One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union
[2018] FCAFC 77
•25 May 2018
FEDERAL COURT OF AUSTRALIA
One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FCAFC 77
Appeal from: Construction, Forestry, Mining and Energy Union v One Key Workforce Pty Ltd [2017] FCA 1266 File number: NSD 2073 of 2017 Judges: BROMBERG, KATZMANN AND O'CALLAGHAN JJ Date of judgment: 25 May 2018 Catchwords: INDUSTRIAL LAW — enterprise agreements — where labour hire company hired three employees and the three employees voted to approve an enterprise agreement applying to employees and prospective employees covered by 11 modern awards — where employer declared it had explained to the employees the terms of the agreement and their effect but there was no evidence of the content of the explanation — where Fair Work Commission approved agreement and primary judge declared approval to be void and of no effect, whether primary judge erred in holding that there was no agreement susceptible of approval — whether compliance with s 180(5) of the Fair Work Act 2009 (Cth) is a jurisdictional fact — whether primary judge erred in holding in the alternative that the Commission’s satisfaction was affected by jurisdictional error — purpose of s 180(5) — scope of s 188(c) — whether Commission’s decision also affected by jurisdictional error because it failed to take into account certain considerations in achieving satisfaction that agreement passed the “better off overall test” under s 193 or because there was no reasonable basis upon which it could have been satisfied Legislation: Constitution, s 75(v)
Acts Interpretation Act 1901 (Cth) s 15AA
Fair Work Act 2009 (Cth) ss 3, 53(1), 54(1), 57, 171, 172, 173, 176(1), 180, 181, 182, 185, 186, 187, 188, 189(2), 190, 193, 578(a)
Workplace Relations Act 1996 (Cth) ss 3, 170L, 170LT
Explanatory Memorandum, Fair Work Bill 2008 (Cth)
Right to Organise and Collective Bargaining Convention (No 98), opened for signature 1 July 1949, 96 UNTS 257 (entered into force 18 July 1951)
Cases cited: Aerocare Flight Support Pty Ltd v Transport Workers’ Union of Australia [2018] FCAFC 74
Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27
ALDI Foods Pty Ltd v Shop, Distributive and Allied Employees Association [2017] HCA 53; (2017) 350 ALR 381; 92 ALJR 33; 270 IR 459
Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241
Australasian Meat Industry Employees Union v Coles Supermarkets Australia Pty Ltd [1998] FCA 166; (1998) 80 IR 208
Australian Commercial Catering Pty Ltd v Fair Work Commission (2015) 235 FCR 441
Australian Industry Group v Fair Work Australia (2012) 205 FCR 339
Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353
Buck v Bavone (1976) 135 CLR 110
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384
City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813; (2006) 153 IR 426
Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission (2000) 203 CLR 194
Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission (1999) 93 FCR 317
Construction, Forestry, Mining and Energy Union v John Holland Pty Ltd (2015) 228 FCR 297
Construction, Forestry, Mining and Energy Union v One Key Workforce Pty Ltd [2017] FCA 1266
Construction, Forestry, Mining and Energy Union v PilbaraIronCompany (2011) 194 FCR 269
Construction, Forestry, Mining and Energy Union v Wagstaff Piling Pty Ltd (2012) 203 FCR 371
D’Amore v Independent Commission against Corruption [2013] NSWCA 187; (2013) 303 ALR 242
Energy Australia Yallourn Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2017] FCA 1245
Gedeon v Commissioner of the New South Wales Crime Commission (2008) 236 CLR 120
Graham v Minister for Immigration and Border Protection [2017] HCA 33; (2017) 91 ALJR 890; 347 ALR 350
Htun v Minister for Immigration and Multicultural Affairs (2001) 233 FCR 136
Kirk v Industrial Court of New South Wales (2010) 239 CLR 531
Kucks v CSR Ltd (1996) 66 IR 182
McManus v Scott-Charlton (1996) 70 FCR 16
Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24
Minister for Immigration and Citizenship v SZIAI [2009] HCA 39; (2009) 83 ALJR 1123; 259 ALR 429; 111 ALD 15
Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611
Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259
Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611
Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323
Minister for Immigration and Multicultural and Indigenous Affairs v SGLB [2004] HCA 32; (2004) 207 ALR 12; 78 ALD 224; 78 ALJR 992
Plaintiff M70/2011 v Minister for Immigration and Citizenship (2011) 244 CLR 144
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355
Public Service Association and Professional Officers’ Association Amalgamated Union of New South Wales v State of New South Wales [2014] NSWCA 116; (2014) 242 IR 338
R v Connell; Ex parte Hetton Bellbird Collieries Ltd (1944) 69 CLR 407
R v Darling Island Stevedoring & Lighterage Co Ltd; Ex parte Halliday and Sullivan (1938) 60 CLR 601
R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd (1953) 88 CLR 100
Re Australian Workers’ Union; Ex parte Construction, Forestry, Mining and Energy Union (2002) 120 FCR 527
Re KCL Industries Pty Ltd [2016] FWCFB 3048; (2016) 257 IR 266
Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30; (2003) 198 ALR 59; 77 ALJR 1165
Re Patterson; Ex parte Taylor (2001) 207 CLR 391
Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82
Re Site Fleet Services Pty Ltd [2017] FWC 2163
Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252
Shop Distributive and Allied Employees’ Association v Woolworths SA Pty Ltd [2011] FCAFC 67
Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155
Shop, Distributive and Allied Employees Association v The Australian Industry Group [2017] FCAFC 161; (2017) 350 ALR 592; 272 IR 88
Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 234 FCR 549
SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; (2017) ALR 405; 91 ALJR 936
Taulahi v Minister for Immigration and Border Protection (2016) 246 FCR 146
Teys Australia Beenleigh Pty Ltd v Australasian Meat Industry Employees Union (No 2) [2016] FCA 2; (2016) 259 IR 164
Timbarra Protection Coalition Inc v Ross Mining NL (1999) 46 NSWLR 55
United Voice v MSS Security Pty Ltd [2016] FCAFC 124; (2016) 153 ALD 200
Oxford English Dictionary (online edition, Oxford University Press, 2018)
Date of hearing: 16 March 2018 Registry: New South Wales Division: Fair Work Division National Practice Area: Employment & Industrial Relations Category: Catchwords Number of paragraphs: 238 Counsel for the Appellant: Mr I Neil SC with Mr A Flecknoe-Brown Solicitor for the Appellant: Ashurst Australia Counsel for the First Respondent: Ms C Howell Solicitor for the First Respondent: Slater and Gordon Counsel for the Second Respondent: The Second Respondent filed a submitting notice save as to costs Table of Corrections 21 June 2019 In paragraph 46, the words “All relevant employees were emailed a copy of the proposed RECS Pty Ltd Enterprise Agreement. 7 August 2015.” have been italicised 21 June 2019 In paragraph 120, “[54]” has been replaced with “[53]” 21 June 2019 In paragraph 166, “[54]” has been replaced with “[53]” 21 June 2019 In paragraph 166, “[57]” has been replaced with “[56]” ORDERS
NSD 2073 of 2017 BETWEEN: ONE KEY WORKFORCE PTY LTD
Appellant
AND: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION
First Respondent
FAIR WORK COMMISSION
Second Respondent
JUDGES:
BROMBERG, KATZMANN AND O'CALLAGHAN JJ
DATE OF ORDER:
25 MAY 2018
THE COURT ORDERS THAT:
1.Within 28 days the parties file submissions (not exceeding five pages) on the question of what orders should be made in the light of these reasons.
2.Unless otherwise ordered, the question be determined on the papers.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
THE COURT:
This appeal is concerned with the approach taken to the approval of an enterprise agreement by both the Fair Work Commission and the Court on review. It raises two important questions. Both relate to the extent of the Court’s powers of review. One is whether the Court has the power to determine for itself whether a pre-approval obligation imposed on employers has been discharged or whether it may only consider whether the Commission’s satisfaction that the obligation had been discharged was affected by jurisdictional error. The other is whether, if the Commission erred, its error or errors are properly to be characterised as jurisdictional.
THE ENTERPRISE AGREEMENT
The enterprise agreement in question is the RECS (QLD) Pty Ltd Enterprise Agreement 2015 (RECS Agreement or Agreement). It came into force on 6 November 2015, having been approved by the Commission on 30 October 2015: RECS (QLD) Pty Ltd Enterprise Agreement 2015 [2015] FWCA 7516. The appellant, One Key Workforce Pty Ltd (OKW), was previously known as RECS (Qld) Pty Ltd. For convenience, RECS will be referred to throughout as OKW. The company was incorporated in March 2015. By the time the Agreement was made in August 2015, it had three employees, hired at different times over the preceding months.
The Agreement was made with those three employees. Two of the employees worked in the coal mining industry, one in the construction industry. But for the Agreement their employment would have been covered by the Black Coal Mining Industry Award 2010 (BCMIA) and the Building and Construction General On-Site Award 2010 respectively. There is no reason to think they had any interest in the effect of the Agreement on employees working outside their respective industries. The parties to the Agreement, however, and the employees the Agreement was intended to cover were employees of OKW (employed to work anywhere in Australia) whose employment would, but for its operation, be covered by any of the following 11 awards:
·Building and Construction General On-Site Award 2010;
·Mining Industry Award 2010;
·Black Coal Mining Industry Award 2010;
·Manufacturing and Associated Industries and Occupations Award 2010;
·Road Transport (Long Distance Operations) Award 2010;
·Road Transport and Distribution Award 2010;
·Hydrocarbons Industry (Upstream) Award 2010;
·Clerks – Private Sector Award 2010;
·Hospitality Industry (General) Award 2010;
·Oil Refining and Manufacturing Award 2010; or
·Maritime Offshore Oil and Gas Award 2010.
Two of the three employees who voted on the Agreement were employed as casuals.
There was no union bargaining representative for the Agreement (presumably because none of the three employees was a member of a registered employee organisation — see s 176(1) of the Fair Work Act 2009 (Cth)). Indeed, there was no bargaining. The Commissioner who dealt with the approval application said that there was no negotiation over the terms of the Agreement. The Construction, Forestry, Mining and Energy Union (CFMEU), an organisation of employees registered under the Fair Work (Registered Organisations) Act 2009 (Cth), and the applicant before the primary judge, was unaware of the Agreement until after the Commission’s decision.
THE RELEVANT LEGISLATIVE PROVISIONS
To understand the Commissioner’s decision and the primary judge’s reasons it is necessary to understand the legislative context.
Enterprise agreements are dealt with in Part 2–4 of the Fair Work Act.
The term “enterprise agreement” is defined in s 172(1) as an agreement about one or more of the following four matters: matters pertaining to the relationship between an employer that will be covered by the agreement and that employer’s employees who will be covered by the agreement; matters pertaining to the relationship between the employer or employers, and the employee organisation or employee organisations, that will be covered by the agreement; deductions from wages for any purpose authorised by an employee who will be covered by the agreement; and the manner in which the agreement will operate.
