Ealwin Pty Ltd
[2025] FWCA 612
•18 FEBRUARY 2025
| [2025] FWCA 612 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
Ealwin Pty Ltd
(AG2024/5136)
EALWIN PTY LTD ENTERPRISE AGREEMENT 2024
| Building, metal and civil construction industries | |
| DEPUTY PRESIDENT GRAYSON | SYDNEY, 18 FEBRUARY 2025 |
Application for approval of the Ealwin Pty Ltd Enterprise Agreement 2024
Introduction
Ealwin Pty Ltd (the Employer) has made an application for approval of an enterprise agreement known as the Ealwin Pty Ltd Enterprise Agreement 2024 (the Agreement) pursuant to s.185 of the Fair Work Act 2009 (the Act). The Agreement is a single enterprise agreement.
Transitional arrangements under the Secure Jobs, Better Pay amendment
The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (Amending Act) made a number of changes to enterprise agreement approval processes in Part 2-4 of the Act, that commenced operation on 6 June 2023. The notification time for the Agreement under s.173(2) was 27 November 2024 and the Agreement was made on 20 December 2024. Accordingly, both the genuine agreement and the better off overall test requirements are those applying on and from 6 June 2023.
Form F16 Irregularities
On review of the application, the initiating documents contained a number of irregularities:
The application filed indicated that the Agreement was a multi-enterprise agreement, but the lodgement documents and Agreement pertained to single-enterprise agreement; and,
The Agreement was signed on behalf of employees by an employee bargaining representative, but no employee bargaining representative had been listed on the Form F16.
On 16 January 2025, the Employer provided submissions that these irregularities were typographical errors and filed an amended Form F16 which:
Clarified that the application was for a single-enterprise agreement; and,
Nominated an employee bargaining representative for the Agreement (with this employee bargaining representative being the signatory on behalf of the employees for the Agreement).
I consider it appropriate in the circumstances to allow an amendment of a document relating to a matter before the FWC and do so pursuant to s.586(a) of the Act.
Notification time and provision of Notice of Employee Representational Rights (NERR)
The notification of time, place and method of vote was provided in the initiating Form F17B as 1 September 2024. The Form F17B also indicated that the NERR was provided to employees on 27 November 2024, which was more than 14 days after the notification time and did not comply with s.173(3) of the Act.
On 16 January 2025, the Employer provided submissions that the Form F17B contained a typographical error with respect to the notification time and filed an amended Form F17B which clarified that the notification time for the Agreement was 27 November 2024, being the same day as the day that the NERR was provided to employees.
I consider it appropriate in the circumstances to allow an amendment of a document relating to a matter before the FWC and do so pursuant to s.586(a) of the Act.
Genuine Agreement
The Agreement covers a small cohort of employees who are employed in construction work. The Agreement was voted up by two employees who cast an eligible vote. The Agreement covers seven classifications and operates in every Australian state and territory. The application did not disclose any further information in respect of the ‘sufficient interest and sufficiently representative’ matters at Q27 of the Form F17B (in respect of s.188(2) of the Act and s188(1) and [17] – [18] of the Statement of Principles on Genuine Agreement (Statement of Principles).
Section 188(1) of the Act provides that the Commission must take into account the Statement of Principles made under s.188B in determining whether it is satisfied that an enterprise agreement has been genuinely agreed to by the employees covered by it. Section 188(2) provides that the Commission cannot be satisfied that an enterprise agreement has been genuinely agreed to by the employees covered by it unless the Commission is satisfied that the employees requested to approve the agreement by voting for it:
(a) have a sufficient interest in the terms of the agreement; and
(b) are sufficiently representative, having regard to the employees the agreement is expressed to cover.
Section 188 of the Act contains a note as follows:
Note: In One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FCAFC 77 (2018) 262 FCR 527, a Full Court of the Federal Court observed that whether an agreement has been genuinely agreed involves consideration of the authenticity of the agreement of the employees, including whether the employees who voted for the agreement had an informed and genuine understanding of what was being approved.
Principle 17 of the Statement of Principles relevantly provides:
In considering whether employees have a sufficient interest in the terms of an enterprise agreement as required by section 188(2)(a) of the Fair Work Act, and whether the employees are sufficiently representative as required by section 188(2)(b), the FWC may take into account:
(a)whether the employees entitled to vote on the enterprise agreement are to be paid the rates of pay provided for in the agreement, and,
(b)the extent to which the employees entitled to vote on the enterprise agreement are employed across the full range of:
(i)classifications in the agreement
(ii)types of employment in the agreement (for example, full-time, part-time and casual)
(iii)geographic locations the agreement covers, and
(iv)industries and occupations the agreement covers.
Given the small number of employees covered by the Agreement the Commission sought submissions from the Employer concerning whether the employees who voted on the Agreement had a sufficient interest in the terms of the enterprise agreement and were sufficiently representative. The Commission indicated that there was a concern that the circumstances of the application might be distinguishable from those in Application by Construction, Forestry and Maritime Employees Union[1] (Application by CFMEU) and sought that the Employer provide a response addressing these concerns and those arising from the decision of One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union.[2] The Employer provided submissions, payslips and a statutory declaration in response.
