SIMPEC Pty Ltd T/A SIMPEC Pty Ltd

[2019] FWCA 5646

[2019] FWCA 5646

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

SIMPEC Pty Ltd T/A SIMPEC Pty Ltd
(AG2019/1472)

SIMPEC PTY LTD ENTERPRISE AGREEMENT 2019

Building, metal and civil construction industries
DEPUTY PRESIDENT BEAUMONT	PERTH, 28 NOVEMBER 2019

Application for approval of the SIMPEC Pty Ltd Enterprise Agreement 2019.

[1] On 31 October 2019, I issued a decision 1 regarding an application made by SIMPEC Pty Ltd (Simpec) for the approval of an enterprise agreement known as the SIMPEC Pty Ltd Enterprise Agreement 2019 (the Agreement). The application was made under s 185 of the Fair Work Act 2009 (Cth) (the Act), and the Agreement is a single enterprise agreement.

[2] The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (the CEPU), while not a bargaining representative for the Agreement, objected to its approval. I decided to hear from the CEPU but limited its standing to input regarding the Better Off Overall Test (BOOT). In short, the CEPU objected to Simpec’s reliance on the Building and Construction General On-Site Award 2010 2 (the Building and Construction Award) as the only reference instrument. The CEPU contended that Simpec should have included as a reference instrument, the Electrical, Electronic and Communications Contracting Award 20103(the Electrical Award).

[3] I concluded that each of the Building and Construction Award, the Electrical Award and the Hydrocarbons Industry (Upstream) Award 2010 4 (the Hydrocarbons Award) were the relevant modern awards for the purpose of assessing whether the Agreement passed the BOOT. With respect to passing the BOOT, I was satisfied that each employee and each prospective employee covered by the Building and Construction Award and the Electrical Award would be better off overall if the Agreement with undertakings provided by Simpec on 27 September 2019 applied, rather than the two aforementioned awards. However, as far as passing the BOOT with respect to the Hydrocarbons Award, I was unpersuaded that the Agreement passed.

[4] Having concluded that the Electrical Award and Hydrocarbons Award were also reference instruments, I observed Simpec had not been provided with the opportunity to address its compliance with s 180(5) in light of the conclusion reached. Directions were issued for Simpec to address the BOOT issue, its compliance with s 180(5) and whether there were no other reasonable grounds for believing that the Agreement had not been genuinely agreed to. The CEPU were invited to provide submissions regarding the BOOT issue concerning the Hydrocarbons Award, but declined to do so.

[5] On 7 November 2019, Simpec provided submissions addressing the issues identified in my initial decision, in addition to giving a revised undertaking that responded to the remaining BOOT issues concerning the Hydrocarbons Award.

Concerns about the BOOT and compliance with s 180(5)

[6] The Full Bench in AWU v Rigforce Pty Ltd 5 arrived at four propositions applicable to s 180(5) of the Act. It did so, having considered the decisions of the Federal Court in CFMEU v One Key Workforce Pty Ltd6 and the Full Bench decision in CFMMEU v Ditchfield Mining Services Pty Ltd.7 Those four propositions were:

a) whether an employer has complied with the obligation in s 180(5) depends on the circumstances of the case;
b) 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:

i. the steps taken were reasonable in the circumstances; and
ii. these were all the reasonable steps that should have been taken in the circumstances;

c) 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
d) an employer does not fall short of complying with the obligation in s 180(5) of the Act merely because an employee does not understand the explanation provided. 8

[7] In my initial decision, I stated if the Building and Construction Award was the only reference instrument, I was satisfied that Simpec had complied with s 180(5) based upon the totality of the evidence before me. However, because there were two further reference instruments, neither of which were referred to when Simpec provided its explanation of the Agreement to employees, further consideration of Simpec’s compliance with s 180(5) was required.

[8] In the decision of Construction, Forestry, Maritime, Mining and Energy Union and others v Specialist People Pty Ltd, 9 (Specialist People) the Full Bench adopted the four aforementioned propositions, and thereafter expressed concern that the applicant had used a summary document to explain the terms of the agreement, but the document omitted to explain the differences between the rates and conditions provided for in the agreement as compared to the four reference instruments.10 The Full Bench’s view was that an explanation of the differences was a reasonably necessary step regarding at least three of the awards because, as was conceded by the applicant, the employees would not be better off overall under the agreement than under those awards.11

[9] In response to the concerns of the Full Bench, the applicant in Specialist People provided an undertaking addressing the BOOT issue and compliance with s 180(5). The Full Bench expressed that their concern about compliance with s 180(5) had been addressed by the undertaking proffered because it ensured employees were better off overall under the agreement by a significant margin when performing work covered by the awards. This had, according to the Full Bench, effectively rendered moot the omission identified with respect to s 180(5). That is, the detriment which required explanation (not being better off overall under the agreement) no longer existed. On that basis, the Full Bench concluded the applicant had complied with s 180(5).

[10] Having considered the revised undertaking of 7 November 2019, I am satisfied that it addresses the BOOT concerns identified and therefore allows me to be satisfied that Simpec has complied with s 180(5) of the Act. This is because the revised undertaking, as worded, ensures that employees are better off overall under the Agreement, including, with respect to pay rates for adult employees, under the Electrical Award, the Building Award, and the Hydrocarbons Award. As was the case in Specialist People, the undertaking given has effectively rendered moot the omission of Simpec regarding its lack of explanation concerning the BOOT issues with respect to the Electrical Award and Hydrocarbons Award.

[11] With respect to the undertaking, a copy is attached in Annexure A. Clearly, I do not consider its acceptance would be likely to cause financial detriment to any employee covered by the Agreement or result in substantial changes to the Agreement. In accordance with s 190(4) of the Act, the views of bargaining representatives were sought on 26 November 2019. No objections were raised; I therefore accept the undertaking proffered.

Pre-approval steps

[12] Based on the totality of the submissions, application, accompanying statutory declarations, evidence and revised undertaking of 7 November 2019, I am satisfied that there are no other reasonable grounds for believing that the Agreement has not been genuinely agreed to by the employees.

[13] It follows that I am satisfied that the Agreement has been genuinely agreed to by the relevant employees 12 and do not consider it necessary to consider Simpec’s submissions with respect to s 188(2) of the Act.

Conclusion

[14] Subject to the undertakings referred to above, and on the basis of the material contained in the application and accompanying statutory declaration, I am satisfied that each of the requirements of ss 186, 187, 188, and 190 as are relevant to this application for approval have been met.

[15] The Agreement was approved on 28 November 2019 and, in accordance with s 54, will operate from 5 December 2019. The nominal expiry date of the Agreement is 28 November 2023.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<AE504868  PR711312>

Annexure A

 1   SIMPEC Pty Ltd T/A SIMPEC Pty Ltd [2019] FWC 7545.

 2   MA000020.

 3   MA000025.

 4   MA000062.

 5   [2019] FWCFB 6960.

 6 [2017] FCA 1266.

 7   [2019] FWCFB 4022.

 8   [2019] FWCFB 6960 [35].

 9   [2019] FWCFB 7919.

 10   [2019] FWCFB 7919 [22].

 11   [2019] FWCFB 7919 [22].

 12   Fair Work Act 2009 (Cth) s 186(2)(a).