McColl's Operations Pty Ltd v Transport Workers' Union of Australia
[2022] FWCFB 212
•22 NOVEMBER 2022
| [2022] FWCFB 212 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.604—Appeal of decision
McColl’s Operations Pty Ltd
v
Transport Workers’ Union of Australia
(C2022/6048)
| ACTING PRESIDENT HATCHER | SYDNEY, 22 NOVEMBER 2022 |
Appeal against decision [2022] FWC 2138 of Commissioner McKinnon at Sydney on 11 August 2022 in matter number AG2022/1596.
Introduction and background
McColl’s Operations Pty Ltd (McColls) has appealed against a decision of Commissioner McKinnon issued on 11 August 2022[1] in which she dismissed McColls’ application for approval of the McColl’s Operations Northern Victoria Farm Milk Collection Agreement 2022-2024 (McColls Agreement). In her decision, the Commissioner concluded that she was not satisfied that the McColls Agreement was genuinely agreed to by the employees covered by it, with the consequence that the agreement did not meet the requirement for approval in s 186(2)(a) of the Fair Work Act 2009 (Cth) (FW Act). McColls contends in its appeal that the Commissioner erred in not considering whether the Agreement was genuinely agreed within the meaning of s 188(2) of the FW Act, and that it was denied procedural fairness. Permission is required for the appeal.
The statutory framework applicable to the decision under appeal is as follows. Section 186(1) of the FW Act provides that the Commission must, on application, approve an enterprise agreement if the requirements of ss 186 and 187 are met. One of those requirements, in s 186(2)(a), is that if the agreement is not a greenfields agreement, the agreement has been “genuinely agreed to” by the employees covered by the agreement. Section 188 explicates when an agreement has been genuinely agreed to for the purpose of s 186(2)(a). The section provides:
188When employees have genuinely agreed to an enterprise agreement
(1) 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.
(2) An enterprise agreement has also been genuinely agreed to by the employees covered by the agreement if the FWC is satisfied that:
(a) the agreement would have been genuinely agreed to within the meaning of subsection (1) but for minor procedural or technical errors made in relation to the requirements mentioned in paragraph (1)(a) or (b), or the requirements of sections 173 and 174 relating to a notice of employee representational rights; and
(b) the employees covered by the agreement were not likely to have been disadvantaged by the errors, in relation to the requirements mentioned in paragraph (1)(a) or (b) or the requirements of sections 173 and 174.
In respect of the element of genuine agreement prescribed by s 188(1)(b), s 182(1) was applicable to the McColls Agreement because it is a single-enterprise agreement that is not a greenfields agreement. Section 182(1) provides:
182 When an enterprise agreement is made
Single‑enterprise agreement that is not a greenfields agreement
(1) If the employees of the employer, or each employer, that will be covered by a proposed single‑enterprise agreement that is not a greenfields agreement have been asked to approve the agreement under subsection 181(1), the agreement is made when a majority of those employees who cast a valid vote approve the agreement.
Section 181(1), which is referenced in the above provision, provides:
181 Employers may request employees to approve a proposed enterprise agreement
(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.
Because of McColls’ contention of a denial of procedural fairness, and to explain its contention that s 188(2) should have been applied in respect of the genuine agreement requirement, it is necessary to set out the factual background in some detail. McColls commenced the bargaining process which led to the McColls Agreement when it issued a notice of employee representatives rights (NERR) pursuant to s 173(1) of the FW Act on 10 September 2019. The NERR identified the coverage of the proposed agreement as “employees that are employed from Farm Milk Collection in Tongala, Cobram, Northern Victoria and Wagga Wagga”. A protracted period of bargaining then followed. The Transport Workers’ Union of Australia (TWU) was the only employee bargaining representative which participated in bargaining. McColls put proposed enterprise agreements to a vote of employees pursuant to s 181(1) on five occasions (12 December 2019, 31 March 2020, 22 May 2020, 26 November 2021 and 18 March 2022), but on each occasion failed to obtain employee approval.
On 1 February 2022, McColls completed the purchase of the dairy division of Peter Stoitse Transport (PST). In doing so, it acquired a new site, used for the business of farm milk collection, located at Orrvale within the city of Greater Shepparton in Victoria. The former employees of PST at this site became employees of McColls upon completion of the sale. Pre-existing McColls employees who had previously been located at another site in Shepparton transferred to the Orrvale site at this point.
Shortly before the sale, PST had made an enterprise agreement with its milk division employees, the Peter Stoitse Transport Milk Enterprise Agreement 2021 (PST Agreement), which, relevantly, covered the PST employees at the Orrvale site. This agreement took effect on 7 December 2021 and has a nominal expiry date of 1 July 2024.
