W.H. Heck & Sons Pty Ltd T/A Rocky Point Sugar Mill - [2022] FWC 340

[2022] FWC 340

FAIR WORK COMMISSION

reasons for DECISION

Fair Work Act 2009

s.185—Enterprise agreement

W.H. Heck & Sons Pty Ltd T/A Rocky Point Sugar Mill

(AG2021/8709)

COMMISSIONER HUNT

BRISBANE, 17 FEBRUARY 2022

Application for approval of the Rocky Point Sugar Mill Enterprise Agreement 2021 – application dismissed in ex tempore decision – modern award not provided to employees during access period – undertaking offered by Applicant not accepted – dispute settlement procedure term not met

Introduction

On 3 December 2021, W.H. Heck & Sons Pty Ltd T/A Rocky Point Sugar Mill (the Employer) applied to the Fair Work Commission (the Commission) for approval of the Rocky Point Sugar Mill Enterprise Agreement 2021 (the Agreement) pursuant to s.185 of the Fair Work Act 2009 (the Act).

Issues were raised pertaining to the dispute resolution procedure within the Agreement. Undertakings were offered by the Employer which I did not consider sufficient to allow approval of the Agreement. On 1 February 2022, following a hearing in this matter, I made an ex tempore decision to dismiss the application for approval of the Agreement and made orders accordingly. These are my Reasons for Decision.

Background

The Employer provided a Form F17 – Employer’s declaration in support of an application for approval of an enterprise agreement (other than a greenfields agreement) (F17) declared by Mr David Heck, Managing Director of the Employer. In the F17, Mr Heck declared that employees covered by the Agreement were covered by the Sugar Industry Award 2020 [MA000087] (the Sugar Award).

The following unions (collectively, the Unions) have been involved as bargaining representatives for the Agreement, in addition to three employee bargaining representatives:

· “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU);

· The Australian Workers’ Union (AWU); and

· Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (ETU/CEPU).

It is fair to say that the Employer did not initially enthusiastically participate in the bargaining process for the Agreement. On 14 June 2021, the AMWU sought the assistance of the Commission in its bargaining with the Employer by way of lodging a ‘Form F32 – Application for a bargaining order’ (F32). In the F32, reference was made to the previous enterprise agreement, the Rocky Point Sugar Mill Enterprise Agreement 2015 (the 2015 Agreement), which passed its nominal expiry date on 4 May 2017, and that a protracted bargaining process had been underway since around that time. The F32 made reference to earlier protected action ballot orders issued by Hamberger SDP.[1]

By July 2021 there was some disagreement as to whether a majority of employees wished to bargain. The F32 application was withdrawn on 3 August 2021 by the AMWU following agreement by the Employer to bargain on the basis of a petition of employees which demonstrated that a majority of employees wished to bargain.

The dispute resolution procedure provided by the Agreement

Clause 19 of the Agreement simply provides:

“19 Consultation and Dispute Resolution

The term [sic] of this clause are to be taken from Part 10 of the Act.”

It is necessary to note that there is no Part 10 of the Act.

On 13 December 2021, I issued correspondence to the Employer, the Unions and employee bargaining representatives, raising concerns with the dispute resolution and consultation clause in the Agreement. I also raised a concern about first year apprentices (who have not completed grade 12) being better off overall under the Agreement. An appropriate undertaking was given by the Employer to address the concern about apprentice rates of pay; this issue is not in dispute.

I was, and am, of the view that the Agreement did not contain a consultation term, and therefore, the Agreement did not meet the requirements of s.205 of the Act to permit approval of the Agreement. I informed the parties that in the event of approval, the model consultation term would be inserted into the Agreement. The Employer did not cavil with my proposal that a copy of the model consultation term prescribed by Schedule 2.3 to the Fair Work Regulations 2009 (the Regulations) would be included with Agreement, if approved, and be taken to be a term of it.

I was, and am, of the view that the Agreement did not contain a dispute resolution term and, therefore, the Agreement did not meet the requirements of s.186(6) of the Act to permit approval of the Agreement. I invited the Employer to give an undertaking that the model term for dealing with disputes for enterprise agreements in Schedule 6.1 to the Regulations will be inserted in the Agreement and taken to be a term of the Agreement, so that the Agreement would satisfy the requirements in s.186(6) of the Act:

“Requirement for a term about settling disputes

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

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

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

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

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

Later, on 13 December 2021, the Employer declined to provide the undertaking proposed by me and instead offered to give an undertaking that clause 39 of the Sugar Award, the Dispute Resolution clause be taken to be a term of the Agreement.

On 21 December 2021, the AMWU raised concerns with the undertaking proposed as to the dispute settlement procedure. The AMWU’s concerns were expressed as follows:

“We refer to the above matter and to the amended undertakings proffered by the Applicant.

The Union is concerned that the undertaking dealing with dispute resolution may not meet the requirements of Section 186 of the Act which requires that the Commission must be satisfied that the agreement includes a term:

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

i)         About any matters arising under the agreement (our emphasis); and
ii)        In relation to the National Employment Standards; and
iii)       That allows for the representation of employees covered by the agreement for the purposes of that procedure. [emphasis in original]

The proffered undertakings seem only to extend to disputes arising under the Sugar Industry Award 2020 or in relation to the National Employment Standards. We are therefore concerned that this leaves employees unable to raise disputes about matters arising under the agreement, which contains terms that depart from the Modern Award. [emphasis added]

We respectfully submit that the Commission should insert the model dispute resolution procedure contained at Schedule 6.1 of the Fair Work Regulations 2009 (Cth) as a term of the Enterprise Agreement.

A series of correspondence ensued between the Employer, the Unions, and the Commission, regarding the dispute resolution procedure, which culminated in this matter being listed for a hearing. Throughout the course of this correspondence, the Employer provided further revised undertakings, but not the undertaking sought by the Commission. The undertakings offered are described below.

On 22 December 2021, Mr Heck offered an undertaking which proposed that clauses 37-39 of the Sugar Industry Award 2020 be included, but with the addition of the words “the agreement, the” in clauses 39.1 and 39.8:

“I, David Heck, Managing Director have the authority given to me by W.H. Heck & Sons Pty Ltd T/A Rocky Point Sugar Mill to give the following undertakings with respect to the Rocky Point Sugar Mill Enterprise Agreement 2021 ("Agreement").

1. The Agreement will be interpreted and applied as though clause 19 of the Agreement were deleted and replaced with the following:

"19 Consultation and Dispute Resolution

A. The consultation procedure at clause 37 and 38 of the Sugar Industry Award 2020, as amended from time to time, the present form of which is reproduced below, is taken to be a term of the Agreement:

37. Consultation about major workplace change

37.1 If an employer makes a definite decision to make major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must:

(a) give notice of the changes to all employees who may be affected by them and their representatives (if any); and

(b) discuss with affected employees and their representatives (if any):

(i) the introduction of the changes; and

(ii) their likely effect on employees; and

(iii) measures to avoid or reduce the adverse effects of the changes on employees; and

(c) commence discussions as soon as practicable after a definite decision has been made.

37.2 For the purposes of the discussion under clause 37.l(b), the employer must give in writing to the affected employees and their representatives (if any) all relevant information about the changes including:

(a) their nature; and

(b) their expected effect on employees; and

(c) any other matters likely to affect employees.

37.3 Clause 37.2 does not require an employer to disclose any confidential information if its disclosure would be contrary to the employer's interests.

37.4 The employer must promptly consider any matters raised by the employees or their representatives about the changes in the course of the discussion under clause 37.l(b).

37.5 In clause 37 significant effects, on employees, includes any of the following:

(a) termination of employment; or

(b) major changes in the composition, operation or size of the employer's workforce or in the skills required; or

(c) loss of, or reduction in, job or promotion opportunities; or

(d) loss of, or reduction in, job tenure; or

(e) alteration of hours of work; or

(f) the need for employees to be retrained or transferred to other work or locations; or

(g) job restructuring.

37.6 Where this award makes provision for alteration of any of the matters defined at clause 37.5, such alteration is taken not to have significant effect.

38. Consultation about changes to rosters or hours of work

38.1 Clause 38 applies if an employer proposes to change the regular roster or ordinary hours of work of an employee, other than an employee whose working hours are irregular, sporadic or unpredictable.

