Construction, Forestry, Mining and Energy Union v Baulderstone Pty Ltd

[2013] FWC 2671

Note: An appeal pursuant to s.604 (C2013/4419) was lodged against this decision.

[2013] FWC 2671

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.437—Protected action

Construction, Forestry, Mining and Energy Union
v
Baulderstone Pty Ltd
(B2013/779)

SENIOR DEPUTY PRESIDENT O’CALLAGHAN ADELAIDE, 1 MAY 2013

Application for a protected action ballot order - visa compliance clause claim - pertaining to employment relationship - contractor clause.

[1] On 12 April 2013 the Construction, Forestry, Mining and Energy Union (CFMEU) lodged an application for a protected action ballot order with respect to an agreement proposed to apply to employees currently covered by the Baulderstone South Australia Union Collective Agreement 2010-2013. This agreement achieved its nominal expiry date on 18 March 2013.

[2] The application was listed for hearing on 18 April 2013. At that hearing, Mr Roberts represented the CFMEU and Mr Earls of the Master Builders Association of South Australia, represented Baulderstone Pty Ltd (Baulderstone).

[3] The CFMEU position was that negotiations over the previous five months had failed to resolve the differences between the parties. The main issues in dispute related to:

● guaranteed salary and allowance increases,
● Contractor clause,
● Delegates clause, and
● Visa clause.

[4] The CFMEU asserted that it had participated in the bargaining process in good faith and was genuinely seeking an agreement with Baulderstone.

[5] Baulderstone foreshadowed opposition to the application on the basis that it asserted that the contractor provisions sought by the CFMEU were such that they did not pertain to the relationship between Baulderstone and its employees so that the CFMEU was not, and had not been, genuinely trying to reach an agreement.

[6] At the request of the CFMEU the matter was adjourned to 23 April 2013. At this hearing the CFMEU was represented by Mr O’Brien and Mr Borg. Baulderstone was represented by Mr Earls and Mr Putland of the Master Builders Association of South Australia.

[7] A few hours before this hearing, Baulderstone provided advice 1 that it had reviewed the evidence of the negotiations in this matter and conceded that it was likely that the CFMEU would be able to establish that, with respect to the claimed contractor provisions, it had been genuinely trying to reach agreement. However, Baulderstone asserted that the CFMEU’s proposed “Visa clause” reflected the active pursuit of a provision which was not a matter pertaining to the relationship between Baulderstone and its employees and hence precluded the granting of a protected action ballot order.

[8] The CFMEU then provided both Baulderstone and the Fair Work Commission (the Commission) with the following advice: 2

“The CFMEU is no longer pursuing the claim as to the Visa Clause.

In light of this, given your letter of even date, it seems that there is no basis for opposing the making of the Order as sought. Please confirm that your client will not be opposing the making of the proposed Order as soon as possible.”

[9] Baulderstone responded with the following e-mail advice:

“..... As the SDP noted at the previous hearing, the applicant must both be genuinely trying and have been genuinely trying. A withdrawal at this late stage does not in our view satisfy the second element. As such, we believe that the appropriate course of action is for this application to be withdrawn and negotiations to be resumed for a reasonable period prior to reconsidering protected action.

Can you please confirm if this an acceptable course of action?” (sic)

[10] The hearing on 23 April 2013 proceeded on this basis. Evidence about the negotiation process was given by Mr O’Grady, the Assistant National Secretary of the CFMEU and, for Baulderstone, by Mr Shaw, a Baulderstone Construction Manager, and Mr Leopold, the Building Manager for the South Australian Building Division of Baulderstone. These witnesses referenced a substantial quantity of background information detailing both claims made and the negotiations themselves.

The Background

[11] Baulderstone is a building construction contractor. The evidence of Mr Shaw and Mr Leopold was that Baulderstone is involved in building and construction projects, tenders for work and arranges for this work to be performed with most on-site labour undertaken by employees and subcontractors. Baulderstone’s current South Australian projects consist of:

● the Adelaide Oval Redevelopment
● the Adelaide Convention Centre
● the Tonsley Park TAFE
● the Tonsley Park Infrastructure Project

[12] Mr Shaw and Mr Leopold advised that these projects involved approximately 1000 employees of whom only around 40 were Baulderstone direct hire employees. 3

[13] Negotiations directed at achieving an agreement have occurred since mid-December 2012. Since 31 January 2013 these negotiations have involved nine meetings.

[14] Mr O’Grady’s evidence went to his involvement in six of these meetings, and to the constitution of the CFMEU negotiating group and the claims pursued.

[15] Mr Shaw and Mr Leopold gave evidence about the negotiations from Baulderstone’s perspective. They endorsed various minutes, records and notes of these meetings.

The Visa compliance clause

[16] On 21 January 2013 the CFMEU advised Baulderstone that it was seeking the inclusion of a Visa compliance clause based on a clause in the Baulderstone Queensland Building and Construction Enterprise Agreement 2011 - 2015 (the Queensland Agreement). 4

[17] There is no dispute that the Visa clause claimed by the CFMEU is in the following terms and is derived from the Queensland Agreement:

“8.10 VISA COMPLIANCE

The Company recognises its obligations in respect of compliance with the Australian Immigration laws.