On 9 May 2022, McColls made a request for employees to vote on the Agreement. Clause 1.2 of the Agreement provides for its coverage in the following terms:
1.2 PARTIES BOUND
This Agreement is binding on McColl’s Operations Pty Ltd and all current and future Employees whose base depots are in Tongala, Cobram, Shepparton and Wagga Wagga, whose Divisional alignment is McColl’s Dairy Division, and who perform farm milk collection and other transport services as classified within the Road Transport and Distribution Award 2020 and the Road Transport (Long Distance Operations) Award 2020.
It is not in dispute that the employees at the Orrvale site are covered by the Agreement by virtue of the reference to “base depots… in… Shepparton” in the above provision. This includes the former PST employees at the site, notwithstanding that the PST Agreement transferred to McColls and continues to apply to the former PST employees by operation of Div 2 of Pt 2-8 of the FW Act. As the Commissioner adverted to in her decision by reference to s 58 of the FW Act,[2] and is not contested in the appeal, although only one enterprise agreement can apply to an employee at a particular time, an employee may be covered by more than one agreement at a time. Because the former PST employees at the Orrvale site were covered by the proposed McColls Agreement, they should have been included in any request to vote to approve the agreement made pursuant to s 181(1). That is accepted by McColls in the appeal (although not at first instance).
It appears however that when McColls made its request for employees at the four sites covered by the McColls Agreement to vote to approve it, it excluded the former PST employees from the request. The results of the vote were declared on 10 May 2022 as follows:
Total eligible voters: 86
Total voted:59
Total did not vote: 27
Yes votes:45
No votes:14
On the basis that a majority of those who voted approved the McColls Agreement, McColls lodged its application for the Commission to approve the agreement on 23 May 2022. The application was accompanied by a Form F17 statutory declaration made by Ms Freya Fidge, McColls’ Manager – Corporate Development. In that declaration, in respect of the question as to whether the McColls Agreement covered all of McColls’ employees, Ms Fidge said:
“McColl’s Operations operates throughout Australia carrying Bulk Food Grade, Farm Milk and Bulk Chemical products. This agreement only covers the Employees whose base depots are in Tongala, Cobram, Shepparton and Wagga Wagga, whose Divisional alignment is McColl’s Dairy Division, and who perform farm milk collection and other transport services. McColl’s employees in other part of Australia are covered by other agreements.”
Elsewhere in her declaration, Ms Fidge set out the steps taken by McColls to comply with the “pre-approval steps” prescribed in the FW Act. This relevantly included that:
·on 29 April 2022, copies of the proposed agreement were made available in lunchrooms and at relevant depots in Wagga, Cobram, Shepparton and Tongala; and
·on 5 May 2022, an on-site meeting was conducted at Shepparton to explain the terms of the agreement.
On 2 June 2022, the Commissioner sent an email to McColls and the TWU raising a number of issues which she had identified concerning whether the McColls Agreement complied with the requirements for approval in the FW Act. The email did not raise the exclusion of the former PST employees from the voting cohort for the Agreement (because McColls had not yet disclosed this), but it did point out the difference between the proposed coverage of the agreement as described in the NERR and the actual coverage in clause 1.2 of the McColls Agreement and stated: “Although Shepparton is located in Northern Victoria, it is not clear whether this is the only work site in the region. Please provide more information about how all relevant employees were provided with the NERR as required”. Towards the end of the email, in a section explaining how the identified concerns might be resolved, the email stated:
“Correcting errors and waiving technical non-compliance
Under section 188(2) of the Fair Work Act 2009 (the Act), the Commission can waive minor procedural or technical errors in relation to the steps required to ensure that an Agreement has been genuinely agreed or the issue of the notice of employee representational rights, as long as employees were not likely to have been disadvantaged by the errors.
Under section 586 of the Act, the Commission may allow a correction or amendment of any application or other document relating to a matter before it on any terms it considers appropriate or waive an irregularity in the form or manner in which an application is made.
If your application is affected by an error of the kind described above, you can apply in writing for the issue to be dealt with under the relevant section of the Act. If you are seeking to correct the content of a document filed with your application (for example, to correct an issue with the Agreement’s signature page), you should provide a replacement page with your application so that it can be included in any document published by the Commission.”
On 3 June 2022, Ms Fidge sent an email to the Commissioner’s chambers responding to the identified concerns. In relation the matter concerning the different description of coverage in the NERR and in clause 1.6 of the McColls Agreement, the email simply stated:
“Employees were provided with the NOERR in 2019 and the vote occurred in 2022, and during that time the Shepparton site was acquired. Could we please discuss your specific concerns in relation to this matter, thank you.”
Pursuant to a request made by McColls, the Commissioner conducted a short hearing by video link in relation to the matter on 14 June 2022. McColls (represented by Ms Fidge) and the TWU (represented by two officials) appeared at the hearing. The Commissioner went through the issues identified in the 2 June 2022 email. The following exchange occurred concerning the issue of coverage:
“THE COMMISSIONER: Okay. Now, what happened then was that the company bought the Shepparton facility.
