Construction, Forestry, Mining and Energy Union

[2013] FWC 1462

[2013] FWC 1462

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement

Construction, Forestry, Mining and Energy Union
(AG2013/4665)

Construction, Forestry, Mining and Energy Union
(AG2013/4690)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 14 MARCH 2013

Summary: application for approval of an enterprise agreement - whether permitted matter in relation to future agreement making - whether agreement can apply and cover (future) related and associated entities - compliance with s. 172(2) - whether fairly chosen (s.186(3)) - collective bargaining - whether valid agreements/applications.

[1] This matter concerns two applications for approval of an enterprise agreement. The agreements are described as being building and construction industry template agreements. The two enterprise agreements are as follows:

• Freshmore (Qld) Pty Ltd Advanced Precast (Aust) .and CFMEU Union Collective Agreement 2011 – 2015 (“the Freshmore agreement”); and



• D and J Harris Corporation Pty Ltd and CFMEU Union Collective Agreement 2011-2015 (“the D & J Harris agreement”).

[2] The applications, in each case, were made by the Construction, Forestry, Mining and Energy Union, Construction and General Division, Queensland Builders Labourers Divisional Branch (“the BLF”).

[3] For the reason alluded to above, both agreements are couched in the same terms, and replicate certain terms or clauses that are common in CFMEU agreements in Queensland. For purposes of example, I will refer to the terms as they arise in the Freshmore agreement referred to above.

[4] Clause 2 of the Freshmore agreement provides as follows:

Date of Operation

This agreement remains in force until 31 March 2015. The agreement will continue to apply beyond its expiration date until it is replaced by another agreement with, or which covers, the Construction, Forestry, Mining and Energy Union Construction and General Division, Queensland Builders Labourers Divisional Branch [...].

[5] Clause 3 of the agreement provides as follows:

Application of Agreement

This agreement applies to Freshmore (Qld) Pty Ltd Advanced Precast (Aust) (ACN: 117392079 (ACN: 156 631 500) and all related and associated entities, here in after referred to as “the employer”, the CFMEU signatory to this agreement and all employees of the employer engaged in building and construction work and\or to whom classification and rates of pay are provided by this agreement. This agreement however, only applies to works done in Queensland and to work done outside Queensland by employees who are based in Queensland.

[6] Clause 4 of the agreement provides as follows:

Parties Bound and Covered

This agreement is legally binding upon and covers the employer and the Construction, Forestry, Mining and Energy Union Construction and General Division, Queensland Builders Labourers Divisional Branch [...].

[7] In view of the above clauses, I directed correspondence to the Applicant on 7 February 2013 in the following (relevant) terms:

Application/coverage

Whilst it is a feature of the agreement template, can you please provide an explanation (in the case of each agreement) of the application/coverage clause in so far as:

• What are the various “related or associated entities” to which the agreement purports to cover or apply?



• In the case of each agreement, are all relevant employees in “all related and associated entities” employees who will be covered by the agreement and therefore employees who also voted on the agreement and were subject to the additional procedural steps that must precede an application;



• in the case of each agreement, is the agreement a single-enterprise agreement relating to a single legal employer (as seems to be declared in form F17 by the employer) or whether several legal employers are purported to be covered by the Agreement (i.e. other related companies – if that is intended –  or associated entities as defined under the Corporations Act); and



• in the case of each agreement, is the agreement an agreement with a single employer or between employees and two or more single interest employers for purposes of s.172(5) of the Fair Work Act?

Future agreements

In the case of each agreement, clause 2 (Date of Operation) purports to provide that the agreement will apply past its nominal expiry date until it is replaced by another agreement with (or which covers) with CFMEU-BLF. I am concerned that this provision may be in conflict with s.172(1) of the FW Act.

[8] The Applicant’s written reply did not assist in satisfactorily resolving the above concerns. There were claims about various constructions of the Act that required resolution, and there was uncertainty as to particular factual situations as much of that information resided with the employers and not the BLF. The matters, therefore, were brought on for hearing.

[9] The above questions are designed to draw out factual information and otherwise to assist in the approval process now and in the future (given that the clauses under consideration feature in the CFMEU agreement template generally). The questions give rise to a number of issues, which I set out below (and where possible make an effort to resolve). Following the hearing, the various bargaining representatives were provided a further opportunity for submissions in relation to the issues raised over the course of the hearing. The BLF availed itself of this opportunity as did the representative for the Freshmore Agreement.

Issue 1: Operation of Agreement

[10] Under the heading “Date of Operation”, the Agreements make provision for the terms on which a future agreement may be made.

