Phabcast Pty Ltd

[2018] FWC 2886

[2018] FWC 2886 [Note: An appeal pursuant to s.604 (C2018/3167) was lodged against this decision.]

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Phabcast Pty Ltd
(AG2017/6736)

COMMISSIONER MCKINNON MELBOURNE, 22 MAY 2018

Application for approval of the Phabcast Enterprise Agreement 2017.

Introduction

[1] Application has been made for approval of a single enterprise agreement known as the Phabcast Enterprise Agreement 2017 (the Agreement). The application was made under s.185 of the Fair Work Act 2009 (the Act) by Phabcast Pty Limited (Phabcast).

[2] The application is opposed by the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) and The Australian Workers’ Union (AWU). Neither the CFMMEU nor the AWU are bargaining representatives in relation to the Agreement.

[3] This decision sets out my preliminary findings in relation to the application for approval of the Agreement. It also deals with two applications for Orders to Produce made by the CFMMEU.

Background

[4] The Agreement was lodged with the Commission for approval on 22 December 2017.

[5] On 23 March 2018, the AWU sought to be heard in relation to the Agreement. On 26 March 2018, the CFMMEU made a request to make submissions in relation to the Agreement. Both the AWU and the CFMMEU sought access to documents filed in support of the application. The F16 and F17 forms in relation to the Agreement were provided to each union on 28 March 2018.

[6] On 6 April 2018, the CFMMEU advised the Commission it had “grave concerns” about the application arising from documents filed with the application and sought to be heard. It filed submissions detailing concerns about compliance with a pre-approval step, whether employees were fairly chosen and whether the Agreement was genuinely agreed.

[7] On 6 April 2018, the AWU made submissions in relation to the Agreement including about compliance with the same pre-approval step identified by the CFMMEU, the Agreement being a “sham”, and whether it was genuinely agreed. It said it was denied the opportunity to negotiate in relation to the Benalla site.

[8] On 9 April 2018, Phabcast filed a revised Form F17 statutory declaration dealing with the pre-approval step identified by the CFMMEU as a concern.

[9] On 16 April 2018, the CFMMEU made application for two Orders to Produce; one against Phabcast and one against Lima South Quarry Pty Ltd.

[10] The matter was listed for hearing on 24 April 2018. The unions both sought an adjournment due to unavailability and Phabcast, which initially opposed any adjournment, subsequently supported that course and advised no urgency in relation to the application. On that basis, the hearing was vacated pending Phabcast’s response to the materials filed by the CFMMEU and the AWU.

Pre-approval steps

“Misleading” Notice

[11] The CFMMEU submits that the Notice of Employee Representational Rights issued in relation to the Agreement (the Notice) was misleading to employees because it refers to Phabcast’s “Murray Road, Benalla” site, which does not exist.

[12] The Act does not limit the coverage of enterprise agreements to sites that are fully operational. It is not an uncommon circumstance for both greenfields and employee project agreements to cover sites that never in fact exist, including those made with the CFMMEU (for example, because they cover employees who will work on a project an employer is bidding for, but ultimately does not win). The Act does not require that an enterprise agreement related to a new enterprise be made as a greenfields agreement. 1

[13] The material filed by both the CFMMEU and the AWU confirms the existence of the Murray Road, Benalla site, which has been approved by the local council, publicly announced and is in the preparatory stages of construction. 2

[14] There is nothing before me to indicate that employees were misled about the coverage of the Agreement. I do not accept this submission.

Access period

[15] The CFMMEU submits that Phabcast did not notify employees by the start of the “seven day access period” of the time and place at which the vote would occur and the voting method, as required by section 180(3) of the Act. They say that the 7-day access period before the start of the voting process for the purposes of 180(4) of the Act was the end of the day on 14 December 2017. It says that based on information provided by Phabcast, this actually occurred on 15 December 2017, which was one day late. 3 It refers to the decisions in Construction, Forestry, Mining and Energy Union v Australian Mining Supplies Company Pty Ltd4(Australian Mining)and CBI Constructors Pty Ltd5 (CBI) and urges me not to follow CBI which it says is ‘plainly wrong’ (and under appeal).