MS FIDGE: So in September 2019 the intent was to negotiate the new agreement. This is actually before I commenced with McColl’s. In early 2020 there was a vote - sorry, I believe the vote actually was tabled in late 2019, which was unsuccessful. When we returned to the table in early 2020 COVID followed shortly after and we sort of agreed to just pause those negotiations at that point in time. During that period where we recommenced negotiations genuinely in good faith in 2021 throughout that year we’ve obviously had various stop starts in that period as well. But when we finalised the document in 2022 we updated it to include Shepparton being a new depot since we acquired the Peter Stoitse business, which wasn’t on the radar when the notice of rep rights was actually issued.
THE COMMISSIONER: Okay. So when did you acquire the Shepparton site?
MS FIDGE: Technically 1 February 2022.
THE COMMISSIONER: Okay. As a result of taking over that site did you take on employees from that site?
MS FIDGE: We have taken on employees from that site, but they are still covered by the Peter Stoitse agreement.
THE COMMISSIONER: The way the agreement is written it seems to suggest that they will also become covered by this agreement. Is that your understanding?
MS FIDGE: That would be our intent.
THE COMMISSIONER: Okay. So did you give a notice of representational rights to those employees in relation to this agreement?
MS FIDGE: No, we didn’t.
THE COMMISSIONER: And did they participate in the process at all?
MS FIDGE: No, they didn’t.
THE COMMISSIONER: Okay. So I think that’s a pretty big problem, Ms Fidge, with the agreement application. So the case law suggests that - well, not suggests, establishes that when the scope of a bargain is expanded there’s a new notification time and therefore a new obligation to issue the notice of representational rights, and what seems to have happened here is that that didn’t happen, and as a result some of the employees who will be covered by this agreement didn’t have an opportunity to have their say. So I don’t know that I am going to be able to approve the agreement with those facts. So it might be something that you want to think about, whether you want me to go ahead and decide the application I can do that, or you can withdraw the application and recommence the voting process is another option to you, or you can seek a period to get some advice, that’s also fine, but it’s an important issue that all relevant employees have an opportunity to vote, and here not for any ill intent, but just because of logistical issues probably a group seems to have been left out.[3]
(underlining added)
In response to a submission from Ms Fidge that the PST Agreement still applied to the ex-PST employees, the Commissioner said that this was a different issue, and went on to say:
“So it might be best that if you want to take some time to have a look into that you do so before making a decision about how to proceed, but effectively my understanding is that because the agreement is expressed to cover the Shepparton group then they will be covered by the agreement and therefore have an interest in having a say on whether it’s approved or not.”[4]
(underlining added)
The hearing ended on the basis that McColls would consider its position and then provide advice to the Commission. McColls evidently decided to press on with its application since, on 17 June 2022, McColls provided by email a more comprehensive response to the Commission’s 2 June 2022 email. In relation to the coverage issue, the email stated:
“• This Agreement is binding on McColl’s Operations Pty Ltd and all current and future Employees whose base depots are in Tongala, Cobram, Shepparton and Wagga Wagga, whose Divisional alignment is McColl’s Dairy Division, and who perform farm milk collection and other transport services as classified within the Road Transport and Distribution Award 2020 and the Road Transport (Long Distance Operations) Award 2020.
• McColl’s Dairy Division in Northern Victoria includes work sites in Tongala, Cobram, Shepparton and Wagga Wagga.
• All employees covered by the Agreement were given the NERR and were given with the opportunity to vote. This included the 9 employees that are covered by the Agreement and based at Shepparton.”
