Construction, Forestry, Mining and Energy Union v B J Jarrad Pty Ltd
[2013] FWCFB 8740
•28 NOVEMBER 2013
[2013] FWCFB 8740 |
FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604—Appeal of decision
v
B J Jarrad Pty Ltd
(C2013/1535)
JUSTICE BOULTON, SENIOR DEPUTY PRESIDENT | MELBOURNE, 28 NOVEMBER 2013 |
Appeal of decision - application for approval of enterprise agreement - better off overall test - modern award applicable to employees covered by enterprise agreement.
[1] This is an application by the Construction, Forestry, Mining and Energy Union (CFMEU) for permission to appeal and, if permission is granted, an appeal pursuant to s.604 of the Fair Work Act 2009 (the Act). The CFMEU seeks to appeal against a decision of Senior Deputy President O’Callaghan made pursuant to s.185 of the Act. 1 In the decision, the Senior Deputy President approved the B J Jarrad Pty Ltd Enterprise Agreement 2013 (the Agreement).2
[2] The background to the appeal can be briefly set out as follows. On 26 July 2013, an application was made to the Fair Work Commission (the Commission) by B J Jarrad Pty Ltd (the Company) for the approval of the Agreement. The application identified the CFMEU and the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU) as employee bargaining representatives for the Agreement. The employer declaration in support of the application (Form F17) identified the Plumbing and Fire Sprinklers Award 2010 3(the Plumbing Award) as the modern award covering the employees to whom the Agreement would apply, and therefore the underpinning instrument by reference to which the better off overall test (BOOT) should be conducted. The AMWU filed a declaration (Form F18) supporting the approval of the Agreement and seeking to be covered.
[3] Senior Deputy President O’Callaghan sought clarification from the Company as to the relevant modern award. The correspondence from his chambers noted that:
“The agreement and the Employer’s Declaration refer to the Plumbing and Fire Sprinklers Award 2010. The Wages Schedule and Classification Definitions in the agreement refer to classifications which appear to be derived from the Building and Construction General On-site Award 2010. I request the provision of advice and/or a signed undertaking which confirms the appropriate classification comparison and how clause 6.1.1 of the agreement operates”.
[4] On 5 August 2013 the Company advised that it performs plumbing and civil works contracts, primarily in relation to sewer and water infrastructure for its major client, SA Water. It indicated that the Plumbing Award was the correct award for the purposes of the BOOT, and that classifications in the Agreement referring to construction work were retained from a previous enterprise agreement. A table was provided matching the classifications in the Agreement to the appropriate classifications in the Plumbing Award.
[5] On 6 August 2013 the CFMEU wrote to the Senior Deputy President advising that labourers and plant operators employed by the Company and engaged in civil construction work would be covered by the Building and Construction General On-site Award 2010 4 (the On-site Award). The CFMEU submitted that, when considered by reference to the On-site Award, the Agreement did not pass the BOOT and should not be approved.
[6] The application for approval of the Agreement was the subject of hearings before the Senior Deputy President on 15 and 21 August 2013. Evidence was given for the Company by its acting General Manager, Mr Brett Jarrad. In the hearings the CFMEU submitted that the Company was most accurately described as a civil contractor, that some of its employees were covered by the On-site Award, and that the Agreement did not pass the BOOT.
The Senior Deputy President’s Decision
[7] In his decision the Senior Deputy President examined the relevant provisions of the Plumbing Award and the On-site Award, and the relevant classification descriptions in the awards. He also referred to the evidence given by Mr Jarrad, which included that the Company is a registered plumbing business and a member of the Plumbing Industry Association of South Australia and only performs work associated with plumbing works relating to water supply, drainage and sewerage works. 5
[8] In relation to the applicable modern award for the purposes of the BOOT, the Senior Deputy President concluded as follows:
“[35] Having considered all of the evidence before me I have concluded that Jarrad is a plumbing contractor and is covered by clause 4.1 of the Plumbing Award. On the material before me it is clear that the civil works undertaken by Jarrad are elements of plumbing works such that Jarrad should not be characterised as a civil construction contractor.