The Company also undertakes to ensure that all temporary foreign labour employed on the project continue to be employed in accordance with the work entitlements of their visas. To this end, the Company will maintain HR systems (including utilising DIAC’s Visa Entitlement Verification Online (VEVO) system on an ongoing basis), to ensure that temporary foreign workers are at all times employed in accordance with the work entitlements of their visas.

Existing and prospective Employees will be required to complete the Authority (Appendix B) to obtain from Department of Immigration and Citizenship (DIAC) of immigration status. No person will be allowed to undertake any work for the Company unless it is verified he/she has the right to work in Australia.

Copies of this authority will be available on request to the Secretary of the Union or nominee.

This provision will be strictly complied with by the Company.”

[18] In various meetings on and after 1 March 2013 the CFMEU pressed for the adoption of this clause and Baulderstone refused to concede to the inclusion of that clause. I deal with these discussions in more detail later in this decision.

The legislative framework

[19] Section 437 of the Fair Work Act 2009 (the FW Act) sets out the requirements associated with an application for a protected action ballot. Section 443 relevantly states:

“443 When the FWC must make a protected action ballot order

(1) The FWC must make a protected action ballot order in relation to a proposed enterprise agreement if:

(a) an application has been made under section 437; and

(b) the FWC is satisfied that each applicant has been, and is, genuinely trying to reach an agreement with the employer of the employees who are to be balloted.

(2) The FWC must not make a protected action ballot order in relation to a proposed enterprise agreement except in the circumstances referred to in subsection (1).”

[20] There is no question that the application is properly made. The only issue is whether I can be satisfied that the CFMEU has been and is, genuinely trying to reach an agreement.

[21] Protected industrial action is available to employees who have given majority support for a protected action ballot. The relevant form of protected industrial action in this situation is employee claim action. Employee claim action is addressed in s.409.

[22] Section 172 specifies the matters about which an agreement can be made. Section 172(1) states:

“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.

Note 1: For when an enterprise agreement covers an employer, employee or employee organisation, see section 53.

Note 2: An employee organisation that was a bargaining representative for a proposed enterprise agreement will be covered by the agreement if the organisation notifies the FWC under section 183 that it wants to be covered.”

[23] Finally, in terms of the provisions of the FW Act, s.253 states:

“253 Terms of an enterprise agreement that are of no effect

(1) A term of an enterprise agreement has no effect to the extent that:

(a) it is not a term about a permitted matter; or

(b) it is an unlawful term; or

(c) it is a designated outworker term.

Note 1: A term of an enterprise agreement has no effect to the extent that it contravenes section 55 (see section 56).

Note 2: A term of an enterprise agreement permitting or requiring deductions or payments to be made has no effect if it benefits the employer and is unreasonable in the circumstances (see section 326).

(2) However, if an enterprise agreement includes a term that has no effect because of subsection (1), or section 56 or 326, the inclusion of the term does not prevent the agreement from being an enterprise agreement.”

[24] The Explanatory Memorandum refers to the “permitted matters” in the following terms:

668. Paragraph 172(1)(a) refers to ‘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’, referred to after this as ‘matters pertaining to the employment relationship’.

669. The matters pertaining to the employment relationship formulation is of long standing. Under both the Industrial Relations Act 1988 and the WR Act prior to 27 March 2006, collective agreements had to be about matters pertaining to the employment relationship. Since 27 March 2006, a term of a workplace agreement that was not about such matters was ‘prohibited content’. Between 1904 and 2006, the formula was also used in the definition of ‘industrial dispute’ under successive Commonwealth industrial relations statutes.

670. Although the precise words used have changed from time to time, the courts have construed each manifestation of the formula in a similar way. There is substantial jurisprudence about what the phrase means. It is intended that paragraph 172(1)(a) should be read in line with that jurisprudence. The courts’ interpretation of the formulation has evolved over time in line with changing community understandings and expectations about the kinds of matters that pertain to the employment relationship, and it is expected that this approach will continue.

671. Whether a particular term is about matters pertaining to the employment relationship will depend on its precise construction, as well as the circumstances surrounding the particular employment relationship. Frequently, it will be obvious that a term pertains to the employment relationship – e.g., a term about the payment of wages or a term about hours of work and shift patterns. However, there are some terms where it is not so immediately clear whether the terms are about matters pertaining to the employment relationship (see, e.g., the discussion in Re Schefenacker Vision Systems Australia Pty Ltd, AWU, AMWU Certified Agreement 2004 [2004] AIRC 1064.

