Macmahon Contractors Pty Ltd

[2012] FWA 3046

[2012] FWA 3046

FAIR WORK AUSTRALIA

REASONS FOR DECISION

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

Macmahon Contractors Pty Ltd
(AG2011/3173)

Building, metal and civil construction industries
COMMISSIONER BOOTH	BRISBANE, 16 APRIL 2012

Application for approval of the Macmahon Queensland Construction Agreement 2011.

[1] An application for approval of a single enterprise Agreement under s.185 of the Fair Work Act 2009 (the Act) was made by Macmahon Contractors Proprietary Limited (the Applicant). The Agreement is entitled Macmahon Queensland Construction Agreement 2011 (the Agreement).

[2] The Construction Forestry Mining and Energy Union (CFMEU) objected to the approval of the Agreement. A hearing was conducted on 15 March 2012.

[3] On 19 March 2012 I approved the application. These are my reasons for approving the Agreement.

[4] Relevant legislation for approval of enterprise agreements

186 When FWA must approve an enterprise Agreement—general requirements

Basic rule

(1) If an application for the approval of an enterprise agreement is made under section185, FWA must approve the agreement under this section if the requirements set out in this section and section 187 are met.

…..

Note: FWA may approve an enterprise agreement under this section with undertakings (see section190).

Requirements relating to the safety net etc.

(2) FWA 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

…..

Note 1: For when an enterprise agreement has been genuinely agreed to by employees, see section 188.

…..

187 When FWA must approve an enterprise agreement—additional requirements

Additional requirements

(1) This section sets out additional requirements that must be met before FWA approves an enterprise agreement under section 186.

Requirement that approval not be inconsistent with good faith bargaining etc.

(2) FWA must be satisfied that approving the agreement would not be inconsistent with or undermine good faith bargaining by one or more bargaining representatives for a proposed enterprise agreement, or an enterprise agreement, in relation to which a scope order is in operation.

…..

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 FWA 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.

Grounds of Objection to the approval of the Agreement

[5] The CFMEU objects to the approval of the Agreement on two grounds:

(a) it is not an ‘enterprise Agreement’ made pursuant to s.172 of the Act, because it was not made “with the employees who are employed at the time the Agreement [was] made and who will be covered by the Agreement”; and

(b) further and in the alternative, the Agreement was not genuinely agreed to by the employees covered by the Agreement as required by s.186 of the Act.

Is the Agreement an enterprise Agreement made pursuant to s.172?

CFMEU Submissions

[6] The CFMEU was represented by Mr Ben Green.

[7] The CFMEU submits that the proposed Agreement purports to be a single enterprise agreement that is not a greenfields agreement.

[8] Section 172(2) provides an employer may make an enterprise agreement:

(a) with the employees who are employed at the time the agreement is made and who will be covered by the agreement.

[9] The CFMEU argues that the Applicant did not make the agreement with the employees who were employed at the time the agreement was made and who were to be covered by the agreement and therefore it:

● is not an enterprise agreement in accordance with s.172;
● cannot be the subject of an application for approval under s.185; and
● cannot be approved under s.86.

[10] The CFMEU submits:

● the Agreement was made in November 2011 with the employees at the Gap 50 site, which was scheduled to finish in December 2011;
● at that time 33 employees were eligible to vote;
● the project is now finished or very nearly finished with only around 5 employees continuing to work performing finishing duties;
● there is no evidence of any new civil construction project to be undertaken by the Applicant in Queensland;
● at the time FWA was asked to approve the Agreement no other projects will be covered by it and none of the employees with whom the Agreement is made will be “engaged in civil construction work” in terms of clause 6.1 of the Agreement.

[11] In oral submissions Mr Green noted that there were at the time only 3 1 employees left on the project. He submitted:

“There is also evidence that’s been given that if anyone will be employed by Macmahon under this Agreement – that is, if Macmahon will employ any employees on civil construction projects in Queensland that don't already have project agreements – the number will be in the hundreds. That, in my submission, supports the submissions that have been made as to, firstly, whether the Agreement was made within the requirements of section 182 and, secondly, as to whether there was genuine agreement.”

[12] The CFMEU sought to rely on the CFMEU v Australian Industrial Relations Commission 2 (the Mine Management case).That case was decided under the now-repealed Workplace Relations Act 1996 and involved complex litigation, long running industrial disputes including the dismissal of an entire workforce and closure of the Gordonstone mine for an extended period, and changes in the ownership and management of the mine.

