Hawthorne Plant And Logistics Pty Ltd
[2024] FWC 2756
•3 OCTOBER 2024
| [2024] FWC 2756 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
Hawthorne Plant And Logistics Pty Ltd
(AG2024/1501)
| COMMISSIONER DURHAM | BRISBANE, 3 OCTOBER 2024 |
Application for approval of the Hawthorne Plant and Logistics Pty Ltd Enterprise Agreement 2024 – whether employees are Better Off Overall – whether employees who voted have sufficient interest and were representative of those to be covered – whether genuine agreement – application dismissed
Hawthorne Plant and Logistics Pty Ltd (HPL) has made an application under s 185 of the Fair Work Act 2009 for approval of an enterprise agreement known as the Hawthorne Plant and Logistics Pty Ltd Enterprise Agreement 2024 (Agreement).
The Application seeks approval of a single-enterprise agreement to cover employees engaged in the operation of minor and major plant and haulage, whom are presently covered by either the Road Transport and Distribution Award 2020 (Haulage Award) or the Building and Construction General On-site Award 2020 (Building Award). The application is opposed by the Construction, Forestry and Maritime Employees Union (CFMEU).
I cannot approve an enterprise agreement unless all the statutory approval requirements have been met. Having considered the evidence and submissions of the parties, I am not satisfied that all employees will be better off overall under the agreement. Further, I have not been convinced that HPL took all reasonable steps to explain the agreement, nor that the employes who voted to approve the agreement are sufficiently representative of those who will be covered by it. Whilst the identified Better of Overall Test (BOOT) issues may be capable of being addressed through further undertakings, the genuine agreement issues cannot. Consequently, the Agreement is not capable of being approved. My reasons follow.
Procedural Background and Evidence
An application seeking approval of the Agreement was lodged on 3 May 2024. The matter was initially allocated to Commissioner Lee who undertook a review of the Agreement and identified a number of issues relating to pre-approval processes and BOOT concerns.
HPL were invited to provide further submissions and/or undertakings to address these concerns, which they did.
On 20 May 2024, pursuant to s 590 of the Fair Work Act 2009 (the Act), Commissioner Lee granted the CFMEU’s request for permission to be heard in relation to the approval of the Agreement. The CFMEU were subsequently provided with the Form F16 and Form F17B (redacted) and associated attachments including the Agreement itself.
The Matter was reallocated to my Chambers as a contested agreement. On 23 May 2024, having reviewed the application and associated correspondence, I sent an email to HPL seeking responses to a range of additional issues I had identified with the Agreement. The CFMEU were invited to provide their views with respect to all of the issues that had been raised regarding the Agreement to date, including the responses and undertakings that had already been provided by HPL.
The matter was listed for conference on 5 June 2024. The CFMEU were invited to provide written submissions in advance of the conference. Briefly summarised, the CFMEU submitted that the Agreement was not capable of being approved because:
It does not pass the BOOT,
HPL failed to take all reasonable steps to explain the terms of the proposed Agreement and,
The employees who voted to approve the Agreement were not sufficiently representative of the employees that would be covered by it.
Following the conference, I remained unconvinced that the Agreement was capable of being approved. The matter was listed for Hearing on 11 July 2024.
Prior to the Hearing, the CFMEU had sought that Mr Zdravko Cvetanoski, HPL’s General Manager, be made available for cross examination. They made this request on the understanding that Mr Cvetanoski had completed the F17B on behalf of HPL (this information had been redacted from the F17B they had received).
HPL objected to the CFMEU being granted the opportunity to cross examine their witness, arguing that the Commission had only granted the CFMEU to be heard on the matter pursuant to s 590 of the Act, and that such permission did not extend to them the right to cross examine witnesses.
I disagreed with HPL on this point, confirming that I considered the CFMEU standing to be heard extended to the making of submissions and the cross examination of any witnesses to be relied upon by HPL.
On 4 July 2024 HPL wrote to Chambers about the CFMEU’s intent to cross examine Mr Cvetanoski regarding the F17B. They advised that Mr Cvetanoski had not completed the F17B, rather, it had been completed by Ms Stacey Arnold, HPL’s then HR Manager. It was further noted that Ms Arnold was no longer employed by HPL. Whilst noting their acceptance that I may inform myself in relation to this matter as I saw appropriate, they suggested that in the circumstances a hearing may no longer be necessary.
On 5 July 2024, the CFMEU sought that as Ms Arnold, was the maker of the F17B Declaration, she be made available for cross examination.[1] In response HPL advised that they had made contact with Ms Arnold and that she was attempting to make arrangements to be available for the Hearing.
On 9 July 2024, HPL advised that Ms Arnold had been unable to make arrangements to attend and that as such they would rely on the F17B and Mr Cvetanoski’s evidence. The following day, HPL filed a second witness statement for Mr Cvetanoski which outlined his understanding of the Agreement explanation and the F17B.
It is noted that the CFMEU strongly objected to any weight being given to the F17B, given HPL’s failure to lead any first-hand evidence in that regard. They also objected to Mr Cvetanoski’s second statement being admitted on the basis that no leave was sought to lodge a supplementary statement and further that it simply contained unsourced third-hand hearsay.
Due consideration was given to the submissions of the parties and all of the circumstances of this matter however, noting that I am not bound by the rules of evidence, I admitted both the F17B and the second statement of Mr Cvetanoski. The CFMEU, in closing submissions again pressed their contention that no weight can be afforded to either the F17B or Mr Cvetanoski’s evidence in this regard.