The Commissioner conducted a further hearing on 27 June 2022. Mr Peter Lawry, McColl’s Chief People Officer, appeared together with Ms Fidge for McColls. The Commissioner raised the issue concerning the Shepparton employees again, saying:
“THE COMMISSIONER: Okay. Now, I just need to ask you about the coverage issue with Shepparton as well, because I am getting different information about what happened with the Shepparton site and the Shepparton employees. In our last discussion at the hearing I was told that Shepparton employees did not receive the notice of employee representational rights. I have now got two different pieces of correspondence. One says they all got it and the other says six of the nine got it. And I have also got the question about, well how can employees in Shepparton have got the notice if it was issued in 2019…”[5]
In response, Ms Fidge on behalf of McColls said:
“MS FIDGE: Yes. So the response about Shepparton employees was about a group of employees who were employed by McColl’s on 1 February as a result of transfer of business. Those employees are continuing to operate under their industrial agreement, or instrument rather that transferred with them as part of that process. So they weren’t provide[d] with the notice of representational rights or eligible to vote. So apologies for that on the last call.”[6]
The Commissioner then requested that McColls provide more documentation about what happened with the Shepparton employees, saying:
“THE COMMISSIONER: …but I would like to understand the facts in relation to the Shepparton group; who knew what when, what happened with whom. You can give me whatever documents you have. You might have an email that you sent to employees with the names. You can give me a list of the employee[s’] name[s]. You can give me correspondence that you sent if you’ve got any. You can give me a printout from the payroll system that shows who’s employed there. Whatever you’ve got to help me understand what happened in relation to the Shepparton employees, and whether or not the notice requirements were met for those employees.”[7]
The Commissioner later also said:
“THE COMMISSIONER: Okay. So just be aware that there’s a distinction in the Act between who’s covered by an agreement and the people to whom an agreement applies, and just because the transferring employees were not going to have your agreement apply to them straight away because they were covered by the transferrable instrument, that doesn’t mean they weren’t covered by your agreement, because they are covered by your agreement because it’s expressed to cover employees in northern Victoria. So it’s possible I think in this case that those employees were not included in the vote.”[8]
A TWU representative, Mr Coghill, then alleged that he had been advised by employees at Shepparton covered by the McColls Agreement that they had been told that, once the agreement was approved, they would “automatically come across to the McColl’s agreement”. McColls responded that, while this was its objective, there was a process that needed to be followed. Mr Lawry said:
“MR LAWRY: Yes, I do. Well, it’s not - anyway I guess our legal advice is that there’s quite a process to go through, and that with the transferred instrument we now read where the company would have been Peter Stoitse, that now gets read as McColl’s into that, and that’s actually what applies to that workforce. And then those that are covered under the McColl’s EBA they are covered under that, and so there is actually two agreements that will be existing on site until we go through a process with the employees to actually merge into the one McColl’s piece, but essentially it is at the moment. Our understanding and our legal advice is that there are two EBAs in existence to cover two sets of employees.”[9]
(underlining added)
The following exchange subsequently occurred:
“MR COGHILL: Sorry, Commissioner, just a little bit further to the comments made by Mr Lawry, the employees at Shepparton have advised to us that they were advised by the company that they would be covered by this agreement should it be approved, and that they would automatically be transferred across. Now, there seems to be a large confusion for these employees at Shepparton, because a lot of them were also provided with documentations around the voting process, and in the voting process of the agreement that’s before you today. So there was so much confusion. At the end of the day, Commissioner, we don’t know who actually voted over at Shepparton and who wasn’t voting, and it’s just a mess, and if I was the employee there I wouldn’t know what I’m doing.
THE COMMISSIONER: Yes. I think because of the Shepparton situation I’m a bit concerned about whether the various requirements have been met. It sounds like the company’s got some advice about these issues. I don’t need you to give me your advice, I would never ask you to do that, but what I would ask you to do is write me a submission about why the Shepparton situation is no impediment to approval of the agreement, covering off on firstly how the notice of rep rights issue was dealt with. So when was the notification time and who got the notice and how that worked in relation to the Shepparton employees. And secondly how the Shepparton employees were involved in the voting process, if at all, and how that worked through with the various provisions of the Act, noting in particular the coverage rules in the Act and section 58. Probably because you’ve got that legal advice you can sort of use that as a basis for something that you can put together to help me see what’s happening there and how it works. So if you can do that for me I think that will help me understand better the situation as to Shepparton, and some documentary evidence would be helpful.”[10]
(underlining added)
Mr Lawry undertook to provide a response, but noted that McColls had been acting on the basis of its legal advice.[11]
On 6 July 2022, McColls sent by email a submission to the effect that the former PST employees at Shepparton were not eligible to vote on the McColls Agreement because the PST Agreement continued to apply to them. This submission was articulated by reference to various provisions of the FW Act. In a further submission sent to the Commission on 7 July 2022, McColls set out at length the process by which it provided employees with the NERR and conducted the vote. In this further submission, McColls contended that it had provided the NERR to a total of six employees located at Shepparton on 10 September 2019, and had provided it to a further three employees who subsequently commenced at Shepparton.
On 14 July 2022, the TWU filed a submission in response in which it contended, among other things, that:
·when the NERR was provided to employees in September 2019, McColls did not have a depot in Shepparton;
·as at 1 February 2022, there were six employees at Shepparton “that were to be covered by this Agreement”; and
·the NERR was defective in that it referred to Northern Victoria as opposed to the exact depots, and there might be additional depots in that area, for example at Bendigo.
In an email to the Commission dated 18 July 2022, McColls responded to this submission by identifying that it had operated depots in Shepparton since December 2018, but did not otherwise respond to the TWU’s submissions above.
As earlier stated, the Commissioner issued her decision on 11 August 2022.