38.2 The employer must consult with any employees affected by the proposed change and their representatives (if any).

38.3 For the purpose of the consultation, the employer must:

(a) provide to the employees and representatives mentioned in clause 38.2 information about the proposed change (for example, information about the nature of the change and when it is to begin); and

(b) invite the employees to give their views about the impact of the proposed change on them (including any impact on their family or caring responsibilities) and also invite their representative (if any) to give their views about that impact.

38.4 The employer must consider any views given under clause 38.3(b).

38.5 Clause 38 is to be read in conjunction with any other provisions of this award concerning the scheduling of work or the giving of notice.

B. The dispute resolution procedure at clause 39 of the Sugar Industry Award 2020, as amended from time to time, the present form of which is reproduced below, is taken to be a term of the Agreement:

39. Dispute resolution

39.1 Clause 39 sets out the procedures to be followed if a dispute arises about a matter under this agreement, the award or in relation to the NES.

39.2 The parties to the dispute must first try to resolve the dispute at the workplace through discussion between the employee or employees concerned and the relevant supervisor.

39.3 If the dispute is not resolved through discussion as mentioned in clause 39.2, the parties to the dispute must then try to resolve it in a timely manner at the workplace through discussion between the employee or employees concerned and more senior levels of management, as appropriate.

39.4 If the dispute is unable to be resolved at the workplace and all appropriate steps have been taken under clauses 39.2 and 39.3, a party to the dispute may refer it to the Fair Work Commission.

39.5 The parties may agree on the process to be followed by the Fair Work Commission in dealing with the dispute, including mediation, conciliation and consent arbitration.

39.6 If the dispute remains unresolved, the Fair Work Commission may use any method of dispute resolution that it is permitted by the Act to use and that it considers appropriate for resolving the dispute.

39.7 A party to the dispute may appoint a person, organisation or association to support and/or represent them in any discussion or process under clause 39.

39.8 While procedures are being followed under clause 39 in relation to a dispute:

(a) work must continue in accordance with this agreement, the award and the Act; and

(b) an employee must not unreasonably fail to comply with any direction given by the employer about performing work, whether at the same or another workplace, that is safe and appropriate for the employee to perform.

Clause 39.8 is subject to any applicable work health and safety legislation.

2. First Year Apprentices who have not completed year 12 covered by the Agreement will be paid at rates no less than 5 cents per hour more than the equivalent rate under the Sugar Industry Award 2020 Award, as in force from time to time.
These undertakings are provided on the basis of issues raised by the Fair Work Commission in the application before the Fair Work Commission.”

On 23 December 2021, my Chambers issued the following correspondence to the parties, providing some draft wording in an attached undertaking for the Employer’s consideration:

“Reference is made to the above matter and recent correspondence in this matter regarding the consultation and dispute resolution terms to be used in this agreement, if approved.

The Commissioner has reviewed the amended undertakings provided, along with the AMWU’s concerns, and considers that the preferable course of action would be for the attached draft undertaking to be considered by the Applicant.

The attached draft undertaking provides for the model dispute settlement clause to apply, and provides an undertaking in relation to first year apprentices.

Regarding the model consultation term, it simply references it as a note, but it is not an undertaking as an undertaking cannot be given on this issue.

The Commissioner invites the Applicant to consider the attached draft undertakings, and to sign and lodge them if they are acceptable. The views of the AMWU are invited.”

The proposed draft undertaking provided by the Commission for the Employer’s consideration was as follows:

“Undertaking 1:

Dispute Settlement Procedure: The Agreement will be interpreted and applied as though clause 19 of the Agreement were deleted. It is acknowledged that the model dispute resolution term contained in Schedule 6.1 to the Fair Work Regulations 2009, as amended from time to time, is taken to be a term of the Agreement. The model term currently reads as per below and is reproduced for convenience, however the model term as amended from time to time shall apply:

“Schedule 6.1—Model term for dealing with disputes for enterprise agreements
(regulation 6.01)
Model term

(1) If a dispute relates to:

(a) a matter arising under the agreement; or

(b) the National Employment Standards;

this term sets out procedures to settle the dispute.

(2) An employee who is a party to the dispute may appoint a representative for the purposes of the procedures in this term.

(3) In the first instance, the parties to the dispute must try to resolve the dispute at the workplace level, by discussions between the employee or employees and relevant supervisors and/or management.

(4) If discussions at the workplace level do not resolve the dispute, a party to the dispute may refer the matter to Fair Work Commission.

(5) The Fair Work Commission may deal with the dispute in 2 stages:

(a) the Fair Work Commission will first attempt to resolve the dispute as it considers appropriate, including by mediation, conciliation, expressing an opinion or making a recommendation; and

(b) if the Fair Work Commission is unable to resolve the dispute at the first stage, the Fair Work Commission may then:

(i) arbitrate the dispute; and

(ii) make a determination that is binding on the parties.

Note: If Fair Work Commission arbitrates the dispute, it may also use the powers that are available to it under the Act.

A decision that Fair Work Commission makes when arbitrating a dispute is a decision for the purpose of Div 3 of Part 5.1 of the Act. Therefore, an appeal may be made against the decision.

(6) While the parties are trying to resolve the dispute using the procedures in this term:

(a) an employee must continue to perform his or her work as he or she would normally unless he or she has a reasonable concern about an imminent risk to his or her health or safety; and

(b) an employee must comply with a direction given by the employer to perform other available work at the same workplace, or at another workplace, unless:

(i) the work is not safe; or

(ii) applicable occupational health and safety legislation would not permit the work to be performed; or

(iii) the work is not appropriate for the employee to perform; or

(iv) there are other reasonable grounds for the employee to refuse to comply with the direction.

(7) The parties to the dispute agree to be bound by a decision made by Fair Work Commission in accordance with this term.”

Undertaking 2:

First Year Apprentices: First Year Apprentices who have not completed year 12 covered by the Agreement will be paid at rates no less than 5 cents per hour more than the equivalent rate under the Sugar Industry Award 2020, as in force from time to time.

Noted:

Consultation Term: The Agreement will be interpreted and applied as though clause 19 of the Agreement were deleted. It is acknowledged that the model consultation term contained in Schedule 2.2 to the Fair Work Regulations 2009 is taken to be a term of the Agreement. It is understood an undertaking cannot be provided in respect of this issue.

These undertakings are provided on the basis of issues raised by the Fair Work Commission in the application before the Fair Work Commission.”

On 23 December 2021, the AMWU advised that it was content with the course of action proposed by the Commission earlier that day (outlined above).

On 27 December 2021, Mr Heck provided the following response, again providing the undertakings provided earlier on 22 December 2021:

“The workforce voted on the terms of clause 19 as if it was referenced from the Award. As such my previous undertaking in draft stands as if clause 19 is proposed to be deleted and replaced by terms of the regulation I am concerned this is a material difference to that put to the workforce and voted.

I attached again these previous undertakings for reference.”

On 4 January 2022, my Chambers issued the following correspondence:

“Reference is made to the above matter and the below and attached correspondence.

The Commissioner has considered the correspondence from Mr Heck on 27 December 2021 and advises that the Commission cannot accept an undertaking for the consultation term. Accordingly the agreement is unable to be approved. The Commissioner invites the Employer to consider the application of the below relevant sections of the Act:

- Section 205(2) of the Act provides:

“(2) If an enterprise agreement does not include a consultation term, or if the consultation term is an objectionable emergency management term, the model consultation term is taken to be a term of the agreement.” (emphasis added)

- Section 186(6) of the Act provides:

“Requirement for a term about settling disputes

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

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

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

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

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

- Sections 190(1) and (2) provide:

“Application of this section

(1) This section applies if:

(a) an application for the approval of an enterprise agreement has been made under subsection 182(4) or section 185; and

(b) the FWC has a concern that the agreement does not meet the requirements set out in sections 186 and 187.

Approval of agreement with undertakings

(2) The FWC may approve the agreement under section 186 if the FWC is satisfied that an undertaking accepted by the FWC under subsection (3) of this section meets the concern.”

The Commission’s power to accept undertakings under s.190 extends only to matters of concern arising under ss.186-187. The consultation clause requirements are contained in s.205. Any issue with compliance with s.205 is addressed by the model consultation term being taken to be part of the agreement. In practice, this is noted in the decision to approve the agreement.

