United Firefighters' Union of Australia v Fire Rescue Victoria

[2025] FWCFB 198

[2025] FWCFB 198

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.604—Appeal of decisions

United Firefighters’ Union of Australia

v

Fire Rescue Victoria

(C2025/1998)

JUSTICE HATCHER, PRESIDENT

DEPUTY PRESIDENT BELL

COMMISSIONER YILMAZ

SYDNEY, 3 SEPTEMBER 2025

Appeal against decision [2025] FWCFB 54 of Deputy President Colman, Commissioner Wilson and Commissioner Mirabella at Melbourne on 16 March 2025 in matter number C2024/5387 – appeal dismissed.

Introduction

1. On 18 March 2025, the United Firefighters’ Union of Australia (UFU) lodged a notice of appeal against two Full Bench decisions in matter C2024/5387. That matter concerned an application made by the UFU under s 739 of the Fair Work Act 2009 (Cth) (FW Act) for the Commission to deal with a dispute between the UFU and Fire Rescue Victoria (FRV) arising under the dispute resolution procedures in cl 21 of Division A and cl 26 of Division B of the Fire Rescue Victoria Operational Employees Interim Enterprise Agreement 2020[1] (Agreement). The dispute concerned the provision of income protection for employees covered by the Agreement pursuant to cl 48 of Division A and cl 56 of Division B of the Agreement. The first decision the subject of the appeal, which was made on 11 March 2025 during the hearing of the matter, was an interlocutory decision requiring the UFU to produce certain documents called for by FRV (Production Decision). The second decision was the substantive decision made by the Full Bench on 16 March 2025[2] to determine the dispute pursuant to the arbitration provisions of the dispute resolution procedures in the Agreement (Substantive Decision).

1. This decision deals with four issues. The first is whether this Full Bench can, as a matter of jurisdiction under the FW Act, hear an appeal from the earlier Full Bench concerning the Substantive Decision. The second is whether the Agreement intends, as a matter of construction, for there to be a right of appeal from one Full Bench to another in the circumstances before us. The third and fourth are whether the Production Decision and Substantive Decision respectively were the subject of appealable error. For the reasons which follow, we firstly consider that the appeal is incompetent because the Commission has no jurisdiction to consider an appeal from a decision of a Full Bench of the Commission. Secondly, properly construed, the disputed term in the Agreement does not allow an appeal by the parties from an earlier Full Bench exercising original jurisdiction to another Full Bench. In the event that these conclusions are incorrect, we have considered the merits of the appeal. Our third and fourth conclusions are, respectively, that the UFU has not demonstrated appealable error in the Production Decision or the Substantive Decision. All the grounds of appeal are rejected and the appeal, if it is within jurisdiction, is dismissed.

Relevant terms of the Agreement

1. The Agreement in its current form is an amalgam of two previous enterprise agreements that respectively applied to two separate entities, the Metropolitan Fire and Emergency Services Board and the Country Fire Authority, both of which ceased to exist upon the establishment of FRV on 1 July 2020. The provisions of Division A of the Agreement substantially reflect the terms of an agreement which previously applied to the former entity, and Division B substantially reflects the term of an agreement which applied to the latter. There is a large measure of identicality in many of the terms of Divisions A and B, and the provisions relevant to this matter are identical. The dispute resolution procedure in cl 21 of Division A, which is replicated in cl 26 of Division B, provides in cl 21.1 that the procedure applies to all matters arising under Division A, all matters relating to the application of, or for which express provision is made in Division A, all matters pertaining to the employment relationship, all matters pertaining to the relationship between FRV and the UFU, and all matters arising under the National Employment Standards. Clause 21.2 provides for a five-step procedure for resolving disputes. The final step in cl 21.2.6 applies if the dispute cannot be resolved at the workplace level:

21.2.6 Step 5 If the matter is not settled following progression through the disputes procedure it may be referred by the union or the employer to FWC. The FWC may utilise all its powers in conciliation and arbitration to settle the dispute.

1. Clause 21.7 of Division A provides:

21.7 A decision of FWC under this clause may be appealed as of right to a Full Bench. Any decision of the FWC may be appealed. A dispute is not resolved until any such appeal is determined.

1. Clause 11.5 of Division A, replicated in cl 11.11 of Division B, defines ‘FWC’ to mean the Fair Work Commission.

1. Clause 48 of Division A, replicated in cl 56 of Division B, provides:

48.ACCIDENT AND ILLNESS POLICY

48.1FRV and UFU will consult and implement an agreed income protection policy/scheme for all employees covered under this Division. This income protection policy/scheme will commence from July 2017.

1. Clause 16 of Division A, which is substantially replicated in cl 21 of Division B, provides for the establishment of a Consultation Committee consisting of equal numbers of representatives appointed by FRV and the UFU respectively. Clause 16.1 defines ‘consultation’ for the purpose of the clause to mean ‘the full, meaningful and frank discussion of issues/proposals and the consideration of each party’s views, prior to any decision’. Clause 16.4.2 provides that the functions of the Consultation Committee include to ‘[c]onsult where provisions in this Division require consultation’, and cl 16.4.4 provides that the committee’s functions also include to:

16.4.4. Consider and make recommendations and decisions regarding matters required to be the subject of consultation under this Division;

1. Clause 16.3.2 provides:

16.3.2 Representatives appointed by the employer and UFU shall include a person or persons with authority to speak and make decisions on behalf of the employer and UFU respectively.

1. Clause 16.5.1 provides:

16.5.1.The Committee will operate on the basis of consensus and consensus shall be required prior to the implementation of any matter or change about which consultation is required under sub-clause 16.4.

1. Clause 16.5.11 provides that, for the purpose of cl 16, ‘consensus’ means ‘unanimous agreement on an outcome supported by all members’. Clause 21.5.1 of Division B similarly requires consensus, but Division B has no direct equivalent to cl 16.5.11 of Division A.

1. Although the provisions of both Divisions A and B have been invoked by the parties in dealing with their dispute, we will henceforth for convenience only refer to the above provisions of Division A. Where we state a conclusion as to the construction and application of any of the provisions of Division A referred to above, the same conclusion will apply to the equivalent provision in Division B.

The course of the proceedings

1. It is necessary to briefly recount the procedural course of this matter to explain how it has come about that the UFU has lodged a purported appeal against two Full Bench decisions, as well as certain other unusual features of this case. The proceedings in the Commission were initiated by the UFU on 7 August 2024 when it lodged an application under s 739 of the FW Act for the Commission to deal with a dispute in accordance with the dispute resolution procedures in the Agreement. We shall set out in greater detail the nature and circumstances of the dispute later in this decision but, broadly speaking, it was said by the UFU to concern an apprehension that FRV would reduce the amount of reimbursements payments made to employees in respect of contributions to the ‘income protection policy/scheme’ which the UFU contended had been agreed under cl 48 of Division A of the Agreement. The dispute was initially the subject of a conciliation conference before Commissioner Wilson on 15 August 2024. On 27 August 2024, FRV applied for an order for the production of the discretionary Trust Deed (Deed) pursuant to which the ‘income protection policy/scheme’ referred to in the UFU’s application was administered. The production of the Deed was opposed by the UFU. On 24 September 2024, the Commissioner made an order[3] (Production Order) requiring the UFU to produce the Deed, subject to access by FRV being limited to one nominated senior executive and FRV’s lawyers. As subsequently amended, the Commissioner’s order required production of the Deed by 10:00 am on 8 October 2024.[4]

1. Just before close of business on 7 October 2024, the UFU lodged an appeal against the Commissioner’s order and sought a stay pending the determination of the appeal. It did not produce the Deed in accordance with the Production Order by the time and date specified. The application for a stay was heard by the President on 10 October 2024 and was refused by him in a decision issued on 11 October 2024[5] (Stay Decision). On 25 October 2024, without having complied with the Production Order, the UFU applied to the Federal Court of Australia for judicial review of the Stay Decision. This was listed for an expedited hearing before a Full Court on 18 November 2024. However, on 15 November 2024, the UFU applied for leave to discontinue its application with no order as to costs, and the hearing was vacated. On 27 November 2024, the UFU discontinued its appeal against the Production Order in the Commission. However, the UFU still did not comply with the Production Order.

1. In light of these developments, on 2 December 2024 the President directed, pursuant to ss 582 and 618(2) of the FW Act, that the UFU’s dispute application (matter C2024/5387) be dealt with by a Full Bench comprised of Deputy President Colman and Commissioners Wilson and Mirabella. The UFU and FRV were advised of this on 3 December 2024. Neither party raised any issue concerning the validity of this direction. The Full Bench conducted a directions hearing on 4 December 2024 and subsequently listed the matter for hearing on 11 March 2025.

1. On 12 December 2024, FRV made an application to the Federal Court for a mandatory injunction requiring the UFU to produce the Deed to the Commission. The Court (Neskovcin J) granted this application, with the same access limitations as in the Production Order, on 20 January 2025.[6] On 21 January 2025, the UFU produced the Deed to the Commission.

1. The hearing was conducted by the Full Bench on 11 March 2025. Over the objection of the UFU, the Deed was admitted into evidence without being subject to any confidentiality requirement. The Full Bench, as earlier stated, issued its decision on 16 March 2025. The UFU’s notice of appeal lodged on 18 March 2025 invoked cl 21.7 of Division A of the Agreement as conferring a right of appeal without any prior requirement for permission to appeal.

The dispute — background facts

1. The background facts concerning the dispute, as related uncontroversially in the Substantive Decision or as disclosed by the documents in evidence, may be summarised as follows. Until January 2023, the ‘agreed income protection policy/scheme’ under cl 48 was an income protection insurance policy provided by ATC Insurance Solution Pty Ltd (ATC) (which is sometimes referred to as the ‘Protect’ policy or arrangement in the document). The arrangement agreed to was that the employees authorised FRV to deduct the insurance premiums from their wages, and FRV reimbursed employees for these amounts. The policy provided for weekly injury, sickness and death benefits, as well as capital benefits for various injuries and damage. The quantum of the amount which FRV was required to reimburse was determined by order of the Commission pursuant to the dispute resolution procedures in the Agreement. The most recent substantive order was made by the Commission (Wilson C) on 21 October 2022[7] (Reimbursement Order). Paragraph 3 of that order provided:

Employees who have income protection insurance under the arrangements agreed between UFU and FRV from time to time will be entitled to reimbursement of their premiums up to an amount of $50.43 per week or such other amount as is agreed between the UFU and FRV for the period of operation of the Fire Rescue Victoria Operational Employees Interim Enterprise Agreement 2020 and any agreement which directly replaces that agreement, to indemnify them for the cost of such insurance, subject to the employee providing proof of payment.

1. The ATC policy was due to expire on 1 November 2022. In September 2022, the UFU decided it did not want to continue with the ATC policy and instead to look for a new provider. On 26 October 2022, the UFU presented a recommendation to the Consultation Committee for the ATC policy to be extended to 1 January 2023 to give it time to find a replacement provider. This recommendation was endorsed by the Consultation Committee.

1. On 27 October 2022, Peter Marshall, the branch secretary of the UFU, and Laura Campanaro, an industrial officer for the UFU, met with Craig Harms of Howden Insurance Brokers (Australia) Pty Ltd (Howden). They discussed the possibility of Howden putting in place an ‘alternative risk scheme’ by means of a discretionary trust. As described by Mr Harms in evidence given by him, an alternative risk scheme involves the use of a discretionary trust to cover certain risks, with the trustee making payments if the risks eventuate. Claims are usually paid out from available trust funds up to a limit, with an insurance policy being taken out to cover risks beyond that limit. Because the insurance policy only covers the residual risk above this limit, it is cheaper than traditional insurance policies which cover all the risk. Mr Harms recommended that the UFU enter into an alternative risk scheme to be provided by Howden.

1. Mr Marshall subsequently acted on Mr Harms’ recommendation and selected Howden to be the new provider. Mr Harms instructed Howden’s lawyers to prepare a standard trust deed. Mr Marshall and Ms Campanaro informed Kirstie Schroder, FRV’s deputy secretary, and Martin Braid, FRV’s deputy commissioner, of their intention that a new arrangement be put in place involving the use of a trust, with the premium being the same as for the ATC policy but with enhanced benefits such as health insurance cover. The name ‘Howden’ was not mentioned at this stage. Ms Schroder and Mr Braid, according to Ms Campanaro’s evidence, did not object.

