Smit Lamnalco Australia Pty Ltd

[2016] FWC 5249

[2016] FWC 5249

FAIR WORK COMMISSION

DECISION

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

Smit Lamnalco Australia Pty Ltd
(AG2016/3337)

COMMISSIONER ROE MELBOURNE, 2 AUGUST 2016

Application for approval of the Smit Lamnalco Australia Maritime Offshore Oil and Gas Industry Enterprise Agreement 2016.

Introduction

[1] On 27 May 2016 Smit Lamnalco Australia applied for the approval of the Smit Lamnalco Australia Maritime Offshore Oil and Gas Enterprise Agreement 2016 (the Agreement).

[2] There were three issues of concern in respect to the approval of this Agreement:

1. The rates in Schedule 8 of the Agreement, the rates applicable to work on an unemployed vessel, were in some respects lower than the relevant Award rates. The work which was undertaken by the three employees who voted for the Agreement in the period leading up to the vote and following the vote was work which falls under Schedule 8 of the Agreement.

2. I had concerns about whether or not the scope of the Agreement was fairly chosen.

3. I had concerns about whether or not there had been genuine agreement.

[3] I am satisfied that the concern regarding Schedule 8 rates can be resolved by the provision of an undertaking. Smit Lamnalco have indicated that they are prepared to provide a satisfactory undertaking. The bargaining representative has been consulted and supports the draft undertaking. I am satisfied that the undertaking is not likely to cause any financial detriment to any employee and it does not result in a substantial change to the Agreement

[4] I am satisfied that other than in respect to the issues relevant to these concerns each of the requirements of Section 186 and 187 of the Fair Work Act 2009 (the Act) have been met. This decision will focus on the remaining issues of fairly chosen and genuine agreement. These matters were the subject of hearing on 27 July 2016.

[5] After considering correspondence from the Australian Mines and Metals Association (AMMA) and The Maritime Union of Australia (MUA) I advised them that the MUA had not established a right to intervene in the process of approval of the agreement. However, I decided that I would be assisted in reaching a conclusion about the issues of genuine agreement and fairly chosen if I had submissions from the MUA because the MUA has a high level of membership in the industry and it is therefore likely that employees who may be engaged in the future under the agreement will be members of the MUA. This is particularly the case given only three employees are currently covered by the Agreement which includes an extensive range of classifications and is to operate throughout Australia (excluding the ACT). I provided the MUA with access to a copy of the Agreement, the F17, the F16 and the proposed undertaking. Any employee names were redacted.

[6] The MUA was not a bargaining representative for the Agreement. I established this fact at the conclusion of the hearing after examining the MUA membership records and comparing them to the employee records both of which were provided on a confidential basis to the Fair Work Commission.

[7] Smit Lamnalco Australia is a part of the Smit Lamnalco Group of companies which owns more than 225 vessels worldwide and employs close to 3,000 workers. It provides towage and associated marine services to the oil and gas industry. Wholly owned subsidiary companies operate towage services in various Queensland ports and offshore vessel management and maintenance services.

[8] One vessel is operated by the Applicant, Smit Lamnalco Australia. For eight years ending in February 2016 that vessel was contracted to provide support services to Quadrant Energy (formerly Apache Corporation). The workers on board that vessel were labour hire workers covered by collective agreements. The MUA was covered by one of those agreements. That agreement was one of 22 agreements which were in similar terms and which were approved in 2010. Since February 2016 Smit Lamnalco has been doing maintenance on the vessel so that it has audit clearance to be able to be hired out for work at sea at short notice. That maintenance work has recently been completed and Smit Lamnalco is actively seeking both longer term work contracts for the vessel and short term work contracts for the vessel on the spot market. Smit Lamnalco has not yet been successful in securing work at sea for the vessel.

