Freyssinet Australia Pty Ltd T/A Freyssinet

[2017] FWC 3310

[2017] FWC 3310

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Freyssinet Australia Pty Ltd T/A Freyssinet
(AG2017/1575)

COMMISSIONER ROE MELBOURNE, 28 JUNE 2017

Application for approval of the Freyssinet Australia Pty Ltd (SA) Enterprise Agreement 2017 - Undertakings result in substantial change (s.190(2)) - Failure to provide adequate explanation of Agreement and its effect (s.180(5))- Application dismissed.

[1] An application has been made for approval of an enterprise agreement known as the Freyssinet Australia Pty Ltd (SA) Enterprise Agreement 2017 (the Agreement). It has been made by Freyssinet Australia Pty Ltd (the Applicant). The Agreement is a single enterprise agreement.

[2] The Building and Construction General On-site Award 2010 (the Award) is the relevant reference instrument for the purposes of the better off overall test (BOOT) as required under s.186 of the Act.

[3] On 22 May 2017, the Commission sent correspondence to the Applicant advising them that upon review of the application documents, the Commissioner had a number of concerns regarding whether the agreement satisfies the requirements of the Fair Work Act 2009 (the Act). The concerns were as follows:

“1. The Commissioner is concerned the answer provided at Questions 2.4 of the Form F17 does not adequately address the steps taken by the Employer to provide employees with a copy of the Agreement. As you may be aware, Section 180(2) of the Act requires the Employer to take all reasonable steps to give employees a copy of the Agreement and any other material incorporated. Question 2.4 of the F17 asks you to describe the steps taken to give employees the Notice and a copy of the Agreement. Please provide a revised F17 detailing the method you used to distribute the Agreement.

2. The Commissioner notes Clause 24 of the Agreement allows for shut down over the Christmas period however it does not containing(sic) the safeguard contained at Clause 38.3 of the Building and Construction General On Site Award 2010 (the Award) which states the employer must give at least two months’ notice of their intention to shut down. The Commissioner therefore requests an undertaking that addresses this concern.

3. Further, it is noted that Clause 11.1.4 defines excess leave as more than 4 weeks and allows the employer to direct employees to take leave with 4 weeks’ notice. Clause 38.6(a) of the Award defines excess leave as more than 8 weeks and states a direction to take leave has no effect if it results in the employees remaining accrued leave being less than 6 weeks. The Commissioner is concerned that Clause 11.1.4 of the Agreement does not contain the safeguards as contained in the Award. The Commissioner therefore seeks an undertaking addressing this concern.

4. Clause 7.1.1 of the Agreement states the ordinary hours of work shall be an average of 38 hours per week however no roster cycle or averaging period has been provided to satisfy the Commissioner that the employees are better off overall. The Commissioner requests an undertaking addressing this issue. As you may be aware, Clause 33.1(a)(i) of the Award provides where an RDO system is in place, hours of work will be averaged over a four week period, and alternatively, where no RDO system is in place, Clause 33.1(a)(vii) of the Award states employees can work no more than 8 hours per day. The Commissioner is concerned the Agreement does not define the averaging period and further, Clause 7.6 of the Agreement appears to only provide that an employee may work an RDO system. The Commissioner requests an undertaking to address this concern and clarification in relation to the RDO system.

5. Further, Clause 7.1.3 of the Agreement allows hours to be started at 5am due to hot weather. As you may be aware, Clause 33.1(viii) allows for, by agreement, work to commence at 6am. The Commissioner notes that the rates of pay are not high enough to compensate the lack of overtime penalty between 5am and 6am should the employees regularly start at 5am. The Commissioner therefore seeks an undertaking addressing this concern.

6. Clause 7.2.3 of the Agreement defines overtime as ‘all additional hours worked in a rostered shift’. Clause 36.2 of the Award defines overtime as all time worked beyond an employee’s ordinary time of work. The Commissioner is concerned that the wording in the Agreement is unclear to when overtime is payable. The Commissioner therefore seeks an undertaking addressing this concern.

