Osmose Australia Pty Ltd
[2024] FWCA 3373
•26 SEPTEMBER 2024
| [2024] FWCA 3373 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
Osmose Australia Pty Ltd
(AG2024/2926)
OSMOSE AUSTRALIA PTY LTD ENTERPRISE AGREEMENT 2024
| Electrical power industry | |
| DEPUTY PRESIDENT ROBERTS | SYDNEY, 26 SEPTEMBER 2024 |
Application for approval of the Osmose Australia Pty Ltd Enterprise Agreement 2024
On 31 July 2024 an application was made for the approval of an enterprise agreement known as the Osmose Australia Pty Ltd Enterprise Agreement 2024 (Agreement). The Application was made pursuant to s.185 of the Fair Work Act 2009 (Cth) (Act). It has been made by Osmose Australia Pty Ltd (Applicant). The Agreement is a single enterprise agreement.
Following the filing of the application, I wrote to the Applicant setting out some initial concerns in relation to the application and inviting the Applicant to provide further submissions and/or undertakings to address those concerns. The Applicant subsequently responded to that correspondence by providing further written submissions and proposed undertakings.
On 15 August 2024 the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union (CEPU) notified the Commission and the Applicant that it objected to the application for approval. The CEPU filed a Form F18 describing the basis for its objection.
On 22 August 2024 I made directions for the filing of material by the Applicant and the CEPU in support of their respective positions. Written submissions (and, in the case of the Applicant, a further witness statement) were filed and the parties later advised that they were content for the application to be determined on the papers.
Objections
The CEPU raised four objections to the application for approval. First, they said that the Commission could not be satisfied that the group of employees covered by the Agreement was fairly chosen as required by s.186(3) of the Act.
Second, they submitted that the Commission could not be satisfied that the Agreement had been genuinely agreed to by the employees covered by the Agreement as required by s.186(2)(a) and s.188. There were a number of limbs to this second argument. The CEPU put the argument on the basis that:
(i)the employees requested to approve the agreement did not have a sufficient interest in the terms of the Agreement (s.188(2)(a)) and were not sufficiently representative having regard to the employees the Agreement is expressed to cover (s.188(2)(b));
(ii)the Applicant did not take all reasonable steps to ensure that the terms of the Agreement and their effect were explained to employees who will be covered (s.180(5) and s.188(4A));
(iii)taking into account the Statement of Principles (Statement)[1] the Commission could not be satisfied that the Agreement had been genuinely agreed (s.188(1)); and
(iv)there had been non-compliance by the Applicant with the requirements of s. 173(1) which deals with giving notice of employee representational rights (s.188(4)(a)).
Third, the CEPU submitted that the Agreement did not pass the ‘better off overall test’ (BOOT) (s.186(2)(d)).
Fourth, it was submitted that the documents filed by the Applicant raised the issue of whether the Applicant had engaged in pattern bargaining in contravention of s.412 of the Act.
I set out in further detail and deal with each of these objections, in turn, below.
Fairly chosen
It was not in issue that the Agreement does not cover all of the employees of the Applicant.
The Agreement is expressed to cover and apply to the Applicant and each of its employees engaged in the classifications listed in Schedule A to the Agreement[2]. Schedule A lists 7 classifications. According to the evidence of Mr. Cloete, the Applicant’s Director People and Safety, the Agreement covers all employees engaged in ‘field-work’ which is work where employees travel to client sites to perform utility maintenance of electrical power poles.[3] These employees work on a roster[4], report to Operations Managers[5] and, according to the Applicant, form the operations function of the Applicant.
All other employees not covered by the Agreement do not work on a roster, are principally based in office locations, and perform supervisory, administrative, managerial, accounting or other business functions[6].
The Applicant currently only employs employees in the classifications in schedule A of the Agreement in Western Australia, New South Wales and Victoria. It is not recruiting for those roles in other States or Territories.[7] Nonetheless it was accepted by the Applicant that if approved, the Agreement would operate all across Australia in relation to those classifications. The Applicant said that it tendered for work on a national basis and wanted a uniform set of conditions for employees performing like work across the country[8].
