Health Services Union v Clinpath Laboratories Pty Ltd; Strath, Jenny and Others
[2018] FWCFB 5694
•11 SEPTEMBER 2018
| [2018] FWCFB 5694 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604––Appeal of decisions
Health Services Union
v
Clinpath Laboratories Pty Ltd; Strath, Jenny and Others
(C2018/3512)
VICE PRESIDENT HATCHER | SYDNEY 11 SEPTEMBER 2018 |
Appeal against decision [2018] FWCA 3391 of Commissioner Johns at Sydney on 8 June 2018 in matter number AG2018/97 – Explanation of the terms of the agreement and their effect – Requirement to seek the views of bargaining representatives – Error – Permission to appeal granted - Appeal upheld.
[1] The Health Services Union (HSU) has lodged an appeal, for which permission is required, against a decision of Commissioner Johns (Decision) 1 made on 8 June 2018 under s 185 of the Fair Work Act 2009 (the Act) to approve the Clinpath Laboratories - Enterprise Agreement 2017 (Agreement)2.
[2] The notice of appeal advances three principal grounds of appeal, all of which contend that the Commissioner erred by approving the Agreement. First, the HSU contends that, because various pre-approval requirements were not met, the Commissioner could not have been satisfied that the Agreement was genuinely approved. In this regard, it submits that employees did not receive access to the proposed agreement until four days after the voting commenced; that the employer, Clinpath Laboratories Pty Ltd (Clinpath), did not take all reasonable steps to notify employees of the voting arrangements; that misleading information was sent to employees and that the explanation of the terms of the Agreement was inadequate; and that the notice of representational rights (NERR) was defective. Secondly, it submits that the Commissioner did not properly assess whether the Agreement passed the better off overall test (BOOT). Thirdly, it contends that the Commissioner did not exercise his powers and functions in a manner that was just and fair, such that the HSU was denied procedural fairness in respect of objections it had raised to the Agreement’s approval.
[3] An appeal under s 604 of the Act is an appeal by way of rehearing and the Commission’s powers on appeal are exercisable only if there is error on the part of the primary decision-maker. 3 There is no right to appeal and an appeal may be made only with the permission of the Commission. Subsection 604(2) requires the Commission to grant permission to appeal if satisfied that it is “in the public interest to do so”. Permission to appeal may otherwise be granted on discretionary grounds.
[4] Other than the special case in s 604(2), the grounds for granting permission to appeal are not specified. Considerations which have traditionally been treated as justifying the grant of permission to appeal include that the decision is attended with sufficient doubt to warrant its reconsideration and that substantial injustice may result if leave is refused. 4
Background
[5] In late 2017, Clinpath and the HSU were negotiating an enterprise agreement to replace the Clinpath Laboratories - Enterprise Agreement 2015 (2015 Agreement). 5 Minutes of a meeting that occurred on 23 November 2017 record that, although the company and the HSU had not reached agreement, Clinpath decided to put the Agreement to a vote of employees.
[6] On 1 December 2017 the company wrote to employees whose employment would be covered by the Agreement, stating that, following consultation with bargaining representatives, it had an agreement that was ready to be voted on by staff. The letter contained a brief summary of the terms of the Agreement, and noted certain changes to existing conditions that the Agreement would introduce, as well as certain clauses in the 2015 Agreement that would remain unchanged. 6 One of the changes noted was that under the Agreement, ‘incremental (wage) increases occur at 1950 hours for all staff.’ The changes to the way employees would move through wage increments under the Agreement are a matter of some significance, to which we will return.
