McNab Constructions Pty Ltd

[2020] FWCA 3329

[2020] FWCA 3329

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement

McNab Constructions Pty Ltd
(AG2020/892)

MCNAB CONSTRUCTIONS PTY LTD ENTERPRISE AGREEMENT 2020

Building, metal and civil construction industries
DEPUTY PRESIDENT LAKE	BRISBANE, 25 JUNE 2020

Application for approval of the McNab Constructions Pty Ltd Enterprise Agreement 2020.

[1] McNab Constructions Pty Ltd (the Applicant) has applied for approval of an enterprise Agreement known as the McNab Constructions Pty Ltd Enterprise Agreement 2020 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act). The Agreement is a single enterprise agreement.

[2] On 15 April 2020, correspondence was sent to the Applicant identifying concerns in relation to pre-approval requirements, in particular the Applicant’s failure to provide a copy of the Notice of Employee Representational Rights (NERR), and whether the Agreement passes the better off overall test (BOOT) when compared to the Building and Construction General On-Site Award 2010 (the Award). On 16 April 2020, the Applicant provided a detailed response to the concerns raised by the Commission and a copy of the NERR issued.

[3] The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU/the Union) corresponded with the Commission regarding the application seeking that the Commission exercise its discretion under s.590 of the Act to hear from the Union in relation to its opposition to the approval of the Agreement. The CFMMEU conceded that it was not a bargaining representative for the Agreement but maintained that it was the primary union which covers employees engaged under the Award and has extensive history of industrial representation of workers in respect of the work covered by the Award. On this basis, the CFMMEU submitted it would be of assistance to the Commission in response to whether the Agreement should be approved.

[4] Given the absence of a contradictor in the proceedings, I decided to exercise the direction under s.590 of the Act to hear from the CFMMEU.

[5] I issued directions for filing of material in the matter on 16 April 2020. On 20 April 2020, the CFMMEU provided submissions opposing approval of the Agreement. On 1 May 2020, the Applicant provided submissions in reply to the CFMMEU’s submissions and the concerns identified by the Commission.

EVIDENCE AND SUBMISSIONS

[6] The issues raised by the Union can be summarised as follows:

•  The Commission cannot be satisfied on the basis of the material filed by the Respondent that all reasonable steps were taken to explain the terms of the Agreement and their effect;

•  In particular, the group of employees to be covered by the Agreement have not be “fairly” chosen for the purposes of s.186(3) of the Act;

•  The Commission cannot be satisfied that the Agreement does not contravene s. 55 of the Act, and the Agreement is therefore incapable of approval; and

•  The Agreement does not pass the Better Off Overall Test (BOOT).

Better off overall test (BOOT)

[7] Section 193 of the Act provides:

“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.

FWC must disregard individual flexibility arrangement

(2) If, under the flexibility term in the relevant modern award, an individual flexibility arrangement has been agreed to by an award covered employee and his or her employer, the FWC must disregard the individual flexibility arrangement for the purposes of determining whether the agreement passes the better off overall test.

When a greenfields agreement passes the better off overall test

(3) A greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that 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.

Award covered employee

(4) An award covered employee for an enterprise agreement is an employee who:

(a) is covered by the agreement; and

(b) at the test time, is covered by a modern award (the relevant modern award) that:

(i) is in operation; and

(ii) covers the employee in relation to the work that he or she is to perform under the agreement; and

(iii) covers his or her employer.

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.

Test time

(6) The test time is the time the application for approval of the agreement by the FWC was made under section 185.

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.”

[8] The BOOT is an evaluative determination, not to be not to be conducted via a line by line analysis. 1 It is an assessment that requires consideration of the advantages and disadvantages of an enterprise agreement to award covered employees and prospective award covered employees. There will invariably be some advantages to making an agreement, as there will likely be some disadvantages. An enterprise agreement may pass the BOOT even if some award benefits have been reduced, so long as they are more than offset by the benefits of the enterprise agreement.2 Ultimately the application of the BOOT is a matter that involves the exercise of discretion and it is a value judgment.3

[9] In order to properly apply the BOOT in the present case, it is necessary to construe the terms of the Building and Construction General On-Site Award 2010 (the Award). The approach to the interpretation of Enterprise Agreements was extensively considered by a Full Bench of the Commission in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers Union (AMWU) v Berri Pty Limited (Berri): 4

“[114] The principles relevant to the task of construing a single enterprise agreement may be summarised as follows:

1. The construction of an enterprise agreement, like that of a statute or contract, begins with a consideration of the ordinary meaning of the relevant words. The resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose. Context might appear from:

(i) the text of the agreement viewed as a whole;

(ii) the disputed provision’s place and arrangement in the agreement;

(iii) the legislative context under which the agreement was made and in which it operates.

2. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.

3. The common intention of the parties is sought to be identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement, without regard to the subjective intentions or expectations of the parties.

4. The fact that the instrument being construed is an enterprise agreement made pursuant to Part 2-4 of the FW Act is itself an important contextual consideration. It may be inferred that such agreements are intended to establish binding obligations.

5. The FW Act does not speak in terms of the ‘parties’ to enterprise agreements made pursuant to Part 2-4 agreements, rather it refers to the persons and organisations who are ‘covered by’ such agreements. Relevantly s.172(2)(a) provides that an employer may make an enterprise agreement ‘with the employees who are employed at the time the agreement is made and who will be covered by the agreement’. Section 182(1) provides that an agreement is ‘made’ if the employees to be covered by the agreement ‘have been asked to approve the agreement and a majority of those employees who cast a valid vote approve the agreement’. This is so because an enterprise agreement is ‘made’ when a majority of the employees asked to approve the agreement cast a valid vote to approve the agreement.

6. Enterprise agreements are not instruments to which the Acts Interpretation Act 1901 (Cth) applies, however the modes of textual analysis developed in the general law may assist in the interpretation of enterprise agreements. An overly technical approach to interpretation should be avoided and consequently some general principles of statutory construction may have less force in the context of construing an enterprise agreement.

7. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or it is ambiguous or susceptible of more than one meaning.

8. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.

9. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.

10. If the language of the agreement is ambiguous or susceptible of more than one meaning then evidence of the surrounding circumstance will be admissible to aide the interpretation of the agreement.

11. The admissibility of evidence of the surrounding circumstances is limited to evidence tending to establish objective background facts which were known to both parties which inform and the subject matter of the agreement. Evidence of such objective facts is to be distinguished from evidence of the subjective intentions of the parties, such as statements and actions of the parties which are reflective of their actual intentions and expectations.

12. Evidence of objective background facts will include:

(i) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;

(ii) notorious facts of which knowledge is to be presumed; and

(iii) evidence of matters in common contemplation and constituting a common assumption.

13. The diversity of interests involved in the negotiation and making of enterprise agreements (see point 4 above) warrants the adoption of a cautious approach to the admission and reliance upon the evidence of prior negotiations and the positions advanced during the negotiation process. Evidence as to what the employees covered by the agreement were told (either during the course of the negotiations or pursuant to s.180(5) of the FW Act) may be of more assistance than evidence of the bargaining positions taken by the employer or a bargaining representative during the negotiation of the agreement.

14. Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or rewrite the provision in order to give effect to an externally derived conception of what the parties’ intention or purpose was.

15. In the industrial context it has been accepted that, in some circumstances, subsequent conduct may be relevant to the interpretation of an industrial instrument. But such post-agreement conduct must be such as to show that there has been a meeting of minds, a consensus. Post-agreement conduct which amounts to little more than the absence of a complaint or common inadvertence is insufficient to establish a common understanding.”

[10] The Union took issue with a number of provisions of the Agreement, when compared with the Award, and argued the Agreement did not pass the BOOT. The Union also referred to the Load Rates Agreement decision, 5 noting that the BOOT assessment is not limited to remuneration and requires consideration of comparative advantages and disadvantages of monetary and non-monetary benefits.

[11] In response, the Applicant noted that the Award covers on-site building, engineering and civil construction industries. When completing the Form F17, the Applicant stated that focus was placed on conditions specifically relevant to the Applicant’s work environment, which is the on-site building industry, and features specific to its own operations.

[12] The Union raised issue with the Form F17 lodged by the Applicant. In particular, the Union stated that, although correctly identifying that the Agreement contained terms less beneficial when compared to the Award (industry specific redundancy scheme, overtime penalties, public holiday penalties and overtime meal allowance), the Applicant failed to bring to the Commission’s attention that the Agreement also did not include a range of provisions provided by the Award.

[13] The Applicant submitted that the following provisions of the Award raised by the Union are not applicable to work carried out by the Applicant, and consequently, did not identify them in its F17:

•  Mobile cranes capacity adjustment formula – clause 19.5 of the Award;

•  Site and general wage related allowances (but for the multi-storey allowance and first aid allowance) – clause 21 of the Award;

•  Special rates – clause 22 of the Award;

•  Certain work practices giving rise to entitlement to overtime and penalty rates:

•  Recalling employees after the conclusion of ordinary time hours – minimum of three hours’ payment if so recalled;

•  Requiring employees to work continuously for 20 hours – provision of 12-hour break without loss of pay

•  Rostering employees to work less than four hours on a Sunday or Public Holidays – minimum of four hours’ payment; and

•  Requiring work to be performed on the Saturday after Good Friday – which is to be paid at double time and a half

•  Work the subject of the qualifying provisions of clause 24.1(a) of the Award (distant work) because of clause 24.1(a)(i).

