The Australian Workers' Union v Skout Solutions Pty Ltd
[2021] FWCFB 119
•13 JANUARY 2021
| [2021] FWCFB 119 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604—Appeal of decision
The Australian Workers’ Union
v
Skout Solutions Pty Ltd
(C2020/6727)
DEPUTY PRESIDENT ASBURY | BRISBANE, 13 JANUARY 2021 |
Appeal against decision to approve the Skout Solutions Industrial Enterprise Agreement 2019 of Deputy President Clancy at Melbourne on 7 April 2020 in matter number AG2020/353.
Introduction
[1] The Australian Workers’ Union (the Appellant) has applied for permission to appeal and has appealed against a decision1 made by Deputy President Clancy on 7 April 2020 (the Decision) to approve the Skout Solutions Industrial Enterprise Agreement 2019 (the 2019 Agreement).
[2] Section 604(1) of the Act permits a “person aggrieved” to make an application for permission to appeal a decision of the Commission. We are satisfied that the Appellant is such a person in relation to the Decision.
[3] The Appellant lodged its notice of appeal on 2 September 2020. Rule 56(2) of the Fair Work Commission Rules 2013 relevantly provides that a notice of appeal under s.604 must be filed within 21 calendar days after the date of the decision the subject of the appeal or within such further time allowed by the Commission on application by the Appellant. The Appellant’s notice of appeal was filed 127 days after the prescribed 21-day time period had expired. Accordingly, it is necessary for the Appellant to be granted an extension of time in order for the appeal to be competent.
[4] In its notice of appeal, the Appellant set out the following substantive grounds of appeal:
1. The Deputy President erred in concluding that the Skout Solutions Industrial Enterprise Agreement 2019 was genuinely agreed in accordance with s. 186(2) and s. 188 of the Fair Work Act 2009 (Act). (Appeal Ground 1)
2. The Deputy President erred in concluding that the scope of the Skout Solutions Industrial Enterprise Agreement 2019 was fairly chosen as required by s. 186(2)(d). (Appeal Ground 2)
3. The Deputy President erred in concluding that the Skout Solutions Industrial Enterprise Agreement 2019 passed the better off overall test as required by s. 186(2)(d) of the Act. (Appeal Ground 3)
[5] The extension of time application, permission to appeal and the merits of the appeal were listed before us for hearing on 20 October 2020.
Background
[6] Skout Solutions Pty Ltd (Skout), the employer covered by the Agreement, is a specialist provider of labour to clients across a number of industries. Its parent companies are Ventia and Randstad through which a Joint Venture was entered into in 2016. The coverage of the Agreement is expressed in the following terms;
“2.1 This Agreement shall cover and apply to:
(a) Skout Solutions Pty Ltd (ABN 40 614 706 526); and
(b) any Employee of the Company engaged to perform work for a Client involving repair, replacement, renovation, rehabilitation, maintenance, earth works, civil works, concrete works, electrical services, infrastructure, power or water, fabrication, preassembly, assembly, disassembly, construction, breakdowns, shutdowns, outages, turnarounds, access of any type including by rope, preparatory, repair, modification, pre-commissioning, commissioning, decommissioning, hook up, hook-up and commissioning, completions, local service upgrades, minor capital or capital works and all associated and similar miscellaneous industrial works or all nature of work listed above within the Commonwealth of Australia (onshore and offshore).
2.2 Notwithstanding clause 2.1, this Agreement shall not cover or apply to any managerial, supervisory, hospitality, administrative or clerical Employees.”
[7] Skout issued a notice of representational rights (NERR) to its employees on 25 October 2019 and bargaining then commenced for a new enterprise agreement to replace the prior agreement, the Skout Solutions Industrial Enterprise Agreement 20162 (the 2016 Agreement) which had a nominal expiry date of 14 March 2021. The Form F16 application identified that there were no union bargaining representatives or employee bargaining representatives involved in bargaining for the Agreement.3
[8] The coverage clause in the Agreement is in the same terms as the 2016 Agreement save for the removal of the exclusion of the operation of the Agreement in the Wollongong region, such exclusion having been present in the 2016 Agreement. The Agreement wholly displaces any awards that would otherwise apply except where clauses of the relevant awards are explicitly incorporated. Skout identified in its Form F17 Statutory Declaration the following relevant Awards for the purposes of the BOOT assessment4;
• Hydrocarbons Industry (Upstream) Award 2020 (the Hydrocarbons Award);
• Building and Construction General On-site Award 2020 (the Building and Construction Award);
• Manufacturing and Associated Industries and Occupations Award 2020 (the Manufacturing Award); and
• Electrical, Electronic and Communications Contracting Award 2020 (the Electrical Award)
[9] According to the Respondent’s Form F17, employees of Skout were notified by email on 20 January 2020 of a ballot to be conducted on 30 January 2020 to approve the Agreement.5 Employees were also provided with the following documents;
• An award comparison document that described the 4 underpinning awards6 (the Award Comparison Document);
• A document summarising the changes in the Agreement from the 2016 Agreement7 (the Agreement Comparison Document);
• A frequently asked questions document8 (the FAQ Document); and
• Copies of the 4 underpinning awards.
[10] Two information sessions were conducted by telephone on 22 & 23 January 2020 which were accompanied by individual phone calls to employees from their “Skout Rep” to confirm that employees had received the information and to check if there were any questions. At the same time as the ballot for approval of the 2019 Agreement was conducted, employees were also asked to vote on the termination of the 2016 Agreement which had not yet reached its nominal expiry date of 14 March 2021.
[11] The rationale provided by Skout to employees for seeking the early termination of the 2016 Agreement and replacement of it with the 2019 Agreement was that putting the 2019 Agreement in place for a further 4 years would maximise Skout’s ability to secure new long term project work with its customers and strengthen its ability to win new projects and contract extensions. According to Skout’s explanation to employees, it also allowed for a small number of adjustments to terms and conditions in the 2019 Agreement including offering greater pay increases.9
[12] An electronic ballot for approval of the 2019 Agreement was conducted on 30 January 2020, at which time there were 74 employees that were covered and eligible to vote. Of those 74 employees, 56 voted with 52 employees voting to approve the 2019 Agreement.
The Decision
[13] The Decision of the Deputy President dealt with two related applications before him, those being an application to terminate the 2016 Agreement pursuant to s. 223 of the Act and the application for approval of the 2019 Agreement pursuant to s. 185 of the Act.
[14] The Deputy President set out the background to the applications at [1]-[3] of the Decision and concluded at [4] that it was “therefore convenient to deal with the two applications together.” He then set out at [5]-[6] the steps that the employer was required to take in requesting employees covered by the 2016 Agreement to approve its proposed termination. The Deputy President then detailed evidence of Skout’s General Manager, Mr Matthew Berry, as to the steps taken by Skout to explain to employees the effects of termination of the 2016 Agreement and approval of the 2019 Agreement;
“[7]Mr Matthew Berry, General Manager of Skout, made a statutory declaration on 20 March 2020 in support of the application for the approval of the termination of the 2016 Agreement (the termination statutory declaration). Having regard to the contents of the termination statutory declaration and those of the statutory declaration in support of the application for the approval of the Agreement (the approval statutory declaration), also made by Mr Berry on 20 March 2020, I am satisfied these obligations were fulfilled. In particular, I that note Mr Berry has declared in these two statutory declarations:
• At an information session for employees held on 18 December 2019, he said words to the following effect:
• that while the 2016 Agreement did not expire until March 2021, Skout proposed to terminate the 2016 Agreement and replace it with a new agreement so that conditions in the new agreement could commence and Skout could both retain long term clients and offer better job security;
• a vote was going to take place in which the employees could vote in favour of terminating the 2016 Agreement and simultaneously vote to replace it with the new agreement;
• if the vote was not successful, the 2016 Agreement would remain on foot; and
• if the vote was successful, the 2016 Agreement would be terminated and would be replaced by the new agreement, subject to its approval by the Commission.
