Construction, Forestry, Mining and Energy Union

[2017] FWC 1484

[2017] FWC 1484

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.236 - Application for a majority support determination

Construction, Forestry, Mining and Energy Union
(B2016/1245)

DEPUTY PRESIDENT LAWRENCE SYDNEY, 17 MARCH 2017

O'Keeffe Heneghan Pty Ltd & Rocky Neill Construction Pty Ltd & Auslife Pty Ltd T/A KNF Construction.

Background

[1] On 9 February 2017 I issued an initial decision in respect of this matter [(2017) FWC 780] which dealt with the confidentiality of the names and signatures on the petition obtained by the Construction, Forestry, Mining and Energy Union (CFMEU) in support of its application, lodged on 24 November 2016, for a majority support determination pursuant to s.236 of the Fair Work Act 2009 (the Act).

[2] The following extracts from that decision summarise the background to this decision:

“[2] The application relates to employees of O’Keeffe Heneghan Pty Ltd and Auslife Pty Ltd and Rocky Neill Construction Pty Ltd T/A KNF Construction (KNF Construction) in the building and construction industry “in Northern New South Wales (specifically, all works in NSW north of Port Macquarie and south of the Queensland border)”.

[3] The application asserted that these employees are geographically and operationally distinct from other KNF Construction employees. The employees are on the Warrell Creek to Nambucca Heads Road Project operated by Ferrovial Agroman (Australia) Pty Ltd and Acciona Infrastructure Australia Pty Ltd who operate as a joint venture known as Acciona Ferrovial Pacifico JV (Pacifico).

[4] The CFMEU requested, in writing, on 4 November 2016, that KNF Construction commence bargaining. There was no response.

[5] The CFMEU states that the group of employees is fairly chosen, as required by s.237(2)(c) of the Act. It is consistent with KNF Construction’s management structure, it is submitted.

[6] Between 11 and 22 November 2016, the CFMEU distributed a petition to all available workers which stated:

“We the undersigned employees of O'Keefe Heneghan Pty Ltd & Rocky Neill Construction Pty Ltd & Auslife Pty Ltd T/A KNF Construction, wish to negotiate an Enterprise Agreement with our employer to cover all work performed within New South Wales north of Port Macquarie. We request that the companies act to commence bargaining immediately, and negotiate in good faith. We nominate CFMEU to act as our bargaining representative in this matter.”

[7] The application says that some 48 out of 60 relevant employees signed the petition. Accordingly, it is an appropriate method of the Commission determining majority support in accordance with s.237(3).

[8] KNF Construction has an agreement with employees which applies to all of its employees, KNF Construction Enterprise Agreement 2012 (AE899797). Its nominal expiry date is 15 February 2017.”

Commission Proceedings

. . .
[12] The CFMEU’s submission is that the complete petition, with names of employees and signatures, should be provided to the Commission on a confidential basis. KNF Construction should then provide to the Commission a list of employees who perform work in New South Wales, north of Port Macquarie. The Commission should then undertake the comparison to ensure that there is a valid majority of employees who have signed the petition.

[13] The CFMEU lodged witness statements from officials David Kelly and Dean Rielly which describe the process undertaken to collect the signatures to the petition.

[14] On 11 January 2016, solicitors for KNF Construction lodged an application for an order to produce in respect of the names and signatures on the petition. KNF Construction submits that this is necessary so that it can test the claim that a majority of employees have signed the petition. The Respondent should be given access to these documents so that it can make a submission to the Commission. Otherwise, it is submitted the Respondent will be denied procedural fairness. The order to produce was issued on 12 January 2017.

[15] On 12 January 2017 the CFMEU lodged an application to set aside or vary the Order that the names and signatures are made available to the Commission only. It is submitted that the disclosure of the names and signatures would be a risk to employees’ privacy and rights to freedom of association. It is submitted that there is no procedural unfairness in adopting the common procedure of the Commission comparing the two lists on a confidential basis.

[16] On 13 January 2017, I enquired of the parties by email whether agreement could be reached on the procedure of the Commission’s comparing the two lists on a confidential basis. KNF Construction did not consent so the issue was listed for a telephone conference on Tuesday, 17 January 2017.

[17] The CFMEU provided the list of names and signatures to my chambers on 16 January 2017. Further witness statements were lodged by Mr Kelly and Mr Reilly attesting to the bona-fide manner in which the petitions were completed.

[18] A compromise proposal that the names and signatures be viewed by legal representatives only, on a confidential basis, was rejected by KNF Construction following the 17 January telephone conference.

[19] It was agreed that the hearing on 19 January would focus on the order to produce.”

[3] The CFMEU submits that the provision of the names and signatures to the Commission is sufficient for the purpose of s.237 so that the Commission can determine: “whether a majority of employees want to bargain using any method the Fair Work Commission considers appropriate” (s.237(3)).

