Seadar Contractors Pty Limited
[2024] FWCA 2533
•9 JULY 2024
| [2024] FWCA 2533 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
Seadar Contractors Pty Limited
(AG2024/1656)
SEADAR CONTRACTORS PTY LIMITED ENTERPRISE AGREEMENT 2024-2028
| Building, metal and civil construction industries | |
| DEPUTY PRESIDENT SAUNDERS | NEWCASTLE, 9 JULY 2024 |
Application for approval of an enterprise agreement – genuine agreement – BOOT – agreement approved.
Introduction and background
On 17 May 2024, Seadar Contractors Pty Ltd (Seadar) applied for approval of the Seadar Contractors Pty Limited Enterprise Agreement 2024-2028 (Enterprise Agreement), which covers employees of Seadar who are covered by the Building and Construction General On-site Award 2020 (Building Award) or the Road Transport and Distribution Award 2020 (RTD Award). These employees are predominantly involved in the civil construction and road transport activities undertaken by Seadar.
The Enterprise Agreement will, if approved, replace the Seadar Contractors Pty Ltd Enterprise Agreement 2018 – 2022 (Current Agreement).
The form F17B declaration filed by Seadar in support of its application for approval of the Enterprise Agreement states that, at the time the Enterprise Agreement was made (10 May 2024), 20 employees were covered by the Enterprise Agreement, 18 employees cast a valid vote, and all 18 employees voted to approve the Enterprise Agreement.
The Construction, Forestry and Maritime Employees Union (CFMEU) is a bargaining representative for the Enterprise Agreement.
The CFMEU contends that the Enterprise Agreement is not capable of being approved for two reasons:
(a)First, the CFMEU contends that the Enterprise Agreement was not genuinely agreed to in accordance with s 186(2) of the Fair Work Act 2009 (Cth) (Act); and
(b)Secondly, the CFMEU contends that the Enterprise Agreement does not pass the better off overall test (BOOT).
Seadar has provided the Fair Work Commission with undertakings to address a number of concerns raised by the Commission and the CFMEU in relation to the Enterprise Agreement (Undertakings). A copy of the Undertakings is contained in Annexure A to this decision.
Genuine Agreement
Relevant principles
Section 186(2)(a) of the Act requires that the Commission be satisfied that the Enterprise Agreement was genuinely agreed. Section 188 goes on to set out certain matters that the Commission must take into account or be satisfied of in determining whether an agreement has been genuinely agreed. Relevantly for present purposes, s 188(1) of the Act requires the Commission to take into account the Statement of Principles made under section 188B in determining whether it is satisfied that the agreement was genuinely agreed.
Further, s 188(4A) of the Act states the Commission cannot be satisfied that an agreement was genuinely agreed unless it is satisfied that the employer complied with s 180(5) of the Act. Section 180(5) requires an employer to take all reasonable steps to explain the terms of an enterprise agreement and the effect of those terms and ensure that the explanation is provided in an appropriate manner taking into the particular circumstances of the employees who will be covered by the agreement.
The purpose of the requirement in s 180(5) is to “enable the relevant employees to cast an informed vote: to know what it is they are being asked to agree to and to enable them to understand how wages and working conditions might be affected by voting in favour of the agreement”.[1]
Reaching the requisite state of satisfaction as to compliance with s 180(5) depends on the circumstances of the case. The nature of the requirement was helpfully summarised by a Full Bench in The Australian Workers’ Union v Rigforce Pty Ltd[2] as follows:
“[35] In considering the ‘genuinely agreed’ ground of appeal, it is necessary for reasons which will become apparent to consider in detail only the question of compliance with the pre-approval step in s 180(5). The nature of the requirement in s 180(5) was analysed in detail by the Federal Court (Flick J) in CFMEU v One Key Workforce Pty Ltd. We adopt the summary of that analysis set out in CFMMEU v Ditchfield Mining Services Pty Limited, which reduced it to the following four propositions:
(1) whether an employer has complied with the obligation in s 180(5) depends on the circumstances of the case;
(2) the focus of the enquiry whether an employer has complied with s 180(5) is first on the steps taken to comply, and then to consider whether:
·the steps taken were reasonable in the circumstances; and
·these were all the reasonable steps that should have been taken in the circumstances;
(3) the object of the reasonable steps that are to be taken is to ensure that the terms of the agreement, and their effect, are explained to relevant employees in a manner that considers their particular circumstances and needs. This requires attention to the content of the explanation given; and
(4) an employer does not fall short of complying with the obligation in s 180(5) of the FW Act merely because an employee does not understand the explanation provided.
[36] Additionally, we also adopt the analysis of Gostencnik DP in BGC Contracting Pty Ltd concerning the nature of a statutory obligation to take “all reasonable steps” as follows (footnote omitted):
[43] A requirement or obligation to take “all reasonable steps” seems to me to require the identification of the steps a reasonable person would regard as reasonable in the circumstances that apply. Whether particular steps are reasonable will depend on the particular circumstances existing at the time the obligation arises. A requirement to take all reasonable steps does not extend to all steps that are reasonably open in some literal or theoretical sense…”
On 12 May 2023, the Commission issued the Statement of Principles pursuant to s 188B of the Act which relevantly states as follows:
“This Statement of Principles sets out matters that the Fair Work Commission (FWC) must take into account in determining whether it is satisfied that an enterprise agreement ‘has been genuinely agreed to by the employees covered by the agreement’.