• Employees were issued with information regarding the times and methods of electronic voting that would be used via an email sent to them on 20 January 2020.
• A range of documents were provided to employees on each of 20, 22 and 23 January 2020 with information about the proposal and the vote.
• Information sessions were held with employees on 22 and 23 January 2020, which covered matters such as the differences between the 2016 Agreement and the proposed new agreement.
• Between 22 and 29 January 2020, he made individual phone calls to all employees during which he reiterated that the vote was a one-step process that would deal with both the 2016 Agreement and the proposed new agreement.”10
[15] The Deputy President then dealt with the failure of Skout to file an application for approval of termination of the 2016 Agreement within 14 days of the ballot conducted on 30 January 2020. He concluded as follows;
“[10]I have had regard to the fact that there was a joint process employed that involved both voting whether to terminate an existing agreement and approving a proposed new agreement and the result was that a majority of employees endorsed these outcomes. I have also noted that the application for the approval of the Skout Solutions Industrial Enterprise Agreement 2019 was made within the requisite time period and am prepared to accept the explanation from Skout that the accompanying requirement to make application to terminate the 2016 Agreement was overlooked. In all the circumstances, I am satisfied it is fair to extend the time for the making of the application to terminate the 2016 Agreement to 23 March 2020.”
[16] After setting out the statutory provisions relevant to the application to terminate the 2016 Agreement the Deputy President then determined the application for termination of the 2016 Agreement as follows;
“[12]As I have outlined in [7] above, I am satisfied that Skout complied with s.220(2) in relation to the 2016 Agreement (s.223(a)). Further, as outlined in [8], I am satisfied that the termination of the 2016 Agreement was agreed to in accordance with s.221(1) of the Act (s.223(b)) and additionally, I am satisfied based on the material before me that there are no other reasonable grounds for believing that the Skout employees have not agreed to the termination (s.223(c)). Turning to s.223(d), I consider it appropriate to approve the termination and note there are no employee organisations covered by the 2016 Agreement.
[13] Accordingly, with the conditions in s.223 having been satisfied, I must approve the termination of the 2016 Agreement.”
[17] Having dealt with the application to terminate the 2016 Agreement the Deputy President turned to consider the application for approval of the 2019 Agreement and found as follows;
“Application for approval of the Skout Solutions Industrial Enterprise Agreement 2019
[14] As outlined in at [1] above, an application has been made for the approval of an enterprise agreement known as the Skout Solutions Industrial Enterprise Agreement 2019 (the Agreement) pursuant to s.185 of the Act. The Agreement is a single enterprise agreement.
[15] The Agreement does not cover all of the employees of Skout, however, taking into account the factors in s.186(3) and s.186(3A) I am satisfied that the group of employees was fairly chosen.
[16] Skout 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 a substantial change to the Agreement. The undertakings are taken to be a term of the Agreement.
[17] Subject to the undertakings referred to above, and on the basis of the material contained in the application and accompanying statutory declaration, I am satisfied that each of the requirements of ss 186, 187, 188 and 190 as are relevant to this application for approval have been met.”
[18] The undertakings accepted by the Deputy President addressed concerns he had raised regarding casual employee minimum engagement periods, part-time employee minimum engagement periods and penalty rates payable for working less than 5 consecutive afternoon or night shifts.
[19] Both the termination of the 2016 Agreement and commencement of the 2019 Agreement took effect from 14 April 2020. The Agreement has a nominal expiry date of 8 April 2024.
Extension of time
[20] As previously stated, the Decision was issued on 7 April 2020 and the appeal was filed on 2 September 2020, 127 days after the prescribed 21-day time period had expired. Consequently, it is necessary for the Appellant to be granted an extension of time in order for the appeal to be competent.
[21] The usual principles applying to consideration of an application to extend time to lodge an appeal were summarised in the Full Bench decision in Jobs Australia v Eland11as follows (footnotes omitted):
“[5]Time limits of the kind in Rule 56 should not simply be extended as a matter of course. There are sound administrative and industrial reasons for setting a limit to the time for bringing an appeal and it should only be extended where there are good reasons for doing so. The authorities indicate that the following matters are relevant to the exercise of the Tribunal’s discretion under Rule 56(2)(c):
• whether there is a satisfactory reason for the delay;
• the length of the delay;
• the nature of the grounds of appeal and the likelihood that one or more of those grounds being upheld if time was extended; and
• any prejudice to the respondent if time were extended.”
[22] In broad terms the issue for us is whether, in all the circumstances and having regard to the matters set out above, the interests of justice favour an extension of the time within which to lodge the appeal. We propose to deal with each of the matters set out above in turn.
Reason for the delay
[23] The Appellant submits that it did not become aware of the 2019 Agreement and the Decision until some of its members contacted the Appellant on 14 August 2020 when those members were offered employment with Skout to undertake work on Inpex’s offshore hydrocarbons facilities. Those offers of employment were said to be in circumstances where those persons had been previously employed to perform the same work by BR&I Pty Ltd (BR&I), an associated entity of Skout, and had been covered in their employment with BR&I by the BR&I Pty Ltd Enterprise Agreement 201612 (BR&I Agreement). According to the Appellant, Skout had not operated in the offshore hydrocarbons sector previously. The AWU submits that after it became aware of the Decision it was diligent in the steps it took to consider whether the Agreement had been properly approved before filing its appeal on 2 September 2020.
[24] Skout contend that while the stated reason for the Appellant’s delay in filing the appeal is explicable, the degree of assiduousness underpinning that reason is not. Skout further submit that while a lack of awareness of an approval decision may be an acceptable explanation for a delay in appealing, that will not necessarily be so where the delay was significant and there was a lack of due diligence on the part of the Appellant. Skout submit that a reasonably expected part of the “overarching campaign of the offshore alliance” of the AWU would have been to take reasonable steps at an earlier time to make itself aware of enterprise agreements operating in the offshore sector, which could have occurred by way of search of the Commission’s database.
[25] We accept that the AWU was unaware of the making and ultimately the approval of the 2019 Agreement. It is notable that neither party contended that Skout was an active participant in the offshore sector at the time of the making of the Agreement. Nor was the AWU a bargaining representative in respect of the 2019 Agreement or the 2016 Agreement. In these circumstances we are satisfied that the Appellant has provided a credible reason for the delay. This weighs in favour of granting an extension of time within for the Appellant to institute the appeal.
Length of delay
[26] The length of the delay in filing an appeal, that of 127 days beyond the 21 day appeal period, is significant and weighs against granting an extension of time for the Appellant to institute the appeal.
Prejudice to Respondent
[27] The Appellant contends that there is no prejudice to the Respondent because if the Appellant is successful in its appeal, the 2016 Agreement will apply and underpin the employment of Skout’s employees.
[28] Skout submits that there would be significant prejudice to it if an extension of time was granted. The Agreement has been in operation since 14 April 2020. Furthermore, the expressed purpose of securing approval of the 2019 Agreement to ensure it had sufficient certainty in its industrial arrangements to seek out long term work opportunities would not be realised, this purpose having been explained to employees prior to the ballot for the Agreement. Skout also points to the fact that unless the Deputy President’s decision to terminate the 2016 Agreement was also quashed on appeal, employees would fall back to the underpinning awards if the AWU was entirely successful in its appeal of the Deputy President’s decision to approve the 2019 Agreement.