Save in certain circumstances, which are not presently relevant, an enterprise agreement “covers” an employer or employee if the agreement is expressed to cover the employer or employee: s 53(1). An enterprise agreement “applies” to an employer or employee if the agreement is in operation, the agreement covers that employer or employee, and there is nothing in the Act which excludes it or has that effect. At any time that an enterprise agreement applies to an employee in relation to particular employment, the modern award that would otherwise apply to the employee does not apply: s 57.
The Act provides for both single-enterprise and multi-enterprise agreements. “Enterprise” is defined in s 12 to mean “a business, activity, project or undertaking”.
Making an enterprise agreement
Agreements may be made for both existing and new enterprises. Different rules apply, however, to the making of agreements involving “genuinely new” enterprises.
The RECS Agreement is a single-enterprise agreement. A single-enterprise agreement may be made by an employer with those employees “who are employed at the time the agreement is made and who will be covered by the agreement”: s 172(2)(a). Where, however, the agreement relates to “a genuine new enterprise the employer or employers are establishing or proposing to establish” and none of the people necessary for the normal conduct of that enterprise who will be covered by the agreement have yet been employed, a single-enterprise agreement may only be made with “one or more relevant employee organisations”: s 172(2)(b). Similar provisions for the making of agreements apply to multi-enterprise agreements: s 172(3). Agreements relating to genuinely new enterprises where no employees have been engaged are called “greenfields” agreements: s 172(4).
An agreement may not be made with a single employee: s 172(6).
The agreement-making process is described in some detail in Division 3 (ss 173–178B).
The employer is required to take “all reasonable steps” to give notice of the right to be represented by a bargaining representative to each person in its employ at the notification time for the agreement who will be covered by the agreement: s 173(1). For relevant purposes the notification time (defined in s 173(2)) is the time the employer initiated bargaining for the agreement.
The remaining provisions of Division 3 deal with bargaining representatives. Since there was no bargaining in the present case, the only relevance of these provisions is their inter-relationship with the approval process. For that purpose it is sufficient to note that an employer that will be covered by the agreement is a bargaining representative for the agreement: s 176(1).
Approval of an enterprise agreement
Division 4 (ss 179–201) deals with approval of agreements. The questions with which this case is concerned turn on the operation and effect of some of those sections, principally ss 180(5), 186, 187, and 188. None of the provisions in the remaining divisions of Part 2–4 is relevant, apart from s 171, which sets out the objects of Part 2–4.
Two types of approval are required. First, in the case of non-greenfields agreements, there must be a vote by the employees who are employed at the time and who will be covered by the agreement. This vote must be held only after the eligible voters have been provided with certain information. Second, the agreement must receive the approval of the Commission. An enterprise agreement does not operate until the passage of seven days from the approval of the agreement or such later date as may be specified in the agreement: s 54(1).
The approval of the employees who are employed at the time and who will be covered by the agreement
An employer that will be covered by a proposed enterprise agreement may request those employees who are employed at the time and who will be covered by the agreement to approve the agreement by voting for it: s 181(1). But before it may make such a request the employer must comply with the requirements of s 180. Those requirements, set out in s 180(2), (3) and (5), are to take all reasonable steps to:
(1)ensure that during the access period for the agreement (the seven‑day period ending immediately before the start of the voting process referred to in s 181(1)), “the relevant employees” (those who are employed at the time and who will be covered by the agreement) are given a copy of the text of the agreement and any other material incorporated by reference in the agreement or that they have access throughout the access period to a copy of those materials (s 180(2));
(2)notify the relevant employees before the access period begins of the time and place at which the vote will take place and the method of voting that will be used (s 180(3)); and
(3)ensure that:
(a)the terms of the agreement, and the effect of those terms, are explained to the relevant employees; and
(b)the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees (s 180(5)).
The last requirement, set out in s 180(5), loomed large in the court below. It must be read with s 180(6), which provides some guidance to employers on the form and content of the requisite explanation. Section 180(6) states:
Without limiting paragraph (5)(b), the following are examples of the kinds of employees whose circumstances and needs are to be taken into account for the purposes of complying with that paragraph:
(a) employees from culturally and linguistically diverse backgrounds;
(b) young employees;
(c) employees who did not have a bargaining representative for the agreement.
An employer must not request its employees to vote on an agreement until at least 21 days after the day on which the last notice under s 173(1) was given: s 181(2). Voting may take place “by an electronic method”: s 181(3).
A single-enterprise agreement that is not a greenfields agreement is made when a majority of those employees who cast a valid vote approve the agreement: s 182(1). An agreement is only effective, however, if and when it is approved by the Commission. As the plurality explained in ALDI Foods Pty Ltd v Shop, Distributive and Allied Employees Association [2017] HCA 53; (2017) 350 ALR 381; 92 ALJR 33; 270 IR 459 at [34]:
An enterprise agreement comes into operation in the sense of creating rights and obligations between an employer and employees in relation to the work performed under it only after it has been approved by the Commission. After that time the agreement applies to the employers and employees who are covered by it. But before that time, as will be seen, by virtue of s 182(1) of the Act, a non-greenfields enterprise agreement is “made” when a majority of those employees who will be covered by the agreement cast a valid vote to approve the agreement. As will be seen, once the agreement is made in accordance with s 182(1), the agreement is treated by the Act as covering the employers and employees to whom it refers.
The approval of the Commission
The next step in the process, then, is the making of an application to the Commission for the approval of the agreement. The application must be made by a bargaining representative: s 185(1).
The Act requires the Commission to approve an agreement in certain circumstances but gives the Commission a discretion to do so in certain other circumstances.
The Commission must approve an agreement if it is satisfied that each of the requirements set out in ss 186 and 187 is met: s 186(1). If the Commission has a concern that the agreement does not meet those requirements, in the exercise of its discretion it may still approve the agreement, provided that it is satisfied that an undertaking it accepts meets the particular concern: s 190(1)–(2). The Commission may only accept an undertaking if it is satisfied that the effect of doing so is not likely to cause financial detriment to any employee covered by the agreement or to result in substantial changes to the agreement: s 190(3).
The requirements in s 186 relevantly include the following matters:
(1)that the agreement has been genuinely agreed to by the employees covered by the agreement: s 186(2)(a);
(2)that the group of employees covered by the agreement was fairly chosen: s 186(3); and
(3)that the agreement passes the “better off overall test” (BOOT): s 186(2)(d).
Subsections 186(2)(a) and 186(3) both refer to “employees covered by the agreement”. It will be recalled that (by s 53(1)) an enterprise agreement “covers” an employee if the agreement is expressed to cover the employee. Nevertheless, the High Court held in ALDI that the phrase “the employees covered by the agreement” in s 186(2)(a) refers only to “those persons currently employed who fall within the whole class of employees to whom the agreement might in future apply”: ALDI at [83]. “The group of employees covered by the agreement” in s 186(3), however, includes the whole class of employees to whom the agreement might in future apply, extending to “any person who will, in the future, be engaged as an employee to whom the agreement will apply”: ALDI at [83]; see also Construction, Forestry, Mining and Energy Union v John Holland Pty Ltd (2015) 228 FCR 297 at [2] (Besanko J); [34]–[41] (Buchanan J); [87] (Barker J). These two expressions have different meanings because of the difference in the scope of the two provisions — s 186(2), unlike s 186(3), exclusively concerns agreements which are not greenfields agreements: ALDI at [83]; John Holland at [39] (Buchanan J).
An enterprise agreement that is not a greenfields agreement passes the BOOT if the Commission is satisfied that, as at the time the application for approval of the agreement is made under s 185, each award-covered employee and each prospective award-covered employee would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee: s 193(1).
The question of genuine agreement in s 186(2)(a) is defined by s 188, which reads as follows:
An enterprise agreement has been genuinely agreed to by the employees covered by the agreement if the [Fair Work Commission] is satisfied that:
(a)the employer, or each of the employers, covered by the agreement complied with the following provisions in relation to the agreement:
(i) subsections 180(2), (3) and (5) (which deal with pre approval steps);
(ii)subsection 181(2) (which requires that employees not be requested to approve an enterprise agreement until 21 days after the last notice of employee representational rights is given); and
(b)the agreement was made in accordance with whichever of subsection 182(1) or (2) applies (those subsections deal with the making of different kinds of enterprise agreements by employee vote); and
(c)there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.
Other relevant duties of the Commission
In performing any of its functions or exercising any of its powers under any part of the Act, the Commission must take into account the objects of the Act and any objects of the part of the Act: s 578(a).
The object of the Act is set out in s 3:
The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:
(a)providing workplace relations laws that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia’s future economic prosperity and take into account Australia’s international labour obligations; and
(b)ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders; and
(c)ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system; and
(d)assisting employees to balance their work and family responsibilities by providing for flexible working arrangements; and
(e)enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; and
(f)achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action; and
(g)acknowledging the special circumstances of small and medium-sized businesses.
The objects of Part 2–4 (set out in s 171) are twofold:
(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 the [Fair Work Commission] 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 the [Commission] for approval of enterprise agreements are dealt with without delay.
“Good faith bargaining” is defined by the considerations in s 228.
THE FACTS
OKW is one of a number of related companies which together operate as a business known as One Key Resources Group. The business of One Key Resources includes the provision of contract labour to other businesses (clients) in a range of industries. By August 2015 One Key Resources supplied more than 300 full-time employees to operators of coal mines in New South Wales and Queensland. That work was covered by the BCMIA.
Between March 2015, when OKW was first registered, and August 2015, when the vote on the Agreement took place, OKW hired three employees: Kevan O’Brien, Reuben Raymond and Vernon Marfell. Notwithstanding the scope of the Agreement, these three men were the only employees of the company before the Commission approved the Agreement.
Mr O’Brien began working for OKW in June 2015. He was employed on a permanent basis, working in the coal mining industry as a specialised machine operator/trainer assessor and placed with HSE Mining to work on the pre-stripping contract with BHP Billiton Mitsubishi Alliance at the Peak Downs black coal mine in Queensland. Mr Raymond began working for OKW in late May 2015. He was employed as a casual labourer. At first he was placed with BMD Constructions on a construction project in Darwin. Soon afterwards he was placed with BMD Urban to work on another construction project also in Darwin. Mr Marfell began working for OKW in late April 2015, also on a casual basis. He was employed as a site trainer/assessor and placed with Whitehaven Coal at Maules Creek in New South Wales. By 3 March 2017 Mr O’Brien was the only one of the three employees still employed by OKW. Mr Marfell’s employment ended on 29 February 2016, four months after the Commission approved the Agreement, and Mr Raymond’s on 16 September 2015, six weeks before the Commission approved the Agreement and almost two months before it came into force.
At the hearing before the primary judge, without objection the CFMEU read parts of affidavits filed by OKW in this Court. Petrina Ind, an employee of One Key Resources (but not of OKW) was the deponent of one of those affidavits. The CFMEU also questioned Ms Ind.
On 24 July 2015 Ms Ind sent an email to the three employees attaching a notice of employee representational rights in accordance with s 173 of the Fair Work Act. Ms Ind and OKW described this as the commencement of bargaining for the agreement. The notice stated that the agreement was to cover employees covered by the 11 awards and identified those awards. It also contained a brief explanation of an enterprise agreement, informed the employees of their right to appoint a bargaining representative, and told them what to do if they had any questions.
