National Union of Workers v ePharmacy Pty Ltd

[2015] FWC 3819

[2015] FWC 3819

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.236—Majority support determination

National Union of Workers
v
ePharmacy Pty Ltd
(B2015/448)

DEPUTY PRESIDENT GOSTENCNIK MELBOURNE, 12 JUNE 2015

Application by National Union of Workers for a majority support determination; whether NUW can represent the industrial interest of employees; whether employees are retail workers; whether employer operates a warehouse; whether group of employees fairly chosen; application granted.

Introduction

[1] The National Union of Workers (NUW) is an organisation registered under the Fair Work (Registered Organisations) Act 2009 (RO Act) and purports to be bargaining representative of some of the employees of ePharmacy Pty Ltd (ePharmacy) who will be covered by a proposed enterprise agreement. These employees are employed at premises operated by ePharmacy located at 44 Raglan Street, Preston in the State of Victoria (Preston site). The NUW has applied to the Fair Work Commission (Commission) pursuant to s. 236 of the Fair Work Act 2009 (Act) for a determination that a majority of employees who will be covered by the proposed enterprise agreement want to bargain with ePharmacy, that will also be covered by the proposed enterprise agreement.

[2] The Preston site once operated as the main Melbourne-based distribution centre for AM Solutions Pty Ltd (AM Solutions). 1 The ePharmacy business was acquired by AM Solutions in or about 2004.2 In or around September or October 2014 AM Solutions commissioned a new distribution centre in Somerton in Victoria.3 Thereafter a decision was made to utilise the Preston site to service the online retail part of AM Solutions’ business.4

[3] According to ePharmacy, the Preston site opened in October 2014 as a "dark store". 5 A dark store is said to be a location that operates as a retail store but without the direct presence of customers.6 Put another way, a dark store is a retail outlet or distribution centre that caters exclusively for online shopping.7 The evidence of ePharmacy was that in creating a dark store at the Preston site, the AM Solutions business took elements of activity from other sites and consolidated these at the Preston site, and that subsequently all international online retailing is to be facilitated from that site.8

[4] There was little dispute that the employees that will be covered by the proposed agreement perform duties which include picking and packing items and filling of shelves. 9 However, the environment in which the duties are performed is in dispute with the NUW which maintains the work is performed in a warehouse or distribution centre environment whereas ePharmacy submits that work is carried out in a retail environment.

ePharmacy’s opposition to a majority support determination

[5] ePharmacy opposes the making of a determination on several grounds. In summary these ground are as follows.

[6] First, ePharmacy submits that the work performed by employees who will be covered by the proposed enterprise agreement is primarily retail in nature. It submits that although the relevant employees perform duties that in some way involve handling and packing of goods, those duties are performed for the purpose of facilitating retail sales, and are incidental to the fundamental duties of retail sales. It submits that the NUW has never been entitled to represent the industrial interests of retail workers and it follows that the NUW is not entitled to represent the industrial interests of the relevant employees.

[7] Secondly, ePharmacy submits that the NUW has proposed that the employees who will be covered by the proposed enterprise agreement are “the employees who are engaged in warehousing at the Employer’s warehouse located at 44 Raglan Street, Preston VIC 3072.”. It submits that the employee group proposed to be covered by the proposed enterprise agreement for which the Majority Support Determination is sought, does not exist. It submits that the NUW has incorrectly framed the nature of the business at the Preston site, and has incorrectly framed the type of work being performed by the employees who work at the Preston site.

[8] Thirdly, ePharmacy submits that the Commission cannot be satisfied that a majority of employees that will be covered by the proposed enterprise agreement want to bargain with ePharmacy.

[9] These objections are dealt with in turn below.

