DDP Electrical Services Pty Ltd T/A DDP Electrical Services

[2019] FWCA 4999

[2019] FWCA 4999

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement

DDP Electrical Services Pty Ltd T/A DDP Electrical Services
(AG2018/5112)

DDP ELECTRICAL SERVICES PTY LTD SYDNEY CONSTRUCTION AGREEMENT 2018

Electrical contracting industry
DEPUTY PRESIDENT CROSS	SYDNEY, 20 AUGUST 2019

Application for approval of the DDP Electrical Services Pty Ltd Sydney Construction Enterprise Agreement 2018.

BACKGROUND

[1] An application has been made for the approval of an enterprise agreement known as the DDP Electrical Services Pty Ltd Sydney Construction Enterprise Agreement 2018 (“the Agreement”). The application was made by DDP Electrical Services Pty Ltd (“the Applicant”) pursuant to s.185 of the Fair Work Act 2009 (Cth) (“the Act”). The Agreement is a single-enterprise agreement.

[2] The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (“the CEPU”) filed a Form F18 in the matter and was listed as a union bargaining representative pursuant to s.176(1)(b) of the Act. It is noted that the CEPU does not support the approval of the Agreement in the approval process.

[3] On 22 March, 2019, I convened a telephone Directions Hearing with the Applicant and the CEPU to confirm the manner in which Outlines of Submissions addressing the issues with the Application and how they may impact the Better Off Overall Test were to be filed, together with evidentiary materials that the parties intended to rely on in support of their position. The relevant modern award is the Electrical, Electronic and Communications Contracting Award 2010 (“the Award”).

[4] Pursuant to those Directions, the following documents were filed:

a. The CEPU filed an outline of Submissions on 29 March, 2019 (“the CEPU Submission”), together with a witness statement of Mr Antony Stegic, Organiser, dated 27 March, 2019.

b. The Applicant filed outline of Submissions (“the Applicant’s Submission”), together with a witness statement of Mr Darren Stevens, Director of DDP, of same date.

c. The CEPU filed reply Submissions on 29 March, 2019 (“the CEPU Reply Submission”).

[5] On 22 March, 2019, at the Hearing when the Directions for the filing and service of Submissions and evidentiary materials were made, it was agreed that I should determine the application on the papers without a Hearing. There has since been no suggestion that that was not the appropriate course.

THE OUTSTANDING ISSUES

[6] In the CEPU Submission,the Union submitted that the FWC should not approve the Agreement as it could not be satisfied that:

a. The Agreement has been genuinely agreed to by the employees covered by the Agreement;

b. The terms of the Agreement do not contravene s.55 of the Act; and

c. The Agreement passes the Better Off Overall Test (“BOOT”).

[7] In the CEPU Reply Submission, a further submission asserting the Applicant had not bargained in good faith was advanced.

(a) Genuine Agreement

[8] In the CEPU Submission, the CEPU outlined five bases for their submission that there was no genuine agreement. They were:

a. The Applicant had failed to take all reasonable steps to notify employees of the time and place for which voting was to occur and the voting method;

b. The Applicant had failed to take all reasonable steps to explain the terms of the Agreement to affected employees;

c. Material supplied and the explanation provided;

d. The Applicant failed to identify deficiencies contained within the Agreement; and

e. The Applicant failed to take into account the circumstances and needs of the employees.

[9] The submissions of the CEPU as to genuine agreement were directed at first, in the CEPU Submission, to the information contained in the Form F17 of the Applicant, and later, in the CEPU Reply Submission, to the Form 17 as augmented by the Statement of Mr Stevens and the Applicant’s Submission. The basis of the submissions was solely directed to the sufficiency of the material put by the Applicant and its contents.

[10] While the CEPU went into evidence in filing the Statement of Mr Stegic, the totality of Mr Stegic’s Statement was as follows:

“I, Antony Stegic, of level 5, 370 Pitt Street in the state of New South Wales, organiser, states as follows:

Background

1. I am an organiser employed by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (the CEPU).

2. As an organiser for the CEPU, I represent the industrial interests of electrical workers engaged in the construction industry.

3. The CEPU has members currently employed by DDP Electrical Services Pty Ltd T/A DDP Electrical Services (DDP Electrical). I am responsible for dealing with the industrial issues that arise for those members.

Agreement

4. The scope of the proposed Agreement covers electrical workers who perform work in the construction industry in the County of Cumberland.

5. The CEPU was not involved in the agreement making process of the Agreement.

6. The CEPU had members employed by DDP Electrical at the time the Agreement was made.

7. The CEPU still has members currently employed by DDP Electrical who are covered by the DDP Electrical Services Pty Ltd Sydney Construction Enterprise Agreement 2018 (the Agreement).” (Emphasis added).

[11] In light of Mr Stegic’s evidence, it is clear that the CEPU would have readily available members who could provide statements contradicting the evidence and submissions of the Applicant, if such contradiction were available. No such statements were received. As such, the best, and only, evidence before the Commission was the Form F17 Statutory Declaration and the Statement of Mr Stevens.

