The Australian Workers' Union
[2016] FWCA 9249
•23 DECEMBER 2016
| [2016] FWCA 9249 [Note: An appeal pursuant to s.604 (C2017/128) was lodged against this decision - refer to Full Bench decision dated 5 May 2017 [[2017] FWCFB 2296] for result of appeal.] [Undertakings 1 and 6 have been removed as per the Full Bench decision.] |
| FAIR WORK COMMISSION |
| decision |
Fair Work Act 2009
s.185 - Application for approval of a greenfields agreement
The Australian Workers' Union
(AG2016/5442)
TCQ Labour Pty Limited / AWU Civil Construction Metro Greenfield Agreement 2016
| Building, metal and civil construction industries | |
| DEPUTY PRESIDENT LAWRENCE | SYDNEY, 23 DECEMBER 2016 |
Application for approval of the TCQ Labour Pty Limited / AWU Civil Construction Metro Greenfield Agreement 2016.
Introduction
This decision follows on from a decision I issued on 15 November 2016 [2016] FWC 8190 (the 15 November 2016 Decision) in respect of an application by The Australian Workers’ Union (AWU) for approval of an enterprise agreement known as the TCQ Labour Pty Limited / AWU Civil Construction Metro Greenfield Agreement 2016 (the Agreement). The Agreement is a single enterprise greenfields agreement. It has been made between TCQ Labour Pty Limited (Telum) and the AWU.
On the same day I issued two other decisions relating to Telum related companies:
· [2016] FWC 8161 – an application for approval of the Telum Contract Labour Pty Ltd / AWU WestConnex Project Civil Construction Greenfields Agreement 2016 (the WestConnex Agreement). AG2016/5440
· [2016] FWC 8186 – an application for approval of the TCQ Labour Pty Limited Regional Greenfield Agreement 2016 (the Regional Agreement). AG2016/5441
These three agreements have been dealt with together through joint submissions and a hearing, but separate decisions have been issued. I have continued this practice.
The 15 November 2016 Decision
I will not repeat the matters contained in the 15 November 2016 Decision but I rely on them.
That decision arose from the opposition of the Construction, Forestry, Mining and Energy Union (CFMEU) to the certificate of the Agreement.
In short, the 15 November Decision:
· set out in full the legislative provisions relating to the approval of agreements.
· decided that the agreement was made under s.187(3).
· stated that:
“[23] The questions to be determined are:
(a) Does the Agreement relate to a “genuine new enterprise” as provided for in s.172(b) which has not yet employed anyone to be covered by the Agreement?
(b) Is the AWU entitled to represent the industrial interests of one or more employees who will be covered by the Agreement as provided for in s.177(b)?
(c) Does the Agreement satisfy the requirements of ss.186 and 187? Including:
(i)does it pass the better off overall test? (s.186(2)(d));
(ii)does the AWU represent the industrial interest of a majority of employees to be covered by the Agreement? (s.187(5)(a));
(iii)is it in the public interest to approve the Agreement? ((s.187(5)(b)).”
· relied on the decisions in CFMEU v Collinsville Coal Operations Pty Ltd (2014) FWCFB 7940 (Collinsville) and CFMEU v MGI Piling NSW (2016) FWCFB 2654 (MGI Piling) to conclude that whilst the CFMEU did not have a right to be heard and was not a party, it would be allowed to make submissions with respect to the genuineness and BOOT issues, pursuant to s.590 of the Fair Work Act 2009 (the Act).
· decided that the AWU has coverage of a majority of the employees to be covered by the Agreement.
· allowed the CFMEU to peruse the initiating documents.
The following process was to be implemented:
“In summary, I have decided that the following steps will now be taken:
1.The CFMEU can peruse the F19, F20 and F21 documents until Close of Business Friday, 18 November 2016 at the Commission.
2.My chambers will provide to the AWU and Telum a summary of possible issues with respect to the BOOT soon after this decision is issued.
3.The AWU and Telum are to lodge with the Commission any submissions/evidence with respect to the genuineness and BOOT issues by Close of Business Monday 21 November 2016.
4.Any submissions by the CFMEU shall be filed and served on the AWU and Telum by Close of Business Monday 21 November 2016.
5.The matter will be listed for further hearing on Friday 25 November 2016.”
CFMEU Submissions
The AWU and Telum relied on the material lodged with the application. However, the CFMEU lodged extensive written submissions on 21 November. The submissions related to the three proposed greenfields agreements.