Sufficient interest test
The Employer submitted that each of the two employees who voted in favour of the Agreement had a sufficient interest in the Agreement within the meaning of s.188(2)(a) (and as per Principle 17(a) of the Statement of Principles) because they are engaged in classifications covered by the Agreement and are to be paid the rates of pay provided by the Agreement. The Employer provided pay slips for each of the two employees who are currently employed under the predecessor Agreement, which it submitted indicated that the employees are paid at a rate very close to the rates and entitlements in the Agreement. The Employer submitted that the two employees will be paid the rates of pay and provided with the entitlements prescribed by the Agreement if approved and therefore, the employees had a sufficient interest in the Agreement within the meaning of s.188(2) of the Act.
Based on the information before the Commission it appears that these employees will be classified and paid the rates of pay and provided with the entitlements prescribed by the Agreement if approved and in this regard I find that the employees have a sufficient interest in the Agreement within the meaning of s.188(2)(a) of the Act and having had regard to Principle 17 of the Statement of Principles.
Sufficiently representative
The Employer submitted that the two employees covered by the Agreement fall within the coverage of the Building and Construction General On-site Award 2020 (Award), and that the classifications in the Agreement per clause 4 and Appendix 1 are covered by the Award classifications CW1 – CW7. The Employer filed evidence that the two employees who voted to approve the Agreement are covered by the CW5 and CW7 classifications and perform work in a number of geographic locations across Australia. Further, the Employer submitted that the number of classifications applying to the two employees who voted on the Agreement did not preclude a finding that the employees who voted on the Agreement were sufficiently representative. The Employer relied on submissions made seemingly by direct reference to [12] of the decision in the Application by CFMEU, extracted as follows:
The legislative scheme allows for the making of an Agreement with two or more employees and in this regard:
a. It would seldom be the case that an Agreement covering two employees would have those employees engaged in every possible classification under that Agreement;
b. A finding that two employees in the same classification voting on an agreement with five classifications were not sufficiently representative would lock out many small employers and their employees from the benefits of the enterprise bargaining regime under the Act and that cannot have been the intention of the Parliament when it passed amended s.188(2);
Rates of pay and conditions are relevant to the consideration of whether the employees who voted on the Agreement are sufficiently representative because:
a. The clear legislative intention of s.188(2), as evidence from the legislative note and explanatory memorandum, is to prevent a situation like that in One Key or KCL where the enterprise bargaining scheme is subverted by agreements that ‘lack authenticity’ and ‘moral authority’;
b. In the Agreement, rates for each of the classifications under the Agreement are over and above what those classifications would be entitled to under the Award, allowances are not under the Award and there are only a small number of entitlements that are less beneficial than the awards;
c. The current matter can therefore be contrasted to One Key and KCL where the agreements in question provided only marginal increases to pay, while removing a number of conditions that employees would have been entitled to under the relevant modern award.
d. The circumstances of the current matter are distinctly different to the decisions mentioned in the Explanatory Memorandum in relation to the sufficiently representative test.
While it is the case that the only employees who voted for the Agreement are engaged under 2 classification, one-fifth coverage of the classifications is a far greater fraction than was the case in the agreements considered in One Key and KCL noting that:
a. in One Key the employer made an agreement with three employees and the coverage included any employee covered by 11 awards;
b. in KCL the agreement in question was voted on by two (out of three) employees and covered a wide range of classifications most of which had no relevance to the work performed by the employer’s three existing employees and encompassed industries in which the employer did not currently operate, amongst other deficiencies;
c. in the current matter, the position is the opposite in that the Agreement applies only to a narrow band of classifications that are contemplated by one Award, and only to the extent that employees engaged in those classifications are engaged in work already performed by the employer.
-The note appearing under s.188(2) referring to One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union (One Key) is not part of the Act, it assists in understanding the legislative intent of s.188(2);
-The Full Court in One Key was asked to consider the genuineness of an agreement for an enterprise agreement that, at the time it was approved, was to cover three employees, two of whom were casual.
As per Commissioner Matheson in Application by Construction, Forestry and Maritime Employees Union [2024] FWCA 4491:
[14] While s.172(6) of the Act provides that an enterprise agreement cannot be made with a single employee, there is no prohibition on the making of an agreement with a small cohort consisting of two or more employees. The question that arises in this matter is whether the Commission is satisfied, in accordance with s.188(2), that the employees who voted are sufficiently representative having regard to the employees the agreement is expressed to cover. The note appearing below s.188(2) of the Act provides an indication as to the purpose toward which s.188(2) was directed with reference to One Key[3]and the observation of the Full Court of the Federal Court that whether an agreement has been genuinely agreed involves consideration of the authenticity of the agreement of the employees.
