Mechanical Maintenance Solutions Pty Ltd

[2019] FWC 6801

[2019] FWC 6801

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Mechanical Maintenance Solutions Pty Ltd
(AG2018/1899)

COMMISSIONER MCKINNON MELBOURNE, 2 OCTOBER 2019

Application for approval of the MMS Latrobe Valley Enterprise Agreement 2018.

[1] Application has been made for approval of the MMS Latrobe Valley Enterprise Agreement 2018 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act) by the Trustee for the Tim Brown Family Trust ATF Mechanical Maintenance Solutions Pty Ltd (MMS). The Agreement is a single enterprise agreement.

[2] The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU), the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) each oppose the application.

[3] The Agreement was approved on 14 December 2018. 1 On appeal, a Full Bench of the Commission quashed the approval decision and remitted the matter to me for redetermination.2 This decision deals with the application anew.

Background

[4] The Agreement covers MMS and its employees in the classifications listed in Appendix 1 to the Agreement. It applies to work performed at the Loy Yang A, Loy Yang B and Yallourn power stations in Victoria. It also applies to MMS’s workshop at Centre Road, Morwell in Victoria but does not apply to supervisory or administrative employees.

[5] The duties associated with classifications MMS1 to MMS8 in Appendix 1 of the Agreement are Confined Space Hole Watch, General Labourer/Fire Watch, Trades Assistant, Cleaner/Peggy, Storeperson, Basic, Intermediate and Advanced Rigger, Basic, Intermediate and Advanced Scaffolder, Dogger, Mobile Crane Operator or Crane Driver, Welder Non-Trade, Tradesperson Level 1 and 2, Electrician, Dual Trade Qualified and Instrument Fitter.

[6] Some of the employees who will be covered by the Agreement are currently covered by the Mechanical Maintenance Solutions P/L (MMS) Latrobe Valley Power Stations (AMWU and CFMEU) Greenfields Enterprise Bargaining Agreement 2012-2016 3(the Greenfields Maintenance Agreement) which is expressed to cover MMS, the CFMMEU, the AMWU and:

“all Company employees who are engaged in maintenance work on the Power Stations and Open Cut Mine sites in the Latrobe Valley (excluding Yallourn W Power Station and Mine) in the classifications and occupations listed in Clause 35 Appendix 1. The Agreement does not apply to work (other than maintenance work) within the definition of “general building and construction” in the Building and Construction General On-Site Award 2010. The Agreement applies to the exclusion of any other agreement.”

[7] The classifications and occupations listed in clause 35, Appendix 1 to the Greenfields Maintenance Agreement are Supervisor Levels 1 and 2, Team Leader, Tradesperson Special Class Levels I and II, Pressure Welder, Crane Operator, Tradesperson, Basic, Intermediate and Advanced Scaffolders and Riggers, Intermediate Dogman, Trades Assistant, Storeman and Peggy.

[8] While the scope of the Agreement is broader than the Greenfields Maintenance Agreement, there is an overlap in coverage in relation to employees working at the Loy Yang A and Loy Yang B power stations and who are employed to perform the duties of Trades Assistant, Peggy, Storeperson, Basic, Intermediate and Advanced Scaffolder or Rigger, Dogger, Crane Operator or Driver, Welder or Tradesperson.

[9] Another greenfields enterprise agreement, the Mechanical Maintenance Solutions Pty Ltd (MMS) Latrobe Valley (Victoria) Power Industry Electrical (ETU) Greenfields Enterprise Agreement 2013 4 (the Greenfields Electrical Agreement) also appears to cover some of the employee classifications that fall within the scope of the Agreement, because it is expressed to cover MMS, the Electrical Trades Union (a division of the CEPU) and employees engaged in the classifications of Temporary Work Group Leader, Team Leader, Tradesperson Special Class Level 1 Instrument Technician, Tradesperson Level III Electrician A Grade, Tradesperson Level II Instrument Fitter, Tradesperson Level I and Employee Level I (EW3).

[10] The Greenfields Electrical Agreement applies to the “MMS Electrical activities” within the Latrobe Valley in Power stations, mines and associated Plant and its employees engaged in maintenance at those sites. “MMS Electrical” is not a defined term in the Greenfields Electrical Agreement and the phrase “MMS Electrical activities” is taken to have its natural and ordinary meaning of electrical activities undertaken by MMS.

Consideration

[11] If an application for approval of an enterprise agreement is made under section 185, the Commission must approve the agreement if the requirements in sections 186 and 187 are met.

The application for approval under section 185

[12] Sub-section 185(1) of the Act requires a bargaining representative for an enterprise agreement that has been “made” to apply to the Commission for its approval. It is not in dispute that MMS, as the relevant employer, was a bargaining representative for the Agreement and that it was the only bargaining representative at the time the Agreement was made. In that respect it is not in dispute that there were no union bargaining representatives for the Agreement or that the ‘employee bargaining representative’ was not appointed in writing as required by section 176(1)(c). 5

[13] Section 182 of the Act sets out when an enterprise agreement is “made”. If employees employed at the time who will be covered by the agreement have been asked to approve it under subsection 181(1) by vote, the agreement is made when a majority of those employees “cast a valid vote to approve the agreement”.

[14] The evidence of MMS establishes that it had five employees employed at the time who would be covered by the Agreement. The unions submit that one of those employees, Wayne Silvester, was not covered by the Agreement at relevant times because he was employed in a supervisory capacity as “Project and Stores Coordinator”.

[15] According to MMS, four of the five employees who voted on the Agreement voted in favour of the Agreement, while one voted against it. Assuming Mr Silvester was in the cohort that voted in favour of the Agreement (but his vote was not to be counted), three of the remaining four employees also voted to approve the Agreement, constituting a clear majority. If Mr Silvester voted against the Agreement in circumstances where his vote could not be counted, the outcome would instead have been unanimous approval of the Agreement by each of the four relevant employees. In that respect, whether Mr Silvester was covered by the Agreement or not is immaterial.

[16] The question is however of significance in relation to whether Mr Silvester was a person with capacity to sign the Agreement on behalf of employees.

Is Mr Silvester covered by the Agreement?

[17] Evidence in the proceedings in relation to Mr Silvester’s role was given by Ryan Murphy, a consultant to MMS who was actively involved in bargaining for the Agreement on behalf of MMS. Attached to one of his statements in the proceedings were various “trade tickets” and related qualifications held by Mr Silvester, including a Heavy Vehicle Drivers Licence, Licence to Perform High Risk Work, Worksafe Construction OHS Induction, Latrobe Valley Thermal Generators Power Industry Induction Card, Competency in Portable Appliance Testing, Trades Hall Council Certification for HSR Refresher Occupational Health & Safety Training Course, and competencies in Work Safely, Work in Accordance with an Issued Permit, Enter Confined Spaces, Observe Permit Work and Work Safely at Heights. 6

[18] No other documents that might evidence the precise nature of Mr Silvester’s role, such as a contract of employment or job description, were tendered in the proceeding.

[19] According to Mr Murphy, Mr Silvester has been employed on a permanent basis with MMS since 2009 as a “Storeperson and a Rigger and Scaffolder”, roles that fall within the Agreement classifications of MMS2 and MMS3 respectively. He had been paid under the Greenfields Maintenance Agreement (including outage allowance). After the earlier approval of the Agreement, he was paid as an MMS3 under the Agreement. He primarily performs duties in the workshop, but also works at other sites including the Latrobe Valley power stations. 7

[20] Mr Murphy gave evidence that Mr Silvester undertakes workshop duties including forklift driving, preparing, loading and delivery of tools and equipment for use on site, preparing shipping containers containing rigging supplies, checking workshop items and equipment. He does not coordinate or supervise the work of other employees or sign off their timesheets. 8

[21] Mr Murphy also gave evidence that as part of his role, Mr Silvester was:

“in charge of the rigging supplies.  Tim has large shipping containers and each of them have rigging containers that are stored in the Morwell workshop.  So what happens is Wayne looks at all the rigging gear and is responsible for making sure that the rigging gear is in good condition and then taking it up and down to wherever Tim's got other work.” 9

…

“He does the auditing and the checking of it, loads it onto the truck, and then he might either drive the truck or the truck might be driven up by a third party logistics company.”  10

[22] None of this evidence establishes that Mr Silvester had any supervisory role in relation to other employees of MMS, or contractors for that matter. The only evidence that Mr Silvester might be engaged in a “supervisory role” is his title of “Project and Stores Coordinator” 11 and his apparent statement to an unidentified administrative officer of the CFMEU (as it then was) in 2014 that his reason for resigning from the union was that he “was working as staff as Project Co-ord role”.12 Mr Silvester did not give evidence in the proceedings. According to Mr Murphy, this was because he was “concerned about the way that he may be treated by other employees in the Latrobe Valley”.13 The CFMMEU strongly objected to that aspect of Mr Murphy’s statement as hearsay. It seems to me that the statement made by Mr Silvester to Mr Murphy was no more than an expression of his state of mind about involvement in these proceedings. It was not a statement of asserted fact. I accept the evidence to the extent that it is relevant. I also accept the other evidence of Mr Murphy and that of Toby Thornton.

