Kimberly-Clark Australia Pty Limited

[2017] FWC 2591

[2017] FWC 2591

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Kimberly-Clark Australia Pty Limited
(AG2016/7257)

COMMISSIONER GREGORY MELBOURNE, 15 MAY 2017

Application for approval of the Kimberly-Clark Australia Pty Limited Millicent Mill Production Enterprise Agreement 2015.

Introduction

[1] An application has been made for approval of an enterprise agreement known as the Kimberly-Clark Australia Pty Limited Millicent Mill Production Enterprise Agreement 2015 (“the Agreement”). The application was made pursuant to s.185 of the Fair Work Act 2009 (Cth) (“the Act”) by Kimberly-Clark Australia Pty Ltd (“Kimberly-Clark”). It is a single enterprise agreement.

[2] However, on reviewing the application it was discovered that the Notice of Employee Representational Rights given to the employees to be covered by the Agreement does not contain the correct telephone number for the Fair Work Commission Infoline. It instead contains the telephone number of the enquiry line at the office of the Fair Work Ombudsman.

[3] These same circumstances arose in three recent applications, including an application to approve the DOF Management Australia Pty Ltd Maritime Offshore Oil and Gas Industry Enterprise Agreement 2016 (“DOF Management”). That application was initially approved in a decision handed down on 1 August 20l6, 1 however, it was subsequently taken on appeal by the Maritime Union of Australia. A Full Bench of the Commission, in a decision handed down on 1 February 2017,2 determined that the Agreement could not be validly approved because the Notice of Employee Representational Rights given to employees was not in the correct form.

[4] It is understood that a further application has now been made to the Federal Court for a judicial review of that decision. The Full Bench decision has also been stayed pending the Federal Court appeal. 3

[5] The Federal Government has also introduced a Bill into the Parliament, 4 which intends to provide the Commission with a degree of discretion to enable it to overlook procedural deficiencies in the agreement making process in circumstances where the exercise of that discretion would not disadvantage the employees to be covered. It is also understood that the inclusion of these proposed amendments in the Bill has been motivated, in part, by the Full Bench decision referred to above.

[6] Having identified the issue with the Notice of Employee Representational Rights, the Commission contacted Kimberly-Clark and the Construction, Forestry, Mining, Energy Union - Pulp and Paper Workers Branch, Forest and Furnishing Products Division (“the CFMEU”), who are a bargaining representative for the Agreement, to seek their views about how the matter should now be progressed, given the Full Bench decision in DOF Management.

[7] Kimberly-Clark indicated in response “that the matter should be stood over pending the outcome of the Appeal,” 5 but if the Commission had any concerns about this proposal it sought to have the matter set down for hearing to enable it to provide further submissions in support of the application. However, the CFMEU responded by indicating that the application should now be discontinued by Kimberly-Clark and if it was not then the Commission should act to dismiss the application. It also indicated that it wished to be heard in regard to the matter. The application was accordingly set down for hearing.

[8] Mr Andrew Short from Minter Ellison appeared by video link from Adelaide on behalf of Kimberly-Clark. Mr Eugene White of Counsel appeared on behalf of the CFMEU. Both were given permission to appear under s.596(2)(a) as the matter involves a degree of complexity and their involvement might enable it to be dealt with more efficiently.

The Submissions and Evidence

[9] Kimberly-Clark submits that the following considerations are relevant to the exercise of the Commission’s discretion in this matter. Firstly, it has entered into an Agreement in good faith and now seeks to have that Agreement honoured. It also refers to the objects of the Act in ss.3(a) and (f), which make reference to workplace laws that are “fair to working Australians” 6 and “flexible for businesses,”7 and to achieving “productivity and fairness through an emphasis on enterprise-level collective bargaining….”8

[10] It next refers to the decision in DOF Management and adopts the submissions of the Employer in that matter, which are summarised at [60] of the decision in the following terms:

“[60] In relation to the NERR issue, DOF and Smit Lamnalco submitted that:

• the MUA should not be granted leave to amend its notice of appeal to add the additional NERR appeal ground, since it had not raised the issue at first instance and it only arose when ventilated by a member of the Full Bench;



• in the circumstances described the proposed amendment would amount in substance to the Commission initiating an appeal against its own decision;



• in any event the point was wrong for a number of reasons;



