Linx Labour Pty Ltd
[2018] FWC 759
•6 FEBRUARY 2018
| [2018] FWC 759 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
Linx Labour Pty Ltd
(AG2017/3403)
| DEPUTY PRESIDENT BOOTH | SYDNEY, 6 FEBRUARY 2018 |
Application for approval of the Linx Labour Pty Ltd Enterprise Agreement 2017 - 2020.
On 9 August 2017 Linx Labour Pty Ltd (Linx) made an application to the Fair Work Commission (the Commission) pursuant to s.185 of the Fair Work Act 2009 (the Act) for approval of an enterprise agreement known as the Linx Labour Pty Ltd Enterprise Agreement 2017-2020 (the Agreement).
The Agreement is a single-enterprise agreement and is not a greenfields agreement. There were no union bargaining representatives for the Agreement.
On 16 August 2017, the Commission received an email communication from the
Construction, Forestry, Mining and Energy Union (CFMEU) requesting copies of documents relevant to the application, including the Approval of an enterprise agreement (other than a greenfields agreement) (Form F16), Employer’s statutory declaration in support of an application for approval of an enterprise agreement (other than a greenfields agreement) (Form F17) and Notice of Employee Representational Rights. In that email the CFMEU advised the Commission that it sought to be heard in relation to the application for approval of the Agreement and also filed preliminary submissions indicating they opposed the approval of the Agreement.
The Commission provided the CFMEU with the documentation on 23 August 2017, consistent with the decision of the Full Bench in Construction, Forestry, Mining and Energy Union v Ron Southon Pty Ltd[2016] FWCFB 8413.
The matter was allocated to me on 31 October 2017. I listed the matter for Mention on 10 November 2017 to ascertain the preliminary issues in the matter and discuss with the parties the matter of the CFMEU’s application to be heard.
On 10 November 2017 Mr Matthew Gissane, Industrial Relations Officer at the Master Builders Association of New South Wales (MBA) appeared on behalf of Linx. Mr Tom Fischer appeared on behalf of the CFMEU. Both Mr Fischer and Mr Gissane relied upon the written submissions they had previously made, respectively, for and against, the CFMEU being heard. The parties agreed to have further discussions following the Mention. I asked the CFMEU to advise my chambers by 17 November 2017 whether they pressed to be heard.
On 21 November 2017 the CFMEU advised that it pressed to be heard, particularly on the issue of whether the Agreement had been genuinely agreed pursuant to s.186(2)(a) and s.188 of the Act.
On 22 November 2017 I instructed my chambers to advise the parties that I would allow the CFMEU to be heard. I listed the matter for Mention on 7 December 2017 to deliver my reasons for that decision and to program the matter for hearing.
For reasons given on transcript at 7 December 2017, I exercised my discretion pursuant to s. 590 of the Act to allow the CFMEU to be heard in relation to the application for approval of the Agreement. In short, I determined that I would be assisted by having a ‘contradictor’ with industry knowledge, particularly in the context of questions being raised as to whether the Agreement was genuinely agreed. I also took into account the fact that should I approve the Agreement, the CFMEU would have the standing to appeal that decision despite not having being a bargaining representative for the Agreement.
The CFMEU filed written submissions on 15 December 2017 outlining a number of grounds on which it argued the Agreement should not be approved. The MBA filed brief submissions in reply on 19 December 2017.
On 22 December 2017 I instructed my chambers to advise Linx and the CFMEU that I did not consider I had enough information on the question of whether the Agreement was genuinely agreed and would therefore list the matter for a hearing early in 2018. I requested that a representative of Linx attend the hearing to assist me with my enquiries.
Accordingly, I listed the matter for hearing on 17 January 2018. At the hearing Mr Gissane appeared on behalf of Linx, together with Belinda Culbert, Director of Linx. Mr Fischer appeared on behalf of the CFMEU as an intervenor. Ms Culbert gave evidence as to the nature of the business and workforce and the process of the making of the Agreement.
