McConnell Seats Australia Pty Ltd

[2012] FWA 7698

[2012] FWA 7698

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

McConnell Seats Australia Pty Ltd
(AG2012/4516)

COMMISSIONER GAY MELBOURNE, 10 SEPTEMBER 2012

Application for approval of the McConnell Seats Australia Enterprise Agreement 2012.

[1] The following decision, now edited, was handed down in transcript on 15 and 16 August 2012 by means of a video-hearing linking Melbourne with Sydney. While giving the decision in transcript the video-link was lost and not able to be restored. On the following day, 16 August the video-link being once more achieved, I continued to give my decision. The decision recommences at paragraph 23 below.

[2] “This is an application under s.185 for approval of a single-enterprise agreement known as the McConnell Seats Australia Enterprise Agreement 2012 (the Agreement) by McConnell Seats Australia Pty Ltd (McConnell Seats). I really have benefited from earlier communication with Mr Cannell, the representative for McConnell Seats, who has chased to ground a number of queries that I did have as a result of the review undertaken within Fair Work Australia by me and also by members of the research body engaged for that very purpose. I do wish to say, without wishing to sound fatuous, that it is, in this case, possible to be quite satisfied that there is a genuine approach adopted by Mr Cannell and the bargaining representatives, they being Mr Lowe, the general manager of McConnell Seats for the firm, and Mr Mallia, Mr Engel and some other bargaining representatives with whom I have not had the benefit of speaking.

[3] I do not find that there is any deficit as a result of not having had the opportunity to speak with them because I have a real confidence that the commentary made about the negotiation and the approach adopted by everyone - even though I am sure it was not all smooth sailing, there must have been issues in contest - the negotiation itself has been conducted in a proper way. Subject to what follows I also do not have any doubts that the necessary procedural steps taken have been carried out. In my view they have been carried out. This hearing deals with one issue only and that is that an advice accompanied the employee notice of representational rights of 8 November 2011. It was given under the hand of James Lowe, the general manager of McConnell Seats Australia.

[4] The issue that confronts me is whether it can be said that the series, the continuum of events, has occurred in this case in a way that can allow for approval. I step to one side to say that in every other respect in my view the agreement in its present form can be approved. I say that that relates to such practical issues as steps taken to inform the employees and for the necessary communication and so on. Sometimes they are difficult within an agreement because they have not been carried out correctly. No such issue arises in my understanding.

[5] I will say something about the statutory framework. I am not going to repeat it all, it has been dealt with in some detail today by Mr Cannell more than adequately. It is the case, though, that for an enterprise agreement to be properly undertaken and approved in Australia under the Fair Work Act, various things have to happen. Central to today’s purposes is - and I will try and do this briefly - prior to the employer asking the employees to approve an agreement of this nature there has to be issued a notice of employee representational rights. I know everyone at McConnell Seats - well, present in Fair Work Australia in Melbourne - is aware of that.

[6] It has to contain certain features and there is a Schedule which sets out a model term. Some people do not follow the model term in which case sometimes they get themselves into strife; sometimes they do not. It is vitally important, though, that the intentions of the Parliament are satisfied, and that is, that proper treatment is given of the essential features of the s.173(1) notice of employee representational rights because it has a vital purpose. The purpose is that for an employee, told that the employer or other bargaining initiator wishes to negotiate an agreement, who feels that they wish to be represented, that they can be represented. As s.173(1) provides, the employer’s obligation is to take all reasonable steps to give notice to employees “of the right to be represented by a bargaining representative”.

[7] Not everyone is sufficiently confident or able to represent themselves. Some people may have a whole range of reasons why they wish to have a representative, we do not need to go through those because the position is, as is understood, if a person is a member of the union and they do not nominate another bargaining representative then their union - as long as the union has proper scope under their registered rules to cover the work to be performed and so on, those technical s.174(3)(a) stipulations, then that union becomes the bargaining representative. Otherwise the bargaining representative for the employer is the employer’s representative and then nominated bargaining representatives.

[8] Of course an employee, employed at the notification time who will be covered by the Agreement, can appoint themselves as a bargaining representative. Other employees can appoint the same person, a fellow employee, as the bargaining representative, or they can appoint someone else who they desire as their bargaining representative. All those bargaining representatives then have obligations which also are dealt with - and I will not go through all these things in the interests of time - but people have to conduct themselves in a proper way, they have got to bargain in good faith and genuinely attempt to reach agreement and so on. I am using some shorthand terms there.

[9] The Act is very clear, though, about the notice of employee representational rights. It is set out at s.173 and s.174 and it sets out the obligation of the employer to issue the notice. This is a case where the notice was issued, so there cannot be any doubt about that. But it was accompanied by an advice of the general manager which was a serious document, a treatment of the circumstances of the impending negotiation and I am told today its purpose was to advise the dates and provide general information and it was not intended to replace the employee notice of representational rights.

