FMS Group Pty Ltd T/A Field Mining Services Group

[2021] FWCA 6700

[2021] FWCA 6700

FAIR WORK COMMISSION

DECISION

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

FMS Group Pty Ltd T/A Field Mining Services Group
(AG2021/7047)

FMS EMPLOYEE AGREEMENT 2021

Building, metal and civil construction industries
COMMISSIONER MCKINNON	MELBOURNE, 16 NOVEMBER 2021

Application for approval of the FMS Employee Agreement 2021

[1] Application has been made for approval of a single enterprise agreement known as the FMS Enterprise Agreement 2021 (the 2021 Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act) by FMS Group Pty Ltd (ABN 32 621 415 709), formerly known as FMS Resources Pty Ltd. The application is opposed by the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU), which was a bargaining representative for the Agreement.

[2] The CFMMEU submits that the 2021 Agreement cannot be approved for three reasons: the notice of employee representational rights was not given to employees in accordance with the Act; the 2021 Agreement has not been genuinely agreed to by relevant employees; and the 2021 Agreement does not pass the better off overall test. FMS has given undertakings in relation to genuine agreement and the better off overall test and the CFMMEU has given its views on those undertakings. I decline the CFMMEU’s request for a further opportunity to make more fulsome submissions on the undertakings.

[3] This decision deals with the application for approval.

Notice of employee representational rights

[4] A notice of employee representational rights must be given to each employee who will be covered by a proposed agreement and who is employed at the notification time for the agreement. 1 In this case, relevant employees were given the notice of employee representational rights. The question that arises is whether having received the notice, they understood that the proposed enterprise agreement would cover them in relation to their employment.

[5] The CFMMEU submits that employees could not have known this, because of the way the notice describes the proposed coverage of the 2021 Agreement. The description is embedded in the first paragraph of the notice, which says:

“FMS Group Pty Ltd gives notice that it is bargaining in relation to an enterprise agreement (FMS Employee Agreement 2021) which is proposed to cover employees that are employed by FMS Group Pty Ltd across Australia who are engaged in the classifications defined therein”.

[6] The CFMMEU submits that because the description was not accompanied by a copy of the proposed enterprise agreement or the proposed employment classifications “defined therein”, it was not a description at all. This meant that employees could not know if they would be covered by the 2021 Agreement and were not given a proper opportunity to exercise their representational rights.

[7] FMS makes three submissions in response:

1. Firstly, employers are not permitted to provide additional documents or attachments with the notice of employee representational rights

2. Secondly, similar descriptions in notices of employee representational rights are common, describing agreement coverage by reference to the classifications in the proposed agreement, without more.

3. Finally, employees who received the notice in this case are covered by the FMS Employee Agreement 2018 and it is reasonable to consider that they would understand their coverage under the updated Agreement would continue.

[8] The first submission misconstrues the effect of section 174(1A) of the Act. Section 174(1A) strictly limits the content of notices of employee representational rights to the content prescribed by the Fair Work Regulations 2009 (Cth). It does not prevent a copy of the proposed agreement from being provided to an employee at the same time as a notice of employee representational rights. It may not always be practical to do so, given that notices are issued at the very early stages of bargaining, but it is permitted. As was made clear in Peabody Moorvale Pty Ltd v CFMEU 2, additional material can be provided to employees at the same time as a notice. The question then becomes what constitutes “the notice” – a matter to be determined in each case on its facts. An attachment to the notice containing, or continuing, the description of an enterprise agreement’s proposed coverage is likely to form part of the notice because such a description is not only permitted but required. Further, section 188(2A) of the Act has altered the requirement for strict compliance with the Act’s form and content requirements in relation to the notice of employee representational rights.

