Queensland Bulk Handling Pty Ltd v Construction, Forestry, Mining and Energy Union
[2012] FWA 4478
•23 MAY 2012
Note: An appeal pursuant to s.604 (C2012/4146) was lodged against this decision - refer to Full Bench decision dated 3 September 2012 [[2012] FWAFB 7551] for result of appeal.
[2012] FWA 4478 |
|
DECISION |
Fair Work Act 2009
s 185 - Application for approval of a single-enterprise agreement
Queensland Bulk Handling Pty Ltd
v
Construction, Forestry, Mining and Energy Union
(AG2012/283)
DEPUTY PRESIDENT SAMS | SYDNEY, 23 MAY 2012 |
Application for approval of the Queensland Bulk Handling Enterprise Agreement 2012 - ‘opt out’ clause - Better Off Overall Test - whether employees fairly chosen - undertakings - Full Bench authority - Agreement approved subject to undertaking.
INTRODUCTION
[1] Fair Work Australia (‘FWA’) has been asked to approve a single enterprise agreement, pursuant to s 185 of the Fair Work Act 2009 (the ‘Act’) to be known as the Queensland Bulk Handling Enterprise Agreement 2012 (the ‘Agreement’). The Agreement is to cover 26 employees engaged by Queensland Bulk Handling (the ‘applicant’) at its port operations in Brisbane.
[2] There is controversy over whether the Agreement should be approved by FWA as it is claimed by the Construction, Forestry, Mining and Energy Union - Mining and Energy Division (the ‘Union’) that:
(a) the Agreement does not meet the Better Off Overall test (‘BOOT’) as required by s 186(2)(d) of the Act;
(b) the group of employees proposed to be covered by the Agreement was not fairly chosen as required by s 186(3) and 3A of the Act; and
(c) the applicant has not offered any undertakings concerning (a) & (b) above as may be accepted by FWA under s 190(3) of the Act.
Shortly put, the disputed clause is at Cl. 1 which deals with coverage of the Agreement. It reads as follows:
1. Coverage
“This Agreement shall cover:
● Queensland Bulk Handling Pty Ltd, ACN 010 284 509 (‘QBH’) and
● Employees of QBH who are employed at the QBH operations as Logistics Operators or Maintainer Operators except those who have elected in writing not to be covered by this Agreement (‘employee/s’).
For convenience, it is generally understood that the dispute concerns the ‘opt out’ provision in this clause.
Preapproval Steps
[1] The employees to be covered by the Agreement were last given notice of their representational rights as required by s 181(2) of the Act on 24 October 2011. In mid January 2012, employees were provided with a copy of the proposed Agreement and details of the voting process. Presentations to employees were made on site by the Port Operations Manager on 16 and 17 January, 2012 and copies of the presentations were available or sent to employees who could not attend the sessions. I note that the Union was involved in the negotiations for the Agreement.
[2] Voting for the Agreement’s approval took place on 24 and 25 January 2012 with a unanimous vote of 24 employees agreeing to support the Agreement in a secret ballot. The Agreement was lodged with FWA on 7 February 2012, thereby satisfying the 14 day time period required by s 185(3) of the Act.
[3] On 9 February, 2012 the Union’s District President, Mr Stephen Smyth, attested to a statutory declaration (F18) in which he said that the Union:
(a) was a bargaining representative for one or more of its members to be covered by the Agreement;
(b) did not support the approval of the Agreement by FWA;
(c) did not agree with the employer’s F17 declaration; and
(d) did not wish to be covered by the Agreement.
Other terms of the Agreement
[4] The applicant’s Form 17 identified the Coal Export Terminals Award 2010 (the ‘modern award’), as the relevant reference instrument for the purposes of the BOOT. It was said that the Agreement complied with the BOOT in that it provided for higher remuneration and overtime rates for employees who would be otherwise covered by the modern award. On the other hand, the Agreement does not provide for specific Award allowances or penalties for not taking a 10 hour break between shifts.