[14] The Applicant submitted that the multi-storey allowance and first aid allowance were taken into account in the Applicant’s BOOT modelling calculations prior to commencing negotiations.

[15] The Union also raised issue that the Agreement did not reflect the following Award provisions.

Overtime and penalty rates

[16] The Union noted that the Applicant’s Form F17 acknowledged a diminution in relation to overtime worked between Monday to Friday, to the extent that the extended span of hours provided by the Agreement results in reduced access to overtime. The reduced public holiday penalties were also recognised by the Applicant as being less beneficial in its Form F17. The Union raised is that the Agreement did not include:

•  An entitlement to a minimum of three hours’ payment for an employee that is recalled after the conclusion of ordinary time hours provide under clause 36.3 of the Award;

•  A prohibition on employees under the age of 18 working shift or overtime;

•  A requirements that all overtime performed after 12:00 noon on Saturday be paid at double time;

•  A requirement that the Applicant provide transport or pay transport costs for employees who complete overtime when no reasonable means of transport is available;

•  A requirement that employees who have worked continuously for 20 hours receive a 12 hour break without loss of pay;

•  An entitlement to a minimum of 4 hours’ pay for employees required to work on a Sunday or a public holiday; and

•  A requirement that all worked performed on the Saturday after Good Friday be paid at double time a half.

[17] The Applicant submitted that the requirement that overtime after 12 noon on a Saturday to be paid at double is not applicable, nor is the requirement to provide transport or pay transport for employees who complete overtime when no reasonable means of transport is available According to the Applicant, this circumstances has never arisen. Irrespective of this, the Applicant maintains that the above items have been compensated for by the high wage rates and overall better conditions provided by the Agreement.

[18] In relation to the prohibition on employees under the age of 18 working shift work and overtime, the Applicant submitted that clause 15.3(b) and 36.5 of the Award are consistent with clause 16.1(vi) of the Agreement, except for the reference to shift work, which is addressed by virtue of clause 11.8.

Termination of employment

[19] The Union submitted that the Agreement confirms that an employee is required to give the Applicant the equivalent notice period they would have been entitled to receive, with the exception of having to give an additional weeks’ notice if over the age of 45 and with two years’ of service. The Union took issue that the Agreement failed to provide the prohibition contained in the Award that prevents the employer from withholding an amount not exceeding one weeks’ wage in circumstances where the requisite period of notice is not given.

[20] The Union also submitted that the Agreement does not provide that the Applicant is required to pay all monies owing to an employee on the date of termination or where this is not practicable, within two working days following termination.

[21] In response, the Applicant submitted that it processes it payroll on a weekly basis, including, where relevant, any termination payments that may be payable. The Applicant also submitted that the Agreement does not enable the practice of withholding pay where requisite notice is not given, which is otherwise prohibited under s.324 of the Act. Accordingly, the Applicant stated that is no need for the Agreement to expressly contain this prohibition.

Annual leave

[22] The Union submitted that the Agreement contains no entitlement to leave loading, however noted that the Applicant has stated it has been factored into the loaded rates. The Union also took issue that the Agreement does not enable an employee to access annual leave in advance of accrual, in accordance with clause 38.4 of the Award.

[23] The Applicant submitted that it had in place a system for all employees to apply for leave in arrears and maintained that leave loading was taken into account in the Applicant’s BOOT modelling calculations prior to commencing negotiations.

[24] After requesting further information regarding the Applicant’s “leave in arrears” system, the Applicant submitted its system permits employees to take annual leave before it has fallen due, putting their leave account in arrears. The Applicant also provided the below undertaking to maintain the system:

“In respect of clause 14.1(ii) of the Agreement, we undertake to maintain our existing system which permits employees to take annual leave before it has fallen due (which puts their leave account in arrears), in accordance with clause 38.4 of the Building and Construction General Onsite Award 2010.”

Meal allowances

[25] The Union submitted that the Agreement does contain a provision pertaining to the timing of a meal break. The Union also took issue that the Agreement does not include the ability for a majority of employees to agree to an extension of a meal break to 45 minutes in certain circumstances, and that there is no entitlement to be paid crib time of 20 minutes after the completing of two hours ‘overtime, nor a 30 minutes paid crib break for each four hours worked thereafter. The Union also submitted that the Agreement does not contain breaks for employees working with toxic substances, as per clause 35.4 of the Award.

[26] The Applicant submitted the Agreement provides for better conditions in relation to meal allowances. In regards to the timing of the meal break, the Agreement states that breaks will be taken at times agreed to by the Applicant and its employees, which is generally consistent with the ability to agree under clause 25.1(a) of the Award, and provides increased flexibility and a greater degree of self-determination for the Applicant’s individual employees. The Applicant submits this is a benefit, not a disadvantage.