The Commissioner recommends the employer make the undertaking proposed by the Commissioner on 23 December 2021 (see attached Word document). The Commissioner notes that the AMWU has expressed its support for this approach on 23 December 2021.

In the event the employer does not wish to make the undertaking as proposed, the Commissioner advises it is her preliminary view that she would dismiss the application to approve the agreement. She advises that she is prepared to provide the employer until 4:00PM (AEST) Monday, 10 January 2022 to advise its position on this issue.”

On 6 January 2022, Mr Heck sent the following email:

“Please find attached revised undertaking, given the comments from the Commission:

· Under Section 205(2) of the Act:
· The model consultation term has been adopted;

· Under Section 186 (6) of the Act, requirement for a term about settling disputes:

· The undertaking provides a procedure that requires or allows the FWC to settle disputes:
· About any matters arising under the agreement; and
· In relation to the National Employment Standards; and

· Allows for the representation of employees covered by the agreement for the purposes of this procedure.”

The revised undertaking provided by Mr Heck on 6 January 2022 was as follows:

“I, David Heck, Managing Director have the authority given to me by W.H. Heck & Sons Pty Ltd T/A Rocky Point Sugar Mill to give the following undertakings with respect to the Rocky Point Sugar Mill Enterprise Agreement 2021 ("Agreement").

Undertaking 1:

Dispute Settlement Procedure: The Agreement will be interpreted and applied as though clause 19 of the Agreement were replaced with the following:

19 Dispute Resolution
(1) If a dispute relates to:

(a) a matter arising under the agreement; or

(b) the National Employment Standards;

this clause sets out procedures to settle the dispute.

(2) An employee who is a party to the dispute may appoint a representative for the purposes of the procedures in this clause.

(3) In the first instance, the parties to the dispute must try to resolve the dispute at the workplace level, by discussions between the employee or employees and relevant supervisors and/or management.

(4) If discussions at the workplace level do not resolve the dispute, a party to the dispute may refer the matter to Fair Work Commission.

(5) The Fair Work Commission may deal with the dispute in 2 stages:

(a) the Fair Work Commission will first attempt to resolve the dispute as it considers appropriate, including by mediation conciliation expressing an opinion or making a recommendation; and

(b) if the Fair Work Commission is unable to resolve the dispute at the first stage, the Fair Work Commission may then:

(i) arbitrate the dispute; and

(ii) make a determination that is binding on the parties.

Note: If Fair Work Commission arbitrates the dispute, it may also use the powers that are available to it under the Act.

A decision that Fair Work Commission makes when arbitrating a dispute is a decision for the purpose of Div 3 of Part 5.1 of the Act. Therefore, an appeal may be made against the decision.

(6) While the parties are trying to resolve the dispute using the procedures in this clause:

(a) an employee must continue to perform his or her work as he or she would normally and as directed by the employer, unless he or she has a reasonable concern about an imminent risk to his or her health or safety, the work is deemed not safe and the Work Health and Safety Act 2011, as amended from time to time, would not permit the work to be performed; and

(b) an employee must comply with a direction given by the employer to perform other available work at the same workplace, or at another workplace, unless:

(i) the work is deemed not safe; and

(ii) the Work Health and Safety Act 2011, as amended from time to time, would not permit the work to be performed; or

(iii) the employee is not competent to perform the work.

An employee must not unreasonably fail to comply with any direction given by the employer about performing work, whether at the same or another place, that is safe and appropriate for the employee to perform.

Undertaking 2:

First Year Apprentices: First Year Apprentices who have not completed year 12 covered by the Agreement will be paid at rates no less than 5 cents per hour more than the equivalent rate under the Sugar Industry Award 2020 Award, as in force from time to time.

Noted:

Consultation Term: It is acknowledged that the model consultation term contained in Schedule 2.2 to the Fair Work Regulations 2009 is taken to be a term of the Agreement. It is understood an undertaking cannot be provided in respect of this issue.

These undertakings are provided on the basis of issues raised by the Fair Work Commission in the application before the Fair Work Commission.”

Later, on 6 January 2022, the AMWU provided the following submission in respect of the above revised undertaking provided by Mr Heck:

“Upon review of the material, it appears that the Applicant’s revised undertaking alters the model term. I have set out the alterations that we have identified for the benefit of the Commission:

The model term provides:

“While the parties are trying to resolve the dispute using the procedures in this term:

(a) an employee must continue to perform his or her work as he or she would normally unless he or she has a reasonable concern about an imminent risk to his or her health or safety; and

(b) an employee must comply with a direction given by the employer to perform other available work at the same workplace, or at another workplace, unless:

(i) the work is not safe; or

(ii) applicable occupational health and safety legislation would not permit the work to be performed; or

(iii) the work is not appropriate for the employee to perform; or

(iv) there are other reasonable grounds for the employee to refuse to comply with the direction.

(7) The parties to the dispute agree to be bound by a decision made by Fair Work Commission in accordance with this term.”

The Applicant’s Undertaking provides:

While the parties are trying to resolve the dispute using the procedures in this ~~term~~ clause:

(a) an employee must continue to perform his or her work as he or she would normally ~~unless he or she has a reasonable concern about an imminent risk to his or her health or safety~~ and as directed by the employer, unless he or she has a reasonable concern about an imminent risk to his or health or safety, the work is deemed not safe and the Work Health and Safety Act 2011, as amended from time to time, would not permit the work to be performed; and

(b) an employee must comply with a direction given by the employer to perform other available work at the same workplace, or at another workplace, unless:

(i) the work is deemed not safe; or

(ii) ~~applicable occupational health and safety legislation would not permit the work to be performed~~ the Work Health and Safety Act 2011, as amended from time to time, would not permit the work to be performed; or

(iii) ~~the work is not appropriate for the employee to perform~~ the employee is not competent to perform the work; or

~~(iv) there are other reasonable grounds for the employee to refuse to comply with the direction.~~

An employee must not unreasonably fail to comply with any direction given by the employer about performing work, whether at the same or another place, that is safe and appropriate for the employee to perform.

(7) The parties to the dispute agree to be bound by a decision made by Fair Work Commission in accordance with this term.”

We note the Commission’s previous advice to the Applicant in respect of what content any further undertaking should contain. In the context of the Commission’s previous advice, as well as our previous submissions, the Union is concerned that the alterations to the model term appear to:

1. Limit an employee’s right to cease working where there is an imminent risk to their health or safety; and

2. Confine matters of health and safety to that which is contained solely in that Act; and

3. Place an emphasis on matters that are “deemed” or otherwise decided upon to be unsafe; and

4. Place an additional obligation on employees around failure to comply with directions from the employer in the context of a health or safety matter.

The Union is at the discretion of the Commissioner as to the future conduct of the application.”

On 7 January 2022, Mr Heck provided the following response to the above email of the AMWU on 6 January 2022:

“In response to your email, as employer, the undertakings sent yesterday are believed to have addressed the concerns of the Commissioner, namely that the model term for Consultation was included, which it was, and that section 186 (6) of the Act was adhered to, which I believe it was in my undertaking.

Noting, section 2.3 of the Fair Work Regulations was followed in essence to adhere to the requirements of section 186 (6) of the Act, albeit the changes you point out in your email. I was concerned the working of the model term had an objective component that could be misused or interpreted when it came to the test of a worker continuing if only for saying they believed the work was not safe, with no real test. This is the reason for the changes to provide a more definitive test for continuing to work. (I believe but stand corrected that there was a typo in the Commission draft for section 2.2)

Noting also, that while I discussed these changes with one of the workforce representatives with him having not objection, the rest of the workforce covered by this agreement are currently on holidays until the end of this month, so may not be getting correspondence nor updates in this process.

In this regard, I ask the Commissioner defer any decision until such time as the workforce returns, if this is possible, so as not to unduly disadvantage them if the matter is not resolved to allow them input?”

On 13 January 2022, the following correspondence was sent by my Chambers to the parties:

“The Commissioner advises the parties that: the Agreement that was made by the Applicant and the employees said this about a disputes procedure:

“19. Consultation and Dispute Resolution

The term of this clause are to be taken from Part 10 of the Act.”

The Commissioner considers that the reference is ambiguous, however, it can only have been an incorrect reference to the Model Term for dealing with disputes for enterprise agreements found at Schedule 6.1 of the Fair Work Regulations.