In their submissions of 15 December 2017 the CFMEU argued that the Agreement had not been genuinely agreed to by the employees covered by the Agreement and relatedly that the effect of the terms of the Agreement had not been explained to the relevant employees. They also submitted that:
“There are other reasonable grounds for believing that the proposed agreement has not
been agreed to in that:
(i) The effect of particular terms was not explained to employees;
(ii) The agreement contains an objectionable term;
(iii) There is doubt whether the employees voting had or have a real interest in the terms of the agreement.” [1]
The CFMEU also submitted that the Agreement contained a term that contravened s.55 of the Act.
For the reasons set out below, I find that Linx did not comply with the pre-approval steps in either ss.180(2) or 180(5) and the Agreement was therefore not genuinely agreed pursuant to ss.186(2) and 188 of the Act. I am therefore unable to approve the application made by Linx pursuant to s.185 of the Act.
In order to address the issues raised by the CFMEU, and the other matters I am required to consider in deciding whether to approve the agreement, is it appropriate to first set out the background to the application and the relevant legislative framework.
Background
Broadly speaking, many of the concerns raised by the CFMEU prior to the hearing in relation to the question of whether the Agreement was genuinely agreed arose because the material filed by Linx did not disclose information that was sufficient to draw conclusions about important issues such as what work the employees who voted on the Agreement undertook, whether they were covered by the Agreement and the scope of the operation of Linx.
The Form F17 accompanying the application for approval filed by Linx declared that the company’s primary activity was as a ‘Labour Hire Contractor working in the Building and Construction Industry’. It also indicated that the Agreement would operate in all states and territories of Australia. It identified the Building and Construction General On-Site Award 2010 (the Award) as the award covering Linx and its employees.
The Form F17 also declared that only two employees will be covered by the Agreement, that two employees cast a valid vote and that two employees voted to approve the Agreement. Linx also declared that of the employees covered by the Agreement, two were casual.
Ms Culbert’s evidence shed significantly more light on the Agreement application than the Form F16 and Form F17 filed on behalf of Linx.
Ms Culbert gave evidence that Linx commenced operations in the middle of 2016. At that time the company employed approximately 6 casual labourers to undertake general labour on building sites. Ms Culbert is one of two owners and directors of Linx.
When questioned by Mr Fischer, Ms Culbert confirmed the company had no relationship with any other entity bearing a similar name. She stated that ‘we liked the name Linx and went with it’. Ms Culbert explained the idea behind starting Linx as follows:
“the company that I worked for, we were getting frustrated by the fact that we needed labourers like quickly but we had no one to really get the labourers. So then I just came up with my own idea on the site to start a labouring company and then I hired company. I have connections with like job agencies and stuff who are very good, and I just say can [sic] “We need someone straight away” and they give me someone and then we’ll interview them either over the phone or we’ll go in and see them”[2]
Six or seven months after the company commenced operations the work dropped off, and at the time the process was underway for making the Agreement, there were only two labourers ‘on the books’.[3] Ms Culbert confirmed that Linx wanted to have an enterprise agreement in place because building companies they provided workers to required it.
She confirmed that the two employees who were employed at the time of the making of the Agreement worked specifically laying membrane on the soil prior to construction commencing, something which required them to have attended a workshop.[4] She said that while those employees remained ‘on the books’ they had not worked lately, however she would offer them work if Linx was approached by a company looking to have the task of laying membrane performed.
She said that the work Linx’s employees do has moved from more general labouring to labouring with glass glazing companies. In practice, Linx provides workers to undertake tasks like cleaning and demolition work, alongside tradespeople who carry out the glazing and installation of windows.
Ms Culbert explained that Linx employs workers on a casual basis because the quantity of work is uncertain. She confirmed that currently the company has 6 casual employees (including the two employed at the time the Agreement was made) however they are in the process of hiring more because there is currently additional work available.
Despite the Form F17 indicating that the Agreement would operate across Australia, Ms Culbert said that was not a ‘reality’ and that operations would not be likely to be outside NSW. She explained that the company usually operated within the Sydney CBD.[5]
Ms Culbert gave evidence that on 11 July 2017 the company’s two employees were physically handed a copy of the proposed enterprise agreement, which had been drafted by the MBA.[6] The following exchange from Ms Culbert’s evidence concerns the events that followed:
THE DEPUTY PRESIDENT: And what did you say to them when you gave them that agreement, or why were they getting the agreement? What would they have understood?