Consideration

The right to represent the industrial interests of employees

[10] Only a bargaining representative of an employee who will be covered by a proposed enterprise agreement may make an application for a majority support determination. 10

[11] Section 176 of the Act identifies the persons that are bargaining representatives for a proposed enterprise agreement relevantly as follows:

176 Bargaining representatives for proposed enterprise agreements that are not greenfields agreements

Bargaining representatives

(1) The following paragraphs set out the persons who are bargaining representatives for a proposed enterprise agreement that is not a greenfields agreement:

(a) an employer that will be covered by the agreement is a bargaining representative for the agreement;

(b) an employee organisation is a bargaining representative of an employee who will be covered by the agreement if:

(i) the employee is a member of the organisation; and

(ii) in the case where the agreement is a multi-enterprise agreement in relation to which a low-paid authorisation is in operation—the organisation applied for the authorisation;
unless the employee has appointed another person under paragraph (c) as his or her bargaining representative for the agreement, or has revoked the status of the organisation as his or her bargaining representative for the agreement under subsection 178A(2); or

(c) a person is a bargaining representative of an employee who will be covered by the agreement if the employee appoints, in writing, the person as his or her bargaining representative for the agreement;

(d) a person is a bargaining representative of an employer that will be covered by the agreement if the employer appoints, in writing, the person as his or her bargaining representative for the agreement.

. . .

(3) Despite subsections (1) and (2):

(a) an employee organisation; or

(b) an official of an employee organisation (whether acting in that capacity or otherwise);

cannot be a bargaining representative of an employee unless the organisation is entitled to represent the industrial interests of the employee in relation to work that will be performed under the agreement.

[12] The NUW relies for its status as bargaining representative upon the default position in s.176(1)(b) of the Act. ePharmacy maintains that the NUW cannot represent the industrial interests of any employee in relation to work that will be performed under the proposed enterprise agreement, because those employees are not eligible to be members of the NUW under its registered rules. It points to Rule 5 of those rules, which deals with the conditions of eligibility for membership of the NUW and relevantly provides:
...

(B) The Union shall consist of an unlimited number of employees engaged in, or assisting -

(a) The reception, handling, storage, preparation, bottling, packing and delivery of goods and merchandise, and processes and activities incidental or ancillary to such reception, handling, storage, preparation, bottling, packing and delivery including the pulping, testing and/or processing of eggs.

. . .

(c) All persons engaged in or in connection with the business of a wholesale and/or manufacturing chemist.

. . .

(D) The Union shall also consist of an unlimited number of employees in the industry of the craft occupation of Commercial Traveller.

[13] ePharmacy submits that although the relevant employees perform duties that in some way involve handling and packing of goods, those duties are performed in the context of employees facilitating retail sales and are incidental to the fundamental duties of retail sales. It says the NUW has never been entitled to represent the industrial interests of retail workers and it follows that the NUW is not entitled to represent the industrial interests of the relevant employees.

[14] The industries in or in connection with which the NUW is registered is set out in Rule 4 and relevantly provides:

. . .

(B) (i) Storing and packing goods and merchandise (but not so as to limit the generality of the expression 'Storing and Packing'), the reception, handling, storing, preparing, bottling, packing and delivery of goods and merchandise so far as such reception and/or handling and/or preparing and/or delivery of such goods and merchandise is in any way incidental or ancillary to their storing and packing as above described including the pulping, testing and/or processing of eggs;

. . .

[15] I do not accept ePharmacy’s submission that the employees that will be covered by the proposed enterprise agreement perform duties of retail sales, and that handling, picking and packing of goods in incidental to their duties of retail sales. The totality of the evidence tells against such a conclusion. First, ePharmacy issued pay slips describing the workers’ classifications as “Storeworker Lv1 DC Storeworker ...”. The pay slips in evidence were issued as recently as 23 April 2015. 11 Secondly, there is the evidence of the duties performed by the employees.12 These duties are consistent with the classification description on the payslips in evidence. Thirdly, there is the description of the person apparently incharge of the Preston site, Ms Linda Kong, as “Epharmacy Preston - Warehouse Manager”.13 Fourthly, there is the signage at the Preston site describing it as “EP DISTRIBUTION CENTRE”.14 Fifthly, there is the list of “ePharm Preston Storeworkers Warehouse” employees said to have been on ePharmacy’s intranet site as at 19 May 2015.15 Finally, there is the evidence of Ms Joanne Lipsey given on behalf of ePharmacy that for the purposes of complying with minimum obligations set by an applicable modern award, it “uses” the Storage Services and Wholesale Award 2010 [MA000084] (Storage Award) in relation to the employees that will be covered by the proposed enterprise agreement.16

[16] Whilst I accept that ePharmacy’s Preston site operates exclusively to fill online orders of customers, this does not change the character of the principal functions of the employees. The relevant employees are, in my opinion, storeworkers performing traditional storeworker duties, that is, the handling, picking and packing of goods, in a distribution centre albeit one designed to cater for the dispatch of online sales orders. The employees are not engaged in retail sales. The sale occurs online. The employees perform storeworker duties to dispatch the item or items to customers who have already purchased the item or items.