On 7 August 2015 Ms Ind emailed the employees a copy of the proposed agreement. The email attached copies of the 11 modern awards.
Ten days later, on 17 August 2015, Ms Ind advised the employees by email that voting on the agreement would occur between 9am and 5pm on 25 August 2015. Ms Ind then telephoned each of the employees to confirm that he had received the email. According to evidence adduced before the primary judge but not before the Commission, in the telephone calls she explained the voting process, went through the terms of the Agreement, reading out certain clauses but did not “go through” the awards or explain how the terms of the Agreement would interact with the awards. She told the Court that she had not undertaken a comparison of the 11 awards with the Agreement. She also told the Court that (at all relevant times) she was unaware that the BCMIA did not permit casual employment for engineering and production employees.
In accordance with the indication given on 17 August 2015, voting for the agreement commenced on 25 August. Between 2.53pm and 2.55pm that day Ms Ind sent an email to the three employees, drafted by a solicitor, which she described in her evidence to the Court as “a comprehensive email that explained the terms of the Agreement and the effect of those terms on the Employees”. The email did not answer that description. The relevant text was set out at [62] of the primary judge’s reasons. With the exception of a statement in the second paragraph, which was at best misleading, the email paraphrased cl 3.2 of the Agreement and merely restated a select few of its other terms.
The statement in the second paragraph read:
If the vote is successful and the Agreement commences operation, your current terms and conditions of employment will not change, however they will be underpinned by the Agreement.
On 25 August 2015 Ms Ind also spoke with each employee by telephone. She said that she asked each employee if he had read the email that she had sent that afternoon, if he had understood the email, and if he had any questions. Ms Ind did not suggest that she interrogated the employees to make sure that they understood the terms or their effect. In any case, as she had not undertaken a comparison of the Agreement and the 11 awards, she could not have explained the effect of the Agreement to them.
Apart from the fact that none of the employees had any questions, in her affidavit and in oral evidence Ms Ind professed to have no recollection of what was said in these conversations, except that each employee had informed her that he had received her email and that he understood the terms of the Agreement. (That evidence, we stress, was not before the Commission.) If any notes were taken, none were produced.
At 3.05pm a further email was sent to the employees telling them they could now vote on the Agreement. The email indicated that they could vote by replying either yes or no to the email. Each employee voted yes. Mr Marfell was the first to do so at 3.09pm. Mr Raymond was next at 3.32pm. Mr O’Brien replied at 4.06pm.
On 4 September 2015 OKW applied to the Commission for approval of the Agreement. The application was accompanied by a statutory declaration (Form F17), signed by Ms Ind. The form included a number of questions inviting the applicant’s responses. The following questions and answers are of significance. The answers appear in italics.
Agreement genuinely approved
2.4What steps were taken by the employer and on what date were they taken to ensure that the relevant employees were either:
a.given a copy of the written text of the agreement and any other material incorporated by reference into the agreement (must be provided during the 7 days before the start of the voting process), or
b.had access to the above materials (must have access throughout the whole 7 day period)?
All relevant employees were emailed a copy of the proposed RECS Pty Ltd Enterprise Agreement. 7 August 2015.
…
2.6What steps were taken by the employer to explain the terms of the agreement, and the effect of those terms, to the relevant employees?
The terms of the Agreement and the effect of the terms were explained to the relevant employees during telephone conversations on 17th August. During these telephone conversations the employees were given an opportunity to ask any questions that they had about the Agreement.
The terms of the Agreement were also explained to the relevant employees by email on 25 August 2015 prior to them being asked to vote on the Agreement.
Following the email on 25 August 2015, Petrina Ind spoke with each relevant employee and asked them whether they had any questions about the email or the terms of the Agreement. None of them had any questions.
2.7When you explained the terms of the agreement to the employees, what did you do to take into account the particular circumstances and needs of the relevant employees?
There are no employees from non-English speaking backgrounds, nor any employees under 21 years of age.
To ensure that the employees fully understood the terms and conditions of the Agreement it was reiterated throughout the process that the employees should contact if they required additional clarification/ explanation about the Agreement.
The substance of the explanation purportedly given was not included in the statutory declaration. The response to question 2.7 wrongly assumed that only the particular circumstances and needs of employees under 21 and those from non-English speaking backgrounds had to be taken into account.
Part 3 of the form dealt with the BOOT. Ms Ind answered “yes” to the question at [3.4]:
Does the agreement contain any terms or conditions of employment that are more beneficial than equivalent terms and conditions in the reference instrument(s) [the 11 awards] and/or does the agreement confer any entitlements that are not conferred by those reference instruments?
(Emphasis in original.)
Ms Ind proceeded to state that the following terms were more beneficial than the equivalent terms and conditions in the awards or as entitlements not conferred by them:
Under clause 3.2 of the Agreement, the Agreement incorporates the terms of the relevant Award (listed at question 3.1 above) that would otherwise apply to the employee's particular role.
To ensure that the employees are better off overall than [under] the relevant Award, in addition to the (scil.) base hourly rate of pay in the relevant Award, employees will receive a BOOT Allowance, which is 0.1% of the hourly base rate of pay in the relevant Award. This applies to all employees.
In addition, under clause 12 of the Agreement, while the Agreement incorporates the employees’ hours of work from their relevant Award, the agreement also provides a guarantee that the maximum ordinary hours of work are 12 per day (or shift). This applies to all employees.
Under Clause 11 of the Agreement employees are entitled to an additional casual loading of 1% of the hourly base rate of pay in the relevant Award. This applies to employees whose relevant Award includes a provision that requires or allows the conversion of casual employees to permanent employees.
Ms Ind answered “no” to the question at [3.5]:
Does the agreement contain any terms that are less beneficial than equivalent terms and conditions in the reference instrument(s) … and/or does the agreement confer any entitlements that are not conferred by those reference instruments.
When asked in evidence how she could have been satisfied that there were no inconsistencies between the awards and the Agreement which might lead to detriments for employees without having undertaken a comparison of the 11 awards with the Agreement, Ms Ind offered the following, somewhat bizarre, response:
I read the agreement many, many times myself. I knew it incorporated the awards. I – obviously the awards are fair. They’re from Fair Work Commission. Like, I felt comfortable with that in myself.
She declared that she thought the agreement passed the BOOT.
Initially, the Commissioner was not satisfied that the agreement was genuinely agreed to or that it passed the BOOT. On 18 September 2015 he communicated his position to OKW by email (through a member of the Commission’s staff). On the first matter, the staffer wrote:
The Agreement nominates several Awards, and given that the Agreement only covers 3 employees, the Commissioner is concerned that scope of the Agreement is too broad and could not have been genuinely agreed to by the 3 employees.
Additionally, for the Agreement to have been genuinely agreed to, the Commissioner needs to be satisfied all employees received copies of or had access to all of the Modern Awards listed in the Agreement, and that they had the ability to understand such.
On the second matter the Commissioner was concerned that the rates of pay were not high enough to adequately compensate employees given the onerous obligations imposed by the agreement on the employees, singling out as an example the occupational health and safety requirements in cl 8.
The email closed with an invitation to OKW to consider providing additional information “as to how employees satisfy the better off overall test, or provide an undertaking to satisfy the Commissioner’s concern”.
On 30 September 2015 OKW responded through its lawyers. First, it cavilled with the Commissioner’s observation about the pay rates and the employees’ obligations. Then it signalled its willingness to provide a limited undertaking and asked to be heard on the remuneration question. These matters went to the Commissioner’s lack of satisfaction as to whether the Agreement passed the BOOT. It then turned to the Commissioner’s concerns about the scope of the Agreement, which went to the question of whether the Agreement had been genuinely agreed to. OKW responded that it was settled law that an agreement can be made with a small number of employees yet cover “classifications” other than those in which those employees are employed, referring to a number of decisions of the Full Bench of the Commission and the Full Court’s judgment in John Holland. OKW contended that these authorities supported its position that the Agreement should not be rejected because it was “voted by three employees but has a potentially broader application”. It submitted that the three employees were its only “blue collar employees”, that the scope of the Agreement represented the proposed scope of employees it would employ, and that the Agreement would apply to its entire “‘blue collar’ workforce”. Finally, OKW confirmed that each of the three employees had received copies of the modern awards listed in the Agreement and attached to its response copies of the relevant emails.
The Commissioner’s concerns were not apparently allayed by this response, at least in relation to satisfaction of the BOOT, for on 13 October 2015 the Commission wrote again to OKW referring to a number of additional clauses of the Agreement which “could be potentially disadvantageous to (scil.) employees, noting that the agreement incorporates the Awards listed in clause 2.1(b) [the 11 awards listed above]”. The substance of the email is extracted in full in the primary judge’s decision at [72].
OKW replied to the Commission on 16 October 2015, taking issue with almost all the points that were raised. OKW then offered certain undertakings.
The application for approval of the Agreement was heard on 26 October 2015. Michael Moy, OKW’s lawyer, appeared by leave. There was no contradictor.
The next day Ms Ind wrote to the Commission offering more extensive undertakings on behalf of OKW. Those undertakings were that:
(1)it would not apply cll 8.2, 8.3, 9.4, 11, and 12.3 “as terms of the Agreement”;
(2)nothing in cll 9.2 and 12.5 is intended to override any rights an employee may have under the National Employment Standards (NES) (contained in the Fair Work Act) or in respect of unfair dismissal; and
(3)client policies and protocols do not form part of the agreement.
Three days later, on 30 October 2015, the Commissioner approved the Agreement with the undertakings, publishing reasons at the same time.
THE COMMISSIONER’S DECISION
Given the scope of the primary judge’s decision and the issues on the appeal, it is unnecessary to refer to the entire decision. Two matters are presently relevant.
On whether he was satisfied that s 180(5) had been complied with, the Commissioner said:
5The Applicant says that the terms of the Agreement were explained to the employees. There were no bargaining representatives and there was no negotiation. The employer drafted a proposed agreement and provided it to employees by email. Employees were provided with a link that directed them to the relevant Awards.
…
9Section 180(5) of the Act requires that all reasonable steps must be taken by the employer to explain the terms of the agreement and the effect of those terms. It is quite common for the Fair Work Commission to identify terms which it believes may disadvantage employees in circumstances where the employer has failed to identify these matter in the F17 Statutory Declaration and in the information provided to employees. In this case the employer failed to identify a number of matters which disadvantage employees. Where these matters are minor it does not necessarily mean that Section 180(5) has not been complied with. The requirement is about “reasonable steps”. Where the matters are more significant the Fair Work Commission might not be satisfied that Section 180(5) has been met and as a consequence the requirement for genuine agreement in Section 188 may not be met and this will prevent the Agreement being approved. In the circumstances of this case I am satisfied, on a fine balance, that reasonable steps were taken to explain the terms of the agreement and the effect of those terms.
