Rigforce Pty Ltd T/A Rigforce

[2020] FWC 591

[2020] FWC 591

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement

Rigforce Pty Ltd T/A Rigforce
(AG2019/835)

COMMISSIONER LEE MELBOURNE, 9 APRIL2020

Application for approval of the RFD Enterprise Agreement 2019 - remitted from Full Bench after appeal upheld due to failure to comply with s.180(5) - genuine agreement concern-consideration of whether s.188(2) can overcome the concern-whether there are consequences for Commissions satisfaction under s. 188(1)(c) - whether proposed s.190 undertaking meets the concern - undertaking does not meet the genuine agreement concern - application dismissed.

Introduction and Background

[1] The application for approval of the RFD Enterprise Agreement 2019 (the Agreement) was made on 21 March 2019 by Rigforce Pty Ltd T/A Rigforce (the Applicant). The application was allocated to me. I determined I was satisfied that the requirements in s. 186, 187 and 188 were met and subsequently approved the Agreement on 5 April 2019.

[2] Subsequent to my decision to approve the Agreement, the Australian Workers’ Union (AWU) appealed the decision to approve the Agreement on a number of grounds. By a decision dated 23 October 2019, a Full Bench of the Fair Work Commission granted the AWU an extension of time to lodge the appeal, granted permission to appeal in relation to Ground 1 of the AWU’s Notice of Appeal, and upheld Ground 1 on the basis that the Applicant’s explanation of the Agreement’s rates of pay as they compared with the predecessor agreement was incorrect. In the circumstances, the Full Bench determined that the conclusion that s.180(5) was complied with was unavailable. The Full Bench determined that:

“[42] In circumstances where there was a failure to comply with s 180(5), it was not jurisdictionally available to the Commissioner to conclude that the “genuinely agreed” approval requirement in s 186(2)(a) was satisfied absent the application of s 188(2), which was clearly not considered by the Commissioner. In those circumstances, we consider it necessary to grant permission to appeal in respect of the “genuinely agreed” ground, uphold the appeal, and quash the Decision.” 1

[3] The Full Bench refused permission to appeal in relation to the remaining grounds of the Appellant’s Notice of Appeal. The Full Bench remitted the matter to me for redetermination. The Full Bench noted that the redetermination would require consideration to be given as to whether:

•  Section 188(2) of the Act can overcome the Applicant’s non-compliance with s.180(5); and

•  The Applicant’s incorrect statement has any consequences for the Commission’s satisfaction or otherwise of s. 188(1)(c). 2

[4] Subsequent to the remittal, I set directions for the filing of materials and listed the matter for hearing. I determined to allow the AWU to be heard in the matter of the remittal as I thought it was appropriate in the circumstances to do so having regard to the discretion afforded to me pursuant to s. 590 of the Act. I also allowed counsel for the Applicant permission to appear.

[5] Following the hearing, the Applicant wrote to my Chambers and asked to file further brief written submissions. The AWU did not oppose the proposed course of action, and further directions were issued for both parties to provide further submissions. Following the Full Bench handing down the recent decision of Construction, Forestry, Maritime, Mining and Energy Union v Karijini Rail Pty Ltd (Karijini Rail), 3 the Applicant contacted my Chambers and drew my attention to the the Full Bench’s observations in the matter. In the circumstances, I allowed both parties an opportunity to make further submissions on the significance of that decision with reference to the matter currently before me.

Background

The error in the explanation to employees

[6] The Applicant was previously named Interpeople Contracting Services Pty Ltd (ICS). In 2013, ICS, as the Applicant then was, entered into the ICS Enterprise Agreement 2013 (ICS Agreement). At the time of the making of the Agreement, three employees were to be covered by it and those employees are currently covered by the ICS Agreement.

[7] At the time of making the Agreement, a number of steps were taken to explain the terms of the Agreement and the effect of those terms to employees. One of the steps taken was that Mr O’Brien, Managing Director for the Applicant, prepared an explanatory document which set out each clause of the proposed Agreement, the meaning of each term and set out the material differences between the proposed agreement and the existing ICS Agreement. This document was emailed to all employees. There were also other steps that were taken to explain the terms of the Agreement. These are set out in paragraph [20] of the Full Bench decision. 4

[8] During the hearing before the Full Bench, Mr O’Brien provided additional evidence as to the steps taken to explain the Agreement to employees and his evidence was summarised by the Full Bench as follows:

“[24] Mr O’Brien’s witness statement gave the following information concerning the explanation of the terms of the RFD Agreement given to relevant employees:

• the RFD Agreement was with the three employees of Rigforce in the classifications in the agreement at the relevant time, two of whom were permanent employees and one of whom was a casual;

•  on 6 March 2019 Mr O’Brien sent an email to the three employees which attached the explanatory document, and the email contained web links to the ICS Agreement, the Hydrocarbons Industry (Upstream) Award 2010 (Award), and two other recent offshore drilling enterprise agreements entered into by competitors;

•  Mr O’Brien had individual discussions with each of the three employees about the RFD Agreement (one in person, and two by telephone), he went through the agreement with each employee using the explanatory document;