[5] At Cl 6.1, the Agreement provides for four classifications as follows:
LOGISTICS OPERATOR - COMMENCEMENT
Roster | Total Salary |
Average of 43.2 hours per week (averaged over the roster cycle) including rotating day and night shifts and including regular weekend work and public holidays (except Christmas Day) plus 4 mandatory 8 hour training and development days per annum (1 per quarter) | $91, 324 p.a. |
LOGISTICS OPERATOR - COMPETENT
Roster | Total Salary |
Average of 43.2 hours per week (averaged over the roster cycle) including rotating day and night shifts and including regular weekend work and public holidays (except Christmas Day) plus 4 mandatory 8 hour training and development days per annum (1 per quarter) | $100,000 p.a. |
MAINTAINER OPERATOR COMMENCEMENT
Roster | Total Salary |
Average of 43.2 hours per week (averaged over the roster cycle) including rotating day and night shifts and including regular weekend work and public holidays (except Christmas Day) plus 4 mandatory 8 hour training and development days per annum (1 per quarter) | $98, 630 p.a. |
MAINTAINER OPERATOR COMPETENT
Roster | Total Salary |
Average of 43.2 hours per week (averaged over the roster cycle) including rotating day and night shifts and including regular weekend work and public holidays (except Christmas Day) plus 4 mandatory 8 hour training and development days per annum (1 per quarter) | $108, 000 p.a. |
[6] Payments are also made for work performed outside rostered hours (Cl. 6.2). Three 3.5 percent salary increases are to apply from 1 January of each year from 2013 during the Agreement’s nominal term which expires on 31 December 2015. The Agreement provides for the mandatory flexibility and consultation terms at Cl. 4 and Cl. 17 respectively and a disputes resolution procedure at Cl. 21 provides for conciliation by FWA, and by consent of both parties, the issuing of an opinion or recommendation.
First hearing
[7] At a telephone hearing of the application on 29 February 2012, Ms D Armbrust, for the applicant, submitted that all of the statutory requirements for the approval of the Agreement had been met. In respect to the Union’s opposition, Ms Armbrust relied on Construction, Forestry, Mining and Energy Union v Fair Work Australia [2011] FCA 719 (‘CFMEU v FWA’); Newlands Coal Pty Ltd v CFMEU [2011] FWAFB 7325 (15 December 2011) (Newlands No. 2) and New Acland Coal Enterprise Agreement 2011 [2011] FWA 9075 (‘New Acland’).
[8] Ms J Hobson, for the Union, reaffirmed its opposition to the Agreement’s approval based on the ‘opt out’ clause not meeting the BOOT and that the group of employees to be covered by the Agreement was not fairly chosen. Save for these two matters, the Union accepted that all of the other statutory requirements for approval of the Agreement had been met.
[9] At the conclusion of the hearing, I issued further directions to both parties to file and serve submissions on the matter in dispute, expressing my concern that any delay in approving the Agreement might delay salary increases available to employees under the terms of the Agreement. Ms Armbrust undertook to seek further instructions on my concern and by email to my Chambers dated 19 March 2012, Ms Armbrust said ‘Queensland Bulk Handling will back pay the increase’.
SUBMISSIONS
Satisfaction of the BOOT
[10] Mr A Slevin of Counsel, for the Union, submitted that the recent decision of the Federal Court of Australia (‘FCA’) in CFMEU v FWA made clear that an ‘opt out’ clause cannot pass the BOOT because the exercise of the employee’s election not to be covered by an agreement means that an employee or prospective employee may be no better off than if the modern award applied. Thus, the superior terms of the Agreement are not guaranteed. Mr Slevin added that FWA must consider the effect of all of the terms of the Agreement at ‘test time’ (s 193(6)).
[11] Ms Armbrust, in relying on CFMEU v FWA and Newlands No. 2, argued that an ‘opt out’ clause did not invalidate an enterprise agreement because the Federal Court of Australia (‘FCA’) found that the FWA Full Bench erred:
a) in considering that the right to choose not to be covered was a benefit to be taken into account in determining the BOOT; and,
b) that the Full Bench erred in not considering s 186(3)(a).
