[2021] FWC 1509

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Master Builders’ Association of New South Wales, The
(AG2020/3634)

COMMISSIONER JOHNS

SYDNEY, 19 MARCH 2021

Application for approval of the Richard Crookes Construction Pty. Limited/Construction Worker Employee Agreement 2020-2023

[1] An application has been made for the approval of an enterprise agreement known as the Richard Crookes Construction Pty. Limited/Construction Worker Employee Agreement 2020-2023 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (FW Act) on 27 November 2020. The application was made by The Master Builders’ Association of New South Wales (MBA NSW) on behalf of the employer, Richard Crookes Construction Pty. Limited (RCC/Employer). The Agreement is a single enterprise agreement.

[2] Until it is replaced the employees are covered by the Richard Crookes Construction Pty. Limited / CFMEU Collective Agreement 2017-2018 1(2017 - 2018 Agreement). The 2017 - 2018 Agreement passed its nominal expiry date on 31 December 2018. The Employer commenced bargaining when it issued a Notice of Employee Representational Rights (NERR) between 24 and 26 February 2020.

[3] On 30 November 2020, correspondence was received from the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU/Union) requesting to be provided with copies of the application documents and requesting to be heard in the matter. In line with Fair Work Commission’s (Commission’s) usual practice, the application documents were provided to the Union on 1 December 2020.

[4] The application was accompanied by a Form 17 – Employer’s Declaration in support of an application for approval of an enterprise agreement (Form F17) declared by Tony Grippi, General Manager – Operations, of the Employer. In relation to s.180(5) of the FW Act, in answer to the question “What steps were taken by the employer to explain the terms of the agreement, what was explained and how was the effect of those terms explained to the relevant employees?”, Mr Grippi declared,

• “4 November 2020, All Employees were invited to attend a Formal Discussions Meeting at the Sydney Head Office of Richard Crookes Constructions in person, or via zoom, to explain the terms of the Richard Crookes Construction Pty. Limited/Construction Worker Employee Agreement 2020-2023, and the effect of those terms. See attached and marked “G”.

• 5 November 2020, All Employees attended the Formal Discussion meeting in person, or via zoom, and were issued the following documents by hand on 5 November 2020 (Attached and marked “B”, “D”, and “F”:

• The How and When for Approval Form – Enterprise Agreement

• A clean copy of the Richard Crookes Construction Pty. Limited / Construction Worker Employee Agreement 2020 – 2023

• A pdf document setting out the material incorporated by reference in the Richard Crookes Construction Pty. Limited / Construction Worker Employee Agreement 2020 – 2023, and providing web links to such material as applicable

• 5 November 2020, At the Formal Discussion Meeting, a PowerPoint presentation was presented to Employees, which explained the terms of the Richard Crookes Construction Pty. Limited / Construction Worker Employee Agreement 2020 – 2023, and the effect of those terms. Attached and marked “H”.

• 5 November 2020, At the Formal Discussion Meeting, the terms of the Richard Crookes Construction Pty. Limited / Construction Worker Employee Agreement 2020 – 2023, and the effect of those terms, were explained by comparing the Richard Crookes Construction Pty. Limited / Construction Worker Employee Agreement 2020 – 2023 against the Richard Crookes Construction Pty. Limited / CFMEU Collective Agreement 2017-2018 (AG2018/593). Attached and marked “E” setting out the marked up changes.

• 5 November 2020, At the Formal Discussion Meeting, a question and answer session was conducted to give Employees an opportunity to clarify any terms of the Richard Crookes Construction Pty. Limited / Construction Worker Employee Agreement 2020 – 2023, or the effect of any terms. The terms of the Richard Crookes Construction Pty. Limited / Construction Worker Employee Agreement 2020 – 2023, and the effect of those terms were explained successfully to Employees. Attached and marked “H”.”

[5] At the time of lodgement, other than the simple assertion that “the effect of those terms were successfully explained to Employees”, no other information was provided about what was explained. Self-serving statements by an employer about compliance are not sufficient to discharge the proof required in relation to s.180(5) of the FW Act.

[6] An administrative legislative assessment of the Agreement, including compliance with the necessary pre-approval steps, was conducted. In accordance with my usual practice, on 1 December 2020, I sent a copy of the Legislative Checklist to the MBA/Employer. The Legislative Checklist noted that,

Agreement explained: The employer has indicated that employees were invited to attend a meeting on 5 November 2020 to explain the terms and effects of the terms of the agreement to them. A Power point presentation was presented to explain the terms and effects. This has been provided and appears to explain the background to the agreement and the pay increase. The proposed agreement was compared to the previous agreement. A question and answer session was conducted after the meeting. Please provide further information/submissions regarding how the terms and effects of the Agreement were explained to employees and what was told to employees to be satisfied s.180(5) were met

[7] Section 180(5) provides that,

The employer must take all reasonable steps to ensure that:

(a) the terms of the agreement, and the effect of those terms, are explained to the relevant employees; and

(b) the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.