672. It is intended that the following terms would be within the scope of permitted matters for the purpose of paragraph 172(1)(a):

• terms relating to particular staffing levels (subject to any other applicable legislative requirements or limitations) particularly if those terms are aimed at ensuring the health, safety and well-being of employees;



• terms relating to conditions or requirements about employing casual employees or engaging labour hire or contractors if those terms sufficiently relate to employees‘ job security – e.g. a term which provided that contractors must not be engaged on terms and conditions that would undercut the enterprise agreement;



• terms that would provide that casual employees are converted to permanent employees after a set period of time;



• terms that would prevent an employer from seeking a contribution or indemnity from an employee in respect of personal injuries or losses suffered by that person where such injuries or losses were cause by the employee in the course of their employment.

673. The following terms would not be intended to be within the scope of permitted matters for the purpose of paragraph 172(1)(a):

• terms that would contain a general prohibition on the employer engaging labour hire employees or contractors;



• terms that would contain a general prohibition on the employer employing casual employees;



• terms that would require an employer or employee covered by to the enterprise agreement to make a donation to a political party or charity;



• terms that would require an employer to source only products from a particular supplier or Australian made products (unless, e.g., such a term was directly related to employees’ job security);



• terms that would require an employer to engage or not engage particular clients, customers or suppliers who had agreed to commit to certain employment, environmental or ethical standards (unless, e.g., such a terms was directly related to employees‘ health and safety);



• terms that relate to corporate social responsibility, e.g., terms requiring an employer to participate in charity events or commit to climate change initiatives.

674. The permitted matters in paragraph 172(1)(a) are focussed on the employment relationship. One effect of this is that terms that are about the relationship between an employer and an employee organisation may not pertain to the employment relationship, even where the terms are closely associated with the organisation‘s representation of employees under the agreement.

675. Paragraph 172(1)(b) permits terms in agreements that are about matters pertaining to the relationship between the employer or employers, and the employee organisation or employee organisations that will be covered by the agreement. For an agreement term to fall within paragraph 172(1)(b), the term needs to relate to the employee organisation‘s legitimate role in representing the employees to be covered by the agreement.

676. The following terms are examples of those intended to fall within the scope of permitted matters for the purpose of paragraph 172(1)(b):

• terms relating to union training leave and leave for training conducted by a union;



• terms that provide for employees to have paid time off to attend union meetings or participate in union activities ;



• terms that provide for union involvement in dispute settlement procedures;



• terms that allow unions to promote membership or have noticeboards in the workplace or otherwise provide information to employees;



• terms that require an employer to provide information to a union about employees who are covered by an enterprise agreement or information about a union to an employee;



• terms that provide for the union to attend the workplace for certain purposes such as dispute resolution or consultation meetings (subject to the rules governing unlawful content – clause 194).

677. The fact that a term falls with paragraph 172(1)(b) does not prevent it from also falling within the description in paragraph 172(1)(a).

678. Because of the way in which the relationship arises, there are limitations on the types of terms that would pertain to the relationship between an employer and an employee organisation. For example, a term granting a lease over property owned by the employer to the employee organisation would not be a term about a permitted matter because it would not concern the relationship between the employer as an employer and the employee organisation as a representative of the employees covered by the agreement.”

[25] A Full Bench in Australian Postal Corporation v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia-Communications Division 5 (Australian Postal Corporation) summarised the relevant history of consideration of claims for agreement content which do not pertain to the employment relationship. The Full Bench then stated:

“[56] Given the wording of s.409(1)(a) the jurisprudence prior to the enactment of the FW Act must be viewed cautiously. The first Full Bench adverted to this at paragraph 39 of its reasons. Employee claim action may be engaged in for the purpose of advancing claims that are reasonably believed to be only about permitted matters. It seems to us to follow that if a bargaining agent that reasonably believed that the claims it was advancing at the time it sought a protected action ballot order were only about permitted matters, it could not, for that reason alone, be said that the bargaining agent was not genuinely trying to reach an agreement.

[57] Further, the recognition in s.253(2) that an enterprise agreement might contain a term which is not about a permitted matter, lends weight to this proposition. The apparent tension between that section and s.172(1)(a), adverted to by the first Full Bench, may be more apparent than real. In our view, the combined effect of ss.172(1) and 253(2) is that the agreement will be an agreement under the Act only insofar as it deals with the matters in s.172(1). Terms which are not about matters set out in s.172(1) are merely of no effect.

[58] The history of the negotiations demonstrates that the CEPU, especially after the decision of the first Full Bench, was seeking to formulate a contractors’ clause that did not restrict or qualify the right of Australia Post to use contractors or agency staff and pertained to the employer/employee relationship. It is clear that by the time of the last hearing before Commissioner Roberts, and indeed well before, the CEPU reasonably believed that the clauses it was promulgating did not contain non-permitted matters.”

[26] A Full Bench in Airport Fuel Services Pty Ltd v Transport Workers’ Union of Australia 6 (Airport Fuel Services) observed that:

“[10] Sections 443(1) and (2) of the FW Act are relevantly similar to ss.461(1)(a) and (b) of the Workplace Relations Act 1996 (Cth) (the WR Act). Sections 461(1)(a) and (b) of the WR Act were as follows:

“(1) The Commission must grant an application for a ballot order if, and must not grant the application unless, it is satisfied that:

(a) during the bargaining period, the applicant genuinely tried to reach agreement with the employer of the relevant employees; and

(b) the applicant is genuinely trying to reach agreement with the employer”.