[9] As to the second submission, it is enough to observe that a common approach does not always mean a compliant approach. The question remains whether the notice describes the 2021 Agreement’s proposed coverage. While there is a description contained within the notice, it omits one of the three characteristics that inform whether a person is covered by the 2021 Agreement. That is, employees must be employed by FMS; they can be employed anywhere in Australia; and thirdly, they must be engaged in one of the classifications defined in the 2021 Agreement. In this last respect the notice is incomplete because it describes where to find the information, but not the information itself.

[10] The question is whether the deficiency renders the application incapable of approval. Unlike the similar circumstances considered in AMOU v Harbour City Ferries 3, the matter must now be considered both through the lens of compliance with sections 173 and 174 of the Actand the discretion conferred by section 188(2A). It is also distinguishable from Harbour City Ferries, because in that case the notice referred to classifications in a non-existent “Attachment A”, rather than a proposed agreement to replace an existing enterprise agreement covering the employees.

[11] The CFMMEU’s submission invites consideration of the proposed coverage description in a vacuum, without regard to the context in which the notice was given. Employees are likely to have understood they would be covered by the 2021 Agreement both because they had received the notice, and because they were already covered by the FMS Employee Agreement 2018 (the 2018 Agreement). With one exception, the work covered by the 2018 Agreement and the 2021 Agreement is identical. The only difference is that work covered by the Hydrocarbons Industry (Upstream) Award 2010 (Hydrocarbons Award) is covered by the 2018 Agreement but not covered by the 2021 Agreement. As no relevant employee was, or is, engaged to perform that work, the difference was not material to them. If this changes in future so that work is performed that would be covered by the Hydrocarbons Award, the 2018 Agreement will continue to apply. The 2021 Agreement does not alter the position of employees who do, or may in future, perform work covered by the Hydrocarbons Award.

[12] FMS submits that all relevant employees were given a copy of the notice and there is no reason to believe that this was not the case. There is also no suggestion in the materials that employees who received the notice of employee representational rights did not understand that it was relevant to them. At least three employees exercised their representational rights, leading to the involvement of the CFMMEU as an active participant in bargaining on behalf of its members for the 2021 Agreement, with a particular interest in the black coal mining industry. Two additional employees were nominated as employee bargaining representatives.

[13] I do not accept that employees are likely to have been disadvantaged by the giving of an incomplete notice based on hypothetical statistical analysis of the levels of union membership in Australia. In my view, employees are unlikely to have been disadvantaged by the error, including because the 2021 Agreement replaces the 2018 Agreement which is in very similar terms. Where the two diverge, they do so in two respects. One (the narrower coverage) was immaterial to relevant employees. The other was a series of changes to working conditions in the black coal mining industry. These changes were the subject of bargaining between the parties, with employees represented at the bargaining table by both experienced union representatives and individual employees.

[14] In the circumstances, I find that the notice did not adequately describe the proposed coverage of the 2021 Agreement for the purposes of section 174 and that this was a minor technical error of the kind contemplated by section 188(2A). Employees are unlikely to have been disadvantaged by the error.

Failure to explain the change in coverage

[15] The CFMMEU submits that the 2021 Agreement was not genuinely agreed to by employees because there was no explanation of the change in coverage to omit work covered by the Hydrocarbons Award. The CFMMEU appears to rely on section 58 of the Act in support of the submission that employees who transfer from work covered by the 2021 Agreement to work covered by the Hydrocarbons Award will be bound to the 2021 Agreement even though it will not apply to them. The submission proceeds on the wrong assumption (which appears to be shared by FMS) that if the 2021 Agreement is approved, the effect of section 58 will be that the 2018 Agreement ceases to apply entirely.

[16] An enterprise agreement applies to an employee in relation to particular employment, and an enterprise agreement can only apply to employees that it covers. Although the 2018 Agreement has passed its nominal expiry date, it continues to operate until terminated or replaced. For many employees, the 2018 Agreement will cease to apply when (and if) the 2021 Agreement commences operation. This is because the work they perform is covered by both enterprise agreements. However, work covered by the Hydrocarbons Award is not covered by the 2021 Agreement. This work will continue to be covered by the 2018 Agreement. In the same way as it would now, and as things presently stand, the 2018 Agreement will apply to future employees performing work covered by the Hydrocarbons Award. That is, there is no relevant change to the terms and conditions of employment for employees who may, in future, perform this work.

