[2021] FWCA 5187

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Petrofac Facilities Management Limited
(AG2021/5196)

AUSTRALIAN FACILITIES MANAGEMENT ENTERPRISE AGREEMENT 2021

Oil and gas industry
COMMISSIONER WILSON	MELBOURNE, 31 AUGUST 2021

Application for approval of the Australian Facilities Management Enterprise Agreement 2021. Whether group covered by agreement is fairly chosen. Whether agreement is genuinely agreed.

[1] Application for approval of the Australian Facilities Management Enterprise Agreement 2021 (the Agreement) was made to the Fair Work Commission (the Commission) by Petrofac Facilities Management Ltd (Petrofac or the Applicant) on 18 May 2021. The scope of the Agreement is stated in clause 3.1 in the following way:

“3. APPLICATION AND OPERATION OF AGREEMENT

1. This Agreement will apply to the Company and the Company's Employees engaged in the classifications set out in Schedule 1 of this Agreement who are employed to perform work on a Site that would, but for the creation of this agreement, have been covered by the Hydrocarbons Industry (Upstream) Award 2020.

…”

[2] This decision concerns an objection to the Commission’s approval of the Agreement by the Australian Workers’ Union (AWU) on the ground the group to be covered by the Agreement was not fairly chosen; that it has not been genuinely agreed including that the employer failed to take all reasonable steps to explain the terms of the Agreement and the effect of those terms; and that the better off overall test is not met.

[3] Submissions and evidence pertinent to these matters were received from Petrofac, three employee bargaining representatives and the AWU. A hearing in relation to these matters was conducted by me on 21 July 2021.

[4] Mr Alex Mossop of Counsel, appeared with permission for Petrofac, instructed by Clayton Utz. Mr Zach Duncalfe, National Legal Officer appeared for the AWU. Four witnesses gave evidence on behalf of Petrofac; Ms Anna Keen, its HR manager and each of the three Employee Bargaining Representatives, Mr John Collidge, Mr Kevin Dowd and Mr Matt Bain. An AWU organiser, Mr Douglas Heath, gave evidence on behalf of the union.

[5] For the reasons set out below I am satisfied the Agreement was genuinely agreed and that since the other statutory criteria for approval of an agreement have been met the Agreement may be and is approved.

THE COMMISSION’S PRE-HEARING CONCERNS

[6] In accord with the Commission’s usual process after an application for approval of the Agreement is made, the Agreement’s conformity with the Act’s approval obligation was considered after which a number of matters of concern were identified to the parties in correspondence dated 25 May 2021. Those matters together with Petrofac’s responses may be summarised thus:

Pre-approval Requirements

• Coverage: there is a variation between the coverage clause in the Agreement and the coverage of the Notice of Employee Representational Rights (NERR). The Agreement states the Agreement will apply to employees engaged in classifications set out in Schedule 1 whereas the NERR states that the Agreement proposes to cover employees who fall under a classification listed in the NERR. The NERR omits certain classifications under Schedule 1 of the Agreement, including: service technician and general service operator. Petrofac confirm that at the time the NERR was issued until the date of responding there are no employees employed under the classification of Service Technician or General Services Operator.

• Vote Details: It is unclear from the Form F17 Employer’s Support Declaration if employees were advised of the method of vote prior to the vote taking place. Petrofac provided to the Commission a copy of the email distributed on 6 May 2021 to employees notifying of the method of vote.

Terms of the Agreement

• Definition of a shiftworker for the purposes of the National Employment Standards (NES): The Agreement does not describe or define an employee as a shiftworker “for the purposes of the NES”, in accordance with s.187(4) and s.196 of the Act. Petrofac provided an undertaking expanding the definition for the purposes of the NES.

• Stand down:Clause 23(1) of the Agreement provides that the employer may stand down an employee where there is a machinery breakdown or other conditions which prevent the safe performance of the work facility. As clause 23(1) does not specify that the reasons for the stand down are required to be reasons for which the employer cannot reasonably be held responsible, this appears to be inconsistent with s.524(1) of the Act. Petrofac provided an undertaking specifying the reasons for the stand down in compliance with s.524(1).

• Dispute settlement:Clause 25(8) of the Agreement provides that the Fair Work Commission when settling a dispute in accordance with the dispute resolution procedure, must not make a determination which is inconsistent with the Agreement. An undertaking has been provided amending Clause 25(8) to:

“Provided that the Fair Work Commission must not make a determination which is inconsistent with:

(a) any other legislative obligations”.

• Incorporated Model Flexibility Term and Model Consultation Term:The front page of the Agreement, as well as Clauses 24(1)(b) and (c) provide and indicate that the Agreement incorporates the Model Flexibility and Model Consultation Terms at Schedule 2.3 of the Fair Work Regulations however the actual terms were not included in the text of the Agreement. The Model Terms are to be inserted as terms of the Agreement.

[7] I am satisfied for the purposes of s.190 that the undertakings may be accepted by me and that none are likely to cause financial detriment to any employee covered by the Agreement or to result in substantial changes to the Agreement, noting that no individual bargaining representative argued to the contrary. The views of each individual bargaining representative about the proposed undertakings were sought and no responses were received.

BACKGROUND

[8] The background to the Agreement is that Petrofac, being a global oil and gas services provider based in the United Kingdom, has not had a significant Australian presence until recently, other than a unit based in Brisbane. Ms Keen addressed the company’s background and its Australian objectives in this way in her witness statement, as well as how it came to engage the three employee bargaining representatives:

“I was offered the Human Resources Manager position in August 2020. This in line with the business decision to strengthen our services offer to the Australian Energy sector. This included Operations and Maintenance, Well Engineering, New Energy and Decommissioning services. Petrofac had already built an experienced Asset Integrity team based in Brisbane, Australia since 2011.

Petrofac management had set an objective to build the Petrofac brand in the Australian Energy sector. As part of this strategy, to build an employee/recruitment database of offshore and onshore operations and maintenance personnel. In 2020 Petrofac had an opportunity in the Perth Basin where we were looking to place some operations and maintenance personnel for a small operator. Petrofac were approached by other operators who were looking for local support to back fill temporary roles due to COVID-19 related travel issues. We placed an EOI on Seek on 11 September 2020.

Petrofac have had an overwhelming initial response with 1,750 resumes (to date we have over 4,000). I was tasked with working through the applications and screen calling the applicants. I spoke to over 900 applicants in person, and I quickly realised there was a common frustration amongst the candidates I had spoken to. The issues included unsteady work patterns and only having casual swings, job security, culture, diversity and inclusion, flexibility were all openly shared and discussed at length.

The ability for Petrofac to take a fresh approach was evident. Our first step was to secure contracts to work in the Australian Energy sector. Petrofac started to discuss employing a small team of personnel to allow us to develop and better understanding of what we need to do to build from the onset, to allow Petrofac to have a safe, strong and engaged workforce who are part of a wider operations team that could collectively win and maintain work in the onshore and offshore sectors of Australia.

The selection criteria for the operational readiness team, focused on selecting experienced strong technical personnel that have a positive attitude, onshore and offshore experience, good communication and leadership skills. This allowed us to challenge our thinking and fully understand the recurring issues gathered from our screening calls over the last few months. Petrofac offered Casual Contracts to the selected personnel all with no client contracts in place, to support the objectives set by Petrofac senior management. Petrofac engaged Kevin Dowd - Electrical & Instrument Technician, John Collidge - Rigger Scaffolder, Rope Access Level 3 and Matt Bain - Mechanical Technician, Rope Access Level II”. 1

[9] The Notice of Employee Representational Rights was first provided on 18 March 2021. 2 After bargaining for the Agreement was complete, the access period commenced on 7 May 2021 and the Agreement was made on 18 May 2021.

[10] The AWU argues in relation to the circumstances that the Agreement was not genuinely agreed for several reasons, including that the three Employees cannot be said to have a stake in the Agreement’s terms and conditions, not least of all for the reason that it did not apply to them. 3

[11] It is also to be noted that at the time the Agreement was made, there were only three employees within its coverage, being Mr Collidge, Mr Dowd and Mr Bain (referred to in this decision as the Employees). When the Agreement was made two of the three Employees voted for it and one did not. 4

CONSIDERATION

Fairly chosen

[12] It is convenient to deal first with the AWU’s “fairly chosen” contention. The AWU argues the three Employees who bargained for and subsequently made the Agreement “are properly characterised as management and on the evidence appear to be concerned with the company’s interests”. 5

[13] Petrofac submits this contention is misconceived, 6 a proposition with which I agree.

[14] Section 186(3) of the Act requires that before approving an enterprise agreement the Commission is “satisfied that the group of employees covered by the agreement was fairly chosen”, with “fairly chosen” determined with regard to the following:

“186 (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.”

[15] The AWU’s argument in this regard goes to whether the Employees who bargained for and made the Agreement were entitled to do so, that is they were not within the group covered by the Agreement. The argument is not that there were employees who may have been entitled to bargain for and make the Agreement but for an artificial choice of the coverage group. In those respects, the submission is misconceived. If the Employees are not amongst those who will be covered by the Agreement, then it is not genuinely agreed.

[16] As a result, I do not find there is a question about whether the group of employees covered by the agreement was fairly chosen.