[13] Mr Green urged that the principles of the case, rather than the facts, were relevant. In the Mine Management case the employees with whom the agreement was made were not, at the time the agreement was made, yet working in the areas that would be covered by the agreement. Mr Green submitted that the principles of that case are relevant in the terms of making an agreement with a small number of employees when it is on the horizon that potentially hundreds of employees will be covered the terms of the agreement.

[14] In the Mine Management case, Wilcox and Madgwick JJ analysed in depth s. 170(LK)(1) of the repealed Act in the context of there being no workers at any coal mine at the time of the agreement:

“[121] The question is, therefore, whether an agreement regulating terms and conditions of employment in a proposed single business, made with employees who may, in the future, be employed in that business but are not yet so employed, qualifies as an agreement that may be certified under the Act. In our view, the preferable conclusion, as a matter of both textual and purposive interpretation of the Act, is that it does not.

[122] Textual matters that cast some light on the subject are these. When s170LK(1) says that "the employer may make the agreement with a valid majority of the persons employed at the time whose employment will be subject to the agreement", the phrase "the time" clearly means the time of making the agreement. The phrase "whose employment" equally clearly means the employment of the persons employed at that time. The natural meaning of a reference to the employment of such persons is to the type or nature of that employment at that time. Thus the natural meaning of s170LK(1) is that the agreement may be made with employees whose employment is then of a type or nature that will be subject to the agreement.

.....

[124] In the present case it can be said that any employee bound by the terms of the certified agreement would be an employee who participated in the ballot or a person who sought employment at the mine after the agreement was made; and who therefore, knew - or at least had the opportunity of knowing - the terms of the agreement. But this is true only because of the unusual circumstance that the mine was closed at the time of Mine Management's assumption of responsibility.....” 3

[15] In the Mine Management case, the Full Court held there was no agreement for the purposes of the relevant section and accordingly no valid application. The order of the Commission making the agreement was declared null and void.

[16] In his oral submissions Mr Green summarises his argument that while employees do not need to remain with the same employer in perpetuity, some meaning must be given to the reference to ‘employees who will be covered by the agreement’.

Applicant’s submissions

[17] At the hearing, Mr Murdoch Senior Counsel (SC) appeared with leave for the Applicant.

[18] The Applicant submits as follows:

● it has met all relevant requirements of the Act in respect of making the Macmahon Queensland Construction Agreement 2011 and that FWA is therefore required to approve the Agreement;
● on whether the Agreement was made with the employees who are employed at the time the Agreement was made, the Applicant points to the requirements of the Act - in particular subsection 182(1): the agreement is made when a majority of those employees who cast a valid vote approve the agreement. It submits 31 employees who were eligible to vote in the Agreement were engaged during the voting period, performing civil construction works at the Gap 50 project;
● further the Act contains no requirement to assess how the Agreement will apply after commencing operation. An employer's workforce may change between the date of an agreement and approval date; any consideration of a prospective workforce would be difficult in civil construction industry that undertakes largely project work; and an employer can hardly make an agreement with employees it has not employed;
● who will be covered is a separate concept from who an enterprise agreement applies to.

[19] The Applicant submits the Agreement is capable of approval and should be approved in accordance with s.186(1) of the Act as it was validly made and covers the employees who are described in the Agreement. These employees participated in negotiation and consultation and subsequently voted on the Agreement. To support this, the Applicant relies on its material filed with the Application.

[20] The Agreement will cover current employees engaged at the Gap 50 site and any other Macmahon civil construction project in Queensland for which there is no greenfields agreement. It is therefore an enterprise agreement under s.172 of the Act.

[21] Mr Murdoch SC referred to the Federal Court decision of Construction Forestry Mining and Energy Union v Deputy President Hamberger 4 where at paragraph 83 Katzman J, considering an ‘opt-out’ clause, describes the effect of s.172 and the combined effect of s.180-182. Her honour states:

“Section 172(2) enables employers to make enterprise agreements with those employees employed at the time the agreement is made and who will be covered by the agreement. The combined effect of ss 180 – 182 is that such employees – those current employees whose terms and conditions of employment will be affected by the proposed – are provided with the opportunity to vote on it, and the agreement is made when a majority of them cast a valid vote in favour of it.”

Has the agreement been made pursuant to s.172?

[22] The Act establishes the requirements for when an agreement is made and who will be covered by it. In this case, the Agreement was voted on from 3-9 November 2011 by a majority of employees casting a valid vote approving the Agreement.