The Fair Work Act 2009 (Cth) (Fair Work Act) provides that an enterprise agreement must be approved by the FWC to come into operation. Section 186 of the Fair Work Act sets out general requirements for the approval of an enterprise agreement. These requirements include, if the agreement is not a greenfields agreement, that the FWC is satisfied the agreement has been genuinely agreed to by the employees covered by the agreement.
Section 188 sets out requirements that must be met for the FWC to be satisfied an enterprise agreement has been genuinely agreed to by employees. One of these requirements (in section 188(1)) is that the FWC must take into account this Statement of Principles on Genuine Agreement, which is made by the FWC under section 188B.
...Explaining to employees the terms of a proposed enterprise agreement and their effect
8. Section 180(5)(a) of the Fair Work Act requires the employer to take all reasonable steps to explain the terms of a proposed enterprise agreement, and the effect of those terms, to employees employed at the time who will be covered by the agreement. This should include at a minimum explaining to employees how the proposed agreement will alter their existing minimum entitlements and other terms and conditions of employment. In explaining this, subject to paragraph 9:
a. where a proposed enterprise agreement will replace an existing enterprise agreement—it will generally be sufficient to explain:
i.the differences in entitlements and other terms and conditions between the proposed agreement and the existing agreement, and
ii.the differences in entitlements and other terms and conditions between the proposed agreement and any applicable modern award provisions that have been varied since the existing agreement was made (including award variations that have not yet come into effect), or
b. where a proposed enterprise agreement will not replace an existing enterprise agreement—it will generally be necessary to explain the differences in entitlements and other terms and conditions between the proposed agreement and any applicable modern award.
9. In explaining to employees how the proposed enterprise agreement will alter their existing minimum entitlements and other terms and conditions of employment, there is usually no need to explain trivial differences between the proposed agreement and an existing enterprise agreement or modern award that have no effect on employees’ entitlements or obligations.
10. Section 180(5) will generally not be satisfied if the employer makes an incorrect representation or misleads employees (by words, action or otherwise) about a significant term of the proposed enterprise agreement or its effect.
11. In determining whether section 180(5) has been complied with, the FWC may have regard to any explanation of the proposed enterprise agreement given to employees by one or more employee organisation(s) acting as bargaining representative(s) for a significant proportion of the employees to be covered by the agreement.
12. Subject to paragraph 13, an employee may be provided with the explanation required by section 180(5):
a. by giving the employee, or ensuring the employee has access to, a hard copy of the explanation
b. by electronic means (either by sending the explanation to the employee, or by sending the employee a link to the explanation or otherwise giving the employee access to the explanation online)
c. orally, but the FWC may take into account whether there is a written record or summary kept of the oral explanation, or
d. by a combination of the above methods.
13. Where an employee is provided with the explanation required by section 180(5) in part or full by the method in paragraph 12(a) or 12(b), the employee should have a reasonable opportunity to read the explanation. Where an employee is provided with the explanation required by section 180(5) in part or full by the method in paragraph 12(c), the employee should have a reasonable opportunity to attend the oral explanation.
14. Section 180(5)(b) of the Fair Work Act requires the explanation of the proposed enterprise agreement to be provided in an appropriate manner taking into account the particular circumstances and needs of the employees. In determining whether the explanation of the proposed enterprise agreement was given in an appropriate manner, in addition to taking into account the circumstances and needs of the kinds of employees in section 180(6), the FWC may take into account:
a. the location(s) where employees are working
b. the environment(s) in which work is performed (for example, office, workshop, field, operating equipment or machinery, driving between locations)
c. facilities available at the location(s) or in the environment(s) in which work is performed (for example, internet access, computer facilities, ability for employees to access mobile telephones while working, printing/copying facilities, private space for employees to consider material or information)
d. hours of work or rosters which may limit access to relevant facilities or limit the time employees have to consider materials or information
e. the circumstances and needs of employees who are absent from a workplace due to their roster cycle or for other reasons, and
f. the nature of the work performed by the employees.
NOTE 1: Under section 180 of the Fair Work Act, before an employer requests that employees vote on a proposed enterprise agreement, the employer must take all reasonable steps to ensure that:
(a) the terms of the agreement, and the effect of those terms, are explained to the employees employed at the time who will be covered by the agreement (section 180(5)(a)), and
(b) the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of those employees (section 180(5)(b)).Section 180(6) provides that, without limiting section 180(5)(b), the following are examples of the kinds of employees whose circumstances and needs are to be taken into account for the purposes of complying with section 180(5)(b):
(a)employees from culturally and linguistically diverse backgrounds
(b)young employees, and
(c)employees who did not have a bargaining representative for the agreement.