Considering all of the circumstances of this matter, the fact remains that the F17B was completed by Ms Arnold on behalf of HPL. I accept HPL’s submissions that all applicants are bound by the procedures of the Act when making an application for approval of an enterprise agreement, including the requirement to lodge an F17B. It is noted that it is not at all unusual for a HR Manager to be the person completing this form on behalf of the company and that F17B declarations made in this way are routinely relied upon by the Commission when deciding agreement approval applications, without the requirement for sworn evidence as to their contents.
I also note that the CFMEU have referenced the F17B themselves when addressing the question of whether or not the Agreement was sufficiently explained. As will be addressed further in this decision, I have found the F17B to have been quite instructive in this regard and as such it has been of assistance in informing myself.
Who does the Agreement seek to Cover?
HPL describe their core business function as providing the following services to its clients:[2]
haulage of plant and civil construction materials
hiring of plant operating equipment
plant operation services
The below table show the number of employees eligible to vote, their current award classification and proposed agreement classification:
| Summary of employees at time of ballot | ||
| Agreement Classification | Award Classification | Number of employees |
| Building Award | ||
| CW1 New Entrant | CW1(d) | 0 |
| CW2 – Experienced Labourer | CW2 | 0 |
| CW3 – Skilled Construction Worker | CW4 | 4 |
| CW4 – Minor Plant Operator | CW4 | 0 |
| CW5 – Major Plant Operator | CW5 | 6 |
| CW6 – Advanced Plant Operator | CW6 | 2 |
| Haulage Award | ||
| HR Driver | Transport Worker Grade 4 | 4 |
| HC Driver | Transport Worker Grade 5 | 1 |
| MC Driver | Transport Worker Grade 6 | 1 |
| Total Employees | 18 | |
Is the Agreement capable of approval?
My concerns with the Agreement fall into two categories, those related to BOOT, and those related to the Genuine Agreement requirements of the Act.
BOOT Concerns
For an agreement to pass BOOT, I must be satisfied that at the time of application (test time) each award covered employee, and any future award covered employee, would be better off overall if the agreement applied to them instead of the relevant Award.[3]
Importantly, I must consider any prospective or future employees when applying BOOT because sometimes, as is the case in this matter, a proposed agreement seeks to cover classification/s of employees in which no employees are engaged at the test time.[4]
Rates of Pay
On a straight comparison, the rates of pay within the Agreement (not loaded rates) are:
Haulage Award - between 27.88% and 55.16% above the Award, and
Building Award - between 3.21% and 57.60% above the Award.
Whilst these rates of pay are generally significantly higher than the Award, this is not the case for Levels CW1 and CW2 of the proposed Agreement, which are only 7.51% and 14.77% respectively above the award rates for permanent employees and 3.21% and 10.18% respectively above the award rates for casual employees.
When BOOT modelling is undertaken, using the usual parameters for the construction industry of a 50-hour week and taking into account all factors of the agreement such as reduced or amended allowances and entitlements the rates under the agreement are:
Haulage Award - between 25.96% and 33.15% above the Award, and
Building Award - between 1.93% and 44.02% above the Award.
Again, the rates of pay for CW1 and CW2 employees are considerably lower than other employees.
When the same modelling is undertaken with an RDO factored in, the CW1 and CW2 rates of pay reduce even further to -3.03% for CW1 and 3.14% for CW2.
As will be discussed further on in this decision, at test time, HPL did not currently employ any workers at these levels and no employees at these levels voted on the Agreement.
Undertakings
Many of the issues raised by both Commissioner Lee and myself have been addressed by HPL through undertakings, however several remain unresolved. For completeness I will step through each of the issues, and relevant submissions/undertakings below.
Part time minimum engagement – Haulage Award
The Agreement is silent on minimum engagements for part time employees. Clause 10.7 of the Haulage Award provides for a minimum of 4 hours and as such, I raised my concern that the rates of pay provided by the Agreement did not appear to compensate for this reduction. In response, HPL provided the following undertaking:[5]
“A part-time employee shall be entitled to a payment of a minimum of four (4) hours’ work per engagement”.
This undertaking is consistent with clause 10 of the Haulage Award and as such I am satisfied that it addresses this concern.
Hours of work
Clause 7.1 of the Agreement provides a span of ordinary hours between 4:00am and 6:00pm, however the Building Award at clause 16.1 provides a span between 7:00am and 6:00pm Monday to Friday, with the option to begin at 6:00am by agreement. The Haulage Award, at Clause 13 provides a span of hours between 5.30am and 6.30pm Monday to Friday.
It was raised with HPL that not all of the Agreement rates of pay appeared high enough to compensate for the wider span of hours where employees would otherwise receive overtime payments between 4:00am and 7:00am under the Building Award, or between 4:00am and 5.30am for the Haulage Award. In response to this concern, HPL have provided the following undertaking:[6]
“The ordinary hours may be worked from 6:00am to 6:00pm, Monday to Friday”.
The proposed undertaking is consistent with the Building Award and more beneficial than the Haulage Award. I am satisfied that my concerns in this regard have been addressed.
