Vertech Group Pty Ltd T/A Vertech Group

[2021] FWC 447

[2021] FWC 447

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Vertech Group Pty Ltd T/A Vertech Group
(AG2020/2911)

DEPUTY PRESIDENT MANSINI MELBOURNE, 29 JANUARY 2021

Application for approval of the Vertech Group Pty Ltd Offshore Inspection Enterprise Agreement 2020.

[1] Vertech Group has made an application for approval of a single enterprise agreement known as the Vertech Group Pty Ltd Offshore Inspection Enterprise Agreement 2020 (Proposed Agreement) pursuant to s.185 of the Fair Work Act 2009 (Cth) (Act).

[2] In the course of the proceedings to date, concerns about the application have been raised with and by the Commission. The concerns relate to whether the Commission can be satisfied that:

a) The employees to be covered and prospective employees are “better off overall” under the Proposed Agreement than if the relevant award applied; and

b) The Proposed Agreement was “genuinely agreed” by the employees to be covered, specifically regarding:

•  the selection of the voting cohort; and

•  the explanation of the terms and effect of the Proposed Agreement.

[3] The Australian Workers’ Union (AWU), in its role as bargaining representative, filed a declaration indicating that it did not support the approval of the Proposed Agreement but sought to be covered by the Proposed Agreement if approved. 1

[4] Vertech Group was directed to respond to the concerns raised and the parties attended a conference at which the concerns were discussed but not resolved. As the parties sought the opportunity to address the Commission further, a program for the filing of submissions and further evidence was agreed and a hearing was convened. In addition to the original application materials, Vertech Group filed an amended declaration (which was not opposed and was received by the Commission pursuant to s.586), submissions and a witness statement of Mr Tom Brennan (Managing Director of Vertech Group). 2 In addition to its original declaration, the AWU filed submissions and a witness statement of Mr Doug Heath (Organiser of the AWU and the Maritime Union of Australia). At the hearing, neither witness was required for cross examination and the parties respectively supplemented their written materials with oral submissions in closing.

The first approval issue

Statutory context

[5] An enterprise agreement requires approval by the Commission in order to have legal effect under the Act. Section 186(1) of the Act establishes a “basic rule” that, where an application for approval of an enterprise agreement has been made, the Commission must approve the agreement if the requirements set out in ss.186 and 187 are met. One such requirement is that I be satisfied that the Proposed Agreement passes the “better off overall” test (test) in assessing whether it must be approved in accordance with the Act. 3 An enterprise agreement passes the test if the Commission is satisfied, as at the time the application is made, that each award covered employee and each prospective award covered employee for the enterprise agreement would be “better off overall” if the enterprise agreement applied, than if the modern award applied.4

[6] It is clear from the references to “each award covered employee” 5 and “each prospective award covered employee”6 in s.193(1) that every employee and prospective employee must be assessed as better off overall under the enterprise agreement than if the relevant modern award applied to that employee or prospective employee, as at the test time.7 However, s.193(7) permits the Commission to be satisfied, in particular circumstances, that all employees and prospective employees in a class of employees or prospective employees will be better off if the agreement applied to that class than if the relevant modern award applied to that class.8

[7] The application of the test requires the identification of enterprise agreement terms which are more beneficial, and the terms which are less beneficial, and then an overall assessment is made as to whether employees would be “better off overall” under the agreement than the relevant award. 9

Are employees “better off overall” under the Proposed Agreement?

[8] The Proposed Agreement, if approved, would operate to the exclusion of the relevant reference instrument (the Hydrocarbons Industry (Upstream) Award 2020 (Award)) and any other industrial instrument (subject to the operation of another law).

[9] It is common ground that the “Site Base Rate of Pay” for each classification under the Proposed Agreement is significantly higher in the Proposed Agreement than in the Award (assessed by the Commission as between 72% and 160% higher than the corresponding rates in the Award). However, the following concerns were identified:

a) Employees working on client sites would receive “different” and unspecified site or project terms and conditions subject to an agreement or arrangement made between Vertech Group and its client without the necessary safeguards (clause 5.16 of the Proposed Agreement); and

b) Employees working at an undefined “non-site location” would be paid an unspecified amount being a “minimum of 60% of the Site Base Rate of Pay” and only “where this is chargeable to the client” (defined as a “Non-Site Base Rate of Pay”) (clause 5.9 of the Proposed Agreement).