NOTE 2: Section 188(5) provides that the FWC may disregard minor procedural or technical errors in relation to section 180(5), provided that it is satisfied that the employees were not likely to have been disadvantaged by the errors.”
It is important to understand that although the Commission is required to take into account the Statement of Principles in determining whether an agreement has been genuinely agreed, it does not operate as a set of mandatory rules that must be complied with by an employer absent which the Commission cannot be satisfied that an agreement has been genuinely agreed.[3] Where an employer follows pre-approval steps that are consistent with the Statement of Principles, that weighs in favour of a conclusion that an agreement has been genuinely agreed. The converse is also true.
The Commission’s requirement to take into account the Statement of Principles does not displace the requirement to consider each of the other matters set out in s 188 in determining whether an agreement has been genuinely agreed.
It is well understood that a s 180(5) concern can be remedied by an undertaking in an appropriate case.[4]
Summary of CFMEU’s submissions
The CFMEU submits that the written explanation provided by Seadar to its employees made no mention of the Current Agreement. It is submitted that the Enterprise Agreement is not a rollover of the Current Agreement. The CFMEU submits that the following differences between the Enterprise Agreement and the Current Agreement were not explained to employees:
(a)RTD Award coverage: expanding the coverage of the Enterprise Agreement to include employees covered by the RTD Award;
(b)Application of the RTD Award: the application of the RTD Award in the event that the Enterprise Agreement does not cover a matter and is inconsistent with the Building Award;
(c)Productivity allowance: the productivity allowance at clause 11.6 of the Enterprise Agreement is paid on a discretionary basis, whereas clause 5.6 of the Current Agreement provides for the productivity allowance to be paid automatically when an employee is working;
(d)Redundancy: clause 37.2 of the Enterprise Agreement restricts redundancy payable to employees to circumstances where Seadar no longer requires the job to be performed by the employee or because of the insolvency or bankruptcy of the employer, whereas clause 13.2 of the Current Agreement defines redundancy as a situation where an employee ceases to be employed by Seadar other than for reasons of misconduct or refusal of duty;
(e)Spread of ordinary hours: pursuant to clause 12 of the Enterprise Agreement, ordinary hours are between 6am and 6pm Monday to Friday, whereas clause 7.1.1 of the Current Agreement provides for ordinary hours to be between 7am and 6pm;
(f)Change to ordinary hours: pursuant to clause 12.3 of the Enterprise Agreement, Seadar is able to unilaterally change the start and finish times of employees, whereas under clause 7.1.4 and clause 7.1.5 of the Current Agreement Seadar is required to reach agreement with the majority of employees in order to fix their daily hours, or with an individual employee to fix their spread of hours;
(g)Overtime and weekend penalty rates: the overtime and weekend penalty rates provided for in clause 40 of the Enterprise Agreement are different to the Current Agreement. The Enterprise Agreement provides for all overtime to be paid at a rate of time and a half for all hours worked in excess of ordinary hours, whereas clause 7.3 of the Current Agreement provides for an employee to be paid time and a half for the first two hours and double time thereafter, together with weekend penalty rates for Saturdays being time and a half for the first two hours and double time thereafter or double time after 12pm, as well as double time for all time worked on a Sunday; and
(h)Injury reporting: clause 35 of the Enterprise Agreement introduces obligations for an employee to notify of an incident or accident, whereas the Current Agreement does not provide for any such obligation.
The CFMEU submits that although the explanation provided by Seadar mentioned the redundancy clause being different in comparison to the Building Award, none of the differences between the Current Agreement and the Enterprise Agreement were brought to the attention of employees. It is contended that the steps taken by Seadar fell short of complying with s 180(5) of the Act.
The CFMEU submits that the duty imposed on an employer under s 180(5) of the Act is to take all reasonable steps. The intensifying adjective “all” is significant in the statutory phrase must be given work to do. “All” means “the whole of … the whole number of… the greatest possible”. The adjective “reasonable” means “logical and rational” but not “excessive”. Therefore, the ordinary meaning of the phrase “all reasonable steps” is, so the CFMEU contends, every step it would have been logical or rational for employer to take in the circumstances.
The CFMEU also contends that Seadar made an incorrect and misleading statement to employees, namely that the Seadar Contractors Pty Ltd Enterprise Agreement 2023-2027 (2023 Agreement) covers the employees. Seadar provided the employees with a copy of the 2023 Agreement as part of the material for their consideration in deciding whether to vote for the Enterprise Agreement. However, Seadar’s application for approval of the 2023 Agreement was dismissed by Deputy President Colman on 22 February 2024,[5] principally because Seadar did not provide a number of employees with a notice of employee representational rights until the commencement of the voting period.
Summary of Seadar’s submissions
Seadar submits that, having regard to its submissions and the Undertakings it has provided to the Commission, it should be concluded that the Enterprise Agreement was genuinely agreed to in accordance with s 186(2) of the Act.
