Veolia Environmental Services (Australia) Pty Ltd

[2016] FWCA 5055

[2016] FWCA 5055

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.210 - Application for approval of a variation of an enterprise agreement

Veolia Environmental Services (Australia) Pty Ltd
(AG2016/1495)

VEOLIA ENVIRONMENTAL SERVICES (AUSTRALIA) PTY LTD COOPER BASIN ENTERPRISE AGREEMENT 2014-2017

Manufacturing and associated industries
COMMISSIONER HAMPTON	ADELAIDE, 26 JULY 2016

Application for variation of the Veolia Environmental Services (Australia) Pty Ltd Cooper Basin Enterprise Agreement 2014-2017 – variation agreed with employees – whether agreement of employees genuine – whether proper process followed – whether copy of agreement with variations and any incorporated terms provided to employees – whether undertaking given in original proceedings retained - whether union marginalised – whether coercion or unreasonable pressure – whether outcome of the ballot unclear due to question posed – whether BOOT satisfied – whether serious public interest grounds to refuse approval – genuine agreement found – statutory requirements met – variation approved with undertakings.

1. Introduction

[1] An application has been made by Veolia Environmental Services (Australia) Pty Ltd (Veolia) under s.210 of the Fair Work Act 2009 (the Act) for the approval of a variation to an enterprise agreement known as Veolia Environmental Services (Australia) Pty Ltd Cooper Basin Enterprise Agreement 2014-2017 (the Agreement).

[2] The Australian Workers’ Union (AWU) and the Australian Manufacturing Workers’ Union (AMWU) are covered by the Agreement and during a preliminary hearing on 21 June 2016 each indicated that they opposed the application.

[3] I note that on 14 July 2016 the AMWU confirmed that it would not be lodging submissions or evidentiary material and did not participate in the subsequent hearing of the matter on 19 and 25 July 2016.

[4] The Agreement was approved 1 by the Commission in February 2015, with a nominal expiry date of 30 June 2017, and applies to Veolia and its employees engaged in various environmental services provided under contract to Santos Limited (Santos) in the Cooper Basin. Santos is a major oil and gas producer.

[5] The variation application has been made in the context of Santos putting the environmental services contract currently held by Veolia out to tender in circumstances where the reduction in the price of oil and gas has led to significant job losses and cost-cutting measures throughout the industry.

[6] The application seeks approval of the following amendments to the Agreement as part of the variation:

● Clause 1.2 (Area Incidence definition) amended – editorial only;
● Clause 4 (Santos Location definition) amended – editorial only;
● Clause 11.1(b), 12.3, 13.1(a), 15.2 and 15.4 (clause references) amended – consequential only;
● Clause 7.2 (isolation allowance) removed;
● Clause 7.5(c) (reference to 4% wage increase on or after 1 July 2016) removed;
● Clause 11.3(b) (Saturdays time and a half) removed;
● Clause 11.3(c) (Sundays double time) removed;
● Clause 11.4(a) (day work overtime) amended and Saturday and Sunday at double time removed;
● Clause 11.4(b) (over cycle overtime) removed;
● Clause 11.5(d) (shift work Saturday rate) removed;
● Clause 11.5(e) (shift work Sunday rate) removed;
● Clause 11.5(g) (night shift rate) amended;
● Clause 11.6(a) (shift work overtime) removed;
● Clause 11.6(b) (shift work overtime) removed;
● Clause 11.7(a) (travel time) removed;
● Clause 11.7(b) (Public Holiday travel) removed;
● Clause 12.7 (flight provisions) amended;
● Clause 12.9(f) (flight delay payments – into the field) removed;
● Clause 12.9(g) (flight delay payments – out of the field) removed;
● Clause 13.1(c) (annual leave) amended;
● Clause 13.1(d) (annual leave) amended and loading removed;
● Clause 13.1(f) (annual leave loading) removed;
● Clause 13.1(h) (excessive annual leave) amended;
● Clause 14.1(a) (personal leave) amended;
● Clause 15.5 (RDO’s falling on Public Holiday) removed;
● Clause 17 (parental leave) amended;
● Clause 21.2(c) (training) amended;
● Clause 21.2(d) (training) removed; and
● Schedule 1 (wage increase) removed.

[7] The effect of the variation is to remove or substantially reduce a number of existing agreement entitlements including additional rates for weekend work, annual leave loading, overtime arrangements and certain additional benefits associated with the location of the work in question. The variation also removes scheduled wages increases however the existing base wage rates in the Agreement, which are in the order of at least 50% higher than the modern award, are maintained.

[8] Veolia contends that the variation has been genuinely agreed with a valid majority of its employees and that all of the other requirements for approval of the variation under the Act have been met.

[9] The AWU opposes the application on a number of grounds principally associated with whether the employees have genuinely agreed to the variation.

2. The requirements for approval of a variation

[10] The various requirements for approval of a variation to an enterprise agreement are set out in Part 2-4 of the Act as follows:

“207 Variation of an enterprise agreement may be made by employers and employees

Variation by employers and employees

(1) The following may jointly make a variation of an enterprise agreement:

(a) if the agreement covers a single employer—the employer and:

(i) the employees employed at the time who are covered by the agreement; and
(ii) the employees employed at the time who will be covered by the agreement if the variation is approved by the FWC;

(b) if the agreement covers 2 or more employers—all of those employers and:

(i) the employees employed at the time who are covered by the agreement; and
(ii) the employees employed at the time who will be covered by the agreement if the variation is approved by the FWC.

Note: For when a variation of an enterprise agreement is made, see section 209.

(2) The employees referred to in paragraphs (1)(a) and (b) are the affected employees for the variation.

Variation has no effect unless approved by the FWC

(3) A variation of an enterprise agreement has no effect unless it is approved by the FWC under section 211.

Limitation—greenfields agreement

(4) Subsection (1) applies to a greenfields agreement only if one or more of the persons who will be necessary for the normal conduct of the enterprise concerned and are covered by the agreement have been employed.

208 Employers may request employees to approve a proposed variation of an enterprise agreement

(1) An employer covered by an enterprise agreement may request the affected employees for a proposed variation of the agreement to approve the proposed variation by voting for it.

(2) Without limiting subsection (1), the employer may request that the affected employees vote by ballot or by an electronic method.

209 When a variation of an enterprise agreement is made

Single-enterprise agreement

(1) If the affected employees of an employer, or each employer, covered by a single-enterprise agreement have been asked to approve a proposed variation under subsection 208(1), the variation is made when a majority of the affected employees who cast a valid vote approve the variation.

Multi-enterprise agreement

(2) If the affected employees of each employer covered by a multi-enterprise agreement have been asked to approve a proposed variation under subsection 208(1), the variation is made when a majority of the affected employees of each individual employer who cast a valid vote have approved the variation.

210 Application for the FWC’s approval of a variation of an enterprise agreement

Application for approval

(1) If a variation of an enterprise agreement has been made, a person covered by the agreement must apply to the FWC for approval of the variation.

Material to accompany the application

(3) The application must be accompanied by:

(a) a signed copy of the variation; and
(b) a copy of the agreement as proposed to be varied; and
(c) any declarations that are required by the procedural rules to accompany the application.

When the application must be made

(4) The application must be made:

(a) within 14 days after the variation is made; or
(b) if in all the circumstances the FWC considers it fair to extend that period—within such further period as the FWC allows.

Signature requirements

(4) The regulations may prescribe requirements relating to the signing of variations of enterprise agreements.

211 When the FWC must approve a variation of an enterprise agreement

Approval of variation by the FWC

(1) If an application for the approval of a variation of an enterprise agreement is made under section 210, the FWC must approve the variation if:

(a) the FWC is satisfied that had an application been made under subsection 182(4) or section 185 for the approval of the agreement as proposed to be varied, the FWC would have been required to approve the agreement under section 186; and
(b) the FWC is satisfied that the agreement as proposed to be varied would not specify a date as its nominal expiry date which is more than 4 years after the day on which the FWC approved the agreement;
unless the FWC is satisfied that there are serious public interest grounds for not approving the variation.

Note: The FWC may approve a variation under this section with undertakings (see section 212).

Modification of approval requirements

(2) For the purposes of the FWC deciding whether it is satisfied of the matter referred to in paragraph (1)(a), the FWC must:

(a) take into account subsections (3) and (4) and any regulations made for the purposes of subsection (6); and
(b) comply with subsection (5); and
(c) disregard sections 190 and 191 (which deal with the approval of enterprise agreements with undertakings).

(3) The following provisions:

(a) section 180 (which deals with pre-approval steps);
(b) subsection 186(2) (which deals with the FWC’s approval of enterprise agreements);
(c) section 188 (which deals with genuine agreement);
have effect as if:
(d) references in sections 180 and 188 to the proposed enterprise agreement, or the enterprise agreement, were references to the proposed variation, or the variation, of the enterprise agreement (as the case may be); and
(e) references in those provisions to the employees employed at the time who will be covered by the proposed enterprise agreement, or the employees covered by the enterprise agreement, were references to the affected employees for the variation; and
(f) references in section 180 to subsection 181(1) were references to subsection 208(1); and
(g) the words “if the agreement is not a greenfields
agreement—” in paragraph 186(2)(a) were omitted; and
(h) paragraph 186(2)(b) were omitted; and
(ha) references in paragraphs 186(2)(c) and (d) to the agreement were references to the enterprise agreement as proposed to be varied; and
(hb) subparagraph 188(a)(ii) were omitted; and
(j) the words “182(1) or (2)” in paragraph 188(b) were omitted and the words “209(1) or (2)” were substituted.