[16] The AWU supports the CFMMEU submissions in relation to the date of the Explanatory Statement. It says that if employees were informed of the voting time and method on 15 December and the voting process commenced on 22 December 2017, Phabcast was required to take all reasonable steps to notify employees of the vote before midnight on 15 December 2017. It says it did not do so and the error is fatal to approval of the Agreement.

[17] The decisions referred to by the CFMMEU do not appear to me to be inconsistent. While Australian Mining was dealing generally with the seven day access period, CBI was dealing specifically with calculation of the access period by reference to the actual time of the vote in that case.

[18] The requirement to provide certain information to employees about the voting process for an enterprise agreement immediately before the seven day access period is a mandatory requirement. After being alerted to what is a potentially significant barrier to approval of the Agreement, Phabcast filed a revised Form F17 statutory declaration attesting that references to 15 December 2017 were in error and that the relevant information was given to employees on 14 December 2017.  6 It provided no explanation for how the error occurred. A review of the material filed in support of the application does not resolve the matter. The Explanatory Statement attached to each version of the Form F17 is dated 14 December 2017. The Notice to Employees setting out details of the vote is also dated 14 December 2017 but refers to “recent discussions” and notes that the access period “will commence today” and end on 22 December 2017. 7

[19] If the discrepancy were a simple typographical error, one would expect this to be more apparent on a fair reading of the first version of the Form F17. 8 However, that version of the Form F17 draws a distinction between events on both 14 and 15 December 2017 in answer to question 2.6, and the date “15 December 2017” is used on four separate occasions.

[20] The Notice to Employees states that voting for the Agreement was to occur by show of hands at 10.00am on 22 December 2017. There is no information before me about the actual time that relevant information was communicated to employees at the start of the access period, either on 14 or 15 December 2017.

[21] It follows that I am not presently satisfied that Phabcast has complied with the requirements of section 180(3) in providing notice to employees of the time and place of the vote and the voting method to be used by the start of the access period for the Agreement.

Was the group of employees fairly chosen?

[22] Section 186(3) of the Act requires the Commission to be satisfied that the group of employees who will be covered by the Agreement is fairly chosen. 9 The “fairly chosen test” involves a very broad judgement, relevant to which are factors including business rationale for the choice and the possibility of unfair exploitation.10

[23] The CFMMEU submits that the group of employees who will be covered by the Agreement was not fairly chosen because it does not cover supervisors and team leaders, it is limited to the “Benalla site” and there is no cogent or logical business rationale for making the Agreement before 2018. It contends that there is a possibility of unfair exploitation of employees within the Agreement’s scope, including because it was made by part-time casual employees and trainees each of whom have only been employed for short periods. 11 The AWU makes submissions of a similar nature but does not expressly assert that the group of employees were not fairly chosen.

[24] Phabcast submits that the group of employees was fairly chosen and that the Agreement scope is distinct in all relevant senses (geographically, by reference to the site, operationally, by reference to the concrete operations, and organisationally, by reference to award classifications). It says there is a cogent business rationale for adopting the course that it did in making the Agreement – that being to lock in an enterprise agreement prior to the site becoming operational. This reflected its preference for an enterprise agreement with employees as opposed to a greenfields agreement with unions. It says that preference does not render the choice unfair.

[25] The Agreement will cover Phabcast employees engaged at its “pre-cast site at Murray Road, Benalla”. In this respect it is both geographically and operationally distinct. It will cover all such employees within the scope of the Concrete Products Award 2010 12(the Award), other than supervisors and team leaders. In this respect, it makes a reasonable organisational distinction between employees with supervisory responsibilities and those without.

[26] Despite the submissions of the CFMMEU and the AWU, I accept that there is a cogent business rationale for Phabcast to make the Agreement with its employees when it did. Settling the terms of industrial regulation for a new enterprise in advance is logical, rational and relatively common in Australia. It gives stability and certainty to the parties and allows contracts of employment and other related arrangements to be made, based on a known set of terms and conditions that will be fixed for a period – in this case, four years. It reduces exposure to industrial action for that period.

