Drummond and Kindred Clothing Company Pty Ltd
[2020] FWC 2396
•6 MAY 2020
| [2020] FWC 2396 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.222 - Application for approval of a termination of an enterprise agreement
Drummond and Kindred Clothing Company Pty Ltd
(AG2019/4708)
COMMISSIONER HUNT | BRISBANE, 6 MAY 2020 |
Application for approval of a termination of an enterprise agreement – where ineligible employees voted for approval of termination – majority of eligible employees approved termination of agreement – information provided to employees by employer misleading or potentially misleading – application dismissed
[1] On 6 December 2019, Drummond and Kindred Clothing Company Pty Ltd(Drummond) made an application pursuant to s.222 of the Fair Work Act 2009 (the Act) to terminate the Drummond & Kindred Employees Enterprise Agreement 2012 (the Agreement). The Agreement commenced from 20 July 2012, with a nominal expiry date of 1 July 2014.
[2] The application was supported by a Form F24A statutory declaration made by Ms Natalie Cumner, HR Coordinator for Drummond. Ms Cumner declared, amongst other things, that the 42 employees covered by the Agreement were notified of the time and place of the vote and that of the 38 votes cast, 26 employees approved the termination of the Agreement.
[3] Clause 1.2(c) of the Agreement provides that the Textile, Clothing and Footwear Union of Australia (TCFUA) is covered by the Agreement. The TCFUA is now part of the Construction, Forestry, Maritime, Mining and Energy Union’s (CFMMEU) Manufacturing Division.
[4] On 11 December 2019, I sought the views of the CFMMEU. On 16 December 2019, the CFMMEU advised my chambers that it opposed the application based on a range of concerns regarding the process undertaken by Drummond. These included:
• certain representations made by Drummond representatives to affected employees about the process;
• that some employees did not understand the full consequences of a termination of the Agreement; and
• which employees are covered by the Agreement and were therefore eligible to vote. 1
[5] Drummond did not wish for a conference to be convened in this matter. I issued directions for the filing of material and listed the matter for hearing on 17 February 2020. Mr Troy Spence of Counsel was granted leave to appear for Drummond, instructed by IRIQ Law Pty Ltd. Ms Vivienne Wiles, Senior National Industrial Officer and Co-ordinator appeared for the CFMMEU. Ms Cumner gave evidence by telephone and was cross-examined.
Relevant legislation
[6] The relevant sections for consideration are ss.219 to 223 of the Act, produced below:
“Section 219 Employers and employees may agree to terminate an enterprise agreement
Termination by employers and employees
219(1) The following may jointly agree to terminate an enterprise agreement:
(a) if the agreement covers a single employer – the employer and the employees covered by the agreement; or
(b) if the agreement covers 2 or more employers – all of the employers and the employees covered by the agreement.
Termination has no effect unless approved by the FWC
219(2) A termination of an enterprise agreement has no effect unless it is approved by the FWC under section 223.
…..
Section 220 Employers may request employees to approve a proposed termination of an enterprise agreement
220(1) An employer covered by an enterprise agreement may request the employees covered by the agreement to approve a proposed termination of the agreement by voting for it.
220(2) Before making the request, the employer must:
(a) take all reasonable steps to notify the employees of the following:
(i) the time and place at which the vote will occur;
(ii) the voting method that will be used; and
(b) give the employees a reasonable opportunity to decide whether they want to approve the proposed termination.
220(3) Without limiting subsection (1), the employer may request that the employees vote by ballot or by an electronic method.
Section 221 When termination of an enterprise agreement is agreed to
Single-enterprise agreement
221(1) If the employees of an employer, or each employer, covered by a single-enterprise agreement have been asked to approve a proposed termination of the agreement under subsection 220(1), the termination is agreed to when a majority of the employees who cast a valid vote approve the termination.
…..
Section 222 Application for approval
Application for approval
222(1) If a termination of an enterprise agreement has been agreed to, a person covered by the agreement must apply to the FWC for approval of the termination.
Material to accompany the application
222(2) The application must be accompanied by any declarations that are required by the procedural rules to accompany the application.
When the application must be made
222(3) The application must be made:
(a) within 14 days after the termination is agreed to; or
(b) if in all the circumstances the FWC considers it fair to extend that period--within such further period as the FWC allows.
Section 223 When the FWC must approve a termination of an enterprise agreement
223 If an application for the approval of a termination of an enterprise agreement is made under section 222, the FWC must approve the termination if:
(a) the FWC is satisfied that each employer covered by the agreement complied with subsection 220(2) (which deals with giving employees a reasonable opportunity to decide etc.) in relation to the agreement; and
(b) the FWC is satisfied that the termination was agreed to in accordance with whichever of subsection 221(1) or (2) applies (those subsections deal with agreement to the termination of different kinds of enterprise agreements by employee vote); and
(c) the FWC is satisfied that there are no other reasonable grounds for believing that the employees have not agreed to the termination; and
(d) the FWC considers that it is appropriate to approve the termination taking into account the views of the employee organisation or employee organisations (if any) covered by the agreement.”
Background
[7] On 26 November 2019, employees were provided with four documents:
(a) An explanation of the proposed changes;
(b) A comparative table setting out the differences between the Agreement and the Textile, Clothing, Footwear and Associated Industries Award 2010 (the Award);
(c) A letter of offer which preserved certain terms of employment; and
(d) A notice of ballot indicating the time and place of the ballot and the method of voting.
[8] The document referred to in paragraph [7(a)] above is detailed below:
“26 November 2019
Termination of the Drummond and Kindred Employees Enterprise Agreement 2012
Drummond and Kindred Clothing have made the decision to ask you to terminate this Agreement.
This is for a number of reasons that includes:
• The Agreement expired a long time ago
• It contains outdated terms and even unlawful terms (e.g. the 16% and 20% loading options)
• We are a small business and we believe the award provides everything we need
• Having an agreement has not provided the flexibility for us or for you that we hoped it would
• There is a lot of time wasted in making and renewing Agreements
• We are happy to guarantee the benefits to you that you get because of the Agreement
• Lets [sic] make life simpler for everyone” 2
This document will provide you with a more detailed explanation of how the proposed termination of your Enterprise Agreement will work before you vote on the termination of the Agreement.
What remains the same?
As it stands, most of the terms of the Award already apply to your Employment pursuant to the Enterprise Agreement. If the Enterprise Agreement is terminated, your Employment will no longer be governed by the Agreement and instead will fall back on the Award. This will result in very little change to your current entitlements. Note that the following matters will not change:
• Your current position and classification;
• Your roster and hours of work, as well as the applicable overtime rates payable for work performed outside these hours:
◦ Week One: 32 hours i.e. working 8 hours Monday, Tuesday, Wednesday, and Thursday; and
◦ Week Two: 40 hours i.e. working 8 hours Monday, Tuesday, Wednesday, Thursday and Friday;
• Your entitlement to payment for all public holidays except those which fall on the Friday in Week One as above;
• Your entitlement to 4 weeks annual leave each year;
• Your entitlement to 10 days paid personal leave each year;
• Your entitlement to 5 days unpaid family and domestic violence leave each year;
• Your entitlement to parental leave in accordance with the National Employment Standards;
• Your entitlement to unpaid leave for voluntary emergency service;
• Your entitlement to attend jury duty which is paid according to time spent on the activity; and
• Your entitlement to notice of termination according to the NES and the access to redundancy pay if your position is no longer required.
Letter of Offer
You will receive a letter of offer. This offer has the effect of preserving clauses of the Enterprise Agreement that differ from the Award. The letter will preserve the following matters:
• The Company may still direct Employees to take annual leave when operations are closed down over Christmas;
• Employees will always be paid at least 0.25% above the rates set out in the Award; and
• The ordinary hours of work will remain 36 hours per week.
What terms will change?
The only terms that will change are the terms of the Agreement that are different from the Award and are not set out in the letter of offer. These terms are:
• Individual Flexibility Agreements – You will still be able to enter into an Individual Flexibility Arrangement, however it will now be in accordance with the rules set out in the Award. The main change is that you will no longer be able to trade off entitlements such as Annual Leave and Public Holidays in exchange for a higher base rate of pay.
• Consultation – The provisions around consultation will largely remain the same, however it will now be in accordance with clause 9 of the Award.
• Dispute Resolution – the dispute resolution procedure will be under clause 10 of the Award. Now the clause may only be used about disputes relating to the Award and the NES (not the employment relationship as a whole). Furthermore, Employees will no longer be entitled to unlimited paid time to resolve disputes.
• Hours of work – Ordinary hours of work will be from 7:00am to 7:00pm, this is a change from the Agreement which provides that ordinary hours of work will be from 7:00am – 5:00pm. Note that your current roster will not change as a result of this Agreement unless otherwise advised.
• Wage increases – Wage increases will be in accordance with the Minimum Wage order, the 16% and 20% uplifts under the Flexibility clause in your present Agreement will no longer be applicable.”