(4) Section 193 (which deals with passing the better off overall test) has effect as if:

(a) the words “that is not a greenfields agreement” in subsection (1) were omitted; and
(b) subsection (3) were omitted; and
(c) the words “the agreement” in subsection (6) were omitted and the words “the variation of the enterprise agreement” were substituted; and
(d) the reference in subsection (6) to subsection 182(4) or section 185 were a reference to section 210.

(5) For the purposes of determining whether an enterprise agreement as proposed to be varied passes the better off overall test, the FWC must disregard any individual flexibility arrangement that has been agreed to by an award covered employee and his or her employer under the flexibility term in the agreement.

Regulations may prescribe additional modifications

(6) The regulations may provide that, for the purposes of the FWC deciding whether it is satisfied of the matter referred to in paragraph (1)(a), specified provisions of this Part have effect with such modifications as are prescribed by the regulations.

212 FWC may approve a variation of an enterprise agreement with undertakings

Application of this section

(1) This section applies if:

(a) an application for the approval of a variation of an enterprise agreement has been made under section 210; and
(b) the FWC has a concern that the variation does not meet the requirements set out in section 211.

Approval of agreement with undertakings

(2) The FWC may approve the variation under section 211 if the FWC is satisfied that an undertaking accepted by the FWC under subsection (3) of this section meets the concern.

Undertakings

(3) The FWC may only accept a written undertaking from one or more employers covered by the agreement if the FWC is satisfied that the effect of accepting the undertaking is not likely to:

(a) cause financial detriment to any affected employee for the variation; or
(b) result in substantial changes to the variation.

Signature requirements

(4) An undertaking must meet any requirements relating to the signing of undertakings that are prescribed by the regulations.

213 Effect of undertakings

(1) If:

(a) the FWC approves a variation of an enterprise agreement after accepting an undertaking under subsection 212(3) in relation to the variation; and
(b) the agreement covers a single employer;
the undertaking is taken to be a term of the agreement, as the agreement applies
to the employer.

(2) If:

(a) the FWC approves a variation of an enterprise agreement after accepting an undertaking under subsection 212(3) in relation to the variation; and
(b) the agreement covers 2 or more employers;
the undertaking is taken to be a term of the agreement, as the agreement applies to each employer that gave the undertaking.

214 When the FWC may refuse to approve a variation of an enterprise agreement

(1) If an application for the approval of a variation of an enterprise agreement is made under section 210, the FWC may refuse to approve the variation if the FWC considers that compliance with the terms of the agreement as proposed to be varied may result in:

(a) a person committing an offence against a law of the Commonwealth; or
(b) a person being liable to pay a pecuniary penalty in relation to a contravention of a law of the Commonwealth.

(2) Subsection (1) has effect despite section 211 (which deals with the approval of variations of enterprise agreements).

(3) If the FWC refuses to approve a variation of an enterprise agreement under this section, the FWC may refer the agreement as proposed to be varied to any person or body the FWC considers appropriate.

215 Approval decision to note undertakings

If the FWC approves a variation of an enterprise agreement after accepting an undertaking under subsection 212(3) in relation to the variation, the FWC must note in its decision to approve the variation that the undertaking is taken to be a term of the agreement.

216 When variation comes into operation

If a variation of an enterprise agreement is approved under section 211, the variation
operates from the day specified in the decision to approve the variation.”

[11] In general terms, under s.211 of the Act, the Commission is required to approve a variation to an enterprise agreement where:

• the application is made in accordance with the requirements of the Act and the Fair Work Regulations 2009 (the Regulations);



• the agreement to vary the enterprise agreement has been genuinely made between the employer and a majority of the relevant group of employees in the same manner as required to make an enterprise agreement that is approvable under s.186 of the Act, including ss.180, 186 and 188 as modified (these also include the provisions of Subdivision E, dealing with approval requirements relating to particular employees);



• the enterprise agreement as modified by the proposed variation is such that it would meet the relevant approval requirements of s.186 of the Act (with appropriate modifications) including the Better Off Overall Test of s.193 of the Act and compliance with the National Employment Standards;



• the group of employees covered by the enterprise agreement is fairly chosen, the agreement as modified does not contain any unlawful terms, the agreement includes a term that provides a procedure for settling disputes and meets other form and content requirements; and



• the agreement as varied does not specify a nominal expiry date of more than four years after the day on which the Commission initially approved the agreement; unless



• it is satisfied that there are serious public interest grounds for not approving the variation.

[12] Where concerns exist as to whether the genuinely agreed variation meets the requirements set out in s.211 of the Act, the Commission may accept undertakings and approve the variation, provided that the undertakings:

• meet the concerns;



• would not cause financial detriment to any affected employee for the variation or result in substantial changes to the variation; and



• have been signed as required by the Regulations.

[13] The original application was accompanied by a Statutory Declaration as required by the Act and Regulations, however, that declaration contained an error. The error has been corrected by a revised declaration 2 and I granted leave3 to amend the application to substitute the amended declaration to the extent that this was necessary.

3. The issues arising in this matter

[14] In order to approve the application, the Commission must be satisfied that all of the relevant requirements of the Act have been met. There are no presumptions in the Act that these requirements have been met and it remains the responsibility of Veolia to convince the Commission that the application does so. It is, however, convenient to start with the requirements that have been specifically put into issue as a result of the position taken by the AWU in opposition to the application. A number of issues also arose during the course of the proceedings and these are also outlined below.

[15] The AWU contends there is no jurisdiction for the Commission to approve the variation on the basis that the Commission cannot be satisfied (under s.188 of the Act) that the variation has been genuinely agreed to by the employees. A number of grounds were advanced by the AWU in support of this proposition which may be summarised as follows:

• whilst the employees were given a copy of the proposed amended Agreement, they were not given a copy of (or access to) any material incorporated into the Agreement during the access period, as required by s.180(2) of the Act – the relevant material being all or some of the Manufacturing and Associated Industries Award 2010 (the modern award);



• the effect of clause 3.1 and 3.2 of the Agreement is unclear and ambiguous and no explanation was given by Veolia to the employees on that issue or those conditions that were less than the modern award as required by s.180(5) of the Act;



• Veolia changed a part of the variation, or a factor bearing upon the variation (access to Voluntary Redundancy - VR), during the access period and this meant that the access period should have been restarted;



• the voting method utilised a text message and the contents of the text message could have been misconstrued by the employees causing them to vote incorrectly; namely that employees were voting in favour of the existing enterprise agreement rather than the variation;



• Veolia failed to recognise the AWU in the process, which caused a denial of an opportunity to disseminate an alternative view and/or to negotiate the terms of the variation; and



• unreasonable pressure was placed on the employees to persuade them to vote in favour of the proposed variations.

[16] The AWU further contends that as a result of the process adopted by Veolia, a number of the necessary steps to lead to a genuine agreement within the meaning of the Act have not been met and further, that there were reasonable grounds to consider that the variation was not genuinely agreed to by the employees.

[17] Veolia contends as follows:

• Any terms of the modern award that are relevant have been expressly incorporated into the Agreement and are not incorporated by reference so as to create an obligation to provide access to the modern award. In any event, the modern award is a public document that is freely available in the public domain and therefore, the employees had access to a copy of the modern award through a variety of ways including online;



• s.180(5) of the Act does not require Veolia to describe the terms of every varied term to every employee – the test is one of reasonableness by the employer in explaining the variation and it took all reasonable steps to explain the proposed variations to what was an already approved and operating enterprise agreement;



• the employees were aware of the voting method and had been provided with information about the purpose of the vote and the response to the text message (the votes) was clear and involved a significant majority of employees endorsing the variation;



• the change in relation to the VR process was made in direct response to requests from employees and did not involve any change to the terms of the Agreement or the proposed variations;



• Veolia actively sought to engage with the AWU about the proposed variation, however, the AWU was content to let “democracy take its course”; and



• Veolia sought to encourage employees to vote in favour of the variations but there was nothing improper about that approach.

[18] Further, during the course of the hearing and consideration of this matter an issue arose that was not apparent from the materials provided by each of the parties. That issue arose from a consideration of whether the proposed variation to the enterprise agreement meets the requirements in s.196 of the Act, which in turn relates to annual leave provisions for shift workers. In that light, I obtained and reviewed the original approval decision for the Agreement and noted that an undertaking was provided on this issue (the s.196 undertaking). This further raised a number of subsequent issues concerning both the employee approval process in this matter and in relation to other variation approval requirements.

[19] Finally, a question arose as to whether the Annual Leave clause in the Agreement, and in its amended form, complied with the NES due to the manner in which the basic entitlement was stated.

[20] These latter two issues became the focus of a subsequent hearing.