[23] On the question of who will be covered, the CFMEU says that this is not a case of normal turnover. Mr Green highlights the evidence from Mr MacLennan 5 that approximately 200 employees could be engaged under this Agreement and refers to the Mine Management decision. In response the Applicant says that it has complied with the requirements of s.172 and notes the requirements of s.181(1):

“An employer that will be covered by a proposed enterprise agreement may request the employees employed at the time who will be covered by the agreement to approve the agreement by voting for it.”

[24] The Applicant notes thatthe concept of who will be covered by the agreement is distinct from whom an enterprise agreement will apply to. Sections 52 and 53 of the Act deal respectively with the concepts of “applies” and “covers”.

[25] The Applicant submits that Fair Work Australia (FWA) is not required to speculate as to whom an enterprise Agreement will apply to from time to time during its term.

[26] The explanatory memorandum supports this analysis:

“…the use of the phrase ‘employees who will be covered by the agreement’ in clause 172 is intended to make clear that employees covered by the agreement are not limited to those employees who are employed at the time the agreement was made. An agreement covers all employees whom it is in expressed to cover (clause 53). This includes persons employed at the time the agreement was made and persons employed at a later time provided they fall within the class or group of employees who are expressed to be covered by the agreement.”(emphasis added)

[27] While the CFMEU acknowledges this to be the case they press the argument that only 31 employees made the Agreement and it cannot have been contemplated that it was to apply at a later time to a much larger and different class of employees.

[28] In contrast, the plain words of the Act and the explanatory memorandum do contemplate such a scenario and indeed it would be impossible to make an agreement for the future if it were otherwise.

[29] Additionally, the Mine Management case, while premised on the idea of fair agreement making, contemplated a wholly different set of facts and a different legislative framework. Their Honours noted:

“There can hardly be fair agreement-making between employers and employees about wages and employment conditions in a workplace (a mine is a good example) before both sets of parties have actual experience of the work and its place of performance.... An agreement prematurely made is unlikely to be effective.” 6

[30] In this matter, both sets of parties do have actual experience of the work, and it is not an agreement made prematurely. As required under the Act, the Agreement was made with a valid majority of employees and it covers the employees who are described in the Agreement, whose participation is described in documents accompanying the application and approved by the vote of a valid majority. The Agreement covers the Applicant's employees currently located at Gap 50. It will also apply to other Macmahon civil construction projects in Queensland for which there is no greenfields agreement. Such an agreement is contemplated in the Act.

[31] It therefore is an agreement made with the employees who will be covered by it. It is an agreement within the meaning of s.172 of the Act and subject to satisfying all the requirements in s.186 it is capable of approval. As foreshadowed, however it must meet the ‘genuine agreement’ requirements of s.186 if it is to be approved.

Have the employees genuinely agreed as required by s.186 of the Act ?

[32] Section 186 of the Act provides that before approving an agreement, FWA must be satisfied that the agreement has been genuinely agreed to by the employees covered by the agreement.

[33] Guidance as to whether their employees have genuinely agreed to an enterprise agreement is provided under s.188 of the Act, extracted above in paragraph [4].

[34] The Applicant tendered the material which must be submitted with an application to approve an enterprise agreement.

[35] These documents establish that the pre-approval steps in s.180(2), (3) and (5), requiring that the employees obtain a copy of the agreement, understand the terms and effect of the agreement and that the employer ensures compliance with the voting process, has been satisfied. The 21 day requirement in s.181(2) has similarly been satisfied.

[36] Having established ss.180(2), (3) and (5) and 181(2) have been met, the Applicant has therefore also satisfied s.188 (a) and (b).

[37] FWA must also be satisfied that requirement in s.188(c) is met. It states:

“…there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.”

CFMEU Submissions

[38] The CFMEU submits that the employees covered by the Agreement have not genuinely agreed to an enterprise agreement because:

(a) the Applicant did not comply with the good faith bargaining requirements; and

(b) the employees who approved the agreement are substantially different, in number and other relevant aspects, from the employees who will be covered by the agreement.

[39] The CFMEU contends there has been significant non-compliance with the good faith bargaining requirements in s.228 of the Act to such extent that there was not genuine agreement. The submissions refer to the decision of J & D Rigging Pty Ltd v CFMEU 7 which the CFMEU submits supports that the good faith bargaining provisions could reasonably inform a judgement as to whether an agreement was ‘genuinely agreed’. Further that FWA should have regard to any objections on those grounds.