[29] We accept that the length of time that the 2019 Agreement has been in operation and the benefits that the 2019 Agreement provides for Skout in maintaining and securing work are matters that support Skout’s contention of prejudice. This weighs against the granting an extension of time within which to allow the Appellant to institute the appeal.
Prospects of appeal
[30] It is unnecessary for us to consider all of the grounds of appeal at this stage. Skout conceded that the Appellant has prospects of success on Ground 3 of the appeal in respect of the 2019 Agreement not meeting the BOOT, albeit on a narrower basis than contended by the AWU. For reasons that are set out below we are of the view that this concession was properly made. This weighs in favour of granting an extension of time within which to allow the Appellant to institute the appeal.
[31] Having regard to all of the relevant considerations above we are persuaded that it is in the interests of justice to extend time for the filing of the appeal.
Principles governing an appeal under s. 604 of the Act
[32] An appeal under s 604 of the Act is an appeal by way of rehearing and the Commission’s powers on appeal are only exercisable if there is error on the part of the primary decision maker. 13 There is no right to appeal and an appeal may only be made with the permission of the Commission. Subsection 604(2) requires the Commission to grant permission to appeal if satisfied that it is in the public interest to do so. Permission to appeal may otherwise be granted on discretionary grounds.
[33] The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment. 14 The public interest is not satisfied simply by the identification of error, or a preference for a different result.15 In GlaxoSmithKline Australia Pty Ltd v Makin a Full Bench of the Commission identified some of the considerations that may attract the public interest:
“... the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters...” 16
[34] Other than the special case in s 604(2), the grounds for granting permission to appeal are not specified. Considerations which have traditionally been treated as justifying the grant of permission to appeal include that the decision is attended with sufficient doubt to warrant its reconsideration and that substantial injustice may result if leave is refused. 17
[35] It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of appealable error. 18 However, as earlier stated, the fact that the Member at first instance made an error is not necessarily a sufficient basis for granting permission to appeal.
[36] We also note the observation of the Full Bench in Diamond Offshore General Company v Baldwin & Ors 19 (Diamond Offshore) when dealing with the decision making process required to approve an agreement, stated as follows;
“[25] To the extent that part of the decision-making process required to approve an agreement involves the exercise of discretion or satisfaction in relation to statutory criteria, the principles relevant to appealable error in relation to such decisions are well established. An appealable error in a decision involving the exercise of discretion is an error of the kind identified in House v The King. An error in relation to satisfaction is a question as to whether the decision maker has reached a “state of mind which must be formed reasonably and on a correct understanding of the law.”
Consideration
Whether the Full Bench should receive further evidence in the appeal
[37] Before turning to consider the grounds of appeal we firstly deal with whether the Full Bench should receive new evidence that the Appellant seeks to adduce on appeal, namely the witness statement of Mr Douglas Heath dated 29 September 2020. Section 607(2) provides that the Commission may on appeal admit further evidence and take into account any other information or evidence, however it is by no means a matter of course that it will do so.
[38] It is uncontroversial that the exercise of discretion to admit new evidence or to consider further material is governed by the principles set down in Akins v National Australia Bank20 (Akins) in which the New South Wales Supreme Court identified three conditions that it would need to be satisfied of before the discretion might be exercised to admit further evidence. Firstly, it must be established that the evidence could not have been obtained or adduced with reasonable diligence for use at first instance. Secondly, it must be evidence which is of such a high degree of probative value that there is a probability that there would have been a different result at first instance. Thirdly, the evidence must be credible. 21
[39] The Appellant submits that the materials ought to be considered by the Full Bench in hearing the appeal on the following basis. Firstly, the Appellant did not appear at the first instance proceedings as it was unaware of these proceedings and did not have an opportunity to call Mr Heath’s evidence. Secondly, had Mr Heath given evidence at first instance it is highly likely that the Deputy President would have considered the matters the subject of the appeal and not been satisfied of one or more of those matters. Finally, the Appellant submits that Mr Heath’s role and responsibilities with the Appellant means that he is familiar with the offshore sector, has direct knowledge of the matters raised in his statement and therefore his evidence is credible.
[40] As to the first consideration, the Appellant says that it was unaware of the making of the 2019 Agreement. We accept that this is not a case where the evidence in question might reasonably have been obtained and led at first instance. As to the second consideration however, we are not persuaded that there is a high degree of probability of a different result, for the following reasons.
[41] Mr Heath states that he was involved in the negotiations with BR&I for a replacement agreement for the BR&I Agreement which reached its nominal expiry date on 28 March 2020. The BR&I Agreement covered employees engaged by BR&I on work on offshore hydrocarbons facilities operated by Inpex. Discussion over renewal of the BR&I Agreement between the Appellant and BR&I commenced in August 2019 although a notice of employee representational rights (NERR) was not issued by BR&I.
[42] According to Mr Heath, discussions with representatives of BR&I and its parent company Broadspectrum, progressed to a point whereby “in-principle” agreement was reached on 7 February 2020 that BR&I would issue revised contracts of employment to BR&I employees reflecting conditions of employment provided by another offshore contractor, M Maintenance, and that on expiry of the BR&I Agreement, BR&I would introduce a replacement agreement in similar terms to that of M Maintenance. This position was communicated by Mr Heath to members of the Appellant employed by BR&I on 12 February 2020. A draft employment contract intended to give effect to the “in-principle” agreement was subsequently provided by Broadspectrum’s representative for Mr Heath’s review on 28 February 2020.
[43] On Wednesday 11 March 2020 Mr Heath was contacted by an employee of BR&I who advised him that most of BR&I’s employees engaged to perform work on Inpex’s offshore facilities had been stood down due to the impact of Covid-19. Mr Heath says these circumstances led to discussions between the Appellant and Broadspectrum/BR&I being put on hold.
[44] Mr Heath says he was contacted by a member of the Appellant on 14 August 2020 who had been previously engaged by BR&I on Inpex’s offshore facilities. After having had his employment terminated by BR&I due to Covid-19 the member reported to Mr Heath that he had more recently been offered a new contract with Skout to enable his return to work. Mr Heath was forwarded copies of the new employment contract which confirmed that the 2019 Agreement would apply. This was the first time Mr Heath became aware of the 2019 Agreement.
[45] In our view the chronology of events relied on by Mr Heath, both in relation to the offers of employment to BR&I employees in August 2020 and the bargaining timelines for both the 2019 Agreement and replacement of the BR&I Agreement in which the Appellant was involved does not support the allegation of a contrived process undertaken by Skout and one of its related entities to avoid collective bargaining. To simply illustrate, the ballot for approval of the 2019 Agreement took place on 30 January 2020 which was prior to the “in-principle agreement” reached between Mr Heath and BR&I/Broadspectrum on 7 February 2020.
[46] The Appellant invites the Full Bench to accept that the “in principle agreement” reached between Mr Heath and BR&I/Broadspectrum on 6 February 2020 was little more than an elaborate ruse when the real strategy was to replace BR&I with Skout. However, on Mr Heath’s own evidence, the only reason why bargaining for a new agreement with BR&I did not progress beyond an “in-principle” agreement was because of the impact of the Covid-19 pandemic and the forced stand down of the BR&I workforce in March 2020. This evidence undermines the Appellant’s contention that the use of the Skout entity and the Agreement was simply to avoid bargaining with the AWU. The evidence does not in our view rise above speculation.