[23] Of course, Mr Silvester’s apparent statement to the CFMMEU five years earlier as recorded in the CFMMEU’s membership system is also hearsay. It suggests, but does not establish, that Mr Silvester was employed as “staff” with the result that he could not have been covered by the Agreement. The evidence does not assist in relation to the meaning of “staff” within MMS’s business one way or another and I am reluctant to assign it a meaning that is not supported by evidence. MMS is a small business and Mr Murphy in his evidence referred to employees who are covered by the Agreement interchangeably as “staff” and “employees”. The statement to the CFMMEU also does not establish that Mr Silvester was employed in either a supervisory or administrative role either in 2014 or at any other time. It does not contradict the more recent evidence of Mr Murphy about the work Mr Silvester performed, based on his own observations and his review of MMS’s employment records.

[24] The Agreement covers employees engaged in classifications including “Storeperson” and “Rigger”. The terms are not defined in the Agreement other than by use of their descriptive names and the differentiation of “Rigger” competency across classifications, from “basic” to “advanced”. Clause 1.6 of the Agreement provides that employees will be “advised of their classification level and status of employment in writing” upon commencement on any site or project, which can then only be varied by agreement in writing in advance.

[25] The Manufacturing Industries and Associated Occupations Award 2010 (the Manufacturing Award) is identified by MMS as the relevant modern award for the purposes of the better off overall test. It contains a number of classifications that, if ambiguity were to be found in the Agreement, might provide useful guidance in the interpretation of the Agreement’s classification structure. Absent any ambiguity, the terms of the Agreement stand on their own. While the Agreement contains a commitment to ensure that rates of pay do not fall below those in the Manufacturing Award, no term of that modern award (nor any other modern award) is incorporated as a term of the Agreement.

[26] The CFMMEU submits that if Mr Silvester’s position title includes the word “Coordinator” he must be employed in a supervisory capacity equivalent to a “Supervisor/Trainer/Coordinator” in Schedule B to the Manufacturing Award. 14 The result, it says, is that he is excluded from coverage of the Agreement as a “supervisory employee”. I do not agree.

[27] Firstly, there is no equivalent “Supervisor/Trainer/Coordinator” classification in the Agreement. There is a “leading hand allowance” which varies according to the number of employees in the relevant team, indicating some distinction drawn by the parties between supervisory employees who are excluded from coverage of the Agreement and employees who have responsibility for leading a team of up to 20 employees, but who remain covered by the Agreement.

[28] Secondly, there is no evidence before me that Mr Silvester is engaged in a supervisory capacity, or that he has the necessary responsibilities or qualifications required for classification as a “Supervisor/Trainer/Coordinator” in the Manufacturing Award. The classification applies “where an employee is performing supervisory responsibilities”. Further definition is found in clause B.3.2 of Schedule B, including that it is “an employee who is responsible for the work of other employees and/or provision of structured on-the-job training” or “an employee who is mainly engaged to perform work supervising or coordinating the work of other employees” or “an employee who is responsible for the supervision and/or training of Supervisor/Trainers/ Coordinators—Level I”. The minimum qualification for an employee in this category is an AQF III with at least one third of the competencies related to supervision/training, or equivalent.

[29] To the extent that the Manufacturing Award has any bearing on the subject matter, the C11 and C10 classifications cover “inventory and stores control” and “high level stores and inventory responsibility” respectively. It seems evident that a person whose primary responsibility is inventory and stores control in the manufacturing industry could fall within scope of the Manufacturing Award without being classified as a “Coordinator”. The separate classification would require those employees to also have supervisory responsibilities and/or responsibility for the work or training of other employees.

[30] Mr Murphy gave extensive evidence about the active role played by Mr Silvester in bargaining for the Agreement. It gave the impression of a person who had a material interest in the outcome of negotiations in his capacity as an employee who would be subject to the Agreement.

[31] I am persuaded on the evidence that the principal purpose of Mr Silvester’s employment is to ensure that the rigging gear of MMS is maintained in good condition and available for use as required at the various work sites where MMS undertakes its activities. It is the kind of work that falls within the ordinary meaning of Storeperson, which as MMS submits, is classified as “MMS2” under the Agreement. Mr Murphy gave evidence that Mr Silvester also works “on site” from time to time. To the extent that his work on site involves the use of rigging gear, he would also fall within the classifications of the Agreement that cover “Rigger” (MMS2 to MMS4), although there is no evidence before me as to his particular level of competency as a Rigger or in relation to the difference between Basic, Intermediate and Advanced Rigger. The nature of his role suggests a depth of familiarity with rigging work. MMS submits that he is classified as an MMS3 “Intermediate Rigger”, but the evidence is not conclusive. There is also no evidence of what work Mr Silvester might perform as a Scaffolder, although I cannot rule out that possibility.

[32] For present purposes, I am comfortable in the conclusion that Mr Silvester was covered by the Agreement at all relevant times as a “Storeperson”.

Has the application been properly made?

[33] Except in relation to Mr Silvester, it does not appear to be in dispute that the employees who voted for the Agreement were the only employees who were both employed at the time and who would be covered by the Agreement.

[34] Each of these employees was given notice of their representational rights on 15 February 2018, more than 21 days before being asked to vote on the Agreement. A majority (four of the five employees) voted in favour of the Agreement on 4 May 2018. For the purposes of section 182 of the Act, the Agreement was “made” at that time.

[35] It is not in dispute that there were more than 7 clear days between the provision of relevant agreement and voting information to employees and the conduct of the vote. As it was required to do, MMS then applied for approval of the Agreement under section 185 of the Act on 7 May 2018.

[36] The application for approval was accompanied by a signed copy of the Agreement, but it was not a “signed copy” for the purposes of section 185(2)(a) of the Act and regulation 2.06A of the Fair Work Regulations 2009 (the Regulations). 15 It was signed by Mr Silvester as an “employee bargaining repersentative” even though it is uncontroversial that he was not appointed “in writing” to act as a bargaining representative under the Act. For the Full Bench, that meant Mr Silvester’s authority to sign the Agreement was not explained as required.

[37] Of course, as the Full Bench observed, “a representative of the employees covered by the agreement” for the purposes of Regulation 2.06A does not need to be a bargaining representative. It includes an employee who is covered by the agreement. 16 As I have found that Mr Silvester is covered by the Agreement, he is an employee who is capable of signing the Agreement under Regulation 2.06A.

[38] Mr Silvester has signed the Agreement’s signature page in a section headed “Signed for and on behalf of the employees”. Those words, together with the description of Mr Silvester as “Employee” under his signature would in my view be sufficient to explain his authority to sign the Agreement. However, the deficiency identified by the Full Bench is that his role has been misstated as “employee bargaining representative”. It is a matter that must be resolved because the Act requires an application for approval of an enterprise agreement to be accompanied by a “signed copy” of the Agreement.

[39] The deficiency can be resolved by the exercise of discretion under section 586 of the Act. In that regard, it is relevant that each of the other signing requirements have been met in relation to the Agreement. The Agreement is signed by Tim Brown in his capacity as the Managing Director of MMS. The full name and business address of both Mr Brown and Mr Silvester are apparent on the signature page. The Agreement is signed by Mr Silvester in a way that substantially complies with the Regulations, but not quite.

