New Acland Coal Pty Ltd
[2011] FWA 9075
•20 DECEMBER 2011
Note: An appeal pursuant to s.604 (C2012/2233) was lodged against this decision - refer to Full Bench decision dated 18 June 2012 [[2012] FWAFB 5107] for result of appeal.
[2011] FWA 9075 |
|
DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
New Acland Coal Pty Ltd
(AG2011/3151)
VICE PRESIDENT LAWLER | MELBOURNE, 20 DECEMBER 2011 |
New Acland Coal Enterprise Agreement 2011.
[1] This is an application by New Acland Coal Pty Ltd (Company) for approval of the New Acland Coal Enterprise Agreement 2011. The application is opposed by the Construction, Forestry, Mining and Energy Union (CFMEU) who was a bargaining agent for that agreement.
[2] The CFMEU’s opposition to approval is based on the coverage clause, clause 2:
- New Acland Coal Pty Ltd, CAN 90 081 022 380 (“New Acland”), and
- Employees of New Acland who are employed at New Acland’s operations as Production Mineworkers or Trade Mineworkers as described in Clause 6.1 of this Agreement, except:
“2. Coverage
This Agreement covers:
- Employees who are covered by an Australian Workplace Agreement (“AWA”) that has not reached its nominal expiry date; or
- Those Employees who have elected in writing not to be covered by the Agreement.”
(emphasis added)
[3] The CFMEU contends that the exclusion from coverage of “[t]hose Employees who have elected in writing not to be covered by the Agreement” has the consequence that:
(a) the Agreement does not pass the Better Off Overall Test (BOOT) in s.193 as required by s.186(2)(d); and
(b) that the group of employees covered by the agreement was not “fairly chosen” as required by s.186(3)
[4] The key authority is the decision of the Federal Court in CFMEU v Fair Work Australia 1 (“Newlands”) in which Katzmann J allowed an appeal against a decision of a Full Bench of Fair Work Australia which had allowed an appeal against a decision of Roe C who had refused approval of an enterprise agreement without undertakings. The agreement in Newlands was expressed not to cover:
“- Employees who are covered by an Australian Workplace Agreement (“AWA”), that has not reached its nominal expiry date; or
- Employees who at any time elect in writing not to be covered by the Agreement.”
(emphasis added)
[5] Roe C held that this “opt-out” clause resulted in the agreement failing the BOOT and also had the effect that the group of employees who will be covered by the agreement was not “fairly chosen” as required by s.186(3). The Full Bench held that Roe C had erred in each of these conclusions. Katzmann J upheld Roe C’s conclusion that the agreement failed the BOOT.
[6] In relation the BOOT issue, Katzmann J held:
“91. Newlands defended the decision, noting that there was no dispute between the parties that the wage rates to be paid under the agreement exceeded those in the modern award and conferred benefits not available under the award. Newlands pointed out that there was no role for the BOOT with respect to employees who are not or who cease to be covered by the agreement. The reference to choice was, in effect, gratuitous. But, as the majority recognised (and Newlands’ submissions overlook), s 93(1) requires that at the “test time” each award covered employee and each prospective award covered employee would be better off overall. The test time is when the application for approval is made to Fair Work Australia: s 193(6). It is not the time after the election not to be covered by the agreement is made. The purpose of the BOOT is to guarantee the benefit of its superior terms to employees who at that time are covered by the agreement and prospective employees who would be covered. A right to choose not to be covered is not a benefit or entitlement conferred by the agreement. It is a right to forfeit the benefits or entitlements which the agreement guarantees. What the majority described was no benefit at all. For these reasons I am satisfied that the majority fell into error.
...
96. Here, the majority of the Full Bench purported to apply the statutory test but did not in fact do so. As I said earlier, the BOOT is concerned with the terms and conditions that will apply to employees, not to the means by which they will acquire them. The exercise of the election means that the employee may be no better off than if the modern award applied. That this circumstance was reached by the exercise of a choice could not alter that fact. The CFMEU argued that the majority misconstrued s 193, took into account an irrelevant consideration (that the fact that the employee may be no better off comes about as the result of a choice) and thereby misconceived the nature of the function they were exercising. Another way of describing what happened is to see it as a failure on the majority’s part to apply themselves to the question which the law prescribes, which is certainly a jurisdictional error as it constitutes a constructive failure to exercise jurisdiction (Ex parte Hebburn Ltd; Re Kearsley Shire Council (1947) 47 SR (NSW) 416 at 420, applied in Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194 at [31] and in numerous other decisions). Although they give the appearance of having asked the right question (are the employees better off overall?), they really posed a different question: does the fact that the employees may choose whether or not to be covered by the agreement mean that they are better off overall? However one may characterise this error, it seems to me that it goes to jurisdiction because it affects the exercise or purported exercise of the power of Fair Work Australia to approve the making of an enterprise agreement, one of its core statutory responsibilities.”
