McDermott Australia Pty Ltd

[2016] FWC 1113

[2016] FWC 1113

FAIR WORK COMMISSION

REASONS FOR DECISION

Fair Work Act 2009
s.185—Enterprise agreement

McDermott Australia Pty Ltd
(AG2016/2073)

COMMISSIONER LEE MELBOURNE, 25 FEBRUARY 2016

Application for approval of the McDermott Australia Pty Ltd Ichthys Project Offshore Construction Agreement 2016.

[1] This is an application for approval of an enterprise agreement known as the McDermott Australia Pty Ltd Ichthys Project Offshore Construction Agreement 2016 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act). It has been made by McDermott Australia Pty Ltd (the Applicant). The Agreement is a single enterprise agreement.

[2] This application was made on 12 January 2016 and was allocated to me for consideration. A Form F18 – Statutory declaration of employee organisation in relation to an application for approval of an enterprise agreement (Form F18) was lodged by The Australian Workers’ Union (AWU) and the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) (the Unions). Both Unions asserted that they were bargaining representatives for the Agreement. The Form 18’s of both Unions indicated that they opposed the approval of the Agreement. I listed the matter for hearing and directed the Unions to file submissions and any other material in support of their position that the application should not be approved. The Applicant filed material in response.

[3] The two grounds of objection raised by the Union were that the application was not accompanied by a properly signed copy of the Agreement and that I cannot be satisfied that the employees genuinely agreed to the Agreement.

[4] The matter was listed for hearing by video link to Perth. Permission to appear was granted to Mr Caspersz to represent the Applicant and to Mr Kucera to represent the AMWU, as I was satisfied that the circumstances contemplated in s.596(2)(a) of the Act were evident. Ms Douglas appeared on behalf of the AWU. Mr Dixon an Organiser at the AWU and Mr McMahon a Human Resources Generalist employed by the Applicant gave evidence.

[5] At the conclusion of the hearing, I dismissed the application for approval of the Agreement. In doing so I stated that I was not satisfied that the Agreement was made in accordance with s.182(1) of the Act and that I would issue further written reasons for making my decision.

[6] What follows are my reasons for decision.

The evidence

[7] Mr McMahon’s evidence is that the company gave a Notice of Employee Representational Rights (NERR) to employees on the 15 December 2015. The NERR provided as follows:

“McDermott Australia Pty Ltd gives notice that it is bargaining in relation to an enterprise agreement McDermott Australia Pty Ltd Ichthys Project Construction Agreement 2016-2020 which is proposed to cover employees that are performing construction work on Inpex’s Ichthys Project and are covered by the Building and Construction General On-Site Award 2010.”

[8] The Form 17 – Employer’s statutory declaration in support of an application for approval of an enterprise agreement (Form F17)  1 indicated that the date of notification time was the same date that the last NERR was given to employees, being 15 December 2015. All employees to be covered by the proposed agreement are casual employees.

[9] Mr Dixon gave evidence that he became aware through an AWU member that the NERR had been issued by the Applicant. Mr Dixon then emailed Mr Nathan Rowden, Australasian HR Manager for the Applicant, and requested a meeting. It is not clear if any meeting took place.

[10] On 22 and 23 December 2015 briefing sessions for employees were conducted by the Applicant in Brisbane and Perth. On 29 December 2015 the Applicant sent an email to each of the employees attaching the proposed agreement, associated documents and explanatory material including a letter explaining the access period and a “how to vote” presentation. Employees were then individually telephoned where possible by Mr McMahon or a Ms Edwards.

[11] The Form F17 filed with the application of Mr McMahon provides at Q2.8 that the date voting for the Agreement commenced was 6 January 2016 and the date the Agreement was made was 7 January 2016. The vote was conducted by an organisation independent of the Applicant. Voting was conducted on-line, by phone and SMS.

[12] The Form F17 provides at Q2.10 that 36 employees will be covered by the proposed agreement, that 33 cast a valid vote and that 19 employees voted to approve the Agreement.

