Lane Scaffold Pty Ltd

[2021] FWCA 1354

[2021] FWCA 1354

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement

Lane Scaffold Pty Ltd
(AG2020/3593)

LANE SCAFFOLD PTY LTD ENTERPRISE AGREEMENT 2020 - 2024

COMMISSIONER JOHNS SYDNEY, 12 MARCH 2021

Application for approval of the Lane Scaffold Pty Ltd Enterprise Agreement 2020 - 2024

[1] On 25 November 2020 Lane Scaffold Pty Ltd (Lane/Employer) made an application for the approval of an enterprise agreement known as the Lane Scaffold Pty Ltd Enterprise Agreement 2020 – 2024 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (FW Act), the Agreement is a single enterprise agreement.

[2] The application was made by The Master Builders’ Association of New South Wales (Applicant/MBA NSW) on behalf of the employer, two employee bargaining representatives also participated in the bargaining process. The Employer declares that they only have two employees, being the two bargaining representatives mentioned. Both employees voted on the Agreement. Both voted in favour of the Agreement.

[3] The employees to be covered by the Agreement are currently employed subject to the Building and Construction General On-site Award 2020 (the Award).

[4] The application Form F16 was accompanied with a statutory declaration in support of the application (Form F17), which annexed the Notice of Employee Representational Rights (NERR), a copy of the Agreement, and an explanatory document distributed to employees setting out the approval process.

[5] On 1 December 2020 correspondence was received from the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU/Union) requesting to be provided with copies of the application documents and requesting to be heard in the matter. In line with the Fair Work Commission’s (Commission) usual practice the application documents were provided to the Union later that day.

[6] The matter was allocated to me for consideration on 8 December 2020. My Chambers contacted the Employer, the MBA NSW and the CFMMEU by email on 17 December 2020 – wherein I expressed that I was inclined to approve the Agreement subject to the Union pressing their opposition. By reply email the next day, the CFMMEU expressed concerns with the Agreement in relation to whether it had been genuinely agreed under s 180(2) and s 180(5) of the FW Act, and regarding the better off overall test (BOOT). I then issued Directions, which provisionally listed the matter for hearing, called for the filing of materials, and provided the parties with the Commission’s agreement analysis checklist for the Applicant address.

[7] The Applicant filed response submissions to the agreement analysis checklist, an amended copy of the Agreement with a revised signature page and provided an undertaking. In response to the Applicant’s submissions and undertakings, the Union expressed a continued desire to oppose the Agreement on the same grounds as before.

[8] I received submissions from the CFMMEU on 15 February 2021 and reply submissions from the Applicant on 23 February 2021. By consent it was determined that the matter could be decided on the papers. All the application documents, emails from the parties, and formal submissions and attachments filed, whether specifically noted or not, are before me in considering the application and the Union’s opposition to same.

The Application Documents

[9] The Form F17 - Employer’s declaration in support of an application for approval of an enterprise agreement, details:

•  that the Employer commenced bargaining when it issued a NERR on 13 October 2020 by hand delivery,

•  that on 28 October 2020, all employees intended to be covered by the Agreement were hand-delivered a ‘How and When’ (regarding voting) notice by the Employer director, this notice also included hyperlinks to the Award, the NES, the Building Code 2016, and other related material, and

•  that on 30 October 2020, the Employer provided all employees a printed hardcopy of the Agreement.

•  That, also on 30 October 2020 at 3:00 pm, a formal discussion meeting at the Employer’s Liverpool premises was held to explain the terms of the Agreement, and the effect of those terms, including particular discussions around:

•  Wage rate changes,

○ Classifications being proposed,
○ Travel arrangements in clause 6 and the ‘Distant Work Provisions and Allowances’,
○ Leave entitlements in the Agreement, including the ‘Compensation Allowance’,
○ Hours of work and Overtime provisions, including meal breaks, crib breaks, and meal allowances, and
○ Shiftwork provisions,

•  that employees participated in the discussion, and all their questions were answered.

•  That on 12 November 2020 voting for the Agreement commenced and concluded, with both employees (2 total) casting a valid to approve the Agreement.