[4] O’Keefe Heneghan Pty Ltd and Auslife Pty Ltd and Rocky Neill Construction Pty Ltd T/A KNF Construction (KNF Construction) desired to test the petition process and therefore sought access to the signatures and names. It also submitted that the petition process was unsound and that a ballot is necessary to test whether there is majority support.

[5] In coming to my decision I stated and now reiterate the following:

“[34] It is important to note that the Act, in s.237, gives a broad discretion to the Commission to determine the method of judging “majority” and judging whether that method has revealed majority support. The legislature made a clear policy choice in favour of the Commission’s discretion, as opposed to an automatic ballot option.

[35] It is also important to note that a majority support determination is only a first step in the bargaining process. It does not mean that an employer has to make concessions or reach agreement.

[36] The confidential comparison of lists method is widely used as the method of determining majority support. Of course, this is usually by consent, either whole or partial. I was not referred to a decision of the Commission where the provision of signatures and names has been dealt with on an interlocutory basis as a result of a notice to produce.

[37] Adequacy of the petition has usually been determined as a part of the overall case. So that the Commission might order a ballot to determine a majority support because it is not satisfied that the petition reveals majority support. This is after all the evidence has been heard, especially the cross-examination of the union officials.

[38] There are some cases where the employer has scrutinised the signatures and names on the petition, e.g. Bissett C in United Voice v Berkeley Challenge Environmental Services Pty Ltd [2011] FWA 3422; Lee C in Transport Workers Union of Australia v GTS Freight Management Pty Ltd [2012] FWA 6677; Williams C in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Monadelphous Engineering Associates Pty Ltd [2010] FWA 6357. It is not clear whether this was by consent or not. In Transport Workers’ Union of Australia v Darling Downs Express [2015] FWC 2658, Spencer C allowed the Union to inspect the list of employees provided by the employer after a protracted process. This was an unusual case where the union ultimately withdrew its application.

[39] In The Australian Workers’ Union v Kantfield Pty Ltd T/A Martogg & Company[2016] FWC 6473 Ryan C allowed the respective counsel to check the lists. There was extensive evidence about the petition and a subsequent ballot. In Australian Nursing and Midwifery Federation v Mark Moran at Little Bay Pty Ltd T/A Moran Little Bay[2016] FWC 1981 McKenna C relied on a comparison of the names on the two lists which were provided under seal. The employer opposed the use of the petition and provided extensive submissions and evidence which sought to attack the validity of the petition. The Commissioner determined the matter based on this evidence. In National Union of Workersv Cotton On Group Services Pty Ltd[2014] FWC 6601, Roe C undertook an extensive analysis of the various lists which were then the subject of comment by the parties. He based his decision on a detailed analysis of all the circumstances. In National Union of Workers’ [2015] FWC 3473 (Lee C) and “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Veolia Water Operations Pty Ltd[2015] FWC 2561 (Booth C) the petitions appear to have been provided in a non-redacted form. Both members determined that the petitions were not an appropriate method of judging majority support because of evidence about the collection and custody of the signatures.

[40] These cases show that the Commission makes a decision under s.237 taking account of the submissions and evidence. I can find nothing which requires the names and signatures on a petition to be provided to the employer on an interlocutory basis. In the circumstances of this case, I do not think it appropriate or necessary for a final determination of the matter for KNF Construction to view the names and signatures.

[41] The risk to employees’ right to freedom of association in a hotly contested bargaining dispute is real. It would require, in my view, the Commission to be convinced by a specific submission as to the use they would be put for the Commission to provide them to the employer. No such submission has been made by KNF Construction.

[42] I am not satisfied that there would be procedural unfairness to KNF Construction in the Commission examining the signatures and names on the petition. Nor would there be procedural unfairness to KNF Construction for it to be required to provide a list of employees, covered by the application, to be examined by the Commission on the same basis.

[43] KNF Construction will have an opportunity to cross-examine the CFMEU officials on the circumstances around the collection of the petition and make appropriate submissions.

[44] Ultimately the Commission must make an overall judgment as to whether the petition is an appropriate method of determining majority support based on the full case, not on a piecemeal basis.”

[6] I made a confidentiality order with respect to the names and signatures on the petition. I also ordered that KNF Construction provide a list of employees with classification / work area, employed as at 9 February 2017, to the Commission by close of business Friday, 17 February 2017. This list was not to be provided to the CFMEU. The matter was listed for hearing on 23 February 2017.

[7] KNF Construction has appealed this decision and the accompanying orders. They also sought a stay.

[8] The stay application was heard by Deputy President Gooley on 22 February. The Deputy President decided not to grant the stay. She published written reasons for her decision on 27 February 2017 [(2017) FWC 1127].

[9] Accordingly, the hearing proceeded on 23 February 2017 in respect of the merits of the application.