The Commissioner proceeded to identify some of the matters in the Agreement which put employees at a disadvantage compared to their position under the awards (or some of them). He did so, however, not to explain why he reached the conclusion that all reasonable steps had been taken to explain the terms and effect of the Agreement, but in the context of his discussion of whether the Agreement met the BOOT. On that question, the Commissioner was only satisfied in the light of OKW’s undertakings. The undertakings did not address the concern earlier expressed that the Agreement had not been genuinely agreed to by the employees covered by the Agreement and nothing in the Commissioner’s reasons specifically addressed that question. Nevertheless, he said that he was satisfied as to each of the requirements of ss 186, 187 and 188 of the Act as was relevant to the application.
THE APPLICATION BEFORE THE PRIMARY JUDGE
No application was made to the Full Bench for permission to appeal. Rather, the CFMEU applied to the Court under s 39B(1A)(c) of the Judiciary Act 1903 (Cth), ss 21, 22 and 23 of the Federal Court of Australia Act 1976 (Cth) and ss 562 and 563 of the Fair Work Act for a declaration that the approval of the RECS Agreement was “void and of no effect”. In the alternative it sought a writ of certiorari to quash the approval and an order that a writ of mandamus be issued to the Commission requiring it to hear and lawfully determine the application to approve the Agreement.
The application was made in November 2016, some 13 months after the Commissioner’s decision was published. It appears from the reasons of the primary judge that the CFMEU did not become aware of the decision until about two and a half months had passed and did not become aware that some of its members were covered by the Agreement until late May or early June 2016. Having regard to the delay, OKW argued (unsuccessfully) that relief should be refused in the exercise of the Court’s discretion.
The grounds upon which the application was made were initially set out in an affidavit sworn by the CFMEU’s solicitor on 28 November 2016. But the following January the CFMEU filed a statement of claim. In substance, the union’s case was that there was no agreement capable of approval by the Commission and so the purported approval was of no effect. Alternatively, it contended that the Commissioner’s decision to approve the agreement should be quashed because it was affected by a number of jurisdictional errors.
The grounds relied upon for declaratory and prerogative relief covered the same issues. Those issues were:
·whether the Agreement could not satisfy the BOOT as employees were not better off overall under it than under the relevant modern award;
·whether OKW had failed to comply with s 180(5) of the Act because it had not taken “all reasonable steps” to explain to the employees the terms of the proposed agreement and their effect;
·whether there had been a “genuine agreement” within the meaning of ss 186(2)(a) and 188(c) and/or whether the agreement put forward for approval was a “sham”;
·whether the Agreement impermissibly incorporated unknown terms by reference to policies and procedures;
·whether the requirements for the signing of the Agreement, imposed by s 185(2)(a) of the Act, had been met; and
·whether the Commissioner wrongly identified the employees “covered by” the Agreement.
The challenge to the Commissioner’s satisfaction was made on the basis that it was affected by jurisdictional error either because relevant considerations had not been taken into account or because it was legally unreasonable.
THE DECISION OF THE PRIMARY JUDGE
The primary judge made the declaration sought by the CFMEU that the approval was void and of no effect, accepting its principal argument that there was no agreement within the meaning of Part 2–4 on which the purported approval could operate.
His Honour explained that he came to this conclusion for “either of two principal but separate reasons”. They were first, that OKW had failed to comply with the requirements in s 180(5), in other words, that it had failed to take all reasonable steps to ensure that the terms of the Agreement and their effect had been explained to the relevant employees; and secondly, that there never was an agreement genuinely agreed to by the employees covered by the Agreement (s 186(2)(a)).
The primary judge acknowledged that it is the Commission, and not the Court, that must be “satisfied” under ss 188(a)(i) and 186(2)(a) of the employer’s compliance with s 180(5) and as to whether the agreement was genuinely agreed to. But his Honour went on to say that the power of approval conferred by s 186 is conditioned on there being in fact and in law an “agreement” which satisfies the meaning of that term as employed in Part 2–4 of the Act.
His Honour also concluded, however, that the Commissioner’s satisfaction, both under s 188(a)(i) (that OKW had complied with s 180(5)) and under s 186(2)(a) (that the Agreement was genuinely agreed to), was affected by jurisdictional error.
The jurisdictional error in respect of s 180(5), his Honour held, occurred because the Commissioner failed to consider the steps that OKW had taken to comply with the requirements, focussing instead on the advice it had given to the Commission, and/or because a pre-condition for the exercise of the Commission’s power to approve the agreement had not been satisfied (namely, that OKW had not complied with s 180(5)).
His Honour found that, on the evidence before him, OKW did little more than read to the employees parts of the Agreement and certainly did not explain the effect of its terms. Accordingly, he held that all reasonable steps had not been taken and that there had been a “manifest failure” on the part of the employer to comply with s 180(5). He noted in particular that no guidance was given to any of the three employees as to the manner in which the Agreement affected their personal interests. At [109] his Honour said:
Such reasons as were provided by the Commissioner at para [9] of his reasons for decision expose jurisdictional error. Little, if any, consideration was given to what were the “steps” in fact taken by the employer or the adequacy of those steps. Such consideration as was given was more directed to the subject-matter of the information communicated rather than to the content of the information communicated or the effectiveness of the communication of that information or (for that matter) what was not communicated.
As to the second basis, his Honour said at [97]:
Section 180(5) is not a section which is expressed in terms of whether the Commission is “satisfied” that “all reasonable steps” have been taken. That subsection is expressed as a statement of objective fact as to that which must occur before approval is sought. If “all reasonable steps” have not in fact been taken, the Commission lacks power to “approve” the agreement. A statement of “satisfaction” on the part of the Commission as to compliance with s 180(5) cannot conceal from scrutiny by this Court the adequacy of the steps in fact taken.
The finding of jurisdictional error affecting the Commission’s satisfaction that there had been a genuine agreement within the meaning of ss 186(2)(a) and 188 was based on the failure to take into account relevant considerations and the absence of reasonable grounds for forming the requisite state of satisfaction.
His Honour concluded (at [123]) that the Commissioner had failed to give any or any adequate or proper consideration to a number of relevant matters, the effect of which was to vitiate the decision. Those matters included, his Honour said at [122], “such [matters] as”:
Ÿthe ability or appropriateness of Messrs O'Brien, Raymond and Marfell (with their particular employment backgrounds) being called upon to agree to terms and conditions covering employees in such other diverse areas of employment as road transport, clerking or the hospitality industry [being areas covered by the various other awards]; or
Ÿsuch factual differences as may have existed (and presumably did exist) between the areas of employment represented by Messrs O'Brien, Raymond and Marfell and those pertaining to road transport, clerking or the hospitality industry and whether such factual differences precluded the Agreement being agreed to by only three employees with their limited employment background.
Neither of these matters was addressed in the Commissioner’s reasons.
The primary judge held that OKW secured consent to the Agreement with the intention that it would thereafter cover other employees. That much would have been uncontroversial. The effect, his Honour noted, was to “preclude a genuine bargaining process or any ‘industrial action’ throughout the duration of the Agreement”. Amongst the matters to which his Honour referred in this context was the absence of any explanation as to why Messrs O’Brien, Raymond and Marfell were the only workers hired by the company before the Commission approved the Agreement on 30 October 2015.
His Honour said it was unnecessary to decide whether the Agreement was one which would subvert the legislative regime or was a “sham”, as the CFMEU argued, holding instead that “it was sufficient to conclude that it was not one which was susceptible of approval”.
As to the other alleged errors, the primary judge pointed to difficulties he considered the CFMEU faced in demonstrating that those errors were jurisdictional, but came to no final conclusions on any of them.
THE APPEAL
The notice of appeal was not well drafted. Nine grounds were pleaded. The first is conclusory only and identifies no specific error. Several of the remaining grounds identify alleged errors but only with respect to steps in the primary judge’s reasoning process. As Branson J observed in Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 234 FCR 549 at [4], alleged errors with respect to steps in a process of legal reasoning leading to an ultimate conclusion of law may be relied upon to support a ground of appeal, but they do not themselves constitute a ground of appeal.
The issues
OKW argued that the appeal raised five issues:
(1)Does s 180(5) impose an independent jurisdictional constraint on decisions of the Commission (as the primary judge held) or (as OKW contended) is the relevant jurisdictional fact the satisfaction of the Commission under s 188(a)(i)? In other words, on an application for judicial review, is compliance with s 180(5) only relevant as a matter about which the Commission must be satisfied?
(2)If the relevant jurisdictional fact is the Commission’s satisfaction under s 188(a)(i), can the Court substitute its own opinion for that of the Commission (as the primary judge did)?
(3)If so, is there a relevant distinction between the extent to which the employer had advised the Commission as to the steps it had taken to comply with s 180(5) on the one hand and the steps in fact taken by the employer to comply with s 180(5) on the other?
(4)Even if the primary judge’s construction of the relevant sections was correct, did OKW nevertheless take all reasonable steps to comply with s 180(5)?
(5)Did the class of employees who were the “relevant employees” for the purposes of s 180(5) include prospective employees or was it limited to those who were employed at the time the pre-approval steps were taken?
OKW’s analysis, however, obscures two of the primary judge’s critical findings. The CFMEU, spotting the omission, submitted that, even if all five of the issues OKW had identified were resolved in its favour, they would not provide a basis for the relief sought because they would not dispose of all the Court’s findings. In other words, there was an independent basis for the Court’s orders. The CFMEU is right.
As we have already observed (at [74]–[76] above), his Honour decided the question of compliance with s 180(5) on two separate bases.
The first basis was that the Commissioner’s reasons at [9] were affected by jurisdictional error because he failed to give proper consideration to the steps in fact taken by the employer or the adequacy of those steps, and because his consideration of this issue was “directed to the subject-matter of the information communicated” rather than to the content of the information communicated, the effectiveness of the communication or to what was not communicated at all.
By “subject-matter” we take his Honour to have been referring to the subject of whether an explanation had been provided and the means by which it was communicated. As we read his Honour’s reasons, he found jurisdictional error on the basis that the Commissioner did not consider what information OKW provided the relevant employees or whether it was effective in conveying to them the terms of the Agreement and their effect. In other words, the Commissioner misconstrued the statutory inquiry he was required to undertake.
OKW recognised as much in its notice of appeal, ground 3 of which reads:
The primary judge erred in holding (at [97]-[109]) that the [Commission] had committed jurisdictional error in reaching a state of satisfaction as stipulated by s 188 of the Act by reason of “focussing its attention upon the extent to which the employer had advised the Commission as to the steps it had taken to comply with s 180(5) and in failing to give any consideration to the steps in fact taken by the employer to comply”.
OKW’s characterisation of the issues also fails to deal with the primary judge’s finding at [123] that there was no material before the Commissioner which could support a conclusion that the agreement had been “genuinely agreed to by the employees covered by the agreement” as required by ss 186(2)(a) and 188, and further that the Commissioner had failed to give any or any adequate consideration to various matters affecting the genuineness of the agreement. Yet, this was the subject of ground 9 of the notice of appeal.
Neither ground 3 nor ground 9 was abandoned and both were the subject of written and oral submissions.
