OneSteel Recycling Pty Limited T/A OneSteel Recycling (C2014/6309) JUSTICE BOULTON, SENIOR DEPUTY PRESIDENT
[2014] FWCFB 7560
•13 NOVEMBER 2014
[2014] FWCFB 7560
DECISION
| Fair Work Act 2009 | |
| s.604—Appeal of decision | |
| OneSteel Recycling Pty Limited T/A OneSteel Recycling | |
| (C2014/6309) | |
| JUSTICE BOULTON, SENIOR DEPUTY PRESIDENT | |
| SENIOR DEPUTY PRESIDENT DRAKE | |
| COMMISSIONER MCKENNA | SYDNEY, 13 NOVEMBER 2014 |
Appeal against decision [2014] FWC 5783 of Commissioner Ryan at Melbourne on 21 agreement - whether the group of employees covered by the agreement was fairly chosen - whether the group of employees is geographically, operationally or organisationally distinct - procedural fairness - decision handed down after correspondence between the Commissioner and the parties - opportunity for hearing - permission to appeal granted - appeal allowed - application for approval of agreement remitted for further determination.
[1] On 23 October 2014, the Full Bench heard an appeal by OneSteel Recycling Pty Ltd (OneSteel Recycling) against a decision of Commissioner Ryan given on 21 August 2014.[1]In the decision, the Commissioner dismissed an application by OneSteel Recycling under s.185 of the Fair Work Act 2009 (the Act) for the approval of an enterprise agreement known as the
[1][2014] FWC 5783.
OneSteel Recycling Victoria Enterprise Agreement 2014 (the Agreement).
[2] The basis on which the Commissioner decided to dismiss the application related to the requirement in s.186(3) of the Act that the Fair Work Commission (the Commission) “must be satisfied that the group of employees covered by the agreement was fairly chosen.” Having regard to the limited material provided by the employer and other considerations, the Commissioner determined he could not be satisfied that the group of employees was fairly chosen and therefore that he would not approve the Agreement.[2]
[3] In the appeal proceedings, OneSteel Recycling was represented by Mr Michael Mead of the Australian Industry Group. Mr Mead expanded upon the detailed written submissions filed by OneSteel Recycling in the appeal and sought to provide further evidence regarding the fairly chosen issue. The further evidence was a sworn statement by Mr Stuart Gordon, National Manager of Employee Relations for Arrium Ltd, who is responsible for managing the employee relations function across Arrium Ltd’s business - which includes OneSteel Recycling. The bargaining representatives for the Agreement, The Australian Workers’ Union (AWU) and Mr J. Wallman, were not represented in the proceedings and did not file any written submissions.
[2014] FWCFB 7560
[4] At the conclusion of the proceedings, the Full Bench announced our decision to grant permission to appeal, to allow the appeal and to set aside the decision of the Commissioner. The Full Bench also indicated we were satisfied that, having regard to the material before the Commissioner together with the submissions and additional evidence presented in the appeal, the group of employees covered by the Agreement was fairly chosen. We also indicated that the application for the approval of the Agreement would be referred to Justice Boulton for determination.
[5] The reasons for the decision of the Full Bench are as follows.
[6] The Commissioner raised a series of concerns about the Agreement by letter dated 16 July 2014 addressed to OneSteel Recycling, the AWU and Mr Wallman. The concerns included whether the group of employees to be covered by the Agreement was fairly chosen having regard to s.186(3) and (3A) of the Act. This was because the Agreement covered operational wages employees at four sites in Victoria (Brooklyn, Eaglehawk, Somerton and Wendouree) and there was another agreement[3]covering employees of OneSteel Recycling in
similar classifications at two other sites in Victoria (Dandenong and Coolaroo). The Commissioner indicated in the letter that OneSteel Recycling would be given an opportunity to provide submissions in support of its contention that the group of employees to be covered by the Agreement had been fairly chosen. The letter concluded that the Commissioner was of the view “that each of the concerns raised by the Commission could appropriately be dealt with by way of undertakings” and that if OneSteel Recycling or any other bargaining representative contended the concerns were not well-founded then the matter would, if requested, be listed for hearing.
[7] OneSteel Recycling responded to the Commissioner by letter dated 29 July 2014. The response dealt with the range of issues raised by the Commissioner in his letter, including the concerns raised regarding the fairly chosen group of employees to be covered by the Agreement.