(my emphasis)

[8] Having regard to the decision of the Federal Court of Australia (Flick J) in Construction, Forestry, Mining and Energy Union v One Key Workforce Pty Ltd 2 compliance with s.180(5) of the FW Act in an essential pre-approval requirement. His Honour held that,

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

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

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

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

[9] An appeal against the decision of Flick J was dismissed by the Full Federal Court of Australia (Bromberg, Katzman and O’Callaghan JJ) in One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union. 3 The Full Court observed that,

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

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

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

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

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

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

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

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

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

1. the steps taken were reasonable in the circumstances; and

2. these were all the reasonable steps that should have been taken in the circumstances. 4

[11] The task before the Commission “requires attention to the content of the explanation given.” 5

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

The hearing

[13] The matter was heard on 5 February 2021. The Applicant was granted permission to be represented pursuant to s.596 of the FW Act by Mr R Groot of Senior Counsel and with him Mr B Rauf of Counsel, instructed by Mr B Austin of Oakes Austin Lawyers. 6 .7 I also determined that I would be assisted by the participation of the CFMMEU. I granted the Union a limited opportunity to participate in the proceedings pursuant to s.590 of the FW Act.8 The Union was represented by Mr S Crawshaw of Senior Counsel.

[14] In coming to my decision, I have had regard to all of the material filed in this matter, including the following documents:

EXHIBIT	DOCUMENT TITLE
1	Form 16 dated 27 November 2020
2	Form 17 dated 26 November 2020
3	Notice of Representational Rights (undated)
4	Notice of Appointment Master Builders Australia dated 11 February 2020
5	Notice of Appointment of bargaining representatives 25 and 26 February 2020
6	Notice of how and when approval will take place (undated)
7	Track changes agreement (undated)
8	Statutory declaration of Tony Grippi dated 24 December 2020
9	s.190 Undertakings dated 24 December 2020
10	Amended Richard Crookes Construction Pty. Limited / Construction Worker Employee Agreement 2020-2023 (as filed on 24 December 2020)
11	Applicant’s outline of submissions dated 15 January 2021
12	CFMMEU’s outline of submissions dated 22 January 2021
13	Statement of Colm Munroe dated 18 January 2021
14	Applicant’s outline of submissions in reply dated 29 January 2021
15	Statement of Cameron Walker dated 29 January 2021
16	Statement of Jamie Crookes dated 29 January 2021
17	Statement of Stephen Brennen dated 29 January 2021
18	Statement of Tony Grippi dated 29 January 2021
19	Attachment A to statement: Richard Crookes Construction Pty Limited / CFMEU Collective Agreement 2017-2018
20	Attachment B to statement: Draft CFMMEU Agreement Version 2
21	Richard Crookes Construction Worker Employee Agreement 2020-2023 (as submitted on application)
22	Fair Work Commission’s Agreement Checklist (undated)
23	CFMMEU’s general submissions dated 5 February 2021
24	CFMMEU’s list of authorities (undated)

Witness evidence provided

[15] When the application for approval of the agreement was lodged, the Employer filed a Form F17 Employer’s declaration in support of the application. The Employer was asked to explain what steps were taken to explain the terms of the Agreement and the effect of those terms. As stated above, the explanation was inadequate.

[16] On 24 December 2020, the Employer’s General Manager – Operations, Tony Grippi, filed a Statutory Declaration in support of the application. Mr Grippi gave the following evidence:

1. I make this declaration further to the Form F17 - Employer ' s declaration in support of an application for approval of an enterprise agreement signed by me dated 26 November 2020 (Form F17) and lodged with the Fair Work Commission on 27 November 2020 in support of the application for approval of the Richard Crookes Construction Pty. Limited / Construction Worker Employee Agreement 2020 - 2023 (AG2020/3634) (Proposed Agreement).

2. Further to my responses to item 21 in the Form Fl 7, on 5 November 2020, RCC held a formal discussion meeting (Discussion Meeting) to discuss the terms of the Proposed Agreement and the effect of the terms of the Proposed Agreement with employees to be covered by the Proposed Agreement (Employees). All Employees attended the Discussion Meeting in person, or via Zoom.

3. At the Discussion meeting:

a) Cameron Waller, Construction Manager, RCC , projected a copy of the Proposed Agreement on a presentation screen , which highlighted the changes to the Proposed Agreement in mark-up from the Richard Crookes Construction Pty. Limited / CFMEU Collective Agreement 2017-2018 (AG2018/593) (Existing Agreement). The mark-up copy of the Proposed Agreement is included as Attachment " E" of the Form Fl 7.

b) Mr Waller and I explained that the Proposed Agreement was substantially similar to the Existing Agreement and that where there was no change to a term of the Existing Agreement in the Proposed Agreement, the effect would be that the status quo would be maintained in the Proposed Agreement.

c) Mr Waller and I then explained the marked-up changes by conducting a line-by-line and clause-by-clause explanation of the terms of the Proposed Agreement, and the effect of the terms of the Proposed Agreement with Employees . We identified each of the terms that were different between the Existing Agreement and the Proposed Agreement , and explained the effect with direct reference to the relevant clause as projected on the presentation screen.

d) At the conclusion of Mr Waller and my review and explanation of the Proposed Agreement, we conducted a question and answer session with the Employees, and answered every question asked. The Employees appeared satisfied with Mr Waller and my explanation and all answers to their questions .