[17] The 2021 Agreement has no effect in relation to work covered by the Hydrocarbons Award because it will not cover or apply to that work. That this work will remain covered by the 2018 Agreement was not explained to employees, despite a summary of the “main differences” between the 2018 and 2021 Agreements having been provided. The information was available for employees to discern by reading the coverage clauses of the 2018 Agreement and the 2021 Agreement. However, I agree that the explanation of this difference to employees in relation to potential future work was a reasonable step for FMS to take.

[18] My concern about genuine agreement only arises in relation to potential future work because no employees are presently engaged to perform that work. FMS has given an undertaking that clearly states the missing information: that work covered by the Hydrocarbons Award remains covered by the 2018 Agreement. The undertaking does not change the 2021 Agreement. It effectively renders the omission moot by providing that part of the explanation not given. In the circumstances, the explanation being given now rather than during in late August 2021, during the access period, has no practical bearing on the outcome of the vote, because it was an issue that did not affect any of the employees in any material way.

[19] I accept the undertaking under section 190 of the Act.

Better off overall test

[20] The CFMMEU submits that the 2021 Agreement does not pass the better off overall test when compared against the Black Coal Mining Industry Award 2010 (the Coal Award).

Rates of pay for casual employees

1. The appropriate comparator for production and engineering employees

[21] The CFMMEU submits that the appropriate comparator for casual production and engineering employees under the 2021 Agreement is a permanent employee (full- or part-time) because the Coal Award does not provide for casual employment, although it concedes that the Coal Award also does not prohibit casual employment. FMS submits that the appropriate comparator in relation to casual employment conditions for mining employees is a casual staff employee under the Coal Award. Both parties refer to earlier decisions of the Commission, including CFMMEU v SESLS Industrial Pty Ltd 4 and AKN Pty Ltd t/as Aitken Crane Services5.

[22] Neither of the decisions cited above resolves the question now before me. The paragraph relied upon by the CFMMEU in AKN as the “correct approach”, when read in context, must be understood as dealing with the very different issue of how to approach the better off overall test generally – by taking a global, rather than line by line, approach - informed by relevant analysis. While in SESLS the Full Bench did engage directly with the appropriate comparator for a casual production and engineering employee, the question was not resolved.

[23] For present purposes, I propose to take notice that casual employees are paid a 25% loading instead of the benefits of permanent employment, as is the case for staff employees under the Coal Award. The CFMMEU asserts that “simply providing a 25% loading is not sufficient to compensate for the disadvantage of introducing casual employment to classifications in Schedule 1” (presumably to the 2021 Agreement). The assertion is not accompanied by an appropriate evidentiary case and I am not prepared to assume that it is correct without more. It is also relevant that the terms of the Coal Award are incorporated as terms of the 2021 Agreement to the extent of inconsistency, ameliorating what might otherwise be an absence of terms or conditions in the 2021 Agreement. Of course, some of the incorporated award entitlements are specific to permanent employment and do not apply to casual employees.

2. Payments on termination

[24] The CFMMEU submits that a prospective casual production and engineering employee who works no more than one shift for FMS will not be better off overall under the 2021 Agreement, because they will not be entitled to the payments on termination for accrued personal leave, redundancy pay and notice of termination that would apply to permanent employees under the Coal Award.

[25] I accept that the 2021 Agreement does not confer these entitlements on casual employees who are made redundant or retrenched after a short period of engagement under the 2021 Agreement. Not all circumstances of termination of employment will fall within the meanings of redundancy and retrenchment in the Coal Award. In a sense, the disadvantage is hypothetical because it requires the relevant circumstances to arise before an entitlement to payment arises. It is also hypothetical in the sense that these entitlements do not apply to casual employees under the Coal Award.