[9] Ms Carter for the company gave evidence that the company decided during 2015 to consider directly employing the crew that operated the vessel rather than use labour hire workers. In November 2015 Smit Lamnalco made its first attempt to make an agreement with directly employed labour. The small group of three employees who voted for the November 2015 agreement were being trained at the time they voted for the agreement. The employees were never mobilised to work at sea. The November 2015 Agreement was approved. The MUA appealed the approval decision and by consent that decision was overturned on appeal primarily because the agreement submitted to Deputy President Hamilton in the first instance was not properly signed by a representative of the employees. The employees who made this agreement are no longer employed by Smit Lamnalco. During the proceedings Smit Lamnalco submitted that the decision to dismiss the agreement on appeal led to the loss of the long term contract for the vessel. Although the cancellation of the contract occurred four days after the appeal decision, I am not satisfied that there is sufficient evidence before me to support a finding of a causal link between the two events. There are many reasons why contracts may be cancelled.

[10] The relevant facts concerning the bargaining and approval process for the Agreement are as follows:

● Three employees were engaged at the time of the vote within the coverage of the Agreement.
● The first employee was engaged on 5 April 2016 and the last employee was engaged on 11 April 2016. The three employees were employed in positions falling within the coverage respectively of the AMOU, AIMPE and MUA.
● The master and the engineer were paid a daily rate of $450 and the integrated rating was paid $315 per day. The Agreement rates for the work are $190.30 per day for the integrated rating and $300.64 per day for the master and $294.73 for the chief engineer. It is possible that a 20% loading for casual work may be payable under the Agreement but not currently paid to the employees. Even allowing for this the rates in the Agreement are less than the rates being paid to the employees at the time they voted for the Agreement. Under the 2010 agreements the daily rate for integrated rating (not including casual loading) is approximately $336 and higher for the master and engineer. The current rates in the Ports, Harbours and Enclosed Water Vessels Award 2010 are $220 for the master and $198.45 for the integrated rating (not including casual loading).
● The three employees who voted for the Agreement were engaged by Smit Lamnalco on a casual basis. The Ports Harbours and Enclosed Water Vessels Award 2010 contains provisions for casual employment but the Maritime Offshore Oil and Gas Award 2010 does not contain provision for casual employment. The 2010 agreements provide for casual employment.
● The three employees were engaged in maintenance work on the vessel in port during the period from 11 April 2016, working approximately five days per week. One of the employees resigned on 1 June 2016. The other two remained employed but in the recent period they have only been employed for a few days each week. There has been no work at sea and currently there are no contracts for work at sea. The company is actively seeking contracts for work at sea.
● The notification time for the Agreement was 12 April 2016 and the Notice of Employee Representational Rights (NERR) was provided to the three employees by email at around 12.50pm on the same day.
● The three employees appointed one of their number to be a bargaining representative on the same day as the NERR was issued. The three letters of appointment were emailed to the company at 3.52pm, 3.55pm, and 4.02pm. The three employees subsequently appointed a different representative on 3 May 2016. That representative was Mr George Haros, principle, MacPherson Kelly lawyers. MacPherson Kelly are a law firm which generally acts for employers and advertises this fact on its website.
● A draft agreement was provided to the employees by the company by email at some time shortly before 25 April 2016. There was no bargaining prior to the provision of the company draft agreement. Bargaining commenced with a face to face bargaining meeting on 25 April 2016. This was the only meeting during the bargaining process. The meeting involved the three employees not just the bargaining representative.
● After 25 April 2016 Ms Carter communicated with employees individually to consider any issues they had about the proposed agreement. There were also communications between Mr Haros and individual employees and between Mr Haros and Ms Carter during the period from 3 May 2016 to 11 May 2016. There were no meetings between Mr Haros and the employees or between Mr Haros and the company.
● Ms Carter says that at the 25 April 2016 meeting or immediately after that meeting employees expressed the desire to have access to advice. In her Statement Ms Carter said that it was shortly after the meeting on the same day, whilst in the proceedings Ms Carter said that the issue was raised at the conclusion of the meeting. When the issue was raised Ms Carter told the employees that Smit Lamnalco would meet the cost of that advice. Ms Carter also agreed to suggest who might be suitable to provide that advice. Ms Carter says that she spoke to AMMA and they suggested Mr Haros. Ms Carter provided the employees with Mr Haros’s details. The employees then appointed Mr Haros and one of them signed a costs agreement. One of the employees paid Mr Haros’s fees and then received reimbursement from Smit Lamnalco. Mr Haros gave evidence that his fees were $20,000 and of that half to two thirds was his direct time at $550 per hour. The balance was for the cost of other more junior solicitors who assisted him. He estimated he spent 15-20 hours on the job. This included conversations with AMMA and Ms Carter and with individual employees.
● The evidence of Ms Carter and Mr Haros identified four matters which were addressed in response to issues or questions raised by employees concerning the draft agreement. Firstly, where employees’ incomes were sufficiently high so that their pre-tax superannuation contribution would exceed the ATO threshold, employees would be able to have the balance paid as salary. Secondly, employees sought the inclusion of salary sacrifice arrangements. Thirdly, employees sought clarity that the wage increases provided for in the Agreement also applied to Schedule 8 rates. Finally, employees sought clarity about the scope of work which was covered by Schedule 8 (the last point did not result in any amendment to the Agreement draft).
● Employees were advised of the time and place and method for voting and were provided with a final copy of the Agreement on 11 and 12 May 2016. Voting commenced on 19 May 2016 and concluded on 20 May 2016. The three employees voted in favour of the Agreement.