[40] In a statement to FWA, Mr Jade Ingham, Assistant Secretary of the CFMEU Construction and General Division, Queensland and Northern Territory Construction Workers Divisional Branch stated:

● The work performed by Macmahon employees who work on civil projects is such that the CFMEU is entitled to represent their industrial interests and that a number of the employees are members of the CFMEU.

● The CFMEU had and has members whose industrial interests of CFMEU was entitled to represent who are employed by Macmahon at the Gap 50 project at the time when the agreement was put to employees for ballot. However, Mr Ingham was not aware of the proposed agreement and did not become aware of it until it was listed for approval by FWA in February 2012.

● If Mr Ingham had been aware of the proposed agreement he would have ensured the CFMEU participated in bargaining for the agreement.

● On 18 January 2012 he attended meetings in Brisbane and Darwin with Charissa McCutcheon, the National Industrial Relations representative for Macmahon.

● During those meetings the future relationship between CFMEU and Macmahon was discussed. While expressing interest in working with Macmahon, neither Ms McCutcheon nor anyone else told Mr Ingham the company had already made a state-wide enterprise agreement with its employees in November 2011.

[41] The CFMEU submits there was not genuine agreement because of the disparity in number between the employees who are said to have agreed and the employees who will be covered by the Agreement. The CFMEU contends that it is the latter category of employees who must genuinely agree.

[42] As well, the CFMEU in its written submissions argued:

● the Application failed to declare the existence and details of the bargaining representative to the Agreement, namely the CFMEU; and
● an application containing information that is false, or so incomplete as to be misleading, in relation to the significant issue of bargaining representatives as required by [Form F16] … may not be said to constitute ‘an application made under section 185’.

Applicant’s Submissions

[43] The Applicant submits that:

(a) the CFMEU has not established that they were a bargaining representative; and

(b) even if they were bargaining representative, in the absence of this fact coming to the employer's attention, there can be no breach of the good faith bargaining principles.

[44] The Applicant also relies on the decision in J & D Rigging Pty Ltd, in particular SDP Richards’ finding that whether an agreement was genuinely approved for the Act’s purposes:

“[6] In my view, issues such as those raised by the good faith bargaining provisions of the Act, amongst other matters, reasonably may have implications for a finding by FWA as to whether an agreement was genuinely approved for the Act’s purposes. But any such findings will need to be appropriately contextualised within the body of wider evidence and accorded relevant weight for purposes of s.186(2)(a) of the Act.....” 8

[45] It submits that it has complied with the requirements of ss.186 and 188 and it follows that the enterprise agreement has been genuinely agreed. Further, the Applicant argues there is no basis for asserting that the good faith bargaining principles were not complied with nor should this be considered when FWA assesses the application before it.

[46] The Applicant submits that it was unaware of any employee bargaining representatives and is under no positive obligation to seek out employee organisations that may have an interest in the agreement.

[47] On the issue of a conversation between Ms McCutcheon and Mr Ingham the Applicant submits “this relates to a meeting some 10 weeks after the agreement was made and (again) in circumstances where our client had no knowledge of the CFMEU having members covered by the agreement.”

[48] In support of significant change in the workforce after approval, the Applicant cited the decision of Vice President Lawler in Manfield Colair and CEPU Electrical Division Northern Territory Enterprise Agreement Gove Alumina Refinery and Mine Site-20 10/2012 9 (Manfield Colair). Vice President Lawler was deciding about an enterprise agreement that was made over one year prior to the application for approval, in circumstances where the composition of the employer’s workforce had significantly changed. His Honour wrote:

“The enormous change in the composition of the workforce in this case does not provide reasonable grounds supposing that the agreement which was approved by a vote of all employees who were eligible to vote at the time of the vote has not been genuinely agreed to by those employees. It follows that I reject the Company’s contention that the requirement in section 188(c) is not met.”

Is there genuine agreement as required by s.186?

[49] Having already concluded that the Applicant has complied with s.188(a) and (b), there remains consideration of whether there are “any reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees”.

[50] The CFMEU urges there are reasonable grounds to find that the employees did not genuinely agree to the enterprise agreement.

[51] It submits the Applicant should have been aware that it was likely that the CFMEU would be a bargaining representative, given the scope of the Agreement and the Applicant’s industry experience.

[52] Although it was not until 18 January 2012 that Mr Ingham told the Applicant of the CFMEU’s bargaining representative status, it argues that ‘it ought to have been aware” and that the Applicant’s failure to recognise and bargain may constitute capricious and unfair conduct. As such, the union argues, the actions of the Applicant breached the good faith requirement. Additionally, the CFMEU argues that a failure to identify it as a bargaining representative in the Application would be a failure to comply with s.185.