[27] The three employees who made the Agreement may have done so in their own interests but there is nothing to indicate that in doing so, they acted contrary to the interests of future employees it may well bind. The fact that it was trainees who made the Agreement, which also covers trade qualified employees, does not weigh against my conclusions in this regard. It might do so if in a particular case, the proposed terms of an enterprise agreement undermined the legislative safety net including modern award terms set by the Commission with significant input from experienced industry participants. However, the Agreement in this case is largely consistent with the Award including in relation to the employment of both trainees and more qualified and experienced employees. If the trainees employed by Phabcast are undertaking formal training in anticipation of work at the Benalla site, their interests are very much aligned with those of the more qualified employees they are likely to become.

[28] No party submits that the Agreement does not pass the better off overall test or that it will disadvantage employees. Indeed, for the most part, wage rates are at least more than 20% above than the Award.

[29] There is nothing before me to ground a concern that future employees who become covered by the Agreement will suffer any relevant unfairness by reason of the Agreement setting their terms and conditions of employment in advance. Subject to what I say below, I am otherwise satisfied that the group of employees covered by the Agreement was fairly chosen.

Are there reasonable grounds for believing that the Agreement has not been genuinely agreed?

[30] The CFMMEU submits that the Agreement lacks “moral authority and authenticity of assent”, pointing to what it says was a 25 day period that employees had been employed before the Agreement was made. It says the three employees who made the Agreement, including two trainees who were also bargaining representatives, had little, if any, knowledge of the terms and conditions in the Award as well as little, if any, experience in the pre-cast concreting industry and no experience in various machine operation functions or in the occupations or industry covered by the Agreement.

[31] The CFMMEU says that the Agreement will not apply to employees until October 2018 when construction of the pre-cast concrete manufacturing facility is scheduled for completion. In that circumstance, it questions what stake the three employees can have in an enterprise agreement that will not cover them until that time.

[32] The AWU similarly submits that Phabcast is not genuinely operating a business requiring the employment of trainees. It says that Phabcast, a new company established to operate in a different industry at a site not yet operational is avoiding a “greenfields agreement” with the AWU. It asks what work are Phabcast employees doing, and where?

[33] The CFMMEU asserts that there can be no genuine agreement in circumstances where Phabcast “commandeered” and “secured the consent of the cohort” to preclude bargaining and industrial action by future employees, many of whom will inevitably be covered by the Agreement. In the same vein, the AWU asserts that employees of Lima South Quarry have become Phabcast employees so they can vote on the Agreement. I do not discount the possibility that employees of Phabcast may have some current or prior relationship with Lima South Quarry. However, there is no evidence before me to either show or suggest that the employees were not employed by Phabcast at the relevant time. There is no evidence that any of the employees were pressured to make the Agreement.

[34] The CFMMEU separately says the Agreement is a “sham” – a “false front”, a “spurious imitation and counterfeit”, because there is no enterprise operating, or likely to commence operating any time soon, and the Agreement is not capable of applying to anyone prior to completion of the facility.

[35] The various concerns about the fact that the Agreement will not apply until some future time are answered by the distinction between the concepts of ‘covers’ and ‘applies’ in sections 52 and 53 of the Act. An enterprise agreement can cover employees even though it does not, at that time, apply to them. The Act does not require that an enterprise agreement both cover and apply to employees, in the sense of operating to fix their rights and obligations in the work actually being performed by them at the time approval of the enterprise agreement is sought. It must, however, cover each of the employees who made the enterprise agreement, who must be the only employees the Agreement is expressed to cover. 13

[36] There is no requirement that employees who vote to make an agreement must have been in employment for any length of time, or that they must remain in employment after an enterprise agreement is made. 14

[37] As to the authenticity and moral authority of the Agreement, this concern was first identified by the Federal Court in Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission 15(CFMEU v AIRC) having regard to the objects of the former Workplace Relations Act 1996, as follows:

“The question is, therefore, whether an agreement regulating terms and conditions of employment in a proposed single business, made with employees who may, in the future, be employed in that business but are not yet so employed, qualifies as an agreement that may be certified under the Act. In our view, the preferable conclusion, as a matter of both textual and purposive interpretation of the Act, is that it does not.