[11] The coverage of the 2010 agreements were confined to employees in the relevant classifications “engaged in the offshore oil and gas industry”. The Agreement has essentially the same coverage but also covers employees whether or not they are at a particular point in time performing duties on rostered work time on a vessel, and it also covers employees in any approved leave, pre-mobilisation, or on-shore duties that the employer requires the employer to undertake before or after commencing work in any of the said classifications. Reflective of this broader coverage the Agreement contains a Schedule 8 which applies to work performed on unemployed vessels. These rates are much lower than the rates for work on vessels which are not unemployed. An unemployed vessel is one which is not contracted to a client and is located in Port and alongside. Ms Carter for Smit Lamnalco agreed that this work is within the scope of the Ports Harbours and Enclosed Water Vessels Award 2010. The scope of the 2010 agreements is confined to the scope of the Maritime Offshore Oil and Gas Award 2010.

[12] I accept the evidence of Mr Tracey for the MUA that bargaining for replacements for the 2010 agreements began in late 2012 or early 2013. AMMA represented the employers in this process. Only two replacement enterprise agreements have been approved by the Commission to date. The MUA supported those agreements and is covered by them. Five of the major employers, represented by AMMA, put forward an agreement for employee vote in November 2015. The employees rejected the agreements and the MUA urged them to do so. The agreements were similar to the terms of the Agreement in this case.
[13] I also accept the evidence of Mr Tracey that there are two other agreements, similar to the Agreement in this case, which are currently before the Fair Work Commission for approval. They are the MMAOL Pty Ltd Enterprise Agreement 2016 (MMAOL Agreement) (AG2016/3091) and the DOF Management Australia Pty Ltd Maritime Offshore Oil and Gas Industry Enterprise Agreement 2016 (DOF Agreement) (AG2016/2924). AMMA is the bargaining representative for the MMAOL Agreement and is representing DOF. Mr Tracey gave evidence that in both the MMAOL and DOF cases, as is the case with this Agreement, the agreements were made with a very small number of employees who the MUA argues were not engaged in normal at sea operations at the time the agreements were made. It would be inappropriate for me to reach any conclusion about the facts as they relate to the making of the two other agreements as they are currently before the Fair Work Commission. However, I accept the evidence of Mr Tracey that the MUA believe that the tactic being utilised by AMMA and their member in this case is not isolated to this case.

[14] Mr Haros provided an F18A Statutory Declaration in relation to the approval of the agreement. In that declaration he stated in respect to the employer’s F17 that:

“I agree with the statutory declaration save that I cannot comment on the issue referred to in section 4.4 of the Form F17 statutory declaration. I raised with employees the possibility that a transferable instrument may operate and offered them the opportunity for advice on the matter. Each of the employees I was appointed in writing to represent instructed me not to review or provide further advice on the matter.”