•  each employee was at the time paid significantly in excess of the rates specified in the RFD Agreement, and both the permanent employees raised a concern that their actual rates might be reduced to the rates in the agreement once it was approved;

•  in response, Mr O’Brien said (in substance) that the rates in the RFD Agreement were the minimum rates, and they could be dropped back to them to ensure that Rigforce was able to compete for future work in what was a very competitive market; and

•  Mr O’Brien also said that the rates in the RFD Agreement were higher than for the agreements for the two competitors against which it benchmarked itself, and this is what the rates explanation in the explanatory document was meant to say.” 5

[9] The Full Bench identified that an incorrect statement was made in the explanatory document circulated by Mr O’Brien. The detail of the error is important and was explained by the Full Bench as follows:

“[22] The explanatory document referred to above (explanatory document), which was annexed to Mr O’Brien’s Form F16 declaration, gave an explanation of various terms of the Agreement in a table with four columns, which were headed “RFD Agreement clause”, “Explanation”, “How does the RFD Agreement change from the ICS Agreement”, and “How does the RFD Agreement differ from the Hydrocarbons (Upstream) Award 2010 (Award)” respectively. In relation to the classifications and rates of pay set out in Annexure A, the statement in the third column of the explanatory document concerning how the RFD Agreement changed from the ICS Agreement relevantly includes the following (underlining added):

“The minimum rates of pay in the RFD Agreement have been increased.

The classification of “Non-Drilling Support Functions” has been renamed to “Drilling Support Functions” for clarity.

The RFD Agreement no longer includes the classification of “Processing and Operations” which was included in the ICS Agreement…”

[23] It is apparent, and Rigforce has conceded, that the underlined part of the statement is incorrect. The hourly and daily rates for permanent employees in all three classifications under the RFD Agreement are lower than the equivalent rates in the ICS Agreement that was entered into in 2013, at least until the first CPI increase is due on 1 July 2020 (and, having regard to the current low rate of inflation, almost certainly not even then for the Drilling Functions classification).” 6

[10] The Full Bench found that, leaving aside the error described in the explanatory document, that it might be said that the approach taken by the Applicant to explain the Agreement was a model of its kind. 7 Importantly however, having regard to the incorrect statement, the Full Bench made the following observations:

“[39] However that incorrect statement changes the position. The existing minimum pay entitlements of the three employees immediately before they made the RFD Agreement were those contained in the ICS Agreement. Any explanation of the effect of the terms concerning the rates of pay in the RFD Agreement necessarily required the identification of how the pre-existing rates of pay in the ICS Agreement were to be altered by the RFD Agreement. It is a statement of the obvious that rates of pay are, to employees, likely to be the most fundamentally important aspect of an enterprise agreement. That position was no different here merely because the employees at that time were receiving actual rates of pay higher than what was proposed in the RFD Agreement because, as the statement of Mr O’Brien revealed, the employees were concerned about the prospect of their pay rates being reduced in the future to those in the agreement, and Rigforce advised them that this could possibly happen.

[40] In the circumstances, the reasonable step required to be taken by Rigforce for the purpose of s 180(5) was to give an accurate explanation of any change in the quantum of the rates of pay that would be effected if the RFD Agreement displaced the ICS Agreement. This step was all the more necessary because the minimum rates of pay for permanent employees were to be reduced at least until 1 July 2020 if not for longer. Rather than the explanatory document clearly identifying the reduction in rates, it incorrectly conveyed to employees that the rates constituted an increase upon those contained in the ICS Agreement. The explanatory statement said that the minimum rates of pay in the “RFD Agreement have been increased”. The clear import of these words is that the rates in the RFD Agreement had been increased as against the ICS Agreement, not simply that they had been increased from some earlier offer. The statement must be read in the context of the table in the explanatory statement, the relevant column of which was concerned with the question “How does the RFD Agreement change from the ICS Agreement?” The evidence of Mr O’Brien before us does not demonstrate that this error was ever identified to employees let alone corrected. It makes unavailable the conclusion that s 180(5) was complied with.”

[11] As set out earlier, the Full Bench remitted the matter to me to determine whether:

• Section 188(2) of the Act can overcome the Applicant’s non-compliance with s.180(5); and

• The Applicant’s incorrect statement has any consequences for the Commission’s satisfaction or otherwise of s. 188(1)(c). 8

[12] The submissions on these matters made before me on remittal are as follows.

The Applicant’s Submissions

[13] As to whether s. 188(2) can overcome the non-compliance with s.180(5), the Applicant submitted that its incorrect statement was a minor procedural or technical error capable of cure under s. 188(2) and relied on the submissions that were made to the Full Bench on this point. 9

[14] Those submissions were:

“Section 188(2) establishes an alternative mechanism for the Commission to reach its state of satisfaction concerning genuine agreement. It relevantly operates where the Commission is satisfied of two things: first, that the agreement would have been genuinely agreed to but for minor procedural or technical errors (which relevantly include those made in relation to section 180(5) requirements); and second, that the relevant employees were not likely to have been disadvantaged by those errors.

