McMahon Services Australia Pty Ltd
[2019] FWC 6270
•16 OCTOBER 2019
| [2019] FWC 6270 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
McMahon Services Australia Pty Ltd
(AG2018/5865)
MCMAHON SERVICES AUSTRALIA PTY LTD ROOFING AND CLADDING DIVISION ENTERPRISE AGREEMENT 2018
Building, metal and civil construction industries | |
COMMISSIONER YILMAZ | MELBOURNE, 16 OCTOBER 2019 |
Application for approval of the McMahon Services Australia Pty Ltd Roofing and Cladding Division Enterprise Agreement 2018.
[1] An application has been made for approval of a single enterprise agreement known as the McMahon Services Australia Pty Ltd Roofing and Cladding Division Enterprise Agreement 2018 (the Agreement). The application was made on 19 October 2018 pursuant to s.185 of the Fair Work Act 2009 (Cth)(the Act). It was made by McMahon Services Australia Pty Ltd.
[2] The application was accompanied by a statutory declaration by Mr David McMahon, Director.
[3] The Agreement applies to all employees who are employed in the Roofing and Cladding Division of the business performing roof plumbing work and/or work covered by the Building and Construction General On-site Award 2010 (the Building Award) and Plumbing and Fire Sprinklers Award 2010 (the Plumbing Award).
[4] The Agreement does not cover all of the employees of the employer, however, taking into account the factors in ss.186(3) and (3A) I am satisfied that the group of employees was fairly chosen.
[5] At the time of voting for the Agreement there were 23 employees covered, of which 18 cast a valid vote and 17 voted to approve the Agreement. The employer notified employees of the time, place and method of the vote, by the start of the access period.
[6] The Notice of Employee Representational Rights (Notice) was in the prescribed form, and the employer issued the Notice to each employee covered by the Agreement at the time of notification in accordance with s.173 of the Act.
The CFMMEU request to be heard
[7] The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) after requesting copies of the F16 and F17 forms on 17 April 2019, lodged a request to be heard.
[8] My Chambers provided the CFMMEU copies of the materials requested and sought from the CFMMEU that it provides submissions establishing its status as a bargaining representative or otherwise its standing to be heard in relation to the matter.
[9] In response to the question that the CFMMEU establish its status as a bargaining representative or otherwise, the CFMMEU asserted:
• that it had a significant number of members employed by the Applicant’s business but could not confirm that their members would be covered by the Proposed Agreement because they assert that the coverage of the Proposed Agreement overlaps with the coverage of the McMahon Services Australia Pty Ltd Infrastructure, Demolition, Rehabilitation & Services Enterprise Agreement 2017, and
• it is unclear if the employees move between the employing entities, and
• the CFMMEU is covered by, and a bargaining representative for the McMahon Services Australia Pty Ltd (SA Demolition & Asbestos) Enterprise Agreement 2017
• If the CFMMEU does not have members who are covered by the Proposed Agreement, it is likely to have members covered by it in the future; or alternatively
• The Commission would be assisted by hearing from the CFMMEU in respect to whether the Proposed Agreement meets the requirements for approval, consistent with the Commission’s discretionary power pursuant to s.590 of the Act.
[10] The Applicant objected to the CFMMEU being heard on the basis that:
• The CFMMEU are not a bargaining agent
• The CFMMEU are unable to establish membership within the business unit
• The Agreement applies to a distinct operational unit, namely roofing and the work of roofing falls outside of the CFMMEU’s eligibility rules. That is, the Applicant does not employ workers as described by the CFMMEU coverage clause
• The business is a well-established business that has operated for some time and further, the work of the business unit which employs roof plumbers will not change markedly during the life of the Agreement to fall within the eligibility rules of the CFMMEU
• The CFMMEU were or ought to have been reasonably aware of the application, and failed to act expeditiously, which is causing the Applicant to suffer delay and prejudice, and
• in the event the Commission grants the CFMMEU permission to be heard, it should be limited to the information already contained in its filed materials.
[11] On 17 May 2019, upon consideration of the submissions of the CFMMEU regarding their request to be heard and the submissions of the Applicant opposing their submissions, I was not satisfied that the CFMMEU established its status as a bargaining representative. However, to enable the Commission to inform itself, I granted the CFMMEU permission to be heard pursuant to s.590(2)(b), and s.590(2)(h) to avoid additional delay in settling the status of the Agreement.
[12] I am exercising my discretion pursuant to s.590 of the Act consistent with observations of the Full Bench in Construction, Forestry, Mining and Energy Union v Collinsville Coal Operations Pty Ltd: 1
“[75] We would make the observation however, that the Commission may choose, in a particular case, to hear from an employee organisation or any other person about the approval of an agreement even though the organisation or person may not otherwise have a right to be heard. The Commission has a broad power to inform itself in relation to any matter in such manner as it considers appropriate, including by inviting oral or written submissions from a person of organisation.” 2
[13] The CFMMEU have membership in the building industry and are familiar with the Building Award. As such, the CFMMEU submissions have been considered and taken into account in arriving at this decision.