[11] In Country Fire Authority v United Firefighters’ Union of Australia, a Full Bench of the Australian Industrial Relations Commission (the Commission) said in respect of ss.461(1)(a) and (b):

“[33] The task of the Commission in determining an application for a protected action ballot is set out in s.461 of the Act which is set out above. The section requires the Commission to grant an application for a ballot order if it is satisfied of certain circumstances and precludes the Commission from granting the application unless it is satisfied that those circumstances exist. This is subject to a qualified discretion in s.461(2). For present purposes the relevant requirements in s.461(1) are paragraphs (a) and (b). These involve the same concept of determining whether the applicant has and is genuinely trying to reach agreement but the paragraphs are expressed by reference to different points in time. Section 461(1)(a) requires the Commission to be satisfied that the applicant genuinely tried to reach agreement during the bargaining period. The requirement in s.461(1)(b) is expressed by reference to the present, or the time of making and determining the application. The combined effect of the provisions is that the applicant must not only have genuinely tried to reach agreement during the bargaining period but must also be genuinely trying to reach agreement at the time the application is bought before the Commission …

[38] In our view, the pursuit of claims which involve prohibited content at the same time as seeking a Workplace Agreement, whether the prohibited content forms part of the proposed agreement or otherwise, strongly suggests that the Union is not genuinely trying to reach a Workplace Agreement which complies with the requirements of the Act. In the circumstances of this case, claims for prohibited content had been made, and at no time prior to, or during the proceedings before the Commissioner, was there any reliable evidence to show that the claims were no longer being pursued or were otherwise irrelevant to the negotiations for a collective agreement. In these circumstances, we do not believe that the Commissioner could have been satisfied that the UFU was genuinely trying to reach an agreement during the bargaining period, or at the time of the application.

[12] Further, in Tyco Australia Pty Ltd trading as Wormald v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, a Full Bench of the Commission said:

“[20] There is no doubt that the provisions dealing with the negotiation and making of workplace agreements outlaw prohibited content. In that respect the construction of the legislation urged on us by Wormald and the Commonwealth is clearly correct. It may be accepted that a union which makes prohibited content a part of its claims cannot be said to be genuinely trying to reach agreement. That is because agreement in this context must mean a workplace agreement under the Act, as explained by Senior Deputy President Acton in Kempe Engineering Services. Of course it is not always easy to say whether claims involve prohibited content. Whether it can be said that a union is advancing such claims depends upon the evidence as to the nature of the claims and the union’s statements and conduct. Leaving aside cases in which it is clear on any reasonable view that claims being advanced involve prohibited content, it is conceivable that a party may be “genuinely trying” to reach an agreement under the Act even though, as a matter of ultimate conclusion, the claims it is advancing do contain prohibited content. In cases where doubt exists it is open to a union to make it clear that it is not pursuing claims containing prohibited content and, given that industrial action to advance such claims is not protected action, it might be prudent to do so.”

[27] The Full Bench concluded:

“[22] In summary, from the legislation, the jurisprudence and the Explanatory Memorandum to the Fair Work Bill 2008 it can be concluded that:

• “Permitted matters” are “matters pertaining to the relationship between an employer that will be covered by the (enterprise) agreement and that employer’s employees who will be covered by the agreement”, “matters pertaining to the relationship between the employer … and the employee organisation … that will be covered by the agreement”, matters concerning employee authorised deductions from wages and matters concerning how the agreement will operate.



• It is intended that terms relating to conditions or requirements about employing casual employees or engaging labour hire or contractors, which sufficiently relate to employees’ job security such as a term which provided that contractors must not be engaged on terms and conditions that would undercut the enterprise agreement, would be within the scope of permitted matters which are matters pertaining to the employment relationship.



• It is not intended that “terms that would contain a general prohibition on the employer engaging labour hire employees or contactors” or “terms that would require an employer to engage or not engage particular clients, customers or suppliers who had agreed to commit to certain employment, environmental or ethical standards (unless, e.g., such a terms [sic] was directly related to employees’ health and safety)” would be within the scope of permitted matters which are matters pertaining to the employment relationship.



• Terms restricting or qualifying the employer’s right to use independent contractors are not matters pertaining to the employment relationship.



• For a term to be about matters pertaining to the relationship between the employer and the employee organisation that will be covered by the agreement, the term needs to relate to the employee organisation’s legitimate role in representing the employees to be covered by the agreement.



• A bargaining representative or party proposing that an agreement contain a non-permitted matter as a substantive term cannot be genuinely trying to reach an agreement under the FW Act.



• Leaving aside cases in which it is clear on any reasonable view that claims being advanced involve non-permitted matters, it is conceivable that a bargaining representative or a party may be “genuinely trying” to reach an agreement even though, as a matter of ultimate conclusion, the claims it is advancing do contain non-permitted matters. In cases where doubt exists, it is open to a bargaining representative or a party to make it clear that it is not pursuing claims containing non-permitted matters.