7. Further Clause 7.7 allows for the payment of TOIL rather than overtime, however the Agreement does not specify whether the TOIL is taken at time for time or at the penalty rate. The Commissioner requests an undertaking addressing this issue.

8. The Commissioner notes the rates of pay for employees in the lower classifications are only marginally above the Award rates of pay, when taking into account allowances payable under the Award. As such the Commissioner is concerned there are a number of reductions contained in the Agreement which may result in employees not being better off when compared to the Award. The Commissioner has requested undertakings be provided addressing the below issues:

• The agreement does not offer annual leave loading. The Commissioner is concerned that the rate of pay for the labourer is not high enough to compensate employees when taking into account of the lack of annual leave loading. The Commissioner requests an undertaking addressing this issue;



• The entitlements contained in the inclement weather clause (clause 15) appear more detrimental to employees than compared to Clause 23 of the Award. Furthermore the explanation of inclement weather at Clause 15 of the Agreement states “makes work unsafe” is unclear and more detrimental to employees than compared to Clause 23 of the Award;



• The terms contained in the abandonment of employment clause (clause 19) do not appear in the Award and the Commissioner is concerned this Clause is detrimental to employees;



• The Agreement does not appear to offer a majority of allowances that are otherwise payable under the Award, particularly those contained at Clause 22 of the Award. The Commissioner is concerned, should employees qualify for such allowances, the rates of pay contained within the Agreement do not appear high enough to compensate for this reduction.”

[4] The rates of pay in the Agreement are between 0.24% to 38.57% above the minimum Award rates, inclusive of industry and special allowances, for building employees.

[5] The Applicant provided a response on 24 May 2017, requesting an extension of time until close of business, 26 May 2017 to provide an adequate response. This extension of time was granted.

[6] The Applicant provided a response on 26 May 2017, offering an undertaking (Annexure A), providing a revised Form F17 and providing submissions in relation to the several issues raised by the Commission. The Applicant made submissions as to why the Agreement provisions in respect to allowances should be found acceptable. The Applicant offered an undertaking in respect to the other concerns.

[7] The Applicant provided an undertaking increasing all of the rates of pay by $1.00. This raised the rates of pay in the Agreement to about 4.95% to 38.57% above the minimum Award rates for building employees.

[8] On 2 June 2017, the Commission sent correspondence advising the Applicant that there were still a number of concerns including that the Agreement does not contain a majority of the allowances otherwise found in Clause 22 of the Award and requested a response from the Applicant.

[9] The Applicant provided a response on 2 June 2017, attaching another undertaking (Annexure B) addressing the concern regarding allowances. I doubt that the undertaking offered succeeds in creating an enforceable obligation that employees will not work in conditions where the relevant award allowances would be applicable.

[10] On 5 June 2017, the Commission received an email from the Construction, Forestry, Mining and Energy Union (CFMEU) seeking to be heard in relation to this matter. The CFMEU provided their concerns in the body of the email and stated that in their opinion, the Agreement should not be approved.

[11] On 8 June 2017, the Commission sent correspondence advising the Applicant that the CFMEU had provided objections to the approval of the Agreement and attached the correspondence for the Applicant to view. The Applicant was also advised that although undertakings had been provided to address the concerns raised, given the number of undertakings provided, there was a concern that the undertakings may result in a substantial change to the Agreement. Section 190(3) of the Act states the Commission may accept undertakings if it is satisfied the undertakings are not likely to cause financial detriment to employees or result in substantial changes to the Agreement. In addition, the Commission was concerned that Question 3.5 of the Form F17 did not identify the majority of less beneficial terms contained in the Agreement, which gives rise to concerns that employees may not have been adequately informed about the content of the Agreement. Therefore, the Agreement may not have been genuinely agreed to. In relation to these concerns, the Applicant was requested to provide a response.