The position of the parties
[14] The CFMMEU opposed the approval of the Agreement on the grounds that:
• The Commission cannot be satisfied that the Agreement passes the Better Off Overall Test (BOOT) as required by s.193 of the Act
• There are incorrect and/ or misleading responses in the Applicant’s Form F17, inferring s.180(5) has not been met, and
• There is an associated concern with the above that the Agreement falls foul of s.188(c) of the Act.
[15] The additional requirements pursuant to s.187 are not in contention. There was no evidence to suggest that there was any issue with application of s.187 to this matter.
[16] The matter was listed for mention/ conference on 12 June 2019, where the issues in dispute were further clarified. Both the CFMMEU and the Applicant were invited to make written submissions.
[17] The CFMMEU submissions identify where in their analysis, the terms of the Agreement would render the employees worse off in comparison to remaining under the Building Award. This analysis included references to various allowances and operative clauses.
[18] The Applicant challenged the CFMMEU’s analysis as a line by line analysis and “grab bag” 3 of all award conditions regardless of their applicability to the work performed by the employees in the employer’s respective business unit.
[19] Prior to the CFMMEU intervention, the Commission conducted its own assessment of the Agreement and had requested evidence, submissions and/or undertakings to address its own identified issues. In addition to addressing the issues raised by the Commission, the Applicant responded to the CFMMEU submissions by providing additional undertakings to avoid any further undue delay in the approval of the Agreement.
[20] The CFMMEU submits that responses in the Form F17 are incorrect or misleading, inferring that s.180(5) has not been met, and therefore the Agreement was not genuinely agreed to by the relevant employees and therefore also falling foul of s.188(c).
[21] The CFMMEU’s submissions focus on the BOOT issues they identified to assert that employees did not have the Agreement terms properly explained, and based on their analysis of the proposed agreement, they therefore submit the Commission cannot satisfy itself that the Agreement was genuinely made.
[22] There is no dispute concerning notification, access, timing or vote.
[23] I have considered the submissions of the CFMMEU, the Applicant and the Commission’s own analysis of the Agreement.
Legislative framework
[24] The approval of an enterprise agreement is dealt with in Division 4, Part 2-4 of the Act. Section 186(1) provides that if the application for approval is made under s.185, the Commission must approve the agreement if the requirements under ss.186 and 187 are met. Section 186(2)(d) relates to the requirement that the agreement passes the BOOT. The Commission can approve agreements under this section with undertakings. 4
[25] Section 187 provides for additional requirements that must be met before the Commission approves an enterprise agreement under s.186. The provisions of this section relating to good faith bargaining, notice of variation of the agreement, requirements relating to particular kinds of employees and requirements relating to greenfields agreements are irrelevant to this matter.
[26] Section 186(2)(a) of the Act requires the Commission to be satisfied that if the agreement is not a greenfields agreement – the agreement has been genuinely agreed to by the employees covered by the agreement.
[27] Section 188 relates to when employees have genuinely agreed to an enterprise agreement. The relevant provisions are:
“188 When 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 section 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.” 5
[28] Section 193 of the Act deals with passing the better off overall test. The relevant provisions are:
“193 Passing the better off overall test
When a non-greenfields agreement passes the better off overall test
(1) An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.
…
Prospective award covered employee
(5) A prospective award covered employee for an enterprise agreement is a person who, if he or she were an employee at the test time of an employer covered by the agreement:
(a) would be covered by the agreement; and
(b) would be covered by a modern award (the relevant modern award) that:
(i) is in operation; and
(ii) would cover the person in relation to the work that he or she would perform under the agreement; and
(iii) covers the employer.
FWC may assume employee better off overall in certain circumstances
(7) For the purposes of determining whether an enterprise agreement passes the better off overall test, if a class of employees to which a particular employee belongs would be better off if the agreement applied to that class than if the relevant modern award applied to that class, the FWC is entitled to assume, in the absence of evidence to the contrary, that the employee would be better off overall if the agreement applied to the employee.” 6
[29] The Full Bench in Newlands Coal Pty Ltd v CFMEU 7observed that the Commission, in determining whether an enterprise agreement should be approved, ought to be mindful that:
“[33] FWA does not have a general discretion under the Act to determine whether an enterprise agreement should be approved. Rather, s.186 imposes an obligation on the tribunal to approve an agreement if a valid application for approval of the agreement is made under s.185 and the requirements of ss.186 and 187 are met.
[34] Broadly, the directions of s.187 involve examining the steps followed in the making of the agreement and the lodging of the application. Section 186 broadly involves the content of the agreement. Essentially, the role is one of examining whether the procedures followed leading up to the agreement being made were in accordance with what the Act requires and whether the content of the agreement satisfies certain conditions that the Act imposes.
[35] There is also a requirement for FWA to consider whether the agreement contains unlawful matters. What is an unlawful matter is defined by s.194. Additionally, and despite the requirements of s.186, Fair Work Australia may refuse to approve an agreement if a term of the agreement would mean compliance with that term would involve a breach of a Commonwealth law (s.192). There is no general role for the Tribunal to examine the validity of provisions in the agreement.