[10] I emphasize that I did not decide, in my 9 February 2017 decision, that the petition is an appropriate method of the Commission determining majority support in accordance with s.237(3). The notice of appeal lodged by KNF Construction asserted that I had come to this conclusion at paragraph [7] of the decision. I make it clear that this was intended to be a statement of the CFMEU’s position only. The determination in accordance with s.237(3) needs to be made after hearing all the evidence and submissions.

[11] The substantive appeal with respect to the confidentiality order is yet to be heard.

Relevant Legislation

[12] The matters to be considered when the Commission is asked to make a majority support determination are contained in s.237 which provides:

“237  When the FWC must make a majority support determination

Majority support determination

(1) The FWC must make a majority support determination in relation to a proposed single-enterprise agreement if:

(a) an application for the determination has been made; and
(b) the FWC is satisfied of the matters set out in subsection (2) in relation to the agreement.

Matters of which the FWC must be satisfied before making a majority support determination

(2) The FWC must be satisfied that:

(a) a majority of the employees:

(i) who are employed by the employer or employers at a time determined by the FWC; and
(ii) who will be covered by the agreement;

want to bargain; and

(b) the employer, or employers, that will be covered by the agreement have not yet agreed to bargain, or initiated bargaining, for the agreement; and
(c) that the group of employees who will be covered by the agreement was fairly chosen; and
(d) it is reasonable in all the circumstances to make the determination.

(3) For the purposes of paragraph (2)(a), the FWC may work out whether a majority of employees want to bargain using any method the FWC considers appropriate.

(3A) If the agreement will not cover all of the employees of the employer or employers covered by the agreement, the FWC must, in deciding for the purposes of paragraph (2)(c) whether the group of employees who will be covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.

Operation of determination

(4) The determination comes into operation on the day on which it is made.”

Commission Proceedings

[13] At the hearing on 23 February, the CFMEU was again represented by Mr Fischer and KNF Construction by Mr Price.

[14] The CFMEU relied on its written submission and the statements of its officials, Dave Kelly (Exhibits F1 and F2) and Dean Rielly (Exhibits F3 and F4). These were admitted into evidence with certain deletions sought by Mr Price and reflected in the transcript. The confidential list of petition signatories was marked Exhibit F5.

[15] KNF Construction relied on its written submission and the witness statement of Kevin O’Keeffe, its Managing Director (Exhibit P1).

[16] The list of employees produced by KNF Construction, pursuant to my order, as at 9 February 2017, was marked “Confidential P2”. A further version was provided with employees casual or permanent status identified. It was marked “Confidential P3”.

[17] Somewhat surprisingly, KNF Construction decided not to cross-examine the CFMEU witnesses. Their statements, as amended, were therefore admitted into evidence.

The CFMEU’s Case

[18] The CFMEU submitted that it had been contacted since mid-2016 by employees on the Warrell Creek to Nambucca Heads road project complaining about their wages and conditions and other issues. The petition was signed between 11 and 22 November 2016. The CFMEU relies on it to establish majority support.

[19] The CFMEU devoted a large part of their written submissions to their coverage. However, it was not ultimately contested that they had coverage of at least some of the workers covered by the application.

[20] The CFMEU submits that the group is fairly chosen because it has been selected on an objective basis and was not unfairly chosen. The geographical separation of the worksites is relevant and movement between these sites and the Sydney area is minimal and certainly not sufficient to make the group unfairly chosen.

[21] The CFMEU also submits that the group is operationally distinct both in terms of the localised nature of the workforce and separate management structure.

[22] The statements of Dave Kelly and Dean Rielly reveal that the completed petitions were provided to them on site visits. Sometimes they were completed in their presence. On other occasions they were collected from workers by other workers and provided to the officials.

KNF Construction’s Case

[23] KNF Construction submits that the petition does not provide a sound basis for the Commission to conclude that a majority of employees support the application. It casts doubt on the way the signatures were collected, arguing that there is a lack of evidence that this was freely done.

[24] It is submitted that the choice of the group is artificial and therefore not fairly chosen. The current KNF Construction enterprise agreement covers the whole of New South Wales and it is the appropriate group for the purpose of the negotiation of an enterprise agreement.

[25] KNF Construction points out that work on the road project will end in late 2017. Bridge work, which is 66% of the job, will be completed before the end of April 2017. The granting of the application would therefore have little utility. This is another argument in favour of the group being the whole state of New South Wales.

[26] KNF Construction utilises its workforce flexibly throughout the state, it submits, and has common administrative systems. If it is compelled to bargain for an enterprise agreement with a narrower scope it will be prejudiced in its business operations.