1. On 21 December 2022, Mr Marshall presented a one-page proposal to the Consultation Committee. The FRV representatives at this meeting were Mr Braid, Nick Koletsis, Ed Starinskas and Mark Kennedy. After a short recital of the relevant provisions of the Agreement and the Reimbursement Order, the substantive content of the proposal was as follows:

FRV and UFU have previously met to discuss the new arrangements. It is recommended that this meeting of the Consultative Committee endorse the new provider to be Howden Insurance Brokers (Australia) Pty Ltd with insurance underwritten by Arch Underwriting at Lloyd’s (Australia) Pty Ltd and that these arrangements take effect from 1 January 2023. These new arrangements (including provider) replace any other arrangements and/or agreements (and providers) that have been in place.

1. The minutes of the meeting record, next to the agenda item ‘Income Protection Arrangements’, the following:

21/12/2022 – PAPER RECEIVED – Peter Marshall

Peter presented the proposal to the committee.

CC agrees and endorses the new income protection arrangements effective 1 January 2023, including but not limited to the new provider being Howden Insurance Brokers (Australia) Pty Ltd with insurance underwritten by Arch Underwriting at Lloyd’s (Australia) Pty Ltd. These new arrangements (including provider) replace any other arrangements and/or agreements (and providers) that have been in place.

FRV acknowledges the work that UFU have provided to ensure fire fighters are supported in their time of need.

1. On 23 December 2022, the Deed was executed by the trustee, Alternative Risk Management Services Pty Ltd (ARMS or Trustee), a company owned and controlled by Howden, and by the UFU. Mr Harms was appointed the manager of ARMS and authorised to act as Trustee. On the same date, ARMS provided a ‘side letter’, executed as a deed, to the UFU (Side Letter). We describe the relevant provisions of the Deed and the Side Letter in greater detail later.

1. On 30 December 2022, Mr Marshall sent Ms Schroder a letter in which he referred to the expiry of the ATC policy, the terms of the Reimbursement Order and the 21 December 2022 meeting of the Consultation Committee, and stated:

…

I advise that in accordance with these matters Howden Insurance Brokers have been engaged and all is on track for income protection under the new scheme to commence for eligible operational FRV employees on 1 January 2023 at 4:00pm.

I understand that FRV payroll is presently working on a seamless transition from the old arrangements to these new ones. The UFU will facilitate a meeting between Howden and FRV payroll representatives in the near future.

Please do not hesitate to contact me if you have any questions about the above

1. On 6 January 2023, Mr Marshall and Ms Campanaro had a Zoom meeting with Ms Schroder and other FRV representatives to discuss the payroll arrangements for processing member contributions, including the bank details for where the contributions were to be sent. The name of the account was: ‘United Firefighters Union of Australia Victorian Branch Discretionary Trust’. FRV also obtained the Australian Business Number of the Trust on the same day. Payments commenced in February 2023.

1. On 13 January 2023, Ms Schroder requested on behalf of FRV that Mr Harms provide a breakdown of the $50.43 post-tax payroll deduction which was being sent to the Trust account, and also sought confirmation that a tax invoice for the GST component of the insurance premiums would be rendered and that ‘the Trust Cover for FRV employees is fully discretionary, and that the Trust has no contractual obligation to support a member financially’. Mr Harms responded that the breakdown of the deduction amount was:

a)Trust Cover $39.89

b)Insurance Cover Lump Sum - $3.36

c)Insurance Cover Loss of income - $2.00

d)Insurance Cover Additional Benefits - $0.06

e)GST $4.52

f)Stamp Duty $0.60

1. Mr Harms also confirmed that a tax invoice would be rendered to FRV and, in respect of the requested confirmation of the discretionary nature of the Trust, said: ‘Correct. The Trust is established to respond in the best interests of the Members just so you don’t think the worst!’.

1. In a decision issued on 15 August 2023,[8] the Commission (Wilson C), in exercise of arbitration powers under the dispute resolution procedures in the Agreement, determined to increase a range of allowances in the Agreement by 9.5 per cent in accordance with a claim advanced by the UFU based on cost-of-living considerations. The order made to give effect to this decision[9] (Adjustment Order) increased, among other things, what was described as the ‘Income Protection Reimbursement Allowance’ from $50.43 per week to $55.22 per week. It may be noted at this point that there is no such allowance in the Agreement, and the amount that was adjusted was the amount specified in the Reimbursement Order.

1. On 28 September 2023, the Victorian Branch of the UFU and ARMS executed an agreement entitled ‘Advocate Agreement’ (Advocate Agreement). The provisions of the Advocate Agreement are described later in this decision.

1. On 23 October 2023, Tony Matthews, the Executive Director Corporate Services for FRV, sent Mr Marshall a letter seeking information about the use of payments received by the Trust in respect of FRV employees for the purpose of determining their tax treatment. In his recital of the background to this request, Mr Matthews noted that:

   …

   ·in December 2022, FRV and the UFU (as members of the Consultative Committee) agreed on a particular income protection policy/scheme to be implemented for the purposes of the FRV EA; and

   ·the UFU procures cover for those FRV employees that have signed up to the insurance through a discretionary trust established by the United Firefighters Union of Australia - Victorian Branch … and through an insurance policy held by the Discretionary Trust and the members of the Discretionary Trust with a third party insurer (Arch Underwriting at Lloyd's (Australia) Pty Ltd)…

1. To enable this assessment, Mr Matthews requested:

·a copy of the trust deed for the Discretionary Trust;

·the financial statements for the Discretionary Trust since the Discretionary Trust was established;

·to the extent not shown in the financial statements, details of []:

○the total membership contributions by members since the Discretionary Trust was established;

○the allocation of membership contributions by the Discretionary Trust, for example, between:

• any third party policies of insurance;
• discretionary payments by the trust;
• investments by the Discretionary Trust;
• trustee and management fees; and
• other costs and expenses;

○the categories of insurance obtained by the Discretionary Trust (and the allocation of member contributions to them);

○actuarial reports (including those undertaken and procured by Howden Insurance Brokers (Australia) Pty Ltd) that set out the allocation of policy premiums to categories of insurance (and any other member benefits);

○the terms on which the Discretionary Trust exercises its discretion with regard to claims by members and the nature of the coverage offered (for example, whether this applies to income protection or other types of insurance);

·whether there are any policies of insurance obtained by the Discretionary Trust other than the Group Personal Accident Policy with Arch.

1. The evidence does not establish that Mr Marshall ever provided a written response to Mr Matthews’ request. However, in November 2023, the UFU did provide a copy of the Deed to FRV’s tax advisors on a confidential basis. It also appears that some further information was provided to FRV, but the extent of this and the means by which it was done are unclear.

1. On 1 May 2024, the FRV Commissioner, Gavin Freeman, sent a letter to Mr Marshall which made a further request for information arising from an apprehension that FRV’s reimbursement of the contributions made by employees might be subject to Fringe Benefits Tax (FBT). In this letter, Mr Freeman first set out FRV’s understanding of the arrangement which had been put in place, including:

On 21 December 2022, the FRV and UFU Consultative Committee agreed to implement a new income protection policy/scheme for employees covered by the FRV EA, with the provider being Howden Insurance Brokers (Australia) Pty Ltd (Howden) with insurance underwritten by Arch Underwriting at Lloyd’s (Australia) Pty Ltd (Arch).

Unlike previous arrangements with Protect, the arrangements implemented effective 1 January 2023 involve payment to a discretionary trust established by the UFU (Discretionary Trust). The indication is that the Discretionary Trust pools the funds received and applies them to meet member claims, purchase insurance cover and meet the costs of running the Discretionary Trust.

Currently the reimbursement payments amount to $50.43 per employee per week, commensurate with the adjusted amount that was reimbursed through the previous income protection arrangement.

Based on information recently provided to FRV and/or its advisors to date, FRV relevantly understands that:

·the Trustee of the Discretionary Trust is Alternative Risk Management Services Pty Ltd;

·the Discretionary Trust provides both ‘insurance cover’ (being external insurance purchased by the trustee for the Discretionary Trust and its members) and ‘trust cover’ (a discretionary cover component);

·in relation to the ‘insurance cover’, the Discretionary Trust has taken out insurance policies underwritten by Arch to cover the following risks:

○loss of income;

○lump sum; and

○additional benefits;

·in relation to the ‘trust cover’, payments made by the Discretionary Trust to members are entirely at the discretion of the Trustee;

·of the member contributions of $50.43 per week, approximately $4.06 per week is used to secure income protection insurance with Arch;

·the remaining member contributions are used to secure other insurance cover and to contribute to the trust cover; and

·the trust cover may also be utilised to meet claims relating to income protection.

1. Mr Freeman’s letter then stated that it was ‘FRV’s preliminary assessment’ that a significant portion of the weekly reimbursement amount for each employee, namely $46.37 of the total of $50.43 (being the amount remaining after the deduction of the $4.06 used to pay the premium for the income protection insurance with Arch), would be subject to FBT, and explained the basis of this assessment. Mr Freeman went on to describe the significance of the assessment as follows:

This assessment has significant implications for FRV and its operational employees. From an organisational perspective, FRV’s FBT liability in relation to the taxable component of the reimbursements may amount to approximately $7,000,000 per year (which has not previously been accounted for).

From the individual operational staff perspective, FRV will be required to include the $46.37 per week as a reportable fringe benefit amount on employee income statements, which will increase their adjusted taxable income by approximately $4,550 per annum. This may have implications for employees’ ability to access various means tested government benefits and certain payment obligations including child maintenance payments.

Additionally, as a Victorian public entity, it is critical that FRV has visibility over the beneficiaries of payments of public funds, and the purposes of those payments. Currently, FRV does not have adequate visibility over the application of the reimbursements made to operational employees for their member contributions to the Discretionary Trust.

1. Mr Freeman sought the UFU’s cooperation with the FRV obtaining a private tax ruling from the Australian Taxation Office (ATO) to resolve the problem, and requested the provision of the following information:

·a copy of the Trust Deed for the Discretionary Trust;

·the beneficiaries of the Discretionary Trust;

·details of claims made under the previous insurance arrangement with Protect;

·the total proportion of member contributions which are referable to covering income protection insurance claims (which, in relation to the trust cover component, may be based on the proportion of the total losses paid out of the trust cover which were referable to income protection claims); and

·the total proportion of member contributions that are applied towards obtaining income protection insurance cover for members.

1. Finally, Mr Freeman stated that without the above information there would be insufficient information upon which the ATO could make a private tax ruling, and he warned:

As FRV cannot support the continuation of the significant implications for FRV or its employees outlined above, in these circumstances it will likely be necessary for FRV to propose steps to reduce the reimbursements paid to employees to reflect the amount which it can assess (based on the information provided) to be referrable to income protection insurance and therefore falling within the ‘otherwise deductible rule’.

1. On 20 June 2024, Mr Marshall responded to Mr Freeman’s correspondence by notifying him of a dispute pursuant to the dispute resolution procedures in the Agreement. Mr Marshall’s correspondence characterised the dispute in the following terms:

This dispute arises and relates to the recent proposals of FRV to reduce the reimbursements to reflect the FBT payable by FRV. That is inconsistent with the Commission’s order and the UFU disputes FRV’s entitlement to do so.

The UFU requires urgent confirmation by 4pm, Wednesday 26 June 2024 that the FRV will continue to comply with the Commission’s order and reimburse the premiums of employees who have income protection insurance under the arrangements agreed between UFU and FRV, of $55.22 per week.

1. In a reply letter dated 25 June 2024, Mr Freeman rejected Mr Marshall’s characterisation of FRV’s proposal as being one to reduce the reimbursements amount, but noted that:

…FRV also does not agree with the UFU’s assertion that, if FRV did propose such steps, this would necessarily be inconsistent with the Agreement or any order of the Fair Work Commission.