The agreement will continue to apply beyond its expiration date until it is replaced by another agreement with, or which covers, the Construction, Forestry, Mining and Energy Union Construction and General Division, Queensland Builders Labourers Divisional Branch [BLF]

[11] The relevant clause, as set out above, indicates that the “agreement will continue to apply beyond its expiration date until it is replaced by another agreement with, or which covers, the BLF.”

[12] Because the clause distinguishes between (by use of the conjunction “or”) an agreement “with” the BLF and one which “covers” the BLF I have taken the clause to mean that an agreement must either be made with the BLF, or the agreement must cover the BLF.

[13] In the first instance, the clause sets out to regulate the operational life of the Agreements by reference to its replacement by another agreement made “with” the BLF, or else which “covers” the BLF.

[14] The BLF contends, however, that the clause is consistent with s.172(1) of the Act (at least other than in respect of s.172(1)(c) of the Act), which provides as follows:

172 Making an enterprise agreement

Enterprise agreements may be made about permitted matters

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

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

(b) matters pertaining to the relationship between the employer or employers, and the employee organisation or employee organisations, that will be covered by the agreement;

(c) deductions from wages for any purpose authorised by an employee who will be covered by the agreement;

(d) how the agreement will operate.

[15] The BLF contended in its initial written material (filed on 19 February 2013) and in its oral submissions that the inclusion of the clause met the requirements of s.172(1) of the Act (seemingly other than in relation to s.172(1)(c) of the Act). The BLF argued that:

MR CRANK: I'll go first, your Honour, if that's all right. The concern that your Honour has raised in the correspondence about clause 2 of the agreement is a concern about the interaction between the clause and section 172 of the Act, and section 172 of course deals with what are permitted matters. And our submission that we have put in writing and which we rely on in support today is essentially that the clause or the term in particular about when the agreement continues in force beyond its nominal expiry date is a matter which pertains to the relationship between an employer and the employer's employees who will be covered by the agreement in terms of section 172(2)(i)(a), and that is because the effect of that term provides for or relates to the period within which the employees and the employer will be bound by the terms of the agreement, including the wage rates and all of the other conditions of employment.

So the term pertains to the relationship between the relevant employer and employees in that way. The relevant term of the agreement in clause 2 also pertains to the relationship between the employer and the employee organisation, namely the CFMEU, because it provides for – the term relates to the binding of the CFMEU to the agreement. And thirdly, the term also relates to how the agreement will operate in terms of section 172(1)(d) of the Act. That is, the period during which the agreement will operate is obviously a matter of how the agreement will operate. That is what the term deals with. So the relevant term is a permitted matter under three of the four paragraphs of section 172(1) and therefore, in our submission, is undoubtedly a permitted matter and deserves to be in the agreement. 1

[16] Other than that this, the BLF contended that even if the term was not a permitted matter it would not prevent the approval of the agreement.

Consideration

Issue One: Operation of Agreement

[17] Can an agreement be made “with” the BLF?

[18] Other than in respect of greenfields agreements, enterprise agreements under the Act are made between employers and employees and not between employer organisations and employers. The clause does not comply on its face with the statutory framework, as it anticipates that a new agreement can be made “with” the BLF.

[19] The clause appears to be inoperable (or to be of no effect) as it presupposes that an agreement which is a purported single enterprise agreement (not being a greenfields agreement) can be replaced by a further single enterprise agreement that is made “with” the BLF.

[20] A further issue arises because the clause states that the Agreements can only be replaced when another agreement is reached which covers the BLF. This anticipates an outcome of the bargaining process (or else seeks to regulate that process), in which employees (who will be subject to the proposed agreement and) who make agreements with their employers are able to exercise certain bargaining representative rights.

[21] In actuality, a term of an enterprise agreement cannot have the effect of causing the agreement to cover an employee organisation. This is because the Act makes express provision for the machinery by which an agreement comes to cover an employee organisation. This machinery is set out at s.183 of the Act:

183 Entitlement of an employee organisation to have an enterprise agreement cover it

(1) After an enterprise agreement that is not a greenfields agreement is made, an employee organisation that was a bargaining representative for the proposed enterprise agreement concerned may give the FWC a written notice stating that the organisation wants the enterprise agreement to cover it.

(2) The notice must be given to the FWC, and a copy given to each employer covered by the enterprise agreement, before the FWC approves the agreement.

