SEMA Group Pty Limited
[2009] FWA 1153
•19 NOVEMBER 2009
[2009] FWA 1153 |
|
DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
(AG2009/13625)
COMMISSIONER LARKIN | SYDNEY, 19 NOVEMBER 2009 |
SEMA Group Pty Ltd NSW Operations Employees Enterprise Agreement 2009.
[1] SEMA Group Pty Limited (the applicant, the employer and bargaining representative) has applied to Fair Work Australia pursuant to s.185 of the Fair Work Act 2009 (the FW Act) for the approval of the SEMA Group Pty Ltd NSW Operations Employees Enterprise Agreement 2009. The application advised that the applicant’s representative was the Australian Industry Group (AiG).
[2] The industry of the employer is Graphic Arts. The application advised that there were no employee organisations that were bargaining representatives for the agreement and that, to the best of the applicant’s acknowledge, there were other employee bargaining representatives (i.e. non union) for the agreement.
[3] The agreement is to cover 90 employees. A valid vote was cast by 81 employees and 54 employees voted in support of the agreement. The agreement was made on 8 September 2009.
[4] The matter was listed for hearing on 22 October 2009. Prior to the hearing of the application the employer’s representative was advised that issues relevant to the application would require attention at the hearing of the application. Those issues, predominately, concerned:
- The requirements of paragraph (a) of ss.185(3) of the FW Act.
- The requirements of ss.186(6) of the FW Act.
[5] Mr Bray, AiG, representing the employer appeared with Mr Hage-Hassan, SEMA Commercial Manager and Ms Hyslop, HR Business Partner. In attendance at the hearing were two employee representatives, Ms Watson and Mr Hijazi.
[6] Ms Watson and Mr Hijazi, along with six other employee representatives had signed the agreement, as an employee elected representative, on behalf of employees to be covered by the agreement. The employees, Mr Bray submitted, were not bargaining representatives appointed in writing by an employee but an employee representative elected from each unit of the business. Ms Watson advised FWA that management had requested a representative from each unit to be elected by employees working in that unit.
[7] At the hearing of the application, Mr Bray conceded that the requirements of ss.185 (3) had not been complied with in that the application had not been made within 14 days after the agreement had been made. Mr Bray sought that FWA exercise the discretion under paragraph (b) of ss.185 (3) and extend that period. Mr Bray had set out his reasons for the request in correspondence to FWA, dated 22 October 2009.
[8] The agreement was made on 8 September 2009 and the application, to comply with the prescribed time to lodge, should have been made by 22 September 2009. The file reflects the date lodged as the 25 September 2009, which is three days outside of the time required to make the application. Mr Bray submitted that it took some time for the various parties to sign the approved document. The relevant forms were signed on 22 September 2009 and e-filed on the same day. On 24 September 2009 FWA forwarded a “Dispatch advice of electronic filing – Agreements” and on 25 September 2009 forwarded an acknowledgement that the application had been lodged electronically with FWA on 24 September 2009. Mr Bray submitted: “From the 22nd September until to the 25th September (the period in which the lodging is late) was the period between the efiling and the acknowledgment as a filing by FWA”. 1 Mr Bray stated, as an aside, and in hindsight, this problem would not have arisen if the documents had been printed and lodged over the counter with FWA.
[9] After considering the circumstances I decided that it was fair to extend the period to 25 October 2009, and did so in transcript on 22 October 2009.
[10] The next issue concerned clause 17 of the agreement. Clause 17 states:
“17. DISPUTE RESOLUTION PROCEDURE
SEMA Group is committed to providing a fair, safe and productive work environment where grievances are dealt with sensitively and quickly. An essential part of developing such an environment is ensuring that employees feel comfortable when coming forward with their grievances.
This procedure provides a mechanism for employees to escalate grievances in relation to general matters. Discrimination, harassment or sexual harassment related grievances are to be treated separately. Refer to the National Discrimination and Harassment Policy.
A ‘grievance’ is a work-related problem, condition or dispute that an employee believes to be unfair, inequitable, and discriminatory or a hindrance to their effective operation in the workplace.