[10] It is true, as Mr Cannell has said in his very able presentation, that the reference is made in the advice to Schedule 2.1, which was attached to the advice. The memo from the general manager indicates that if a person is a member of a union that person may wish to engage them as their bargaining agent. The key element is this, the accompanying advice - the memorandum of the general manager - read in its operative part as follows:

“Negotiation of the EA: the consultative committee will be formed comprising both employer and nominated employee representatives who will provide the necessary support network for the negotiation and approval of the agreement in accordance with requirements of the Fair Work Act 2009. Nominations for employees to act as bargaining representatives are now called for representation on the consultative committee.”

[11] I interpose to say, so this is in the context of a consultative committee, and I again quote:

“The nominated bargaining representative must be engaged as current full-time, part-time or casual employee and should possess the necessary qualities to communicate effectively with both management and fellow employees and have a high level of commitment and trust within the workplace.”

[12] That is the end of that quote, and that then leads into the sentence I read a minute or two ago:

“Alternatively, as indicated in the attached Schedule 2.1, if you are a member of a union you may wish to engage them as your bargaining agent.”

[13] It is noteworthy that the paragraph I read that commenced:

“The nominated bargaining representative must be engaged as current full-time, part-time or casual employee and should possess the necessary qualities to communicate effectively with both management and fellow employees and have a high level of commitment and trust within the workplace ...”

was underlined and was italicised.

[14] The central question I must concern myself with now is whether, adopting a commonsense approach, it can be said that that passage negated or had such an effect on the issuing of the employee notice of representational rights as to offend the Act or as to - I do not say as an offence against the Act - but as to render the process that then followed invalid. I have been directed - there are a number of decisions that have dealt with these issues. Time does not permit me to deal with them all now. I will though deal with aspects of the Full Bench decision in Galintel Rolling Mills Pty Ltd t/a The Graham Group ((2011) FWAFB 6722) (Galintel) referred to and relied upon today by Mr Cannell, and that is the decision of Watson VP, Action SDP, Cambridge C of 18 October 2011.

[15] In that case, by majority, it was held that the particular position for approval of an agreement with which the Full Bench was dealing was capable of approval. It seems to me that there are important passages of that Decision referable to the matters to be considered today. The majority of that bench say at [38] “We agree that the requirement cannot be satisfied...” - and this is the requirement stemming from s.181:

“We agree that the requirement cannot be satisfied if a notice referred to in s.173 is not given. It is therefore necessary to consider whether the employer gave a notice under s.173.”

[16] The Full Bench goes on to say:

“The context and purpose of these provisions are important. Imposing a requirement for employers to notify its employees of their rights of representation is obviously seen by the legislature as an essential ingredient of fair bargaining and agreement making under the Act. So too is the notion of employees being free to exercise their choice of representation. In some workplaces employers may be negative or even hostile to union representation. Negotiations may be quite adversarial.”

[17] I read on now from paragraph 40 of the majority decision of that Full Bench:

“If an employer fails to advise employees of their rights in the manner specified the requirement is not satisfied.”

[18] The majority go on and say it is open to an employer to make some representations. That is a view expressed by that majority of that bench and they are dealing with the particularities of that case, but they then go on - and I will read on - this is from paragraph 40:

“If the representations contradict the notice about employee rights then there will be real questions whether a valid notice was in fact given. If the representations are such that they affect the genuineness of any subsequent agreement then s.188(c) will become relevant.”

[19] So the issue here about which I must concern myself is whether what was put in the 8 November 2011 advice from Mr Lowe so affected the otherwise satisfactory notice of employee representational rights as to render the process of the Act invalid, or in some other way, have one conclude it miscarried. I have asked myself did in some way the words in the 8 November 2011 advice alter the nature of the employee representational rights notice such that it ceased to be a valid notice? This would be a s.188(c) ground.

[20] Regrettably for McConnell Seats I have come to the view that it did. I do not doubt its purpose for a moment. Regrettably on a fair reading of the statement, its purpose - the italicised and underlined general managerial advice was simply that a bargaining representative must be engaged as a current full-time, part-time, or casual employee. It then goes on and says, as Mr Cannell has pointed out, that there should be - not mandatorily, but a nominee should possess the necessary qualities to communicate effectively, and so on.

[21] I understand the reason motivating the employer because they have been put to me and I accept them for what they are; company desires that bargaining representatives should understand the special production methods and challenges and changes that the company feels should be effected by the agreement. Unfortunately for McConnell Seats, the Act must be applied.”

[22] The decision resumed on 16 August from 15 August.

[23] “In an attempt to avoid repetition I will perhaps summarise to some small extent. Hopefully it will be sufficient to note the importance of s. 173 in the statutory scheme of bargaining. It is not a mechanical process step that can be avoided or side-stepped, whatever the motive or intention of the employer, in a particular case. As I have already said and say again, in this case I am of the firm view that no negative intention motivated the steps taken. But of course that does not vitiate my obligation to apply the Act fully, and I will not do otherwise.

