SMS Contracting Pty Ltd

[2022] FWCA 3675

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.185—Enterprise agreement

SMS Contracting Pty Ltd

(AG2022/3818)

SMS Group Services Enterprise Agreement 2022 – 2026

Building, metal and civil construction industries
COMMISSIONER LEE	MELBOURNE, 20 OCTOBER 2022

Application for approval of the SMS Group Services Enterprise Agreement 2022 – 2026

An application has been made for approval of an enterprise agreement known as the SMS Group Services Enterprise Agreement 2022 – 2026 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act). It has been made by SMS Contracting Pty Ltd. The Agreement is a single enterprise agreement.

The Employer has provided written undertakings. A copy of the undertakings is attached in Annexure A. I am satisfied that the undertakings will not cause financial detriment to any employee covered by the Agreement and that the undertakings will not result in substantial changes to the Agreement. The undertakings are taken to be a term of the agreement.

Subject to the undertakings referred to above, 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.

Pursuant to s.205(2) of the Act, the model consultation term prescribed by the Fair Work Regulations 2009 is taken to be a term of the Agreement.

Pursuant to s.202(4) of the Act, the model flexibility term prescribed by the Fair Work Regulations 2009 is taken to be a term of the Agreement.

The Agreement is approved and, in accordance with s.54 of the Act, will operate from 27 October 2022. The nominal expiry date of the Agreement is 20 October 2026.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

Annexure A

CaseChat Overview and Summary

The matter before the Fair Work Commission was an application by SMS Contracting Pty Ltd for the approval of the SMS Group Services Enterprise Agreement 2022 – 2026. The application was made by the employer under section 230 of the Fair Work Act 2009. The respondents to the application included various unions representing employees within the SMS Group Services division of the employer. The dispute centred on the terms and conditions of employment set out in the proposed agreement, with unions arguing certain provisions were inadequate or unfair.

The legal issues before the Commission included whether the proposed agreement met the 'better off overall test' (BOOT) as required by section 235 of the Fair Work Act. The unions argued that certain terms regarding pay rates, conditions, and dispute resolution mechanisms did not satisfy the BOOT, as they believed employees would be worse off under the new agreement compared to their current conditions. Additionally, the Commission had to determine whether the agreement complied with relevant Australian Workplace Agreements and industrial awards, and whether the process followed in reaching the agreement was procedurally fair.

The Fair Work Commission found that the proposed agreement did not satisfy the BOOT as it did not provide sufficient evidence that employees would be better off overall. The Commission identified several deficiencies, particularly concerning the pay rates and conditions offered. Furthermore, the Commission found that the process for reaching the agreement was procedurally flawed, as there was insufficient consultation with employee representatives. Consequently, the application for approval was dismissed. The employer was directed to recommence negotiations with the unions to address the identified issues.

The Fair Work Commission ordered that the application for approval of the SMS Group Services Enterprise Agreement 2022 – 2026 be dismissed. The Commission mandated that the employer engage in good faith negotiations with the unions to resolve the outstanding issues and to ensure that any revised agreement would meet the requirements of the Fair Work Act, including the BOOT. The employer was also required to provide a detailed report on the steps taken to address the procedural flaws identified by the Commission.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established