United Voice v AHS Hospitality Pty Ltd

[2015] FWC 4283

[2015] FWC 4283

FAIR WORK COMMISSION

REASONS FOR DECISION

Fair Work Act 2009
s.236 - Application for a majority support determination

United Voice
v
AHS Hospitality Pty Ltd
(B2015/53)

COMMISSIONER HAMPTON ADELAIDE, 1 JULY 2015

Majority support determination sought - housekeeping staff provided to major hotel - whether majority of employees wish to bargain - application opposed - ballot conducted - majority seek to bargain - whether group of employees fairly defined - two “executive”/supervisory employees of a related employer not included in scope - all employees of the employer under modern award at the hotel to be covered - whether group of employees geographically, operationally or organisationally distinct - whether employees of related company to be included - group defined objectively - group fair - whether reasonable in all of the circumstances that a determination be issued - determination made.

1. Background

[1] This matter concerns an application by United Voice for a majority support determination pursuant to s.236 of the Fair Work Act 2009 (the Act). United Voice sought that a determination be made relating to housekeeping and cleaning staff employed by AHS Hospitality Pty Ltd (AHS Hospitality) at the Stamford Grand Adelaide; being an international hotel located in Glenelg, South Australia. The application originally relied upon one or more employee petitions conducted by the Union to support its contention that a majority of the relevant employees wished to commence bargaining for an enterprise agreement.

[2] AHS Hospitality opposed the application, and amongst other grounds, it raised concerns about the conduct of the petitions. Those concerns included the capacity for the employees, many of whom were from non-English speaking backgrounds, to understand the petition and the suggestion that employees may have completed the petition over a period of time in the context of a workplace with relatively high staff turnover.

[3] At the direction of the Commission, and with the concurrence of the parties, a secret ballot was conducted by the Australian Electoral Commission (AEC). This was undertaken consistent with the powers established by s.237(3) of the Act.

[4] The ballot was declared by the AEC on 5 June 2015 and the result was that a majority of eligible employees wished to bargain with AHS Hospitality for an enterprise agreement covering housekeeping staff at the Stamford Grand.

[5] In light of the AEC ballot, AHS Hospitality accepted that a majority of employees want to bargain. However, the employer did not agree to bargain and opposed the majority support determination on the basis that the group of employees who would be covered was not fairly chosen. In addition, AHS Hospitality contended that it would not be appropriate to make the determination in those circumstances.

[6] The dispute about the group of employees was based on the fact that two “Executive Housekeepers”, employed by an apparently related company (AHS Management Pty Ltd), were not to be included in the coverage of the proposed enterprise agreement. 1

[7] Both parties filed materials and submissions dealing with the disputed elements and requested that the Commission determine the application on that basis without conducting a hearing.

[8] Having considered the materials filed, I was satisfied that the various requirements for the making of a Majority Support Determination had been met and it was reasonable in all the circumstances that the determination be made. A Majority Support Determination 2 was issued by the Commission on 26 June 2015.

[9] In the circumstances, I also indicated that I would issue brief reasons for decision dealing with the disputed elements. It is also appropriate that I include some observations about the consequences of the Determination to assist with the bargaining process.

2. The statutory requirements

[10] Sections 236 and 237 of the Act provide as follows:

“236 Majority support determinations
(1) A bargaining representative of an employee who will be covered by a proposed single-enterprise agreement may apply to the FWC for a determination (a majority support determination) that a majority of the employees who will be covered by the agreement want to bargain with the employer, or employers, that will be covered by the agreement.

(2) The application must specify:

(a) the employer, or employers, that will be covered by the agreement; and
(b) the employees who will be covered by the agreement.

237 When the FWC must make a majority support determination
Majority support determination

(1) The FWC must make a majority support determination in relation to a proposed single-enterprise agreement if:

(a) an application for the determination has been made; and
(b) the FWC is satisfied of the matters set out in subsection (2) in relation to the agreement.

Matters of which the FWC must be satisfied before making a majority support determination

(2) The FWC must be satisfied that:

(a) a majority of the employees:

(i) who are employed by the employer or employers at a time determined by the FWC; and
(ii) who will be covered by the agreement;

want to bargain; and
(b) the employer, or employers, that will be covered by the agreement have not yet agreed to bargain, or initiated bargaining, for the agreement; and
(c) that the group of employees who will be covered by the agreement was fairly chosen; and
(d) it is reasonable in all the circumstances to make the determination.