[9] The document referred to in paragraph [7(b)] above is an 88-page document providing a column for each clause of the Award and each clause of the Agreement. A column to the right of the page is headed “Action”, and as I understand it, provides, at times, for some explanation between the Agreement and the Award. The first occasion there is any text in the Action column is at Clause 9, Consultation, where the text states, “Amended, now the Award will apply.”
[10] The document referred to in paragraph [7(c)] above is detailed below:
“Dear <insert name>
As you are aware, Drummond and Kindred is taking steps to terminate its Enterprise Agreement. What this will mean is that your minimum terms and conditions will now be governed by the Textiles, Clothing, Footwear and Associated Industries Award 2010. As your Enterprise Agreement incorporated the Award, this change will not have a significant impact on your employment. There are however some provisions that were contained in your Agreement that are not reflected in the Award. To preserve these terms we require you to sign and return this letter of offer. The terms that will be preserved from the current Agreement are set out below.
Christmas Shutdown
The employer will shut down over the December/January period and/or Easter and/or School Holiday periods. Employees will be able to take annual leave or leave without pay during these periods. Employees will be given 28 days notice of such a shutdown and the dates thereof.
Wages
Employees will be paid at a rate of 0.25% above the Award rate at all times.
Hours of Work
Employees will be required to work 36 hours per week which may be averaged in accordance with the relevant Award.
All other provisions will be in accordance with the Textile, Clothing, Footwear and Associated Industries Award 2010.
I understand and agree to these terms forming part of my employment contract with Drummond and Kindred.
Name: <insert employee name>
Signature: ______________ Date: _____________”
[11] The document referred to in paragraph [7(d)] above is detailed below:
“26 November 2019
Important Notice – Please Read Carefully
Drummond and Kindred Clothing Co Pty Ltd are seeking your approval to terminate the Drummond & Kindred Employees Enterprise Agreement 2012.
We recommend that you have your say and we encourage you to support the proposed termination of the enterprise agreement by voting YES. We thank you in anticipation for your cooperation.
Michael Agnew
Director
Drummond and Kindred Clothing Co Pty Ltd
………………………………………………”
[12] The document above provided voting instructions, with a voting period open between 7:00am and 3:00pm on 4 December 2019. Voting was to be conducted by text, with employees required to vote either ‘Y’ for yes, or ‘N’ for no. The balloting service was stated to be provided by an independent third party, IRIQ Pty Ltd (IRIQ).
[13] On 4 December 2019 at 3.26pm Mr Luke Gilliland, Solicitor, certified the following results:
• The vote opened at 7:00am and closed at 3:00pm on 4 December 2019;
• 40 employees eligible to vote were sent an SMS message at around 7:00am on 4 December 2019;
• 2 employees eligible to vote were sent an email invitation at around 7:00am on 4 December 2019 with a link enabling them to vote online;
• 3 employees eligible to vote were sent a letter of invitation with a ballot ID, voter ID and unique password to cast their ballot via the phone number provided for IRIQ’s balloting line. By phoning the IRIQ Balloting line they were greeted by an automated introductory message and required to input their ballot ID, voter ID and password and required to press a button to vote;
• Out of 45 employees eligible to respond, 38 employees responded. The results were 26 yes votes and 12 no votes.
Objections by the CFMMEU
[14] In written submissions, the CFMMEU raised a number of objections to the Commission being able to satisfy itself that the Agreement should be terminated. 3 I shall deal with the evidence of Drummond relevant to each objection.
The composition of the group of employees balloted
[15] The CFMMEU correctly submitted that s.220(1) of the Act requires the question to be put to employees covered by the agreement. Ms Cumner’s statutory declaration accompanying the application cited 42 eligible employees, whereas the ballot report cited 45 eligible employees.
[16] In written submissions filed on 20 January 2020, 4 Drummond submitted that at the time the ballot was undertaken, three administrative employees were provided with the opportunity to vote, despite the Agreement not applying to administrative staff. Drummond conceded these three administrative employees should not have been entitled to vote to terminate the Agreement. It was submitted that if the three administrative employees had voted to approve the termination of the Agreement, and their votes were now excluded, the result would be 23 yes votes and 12 no votes.
[17] The CFMMEU submitted in written submissions dated 28 January 2020 that s.223(a) of the Act requires that an employer seeking to terminate an agreement must comply with sub-s.220(2), which does not permit an employer to request a group of employees, which includes employees not covered by the Agreement to vote to approve the termination.
[18] The CFMMEU further submitted that there may be doubt as to those purported by Drummond to be eligible to vote as the CFMMEU understood that two cleaners employed by Drummond may have been included in the group considered by Drummond to be eligible to vote.
[19] On 4 February 2020, Drummond filed further material, including a second witness statement of Ms Cumner, who stated that there were four individuals, including herself, whose names were provided to IRIQ to participate in the vote. Ms Cumner stated that she did not have knowledge as to whether the other three ineligible employees voted. In cross-examination it became clear that Ms Cumner did vote, and voted in favour of terminating the Agreement.
[20] Having received various accounts as to the eligibility of employees to vote to terminate the Agreement, I directed Drummond to provide a list to my chambers of eligible employees, and also a list of those who were provided with an opportunity to vote. The list was supplied to my chambers on 7 February 2020 detailing 45 names. Ms Cumner and three other employees were identified as not eligible to vote.
[21] The CFMMEU submitted that ss.223(b), 2221(1) and 223(a) all require the Commission to be satisfied that the correct group of employees were advised and given the opportunity to cast a valid vote.
[22] Drummond submitted that even if the number of votes of those employees who were not eligible to vote were to be excluded, a majority of employees voted in favour of terminating the Agreement.
Can the Commission be satisfied s.223(c) has been met?
[23] The CFMMEU submitted that a range of matters impacted on whether employees were in a sufficiently informed position to genuinely ‘agree’ to the termination, given a yes vote would result in a diminution of their current terms and conditions of employment.
[24] It was submitted that statements made in writing and orally as to the reasons for seeking to terminate the Agreement were actually or potentially misleading and/or were intended to pressure employees into voting for the termination.
[25] It was submitted, without supporting evidence, that in meetings with employees Ms Cumner made statements to the following effect:
• “The EBA is now redundant because all IFA’s have recently been cancelled”;
• “The EBA is no longer viable”; and
• “May as well go the award”.
[26] Ms Cumner denied that she had coerced or placed undue pressure on employees. In cross-examination she stated that she and another employee Ms Karen Mulgrew, Office Manager, “split the room” to speak with employees and see if they had any questions relevant to the vote. 5
[27] It was submitted that due to some earlier individual flexibility agreements having been ‘cancelled’, at the time the statement was made by Ms Cumner, it was no longer true. The Agreement contains an IFA clause. It was submitted that the termination of IFA’s did not make the Agreement redundant, nor effect its viability as other provisions remained in force. It was submitted that the use of the words ‘redundant’ and ‘viable’ might indicate to some employees that the business is not viable, with the potential of job losses.
[28] Relevant to the language used by Drummond in the document detailed at paragraph [7(a)] above, it was submitted that the expression that the Agreement “expired a long time ago” is misleading, as it implies the Agreement has no continuing operation, and thus its termination would not have any material effect. Further, it was submitted that reference to “outdated terms” and “unlawful terms” also overstated the position, as IFA’s which had included references to 16% and 20% loading had, by that time, been terminated.
[29] It was submitted that Drummond representatives engaged in conduct, including representations to employees with the intention of understating the impact on employees’ terms and conditions which would be caused by the termination of the Agreement. It was put that some misrepresentations were directly misleading, or otherwise have the potential to mislead employees regarding the effect on their current terms and conditions of employment.
[30] The CFMMEU submitted that Ms Cumner’s conduct in holding discussions with employees eligible to vote had the potential to exert pressure on employees to vote in favour of the termination as openly desired by Drummond.
[31] It was put that where Drummond stated to employees“We are happy to guarantee the benefits to you that you get because of the Agreement” is misleading, as there are a range of conditions in the Agreement which have not been guaranteed. These include:
• Ordinary hours of work and rostering;
• Consultation requirements;
• Dispute resolution procedure;
• Health and safety requirements;
• Anti-discrimination requirements; and
• Skill level classification review mechanism.
[32] I shall deal with these in turn.
Ordinary hours of work and rostering
[33] The CFMMEU submitted Drummond stated to employees in the document provided to employees at paragraph [7(a)] above that employees’ rosters and hours of work will not change; the ordinary hours of work will remain 36 hours; the ordinary hours of work will change to 7:00pm to 7:00pm; and the current roster will not change, unless otherwise advised. However, the document produced at paragraph [7(c)] above only appeared to guarantee that employees will continue to be engaged on a part-time basis of 36 hours per week, which may not be averaged.