The Commission’s assessment of whether an error is of a “minor procedural or technical” nature calls for an evaluative judgment having regard to the underlying purpose of the relevant requirement.34 As noted above, the underlying purpose of the requirement in s180(5) is to enable the relevant employees to cast an informed vote.35

The assessment of whether an error is “minor” must also be made in context. That is, in light of other relevant circumstances which operate to mitigate the severity of what might otherwise have been the error’s impact upon the employees’ genuine agreement.

Here, those contextual matters relevantly include each of the matters identified at Part B above. Chief amongst those for s 188(2) purposes is the fact that the employees well understood that the Agreement’s rates were ‘baseline’ rates which were above those of Rigforce’s competitors, but which did not constitute their actual rates of pay. That fact establishes two things:

(a) first, that the error was, in all of the relevant circumstances, a minor one. It concerned one aspect of one explanation of one term in the Agreement, in circumstances where that one term operated as a safety net rather directly setting the employees’ conditions; and

(b) second, the employees covered by the agreement were not likely to have been disadvantaged by the error. Each of the employees who voted on the Agreement was paid a higher over-agreement rate of pay. Each engaged in a detailed face-to-face explanation process in which they ventilated their practical concerns with the Schedule A rates. No serious criticism could be levelled at the content of that explanation. Any ‘disadvantage’ would have in any event been cured by those subsequent steps. To hold that those employees were disadvantaged by the inaccuracy in the explanation would require the Full Bench to find that the relevant employees disregarded Rigforce’s broader explanations (including the provision of the relevant instruments themselves) and voted in favour of the Agreement in reliance on that inaccuracy. Those findings are not open in light of O’Brien’s direct evidence of his discussions with the relevant employees.” 10

[15] The Applicant submits that, should the Commission find that s.188 (2) cannot cure the error, and accordingly held a concern that the Agreement was not genuinely agreed, the Applicant proposes an undertaking which provides higher rates of pay for all Agreement classifications compared to those under the ISC Agreement. It is submitted that proposed undertaking would bring the terms of the Agreement in line with the Applicant’s explanatory materials, and thus cure the only genuine agreement issue identified by the Full Bench. The undertaking is set out in detail in schedule 1 of the Applicant’s written submissions filed on 22 November 2019. The effect of that undertaking is to replace the pay rates in the Agreement that was made, with higher rates. The rates in the undertaking are approximately 5% higher than the rates in the ICS Agreement. The undertaking also would increase the casual rates of pay by 19%.

[16] Whilst the Applicant accepts that its incorrect explanation meant that it did not comply with s. 180(5), they submit that an incorrect explanation does not give rise to any “other reasonable ground” for the purposes of s 188(1)(c) not already addressed “through the lens” of s.180(5). On this point the Applicant submitted as follows:

“Section 188(1)(c) “is intended to pick up anything not caught by paras (a) and (b)”.2 That its scope does not overlap with matters caught by subparagraphs (a) and (b) is plain from its disjunctive opening words: “any other reasonable ground”. Whilst the examples set out by the Full Court in One Key Workforce suggest that the provision of incorrect information to the voting group might fall within the scope of s 188(1)(c), they would do so only in circumstances where those matters did not already bear upon the Commission’s assessment of s 180(5) (and consequently upon s 188(1)(a)).

Here, the incorrect explanation has been raised through the lens of ss 180(5) and 188(1)(a). The consequences of that incorrect explanation for approval would be no different if they were instead raised through the lens of s 188(1)(c): the error would still be amenable to the same s 188(2) analysis advanced at Part B above, or alternatively could be addressed by the undertaking proposed at Part D below in the same fashion.” 11

[17] The Applicant also submits the following:

“The fact that the revised rates of pay creating the relevant ‘cure’ would arise by way of undertaking is no barrier to a finding of satisfaction concerning s 186(2)(a) (whether on the basis of ss 180(5) or 188(1)(c)). A literal and contextual reading of s 190(1)(b) shows that Part 2-4 comprehends that concerns about each of the approval requirements set out in ss 186 and 187 are at least capable in-principle of address by undertaking. The section carves out none of those requirements. Were s 186(2)(a) intended to have been immune from s 190, Parliament would have dealt with as a standalone approval requirement (as is the case with section 181(2)).” 12

[18] In submissions filed on 11 March 2020, the Applicant specifically addressed the Full Bench decision in Karijini Rail on this point. The Applicant submitted that the conclusion that its proposed undertaking is capable of satisfying, and does in fact satisfy, the Commission’s concern over whether it met the requirement in s.180(5) and in turn, the requirements in s. 188(1)(a) and 186(2)(a) is now “unassailable” in light of Karijini Rail. In that case, the Full Bench found no error with the Deputy President’s acceptance of an undertaking to bring the terms of the agreement in line with the explanation given.