Examples of general grievances can include:
• counselling and warnings
• internal job selection decisions
• policies and procedures
• workplace bullying
• victimization
To ensure fairness to all parties involved in any grievance, the below process should be followed. All parties must be given an opportunity to respond within the given timeframes prior to escalating their grievance to an external party of (sic) alternative internal party.
If parties of the grievance can not come to an agreement as to who will be involved in each level of discussion the HR Business Partner, or his/her nominee, can make the final decision based upon the best interests of all parties involved. The parties agree to engage a mutually agreeable mediator to conciliate in the event that this is necessary.
All correspondence in the remedy of the grievance including the details of the grievance raised will be kept in the employee file of the employee raising the grievance.
In the event of a dispute about a matter arising under this agreement, or the National Employment Standards (except for disputes related to reasonable grounds for refusal of requests for flexible working arrangements or additional unpaid parental leave) the process outlined below shall be followed.
The employee/s and employer may appoint a person or organisation to represent them in relation to the dispute.
If the dispute is unable to be resolved at the workplace level, a party to the dispute may refer the matter to Fair Work Australia for assistance through mediation, conciliation, expressing an opinion or making a recommendation.
Work shall continue normally unless an employee has a reasonable concern about an imminent risk to his or her health and safety. If such concern exists, the employee must not unreasonably fail to comply with a direction of the employer to perform other available work, whether at the same or another workplace, that is safe and appropriate for the employee to perform.
Step 1: Grievance raised by employee
Inform in writing or otherwise to Supervisor / Team Leader the nature and details of the grievance. An employee can expect a response within 24 hours.
If needed, the employee can request a meeting with Supervisor / Team Leader to discuss grievance.
↓
(Not resolved after 24 hours)
↓
Step 2: Grievance raised with Line Manager
The employee, upon not reaching a satisfactory resolution with Supervisor / Team Leader, can raise their grievance with their Line Manager. An employee can expect a response within 24 hours.
↓
(Not resolved after 24 hours)
↓
Step 3: Grievance raised with Senior Manager
The employee, upon not reaching a satisfactory resolution with the Line Manager, can raise their grievance with their Senior Manager. An employee can expect a response within 24 hours.
↓
(Not resolved after 24 hours)
↓
Step 4: Grievance raised with Human Resources
The employee, upon not reaching a satisfactory resolution with the Senior Manager, can raise their grievance with the Human Resource Department. An employee can expect a response within 24 hours. The role of HR is to become briefed on the employee’s grievance, conduct discussions with all relevant parties and to mediate to a solution that reached the satisfaction and expectation of both employee and management.
Line Manager and HR ↔ Senior Manager of Department and HR
The option above exists dependant upon the nature of the grievance
↓
(Not resolved after 24 hours)
↓
Step 5: Grievance raised with Director
Following a meeting with HR and the Department Manager, the employee may choose to escalate their grievance to the Director. An employee can expect a response within 24 hours. The role of Director is to arbitrate the grievance after consultation with both the employee and the relevant managers.
↓
(not resolved)
Step 6: External Processes
On occasions when an employee does not believe they have received a fair process to their grievance, they may choose to explore external options for representation.”
[11] During proceedings I advised Mr Bray that my concern with the above provision related to steps 5 and 6 of the procedure. Step 5 provided that the role of the Director is to arbitrate the grievance. Step 6 provided for External Processes that if an employee did not believe they had received a fair process to their grievance they may choose to explore external options for representation, which, from my perspective, was not clear in its meaning. My concern was that the procedure did not meet the requirements of ss.186 (6) of the FW Act. I also raised a concern in relation to the settlement of a dispute by FWA or a person independent of the parties. I will address this last point at the end of this decision.
[12] Mr Bray acknowledged that the procedure was broad and submitted that it was a procedure owned by the parties to the agreement. Step 6, it was submitted, was a broad term that referred to external processes, which may be a complaint to the Human Rights and Equal Opportunity Commission, a State anti-discrimination complaint or a process that could be initiated in FWA. Mr Bray submitted that Step 5 had been in the previous agreement between the parties and there had not been a dispute that had got that far in the procedure. After seeking instructions Mr Bray sought to provide undertakings to FWA.