MS CULBERT: Well, I just said that it was basically they needed to read through it, it was the terms of their employment and if there was any issues with it they have to let me know.
THE DEPUTY PRESIDENT: Right, okay, and then on the 19th you asked them to come into a meeting?
CULBERT: Yes.
…
THE DEPUTY PRESIDENT: And so they come in?
MS CULBERT: Yes.
THE DEPUTY PRESIDENT: And when you say a discussion meeting was held, can you tell me how that unfolded?
MS CULBERT: Well, I basically just asked them if they had read it, if there was any issues and there was - everything was fine.
THE DEPUTY PRESIDENT: And so they said "No, we don't have any concerns with this document"?
MS CULBERT: Yes. Yes.
THE DEPUTY PRESIDENT: So they didn't have any suggested changes they wanted to make to it?
MS CULBERT: No.
THE DEPUTY PRESIDENT: So were in fact any changes made to it as a result of that meeting?
MS CULBERT: No.
THE DEPUTY PRESIDENT: So then did you tell them what was going to happen next?
MS CULBERT: Well, I just said that this would be submitted back to Master Builders and that was just - yes. Yes.
THE DEPUTY PRESIDENT: So I think that you did advise them, your stat dec says that you advised them that there would be a vote taken?
MS CULBERT: Yes.
THE DEPUTY PRESIDENT: On 28 July and I think you provided me with a document that is in a form of a notice to the employees that I think you or the MBA might have obtained from the Fair Work Commission or FWO, I don't which but - it seems to be from the Commission because it says "If you have any questions please speak to either your employer, bargaining representative or go to et cetera. So that's the how and when for approval enterprise agreements. Did you give them that piece of paper at that meeting on the 19th?
MS CULBERT: Yes, they had to sign and witness, I'm pretty sure, if that's what I'm thinking. Yes.
THE DEPUTY PRESIDENT: Right, and so did you hear from them at all between the 19th and 28th July? Did they physically have in their hands still a copy of the proposed agreement during that period?
MS CULBERT: Yes, I didn't take it back from - they still have it now. Yes.
THE DEPUTY PRESIDENT: Right, did they have anything else with them? Did you give them for example a copy of the Building and Construction General Onsite Award?
MS CULBERT: No.
THE DEPUTY PRESIDENT: No?
MS CULBERT: Yes.
THE DEPUTY PRESIDENT: Did you give them a link to that? Did you give them a document that said "If you want to look at the - - -?
MS CULBERT: Is it just the general award?
THE DEPUTY PRESIDENT: Yes?
MS CULBERT: No I - the - all they had was the EBA, or the draft. [7]
The vote on the Agreement took place on 28 July 2017. Ms Culbert explained that the vote occurred when she called both employees individually and asked them if they were voting in favour of the Agreement, to which they both replied that they were.[8]
Legislative Framework
Section 186 of the Act provides that the Commission must approve an agreement if an
application is made pursuant to s.185 of the Act and the requirements of ss.186 and 187 of the Act are met. Relevantly, s.186 (2)(a) of the Act requires that the Commission be satisfied that the agreement has been genuinely agreed to by the employees covered by the agreement and s.188 sets out when an enterprise agreement has been genuinely agreed to by the employees covered by the agreement.
Section 186 of the Act provides, relevantly, as follows:
186 When the FWC must approve an enterprise agreement—general requirements
Basic rule
(1) If an application for the approval of an enterprise agreement is made under subsection 182(4) or section 185, the FWC must approve the agreement under this section if the requirements set out in this section and section 187 are met.
Note: The FWC may approve an enterprise agreement under this section with undertakings (see section 190).
Requirements relating to the safety net etc.