The decision under appeal
In her decision, the Commissioner made the following finding:
“[8] I am not satisfied that the Agreement has been genuinely agreed to by the employees. This is because a group of employees covered by the Agreement was excluded from the vote to approve the Agreement. Further, I am not satisfied that if this group of employees had participated in the vote to approve the Agreement, the outcome would have been the same.”[12]
The Commissioner described the circumstances of the acquisition of the Orrvale site in February 2022, and said “I do not know how many employees transferred to McColl’s in connection with the transfer of business (the transferring employees)” but that it was not in dispute that there were transferring employees and none was given an opportunity to vote to approve the Agreement.[13] The Commissioner then gave her reasons for rejecting McColls’ explanation for this “error”, namely that the transferring employees were not covered by the McColls Agreement,[14] and concluded that while the PST Agreement would continue to apply to the former PST employees, they were nonetheless still covered by the McColls Agreement. The Commissioner concluded:
“[13] Under section 181 of the Act, a request to vote on an enterprise agreement vote is one that is made to “the employees employed at the time who will be covered by the agreement”. In this case, the request was made to some but not all employees who will be covered by the [McColls] Agreement. Absent confirmation as to how many employees were excluded from the vote on this basis, I cannot rule out the possibility that if the transferring employees had voted, the Agreement would not have been ‘made’ under section 182 of the Act. The omission is one that cannot by cured by an undertaking under section 190 of the Act.”
The Commissioner also dealt with the other matters that had been raised in connection with the McColls Agreement and concluded, among other things, that she would accept undertakings proposed by McColls to address a deficiency under the better off overall test.
McColls’ appeal grounds and submissions
McColls brings its appeal on the following three grounds:
1.The Commissioner erred by failing to address the requirements of s 188(2) in coming to the state of satisfaction required by ss 186(2)(a), 188(1) and 188(2).
2. The Commissioner erred by treating the satisfaction required to be reached in ss 186(2)(a), 188(1) and 188(2) as one that required her to adopt a fact finding approach of “rul[ing] out [all] possibilities”.
3.The Commissioner denied procedural fairness, and/or failed to exercise her powers in accordance with ss 577-578, in the course of coming to the state of satisfaction required in ss 186(2)(a), 188(1) and 188(2).
The third appeal ground was supported by particulars to the effect that:
·McColls was denied the opportunity to confirm how many employees were excluded as referred to in paragraph [13] of the decision;
·having determined that it was necessary to understand the “majority” for the purposes of s 182(1), it was incumbent upon the Commissioner to require information about this from McColls so as to come to her decision on the merits (s 578(b)), without unnecessary technicality (s 577(b)) and in the interests of simplicity (ss 578(a), 171(1));
·McColls was consequently denied the opportunity of addressing the Commission as to whether the error of excluding those employees was a minor procedural or technical error that caused no disadvantage for the purposes of section 188(2); and
·McColls was self-representing and not able to appreciate the concerns expressed by the Commissioner below on the question of coverage and application of enterprise agreements under the FW Act.
In relation to appeal ground 1, McColls submitted that the Commissioner’s decision did not engage with the criteria in s 188(2). It submitted that s 186(1) imposes a mandatory obligation to approve enterprise agreements if the requirements of ss 186 and 187 are met, including the requirement in s 186(2)(a) as to genuine agreement. Section 188 sets out how that mandatory satisfaction is reached and, if the satisfaction set out in s 188(1) is not met, then the Commission is required to satisfy itself of the criteria in s 188(2). Because the Commissioner did not engage with s 188(2), it was submitted, the Commission’s duty to satisfy itself of genuine agreement under s 186(2)(a) was only partially performed, and this constituted appealable error in the House v The King[15] sense in that the Commissioner acted upon a wrong principle or failed to take into account a material consideration.
In relation to appeal grounds 2 and 3, McColls submitted that, had the Commissioenr turned her mind to the criteria in s 188(2), McColls would have been able to identify the precise evidence that was required in order to engage with the criteria in s 188(2), and this misdirection resulted in McColls being denied a reasonable opportunity to furnish appropriate evidence to address those criteria. An important aspect of McColls’ submission in relation to ground 3, as developed in oral submissions, was that the issue raised by the Commissioner at the two hearings concerned only the fact the NERR was not provided to the former PST employees, and that the Commissioner’s decision to refuse to approve the McColls Agreement was “on a different basis”, namely the exclusion of the former PST employees from the vote.
McColls submitted that on a rehearing of its application for approval of the McColls Agreement, we should approve the Agreement. It sought to rely, in a rehearing, on a statutory declaration made by Mr Lawry on 1 September 2022. Mr Lawry stated in this declaration, in summary, that:
(a) There were 27 former PST employees that were mistakenly not invited to participate in the vote when it took place on 9 May 2022. If one adds those 27 employees to the voting cohort and assumes the worst — that is, that all of them participated in the vote and voted against the McColls Agreement — this would make 86 employees. The 45-strong majority would have nonetheless carried the vote.