Night Shift
Clause 7.4 of the Agreement defines night shift as a shift that commences between 6:00pm and 4:00am. Clause 17.2 of the Building Award provides for night shift where a shift starts at or after 8:00pm and before 6:00am. It was unclear if all employees would be better off given the reduction as they may work ordinary hours under the Agreement where they would otherwise be entitled to the night shift penalty under the Award. In response to this concern, HPL provided the following undertaking:[7]
“With respect to Clause 7.7 – Shift work. The following will apply in regard to the definition of a Night Shit [sic] and Day Work.
A Night Shift is defined as a shift whereby the ordinary hours of work commence between 8:00pm and 6:00am.
Day work (i.e. work commencing between 6:00am and 10:00am) is not shift work”.
In closing submissions, HPL noted two minor typographical errors in the undertaking. The first being that the reference to Clause 7.7 should read 7.74. Unfortunately, this submission also appears to be a typographical error. It is presumed that the correction was intended to ensure that the undertaking apply to clause “7.4 Night Shift” of the Agreement. The second minor error is the misspelling of Night Shift.
I also note that afternoon shift has not been amended resulting in an employee who commences between 6:00pm and 8:00pm, not receiving a loading of 115% as per clause 17.2(a) of the Building Award.
With the above noted errors corrected, the Night Shift provisions of the Agreement align with the Building Award and are no longer a BOOT concern, however without further undertakings to ensure that the definition of an afternoon shift is also consistent with the Building Award, the rates of pay provided by the Agreement for the CW1 employees are not sufficient to compensate for this reduction.
Redundancy Scheme
Clause 5.3 of the Agreement provides for redundancy as per the National Employment Standards (NES) rather than the industry specific redundancy scheme that is provided for at Clause 41 of the Building Award. This results in employees who have worked for HPL for up to three (3) years, receiving less than they would under the Award.
HPL submitted that the wage rates contained within the Agreement contain a component that compensates for this reduction. HPL also note that this was explained to employees. In this regard I note that the summary document provided to employees contains the following:[8]
“Redundancy
10. Redundancy will be in accordance with the National Employment Standards (“NES”) of the Fair work Act 2009 (Cth).
11. For employees who are engaged in civil works. The NES redundancy scheme replaces the industry scheme in the Building and Construction General On-Site Award 2020. The industry scheme is contained in Clause 34 of the Modern Award available in the link provided.
· The wage rate contains an amount equal to 1.75 hours per week at the ordinary rate in the modern award to compensate for the payment for terminations that are not covered by the NES redundancy scheme.”
HPL submit that, despite the adoption of the NES redundancy provisions in the Agreement, the rates of pay are sufficient to compensate for the difference between the NES and the industry specific redundancy scheme under the Award.
I accept the submission of HPL with respect to all classifications other than CW1 and CW2.
Casual loaded rates
Clause 6.3 of the Agreement provides as follows:
“6.3 Loaded Rates - An employee may be paid a loaded rate at the discretion of the employer in lieu of ordinary time, overtime, penalties, public holidays and allowances that arise from this agreement (excluding living away from home allowance). The loaded rate will apply for a maximum of 56 hours per week in a work cycle Monday to Saturday”.
The clause does not restrict its applicability to permanent employees and as such loaded rates could be applied to casual employees. In considering the impact of clause 6.3, I note that HPL’s workforce is predominantly casual. Of the eighteen (18) employees engaged at test time, only five (5) were engaged on a full-time basis, with thirteen (13) engaged as casuals.
The Loaded Rates in Agreements, as noted in Application by Aldi Foods Pty Limited as General Partner of ALDI Stores (A Limited Partnership) T/A Aldi Stores & Welsh, Patrick which provides that it will be difficult for casual employees with loaded rates to pass the BOOT, because ‘it would always be possible for the casual employee, in a given pay period, to be engaged to work on a day or at a time which would attract the payment of penalty rates under the relevant award and not to be engaged on any other hours or at any other times’.[9]
I raised concerns in this regard, as did the CFMEU. The CFMEU submissions reference the decision of the Full Bench as I have cited above,[10] further noting that the Full Bench went on to state that:[11]
“In that circumstance, if the agreement provided for a loaded rate which was
less than the highest penalty rate provided for in the relevant award, the
employee would necessarily be disadvantaged as compared to the award”.
In response to my concerns, HPL made the following submissions:[12]
“Casual employees engaged on loaded rates will be part of work crew (sic) that will be engaged for full work cycle (i.e 56 hour week) or at least a majority of that work cycle. A casual employee working a Saturday shift standalone in the work cycle would not be practical and does not form the applicant’s ordinary and customary works in their sector.
Any casual employee that is required to be engaged on a standalone shift specifically on the weekend will be paid in accordance with the enterprise agreement ordinary wage rates, ordinary hours and additional hours / overtime penalty rates as prescribed in clause 6.2.1, 6.2.2, 7.1 and 7.2 respectively.
In accordance with clause 7.2.1 all work outside the span of ordinary hours or in excess of 56 hours will attract the penalty rate of double time.
The applicant respectfully submits that a casual employee engaged either through loaded rate or ordinary rates arrangement of the proposed agreement will not be worse off against the Modern Award”.
In response to these submissions, the CFMEU state:[13]
“That is all very well. But those submissions are not reflected in the terms of the
Proposed Agreement, and they are not sufficient to address the concern raised by the
Commissioner. They fall well short of the “entitlement to guaranteed hours and
rosters” which the Full Bench in the Loaded Rates in Agreements case suggested may
make it possible to construct a loaded rate for casuals which is capable of passing the
BOOT”.