1. Subsequent discussions and exchanges of correspondence did not result in FRV providing the ‘urgent confirmation’ requested by the UFU. On 7 August 2024, the UFU made an application under s 739 of the FW Act for the Commission to deal with the dispute it had identified pursuant to the dispute resolution procedures in the Agreement. In its application, the UFU sought an order that ‘FRV continue to pay the full amount of the income protection allowance as fixed by the Order of Commissioner Wilson dated 21 October 2022’. However, by the time of the hearing, the UFU had revised its position so that it sought relief by way of the orders in the following form:

Pursuant to sections 595 and 739 of the Fair Work Act 2009 (Cth), the Full Bench of the Fair Work Commission

DECLARES:

1.That the scheme known as the United Firefighters Union of Australia – Victorian Branch Discretionary Trust … is an ‘income protection policy/scheme’ which, on 21 December 2022, was ‘agreed’ by the parties, within the meaning of cl 21.2.6 of Division A and cl 21.2.6 of Division B of the Fire Rescue Victoria Operational Employees Interim Enterprise Agreement 2020…; and

ORDERS:

2.That FRV implement the Scheme by reimbursing employee contributions to the Scheme in the amount of $55.22 per week or such other amount as is agreed between the UFU and FRV for the period of operation of the FRV Agreement, subject to the employee providing proof of payment.

Documents governing the Howden scheme

1. The scheme involving the Trust established by the UFU and Howden in December 2023, to which employees made contributions from 1 January 2023 and were reimbursed for these by FRV (Howden scheme), was governed by a number of legal instruments. The relevant provisions of these instruments are set out or described below.

The Deed

1. The Deed states it was made on 1 January 2023 between ARMS (as Trustee) and the Victorian Branch of the UFU (referred to as the ‘Advocate’). Clause 2.2 of the Deed describes its purpose as follows:

2.2Purpose

The purpose of the Trust is to establish a scheme to:

(a)mitigate and protect against Member Risks;

(b)maintain funding to meet Claims (subject to the terms of this deed) and purchasing Insurance;

(c)develop risk management programs to manage Member Risks and reduce Claims; and

(d)undertake such other activities that the Trustee considers appropriate for the purposes of addressing Member Risks and managing Claims.

1. The expression ‘Member Risks’ is defined in cl 1.1 as meaning ‘certain risks associated with the Members as determined by the Trustee in consultation with the Advocate’. A ‘Member’ is a person who is a member of the UFU or an employee covered by the Agreement who is admitted as a Member of the Trust. Under cl 7.1, the Trustee retains complete discretion as to who may be admitted as a Member.

1. ‘Insurance’ is defined in cl 1.1 to mean insurance obtained via the ‘Insurance Policy’, which in turn is defined as meaning:

…the insurance policy or such other contract that transfers risk to a third party (in a similar manner to insurance) that is purchased by the Trust in respect of specific Member Risks and/or to meet eligible Claims at prescribed thresholds determined by the Trustee;

1. ‘Claim’ is defined in cl 1.1 to mean ‘any claim by a Member against the Trust in respect of any loss which the Trust [is] intended to meet, as outlined in the Disclosure Document’. The ‘Disclosure Document’ is defined as ‘the Product Disclosure Statement or such similar document issued by the Trustee in respect of the Trust’.

1. Clause 2.5 of the Deed provides:

2.5Deed binding on Trustee, the Advocate and Members

The Trustee, the Advocate and each Member (and each person claiming through a Member) is entitled to the benefit of and is bound by this deed in accordance with and to the extent provided for in this deed as if each of them is a party to this deed.

1. Clause 4.1 provides that the Advocate is required to perform its functions, powers and duties under the Deed for the benefit of the Members, promote the Trust and encourage participation in the Scheme, and refer all enquiries regarding the Trust to the Trustee or its nominated affiliate or agent. Under cl 4.2, the Advocate covenants with the Trustee and Members to act honestly and exercise all due diligence and vigilance in carrying out its functions, powers and duties under the Deed and, subject to the terms of the Deed, exercise its functions, powers and duties in the best interests of Members generally and not in its own interests if those interests are not the same. Clause 13.2 provides that the ‘Advocate is not entitled to a fee in relation to its role under th[e] Deed.’

1. Clause 9 sets out the Trustee’s obligations with respect to Claims and Member Risks:

9.Management of Claims and Member Risks

9.1 Obligation to consider

The Trustee must consider all Claims made by Members.

9.2 Trustee retains discretion

Where Claims are not covered by the Insurance Policy, the Trustee retains the absolute discretion as to whether to partially or wholly accept a Claim and the Trustee may impose certain terms and conditions in relation to the satisfaction of any Claims.

9.3 Management of Member Risks and minimisation of Claims

The Trustee may apply the Trust Property at its discretion towards the management of Member Risks and the minimisation of Claims where it consider[s] it is in furtherance of the purpose of the Trust.

1. More generally, the key aspects of the powers of the Trustee are set out in cls 12.1–12.3:

12.1 General power of Trustee

(a)In addition to its powers under this deed and by law but subject to this deed, the Trustee has all the powers in respect of the Trust and the Trust Property of a natural person or corporation by law as though it were the absolute and beneficial owner of the Trust Property acting in its personal capacity.

(b)Subject to this deed, all Trust Property will be held in the name of the Trustee.

12.2 Exercise of discretion

Subject to the law and to this deed, the Trustee may decide whether to exercise and, if so, the manner, mode and time of exercise of the Trustee's duties, powers and discretions in its absolute and uncontrolled discretion.

12.3 Trustee to act in best interest of Members

Subject to clause 12.6, in addition to its other obligations arising under this deed or at law, the Trustee agrees that it will exercise all due diligence and vigilance in carrying out its functions and duties under this deed and in protecting the rights and interests of the Members under this deed and will at all times act in the best interests of the Members.

Side Letter

1. The Side Letter, which was, as earlier stated, executed as a deed on 23 December 2022, was not in evidence before the Full Bench below, but was rather placed in evidence in the appeal in circumstances we explain later in this decision. Under the Side Letter, the Trustee agreed to grant the Advocate a range of additional rights and obligations for which the Deed made no provision. These included, in cl 2.1 of the Side Letter, extensive rights for the Advocate to be provided with information about the operation of the Trust and, in cl 2.5, an obligation that the Trustee consult with the Advocate by 31 March 2023 about additional Member benefits that might be included in the Trust including, but not limited to, group medical cover, leisure travel, family assistance covers, family bereavement cover and tragedy/disaster personal cover.

Product Disclosure Statements

1. As earlier stated, cl 1.1 of the Deed makes reference to a ‘Product Disclosure Statement’. The Product Disclosure Statement for the Trust dated 1 January 2023 (2023 PDS) provides an overview of the Trust. It relevantly states:

The Discretionary Trust is made up of two parts:

§The Trust Cover. This is risk cover, but it is not insurance because the Trustee has discretion as to whether or not to pay a Claim and how much to pay; and

§The Insurance Cover, which is insurance. A Member has a third party beneficial interest in the Insurance Policy which is purchased by the Trustee for the Discretionary Trust and its Members.

The Discretionary Trust has been established to help manage the Members’ risk of:-

1.Loss of income, death and disability due to injury or sickness 24 hours a day, seven days a week.

2.Accidental dental injuries 24 hours a day, seven days a week.

3.Broken bones due to injury 24 hours a day, seven days a week.

4.Ambulance cover provided through Ambulance Victoria, family membership.

A Prospective Member can become a Member of the Discretionary Trust by making the payment of the Membership Contributions shown on the Tax Invoice within 30 days of receipt of this PDS and Tax Invoice, whichever is later, or such longer period as is determined by the Trustee. The Insurance Broker will forward the Membership Contribution to the Trustee.

The Trustee pools the Membership Contributions of all Members and holds them in the Fund. The Fund is used to meet Claims under the Trust Cover, purchase the Insurance Cover and meet the costs of establishing and running the Discretionary Trust.

. . .

If the Trustee accepts a Claim, the Claimant must pay the Individual Member’s Deductible as shown below or on the schedule/Tax Invoice. At the Trustee’s discretion, the Trustee may pay the Claim and all associated expenses incurred under the Trust Cover.

Once the Trust Cover is exceeded, the Trustee will refer the Claim to the Insurer for the Insurer to decide in accordance with the Insurance Cover…

1. The 2023 PDS further explains the ‘Trust Cover’ provided by the Trust as follows:

Trust Cover

Note: Due to the Trustee’s discretion, a Claim can be lodged under the Trust Cover for any event, not only those events that would be covered under the Insurance Cover (see Section 2 of the PDS) and the Trustee will consider the Claim.

A benefit of the discretionary Trust Cover is that Claims, which may not be covered under the Insurance Policy wording of the Insurance Cover may be paid by the Trustee, subject to this being for the benefit of the Members. However, the Trustee, in its sole discretion, may not exercise its discretion in favour of the Claimant. For details of further risks associated with this product, please refer to Section 3 of this PDS.

In exercising its discretion, the Trustee cannot be influenced by anyone and is legally bound to conduct its duties and obligations in accordance with trust law. The Trustee must settle each Claim in accordance with the merits of the Claim.

1. Section 3 of the 2023 PDS explains the risk under ‘Trust Cover’ and ‘Insurance Cover’:

Section 3: Risks Under Trust Cover and Insurance Cover

There are a number of risks a Prospective Member should be aware of under the Discretionary Trust including:

1.The payment of benefits under the Trust Cover is at the absolute discretion of the Trustee which means that the Trustee may exercise its discretion not to pay a Claim;

2.The Insurance Cover component of the Discretionary Trust only comes into effect for a Claim in excess of the Individual Member’s Deductible and the Trust Cover;

3.The Insurance Cover component has various conditions and exclusions. Therefore, if a Claim is in excess of the Individual Member’s Deductible and the Trust Cover and the Insurance Cover component comes into effect, the Claim may not be covered under the Insurance Cover component as a result of the conditions and exclusions;

4.Renewed membership of the Discretionary Trust is at the discretion of the Trustee and a Member’s cover will cease after the expiry of the Fund Period if renewed membership is not offered. If this happens, a Claim cannot be made for an event occurring after the expiry of the Fund Period.

1. A revised version of the PDS was published on 27 August 2024 (2024 PDS). One of the revisions of particular relevance was that the following was added to the list of risks for Prospective Members and Members:

Should the funds within the Trust reach zero, a Claim cannot be paid under the Trust Cover, even if it is within the Period of Cover. However, the Claim may be addressed by the Insurance Cover (subject to its various conditions and exclusions).

The Advocate Agreement

1. The Advocate Agreement was placed in evidence in the appeal, again in circumstances which will later be explained. The recitals to the Advocate Agreement state that ‘ARMS and the Advocate desire to market and provide information about the Discretionary Fund to the Advocate’s members and prospective members’ and ‘ARMS has requested and the Advocate has agreed to aid and assist in the Marketing of the Discretionary Fund on the terms and conditions in this Agreement’. As in the Deed, the Advocate is the Victorian Branch of the UFU: cl 1.1(2). The key obligations under the Advocate Agreement are that ARMS is required to pay the Advocate a ‘Service Fee’ as consideration for the provision of the ‘Services’ by the Advocate: cls 3.1, 5.1(1)(3) and 6.1(1).

1. Clause 1.1(20) and Item 5 of Schedule 1 to the Advocate Agreement provide that the ‘Service Fee’ is $30,000 per month, exclusive of GST, for the first year of the term of the agreement, and is to be reviewed annually thereafter. The fee is payable from the ‘deemed commencement date’, which is 1 January 2023: cls 1.1(4), 2.1 and 3.2 and Item 2 of the Schedule. Clause 1.1(19) and Item 6 specify the ‘Services’ in the following terms:

In each year in which this Agreement is in force, the Advocate will provide ARMS with the following services:

·Maintaining relationships with key employers

·Provide the participating employer and/or Member with necessary documentation (brochures, acceptance forms, Product Disclosure Statement, Financial Services Guide, Target Market Determination (if requested by the Member or Potential Member))

·Refer all request for advice relating to the Discretionary Funds or claims to ARMS and Howden

·Co-ordinate and chair meetings with Members or with representative committees

·Assist with communication of Trust performance, benefits and services to the Members and/or their representative committees

·Provide services to the Trustee regarding complex claims issues

·Provide access to web-site, facilitate site visits and other promotional activities, as required

·Permit ARMS to promote ARMS’ role as sponsor at events, which includes where appropriate, designating ARMS as a or the premium sponsor at an event or events by describing ARMS as ‘Platinum Sponsor’ and displaying ARMS’ logo

·Ensure that agreed publications in relation to events, including but not limited to invitations, banners, signage, promotional products and merchandise, acknowledge the sponsorship of ARMS which includes where appropriate, designating ARMS as a or the premium sponsor of the event by describing ARMS as ‘Platinum Sponsor’.