(b)McColls did not have this information at the hearings before the Commissioner on 14 and 27 June 2022. McColls’ representatives at those hearings (Mr Lawry and Ms Fidge) did not provide it to the Commissioner subsequent to those hearings because they were mistaken and did not understand the point that the Commissioner was making to them. Neither Mr Lawry nor Ms Fidge is legally trained and they did not appoint a legal representative to appear for McColls.
(c)Subsequent to the Commissioner’s decision, and after having appreciated the issue, McColls then canvassed (by way of a formal voting process conducted by the same voting agent which conducted the vote on the McColls Agreement), 22 of the (now) 26 former PST employees at Shepparton to ascertain whether they would be interested in transferring to the “applicable in-term McColl’s Agreement” rather than have the PST Agreement apply to their employment until 1 July 2024.
(d)17 of the 22 employees at Shepparton who were canvassed voted to express such an interest. Only 1 employee opposed. This has caused McColls to conclude that a transfer application under s 318 of the FW Act would be in the interests of the former PST employees (as well as in the interests of McColls) after the McColls Agreement is approved.
(e)Had McColls been asked about this by the Commissioner, it could have canvassed the former PST employees at the Shepparton site to determine their interest in a possible transfer application after the hearing and reported back to her about it.
McColls submitted, on the basis of the above evidence, that the error identified by the Commissioner was a “procedural” error for the purpose of s 188(2)(a), in that it was a departure from the obligation to follow the particular process of canvassing all employees to be covered by the McColls Agreement or, alternatively, it could be described as a “technical” error in that it was a departure from the technique required in the voting process. As to whether the error was “minor”, it was submitted that it was necessary to have regard to the purpose of s 188(2), being to confer a discretion on the Commission to approve enterprise agreements in the face of minor procedural errors or defects in the bargaining process derailing an otherwise fundamentally sound agreement at the approval stage. The error was minor, it was submitted, because, but for the error, the majority of employees to be covered would still have carried the vote. The search for a majority of employees is the very purpose of s 182(1) and, once that is appreciated, the interests of a minority of employees and the errors said to have affected them are not material. In relation to s 188(2)(b), it was submitted that employees were not disadvantaged by the error because, had the former PST employees participated, a majority would still have carried the vote. Despite the error, former PST employees remain entitled to the benefits of the separate PST Agreement until 1 July 2024.
McColls submitted that permission to appeal should be granted because the Commissioner’s decision is attended with sufficient doubt so as to warrant reconsideration, and a substantial injustice will occur if permission is refused in that McColls and all employees to be covered by the McColls Agreement (including the former PST employees) are losing the opportunity to obtain its superior terms and conditions.
Consideration
For the reasons which follow, we consider that permission to appeal should be refused.
First, the appeal grounds do not have sufficient merit to justify the grant of permission to appeal. It is convenient to deal with the contention of a denial of procedural fairness in appeal ground 3 first. This contention is entirely unmeritorious. As the detailed account we have earlier given of the course of the proceedings demonstrates, the Commissioner clearly and repeatedly explained to McColls’ representatives that the exclusion of the former PST employees from the vote on the McColls Agreement was a major difficulty which was likely to result in the non-approval of the agreement, and requested that further information be provided about those who were excluded from the voting process. McColls’ submission that the Commissioner only raised the issue of the NERR during the hearings and then decided the matter “on a different basis” is patently wrong: the underlined parts of the transcript extracts we have earlier set out make it clear that the Commissioner repeatedly identified the exclusion of the former PST employees from the vote as an impediment to the approval of the McColls Agreement. In summary:
(1)The initial correspondence from the Commissioner’s chambers expressly identified that, under s 188(2), the Commission could waive minor or technical errors in relation to NERR and genuine agreement steps as long as employees were not likely to have been disadvantaged.
(2)At the first hearing on 14 June 2022, having become aware that the former PST employees at Shepparton had neither been given the NERR nor allowed to participate in the voting process, the Commissioner told McColls that this was “a pretty big problem” and that she did not know that she was going to be able to approve the agreement with those facts. She then invited McColls to consider whether it wanted to proceed or alternatively withdraw the application and recommence the voting process. Thus, by the end of that hearing, McColls was on notice that its application was likely to fail because of the identified issue.
(3)McColls’ response to this was its email of 17 June 2022, in which it accepted that the McColls Agreement covered all employees at Shepperton, but then stated that all employees at Shepparton (nine in number) had been given the NERR and were given the opportunity to vote. This was both inconsistent with what had been said at the 14 June 2022 hearing and untrue.
(4)At the further hearing on 27 June 2022, after McColls conceded that what it had stated in the 17 June 2022 email was incorrect, the Commissioner made an explicit request for further information, including documentary evidence, about the position of the Shepparton employees and invited a submission as to why this was not an impediment to approval of the McColls Agreement.