Genuine agreement

[17] The AWU’s objection that the Agreement was not genuinely agreed is in two parts:

• The pre-approval requirement in s.180(5) was not complied with for several reasons associated with the use of Site Addendums to contractually set working conditions; what could be an employee’s misapprehension of the effect of the Agreement; and representations to employees about a wages comparison between the proposed Agreement and the reference Award. 7

• The making of the Agreement is inauthentic given only three employees negotiated and voted on it; 8

• The three Employees who participated in the vote for the Agreement were not performing work covered by it. Furthermore, Petrofac itself was not at the time the Agreement was made performing any work falling within the scope of the Agreement. 9

[18] The pre-approval matters are considered in the section which follows. The second and third objections are considered together owing to the need to take into account similar matters.

The pre-approval objections

[19] The preapproval objections rely on the submission that what was explained to the Employees about the terms of the agreement and the effect of those terms was insufficient to satisfy the obligation of s.180(5). Section 180, so far as is relevant to this matter provides as follows:

“180 Employees must be given a copy of a proposed enterprise agreement etc.

Pre-approval requirements

(1) Before an employer requests under subsection 181(1) that employees approve a proposed enterprise agreement by voting for the agreement, the employer must comply with the requirements set out in this section.

Employees must be given copy of the agreement etc.

(2) The employer must take all reasonable steps to ensure that:

(a) during the access period for the agreement, the employees (the relevant employees) employed at the time who will be covered by the agreement are given a copy of the following materials:

(i) the written text of the agreement;

(ii) any other material incorporated by reference in the agreement; or

(b) the relevant employees have access, throughout the access period for the agreement, to a copy of those materials.

(3) The employer must take all reasonable steps to notify the relevant employees of the following by the start of the access period for the agreement:

(a) the time and place at which the vote will occur;

(b) the voting method that will be used.

(4) The access period for a proposed enterprise agreement is the 7-day period ending immediately before the start of the voting process referred to in subsection 181(1).

[(4A) – (4C) omitted]

Terms of the agreement must be explained to employees etc.

(5) The employer must take all reasonable steps to 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.

(6) 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;

[20] The AWU stresses that the obligation within s.180(5) is for Petrofac to take all reasonable steps to give the required explanation. 10

[21] The AWU raise three pre-approval objections:

• For reasons associated with the use of Site Addendums, Petrofac gave an incorrect and misleading explanation of the rates of pay and allowances provided by the Agreement. The effect of the explanation given is to cause the Employees to have an incorrect belief about the operation of the Agreement; 11

• Petrofac’s explanation to employees, that the rates of pay in the Agreement are 20% above the rates of pay in the reference Award was materially incorrect; 12

• For the reason it is unclear whether all Employees attended each of the information sessions, Petrofac has not provided sufficient information for the Commission to be satisfied the Applicant took all reasonable steps to give the requisite explanation. 13

The Site Addendum ground

[22] The context of the union’s pre-approval requirement objection is that the Agreement provides baseline employment conditions only and it being the case that “the rates of pay have been set by the company with the sole intention of having the agreement pass the better off overall test and are not at all reflective of the industry rates of pay that comparable companies in the sector pay. The result of baseline enterprise agreements is inevitably a reduction in the terms and conditions of workers in the sector as a whole”. 14

[23] In some but perhaps not all cases the rates Petrofac intend employees to receive are not specified in the Agreement, but rather may be found in “Site Addendums” which evidently are to operate contractually and outside of the Agreement’s terms. The Agreement defines a Site Addendum in this way:

“Site Addendums apply additional terms of employment and benefits specific to certain working sites beyond the terms outlined within the Enterprise Agreement. Site Addendums are outlined within the Employees contract of employment”. (cl.1 (Definitions))

[24] Several other references are made within the Agreement to the operation of Site Addendums:

• Cl.1 (Definitions) – definition of Facility Position Allowance:

“Facility Position Allowances will be contained on Site Addendums if applicable. Facility Position Allowances increase the remuneration for Employees based on the working site that they are employed or required to work and the position they are employed to carry out. Facility Position. Allowances are a per annum addition to the Ordinary Rate of Pay.”

• Cl.1 (Definitions) – definition of Overcycle Allowance:

“When an Employee is required to return to work early during the Employee's Off-duty period, the Employee will be paid their Annual Salary and an additional penalty (Overcycle Allowance) of two times (2.0x) the Day Rate for each full additional day worked (a total of 3.0x rate inclusive of 2.0x Overcycle plus 1.0x Annual Salary).

If an additional Overcycle rate applies this will be captured within the Site Addendum.”

• Cl.3 (Application and operation of Agreement):

“4. The intent of this Agreement is to apply the minimum terms of employment entitlements between the Company and the Company's Employees. Each Site will have varying additional entitlements which will benefit the Employees, these additional entitlements will be captured within Site Addendums.

5. Petrofac will engage in consultation with two fulltime O&M trades employees to maintain industry standards across new site addendums.”

• Cl.13 (Working at offshore and remote sites):

“13.1. Offshore and Remote Site Allowances

1. For employees required to work on offshore or remote sites an offshore or

remote allowance will be paid. The value of the offshore/remote allowance is

contained within the Site Addendum referred to within subclause 14.1.2.

2. Offshore/remote allowance is to be paid for each on duty shift worked on the

offshore/remote site.

13.2. Travel Expenses to Offshore and Remote Site

1. Whilst the employee is travelling to /from their point of hire and residential

address to work at an offshore site reasonable travel expenses will be

reimbursed up to a capped value.

2. To be eligible to claim the travel expenses upon completion of an expense

claim accompanied with receipts.

3. The travel expenses reimbursement value is contained within the Site

Addendum referred to within subclause 14.1.2.

13.3. Cabins

1. For employees who are appointed as core crew on an offshore site every

attempt will be made to ensure that a single berth cabin will be assigned for

accommodation to the extent of the Company's control.

2. Where there is a requirement for cabin sharing at offshore sites for core crew

a Shared Cabin Allowance may apply. If a Shared Cabin Allowance is

applicable this will be contained within the Site Addendum referred to within

subclause 14.1.2.”

• Cl.14 (Remuneration):

“14.1. Ordinary Rates of Pay

1. The rates of pay set out in Schedule 1 are a composite and include, but are not limited to, payments for any shift work penalties, disabilities and like allowances, penalty rates, overtime payments, Public Holidays, leave loading and all other allowances or penalties applicable under the Award unless otherwise detailed in this Agreement.

2. Employees will be entitled to additional Site-specific pay rates, allowances and/or penalties, as set out in the relevant Site addendum and/or contract of employment, as amended or varied from time to time.”

(Remainder of clause omitted)

[25] It is the AWU’s contention that the fact the actual content of the Site Addendums was not known to the Employees when they bargained for the Agreement means they could not have been properly informed about the terms of the Agreement and the effect of those terms. The AWU also concludes that such explanation as was given must be wrong, since the employees’ understanding of the operation of the Agreement is inconsistent with its actual operation. In this regard, it gave the example of Mr Collidge whose short witness statement addressed how he understood the Agreement to work as well as the context in which the Agreement was negotiated and made. In these respects, Mr Collidge stated:

“It has been a drawn out process as we went back and forth to cover different aspects of the agreement that will benefit both employee and employer alike. Management has backed our advice that the way forward for the company is to treat our employees better than any competitors. It is this aspect that will allow us to attract the best personnel in the industry to formulate and keep a great team, and more importantly, culture. I believe this is reflected in the EA that we have submitted.

I also have expressed my concern that the EA could be perceived as, so called, Base Line but that is where I would leave it, simply as "perceived." Investigated further it is clear there is a deliberate and considered emphasis on the addition of specific site addendums that contain a "Facility Position Allowance" and "Offshore Allowance" that make up the Total Annual Salary.

Furthermore it was negotiated that any new site addendums to be released with growing or potential contract awards must be formulated with a minimum of two employee representatives. It was explained to us in good faith that the afore mentioned EA was considered to cover our workforce of not only offshore but also onshore personnel on the many different potential facilities around Australia.” 15 (underlining added)

[26] The AWU draws from this that Mr Collidge holds a mistaken view about what employees would actually receive if the Agreement was approved; instead of receiving only the benefits set out in the Agreement, it views Mr Collidge as believing employees would always benefit from a Site Addendum, with it being submitted that:

“Mr Collidge is clearly under the impression that it is not possible for workers engaged under the Agreement to receive anything less than what he and the employer terms a ‘total annual salary’ that contains significant payments that an employee is not entitled to in accordance with the terms of the Agreement. Mr Coolidge is clearly mistaken.” 16

[27] Petrofac argue that such impression cannot be reasonably drawn from the evidence of the Employees, including Mr Collidge. The latter accepted in cross-examination that the Site Addendums were not “written … in stone in the agreement” and that it was possible for an addendum to provide only a minor variation in allowances. 17

[28] The obligation on Petrofac was to explain the terms referring to Site Addendums and the effect of those terms, which it did. Because it was not in a position to give specific, actually operating documents to the Employees it gave examples which showed them to include elements not inconsistent with the explanation given, or the matters referred to in bargaining.