[17] In any event, a proper construction of the NUW’s eligibility rules do not exclude persons who perform traditional storeworker functions described in Rule 5(B)(a) if those functions are performed in connection with a retail operation. Such retail exclusions as exist in the NUW’s rules are set out at Rule 5(D)(3) and relevantly provides:
...

(3) the following classes of persons shall be excluded from the classes of persons eligible for membership of the Union by reason only of Rule 5(D) hereof:

. . .

(i) persons employed in the printing industry who are engaged wholly or substantially in soliciting orders for articles, goods, wares, services, merchandise, materials or advertising of any kind from the place of business of the employer where such persons hold a qualification specifically related to the printing industry and/or where such persons who perform duties in soliciting orders as described above as part of a career path related to or as part of a career path in the printing industry;

(j) persons employed in the printing industry wholly or substantially engaged in retail or wholesale selling at the employer’s place of business except where the employee solicits orders via telephone or other electronic means or any combination thereof.

(k) persons employed in or for the purpose of soliciting orders for goods in or for any retail operation except:

(i) where the employee is employed substantially away from the employer’s place of business; or

(ii) where the employee is principally employed in soliciting orders via telephone or other electronic means or any combination thereof and the soliciting of orders is neither directly related to the retail operation or an extension of activity performed by employees employed in the retail operation.

(l) persons employed in retail shops including employees who solicit orders and/or promote the business of their employer as part of their ordinary duties and the performance of such activities is incidental and/or ancillary to the performance of duties as an employee employed in or for any retail operation or retail shop.
Provided that the above exclusions shall apply only to Rule 5(D) hereof.

[18] As this rule is at pains to point out, the exclusions have limited operation and do not apply if a person is otherwise eligible under Rule 5(B)(a).

[19] For these reasons I am satisfied that the employees who will be covered by the proposed enterprise agreement are eligible to be members of the NUW.

[20] However, the entitlement to represent the industrial interests of an employee is not determined merely by a person’s eligibility to join an organisation. Sometimes representation orders made under Chapter 4 of the RO Act or similar orders under predecessor legislation might curtail representation rights notwithstanding eligibility. I am not aware of any such order that might operate in this way in the present case, nor has ePharmacy submitted that any such order so operates. It is not disputed that at least one of the current employees who will be covered by the proposed enterprise agreement is a member of the NUW. In the circumstances I am satisfied that the NUW is entitled to represent the industrial interests of a member who is an employee that will be covered by the proposed enterprise agreement.

[21] There is no evidence that any employee who will be covered by the proposed agreement has appointed themselves or some other person as a bargaining representative. It follows that the NUW is a bargaining representative for an employee who will be covered by the proposed agreement by operation of s. 176(3) of the Act. Consequently the NUW is entitled to make the application for a majority support determination.

Description of employees who will be covered by the proposed agreement

[22] The gravamen of the second basis for objection is that the employee group identified by the NUW as being covered by the proposed enterprise agreement and for whom the Majority Support Determination is sought (as described in the NUW’s application) does not exist. In support of this objection ePharmacy submitted as follows:

7. Section 236(2)(b) requires that the Application specify the employees to be covered by the agreement. In the Application the NUW has asserted that the employees to be covered by the agreement are:

“the employees who are engaged in warehousing at the Employer’s warehouse located at 44 Raglan Street, Preston VIC 3072.”

8. The difficulty with the characterization of the employee group and their location, as identified by the NUW, is that ePharmacy does not operate a warehouse located at 44 Raglan Street, Preston VIC 3072, and the employees of ePharmacy who work at 44 Raglan Street, Preston (“Preston Site”) are not engaged in warehousing.

9. The Preston Site is the former location of Administration & Marketing Solutions Pty Ltd’s warehouse/distribution centre (DC). That DC ceased functioning at the Preston site in or around September 2014. A new DC commenced operating at or around this time in Somerton.

