D & D Traffic Management Pty Ltd

[2016] FWCA 6184

[2016] FWCA 6184

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.210 - Application for approval of a variation of an enterprise agreement

D & D Traffic Management Pty Ltd
(AG2016/2677)

D&D TRAFFIC MANAGEMENT & OTHER WORK - ENTERPRISE AGREEMENT 2015

Building, metal and civil construction industries
SENIOR DEPUTY PRESIDENT DRAKE	SYDNEY, 8 SEPTEMBER 2016

Application for variation of the D&D Traffic Management & Other Work - Enterprise Agreement 2015.

[1] This decision arises from an application by D & D Traffic Management Pty Ltd (D & D) to vary an enterprise agreement pursuant to s.210 of the Fair Work Act 2009 (the Act). The agreement sought to be varied is the D & D Traffic Management and Other Work - Enterprise Agreement 2015 (the Agreement). 1

[2] Section 210 of the Act is set out below:

Application for approval

(1)  If a variation of an enterprise agreement has been made, a person covered by the agreement must apply to the FWC for approval of the variation.
Material to accompany the application

(2)  The application must be accompanied by:

(a)  a signed copy of the variation; and
(b)  a copy of the agreement as proposed to be varied; and
(c)  any declarations that are required by the procedural rules to accompany the application.

When the application must be made

(3)  The application must be made:

(a)  within 14 days after the variation is made; or
(b)  if in all the circumstances the FWC considers it fair to extend that period—within such further period as the FWC allows.

Signature requirements

(4)  The regulations may prescribe requirements relating to the signing of variations of enterprise agreements.

[3] In its application D & D seeks to vary the geographic application of the Agreement from its present discrete application in New South Wales and the Australian Capital Territory to a national application.

[4] I listed this application for hearing on 14 June 2016. The Australian Workers’ Union (AWU) was represented by Mr Crawford. Mr Crawford made oral submissions. He tendered a newsletter issued by the D & D group 2 and provided a written Outline of Submissions on 17 June 2016.

[5] D & D was represented by Mr Murray from the Australian Industry Group (AiG). Mr Murray tendered D & D’s form F23A, 3 a Summons to Produce Documents issued by the AWU and the documents produced in answer to that summons4 and on 25 July 2016, following receipt of the AWU’s Outline of Submissions, he provided Submissions in Reply.

[6] The AWU’s submission that the Fair Work Commission does not have jurisdiction to approve the variation was as follows.

“Statutory provisions

4. Section 211 (1) (a) of the Act relevantly states the Commission must approve an application to vary an agreement if it is satisfied that “had an application been made under section 185 for the approval of the agreement as proposed to be varied, the FWC would have been required to approve the agreement under section 186”.

5. Two of the jurisdictional pre-requisites to the approval of an agreement under s 186 of the Act are:

- Satisfaction that the agreement “has been genuinely agreed to by the employees covered by the agreement” (s 186 (2) (a)); and

- Satisfaction that the “group of employees covered by the agreement was fairly chosen” (s 186 (3)).

6. Section 211 (3) (e) of the Act states the reference in s 186 (2) of the Act to the “employees covered by the agreement” in relation to the variation of an agreement is taken to be a reference to the “affected employees for the variation”.

7. The definition of “affected employees” for the variation is found in s 207 (2) of the Act. For present purposes, the affected employees for the variation are:

- The employees employed at the time who are covered by the agreement; and

- The employees employed at the time who will be covered by the agreement if the variation is approved by the FWC.

8. The AWU accepts that these groups are the same in relation to this application because all of the employees employed at the time of the vote for the variation were already covered by the agreement.

Genuinely agreed

9. Section 188 of the Act prescribes when an agreement or variation has been genuinely agreed to by the employees.

10. However, s 211 (3) (hb) of the Act modifies the operation of s 188 in relation to a variation of an agreement by requiring that s 188 (a) (ii) be omitted.