The CFMEU submits that the Agreement does not relate to a “genuine new enterprise” that the employer is proposing to establish in accordance with s.172(2)(b)(i). Reliance is placed on the fact that there are a group of Telum companies with common directorship/ownership, namely Mr Neeson and Mr Castrisos. Two of these companies, Telum (Qld) Pty Ltd and Telum Precast (NSW) Pty Ltd are involved in disputation with the CFMEU and AWU in other matters which have been before the Commission. The concern is that employees currently covered by other agreements may be transferred to the other legal entities. This concern particularly related to the Metro and Regional Agreements, given their proposed general coverage.
The CFMEU submits that the Agreement attempts to exclude a provision of the NES by requiring that an employee is not entitled to be paid for a public holiday if they have not worked immediately before or after the holiday.
The CFMEU also submits that the Agreement does not satisfy the BOOT. Most of the written submission concerned the Regional Agreement which had more numerous and obvious problems with respect to the BOOT. However, with respect to the WestConnex and Metro Agreements, which were mirrors, the following issues were raised:
- no provision for a job search entitlement where an employee has been given notice of termination;
- the spread of hours;
- definition of shifts;
- abandonment of employment;
- the lack of a provision preventing employees from being transferred etc in inclement weather.
The CFMEU provided extensive information, mainly through ASIC searches, to show the nature of the common management structures of the various Telum corporate entities. They also tendered the documentation relating to a number of recent disputes and Commission proceedings involving Telum entities and the CFMEU.
The CFMEU filed some orders for production on 18 November. However, I declined to issue them on the basis that the CFMEU was not a party to the proceeding.
25 November Hearing
Mr G. Beard appeared for the AWU, Mr B. Cross, counsel, appeared for Telum and Mr P. Boncardo for the CFMEU. Mr Cross was granted permission to appear pursuant to s.596 of the Act.
Prior to the hearing, Telum had provided certain undertakings which were designed to satisfy concerns in respect of the BOOT.
Telum submitted that the accusation of lack of genuineness was not supported by any evidence. It was consistent with usual practice for Telum to enter into a greenfields agreement with the union that has traditional coverage in respect of civil construction.
It is submitted that the Agreement applies to a genuine new enterprise, which, as defined in s.12 means “a business, activity, project or undertaking”. Other Telum entities have work, and employ people, pursuant to specific contracts.
I was assured that neither Telum Contract Labour Pty Ltd nor TCQ Labour Pty Limited have any employees. I was further advised that the former is intending to tender for the WestConnex project and no other project.
Mr Boncardo referred me to a number of decisions about the approval of agreements. In essence the submission was that these corporate entities are not genuine new enterprises because there are other corporate entities under the same control. No evidence was presented that the position of the two Telum entities was other than that submitted by Telum.
Mr Boncardo reiterated his written submission with respect to the BOOT. Again, most attention was directed to the Regional Agreement.
Finally, the CFMEU relied on Booth C’s analysis of the public interest in relation to the approval of greenfields agreements in Abigroup Contractors Pty Ltd [2012] FWA 3745 (Abigroup), to argue that approval of the Agreement was not in the public interest.
In answer to my question, Mr Boncardo did not deny that the WestConnex agreement related to a genuine new enterprise.
Telum, in response, pointed out that the CFMEU has made many greenfields agreements with employers in exactly the same way as the AWU and Telum had done in this case.
At the conclusion of the hearing, I dealt with possible undertakings in conference with Telum and the AWU.
Following the hearing I was provided by Telum with copies of other agreements in the construction industry. I was also provided with draft undertakings.
Importantly I was advised on 5 December that the Regional Greenfield Agreement application had been withdrawn.
I now turn to my conclusions in respect of the three issues that remain outstanding, namely:
1.Does the Agreement relate to a “genuine new enterprise” as provided for in s.172(b)?
2. Does the Agreement pass the BOOT?
3. Is it in the public interest to approve the Agreement?
Genuineness
Rares J dealt with the meaning of “greenfields agreement” in s.172(2)(b) of the Act in National Union of Workers, New South Wales v HP Distribution Pty Ltd [2013] FCA 139.
His conclusion was based on an overall analysis of the facts. He stated:
“29. In my opinion, the Commission could only approve an agreement as a greenfields agreement under ss186(1) and 187(5) if the document satisfied the requirements of s172(2)(b) or 172(3)(b). That is, the actual existence of the facts necessary for an agreement to meet the statutory criteria for a greenfields agreement was a jurisdictional fact necessary to ground the Commission’s power to approve it. If the agreement were not of that nature, then the only enterprise agreement that the employer could make was one under s172(2)(a). Relevantly, s172(2)(b) required that a greenfields agreement have the following characteristics, namely that:
· ·an employer (here HP Distribution) had made the enterprise agreement with a relevant employee organisation (here SDA);
· ·the agreement related to a genuine new enterprise that the employer was establishing or was proposing to establish;
· the employer had not employed, before the agreement was made, any of the persons who were necessary for the normal conduct of that enterprise; and
· those persons were to be covered by the agreement.