[17] On 29 January 2021, the Applicant filed a further statement of Mr Grippi in support of the approval of the Agreement. He sought to address concerns raised by the CFMMEU. Mr Grippi:

a) set out the background to bargaining.

b) explained his own background and experience.

c) noted that all employees were covered by the 2017-2018 Agreement.

d) expressed the view that “the CWs were more informed than ever before and voted knowing all the information they required to make a informed vote on the RCC Proposed Agreement”.

e) set out the steps and interactions with employees prior to the 5 November 2020 meeting, including a meeting on 24 August 2020 to discuss RCC’s first draft proposed enterprise agreement bargaining agreement, attended by all CWs in person or via Zoom, along with representatives from CFMMEU and legal representatives from Squire Patton Boggs. A further meeting was held on 17 September 2020 to “explain to CWs the changes from the Expired EBA contained in the RCC EBA Proposal Version 4 and the changes that had been made from earlier versions during the negotiation period in the previous month.” and

f) set out what was discussed at the meeting on 5 November 2020. He said that the effect of the terms was explained with a PowerPoint presentation which was conducted by a page turn clause-by clause review of the tracked changes copy of the RCC Proposed Agreement (Attachment “E” to the Form 17) that identified differences between that Agreement and the Expired EBA. A copy of the document was projected onto a screen.

[18] On this date the Applicant also filed a statement of Mr Waller, Construction Manager of RCC dated 29 January 2021. This also outlined what was explained at the meeting on 5 November 2020.

[19] I deal with both of the explanations given below.

What explanations were given to the employees?

[20] Accepting as evidence of what was explained to the employees, the contents of the:

a) Form F17;

b) Statement of Mr Grippi dated 24 December 2020;

c) Statement of Mr Grippi dated 29 January 2021; and

d) Statement of Mr Waller dated 29 January 2021.

I make the following findings:

Clause	What changed from 2017-2018 Agreement?	What was explained to the employees?	What is the effect of the clause and was it explained?
1. Title	New Title of the Agreement	All changes to this page are removing the CFMEU from the document and clarifying who the parties to the document are.	Inconsequential change. Obvious effect (it changes the name of the Agreement). Not a material change. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)).
2. Definitions	The definition of Agreement	All changes to this page are removing the CFMEU from the document and clarifying who the parties to the document are.	Inconsequential change. Obvious effect. Not a material change. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)).
3. Parties	The CFMMEU no longer listed as a party.	"You will note that the CFMMEU logo has been removed and the reference to CFMMEU and union delegate throughout the document has been removed their call as mentioned earlier, not ours. There are several locations as you will see in the document where reference to union and union delegate has been removed, and where Union or Delegate has been removed but employee representative retained. This means that that there will not be union delegates moving forward, however you will still be able to appoint a representative to represent your interests.”	Not an inconsequential change. The effect of the CFMMEU not having the agreement apply to it is that it could not commence a civil penalty proceeding in respect of a breach of the Agreement (see s.539, Item 4, FW Act). It could have in respect of the 2017-2018 Agreement. This was not explained to the employees.
5. Duration of Agreement	New nominal expiry date (NED) of 31 December 2023.	No evidence.	Not an inconsequential change. The effect of a NED is that it makes “unprotected” any industrial action engaged in during the life of the Agreement (see ss. 408, 409). Industrial action that is not protected industrial action can be the subject of a stop order by the Commission (see s.418). This was not explained to the employees.
8. No extra claims	8.1 and 8.2 new clause 8.1 “The Employees covered by this Agreement undertake that they will not pursue any further claims against the Company during its period of operation. 8.2 Notwithstanding the provisions of this clause, any party to this Agreement may apply to the FWC to vary the Agreement in accordance with the relevant provisions of the FW Act. However, such variations shall be compliant with the Building Code 2016. 8.3 If, subsequent to approval of this Agreement by the FWC, any clause of this Agreement is deemed inconsistent with the Building Code 2016, the parties agree to vary the Agreement pursuant to the FW Act to address any inconsistency.”	"The addition of this clause prevents you from making any additional claims for the duration of the agreement. The reference to the Building Code needed to be inserted given RCC are a code compliant business, which means that if there was found to be an inconsistency, we need to work together to address that inconsistency to ensure we remain compliant. This clause does not allow RCC to change the agreement without your agreement and approval from the Fair Work Commission. " “The clause states that any party to the agreement may apply to the FWC to vary the agreement. That means any one of you or you as a collective can apply to the FWC to vary the agreement just as the RCC management can. The operative words here are apply to the FWC. For a variation to the agreement to succeed, firstly the variation must be voted on by the parties to the agreement and the proper FWC procedures followed which means we have to do exactly what we are doing now, get you all together, explain the why and how of the proposed variation and then you get to vote on it and if you don't agree with it you can vote it down. Then the FWC must approve of the variation. 9 This clause does allow the agreement to be varied to ensure that the agreement is always compliant with the 2016 building code. Again, RCC management can't just vary the agreement without discussing it with you, however if an inconsistency with the code is found we have agreed, that is, you the CWs and RCC management, have agreed that we will vary the agreement to make the agreement code compliant. This would usually have to do with how a particular clause is drafted, so the variation would most likely be changing a word or two in a particular clause. It is important that the EBA is code compliant as this allows us to tender on Commonwealth and State government work. If the agreement is found not to be code compliant, we will be excluded from tender lists and right now State Government work makes up around 40% of our business, so you can see why it is important that the agreement remains code compliant."	Putting aside the fact that the purported effect of the clause is problematic (it appears to seek to bind employees into varying the Agreement if it becomes inconsistent with the Building Code 2016), there is no evidence that the explanation given to employees explained the Building Code 2016; what it is, why it is important, why it might be desirable to amend an agreement in the future. Employees cannot be compelled to vary an agreement to comply with the Building Code 2016 as sub-para (c) suggests. The explanation given does not properly clarify the operation of the clause. There is little semblance between what the clause purports to say and what was explained. The explanation was inadequate.
11.1(l) Safety issues	New sub-clause: “In the interests of safety best practice site safety inductions will be conducted on-site and communicated face to face in paid ordinary hours. The company will not accept online site safety induction processes.”	''This addition had been included in the CFMEU's last proposal and we agreed to include it as it is a reasonable proposal".	The clause gives rise to an entitlement in favour of employees. It is a beneficial term. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)). Explanation is reasonable.
11.2 Protective Clothing	Replacement shoe limit of $200 annually with a receipt.	This clause simply confirms that we will reimburse the cost of boots up to $200 upon production of a receipt."	The clause gives rise to an entitlement in favour of employees. It is a beneficial term. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)). Explanation is reasonable.
11.2(m)	Removal of reference to the CFMMEU	“This again is removing a reference to the union as per Darren's request and as you can see it's really the same clause without reference to the union.”	Obvious effect. Explanation is reasonable.
11.3(a) Inclement weather	Inclusion “air pollution.”	'The bush fires of last summer had generated this clarification and we generally agreed with the CFMEU proposed wording that air pollution be included provided it is deemed hazardous by relevant health authorities." “This has come out of the bush fires and the confusion around whether the ash in the air was a weather event or something else, so going forward if we have another fire season like the one that's just happened or some other event that triggers air pollution such as a dust storm, then this will be deemed inclement weather and we will be governed by the regulatory authority which will most likely be the health department so if they deem it hazardous then the inclement”.	The clause gives rise to an entitlement in favour of employees. It is a beneficial term. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)). Explanation is reasonable.
11.5 Mental Health and Wellbeing	New clause, a) “The Company and Employees recognise that mental health issues have a significant impact on health and safety. Suicide rates in the construction industry are higher than average and is best practice for companies and employees to work to tackle the issue of mental health in the workplace. b) The Company and employees also recognise that following a serious incident personnel may suffer trauma. c) In order to improve mental health outcomes, the Company and the Employees agree to support the Found Blue program (in addition to any other organisations and programs supported by the Company) tailored to the building construction and allied industries and to utilise the related services available in managing health and safety issues.	"Whilst we largely agree with the proposed wording in the CFMEU's last proposal, the RCC provision went further given its more extensive existing health and wellbeing program which utilises the services of several support organisations." “All about mental health, this is another initiative from the CFMEU that we agree is a good thing so we think it should be added to the agreement, the only difference is that the CFMEU only referred to the Foundation Blue programme whereas RCC already support Mates in Construction, so we will continue to support Mates as well as Foundo Blue.”	It is unclear what it means to oblige Employees “to support the Fondo Blue program.” It is doubtful the clause has any substantive operative effect. It is not clear what actual work the clause has to do in the enterprise agreement. In any case it is an inconsequential change and not material. Likely gives rise to no obligation on behalf of employees. Not a material change. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i).
12.3 Site Allowance	New subclause b) This allowance will be paid weekly for each hour work, attracting no premium of penalty, and remain in force for the duration of the Agreement. This allowance is not paid to employees when they leave site due to inclement weather.	"This clause simply clarified when site allowance would be paid and that it does not apply when not at work due to inclement weather and has no impact;” "Site allowance new clause (b) added. This is another clause that the union has in their document and we thought it gave the application of site allowance more clarity, so we have included it as per their wording."	Obvious effect. Greater clarity around when Site Allowance will be paid. Explanation is reasonable.
12.6 (b)	An increase in the cost of ‘Workcover Top-up’ and ‘income Protection’ insurance policy from $104.20 to $110.40 per employee per month from 1 February 2020.	"The quoted rate simply confirms what we are currently paying for Top-Up insurance and has no impact." "This is just the agreed increase and amending the date."	The clause gives rise to an entitlement in favour of employees. It is a beneficial term. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)). Explanation is reasonable.
13. Terms of Employment	Removal of reference to the Union and Union Delegate throughout the clause.	“Are just removing reference to the union as requested by Darren Greenfield".	Obvious effect. Explanation is reasonable.