[12] The Form F17 Statutory Declaration, also completed by Mr Stevens, stated variously:

“Each Employee was provided with a copy of the proposed Agreement [on] 28 August 2018 by email and in person. The copy of the Agreement to be voted on was made available to all employees as well.”

“On 28 August each employee received a “How and When for Approval Notice” which outlined the time and place of the vote and the method of the vote. The notice was provided by email and provided to all employees who were covered be the Agreement.”

“On 5 September 2018, a meeting was conducted at 1/11 Stoddard Road Prospect [at] 1.30 pm for the purpose of explaining the terms of the Enterprise Agreement. An opportunity was provided for each employee to as questions in relation to any terms of the agreement.”

“Each employee was given the opportunity to express whether they had any special needs which were required to be accommodated for, it was acknowledged in the ‘How and When for Approval’ document that any employees under the age of 18 would be entitled to have a parent or guardian present. All employees however are fluent in written and spoken English and did not require special needs to be accommodated for.”

[13] It was a material fact in the matter that a previous Agreement had been made on or about 4 April, 2018, however the application for approval of that agreement was apparently withdrawn as the Notice of Employee Representational Rights was defective. The Applicant relied upon the facts surrounding that withdrawn agreement to assert employee familiarity with the subject matter of the Agreement, and seemingly that prior explanation had been given as to the nature of changes from the existing agreement in place prior to the meeting on 5 September, 2018. Mr Stevens’ evidence regarding that meeting was the following:

“On 4 April 2018, a discussion meeting was held to explain the terms of the agreement. I explained to the employees that this Agreement was largely modelled on the Union based agreement which had covered DDP for approximately 15 years. Where there were changes from the (sic.) these were outlined in a summary document. This document is attached to this statement and marked "B". Where there were changes between the current EBA and the proposed EBA, I read out the clause, explained the nature of the change and clarified the clause in answer to any questions. During the meeting, each employee had a copy of the agreement during the discussion. When I read out and explained the changes to the EBA, the employees followed by going to the relevant clause.” 1

[14] The CEPU did not take issue that explanation that occurred in the meeting on 4 April, 2018, and the provision of Annexure B, had related to a previous abandoned agreement. Regarding that evidence, the CEPU submitted:

“As evidenced in the Applicant’s submissions, in particular attachment B of Mr Darren Stevens’ Statement, employees were provided with a summary document, which only outlines the clauses in the Agreement that were changing from the previous 2012 Agreement. The Applicant’s document does not provide an explanation as to the effects of these changes on employees’ current terms and conditions.” 2

[15] The issue taken by the CEPU was not whether a comparison of clauses in the Agreement occurred, but that the point of comparison was wrong. That submission, however, is contrary to the evidence. Mr Stevens’ unchallenged evidence was:

“The agreement which currently applies is the DDP Electrical Services Pty Ltd Union Enterprise Agreement 2012.” 3

[16] The CEPU submitted that the Applicant had failed to substantiate that it had taken all reasonable steps to notify the employees of the time and place at which voting was to occur and the voting method, because failed to take additional steps to confirm with the employees as to whether they had received the relevant material. I do not consider that additional step is necessary.

[17] The CEPU submitted that the Applicant had failed to take all reasonable steps to explain the terms of the Agreement to employees by relying on the Applicant’s response to Part 2.4 of the Form F17 which states that employees were only provided with a copy of the Agreement. The CEPU further relied on the Full Court Decision of One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union (“One Key”) 4, and submitted that “a bare statement by an employer that an explanation has been given is an inadequate foundation upon which to reach a state of satisfaction”5.

[18] I do not accept that it is appropriate to characterise the Applicant’s explanation to its employees as a bare statement. Using a comparison document, Mr Stevens read out each clause where there were changes between the 2012 Agreement and the Agreement, and explained the nature of the change. He also clarified clauses in answer to any questions.

[19] I am also satisfied that further material and/or information to explain the terms and effects of the Agreement was provided, particularly by way of the document titled “How and When for Approval – Enterprise Agreements”, that less beneficial terms were identified, as they were at the Form F17 6, and that the Applicant took into account the circumstances and needs of employees7.

(b) Contravention of Section 55 of the Act

[20] The CEPU has asserted that Clause 57 of the Agreement is inconsistent with s.202(1) of the Act. The Applicant has indicated it is willing to provide an undertaking to clarify the compliance by any flexibility arrangements with s.203 of the Act. I require the provision of such undertaking, together with an undertaking as to apply the Casual Conversion Clause of the Award.