[36] Further, notwithstanding the somewhat general classification descriptors in the Agreement, I am satisfied that the employees to be covered by that Agreement can be most appropriately described by the Plumbing Award classifications in that the employees engaged under the Agreement all undertake work which is directly related to the plumbing work undertaken by Jarrad.
[37] Accordingly, I consider that the relevant Award for the purposes of the BOOT is the Plumbing Award.”
[9] The Senior Deputy President noted that the Company’s application for approval of the Agreement described it as part of the “civil works” industry. However the Senior Deputy President took the view that this did not warrant a conclusion about award coverage as it was more likely “a statement made without consideration of the potential industrial consequences” 6.
[10] Having determined that the Plumbing Award was the relevant instrument for the purposes of the BOOT, the Senior Deputy President considered that the CFMEU’s objections based on the application of the On-site Award were not relevant. As such, he was satisfied that the Agreement passed the BOOT, and subject to an undertaking from the Company in relation to shift workers, approved the Agreement. 7
Appeal Principles
[11] An appeal under s.604 of the Act involves an appeal by way of rehearing, with the powers of the Full Bench being exercisable only if there is error on the part of the primary decision-maker. 8 The nature of the error which an appellant must demonstrate will depend upon the nature of the decision appealed against.
[12] In conducting the BOOT, the Commission is required to form an overall impression of an enterprise agreement in which “no one [consideration] and no combination of [considerations] is necessarily determinative of the result” and the decision-maker is “allowed some latitude as to the choice of the decision to be made”. 9 A decision with respect to the BOOT is therefore a discretionary decision. The majority of the High Court in Coal and Allied Operations Pty v Australian Industrial Relations Commission explained how error may be identified where a discretionary decision is involved:
“Because a decision-maker charged with the making of a discretionary decision has some latitude as to the decision to be made, the correctness of the decision can only be challenged by showing error in the decision-making process. 10 And unless the relevant statute directs otherwise, it is only if there is error in that process that a discretionary decision can be set aside by an appellate tribunal. The errors that might be made in the decision-making process were identified, in relation to judicial discretions, in House v The King in these terms:
‘If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so.’ 11”
[13] However before the BOOT can be conducted, it is necessary to correctly identify the modern award that covers the employees to whom the enterprise agreement will apply. If the BOOT is conducted by reference to the wrong award, the Commission may “act... upon a wrong principle” or “allow extraneous or irrelevant matters to guide [it]” so as constitute error in the decision-making process of the kind described in House v The King. The question of the applicable modern award is a mixed question of fact and law, 12 though perhaps “primarily a question of law”.13
[14] An appeal under s.604 of the Act may only be pursued with the permission of the Commission. This would normally require an applicant to demonstrate an arguable case of appealable error and to refer to other considerations which would justify the granting of permission to appeal. Section 604(2) requires the Commission to grant permission to appeal if it is satisfied that it is in the public interest to do so.
Relevant legislative and award provisions
[15] Before the Commission can approve an enterprise agreement it must be satisfied, amongst other requirements, that the agreement passes the BOOT (see s.186(2)(d) of the Act). The BOOT is set out in s.193 of the Act. For the purposes of the present matter, the relevant parts of s.193 are as follows:
“193 Passing the better off overall test
When a non greenfields agreement passes the better off overall test
(1) An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.
…
Award covered employee
(4) An award covered employee for an enterprise agreement is an employee who:
(a) is covered by the agreement; and
(b) at the test time, is covered by a modern award (the relevant modern award) that:
(i) is in operation; and
(ii) covers the employee in relation to the work that he or she is to perform under the agreement; and
(iii) covers his or her employer.
Prospective award covered employee
(5) A prospective award covered employee for an enterprise agreement is a person who, if he or she were an employee at the test time of an employer covered by the agreement:
(a) would be covered by the agreement; and
(b) would be covered by a modern award (the relevant modern award) that:
(i) is in operation; and
(ii) would cover the person in relation to the work that he or she would perform under the agreement; and
(iii) covers the employer …”
[16] Section 48(1) of the Act provides that “[a] modern award covers an employee… if the award is expressed to cover the employee”. The determination of the applicable modern award for the purpose of the BOOT therefore requires a consideration of the coverage of potentially relevant awards.