• firstly, the NERR was valid, in that the text of the prescribed form in Schedule 2.1 of the FW Regulations had been followed completely;



• Harbour City Ferries was authority only for the proposition that the fields in the form had to be populated, not that they had to be populated “correctly”;



• KCL involved a different set of facts, in that the wrong infoline had been described;



• Peabody involved a very substantial departure from the prescribed form, and was in any event decided incorrectly;



• Aldi did not determine the correctness or otherwise of Peabody;



• Peabody when read with Harbour City Ferries would lead to absurd outcomes, including that the slightest error in the information used to populate the NERR would lead to invalidity;



• there was no obligation to populate the fields accurately or correctly;



• the failure to include the correct telephone number did not undermine the purpose and intent of the NERR in any way, given that the final paragraph of the prescribed form did not inform the employee of anything relevant to bargaining, the infoline is only one of four contact points identified, the correct number was not hard to find, and the use of the Fair Work Ombudsman’s number which was actually included in the DOF and Smit Lamnalco NERRs was likely to lead to the person being assisted with their inquiry or referred to the correct number; and



• alternatively, consideration of the NERR issue should be deferred until applications for questions concerning defective NERRs which arose in two other appeals 30 to be referred by the President to the Federal Court pursuant to s.608 of the FW Act had been determined. If the referrals were ordered, the determination of the issue should then be further deferred until the Court had issued its decision. If the referrals were refused, the Full Bench should not determine the appeals until DOF and Smit Lamnalco had been given an opportunity to apply themselves for referrals of the NERR issue pursuant to s.608.” 9

[11] It also notes that a further application has now been made to the Federal Court seeking a judicial review of that decision. The Full Bench decision has also been stayed pending the Federal Court appeal. In its submission the Commission should now await the decision of the Federal Court, and its determination about whether there is “a proper application capable of being approved by the Commission…” 10

[12] It also refers to the recent introduction into Federal Parliament of the Fair Work Amendment (Repeal of 4 Yearly Reviews and Other Measures) Bill 2017, and submits that it intends, inter alia, to amend the existing s.188 of the Fair Work Act 2009 (Cth). The amendments set out in the Bill propose to add the following wording at the end of section 188:

“(2) An enterprise agreement has also been genuinely agreed to by the employees covered by the agreement if the FWC is satisfied that:

(a) the agreement would have been genuinely agreed to within the meaning of subsection (1) but for minor procedural or technical errors made in relation to the requirements mentioned in paragraph (1)(a) or (b), or the requirements of sections 173 and 174 relating to a notice of employee representational rights; and

(b) the employees covered by the agreement were not likely to have been disadvantaged by the errors.” 11

[13] It also refers to the Explanatory Memorandum to the Bill which states, in part:

“The effect of this amendment is that an enterprise agreement will have genuinely been agreed to despite any minor procedural or technical error if the employees (as a whole) were not likely to have been disadvantaged by those errors.” 12

[14] In its submission the passage of this legislation would deal with the issue that now prevents the present Agreement from being approved. It acknowledges that passage of the Bill cannot be assured, but submits that the Government appears to be moving expeditiously to pass the legislation as soon as possible. In its submission this possibility creates the potential for a prompt response to be provided to the circumstances which now prevent the Agreement from being approved.

[15] Kimberly-Clark next makes reference to the circumstances at the Millicent site. It indicated that the Operations Manager at the Site was available to give evidence but advised in response to an enquiry from the Commission, that his evidence was intended to go to the fact that the business was facing significant competitive pressure and the Agreement, if approved, could assist that situation by improving the cost structure of the business. This outcome would, in turn, enhance the on-going job prospects of the existing employees. It also indicated it was concerned that if the Agreement was not approved, and the process of making and having the Agreement approved had to be recommenced, the CFMEU might “run a “no” campaign,” 13 which could jeopardise the likelihood of the Agreement being approved in a future ballot of employees. If this if this occurred it could in its submission ultimately jeopardise “the viability of the enterprise.”14

[16] It also indicated in response to a question from the Commission that it wanted to maintain the status of the current Agreement, if at all possible, and emphasised again that it was concerned that it might not be voted up again if the Agreement has to be put to a vote in another ballot. Kimberly-Clark also submits, in conclusion, that despite the “impediment to approval” 15 that the Full Bench decision in DOF Management has established this should not “lead to a conclusion that there was unfair bargaining or that an agreement was not, in truth, agreed.”16

[17] It concludes by submitting that the employees will not be prejudiced by any delay because clause 13 of the Agreement provides for them to receive back pay once the Agreement is approved. In its submission it is accordingly now appropriate for the application to be adjourned, and for it to be called back on again at some point in the future as developments unfold.