(5)McColls’ submissions in response of 6, 7 and 18 July 2022 were to the effect that the former PST employees were not entitled to vote on the McColls Agreement because the PST Agreement continued to apply to them. It provided no information about the number of former PST employees, did not accept that their exclusion from the vote constituted any sort of “error”, and did not contend that their inclusion in the vote would not have made any difference to the outcome.
McColls’ contentions that it was denied the opportunity to confirm how many employees were excluded from the vote, that the Commissioner did not “require” information about this, and that consequently it was denied the opportunity to make a submission as to the application of s 188(2) are therefore factually without foundation. Indeed, the opposite is true.
That McColls failed to take advantage of the opportunities it was afforded to address the concerns the Commissioner had so clearly identified does not demonstrate any denial of procedural fairness: procedural fairness requires the Commission to give a party a reasonable opportunity to present its case, but not to ensure that the party takes best advantage of that opportunity.[16] This position is not altered by the fact that McColls chose not to be legally represented in the proceedings: McColls is a substantial business; it was represented by HR personnel; its submissions of 6 and 7 July 2022, if not actually drafted by a lawyer, show a significant degree of familiarity with the provisions of the FW Act; and Mr Lawry made it clear that McColls had in fact obtained legal advice in respect of (it appears) the former PST employees being moved across to the McColls Agreement. In his declaration, Mr Lawry asserts that neither he nor Ms Fidge understood the point that the Commissioner was making. This may or may not be so, but we do not think that the Commissioner could have put the position any clearer than she did.
Appeal ground 1 is likewise without merit. The proposition that the Commissioner erred by failing to address s 188(2) “in coming to the state of satisfaction required by ss 186(2)(a), 188(1) and 188(2)” is thoroughly misconceived because the Commissioner did not reach any state of satisfaction concerning the genuinely agreed requirement. McColls, as the applicant, bore the risk of failure if the material it advanced was inadequate to permit the Commissioner to reach the requisite state of satisfaction.[17] We do not accept that the Commissioner was obliged, in her decision, to expressly address s 188(2) in circumstances where no submission was advanced to suggest it was capable of application to the matter. Further, even if the Commissioner had addressed it, there was no material before her upon which she could have found that there was genuine agreement by virtue of s 188(2). McColls did not even concede before the Commissioner that it had made an error, and it failed to provide any material upon which the Commissioner might have found that any error was minor and not likely to have disadvantaged employees. McColls does not contend on appeal that the Commissioner, on the material before her, could properly have reached a state of satisfaction under s 186(2)(a) had she considered s 188(2). Appeal ground 1 therefore goes nowhere.
Second, McColls seeks to advance a fundamentally different case than the one it advanced before the Commissioner. Its position before the Commissioner was that the former PST employees were not entitled to vote and that there was no error in excluding them. Its case on appeal is that it accepts that the PST employees were entitled to vote and that it was an error, but that the Commissioner erred in not considering the application of s 188(2). Permission to appeal will not usually be granted to permit an appellant to run a substantially different case on appeal in order to address deficiencies in its case at first instance.[18]
Third, the grant of permission to appeal would not have any practical utility since, even if the appeal were upheld, we do not consider that there would be a proper basis to grant the application for approval of the McColls Agreement on a rehearing. McColls concedes that satisfaction as to genuine agreement cannot be reached under s 188(1) and does not contend that any deficiency in this respect can be cured by an undertaking. Its hopes for ultimate approval of the McColls Agreement therefore rest entirely on the application of s 188(2) to reach the requisite state of satisfaction as to genuine agreement.