[29] The bargaining minutes on the subject include an explicit reference to the Site Addendums providing for conditions above those in the Agreement:

“• The proposed Enterprise Agreement will work in conjunction with the Hydrocrarbons Industry (Upstream) 2020 Award, and Contract of Employment including specific site addendums

• The Enterprise Agreement will work across multiple facilities in the same way that the Award does. It is a blanket terms of employment How does the EA work across the multiple facilities. With different conditions (eg some sites would have higher pay or allowances). This would be covered by the addendums on top of the Award. The Addendum and the Contract are also legally binding with the Agreement being the base terms of employment, and individual contract terms are above.” 18

[30] The Site Addendums are referred to in the comparison table provided to employees at item 14 dealing with the matter of Remuneration:

“There is a link to the Agreement to Facility Position Allowances which utilize the Agreement as the base terms of employment, and the Addendum includes allowances and benefits above and beyond the Agreement.” 19

[31] While the same document explains each of the matters within the Definitions clause, categorising them it omits to refer to the definition of “Site Addendum”. To the extent that it is necessary, I am satisfied that this omission constitutes a minor procedural or technical error for the purposes of s.188(2)(a). That this is the case is especially so given the centrality of the addendums in bargaining and the other material provided to employees about the Site Addendums I am satisfied that the error is properly characterised as a minor procedural error; that the Agreement would have nonetheless been genuinely agreed had it not been made; and that the employees covered by the Agreement were not likely to have been disadvantaged by it. 20 In forming my opinion on the subject I have had regard to the content of the Form F17 Employer’s Support Declaration and all the explanatory material before the Commission.

[32] I am satisfied from the totality of the explanation given by Petrofac on the subject of the Site Addendums the terms of the Agreement were explained to employees as they related to the Site Addendums and the effect of those terms.

The 20% uplift ground

[33] The AWU argues the following in relation to the wages provided in the Agreement as compared with the Hyrdrocarbons Industry (Upstream) Award 2020 (Hydrocarbons Award):

“50. In addition to the employer’s reliance on the proposed ‘site addendums’ in explaining the terms of the Agreement to employees, the employer’s insistence that the rates of pay in the Agreement are and will remain 20% above the relevant rates of pay in the Hydrocarbons Industry (Upstream) Award 2020 (Award) is clearly incorrect.

51. Not only are the rates of pay in the Agreement not 20% above the relevant rates of pay in the Award (which was contained in both the explanation given and in a term of the Agreement itself), the Agreement permits roster patterns the working of which will result in the Agreement providing a lesser benefit than the Award.” 21 (underlining added)

[34] In its closing submissions the AWU backed away from its concern being that the rates of pay in the Agreement were not at least 20% higher than the Award and recast its concern as being in relation to a comparison between annualised salaries in the two instruments:

“The annualised salaries in the Agreement are not currently 20% greater than those in the Award. This is true for an annualised salary for an even time roster as much as it is for an annualised salary for a non-even time roster.” 22 (underlining added)

[35] Clause 14.1.5, within the Remuneration clause, provides there will be an uplift to a number of things:

“5. The Company will pay as a minimum the applicable base ordinary hourly rate of the Hydrocarbons Industry (Upstream) Award 2020 equivalent, plus twenty percent, on the hourly rates of pay, or composite annualised salaries, for time worked pursuant to the designated roster.”

[36] Petrofac’s explanations to employees on the subject of the 20% uplift include these statements in the 6 May 2021 Comparison Table (with the following extracted by me):

Comments	Comparison between Agreement and Award/Meaning and effect of the EA provision being made
In relation to cl.3 (Application and Operation of Agreement)	“Within Clause 3(5) reference is given to the ordinary rate of pay for each employee covered by the agreement maintaining a 20% remuneration increase over the relevant award classification.”	“Annualised salary is 20% above the Award level”
In relation to cl.13.1 (Offshore and Remote Site Allowances)	“• Employees who are required to work on offshore or remote sites an allowance will be paid for each day worked at the facilities, in addition to the salary outlined within the Ordinary Rates of Pay • When travelling”	“• Better Off • The ordinary rates of pay are 20% above the BOOT, the Allowances for working at Offshore and Remote sites are in addition to the Ordinary Rates of Pay.”
In relation to cl.14 (Remuneration)	“• The rates of pay within the Agreement are created as composite rates, inclusive of penalties, disabilities and like allowances, leave loading and all other allowances or penalties applicable under the award. • There is a link to the Agreement to Facility Position Allowances which utilize the Agreement as the base terms of employment, and the Addendum includes allowances and benefits above and beyond the Agreement. • Training for work and time for medical requirements are paid at the Shift Rate per hour • Salary will be paid fortnightly • The rates of pay in the Agreement also refers to Schedule 1. The composite rates within the Agreement are 20% above the Award wage rates as indicated by the Better Off Overall Test (BOOT). • Guaranteed 1% increase every calendar year, as well as CPI review annually • 25% loading on ordinary annualized salary plus facility position allowance, for Casual Employees.”	“• Better Off • 20% above BOOT • Fortnightly Pay • Training and Medical time is paid at Shift Rate Per Hour”
In relation to Sch.1 (Classifications and Rates of Pay)	“• The Classifications and Rates of Pay table in the Agreement summarises the classifications that will apply to employees covered by the Agreement and how they relate to the equivalent classification within the Award. • The rates within the Agreement outline the ordinary rates of pay per hour and the annualised salary. • The rates are a composite and inclusive of but not limited to, payments for any shift work penalties, disabilities and like allowances, penalty rates, over time rates, Public Holidays, leave loading and all other allowances or penalties applicable under the Award, unless otherwise detailed in this Agreement. • The rates within the Agreement are 20% above the composite rate within the Award.”	“• Better off”

[37] Further, in a meeting held on 6 May 2021, attended by each of the Employees, Ms Keen and another person, the following minutes were recorded:

“Classifications and rates of pay are the pure base. Contracts of employment and addendums will outline salary will be the base rate of pay

To review possible Annual Salary / Rates at 20% above award.” 23

“Re-iterated Annualised Salary will always remain at least 20% above the Award” 24

[38] The substance of the AWU’s contention also includes the proposition that the Agreement’s rates are not actually 20% above the Award rates of pay and thereby that the explanation given was misleading or incomplete.

[39] If that is a submission directed at the “Ordinary rate of pay – per hour” shown in column 4 of the table in Schedule 1 (Classifications and Rates of Pay) it is plainly wrong, since the relevant hourly rates are far above those prescribed by the Hydrocarbons Award (as shown in the “Minimum hourly rate” column in clause 16.1). If instead the submission refers to the differences between the annualised salaries provided for in the two instruments, the submission may be disposed of with reference to the provisions of the Agreement which deals with the subject of annualised salaries in three principal ways:

1. A provision incorporating into the Agreement the Hydrocarbons Award provisions setting out a series of obligations and protections when developing and administering annualised salaries;

2. Specified minimum annualised salaries shown in Schedule 1 and which range between $85,853.04 and $112,235.70 per year. These minimum amounts apply from the commencement of the Agreement and, pursuant to clause14.1.6 are increased by a 1% each 1 January for the duration of the Agreement;

3. The protections afforded by clauses 14.1 (1) and (5) and Schedule 1.

[40] The provisions referred to in item 1 above are the following:

• Clause 10.1.4 of the Agreement:

“4. The provisions of Clause 18 of the Award shall apply to any annualised salary arrangements made between the Company and an employee.”

• Clause 18 of the Hydrocarbons Award:

“18.1 Annualised wage instead of award provisions

(a) An employer may pay a full-time employee an annualised wage in satisfaction, subject to clause 18.1(c), of any or all of the following provisions of the award:

(i) clause 16—Minimum rates;

(ii) clause 20—Allowances;

(iii) clause 23—Overtime;

(iv) clause 24—Penalty rates; and

(v) clause 25.5(b)—annual leave loading only.

(b) Where an annualised wage is paid the employer must advise the employee in writing, and keep a record of:

(i) the annualised wage that is payable;

(ii) which of the provisions of this award will be satisfied by payment of the annualised wage;

(iii) the method by which the annualised wage has been calculated, including specification of each separate component of the annualised wage and any overtime or penalty assumptions used in the calculation; and

(iv) the outer limit number of ordinary hours which would attract the payment of a penalty rate under the award and the outer limit number of overtime hours which the employee may be required to work in a pay period or roster cycle without being entitled to an amount in excess of the annualised wage in accordance with clause 18.1(c).

(c) If in a pay period or roster cycle an employee works any hours in excess of either of the outer limit amounts specified pursuant to clause 18.1(b)(iv), such hours will not be covered by the annualised wage and must separately be paid for in accordance with the applicable provisions of this award.

18.2 Annualised wage not to disadvantage employees

(a) The annualised wage must be no less than the amount the employee would have received under this award for the work performed over the year for which the wage is paid (or if the employment ceases earlier over such lesser period as has been worked).

(b) The employer must each 12 months from the commencement of the annualised wage arrangement or upon the termination of employment of the employee calculate the amount of remuneration that would have been payable to the employee under the provisions of this award over the relevant period and compare it to the amount of the annualised wage actually paid to the employee. Where the latter amount is less than the former amount, the employer shall pay the employee the amount of the shortfall within 14 days.

