LCR Group Pty Ltd

[2015] FWCA 7243

[2015] FWCA 7243

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

LCR Group Pty Ltd
(AG2015/5209)

LCR GROUP PTY LTD (CENTRAL QUEENSLAND) MOBILE CRANE ENTERPRISE AGREEMENT 2015

Building, metal and civil construction industries
COMMISSIONER ROE	MELBOURNE, 10 NOVEMBER 2015

Application for approval of the LCR Group Pty Ltd (Central Queensland) Mobile Crane Enterprise Agreement 2015.

[1] An application has been made for approval of an enterprise agreement known as the LCR Group Pty Ltd (Central Queensland) Mobile Crane Enterprise Agreement 2015 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act). It has been made by LCR Group Pty Ltd (the employer). The Agreement is a single enterprise agreement.

[2] The Construction, Forestry, Mining and Energy Union (“CFMEU”) was a bargaining representative for the Agreement. The CFMEU objected to the following aspect of the disputes settlement clause of the Agreement, clause 2.1(2)(v) of the Agreement:

“The Employee should submit the matter to the FWC for resolution by mediation and/or conciliation and, if the dispute remains unresolved, by arbitration. If arbitration is necessary, the FWC may exercise the procedural powers in relation to hearings, witnesses, evidence and submissions, which are necessary to make the arbitration effective. The decision of the FWC member will bind the parties, subject to either party exercising a right of appeal against the decision to a Full Bench. Any outcome determined (by any third party) must be consistent with The National Code of Practice (“NCOP”) and implementation guidelines for the construction industry as well as all legislative obligations.” (Emphasis added)

[3] The CFMEU noted that the status of the National Code of Practice and Implementation Guidelines is indeterminate and argued that insofar as clause 2.1(2) of the Agreement purports to constrain the outcomes of disputes arising under the Agreement to outcomes that are consistent with the National Code of Practice and Implementation Guidelines, the terms and conditions arising under the Agreement are in and of themselves indeterminate. The CFMEU went on to submit that the Agreement cannot be approved in accordance with the Full Bench decision in CFMEU v CSR Limited T/A Viridian New World Glass[2015] FWCFB 3889 for want of determinateness with regard to the Better Off Overall Test.

[4] I accept, that the Viridian decision is authority for the proposition that provisions which create uncertainty as to what are the operative terms of the Agreement can in some circumstances mean that:

● the Agreement is able to be varied in a manner inconsistent with the requirements in the Act for variation to an agreement;
● it is not possible to determine that an agreement passes the BOOT because of the uncertainty as to what the operative provisions of the agreement are;
● there is a question as to whether there could have been a genuine agreement.

[5] In the Viridian case the agreement provided that clauses in the relevant Award and Agreement had no effect if they were inconsistent with the Building and Construction Industry (Fair and Lawful Building Sites) Code 2014 (‘Construction Code”) as varied or replaced from time to time. After considering the submissions of the CFMEU, I am satisfied that the situation in this case is quite different. The clause does not allow for the variation of any other clause of the Agreement or render any other clause of the Agreement inoperative or unenforceable. The clause limits what can be determined by arbitration in the settlement of a dispute.

[6] The CFMEU argued moreover that the dispute settlement procedure clause falls foul of the requirement in subsection 186(6) of the Fair Work Act insofar as the dispute settlement procedure is unworkable, for want of certainty.

[7] It has been established by Full Bench authority that the requirement in Section 186(6) for agreements to include a term “to settle disputes” does not mean that the Fair Work Commission (“FWC”) (or other independent body) must be empowered to settle the dispute by determination or arbitration. Section 739 prevents the FWC from making a decision in the settlement of a dispute which is inconsistent with the Agreement. Clearly if the Construction Code required something which was inconsistent with the Agreement the FWC could not make a determination which was consistent with the Construction Code. To do so would be to alter the Agreement. If Clause 2.1(2)(v) mandated the FWC to make such a decision to alter the Agreement then it would fall foul of the Viridian decision. It would effectively be a variation to the Agreement which was inconsistent with the provisions of the Act for Agreement variations.