[7] Katzmann J held that the Full Bench erred in its consideration of the “fairly chosen” requirement in s.186(3) because it did not explicitly consider the matters specified in s.186(3A). However, her Honour did not express a view on the central issue of whether the opt-out clause meant that the requirement in s.186(3) could not be satisfied.
[8] Katzmann J remitted the appeal to the Full Bench back to the Full Bench for rehearing. The Full Bench published its further decision as Newlands Coal Pty Ltd v CFMEU 2 (second Full Bench decision). Dealing first with the BOOT, Hamberger SDP held that he was obliged to follow the BOOT analysis of Katzmann J:
“[20] Applying the decision of Katzmann J (as I am required to do) I am not satisfied that the agreement passes the BOOT. This is because the agreement does not guarantee to employees who are covered by the agreement at the test time, and prospective employees who would be covered, that they would be better off overall. Employees who choose to ‘opt out’ are only guaranteed the terms and conditions of the modern award. To pass the BOOT the agreement needs to ensure that such employees would be better off overall than if the modern award (as at the test time) applied. Before the agreement could be approved there would need to be an undertaking to that effect. Particular consideration to how such an undertaking would be enforceable might need to be given, as the employee(s) to whom it would relate would cease to be covered by the agreement once they had opted out.”
[9] Hamberger SDP held that the agreement failed the BOOT and could not be approved without an undertaking that addressed that concern by guaranteeing that any employee who opted out of the agreement was better off overall when compared to the relevant modern award. McCarthy DP held that the agreement satisfied the BOOT such that it could be approved without an undertaking. That conclusion is directly inconsistent with the decision of Katzmann J, a decision that bound McCarthy DP and, with unfeigned respect, cannot be accepted.
[10] Blair C, following Katzmann J, found that the BOOT was not satisfied. However, Blair C considered that this defect could not be properly addressed by an undertaking. It is also clear that Blair C maintained his earlier dissenting view that the presence of the opt-out clause meant that the group of employees covered by the Agreement was not fairly chosen as required by s.186(3) and provided additional reasoning in that regard. Hamberger SDP found that the group was fairly chosen notwithstanding the opt-out clause. McCarthy DP agreed with that aspect of Hamberger SDP’s decision.
[11] Thus,
- a majority of the Full Bench (Hamberger SDP and Blair C) held that the BOOT was not satisfied but only Hamberger SDP considered that his concern in that regard could be addressed by an undertaking; and
- a majority of the Full Bench (Hamberger SDP and McCarthy DP) held that the “fairly chosen” requirement in s.186(3) was satisfied notwithstanding the presence of the opt-out clause.
[12] The opt-out words in clause 2 of the present Agreement are to the identical effect of the words considered in Newlands. Although, not expressly submitting that the decision of Katzmann J is wrong, the Company advanced arguments based on the “test time” that lead to a conclusion that an opt-out clause of the sort at issue here does not fail the BOOT and amount in substance to a submission that the decision of Katzmann J was wrong. Notwithstanding the Company’s arguments, I cannot properly distinguish the present Agreement from the agreement before Katzmann J. I consider myself bound by the decision of Katzmann J and accordingly, I must find on the authority of that decision that the present Agreement does not pass the BOOT with the result that I must refuse the application for approval unless the Company provides an undertaking that addresses my concern that the Agreement does not pass the BOOT.
Fairly Chosen
[13] In relation to the present application, and in considering whether the group was fairly chosen within the meaning of s.186(3), I am required to have regard to the matter specified in s.186(3A). I find that Production Mineworkers and Trade Mineworkers as described in clause 6.1 of the Agreement are organisationally distinct groups of employees. Moreover, the Agreement covers only employees within those groups at a geographically distinct location.