[15] I questioned Mr Haros about this matter. Mr Haros believed that one or more of the 2010 agreements had applied to one or more of the employees immediately prior to their engagement by Smit Lamnalco and that the instrument may have been transferable. This may have affected judgement about the effect of the making of the Agreement upon one or more of the employees. Mr Haros gave evidence that he raised this issue with Ms Carter who expressed the view that a 2010 agreement did not apply to the work being performed by the employees because the maintenance work on an unemployed vessel was not within the scope of the 2010 agreement but was covered by the Ports Harbours and Enclosed Water Vessels Award 2010. Mr Haros gave evidence that he checked the information provided by Ms Carter about the nature of the work performed with the employees and they confirmed its accuracy. As a result Mr Haros gave evidence he was satisfied that a 2010 agreement did not apply. Mr Haros also gave evidence that the employees gave him instructions not to investigate the matter further.

[16] It seems strange to me that if Mr Haros had reached the conclusion that a 2010 agreement did not apply and therefore that there was no transferable instrument operating he would not have said so in his F18A note and added that he advised the employees that he did not believe that the transferable instrument was operating. I consider that a fair reading of his F18A note is that Mr Haros considered it a possibility that a transferable instrument may operate and that he did not have a concluded view on the matter because the employees instructed him not to provide further advice on the matter. I prefer Mr Haros’ evidence in the F18A statement to the evidence in the proceedings to the extent that the two are in conflict.

[17] Despite this I am satisfied that the 2010 agreements do not apply to the work on an unemployed vessel in harbour at a time when that vessel does not have any work secured in the offshore oil and gas industry. That work is covered by the Ports Harbours and Enclosed Water Vessels Award 2010. I accept that there was no transmission of a 2010 agreement.

Was the group of employees covered by the agreement fairly chosen? (Section 186(3)

[18] The legislative requirement is as follows:

“(3) The FWC must be satisfied that the group of employees covered by the agreement was fairly chosen.

(3A) If the agreement does not cover all of the employees of the employer or employers covered by the agreement, the FWC must, in deciding whether the group of employees covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.”

[19] The scope of the Agreement is set out in Clause 4 of the Agreement. It does not cover all of the employees of the employer. It covers all employees in the classifications across the full scope of the three streams officers, engineers and ratings employed to work in the maritime offshore oil and gas industry. I am satisfied by the evidence of Ms Carter that on its face that group is both operationally and organisationally distinct. The only issue is whether or not the inclusion as part of the group of those who are undertaking “pre-mobilisation or on shore duties” “before… commencing work in any of the said classifications” (Clause 4 of the Agreement) undermines this. As discussed earlier, I am satisfied that this is certainly unusual in the industry. These employees are covered by a different Award and are traditionally not covered by the industry agreements. I am not satisfied that this group of employees are operationally part of the group which constitutes the ships crew in the maritime offshore oil and gas industry. The fact that these employees have no guaranteed work at sea reinforces my conclusion in this respect. I am not satisfied that the group chosen is operationally or geographically distinct. However, I accept the evidence of Ms Carter that they are managed by the same people as would manage the vessel’s operations at sea. In this sense their inclusion does not destroy the organisational distinctiveness. I am satisfied that the group is organisationally distinct. Therefore, the requirement in Section 186(3A) is met.

[20] I now turn to the more general requirement in Section 183 and whether I am satisfied that the group of employees covered by the agreement was fairly chosen.

[21] Ms Carter gave evidence which confirmed that the main purpose of having the Agreement from the point of view of Smit Lamnalco was to regulate the terms and conditions of employment for the work of the vessel when it was contracted to work in the offshore oil and gas industry. Ms Carter believed that without an enterprise agreement it would be difficult to get contracts for work in the industry because the terms and conditions (including the price) of labour would not be known and because of the risk of protected industrial action by the crew if an agreement was not in place. Given that the crew had previously been engaged by labour hire employers and Smit Lamnalco had for legitimate business reasons decided to employ crew directly it was necessary to finalise a new agreement.

[22] There is no business reason why the maintenance work carried out by the three casual employees, considered in isolation from potential work at sea, needed to be covered by an enterprise agreement. Each of the employees signed common law contracts of employment which for the purpose of the maintenance work was underpinned by the Ports Harbours and Enclosed Water Vessels Award 2010.

