NRC Reinforcement Pty Ltd

[2020] FWCA 1862

[2020] FWCA 1862

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

NRC Reinforcement Pty Ltd
(AG2020/59)

NRC REINFORCEMENT PTY LTD ENERPRISE AGREEMENT 2020 - 2023

Building, metal and civil construction industries
DEPUTY PRESIDENT CROSS	SYDNEY, 8 APRIL 2020

Application for approval of the NRC Reinforcement Pty Ltd Enterprise Agreement 2020 - 2023.

[1] An application has been made for the approval of an enterprise agreement known as the NRC Reinforcement Pty Ltd Enterprise Agreement 2020 - 2023 (‘the Agreement’). The application was made by NRC Reinforcement Pty Ltd (‘the Applicant’) pursuant to s.185 of the Fair Work Act 2009 (‘the Act’). The Agreement is a single-enterprise agreement.

[2] The Agreement will cover two employees of the Applicant. Each of those employees was appointed as an employee bargaining representative, and each voted to approve the Agreement. On 10 January 2020, a Form F16 Application for approval of the Agreement was made, and filed together with a Form F17 Statutory Declaration.

[3] On 22 January 2020, the Construction, Forestry, Maritime, Mining and Energy Union (‘the CFMMEU’), wrote to the Fair Work Commission (‘the FWC’), and requested to be provided with the Form F16 Application for approval of the Agreement, the Form F17 Statutory Declaration, and any other documents relied upon by the Applicant. Those documents were provided to the CFMMEU.

[4] On 31 January 2020, the FWC wrote to the Applicant raising issues of the sufficiency of information provided to employees, possible non compliance with National Employment Standards regarding abandonment of employment and issues regarding minimum engagement and the Better Off Overall Test.

[5] On 18 February 2020, the CFMMEU provided detailed submissions opposing the approval of the Agreement. The grounds for such opposition were:

a) That the proposed agreement includes a provision requiring workers compensation to be paid at the base rate of pay only contrary to the provisions of the Workers Compensation Act 1987 (the WC Act), such provision being an unlawful term.

b) The proposed agreement includes an abandonment provision at clause 12.3.4 which is contrary to the National Employment Standards (NES).

c) The minimum engagement provision at proposed clause 7.4 is limited to full-time employees, raising concerns regarding the application of the better off overall test

d) The employees covered by the proposed agreement did not genuinely agree to the proposed agreement.

[6] On 26 March 2020, the Application for Approval was heard by the FWC. At that time Mr Gissane of the Master Builders Association (‘the MBA’) appeared for the Applicant and Mr Kruse of the CFMMEU sought to be heard pursuant to s.590 of the Act. I decided to hear from the CFMMEU notwithstanding that it had no right to be heard. The written submissions relied upon by the CFMMEU provided a considered and balanced agitation of the issues that were live in the proceedings, and I formed the view that I could only be assisted by their participation. That view was only confirmed by the conduct of Mr Kruse in the Hearing.

[7] It transpired that shortly after the hearing the only issue outstanding between the parties was the provision requiring workers compensation to be paid at the base rate of pay only contrary to the provisions of the WC Act (‘the WC Issue’), such provision being submitted to be an unlawful term.

[8] On 1 April 2020, the Applicant forwarded an undertaking to address the WC Issue. That undertaking included the following:

That Sub-Clause 11.1.1 be deleted and replaced with the following:

“11.1.1 An Employee entitled to worker’s compensation payments will be paid the rate

of pay as determined by the relevant State or Territory legislation.”

[9] A response was sought from the CFMMEU, and an email containing the following was received:

With respect to the undertaking, the proposed wording is that workers compensation payments “will be paid at the rate of pay as determined by the relevant state or territory legislation.”

We note that the only state or territory in which the proposed agreement applies is New South Wales - note the answer to question 4.2 in the F17.

Clause 11.1.1 currently reads “an employee entitled to workers compensation payments will be paid the relevant base rate of pay (emphasis added) in accordance with the relevant state/territory legislation.”

The proposed undertaking does not actually bring employees attention to the fact that the reference to the base rate at clause 11.1.1 is wrong. The proposed reference to “relevant state or territory legislation” does not actually resolve the uncertainty created by clause 11.1.1. In order for an employee to become truly appraised as to their actual workers compensation rights. Any employee reading the proposed undertaking would then be required firstly to locate the relevant workers compensation provisions and then review the schedule 3 in order to identify that the relevant entitlement is actually the “weekly average of the gross preinjury earnings received by the work of full work in any employment in which the worker was engaged at the time of injury.” Given the misstatement of the legal entitlement at the current clause 11.1.1, in our view the proposed undertaking should be structured such that on its face it directs workers to the actual entitlement, rather than provide a vague reference to relevant state or territory legislation.