10. In or around late 2014, following an analysis of the ePharmacy operations, ePharmacy commenced operating a “dark store” at the Preston site. Since that date there is effectively no warehouse at the Preston site, and no employees engaged in warehousing.

11. A dark store is, in effect, a retail store that is set up to service orders of customers of ePharmacy made online. The layout of the dark store at the Preston site is the same as the layout as retail stores of Chemist Warehouse, employees at the dark store service the customer orders in the same way a customer would if shopping in a retail store and the dark store uses the same point of sale system as is used in the retail sites of Chemist Warehouse. The dark store has additional reserves similar to a storeroom facility at a retail store in order to replenish its shelves.

12. On that basis, in ePharmacy’s submission the Application is fundamentally flawed, in that the employee group proposed to be covered by the enterprise agreement for which the Majority Support Determination is sought does not exist. The NUW has incorrectly framed the nature of the business at the Preston site, and has incorrectly framed the type of work being performed by the employees who perform work at the Preston site. 17

[23] The objection is, in my view, concerned with semantics not substance.

[24] There is little doubt that ePharmacy operates a distribution centre at 44 Raglan Street, Preston in Victoria. In my view, the description of a facility as a distribution centre is synonymous with a warehouse, in that a distribution centre is no more than a description for a warehouse, and the business that is based there, that stores goods temporarily before they are transported to other outlets or to customers for sale. That the distribution centre operates only to facilitate dispatch and delivery of online sales is beside the point and does not detract from the nature of the facility being described as a distribution centre. The signage on the premises describes it as a distribution centre. Its manager describes herself as the “EPharmacy Preston - Warehouse Manager”. In my view, ePharmacy operates a warehouse at 44 Raglan Street, Preston, which it currently describes as a distribution centre, the principal function of which is to store and dispatch goods to customers which are purchased online by those customers.

[25] As to the description of the employees as those engaged in warehousing, I accept the NUW’s submission that “warehousing” or “warehouse worker” is a common description for “storeworker”, a classification found in Storage Award. The description “storeworker” is also used by ePharmacy in payslips it issued to the relevant employees.

[26] The objection under this head has no substance and is rejected. The application adequately specifies the employees who will be covered by the proposed enterprise agreement and is not deficient as suggested by ePharmacy. In my view, all that is required by s.236 (b) of the Act is that the specified employees be described in a way that is able to be understood by the employer, the employees and by the Commission. It stretches the bound of credulity to suggest that persons described by the NUW as “employees who are engaged in warehousing at the Employer's warehouse located at 44 Raglan Street, Preston VIC 3072” do not exist or that ePharmacy does not know who such employees are. That which has webbed feet, waddles and quacks is likely to be a duck. Putting a saddle on it and calling it Phar Lap will not change that fact.

Whether employees who will be covered by the proposed agreement want to bargain with ePharmacy

[27] The third basis of objection is related to the second. ePharmacy submits that I cannot determine whether a majority of employees want to bargain given its submissions discussed under the previous head of objection, namely the identity or description of those employees. It was submitted that the NUW’s application is concerned with warehousing workers in a warehouse and no such employees exist at ePharmacy. For the reasons already given this submission is rejected.

[28] It was submitted in the alternative that even if the NUW could establish that a majority of employees working at the Preston site want to bargain, the incorrect characterisation of the work performed by employees at the Preston site, and the incorrect characterisation of the nature of the Preston site, are almost certain to have caused the NUW to provide incorrect information to employees at the Preston site as to the type of enterprise agreement they might be bargaining for. This submission is made without any evidentiary foundation and in any event is misconceived. The relevant question is whether a majority of relevant employees want to bargain with ePharmacy. That question is not concerned with whether an enterprise agreement can or will be achieved through bargaining nor is it concerned with the form or content of any enterprise agreement that might be made.