[13] On 30 October 2009 Mr Bray filed material in response to the issues raised in the proceedings. In summary, the submission stated that a dispute resolution procedure in an agreement does not require a power to arbitrate or finally determine a dispute to comply with the requirements of ss.186 (6). 2 A reading of ss.186 (6) as requiring an arbitrational process for dispute settlement would be inconsistent with the provisions of the FW Act found at sections 738 to 740 and sections 589 to 595.
[14] In relation to Step 5 of clause 17 of the agreement, it was submitted:
“The concern with the wording of Step 5 is clearly valid should the meaning of that step be read as conferring a power on the Director of the employer to finally determine (by “arbitration”) a dispute (especially in circumstances where the independent dispute resolution provider (FWA) is not given that power).
It is submitted that reading that part of the clause in that way is not consistent with what is intended by the wording of it. It is also submitted nevertheless that the undertaking offered by the employer in this regard should ally the concern Fair Work Australia has.
Firstly reading the term in this way is to read the term in such a way which contradicts the meaning and operation of other surrounding clauses. In particular, that part of he (sic) clause which reads
“if the dispute is unable to be resolved at the workplace level, a party to the dispute may refer the matter to Fair Work Australia for assistance through mediation, conciliation, expressing an opinion or making a recommendation.”
And
“Step 6 External Processes…On occasions when an employee does not believe they a (sic) received a fair process to their grievance, they may choose to explore external options for representation.”
A reading of step 5 as conferring a power on (an officer of) one of the parties renders both these clauses meaningless.
It is worth remembering that in practice the employer will be a party to a dispute or grievance the subject of the procedure. The procedure is designed to attempt to resolve the grievance internally prior to the matter being referred externally – it makes sense that the highest officer of the employer should be able to put the employer’s final position to the employee before the employee elects to refer the matter externally.
In order to clarify what is perhaps unfortunate wording in the circumstances, the employer offers the following undertaking
“Where a dispute under the Dispute Resolution Procedure has escalated to Step 5, the director shall arbitrate in the following manner:
• by hearing from the employee and/or their representative to ascertain the nature of the employee’s grievance, and
• by hearing from the company representatives to ascertain the employer response to the employee’s grievance
• by providing to the employee
• the final position or offer the employer is prepared to take or make in relation to the grievance
• a reminder that if that position or offer is not acceptable the employee is free to take the matter to Step 6 – External Processes including a referral to Fair Work Australia”.” 3
[15] Subsection 186(6) states:
“FWA must be satisfied that the agreement includes a term:
(a) that provides a procedure that requires or allows FWA, or another person who is independent of the employers, employees or employee organisations covered by the agreement, to settle disputes:
(i) about any matters arising under the agreement; and
(ii) in relation to the National Employment Standards; and
(b) that allows for the representation of employees covered by the agreement for the purposes of that procedure.”
[16] The Explanatory Memorandum to the Fair Work Bill 2008, relevant to s.186 (6) of the FW Act, states:
“782. Paragraph 186(6)(a) requires FWA to be satisfied that the agreement includes a term that provides a procedure that requires or allows FWA or another person independent of the person covered by the agreement to settle disputes:
• about any matters arising under the agreement; and
• in relation to the NES.
783. A disputes procedure could not, for example, provide for disputes to be resolved by:
• the managing director of the employer; or
• a disputes board made up of officials of a union covered by the agreement.” (underlining my emphasis)
[17] It is clear, in my view, that the legislative intent of ss.186(6) is to provide for a procedure that requires or allows an independent body or person to deal with a dispute that an employee has with its employer, which the internal process of the procedure has been unable to resolve, as the final stage of the process. There are, in my opinion, two difficulties with the provision the employer has put forward as an undertaking.