[34] Drummond submitted that the hours of work and rostering would remain unchanged as a result of the termination, and employees were reassured of this. With respect to the span of hours, the letter of offer changed this. Drummond submitted that whilst the letter of offer didn’t guarantee the current roster employees worked would remain in place as a matter of law, it reassured employees there was no intention that the roster would change. Drummond further submitted the current roster worked by employees wasn’t protected by the Agreement or the Award. 6
[35] Drummond submitted that the change to the outer span of hours is a technical change, and that employees recognised that the change will have little to no impact on their roster, and they were made aware of the change and chose nevertheless to terminate the agreement. 7 Drummond submitted that there was no intention to change the roster arrangements as evidenced by Ms Cumner’s witness statement where she stated:8
“the company has no intention to change the roster arrangements of any employee. Employees were told this prior to the vote occurring. Currently all employees work within the span of ordinary hours between 7:00am and 5:00pm, the change will therefore not result in any detriment.”
[36] The comparison document makes the following note in the “Action” column:
“Hours of work will remain the same, let them know that span is between 7:00am and 5:00pm and an average of 36 hours per week.”
[37] At the hearing, I asked Ms Cumner about the ordinary hours of work under the Agreement. The exchange was as follows: 9
Commissioner: | Your enterprise agreement allows for ordinary hours to be worked between 7 am and 5 pm for up to eight hours per day? |
Ms Cumner: | Correct. |
Commissioner: | What time do you ordinarily start employees covered by the agreement? |
Ms Cumner: | 7.30. |
Commissioner: | Even though you say there's no desire to change the roster now, do you understand that if the agreement is terminated, the span is then 7 am to 7 pm? |
Ms Cumner: | Yes. |
Commissioner: | So you could start somebody at, say, 10.30 am and make them work 8.5 hours, half hour unpaid meal break and finish at 7 pm under the award. That's something that you could do under the award, isn't it? |
Ms Cumner: | It is something that could be done under the award, yes. |
Commissioner: | Right? |
Ms Cumner: | But not without notice and discussion. |
Commissioner: | But you didn’t put that in the offer to the employees, that the span of 7am to 5pm is preserved? |
Ms Cumner: | I’d have to reread it, sorry. There’s the consultation clause in there. There are the individual flexible arrangements. ….. |
Commissioner: | ….. My question then, Ms Cumner - if the agreement is terminated you can ask people to work 7 am to 7 pm, can't you? |
Ms Cumner: | We could but that doesn't mean we would. |
Commissioner: | But you were asked questions by Ms Wiles as to what you have preserved, and you've only preserved three items? |
Ms Cumner: | Yes. Look, I'm not 100 per cent sure of - I'm a bit confused with all this in front of me. But the agreement and the EBA - and I believe that the award is better. There's not a huge amount of differences. The differences are as been stated. The consultation - we still have consultation however it's under clause 9 of the award. Dispute resolution - there will still be a dispute resolution. Hours of work - yes, if you spoke to the staff I'm sure that they would agree that if work ramped up and we needed to do split shifts, as in - not split shifts, as in a later group started and that meant another 20 employees to do a later shift or something like that we would probably get people who are willing to work those hours. It wouldn't be forced on anybody. |
Commissioner: | Ms Cumner, how can you say that? |
Ms Cumner: | What do you mean, how can I say that? |
Commissioner: | You may not even be there? |
Ms Cumner: | I may not be. But that's what I believe. That would only be if the work increased a great deal before they did anything like that and they would have to have a - excuse me - real lot of employees before they would even change that. That is my opinion and you were asking my opinion. |
Consultation requirements
[38] The CFMMEU submitted that clause 9 (the Consultation Clause) of the Agreement is a comprehensive provision which provides significant, and more beneficial consultation rights for employees at Drummond than that provided under the Award.
[39] The CFMMEU submitted that should the Agreement be terminated, employees would lose the significantly superior consultation terms provided under clause 9 including: 10
• A broader set of circumstances when the consultation clause is triggered i.e. when the employer is ‘seriously considering workplace change’ compared to when the employer ‘makes a definite decision’; 11
• A wider definition of ‘significant effects’ without any express exclusions; 12
• Enhanced role of the union representing its members as part of the consultation process; 13 and
• The right for employees to meet with the union (or other nominated representative) in paid time to discuss the proposed change and to provide reasonable time and opportunity for employees and the union to consider the proposed change. 14
[40] The CFMMEU submitted that the statements by Drummond to employees that ‘this change will not have a significant impact on your employment’ were misleading, and it was incorrect for Drummond to assert that the provisions of their employment would remain largely the same if the Agreement is terminated, and that Drummond’s statements in this regard were likely to mislead employees about their terms and conditions of employment should the Agreement be terminated.
[41] Drummond submitted that the changes to the consultation clause were minor, and that although the Award does not contain an obligation to consult where a change is proposed to the “legal or operational structure of the employer or business”, it is difficult to conceive a circumstance where a change is made to the legal or operational structure of the employer or business which does not result in a change that has significant effects as set out in clause 9. 15
[42] In the comparison document provided to employees, the “Action” column stated, “Amended, now the Award will apply.”
[43] Ms Cumner was cross-examined regarding the consultation clause. The following put and answered: 16
Ms Wiles: | I'm putting to you that the agreement terms captures a broader set of circumstances when the employer has to or is obligated to consult. Would you agree with that? |
Ms Cumner: | You're saying that the EBA provides a wider scope? Is that what you're saying, sorry? |
Ms Wiles: | Yes, a broader set of circumstances in which the employer is obligated to consult employees and the union? |
Ms Cumner: | Okay - yes, I believe it does, but I believe that the award gives it more opportunity to the employer and employees work together. |
Ms Wiles: | Well, I'll take you to the second way in which the agreement clause is more beneficial. So still looking at the left-hand side, which is the award, over the page at 9.5 it talks about what constitutes, "significant effects." Can you see that? |
Ms Cumner: | Could you say that again, sorry? What constitutes - - - |
Ms Wiles: | - - - significant effects? |
Ms Cumner: | Right, yes. |
Ms Wiles: | That's at 9.5 on the award side of the page. You can see that? |
Ms Cumner: | Yes, (indistinct) should be right there. Please continue. |
Ms Wiles: | Then the definition of, "significant effects", on the right-hand side of the page, which is the agreement, we say that there is a wider definition of significant effects; so there are more things about which the employer would need to consult. Do you agree with that? |
Ms Cumner: | Yes. |
Ms Wiles: | The third way that the union says the agreement clause is more beneficial for employees is that there is an enhanced role of the union representing its members as part of the consultation process. That's actually in a few spots in the agreement side of the ledger. That's at 9.1, 9.3 to 9.7? |
Ms Cumner: | Can't the - even if they're on the award, can't anybody that belongs to the union ask for help from the union? |
Ms Wiles: | That's correct, they can. What we're saying - - -? |
Ms Cumner: | So they still haven't lost out on that, so it's not more beneficial, it's the same, as in they can still have their union representative involved in meetings and everything to do with any changes. |
Ms Wiles: | If we look at 9.5 though, for example, that's on the agreement side of the page? |
Ms Cumner: | Yes. |
Ms Wiles: | There is a benefit there whereby the employees can meet with the union or any other nominated representative in paid time to discuss the proposed change and provide reasonable time and opportunity for employees and the union to consider the proposed change. That doesn't exist under the award, does it? There is no right to paid time? |
Ms Cumner: | No, it doesn't exist under the award. |
Ms Wiles: | So they're not minor changes, are they? They're quite significant. Do you agree with that? |
Ms Cumner: | It's not significant to a higher percentage of our workforce. ….. |
Ms Wiles: | The question is, Ms Cumner, is that the differences between the agreement consultation clause and the award clause are not minor. Would you agree with that? |
Ms Cumner: | No, I believe they are minor - - - |
Ms Wiles: | So if you we just take the - - -? |
Ms Cumner: | Because the [employee] can still ask for union help - it has not changed that. A person still has legal rights to representation. |
Ms Wiles: | Yes, but for example there's no right under the award clause for the union or for the employee to meet with the union in paid time to discuss the dispute, is there? |
Ms Cumner: | No, but does that happen anywhere else in any other workplace? |
Ms Wiles: | Well, it does, but in terms of Drummond and Kindred, that is a current benefit, isn't it, that employees have? |
Ms Cumner: | To a small percentage of the workforce. |
Ms Wiles: | Well, it's still a benefit that currently - - -? |
Ms Cumner: | And a disadvantage for the employer. And a disadvantage to the employers. |
Ms Wiles: | But we're not talking about disadvantage to employers here, are we? We're talking about what benefits employees currently have under the agreement. That's what we're talking about, isn't it? |
Ms Cumner: | Correct. |
[44] Shortly thereafter Ms Cumner and I had the following exchange: 17
Commissioner: | Sorry, before you move on there - Ms Cumner, your concern is that you say there might be a small percentage of employees who are members of the union but 9.5 is not just about the person meeting with the union. It's also about providing them an opportunity to meet with any other nominated representative? |
Ms Cumner: | That's correct and that's provided also in the award. |
Commissioner: | Is that in paid time under the award? I mean, this could be their solicitor, this could be their - anybody, couldn't it? |
Ms Cumner: | Yes, it could. Look, I'm really sorry I'm not a solicitor. I'm only - as I said, I'm only learning HR. I'm not going to be able to tell - like everything single thing. I'm trying to the best of my ability, I promise you. This is why we have IRIQ, is because if we need anything, we ring them up and check what our legal rights are. I also get on Fair Work website all the time so I only can give you my opinion. I can't give you a total - what do you say - yes. I've got both here at the moment, the award and the EBA. |
Commissioner: | Just concentrating on 9.5 of the agreement, it currently provides employees an opportunity to meet with the union or any other nominated representative in paid time to discuss the proposed change. So that's a right that would not exist under the award. Do you accept that? |
Ms Cumner: | Yes, I do, yes. |
Commissioner: | Did you let employees know - because this is not about you, this is about what the employees were told? |
Ms Cumner: | Yes.. |
Commissioner: | And understood? |
Ms Cumner: | Yes, that is in there. ….. |
Commissioner: | So that is not a preserved entitlement under the common law document that you gave to the employees, is it? |
Ms Cumner: | No. |
Commissioner: | It's contended by the union that it wasn't adequately explained to employees that that was- |
Ms Cumner: | That it's in the - sorry, I didn't mean to interrupt. |
Commissioner: | No, you're right? |
Ms Cumner: | It is in the documentation that was given to the employees to read. It is, and I told them that they have to read that and if they didn't understand anything that I would help them in any way I could. If they preferred they could go to Karen. |
Commissioner: | So your document that gave to them - the one with the seven bullet points up front, that you printed off just recently - it says, "Consultation: provisions around consultation will remain largely the same. However, it will now be in accordance with clause 9 of the award." So the ability to meet with one's representative in work time, you said that was a minor change. In light of you telling people that it's largely the same, do you accept that relevant to that issue it's not largely the same and that there is a disadvantage going to the award? |
Ms Cumner: | What can I say but yes? |
[45] The CFMMEU submitted that the Agreement contains significantly superior consultation terms than the Award, and accordingly it is blatantly incorrect for Drummond to assert to its employees that the provisions will remain largely the same. Where Drummond informed employees that “We are happy to guarantee the benefits that you get because of the Agreement”, Drummond has not guaranteed the superior consultation rights in the Agreement.
