MI&E Holdings Pty Ltd
[2012] FWA 9503
•6 NOVEMBER 2012
Note: An appeal pursuant to s.604 (C2012/6132) was lodged against this decision - refer to Full Bench decision dated 11 April 2013 [[2013] FWCFB 2142] for result of appeal.
[2012] FWA 9503 |
|
DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
MI&E Holdings Pty Ltd
(AG2012/1272)
DEPUTY PRESIDENT MCCARTHY | PERTH, 6 NOVEMBER 2012 |
Application for approval of the MI&E Holdings Pty Ltd Western Division Enterprise Agreement 2012.
Background
[1] On 18 April 2012, MI&E Holdings (the Applicant or MIE) lodged an application for approval of the MI&E Holdings Pty Ltd Western Division Enterprise Agreement 2012 (the Agreement). The application concerns a single enterprise agreement. Their application states that there were four instruments of appointment for a bargaining representative and the name of that bargaining representative was stated.
[2] I approved the Agreement on 29 May 2012 1 unaware that the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (the CEPU) had conveyed to my office that they wished to be heard in respect of the application. The approval was consequently quashed2 by a Full Bench of Fair Work Australia (FWA). The application for the approval of the Agreement was remitted back to me and it is now that reconsideration that I deal with.
[3] The CEPU, The Construction, Forestry, Mining and Energy Union (the CFMEU), and the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (the AMWU) (collectively the Union Objectors) each indicated a wish to be heard. I allowed those requests. The Australian Workers Union had expressed an interest in the matter but did not participate in the hearing nor make any written submissions.
[4] There are two clauses in the Agreement that the Objecting Unions assert do not meet the requirements of the Fair Work Act 2009 (the FW Act). The contentious clauses are Clause 2 ‘Coverage and Application of this Agreement’ and Clause 17 ‘Ordinary Hours’.
[5] Clause 2 Coverage and Application of the Agreement provides:
“(a) Subject to clause 2(b), this Agreement shall apply to;
MI&E Holdings Pty Ltd (MIE) (the Company”); and
Employees of the Company employed in and performing work as set out in the classifications specified in Schedule 1 - Classifications, of this Agreement in Western Australia.
(b) The Company undertakes separate project or site specific work that is regulated by its own site specific terms and conditions. This Agreement does not cover or apply to any employees working at those project sites where any of the following agreements are in operation (whether before their nominal expiry dates or not);
(a) A greenfields agreement made in accordance with section 172(4) of the Act or predecessor legislation; or
(b) Any other enterprise agreement made with employees in replacement or, or as a successor to, a greenfields agreement in (a).”
[6] The contentious provision in Clause 17 Ordinary Hours is the following:
“(b) Ordinary hours of work will be worked between 6.00am and 6.00pm Monday to Sunday, except in the case of shift workers. All work performed on the weekend will be paid at overtime rates.”
[7] The circumstances of this application include the fact that only four employees were involved in the making of the Agreement and at that time over 200 employees were covered by greenfield agreements with MIE at the Shenton Park Solid Waste Treatment Plant Project (the Shenton Park Project) and the Worsley Efficiency & Growth Project (the Worsley Project). Work at those projects has now been completed. Since that time 200 other employees have been engaged for and work at two other major construction sites namely the Wheatstone Project and the Macedon Project.
[8] The Union Objectors submitted that the group of employees who will be covered by the Agreement were not fairly chosen. They say that the coverage of the Agreement is artificial and arbitrary and that the Agreement undermines collective bargaining. They also argue that the spread of hours in Clause 17 is such that the agreement does not meet the Better Off Overall Test (the BOOT).
[9] MIE submitted that the group of employees was fairly chosen and the terms of the coverage clause reflect that the group of employees covered by the Agreement is geographically, operationally and organisationally distinct. They argue that the employees who made the Agreement chose not to be represented by the any union and the real complaint is that the Agreement was not made with the involvement of the Objecting Unions. They assert that the Agreement does no more than support the express capacity within the FW Act for parties to make greenfields agreements for new projects despite overlap with an agreement covering employees of an employer’s existing business. MIE say that the Agreement contains generous terms, and even with ordinary hours worked across a weekend the Applicant is confident that it passes the BOOT
[10] The Objecting Unions devoted almost all of their submissions in support of their contention that the employees who will be covered by the Agreement were not fairly chosen. They assert that choice of the group undermines the Objects of the FW Act and frustrates the rights of employees to be represented or collectively bargain
The Legislation
[11] The mandatory obligation for FWA in Part 2-4 is to approve agreements subject to compliance with the statutory requirements. The Agreement here is a single enterprise agreement, not being a greenfields agreement. Such an agreement is made when a majority of employees employed at the time who will be covered by the agreement, who cast a valid vote, approve it.