[23] The MUA argues that the decision of Smit Lamnalco to make an agreement with three employees who are not actually engaged in work at sea which is the main purpose of the Agreement is a manipulation of the agreement making process. The MUA argues that making an agreement with three employees who were not engaged for the main purpose of the Agreement is a device to avoid either having to make a greenfields agreement with the MUA or having to bargain with a full crew of workers engaged to work at sea.

[24] I am satisfied that Smit Lamnalco has gone to extraordinary lengths, including paying $20,000 to cover Mr Haros’ costs, to ensure that it does not have to deal with the MUA and to finalise an agreement which does not have the support of the MUA. Given the opposition of the MUA an agreement in its current form could not form the basis for a greenfields agreement with the MUA. I also accept the evidence of Mr Tracey that it would be unlikely at the present time for an agreement in this form to be voted up as a single enterprise agreement if a full crew had been engaged and had been able to vote on the agreement.

[25] The MUA point to another unusual feature of the scope of the Agreement, its inclusion of all three streams: officers, engineering, and ratings. These three streams are more commonly in separate agreements. I am satisfied that an agreement which includes all three streams is no less fairly chosen than an agreement which only covers one of the streams. There is a legitimate operational and organisational rationale for both approaches. There is no basis for the MUA’s objection to the scope of the Agreement on this ground.

[26] I am satisfied that the relevant Awards and the collective agreements covering work in the offshore oil and gas industry traditionally do not include maintenance work on unemployed vessels which do not have contracts to work in the industry. The three employees who voted for the Agreement were all casual employees and the only work that they were engaged in in the lead up to the vote and subsequent to the vote has been maintenance work on an unemployed vessel. As they were casual employees there was no guarantee that they would ever do work in the offshore oil and gas industry. They signed contracts of employment which included the possibility of work in the offshore oil and gas industry. I am satisfied that Smit Lamnalco is trying to find work for the vessel in the offshore oil and gas industry and so the prospect of work for these casual employees in the industry is not fanciful. If the three workers had been engaged on a full time basis then if the work arose in the industry they would be guaranteed of being on the vessel at sea if it won work. However, given that the employees are casual there is no guarantee that they will be allocated work on the vessel at sea even if contracts for work are won.

[27] Ms Carter gave evidence that Smit Lamnalco had a view that potential customers for the vessel in the industry would be unlikely to use the vessel and its crew unless there was an enterprise agreement. She gave evidence that the main reason for this was the elimination of the risk of protected industrial action during the life of the agreement. I have accepted that a greenfields agreement of the sort desired by Smit Lamnalco could not be achieved in a short period of time. I have also accepted that it is unlikely that Smit Lamnalco could have achieved the agreement of the sort desired once it had hired a full crew. However, the overwhelming majority of vessels in the industry at the present time are covered by the 2010 agreements. That is, the overwhelming majority of the industry are subject to the uncertainty of potential protected industrial action. There are limited opportunities for potential customers utilising Australian crewed vessels to avoid the risk of potential protected industrial action. I therefore do not accept that there is a legitimate business rationale for the scope of the Agreement on the ground that without an agreement being in place the vessel would be unable to obtain contracts from potential customers.

[28] It is however possible that the achievement of an agreement which removed the risk of protected industrial action for the life of the agreement may be a competitive advantage in seeking work for the vessel. I consider that this would be a more accurate description of the business rationale. This is particularly the case when the more general context of the bargaining situation in the industry as outlined in the evidence of Mr Tracey discussed earlier is considered.

[29] I accept the evidence of Ms Carter that there was a clear business rationale to move from use of labour hired crew to direct hired crew. I accept her evidence that there were significantly reduced costs in this approach and that cost reductions were required due to the current business contraction in the industry.

[30] Ms Carter gave evidence that the business rationale also included:

● The business could grow its reputation and secure more work by presenting an offering whereby Smit Lamnalco had “a stable workforce of its own employees”. 1

● The business could “offer those employees as on-hired labour in the future.” 2

[31] The only persons hired to date are three casual employees one of whom left ten days after the Agreement was made. The employee who left said in his resignation letter to Smit Lamnalco that he was leaving to achieve “a more reliable income stream for the short term.” 3 This evidence suggests that at least one of the employees was not confident they would achieve work at sea with Smit Lamnalco in the short term, despite the making of the Agreement. I am not satisfied that Smit Lamnalco has taken steps to engage a crew that was stable and could be on-hired. If this had been done, for example by the engagement of the three employees on a full or part time basis, then this may have formed part of the organisational or operational rationale for the scope of the agreement.

