FEDERAL COURT OF AUSTRALIA
Construction, Forestry, Mining & Energy Union v Deputy President Hamberger [2011] FCA 719
Citation: Construction, Forestry, Mining & Energy Union v Deputy President Hamberger [2011] FCA 719 Parties: CONSTRUCTION, FORESTRY, MINING & ENERGY UNION v DEPUTY PRESIDENT HAMBERGER, DEPUTY PRESIDENT MCCARTHY, COMMISSIONER BLAIR OF FAIR WORK AUSTRALIA and NEWLANDS COAL PTY LIMITED File number(s): NSD 1676 of 2010 Judge: KATZMANN J Date of judgment: 24 June 2011 Catchwords: INDUSTRIAL LAW – Enterprise agreement – coverage clause – whether Fair Work Australia may approve an enterprise agreement which permits employees to elect not to be covered by it – whether the Full Bench erred in holding that the right to choose means that employees are better off overall than if they were covered by the modern award – whether the Full Bench failed to consider whether the group of employees who will be covered by the award were geographically, operationally or organisationally distinct pursuant to s 186(3A), Fair Work Act 2009 (Cth)
ADMINISTRATIVE LAW – Applications for writs of certiorari and mandamus – whether, if the Full Bench erred, errors were jurisdictional errors
STATUTORY INTERPRETATION – Meaning of “[employees] who will be covered by the agreement” in Part 2-4, Fair Work Act 2009 (Cth)
Legislation: Fair Work Act 2009 (Cth) ss 53, s 171, 172, 180, 181, 182, 185, 186, 187, 193, s 256A, 562, 563, 570
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth)
Judiciary Act 1903 (Cth) s 39B
Workplace Relations Act 1996 (Cth)Cases cited: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue(Northern Territory) (2009) 239 CLR 27
Brackenridge v Toyota Motor Corporation Australia Ltd (1996) 142 ALR 99
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384
Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194
Commonwealth Bank of Australia v Finance Sector Union of Australia (2007) 157 FCR 329
Concut Pty Ltd v Worrell (2000) 103 IR 160
Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission and Another (2007) 157 FCR 260
Craig v State of South Australia (1995) 184 CLR 163
Deva v University of Western Sydney [2011] FCA 199
Elias v Commissioner of Taxation (2002) 123 FCR 499
Kirk v Industrial Relations Commission of New South Wales & Anor (2010) 239 CLR 531
Re McJannet; ex parte The Australian Workers’ Union of Employees, Queensland [No 2] (1997) 189 CLR 654
Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323
Nestle Australia Ltd v Commissioner of Taxation (Cth) (1987) 16 FCR 167
Newlands Coal v CFMEU [2010] FWAFB 7401
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355
Zhang v Canterbury City Council (2001) 51 NSWLR 589Date of hearing: 5 April 2011 Date of last submissions: 7 April 2011 Place: Sydney Division: FAIR WORK DIVISION Category: Catchwords Number of paragraphs: 107 Counsel for the Applicant: Mr S Crawshaw SC with Mr A Slevin Solicitor for the Applicant:
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Details
- Case
- [2011] FCA 719
- Decision Date
CaseChat Overview and Summary
The Construction, Forestry, Mining and Energy Union (CFMEU) sought to challenge a decision of the Full Bench of Fair Work Australia (FWA) which approved an enterprise agreement between Newlands Coal Pty Ltd and its employees. The CFMEU argued that the agreement was invalid because it contained a clause that allowed employees who were initially covered by the agreement to later opt out of it. This dispute reached the Federal Court of Australia, where the CFMEU sought a writ of certiorari to quash the Full Bench's decision and a writ of mandamus to compel the Full Bench to redetermine the appeal. The central legal issues were whether the opt-out clause was consistent with the requirements of the Fair Work Act 2009 (Cth) and whether the Full Bench had correctly interpreted the "Better Off Overall Test" (BOOT) and the phrase "employees who will be covered by the agreement".