[22] Section 201(2) of the Act provides that once the written notice referred to in s.183 of the Act is given in accordance with its terms, the Commission must note the fact of coverage in its approval decision:

Approval decision to note that an enterprise agreement covers an employee organisation

(2) If:

(a) an employee organisation has given a notice under subsection 183(1) that the organisation wants the enterprise agreement to cover it; and

(b) the FWC approves the agreement;

the FWC must note in its decision to approve the agreement that the agreement covers the organisation.

[23] There is no other means by which an employee organisation can be covered by an enterprise agreement other than by the express statutory procedure (and subject to its various conditions). This means Clause 2 of the Agreements cannot have the effect that it purports to have.

[24] It appears to me, as a matter of construction, that s.171(1)(d) of the Act deals with the matters relevant to how the agreement “will operate”, and not the contingent basis on which it can be replaced by a subsequent agreement and with whom that agreement must be made and which employee organisation it will cover. The clause travels too far in this respect.

[25] The Explanatory Memorandum to the Fair Work Act 2009 supports this view. In respect of s.171(1)(d) of the Act, the Explanatory Memorandum provides as follows:

Item 681

Paragraph 172(1)(d) of the Act permits an agreement to contain terms about how the agreement operates. This could include, e.g. terms setting out how and when the negotiations for a replacement agreement will be conducted, about the nominal expiry date or terms specifying who the agreement will cover (subject to subclause 186(3)).

[26] The Explanatory Memorandum does not suggest that the replacement of an agreement can be made contingent upon making a subsequent agreement “with” an employee organisation. This is unexceptional given that single enterprise agreements that are not greenfields agreements are made between employers and employees and not “with” employee organisations. The “who” referred to in Item 681 of the Explanatory Memorandum is a reference to the employees who will be covered by the enterprise agreement and not to an employee organisation. This is why Item 681 refers to s.186(3) of the Act.

[27] Equally so, as a matter of construction, the Act would be most unlikely to vest certain representational rights in employees if those rights (as they might be exercised in the future) could be conditioned by a clause of the kind here under consideration (in a prior agreement). That is, the BLF may not necessarily have the representational standing to be covered by any future agreement unless the employees who made the agreement with their employer maintained its default representative bargaining status.

[28] The clause - given its terms - does not otherwise appear to me to meet any of the requirements of s.172(1) of the Act.

[29] But having said as much, the mere existence of a clause in the Agreement that is not permitted content (because it does not meet the preconditions specified at s.172 of the Act) is not a reason for not approving the Agreement.

[30] I have set out my full explanation for this approach elsewhere, and it is an approach that has also been reflected in recent judicial comment. 2

[31] It is enough to say at this juncture that s.253 of the Act provides that such terms as those here considered may be of no effect, and that the parties will evaluate their legal risks if and when such clauses are relied upon, or sought to be relied upon, in the future.

Issue 2: Clause 3 of the Agreements

[32] At the outset, an effort was made at the hearing to identify the range of employing entities to which clause 3 of the agreement purported to apply.

[33] One employer party in relation to the Freshmore Agreement indicated that it had no other entities of any description within its corporate structure, and therefore no employees other than those employed by the employer nominated in Form F17. The Director of the other, D&J Harris Pty Ltd, claimed to also be the Director of another proprietary limited company, which was a cleaning services company, which employed employees.

[34] Initially, there was some confusion (at least in my mind) as to whether the D&J Agreement, by virtue of Clause 3, would apply to and cover both entities. In this regard the BLF contended, it seemed in the end, that the Agreement would (in its view as the employee bargaining representative) apply to and cover the cleaning entity when and if at such time that entity employed employees who performed work within the building industry.

[35] The BLF put it this way:

MR CRANK:   Your Honour, [the Agreement] only applies to a related or associated entity if that related – if and when that related or associated entity becomes an employer of employees who are covered by the agreement.

THE SENIOR DEPUTY PRESIDENT:   Okay, so the agreement applies where there is a related or associated entity, whatever that quite may mean, but whenever there's a related and associated entity which employs employees who perform work in the building construction industry and for whom the classifications, rates of pay provided by this

MR CRANK:   Yes.

THE SENIOR DEPUTY PRESIDENT:   Yes, so other than that, if there's an entity that does not employ any such persons in any such classifications the agreement doesn't apply to them but applies to them prospectively should they employ people who do that work at some point in the future.  Is that what you're - - -

MR CRANK:   Yes, as it would apply prospectively – as every agreement applies to future employees who were not engaged at the time that the agreement was made. 3

[36] Clause 3 is said to apply to “all associated or related entities” and to cause the Agreements to cover their employees when and if they employee employees who perform work in the building and construction industry (in any of the modern award/agreements classifications).