[19] The Applicant drew my attention to the hypothetical scenario set out at paragraph [107] of that decision:

“[107] Secondly, a concern about whether an employer has complied with s.180(5) and therefore whether the agreement has been genuinely agreed to by the relevant employees, may as a matter of logic be remedied depending on the nature of the concern. It is accepted that in a number of cases concerns about genuine agreement will not be able to be met by an undertaking. But it is not the case, as a matter of logic, that any such concern could never be met. Why for example, could not a concern that an employer explained the effect of a term of the agreement as to shift work was that an afternoon shiftworker would receive a 15% loading under the agreement, when the agreement only provides for a 10% loading, be met by an undertaking that the employer would pay an afternoon shiftworker a loading of 15%? We consider that such an undertaking would remedy the concern since the agreement operating with the undertaking is consistent with the explanation given.” 13

[20] The Applicant submits that approach is on all fours with the undertaking here, in that it would bring the Agreement in line with the explanation provided in the same way as the undertaking in the hypothetical shift loading example given by the Full Bench in Karijini Rail and the undertaking accepted by Deputy President Beaumont at first instance.

[21] The Applicant also makes the following submission:

“Further, as the Full Bench observed (at [108]), that approach is also consistent with that adopted by the Full Bench in Specialist People No 2.2 It is similarly consistent with that adopted by the Commission at first instance in each of MMS No 2,3 and SIMPEC.4 For the reasons Rigforce has previously advanced, there is no relevant distinction to be drawn between s 180(5) concerns arising from express inaccurate statements on the one hand, and those arising from omissions on the other: If anything, an undertaking which brings an agreement into line with an express explanation is more likely to cure any concern over the quality of that explanation. Indeed, Karijini Rail provides a pertinent example of a case in which an express inaccurate explanation was found to be curable (and cured) by a subsequent undertaking: in that case, the defective explanation arose from express statements which focused upon rates of pay in letters of offer rather than those detailed in the relevant agreement. 14

[22] The Applicant summarises its position as follows:

“Rigforce’s failure to comply with s 180(5) identified by the Full Bench is capable of remedy by operation of s 188(2). If it is not, its Proposed Undertaking provides a complete answer to any genuine agreement concerns (whether under the guise of ss 180(5), or 188(1)(c)).” 15

The AWU submissions

[23] The AWU submits that the application of s.188(2) is unavailable to the Applicant in the present circumstances. 16 This is for two reasons. Firstly, for s.188(2) to apply to an error made, that error must be minor. Secondly, it must be unlikely that the employees covered by the Agreement were disadvantaged by the error.

[24] The AWU submits that the error was not minor and also that the error was not unlikely to disadvantage the employees. 17

[25] The AWU refer to the decision in Re Huntsman Chemical Company Australia P/L t/a RMAX Rigid Cellular Plastics and Ors 18 (Huntsman) and submit that:

•  In Huntsman, the Full Bench held that the underlying purpose of s.180(5)(a) is to ensure that employees understand the effect of the agreement that is to be voted on, enabling them to make an informed decision.

•  The Applicant has conceded that it did not comply with the requirements of s.180(5). Specifically, the Applicant inaccurately informed the relevant employees that the rates of pay in the Agreement were superior to those contained in the predecessor enterprise agreement. when in fact the Agreement rates of pay for permanent employees were inferior. 19

[26] The AWU submit that the error made by the Applicant is in no way minor, especially when the purpose of s.180(5) to enable employees to make an informed decision is taken into account. Further, the error runs wholly counter to the underlying purpose of s.180(5) as it inevitably leads to employees being misinformed. An error that leads to such incorrect information being provided is entirely incapable of being characterised as ‘minor’.

[27] The AWU refer to the submissions of the Applicant that the error in providing incorrect information to employees to prepare them to vote on the Agreement was minor as the rates of pay in the Agreement were ‘baseline’ rates that did not actually constitute the employees’ actual rates of pay. In response, the AWU refer to the following statement of the Full Bench in AWU v Rigforce:

“…It is a statement of the obvious that rates of pay are, to employees, likely to be the most fundamentally important aspect of an enterprise agreement. That position was no different here merely because the employees at the time were receiving actual rates of pay higher than what was proposed in the RFD Agreement…” 20

[28] The AWU submits that, insofar as the Applicant contends that the ‘baseline’ rates of pay in the Agreement somehow reduce the importance of rates of pay to employees and therefore the error in providing incorrect information about them is a ‘minor’ one, it appears that the Full Bench would disagree.

[29] In relation to any assertion that the error made by the Applicant would be unlikely to disadvantage employees covered by the Agreement, the AWU submits that it is not available for the Commission to conclude that the error would be unlikely to disadvantage employees. This is because the rates of pay in an enterprise agreement are of fundamental importance to employees. The effect of the error made by the Applicant was to lead employees to believe that the rates of pay in the Agreement they voted to approve were superior to those that applied to them at the time and it is clear that at least the permanent employees are likely to be disadvantaged by the error.

[30] The AWU note that it is the Applicant’s own evidence that employees to be covered by the Agreement were concerned by the prospect of their actual rates of pay being reduced to the ‘baseline’ rates of pay contained in the Agreement. 21 Accordingly, any incorrect information provided to those employees about the rates of pay, especially that the rates of pay were superior when they were not, is absolutely likely to disadvantage these employees.

[31] Therefore, the AWU submit that s.188(2) cannot apply to the Applicant’s inaccurate explanation regarding the rates of pay in the Agreement. Although this error may be characterised as ‘procedural,’ it cannot be said to be minor, nor to be unlikely to disadvantage the employees.