30. It is significant that in the expression “are establishing or propose to establish” s172(2)(b)(i) addressed alternatives comprised of a present and potential state of the new enterprise. In its ordinary and natural meaning that expression contemplated that the employer or someone whose work it adopts can have progressed the new enterprise beyond a planning or merely conceptual phase. However, s172(2)(b)(ii) ensured that the employer could not employ anyone who would be necessary for the normal (as opposed to preparatory) conduct of the enterprise before it could enter a greenfields agreement. Moreover, s172(3)(b) contemplated that the agreement also could relate to a genuine new enterprise that two or more separate employers “are establishing or propose to establish”. The words in the present tense in each of s172(2)(b) and (3)(b), “are establishing”, indicated that preparatory work may be done, including significant preparatory work prior to the agreement being made.
31. It is difficult to contemplate how two or more employers, who were not all single interest employers, would be able to make an enterprise agreement for the purposes of s172(3)(b) unless significant preparatory work to formulate business plans and define roles for each of those employers had been done. Where two or more employers with different interests agree to undertake a new enterprise, ordinarily, they will need to identify the nature and scope of their individual responsibilities for the future conduct of the enterprise, what each of those employers expects the business to do, how its activities will be undertaken, the nature of the tasks and work the employees will perform, their training and the other incidents that such a complex arrangement would involve. The practical implementation of such an arrangement may also require considerable lead time before the new enterprise would be ready to commence operating. Such arrangements might also need to address any issue that might arise under the provisions of Pt IV of the Competition and Consumer Act 2010 (Cth) in relation to their collaboration on that matter.
32. There is nothing in s172(3) that identifies any particular assignment of responsibilities between the two or more employers as to whether one or all is or are to undertake the relevant establishment work, or whether the enterprise agreement will be made by all of the employers, one or some of them together with, or simply by, a special purpose vehicle that is a newly incorporated subsidiary of one or some or all of the employers. Those matters suggest that the Parliament intended that a genuine new enterprise could be in the process of being established to a greater or lesser extent before the ink had to be dry on greenfields agreement or the vehicle by which it would be conducted was identified or incorporated. Indeed, the expressions “are establishing” and “propose to establish” in each of ss172(2)(b)(i) and (3)(b)(i) indicated that one of two scenarios might exist and that preparatory steps, even of a very substantial nature, would not necessarily disqualify an agreement from being a greenfields agreement for the purposes of s172(2) or (3). The mere fact that an employer, or a related company, had taken steps to establish the business, of itself, will not detract from the genuineness of the new enterprise or preclude the employer subsequently being able to enter a greenfields agreement provided that the requirements in s172(2) or (3) are met.
33. I am of opinion that the unchallenged evidence of Mr Town established that there was a genuine new enterprise that HP Distribution was establishing or proposing to establish at the time the greenfields agreement was made. That is because, as the Full Bench itself found, and I agree, Woolworths had created HP Distribution to operate a distribution business to service a different balance of subsidiaries and its business needs. That business, activity, project or undertaking was different from any existing business that Woolworths was operating. The scope of the arrangements appears to have been somewhat fluid over the period between the preparatory work for the Dick Smith unit, that commenced in August 2011 and the final entry into the greenfields agreement on 9 December 2011. So much appears from the evidence of Mr Smith of SDA, about the initial scope of what was planned, which did not include the Dick Smith business.
34. It is, of course, one thing for an employer to take over or re-badge an existing “enterprise”, as defined in s 12 of the Act, and another for it to create a new one. The objective character and identity of the enterprise to which the agreement will apply and its novelty in relation to the employer’s business (or that of the group of which they form part as single interest employers within the meaning of s.172(5) may be relevant considerations for the tribunal of fact: Patrick Cargo Pty Ltd v Transport Workers’ Union of Australia (2002) 115 IR 443 at 446-447 per Munro J, Duncan SDP and Roberts C.