[36] The tribunal has no general nor specific power to rectify matters in the agreement if the terms of the agreement do not meet the requirements of the Act. The tribunal can accept undertakings, but those undertakings can only be accepted if they are regarding concerns over the meeting of the requirements of ss.186 and 187.
[37] In summary, the role of FWA is to decide on whether the prescribed rules for conduct and procedures have been followed in the making of the agreement and if an agreement is made did the parties agree to things which an agreement can be about and are the terms agreed sufficient to satisfy the tests set out in the Act.” 8
[30] In respect to s.188, the Full Bench Majority referenced Ostwald Bros Pty Ltd 9 in Huntsman Chemical Company Australia Pty Limited T/A RMAX Rigid Cellular Plastics & Others10(Huntsman) in relation to the pre-approval steps, the time frame requirements and other reasonable grounds that affect when employees may genuinely agree.
“[24] The Full Bench majority in Ostwald Bros Pty Ltd v CFMEU (Ostwald) described the operation of s.188(1) (then numbered s.188) in broad terms as follows:
[78] … “Genuinely agreed”, in s.188 is expressed in terms of satisfaction that particular bargaining provisions within the Act have been complied with (ss.188(a) and (b)) and satisfaction of a more general criterion in s.188(c), rather than in terms of a general consideration of whether in the circumstances of a particular agreement a member is satisfied that the agreement has been genuinely agreed to by the employees.
[79] As the Full Bench in Galintel noted “Section 188 establishes a set of requirements, each of which must be satisfied if the necessary finding is to be made under s.186(2)(a)”.
[80] Section 188 of the Act does not provide a wide general discretion for determining whether employees have genuinely agreed to an enterprise agreement focussed at the point of approval. Rather it requires specific actions to have been undertaken (in ss.188(a) and (b) at specified times in advance of approval), with s.188(c) then requiring satisfaction that there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees. Section 188(c) of the Act, although itself a broad discretionary consideration, is an additional matter about which [the Commission] needs to be satisfied and relates to grounds other than those arising in relation to the ss.188(a) and (b) matters.
[81] Section 188 of the Act is different, in that respect, from some previous statutory provisions concerning genuine agreement or genuine approval of agreements which were cast in general terms. For example, s.170LT (Certifying an Agreement) of the Workplace Relations Act 1996’. ” 11 [Citations omitted]
[31] The application of s.188 is clear that the Commission must be satisfied that in the process and the general requirements under the Act, that the employees genuinely agreed to the agreement. Section 188(c) is to be read sequentially following subsections 188(1)(a) and (b), and requires that pursuant to s.180 that the employees are given a copy of the agreement and material incorporated by reference in the agreement, or the employees have access to the material throughout the access period. 12 Further, it is required that the employer take all reasonable steps to explain the terms of the agreement and their effects to employees, considering the particular circumstances of the employees.13
[32] The CFMMEU contends that the Form F17 contained either incorrect or misleading information because it did not in its comparison of the Agreement with award terms include all terms that are reduced, less beneficial or omitted, consequently the CFMMEU infers from that information that s.180(5) had not been met. 14 Taking into account the CFMMEU objections to the Agreement, I have considered the submissions concerning the Form F17, BOOT and genuine agreement.
Form F17, award terms and s.180(5)
[33] The CFMMEU identified the Building Award terms that were not referenced in the Form F17 as either less beneficial, excluded or reduced:
Award provision | CFMMEU position 15 | Applicant position 16 |
Allowances- fares and travel (cl 25) Leading Hand (cl 19.2) Overtime meal allowance (cl 20.2) | Contends that while the base rates are higher than the Award, “they are unlikely to compensate for the removal of commonly applicable allowances” 17 | The Commission conducted modelling of a scenario potentially applicable under the proposed agreement; the Applicant states that despite the current working patterns of the employer which currently do not attract the various allowances, an undertaking was provided. The leading hand is a tradesperson rather than a labourer given the nature of the employer’s business. Notwithstanding, an undertaking was provided to deal with this matter. 18 The meal allowance is factored into the base rate of pay, and, given the nature of work i.e. the infrequent nature of overtime, the allowance weighs in favour of the BOOT. |
Dispute resolution procedure training leave cl 9.7 | Item not mentioned in F17 as less beneficial term | The Award clause is a contingent entitlement unlikely to be used as there are no union members and therefore the issue should be given marginal weight. |
Casual conversion cl 14.8 | Item not mentioned in F17 as less beneficial term | The proposed Agreement covers daily hire and no casuals are presently engaged by the employer. The casual loading is included in the casual employee’s base rate of pay for the purposes of calculating overtime, therefore the Applicant submits this outweighs the marginal disadvantage for casual conversion. The effect of the Skene decision would have to be considered if/ when applicable. |
New employee hours cl 19.4 | Item not mentioned in F17 as less beneficial term | The proposed Agreement applies to employees who are employed, not new employees not yet commenced. In any event if an employee presents for work and is not required, the employee will be paid the minimum of eight hours of pay. |
Tool & employee protection cl 20.1 Transporting of tools | Item not mentioned in F17 as less beneficial term | These allowances are included in the base rate of pay. In respect to transporting tools, the proposed Agreement provides more generous provisions with the living away from home allowance. Employees are also driven when living away from home. |
Compensation clothes & tools | Item not mentioned in F17 as less beneficial term | The proposed Agreement provides generous clothing entitlements including replacement for wear and tear. The Award does not provide for the provision of clothing, nor does it provide for replacement of equipment and to this extent the Agreement is more generous than the Award. |