4. The general events leading to the application

[21] In order to deal with the issues arising in this matter, it is necessary to make findings about the events that have led to the application. I have considered the witness and other evidence provided by the parties, which includes written statements and oral evidence from the following:

Led by Veolia:

• John Crouch, Manager Industrial Relations and Human resources for Western and Central Australia;



• Charles Vidugiris, General Manager – Regional South Australia;



• David Vellacott, Resource and Procurement Manager for Industrial Services in South Australia; and



• Jennifer Newell, Human Resources Manager for South Australia and Northern Territory.

Led by the AWU:

• Brett Withers, former Team Leader – Industrial Services for Veolia in the Cooper Basin and AWU Delegate; and



• Peter Lamps, Acting AWU South Australian Branch Secretary.

[22] In considering that evidence, I have also had regard to the various submissions made as to its credibility and probative value. In the end result, there is little major factual dispute and I have resolved this based upon my assessment of the witnesses and placing greater weight on the most direct and convincing evidence before the Commission.

[23] Veolia has provided various services for Santos operations in the Cooper Basin in north eastern South Australia and south western Queensland for the last 10 years. The services are primarily industrial services including high pressure water blasting and industrial cleaning and associated environmental services, related to the processing and treatment of industrial gases and oil.

[24] Veolia employed approximately 80 employees at the peak of provision of its services to Santos at Cooper Basin, however as a result of recent redundancies and a decline in services, it currently engages 38 employees under the Agreement. The relatively recent and significant decline in world commodity prices, including oil prices, has led to Santos restructuring its operations and looking to renegotiate its contractual arrangements with various service providers, including Veolia.

[25] As part of the consequences of this process, Veolia has come under considerable commercial pressure and has had to look to achieve substantial reductions in its workforce. Specifically, Veolia called for voluntary redundancies in April 2015, July 2015 and March 2016.

[26] In or around March 2016, Santos sought significant changes to the service fee and contractual arrangements with Veolia. At some point in the period that followed, Santos put the industrial services contract work out to tender.

[27] In or about late April 2016, Mr Vidugiris met with Mr Lamps from the AWU and introduced him to Mr Crouch. They had a discussion about the general industrial position and commercial pressures that Veolia faced, and in particular the need for redundancies at the Santos operations. Mr Lamps was told that Veolia proposed to progress a variation to the enterprise agreement in the near future, to which Mr Lamps indicated that he would be prepared to have some discussions about it in the future and to let him know when Veolia wanted to commence.

[28] Veolia had already commenced preparations for the proposed variation at the time that it met with Mr Lamps. Elements of the variation were drafted but not finalised at that point and Mr Lamps was given only a very general impression about the nature of the variations and no details were provided.

[29] On 10 May 2016, an email was sent by Mr Crouch to Mr Lamps describing the challenging environment that Veolia was in and included reference to the fact that its contract work was out to tender. 4 The email acknowledged that it was a stressful and difficult time for employees and referred to redundancies. No reference was made to any proposed variation of the Agreement. Similarly, a letter dated 14 May 2016 was issued to all employees describing the challenging environment, the fact that the contract in the Cooper Basin was out to tender and that Veolia would be “vigorously defending the contract and our longevity in the Cooper Basin.”5

[30] Although the proposed variations were in a finalised form earlier than this point, it is probable that they were signed off by senior management in the immediate lead up to the proposals being put out to the employees.

[31] On 17 May 2016, employees covered by the Agreement were sent, by express post, a hard copy of the proposed varied agreement with an explanatory letter. Also enclosed was a letter from Cirrena Independent Voting Solutions (Cirrena) containing voting information. The letter from Cirrena contained the following information:

● Cirrena will be conducting the vote on whether to approve the proposed variation;
● Votes are confidential and you can only vote once;
● The voting will open Friday 27 May 2016 at 06:00hrs ACST and will close Saturday 28 May 2016 at 06:00hrs ACST;
● Instructions on how to lodge the vote, which included “When the vote opens, Cirrena IVS will send you an SMS asking ‘Do you vote in favour of the Veolia Environmental Services (Australia) Pty Ltd Cooper Basin Enterprise Agreement 2014-2017?’ and further ‘Reply to the SMS with a Yes or No’”; 6 and
● A number of PowerPoint slides reiterating the above information and providing a photo of the SMS.

[32] The documents were also emailed to the employees, on the same day, except for one employee who did not have email access and the employer couriered the documents to that employee. Although not provided in the material supplied to the employees, access to the current Agreement and the relevant modern award was available through the internet via computers at the workplace and elsewhere.

[33] Later in the day on 17 May 2016, Mr Vidugiris called Mr Lamps and proposed a meeting at 11.30 am on the following day to discuss the proposed variations. At or around 5.30 pm on 17 May 2016, Mr Lamps received an email from Mr Crouch with a copy of the proposed variation to the Agreement.

[34] Mr Lamps was informed by AWU members on 18 May 2016 that the variation had already been circulated and a vote scheduled for 27 May 2016. On the same day, shortly afterwards, Mr Lamps sent a text message to Veolia indicating that he could not attend the meeting due to other commitments and further stating “I note the Agreement is out for voting so we will let democracy take its course.” 7 There were no subsequent attempts by either party to rearrange the meeting and no further contact was made between the AWU and Veolia.

[35] Mr Lamps received a number of calls from concerned AWU members which caused him to convene a teleconference. The teleconference occurred on Saturday 21 May 2016 where approximately 10 members dialled in.

[36] Veolia conducted a number of toolbox meetings from 18 to 26 May 2016 and a presentation was put together on the Agreement variations and this included supporting documentation. Information sessions were also held between 24 and 27 May 2016 in the Adelaide office boardroom for employees who were not in the field when the toolbox meetings were held. Furthermore, copies of the Agreement (with the variation marked up but without making any reference to the s.196 undertaking) were left in the crib room and on notice boards in relevant locations for employees to access between 18 and 26 May 2016.

[37] One of the information session involved Mr Crouch along with Mrs Preet Brar, Veolia’s Group General Manager for South Australia and the Northern Territory, which was conducted on 26 May 2016 at the Moomba site. During this session, employees raised questions about the impact of the proposed variations on previously accrued untaken leave. Mr Crouch indicated that this would be paid at the previous entitlement. During the course of the meeting, the issue of access to the VR program was also raised by employees. There is a dispute about whether Mr Crouch gave a guarantee to the effect of “if the variation is made and an employee decides they cannot survive on the reduced income, they can take a voluntary redundancy”. 8

[38] In any event, Mr Crouch subsequently had discussions with Mrs Brar and Mr Vidugiris about the employees’ VR request. Subsequently, a letter dated 26 May 2016 confirming the offer to extend access to the VR was provided to the employees 9 and this read in part:

“Veolia has considered the request and whilst not incorporated into the agreement, as a sign of good faith, Veolia agree to accept voluntary redundancy applications following the immediate six (6) weeks post the varied agreement approval.

Such offer is conditional upon the current variation scheduled for vote, Friday 27 May, being successful.”

[39] It is apparent that the period of six weeks would have been reasonably understood to refer to a period after any variation was approved and operational.

[40] The information sessions included the discussion about the variations and the impact upon the employees, at least in broad terms. The emphasis was upon the implications of the tender process and the fact that without the variations it was likely that Veolia would not win the tender and as a result, the Cooper Basin jobs would be in serious jeopardy. Mr Crouch informed employees to following effect:

“There is no doubt that the variation if approved will have a significant effect on your incomes. You will also however need to consider that if Veolia is not successful in the tender your jobs are at risk and our ability to redeploy you elsewhere is limited.

Recently in Queensland Veolia lost an industrial service contract after many years to a competitor and that competitor has not engaged many of Veolia’s employees and the competitor’s wage rates and conditions for those that were employed were significantly less than Veolia’s.” 10

[41] The employees were also advised in briefings that changes to the Agreement could not await the renegotiation of the Agreement and the present cost levels were unsustainable in the context of the Santos tender. 11

[42] Voting commenced on 27 May 2016 and closed on 28 May 2016. The text message that was sent to employees to enable them to cast their vote was in line with the earlier advice to employees and read as follows:

“Do you vote in favour of the Veolia Environmental Services (Australia) Pty Ltd Cooper basin Enterprise Agreement 2014-2017?”

[43] Cirrena confirmed that out of 41 employees covered by the agreement, 38 voted with 24 employees voting in favour. Subject to the other considerations, this represents a valid majority of the employees.

[44] The application for approval of the variation to the enterprise agreement was then lodged with the Commission on 10 June 2016.

5. Were the variations genuinely agreed to by the employees?

5.1 The proper approach to the issues

[45] Section 211 requires that the agreement to vary the enterprise agreement has been genuinely made between the employer and a majority of the relevant group of employees in the same manner required to make an enterprise agreement that is approvable under s.186 of the Act, including ss.180 and 188 as modified. These requirements also include the provisions of Subdivision E, dealing with approval requirements relating to particular employees.

[46] Section 188 of the Act provides as follows:

“188 When employees have genuinely agreed to an enterprise agreement

An enterprise agreement has been genuinely agreed to by the employees covered by the agreement if the FWC is satisfied that:

(a) the employer, or each of the employers, covered by the agreement complied with the following provisions in relation to the agreement:

(i) subsections 180(2), (3) and (5) (which deal with pre approval steps);
(ii) subsection 181(2) (which requires that employees not be requested to approve an enterprise agreement until 21 days after the last notice of employee representational rights is given); and

(b) the agreement was made in accordance with whichever of subsection 182(1) or (2) applies (those subsections deal with the making of different kinds of enterprise agreements by employee vote); and

(c) there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.”