[37] Indeed, it was the BLF’s ultimate position that clause 3 of the Agreements had the effect of applying to and covering “all related and associated entities” that might prospectively be established (that is, which might be created in the future), once that entity in whatever corporate guise employed employees who performed work within the building and constructions industry within the range of classifications provided for in the Building and Construction General On-Site Award 2010 (“the modern award’). The Agreements provide for such incorporation through Appendix One of the Agreements:

THE SENIOR DEPUTY PRESIDENT: If the company exists now and it employs people within the building construction industry in the future, the agreement will then apply to it.

MR CRANK: Yes.

THE SENIOR DEPUTY PRESIDENT: If the entity, whatever it might be, doesn't exist now but exists in the future and then employs people, then the agreement will apply to it.

MR CRANK: If those employees are in the building construction industry, yes.

THE SENIOR DEPUTY PRESIDENT: Yes, in the building construction industry.

MR CRANK: Yes.

THE SENIOR DEPUTY PRESIDENT: Because they're the different scenarios, aren't they? They exist now but don't employ anyone, they exist in the future and don't employ anyone or they exist in the future and they do employ someone, but in those – at least forgetting the middle reference, where they exist now and employ someone, the agreement covers them, regardless of them not being the named employer on the F17. It extends to their operations by virtue of this application's clause, then if they exist now but don't employ anyone it doesn't apply to them. If they exist now and they employ someone in the future in the building construction industry it applies to them. If it doesn't exist now and the company creates a different corporate entity of whatever description in the future and it employs employees who perform work in the building construction industry it applies to them.

MR CRANK: Yes.

THE SENIOR DEPUTY PRESIDENT: That's how it operates, is it, that clause 3?

MR CRANK: Yes. 4

Issue 2(a)

[38] It appears to me that this approach to the application clause contended for by the BLF, the applicant union, is problematic.

[39] It is problematic, firstly, because it has the consequence of generally applying to and covering employer entities which are not named or capable of disclosure or identification in the application.

[40] It seems to me that an enterprise agreement for which approval is sought must be an agreement for the purposes of s.172(2) of the Act and must be made with an identifiable employer or with two or more identifiable employers that are single interest employers, in the meaning of the section. The section provides as follows:

Single-enterprise agreements

(2) An employer, or 2 or more employers that are single interest employers, may make an enterprise agreement (a single-enterprise agreement):

(a) with the employees who are employed at the time the agreement is made and who will be covered by the agreement; or

(b) with one or more relevant employee organisations if:

(i) the agreement relates to a genuine new enterprise that the employer or employers are establishing or propose to establish; and

(ii) the employer or employers have not employed any of the persons who will be necessary for the normal conduct of that enterprise and will be covered by the agreement.

[41] In this instance, because of the operation of clause 3 of the Agreements, the employers to whom the Agreements will cover and apply are indeterminate (other than in respect of the nominal employer which lodged the Form F17).

[42] The BLF, as the employee bargaining representative, contends that the Agreements can be made with one employer (identified in the Form F17), but cover and apply to other corporate entities over time (as they come into existence) and cover them as they employ employees performing work within the building and construction industry under the modern award classification structure (which is incorporated into the agreement).

[43] It appears to me that if clause 3 of the Agreements operated in this manner they would circumvent the role of s.172(2) of the Act (and s.172(5) of the Act, the terms of which are set out further below). This is because a single enterprise agreement could be made by one employer and its employees who are employed at the time the agreement is made and who will be covered by the agreement, but then subsequently extend to other employers (who fall within the scope of meaning of “all related and associated entities”) but without regard to the definition of a single interest employer (at s.172(5)(a), s.170(5)(b) or s.170(5)(c) of the Act), and without that employer having employed employees at the time the agreement was made.

[44] It appears to me, therefore, that an agreement that purports to apply to and to cover prospectively other unidentified and unidentifiable employer’s in the future would not be an agreement for the purposes of s.172(2) of the Act, and I could not exercise the Commission’s jurisdiction to approve an agreement of such a kind.

[45] I add that clause 3 as argued for would also make Division 2 of Part 2-8 of the Act partially redundant (in relation to transferring instruments and transferring businesses between associated entities), and also obviate the need for the greenfields agreements provisions of the Act (see s.183(2) of the Act and s.187(5) of the Act). I add that the issue of the Commission’s jurisdiction was also agitated by the BLF, and I deal with this matter below (at Issue 3).

Issue 2(b)

[46] It further appears to me that the agreements are problematic because of the effect of the clause (and its composite definition of employer) on the rights of prospective or future employees in the full range of other entities it purports to extend to prospectively.