Undertaking

[10] I had previously expressed a concern that the Agreement would allow for the engagement of apprentices, but that the Agreement does not provide for apprentice rates of pay. Consequently, I was concerned that apprentices may not be better off overall.

[11] On 20 January 2021 the Employer provided an undertaking that amends clause 4.1.1 of the Agreement to provide that employees are to be employed as either “Full-time or Part-time Daily Hire Employees… (or) Casual Employees”. 1 That is, the Agreement no longer applies to apprentices. This undertaking resolves my concern.

Submissions

The CFMMEU

[12] In summary the CFMMEU submit that:

“a) The proposed agreement was not genuinely agreed in accordance with s 180(5) of the Act;

and

b) The proposed agreement does not pass the better off overall test in accordance with s 193 of the Act.” 2 (citations removed)

Better-Off-Overall Test

[13] The Union says that clause 3.4.3. of the Agreement has the effect empowering the Agreement to override the Award in areas where the Agreement provides terms, and that this can be the case even if the Agreement provides worse off overall conditions than the Award. The Union say that this is so, even though clause 3.4.3. states the Agreement has been drafted to be better-off-overall. The clause reads:

“3.4.3. Where modern award conditions have been modified by the terms of this Agreement, remuneration and other conditions of this Agreement have been set at a level to ensure that persons employed under this Agreement, as better-off-overall than they would otherwise be under the modern award. However, whether the Agreement is silent on the relevant award provisions, then those modern award provisions shall apply.”

[14] The Union then goes on to identify the Agreement clauses that it contends are worse-off-overall than the Award provisions:

Payment of wages

•  Clause 5.4.2. provides that employees wages will be accessible by no later than the close of business Friday of each working week, whereas the Award provides wages will be accessible at the end of ordinary hours on Thursday of each working week,

•  Employees are worse-off as they may need to wait an additional day to access their wages under the Agreement.

Deductions from employees’ wages

•  Clause 5.4.4. provides that the Employer may deduct up to one weeks’ wages from the employees’ termination pay provided the deduction is not unreasonable in the circumstances,

•  This clause is contrary to section 323 of the FW Act, and provides a broader discretion for the Employer to deduct wages than those contained in the Award.

Termination pay

•  Clauses 5.4.5. and 12.1.6. provides the Employer with up to 5 days after the date of termination to pay all termination entitlements to the employee,

•  Whereas under the Award termination entitlements are to be paid at the time of termination where notice is given, or two working days where this is not practicable.

Crib breaks

•  Clause 7.6. of the Agreement provides that an employee may take a crib break after each block of 4 hours overtime worked, provided work is resumed after the crib break,

•  Whereas the Award provides that crib breaks can be taken after just 2 hours after the employees’ usual finishing time, a detriment of at least 2 hours.

Annual Leave

•  Clauses 9.2.6(c) of the Agreement allows the Employer to require an employee to take excessive annual leave accruals without specifying a process, or requiring that the Employer and employee reach agreement to the determination,

•  Whereas the Award provides for a process for the Employer making such a direction, but first requires the Employer to “genuinely (try) to reach agreement with (the) employee” 3 prior.

Not genuinely agreed, Section 180(5)

[15] The Union draws attention to the requirement set for an employer to explain the effect of clauses in cases where the proposed agreement contains worse-off-overall clauses. 4 They then submit that:

•  That the Employer has not declared that the Agreement does not contain less beneficial clauses than the Award,

•  There is therefore no evidence that the Employer highlighted the less beneficial clauses to the employees,

•  Without having the less beneficial clauses brought to their attention and their effects explained, the Agreement cannot have been genuinely agreed to by the employees in accordance with s.180(5) of the FW Act.