(c) The employer must keep a record of the starting and finishing times of work, and any unpaid breaks taken, of each employee subject to an annualised wage arrangement for the purpose of undertaking the comparison required by clause 18.2(b). This record must be signed by the employee, or acknowledged as correct in writing (including by electronic means) by the employee, each pay period or roster cycle.

18.3 Base rate of pay for employees on annualised wage arrangements

For the purposes of the NES, the base rate of pay of an employee receiving an annualised wage under this clause comprises the portion of the annualised wage equivalent to the relevant rate of pay in clause 16—Minimum rates and excludes any incentive-based payments, bonuses, loadings, monetary allowances, overtime and penalties.”

[41] The provisions referred to in item 3 above are the following:

• Clauses 14.1 (1) and (5):

“1. The rates of pay set out in Schedule 1 are a composite and include, but are not limited to, payments for any shift work penalties, disabilities and like allowances, penalty rates, overtime payments, Public Holidays, leave loading and all other allowances or penalties applicable under the Award unless otherwise detailed in this Agreement.”

• Schedule 1:

“The rates of pay set out in the table below are a composite and include, but are not limited to, payments for any shift work penalties, disabilities and like allowances, penalty rates, over time rates, Public Holidays, leave loading and all other allowances or penalties applicable under the Award, unless otherwise detailed in this Agreement.

The below rates will remain at least 20 per cent above the Hydrocarbon Industry (Upstream) Award 2020 Annualised Salary.”

[42] I am satisfied these provisions amount not only to a robust and substantial protection for employees engaged on annualised salaries, but are “roster neutral”, and achieve what Petrofac explained they do – namely that the “Annualised salary is 20% above the Award level”.

[43] Because of this, it is not the case the Employees either did not have the terms and effect of the Agreement explained to them insofar as the subject of the Site Addendums is concerned, or that the explanations given were misleading. I am therefore satisfied that Petrofac’s explanation to employees is consistent with the content of the term and that it took all reasonable steps to explain the terms of the Agreement as they related to wages and the effect of those terms.

[44] Accordingly, this aspect of the AWU pre-approval objection is not upheld.

The employee attendance ground

[45] Finally in respect of its pre-approval objections the AWU submits that not all Employees were present at all of the meetings which took place about the Agreement, despite what it understands the Form F17, the Employer’s Support Declaration, to say:

“53. Finally, the AWU notes that neither the Form F17 or the meeting minutes provided by the employer indicate which employees attended which meetings, implying that all employees attended all meetings. On the employer’s own evidence, Mr Bain was absent from the first meeting. In the Form F17 filed by the employer, Ms Keen states that it was this meeting in which the terms of the Award were reviewed.

54. This raises two concerns. Firstly, if Mr Bain’s absence was not marked from the first meeting, which he clearly did not attend, how can the Commission be satisfied that all employees attended all meetings, or even if a majority of employees attended a majority of meetings?

55. Secondly, as the meeting on 24 March 2021 was the only meeting in which the terms of the Award were discussed and Mr Bain was absent from that meeting, how can the Commission be satisfied that the employer took all reasonable steps to explain the terms and effect of the Agreement to all employees who were asked to vote on the Agreement?” 25

[46] The Applicant notes in respect of this argument that Mr Bain gave evidence that he was abreast of the matters in discussion by speaking with a manager who had been involved in the bargaining meetings as well as keeping up to date with the minutes of the meetings. 26

[47] I am satisfied that in the circumstances Mr Bain’s absence does not lead to a finding Petrofac did not take all reasonable steps to explain the terms and effect of the Agreement. There was plainly communication to him from Petrofac about what took place in bargaining. He was provided with the same suite of documents as the other employees, including those provided at the start of the access period. There is no requirement that each employee bargaining representative attend every bargaining meeting, and if such a requirement were proposed it would in many circumstances be seen as an unreasonable burden on all concerned involved in bargaining.

[48] As a result, I am not persuaded by the AWU on this part of its pre-approval objection.

The lack of authenticity and employee/employer coverage objections

[49] The AWU contends that the nature of the employment status of the three Employees is such that the product of their bargaining is inauthentic. At the time the Agreement was made the employees did not perform any work falling within the Agreement’s scope. Furthermore Petrofac did not at the time the Agreement was made have any work that would be performed under the Agreement, and the work of two of the employees at the time bargaining took place (Mr Dowd and Mr Collidge) involved the recruitment of other employees with them working at Petrofac’s Perth offices. The third employee (Mr Bain) is said in substance to be engaged in a management position. 27

[50] The evidence each employee gave about their employment status includes these matters:

John Collidge

[51] Mr Collidge has been employed in the construction and maintenance sector of the resources industry for the past twelve years working on large scale projects.

[52] He has been employed by Petrofac since the end of February 2021 and reviews and aligns working procedures that were implemented in the United Kingdom in his profession of rope access. 28 His current position title is Rigger Scaffolder, Rope Access Level 3.29

[53] In his oral evidence, Mr Collidge confirmed that during his employment with Petrofac he has met with and conducted interviews with potential employees of Petrofac. 30

Matt Bain

[54] Mr Bain has completed an apprenticeship as a Mechanical Fitter and Turner and holds a Diploma in Maintenance and Reliability Engineering. He has fifteen years’ experience within the oil and gas, mining, processing, manufacturing, and construction industries. Seven of those years were working within the Australian onshore and offshore hydrocarbon industry. 31 Mr Bain is a casual Mechanical Technician, Rope Access Level 232 and signed an employment contract with Petrofac in March 2021.

Kevin Dowd

[55] Mr Dowd signed an employment contract with Petrofac on 8 March 2021 and has more than twenty years’ experience. 33 Mr Dowd is a casual Electrical and Instrument Technician34 and works “supporting operational readiness through recruitment, interviews, training and EA negotiations”.35 In his oral evidence, Mr Dowd expanded on his duties to include:

“Operational readiness was basically, obviously recruitment, taking care of the training matrix with possible candidates, obviously taking part in EA negotiations, assisting the contracts manager with the transition plan for future contracts, so basically on a consultancy basis, yes, just using my offshore oil and gas experience sort of bridging that gap between the office and the field. So, yes, that's pretty much it.” 36

[56] I am satisfied from this evidence that each of the three Employees was someone “employed at the time … and who will be covered by the agreement” and therefore someone to be bargained with, etc at each stage of the bargaining process. In particular:

• Mr Collidge and Mr Dowd were, at 18 March 2021 when the NERR was distributed, employed by Petrofac and thereby an employee to whom the commencement of bargaining should be notified and provided with the NERR, since they were an employee “that will be covered by a proposed agreement”. 37 Mr Bain was sent a copy of the NERR while employed elsewhere at the time38 and was entitled for this to be done for he too is someone to be covered the proposed Agreement;

• Each of the three Employees was a person to whom the information required to be provided by s.180(3) must be given, as must the explanation required by s.180(5). Those sections require the required information and explanations be given to “the relevant employees”, which is defined in s.180(2) to mean “the employees … employed at the time who will be covered by the agreement”;

• Each Employee was a person who must be requested to approve the agreement by voting for it, with the request required to be given to “the employees employed at the time who will be covered by the agreement” (s.181).

[57] The AWU argues the Employees were not in a position, as being merely three employees of some future larger workforce, to properly bargain for and make the Agreement:

“33. The disjunct between the characteristics of those who negotiated and voted on the agreement and the scope of the Agreement is substantial. Not only do the employees (based on their titles) represent only three of sixteen roles, they are all engaged as casual, they all perform work at the employer’s office in Perth, and they all receive rates of pay higher than those listed in the Agreement, not one of them has performed any work covered by the Agreement since the commencement of their employment with the employer.

34. As was the case in KCL Industries, these employees cannot be said to have any ‘stake’ in the Agreement’s terms and conditions. Not least of all that they do not apply to them.” 39

[58] Re KCL Industries involved a first instance refusal of Commissioner Roe to approve an enterprise agreement for several reasons. On appeal the Full Bench identified the matter of genuine agreement as also requiring consideration, noting there “is an obvious disjunction between the content of the Agreement and the characteristics of those who entered into it”, with it also being noted that at the time it was made “three employees would be covered by the Agreement, of whom two cast a valid vote and voted to approve the Agreement”. Further, two of the employees were casuals. 40

[59] Against that backdrop, the agreement under consideration in Re KCL Industries was couched as applying to all employees, whether full-time, part-time, casual or temporary setting out “classifications and pay rates for private sector clerical employees, manufacturing employees, and production and staff employees in the black coal mining industry (with the last category including classifications for surveyors, safety officers, deputies, forepersons, open cut overseers, geologists, chemists, production supervisors and undermanagers)”. 41 In its consideration the Full Bench turned to an explanatory document issued to employees:

“[33] The document issued by KCL to explain the terms of the Agreement issued on 7 December 2015 together with a copy of the Agreement itself included the following statement (underlining added):

“You are entitled to vote on the proposed Enterprise Agreement, and you will see that it provides a safety net along the same lines as Awards do, but the safety net is higher than that provided under the awards. It provides for employees to be paid on the same structure as the awards, meaning a base rate, with penalties for overtime, weekend and late work etc, or if it suits you and the company, you can be paid a flat rate, as agreed. It also allows for payout of annual leave and long service leave where agreed.