[13] Mr Dixon gave evidence that based on his knowledge of the vessel to be used in the operation, that he couldn’t work out how there were as many as 36 employees that could be covered by the Agreement and that, he could only establish that there could be at best 30 employees covered.  2 In essence, the evidence of Mr Dixon sought to cast doubt as to whether some employees voted for the Agreement who were not eligible to vote.

[14] Mr McMahon provided an additional statutory declaration which included the following statement:

“Using the information in McDermott’s SAP payroll system, I compiled a list made up of employees who were actually or usually employed in the categories to be covered by the Ichthys Agreement (Employees).”  3

[15] A redacted version of a payroll record was attached to the additional statutory declaration. There are 36 entries on the payroll record.

[16] There was evidence led relating to when the employees were “mobilised”. Mobilisation was described by Mr McMahon as “…them flying up to Broome and then proceeding to walk on to the vessel whilst the vessel was alongside…”  4 The evidence of Mr McMahon is that employees were not “mobilised” until 10 January 2016. It was not clear how many employees were mobilised on 10 January 2016.5 Of the 36 employees, all had been paid some form of wages, although the circumstances varied. Ms Douglas gave evidence that “some had worked on the vessel, on previous campaigns on the project, and some more had already been paid for their specific training that they require to work on board that specific - or any other facility for McDermott.” 6

[17] It was clear that the employees were casual employees when they worked on previous campaigns.  7

[18] The following exchange on cross examination provided some important context:

Mr Kucera: “Okay. Now, all of the 36, who were balloted, are casual employees?”

Mr McMahon: “Yes”.

Mr Kucera: “So engaged and paid as such?”

Mr McMahon: “Yes”.

Mr Kucera: “Each day stands alone, a casual is a daily hire employee, you’d agree with that, wouldn’t you?”

Mr McMahon: “Yes, I believe that’s the nature of a casual employment”.

Mr Kucera: “Okay. So - and these employees were all balloted on 6 and 7 January?”

Mr McMahon: “Yes”.

Mr Kucera: “Before they were actually sent to the job to perform work in their classification?”

Mr McMahon: “Yes”.

Mr Kucera: “Right. So none of these employees, who were balloted on 6 and 7 January, were actually at work on the project, were they?”

Mr McMahon: “Not at work on the 6th or 7th, no”.

Mr Kucera: “So there was no actual performance of work for which they were employed on those dates they were balloted?”

Mr McMahon: “Not specifically on the 6th or 7th, no”.

Mr Kucera: “In fact, quite a few of these blokes would have been, and I’m able to say blokes, because I notice from your statutory declaration there’s no women on the list?”

Mr McMahon: “That’s correct”.

Mr Kucera: “They would have been balloted while they were at home?”

Mr McMahon: “Yes”.

Mr Kucera: “Right. And at the time those employees were balloted they weren’t being paid for performing any work, were they?”

Mr McMahon: “No, because they weren’t completing work on those days, no”.

Mr Kucera: “So in actual fact, they weren’t actually employed on the day the ballots were taking place, were they?”

Mr Caspersz: “If my friend is asking the witness for an opinion as to what that means, for the purpose of the Act, I’d object. But if he’s simply asking the witness for his perception I wouldn’t object”.

The Commissioner: “I’m interested in the answer to the question, thanks. Sit down, there’s no basis for that objection. Ask the question again, please”.

Mr Kucera: “Yes. So on the day that the ballot was actually taken, these employees weren’t actually employed, were they?”

Mr McMahon: “They were not on board the vessel actively fulfilling the role, no”.

Mr Kucera: “So they were on your list of people that you wanted to go to the job, but they weren’t actually doing any work?”

Mr McMahon: “No, they were not working on board a vessel”.

Mr Kucera: “And none of them were being paid, were they?”

Mr McMahon: “No, they don’t get paid for days that they don’t work”.

Mr Kucera: “All right. Now, in your role, you’ve obviously got”.

The Commissioner: “Just before you go on. How many people, Mr McMahon, were being paid, in relation to this project, on 6 January and how many were being paid on 7 January?”

Mr McMahon: “As in - sorry, as they had been paid previously by McDermott to that date, or people”.