(c) BOOT Issues

[21] The CEPU raised numerous issues regarding the BOOT. The CEPU identified:

a. Clause 9(b)(iii) of the Agreement prescribes a 20% casual loading in addition to a causals base hourly rate, however, Clause 10.3(b) of the Award prescribes a casual loading of 25%;

b. Clause 12 & Schedule B wage review;

c. Hourly rates for first year apprentices;

d. Clause 15(g) of the Agreement regarding the rate of pay for those employed on continuous shift work and engaged in overtime;

e. Clause 17 of the Agreement providing than an employee may be directed to take annual leave if the employee has an accrued annual leave balance of more than eight weeks, however, Clause 28.6 of the Award provides that employees may be directed to take leave for excessive annual leave accruals, 8 weeks for employees and 10 weeks for shift workers;

f. Clause 26 of the Agreement provides that employees may be issued with a productivity allowance per hour as per the levels set out in schedule B of the Agreement, however it is provided at the sole discretion of the employer and so cannot be seen as a benefit;

g. Meal allowance being $0.79 less than the Award;

h. First aid allowance possibly being lower under the Award;

i. Tool allowance being $1.06 less under the Agreement; and

j. Certain clauses from the Award are absent from the Agreement, including Electrician’s Licence Allowance, Industry Allowance, Multi-storey Allowance, Tower Allowance, Leave to deal with Family and Domestic Violence, a Casual Conversion Clause, and Job Search Entitlements.

[22] The BOOT is not intended to operate in a manner that would see each individual entitlement in an enterprise agreement assessed against the corresponding entitlement in a modern award but intended to instead operate as a global assessment.

[23] What is required is an overall assessment, identifying terms which are more beneficial for an employee, terms which are less beneficial and an overall assessment being made as to whether an employee would be better off under the Agreement as opposed to the applicable modern award. 8

[24] Such an overall assessment in this matter results in an assessment that all employees, but for First Year Apprentices, would be better off under the Agreement. That is principally because the rates of pay are significantly higher than the Award rates.For example, Grade 1 under the Agreement is 39.89% higher than the EW1 classification under the Award, and Grade 4 under the Agreement is 40.34% higher than the EW4 classification under the Award. The hourly rate for First Year Apprentices is 2.86% less than the Award.

[25] The Agreement would pass the BOOT if the Applicant provided an undertaking to pay First Year Apprentices an hourly rate of 5% above the Award.

(d) Bargaining in Good Faith

[26] The CEPU submitted in reply that the Applicant, by distributing to its employees a letter on 15 December, 2017, that provided employees with the option to elect to have a Union or Non-Union Agreement, the Applicant purported to discourage it employees from engaging in collective bargaining for a Union Enterprise Agreement.

[27] The CEPU particularly referred to that part of the letter that opined that should the CEPU be successful in negotiating an Enterprise Agreement, that the employees would be out of a job, working in labour hire, and that the company will be closed within six months. The CEPU submitted that the Applicant’s conduct failed to meet the obligation under the Act, at s.228(1)(e) to “[refrain] from capricious or unfair conduct that undermines freedom of association or collective bargaining”.

[28] Paragraph [951] of the Explanatory Memorandum to the Fair Work Bill 2008 gave the following examples of capricious or unfair conduct by an employer which may fall within s.228(1)(e) of the Act:

“The good faith bargaining requirements are generally self-explanatory. The last requirement, ‘refraining from capricious or unfair conduct…’ is intended to cover a broad range of conduct. For example, conduct may be capricious or unfair conduct if an employer:

● fails to recognise a bargaining representative;

● does not permit an employee who is a bargaining representative to attend meetings or discuss matters relating to the terms of the proposed agreement with fellow employees;

● dismisses or engages in detrimental conduct towards an employee because the employee
is a bargaining representative or is participating in bargaining; or

● prevents an employee from appointing his or her own representative.”

[29] I do not consider the conduct of the Applicant amounted to capricious or unfair conduct. The Applicant clearly made a forceful expression of their choice of participants in the Agreement, but nonetheless they presented their employees with a choice of a union or non-union agreement. I am satisfied that that the Applicants actions have not undermined the good faith bargaining requirements of the Act.

CONCLUSION

[30] The CEPU gave notice under s.183 of the Act that they wish to be covered by the Agreement. In accordance with s.201(2) of the Act, I note that the Agreement covers CEPU.

[31] I am satisfied that, subject to the provision of the undertakings referred to in paragraphs [20] and [25] above, the relevant requirements of ss.186, 187, 188 and 190 of the Act concerning this Application for approval have been met.

[32] The Agreement is approved and, in accordance with s.54 of the Act, will operate from seven (7) days after the issuing of this approval decision. The nominal expiry date of the Agreement is20 August, 2024.

DEPUTY PRESIDENT

 1 Statement of Darren Stevens dated 12 April, 2019, at [6].

 2 CEPU Reply Submission at [16].

 3 Statement of Darren Stevens dated 12 April, 2019, at [3].

 4 [2018] FCAFC 77.

 5 Ibid, at [112].

 6   Question 3.5.

 7   Form F17 at Q. 2.7.

 8   Re Armacell Australia Pty Ltd (2010) 202 IR 38 at [41], confirmed by the High Court in Aldi v SDA [2017] HCA 53 at [92].

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