Foundation Housing Ltd
[2023] FWCA 636
•21 JULY 2023
| [2023] FWCA 636 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
Foundation Housing Ltd
(AG2022/5395)
FOUNDATION HOUSING LTD ENTERPRISE AGREEMENT 2021
| Real estate industry | |
| COMMISSIONER SCHNEIDER | PERTH, 21 JULY 2023 |
Application for approval of the Foundation Housing Ltd Enterprise Agreement 2021
Foundation Housing Ltd (the Applicant) has made an application for the approval of an enterprise agreement known as the Foundation Housing Ltd Enterprise Agreement 2021 (the Agreement).
The application was made under section 185 of the Fair Work Act 2009 (Cth) (the Act).
The Agreement is a single enterprise agreement.
The Australian Municipal, Administrative, Clerical and Services Union (the ASU or the Union), being a bargaining representative for the Agreement, has given notice under section 183 of the Act that it seeks to be covered by the Agreement.
Background
Although it does not strictly oppose the approval of the Agreement, the Union raised concerns regarding Award coverage under the Agreement.
The Commission issued initial Directions to the parties, on 9 January 2023, highlighting minor issues identified in the application by the Commission and noting the issues raised by the ASU.
In response to the Directions, the Applicant provided a written undertaking and other supporting documentation, on 19 January 2023.
The ASU filed further submissions on the issue of Award coverage, also on 19 January 2023.
The Applicant filed submissions in reply to the Union’s Award coverage materials, on 24 January 2023.
The matter was then subject to a conference before the Commission, after which, it was determined a Hearing would be the most appropriate setting to resolve the Award coverage issue.
The parties attended a Hearing regarding the Award coverage issue before the Commission, on 28 February 2023.
Following the Hearing, after which I formed my preliminary views on the issues discussed, a further listing was held at the Commission.
The parties have sought leave to file amended documents with the Commission, to resolve the issues at hand.
Legislation
The sections and subsections of the Act that are most relevant to the issues at hand in this matter are as follows.
Section 180(5) of the Act concerns agreement explanations:
“180 Employees must be given a copy of a proposed enterprise agreement etc.
…
(5)The employer must take all reasonable steps to ensure that:
(a)the terms of the agreement, and the effect of those terms, are explained to the relevant employees; and
(b)the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees. …”
Section 186 of the Act requires that the Agreement must be genuinely agreed to:
“186 When the FWC must approve an enterprise agreement—general requirements
Basic rule
(1)If an application for the approval of an enterprise agreement is made under subsection 182(4) or section 185, the FWC must approve the agreement under this section if the requirements set out in this section and section 187 are met.
Note:The FWC may approve an enterprise agreement under this section with undertakings (see section 190).
Requirements relating to the safety net etc.
(2)The FWC must be satisfied that:
(a)if the agreement is not a greenfields agreement—the agreement has been genuinely agreed to by the employees covered by the agreement; and
(b)if the agreement is a multi‑enterprise agreement:
(i)the agreement has been genuinely agreed to by each employer covered by the agreement; …”
Finally, section 188 of the Act details the issue of genuine agreement and remedying apparent issues in this requirement:
“188 When employees have genuinely agreed to an enterprise agreement
(1)An enterprise agreement has been genuinely agreed to by the employees covered by the agreement if the FWC is satisfied that:
(a)the employer, or each of the employers, covered by the agreement complied with the following provisions in relation to the agreement:
(i)subsections 180(2), (3) and (5) (which deal with pre‑approval steps);
(ii)subsection 181(2) (which requires that employees not be requested to approve an enterprise agreement until 21 days after the last notice of employee representational rights is given); and
(b)the agreement was made in accordance with whichever of subsection 182(1) or (2) applies (those subsections deal with the making of different kinds of enterprise agreements by employee vote); and
(c)there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.