[18] The CFMEU submits, in response, that Kimberly-Clark is effectively asking “the Commission not to perform its duty.” 17 It acknowledges that the Commission has broad powers under s.589, but submits they must be exercised subject to other specific provisions in the Act. It refers in this context to s.577(b), which requires that the Commission perform its functions and exercise its powers in a manner that “is quick, informal and avoids unnecessary technicalities.”18

[19] It also refers to section 33 of the Acts Interpretation Act 1901 (Cth), which provides that:

“Where an Act confers a power or function or imposes a duty, then the power may be exercised and the function or duty must be performed from time to time as occasion requires.” 19

[20] It continues to submit that “It is not open, generally, to courts or Commissions to choose not to exercise the powers that have been given to it and which have been enlivened on an application.” 20

[21] It also refers to s.185 of the Act which requires that an application for approval of an agreement be lodged within 14 days of the agreement being made, and submits this limited time frame makes clear that the scheme of the Act intends that applications for approval of an enterprise agreement be dealt with “quickly and expeditiously.” 21

[22] In response to the possibility of the amending legislation being passed, the CFMEU submits, firstly, that the proposed legislation set out in the Bill is not expressed to apply in retrospective terms, and further that this is entirely consistent with the principles that generally apply in regard to amending Acts of Parliament.

[23] In its submission this is confirmed by the Explanatory Memorandum to the Bill which makes clear that the proposed amendments to section 188 will only apply to applications to approve enterprise agreements made after the amendments commence. Therefore, in its submission even if the amending legislation is passed by the Parliament, it cannot “have any impact on the application before the Commission.” 22

[24] In regard to the application for judicial review in the matter of DOF Management it submits, firstly, that the law on this issue is now clear and settled. In this context it refers to the decisions in Peabody Moorevale Pty Ltd 23 and Shop, Distributive & Allied Employees Association v ALDI Foods [2016] FCAFC 161. It continues to submit that on the basis of these authorities any future judicial review of the decision in DOF Management has no reasonable prospect of success.

[25] It also submits that, in any case, it is not possible to estimate with any certainty when the matter might be heard by the Federal Court. It also notes that the nominal expiry date of the Agreement, being July 2018, is itself a relatively short time away.

[26] It finally submits that the business conditions confronting the business at this time are not relevant to “the Commission’s obligation to hear and determine the matter” 24 in accordance with its statutory obligations.

Consideration

[27] It is obviously unfortunate that approval of the proposed Kimberly-Clark Australia Pty Ltd Millicent Mill Production Enterprise Agreement 2015 has been derailed by an inadvertent mistake involving the telephone number of the office of the Fair Work Ombudsman being included in the Notice of Employee Representational Rights given to employees, instead of the telephone number of the Fair Work Commission’s Infoline. However, based on the authority of recent Full Bench decisions the Agreement cannot be approved, given this deficiency in the Notice, despite the fact that no issues have been found to exist in regard to satisfaction with the requirements of the “better off overall” test.

[28] Kimberly-Clark submits that as a consequence any further consideration of the application should be deferred pending either the passage of amending legislation or a future decision of the Federal Court following an application for judicial review of the earlier Full Bench decision.

[29] The CFMEU submits, in response, that the application should be dismissed, given the existing authorities, which make clear that the employees were not provided with a valid Notice of Employee Representational Rights. I have already indicated that it is regrettable that such an inadvertent mistake means the Agreement cannot be approved. However, I am also satisfied that an application for approval of an Agreement should not be adjourned indefinitely pending the outcome of developments elsewhere. Section 577 makes clear that the Commission is required to perform its functions and exercise its powers in a manner that “is quick, informal and avoids unnecessary technicalities.” 25 Indefinitely adjourning the application would not sit well with at least one of those requirements, that being the obligation to act quickly.