Special & industrial allowance cl.21 & 22 | Item not mentioned in F17 as less beneficial term | Where relevant the allowances are included in the base rate and the affidavit from the employer confirms the unlikely exposure resulting in the payment of the allowance. An allowance of $1.00 per hour where applicable already covers the application of the allowances where applicable. Given the nature of the work undertaken, i.e. roof work, it falls under the Plumbing Award and that Award does not include a roof allowance for repairs |
Accident pay cl 27 | Item not mentioned in F17 as less beneficial term | Employees are South Australian based, and the State legislation is more generous than the Award |
Higher duties cl 30 | Item not mentioned in F17 as less beneficial term | The likelihood of applicability is infrequent given the nature of the work. Those performing higher level work for an extended period will be engaged in that classification |
Flexible work cl 37A | Item not mentioned in F17 as less beneficial term | The Award clause was inserted post-test time and nonetheless, the NES applies. The Applicant is prepared to provide a further undertaking in respect to the NES to avoid doubt. |
Family & domestic violence leave cl 41A | Item not mentioned in F17 as less beneficial term and proposed Agreement contains no such clause | This is provided in the NES and therefore applicable to Agreement covered employees. |
Superannuation cl 32.5 | Item not mentioned in F17 as less beneficial term and proposed Agreement contains no superannuation clause | The Agreement clause refers to ordinary time earnings under tax laws, employees are better off than if the award’s base rate of pay applied. The assessment of the BOOT is on the award base not on over award benefits. |
Consultation | Proposed Agreement does not require written information | The difference is a minor matter making no material difference to the BOOT |
Full-time & part-time | No requirement to agree in writing to the engagement of part-time work | The difference is a minor matter making no material difference to the BOOT |
Fixed term employment | No such category under the Award and no redundancy payment | The addition of fixed-term employment is not a disadvantage. The Award does not prohibit such arrangements and the proposed Agreement does not exclude such arrangements from the redundancy benefits as clause 8.4.1 incorporates the Award’s industry specific redundancy scheme. |
Apprentices | Agreement excludes various provisions contained in the Award including reference to school-based apprentices | The Applicant does not use school-based apprentices on roofing work due to its high-risk nature and is prepared to give an undertaking that the Agreement does not apply to school based apprentices |
Traineeships | Agreement contemplates traineeships but contains no rates & conditions | The employer does not presently engage trainees and is prepared to give an undertaking that in the event a trainee is engaged the provisions of clause 28 and schedule C and D of the Award would apply, save and except the trainee would receive an additional $1.00 per hour worked |
Ordinary hours of work | Agreement expands spread of hours by one hour, allows for 10 ordinary hours to be worked and does not include five minutes washing up time | There is a drafting anomaly with a conflict between clause 4.1.1(ordinary hours of work during summer months) and 11.2.7 (inclement weather – extreme heat affecting start and finish times). The Applicant is prepared to provide an undertaking that the provisions of clause 11.2.7 apply |
Time off in lieu of overtime | Award contains no time off in lieu provision | The proposed Agreement provides for TOIL paid at overtime rates on termination of employment and there is no disadvantage to employees using TOIL |
Shift work | Award definitions and penalties are more beneficial | Shift work is rare and problematic as roof work is unsafe at night. The employer recalls only one incident in 10 years where shift work occurred. |
Meal break | Proposed Agreement allows for a break after six hours compared to five in the Award | The Award provides for a meal break between noon and 1.00 pm, therefore a meal break will occur after six hours should the employee commence at 6.00am |
Taking paid annual leave | Close down not limited to the Christmas period | Any disadvantage would be marginal as the employee still receives their annual leave entitlement |
Leave loading | Payment of shift loading if higher than the 17.5% leave loading is not provided | The submissions are misguided and do not take into account shift work is inherently improbable. Additionally, the daily fares allowance is incorporated into the base rate of pay and therefore employees would receive the 17.5% loading on the base rates of pay which include the daily fares component. |
Cashing out annual leave | The Award limits two weeks in a 12-month period | This is not a disadvantage; the employee would have to apply for the encashment of leave and retains full control over whether and, if so, how much leave to cash out. |
Fares and travel patterns | There is no allowance in the metropolitan area and the allowance outside the metro radius “is less beneficial” | Daily fares and travel are included in the Applicant’s modelling. Travel outside the radial area is paid in 15-minute increments on the higher rate of pay than the Award. |
Living away from home | The proposed Agreement does not include a camping or messing allowance or other allowances per clauses 24.7(b), 24.7(d) or 24.7(f) | Clause 9.2.3 of the Agreement is a better provision than the camping and messing allowance or other allowances in the Award because employees are provided with accommodation. There is no camping or messing allowance under the Agreement because a more favourable allowance applies. This means employees are better off with the more favourable allowance and the provision of accommodation. The Applicant is prepared to provide an undertaking despite no employee being required to work away from home for two months or more. This undertaking, to avoid doubt, will provide that an employee required to work away from home for two or more months will be permitted to return home and be paid travel time in accordance with clause 9.2.3 of the Agreement. |
Training program | Clause 10.2.8 is less beneficial than the Award | The provisions are different, the proposed Agreement does not require the employee to pay up front for training. The differences are minor. |
Better Off Overall Test
[34] The CFMMEU submitted that each of the issues identified by them as BOOT deficiencies (Award omissions in part or in full) leave employees worse off, despite the higher rates of pay. As the Form F17 does not list the Award clauses that are omitted that leave employees worse off, it is in their view that the Agreement was not genuinely made as employees were likely to have been misled or inaccurate information was available for them to compare the benefits of the Agreement as opposed to their benefits under the Award.