Seadar submits that it explained to employees some of the differences in entitlements identified by the CFMEU. In particular, on the topic of RTD Award coverage Seadar expressly referred to the RTD Award in its email to employees sent on 1 May 2024 and its explanation, including as to coverage of the Enterprise Agreement. Further, the Enterprise Agreement refers expressly to the RTD Award in its interpretation, coverage and relationship clauses. In the circumstances, it was plain, so Seadar submits, from its explanation and the terms of the Enterprise Agreement that the employees were informed that the Enterprise Agreement extended to employees covered by the RTD Award.
Seadar submits that its failure to address in its explanation to employees some of the changes between the Current Agreement and the Enterprise Agreement is not material in light of its Undertakings. In particular:
(a)Productivity allowance: Seadar will, through its Undertakings, provide the productivity allowance as an entitlement (in terms that reflect the Current Agreement) and not as a discretionary benefit;
(b)Spread of ordinary hours: Seadar will, through its Undertakings, provide the same spread of hours as the Current Agreement;
(c)Change to ordinary hours: Seadar will, through its Undertakings, provide for the same arrangement for changes to ordinary hours as exists under the Current Agreement;
(d)Overtime and weekend penalty rates: Seadar will, through its Undertakings, provide for the same entitlements for overtime and weekend penalty rates as the Current Agreement; and
(e)Injury reporting: Seadar will, through its Undertakings, not rely on the provision in the Enterprise Agreement that imposes an obligation on employees to report injuries;
(f)Application of the RTD Award: Seadar will, through its Undertakings, ensure that employees receive the more beneficial entitlement under either the RTD Award or the Building Award where the Enterprise Agreement is silent on an issue. This will ensure that employees at least maintain the benefit they had under the Current Agreement; and
(g)Redundancy: Seadar will, through its Undertakings, provide employees with the same redundancy benefits as they enjoy under the Current Agreement.
Seadar disputes the contention advanced on behalf of the CFMEU that it is required to take every step which is logical or rational for an employer to take in the circumstances to explain the Enterprise Agreement to employees.
Seadar submits that it did not suggest to employees that the 2023 Agreement was approved by the Commission or was incorporated into the Enterprise Agreement. Seadar submits that the 2023 Agreement was provided to the employees at their request so that they could compare the rates of pay in the 2023 Agreement to the rates of pay in the Enterprise Agreement, in respect of which they were being asked to cast a vote. Seadar further submits that there is no evidence of an employee being misled by the provision to them of a copy of the 2023 Agreement as part of the materials relating to their consideration of the Enterprise Agreement.
Consideration re genuine agreement
I reject the CFMEU’s contention that the phrase “all reasonable steps” in s 180(5) of the Act means every step it would have been logical or rational for employer to take in the circumstances. This contention is contrary to both Full Bench and Federal Court authority. As set out in paragraph [10] above, the Full Bench in The Australian Workers’ Union v Rigforce Pty Ltd endorsed the analysis undertaken by Deputy President Gostencnik in BGC Contracting Pty Ltd in which the Deputy President concluded that a requirement to take all reasonable steps requires “the identification of the steps a reasonable person would regard as reasonable in the circumstances that apply … [and] does not extend to all steps that are reasonably open in some literal or theoretical sense”. Similarly, in CFMMEU v Mechanical Maintenance Solutions Pty Ltd,[6] Justices O’Callaghan and Wheelahan made the following observations in relation to s 180(5) of the Act:
“169 For the purposes of s 180(5), the Commission must be satisfied that “all reasonable steps” were taken to ensure that the terms of the agreement and their effect were explained to the relevant employees. We do not consider that this requirement necessarily involves the identification of the universe of reasonable steps, and requires that the Commission be satisfied that every one of those steps was taken. Often, a requirement to take all reasonable steps to achieve a particular outcome may be met in different ways. The fact that one reasonable path is chosen over others need not result in a conclusion that all reasonable steps were not taken. For instance, it might be reasonable to explain the terms of an agreement by a written document, or by PowerPoint slides, or by face-to-face meetings as occurred here, or by a combination of those means. The choice of one form or words, or one reasonable medium of communication over others may be relevant to the evaluation that the Commission must make. But the legislation contemplates that there be flexibility. That flexibility arises particularly from s 180(5)(b) which requires that the employer take all reasonable steps to ensure that the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the employees. If an employer in a particular case pursues a path of explanation and mode of communication that is reasonable, the standard of reasonableness may not require that the employer pursue all parallel means of explanation and communication to achieve the same end.
170 Further, any explanation of the terms of the agreement and their effect will often be open to challenge on the ground that the explanation could have been made with a greater level of precision or particularity. It is in the nature of most explanations that they could be given in greater detail, or alternatively at a higher level of generality. The same observation can be made about the evidence of an employer’s explanation before the Commission. In the absence of a verbatim record of what was said to the employees, evidence may always be open to a claim that the evidence could have descended into a greater level of detail. These are all matters for the Commission to evaluate in determining whether it reaches the requisite level of satisfaction, and in determining whether it has any concerns that would engage its power to accept undertakings under s 190(2).