[18] Step 5 is the step taken after four internal steps, one being mediation by the employer’s human resources department at step 4, have failed to resolve the dispute. Step 5, as proposed by the undertakings, not only states that the Director shall arbitrate the dispute but also lists the procedure that the Director will embark upon in that arbitration. The procedure has all the markings of an arbitral hearing. The Director is to hear each party to the dispute and then pronounce his/her decision based upon the parties’ respective argument by “providing the employee – the final position or offer the employer is prepared to take or make in relation to the grievance”. The step, in my view, by its terms infers a final determination of the employee’s dispute by a Director of the employing company by an arbitral process.
[19] Step 6 of the agreement, which is the final step in the dispute resolution process, does not refer to or provide for a referral of the dispute, if not resolved, to FWA or another independent person to settle the dispute about matters arising under the agreement and in relation to the National Employment Standards. Further, Step 6 of the procedure in the agreement concerns an employee’s belief that “a fair process” has not been provided to them and a choice to “explore external options for representation”.
[20] It is not clear from the written submissions that the employer is putting forward an undertaking in relation to Step 6 of clause 17 of the agreement. It appears that, from the undertakings filed with FWA, part of the process outlined at Step 5 would be that the Director would provide a reminder to the employee, if the employer’s final position or offer was not acceptable, that the employee is “free to take the matter to Step 6 – External Processes including a referral to Fair Work Australia”.
[21] The clause within the procedures contained at clause 17 of the agreement, which provides for a referral to FWA, does not form part of the Steps of the procedure to be taken by the parties in dispute. Step 6 in the agreement is the final step in the dispute resolution procedure. On its terms, the step is concerned with an employee’s belief that they have not received a fair process to their grievance and directs them, if they choose, to seek external options for representation. An employee may feel that the process was fair, however, his/her dispute has not been resolved. Further, the step is concerned with seeking representation. Representation for what end? Step 6 of the procedure does not, in my view, constitute the final stage of the internal dispute resolution process whereby the unresolved dispute may be referred, by either party to the dispute, to an independent person or body.
[22] Section 190 of the FW Act provides that FWA may approve an enterprise agreement with undertakings. Subsections (1) and (2) state:
“190 FWA may approve an enterprise agreement with undertakings
Application of this section
(1) This section applies if:
(a) an application for the approval of an enterprise agreement has been made under section 185; and
(b) FWA has a concern that the agreement does not meet the requirements set out in sections 186 and 187.
Approval of agreement with undertakings
(2) FWA may approve the agreement under section 186 if FWA is satisfied that an undertaking accepted by FWA under subsection (3) of this section meets the concern.
Undertakings
(3) FWA may only accept a written undertaking from one or more employers covered by the agreement if FWA is satisfied that the effect of accepting the undertaking is not likely to:
(a) cause financial detriment to any employee covered by the agreement; or
(b) result in substantial changes to the agreement.”
[23] During the hearing of the application to approve the agreement I raised my concerns that the agreement, in my view, had not met the requirements of ss.186 (6). For the above reasons I am not satisfied that the undertakings provided meet my concerns with clause 17 of the agreement. I am unable to accept those undertakings. Therefore, I cannot approve the agreement as I am not satisfied that the agreement includes a term as required by ss.186(6).
[24] There is one further point that I must address in relation to the application. That point concerns Mr Bray’s submission in relation to the term settle found at paragraph (a) of ss.186(6) of the FW Act. The point is not decisive to my decision not to approve the agreement, however, as the point was raised I will make comment upon it.
[25] Previously in this decision I provided a summary of the submission on this point. Mr Bray argued that ss.186(6) did not require an arbitrational process for dispute resolution procedures in an agreement. My preliminary view, after considering the argument and having regard to other provisions of the FW Act and the Explanatory Memorandum to the Fair Work Bill 2008, would be that Mr Bray has a strong argument.
[26] In support of the argument, Mr Bray referred to sections of the FW Act that deal with FWA’s power in dealing with disputes found at Part 6-2, Chapter 6 – Miscellaneous.