The CEPU submitted that the inclusion of employees across all States and Territories undermined any geographic distinctiveness. They said the operational distinctiveness was also questionable because the Applicant operates across multiple jurisdictions each governed by different licensing and legislative requirements which resulted in different work conditions and operational procedures which diminished ‘the notion of a single, cohesive and operationally distinct group.’ Further, the CEPU argued that each contract the Applicant had with different entities ‘likely’ entails unique requirements and that ‘variations in obligations and work practices reinforce that the employees do not constitute an operationally distinct group.’
The Applicant submitted that the use of the word ‘or’ in s.186(3A) meant that a group could be fairly chosen even if it can be established that its distinctiveness is only in respect of one of three categories referred to. They said the work performed by those covered by the Agreement was the same across all locations in the country and geography had no bearing on the conditions of employment for employees proposed to be covered by the Agreement. They pointed out that the CEPU had led no evidence in support of their claim of ‘different local conditions and practices’ that negated the uniform application of employment terms. The Applicant said that absent the Agreement, employees would be covered by the Electrical, Electronic and Communications Contracting Award 2020 (Award) which provides uniform conditions Australia-wide. They said the group had been chosen on an objective basis, namely all employees who perform ‘field work’, and on that basis the Commission could be satisfied that the group had been fairly chosen.
Subsections 186(3) and (3A) provide as follows:
Requirement that the group of employees covered by the agreement is fairly chosen
(3) The FWC must be satisfied that the group of employees covered by the agreement was fairly chosen.
(3A) If the agreement does not cover all of the employees of the employer or employers covered by the agreement, the FWC must, in deciding whether the group of employees covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.
In Aerocare Flight Support Pty Ltd (t/as Aerocare Flight Support) v. Transport Workers’ Union[9] the Full Bench set out a number of principles that could be extracted from the authorities on the meaning of these subsections. They included the following:
the expression “the group of employees covered by the agreement” in s 186(3) refers to the whole class of employees to whom the agreement might in future apply, not the group of employees who actually voted on whether to make the agreement;
a Member’s decision as to whether or not they are satisfied that the group of employees covered by an agreement was “fairly chosen” involves a degree of subjectivity and the exercise of a very broad judgment or value judgment, and in a broad sense can be characterised as a discretionary decision;
once it has been determined that an agreement does not cover all of the employees of the employment, it is necessary for the Commission to make a finding as to whether the group of employees who are covered is geographically, operationally or organisationally distinct, and then take that matter into account and give it due weight, having regard to all other factors;
if the group of employees covered by the agreement is 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;
the selection of the group of employees to be covered on some objective basis, as opposed to an arbitrary or subjective basis, is likely to favour a conclusion that the group was fairly chosen.[10]
In Woodside Energy Ltd v. The Australian Workers’ Union[11] the Full Bench, in its examination of analogous terminology in s.237(3A) relating to majority support determinations, said:
What is required is an overall evaluation as to whether, taking into consideration the geographical, operational and organisational attributes of those parts of the workforce who will not be covered by the proposed agreement, those who will be covered may reasonably be characterised as distinct in any of the prescribed ways. What is not required is a mechanical process of comparison with every segment of the workforce not covered to produce a “yes” or “no” answer in each case as to whether they are geographically, operationally or organisationally distinct.[12]
Based on the evidence before me I am of the view that the group of employees covered by the agreement is operationally and organisationally distinct. I am of this view because the evidence discloses that the employees covered perform a particular type of work, namely undertaking inspections of electrical poles and reinforcing electrical poles,[13] whereas the remaining employees perform different work being administrative, managerial, accounting and other business functions.[14] This is not simply a case of employees performing slightly different tasks in an integrated operation, but rather a situation where they perform a qualitatively different type of industrial or productive activity.[15] I regard the group as organisationally distinct because of the way the work has been arranged for the employer’s operations to be conducted. The employees covered work on a roster system and the other employees do not.[16] The employees covered report to Operations Managers. They work away from the Applicant’s central office locations and perform maintenance work on client sites or in public locations. The remaining employees are principally based in office locations.[17]
I am satisfied that the employees covered by the Agreement have been selected on an objective basis and, having regard to my conclusions above, that they have been fairly chosen for the purposes of s.186(3).