[35] I provide the following assessment regarding each of the BOOT issues raised by the CFMMEU:
Award provision | FWC Assessment |
Allowances- fares and travel (cl 25) Leading Hand (cl 19.2) Overtime meal allowance (cl 20.2) | The Commission conducted its own modelling taking into account the impact of applicable allowances in the event employees worked a 50-hour week. While the Applicant submits a 50-hour week would not be a common situation, there is scope under the Agreement for this to occur. The Applicant proposes an undertaking that factors into the wages the fares allowance, meal allowance, tool allowance, industry allowance, special allowance and follow-the-job loading and an additional $1.00 per hour to satisfy the Commission. In respect to the leading hand allowance, the Applicant proposes an additional undertaking that a leading hand will either be provided with a vehicle to travel to/from work; or paid a base rate of pay that is greater than $1.50 per hour above the minimum for the employee’s classification; or paid an additional allowance of $1.50 per hour worked as a leading hand. I am satisfied with both undertakings (allowances and leading hand) as proposed. |
Dispute resolution procedure training leave cl 9.7 | It was not established that the business had any union members. On balance, the omission of training for union members will in my opinion have no real detriment in relation to the BOOT. |
Casual conversion cl 14.8 | The Agreement contemplates the engagement of full-time, part-time, casual, fixed term and daily hire employees. While at the time the Form F17 was completed there were no part-time or casual employees, and the Applicant suggests that casuals may not be commonly engaged, the Agreement does nevertheless, provide for casual employment and in particular, clause 3.2.3 allows for ongoing employment of casuals. Consequently, should casuals be engaged on an ongoing basis beyond six months, they will not be entitled to the benefit of casual conversion. I invite the Applicant to provide an undertaking that satisfies this matter. |
New employee hours cl 19.4 | I do not consider clause 19.4 of the Award as a concern impacting the BOOT. The Agreement contains ordinary hours provisions in Part 4. Employed daily hire and full-time employees work an 8-hour day, which includes 7.6 ordinary time and 0.4 towards an RDO. Clause 8.3.3 provides one day’s notice for daily hired employees. The likelihood of the event that a new employee presents themselves for work to commence employment and is subsequently not required is nominal or negligible at best when considered in a practical context. |
Tool & employee protection cl 20.1 Transporting of tools | The rates of pay in the Agreement are inclusive of the tool allowance. The Agreement does not offer employees the employee protection or transportation of tools entitlement. I am satisfied that the wages in the Agreement sufficiently absorb the tool allowance entitlement under the Award. In respect to the employee protection and transportation of tools entitlement, I am inclined to agree with the Applicant that the more beneficial living away from home entitlement offered by the Agreement offsets this entitlement. |
Compensation clothes & tools | The Agreement provides for the provision of uniform and personal protective equipment (PPE) and their replacement if damaged through no fault of the employee or through normal wear and tear. This is more generous than the Award. However, the Award does provide for replacement of tools should the premises be subject to fire, breaking and entering or when transporting tools at the direction of the employer and provided the employee takes care of their own tools, the replacement is at current replacement value. While the Agreement is silent, the employer presumably carries insurance for such events. I invite the Applicant to address this issue with an appropriate undertaking. |
Special & industrial allowance cl.21 & 22 | I am satisfied with the submissions and undertaking of the Applicant that the base rate and $1.00 per hour allowance where applicable provides for instances should employees be exposed to such circumstances under the Award and I am satisfied that employees under the Agreement are better off in this respect. |
Accident pay cl 27 | Accident pay pursuant to South Australian law is more beneficial, providing 52 weeks of pre-injury average weekly earnings. I am satisfied that employees are better off receiving the state legislative entitlement in this respect. |
Higher duties cl 30 | Given the submissions of the Applicant I am not satisfied that employees will be disadvantaged by the omission of the Award clause. |
Flexible work cl 37A | This Award clause was introduced after test time. The Agreement incorporates the NES, and the Applicant has proposed an undertaking for the avoidance of doubt that the NES applies to employees covered the Agreement. I invite the Applicant to provide the undertaking as proposed. |
Family & domestic violence leave cl 41A | Omission of the Award clause does not disadvantage employees as the NES applies to employees and the Applicant has offered an undertaking clarifying this further. |
Superannuation cl 32.5 | Superannuation is governed by the superannuation guarantee legislation, which the Award clause confirms. There is no likelihood of disadvantage to employees in terms of the BOOT by not including the Award clause. |