In response to these concerns, HPL acknowledged that, in respect of casual employees, “there can be a BOOT concern for the lower-level classifications if the casual employee was to work a Saturday shift standalone”.[14]
To address this specific concern, HPL provided the following undertaking:[15]
“In the event, a casual employee is required to work a Saturday shift without working a minimum of 20 hours on weekdays, in that work cycle, The casual employee will be paid at the ordinary wage rates and additional/overtime provisions as prescribed in clause 6.2 and 7.2 respectively for the entirety of the Saturday shift.
When considering BOOT, I must be satisfied that all employees will be better off under the Agreement working any pattern of hours permitted by the Agreement.[16] The Commission is required to not just consider current actual working arrangements in assessing the BOOT, but any possible work pattern. As highlighted by Principal 1 of the Full Bench’s Loaded Rates in Agreements decision.
Whilst the undertaking addresses the specific issue identified by HPL relating to work undertaken on a stand-alone Saturday, it does not address the broader questions raised by the CFMEU. I note that the Agreement does not restrict the use of casual employees to the patterns of work described above, and whilst I acknowledge HPL’s submissions relating to the usual patterns of work, these have not been offered as undertakings. Further, I do not accept HPL’s contention that “In accordance with clause 7.2.1 all work outside the span of ordinary hours or in excess of 56 hours will attract the penalty rate of double time”. Whilst Clause 7.2.1, Overtime – Loaded Rates, does provide penalties for time worked in excess of 56 hours per work cycle or work undertaken on a Sunday, it does not make any reference to all work outside of the span of hours attracting a penalty rate.
As such undertakings have not been provided, I am not convinced that all employees, particularly those who are at the lower levels will be better off under the Agreement when considering all of the patterns of work and hours that it permits.
Allowances
Clause 4 of the Agreement provides that it applies to the exclusion of the Modern Award, except as otherwise provided. This means that only those allowances specifically prescribed in the Agreement will apply.
The summary document provided to employees states that:[17]
“7. The ordinary rates of pay will absorb the following allowances in the Modern Award/s:
·Industry Allowance (Building and Construction General On-site Award 2020)
·Overtime Meal Allowance (Building and Construction General On-site Award 2020)
·Overtime Cribb Allowance (Building and Construction General On-site Award 2020)
The Enterprise Agreement wage rates compensate for any other allowances that may apply in the Modern Awards”.
The CFMEU raise two BOOT concerns related to allowances. Firstly, they identify that several of the allowances included in the Agreement provide for a lessor entitlement than the Award prescribed allowance and secondly, that the Agreement does not include a range of other allowances such as first aid allowance and multistorey allowances. There primary concern is that the rates of pay provided by the Agreement are not high enough to compensate for this.
HPL submits that regard must be had to the work being undertaken under the Agreement. They argue that the proposed Agreement’s coverage is civil construction and haulage works. In respect of civil construction works, multistorey works is not a feature of these works and this allowance is not applicable to the employees covered by this Agreement.
With respect to the first aid allowance, HPL submit that company is structured that the salaried supervisory positions in the company are engaged in first aid duty on worksites and the first aid allowance is not applicable to the employees covered by the Agreement.
Multiple submissions were made by both parties regarding the Distant Work Payment as prescribed at Clause 26.4 of the Building Award. Prior to the Hearing, HPL provided the following undertaking:[18]
“5. with respect to clause 6.5 Travel allowance the following will apply in addition to the clause in regards to travel allowance.
In the circumstances where the works satisfy the definition of the Distant Work Payment in clause 26.4 of the Building and Construction General On-site Award 2020, the applicant will pay the minimum rates and payments prescribed in that clause in lieu of the travel allowance in the enterprise agreement.”
Noting the above, HPL maintain that the proposed rates of pay are high enough to compensate for reduction in rates or entitlements with respect to allowances contained within the Agreement and any applicable Award allowances that are not specified by the Agreement.
Modelling undertaken by the Commission supports this assertion when based on a 50-hour week provided no RDO is worked, for all levels other than CW1. As explored below, further BOOT concerns do arise if an RDO is worked, again, particularly for CW1 and CW2 employees.
The impact of RDO’s
The CFMEU have raised concerns that if an RDO is worked, the CW1 classification does not pass the BOOT. Modelling undertaken by the Commission concurs with this assertion, demonstrating that the proposed agreement rates of pay for a CW1 employee engaged on a 50-hour week, who was required to work an RDO arrangement would in fact be 3.03% lower than this provided under the Building Award.