…

Section 170LT(6) requires that a "valid majority of persons employed at the time whose employment would be subject to the agreement must have genuinely made the agreement". This plainly betokens a concern with the authenticity and, as it were, the moral authority of the agreement. It is perfectly understandable - indeed, one might reasonably think, plainly necessary - this be so.

…

There can hardly be fair agreement-making between employer and employees about wages and employment conditions in a workplace before both sets of parties have actual experience of the work and its place of performance. Without that, cooperative workplace relations are unlikely to be achieved. An agreement prematurely made is unlikely to be effective; measuring effectiveness in this context by such matters as durability, aptness and comprehensiveness. Established “safety net” standards are less likely to be respected and maintained, because the range of conditions in relation to which such standards exist may not have been fully comprehended.”

[38] The decision in CFMEU v AIRC was made under previous legislation and while there are similarities in the objects of that earlier legislation and the Act, there are also differences. As the High Court has recently observed, there is no reason to construe the Act in a way that denies a small group of employees in a proposed new enterprise the capacity to make an enterprise agreement that is capable of approval and that will, in the future, bind a larger group. 16

[39] The Act provides for bargaining both with and without unions, without preference, and the right to strike is curtailed during the nominal life of enterprise agreements in each case. 17 A small group of employees can make an enterprise agreement that binds future employees, both before work on a project has commenced and as soon as a very small number of employees have been engaged.18 The capacity to make enterprise agreements in this way is established in the context of a range of protective provisions relating to rights of representation, the fairly chosen test and most importantly, the better off overall test.19

[40] The evidence before me does not run contrary Phabcast’s submission that the three employees who made the Agreement were its only employees at that time. The relevant question seems to me to be whether those employees were covered by the Agreement on 22 December 2017 when they voted to approve it.

[41] On this question, the relevant material before me is as follows:

1. The Form F16 application for approval of the Agreement which identifies two employee bargaining representatives, Jillian Ryan and Simon Richards, as “Trainees”.

2. The Form F17 statutory declaration 20 in support of the application, which states that Phabcast employs three employees who will be covered by the Agreement, including one casual employee and two part-time employees, including one female employee and two over 45 years of age.

3. Contracts of employment for three employees including Jillian Ryan, Simon Richards and one other, identifying that in each case employment with Phabcast commenced on 27 November 2017 in the position of “Labourer”. One contract is for employment as a casual employee and two contracts are for employment as a part-time employee under the Award.

4. Payslips for each of the three employees covered by contracts of employment, identifying the employees as a classification “Level 1” (which in the Agreement corresponds with the description of “Trainee”). The payslips cover the period from 27 November 2017 to 17 April 2018 and show varying hours of work and leave periods over that time.

5. Invoice and purchase order forms relating to “1 Stop Driving School” and “CVGT Benalla” indicating that one of the employees undertook forklift license training from 17 to 19 January 2018 and another undertook civil construction skid steer loader operations training on 13 March 2018.

6. Notices of appointment of a bargaining representative signed by each of the three employees on 13 December 2017.

7. A conversation between Mark Tait of the CFMMEU and one of the employees, Jillian Ryan, who answered the phone at Lima South Quarry, indicated that Simon Richards was not in the office and agreed there had been a vote for the Agreement and that she was a trainee for the pre-cast yard. 21

8. A conversation between Darren Cameron of the AWU and the receptionist of Lima South Quarry who advised that Jillian Ryan and Simon Richards “were not there that day”. 22

9. A Facebook page print out for “Jillian Ryan”.

[42] The three employees appear to have remained in employment since the Agreement was made on 22 December 2017. This runs counter to the notion that they were employed for the short-term purpose of achieving an enterprise agreement in which they had no stake.

[43] However, one of the contracts of employment (“Doc ID 72902507”) filed in the Commission in ‘unredacted form’ appears to be an altered version of the same contract of employment filed in redacted form. This, combined with the earlier discrepancy in the Form F17 discussed above, raises serious questions about the bona fide nature of at least some of the information filed in support of the application for approval.

Was the Explanatory Statement deficient or misleading?