[47] Acceptance of the Appellant’s contention based on Mr Heath’s evidence would require the Full Bench to accept that a plan existed between Skout and BR&I to replace BR&I as early as October 2019 and that discussions between BR&I and the Appellant for a new agreement were at all times nothing more than a charade. Furthermore, it would require us to accept that Skout and BR&I knew in late 2019 or early 2020 that Covid-19 would impact Australia and result in the stand down of BR&I’s offshore workforce in March 2020. We are not persuaded by Mr Heath’s evidence to accept that suggestion.
[48] Information which was available at the time of an initial hearing will normally not be admitted in the hearing of an appeal. Information which comes to light subsequently may be admitted if it bears on an issue to be determined in the appeal. In this case, the evidence the Appellant seeks to adduce goes to unrelated negotiations and events that occurred following the ballot undertaken for approval of the Agreement. That evidence does not in our view bear upon the correctness of the Deputy President’s decision as to the requirements of the Act regarding his approval of the Agreement.
[49] The Deputy President made that decision based on the evidence and submissions before him. Any subsequent reassessment of those circumstances based on events that occurred after the Decision is not relevant to the specific question we are required to consider. In our opinion, the evidence of Mr Heath that is sought to be adduced by the Appellant does not carry a high degree of probability of a successful appeal, or a different decision upon a rehearing of the original application. We consequently decline to accept Mr Heath’s statement. Even if we had done so, it would not have made any difference to the strength of the Appellant’s appeal.
[50] Notwithstanding the above, we are satisfied that, in addition to the matters discussed above, Mr Heath’s statement includes evidence going to the reason for the delay in the filing of the appeal and actions taken by the Appellant once it became aware of the approval of the Agreement. To the extent that Mr Heath’s statement goes to those matters, we have had regard to that evidence in our consideration of the extension of time sought by the Appellant for the filing of the appeal. Mr Heath’s statement also includes modelling in support of the Appellant’s contention that the Agreement fails the BOOT and therefore was incapable of approval. We have also had regard to that material in consideration of the Appellant’s third ground of appeal.
[51] We now turn to consider each of the grounds of appeal.
Appeal Ground 1 – Whether genuinely agreed
[52] The Appellant submits that the Deputy President fell into jurisdictional error in that he could not have reached the requisite state of satisfaction that Skout had taken all reasonable steps to explain the terms of the 2019 Agreement and the effect of those terms as required by s 180(5) of the Act. Further, the Appellant submits that the Deputy President failed to consider whether there were no other reasonable grounds for believing that the agreement had not been genuinely agreed under s 188(1)(c).
[53] With respect to the first limb of appeal Ground 1, that of compliance with s 180(5), the Appellant cites the following matters as relevant in relation to this ground of appeal;
• the circumstances present in this case strongly indicate an example of where the employer could have reasonably expected to take more steps to explain the terms of the Agreement and the effect of those terms;
• the explanation provided to employees was confined to the distribution of limited documentation and there was no evidence of what was said to employees in the information sessions held on 22 & 23 January 2020;
• the FAQ document consisted of 10 questions of which only half could be possibly considered relevant;
• one question in the FAQ document merely lists changes from the 2016 Agreement stating that the changes are all favourable to employees when on the face of it one of the changes, that of the new ‘introductory classification’, appears unfavourable;
• the EA Comparison Document is brief, it consists of a single table listing seven items and is incomplete in that it fails to identify other changes of significance including clause 10.3 (which allows for termination of employment for refusal of a transfer direction) and clause 13.5 (which allows for termination of casual employees with one hour’s notice);
• the Award Comparison Document fails to provide a comparison of the terms of the 2019 Agreement versus relevant award terms, specifically in relation to relative detriments in the Agreement;
• there are a number of terms in the Hydrocarbons Award that are not conferred by the Agreement and there are a number of provisions in the 2019 Agreement not conferred by the Hydrocarbons Award; and
• Skout’s Form F17 failed to identify terms in the Agreement that were less beneficial than the relevant award which is prima facie evidence that the explanation of the 2019 Agreement terms provided by Skout to employees was inadequate.
[54] The Deputy President was required to evaluate whether Skout took all reasonable steps to ensure the terms of the 2019 Agreement and the effects of the terms were explained to employees. In doing so, section 188(1) of the Act makes clear that Skout’s compliance with s. 180(5) of the Act need only be established to the satisfaction of the decision maker. Actual compliance is not a jurisdictional fact and does not need to be objectively proven. However, reaching a state of satisfaction as to compliance with s 180(5) is a jurisdictional fact and in order to reach that requisite state of satisfaction there must have been material before the Deputy President to support his reaching the requisite state of satisfaction in respect of compliance with s 180(5). As made clear by the Federal Court in One Key Workforce Pty Ltd v CFMEU 22, an absence of material or an insufficiency of material relied on in reaching the state of satisfaction is no evaluation at all and will not found a sufficient basis for being satisfied as to compliance with s 180(5).
[55] Reaching the requisite state of satisfaction as to compliance with s 180(5) depends on the circumstances of the case. The nature of the requirement was helpfully summarised by a Full Bench of the Commission in The Australian Workers Union v Rigforce Pty Ltd 23as follows;
“[35] In considering the “genuinely agreed” ground of appeal, it is necessary for reasons which will become apparent to consider in detail only the question of compliance with the pre-approval step in s 180(5). The nature of the requirement in s 180(5) was analysed in detail by the Federal Court (Flick J) in CFMEU v One Key Workforce Pty Ltd. We adopt the summary of that analysis set out in CFMMEU v Ditchfield Mining Services Pty Limited (Ditchfield Mining), which reduced it to the following four propositions:
(1) whether an employer has complied with the obligation in s 180(5) depends on the circumstances of the case;
(2) the focus of the enquiry whether an employer has complied with s 180(5) is first on the steps taken to comply, and then to consider whether:
• the steps taken were reasonable in the circumstances; and
• these were all the reasonable steps that should have been taken in the circumstances;
(3) the object of the reasonable steps that are to be taken is to ensure that the terms of the agreement, and their effect, are explained to relevant employees in a manner that considers their particular circumstances and needs. This requires attention to the content of the explanation given; and
(4) an employer does not fall short of complying with the obligation in s 180(5) of the FW Act merely because an employee does not understand the explanation provided.
[36] Additionally, we also adopt the analysis of Gostencnik DP in BGC Contracting Pty Ltd concerning the nature of a statutory obligation to take “all reasonable steps” as follows (footnote omitted):
“[43] A requirement or obligation to take “all reasonable steps” seems to me to require the identification of the steps a reasonable person would regard as reasonable in the circumstances that apply. Whether particular steps are reasonable will depend on the particular circumstances existing at the time the obligation arises. A requirement to take all reasonable steps does not extend to all steps that are reasonably open in some literal or theoretical sense…”
[56] It is well established that the question of whether Skout complied with s 180(5) requirements depends on the particular circumstances and the focus of the enquiry is whether the steps taken were reasonable and whether they were all the reasonable steps that could have been taken.
[57] As set out above, the explanation of the Agreement terms and the effects of those terms took the following form. A series of documents were provided to employees at the commencement of the “access period”. Those documents were: the Award Comparison Document, the Agreement Comparison Document, the FAQ Document, and copies of the four relevant awards. Two information sessions were then conducted during the access period following which individual phone calls were made to each employee prior to the conduct of the ballot to confirm their understanding and answer any further questions regarding the 2019 Agreement.
[58] The particular circumstances in which the explanation of the Agreement terms and the effect of the terms took place was that the 2019 Agreement was intended to replace the 2016 Agreement and involved a small number of changes that did not significantly bear upon existing working arrangements. The four relevant awards, as was the case in respect of the predecessor 2016 Agreement, were displaced by the 2019 Agreement.