The Commissioner: “No. How many were being paid on - listen carefully, answer this question. How many were being paid on 6 January, that’s the first question, and how many were being paid on 7 January, that’s the second question?”

Mr McMahon: “To the first question, none, zero. And to the second question, also zero”.  8

Law to be applied

[19] In National Tertiary Education Industry Union v Swinburne University of Technology (Swinburne)  9 a Full Bench of the Federal Court dealt with an appeal against a decision of a Full Bench of the Fair Work Commission (the Commission). The Full Bench had approved an agreement covering Swinburne University employees. The Union appealed the decision challenging the process of approval that was endorsed by the Full Bench of the Fair Work Commission. The decision of a majority of the Full Court of the Federal Court (Jessup J with White J in agreement) is directly relevant to this matter.

[20] In his Judgment, Jessup J set out the relevant provisions of the Fair Work Act 2009 at paragraphs 4-8:

“4. Division 4 of Pt 2-4 of the FW Act provides for the approval of enterprise agreements. An agreement must be approved by the employees to whom it will apply, in the manner specified by the FW Act, and by the Commission. The provisions of the FW Act under which these steps must be taken are of central importance in the present proceeding.

5. Section 181(1) of the FW Act provides as follows:

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.

The procedure available to an employer under s 181(1) is, however, subject to s 180, subs (1), (2), (3) and (4) of which are as follows:

(1) Before an employer requests under subsection 181(1) that employees approve a proposed enterprise agreement by voting for the agreement, the employer must comply with the requirements set out in this section.

(2) The employer must take all reasonable steps to ensure that:

(a) during the access period for the agreement, the employees (the relevant employees) employed at the time who will be covered by the agreement are given a copy of the following materials:

(i) the written text of the agreement;
(ii) any other material incorporated by reference in the agreement; or

(b) the relevant employees have access, throughout the access period for the agreement, to a copy of those materials.

(3) The employer must take all reasonable steps to notify the relevant employees of the following by the start of the access period for the agreement:

(a) the time and place at which the vote will occur;
(b) the voting method that will be used.

(4) The access period for a proposed enterprise agreement is the 7-day period ending immediately before the start of the voting process referred to in subsection 181(1).

The terms of s 180(2)(a) and of s 181(1) are critical in the present case, and I shall return to them. For the present, it should be noted that each uses the expression “the employees employed at the time who will be covered by the agreement”.

6. Section 182(1) of the FW Act provides as follows:

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.

Relevantly to the facts of the present case, one then passes to s 185(1), which provides as follows:

If an enterprise agreement is made, a bargaining representative for the agreement must apply to the FWC for approval of the agreement.

In the facts of the present case, it was the University which applied to the Commission for approval of the agreement which it had put to its staff in February 2014.

7. The Commission’s obligation upon receipt of the University’s application under s 185(1) was the subject of s 186(1) as follows:

If an application for the approval of an enterprise agreement is made under section 185, the FWC must approve the agreement under this section if the requirements set out in this section and section 187 are met.

Although the requirements of ss 186 and 187 are detailed, that which is relevant in the present case is the subject of s 186(2)(a), as follows:

The FWC must be satisfied that:


(a) if the agreement is not a greenfields agreement — the agreement has been genuinely agreed to by the employees covered by the agreement....

8. What constitutes genuine agreement by the employees covered by the agreement, as required by s 186(2)(a), is the subject of s 188, as follows:

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 preapproval 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.

Of particular relevance in the facts of the present case is para (b) of this section.”  10

[21] The Swinburne casefocussed on the words “employed at the time” as is used in s.180(2)(a) and s.181(1) of the Act. This was at issue in Swinburne as a large number of sessional or casual employees were included in the ballot. This raised the question as to whether those employees were “employed at the time”. Reference was made by His Honour to the Commissions use of the term “usually employed” and whether staff who were “usually employed” were “employed at the time”.