[8] I am not satisfied that Clause 2.1(2)(v) requires or allows the FWC to vary the provisions of the Agreement. It only prevents the FWC from making a determination in the settlement of a dispute which is inconsistent with the Construction Code. The provisions of the Act concerning variations to Agreements and the provisions of Section 739 would simply prevent the FWC from making any determination in the settlement of a dispute which varied the Agreement or was inconsistent with the Agreement. The real of effect of Clause 2.1(2)(v) is to therefore prevent the FWC from arbitrating in cases where the provisions of the Agreement are inconsistent with the Construction Code. A limitation on the arbitral power of the FWC is not prohibited by Section 186(6).

[9] The CFMEU made a further submission that in the light of the status of the National Code of Practice and Implementation Guidelines as incorporated into the Agreement, the requirement in subsection 180(5) FW Act has not been complied with.

[10] I accepted the submission of the CFMEU that there was some uncertainty as to what version of the National Code of Practice and Implementation Guidelines was being referenced. Given that the documents were incorporated in the Agreement for the purpose of the disputes settlement clause, there was some question as to whether or not employees had had access to the relevant documents as required by Section 180(2) and also some question as to whether the effect of the terms of the Agreement had been adequately explained as required by Section 180(5).

[11] In relation to the requirement under s182(2)(a)(ii) that the employer must take all reasonable steps to provide any other material incorporated by reference in the agreement to employees, the CFMEU submitted that the employer cannot have provided the National Code of Practice and Implementation Guidelines per this requirement and accordingly the employees cannot have had access to the relevant document(s) per the requirement in subsection 180(2)(b).

[12] It was the uncontested evidence from the employer that employees when provided with the Agreement were also provided with links to a version of the Construction Code and guidelines. Section 180(2)(b) is complied with in respect to the version of the code and guidelines in the link provided.

[13] The Full Bench decision in McDonald’s Australia Pty Ltd; Shop, Distributive and Allied Employees’ Association [2010] FWAFB 4602 is authority for the proposition that employees do not have to be provided with copies of or access to legislation which is referred to in Agreements given that legislation is readily accessible. (Paragraph 44):

“The laws of the land are available to Australian citizens in a variety of ways. We find that the employer was not required to take any further steps to ensure that the relevant employees had access to the South Australian legislation. Because the legislation is freely available in the public domain, no further steps were required.”

[14] For this reason the reference to consistency with legislation in Clause 2.1(2) of the Agreement is not problematic.

[15] I accept that the drafting of the Agreement was imprecise as to the particular version of the Code and guidelines which were referred to in the Agreement disputes clause. However, given that this is a matter which can be remedied by an undertaking, the Agreement as remedied by that undertaking is one where employees had access to the relevant documents.

[16] The obligation to ensure that reasonable efforts are made to explain the effect of the Agreement has to be considered in the circumstances. One of the relevant considerations is whether or not employees were represented by a bargaining representative. The legislative intent is clearly that if employees have access to a bargaining representative, particularly a union representative with broader knowledge and expertise, it is more likely that the bargaining representative will play a role in ensuring that the impact of an Agreement is explained. The CFMEU was a bargaining representative for this Agreement. In the circumstances of this case I am satisfied that the employer made reasonable efforts to explain the effect of the Agreement.

[17] To the extent that the failure to refer to the particular version of the National Code of Practice and Implementation Guidelines rendered the Agreement uncertain, this is able to be remedied by an undertaking provided by the employer.

[18] At the hearing of this matter on 4 November 2015 the employer agreed to provide an undertaking that restricted the references to the National Code of Practice and Implementation Guidelines to the particular version to which employees were given access. I considered that this would resolve the issue. However, the employer upon reflection offered an undertaking which excluded all reference to the National Code of Practice and Implementation Guidelines. The undertaking replaced the underlined sentence in Clause 2.1(2)(v) above with “Any outcome determined (by a third party) must be consistent with all legislative obligations”. The CFMEU objected to this revised undertaking and I provided them and other bargaining representatives with the opportunity to be consulted and make any submission they wished to make.