It is not clear whether, if there was a rehearing, the TWU would contest the facts asserted in Mr Lawry’s statutory declaration. But, even taking McColls’ case at its highest, we do not consider that Mr Lawry’s statement could found a proper basis for satisfaction that there was genuine agreement under s 188(2). Mr Lawry’s declaration does not explain the circumstances by which the former PST employees were excluded from the vote on the McColls Agreement, and so does not permit the conclusion that their exclusion was an “error” within the meaning of s 188(2)(a). It is clear that the exclusion of the former PST employees was an intentional act, but what is left unexplained is what motivated McColls to exclude such employees. As explained in the Full Bench decision in Huntsman Chemical Company Australia Pty Limited[19] (Huntsman):
“[73] Accordingly a proper distinction is to be made between an intentional act which unintentionally results in non-compliance with the procedural and/or technical requirements for the making of an enterprise agreement and which may depending on the circumstances be capable of characterisation as an error, and intentional non-compliance with those requirements, which will not constitute an error for the purpose of s.188(2). …”
In circumstances where McColls clearly recognised that the McColls Agreement covered all the employees at the Orrvale depot in Shepparton and, as Mr Lawry disclosed before the Commissioner, McColls had sought and obtained legal advice concerning the position of the former PST employees in relation to the future application of the McColls Agreement, it could not necessarily be inferred that McColls’ non-compliance with s 181(1) (and, consequently, s 182(1)) was unintentional. This issue was not even addressed in McColls’ submissions. There is a further issue of whether, if there was an “error” concerning the conduct of the vote, it can be characterised as merely “procedural or technical” in nature. On one view, the vote on a proposed agreement required by s 182(1) is a fundamental or core requirement rather than merely being procedural or technical in nature since it is the means by which an agreement is “made”. However, we acknowledge that, in Huntsman, the Full Bench said that “s 188(2), properly construed, contemplates that agreements which have not been ‘made’ may nonetheless be approved if the specified conditions in the new provision are satisfied”.[20]
Even if a procedural or technical error is assumed, we do not consider that it would be open to characterise it as “minor” within the meaning of s 188(2)(a). In Huntsman, the Full Bench said that what constitutes a minor error “calls for an evaluative judgment having regard to the underlying purpose of the relevant procedural or technical requirement which has not been complied with and the relevant circumstances”.[21] In its analysis of the construction and potential scope of application of s 188(2), the Huntsman Full Bench identified a range of procedural or technical errors which might properly be characterised as minor,[22] but did not consider that this included the exclusion of employees covered by the proposed agreement from the voting cohort. In this case, on the basis of the facts stated in Mr Lawry’s declaration, it appears that the total number of employees covered by the McColls Agreement at the time of the vote was 113,[23] and that the number of former PST employees who were not permitted to vote was 27. This represents almost a quarter of those who, under s 181(1), should have been requested to vote on the McColls Agreement. An error of this magnitude is not capable, in our view, of being characterised as “minor” for the purpose of s 188(2)(a).
We reject McColls’ submission that the exclusion of the former PST employees could be characterised as “minor” on the basis that their inclusion in the vote could not, mathematically speaking, have made a difference. First, we do not consider that the magnitude of an error can only be measured by reference to its consequences. Second, McColls’ approach is far too reductionist in nature. Participation in the voting process contemplated by the FW Act involves more than simply casting a vote. Under s 180, prior to employees being requested to vote under s 181(1), they must be provided with or given access to a copy of the proposed agreement and any relevant materials (s 180(2)) and the employer must take all reasonable steps to explain to employees the terms of the agreement and their effect (s 180(5)). The real possibility that employees may confer amongst themselves and influence each other’s views when this is done cannot be excluded. For that additional reason, we do not consider that the exclusion of 27 employees from a voting cohort of 113, of which only 45 voted in favour of the McColls Agreement, could be assumed not to have made any difference to the outcome.
Finally, we do not consider that any weight would, in a rehearing, be placed on that part of Mr Lawry’s declaration which describes an “expression of interest” vote that McColls conducted amongst some of the former PST employees after the Commissioner issued her decision. It is not clear to us what an “expression of interest” should be taken to signify, and in any event the vote proceeded on the incorrect premise that there was an “applicable in-term McColls Agreement” to which the former PST employees could be transferred. There was no such agreement in operation given the Commissioner’s refusal to approve the McColls Agreement.
Conclusion
Permission to appeal is refused.
ACTING PRESIDENT
Appearances:
L Howard of counsel for the appellant.
B Baarini for the respondent.
Hearing details:
2022.
Melbourne:
24 October.
[1] [2022] FWC 2138
[2] Ibid at [11]-[12]
[3] Transcript, 14 June 2022, PNs 19-31
[4] Ibid, PN33
[5] Transcript, 27 June 2022, PN119
[6] Ibid, PN124
[7] Ibid, PN127
[8] Ibid, PN129
[9] Ibid, PN 136
[10] Ibid, PNs 138-139
[11] Ibid, PN 144
[12] [2022] FWC 2138 at [8]
[13] Ibid at [9]
[14] Ibid at [10]-[13]
[15] [1936] HCA 40, 55 CLR 499
[16] Re Coldham; Ex parte Municipal Officers Association of Australia [1989] HCA 13, 84 ALR 208 at 220, [19] per Gaudron J; Sullivan v Department of Transport [1978] FCA 48, 20 ALR 323 at 343 per Deane J; Secretary, Department of Family and Community Services v Verney [2000] FCA 570 at [45], Soames v Secretary, Department of Social Services [2014] FCA 295 at [41]
[17] RFFWUI v Coles Supermarkets Australia Pty Ltd[2021] FWCFB 4414 at [16]
[18] See e.g. ASU v Yarra Valley Corporation [2013] FWCFB 7453 at [24]; AWU v BlueScope Steel (AIS) Pty Ltd[2021] FWCFB 5030 at [15].
[19] [2019] FWCFB 318
[20] Ibid at [68]
[21] Ibid at [55], [74]
[22] Ibid at [55]-[58], [74]-[81]
[23] Being the sum of the 86 employees who were given an opportunity to vote and the 27 former PST employees who were not given the opportunity to vote (according to paragraphs [10]-[15] of Mr Lawry’s declaration)
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