[29] The NUW provided me with a redacted and non redacted version of a petition signed by 11 persons employed by ePharmacy at the Preston site. 18 The petition indicates that the undersigned persons employed by ePharmacy want to bargain with ePharmacy covering warehouse employees.19 For reasons earlier given, I am satisfied that the description “warehouse employees” adequately specifies the group of employees that will be covered by the proposed enterprise agreement. Each person who signed the petition appears to have done so on 15 May 2014. Mr George Roberston, an organiser with the NUW, gave evidence about the circumstances in which the petition was obtained.20 I accept that evidence.

[30] Separately, ePharmacy provided a list of employees titled “ePharmacy Preston Employee List” which contains 16 names. 21 The names of all 11 persons who have signed the petition appear on the list provided by ePharmacy. It seems that ePharmacy had little difficulty in producing a list of employees that seems to correspond with the persons who signed the petition in which they are described as warehouse employees. There is no evidence of any coercion or pressure being applied to any person to sign the petition. No employee of ePharmacy was called to give evidence of any pressure or any other illegitimate conduct engaged in by the NUW in order to procure a signature on the petition. There is no basis to question the legitimacy of the petition as an expression of the wishes of those who signed it. I am therefore satisfied that the petition method utilised by the NUW in this case is an appropriate basis to work out whether a majority of relevant employees want to bargain and I am satisfied that a majority do.

Statutory criteria

[31] For the reasons already given, I am satisfied that a valid application has been made by the NUW in its capacity as a bargaining representative for the proposed enterprise agreement and of the matters set out in s.237(2)(a) of the Act. It is not in dispute that ePharmacy has not yet agreed to bargain or initiated bargaining for the proposed agreement and I am so satisfied.

[32] As to the question whether the group of employees who will be covered by the proposed enterprise agreement was fairly chosen, there is no need for the group of employees to be the fairest group that could be chosen; it is sufficient that the group is fairly chosen. If, as is the position in the instant case, the proposed enterprise agreement will not cover all the employees of the employer, in deciding whether the group of employees who will be covered was fairly chosen, I must take into account whether the group of employees is geographically, operationally or organisationally distinct.

[33] Distinctiveness on one, or all, of these bases is not determinative, but will be a factor weighing in favour of a finding that the group of employees was fairly chosen. In this application, the group of employees who will be covered by the proposed enterprise agreement appears on the material to a distinct group of employees. They are those non-salaried employees performing warehouse or storeworker functions at the Preston site in a warehouse or distribution centre, the principle function of which is to store and then to dispatch to customers goods purchased by such customers exclusively online. The employees appear to be separate and distinct from the managerial and administrative employees located at the Preston site. Moreover, there is no suggestion to the contrary. The evidence of Ms Lipsey suggesting that these employees perform sales functions and regularly interact with on line customers, is best described as weak and self-serving rather than an accurate description of the duties of the relevant employees. It runs counter to the evidence that I have discussed at [15] of this decision. For this reason I have given it little weight.

[34] I am therefore satisfied that the group of employees was fairly chosen.

[35] Apart from the objections discussed earlier in these reasons, ePharmacy does not identify any other basis on which it might be said that in the circumstances it would not be reasonable to make the determination, nor have I been able to identify any such reason. I am therefore satisfied that it is reasonable in all the circumstances to make the determination.

Conclusion

[36] The application for a majority support determination made by the NUW should succeed and a determination will separately be issued and will come into operation 15 June 2015.

DEPUTY PRESIDENT

Appearances:

The Applicant: Ms. Barrett

The Respondent: Mr. Tindley

Hearing details:

Melbourne

25 May 2015

 1   Exhibit ePharmacy 1 at [9]

 2   Ibid at [6]

 3   Ibid at [9]

 4   Ibid

 5   Ibid at [10]

 6   Ibid

 7   Transcript PN 226-PN231

 8   Exhibit ePharmacy 1 at [10]

 9   Transcript PN 278 - PN 288

 10   Section 236 (1) of the Act

 11   Exhibit NUW 8

 12   Transcript PN 278 - PN 288

 13   Exhibit NUW 7

 14   Exhibit NUW 6

 15   Exhibit NUW 3; Transcript PN 313 - PN 318

 16   Transcript PN 351-PN352

 17   Submission of Respondent at [7]-[12]

 18   Attachment 3 to Exhibit NUW 1 and MFI 2.

 19   Ibid

 20   Exhibit NUW 1 at [4]-[10]

 21   MFI 1

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