(2)An enterprise agreement has also been genuinely agreed to by the employees covered by the agreement if the FWC is satisfied that:
(a)the agreement would have been genuinely agreed to within the meaning of subsection (1) but for minor procedural or technical errors made in relation to the requirements mentioned in paragraph (1)(a) or (b), or the requirements of sections 173 and 174 relating to a notice of employee representational rights; and
(b)the employees covered by the agreement were not likely to have been disadvantaged by the errors, in relation to the requirements mentioned in paragraph (1)(a) or (b) or the requirements of sections 173 and 174.”
Initial issues and positions of the parties
In summary, the primary issue in dispute is which Award(s) should be used to complete the Better Off Overall Test (BOOT) by the Commission.
At the commencement of the hearing, it was confirmed, by the ASU, that clause 3.3 of the Agreement operates to exclude the Awards from the Agreement and that the issue in dispute is only the Award coverage for BOOT calculation purposes.
The Applicant is of the position that the below listed Awards should be used for the purposes of conducting the BOOT analysis.
· Clerks – Private Sector Award 2020 (Clerks Award)
· Miscellaneous Award 2020 (Miscellaneous Award)
· Professional Employees Award 2020 (PE Award)
· Real Estate Industry Award 2020 (REI Award)
· Social, Community, Home Care and Disability Services Industry Award 2020 (SCHADS Award)
The ASU contends that only the SCHADS Award should be used for comparison.
Consideration of initial issues
Following the Hearing, I reserved my decision and began to form my preliminary views on the application.
I formed the view that two Awards, being the SCHADS Award and the REI Award, were applicable. However, the other Agreements initially referred to by the Applicant were not.
This conclusion raised concerns, likely fatal to the application, regarding the Agreement explanation and, accordingly, genuine agreement.
In light of these views, I invited the parties to attend a listing before the Commission.
Amended application and change of position
Following the conference, the parties came to an Agreement between themselves regarding the Award coverage issue.
The Applicant then sought leave to file an amended application.
The amended application includes reference to only the SCHADS and REI Awards.
The ASU then filed an amended F18 Declaration, accompanied by submissions regarding the amendment to remedy the Award issue.
The Union’s submissions are extensive and detailed.
For the purposes of this Decision, I believe it is helpful to quote these submissions at some length.
What follows are the most pertinent excerpts of the Union’s submissions.
Union submissions
In relation to the issue of the Agreement explanation and the effect of the amended application, the Union submits that the error should be treated as a minor technical or procedural error for the following reasons.
“8. The Respondent contends that the Commission’s lack of satisfaction regarding s 186(2)(a) of the FW Act likely relates to the Commission’s lack of satisfaction that the Agreement was ‘genuinely agreed’ pursuant to s 188(1)(a) of the FW Act. The Respondent contends so because it is likely that by the provision of incorrect award coverage information to the Relevant Employees the Applicant has not complied completely with s 180(5) of the FW Act…”
…9. However, the Applicant’s non-compliance with the requirements of s 180(5) of the FW Act can be classified in the circumstances as a ‘minor procedural or technical error’ under s 188(2) of the FW Act. This is so because:
a. the Commission has expressed a view that the Agreement was not ‘genuinely agreed’ under s 188(1) of the FW Act;
b. compliance with s 180(5) of the FW Act is a matter contemplated within s 188(1)(a) of the FW Act; and
c. the Relevant Employees were not likely disadvantaged by the Applicant’s errors regarding award coverage.
11. Firstly, whether a procedural or technical error is ‘minor’ pursuant to s 188(2)(a) of the FW Act calls for an evaluative judgment considering the purpose of the relevant technical and/or procedural provision not complied with and the circumstances in which the error was made. The purpose of s 180(5) of the FW Act is protective of employees’ being afforded the opportunity to make an informed decision when voting for an enterprise agreement. The Applicant’s award coverage error is minor because in the circumstances the Respondent contends that:
a. The Applicant had informed the Relevant Employees regarding which awards covered which groups of Relevant Employees during the ‘access period’…
…b. The Commission has expressed a preliminary view that the SCHCADS Award and the REI Award were correctly identified by the Applicant as covering awards of the Relevant employees but that the Clerks Award, Miscellaneous Award and PE Award were not covering awards. Furthermore, the preceding also demonstrates that it was only certain sub-groups of the group of Relevant Employees that were provided incorrect information while the remaining group of Relevant Employees were not provided incorrect award coverage information. In these circumstances it can be contended that the Applicant has demonstrated a ‘low level of non-compliance’ such that it makes a finding of the award coverage error being a ‘minor technical or procedural error’ pursuant to s 188(2) of the FW Act highly likely.