Genuinely agreed – Sufficient interest and sufficiently representative
Section 188(2) provides as follows:
Sufficient interest and sufficiently representative
(2) The FWC cannot be satisfied that an enterprise agreement has been genuinely agreed to by the employees covered by the agreement unless the FWC is satisfied that the employees requested to approve the agreement by voting for it:
(a) have a sufficient interest in the terms of the agreement; and
(b) are sufficiently representative, having regard to the employees the agreement is expressed to cover.
The CEPU’s contended that there were concerns as to whether the Applicant’s ‘communication efforts’ were sufficient, particularly for employees outside of Western Australia (WA), New South Wales (NSW) and Victoria (Vic), to ensure employees had a ‘genuine understanding’ of the Agreement and said that there was a lack of clarity as to how those employees were informed about the bargaining process and had meaningful participation in the vote.
The Applicant gave unchallenged evidence that it did not currently employ employees outside of WA, NSW or Vic and that although it was a national business, it was not currently recruiting such employees and has no immediate intention to do so.[18] The CEPU’s concerns about such employees are not an impediment to approval in these circumstances since there are no such employees that form part of the group of employees requested to approve the agreement.
Moreover, the Applicant gave unchallenged evidence that the group of employees requested to approve the Agreement were employed in the full range of classifications in the Agreement and would be paid at the rates provided for in the Agreement for those classifications[19]. The evidence was also that those employees were employed in all of the forms of employment provided for by the Agreement, namely full-time, part-time and casual employment. The employees requested to approve the Agreement clearly had a stake in the outcome of the vote and were sufficient in number, classification and type of employment to be representative having regard to the scope of the Agreement’s coverage. I am satisfied on the basis of the evidence that the employees requested to approve the Agreement have a sufficient interest in it and are sufficiently representative having regard to the employees the Agreement is expressed to cover.
Genuinely agreed – reasonable steps to explain
The CEPU raised concerns that the sufficiency of the explanation required by s.180(5) was questionable and drew specific attention to the 15 employees from non-English speaking backgrounds and 3 employees under the age of 21 years employed at the time who would be covered by the Agreement. They said that the Commission should consider whether there were reasonable steps not taken, such as providing translations and personalised explanations and in the case of younger employees, have regard to the likelihood that such employees will be less familiar with industrial norms and the consequences of explanations.
The Applicant referred to and relied on the steps that had been taken to explain the terms and their effect which included:
· providing employees with a tracked changes copy of the Agreement identifying the differences between that document and the current agreement;
· providing employees with a comprehensive explanation document in plain English that included a summary of the changes from the current agreement to the proposed agreement and relevant changes to the Award since the current agreement was made;
· allowing employees 11 days to consider the proposed agreement and explanatory material;
· providing employees with an opportunity to attend verbal explanation sessions; and
· providing employees with an opportunity to have a private discussion with management about the Agreement.
Section 180(5)(b) of Act requires the explanation of the proposed enterprise agreement to be provided in an appropriate manner taking into account the particular circumstances and needs of the employees. The Applicant addressed each of the matter in paragraph 14 of the Statement which sets out matters that the Commission may take into account in addition to the circumstances and needs of the employees referred to in s.180(6). They argued that the explanation was provided in an appropriate manner having regard to those factors.
In relation to employees from culturally and linguistically diverse backgrounds the evidence of the Applicant was:
· As the employees work in electrical or electrical adjacent work, the Applicant has strict safety protocols and it is an inherent requirement of these roles that all employees are fluent in English (speaking, reading and writing);
· The employees are ‘customer-facing’ and must be able to speak fluent English to communicate with customers;
· Employees are required to write reports and risk assessments as part of their core duties;
· As part of the Applicant’s recruitment process English language competency is assessed to ensure employees can perform the inherent requirements of the roles.[20]
The Applicant argued that in circumstances where the explanation was adequate for all employees there was no need for a differentiated method of explanation for any one or more of the persons referred to in s.180(6)[21]. They pointed to the failure of the CEPU to lead any evidence to suggest there was a lack of comprehension on the part of any employees or that the steps that were taken were deficient. Finally, the Applicant said that the fact that there had been three prior votes on the Agreement, including one unsuccessful vote, demonstrated that employees understood what was being proposed and would not have been disadvantaged by any error in the explanation process.
