Leed Engineering and Construction Pty Ltd

[2021] FWCA 4100

[2021] FWCA 4100

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Leed Engineering and Construction Pty Ltd
(AG2021/4669)

LEED ENGINEERING AND CONSTRUCTION PTY LTD ENTERPRISE AGREEMENT 2021 – 2024

Building, metal and civil construction industries
DEPUTY PRESIDENT MANSINI	MELBOURNE, 13 JULY 2021

Application for approval of the Leed Engineering and Construction Pty Ltd Enterprise Agreement 2021 - 2024.

[1] Leed Engineering and Construction Pty Ltd (Applicant) has applied for approval of a single enterprise agreement known as the Leed Engineering and Construction Pty Ltd Enterprise Agreement 2021 - 2024 (Agreement) pursuant to s.185 of the Fair Work Act 2009 (Act).

[2] I have determined to approve the Agreement in accordance with the Act. The reasons for this decision follow.

Context

[3] Since the application was filed, various concerns have been raised by and with the Commission.

[4] The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) was not a bargaining representative for the Agreement but sought to address the Commission in relation to whether the pre-approval steps were met and the Agreement passes the “better off overall” test. 1 Pursuant to s.590, the CFMMEU was invited to inform the Commission in relation to its specified objections.

[5] The CFMMEU provided submissions and the Applicant provided a response and proposed undertakings. Following a conference, final undertakings were proposed (Undertakings). The employees covered did not elect to provide any views; the CFMMEU made further brief submissions. 2 There was an invitation but no request to be heard further.

Does the Agreement pass the “better off overall” test?

[6] If approved, the Agreement would replace the existing Leed Engineering and Construction Pty Ltd Enterprise Agreement 2018 – 2021 and cover Leed Engineering and Construction Pty Ltd and its employees engaged in construction worker, leading hand and apprentice classifications as defined in Schedule 1 of the Agreement. The Agreement is to be assessed against the Building and Construction General On-Site Award 2020 (Award).

[7] I must be satisfied that the Agreement passes the “better off overall” test in assessing whether it must be approved in accordance with the Act.

[8] An enterprise agreement passes the better off overall test if the Commission is satisfied, as at the time the application is made, that each award covered employee and each prospective award covered employee for the enterprise agreement would be better off overall if the enterprise agreement applied, than if the modern award applied. 3 The application of the test requires the identification of agreement terms which are more beneficial, and the terms which are less beneficial, and then an overall assessment is made as to whether employees would be better off overall under the agreement than the relevant award.4 The difficulties that often arise in assessing contingent, and non-financial, terms is explained in Coles.5

[9] It is not disputed that the wage rates for each classification in the Agreement are higher than the relevant comparator in the Award. However, the CFMMEU contended that the Commission should not be satisfied that employees covered by the Agreement are “better off overall”. The CFMMEU did not request to attend the conference at which proposed undertakings were discussed, but maintained that some of the issues it had earlier raised were not adequately addressed in the final proposed Undertakings, specifically: the absence of superannuation payments whilst in receipt of workers’ compensation payments; the penalty rate while working broken shifts is not the appropriate rate; and the less beneficial overtime rate for shift work is not the appropriate rate. 6

[10] The Commission has received evidence that the Applicant’s business is that of an engineering and civil construction contractor. 7 The Applicant predominately performs project work in regional and remote locations on a 10/4 roster. Historically this has not always been the case and the Agreement is not so confined but rather allows for metropolitan work on alternate roster scenarios. Night shift and afternoon shift work has historically rarely (if ever) arisen but such shifts are also conceivably possible under the Agreement. Whilst this evidence may be accepted as indicative, it does not preclude the conclusion that employees may be required to work a range of alternate rosters and shifts under the Agreement and the better off overall assessment has been undertaken with regard to the range of possibilities.

[11] On the calculations and modelling before the Commission, ordinary rates of pay under the Agreement are at least 21% (and up to 65%) above Award. 8 The lowest paid classification under the Agreement is 9.72% above Award calculated on the standard industry 50 hour working week – that is, taking into account the applicable allowances and loadings that would apply under the Award in this scenario.9 In each of these scenarios, excluding the living away from home allowance which is a significant financial benefit of the Agreement in the circumstances where it applies.

[12] On an analysis of the materials before the Commission, it is apparent that the Agreement includes at least the following financially more beneficial terms:

a) Higher wage rates for each classification of employee and prospective employee to be covered;
b) Higher superannuation contributions, being calculated on the higher wage rates under the Agreement; and
c) Higher overtime rates, being calculated on the higher wage rates under the Agreement.

[13] The living away from home allowance is a financially more beneficial term, to the value of around $1,300 per week (when regard is had to the taxation treatment of the allowance). Whilst a likely scenario, this more beneficial term is contingent on particular circumstances and for the purposes of the better off overall assessment may not properly be regarded as applicable in all circumstances.