[40] These matters weigh heavily in favour of a correction or waiver under section 586. Accordingly, if the Agreement is capable of approval, I will amend the signature page of the Agreement under section 586 to remove the words “bargaining repersentative” from the “Authority to Sign” section of Mr Silvester’s signature block and replace them with the word “employee”.

[41] The application was made within 14 days after the Agreement was made. In all the circumstances, and subject to resolution of the signing requirements deficiency discussed above, I am satisfied that the application for approval of the Agreement has been made in accordance with section 185 of the Act.

Was the Agreement genuinely agreed?

[42] For the Agreement to be approved, I must be satisfied under section 186(2)(a) of the Act that the Agreement has been genuinely agreed to by the employees covered by its terms.

[43] Section 188 deals with when an enterprise agreement has been “genuinely agreed” to by the employees. It was recently amended by the Fair Work Amendment (Repeal of 4 Yearly Reviews and Other Measures) Act 2018 to confer discretion on the Commission in relation to certain matters. For present purposes it is sufficient to note that for an enterprise agreement to be genuinely agreed under what is now sub-section 188(1), the Commission must be satisfied of three matters:

1. The employer must have complied with the pre-approval steps set out in sections 180(2), (3) and (5) and section 181(2) of the Act;

2. The Agreement must have been “made” in accordance with section 182 of the Act; and

3. There must be no other reasonable grounds for believing that the Agreement has not been genuinely agreed to by the employees.

[44] The question of whether enterprise agreements have been “genuinely agreed” is a vexed one. Since the requirement was first introduced in 2010, a substantial body of case law has developed on the issue. Perhaps unsurprisingly because each case depends on its own facts and circumstances, the developing jurisprudence has exposed a divergence of approach on certain matters. What is plain, however, is that the evidence now required to establish genuine agreement can be substantial, and in some cases the threshold for satisfying the criteria is high.

The first limb of ‘genuinely agreed’ - compliance with pre-approval steps and timeframes

[45] Section 180(2) requires an employer to take all reasonable steps to ensure that during the access period for the agreement (being 7 clear days before the start of the voting process 17), relevant employees are given a copy of the proposed enterprise agreement and any other material incorporated by reference in the agreement. Alternatively, relevant employees must have access, throughout the access period, to a copy of those materials.

[46] Section 180(3) requires that by the start of the access period, an employer take all reasonable steps to notify relevant employees of the time and place at which the vote will occur and the voting method that will be used.

[47] Section 181(1) permits an employer to ask the employees employed at the time who will be covered by a proposed agreement to approve it by voting for it, but section 181(2) makes clear that the request cannot be made until at least 21 days after the last notice of employee of representational rights is given.

[48] For the reasons set out above, having regard to the factual matters disclosed on the Commission’s file and the evidence of Mr Murphy, I am satisfied that each of the requirements in section 180(2) and (3) and section 181(2) has been met in this case.

[49] The more difficult matter is whether the requirement in section 180(5) of the Act has also been met. Under section 180(5), an employer must take all reasonable steps to ensure that the terms of the proposed agreement, and the effect of those terms, are explained to relevant employees. The explanation must be provided in an appropriate manner, taking into account the particular circumstances and needs of relevant employees, including those from culturally and linguistically diverse backgrounds, young employees and those who did not have a bargaining representative for the agreement. 18

•  The meaning of ‘all reasonable steps’

[50] In Construction, Forestry, Mining and Energy Union v One Key Workforce Pty Ltd 19(One Key No. 1), the Federal Court of Australia observed that:

“…The requirement imposed by section 180(5) to “take all reasonable steps to ensure that … the terms of the agreement, and the effect of those terms, are explained” is an important obligation imposed upon an employer to ensure that employees are as fully informed as practicable. The requirement is not a mere formality. Whatever steps may be necessary will depend upon the facts and circumstances of each particular case but those steps are not satisfied by a person reading – without explanation – the terms of an agreement to an employee.” 20

[51] In One Key No. 1, “all reasonable steps” were held not to have been taken, because there were other steps that could have been taken, including:

•  expressly identifying, by reference to particular clauses of the proposed agreement, those which had particular application to each of the employees so as to put them on notice of matters to which they could give greater attention;

•  expressly identifying the particular award which covered each of the employees and particular differences between the relevant awards and the proposed agreement; and

•  guidance as to how the proposed agreement affected their personal interests. 21

[52] Following One Key No. 1, a Full Bench of the Commission in Construction, Forestry, Mining and Energy Union v Dawsons Maintenance Contractors Pty Ltd 22 (Dawsons) found that not all reasonable steps had been taken to explain an enterprise agreement and its effect to relevant employees, observing that:

“…The legislation does not require that an employer take some reasonable steps or only those steps that it thinks necessary. Instead the legislation requires that employers must take all reasonable steps to provide the requisite information.” 23

[53] In Dawsons the Full Bench considered the circumstance of an explanation about an enterprise agreement that would replace an earlier enterprise agreement, which relied on classification descriptions from the relevant modern award. It held:

“At the least, taking all reasonable steps to provide this information would require no less than providing employees with a hard copy of the descriptors, perhaps in their lunchrooms or pinned to notice boards; or even to provide each person to be covered by the agreement with a hyperlink to the relevant clause of the applicable modern award…” 24

[54] The fact that employees had been working under a similar enterprise agreement in the past was held to be a neutral factor in Dawsons, because while the workforce could be said to be thoroughly familiar with the modern award information not provided, their familiarity with that information had diminished over time as they were no longer directly employed under modern awards. 25

[55] A Full Court of the Federal Court in One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union 26(One Key No. 2) subsequently clarified the obligation to take all reasonable steps for the purposes of section 180(5) of the Act in this way:

“The Commission was required to be satisfied that OKW had taken “all reasonable steps to ensure” that both the terms and the effect of the terms had been explained to the relevant employees as an element of the inquiry as to whether “genuine” agreement had been obtained from them. The agreed purpose of the obligation imposed on employers by s 180(5) is to enable the relevant employees to cast an informed vote: to know what it is they are being asked to agree to and to enable them to understand how wages and working conditions might be affected by voting in favour of the agreement.” 27

[56] For the Commission to reach the requisite state of satisfaction, the Full Court held that it would need to know what employees had been told before they cast their votes, and the terms in which the explanation had been conveyed. Absent such information, the Commission could not form an opinion as to whether the explanation was sufficient for purpose, including the extent to which it took into account the particular circumstances and needs of specified employee groups. 28 Relevant considerations included the content of the information communicated, the effectiveness of that communication and also what might not have been communicated to employees.

[57] In BGC Contracting Pty Ltd 29 (BGC), Gostencnik DP of the Commission explained the task as requiring identification of the steps a reasonable person would regard as reasonable in the circumstances that apply, rather than all steps that were reasonably open in some literal or theoretical sense. Whether particular steps are reasonable will depend on the circumstances that exist at the time the obligation arises.30

[58] In Diamond Offshore General Company v Baldwin & Ors 31 (Diamond Offshore) a Full Bench of the Commission held that the obligation placed on an employer to explain the terms of an agreement and their effect is not limited to the operative outcome that the text of the term produces. While the operative outcome of a term might be synonymous with the effect of the term in some cases, that was not always so:

“The operative outcome of a term with respect to employees covered by an enterprise agreement is that it provides a right or an entitlement to employees or places an obligation on employees. The effect of a term may also be that it displaces another previously operative term either explicitly or by omission or that the obligation it places on employees is one that they would not otherwise be subject to. Where a material or significant change is brought about by a term of a proposed agreement, an explanation of the effect of that term may be required to extend beyond its operative outcome.” 32

[59] In Diamond Offshore, the Full Bench observed that while the Act did not require an employer to explain differences between an existing agreement and a proposed agreement, it might be considered necessary in a particular case:

“To form the necessary state of satisfaction about whether reasonable steps were taken by an employer to explain the terms of an enterprise agreement and their effect, the Commission may consider it relevant to take into account a range of facts and circumstances including: the terms of the agreement itself; the context in which it was negotiated; the history of instruments regulating terms and conditions of employment of employees; other relevant statutes particular to the employees or the work covered by the agreement or the industry in which that work is performed; the nature of the work covered by the agreement; the identity and work history of the employees who were requested to approve the proposed agreement; and matters particular to the employees to whom the explanation was provided, such as their qualifications, skills and other considerations of the kind referred to in s. 180(6) of the FW Act.” 33

[60] In Construction, Forestry, Maritime, Mining and Energy Union & Ors v LS Precast Pty Ltd 34 (LS Precast) a Full Bench of the Commission dealt with the adequacy of the explanation provided to employees:

“We do not consider the failure to highlight the minutiae of the differences in notice arrangements as between the Agreement and the Award concerning shift arrangements given the overall explanation about these terms and the terms of the Agreement as a whole, constitutes a failure to comply with the obligation under s.180(5).” 35

[61] In LS Precast, not every single departure from the modern award compared to the enterprise agreement had been explained to employees. The Full Bench was satisfied that the effect of the agreement and the various differences between the award and the agreement had been adequately explained, after considering the detailed evidence before it of what employees were told in the process of making the agreement. That evidence included that:

•  if the agreement was approved by the Commission it would apply instead of the Award that currently applies to their employment;

•  there were key differences between the agreement and the award but that the company considered employees to be better off overall under the agreement;

•  the company “want[ed] to make sure that you know the key differences” and that employees could undertake their own checks as to the differences between the agreement and the award if they wish;

•  key differences between the agreement and the award were highlighted; and

•  copies of the award were available if employees wanted to go through it during upcoming discussions.

[62] In Construction, Forestry, Maritime, Mining and Energy Union v Ditchfield Mining Services Pty Ltd 36 (Ditchfield) a Full Bench of the Commission confirmed that what is required by the obligation to take all reasonable steps for the purposes of section 180(5), including how many steps and the content of those steps, necessarily depends on the circumstances. Some employers may need to take more or fewer steps than other employers. Each case is assessed by reference to its own circumstances. An employer will not always be required to identify detriments in an agreement compared to the relevant modern award, or to provide an analysis between the agreement and that instrument, particularly in circumstances where no modern award applies because there is an existing enterprise agreement.37 Its conclusions in this latter respect appear to depart from the earlier conclusions reached in Dawsons.

[63] Following on from Ditchfield, a Full Bench of the Commission in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v e20 Pty Ltd 38observed that “there will always be a limit to the material provided to employees and to the Commission, and it is easy to simply claim that more should have been provided.”39 In the matter there under consideration, the Full Bench found there to have been sufficient material before the Commission to satisfy the requirements of the Act relating to explanations and genuine agreement, including a simple and clear document titled “Meaning and Effect”, a Frequently Asked Questions document, statutory declarations, oral evidence and submissions.

[64] More recently, in The Australian Workers’ Union v Ace Citrus Pty Ltd 40 (Ace) a Full Bench observed that whether an enterprise agreement had been genuinely agreed, and whether an explanation about the terms and effect of an enterprise agreement was adequate, were matters involving an exercise of discretion with a “degree of latitude”.41

[65] While the “genuinely agreed” requirement is generally to be assessed having regard to the circumstances existing when the agreement was voted on, 42 a recent Full Bench of the Commission has held that future modern award changes, such as those arising from the 4 yearly review of modern awards, as well as the circumstances in which those changes emerged, might also need to be explained to relevant employees.

[66] In The Australian Workers’ Union v Gray Australia Pty Ltd & Ors 43 (Gray) a Full Bench held that in circumstances where forthcoming changes to a relevant modern award were “known in precise detail”,44 those changes formed part of the content of the explanation that was necessary for employers to give to employees, including for employers that had no relevant knowledge of those changes. The necessary explanation was held to include how a proposed enterprise agreement would modify future modern award changes and the likely effect of the changes on employees in circumstances where the Commission had published a “provisional view” as to the changes to be made.

[67] In Gray, the content of the explanation was held to require, “at the very least”:

•  Details of decisions already made by the Commission concerning future changes to relevant modern awards in precise detail, as well as the precise detail of provisional views about the implementation of those changes and the positions of relevant industry bodies in relation to those changes;

•  The context in which the Commission makes changes to modern awards and the fact that it had received detailed evidence from employers about the nature of the industry and how its stakeholders were likely to respond to the changes, which the Commission was taking into account; and

•  Whether the effect of the Agreement would be less beneficial in the future for employees whose modern award terms and conditions would be displaced by the Agreement. 45

[68] Answers contained in Form F17 statutory declarations filed with an application for agreement approval have also been found to affect the “genuinely agreed” requirement.

[69] In Construction, Forestry, Mining and Energy Union v KAEFER Integrated Services Pty Ltd 46(KAEFER), a Full Bench of the Commission considered whether the provision of erroneous information in the Form F17 Statutory Declaration accompanying an enterprise agreement approval application meant that employees had not genuinely agreed to the Agreement. The erroneous information was answering ‘no’ to the question of whether there were any terms in the proposed agreement that were less beneficial than the relevant modern award(s). The Commission held that while an incorrect answer in a Form F17 “might well give pause to query whether an employer understood the full effect of the Agreement”47 it was proposing, and whether it “could impart relevant information to employees”,48 it did not mean that the requirement in section 180(5) could never be satisfied.49 Whether it was needed to be separately established on the evidence. A similar approach was taken in BGC Contracting Pty Ltd50.

[70] Other Full Benches have held that an enterprise agreement cannot have been properly explained to employees absent evidence that less beneficial terms of an enterprise agreement were explained to employees in circumstances where an employer’s answer in a Form F17 was at odds with the factual position. 51 In The Australian Workers’ Union v Professional Traffic Solutions Pty Ltd, a Full Bench concluded as follows:

“We agree with the Union’s submission that if there is a failure to identify any less beneficial terms in the Agreement to those in the relevant Award, and that further, in circumstances where the F17 declaration expressly states there are no less beneficial terms, then the only inference which can be drawn (in the absence of any evidence to the contrary) is that the pre-approval explanation cannot amount to the taking of all reasonable steps to explain the terms of the Agreement and their effect on employees.” 52

[71] In Dawsons, the Full Bench concluded that the number of undertakings given to address concerns about whether the better off overall test had been met, combined with the limited explanatory material and information provided to employees and the failure to identify less beneficial terms of the proposed agreement compared to the modern award either in the Form F17 statutory declaration accompanying the application for approval or the explanation to employees meant that employees could not have genuinely agreed to the agreement. 53

[72] As is clear from the above, while there is a degree of tension in the authorities, what is required in a particular case to establish that all reasonable steps have been taken to explain an enterprise agreement and its effect on employees will depend on the facts and circumstances of the case. The requisite level of detail varies relative to those facts and circumstances. However, the task of the Commission remains to understand the content of the explanation provided to employees and then to determine whether the explanation was adequate. The explanation must have put employees in a position to know what they are being asked to agree to and to understand how wages and working conditions might be affected by their voting to approve the enterprise agreement.

[73] It will not always be necessary for an employer to have explained the minutiae of every difference between a modern award and an enterprise agreement, or every detriment or benefit. A range of matters giving context both to the proposed agreement and the explanation provided to employees can be relevant in determining whether an explanation is sufficient. Those matters include the effectiveness of an employer’s communication and what has not been communicated. Material or significant changes are likely to require more explanation than minor or trivial matters, both in terms of their operative effect and the consequences of implementation (for example, the displacement of existing rights or obligations, or the creation of new ones).

•  The explanation provided by MMS

[74] MMS has provided detailed information to the Commission about how the terms of the Agreement and their effect were explained to employees, as well as information about the particular circumstances of employees. This information has been supplemented by a detailed account of the explanation given to employees by Mr Murphy.

[75] Employees who participated in the agreement-making process did so directly. They are experienced workers in a range of classifications and were all performing work that will be covered by the Agreement at the time it was made. There were discussions, including questions asked and answers given, about how the Agreement would apply both to the employees participating in bargaining as well as future employees.