11. The effect of this omission is that a notice of representational rights does not have to be issued to the affected employees in relation to a variation and hence the general limitation that the vote cannot occur until at least 21 days after the last notice of representational rights has been issued does not apply.

12. This means the Commission must only be satisfied in relation to the matters specified in s 188 (a) (i), (b) and (c) in relation to an application to vary an agreement.

The correct approach to s 188 of the Act

13. In KCl Industries Pty Ltd a Full Bench of the Commission very recently confirmed that there are three separate requirements that must be satisfied for a finding that there has been genuine agreement under s186 (2) (a) of the Act.

14. The Full Bench in KCL Industries Pty Ltd agreed with and adopted the analysis of the Full Bench majority in Ostwald 5 to the effect that the Commission must be satisfied of compliance with the procedural steps in s 188 (a) and (b) and also that there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees as per s 188 (c).

15. The Full Bench in KCL Industries Pty Ltd then also agreed with and adopted the analysis of Deputy President Asbury from Central Queensland Services Pty Ltd 6regarding s 188 (c) of the Act.7

Section 188 (c) – “moral authority”

16. Mr Robert Cazzolli accepted under cross-examination that the variation would have no effects whatsoever on the terms and conditions of employment for the employees who voted. 8

17. The KCL Industries Pty Ltd Full Bench recently determined the following in relation to employees voting for an enterprise agreement which would not impact upon their own terms and conditions of employment:

In summary, the position is that the Agreement covers a wide range of classifications most of which have no relevance to the work performed by KCL’s three existing employees, encompasses industries in which KCL does not currently operate, and contains rates of pay which, even in respect of those classifications relevant to the current employees, are not to apply to those employees. In those circumstances we do not consider that any authenticity could attach to the agreement of the two employees to the rates and conditions in the Agreement. The employees had no “stake” in the Agreement’s rates of pay, since they were assured that their existing, higher rates of pay would remain in place (subject to “operational needs and satisfactory performance”), and they could not have given informed consent in relation to occupation and industries in which they did not work and presumably had no experience. 9

18. Given Mr Cazzolli’s admission, we submit the factual context for this variation is identical to that considered by the Full Bench in KCL Industries Pty Ltd. The employees who voted for this variation had absolutely nothing at stake.

19. Further, consistent with the issues raised by the KCL Industries Pty Ltd Full Bench at [37], the employees who voted to vary clause 6 of the Agreement are unlikely to have had any idea about the licenses and qualifications that may be relevant outside of NSW and the ACT and no need to be concerned about the various long service leave regimes across Australia.

20. On this basis, the Commission should follow 10 the KCL Industries Pty Ltd Full Bench decision and find that there are other reasonable grounds for believing that the agreement has not been genuinely agreed by the employees.

21. If the Commission is not satisfied in accordance with s 188 (c) it follows there is no genuine agreement under s 186 (2) (a) and the application must be dismissed.

Section 188 (c) – failure to recognise the AWU

22. Mr Cazzolli accepted the following under cross-examination:

- D & D Traffic were aware the AWU had members amongst its employees 11;

- He has met the relevant AWU Organiser for D & D Traffic on a “number of occasions” 12;

- The AWU is covered by the Agreement 13; and

- D & D Traffic took no steps to communicate directly with the AWU about the variation 14.

23. Deputy President Bartel stated the following in relation to an employer not recognising a union during a variation process in Samaras 15:

Section 228(1)(f) of the Act states that recognising and bargaining with other bargaining representatives for the agreement is a good faith bargaining requirement. While there is no apparent provision for the appointment of bargaining representatives in the negotiation of a proposed variation of an agreement, having regard to the objects of the Act appropriate recognition of representatives appointed by each of the parties will be relevant to the assessment of the genuine agreement of employees.

24. On this basis, the failure of D & D Traffic to take any steps to communicate directly with the AWU despite being well aware that it had members covered by the Agreement is another reasonable ground for the Commission to believe the variation has not been genuinely agreed to by the employees.