Consultation | The difference in the wording does not produce a result where the BOOT is not met and there is no likelihood that employees will be disadvantaged. |
Full-time & part-time | The difference in the wording does not produce a result where the BOOT is not met and there is no likelihood that employees will be disadvantaged. |
Fixed term employment | The Award does not prohibit the engagement of fixed term employment and the redundancy provisions under the Agreement do not exclude fixed term employees from the benefit. There is no disadvantage to employees. |
Apprentices | The employer does not engage school-based apprentices due to the high-risk work on roofs and is prepared to provide an undertaking clarifying this position. I invite the Applicant to provide an undertaking to avoid doubt. |
Traineeships | The employer at this stage does not employ trainees, however, has offered to provide an undertaking to confirm the rates and conditions applicable should a trainee be engaged. As the Agreement contemplates trainees, I invite the Applicant to provide the undertaking as proposed. |
Ordinary hours of work | The concerns raised by the CFMMEU identified a potential anomaly where clauses 4.1.1 and 11.2.7 are not obviously linked. The Applicant offered an undertaking to ensure the link is clear. I invite the Applicant to provide the undertaking. |
Time off in lieu of overtime | While the Award contains no time off in lieu provision, the Agreement offers the entitlement as a benefit and there is no disadvantage to employees using time off in lieu or when paid accrued time off in lieu on termination of employment. |
Shift work | The shift work provisions of the Award are not entirely suited to the work of the employer as I accept the Applicant’s submissions that roof work is unsafe at night. I am satisfied that the employees are not disadvantaged by the omission of the Award clause. |
Meal break | The differences in the Award and Agreement are minor to not disadvantage employees. |
Taking paid annual leave | Employees are not disadvantaged from taking their annual leave entitlement. |
Leave loading | Payment of shift loading in lieu of 17.5% leave loading is unlikely given the nature of the work conducted by the Applicant. |
Cashing out annual leave | Omitting the Award limitation of two weeks in a 12-month period does not disadvantage employees. The provision in the Agreement is consistent with ss.92 – 94 of the NES. Additionally, the undertaking offered by the Applicant in relation to the NES satisfies this matter. |
Fares and travel patterns | I am satisfied that employees are better off in this respect. |
Living away from home | I am satisfied that employees are better off in this respect. |
Training program | The Agreement and Award clauses operate procedurally different. I am not satisfied that employees are likely to be disadvantaged. |
[36] On assessment of the Agreement together with the further undertakings by the Applicant, I am satisfied that the Agreement contains a number of benefits and or improvements that are above the Award. The improvements to employee conditions include higher base rates of pay, which compensate for the meal allowance, fares allowance, follow-the-job loading, asbestos allowance, industry allowance and the special allowance; casual employees receive the casual loading for all purposes including during overtime; tool allowance and transportation of tools; travel and inclement weather payments are not capped and living away from home allowances.
[37] In my opinion, employees are better off under the Agreement than the relevant Modern Awards, and the benefits of the Agreement outweighs the minor possible disadvantage to employees should they remain subject to the Awards operative conditions.
S.180(5) and genuinely agreed
[38] The CFMMEU contend that there are reasonable grounds and a real concern that the proposed Agreement falls foul of ss.188(1)(c) because there are “incorrect and/or misleading responses in the Applicant’s Form F17, which indicate a likelihood that the requirements at s.180(5) of the Act has not been met” 19. The CFMMEU submit that if the F17 is taken to set out the employer’s understanding of the Agreement and, if that understanding is erroneous, this will presumably have resulted in the provision of misleading explanation to employees and will impact on whether or not the Agreement has been genuinely agreed.
[39] I am not satisfied that the Form F17 was misleading or inaccurate as submitted by the CFMMEU. Based on the BOOT analysis there is no evidence to support the contention that the Applicant deliberately misled or provided inaccurate information to the Commission in the Form F17, and consequently that that information was inaccurate or misled employees. The Form F17 was prepared for the purpose of accompanying an application for an agreement to inform the Commission. The Form F17 purpose is not to be provided to employees prior to the vote. There is no suggestion on the evidence that the Form F17 was provided to employees or that any omissions or errors were communicated to employees prior to the vote. The Form records the related clauses in the Agreement that are either less or more beneficial than the Award, it does not list every Building Award clause that the CFMMEU has identified as being less beneficial. The BOOT analysis above supports the contention of the Applicant that not all Award clauses are relevant, and if relevant, present minor differences that do not disadvantage employees.