(2) The FWC must be satisfied that:
(a) if the agreement is not a greenfields agreement—the agreement has been genuinely agreed to by the employees covered by the agreement; and
(b) if the agreement is a multi‑enterprise agreement:
(i) the agreement has been genuinely agreed to by each employer covered by the agreement; and
(ii) no person coerced, or threatened to coerce, any of the employers to make the agreement; and
(c) the terms of the agreement do not contravene section 55 (which deals with the interaction between the National Employment Standards and enterprise agreements etc.); and
(d) the agreement passes the better off overall test.
Section 188 of the Act sets out the circumstances in which an agreement has been genuinely agreed to:
188 When employees have genuinely agreed to an enterprise agreement
An enterprise agreement has been genuinely agreed to by the employees covered by the agreement if the FWC is satisfied that:
(a) the employer, or each of the employers, covered by the agreement complied with the following provisions in relation to the agreement:
(i) subsections 180(2), (3) and (5) (which deal with pre‑approval steps);
(ii) subsection 181(2) (which requires that employees not be requested to approve an enterprise agreement until 21 days after the last notice of employee representational rights is given); and
(b) the agreement was made in accordance with whichever of subsection 182(1) or (2) applies (those subsections deal with the making of different kinds of enterprise agreements by employee vote); and
(c) there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.
Section 180 of the Act sets out the pre-approval requirements that an employer must comply with prior to asking employees to vote on an agreement and provides, relevantly, as follows:
180 Employees must be given a copy of a proposed enterprise agreement etc.
Pre-approval requirements
(1) Before an employer requests under subsection 181(1) that employees approve a proposed enterprise agreement by voting for the agreement, the employer must comply with the requirements set out in this section.
Employees must be given copy of the agreement etc.
(2) The employer must take all reasonable steps to ensure that:
(a) during the access period for the agreement, the employees (the relevant employees) employed at the time who will be covered by the agreement are given a copy of the following materials:
(i) the written text of the agreement;
(ii) any other material incorporated by reference in the agreement; or
(b) the relevant employees have access, throughout the access period for the agreement, to a copy of those materials.
(3) The employer must take all reasonable steps to notify the relevant employees of the following by the start of the access period for the agreement:
(a) the time and place at which the vote will occur;
(b) the voting method that will be used.
…
(5) 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.
Was the Agreement genuinely agreed?
Was the Agreement genuinely agreed by employees covered by the Agreement?
The objections of the CFMEU to the approval of the Agreement were concerned with the issue of whether the agreement was genuinely agreed to by employees covered by it, as the Commission must be satisfied of pursuant to s.186(2)(a). The CFMEU’s written submissions in this regard were made before Ms Culbert gave her evidence and on the basis of the minimal information available from the documentation lodged with the application.
The CFMEU submitted that there was insufficient evidence to establish that the employees who voted on the Agreement were within its application and scope. The CFMEU was concerned that Linx did not yet operate in the building industry and therefore, while it may have had employees, they may not have been employed under any of the classifications of the Agreement.
The coverage of the Agreement is set out in clauses 3.2 and 3.3 of the Agreement, which read as follows:
3.2 Application
3.2.1 This Agreement deals with matters pertaining to the employment relationship between:
(a) the Company; and,
(b) Employees of the Company who are engaged in any of the callings or classifications defined by the Appendices of this Agreement.
3.3 Scope
3.3.1 This Agreement shall apply where the Company undertakes construction work, including maintenance work.
I consider that the evidence given by Ms Culbert about the business, the employees and the work performed by those employees adequately addresses the concerns raised by the CFMEU. I am satisfied that Linx was operating at the time the Agreement was made, and that the two employees were performing work covered by the scope of Agreement.
Mr Fischer also raised the possibility that the relevant reference award might be the Joinery and Building Trades Award 2010. On balance I consider that Linx and its employees are within the coverage of the Award identified as the reference award in the Agreement.
No other reasonable grounds for believing the agreement has not been genuinely agreed – s.188(c)?
The CFMEU also raised s. 188(c) of the Act, and argued that in this case the Commission cannot be satisfied that there are no other reasonable grounds for believing the agreement has not been genuinely agreed to by the employees.