Dispute resolution procedure
[46] The CFMMEU submitted that the dispute resolution clause under the Agreement contained more beneficial terms. The CFMMEU argued that the representations made by Drummond as to the effect of the termination of the Agreement on employees did not mention these beneficial terms which had the potential to mislead employees regarding the impact of terminating the Agreement.
[47] The CFMMEU summarised what it considered to be the more beneficial terms of the Agreement in its outline of submissions:
“Clause 10 (Dispute Resolution Procedure) of the D&K Agreement contains significantly more beneficial terms than those provided under clause 10 (Dispute Resolution) of the TCF Award, including: 18
• A very wide scope about which a dispute can be raised under the procedure i.e. matters arising under the Agreement; the NES including sections 65(5) and 76(4); any matter pertaining to the employee/employer relationship or the relationship between the employer and the union; General protections in the Fair Work Act 2009; 19
• Right of an employee/s in dispute to consult in paid time with, and be represented by a union delegate, shop steward or union official (or such other representative as requested by an employee) and may occur at any stage of the procedure; 20
• Right of the employee’s representative to be given access to all relevant documents and materials; 21
• A right to have a dispute/grievance referred to the Fair Work Commission for resolution by mediation and/or conciliation, and where the matter remains unresolved, arbitration; 22 and
• An express status quo term whilst the dispute/grievance is being dealt with. 23”
[48] Drummond did not accept the CFMMEU’s submissions and submitted that employees still have a right to refer matters to the Commission, but this is by agreement. Drummond submitted that giving parties the option to select the most appropriate method of dispute resolution would be more effective, timely and cost-effective than requiring parties to engage in arbitration in circumstances where arbitration is not appropriate.
[49] Drummond further submitted that the change was minor and its omission was not intentional, and any impact would be insignificant.
[50] In the comparison document provided to employees, the “Action” column stated, “Amended, now the Award will apply. There will no longer be unlimited paid time to deal with disputes.”
[51] Ms Cumner was cross-examined regarding the dispute resolution clause. The following put and answered: 24
Ms Wiles: ….. Ms Cumner, would you agree that one of the benefits in the agreement dispute resolution clause is that an employee can go to the Fair Work Commission and if the matter can't be resolved they can ask the Commission to determine that dispute?
Ms Cumner: Correct.
Ms Wiles: Under the award, that same employee, would you agree, unless the company agreed then the Commission is not arbitrating that dispute, are they?
Ms Cumner: Beg your pardon?
Ms Wiles: All right, I'll put - - -?
Ms Cumner: Could you repeat that last bit?
Ms Wiles: I'll put it another way.
Commissioner: Take her to clause 10.6.
Ms Wiles: Yes. Ms Cumner, have you got the large comparison document in front of you?
Ms Cumner: Yes.
…..
Ms Wiles: ….. under both the agreement and the award the relevant clause number is clause 10 to deal with dispute resolution procedure?
Ms Cumner: Yes.
Ms Wiles: Now, looking at the - just bear with me for a moment - at 10.1 on the agreement side - - -?
Ms Cumner: Yes.
Ms Wiles: - - - at 10.1(a), (b) and (c), they're the matters about which an employee could bring a dispute. Can you see that?
Ms Cumner: Yes.
Ms Wiles: So it's quite a broad range of things, isn't it?
Ms Cumner: Yes.
Ms Wiles: Then if we look at 10.1 under the award, it's a much more limited group of things that an employee can bring a dispute about, isn't it?
Ms Cumner: I would hope that people would use their HR person and that clause would not be - the dispute would be handled internally and dealt with at the time.
Ms Wiles: Well - - -?
Ms Cumner: If they couldn't, they do have the option of going to the Commission or they can ring their union rep, who can come and talk to us as well.
Ms Wiles: Then at 10.3 on the agreement side - I'll let you get to that?
Ms Cumner: Yes.
Ms Wiles: There is a benefit there to the employee that they can consult in paid time with the union delegate, shop steward or another official or another representative about that dispute. Can you see that?
Ms Cumner: Yes, I can.
Ms Wiles: Would you agree that that right doesn't exist under the award?
Ms Cumner: Yes. However, the award gives the opportunity for things to be worked out internally and keeps open communication with senior management and staff, which I believe is beneficial for both employer and employee, instead of having a barrier as well.
Ms Wiles: Doesn't the agreement clause allow that? I mean, it's got a first step of the employees and the employer meeting in the first instance to try and resolve it at the workplace. That's a current - that is something people could do now, isn't it, under the agreement?
Ms Cumner: They could.
Ms Wiles: Yes, so there's no difference, really, in that issue that you raised?
Ms Cumner: When they're told they're allowed to.
Ms Wiles: I want to take you to 10.4 on the agreement side of the document?
Ms Cumner: Yes.
Ms Wiles: If you go to 10.4(c), which is over the page, what that clause allows is that if the matter can't be resolved, either at the workplace or initially at the Commission, the employee can ask the Commission to determine the dispute; so what's called arbitration. Do you agree with that?
Ms Cumner: Yes, I believe so.
Ms Wiles: By comparison under the award an employee could bring a dispute to the Commission but unless the employer agreed, the Commission could not arbitrate that dispute. Do you agree with that?
Ms Cumner: Just let me read that, sorry.
Commissioner: It's at 10.5, Ms Cumner?
Ms Cumner: Thank you. I have to take your word for that because I'm not sure of that whole meaning. It says on both sides, so they both have to agree.
Ms Wiles: Well - - -
Commissioner: Do you understand what consent arbitration is, Ms Cumner?
Ms Cumner: Yes, I do, yes.
Commissioner: So it would require the respondent in a dispute notification to consent to the Commission arbitrating the matter. Is that something you understand?
Ms Cumner: Yes.
Commissioner: The respondent could say, "Not interested, thank you; we'll participate in conciliation only"?
Ms Cumner: Yes, I understand that but couldn't it - doesn't that mean that both the employer and the employee can disagree or agree to it?
Commissioner: You might have the applicant - it could be either you, so the business as the applicant - - -?
Ms Cumner: Yes.
Commissioner: - - - comes to the Commission with a dispute and the Commission can only arbitrate it by consent. If the employee brought the dispute, the employer, who would be the respondent, could say, "Thank you, we'll participate in the conciliation but we don't consent to arbitration"?
Ms Cumner: Okay.
Commissioner: Do you understand - - -?
Ms Cumner: I understand now.
Commissioner: There is a difference between that scenario and what the agreement currently provides, which doesn't require consent of the other party?
Ms Cumner: Okay, yes.
Commissioner: So is that only coming to your attention now, that differentiation?
Ms Cumner: No, it's just the way that it's written, a bit, yes.
Commissioner: So are you saying that you understood that before today?