[8] Some of the key matters in the OneSteel Recycling response were as follows:
OneSteel Recycling operates at 24 site locations across Australia and currently has
seven enterprise agreements operating across those sites;
all the enterprise agreements cover and apply only to operational employees and
not to salaried staff, clerical, supervisory and managerial personnel;
the OneSteel Recycling business has expanded and contracted through a series of
acquisitions and divestments, which has contributed to the organisational and
geographical coverage of the enterprise agreements;
the Agreement was negotiated with the AWU, as the default bargaining
representative under the Act, and one employee appointed bargaining
representative;
the coverage of the Agreement is the same as the predecessor agreement; and
at no stage during the negotiations was the coverage of the Agreement an issue.
[9] OneSteel Recycling submitted that the Agreement applied to an organisationally,
geographically and operationally distinct group of employees (namely, operators) which does
[2014] FWCFB 7560
not include salaried, clerical, supervisory and managerial roles and that the group was fairly
chosen consistent with the provisions of the Act.
[10] OneSteel Recycling made enquiries by email to the Commissioner’s associate on 15 and 20 August 2014 about the position regarding the approval of the Agreement. It was advised by email on 20 August 2014 that the Commissioner was aware that he was due to issue a decision in the matter and was working on it.
[11] On 21 August 2014, the Commissioner published his decision.
[12] In the appeal proceedings, it was submitted that the Commissioner did not afford procedural fairness to the parties when dealing with the application to approve the Agreement. In this regard, it was said that the approach adopted by the Commissioner was procedurally unfair in that he did not advise OneSteel Recycling he was not satisfied with the information provided on the fairly chosen group issue or give OneSteel Recycling an opportunity to provide further information or a suitable undertaking on that issue.
[13] Given the indications in the letter sent by the Commissioner that all the concerns regarding the approval of the Agreement could be dealt with by undertakings and the reference to the possibility of a hearing to consider any contested issues, we consider there was a procedural fairness-related failure in relation to the approach adopted by the Commissioner.
[14] In Galintel Rolling Mills Pty Ltd T/A The Graham Group,[4]the obligation of members
[4][2011] FWAFB 6772.
of the Commission to act in a judicial manner and to apply the rules of natural justice was
considered. The Full Bench in that case noted that:
“[30]
In a matter concerning an application for approval of an agreement it will usually be a duty of tribunal members to provide parties to the agreement an opportunity to lead evidence and make submissions on issues that may lead to the rejection of the application...”
[15] In McDonald’s Australia Pty Ltd v Shop, Distributive and Allied Employees
Association[5]a Full Bench, after referring to the objects of Part 2-4 of the Act which deals
with Enterprise Agreements (see s.171), said:
“[13]
The appellants emphasised the facilitative aspects of these objectives. We agree that these objectives place the primary role for making enterprise agreements on the parties to those agreements and their representatives and that the role of Fair Work Australia (FWA) includes facilitating the making of enterprise agreements. In general we believe that the requirements for approval should be considered in a practical, non- technical manner and that reasonable efforts should be made to clarify matters with the parties and consider undertakings to clarify or remedy concerns to the extent that these may be available under s 190 of the Act.”
[2014] FWCFB 7560
[5][2010] FWAFB 4602.
[16] In Construction, Forestry, Mining & Energy Union v Hamberger,[6]Katzmann J noted
the fairly chosen criterion is a matter which must be considered by the Commission and a
failure to do so will result in jurisdictional error:
[6](2011) 195 FCR 74 at 95 [103].
“[103] Section 186(3A) imposes an obligation on Fair Work Australia, in deciding whether the group was fairly chosen, to take into account whether the group of employees covered by the agreement is geographically, operationally or organisationally distinct. In other words these are factors Fair Work Australia is bound to consider. A failure to do so will give rise to jurisdictional error. …
[17] Although the Commissioner considered the fairly chosen criterion, as he was bound to, we consider that the approach taken by the Commissioner in rejecting the application for the approval of the Agreement was inconsistent with the approach outlined by the Full Benches in the abovementioned cases and this meant OneSteel Recycling was not given a proper opportunity to seek to satisfy the Commission in regard to the fairly chosen issue. In particular, we consider that, given the indications in the correspondence in relation to possible undertakings and further proceedings, the rejection of the application without giving OneSteel Recycling a further opportunity to address matters of concern amounted to a denial of procedural fairness. For this reason, we accept the appellant’s submission that the decision should be set aside.