The CFMEU asserted that the primary judge had dealt with the question of genuine agreement in two alternative ways, just as he had done with the question of compliance with s 180(5), first by determining that there was no genuine agreement capable of approval and secondly, by holding in the alternative that the Commissioner’s satisfaction was infected by jurisdictional error
OKW disagreed with the CFMEU’s analysis of the primary judge’s reasons on this point, arguing that the structure of the primary judge’s reasons at [112]–[125] (where his Honour discussed the genuine agreement issue) “makes clear that those paragraphs together constitute a chain of reasoning leading to the conclusion that there was ‘jurisdictional error’ because there has never been an ‘agreement ... genuinely agreed to by the employees covered by the agreement’”.
In our opinion OKW’s construction is the correct one. Although at various points in his reasons, the primary judge declared that there was never an agreement capable of being approved by the Commission, he did not say that the genuine agreement of the employees was a precondition or jurisdictional fact, as opposed to the Commission’s satisfaction under s 186(2)(a). His Honour acknowledged as much at [117] of his reasons, observing that his own concern about the agreement not being genuinely agreed to “confronts the difficulty of this being a matter entrusted to the Commission to reach a state of ‘satisfaction’”. His Honour then went on to characterise the jurisdictional error in the Commission’s satisfaction under s 186(2)(a) – see [123].
The real questions raised by the appeal, then, are:
(1)Was actual compliance with s 180(5) a precondition for the exercise of the Commission’s power to approve the Agreement or was the relevant jurisdictional fact the Commission’s satisfaction that the subsection had been complied with?
(2)If the latter, did the primary judge err in concluding that there was jurisdictional error affecting the Commission’s satisfaction under s 188(a)(i) that OKW had complied with s 180(5)?
(3)If the former, was the primary judge wrong to find that OKW did not take all reasonable steps to comply with s 180(5)?
(4)Regardless, did the primary judge err in holding that there was jurisdictional error affecting the Commission’s satisfaction that the Agreement had been “genuinely agreed to” having regard to para 188(c)?
For the reasons given below, the answers to these questions are:
(1)Compliance with s 180(5) was not a precondition for the exercise of the Commission’s power to approve the Agreement. The relevant jurisdictional fact is the Commissioner’s satisfaction that the subsection had been complied with.
(2)No.
(3)Unnecessary to decide.
(4)No.
Was compliance with s 180(5) a jurisdictional fact?
The primary judge held (at [91]) that, on the evidence before the Court, OKW had not complied with s 180(5) and that consequently there was no agreement capable of approval. As OKW argued, in substance or effect this was a finding that the discharge of the obligation imposed on it by s 180(5) was a jurisdictional fact.
A jurisdictional fact is a condition precedent to the exercise of jurisdiction or a criterion the satisfaction of which enlivens a statutory power or discretion; unless the condition is fulfilled or the criterion satisfied, a decision purportedly made in the exercise of the jurisdiction or the power or discretion conferred by the relevant statute will have been made without authority: R v Connell; Ex parte Hetton Bellbird Collieries Ltd (1944) 69 CLR 407 at 429–30; Gedeon v Commissioner of the New South Wales Crime Commission (2008) 236 CLR 120 at [43]. A decision will be tainted by jurisdictional error if the Court finds that there was no such fact at the time the decision was made: Timbarra Protection Coalition Inc v Ross Mining NL (1999) 46 NSWLR 55 at [37].
If the exercise of power is expressly conditioned on the formation of an opinion or belief by the decision-maker, however, the existence of the requisite opinion or belief is a jurisdictional fact: Plaintiff M70/2011 v Minister for Immigration and Citizenship (2011) 244 CLR 144 at [57] (French CJ). This principle is not restricted to the exercise of powers as distinct from duties. Section 65(1) of the Migration Act 1958 (Cth), for example, imposes an obligation on the responsible Minister to grant a visa the subject of a valid application if he or she is satisfied of a number of matters, and an obligation to refuse to grant it if not so satisfied. The satisfaction of the Minister is a condition precedent to the discharge of the obligation and a jurisdictional fact, reviewable under s 75(v) of the Constitution: Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at [131] (Gummow J); Minister for Immigration and Multicultural and Indigenous Affairs v SGLB [2004] HCA 32; (2004) 207 ALR 12; 78 ALD 224; 78 ALJR 992.
Not all conditions precedent or criteria for the exercise of a statutory power or discretion are jurisdictional facts. That depends on whether, as a matter of statutory construction, Parliament intended that the question of satisfaction of the conditions or criteria be left to the administrative decision-maker or, in the final instance, to a court on judicial review: Public Service Association and Professional Officers’ Association Amalgamated Union of New South Wales v State of New South Wales [2014] NSWCA 116; (2014) 242 IR 338 at [75] (Basten JA); Australian Commercial Catering Pty Ltd v Fair Work Commission (2015) 235 FCR 441 (ACC v FWC) (Tracey, Barker and Katzmann JJ) at [42].
Where the exercise of statutory construction leads to the conclusion that Parliament intended that the relevant criterion can only be met if the relevant fact or facts objectively exist, “the rule of law requires a court with a judicial review jurisdiction to give effect to that intention by inquiry into the existence of the fact or facts”: Timbarra at [40] (Spigelman CJ, Mason P and Meagher JA agreeing at [123] and [124] respectively).
In ACC v FWC the Full Court addressed the exercise of statutory construction at [43]–[44]:
43To properly construe the statute, it is necessary to examine both the language in which the relevant provision is cast and “the total context of the legislative scheme in which the power is conferred, including the scope and nature of the jurisdiction and of the fact said to be jurisdictional”: Woolworths Ltd v Pallas Newco Pty Ltd (2004) 61 NSWLR 707 at [6] (Spigelman CJ) …
44His Honour also observed (at [89]) that where the criterion is a matter upon which reasonable minds may differ it is less likely that Parliament intended the criterion to be an objective fact. Similarly, in Plaintiff M70/2011 v Minister for Immigration and Citizenship (2011) 244 CLR 144 at [57] French CJ said that “[w]hen a criterion conditioning the exercise of statutory power involves assessment and value judgments on the part of the decision-maker, it is difficult to characterise the criterion as a jurisdictional fact, the existence or non-existence of which may be reviewed by a court”.
The matters identified in s 180(5) were matters to which the employer was required to attend. On a proper construction of the statute, however, they were not jurisdictional facts. The jurisdiction the Commission exercised or purported to exercise was the jurisdiction to approve an enterprise agreement under s 186. A condition precedent to the exercise by the Commission of its jurisdiction under s 186 is its satisfaction that the employer has complied, among other things, with s 180(5): see s 186(2)(a) read with s 188(a)(i). Alternatively, as s 190 provides, the Commission may approve an agreement under s 186 despite having a concern that the agreement does not meet the requirements set out in ss 186 and 187 provided that it is satisfied that an undertaking of the kind described in s 190(3) meets that concern. The mere fact that the Act entitles the Commission to approve an agreement even if it is concerned that the employer has not complied with s 180(5) tells against the conclusion that compliance with s 180(5) is a fact, the objective existence of which is a precondition to the Commission’s power to approve the agreement. While not determinative, so too does the language of satisfaction. As Basten JA observed in D’Amore v Independent Commission against Corruption [2013] NSWCA 187; (2013) 303 ALR 242 at [241]:
The language of “satisfaction” or “opinion” is a statutory device to ensure that the matters identified as preconditions to the exercise of power are indeed not jurisdictional facts, but facts which need only be established to the satisfaction of the decision-maker.
In Australian Industry Group v Fair Work Australia (2012) 205 FCR 339 at [43] North, McKerracher and Reeves JJ came to the same conclusion about the approval of an enterprise agreement containing an unlawful term where s 186(4) of the Fair Work Act provides that the Commission must be satisfied that the agreement does not include any unlawful term.
Furthermore, like many of the pre-approval requirements, satisfaction as to whether s 180(5) has been complied with involves an evaluative judgment, including because an assessment is to be made as to whether “reasonable steps” were taken by the employer. As Bromberg J said in Teys Australia Beenleigh Pty Ltd v Australasian Meat Industry Employees Union (No 2) [2016] FCA 2; (2016) 259 IR 164 at [75], in a passage cited by the primary judge at [119]:
These are difficult questions, upon which reasonable minds might sometimes (perhaps often) differ. The legislature’s intent was evidently that they be dealt with — for the benefit of employees and employers both — by independent specialists and experts, through the process of Commission scrutiny. …
Besides, it should not be supposed that Parliament intended that the validity of an enterprise agreement should be open to collateral attack on the basis that the objective existence of the facts required by s 180(5) cannot be established. Parliament should be presumed not to have intended public inconvenience of the kind that would arise if the existence of the pre‑approval requirements the subject of the satisfaction that the Commission is required to form in order to approve an agreement was a jurisdictional fact amenable to authoritative determination by a court: see Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [97].
For completeness, we would add that, if we are wrong about the proper construction of the primary judge’s reasons (see [93]–[95] above), and the primary judge did indeed make a finding that, independent of the question of compliance with s 180(5), the objective existence of a genuine agreement was a jurisdictional fact, then, for the same reasons, this finding would also have been erroneous.
Did the primary judge err in concluding that there was jurisdictional error affecting the Commission’s satisfaction under s 188(a)(i) that OKW had complied with s 180(5)?
Still, the Commissioner’s decision was not immune from review.
Where, as here, a statute vests a power in, or imposes a duty on, an administrative decision‑maker to do something upon reaching a state of satisfaction and matters the statute requires the decision-maker to take into account are not considered, as a matter of law the requisite state of satisfaction is not reached and the Court may grant relief: Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353 at 360 (Dixon J); Buck v Bavone (1976) 135 CLR 110 at 118–119 (Gibbs J) (approved by Brennan CJ, Toohey, McHugh and Gummow JJ in Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 275); Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at [54]. Perhaps the clearest exposition of the point was given by Latham CJ in R v Connell at 430–432:
[W]here the existence of a particular opinion is made a condition of the exercise of power, legislation conferring the power is treated as referring to an opinion which is such that it can be formed by a reasonable man who correctly understands the meaning of the law under which he acts. If it is shown that the opinion actually formed is not an opinion of this character, then the necessary opinion does not exist.
…
It should be emphasised that the application of the principle now under discussion does not mean that the court substitutes its opinion for the opinion of the person or authority in question. What the court does do is to inquire whether the opinion required by the relevant legislative provision has really been formed. If the opinion which was in fact formed was reached by taking into account irrelevant considerations or by otherwise misconstruing the terms of the relevant legislation, then it must be held that the opinion required has not been formed. In that event the basis for the exercise of power is absent, just as if it were shown that the opinion was arbitrary, capricious, irrational, or not bona fide.
Equally, a misconception as to what the exercise of the statutory power entails is a jurisdictional error: Graham v Minister for Immigration and Border Protection [2017] HCA 33; (2017) 91 ALJR 890; 347 ALR 350 at [68].
The only material before the Commission on compliance with s 180(5) was contained in Ms Ind’s statutory declaration. Although the statutory declaration was silent as to the content of the explanation or, indeed, as to the substance of the communications, OKW submitted that the declaration itself was some evidence upon which the Commission could form the requisite state of satisfaction. That may be so, but it was by no means enough to enable the Commission to lawfully reach that state.