Approval of the Enterprise Agreement will not mean that you are then paid at the rates stipulated in the Agreement. Subject to operational needs and satisfactory performance, you will continue to be paid for your current work in accordance with our existing arrangements.”

[34] After an inquiry was made of KCL as to the meaning and purpose of the underlined paragraph of the above statement, KCL in a written submission identified that the relevant employees were all paid above the rates contained in the Agreement, but were otherwise to be subject to the other aspects of the Agreement.”

[60] Against this, the Full Bench considered employees could not be said to have had a stake in the making of the agreement:

“[36] In summary, the position is that the Agreement covers a wide range of classifications most of which have no relevance to the work performed by KCL’s three existing employees, encompasses industries in which KCL does not currently operate, and contains rates of pay which, even in respect of those classifications relevant to the current employees, are not to apply to those employees. In those circumstances we do not consider that any authenticity could attach to the agreement of the two employees to the rates and conditions in the Agreement. The employees had no “stake” in the Agreement’s rates of pay, since they were assured that their existing, higher rates of pay would remain in place (subject to “operational needs and satisfactory performance”), and they could not have given informed consent in relation to occupation and industries in which they did not work and presumably had no experience.”

[61] Further, the Full Bench explicitly affirmed and adopted propositions advanced in an earlier single-member decision which advanced that consideration of genuine agreement “betokens a concern with the authenticity and moral authority of an agreement”. 42

[62] It is clear that a new or nearly new enterprise may establish an enterprise agreement through either of two means; as a greenfields agreement, or one which is not, with the Act not contemplating that an enterprise agreement is a greenfields agreement simply because it relates to a new enterprise. Section 172 does not require that an enterprise agreement related to a new enterprise be made as a greenfields agreement. 43 Pursuit of a greenfields agreement though is restricted by ss.172(2)(b) and (3)(b) to circumstances in which there has not been employment of “any of the persons who will be necessary for the normal conduct of that enterprise and will be covered by the agreement”.

[63] In ALDI Foods Pty Ltd v Shop, Distributive and Allied Employees Association (ALDI), the High Court noted the import of ss.52 and 53 of the Act; while an enterprise agreement may cover an employee when it is not in operation, it can only apply to an employee when it is in operation 44 and to “speak of an employee being covered by an agreement is to speak of the agreement providing terms and conditions for the job performed by, or to be performed by, the employee”.45 The factual base in ALDI included offers of employment to existing employees to work in a new SA warehousing facility. The new facility was a “new undertaking” and offers of employment were sought from its existing workforce in other states. Seventeen employees accepted the offer and at some later stage there was bargaining for an enterprise agreement to apply to the new undertaking. At the time the agreement was originally approved in the Commission:

“… ALDI was not conducting any operations at all in the Regency Park Region. Its distribution centre and the proposed stores at Seaford Heights and Parafield Gardens were still under construction or, at least, not trading. None of the employees who voted on the Agreement was, at the time, employed in the Regency Park Region, although each was an employee of ALDI in another Region” 46

[64] With reference to s.53(6), which provides that “a reference to the agreement covering the employee in relation to particular employment”, the High Court plurality held in ALDI that:

“In this context the natural meaning of the reference in s 53(6) to “particular employment” of an employee is to the description of the employee’s job in the agreement. In this regard, the terms of cl 5 of the Agreement refer to the job descriptions of employees whose employment the Agreement will regulate when it comes into operation. It is a natural and ordinary use of language to speak of the Agreement as covering these employees.” 47

[65] The High Court considered it was invited by the SDA in ALDI to find:

“… the proposed enterprise agreement was, in truth, a greenfields agreement because the employees who were already working for ALDI in other regions were not relevantly “employed” for the purposes of s 172(2)(a) as they were not actually doing the work under the proposed agreement. In its insistence that it is impossible to be “covered” by an agreement under which work has not yet actually begun, this argument amounts to a contention that “coverage” and “application” are synonymous, and that one can disregard the distinction deliberately drawn by ss 52 and 53 between the two terms.”

[66] In dismissing a contention that the reference in s.53(6) to “the agreement covering the employee in relation to particular employment”, is a reference to a case where the employee is actually performing work under the agreement at that time, the High Court accepted that s.53(6) “is simply referring to the employee’s job as described in the agreement rather than to the actual performance by the employee of the tasks involved in that job” 48 and:

“The question of coverage that arises when the Commission asks whether the agreement has been genuinely agreed to for the purposes of s 186(2)(a) is not whether the employees voting for the agreement are actually employed under its terms, but rather whether the agreement covers all employees who may in future have the terms and conditions of their jobs regulated by it.” 49

[67] As to the matter of the employment base of an agreement starting off small and becoming larger, ALDI confirmed that such was permitted by the Act subject to the protections of the Act, with the prospect that the votes of a few original employees may eventually bind a much larger group as the enterprise grows being “uncontroversial” 50:

“In light of the ordinary and natural meaning of the terms of Pt 2-4 of the Act, a non-greenfields enterprise agreement can be made with two or more employees, so long as they are the only employees employed at the time of the vote who are to be covered by the agreement. It does not matter that the agreement may, in due course, come to apply to many more employees. That understanding is consistent with the approach of the Full Court in John Holland.” 51

[68] The Full Federal Court in One Key v CFMEU 52 (One Key), decided after ALDI considered in detail the subject of “genuine agreement” and the juncture of considerations in that respect with an agreement made with only a small number of employees:

• The employer’s compliance with s.180(5), and s.186(2)(a) read with s.188(a)(i) is a condition precedent to the exercise by the Commission of its jurisdiction under s.186; 53

• Satisfaction as to whether s.180(5) has been complied with involves an evaluative judgement, including because an assessment is to be made as whether “reasonable steps” were taken by the employer; 54

• the content of the explanation and the terms in which it was conveyed are relevant considerations to which the Commission is bound to have regard. In this regard 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.” 55

• As to “the language utilised in ss.186(2)(a) and 188(c), the word “genuinely” in the phrase “genuinely agreed”, indicates that mere agreement will not suffice, and that consent of a higher quality is required”; 56

• Even though an “enterprise agreement made early in the life of an enterprise with two or three employees and before the employment of the much larger workforce necessary to operate the business of the enterprise is, in terms of the process by which it was made, far more likely to reflect characteristics akin to individual bargaining than collective bargaining” it should not be surprising “that an enterprise agreement may be made with two or three employees and, in relation to a new enterprise, may be made as a non-greenfields agreement where some employees of the enterprise are already employed”; 57

• Apprehending the issues associated with genuine agreement in the case of an agreement bargained with only a small number of employees, the Full Court sounded a caution:

“Where employees working in few occupational classifications consent to an agreement which covers numerous other occupations or other occupations in many industries beyond their own, an explanation of the terms of the agreement and their effect may fall short of providing an adequate basis for the formation of genuine consent.” 58

• Having made that observation, the Full Court turned to the matter as originally considered in the Commission:

“On the face of the material before the Commission there was a vast disparity of occupational classifications as between those held by the three individuals who voted and the classifications covered by the Agreement. How it was that the three employees might be regarded as having had a sufficient appreciation of the appropriateness of the terms and conditions proposed for the disparate occupational classifications covered, including in industries foreign to their own, was not identified by the Commissioner as a factor relevant to the genuineness of the approval and was not the subject of his consideration. Whether the three employees had appreciated the terms and conditions provided for by the Agreement, beyond those of direct interest and relevance to them, and thereby “genuinely agreed” to its terms (not just those that directly affected them) should have been considered.” 59

• In finality it was the Commissioner’s responsibility to enquire into how it might be said there was genuine agreement:

“Nevertheless, 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 provided the employees before they cast their votes. In addition the Commissioner’s decision was affected by jurisdictional error because he failed to appreciate that, in determining whether the relevant employees had genuinely agreed to the Agreement he needed to consider whether they were likely to have understood its terms and effect.” 60

[69] While the AWU seeks to undermine Petrofac’s entitlement to initiate and undertake bargaining, as well as to cast a shadow over the capacity of the three Employees to be involved in bargaining and join with Petrofac to make the Agreement, I am satisfied those efforts do not lead to a finding in favour of the union. As set out above, each of the three Employees was entitled to be notified of Petrofac’s intention to bargain for an enterprise agreement, to then be involved in bargaining and to then vote for the making of the Agreement.

[70] The nature and location of the work the Employees were doing at the time they bargained for the Agreement and then made it is not relevant to the disposition of this matter. Instead, what is relevant is that they are persons who will be covered by the Agreement once made. Similarly not relevant is the status of Petrofac at the time the Agreement was made.

[71] The Commission is not required to be satisfied that Petrofac was working within the scope of the Agreement when it was bargained for and made, but that it is an “employer that will be covered by” a proposed enterprise agreement, a matter about which I am satisfied.