[18] It was also submitted in the appeal proceedings that the Commissioner, in any event,
erred in finding that the group of employees covered by the Agreement was not fairly chosen
(s.186(3) and (3A)).
[19] The Commissioner reached his conclusion on the fairly chosen issue having regard to the material before him. It would seem that the Commissioner was particularly concerned about the four sites covered by the Agreement vis-à-vis the agreement covering the sites at Dandenong and Coolaroo and that no rationale had been provided by OneSteel Recycling to explain the separate coverage of the different sites. The Commissioner concluded that “the paucity of material provided by the employer is such that the Commission cannot conclude that the group of employees covered by the Agreement is geographically, operationally or organisationally distinct”.[7]The Commissioner said that this was a factor telling against a finding that the group was fairly chosen[8]although it was recognised that the Commission
must take into account all the relevant circumstances before coming to a concluded view on
this issue.[9]In this regard, the Commissioner noted relevant considerations included that the
previous agreement had the same coverage provision and that the bargaining representatives did not oppose the coverage of the Agreement.[10]However, the Commissioner was not
satisfied that the group of employees to be covered by the Agreement was fairly chosen and
therefore the application for approval was dismissed.
[7][2014] FWC 5783 at [22].
[8]See Cimeco Pty Ltd v CFMEU and Others [2012] FWAFB 2206.
[9][2014] FWC 5783 at [23] - [24].
[10]Ibid at [35].
[20] In the appeal proceedings, it was submitted by OneSteel Recycling that the
conclusions reached by the Commissioner on the fairly chosen issue were not reasonably open to him. It was said the information before the Commissioner supported a conclusion that the
[2014] FWCFB 7560
group of employees was geographically, operationally or organisationally distinct and that the group was fairly chosen. It was said that the correspondence and decision show that the Commissioner had formed at least a preliminary view that the six Victorian sites should be covered by the same agreement and not by two different agreements. It was submitted that there was no legitimate basis to form such a view and that it was not practically open to OneSteel Recycling and the AWU to include the employees at Dandenong and Coolaroo in the Agreement’s coverage as those employees were already covered under a separate agreement with a nominal expiry date in 2016. It was also submitted that the Commissioner failed to have regard to some of the information provided by OneSteel Recycling when making his decision and that the Commissioner could have asked OneSteel Recycling to provide additional material if he considered that the material before him was deficient.
[21] We have had regard to the information and material before the Commissioner relevant
to the fairly chosen issue. We have also had regard to relevant decisions of Full Benches of
the Commission.[11]
[11]See in particular Cimeco, above n8 and CFMEU v ResCo Training and Labour [2012] FWAFB 8461.
[22] In Cimeco Pty Ltd v Construction, Forestry, Mining and Energy Union and Others,[12]
[12]Cimeco, above n8.
the Full Bench stated:
“[19] Given the context and the legislative history it can reasonably be assumed that if the group of employees covered by the agreement are geographically, operationally or organisationally distinct then that would be a factor telling in favour of a finding that the group of employees was fairly chosen. Conversely, if the group of employees covered by the agreement was not geographically, operationally or organisationally distinct then that would be a factor telling against a finding that the group was fairly chosen. [20] It is important to appreciate that whether or not the group of employees covered by the agreement is geographically, operationally or organisationally distinct is not decisive, rather it is a matter to be given due weight, having regard to all other relevant considerations. [21] It is not appropriate to seek to exhaustively identify what might be the other relevant considerations. They will vary from case to case and will need to be demonstrated to the satisfaction of the tribunal. The word ‘fairly’ suggests that the selection of the group was not arbitrary or discriminatory. For example, selection based upon employee characteristics such as date of employment, age or gender would be unlikely to be fair. Similarly, selection based on criteria which would have the effect of undermining collective bargaining or other legislative objectives would also be unlikely to be fair. It is also appropriate to have regard to the interests of the employer, such as enhancing productivity, and the interests of employees in determining whether the group of employees was fairly chosen...” [23] In Construction, Forestry, Mining and Energy Union v ResCo Training and Labour,[13]
[13]ResCo, above n11.
the Full Bench said:
[2014] FWCFB 7560
“[33]
In our view the scope of the Agreement is primarily a matter for the parties in the negotiation for an agreement. Enterprise agreements commonly cover sub-groups of employees in the workforce. Indeed it is very rare in our experience that all employees of a private sector employer would be covered by a single enterprise agreement. A common basis for differentiation is employees of a particular occupation or group of occupations that are considered to be sufficiently similar to warrant coverage under one agreement. We caution against the assumption that because an agreement does not cover all employees there are therefore grounds for challenging approval of the agreement on the basis that the coverage is unfair. It is likely that cases involving unfair coverage will not be common. The coverage clauses considered in Cimeco are not present in many agreements with respect to which approval is sought.