[14] Less beneficial terms have also been identified. Further information and modelling was provided and undertakings were proposed in respect of those concerns. Of the outstanding issues pressed by the CFMMEU following provision of the final proposed Undertakings, I am satisfied that the following are detriments under the Agreement when compared to the Award, in the circumstances where they arise:

(a) meal breaks to be taken as scheduled by Leed, with no specified time or maximum number of hours worked before a break is to be taken and no penalty for non-shift workers who may be required to work through a break (per cl.18.1 and 18.2 of the Award);
(b) for employees working more than 2 hours’ overtime, the absence of paid crib breaks immediately after their finishing time and after each 4 hours of work (per cl.18.3 of the Award);
(c) for an employee in receipt of workers’ compensation payments, the absence of express provision for superannuation to be paid under the Agreement (as may apply, subject to the governing rules of the relevant fund and for a maximum period of 52 weeks’ absence, under cl.28.5 of the Award); and
(d) for shift workers, entitlements for call backs, Saturday, Sunday and public holiday work and penalty for less than 5 successive broken shifts (per cl.17.2 of the Award).

[15] The Applicant pointed to the more beneficial financial terms and the final proposed Undertakings as effectively offsetting the identified detriments and provided detailed calculations and modelling (including of a range of unrealistic, yet possible scenarios) in support. To the extent that these detriments (particularly at (a)) are non-financial, the value is difficult if not impossible to quantify. In this respect, the Undertakings now provide for a maximum time that may be worked before a mandatory meal break which is longer than that in the Award (6 hours under the Agreement compared to 5 hours under the Award, although under the Award a non-shift worker may be required to work through the meal break for financial compensation at penalty rates). There are other (paid and unpaid) breaks provided by the Agreement. The Agreement also provides for the Applicant and an individual employee to agree to alternative break arrangements and for an employee to raise a dispute about the operation of this provision. Pending resolution of such dispute, an employee is not obliged to continue to perform work if they have a reasonable concern about an imminent risk to their health or safety, and is not required to comply with a direction if the work is not safe, if applicable work health and safety legislation would not permit the work to be performed, if the work is not appropriate for the employee to perform or there are other reasonable grounds for so refusing. Further, to the extent of a safety concern, the Applicant’s obligations under applicable safety legislation continue to apply and are not altered by the terms of the Agreement. The detriment at (b) may also be considered a non-financial detriment which attracts similar considerations, notwithstanding that the Award provides for payment after the conclusion of the finishing time and after each 4 hours of continuous work.

[16] Ultimately, the assessment of the better off overall test will focus attention on matters that are objectively verifiable as relative benefits or detriments, including in particular the number of hours that employees can be required to work and the payments employees receive for doing so. 10 The analysis inquires whether employees would be better off overall under the Agreement than under the relevant award, not better off on a line by line or itemised basis. It is plainly permissible under the Act to trade off or vary Award conditions in making an enterprise agreement.

[17] On an overall assessment of whether employees to be covered would be better off overall under the Agreement, including with regard to the more beneficial and the less beneficial terms in the Agreement and the Undertakings and all of the submissions and materials before the Commission, I am satisfied that the Agreement passes the better off overall test. 11 In making this assessment, I observe that the nature of the detriments identified, as well as in the context of the global or overall assessment, is plainly distinguishable from the circumstances to which the Commission was referred in Perth Access Scaffolding Pty Ltd.12

[18] A copy of the Undertakings is attached at 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.

Was the Agreement “genuinely agreed”?

[19] The CFMMEU invited the Commission to find that the Agreement was not “genuinely agreed” within the meaning of s.188 of the Act. Specifically, it said the Applicant had not met its statutory obligation to take all reasonable steps to ensure the giving of or access to materials incorporated by reference in the Agreement in accordance with s.180(2). A further concern relates to whether the terms and effect of the Agreement were explained as required by s.180(5).

[20] The starting point under the legislation is that the Commission is required to approve an enterprise agreement if the requirements of ss.186 and 187 are met. Section 186(2)(a) provides that the Commission must be satisfied that the Agreement has been “genuinely agreed” by the employees covered by the agreement. Section 188 defines when employees have genuinely agreed. It establishes a set of requirements, each of which must be satisfied if the necessary finding is to be made under s.186(2)(a).

The s.180(2) concern

[21] Section 188(1)(a)(i) requires compliance with s.180(2), which provides that before an employer requests that employees approve a proposed enterprise agreement by voting for the agreement, the employer must take all reasonable steps to ensure that the relevant employees are:

a) given a copy of the written text of the agreement and any other material incorporated by reference in the agreement, during the access period; or
b) have access to a copy of those materials, throughout the access period.