[10] Individually and together these concerns gave rise to a question of whether, on an overall basis, some classes of employees would not be “better off overall” under the Proposed Agreement.

[11] Vertech Group proposed undertakings directed at addressing these concerns. The amended version (currently proposed undertakings) is extracted in full at Attachment A to this decision.

[12] The proposed undertaking which is directed at the application of client or project terms and conditions under clause 5.16 was not opposed. Having regard to that proposed undertaking, I am satisfied that it would not cause financial detriment to any employee covered by the Proposed Agreement, would not result in substantial changes to the Proposed Agreement and its effect would be that clause 5.16 would not operate as a detriment for the purposes of the better off overall test.

[13] The proposed undertakings in relation to clause 5.9 were not supported by the AWU. Whilst these undertakings plainly guarantee that the rate of pay for ordinary hours, overtime and penalty rates under clause 5.9 will be greater than the Award by at least one cent per hour, that is a marginal amount. In the absence of a definition of “non-site location” or any clarification of the circumstances when the “Non-Site Base Rate of Pay” under clause 5.9 will be applied, the overall implications of the Proposed Agreement for the employees under clause 5.9 are simply not able to be quantified as either a benefit or a detriment. That is because there are a number of allowances and conditions that could conceivably apply under the Award which are excluded from and not offset by other conditions in the Proposed Agreement. The provision is also unclear as to whether an employee will be paid at all if work is performed at a “non-site location” where that work is not chargeable to the client. Accordingly, I am not satisfied that the proposed undertakings meet the concern. It follows that the Proposed Agreement does not meet the requirements of ss.186 and 187.

The second approval issue

Statutory context

[14] Another requirement for approval of an enterprise agreement, set out in s.186(2)(a), is that the Commission must be satisfied that the agreement has been “genuinely agreed to” by the employees covered by the agreement.

[15] Section 188 defines when employees have “genuinely agreed”. It establishes a set of requirements, relevantly:

a) Compliance with s.180(5), which provides that an employer must take “all reasonable steps” to ensure that the terms of the enterprise agreement, and the effect of those terms, are explained to the relevant employees and the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees (s.188(1)(a)(i));

b) That the agreement was made in accordance with s.182(1), which provides that if employees have been requested to vote to approve a non-greenfields agreement under s.181(1), the enterprise agreement is “made” when a majority of those employees cast a valid vote to approve it; and s.181(1) provides that an employer that will be covered by a proposed enterprise agreement may request the employees employed at the time who will be covered by the agreement to approve the agreement by voting for it (s.188(1)(b)); and

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

[16] These requirements are subject to s.188(2), which allows for the Commission to find that it would have been genuinely agreed but for minor technical or procedural errors made in relation to the requirements at s.188(1)(a) or (b) and the employees covered by the agreement were not likely to have been disadvantaged by the errors. Consideration of the genuineness of agreement under s.188(1) and (2) involves an evaluative assessment. 10

The explanation of the terms and effect of the Proposed Agreement

[17] The application included declarations that the Vertech Group Pty Ltd Rope Access Enterprise Agreement 2016 (2016 Agreement) currently applies to employees covered by the Proposed Agreement and of the steps taken to explain the terms and effect of the Proposed Agreement to the relevant employees, as follows: “dial in information sessions” with employees in which the differences from the 2016 Agreement to the Proposed Agreement were explained and employees were allowed to ask questions; a written explanation statement which explained the Proposed Agreement, the relevance of the Award and included a comparison of the 2016 Agreement and the Proposed Agreement; an email and letter to each individual employee to inform them of their new classification under the Proposed Agreement, how their pay would be impacted by the new Proposed Agreement and that the new Proposed Agreement did not include a separately payable site allowance; and “one-on-one” discussions by management with employees to answer questions. Copies of the written explanatory materials were provided to the Commission as attachments to Vertech Group’s amended declaration.

