Formaction Concrete Civils Pty Ltd

[2014] FWC 6310

[2014] FWC 6310

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Formaction Concrete Civils Pty Ltd
(AG2014/842)

DEPUTY PRESIDENT MCCARTHY PERTH, 12 SEPTEMBER 2014

Application for approval of the Formaction Concrete Civils Pty Ltd Single Enterprise Agreement 2014.

[1] This matter concerns an application by Formaction Concrete Civils Pty Ltd (the Applicant) for the approval of the Formaction Concrete Civils Pty Ltd Single Enterprise Agreement 2014 (the Agreement).

[2] The application was lodged on 10 April 2014. I held a telephone conference on 9 May 2014. The Construction, Forestry, Mining and Energy Union (the CFMEU) were granted permission to participate in the conference. The CFMEU advised that a number of employees had contacted the CFMEU and indicated that they believed they were covered by the Agreement but were not involved in the making of it.

[3] The Agreement provides in Clause 6 Application that:

“The Agreement applies to Employees of the Company engaged in civil construction within the classification structure described in Schedule One of this Agreement.”

[4] The Company is defined in the Agreement as the Applicant. The Agreement at Schedule 1 Employment Classifications of the Agreement includes a table of classifications which appears to be extracted from the Building and Construction General On-site Award 2010.

[5] There is thus no limitation, or exclusion, of any nature for employees of the Applicant that are covered by the classifications in Schedule 1 of the Agreement. The Agreement will nominally expire four years after the date that the Fair Work Commission (the FWC) approves it.

[6] It is not in dispute that at the time of making the Agreement the Applicant employed employees at a number of major construction projects in Western Australia and the Northern Territory. Employees of the Applicant at those projects are covered by Greenfield Agreements.

[7] At the conference conducted on 9 May 2014 the Applicant indicated that they would be prepared to give an undertaking to exclude the operation of the Agreement for employees covered by Greenfield Agreements. By excluding those employees covered by Greenfield Agreements all remaining employees would be covered, and all of those employees were involved in the making of this Agreement. I indicated at the conference that I was not inclined to accept an undertaking to overcome the issue.

[8] At the conference I requested the Applicant to advise me of what further actions they may wish to take or request that I take. On 14 May 2014 the Applicant emailed my Chambers and advised as follows:

“In relation to the teleconference held on 9 May 2014, Formaction proposes an undertaking to clarify the scope of the agreement. We advise that it was never the intention of Formaction for this agreement to cover employees covered by existing site or project specific enterprise agreements.

Specifically, it was not the intention of Formaction that employees covered by Nammuldi project agreements be covered by this agreement. This is further evidenced by the contracts of employment for those.

We have received external advice prior, during and subsequently that the employees chosen by Formaction to be covered by the proposed agreement were fairly chosen as they were geographically, operationally and organisationally different from the employees to whom the existing agreements apply.

Given this, Formaction proposes an undertaking as set out in the letter attached.

We are unsure if the CFMEU have a standing to be party to this process as they were not bargaining representatives for this agreement and, to our knowledge have no members under this agreement. Our understanding from the teleconference of Friday 9th May 2014 is that the CFMEU were claiming to represent only members employed at the Nammuldi project.”

[9] I conducted a further conference on 12 June 2014. I requested that the Applicant and the CFMEU provide me with written submissions regarding (a) whether the Agreement has been genuinely agreed to and (b) whether an undertaking can overcome the deficiency of the Agreement covering persons who were not involved in the making of it.

[10] Representatives for the Applicant provided written submissions on 16 June 2014. They submitted that the Applicant’s email to me (presumably being the email of 14 May 2014) explained that the scope issue was a drafting error. Whilst the email made no mention or suggestion that the Scope Clause in the Agreement was a drafting error, I accept that could have been what they meant in their explanation.

[11] The Applicant suggested that s.186 [and especially s.186(3) and (3A)] and s.190 were the provisions of the Fair Work Act 2009 (the FW Act) most relevant to the application.