35. Woolworths established HP Distribution to arrange for the distribution of goods for three significant business units within the overall Woolworths organisation. That was a new business activity, project or undertaking. It would be conducted from one location. Staff employed by HP Distribution at the Hoxton Park precinct would be able to move from one part to another to service the requirements of the distribution activities as they changed or developed. Woolworths had not previously established such an enterprise, although some preparatory work had been done in a preliminary fashion by persons employed by Action Work Force in relation solely to the Dick Smith indent storage arrangements. The scope, structure and direction of the way in which the two sheds were to operate at the Hoxton Park precinct was not the same as the undertaking or work of the labour supplied by Action Work Force when operating, in the preliminary stages, earlier in 2011 at the Hoxton Park precinct. None of the employees who operated that business was employed by any of the Woolworths companies prior to 9 December 2011, as Mr Town made clear.
36. As a matter of practical reality, I am satisfied that the business, activity, project or undertaking which prior to 9 December 2011 Woolworths had contemplated be established at the Hoxton Park precinct was genuinely new and different from an existing enterprise. I reject NUW’s argument that the participation of Woolworths in the preparatory planning and development of the enterprise or the agreement meant that HP Distribution could not be said to be the relevant employer. For the reasons above, I am of opinion that s172(2)(b) envisages that a holding company may do significant preparatory work directed to establishing or proposing to establish a genuine new enterprise that it intends will be conducted by a subsidiary that will be incorporated shortly before the subsidiary enters into a greenfields agreement with a relevant employee organisation. The relationship between the holding company and the subsidiary, together with the amount of preparation cannot preclude, but may be relevant to, the characterisation of the enterprise agreement as a greenfields agreement for the purposes of s172.”
Although, the facts are much simpler in this case, a practical analysis leads to the conclusion that this is a genuine new enterprise. The use of different corporate structures and/or entities should not be a bar, as Rares J found, to the conclusion that the enterprise is genuinely new if the overall facts indicate that this is the case.
There is no question that the M4 East and new M5 WestConnex is a new project. The CFMEU was forced to admit that this was the case.
The proposed regional agreement has now been withdrawn. There is, therefore, no evidence before the Commission that in areas of current dispute the proposed new agreement could be used as a device to transfer employees covered by other agreements and employed by other entities.
It is not uncommon or improper for employers in contracting industries, in particular, to have different corporate entities to be used for different purposes. There is no evidence that this is not legitimate in this case. I have no reason to doubt the assurance given that neither Telum Contract Labour Pty Limited nor TCQ Labour Pty Limited have any employees. Moreover, an undertaking was given that the proposed agreement would only apply to new projects.
Accordingly, I am satisfied that the Agreement relates to a genuine new enterprise as provided for in s.172(b).
The BOOT
I have considered the Full Bench decision in Hart v Coles Supermarkets Australia Pty Ltd and Bi-Lo Pty Limited[2016] FWCFB 2887. I have also taken into account the recent comments of Sams DP in Beechworth Bakery Employee Co Pty Ltd Enterprise Agreement 2016 [2016] FWCA 8862 where he stated:
“[64] It is trite to observe that an agreement does not necessarily fail the BOOT because employees do not receive weekend penalty rates, public holiday loadings or any other Award term or condition. Such a simplistic test would be to adopt an incorrect approach to the exercise of ensuring employees (and prospective employees) are ‘better off overall’ under the Agreement, rather than the relevant reference instrument. It is not an exercise in which the Commission ‘negotiates’ with the parties over remotely unlikely ‘what if’ scenarios about implausible or fanciful work patterns or rosters which the employer has never utilised and never intends to. This would be a barren and wasted exercise, perhaps of some obscure academic novelty, but of no practical utility.
[65] The BOOT is a balancing exercise - not a ‘line by line’ comparison. In NTEU v UNSW [2010] FWAA 9588, Lawler VP said as follows:
‘It is trite to observe that awards typically contain both monetary and non-monetary terms and conditions. Obviously enough, the BOOT calls for an overall assessment. Comparing monetary terms and conditions is, at the end of the day, a matter of arithmetic. There is an obvious problem of comparing apples with oranges when it comes to including changes to non-monetary terms and conditions into the “overall” assessment that is required by the BOOT. In such circumstances the Tribunal must simply do its best and make what amounts to an impressionistic assessment, albeit by taking into account any evidence about the significance to particular classes of employees covered by the Agreement of changes to particular non-monetary terms that render them less beneficial than the equivalent non-monetary term in an award. In my view, it may also be relevant to consider the terms of any existing agreement and whether there is a relevant change of position when compared to that existing agreement.’ (my emphasis)
[66] In the present case, the assessment of the BOOT is relatively straightforward. This is so because the Agreement does not provide any other terms or conditions which are more beneficial than the reference instrument, other than the higher loaded rates of pay which apply for ordinary time worked during the week and on the weekend and public holidays.