[12] Upon remittance of the matter, in Newlands No. 2, Hamberger SDP required and received an undertaking and McCarthy DP, found the Agreement met the BOOT without an undertaking. Lawler VP approved an identical ‘opt out’ clause with an undertaking as he considered himself bound by Newlands No. 2. Ms Armbrust emphasised that the ‘test time’ for the application of the BOOT is the time the application for approval is lodged (s 193(6)) and not some later date at which an employee may elect not to be covered by the Agreement. The FCA did not determine otherwise.
[13] Nevertheless, Ms Armbrust said that the applicant would be prepared to give the following undertaking:
‘employees who ‘opt out’ of the QBH Agreement will be provided with remuneration and conditions that are better off overall than those that the employee would be entitled to under the Black Coal Mining Industry Award 2012’.
Were the group of employees fairly chosen?
[14] Mr Slevin identified two groups of employees excluded from the Agreement, but accepted that managerial and administrative roles were distinct and therefore not unfairly omitted. However, the second group concerned those employees who elect not to be covered by the Agreement. He relied on Newlands No. 2 and New Acland and submitted that there are conflicting views within the Tribunal as to whether an agreement with an ‘opt out’ clause should be approved.
[15] Mr Slevin put that obvious unfairness arises when two groups of employees performing the same work are offered different wages and conditions. By accepting an ‘opt out’ clause, the group of employees to be covered by the Agreement cannot be ‘geographically, operationally or organisationally distinct’. See 186(3A) of the Act.
[16] On the other hand, Ms Armbrust submitted that the group of employees was not ‘unidentifiable’. There are those who will be covered by the Agreement at the time it is made and at any later time. The FCA did not decide whether the group was fairly chosen but remitted the matter back to FWA to determine. Ms Armbrust said that the words ‘will be covered’ are not used in s 186(3) or s 186(3A) but are used in relation to majority support determinations and scope orders.
[17] Ms Armbrust added that the Act does not require a comparison to be made to wages and conditions between those covered by an agreement and those who are not. Every employee has the same option, so it cannot be regarded as unfair.
THE LEGISLATION AND PRINCIPLES
[18] The relevant sections of the Act considered in this decision are as follows:
Section 193(1) deals with the BOOT in these terms:
(1) An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if FWA is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.
The ‘test time’ for the BOOT is found at s 193(6) as follows:
(6) The test time is the time the application for approval of the agreement by FWA was made under section 185.
Section 186(3) and 3A of the Act deal with whether the group of employees to be covered by the Agreement was fairly chosen. It is in these terms:
(3) FWA must be satisfied that the group of employees covered by the agreement was fairly chosen.
(3A) If the agreement does not cover all of the employees of the employer or employers covered by the agreement, FWA must, in deciding whether the group of employees covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.
[19] It is necessary to appreciate the background to this decision by reference to the various authorities referred to me by the parties and I intend to quote extensively from CFMEU v FWA.
[20] An FWA Full Bench decision in Newlands Coal Pty Ltd v Construction, Forestry, Mining and Energy Union [2010] FWAFB 7401 (‘Newlands No. 1’)was considered by the FCA in CFMEU v FWA. There, Her Honour Katzmann J, said at para [67] - [86]:
‘The position of the CFMEU, succinctly put, is this. The jurisdiction of Fair Work Australia depends on the making of an enterprise agreement within the meaning of the Act, since its statutory duty under s 186(1) to approve an agreement that meets the requirements of ss 186 and 187 of the Act is contingent on there being a valid enterprise agreement. There could only be a valid enterprise agreement if the agreement was made with employees “employed at the time who will be covered by the agreement”. This agreement was not made with such a body of employees. Therefore there was no valid application for approval before the Full Bench, the order for approval was ineffective, and no enterprise agreement came into existence: Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission and Others[1999] FCA 847; (1999) 93 FCR 317 at [128].
