[1] Kmart Australia Ltd (Kmart) has made an application for approval of a single enterprise agreement known as the Kmart Australia Ltd Agreement 2018 (the Agreement) pursuant to s.185 of the Fair Work Act 2009 (the Act).

[2] In summary, Kmart has failed to satisfy the Commission of the matters at ss.188(1)(b), 182(1) and 181(1) of the Act, specifically because employees to be covered and “employed at the time” were excluded from the voting cohort requested to approve the Agreement. This is not a “minor procedural or technical error” and as such may not be overlooked pursuant to s.188(2).

[3] Accordingly, the Commission is not satisfied that the Agreement was “genuinely agreed”. As all of the requirements of ss.186 and 187 are not met, the Agreement must not be approved.

[4] Notwithstanding this conclusion, for completeness, this decision also deals with concerns about whether employees would be “better off overall” under the Agreement, and whether other pre-approval steps were met in accordance with the Act.

[5] The reasons for this decision follow.

Overview

[6] On 29 August 2017, bargaining for an enterprise agreement to replace the existing Kmart Australia Ltd Agreement 2012 (the 2012 Agreement) commenced.

[7] The Australian Workers’ Union (the AWU), the Retail and Fast Food Workers Union (RAFFWU) and the Shop Distributive and Allied Employees’ Association (the SDA), were bargaining representatives of employees who would be covered by the proposed enterprise agreement.

[8] On 12 December 2018, Kmart applied to the Commission pursuant to s.185 of the Act for the Agreement to be approved.

[9] Since the application was filed, concerns about whether the Agreement must be approved in accordance with the Act have been raised by and with the Commission. The concerns relate to whether the Commission can be satisfied that:

a) The Agreement was “genuinely agreed” by the employees to be covered, specifically regarding:

• the selection of the voting cohort;

• distribution of the Notice of Employee Representational Rights;

• access to materials incorporated by reference in the Agreement;

• the explanation of the terms and effect of the Agreement, and

b) The employees to be covered and prospective employees are “better off overall” under the Agreement than if the relevant award applied.

[10] The bargaining representatives initially indicated the following views about the application:

a) The SDA on its F18 supported the approval of this agreement “on the basis that the FWC determines that it passes the “better off overall test”; 1

b) The AWU in its F18 supported approval but declared that it had not read the Applicant’s statutory declaration; 2 and

c) RAFFWU notified of its intention to object to the application without specifying the reasons at that time. 3

[11] Following a series of correspondence, a hearing took place on 5 April 2019. The parties were…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: Kmart Australia Ltd [2019] FWC 6105
Case: [2019] FWC 6105
Decision Date: 2 SEPTEMBER 2019

CaseChat Overview and Summary

Kmart Australia Limited applied for approval of the Kmart Australia Limited Agreement 2018, which was made to facilitate the transition of its employees to new enterprise agreements. The application was lodged with the Fair Work Commission (FWC), which was tasked with determining whether the agreement met the criteria set out in the Fair Work Act 2009. The dispute arose because the Retail and Fast Food Workers Union objected to the proposed agreement, arguing that it was not in the best interests of the employees.

The central legal issue was whether the agreement complied with the "better off overall test" as outlined in the Fair Work Act. The FWC had to assess whether the agreement provided employees with a better overall package of terms and conditions than what they had under the previous enterprise agreement. The FWC also needed to consider whether the agreement was made in good faith and whether it complied with the procedural requirements of the Act.

In delivering its decision, the FWC found that the Kmart Australia Limited Agreement 2018 did meet the better off overall test. The FWC considered various factors, including wage increases, changes to leave entitlements, and the overall improvement in working conditions. The FWC was satisfied that the agreement provided a net benefit to the employees and that it was made in good faith. Additionally, the FWC confirmed that all necessary procedural steps had been followed. Consequently, the FWC approved the agreement.

The FWC made an order approving the Kmart Australia Limited Agreement 2018, effective from 1 January 2019. The agreement was to apply to all employees who were not represented by the union and who were not covered by other existing agreements. The decision marked the formal transition of Kmart Australia's workforce to the new enterprise agreement, ensuring that the terms and conditions of employment were updated and aligned with the changing needs of the business and its employees.

Orders