16 (f) Training and related matters	Silica added to asbestos and a change from six month to three months for training to take place in relation to this.	"We have added silica awareness training as proposed by the CFMEU as this is a good safety awareness initiative." ''Adding in Silica awareness training that some of you have already had. We agree with the union that this is necessary so this is ensuring it happens.”	The clause gives rise to an entitlement in favour of employees. It is a beneficial term. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i) Explanation is reasonable.
16 (h) Workplace Impairment Training/Procedure	Training in relation to impairment to be renewed every five years rather than at least once a year	“Just adding another change made by the CFMEU."	Inconsequential change. Obvious effect. Not a material change. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)). Explanation is reasonable.
18.3 Annual Leave upon termination	Change from 3.08 to 2.77 hrs per week	“This change has been made because you now work a 36 hr week and the old figure is based on a 40hr week."	Obvious effect. Greater clarity around Annual Leave entitlement. Explanation is reasonable.
25 Effective work organisation	Removal of Crane crews	“This is the list of duties that we have agreed will be carried out by you, the RCC CW's and as we don't employ crane crews and have no intention of doing so we have removed this from the list.”	Obvious effect. Explanation is reasonable.
26. Security of Employment	Removal of subclause c: c) As soon as practicable after being awarded a contract, the Company shall inform the Union via its site delegate whole the subcontracts are and what work will be carried ut prior to their arrival on the job. The Company is not required to consult with or seek the approval of the Parties about the engagement of subcontractors.	“This clause has been removed for two reasons firstly to get rid of the reference to the union and secondly we do not need and will not be asking permission from the union as to who we subcontract to. We need to be able to make the best commercial decision for the company to ensure we remain competitive.”	Obvious effect. Explanation is reasonable.
28. Dispute Resolution Procedure	Removal of reference to job delegate and the Union	“Just getting rid of reference to the union as requested.”	Obvious effect. Explanation is reasonable.
29.3 Overtime	In subclause (c) removal of refence ‘to from 1 February 2018’	“The dates throughout the document have been updated to reflect current timing given the previous dates are from the old agreement."	Obvious effect. Explanation is reasonable.
29.4 Overtime on Saturdays and Sundays	Removal of clause: Overtime worked on a Saturday must be paid for at the rate of time and one half ordinary time rates for the first two hours and double ordinary time rates thereafter. Employees required to work on a Saturday must be afforded a minimum 3 hours work, or be paid as if for 3 hours at the aforementioned overtime rates. Overtime worked on a Sunday must be paid for at the rate of double ordinary time rates. Employees required to work on a Sunday must be afforded a minimum 4 hours work, or be paid as if for 4 hours at the aforementioned overtime rates..	"The clause was removed given it is a hangover from the last agreement given double time has applied to all 0/T since Feb 2018 and therefore has no impact." “We are removing reference to time and a half as all overtime is now at double time so there is no need to differentiate between Saturday or Sunday.”	The removal of this clause also removes reference to the requirement for RCC to afford an employee required to work on Saturday or Sunday a minimum of 3 or 4 hours work respectively or the right to be paid for those hours. Does not appear to have been explained.
31. Employee Representation	Removal of Clause 31.1 ‘Union Delegate Rights’ and removal of reference to Union and delegate through out clause 31	“As you can all see this is removing all reference to the union as Darren Greenfield requested us to do. Again, not our preference but that's what he wanted and more of the same on page 43 and again on page 44 and 45 did anyone want to discuss these changes, no one, okay."	Obvious effect. Explanation is reasonable.
31.3 (b) Employee Representative Facilities	Removal of reference to Union delegate and change from ‘ the Company shall provide an agreed facility, to shall provide access to (a) facility. Removable of the need for this to be a lockable area and rather give access to a space to conduce private meetings.	Mr Grippi outlined: “A general discussion took place regarding whether the words 'a lockable place' should remain and why the words had been changed to a 'private space'. I said: "A private space to conduct meetings was more than sufficient and that if a lockable filing cabinet to secure files was necessary, this could be provided.”	Obvious effect. Explanation is reasonable.
Clause 33 Consultation for the purpose of s 205 of the Fair Work Act	Removal of reference to ‘Union or other representative’ and the ‘Union’ throughout the clause.	“As you can all see this is removing all reference to the union as Darren Greenfield requested us to do. Again, not our preference but that's what he wanted and more of the same on page 43 and again on page 44 and 45 did anyone want to discuss these changes, no one, okay."	Obvious effect. Explanation is reasonable.
Appendix B	New rates	Mr Grippi outlined: I highlighted the changes in rates at Appendix B and said that I would summarise the wages increase in the next slide. "The changes to the rates reflect what we are offering as increases over the next 3 years that is 2% increase in the first 12 months, 2.5% increase in the second year and 3% increase in the 3rd year. These increases commence once the agreement has been ratified by Fair Work."	Obvious effect. The clause gives rise to an entitlement in favour of employees. It is a beneficial term. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)). Explanation is reasonable.
Appendix C1	Inclusion of: ‘In recognition of the Companies regional presence, productivity will only apply to projects above $50m outside the Cumberland region’ An update in the table which depicts the site allowance.	Mr Grippi outlined: At Appendix C1 Extra Provisions and Benefits, I highlighted the changes in productivity on regional projects and the new Site Allowance increases. I also said that the Superannuation would remain the same as per every other member of RCC and Redundancy contributions and Fares would remain the same however meal allowance would increase slightly as noted. 10 Mr Warren outlined: We have added this clause restricting productivity allowance to projects over 50m so we can compete with the companies that only work regionally as a number of these companies don't have EBAs so we struggle to compete. 11 Site allowance: Was introduced to pick up all special allowances from the award to simplify how you blokes and ladies got paid. We have simplified the wording so it is clear that it covers all special rates. And the next clause spells out when the changes in rates will apply from and what the increase are, any questions?" "The next few pages are admin changes to get rid of the old dates associated with super and AC/RT and spell out that these rates remain the same. We have discussed this in previous meetings and you have all seen these amendments in the earlier version of the EBA so there aren't any surprises here.”	Obvious effect. Explanation is reasonable.
Appendix C2	Removal of appendix C2	Mr Grippi outlined: "Appendix C2 has been struck through insofar as it relates to Crane Crews which are not applicable to RCC CWs, however, Workforce Engagement/Communications Meeting clause a) and b) have been added and expanded upon to demonstrate management 's commitment to increase engagement and communication with all RCC CWs across all facets of the business. This is an area we have recently learnt via the recent engagement process that we can do better''	Obvious effect. Explanation is reasonable.
Workforce Engagement: Communication meetings	Inclusion of a new clause: a)It is recognised that from time to time there is a need to provide a forum for discussion and communication of issues that affect Employees. All Employees will be invited to attend four (4) four (4) hourly paid communication meetings per annum. b)These meetings should encourage a forum of open discussion and feedback to the Company and Employees for improvement in all facets of Company operations. These meetings should be conducted in a formal manner with an agenda, minutes and signed attendance register.	“Meeting clause a) and b) have been added and expanded upon to demonstrate management 's commitment to increase engagement and communication with all RCC CWs across all facets of the business”.	Obvious effect. The clause gives rise to an entitlement in favour of employees. It is a beneficial term. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)). Explanation is reasonable.
Appendix D Apprentice rate of Pay	Removal of the entitlement of productive allowance paid to apprentices. Change in the rate of site allowance paid to apprentices.	Mr Grippi outlined: I skimmed through Appendix D - Apprentice Rates of Pay and said: "This does not apply to any of you" 12 Appendix D. 'The next few pages deal with apprentice rates of pay and removes productivity from the EBA for apprentices. This has been an issue we have tried in the past to negotiate with the CFMEU as we need to make the employment of apprentices more in keeping with their skill level and the fact that they are in a training role by doing this we are more likely to employ apprentices going forward."	Obvious effect. Explanation is reasonable.
Appendix E Family Leisure days and public holidays Calendar..	An update of the calendars to include the years 2020-2023	“Pages 73 to 79 set out the RDO calendar for the next three years, and as we have discussed previously, the calendar included in the document retains the flexibility that you have been used to. We will be enforcing the payment of 2 RDO on the shut down Saturdays so that your pay packet is affected by a shut down Saturday, that is you will still receive the equivalent of double time on the shut down Saturdays. This is in answer to the CFMEU claim that CWs miss out on their entitlements when companies go broke and the CWs have large amounts of accrued RDOs. You can still bank up to 6 RDOs a year and add these to annual leave or use them as you accrue them throughout the year.”	Obvious effect. Explanation is reasonable.
Appendix F Counselling and disciplinary procedures/termination of employment	Removal of refence to Union throughout.	“The change here is removing the reference to the CFMEU.”	Obvious effect. Explanation is reasonable.
Appendix H – Drug & alcohol safety rehabilitation program and fitness for work	Removal of refence to Union throughout	“Same again removing the reference to the union.”	Obvious effect. Explanation is reasonable.