The CFMEU also argued that Fair Work Australia could not have the requisite satisfaction for approval of the agreement under ss 186(2)(a) and 188 because the agreement was not made in accordance with ss 180(2), (3) and (5) and 182(1). Section 180(2) imposes an obligation on the employer to take all reasonable steps to ensure that during the access period for the agreement “the employees ... employed at the time who will be covered by the agreement” are provided with copies of the text of the agreement and any material incorporated by reference in it, and have access throughout the period to a copy of those materials. Section 180(3) requires the employer to take all reasonable steps to notify such employees of the time and place of the vote and the voting method. Section 180(5) requires the employer to take all reasonable steps to ensure that the terms of the agreement and its effect are explained to those employees in an appropriate manner taking into account their particular circumstances and needs. Section 182(1) relevantly provides that an enterprise agreement is made when a majority of those employees who cast a valid vote approve it.
The first question, then, is what is meant by the expression “who will be covered by the agreement”, more particularly what “will” means in this context.
The starting point is to construe the words according to their ordinary meaning having regard to their context and legislative purpose. Context includes the existing state of the law and the mischief it was intended to remedy. See Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue(Northern Territory) [2009] HCA 41; (2009) 239 CLR 27 at [14]; CIC Insurance Ltd v Bankstown Football Club Ltd(1997) 187 CLR 384 at 408. The words should be read by reference to the language of the statute as a whole: Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355at [69].
The majority interpreted “will” in the expression to mean “future likelihood” (which the majority apparently took to be synonymous with an expression of present intention). The CFMEU submitted that the more appropriate meaning of “will be covered” in context is that coverage of the employees employed at the time the agreement is made is a necessary result of the agreement being made, intimating that such an interpretation provided the required degree of certainty. In any event, the CFMEU submitted that, even if the majority were correct, in this case it could not be said that it was intended that the employees who are employed at the time will be covered by the agreement if there is a clear indication in the agreement itself that they may not be. Thus, it was said, the employees who are employed at the time and participate in the vote for the agreement might be covered by it; it cannot be said they necessarily will be covered.
The majority’s interpretation reflected one of the meanings given to the auxiliary verb in the Macquarie Dictionary:
indicating future likelihood: I will take a taxi; she will meet us there; do you think it will rain?; you will be surprised.
The CFMEU’s contention reflects one of the meanings given in the Oxford English Dictionary:
expressing a determinate or necessary consequence (without the notion of futurity).
In my view, the construction which the CFMEU espouses is the preferable one. It more accurately reflects the sense in which the expression is used in the statute. But I do not think that this is determinative of the question of validity.
In ascertaining the meaning of the statutory words an examination of the existing state of the law has proved unhelpful. Section 327 of the Workplace Relations Act (now repealed) provided:
An employer may make an agreement (an employee collective agreement ) in writing with persons employed at the time in a single business (or part of a single business) of the employer whose employment will, or would but for the operation of an ITEA that has passed its nominal expiry date, be subject to the agreement.
I have been unable to find any authority that considered the meaning of the expression “will ... be subject to the agreement” in that section. Certainly, my attention was drawn to none.
Notwithstanding what the majority appear to have thought, the Explanatory Memorandum is also unhelpful on this question. They referred to paragraph 683, which states:
The use of the phrase ‘employees who will be covered by the agreement’ in clause 172 is intended to make clear that the employees covered by the agreement are not limited to those employees who were employed at the time the agreement was made. An agreement covers all employees whom it is expressed to cover (clause 53). This includes persons employed at the time the agreement was made and persons employed at a later time provided that they fall within a class or group of employees who are expressed to be covered by the agreement.
The majority said of this passage:
This makes clear that the phrase “employees who will be covered by the agreement” refers to the class or group of employees who are expressed to be covered by the agreement. It does not restrict how the agreement specifies that class or group. As with any other term of an agreement it is a matter for the parties to decide what they agree about (subject to meeting the specific requirements contained in ss. 186 and 187).
[Emphasis in original.]