[53] The facts of this case do not reveal that the employer had been bargaining with a bargaining representative and then omitted to contact it - in those circumstances it may well be the employer “ought to have been aware”. But it was two months after the agreement had been made that there was contact between the CFMEU and the employer. In these circumstances, the Act does not require an employer to contact a bargaining representative following the issue of a notice of representational rights.

[54] I do not conclude that not contacting the CFMEU during the bargaining process is a reasonable ground for believing that the Agreement has not been genuinely agreed to by the employees. It follows that not identifying the CFMEU as a bargaining representative cannot be a ground for refusal to approve the agreement under s.185.

[55] The CFMEU also submitted that because the employees who approved the Agreement will be substantially different in number and other relevant (although unspecified) aspects from those covered by it then this is a reasonable ground for concluding under s.188 (c) that the Agreement has not been genuinely agreed to by the employees to be covered by the Agreement. They rely on the principles from the Mine Management case.

[56] The principles from the Mine Management case provide limited assistance in this matter. It is not only that the facts are different, the case deals with the different legislative language and different legal issues, therefore it is of little guidance as to whether the requirements of s.188 have been met.

[57] Section 188 describes when FWA can be satisfied that an enterprise agreement has been genuinely agreed to. Part (a) and (b) describes what the legislature considers ‘reasonable grounds’ for FWA to conclude genuine agreement. It requires that certain steps are taken by an employer. There is little discretion – they are either satisfied or they are not. In contrast, s188(c) requires FWA to consider, before approving an agreement that there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.

[58] In the Manfield Colair case VP Lawler outlined how this section will apply when considering an application for approval, and importantly clarifies that it requires a consideration of whether there was the genuine agreement of those employees who voted to approve it. In particular, that:

“s188(c) on its proper construction, requires a consideration of all relevant circumstances revealed by the material before FWA at the time FWA considers the application for approval in order to ascertain whether there are reasonable grounds for rejecting the genuineness of the agreement given by employees when they made the agreement by voting to approve it. It is those employees to which the expression “the employees” in s.188(c) refers.” 10

[59] Having already made a finding that there has been genuine agreement in that all pre-approval steps have been met, timelines have been complied with, is there any other circumstance for rejecting the genuineness of the agreement made by “the employees” who voted to approve it?

[60] There is no material before FWA that establishes any reasonable grounds to reject the genuineness of the agreement given by those employees who voted to approve it, and any potential significant change in the workforce at a later time is not a reasonable ground to conclude that the Agreement was not genuinely agreed to by the employees at the time they made the Agreement.

[61] I have therefore concluded that there is genuine agreement given by the employees when they made the Agreement by voting for it.

[62] The Applicant has satisfied the general requirements for approval of an enterprise agreement under s.186, the additional requirements in s.187 and the employees genuinely agreed to an enterprise agreement as required under s.188.

[63] It is noted prior at the hearing of this matter that the Australian Workers Union (AWU) sought and was granted leave to intervene in the matter. In written submissions the AWU disputed that the CFMEU was a bargaining representative. Having approved the Enterprise Agreement it is unnecessary to further consider these submissions. It is noted that the AWU did not seek to be covered by the Agreement. However the AWU sought and successfully obtained certain undertakings. These undertakings are attached to the Agreement and form part of the Agreement.

[64] As the Application has been made under s.185, the requirements in ss.186 and 187 have been met, I approve the agreement entitled Macmahon Queensland Construction Agreement 2011 11.

COMMISSIONER

Appearances:

J Murdoch of Senior Counsel for Franklin, Athanasellis, Cullen for the Applicant.

B Green for Construction, Forestry, Mining and Energy Union.

D Broanda for The Australian Workers’ Union (intervening).

Hearing details:

2012.
Brisbane:
March 15.

 1   Transcript dated 15 March 2012 at PN 308 evidence of Mr MacLennan

 2 [1999] FCA 847

 3 [1999] FCA 847 at PNs 121, 122 and 124.

 4 [2011] FCA 719

 5   Transcript dated 15 March 2012 at PN 322

 6 [2011] FCA 719 at PN 126

 7   [2012] FWAA 1653

 8   [2012] FWAA 1653 at PN [6]

 9   [2011] FWAA 9129

 10   [2011] FWAA 9129 at PN [22]

 11   AE892412 [PR521273]

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