[27] Regarding the ability for a majority of employees to agree to an extension of a meal break to 45 minutes, the Applicant submitted that this is a consistent benefit under the Award (and the employees have already decision how the meal break is to be taken, by voting for the Agreement) and the Agreement provides for paid rest breaks of 20 minutes in excess of the equivalent entitlement under clause 35.3(a) of the Award.

Living away from Home allowance

[28] The Union submitted that the Agreement omits several conditions related to employees living away from home that are otherwise conferred in the Award. They are:

•  The provision of a meal allowance when on a forward and return journey;

•  Weekend return home allowance, which apples under the Award provided that no ordinary hours of work are missed

•  Rest and recreation entitlements after two months’ continuous service and every three months thereafter, which includes paid transport home and two days’ paid leave in certain circumstances; and

•  Provisions for extended notice of termination to allow for arrangement of suitable transport on termination.

[29] The Applicant submitted that, notwithstanding the employees are not performing work subject of the qualifying provisions of clause 24.1(a) of the Award, the Agreement provides for meal allowances which apply in circumstances of forward and return journeys, at clause 12.7(i)(c) of the Agreement, and provides pay for time spend travelling (thereby covering this circumstance) at clause 12.7(i)b) of the Agreement. The Applicant submitted that the Agreement provides for better conditions that that contained in the Award.

[30] In response to the issue regarding the provision for extended notice of termination to allow for arraignment of suitable transport on termination, the Applicant provided the following undertaking to address the concern:

“4. In clause 12.7 of the Agreement dealing with Working Away from Home, we undertake apply clause 24.7, f, (ix) of the Building and Construction General On-site Award 2010.”

Types of employment

[31] The Union submitted that, in relation to part-time employees, the Award requires at clause 13.3 and 13.4 that an employer to provide information as to the days and hours to be worked, in addition to start times and confirmation of the applicable classification. The Award dictates that casual employees be informed as to the job they are to perform, their classification level and the actual or likely number of hours worked.

[32] The Union noted that clause 8 of the Agreement requires that the Applicant confirm the mode of employment on commencement. The Union, however, took issue that the Agreement does not require the Applicant to provide the more prescriptive information as outlined in clause 13.3 and clause 13.4 of the Award.

[33] In response to this issue, the Applicant provided the following undertaking to address the concern:

“In clause 8 of the Agreement dealing with Employment Status, we undertake to provide employees with details of the relevant type of employment, classification level, working days and hours, and start times in the employee’s Contract of Employment at commencement of their employment, consistent with the requirements of clauses 13.3, 13.4 and 14.3 of the Building and Construction General On-site Award 2010.”

Apprentices

[34] The Union took issue that the Agreement appears to contain no express prohibition of a payment by results system for apprentices.

[35] The Applicant submitted that the Agreement covers this field by providing a method of payment for apprentices; any other method (including by a results system) would not be possible as it would be in conflict with the Agreement. The Applicant argued that consequently, there is no need for the Agreement to expressly contain this prohibition.

Presenting for work but not required

[36] The Union submitted that clause 19.4 of the Award entitles a new employee that attend work but is not required to, payment of 8 hours’ wage, in additional to the appropriate fares and travel allowance. However, the Agreement does not contain an equivalent provision.

[37] In response, the Applicant submitted that due to the way it operates its business, having numerous worksites where work is prearranged and rostered, and being sophisticated in its allocation of labour, these circumstances would not arise. The Applicant maintained that in any event, such an employee would be entitled to the minimum notice of termination of employment provisions in clause 18.3 of the Agreement. As such, it is the Applicant’s submission that clause 19.4 of the Award is either obsolete, or such a hypothetical employee would be better off under the Agreement.

Superannuation

[38] The Union acknowledged that both the Award and the Agreement require the payment of superannuation contributions consistent with the Superannuation Guarantee (Administration) Act 1992. However, it took issue that the Agreement does not include provision for employees making voluntary contributions. Further, the Union submitted that there is no express provision confirming the Applicant will make contribution for any period in which an employee is on paid leave or in receipt of workers’ compensation payments.

[39] The Applicant submitted that the Agreement does not prohibit voluntary employee superannuation contributions. In advancing its argument, the Applicant stated that after-tax employee contributions of the type mentioned at clause 32.3 of the Award may be made by any employee, irrespective of whether that concept is mentioned in the Agreement or otherwise.

[40] In relation to the contributions on paid leave and workers’ compensation, the Applicant submitted these conditions are provided in clause 32.5 of the Award which does not apply to employer contribution in clause 32.2 of the Award and only applies to employee voluntary contributions.