[32] Ms Carter gave evidence that at no time were the employees told by her or anyone else that their employment was conditional on or for the purpose of entering into the Agreement. 4 In the absence of direct evidence from the employees concerned and from the other persons who had involvement in the recruitment of the employees I do not accept this evidence. Given Smit Lamnalco was on notice that I was concerned that the scope of the Agreement may not have been fairly chosen it was open to Smit Lamnalco to provide this evidence. Even if the employees were not told that the purpose of their employment was to achieve the Agreement, that does not mean that this was not one of the purposes. Given the timing of the events and the extraordinary efforts made by the employer to support the making of the Agreement with three casual employees, I consider it reasonable to infer that one of the reasons why the three employees were engaged was for the purpose of achieving the Agreement. However, there is no evidence that the employees were told that their employment was conditional upon them making the Agreement.

[33] The fact that the rates of pay in the section of the Agreement (Schedule 8) which applied to the employment of the three workers at all stages of their employment to date are significantly less than the rates which they were currently paid also raises questions about the purpose of their engagement. It should also be noted that I was concerned that the rates in Schedule 8 were in some cases less than the relevant Award rates and Smit Lamnalco has offered a suitable undertaking which will overcome that concern.

[34] I considered the option of requiring one or more of the employees to give evidence. However, at the point I considered this relevant I had already made a confidentiality order at the request of Smit Lamnalco and the MUA said that they did not oppose the making of that order. I made the order to facilitate the efficient and timely conduct of the proceedings. There was no evidence to support a finding that the identity of the employees should be protected because of any threat or danger. I accept that the employees requested anonymity. The MUA did not seek that I require one or more of the employees to give evidence.

[35] The overall circumstances strongly point to an inference that Smit Lamnalco has chosen to make an agreement with those engaged outside the traditional offshore oil and gas industry but with a much broader scope which also includes work at sea in the offshore oil and gas industry in order to avoid dealing with the MUA. That is, the scope of the Agreement has been manipulated to include the traditional work at sea in the oil and gas industry to avoid dealing with the MUA.

[36] This suggests that the scope of the Agreement has not been fairly chosen. However, there are other countervailing factors which need to be considered and which suggest that the exclusion of the MUA was not the sole purpose or rationale for the broader scope of the Agreement.

[37] I do not see that an agreement with a scope that includes all three main occupational streams and which includes in its scope maintenance work on an unemployed vessel without contracts in the industry is necessarily unfairly chosen. Those who perform the maintenance work on an unemployed vessel can then perform required work at sea as part of a full crew. I accept the evidence of Ms Carter that the maintenance work was a necessary precursor to obtaining contracts on the spot market. I accept that completion of the maintenance work was necessary to obtain the necessary audits so that the vessel could be offered for work at sea at short notice. There is a rationale for the scope chosen by Smit Lamnalco and the employees who voted for the agreement. The rationale for the employees is that it increased the possibility that they would get work at sea. The rationale for Smit Lamnalco is that the work to get the vessel ready is closely linked to achieving work at sea and if it achieved work at sea it may include those workers in the crew.

[38] This is not a case where there is any basis to conclude that it is likely that the Agreement will end up covering a much broader scope of classifications or work than that which the employees who make the Agreement understood or experienced. Smit Lamnalco only operates one vessel in the industry so the Agreement is not a device to achieve an instrument which will cover a much broader scope of work. The three employees include one employee from each of the main classes of work in the industry. Although there are a wider range of classifications in the Agreement the employees who voted would have a reasonable appreciation of the scope of the work for which they are determining the wages and conditions. This is in sharp contrast to some of the other cases where concerns have been raised about the scope of an agreement being manipulated.
[39] In the absence of direct evidence from the employees concerned there is no basis to find that the employment of the three employees was conditional upon them making the Agreement.