[12] I am obliged to take into account the Object of the FW Act and the Objects of the Part 3 . The Objects of Part 2-4 4 are provided in s.171 as follows:
“The objects of this Part are:
(a) to provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits; and
(b) to enable FWA to facilitate good faith bargaining and the making of enterprise agreements, including through:
(i) making bargaining orders; and
(ii) dealing with disputes where the bargaining representatives request assistance; and
(iii) ensuring that applications to FWA for approval of enterprise agreements are dealt with without delay.”
[13] The enabling of collective bargaining in good faith is provided for through the provision in Part 2-4. “Collective bargaining” is not defined nor “good faith”. What is required though is that bargaining representatives meet good faith bargaining requirements in s.228. 5 Undermining of collective bargaining is referred in s.228(e) as “refraining from capricious or unfair conduct”.
[14] The obligations for FWA include an obligation to be satisfied that the group that will be covered by the agreement were fairly chosen. The fairly chosen requirements are set out in s.186(3) and (3A). The provisions of s.228(e) are influential in the consideration of the statutory construction of s.186(3) and (3A). 6
[15] The obligations of S.186(3) were explained in Cimeco Pty Ltd v CFMEU and Others (Cimeco). 7 What Cimeco makes clear is that what is required is that the defining group must be fairly chosen. 8 That involves comparing the group chosen with any remaining employees employed by the employer. The approach involves identifying the group chosen and the features that give the group a character of having been fairly chosen. In considering the application FWA is obliged to make findings as to whether the group is geographically, operationally or organisationally distinct [the “good test” (as Mr Gianatti described it)]. Those findings are then weighed up with other factors and a decision is made about whether the group was fairly chosen.
[16] Cimeco is also authority for the proposition that the term “fairly chosen” is to be given a wide meaning. That is consistent with the approach of the Australian Industrial Relations Commission (the AIRC), and the predecessor provisions of the Workplace Relations Act 1996 (the WR Act). 9 Cimeco also endorsed the observations of Lawler VP in Re ANZ Stadium Casual Employees Enterprise Agreement 2009 (ANZ) 10 regarding the time when the group was chosen. The fairly chosen test time is at the time the coverage provisions were agreed in the bargaining, although more accurately what is probably meant is the time the agreement was made.11 It is also well established that the terms of an agreement including the coverage by it is a matter for the parties in the negotiation for an agreement.12
The Evidence
[17] An Employer’s Declaration in Support of the application was lodged (the Declaration) by Ms Laura Gregson, an industrial relations adviser for MIE. The declaration stated that the Agreement did not cover all employees of MIE and that there were four employees who would be covered by the Agreement, all of whom voted and approved the Agreement. It stated that the group was fairly chosen and the supporting reasons. Ms Laura Gregson was called to attest to the Declaration. She was not cross-examined.
[18] Ms Alicia Norgrove, a Senior Employee Relations Advisor with Monadelphous Engineering Associates Pty Ltd (MEA), gave evidence about the considerations leading to the making of the Agreement. MIE is a subsidiary of the Monadelphous Group and it is apparent that Ms Norgrove advises companies within the Monadelphous Group. She outlined the history of MIE and the business objectives of MIE including how the making of the Agreement was consistent with those objectives.
[19] MIE was purchased by the Monadelphous Group in 2005 and became a wholly owned subsidiary. MIE remains an independent electrical construction and maintenance contractor and is a national entity with its own board and management, but like the Monadelphous Group it is divided operationally between Western Division (i.e. Western Australia, Northern Territory and South Australia) and East Coast work (i.e. Queensland and New South Wales). This reflects the different Group focuses through its major contractors MEA in the West, and then MEPL in the East.