50- hour week – RDO system
CW1 (non-loaded rate) employee working a 50-hour week
| Agreement Ordinary Rate | $28.50 | CW1 | Award Ordinary Rate | $26.51 | CW1(d) | |||
| Hours | Loading | weekly total | Hours | Loading | weekly total | |||
| Monday | 8 | 100% | $228.00 | Monday | 8 | 100% | $212.08 | |
| Tuesday | 8 | 100% | $228.00 | Tuesday | 8 | 100% | $212.08 | |
| Wednesday | 8 | 100% | $228.00 | Wednesday | 8 | 100% | $212.08 | |
| Thursday | 8 | 100% | $228.00 | Thursday | 8 | 100% | $212.08 | |
| Friday | 8 | 100% | $228.00 | Friday | 8 | 100% | $212.08 | |
| Overtime | 10 | 150% | $427.50 | Overtime | 10 | 150% | $397.65 | |
| Allowances | Amount | Value | Allowances | Amount | Value | |||
| Crib time | $0.00 | Crib time | 5 | $17.67 | $88.37 | |||
| Meal Allowance | $0.00 | Meal Allowance | 5 | $17.57 | $87.85 | |||
| Fares | 5 | $25.00 | $125.00 | Fares | 5 | $21.19 | $105.95 | |
| Annual Leave | Yes | $83.31 | Annual Leave | Yes | $77.49 | |||
| Leave Loading | No | $0.00 | Leave Loading | Yes | $13.56 | |||
| Totals | 50.00 | Hrs | $1,775.81 | Totals | 50.00 | Hrs | $1,831.27 | |
| Agreement Total Weekly Rate | $1,775.81 | |||||||
| Award Total Weekly Rate | $1,831.27 | |||||||
| Dollar / Actual Percentage Difference | -$55.46 | |||||||
| 3.03% | ||||||||
HPL maintain that the “CFMEU BOOT modelling erroneously tests the Enterprise Agreement against the B&C Award in terms of a 50-hour week with RDO. The Applicant does not apply an RDO system within its enterprise nor does the Enterprise Agreement include within it an RDO system which is facilitated by clause 16.8 of the B&C Award.”[19]
The CFMEU reject this proposition, arguing that the Agreement expressly provides for RDOs. Clause 7.4 provides:[20]
“Any absence from work for reason of inclement weather, public holiday/s,
RDO/s and/or any leave prescribed in Clause 8 of this Agreement occurring
during shift work will still count towards five (5) continuous shifts worked.”(emphasis added)
They argue that this is consistent with the ordinary hours and overtime provisions of the
Agreement at clauses 7.1 and 7.2, which permit the Applicant to adopt an RDO system from time to time (for example, in relation to projects where an RDO system is adopted for the whole workforce).[21] Further, they note that Clause 7.1 provides:[22]
“The ordinary hours of work shall be an average of 38 hours per week to be worked over a nominated work cycle. The ordinary hours may be worked from 4:00am to 6:00pm, Monday to Friday. The daily ordinary hours shall not exceed eight (8) per day.
The work cycle may be altered by agreement or reasonable notice to suit project requirements.” (emphasis added)
And Clause 7.2 provides:
“All time worked in excess of the work cycle's daily hours or outside of the spread of ordinary hours of work shall be paid at the following overtime
rates …” (emphasis added)
The CFMEU suggest that although clauses 7.1 and 7.2 do not themselves prescribe an RDO system, it is nonetheless open to the Applicant to “alter” the “work cycle” in accordance with those clauses to implement an RDO system.[23]
Mr Cvetanoski’s statement provided that the “plant hire being at the direction of clients, does not allow an RDO system to operate”.[24] However under cross examination, Mr Cvetanoski was not able to rule out the possibility that, where a client worked an RDO system, HPL may also be required to adopt one.
I agree with the CFMEU that the Agreement does not preclude HPL from implementing a pattern of work that includes an RDO, and I note that such patterns of work are commonplace in the civil construction industry.
The impact of an RDO on BOOT calculations was identified by the CFMEU as an issue from the outset. It is of note that whilst other undertakings were offered, HPL has not offered an undertaking to the effect that they would not implement RDOs. This is of particular note given such an undertaking would have been a simple way to have resolved this issue.
Considering all of the issues, particularly the impact of an RDO on the rates of pay for CW1 and CW2 employees, such an undertaking would be required for the Agreement to pass BOOT.
Conclusions on BOOT
Notwithstanding the undertakings provided, I am not satisfied that all employees will be better off under the Agreement.
Genuine Agreement
To approve an agreement, I must be satisfied that it was genuinely agreed to by the employees who are to be covered by it. Section 188 of the Act sets out the factors that I must take into consideration when determining this. Among other matters, these relevantly include:
consideration of the Statement of Principles (Principles).
whether employees requested to approve the agreement have a sufficient interest in the terms of the agreement and are sufficiently representative, having regard to the employees the agreement is expressed to cover.
whether the employer has taken all reasonable steps to explain the terms of the agreement and the effect of those terms to employees.
Statement of Principles
As noted above, s 188 requires that I must take into account the Principles when determining whether I am satisfied that an enterprise agreement has been genuinely agreed to by the employees covered by that agreement. Relevant to this matter, the Principles provides:
“Explaining to employees the terms of a proposed enterprise agreement and their effect
Section 180(5)(a) of the Fair Work Act requires the employer to take all reasonable steps to explain the terms of a proposed enterprise agreement, and the effect of those terms, to employees employed at the time who will be covered by the agreement. This should include at a minimum explaining to employees how the proposed agreement will alter their existing minimum entitlements and other terms and conditions of employment. In explaining this, subject to paragraph 9:
…
(b) where a proposed enterprise agreement will not replace an existing enterprise agreement—it will generally be necessary to explain the differences in entitlements and other terms and conditions between the proposed agreement and any applicable modern award.
In explaining to employees how the proposed enterprise agreement will alter their existing minimum entitlements and other terms and conditions of employment, there is usually no need to explain trivial differences between the proposed agreement and an existing enterprise agreement or modern award that have no effect on employees’ entitlements or obligations.