…
[16] In One Key[4] the Full Court of the Federal Court found:
It is not readily apparent why the Commissioner was no longer troubled by his initial concern (raised in his email of 18 September 2015) about whether the agreement had been “genuinely agreed” to. It is clear, however, that the Commissioner did not believe he needed to consider whether, in the light of the small number of employees and the large number of awards, he could be satisfied that the three employees had understood the Agreement and its effect before casting their votes. On the face of the material before the Commission there was a vast disparity of occupational classifications as between those held by the three individuals who voted and the classifications covered by the Agreement. How it was that the three employees might be regarded as having had a sufficient appreciation of the appropriateness of the terms and conditions proposed for the disparate occupational classifications covered, including in industries foreign to their own, was not identified by the Commissioner as a factor relevant to the genuineness of the approval and was not the subject of his consideration. Whether the three employees had appreciated the terms and conditions provided for by the Agreement, beyond those of direct interest and relevance to them, and thereby “genuinely agreed” to its terms (not just those that directly affected them) should have been considered. As the primary judge held, the Commissioner’s failure to do that evinced jurisdictional error.
The Explanatory Memorandum to the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 provides insight into the rationale for the new provisions, stating:
702. New subsection 188(2) is intended as a safeguard against agreements which are not the result of collective bargaining in good faith, including ‘unrepresentative’ and ‘low voter cohort’ agreements. For example, a small cohort of employees offered rates of pay above those provided in the enterprise agreement should not be capable of being found to have genuinely agreed (see, for example, Re KCL Industries Pty Ltd[2016] FWCFB 3048; (2016) 257 IR 266)).
…
704. New paragraph 188(2)(b) is intended to ensure that employees requested to vote on an agreement are sufficiently representative, having regard to the coverage terms or intended coverage of the agreement. For example, employees engaged in one industry, occupation or classification should not be capable of being found to have genuinely agreed to an enterprise agreement intended to cover employees across a substantially wider range of industries, occupations or classifications.
705. A small cohort of employees would also not be sufficiently representative where the agreement is intended to ultimately cover a much wider workforce following transfers of employment, possibly within a corporate group.
The coverage of the Agreement is relatively broad and the employees who voted to approve the Agreement are not employed in the full remit of classifications and employment types under the Agreement. By way of explanation, the Employer submitted that it recently finished a large-scale project, and with no project to continue on with, decided to retain only its full-time and long-term employees. The two employees had 22 and 2 years of service respectively and one had been employed by the Employer when the predecessor agreement was made and approved. The Employer submitted that it expected to increase its operations over the next three to six months, and that it would engage employees covering the majority of the classifications in the Agreement.
A significant number of agreements come before the Commission and in many of them, employees who voted will not be employed in roles across every possible classification under the Agreement. I consider that this does not, in and of itself, mean that employees who voted on an agreement are not ‘sufficiently representative’. The Statement of Principles at [17] does require consideration of the extent to which the employees entitled to vote on the enterprise agreement are employed across the full range of:
(i)Classifications in the agreement;
(ii)Types of employment in the agreement (for example, full-time, part-time and casual;
(iii)Geographic locations the agreement covers; and
(iv)Industries and occupations the agreement covers.
In the circumstances of this matter, the employees who voted on the Agreement are:
(i)Employed in two of the seven possible classifications of the Agreement;
(ii)Employed on a full-time basis in the context of an enterprise agreement that provides for this employment type, noting that the Agreement also provides for part-time and casual employment;
(iii)Employed in different states and performing work across the geographic locations that the Agreement covers; and
(iv)Working in the only industry and occupation the Agreement covers, being construction work.
I consider that the employees were not asked to vote on an enterprise agreement intended to cover employees across a substantially wider range of industries, occupations or classifications. There is no evidence to suggest that the Agreement is intended to ultimately cover a much wider workforce. A search of the Commission’s records demonstrates that the Employer has a long history of making agreements with its employees- since on or around 2002. The Agreement is a roll-over agreement and only expired on 1 February 2025. The Agreement was made with long term employees. I infer from this that the process of making the Agreement was not opportunistic or designed to create an agreement with inferior conditions designed to be used as an industrial Trojan Horse to drive down conditions in a process lacking moral authenticity. In the circumstances of this matter, there is no evidence to suggest that the employees who voted would not have a true understanding of the consequences of the proposed agreement across the classifications relevant to the works covered by the Agreement.
Having regard to all the circumstances in this matter, I am satisfied that the employees requested to approve the Agreement by voting on it are, in accordance with s.188(2)(b) sufficiently representative having regard to the employees the Agreement is expressed to cover. In reaching this conclusion I have had regard to the Statement of Principles.
Section 186, 187 and 188
Having had regard to the Statement of Principles, I am satisfied that each of the requirements of ss.186, 187 and 188 as are relevant to this application for approval have been met.
Approval
The Agreement is approved and, in accordance with s.54 of the Act, will operate from 25 February 2025. The nominal expiry date of the Agreement is 18 February 2029.
DEPUTY PRESIDENT
[1] [2024] FWCA 4491.
[2] [2018] FCAFC 77.
[3] Ibid.
[4] Ibid.
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