The court found that the Full Bench had correctly interpreted the provisions of the Fair Work Act and had not erred in its decision. The Full Bench held that the opt-out clause did not render the agreement invalid as long as the employees who were initially covered were fairly chosen and the employees who remained under the agreement would be better off overall. The court reasoned that the role of the Commissioner in approving the agreement was limited to determining whether a valid application had been made, which involved verifying that a majority of valid votes were cast. The court rejected the Commissioner's concern that the opt-out clause could lead to uncertainty about who would be covered by the agreement, stating that such uncertainty was not uncommon in enterprise agreements due to changes in employee numbers and operational changes. The court also clarified that the term "will" in the context of the agreement denoted an intention rather than a certainty, meaning that employees who made the agreement would be covered by it, although they might not remain so.
Ultimately, the Full Bench determined that the application for approval of the agreement should be granted, subject to certain undertakings. The Federal Court of Australia upheld the Full Bench's decision, affirming that the opt-out clause did not invalidate the agreement provided that the employees who remained under the agreement were better off overall. The court ordered that within seven days, the parties were to bring in short minutes giving effect to these reasons and any application for costs be made by notice of motion.
The court found that the Full Bench had correctly interpreted the provisions of the Fair Work Act and had not erred in its decision. The Full Bench held that the opt-out clause did not render the agreement invalid as long as the employees who were initially covered were fairly chosen and the employees who remained under the agreement would be better off overall. The court reasoned that the role of the Commissioner in approving the agreement was limited to determining whether a valid application had been made, which involved verifying that a majority of valid votes were cast. The court rejected the Commissioner's concern that the opt-out clause could lead to uncertainty about who would be covered by the agreement, stating that such uncertainty was not uncommon in enterprise agreements due to changes in employee numbers and operational changes. The court also clarified that the term "will" in the context of the agreement denoted an intention rather than a certainty, meaning that employees who made the agreement would be covered by it, although they might not remain so.
Ultimately, the Full Bench determined that the application for approval of the agreement should be granted, subject to certain undertakings. The Federal Court of Australia upheld the Full Bench's decision, affirming that the opt-out clause did not invalidate the agreement provided that the employees who remained under the agreement were better off overall. The court ordered that within seven days, the parties were to bring in short minutes giving effect to these reasons and any application for costs be made by notice of motion.
Orders
Orders of the court
Within seven days:
1. the parties bring in short minutes giving effect to these reasons; and
2. any application for costs be made by notice of motion.
Note:
Background
Background to the litigation
The primary question in this case is whether an employer may lawfully provide in an enterprise agreement for employees who are covered by the agreement at the time it is made to later choose not to be covered by it. Background In September 2009 the second respondent (“Newlands”) started to bargain with the applicant (“the CFMEU”) about a proposed enterprise agreement. Negotiations continued until April 2010 when the parties reached agreement. Consequently, in May 2010 Newlands asked its employees to make the enterprise agreement (“the agreement”). The group of employees to which the agreement relates is specified in the agreement as “employees of the company engaged at Newlands Surface Operations in the classes of work included in Schedule A to the Black Coal Mining Industry Award”. 101 (of a total of 109) employees voted to approve the making of the agreement. On 17 May 2010 Newlands applied to Fair Work Australia to have the agreement (entitled the Newlands Coal Surface Operations Enterprise Agreement 2010) approved. At that time the CFMEU supported the application. I should point out, however, that it had, during the period of negotiations, expressed the view that the coverage clause did not meet the requirements of the Fair Work Act 2009 (Cth) (“the Act”) but was informed by Newlands that its legal advice was to the contrary and negotiations proceeded accordingly. On 20 May 2010 Fair Work Australia, through the associate to Commissioner Roe, wrote to Newlands raising concerns, amongst other things, about the coverage clause. The Commissioner was concerned that the coverage clause included a provision for new employees to elect not to be covered by the agreement and for any employee at any time to opt out of being covered by the agreement (“the opt out clause”). The Commissioner expressed doubts that this was consistent with the requirements of ss 186(3) and 186(3)(A) of the Act and indicated that he could not be sure that a current or future employee who elected not to be covered by the agreement will be better off overall for the purposes of the “Better Off Overall Test” (“BOOT”) imposed by the Act. On 27 May 2010 Newlands replied to Fair Work Australia. On the question of the coverage clause it offered an