The Commissioner considers the Applicant should accept the terms of the Model Term, as it is difficult to imagine that employees “made” the Agreement, that is by voting on it, having regard to any other clause.

The Commissioner provides the Applicant until 4:00pm (AEST) Monday, 17 January 2022 to make the undertaking as earlier proposed by the Commissioner.

In the event that the Applicant does not wish to make the undertaking, the Commissioner proposes to call the matter on for a hearing at 10:00am (AEST) Friday, 21 January 2022.”

On 17 January 2022, Mr Heck provided the following response:

“With due respect, the union bargaining representatives are negotiating terms to this agreement without employee input, as the employees have been on leave before Christmas and are due to return in two weeks time, the other workforce bargaining representative no longer works for us, and the other resigned as a union member because of the protraction of this EB process.

Similarly the Commission would not be aware of the background nor what was discussed by the employer regard this term.

To clarify and summarise:

· Firstly, there is not Part 10 of the Act, the Dispute claue could only have intended to be Part 10 of the Sugar Industry Award 2020 – Consultion and Dispute Resolution;

· In the previous corresponsence, the Commission incorrectly assumes “it can only have been an incorrect reference to the Model term for dealing with disputes for enterprise agreements found at Schedule 6.1 of the Fair Work Regulations”; and “it is difficult to imagine that employees “made” the Agreement, that is by voting on it, having regard to any other clause”;

· The Employer points out, that the Model term for Dispute resolution and the award terms are considerably different regard the test for ongoing work by the employee;

· Clause 19 of the discussed 2021 agreement was in reference to the Sugar Industry Award 2020, not the Act, as was mistakenly inserted into this clause. As such, no other reference can be made without taking this agreement back to the employees to vote. There is no Part 10 of the Act, and Part 10 of the award deals with dispute resolution;

· The incorrect reference to award and not “this agreement”, can also be seen in the Dispute resolution process of the current (2015) agreement and its clause 19, noting it does not reference the Model term (Fair Work Regulations) regard the dispute process, rather that work must continue in accordance with this award (by mistake instead of – ‘in accorance with this agreement’) and the Act, namely:

· 19.6 While the dispute resolution procedure is being conducted, work must continue in accordance with this award and the Act. Subject to applicable occupational health and safety legislation, an employee must not unreasonably fail to comply with a direction by the employer to perform work, whether at the same or another workplace, that is safe and legal for the employee to perform.

This clause was copied from the award, as is this case for the 2021 proposed agreement, as the same wording was used, put to employees and accepted by vote;

· It is the understanding of the Employer who discussed this clause with the workforce, that this clause would once again be taken from the award, and it is these terms that the workforce accepted through their vote;

· The Model term regard consultation was only adopted by the Employer as it was a requirement of the Commission to do so;

· The Commission did not require a Model term for Dispute resolution to be a part of the Employer undertaking, until recommended recently;

· Any change other that that attached, including a directive from the Commission to make the Dispute resolution clause a Model term, will be rejected by the Employer as these Model terms were not put to the employees covered by the proposed agreement, nor were they accepted by the Employer.

As a compromise, the Employer now puts forward, once again, the award clause 39 terms for Dispute, as has always been the intention, in the attached marked up undertaking.

Unfortunately, the Empoyer is not available this Friday for a hearing as it is the site RDO, however suggesting if required, a hearing on Monday 31^st January 2022 on the day the workforce returns to work, to allow their input.”

Together with the above correspondence, Mr Heck provided the following undertakings:

“I, David Heck, Managing Director have the authority given to me by W.H. Heck & Sons Pty Ltd T/A Rocky Point Sugar Mill to give the following undertakings with respect to the Rocky Point Sugar Mill Enterprise Agreement 2021 (“Agreement”).

Undertaking 1:

Dispute Settlement Procedure: The Agreement will be interpreted and applied as though clause 19 of the Agreement were replaced with the following:

19. Dispute resolution

19.1 This clause 19 sets out the procedures to be followed if a dispute arises about a matter under this ~~award~~agreement or in relation to the NES.

19.2 The parties to the dispute must first try to resolve the dispute at the workplace through discussion between the employee or employees concerned and the relevant supervisor.

19.3 If the dispute is not resolved through discussion as mentioned in clause 19.2, the parties to the dispute must then try to resolve it in a timely manner at the workplace through discussion between the employee or employees concerned and more senior levels of management, as appropriate.

19.4 If the dispute is unable to be resolved at the workplace and all appropriate steps have been taken under clauses 19.2 and 19.3, a party to the dispute may refer it to the Fair Work Commission.

19.5 The parties may agree on the process to be followed by the Fair Work Commission in dealing with the dispute, including mediation, conciliation and consent arbitration.

19.6 If the dispute remains unresolved, the Fair Work Commission may use any method of dispute resolution that it is permitted by the Act to use and that it considers appropriate for resolving the dispute.

19.7 A party to the dispute may appoint a person, organisation or association to support and/or represent them in any discussion or process under clause 19.

19.8 While procedures are being followed under clause 19 in relation to a dispute:

(a) work must continue in accordance with this ~~award~~agreement and the Act; and

(b) an employee must not unreasonably fail to comply with any direction given by the employer about performing work, whether at the same or another workplace, that is safe and appropriate for the employee to perform.

19.9 Clause 19.8 is subject to any applicable work health and safety legislation.

deleted. It is acknowledged that the model dispute resolution term contained in Schedule 6.1 to the Fair Work Regulations 2009, as amended from time to time, is taken to be a term of the Agreement. The model term currently reads as per below and is reproduced for convenience, however the model term as amended from time to time shall apply:

“Schedule 6.1—Model term for dealing with disputes for enterprise agreements
~~(regulation 6.01)~~
~~Model term~~

~~(1) If a dispute relates to:~~

~~(a) a matter arising under the agreement; or~~

~~(b) the National Employment Standards;~~

~~this term sets out procedures to settle the dispute.~~

~~(2) An employee who is a party to the dispute may appoint a representative for the purposes of the procedures in this term.~~

(3) In the first instance, the parties to the dispute must try to resolve the dispute at the workplace level, by discussions between the employee or employees and relevant supervisors and/or management.

~~(4) If discussions at the workplace level do not resolve the dispute, a party to the dispute may refer the matter to Fair Work Commission.~~

~~(5) The Fair Work Commission may deal with the dispute in 2 stages:~~

(a) the Fair Work Commission will first attempt to resolve the dispute as it considers appropriate, including by mediation, conciliation, expressing an opinion or making a recommendation; and

~~(b) if the Fair Work Commission is unable to resolve the dispute at the first stage, the Fair Work Commission may then:~~

~~(i) arbitrate the dispute; and~~

~~(ii) make a determination that is binding on the parties.~~

~~Note: If Fair Work Commission arbitrates the dispute, it may also use the powers that are available to it under the Act.~~

~~A decision that Fair Work Commission makes when arbitrating a dispute is a decision for the purpose of Div 3 of Part 5.1 of the Act. Therefore, an appeal may be made against the decision.~~

~~(6) While the parties are trying to resolve the dispute using the procedures in this term:~~

~~(a) an employee must continue to perform his or her work as he or she would normally unless he or she has a reasonable concern about an imminent risk to his or her health or safety; and~~

~~(b) an employee must comply with a direction given by the employer to perform other available work at the same workplace, or at another workplace, unless:~~

~~(i) the work is not safe; or~~

~~(ii) applicable occupational health and safety legislation would not permit the work to be performed; or~~

~~(iii) the work is not appropriate for the employee to perform; or~~

~~(iv) there are other reasonable grounds for the employee to refuse to comply with the direction.~~

~~(7) The parties to the dispute agree to be bound by a decision made by Fair Work Commission in accordance with this term.”~~

Undertaking 2:

First Year Apprentices: First Year Apprentices who have not completed year 12 covered by the Agreement will be paid at rates no less than 5 cents per hour more than the equivalent rate under the Sugar Industry Award 2020 Award, as in force from time to time.

Noted:

Consultation Term: The Agreement will be interpreted and applied as though clause 19 of the Agreement were deleted. It is acknowledged that the model consultation term contained in Schedule 2.2 to the Fair Work Regulations 2009 is taken to be a term of the Agreement. It is understood an undertaking cannot be provided in respect of this issue.