[47] I note that the requirement that employees not be requested to approve the agreement (variation) until 21 days after the notice in s.188(a)(ii) is omitted in the case of a variation by virtue of s.211(3)(hb) of the Act. Further, in this context reference to the agreement is to be taken as being a reference to the variation.

[48] The requirements of s.188 have recently been conveniently summarised by the Full Bench in KCL Industries Pty Ltd 12 (KCL) in the following terms:

“[24] The “genuinely agreed” requirement has its origin in the scheme for the making and certification of collective agreements under the Workplace Relations Act 1996. Section 170LT(6) of that Act (as it was prior to the amendments effected by the Workplace Relations Amendment (Work Choices) Act 2005) provided, as a requirement in order for an agreement with employees to be certified, that “a valid majority of persons employed at the time whose employment would be subject to the agreement must have genuinely made the agreement”. In CFMEU v Australian Industrial Relations Commission (Gordonstone) the Federal Court Full Court said that s.170LT(6) “plainly betokens a concern with the authenticity and, as it were, the moral authority of the agreement”. An example of the application of Gordonstone under the Workplace Relations Act was Grocon Pty Ltd Enterprise Agreement (Victoria), in which it was held that an agreement had not been genuinely agreed because the employees’ consent was not informed and they were not advised of the consequences of their vote.

[25] The Explanatory Memorandum for the Fair Work Bill 2008, in relation to subclause 188(c) of the Bill, made express reference to Gordonstone and Grocon as follows:

“796. Paragraph 188(c) provides that FWA must only approve an agreement if there are no other reasonable grounds to believe that the agreement was not genuinely agreed to by the employees. FWA can refuse to approve an agreement where there are reasonable grounds to believe that the agreement has not been genuinely agreed to by the employees who will be covered by the agreement.

797. In determining whether there are reasonable grounds for believing that the agreement has not been genuinely agreed to by employees, FWA may consider whether the agreement has been validly made in accordance with clause 182 (see, e.g., Construction Forestry Mining and Energy Union v Australian Industrial Relations Commission (1999) 93 FCR 317 and the decision of the AIRC in Grocon Pty Ltd Enterprise Agreement (Victoria) (2003) 127 IR 13).”

[26] The reference in paragraph 797 to clause 182 is to the requirements for making agreements now contained in s.182 of the FW Act. In s.182(1), a single-enterprise non-greenfields agreement is treated as having been made when a majority of employees that will be covered by the agreement and who cast a valid vote approve the agreement.

[27] Of relevance to this matter, the Explanatory Memorandum made a further observation concerning subclause 188(c) in the context of its discussion about the better off overall test (underlining added):

“824. The better off overall test also refers to prospective award covered employees because sometimes an agreement may cover classifications of employees in which no employees are actually engaged at the test time. Extending the application of the better off overall test to these types of employees guarantees the integrity of the safety net. Note that where an agreement covers a large number of classifications of employees in which no employees are actually engaged there may be a question as to whether the agreement has been genuinely agreed - see clause 188.”

[28] Section 188 was considered in general terms by a Full Bench in Ostwald Bros Pty Ltd v Construction, Forestry, Mining and Energy Union. The Full Bench majority (Watson SDP and Gooley C, as she then was) said:

“[78] ...“Genuinely agreed”, in s.188 is expressed in terms of satisfaction that particular bargaining provisions within the Act have been complied with (ss.188(a) and (b)) and satisfaction of a more general criterion in s.188(c), rather than in terms of a general consideration of whether in the circumstances of a particular agreement a member is satisfied that the agreement has been genuinely agreed to by the employees.

[79] As the Full Bench in Galintel noted “Section 188 establishes a set of requirements, each of which must be satisfied if the necessary finding is to be made under s186(2)(a).”

[80] Section 188 of the Act does not provide a wide general discretion for determining whether employees have genuinely agreed to an enterprise agreement focussed at the point of approval. Rather it requires specific actions to have been undertaken (in ss. 188(a) and (b) at specified times in advance of approval), with s 188(c) then requiring satisfaction that there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees. Section 188(c) of the Act, although itself a broad discretionary consideration, is an additional matter about which [the Commission] needs to be satisfied and relates to grounds other than those arising in relation to the ss. 188(a) and (b) matters”.

[29] In Central Queensland Services Pty Ltd, Asbury DP undertook a detailed analysis of decided cases relevant to the proper interpretation and application of s.188(c). The Deputy President referred to the above passage in Ostwald and then continued as follows:

“[65] The approach to considering whether employees have genuinely agreed has been discussed in a number of cases considering s. 188(c) and similar provisions in earlier versions of the legislation and can be summarised as follows:

• In deciding whether there are no other reasonable grounds for believing that an agreement has not been genuinely agreed to [by] employees who will be covered, the circumstances to be considered are those that existed when the agreement was voted on.



• A consideration of all relevant circumstances revealed by the material before the Commission, at the time the Commissions considers the application for approval is required, in order to ascertain whether there are reasonable grounds for rejecting the genuineness of the agreement;



• Circumstances including the provision of material or information to employees which has the character of being misleading or intimidating, or where approval is affected by a material non-disclosure, or there is a scheme underpinning the agreement about which employees are not informed, will be relevant to the Commission’s assessment of whether the agreement has been genuinely agreed by the employees;



• Genuine agreement requires that the consent of employees was informed and that there was an absence of coercion. 



• Section 188(c) is only a basis for finding that an agreement is not genuinely agreed to if there are found to be reasonable grounds for this belief. This requires a consideration of the soundness of the agreement.



• The requirement for genuine agreement considered in conjunction with the objects of the Act in relation to agreement making betokens a concern with the authenticity and moral authority of an agreement. 

[66] The facts in the cases where the genuineness of the agreement of employees has been brought into question are instructive. In Re Toys “R” Us (Australia) Pty Limited Enterprise Flexibility Agreement 1994 it was found that the material supplied by the Company to employees did not fully disclose the impact of the agreement when compared to the existing award conditions. It was also found that the union with coverage of the employees was hampered in its efforts to disseminate an alternative view, at least over two crucial days when the ballot for approval of the Agreement was held. As a result it was found that the employees had not genuinely agreed to the agreement.

[67] The Manfield Colair Enterprise Agreement involved circumstances where the employer resisted the approval of an agreement that had been voted on and approved by employees, on the ground that the final version of the agreement distributed to employees by the employer contained a significant mistake. Vice President Lawler found that there was no indication that the agreement was other than the product of a bona fide bargaining process. It was also held that a unilateral mistake made by the employer in the version of the agreement that was distributed, did not mean that the version of the Agreement voted on was not the true agreement and that there was no question of there being some other agreement, different to the one annexed to the application for approval that is the “true agreement”. On appeal, a Full Bench of the Commission upheld that decision and held that an employer who wishes to propose an agreement to its employees has an obligation to ensure that the agreement reflects its intentions.

[68] In Re MSS Security Pty Ltd Enterprise Agreement 2012 the matters that were held to constitute reasonable grounds for the Commission to believe that the agreement was not genuinely agreed to were that employees were incorrectly advised of the date upon which the approval ballot would close and as the percentage of employees who cast a vote was small, it was more probable than not that a significant number of employees did not vote because of incorrect information about the closing date of the ballot. The version of the Agreement that was voted on by the employees in that case was also missing pages.

[69] The Decision of the Federal Court in Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission and Others (Gordonstone) dealt with the issue of whether an agreement was validly made in circumstances where the group of employees who made it were not yet employed and may never have been employed in the relevant single business. The Court concluded that the agreement had not been genuinely made. 

[70] In Grocon Pty Ltd Enterprise Agreement (Victoria) it was held that the employer had created a structure or scheme involving employees being covered by a number of agreements in circumstances where the employees who voted to approve an agreement had been misinformed or had not been informed about the effect of the arrangements, and in particular the fact that they could be the only employees bound by the conditions in the agreement while other employees had different conditions. As a result, the vote of employees to approve the agreement was not genuine.

[71] It can be seen from the cases that the question of whether the Commission is satisfied that there are no other reasonable grounds for believing that an agreement has not been genuinely agreed to by employees is not limited to a consideration of whether there has been coercion or misinformation in relation to the agreement and its effect. The consideration under s.188(c) is not limited to these matters and incorporates all of the relevant circumstances surrounding the process by which employees indicate their agreement.”

[30] We agree with and adopt the majority analysis in Ostwald, and that of Asbury DP in Central Queensland Services.”

[49] Against that background I will deal with the various issues relevant to the contentions of the parties and the other issues arising from the proceedings. It is convenient to group those issues as follows:

● The vote;
● The process seeking employee approval of the variations; and
● Whether there are (other) reasonable grounds to consider that the variation was not genuinely agreed to by the employees.

5.2 The Vote

[50] The terms of the voting text message have been set out earlier in this decision. The question becomes whether the form of the question led to confusion about the meaning of the vote in the minds of the employees. That is, whether it could be reasonably understood that a vote for the proposition was not clearly a vote in favour of the variation.