[12] The Applicant provided a response on 9 June 2017, requesting an extension of time until close of business, 16 June 2017 to provide an adequate response.

[13] The Commission did not receive a response to the correspondence sent to the Applicant on 8 June 2017. The Commission sent a further email on 19 June 2017, putting the parties on notice that in the absence of any response by close of business Tuesday, I intended to issue a decision on 21 June 2017 based upon the material currently before the Commission.

[14] The Commission received correspondence dated 20 June 2017. In that response, the Applicant responded to the CFMEU submission that the two employees were not covered by the Agreement by stating that one of the employees signed the Agreement and that the employer relied upon the Form F17. The Form F17 is not sufficient to satisfy me concerning the authenticity and moral authority of the Agreement. I would require further information about where the two employees were working, what type of work they were doing, and what they were paid during the period following the notification time for the proposed agreement before I could be satisfied. The Form F17 does not provide this type of information.

[15] In the response of 20 June 2017, the Applicant submitted that the undertakings did not result in a financial detriment. I agree that is the case.

[16] Finally in their response, the Applicant argued that the undertakings do not result in a substantial change. They submitted that:

“whilst the 13 undertakings in this matter are of substance, they do not add up to a result of ‘substantial changes’ to the Agreement, and as such the agreement is capable of approval in accordance with Section 190(2) and Section 186 of the Fair Work Act.”

[17] The Applicant requested that if we require further submissions, we should note that Ms Kamleh is currently on leave returning on 29 June 2017.

[18] I requested the Member Support team to respond as follows:

“1. The Commissioner is not convinced by your submission that the undertakings do not result in a substantial change to the agreement.

2. The Commissioner considers that the undertaking in respect to the Clause 22 allowances does not achieve the objective of ensuring that employees do not work in conditions in the future which would result in these allowances being applicable under the Award. This issue could be readily fixed by an amended undertaking.

3. The Commissioner is not satisfied that the employer took all reasonable steps to explain the agreement and the effect of its terms to the employees because it is reasonable to infer that the employees were told what is in the F17 and the F17 does not accurately identified(sic) the detrimental terms and the omissions are significant.

4. The Commissioner would require further information about what work the two employees were performing in South Australia during the period between the notification time and the vote on the Agreement and what pay they received during that period and whether or not they were employees of the company or a related entity prior to the notification time before he could be satisfied that there was a genuine agreement.

In light of points 1 and 3 above the Commissioner would not be able to approve the Agreement. In the absence of any further response the Commissioner will make a decision to not approve the agreement tomorrow morning at 10am. Should you wish to make further submission(sic) you will need to advise by no later than 9am Melbourne time tomorrow. Should we receive such advice the matter will be listed for final hearing on Friday at 2pm (Melbourne time). Video link facility to the Adelaide FWC will be arranged. The Commissioner understands that Ms Kamleh is on leave however the Commissioner does not consider that further delay would be appropriate given that the company is represented by the MBA which is a substantial registered organisation and that the matter can be decided upon issues which do not depend upon contested facts and that the Applicant has already had opportunity to provide submissions and has already been granted significant extensions of time in that process.”

[19] The Applicant requested the opportunity to make further submissions and the matter was listed for hearing.

[20] At the hearing of the matter, Mr Hampson, the Regional manager of Freyssinet Australia Pty Ltd in South Australia, gave evidence. He gave evidence that some of the special rates in Clause 22 of the Award, do apply to work performed by the company from time to time but that some of the other allowances do not apply to the nature of the work undertaken by the company at this time. Freyssinet is prepared to provide an undertaking that certain allowances are not generally applicable to the type of work performed by the company and that in the event that a circumstance arose where the allowance would have been applicable under the Award, the company will pay the allowance at the relevant award rate. This would resolve the concerns about those allowances.