I have considered the terms of the documents that provided a written explanation of the terms of the Agreement and their effect. The documents are clear and comprehensive. They include a tracked-change version of the current agreement to the proposed agreement and a separate explanation document describing the changes to the agreement and the changes to the underpinning modern award. These are reasonable steps to take and appropriate having regard to the needs and circumstances of employees including younger employees. I have taken into account the various factors set out in paragraph 14 of the Statement and the Applicant’s submissions in relation to each of them and am of the view that the explanation was given in an appropriate manner having regard to those factors.
I accept the unchallenged evidence of the Applicant as to the inherent requirements of the roles of the employees to be covered by the Agreement and their level of proficiency in the English language. I note that there was no evidence that concerns had been raised at any stage by employees about the explanation of the Agreement or the appropriateness of the explanation. I also note that employees had an opportunity to attend a verbal explanation session and a private discussion about the terms of the Agreement.
In the circumstances of this case, I am satisfied that all reasonable steps have been taken by the Applicant in accordance with s.180(5) of the Act[22].
Genuinely agreed – Statement of Principles
Section 188 of the Act requires the Commission to take into account the Statement made under s.188B in determining whether it is satisfied that the Agreement has been genuinely agreed to by the employees covered by the Agreement.
The CEPU argued that the Applicant’s efforts to inform employees, particularly those outside WA, NSW and Vic, were inadequate resulting in a significant portion of the workforce being unaware of the bargaining process. Secondly, they submitted that employees were not adequately informed of their right to representation. Thirdly, they said the 11-day period between the distribution of the Agreement and the vote was insufficient, particularly for those who may have had limited access to the documentation. Fourthly, they said the terms of the Agreement had not been adequately explained, particularly for persons from a non-English speaking background and younger persons. Finally, they submitted that the voting process was not ‘genuinely inclusive or representative of the employees the agreement is expressed to cover, particularly for employees in states other than WA, NSW and Vic.’
Paragraph 1 of the Statement sets out that the employer should ensure that employees of the employer who will be covered by a proposed enterprise agreement and are employed at the notification time for the agreement (as defined in section 173(2) of the Act) are informed:
a.that the employer is bargaining for an enterprise agreement and of the proposed coverage of the agreement, and
- of the employees’ rights to be represented in bargaining for the agreement, including by an employee organisation or by another bargaining representative of their choice, and how to exercise those rights,
at such a time and in such a manner that the employees have a reasonable opportunity to be represented in bargaining for the agreement.
Paragraph 2 provides that where s.173(1) applies to an employer, the employer will be taken to satisfy paragraph 1 if, subject to paragraph 3, the employer gives a notice of employee representational rights in accordance with sections 173 and 174. The evidence shows that the Applicant informed employees that it was bargaining for a proposed enterprise agreement and informed employees of their right to be represented by a bargaining representative when it distributed the Notice of Employee Representational Rights (NERR) to all eligible employees who were to be covered by the Agreement and who were employed at the notification time on 12 - 13 June 2024. There was no suggestion that the Applicant had misled the employees as to their rights to be represented. Paragraph 3 has no application here. The evidence confirmed that there were no employees who were employed in locations outside of WA, NSW and Vic at the notification time of the Agreement. I conclude that the Applicant complied with the Statement in relation to the requirements to inform employees that bargaining was occurring and that employees had a right to be represented.
Paragraph 4 of the Statement sets out that an employer should provide employees with a reasonable opportunity to consider a proposed enterprise agreement before voting on it, so that the employees can vote in an informed manner.
The Statement confirms at paragraph 5 that an employer will be taken to have satisfied paragraph 4 if, a reasonable time period before the start of the voting on the proposed agreement, the employer provides to employees who are entitled to vote on the agreement:
a.a full copy of the agreement, and
- a full copy of any other material incorporated by reference in the agreement.