The Applicant

[16] The Applicant makes the following submissions in response:

Regarding the BOOT

•  The Commission not required to examine each clause in a vacuum, it is required to analyse the Agreement as a whole and in doing so, reach a conclusion on to the BOOT,

•  No disadvantage arises in regard to employees being paid on a Friday rather than a Thursday,

•  Clause 5.4.4 should be read in context of the preceding paragraph which deals with overpayments, this limits the application of clause 5.4.4 of allowing deductions only in overpayment scenarios,

•  It is reasonable to modify the Award and allow the Employer up to 5 days to organise termination pay due to the complexities entailed,

•  The less beneficial nature of clause 7.6 providing for a crib break after 4 hours, compared to the Award’s 2 hours, is to be read in conjunction with clause 5.6.6 of the Agreement that provides for a compensatory allowance in place of the crib break,

•  It is reasonable for the Employer to have the discretion in regard to excessive annual leave as these provisions are consistent with the Annual Leave Act,

•  The clauses criticized by the Union have been accepted by the employees through the voting process, and when viewed in the context of the Agreement as a whole, the employees are better-off-overall

Genuine agreement

•  The terms of the Agreement were adequately explained to the employees at the meetings detailed in the application documents,

•  The nature of the meetings, and any perceived inadequacies, should be tempered against the fact that the Employer Director, Mr David Lane, is a former CFMMEU delegate, as was one of his two employees, and all three are former CFMMEU members – it follows that the bargaining process did not require the same level of formality that bargaining with less sophisticated employees may have,

•  Further, the Applicant says that:

“a) All employees nominated themselves as bargaining representatives.

b) No employees nominated the Union as their bargaining representative, despite

express notification being given that they had a right to do so [see NERR].

c) All employees participated in the bargaining.

d) All employees participated in the Discussion Meeting.

e) All employees voted in favour of proposed agreement.

f) One of the self-nominated bargaining reps signed the Agreement.” 5

•  There has been no evidence put forward by the Union that the employees did not genuinely agree or understand the Agreement – just bare assertions,

•  That the Commission should be wary of accepting the objections of a Union who has not been involved in the bargaining process and who presents “a ‘desktop’ foundation upon which they might seek to be heard to oppose the approval of an enterprise agreement (i.e. solely on the basis of what is able to be extrapolated or said to be inferred (in an adverse way) from the face of an F17 form …).” 6

Consideration

[17] Section 180(5) provides that,

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.

(my emphasis)

[18] Having regard to the decision of the Federal Court of Australia (Flick J) in Construction, Forestry, Mining and Energy Union v One Key Workforce Pty Ltd 7 compliance with s.180(5) of the FW Act in an essential pre-approval requirement. His Honour held that,

“[108] The response provided to the Commission in para 2.6 of the F17 Statutory Declaration was misleading to the extent that it asserted on behalf of One Key Workforce that the “terms of the Agreement and the effect of the terms were explained to the relevant employees” by means of either the 25 August 2015 email or during the “telephone conversations”.

[109] Such reasons as were provided by the Commissioner at para [9] of his reasons for decision expose jurisdictional error. Little, if any, consideration was given to what were the “steps” in fact taken by the employer or the adequacy of those steps. Such consideration as was given was more directed to the subject-matter of the information communicated rather than to the content of the information communicated or the effectiveness of the communication of that information or (for that matter) what was not communicated.

[110] Separate from that source of jurisdictional error is the further conclusion that there must in fact be compliance with s 180(5) before the power of the Commission to “approve” the agreement arises. Although the Commission must form a state of “satisfaction” for the purposes of s 188(a)(i) of the Fair Work Act as to whether an employer has “complied with” s 180(5), its statement of having reached that state of “satisfaction” cannot transform a manifestly inadequate explanation process into one which complies with s 180(5). That factual inquiry, on this alternative basis, remains a matter that this Court can examine.

[111] On this alternative basis, it is further concluded that the approval process entrusted to the Commission miscarried.”

[19] An appeal against the decision of Flick J was dismissed by the Full Federal Court of Australia (Bromberg, Katzman and O’Callaghan JJ) in One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union. 8 The Full Court observed that,

“[111] The only material before the Commission on compliance with s 180(5) was contained in Ms Ind’s statutory declaration. Although the statutory declaration was silent as to the content of the explanation or, indeed, as to the substance of the communications, OKW submitted that the declaration itself was some evidence upon which the Commission could form the requisite state of satisfaction. That may be so, but it was by no means enough to enable the Commission to lawfully reach that state.