[72] The steps taken by Petrofac and the bargaining representatives to make the Agreement the subject of this decision may be summarised as:

Date	Event
18 March 2021 61	Notification time for the Agreement
18 March 2021 62	Notice of Employee Representational Rights was given to employees
Ten attendance meetings between 24 March 2021 and 6 May 2021 63	Explanation of the terms and effects of the terms of the Agreement given to employees
6 May 2021 64	The time and place at which the vote was to occur, and the voting method details was given to employees
7 May 2021 65	Copy of written text of Agreement and other material incorporated by reference was given to employees
14 May 2021 66	The date voting for the Agreement commenced
18 May 2021 67	The date the Agreement was made

[73] The Form F17 Employer’s Support Declaration details the steps taken by the employer to explain the Agreement to employees and the effect of its terms in a series of attendance meetings which can be summarised thus:

• 24 March 2021 – a review of the Hydrocarbon Industry (Upstream) Award 2020 was provided along with the intent and coverage of the Agreement and an explanation that the Award applies as the base term of employment under the employees normal positions;

• 30 March 2021 – review of the consultation terms, definitions and title of the Agreement;

• 31 March 2021 – review of sections of the Agreement;

• 1 April 2021 – focus on classifications rates of pay and distant work allowances;

• 7 April 2021 - explanation of amendments made from feedback of earlier meeting;

• 13 April 2021 – explanation of travel allowance, and the company to confirm details of salary increase per annum in site addendums and cabin allowance;

• 15 April 2021 – employees did not accept terms of the Agreement, meeting adjourned for review of terms to incorporate more details particularly focusing on offshore work;

• 30 April 2021 – changes made to the Agreement including extra pay for travel, offshore and site allowances, cabin allowance, training and development arrangements, personal health insurance and CPI increase and explanation of base rates;

• 5 May 2021 – company to confirm if no CPI increase whether a fixed rate increase can be included, meal times included and updated classifications;

• 6 May 2021 – discussion of the definition of the facility position allowance, including a definition of overcycle allowance, explanation of total annual salaries, intent of Agreement and casual employees receiving casual loading and the facility position allowance on ordinary rates of pay, inclusion of utility days, remain on duty allowance, swing off day additional pay, superannuation, classifications, rates in Agreement to be 20% above the Award rates and updated meal times. 68

[74] The Applicant has also provided the “Enterprise Agreement Meeting Minutes” which sets out:

• the subject as “Enterprise Agreement Meetings – Petrofac 2021”;

• the ten bargaining meeting dates as set out above;

• the venue being the “Perth Office”;

• the time of the meetings which is only listed as “various”;

• the attendees as “Anna Keen – HR Manager Petrofac, John Collidge – Rope Access Technician, Kevin Dowd– E&I Technician, Matt Bain – Mechanical Technician and Chris Bromell – Operations Coordinator”. The document does not specify the attendees or apologies at each of the ten separate meetings;

• a distribution section which states “Attendees and Apologies”;

• A documents list including:

o “Hydrocarbons Industry (Upstream) Award 2020

o Draft Australian Facilities Management Enterprise Agreement 2021

o EA Comparison Table

o Better Off Overall Document – BOOT

o Sample Employment Addendums (Mechanical Lead, Rope Access Lead, E&I Lead)

o Attendees List”;

• A list of items numbered 1-83 and associated minutes and actions. 69

[75] In forming a view about the explanation given to employees for the purposes of s.180(5), I have had regard both to the explanation given to the Employees, the context of their employment and bargaining, as well as to the overall nature of the Agreement, as expressed by the Applicant.

[76] Each of the Employees has experience and expertise in working in the Australian hydrocarbons industry. It may be accepted on the basis of this experience that each was in a position to form judgements and express opinions about the proposals put forward in bargaining by Petrofac. More significantly the evidence shows they did so with the intention of having Petrofac move its bargaining position.

[77] The relevant obligation in s.180(5) is that before employees are requested to approve a proposed enterprise agreement by voting for it the employer must take all reasonable steps to ensure the terms of the agreement and the effect of those terms are explained to the relevant employees. Reasonable steps must also be taken to ensure the explanation “is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees” (s.180(5)(b). While s.180(6) provides examples of “the kinds of employees whose circumstances and needs are to be taken into account” it is not prescriptive, although of course, one of the examples given by the section is of “employees who did not have a bargaining representative for the agreement”.

[78] It is to be noted that the “relevant employees” are those provided for by s.180(2) who are “the employees … employed at the time who will be covered by the agreement” and that the “time” is the point “[b]efore an employer requests under subsection 181(1) that employees approve a proposed enterprise agreement by voting for the agreement” (s.180(1)). The request in s.181 may be given at any time and is limited only by its proximity to the NERR, with the section providing:

“(2) The request must not be made until at least 21 days after the day on which the last notice under subsection 173(1) (which deals with giving notice of employee representational rights) in relation to the agreement is given.”

[79] In this case the last NERR was given on 18 March 2021 and the voting request was made on 6 May 2021. Explanations were also given to the Employees on 6 May 2021, however that is not to say they were not also given before that point as well. In the case of bargaining which involved each of the employees who would be covered by an agreement, relevant explanations may well be given throughout the bargaining process with that process obviously being consistent with explanations being in an appropriate manner taking into account the particular circumstances and needs of the relevant employees. Uniquely with a small group of employees, the things said and done in bargaining may form a part of the explanation base.

[80] The concern expressed in One Key 70 about the extent to which the limited number of those involved would appreciate the terms and conditions provided for by the Agreement, beyond those of direct interest and relevance to them as well as to understand its terms and effect is addressed with consideration of the Agreement’s nature.

[81] Petrofac argues the Agreement is a baseline allowing Petrofac and its employees to have flexibility of onshore and offshore work. 71 A significant part of the baseline is an ordinary wage structure explained as including an “ordinary rate of pay for each employee covered by the agreement maintaining a 20% remuneration increase over the relevant award classification”72 and which will remain so for the duration of the Agreement (cl.3.8 and 14.1.5). Beyond the baseline, the Agreement provides for Site Addendums which may “apply additional terms of employment and benefits specific to certain working sites”. The Agreement itself provides that the addenda are additional benefits, since “Each Site will have varying additional entitlements which will benefit the Employees, these additional entitlements will be captured within Site Addendums” (cl.3.4).

[82] I have also had regard to the summary of the differences between the Agreement and the Award set out in the Form F17, the Employer’s Support Declaration in the following manner:

• Item 10 – Agreement’s more beneficial terms

“• 3(7) of the Agreement, outlines that employees ordinary rates of pay will remain 20% above the Hydrocarbon Industry (Upstream) Award at all times

• 11.1(3) of the Agreement, if any travel arrangements are varied to an extent that results in an employee returning home more than 4 but less than 8 hours from their normal arrival time at the Point of Hire, the employee will receive a half days Pay Rate.

• 11.1(4) of the Agreement, If an employee arrives at their Point of Hire more than 8 hours after their normal arrival time, they will be paid an additional days Day Rate pay.

• 13.1 of the Agreement, outlines that work carried out on offshore facilities or remote sites will receive additional allowances in addition to the ordinary rates of pay.

• 14.1(6) of the Agreement, the company will increase the rates of pay by 1% per annum.

• 14.1(7) of the Agreement, the company will review the rates of pay in line with the CPI annually, and if appropriate increase the rates of pay

• 14.1(8) of the Agreement, the Employees salary will be paid fortnightly.

• 14.1(10) of the Agreement, in the even an Employee completes more than 6 hours of work on their swing off day they will receive a full Day Rate remuneration.

• 15 of the Agreement, the company will provide the Employee with 4 weeks of notice period for Termination of employment. The Employee is only required to give notice period in line with the FW Act.

• 17 of the Agreement, Superannuation contributions will be calculated and paid on the Total Annual Salary, inclusive or Ordinary Rate and allowances.

• 23(2) of the Agreement, within the Stand-Down provision the Company will pay at the Minimum 3 days of their rate of pay in the event of being Stood-Down.

• Schedule 1. Rates of pay 20% above the Award.”

• Item 11 – Agreement’s additional terms

“• 13. Working at Offshore and Remote Sites

• 13.3. Cabins

• 18. Company Provided Health Insurance

• 19. Personal Accident Insurance

• 20.3 Special Leave

• 20.6 Cultural Ceremonial Leave.”

• Item 12 – Agreement’s less beneficial terms

“• 10.1(1) the Employees working cycle will mean that they are working an average of 42 hours (consisting of the 38 ordinary hours plus four additional hours).”

[83] In this matter, the information provided to the employees and the explanations given to them about the terms of the Agreement and the effects of the terms is included within several documents provided on 6 May 2021 at the start of the access period. One of the documents was a table comparing the provisions of the Agreement with those of the Hydrocarbons Award the operation of which is excluded by the Agreement. The comparison table considers each Agreement clause and compares it with the relevant Hydrocarbons Award provision, to the extent there are comparable clauses.

[84] While I have not reproduced that table in this decision, I note it compares all clauses with the comparable Award provision, if there is one. Where a comparison is available, the table explains the operation of the Agreement term. The table includes an indication of how each term of the Agreement is intended to operate. If there is a Hydrocarbons Award point of comparison the document explains the effect of the comparison, including by indicating through the use of a variety of synonyms whether the provisions are similar, more beneficial, or that it differs.