[20] Ms Norgrove explained that the intention with the Agreement was for it to operate in a similar way to the agreement that operated in Queensland. The intention was for there to be a permanent workforce based at Bibra Lake, a suburb of Perth, but with a capacity to have project conditions for onsite work for employees on major projects. She explained that this was consistent with how it had operated in Queensland and the manner in which MIE wished to operate in WA. The industrial instruments MIE wished to create were aimed at supporting that manner of operating and in particular allowing employees to benefit from any major project terms and conditions which would be more beneficial to employees than those provided in this Agreement.
[21] The business initiative of MIE in WA was to move away from project only based employment to employing a permanent workforce and looking at continuous short term contracts and work which could be performed by MIE employees. The aim was to employ this permanent workforce on projects and bring them back into the Bibra Lake workshop for short periods of time in between projects.
[22] MIE thus established a facility and yard in Bibra Lake which was able to accommodate a small permanent workforce at the facility for short periods of time performing pre-fabrication work, along with testing and tagging and project support. The Manager Mr Lou Lazzari thus sought to have rates and conditions to be able to employ employees for this work and to have a permanent workforce that he could deploy at different sites and if there wasn't any work at other sites to be able to that bring them back to Bibra Lake.
[23] MIE had greenfields agreements that were in operation at the time of making the Agreement, at two different projects. Those projects were the Shenton Park Project and the Worsley Project. MIE explained that employees at those projects were not included as the work was nearing completion at the time of making the Agreement and the expectation was that they would soon finish their employment with MIE.
[24] The Objecting Unions called no evidence from employees that had been employed at the Shenton Park Project nor from the Worsley Project, nor union officials that had been involved in those projects. MIE employed over two hundred employees at those projects. The Objecting Unions also did not provide evidence from employees or unions officials involved in the Wheatstone Project nor the Mt Macedon Project. There were over two hundred employees at those sites.
[25] The Objecting Unions argued that the real motivation and reasoning behind the making of the Agreement was to avoid potential exposure to protected industrial action or to an obligation to bargain with unions for greenfields agreements at major construction sites. It also seems that the Objecting Unions were asserting that the Coverage clause is contrary to a purpose of the FW Act.
Consideration
[26] In CFMEU v John Holland (John Holland) 13 it was found that FWA must be able to make an assessment with some certainty of what classes or groups of employees are covered by an agreement.14 Without that certainty it may be impossible for FWA to be satisfied about the meeting of the requirements of the FWA Act. The Objecting Unions argue that here there is no certainty about what the group is.
[27] The circumstances here are that the employees excluded through the existence of greenfields agreements at the time of the making of the Agreement are no longer covered by those greenfields agreement as those projects have completed. However there are now over two hundred employees employed at the Wheatstone and Macedon Projects that will be covered by the Agreement. There is no greenfields or any other agreement that covers employees of MIE on those projects.
[28] The Objecting Unions are relying primarily if not solely on the terms of the Agreement being contrary to the purposes of the FW Act in that it undermines collective bargaining. The main reason they proffered in support of that contention was the inability of employees to take protected industrial action.
[29] The facts here are that at the time of the making of the Agreement there was no uncertainty as to who was then covered by the Agreement and who was not. Those covered were the four employees at Bibra Lake. Those excluded were the 200 or so employees at the Worsley Project and the Shenton Park Project.
[30] The means of ascertaining the class of employees that will be covered in the future is also clear. It is those employees who are not covered by a greenfields agreement. It is also clear that the type of greenfields agreement is one made under s.172(4) of the FW Act.
Is the Group Geographically distinct?
[31] The Objecting Unions assert that the scope of the Agreement should have been confined to the Bibra Lake workshop. However that would mean applying the FW Act as if it said that a geographical distinction meant a geographically distinct work location. It is well established that those that make the Agreement decide for themselves what its coverage should be.
[32] I find that the group covered by the Agreement is geographically distinct. The geographically distinguishing feature of the group is that it is in Western Australia, other than locations which have the characteristic of there being a greenfields agreement which covers employees.
Is the Group Operationally distinct?
[33] The evidence of Ms Norgrove explained MIE’s objectives and in doing so how MIE intended the group to be operationally distinct. In that regard this matter can be distinguished from the John Holland decision. There the Full Bench stated that the group could be operationally and organisationally distinct but there was no substantive evidence to establish that fact.