In their written submissions of 15 December 2017, the CFMEU argued that the following factors weighed in favour of this conclusion:
(a) The number of workers engaged, and the form of their engagement as casuals is nugatory, literally the bare minimum possible under the act. On its face, this appears to be a manipulation of the agreement making process to avoid engagement in a Greenfields process as set out under the act.
(b) No work is known to have commenced, or claimed to be commenced; and as a result it’s unclear both whether they are covered by the relevant award, and whether the workers who voted have a genuine interest of any kind in the outcome of the agreement process.
(c) The application of the agreement is literally the broadest possible application, with the company indicating in the F17 that it intends to operate in all states and territories in Australia.
(d) The nature of a labour hire operation in the building industry (especially one with the broad remit indicated by the classifications in the agreement) is that it competes on labour cost, and makes up for its low margins per worker by operating at scale. It is not reasonable to assume that a business of this nature *could* operate effectively or profitably with only two workers. This must give rise to reasonable suspicions about the genuineness of its claim to be an already-operating enterprise; and a potential manipulation of the enterprise agreement process designed to lock in a low-cost deal prior to commencing operation.[9]
Again, I consider that the evidence of Ms Culbert, which was not available to the CFMEU prior to the hearing, adequately addresses these issues. Contrary to the CFMEU’s submissions, Linx has been operating since the middle of 2016. Despite employees voting on the enterprise agreement some 6 months ago, the company remains small, with only 6 employees currently ‘on the books’. Ms Culbert also confirmed that the company has no links to larger enterprises and despite declaring that operations would be national in the Form F17, in reality there are no plans to expand the company beyond its current operations in the Sydney CBD. I do not accept the CFMEU’s broad brush assertions that small scale operation in labour hire enterprises cannot operate profitably and therefore necessarily gives rise to ‘suspicion’ about manipulation of the enterprise agreement process.
The CFMEU referred me to a number of decisions that have considered aspects of the question of genuine agreement in in the context of s.188(c) in various different circumstances. However I consider that the facts of this matter as elucidated considerably through Ms Culbert’s evidence mean that I do not need to consider this issue further.
Were employees given copies of or provided access to the Agreement and incorporated material - s.180(2)?
In order to find the Agreement has been genuinely agreed, the Commission must be satisfied that, amongst other things, the pre-approval steps in s.180(2) were complied with by Linx. No submissions were made by the CFMEU in respect of this pre-approval requirement, however that does not alter the fact that the Commission must still reach a state of satisfaction in respect of whether an agreement is genuinely agreed.
Pursuant to s.180(4) of the Act, the relevant access period ran for 7 days before 28 July 2017. I am satisfied that prior to the start of the access period, Linx provided employees with a copy of the written text of the Agreement, pursuant to s.180(2)(a)(i) of the Act. I am also satisfied that the employees continued to have access to a copy of the Agreement throughout the access period, pursuant to s.180(2)(b) of the Act.
Clause 3.4 of the Agreement, entitled ‘Relationship to other Awards and Agreements’ provides, relevantly, as follows:
3.4.2 The relevant award for purposes of applying the better off overall test to this Agreement is the Building and Construction General On-site Award 2010.
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, are better-off-overall than they would otherwise be under the modern award. However, where the Agreement is silent on the reference award and provisions, then those provisions shall apply.
I consider that the effect of clause 3.4.3 is that the Award is incorporated by reference in the Agreement. However, as is clear from the evidence given by Ms Culbert set out above, the two employees were not given copies of, or access to, the Award.