[26] Weighed against the potential for disadvantage in this regard are the benefits conferred by the 2021 Agreement for casual employees, including rates of pay approximately 11% higher than rates of pay in the Coal Award, the additional 25% casual loading as well as higher superannuation contributions and a longer minimum engagement period.

3. Shift work rates

[27] The CFMMEU submits that if the staff classifications in the Coal Award are adopted as an appropriate comparator, the 2021 Agreement will not leave employees better off overall because it is silent on the interaction between casual loading and shift penalties. It refers to the recent Full Bench decision in Four yearly review of modern awards—Black Coal Mining Industry Award 2010 6in support of the contention that shift and casual loadings compound. Specifically, it submits that casual shift workers who work on weekends will be paid less under the 2021 Agreement than the Coal Award on Saturdays where more than four hours is worked (by $0.73 per hour) and on Sundays (by $1.46 per hour).

[28] FMS submits that shift and overtime penalties do not compound under the Coal Award and concedes that the award casual loading is applied on a compounding basis. It also submits that the rates of pay in the 2021 Agreement are adequate to overcome any perceived deficiency.

[29] I agree that under the 2021 Agreement, the casual loading of 25% is added to the penalty rate for weekend work before the weekend penalty rate is calculated. I do not agree with the CFMMEU’s approach to calculation of casual weekend shift work rates under the 2021 Agreement. Nor do I agree with the submission of FMS that penalty and shift loadings do not compound under the Coal Award (or, for that matter, the 2021 Agreement).

[30] In my view, shift penalties under the 2021 Agreement compound upon weekend penalties that apply to ordinary hours of work, in the same way as they compound under the Coal Award. So much is clear from the use of the phrase “115% of the applicable ordinary time rate” for afternoon and rotating night shift, and a phrase in equivalent terms for permanent night shift, in clause 40.2 of the 2021 Agreement. For reasons that are analogous to those set out in the Four yearly review decision, the “ordinary time rate” in clause 40.2 of the 2021 Agreement is the rate payable for ordinary hours of work at the relevant time (in this case, the weekend) inclusive of casual loading. The ordinary time rate is calculated first and then the shift loading is applied. The outcome is a rate of pay above the Coal Awardin each case,as illustrated by the tables below.

Weekend work (ordinary hours) – casual employees

Mineworker classification	Award rate (Minimum rate x weekend loading x casual loading)	Agreement rate (Minimum rate x (weekend loading + casual loading))
Sunday	$27.27 x 200% x 125%	$30.47 x (200+25)%
Total hourly rate	$68.17	$68.55

Weekend shift work – casual employees

Mineworker classification	Award rate (Casual weekend rate x shift loading)	Agreement rate (Casual weekend rate x shift loading)
Afternoon shift	$68.17 x 115%	$68.55 x 115%
Total hourly rate	$78.39	$78.83

4. Annual leave for fixed term employees

[31] The CFMMEU submits that fixed term employees under the 2021 Agreement will accrue less annual leave than permanent employees under the Coal Award because clause 42(1)(a) of the 2021 Agreement is silent on the rate of annual leave accrual for employees other than permanent full-time and part-time employees.

[32] I do not accept the submission. Clause 42.3 of the 2021 Agreement deals expressly with the accrual of annual leave for employees “other than casual employees”. The accrual rate mirrors the rate of accrual in clause 25.3 of the Coal Award and plainly applies to fixed term employees. As the provision is located in a schedule to the 2021 Agreement, it prevails over the rate of accrual in the National Employment Standard (NES) (see clause 30.1 of the 2021 Agreement).

5. Stand down in circumstances of force majeure

[33] The CFMMEU submits that clause 13.1(c) of the 2021 Agreement, which deals with stand down, expands the circumstances in which an employee can be stood down under the 2021 Agreement in a way that is less beneficial than if the Coal Award applied. This is because force majeure is not defined in the 2021 Agreement, is usually a creature of contract and is not limited by the qualification that there be a “stoppage of work”.