[59] The gravamen of the Appellant’s criticism of the Decision under this ground of appeal is that the Deputy President could not have been satisfied as to compliance with s 180(5) given the inaccuracy and brevity of the explanation provided to employees of the terms of the 2019 Agreement and the effect of those terms, both relative to the four relevant awards and the 2016 Agreement.
[60] Turning firstly to the explanation provided to employees relative to the Awards, the explanation was limited to the Award Comparison Document which set out a high level summary of the 2019 Agreement terms relative to key award provisions. It did not provide a detailed analysis of the differences between the 2019 Agreement and various award provisions including where there were detriments in the 2019 Agreement relative to the awards or where there were provisions in the Agreement not found in the relevant awards. However in our view, such a detailed explanation was not required in the circumstances where the terms and conditions of the employees were, at the time of the ballot, not regulated by the four awards.
[61] The Full Bench in Ditchfield Mining 24 dealt with the issue of the extent to which an explanation involving a comparison between an agreement and an award covering relevant employees needs to be given:
“[71] Compliance with s.180(5) will not always require an employer to identify detriments in an agreement vis-à-vis the reference instrument, or for the employer to provide an analysis between the agreement and the relevant reference instrument, particularly in circumstances where an existing enterprise agreement, not a reference instrument, applies to the employees in their employment with the employer. The question of compliance with s.180(5) is to be judged against the circumstances that pertain at the time at which compliance was required. Section 57 of the Act makes clear that a modern award does not apply to an employee in relation to particular employment at a time when an enterprise agreement applies to the employee in relation to that employment. In the present case, when the explanations were given, no enterprise agreement applied to the employees and the Award did apply. An explanation of the effect of the terms of the Agreement vis-à-visthe Award was therefore capable of being relevant to the evaluative assessment of whether all reasonable steps were taken to explain the terms of the Agreement and the effect of those terms.”
[62] The reasoning of the Full Bench in Ditchfield Mining, as set out above, is relevant to the circumstances of the present matter. At the time that Skout’s employees were asked to vote on the Agreement, the relevant awards did not cover them due to the operation of the 2016 Agreement which displaced the operation of the awards in respect of their employment. In these circumstances, we are not persuaded that the relevant comparison of terms and conditions required was that of between the 2019 Agreement and the relevant awards. In our view the relevant comparison required to enable employees to make a considered and informed decision was between the 2016 Agreement and the 2019 Agreement. To the extent that Skout did provide a high level summary of the 2019 Agreement provisions versus the Awards, that in our view was a reasonable step taken and sufficient in the circumstances.
[63] We accept as a general proposition the Appellant’s submission that a failure of an employer to identify less beneficial terms in the 2019 Agreement relative to an award in its Form F17 declaration may prima facie be an indication of an inadequate explanation of the terms of an agreement and the effect of those terms. That in our view will be a more compelling argument in circumstances where the terms and conditions of employment are, at the time of the ballot for an agreement, regulated by an award or awards. That was not the case in the present matter.
[64] Turning now to the nature of the explanation provided by Skout to its employees in respect of changes from the 2016 Agreement. That explanation was provided by way of two documents, the Agreement Comparison Document, and the FAQ Document. The Appellant submits that the form of explanation was inadequate in several respects which are summarised above at [53]. Contrary to the Appellant’s submission we are not persuaded that the circumstances of this case are such that more steps were required then were taken for the following reasons.
[65] The 2019 Agreement was essentially a “rollover” agreement with a limited number of substantive changes. It was not a case where employees were, at the time of the ballot for approval of the 2019 Agreement, covered by a series of awards that were to be wholly displaced and replaced by an agreement with very different terms. We accept that in those circumstances a far more comprehensive explanation of the terms and effect of the terms may have been required. However, that was not the case and there was no material before the Deputy President that would have indicated that employees were unfamiliar with their existing terms and conditions of employment. To the contrary, the fact that there were 74 employees entitled to participate in the ballot suggests the contrary.
[66] While the Agreement Comparison Document and FAQ Document were both brief, we see no difficulty in that in circumstances where the nature of the changes in the 2019 Agreement from that of the 2016 Agreement were limited and straightforward. Both the nature of the changes in the terms and the effect of those changes, were in our view apparent on a fair reading of the two above-referred documents. We also note that the Award Comparison and FAQ Documents were supplemented by information sessions and one on one telephone calls, although we accept that the specific content of the information sessions and telephone calls was not in evidence before the Deputy President.
[67] As to the Appellant’s contention that the statement in the FAQ document that all changes/benefits were “favourable to employees” 25 was incorrect, we disagree. The Appellant specifically refers in its submissions to the new “Level 1a” classification as being less beneficial on its face. While the introduction of a new entry level classification for persons with less than 12 months service is at a lower rate than was provided by the Level 1 rate in the 2016 Agreement, it is apparent that the introduction of the new classification was directed to provide an entry level pathway into the workforce and would not be applicable to the employees who voted to approve the 2019 Agreement given the classification definition for that level which provides that it applies to employees required to undertake labouring duties under general supervision with less than 12 months experience in the industry.
[68] We are unable to identify on the materials before the Deputy President the specific detriment suggested by the Appellant, particularly in circumstances where an entry level classification is likely to improve the prospects of recruiting inexperienced employees into the workforce. We note that entry level classifications for inexperienced employees is a feature of the relevant awards. Furthermore, a specific statement was made by Skout to employees in the FAQ document that no employee would suffer a reduction in their pay rate or classification as a consequence of the 2019 Agreement coming into effect 26 and it is clear that the classification “Level 1a” could not apply to the cohort of employees who voted to approve the Agreement, in any event. In these circumstances we are not persuaded of the detriment claimed by the Appellant such that the statement made in the FAQ Document as to all changes being favourable to employees was incorrect.
[69] Turning now to the Appellant’s submission that the explanation provided to employees failed to include any reference to two particular changes to the 2019 Agreement, those changes being the insertion of clause 10.3 (refusal of transfer direction) and clause 13.5 (casual employment notice of termination), we accept that the Agreement Comparison And FAQ Document do not refer to those changes. Nor is it apparent that those particular changes were highlighted in the two information sessions or the one on one employee telephone calls.
[70] It is not the case that all changes made to an agreement from a previous applicable instrument must be explained. It will of course depend on the particular circumstances, the nature of and significance of the change. In the case of clause 13.5, the inserted clause states as follows;
“13.5 A casual employee can be terminated by providing a minimum of one hour’s notice.”
[71] We note that none of the Awards relevant to the application of the BOOT provide for notice on termination of employment for casual employees. It is also the case that the provisions of the 2016 Agreement in relation to notice on termination of employment exclude casual employees. It is therefore the case that the inclusion in the 2019 Agreement of one hour’s notice is a benefit when compared to the 2016 Agreement which provides for no notice on termination of employment for casual employees. In our view the clause does no more than grant casual employees a notice period and as such we do not regard the change or its operative effect as being significant. To the extent that any concern arises in relation to a detriment relative to the 2016 Agreement we also observe that the Deputy President raised a concern with Skout as to the minimum engagement periods for casual employees resulting in the provision of an undertaking aligning the minimum engagement periods for casual employees with the conditions that would otherwise apply under the relevant awards.
[72] As regards clause 10.3, the new clause has been inserted into clause 10 in the following terms (highlighted);
“10. ENTERPRISE FLEXIBILITY
10.1 All Employees will carry out lawful directions and duties that are within their skill, competency and training provided that the Employee can perform the work directed in a safe manner.
10.2 In addition to 10.1, an Employee (other than a casual) may be required by the Company, due to operational reasons, to transfer to another role, where an Employee holds suitable skills to do so, or location, either temporarily or permanently. Without limiting the scope of this clause, an Employee (other than a casual) may be required to move between onshore and offshore work locations or between day work and shift work as required on provision of provision of 2 days' notice (or shorter if by agreement).
