Construction, Forestry, Mining and Energy Union v Brookfield Multiplex Australasia Pty Ltd

[2012] FWA 4051

[2012] FWA 4051

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.437 - Application for a protected action ballot order

Construction, Forestry, Mining and Energy Union
v
Brookfield Multiplex Australasia Pty Ltd
(B2012/764)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 16 MAY 2012

Summary: protected action ballot order - whether genuinely trying to reach agreement - whether substantive term a permitted matter - contractors clause - whether clause has any ascertainable nexus with employment relationship - s.172(a) - whether related to security of employment of employees to be covered by the agreement - s.409(1)- alleged industry-wide claim.

[1] On 8 May 2012, an application by the Construction, Forestry, Mining and Energy Union (“CFMEU”) for a protected action ballot order under s.437 of the Fair Work Act 2009 (“the Act”) was subject to a contested hearing. The employer was Brookfield Multiplex Australasia Pty Ltd (“the Employer”). There have been various prior applications seeking a protected action ballot in relation to the employees of the Employer.

[2] At the conclusion of the hearing there remained one unresolved matter in relation to which I had reserved my decision. That matter concerned, for the purposes of s.443(1)(b) of the Act, whether or not the CFMEU had been and was still genuinely trying to reach an agreement with the employer of the employees who are to be balloted.

[3] The particular matter in contest was whether the requisite degree of satisfaction for the purposes of s.443(1)(b) of the Act could be reached in circumstances in which it was claimed the CFMEU was seeking to include in its agreement a non-permitted term (for the purposes of s.172 of the Act). Section 172 of the Act 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. [My emphasis]

[4] After the evidence had been taken, authorities referred to and submissions provided, the hearing was closed in the ordinary manner. The CFMEU subsequently sought an opportunity to file further written submissions. It did so on natural justice grounds, alleging that it had been surprised by the Employer’s argument against the making of the order as sought.

[5] This natural justice argument had little merit. The CFMEU reasonably would have appreciated before the hearing that the Employer had concerns about the legality of the clause. The Employer’s correspondence of 30 April 2012 1  to the CFMEU raised concerns that the contractors clause needed to operate within the law. Further, at the time the present application was subject to hearing, the CFMEU had had an opportunity to read the materials provided by the Employer. In such circumstances, the CFMEU can hardly have been taken by surprise with the Employer’s argument at the hearing.

[6] Further, it was open to the CFMEU at the time of the hearing to seek an adjournment, but it did not do so. Indeed, given that the present application was lodged immediately after an earlier application had been withdrawn (owing to a statutory deficiency revealed in the course of its hearing in relation to that application), there were strong grounds for an adjournment of the subsequent application, had one been sought.

[7] Notwithstanding this, the CFMEU agitated (after the conclusion of the hearing) that it had not been in a position to present its case. While I do not accept that is the case, the issue at hand is an important one as it concerns a clause in an industry agreement which may have wider ramifications than the current case. Or as the CFMEU put it, the hearing raised “a serious issue to be determined which may have consequences beyond the matter at hand”. I note too that the Employer has acted at all times to facilitate the hearing of the CFMEU’s various applications. Because of these circumstances, and while being conscious of not setting a precedent, I acceded to the CFMEU’s request to file additional written submissions, and provided the Employer with an opportunity to provide further written submissions in reply.

It seems to me to be reasonably clear on the balance of Full Bench authorities that the scheme of the Act requires that the substantive terms of an enterprise agreement concern permitted matters. Consequentially, an applicant for a protected action ballot order who is pursuing a claim as a substantive term of a proposed enterprise agreement which is not about a permitted matter is not genuinely trying to reach agreement. 2

The CFMEU and the Employer both filed witness statements including extensive annexures. The CFMEU did not challenge the Employer’s claims as made in its witness statement.

The relevant, unchallenged factual matrix relating to this application therefore includes the following:

• The Employer only employs workers in a minority of the classifications listed in the Building Construction Industry Award – State 2003;



• The “great bulk” of form work, concreting and scaffolding work on the Employer’s projects is contracted to a specialist subcontractor;



• The Employer's employees carry out work as crane drivers, bloggers, hoist drivers, forklift operators, traffic controlling, general labouring, and carpenters;



• The Employer does not employ workers to do any work in classifications as bricklayers, painters, plasterers and renderers, plumbers, electrical work, structural steel erection, furniture installation, carpet laying, or glaziers; and



• The Employer does not intend to employee employees in such classifications outside its current workforce.