Shift work

[41] The Union raised issues with the provisions in the Agreement pertaining to shift work. The Union submitted that 11.8 of the Agreement states that the Applicant does not intend to engage shift workers (as defined) but does not rule out the introduction of shift work in the future. However, the Union submitted the Agreement does contain provision for “Night Work” at clause 11.4, which constitutes work carried out between 7.00pm and the commencement of ordinary hours (either 5am or 6am). The Union stated that whilst employees performing “night work” would get the equivalent shift loading to a person working afternoon or night shift under the Award, this same loading would also be paid in circumstances of broken shift. A person working a broken shift under the Award is entitled to time and a half for the first two hours and double time thereafter. Further, an employee performing “night work” on a Saturday or Sunday would be denied access to penalties that would otherwise apply. The Union submitted that the Agreement does not require the provision of 48 hours’ notice for employees being instructed to perform “night work”, as is the case with shift workers under the Award.

[42] In response, the Applicant submitted that its employees do not currently undertake shift work, as identified in clause 11.8 of the Agreement. Relating to night work, the Applicant submitted that pursuant to clause 11.4 of the Agreement, there is a method for working ordinary hours between 7:00 pm and 5:00 am or 6:00 am, including that a penalty will be paid to compensate the employee for working these hours. Clause 11.4 of the Agreement does not provided for shift work and is not comparable to clause 34.1 of the Award. The Applicant submitted that consequently, issue regarding loadings for afternoon or early afternoon shifts do not arise.

Accident pay

[43] The Union submitted that unlike clause 26 of the Award, the equivalent accident pay provision in the Agreement does not state the Applicant is required to continue accident pay following termination of employment.

[44] In the first instance, the Applicant noted that clause 26 of the Award does not deal with accident day. However, the Applicant submitted that in any event, an obligation to pay a former employees anything is not a matter pertaining to the relationship between an employee and that employer’s employees and cannot properly be the subject of an enterprise agreement under s.172 of the Act. Further, the Applicant submitted that in so far as the Agreement operates in Queensland, the accident pay provisions of the Award have no effect because of ss.26, 27 and 29 of the Act and section 107D(4) of the Workers’ Compensation and Rehabilitation Act 2003 (Qld).

Consultation

[45] The Union submitted that clause 19 of the Agreement, which contains the mandatory consultation term, appears to confer a less beneficial entitlement than the Award as it does not require the Applicant to give employees and their representative notice of a major workplace change as the first step of the consultation process. Further, the Union argued that clause 19 enables the Applicant to circumvent consultation obligations in circumstances where the Agreement provides for a major change.

[46] The Applicant submitted that the Agreement adopts the model consultation clause and has been unable to identify any material different in application and practice of the model consultation clause, compared to clause 8 of the Award.

Dispute Resolution

[47] The Union submitted clause 9 of the Award pertains to dispute resolution and provides for up to five days’ paid leave per year for eligible employee representatives to undertake dispute resolution training leave. The Union noted that the Agreement does not confer an equivalent entitlement.

[48] In response to this issue, the Applicant provided the following undertaking to resolve the concern raised by the Union:

“In clause 17 of the Agreement dealing with Dispute Resolution, we undertake to provide employee representatives with dispute resolution training each year for up to five (5) days, during paid work time.”

Ordinary Hours and Rostered Days Off

[49] The Union submitted that the span of hours provided under the Award is 7:00 am to 6:00 pm, Monday to Friday. However, at clause 11.1(ii), the Agreement expands the span of hours to 6:00 am to 6:00 pm between the months of March to August, and 5:00 am to 6:00 pm between September and February. The Union submitted that broadening the span of hours in such a manner limits the ability of employees to access overtime rates.

[50] The Union also noted that clause 33.1(a) of the Award sets out a system for rostered days off which occurs over a 20 day cycle, with a rostered day off occurring on the fourth Monday of each cycle. On such days, an employee is entitled to also receive fares and travel allowances. The Agreement does not make provision for rostered days off.

[51] The Applicant submitted that the issue of ordinary hours was considered in the Applicant’s BOOT modelling calculations prior to commencing its negotiation for the Agreement. However, no submissions were made by the Applicant in response to the Union’s concerns as to rostered days off.

Included clause in the Agreement

[52] The Union took issue with the inclusion of the following clauses in the Agreement that are not featured in the Award. The first being clause 7, fitness for duty, that enables the Applicant to engage in random drug and alcohol testing to allow it to direct employees to attend medical examination for the purposes of determining whether they are able to perform the inherent requirements of the job. Secondly, clause 10.1 provides that classification progression will be at the sole discretion of the Applicant. Thirdly, clause 18 requires employee to provide their written consent to deductions of any monies owing to the Applicant on termination. The Union noted that this may be inconsistent with s.324 of the Act.