[18] The AWU invited the Commission to find that the requirements of s.180(5) were not met by the steps taken, in summary because:

a) A different enterprise agreement, the Vertech Group Pty Ltd Inspection Services Enterprise Agreement 2019 (2019 Agreement), covers and in fact currently applies to the relevant employees - not the 2016 Agreement which was subject of the comparison provided to employees by Vertech Group as part of its explanation; and

b) A new clause (clause 5.9) was not addressed in Vertech Group’s explanation of the Proposed Agreement and is confusing in terms of the rate of pay that applies to employees “working on a non-site location” and in what circumstances.

[19] As outlined above, in considering whether there was “genuine agreement”, s.188(1)(a)(i) requires compliance with s.180(5), which provides that the employer must take all reasonable steps to ensure that the terms of the enterprise agreement, and the effect of those terms, are explained to the relevant employees in an appropriate manner taking into account any particular circumstances and needs.

[20] The nature of the requirement in s.180(5) was analysed by the Federal Court in CFMEU v One Key Workforce Pty Ltd 11 and reduced to the following four propositions:

a) Whether an employer has complied with the obligation in s.180(5) depends on the circumstances of the case;

b) The focus of the enquiry whether an employer has complied with s.180(5) is first on the steps taken to comply, and then to consider whether:

•  the steps taken were reasonable in the circumstances; and

•  these were all the reasonable steps that should have been taken in the circumstances;

c) The object of the reasonable steps that are to be taken is to ensure that the terms of the agreement, and their effect, are explained to relevant employees in a manner that considers their particular circumstances and needs. This requires attention to the content of the explanation given; and

d) An employer does not fall short of complying with the obligation in s 180(5) of the Act merely because an employee does not understand the explanation provided. 12

[21] In BGC Contracting Pty Ltd, 13 the nature of the statutory obligation to take “all reasonable steps” was analysed as follows:

“A requirement or obligation to take “all reasonable steps” seems to me to require the identification of the steps a reasonable person would regard as reasonable in the circumstances that apply. Whether particular steps are reasonable will depend on the particular circumstances existing at the time the obligation arises. A requirement to take all reasonable steps does not extend to all steps that are reasonably open in some literal or theoretical sense…” 14

[22] The “evident purpose” of s.180(5) was described in Construction, Forestry, Maritime, Mining and Energy Union v Ditchfield Mining Services Pty Limited as “to ensure that employees are as fully informed as practicable about the terms and effect of the terms of a proposed enterprise agreement before voting on whether to approve it” and, further, “.. an employer’s discharge of its obligation under s.180(5) is intended to enable the employees to know what they are being asked to agree to, and to understand how their wages and working conditions might be affected by voting in favour of an agreement”. 15 It is not always the case that detriments in the enterprise agreement when compared to the relevant reference instrument (award) will need to be identified, particularly where an existing enterprise agreement applies.16 A key question will be whether “all” reasonable steps were taken, and what is reasonable will depend on the particular circumstances of the case.17

[23] Whilst each case turns on its own facts, an inaccuracy in the explanation may be fatal to the approval of an enterprise agreement 18 or alternatively may be cured by provision of an undertaking which effectively brings the enterprise agreement in line with the explanation.19 The existence of an ambiguity, even where it exists on the face of the enterprise agreement, may not provide a proper basis for concluding that there are reasonable grounds for believing that the agreement was not genuinely agreed.20

[24] In this case, it is common ground that Vertech Group’s explanations focussed on a comparison of the differences between the 2016 Agreement (which it says presently applies to the relevant employees) and the Proposed Agreement. Whilst there does not appear to be any dispute that both the 2016 Agreement and the 2019 Agreement may cover the employees who will be covered by the Proposed Agreement, the question of whether the 2016 Agreement or the 2019 Agreement in fact applies to their employment appears to be a live issue between the parties (and, it was submitted, that dispute is subject of another matter presently before another member of the Commission). 21 For present purposes, this may be relevant to the extent that the explanation of the Proposed Agreement included a comparison of the Proposed Agreement terms against terms that were said to be (but may not in fact be) applicable in the absence of the Proposed Agreement being made. The employees covered by the Proposed Agreement were engaged and paid under the 2016 Agreement (as though it applied to their employment at the relevant times). Vertech Group also pointed to the evidence of the age demographic and experience of the employees covered by the Proposed Agreement as an indicator that they were familiar with and able to comprehend the proposed terms and conditions.22

