Toosey Ltd

[2020] FWC 3009

[2020] FWC 3009

FAIR WORK COMMISSION

DECISION

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

Toosey Ltd
(AG2020/417)

COMMISSIONER MCKINNON MELBOURNE, 9 JUNE 2020

Enterprise agreement – whether agreement ‘made’ – whether genuinely agreed – better off overall test – application dismissed.

[1] Toosey Ltd has applied for approval of a single enterprise agreement known as the Toosey Ltd Enterprise Agreement 2018. The application is supported by the Australian Nursing and Midwifery Federation and the Health Services Union.

[2] I have decided to dismiss the application. These are my reasons.

The notification time

[3] The process leading to the making of the Agreement in this case was anything but straightforward. It involved four separate votes to approve the Agreement over a period of approximately 11 months. The multitude of steps taken by the parties to give effect to their agreement gives rise to a number of concerns about whether the Agreement can be said to have been genuinely agreed. The particular concerns fall into three categories: issue of the notice of employee representational rights; explanation of the agreement; and when the Agreement was ‘made’, if it was made at all.

[4] Section 173(3) of the Act requires employers to give employees notice of their representational rights as soon as practicable, and no later than 14 days after the notification time for an enterprise agreement.

[5] The notification time for an enterprise agreement is defined in section 173. For present purposes, it means the time Toosey agreed to bargain, or initiated bargaining, for the Agreement. The best evidence of when that occurred is a revised Form F17 filed in support of the application on 7 April 2020 and a witness statement of Daniel Cadart dated 7 April 2020. The Form F17 identifies the notification time as either 28 March 2018, when Toosey met with the unions or 18 April 2018, at a staff meeting where employees were advised that the unions had presented a log of claims to Toosey. According to Mr Cadart, by 18 April 2018, initial discussions about a proposed enterprise agreement with the unions had commenced. Minutes of the meeting on 18 April 2018 indicate that employees were invited to put their own suggestions forward in relation to proposed wage increases or the unions’ log of claims.

[6] I find that Toosey agreed to bargain with the unions on 28 March 2018 when it met with them to discuss a proposed enterprise agreement to replace the Toosey Ltd Enterprise Agreement 2016.

Was the Agreement made?

[7] Notices of employee representational rights in relation to the proposed agreement were issued to employees on 28 August 2018. It was necessary under section 173(3) of the Act for employees to be given this notice as soon as practicable, and no later than 14 days after the notification time. As things transpired, the notice was given exactly five months late. It follows that Toosey did not comply with section 173(3) before employees were asked, and voted, to approve the Agreement.

[8] In Huntsman Chemical Company Australia Pty Limited T/A RMAX Rigid Cellular Plastics & Others 1, a Full Bench touched on the requirement to issue the notice of representational rights within 14 days, by reference to an earlier Full Bench decision in AMWU v Broadspectrum (Australia) Pty Ltd2. It said:

“In the decision in AMWU v Broadspectrum (Australia) Pty Ltd it was decided by majority that in order for an agreement to have been ‘made’ in accordance with s 182(1), the relevant employees must have been requested by the employer to approve the agreement in accordance with s 181(1). The capacity to make such a request, it was held, operated subject to s 181(2), which provides that such a request must not be made until at least 21 days after the day on which the last NERR under s 173(1) is given. Applying the earlier Full Bench decisions in Peabody Moorvale Pty Ltd v CFMEU, Uniline Australia Limited and MUA v MMA Offshore Logistics, this meant in turn, it was held, that where a NERR was issued which did not comply with the content and form requirements of s 174 and/or the temporal requirement in s 173(3), the condition precedent to a valid request for a vote under s 181(1) was not satisfied and, accordingly, an agreement could not have been ‘made’ in accordance with s 182(1).”

[9] In Hunstman, the Full Bench considered the potential difficulty with this approach, as rendering invalid any enterprise agreement affected by non-compliance with sections 173(3), 174 or the pre-approval requirements in section 180(2), (3) or (5). The Full Bench concluded that such deficiencies were intended to, and could, be rectified under section 188(2), which allows the Commission to overlook minor procedural and technical errors that were not likely to disadvantage employees in deciding whether an agreement has been genuinely agreed.