[53] The Applicant noted that the Union failed to identify what any potential determents may be caused by the above clauses. In advancing its position, the Applicant submitted that it had been able to identify any inconsistencies between these clauses and the Award or applicable legislation, nor has it been able to identify any potential detriment to employees.

Inaccuracies in the Form F17 and genuine agreement

[54] Section 186 of the Act relates to genuine agreement, and provides as follows at subsection (2):

“(2) 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; and

(b) if the agreement is a multi-enterprise agreement:

(i) the agreement has been genuinely agreed to by each employer covered by the agreement; and

(ii) no person coerced, or threatened to coerce, any of the employers to make the agreement; and

(c) the terms of the agreement do not contravene section 55 (which deals with the interaction between the National Employment Standards and enterprise agreements etc.); and

(d) the agreement passes the better off overall test.”

[55] Section 188 of the Act defines when an agreement is genuinely agreed to:

“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 sections 173 and 174 relating to a notice of employee representational rights; and

(b) the employees covered by the agreement were not likely to have been disadvantaged by the errors, in relation to the requirements mentioned in paragraph (1)(a) or (b) or the requirements of sections 173 and 174.”

[56] Section 180(5) provides:

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

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

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

[57] The relevant principles applicable to s 180(5) were summarised in paragraphs [35]-[36] of the Full Bench decision in AWU v Rigforce Pty Ltd where it was stated that:

“…The nature of the requirement in s 180(5) was analysed in detail by the Federal Court (Flick J) in CFMEU v One Key Workforce Pty Ltd. We adopt the summary of that analysis set out in CFMMEU v Ditchfield Mining Services Pty Limited, which reduced it to the following four propositions:

(1) whether an employer has complied with the obligation in s 180(5) depends on the circumstances of the case;

(2) the focus of the enquiry whether an employer has complied with s 180(5) is first on the steps taken to comply, and then to consider whether:

• the steps taken were reasonable in the circumstances; and

• these were all the reasonable steps that should have been taken in the circumstances;

(3) the object of the reasonable steps that are to be taken is to ensure that the terms of the agreement, and their effect, are explained to relevant employees in a manner that considers their particular circumstances and needs. This requires attention to the content of the explanation given; and

(4) an employer does not fall short of complying with the obligation in s 180(5) of the FW Act merely because an employee does not understand the explanation provided.

[36] Additionally, we also adopt the analysis of Gostencnik DP in BGC Contracting Pty Ltd 11 concerning the nature of a statutory obligation to take “all reasonable steps” as follows (footnote omitted):

“[43] A requirement or obligation to take “all reasonable steps” seems to me to require the identification of the steps a reasonable person would regard as reasonable in the circumstances that apply. Whether particular steps are reasonable will depend on the particular circumstances existing at the time the obligation arises. A requirement to take all reasonable steps does not extend to all steps that are reasonably open in some literal or theoretical sense…”

[58] The Union submitted that due to the concerns pertaining to the BOOT identified by the Union and that the Applicant response to item 4.2 of the Form F17 incorrectly states that the operation of the Agreement is limited to Queensland, raises genuine concern as to compliance with s.180(5) of the Act.

[59] The Union also drew the Commission’s attention to item 2.7 of the Agreement, that indicates that employees were provided with two summary documents; one which compared the terms of the Agreement to that of the current agreement and another which offered a comparison of the Agreement and the Award.

[60] In advancing its position, the Union relied on the decision of CFMEU v Shamrock Civil Pty Ltd (Shamrock) 6 where consideration was had for an application to approve an enterprise agreement in circumstances whereby the Form F17 field in support of the application failed to illuminate any terms that were more or less beneficial by reference to the underlying award.

[61] The Applicant rejected the Union’s argument, maintaining that its Form F17 is not inconsistent with the findings in Shamrock on the basis that the Applicant has only omitted from its Form F17 those matters that are irrelevant to the Applicant’s business operations, and are consequently matters that do not have sufficient significance to the Applicant to warrant inclusion in the Form F17.

[62] In response to the Union’s submissions that the applicant failed to comply with s.180(5) of the Act because of its response to item 4.2 of the Form F17, the Applicant submitted item 4.2 relates to statistical matters only. The Applicant stated that it is not a declaration as to the coverage of the Agreement and that there is no dispute the coverage of the Agreement, as set out in clause 3.1 of the Agreement, is not limited to Queensland.