This is far from an unusual classification arrangement - or workforce structure - for a construction company.

On 24 April 2012, the Employer met with Mr Travis O'Brien, CFMEU Legal Officer and Mr Kane Pearson, Assistant Divisional Branch Secretary of the CFMEU in respect of its Construction and General Division, Queensland Builders Labourers Divisional Branch.

Mr Pearson said words to the effect during the meeting that the contractors clause was a “deal breaker” and that unless there was agreement on that clause there was no point in proceeding with other items set down for the discussion.

The clause sought by the CFMEU was a clause said by the CFMEU to have been utilised previously in the industry, and is contained in its CFMEU Union Collective Agreement, which provides relevantly as follows:

36.2 Use of Contractors

If the employer wishes to engage a contractor to perform work described in the classifications of this agreement, the employer must consult in good faith with potentially affected employees and the union before engaging such contractor. Only bona fide contractors may be engaged.

The employer shall ensure that anyone performing construction work which is part of, or assists in, the performance of work which the employer is entitled to be paid, receives the same wages and other terms and conditions of engagement (or terms no less favourable) as they would receive if they were engaged as employees under this agreement performing the same work.

The use of sham sub-contracting arrangements is a breach of this agreement.

36.3 Supplementary Labour Hire

If the employer wishes to engage a provider of labour (e.g a labour hire employer) to perform work described in the classifications of this agreement, the employer must consult in good faith with potentially affected employees and the union before engaging such contractors. Only bona fide labour hire companies may be engaged.

The employer shall ensure that labour hire workers performing construction work which is part of, or assists in, the performance of work for which the employer is entitled to be paid, receive the same wages and other terms and conditions of engagement (or terms no less favourable) as they would receive if they were engaged as employees under this agreement performing the same work. 3 

Clause 17.1 of the CFMEU Union Collective Agreement reads as follows:

The classification levels for employees engaged under this agreement shall be read in accordance with clauses 5.1 and 5.2 of the former Building Construction Industry Award – State 2003 unless specifically amended by the terms of this agreement. Classification levels, relativities, pay rates and other details are contained in appendix 1. 4 

Because it is an industry award, the classifications in the Building Construction Industry Award – State 2003 are very extensive in their range and scope.

For reasons that will be set out in further detail below, the Employer resisted this proposed clause and provided an alternative. The Employer’s alternative clause was designed to ensure that if contractors were engaged to perform the work normally performed by the Employer's employees, they would receive the same terms and conditions the Employer's employees would receive.

The Employer contended that there was no incentive for it to use contractors or other supplementary labour to carry out work which its employees are doing, and (as stated above) that it has never been its intention to do so. 5 

The CFMEU’s response to the Employer’s proposal was to re-affirm, initially, that it sought to include the classifications set out in the Building Construction Industry Award – State 2003 in any agreement and that its proposed contractors clause had to be read in light of that claim. 6 

The CFMEU then proposed an alternative or modified proposed contractors clause which relevantly read as follows:

Use of Contractors

Where [the Employer] intend[s] to engage contractors or their employees to undertake work described in the classifications of this agreement, [the Employer] will first consult in good faith with potentially affected employees and their union.

If, after consultation, [the Employer] decides to engage contractors to perform such work, those contractors and their employees, if any, must be afforded the same terms and conditions of engagement (or terms no less favourable) as they would receive if they were engaged as employees under this agreement performing the same work.