[40] The analysis of the BOOT and the consideration of what was provided in the Form F17 does not lead me to conclude that the responses in the Form F17 were misleading or incorrect to affect the genuineness of the Agreement by the employees. I concur with the statement made in BCG Contracting Pty Ltd, 20 by Deputy President Gostencnik where he observed:
“[92] To the extent that the Unions rely on the decision in Construction, Forestry, Mining and Energy Union v Shamrock Civil Pty Ltd in support of their contention, that decision does not and cannot establish a decision rule as to the consequences of misstatements in an employer’s statutory declaration. The significance of the misstatement will depend on the circumstance including, importantly, that which was actually communicated to the relevant employees.” 21 (Citations omitted)
[41] The Applicant provided all relevant materials to employees including the proposed Agreement and had a number of meetings with employees and their bargaining representatives. Further I am satisfied that the Applicant considered proposals from the employees before finalising the Agreement that went to a vote of employees.
[42] The Applicant filed two Affidavits, from Messrs Lowe (tradesman) and Elland (construction manager) dated 25 June 2019. Mr Lowe states in his Affidavit that during 2018, employees were aware that an enterprise agreement was coming up. Employees met with themselves to discuss the Award, entitlements and the negotiations for an Agreement. The Affidavit states that the senior employees spent time with those less experienced in enterprise agreement negotiations to explain the Construction Awards conditions, other entitlements and the negotiation process. Mr Lowe’s affidavit also refers to the process conducted by the Applicant when bargaining began, including his observations of employee meetings with the Applicant and the ongoing employee meetings. Mr Lowe was selected spokesperson for the employees to advance the employee led negotiations. Mr Lowe’s statement refers to the negotiations that led to the final version of the Agreement and the understanding of employees relating to the Agreement.
[43] The Affidavit of Mr Elland states that he was primarily responsible for the negotiation of the Agreement on behalf of the company. He states that employees in the roofing division have traditionally been paid over Award payments to compensate for various loadings and allowances. In or around March 2018, the supervisors were advised in advance that the company was considering making an Agreement. Bargaining commenced in August 2018. Mr Ellard states he met individually with each employee and on some occasions with more than one employee at a time. He confirms each employee was given a copy of the Agreement and a copy of their above Award terms and conditions. Employees were explained the Agreement and its effect on their terms and conditions. All employees were given time to review the information and ask questions. Mr Elland confirms that employees nominated Mr Lowe as their spokesperson when negotiating the terms of the Agreement. Mr Elland attached to his affidavit documentation that was provided to employees and the employee response from Mr Lowe on behalf of employees with the suggested changes to the draft agreement for consideration by the company.
[44] Evidence from the Affidavits is that the Applicant engaged with employees and reasonable steps were taken. The steps taken were not in my opinion a mere formality, as was an issue in OneKey Workforce Pty Ltd v CFMEU. 22 In this matter, I am satisfied that employees are paid above the Awards, they advanced their own demands during negotiations and the demographics of the group did not identify any particular requirements that would affect their ability to engage or understand the Agreement or the negotiations leading to the making of the Agreement. Material submitted which includes email correspondence from Mr Lowe demonstrates that the employees were active participants in advancing their claims during negotiations and understood the terms of the Agreement.
[45] The employees agreed to the Agreement in October 2018, after a revised Agreement was distributed in September and after negotiations first commenced in July 2018. The vote of 17 out of 18 employees that voted from among 23 eligible to vote is a clear majority.
[46] The employer provided all employees a copy of the CFMMEU submissions and asked if there were any concerns before making final submissions to the Commission. No employee raised concerns regarding the Agreement that was voted on and lodged with the Commission.
[47] I am satisfied that all employees had a reasonable opportunity to make an informed decision and decide on the Agreement prior to lodgement and had a subsequent opportunity to consider their position following the objections raised by the CFMMEU.
Consideration
[48] The Commission should approve a valid agreement lodged pursuant to s.185 that meets ss.186 and 187. Requirements relating to the safety net can be met with undertakings. The Commission must also be satisfied that the agreement was genuinely made by the employees.
[49] I am satisfied with the evidence of the Applicant that it complied with s.180, including ss.180(5). Employees had access to the Agreement, meetings were held to explain the terms of the Agreement and their effects, notice requirements were met and feedback from employees was taken into account in the final drafted version of the Agreement for vote. The vote consisted of a majority number of employees and the vote in favour was a clear majority.
[50] The CFMMEU contention that the Form F17 failed to list all clauses of the Building Award that are either less beneficial or more beneficial than the Agreement as the basis for arguing that the explanation to employees was deficient is reliant on a line by line analysis. The analysis of the Building Award clauses against the Agreement show that not all Award clauses are relevant or would result in disadvantage to employees. The Applicant agreed to address the Commission’s concerns through undertakings. In addition, the Applicant agreed to undertakings to clarify circumstances concerning allowances, school-based apprentices, trainees and to rectify the ordinary hours of work clause anomaly.
[51] In response to the request for information from the Commission, the Applicant submitted an affidavit of Ms Jayne Bettison, Human Resources Manager for McMahon Services which confirms that the Roof Division has been operating since around 2006, employs 20 people, although this can fluctuate depending on the work, and work is performed in commercial and industrial construction, such as warehouses. The work does not involve commercial high-rise work or tiling as the materials are metal sheet roofing (i.e. colorbond type product). The Division does not install roof trusses or similar products nor works with fibreglass, cement, asbestos or tar-based products. Rarely, the Division may perform roof repairs, although this work is performed by roof plumbers on metal sheet roofing and guttering.