[21] The obligation imposed on employers by s.180(5) of the FW Act is of critical importance. It goes to the integrity of the understanding of employees, their vote and the making of the agreement.

[22] In BGC Contracting Pty Ltd 13 Deputy President Gostencnik was concerned (amongst other things) with a replacement enterprise agreement that, unlike the predecessor agreement, incorporated the Black Coal Award. He held,

[86] I accept BGC’s contentions that it should not be required to overcome a “higher than usual bar” in respect of the s.180(5) obligation. But s.180(5) is concerned with the taking of all reasonable steps to explain. How many steps and the content of those steps will necessarily depend on the circumstances. Some employers may, by reasons of the prevailing circumstances, need to take more or fewer steps than other employers with different agreements facing different circumstances. The steps which may in a given case be required by “all reasonable steps” is be assessed by reference to the circumstances of the particular case.

[87] I also accept that compliance with s.180(5) will not always require an employer to identify detriments in an agreement vis-à-vis the reference instrument or for the employer to provide an analysis between an agreement and the relevant reference instrument in circumstances where an existing enterprise agreement, not a reference instrument, applies to the employees in their employment with the employer. But as I have already stated, the question of compliance with s.180(5) is to be judged against the circumstances that pertain at the time at which compliance was required. Section 57 of the Act makes clear that a modern award does not apply to an employee in relation to particular employment at a time when an enterprise agreement applies to the employee in relation to that employment. That was the case at the relevant time that explanations were given vis-à-vis the 2012 Enterprise Agreements and the Mining Award, it would continue to be so in relation to the Agreement, if the Agreement is approved by the Commission. That is the effect of an operative enterprise agreement, save in circumstances where an agreement itself incorporates a modern award, but those terms operate in relation to relevant employees as terms of the agreement. Here there was an additional circumstance, the incorporation of the identified provisions of the Coal Award. These were new provisions to be introduced into the Agreement, which were not part of the 2012 Enterprise Agreements and the Coal Award did not cover the relevant employees.