[47] Section 186(3) of the Act provides as follows:

(3) The FWC must be satisfied that the group of employees covered by the agreement was fairly chosen.

[48] It appears to me that where an agreement purports to cover and apply prospectively to employees employed by employing entities of any kind (“all associated or related entities”) that may be established in the future (subject to various circumstances cited above) it may be concluded that such employees are not fairly chosen (under s.186(3) of the Act), for the purposes of being covered the agreement.

[49] This is because so far as the agreement would seek to cover and apply to such employees in such prospective entities, those employees consequentially would have no rights themselves to bargain for their terms and conditions of employment with their employer, by utilising the statutory rights (such as immunity from common law action) and machinery that otherwise would be at their disposal. Consequentially, clause 3, because it denies such rights to the employees of other employers in the future would operate so as to undermine collective bargaining by employees employed in “all related and other entities”.

[50] This appears to be akin to the circumstances the Full Bench in Re: John Holland considered for purposes of a finding in relation to whether the employees covered by an agreement (then before it) were “fairly chosen” for purposes of s.186(3A) of the Act:

[…] [T]he agreement reached between John Holland and three employees on the New Children’s Hospital site potentially has application to many employees on many sites. Cimeco is authority for the proposition, amongst other things, that selection of the group covered based on criteria which would have the effect of undermining collective bargaining or other legislative objects (for example those in s.171) would be unlikely to be fair within the meaning of s.186(3). In this case three employees on one site have bargained and agreed on an agreement with potentially very wide application to other employees who have not engaged in bargaining under Part 2-4 of the Act and will not be given the opportunity to bargain. The Agreement before us can potentially cover all employees of John Holland engaged in building and civil construction work in Western Australia who fall within the relevant classifications (clause 1).

It was submitted by John Holland that the making of the Agreement did not preclude all bargaining activity. While it is true that some bargaining may occur notwithstanding the Agreement, it is still the case that only some aspects of the bargaining options under the Act would be available to employees covered by the Agreement. For example, employees at a new site who fall within the terms of clause 1.1(b) would be covered by the Agreement and therefore would not be able to take protected industrial action in relation to the bargaining for a site or project specific agreement during the operation of the Agreement. The taking of protected action is part of the bargaining scheme of the Act. The purpose of a protected action ballot, for example, is to “to determine whether employees wish to engage in particular protected industrial action for the agreement” (s.437). The date of expiry of an agreement is relevant to such action, as well as for example the making of a bargaining order under s.229(3). 5

[51] As I have noted above, the decision of the Full Bench in Re: John Holland concerned the application of s.186(3A) of the Act. The BLF maintained that this decision of the Full Bench was not on point because it concerned the exclusion of employees, which was unrelated to the coverage issue here under consideration.

[52] The same principle as set out above, however, applies in relation a consideration of s.186(3) of the Act. That is, I must be satisfied that the employees to be covered by the Agreement were fairly chosen. For purposes of approval, the Commission must be satisfied as the requirements of both s.186(3) of the Act and s.186(3A) of the Act in relation to the agreement.

[53] Though it did not contemplate the notion of composite or multiple or prospective employers and employees, the Full Bench in Re: Cimeco put it this way:

The Tribunal’s first task under s.186(3) is to establish whether the agreement covers all of the employees of the employer(s) covered by the agreement. If all of the employees are covered then s.186(3A) is irrelevant but the Tribunal must still decide whether the group of employees covered by the agreement (ie. all of the employers’ employees) was ‘fairly chosen’. In some circumstances it may not be fair to choose all of the employees of an employer as the group to be covered by an agreement. 6 [My emphasis]

[54] Of course, for current purposes I am assuming (notwithstanding my finding at Issue 2(a) above) that the terms of an agreement could ever have the reach as claimed, so that this particular circumstance could arise.

Issue 2(c)

[55] The BLF went on (in its summary written submissions) to argue that:

If any related or associated entities employed anyone when the agreements were made (although they did not), the agreement would nonetheless be “single enterprise agreements” within the meaning of s.172(2)(a) of the FW Act, because the related or associated entities would be employers that are “single interest employers”.

[...]

The related or associated entities would be engaged in a common enterprise and/all the related bodies corporate, within the meaning of s.172(5).

[56] Section 172(5) of the Act provides as follows:

Single interest employers

(5) Two or more employers are single interest employers if:

(a) the employers are engaged in a joint venture or common enterprise; or

(b) the employers are related bodies corporate; or

(c) the employers are specified in a single interest employer authorisation that is in operation in relation to the proposed enterprise agreement concerned.