10.3 If an employee refuses a direction under clause 10, and the movement amounts to or is considered a reasonable and suitable transfer or redeployment, the employee will be terminated with the applicable notice period applying.”
[73] As will be seen, the new clause 10.3 supplements the existing clause 10.1 and clause 10.2 in respect of the right of the employer to transfer employees to other sites or roles for which they are suitably qualified. It confirms the right of the employer to terminate the employment of a permanent employee where a permanent employee refuses such a direction. Significantly however, the right is conditioned by the requirement that the direction be a “reasonable and suitable transfer.”
[74] The clause does not alter the rights of an employer to terminate an employee in circumstances where there is a refusal to follow a lawful direction. Nor does the clause override the rights of an employee in respect of their pursuit of a remedy for an alleged unfair dismissal. To that extent the clause appears to do little more than clarify the existing rights available to the employer. It is also noted that the nature of Skout’s business is that of a specialist provider of labour to clients across a number of industries and as such the capacity to transfer employees between locations and into different roles is a usual incident of being employed by a labour hire company regardless of whether such a term is included in an enterprise agreement.
[75] We do not regard the inclusion of notice of termination for casual employees or a change to clause 10 as significant in terms of operative effect such that the alleged failure of the Deputy President to consider these matters was an error. If it be an error we do not regard the error as an error of such significance that it resulted in circumstances sufficient for us to find that the Deputy President could not have reasonably reached a state of mind of satisfaction that the explanation of the terms of the Agreement and their effect, was not sufficient for a finding of that the Agreement had been genuinely agreed.
[76] In forming his view that Skout had met the requirements of s 180(5) the Deputy President considered the Form F17 employer declaration and the documentary material provided to employees. The material detailed the relevant and significant changes to the 2019 Agreement compared to the 2106 Agreement. The steps taken to explain the terms of the 2019 Agreement and the effect of those terms were in our view all reasonable steps required to be taken in the explanation of the terms and the effect of those terms necessary to comply with s 180(5) of the Act.
[77] Turning now to the Appellant’s second limb of Ground 1 of its appeal, it submits that the Deputy President failed to consider whether there were no other reasonable grounds for believing that the agreement had not been genuinely agreed under s 188(1)(c). The Appellant identified the following matters and circumstances that logically bore upon the question as to whether the agreement of employees was genuine which it contends were not addressed by the Deputy President;
(i) Whether the voting cohort had knowledge of or connection with the work performed under all of the awards;
(ii) The explanation of the Agreement’s terms and the effect of the terms fell well short of full disclosure of the terms by comparison to the relevant awards;
(iii) Where there were no bargaining representatives or bargaining meetings conducted, did employees have a sufficient grasp of what effect voting in favour of the Agreement would have;
(iv) Where the employer sought to bargain for and make an agreement well in advance of the nominal expiry date of the 2016 Agreement; and
(v) Where the employer sought to file a retrospective application for the termination of the in-term 2016 Agreement.
[78] We consider that the second limb of appeal Ground 1 has insufficient merit to justify the grant of permission to appeal for the reasons that follow.
[79] In relation to points (i) & (ii), Skout employees’ familiarity with, and knowledge of, the underpinning awards, was as we have already stated above, not relevant given that employees were covered by the 2016 Agreement at the time of the ballot. The awards had been displaced by the 2016 Agreement and no change was proposed in that respect under the 2019 Agreement. The relevant benchmark for the purpose of understanding the terms and the effect of the terms of the 2019 Agreement was the 2016 Agreement and changes that were proposed to be made to that agreement.
[80] Turning to point (iii), while we accept that the absence of a bargaining representative/s or bargaining meetings, which was apparent on the face of the materials before the Deputy President, may tell in favour of a finding of a lack of genuine agreement in certain circumstances, we do not regard the present case as being such a case. As we have already stated above, the employees of Skout were covered at the time of the ballot for approval of the 2019 Agreement, by the 2016 Agreement, which was in substantially the same terms. The substantive changes from the 2016 Agreement were minimal and had little if any operative effect on the employees who voted to approve the 2019 Agreement. In these circumstances we do not regard the point raised by the Appellant as having merit.
[81] As regards point (iv), the reason for Skout seeking to put the 2019 Agreement in place and terminate the 2016 Agreement prior to its nominal expiry date of 14 March 2021, was specifically explained to employees at Question 1 in the FAQ Document. 27 This material was before the Deputy President and the absence of specific reference to it in the Decision does not in our view indicate that he had no regard to it given his stated satisfaction as to the statutory requirements having been met at [17] of the Decision.
[82] Turning to point (v), it is clear that the matter of the application for the termination of the 2016 Agreement was a live issue before the Deputy President. So much is clear by his dealing with that issue in the Decision, the relevant paragraphs of which are set out above at [14]-[16]. It is apparent from the Decision that it was a matter that exercised the Deputy President’s mind and we are not persuaded that he failed to consider it.
[83] In the circumstances of the case before the Deputy President, we can discern no error in his approach to considering whether the requirements of s. 180(5) or s 188(i)(c) had been met. We are not persuaded that he acted on a wrong principle or mistook the facts. Nor did he allow extraneous or irrelevant matters to guide him in the exercise of the discretion or in forming his state of satisfaction about whether those requirements had been met.
Appeal Ground 2 – Whether group of employees fairly chosen
[84] In relation to Appeal Ground 2, that the group of employees in the scope of the 2019 Agreement was not fairly chosen, the AWU submitted that the Deputy President failed to consider a number of matters and thereby failed to perform the statutory task required of him by s 186(3) of the Act. Relevant matters included that;
• no submissions were made by Skout in proceedings before the Deputy President regarding the distinctiveness of the group of employees chosen and how the employees were distinct on the bases of operations, organisation, or geographic location;
• given the nature of Skout’s business (that of operating in the labour hire industry), the Agreement if approved would cover not just employees who voted for it but all casual and permanent employees who worked for Skout during its term;
• the circumstances were such that whether it was fair for Skout to enter into an agreement with employees who were not likely to be representative of industries to which the agreement would apply was a question that ought to have been considered;
• the circumstances in which offers of employment were made by Skout to former employees of a related entity (BR&I) indicate a contrived method to avoid bargaining with employees and the AWU in respect of work to be performed in the offshore hydrocarbons sector; and
• the Deputy President failed to make findings as to whether the group of employees was geographically, operationally or organisational distinct such that they could be said to be fairly chosen.
[85] We consider that the second ground of appeal has insufficient merit to justify the grant of permission to appeal for the reasons that follow.
[86] While no explicit finding was made by the Deputy President that the group of employees was geographically, operationally or organisationally distinct, to which point we will shortly return, he was satisfied that the material before him supported the conclusion that the group of employees covered by the 2019 Agreement was fairly chosen, notwithstanding the Agreement did not cover all of Skout’s employees. The 2019 Agreement, as we comprehend, covers all of Skout’s employees who perform “blue collar” roles that would otherwise be covered by the modern awards displaced by the 2019 Agreement. In our view it is self-evident that such employees are operationally distinct from employees of Skout performing professional or administrative tasks.
[87] Significantly, the Appellant failed to identify any groups of employees that ought to have been included or excluded from coverage in order to render it fairly chosen. We accept that a conclusion that the group of employees covered by an agreement is operationally or geographically distinct favours, but is not determinative of, a conclusion that the coverage of an agreement was fairly chosen.