Section 188 (c) – other factors

25. The following other evidence should cause the Commission to be particularly concerned about whether the variation has been genuinely agreed to by the employees:

- Employees had to attend the vote in their own time and were not paid for attending the meeting on 17 June 2016 16;

- It is likely some employees had to travel around 100 kilometres in their own time to attend the meeting 17;

- Most of the workforce is casual and have no guarantee of ongoing work 18; and

- Mr Cazzolli and another senior manager, Geoff Hogbin, were both present when the vote occurred via a show of hands 19.

26. We submit, without making any specific allegation against D & D Traffic, that as a general matter of common sense a casual employee is likely to feel somewhat reluctant to vote against a proposal being put forward by their employer when the vote occurs via a show of hands in the presence of management.

27. We also submit it is not good industrial practice to require employees to vote upon an agreement outside of working hours particularly if they are required to travel significant distances to attend the vote. It is almost inevitable that the voting turnout will be negatively affected in these circumstances.

28. These matters provide the Commission with reasonable grounds for believing the agreement has not been genuinely agreed to by the employees and hence it cannot be satisfied in accordance with s 188 (c) of the Act.

Section 188 (a) (i) of the Act

29. In this case, D & D Traffic have failed to comply with the pre-approval step specified in s 180 (3) (b) of the Act because they did not notify employees of the “voting method that will be used” by the start of the access period for the variation.

30. It is clear from the Memorandum dated 8 March 2016 which is Exhibit “D & D 2” in these proceedings and the evidence of Mr Cazzolli on 14 June 2016 that the voting method for the variation was not determined until immediately prior to the vote on 17 March 2016.

31. The approach adopted by D & D Traffic was apparently to use a show of hands during the meeting on 17 March 2016 to determine that the voting method will be a show of hands. 20

32. The practical effect of this approach is that employees did not know whether the vote for the variation would be undertaken via a ballot or show of hands until immediately before they voted on 17 March 2016.

33. Aside from the obvious technical point that this approach is not permitted by s 180 (3) of the Act, the procedure is problematic on a practical level because only 67 of the 140 employees eligible to vote for the variation attended the meeting on 17 March 2016.

34. The 73 employees who did not attend the meeting were never informed about which method of voting would be used.

35. Further, the Commission could not possibly be satisfied on the evidence that the uncertainty about the voting method did not contribute to the low attendance numbers at the meeting on 17 March 2016.

36. It is entirely plausible that employees may have been more inclined to attend the meeting and to hence vote regarding the variation if they knew the voting method would be a secret ballot as opposed to a show of hands.

37. Whilst we acknowledge it may be possible under s 180 (3) (b) of the Act to have multiple methods of voting given the operation of s 23 (b) of the Acts Interpretation Act 1901, employees must still be notified of the method/s that will be used before the start of the access period.

38. In this case, D & D Traffic only notified employees of two methods that may be used. This does not satisfy s 180 (3) of the Act.

39. The consequence of failing to comply with s 180 (3) of the Act is that s 188 (a) (i) of the Act is not satisfied. This in turns means the Commission cannot be satisfied there was genuine agreement as required by s 186 (2) (a) of the Act.

Section 186 (3) – fairly chosen

40. Exhibit “AWU 1” in these proceedings is a document from the D & D Traffic website regarding its acquisition of Able Traffic Services Pty Ltd.

41. Mr Cazzolli confirmed in cross-examination that around 40 employees of Able Traffic Services Pty Ltd transferred to D & D Traffic on 29 April 2016. 21

42. Mr Cazzolli effectively confirmed there is no transferable instrument which covers the former Able Traffic Services Pty Ltd employees because they are currently being paid under an award. 22 Hence if the variation is approved the Agreement will immediately apply to these employees.23

43. Mr Cazzolli also admitted that he was aware that Able Traffic Services Pty Ltd would be acquired from around December 2015 or January 2016. 24

44. Therefore, the following timeline reflects what Mr Cazzolli agreed in cross-examination:

- December 2015/January 2016: D & D Traffic are aware they will purchase Able Traffic Services Pty Ltd;

- 7 and 8 March 2016: D & D Traffic notify employees they are seeking to vary the Agreement so it can be applied Nationally with the vote to occur on 17 March 2016; and

- 28 April 2016: Around 40 Able Traffic Services Pty Ltd employees transfer to commence working for D & D Traffic.