• The requirement that an applicant for a protected action ballot order “is”, as opposed to “has been”, genuinely trying to reach an agreement is expressed by reference to the time of the making and determining of the application for the order.

(references removed)

[28] I have initially considered whether the Visa compliance clause is a permitted matter. If so, the protected action ballot order cannot be refused on that basis. If the clause is not a permitted matter, the question of whether the claim was pursued on a reasonable belief then becomes relevant.

Is the Visa compliance clause a permitted matter?

[29] Notwithstanding that, on 23 April 2013, the CFMEU confirmed that it was no longer pursuing the Visa Compliance clause, s.443(1)(b) requires that I am satisfied that the CFMEU has been and is genuinely trying to reach agreement. In this context I have considered whether the pursuit, by the CFMEU, until 23 April 2013 of the Visa compliance clause, permits a conclusion that the CFMEU was genuinely trying to reach agreement.

[30] The CFMEU has required Baulderstone to adopt the Visa compliance clause in the Queensland Agreement. I am satisfied that this claim has been consistently expressed as such and there is no evidence to refute the Baulderstone position that, at the negotiation meeting on 23 March 2013, the CFMEU demanded that this provision be agreed to in full, 7 or that, at the last meeting on 4 April 2013, a CFMEU negotiator, Mr Ingham, the Queensland/NT Assistant State Secretary, confirmed that there was no middle ground on this issue and that Baulderstone had to either except the clause or reject it.8

[31] The Visa compliance clause establishes a number of obligations. Firstly, the clause requires recognition, by Baulderstone of its obligations under immigration laws. To the extent that this obligation simply restates legal requirements relevant to Baulderstone, it is largely superfluous and clearly does not establish any impermissible obligation.

[32] Secondly, however, the clause obligates Baulderstone to ensure that all temporary foreign labour on the project are employed consistent with their visas. The phrase “temporary foreign labour” is different to the concept of “employees” which is defined in the clause detailing the parties to the agreement and must refer to foreign labour engaged on building and construction projects, irrespective of whether Baulderstone is the employer. On at least two occasions in the agreement negotiations, 9 Baulderstone indicated its understanding of the clause sought extended to subcontractor employees. There is no evidence that indicates that the CFMEU disputed this or sought to limit, or constrain the operation of this provision. I have concluded that this aspect of the clause requires Baulderstone to police contractor employment arrangements. That is, Baulderstone has to advise subcontractors that they cannot employ or continue to employ certain persons. This may need to occur before, or after, the relevant government enforcing authority is involved.

[33] Thirdly, the clause requires existing Baulderstone employees and prospective employees to complete the Immigration Department authority to allow access to information about that person’s immigration status. The evidence is not clear about who would then have access to this information. To the extent that this requirement is binding on Baulderstone employees, it is simply a requirement of those employees. To the extent that it purports to apply to prospective employees, the provision is clearly problematic and may represent an unenforceable aspiration. It appears to require that Baulderstone not employ any person unless Baulderstone has verified that person’s right to undertake work in Australia. The establishment of those rights may involve complex legal issues generally the domain of the relevant authorities.

[34] Fourthly, the clause specifies that no person will be allowed to do any work for Baulderstone unless there is verification of their right to work in Australia. This requirement refers to “persons”. I have concluded that it extends beyond the “employees” who are party to the agreement and to works or sites upon which the agreement applies.

[35] Finally, the clause requires that copies of immigration authority documents are to be made available to the Secretary of the CFMEU or that person’s nominee. The clause concludes on the basis that Baulderstone is required to strictly comply. I have taken this to indicate that Baulderstone are required to ensure that all aspects of the clause are met, including the provision of information and immigration authorities are provided, on request to the CFMEU.

[36] The CFMEU position is that the clause pertains to the employment relationship. The CFMEU asserts that Baulderstone has misunderstood the clause and that further discussion about it may have removed doubt about its operation. As I have indicated, I cannot agree with this as the evidence before me indicates that the clause was not described as a negotiable matter.

[37] The CFMEU assert that the clause is consistent with the provisions of the Explanatory Memorandum. The CFMEU position is that contraventions of immigration work visas on the part of subcontractors had the real potential to affect Baulderstone employees covered by the agreement including affecting their job security. The CFMEU argued that this was apparent from the evidence of Mr Shaw and Mr Leopold. The CFMEU relied on a decision by MacDonald C in CFMEU v Lend Lease Project Management and Construction (Australia) Pty Ltd 10inasmuch as the Commissioner recognised future possibilities as relevant to the consideration of whether a provision is a permitted matter. In this respect the Commissioner referred to the Full Bench decision in John Holland v “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)11 (John Holland).