[67] In my judgement, the decision of the Full Bench of the Commission in Hart v Coles has no application to this matter, for one significant reason. In Hart v Coles, the employer was invited, but refused, to provide undertakings, under s 190 of the Act, to address the identified concerns with the BOOT. By refusing to do so, the decision of the Commission not to approve the Agreement, was hardly surprising. That is not the position here. Beechworth has conceded a number of individual circumstances (mostly unlikely, given the rostering and employment arrangements of the business) which might result in a small cohort of employees not being ‘better off overall’ under the Agreement, rather than the relevant Award. The only identifiable real circumstance was one employee who, for purely personal reasons can only work on Sundays, which meant she was ‘worse off’ than if the Award applied. This was readily acknowledged and corrected, by an undertaking, that any employee who works solely on a Sunday or public holidays (highly unlikely) would be paid at a rate to ensure they would not be ‘worse off’ under the Agreement, compared to the relevant Modern Award. However, for reasons I will explain later, this may not be sufficient.”
The major concerns with the BOOT related to the regional agreement which has now been withdrawn. The WestConnex and Metro agreements are mirrors. Both provide for rates of pay which are 17% to 32% above the Award. They also have penalty rates for weekends and public holidays and overtime. They also incorporate the Award so that there is that protection. They provide 5% per annum increases over the life to the Agreement.
The issues of concern that were raised were:
· Clause 18(b) - no payment for a public holiday if the employee does not work before or after the day;
· The possibility of the spread of hours being varied by agreement so that employees are disadvantaged;
· Clause 23(c) – personal protective equipment costs can be withheld if the employee resigns within three months;
· Uncertainty about the payment for permanent night shift.
I am satisfied that the undertakings provided by Telum which are attached to this decision and incorporated into the Agreement deal with these issues.
Accordingly I am satisfied that the Agreement meets the BOOT.
Public Interest
Booth C in Abigroup provides a useful summary of the public interest matters to be considered in dealing with greenfield agreements:
“[55] The use of the public interest test in approval of a Greenfields agreement can be contrasted to the requirements of agreement making where employees vote on the agreement following significant consultation. Importing a public interest test where an agreement can be approved for future employees requires FWA not only to ensure that the procedural steps are met to approve an enterprise agreement but that the additional requirements of the public interest are also considered. . . .
[67] Whether approval of the Agreement is in the public interest is a discretionary decision, and my judgement of it is informed by consideration of the following matters.
(a) Approval of the Agreement is consistent with the object of the Act set out in section 3, especially section 3(f) and the objects of Part 2-4 about enterprise agreements set out in s.171.
(b) The Agreement is consistent with the Greenfields agreement made for the other part of the construction with another corporation, minimising the potential for industrial disputation.
(c) The Agreement provides equal or better terms and conditions that the relevant modern award and wages are significantly higher than the award.
(d) It is positively in the public interest for the parties to the Agreement to eliminate lost time or productivity arising out of disputes or grievances during the construction under the agreement.
(e) It is positively in the public interest for the Agreement to be approved to assist completion of the project within its time and financial targets.
(f) No substantive arguments were raised in opposition to the approval of the Agreement being in the public interest even though the CFMEU asserts such.”
This Agreement is made with the union, the AWU, which has uncontested coverage of the work covered by it. It provides wages and conditions which are well in excess of that provided in the Award. It is in the public interest for agreements to be made for construction projects which provide stability of wages and conditions and completion of projects within time and financial targets.
Accordingly, I am satisfied that approval of the Agreement is in the public interest.
Conclusion
I am satisfied that this greenfields agreement meets the requirements of s.172(2)(b). I am also satisfied that each of the requirements of ss.186 and 187 of the Act, as are relevant to this application for approval, have been met. In accordance with s.187(5)(a) of the Act, I am satisfied that The Australian Workers’ Union is entitled to represent the industrial interests of a majority of employees who will be covered by the Agreement in relation to work that is to be performed under it. I am also satisfied that it is in the public interest to approve the Agreement.
Pursuant to s.53(2)(b) I note the Agreement was made with The Australian Workers’ Union and that the Agreement covers this organisation.
The Commission notes and accepts the undertaking provided by the employer and it is taken to be a term of the Agreement. A copy of the undertaking is attached to this decision as Annexure A.
The Agreement is approved and, in accordance with s.54, will operate from 30 December 2016. The nominal expiry date of the Agreement is 1 July 2020.
DEPUTY PRESIDENT
Appearances:
G. Beard for the AWU;
B. Cross, of counsel for Telum;
P. Boncardo for CFMEU,
Hearing details:
2016
November 25.
Further Written Submissions
December 5 – Telum;
December 7 – CFMEU.
Annexure A
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