I note that similar issues have previously been the subject of attention by various full benches of the Commission. The Full Bench in Re McDonald’s Australia Enterprise Agreement 2009[2010] FWAFB 4602 (McDonald’s) determined that although the provisions of the South Australian Long Service Leave Act 1987 were incorporated into the agreement in question and a copy of that Act had not been provided to relevant employees, there was no requirement to do so because the legislation was ‘freely available in the public domain’.[10]
However subsequent decisions of the Commission have established that the approach in McDonald’s may not have universal application. The Full Bench in National Tertiary Education Industry Union v University of New South Wales[2011] FWAFB 5163, when considering the decision in McDonald’s said “We do acknowledge however that there may be cases where the characteristics of the workplace and the composition of the workforce may require more than what that Full Bench indicated was adequate.”[11] In that instance, the Full Bench noted that every employee had access to a computer.[12]
Compliance with s.180(2)(a) in relation to, in part, material available on the internet, was considered more recently by the Full Bench in Construction, Forestry, Mining and Energy Union v Sparta Mining Services Pty Ltd[2016] FWCFB 7057 (Sparta). The Full Bench made the following observations:
“The statutory purpose of s.180(2) is clear: where a proposed enterprise agreement contains, as material incorporated by reference in the agreement, entitlements or obligations derived from an external document, that document is to be provided to employees to be covered by the agreement before they vote upon it so that they know what the content of those entitlements or obligations are when they consider whether to approve the agreement. That is why compliance with s.180(2) is an element of the requirement for an enterprise agreement to have been “genuinely agreed” by the employees who voted upon it. A failure to provide any such external documents is not answered or addressed by providing employees with the documents after they have voted and after the agreement has already taken effect.” [13]
In dealing with the question of whether the decision in McDonald’s was applicable to particular industry codes of practice, the Full Bench in Sparta considered that in McDonald’s:
“the Full Bench took judicial notice of the fact that legislation, including South Australian legislation, is readily available to citizens in a number of ways (most notably on the internet), and therefore presumed for the purpose of s.180(2)(b) that it was accessible to employees during the access period. However it must be noted that the subsequent Full Bench decision in National Tertiary Education Industry Union v University of New South Wales left open the possibility that paragraph [43] of McDonalds above may not be universally applicable, but rather that “that there may be cases where the characteristics of the workplace and the composition of the workforce may require more than what that Full Bench indicated was adequate”. We further note that McDonalds did not explain how the mere availability of material in the public domain meant that there was no reasonable step at all which the employer could have taken to ensure access to a copy of the material.” [14]
Although evidence was not lead by either Linx or the CFMEU in relation to the circumstances surrounding the provision of documentation during the access period, I note that there is nothing to suggest it would have been difficult for the employees, numbering only two – both of whom attended the Linx office in person to be provided with copies of the Agreement – to also be provided with, at the very least, instructions about where they could locate the Award. I note that the employees were labourers, and there was no suggestion they would have had access to a means by which they could have accessed the Award electronically while at work. Although Linx is clearly a small company with limited resources, they were being significantly assisted by the MBA in their endeavour to have an enterprise agreement cover their workforce. I also observe that no explanatory material was made available to the employees which may have given them any further information about the provisions of the Award that may apply to their employment.
Towards the conclusion of the hearing of the matter I asked Mr Gissane to address me on whether I should be concerned by the fact that neither the Award itself, or any link to it, had been provided to employees during the access period. He said ‘Possibly, but I could say with a high degree of confidence if a question arose the award would have been provided and those enquiries would have been, you know, run through and resolved most likely with the assistance of our association.’[15]
Given the comments above by the Full Bench in Sparta concerning the legislative purpose of s.180(2)(a), I do not consider Mr Gissane’s assurances assuage my concerns that no steps at all were taken by Linx to provide employees with a copy of, or access to, the Award. As noted by the Full Bench, s.180(2) is intended to ensure employees are aware of the full extent of their entitlements or obligations before they vote on an agreement. The onus is on an employer to ensure that all reasonable steps are taken to provide employees with, at a minimum, access to the requisite materials regardless of whether any questions are raised by an employee.
At the conclusion of the hearing, Mr Fischer acknowledged the issue was a ‘concern’ for the CFMEU but said he didn’t have a view on whether it should affect the approval of the Agreement. However the view of the CFMEU in this regard does not alter the fact that I must be satisfied that the Agreement was genuinely agreed in order to be able to approve it.
The failure of Linx to provide a copy of the Award, or a link to the Award means I am not satisfied that employees were given copies of or provided access incorporated material as required by s.180(2).
Did Linx take all reasonable steps to notify employees – s.180(3)?