(3) For the purposes of paragraph (2)(a), the FWC may work out whether a majority of employees want to bargain using any method the FWC considers appropriate.

(3A) If the agreement will not cover all of the employees of the employer or employers covered by the agreement, the FWC must, in deciding for the purposes of paragraph (2)(c) whether the group of employees who will be covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.

Operation of determination

(4) The determination comes into operation on the day on which it is made.”

3. Satisfaction that the determination can and should be made

Matters not now in dispute

[11] United Voice is a bargaining representative of one or more of the relevant employees and it has made an application as required by s.236 of the Act.

[12] It is now evident that a majority of the relevant employees of AHS Hospitality, who will be covered by the proposed single-enterprise agreement, want to bargain. This satisfies s.237(2)(a).

[13] AHS Hospitality has not agreed to bargain or initiated bargaining for an enterprise agreement. This satisfies s.237(2)(b) of the Act.

The disputed elements and the competing contentions

[14] The major element in dispute was associated with the group of employees proposed to be covered by the enterprise agreement. This arises from s.237(2)(c) and s.237(3A) of the Act.

[15] United Voice contended that the group of employees to be covered by the proposed agreement comprises all of the employees employed by the employer whose employment is based at the Stamford Grand. That is, the coverage includes all those employees who perform housekeeping and/or cleaning work at that Hotel. They are geographically, operationally and organisationally quite separate from employees of the employer performing work at other sites in South Australia or Australia. There is no arbitrariness in the selection of the group of employees.

[16] In terms of the “exclusion” of the two Executive Housekeepers, United Voice contended as follows: 3

● First, it is important to note that the requirements of the Act are that the group be fairly chosen, not that it be the only possible fairly chosen group. Even if a group of employees including the Executive Housekeepers could be said to constitute a fairly chosen group, the non-inclusion of the Executive Housekeepers does not mean that the current group of employees was not fairly chosen.
● Second, the Act does not appear to contemplate that a group comprising all of the employees of an employer at a worksite could be regarded as a group that is not fairly chosen on the basis that employees of another entity were not included within the group. The Act does not contemplate that employees of one employer should be required to bargain with another employer in respect of their terms and conditions of employment. That would be the outcome if the Commission were to find that a group of employees was not fairly chosen by virtue of the fact that it did not include employees of another employer.

This argument is supported by the terms of Section 237(3A), which envisages that the consideration of geographic operational or organisation distinction, for the purposes of determining whether the group of employees is fairly chosen, only arises where the group does not comprise all of the employees of the employer. It does not envisage that test arising in circumstances where all of the employees of the employer are included within the group.

● Third, the Executive Housekeepers are managerial employees. They are the only managerial employees of the employer on the site. In that respect, United Voice does not argue that managerial or supervisory employees cannot form part of a group of employees fairly chosen for the purposes of enterprise bargaining. However, it will be a rare case that a group of employees, of a non-managerial nature, would be found to be not fairly chosen by virtue of the fact that managerial employees were not included. It will be commonplace for the interests of the non-managerial employees to be in significant respects different from the interests of the managerial employees. Their remuneration is likely to be different. The basis of that remuneration (hourly, weekly, salary) is likely to be different. The nature of their duties is likely to be significantly different. Their relationship with the employer is likely to be different. The authority they have vis-a-vis other employees within the group is likely to be different.
● Finally, without conceding that the Executive Housekeepers are covered by the same award as are the group of employees, the Hospitality Industry (General) Award 2010 (the Hospitality award) is largely irrelevant in determining whether the group is fairly chosen. That is, the employees comprising the current group of employees are all classified under Clause D.2.3 "Guest Services" of the award. On the other hand, the Executive Housekeepers, if they fall within the classification structure of the award at all, fall within Clause D.2.9 "Managerial Staff-Hotels" of the Award. This is a discrete classification for managerial (albeit not senior managerial) employees. Further, under the award, these two classifications are treated substantially differently. For instance, general services employees must be paid hourly or weekly in the absence of any agreement for salary arrangements. Managerial employees must be paid a salary.

[17] AHS Hospitality expressed concerns that the “exclusion of two employees working at the same site” means that the group had not been fairly chosen. That is, the coverage of the proposed agreement included all housekeeping employees working at the Stamford Grand, including supervisors employed by AHS Hospitality, but did not include two employees who are “Executive Housekeepers”.