[34] I find that the group here that will be covered by the Agreement is a distinct operational group. The group covered by the Agreement will be those in the WA part of the operations working at Bibra Lake and at sites where contracts to perform works are won except if there is a greenfields agreement. That also is consistent with the nature the industry where works are continually tendered for and are sometimes successful.
Is the Group Organisationally distinct?
[35] The group covered by the Agreement operates separately from its Queensland operations, which was clearly evidenced by Ms Norgrove. The organisation is structured in a way to create a distinction from other parts of the organisation.
[36] I find that the group is organisationally distinct.
Other considerations regarding fairly chosen
Why are there exclusions?
[37] The only existing employees excluded at the time of making the Agreement were those at the Shenton Park Project and the Worsley Project. The explanations given by MIE about the reasons for those exclusions are sound. Indeed it would have been strange for employees at either of those two sites to have been involved in the making of the Agreement. There are also sound reasons why some future employees may not be covered.
The Business Strategy of MIE?
[38] The business strategy of MIE is a factor I have taken into account. The evidence establishes that when the Agreement was made there were only four employees and the intention was to grow the business. The growth was anticipated to create a mix of permanent Bibra Lakes based employees that could perform work and be temporarily relocated to various sites. The intention was that it would provide MIE with flexibility.
[39] The group chosen here have a community of interest in the type of work they perform, the places where they may perform that work, the permanency of their employment and the capacity to be employed on projects where higher terms and conditions cover them.
Changes to Composition of the Workforce
[40] The Objecting Unions argue that because greenfields agreements can be established to cover part of the group covered by this Agreement, thereby displacing this Agreement for that later group, that it has the effect of undermining collective bargaining. They argue this is because employees that may be engaged for work on major construction projects will not have the capacity to take protected industrial action.
[41] The Objecting Unions argue this is particularly so when only four employees were involved in the making of the Agreement but hundreds would now be covered by it if it were approved. The Objecting Unions argue that those employees should have the right to collectively bargain and it has been undermined.
[42] MIE argue that the provision enables collective bargaining for major construction projects by allowing greenfields agreements to have effective application. Ms Gregson made the Employers Declaration in Support of the Application and was available to be cross examined. The only reason provided in the declaration for the exclusions that the reason for the distinction is that those projects are already covered by their own agreed site specific arrangements tailored for use at those particular projects.
[43] The common practice in this industry is that greenfields agreements are established for major construction projects. The reality is that in the construction industry work is performed by groups of employees for specific projects and they usually move from project to project with the same or different employers and are subject to different terms and conditions depending on what the terms and conditions are for a specific project.
[44] The evidence that Ms Norgrove gave was that the intention of MIE was to cover small projects and not cover any site that had a greenfields agreement. It was also explained to employees that if they went onto a site that provided higher terms and conditions, they'd get paid in line with that and if they went on a site with an agreement, they'd be covered by that agreement.
[45] It may be that there is an appearance of something inappropriate because of the numbers of employees involved in the making of the Agreement (four) compared to the later application of the Agreement (over two hundred). However there are a variety of circumstances where there can be substantial, maybe even significant, changes to the composition of a workforce after an agreement is made. 15
[46] The evidence here does not establish that any information was withheld from those involved in making the Agreement. There was also no evidence that the Agreement was not democratically made. There is also no evidence that establishes that MIE embarked on a deliberate strategy to undermine collective bargaining. To the contrary I consider that MIE intentions of MIE were to facilitate the capacity for collective bargaining once the Agreement was made at those places where existing employees might be deployed or where new employees might be engaged where better conditions might be obtained which would most likely be at major construction projects.
[47] There appears to me to be good grounds why the Agreement excludes from the group any employees that will be covered by a greenfields agreement or a replacement for a greenfields agreement.
Does the Coverage clause in the agreement undermine collective bargaining?
[48] CFMEU v Queensland Bulk Holding (QBH) 16 is authority that a term of an agreement cannot be contrary to the purpose of the FW Act. QBH involved the capacity for individual employees to opt out of the coverage of the agreement. It was found that the means to provide flexibility for individuals in the FW Act was through the instrument that the FW Act provided being an Individual Flexibility Agreement. A provision that allowed for a means of individual flexibility by opting out of an Agreement was considered to be contrary to the purposes of the FW Act.