[57] Here the BLF contends that the agreements can be made with all related or associated entities which are employers at the time of the approval of the agreements because the resulting single enterprise agreement would be an agreement made between “single interest employers”. The BLF went on in its written submissions to comment as follows:

The nature of the corporate structure of the enterprise at the time the agreement was made, including any multiplicity of entities within the enterprise, does not alter the facts that:

• the enterprise is one and the same enterprise, and;



• the agreement was made with one enterprise.




Any change to the corporate structure of the enterprise during the operation of the agreement, including the addition of new entities to the enterprise, does not alter the facts that:

• the enterprise remains one and the same enterprise and



• the agreement was made with that one enterprise.

[58] It appears to me that whether or not an enterprise agreement is a single enterprise agreement that is made between single interest employers (for purposes of s.172(2)(a) of the Act) is a matter of fact to be determined in each case.

[59] That is, the facts in respect of s.172(5)(a), s.172(5)(b) and s.172(5)(c) of the Act need to be made in respect of each application. For example, given the clause in question purports to extend coverage to “all related or associated entities” (which is an amorphous reference), these may not all be “related bodies corporate”, as defined under the Corporations Act 2001.

[60] Further, not all employers (as properly identified) within a corporate structure may be in a “joint venture” or “common enterprise”, and the facts in each case would need to be made out (other than by mere assertion by a non-employer applicant).

[61] The initial difficulty in the applications now before me is that the Agreements purport to apply to prospective employers (which are “related or associated entities” of the employer nominated in the Form F17) who employ employees in the building and construction industry, the identity of which is unknown at the approval time. Further, it is said that the Agreement would apply to and cover the D & J Harris cleaning services entity as an employer prospectively when that separate entity employs employees in the building and construction industry.

[62] The Agreement cannot have application in relation to or cover the D & J Harris cleaning services employer entity absent the factual case being made out in relation to s.172(5) of the Act.

[63] It also appears to me that so far as an agreement claimed to apply and to cover prospective employers the purpose of the conditional definition of a single interest employer would be defeated (because the requisite relationships at s.172(5) of the Act could not be made out at the time of the approval).

[64] In any event, the scope of meaning of an associated entity for the purposes of s.50AAA of the Corporations Act 2001 may well travel beyond the scope of meaning of the kinds of entities that may constitute a single interest employer under section 172(5) of the Act (short of the relevant authorisation being given at s.172(5)(c) of the Act).

Issue 2(d)

[65] The application clause is uncertain in its terms. The clause reads in part as follows:

This agreement applies to Freshmore (Qld) Pty Ltd Advanced Precast (Aust) (ACN: 117392079 (ACN: 156 631 500) and all related and associated entities, here in after referred to as “the employer”, the CFMEU signatory to this agreement and all employees of the employer engaged in building and construction work and/or to whom classification and rates of pay are provided by this agreement.

[66] On its face, the clause states that the agreement applies to all employees of the employer engaged in building construction work and to whom the classification and rates of pay are provided in this agreement, as well as employees to whom the classification and rates of pay are provided in this agreement (regardless of them being engaged in the building construction work).

[67] This issue arises because of the use of the split conjunction “and\or” and may constitute a typographical issue.

[68] Because of my finding above, there is no need to reach a determinative finding in relation to this matter, other than it is a further particular impediment to understanding the operation of clause 3 of the Agreements for purposes of the approval process.

Issue 3: Jurisdiction

[69] Generally the BLF contended that there was no need to enquire into the above matters as the jurisdiction of the Commission in relation to the approval of an enterprise agreement is restricted. The contention here was that the Commission must only consider the requirements of s.186 and s.187 of the Act, as set out in s.186(1) of the Act:

If an application for approval of an enterprise agreement is made under section 185, FWA must approve the agreement under this section if the requirements set out in this section and section 187 are met.

[70] This argument neglects the operation of s.188 of the Act, which obliges the Commission to reach a proper degree of satisfaction regarding a range of matters arising under s.180 of the Act and s.181 of the Act.

[71] Perhaps more importantly, the argument suggests that the Commission should disregard the conditions upon which its jurisdiction is founded when exercising that jurisdiction to approve an enterprise agreement.

[72] The BLF urged me to adopt the reasoning of the Full Bench in Newlands Coal Pty Ltd v CFMEU, 7 which it asserts stands for the proposition it advances above. I do not read the Full Bench decision (which was overturned on judicial review) as making comment on the jurisdictional foundation to an agreement. Instead, I read the Full Bench decision as seemingly making comment in relation to provisions in an agreement as opposed to the jurisdictional competency of the agreement, which is another matter.