In order to find the Agreement has been genuinely agreed, the Commission must be satisfied that, amongst other things, Linx took all reasonable steps to notify employees of the time and place of the vote, as well as the voting method, by the start of the access period.
Linx gave a notice to employees on 11 July 2017 (attached to the Form F17) confirming that the vote would take on Linx’s premises on 28 July 2017 by way of show of hands. However Ms Culbert gave evidence that although the vote did take place on 28 July 2017, the voting method was simply to call both employees separately and ask them if they were voting in favour of the agreement.
There is no evidence to indicate when Linx advised the employees that the details of the conduct of the vote changed. However in circumstances where no employee was unable to vote on the Agreement, I prepared to accept that this pre-approval step is satisfied.
Did Linx take reasonable steps to explain the terms of the agreement – s. 180(5)?
Although compliance by Linx with s.180(5) of the Act was raised briefly by the CFMEU in their written submissions, the issue was not elaborated on at the hearing before me. However having heard Ms Culbert’s evidence I became concerned that the approach taken by Linx fell short of the requirements of s.180(5) and accordingly I could not be satisfied the Agreement had been genuinely approved pursuant to ss. 186(2)(a) and 188(a)(i).
The requirements of s. 180(5) of the Act have recently been examined in some detail by the Federal Court in the decision of Flick J in Construction, Forestry, Mining and Energy Union v One Key workforce Pty Ltd [2017] FCA 1266 (One Key Workforce). In that decision, His Honour stated:
“Section 180(5) is not a section which is expressed in terms of whether the Commission is “satisfied” that “all reasonable steps” have been taken. That subsection is expressed as a statement of objective fact as to that which must occur before approval is sought. If “all reasonable steps” have not in fact been taken, the Commission lacks power to “approve” the agreement.” [16]
In One Key Workforce, the Federal Court took a dim view of steps taken by the employer which it considered, in effect, did little more than repeat the terms of the agreement (in that case, by email and telephone):
“The requirement imposed by s 180(5) to “take all reasonable steps to ensure that … the terms of the agreement, and the effect of those terms, are explained” is an important obligation imposed upon an employer to ensure that employees are as fully informed as practicable. The requirement is not a mere formality. Whatever steps may be necessary will depend upon the facts and circumstances of each particular case; but those steps are not satisfied by a person reading – without explanation – the terms of an agreement to an employee.” [17]
In that case, His Honour found that, in respect of the three relevant employees, further steps could have been taken to identify particular clauses of the agreement to which they should give greater attention and identify terms of the relevant awards that varied (or did not vary) from the agreement. His Honour noted that ‘One of the things which was missing from the explanation provided was any guidance…as to the manner in which the Agreement affected their personal interests.”[18]
Question 2.6 of the Form F17 requires a description of the steps taken by the employer to explain the terms of the agreement, and the effect of those terms to the relevant employees. It is also clear that the relevant employees to whom an employer must take all reasonable steps to explain the terms of an agreement are those employees employed at the time who will be covered by the agreement.[19]
In this matter, in answer to Question 2.6 in the Form F17, Ms Culbert declared:
“After Employees were physically handed a written copy of the proposed Agreement on 11 July 2017, a number of informal discussions were held between the Company and the nominated bargaining representatives to explain the terms of the Agreement and the effect of those terms. These discussions and explanations culminated in the formal discussion meeting held on 19 July 2017.”
In answer to Question 2.4 of the Form F17, which addresses steps taken pursuant to s.180(2) of the Act, Ms Culbert declared that on 19 July 2017 “A Discussion Meeting was held at the Company premises located at Unit 4 -6 / 12 York Street Ingleburn at 10.00am where all effects of the terms of the Agreement were discussed. All Employees’ questions were answered to their satisfaction.”
However, the evidence given by Ms Culbert on this issue at the hearing before me was quite different to the information contained in the Form F17 filed in the matter. As set out above, Ms Culbert said that when she gave the employees a copy of the Agreement on 11 July 2017, she said they should let her know if they had any ‘issues’ with it. She did not identify that any discussions were in fact held with the relevant employees between 11 July 2017 and 19 July 2017.