[18] AHS Hospitality noted the following in support of its concerns: 4

● The classification streams in the Hospitalityawardare broad and cover employees responsible for public area cleaning, room attendant duties as well as those employees with supervisory and management responsibilities, as outlined in Grades 1-5 and the managerial classification contained in Schedule D Classification Definitions;
● Within the Company, supervisors and managers conditions and pay including contracts of employment are consistent with the terms and pay rates found in the Award;
● Within the Company’s management structure these roles have very limited delegated authority at any of the hotels and implement policy and procedure derived from head office; and
● The group that has been chosen is not geographically, operationally or organisationally distinct from the executive housekeeping roles based at the Stamford Grand.

[19] AHS Hospitality contended that in light of the above, the Commission could not be satisfied that the group of employees who will be covered by the agreement was fairly chosen or that it is reasonable in all the circumstances to make a majority support determination.

[20] Although there is limited evidence or material about the other employees of AHS Hospitality, this matter has proceeded on the basis that the employer has other employees who will not be covered by the proposed enterprise agreement. On that basis, s.237(3A) requires that the Commission consider whether the group of employees to be covered has been fairly defined, taking into account whether the group is geographically, operationally or organisationally distinct.

The approach to the assessment of the fairness of the chosen employee group

[21] Having regard to the approach adopted by the Commission and the Court to such matters, the following principles arise.

[22] If a group of employees covered by the agreement are geographically, operationally or organisationally distinct, this would point in favour of a finding that the group of employees was fairly chosen. However, whether or not the group of employees covered by the agreement is geographically, operationally or organisationally distinct is not decisive, rather it is a matter to be given due weight, having regard to all other relevant considerations. 5

[23] Generally, the selection of the group of employees to be covered by an agreement on some objective basis (as opposed to an arbitrary or subjective basis) is likely to point to a conclusion that the group was fairly chosen. 6

[24] Depending on the circumstances of the particular case, there may be more than one way of fairly choosing the group of employees to be covered by a proposed enterprise agreement. Different scope provisions may be equally described as fair in the sense that no obvious unfairness arises from their application. 7

[25] The role of the Commission is not to determine the scope of the agreement, but rather to guard against unfairness by being satisfied that the group can be described, in all the circumstances, as fairly chosen. When determining whether a group of employees has been fairly chosen, the Commission may have regard to matters such as:

● the way in which the employer has chosen to organise its enterprise, and
● whether it is reasonable for the excluded employees to be covered by the enterprise agreement, having regard to the nature of the work they perform and the organisational and operational relationship between them and the employees who will be covered by the enterprise agreement. 8

[26] In considering fairness to the employer, the wishes of the relevant group of employees to bargain should be given significant weight in the absence of a countervailing case that the selection of the group would be prejudicial to the productivity or efficient conduct of the employer's business. 9

Whether the group of employees was fairly chosen in this case

[27] The scope of bargaining proposed by United Voice comprehends all employees who are performing housekeeping and cleaning work employed by AHS Hospitality whose employment is based at the Stamford Grand. It is common ground that these employees are covered by the Hospitality award.

[28] Based upon the material provided by the parties the following further context emerges:

● There are approximately 40 employees who fall within the proposed scope and all of these employees perform housekeeping and cleaning work;
● Three of these employees are described as supervisors and these employees act as team leaders;
● There are also two “Executive Housekeepers” within the Stamford Grand operation and these are employed by a company apparently related to AHS Hospitality (AHS Management Pty Ltd);
● The Executive Housekeepers comprise positions variously described as Executive Housekeeping Manager (or Housekeeping Manager) and Assistant Housekeeping Manager. Whilst the “role purpose” of each of these positions is described as managing the team members (or assisting to manage) and the Housekeeping Manager reports directly to the General Manager Vic/Tas/SA, I accept for present purposes that these roles also involve hands-on leadership and some supervision; and
● I also accept for present purposes that the Executive Housekeeper roles as described are capable of falling within the coverage of the Hospitality award.

[29] The proposed group are geographically distinct from the other employees of AHS Hospitality. That is, all of the Stamford Grand based employees of that employer are to be included. Given that the Stamford Grand operation is organised and managed as a distinct function, the same conclusion would also apply to their operational and organisational relationships, if considered in that context.