In essence, all the majority picked up from paragraph 683 was the reference to clause 53 (now s 53 of the Act). In my view, whatever the intention of the draftsperson may have been, the use of the expression“employees who will be covered by the agreement” in s 172 does not make it clear “that the employees covered by the agreement are not limited to those employees who were employed at the time the agreement was made”, but may also include employees employed at a later time as long as they fall within the specified class. On the contrary, s 172 is concerned with the making of an enterprise agreement and the employer can hardly make an enterprise agreement with employees not yet employed, even if some time in the future they may be covered by the agreement. Objectively, the intention of the legislature in using the expression was to ensure that the employer could only make an agreement with those employees who were named or described in the agreement and whom the agreement purported to cover.
In its application to Fair Work Australia for approval of the agreement Newlands, when asked to specify the group of employees who will be covered by the agreement, answered this way:
The agreement covered all employees who were operationally or organisationally distinct as production and trade employees engaged in classes of work included in the Black Coal Mining Industry Award 2010, other than those employees who were not legally able to be covered as they were covered by an Australian Workplace Agreement that had not reached its nominal expiry date, or who elected in writing not to be covered by the agreement.
There was no evidence that anyone had elected in writing not to be covered by the agreement before the application was made to Fair Work Australia. Indeed, the case was conducted below and in this Court on the common understanding that employees could, and if so disposed would, make that election after the agreement was approved.
There are no statutory limits on the class of employees who may be covered by an agreement save for those imposed by ss 186 and 187. Section 53 states that an employee is covered if “the agreement is expressed to cover (however described)” him or her. Section 256A(2) enables the agreement to specify employees by class or name. In the case of descriptions by class, s 256A(4) provides some examples but expressly does not purport to limit the way this can be done. The opt out clause is not at odds with s 256A. It is merely a device for limiting the membership of the chosen class. The class is described by inclusion and exclusion. The terms of s 256A allow for the implicit exclusion of certain employees and the Act clearly contemplates that not all employees will be covered by an enterprise agreement. The CFMEU accepted that employees covered by AWAs and ITEAs could validly be excluded. Thus, the mere exclusion of a group of employees would not mean that there is no valid enterprise agreement. Nor, in my view, would the fact that the identity of those who might later be excluded is unknown at the time the agreement is made. The membership of the class will be fluid. At that time all that can be known for certain is that those employees who voted on the making of the agreement will be covered by it for as long as they remain within the class.
The purpose of the relevant provisions in Part 2-4 is to facilitate the making of a democratic and informed decision on whether the agreement should be made. I do not see the opt out clause as inconsistent with this intention. Section 172(2) enables employers to make enterprise agreements with those employees employed at the time the agreement is made and who will be covered by the agreement. The combined effect of ss 180-182 is that such employees – those current employees whose terms and conditions of employment will be affected by the proposed agreement – are provided with the opportunity to vote on it, and the agreement is made when a majority of them cast a valid vote in favour of it. In this case they were the employees engaged at the Newlands Surface Operations in the classes of work included in Schedule A of the relevant award who had not elected in writing not to be covered by the agreement. If the employees who voted on the agreement answered that description, then they also answered the statutory description of employees named by class. Thus, those employees who will be caught by its terms had the opportunity to vote for or against it. If, before the agreement was made, any of these employees had elected in writing not to be covered by the agreement they would not have been entitled to participate in the vote because the agreement excluded them. There is no lack of clarity or certainty about who will be covered by the agreement at the time it is made or, indeed, at any later time. The fact that at a later date employees who had voted on the agreement may choose not to be covered by it does not mean that at the time the agreement was made it was not a necessary consequence of its terms that they were covered by it.
