The Australian Workers' Union v Ace Citrus Pty Ltd as trustee for the Ashley Meyer Family Trust
[2019] FWCFB 5722
•16 AUGUST 2019
| [2019] FWCFB 5722 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
The Australian Workers’ Union
v
ACE Citrus Pty Ltd as trustee for the Ashley Meyer Family Trust
(C2019/3531)
VICE PRESIDENT HATCHER | SYDNEY, 16 AUGUST 2019 |
Appeal against decision [2019] FWCA 3443 of Commissioner Harper-Greenwell on 17 May 2019 – union request to be heard overlooked – procedural fairness – explanation of agreement – better off overall test – appeal upheld
Issues in the appeal
[1] The Australian Workers’ Union (AWU) has lodged an appeal, for which permission to appeal is required, against a decision issued by Commissioner Harper-Greenwell on 17 May 2019 (Decision) 1 in which she approved the Ace Citrus Pty Ltd Enterprise Agreement 2018 (Agreement) under s 185 of the Fair Work Act 2009 (FW Act).
[2] The AWU advances three grounds of appeal. First, it contends that it was denied procedural fairness in connection with the process by which the Agreement was approved. It says that it wrote to the registry of the Commission seeking to be heard in relation to the application, but the Agreement was approved without its request being brought to the Commissioner’s attention. The union says that, in light of its other appeal grounds, it cannot be said that the denial of procedural fairness was inconsequential.
[3] Secondly, the AWU submits that the Commissioner erred in concluding that the Agreement passed the “better off overall test”. It says employees are worse off under the Agreement because it does not reflect or offset certain overtime and shift work conditions for casuals that were introduced into the Horticulture Award 2010 (Award) after the Agreement was made by employees but before it was approved by the Commission. Thirdly, the AWU submits that the Commissioner erred in concluding that the Agreement was genuinely agreed to by the employees because it did not fully explain the effect the Agreement would have of excluding the proposed casual Award conditions.
[4] The employer respondent, ACE Citrus Pty Ltd (company) made no submission in relation to the AWU’s contentions regarding the denial of procedural fairness, or the union’s standing to bring the appeal. It contends however that the Commissioner was correct to conclude that the Agreement passed the better off overall test and that the Agreement was genuinely made. It contends that the Decision was not affected by any other error, and that there is therefore no utility in the appeal and that permission to appeal should be refused.
[5] The facts that are relevant to the AWU’s contention that it was denied procedural fairness are not in dispute. On 22 November 2018, the AWU sent an email to the Sydney registry of the Commission requesting copies of the application for approval of the Agreement and the supporting statutory declaration, and seeking an opportunity to be heard in relation to the application. On 5 June 2019, after the approval of the Agreement, the AWU sent an email to the Commissioner’s chambers asking whether its request to be heard had been brought to the Commissioner’s attention. The Commissioner’s associate confirmed that the Commissioner had not been aware of the union’s request.
[6] It is clear that the AWU was denied an opportunity to make submissions in support of its request to be heard on the application for approval of the Agreement. No decision was made in relation to the union’s request to be heard because the Commissioner was not aware that such a request had been made until after the Agreement had been approved.
[7] Relevant to the second and third grounds of appeal are recent variations that have been made to the Award. On 2 April 2019 a Full Bench of the Commission issued a determination to vary the Award. 2 The determination followed upon decisions of the Commission made on that same day and also on 9 August 2018.3 The determination inserted into the Award a new clause 22.2, which provides that the ordinary hours for casual employees other than shift workers will not exceed 304 hours over an eight week period or 12 hours per engagement on any one day, and that each hour of overtime will be paid at the rate of 175%, inclusive of the casual loading. The new clause also provides that ordinary hours worked by a casual between 8.31pm and 4.59am will attract a 15% penalty in addition to the 25% casual loading. The determination came into operation on 15 April 2019, and took effect in relation to particular employees at the start of the first full pay period on or after the date of operation, in accordance with s 165(3).