[73] In any event, on appeal to the Court, the CFMEU argument (in that matter) was that the Full Bench was in jurisdictional error in approving the agreement as it has no valid agreement before it (for purposes of s.172 of the Act), and the Court proceeded to consider whether the issue of validity arose:

62. It is common ground that to succeed the CFMEU had to show jurisdictional error. Certiorari will only lie for an error of that kind. See Craig v State of South Australia (1995) 184 CLR 163(“Craig”); CFMEU v AIRC at [81].

63. The CFMEU’s principal argument was that Fair Work Australia had no power to approve the agreement because it was not an enterprise agreement within the meaning of the Act. Cf. Commonwealth Bank of Australia v Finance Sector Union of Australia [2007] FCAFC 18; (2007) 157 FCR 329at [173]- [176].Unless the agreement is made with employees who will be covered by it, the CFMEU argued it was not, in truth, an enterprise agreement; Fair Work Australia was not only not obliged to approve it, it had no power to do so.

[...]

65. Newlands submitted that the majority was correct in all respects. It argued that the contention that the Act precludes Fair Work Australia from approving the agreement is misconceived because [...]

66. Newlands also [...] acknowledged that if an administrative decision-maker misconstrues a statute and thereby misconceives the nature of its function or the extent of its powers in the particular case, that will be a jurisdictional error. It accepted that, if the CFMEU’s principal argument were correct and the enterprise agreement did not satisfy the requirements of s 172 of the Act, then that would be a jurisdictional error.

Was this an enterprise agreement within the meaning of the Act?

67. The position of the CFMEU, succinctly put, is this. The jurisdiction of Fair Work Australia depends on the making of an enterprise agreement within the meaning of the Act, since its statutory duty under s 186(1) to approve an agreement that meets the requirements of ss 186 and 187 of the Act is contingent on there being a valid enterprise agreement. There could only be a valid enterprise agreement if the agreement was made with employees “employed at the time who will be covered by the agreement”. This agreement was not made with such a body of employees. Therefore there was no valid application for approval before the Full Bench, the order for approval was ineffective, and no enterprise agreement came into existence: Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission and Others [1999] FCA 847; (1999) 93 FCR 317 at [128]. 8

[74] It appears to me that the Commission is responsible for ensuring that the enterprise agreement approval function the statute invests in it is exercised upon a proper or sound jurisdictional foundation.

[75] Indeed, many objections or appeals in relation to the approval of greenfield agreement and other single enterprise agreements proceed on the basis that the relevant jurisdictional facts have not been established prior to the exercise of the Commission’s powers.

[76] This approach appears to have been endorsed recently by the Federal Court of Australia in National Union of Workers, New South Wales v HP Distribution Pty Ltd. 9In that judgment, the Court considered whether certain jurisdictional facts needed to be made out by Fair Work Australia (as it was then) prior to approving the (greenfield) agreement itself. In dismissing the argument that no consideration of the jurisdictional foundation to the agreement was necessary, the Court found as followed:

40. The discretionary judgment concerning the public interest that s 187(5)(b) required the Commission to form, in approving an agreement, is characteristically one that suggests that its role was to look at the interests and welfare of the employees, in particular, prior to approving such an agreement. It also suggests that the approval would give the agreement the force of law under the Act, so that whether or not it could truly be said to be a greenfields agreement that precisely met the jurisdictional requirements in ss 172(2)(b) and (3)(b) could become irrelevant once the Commission had been satisfied and gave approval under s 187(5).

41. However, in my opinion, this is not the correct construction of the Act. That is because the Commission only had power to approve a greenfields agreement under ss 186(1) and 187(5) if the agreement were one actually made under, and meeting the requirements of, s 172(2)(b) or (3)(b). The Parliament intended that unless those requirements were met, employers had to make enterprise agreements with their employees under s 172(2)(a) or (3)(a).

42. Here, the jurisdictional facts were established before the Commission and before me, that the agreement was an enterprise agreement meeting the characteristics of a greenfields agreement for the purposes of s 172. [My emphasis]

[77] It seems to me that the Court’s reasoning in relation to an agreement made under s.172(2)(b) of the Act is also resonant in relation to one made under s.172(2)(a) of the Act.

[78] I add further the Court’s judgment in The Australian Workers’ Union v Leighton Contractors Pty Limited 10 proceeded on the basis of whether the agreement before FWA (as it was at the time) was jurisdictionally competent (in so far as whether the signature by the signing officer of the CFMEU was authorised). The argument did not proceed on the basis that ascertaining the relevant jurisdictional fact was unnecessary to the approval process.