[76] A particular matter of interest to employees was where the Agreement would leave them compared to employees of other employers in the Latrobe Valley. MMS went to some lengths to provide this additional information to employees including by sourcing comparable agreements for employees to review, including an EnergyAustralia agreement which was a focus of the negotiations.

[77] Mr Murphy gave evidence that he has been working with MMS since 2015 and assisted Mr Brown with the negotiation and voting processes for the Agreement.

[78] In late February 2018, in what Mr Murphy described as a “kick off meeting”, employees were given a draft of the proposed Agreement. The meeting involved Mr Silvester and “Employee 2” (who resigned in July 2018) and a couple of other employees who have since left employment. There was a discussion about the bargaining process and what was happening in industry. An information pack was provided to employees, containing a draft copy of the Agreement, a copy of the Manufacturing Award and a copy of the Code for the Tendering and Performance of Building Work 2016 (the Building Code) incorporated into the Agreement’s dispute resolution term.

[79] On or about 22 or 23 March 2018, Mr Brown met with employees in the boardroom above the MMS Workshop. Mr Murphy, who did not participate in the meeting, subsequently received an email from Mr Brown asking him to make changes to the draft agreement in relation to the classification structure to reflect discussions Mr Brown had held with employees in that meeting. His evidence of what occurred in the meeting with Mr Brown was derived from discussions with employees who were there (hearsay) and his direct evidence of communication with Mr Brown about the need for changes to the Agreement classification structure after the meeting.

[80] On or about 5 April 2018, another meeting occurred at the Latrobe Valley workshop between Mr Murphy, Employee 2 and another employee who subsequently left for another job.A revised copy of the draft Agreement was provided following on from the recent discussion with Mr Brown. There was a further general discussion about the process. A clause by clause analysis of the revised Agreement occurred, with classification changes highlighted. There was discussion about the EnergyAustralia Yallourn enterprise agreement and how the proposed Agreement compared. The payment of outage allowances as a flat rather than all-purpose allowance was also discussed.

[81] On or about 21 April 2018, Mr Murphy met with Mr Silvester and “Employee 3” (who is employed as a Rigger) in Singleton. Employee 3 was given the information pack and a similar clause by clause discussion of the proposed Agreement occurred. There was also discussion about other enterprise agreements in the Latrobe Valley, including EnergyAustralia, and how they compared to the Agreement. The meeting took approximately 1.5 hours, and after the meeting Mr Murphy emailed the employees copies of the comparable industry agreements for review.

[82] On 25 April 2018, Mr Murphy met with “Employee 4” and “Employee 5” who had only recently commenced employment. The discussion followed a similar pattern to earlier discussions with the other employees. The information pack was provided and there was a clause by clause analysis of the Agreement terms and their effect. The meeting took between 1 and 2 hours.

[83] In summary, the effect of the evidence is that the explanation provided to employees over the course of these meetings comprised of Mr Murphy going through the draft Agreement clause by clause, explaining what each clause meant, its effect and operation “for every single one of the five” employees. 54 The explanation began in general terms, and varied according to the employee involved. For example, Mr Silvester and “Employee 2” are full time employees, and while the operation of casual loading under the Agreement was explained to them, it had no “operative effect to them”. The same explanation was a lot more detailed for “Employee 3”, who was a casual employee. For him, the explanation expanded on the interaction of casual loading and other entitlements such as shift loading.55

[84] Mr Murphy gave detailed evidence about his explanation of a range of terms of the Agreement and how they would operate. I am satisfied that he went through each clause of the Agreement with each employee. The discussion of each term, and the depth of that discussion, varied. There was limited discussion about some of the National Employment Standards, the flexibility term and consultation term except in reference to the Act. There was detailed discussion about other matters, such as ticketed training, hours of work and rostered days off. The classification structure, and the appropriate relativities for certain roles, was a focus of some of the employees. I am satisfied that Mr Murphy took all reasonable steps to explain the Agreement to the employees, and to ensure that the explanation was tailored to the individual circumstances of employees. His approach was informed by his understanding of those circumstances:

“I knew what the position for each of the employees was relative to their own experience, their own tickets, where they sat within the classifications and things like that.” 56

[85] The discussion canvassed key differences between the Agreement and the Manufacturing Award, as well as some of the differences between the Agreement and the Greenfields Maintenance Agreement (although some differences, such as the omission of union rights under the dispute resolution term, were not explained). Mr Murphy conceded, however, that it did not deal with the Greenfields Electrical Agreement, despite its overlapping coverage with the Agreement in relation to electricians.

[86] Mr Murphy explained this omission on the basis that because the Greenfields Electrical Agreement and the Greenfields Maintenance Agreement are very similar, one only needed to explain the changes from one of the two. It is also the case that none of the employees were employed as electricians, although one appears to have advanced electrical instrumentation qualifications.

[87] I accept, and it is not seriously in dispute, that the Greenfields Electrical Agreement and the Greenfields Maintenance Agreement are substantially similar in terms of their content. There are a number of differences of a relatively minor nature, and with one exception, in my view the failure to explain those matters would not render the explanation inadequate for the purposes of section 180(5). However, there is one key difference that falls into such a category.

[88] The Greenfields Electrical Agreement incorporates the Electrical, Electronic and Communications Contracting Award 2010 (the Electrical Award), except in relation to the model dispute resolution, flexibility and consultation terms. It does not appear to be the case that the Electrical Award would otherwise cover or apply to employees of MMS, because it is not in the industry of providing electrical services. 57

[89] In a similar vein, the Greenfields Maintenance Agreement incorporates the Manufacturing Award, as well as large sections of the pre-reform Metal, Engineering and Associated Industries Award 1998 (Parts I and IV), the pre-reform Metal, Engineering and Associated Industries (Accident Pay, Victoria) Award 1998 and the pre-reform Metal, Engineering and Associated Industries (Superannuation) Award 2000 as they stood on 1 March 2006. It also provides for the continuation of a range of unspecified “existing over Agreement payments and conditions of employment” 58.

[90] Except in relation to the Manufacturing Award, there is no evidence of any discussion about the consequences of making the Agreement in relation to the displacement of the various instruments incorporated by reference in the Greenfields Electrical Agreement and the Greenfields Maintenance Agreement. The breadth of terms and conditions regulated by those instruments makes this a material omission. It falls in the category of concern identified in One Key No. 2 and later in Diamond Offshore,in that despite the industry experience of the employees and their varying levels of familiarity with working conditions in the Latrobe Valley, I cannot be satisfied that employees were put in a position to fully appreciate the effect on their existing conditions of employment in voting to approve the Agreement.

[91] It follows that I am not presently satisfied that the Agreement was genuinely agreed for the purposes of section 188(a) of the Act, because the evidence does not establish that all reasonable steps were taken to ensure the explanation given to employees under section 180(5) was adequate.

[92] The question is whether an undertaking can be given to remedy the concern. It is appropriate that an opportunity be given to MMS to consider and respond to the matter, as well as to consider whether an undertaking of the kind required might result in substantial changes to the Agreement such that it cannot be accepted because of the operation of section 190(3)(b) of the Act.

The second limb of ‘genuinely agreed’ - the Agreement must have been “made” in accordance with section 182

[93] I have earlier set out that the Agreement was made when a majority of employees cast a valid vote to approve the Agreement after being asked to do so by MMS. There were at least 21 days before the last notice of employee representational rights was issued on 15 February 2018, which is also the only notification time evident on the materials before me. Employees were requested to vote on the Agreement on 4 May 2018.

[94] I am satisfied that this requirement has been met.

The third limb of ‘genuinely agreed’ – any other reasonable grounds for believing that the Agreement has not been genuinely agreed to by the employees (section 188(c))

[95] Section 188(c) requires the Commission to be satisfied that there are “no other reasonable grounds for believing that an enterprise agreement has not been genuinely agreed”.