These undertakings are provided on the basis of issues raised by the Fair Work Commission in the application before the Fair Work Commission.”

On 17 January 2022, my Chambers advised the parties that I proposed to list the matter for hearing by video using Microsoft Teams on Tuesday, 1 February 2022, and invited the parties to advise of any unavailability by Thursday, 20 January 2022.

On 21 January 2022, with no party having indicated any unavailability, I listed this matter for hearing by video using Microsoft Teams on Tuesday, 1 February 2022 and communicated this to the parties formally by way of Notice of Listing.

The hearing

On 1 February 2022, I conducted a hearing of this matter by video using Microsoft Teams. The following people appeared:

·Mr David Heck, Managing Director of the Employer;
·Mr Kegan Scherf, Industrial Advocate, AMWU;
·Mr Scott Stanford, State Organiser, AMWU;
·Mr Terry McQuillan, Industrial Advocate, AWU;
·Mr Paul McGrath, Southern District Organiser, AWU;
·Mr Beau Malone, Gold Coast Organiser, ETU;
·Mr Bruce Tyson, Mills Manager, Employee;
·Mr Dylan Ernst, Fitter/Boiler Maker, Employee Bargaining Representative; and
·Mr Scott Samson, Trades Assistant/Sugar Boiler, Employee Bargaining Representative.

At the hearing of this matter, I heard evidence from Mr Heck and Mr Stanford. Submissions were made by the AMWU, AWU and ETU.

In the Form F17, Mr Heck declared that he did not provide a copy of the Sugar Award to employees during the access period. On 20 December 2021, in an email to my Chambers, Mr Heck further noted:

“While a copy of the Award was not supplied in its entirety, and the Award was referenced as forming part of the agreement, it is suggested there were no changes from the current agreement (2015) to the 2021 agreement given any modernising had already been taken up and was already being used and referenced in the current agreement;

Both the 2015 and the proposed 2021 agreements reference “the Sugar Industry Award 2010, as varied from time to time, are incorporated.”

During the hearing, the following was put and answered:

Commissioner: All right, thanks Mr Heck. So, can I ask you why it is that the award was not provided, for example, in the lunch room, just one copy for employees to consider when they were in the access period prior to the vote?

Mr Heck:Commissioner, the employees had noted that a copy of the award was floating around. Needless to say, the dispute first referred to - - -

Commissioner: Sorry, I'll just take you back to that point. You've said that - you say employees have said that the award was floating around. How would I know that?

Mr Heck:Because you'd have to ask them, Commissioner.

Commissioner: Well, that's no good you telling me that. Was the award provided to employees as per your obligation under the Act?

Mr Heck:A copy of the award - - -

Commissioner: What do you know, Mr Heck?

Mr Heck: A copy of the award was not furnished to the employees.

Commissioner: Yes, and I think that's been provided in some earlier correspondence, right. So, why isn't it that you - why didn't you provide a copy of the award, given it's incorporated?

Mr Heck:Because the changes that were being made to the award as it stood in 2015, were explained to the employees.

Commissioner: Well, the Act says that you must reasonably provide copies of incorporated documents. So, did you deliberately not provide the award, or you ignorantly not provide the award?

Mr Heck:Commissioner, I wouldn't say I ignorantly did not provide the award. I would say that I mistakenly did not furnish the award to them.

Commissioner: How is that you then say that employees would understand that the reference in the agreement is to the dispute's procedure within the award?

Mr Heck:Because word for word taken from the award.

Commissioner: Well, it references part 10 of the Act. So, how could I conclude that employees who were not provided with the award, know that that clause within the draft agreement means that they should refer to clause X of the Sugar Award?

Mr Heck:Commissioner, I believe there was the same reference that was in the 2015 agreement and the 2015 agreement had the same incorrect reference.

Commissioner: That doesn't help me with employees in late 2021, who are voting to make the agreement. So, we've got the issue that you didn't provide the award, and secondly, you're saying well, everybody should have known that that was a reference to a clause within the award, that they don't have?

Mr Heck:Commissioner, I'm not going to defend an action. What's done is done. I can't turn that clock back. So, you need to make your decision based on that. The employees voted on an agreement. That agreement had an incorrect reference in there. As much as Mr Scherf would like to say the reference is made to the Act, there's no possible way it could be made to the Act when the Act does not have a part 10 in it. It can only be the award. The incorrect wording is the same incorrect wording - let me find the 2015 agreement. Now, I'm saying why was that not picked up when that agreement was - application was put in and it was approved.

In fact, the 2015 Agreement contains a detailed and comprehensive dispute settlement procedure, compliant with the Act. The Agreement was approved by Asbury DP and the Deputy President did not require any undertakings to be given the Employer.

I questioned Mr Heck as to why he changed the dispute settlement procedure in the proposed 2021 Agreement; he was unable to say why.

Mr McQuillan stated that the organisers of the various unions informed Mr Heck that there were difficulties with the draft Mr Heck had proposed the employees would vote upon. He stated that the Unions were refused entry to update employees on the proposed agreement, and the vote was then brought forward without consultation. It was submitted that Mr Heck put up obstacles to having the Agreement approved by the Commission, including by inserting terms that would result in the Agreement not complying with the Act.

Mr McQuillan submitted that the Agreement was put to vote during the Employer’s busiest period, and accordingly there were additional casual employees, who are no longer required.

Mr Stanford gave evidence as to his communication with Mr Heck regarding the draft agreement in its various iterations. On 10 November 2021, Mr Heck sent the following email to Mr Stanford:

“Hi Scott

Please find attached our first whole draft – without prejudice. I am having our IR consultant view and expect comments Friday which I will send you.

Regards”

The document attached to Mr Heck’s email contains tracked changes and shows that he deleted large, substantive consultation and dispute resolution clauses and instead inserted:

“The term of this clause are to be taken from Part 10 of the Act.”

Mr Stanford replied within an hour:

“Thanks David,
On a quick skim, I don’t believe the change to the consultation and or dispute resolution will be met favourably.
I for one do not accept it.”

Mr Stanford’s evidence is that despite the concerns raised by the AMWU, the Employer put the Agreement to vote.

The following was discussed with Mr Heck during the hearing:

Mr Heck: Commissioner, I strongly believe that whether the employees knew what the terms of that dispute process was in the 2021 proposed agreement as it was originally applied before the Commission, whether they knew what that meant or not, I don't have any idea. But what I do say is that the unions pointed it out, so they may well have explained to the employees what that term meant and it as the employees who voted on the document.

So if there was a misunderstanding or if there was an interpretation to be made of what that term or wording meant from the agreement that they voted and it wasn't explained by the unions and now it is disputed by the unions, I struggle with that.

Commissioner: Well, that sounds very disingenuous to me, Mr Heck. This is your agreement and your changes that you made that now come before me, and you are now trying to shift the blame to the union representatives. That's outrageous.

Mr Heck: Commissioner, Scott was not the only person that was discussing matters with the employees. Paul McGrath was also on site through December, before the document was voted, to discuss with employees as well. I'm not privy to those discussions of course, but part of that, you would think would be more to point out there's a problem with this document you are about to vote on. I made an error, but I mean, why does that - - -

Commissioner| I think Mr Stanford has done that to you. And what did you do about that, Mr Heck? He's told you that in that email.

Mr Heck: And I tried to get the terms that were in the award. Genuinely, I tried to get those terms that were reflected in the 2020 Sugar Industry Award. Under dispute, I tried to get those adopted. And I even put that in my undertaking. If you have a look in my undertakings - numerous undertakings that I made before the Commissioner, I put that (indistinct) clause 39 into the undertakings.

Noting that Mr Heck’s correspondence to Mr Stanford stated he was obtaining advice from an IR consultant, I asked Mr Heck if he did have an IR consultant assisting him in drafting the Agreement. Mr Heck was reluctant to nominate the name of the IR consultant during the hearing and finally provided details of correspondence between the IR consultant and himself to my Chambers only. I satisfied myself that the IR consultant is not a lawyer. If the IR consultant had been a lawyer, legal professional privilege would attract to the advice given.