[34] At the hearing, the CFMMEU also submitted that if the meaning of the term cannot be known, employees cannot have genuinely agreed to the 2021 Agreement.

[35] FMS submits that the inclusion of “force majeure” as a basis for stand down was carried over from the 2018 Agreement. It operates where there may not be a stoppage of work, but circumstances make work exceptionally challenging or hazardous to employees – for example, in the case of a natural disaster where access to the worksite was cut off for some employees, while others continued to work.

[36] I am not persuaded that the inclusion of “force majeure” in clause 13 is likely to operate in a way that causes any significant detriment to employees. Applying ordinary principles of agreement interpretation, the term is likely to take its ordinary meaning, which in the Macquarie Dictionary Online includes “a superior force; an unexpected and disruptive event operating to excuse a party from a contract.” The circumstances in which force majeure is relied upon to stand down employees are likely to be rare, and usually where another available basis for the stand down of employees also applies. The provision only operates where an employee cannot be usefully employed and cannot be because of circumstances for which FMS is responsible. In some circumstances, the term may even operate beneficially in the sense that for some employees, work may be able to continue rather than to stop.

6. Annual leave loading and rostered overtime

[37] The CFMMEU submit that compared with clause 25.9 of the Coal Award, the 2021 Agreement is detrimental to employees in relation to annual leave loading. This is because the Coal Award provides for annual leave loading to be calculated either at the ordinary rate of pay plus 20% or the value attributed to rostered earnings for the period, including overtime, public holidays but not shift allowances except for seven-day roster employees. The 2021 Agreement incorporates the entitlement to leave loading into the minimum wage rates.

[38] The difficulty is that the CFMMEU has not done any calculations to establish that there is a relevant detriment to employees. The submission is a mere assertion, based on what are said to be common trends in the industry. Against it are the higher rates of pay in the 2021 Agreement, the benefit of which compounds when payment of penalty rates, loadings and superannuation is made – the latter also being set at a higher contribution rate. I am not satisfied that in this regard, employees will not be better off overall.

7. Award terms incorporated to the extent of inconsistency

[39] The CFMMEU submit that the 2021 Agreement does not pass the better off overall test because the relationship between the Agreement and the four incorporated modern awards excludes beneficial award terms in relation to notice of redundancy, public holidays, personal leave for part-time employees and civil penalties.

[40] The relationship between these instruments is described in clause 5.1 of the 2021 Agreement, which says:

“This Agreement incorporates the Relevant Awards. The Relevant Award is to be read and applied in conjunction with the terms and conditions in this Agreement. To the extent that there is any inconsistency, the Agreement shall prevail.”

[41] “Relevant Award” is defined in clause 4.1 and clause 4.3 of the 2021 Agreement. Clause 4.3 clarifies the relationship between the instruments:

“A reference to the “Relevant Award” in this Agreement shall mean the Modern Award, as listed in clause 4.1 that would have applied to an Employee but for this Agreement (and continues to apply in accordance with this Agreement).”

[42] In relation to notice of redundancy, the CFMMEU submits that the 2021 Agreement is less beneficial than the Coal Award. The argument is not set out in detail, but I understand it to deal with the interaction between clause 33.1 of the 2021 Agreement and clause 13.3(a) of the Coal Award. Clause 33.1 of the 2021 Agreement provides that notice of termination will be “in accordance with the National Employment Standards”. By contrast, clause 13.3(a) of the Coal Award provide that the minimum notice of termination on redundancy will be 4 and 5 weeks’ respectively, depending on age and length of service. This clause supplements the National Employment Standards for employees with 5 or fewer years of service.