45. In these circumstances, it is an inescapable conclusion that D & D Traffic made a conscious decision to try and vary the Agreement before the Able Traffic Services Pty Ltd employees commenced employment with them.

46. Mr Cazzolli accepted that the effect of this approach is that the Able Traffic Pty Ltd employees did not get an opportunity to vote in relation to the variation 25 and that if the variation is approved these employees have lost the right to collectively bargain until 2019.26

47. In making this submission, we accept there is no impediment to bargaining during the nominal term of the Agreement but the effect of s 58 of the Act is that a newly negotiated agreement would only apply when the Agreement nominally expires.

48. We note this factual context may be another relevant factor in terms of assessing whether the agreement of the D & D Traffic employees was authentic and genuine as required by s 186 (2) (a) of the Act.

49. In Cimeco 27a Full Bench of the Commission headed by the President, Justice Ross, stated the following in relation to the fairly chosen requirement in s 186 (3) of the Act (emphasis added):

[21] It is not appropriate to seek to exhaustively identify what might be the other relevant considerations. They will vary from case to case and will need to be demonstrated to the satisfaction of the tribunal. The word ‘fairly’ suggests that the selection of the group was not arbitrary or discriminatory. For example, selection based upon employee characteristics such as date of employment, age or gender would be unlikely to be fair. Similarly, selection based on criteria which would have the effect of undermining collective bargaining or other legislative objectives would also be unlikely to be fair. It is also appropriate to have regard to the interests of the employer, such as enhancing productivity, and the interests of employees in determining whether the group of employees was fairly chosen. In this regard, it is not only the interests of the employees covered by the agreement that are relevant; the interests of those employees who are excluded from the coverage of the agreement are also relevant. We note that there is a suggestion to the contrary in the oral submissions put on behalf of Cimeco when counsel submitted that:

“It was an erroneous approach to introduce the identification of the persons who were relevantly employed at the time of the making of the agreement for the purposes of testing the group chosen.” 12

[22] To the extent that it is suggested that the interests of the excluded employees are irrelevant we reject that submission. In evaluating whether the group to be covered by the agreement has been fairly chosen it is entirely appropriate to have regard to the consequences of that choice, that is, which employees have been excluded from the agreement.

50. We submit the decision by D & D Traffic in March 2016 to try and vary the scope of the Agreement so it could be applied Nationally was not fair because it was fully aware the effect of the variation would be that around 40 employees of Able Traffic Services Pty Ltd would lose the ability to collectively bargain until 2019.

51. It was entirely practicable and reasonable for D & D Traffic to put the variation to a vote after 29 April 2016 so the Able Traffic Services Pty Ltd employees could have a vote on their employment conditions.

52. It is important that the Commission confirms this is the correct approach for employers in comparable circumstances as opposed to getting employees who have nothing at stake whatsoever to vary an agreement to the effect that other people lose their right to collectively bargain (or at least to vote) in relation to their conditions of employment.”

Conclusion

[7] The AWU challenges D & D’s compliance with the procedural requirements of the Act. It submits that D & D has breached s.180(3) of the Act in that the notice of the vote provided to employees should have specified with particularity the method of voting which would be used.

[8] In the notice provided to employees the method of voting was described as follows:

“Vote will be by a show of hands or ballot, to be decided at meeting.”

[9] Mr Murray submitted that the voting process was as follows:

“– The vote would take place by attendance at a meeting on 17 March at Toongabbie
– those in attendance would vote by either show of hands or ballot
– the choice of whether to vote by show of hands or ballot would be made (by those in attendance) at the meeting.”