[32] The AWU also submits that in the circumstances of the making of the Agreement, the incorrect statement that was made by the Applicant regarding the rates of pay contained in the Agreement does raise a reasonable ground for believing that the Agreement has not been genuinely agreed to by the employees that would be captured by s.188(1)(c). There are two elements to this submission.

[33] The first element is as follows:

“The incorrect statement by Rigforce to the employees who voted on the Agreement regarding rates of pay in the Agreement and how they compare to the rates of pay in the ICS EA was clearly the provision of misleading information. That is, the employees who voted on the Agreement were misled by Rigforce when Rigforce informed those employees that the agreement they were to vote on provided for an increase in rates of pay when it in fact provided for a decrease for two of the three employees.

A Full Court of the Federal Court has held that the provision of misleading information is an obvious example of an action caught by s.188(1)(c). Accordingly, this action by Rigforce is a reasonable ground to believe that the Agreement has not been genuinely agreed to by the employees. As such, the application for the approval of the Agreement must be dismissed.” 22

[34] The second element is that the error made by the Applicant in providing the misleading information about rates of pay to the employees indicates that the Applicant did not provide full disclosure regarding the “true reasons” for making the Agreement to the employees who voted on it. This argument is underpinned by the AWU’s submission (which they admit was traversed in the appeal proceedings), to the effect that it was the intent of the Applicant to use the Agreement to replace the RFMS Enterprise Agreement 2015 (RFMS Agreement), an agreement that covers an associated entity of the Applicant known as RF Managed Services Pty Ltd (RFMS) and to transfer employees covered by the RFMS Agreement to the Agreement (presumably by transferring them to the Applicant) once the Agreement was approved. The AWU claim the rationale for the shift from the RFMS Agreement to the Agreement was to avoid bargaining with employees (and by extension the AWU) for an agreement to replace the RFMS Agreement.

[35] The Applicant submits that this second element to the AWU submission is outside of the remit of the Full Bench and is a thinly veiled reconstitution of one it raised on appeal. I agree with that submission. The fact that the Full Bench expressly confined the scope of s.188(1)(c) matters on redetermination to whether the incorrect statement concerning rates of pay in the explanatory document has any consequence for the Commission’s satisfaction or otherwise under s.188(1)(c) underscores that point. This second element of the AWU argument is an attempt to re-run an argument that was not upheld by the Full Bench. It does not form part of the remittal. Accordingly, this second element to the s.188(1)(c) submission of the AWU is not relevant to the consideration before me.

[36] As to the undertaking proposed by the Applicant, the AWU submit that:

“The applicant has offered a proposed undertaking that it claims to ‘cure’ the defects in the pre-approval process identified by the Full Bench in the appeal proceedings. Whilst the AWU recognises that the proposed undertaking provides for rates of pay to be inserted into the Agreement that are in fact superior to those in the ICS EA, the AWU contests that the proffering of undertakings is available to the applicant to cure the specific defects in its agreement making process.

The AWU submits that the Agreement is incapable of approval on the basis of noncompliance with s.180(5) and due to two separate but related reasonable grounds regarding genuine agreement under s.188(1)(c). The Commission should not accept the undertaking offered by the applicant as it does not resolve these defects. In the submission of the AWU, the grounds under s.188(1)(c) cannot be remedied by way of undertaking, especially the withholding of information by Rigforce of the intended application of the Agreement to Rigforce employees at large, despite only being considered by three of them.” 23

[37] In their most recent submissions, 24 referencing the Full Bench decision in Karijini Rail, the AWU submit that as Karijini Rail is consistent with Construction, Forestry, Maritime, Mining and Energy Union and others v Specialist People Pty Ltd (Specialist People)25 as to the availability of undertakings to remedy a failure to meet the obligation in s.180(5)the decision does not bolster or improve the Applicant’s case in any manner.

[38] As to the differences between the current matter and the circumstances in Karijini Rail, the AWU makes the following submissions:

“The AWU does not agree with the Applicant that the example provided at paragraph [107] of Karijini Rail is necessarily identical to the immediate matter. The AWU accepts that the example concerns aligning an actual entitlement via undertaking to that explained in what was at the time an incorrect explanation. However, there are two easily identifiable differences between the example and the immediate matter.

Firstly, the example is in reference to a loading and not a rate of pay. The rates of pay in an agreement are necessarily more fundamental both to the agreement and to the employees invited to vote on a proposed agreement than a loading.

Secondly, the immediate matter does not merely involve an incorrect explanation on its own, it also involves employees voting, likely on the basis of an incorrect explanation, for an agreement that (for the majority of the voting employees) reduced the rate of pay they were previously entitled to. This is not an express element of the example provided in Karijini Rail.