Section 180(5) will generally not be satisfied if the employer makes an incorrect representation or misleads employees (by words, action or otherwise) about a significant term of the proposed enterprise agreement or its effect.
…
Subject to paragraph 13, an employee may be provided with the explanation required by section 180(5):
(a) by giving the employee, or ensuring the employee has access to, a hard copy of the explanation
(b) by electronic means (either by sending the explanation to the employee, or by sending the employee a link to the explanation or otherwise giving the employee access to the explanation online)
(c) orally, but the FWC may take into account whether there is a written record or summary kept of the oral explanation, or
(d) by a combination of the above methods.
Were the steps taken by HPL to explain the agreement sufficient?
For the Commission to be satisfied that there was genuine agreement, pursuant to s.180(5)(a) and (b) of the Act, the employer must be able to demonstrate that they took all reasonable steps before requesting that the employees vote to ensure that:
the terms of the agreement, and the effect of those terms, are explained to the relevant employees, and
the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.
The purpose of this explanation is to “enable the employees to cast an informed vote, so that they know what it is they are being asked to agree to, and to help them to understand how their wages and working conditions might be affected if they vote in favour of the agreement”.[25]
The Principles provide that the explanation of the terms and their effect as required by s 180(5)(a) should include, as a minimum, explaining to employees how the proposed agreement will alter their existing entitlement and other terms and conditions. In explaining this, the Principles further suggest that where a proposed enterprise agreement will not replace an existing agreement, as is the case in this matter, “it will generally be necessary to explain the differences in entitlements and other terms and conditions between the proposed agreement and any applicable modern award.”
HPL rely heavily on the summary document that was provided to employees. The F17B outlines the steps that HPL took to explain the agreement to employees. These steps can be summarised as follows:
9 –10 April 2024 – The company held site meetings (Yarrabilba site and Toowoomba site) to discuss the agreement. At this meeting, the company used a summary document, (in Q&A format), to help explain the agreement. Employees were encouraged to ask questions and contact the company if they had any further queries;
11 – 12 April 2024 – the Company held phone conversations with employees who had been unable to attend site meetings
12 April 2024 - To commence the access period, all employees were sent an email which attached a copy of the proposed agreement, the summary document for the final agreement and the ballot notice;
15 April 2024 – The company held a meeting with employees engaged on the “Glen Molloy crew” (during transit to site).
The Meetings
During cross examination, Mr Cvetanoski confirmed that he was not involved in bargaining and that he did not participate in any of the meetings or phone conversations relied upon by HPL in their F17B. I also note that whilst a copy of the email sent to employees on 12 April 2024 was provided, no further supporting information, such as attendance records or meeting notes have been provided.
As noted by the CFMEU during the Hearing:
“There's no evidence that the applicant has taken any step to seek to compel Ms Arnold to give evidence, other than to confirm what her work commitments are. The applicant could have filed other evidence. Presumably there were other employees, other than Ms Arnold and Ms Marshall who were in attendance at these meetings. The applicant has referred to an individual employee bargaining representative in the F16. Presumably they were at the meeting, but instead the applicant has really just called no evidence, no direct evidence certainly about what occurred in the explanation meeting.”
The CFMEU also observe that the F17B identifies travel allowance and loaded rates as being more beneficial than the Award entitlement, which they suggest is misleading. I accept the CFMEU’s argument in this regard, noting that both travelling allowance and loaded rates have been the subject of additional undertakings and BOOT concerns.
The CFMEU further argue that this should be taken as an indication that any explanation of travelling allowance or loaded rates that was provided to employees at face-to-face meetings, or phone calls would also have been based on this misleading information.
It is clear that HPL were aware of my and the CFMEU’s concerns regarding the steps taken to explain the Agreement and had the opportunity to file additional evidence but failed to do so. Noting 12 (c) of the Principles, this does not weigh in favour of a finding that HPL took all reasonable steps to explain the Agreement.
The Summary Document
The CFMEU argue that whilst the summary document does explain the benefits of the proposed agreement, it does not “identify any of the less beneficial terms of the proposed Agreement at all”.[26] They note that the document references that items such as hours of work “differ” from the span of hours provided in the modern awards, but it does not identify any actual reductions in entitlements.
HPL submit that s 180(5) of the Act does not create a requirement to exhaustively review with employees, line by line, item by item, the differences between an applicable modern award and a proposed enterprise agreement. Rather, the underlying purpose of the requirement is to ensure that employees understand the effect of the agreement that is to be voted on, enabling them to make an informed decision.[27]
Upon review of the summary document, I also note that whilst it does explain the entitlements that will apply under the proposed Agreement, it does not provide any information at all regarding the existing entitlements nor, as a minimum, even provide an assessment of whether the proposed entitlement is more or less beneficial than the relevant Award provision.
Of particular concern, I note that the summary document does not reference the fact that employees will not receive annual leave loading. Given the other items that are expressly explained as being “absorbed in the agreement”, the failure to reference the removal of annual leave loading, in my view, opens the very real possibility that employees could be under the impression that they would continue to receive this payment.
Similarly, with respect to the rates of pay, the summary document does not reference any of the modelling that was provided with the F17B which demonstrates that whilst some classifications are significantly above the Award, the new CW1 and CW2 classifications are not.