[96] In One Key No. 2, the Full Federal Court observed that the scope of section 188(c) is broad, and covers any circumstance that could logically bear on the question of whether agreement was genuine, including matters such as the provision of misleading information, the absence of full disclosure and the likelihood of relevant employees understanding the operation of the various awards affected as well as the extent of changes between the modern award(s) and the proposed agreement. It explained the statutory task as requiring consideration of whether the employees who approved the Agreement were likely to have understood the terms of the Agreement and its effect, and whether by reason of that fact, there were reasonable grounds for believing that the Agreement had not been genuinely agreed. 59

[97] Although the scope of section 188(c) is broad, it does not extend to matters arising under sections 188(a) and (b) of the Act. 60

[98] In KCL Industries Pty Ltd 61(KCL), a Full Bench of the Commission agreed with the majority in Ostwald Bros Pty Ltd v Construction, Forestry, Mining and Energy Union on what is required by section 188(c) as well as a summary of relevant caselaw by Asbury DP in Central Queensland Services Pty Ltd62. The Full Bench concluded that an enterprise agreement had not been genuinely agreed in circumstances where the Agreement covered a wide range of classifications, most of which had no relevance to the work performed by the company’s three employees, encompassed industries in which the employer did not currently operate, and whose rates of pay would not apply to the employees who voted upon it, because they were all paid higher rates of pay than those contained in the Agreement. Accordingly, employees had no “stake” in the enterprise agreement’s rates of pay and could not have given informed consent to an agreement covering occupations and industries in which they did not work and presumably had no experience.63

[99] Similar inferences to those drawn in KCL were considered open by a Full Bench in Construction, Forestry, Mining and Energy Union v Sparta Mining Services Pty Ltd 64(Sparta) where the evidence suggested that a vote in favour of an enterprise Agreement by three employees may not have been authentic because employees appeared to have been selected for employment for the specific and sole purpose of making the Agreement in circumstances where the provisions of the Agreement were not intended to apply to them and employees would not continue in their employment after the Agreement was approved.

[100] In One Key No. 1, the Federal Court had considerable difficulty accepting that three employees with a very confined employment experience (and covered by a limited number of modern awards) could genuinely agree to an enterprise agreement covering employees falling within “such a diverse range” of modern awards (being a total of 11 awards, covering building and construction, mining, manufacturing, road transport, hydrocarbons, clerks, hospitality, oil refining and manufacturing and offshore oil and gas). The agreement was found to “lack authenticity and moral authority” in the sense identified in Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission. 65

[101] In One Key No. 2, the Full Federal Court endorsed KCL, observing that where a group of voting employees does not broadly reflect the occupational scope of the proposed agreement (for example, by including a representative from each classification), the terms and conditions in the agreement for which the group of employees might genuinely speak is restricted. 66

[102] In summary, and building on the earlier summary of Asbury DP in Central Queensland Services, the following principles can be derived from the case law in relation to whether there are reasonable grounds for believing that an enterprise agreement has not been genuinely agreed for the purposes of section 188(c):

•  The task is to consider whether the employees who approved the enterprise agreement were likely to have understood its terms and its effect, and whether by reason of that fact, there were reasonable grounds for believing that agreement was not genuinely agreed. 67

•  Genuine agreement requires more than an absence of fraud, coercion or duress. It must be the product of informed consent from employees. The concern is with the substantive validity or qualitative legitimacy of the approval given.  68

•  The scope of section 188(c) is broad and covers any circumstance that could logically bear on the question of whether agreement was genuine, except matters arising separately under sections 188(a) and (b). 69

•  Section 188(c) is only a basis for finding that an agreement is not genuinely agreed to if there are reasonable grounds for this belief on the material disclosed to the Commission. 70

•  The question of whether there are reasonable grounds for believing that an agreement was not genuinely agreed is to be considered having regard to the circumstances existing when the agreement was voted on. 71

•  Employees must have an informed and genuine understanding of what they are being asked to approve. 72

•  The provision of misleading or intimidating material or information to employees (verbally or in writing) or a material non-disclosure or scheme underpinning the agreement about which employees are not informed, will be relevant to the Commission’s assessment of whether the agreement has been genuinely agreed, as is the likely effect of that representation or omission on the overall outcome of the vote. 73

•  Employees may not be able to give informed consent for an enterprise agreement covering a much wider range of occupations and industries than those in which they were employed or experienced. Such an enterprise agreement may lack the necessary “authenticity and moral authority”. 74

•  The group of employees voting for an enterprise agreement should broadly reflect the occupational scope of the proposed agreement. Otherwise, the terms and conditions about which the group of employees can genuinely speak is limited. 75

•  Authenticity may be lacking where employees are selected for employment for the sole purpose of making an enterprise agreement that is never intended to apply to them. 76

•  Employees may not have a relevant ‘stake’ in terms and conditions of employment conferred by an enterprise agreement if it would apply to them only in a theoretical sense, given their more favourable contractual terms and conditions. 77

•  Employees might have a relevant stake in an enterprise agreement tied to their interest in the success of the employer’s business. 78

•  An intention to operate in an industry in which an employer has not previously operated, or a process of bargaining that might not have been “robust or rigorous”, or a failure to call employees who voted to approve an agreement or their bargaining representatives to give evidence in support of its approval, are not, either separately or in combination, reasons to infer no genuine agreement. 79

[103] The first point to make is that the matters arising for consideration in relation to sections 180(5) and section 188(a) of the Act do not again fall for consideration under section 188(c).

[104] It is also the case that the factual scenario arising here is different to those considered in KCL and One Key No. 2. Rather than covering a wide range of classifications and industries of limited relevance to the work performed by MMM’s five employees, the Agreement covers a limited range of classifications in the manufacturing and related industries, and which reflect the industry in which each of the employees works and has relevant experience. The work to be covered by the Agreement is covered by a single modern award. There is no evidence that any of the employees lack a relevant ‘stake’ in the Agreement in the sense that minimum rates of pay or other conditions would not apply to them. The evidence is to the contrary, with employees taking an active interest in particular terms of the Agreement of interest to them, including wage rates, allowances and relativities in the classification structure.

[105] Four of the five employees had prior relevant experience either in power stations or heavy industry. Taken together, the employees were generally representative of the range of classifications in the Agreement, from Trades Assistant to Dual Qualified Tradesperson. It is true that there was not one employee employed in each of the Agreement’s classifications. To adopt such a requirement as a minimum standard, however, would be to construe the Act’s enterprise bargaining provisions as preventing enterprise agreements from being made with a group of employees whose number was less than the number of classifications contained in the proposed agreement. The Act does not contain any such restriction.

[106] I am not satisfied that employees were selected for employment for the specific and sole purpose of making the Agreement, in circumstances where the provisions of the Agreement were not intended to apply to them and they would not continue in their employment after the Agreement was approved, as discussed in Sparta. The evidence does not establish or support the AMWU’s allegation that some of the employees were “ring ins” engaged for the sole purpose of making the Agreement.

[107] The evidence of Mr Murphy set out the relevant employment history of each of the employees who voted on the Agreement. 80

[108] Mr Silvester has been employed with MMS since 2009, and at the time the Agreement was made, remained employed as Project & Stores Coordinator and Storeperson for the purposes of the Agreement.

[109] Employee 2 was employed by MMS in 2012 as Trades Assistant and subsequently completed his apprenticeship in carpentry. He also holds tickets in other work covered by the Agreement such as scaffolding. He ceased permanent employment with MMS in July 2018 (approximately two months after the Agreement was made) and has continued employment on a casual basis since that time.

[110] Employee 3 was employed by MMS in 2016 on a casual basis as a Rigger and Scaffolder, also performing work as a Crane Driver. Prior to the making of the Agreement, the employee worked for MMS in five separate successive periods. The latter period, occurring over the period that the Agreement was made, was from 23 March 2018 to 1 June 2018, working 40 hours per week plus overtime as required both on site and in the workshop. After the Agreement was made, the employee worked an additional four successive periods, and was “currently employed” as at 23 July 2019. The employee has prior experience working in power stations and a local mill.

[111] Employee 4 was employed by MMS on 16 April 2018 and commenced work on 24 April 2018 on a casual basis as a Rigger and Trades Assistant. The employee is a qualified armament fitter with advanced qualifications in electrical instrumentation, as well as high risk licences and prior experience as a rigger, dogman and forklift driver in heavy industries. Employee 4 worked 40 hours per week plus overtime as required for two periods, from 24 April 2018 to 17 May 2018 and from 26 June 2018 to 6 July 2018. The employee was offered, but did not accept, further work from MMS on the basis that they had secured full time work close to family. The employee had prior experience in rigging, forklift duties and instrumentation fitting.

