Construction, Forestry, Mining and Energy Union v One Key Workforce Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Construction, Forestry, Mining and Energy Union v One Key Workforce Pty Ltd [2017] FCA 1266

File number: NSD 2058 of 2016
Judge: FLICK J
Date of judgment: 8 November 2017
Catchwords:

INDUSTRIAL LAW – enterprise agreements – review of approval of enterprise agreement by Fair Work Commission – where agreement voted on by the three employees employed at the time agreement was made –where agreement covers employees under 11 modern awards – pre-approval steps – whether Commission failed to take all reasonable steps to explain the agreement – whether agreement genuinely agreed to by the employees covered by the agreement – jurisdictional error – no agreement susceptible of approval under s 186 of the Fair Work Act 2009 (Cth)

PRACTICE AND PROCEDURE – delay – where Originating Application filed over twelve months after decision of the Commission – where adequate explanation provided for the delay – where discretion not exercised to refuse relief on the basis of delay 

Legislation:

Fair Work Act 2009 (Cth) ss 3, 53, 171, 172, 173, 174, 176, 180, 185, 186, 187, 188, 193, 417

Federal Court of Australia Act 1976 (Cth) s 16

Workplace Relations Act1996 (Cth) ss 170LT, 170XA, 327

Fair Work Regulations2009 (Cth) reg 2.06A

Cases cited:

Anderson v Director-General of the Department of Environmental and Climate Change [2008] NSWCA 337, (2008) 251 ALR 633

Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v ALS Industrial Australia Pty Ltd [2015] FCAFC 123, (2015) 235 FCR 305

Carrascalao v Minister for Immigration and Border Protection [2017] FCAFC 107

Commissioner of Taxation v Pham [2013] FCA 579, (2013) 134 ALD 534

Commonwealth Bank of Australia v Finance Sector Union of Australia [2007] FCAFC 18, (2007) 157 FCR 329

Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission [1999] FCA 847, (1999) 93 FCR 317

Construction, Forestry, Mining and Energy Union v John Holland Pty Ltd [2015] FCAFC 16, (2015) 228 FCR 297

Construction, Forestry, Mining and Energy Union v Pilbara Iron Company (Services) Pty Ltd [2011] FCAFC 91, (2011) 194 FCR 269

Construction, Forestry, Mining and Energy Union v Wagstaff Piling Pty Ltd [2012] FCAFC 87, (2012) 203 FCR 371

Cook v Australian Postal Corporation [2017] FCA 509

John Holland Pty Ltd v Construction, Forestry, Mining and Energy Union [2014] FCA 286, (2014) 241 IR 439

Maritime Union of Australia v MMA Offshore Logistics Pty Ltd [2017] FWCFB 660, (2017) 263 IR 81

Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30, (2001) 206 CLR 323

Pilbara Infrastructure Pty Ltd v Australian Competition Tribunal [2012] HCA 36, (2012) 246 CLR 379

Re KCL Industries Pty Ltd [2016] FWCFB 3048, (2016) 257 IR 266

Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30, (2003) 198 ALR 59

Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449

Teys Australia Beenleigh Pty Ltd v Australasian…

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Details
Case
[2017] FCA 1266
Decision Date

CaseChat Overview and Summary

In the Federal Court of Australia, the Construction, Forestry, Mining and Energy Union brought an action against One Key Workforce Pty Ltd, seeking to set aside the approval of an enterprise agreement by the Fair Work Commission. The dispute centered on the procedural fairness and substantive validity of the enterprise agreement, which was voted on by the three employees employed at the time the agreement was made. The agreement covered employees under 11 modern awards and was approved by the Commission on 30 October 2015. The Union argued that the Commission had failed to take all reasonable steps to explain the agreement to the employees and that the agreement was not genuinely agreed to by the employees covered by it. The Union further contended that the agreement was not susceptible of approval under section 186 of the Fair Work Act 2009 (Cth).

The court considered the procedural fairness of the approval process and the substantive validity of the agreement. It noted that the Fair Work Commission had engaged with the parties and provided detailed feedback on potential issues with the agreement. However, the court found that the Commission had not taken all reasonable steps to ensure that the employees understood the implications of the agreement, particularly in relation to clauses that affected their rights under the modern awards. The court concluded that the agreement was not genuinely agreed to by the employees and that it was not susceptible of approval under the Fair Work Act. The court also considered the delay in filing the Originating Application but found that the delay was adequately explained and that the discretion should not be exercised to refuse relief.

The Federal Court set aside the approval granted by the Fair Work Commission and concluded that the enterprise agreement was not an agreement that was susceptible of approval under section 186 of the Fair Work Act. The parties were ordered to bring in Short Minutes of Orders to give effect to these reasons within fourteen days. This case highlights the importance of procedural fairness in the approval of enterprise agreements and the need for the Fair Work Commission to ensure that employees fully understand the terms of any agreement before it is approved.