1. An email from Mr Harms to Mr Marshall dated 1 December 2023, which was placed in evidence in the appeal, records that, from 1 January 2024, the Service Fee would be increased to $60,000 per month plus GST. There is no factual dispute that ARMS paid the Service Fee in accordance with the Advocate Agreement out of the funds of the Trust. The evidence before the Full Bench below disclosed that, for the period 1 January 2023 to 29 February 2024, a total of $480,000 had been paid from Trust funds to the UFU as ‘Promotion/Management Costs’. It is now apparent that these were payments of the Service Fee pursuant to the Advocate Agreement. We infer that this total amount was made up of 12 monthly payments of $30,000 for 2023, and payments of $60,000 each for January and February 2024.

Is the appeal competent?

1. An initial question arises as to the competency of the UFU’s appeal. Section 604(1)(a) of the FW Act permits a person who is aggrieved by a decision of the Commission, other than a decision of a Full Bench or an Expert Panel, to appeal the decision with the Commission’s permission. The FW Act does not provide for any mechanism in which a decision by the Commission constituted as a Full Bench, including a first-instance decision, may be appealed. Subject to any application for judicial review, a decision of a Full Bench is final.

1. Additionally, the FW Act does not permit the constitution of a Full Bench other than in specific circumstances prescribed by the Act. The default position established by s 612(1) is that a function or power of the Commission may be performed or exercised by a single Commission Member, other than an Expert Panel Member, as directed by the President, except as provided by Subdivision A of Division 4 of Part 5-1 of the FW Act. The provisions of Subdivision A prescribe the circumstances in which the Commission may or must be constituted as a Full Bench. These are, in summary, as follows:

·Section 613: to hear an appeal under s 604 (including to determine whether to grant permission to appeal).

·Section 614: to decide whether to conduct a review of a decision under s 605 (on application of the Minister) and, if the Full Bench decides to conduct the review, to conduct the review.

·Section 615: where the President directs that a function or power be performed or exercised by a Full Bench.

·Section 615A: where the President is required to direct that certain functions or powers be exercised by a Full Bench.

·Section 616: certain prescribed functions or powers must be performed or exercised by a Full Bench.[10]

1. None of the above provisions is applicable to the UFU’s putative appeal.

1. Notwithstanding this, the UFU and the FRV both contend that the UFU’s appeal against the Full Bench’s decision at first instance is competent and must be heard by another Full Bench. They were directed to file submissions addressing this issue in order to satisfy us that we had jurisdiction to hear the appeal.

Submissions

1. The UFU submits that because cls 21.7 and 26.7 of the dispute resolution procedures in the Agreement provide that any decision of the Commission made under those clauses may be appealed as of right to a Full Bench, the Commission is empowered as a private arbitrator to hear its appeal, regardless of the fact that the decision at first instance was made by a Full Bench. The UFU refers to the Federal Court Full Court decisions in AMWU v ALS Industrial Australia Pty Ltd[11] (ALS), Endeavour Energy v CEPU[12] (Endeavour Energy) and United Firefighters’ Union of Australia v Fire Rescue Victoria[13] (UFU v FRV) as authority for the proposition that the exercise of the Commission’s powers of private arbitration does not involve the exercise of a statutory jurisdiction but rather a jurisdiction conferred privately by the parties to the dispute. It submits that it follows from this proposition that when the Commission conducts a private arbitration, it is bound to act in accordance with the procedures agreed by the parties, rather than the statutory procedures laid down in the FW Act, although the parties may agree that the statutory procedures should be followed. The UFU further submits that, given the clear right of appeal conferred by cl 21.7 of Division A (and cl 26.7 of Division B), the only tenable alternative to its position is that the provision should be construed as impliedly requiring that the original decision of the Commission be made by a single Member. The UFU submitted that there was no conceptual difficulty with a body of three conducting an appeal from a body of three, although it might be appropriate for a Full Bench of five to be constituted in to hear the appeal in that circumstance.

1. The FRV submits that when parties to an enterprise agreement agree to confer a power of private arbitration on the Commission then, absent any contrary indication, the parties take the Commission as they find it, including as to the capacity to appeal. Consistent with this proposition, the appeal procedure in s 604(1) is capable of being modified where the foundation for the appeal is the conferral of a power of private arbitration under an enterprise agreement and a contrary intention is expressed within that enterprise agreement — such as, for example, removing the requirement for permission to appeal. Similarly to the UFU, the FRV submits that cl 21.7 of Division A is to be construed as bestowing a right of appeal against any decision of the Commission, including one made by a Full Bench. By these provisions, it is submitted, the parties have expressed a contrary intention to modify s 604(1) of the FW Act and confer upon the Commission jurisdiction to hear the appeal, despite the decision under appeal being a decision of the Full Bench. The FRV referred to many of the same case authorities as did the UFU in support of the proposition that the appeal was competent and, in addition, cited Glen Cameron Nominees Pty Ltd v TWU (No 2)[14] (Glen Cameron).

Consideration

1. The UFU and FRV cannot confer, by agreement, jurisdiction on the Commission to hear this appeal independent of the terms of the Agreement. It is appropriate and necessary for us to form our own opinion as to whether we have authority under the FW Act, operating in conjunction with the dispute resolution procedures in the Agreement, to entertain the UFU’s appeal.

1. The starting point for consideration of the parties’ submissions is that the Commission is a statutory tribunal, and its authority to engage in the arbitration of disputes necessarily derives from the FW Act. Parties can, by agreement, confer a power of private arbitration on the Commission only to the extent that the FW Act authorises it. This proposition was articulated by the Federal Court (Colvin J) in Maersk Crewing Australia Pty Ltd v CFMMEU[15] (Maersk) at [6] as follows:

… the nature and extent of the arbitral appointments that the FWC may undertake are also confined by the extent of the statutory authority to act as arbitrator conferred on the FWC by the Act. Whereas a natural person can accept an appointment to resolve any dispute, the FWC can only do so for the purpose of performance of its statutory functions.

(underlining added)

1. At a later stage in the same litigation, Colvin J said in Maersk Crewing Australia Pty Ltd v CFMMEU(No 2)[16] at [142]:

… the power is a private arbitral power, but the manner in which it may be conferred is regulated by the statute.

(underlining added)

1. Thus, characterisation of the powers that the Commission exercises when it arbitrates a dispute pursuant to a dispute resolution procedure in an enterprise agreement as ‘private arbitration’ should not obscure the fact that the Commission’s authority to arbitrate must ultimately emanate from its governing statute. The ‘private arbitration’ characterisation has its origin in the High Court decision in CFMEU v Australian Industrial Relations Commission[17] (Gordonstone). In this decision, the Court considered the constitutional validity of s 170MH of the Industrial Relations Act 1988 (Cth), which relevantly provided that procedures in a certified agreement for preventing and settling disputes between employers and employees might empower the Australian Industrial Relations Commission (AIRC) to settle disputes over the application of the agreement, including by arbitration. The Court said:[18]

To the extent that s 170MH of the IR Act operates in conjunction with an agreed dispute resolution procedure to authorise the Commission to make decisions as to the legal rights and liabilities of the parties to the Agreement, it merely authorises the Commission to exercise a power of private arbitration.

1. The above passage makes clear enough the statutory source of the power authorising the Commission to engage in private arbitration. This was further emphasised in the High Court decision in TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia,[19] (TCL) in which French CJ and Gageler J referred to Gordonstone and said (at [29]):

The context of that articulation puts its reference to ‘private arbitration’ in appropriate perspective. The context was that of a challenge to the capacity of a statutory body consistently with Ch III of the Constitution to exercise a statutory function to settle a dispute where so empowered by an agreement entered into as a result of statutory processes. The reference to ‘private arbitration’ was not to a private function, as distinct from a public function, but rather to a function the existence and scope of which is founded on agreement as distinct from coercion.

(underlining added)

The statutory scheme for consensual arbitration of disputes

1. The submissions of the UFU and FRV do not, in our view, pay sufficient attention to what the FW Act authorises as distinct from what cl 21.7 of Division A of the Agreement purports to authorise. The statutory scheme for the consensual arbitration of disputes pursuant to dispute resolution procedures in enterprise agreements may be outlined as follows. First, s 595 deals with the Commission’s power to deal with disputes generally:

595FWC’s power to deal with disputes

(1)The FWC may deal with a dispute only if the FWC is expressly authorised to do so under or in accordance with another provision of this Act.

(2)The FWC may deal with a dispute (other than by arbitration) as it considers appropriate, including in the following ways:

(a)by mediation or conciliation;

(b)by making a recommendation or expressing an opinion.

(3)The FWC may deal with a dispute by arbitration (including by making any orders it considers appropriate) only if the FWC is expressly authorised to do so under or in accordance with another provision of this Act.

Example: Parties may consent to the FWC arbitrating a bargaining dispute (see subsection 240(4)).

(4)In dealing with a dispute, the FWC may exercise any powers it has under this Subdivision.

Example: The FWC could direct a person to attend a conference under section 592.

(5)To avoid doubt, the FWC must not exercise the power referred to in subsection (3) in relation to a matter before the FWC except as authorised by this section.

1. It is apparent that s 595 does not of itself confer a power upon the Commission to deal with disputes, including by arbitration, but requires that this be expressly authorised by another provision of the FW Act. Part of the function of s 595 is to identify what the Commission may do when it is authorised to deal with a dispute. Section 595(2) thus identifies the means, short of arbitration, by which the Commission may deal with a dispute when authorised to do so, and s 595(4) identifies the procedural powers which the Commission may exercise in dealing with a dispute.

1. Second, specifically in relation to enterprise agreements, s 186(6) of the FW Act requires as a condition for approval by the Commission that the agreement contain a term providing for a dispute resolution procedure:

Requirement for a term about settling disputes

(6)The FWC must be satisfied that the agreement includes a term:

(a)that provides a procedure that requires or allows the FWC, or another person who is independent of the employers, employees or employee organisations covered by the agreement, to settle disputes:

(i)      about any matters arising under the agreement; and

(ii)     in relation to the National Employment Standards; and

(b)that allows for the representation of employees covered by the agreement for the purposes of that procedure.

1. Section 186(6) establishes a minimum prescription for a dispute resolution procedure, which may include additional provisions provided that they pertain to the employment relationship of those covered by the agreement (see ss 172(1)(a) and (b)).[20] It may be noted that a term which satisfies that prescription may ‘require’ the Commission to settle disputes about the matters identified. However, s 186(6) is not a provision which of itself confers jurisdiction on the Commission or authorises it, for the purpose of s 595(3), to engage in the arbitration of disputes.

1. Third, Subdivision B of Division 2 of Part 6-2 of the FW Act is specifically concerned with dealing with disputes pursuant to dispute resolution procedures in various categories of instruments, including enterprise agreements. Section 738(b) provides that Division 2 applies in respect of an enterprise agreement that ‘includes a term that provides a procedure for dealing with disputes, including a term referred to in subsection 186(6)’. Section 739 then provides:

739Disputes dealt with by the FWC

(1)This section applies if a term referred to in section 738 requires or allows the FWC to deal with a dispute.

[There is no subsection (2).]

(3)In dealing with a dispute, the FWC must not exercise any powers limited by the term.

(4)If, in accordance with the term, the parties have agreed that the FWC may arbitrate (however described) the dispute, the FWC may do so.

Note: The FWC may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)).

(5)Despite subsection (4), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.

(6)The FWC may deal with a dispute only on application by a party to the dispute.

1. It is apparent that s 739(4) provides express authorisation for the Commission to deal with a dispute by arbitration as contemplated by s 595(3). The agreement of the parties to arbitration in accordance with the dispute resolution procedure is the precondition to the exercise of arbitral power by the Commission. Beyond the conferral of authority to arbitrate the dispute in question if this precondition is met, s 739(4) does not confer any additional powers of a procedural or substantive nature that are not otherwise to be found in the FW Act. In this respect, two matters of construction arise. First, the words ‘in accordance with the term’ syntactically condition the agreement of the parties to arbitrate, so that the parties cannot agree to arbitrate in circumstances inconsistent with the dispute resolution procedure. For example, the term may place restrictions on the types of matters which are or may be agreed to be arbitrated, or the stage of the process at which it is agreed arbitration may occur.[21] The subsection cannot reasonably be construed on the basis that ‘in accordance with the term’ conditions the words ‘the FWC may do so’, such as to constitute a potential source of powers and functions not otherwise found in the FW Act which may or must be exercised in connection with the agreed arbitral power. Second, we likewise consider that the reference in s 739(4) to the power to arbitrate ‘however described’ (in the dispute resolution procedure) cannot be construed as meaning that the term can dictate other powers that may or must be exercised by the Commission in discharging its arbitral function. This reference is more naturally construed as meaning that the dispute resolution procedure does not have to use the precise terminology of arbitration for the authorisation to operate; it is sufficient that language which is synonymous with arbitration is used.