[25] In this case, the submission that the explanation was founded on an inaccuracy in that the 2019 Agreement (and not the 2016 Agreement) in fact applied to the employment of those to be covered by the Proposed Agreement was limited to broad assertions and, without more, I do not make such a conclusion. The written explanation included an analysis (in some detail, amounting to some 24 pages) of the differences between the terms and conditions that employees were (and presently are) being paid under the 2016 Agreement against the proposed terms and conditions in the Proposed Agreement. There were also other explanations provided by way of discussion and the evidence is that the employees requested those discussions concentrate on the differences between the 2016 Agreement and Proposed Agreement. At the time of the explanation, the employer believed (and continues to maintain) that the 2016 Agreement applied to the relevant employees, and applied those terms and conditions to their employment accordingly. In all of the circumstances of this case, I consider the steps taken to amount to “all reasonable steps” for the purposes of s.180(5) including because I am satisfied that employees could understand what they were being asked to agree to and how their wages and working conditions might be affected by voting in favour of the Proposed Agreement.

[26] Further, I note that it was not pressed and I am satisfied that, this is a case in which an explanation of the specific benefits and detriments against the award was not required in order to meet the obligation at s.180(5).

[27] Having so found, it is not necessary to consider the application of s.188(2).

[28] For completeness, I note that the unresolved “better off overall” concern identified earlier in this decision may give rise to a valid contention about whether the Agreement is “genuinely agreed”. As this may, at least conceivably, be addressed by the provision of an undertaking I will hear from the parties further before determining this question.

The voting cohort

[29] Vertech Group’s application for approval of the Proposed Agreement identified:

•  45 employees were covered by the Proposed Agreement at the time of the vote;

•  43 of those employees cast a valid vote; and

•  25 of those employees voted to approve the Proposed Agreement. 23

[30] In response to the AWU’s contention that there were “only approximately 25” employees covered by the Proposed Agreement at the time of the ballot, Vertech Group provided more evidence about the composition of the voting cohort. This included the following evidence in relation to the 45 employees in Vertech Group’s voting cohort:

•  3 employees were on and paid “JobKeeper” and were identified as assigned to a corresponding project during the access period and at the time of the vote;

•  A further 15 employees were on and paid “JobKeeper” during the access period and at the time of the vote: 5 of whom were “finished up from active work and stood down” in February 2020, 10 of whom were stood down in March 2020 and all of whom will be sent to an offshore project as soon as Vertech Group can (that is, “in the future when COVID passes”);

•  4 employees held a job title which included the word “supervisor” (Project Supervisor/Hull Tank Inspector, Offshore Inspection Supervisor, NDT Supervisor and Offshore RA NDT Supervisor) and were identified as classification levels 2 or 3;

•  All sites identified as “Project” are offshore inspection contract sites and the position titles identified as “Role” are all offshore inspection roles at those respective Projects; and

•  The voting cohort did not include Mr Brennan, who did not cast a vote or participate in the Proposed Agreement approval process, or an employee named “Tiffany”. 24

[31] Following receipt of the further evidence, the AWU continued to contend that the voting cohort included ineligible voters: 4 employees marked with job titles that included the term “supervisor” and 15 employees who were in receipt of JobKeeper since April 2020 (but were stood down from their employment in February or March 2020).

[32] As outlined above, in considering whether there was “genuine agreement”, s.188(1)(b) requires compliance with s.182(1). The cohort of employees entitled to be asked to vote under s.182(1) are those who were: “employed at the time” of the access period and the request to vote and “who will be covered” by the enterprise agreement.  25 On the expanded evidence, I accept that that the 4 roles with “supervisor” in the title and all of the employees on JobKeeper were employed by Vertech Group during the access period and the vote. The question in relation to these employees is whether they are also those “who will be covered” by the Proposed Agreement.