The Act does not demand that those employees are covered in perpetuity by the agreement. That would be absurd. After all, as the majority observed, employees may come and go. Some may die. Some may retire or be dismissed or retrenched. Some may leave the mine for other jobs. It is true that these people would no longer be employees. Some, however, will leave the class but remain in Newlands’ employ, such as those who accept promotions to positions outside the class. Yet, at the time the agreement is made or approved, their identities will be unknown. That contingency does not signify that there is no enterprise agreement within the meaning of the Act. The CFMEU sought to equate the position of an employee who accepted a promotion with that of an ex-employee. It argued that in law a change of duties or classification leads to a termination of the old contract of employment and the making of a new one (referring to Brackenridge v Toyota Motor Corporation Australia Ltd [1996] IRCA 628; (1996) 142 ALR 99 at 106). That case, however, turned on its own facts. Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 103 IR 160 at [18]- [20] and [44], to which Newlands referred, suggests a different interpretation. Whatever the position, however, these people remain employees.
Even so, the CFMEU submitted that the position of employees transferred to other positions was accommodated by the Act. It relied on s 53(6) which provides that a reference in the Act to an enterprise agreement covering an employee is a reference to the agreement covering the employee in relation to particular employment. But, as Newlands pointed out, s 53(6) has nothing to do with this situation. Its purpose is to deal with a situation where an employee has more than one job. It ensures that the terms of the agreement cover only the job to which the agreement refers. There are similar provisions relating to comparable references to modern awards (ss 47(3), 48(5)). If there is any doubt about that, it is removed by what is said in paragraph 205 of the Explanatory Memorandum:
This means that, if a national system employee has more than one job, each job is treated separately in determining the effect of an award or agreement on the employee’s entitlements in relation to each job. For instance, the rule that only one enterprise agreement can operate in relation to a person at a particular time (see clause 58) does not mean that two agreements cannot cover, or apply to, an employee in relation to two different jobs.
I agree that Fair Work Australia is not empowered to approve an agreement unless it is made in accordance with the terms of ss 180(2), (3) and (5) and s 182(1) of the Act but I am not persuaded that this is an agreement that was not made in accordance with those terms’.
[21] As to the ‘fairly chosen test’, Her Honour said at para [102] - [103]:
‘Newlands submitted that the cursory way in which the issue was dealt with in the reasons can be explained by the fact that before the Commissioner there was never an issue that the group had been fairly chosen. Even if that were so, however, it would not relieve them from their statutory task. They had to be satisfied for themselves and before reaching such a state of satisfaction they had to consider whether the group was geographically, operationally or organisationally distinct. But it was not so. Both parties addressed the Commissioner at length on the point. Indeed, the Commissioner referred in his reasons (at [63]) to “extensive submissions from Newlands and from the CFMEU on the issue of Section 186(3) and (3A)”. The transcript of the argument was not only before me but also before the Full Bench. The point counsel for the CFMEU squarely made (with which the Full Bench did not deal) was that the effect of the opt out clause was to create two distinct groups within the one organisational area with no sound basis for distinguishing between them.
Section 186(3A) imposes an obligation on Fair Work Australia, in deciding whether the group was fairly chosen, to take into account whether the group of employees covered by the agreement is geographically, operationally or organisationally distinct. In other words these are factors Fair Work Australia is bound to consider. A failure to do so will give rise to jurisdictional error. It is not enough for it to state that it is satisfied that the requirements have been met. Here, the majority made no finding about whether or not the group was geographically, operationally or organisationally distinct. Without reaching a view about that, it could not perform its statutory task.
This is not merely a case of failing to give adequate reasons. To take a matter into account means to evaluate it and give it due weight: Nestle Australia Ltd v Commissioner of Taxation (Cth) (1987) 16 FCR 167 at 184 per Wilcox J, cited with approval by Hely J in Elias v Commissioner of Taxation [2002] FCA 845; (2002) 123 FCR 499 at [62]. If the matter does not rate a mention, it is difficult to see how it can be said that it was taken into account, especially when the authorities indicate that mere advertence will not be enough. See, for example, Zhang v Canterbury City Council[2001] NSWCA 167; (2001) 51 NSWLR 589 at [64]’.