[7] By letter dated 11 December 2017, but not sent until 13 December 2017, the company advised employees of the arrangements for voting on the Agreement. It asked employees to decide whether they wanted to vote in favour of or against the Agreement, to complete an attached ballot paper, and to return it to the company in the accompanying reply paid enveloped by 4pm on 28 December 2017. However, the letter did not state when the vote would commence. 7
[8] On 13 December 2017, Ms Elizabeth Main, Clinpath’s manager of people and culture, sent an email message to employees, stating that a copy of the proposed Agreement would be available on the intranet from the following day, and that voting on the Agreement would open on 21 December 2017. 8 On 14 December 2017, the company sent to employees by email a copy of the proposed Agreement, repeating the information about the voting arrangements.9
[9] On 20 December 2017, at 4.15pm and again at 4.19pm, the company sent an email to employees, stating that the HSU had informed the company that it believed staff had been misled in various respects about the content of the Agreement. The message said that the company did not agree that employees had been misled, but that it wished to clarify any misunderstanding. It stated that one change introduced by the Agreement was for ‘all staff to move through the (wage) increments after having worked the same number of hours, being 1950 for a full time, part time and casual staff.’ It explained that this was a ‘change for casual and part time staff, who currently move through the increments after having worked 1560 hours or 2 years.’ 10
[10] According to Ms Main, a small number of ballot papers - she believed no more than 4 - were received by the company before 21 December 2017, the first day of the vote. She said that the relevant employees were told that their ballots could not be accepted, and their ballots were returned to them. 11
[11] On 11 January 2018, Clinpath lodged an application under s 185 of the Act for the Commission to approve the Agreement, accompanied by a statutory declaration, in the Commission’s Form F17 format, sworn by Ms Main. The statutory declaration noted that, of the 583 employees to be covered by the Agreement, 229 had cast a valid vote, and 117 had voted to approve the Agreement.
[12] On 16 January 2018, the HSU lodged a Form F18 in which it objected to the application for approval of the Agreement, on grounds that essentially reflect those advanced in the present appeal.
[13] The Commissioner’s decision contained five paragraphs. It noted the Commissioner’s satisfaction that the requirements of sections 186, 187, 188 and 190 had been met, and attached undertakings. 12 The Commission deals with many thousands of applications for approval of enterprise agreements each year. Brief decisions are both common and appropriate in respect of applications that are uncontested or do not otherwise raise concerns as to whether the various approval requirements in the Act have been met. However, when a bargaining representative for an agreement opposes its approval and articulates substantive and reasonably arguable grounds for its opposition, a decision containing more detailed reasoning may be required.
Consideration
[14] The HSU’s first ground of appeal contended that the Commissioner erred by failing to properly assess whether he was satisfied that the Agreement had been genuinely agreed to by employees, as required by s 186(2)(a)). Section 188 relevantly provides that an agreement has been genuinely agreed to if the Commission is satisfied that the employer complied with the pre-approval requirements in sections 180(2), (3), and (5). Several contentions of error were advanced.
[15] First, the HSU submitted that the Commissioner could not have been satisfied that Clinpath complied with s 180(2). This requires an employer to take all reasonable steps to ensure that during the access period the relevant employees are given a copy of the written text of the Agreement and other materials incorporated by reference, or that throughout the access period employees have access to the Agreement and the incorporated materials. The ‘access period’ is the seven day period ending immediately before the start of the voting process (s 180(4)).
[16] The HSU contended that employees did not receive the Agreement until several days after the voting process had commenced. It considers that the company’s letter dated 11 December 2017, which was posted to employees on 13 December 2017, constituted the start of the voting process. This is not correct. The letter omitted to specify when the vote would commence, however this error was corrected by the email of 13 December 2017, which stated that the vote would not open until 21 December 2017. 13 Accordingly, the voting process started on 21 December 2017. The ‘access period’, being the 7-day period ending immediately before the start of the voting process, was 13 to 20 December 2017.14 Employees were given the Agreement during the access period: it was emailed to them on 14 December 2017. The Commissioner was therefore correct to be satisfied that the requirement of s 180(2) had been met.