[33] An enterprise agreement “covers” an employee or employer if the agreement is expressed to cover (however described) the employee or the employer. 26 Because an employee may be covered by more than one agreement at one time, s.58(1) of the Act provides that only one enterprise agreement can apply to an employee at a particular time. In this context, the High Court of Australia in ALDI Foods Pty Limited v Shop, Distributive & Allied Employees Association27 (Aldi) held:

“The question of coverage that arises when the Commission asks whether the agreement has been genuinely agreed to for the purposes of s 186(2)(a) is not whether the employees voting for the agreement are actually employed under its terms, but rather whether the agreement covers all employees who may in future have the terms and conditions of their jobs regulated by it. At the stage of considering whether an enterprise agreement is available to be made under s 172 of the Act, ie when no agreement has as yet been made, it is a natural and ordinary use of language to speak of the employees whose jobs are within the scope of the proposed agreement as employees who “will be covered” by the agreement. At the stage of considering whether an enterprise agreement, which has been made (by virtue of s 182(1)), should be approved pursuant to s 186(2)(a), it is a natural and ordinary use of language to speak of the employees, whose jobs are described by the terms of the agreement which has been made, as employees who “are covered” by the agreement.”  28

[34] As set out above, enterprise agreement coverage derives from the expression of such in the terms of the agreement itself. Clause 2 of the Proposed Agreement defines the employees whose terms and conditions of employment will be regulated by the Proposed Agreement once operative as:

“(b) The employees of the Company’s operations in Australia employed and working offshore as inspectors in any of the classifications covered by this Agreement (Employees).”

[35] Clause 5.7 of the Proposed Agreement provides for classifications in levels defined as follows: Level 1 – Entry level; Level 2 – Intermediate Level; Level 3 – Advanced level; and Level 4 - Specialists. There are no job titles specified in the Proposed Agreement but there is a short description of duties and skills for each level. All levels hold inspection qualifications and/or a degree of applicable industry experience. Levels 2 and 3 carry out semi-skilled and skilled work, respectively and are expected to work with “minimal supervision”; Level 3 employees “showing” leadership qualities. Clauses 5.5 and 5.6 provide that the employer in its absolute discretion sets the classification level in accordance with the principles at clause 5.7 and may progress with regard to consideration of (among other things) a company requirement to perform work at that level.

[36] On the evidence of Mr Brennan, the 4 roles with titles that include “supervisor” are employed for the primary purpose of being “on the tools” as an offshore inspector and to undertake the work comprehended by the inspection classifications in the Proposed Agreement. The job titles themselves are also reflective of these functions. Mr Brennan also gave evidence that the term “supervisor” is reflective of certain ancillary Industrial Rope Access Trade Association (IRATA) duties which are required in ensuring the safety of rope access operations and not as a supervisor in the sense of managing or leading a team of offshore inspectors. I accept that the Proposed Agreement is not expressed to cover a supervisor classification in the sense of responsibility for management or leadership of a team. However, it does not proscribe job titles or preclude a person with the term “supervisor” in their title being engaged to perform work covered by the classifications in the Proposed Agreement. Vertech Group has provided evidence of the work performed by these roles and for the use of the term “supervisor” in these 4 job titles such that I am satisfied these roles may be employed in level 2 or level 3 classifications under, and are therefore covered by, the Proposed Agreement. Even if that were not the case and these 4 were not so covered and were ineligible to vote, this issue of itself is not fatal to the question of approval in that the Proposed Agreement would still have been approved by a valid majority. 29

[37] The remaining issue potentially infects a larger portion of the voting cohort such that the outcome may differ if the 15 employees on JobKeeper were ineligible as the AWU contends. It is common ground that a total of 18 employees were not actually working offshore and were “receiving JobKeeper” during the access period and the vote. Of those, 15 were stood down from their offshore worksites in February or March 2020, did not receive JobKeeper payments until April 2020 and were not identified by the employer as assigned to a particular offshore project. The AWU accepted that, the fact of not working on a worksite and being in receipt of JobKeeper payments at the relevant time(s) did not of itself render an employee ineligible to vote (and that this was likely the case for the other 3 employees solely receiving JobKeeper but assigned to an offshore project). It sought to distinguish the 15 who were not identified as having a corresponding offshore project whom it contends were employed solely for the purposes of receiving JobKeeper. There is simply no probative evidence to support such allegation. To the contrary, the evidence is that these 15 employees were employed to work offshore, in offshore inspection roles, continued to be employed at all relevant times and, but for the intervening circumstance and impact of the global pandemic (COVID-19), would have continued working offshore during the relevant times. They were initially stood down but at the relevant times were paid having been assessed as eligible for the JobKeeper scheme. Furthermore, the evidence is that these 15 employees would return to work offshore as soon as they were able. I am satisfied on the evidence that the 15 employees were employed in roles that are covered by the Proposed Agreement and whose employment the Proposed Agreement will regulate when it comes into operation.