[8] The Agreement was made with two casual employees, both of whom voted to approve the Agreement on 13 November 2018. The application for approval of the Agreement by the Commission under s 185 was lodged on 21 November 2018. 4
[9] Before approving an enterprise agreement, the Commission must be satisfied that the agreement passes the better off overall test (s 186(2)(d)). Section 193(1) provides:
(1) An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.
[10] The “test time” referred to in s 193(1) is defined in s 193(6) as the time the application for approval of the agreement by the Commission was made. It is not in dispute that the test time in this matter was 21 November 2018, the date on which the application was lodged in the Commission, and that this date fell before the date on which the variations to the Award took effect.
[11] At the hearing of the appeal, we granted the company leave to file a statutory declaration of Mr Ashley Meyer dated 17 July 2019, which supplemented information he provided in two previous declarations submitted in support of the application for approval of the Agreement that were considered by the Commissioner, about the company’s explanation to employees of the terms of the Agreement. Mr Meyer attended the appeal hearing and was cross-examined by the representative of the AWU.
[12] The submissions of the AWU on appeal can be summarised as follows:
• The AWU is entitled to represent employees working for employers that are engaged in the horticultural industry who are covered by the Agreement. It is therefore a “person aggrieved” by the Decision and has standing to bring an appeal under s 604(1).
• Although not every decision affected by a denial of procedural fairness will warrant correction, in this case it cannot be confidently concluded that the denial of procedural fairness did not affect the outcome, given the merit of the other appeal grounds.
• The Agreement was one of many filed by employers in the horticulture sector from mid-2018 to head off expected variations to the Award that would enhance conditions for casuals. This calls into question whether the Agreement was genuinely made.
• The Agreement did not pass the better off overall test. Although the “test time” for the BOOT occurred before the new award provisions took effect, the Commission is required to take into account everything that is known about the relevant award and the agreement at the time it makes its decision, albeit from the vantage point of the test time. When the Commission approved the Agreement in May 2019, it knew that, as at the test time in November 2018, casual employees were in fact not better off overall, because they would forego enhanced award benefits from April 2019.
• The Agreement largely reflects the Award, with only slightly higher rates of pay at the test time and no increases during the four year term. Although base rates of pay in the Agreement are protected from falling below permanent base rates of pay in the Award by s 206 of the FW Act, that protection would not ensure casual employees receive at least the minimum award rate for a casual employee at all times because the 25% casual loading does not fall within the FW Act’s definition of base rate of pay.
• The Agreement was not genuinely agreed to by the two casual employees because the effect of its terms was to preclude imminent improvements for casuals under the Award and this was not properly explained to them as required by s 180(5).
• The first statutory declaration of Ashley Meyer says nothing about pending variations to the Award. His second statutory declaration, dated 9 May 2019, refers to a meeting at which “the effect of the terms in relation to the current award and including the pending changes to the award that were proposed to include overtime for casuals”. This is a self-serving statement that could not be sufficient to satisfy the Commissioner of the statutory test as it did not provide any detail about what was actually explained to the two employees.
• The two statutory declarations submitted in support of the application for approval of the agreement failed properly to identify terms of the Agreement that are inferior to the Award.
• Given these deficiencies, the Commissioner erred in concluding that the Agreement was genuinely agreed to by the employees covered by it.
[13] The company made the following submissions:
• The Agreement passes the better off overall test. As to the casual loading, clause 14.1(c) of the Agreement provides that casual employees will receive the applicable minimum weekly rate of pay “plus a casual loading of 25%”. Therefore, any increase in the minimum weekly rate of pay under the FW Act will have the 25% casual loading applied in addition to the increased base rate.
• As to the Award variations affecting casuals, the BOOT requires an overall comparison of agreement and award conditions that are known at the test time. The Agreement was lodged on 21 November 2018. The variations took effect on 15 April 2019. At the test time they were a matter of speculation. The final form of the variations was not known, nor was their date of effect, or whether the proposed changes, once settled, would be subject to an implementation period.