171 The central premise of the applicants’ case before this court in relation to the Explanation Issues was to identify a series of claimed differences between the greenfields agreements and the enterprise agreement, not all of which were the subject of submissions to the Commission, and to contend that the Commission was required to consider the explanations, if any, given to the employees in relation to all those claimed differences. In our view, that was not the Commission’s function. The Commission’s function was to form an evaluative judgment about issues that were at a higher level of abstraction, directed to the statutory question whether the employer took all reasonable steps to ensure that the terms of the proposed agreement and their effect were explained to the employees in an appropriate manner. As senior counsel for the applicants must be taken to have recognised by his acceptance of the correctness of [73] of the Commission’s reasons for the interim decision (see [147] above), there was no requirement that every difference between an existing industrial instrument and a proposed enterprise agreement be explained in order that the Commission be satisfied that all reasonable steps were taken. The identification of what reasonable steps were required, and what differences, if any, had to be explained, and if so in what terms, and by what means, were all matters for the Commission to consider.”
I will now analyse the steps undertaken by Seadar to explain the terms of the Enterprise Agreement, and their effect, to its employees.
On 1 May 2024, Mr Nelson Da Silva, Safety, HR Office Manager of Seadar, sent an email to employees covered by the Enterprise Agreement. The email relevantly stated:
“Dear Seadar Contractors Staff,
As you are aware, Seadar Contractors Pty Limited has been engaged in the process of preparing a new Seadar Contractors Pty Limited Enterprise Agreement 2024 – 2028 (Seadar EA) that will cover drivers, labourers, and plant operators otherwise covered by the Seadar Contractors Pty Limited Enterprise Agreement 2023-2027, Road Transport and Distribution Award 2020, or the Building and Construction General On-site Award 2020.
We advised that the access period for the Seadar EA has commenced today, being Wednesday, 1 May 2024 (Access Period). During the Access Period, you or your representative will have the opportunity to ask questions about or suggest any amendments to the Seadar EA.
Prior to voting, we ask that each of you take time to consider the following documents, which are attached to this email:
1. the access period memorandum;
2. a draft version of the Seadar EA;
3. a summary of key terms within the Seadar EA;
4. the Fair Work Act 2009 (Cth);
5. the Fair Work Regulation 2009 (Cth);
6. the Building and Construction General On-site Award 2020;
7. the Road Transport and Distribution Award 2020; and
8. the Seadar Contractors Pty Limited Enterprise Agreement 2023-2027.
… If you have any questions about the Seadar EA, you can meet with me in person on Monday, 6 May 2024 at the Seadar Contractors Pty Limited’s head office … I am otherwise available any time to explain the terms of the Seadar EA and can be contacted via the above channels.
…If you have any questions, or difficulties reading or understanding any document attached to this email, or know anyone who has any difficulty understanding English, or if you are 21 years old or younger, please contact myself to ensure you are provided with any necessary assistance.
Similarly, if you would like to discuss any amendments to the Seadar EA, please contact myself…”
The “summary of key terms” attached to Mr Da Silva’s 1 May 2024 email relevantly states:
“This summary of the Seadar Contractors Pty Limited Enterprise Agreement 2024 – 2028 (Seadar EA) has been prepared to help explain key terms, in comparison with both the Building and Construction General On-site Award 2020 (Building Award) and the Road Transport and Distribution Award 2020 (Road Transport Award). If you have any questions about the Seadar EA, please contact Nelson Da Silva …
3. COVERAGE
Clause 3 sets out which Employees are going to be covered by the Seadar EA. If your employment is normally covered by the Building Award (labourers/machine operators) or the Road Transport Award (truck drivers), the Sedar EA will cover your employment.
Please note that employees engaged in admin, senior managers, or employees who carry out work which isn’t set out in the Seadar EA will not have their employment covered by the Seadar EA.
4. RELATIONSHIP TO OTHER WORKPLACE LAWS
The Seadar EA will apply to your employment, not the Building Award or the Road Transport Award. This is because enterprise agreements operate to the exclusion of and Award. However, if the Seadar EA does not cover a matter, and there is an inconsistency between the Building Award and Road Transport Award, then Seadar will look towards the Road Transport Award for guidance.
…14. REDUNDANCY
The definition of redundancy under the Seadar EA has been taken from both section 119 of the Fair Work Act 2009 (Cth) and clause 35 of the Road Transport Award. Redundancy under the Seadar EA means a scenario where in Seadar terminates and Employee’s employment because:
1. Seadar does not require an Employee’s job to be completed;
2. Seadar becomes insolvent or bankrupt.
This definition of redundancy differs from the definition of redundancy under the Building Award, which defines redundancy as a situation where an employee ceases to be employed by an employer to whom this award applies, other than for reasons of misconduct or refusal of duty.
By incorporating the definition of redundancy under the FW Act, employees who cease to be employed for any reasons other than misconduct or refusal of duty are not entitled to redundancy under the Seadar EA.
Redundancy amounts are set out within clause 37 of the Seadar EA.”