[51] The wording of the text message was not ideal. In some circumstances, the proposition advanced by the AWU - that the form of the question could have led some employees to vote “yes” as a means of supporting the current Agreement (and not the variation) - would have substance. I would also accept that if the outcome was not clear on this basis, this could support a conclusion that there are reasonable grounds to consider that the variation was not genuinely agreed to by the employees.

[52] However, the text message and the responses must be seen in context. The employees were advised that they would be requested to vote on whether they approved the variation. The precise form of the ultimate text question itself was contained in the written material advising the employees of the vote and there would appear to be no uncertainty that the employees were voting whether to approve or reject the proposed variation.

[53] On that basis, the vote of 24 votes in favour, out of the 38 employees who voted, represents a valid and sound majority of employees supporting the approval of the variations.

5.3 The process seeking employee approval of the variation – s.180 of the Act

[54] This ultimately necessitates consideration of the relevant statutory requirements that have been set out earlier this decision. Before dealing with those requirements, it is appropriate to touch upon three aspects of this matter that inform those considerations.

The issues arising from clause 3.1 and 3.2 of the (existing and varied) Agreement

[55] The relevant provisions of the Agreement are in the following terms:

“3.1 This Agreement is a comprehensive stand alone Agreement that incorporates relevant provisions of the Award. The parties are committed to the relevant Award standards to underpin the terms and conditions of employment. Where any inconsistency between this Agreement and the above Award occurs, in which case the provisions of this Agreement shall prevail to the extent of the inconsistency.

3.2 Conditions of employment for Employees engaged pursuant to this Agreement (excluding rates of pay) will be consistent with those contained in the Award (as varied).”

[56] These provisions were not altered as part of the variation.

[57] There is a dispute about the import of these provisions and whether there are terms of the modern award that are incorporated within the Agreement by reference.

[58] On their face, there is some tension within the provisions. That tension has existed since the Agreement was made and approved. In my view, the words when read in context and having regard to the terms of the Agreement more generally, 13 mean that the Agreement is a stand-alone instrument which incorporates any relevant terms of the modern award by express inclusion. The express reference to the Agreement being a comprehensive stand-alone instrument is clear. The remaining references to the award in clauses 3.1 and 3.2, with one exception, are more aspirational than operative. The Agreement is also a comprehensive instrument and it is not apparent that there are terms and conditions that would need to be included by reference from the modern award in order for the package to be complete.

[59] The exception alluded to above, is the reference to “inconsistency” and the terms of the Agreement “prevailing” in clause 3.1. Whilst this is somewhat problematic, my view is that this must be seen in the context of the express declaration as to the nature of the instrument earlier in 3.1 and the overall terms of the Agreement.

[60] I also note that the s.196 undertaking sought as part of the original enterprise agreement approval process would not have been required if the Commission considered that clause 3 of the Agreement effectively incorporated the relevant annual leave terms of the modern award.

The impact of the change to the Voluntary Redundancy (VR) process

[61] The facts surrounding the change to the VR process have been outlined earlier in this decision. Veolia contends that this change arose from discussions with employees and a request made to extend the time for electing to take a VR until after the outcome of the variation process was known and had been experienced by the employees. The evidence before the Commission supports that contention.

[62] However, the AWU contends that the change to the VR process was a change to the proposed agreement variations that should have led to a new access period. The access period is the seven day period ending immediately before the start of the voting process 14 and the employer is obliged to take all reasonable steps to provide the relevant ballot details before,15 and the materials required by s.180(2) during, that period. The AWU also contend that the change in the VR process was coercive and undermined the genuineness of the vote.

[63] The Agreement contains provisions for redundancy benefits, 16 however, the VR process is not a matter that is set out in the Agreement. That process was underway prior to the variation proposal being advanced, and given the extension provided by the employer, after the outcome of the proposal is known.

[64] I accept that the change to the VR process may have had an impact upon how employees voted and that this may have been intended. However, it was a responsive change that provided the employees with further options and I do not consider that such a change required the access period to be restarted. Although I will return to this issue as part of the broader consideration of the matter, I also do not consider that the VR change meant that the vote of the employees was somehow impugned or less genuine as a result.

The issues arising from the original s.196 (annual leave) undertaking

[65] During the course of the original proceedings to approve the Agreement an undertaking was provided by Veolia, and accepted by the relevant Senior Deputy President, arising at least principally, from the requirements of s.196 of the Act.

[66] Section 196 provides as follows:

“196 Shiftworkers

Application of this section

(1) This section applies if:

(a) an employee is covered by an enterprise agreement; and
(b) a modern award that is in operation and covers the employee defines or describes the employee as a shiftworker for the purposes of the National Employment Standards.

Shiftworkers and the National Employment Standards

The FWC must be satisfied that the agreement defines or describes the employee as a shiftworker for the purposes of the National Employment Standards.

Note: Section 87 provides an employee with an entitlement to 5 weeks of paid annual leave if an enterprise agreement that applies to the employee defines or describes the employee as a shiftworker for the purposes of the National Employment Standards.”

[67] The import of this provision was comprehensively considered by the Full Bench in Ramsay Health Care Australia Pty Ltd T/A Greenslopes Private Hospital v The Australian Workers’ Union of Employees, Queensland¹⁷(Ramsay Health Care). First it must be determined whether s.196 of the Act applies to the matter. In this regard, the Full Bench assessed the construction/requirements of s.196(1)(a), which requires there to be an employee who is covered by an enterprise agreement, and said:

“[19] … we refer first to the definition of “enterprise agreement” contained in s.12 of the Act. That provides, relevantly, that it means a single-enterprise agreement and "single-enterprise agreement" means “an enterprise agreement made as referred to in subsection 172(2)". It is to be noted that all that is here required is that the enterprise agreement is one that has been made. Clearly it having been presented for approval the Agreement had been made. Next, the consideration is whether an employee is covered by it. In this respect we have noted above that s.53 of the Act provides that an enterprise agreement covers an employee or employer if the agreement is expressed to cover the employee or the employer.”

[68] The Full Bench continued in relation to the remainder of s.196 and said:

“[23] … s.196 is to be read in a way in which the employee who is referred to in ss.196(1)(a) and (b) and in s.196(2) is the same employee. It is to that employee’s entitlements under the modern award and to that employee’s entitlements under the Agreement to which the section directs attention. It is the status of that employee as a shiftworker, for the purposes of the NES, which is to be maintained in the Agreement.”

[69] The Full Bench acknowledged that their construction of s.196 was consistent with the decision in Seventh-Day Adventist Aged Care (South Queensland) Ltd¹⁸ where the Commission said:

“[25] … the ordinary and natural meaning of s.196(2) is that the enterprise agreement must also define or treat those particular employees as shiftworkers for the purposes of the relevant NES (s.87(1)(b)(ii)).”

[70] And later added:

“[32] … an enterprise agreement that also included other employees within the definition of shiftworker for present purposes, or implied the relevant definition by providing the equivalent of the award-based NES leave, would appear to be permissible under s.196 of the Act.”

[71] The s.196 undertaking given in the original proceedings included the following:

“I can confirm that the employees under the Agreement will only be working day shifts and as such are not “shiftworkers” as per the above.

However, in the event that employees may be required to undertake work other than the usual day shift work on a permanent basis, the Veolia would provide the employees with the required shift allowance and additional leave entitlements in accordance with the Fair Work Act 2009 (Cth).” 19

[72] The modern award contains a definition of shift workers for the purposes of the NES. 20 Veolia has confirmed that the circumstances outlined in the original s.196 undertaking remain relevant. That is, it has not previously, and is not presently engaging employees as shift workers within that definition. Given the approach identified in Ramsay Health Care, it is feasible that the s.196 undertaking was provided and accepted as a matter of abundant caution.

[73] It is clear that the copy of the variation as provided to the employees did not contain the s.196 undertaking on annual leave that was accepted by the Commission as part of the original approval proceedings. In the further hearing of this matter, the AWU contended that as the undertaking was not included in the material provided to the employees it was not therefore included in the Agreement as varied as required by the Act. Further, it contends that the deletion of the undertaking was not explained to the employees as required.

[74] I also note that the AWU contended that in light of the problematic nature of clause 3 of the Agreement, it was not clear whether the shift worker annual leave provisions had been incorporated into the instrument. I have dealt with this above.

[75] Veolia contends that the original s.196 undertaking remains a valid and enforceable term of the Agreement and that it was not altered or varied by the agreed variation. As such, the term did not need to be explained to the employees and was not an incorporated term.

[76] The effect of the undertaking provided during the initial approval process is set out in s.191 of the Act as follows:

“191 Effect of undertakings

(1) If:

(a) the FWC approves an enterprise agreement after accepting an undertaking under subsection 190(3) in relation to the agreement; and
(b) the agreement covers a single employer;

the undertaking is taken to be a term of the agreement, as the agreement applies to the employer.

(2) If:

(a) the FWC approves an enterprise agreement after accepting an undertaking under subsection 190(3) in relation to the agreement; and
(b) the agreement covers 2 or more employers;

the undertaking is taken to be a term of the agreement, as the agreement applies to each employer that gave the undertaking.”