If the agreement was proposed to apply in numerous states, then some general reference to state or territory laws might be sufficient. However, given that the agreement only applies in New South Wales, we are of the view that the most appropriate response is for the undertaking to refer to the actual entitlement.

We would recommend an undertaking as follows:

“That sub clause 11.1.1 be deleted and replaced with the following:

‘11.1.1 an employee entitled to workers compensation payments will be paid the weekly average of the gross preinjury earnings received by the worker for work in any employment in which the worker was engaged at the time of injury.’”

[10] The Applicant’s view in relation to the CFMMEU’s proposed wording of an undertaking to address the WC issue. The response, received from the MBA, was as follows:

“The wording as proposed by the Union is:

11.1.1 an employee entitled to workers compensation payments will be paid the weekly average of the gross preinjury earnings received by the worker for work in any employment in which the worker was engaged at the time of injury. [Emphasis added].

The amount of compensation to be paid to an injured worker is calculated by the insurer as prescribed by the Workers Compensation Act 1987 (NSW). This can be a detailed process where ‘Pre-Injury Average Weekly Earnings’ is but one term defined for that exercise. Other dependent terms defined in the Act are: ‘Pre-injury earnings’, ‘relevant earning period’ and ‘earnings’. All of these terms together are applied to calculate the amount of weekly compensation payments due to a worker. Many terms used in the Act are also able to be re-defined by regulation.

Ultimately, the amount of weekly compensation payments to be paid is determined by the insurer in accordance with the Act. Rather than interfere with that arrangement by introducing an agreement-based method of calculating those earnings, we prefer that the Agreement continue to refer generally to the legislation enacted for that purpose.”

[11] As the Applicant’s response raised new issues of compensation calculations under the WC Act, the response of the CFMMEU was sought. The response received was as follows.

The CFMMEU remains concerned that clause 11.1.1, by referring to an employee’s “base rate of pay” is misleading, in the context of the relevant entitlement in the Workers Compensation Act being an “average of gross preinjury earnings.”

Pursuant to section 190(3) of the Fair Work Act 2009 the Commission must be satisfied that the effect of an undertaking is not likely to (a) cause financial detriment to any employee covered by the proposed agreement, or (b) result in substantial changes to the agreement.

On the issue of financial detriment, the CFMMEU remains concerned that the proposed undertaking does not resolve the ambiguity arising from clause 11.1.1, namely it does not clarify that the “base rate of pay” is not the relevant entitlement. In essence, the proposed undertaking does not cure the misleading nature of the clause, and does not resolve the issue of financial detriment.

With respect to the issue substantial change, this is an evaluative judgement for the Commission. Section 190(3) does not permit undertakings that result in a wholesale reshaping of the agreement such that it does not bear resemblance to the pre-undertaking agreement approved by the employees - CFMEU v KAEFER Integrated Services Pty Ltd [2017] FWCFB 5630 at [41].

[12] I consider the undertaking provided by the Applicant as sufficient in addressing the WC Issue. The term as contained in the Agreement did appear to constitute an unlawful term, but that defect is remedied by the undertaking provided.

[13] As to the two points of objection raised by the CFMMEU, there is no financial detriment as the undertaking is noted to be a term of the agreement (s.191(1) of the Act), and will outline the entitlement of employees. If I were to accede to the CFMMEU’s argument it would follow that wherever an undertaking is provided to cure a defect in a proposed agreement, that the offending clause in such agreement must be expunged to avoid misleading. Such an approach is inconsistent with the statutory approach to undertakings.

[14] As to the suggestion of substantial change to the agreement, it is unclear whether that point is advanced by the CFMMEU, however if it is, the change contained in the undertaking provided by the Applicant is only minor, and corrective.

[15] I am satisfied that the relevant requirements of ss 186, 187, 188 and 190 of the Act concerning this application for approval have been met, with the provision of written undertaking from the Applicant addressing miscellaneous matters. Copies of the undertaking are attached to this decision and marked ‘Annexure A’. I note that the undertaking is taken to be a term of the Agreement.

[16] The Agreement is approved and, in accordance with s 54 of the Act, will operate from seven days after the issuing of this approval decision. The nominal expiry date of the Agreement is 8 April 2023.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<AE507710  PR718149>

Annexure A