It is common ground that the Commission was never told what was said to the relevant employees. It was simply told that they had been given an explanation of the terms of the Agreement and the effect of those terms. In effect, this amounted to little more than a self-serving statement that the employer had complied with its obligation under the Act. OKW contended that the fact that it made such a statement in a statutory declaration was significant. It is not. As the CFMEU argued, whether all reasonable steps were taken to ensure that the effect of the terms of the Agreement was explained in an appropriate manner is a question of substance, not form. The recital of a conclusion on the very question the Commission was required (through an evaluative process) to determine is not, without more, a sufficient basis for the satisfaction of the statutory test. In other words, a bare statement by an employer that an explanation has been given is an inadequate foundation upon which to reach a state of satisfaction. OKW submitted that if the Commission had erred in this respect, it was an error in fact finding or an error in process, which would be an error within its jurisdiction. We reject this submission. In order to reach the requisite state of satisfaction that s 180(5) had been complied with, the Commission was required to consider the content of the explanation and the terms in which it was conveyed, having regard to all the circumstances and needs of the employees and the nature of the changes made by the Agreement. It is true that the Act does not expressly say that. But the question of whether an administrative decision-maker is required to consider a matter is not determined only by the express words of the Act; it may also be determined by implication from the subject-matter, scope and purpose of the Act: Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39–44 (Mason J).
A consideration of the subject-matter, scope and purpose of the relevant provisions of the Fair Work Act indicates that the content of the explanation and the terms in which it was conveyed were relevant considerations to which the Commission was bound to have regard. The absence of that information meant that the Commission was not in a position to form the requisite state of satisfaction. Put differently, without knowing the content of the explanation, it was not open to the Commission to be satisfied that all reasonable steps had been taken to ensure that the terms and their effect had been explained to the employees who voted on the Agreement or that they had genuinely agreed to the Agreement.
The following considerations point inexorably to that conclusion.
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 in 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.
In order for the employer to comply with the obligation it must take into account the particular circumstances and needs of those employees, including their cultural and linguistic backgrounds, their youth, and the absence of a bargaining representative. That is made explicit in s 180(6). How could the Commission decide whether the steps the employer had taken were “all reasonable steps” unless it knew what the employees had been told before they cast their votes? Without knowing the terms in which the explanation had been conveyed how could the Commission form an opinion on the sufficiency of the explanation, particularly having regard to the considerations mentioned in s 180(6)? Ultimately, how could the Commission decide that a genuine agreement had been reached without having evidence upon which it could answer both these questions?
As there was no evidence of these matters before the Commission, it necessarily follows that the Commission purported to be satisfied that OKW’s obligations under s 180(5) had been discharged without taking those matters into account. That was a jurisdictional error because the Commission did not have authority to make the decision unless its satisfaction had been informed by them. As is often the case, there are several ways of describing the error. It could be characterised as a misconception as to what the exercise of the statutory power entails or an error “as to an important attribute of the decision to be made”: Graham at [68]. Equally it could be seen as a misunderstanding on the part of the Commission of the nature of the opinion it was required to form: Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission (2000) 203 CLR 194 at [31] (Gleeson CJ, Gaudron and Hayne JJ). Had the Commissioner applied his mind to the question of what the putative explanation entailed, he would inevitably have inquired into its content and terms.
Alternatively, as the CFMEU submitted, the Commissioner’s error might be regarded as an error of the kind referred to by the High Court in R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd (1953) 88 CLR 100 at 120. In that case, where an order was made for prohibition under s 75(v) of the Constitution, the Court observed that the inadequacy of the material before the tribunal was not itself a ground for prohibition but “a circumstance which may support the inference” that the tribunal applied the wrong test, was not really satisfied of the requisite matters, or misconceived the purpose of the function committed to it. In circumstances such as these, the Court said, “it is but a short step to the conclusion that in truth the power has not arisen because the conditions for its exercise do not exist in law and in fact”.
In his reasons at [9], the Commissioner noted that OKW had failed to identify in its statutory declaration a number of matters in the Agreement which disadvantage employees. He remarked that in the case of minor matters that does not necessarily mean that s 180(5) has not been complied with. In the absence of evidence of the contents of the explanation, this observation tends to indicate, as the primary judge found, that the Commissioner was focussed on the advice to the Commission rather than the terms of the explanation.
It was of course open to the Commissioner to ask OKW what it actually told the relevant employees. The Commission had raised other matters with the company in its 18 September email in which it said, at that point, that the Commissioner was not satisfied that the Agreement was genuinely agreed to (see [53] above). It may well be the case, as the CFMEU argued, that the failure to inquire about the content of the explanation was also a jurisdictional error. The inquiry was an obvious one to make. For the reasons given earlier, the content of the explanation was a critical matter. The information was easily ascertainable. In the context of decisions made under the Migration Act where the Refugee Review Tribunal had a duty to review the Minister’s decision, in Minister for Immigration and Citizenship v SZIAI [2009] HCA 39; (2009) 83 ALJR 1123; 259 ALR 429; 111 ALD 15 the High Court said:
It may be that a failure to make an obvious inquiry about a critical fact, the existence of which is easily ascertained, could, in some circumstances, supply a sufficient link to the outcome to constitute a failure to review. If so, such a failure could give rise to jurisdictional error by constructive failure to exercise jurisdiction. It may be that failure to make such an inquiry results in a decision being affected in some other way that manifests itself as jurisdictional error.
In SZIAI the point was not developed any further because the Court found that on the available material any further inquiry would have been futile. In contrast to the position in SZIAI, however, an inquiry in the present case would not have been futile. Indeed, the evidence before the primary judge revealed that an inquiry would have been extremely useful. It would have disclosed that, contrary to the assertion in the statutory declaration, no explanation was given to the relevant employees. In those circumstances, it is inconceivable that the Commissioner would have approved the Agreement. Had he done so, he would have fallen into jurisdictional error. It is unnecessary, however, in view of our other conclusions, to decide whether the failure to make the inquiry amounts to a jurisdictional error.
Did the primary judge err in holding that there was jurisdictional error affecting the Commission’s satisfaction that the Agreement had been “genuinely agreed to” having regard to para 188(c)?
This passage was cited with approval by a bench of five (North, Tracey, Flick, Jagot and Bromberg JJ) in Shop, Distributive and Allied Employees Association v The Australian Industry Group [2017] FCAFC 161; (2017) 350 ALR 592; 272 IR 88 at [99].
Clause 7: obligation upon employees to follow “all lawful directions”
Clause 7 is in the following terms:
7.1Employees must follow all lawful directions given by the Employee's Leading Hand/Supervisor, or any other person nominated by the Company or Client. Should an Employee not be able to perform the assigned task for any reason whatsoever, it is an Employee's duty to inform their Leading Hand/Supervisor or other appropriate person immediately.
7.2.Refusal to comply with any lawful direction may result in disciplinary action, which may include the termination of an Employee's employment.
The Commissioner addressed this clause in his reasons. He said:
Clause 7 requires the employees to follow lawful and reasonable directions from both the employer and also from the client and failure to do this may result in disciplinary action including termination of employment. This clause makes what may be a common law requirement an enforceable agreement term with possible penalties for non-compliance. Generally the consequence of non-compliance is disciplinary not enforcement. For this reason the clause is not a significant disadvantage but it is not immaterial.
The CFMEU accepted that the Commissioner did in fact identify a detriment in cl 7 but submitted that he had mistakenly read the clause as requiring employees to follow directions which are not just lawful but both lawful and reasonable, in conformity with the position at common law. The Commissioner considered the detriment was not immaterial but equally not significantly disadvantageous. The CFMEU argued that when the mistake is taken into account the disadvantage is more significant, having regard to the fact that the breach of a term of an enterprise agreement may attract the imposition of a civil penalty (see Fair Work Act, s 50 and the table to s 539).
We are not convinced that the Commissioner did misread cl 7. In all likelihood his reference to “lawful and reasonable directions” reflected his construction of the clause. It is doubtful whether a different construction would be given by any other member of the Commission. That is because the duty of the employee at common law is to obey lawful orders. The “standard or test” by which the common law determines whether the order is lawful is one of reasonableness: R v Darling Island Stevedoring & Lighterage Co Ltd; Ex parte Halliday and Sullivan (1938) 60 CLR 601 at 621. Dixon J explained at 621–2:
If a command relates to the subject matter of the employment and involves no illegality, the obligation of the servant to obey it depends at common law upon its being reasonable. In other words, the lawful commands of an employer which an employee must obey are those which fall within the scope of the contract of service and are reasonable.
As Finn J observed in McManus v Scott-Charlton (1996) 70 FCR 16 at 21:
The need for some such limitation is patent: employment does not entail the total subordination of an employee’s autonomy to the commands of the employer. As was said by the President in Australian Tramway Employees’ Association v Brisbane Tramways Co Ltd (1912) 6 CAR 35 at 42:
‘A servant has to obey lawful commands, not all commands. The servant does not commit a breach of duty if he refuse[s] to attend a particular church, or to wear a certain maker’s singlets. The common law right of an employee is a right to wear what he chooses, to act as he chooses, in matters not affecting his work.’
There are obvious, and powerful, considerations of civil rights and liberties and of due process which inform this. These need not be laboured here although they are of no little significance in the resolution of this case.
The principles governing the interpretation of enterprise agreements are the same as those governing the interpretation of awards: see Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at [96] (Kirby J) and [129] (Callinan J); Australasian Meat Industry Employees Union v Coles Supermarkets Australia Pty Ltd [1998] FCA 166; (1998) 80 IR 208 at 212 (Northrop J); Energy Australia Yallourn Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2017] FCA 1245 at [74] (Bromberg J).
In the oft-cited words of Madgwick J in Kucks v CSR Ltd (1996) 66 IR 182 at 184:
It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.
(Emphasis added.)
Similarly, words in an industrial agreement must not be interpreted “in a vacuum divorced from industrial realities”: City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813; (2006) 153 IR 426 at [57]. Regard must be had to the nature of the document, the manner of its expression, the context in which it operates, and the industrial purpose it serves: Amcor at [96] per Kirby J. Another relevant factor is the intention of the parties: Shop Distributive and Allied Employees’ Association v Woolworths SA Pty Ltd [2011] FCAFC 67 at [14]; Kucks at 184. Here, one of the contextual considerations is that the employer is a labour hire firm which supplies employees to its clients. The evident purpose of cl 7 of the Agreement is not to extend the common law duty to unreasonable orders. Rather, its evident purpose is to extend the common law duty to require obedience to orders issued by the employer’s clients.
In the absence of clear words to the contrary, cl 7 should be read as subject to the limits of the common law obligation.
Be that as it may, OKW did not contradict the CFMEU’s contention that the Commissioner had misread the clause or that the effect was to increase the disadvantage. It was prepared to assume the correctness of these submissions. OKW’s riposte was that this was a non‑jurisdictional error, not amenable to judicial review. In this respect, OKW is right. Assuming in the CFMEU’s favour that the Commissioner did misread the clause and there was in truth a greater disadvantage than he believed, his error was within jurisdiction.