HPL contend that the relevant employees are experienced construction workers who are familiar with the Award and understood how the Agreement would affect them, however as they failed to provide any evidence to support this contention, I have not been convinced that is the case.
I note that the explanatory document includes links to the relevant Awards and the NES, however, given the summary document does not indicate which conditions are less favourable than the Award, and fails to highlight the results of the modelling, employees would need to undertake that analysis for themselves by conducting a full assessment of the agreement against the Award, a task that most people would find challenging, not to mention extremely time consuming. These are the very reasons that the Act requires such explanations to be provided by the employer.
Principle 18 of the Principles further provides that:
“An enterprise agreement will generally not have been genuinely agreed to by the employees covered by the agreement unless the agreement was the product of an authentic exercise in agreement-making between the employer(s) and the employees in one or more enterprises, and the employees who voted for the agreement had an informed and genuine understanding of what was being approved” (emphasis added)
As noted in One Key Workforce Pty Ltd V Construction, Forestry,Mining and Energy Union and Another (One Key), it is not sufficient for an employer to simply state in its F17 declaration that it explained the terms of the agreement and the effect of those terms, rather I am required to consider the content of the explanation and the terms in which it was conveyed, having regard to all of the circumstances and the needs of the employees and the nature of the changes made by the Agreement. This is a mandatory requirement.[28]
Of particular relevance in this matter is that the obligation in s 180(5) of the Act required the employer to explain the effect of the whole proposed agreement not just the terms that are relevant to those employees.[29] That the impact of the Agreement on the proposed new classification CW1 and CW2 were not explained to employees is of concern.
To be satisfied that there was genuine agreement, pursuant to s 180(5)(a) I must be satisfied not only that HPL took all reasonable steps to explain the terms of the Agreement, but also the effect of those terms. Taking all of the submissions and evidence into consideration, I have not been convinced that HPL did so.
Sufficient Interest
Section 188(2) of the Act provides that I cannot be satisfied that an enterprise agreement has been genuinely agreed to by the employees unless I am satisfied that the employees who are requested to approve the agreement had a sufficient interest in the terms of the agreement and are sufficiently representative of the employees the agreement seeks to cover.
During the course of considering the application, the following issues were identified as potential concerns relating to s 188(2):
The number of casual employees voting on the agreement
The inclusion of certain employees in the ballot
The representation of employees at the CW1 and CW2 levels
The Principles provide that when considering these questions, I may have regard to:
Whether the employees entitled to vote on the agreement are to be paid the rates of pay provided for in the agreement, and
The extent to which the employees entitled to vote on the agreement employed across the full range of:
o Classifications in the agreement
o Types of employment in the agreement (for example full-time, part time and casual,)
o Geographic locations the agreement covers, and
o Industries and occupations the agreement covers
Casual Employees/Inclusion of certain employees in the Ballot
The F17B indicates that at test time, 18 employees were covered by the Agreement. Thirteen of these employees were engaged on a casual basis. In light of the Full Bench decision in appeal by Kmart Australia Limited t/a Kmart and Others,[30] further information was requested so that I could be satisfied that the casual employees who voted were employed at the time and entitled to vote.
HPL provided payroll summaries that satisfied my concerns in this regard, however the material provided raised an added concern. The payroll summary provided included HPL’s Operation’s Manager and Business Development Manager, neither of whom were proposed to be covered by the Agreement, raising further concerns as to whether the employees who voted on the Agreement had sufficient interest in its terms. During cross examination Mr Cvetanoski confirmed, and I accept, that these names were included in the list in error and that only those employees entitled to vote on the Agreement received a vote.
Representation of CW1 and CW2 Employees
I raised with HPL my concern regarding whether the employees entitled to vote on the Agreement were employed across the full range of classifications in the Agreement pursuant to s 188(2) of the Act and Principles 17.
As noted in One Key:[31]
“…….sections 186(2) and 188 have a protective purpose. That s 188 harbours a concern directed at agreements made by a small number of employees in circumstances where the agreement covers a wider range of employee classifications is confirmed at [824] of the Explanatory Memorandum which provides:[32]
“Note that where an agreement covers a large number of classifications of employees in which no employees are actually engaged there may be a question as to whether the agreement has been genuinely agreed — see clause 188.”
My primary concern with respect to s 188(2) remains the fact that at the time of the ballot, HPL did not have any employees at the CW1 And CW2 levels. These concerns are heightened when considered in light of my findings as they relate to the BOOT. This concern was also raised by the CFMEU.[33]
In CFMEU v John Holland, the Full Bench of the Federal Court indicated that it may not be fair for an enterprise agreement made with a small number of existing employees to cover a wide range of other classifications and jobs which they may have no conceivable interest.[34]
Building on that point, the Full Bench in One Key found that “genuine agreement” requires employees to have an informed and genuine understanding of what is being approved. As already addressed, the rates of pay provided for higher classifications are significantly better than those proposed for the CW1 and CW2 classification. This was not expressly called out in the explanatory document and there is no evidence that this was highlighted during the face to face meetings. Notwithstanding the above, as One Key suggests, employees at other levels or classifications are not required to represent the interests of other employees.
The CFMEU argue because the CW1 and CW2 classifications, which are the classifications that are worst off under the proposed agreement compared to the Award were not represented in the vote, I cannot be satisfied that those employees who voted to approve the agreement had a sufficient interest in its terms, or were sufficiently representative of the employees it expressed to cover, for the purposes of a finding that the proposed Agreement was genuinely agreed as required by ss 186(2)(a) and 188(2) of the Act.