[27] Mr O’Keeffe testified that the approximately 75 employees on the North Coast road project are some 39% of KNF Constructions’ total workforce

Analysis of the Petition

[28] I have compared the CFMEU’s petition (Confidential Exhibit F5) with the list of employees provided by KNF Construction as at 9 February 2017 (Confidential Exhibit P3). I have excluded five employees on the KNF list who appear to be “staff” and therefore not covered by the application. This leaves 75 employees.

[29] Thirty four employees, on the KNF Construction list, have signed the petition. Thirteen employees signed the petition but are not on the list of employees. Presumably, this is because they have left the job in the three or so months since the petitions were signed. It is likely that there will have been further turnover. There are four employees who signed the petition twice.

[30] The petition therefore does not disclose majority support for bargaining. I am not satisfied that the petition is an appropriate method pursuant to s.237(3).

Is the Group of Employees Fairly Chosen?

[31] Both parties relied on the Full Bench decision in Cimeco Pty Ltd v Construction, Forestry, Mining and Energy Union (2012) FWAFB 2206 (Cimeco) and Construction, Forestry, Mining and Energy Union v ResCo Training and Labour Pty Ltd (2012) FWAFB 8461 (ResCo).

[32] The task of the Commission is to weight the various factors. If the group is selected on an objective basis and is not selected in a way which leads to unfairness, the Commission may be satisfied that it has been fairly chosen.

[33] The following passage from Cimeco is relevant:

“[21] It is not appropriate to seek to exhaustively identify what might be the other relevant considerations. They will vary from case to case and will need to be demonstrated to the satisfaction of the tribunal. The word ‘fairly’ suggests that the selection of the group was not arbitrary or discriminatory. For example, selection based upon employee characteristics such as date of employment, age or gender would be unlikely to be fair. Similarly, selection based on criteria which would have the effect of undermining collective bargaining or other legislative objectives would also be unlikely to be fair. It is also appropriate to have regard to the interests of the employer, such as enhancing productivity, and the interests of employees in determining whether the group of employees was fairly chosen. In this regard, it is not only the interests of the employees covered by the agreement that are relevant; the interests of those employees who are excluded from the coverage of the agreement are also relevant. We note that there is a suggestion to the contrary in the oral submissions put on behalf of Cimeco when counsel submitted that:

‘It was an erroneous approach to introduce the identification of the persons who were relevantly employed at the time of the making of the agreement for the purposes of testing the group chosen.’ ”

[34] The following passage from ResCo is also relevant:

“[35] In most enterprises there is unlikely to be only one fair manner of selecting the class of employees to be covered by an enterprise agreement. Different scope provisions may be equally described as fair in the sense that no manifest unfairness arises from their application. That is not to say that the parties may have a particular preference or view about the scope and favour a different formulation. The tribunal’s task however is not to determine the scope clause. Its task is to guard against unfairness by being satisfied that the group can be described, in all the circumstances, as fairly chosen.”

[35] In this case, I am satisfied that the group has been objectively chosen on a geographic basis. In practice, the chosen area relates to a major job. It is common in the construction industry to have agreements that relate to major construction projects.

[36] The project has an on-the-ground management structure by KNF Construction. The fact that local management reports to more senior management based in Sydney does not detract from this. Whilst there may be some transfer of labour from outside the area, KNF Construction has not established that most of the relevant workers are not locally based. I find therefore that the group can be regarded as operationally and organisationally distinct.

[37] The fact that the North Coast job is of limited duration is a factor which weighs against the CFMEU’s application. However, in the absence of KNF Construction agreeing to bargain on a state-wide basis, the CFMEU is entitled to exercise its right under the Act to seek to bargain on a more limited basis, provided the group is fairly chosen in accordance with s.237(3A).

[38] For the reasons given, I am satisfied that the group was fairly chosen.

Conclusion and Order

[39] Notwithstanding my decision that the group of employees who will be covered by the agreement is fairly chosen, I cannot be satisfied of the matters contained in s.237(2). It is apparent that a substantial number of employees want to bargain but the petition does not establish that there is a majority who want to bargain.

[40] The CFMEU submitted, as an alternative submission, that the Commission should order that the Australian Electoral Commission (AEC) should conduct a ballot of employees covered by the application.

[41] Given the objects of the legislation, it is appropriate that the Commission take further steps to identify whether or not a majority support determination should be made on the basis of the application.

[42] I will therefore order that the AEC conduct a ballot as soon as practicable in order that I can be satisfied or not as to whether a majority of the employees who will be covered by the proposed agreement want to bargain.

[43] The Order (PR591122) is issued together with this decision.

DEPUTY PRESIDENT

Appearances:

T. Fischer with D. Kelly for the CFMEU;

B. Rauf of counsel and S. Prince of counsel with D. Fleeton, solicitor for KNF Construction.

Hearing details:

2016

Sydney:

December 12.

2017

Sydney:

January 19;

February 23.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR591006>