It is often said that there is no bright line between jurisdictional error and error in the exercise of jurisdiction but the distinction is a real one. Hayne J explained in Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at [163], approved by the plurality in Kirk v Industrial Court of New South Wales (2010) 239 CLR 531 at [66]:
There is a jurisdictional error if the decision maker makes a decision outside the limits of the functions and powers conferred on him or her, or does something which he or she lacks power to do. By contrast, incorrectly deciding something which the decision maker is authorised to decide is an error within jurisdiction. (This is sometimes described as authority to go wrong, that is, to decide matters within jurisdiction incorrectly.) The former kind of error concerns departures from limits upon the exercise of power. The latter does not.
Here, as OKW submitted, the Commissioner was required to satisfy himself that the BOOT had been passed. The determination of that question depended in part on the resolution of anterior questions about the construction of the relevant terms of the Agreement. Accordingly, it is implicit in the jurisdiction conferred on the Commission to approve enterprise agreements that it also has jurisdiction to resolve for itself the anterior questions of construction, as a step in the process of answering the statutory question or attending to its statutory task.
As Gray and Moore JJ said in Re Australian Workers’ Union; Ex parte Construction, Forestry, Mining and Energy Union (2002) 120 FCR 527 at [52] of mistakes of construction of eligibility rules, it is probable that the Commission has been given by Parliament some latitude in exercising its statutory power (here under s 186(2)(d) to determine whether the agreement passes the BOOT) to take a mistaken view about the meaning of an agreement. The Full Court reached a similar conclusion in relation to the construction of a union collective agreement (albeit in a different context) in Construction, Forestry, Mining and Energy Union v Wagstaff Piling Pty Ltd (2012) 203 FCR 371 at [40].
Furthermore, the Commissioner was alert to the possibility of a civil penalty. It was for that very reason that he described the detriment as “not immaterial”.
Clauses 9.1 and 9.3: casual employment
These clauses provide:
9.1Employees shall be engaged on an Assignment as full time, part time or casual.
…
9 .3 A casual employee is one who is engaged and paid as such.
The CFMEU pointed out that the BCMIA does not permit engagement of production and engineering employees on a casual basis. Clause 10.1 of the award states:
An employer may employ an employee in any classification included in this award in any of the following types of employment:
(a) full-time;
(b) part-time; or
(c) in the case of classifications in Schedule B—Staff Employees, casual.
Production and engineering employees fall within the classifications listed in Schedule A and so are not captured by cl 10.1(c).
For this reason the CFMEU submitted that unlike all the other modern awards, the BCMIA does not permit casual employment. It argued that, in contrast to employment under the BCMIA, an employee engaged as a casual under the Agreement would have no guaranteed shifts, no guaranteed income, and no access to a range of financial and other benefits (such as sick leave, annual leave, long service leave, and superannuation). Furthermore, the CFMEU submitted that an employee could be engaged on “zero hour contracts”, for example, in the event of a breakdown or unplanned shutdown, (s)he could be stood down indefinitely without income. None of these submissions was contradicted.
The Commissioner did not refer in his reasons to the introduction of casual employment for production and engineering employees performing work covered by the BCMIA. OKW submitted that the proper inference was that he did not consider that it gave rise to any disadvantage worth mentioning. That submission cannot be accepted. The fact that the Commissioner was conscious of the availability of casual employment under the Agreement, as OKW argued, does not mean that he was alive to the fact that for some award‑covered employees or prospective employees this was a novelty. Rather, it is abundantly clear that he did not, for the Commissioner proceeded as though all 11 awards permitted casual employment for all employees.
The Commissioner referred to casual employment at two points in his reasons. Both references concerned the effect of cl 11 of the Agreement. Clause 11 (entitled “Casual Conversion”) removed award rights of casual employees to convert to permanent employment and provided for an additional 1% loading on the base hourly rate under the awards. At [14]–[15] the Commissioner said:
14I am not satisfied that the additional 1% is sufficient compensation for the removal of the right to casual conversion in Awards. I accept the submission of the employer that there have been a number of agreements approved by the Fair Work Commission which contain this provision. The substitution of non-monetary entitlements for monetary entitlements is often a difficult matter to judge. Casual conversion offers employees the opportunity for job security and access to paid leave. Employees may value these matters differently. There will be differential issues for employees. For example, those with a disability or with particular family circumstances will be likely to gain greater benefit from increased job security and access to paid leave. For the purpose of the BOOT it may not be appropriate to see all casual employees as a single class in this particular circumstance. I note that the F17 Statutory Declaration reveals that two of the three current employees who will be covered by the Agreement are casuals. One of the employees is an Aboriginal or Torres Strait Islander. Job security is likely to be a particularly valuable consideration for employees of indigenous background.
15The employer submitted that the Fair Work Act 2009 provides regular casual employees with protection from unfair dismissal and this reduces the importance of the casual conversion clause. I am satisfied that casual employees in the labour hire industry are not guaranteed any particular number of hours of work and therefore their income is precarious. Casual conversion offers those employees the opportunity for guaranteed 38 hours of work and pay per week if full time or regular guaranteed hours if part time. This is a major potential advantage to some casual employees.
(Emphasis added.)
Since the Commissioner considered that an additional 1% was insufficient compensation for the removal of the right to casual conversion, that he was of the opinion that the income of casual employees in the labour hire industry was “precarious”, and that he only approved the Agreement having received an undertaking from the employer that it would not apply the exclusion of the casual conversion provisions in the awards, it is reasonable to infer that he failed to have regard to the effect of the introduction of casual employment for prospective production and engineering employees covered by the BCMIA. Production and engineering employees covered by the BCMIA had no rights to casual conversion, as they could not be employed as casuals. It follows that the effect of the Agreement for such employees or prospective employees was that they could lose the job security guaranteed by the award as well as the additional benefits of permanent employment. In the light of the Commissioner’s concern that the BOOT allowance was insufficient compensation for the loss of the right to casual conversion, it is inconceivable that, had the Commissioner appreciated that the Agreement introduced casual employment for this class of employee, he would not have adverted to it in his reasons.
It is an error of law to fail to have regard to relevant material in a way that affects the exercise of power. An administrative decision-maker who makes such an error exceeds his or her authority and acts without jurisdiction. See Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at [82] (McHugh, Gummow and Hayne JJ).
The CFMEU submitted that, having regard to the value the Commissioner placed on the right to seek casual conversion, “it cannot be doubted that, had he been aware of these facts, [he] would properly have given the introduction of casual employment significant weight as a relevant detriment under the BOOT, and would not have found that the BOOT was met”. The CFMEU pointed to the same Commissioner’s reasons in a later case, Re Site Fleet Services Pty Ltd [2017] FWC 2163, which concerned an application by another labour hire company for approval of an agreement. In that case, where the CFMEU asked for and was given permission to be heard on the application, the Commissioner noted (at [30]) that the BCMIA did not provide for casual employment and treated the introduction of casual employment by the relevant agreement as a detriment not sufficiently compensated by the provision of a 25% loading. He acknowledged that “there [was] nothing to stop an Agreement meeting the BOOT which includes casual employment in this industry” but considered that the rates or other benefits would need to be “greater than 25% compensation”.
OKW quarrelled with the CFMEU’s description of the introduction of casual employment as a detriment, submitting that it would have been open to the Commissioner to conclude that the availability of casual employment is an advantage in that it offers flexibility, which might be attractive to some employees, and access to a substantial loading. We interpolate that casuals under the BCMIA are entitled to a 25% loading in lieu of leave entitlements with a minimum four hours payment on each engagement. This was a bold submission. Even if one were to ignore what the Commissioner said in Site Fleet Services, given what he said in this case (at [15] of his reasons) about the uncertainty of available work and the insecurity of income for casual employees in the labour hire industry, it is unlikely that he would have considered the prospect of casual employment for production and engineering employees to be an advantage to them in comparison to the benefits to which they would have been entitled under the Award.
The CFMEU’s submission takes the matter too far. Still, the failure of the Commissioner in the present case to recognise that the BCMIA did not permit casual employment for production and engineering workers was a significant omission.
Section 186(2)(d) read with s 193(1) required the Commissioner to compare the positions under the relevant award and the Agreement of each employee and each prospective employee. As OKW argued, whether the introduction of casual employment should be seen as a benefit or a detriment was a matter for the Commissioner. Either way, however, the Commissioner was obliged to consider its potential effects in evaluating whether all the relevant employees were better off overall under the Agreement, as he did in Site Fleet Services.
The introduction of casual employment for production and engineering employees covered by the BCMIA (whether actual or prospective) was a relevant consideration that the Commissioner was bound to take into account; it was a step in the process of applying the BOOT. In failing to take it into account, the Commissioner erred in law in a way that affected the exercise of his power. It indicates that he failed to conduct the requisite comparison and so failed to apply himself to the question prescribed by ss 186(2)(d) and 193(1), at least in relation to those employees (as in United Voice v MSS Security Pty Ltd [2016] FCAFC 124; (2016) 153 ALD 200) or, at least, failed to complete his statutory task (as in Htun v Minister for Immigration and Multicultural Affairs (2001) 233 FCR 136 at [42], [44] per Allsop J, with whom Spender and Merkel JJ agreed). Whichever way it is characterised, the error is jurisdictional.
Accordingly, in this respect the notice of contention should be upheld.
Clause 9.6: restraint on accepting offers of employment
Clause 9.6 reads:
If an Employee is offered employment by a Client the Employee must refer the Client to the Company.
The CFMEU submitted that this clause creates a “non-monetary detriment” and that there is no comparable clause in the BCMIA. It contended that this is a material detriment, the significance of which is greater than it might otherwise have been because of the introduction of casual employment. Its effect, the CFMEU argued, was that employees with no guaranteed hours of work or security of employment would be required to disclose to OKW any offer of employment from the client for whom they are performing the work.
The Commissioner did not mention the clause in his reasons for the decision. Nor did he raise it in his correspondence with OKW. And it was not mentioned at the hearing. OKW submitted that the only available inference is that the Commissioner did not consider the clause to be materially disadvantageous, and therefore attached no weight to it. OKW also submitted that the CFMEU was wrong to assume that the clause could reasonably be viewed as detrimental when considered together with the introduction of casual employment because this would require the erroneous assumption that casual employment is inherently disadvantageous to employees.
A labour hirer who provides its employees to its clients on short-term engagements faces the risk that the employee provided may also be self-employed and may take for him or herself the benefit of future engagements or, alternatively, may directly engage with the client as an employee and, in either case, deny to the labour hirer the opportunity of future engagements with the client. Although cl 9.6 is not well expressed, its evident purpose is to impose a requirement upon an employee of OKW to inform OKW of any offer of direct engagement made to the employee by a client of OKW. In circumstances where the employee and OKW are potential competitors for future work, the requirement imposed by cl 9.6 is potentially detrimental to the employee because it requires that OKW be given an opportunity to advance its interests with the client to the potential disadvantage of the employee.