The Statement also confirms that a reasonable time period will include at least 7 full calendar days before day on which voting starts and that the material referred to in paragraph 4 can be given in hard-copy, by electronic means or by combination of the two methods, provided the employee has reasonable opportunity to access and read the material during the whole of the period from the time the material is provided until completion of the voting process.
The evidence shows that the employees were provided with a copy of Agreement (and an explanatory document and information about the vote) on 11 July 2024. The employees were advised that the vote would occur on 22 and 23 July 2024. They had 10 clear days to consider the Agreement and had access to it during this period. This is a reasonable period for the purpose of paragraph 6 of the Statement. I note that the Agreement operates to the exclusion of the Award except where specifically stated in the Agreement[23]. Clause 35 of the Agreement incorporates the provisions of the Award relating to Community Service Leave and Family and Domestic Violence Leave. The employees were provided with access to the Award via a link in the explanatory document sent on 11 July 2024.
I am satisfied that the employees had a reasonable opportunity to consider the proposed enterprise agreement before voting on it in accordance with the Statement.
My conclusions on the reasonable explanation of the terms of the Agreement are set out in paragraphs [29] to [31] above. No question of non-compliance with the Statement arises under this heading.
I am also satisfied on the evidence that the employees were given a reasonable opportunity to vote in a free and informed manner in accordance with paragraphs 15 and 16 of the Statement. My conclusion on the representative nature of the employees asked to vote on the Agreement is set out at paragraph [24] above. To the extent that the CEPU’s concern relates to employees in states other than WA, NSW and Vic it is misplaced because there were no such employees.
Genuinely agreed – non-compliance with NERR requirements
The CEPU submitted that there were ‘significant gaps’ in the distribution of the NERR. The nature of those alleged gaps was not identified. The NERR was distributed on 12 and 13 June 2024 to employees who would be covered by the Agreement and who were employed at the notification time. The requirements of ss.173(1), 174 and 188(4)(a) have been met.
Better off overall test (BOOT)
The CEPU raised a concern that the lack of overtime payments for casual employees meant that the Agreement did not satisfy the BOOT. The Commission raised a similar concern with the Applicant following the initial assessment of the terms of the Agreement. The Applicant provided a written undertaking which adequately addresses this concern by making provision for overtime payments for casuals in similar terms to clause 20.1(b) of the Award. By the terms of the undertaking the overtime penalties are to be applied to the aggregated rate of pay rather than the award rate, the former being significantly higher than the latter. There is a separate clause that provides for penalty rates for casual employees working on Sunday[24]. There are no residual BOOT concerns in relation to this aspect of the Agreement.
The CEPU contended that clause 26(a) of the Agreement extends ordinary hours from a maximum of 38 hours per week to an average of 38 to 152 hours over a four-week period but omits provisions contained in the Award regarding the limits on maximum daily hours, requirements for breaks between shifts and health and safety provisions for extended hours. They also argued that clause 26(b) of the Agreement extends the span of ordinary hours under the Award in length and to include weekend work yet omits provisions in the Award regarding twelve-hour shifts and characterises weekend hours as ordinary time hours.
The Applicant accepted that the span of hours is increased under the Agreement but pointed to Clause 27 of the Agreement. That clause provides that employees are entitled to weekend penalty rates, on the aggregated rates, for ordinary hours worked on weekends. The Applicant said in that case, employees would not be financially disadvantaged as a consequence and would obtain an additional financial benefit by having superannuation entitlements paid on ordinary hours worked on the weekend. I accept that the clause alleviates any potential financial disadvantage associated with characterising hours worked on weekends as ordinary hours.