[21] Mr Hampson also proposed to provide an undertaking to further increase the hourly rates paid. The labourer rate in the agreement is $21.28 per hour, the original undertaking lifted this to $22.28 per hour and the new undertaking would lift this to $25.92 per hour. The undertaking would increase the rates in the Agreement by 21.8%.

[22] The Applicant submitted that these amended undertakings would replace undertakings 7 in Annexure A, in respect to annual leave loading and undertakings 10, 11 and 12 in respect to wage rates and allowances.

[23] It was agreed that I should assess the matters in contention on the basis of the amended undertakings. The revised undertakings were provided after the hearing and they are attached as Annexure C to this decision.

[24] The Applicant conceded that the rates of pay in the Agreement were too low to ensure that the Agreement passed the BOOT without the undertakings. The Applicant identified that the following matters are more beneficial than the Award:

• the living away from home allowance;



• the living away from home meal allowance; and



• the travel between worksites allowance.

[25] These allowances are conditional upon certain circumstances and they do not apply to all work. The rates of pay for labourers are very close to the Award. A site allowance of $1 applies to working on site but does not apply to periods of leave. I accept that the site allowance will apply to most circumstances. The site allowance is not sufficient to compensate for all of the detriments identified by the Commission. The Applicant submits that it is sufficient to compensate for the absence of multi-story allowance and first aid allowance. However, where other allowances are applicable, the BOOT cannot be met. This is particularly the case as I consider that the alignment of classifications from the Agreement to the Award to be understated. In the Form F17, the Applicant has aligned the non-trades classifications in the Agreement with CW1 and CW2 and the trades classifications with CW3. I doubt the accuracy of this alignment. Some of the non-trades work performed by skilled or specialist applicators and post tensioners would certainly be at a classification above CW2 in the Award. There are no classification descriptors in the Agreement and as a consequence alignment should be done on the basis of the highest likely comparable Award classification level.

[26] The Applicant submitted that some of the undertakings were either unnecessary or were simply clarification of the status quo and the mutual intention of the parties. I accept that this is the case in respect to undertaking 6, in respect to time off in lieu. I accept that abandonment of employment is not likely to have a major effect on employees. However, I consider that the absence of notice for close down, the lack of protections of accrued annual leave, the more restricted application of inclement weather protection, the absence of penalty rates for working prior to 6.00 am, the lack of clarity in respect to how ordinary hours can be arranged and when overtime is paid, and the absence of many allowances are significant.

[27] I accept the evidence of Mr Hampson that there are a number of allowances in Clause 22 of the Award which are unlikely to apply to the Applicant’s work.

[28] The CFMEU was not a bargaining representative for the Agreement, but I decided that I would be assisted in informing myself if I gave the CFMEU the opportunity to make submissions and to participate in the hearing of the matter.

[29] The CFMEU were granted permission to intervene in this matter by virtue of s.590 of the Act. The CFMEU has a long history of representing the industrial needs of employees in the building and construction industry and I considered that the CFMEU could make a positive contribution to this matter. I considered, given the nature of the matters in contention in this particular matter, that the proceedings will be made both fairer and more efficient by the presence of a contradictor.

[30] In considering whether or not the undertakings provided constitute a substantial change to the Agreement, I have had regard to the following:

• The number of undertakings is an indicator of substantial change but not in itself determinative.



• The overall impact of the undertakings is of course much more substantial where the Agreement is close to the Award than where the Agreement provides wages and conditions well above the Award. In this case, the rates of pay and the conditions are in some cases very close to the Award or detrimental when compared to the Award. The impact of the undertakings is therefore likely to be substantial.



• The impact of the undertakings is less substantial where the undertakings simply clarify what was the mutual intention of the parties or deal with a rare situation or a situation of marginal impact. Although this is the case in respect to some of the undertakings, it is not true of the undertakings taken as a whole.