[22] When remitted back to the Full Bench of FWA, the Full Bench, by majority, found that the employees covered by the Agreement were ‘fairly chosen’. Hamberger SDP, (McCarthy DP, agreeing on this point), said at para 25:
‘The only distinction between those who would be covered and those who would not is that the latter have made an election not to be covered. I do not consider that there is anything unfair about such a process (or such an outcome)’.
The presiding member of the Bench, Hamberger SDP, found that the Agreement could be approved with an undertaking as to the BOOT and the second member in the majority, McCarthy DP, found that no undertaking was required for the Agreement to be approved.
[23] More recently, Lawler VP, considered Newlands No. 1 and the ‘fairly chosen’ test and said at paras [16] - [20]:
‘For myself, I consider that the reasoning of Roe C on this topic is correct. If employees in a given group can opt-out of the coverage of an enterprise agreement then I do not see how that group can properly be described as a “group of employees who will be covered by the agreement” within the meaning of s.186(3). This language connotes certainty of coverage by the agreement if an employee is employed in a particular role while the agreement is in operation. If an employee who is otherwise within the scope of an enterprise agreement has the right to elect not to be covered by the agreement then it cannot be said that the employee will be covered by the agreement while it is in operation but only that they may be covered by the agreement. That is not what s.186(3) requires. Further, in my view, the objects, purpose and scheme of the FW Act in relation to enterprise bargaining is inconsistent with an ”opt-out” clause permissibly forming part of an enterprise agreement.
The second Full Bench decision does not address the requirement in s.186(3) in relation to the operation of the opt-out clause in respect of employees who are not employed at the time the Agreement comes into operation but who are employed while it is in operation. In my view the arguable ability of the employer to make an opt-out election a condition precedent to employment creates an additional difficulty in relation to the requirement in s.186(3). Such an employee cannot choose to be employed under the Agreement. In my view this also renders the group in the present case “unfairly chosen”. However, such a view is inconsistent with a majority position on s.186(3) in the second Full Bench decision.
But for the second Full Bench decision, I would have found that the requirement in s.186(3) was not made out. I would have been prepared to address that concern by accepting an undertaking pursuant to s.190 that, notwithstanding clause 2 of the New Acland Coal Enterprise Agreement 2011, while ever that Agreement remains in operation the Company will not seek or accept from an employee who is a Production Mineworker or Trade Mineworker, as described in clause 6.1 of that Agreement, any election in writing not to be covered by the Agreement or make such an election a condition precedent to employment in such a classification”.
Conclusion
I have found that the BOOT is not satisfied in relation to the Agreement. On binding authority I am satisfied that the requirement in s.186(3) has been met. I am otherwise satisfied that the requirements of the FW Act have been met in relation to the application for approval.
I am prepared to accept an undertaking in relation to the BOOT that meets my concern. I take the view that an undertaking sought pursuant to s.190 should be confined to that which is sufficient to meet the tribunal’s “concern” and cannot permissibly be made the occasion for imposing restrictions on the employer which go beyond meeting that concern. For this reason I propose an undertaking consistent with the reasoning of Katzmann J and of Hamberger SDP in the second Full Bench decision, the main operative clause of which would be:
Notwithstanding clause 2 of the New Acland Coal Enterprise Agreement 2011, while ever that Agreement remains in operation the Company will not:
(a) seek or accept from an employee who is a Production Mineworker or Trade Mineworker, as described in clause 6.1 of that Agreement, any election in writing not to be covered by the Agreement unless the Company also enters an enforceable agreement with such employee that provides a remuneration to the employee that is greater than the remuneration to which the employee would be entitled under the Black Coal Mining Industry Award 2010; or
(b) make such an election a condition precedent to the employment of a person as a Production Mineworker or Trade Mineworker, as described in clause 6.1 of that Agreement’.