[38] I do not consider that this characterisation of the John Holland decision is correct. The John Holland decision dealt with an appeal over whether the necessary preconditions for a ballot order had been met. The Full Bench stated:

“[50] It may be accepted that an enterprise agreement cannot contain matters which are not permitted matters. The appellant advanced an argument that the AMWU was not genuinely trying to reach agreement because it was seeking to include in the proposed agreement matters which were not permitted matters. The argument was based on the premise that in seeking the incorporation of the whole of the metal industry award in the proposed agreement, the AMWU was seeking the inclusion of terms which were irrelevant to the relationship between those to be covered by the proposed agreement and therefore not permitted by s.172(1). It is unclear whether this point was advanced before the Senior Deputy President. On one view it clearly was not. Out of an abundance of caution, however, we have decided to deal with it.

[51] Most cases in which it is alleged that certain matters are not permitted involve the identification of specific claims. This case is different. It is submitted that by necessary implication the incorporation claim involves a claim for matters which are irrelevant to the relationship and therefore not permitted. We doubt the correctness of that proposition. It is difficult to see how matters in the metal industry award which are incapable of application to the appellant’s employees could have any legal effect in relation to them. Nor is there any suggestion that the AMWU intends irrelevant provisions to have any effect. Looked at from the perspective of the bargaining agent, it is to be assumed that incorporation is sought in order to ensure that no relevant condition ceases to apply rather than that irrelevant conditions should commence to apply. We reject the suggestion that pursuit of the claim for incorporation of the metal industry award involved a claim for matters which are not permitted.”

(references removed)

[39] The Baulderstone position is that the clause is not a permitted matter and that the CFMEU’s pursuit of it meant that the union was not genuinely trying to reach agreement.

[40] Baulderstone assert that the clause addressed obligations which did not have a sufficient or direct effect on Baulderstone and its employees. Baulderstone submitted that the obligations established by the clause extended to employees of Baulderstone who are not covered by the agreement and, possibly even outside of Australia and that the clause established obligations significantly beyond the employment relationship between Baulderstone and its employees.

[41] In reaching a conclusion about whether the Visa compliance clause is a pertaining matter, I have considered both the plain words of the clause and the extent to which the evidence allows me to conclude that non-compliance with immigration visa requirements by contractors to Baulderstone and/or its employees, could impact on Baulderstone and its employees covered by the agreement.

[42] I am not satisfied that the evidence of Mr Shaw and that of Mr Leopold establishes any real link between asserted non-compliance with the immigration department requirements and Baulderstone and its employees. Mr Shaw’s evidence under cross-examination was such that he conceded that the forced removal from a project site of a substantial portion of a subcontractor’s employees because of immigration compliance issues, could impact on that project. Mr Leopold’s evidence was that the sudden loss of subcontracting employees on a site because of immigration compliance issues was highly unlikely to impact on Baulderstone employees and he was not aware of examples of non-compliance issues of that nature. 12 Mr Leopold confirmed that under its contractual arrangements Baulderstone was able to engage an alternative subcontractor in the event that the initial subcontractor could not undertake the contracted works.

[43] Both Mr Shaw and Mr Leopold confirmed that Baulderstone’s contractual arrangements with subcontractors required those subcontractors to comply with all relevant legislation, including immigration legislation. Mr Leopold’s evidence went to Baulderstone’s compliance with the National Building Construction Code, the use of pre-start checklists to pre-empt future problems and Baulderstone’s periodic audits of subcontractors.

[44] Further, both Mr Shaw and Mr Leopold confirmed that they considered that the practical difficulties associated with compliance with the Visa compliance clause were substantial. Mr Leopold’s evidence was that when the Visa compliance clause was put to Baulderstone it was rejected because Baulderstone did not agree that this provision could relate to employment security issues and could not apply that type of provision to subcontractors. 13

[45] I have considered the evidence of Mr O’Grady of the CFMEU in this respect. That evidence does not go to establishing a link between non-compliance with these requirements on the part of subcontractor employees and the job security or work undertaken by Baulderstone employees.

[46] I am not satisfied that the job security of Baulderstone employees is related to subcontractor immigration compliance. There are a great many circumstances where issues impacting on a subcontractor may affect employees of other employers. That does not constitute the test for permissibility.

[47] Even if I accepted the highly speculative link between the removal from a project site of a number of subcontractor employees, for immigration reasons could impact on the work requirements of Baulderstone employees, I am not persuaded that this would then make the provision permissible. The clause imposes audit and reporting obligations on Baulderstone which are clearly incompatible with its role as an employer. The clause effectively requires Baulderstone to undertake an immigration enforcement function which is neither its prerogative nor function. It exposes Baulderstone to substantial risks that actions taken to comply with this clause would impinge on the rights and obligations of employees and their separate employers.

[48] I do not consider that the provisions of the Visa compliance clause correspond with the examples of permitted matters referenced in the Explanatory Memorandum.