[77] Accordingly, the undertaking is taken to be a term of the enterprise agreement as approved by virtue of the operation of the Act. It has also been noted in the enterprise agreement approval decision 21 as required by the Act.22

[78] I must initially consider the legal impact of the non-inclusion of the s.196 undertaking in the supplied version of the variation. Depending upon the view taken about that issue, I may need to consider whether this meant that the employees were not provided with a copy of the variation as required by s.180(2) and/or whether the absence of a reference to the non-inclusion of the undertaking was itself part of the variation that should have been explained under s.180(5) and (6) of the Act.

[79] In my view, the s.196 undertaking is and remains a term of the Agreement by virtue of s.191 of the Act. I leave aside for present purposes whether it would be possible for parties to agree to remove an undertaking that led to the approval of an Agreement and became a term in that way. In any event, even if that were feasible, a variation of that nature would need to be explicit and there is no suggestion in the process that any variation to the s.196 undertaking was contemplated.

[80] Whatever the consequences of its omission from the supplied version of the Agreement might be, the s.196 undertaking remains a term of the Agreement.

S.180(2) - a copy of, and access to, the agreement variation

[81] In relation to access to materials in the lead up to a vote on an agreement or variation, s.180 of the Act relevantly provides as follows:

“Employees must be given copy of the agreement etc.

(2) The employer must take all reasonable steps to ensure that:

(a) during the access period for the agreement, the employees (the relevant employees) employed at the time who will be covered by the agreement are given a copy of the following materials:

(i) the written text of the agreement;
(ii) any other material incorporated by reference in the agreement; or

(b) the relevant employees have access, throughout the access period for the agreement, to a copy of those materials.”

[82] In the case of a variation, the reference to “text of the agreement” and related references under this provision are taken to refer to the “proposed variation”. 23

[83] The Commission has held 24 that depending upon the nature of the incorporated materials and the workplace, access to public documents through internet or other similar sources will be sufficient for present purposes. In the case of the modern award, this a public document and the evidence in this matter reveals that employees had a means of access to the modern award as contemplated within the authorities.

[84] On that basis, even if the terms of the modern award are incorporated by reference – which I do not find, Veolia has complied with the relevant requirements of s.180(2) of the Act.

[85] It is however appropriate to consider whether the employer has taken all reasonable steps to provide a copy of (and to provide access to) the written text of the proposed variation given the absence of the original s.196 undertaking from the materials provided to the employees.

[86] I do not consider that the s.196 undertaking has been incorporated by reference. That is, the undertaking is not referred to (or called-up) in the Agreement; rather, it is a term by virtue of the operation of the Act.

[87] There is no proposed variation to delete the s.196 undertaking and as such it is not a proposed variation. Its non-inclusion in the supplied marked-up version was an oversight but not in my view such as to mean that Veolia did not comply with the reasonable steps requirement set out in s.180(2) of the Act.

S.180(5) and (6) - the explanation of the variations provided to the employees

[88] The relevant obligation arises under s.180(5) and (6) of the Act in the following terms:

“Terms of the agreement must be explained to employees etc.

(5) The employer must take all reasonable steps to ensure that:

(a) the terms of the agreement, and the effect of those terms, are explained to the relevant employees; and
(b) the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.

(6) Without limiting paragraph (5)(b), the following are examples of the kinds of employees whose circumstances and needs are to be taken into account for the purposes of complying with that paragraph:

(a) employees from culturally and linguistically diverse backgrounds;
(b) young employees;
(c) employees who did not have a bargaining representative for the agreement.”

[89] When applying to a variation, reference in these provisions to the “agreement” means the proposed agreement. 25

[90] The operation of s.180(5) and (6) has been considered by the Commission in many matters. In National Tertiary Education Industry Union v University of New South Wales, 26 the Full Bench outlined the decision at first instance and its view as follows:

“[32] His Honour dealt with the challenge that was made by reference to the requirements of s.180(5)(a) in this way:

“[46] The NTEU contends that the University failed to adequately explain the terms of the Agreement, and the effect of those terms, as required by s.180(5)(a) because it failed to identify certain disadvantageous changes from the 2006 Agreement. Having regard to the evidence of Mr Ward, which I accept, none of the matters relied upon by the NTEU were matters of any great moment. UNSW provided substantial explanatory material. A practical approach needs to be adopted in relation to the obligation in s.180(5)(a). Obviously, the nature of the explanation provided to employees who will be covered by an agreement, and the steps that will constitute “all reasonable steps” will vary according to the circumstances of the employer and employees covered by the agreement and the complexity of the agreement.

[47] In this case the Agreement is lengthy and complicated. The obligation in s.180(5)(a) did not require UNSW to explain every single feature or every single clause in the Agreement. I am not persuaded that UNSW failed to comply with s.180(5)(a).”

[33] We can identify no error in His Honour’s approach. We agree with the UNSW submission that the obligation on an employer in s.180(5)(a) of the Act to explain the terms of the Agreement and the effect of those terms to employees does not require an explanation of every clause in the Agreement. These are not employees new to bargaining and it can be assumed they were well informed about the pre-approval steps needed to be taken to obtain FWA approval of the Agreement. The evidence certainly establishes the UNSW went into great detail to explain these matters and the content of the Agreement. Comparative schedules identifying all significant provisions were distributed and some 14 information sessions were conducted. Although we accept it is the actions taken by the UNSW to explain the Agreement to which s.180(5)(a) is directed, it would be unrealistic to ignore the active campaigns undertaken by the Appellant and the CPSU accompanied as they were by leaflets, emails and posters. These facts, and taking account of the composition of the workforce to be covered by the Agreement, could properly inform His Honour in his consideration of the requirements of s.180(5)(a). As for the sign on bonus His Honour was taken to the various documents and occasions where it was explained to employees. The evidence was adequate for His Honour to form the view that the requirements of s.180(5)(a) were met. No error has been established.”

[91] The steps taken by Veolia to explain the terms of the variation have been set out in general terms earlier in this decision. The AWU contends that those actions did not represent all reasonable measures to explain the terms including by reason of the lack of clarity around clause 3 of the Agreement, the fact that the variations reduced a number of provisions that are set out in the modern award, and the explanation of the impact upon leave accruals was not clear.

[92] It has not been suggested that any particular steps were necessary as a result of the circumstances contemplated by s.180(6) of the Act. There are, however, a range of circumstances that are relevant to the immediate consideration including:

• The nature and location of the workplace and workforce;



• There is an existing Agreement and its present operation would reasonably be understood by the employees;



• There are many provisions of the Agreement that are not the subject of proposed variations;



• The variations have a potentially significant impact upon certain entitlements under the existing Agreement, however, the variations in themselves are not complicated and involve, for the most part, the removal of a benefit and this would be reasonably evident from the terms of the variation themselves; and



• The reduction in provisions that would in other circumstances have been provided under the modern award would be of interest to the employees, however the modern award does not apply to the employees by virtue of the operation of the Agreement and the provisions of the Act. 27On that basis, the variations do not affect the terms of the modern award in relation to the employees.

[93] In reaching my conclusion on this aspect, I have also considered the process and implications surrounding the VR change and the impact of clause 3 of the Agreement. I do not consider that the explanation provided in relation to, or in light of, these matters was inadequate or misleading.

[94] In terms of the leave accruals, I will return to this aspect more generally when considering the form and nature of an undertaking provided by Veolia. For present purposes, it is sufficient for me to indicate that I also do not consider that the explanation provided on this aspect was inadequate or misleading in the circumstances so as to undermine the genuineness of the employees’ agreement.

[95] The original s.196 undertaking was and is a term of the Agreement. On that basis it was not necessary to explain any variation in that regard. I have however also considered whether the absence of any explanation of its omission from the worked-up version meant that the employer has not taken all reasonable steps to ensure that the effect of the terms of the variation has been explained to the relevant employees in an appropriate manner taking into account the particular circumstances and needs of those employees. Again this does not arise.

[96] I also note that the s.196 undertaking operates on a conditional basis; namely, if employees are engaged that might otherwise be considered to be “shift workers”. Although potentially important in legal terms, it is apparent that there have not been shift workers as contemplated within the undertaking engaged under the Agreement and that the undertaking has had no practical work to do to this point.

[97] Having regard to the nature of the variations and the circumstances at this workplace – including those issues set out above, I am satisfied that all reasonable steps were taken to ensure that the terms of the variations were explained to the employees. These steps included the written information, tool box meetings and information sessions and the processes established to permit the employees to seek further information or clarification.

5.4 Are there (other) reasonable grounds to consider that the variation was not genuinely agreed to by the employees?

[98] This question arises from s.188(c) of the Act and in this case involves a consideration of the overall circumstances, including some of the elements set out above, and two principal matters put in issue by the AWU.

The process leading to the proposal being given to employees and the role of the AWU

[99] It would be clear from the chronology of events outlined earlier in this decision that Veolia did not negotiate the terms of the proposed variation with the employees, or the AWU, prior to putting the proposal to the employees for approval.

[100] Despite the tight timeframe within which it had to respond to the tender process established by Santos, I am satisfied that Veolia had an opportunity to at least consult with the employees and the AWU prior to taking that step. The question becomes whether the “failure” to do so has led to a circumstances where the employees have not genuinely agreed to the variations given the terms of the Act.

[101] The AWU contends, in effect, that Veolia denied the AWU the opportunity to disseminate an alternative view and effectively excluded it from the process. In that light, and given the other circumstances, it argues that there were reasonable grounds to consider that the variation was not genuinely agreed to by the employees.