[88] There are other relevant factors that support the conclusion that the 2019 Agreement covered a group of employees that was operationally distinct and consequently fairly chosen. The coverage of the 2019 Agreement is the same (less removal of the previous Wollongong region exclusion) as the predecessor 2016 Agreement approved by the Commission. The coverage has a logical relationship with the coverage of the relevant awards and the 2019 Agreement was made with seventy four employees engaged at the time of the ballot which is demonstrative that the group was fairly chosen.
[89] We accept that legitimate questions may arise where a small group of employees make an agreement with their employer covering a much wider group in terms of classifications and geography but that is not the case here on the material that was before the Deputy President or before us. There is no evidence that the coverage was chosen arbitrarily or in a discriminatory fashion or was done for the purposes of manipulating the group of employees of Skoutwho were able to participate in the bargaining process.
[90] The gravamen of Appellant’s complaint is that Skout’s parent company has changed the corporate entity it uses to employ its workforce on the contract held with Inpex for the purpose of avoiding bargaining with the Appellant. The Appellant seeks to draw an inference that this is what has occurred, although the timing of a number of crucial events is not reconciled by the Appellant to support the inference it seeks be drawn. The tension in the Appellant’s submission is exposed when one considers that conclusion of bargaining for the Agreement occurred in January 2020 whereas in-principle agreement was reached between the Appellant and BR&I on a new BR&I agreement in February 2020. It is also significant that at the time the Agreement was made, the prospects of a stand down of BR&I’s workforce in March 2020 due to the Covid-19 pandemic could not in our view have been reasonably contemplated by Skout or its parent company.
[91] We agree with the view expressed by the Full Bench in The Australian Workers' Union Rigforce Pty Ltd t/a Rigforce 28 (Rigforce) when dealing with a not dissimilar claim of use or manipulation of corporate entities for the purpose of making an enterprise agreement to avoid bargaining. The Full Bench in Rigforce said as follows;
“[34]…… However it seems to us the “fairly chosen” requirement in s 186(3) and (3A) is concerned with the selection of the group of employees employed by the employer or employers who made the agreement in question, and does not deal with a situation where a group of companies selects (and perhaps manipulates) different employing entities within the group at different times for the purpose of making enterprise agreements and operating as the employer of the relevant part of the workforce. In other words, taking the AWU’s case at its highest, it is not demonstrative of any error in the conclusion that the “fairly chosen” requirement was satisfied.”
[92] To the extent the Appellant’s contention that manipulation of associated entities for the purpose of avoiding bargaining is relevant to the question of whether the group of employees was fairly chosen, we make the following points. The circumstances in the present matter are even further removed from the suggestion of manipulation dealt with in Rigforce which involved a new agreement made by the company with three employees under the coverage of which it was anticipated a larger number of employees would be moved to from an associated entity. Furthermore, the Agreement in the present matter was a rollover agreement, involved a minor scope change (the Wollongong exclusion removal), saw a small number of changes in terms and conditions and was subject to a ballot of seventy four employees. These are not factors that tell in favour of a finding of manipulation claimed by the Appellant.
[93] We return to the Appellant’s contention that the Deputy President failed to make a positive finding regarding whether the group of employees was geographically, operationally or organisational distinct such that the group of employees could be said to be fairly chosen, support for which submission the Appellant referred to a recent Full Bench decision in Inpex Australia v The Australian Workers Union 29 (Inpex). In that decision the Full Bench was dealing with an appeal of a contested majority support determination (MSD) decision. The Full Bench concluded in Inpex that while the member had found at first instance that the group of employees to be covered by a proposed agreement was “fairly chosen”, she had not made a “factual finding” in relation to matters in s 237(3A) of the Act, provisions which are in a similar form to those found in s 186(3A) of the Act.
[94] The following things may be said about Inpex in the context of the present matter. Inpex involved a contested MSD during which the issue of whether the group of employees to be covered by the proposed agreement was “geographically, operationally or organisationally distinct” was contested at first instance. The presiding member at first instance in Inpex identified that the issue of geographical, operational or organisational distinctness was in contest but then failed to make a factual finding in relation to that contest in reaching a conclusion that the group of employees that would be covered by the proposed agreement was “fairly chosen”. The Full Bench found in those circumstances that a failure to make a factual finding was an error of jurisdiction.
[95] The above circumstances may be contrasted with those confronted by the Deputy President in the present matter where the application for approval of the Agreement was uncontested. As relevantly stated by a Full Bench in HSU v Clinpath Laboratories Pty Ltd & Ors (Clinpath) 30;
“[13] The Commissioner’s decision contained five paragraphs. It noted the Commissioner’s satisfaction that the requirements of sections 186, 187, 188 and 190 had been met, and attached undertakings. The Commission deals with many thousands of applications for approval of enterprise agreements each year. Brief decisions are both common and appropriate in respect of applications that are uncontested or do not otherwise raise concerns as to whether the various approval requirements in the Act have been met. However, when a bargaining representative for an agreement opposes its approval and articulates substantive and reasonably arguable grounds for its opposition, a decision containing more detailed reasoning may be required.” (our emphasis added)
[96] We agree with the Full Bench’s observations in Clinpath as they are relevant to the present matter. Firstly, the application for approval of the 2019 Agreement before the Deputy President was uncontested. Secondly, there was nothing in the application or materials filed that otherwise raised concerns regarding s 186(3A) requirements. Thirdly, the only change in coverage between the 2016 Agreement and the 2019 Agreement, that of the removal of the Wollongong region coverage exclusion, was identified in the application material before the Deputy President, that being the Form F17 Employer declaration and the explanatory information provided to employees.
[97] It follows from the above that we are not persuaded that the absence of a factual finding recorded in the Decision was an error. If it were an error we are not persuaded that it was a significant error that would justify the grant of permission to appeal in the circumstances that we have outlined above. We are also of the view that as an objective fact, the requirements in s 186(3A) are met and the group of employees was fairly chosen.
Appeal Ground 3 – Whether the BOOT is met
[98] In relation to Appeal Ground 3 concerning the better off overall test (the BOOT), the AWU submits that;
• comparison documents provided by the Appellant reveal that for at least two classifications the 2019 Agreement provides for inferior terms and conditions when compared against the Hydrocarbons Award when applied to a 4 week offshore roster cycle, resulting in an Agreement shortfall versus the Hydrocarbons Award of over $300 per week; and
• the comparisons do not take into consideration other detriments that the 2019 Agreement contains relative to the awards including; an offsetting clause for over agreement payments, application of the Building Code, and omission of various terms found within the Hydrocarbons Award such as job search entitlements, accident pay and tool allowance.
[99] To support its submission that the Agreement does not meet the BOOT and was therefore incapable of approval, the Appellant furnished two examples, those being for a casual Scaffolder/Rigger and Tradesman required to work an even time 4 week offshore cycle. Such a roster cycle is typical in the offshore sector and involves working 2 weeks on followed by 2 weeks off. Both the Hydrocarbons Award and the Agreement permit the working of such rosters. The Appellant did not elaborate in its submissions as to how other contended detriments between the Agreement and the relevant awards to which they have referred, would lead to the Agreement not meeting the BOOT.
[100] The Appellant’s analysis at DH-24 and DH-25 (attached to Mr Heath’s witness statement) identifies earnings shortfalls in weekly earnings under the Agreement versus the Hydrocarbons Award of $344.56 in the case of the casual Advanced Scaffolder/Rigger and $304.46 in the case of a casual Tradesman.