Orders

Orders of the court

1. The parties are to bring in Short Minutes of Orders to give effect to these reasons within fourteen days.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

It is nevertheless considered that, on balance, the discretion should not be exercised to refuse relief.CONCLUSIONS The approval granted by the Commission on 30 October 2015 should be set aside. The Agreement, it is concluded, is not an agreement which was susceptible of approval pursuant to s 186 of the Fair Work Act. The parties are to bring in Short Minutes of Orders to give effect to these reasons within fourteen days.THE ORDER OF THE COURT IS: The parties are to bring in Short Minutes of Orders to give effect to these reasons within fourteen days.

Ratio Decidendi

Legal Principle Established

A further email was sent by the Commission on 13 October 2015 which stated in part as follows (without alteration):I write in relation to the above matter and refer to your email dated 30 September 2015 and the email from my colleague dated 18 September 2015.Commissioner Roe notes your response, however, has raised the following issues that could be potentially disadvantageous on employees, noting that the agreement incorporates the Awards listed in clause 2.1(b).Operation of clause 9.2 and 12.5 conjunctively:Clause 9.1 provides that employees shall be engaged on assignment as either a full time, part time or casual employee.Further, clause 9.2 provides that full time or part time employees can be engaged on a permanent, fixed term, maximum term or fixed task basis.Clause 12.5 provides that when an employee is on assignment the client can change a nominated shift pattern or roster cycle. Each time a cycle is changed an employee’s assignment will be taken to end.The Commissioner is concerned that clause 12.5 is inconsistent with the employment categories under the agreement.Clause 11 Casual ConversionClause 11 removes an employee’s right to casual conversion, where it is an entitlement under any of the Modern awards listed in clause 2.1(b).The removal of the right to casual conversion is compensated by an additional loading of 1%.The Commissioner is not satisfied that the additional 1% is sufficient compensation for the removal of the right to casual conversion.Clause 12.3 Maximum Hours of WorkClause 12.3 of the agreement provides that an employee can work a maximum of 12 hours per day.The Commissioner notes that the incorporated awards provide numerous different mechanisms of setting the maximum working hours for employees.Thus, the Commissioner is concerned with clause 12.3 providing that all employees can be required to work a maximum of 12 hours on any day, irrespective of which award would cover the work that they are performing.Clause 9.4: Abandonment of employmentClause 9.4 provides that where an employee is absent from work for a continuous period exceeding two working days, employment is deemed to be abandoned. The Commissioner notes that the abandonment of employment is possible at common law. Further in relation to the incorporated awards under the agreement, it is available under only the Manufacturing and Associated Industries and Occupations Award 2010.The Commissioner is concerned that this clause does not provide the opportunity for employees to explain their absence. This restricts an employee’s opportunity to prevent their employment being considered abandoned by the employer.The Commissioner also notes that the Manufacturing and Associated Industries and Occupations Award 2010 requires an employee to be absent for a period exceeding three working days to activate the abandonment provisions.Clause 6: Policies and ProceduresClause 6 requires employees to comply with specific client policies and procedures applicable to their assignment of work.The Commissioner is concerned that the terms of employment can thus be changed to incorporate provisions that could not be assessed by the Fair Work Commission, whilst the agreement is being considered for approval.The Commissioner is willing to consider any undertakings in relation to any of the above matters or any of the matters previously raised in correspondence. Alternatively, you may wish to provide submissions in relation to the additional matters raised.If you do wish to provide any undertakings please do so in a written and signed format and return it via email to the address provided below. Any undertakings should be signed by the employer. Furthermore, the Commissioner asks that you seek the views of all bargaining representation, if any, regarding any proposed undertakings. Any objections to the proposed undertakings should be raised with the Commission prior to the approval of the agreement.The Commissioner has asked that you provide any undertakings or submissions by close of business on Friday, 16 October 2015. That email provoked a response by the solicitors acting for One Key Workforce on 16 October 2015. That response was a letter which addressed in such detail as was then thought appropriate the matters canvassed in the email from the Commission under the headings:·“Operation of clauses 9.2 and 12.5 conjunctively”·“Clause 11 – casual conversion”·“Clause 12.3 – maximum hours of work”·“Clause 9.4 – abandonment of employment”·“Clause 6 – policies and procedures”Also forwarded to the Commission on 16 October 2015 was an undertaking that RECS would “not apply clause 9.4 of the RECS (Qld) Pty Ltd Enterprise Agreement 2015 as a term of the Agreement” and that cl 12.3 of the Agreement would “be read subject to clauses 22.3 and 23.3 of the Road Transport and Distribution Award 2010”.