Be that as it may, the clause does not prevent an employee from accepting an offer of employment made by the client. Nor does it say that the employee must refer the client to OKW before accepting any offer. Although there may be some detriment to the employee, the Commissioner may have regarded it as insufficiently material to warrant mention in his reasons. As we have already observed, the question of what is or is not detrimental is a matter for the Commission. In these circumstances, we are not persuaded that the Commissioner overlooked a relevant consideration or that he did so in a way that would amount to a jurisdictional error
Clauses 12.1 and 12.4: hours of work
These clauses are in the following terms:
12.1As the Company is a labour hire business, Employees will work within start and finish times consistent with the Client’s site requirements. Generally, whatever hours of work and associated rostering arrangements apply at the Client's site, these will also apply to an Employee’s Assignment unless otherwise advised by the Company.
…
12.4.While on an Assignment an Employee may be required to work in accordance with any shift pattern or roster cycle nominated by the Company.
The CFMEU argued that cll 12.1 and 12.4 remove a range of protections contained in cll 22, 23 and 24 of the BCMIA and give OKW a greatly increased discretion in the determination of shift and rostering arrangements than it would have had if the BCMIA continued to apply. The CFMEU went on to submit that:
·the definitions in cl 22.1 of the BCMIA (of “afternoon shift”, “night shift” and “permanent night shift employee”) are inconsistent with cl 12.1 of the Agreement which, it contended, entitles the employer to determine shift times and spans at its discretion, depending on the local arrangements, and thereby reduce penalty rates; and
·cl 12.1 removes the guarantee in cl 24 of the BCMIA that employees will not be required to work more than five hours without a meal break or, that if such arrangements apply, the meal break will be a paid break.
The CFMEU’s submission should be rejected. There is no “clear inconsistency” between cll 12.1 and 12.4 and the particular terms of the BCMIA to which it referred.
Clause 22.1 of the BCMIA defines “afternoon shift” to mean “any shift, the ordinary hours of which finish after 6.00pm and at or before midnight”, “night shift” as “any shift, the ordinary hours of which finish after midnight and at or before 8.00 am” and “permanent night shift employee” as an employee who works night shift only, stays on night shift longer than four consecutive weeks, or works on a roster that does not give at least one-third of his or her working time off night shift in each roster cycle.
But as OKW submitted, cl 12.1 of the Agreement is expressed in general terms and does not redefine these shifts. Indeed, it says nothing at all about shifts. It is only concerned with working hours. OKW acknowledged that the definitions in cl 22.1 of the BCMIA will continue to apply. Moreover, as OKW also submitted, cl 12.1 is silent, too, about meal breaks. For each five hours worked during rostered hours determined by reference to the client’s required start and finish times, employees will continue to be entitled to a meal break in accordance with cl 24.1 of the BCMIA.
Clause 23 of the BCMIA relevantly provides:
23. Rostering
[Varied by PR994553, PR531393; 22 renumbered as 23 by PR545966 ppc 01Jan14]
23.1 Rostering of hours and length of shifts
(a) The employer can determine the type of rosters to be worked.
(b)The employer can determine the shift length to be worked as long as the ordinary hours do not exceed 10. Shifts of more than 10 ordinary hours can only be implemented by agreement between the employer and the majority of employees affected or, in the case of a dispute, as resolved in accordance with clause 9—Dispute resolution.
23.2 Shift starting and finishing times
The start and finish times of shifts up to 10 ordinary hours may be determined by the employer. Shifts in excess of 10 ordinary hours will be worked between the starting and finishing times that are agreed between the employer and the majority of employees affected or, in the case of a dispute, as resolved in accordance with the dispute resolution procedure.
23.3 Number and spread of shifts
The number and spread of ordinary shifts may be varied by the employer and, in the case of dispute, the dispute resolution procedure applies.
23.4 Starting and finishing places
(a)The starting and finishing place of a shift are to be agreed between the employer and the majority of affected employees or, in the absence of agreement, as determined in accordance with the dispute resolution procedure.
(b)At underground mines, the designated starting and finishing place will be on the surface.
23.5 Roster changes
An employee’s place on a roster will not be changed, except where:
(i) one week’s notice of any change is given to the employee; or
(ii)where less than one week’s notice is given, the employee is paid at overtime rates for all work from the time of change of shift until the week’s notice would have expired.
The Agreement must be read with the Award. Clause 3.2 of the Agreement reads:
This Agreement shall, in respect of each individual Employee, be read and interpreted as incorporating the terms of the Award, provided that where there is any inconsistency between this Agreement and the Award, this Agreement shall take precedence to the extent of the inconsistency.
We accept OKW’s submission that cl 12.1 is silent about meal breaks. The entitlement to meal breaks, conferred by cl 24 of the BCMIA, is unaffected by the Agreement. The reference to “shift pattern” in cl 12.4 of the Agreement is not entirely clear. No submissions were made on this point. But we are not persuaded that in the relevant respects the Agreement and the BCMIA are inconsistent. It seems to us that cll 12.1 and 12.4 of the Agreement can be read harmoniously with cl 22 of the BCMIA. The rates of pay specified by cl 22.2 for shifts falling within the various time periods specified in cl 22.1 will have application to the rostering arrangements referred to in cl 12.1 of the Agreement. Accordingly, employees are not detrimentally affected. It follows that the Commissioner’s failure to advert to these matters does not evince a failure to have regard to a relevant consideration or relevant material, let alone jurisdictional error.
In its written submissions the CFMEU also complained about cl 12.5 of the Agreement. Clause 12.5 states that:
If, while on Assignment, the nominated shift pattern or roster cycle is changed by the Client, the Employee's Assignment will be taken to have ended effective from the date of that change in cycle.
The CFMEU argued that this term of the Agreement removes the right conferred by cll 22.3 and 23.5 of the BCMIA to reasonable notice or monetary compensation where shift arrangements are changed because under cl 12.5 “each such change is deemed to give rise to a new ‘assignment’”.
The notice of contention did not refer to cl 12.5 and no application was made to amend it. In the circumstances, it is not necessary to deal with the CFMEU’s argument. Nevertheless, it should be noted that OKW informed the Court that the notice and payment in lieu requirements remain in place under the Agreement.
Was there no reasonable basis upon which the Commissioner could have been satisfied that the Agreement passed the BOOT?
It is uncontentious that, where a statute requires an administrative decision-maker to reach a state of satisfaction about a matter, the opinion as to the state of satisfaction must be reached by a rational, reasonable and logical process.
The CFMEU submitted that:
[W]hen all relevant detriments are properly considered, the opinion that the Agreement passed the BOOT test could not have been formed by a reasonable person. An employee or prospective employee could not reasonably be thought better off overall under the Agreement by receiving an additional 80c gross per week but suffering the detriments referred to above.
Expressed in this way, the CFMEU’s submission picks up a passage from the joint judgment of Crennan and Bell JJ in Minister for Immigration and Citizenship v SZMDS(2010) 240 CLR 611 at [130]. Their Honours, speaking of the state of satisfaction required of the Refugee Review Tribunal under s 65 of the Migration Act when deciding whether to refuse to grant a visa, said:
“[I]llogicality” or “irrationality” sufficient to give rise to jurisdictional error must mean the decision to which the Tribunal came, in relation to the state of satisfaction required under s 65, is one at which no rational or logical decision maker could arrive on the same evidence. In other words, accepting, for the sake of argument, that an allegation of illogicality or irrationality provides some distinct basis for seeking judicial review of a decision as to a jurisdictional fact, it is nevertheless an allegation of the same order as a complaint that a decision is “clearly unjust” or “arbitrary” or “capricious” or “unreasonable” in the sense that the state of satisfaction mandated by the statute imports a requirement that the opinion as to the state of satisfaction must be one that could be formed by a reasonable person. The same applies in the case of an opinion that a mandated state of satisfaction has not been reached. Not every lapse in logic will give rise to jurisdictional error. A court should be slow, although not unwilling, to interfere in an appropriate case.
(Emphasis added.)
The part emphasised in the above extract is the part emphasised by the CFMEU. The CFMEU overlooked, however, both the counsel for caution in [130] and the test posited by their Honours in the following paragraph ([131]):
[T]he test for illogicality or irrationality must be to ask whether logical or rational or reasonable minds might adopt different reasoning or might differ in any decision or finding to be made on evidence upon which the decision is based. If probative evidence can give rise to different processes of reasoning and if logical or rational or reasonable minds might differ in respect of the conclusions to be drawn from that evidence, a decision cannot be said by a reviewing court to be illogical or irrational or unreasonable, simply because one conclusion has been preferred to another possible conclusion.
Their Honours went on to observe at [135] that “a decision might be said to be illogical or irrational if only one conclusion is open on the evidence, and the decision maker does not come to that conclusion … or if there is no logical connection between the evidence and the inferences or conclusions drawn”, or where the reasons given are unintelligible. After all, as Gleeson CJ observed in Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30; (2003) 198 ALR 59; 77 ALJR 1165 at [5], to describe reasoning as unreasonable may be no more than an emphatic way of disagreeing with it. This is an apt description of the CFMEU’s argument. In effect, the CFMEU was inviting the Court to substitute its own opinion for that of the Commission.
The Full Court rejected a similar argument in United Voice at [15]ff for the following reasons. First, questions of construction of the agreement, the awards, and the industrial circumstances of the employees and prospective employees involved questions of fact and degree. Secondly, even if the agreement does not pass the BOOT, s 189(2) allows the Commission to approve it in exceptional circumstances if approval would not be contrary to the public interest. The Commission is also given a discretion by s 190 to approve an agreement where it has a concern that the agreement does not pass the BOOT. As the Full Court said in United Voice at [17], “the existence of the discretionary power of the Commission to approve an agreement demonstrates that it is not possible for this Court to determine, as the union sought, that the Full Bench could not have approved the agreement in the exercise of its powers under the Act”.
Ground 1 of the notice of contention must be dismissed.
CONCLUSION
The appeal should be dismissed. In short, although he made some errors, the primary judge was correct to find that the Commissioner fell into jurisdictional error by failing to have regard to the content and terms of the explanation OKW purportedly gave the three employees when reaching his satisfaction that s 180(5) had been complied with. The primary judge was also correct to find that the Commissioner had not reached the requisite state of satisfaction that the Agreement had been genuinely agreed to by the employees covered by it. Consequently, the basis for the exercise of the power conferred on the Commission to approve the Agreement was absent.
Ground 2 of the notice of contention should be upheld. The Commissioner also fell into jurisdictional error by failing to consider the effect of cll 9.1 and 9.3 of the Agreement for production and engineering employees covered by the BCMIA.
In all other respects the notice of contention should be dismissed.
Orders
On 21 December 2017, the primary judge made orders by consent suspending the operation of the final orders made on 23 November 2017. The orders made on 21 December 2017 are expressed so that this stay will operate until the determination of this appeal, or further order.
At the conclusion of the hearing, OKW asked to be heard on the question of the stay before the Court makes final orders determining the appeal. The day before judgment was due to be delivered, however, the parties jointly requested that the Court not make any orders. Instead, they requested that the Court adjourn the matter for 28 days to allow them to consider the reasons for judgment. We have decided to accede to the request but also to require that within that period of time the parties file submissions as to the appropriate form of orders. If agreement can be reached, so much the better. If not, the question will be determined on the papers.
I certify that the preceding two hundred and thirty-eight (238) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Bromberg, Katzmann and O'Callaghan. Associate:
Dated: 25 May 2018
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