The “access period memorandum” attached to Mr Da Silva’s 1 May 2014 email relevantly states:
“… As you are now aware, Seadar Contractors Pty Limited (Seadar) has commenced bargaining for a new enterprise agreement which is proposed to cover drivers, labourers and plant operators who would otherwise be covered by the Seadar Contractors Pty Limited Enterprise Agreement 2023-2027, Road Transport and Distribution Award 2020, or the Building and Construction General On-site Award 2020 (the Proposed Agreement)…”
Save for the matters addressed in paragraph [30] below, I am satisfied, taking into account the Statement of Principles, that the steps taken by Seadar to explain the Enterprise Agreement, and the effect of its terms, to the employees covered by the Enterprise Agreement were reasonable, and the explanation was provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees. I am also satisfied that those steps were all the reasonable steps that should have been taken in the circumstances. On the contested topic of coverage of the Enterprise Agreement over employees covered by the RTD Award, I accept that Seadar did not provide its employees with a copy of the Current Agreement as part of the material for them to consider, nor did Seadar expressly inform the employees that the coverage of the Enterprise Agreement was different to the coverage of the Current Agreement (because the Enterprise Agreement covers employees covered by the RTD Award whereas the Current Agreement does not). However, Seadar made clear to its employees in writing that employees covered by the RTD Award (principally, truck drivers) would be covered by the Enterprise Agreement. This was communicated to the employees in Mr Da Silva’s email of 1 May 2024, the “summary of key terms” document attached Mr Da Silva’s email, the “access period memorandum” attached to Mr Da Silva’s email, and the express terms of the Enterprise Agreement. In my evaluative assessment, these were all the reasonable steps that Seadar should have taken to explain to the employees that employees covered by the RTD Award would be covered by the Enterprise Agreement.
As to the following material differences between the Enterprise Agreement and the Current Agreement, I am of the view that Seadar failed to take all reasonable steps to explain the relevant terms to the employees (and failed to act in accordance with paragraph [8] of the Statement of Principles) because it did not inform the employees that the terms in the Enterprise Agreement pertaining to those matters were different from, and materially less beneficial to employees, than the relevant terms of the Current Agreement, which would continue to apply unless a majority of employees voted in favour of the Enterprise Agreement:
(a)redundancy;
(b)productivity allowance;
(c)spread of ordinary hours;
(d)changes to ordinary hours;
(e)overtime and weekend penalty rates;
(f)injury reporting; and
(g)application of the RTD Award in the event that the Enterprise Agreement is silent on a matter and there is a conflict between the RTD Award and the Building Award.
I do not consider that the failure to explain these differences to the employees represented a “wholesale failure” to comply with s 180(5).[7] It was a failure to explain a limited number of material differences between a current industrial instrument and a new proposed instrument. However, importantly, I am satisfied that the effect of the Undertakings provided by Seadar addresses my concern about non-compliance with s 180(5) by restoring each of the more beneficial terms of the Current Agreement for the purpose of the Enterprise Agreement.
There was some debate about the Undertaking given by Seadar in relation to redundancy. The terms of that Undertaking match the language of the redundancy term in the Current Agreement. In addition, it is clear from the reference to “redundancy standards” in undertaking 4 given to support the Current Agreement that the redundancy pay requirements of the Building Award were imported into the Current Agreement. The same “standard” is maintained in the Enterprise Agreement (clause 37.2), albeit the weekly rates of pay under the Enterprise Agreement are higher than under the Current Agreement, with the result that the redundancy provisions under the Enterprise Agreement are more beneficial to employees than the redundancy provisions under the Current Agreement.
As to the contention that Seadar misled its employees, it is correct that the 2023 Agreement never came into operation because the application for its approval was dismissed. The context in which the 2023 Agreement was provided to employees as part of the material they were considering when deciding whether to vote in favour of the Enterprise Agreement is important. I accept Seadar’s explanation that it provided the 2023 Agreement to the employees at their request so that they could compare the rates of pay in the 2023 Agreement to the Enterprise Agreement. It is understandable that the employees made such a request. Seadar did not suggest to the employees that the 2023 Agreement had been approved by the Commission or that it would operate, govern or impact their terms and conditions of employment if a majority of employees voted against the Enterprise Agreement. Further, the written communications from Seadar to the employees about the 2023 Agreement related to coverage of the Enterprise Agreement. In particular, Seadar explained to the employees that the Enterprise Agreement would “cover drivers, labourers and plant operators otherwise covered by the” 2023 Agreement, RTD Award or the Building Award. Coverage of an enterprise agreement or award simply refers to the types of employees who fall within the coverage of the instrument. It does not mean or suggest that the covering instrument applies or somehow governs the terms and conditions of employment. Having regard to these matters, it is not surprising that there is no evidence before the Commission that any employee covered by the Enterprise Agreement was misled or deceived by the explanation given to them in relation to the Enterprise Agreement or the relevance or impact of the 2023 Agreement.
Taking into account all the circumstances, I am satisfied that Seadar did not make an incorrect representation or mislead its employees about the 2023 Agreement or its effect. In addition, I do not consider that Seadar’s conduct in explaining the terms of the Enterprise Agreement, and their effect, to employees “could reasonably be expected to have the effect of deceiving those employees into voting for something which, if they had known the true position, they would not have voted for”.[8]
For the reasons given, I am satisfied that the Enterprise Agreement was genuinely agreed to by the employees covered by it.