[22] In his Judgment His Honour made the following observations:

“13. In one of the paragraphs set out above, the Commission referred to a person being “employed or usually employed” by the employer in question. The significance of that was that, in Pt 2-4 of the FW Act, an “employee” is a “national system employee”, and “employer” is a “national system employer”. By s 13 of the FW Act:

A national system employee is an individual so far as he or she is employed, or usually employed, as described in the definition of national system employer in section 14, by a national system employer, except on a vocational placement.

Under s 14, a “national system employer” can be any one of a number of listed persons or entities (eg “a constitutional corporation”), “so far as it employs, or usually employs, an individual”. That is to say, an individual will be a national system employee as defined if he or she is usually employed by a national system employer, even if he or she is not in employment at the time to which the inquiry relates (eg he or she may be between jobs).

14. The Commission did not require the University to establish how many of the 2005 voting employees were employed “at the time” apropos either s 180(2)(a) or s 181(1) of the FW Act. Neither was it known how many of the 1031 voting in favour were so employed. But these two statistics were necessary, in my view, before the Commission could have satisfied itself that, of those who were employed at the time and voted, a valid majority voted in favour. What the Commission did was to accept the University’s “cohort” – as it was described by its counsel in this proceeding – of those eligible to vote, to record the number who did vote (2005) and, after taking account of a number of individuals to whose particular circumstances the Union had drawn attention, to find that, on any view, a majority of those who voted approved the agreement.

15. As mentioned, the University’s cohort included all sessional academic staff who had been employed at any time in 2013, that is to say, over a period of 12 months before the s 181 request was made. In the Full Court, counsel for the University invited us to hold that every person who completed an “application for sessional academic engagement” of the kind referred to by the Commission in the passage set out in para 19 of its reasons (see para 11 above), and whose application was accepted, remained in the employ of the University until he or she informed the University of his or her intention to undertake no further work there. We were also invited, in effect, to take it as a given that the cohort to whom the s 181 request was addressed was made up of individuals in this category. Those invitations should not be accepted. Although a pro-forma for an application of the kind referred to was in evidence before the Commission, the case before it was not decided by reference either to the legal nature of the relationship brought about the execution, and acceptance, of a form in those terms or to a finding as to how many of those to whom the s 181 request was addressed had in fact executed such a form and had not subsequently indicated that they desired to have no further work from the University.

16. As the Commission made clear in para 32 of its reasons, the case before it was decided by reference to the view that s 181 both permitted and required the University to address its request to all individuals who were then “usually employed” by it. As the Commission said, this was the “relevant test”. Furthermore, it is apparent that the Commission treated anyone who had been sessionally engaged at any time in 2013, and who had not been shown (eg by the Union’s evidence) to have left the employ of the University, as being “usually employed” in February 2014. Whether the Commission was correct in so identifying the task which lay before it requires me to return to the applicable provisions of the FW Act.

17. The foundational provision is s 172(2), which authorises an employer to make a single-enterprise agreement “with the employees who are employed at the time the agreement is made ....” An “employee” is “an individual so far as he or she is employed, or usually employed” by a national system employer (s 13). Reading this definition into s 172(2), the employer may make the agreement with the individuals who are employed, or usually employed, by the employer, but only to the extent that they are actually employed at the time the agreement is made. So to read s 172(2) does not have the effect of ignoring so much of the definition of “national system employee” as refers to an individual who is usually, but not immediately, employed by the employer. Rather, it recognises the legislative intention of confining, from within a broad class which include individuals who are usually, but not immediately, so employed, the relevant group to those who are employed at the time the agreement is made.”  11

[23] His Honour then considered the relevant provisions in the Act and concluded by identifying a chronological order which is implied by their terms:

“22. …. First, the employer agrees to bargain or initiates bargaining. Secondly, there is then a period of 14 days during which the employer gives the representational rights notices to the employees who were employed when the employer agreed to bargain. Thirdly, bargaining takes place. Although that process is not directly relevant to the subject here being considered, it should be noted that at least 21 days must pass after the giving of the last representational rights notification and the employer’s request under s 181(1). But there appears to be no outer limit to that period. Fourthly, the employer gives a copy of the agreement upon which it is proposed that the employees should vote, and other required materials, to the employees employed at that time. Fifthly, no more than seven days later, the employer requests the employees who are employed at that time to approve the agreement by voting for it. Sixthly, when a majority of those employees who cast a valid vote approve the agreement, the agreement is made.