[17] Clause 4.1 of the Plumbing Award provides that:
“4.1 This industry and occupational award covers:
(a) employers throughout Australia in the industry of the provision of plumbing and/or fire sprinkler fitting services by contract and their employees in the classifications listed in Schedule B—Classification Definitions; and
(b) employers throughout Australia with respect to their employees engaged in the occupations of plumbing and/or fire sprinkler fitting classifications within Schedule B—Classification Definitions, and to those employees.”
[18] “Plumbing” is defined as follows:
“4.7 For the purpose of clause 4.1:
(a) plumbing means plumbing, gasfitting, roof plumbing, lead burning, ship plumbing, heating, airconditioning or ventilation plumbing, irrigation installation, pipe-fitting or domestic engineering work, whether prefabricated or not, engaged on-site or in construction work or any work in or in connection with:
(i) sheet lead, galvanised iron or other classes of sheet metal or any other materials which supersede the materials usually fixed by plumbers;
(ii) lead, wrought, cast or sheet iron, copper, brass or other classes of pipework;
(iii) water (hot or cold), steam, gas, air, vacuum, heating or ventilating appliances, fittings, services or installations; or
(iv) house, ship, sanitary, chemical or general plumbing or drainage and irrigation.”
[19] The coverage clause in the On-site Award provides that:
“4.1 This industry award covers employers throughout Australia in the on-site building, engineering and civil construction industry and their employees in the classifications within Schedule B—Classification Definitions to the exclusion of any other modern award.”
[20] Clause 4.2(d) of the On-site Award specifically excludes from the coverage of that award any employer covered by the Plumbing Award. The relevant part of clause 4.2 reads:
“4.2 Without limiting the generality of the exclusion, this award does not cover employers covered by:
...
(d) the Plumbing and Fire Sprinklers Award 2010...”
[21] Both awards contain a provision which applies in a situation where an employer is covered by more than one award. Clause 4.6 of the Plumbing Award and clause 4.8 of the On-site Award provide that:
“Where an employer is covered by more than one award, an employee of that employer is covered by the award classification which is most appropriate to the work performed by the employee and to the environment in which the employee normally performs the work.”
Submissions
[22] In the appeal the CFMEU submitted that the Senior Deputy President erred in failing to find that the Company was covered by the On-site Award, and therefore in failing to conduct the BOOT by reference to that award. As a result, it was said that the finding that the Agreement passed the BOOT was made in error, and that the Senior Deputy President should not have approved the Agreement. The CFMEU submitted that permission to appeal should be granted as the appeal raises important questions about the Commission’s approach to establishing the relevant modern award for the purposes of the BOOT. In this regard, it was noted that permission to appeal was recently granted in a case raising similar issues. 14
[23] The main submission of the CFMEU was that the Plumbing Award did not cover all the employees covered by the Agreement and, in particular, did not cover plant operators or general labourers employed by the Company. It was also submitted that the Senior Deputy President did not properly determine which award’s classifications most appropriately applied to the functions performed by such employee and the work environment. In this regard it was said that the On-site Award contains classifications which quite specifically cover the type of work performed by some of the Company’s employees, while those in the Plumbing Award are of a much more general nature. The CFMEU submitted that the conclusion that the Company is not in the civil construction industry was erroneous.
[24] The Company submitted that the Senior Deputy President’s decision is correct and does not contain appealable error. It submitted that the Company is in the industry of providing plumbing services by contract; that plant operators and general labourers are covered by at least two classifications in the Plumbing Award; that the coverage of these employees by the Plumbing Award excludes them from coverage by the On-site Award; and that these employees are more appropriately covered by classifications in the Plumbing Award.
Consideration
[25] We have considered the relevant provisions of the Plumbing Award and the On-site Award and the evidence before the Senior Deputy President. The Plumbing Award is both an industry and occupational award and inter alia covers employers in the industry of the provision of plumbing services and their employees in the classifications in Schedule B - Classification Definitions (see clause 4.1(a)).
[26] In our view the evidence before the Senior Deputy President was sufficient to establish that the Company was engaged in the plumbing industry for the purposes of clause 4.1(a) of the Plumbing Award. In so deciding we have had regard to the material presented in the proceedings before the Senior Deputy President, including the witness statement of Mr Jarrad and his testimony. The evidence went to the work ordinarily performed by the Company and provided examples of a range of projects and undertakings in which the Company has been involved. These include licensed plumbing works and work on delivery, management and treatment systems relating to potable water, recycled water, storm water, gas, drainage, sewer effluent and fire fighting. The evidence also demonstrated that the Company has been involved in associated civil works to support its plumbing works and activities.