[30] I am also satisfied that an indefinite adjournment of the application is not appropriate for the employees to be covered by the Agreement. They are entitled to have some certainty about the status of that Agreement. The current proposal by Kimberly-Clark of an indefinite adjournment could mean that 6 months, 12 months, or even longer, could pass by before the outcomes it seeks to rely upon play out. Even then there are clearly no guarantees that the Agreement will be able to be approved.

[31] The submissions of the CFMEU are noted in this regard. There is clearly no certainty that either of the developments Kimberly-Clark relies upon in order to respond to the deficiencies associated with the present application will actually assist. Firstly, the current Bill before the Parliament does not intend to have retrospective application. Secondly, the current state of the relevant authorities suggests the outcome of any judicial review by the Federal Court is problematic at best.

[32] I am satisfied, in conclusion, that it is not appropriate for the employees to be left “in limbo” while these developments play out. They are instead entitled to some certainty in regard to the present application. These considerations, taken together with the obligation imposed on the Commission to act quickly, as far as possible, lead to a conclusion that the application should be determined at this time.

[33] The decision of the Full Bench in DOF Management makes clear that the prescribed form of the Notice of Employee Representational Rights is intended to contain the telephone number of the Fair Work Commission Infoline as a source of information about enterprise bargaining. It concluded “[t]hat purpose would be frustrated entirely if a different and incorrect telephone number could validly be inserted into the NERR.” 26 It also indicated that this defect went beyond what could be characterised as trivial. It accordingly concluded that the Agreement could not have been validly approved because the NERR provided to the employees by the employer was invalid. It followed that the application for approval of the Agreement must be dismissed.

Conclusion

[34] As indicated, the Notice of Employee Representational Rights provided to the employees in the present matter contains the same defect in that the incorrect telephone number was included in the notice. Based on the authority of the Full Bench decision referred to above I am satisfied that the Commission has no option now but to also dismiss the present application.

[35] It is emphasised again that in coming to this decision that the application must now be dismissed the Commission is not expressing any view about satisfaction with the requirements of the “better off overall” test. The Commission has not at this time identified any issues that need to be considered in this context.

COMMISSIONER

Appearances:

A Short for the Applicant.

E White of Counsel for the Construction, Forestry, Mining, Energy Union - Pulp and Paper Workers Branch, Forest and Furnishing Products Division.

Hearing details:

2017.

Melbourne and Adelaide (video hearing):

March 9.

 1   DOF Management Australia Pty Ltd [2016] FWCA 4654.

 2   Maritime Union of Australia v MMA Offshore Logistics Pty Ltd t/a MMA Offshore Logistics & Ors[2017] FWCFB 660.

 3 Application [WAD38/2017] filed 9 February 2017 seeking relief under s.39B Judiciary Act 1903.

 4   Fair Work Amendment (Repeal of 4 Yearly Reviews and Other Measures) Bill 2017 (Cth).

 5   Email correspondence from Applicant to Fair Work Commission, dated 23 February 2017.

 6   Fair Work Act 2009 (Cth) s 3(a).

 7   Fair Work Act 2009 (Cth) s 3(a).

 8   Fair Work Act 2009 (Cth) s 3(f).

 9   Maritime Union of Australia v MMA Offshore Logistics Pty Ltd t/a MMA Offshore Logistics & Ors[2017] FWCFB 660.

 10   Transcript at PN17.

 11   Fair Work Amendment (Repeal of 4 Yearly Reviews and Other Measures) Bill 2017 (Cth) sch 2 item 2.

 12   Explanatory Memorandum, Fair Work Amendment (Repeal of 4 Yearly Reviews and Other Measures) Bill 2017 (Cth) cl 46.

 13   Transcript at PN40.

 14   Ibid.

 15   Transcript at PN81.

 16   Ibid.

 17   Transcript at PN122.

 18   Fair Work Act 2009 (Cth) s 577(b).

 19   Acts Interpretation Act 1901 (Cth) s 33(1).

 20   Transcript at PN125.

 21   Transcript at PN126.

 22   Transcript at PN138.

 23   Peabody Moorvale Pty Ltd v Construction, Forestry, Mining and Energy Union[2014] FWCFB 2042.

 24   Transcript at PN157.

 25   Fair Work Act 2009 (Cth) s 577(b).

 26   Maritime Union of Australia v MMA Offshore Logistics Pty Ltd t/a MMA Offshore Logistics & Ors[2017] FWCFB 660 at [101].

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