Ms Cumner: No. I'm sorry, I'm getting a bit tired. I'm not the only one who was involved in this. As I said I have an office manager and I helped deliver the letters, I helped explain what I understood, I told them everything I possibly could. It doesn't mean that I understand every single thing of this legal document.
Commissioner: If you're coming to that understanding today, that you now understand that consent arbitration is, if an employee had asked you during the period which you were discussing the matter with them, you wouldn't have been able to adequately explain that to them. Is that a fair statement?
Ms Cumner: No, because I would have found the answer out at that time and I have told them that if I did not know the answer, that I would find the answer. So I would have referred the answer back to Karen or back to IRIQ. I would have found them the answer. As nobody asked me that question it's not one that I went back and found for them but I would have answered any question they asked me. They did not come into the office and ask any questions. They were told they could if they wanted to. They were shown the website. They were given the sheet with the website on it. They were told they could ring Fair Work and I'm sure the union members were told that they could contact the union or they would have contacted the union. That's their choice. I don't have anything to do with that. I have not said that I've known everything or understood everything to do with the differences between the two agreements. But I have said that I would find out any information that anybody else needed.
Ms Wiles: Ms Cumner, it's Ms Wiles here again. If you didn't understand that distinction between consent arbitration and arbitration as a right, do you accept that it's possible one or more employees would not have understood that?
Mr Spence: Objection.
Commissioner: I'll allow it?
Ms Cumner: Absolutely, and as I said I gave all the information I possibly could with how to ask for anything that they did not understand. I made sure that everybody knew that if they did not understand any of it, to please talk to somebody about it.
Ms Wiles: All right?
Ms Cumner: I can't force people to take my advice and come and tell me what they don't know or what they don't understand. I cannot force them to ring Fair Work. I cannot force them to ring the union. That is not my job. My job is to provide the information for them and show them where they can get the information or offer to find the information for them if there was something particular they needed.
Ms Wiles: So the things that we've talked about that are in the agreement clause that aren't in the award clause, I put it to you that they're significant differences. Would you agree with that?
Ms Cumner: I don't feel they're significant differences but there may be differences that other people find significant. You've asked for my opinion on them. I've given you my opinion. I've answered the questions. Some of the things may - people may find. I have a different view.
Ms Wiles: All right?
Ms Cumner: I'm sorry, I don't know how you want me to offer my opinion because all of my job was, was to deliver the information and make sure people understood that they could ask questions.
Commissioner: Before you move on, Ms Wiles, Ms Cumner, on the right-hand side, that's the information, the column provided by the employer to employees to assist in understanding the differences between the two?
Ms Cumner: Yes.
Commissioner: Can you see that it reads, for clause 10: "Amended, now the award will apply. There will no longer be unlimited paid time to deal with disputes." Do you see that?
Ms Cumner: Yes.
Commissioner: Do you think that's a complete description of the difference between the two clauses?
Ms Cumner: Probably not a complete description - if a complete description had to be handled it would probably be more complicated. It was just summarised.
Health and safety and anti-discrimination provisions
[52] The CFMMEU submitted that clause 13 (Employees’ Safety, Health and Welfare) will no longer apply as a term of an enterprise agreement, and about which an employee could initiate a dispute/grievance under the dispute resolution procedure. As the Award does not contain an equivalent provision, termination of the Agreement would result in employees losing the right to have a health and safety matter resolved, including by arbitration, as part of the disputes process. 25
[53] Similarly, the CFMMEU submitted the Award had no equivalent provision to clause 4.4 (Equal Employment Opportunity), resulting in employees not being able to have any dispute/grievance dealt with under the dispute resolution procedure should the Agreement be terminated.
[54] Drummond submitted that health and safety matters and discrimination matters could be dealt with in accordance with provisions of the Work Health and Safety Act 2011 (Cth)and the Anti-Discrimination Act 1991 (Qld) respectively.
Skill level classification review mechanism
[55] The CFMMEU submitted that under the Award, employees would lose the benefit of clause 5.2 of the Agreement which allows for an individual or group of employees to request a review of their skill classification, and the review shall be dealt with in accordance with the dispute resolution procedure of the Agreement. The CFMMEU submitted that there is no equivalent provision in the Award, and Drummond had made no commitment to ‘guarantee’ this condition as part of employees’ contracts of employment should the Agreement be terminated.
[56] Drummond submitted that with respect to the skill classification review mechanism, the concern raised by the CFMMEU was with respect to the dispute resolution provisions of the Agreement, and the fact clause 5.2 would not be preserved under the Award would not in itself result in any change to the conditions of employment.
[57] Ms Cumner was cross-examined regarding the skill classification review. The following put and answered: 26
Ms Wiles: I want to ask you about a clause in the EBA that deals with review of skill level classifications. Currently, an employee under the agreement who wanted to dispute their skill level could raise a dispute under clause 5.1 and if the company didn't agree to reclassify that employee the employee could bring that dispute to the Commission and if there still wasn't agreement, the Commission could arbitrate it. Is that your understanding under the agreement currently?
Ms Cumner: Normally it doesn't happen that way due to the fact that they ask us if they can go up the levels and have their classification structure analysed. We show them what they have to do for the next classification and say if you want to work towards this, we will help you. I really don't know - I guess if that's what you think it says, it might say that but I don't really know, as in I've only dealt with it in the way that - I've never gone to the arbitration over a skill level because we discuss it inhouse and settle it inhouse. If a person is doing the next skill level up work, we assess it and we move them up.
Ms Wiles: But that's only if you agree - - -?
Ms Cumner: So I'm not quite sure of the question, I'm sorry.
Ms Wiles: It's partly related to the questions I asked you about the capacity of an employee to have a dispute arbitrated in the Commission, which is the current benefit they've got under the agreement?
Ms Cumner: Yes.
Ms Wiles: So this group of questions relates to if an employee had a dispute about the skill level, currently they could do that. They could go to the Commission and say, "Look, I think I should be skill level three." As we know, higher levels have higher wage rates. If there is a dispute about that, the Commission could decide. Do you agree with that?
Ms Cumner: Yes.
Ms Wiles: So the next part of the question is under the award, because the dispute procedure doesn't have a stand-alone right to arbitration unless the employer agrees, that same employee, if Drummond and Kindred didn't agree, wouldn't be able to get that issue resolved in the Commission, would they?
Ms Cumner: I don't believe - - -
Ms Wiles: That's the effect.
Mr Spence: Objection.
Commissioner: Just wait, Ms Cumner, thank you.
Mr Spence: That is - she needs to put that question clearer. That's a very ambiguous question about - - -
Commissioner: I don't think it is.
Mr Spence: - - - how the Commission can resolve - - -
Commissioner: By consent arbitration - so, Ms Cumner, do you understand what was put; that clause 5.2 of the agreement allows an employee who thinks they're at a higher grade than what their employer says to have the matter determined in the Commission and if the agreement is terminated, the award - Ms Wiles is asserting - does not allow the employee to exercise a right of arbitration. Do you understand what's being put to you?
Ms Cumner: I do. I just don't understand the fact that the skill levels are set out and that's pretty straightforward on whether a person will actually reach that skill level or not. So there would be no reason to take it to arbitration because they either can do the job, or they can't. They're either up to that skill level or they're working towards that skill level. I don't - yes.
Commissioner: Well, Ms Wiles and I have spent the last 12 months in a matter dealing with that very same issue, where employees said that they were a higher classification than what the employer said they were so people do come to the Commission and look for the Commission to find in their favour that they are higher than what their employer says that they are?
Ms Cumner: I wouldn't disagree. I mean, I don't know what you want me to answer. If you find it's a problem, it's a problem. But I have not found that in my case, in this instance.
Ms Wiles: Ms Cumner, do you know why Drummond and Kindred didn't guarantee that right in the letter of offer?
Ms Cumner: No, I'm not senior management. I'm not the director. I am a HR coordinator, so I don't have access to that information.
Ms Wiles: So do you know who decided what went into the letter of offer or you don't have that information?
Ms Cumner: No. I was involved in some of it but not all of it. That's probably a question for the solicitors and the directors.
Can the Commission be satisfied s.223(d) has been met?
[58] Section 223(d) of the Act requires the Commission to consider whether it is appropriate to approve the termination taking into account the views of the employee organisation covered by the Agreement. The CFMMEU submitted that prior to undertaking the vote of affected employees, Drummond did not formally notify the CFMMEU of Drummond’s intention to have the Agreement terminated.
[59] It was submitted that Drummond was aware that Ms Frances Alford is an elected delegate at the site, and Mr Anthony Hack is an allocated organiser at the site. Further, it was submitted that Drummond determined to conduct the vote of employees on 4 December 2019 when Ms Alford was not present at work due to being on pre-arranged leave. This was not put to Ms Cumner in cross-examination.
[60] It was submitted that Drummond had an obligation under clause 9, Consultation Clause of the Agreement, to consult with the CFMMEU on account of Drummond “seriously considering workplace change that is likely to have a significant effect on the employees”, and the definition of significant effects including the alteration of hours of work and changes to the legal or operational structure of the employer or business.