[22] The access period is the 7 day period ending immediately before the start of the voting process to approve the proposed enterprise agreement.

[23] The nature of, and what is required to comply with, the pre-approval step at s.180(2) is detailed in BGC Contracting Pty Ltd  13 (BGC). The “evident purpose” was aptly summarised as:

“to give relevant employees the opportunity to review an enterprise agreement and material incorporated by reference in the agreement before being asked to vote to approve [sic] it. This purpose is given effect by placing an obligation on an employer to take “all reasonable steps to ensure” that employees have this opportunity through one of two means, or through a combination of those means.” 14

[24] Having regard to this and other related authorities, 15 a key question will be whether all reasonable steps were taken to ensure the satisfaction of s.180(2)(a) or (and perhaps also) (b), having regard to the particular circumstances of the application, the business and the relevant employees. In this context, the word “all” does not mean every imaginable step that is available must be taken. It is the steps that are reasonable in the circumstances and which are directed to achieving the ends specified in s.180(2) that are to be taken.16

[25] It is not disputed that the Applicant discharged its obligation under s.180(2) to ensure that the relevant employees were given the Agreement during and/or had access to the Agreement throughout the access period. The central issue is whether the Applicant so complied in relation to the Award, which is an instrument that is referenced in certain clauses of the Agreement.

[26] The CFMMEU contended that, in order to understand the terms and conditions of employment, the Applicant was required to provide copies or give access to the Award. It highlighted that clause 1.4.1 of the Agreement provides that the terms of the Award will not apply whilst the Agreement operates, yet references provisions of the Award which will continue to apply if the Agreement is approved and whilst it is in operation. The Applicant relied on its evidence that the relevant Award clauses were “freely available on the internet”, 17 that the references to the Award provisions were incorporated in the predecessor enterprise agreement (which was approved with undertakings that referenced the Award), and for this reason was a change made in the Agreement which was explained to employees and is not a “new addition” to their terms and conditions.18

[27] The Award is referenced in the Agreement which provides that certain provisions of the Award will apply (for example, see clause 4.4.4 of the Agreement). The Award was noted as the “reference document” in the explanatory presentation to employees, under the heading “Undertakings – additional changes”, with a summary of those changes and a note to prompt “further discussion” in these meetings. 19 However there is an absence of evidence before the Commission to establish that the Applicant took any steps to ensure the relevant employees were given copies of or had access to the Award. In the context and circumstances of this application, I consider it entirely reasonable for an electronic link to the Award (or at least the incorporated provisions of it) to have been emailed to employees and a hard copy made available on worksites along with a copy of the Agreement (which was distributed via these methods). On the evidence before the Commission, I am not satisfied that the Applicant has met the obligation to take all reasonable steps to ensure access to the Award in the circumstances and has not strictly complied with s.180(2). 

[28] As I am not able to be satisfied that all reasonable steps were taken to comply with the pre-approval steps at s.180(2), I am required to consider whether this is an appropriate case to exercise the discretion at s.188(2) such that the Agreement must be approved subject to the other approval requirements in the Act and notwithstanding the strict non-compliance with s.180(2).

[29] On the evidence and materials before the Commission, in all of the circumstances of this case and having regard to Huntsman, 20 I am satisfied that this is precisely a scenario that Parliament intended would engage the discretion under s.188(2). Specifically:

a) The Applicant’s failure to take all reasonable steps to ensure employees were given or had access to the Award (being material incorporated by reference) in accordance with s.180(2) was a procedural or technical error and there is no evidence to suggest this was deliberate or intentional non-compliance;
b) The error was minor in that employees were provided with access to the primary document (the Agreement) and explanatory materials which directed their attention to the references to the Award and the full title of the Award, which was also available in the public domain;
c) But for the minor procedural or technical error concerning compliance with s.180(2) as mentioned in s.188(1)(a)(i), the Agreement would have been genuinely agreed within the meaning of s.188(1); and
d) The employees covered by the Agreement were not likely to have been disadvantaged by the error, including because the then applicable enterprise agreement was approved with undertakings that also referenced the Award indicating employees were already familiar with its existence (if not through other means, sources and experience), the Agreement is in very similar terms to the previously applicable agreement and the impact of incorporation of the Award provisions in each case does not create a detriment or disadvantage for employees.

[30] In all of the circumstances and having regard to the decision in Huntsman, I am satisfied that the Agreement was genuinely agreed within the meaning of s.188(2).

The s.180(5) concern

[31] Similarly, s.188(1)(a)(i) requires compliance with s.180(5), which provides that the employer must take all reasonable steps to ensure that the terms of the agreement, and the effect of those terms, are explained to the relevant employees in an appropriate manner taking into account any particular circumstances and needs.