[12] The Applicant argues that the employees intended to be covered by the Agreement were fairly chosen as they are all those employees except for those employees covered by Greenfield Agreements. However this issue is a matter subsequent to the issue in contention here. The issue in contention here is whether I should accept an undertaking that changes the scope clause of the Agreement. The argument initially put forward was that it was never intended that the employees at the Nummaldi Project be covered by the Agreement. It was later submitted that the employees at three additional projects (Wheatstone, Ichthys and Roy Hill) were not intended to be covered. It was then submitted that the previous explanations were that “it was a drafting error”. This was then explained later in the submission that the Nummuldi Agreement (and other site specific agreements) “were overlooked when the scope clause was drafted”. The Applicant then submitted that the undertaking would overcome the “unintended drafting error”.

[13] The Representative for the Applicant exampled five agreements that had been approved by the FWC with undertakings 1. It is not necessary that I examine those approvals, no doubt they all had their own particular circumstances and factual background.

[14] The FW Act at s.190 provides as follows:

“190 FWC may approve an enterprise agreement with undertakings

Application of this section

(1) This section applies if:

(a) an application for the approval of an enterprise agreement has been made under section 185; and

(b) the FWC has a concern that the agreement does not meet the requirements set out in sections 186 and 187.

Approval of agreement with undertakings

(2) The FWC may approve the agreement under section 186 if the FWC is satisfied that an undertaking accepted by the FWC under subsection (3) of this section meets the concern.

Undertakings

(3) The FWC may only accept a written undertaking from one or more employers covered by the agreement if the FWC is satisfied that the effect of accepting the undertaking is not likely to:

(a) cause financial detriment to any employee covered by the agreement; or

(b) result in substantial changes to the agreement.

FWC must seek views of bargaining representatives

(4) The FWC must not accept an undertaking under subsection (3) unless the FWC has sought the views of each person who the FWC knows is a bargaining representative for the agreement.

Signature requirements

(5) The undertaking must meet any requirements relating to the signing of undertakings that are prescribed by the regulations.”

[15] The operation of s.190 is premised on the basis that the FWC has a concern that the Agreement does not meet the requirements of s.186 and s.187. Here the matter of concern is that the requirements for the approval of the Agreement have not been met due to employees covered by the Agreement not being notified nor involved in the making of the Agreement. This has been explained as variously put as an “oversight” and a “drafting error” and finally an “unintended drafting error”. Whilst that may be so it does not detract from the failure to meet the obligations of the FW Act. I note that the Applicant has dedicated human resources expertise and was involved in four major construction projects for the resource sector at the time the Agreement was made.

[16] There can hardly be a more significant element of an Agreement than who is covered by it. Here, without the undertaking, the Agreement will cover although not apply to, employees at four major projects. I also have no information as to whether it may apply to any of those employees covered by the Greenfield Agreements in the future nor anything about the practices of the employer in respect of engagement and transfer of employees.

[17] I consider that the change to the operation or scope of the Agreement is substantial. I am therefore not able to accept an undertaking for that reason. As a consequence those employees that will be covered by the Agreement were neither given notices of representational rights nor had any opportunity to participate in the making of the Agreement I am not satisfied that the requirements of s.186 and s.187 have been met. I therefore refuse this application.

DEPUTY PRESIDENT

Final written submissions:

Applicant, 16 June 2014.

Construction, Forestry, Mining and Energy Union, 26 June 2014.

 1   Wonderest Limited Polyurethane Foam Manufacturing (Deer Park) Enterprise Agreement 2010-2013 [2011] FWAA 1237; Big River Pork and AMIEU Meat Processing Enterprise Agreement 2013 [2013] FWCA 6411; Leighton Contractors (NSW/ACT) Civil Projects CFMEU, AWU, AMWU Enterprise Agreement 2012-2016 [2013] FWCA 732; MTAA Super Business Development Managers Enterprise Agreement 2012-2015 [2012] FWAA 5908; and Cummins South Pacific Pty Ltd Engine Upfit, Recon, Manufacturing Operations and Recon Warehousing Enterprise Agreement 2010 [2010] FWAA 9285.

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