On 16 November 2021, Mr Stanford sent to Mr Heck the following email on behalf of the Unions:

“Hello David,

We have completed a review of the draft provided. The unions cannot agree to the terms of the draft as per the wishes of our members , your employees.
The Unions are committed to reaching an agreement without further action.
To prevent any further action the unions propose the following;
Attached and below are the clauses that the union and its members agree will bring bargaining to a close. We will require your position by Close of Business 17/11/21.
1, continuous shift clause as per union draft.
2, disputes clause as attached, compliant with Fair Work
3, Consultation term as per attached, compliant with Fair Work
3, the objectives clause as per the current agreement. ( and attached)
4, training dispute clause (accidentally deleted) to be restored as current.
5, all other matters as agreed.
We will be discussing this with members over the next 24 hours. Should the above be acceptable please confirm ASAP. Should this not be acceptable we will leave it up to our members, your employees as to their next course of action.
I think it is fair to say that should this not be acceptable action is likely imminent.
We await your reply.”

Mr Heck forwarded the email to the IR consultant on the same day. The IR Consultant responded:

“Hi David

Just to confirm you need me to have a look at the Dispute and Consultation clauses and find where they have adjusted it compared to the Award?
I can get this done in the morning.”

The IR consultant provided their advice the next morning:

“Hi David,

I’ve reviewed the Consultation and Dispute Training, and Dispute Resolution Clauses.

The revisions are in track changes. Added notes for you are:

Dispute Resolution

Clause 1.6 – the addition of the legislation is of no consequence. It applies anyway.

…..
…..
…..

Consultation Clause

The union’s drafting results in the same entitlements as the Award. The Award’s lay out is easier to follow so I don’t know why they haven’t just said in the Agreement to adopt the Consultation Clause in the Modern Award. I did identify in clause 2.1 (a) (ii) that it needs to say “the Award or this Agreement” rather than just the Award.”

Noting that Mr Heck did obtain advice from his IR consultant and appeared to ignore it, resulting in the dispute settlement procedure clause being deficient, the following was put and answered:

Commissioner: So, tell me. How do you get from telling Mr Stanford it's a one-liner referencing part 10 of the Act, to then getting to essentially the modern award clause with maybe a slight revision, to then getting back to what you present to the employees for them to vote upon?

Mr Heck:The document I had was taken - but the wording I had, rather, was taken from the previous agreement, which I thought was the modern award, and I thought for brevity, I'd just put the clause of the modern award in there, not realising that the modern award had moved, as I am of the understanding now, substantially from where it was in 2015.

Commissioner: All right, but you're getting this IR advice and you've come together with a clause that probably would comply with the Act. How is it that you didn't then go with that? A few days later you're presenting them back with the one-liner, which is incorrect?

Mr Heck:Sorry, Commissioner, I don't have an answer for that.

Mr Scherf made representations at the hearing that the Commission should dismiss the application in an ex tempore decision based on the Employer’s failure to provide appropriate undertakings relevant to the dispute settlement procedure clause. The following was submitted:

Mr Scherf: Commissioner, where this has led us to is probably the inevitable which is that the agreement is - in the absence of the applicant being able to provide a coherent response in relation to your questions, and in the alternate, unwilling or unable to insert the modern term, for reasons I still quite comprehend, but nonetheless, for his own reasons. In our view the agreement can't be approved, which is regrettable, because that's not the position that we wanted to end up with here today.

That being said, I don't - it is the strong view of the union that we should - that you should exercise your discretion to make a decision from the Bench and issue reasons at a later date. It don't think it is, given all that we've gone through, to get to this point. It should be available to the applicant, to simply withdraw his application and walk off with his bat and ball, and then, with the very real prospect that we will end up before you or another member of the Commission again, on some other issue.
I don't think that there's anything else that the applicant - absent your questions of course, Commissioner, but I don't think there's anything more that the unions can offer and that the applicant can offer that could assist you at this stage, other than to say that in our very humble view, there was obviously a reason in which the applicant decided to change the dispute clause. That reason is unknown to us and if I'm to understand his evidence now, is he's unable to answer that under your indirect questioning by the Commission.
In the absence of any coherent response in that respect, I don't think that there's any more that we can offer at this stage, regrettably, because you know, it will probably mean, and I need to be frank about this, it will probably mean a resumption of industrial action on site. It will probably mean escalating negotiations to try and bring this matter to a conclusion, which is not what - - -

Mr McQuillan supported the proposal made by Mr Scherf for the Commission to dismiss the application during the hearing.

Mr Malone submitted that the Employer had put the Agreement to vote to employees during a busy period and had offered an up-front pay increase for the Agreement to be approved. Mr Malone suggested that Mr Heck knew the dispute settlement procedure clause would not be compliant and that he has orchestrated the matter now before the Commission, despite the appropriate advice given by Mr Malone, Mr Stanford and Mr McGrath to Mr Heck.

Mr Malone suggested the Commission explore a way to insert an appropriate dispute settlement procedure into the Agreement. I informed Mr Malone that the Commission could not do so; it could only accept an undertaking if one was given by the Employer.

Mr Malone cross-examined Mr Heck, with Mr Heck confirming that he did not seek advice from the IR consultant as to the consultation and dispute settlement procedure clause he eventually inserted into the Agreement. Mr Heck confirmed that he disregarded the substantially written clauses and inserted the one-line clause.

Clause 6 of the Agreement states:

“6. Classification Rates

1. The pay rates and percentage increase for each classification under this agreement are show in Table 1.

2. These increases will apply from the first pay week after the date of successful vote of this agreement by the employees covered by this agreement, thereafter, the first pay week of May each year, as applicable. The increase will be in good faith pending successful application to and approval from the Fair Work Commission. Should the application be rejected and this agreement require a material change not accepted by the parties, then the pay rate and percentage increases will cease until such time as the changes are accepted by the parties and the revised agreement approved by the Fair Work Commission, thereafter the increases will apply again as per Table 1.”

Mr Malone stated during his cross-examination of Mr Heck that the pay increase initially given to employees was then abruptly removed when the Commission made inquiries and sought undertakings of the Employer. Mr Malone stated that it would be appropriate for the Employer to provide the relevant undertaking as to the model dispute clause so that the Agreement could be approved, and employees could again enjoy the pay increase within the Agreement. I then asked the following of Mr Heck:

Commissioner: Well, it's the safety net. That's what it is, and that's why I could approve the agreement. Mr Heck, when did you withdraw the good faith payment?

Mr Heck:The good faith payment was – the first payment was made, and as the agreement said that if the agreement was rejected by the Commission then - - -

Commissioner: Which hasn't happened, so why have you withdrawn the payment?

Mr Heck:No, but it needs to be accepted by the Commission and it hasn't been approved.

Commissioner: It says:

The increase will be paid in good faith pending successful application to and approval from the Fair Work Commission.
So you pay it until this happens.
Should the application be rejected and this agreement require a material change not accepted by the parties, then the pay rate percentage increases will cease until such time.
So why is it that you've withdrawn the payment now?

Mr Heck:I haven't just withdrawn it now. It was withdrawn as soon as the correspondence came from the Commission that their document wasn't going to be approved. That's the intention of the clause(?) - - -
\Commissioner: No decision has been made, Mr Heck. That's why we're having a hearing.

Mr Heck: It hasn't been approved.

Commissioner: I just don't understand on what basis you have withdrawn the payment, because the event hasn't happened. Parties, what your views on this? Is there a common law - - -

Mr Scherf: (Indistinct) - - -

Commissioner: - - - that you can [take] him to court for on this or not?

Mr Scherf:Commissioner, in our view it's quite arguable, or it's quite open to the union to be able to initiate a breach of agreement proceedings in the Federal Court, frankly. You know, I think it's plainly evident that, in terms of the difficulties that we've got to traverse in trying to reach an agreement with this particular employer, and I can't – I've just got to be I guess as plain as I possibly can be for the benefit of the employer and for the Commission, which is that if we can't get a coherent response out of the employer in relation to why it is he will not put in the model dispute term and settle this all here, right here, right now today, provided that you're accepting of that undertaking, then the employees will have absolutely no choice but to either re‑engage in industrial action, and the union might very well bring Federal Court proceedings for a breach of agreement against the employer.