[112] Employee 5 was employed by MMS on 16 April 2018 and commenced work on 24 April 2018 on a casual basis as a Trades Assistant. The employee worked 40 hours per week plus overtime as required both in the workshop and at Loy Yang A. The employee resigned from employment due to relocation and did not work for MMS after 17 May 2018.

[113] At the time the Agreement was made, some of the employees had only been employed by MMS for a short period and the period coincided with the making of the Agreement. However, it is clear that in the case of each of the casual employees, their employment relationship with MMS either remained on foot more than 12 months after that time or ceased at the initiative of the employee rather than MMS.

[114] I am satisfied that Mr Silvester and “Employee 2” had a stake in the Agreement. So much is clear from their active participation in bargaining, matters of interest to them in that process and their particular interest in understanding how the Agreement compared to other enterprise agreements in the Latrobe Valley.

[115] The CFMMEU submit that the failure of MMS to call witnesses in support of its application other than Mr Murphy support the drawing of an inference that such witnesses would not have assisted MMS. It relies on the principles of open justice adopted in Amie Mac v Bank of Queensland & Ors 81¸ although Amie Mac was dealing with the question of whether individuals named in a ‘stop bullying’ matter should be de-identified. As far as I can see, it has no relevant bearing on the CFMMEU’s concern, which relates to the failure of MMS to call certain individuals to give evidence in support of its application. The CFMMEU could also have sought orders for those individuals to attend and give evidence but did not do so.

[116] I do not consider it necessary or appropriate to draw an adverse inference against MMS in connection with its decision to call only Mr Murphy to give evidence. Ultimately, it is a matter for MMS to decide which evidence it will seek to rely on in support of its case. Its prospects of success in the application are affected accordingly. To support that proposition, one need look no further than my finding above 82 in relation to the failure to adequately explain the effect of the Agreement on employees, which rests entirely on the state of the evidence adduced.

[117] I would also observe that it is not at all exceptional for individual employees to be shielded from proceedings in the Commission (as often at the initiative of a union as of an employer) for a range of reasons, including fear, anxiety or a desire to avoid potential adverse consequences either from their employers or fellow employees. It is no basis, without more, to infer a lack of genuine agreement in relation to the Agreement.

[118] The material before me does not disclose any other reasonable grounds for believing that the Agreement was not genuinely agreed for the purposes of section 188(c).

Does the Agreement exclude the National Employment Standards (NES)?

[119] Clauses 5.1 and 5.2 of the Agreement (dealing with the entitlement to annual leave and personal leave and clause 1.6.2 (dealing with abandonment of employment) appear to exclude the NES in whole or in part.

[120] MMS has given a written undertaking (attached at Annexure A). The undertaking given by MMS will not cause financial detriment to any employee covered by the Agreement and will not result in substantial changes to the Agreement.

[121] Bargaining representatives, as well as each of the unions, will be given a further opportunity to express their views in relation to the undertaking as well as to any additional undertaking MMS might choose to give for the reasons set out earlier in this decision.

Does the Agreement pass the better off overall test?

[122] There is no contention in these proceedings that the Agreement does not pass the better off overall test. The rates of pay are at least 62.99% - 150.93% above the Manufacturing Award and 32.30% - 61.70% above the rates of pay for Apprentices. There are a range of other benefits in the Agreement compared to the Manufacturing Award, as well as some detriments. MMS contends that the test is met “comfortably”. The unions have not made any submission to the effect that the Agreement does not meet the better off overall test, and the Commission’s own analysis of the Agreement indicates that the test is met.

[123] I am satisfied that the Agreement passes the better off overall test.

Were the employees fairly chosen?

[124] The Agreement covers employees performing work at the Loy Yang A and B power stations and the Yallourn power station in Victoria’s Latrobe Valley as well as the MMS workshop at 14 Centre Road, Morwell, but it does not cover all employees of MMS. Employees who are excluded from its scope include supervisory or administrative employees as well as employees who are engaged to work in locations other than those specified in the Agreement.

[125] As can be seen, the groups of employees covered by the Agreement are both geographically and operationally distinct. They are geographically distinct, because coverage is enlivened by reference to the performance of work in a particular place (the workshop in Morwell, and the three power plants in Victoria). They are operationally distinct from both the supervisory and administrative employees working at locations covered by the Agreement, and from employees working in other locations. The groups of employees covered by the Agreement largely mirrors the MMS Enterprise Agreement 2016-2020 83 which excludes from its coverage employees working in and around power stations in the Latrobe Valley. In that sense, it could not be said that there was any ‘arbitrary’ basis for the selection of the group.

[126] The unions contend that MMS manipulated the timing of the Agreement to exclude large numbers of future employees from participating in bargaining for the Agreement. They argue for the drawing of inferences against MMS based on the circumstances of employment of each of the employees and the making of the Agreement when only 5 employees were employed.

[127] In Thiess Pty Ltd v Construction, Forestry, Mining and Energy Union 84 a Full Bench held as follows:

“[42] We agree with Thiess’ contention that clear and compelling evidence should be identified to support a finding (or an inference) that an employer manipulated, or effectively misconducted itself in relation to the making of the Agreement by ‘manipulation’ of the group to be covered by the Agreement. Such a conclusion is a serious one. As is evident from the above, the Commissioner appears to have relied on the above matters to conclude that there was an absence of a clear or defensible business rationale for the group’s selection and thus, there has been a manipulation of the group.

[43] It is to be observed that merely because, at the time an agreement is negotiated and made, the employer only has a small number of employees with whom to negotiate, and the coverage of the resultant agreement encompasses a much wider range of employees, it does not follow that the process has been manipulated and the “fairly chosen” requirement has not been met. The position might be different if it were additionally demonstrated that the bargaining and agreement process had been manipulated in the sense that there was no legitimate business rationale for the coverage of the relevant agreement and/or that the employees who made the agreement were not engaged to meet genuine work requirements but rather for the artificial and short-term purpose of negotiating and making an agreement which was disadvantageous to genuine future employees.”

[128] There is no clear or compelling evidence that MMS engaged in misconduct by seeking to manipulate the group of employees covered by the Agreement. MMS did not know what future contracts it would secure, or when that might occur, or how many additional employees it would need if and when it was successful. A decision to commence bargaining at a quiet time of the year when it had greater capacity to manage what can be a complex, time and resource-intensive process is not a manipulation of process, or misconduct. It is a rational business decision. In this case, it was made in the context of what the CFMMEU described as “a significant ebb and flow of a workforce”. 85 It is also relevant to consider the evidence of Mr Thornton, CFMMEU Organiser, in this regard:

“9. The nature of mechanical maintenance work in the Latrobe Valley, particularly in the power industry, is cyclical. Major facilities such as the power stations and mines may of course require maintenance at any time but beyond that there is a regular program whereby either sections of a plant or the entire plant are shut down for scheduled or “planned” maintenance. As a result the levels of work performed by MMS under the current Agreement has significant peaks and troughs and this naturally affects employee numbers.

10. Historically, during a major shut I estimate that there may often be up to 150 to 200 employees engaged by MMS with up to 50 of those being CFMMEU members. Sometimes this number is greater. For example in 2013 the Loy Yang B shut would have involved somewhere between 200 – 300 MMS employees. For small projects those numbers would of course be lower.

11. On the other hand, during quieter times when there are no significant outages or other similar mechanical maintenance activities occurring the number of employees of MMS may drop very low, even potentially to the extent of their [sic] being no CFMMEU members employed under the current Agreement for different lengths of time. In the last five years I estimate there have been 6 such major outages involving MMS. There has also been major maintenance activity occurring in Loy Yang mine over the past six months, which has now been completed.” 86

[129] Mr Murphy’s evidence is that the motivation of MMS in making the Agreement at the time that it did was to secure certainty of labour costs ahead of tendering for future work, by limiting the capacity for extra claims and industrial action for the term of the Agreement. The decision was made while MMS had one ongoing maintenance contract in the Latrobe Valley, but no other confirmed contracts in place. There is nothing to contradict this evidence. I am satisfied that there was a legitimate business rationale for the Agreement. It is well established that enterprise agreements can be made with a small group of employees, notwithstanding an intention that the agreement will cover a larger group of employees in the future.