c. Furthermore, the Relevant Employees were aware throughout the ‘access period’ that the five (5) identified covering awards would not apply to them because the Agreement would cover and apply to them. This is consistent with s 57 of the FW Act. And the Relevant Employees were aware that the Agreement left them better off overall compared to all five (5) of the identified covering awards. That is, the three (3) sub-groups of the Relevant Employees given incorrect award coverage and better off overall information were also provided information that demonstrated how Relevant Employees would be better off overall with the agreement covering and applying to them than the REI Award and the SCHCADS Award covering and applying to them. The Respondent would contend that it is the case that the Relevant Employees, and prospective Relevant Employees, are better off overall when compared to the five (5) awards. In this sense, while the requirements of s 180(5) of the FW Act are of essential importance to the enterprise agreement scheme under Part 2-4 of the FW Act and should not be diminished, the nature of the award coverage error in these circumstances can be characterised as of less significance or weight to the determination of the Applicant’s compliance with the overarching purpose of s 180(5) of the FW Act (see above at [11]). The fact of incorrect award coverage and better off overall information being provided to certain groups of Relevant Employees in these circumstances does not necessarily result in the Relevant Employees having made their decision to vote being uninformed of the effect of the terms of the Agreement. Therefore, it can be said that the Applicant has substantially complied with the requirement to “take all reasonable steps” to have informed Relevant Employees of the effect of the terms of the Agreement and in a manner that the Relevant Employees would understand. In this sense the award coverage error can be characterised as a ‘minor procedural or technical error’.
12. For the Agreement to be held to have been ‘genuinely agreed’ under s 188(2) of the FW Act it also must be demonstrated that the Relevant Employees were not likely ‘disadvantaged’ by the award coverage error. What is meant by s 188(2)(b) of the FW Act is that it was not probable that the Relevant Employees were prevented from substantively from exercising their rights within the enterprise bargaining scheme in Part 2-4 of the FW Act. And having regard to the circumstances in which the non-compliance arises it is usually necessary to have regard to the impact of that non-compliance on the subsequent course of bargaining.
13. Again, the relevant non-compliance is with s 180(5) of the FW Act most likely as the effect of the terms of the Agreement as compared to correctly identified modern awards was not properly or correctly explained to the Relevant Employees. The Respondent would contend that, as adverted to above, the Relevant Employees had information before them that explained the effect of the terms of the Agreement against all five (5) modern awards identified by the Applicant as covering the Relevant Employees. In this sense the Relevant Employees understood the effect of the terms of the Agreement against the REI Award and the SCHCADS Award and understood that they would be better off overall with the Agreement covering and applying to them rather than the REI Award and SCHCADS Award covering and applying to them. In this sense the Respondent contends that the Relevant Employees were not prevented from substantively exercising their right to be informed as to the effect of the Agreement’s terms in a manner that they could understand prior to then being requested to vote on the Agreement by the Applicant. For the same reason the impact of the Applicant’s error on the subsequent course of bargaining was minimal…” (references omitted).
Turning primarily to the issue of genuine agreement, the Unions submit the following and highlight the actual effect on the employees, or lack thereof, resulting from the Applicant’s error and subsequent amendment.
“16. Nevertheless, it could be that the Commission also holds the preliminary view that the Agreement was not ‘genuinely agreed’ for reasons that fall within s 188(1)(c) of the FW Act…
…17. It is arguable that the provision of incorrect information to Relevant Employees regarding the relevant award that covered them and incorrect ‘better off overall’ information to Relevant Employees did misinform and unintentionally mislead Relevant Employees before being requested to vote for the Agreement by the Applicant. The misinforming or misleading of employees about matters that materially affect whether their collective decision to be bound by an enterprise agreement was informed and freely given can be a ‘reasonable ground’ under s 188(1)(c) of the FW Act to hold that the enterprise agreement has not been ‘genuinely agreed’ by the relevant employees.