[49] The Visa compliance clause extends beyond both Baulderstone as a building project manager and as an employer. It establishes obligations on Baulderstone which clearly extend beyond any normal employer obligations. Non-compliance with immigration laws by a subcontractor and/or its employees is, and must be a matter between that employer, its employees and the relevant authorities. The provisions sought not only attempt to establish obligations incompatible with Baulderstone’s role as a project manager, but it puts both Baulderstone and potentially the CFMEU in quite inappropriate positions which are the domain of law enforcement agencies.

[50] In terms of s.172(1)(a) the Visa compliance clause is not about the relationship between Baulderstone and its employees. In terms of s.172(1)(b) the Visa compliance clause is better characterised as seeking to extend the CFMEU’s role beyond the representation of Baulderstone employees.

[51] Consequently, I have unequivocally concluded that the Visa compliance clause is not a permitted matter. Whilst the Visa compliance clause was withdrawn on 23 April 2013, it was actively pursued up until that date. It follows that, unless I am persuaded that the CFMEU had a reasonable belief that this clause was a permitted matter, a protected action ballot order cannot be made.

[52] The “reasonable belief” consideration was addressed in Australian Postal Corporation in the following terms:

“[60] It is self-evident that if a union is proposing an agreement containing clearly non-pertaining clauses it cannot be genuinely trying to reach an agreement that may be approved by Fair Work Australia under s.186 of the FW Act. Section 409(1) could not be called in aid because it could not be said that a union advancing such claims reasonably believed that they were only about permitted matters.”

[53] In Airport Fuel Services, the Full Bench stated:

“[31] Further, there was no evidence before his Honour that the TWU made it clear that it was not pursuing claims containing non-permitted matters for the enterprise agreement. The evidence before his Honour was that the TWU had been, and was, pursuing its claim for clauses 5.1.2 and 5.3, despite AFS advising them they were non-permitted matters. The TWU did withdraw its claim for clauses 5.1.2 and 5.3 to be part of the proposed enterprise agreement on 28 May 2010, but this was well after it had made its application for a protected action ballot order.

....

[33] Even if we are wrong about s.409(1)(a) of the FW Act not affecting the pre-FW Act jurisprudence on the concept of whether an applicant for a protected action ballot order “has been, and is, genuinely trying to reach an agreement with the employer of the employees to be balloted”, we think his Honour’s conclusion that the TWU “reasonably believed” clauses 5.1.2 and 5.3 to be about permitted matters was affected by appealable error. In so concluding his Honour said:

“[21] The proposed labour hire clause does not contain a general prohibition on the engagement of labour hire employees or contractors. Indeed it specifically envisages that the employer might find it necessary to engage labour hire employees or contractors. Rather it provides that labour hire employees or contractors would need to be engaged under the terms of agreements negotiated with the TWU. It is at the very least arguable that such a provision is precisely the type of provision envisaged by the explanatory memorandum at item 672 as being a permitted matter. Without preventing the use of labour hire employees or contractors, the clause seeks to impose conditions which prima facie are arguably designed to prevent the undercutting of the proposed enterprise agreement, in order to protect the job security of the employees covered by the agreement. Given this, I consider that the TWU has a ‘reasonable belief’ that the proposed clause is about permitted matters. Accordingly I do not consider that the inclusion of the proposed clause in the TWU’s draft agreement means that the TWU is not genuinely trying to reach an agreement.”

[34] As we have indicated it is clause 5.2, not clauses 5.1.2 and 5.3, which is the type of provision envisaged at item 672 of the Explanatory Memorandum to the Fair Work Bill 2008 and which, “[w]ithout preventing the use of labour hire employees or contractors, … seeks to impose conditions which prima facie are arguably designed to prevent the undercutting of the proposed enterprise agreement, in order to protect the job security of the employees covered by the agreement.”

[35] As a result we do not think it was open to his Honour to be satisfied, as required by s.443(1)(b) of the FW Act, that the TWU had been genuinely trying to reach an agreement with AFS as the employer of the employees to be balloted. Accordingly, the statutory requirements for the making of the protected action ballot order by his Honour had not been met.”

(references removed)

[54] The CFMEU position is that it reasonably believed that the Visa compliance clause pertained to the employment relationship because the claim and that particular clause was overtly founded on the provision agreed with Baulderstone in the Queensland Agreement. Thus, the CFMEU argued it could legitimately expect that Baulderstone did not contend that the clause was non-pertaining.

[55] Further, the CFMEU asserted that, at no time in the negotiation process did Baulderstone advise that it considered the Visa compliance clause to be a non-pertaining matter.

[56] The CFMEU advised that it had successfully sought two separate protected action ballot orders in the process of negotiating the Queensland Agreement without any challenge to the permissibility of the Visa compliance clause so as to create concern about that provision.

[57] Finally, the CFMEU argued that, as soon as it became aware, on 23 April 2013 of the Baulderstone position that the Visa compliance clause was not a permitted matter, it immediately withdrew the claim, thus demonstrating its bargaining bone-fides.