[34] Nevertheless as part of the approval process the tribunal needs to be satisfied that the group of employees covered by the agreement is fairly chosen by reference to the other classes of employee who might have been included in the agreement and the various classes who are included. In determining this question the tribunal is required to consider whether the group of employees is geographically, operationally or organisationally distinct. The inclusion or exclusion of a particular group may operate unfairly in one way or another and this will depend on a consideration of all the circumstances.
[35] In most enterprises there is unlikely to be only one fair manner of selecting the class of employees to be covered by an enterprise agreement. Different scope provisions may be equally described as fair in the sense that no manifest unfairness arises from their application. That is not to say that the parties may have a particular preference or view about the scope and favour a different formulation. The tribunal’s task however is not to determine the scope clause. Its task is to guard against unfairness by being satisfied that the group can be described, in all the circumstances, as fairly chosen.”
[24] We consider that there is a basis for finding that the group of employees covered by the Agreement is operationally or geographically distinct in that the Agreement only covers operators employed by OneSteel Recycling in Victoria, albeit the Agreement does not cover all the OneSteel Recycling sites in that State. Because of the nature and location of the work and the organisation of the OneSteel Recycling business, we are satisfied that the group of employees can be properly described as organisationally, operationally or geographically distinct within the meaning of s.186(3A).
[25] As was submitted by Mr Mead in the appeal proceedings, the development of the OneSteel Recycling business, including acquisitions and divestments, has impacted on the organisational and geographical coverage of the current enterprise agreements at the different sites in Victoria. The statement of Mr Gordon dealt with these developments and, in particular, refers to an agreement reached in 2010 to 2011 between OneSteel Recycling and the AWU for the Brooklyn, Eaglehawk, Ballarat and Somerton recycling sites to operate under one enterprise agreement similar to the enterprise agreements used by OneSteel Recycling in all Australian States other than Victoria.
[26] As was said in Cimeco, the question of whether the group of employees covered by the
Agreement is geographically, operationally or organisationally distinct is not decisive; rather,
[2014] FWCFB 7560
it is a matter to be given due weight, having regard to all other considerations. In this regard, we note that the Commissioner referred in his decision to several other relevant considerations to be taken into account in deciding whether the group of employees covered by the Agreement was fairly chosen. These included that the previous agreement covered the same four sites and that the bargaining representatives for employees have not opposed the coverage of the Agreement.
[27] In the present matter, we consider there was adequate material before the
Commissioner, and additional material before the Full Bench, to allow the Commission to be satisfied that the group of employees covered by the Agreement was chosen in a fair and appropriate way. This includes the consideration of the developments relating to the employer’s business, the industrial history and circumstances of the sites covered, the coverage of the predecessor agreement, the distinct group of employees in the OneSteel Recycling business covered by the Agreement (operators) and the acceptance by the bargaining representatives for the employees of the coverage of the Agreement. We also notethat none of the examples of unfair coverage referred to in Cimeco[14]is relevant to the present
case. There is no basis on the material before us to conclude that the selection of the group of employees was arbitrary or discriminatory or that the selection would have the effect of undermining collective bargaining or would be contrary to the interests of the employer or the employees concerned.
[28] Having regard to the grounds relied upon in the appeal relating to procedural fairness,
as considered above, we decided to grant permission to appeal, to allow the appeal and to set
aside the decision of the Commissioner.
[29] Having regard to the submissions and additional evidence presented in the appeal, we are satisfied the requirements of s.186(3) of the Act are met and that, having regard to all the relevant considerations, including the findings in relation to the matters referred to in s.186(3A) of the Act, that the group of employees covered by the Agreement was fairly chosen.
[30] As there are other matters to be considered in relation to the approval of the Agreement, we decided to refer the application for the approval of the Agreement to Justice Boulton, to be determined having regard to the relevant provisions of the Act and this decision.
SENIOR DEPUTY PRESIDENT
Appearances:
M Mead on behalf of OneSteel Recycling Pty Ltd.
[2014] FWCFB 7560
Hearing details:
2014:
Sydney.
October 23.
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