K.B Machining & Fabrication Engineers Pty Ltd

[2015] FWC 4409

[2015] FWC 4409

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

K.B Machining & Fabrication Engineers Pty Ltd
(AG2015/3684)

Manufacturing and associated industries
COMMISSIONER RYAN	MELBOURNE, 1 JULY 2015

Application for approval of the K.B. Machining & Fabrication Engineers Pty Ltd Employee Agreement 2015.

[1] This decision concerns an application made for approval of an enterprise agreement known as the K.B. Machining & Fabrication Engineers Pty Ltd Employee Agreement 2015 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act) and was made by K.B. Machining & Fabrication Engineers Pty Ltd.

Notice of employee representational rights

[2] Attached to the form F17 - Employer’s statutory declaration in support of an application for approval of an enterprise agreement (F17 declaration) was the Notice of Employee Representational Rights (the Notice). The Notice was provided to the employees to be covered by the proposed Agreement, as required by s.173 of the Act. Section 174 of the Act prescribes the required content and form of the Notice:

“174 Content and form of notice of employee representational rights

Application of this section

(1) This section applies if an employer that will be covered by a proposed enterprise agreement is required to give a notice under subsection 173(1) to an employee.

Notice requirements

(1A) The notice must:

(a) contain the content prescribed by the regulations; and

(b) not contain any other content; and

(c) be in the form prescribed by the regulations.”

[3] In Peabody Moorvale Pty Ltd v CFMEU 1(Peabody) the Full Bench held that “the consequence of failing to give a Notice which complies with the content and the form requirements of s.174(1A) is that the Commission cannot approve the agreement.....In our view s.174(1A) is clear and unambiguous. There is simply no capacity to depart from the form and the content of the notice template provided in the Regulations. A failure to comply with these provisions goes to invalidity.”

[4] The Notice is inconsistent with s.174(1A)(a) of the Act in that it is not in the form prescribed by the Fair Work Regulations 2009 as it did not contain the telephone number of the Fair Work Commission Infoline.

[5] As the requirements of s.174(1A)(a) have not been complied with, I cannot be satisfied that employees have genuinely agreed to the enterprise agreement.

[6] The application for approval of the Agreement is therefore dismissed.

Pre-approval steps – 7 day access period

[7] Even if the Notice that was issued to employees had been in compliance with the Act, the application would have failed for the below reason.

[8] From the responses given by Mr Calvert Robert King in the F17 declaration, it is clear that employees were told on 4 June 2015 that the vote for approval of the Agreement would take place 8 June 2015.

[9] Sections 180 and 181 of the Fair Work Act are relevant and are as follows:

“180 Employees must be given a copy of a proposed enterprise agreement etc.

Pre-approval requirements

(1) Before an employer requests under subsection 181(1) that employees approve a proposed enterprise agreement by voting for the agreement, the employer must comply with the requirements set out in this section.

Employees must be given copy of the agreement etc.

(2) The employer must take all reasonable steps to ensure that:

(a) during the access period for the agreement, the employees (the relevant employees) employed at the time who will be covered by the agreement are given a copy of the following materials:

(i) the written text of the agreement;
(ii) any other material incorporated by reference in the agreement; or

(b) the relevant employees have access, throughout the access period for the agreement, to a copy of those materials.

(3) The employer must take all reasonable steps to notify the relevant employees of the following by the start of the access period for the agreement:

(a) the time and place at which the vote will occur;
(b) the voting method that will be used.

(4) The access period for a proposed enterprise agreement is the 7-day period ending immediately before the start of the voting process referred to in subsection 181(1).

Terms of the agreement must be explained to employees etc.

(5) The employer must take all reasonable steps to ensure that:

(a) the terms of the agreement, and the effect of those terms, are explained to the relevant employees; and

(b) the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.

(6) Without limiting paragraph (5)(b), the following are examples of the kinds of employees whose circumstances and needs are to be taken into account for the purposes of complying with that paragraph:

(a) employees from culturally and linguistically diverse backgrounds;
(b) young employees;
(c) employees who did not have a bargaining representative for the agreement.”

“181 Employers may request employees to approve a proposed enterprise agreement

(1) An employer that will be covered by a proposed enterprise agreement may request the employees employed at the time who will be covered by the agreement to approve the agreement by voting for it.

(2) The request must not be made until at least 21 days after the day on which the last notice under subsection 173(1) (which deals with giving notice of employee representational rights) in relation to the agreement is given.

(3) Without limiting subsection (1), the employer may request that the employees vote by ballot or by an electronic method.”

[10] The combined operation of s.180(1), (3) and (4) and s.181(1) and (2) is that an employer can only ask employees to approve a proposed enterprise agreement if both of the following conditions have been met:

1 - the request that employees approve the agreement must be made at least 21 days after the last Notice of Employee Representational Rights was issued to employees (s.181(1) and (2)), and:
2 - the time place and method of voting to approve the enterprise agreement must be notified to employees at least 7 days before the vote is to occur (s.180(3) and (4)).

[11] In the present matter the conduct of the employer creates the appearance that the employer has met the requirements of s.181. However an employer can only be in a position to comply with s.181 if the employer has already complied with s.180.

[12] In the present matter the conduct of the employer makes it clear that the employer has not met the requirements of s.180(1) because of the failure of the employer to comply with s.180(3) by asking employees to vote on the Agreement on 8 June 2015, not a full seven days after 4 June 2015 which was the date when the employees were informed of the time, place and method of vote.

[13] The consequence of not complying with s.180(3) is that the employer could not request the employees to approve the Agreement.