[61] In cross-examination, Ms Cumner could not answer if Ms Alford and Mr Hack had been consulted relevant to the proposal to terminate the Agreement. She considered that it might be a question better put to Ms Mulgrew, or IRIQ.
[62] In re-examination, the following was put and answered: 27
Mr Spence: What was the position of the union regarding the termination?
Ms Cumner: They did not want it terminated at all.
Mr Spence: How do you know that?
Ms Cumner: Because they don't like anything we do, but - how do I know that? Because Anthony would have told me or I would have got an email or they've taken us to the Commission to reject it.
Mr Spence: So what information did they distribute on site about the proposed - - -?
Ms Cumner: Yes, okay - they sent flyers to say that - I don't have that one in front of me but there was a flyer saying that if it sounds fishy or smells fishy then it is no good.
Mr Spence: "If it smells fishy it probably is"?
Ms Cumner: Yes, something like that, and they put it under everybody's car windscreen wiper.
Mr Spence: What was the - past the title if you can recall what was the things that were communicated in that flyer that went to every employee?
Commissioner: Do we have a copy of the flyer?
[63] A copy of the flyer was read onto transcript by Mr Spence: 28
Mr Spence: "If it smells fishy, it probably is. Drummond and Kindred have suggested to terminate our EBA and move us all solely onto the award. It makes no sense! The award already applies to all of us who are covered by the EBA as outlined in clause 3 of the EBA. 3.5: 'Any variations to the TCF award or any provisions of a successor award to the TCF award and which is more beneficial to an employee than a provision of this agreement will apply to and bind the employer and will apply as a term of this agreement.' Further, we would lose all of our EBA conditions which are more beneficial than the award. One of the only conditions they have committed to preserve is one which is actually more beneficial to them! In the award they need to give us three months' notice before a close-down period, whereas they want to keep it at 28 days! Some of the conditions in our EBA which are better than the award: our ordinary rostered hours can currently finish at the latest 5 pm, whereas award allows for ordinary hours to be worked until 7 pm. Consultations requires that when D and K are wanting to introduce a major change is much better in the EBA. The dispute resolution procedure, if we need to raise a problem, is much better in the EBA. There is an antidiscrimination commitment clause and a very strong commitment to our employer in regard to our health and safety. Also, our pay must remain at least 0.25 per cent higher than the award at all times. Remembering of course the most important points: (1) the award already applies anyway; (2) the EBA can be renegotiated to further improve wages and conditions (the company had already previously committed to this) and thirdly, by law an EBA must be better off than the award."
Then it says, "There is no logical reason for us to terminate the EBA so why do they want to? Something smells fishy! If anyone has any questions please call our union organiser, Anthony Hack, on 04381274037", with the CFMMEU manufacturing logo. Was that the material distributed by the CFMMEU on site, Ms Cumner?
Ms Cumner: Yes, it was, yes, and it was put on not just union members' windscreens as well.
Christmas shutdown
[64] The CFMMEU pointed out that the letter from Drummond to employees informed employees that one of the ‘preserved’ terms from the Agreement, if terminated, is the ability for Drummond to provide 28 days’ notice to employees in the event of a shutdown. The Award requires the giving of three months’ notice, and accordingly, it would be unlawful for Drummond to provide only 28 days’ notice. It was submitted that Drummond, in seeking to have employees ‘agree’ to preserve the less beneficial term, has misrepresented to employees the real position as to its legal enforceability.
[65] Curiously, Drummond submitted that there is nothing to suggest employees are any better off as a result of the notice period being amended in its purported common law agreement to 28 days, to the requirement in the award of three months. It was submitted:
“In any event, an employer and employee are entitled to enter into a common law contract that trades off some beneficial terms in place of others. Here employees enjoy several benefits that exceed those set out under the Award (for example a guarantee payment of 0.25% above the Award) in exchange for some less beneficial terms. This is common practice and is permitted.” 29
[66] In reply submissions, the CFMMEU referred the Commission to s.45 of the Act 30 which provides:
“Section 45 Contravening a modern award
A person must not contravene a term of a modern award.”
Closing submissions
[67] In oral closing submissions, the CFMMEU submitted that the onus rests with Drummond to demonstrate that the requirements of s.223 of the Act have been met. When I inquired of Ms Wiles as to why the CFMMEU did not lead evidence of employees that they considered that they had been misled, Ms Wiles stated that while the CFMMEU had intended to file evidence of employees, there became a range of reasons why employees chose not to make those statements. 31
[68] Further concerns were raised by the CFMMEU as to the eligibility of employees to vote on 4 December 2019, and accordingly I directed Drummond to provide to my chambers (only) a list of all employees covered by the Agreement employed as at 4 December 2019. Due to an oversight, that information was not provided to my chambers until 29 April 2020.
[69] The correspondence of 29 April 2020 from Drummond stated the following:
“We have sought the payroll report from the Applicant today in accordance with the transcript below and will send that to you separately for confidentiality reasons however it is appropriate that the CFMMEU be aware of this correspondence.
We note that there are three employees (who we will name in the separate correspondence to you) who were not employed by the company at the time of the first vote and should not have received a vote. We understand this is inconsistent with previous submissions made by the Applicant. We are instructed that the reason for this inconsistency is that the client was in the process of switching from an ERP System to MYOB for payroll. At the time of the ballot they were unable to note dates for people whose employment had been terminated. Our client did not realise this at the time. These three employees had ceased employment before the date of the ballot. We are instructed that our client had fully converted to MYOB Payroll before the ballot for the second application was conducted.
We have made enquiries from the Balloting officer and have been advised that none of these three employees cast a vote in the Ballot relevant to the first application, so there is no impact on the numbers.”
[70] After noting a further discrepancy with Drummond’s roll of eligible employees, I sent ex parte communication to Drummond with a tally of potentially eligible employees. Correspondence was received on an ex parte basis that Drummond concluded that there had been 38 eligible voters on 4 December 2019.
[71] On 1 May 2020, the CFMMEU sought leave to make further submissions relevant to this concerning issue as to eligibility and the integrity of the roll of voters. I decided that it was not necessary to further hear from the CFMMEU on this issue given my decision on the entire application.
Consideration
[72] As stated above, the conditions which must be met for an agreement to be terminated are set out in ss.220-223 of the Act.
Consideration of s.220
[73] Pursuant to s.220(1) of the Act, Drummond was required to request of those employees covered by the Agreement to approve a proposed termination. It is clear on the evidence that a number of additional employees not covered by the Agreement were offered the opportunity to participate in the vote. Further, three former employees of Drummond were sent a text message inviting them to vote.
[74] It is a fact that Ms Cumner participated in the vote and voted for the approval of the termination. Ms Cumner could not state whether the other three employees, Ms Mulgrew, Ms Kerryn Bentley, Administration, and Ms Lesley Bowler, Cleaner participated in the vote or voted.
[75] It defies logic as to why Ms Cumner’s name was included in the roll of eligible voters, purported to be covered by the Agreement. The Agreement’s classification structure mirrors the structure within the Award, an award covering textile workers. If there was any confusion as to the eligibility of herself, Ms Mulgrew, Ms Bentley and Ms Bowler to be included in the roll of voters, it should have been readily apparent to Ms Cumner that neither she nor Ms Mulgrew were eligible to vote being in quasi-management roles.
[76] If they had any doubt as to their eligibility to vote, they should have asked their paid advisor, not recklessly participated in the vote. Ms Cumner’s evidence is that both she and Ms Mulgrew had one-on-one conversations with employees, assisting them to understand the voting process. As a HR professional in the case of Ms Cumner, and Officer Manager in the case of Ms Mulgrew, it was completely improper for them to be incorrectly on the roll of voters, and at the same time addressing employees relevant to the upcoming vote. There is no evidence that Ms Cumner gave any indication to employees that she was going to vote, or that she was preparing to vote yes to terminate the Agreement. However, if she had been asked that question by employees, and answered yes, it may well have had the effect of improper influence over employees entitled to vote.
[77] It is disturbing that the error as to eligibility of voters became apparent due to the difference between the number of eligible voters cited by Ms Cumner in her statutory declaration to the Commission, and the ballot report prepared by a solicitor. Both of those documents were filed together as part of the application to the Commission. In my view it was incumbent on Ms Cumner to address the anomaly at the time of filing the application. The discrepancy only came to the Commission’s attention by virtue of the CFMMEU’s submissions of 13 January 2020. 32
[78] The matter was still not properly clarified in written submissions of Drummond on 20 January 2020, when it was submitted that three clerical employees had inadvertently voted. The Commission later learned that in fact a fourth employee, a cleaner had participated in the vote. Following the hearing the numbers of eligible employees again changed, with the Commission learning that in addition to the four ineligible employees, three former employees had been invited to vote.
[79] I have serious concerns relevant to the potential infection of the vote by employees not covered by the Agreement, and therefore ineligible to vote, and a vote extended to former employees not eligible to vote. There is no evidence before the Commission that the three former employees did not vote; simply a submission.