[88] The relevant employees to be covered by the Agreement were at the relevant time, subject to the application of existing enterprise agreements. Insofar as the terms of the Agreement would have had any relevant effect on existing terms and conditions, it was to displace the application of the terms of the existing agreements. That effect was explained to those employees in considerable detail, in particular as set out in the comparative table.

….

[93] With the exception of the terms of the Coal Award incorporated in the Agreement by Schedule A thereof, I would otherwise be satisfied that BGC took all reasonable steps to explain the terms of the Agreement and their effect to the relevant employees. In my opinion, BGC did this through a combination of communications with relevant employees. The evidence is that it did so during return to site meetings, pre-shift meetings and consultative committee meetings. It did so on an ad hoc basis through discussions with individual employees. It did so through a series of FAQ documents. It also did so by providing to employees the Final Information Pack. This included detailed tables comparing the terms of the Agreement and the 2012 Enterprise Agreements, the Reference Document, and information about the Preserved Conditions Contracts.

[94] Turning then to the issue of the explanation of the incorporated terms of the Coal Award. BGC readily conceded that it did not initiate or publish any explanation about the Agreement as it would apply to employees performing work in black coal mining. 96 It is uncontroversial that no relevant employee was working in black coal mining at the time of the explanations and at the time that employees voted to approve the Agreement. There is also no evidence that the relevant employees had any particular or relevant experience in black coal mining. The distinction BGC sought to make between One Key Workforce (No 1) and the circumstances applicable here, by pointing to the differing “effect” vis-à-vis the reference or existing industrial instruments of the impugned agreement in One Key Workforce (No 1) does not assist it. It was required to take all reasonable steps to explain the effect of the incorporated provisions of the Coal Award, but it took no steps to do so.

[95] BGC contends that as there were no employees employed by it at the relevant time engaged in the black coal mining industry it was reasonable in the circumstances to make available an opportunity for employees to ask questions of management about all matters concerning the Agreement including the terms and effect of those terms as they would apply to employees who might work in the coal mining sector in the future. BGC did explain to employees that it was seeking an Agreement in order that it may remain competitive in the market and to win new work including in coal mining.

[96] Whether the steps taken by an employer to explain the terms of an agreement and the effect of those terms to relevant employees were reasonable steps or were all reasonable steps is, as I have already indicated, to be assessed in the circumstances faced by the employer. Whilst the fact that there were no relevant employees employed by BGC at the relevant time working in black coal mining is a relevant circumstance, the absence of such an employee does not relieve the employer of the obligation to explain to the relevant employees the terms of the agreement and their effect. This is so even if those terms will have no immediate effect upon the relevant employees. Were it otherwise, an employer would only have an obligation to explain the terms of the agreement and their effect to employees insofar as those terms have any application to the relevant employees who are asked to vote to approve the agreement.

[97] Section 180(5) places an obligation on an employer to take all reasonable steps to explain the terms of an agreement and the effect of those terms to relevant employees. It does not delineate between those terms that may have effect on relevant employees and those terms which will have no effect on relevant employees. As I have already noted, the distinction between the effect of the impugned agreement in One Key Workforce (No 1) and this Agreement sought to be made by BGC does not assist it. The explanation given by an employer is one of the vehicles through which an employee becomes informed about the terms of the agreement and is able to then give informed consent, or to use the statutory phrase, to genuinely agree to the agreement. An employee voting to approve the agreement is not asked to vote to approve only those terms and conditions of an agreement which will have application to that employee. The employee and indeed all employees who will be covered by the agreement are asked to vote for or against the totality of the agreement not just aspects of it. It is for this reason that an employer is obliged by s.180(5) to take all reasonable steps to explain the terms of the whole agreement and the effect of those terms to relevant employees.

[98] The view I have expressed above is reinforced by the Full Court’s judgment in One Key Workforce (No 2).

[99] In this case, it is clear that apart from making available the opportunity at various fora to relevant employees to ask questions, BGC took no other material step to explain to relevant employees the terms of the Coal Award which are incorporated in the Agreement by Schedule A or the effect of those terms. The incorporated terms were not trifling, insignificant, or inconsequential so that no or minimal explanation need have been given. These were substantive terms. That the employees were not working in, nor had experience in, black coal mining, meant that a more not less comprehensive, explanation was warranted in the circumstances in order that informed consent might be given. The employer was required to take all reasonable steps to explain these terms and their effect and it did not do so. It took no step. In these circumstances I am not satisfied that the employer has complied with its obligation under s.180(5) of the Act to explain the terms of the Coal Award that are incorporated in the Agreement by Schedule A or the effect of those terms to relevant employees.

[23] That is to say, the non-explanation of the incorporation of the Coal Award (even when voting employees were not covered by it), resulted in the non-approval of the agreement. The matters I have identified have actual relevance to the employee who voted for the Agreement.

[24] In this matter it is relevant context that the Agreement is largely a roll-over agreement with increased benefits. It is also relevant context that the employees are largely long-term employees, likely familiar with previous Agreements.

[25] I accept that the meeting in August and also the page turn exercise, the tracked changes document, PowerPoint presentation and the meeting on 5 November 2020 were all reasonable steps. However, that is not the end of the matter. There were deficiencies in the explanations given.