[52] The working patterns of employees is Monday to Friday 7.00am to 3.30pm with overtime not being common except where working away from home. Saturday work may occur once every two to three months and this may include six-eight hours of work. When staff work away from home, there is a preference to work overtime, therefore the workday may be 10 to 12-hour days. Shift work is rare, and Ms Bettison recalls one occasion in the past ten years, where shift work occurred over a short period. This is because the work at night is dangerous as lighting is difficult on top of the roof. It was confirmed that leading hands are tradespeople. It was stated that the pattern of work is consistent, and it is not expected that the pattern of work will alter over the life of the Agreement.
[53] Given the submissions of the Applicant, the evidentiary material, and the modelling from the Commission based on assumptions applicable to more general construction sites, I am satisfied that the provisions of the Agreement in respect to shift work and work arrangements meets the BOOT.
[54] I am also mindful that the Agreement contains additional benefits that were not listed in the Form F17. These additional benefits include, higher minimum base rates of pay, casual loading incorporated in the casual base for the purposes of determining the overtime rate, superannuation, travel time not capped, and an uncapped inclement weather benefit.
[55] Based on matters raised by the Commission concerning the potential application of meal, travel and leading hand allowance, the Applicant addressed those issues with undertakings.
[56] The Applicant proposed a range of undertakings to address the issues raised by the Commission and the CFMMEU. The following lists the proposed undertakings:
• The Applicant proposed increasing base rates of pay for all eight classification levels consistent with Attachment 1 to the Applicant’s submissions. 23 This undertaking ensures the hourly rate covers any contingencies relating to allowances.
• Leading hand work is conducted by tradespeople and in response to the CFMMEU concerns that the Agreement does not contain a leading hand allowance, the Applicant undertakes to include a commitment to provide the leading hand with a vehicle to travel to and from work or pay $1.50 per hour above the employee’s classification, or pay a leading hand allowance of $1.50 per hour (which may be reduced commensurate with any over-Agreement payment paid to the employee).
• School-based apprentices are not employed by the Applicant due to the high-risk nature of working on roofs. The undertaking will confirm that the Agreement does not cover school-based apprentices
• While the Applicant does not employ trainees at present and the Agreement allows for their employment, the Applicant will provide an undertaking that a trainee will be engaged subject to the provisions of clause 28 of the Award, and Schedule C and D would apply, save and except the trainee would receive an additional $1.00 per hour worked.
• In terms of the ordinary hours of work, the Applicant will provide an undertaking that links clause 11.2.7 with 4.1.1 of the Agreement to resolve an apparent conflict or anomaly.
• Despite the unlikelihood of an employee being required to work away from home for a period of two or more months, the Applicant is prepared to provide an undertaking that an employee required to work away from home for two or more months will be permitted to return home and be paid travel time in accordance with clause 9.2.3 of the Agreement
[57] I consider pursuant to s.193 that the undertakings as proposed by the Applicant ensure that each employee covered by the Agreement is better off overall than if the Building Award and Plumbing Award applied to their employment. I also invite the Applicant to address the issue of casual conversion and compensation for clothing and tools allowance with an appropriate undertaking. My Chambers will be in contact with the parties in relation to the filing of the undertakings and next steps.
[58] Subject to the undertakings referred to above, and on the basis of the material contained in the application and accompanying statutory declarations, I am satisfied that each of the requirements of ss.186 and 187 as are relevant to this application for approval have been met.
[59] I am satisfied that the employees genuinely agreed to the Agreement. I am satisfied that the employer had taken the appropriate reasonable steps pursuant to s.180(5), and the facts and circumstances of this case satisfy the Commission that the Agreement was genuinely agreed to by the employees covered by the Agreement. For the avoidance of doubt, I am also satisfied that there are no other grounds (reasonable or otherwise) to believe that the Agreement was not genuinely agreed to by the employees who voted to approve it. 24
COMMISSIONER
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1 [2014] FWCFB 7940.
2 Ibid at [75].
3 Applicant’s submissions filed 8 May 2019 at [48].
4 Fair Work Act 2009 (Cth) s.190.
5 Ibid s.188.
6 Ibid s.193.
7 [2010] FWAFB 7401.
8 Ibid at [33]-[37].
9 [2012] FWAFB 9512.
10 [2019] FWCFB 318.
11 Ibid at [24].
12 Fair Work Act 2009 (Cth) ss.180(2)(a),(b).
13 Ibid s.180(5).
14 CFMMEU Submissions filed 26 April 2019 at [23]-[24].
15 Ibid at [9]-[21].
16 Applicant’s Outline of Submissions filed 8 May 2019 at [52]-[54].
17 CFMMEU Submissions filed 26 April 2019 at [11].
18 Applicant’s Submissions filed 27 May 2019.
19 CFMMEU Submissions filed 26 April 2019 at [2(b)].
20 [2018] FWC 1466.
21 Ibid at [92].
22 [2018] FCAFC 77.
23 Applicant’s submissions filed 8 May 2019 at [63]; Attachment 1.
24 Fair Work Act 2009 (Cth), s.188(c).
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