• The Commissioner properly conducted an overall comparison of the Agreement and the Award conditions that were known at the test time. The most recent Full Bench consideration regarding casual employee award entitlements had been on 15 October 2018. This stated that “no final determination has been made by (the) Full Bench in relation to the Horticulture Award.” 5
• The explanation of the terms of the Agreement to employees was adequate. The company could not be expected to explain possible future changes to the Award. If this were so, employers would also have to speculate about and explain possible future movements in the annual wage reviews.
• In addition to the two statutory declarations of Mr Meyer and the F18A forms from bargaining representatives, the Commissioner conducted an unrecorded phone conference on 17 May 2019, at which Mr Meyer told the Commissioner that he had explained to employees that, if the Agreement was voted up, no Award terms, including entitlement of casuals to overtime payments, would apply.
• The AWU itself describes the Agreement as a “cut and paste” of the Award with slightly higher rates of pay. There was no obligation on the Respondent under s 180(5) to compare terms of the Agreement that are merely a “cut and paste” from the Award and therefore pose no detriment. The Commissioner noted in the Decision that she was satisfied that the employer had met its obligations under s 180(5) of the FW Act, and she was correct to do so.
• It is not in the public interest to grant permission to appeal because it has no utility, as no further error is disclosed and the outcome would be the same. The AWU has not identified any error related to the better off overall test or employees’ genuine agreement that is fatal to the Agreement’s approval.
Consideration
[14] The AWU did not have a right to be heard in relation to its objections to the company’s application for approval of the Agreement. It was not a bargaining representative for that agreement 6 or a party covered by an earlier agreement whose substantive rights might be affected by the approval of the Agreement.7 A simple capacity to represent employees covered by an enterprise agreement is not a sufficient interest to found a right to be heard.8
[15] However, the Commission may under s 590(1) of the FW Act inform itself in such manner as it considers appropriate, and may choose in a particular case to hear from an organisation or person about the approval of an agreement.9 If an organisation seeks to be heard, it is entitled to be given “a proper opportunity to develop its argument on the question [of] whether it should be heard”.10 It is clear that in the present case the AWU was inadvertently denied that opportunity. Its request to be heard in relation to the approval of the Agreement was constructively refused. This amounted to a denial of procedural fairness.
[16] It is not every denial of procedural fairness that will entitle an aggrieved party to a new hearing. The AWU must demonstrate that the denial of procedural fairness deprived it of the possibility of a successful outcome. It will not have been deprived of this possibility if, upon our analysis now on appeal, we conclude that the Commissioner could not have reached a different result.11 In the present matter, the AWU must therefore demonstrate first that it was denied the possibility of persuading the Commissioner that it should be heard on its objections, and secondly that as aconsequence it was denied the possibility of persuading the Commissioner that those objections should be upheld.
[17] As to the first matter, we cannot conclude that, if the AWU had been afforded the opportunity requested in its email of 22 November 2018 to make submissions in support of its request to be heard on the application for approval of the Agreement, it could not have persuaded the Commissioner to grant this application. Section 590(1) of the FW Act confers on members of the Commission a broad procedural discretion, and in many cases members have allowed employee organisations and other persons to make submissions in relation to applications for approval of enterprise agreements pursuant to s 590(1) in circumstances where they do not have a right to be heard.12 A similar course might have been taken by the Commissioner in this case had the AWU’s request to be heard been brought to her attention.
[18] As to the AWU’s substantive objections to the Agreement that it wished to put before the Commissioner, we take note of the parties’ acknowledgement at the hearing that their central contentions relevant to the AWU’s second ground of appeal have recently been run before another Full Bench in relation to an appeal against the approval of a number of enterprise agreements in the Horticulture sector in circumstances similar to those in the present matter. The Full Bench has reserved its decision. 13 In light of this, and given the conclusion we have reached below, it is sufficient for us to confine ourselves to the third ground of appeal.