Supplementary Labour Hire

Where there is need for supplementary labour to meet temporary\peak work requirements, or where a[n] Employee is unavailable due to sickness, annual leave, workers’ compensation etc such labour may be accessed from bona fide labour hire companies, following consultation with the Consultative committee and\or workplace delegate. [The Employer] shall ensure that any workers it uses from such bona fide labour hire companies and performing work described in the classifications of this agreement, shall receive wages, allowances and conditions not less than those contained in this Agreement. 7 

The CFMEU also proposed an additional clause which read as follows:

Subcontractor preference

[The Employer] will demonstrate a preference to engage subcontractors that have industrial arrangements that deliver industry standards in regards to; pay and conditions, workplace health and safety, workforce training and development and other issues that contribute to enhancing the wellbeing of employees in promoting a high performance industry. 8 

The difficulty with the contractors clause as proposed by the CFMEU, in either of its guises, is that it would require the Employer to extend to all subcontractors it engages on its projects the same terms and conditions that apply to its direct employees covered by the agreement, regardless as to whether the Employer employed employees who perform or will ever perform the type of work carried out by any such subcontractors. The Employer claimed the intention of this clause was to standardise pay rates for subcontractors across the building and construction industry.

The Employer for its part proposed to replicate the employment security or supplementary labour clause in its current agreement, which extended the same terms and conditions of employment to subcontractors who performed the narrow band of work of the kind performed by the Employer’s employees. That clause provides relevantly as follows:

[...]

No Brookfield Multiplex wages Employee will have their employment placed in jeopardy through the use of supplementary/casual labour. [...]

Where Brookfield Multiplex intend to engage contractors to undertake work normally performed by Employees under this agreement, Brookfield Multiplex will first consult in good faith with potentially affected Employees and their union.

If, after consultation, Brookfield Multiplex decides to engage contractors to perform such work, those contractors and their employees, if any, must be afforded the same terms and conditions of engagement (or terms no less favourable) as they would receive if they were engaged as employees under this agreement performing the same work.

[...]

Brookfield Multiplex will demonstrate a preference to engage subcontractors that have industrial arrangements that deliver industry standards in regard to; pay and conditions, workplace health and safety, workforce training and development and other issues that contribute to enhancing the wellbeing of employees in promoting a high performance industry. 9 

But a clause in these terms was not acceptable to the CFMEU:

The reason for this is your proposed clause does not meet the outcome that we are seeking in our claim; that is, it does not “do the work” that we have discussed at meetings.

Our proposal, which must be read in light of our further claim to have our proposed classifications included in the proposed agreement is [see paragraphs 15 - refer to State Award and 19 above]. 1 

CONSIDERATION

As cited above, consistent with s.172 of the Act, an enterprise agreement must concern 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.

Section 172(a) of the Act does not refer to the relationship between employers and employees generally. It concerns, rather, the relationship between the employer that will be covered by the agreement and its employees who will be covered by the agreement. 11 A term of an agreement, therefore, is only permissible so long as it concerns the relationship between the employer that will be covered by the agreement and its employees who will be covered by the agreement.

In the factual circumstances before me, the contractors clause sought by the CFMEU does not concern the relationship between the Employer and the Employer’s employees who will be covered by the agreement. This is because the contractors clause extends to the regulation of the terms and conditions of subcontractors who perform work of a kind that will not be performed by any employee of the Employer covered by the agreement.

Because of its scope, the clause travels beyond any ascertainable nexus with the relationship between the Employer and its employees who will be covered by the agreement.

I add that a term of an agreement may pertain to the relationship between the employer and its employees if it directly concerned the security of employment of the employees covered by the certified agreement.

But in this case, the relevant clause as proposed by the CFMEU cannot be construed to be permissible for this reason. Again, because of its scope, the clause operates to regulate the terms and conditions of subcontractors who perform work that is not performed by any of the employees of the Employer (who will be covered by the Agreement).

In effect, the clause cannot by its terms address the employment security concerns of employees employed by the Employer and who are to be covered by the agreement because it regulates the terms and conditions of employment of a set of subcontractors who perform work that is not nor will be performed by any employees of the Employer who will be subject to the agreement. Therefore the direct interests of the Employer’s workforce that will be covered by the agreement is not affected by the scope of the clause made by the CFMEU.

Again, the direct and unchallenged evidence of the Employer was that it did not employ employees beyond the narrow band of functions it indicated, and it had no intention of doing so in the future. The CFMEU was familiar, I should add, with the Employer’s workforce profile. 12 

But in particular circumstances a non-pertaining clause may be permissible because of its character as being a machinery-type provision only. This is not a case where the clause is permissible because it is incidental or ancillary to a substantive (and permissible) clause within the agreement. It is abundantly clear from the evidence that the contractors clause is a substantive term in its own right.