[85] With the exception of two matters referred to shortly, no meaningful inaccuracies or omissions are evident in the explanation given by Petrofac to its employees. The material is comprehensive and meets the requirement upon Petrofac having taken all reasonable steps to ensure the terms of the Agreement were explained to the relevant employees, with the explanation being in an appropriate manner taking into account their particular circumstances and needs.

[86] The first exception is the omission from the explanatory material of an explanation of the definition of “Site Addendums”, which has already been referred to by me at an earlier point in the decision. The second is an error made by the Applicant in a document provided to the Employees as part of its explanation of the Agreement on 6 May 2021. That document is a lengthy spreadsheet aimed at demonstrating the Agreement if made would pass the BOOT, and Petrofac conceded in its closing submissions it had made an error by not including two allowances. The context in which the error was identified is the submission that “a Level 1 employee working a 2/2 roster is $10,000 worse off under the Agreement”. 73 While the BOOT aspect of the AWU’s submission is dealt with later in this decision, it is convenient to deal at this time with the matter of the error’s effect on whether the Agreement is genuinely agreed.

[87] In that respect whilst the Applicant acknowledges the error in their calculations, they maintain their position that they do not accept that a Level 1 employee working a 2/2 roster is $10,000 worse off under the Agreement:

“… it does concede that the living away from home allowance and electrical allowance (to the extent such an allowance would apply) were erroneously not incorporated into the Award salary calculations set out in document 26 of the Applicant's Materials titled "BOOT Calculations May 2021 REV 11 (1)".” 74

[88] To the extent that the living away from home allowance and electrical allowance is excluded from the Award rate of pay in the Applicant’s modelling and in the explanation provided to employees on this, I have noted this error, together with the error made in respect of the explanation of the Site Addendum definition and propose to exercise my discretion on the subjects finding that genuine agreement may be found irrespective of the errors. Each is a minor procedural or technical error made in relation to the requirements of s.180(5), via s.188(1)(a) with the employees covered by the Agreement not likely to have been disadvantaged by the errors.

[89] Also pertinent to the matter of whether the Agreement is genuinely agreed, the AWU argue that none of the employees were at the relevant times performing work within the scope of the Agreement. 75 It also argues Petrofac itself was not at the time the Agreement was made performing any work falling within the scope of the Agreement and did not have contracts with clients for work that would be performed under the Agreement.76 In this latter regard it notes Ms Keen’s evidence that to date it has “offered Casual Contracts to the selected personnel all with no client contracts in place”.77

[90] The statutory requirements for the formation of a non-greenfields agreement are referred to in detail in ALDI, involving a situation in which any employees had been contracted were yet to perform work within the coverage of the agreement, and One Key, involving a situation in which a handful of employees are employed, and who bargained for an agreement the reach of which went far beyond their classifications or understanding.

[91] This matter involves the former situation and does not involve the latter.

[92] At the time the Agreement was made, the Employees had been employed for the purposes of a future undertaking and would in the future be covered by it but were yet to perform any work under its coverage.

[93] As to the capacity of the Employees to bargain for an Agreement that may in time cover many more people in each of the classifications it includes, I am satisfied they had that capacity and may be regarded as being likely to have understood the Agreement’s terms and effect for each of the classifications contained within it. Demonstrably the Agreement provides conditions which improve upon the Hydrocarbons Award in all but one respect. There are robust and enforceable Agreement provisions to ensure hourly and annualised wages will be at least 20% above the Award. Site Addendums may apply contractually to particular employment (but do not have to be in place), and when they do must provide even more favourable conditions. These are not especially complex matters or of the type which require particular expertise on the part of the bargaining parties to appreciate their effect. They are not things which apply differently to different groups or classes of employee. The Employees’ background and experience supports that within the context of the bargaining undertaken each did understand the terms of the Agreement and their effect. The information and explanation provided by Petrofac to employees was comprehensive and in accord with its requirements to take all reasonable steps to explain the terms of the Agreement and the effect of those terms to the Employees.

[94] For the reasons set out above, and after exercising my discretion under s.188 in two respects as set out above, I find the Agreement was genuinely agreed, notwithstanding the AWU’s objection.

THE AWU BOOT OBJECTION

[95] The AWU advances a submission that as the Agreement contains annualised salaries it is inaccurate for the Applicant to provide calculations for an annualised salary where an employee would be entitled to living away from home allowance and industry allowance under the Award. 78

[96] The AWU argue that on the Applicant’s own calculations a Level 1 employee working a 2 week on/2 week off roster would not be better off overall under the Agreement. 79 The witness statement from Mr Heath provided a payment example of an employee working as a full-time cleaner working offshore on a 3 week on/2 week off continuous shift roster. According to Mr Heath the employee would be entitled to $9,590.08 for a five-week roster cycle under the Hydrocarbons Award which extrapolates to $99,736.83 as an annualised salary (on the basis of there being 10.4 roster cycles in a year). This payment would be substantially greater than the Agreement’s annualised salary of $85,853.04.

[97] The AWU also submits that an employee would be entitled to a living away from home allowance. The Applicant objects to the AWU’s characterisation of the living away from home allowance such that the AWU’s characterisation of the payment implies “that an employee would be entitled to a living away from home allowance for every day of the year, regardless of whether they are on site and living away from home, or not rostered on such that the living away from home allowance would not be applicable. There would therefore not be an entitlement to an additional $1,585.36 for every four weeks of employment, but only every two weeks”. 80

[98] The AWU’s example is extracted and shown in ATTACHMENT 1.

[99] The Applicant refutes the examples used by the AWU in their submission. It argues the default roster under the Agreement is an even-time one and that a 3 week on/2 week off roster is atypical within the industry and not reflective of its intended practices. Further, it takes issue with the AWU’s classification matching and the union’s approach to the inclusion of living away from home allowances. 81

[100] What is apparent from the AWU’s modelling for the Catering/Accommodation Services employee (Cleaner) is that it includes several incorrect assumptions:

• It overstates the Award wages due by using rates applicable after 1 July 2021, which are not the rates “at test time”. Section 193(1) requires the BOOT be assessed “as at the test time” which is defined by s.193(6) to be the “time the application for approval of the agreement by the FWC was made”, while noting there is a need to take account of all that is known at that time with the BOOT analysis not being confined to provisions of an agreement that are applicable only at its inception. 82

• It overstates the Award wages due, through being based on a match to Level 2 of the Hydrocarbons Award when the correct match is Level 1;

• It overstates the Hydrocarbons Award overtime payment, the rate for which is 200% of the ordinary hourly rate, and not 200% of the shift rate. In this regard see:

• Clause 2 (Definitions) which provides “ordinary hourly rate means the hourly rate for the employee’s classification specified in clause 16—Minimum rates, inclusive of the industry allowance. Where an employee is entitled to an additional all-purpose allowance, this allowance forms part of that employee’s ordinary hourly rate.”

• Clause 24.3(a) which provides "A shiftworker or continuous shiftworker must be paid 115% of the ordinary hourly rate for each ordinary hour worked on afternoon shift or night shift. "

• It understates the effect of the Hydrocarbons Award Industry Allowance by not including the payment for all purposes. In this regard see Clause 20.2(b) which provided the following at test time; “Employees will be paid an all-purpose industry allowance of $52.30 per week.”

[101] The Commission has undertaken its own modelling for both a cleaner role matching to Level 1 of the Hydrocarbons Award and a trade assistant matching to Level 2 using the test time rates with ATTACHMENT 2 the comparison between the two instruments’ base rates. That comparison shows the Agreement hourly rates to be between 71.2% and 82.8% higher than those in the Hydrocarbons Award.

[102] The modelling undertaken by the Commission has incorporated the Hydrocarbons Award all-purpose industry allowance into all Award rates of pay, in accordance with the Award’s provisions (see cl.20.2(b)). This means that the model for the Award Level 1 comparison shows an ordinary hourly rate of $22.96 (calculated as $21.58 + 1/38^th of $52.30) and that for the Award Level 2 shows an ordinary hourly rate of $23.79 (calculated as $22.41 + 1/38^th of $52.30).

[103] A summary of the Commission’s modelling is shown as an ATTACHMENT 3 to the decision and demonstrates that employees working under the indicated assumptions will be better off overall under the Agreement. In all, five models have been examined, all involving five-week rosters (except for Model 3 which is a four-week roster):

• Model 1 – A catering/accommodation services employee (matched to the Hydrocarbons Award Level 1) working a 3 week on/2 week off roster – the product of which shows the employee to be around 3.3% better off under the Agreement;

• Model 2 – the same employee with their roster extrapolated over a year – the product of which shows the employee to be around 3.3% better off under the Agreement;

• Model 3 – the same employee working a 2 week on/2 week off roster, with their roster extrapolated over a year – the product of which shows the employee to be around 15.4% better off under the Agreement

• Model 4 – A Trade Assistant (matched to the Hydrocarbons Award Level 2) working a 3 week on/2 week off roster– the product of which shows the employee to be around 7.0% better off under the Agreement;

• Model 5 – the same employee with their roster extrapolated over a year – the product of which shows the employee to be around 7.0% better off under the Agreement.

[104] I am satisfied on the basis of all the material before me that the BOOT is met. This remains the case even allowing for the fact the Hydrocarbons Award rates varied after the test time. It is apparent from that material that as at the test time, that each Hydrocarbons Award covered employee, and each prospective award covered employee would be better off overall if the Agreement applied to the employee than if Hydrocarbons Award applied to them.