[19] The CFMEU made the following submissions in relation to the Undertaking provided:

● The applicant gave evidence that there was genuine agreement made pertaining to the 2012 version of National Code of Practice and Implementation Guidelines for the Construction Industry.
● The 2012 Code and Implementation Guidelines were provided to employees during the access period, and the Agreement was put to a vote of employees, who approved the Agreement.
● While an undertaking to the effect that the reference to the National Code of Practice and Implementation Guidelines at clause 2.1(2)(v) is to the 2012 version of the National Code of Practice and Implementation Guidelines would reflect that agreement, as well as overcome the issue of uncertainty, it would not reflect the Agreement made between employees and the employer on the evidence available.
● The 2012 version of the Code and Implementation Guidelines contains a number of substantive terms that form part of the Agreement through clause 2.1(2)(v). The currently proposed undertaking would fall foul of subsection 190(3)(a), insofar as the removal of the 2012 Code and Implementation Guidelines would result in substantial changes to the Agreement.
● The removal of any reference to the Code and Implementation Guidelines will only create additional uncertainty for employees covered by the Agreement insofar as the employer may then seek to implement subsequent codes or draft codes without their agreement. A specific reference to the 2012 Code and Implementation Guidelines will prevent this from occurring, and provide certainty to those employees covered by the Agreement during its life.

[20] I am of the view that the undertaking that any outcome of the disputes procedure arbitrated by the FWC must be consistent with all legislative obligations, removes any uncertainty associated with the Construction Code and any argument that the Code could in effect vary the agreement in a manner inconsistent with the Fair Work Act provisions for varying agreements. The requirement that the outcome determined by the FWC must be consistent with legislative obligations does not require or permit the FWC to make a decision which is inconsistent with or in any way varies any other provision of the Agreement. Section 739 of the Act would prevent that from occurring. The plain words are only about the type of decision the FWC can make in arbitrating a dispute within the scope of the disputes settlement procedure. The legislative obligations are clearly legislative obligations which apply to the FWC. If the obligations were those which apply to a party to the agreement then those obligations would be referred to in the operative clauses of the Agreement or this would have been explicit in the disputes settlement clause. The plain words are about legislative obligations applicable to the FWC in carrying out its functions and are only about the decisions that the FWC could make consistent with the other provisions of the Agreement.

[21] The Agreement already provides that any FWC decision in arbitration of a dispute must be consistent with legislative obligations. The inclusion or otherwise of the reference to a version of the Code does not alter the application of that requirement. The Agreement, with the provision concerning the Code removed, does not provide for implementation of any Code nor does it require the FWC to take account of any Code. I am satisfied that there is no disadvantage financial or otherwise arising from the exclusion of the National Code of Practice and Implementation Guidelines. I am satisfied that the undertaking does not result in a significant change to the Agreement given that the only effect of the undertaking is to slightly narrow the potential limitations on the matters which can be determined by arbitration by the FWC.

[22] I am of the view that the clause as amended by the undertaking is consistent with the requirements of Section 186 in that it might limit the matters which the FWC can determine through arbitration in circumstances where the Act does not require all matters to be resolved by arbitration and the scope of any matters to be resolved by arbitration is a matter for the parties in reaching an Agreement. 

[23] The Applicant has provided the above mentioned written undertakings. A copy of the undertakings is attached in Annexure A.

[24] Subject to the undertakings referred to above and the reasons provided in the hearing of 4 November 2015, 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. The Agreement does not cover all of the employees of the employer, however, taking into account the factors in Section 186(3) and (3A) I am satisfied that the group of employees was fairly chosen.

[25] Pursuant to s.205(2) of the Act, the model consultation term prescribed by the Fair Work Regulations 2009 is taken to be a term of the Agreement.

[26] Pursuant to s.202(4) of the Act, the model flexibility term prescribed by the Fair Work Regulations 2009 is taken to be a term of the Agreement.

[27] The Agreement was approved on 10 November 2015 and, in accordance with s.54, will operate from 17 November 2015. The nominal expiry date of the Agreement is 21 October 2018.

COMMISSIONER

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<Price code G, AE416272 PR573138>

Annexure A