Section 409(1) of the Act provides as follows:

Employee claim action

(1) Employee claim action for a proposed enterprise agreement is industrial action that:

(a) is organised or engaged in for the purpose of supporting or advancing claims in relation to the agreement that are only about, or are reasonably believed to only be about, permitted matters; and

(b) is organised or engaged in, against an employer that will be covered by the agreement, by:

(i) a bargaining representative of an employee who will be covered by the agreement; or

(ii) an employee who is included in a group or groups of employees specified in a protected action ballot order for the industrial action; and

(c) meets the common requirements set out in Subdivision B; and

(d) meets the additional requirements set out in this section.

The CFMEU contends that it acted on a reasonable belief for the purposes of s.409(1) of the Act that the clause it pressed was a permitted matter. It argued it had legal advice to that end and that various agreements had been approved by FWA which included the clause in question.

It is difficult to identify as to which agreements the CFMEU might be referring, if only for reason that the clause would not be identifiable readily at the approval stage as a non-permitted matter if it presented in the form pressed by the CFMEU, and was not otherwise objected to by an employer (on workforce composition grounds).

Further, the asserted existence of legal advice supporting the clause as pressed takes the matter no further. In any event, the nature of that legal advice of which the CFMEU claims to be in possession is unknown. Was it qualified? Was it premised on a particular factual situation? Did the legal advice consider the current circumstances where the Employer - as a matter of fact - only employs and only intends to employ employees in a small number of classifications and for a limited range of functions? Alternatively, has the CFMEU applied the advice to the appropriate circumstances or understood the advice in its own terms? Even assuming that the possession of legal advice was to be relevant to the statutory question before me, the evidence yields no answers to the preceding questions.

There are further reasons why s409(1) of the Act does not have application in the circumstances. Just as with the Full Bench in Australian Postal Corporation v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia 13 there can be no argument in this case that the contractors clause was being pressed by person or persons who reasonably believed that they were pursuing a claim about a permitted matter as a substantive term of a proposed enterprise agreement, and as such were genuinely trying to reach an agreement (for the purposes of s.443 of the Act). This is because: there are relevant authorities; the Employer’s position in relation to the employees who will be covered by the agreement was clear; the CFMEU had knowledge of the structure of the Employer’s workforce; the construction of the clause pressed was not complicated and its implication was made more apparent by its contrast to the Employer’s alternative clause; the status of those who were pressing the claim was such that they would readily have apprehended the legal concern in relation to the claim (which had been referred to by the Employer in its correspondence of 30 April 2012); and the legal sensitivity of the claim was such the CFMEU had obtained its own advice. 14

Finally, to the extent it is relevant to the statutory question before me, had the CFMEU indicated that it would not press a clause that was impermissible? The viva voce evidence of Mr Pearson was that the CFMEU would not press a claim of such a nature. For all other purposes in the bargaining process the CFMEU pressed its claim without qualification or reservation. The clause had been pressed since the meeting of 16 April 2012. The unchallenged evidence of Mr Higgon was that the CFMEU stated that its contractors clause was a “deal breaker” (and therefore - on the evidence - not one that was likely to be set aside). The CFMEU had also rejected the Employer’s alternative contractors clause (as advised in the correspondence of 30 April 2012) on the basis that it would not achieve the CFMEU’s desired outcome. This correspondence is cited above at paragraph 24. The CFMEU adopted this position in the wider circumstances set out in paragraph 37 directly above.

CONCLUSION

Given all the above circumstances, I find that the contractors clause is not a permitted matter, and because it is being pressed as a claim by the CFMEU as part of its bargaining agenda, the CFMEU cannot be found to be genuinely trying to reach agreement with the Employer for purposes of s.443(1)(a) of the Act. The application by the CFMEU under s.437 of the Act must be dismissed in such circumstances because of the operation of s.443(2) of the Act.

SENIOR DEPUTY PRESIDENT

Appearances:

Mr T. O’Brien for the Applicant

Mr D. Williams, solicitor for the Respondent

Hearing details:

2012.

May 8.

Brisbane.

Final written submissions:

Applicant’s submissions received 11 May.

Respondent’s submissions received 11 May.

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