[31] The undertaking to lift the rates of pay in the Agreement from just above the Award taking into account industry and special allowance to 22% above the Award; is a substantial change to the character of the Agreement. The workers voted on an Agreement where the labourers’ rate was essentially the Award rate; with the undertaking, the Agreement is one where the rate is substantially above the Award rate. The undertakings in respect to hours of work are also substantial. The hours of work provisions of the Agreement allowed for a substantial number of hours to be worked as ordinary time and at ordinary rates which would have been subject to penalty rates or overtime rates under the Award. Work between 5.00 am and 6.00 am was at ordinary rates under the Agreement, whilst with the undertaking the appropriate penalty rates will apply. The employees who voted for the Agreement are excluded from an RDO under Clause 7.6 and as a consequence their ordinary hours can be an average of 38 hours over an indefinite period. This compares unfavourably to the Award, where there is no capacity for averaging except under an RDO system. Up to 12 ordinary hours can be worked in a day under Clause 7.1.1 and 7.1.2 of the Agreement and overtime is only payable in addition to rostered shift hours (Clause 7.2.3.1). This contrasts with the requirement to pay overtime rates after 8 hours under the Award. The undertaking to limit ordinary hours to 8 in any one day and to ensure that overtime is paid beyond ordinary hours rather than beyond rostered hours and to ensure that penalty rates are paid before 6.00 am are substantial changes to the Agreement.

[32] I have determined that the undertakings provided result in a substantial change to the Agreement (s.190(3)(b)). As a result, the undertakings cannot be accepted and the Agreement does not pass the BOOT. The Agreement cannot therefore be approved as there is no suggestion that circumstances exist which would justify the approval of the Agreement when it does not pass the BOOT.

[33] The Form F17 Statutory Declaration identified the absence of first aid allowance and the absence of multi-story allowance as the only detrimental matters in the Agreement when compared to the Award. I am satisfied, as can be seen from the undertakings requested and provided, that there are a number of other substantive matters which are detrimental when compared to the Award. The fact that there may be some errors or omissions in the employer’s assessment of the benefits and dis-benefits of an agreement when compared to the relevant award(s), does not necessarily mean that employees were not properly informed or that all reasonable steps were not taken by the employer to inform employees. Ultimately, the task of assessment for the BOOT is for the Commission not the employer. However, where the omissions or errors are substantial and concern matters which would be essential to a proper explanation of the Agreement and its effect on employees, then the responses of the employer in the Form F17 can be relevant in assessing whether or not the requirements of Section 180(5) have been met.

[34] The hours of work provisions of the Agreement allowed for a substantial number of hours to be worked as ordinary time and at ordinary rates which would have been subject to penalty rates or overtime rates under the Award. This is not disclosed in the Form 17. There are a number of allowances which Mr Hampson conceded were applicable to the work of the Applicant which are not included in the Agreement or in the Form F17. The narrower application of the inclement weather provision and the less beneficial provisions in respect to close down and annual leave were also not disclosed. It is reasonable to infer that the information provided to employees was consistent with the Form F17 Statutory Declaration of the employer. It is therefore reasonable to infer that employees were not told of significant detriments in the Agreement when compared to the Award. Employees were told of the more beneficial provisions in the Agreement. In these circumstances, I cannot be satisfied that the requirements of Section 180(5) of the Act, to take all reasonable steps to explain the Agreement and the effect of the terms of the Agreement were met.

[35] I determine that employees were not adequately informed and the Agreement could not have been genuinely agreed to. The requirements of s.180(5) of the Act have not been met and as a consequence there is not a genuine agreement (s.188(a)(i)) of the Act and the Agreement cannot be approved (s.186(2)(a) of the Act).

[36] The employer was on notice of the nature of the concerns and that it may mean that a decision would be made to dismiss the application for approval of the Agreement. The employer was provided with a reasonable opportunity to make submissions which might resolve these concerns.