[63] The Applicant is headquartered in Toowoomba, and its operations are almost exclusively in south east Queensland. However, from time to time, the Applicant may perform work in other States or Territories. The Applicant submitted that the fact that it may do so does not affect whether s.180(5) of the Act has been satisfied, noting the Award is a national instrument and the relevant obligation is about explaining the effect of the Agreement. 7 Further, the Applicant stated that the statistical declaration at item 4.2 is true and that in any event, this is “not particularly significant”.8

Fairly Chosen

[64] Section 186 of the Act sets out the general requirements to be met such that the obligation to approve, in that the Commission “must approve”, arises. One of those requirements is that the Commission must be satisfied that the group of employees covered by the Agreement is “fairly chosen”. Section 186 relevantly provides:

“186 When the FWC must approve an enterprise agreement—general requirements

…

(3) The FWC must be satisfied that the group of employees covered by the agreement was fairly chosen.

(3A) If the agreement does not cover all of the employees of the employer or employers covered by the agreement, the FWC must, in deciding whether the group of employees covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.”

[65] The Commission’s assessment of whether or not a group of employees to be covered by an agreement was fairly chosen involves a degree of subjectivity or value judgment. 9 In respect of an agreement that does not cover all of the employees of the employer, the Commission must take into account whether the group is geographically, operationally or organisationally distinct.10 Whether the Commission is satisfied that a group is or is not geographically, operationally or organisationally distinct is not determinative but rather is a factor telling in favour of or against a finding of a group being fairly chosen as the case may be.11 Whether or not a group is geographically, operationally or organisationally distinct is a matter to be given due weight, having regard to all other relevant considerations.12 There is no exhaustive list of what other relevant considerations might be but whatever relevant consideration is relied upon must be demonstrated to the satisfaction of the Commission.13

[66] The application and overage of the Agreement is outland in clause 3 as follows:

“3.1 The Agreement is made between McNab Constructions Pty Ltd CAN 073 311 681 (‘McNab’) and employees undertaking on-site construction work, including Apprentices. This Agreement does not cover:

i. Employees who are covered by the National Training Wage Schedule in the Modern Award,

ii. Employees in the role of Labourer who have less than 6 months industry experience in the role, and

iii. Any salaried employee in a supervisor or management role whose remuneration and other terms and conditions of employment are contracted under a common law contract.”

[67] The Union referred to the employees who are excluded by the operation of clause 3.1(i), and noted the Applicant had stated at item 2.2 of the Form F17 that the exclusion of such employees is appropriate as the company does not employee trainees and does not intend to do so in future. It is the Union’s submissions that the fact that the Applicant does not currently or intend to employ trainees is an irrelevant consideration in determining whether such an employee is operationally, organisationally and geographically distinct for the purposes of s.183(3) of the Act.

[68] Regarding the exclusion at 3.1(ii), the Union again submitted that whether the Applicant currently employs, or intends to employ, such a category of worker is irrelevant for the purposes of s.186(3) of the Act. According to the Union, this appears to be arbitrary and would result in scenarios whereby employees who perform the same duties, at the same location being covered by different industrial instruments simply as a consequence of one employee, for instance, having five months’ experience as opposed to an employee with just over six months’ experience.

[69] In response, the Applicant maintained its response provided at item 2.4 of the Form F17. The Applicant provided further submissions with reference to employees geographically, operationally or organisationally distinct for the purpose of s.186(3) of the Act.

[70] In relation to trainees, the Applicant submitted that it does not have the operational capacity to engage trainees, due to the requisite supervision requirements and the type of structure of a trainees’ work generally. Accordingly, the Applicant submitted that for these reasons, trainees are operationally and organisational distinct for the purposes of s.186(3) of the Act.

[71] The Applicant submitted that in relation to labourers with less than six months’ experience, the Applicant and its employee representatives mutually identified this group to be operationally and organisationally distinct. The Applicant submitted it does not engage, or intends to engage, employees of this nature under the higher conditions of the Agreement because of this operational and organisational distinction. The Applicant submitted that operationally, a labourer with less than six months experience on a construction site requires ongoing supervision and support, rendering them unable to productively fulfil the operational duties required on site.

[72] In advancing its argument, the Applicant submitted it only engages labourers with less than six months experience in the industry to provide opportunities for paid work experience. According to the Applicant, these employees, on paid work experience, are not onboarded in the traditional manner that experienced new hires are on-boarded or provided with McNab uniforms. It is the Applicant’s submission that accordingly, the Applicant operates in a way that this category of employee is operationally and organisationally distinct.

National Employment Standards (NES)

[73] The Union raised issue with the following clauses of the Agreement on the basis that the clauses may be inconsistent with the NES:

•  Compassionate leave – clause 14.5

•  Personal/carer’s leave – clause 14.3(iv)

•  Termination of employment

[74] In response to the Union’s concern that clause 14.5 of the Agreement does not expressly state ‘per occasion’ in relation to an employee’s entitlement to two days’ compassionate leave, the Applicant submitted that the entitlement to two days’ compassionate leave being per occasion is consequently implied by the clauses.