[112] It is common ground that the Commission was never told what was said to the relevant employees. It was simply told that they had been given an explanation of the terms of the Agreement and the effect of those terms. In effect, this amounted to little more than a self-serving statement that the employer had complied with its obligation under the Act. OKW contended that the fact that it made such a statement in a statutory declaration was significant.

It is not. As the CFMEU argued, whether all reasonable steps were taken to ensure that the effect of the terms of the Agreement was explained in an appropriate manner is a question of substance, not form. The recital of a conclusion on the very question the Commission was required (through an evaluative process) to determine is not, without more, a sufficient basis for the satisfaction of the statutory test. In other words, a bare statement by an employer that an explanation has been given is an inadequate foundation upon which to reach a state of satisfaction. OKW submitted that if the Commission had erred in this respect, it was an error in fact finding or an error in process, which would be an error within its jurisdiction. We reject this submission. In order to reach the requisite state of satisfaction that s 180(5) had been complied with, the Commission was required to consider the content of the explanation and the terms in which it was conveyed, having regard to all the circumstances and needs of the employees and the nature of the changes made by the Agreement. It is true that the Act does not expressly say that. But the question of whether an administrative decision-maker is required to consider a matter is not determined only by the express words of the Act; it may also be determined by implication from the subject-matter, scope and purpose of the Act: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24 at 39–44 (Mason J).

[113] A consideration of the subject-matter, scope and purpose of the relevant provisions of the Fair Work Act indicates that the content of the explanation and the terms in which it was conveyed were relevant considerations to which the Commission was bound to have regard. The absence of that information meant that the Commission was not in a position to form the requisite state of satisfaction. Put differently, without knowing the content of the explanation, it was not open to the Commission to be satisfied that all reasonable steps had been taken to ensure that the terms and their effect had been explained to the employees who voted on the Agreement or that they had genuinely agreed to the Agreement.

[114] The following considerations point inexorably to that conclusion.

[115] The Commission was required to be satisfied that OKW had taken “all reasonable steps to ensure” that both the terms and the effect of the terms had been explained to the relevant employees as an element in the inquiry as to whether “genuine” agreement had been obtained from them. The agreed purpose of the obligation imposed on employers by s 180(5) is to enable the relevant employees to cast an informed vote: to know what it is they are being asked to agree to and to enable them to understand how wages and working conditions might be affected by voting in favour of the agreement.

[116] In order for the employer to comply with the obligation it must take into account the particular circumstances and needs of those employees, including their cultural and linguistic backgrounds, their youth, and the absence of a bargaining representative. That is made explicit in s 180(6). How could the Commission decide whether the steps the employer had taken were “all reasonable steps” unless it knew what the employees had been told before they cast their votes? Without knowing the terms in which the explanation had been conveyed how could the Commission form an opinion on the sufficiency of the explanation, particularly having regard to the considerations mentioned in s 180(6)? Ultimately, how could the Commission decide that a genuine agreement had been reached without having evidence upon which it could answer both these questions?

[117] As there was no evidence of these matters before the Commission, it necessarily follows that the Commission purported to be satisfied that OKW’s obligations under s 180(5) had been discharged without taking those matters into account. That was a jurisdictional error because the Commission did not have authority to make the decision unless its satisfaction had been informed by them. As is often the case, there are several ways of describing the error. It could be characterised as a misconception as to what the exercise of the statutory power entails or an error “as to an important attribute of the decision to be made”: Graham at [68]. Equally it could be seen as a misunderstanding on the part of the Commission of the nature of the opinion it was required to form: Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194 at [31] (Gleeson CJ, Gaudron and Hayne JJ). Had the Commissioner applied his mind to the question of what the putative explanation entailed, he would inevitably have inquired into its content and terms.

[20] One Key mandates the Commission to focus its enquiry on the steps actually taken to comply s.180(5) and to consider whether:

a) the steps taken were reasonable in the circumstances; and
b) these were all the reasonable steps that should have been taken in the circumstances. 9

[21] The task before the Commission “requires attention to the content of the explanation given.” 10

[22] If the explanation is in writing, the task of assessing the reasonableness of the explanation is relatively easy. If it was not in writing (as in the present case) then it is vitally necessary to understand what words were spoken.