Clause 13.5 of the Award permits the employer and a majority of employees to agree to working ordinary hours not exceeding 12 on any day, subject to suitable roster arrangements and proper health monitoring and supervision. The Agreement contains no equivalent limitation. Nor does the Agreement contain the requirement that appears in the Award that employees are to have ten consecutive hours off duty between shifts. There are other clauses in the Agreement that the Applicant accepted were less beneficial when compared to the Award or which do not appear in the Award. These include payments for working during meal breaks, accrual of rostered days off and the payment of various allowances. There are also clauses which are more beneficial than the Award. The aggregated rates of pay provided for in clause 6 and Schedule A, when modelled against the Award rate including relevant allowances and leave loading over a standard 38-hour week, provide for significantly higher rates. There is an additional paid rest break provided for in the Agreement, a higher meal allowance when living away from home with accommodation provided and an increased minimum engagement period for casual employees.
I have considered the terms of the Agreement in its totality. I have taken into account those terms which are more beneficial and those which are less beneficial than the Award, including all the matters raised by the CEPU, and the views expressed by the CEPU in relation to the BOOT. I have also taken into account the terms of the undertakings that have been provided. On the basis of these matters, my evaluative assessment which has been undertaken on a global basis, is that the BOOT has been satisfied, as at the test time, for each award covered employee and each reasonably foreseeable employee in this case.
Pattern bargaining
The CEPU raised pattern bargaining as a potential obstacle to approval. They said this was evidenced by the declaration in support of approval provided by the Applicant which asserted that the Agreement was ‘substantially identical’ to another agreement, the Logsys Power Services Pty Ltd Enterprise Agreement 2018 (2018 Agreement). At the same time, the CEPU contended that there were significant differences between the two agreements. The Applicant denied there had been any pattern bargaining and said it was formerly Logsys Power Services Pty Ltd and that the Agreement would replace the 2018 for those employees covered by the Agreement. The argument was not seriously developed and in any event, there was no evidence that there was a course of conduct involving a bargaining representative for 2 or more proposed enterprise agreements[25]. The CEPU’s submission on this point is rejected.
Workplace delegates’ right term
The Agreement does not contain a workplace delegates’ rights term as required by s.205A(1) of the Act. Bargaining for the Agreement commenced before the requirement to include such a clause took effect. In response to a concern raised by the Commission, the Applicant provided an undertaking to the effect that the delegates’ rights term, clause 26A of the Award, would be taken to be a term of the Agreement.
Conclusion
The Applicant’s undertakings are set out in Annexure A. The views of the bargaining representatives have been sought as to these undertakings. I am satisfied that the undertakings will not cause financial detriment to employees or result in substantial changes to the Agreement. The undertakings are taken to be terms of the Agreement.
I am satisfied that each of the requirements of ss.186, 187 and 188 has been met.
The Agreement is approved and will commence in accordance with the terms of the Agreement and s.54 of the Act and continue until its nominal expiry date, being 4 years from the date of approval, on 26 September 2028.
DEPUTY PRESIDENT
[1] Section 188B.
[2] Clause 3 of the Agreement.
[3] Cloete Statement paragraph 16.
[4] Ibid at [17].
[5] Ibid at [19].
[6] Ibid at [20].
[7] Ibid at [22] and [23].
[8] Ibid at [24].
[9] (2017) 270 IR 385; [2017] FWCFB 5826.
[10] Ibid at [26], footnotes omitted.
[11] [2023] FWCFB 44.
[12] Ibid at [44].
[13] Cloete Statement at [18].
[14] Ibid at [20].
[15] See QGC Pty Ltd v. The Australian Workers’ Union[2017] FWCFB 1165 at [44].
[16] Cloete Statement at [17] and [20].
[17] Ibid at [20] and [29].
[18] Cloete Statement at [21] and [23].
[19] Form F17B Question 27.
[20] Cloete Statement at [46] – [48].
[21] Appeal by McDonalds Australia Pty Ltd [2010] FWAFB 4602.
[22] See Australian Workers’ Union v Rigforce Pty Ltd t/a Rigforce [2019] FWCFB 6960 at [35]; CFMMEU v Ditchfield Mining Services Pty Limited [2019] FWCFB 4022 at [71]-[72] and Construction, Forestry, Maritime, Mining and Energy Union v Mechanical Maintenance Solutions Pty Ltd [2022] FCAFC 15.
[23] Clause 5.
[24] Clause 27(d).
[25] Section 412(1).
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