroduce award provisions into the Agreement that were intended to be displaced and imposes on employees a need to monitor both Agreement and Award entitlements. This argument is devoid of merit for the following reasons. Firstly, the obligation to conduct the reconciliation falls to the employer, not the employee. Secondly, the undertaking was offered to address particular work patterns that Square Ceilings submitted were improbable and consequently the reconciliation provision would have little or no work to do. Finally, we agree with the Respondent’s submission that undertaking 8 & 9 are a ‘backstop’. The undertakings do not deprive the Agreement of its ‘character’ as contended by the Appellant and the Commissioner was correct to conclude that undertakings 8 & 9 did not constitute substantial change to the Agreement.
[72] As stated above, we are satisfied that the Commissioner fell into error by his failure to provide reasons that disclosed he had applied the correct approach to determining whether the undertakings were capable of acceptance under s 190(3). However, our conclusion does not necessarily result in the grant of permission to appeal. While the Commissioner failed to provide adequate reasons, we are not persuaded there would be any utility in granting permission to appeal, or even if permission was granted, upholding the appeal. That is because we are not otherwise persuaded that the Commissioner’s finding at paragraph 6 of the Approval Decision that the undertakings were capable of acceptance was in error. We consequently decline to grant permission to appeal in respect of ground 2.
Ground 3
[73] The Appellant contends that the Commissioner failed to provide adequate reasons in both the Preliminary Decision and Approval Decision. Specifically, the Commissioner’s reasoning is not disclosed in respect of whether he considered and applied the correct tests in assessing whether the Agreement was genuinely agreed or whether the undertakings could be accepted. That failure to provide adequate reasons is, according to the Appellant, an error in law, and in the circumstances constitutes jurisdictional error. We reject this ground of appeal for the following reasons.
[74] As regards whether the decisions disclose the Commissioner’s reasons for finding that the Agreement was genuinely agreed, it is necessary to read the Preliminary Decision and Approval Decision together. In the Preliminary Decision the Commissioner sets out at [9] in summary form the concerns raised by the Appellant, which relevantly includes whether the terms of the Agreement were properly explained to employees (i.e. whether genuinely agreed).
[75] The Commissioner in the Preliminary Decision refers to the evidence of Mr Zheng and sets out at some length at [11] the evidence as to the steps taken to explain the terms and effects of the terms of the Agreement. It is plainly apparent that the Commissioner has taken into account the explanation of the terms and effects of the terms of the Agreement. The Commissioner then goes on to express satisfaction at [13] that all requirements had been met save for BOOT concerns he still held. This statement makes clear that the Commissioner was satisfied as to the explanation of the terms of the Agreement. That position is confirmed in the Approval Decision when the Commissioner confirms his satisfaction as to all statutory requirements having been met including s 188. We are satisfied that read fairly, the decisions disclose the Commissioner’s reasoning as to his reaching the requisite satisfaction that s 180(5) and s 188 requirements were met.
[76] As to the Appellant’s submission that the Commissioner failed to disclose in his reasons that he had applied the correct test in determining whether the undertakings were capable of acceptance, we have already dealt with this point above at [60] where we accept that the Commissioner fell into error. We have however gone on to state at [72] that no error was otherwise disclosed in his acceptance of the undertakings and on that basis we are not persuaded that the absence of more fulsome reasons vitiates the decision. We find support for this approach in Soliman v University of Technology, Sydney. 40
[77] Having regard to the above, the Appellant’s third ground of appeal is rejected.
Conclusion
[78] For the reasons given, we propose to quash the decisions under appeal and to re-determine ourselves Square Ceilings’ application for approval of the Agreement. Square Ceilings will have the opportunity to file further submissions and/or undertakings addressing the specific concern we have identified in relation to their compliance with s 180(5).
[79] We order as follows:
(1) Permission to appeal is granted in relation to Ground 1.
(2) The appeal is upheld in relation to Ground 1.
(3) The Preliminary Decision ([2020] FWCA 5290) and Approval Decision ([2020] FWCA 5431) are quashed.
(4) The Full Bench will re-determine the application for approval of the Square Ceilings Pty Ltd Enterprise Agreement 2020. The company is to send to the chambers of the presiding member any undertakings and further submissions on ss 180(5) and 188(2) in support of its application within 14 days of the date of this decision.
DEPUTY PRESIDENT
Printed by authority of the Commonwealth Government Printer
<PR726459>
1 [2020] FWC 5290
2 [2020] FWCA 5431
3 Witness Statement of Mr Wenrong Zheng, Appeal Book at pg. 84
4 MA000020
5 Form F17, Appeal Book at pg. 38 and Notice of employee representational rights, Appeal Book at pg. 45
6 Form F16, Appeal Book at pg. 62
7 Form F17, Appeal Book at pg. 30
8 Agreement Explanatory Document, Appeal Book at pg. 47-57
9 Witness Statement of Mr Wenrong Zheng, Appeal Book at pg. 85-86
10 Appeal Book at pg. 83-85
11 Form F17, Appeal Book at pg. 44
12 Preliminary Decision at [7]
13 Ibid at [9]-[11]
14 Ibid at [14]-[15]
15 Ibid at [16]-[17]
16 Ibid at [18]-[29]
17 Ibid at [32]-[34]
18 Approval Decision at [4]
19 Ibid at [5]
20 Ibid at [6]-[8]
21 Coal and Allied Operations Pty Ltd v AIRC (2000) 203 CLR 194 at [17] per Gleeson CJ, Gaudron and Hayne JJ.
22 O’Sullivan v Farrer (1989) 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch (2011) 85 ALJR 398, [69] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; Coal & Allied Mining Services Pty Ltd v Lawler and others (2011) 192 FCR 78 at [44] – [46].
23 GlaxoSmithKline Australia Pty Ltd v Makin[2010] FWAFB 5343, [26]-[27], 197 IR 266; Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth[2010] FWAFB 10089 [28], 202 IR 388, affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler (2011) 192 FCR 78; NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663, [28].
24 [2010] FWAFB 5343, 197 IR 266, [24] – [27].
25 See also CFMEU v AIRC (1998) 89 FCR 200; Wan v AIRC (2001) 116 FCR 481.
26 Wan v AIRC (2001) 116 FCR 481, [30].
27 [2018] FCAFC 77, 277 IR 23
28 [2019] FWCFB 6960
29 See for example Appeal Book at pg. 57
30 Appeal Book at pg. 51
31 [2019] FWCFB 7919 at [23]
32 Appeal Book at pg. 53
33 Appeal Book at pg. 56
34 Appeal Book at pg. 86
35 [2019] FWCFB 6060 at [39] – [40]
36 Ibid at pg. 51
37 [2020] FWCFB 3134
38 Deal Ibid at [32]-[34]
39 [2017] FWCFB 1664
40 [2012] FCAFC 146 at [47] - [57]
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