[75] The Applicant submitted that contrary to the submissions of the Union, clause 14.3 of the Agreement does not impose any conditions that conflicts with the NES of the Act. Rather, the Applicant submitted, clause 14.3(iv) sets out a method consistent with s.107(3) of the Act, which is fair and reasonable to both its employees and the business.

[76] The Union took issue that the Agreement allows for summary dismissal in circumstances beyond the contemplated definition of serious misconduct found at regulation 1.07 of the Fair Work Regulations 2009 (the Regulations), referring to clause 18.2(ii) of the Agreement that provides for summary dismissal where an employee is convicted of a criminal offence that may bring the Applicant into disrepute. The Applicant contended that regulation 1.07 provides an “inclusive” definition for serious misconduct and submitted that clause 18.2 of the Agreement is not inconsistent with regulation 1.07.

CONSIDERATION

Genuine Agreement

[77] In the present case, I am satisfied that the Applicant took all reasonable steps to explain the terms of the Agreement and their effect to the relevant employees. In reaching this conclusion, I have considered the material before as detailed above, and further note that this Agreement replaces a previous Agreement and the explanatory material provided to employees was sufficient to explain its effect in detail.

Were the employees fairly chosen?

[78] I have considered the submissions of the Applicant and the Union noted above in detail, and I am satisfied on the material before me that the group of employees covered by the Agreement was fairly chosen.

Does the Agreement pass the BOOT?

[79] In respect to the concerns raised by the Union in relation to the Applicant failure to bring to the Commission’s attention that the Agreement also did not include a range of provisions provided by the Award, I accept the Applicant’s submissions, specifically that the provisions identified by the Union as noted above are not applicable to the work carried out by the Applicant.

[80] Further, a range of undertakings were provided by the Applicant to address the BOOT issues identified by the Union. I note the undertakings provided by the Applicant clearly identify the Award clauses that have been incorporated into the Agreement. I am satisfied that the undertakings provided resolve the BOOT issues identified.

[81] The final issue for determine in relation to the BOOT is whether the Agreement, that excludes overtime and penalty rates, passes the BOOT. Modelling undertaken by the Commission show percentages of difference between the Award and the Agreement, with the difference being 24.46% to 44.68% above the Award. Based on these percentages, and the undertakings and submissions of the Applicant, I consider that this issue is resolved.

[82] Accordingly, I find that the employees are better off overall under the Agreement.

Does the Agreement exclude the NES in contravention of s.55 of the Act?

[83] I accept the submissions of the Applicant and I am satisfied that the Agreement does not exclude the NES in contravention of s.55 of the Act.

CONCLUSION

[84] The Agreement is approved subject to undertakings. I am satisfied that each of the requirements of ss. 186, 187, 188 and 190 as are relevant to this application for approval have been met.

[85] Pursuant to s.190(3) of the Act, I accept the undertakings of the Applicant. In accordance with ss.191(1) and 201(3) of the Act the undertakings are taken to be a term of the Agreement. A copy of the undertakings is attached to this decision at Appendix A and the Agreement.

[86] The Agreement, in accordance with s.54 of the Act, will operate from 2 July 2020. The nominal expiry date of the Agreement is 25 June 2024.

DEPUTY PRESIDENT

 1   SDA v Beechworth Bakery Employee Co Pty Ltd T/A Beechworth Bakery [2017] FWCFB at [12]; Armaceli Australia Pty

Ltd [2010] FWAFB 9985 at [41].

 2   Re Australia Western Railroad Pty Ltd T/A ARG – A QR Company [20111] FWAA 8555 at [8]; NTEIU v University of

New South Wales [2011] FWAFB 5163 at [47].

 3   TWU v Jarman Ace Pty Ltd [2018] FWCFB 7097 at [28].

 4   [2017] FWCFB 3005.

 5   [2018] FWCFB 3610

 6   [2018] FWCFB 1772

 7   Ibid, [33].

 8   Ibid.

 9   Cimeco Pty Ltd v Construction, Forestry, Mining and Energy Union[2012] FWAFB 2206 (Ross J, Hamilton DP, Spencer C, 12 April 2012) at para. 8.

 10   Fair Work Act 2009 (Cth) s.186(3A).

 11   Cimeco Pty Ltd v Construction, Forestry, Mining and Energy Union [2012] FWAFB 2206 (Ross J, Hamilton DP, Spencer C, 12 April 2012) at para. 19 - 20.

 12 Ibid at [20].

 13 Ibid at [21].

Printed by authority of the Commonwealth Government Printer

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Appendix A