The AWU accepts that the authorities of Specialist People and Karijini Rail permit undertakings to be proffered to ‘remedy’ an employer’s failure to meet the

obligation in s.180(5) of the Act. However, this availability is contingent on the

nature of the concern raised.5

The example of circumstances where the Full Bench would consider an undertaking acceptable to ‘remedy’ a s.180(5) failure provided in Karijini Rail is not identical to the immediate matter as the Applicant submits. The key differences in the immediate matter must necessarily impact on the nature of the concern regarding compliance with s.180(5). In comparison to the example, the failure by Rigforce involved a more fundamental element of the proposed agreement and likely lead to the employees voting in favour of rates of pay that for the majority of employees were inferior than those that currently applied.” 26

Consideration

Whether s.188(2) of the Act can overcome the Applicant’s non-compliance with s.180(5)

[39] When determining the application of s.188(2) of the Act, it is necessary to evaluate the underlying purpose of the relevant section of the Act. In Huntsman, the Full Bench held that the underlying purpose of s.180(5)(a) is to ensure that employees understand the effect of the enterprise agreement that is to be voted on, enabling them to make an informed decision when casting their vote. 27

[40] In this case, the Applicant inaccurately informed the relevant employees that the rates of pay in the Agreement had been increased from those contained in the predecessor ISC Agreement. However, the Agreement rates of pay for permanent employees were in fact less than what employees were receiving under the ISC Agreement. As a result of providing this incorrect information to the employees, the Applicant did not comply with the requirements of s.180(5) of the Act in relation to the Agreement.

[41] As noted above, the Full Bench stated that:

“It is a statement of the obvious that rates of pay are, to employees, likely to be the most fundamentally important aspect of an enterprise agreement. That position was not different here merely because the employees at that time were receiving actual rates of pay higher than what was proposed in the RFD agreement because, as the statement of Mr. O’Brien revealed, the employees were concerned about the prospect of their pay rates being reduced in the future to those in the Agreement and the Applicant advised them that this could possibly happen.” 28

[42] While this statement was made by the Full Bench in its consideration of compliance with s. 180(5), the observations are relevant to the consideration of whether the misleading information was “minor” within the meaning of s. 188(2). In the Huntsman decision, the Full bench noted that:

“What constitutes a ‘minor’ error calls for an evaluative judgment having regard to the underlying purpose of the relevant procedural or technical requirement which has not been complied with and the relevant circumstances.” 29

[43] As the purpose of s. 180(5) is to enable employees to make an informed decision, the AWU submits that the provision of incorrect information to employees runs wholly counter to the underlying purpose of s.180(5) as it inevitably leads to employees being misinformed. 30 The AWU also submit that an error that leads to such incorrect information being provided is entirely incapable of being characterised as ‘minor.’ I do not agree with the AWU that it is ‘entirely incapable.’ Each case turns on its own facts. However, I do agree that in the circumstances in this case, the error was not a minor error. An incorrect statement that the rates of pay in the new Agreement had been ’increased’ is a matter of considerable significance.

[44] I also agree with the AWU submission that it is not available for the Commission to conclude that the error would be unlikely to disadvantage employees. On the basis that the rates of pay in an enterprise agreement are of fundamental importance to employees and the effect of the error made by the Applicant was to lead employees to believe that the rates of pay in the Agreement they voted to approve were superior to those that applied to them at the time, it is clear that at least the permanent employees are likely to be disadvantaged by the error.

[44] For the reasons above, I am not satisfied that the error is a minor error as contemplated by s. 188(2)(a). Further, I am not satisfied that the employees covered by the Agreement were not likely to have been disadvantaged by the error. Therefore, I am not satisfied that s. 188(2) can overcome the non-compliance with s. 180(5) of the Act.

Does the Applicant’s incorrect statement have any consequences for the Commission’s satisfaction or otherwise of s. 188(1)(c)?

[45] As s. 188(2) of the Act does not operate to overcome the compliance with s.180(5), I have a concern that the Agreement is not genuinely agreed. The Applicant agrees that this is the logical conclusion in circumstances where s. 188(2) does not operate to overcome the failure to comply with s.180(5).

[46] However, the Applicant submits that the incorrect explanation does not give rise to any “other reasonable ground” for the purposes of s.188(1) (c) as s. 188(1)(c) “is intended to pick up anything not caught by paras (a) and (b).” 31 The Applicant submits that the scope of s.188(1)(c) does not overlap with matters caught by subparagraphs (a) and (b) and this is plain from its disjunctive opening words; “any other reasonable ground.” Whilst the examples set out by the Full Court of the Federal Court in CFMEU v One Key Workforce Pty Ltd (One Key Workforce)32suggest that the provision of incorrect information to the voting group might fall within the scope of s.188(1)(c), they would do so only in circumstances where those matters did not already bear upon the Commission’s assessment of s. 180(5) (and consequently upon s.188(1)(a)).

[47] Here, the Applicant submits, the incorrect explanation has been raised through the ‘lens’ of s. 180(5) and subsequently s.188(1)(a). Though the consequences of that incorrect explanation for approval would be no different if they were instead raised through the lens of s 188(1)(c): the error would still be amenable to the same s. 188(2) analysis advanced in relation to the error being a minor procedural or technical error, or alternatively could be addressed by the undertaking proposed to address any genuine agreement concerns.