Ms Culbert gave evidence that the meeting on 19 July 2017 involved her asking the two employees if they had read the Agreement, and asking them if they had any ‘issues’ with it, which she says they did not. She did not indicate any further discussion or explanation occurred at the meeting or, indeed, at any other time prior to the vote on 28 July 2017. She said that no changes were made to the agreement consequent upon the 2 employees’ attendance at the meeting on 19 July. While this in itself is not contrary to the Act, it is difficult to see that this constituted “enterprise bargaining” as was envisioned by the authors of the Act.
It is also clear that the employees received no written material summarising the effects of the terms of the Agreement, or, for example, drawing their attention to any differences between the Agreement and the Award.
An example serves to make the point. Clause 5.6.2 of the Agreement provides as follows:
The Compensation Allowance incorporates recognition of all site and general wage related allowances including Multistorey Allowance and special rates provided for in the reference modern award, except for Special and Industry Allowances which are incorporated into the Wages Rates in the relevant Appendices of this Agreement.
To understand the effect of this provision on an individual an employee would need to compare the Agreement with the specific allowances in the Award that are replaced by this provision. I consider that Linx should have explained to employees how this provision of the Agreement operated in comparison to the Award and the evidence is that this did not occur.
In summary, nothing in Ms Culbert’s evidence indicates that any steps were taken by Linx to explain the terms of the Agreement, or the effects of those terms, to the relevant employees beyond indicating that the employees should read the Agreement themselves and raise any queries they had.
I note that the requirement in s.180(5) is only that the employer takes all reasonable steps, not that employees understand the explanation given or indeed that the kind of explanation envisaged by subsections (a) and (b) necessarily occurs. However in this instance I do not find that the approach taken by Linx constitutes all reasonable steps. Linx were supported throughout the enterprise agreement process by the MBA, including the MBA providing Linx with a complete draft agreement. Particularly given the involvement of the MBA, an organisation with considerable experience and resources, I consider that in this case, ‘all reasonable steps’ would have necessarily required some attempt by Linx to identify for the relevant employees the manner in which the Agreement affected their interests. In contrast, the process undertaken by Linx can, in respect of the requirement in s.180(5) fairly be characterised as ‘mere formality’.
As a result I am not satisfied that Linx took reasonable steps to explain the terms of the agreement as required by s. 180(5).
Conclusion
For the reasons set out above, I find that Linx did not comply with the pre-approval steps in either ss.180(2) or 180(5) and the Agreement was therefore not genuinely agreed pursuant to ss.186(2) and 188 of the Act. I am therefore unable to approve the application made by Linx pursuant to s.185 of the Act.
For completeness I note that although the parties did not address me on this point, I do not consider that an undertaking pursuant to s.190 of the Act would rectify the deficiencies in the pre-approval steps.
In the circumstances I do not find it necessary to address the CFMEU’s submissions in respect of s.55 of the Act, Linx’s preparedness to provide an undertaking nor determine whether the Agreement passes the Better Off Overall Test, pursuant to s.186(2)(d) of the Agreement.
Accordingly I dismiss the application for approval of the Agreement.
DEPUTY PRESIDENT
<PR600136>
[1] CFMEU Outline of Submissions, 15 December 2017, paragraph 2(d).
[2] Transcript PN 85.
[3] Transcript PN 68.
[4] Transcript PN 95-96.
[5] Transcript PN102-106.
[6] Transcript PN119-125.
[7] Transcript PN 126-143.
[8] Transcript PN145-150.
[9] CFMEU Outline of Submissions, 15 December 2017, paragraph 18.
[10] [2010] FWAFB 4602, at 43.
[11] [2011] FWAFB 5163, at 24.
[12] [2011] FWAFB 5163, at 25.
[13] [2016] FWCFB 7057, at 15.
[14] [2016] FWCFB 7057, at 22.
[15] Transcript PN280
[16] [2017] FCA 1266, at 97.
[17] [2017] FCA 1266, at 103.
[18] [2017] FCA 1266, at 105.
[19] Construction, Forestry, Mining and Energy Union v One Key workforce Pty Ltd [2017] FCA 1266, at 96.
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