1. The mere agreement for the Commission to ‘arbitrate’ under s 739(4) does not inherently carry with it a requirement for the Commission to act in accordance with whatever procedures for arbitration the parties may agree upon. ‘Arbitrate’ is not defined in the FW Act, but is used in a variety of contexts throughout the Act. Sections 240(4), 333L(4)(b), 333V(b), 369(1)(b) and (2), 527S and 777(1)(b) and (2) all empower the Commission to ‘arbitrate’ specific types of disputes by agreement of the parties — being disputes about, respectively, bargaining, fixed term contracts, the right to disconnect, dismissals alleged to be in contravention of the general protections provisions, sexual harassment, and unlawful termination. None of these provisions has been applied on the basis that the agreement to arbitrate carries with it any broader capacity to dictate, by agreement, how the Commission is to discharge its arbitral function. Other provisions of the FW Act, such as ss 65C, 66MA, 76C, 306Q and 505 authorise the Commission to ‘arbitrate’ specific types of disputes or matters without requiring the consent of the parties. Considered together, these provisions indicate that ‘arbitrate’ in the FW Act bears its ordinary meaning, that is to settle a dispute by hearing it and making a determination that is binding on the parties. Where there is a requirement for agreement to arbitrate, this should be read as agreement simply for the Commission to act as arbitrator of the dispute in the ordinary sense. It does not carry with it any wider implication as to the capacity of parties to determine how the Commission is to discharge its arbitral function.

1. Fundamental to s 739(4) is that the relevant agreement must be for the ‘FWC’ to arbitrate. Section 12 of the FW Act defines ‘FWC’ as the body continued in existence by s 575. Section 575(1) provides that the body previously known as Fair Work Australia continues in existence as the Fair Work Commission. Section 575(2) identifies the officeholders who comprise the Commission. Section 575 is contained in Part 5-1—The Fair Work Commission, which sets out the scheme of provisions concerning the Commission’s establishment and functions, its conduct of matters, its organisation, membership and staffing, and offences relating to the Commission. Thus, we consider, when parties agree to arbitration by the ‘FWC’ under s 739(4) then, subject to s 739(3), to which we will shortly turn, they are agreeing to arbitration by the body with the constitution, organisational structure, procedural powers and other incidents prescribed in Part 5-1. This is consistent with High Court authority to the effect that when the legislature chooses a court or tribunal to exercise a particular function then, in the absence of any manifestation of a contrary indication, it takes the court or tribunal as it finds it with all its incidents: Electric Light and Power Supply Corporation Ltd v Electricity Commission of NSW;[22] Houssein v Under Secretary, Department of Industrial Relations and Technology NSW.[23]

1. A limited degree of departure from that position is permitted by s 739(3). It prohibits the Commission from exercising ‘any powers’ — meaning, we consider, the Commission’s powers provided for elsewhere in the FW Act — where the dispute resolution procedure prescribes a relevant limitation on those powers. For example, a dispute resolution procedure may provide that the Commission, in arbitrating a dispute, is not permitted to order the production of documents by any party. In that case s 739(3) would bar the Commission from making an order to that effect despite the power it otherwise has under s 590(2)(c). Another example is that a dispute resolution procedure may provide that the Commission is not to exercise any appeal powers despite s 604 of the FW Act, rendering the first-instance decision final. However, s 739(3) is expressed as a purely negative stipulation and cannot be read in a positive sense as authorising the conferral by a dispute resolution procedure of any additional powers upon the Commission not contained in the FW Act. Further, s 739(3) is concerned only with the exercise of the powers of the Commission and does not authorise any departure from its constitution, structure or organisation under the FW Act.

1. Section 739(5) is, we consider, concerned with the outcome of an arbitration which the Commission is authorised to undertake consistent with ss 739(3) and (4). It is expressed to operate ‘[d]espite subsection (4)’, which indicates that it operates as a limitation on the exercise of the consent arbitration power under s 739(4), and it applies to the arbitral decision which the Commission makes. It does not constitute an avenue by which a dispute resolution procedure in an enterprise agreement (being a ‘fair work instrument that applies to the parties’) may confer powers on the Commission which it does not otherwise possess under the FW Act or alter its constitution, structure or organisation. This is consistent with the way in which s 739(5) was construed by the Full Court in Endeavour Energy at [33]:

… Section 739(5) does not alter the character of the arbitration which the Commission undertakes under an enterprise agreement in the terms of the Agreement. It merely places a limit on the range of arbitrated (but not conciliated, it may be noted) outcomes available to the Commission in those cases in which the parties have agreed that the Commission may arbitrate (using, in this respect, the same formula as appears as subs (4) of s 740, on any view a private arbitration provision).

1. The Explanatory Memorandum for the Fair Work Bill (EM) provides support for our analysis. In respect of cl 739 of the Bill, the EM relevantly stated:

2735.This clause sets out what FWA can and cannot do when dealing with disputes under a term of a modern award, enterprise agreement or contract of employment.

·Subclause 595(1) provides that FWA may only deal with a dispute if it is expressly authorised to do so under the Act, and subclauses 595(2) and (3) set out how FWA may deal with disputes. For the purpose of subclause 595(1), subclause 739(1) expressly authorises FWA to deal with disputes.

2736.Where such a term requires or allows FWA to deal with a dispute, it can exercise all of its powers under Subdivision B of Division 3 of Part 5-1 (see subclause 595(4)), unless those powers are limited by the term (subclause 739(3)). FWA has general powers under clause 590 to inform itself as it sees fit, including the power to require parties to attend, conduct a conference and take evidence. Clause 595 provides that FWA can deal with a dispute before it as it considers appropriate, including by mediation, conciliation, making non-binding recommendations and expressing an opinion.

2737.Under subclause 739(4) FWA can make a binding decision in relation to a dispute if, in accordance with a term in a modern award, enterprise agreement or contract, the parties have agreed to this, whether the term refers to arbitration, final determination, making an award or order or something similar. For example, a term of an enterprise agreement could authorise FWA to arbitrate or determine (however described) a dispute under that enterprise agreement, resulting in a binding determination.

·Subclause 595(3) provides that FWA may only deal with a dispute by arbitration if expressly authorised to do so under the Bill. For the purpose of that provision, subclause 739(4) expressly authorises FWA to deal with a dispute by arbitration.

2738.Unless the dispute resolution process term provides otherwise, an arbitrated decision of FWA about a dispute will be appealable in accordance with clause 604. Similarly, if FWA holds a hearing in relation to a matter, the hearing would ordinarily be held in public. This is because all of FWA's powers and procedures under this Bill apply in relation to disputes under this Division unless limited by the parties in the term.

2739.Despite anything to the contrary in a modern award, enterprise agreement or contract of employment, FWA cannot make a binding decision that is inconsistent with the parties' rights or obligations under the Bill (including the regulations) or a fair work instrument (such as an enterprise agreement) that applies to them (subclause 739(5)). These rights and obligations can only be finally determined by a court.

·For example, FWA could not make a binding decision that would modify the way the NES or a modern award apply in a particular workplace or to determine that requirements of the Bill do not apply.

·This maintains the integrity and stability of the safety net, by ensuring that NES or a modern award[] cannot be modified other than in accordance with the processes provide[d] in the Bill so that it does not apply differently in relation to particular workplaces or employees.

1. The following propositions may be derived from the above passages in the EM:

·Section 739 was intended to be prescriptive as to what the Commission ‘can and cannot do’ under a dispute resolution procedure in (relevantly) an enterprise agreement.

·In dealing with a dispute, the Commission may exercise all its statutory procedural powers unless those powers are limited by the dispute resolution procedure pursuant to s 739(3).

·The expression ‘however described’ in s 739(4) was intended, consistent with our earlier discussion, to allow for synonymity in the expression of an agreement to arbitrate.

·Section 739(5) is concerned with the decisions which the Commission may make in an arbitration conducted under s 739(4), and is not concerned with the Commission’s power to arbitrate or the manner of discharge of the arbitral function.

1. There is nothing in the EM to suggest it was intended that, apart from a limitation on the exercise of powers of the type to which s 739(3) applies, a dispute resolution procedure could confer additional or novel powers, functions or procedures upon the Commission or require the Commission to exercise them.

1. The specific reference to the appeal function in [2738] of the EM is obviously of significance. The intended default position is clearly that the right of appeal (subject to requirement for permission to appeal being granted) for which s 604 provides will apply to any arbitrated decision. The exception to this (‘Unless the dispute resolution process term provides otherwise…’) is to be read with the last sentence in the paragraph, which causally links it with the proposition that ‘all of’ the Commission’s powers and procedures apply to the dispute resolution function under s 739 ‘unless limited by the parties in the term’. This last expression clearly refers to a limitation on the Commission’s powers under s 739(3), so that ‘provides otherwise’ is to be read as providing otherwise by way of a limitation on the power to hear and determine appeals. Thus, as mentioned at [76] above, a dispute resolution procedure in an enterprise agreement may provide that there is no capacity to appeal an arbitrated decision, in which case the Commission will be prohibited by s 739(3) from exercising its appellate functions. Paragraph [2738] of the EM does not support the proposition that a dispute resolution procedure in an enterprise agreement can effectively rewrite the statutory appeal provisions, as distinct from merely limiting them, or confer upon the Commission appeal functions for which the FW Act does not already provide.

1. The above analysis does not support the proposition that the UFU’s appeal is competent, that there is any capacity or requirement for a Full Bench of the Commission to hear an appeal from another Full Bench that has arbitrated a dispute under cl 21 of Division A of the Agreement at first instance, nor that a Full Bench of the Commission may be constituted in a circumstance not permitted by the FW Act. Section 739(4), from which the Commission derives its power to arbitrate a dispute under a dispute resolution procedure in an enterprise agreement, does not authorise the Commission, in exercising its arbitral function, to exercise other functions or engage in other procedures not otherwise provided for by the FW Act. Nor does s 739(4) authorise alterations to the constitution, structure or organisation of the Commission. Under s 739(3), the general powers of the Commission under the FW Act may be limited in a specific way by a dispute resolution procedure, but they cannot be expanded (beyond the exercise of the arbitral function) or made subject to novel variations. Thus, under this analysis, if cl 21.7 of Division A is to be construed as purporting to empower or require the Commission to hear this appeal — an issue we deal with below — it is of no valid effect because it is not authorised by the FW Act.

Decisions concerning permissions to appeal

1. The UFU and FRV submit that a number of Commission Full Bench decisions, and Federal Court single‑judge and Full Court decisions, authoritatively establish that a dispute resolution procedure in an enterprise agreement may provide, as part of an agreed arbitral process conducted by the Commission, that there is a right of appeal without any prior requirement for permission to appeal notwithstanding s 604(1) of the FW Act. It follows, they submit, that a dispute resolution procedure may likewise provide for a right of appeal to a Full Bench from a first-instance decision made by a Full Bench.

1. The first proposition may be accepted but it is necessary, in order to test the second proposition, to analyse the relevant case authorities to ascertain the statutory foundation upon which the capacity to remove the requirement for permission to appeal rests. An appropriate starting point is the 2009 decision of a Full Bench of the AIRC in Victoria Police Force v Police Federation of Australia[24] (VPF v PFA). This decision concerned an appeal against a decision of a single Member of the AIRC pursuant to a dispute resolution procedure in a workplace agreement made under the Workplace Relations Act 1996 (Cth) (WR Act). A question arose as to the basis upon which the appeal was brought because this affected the nature of the appealable error which the appellant needed to demonstrate. This question arose under a statutory framework which was, in relevant respects, markedly different from the current framework under the FW Act. Firstly, as to appeals, s 120(1) of the WR Act provided:

(1)Subject to this Act, an appeal lies to a Full Bench, with the leave of the Full Bench, against:

(a)an award or order made by a member of the Commission; and

(b)a decision of a member of the Commission not to make an award or order; and

(c)a decision of a member of the Commission under paragraph 111(1)(e); and

(d)a decision of a member of the Commission to vary, or not to vary, an award under section 812; and

(e)a decision of the Commission to vary, or not to vary, an award or workplace agreement that has been referred to the Commission under section 46PW of the Human Rights and Equal Opportunity Commission Act 1986; and

(f)a decision of a member of the Commission that the member has jurisdiction, or a refusal or failure of a member of the Commission to exercise jurisdiction, in a matter arising under this Act.