[17] Secondly, the HSU contended that the Commissioner erred in concluding that Clinpath had complied with s 180(3). This provision requires an employer to take all reasonable steps to notify the relevant employees, by the start of the access period, of the time, place and voting method. The omission in the letter dated 11 December 2017 as to the commencement of the voting process was hastily addressed. On 13 December 2017, employees were advised of the time of the vote by email to their work email addresses. The HSU submitted that employees do not generally have access from their home to work email addresses. Nevertheless, the email advising of the start of the vote was sent a week before its commencement, leaving a reasonable period even for part-time and casual employees to access their work emails and receive the message. Further, Ms Main explained that, in respect of a certain group of phlebotomists, personal email addresses were used, as they are less likely than other employees to access their work email addresses. 15 In our view, the company took all reasonable steps to advise employees of the voting arrangements by the start of the access period.
[18] Thirdly, the HSU submitted that the company had provided employees with misleading information about the content of the Agreement and had not taken all reasonable steps to explain its terms to employees. It said that the Commissioner erred by failing to have regard to the concerns it raised in its F18, and that he erred in concluding that he was satisfied that the Agreement was genuinely made. The notice of appeal made reference both to sections 180(4C) and 180(5). The former provision is not relevant, as it relates only to disclosable benefits under s 179A, which are not at issue in the present proceedings. However, s 180(5) states that the employer must ‘take all reasonable steps to ensure that the terms of the agreement, and the effect of those terms, are explained to the relevant employees’.
[19] The Commission’s F17 statutory declaration document, which must be submitted in support of an application for approval of an enterprise agreement, asks the employer’s deponent to state what steps the employer took to explain the terms of the agreement and the effect of those terms to the relevant employees. Clinpath’s response to this question was to note that various information sessions were held to explain the Agreement, that these occurred on particular dates and at two different sites, and that on 1 December 2017, a letter was sent to employees ‘detailing the agreement.’ The HSU filed its own statutory declaration in relation to the application for approval of the Agreement, in accordance with the Commission’s Form F18. It stated that the HSU considered the company to have misled employees in its letters dated 1 December 2017 and 11 December 2017. In respect of the latter, it said that although the letter had referred to the new arrangements for increment increases after 1950 hours, it had also said that there would be ‘no change to incremental increases’, 16 and was therefore confusing or inconsistent. In a submission to the Commission dated 18 May 2018 in response to the HSU’s F18, the company contended that these letters were not misleading, but that to avoid any misunderstanding, the company had sent further letters to employees on both 13 and 20 December 2017, ‘clarifying the issue of incremental increases’. The company contended that these communications had ‘made clear the meaning of the statements made about the changes, and what remains unchanged, in the 2017 Agreement’.17
[20] In One Key Workforce Pty Ltd v CFMEU, 18 the Full Court of the Federal Court considered the requirements of s 180(5) and stated that the ‘content of the explanation and the terms in which it was conveyed are relevant considerations to which the Commission was bound to have regard.’19 The Commissioner’s decision does not record any analysis of the company’s explanation of the Agreement to employees, other than his satisfaction that the requirements of s 188 (and hence s 180(5)) had been met. This does not necessarily point to error. If it were apparent on appeal that the employer had indeed taken all reasonable steps to explain to employees the terms of the Agreement and the effect of those terms, it might be concluded that the member did have regard to the content of the explanation and reached the relevant state of satisfaction, despite the absence of reasons. However, we have concluded that in the present case, the explanation of the terms of the Agreement and their effect failed to address a significant matter and the Commissioner erred by failing to take this relevant consideration into account.
[21] It will be recalled that on 1 December 2017, the company wrote to employees whose employment would be covered by the proposed Agreement, noting that under the Agreement, ‘incremental increases occur at 1950 hours for all staff’. Under clause 12 of the 2015 Agreement, employees working less than 1560 hours per year (equivalent to 30 hours per week) would progress to the next pay increment in the wage structure on completion of 1560 hours of work, inclusive of extra hours, or after 2 years, whichever came first. Part-time and casual employees working more than 1560 hours, inclusive of extra hours, would progress to the next increment after 12 months service. Clause 12 of the new Agreement provides that employees working less than, now, 1950 hours per year (the equivalent of 37.5 hours per week) will progress to the next increment on completion of 1950 hours work. Importantly, the ‘2 year rule’ is removed. Part-time and casual employees working more than 1950 hours will progress to the next increment after 12 months service.