[102] I have reservations about the process adopted by Veolia in advancing the proposed variations. That is, in the context of an existing enterprise agreement freely made between the parties and with the AWU (and the AMWU) also being covered, the lack of engagement with them prior to formally putting the proposed variations to the employees leaves something to be desired. This strategy also ran the risk of alienating the employees by giving them no involvement in the development of the proposals.

[103] However, there are no express obligations on the employer to negotiate the terms of a proposed variation with the employees prior to submitting a proposed variation for approval by the employees. Unlike the making of an enterprise agreement, there is no requirement to issue a Notice of Representational Rights and there is no significant operative reference to bargaining representatives or processes in the relevant provisions of the Act directly relevant to the variation process or obligations.

[104] In any event, s.208 of the Act directly contemplates the employer who is covered by an enterprise agreement requesting the affected employees to approve the proposed variation by voting for it. In light of the terms of the Act, and the approach adopted in the authorities outlined earlier in this decision, what matters is whether the employer has complied with all the various pre-approval steps set out in Act and whether there are (other) reasonable grounds to consider that the variation was not genuinely agreed to by the employees. I accept that the exclusion of access to the employees’ union, along with other circumstances, could lead to such a conclusion. 28

[105] In this case, I do not consider that the process impugns the genuineness of the apparent agreement to the variation. The AWU was provided with a copy of the proposed variation along with the employees. Veolia had earlier advised the AWU that a variation was being contemplated and when the proposals were finalised it offered to meet with the union to discuss them.

[106] Mr Lamps was not able to meet with Veolia. The indication that the AWU would “let democracy take its course” was a reflection of the fact that by that stage the proposals were already out for the vote and was not an indication that the union was not interested or concerned. However, Mr Lamps did not request either a further meeting or the delay in the voting process.

[107] I would add that I do not imply any criticism of Mr Lamps. The timing of this process coincided with major developments at the Arrium Steelworks in Whyalla and given the circumstances he made the reasonable decision to leave the outcome of this process to the vote.

[108] The timeframes involved did, however, permit Mr Lamps to speak to Mr Withers and other members through individual calls and a members’ telephone conference, which took place during the access period. The access period also enabled the AWU to promote a vote against the proposed variation.

Unreasonable pressure upon the employees to agree with the variation

[109] The AWU contends that the unreasonable pressure was the result of the manner of the explanation provided to the employees and other circumstances including many of the aspects considered above.

[110] Veolia contends that there was no coercion or undue pressure and relied upon the traditional approach to such concepts. 29 Although these concepts are certainly relevant and raised by the Act30, as was made clear by Asbury DP in Central Queensland Services Pty Ltd31 (and cited with approval by the Full Bench in KCL) the present consideration is not limited to those matters.32

[111] The learned Deputy President also stated as follows:

“[83] I am also of the view that the fact that an employer makes negative comments about the economic environment in which it is operating in an attempt to persuade employees to approve an enterprise agreement, is not of itself a reasonable ground on which to form a belief that an agreement has not been genuinely agreed. That an employer may exaggerate economic circumstances is also not of itself a sufficient basis to justify such a conclusion that agreement is not genuine. In the present case, there is evidence that information disseminated to employees by the CFMEU about the viability of Daunia Mine may have been exaggerated. In the cut and thrust of bargaining, some conduct of this kind from the participants is not inappropriate and it is certainly not a basis for finding that there are reasonable grounds for believing that an agreement is not genuinely agreed to by employees.

[84] What an employer is not permitted to do is to mislead and misinform employees or coerce or intimidate them in a way that interferes with their right to bargain or to be represented by a person of their choice, or so that they do not have the freedom to choose to approve or not to approve an enterprise agreement. I am unable to accept that this has occurred in the present case.

[85] I accept that employees at Daunia Mine may have been under some stress when considering whether to approve the proposed Agreement. They had previously voted to reject an earlier iteration of the proposed Agreement and had been subjected to a “Yes” campaign from BMA and its managers and a “No” campaign from the CFMEU and its members. It is a matter of public record that the coal industry is confronting extremely difficult economic conditions. Employees who work in the Coal industry and live in towns that depend on that industry know first-hand of mine closures or retrenchments of mine workers. I do not doubt that employees at Daunia who voted on whether to approve the Agreement would have considered the possibility of the Mine closing and their jobs being at risk if the Agreement was not approved.

[86] However, I am unable to accept that employees were threatened with the loss of their jobs and the closure of the mine as a direct or indirect consequence of refusing to approve the Agreement. For an employer to state that it requires certainty and that its shareholders view labour costs as an area in which they are not prepared to accept uncertainty, is reasonable, appropriate and undoubtedly factually correct. It is not inappropriate for an employer to state that certainty about labour costs and industrial relations stability is needed in order for a business to continue to operate. Neither is it inappropriate for an employer to state to employees who are considering whether to approve an agreement, that if the agreement is rejected it will not resume negotiations at the level of the rejected offer. These are the statements that BMA managers made to employees and they do not provide reasonable grounds for the Commission to believe that the agreement has not been genuinely agreed to by employees.”

[112] In this case, the employees were informed that if Veolia was not successful in the Santos tender, then jobs were at risk. It was also stated, or reasonably implied by the employees, that the absence of approval of the variation would probably have that result.

[113] In the circumstances of this matter, those statements were not misleading and reflected the unfortunate commercial realities. Indeed, not to provide details about why the variations to the current Agreement were being sought would be disingenuous.

[114] There was some evidence about a manager, Mr Vellacott, asking an employee how they were to vote. I would accept that such exchanges should be carefully scrutinised as in some circumstances these can be indicative of undue or improper pressure. However, in this case the direct evidence is that Mr Vellacott was seeking information about how the employees as a group were likely to vote and there is no evidence that this or other discussions were conducted in a manner that is likely to have led to improper pressure being applied.

[115] I have also considered the impact of the change to the VR process, the position on accrued leave, and the issues surrounding the s.196 undertaking more generally, in assessing the requirements of s.188(c) of the Act.

5.5 Conclusions on genuine agreement

[116] I have considered each of the various necessary steps required to provide the foundation for a genuine agreement to the variations as set out in the Act, including those not expressly put into issue in this matter. I am satisfied that each of those steps was taken in compliance with the Act.

[117] I have also considered the entire circumstances of this mater based upon the evidence before the Commission, including those issues set out above.

[118] I am satisfied that a majority of the employees have agreed to the variations, that that agreement is genuine and that there are no reasonable grounds to consider that the variation was not genuinely agreed to by the employees.

6. The other approval requirements

[119] Earlier in this decision I listed the various requirements that the Commission must be satisfied of under the Act in order to approve a variation to an enterprise agreement. In addition to my findings above, I have also considered the balance of the approval requirements arising under the Act. Although I will deal with some of these in greater detail shortly, and without being exhaustive, I find:

• the group of employees covered by the agreement remains fairly chosen as required by s.186(3) – it is the same group of employees as under the original instrument;



• the Agreement as varied does not contain any unlawful terms or designated outworker terms as required by s.186(4),(4A);



• the Agreement as varied retains a procedure for settling disputes as required by s.186(6), consultation provisions as required by s.205 and a flexibility term as required by ss.202 and 203;



• the Agreement as varied does not specify a nominal expiry date of more than four years after the day on which the Commission initially approved agreement as required by s.186(5);



• the requirements of s.187(4) relating to particular kinds of employees have been met; and



• in light of my earlier findings - the approval would not be inconsistent with or undermine good faith bargaining as required by s.187(2) and no person was coerced or threatened into agreeing to the proposed variation as required by s.186(2)(b)(ii).

Better Off Overall Test

[120] The Agreement as varied must meet the Better Off Overall Test (BOOT) as required by s.186(2)(d). In general terms, an enterprise agreement (or an agreement with variations) passes the BOOT when the Commission is satisfied that each present and prospective award covered employee would be better off overall if the agreement applied rather than the relevant modern award. It is intended by the Act that the Commission may apply the better off overall test to classes of employees (s.193(7)). It is well established that the test requires the identification of terms which are more beneficial for an employee, terms which are less beneficial for an employee, and an overall assessment of whether an employee would be better off under the agreement.

[121] Further, the BOOT is to be applied objectively having regard to all of the relevant provisions of the Agreement and the reference instrument(s) at the test time as they would apply in the context in which they were agreed. 33

[122] Although there are a number of entitlements that are removed from the Agreement, and which are provided by the modern award, the rate of pay contained in Schedule 1 of the Agreement, even without the 4% increase that occurred on 1 July 2016, is significantly higher than that award. I have considered the circumstances of the employees having regard to the comprehensive material provided by Veolia, 34 which addressed a series of classifications and working patterns, and compared the terms of the Agreement as varied with the modern award. In my view, these comparisons represent an appropriate and fair analysis of the two instruments and indicate that in general terms the Agreement as amended provides a margin between 15 and 50% above the modern award in monetary terms.

[123] During the course of the proceedings, it became apparent that part of the explanation provided to the employees was that existing leave accruals would, in effect, retain their present value. That is, leave accrued up to the point of any variation would be paid based upon the rates and entitlements under the Agreement as it stood immediately prior to that point.