[32] Whilst (unlike s.180(2)) the statute does not specify a time for compliance with s.180(5), the “evident purpose” was described in Ditchfield 21 as “to ensure that employees are as fully informed as practicable about the terms and effect of the terms of a proposed enterprise agreement before voting on whether to approve it”.22 Again, a key question will be whether “all” reasonable steps were taken, and what is reasonable will depend on the particular circumstances of the case.

[33] I have had regard to the evidence of the steps taken by the Applicant to explain the terms and conditions of the Agreement to the relevant employees, including an explanatory presentation, a tracked changed copy of the Agreement to show all changes from the previously applicable enterprise agreement, explanations in face to face meetings and telephone discussions. 23 The focus of the explanation was on the changes to the previously applicable conditions that were proposed in offering the Agreement. I find this evidence of steps taken, together with the fact that the employees were being asked to vote on very similar terms and conditions to their previously applicable conditions, to be compelling. Further, I consider that the final proposed Undertakings effectively cure certain identified detriments such that any failure to expressly explain those matters would not prevent approval for the purposes of s.180(5). In all of the circumstances, I am satisfied that the Applicant took all reasonable steps in accordance with s.180(5). I note that there was no specific argument to the contrary. In light of this finding, there is no need for regard to be had to s.188(2).

Approval and operation of the Agreement

[34] For the above reasons, and subject to the Undertakings, 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.

[35] Noting clause 1.3.4 of the Agreement, I am satisfied that the more beneficial entitlements of the National Employment Standards in the Act will prevail to the extent of any inconsistency with the Agreement.

[36] Pursuant to s.201(3) of the Act, the Undertakings are taken to be terms of the Agreement.

[37] As there were no bargaining representatives appointed to represent the employees covered by the Agreement the Commission took steps to ensure the relevant employees were served with, and has received evidence that, the employees were informed of: the application; the Commission’s concerns; the Applicant’s responses to those concerns; and were invited to express their views (including about the Undertakings) and none opposed.

[38] The Agreement was approved on 13 July 2021 and, notwithstanding clause 1.3.1 and in accordance with s.54, will operate from 20 July 2021. The nominal expiry date of the Agreement is 1 July 2024.

[39] For the purposes of publication, the signature page of the Agreement has been redacted in part, for confidentiality and as the enterprise agreement when made did not contain the redacted details. 24

DEPUTY PRESIDENT

Annexure A

 1   CFMMEU Submissions of 26 April 2021.

 2   CFMMEU Email of 29 June 2021.

 3   ss.193(1) and (6) of the Act; see ANMF v Domain Aged Care (QLD) Pty Ltd t/a Opal Aged Care [2019] FWCFB 1716 at [27].

 4   Re Armacell Australia Pty Ltd (2010) 202 IR 38 at [41].

 5   Hart v Coles Supermarkets Australia Pty Ltd and others [2016] FWCFB 2887 (Coles).

 6   CFMMEU Email of 29 June 2021.

 7   Affidavit of Jo Friedrichs of 25 June 2021.

 8   Applicant’s BOOT calculations filed 6 May 2021, Model 1; see also the Applicant’s F17 Statutory Declaration filed 13 April 2021.

 9   CFMMEU v Allstyle Concrete[2018] FWCFB 3823 at [11].

 10   BOC Limited [2019] FWCA 5544 at [9].

 11   Armacell Australia Pty Ltd and Others [2010] FWAFB 9985.

 12   [2016] FWC 8042.

 13   [2018] FWC 1466.

 14 Ibid, at [36].

 15   Including, for example, McDonalds Australia Pty Ltd [2010] FWAFB 4602, (2010) 196 IR 155 (McDonalds) and Construction, Forestry, Mining and Energy Union v Sparta Mining Services Pty Ltd[2016] FWCFB 7057.

 16   BGC at [39]-[42].

 17   Applicant’s F17 Statutory Declaration filed on 13 April 2021.

 18   Applicant’s Submissions filed 6 May 2021.

 19   Attachment to Applicant’s F17 Statutory Declaration filed on 13 April 2021.

 20   Huntsman Chemical Company Australia Pty Limited t/a RMAX Rigid Cellular Plastics and Others [2019] FWCFB 318 (Huntsman).

 21   CFMMEU v Ditchfield Mining Services Pty Limited[2019] FWCFB 4022 (Ditchfield).

 22  Ibid, at [71] and [72].

 23   Applicant’s F17 Statutory Declaration filed on 13 April 2021.

 24   The Australian Workers’ Union v Oji Foodservice Packaging Solutions (Aus) Pty Ltd [2018] FWCFB 7501.

Printed by authority of the Commonwealth Government Printer

<AE512224  PR731635>