23. It will be seen that, broadly, this scheme of things is divided into three stages: pre-bargaining steps, bargaining, and the making of the agreement. As noted above, although there are specific time limits for the taking of some of the required, or permitted, steps, there is no time limit on bargaining. There is no reason why bargaining may not take many months, and we may, I consider, take judicial notice of the fact that it sometimes does. The legislature must have contemplated that employees would, in the normal course of labour turnover, come and go during an extended bargaining period. There should, therefore, be no assumption that the employees employed at the notification time for the agreement under s 173 would be the same employees as those employed “at the time” of the provision of a copy of the agreement under s 180, or as those employed “at the time” of the employer’s request under s 181.

24. Indeed, in my view, the legislature must be taken to have made the contrary assumption. The architecture of these provisions inescapably involves the perception that those who are provided with a copy of the agreement and are requested to vote, on the one hand, need not be the same as those who were, at some previous point, notified of their representational rights, on the other hand. Those to whom a request under s 181(1) should be addressed are confined, in my view, to those who are employed at that time. No other conclusion makes sense of the statutory scheme.”  12

[24] His honour also expressed the following view:

“25. It is not necessary to consider whether employees to whom a copy of the proposed agreement was given under s 180 should, or may, be included within the requested group under s 181. The present case does not depend on such fine distinctions. However, and although the question was not argued, I would be disposed to the view that the “time” referred to in s 180(2)(a) is the whole of the “access period”. Since that period is, at its later boundary, contiguous with the time of the request under s 181, the better view may be that such employees should be so included.”  13

Consideration

[25] In this matter, the clear evidence is that the request to employees to approve the Agreement by voting for it, was made to employees who were not “employed at the time” when that term is applied in the manner determined by His Honour Jessup J. The evidence of Mr McMahon was that, of the group of 36 casual employees that he anticipated would participate in the project, none were employed at the time that voting for the Agreement commenced on 6 January 2016, nor when voting for the Agreement concluded on 7 January 2016.

[26] The employees requested to approve the Agreement by voting for it were casual employees. They were casual employees in the ordinary sense of being daily hire employees. They were not actually engaged in work or being paid at that time. Accordingly, it is apparent on the evidence that the employees who voted for the Agreement were not employed at the time.

[27] I have regard to the view expressed by His Honour Jessup J that the access period is part of the “time”. The state of the evidence is such that I cannot be satisfied that any or some of the 36 employees were employed during the access period. Indeed the evidence suggests that the contrary was the case.

[28] In the circumstances, I cannot be satisfied that a majority of employees employed by the Applicant at the time when it made its s.181 request, and who cast a valid vote, approved the Agreement. It follows from the linking of the various provisions of the Act set out above, that I cannot be satisfied that the Agreement has been genuinely agreed to pursuant to s.186(2)(a) and I therefore cannot approve the Agreement.

[29] I note that in the circumstances it was not necessary for me to consider the other ground of objection raised by the Unions which related to whether the application was accompanied by a properly signed copy of the Agreement.

COMMISSIONER

Appearances:

T Caspersz on behalf of the Applicant

E Douglas on behalf of The Australian Workers’ Union

T Kucera on behalf of the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)

Hearing details:

2016.

Melbourne by video link to Perth:

February 3.

Final written submissions:

3 February 2016

 1   Exhibit C1, Form F17 - Employer’s statutory declaration in support of an application for approval of an enterprise agreement, filed 12 January 2016.

 2   PN55

 3   Exhibit C2, Statutory Declaration of Stephen James McMahon, filed 2 February 2016.

 4   PN135

 5   PN205 – PN206

 6   PN162

 7   PN163

 8   PN208 – PN 226

 9 [2015] FCAFC 98

 10 [2015] FCAFC 98 [4] – [8]

 11 [2015] FCAFC 98 [13] – [17]

 12 [2015] FCAFC 98 [22] – [24]

 13 [2015] FCAFC 98 [25]

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