[27] On the basis of this evidence, and having regard to the definition of “plumbing” in clause 4.7(a) of the Plumbing Award, we are satisfied that the Senior Deputy President was correct in finding that the Company was an employer in the industry of the provision of plumbing services by contract.
[28] The main issue raised in the appeal concerns whether the employees of the Company, and in particular those employees in the classifications of Construction Worker Levels 1-5 in the Agreement (CW1-CW5) were employees within the classifications in the Plumbing Award.
[29] The classification definitions in the Agreement for CW1 to CW5 are as follows:
Classification | Definition: |
Construction Worker Level 1 (CW1) | New entrant to the Civil Construction Industry Construction Worker Level 1 may include: • Competent and ticketed Traffic Controllers |
Construction Worker Level 2 (CW2) | Possesses minimum skills equivalent to CW1 Construction Worker Level 2 may include: • Senior Traffic Controllers supervising small teams |
Construction Worker Level 3 (CW3) | Possesses minimum skills equivalent to CW2 |
Construction Worker Level 4 (CW4) | Possesses minimum skills equivalent to CW3 |
Construction Worker Level 5 (CW5) | Possesses skills equivalent to CW4 |
[30] When the matter of award coverage was raised by the Senior Deputy President, the Company asserted that all the relevant employees were covered by the Plumbing Award and evidence was presented to support this. The CFMEU contested this position but did not lead any evidence of its own. On the basis of the evidence before him, which included the statement and testimony of Mr Jarrad, the Senior Deputy President concluded that the Company’s employees were within the classifications listed in the Plumbing Award.
[31] The Company submitted that the employees in the CW1 to CW5 classifications under the Agreement were covered by the classifications of Plumbing and Mechanical Services Worker Level 1(d) and Plumbing and Mechanical Services Worker Level 2 in the Plumbing Award. The evidence in the proceedings before the Senior Deputy President about the work of the Company’s employees was to the following effect:
● The employees who are licensed plumbers are in control of the excavation, concreting and other activities involved in preparations for work such as pipe laying;
● The Company performs only work associated with plumbing works, and its plant and equipment is not used for any other kind of work. Its work in relation to civil infrastructure is all in connection with water and wastewater, and is regarded as plumbing work;
● The Company employs approximately 61 employees, including 12 licensed plumbers, at least 10 pipe layers and drain layers, around 20 plant operators, three mechanics, and three welders, with the remainder made up of general labourers;
● All of these employees are engaged in plumbing work or in work which is in support of the Company’s plumbing works; and
● General labourers employed by the Company include traffic controllers, riggers and safety supervisors.
[32] Most of the evidence about the work of the Company and its employees was given in the statement and oral testimony provided by Mr Jarrad. We note that Mr Jarrad was cross-examined by a representative of the CFMEU in the proceedings.
[33] We do not set out in full the classification structure definition in the Plumbing Award. However we note that the Level 1(d) classification 15 in the Plumbing Award relevantly includes the following:
“An employee at this level performs work above and beyond the skills of an employee at Plumbing and mechanical services worker/Sprinkler fitting worker Level 1(c) and to the level of their training. The following indicative tasks which an employee at this level may perform are:
- assists in the co-ordination of work in a team environment or works individually under general supervision …
- assists in the provision of on-the-job training to a limited degree …
The following indicative tasks which an employee at this level may perform are subject to the employee having completed the appropriate training to perform the particular task:
…
- assist with rigging …
- undertake site drainage and de-watering;
- assist one or more tradespersons;
- safely handle waste; and
- use tools, plant and equipment requiring the exercise of skill and knowledge beyond that of an employee at Plumbing and mechanical services worker/Sprinkler fitting worker Level 1(c).
- plumber’s labourer ...”