[19] In our opinion the possibility cannot be excluded that, had the union been heard, it might have persuaded the Commissioner that the Agreement should not be approved because it had not been genuinely agreed to by employees, on the basis that the company did not properly explain the Agreement and the effect of its terms to the two casual employees who voted on it. In this connection, we do not agree with the company’s submission that the AWU would need to identify a “fatal” error in the decision. The Commissioner’s consideration of whether the Agreement was genuinely agreed to by employees, and her evaluation of the adequacy of the explanation of the terms of the Agreement and their effect on employees, involved the exercise of discretion. Therefore the question is whether there is a reasonable possibility that the AWU might have persuaded her to exercise her discretion in a manner that led her ultimately to reach a different conclusion.
[20] We make some observations about what was in the public domain in relation to the proposed award variations at the time that the Agreement and the effect of its terms were explained to the two employees in November 2018. In a decision issued on 5 July 2017 as part of the 4 yearly review of modern awards, a Full Bench of the Commission decided that the Award needed to be varied to prescribe overtime penalty rates for casual employees in order to meet the modern awards objective in s 134(1) of the FW Act. It expressed the provisional view that overtime hours should be able to be averaged over a period of eight weeks for this purpose, and invited interested parties to confer and make further submissions concerning this provisional view. 14 In a follow-up decision issued on 9 August 201815 the Full Bench then stated:
“[81] Deputy President Kovacic subsequently conducted some follow-up conferences with the parties (that is, the AWU, the NUW, the Ai Group and the NFF). Arising out of those conferences, a proposal for the implementation of the principal decision emerged which contained the following elements:
• a requirement for the ordinary hours of casual employees not to exceed 304 hours over an 8-week period;
• the ordinary hours of a casual employee to be worked between 5.00am and 8.30pm on any day of the week, and paid at the employee’s minimum hourly wage plus the casual loading of 25%;
• in any State or Territory which does not observe daylight saving time, the capacity for an employer and a majority of employees to agree to permit the daily spread of hours to be moved forward to 4.00am to 7.30pm during the period in which daylight saving time is in operation in States and Territories which observe it;
• ordinary hours worked outside of the daily span of hours to attract a penalty rate of 15% in addition to the 25% casual loading;
• a maximum of 12 ordinary hours is able to be worked on any one day;
• all time worked in excess of 12 hours per day or 304 hours over an 8-week period is overtime, and will be paid at the rate of 175% of the employee’s ordinary hourly rate of pay for his or her classification (inclusive of the casual loading); and
• any hours worked by a casual employee on a public holiday (whether ordinary hours or overtime) will be paid at the rate of 225% of the employee’s ordinary hourly rate for his or her classification (inclusive of the casual loading).
[82] In the course of those conferences the Commission sought the parties’ views as to whether or not they would be prepared to support the above proposal as the basis for the resolution of the abovementioned issues regarding casual employment in the Horticulture Award. The parties subsequently advised that they would not oppose or object to the Horticulture Award being varied to reflect the proposal.
Conclusion
[83] To the extent that the above proposal represents what could be characterised as a broad industry consensus as to an acceptable approach to implementing our conclusion in the principal decision concerning overtime penalty rates for casual employees in the Horticulture Award, we would provisionally be prepared to accept and give effect to it. Although it involves some problematic elements, including a less beneficial span of hours and overtime penalty rate for casual employees than for permanent employees, it may arguably be justifiable on the basis that it would give effect to the principal decision on at least an introductory basis, in circumstances where the horticultural industry has never paid penalty rates for casual overtime before and is rife with award compliance problems. However, we acknowledge that there are likely be other parties who, because they did not attend the scheduled hearing on 1 February 2018, did not have the opportunity to participate in the conference which occurred on that day and the ensuing exchange of views regarding the proposal. To that end, we propose to publish a draft determination to give effect to the proposal and then provide interested parties with 21 days to make further submissions in relation to it. We will then determine whether any further conferences or hearings should be conducted before making a final determination.”