[24] It is essential to appreciate the reason that the s.173 notice is said to occupy an important place in our bargaining scheme. The scheme envisages bargaining representatives discussing the matters of priority with the employer being one bargaining representative. The employee is able to nominate a fellow employee or themselves or, having not done so, being automatically represented by the relevant union of which they may be a member. The right to nominate a bargaining representative, however, goes further. I add as an aside, probably because as in all walks of life, whether through lack of confidence, perception as to expertise and ability, or a desire to have their views as to the workplace issues represented to their employer by their representative, employees have the option of appointing a bargaining representative.

[25] In my view the Parliament has given a broad right of representation to the employees’ unfettered nomination; so the employee may nominate a friend, a lawyer or other person of their choice. To advise the employee that that is their right is a prime purpose behind the notion of the employee representational rights certificate.

[26] One understands that the Schedule need not be slavishly followed as long as its essential features are preserved. In my view if there is a negation or curtailment of an important aspect of the notice one would be concerned as to the Act’s purpose not having been given full effect. As the Full Bench in Galintel put it at paragraph 40:

“If the representations contradict the notice about employee rights then there will be real questions whether a valid notice was in fact given.”

[27] In the present circumstances that statement is highly relevant and, less passively, requires conclusion. The situation at McConnell Seats is that the employees were advised in the general managerial circular which was attached to the Schedule 2.1, that nominations were, “Now called for representation on the consultative committee.” The consultative committee had been set up to provide “the necessary support network for the negotiations and approval of the agreement”. The circular contained the advice around which this decision particularly revolves, and I again set out the passage, this time as it appeared:

“The nominated bargaining representative must be engaged as current full-time, part-time or casual employee and should possess the necessary qualities to communicate effectively with both management and fellow employees and have a high level of commitment and trust within the workplace.”

[28] Those words, unlike any others in the one and a half page circular given by the general manager, were italicised and underlined. The stipulation that:

“The nominated bargaining representative must be engaged as current full-time, part-time or casual employee ...”

in my view invalidates the notice then provided, as on a fair reading, it does not permit an employee to nominate a representative who is not an employee. It expressly precludes such a nomination. This advice means that notwithstanding the issuing of the Schedule, the employees at McConnell Seats were not advised of their rights in a manner specified. In contrast, the majority in Galintel comment on the capacity for employer commentary, preference, or even advice, but noting that in that case, critically, the material advised to employees allowed, “Complete freedom to complete it and to appoint any bargaining representative of the employee’s choice.”

[29] It seems to me that almost the opposite position applies in this case, that is, as to non-McConnell Seats employee representation. This is not a case where one can come to a contrary view by the device of reasoning, “There is no evidence to suggest employees were misled or that the outcome of the vote was affected,” or some such. This case is solely concerned with the advice of fundamental employee rights. One cannot know what might have been had employees been fully advised of their rights. I have paid close regard for the submissions of Mr Cannell. They have been helpful and well informed. I have also had regard for the views pressed by the two representatives of the employees and the general manager. As I have said earlier, I do not doubt their sincerity or their conscientious approach to the task of the negotiation.

[30] It was put to me twice by Mr Lowe, the general manager, that had an employee approached him desirous of appointing a non-employee representative, contrary to the general manager’s directive, that he would have “considered” such an application. I would go further and say it is probably likely that the general manager would, or may well have, acceded to the representation; but it can be seen that such acquiescence is unnecessary and that approach is fundamentally contrary to the statutory scheme, that is, of an employee coming to their management supplicant as to employee representation. This is because the right to an employee or employees, to appoint their representative of choice is the right that has been established by the Parliament.

[31] Although it is not technically necessary for extrinsic materials to be called up, I have noted the statement in the Explanatory Memorandum to the Fair Work Bill 2008, when in noting the expanded, “more significant formal role in the bargaining process compared to bargaining agents under the WR Act”. It is said, at paragraph 696 that; “Division 3 sets out the rights of employers and employees to appoint a person of their choice as their bargaining representative” (emphasis mine).

[32] I have concluded that the General Managerial advice to staff so intruded into the understanding of, and giving effect to, the rights of employees to nominate their choice of representative as to fetter that right. Accordingly I have concluded that the notice of employee representational rights was so affected that one must conclude the notice was not validly issued, with the consequence that employees could not subsequently be asked to approve the agreement (s.181(1)); that Fair Work Australia could not conclude that such an application had been genuinely agreed to by the employees covered by the Agreement (s.186(2)(a)) and that by virtue of the necessary completion of the s.188(a) steps and the more general s.188(c) general ground, Fair Work Australia could not consider the application capable of being granted by approving the Agreement.

[33] The company’s advice about the nature of the employee representational rights notice affected it as to its essence, such that it ceased in my view to be a valid notice.

[34] It is for those reasons that I decline to approve the agreement. In doing so I would indicate that this is a case where the Agreement, subject to the explanatory material provided by Mr Cannell, can be approved and were I satisfied that the employees were properly advised in a future application, would be approved. I now adjourn.”

COMMISSIONER

Appearances:

R Cannell for McConnell Seats Australia Pty Ltd.

Hearing details:

2012.

Sydney/Melbourne video-hearing:

August 15, 16.

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