[37] The Agreement was made with two employees. The CFMEU submit that the two employees were not engaged within the scope of the Agreement, which is in South Australia.

[38] At the hearing, Mr Hampson gave evidence that:

• “I can confirm that both relevant employees were engaged as casual employees pursuant to a written letter of appointment to commence 20 January 2017.”



• “Both employees were appointed as casual construction workers on the Port Bonython project reporting to the Site Supervisor.”



• “The pay rates for the employees in their letters of appointment were:

CW3 - $28.26 per hour inclusive of casual loading and subject to the Award.

CW5 - $31.88 per hour inclusive of casual loading and subject to the Award.”

• “Each employee was aware of the nature and conditions of the work undertaken by them for Freyssinet Australia Pty Ltd (SA), as they had commenced working on the Port Bonython Project for Freyssinet Australia Pty Ltd (SA), initially through a labour hire company and subsequently as employees as weekly paid employees of Freyssinet Australia Pty Ltd (SA).”

[39] Mr Hampson gave further evidence in the proceedings that the rates of pay referred to in his statement were also inclusive of industry and special allowance. He also gave evidence that the Applicant had only established its operations in SA this year and that it is looking to expand its operations and is seeking new contracts in SA. Prior to 2017, it had only occasional work in SA. The Applicant has now obtained a significant contract at the Calvary Hospital in Adelaide. It is using labour hire workers until this Agreement is approved and then it intends to employ these workers directly under the Agreement.

[40] The Applicant has a number of other enterprise agreements. The Freyssinet Australia Pty Ltd NSW Civil Engineering Collective Enterprise Agreement 2016-2018 (NSW Agreement), despite its title, is not restricted in its application to NSW. Clause 3.1.3 ensures that it applies to any Australian based employees of the company engaged on civil engineering projects in the classifications which are similar in scope to the Agreement. I make no finding on this matter and it does not influence my decision in this matter, as this issue was not raised in the proceedings, but it is possible that the NSW Agreement applies to the employees who voted for this Agreement.

[41] Mr Hampson gave evidence that the two employees were engaged in skilled labourer work and they were not tradespersons. They would therefore be classified at the Skilled labourer/applicator level of the Agreement. The rate under the Agreement for that worker would be $22.08 per hour plus a 25% casual loading and plus a $1 site allowance when working on site. That is a rate of $27.60 plus the $1 site allowance. The two employees who voted for the Agreement were being paid $28.26 per hour and $31.88 per hour plus the applicable allowances under the Award (excluding industry and special allowance). The rate of pay of one of the two employees therefore appears to have been significantly above the rate of pay they would have been entitled to under the Agreement. There is nothing to prevent the employer paying more than the rate of pay in the Agreement. However, where the Agreement is made with only two persons and the company is seeking to establish an agreement which it can then utilise to cover expanded work involving more employees, the authenticity of the agreement must be called into question if at least one of those employees does not have a direct stake in the rates and conditions of the agreement being voted upon. The over award benefits in the agreement are certainly more than balanced by the detrimental terms.

[42] Although I have doubts about the authenticity of the Agreement, it is not necessary to finally decide this question. The evidence concerning the stake the employees had in the Agreement was not particularly clear or strong. It is therefore wiser to avoid a final conclusion in circumstances where it is not absolutely necessary.

[43] I am unable to approve the Agreement because I am satisfied that the Agreement does not pass the BOOT without undertakings and the undertakings offered would result in a substantial change to the Agreement. I am also unable to approve the Agreement because I am not satisfied that the employer took all reasonable steps to explain the Agreement and effect of its terms.

[44] On that basis the Application is dismissed.

COMMISSIONER

Appearances:

S Richter of Counsel for the applicant.

N Candy for the Construction, Forestry, Mining and Energy Union.

Hearing details:

2017.

Melbourne and Adelaide (by video):

June 23.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR593920>

Annexure A

Annexure B

Annexure C