[40] I have weighed the extent to which I consider that the scope selected was a deliberate manipulation and the extent to which I consider it to be based upon a bona fide business rationale. On a fine balance I have reached the conclusion that the group of employees to be covered was fairly chosen.

Are there reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees? (Section 188(c))

[41] I am satisfied that the requirements in Section 188, other than the consideration in Section 188(c) are met. Section 188(c) is as follows:

“(c) there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.”

[42] The MUA argue that one of the reasons to doubt genuine agreement is the circumstances surrounding the engagement of Mr Haros as a bargaining representative and the earlier appointment of one of the employees as a bargaining representative. Smit Lamnalco accepted that for the purposes of this consideration it can be assumed that the employee was the ship’s master.

[43] The Regulations set out the requirement for the independence of bargaining representatives as follows:

“2.06  Appointment of bargaining representatives—independence

A bargaining representative of an employee must be:

(a)  free from control by the employee’s employer or another bargaining representative; and
(b)  free from improper influence from the employee’s employer or another bargaining representative”

[44] I have previously considered the issue of whether or not a ship’s master is sufficiently independent. I concluded that it was possible for a ship’s master whose employment fell within the scope of the proposed agreement to act independently as an employee bargaining representative. I do not consider that the circumstances in this matter are sufficiently different to justify a different conclusion. 5

[45] I do not accept that the evidence of Ms Carter and Mr Haros supports a conclusion that there was robust bargaining for the Agreement. There was only one face to face meeting. All contact between Mr Haros and the employees was with separate individuals, not with the collective, and was by telephone or email. The changes made in response to issues raised by the employees were minor and did not involve any significant additional costs to the employer, or loss of flexibility or loss of control. The fundamental condition which directly affected the three employees was the rate of pay under Schedule 8. There is no evidence that there was any bargaining about the rates shown in Schedule 8 notwithstanding the fact that in some instances they may be less than the relevant award and the fact that they are significantly less than the rates that were being paid to the three employees at the time the Agreement was being negotiated. These were the only rates that were likely to apply to the employees in the short to medium term. In the longer term there was the possibility of engagement on the vessel at sea. If this occurred higher rates were on offer in the Agreement but this was only a possibility for these employees. There was no guarantee of this particularly as the employees were casual. The relevance of this is underlined by the fact that one employee left within ten days of the Agreement being made in order to achieve more reliable income for the short term.

[46] Ms Carter gave evidence of the large amount of work she did in preparing the draft Agreement and then in finalising the matter with employees. She referred to numerous discussions with AMMA seeking advice on particular items raised. It is extraordinary that Ms Carter gave evidence that she was not aware that the rates of pay in Schedule 8 of the Agreement were significantly less than the rates currently paid to the three employees whose work fell within the scope of that Schedule. I regard it as strong evidence of a lack of authenticity of the agreement making process that the issue of the rates in Schedule 8 was not raised by the employees or Mr Haros and that Ms Carter was not aware of the issue. The issue of the wage increases applicable during the life of the Agreement was raised but the actual rates were not. The issue of the Schedule 8 rates was not raised in the information provided to employees prior to the vote detailing the impact of the Agreement.

[47] Mr Haros did enter into an agreement with the employees. As a solicitor he was bound to represent his clients. There is no basis to conclude that he was under the improper influence of the employer.

[48] However, the facts surrounding the bargaining do raise doubts about genuine agreement. These include that:

● Mr Haros was proposed by the employer at the suggestion of AMMA.
● Prior to engagement the employer agreed to meet the costs.
● The costs of $20,000 were far in excess of what could or would have been reasonably been be paid by the employees.
● There was an absence of vigorous bargaining or significant issues raised by employees which could explain the time and costs expended by Mr Haros.
● There was an absence of a plausible explanation as to why Smit Lamnalco would agree to suggest an advisor from a law firm which represents and supports business as a representative for employees and would agree to meet such significant costs for that representation.
● The Notice of Employee Representational Rights was issued the day after the last of the three employees was engaged for the first time on a casual basis.
● The three employees acted in concert to appoint one of their number as a bargaining representative within hours of the NERR being issued.
● Neither Mr Haros nor the employees were concerned that the rates of pay in the proposed Agreement for the work that they were performing was significantly less than the rate they were currently being paid and was in some cases arguably less than the relevant award.