[10] I have difficulty characterising a defect which has the effect of rendering a statutory agreement invalid as a minor procedural error. I also have reservations about whether the statutory scheme intended invalidity to be the result of procedural deficiencies in the agreement-making process. Such deficiencies can and generally do fall for consideration in the context of whether an enterprise agreement can be approved, including in terms of whether it has been genuinely agreed. Undertakings may be able to be given to address concerns or the agreement may not be able to be approved. With the advent of section 188(2), a range of minor procedural and technical errors can now also be overcome by the exercise of discretion.

[11] However, there are sound public policy reasons for not readily departing from existing Full Bench authority. Applying Broadspectrum and Huntsman to the facts of this case and the single notification time on 28 March 2018, the request for employees to vote to approve the Agreement was invalid. It relied on the issue of a notice of employee representational rights in a manner that did not comply with section 173(3). The result is that the Agreement was never ‘made’. The deficiency can be remedied under section 188(2) if the notice having been issued 5 months late is capable of being characterised as a minor procedural error that is not likely to have disadvantaged employees.

[12] The late issue of the notice was clearly a procedural error but it was not a minor error. Employees were deprived of the information contained in the notice of employee representational rights for the first five months of what appears to have been an eight month period of substantive bargaining. For more than half of the substantive bargaining round, employees were not apprised of their rights as required. Some of those employees are likely to have been represented by the unions but is also likely that some were not. There is a real prospect that at least some employees may have sought to play a more active role in bargaining, either directly or through a representative, had they been better informed of their rights in that regard earlier in the process.

[13] As it was, the Form F16 indicates that no employee bargaining representatives participated in bargaining. Of the 93 employees who were eligible to vote in the fourth vote in February 2020, only 41 employees actually voted (although all voted in favour). There is no detailed material before me about the ballot results of the three earlier votes. By the time the failure to give notice was remedied on 28 August 2018, it is probable that substantial progress in bargaining had been made and the ability of individual employees to influence the outcome was more limited than it otherwise might have been.

[14] For this reason, I am not satisfied that the Agreement has been genuinely agreed for the purposes of section 188(2) of the Act. The exercise of discretion under section 188(2) cannot cure the significant procedural error that occurred by giving such late notice of employee representational rights.

If it was, when was the Agreement made?

[15] If I am wrong about the consequence of the notice error, a question arises as to when the Agreement was actually made.

[16] The first vote: Employees were notified of the time, place and method of a vote for the Agreement on 6 March 2019. Voting commenced on 13 March 2019 and concluded on 15 March 2019. Employees voted to approve the Agreement There were not 7 clear days between the giving of notice of the vote and commencement of voting. Toosey and the unions subsequently agreed that the version of the agreement circulated to employees prior to the vote was inconsistent with the explanation given about its contents.

[17] The second vote: Employees were notified of the time, place and method of a second vote for the Agreement on 4 April 2019. Voting commenced on 11 April 2019 and concluded on 12 April 2019 and once again, a majority approved the Agreement. Once again, there were not 7 clear days between the giving of notice of the vote and the commencement of voting. Toosey and the unions then decided the wording of the Agreement did not accurately reflect the agreement reached between them.

[18] The third vote: Employees were notified of the time, place and method of a vote for the Agreement on 10 July 2019. Voting commenced and concluded on 18 July 2019 with a majority voting to approve the Agreement. This time, there were 7 clear days between the giving of notice of the vote and the commencement of voting but application was not made to the Commission within 14 days as required. Rather than applying for approval of the Agreement and seeking to explain the delay in favour of an extension of time, a decision was made to conduct a fourth vote.

[19] The fourth vote: On 6 February 2020, a further notice of vote was issued to employees with the same explanatory material as provided on each earlier occasion. A ballot was held on 14 February 2020 and the agreement was approved by a majority of voting employees. The Agreement was then lodged for approval with the Commission on 21 February 2020.