[130] In this case, MMS made the Agreement with all relevant employees who were employed at the time. Each was given notice of their representational rights and from at least that time on, was aware that they could seek the involvement of a union representative if they chose. MMS could have notified the unions separately of its intention to make an enterprise agreement to replace the Greenfields Agreements, or sought their involvement in the process independently of any request of the employees. However, there was no onus on it to do so, and I am not satisfied that its omission in this respect evidences any mala fides on the part of MMS.

[131] I am satisfied that the group of employees covered by the Agreement was fairly chosen.

Other relevant considerations

[132] The Agreement does not contain any unlawful terms or designated outworker terms. There is no evidence of any scope order in operation in relation to the Agreement that would render compliance with the good faith bargaining requirements a relevant consideration.

[133] The nominal expiry date in the Agreement is more than four years from the date of approval. While that concern has not previously been identified, an undertaking will be required having regard to the terms of section 186(5)(b) of the Act if the Agreement is to be capable of approval.

[134] The Agreement contains a dispute settlement term at clause 1.7 which meets the requirements of section 186(6) of the Act. It contains a flexibility term at clause 1.8 consistent with section 203 and a consultation term at clause 1.9 that complies with section 205.

[135] Clause 1.4 of the Agreement contains a definition of shiftworker for the purposes of the additional week of annual leave under the NES.

Conclusion and disposition

[136] For the reasons set out above, I am not currently satisfied that the Agreement has been genuinely agreed and as a result, it cannot be approved under the Act.

[137] MMS should, within seven days, provide any further undertakings (in the form of a single consolidated set of undertakings) to address the matters set out in this Decision and provide a copy of those undertakings to bargaining representatives and each of the participating unions.

[138] Bargaining representatives and each of the unions should provide any views on undertakings received by MMS to the Commission within ten days.

[139] The application will then be determined.

COMMISSIONER

Appearances:

M Follett for MMS

D Vroland for the CFMMEU

J Liley for the CEPU

R Wainwright for the AMWU

Hearing details:

2019.

Melbourne:

August 13.

Printed by authority of the Commonwealth Government Printer

<PR712945>

 1   [2018] FWCA 7386.

 2   Construction, Forestry, Maritime, Mining and Energy Union v Mechanical Maintenance Solutions Pty Ltd [2019] FWCFB 3585.

 3   AE404438.

 4   AE404396.

 5   See [2019] FWCFB 3585 at [5] and [53].

 6   Exhibit 1.

 7   Exhibits 1 and 2.

 8   Exhibit 1.

 9   Transcript at PN241, 13 August 2019.

 10   Transcript at PN243, 13 August 2019.

 11   Form F18A.

 12   Exhibit 3, Attachment TT-2.

 13   Exhibit 1.

 14   See paragraph B.2.3.

 15   [2019] FWCFB 3585 at [55].

 16   [2019] FWCFB 3585 at [52].

 17   Construction, Forestry, Maritime, Mining and Energy Union v CBI ConstructorsPty Ltd[2018] FWCFB 2732.

 18   The Act, s.180(6).

 19 270 IR 410.

 20 Ibid at [103].

 21 Ibid at [105].

 22   [2018] FWCFB 2992 (11 July 2018).

 23 Ibid at [47].

 24   [2018] FWCFB 2992 at [48].

 25 Ibid at [52].

 26 (2018) FWC 527.

 27 Ibid at [115].

 28 Ibid at [116].

 29   [2018] FWC 1466 (12 June 2018)

 30 Ibid at [43].

 31   [2018] FWCFB 6907 (12 November 2018).

 32 Ibid at [28].

 33 Ibid at [33].

 34   [2019] FWCFB 1431 (12 March 2019).

 35 Ibid at [75].

 36   [2019] FWCFB 4022 (14 June 2019).

 37 See ibid at [70]; [71].

 38   [2019] FWCFB 4023 (12 July 2019).

 39 Ibid at [39].

 40   [2019] FWCFB 5722 (16 August 2019).

 41 See ibid at [23].

 42   CJ Manfield Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (2012) 222 IR 457.

 43   [2019] FWCFB 4253 (21 August 2019).

 44 Ibid at [89].

 45 Ibid at [93].

 46   [2017] FWCFB 5630 (20 November 2017).

 47 Ibid at [49].

 48   Ibid.

 49 Ibid at [48].

 50   [2018] FWC 1466 (12 June 2018).

 51   See for example Construction, Forestry, Mining and Energy Union v Shamrock Civil Pty Ltd [2018] FWCFB 1772; [2018] FWCFB 2992; The Australian Workers’ Union v Professional Traffic Solutions Pty Ltd[2018] FWCFB 6333; Australian Workers’ Union v Wagners Industrial Services Pty Ltd[2019] FWCFB 1731.

 52   [2018] FWCFB 6333 at [42].

 53   [2018] FWCFB 2992 at [54].

 54   Transcript, 13 August 2019 at PN330 and PN335.

 55   Transcript, 13 August 2019 at PN343.

 56   Transcript, 13 August 2019 at PN373.

 57   See Electrical, Electronic and Communications Contracting Award 2010, cl.4.1.

 58   Greenfields Maintenance Agreement, cl.5.7.

 59 (2018) 262 FCR 527 at [170].

 60   See, for example, Ostwald Bros Pty Ltd v Construction, Forestry, Mining and Energy Union [2012] FWAFB 9512 (8 November 2012) at [78]-[79].

 61   [2016] FWCFB 3048 (3 June 2016).

 62   [2015] FWC 1554 (6 March 2015).

 63   [2016] FWCFB 3048 at [36].

 64   [2016] FWCFB 7057 (10 October 2016).

 65 (1999) 93 FCR 317; (1999) FCA 847.

 66 (2018) 262 FCW 527 at [157].

 67 Ibid at [170].

 68   Re Toys R Us (Aust) Pty Ltd Enterprise Flexibility Agreement 1994 Print L9066; Grocon Pty Ltd Enterprise Agreement (Victoria) (2003) 127 IR 13, 14; (2018) 262 FCR 527 at [141]-[160] (25 May 2018); Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission (1999) 93 FCR 317.

 69 (2018) 262 FCR 527 at [142]; [2012] FWAFB 9512 (8 November 2012) at [78]-[79].

 70   [2012] FWAFB 9512 at [154]; Maritime Union of Australia v MMA Offshore Logistics Pty Ltd [2017] FWCFB 660 (1 February 2017).

 71 (2012) 222 IR 457, 466 at [36].

 72 See (2018) 262 FCR 527 at [156].

 73   Australian Municipal, Administrative, Clerical and Services Union v Yarra Valley Water Corporation[2013] FWCFB 7453 (30 September 2013); Peabody Moorvale Pty Ltd v Construction, Forestry, Mining and Energy Union [2014] FWAFB at [7]; Re MSS Security Pty Ltd [2010] FWA 3687; (2003) 127 IR 13 at [48]; Manfield Coalair and CEPU Electrical Division Northern Territory Enterprise Agreement Gove Alumina Refinery and Mine Site - 2010-2012 [2011] FWAA 9129 at [23].

 74   See [2016] FWCFB 3048 (3 June 2016); (2017) 270 IR 410; (2018) 262 FCR 527.

 75 (2018) 262 FCR 527 at [157].

 76   [2016] FWCFB 7057 (10 October 2016), [30].

 77   [2016] FWCFB 3048 (3 June 2016) at [36].

 78   Thiess Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FWCFB 2405.

 79   [2017] FWCFB 660 (1 February 2017) at [76].

 80   Exhibit 2.

 81   [2015] FWC 774.

 82 At [91].

 83   AE418311.

 84   [2018] FWCFB 2405 (7 June 2018).

 85   PN651, 13 August 2019.

 86   Exhibit 3 (marked 13 August 2019), 24 August 2018.