[27] Section 737 4 of the Part states that the regulations must prescribe a model term for dealing with disputes for enterprise agreements. The relevant regulation for s.737 is found at regulation 6.01 and the model term is set out at Schedule 6.1.
[28] The model term outlines FWA’s power to deal with disputes that relate to a matter arising under the agreement or the National Employment Standards. The model term states that if discussions at the workplace level do not resolve the dispute a party to the dispute may refer the matter to FWA. The model term provides that FWA may deal with the dispute in two stages. In the first stage of the process FWA will attempt to resolve the dispute in a manner that FWA considers appropriate, which may include mediation, conciliation, expressing an opinion or making a recommendation. If the dispute is unable to be resolved at the first stage of the process, FWA may arbitrate and make a determination that is binding on the parties.
[29] The Explanatory Memorandum at Part 6 – 2 Dealing with disputes, provides an overview of the Part. For present purposes that overview is in the following terms:
“2722. This Part sets out how FWA and other persons can deal with disputes in accordance with a term of a modern award, an enterprise agreement or a contract of employment.
2723. Interaction rules between modern awards, enterprise agreements and contracts of employment mean the employer and employees will be subject to only one dispute settlement procedure (see Divisions 2 and 3 of Part 2-1) in relation to a dispute.
• Where an enterprise agreement applies to an employer and employee, the procedure in the enterprise agreement applies.
• Where there is no enterprise agreement, the procedure in the modern award that applies to the employer and employee applies.
• Where neither an enterprise agreement nor a modern award applies to the employer and employee in relation to the dispute, the procedure in a contract of employment (if any) applies.
2724. Nothing in this Part affects any right of a party to a dispute to take court action to enforce their rights or entitlements.
2725. Nothing in this Part authorises an employee to stop performing work in accordance with his or her contract of employment whilst a dispute is being resolved.” (underlining my emphasis)
[30] The Explanation Memorandum in relation to s.737 states:
“Clause 737 – Model term about dealing with disputes
2728. This clause requires the regulations to prescribe a model term for dealing with disputes that could be included in an enterprise agreement. Consistent with the requirements of the Bill for dispute settlement terms (see subclause 186(6)), the model term will provide for the binding resolution of disputes.
2729. In order to be approved by FWA, an enterprise agreement must contain a procedure for the settlement of disputes about matters arising under the agreement and in relation to the NES (see subclause 186(6)). Such a term:
• must provide for FWA or another person who is independent of the parties to deal with a dispute; and
• must provide for representation of employees in the dispute settlement process.
2730. This requirement means, for example, that while the initial stages of a dispute resolution process may involve the direct participants, such as the manager and the employee (and his or her representative), the final stage of the process must involve FWA or any independent person or body, such as professional mediator.
2731. Employers and employees (and their bargaining representatives) can refer to the model term for guidance, and may agree to include the term, or part of it, in a proposed enterprise agreement.” (underlining my emphasis)
[31] The model term for dealing with disputes for an enterprise agreement expressly authorises FWA to arbitrate the dispute and make a determination if the dispute has not been resolved at the first stage of the process. The Explanatory Memorandum provides that the model term “could be included” in an enterprise agreement, that negotiating parties can refer to the term for guidance and “may agree to include the term, or part of it, in a proposed enterprise agreement”.
[32] The Explanatory Memorandum addresses disputes dealt with by FWA as outlined at clause 739 of the Fair Work Bill 2008, as follows:
“Clause 739 – Disputes dealt with by FWA
2735. This clause sets out what FWA can and cannot do when dealing with disputes under a term of a modern award, enterprise agreement or contract of employment.
• Subclause 595(1) provides that FWA may only deal with a dispute if it is expressly authorised to do so under the Act, and subclauses 595(2) and (3) set out how FWA may deal with disputes. For the purpose of subclause 595(1), subclause 739(1) expressly authorises FWA to deal with disputes.