[10] I am satisfied that providing alternative methods which could be determined by the employees in attendance sufficiently specifies the method of voting. The method of voting that would apply was the method of voting selected by employees. I am satisfied that the notice specified the method of voting in compliance with s.180(3) of the Act.

[11] The AWU submitted that employees may have been more inclined to attend if there was to be a secret ballot. There was no evidence of any disinclination to attend. In any event, D & D could have always dictated a vote by a show of hands if it had wished to do so. I am also satisfied that, given the casual composition of the workforce at D & D, the attendance level was what could be reasonably expected.

[12] I am satisfied that the employees were given a reasonable opportunity to vote.

[13] I am not satisfied that the AWU, as a representative of employees, was not recognised in an appropriate fashion or kept informed regarding the arrangements for the vote on the variation.

[14] I have considered the submissions of the AWU regarding the application of the Full Bench in KCL. I am not persuaded that the AWU’s reliance on that decision has any application to the circumstances before me.

[15] The employees with D & D at the time of the vote on the variation performed the same work in the same industry as will be performed by employees employed by D & D to whom the Agreement will apply when varied.

[16] I have considered Cimeco. I do not consider that that Full Bench decision has any application in the circumstances of this variation. D & D have an Agreement in force which has been approved by the Fair Work Commission with undertakings. It wishes to extend its operation beyond New South Wales and the ACT. Amending the Agreement to enable it to apply to any new enterprise it may acquire in the future when pursuing its business expansion agenda is not prohibited by the Act.

[17] I am satisfied that the application to vary the agreement was genuinely agreed to by the employees covered by the Agreement and that the group of employees who voted was fairly chosen.

[18] I am satisfied that if an application was made for approval of an agreement incorporating the proposed variation the Fair Work Commission would be required to approve that agreement pursuant to s.186 (with the undertakings provided when the Agreement was approved).

[19] Absent any technical defects in the application for variation, or any failure to meet the statutory requirements for approval, there is no reason for me to refuse this variation and indeed, I am obliged to do so. I will approve the variation.

SENIOR DEPUTY PRESIDENT

 1   AG2016/2677

 2   Exhibit AWU 1

 3   Exhibit D & D 1

 4   Exhibit D & D 2

 5   Ostwald Bros Pty Ltd v Construction, Forestry, Mining and Energy Union [2012] FWAFB 9512

 6   Central Queensland Services Pty Ltd [2015] FWC 1554

 7   KCL Industries Pty Ltd [2016] FWCFB 3048 at [30]

 8   See PN238 and PN239 of the Transcript

 9   KCL Industries Pty Ltd [2016] FWCFB 3048 at [36]

 10   See Cetin v Ripon Pty Ltd (T/as Parkview Hotel) (2003) 127 IR 205 at [48] and 4 yearly Review of Modern Awards: Preliminary Jurisdictional Issues [2014] FWCFB 1788 at [25] to [27]

 11   PN69 of the Transcript

 12   PN65 to PN69 of the Transcript

 13   PN79 of the Transcript

 14   PN92 of the Transcript

 15   M & I Samaras No 1 Pty Ltd & M & I Samaras No 2 Pty Ltd & M & I Samaras No 3 Pty Ltd T/A Samaras Structural Engineers re Samaras Structural Engineers & CFMEU Enterprise Agreement 2010 [2012] FWA 751 at [40]

 16   PN107 of the Transcript

 17   PN114 to PN122 of the Transcript

 18   PN154 and PN155 of the Transcript

 19   PN134 and PN135 of the Transcript

 20   See PN129 to PN135 of the Transcript

 21   PN217 and PN218 of the Transcript

 22   PN199 of the Transcript

 23   PN223 of the Transcript

 24   PN196 of the Transcript

 25   PN236 of the Transcript

 26   PN231 to PN235 of the Transcript

 27   Cimeco Pty Ltd v Construction, Forestry, Mining and Energy Union and others [2012] FWAFB 2206 at [21] and [22]

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