1. Second, in respect to dispute resolution processes conducted by the AIRC under a workplace agreement, s 711 of the WR Act provided:

711Commission’s powers

(1)In conducting the dispute resolution process under this Division, the Commission has, subject to subsection (2), the functions and powers:

(a)given to it under the workplace agreement; or

(b)otherwise agreed by the parties.

(2)The Commission does not have the power to make orders.

(3)The Commission must, as far as is practicable, act:

(a)quickly; and

(b)in a way that avoids unnecessary technicalities and legal forms; and

(c)if the parties have agreed, either in the workplace agreement or otherwise, that an aspect of the process is to be conducted in a particular way—in accordance with that agreement.

(4)Subdivision B of Division 4 of Part 3 of this Act does not apply in relation to the conduct of the dispute resolution process by the Commission under this Division.

1. Subdivision B of Division 4 of Part 3, referred to in s 711(4) above, contained provisions setting out the procedural powers of the Commission.

1. The following differences between the relevant aspects of the WR Act regime and the FW Act may be identified:

(1)Under s 120(1) of the WR Act, there was no capacity to appeal a substantive decision made by an AIRC Member in respect of the conduct of a dispute resolution process in a workplace agreement unless on the ground of jurisdictional error under s 120(1)(f). That was because the conduct of such a process could not result in the making of an order (s 711(2)), making s 120(1)(a) and (b) inapplicable, and s 120(1)(c)–(e) were not relevant. By contrast, s 604(1) of the FW Act allows an appeal, with permission, against any decision of a single Member of the Commission.

(2)In conducting a dispute resolution process pursuant to a workplace agreement, s 711(1) authorised the AIRC to exercise any functions and powers, other than making orders, given to it by the agreement or otherwise agreed by the parties. This plainly allowed the AIRC to exercise powers beyond those, or different to, those prescribed by the WR Act if the parties so agreed. By contrast, s 739(4) merely authorises the Commission to arbitrate where the parties agree to do so, and s 739(3) prohibits the Commission from exercising its statutory powers where limited by a dispute resolution procedure.

(3)Section 711(2) prohibited the making of orders by the AIRC. Section 595(3) authorises the Commission to make orders where the parties have agreed to arbitration, subject to any limitation on the Commission’s powers arising by virtue of s 739(3).

(4)Section 711(4) excluded the operation of the AIRC’s usual procedural powers in the conduct of a dispute resolution process pursuant to a workplace agreement. Section 595(4) authorises the exercise by the Commission of any of its procedural powers under Subdivision B of Division 3 of Part 5-1 of the FW Act, subject again to the operation of s 739(3).

1. In VPF v PFA, the AIRC Full Bench first determined (at [11]–[12]) that an appeal could be brought pursuant to s 120(1)(f) against a decision made in the conduct of a dispute resolution process pursuant to s 711 (and indeed against any decision of a single Member of the AIRC) if there was jurisdictional error on the part of the primary decision-maker. Second, the Full Bench found that the appeal in the case before it could be separately brought under the dispute resolution procedure in the agreement in question and s 711(1)(a), and that appeal was not confined to consideration of jurisdictional error:

[13] We deal now with Victoria Police’s contention that an appeal can be brought pursuant to cl 19.5.5 of the Agreement and s 711(1)(a) of the Act. In our view the terms of cl 19.5.5 clearly indicate that the parties intended to confer a right of appeal, subject to leave being granted, to a Full Bench in the circumstances of this case. The submission that cl 19.5.5 is intended to reflect the rights conferred by s 120 of the Act is untenable. Section 120(1)(a) permits an appeal against an order. Section 711(2) provides that in conducting a dispute resolution process under the terms of a workplace agreement the Commission cannot make orders. Section 120(1) does not provide for an appeal against a decision or determination (which is not an order) unless there is jurisdictional error in which case s 120(1)(f) is available. Any decision or determination which does not involve jurisdictional error cannot be appealed under s 120. By including in cl 19.5 an appeal against a ‘decision/determination’ the parties have indicated an intention to provide for an appeal in circumstances where s 120 would not be available, assuming the decision or determination was not affected by jurisdictional error of the kind potentially within s 120(1)(f). Clause 19.5.5 therefore provides a foundation for the appeal. Because that foundation is not confined to jurisdictional error, as s 120(1)(f) is, we shall deal with the appeal under cl 19.5.5.

1. The reference to s 711(1)(a) of the WR Act is important because it was under that provision that the AIRC was authorised to hear an appeal which was not otherwise permitted by s 120(1) of the WR Act. As earlier stated, s 711(1)(a) finds no equivalent in the FW Act.

1. VPF v PFA was followed in University of Western Sydney v Fletcher[25] (Fletcher), which was another case decided by an AIRC Full Bench under the WR Act and also involved an appeal from a decision made pursuant to a dispute resolution procedure in a workplace agreement. In that decision, the Full Bench determined that, notwithstanding that the right of appeal under s 120(1) was conditioned by the requirement for the grant of leave to appeal, the appeal before it did not require leave because the agreement provision pursuant to which the decision under appeal was made established a separate and unconditional right of appeal.[26]

1. The next decision of significance was AMWU v Silcar[27] (Silcar) which was decided by a Full Bench of Fair Work Australia (as the Commission was then named) under the provisions of the FW Act. The decision concerned an appeal against a decision which was, in part, made pursuant to s 739 and the disputes settlement term in an enterprise agreement. A question arose in the appeal as to whether permission to appeal under s 604(1) was required, in circumstances where the term provided for a ‘right of appeal … to a Full Bench’ with respect to any arbitral decision made pursuant to the term. The Full Bench said:[28]

1. The UFU further submits, under grounds 4 and 5, that the Howden scheme is an ‘agreed’ income protection policy/scheme in a functional sense in that FRV willingly and for a long time implemented their role by making payments into the Trust, notwithstanding that they did not have the Deed between UFU and ARMS (although they must have known that such a document existed). In any event, the essential features of the Howden scheme were known to and ‘agreed’ by both parties: (1) it would protect income and provide other benefits; (2) it would do that through a discretionary trust provided by Howden; (3) ‘Trust Cover’ for employees was ‘fully discretionary’ (but the Trust was obliged to respond in the best interest of covered employees); (4) insurance underwriting was provided by Arch; (5) the cost to the employees would be the same as under the previous scheme; and (6) FRV would reimburse that cost. The Full Bench’s finding that there was no agreement because of a range of matters not told to FRV is contrary to the evidence: that FRV did know, and did agree, to making payments into a discretionary trust, and plainly had actual or constructive knowledge that there would be a Trust Deed.

1. As to ground 6, the UFU contends that the Full Bench erred in failing to make the orders sought by the UFU if the Howden scheme is properly to be characterised as an ‘agreed income protection policy/scheme’. There was no reason to refuse any relief on a discretionary basis because it is doubtful that the Commission has any true discretion when the parties submit for private arbitration a question about their pre-existing legal rights. In any event, it is perverse to suggest that the substantive dispute between the parties should be resolved against it for non-compliance with the Production Decision, which it had now complied with in any case. Any concern held by the Full Bench about the lawfulness or appropriateness of the payments from the Trust to the UFU has no rational bearing on the quantum of payments that FRV is obliged to make to the Trust.

1. FRV submits that the Full Bench’s characterisation of the Howden scheme was correct. The Full Bench recognised that a ‘scheme’ under cl 48 is not necessarily confined to an insurance policy provided by an insurance company, but this alone does not require a finding that the Howden scheme falls with the scope of the clause. The Deed does not ‘deal with’ income protection: it omits any reference to income protection, the Trustee has an absolute discretion as to whether and how to execute the purposes of the Trust, and ‘Member Risks’ are as determined by the Trustee in consultation with the Advocate. Although the 2023 PDS makes reference to ‘loss of income’ as a Member Risk, Member Risk does not ‘include’ loss of income unless the Trustee says so, and then only until the Trustee decides otherwise. Likewise, the purchase of insurance is entirely discretionary. FRV submits that the Howden scheme does not make provision for payments that ‘protect’ income in the sense of guarding it against injury or danger because of its discretionary nature. In considering that the employees who voted on the Agreement would not have contemplated that cl 48 allowed a scheme of this nature, the Full Bench correctly undertook an objective contextual assessment of what the voting cohort would have understood by the language used in the clauses in an enterprise bargaining process. The funds paid to the UFU are relevant to whether the Howden scheme can properly be characterised as a scheme ‘for all employees covered under this Division’ because, first, the scheme has conferred significant benefits on a person that the clause was not designed to benefit and, second, the scale and undisclosed nature of the payments suggest that a substantial purpose of the Howden scheme was to allow for the conferral of benefits on the UFU.

1. It is also submitted by FRV that the Howden scheme was not ‘agreed’ under cl 48 at the meeting on 21 December 2022 because the evidence demonstrates that its essential features were not disclosed to FRV, namely:

·it is an alternative risk management scheme;

·the scheme entails the use of a discretionary trust;

·the risks managed under the scheme are at the absolute discretion of the Trustee, and therefore income protection is not a mandated risk to be covered by the scheme;

·whether an FRV employee is permitted to join the Trust is at the Trustee’s discretion;

·the Trustee is entitled to admit UFU members (who are not FRV employees) to membership of the Trust;

·only a small proportion of the premium is to be used to pay for income protection insurance premiums and payments made into the Trust cover claims under $200,000 directly;

·the Trustee is not obliged to make any payment to a Trust Member for income protection; and

·the Trustee had the ability to use Trust funds to confer benefits on the UFU.

1. FRV also submits that the grant of relief was discretionary since the Full Bench was obliged to take into account ‘equity, good conscience and the merits of the matter’ under s 578(b) of the FW Act, and the relief sought by the UFU included the determination of future rights. There was no error in the Full Bench’s decision to refuse the relief sought by the UFU: the UFU had conceded in related Court proceedings that its non-compliance with the Production Order could be taken into account by the Commission in its final arbitral decision, and the payment of Trust monies funded by FRV to the UFU was never disclosed to FRV and has never been properly explained.

1. After the appeal hearing, the UFU, without leave of the Commission or the consent of FRV, filed a document evidencing an amendment to the definition of ‘Member’ in the Deed made on 22 May 2025. This document cannot be used to demonstrate error in the decision of the Full Bench. We do not propose to have regard to it, and our consideration of the appeal will be based on the terms of the Deed as they were at the time of the hearing before the Full Bench.

Consideration

1. It is necessary to begin by construing cl 48.1 of Division A of the Agreement. The subject matter of the provision is an ‘income protection policy/scheme’. Income protection, on its ordinary meaning, means the provision to a worker of financial support, usually by way of fixed periodic payments of a defined quantum, when the worker is unable to work as a result of injury or illness. An entitlement to income protection is relatively common in bargained industrial instruments such as enterprise agreements, and has been considered as such in a variety of contexts.[58] The usual way in which income protection is afforded (both generally and in the industrial context) is by way of an insurance policy pursuant to which the insured person has an enforceable right to a defined quantum of financial support in prescribed circumstances pertaining to illness and injury, and this, in our view, colours the way in which an industrial entitlement to income protection is to be understood. In this context, the reference to ‘policy’ in cl 48.1 means an income protection insurance policy. The inclusion of the additional word ‘scheme’ in relation to income protection must be read as connoting something other than an insurance policy, and hence we consider that the Full Bench was correct in interpreting the reference to a ‘scheme’ as including an income protection arrangement which involved something other than solely an insurance policy.