[124] In that light, Veolia offered to provide a formal undertaking and invited the Commission to consider such as part of its deliberations. Subsequent to the substantive hearing in this matter, a written undertaking was provided by Veolia in a form required by the Act.

[125] The undertaking is as follows:

“1. Subject to and conditional upon the approval by the Fair Work Commission of the Variation sought by Veolia Environmental Services (Australia) Pty Ltd (Veolia) to the Veolia Environmental Services (Australia) Pty Ltd Cooper Basin Enterprise Agreement 2014-2017 (the Agreement) in proceedings in matter no. AG2016/1495;

2. Veolia irrevocably undertakes and agrees to recognise and preserve the dollar value of the annual leave accruals of employees employed under the terms of the Agreement for those employees respective periods of continuous service up to the operative date of the Variation under s216 of the Act on the basis of the application of the terms of the Agreement, including but not limited to the terms of clause 13 and rates of pay applicable under Schedule 1, immediately prior to the operative date of the Variation.” 35

[126] The AWU contended, in effect, that the undertaking should be extended to other forms of leave and to the VR entitlements. I do not consider that it is appropriate to require that extension as such does not arise from commitments made during the consultation and information process and do not directly impact upon the BOOT or other relevant approval requirements. To the extent that this could impact upon sick/personal leave or long service leave, the ordinary rates under the Agreement are being maintained (with the exception of the 1 July 2016 increase that will have operated for a short period) and the variations do not have the same direct substantive impact upon those entitlements as the changes made to the annual leave benefits – where the leave loading has been lost. In this respect, I also note that the Long Service Leave Act 1987 (SA) defines the payment for such leave in a manner that excludes overtime, shift premiums and penalty rates in most circumstances. 36

[127] I also note that there is no evidence of any explanation given to the employees that the same approach would be taken to the VR entitlements.

[128] Noting that the annual leave issue could impact upon the BOOT and the proposed undertaking complies with the requirements of s.212(3) of the Act, I have accepted that undertaking under s.212 of the Act on the basis that this would meet any such concern. In line with s.213 of the Act, the undertaking is taken to be a term of the agreement consequent upon the approval of the variation.

[129] In all of the circumstances I am satisfied that the Agreement as varied meets the BOOT.

Relationship with the NES – s.55

[130] Clause 13.1 of the Agreement states the annual leave entitlement to be “28 consecutive days … … after one year’s continuous service with the employer”. Read narrowly, this is not consistent with the progressive accrual of annual leave under the NES. 37 On that basis, the Agreement as varied could contravene s.55 of the Act, being the provision that deals with the interaction between the NES and an enterprise agreement, as called up by s.186(2)(c) of the Act.

[131] In the lead up to the further hearing in this matter, Veolia provided an undertaking in the following terms:

“Further to the undertaking provided by our letter of 22 July 2016 Veolia further irrevocably undertakes and agrees as part of the proposed Variation to the substitution for the introductory wording to clause 13.1 of the Agreement re annual leave being:

“Except as otherwise provided by this clause, an employee will be entitled to 28 consecutive days (including non-working days) leave after one year’s continuous service with the employer.”

with the following words:

“Employees will be entitled to 28 consecutive days (including non working days) leave in accordance with the provisions on the NES.” 38

[133] Noting that the undertaking deals with the concerns about the NES and annual leave, and the proposed undertaking complies with the requirements of s.212(3) of the Act, I have accepted that undertaking under s.212 of the Act. In line with s.213 of the Act, the undertaking is taken to be a term of the agreement consequent upon the approval of the variation.

Annual leave for shift workers – s.196

[132] Given my findings that the original s.196 undertaking remains a term of the Agreement, I am satisfied that this requirement is met. No further undertaking is required.

Are there serious public interest grounds for not approving the variation?

[133] Whilst the approval of the variation has been strongly opposed, there has been no direct suggestion from the AWU that serious public interest grounds exist that should lead to the non-approval of the variation.

[134] The public interest is generally regarded as being the consideration of interests beyond the immediate circumstances of the parties and often involves reference to the objects of the Act in terms of those interests.

[135] The Object of the Act is provided as follows:

“3 Object of this Act

The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:
(a) providing workplace relations laws that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia’s future economic prosperity and take into account Australia’s international labour obligations; and
(b) ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders; and
(c) ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system; and
(d) assisting employees to balance their work and family responsibilities by providing for flexible working arrangements; and
(e) enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; and
(f) achieving productivity and fairness through an emphasis on enterprise level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action; and
(g) acknowledging the special circumstances of small and medium sized businesses.”

[136] The objects in relation to Part 2-4 of the Act, which deals with enterprise agreements, are provided in s.171 as follows:

“171 Objects of this Part

The objects of this Part are:

(a) to provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits; and

(b) to enable the FWC to facilitate good faith bargaining and the making of enterprise agreements, including through:

(i) making bargaining orders; and
(ii) dealing with disputes where the bargaining representatives request assistance; and
(iii) ensuring that applications to the FWC for approval of enterprise agreements are dealt with without delay.”

[137] As in the case of the statutory objects, in this matter, there are some competing considerations. These include the confidence that employees and other parties should have that in making an enterprise agreement that instrument will be honoured for its duration. Equally however, the Act contemplates that Agreements can be varied by agreement during their term and the capacity for parties to adjust to changing circumstances is also an important factor.

[138] There are various protections and requirements built into the provisions permitting a variation to take place by agreement and provided that agreement to vary is genuine and the end result meets the various BOOT, NES and other safety net requirements, the actual provisions are primarily a matter for the parties themselves.

[139] In this case, there are no serious public interest grounds for not approving the variation.

7. Conclusions

[140] Having considered the above matters and all of the other relevant statutory approval requirements as provided, or called up, by ss.210 and 211 of the Act, I am satisfied that the application should be granted.

[141] This decision confirms the approval of the variations, and as required by s.215 of the Act, the undertakings provided by Veolia have been noted in this decision.

[142] Section 216 of the Act contemplates that the variation operates from the day specified in the approval decision. I consider that variations of this degree and nature should not operate prior to the date of approval by the Commission and indeed that some short lead time is appropriate.

[143] The variations to the Agreement are approved and will operate on and from 8 August 2016.

[144] I note that an increase to the pay rate occurred under the present terms of the Agreement on 1 July 2016 and given the operation of this approval, the variation will not impact upon obligations prior to the date of effect.

[145] A consolidated version of the Agreement, as varied, together with the undertakings, is attached to this decision.

COMMISSIONER

Appearances:

T Kane of Counsel and T Gooch of Macpherson Kelley, both with permission, for Veolia Environmental Services (Australia) Pty Ltd.

S Crawford and later R Walsh for the Australian Workers’ Union.

Hearing details:

Adelaide:

2016

21 June

19 and 25 July.

 1   [2015] FWCA 1009.

 2   Exhibit A6.

 3   S.586 of the Act.

 4   Attachment CV-3 to the Statement of Mr Vidugiris – Exhibit A2.

 5   Attachment CV-4 to the Statement of Mr Vidugiris – Exhibit A2.

 6   Attachment CV-6 to the Statement of Mr Vidugiris – Exhibit A2.

 7   Attachment CV-8 to the Statement of Mr Vidugiris – Exhibit A2.

 8   Statement of Mr Withers – Exhibit R1.

 9   Attachment CV-14 to the Further Statement of Mr Vidugiris – Exhibit A3.

 10   Statement of Mr Crouch – Exhibit A1 at par 7.

 11   Ibid at par 8.

 12   [2016] FWCFB 3048.

 13   See Australasian Meat Industry Employees Union v Golden Cockerel Pty Limited[2014] FWCFB 7447.

 14   S.180(4) of the Act.

 15   S.180(3) of the Act.

 16   Clause 10 of the Agreement.

17 [2012] FWAFB 4033.

18 [2011] FWA 5103.

 19   [2015] FWCA 1009.

 20   Clause 41.3 of the modern award.

 21   [2015] FWCA 1009.

 22   S.201(3) of the Act.

 23 S.211(3)(d) of the Act.

 24   McDonalds Australia Pty Ltd and Shop, Distributive and Allied Employees Association [2010] FWAFB 4602 at [40] to [43] and NTEIU v University of New South Wales[2011] FWAFB 5163at [24].

 25 S.211(3)(d) of the Act.

 26   [2011] FWAFB 5163.

 27   S.57 of the Act.

 28   Toys ‘R’ Us (Australia) Pty Limited Enterprise Flexibility Agreement 1994 Print L9066 as cited in Queensland Services Pty Ltd and KCL.

 29   Including National Tertiary Education Industry Union v Commonwealth of Australia (2002) 117 FCR 114.

 30   S.186(2)(b)(ii) of the Act.

 31   [2015] FWC 1554.

 32 Ibid at [71].

 33   See also Hart v Coles Supermarkets Australia Pty Ltd and Bi-Lo Pty Limited T/A Coles and Bi Lo[2016] FWCFB 2887.

 34   Attachment JN-2 to the Statement of Ms Newell – Exhibit A5.

 35   Undertaking by Veolia dated 22 July 2016.

 36   Long Service Leave Act 1987 (SA) at s.3(2) and s.8.

 37 S.87(2) of the Act.

 38   Undertaking by Veolia dated 25 July 2016.

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