Consideration

Less beneficial terms

[23] I considered the opposing submissions of the Union and the Employer. I also reviewed the terms of the Agreement and the Award. I do not accept that the matters identified by the Union are less beneficial terms. The fact that a term in Agreement differs from that which appears in a Modern Award does not mean that it is, necessarily, less beneficial. In the current matter the subject matters identified by the Union are modifications. Even if I am wrong about the subject matters not being less beneficial terms, I am satisfied that the Agreement passes the BOOT. The BOOT assessment is not a line-by-line assessment. It requires a consideration of whether, overall, the employees are better off under the Agreement as opposed to the Modern Award. I have carefully considered the rates of pay provided for in the Agreement as opposed to what would apply under the Modern Award. My analysis leads me to a conclusion that employees are better off overall. I am further fortified in this view by reason of the operation of clause 5.6 of the Agreement which provides for a compensation allowance. If one is to model a 50-hour week it is clear that the high rates of pay in the Agreement and the compensation allowance are sufficient to ensure that employees are better off overall despite what the Union has described as less beneficial terms.

Genuine agreement

[24] Because I’m not satisfied that the Agreement contains less beneficial terms there was no need for the Employer to explain those terms to the Employees. The matters highlighted by the Union are not material. I’m not satisfied that any of those terms affected or might likely affect how an employee might vote in respect of the Agreement.

[25] The Employer in its submissions set out a number of matters about the context in which the agreement was negotiated and explained. It further set out matters about the employees.

[26] The matters identified by the Employer are all relevant context. I accept that the knowledge and experience of the relevant employees is relevant to determining whether reasonable steps were taken. 11

[27] It is also relevant context that the Agreement incorporates (with only minor modification) the Award.

[28] I accept the evidence of Mr Lane about the process of the negotiation and explanation of the Agreement. They were reasonable steps.

[29] For these reasons:

a) I am satisfied that Lane took all reasonable steps to explain the terms of the Agreement or the effect of those terms to relevant employees.
b) Consequently, I am satisfied that the relevant employees genuinely agreed to the Agreement as described in s.188 of the FW Act.
c) Accordingly, I am satisfied the relevant employees genuinely agreed as required by s.186(2)(a) of the FW Act.

Conclusion

[30] The Employer has provided written undertakings. A copy of the undertakings is attached in Annexure A. I am satisfied that the undertakings will not cause financial detriment to any employee covered by the Agreement and that the undertakings will not result in substantial changes to the Agreement. The undertakings are taken to be a term of the agreement.

[31] Subject to the undertakings referred to above, I am satisfied that each of the requirements of ss.186, 187, 188 and 190 as are relevant to this application for approval have been met.

[32] The Agreement is approved and, in accordance with s.54 of the Act, will operate from 19 March 2021. The nominal expiry date of the Agreement is 11 March 2025.

COMMISSIONER

Final written submissions:

15 February 2021, from the CFMMEU

23 February 2021, from the Applicant

Annexure A

 1   Undertaking of Employer, signed by David Lane, Director, on 20 January 2021

 2   CFMMEU submissions, 15 February 2021, p. 1

 3   Building and Construction General On-site Award 2010, cl 38.6.B

 4   See: Australian Workers' Union v Wagners Industrial Services Pty Ltd[2019] FWCFB 1731 [7] to [9]; One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FCAFC 77; Construction, Forestry, Mining and Energy Union v One Key Workforce Pty Ltd [2017] FCA 1266 [103] (Flick J).

 5   Applicant submissions, 23 February 2021, p. 4

 6   Downer EDI Mining – Blasting services Pty Ltd [2019] FWC 5615 [18]

 7 [2017] FCA 1266.

 8 [2018] FCAFC 77.

 9   BGC Contracting Pty Ltd [2018] FWC 1466, [76].

 10   BGC Contracting Pty Ltd [2018] FWC 1466, [77].

 11   Shamrock Civil [2018] FWCFB 1722, [35].

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