1. The ‘income protection policy/scheme’ must be ‘for all employees covered by this Division’. Because each division of the Agreement, as earlier explained, includes the same income protection provision, this requirement effectively applies to all employees covered by the Agreement. The requirement involves three things. First, the policy or scheme must be ‘for’ the covered employees, which (like the Full Bench) we read as meaning for their benefit. Second, it must be for ‘all’ employees, so that the policy or scheme must not be one which may apply to only some of the employees covered by the Agreement. Third, the policy or scheme is not ‘for’ employees or other persons who are not covered by the Agreement.

1. The obligation imposed by cl 48.1 is for FRV and the UFU to ‘consult and implement’ an income protection policy or scheme that is ‘agreed’. The references to ‘consult’, ‘implement’ and ‘agreed’ are contextually informed by cl 16 of Division A. Clause 16.4.4 provides that the Consultation Committee established by cl 16 is the mechanism by which consideration is to be given and recommendations and decisions made in respect of matters which the Agreement requires to be the subject of consultation. Decision-making by the Consultation Committee is to be by ‘consensus’: cl 21.5.1. Consequently, insofar as cl 48.1 requires FRV and the UFU to ‘consult’ as to an income protection policy or scheme, that carries with it the process of consideration, recommendation and consensus decision-making for which cl 16.4.4 provides. In this context, we consider that ‘agreed’ in cl 48.1 refers to an agreement reached in the form of a consensus decision made by the Consultation Committee, which consists of equal numbers of representatives from FRV and the UFU with decision-making authority. The obligation to ‘implement’ is therefore to be understood as one to give effect to a decision of the Consultation Committee in respect of an income protection policy or scheme. Therefore, any agreement in respect of such a policy or scheme must necessarily be located in a decision of the Consultation Committee.

1. Before we give direct consideration to grounds 5 and 6 of the appeal, which concern whether the Howden scheme can be characterised as an ‘income protection policy/scheme’ and whether it was ‘agreed’, it is necessary to observe the subject matter of the UFU’s case, and the orders it sought in respect of the dispute, had shifted significantly by the time of the hearing before the Full Bench. Its application as filed claimed that the dispute was about an apprehended reduction of the amount that FRV was required to pay under the Reimbursement Order, as adjusted. The relief sought by the UFU was an order that ‘FRV continue to pay the full amount of the income protection allowance as fixed by the Order of Commissioner Wilson dated 21 October 2022’. However, by the time of the hearing, the UFU’s focus had shifted towards the question of compliance with cl 48.1, and the relief it sought was a declaratory order that the Howden scheme was an ‘agreed income protection policy scheme’ under cl 48.1 together with a new order requiring a specified reimbursement amount to be paid by FRV in respect of the Howden scheme.

1. This shift in the UFU’s position is understandable, since the proposition that FRV was required by the Reimbursement Order to pay the amount of $55.22 per week per employee in respect of the Howden Scheme is unsustainable. The Reimbursement Order is expressed as applicable only to employees who have income protection insurance under the arrangements agreed from time to time. FRV’s obligation under the Reimbursement Order, as made, is to reimburse employees for their premiums up to a maximum amount of $50.43 per week (or such other amount as agreed between FRV and the UFU). Although the 2023 Adjustment Order makes reference to a non-existent ‘income protection reimbursement allowance’, the reference to the amount being adjusted ($50.43) makes it plain enough that the relevant effect of the Adjustment Order was to vary the maximum reimbursement amount in the Reimbursement Order by increasing it to $55.22 per week. To the extent that the UFU ventured to submit in the appeal hearing that the Adjustment Order involved some alteration to the scheme to which the reimbursement payment related, that submission is rejected. There is no hint in the Commissioner’s reasons that the UFU disclosed that the Reimbursement Order required variation by reason of some change in the income protection arrangements.

1. The evidence is that the premium being paid on behalf of each employee for income protection insurance since 1 January 2023 is the amount of $5.42 per week. Therefore, even if the Howden scheme is characterised as an agreed arrangement, that amount is all that FRV has been required to reimburse to employees pursuant to the Reimbursement Order, as adjusted, since that date. The UFU did not attempt to demonstrate that, separate from the terms of the Reimbursement Order, there was an agreement with FRV that FRV would pay an amount equal to the maximum amount prescribed by the Reimbursement Order even if this was in excess of what was necessary to reimburse employees for income protection insurance. Certainly, the minutes of the Consultation Committee meeting on 21 December 2022 make no reference to any such agreement. On one view that renders the issues decided in the Full Bench’s Substantive Decision, and the appeal grounds, somewhat academic. Nevertheless, we turn to them now.

1. In respect of ground 5, we consider that the Full Bench’s conclusion that the Howden scheme did not constitute an ‘income protection policy/scheme’ for the purpose of cl 48.1 was correct. Although the Howden scheme permits the provision of income protection to employees, it neither has this as its purpose nor requires it. The purpose of the Trust, as identified in cl 2.2 of the Deed, is to mitigate and protect against ‘Member Risks’ and maintain funding to meet ‘Claims’ and purchase insurance. However, ‘Member Risk’ is not defined to mean, or even necessarily include, loss of income due to illness or injury; rather, it is for the Trustee in consultation with the UFU (in its role as ‘Advocate’) to determine what the relevant risks are. A ‘Claim’ is any claim which the Trust is intended to meet, as outlined in the 2023 and 2024 PDS. Loss of income is just one of a range of risks referenced in the 2023 PDS along with death, accidental dental injury, broken bones and ambulance cover. The Side Letter contemplates a range of additional risks being accommodated by the scheme. Insurance cover may be obtained via an insurance policy, but it is for the Trustee to determine whether to purchase an insurance policy, what Member Risks that policy will cover, and what thresholds will apply in respect of Claims made by Members. The Trustee has an obligation under cl 12.3 to protect the rights and interests of Members and to act in their best interests, but retains an absolute discretion under cls 9.2, 9.3 and 12.2 as to whether to accept any Claim. The 2023 PDS emphasises that the Trustee retains this absolute discretion in respect of ‘Trust Cover’ — that is, Claims which might be met out of the Trust fund. The 2023 PDS explains that insurance coverage will apply for claims over the ‘Member’s Deductible and the Trust Cover’ but, as stated, the Trustee retains a discretion over whether, and to what extent, insurance coverage is purchased.

1. These fundamental characteristics of the Howden scheme means that it cannot be characterised as an ‘income protection policy/scheme’ for two major and related reasons. The first, as the Full Bench found, is that it is a general risk mitigation scheme rather than one concerned with income protection. Although, as the Full Bench accepted, it is possible that a policy or scheme might cover other risks and still be characterised as one concerned with income protection, this is a matter of degree and emphasis. The lack of any obligation under the Deed to actually provide income protection, and the capacity to cover any Member Risks as determined by the Trustee in consultation with the UFU, makes it impossible to characterise the Howden scheme as concerned with income protection. Second, the discretionary nature of the Trust means that it cannot be characterised as ‘protecting’ Members in the sense of providing them with a guarantee, right or entitlement in the event that they lose income because of illness or injury. The only entitlement they may have is to claim against any insurance policy that the Trustee chooses to purchase, but only in respect of a Claim, and that part of such a Claim, that exceeds the prescribed threshold. Mr Harms’ evidence was that the claim threshold for this purpose was $200,000. Members have no right for Claims to be paid out of the Trust fund, as the 2023 PDS emphasises, and the 2024 PDS warns that a depletion of Trust funds may mean that nothing can be paid out to Members. Even where the Trustee exercises its discretion to meet a Claim based on income loss out of the Trust fund, the Member has no entitlement to be paid any particular amount. Mr Harms gave evidence as to how the Trust has operated in practice, including that income protection payments have constituted the large majority of payments made from the Trust fund and that claims are paid out on the basis of a ‘salary cap’ of $2,100 per week, but this is a result of the exercise of the Trustee’s discretion rather than pursuant to any legal entitlement.

1. Further, the Howden scheme cannot be characterised as one ‘for all employees’ covered by the Agreement. As to membership, cl 7.1 provides that the Trustee retains a complete discretion as to who is admitted as a Member of the Trust, which means that employees covered by the Agreement do not have a right to membership and may be excluded by the Trustee. Conversely, persons who are members of the UFU but are not covered by the Agreement may be admitted as Members. Mr Harms’ evidence was that this was intended to allow persons such as unemployed or retired firefighters, FRV non-operational staff and Victorian UFU officials to join, although Mr Marshall was the only person in this category who had joined. Thus, the Agreement coverage and the coverage of the scheme do not coincide as required by cl 48.1.

1. It is also necessary to take into account the Advocate Agreement. Because the Advocate Agreement requires payments to be made from the Trust fund for activities said to be related to the operation of the Trust, it must be regarded as a fundamental feature of the Howden scheme as it has been since 28 September 2023, when the agreement was executed. The services which the UFU is required to provide under the Advocate Agreement lack a logical relationship to the ‘Service Fee’ which must be paid from the Trust fund to the UFU for those services. A number of those services, such as assisting with complex Member claims, communicating with Members about Trust performance, benefits and services, and referring requests for advice to ARMS and Howden, are all tasks which we would expect that the UFU would undertake in any event, at least for its fee-paying members. A number of the ‘services’ are in the nature of promoting ARMS’ business, including by describing it as a ‘Platinum Sponsor’ at events and in publications. One might have thought that ARMS itself, rather than Trust funds, should be paying for promotional activity of this nature. It is not apparent what cost to the UFU would attach to the provision of these services, and the setting of the Service Fee at an arbitrary $30,000 per month for 2023, then doubling it to $60,000 per month from 2024, was left unexplained. Also left unexplained was the back-payment of the Service Fee under the Advocate Agreement to 1 January 2023, the day the Howden scheme came into effect.

1. The payments made pursuant to the Advocate Agreement are a significant feature of the Howden scheme. Mr Harms’ evidence was that annual contributions to the Trust amount to about $10 million per year, meaning that the current Service Fee consumes about seven percent of the contributions made to the Trust. Although it did not become aware of this until the hearing before the Full Bench, these payments to the UFU are funded by FRV. Having regard to these matters, we do not consider that the arrangements for which the Advocate Agreement provides reasonably relate to the subject matter of income protection or are substantially for the benefit of FRV’s employees. This affirms the conclusion reached by the Full Bench, without knowledge of the terms of the Advocate Agreement, concerning the payments made by the Trust to the UFU.

1. The UFU’s submissions in support of ground 5 of its appeal challenge the Full Bench’s reasoning in various respects but, as the UFU accepted, the ‘correctness standard’[59] applies to this appeal. Accordingly, the issue is whether the Full Bench’s conclusion the subject of appeal ground 5 was correct and, for the reasons stated, we consider that it was. In any event, and for completeness, we will address the five instances of error alleged by the UFU. As to the first of these, while as already stated the Deed read in conjunction with the 2023 and 2024 PDS accommodates loss of income being dealt with as a Member Risk, there is nothing in the Deed that requires the Trustee to deal with loss of income as such a risk or to pay out claims for income loss from the Trust fund to any particular amount or at all. The fact that the Trustee has purchased an insurance policy for income protection is not sufficient to render the Howden scheme one for income protection since the Trustee is not required to maintain that policy, and the policy itself only protects income loss above a prescribed threshold below which it is a matter for the Trustee as to whether any Claim is to be met. The limited protection provided by the insurance policy is indicated by the cost of the premium: $5.42 per employee per week, compared to the $50.43 premium for the ATC policy which was in place until the end of 2022.

1. The second alleged error misstates the Full Bench’s reasons: the Full Bench did not construe cl 48.1 in the narrow way suggested by the UFU but, rather, accepted that an ‘income protection policy/scheme’ might involve something other than an insurance policy purchased from an insurance company. The question was whether the Howden scheme specifically answered the description of being an ‘income protection policy/scheme’ — a question which the Full Bench, in our view, answered correctly. As to the third alleged error, we do not consider that the Full Bench engaged in impermissible conjecture about the subjective state of mind of employees when they voted upon the Agreement; rather, we consider that the Full Bench ascertained the intention of the employees who made the Agreement by way of an objective consideration of the terms of cl 48.1 as compared to the essential features of the Howden scheme. The fourth asserted error has as its premise that the payments made to the UFU were ‘expenses’ to a ‘service provider’ which did not detract from the Howden scheme’s character as one concerned with income protection. The UFU is not entitled to allege error on this basis because it called no evidence before the Full Bench to explain the nature and purpose of those payments, refused to provide the documents relevant to those payments, and decamped from the proceedings rather than address the issue. With the benefit of the documents which the UFU refused to provide to the Full Bench, it is apparent to us for the reasons earlier stated that the payments to the UFU do not constitute genuine expenses of the Trust but are rather more in the nature of a secret commission paid to the benefit of the UFU. As to the fifth alleged error, we consider that the same documents demonstrate that the payments to the UFU are a part of the overall Howden scheme and consequently are relevant to its characterisation.