[49] The most recent and relevant consideration of this question is found in the Full Bench decision KCL Industries Pty Ltd. 6

[50] Some of the circumstances referred to in KCL which may lead to a finding on reasonable grounds that there was no genuine agreement are not established in this case. For example:

● There is no evidence of misleading information.
● Except in respect to the Schedule 8 rates issue, there is no evidence that employees were not informed about the effect of the Agreement.
● There is no evidence that employees were hindered from voting or that the voting was in some way not a true expression of the employee views.
● There was no variety of overlapping agreements such that the real impact and purpose of the agreement could not be appreciated by the employees.
● The scope of the agreement does not extend to unrelated industries within which the employees who voted were not engaged.
● Although the principle purpose of the Agreement was to cover the work at sea and the employees were not and had never performed this work and were not guaranteed of access to this work in the future, there was some prospect that this may occur. The prospect is not remote or fanciful.
● The classifications in which the employees were engaged are representative of the three main streams of work covered by the Agreement. The employees were in a reasonable position to understand what they were voting upon and its impact on future employees.

[51] The concerns in this case relate to the lack of authenticity of the bargaining process. The circumstances give rise to a suspicion that an implied condition of employment was that the employees would cooperate to make the Agreement or alternatively that employees were given some assurance about future work at sea in return for their agreement to cooperate to make the Agreement. In the absence of evidence from the three employees in the circumstances of this case there is no direct evidence of coercion.

[52] I did not find the evidence of Ms Carter on the issue of the communication with employees to be satisfactory. In her Statement she said that when she provided employees the NERR she told them they were entitled to choose how they wished to be represented. She says that she also told them that if they did not appoint a representative and they were a member of a union then the union would be the default representative. She says that she did not know if they were union members. During the proceedings Ms Carter said that she did not have this conversation with the employees on the day that the employees were given the NERR. Ms Carter conceded that this was inconsistent with her Statement. 7 This strengthens my concerns about other aspects of Ms Carter’s evidence and the authenticity of the process.

[53] The failure to raise the issue of the lower Schedule 8 rates in the information provided to employees is, in the circumstances of this case, not sufficient to make a finding of lack of genuine agreement. I am not satisfied that this group of employees had difficulties with oral and written English communication and comprehension. I am satisfied, in the absence of any direct evidence from the employees, that they did carefully consider the proposed agreement and raised a number of issues, including the issue of the scope of work covered by Schedule 8. I therefore consider it likely that the employees would have been aware that the rates in Schedule 8 were lower than the rates they were currently being paid. I consider it likely that the employees were focused on the potential opportunity to achieve work at sea rather than on the less well paid and short term casual work on the unemployed vessel. I consider it likely that they believed that voting for the agreement and assisting the employer to make the agreement increased their chances of achieving future work at sea.

[54] There needs to be more than strong suspicion to provide reasonable grounds for believing there has been a lack of genuine agreement. In this case I need to be able to draw an inference that there has been some form of implied condition of employment or assurance about future work in return for cooperation to make the Agreement. On a fine balance I have concluded that although I have serious concerns about the authenticity of the bargaining process and there are a range of circumstantial facts that might support the drawing of the inference, I do not consider those circumstantial facts are quite sufficient to draw the inference. I therefore cannot conclude that there are other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.

Conclusion

[55] The Agreement will be approved subject to receipt of the signed undertaking in the form proposed within the next 72 hours.

COMMISSIONER

Appearances:

Mr R Dalton appeared for the Applicant.

Mr S Crawshaw appeared for the MUA.

Hearing details:

2016

Melbourne by video to Sydney

July 27

 1   Exhibit S2 at para 26(d).

 2   Exhibit S2 at para 26(e).

 3   Exhibit S2, Attachment NC3.

 4   Exhibit S2 at para 38.

 5   Bhagwan Marine Pty Ltd [2016] FWC 3427.

 6   [2016] FWCFB 3048.

 7   Exhibit S2 at paras 49 and 50.

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