2736. Where such a term requires or allows FWA to deal with a dispute, it can exercise all of its powers under Subdivision B of Division 3 of Part 5-1 (see subclause 595(4)), unless those powers are limited by the term (subclause 739(3)). FWA has general powers under clause 590 to inform itself as it sees fit, including the power to require parties to attend, conduct a conference and take evidence. Clause 595 provides that FWA can deal with a dispute before it as it considers appropriate, including by mediation, conciliation, making non-binding recommendations and expressing an opinion.
2737. Under subclause 739(4) FWA can make a binding decision in relation to a dispute if, in accordance with a term in a modern award, enterprise agreement or contract, the parties have agreed to this, whether the term refers to arbitration, final determination, making an award or order or something similar. For example, a term of an enterprise agreement could authorise FWA to arbitrate or determine (however described) a dispute under that enterprise agreement, resulting in a binding determination.
• Subclause 595(3) provides that FWA may only deal with a dispute by arbitration if expressly authorised to do so under the Bill. For the purpose of that provision, subclause 739(4) expressly authorises FWA to deal with a dispute by arbitration.
2738. Unless the dispute resolution process term provides otherwise, an arbitrated decision of FWA about a dispute will be appealable in accordance with clause 604. Similarly, if FWA holds a hearing in relation to a matter, the hearing would ordinarily be held in public. This is because all of FWA’s powers and procedures under this Bill apply in relation to disputes under this Division unless limited by the parties in the term.
2739. Despite anything to the contrary in a modern award, enterprise agreement or contract of employment, FWA cannot make a binding decision that is inconsistent with the parties’ rights or obligations under the Bill (including the regulations) or a fair work instrument (such as an enterprise agreement) that applies to them (subclause 739(5)). These rights and obligations can only be finally determined by a court.
• For example, FWA could not make a binding decision that would modify the way the NES or a modern award apply in a particular workplace or to determine that requirements of the Bill do not apply.
• This maintains the integrity and stability of the safety net, by ensuring that NES or a modern awards cannot be modified other than in accordance with the processes provide in the Bill so that it does not apply differently in relation to particular workplaces or employees.
2740. FWA can only deal with a dispute where requested by a party to the dispute. This means that FWA cannot intervene in a dispute without being asked to do so by at least one of the parties (subclause 739(6)).
2741. Under subclause 739(2), FWA cannot exercise any of its powers or otherwise consider, review or question whether an employer had reasonable business grounds to refuse a request by an employee for flexible working arrangements (see subclause 65(5)) or extension of unpaid parental leave (see subclause 76(4)).
2742. However, if an enterprise agreement provides a right to flexible working arrangements (including by reference to a State law) or a right to request extension of unpaid parental leave that supplements the entitlements under the NES, the dispute settlement procedure in the agreement would apply to this right.”
[33] The remaining paragraphs of the Explanatory Memorandum on this issue suggest that FWA’s powers may be limited by the terms of the dispute resolution provisions as agreed to by the parties to the enterprise agreement. As stated previously in this decision, the point is not decisive of the application before me and, therefore, in my view does not require that I form a concluded view on the point.
[34] The matter before is an application for approval by FWA of the SEMA Group Pty Ltd NSW Operations Employees Enterprise Agreement 2009. Section 186 provides that FWA must approve the agreement under the section if the requirements set out in the section and s.187 are met. Under ss.186 (6) FWA must be satisfied that the agreement includes a term, as set out in that section. For the reasons given in this decision, I am not satisfied that the agreement includes such a term. The application is dismissed.
COMMISSIONER
Appearances:
Mr D. Bray, Australian Industry Group, with Mr Hage-Hassan and Ms Hyslop for the applicant.
Hearing details:
Sydney.
2009:
October, 22.
1 AiG correspondence dated 22 October 2009 at point 1.
2 Ampol Refineries (NSW) Pty Limited v Aust Institute of Marine and Power Engineers; Transfield Services GSS and United Firefighters of Australia (Victorian Branch) and Rescue Certified Agreement 2005[2008] AIRC 675.
3 Written submissions filed 30 October 2009 at page 3.
4 Subdivision A, Division 2, Part 6-2 of Chapter 6 – Miscellaneous.
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