All of this can be averted. Hundreds of thousands of dollars worth of litigation and economic damage to the employer could easily be averted if Mr Heck simply just offered the undertaking. In the absence of that, Commissioner, I mean you can't compel him to, I can't compel him to. He, frankly, has always been determined to do whatever it is that he felt was appropriate for him and his own personal circumstances, which is, you know, in some respects his prerogative, in others it isn't. But it is not available to him to simply make up the law and interpret the way that he wrote his clauses to suit himself. That is plainly evident.

Commissioner: Mr Heck, why did you, and on what date did you withdraw the payment under 6.2?

Mr Heck: Commissioner, can I just have a minute?

Commissioner: Yes.

Mr Scherf:Commissioner, while Mr Heck has a minute I might just take this opportunity to relate that perhaps – our view is undeterred in relation to this particular matter. It is a loathsome and terrible position for employees to be in, but it appears to me, as Mr Stanton, Mr Malone and others have articulated, the only option available to the Commission at this stage is to dismiss the application and issue reasons for decision at some later stage.

But given this latest development in relation to the withdrawal of payment, which I must admit I was unaware of until this morning, it might also be open to you, Commissioner, to issue a recommendation or express an opinion that that is a breach of the agreement, which we may well rely on in later proceedings. I just don't think we're going to be able to reach any form of – unfortunately I just don't think we're going to be able to reach any form of consensus here, despite how long and protracted and adversarial this process has gone on for.
I mean, it's the last thing that any of us as union representatives want for these employees, but the issues that have been highlighted by the Commission in terms of compliance are very real, as have the issues that the union has highlighted. They're very real and they can't simply be ignored, and they can't simply be swept under the carpet in the way that Mr Heck is attempting to do through these proceedings. It was up to Mr Heck to produce this mysterious industrial relations consultant, who could have provided a witness statement about the advice that he had given, and could have made him or herself available for cross‑examination.

Commissioner: I don't think it's particularly material. I've satisfied myself that some advice was sought and given, and it appears to me that Mr Heck has ignored the advice, either deliberately or ignorantly, and set about his own path by not providing that particular clause that was recommended.

Mr Scherf:That's probably what we would have established in cross‑examination anyway, Commissioner, to agree with your point there, but this matter before you is now so convoluted and is now so hopelessly compromised that it is impossible for you, in my respectful submission, to be able to cut through all of the side issues and the I guess myriad of other issues that have been thrown up through the course of these proceedings. I think the only sensible course of action, regrettably, is to dismiss the application and issue reasons for decision and allow the employees to make a decision about how they might want to program the bargaining going forward.

I've also got to mention and in so doing, as Mr Malone mentioned, the crushing season is over. The seasonal employees that voted up this enterprise agreement are no longer employed with the employer. The only employees that remain on the mill are your permanent, you know, trade staff or production staff, which are, you know, either performing maintenance work in the slack or the nominal maintenance season, or otherwise providing, you know, the basic running of mill operations.
So you might find that through the course of negotiations it's not just that simple as we transfer the Sugar Industry Award and that's what was agreed to by employees. It might be that the AMWU – and I don't have instructions on this, but it may be that the AMWU presses for a dispute settlement procedure which is in excess of the model award. It may be - - -

Commissioner: Yes, so that might be tougher bargaining is what you're suggesting.

Mr Heck wasn’t sure when he removed the increased payment. I heard from the employees present during the hearing and they stated they had received the increased payment for approximately 50 hours before it was removed, which was in mid-December 2021. The following was discussed:

Commissioner: Mr Heck, sometime in December you withdrew the payment is that right?

Mr Heck: It sounds like it, Commissioner.

Commissioner: And why?

Mr Heck:Because my interpretation of the document is that it was in good faith and it was paid an extra week to that that I thought would have been paid given the document did not get up, did not get approved. And (indistinct) - - -

Commissioner: What part of the increase will be paid in good faith pending successful application to an approval from the Fair Work Commission? What part of that means that you have a right to take it away? Did you seek any advice on that?

Mr Heck:The clause was written in a way to say that if the document did not get up it wouldn't be paid, and I believe that we paid an extra week, even though the Commission had said that they weren't going to approve the document.

Commissioner: I have never said that, Mr Heck. I have said that I would consider not approving the agreement. I think you've been incorrect in taking that payment away from the employees who voted your agreement up. I can't be any clearer than that.

Mr Heck: Was there a form (indistinct) - - -

Commissioner: Can I have the employees on mute, please? Yes, Mr Heck?

Mr Heck:I'm just wondering if there was a form 18 provided for this document from the AMWU and the ETU.

Commissioner: What's the relevance, Mr Heck?

Mr Heck:Well, they didn't endorse the process. The AWU were quick to say that they endorsed the application, but the AMWU was the first to say that they rejected the application.

Commissioner: This is an agreement made between you and your employees. The unions are third parties who have some benefit if they are named as parties, but this is a contract that you've entered into with your employees, whether they voted yes or no, at the end of the day, this is a contract which could be enforced, potentially, in a court. They could take you to court and say this hasn't yet been approved by the Commission, but this is what men and women agreed to. Then you've gone and taken these payments away from them, because you felt like it?

Mr Heck:I haven't taken it away from them at all, Commissioner. I offered it to them, even when the document wasn't approved and I believe that we made a payment in good faith.

Commissioner: Well, the agreement was made by you and the employees; that's what I mean. It has been made; you've entered into a contract with them. Now, you're awaiting - and that's what you said, you'd pay it, pending approval. Well, guess what, it hasn't yet not been approved, so therefore, in my view, the payment is owing. The parties can take it to a court and you can find out what a court has to say about that Mr Heck, but I'm literally shocked that you've taken the payment from the employees. They can all go away today and say that Commissioner Hunt believes the payment should be still payable?

Mr Heck:And that's fine, but the crux of the issue that we're talking today is not to do with that term, and I'll take that term on board; I'll take that suggestion on board. I have no problem at all with that. It wasn't my intention and it's not the way I felt the clause read. However, we are back at the cross-road now as to what to do with this document and this application. Whether the unions, as you say, they're only parties, but we're for the journey. They have the power and the authority right now to withdraw the application.

Commissioner: No, no, Mr Heck. It's your application. I'm being urged by the AMWU to say these words. The application is dismissed and I will give my reasons later. That's what I'm being urged by Mr Scherf to do. I'd like to hear the views of every other party and it is within my power to do so, at the end of this hearing, make such a decision. I've only just come across this clause. I've only just learnt that the employees - you know, if the employees were still getting the money and I was being urged to do what Mr Scherf is asking me to do, I would have that laying on my conscious as well, that you - any decision to terminate to dismiss the application would see employees lose money. Well, guess what, you've already taken the money off them?

Mr Heck:In fairness, Commissioner, I tried my utmost to get this document across the line. I was - - -

Commissioner: It can get across the line with an undertaking for this dispute clause, because the dispute clause affords the employees the relevant protections, which I'd be comfortable with. Mr Heck, all you have to do is wave that wand and say I undertake that the undertakings will be amended to provide the model dispute clauses I've earlier suggested, and this agreement can be approved, in my view. I can forgive the facts that the award wasn't provided to the employees, because they will be afforded the protection of the model dispute clause.

Sounds to me you've broken hearts by taking money away from people that they agreed when they voted, that that was the deal. You take it away from them, and then potentially you're going to face harder bargaining with your core workforce without additional peripheral casuals. They make take protected industrial action against you. They feel betrayed, I'm told. You could solve this by agreeing to the model disputes clause?

Mr Heck:Commissioner, I've tried in my earnest to get this document across the line. You maybe look at the responses I make and the timeliness of my responses. I tried to get this document across the line before the workforce went on holidays.
Commissioner: You ignored the advice of the organisers, because you appear not to trust them and you ignored the advice of your own industrial consultant?

Mr Heck:Commissioner we are where we are, at this point in time, we've got to move forward and resolve it. I understand you have a decision to make and if I consent to the model term, it's something I will have to live with a change, and I'm saying it's a major change to this document to what I thought it was and the document I thought was voted on, forever. It's not just the term of this document, it's forever, because you never get terms taken from the document. So, my preference at this point in time, my request at this point in time, is that I not withdraw the document. As fast as I can, I get a clause, which is the dispute clause to the representatives and discuss it with the employees and let's see if we can get that across the line as far as possible.