[58] The Baulderstone position was that the CFMEU was consistently advised in the negotiations that the claim was refused because this was a matter dealt with through contractual arrangements and Baulderstone considered it did not relate to the relationship between it and its employees. 14

[59] Baulderstone asserted that given this clear advice, the CFMEU could not rely on Baulderstone’s agreement with the Queensland Agreement. Baulderstone asserted that it had agreed to the Visa compliance clause in the Queensland Agreement so as to pacify the unions, but evidence in this regard was not provided to me. Further, Baulderstone asserted that the two protected action ballot orders were sought in circumstances where there was neither the need for, nor the basis for, any consideration of, or reference to that issue.

[60] Baulderstone asserted that a proper application of the approach adopted by the Full Bench in Australian Postal Corporation required a conclusion that the CFMEU was clearly proposing a non-pertaining clause such that it could not be said to reasonably believe otherwise.

[61] I have concluded that the protected action ballot orders issued relative to the Queensland Agreement cannot represent any clear indication that the Visa compliance clause is or is not a permissible matter. I am not satisfied that this issue was ever bought to the attention of the Commission, and it may even have been the case that agreement had been reached on that particular issue before any protected action ballot order was sought.

[62] Baulderstone may not have explicitly said, during the negotiations, that the Visa compliance clause was not a permissible matter, but it is very clear that the Baulderstone negotiators said on multiple occasions that the clause went to subcontractor employment and contractual issues associated with legal compliance on the part of subcontractor’s and did not relate to its function as an employer. The CFMEU was represented in the negotiations by national and experienced negotiators. The Baulderstone advice that the agreement was between it and its employees and not between it and subcontractors, 15 and Mr Leopold’s advice that contractors were not a party to the agreement,16 made it patently clear that Baulderstone were asserting that the Visa compliance clause related to matters beyond its role as an employer and outside of the employment relationship issues.

[63] I have considered whether the CFMEU is entitled to rely on the Queensland Agreement as a basis for a reasonable belief that the clause was permissible. That may have been the case, had it not been for Baulderstone’s repeated statements that the clause exceeded the employer employee relationship. Further, it is abundantly clear that the CFMEU was aware that it was seeking a provision well outside of the ordinary agreement clauses. The evidence of Mr O’Grady was that the CFMEU indicated in the negotiations that it expected Baulderstone to be an industry leader. 17

[64] The national CFMEU office involvement in the negotiations means that I would have expected those officials to be aware of matters that are, and are not permissible.

[65] Finally, I note that there is no evidence before me that indicates that the claim for the Visa compliance clause emanated from the employees to be covered by the agreement such that the CFMEU could reasonably believe that it was a permissible matter. It seems to me to be clear that the claim was generated by the CFMEU officials as part of a broad industry strategy.

[66] Accordingly, I have concluded that the CFMEU could not have held a reasonable belief that the Visa compliance clause was not a permissible matter. Given my finding that the Visa compliance clause itself is not a permissible matter, this finding means that the protected action ballot order must be refused.

The Contractor Clause

[67] The Baulderstone position with respect to the contractor clause is, at best, equivocal. Baulderstone’s written advice of 23 April 2013 confirmed that there was no continuing opposition to the protected action ballot order on this basis. To the extent however that Baulderstone may have expressed a contrary position in the hearing on the same day, and to minimise the potential for future confusion, I have considered this issue.

[68] I am satisfied that the clause proposed by the CFMEU 18 is in terms that are consistent with those considered by a Full Bench in Asurco Contracting Pty Ltd.19

[69] Further, the nature of the claim pursued by the CFMEU here does not appear to create the same difficulties referenced by Richards SDP in CFMEU v Brookfield Multiplex Australia Pty Ltd. 20

Conclusion

[70] For the reasons set out in this decision I am not satisfied that the CFMEU has been, and was, at the time the protected action ballot order was made, genuinely trying to reach an agreement. Section 443(2) prohibits the making of an order in these circumstances. Accordingly, the application is dismissed.

SENIOR DEPUTY PRESIDENT

Appearances:

T O’Brien (and A Borg) for the Construction, Forestry, Mining and Energy Union

T Earls (and D Putland) for Baulderstone Pty Ltd

Hearing details:

2013.

Adelaide:

April 18 and 23.

 1   MBA letter of 23 April 2013

 2   Exhibit C2, FOS1

 3   Transcript, PN400

 4   Exhibit B1, DS17

 5   [2010] FWAFB 344

 6   [2010] FWAFB 4457

 7   Exhibit B1, DS14, “All or nothing from the union perspective”

 8   Exhibit B1, DS15

 9   Exhibit B1, DS3, 1 March 2013 meeting and Exhibit B1, DS10, 25 March 2013 meeting

 10   [2012] FWA 5112

 11   [2010] FWAFB 526

 12   Transcript, PN357-PN363, PN372-PN375

 13   Transcript, PN336

 14   Exhibit B1, para 20

 15   Exhibit B1, DS3, DS7, DS8 and DS10

 16   Exhibit B1, DS11 and Exhibit B2, para 7

 17   Transcript, PN101

 18   Exhibit C1, FO2

 19   [2010] FWAFB 6180

 20   [2012] FWA 4051

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