[49] The facts here are different to those in QBH. Here there is no capacity to “elect” not to be covered by the Agreement and by that action create the potential for bargaining uncertainty. Secondly here even if all employees became covered by a greenfields agreement they would retain coverage by this Agreement once they ceased to be part of that greenfields agreement group. The evidence also does not establish that the agreement may have no practical effect. Thirdly the Agreement here provides for a form and degree of flexibility contemplated by the statutory framework.
[50] The FW Act allows for flexibilities in collective bargaining through a variety of means. One of those means is greenfields agreements. There is no prohibition and few restrictions on collective bargaining at any time either before or after an agreement is made. There are restrictions on the actions that can be taken during the bargaining, one of which is the capacity to take protected industrial action, if the nominal expiry date of the agreement has not passed.
[51] The inability to take protected industrial action by future employees or by existing employees transferring to another location is not in itself an undermining of collective bargaining. There is no evidence of any conduct either before the making of the Agreement or after it was made that supports any contention that a purpose was to evade the provisions of the FW Act. It appears to me that MIE were trying to provide for the capacity to have future agreements under the provisions of the FW Act to cover future employees through greenfields agreements which are a common industrial instrument in the industry it is involved in.
Conclusions
[52] What MIE says it was trying to achieve seems to me to be consistent with the Objects of the FW Act and of Part 2-4 of the FW Act. MIE gave evidence that supported their contention that they saw the Agreement as an instrument that was a balanced framework for cooperative and productive workplace relations and that promoted economic prosperity. They also believed the instrument to be simple, flexible, collectively bargained in good faith at an enterprise level that delivered productivity benefits. Implicit in their objectives was that it also had the potential to create greater numbers of permanent employees who had the capacity to shift from site to site and return to the Bibra Lake base when site work was not available. The evidence supports the contentions of MIE and I find accordingly.
[53] I find that the employees that will be covered by the Agreement are a group that were fairly chosen on each of the “good test” criteria. Even if the group who will be covered by the Agreement are not distinct by any of the “good” criteria I find that the group was fairly chosen having regard to all of the circumstances.
[54] Further I find that the Clause 2 Coverage and Application is not contrary to a purpose of the FW Act and does not undermine collective bargaining.
[55] I considered the Agreement did meet the BOOT test when I first approved the Agreement and the Objecting Unions whilst they raised this issue did not provide anything more. I have not changed my view and do consider the Agreement meets the BOOT. However as I have some concerns I will require MIE to provide me with an appropriate undertaking that commits to a periodic audit of randomly chosen employees earnings compared to the Award and the capacity for employees to request a comparison of their earnings compared to the Award.
[56] In all other respects I am satisfied that the Agreement meets the requirements of s.185 and s.186 of the FW Act.
[57] I will approve the Agreement if the undertakings I refer to above are received and overcome my concerns.
DEPUTY PRESIDENT
Appearances:
Mr D Brajevic with Mr C Gianatti for the Applicant
Mr K Sneddon, Ms N Ireland and Ms P Lim for the Objecting Unions
Hearing details:
2012:
Perth:
October, 25.
Final written submissions:
Applicant: 15 October 2012
Objecting Unions: 24 October 2012 and 30 October 2012
1 [2012] FWAA 4578
2 [2012] FWAFB 6817
3 S.578(a)
4 See CFMEU v Fair Work Australia (2011) 195 FCR 74
5 See s.228
6 See Re ANZ Stadium Casual Employees Enterprise Agreement 2009[2010] FWAA 3758
7 [2012] FWAFB 2206 at paragraph[10]
8 See Council of Holmesglen Institute of TAFEPrint Q3673 16 JULY 1998 paragrah [23] for the meaning of “distinct”
9 See ASU v Boroodara City Council Print R8518 at paragraph [6]
10 See Re ANZ Stadium Casual Employees Enterprise Agreement 2009[2010] FWAA 3758
11 [2012] FWAFB 8461
12 Ibid at paragraph [34]
13 [2012] FWAFB 7866
14 CFMEU v FWA (2011) 195 FCR 74 at paragraph [68]
15 [2012] FWAFB 3534 for example
16 [2012] FWAFB 7551
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