[21] It can be seen from the above that there was in August 2018 a detailed proposal to vary the Award, and that the Full Bench was provisionally prepared to give effect to the proposal to the extent it represented a broad industry consensus. We acknowledge that there was yet scope for change to the proposed variations to the Award. The Full Bench observed in its decision that there were likely to be other parties who had not been able to participate in the proceedings and it was to that end that a draft determination would be issued. The draft determination was published on 30 August 2018. 16 Nevertheless, the draft variations were the product of a lengthy process that had engaged industry participants and peak bodies and represented a firm and considered proposal for change.
[22] We accept that prior to her approval of the Agreement the Commissioner conducted an unrecorded conference, during which Mr Meyer advised her that he had told employees that, if the Agreement was voted up, none of the Award terms, including any entitlement of casual employees to overtime payments would apply. We note that in paragraph 5 of Mr Meyer’s third statutory declaration, he says that he explained to employees that changes to the Award were proposed and that if they were accepted they would provide casual employees with an entitlement to overtime payments if they worked in excess of their ordinary hours averaged over eight weeks. However, when cross-examined in the appeal hearing about the content of his further supplementary statutory declaration, Mr Meyer acknowledged that he did not tell the two employees who voted on the Agreement that they would not receive the proposed 15% loading for working outside the daily span of hours. This information was not before the Commissioner. Whether Mr Meyer knew about this and other details of the proposed casual overtime variations to the Award is not in evidence, nor were we addressed on the significance of Mr Meyer’s knowledge for the application of s 180(5) in this matter. However it is apparent from Mr Meyer’s third statutory declaration that he was aware of at least some of this detail, namely the eight week averaging proposal. These are matters that could have been considered by the Commissioner had the AWU been afforded an opportunity to be heard and that might have affected her disposition of the application for approval of the Agreement.
[23] More broadly at issue is the question of what s 180(5) required by way of explanation to employees in relation to the proposed award variations in this matter. We have not heard full argument on this question and do not propose to determine the question. However, we do not accept the company’s contention that to expect the company to explain the effect of the proposed award variations would be akin to requiring employers to prognosticate possible annual wage review outcomes. The analogy is inapt, because in this case there was a draft determination that the company itself saw as warranting some explanation to the two casual employees who made the agreement. Whether that explanation was sufficient warrants further consideration. But it cannot be said that the AWU had no reasonable possibility of convincing the Commissioner that the company had failed to meet the requirement in s 180(5) and that accordingly the Agreement had not been genuinely agreed for the purpose of s 188. This does not mean that it was not reasonably open for the Commissioner to reach the conclusion that she did. However the degree of latitude in the decision to be made with respect to s 180(5) and the circumstance of this matter mean that it was possible for an alternative conclusion to have been reached.
[24] For these reasons we conclude that the denial of procedural fairness to the AWU did deny it the possibility of a successful outcome. A failure to accord natural justice in circumstances where the relevant party was denied the opportunity of affecting the outcome of the decision is in our view an error of jurisdiction and enlivens the public interest. We will therefore grant permission to appeal, uphold the appeal and quash the Decision.
[25] Although it was not raised by the AWU in its appeal grounds or submissions, a separate difficulty with the Commissioner’s approval of the Agreement emerged during the hearing of the appeal. Section 180(3) requires an employer to take all reasonable steps to advise employees who will vote upon the approval of an enterprise agreement, by the start of the “access period”, of the time and place at which the vote will occur and the voting method to be used. The “access period” is defined in s 180(4) as being the 7-day period ending immediately before the start of the voting process, and this period must consist of seven clear calendar days between the date upon which advice as to the voting time, place and method is given and the date upon which the voting process commences. 17 Compliance with s 180(3) is rendered, by s 188(1)(a)(i), a necessary element of an enterprise agreement being “genuinely agreed” in accordance with the definition of that expression in s 188(1). Section 186(2)(b) requires that a non-greenfields enterprise agreement be genuinely agreed in order to be capable of approval. Section 188(2) provides that an enterprise agreement may be genuinely agreed, notwithstanding non-compliance with (relevantly) s 180(3), if the Commission is satisfied that this was the result of minor procedural or technical errors and that employees covered by the relevant agreement were not likely to have been disadvantaged by the errors. In summary therefore, where there has been non-compliance with s 180(3), an agreement cannot be approved unless the Commission is able to be satisfied as to the matters in s 188(2).