CONCLUSION

[105] For the reasons set out above I am satisfied the Australian Facilities Management Enterprise Agreement 2021 was fairly chosen, genuinely agreed and passes the better off overall test and may be approved.

[106] On the Form F16 Application for approval and Form F17 Employer’s Support Declaration the entity name provided for the Applicant was incorrect. The legal name of the Applicant is stated in both as "Petrofac Facilities Maintenance Limited". The correct entity name is "Petrofac Facilities Management Limited". Pursuant to s.586(a) of the Act, the name of the Applicant in this matter will be amended by an order to “Petrofac Facilities Management Limited”.

[107] The Employer has provided written undertakings. A copy of the undertakings is attached in Annexure A. I am satisfied that the undertakings will not cause financial detriment to any employee covered by the Agreement and that the undertakings will not result in substantial changes to the Agreement. The undertakings are taken to be a term of the Agreement.

[108] The copy of the Agreement as provided to the Commission included text at the start of the Agreement stating “Note: the model dispute resolution term is taken to be a term of this agreement and can be found at the end of the Agreement”. Those words were included in the document put to employees during the vote and were not included by the Commission. For the avoidance of doubt, the Commission has not inserted the model term since the parties themselves bargained for a dispute resolution term that is in Clause 25 of the Agreement.

[109] Subject to the undertakings referred to above, I am satisfied that each of the requirements of ss.186, 187, 188 and 190 as are relevant to this application for approval have been met.

[110] Pursuant to s.205(2) of the Act, the model consultation term prescribed by the Fair Work Regulations 2009 is taken to be a term of the Agreement.

[111] Pursuant to s.202(4) of the Act, the model flexibility term prescribed by the Fair Work Regulations 2009 is taken to be a term of the Agreement.

[112] The Agreement is approved and, in accordance with s.54 of the Act, will operate from 7 September 2021. The nominal expiry date of the Agreement is 31 August 2025.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

Annexure A

ATTACHMENT 1

ATTACHMENT 2

ATTACHMENT 3

1 Exhibit Petrofac 1, Witness Statement of Anna Keen, 25 June 2021, Hearing Book pp.100 – 101.

2 Form F17 (Employer Support Declaration), 18 May 2021, item 18; Hearing Book p.23.

3 Exhibit AWU 2, AWU Outline of Submissions, 8 July 2021, [34]; Hearing Book p.356.

4 Form F17 (Employer Support Declaration), 18 May 2021, item 26; Hearing Book, p.36.

5 Exhibit AWU 2, AWU Outline of Submissions, 8 July 2021, [59]; Hearing Book p.361.

6 Transcript, PN 177.

7 Exhibit AWU 2, AWU Outline of Submissions, 8 July 2021, [40] - [52].

8 Ibid, [19], [32].

9 Ibid, [23].

10 Ibid, [38].

11 Ibid, [41] – [49].

12 Ibid, [50] – [52].

13 Ibid, [53] – [55].

14 Exhibit AWU 1, Email from Zach Duncalfe, AWU, 4 June 2021.

15 Exhibit Petrofac 2, Witness Statement of John Collidge, 25 June 2021, Hearing Book, pp.98 – 99.

16 Exhibit AWU 2 AWU Outline of Submissions, 8 July 2021, [48]; Hearing Book, p.359.

17 Transcript, PN 487 – 488.

18 Enterprise Agreement Meeting Minutes, filed 25 June 2021, Hearing Book, p.174.

19 Proposed Petrofac Australia Facilities Management Enterprise Agreement 2021 Comparison Table, 6 May 2021, Hearing Book, p.187 – 198.

20 Huntsman Chemical Company Australia Pty Limited T/A RMAX Rigid Cellular Plastics & Others, [2019] FWCFB 318, [35] – [38], [43].

21 Exhibit AWU 2, AWU Outline of Submissions, 8 July 2021, Hearing Book, p.359.

22 AWU’s Outline of Closing Submissions, 4 August 2021, [96].

23 Enterprise Agreement Meeting Minutes, filed 25 June 2021, Hearing Book, p.183.

24 Ibid, p.186.

25 Exhibit AWU 2, AWU Outline of Submissions, 8 July 2021, Hearing Book, p.560.

26 Transcript, PN 586.

27 Exhibit AWU 2, AWU Outline of Submissions, 8 July 2021, [23], [24], [31]; Hearing Book pp.354 – 356.

28 Exhibit Petrofac 2, Witness Statement of John Collidge, 25 June 2021, Hearing Book, p.98 – 99.

29 Exhibit Petrofac 1, Witness Statement of Anna Keen, 25 June 2021, Hearing Book, p.100 - 102.

30 Transcript, PN 465.

31 Exhibit Petrofac 3, Witness Statement of Matt Bain, 25 June 2021, Hearing Book p.96 - 97.

32 Exhibit Petrofac 1, Witness Statement of Anna Keen, 25 June 2021, Hearing Book, p.100 - 102.

33 Exhibit Petrofac 4, Witness Statement of Kevin Dowd, 25 June 2021, Hearing Book p.94 - 95.

34 Exhibit Petrofac 1, Witness Statement of Anna Keen, 25 June 2021, Hearing Book, p.100 - 102.

35 Exhibit Petrofac 4, Witness Statement of Kevin Dowd, 25 June 2021, Hearing Book p.94 - 95.

36 Transcript, PN 714.

37 See FW Act, s.173(1); Form F17 (Employer Support Declaration), 18 May 2021, items 18 – 19; Hearing Book p.23.

38 Transcript, PN 543.

39 Exhibit AWU 2, AWU Outline of Submissions, 8 July 2021, Hearing Book p.356; with reference to Re KCL Industries Pty Ltd[2016] FWCFB 3048, 257 IR 266 [36].

40 Re KCL Industries Pty Ltd[2016] FWCFB 3048, 257 IR 266, [31] – [32].

41 Ibid, [31].

42 Ibid, [30], adopting the reasoning in Central Queensland Services Pty Ltd, [2015] FWC 1554, [65], which in turn referenced CFMEU v AIRC 93 FCR 317 at 357 per Wilcox and Madgwick JJ.

43 ALDI Foods Pty Ltd v Shop, Distributive and Allied Employees Association [2017] HCA 53, 270 IR 459, [22].

44 Ibid, [26].

45 Ibid, [30].

46 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd [2016] FCAFC 161, [87], per White J.

47 ALDI Foods Pty Ltd v Shop, Distributive and Allied Employees Association [2017] HCA 53, 270 IR 459, [31]; per Kiefel CJ, Bell, Gageler, Keane, Nettle, Gordon and Edelman JJ.

48 Ibid, [75].

49 Ibid, [77].

50 Ibid, [85] – [86].

51 Ibid, [82], with reference to Construction, Forestry, Mining and Energy Union v John Holland Pty Ltd (2015) 228 FCR 297; 247 IR 55 at [1]-[2], [34]-[41].

52 One Key v CFMEU [2018] FCAFC 77 (2018) 277 IR 23.

53 Ibid, [103].

54 Ibid, [105].

55 Ibid, [113], [115].

56 Ibid, [141].

57 Ibid, [151] – [152].

58 Ibid, [155].

59 Ibid, [168].

60 Ibid, [172].

61 Form F17 (Employer Support Declaration), 18 May 2021, item 17; Court Book p.23.

62 Ibid, items 18-19; Court Book p.23.

63 Ibid, item 22; Court Book pp.26-32.

64 Ibid, item 20; Court Book p.24.

65 Ibid, item 21; Court Book p.25.

66 Ibid, item 25; Court Book p.36.

67 Ibid, item 25; Court Book p.36.

68 Ibid, item 22; Court Book pp.26-32.

69 Enterprise Agreement Meeting Minutes, filed 25 June 2021, Hearing Book, p.173 – 186.

70 [2018] FCAFC 77 (2018) 277 IR 23.

71 Exhibit Petrofac 1, Witness Statement of Anna Keen, 25 June 2021, Hearing Book, p.100 - 102.

72 Proposed Petrofac Australia Facilities Management Enterprise Agreement 2021 Comparison Table, 6 May 2021, Hearing Book p.191.

73 AWU’s Outline of Closing Submissions, 4 August 2021, [109].

74 Applicant’s Outline of Closing Submissions, 11 August 2021, [117].

75 Exhibit AWU 2, AWU Outline of Submissions, 8 July 2021, [32]; Hearing Book p.356.

76 Ibid, [32], Hearing Book, p.354.

77 Exhibit Petrofac 1, Witness Statement of Anna Keen, 25 June 2021, Hearing Book, p.100 – 102.

78 AWU’s Outline of Closing Submissions, 4 August 2021, [108].

79 Ibid, [109].

80 Ibid, [116(b)].

81 Applicant’s Outline of Closing Submissions, 11 August 2021, [115] – [116].

82 Australian Nursing and Midwifery Federation v Domain Aged Care (QLD) Pty Ltd T/A Opal Aged Care[2019] FWCFB 1716, [27].

Petrofac Facilities Management Limited

[2021] FWCA 5187

31 AUGUST 2021

DECISION

CONCLUSION