1. We therefore reject ground 4 of the appeal. Having failed on this ground, it is strictly speaking unnecessary to decide the UFU’s ground 5. If the Howden scheme was not an ‘income protection policy/scheme’ within the meaning of cl 48.1, it does not matter whether it was agreed or not. In any event, we consider that the Full Bench’s conclusion that the Howden scheme was not ‘agreed’ within the meaning of cl 48.1 was correct. Any agreement made in respect of the Howden scheme must be located in the decision made at the Consultation Committee on 21 December 2022, noting that the first order sought by the UFU is premised upon an agreement having been made at this meeting. In the absence of any witness evidence as to what occurred at that meeting, the only evidence about it is contained in the minutes of the meeting. Mr Marshall’s proposal was scant and did not contain any description of or even reference to the fundamental features of the Howden scheme. A layperson would be likely to understand the proposal, as described in the minutes and without more, as being that the existing insurance provider and policy would, from 1 January 2023, be replaced by a new policy obtained by Howden as the broker and underwritten by Arch.

1. Mr Marshall’s proposal referred to the UFU and FRV having ‘previously met to discuss the new arrangements’. The only evidence about such prior discussions was given by Ms Campanaro and Ms Schroder. The precise terms of the evidence Ms Campanaro gave in her witness statement are noteworthy. Ms Campanaro recounted that she and Mr Marshall had initial discussions with Ms Schroder and Mr Braid (a FRV representative at the 21 December 2022 Consultation Committee meeting) about changing to ‘a different provider’, to which they did not object. A Consultation Committee meeting on 12 October 2022 endorsed an extension of the existing arrangements until 1 January 2023 to allow time to decide upon ‘a new provider’. Ms Campanaro said that, on 27 October 2022, she and Mr Marshall met with representatives of Howden, including Mr Harms, who explained their ‘alternative risk scheme using a discretionary trust’. Ms Campanaro then said:

I remember that at some point after this meeting, Mr Marshall and I told both Ms Schroder and Mr Braid that we were now considering this proposal. I remember that we told them:

(a)that a ‘trust’ would be used;

(b)that the premium would be the same as was paid under the Protect scheme;

(c)that there would be ‘enhanced’ benefits compared to Protect, such as health insurance cover.

I also remember that we did not say the name ‘Howden’ because we were treating the provider as a confidential matter. Ms Schroder and Mr Braid did not raise any objection to the scheme we described.

1. Ms Schroder gave evidence (for the UFU) via a brief witness statement to the effect that, in the months leading up to the 21 December 2022 meeting, she recalled having discussion with Ms Campanaro ‘about a new income protection scheme which the UFU was proposing to have approved by the Consultative Committee under the enterprise agreement’, and that this ‘involved the use of a discretionary trust’. Ms Schroder also said that while she was a member of the FRV Executive Leadership Team (ELT), it was apparent to her that the ELT members, including Mr Braid, ‘also [k]new that the proposed scheme involved the use of a discretionary trust’. Ms Schroder did not identify how this became apparent to her or when the ELT meetings referred to occurred, and she was not cross-examined about this.

1. Taking this evidence at its highest, it does not come close to demonstrating that the essential features of the Howden scheme were disclosed to Mr Braid, or anyone at FRV, prior to the 21 December 2022 meeting. A mere statement that the new scheme would involve the use of a discretionary trust does not say much about it, particularly when communicated to non-lawyers. There was no reference to it being an ‘alternative risk management scheme’ rather than involving a conventional insurance arrangement. The further information which Ms Campanaro says she conveyed was incorrect. Her reference to the ‘premium’ being the same implied the continuation of an insurance arrangement with the same premium, which was of course not the case. Ms Campanaro’s further statement that there would be enhanced benefits including ‘health insurance cover’ was wrong: the Deed does not require the purchase of health insurance cover, and there is no evidence that the Trustee has in fact purchased health insurance for the benefit of FRV employees covered by the Agreement (Mr Harms’ evidence was that it makes a fixed contribution to the cost of health insurance taken out by Members). Accordingly, the evidence does not support the proposition that the minutes of the 21 December 2022 meeting are to be read as informed by a prior understanding of the essentials of the Howden scheme. It might be added that there is no evidence that the name ‘Howden’ was ever mentioned prior to the meeting. Our observations here ought to sound a caution to parties dealing with each other about commercial documents and arrangements ought to involve, at early stages, people with better subject-matter expertise about those areas.

1. It is likely that Mr Marshall could have provided the Consultation Committee with a draft of the Deed, together with the Side Letter, on 21 December 2022, since they were both executed only two days later, but he did not do so then or later. His letter to Ms Schroder of 30 December 2022, which confirmed the engagement of Howden, provided no further information about the arrangement, and did not mention anything about the Deed which had been executed the week before or the critical role of ARMS as the Trustee. What appears to have followed is that various persons at FRV gradually became aware of the details of the Howden scheme. In her request for further information on 13 January 2023, Ms Schroder demonstrated a more sophisticated understanding of the nature of the new arrangement but, interestingly, gave no evidence about this communication or how she acquired this understanding. In his letter of 23 October 2023, Mr Matthews demonstrates some understanding of the role of the discretionary Trust in the arrangement but still appears to consider it as, primarily, a means by which income protection insurance cover was to be procured for FRV employees. It is only in the correspondence sent by the FRV Commissioner, Mr Freeman, on 1 May 2024 that it becomes clear that FRV has acquired a relatively complete understanding of the Howden scheme based on information which was said to have been recently provided to FRV, noting that the UFU had sent the Deed to FRV’s tax advisors on a confidential basis in November 2023.

1. The UFU contends that FRV’s agreement can be inferred from its practical implementation of the Howden scheme following the 21 December 2022 Consultation Committee meeting and its acquisition of knowledge of the essential features of the scheme. However, as already discussed, the evidence does not support the proposition that the Howden scheme was ‘agreed’, in the sense contemplated in cl 48.1, at the 21 December 2022 meeting, and there is no evidence of any endorsement of the scheme based on knowledge of its essential elements at any later Consultation Committee meeting. It is fair to say that FRV failed to undertake any due diligence as to what it thought it was agreeing to at the 21 December 2022 meeting, and subsequently acquiesced in what was effectively a fait accompli engineered by the UFU until such time as it became aware of the FBT implications of what had been put in place. However, an agreement within the meaning of cl 48.1 cannot be constructed on this basis. We do not consider that the scheme was capable of being agreed to within the meaning of clause 48.1 in the absence of the Deed having been disclosed to FRV at the time or disclosure of material terms of the Deed (which did not occur).

1. Moreover, FRV continuously remained unaware of critical features of the Howden scheme until well after the proceedings were commenced: it was not until 2025 that FRV obtained direct access to the Deed and knowledge of the existence of the Side Letter, the Advocate Agreement and the payments to the UFU by the Trust. The extraordinary behaviour of the UFU in strenuously resisting, even in the face of Commission orders, the disclosure to FRV of the documents governing the Howden scheme stands squarely against the proposition that FRV has in any sense knowingly agreed to that scheme or that the UFU had provided FRV with sufficient material detail at the relevant times about the scheme to permit a finding that it was ‘agreed’ to.

1. Ground 5 of the appeal is therefore rejected. Ground 6 would only arise for consideration if the UFU succeeded on both of grounds 4 and 5, which it has not. It is therefore unnecessary to deal with ground 6 except to observe that consideration as to whether to make the second order sought by the UFU, which would impose new obligations on FRV to make reimbursement payments in respect of the Howden scheme, would plainly require the exercise of a discretion. We agree with the Full Bench’s observation that the UFU’s regrettable conduct in these proceedings would weigh against the exercise of the discretion in the UFU’s favour. We would also add that the UFU’s lack of candour concerning the proposed Howden scheme at the 21 December 2022 meeting, which was inconsistent with its obligation under cl 16 of Division A of the Agreement to engage in ‘full, meaningful and frank discussion’ concerning the proposal, and its refusal ever since to disclose or provide access to the relevant documents and other information in response to reasonable requests from FRV would also count against the exercise of any discretion to require FRV to continue to participate in the Howden scheme.

1. We would therefore dismiss the appeal if it were within jurisdiction.

PRESIDENT

Appearances:

N Wood SC with J Fetter, counsel, for the United Firefighters’ Union of Australia.
R Sweet KC with B Avallone, counsel, for Fire Rescue Victoria.

Hearing details:

2025.

Melbourne:

13 May.

[1]  AG847853.

[2]  [2025] FWCFB 54.

[3]  PR779526; [2024] FWC 2619.

[4]  PR779768.

[5]  [2024] FWC 2839.

[6] [2025] FCA 74.

[7]  PR747084.

[8]  [2023] FWC 2020.

[9]  PR768712.

[10] Additionally, s 617 prescribes when a function or power must be exercised by an Expert Panel, which also comprises more than one Commission member.

[11] [2015] FCAFC 123, 235 FCR 305 (‘ALS’).

[12] [2016] FCAFC 82, 244 FCR 178, 260 IR 231.

[13] [2025] FCAFC 7.

[14] [2017] FCA 1515.

[15] [2020] FCA 595.

[16] [2020] FCA 1694.

[17] [2001] HCA 16, 203 CLR 645, 103 IR 473.

[18] Ibid [32].

[19] [2013] HCA 5, 251 CLR 533.

[20] Boral Resources (NSW) Pty Ltd v Transport Workers’ Union of Australia[2010] FWAFB 8437, 202 IR 135; United Firefighters' Union of Australia v Country Fire Authority [2015] FCAFC 1 [248].

[21] See CFMMEU v Falcon Mining Pty Ltd [2022] FWCFB 93 [68].

[22] [1956] HCA 22, 94 CLR 554, 560.

[23] [1982] HCA 2, 148 CLR 88, 96.

[24] [2009] AIRCFB 146, 178 IR 275.

[25] [2009] AIRCFB 368, 183 IR 256.

[26] Ibid [8].

[27] [2011] FWAFB 2555, 208 IR 33 (‘Silcar’).

[28] Ibid. Endnotes have been incorporated into the quote.

[29] Soliman v University of Technology, Sydney [2011] FWAFB 1427, 208 IR 1.

[30] Silcar[2011] FWAFB 2555, 208 IR 33 [17].

[31] [2013] FWCFB 8557, 237 IR 180 (‘DP World’).

[32] [2013] FCA 659, 213 FCR 479, 234 IR 402.

[33] DP World[2013] FWCFB 8557, 237 IR 180 [24].

[34] ALS [2015] FCAFC 123, 235 FCR 305 [48]–[50].

[35] [2024] FCAFC 84, 304 FCR 219.

[36] Transcript, 11 March 2025 PNs 520–534.

[37] Ibid PNs 551–556.

[38] Ibid PNs 596–607.

[39] Ibid PN610.

[40] Ibid PN635.

[41] Ibid PNs 637–639.

[42] Ibid PNs 641–653.

[43] Ibid PN654.

[44] Ibid PN672.

[45] Ibid PNs 654–679.

[46] Ibid PNs 680–681.

[47] Ibid PNs 682–697.

[48] Ibid PN700.

[49] Ibid PNs 702–704.

[50] Ibid PNs 705–724.

[51] Ibid PN726.

[52] Ibid PN739.

[53] Ibid PN748.

[54] Ibid PNs 762–764.

[55] Ibid PNs 1027–1028.

[56] Transcript, 13 May 2025 PNs 622–636.

[57] [2013] HCA 18, 249 CLR 332.

[58] See e.g. Kentz v CEPU [2017] FWCFB 2600; DP World (Fremantle) Ltd v CFMMEU[2019] FWCFB 3965; AMOU v Sydney Ferries Corporation [2009] FCAFC 145, 190 IR 193.

[59] Moore (a pseudonym) v The King [2024] HCA 30 [14]–[15]; Warren v Coombes [1979] HCA 9, 142 CLR 531 at 552.

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