[20] In my view, if the Agreement was made, that occurred when the first vote concluded on 15 March 2019. The process involved in making the Agreement was affected by procedural deficiencies including that the version of the Agreement voted upon was not quite as explained to employees and there was not seven clear days between notice of the vote and its commencement. However, the deficiencies were likely capable of resolution either by undertakings or by waiver of a minor procedural error.

[21] To the extent that the Agreement upon which employees voted did not contain all the agreed matters that had been explained to employees, this would have given rise to a concern about whether the Agreement had been genuinely agreed. Undertakings would likely have been available to Toosey to address the concerns, although. I do not have information before me about the precise nature of the omissions.

[22] The failure to provide seven clear days of notice of the vote to employees is likely to have been capable of resolution either on the basis of further evidence about what constituted all reasonable steps in that regard or by waiver under section 188(2) on the basis that it was a minor procedural error that was not likely to disadvantage employees. In the first vote, as in each vote thereafter, the Agreement was approved by a majority of voting employees after an extensive bargaining process involving two unions.

[23] If the Agreement was made on 15 March 2019, there was an obligation on either Toosey or one of the unions to file the application within 14 days. That did not occur. In the circumstances, and in light of what appears to have been significant confusion about the steps involved in making an enterprise agreement, I would have allowed additional time for the application to be made on the basis that it was fair to do so, having regard to the history of the matter and because when the parties finally concluded a process they considered would give the Agreement the best chance of approval, the application was lodged within 7 days.

Genuine agreement – explanation to employees

[24] The explanatory material provided to employees each time they were requested to vote to approve the Agreement was the same. For the most part, the explanation was straightforward and concise. It was an adequate explanation, given in an appropriate way.

[25] However, the nominal expiry date of the Agreement referred to in the explanatory material was 31 July 2019 compared to the actual nominal expiry date of 31 December 2019 in the final version of the Agreement lodged with the application. The deficiency was material to the first, second and third votes which all occurred before 31 July 2019. It was immaterial to the fourth vote, as by that time in either case the nominal expiry date had passed. As I have found that the first agreement making process was the critical one, an undertaking may have been required to address the concern if the version of the Agreement approved at that time included the discrepancy.

[26] There is also the matter of how the nature of the process was described to employees. The introductory sentence of the explanatory document begins with the words “This is a variation to the agreement and not a new agreement”. Toosey describes the statement as ‘loosely worded’. In my view, it was simply incorrect. Employees were being asked to vote on a new agreement to replace their existing agreement. I accept that the intention in making this statement was to explain that the new agreement was making changes to the old agreement, rather than starting from scratch, and that this is how the process was explained to employees. I would not have found that the Agreement was not genuinely agreed for this reason alone.

Would the Agreement pass the better off overall test?

[27] The relevant modern awards for the purposes of the better off overall test are the Aged Care Award 2010, Nurses Award 2010, and Social, Community, Home Care and Disability Services Industry Award 2010.

[28] The Agreement contains a range of more beneficial terms for employees compared to the modern awards, including overtime at double time for shiftwork nurses, two consecutive days off each week, unlimited jury service pay, change of rosters, workload management, handover, vacant shifts, payslips, working arrangements for community carers, vehicle cleaning, influenza vaccinations, professional development and study leave, ceremonial leave, police record checks, notice boards and union recognition.

[29] There are also a range of less beneficial terms in the Agreement, including a longer span of hours for aged care workers (affecting employees whose rates of pay are 5% or less than the comparable modern award rate), no casual loading for public holiday work for employees covered by the Social, Community, Home Care and Disability Services Industry Award 2010, no overtime penalties for level 4 and 5 registered nurses and the ability to direct the taking of excessive annual leave.

[30] Toosey has given undertakings to remedy the concerns in relation to overtime and payment for work outside the span of ordinary hours, casual loadings and the definition of excessive annual leave. With the undertakings provided, I am satisfied that the Agreement would pass the better off overall test.

Conclusion and disposition

[31] Due to the late issue of the notice of employee representational rights, the Agreement has not been made and it cannot be approved.

[32] The application is dismissed.

COMMISSIONER

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 1   [2019] FWCFB 318.

 2   [2018] FWCFB 6556.