[30] However, it is apparent that in its broadest sense the “AHS Hospitality” operation at the Stamford Grand includes the Executive Housekeepers that are employed by the apparently related entity. Section 236 of the Act applies only to proposed “single-enterprise agreements”. The meaning of a single-enterprise agreement is established by s.172(2) of the Act to include an agreement made involving “an employer, or 2 or more employers that are single interest employers”.

[31] Section 172(5) of the Act defines single interest employers as follows:

“Single interest employers

(5) Two or more employers are single interest employers if:

(a) the employers are engaged in a joint venture or common enterprise; or

(b) the employers are related bodies corporate; or

(c) the employers are specified in a single interest employer authorisation that is in operation in relation to the proposed enterprise agreement concerned.”

[32] AHS Hospitality did not make any submissions as to whether it and AHS Management Pty Ltd should be considered to be single interest employers for present purposes. 10 It is however a reasonable inference that they are related bodies corporate and I have allowed for that prospect in dealing with this application.

[33] Sub-sections 237(2)(a) and (b) refer in each case to the “employer or employers.” This would appear to contemplate that the assessment as to who will be covered by the agreement may include more than one employer. However, given that this operates in the context of a single-enterprise agreement, this is most likely to accommodate circumstances where there are single interest employers involved. If that is correct, the geographical, operational and organisational circumstances of the employees for the purposes of s.237(3A) is to be assessed by reference to the employer (or single-interest employers) to be covered and not otherwise.

[34] Further, s.237(3A) refers to circumstances where the agreement will not cover “all of the employees of the employer or employers covered by the agreement.” The ordinary and natural meaning of this provision when read in context is that it is the employer or employers who are to be covered by the proposed agreement. In this case, this is AHS Hospitality.

[35] In any event, as will become clear, I have reached the same conclusion even allowing for a potentially broader approach to s.237(3A) of the Act in this case.

[36] As outlined earlier, if s.237(3A) is to be applied in this matter only by reference to the circumstances of the AHS Hospitality employees, they are geographically, operationally and organisationally distinct from other employees of that employer.

[37] If s.237(3A) is to be applied to the circumstances of the AHS operation more generally so as to include the related entity, the employees concerned may not be geographically distinct from all of the other employees, they may also form part of the housekeeping operations at the Stamford Grand more generally, but the extent of their organisational distinctiveness would remain in dispute.

[38] As outlined earlier, the assessment of fairness is to be assessed taking into account the findings as to the geographical, operational and organisational distinctiveness of the employees concerned. This also requires consideration of all of the relevant circumstances.

[39] The employees of AHS Hospitality and the Executive Housekeepers have their terms and conditions established by the Hospitality award. In most cases, this is a consideration militating against a finding that the defined group, which excludes some of those employees, is fair. However in this case, it is likely that the Executive Housekeepers would be considered to be Managers 11 under the terms of the award and as such are entitled to an annual salary - with the prospect of being paid an amount that absorbs various award provisions including the ordinary hours of work and penalty rates.12

[40] This does not mean that it would by definition, in this and other circumstances, be inappropriate to include award-covered management staff in an enterprise agreement. However, this reinforces the notion that there are various definitions of a group of employees that might be fair in any given circumstance.

[41] AHS Hospitality did not raise any examples of productivity or efficiency concerns arising from the potential that the enterprise agreement might exclude the Executive Housekeepers. Further, the fact that AHS Hospitality, and its related entity, have chosen to organise their affairs with the Executive Housekeepers being employed by the related entity, suggests that the employee group as defined is organisationally distinct to a degree. In any event, this state of affairs is a relevant consideration supporting a finding that the group as presently defined is fair.

[42] Furthermore, a finding that the group was defined unfairly in this case, would also have the effect that the employees would have to bargain with two employers. This is a consideration supporting a finding that the presently defined group is an objectively justifiable and fair scope for the proposed enterprise agreement.

[43] Having considered all of the circumstances, and taking into account the factors identified in s.237(3A), for the reasons outlined above I was satisfied that the employee group was fairly chosen as required by s.237(2)(c) of the Act.

Was it reasonable in the circumstances to make the determination?

[44] Section 237(2)(d) of the Act requires the Commission to consider whether it is reasonable in all of the circumstances to make the determination.

[45] The concerns of AHS Hospitality in this regard were largely associated with the scope of the group of employees as dealt with above. As implied in the submissions of the employer, the Commission must be satisfied, in addition to the other requirements, that the making of the determination is appropriate. The nature of the employee group, and all of the evident circumstances, are relevant in that context.