The Plumbing and mechanical services worker/Sprinkler fitting worker/Fire Technician Level 1(d) classification incorporates the following translated award classifications:
[34] The Level 2 classification 16 relevantly includes the following:
“The following indicative tasks which an employee at this level may perform are subject to the employee having completed the appropriate training to perform the particular task:
...
- operate machinery and equipment requiring the exercise of skill and knowledge beyond that of an employee at Plumbing and mechanical services worker/Sprinkler fitting worker Level 1(d) ...”
[35] On our consideration of the evidence in this case, and having regard to the submissions in the appeal, we have come to the view that there was sufficient evidence to warrant the conclusion reached by the Senior Deputy President. We have decided that such a finding was open to the Senior Deputy President and was the correct finding.
[36] In this regard, we note the graded classification structure (CW1 to CW5) and classification definitions in the Agreement refer to a range of work including labouring duties such as assisting pipe layers and leading hands, through to having the skills and licenses to operate multiple mobile plant. The classification structure definitions in the Plumbing Award are broad and identify some indicative tasks and translated award classifications. In our view, and on the basis of the available evidence, the Plumbing Award covers the range of semi-skilled and unskilled workers, including labourers and plant operators, employed by the Company under the Agreement in the CW1 to CW5 classifications.
[37] Although the On-site Award may have more specific descriptors than the Plumbing Award for some of the tasks performed by the Company’s employees, this does not mean that it should to be concluded that the relevant employees do not fall within the more general classification definitions in the Plumbing Award. It may be that the work performed by plant operators and general labourers employed by the Company may be covered by both awards. This is not an uncommon position in relation to civil construction works and, in this regard, we note that clause 4.2 of the On-site Award makes specific provision to avoid overlapping coverage (see also clause 4.8).
[38] Clause 4.2 of the On-site Award provides that “[w]ithout limiting the generality of the exclusion, this award does not cover employers covered by: ... the Plumbing and Fire Sprinklers Award 2010”. Given the finding that the Company is covered by the Plumbing Award, it follows that the On-site Award does not cover the Company. In these circumstances, it is not necessary to consider the operation of clause 4.6 of the Plumbing Award and clause 4.8 of the On-site Award and, in particular, which award contains the classifications “most appropriate to the work performed by the employee[s] and to the environment in which the employee[s] normally [perform] the work”. However we note that on the evidence in the present matter the plant operators and general labourers are employed by a plumbing contractor and that their work is generally performed in teams under the direction and control of a qualified plumber and as part of plumbing works or works associated with plumbing works. These considerations would tend to support a conclusion that the Plumbing Award is the most appropriate award to cover the relevant workers employed by the Company.
Conclusions
[39] The issues raised in this appeal relate to complex and significant questions regarding the coverage of and interaction between modern awards for the purpose of the BOOT. As such, we have decided to grant permission to appeal. However, for all the above reasons, we have decided that the Senior Deputy President correctly determined that the Plumbing Award was the relevant award for the purposes of applying the BOOT in relation to the Agreement. Accordingly, the appeal is dismissed.
SENIOR DEPUTY PRESIDENT
Appearances:
S Crawshaw SC and T Roberts for the CFMEU.
H Dixon SC and A Gotting of counsel for B J Jarrad Pty Ltd.
Hearing details:
2013
Adelaide:
November 6.
1 [2013] FWCA 5425.
2 Commission Publication No. AE402895.
3 Commission Publication No. MA000036.
4 Commission Publication No. MA000020.
5 [2013] FWCA 5425 at [29]-[32].
6 Ibid at [34].
7 Ibid at [39]-[41].
8 Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at 205.
9 (2000) 203 CLR 194 at 205 [19].
10 See Norbis v Norbis (1986) 161 CLR 513 at 518-519, per Dixon, Evatt and McTiernan JJ (citation in original).
11 House v The King (1936) 55 CLR 499 at 505, per Dixon, Evatt and McTiernan JJ(citation in original).
12 Australian Workers’ Union v Coffey Information Pty Ltd [2013] FWCFB 2894 at [18].
13 Australian Municipal, Administrative, Clerical and Services Union v City of Fremantle [2011] FWAFB 7161 at [18].
14 See Australian Workers’ Union v Coffey Information Pty Ltd [2013] FWCFB 2894 at [29].
15 See clause B.3.1(d).
16 See clause B.3.1(e).
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