BOOT
General principles
The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (Amending Act) made a number of changes to enterprise agreement approval processes in Part 2-4 of the Act, that commenced operation on 6 June 2023.
Under transitional arrangements, amendments made by Part 16 of Schedule 1 to the Amending Act in relation to the BOOT requirements for agreement approval applications apply where the agreement was made on or after 6 June 2023. The better off overall test provisions in Part 2-4 of the Act, as it was just before 6 June 2023, continue to apply in relation to agreement approval applications where the agreement was made before 6 June 2023. The Enterprise Agreement was made on 10 May 2024.
I must be satisfied that the Enterprise Agreement passes the BOOT before I can approve it.[9] Section 193(1) of the Act provides that an enterprise agreement passes the BOOT if the Commission is satisfied, as at the test time, that each award covered employee, and each reasonably foreseeable employee, for the enterprise agreement would be better off overall if the enterprise agreement applied to the employee than if the relevant modern award applied to the employee. The “test time” is when the application for approval of the enterprise agreement is made.[10]
In Armacell Australia Pty and Others the application of the BOOT was explained by the Full Bench in the following manner:[11]
“The BOOT, as the name implies, requires an overall assessment to be made. This requires identification of terms which are more beneficial for an employee, terms which are less beneficial and an overall assessment of whether an employee would be better off under the agreement.”
This principle is now enshrined in s 193A(2) of the Act.
The BOOT is not applied as a line-by-line analysis. It is a global test requiring consideration of advantages and disadvantages to relevant employees.[12] An enterprise agreement may pass the test even if some award benefits have been reduced, as long as overall, those reductions are more than offset by the benefits of the enterprise agreement.[13]
Ultimately the application of the BOOT is a matter that involves the exercise of discretion, and it involves a degree of subjectivity or value judgement.[14]
It is clear from the references to “each … employee” in section 193(1) of the Act that every employee to whom the enterprise agreement will apply, if approved, must be better off overall than if the relevant modern award applied to the employee. It is not enough that a majority or most of the employees to whom the enterprise agreement will apply, if approved, will be better off overall than if the relevant modern award applied.[15]
The Commission must give consideration to any views relating to whether an enterprise agreement passes the BOOT that have been expressed by any of the following:
(a)the employer or employers covered by the agreement;
(b)the award covered employees for the agreement; and
(c)a bargaining representative for the agreement.[16]
Further, the Commission must give primary consideration to a common view (if any) relating to whether the agreement passes the BOOT expressed by all of the following:
(a)the bargaining representative(s) of the employer; and
(b)the bargaining representative(s) of award covered employees for the agreement (other than a bargaining representative that is not an employee organisation).[17]
In considering whether or not an agreement passes the BOOT, the Commission may only have regard to patterns or kinds of work, or types of employment, if they are reasonably foreseeable at the test time. In considering what is reasonably foreseeable, the Commission must have regard to the nature of the enterprise to which the agreement relates.[18]
The Commission must determine whether a particular pattern or kind of work, or type of employment, is reasonably foreseeable for the purposes of s 193A(6) if a view is expressed by any of the following that it is, or is not, reasonably foreseeable:
(a)the employer covered by the agreement;
(b)the award covered employees for the agreement;
(c)a bargaining representative for the agreement.[19]
Consideration of BOOT
Seadar has expressed the view in its form F17B declaration that the Enterprise Agreement does pass the BOOT. I have given consideration to this view.
The CFMEU has expressed the view in its written and oral submissions that the Enterprise Agreement does not pass the BOOT. I have given consideration to this view.
No common view has been expressed as to whether the Enterprise Agreement passes the BOOT.
Employees covered by the Enterprise Agreement are covered by the Building Award or the RTD Award.
The pay rates, at the test time, under the Enterprise Agreement for employees covered by the Building Award vary between 15.91% and 28.6% above the pay rates under the Building Award.
The pay rates, at the test time, under the Enterprise Agreement for employees covered by the RTD Award vary between 30.51% and 55.12% above the pay rates under the RTD Award.
The following terms of the Enterprise Agreement (including the effect of the Undertakings) are more beneficial than the relevant awards:
(a)pay rates under the Enterprise Agreement are well above the relevant awards and the Enterprise Agreement provides for guaranteed pay rises during the nominal term of the Enterprise Agreement. It is also important to recognise that the higher pay rates under the Enterprise Agreement flow through to many other benefits under the Enterprise Agreement, such as, for example, redundancy pay; and
(b)the Undertakings require Seadar to pay its employees a productivity allowance for hours worked while on-site.
Once the Undertakings are taken into account, the only term of the Enterprise Agreement which the CFMEU contends, or I consider, is detrimental compared to the underlying awards is clause 36.7 of the Enterprise Agreement, which permits Seadar to forego the balance of an employee’s notice period if the employee terminates their employment and fails to provide the required period of notice. In comparison, clause 40.1(d) of the Building Award provides that “If an employee who is at least 18 years old does not give the period of notice required under clause 40.1(b), then the employer may deduct from wages due to the employee under this award an amount that is no more than one week’s wages for the employee”. This is a contingent benefit or protection for employees. It only applies if an employee terminates their employment and fails to give the period of notice required. I am comfortably satisfied that the more beneficial terms of the Enterprise Agreement, particularly higher wage rates and a productivity allowance, outweigh this detriment.