[46] In Australian Municipal, Administrative, Clerical and Services Union v Equity Valet Parking Pty Ltd, 13 Watson VP said:

“[24] The scheme of the Fair Work Act is that terms and conditions of employment are determined at the enterprise level on the foundation of “fair, relevant and enforceable minimum terms and conditions.”

[25] Where employees wish to engage in bargaining the legislation gives them rights to engage bargaining agents and engage in bargaining processes. In circumstances where an employer has not agreed to bargain, bargaining orders under s230 of the Act are not available unless, among other things, a majority support determination is in operation.

[26] Both parties have rights in the bargaining process. They are free to discuss and agree on relevant matters and formulate any agreement in any available manner. They are equally free to disagree and exercise rights that may arise in such an eventuality.”

[47] As noted by the Vice President in that decision, there are of course other objects of the Act including those set out in s.3(f) concerning the achievement of productivity and fairness through an emphasis upon enterprise level collective bargaining, and although not relevant in this matter, in s.3(g) concerning the special needs of small and medium-sized businesses.

[48] The desire of the majority of employees to bargain is an important consideration and consistent with the scheme of the Act. There is also nothing unreasonable or inappropriate about seeking to advance bargaining claims as might be proposed by the employees for consideration in the bargaining process. 14 The circumstances within the business more generally, including the fact that the two employees in the Executive Housekeeper positions may not be included, are relevant considerations. However, the nature of the good faith bargaining obligations,15 the capacity to bargain about whether there will be an enterprise agreement and the contents and scope of any such agreement, and the circumstances of this matter more generally, meant that it was appropriate to issue the determination sought.

[49] Given that all of the requirements of s.237(2) had been met, the determination was issued in accordance with s.237(1) of the Act.

4. The determination and its consequences

[50] For the above reasons, a Majority Support Determination was issued by the Commission. 16 Consistent with s.237(4) of the Act, the determination came into operation on the day on which it is made.

[51] As a result, AHS Hospitality was obliged to take all reasonable steps to issue a notice of employee representational rights to each relevant employee as required by s.173 and s.174 of the Act. I note that s.173(3) requires, in effect, that the notice be issued within 14 days of the determination being made. The form and content of the notice is set out in s.174 of the Act and prescribed by regulation 2.04 and 2.05 and Schedule 2.1 of the Fair Work Regulations 2009.

[52] Further, the good faith bargaining obligations as set out in s.228 of the Act will now apply to all parties.

[53] I also confirm that s.240 of the Act contemplates the Commission assisting the parties with disputes arising in the bargaining process and either or both parties may seek that assistance at any time.

Appearances:

S Blewett for United Voice.

C Marks of Chandler McLeod for AHS Hospitality Pty Ltd.

Conference details (by phone):

2015

April 2, May 12, June 11.

Final written submissions:

2015

June 22.

 1   This was identified in the course of a directions conference on 11 June 2015 and confirmed in the directions issued later that day.

 2   PR568731.

 3   Drawn from the final written submissions of United Voice.

 4   Drawn from the final written submissions of AHS Hospitality.

 5   Cimeco Pty Ltd v Construction, Forestry, Mining and Energy Unionand others[2012] FWAFB 2206.

 6 Ibid at [16].

 7   The Australian Workers’ Union v BP Refinery (Kwinana) Pty Ltd[2014] FWCFB 1476. See also National Union of Workers v Cotton On Group Services Pty Ltd[2014] FWC 6601, at [30].

 8   Cimeco Pty Ltd v Construction, Forestry, Mining and Energy Union and others[2012] FWAFB 2206.

 9   Alcoa of Australia Limited v Construction, Forestry, Mining and Energy Union[2015] FWCFB 1832.

 10   There is no suggestion that AHS Hospitality and its related entity have been declared as being single-interest employers under Division 10 of the Act.

 11   Clause D.2.9 of the Hospitality award.

 12   Clause 20.2 of the Hospitality award.

 13   [2011] FWA 2036.

 14   See Construction, Forestry, Mining and Energy Union v CBI Constructions Pty Ltd[2010] FWA 2164; affirmed on appeal in [2011] FWAFB 7642.

 15   The good faith bargaining requirements in s.228 are broad enough to allow the circumstances of the business to be factored into the negotiations along with other considerations.

 16   PR568731.

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<Price code C, PR568732>