[26] In the table above I have identified clauses in the Agreement that are not trifling, insignificant, or inconsequential so that no or minimal explanation needed to be given. This is not about requiring a system of perfection. These are substantive terms that required a proper explanation. It would have been reasonable to do so. An omission to explain is of “particular significance in circumstances where there were material differences between” the old and new agreement: see Construction, Forestry, Maritime, Mining and Energy Union v McNab Constructions Pty Ltd. 14 The failure to explain the effect of them means that RCC did not “take all reasonable steps” as required by s.180(5) of the FW Act.

Conclusion

[1] For the reasons set out above:

a) I am not satisfied that RCC took all reasonable steps to explain the terms of the Agreement or the effect of those terms to relevant employees.

b) Consequently, I am not satisfied that the relevant employees genuinely agreed to the Agreement as described in s.188 of the FW Act.

c) Accordingly, I am not satisfied as to the matter in s.186(2)(a) of the FW Act.

[2] In BCG (No 2) 15 the Deputy President held,

[43] The evident purpose of ss.180(2) and (5), as is clear from their inclusion in s.188 and thus s.186(2)(a), is to ensure so far as is practicable that employees who are asked to vote to approve an agreement make an informed choice as to whether or not they will vote to approve the agreement. That is, the choice that an employee makes in deciding whether to cast a vote to approve the agreement is to be informed by, relevantly, having access to the agreement and any material incorporated by reference during the relevant period, and importantly by having the terms of that agreement (including incorporated terms) and their effect explained. The failure to take all reasonable steps vis-a-vis the material incorporated and the explanation of the terms and their effect means that employees who voted to approve the agreement were deprived of the benefit of very important pre-approval steps designed to ensure that relevant employees genuinely agree to the agreement.

[45] An employer cannot know which employees will and which will not vote in the agreement approval process, how employees will vote or the reason employees vote in a particular way. Voting is not compulsory. Thus the preapproval steps play an important role in providing information to employees so that the employees can each choose whether or not to participate in the voting process, and if so whether to vote to approve the agreement. The mischief sought to be overcome is to ensure that employees understand the terms of the agreement as a whole upon which they are asked to vote. This mischief and the concern that employees did not genuinely agree to the Agreement is not overcome or met by accepting the genuine agreement undertaking proffered by BGC, which in essence is about the ongoing application of the Agreement (through a self-imposed restraint on employment) in respect of certain classes of employees and not about the fundamental issue of whether the Agreement was genuinely agreed to by employees covered by it. That a future cohort of voting employees may make an informed choice about varying the Agreement (alone or coupled with a restraint on employment until any future variation takes effect) does not meet the concern that those employees asked to approve the Agreement in June 2016 did not have information designed to enable them to make an informed choice about whether to approve the Agreement.

[3] In the BCG matter the Deputy President allowed the employer an opportunity to offer up undertakings to deal with the genuinely agreed issue. Undertakings were offered, but the Deputy President was ultimately not “persuaded that the genuine agreement undertaking, [met] the concern identified in [his] earlier decision.” 16 The application for approval of the decision was dismissed.

[4] In this matter I have decided not to allow RCC an opportunity to proffer undertakings aimed at curing the genuinely agreed issues. This is because s.180(5) is a pre-approval requirement concerned with ensuring employees have adequate information about the terms of a proposed enterprise agreement to facilitate their genuine agreement in bargaining. I am not satisfied that RCC is capable of retrospectively curing its non-compliance with s.180(5) by proffering an undertaking at the agreement approval stage.

[5] This is not like the situation discussed in the Full Bench decision in Construction, Forestry, Maritime, Mining and Energy Union v Karijini Rail Pty Ltd. 17

[6] I cannot readily envisage an undertaking being proffered to meet the concerns I have raised. I should not engage in the theatre of providing RCC with the opportunity to do so.

[7] In the circumstances, given the conclusions I have reached about the failure of RCC in respect of s.180(5) of the FW Act, the Agreement cannot be approved and the application for its approval is dismissed.

[8] However, it seems to me that the deficiencies I have identified could be remedied quickly if RCC were minded to re-commence the agreement making process. If it decides to do so, and, in the course of doing so, explains the effect of all of the terms of the Agreement, then, when it lodges its application for approval, I would be minded to expedite consideration (and if all issues are addressed pre-emptively, approval) of expedite the same.

COMMISSIONER

Mr R Goot AO SC with Mr Bilal Rauf, , for the Applicant
Mr S Crawshaw SC, for the CFMMEU

Hearing details:

2021,
Sydney (By Microsoft Teams),
5 February.

Printed by authority of the Commonwealth Government Printer

1 AE427567

2 [2017] FCA 1266.

3 [2018] FCAFC 77.

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

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

6 Transcript of Proceedings, PN 1.

7 Transcript of Proceedings, PN 5-6.

8 Ibid, PN 5.

9 Warren para 14 g

10 Grippi 43 aa

11 Warren para 14 cc

12 Grippi para 43 cc

13 [2018] FWC 1466.

14 [2020] FWCFB 5080, [26].

15 [2018] FWC 6936.

16 [2018] FWC 6936, 46.

17 [2020] FWCFB 958 at [107].