[14] For my part, I agree with the reasoning of Roe C at first instance in Newlands in relation to the requirement in s.186(3).
[15] However, given that:
- the opt-out words in clause 2 of the present Agreement are to the identical effect of the words considered in Newlands;
- that Katzmann J did not reach a conclusion on the “fairly chosen” argument, and
- that a majority of the Second Full Bench rejected the contention that the presence of meant that the agreement could not satisfy the requirement in s.186(3),
I regard myself as bound by the majority in the second Full Bench decision and, accordingly, I must reject the CFMEU’s objection based on s.186(3), it being common ground that, absent the opt-out, the group was fairly chosen.
[16] For myself, I consider that the reasoning of Roe C on this topic is correct. If employees in a given group can opt-out of the coverage of an enterprise agreement then I do not see how that group can properly be described as a “group of employees who will be covered by the agreement” within the meaning of s.186(3). This language connotes certainty of coverage by the agreement if an employee is employed in a particular role while the agreement is in operation. If an employee who is otherwise within the scope of an enterprise agreement has the right to elect not to be covered by the agreement then it cannot be said that the employee will be covered by the agreement while it is in operation but only that they may be covered by the agreement. That is not what s.186(3) requires. Further, in my view, the objects, purpose and scheme of the FW Act in relation to enterprise bargaining is inconsistent with an ”opt-out” clause permissibly forming part of an enterprise agreement.
[17] The second Full Bench decision does not address the requirement in s.186(3) in relation to the operation of the opt-out clause in respect of employees who are not employed at the time the Agreement comes into operation but who are employed while it is in operation. In my view the arguable ability of the employer to make an opt-out election a condition precedent to employment creates an additional difficulty in relation to the requirement in s.186(3). Such an employee cannot choose to be employed under the Agreement. In my view this also renders the group in the present case “unfairly chosen”. However, such a view is inconsistent with a majority position on s.186(3) in the second Full Bench decision.
[18] But for the second Full Bench decision, I would have found that the requirement in s.186(3) was not made out. I would have been prepared to address that concern by accepting an undertaking pursuant to s.190 that, notwithstanding clause 2 of the New Acland Coal Enterprise Agreement 2011, while ever that Agreement remains in operation the Company will not seek or accept from an employee who is a Production Mineworker or Trade Mineworker, as described in clause 6.1 of that Agreement, any election in writing not to be covered by the Agreement or make such an election a condition precedent to employment in such a classification”.
Conclusion
[19] I have found that the BOOT is not satisfied in relation to the Agreement. On binding authority I am satisfied that the requirement in s.186(3) has been met. I am otherwise satisfied that the requirements of the FW Act have been met in relation to the application for approval.
[20] I am prepared to accept an undertaking in relation to the BOOT that meets my concern. I take the view that an undertaking sought pursuant to s.190 should be confined to that which is sufficient to meet the tribunal’s “concern” and cannot permissibly be made the occasion for imposing restrictions on the employer which go beyond meeting that concern. For this reason I propose an undertaking consistent with the reasoning of Katzmann J and of Hamberger SDP in the second Full Bench decision, the main operative clause of which would be:
Notwithstanding clause 2 of the New Acland Coal Enterprise Agreement 2011, while ever that Agreement remains in operation the Company will not:
(a) seek or accept from an employee who is a Production Mineworker or Trade Mineworker, as described in clause 6.1 of that Agreement, any election in writing not to be covered by the Agreement unless the Company also enters an enforceable agreement with such employee that provides a remuneration to the employee that is greater than the remuneration to which the employee would be entitled under the Black Coal Mining Industry Award 2010; or
(b) make such an election a condition precedent to the employment of a person as a Production Mineworker or Trade Mineworker, as described in clause 6.1 of that Agreement.
[21] I am required to seek the views of the bargaining representatives in relation to the terms of any undertaking accepted pursuant to s.190. They should submit those views in writing by 4.00 p.m. on Thursday 22 December 2011.
VICE PRESIDENT
Appearances:
D Armbrust for New Acland Coal Pty Ltd.
A Slevin of Counsel for the Construction, Forestry, Mining and Energy Union.
Hearing details:
2011.
Melbourne and Brisbane (telephone hearing):
November 16.
1 [2011] FCA 719
2 [2011] FWAFB 7325
Printed by authority of the Commonwealth Government Printer
<Price code B, PR518273>