Mr Malone put to Mr Heck in cross-examination that he only purported to make the Agreement with employees because it was the busiest time of the year and he wished to stop further industrial action from occurring, but he knew the Agreement was not capable of being approved. Mr Heck denied Mr Malone’s proposition.

Mr Scherf stated that the Sugar Award dispute settlement procedure was deficient to accept into the Agreement as an undertaking offered by the Employer.

Consideration

Section 180(2) of the Act provides the following:

“(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.”

Clause 4.1 of the Agreement incorporates the Sugar Award.The evidence of Mr Heck is that he failed to provide to employees a copy of the Sugar Award during the access period.

The employees had before them the following relevant clause:

“19 Consultation and Dispute Resolution

The term of this clause are to be taken from Part 10 of the Act.”

It is the Employer’s submission that employees ought to have known that this was a reference to clauses 37, 38 and 39 of the Sugar Award, and specifically clause 39 relevant to the dispute settlement procedure to be adopted under the Agreement.

The Employer also submitted that employees covered by the 2015 Agreement would consider the Agreement the subject of this application to be a rollover. This could not be further from the truth when Mr Heck has gone to considerable trouble to remove an acceptable dispute resolution clause within the 2015 Agreement to then insert the above nonsensical clause.

Mr Heck made the changes that he did against the advice of experienced union organisers. He did so at the height of the crushing season when there were additional casual employees working who do not make up a core of his usual workforce.

The Employer committed to the employees voting for the Agreement to a substantial pay rise if the Agreement was voted up. The Agreement was made between the Employer and the employees in accordance with the Act. Mr Heck then unilaterally determined that the pay increase within clause 6 should be withdrawn on the basis that the Commission had commenced making inquiries relevant to the application to approve the Agreement.

The change made to the dispute settlement procedure clause was seemingly made without the Employer’s IR consultant’s knowledge. On the information before me, Mr Heck made this change to the document at his own initiative.

The Employer submitted that an undertaking could be given by the Employer which is based on the dispute settlement procedure within the Sugar Award, with appropriate reference to the clause applying to disputes relevant to matters arising under the Agreement and the National Employment Standards. The proposed clause drafted by Mr Heck on 6 January 2022 was based on the model dispute settlement clause with amendments to employees’ rights relevant to safety matters and when employees could claim a safety concern. The proposed clause drafted by Mr Heck on 17 January 2022 reverted to the Sugar Award clause, but allowing disputes under the Agreement to be made.

Section 190(3) of the Act is as follows:

“(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 employee covered by the agreement; or
(b) result in substantial changes to the agreement.”

There is a requirement at s.190(4) of the Act to seek the views of each person who the Commission knows is a bargaining representative of the agreement. This requirement does not equate to the Commission being satisfied that the bargaining representatives consent to the undertaking offered by the employer; simply that the bargaining representatives’ views are sought.

I have determined that I am unable to accept the written undertaking offered by the Employer for the following reasons.

I am not satisfied that the effect of accepting the undertaking is not likely to result in substantial changes to the Agreement pursuant to the consideration required in s.190(3) of the Act. Even at the most benign undertaking offered by the Employer, being an almost exact reproduction of the Sugar Award clause, but with references to disputes being made pursuant to the Agreement, I consider it would result in a substantial change to the Agreement.

What is known is that the Employer had not gone to any lengths to ensure that employees to be covered by the Agreement had before them a copy of the Sugar Award. They did not have the benefit of understanding that where the Employer referenced, at clause 19 of the Agreement, Part 10 of the Act, the Employer really meant to reference clause 39 of the Sugar Award.

In my view, no employee would be aware that the Employer wished for the dispute settlement procedure to allow for disputes to be referred to the Commission, but to prevent the Commission arbitrating any dispute, unless by consent. It is an employee’s right to have before them the terms proposed by the Employer so that they may choose for themselves whether they are comfortable with what they are potentially gaining, and what they are potentially giving up.

The dispute settlement clause within the Agreement is nonsensical and invalid. Any undertaking offered by the Employer will result in a change to the Agreement. I am required to turn my mind to whether the undertaking offered by the Employer, the latest being on 17 January 2022, will result in substantial changes to the Agreement. In this case, I do consider the undertaking that the clause, being nonsensical and invalid, be read as effectively being the Sugar Award dispute settlement clause, to result in substantial changes. That is so, despite the proposed undertaking affecting only one clause. I have determined it would result in a substantial change because of the result and effect this is likely to have on employees who may wish for the Commission to arbitrate a dispute under the Agreement.

An effect on an employee covered by the Agreement, if the undertaking were to be accepted, would be that at some future time they would be informed that while they may have a dispute with the Employer, the Commission is unable to arbitrate the dispute without the Employer’s consent. I consider it would be unfair to impose that restriction on employees as a result of the Employer’s failure to properly put this matter before employees during the access period, noting that there was informed and accurate advice of the Unions provided to the Employer at the relevant time.

In my view, it would then be unacceptable for the Commission to endorse and impose an inferior dispute settlement procedure such as the procedure contained within the Sugar Award, as compared with the model dispute settlement procedure. I had regard to the views of the Unions and bargaining representatives in coming to this conclusion.

As I informed the Employer, I would have no hesitation in accepting an undertaking adopting the model dispute settlement procedure as it would afford to employees the greatest opportunity to have disputes come before the Commission and to allow the matters to be determined.

Where the Employer earlier provided undertakings by modifying the model dispute settlement procedure to effectively reduce rights to refuse work when a safety matter is involved, having regard to the views of the Unions and bargaining representatives, I decided against accepting the undertaking. I was not satisfied that the effect of accepting the undertaking was not likely to result in substantial changes to the Agreement. I considered that there was the potential for a loss of rights to employees to refuse work on the basis of the requirement that safety issues must be ‘deemed’ to be unsafe. I had particular regard to the submissions of the AMWU in the email at [23].

In arriving at my decision to dismiss the application, I had regard to the requirements at s.180(2) of the Act requiring the Employer to take all reasonable steps to provide a copy to employees of incorporated documents, namely the Sugar Award. I satisfied myself that the Employer did not take all reasonable steps to provide a copy to employees of the Sugar Award.

Section 188(2) of the Act affords a discretion for the Commission to determine that the Agreement has been genuinely agreed despite not meeting the obligations provided under the Act, including those relevant to s.180(2) of the Act. In exercising the discretion, the Commission must be satisfied that the Agreement would have been genuinely agreed to by employees, but for minor procedural or technical errors, and the employees covered by the Agreement were not likely to have been disadvantaged by the errors.

The evidence before the Commission is that Mr Heck knew of the Unions’ opposition to the relevant clause proposed by him, and he had been provided with a substantive clause reviewed by the Employer’s IR consultant. Against all advice, Mr Heck put before the employees during the access period an invalid and nonsensical dispute settlement clause, and did not provide to the employees a copy of the Sugar Award. The employees had no way of knowing the terms that would apply to any dispute they may wish to raise under the Agreement.

Further, I am not satisfied that the employees were not likely to have been disadvantaged by the error.

I informed the Employer repeatedly that if the Employer had provided an undertaking with the model dispute settlement procedure I would have exercised my discretion at s.188(2) of the Act to approve the Agreement. I would have exercised this discretion as I would have had significant regard to the weight of the benefit to the employees of the model dispute settlement procedure. I consider that I would have then been in a position to offset the procedural or technical error made by the Employer in not providing a copy of the Sugar Award to employees, and in doing so, I could have then been satisfied it was a minor procedural or technical error, having regard to the benefit of the model dispute settlement procedure to employees. Clearly, the employees would not be disadvantaged by the benefit of having the model dispute settlement procedure apply to them.

In the absence of the Employer providing an undertaking in the manner sought by the Commission, I cannot consider the Employer’s procedural or technical error to be minor.

Conclusion

I indicated to the parties that pursuant to s.190(3) of the Act, I did not accept the undertaking proposed by the Employer.

Accordingly, the clause within the Agreement does not meet the requirements of s.186(6) of the Act.

I conveyed to the parties during the hearing that I have decided that the Agreement is not capable of approval because it does not comply with s.186(6) of the Act. I dismissed the application accordingly.

COMMISSIONER

[1] 5 October 2018 [PR701111].

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Citations

W.H. Heck & Sons Pty Ltd T/A Rocky Point Sugar Mill [2022] FWC 340

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