[26] The Form F17 statutory declaration that accompanied the application for approval of the Agreement stated (at paragraph 2.5) that the advice required by s 180(3) was given on 8 November 2018 in respect of a voting process that commenced on 13 November 2018. Two Form F18A statutory declarations made by bargaining representatives for employees (being the two casual employees who were covered by the Agreement at the time of the vote) affirmed that the Form F17 statutory declaration was correct. These statutory declarations are demonstrative of a failure to comply with s 180(3).
[27] When this problem was raised with the employer by the Commissioner’s chambers in email correspondence dated 5 April 2019, the company advised in reply correspondence dated 8 April 2019 that the advice required by s 180(3) was in fact given on 6 November 2018, and that the date of 8 November 2018 was “mistyped” in the Form F17 statutory declaration. However, this remained demonstrative of non-compliance with s 180(3), because there are only six clear calendar days between 6 and 13 November. The approval of the Agreement, absent satisfaction under s 188(2), would be beyond power in the circumstances described. The record of the proceedings before the Commissioner and the Decision do not suggest that any consideration was given to the application of s 188(2), and the company did not submit otherwise. This would constitute an independent basis to grant permission to appeal and uphold the appeal.
[28] We consider that the most efficient course is for us to remit the application to the Commissioner for redetermination. That will allow the Commissioner to hear and determine the AWU’s application to be heard, to deal with any matters raised by the AWU should they be allowed to intervene, and to consider whether s 188(2) may be applied to the company’s non-compliance with s 180(3).
Orders and directions
[29] We order and direct as follows:
(1) Permission to appeal is granted.
(2) The appeal is upheld.
(3) The Decision ([2019] FWCA 3443) is quashed.
(4) The application for approval of the Ace Citrus Pty Ltd Enterprise Agreement 2018 (AG2018/6447)is remitted to Commissioner Harper-Greenwell for redetermination.
VICE PRESIDENT
Appearances:
S Crawford for the Australian Workers’ Union
P Copeland for ACE Citrus Pty Ltd
Hearing details:
2019
Melbourne
23 July
Printed by authority of the Commonwealth Government Printer
<PR711405>
1 [2019] FWCA 3443
2 PR706485
3 [2019] FWCFB 2108 and [2018] FWCFB 4695, 282 IR 135
4 The application is dated 15 November 2018 but was lodged in the Commission on 21 November 2018.
5 4 yearly review of modern awards - Award stage - Group 3 [2018] FWCFB 6368 at [22]
6 CFMEU v Collinsville Coal Operations Pty Ltd [2014] FWCFB 7940, 246 IR 21 at [16]
7 CFMMEU v Mechanical Maintenance Solutions Pty Ltd [2019] FWCFB 3585 at [33]
8 CFMEU v Collinsville Coal Operations Pty Ltd [2014] FWCFB 7940, 246 IR 21 at [49]-[73]
9 Ibid at [75]
10 Ibid at [76]
11 Stead v State Government Insurance Commission [1986] HCA 54, 161 CLR 141 at 145, 147; AWU v Job Connect Recruitment Pty Ltd[2019] FWCFB 5132 at [15]
12 See e.g. Collinsville Coal Operations Pty Limited[2014] FWC 5628 (affirmed on appeal in [2014] FWCFB 7940, 246 IR 21); Inco Ships Pty Ltd[2016] FWC 1637 (permission to appeal refused in [2016] FWCFB 3370); One Key Coal QLD Pty Ltd[2018] FWC 256
13 C2019/1487 - AWU v Gray Australia Pty Ltd & Others
14 [2017] FWCFB 3541, 269 IR 125 at [748]-[755]
15 [2018] FWCFB 4695, 282 IR 135
16 See also [2019] FWCFB 2108 at [10]
17 CFMMEU v CBI Constructors[2018] FWCFB 2732
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