[14] This in turn means that the Agreement has not been made under s.182(1) which provides that:

“182 When an enterprise agreement is made

Single enterprise agreement that is not a greenfields agreement

(1) If the employees of the employer, or each employer, that will be covered by a proposed single enterprise agreement that is not a greenfields agreement have been asked to approve the agreement under subsection 181(1), the agreement is made when a majority of those employees who cast a valid vote approve the agreement.”

Observations

[15] I have considered the terms of the proposed agreement and, had the application been validly made, I would have raised a number of concerns in relation to the contents of the agreement. To assist the employer I make the following observations as to the contents of the agreement. These observations are not part of the decision in this matter.

[16] The minimum rates of pay in the Agreement are almost the same as the Manufacturing and Associated Industries and Occupations Award 2010 (the Award) rate. Boilermakers and Welders employed under the Agreement are paid as C10 employees and paid at the rate of $20.14 per hour as against $20.13 under the Award. Whilst a 1 cent per hour increase above the Award rate could possibly satisfy the Better Off Overall Test (BOOT), it most probably would not. For an extra 1 cent per hour, employees would be bound by the terms of the Agreement and be unable to take any effective action to renegotiate their terms and conditions of employment until after the nominal expiry date of the Agreement.

[17] The classification structure suggests that employees will be paid less than what they would be entitled to under the Award. For example, all Boilermakers and Welders are to be classified as C10 even if in fact they perform work which under the Award would attract a higher classification level.

[18] Clause 9 does not contain a consultation term which meets the requirements of s.205(1) and (1A) of the Act.

[19] Clause 10.1 permits the employer to terminate an employee in the first three months of employment without notice. This provision contravenes of s.117 of the Act.

[20] The status of an employee during the “qualifying period” is unclear. Given that clauses 10.2 and 10.3 preclude an employee during the qualifying period being either a full time or part time employee, it can only be assumed that employees are employed on a casual basis during the first 3 months of employment. This is a concern which goes to whether those employees serving a qualifying period are genuine casuals. The structure of the Agreement suggests that employees may in fact be engaged as permanent employees but are treated as something less than permanent during the first three month qualifying period. This is a significant BOOT issue.

[21] Clause 11 states that employees are required to work an average of 38 hours per week and yet clause 11.3 talks about a pay week of up to 40 hours and clause 12.1 provides for overtime to be paid only after an employee has worked 40 ordinary hours in a week. This is a BOOT issue.

Further, whilst clause 11 provides for an average of 38 ordinary hours per week, there is no averaging period specified: it could be the life of the Agreement. This is a significant BOOT issue given the 28 day averaging period in the Award.

[22] Clause 18 provides an overtime rate of double time for work on a public holiday, whereas the Award rate is double time and a half. This is a significant BOOT issue given that the wage rates in the Agreement are only just above the Award rates.

[23] The notice period contained in clause 20 in relation to personal leave is more onerous than that which is provided for in the Act, which states at section 107:

“107 Notice and evidence requirements

Notice

(1) An employee must give his or her employer notice of the taking of leave under this Division by the employee.

(2) The notice:

(a) must be given to the employer as soon as practicable (which may be a time after the leave has started); and

(b) must advise the employer of the period, or expected period, of the leave.”

Evidence

(3) An employee who has given his or her employer notice of the taking of leave under this Division must, if required by the employer, give the employer evidence that would satisfy a reasonable person that:

(a) if it is paid personal/carer’s leave—the leave is taken for a reason specified in section 97; or

(b) if it is unpaid carer’s leave—the leave is taken for a permissible occasion in circumstances specified in subsection 103(1); or

(c) if it is compassionate leave—the leave is taken for a permissible occasion in circumstances specified in subsection 105(1).

Compliance

(4) An employee is not entitled to take leave under this Division unless the employee complies with this section.

Modern awards and enterprise agreements may include evidence requirements

(5) A modern award or enterprise agreement may include terms relating to the kind of evidence that an employee must provide in order to be entitled to paid personal/carer’s leave, unpaid carer’s leave or compassionate leave.

Note: Personal information given to an employer under this section may be regulated under the Privacy Act 1988.”

[underlining added]

[24] The obligations on an employee to give notice to their employer in relation to personal/carer’s leave or compassionate leave are exhaustively set out in s.107(1).

[25] As is very clear from s.107(5) an enterprise agreement “may include terms relating to the kind of evidence that an employee must provide in order to be entitled to paid personal/carer’s leave, unpaid carer’s leave or compassionate leave”. However, s.107(5) does not permit an enterprise agreement to alter the notice requirements set by s.107(1).

[26] Where an enterprise agreement seeks to replace the operation of s.107(2) of the Act with a more onerous notice requirement such a term of an enterprise agreement would appear to contravene s.55 of the Act and an enterprise agreement with such a term could not be approved by the Commission given the operation of s.186(2)(c) of the Act.

[27] Clause 23 refers to the incorporation of the long service leave provisions of the Metal, Engineering and Associated Industries Award 1998 (the 1998 Award) as at the date the Agreement was made. Given that the 1998 Awardwas superseded by the modern award on the date the Agreement was made, the purpose of the clause is unclear.

[28] Clause 25.1 does not contain a job search entitlement as per the Award. This is a BOOT issue.

[29] Clause 25.2 contains a provision which permits the employer to withhold monies due to the employee if the requisite notice is not given upon termination, without the employee’s consent. I refer to the reasons set out in Hydro Chem Pty Ltd, [2014] FWCA 5163 in support of the contention that this provision is unenforceable given s.324(1)(b) of the Act.

COMMISSIONER

 1   [2014] FWCFB 2042.

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