[44] The CFMMEU says the Explanatory Statement provided to employees about the Agreement was “deficient” and “misleading”. It identified a number of matters it said contained incomplete or wrong information about the effect of the Agreement on employees, including in relation to casual conversion rights, alterations to the span of hours and the method of working shifts, notice to take excessive leave, dispute resolution training entitlements, provision or reimbursement in relation to clothing, tools and equipment and allowances for travel, accommodation and forklift/crane use.

[45] Phabcast says that the CFMMEU’s position on these issues is “an exercise in nitpicking” relating to arguable ambiguities in the Agreement it seeks to portray as detriments.

[46] The Act requires employers to take all reasonable steps to explain the terms of an enterprise agreement, and the effect of those terms, to employees before it is made. In my view, “reasonable steps” does not require that every single detail of a relevant modern award which differs from a proposed enterprise agreement be identified and explained. If that were the case, enterprise agreements would almost never be approved. It does, however, require the employer to ensure that its employees are given relevant, accurate information about the effect of the Agreement on them if it is made. The steps that are reasonable for employers to take in carrying out that responsibility will necessarily depend on the particular facts and circumstances in each case.

[47] In this case, Phabcast prepared and provided employees with a copy of the Agreement and a detailed Explanatory Statement summarising “key features of the Agreement”.

[48] Some of the issues raised by the CFMMEU in relation to the Explanatory Statement are without merit. For example, the Agreement gives employees an automatic right to convert to permanent employment after 6 months as a casual employee, with no right of refusal for Phabcast. In those circumstances, it was not necessary for the Explanatory Statement to detail provisions of the Award relevant to the refusal of a conversion request.

[49] Other issues raised by the CFMMEU ask the Commission to take an overly technical approach to the consideration of “reasonable steps”. For example, the Agreement provides for alteration of the span of hours by majority agreement or by Phabcast giving 7 days’ notice. The Explanatory Statement explains that the span of hours provisions are different to the Award and correctly notes that work during the span of hours set by the Agreement will not attract overtime rates where it might otherwise under the Award. The CFMMEU says the term might result in employees working socially unpalatable hours without overtime compensation. In my view, this is explained in the Explanatory Statement.

[50] Similarly, the Explanatory Statement does not deal with the alteration of shift rosters and shifts. It cannot be construed as misleading in that respect. As earlier indicated, the Explanatory Statement was explained as a summary of “key features” of the Agreement. It did not detail every Award difference but this does not in my view make it materially deficient.

[51] However, some of the issues raised by the CFMMEU do give rise to legitimate concerns. Both the Form F17 and the Explanatory Statement state that alteration of the span of hours under the Agreement is limited to up to one hour either way. No such restriction is evident in the Agreement. In this respect, the Explanatory Statement appears deficient and it appears that employees were given incorrect information about the effect of the Agreement. It may be that the matter can be cured by way of an undertaking giving effect to what employees were told.

[52] The Agreement deals with the taking of excessive annual leave in way that largely reflects terms of the Award but does not confer a right on employees to take excessive annual leave at a time of their choosing. The Explanatory Statement does not deal with the matter and nor does the Form F17.

[53] The Agreement does not provide for paid dispute resolution training leave. These issues are not identified in the Explanatory Statement or the Form F17, and nor are any of the other provisions of the Award that are identified as detriments in the Form F17. Again, it may be that undertakings can be provided to address the concerns.

Material incorporated into the Agreement

[54] The AWU says the explanation provided to employees was deficient because the Form F17 filed with the application refers at question 2.4 to “other material incorporated by Agreement” provided “by hand” to employees on 15 December 2017, and no material is in fact incorporated by reference in the Agreement. 23

[55] I am not persuaded by this submission. The Explanatory Statement provided to employees is a summary of key terms of the Agreement detailing the effect of those terms for the benefit of employees and presumably prepared to assist Phabcast in meeting the statutory pre-conditions to approval of the Agreement. So much is clear from the opening line of the Explanatory Statement that “the purpose of this statement is to explain the nature and effect of the proposed Phabcast Enterprise Agreement 2017 (the Agreement).” The Explanatory Statement refers to the National Employment Standards (NES) including that “a copy of which has been provided to you”. In my view, the answer to question 2.4 of the Form F17, while technically incorrect, refers to provision of the NES to employees.