In response to my concerns in this regard, HPL argued that they had “no regular use for an employee at a CW1 or CW2 classification level due to the nature of the enterprise and the work inherently performed”, and that they anticipate that CW1 and CW2 classifications will comprise only a minority of the employees it intends to employ under the Agreement.[35]
Notwithstanding the above, the Agreement does provide for employment at these levels and HPL have not provided any undertakings restricting their use, even though they are aware of my concerns in this regard. Were the Agreement to be approved, it would therefore remain open to HPL to increase the use of CW1 and CW2 employees over other employees.
In a similar vein, during the Hearing, Mr Cvetanoski confirmed that the business operates primarily in South East Queensland. Interestingly though, the F17B indicates that the agreement will operate in all States and Territories. Again, it is therefore possible, should the Agreement be approved, that HPL could not only increase their CW1 and CW2 employees, but it could also expand its operation significantly into other States and Territories. Again, this was not explained to employees before they were asked to vote on the Agreement. Whilst there is no suggestion in the evidence that HPL intend to do this, I consider this to be relevant to my considerations regarding genuine agreement.
Conclusion on Genuine Agreement
Having considered the submissions and evidence, and in light of the Principles I am not convinced that the Agreement has been genuinely agreed as required by ss 186(2)(a). I am not satisfied that the employees who voted to approve the Agreement have a sufficient interest, or are sufficiently representative of those it intends to cover as required by188(2). Nor am I satisfied that HPL took all reasonable steps to explain the terms and effect of the proposed agreement as required by ss 180(5) and 188(4A).
Conclusion
This was a contested application. The CFMEU raised valid concerns about whether the Agreement met the approval requirements of the Act. To approve an Agreement, I must be satisfied that each approval requirement has been met.
I am not satisfied that the explanation of the Agreement was in compliance with s 180(5). There were deficiencies in the explanation provided to employees and I have concerns regarding whether or not the employees that voted for the Agreement were sufficiently representative of those the agreement intends to cover per s 188(2). The Agreement has therefore not been Genuinely Agreed and is not capable of being approved.
Additionally, I am not satisfied that all employees will be better of overall under the proposed Agreement when compared to their Award as required by ss 186(2)(d) and 193. Whilst these concerns may have been able to be addressed through further undertakings, my concerns regarding Genuine Agreement cannot.
The application for approval of the Agreement is dismissed
COMMISSIONER
Appearances:
G. Power for the Applicant
D. Power for the Applicant
J. Liley for the CFMEU
Hearing details:
2024
Brisbane
11 July
[1] P.3 of CFEMU Closing Submissions at j.
[2] P.129 of the DCB – Zdravko Cvetanoski Statement at 3.
[3] Fair Work Act 2009 (Cth) s 193.
[4] Explanatory Memorandum, Fair Work Bill 2008 (Cth) 824.
[5] P.155 of the DCB – Undertaking.
[6] Ibid.
[7] Ibid.
[8] P.47 of the DCB – Summary Document.
[9] [2018] FWCFB 3610, [121].
[10] P.163 of the DCB – CFMEU Submissions at 29.
[11] Application by Aldi Foods Pty Limited as General Partner of ALDI Stores (A Limited Partnership) T/A Aldi Stores & Welsh, Patrick[2018] FWCFB 3610, [121].
[12] P.109 to 110 of the DCB – Email Response to Concerns.
[13] P.163 of the DCB – CFEMU Closing Submissions at 32.
[14] P.109 of the DCB – Email Response to Concerns.
[15] P.155 of the DCB – Undertaking.
[16] Application by Aldi Foods Pty Limited as General Partner of ALDI Stores (A Limited Partnership) T/A Aldi Stores & Welsh, Patrick[2018] FWCFB 3610.
[17] P.47 of the DCB – Summary Document.
[18] P.156 of the DCB – Undertaking.
[19] P.114 of the DCB – Applicant Submissions at 11.
[20] P.226 of the DCB – CFMEU Reply Submissions at 5.
[21] P.226 to 227 of the DCB – CFMEU Submissions at 6.
[22] P.227 of the DCB – CFMEU Reply Submissions at 7 to 8.
[23] Ibid at 7 to 9.
[24] P.154 of the DCB – Zdravko Cvetanoski Statement at 12.
[25] One Key Workforce Pty Ltd V Construction, Forestry, Mining And Energy Union And Another [2018] FCAFC 77, [115].
[26] P.165 of the DCB – CFMEU Submissions at 40.
[27] P.121 of the DCB – Applicant Submissions at 51.
[28] One Key Workforce Pty Ltd V Construction, Forestry, Mining And Energy Union And Another [2018] FCAFC 77, [111] – [113].
[29] BGC Contracting Pty Ltd [2018] FWC 1466 at [96]-[97].
[30] (2019) FWCFB 7599.
[31] One Key Workforce Pty Ltd V Construction, Forestry, Mining And Energy Union And Another [2018] FCAFC 77, [154]..
[32] Explanatory Memorandum, Fair Work Bill 2008 (Cth) 824.
[33] P.113 of the DCB – CFMEU Submissions at 53.
[34] [2015] FCAFC 16, [83].
[35] P.127 of the DCB – Applicant Submissions at 63.
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