CONSIDERATION
[24] I agree with Mr Slevin that there appears to be conflicting views between individual members of FWA with respect to ‘opt out’ clauses in agreements. Nevertheless, it seems to me that there is considerable force to the observations and conclusions of His Honour, Lawler VP, in New Acland, particularly as the clear language of s 186(3) of the Act which makes it obvious that the ‘group of employees to be covered by the agreement’ are those who will be covered by it. Plainly, if an employee can elect to ‘opt out’ then such an employee cannot be one who will be covered by the Agreement. His Honour more eloquently expands on this notion at para [16] supra above and I respectfully agree with him. While I accept that the words ‘will be covered’ are not expressly found in s 186(3) or 3A, in my view, these provisions sit comfortably with the other provisions in Part 2-4 of the Act dealing broadly with enterprise agreements which will cover employees. The words ‘will be covered’ are to be found many times in the preceding sections to s 186, namely; ss 172, 173, 174, 176, 178, 180, 181, 182. Therefore, I do not accept the submission of the applicant that the words are limited to scope orders or majority support determinations: see ss 238 and 237 respectively.
[25] Even so, it is not permissible to compartmentalise the overall intent and purpose of Part 2-4 of the Act into artificial and irrelevant distinctions relating to before and after an agreement, is made. The words do no more than recognise a timeline for approving the agreement, rather than demonstrate any serious statutory distinction between the words when used in different sections. Moreover, I agree with His Honour that if the objects, purpose and whole scheme of the Act is designed to encourage enterprise bargaining (as various legislative provisions have done for some time) it is difficult to reconcile these criteria with an agreement which permits the very opposite.
[26] I digress to speculate on another absurd outcome which could arise where an ‘opt out’ clause is incorporated into an agreement. Agreements can have a maximum nominal term of 4 years. It seems that over time, it would be entirely plausible for all employees, including new employees, to ‘opt out’ of the agreement, resulting in the agreement covering no one. In my view, this would be inconsistent with the legislative purpose of the Act and was surely not comprehended by the legislature as an outcome of enterprise bargaining.
[27] In addition, I ask the rhetorical question, what might a prospective employee choose to do when applying for a job and is faced with opting for lower rates and conditions than those provided for in the prevailing agreement? The answer seems to me to be self evident. While there is obviously no evidence in this case of such a likelihood, it is not too hard to imagine what any prospective employee might do in order to ‘curry favour’ with the employer. To my mind, such a result would be contrary to, and undermine the philosophy of encouraging employers and employees to reach agreements which are mutually beneficial and fair. After all, this is one of the objects of Part 2-4 of the Act found at s 171 as follows:
‘(a) to provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits; and
(b) to enable FWA to facilitate good faith bargaining and the making of enterprise agreements, including through:
(i) making bargaining orders; and
(ii) dealing with disputes where the bargaining representatives request assistance; and
(iii) ensuring that applications to FWA for approval of enterprise agreements are dealt with without delay’.
[28] Conversely, I do not imagine that too many existing employees, if at all, would see any benefit in opting out of the Agreement. For my own part, I do not understand what the benefits are for employees in doing so. For me, this raises some reservations as to what the motivations are in pressing for such provisions.
[29] The above observations fortify my general concerns as to the fairness of ‘opt out’ clauses in agreements. In my view, they should be discouraged, if not ultimately found to be inconsistent with the statutory purpose and intent of Part 2-4 of the Act. That said, I am also bound by the Full Bench’s decision in Newlands No. 2.
[30] Accordingly, I will accept an undertaking, pursuant to s 190(3) of the Act, in the terms proposed by Ms Armbrust in para [12] above. Consequent upon receipt of that undertaking and subject to any further views of the parties (s 190(4)) being filed and served within seven (7) days of today, I shall approve a single enterprise agreement to be known as the Queensland Bulk Handling Enterprise Agreement 2012.
[31] Pursuant to s 54 of the Act, the Agreement shall operate 7 days after the filing of such an undertaking or such other date as the Tribunal determines.
DEPUTY PRESIDENT
Appearances:
Applicant: Ms D Armbrust, Human Resources Manager for New Hope Group.
Respondent: Ms J Hobson, Industrial Officer, CFMEU - Mining and Energy Division
Hearing details:
2012
SYDNEY
29 February
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