18. In a situation where relevant employees are misinformed or misled by the employer such a situation can give rise to a ‘reasonable ground’ under s 188(c) of the FW Act if the misleading information or misinformation “could reasonably be expected to have had the effect of deceiving those employees into voting for something which, if they had known the true position, they would not have voted” in the affirmative for it.
19. The circumstances of this Application are that the Relevant Employees were given incorrect award coverage information which led to incorrect ‘better off overall’ information being also provided. But Relevant Employees were aware that the Agreement left them better off overall when compared against the five (5) identified modern awards. Despite the Relevant Employees, or at least a significant group of Relevant Employees, disputing and being concerned regarding the Applicant’s claims that all five (5) of the modern awards covered different sub-groups the Agreement was ‘made’ under s 182 of the FW Act by a margin of four (4) votes in the affirmative. If, considering the hypothetical counterfactual situation, the Applicant had limited its award coverage claims in the ‘access period’ to only the SCHCADS Award and the REI Award (in accordance with the Commission’s preliminary view) then it is likely that a larger group of the Relevant Employees would have voted in the affirmative for the Agreement. In this sense the award coverage error does not negative ‘genuine agreement’ in these circumstances pursuant to s 188(1)(c) of the FW Act because the outcome (being the making of the Agreement under s 182 of the FW Act by an affirmative majority of Relevant Employees voting on the Agreement) would not have been any different.” (references omitted).
Final Consideration
I confirm the Union’s understanding in their submissions, that I had found reasonable grounds to believe the Agreement had not been genuinely agreed to as required by the Act.
The Commission indeed held concern, in relation to the initial issues noted in the original application, that the Agreement could not have been genuinely agreed to, due to the Applicant’s failure to comply with the Agreement explanation requirement under section 180(5) of the Act, arising out of the incorrect identification of relevant Awards.
This failure to comply with the Act arose out of the incorrect information, being the additional information concerning the three (now disregarded) Awards, included in the BOOT calculations provided to the employees.
For the sake of brevity, rather than effectively repeating the above quoted submissions, I will state now that I am in agreeance with the Union’s submissions on the law, in regards to the amendment’s effect on the application.
Turning now to section 188(2) of the Act and the amendment, I am satisfied that the error in Award identification is a minor technical or procedural error for the same reasons provided by the ASU.
Furthermore, I am satisfied that, but for the error, the Agreement has been genuinely agreed to.
Finally, I am satisfied that the employees covered by the Agreement are not likely to have been disadvantaged by the errors.
I echo the reasoning of the Union provided above and note that the Agreement, in spite of the error, still results in the employees being better off overall.
Additionally, I note the Union’s logical conclusion that, in the event the error had been corrected prior to the vote, the Agreement (as amended) would have, in all likelihood, succeeded in being made by an even greater margin of supporting votes.
In summary, the Commission will accept the amended application filed by the Applicant.
The Commission also notes the Union’s support for approval of the Agreement,
Conclusion
The Applicant has provided a written undertaking. A copy of the undertaking is attached to the Agreement.
I am satisfied that the undertaking will not cause financial detriment to any employee covered by the Agreement and that the undertaking will not result in substantial changes to the Agreement.
In compliance with section 190(4) of the Act, the bargaining representative’s views regarding the undertaking proffered were sought. They were provided with the opportunity to raise and address any objections they had to the undertakings proffered. No objection was raised.
Subject to the undertakings referred to above, on the basis of the material contained in the application and accompanying declarations, and noting the reasoning explored above, I am satisfied that each of the requirements of sections 186, 187, 188, and 190 of the Act as are relevant to this application for approval have been met.
In accordance with section 201(2) of the Act, and based on the declaration provided by the Union, I note that the ASU is covered by the Agreement.
The Agreement is approved and, in accordance with section 54 of the Act, will operate from 28 July 2023. The nominal expiry date of the Agreement is 21 July 2027.
COMMISSIONER
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