[22] The company’s statement in its letter of 1 December 2017 was not incorrect; incremental increases would now occur at 1950 hours for all staff. However it did not draw attention to the removal of the 2 year rule for those working less than the designated number of hours. During the appeal before us, it was contended by the company that the letter of 1 December 2017 made a comprehensive statement about incremental progression, stating the new rule that applied for all employees. We accept that the company may have intended to make such a comprehensive statement, but not that it succeeded in doing so. The threshold of 1560 had been changed to 1950 for all employees. But a part-time or casual employee (or any other person) could reasonably have understood this change to leave the 2 year rule unaltered.
[23] Evidently the company apprehended some need to clarify the matter, because on 20 December 2017, at 4.15pm, it sent an email to employees explaining, among other things, that staff would move through the relevant increments after having worked the same number of hours (that is, the same number for all employees), namely 1950 for a full-time, part-time or casual employee. It explained that this was a ‘change for casual and part-time staff, who currently move through the increments after having worked 1560 hours or 2 years’. 20 This was a fulsome and appropriate explanation about an important term of the Agreement and its effect for part-time and casual employees. However, it came at the proverbial eleventh hour, late in the day on the eve of the vote.
[24] The F17 statutory declaration lodged by the company states that, of the 583 employees whose employment is covered by the Agreement, 259 of them are part-time employees and 179 are casual. The removal of the 2 year rule under the Agreement therefore had the potential to affect the majority of employees covered by it. It is not possible to measure the potential impact with accuracy. Nevertheless, it is clear that, for employees working fewer hours, the 2 year rule would have been a significant benefit. Its removal should have been fully explained earlier than the afternoon before the start of the vote.
[25] The company contended that this matter had been a major point of contention, and that it was discussed at consultative committee meetings. We accept this, however it only underscores that it was a matter of importance. It is evident in particular that the HSU was concerned about the question of increments, because the minutes of the bargaining meeting of 23 November 2017 note that Mr Inglis, the HSU organiser, wanted the record to reflect that the HSU did not agree to several proposed clauses, including ‘incremental increase PT / casual employees’. 21 We note that in its F17 statutory declaration, the company adverted to information sessions, and meetings of the consultative committee during the bargaining process, as well as the provision of summary progress updates being sent to staff.22 However these matters go to the negotiation of the Agreement rather than the explanation of the final terms of the Agreement and their effect, as contemplated by s 180(5).
[26] The company contended that no employees had stated that they were in fact misled, or that they did not understand the changes introduced by the Agreement generally or the removal of the 2 year rule specifically. However, this is not relevant. The Act does not require the employer to ensure that employees actually understand, but to take reasonable steps to ensure that the terms of the agreement and their effects are explained. In any event, the mere absence of concerns being raised is not probative of any of these matters.
[27] The HSU’s F18 raised with the Commissioner concerns about the employer’s explanation of the terms of the Agreement and their effect. Perhaps the company’s subsequent submissions led the Commissioner to believe that there was no substance in the concerns. Such a conclusion was not open. The changes introduced by the Agreement to incremental progression were a question of recognised importance. They potentially affected many employees covered by the Agreement. An explanation of a significant element of these terms, namely the removal of the 2 year rule, was made only on the afternoon before the vote opened. The vast majority of employees covered by the Agreement are part-time or casual, and it is not known when they next attended work and opened their email to read the message of 20 December 2017. The start of the vote was on Thursday, 21 December 2017, with only several days remaining to Christmas. It is not known what, if any, arrangements were in place to enable employees who were already on leave to have access to the information on the vote and the further explanation contained in the email of 20 December 2017.