[38] For completeness, there was no contention to the contrary and I am satisfied in the particular circumstances of this matter and on the evidence before the Commission that those employees identified as “Casual” are properly described as long term, regular and systematic who were employed at the relevant times and entitled to vote.

[39] Further, that on an inspection of the unredacted records, there is no evidence that Mr Brennan or a person named “Tiffany” cast a vote.

[40] Having so found, it is not necessary to consider the application of s.188(2).

Conclusion

[41] For the above reasons, I am not able to be satisfied that the employees would be better off overall under the Proposed Agreement and this may give rise to a residual concern as to whether the Proposed Agreement was “genuinely agreed”, such that the requirements of ss.186 and 187 of the Act are not met.

[42] The Commission will separately correspond with Vertech Group and the bargaining representative to invite further undertakings and views about any further undertakings, following which a final determination of this application will be made.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<PR726520>

Attachment A

 1   Form F18 filed on 2 October 2020.

 2   Annexure TB-1 to which was provided to the parties and their representatives in redacted form, and to the Commission in unredacted form, subject to Confidentiality Orders.

 3   Pursuant to s.186(2) of the Act, noting the BOOT is just one of the matters about which the Commission must be satisfied.

 4   Fair Work Act 2009 (Cth) ss.193(1) and (6).

 5   Defined at Fair Work Act 2009 (Cth) s.193(4).

 6   Defined at Fair Work Act 2009 (Cth) s.193(5).

 7   Solar Systems Pty Ltd [2012] FWAFB 6397 at [11]; Hart v Coles Supermarkets Australia Pty Ltd [2016] FWCFB 2887 at [6], [15]; SDAEA v Beechworth Bakery [2017] FWCFB 1664 at [11].

 8   Loaded Rates Agreements [2018] FWCFB 3610 at [102]-[103].

 9   Re Armacell Australia Pty Ltd (2010) 202 IR 38 at [41].

 10   Huntsman Chemical Company Australia Pty Limited t/a RMAX Rigid Cellular Plastics and Others [2019] FWCFB 318.

 11   [2019] FWFB 4022.

 12   [2019] FWFB 4022 at [64]-[68] as cited in The Australian Workers’ Union v Rigforce Pty Ltd t/a Rigforce [2019] FWCFB 6960 at [35].

 13   [2018] FWC 1466.

 14   [2018] FWC 1466 at [43].

 15   [2019] FWCFB 4022 at [71] and [72].

 16   [2019] FWCFB 4022 at [71].

 17   [2018] FWC 1466 at [42].

 18   Rigforce Pty Ltd T/A Rigforce [2020] FWC 591.

 19   Karijini Rail [2020] FWCFB 958.

 20   [2018] FWC 1466 at [147].

 21   Respondent’s Submissions at 16.

 22   TB-1.

 23   Original Form F17 Declaration filed on 25 September 2020 and Amended Form F17 Declaration filed on 15 October 2020.

 24   TB-1 and Amended Form F17 Declaration as filed on 15 October 2020.

 25   ALDI Foods Pty Limited v Shop, Distributive & Allied Employees Association [2017] HCA 53; National Tertiary Education Industry Union v Swinburne University of Technology [2015] FCAFC 98 (Swinburne); Appeal by Shop, Distributive and Allied Employees Association & Ors[2019] FWCFB 7599 at [33].

 26   Fair Work Act 2009 (Cth) s 53.

 27 [2017] HCA 53.

 28 [2017] HCA 53 at [77].

 29   Swinburne at [10].