[101] Skout properly concedes in reply that that there is an earnings shortfall under the 2019 Agreement versus the Hydrocarbons Award in the 4 week even time offshore work cycle worked examples provided by the Appellant, although Skout contends that the shortfall is much less then that claimed by the Appellant. Skout submits that the earnings shortfall is explained by the discretionary nature of the payment of the living away from home allowance (LAFHA) of $503.40 per week for “remote work” under clause 21.15(c) of the 2019 Agreement whereas clause 19.2(e)(ii) of the Hydrocarbons Award provides no such discretion and mandates payment of the LAFHA of $51.75 per day for each day the employee is required to live away from home.
[102] According to Skout’s analysis, with which we agree, and applying that to the Appellant’s DH-24 example of the casual Advanced Scaffolder/Rigger, the shortfall between the 2019 Agreement weekly earnings and the Hydrocarbons Award is $19.86 per week, substantially less than the shortfall claimed by the Appellant. We agree with Skout’s analysis as we believe the Appellant’s analysis is flawed. It overstates the 2019 Agreement earnings shortfall for the following reasons;
• The Appellant’s weekly earnings calculation in DH-24 and DH-25 under the Hydrocarbons Award treats all hours worked beyond 7.6 hours per day on a Monday – Friday basis as overtime whereas the Hydrocarbons Award permits up to 12 ordinary hours of work per day on any day of the week for workers other than continuous shiftworkers, in accordance with clause 13.2 of the Hydrocarbons Award.
• The Hydrocarbons Award permits hours to be worked in accordance with a work cycle, pursuant to clause 13.4 and for ordinary hours to be averaged over a period of up to 26 weeks, pursuant to clause 13.1(c)(ii).
• The effect of the above is that in the examples provided by the Appellant at DH-24 and DH-25, the Appellant wrongly limits the ordinary hours of work that may be worked in a week to 38 hours. In doing so the Appellant fails to apply the ordinary hours applicable to a 4 week even time work cycle permitted by the Hydrocarbons Award. Specifically, the Hydrocarbons Award would allow for the first 152 hours in the 2 weeks “rostered on” period to be treated as ordinary hours of work, as detailed in Skout’s analysis.
[103] It follows from the above that, while we do not agree with the Appellant’s analysis, we do accept that there is a BOOT issue and that the 2019 Agreement was, in the terms in which it was made, incapable of satisfying the approval requirement in s 186(2)(d). The Deputy President erred in concluding otherwise.
[104] Unless addressed under ss 189 or 190 of the Act, an enterprise agreement cannot be approved if it does not pass the better off overall test requirement in s 186(2)(d). Accordingly, the Decision was attended by appealable error. We consider therefore that permission to appeal should be granted and the appeal upheld.
[105] However, we consider that the appropriate course is not simply to dismiss Skout’s application for approval of the 2019 Agreement. Given the nature of the error identified, we do not consider that we need to set aside the Decision to approve the 2019 Agreement. Section 607(3)(a) of the Act relevantly provides that the Commission may in relation to an appeal, vary the decision. We propose to do so by acceptance of an additional Undertaking.
[106] Having conceded the BOOT issue we have discussed above, Skout proposed an additional Undertaking to address that issue in the following terms;
“1A Casual employees performing offshore work who, but for the Agreement, would be covered by the Hydrocarbons Award, shall be paid LAFHA pursuant to clause 21.15(b) of the Agreement at the rate of $71.91 per day (or part thereof) in lieu of the amount otherwise provided for in that sub-clause. For the avoidance of any doubt, for those employees, provision of board and lodging in clause 21.15(a) will not be in lieu of 21.15(b).”
[107] The Undertaking if accepted would in our view ensure that each casual employee engaged to perform work on an offshore facility would receive earnings per day under the 2019 Agreement that are comfortably in excess of the Hydrocarbons Award. We are satisfied that the additional undertaking addresses the identified BOOT concern. We are further satisfied that the additional Undertaking will not cause financial detriment to any employee covered by the 2019 Agreement and that the Undertaking will not result in substantial changes to the 2019 Agreement. Pursuant to s.201(3) of the Act, the additional Undertaking is taken to be a term of the Agreement. We also note that the Form F16 Application for approval of enterprise agreement filed by Skout on 12 February 2020, states that there were no employer or employee bargaining representatives for the 2019 Agreement and that no issue was taken with the accuracy of that declaration in the appeal. Accordingly, we are satisfied that s. 190(4), which requires that views of bargaining representatives are sought in relation to undertakings, does not apply in the present case. Further we note that a signed consolidated document setting out the undertakings previously accepted by the Deputy President and including the proposed undertaking, was provided to the Full Bench and the Appellant after the hearing of the appeal.
Conclusion and orders
[108] We consider that permission to appeal should be granted since the appeal raises an issue of importance concerning the application of the approval requirements for enterprise agreements. However, for the reasons stated, we consider that only the third ground of appeal should be upheld. In respect of the error demonstrated by this ground, we propose to exercise our powers on appeal by varying the decision of the Deputy President under s 607(3)(a) to include an additional Undertaking.
[109] We order that:
(1) Time is extended to 2 September 2020 to allow the AWU to lodge its notice of appeal.
(2) Permission to appeal is granted in relation to Ground 3 of the appeal.
(3) The appeal is upheld in relation to Ground 3 of the appeal .
(4) The decision in [[2020] FWCA 1835] is varied to add the following additional Undertaking;
“1A Casual employees performing offshore work who, but for the Agreement, would be covered by the Hydrocarbons Award, shall be paid LAFHA pursuant to clause 21.15(b) of the Agreement at the rate of $71.91 per day (or part thereof) in lieu of the amount otherwise provided for in that sub-clause. For the avoidance of any doubt, for those employees, provision of board and lodging in clause 21.15(a) will not be in lieu of 21.15(b).”
DEPUTY PRESIDENT
Appearances:
L. Edmonds for the Appellant.
M. Follett counsel and T. Lange solicitor for Skout.
Hearing details:
2020.
By video (Microsoft Teams):
20 October.
Printed by authority of the Commonwealth Government Printer
<PR726098>
1 [2020] FWCA 1835
2 AE423659
3 Appeal Book at pg. 86
4 Ibid pg. 100
5 Ibid at pg.37
6 Ibid at pg. 42
7 Ibid at pg. 40
8 Ibid at pg. 55
9 Ibid at pg. 56
10 Decision at [7]
11 [2014] FWCFB 4822
12 AE423838
13 Coal and Allied Operations Pty Ltd v AIRC (2000) 203 CLR 194 at [17] per Gleeson CJ, Gaudron and Hayne JJ.
14 O’Sullivan v Farrer (1989) 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch (2011) 85 ALJR 398, [69] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; Coal & Allied Mining Services Pty Ltd v Lawler and others (2011) 192 FCR 78 at [44] – [46].
15 GlaxoSmithKline Australia Pty Ltd v Makin[2010] FWAFB 5343, [26]-[27], 197 IR 266; Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth[2010] FWAFB 10089 [28], 202 IR 388, affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler (2011) 192 FCR 78; NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663, [28].
16 [2010] FWAFB 5343, 197 IR 266, [24] – [27].
17 See also CFMEU v AIRC (1998) 89 FCR 200; Wan v AIRC (2001) 116 FCR 481.
18 Wan v AIRC (2001) 116 FCR 481, [30].
19 [2018] FWCFB 6907
20 (1994) 34 NSWLR 155
21 Cited in Perry v Rio Tinto Shipping Pty Ltd [2016] FWCFB 6936.
22 [2018] FCAFC 77, 277 IR 23
23 [2019] FWCFB 6960
24 [2019] FECFB 4022
25 Appeal Book at page 58
26 Ibid at 62
27 Appeal Book at page 56
28 [2019] FWCFB 6960
29 [2020] FWCFB 5321
30 2018 FWCFB 5694
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