[48] The AWU submit that the Full Court of the Federal Court in One KeyWorkforcehas held that the provision of misleading information is an obvious example of an action caught by s. 188(1)(c). Therefore, the AWU submit that as the Applicant has supplied misleading information, this is reasonable ground for determining the Agreement is not genuinely agreed and the application should be dismissed.

[49] In One Key Workforce, the Full Bench of the Federal Court determined as follows:

“Paragraph 188(c) is cast in very broad terms. It is intended to pick up anything not caught by paras (a) and (b). Thus, any circumstance which could logically bear on the question of whether the agreement of the relevant employees was genuine would be relevant. One obvious example is the provision of misleading information or an absence of full disclosure (see, for example, Re Toys “R” Us (Australia) Pty Limited Enterprise Flexibility Agreement 1994 (1995) 37 AILR 3-068 (Print L9066) (C No 23663 of 1994)). Another is the likelihood that the relevant employees understood the operation of the various awards that would be affected by the agreement and the extent to which the wages and working conditions for employees under each of those awards would change, for better or worse, under the terms of the agreement. Thus, if we be wrong to conclude that the Commission is bound by s 180(5) to consider the content of the employer’s explanation of the terms of the Agreement and their effect, in order to be satisfied that the Agreement was “genuinely agreed to” having regard to s 188(1)(a)(i), then for similar reasons we would hold that this was a matter which was not only relevant to the question raised by para 188(c), but was a mandatory consideration.” 33

[50] The Full Court explicitly mention the provision of misleading information as an example of a circumstance which could bear on the question of whether the agreement of the relevant employees was genuine. As the Full Court observed, s.188(c) is cast in very broad terms. While it is intended to pick up anything not caught by subsections (a) and (b), the fact that a matter is relevant to subsection (a) does not mean that it is not also relevant to subsection (c).

[51] In this matter, it is conceded that the misleading explanation is a s. 180(5) concern, in that the Applicant has not taken all reasonable steps to ensure that terms of the Agreement, and the effect of those terms were explained to the relevant employees. However, the error also gives rise to a broader concern that employees voting for the Agreement who were clearly concerned about the rates of pay in the Agreement have been misled into believing the minimum rates of pay were superior to the ones they were currently entitled to. What the employees understood “increased” meant to them is not clear at all. There was no indication in the explanation as to the quantum of the increase. The evidence demonstrated that employees asked questions about the rates of pay and whether their actual rates could be reduced to those rates. Information about the rates of pay to which an employee will be entitled is likely a fundamental matter in determining whether an employee votes in favour of an agreement approval, or against it. In all of the circumstances of this matter, the misleading information given, gives rises to a concern that employees have voted for an agreement thinking that the rates of pay they would be entitled to, have been increased above those in the ICS agreement, when they have not. In these circumstances, the Applicant’s incorrect statement means that s.180(5) has not been complied and also has the consequence that I am not satisfied that the Agreement has been genuinely agreed to by employees for the reasons set out above. This is an ‘other reasonable ground’ as contemplated in s.188(1)(c).

Does the undertaking proffered by the Applicant satisfy the genuine agreement concern?

[52] Whether a genuine agreement concern is raised through the lens of s. 180(5) and consequently a concern under s.188(1)(a) or whether it raises a s.188(1)(c) concern, I agree with the submission of the Applicant that a concern under either s.188(1)(a) or s. 188(1)(c) can potentially be resolved by an undertaking. I do not accept the submission of the AWU that a s.188 (1)(c) concern cannot be resolved by an undertaking. It may or may not be, depending on the circumstances of the particular case.

[53] In this case, the explanation was incorrect. Employees covered by the Agreement were told that they would be paid more than received under the terms of the previous ICS Agreement. This was of concern to them, as they queried whether their rates of pay could revert back to the rates of pay in the Agreement. They were told that this was a possibility. As mentioned previously, rates of pay are of the utmost significance to employees. 34

[54] The Applicant submits that the undertaking brings the Agreement in line with the explanation that employees received. 35 It is true that the rates of pay are now increased to more than that of the ICS Agreement as a result of the undertaking. The Applicant submits that any undertaking that increased the rates above the ICS Agreement, be it by 1%, 5% or some other amount, would satisfy the concern.36 I agree that proposed undertaking brings the Agreement in line with the explanation the employees received and in that sense cures the deficiency identified with respect to s.180(5).

[55] However, even if the undertaking proffered satisfies the concern that arises under s.180(5), that does not necessarily resolve the other reasonable ground for believing that the Agreement has not been genuinely agreed to. The explanation provided to employees did not quantify what the increase in minimum rates was. This is not a case where the employees were told that they would be entitled to 5% more than the ICS Agreement rates, but in fact they were not. In those circumstances an undertaking aligning the rates with the purported 5% increase would likely resolve the concern. However, in this case there is only the vague explanation that the minimum rates of pay had been increased.

[56] I do not know what employees had in mind when deciding to vote for the Agreement, having been given the information, “The minimum rates of pay in the RFD Agreement have been increased” and what that statement meant to them. As the Full Bench observed, there was an obligation to provide an accurate explanation of any change in the quantum of the rates of pay that would be effected if the Agreement displaced the ICS Agreement. As mentioned previously, there was no indication of the quantum of the change, only the misleading statement that the rates had been increased. Employees voting for the Agreement may have understood that explanation to mean an increase of a small amount on their previous rates, or a significant amount. In the absence of any explanation as to what quantum the rates were to be increased by, one can only speculate.