Applications for Orders to Produce

[56] The CFMMEU sought orders issued to Phabcast and Lima South Quarry Pty Ltd requiring the production of a range of documents it says will assist in my consideration of the application.

[57] I have decided not to issue the orders sought. In my view they amount to a classic ‘fishing expedition’, aimed at uncovering some new basis on which to prevent approval of the Agreement. The CFMMEU’s submissions and evidence demonstrate that its relevant and direct knowledge of the agreement-making process in this case comprises the contents of Council minutes approving construction of the facility at Benalla 24, an eyewitness account that the Benalla site is in the preparatory stages of construction, the phone call referred to above with “Jillian Ryan” as well as a review of the Facebook pages of Mr Ashley Day and Ms Ryan.

[58] Whether the CFMMEU has standing to apply for the orders it seeks is not without doubt, given that it was not a bargaining representative for the Agreement and does not otherwise have standing in the matter. 25

[59] It is not necessary to decide that issue finally. I have already set out above the matters that require further consideration before the Agreement can be approved. What further information, if any, Phabcast seeks to rely on in seeking to address those concerns is ultimately a matter for it.

Next steps

[60] The matter will be listed for hearing on:

1. whether employees were notified by the start of the “seven day access period” of the voting method and the time and place at which the vote would occur; and

2. whether the employees who made the Agreement were covered by it at the time the Agreement was made.

[61] The hearing will also be an opportunity for Phabcast to give any undertakings it considers appropriate to address the concerns identified above.

[62] The CFMMEU and the AWU will be allowed to participate in the hearing insofar as it deals with the ‘access period’ issue and to respond to any undertakings offered by Phabcast in relation to the Agreement.

[63] I do not require oral evidence from any of the CFMMEU or AWU witnesses in this matter and I do not require them to attend the Commission for cross-examination.

[64] The CFMMEU and the AWU will not be permitted to participate in the hearing in relation to whether the employees were covered by the Agreement at the time it was made. There is nothing before me to indicate that they have any relevant or direct knowledge on that issue and I do not consider it appropriate to subject employees to cross-examination simply because they decided to make an enterprise agreement with their employer.

[65] Directions will be issued separately to this Decision.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

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 1   Aldi Foods Pty Ltd v Shop, Distributive and Allied Employees Association [2017] HCA 53

 2   Statement of Darren Cameron filed on 16 April 2018; Statement of Mark Tait filed on 16 April 2018

 3   Form F17 declared on 5 April 2018, Question 2.4

 4   [2017] FWCFB 2236

 5   [2017] FWCA 6837

 6   Form F17 declared on 9 April 2018

 7   Notice to Employees, attached to Form F17 declared on 9 April 2018

 8   Form F17 declared on 22 December 2017

 9   Construction, Forestry, Mining and Energy Union v John Holland [2015] FCAFC 16

 10   Construction, Forestry, Mining and Energy Union v One Key Workforce Pty Ltd [2017] FCA 1266

 11   Australian Workers’ Union v BP Kwinana [2014] 242 IR 238 at [15]

 12   MA000056

 13 [2017] HCA 53 at [76] – [77]; [82]

 14  [2015] FCAFC 16; (2015) 228 FCR 297 at 306-307 [34]-[41]

 15 [1999] FCA 847 at [121] – [126]

 16 [2017] HCA 53 at [85]-[87]

 17 [2015] FCAFC 16; (2015) 228 FCR 297 at 306-307 [34]-[41]

 18 [2015] FCAFC 16;

 19 [2017] HCA 53 at [84]

 20   Three versions of the Form F17 each contain the same information about employees covered by the Agreement

 21   Statement of Mark Tait filed on 16 April 2018

 22   Statement of Darren Cameron filed on 16 April 2018

 23   Form F17 declared on 22 December 2017, 5 April 2018 and 9 April 2018 at Question 2.4

 24   Statement of Ralph Edwards filed on filed on 6 April 2018

 25   Construction, Forestry, Mining and Energy Union v Collinsville Coal Operations Pty Ltd [2014] FWCFB 7940.