CONCLUSION

[79] I have found in relation to Issue 2(a) above that an agreement that purports to apply and to cover employers (other than the employer which has identified itself in the Form F17) in the future (where defined circumstances arise) would not be an agreement for the purposes of s.172(2) of the Act. Consequently, I could not exercise the Commission’s jurisdiction to approve an agreement of such a kind as such a jurisdiction does not exist. Clause 3 of the agreements here under consideration is such a clause.

[80] I have also found in relation to Issue 2(b) above that where an agreement purports to cover and apply prospectively to employees employed by employing entities of any kind that may be established in the future (subject to various circumstances), it may be concluded that such employees are not fairly chosen (under s.186(3) of the Act, for the purposes of being covered by the agreement.

[81] The agreements before me do not meet the requirements of s.186(3) of the Act because I cannot be satisfied at the point of approval that the group of employees to be covered by the agreement (as it may be in the future) is fairly chosen. The group is also uncertain as to its identity.

[82] At Issue 2(c) above, I have found that the Agreements (for various reasons) do not meet the requirements of s.172 of the Act, because the requisite relationship(s) under s.172(5) of the Act cannot be made out at the time of the approval.

[83] Whilst I have expressed my view (at Issue 1 above) as to why Clause 2 of the Agreements is not a permitted matter for the purposes of s.172(1) of the Act, I have not concluded that such a deficiency is fatal to the application for approval.

[84] In the above considerations I have dealt with the arguments as presented by the BLF. On the day of the hearing the representative (Queensland Master Builders Association) for the Freshmore Agreement provided particularly limited argument in reply or submission. Following the hearing and in response to an extended directions timetable, the QMBA provided written submissions which largely reflect the positions I have articulated above in relation to Issue 2(a) and 2(c) above. There were no further submissions received in respect of the D & J Harris Agreement.

[85] Because of my finding in these regards, I would ordinarily move to decline to approve the applications. However, before doing so, I will provide an opportunity for those involved in the making of the Agreements to consider any avenues through which the bargain (or at least the agreements they reached) can be preserved (notwithstanding the limited application of s.190 of the Act). The QMBA appears to be of the view that undertakings of some order (perhaps not undertakings of the kind contemplated by s.190 of the Act) may save the bargaining.

[86] In any event, it appears to me to be appropriate to provide an opportunity to those who participated in the process resulting in the making of the agreement or who represent those persons or parties to consider the above findings, and as to what agreement they actually reached and “made”.

[87] This is particularly so as there appears to be some fundamental disagreement between the parties as to the jurisdictional foundation to the applications for approval (of the Freshmore Agreement in particular). It is of course open to the parties to withdraw the applications for approval and remake the agreements in different terms. Alternatively, there may be scope, subject to argument (and as the MBAQ suggest) that the relevant bargaining representatives may provide an agreed clarification of the operation of the agreement(s) in the various salient respects. The D&J Harris Agreement will need to be considered in the same context as the Freshmore Agreement.

[88] Because the Agreements are described as template agreements, some thought may need to be given as the future management of such applications (subject, of course, to parties exercising their rights in relation to this decision of the Commission as they may).

[89] The BLF as the bargaining representative and the employer bargaining representatives have until midday 20 March 2013 to present any agreed proposals etc in all these regards.

SENIOR DEPUTY PRESIDENT

Appearances:

Mr K. Crank, for the BLF

Mr D. Cameron, for Freshmore (Qld) Pty Ltd Advanced Precast (Aust)

Mr D. Harris, for D and J Harris Corporation Pty Ltd

Hearing details:

2013

7 March

Brisbane

Final written submissions:

Received 12 March 2013

 1   Transcript of proceedings dated 7 March 2013, at PNS [19]-[20].

 2   See [2013] FWC 912 at [23]-[26].

 3   Transcript of proceedings dated 7 March 2013, at PNS [95]-[99].

 4   Transcript of proceedings dated 7 March 2013, at PNS [117]-[123].

 5  Construction, Forestry, Mining and Energy Union v John Holland Pty Ltd [2012] FWAFB 7866 at PNS [30]-[31].

 6   Cimeco Pty Ltd v Construction, Forestry, Mining and Energy Union and others [2012] FWAFB 2206 at PN [10].

 7  [2010] FWAFB 7401 at PNS [29]-[37].

 8 Construction, Forestry, Mining & Energy Union v Deputy President Hamberger [2011] FCA 719.

 9 [2013] FCA 139 at PN [41].

 10 [2013] FCAFC 4 (29 January 2013).

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