[57] The example given in Karijini Rail referred to by the Applicant is not identical to this matter. In the example given, the failure in the explanation was to have incorrectly informed employees they would be paid a shift allowance of 15% when the entitlement was only 10%. In such a circumstance, the Full Bench considered that an undertaking to pay a 15% shift allowance would remedy the concern as the Agreement operating with the undertaking is consistent with the explanation given. In contrast, in this matter, there is no ability to clearly identify and quantify the error as demonstrated in the Karijini Rail example.

[58] In the actual circumstances before Deputy President Beaumont in Karijini Rail, her Honour accepted an undertaking to resolve her concern which “mirrored” the explanation provided. However, again, this is not parallel with the circumstances here. The failure here was one where the employees voted for an agreement that had rates of pay that for the majority of employees, were inferior to those that applied to them at the time they voted to approve the Agreement. They did so in the context of having had it explained to them that the rates in the Agreement would be increased, when in fact that was not the case.

[59] For these reasons, I am not satisfied in the circumstances, that the undertaking proffered meets my concern that the Agreement has not been genuinely agreed to by the employees.

Conclusion

[60] In this matter, I am not satisfied for the reasons set out above that s.188(2) of the Act can overcome the Applicant’s non-compliance with s.180(5).

[61] The Applicant’s incorrect statement gives rise to a concern under s. 180(5) and consequently s.188(1)(a) as well as as concerns relevant to s.188(1)(c) as set out above.

[62] I have considered the undertaking proffered by the Applicant. However, for the reasons set out above, I have a further concern that, in all of the circumstances, the incorrect explanation has the consequence that I am not satisfied that the Agreement has been genuinely agreed to by employees. This concern is an ‘other reasonable ground’ for believing that Agreement has not been genuinely agreed to by employees as contemplated in s.188(1)(c). For the reasons set out, I am not satisfied that the undertaking proffered meets that concern.

[63] I am not satisfied that the Agreement has been genuinely agreed to. The requirement for approval set out in s.186(2)(a) has therefore not been met.

[64] Accordingly, the application is dismissed.

COMMISSIONER

Appearances:

Mr Pollock for the Applicant
Mr Duncalfe for the AWU

Hearing details:

2019

20 December

By Telephone

Final written submissions:

19 March 2020

Printed by authority of the Commonwealth Government Printer

<PR716429>

 1   [2019] FWCFB 6960

 2   [2019] FWCFB 6960 at [44]

 3   [2020] FWCFB 958

 4   [2019] FWCFB 6960

 5   [2019] FWCFB 6960 at [24]

 6   [2019] FWCFB 6960 at [22] – [23]

 7   [2019] FWCFB 6960

 8   [2019] FWCFB 6960 at [44]

 9   Respondent’s Supplementary Outline of Submissions in C2019/2792, filed 23 August 2019

 10   Respondent’s Supplementary Outline of Submissions in C2019/2792, filed 23 August 2019 at [24] – [27]

 11   Applicant’s Further Outline of Submissions on Rehearing, filed 22 November 2019 at [7] – [8]

 12   Applicant’s Further Outline of Submissions on Rehearing, filed 22 November 2019 at [11]

 13   [2020] FWCFB 958

 14   Applicant’s Further Supplementary Outline, filed 11 March 2020 at [6]

 15   Applicant’s Further Outline of Submissions on Rehearing, filed 22 November 2019 at [17]

 16   The Australian Workers’ Union Submissions in Reply, filed 29 November 2019 at [7]

 17   The Australian Workers’ Union Submissions in Reply, filed 29 November 2019 at [8]

 18   [2019] FWCFB 318

 19   The Australian Workers’ Union Submissions in Reply, filed 29 November 2019 at [10] – [12]

 20   [2019] FWCFB 6960 at [39]

 21   The Australian Workers’ Union Submissions in Reply, filed 29 November 2019 at [21]

 22   The Australian Workers’ Union Submissions in Reply, filed 29 November 2019 at [25] – [26]

 23   The Australian Workers’ Union Submissions in Reply, filed 29 November 2019 at [41] – [42]

 24   The Australian Workers’ Union Further Submissions post [2020] FWCFB 958, filed 18 March 2020 at [16]

 25   [2019] FWCFB 7919 

 26   The Australian Workers’ Union Further Submissions post [2020] FWCFB 958, filed 18 March 2020 at [18] – [22]

 27   [2019] FWCFB 318 at [117]

 28   [2019] FWCFB 6960 at [39]

 29   [2019] FWCFB 318 at [55]

 30   The Australian Workers’ Union Submissions in Reply, filed 29 November 2019 at [14]

 31   One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FCAFC 77 at [142]

 32 [2018] FCAFC 77

 33   One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FCAFC 77

 34   [2019] FWCFB 6960

 35   Applicant’s Supplementary Outline of Submissions, filed 10 January 2020 at [4]

 36   PN150.