[28] In our view, it cannot be said that the employer took all reasonable steps to ensure that the terms of the Agreement and their effect were explained to employees. The Commissioner did not take these relevant matters into consideration. This was an error of the kind in House v R 23warranting the grant of permission to appeal.
[29] Although it is not necessary for us to address the HSU’s remaining contentions, we note two further matters. First, although the Commissioner accepted several undertakings, 24 he did not seek the views of the HSU in relation to those undertakings. Section 190(4) provides that the Commission must not accept an undertaking under s 190(3) unless it has sought the views of each person it knows is a bargaining agent for the agreement. It is clear the Commissioner was aware of the HSU’s status as a bargaining representative, as this is noted in the Decision.25 This constituted a further error.
[30] Secondly, the HSU contended that, because the scope of the proposed Agreement expanded during bargaining to include an additional small group of warehouse employees, the NERR issued by the company under s 173 was not valid. We disagree. The notice issued by the company was valid at the time it was issued. A notice does not subsequently lose validity. The question is rather whether a new NERR needed to be issued in respect of the warehouse employees when the scope of the proposed Agreement was expanded to cover them. 26 However, the parties provided only brief submissions on this issue, and it is not necessary for us to decide the matter.
Conclusion
[31] It follows from our conclusions concerning the HSU’s first ground of appeal above that the Commissioner’s decision to approve the Agreement was affected by appealable error. On this basis, permission to appeal should be granted, the appeal should be upheld and the Decision quashed. It is not necessary in those circumstances for us to determine the HSU’s second and third grounds of appeal.
[32] Although the error arising from the failure to seek the views of bargaining representatives would be capable of rectification, the error arising from the Commissioner’s consideration of s 180(5) is fatal to the application because we do not consider that, upon redetermination, it would be open to a member of the Commission to be satisfied that the company complied with s 180(5). The company’s application for approval of the Agreement is therefore dismissed.
[33] We order as follows:
(1) Permission to appeal is granted.
(2) The appeal is upheld.
(3) The Decision ([2018] FWCA 3391) is quashed.
(4) The company’s application for approval of the Agreement (AG2018/97) is dismissed.
VICE PRESIDENT
Appearances:
R. Liebhaber for the Health Services Union
J. Mattson, solicitor, for Clinpath Laboratories Pty Ltd
Hearing details:
2018.
Sydney:
21 August.
Printed by authority of the Commonwealth Government Printer
<PR700266>
1 [2018] FWCA 3391
2 AE428763
3 Coal and Allied Operations Pty Ltd v AIRC (2000) 203 CLR 194 at [17] per Gleeson CJ, Gaudron and Hayne JJ
4 Also see CFMEU v AIRC (1998) 89 FCR 200; and Wan v AIRC (2001) 116 FCR 481
5 AE416564
6 Witness statement of Elizabeth Main, LM-4
7 Witness statement of Elizabeth Main, LM-5
8 Witness statement of Elizabeth Main, LM-8
9 Witness statement of Elizabeth Main, LM-9
10 Witness statement of Elizabeth Main, LM-11 and LM-12
11 Witness statement of Elizabeth Main, [25]
12 Decision at [3]
13 The email must have reached employees before the letter, which was sent by regular post on 13 December 2017
14 The time ‘immediately before the start of the voting process’ is the day before the start of the voting process: see CFMMEU v CBI Constructors Pty Ltd, [2018] FWCFB 2732
15 Witness statement of Elizabeth Main, [15]
16 Form F18 at paragraphs 3.1 and 3.2, LM-17
17 Submission of Clinpath dated 18 May 2018, [25]
18 [2018] FCAFC 77
19 [2018] FCAFC 77 at [113]
20 Witness statement of Elizabeth Main, LM-11
21 Witness statement of Elizabeth Main, LM-3
22 Section 2.6
23 House v The King (1936) 55 CLR 499
24 See [2] of the Decision
25 See [4] of the Decision
26 See MUA v Maersk Crewing Australia Pty Ltd[2016] FWCFB 1894 at [49]
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