Having regard to all the benefits and detriments in the Enterprise Agreement (considered together with the Undertakings) compared to the relevant awards, I am comfortably satisfied that, as at the ‘test time’, each award covered employee, and reasonably foreseeable employee, for the Enterprise Agreement would be better off overall if the Enterprise Agreement applied to the employee than if the relevant award applied to the employee.
Satisfaction of other requirements
In accordance with s 190(3) of the Act, I may only accept the Undertakings if I am satisfied that the effect of accepting the Undertakings is not likely to:
(a)cause financial detriment to any employee covered by the Enterprise Agreement; or
(b)result in substantial changes to the Enterprise Agreement.
The Undertakings have been provided to address various issues identified by the Commission and the CFMEU. The purpose of the Undertakings is to provide additional protection and/or benefits to employees. I am satisfied that accepting the Undertakings would not be likely to cause financial detriment to any employee covered by the Enterprise Agreement.
As to whether the effect of accepting the Undertakings is likely to result in substantial changes to the Enterprise Agreement, it is relevant that the Undertakings do not seek to alter the structure of remuneration paid under the Enterprise Agreement.[20] The Undertakings use the remuneration structure built into the Agreement and enhance benefits for employees by increasing the rates paid to employees in particular scenarios. The Undertakings also ensure that protections and benefits afforded to employees under the Current Agreement continue to apply under the Enterprise Agreement. I am satisfied that the Undertakings do not change the “essence or nature” of the Enterprise Agreement.[21] Having regard to all the circumstances, I am satisfied that the effect of accepting the Undertakings is not likely to result in substantial changes to the Enterprise Agreement.
In accordance with section 190(2) of the Act, I am satisfied that the Undertakings will meet the concerns I have identified in relation to whether the Enterprise Agreement meets the requirements set out in sections 186 and 187 of the Act.
The views of each person who the Fair Work Commission knows is a bargaining representative for the Agreement have been sought in relation to the Undertakings.
Pursuant to subsection 190(3) of the Act, I accept the Undertakings. The Undertakings are taken to be a term of the Agreement.
Subject to the Undertakings, I am satisfied that each of the requirements of ss 186, 187, 188 and 190 as are relevant to this application for approval of the Enterprise Agreement have been met.
Conclusion
The Enterprise Agreement is approved and, in accordance with s 54 of the Act, will operate from 16 July 2024. The nominal expiry date of the Enterprise Agreement is 8 July 2028.
DEPUTY PRESIDENT
Hearing:
4 July 2024
Appearances:
Mr A. Gotting, of counsel, appeared for Seadar Contractors Pty Ltd
Mr D. Syron, Legal Officer, appeared for the CFMEU
Annexure A
[1] CFMMEU v Ditchfield Mining Services Pty Ltd[2019] FWCFB 4022 at [69], applying One Key Workforce Pty Ltd v CFMEU [2018] FCAFC 77 at [115]
[2] [2019] FWCFB 6960
[3] SDA v Allen Family Pty Ltd[2024] FWCFB 48 at [76]
[4] CFMMEU v Mechanical Maintenance Solutions Pty Ltd (2022) 289 FCR 508 at [112]-[123] & [176]; SDA v Allen Family Pty Ltd[2024] FWCFB 48 at [92]
[5] [2024] FWC 485
[6] [2022] FCAFC 15
[7] CFMMEU v Mechanical Maintenance Solutions Pty Ltd[2020] FWCFB 1918 at [36]
[8] NTEIU v Southern Cross University[2023] FWCFB 200 at [35], applying Appeal by Australian, Municipal, Administrative, Clerical and Services Union [2013] FWCFB 7453 at [28]
[9] s.186(2)(d) of the Act
[10] s 193(6) of the Act
[11] [2010] FWAFB 9985 at [41]
[12] SDA v Beechworth Bakery Employee Co Pty Ltd[2017] FWCFB 1664 at [12]; s 193A(2) of the Act
[13] Re Australia Western Railroad Pty Ltd T/A ARG – A QR Company [2011] FWAA 8555 at [8]; NTEIU v University of New South Wales[2011] FWAFB 5163 at [47]
[14] TWU v Jarman Ace Pty Ltd[2014] FWCFB 7097 at [28]
[15] Loaded Rates Agreements [2018] FWCFB 3610 at [100]
[16] s 193A(3) of the Act
[17] s 193A(4) of the Act
[18] s 193A(6) of the Act
[19] s 193A(6A) of the Act
[20] CFMMEU v Macmahon Contractors Pty Ltd[2018] FWCFB 4429 at [28]; CFMMEU v Lightning Brick Pavers (2018) 281 IR 9 at [24]
[21] CFMMEU v C&H Acquisition Pty Ltd (2020) 296 IR 294 at [37]
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