[80] If an assumption was made that Ms Cumner, Ms Mulgrew, Ms Bentley, Ms Bowler, and the three former employees all did vote, and all voted yes to approve the termination of the Agreement, it would be necessary to rule out seven yes votes from the 26 yes votes, resulting in there being no more than 19 yes votes.
[81] Despite the very poor way in which the vote was conducted and the results finally declared, I do not consider that it in these circumstances it led to a miscarriage of s.220(1), as I am satisfied that as a minimum, all employees covered by the Agreement as at 4 December 2019 were invited to vote. I have stated that it was improper for a number of employees to be included in the list of eligible voters, and on the assumption, but without the clear knowledge that those employees voted yes to approve the termination of the Agreement, I have removed seven yes votes from the declared vote.
[82] Accordingly, I find that there were 19 yes votes and 12 no votes. I am satisfied that 19 valid votes were cast in favour of termination of the Agreement. Accordingly, s.221(1) has been met as the termination is agreed to when a majority of the employees who cast a valid vote approve the termination.
[83] Relevant to the consideration in s.220(2)(a), the notice of voting was issued to employees on 26 November 2019 and the vote was conducted on 4 December 2019. Employees were given a reasonable period of time to consider the proposed termination.
[84] In that period, the CFMMEU produced and distributed a flyer encouraging employees to vote against the approval termination of the Agreement.
[85] Section 220(2) takes into consideration only the conduct of Drummond, and not that of any other person or party. I am satisfied that Drummond took all reasonable steps to notify the employees of the time and place at which the vote will occur, and the voting method that will be used.
[86] Relevant to the consideration in s.220(2)(b), I am most troubled by the test here as to whether, in the material supplied by Drummond to relevant employees, Drummond gave the employees a reasonable opportunity to decide whether they want to approve the proposed termination.
[87] The document at paragraph [7(b)] above was produced for Drummond for dissemination to relevant employees to explain Agreement terms versus Award terms, and an additional column was inserted providing some commentary. As is evident during my questions of Ms Cumner during the hearing, I have found the additional column to be completely unsatisfactory, and I now declare it to be, in most of the circumstances, when all of the other documents provided to employees at paragraph [7] above are taken into account, misleading, and in other circumstances potentially misleading.
Ordinary hours of work and rostering
[88] It is noted that in the comparison document commentary, voting employees read:
“Hours of work will remain the same, let them know that span is between 7:00am and 5:00pm and an average of 36 hours per week.”
[89] Ms Cumner’s evidence on this issue was not satisfactory, suggesting that employees would not be forced to work an increased span of 7:00am to 7:00pm under the Award, or if they were required to, they would be consulted prior to that occurring. The Agreement’s preferential span of hours of 7:00am to 5:00pm was not stated to be a completely preserved term, yet the commentary in the explanatory document appears to me to have provided an opportunity to have misled employees on this point. It matters not that there was no evidence led by the CFMMEU that employees were actually misled on this point; it is obvious that the commentary provided for in this document did not match the promise made to employees as to preserved terms.
[90] Essentially, employees could vote to terminate the Agreement on the premise that the span of hours would not change from 7:00am to 5:00pm, only to later learn that it was not a preserved term. I consider that the commentary on this point was misleading.
Consultation requirements
[91] Drummond’s actions in informing employees that the difference between the Agreement consultation terms and the Award consultation terms is, “Amended, now the Award will apply” is an abject failure on its part. In providing that additional column for the employees’ consideration, Drummond chose to provide some guidance to employees. It sought to influence the employees. It did so without any proper regard to the variances between the two instruments.
[92] Most importantly, Drummond failed to inform employees that they would no longer have the opportunity in paid time to meet with their union or other representative to discuss proposed workplace changes. In the absence of a document such as the comparison document, I do not consider it necessary for an employer wishing to terminate an Agreement to walk employees through each clause. However, the production of the comparison document by Drummond was intended to be persuasive and informative to employees. It was not complete.
[93] The document issued to employees at paragraph [7(a)] above stated, “Consultation: provisions around consultation will remain largely the same. However, it will now be in accordance with clause 9 of the award.”
[94] Ms Cumner’s evidence on this issue was somewhat disturbing; that the ability of an employee to meet with a representative in paid time was a benefit only for a small percentage of the workforce, and it was a disadvantage for the employer. It seems to me that Ms Cumner has not had proper regard to the fact that the consultation clause within the Agreement allows for employees to meet with any representative in paid time, not just a union official.
[95] I have determined that the commentary regarding the consultation clause was deficient by simply stating, “Amended, now the Award will apply.” I determine that the communication to employees by Drummond that the provisions around consultation will remain largely the same was misleading.
Dispute resolution procedure
[96] Employees were informed in writing that these were the changes to the dispute resolution procedure:
“Dispute Resolution – the dispute resolution procedure will be under clause 10 of the Award. Now the clause may only be used about disputes relating to the Award and the NES (not the employment relationship as a whole). Furthermore, Employees will no longer be entitled to unlimited paid time to resolve disputes.”
and
“Amended, now the Award will apply. There will no longer be unlimited paid time to deal with disputes.”
[97] The above two statements neither cover all of the matters that are factually different between the Agreement and the Award, nor do the above statements match. In the document issued to employees at [7(a)], employees were provided with additional information; that the Award would be more limiting. The document issued to employees at [7(b)] mentioned only that there would no longer be unlimited paid time to deal with disputes under the Award.
[98] Very disappointingly, employees were not informed that the rights that they enjoy under the Agreement to arbitration in the FWA, now the Commission, would not exist, and arbitration would only occur by consent of the parties. It was submitted by Drummond that this loss was minor, its omission was not intentional, and any impact would be insignificant. I am in wild disagreement with this submission. To secure arbitration rights in an agreement is often a hard-fought win by employees and their representatives. It is my experience that applicants in s.739 disputes, where there is no arbitrary power vested in the Commission except by consent arbitration, are often disappointed when this is explained to them. It can often lead to dramatically different outcomes in dispute resolution.
[99] I took Ms Cumner’s evidence to be that she did not properly understand what consent arbitration meant, and therefore did not understand the loss to employees of the right within the Agreement to arbitration before the Commission. The evidence was given by telephone and there was some loss of impact in observing Ms Cumner’s evidence. Ms Cumner agreed in answering a question from me that the comparison document statement on this point was not a complete summary of the differences between the Agreement and the Award.
[100] There is inherently nothing wrong with employees voting to terminate an agreement and returning to consent arbitration under a modern award. The same will inevitably apply whenever an agreement is terminated pursuant to s.225 of the Act. These events occur regularly as is evident in the many decisions of the Commission. However, Drummond’s failure to properly inform employees of this significant loss of a current entitlement, when they have provided only some of the relevant information for consideration, is in my view a failure by Drummond to give to the employees a reasonable opportunity to decide whether they want to approve the proposed termination.
Health and safety and anti-discrimination provisions
[101] I agree with the CFMMEU’s submissions that employees were not informed that in the event they had a grievance relevant to safety, health and welfare, or alternatively, an EEO matter, there would no longer be a right of arbitration before the Commission. Whilst it is true that these matters may be dealt with under alternatives Acts, employees under the Agreement currently enjoy a right to bring such matters before the Commission pursuant to the dispute resolution procedure.
[102] Where an employer makes some attempt to explain to employees the differences between the agreement they are covered by and the award they would be employed under in the event the relevant agreement was terminated, I do not consider it acceptable that the employer decide which matters are important to employees and which are not. That is a matter for the employees to determine.
Skill level classification review mechanism
[103] Similarly, with the loss of arbitration rights under the skill level classification review, it is clear that Drummond did not think this to be an important matter, or potentially one even capable of arbitration before the Commission. Ms Cumner’s evidence was that skill level classifications are straight-forward matters which are typically settled in-house. She appeared to me not to understand that an employee might wish for the Commission to arbitrate a dispute on this issue.
[104] In any event, where Drummond sought to explain to employees the effects of terminating the Agreement and being covered only by the Award, I find that there was no explanation to employees that there would be a loss of right to arbitration on a dispute as to the correct classification of an employee covered by the Agreement.
Conclusion as to whether s.220(2)(b) has been met
[105] Having considered the above, I am not satisfied that before making the request for employees to approve termination of the Agreement, Drummond did give the employees a reasonable opportunity to decide whether they want to approve the proposed termination. That is so because of the various documents provided to the voting employees. The documents were inconsistent at times, inaccurate at times, incomplete, potentially misleading, and in some cases, misleading.
[106] As I have stated earlier, I need not hear from a voting employee that the documents were considered by them to be misleading; I can form that view on the documents alone.
[107] It would have been a better approach, in my view, not to attempt to explain to employees at all the differences between the Agreement and the Award. Simply providing the comparison document without any commentary would be sufficient, in my view. I stated so during the hearing. Employees provided with such a document would not be influenced in the manner that they have been in this application. They would simply be reading a factual document of clauses contained within each of the instruments.