undertaking that any employee who would be covered by the agreement, “except for their election in writing not to be covered, will be better off overall for the purposes of the [BOOT]”. On 7 June 2010 Fair Work Australia again wrote to Newlands maintaining its concern about the coverage clause. The Commissioner indicated he would approve the agreement provided that Newlands offered a written undertaking to the effect that the opt out clause would not apply and Newlands would neither request nor accept such an election. Newlands replied on 18 June 2010, adhering to its position and urging that the matter be fixed for hearing. After hearing from the parties, the Commissioner refused to approve the agreement absent an undertaking not to enforce the opt out clause: Newlands Coal Pty Ltd [2010] FWA 4811; Newlands Coal Pty Ltd [2010] FWA 4986. The second respondent (“Newlands”) appealed from the Commissioner’s decision to a Full Bench of Fair Work Australia. The Full Bench, which is the first respondent in this proceeding, by a majority (Commissioner Blair dissenting) set aside the decision of the Commissioner and approved the agreement, subject to a different undertaking: Newlands Coal v CFMEU [2010] FWAFB 7401. In this proceeding the CFMEU applies for writs of certiorari and mandamus to quash that decision and have the Full Bench redetermine it.The coverage clause
Evidence
Evidence Before The Court
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Decision
Reasons for decision
The Commissioner also considered that if employees were able to opt out of the agreement it could not be said that those who remained were geographically, operationally or organisationally distinct.The decision of the Full Bench The majority considered that the Commissioner’s approach to the opt out clause involved a misunderstanding of his role. According to the majority, his role was a limited one. It involved first considering whether he had a valid application, which involved considering whether the agreement was properly made and that merely involved determining whether a majority of valid votes were cast. If so, then, the majority said, an agreement had been made with employees who will be covered by it. They stated, in effect, that whether or not the employees were fairly chosen was irrelevant to the question of whether a valid application had been made. In the alternative, if it was relevant, the majority rejected the Commissioner’s view that the process of choosing who would be covered could not have been fair as those voting for the agreement could not have known who might be covered by it in the future. They considered that there was no uncertainty about who would be covered and noted there was no evidence of any manipulation of the ballot by “precluding” (presumably it meant “excluding”) those employees who should have been covered or including those who should not. They acknowledged that the voters would not know at the time which individuals would be covered by the agreement at a future time, nor how many employees would be covered. But they considered that such a circumstance was unremarkable as employees come and go, operational changes may significantly alter the number or balance of employees covered by the agreement, or the employer might double in size or go out of business altogether. They therefore found that the Commissioner erred in concluding that the group of employees to be covered by the agreement had not been fairly chosen. Consequently, they allowed the appeal, revoked the Commissioner’s decision and went on to decide for themselves whether the application for approval of the agreement should be granted. The first question posed for consideration of the Full Bench was whether an application had been made under s 185 of the Act. The majority held that it had, rejecting a submission made by the ACTU (which was given permission to intervene in the appeal) that the Act does not contemplate the existence of an enterprise agreement that might cover employees; an employee who might be covered by the agreement is not an employee who will be covered by it. They noted that under the coverage clause an employee who does not elect in writing is, and remains, covered by the agreement, whereas an employee who elects in writing not to be covered by the agreement will not be covered by the agreement but will be covered before any such election. They considered that there was no uncertainty about who will be covered: namely, all those employees in the relevant classifications with the exception of those employees on unexpired AWAs and those who made a written election not to be covered. They said that the Explanatory Memorandum to the Fair Work Bill 2008 (Cth) made it clear that the expression “employees who will be covered by the agreement” refers to the class or group of employees who are expressed to be covered by the agreement. They observed that, subject to the specific requirements contained in ss 186 and 187 of the Act, as with any other term of an agreement, it was for the parties to decide on what they agree. The majority held that “will”, in context, denoted an intention, not a certainty, that something occur. Thus, here, the employees who made the agreement will be covered by it, although they may not remain so. They noted that s 256A specifically provides for employees who are or are to be covered by an enterprise agreement to be specified by class or name. Provided that the group of employees covered by the agreement is fairly chosen, it said, there are no other restrictions on how the parties may specify the class.
Ratio Decidendi
Legal Principle Established
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