[43] I agree that the 2021 Agreement is less beneficial for employees in this respect, because a provision for notice of termination “in accordance with the National Employment Standards” is inconsistent with a provision for notice of termination of more than the National Employment Standards. The effect is that only the notice of termination entitlements in the National Employment Standards apply. FMS has given an undertaking to address the concern.

[44] In relation to the rate of pay for public holidays, the CFMMEU submit that clause 27 of the 2021 Agreement provides for public holidays to be “in accordance with the NES”. As the National Employment Standards is silent on penalty rates for work on public holidays, the 2021 Agreement is inconsistent with the Coal Award, which does provide for public holiday penalty rates. The submission fails to have regard for the terms of the 2021 Agreement as a whole. The 2021 Agreement provides for payment on public holidays at the rates of pay contained in the 2021 Agreement. It incorporates the terms of the Coal Award in relation to penalty rates payable for work on public holidays. There is no inconsistency between the two on this issue.

[45] In relation to personal leave for part-time employees, the CFMMEU submit that clause 29 of the 2021 Agreement, which also provides for personal leave to be “in accordance with” the National Employment Standards, is inconsistent with, and less beneficial than, clause 10.3 of the Coal Award. I do not accept the submission, for the simple reason that clause 10.3 of the Coal Award is incorporated as a term of the 2021 Agreement. This includes the meaning of part-time employment and the express provision for part-time employees to receive, on a pro rata basis, equivalent pay and conditions to those of full-time employees who do the same kind of work. Accordingly, there is no inconsistency, and no detriment to employees, in relation to the pro-rata entitlement to personal leave for part-time employees, based on the entitlement rate for full-time employees in the 2021 Agreement.

8. Civil penalties

[46] Finally, the CFMMEU submits that employees are exposed to civil penalties for breaches of enterprise agreement terms in a range of circumstances that would ordinarily be dealt with in employment contracts. The submission does not delve into the detail of the concern except by way of noting the obligation for employees to provide tools as required. I understand the submission to be primarily in relation to clause 18 of the 2021 Agreement, which sets out a range of employee obligations such as working safely and carefully, traveling to site, completion of time sheets and leave forms and undertaking fitness for duty medical testing.

[47] Some of these are ordinary expectations of employment and some deal with matters that would ordinarily be the subject of agreement between an individual and the employer in a particular case. They supplement clause 12 of the Coal Award, which imposes a broadly crafted obligation on employees to perform work as reasonably required and within the limits of their skill competence and training. Having regard to the terms and conditions of the 2021 Agreement as a whole, I am not satisfied that by reason of clause 18 alone, employees will not be better off overall.

9. Conclusion in relation to the better off overall test

[48] I accept the undertakings given in relation to the better off overall test under section 190.

[49] On balance, I find that the 2021 Agreement passes the better off overall test except in relation to notice of termination on redundancy. An undertaking resolves my concern in this regard.

Conclusion

[50] While the 2021 Agreement does not cover all employees of FMS, the line between employees covered by the 2021 Agreement and management and professional staff is drawn fairly on an organisational basis and is no arbitrary choice.

[51] I am satisfied that the 2021 Agreement meets the necessary conditions for approval because each of the requirements in ss.186, 187, 188 and 190 as are relevant to this application for approval have been met.

[52] The nominal expiry date of the 2021 Agreement is 3 years from the date of approval by the Commission, or 15 November 2024.

[53] The 2021 Agreement contains a dispute settlement term at clause 17, a flexibility term at clause 32 and a consultation term at clause 31. I am satisfied that each of these terms meets the requirements of the Act.

[54] The 2021 Agreement is approved and will operate from 23 November 2021.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

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Annexure A

 1   Fair Work Act 2009 (Cth), s.173

 2   [2014] FWCFB 2042

 3   Australian Maritime Officers’ Union v Harbour City Ferries Pty Ltd & Ors [2015] FWCFB 3337

 4   [2017] FWCFB 3659

 5   [2015] FWCFB 1833 at [45]

 6   [2021] FWCFB 2023