[108] In many s.222 applications before me I have evidenced in my various decisions the promises made by the respective employer as to preserved terms that appear to have formed part of the decision making of relevant employees in their employer’s request to terminate an agreement. I tend to insert such common law agreements in my decisions to help keep employers accountable to their employees where such promises are made at the time of the vote. It is not unusual, in my experience, for employers to agree to retain some agreement terms for the benefit of the employees where such benefit does not breach any term of the modern award the employer and its employees are about to be covered by.
[109] The assertions by Drummond that relevant to the Christmas shutdown it can seek to preserve the giving of 28 days’ notice to employees, as opposed to the Award’s three months’ notice is simply incorrect. The CFMMEU submissions are correct; Drummond cannot ignore the terms of the Award requiring three months’ notice to be given to employees on account that it has decided to pay an amount of 0.25% as an over-award payment. Drummond doesn’t get to decide which terms of the Award apply to it and its employees. The submissions that Drummond and its employees are entitled to enter into a common law contract that trades off some beneficial terms in place of others is incorrect and in contravention of s.45 of the Act. An employer can always agree to apply over-award conditions to employees, but never less, unless expressly provided so in a lawful individual flexibility agreement allowed under the award, or pursuant to an approved enterprise agreement.
Consideration of s.223(d)
[110] The CFMMEU urged the Commission to find that prior to an employer requesting its employees approve the termination of agreement, it is necessary for the employer to consult with employees pursuant to the consultation clause within the Agreement.
[111] I find that the CFMMEU delegate and organiser were aware of the request by Drummond to employees to vote to terminate the Agreement, on account of the evidence given at the hearing as to the flyer distributed to employees.
[112] If I were disposed to finding it was necessary to consult pursuant to an enterprise agreement consultation clause, in these circumstances, I do not consider the threshold of “significant effects”, requiring changes to the legal or operational structure of the employer or business to have been met. None of that has occurred. Simply, employees have been asked to vote to approve the termination of the Agreement pursuant to s.220. I would find that “the alteration of hours of work” had been triggered on account of the potential for a broader span of hours under the Award, even if Drummond had no intention of increasing the span from 7:00am to 5:00pm in the immediate future.
[113] In any event, I do not consider it to be a relevant consideration in the Commission’s determination of a s.222 application, to be satisfied that an employer has met its consultation obligations under the Agreement proposed to be terminated. It has not, to my knowledge, ever been raised as an issue before the Commission, and there are scores of Agreements terminated by the Commission annually, without any such consideration. In 2018, the CFMMEU made hundreds of applications to the Commission pursuant to s.222 of the Act, seeking to terminate agreements in the construction industry which were no longer compliant with the Code for the Tendering and Performance of Building Work 2016 (the Code). As an estimate, I approved the termination of at least 80 such applications, where the CFMMEU was the applicant, and simultaneously sought to have approved new agreements made by employers with their employees that were Code compliant. I always ensured the matters were approved alongside each other to ensure the relevant employees always remained covered by an enterprise agreement. In none of those applications did the CFMMEU address the Commission as to whether the relevant employer had followed the relevant consultation clause within the agreement proposed to be terminated, in order to satisfy the Commission that the relevant agreement could be terminated. Quite simply, the applications were determined pursuant to s.222 and s.185 of the Act, respectively.
[114] In my view, if parliament had intended it to be a relevant consideration, it would be so stated in the Act.
[115] It is necessary for the Commission to take into account the views of the CFMMEU relevant to this application. I understand that the CFMMEU considers that employees could not have validly voted to terminate an agreement and return to award coverage due to the loss of benefits to employees. Termination of the Agreement will result in the loss of beneficial provisions for the employees. In particular, the loss of the more beneficial consultation and dispute resolution clauses is a significant and detrimental change for the employees.
[116] Unsurprisingly, employees in many industries do vote to terminate agreements and return to awards conditions, even with the loss of entitlements within an agreement.
[117] As explained during the hearing, the consideration in s.222 as to the CFMMEU’s concerns, are not the same considerations the Commission must have relevant to a s.225 application where the circumstances of the employer, the employees and the CFMMEU must be taken into account, including the likely effect that the termination will have on each of them. Where it is appropriate in a s.225 application to have regard to what the entitlements of employees will be if the agreement is terminated, it is not a consideration in a s.222 application. Parliament has put in place very different considerations.
[118] If I was considering s.223(d) in isolation only, having taken into account the views of the CFMMEU, I would consider it appropriate to approve the termination of the Agreement.
[119] Having regard to the consideration in s.223(c), if I did not already have regard to what I have determined in the consideration in s.220(2)(b), I would have taken it into account in the consideration at s.223(c). With the information before me, I would not be satisfied that s.223(c) had been met.
Conclusion
[120] The factual difference between the Agreement and the Award should have been put to eligible voting employees in complete factual terms, without error, or it should not have been put to employees at all. Quite simply, the Agreement and Award texts could have been put to employees for their own consideration, without commentary. Drummond’s decision to provide commentary which was not factually correct has the potential to mislead voting employees, and in some circumstances stated above, I have found it to be misleading. I do not consider that it was an intentional act, but nevertheless, because of the conduct of Drummond in its provision to employees of various documents, I consider the opportunity to have been infected. On that basis I am not satisfied that Drummond gave the employees a reasonable opportunity to decide whether they want to approve the proposed termination.
[121] Accordingly, I am not satisfied that s.220(2)(b) has been met.
[122] I have had regard to the very unfortunate way in which the vote was conducted, including seven people ineligible to vote, and the incorrect information provided to the Commission. I would ultimately determine, however, that a majority of eligible employees approved the termination of the Agreement.
[123] The consideration at s.223 requires that the Commission must approve the termination of an agreement if all of the requirements in ss.223(a) to (d) are met. I have determined that I am not satisfied that s.220(2)(b) has been met, and accordingly, I am not satisfied that s.223(a) has been met.
[124] Accordingly, I must dismiss the application and I do so.
COMMISSIONER
Appearances:
Spence T, Counsel for the Applicant.
Wiles V, for the Construction, Forestry, Maritime, Mining and Energy Union.
Hearing details:
17 February 2020, Brisbane.
Printed by authority of the Commonwealth Government Printer
<PR719188>
1 Email from Ms Vivienne Wiles on behalf of the Construction, Forestry, Maritime, Mining and Energy Union dated 16 December 2019.
2 Construction, Forestry, Maritime, Mining and Energy Union’s Outline of Objections, 13 January 2020, Paragraph [35], quoting Attachment A – Termination of the Drummond and Kindred Employees Enterprise Agreement 2012 dated 26 November 2019.
3 Construction, Forestry, Maritime, Mining and Energy Union Outline of Objections, 13 January 2020; Construction, Forestry, Maritime, Mining and Energy Union Further Submissions, 28 January 2020.
4 Submissions on behalf of the Applicant, 20 January 2020, Paragraph [8].
5 Transcript of Proceedings, 17 February 2020, PN308.
6 Applicant’s Outline of Submissions, 4 February 2020, Paragraph [39].
7 Ibid, Paragraph [40].
8 Ibid, Annexure 5 – Statement of Natalie Cumner, 20 January 2020.
9 Transcript of Proceedings, 17 February 2020, PN289 – PN303.
10 Construction, Forestry, Maritime, Mining and Energy Union’s Outline of Objections,13 January 2020, Paragraphs [54]-[56].
11 Drummond & Kindred Employees Enterprise Agreement 2012 [2012] FWAA 5947, Clause 9.1.
12 Ibid, Clause 9.2.
13 Ibid, Clauses 9.1, 9.3 - 9.7.
14 Ibid, Clause 9.5.
15 Applicant’s Outline of Submissions, 4 February 2020, Paragraph [46].
16 Transcript of Proceedings, 17 February 2020, PN383 – PN402.
17 Ibid, PN441 – PN420.
18 Construction, Forestry, Maritime, Mining and Energy Union’s Outline of Objections, 13 January 2020, Paragraph [62].
19 Drummond & Kindred Employees Enterprise Agreement 2012 [2012] FWAA 5947, Clauses 10.1, 10.2.
20 Ibid, Clause 10.3.
21 Ibid, Clause 10.4.
22 Ibid, Clauses 10.5(c), 10.6.
23 Ibid, Clause 10.7.
24 Transcript of Proceedings, 17 February 2020, PN383 – PN402.
25 Construction, Forestry, Maritime, Mining and Energy Union’s Outline of Objections, 13 January 2020, Paragraph [78].
26 Transcript of Proceedings, 17 February 2020, PN454 – PN559.
27 Ibid, PN576 – PN579.
28 Ibid, PN608 – PN609.
29 Submissions on behalf of the Applicant, 20 January 2020, Paragraph [48].
30 Forestry, Maritime, Mining and Energy Union Further Submissions, 28 January 2020, Paragraph [82].
31 Transcript of Proceedings, 17 February 2020, PN651.
32 Construction, Forestry, Maritime, Mining and Energy Union’s Outline of Objections, 13 January 2020, Paragraph [17].
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