WorkPac Construction Pty Ltd
[2022] FWCA 2508
•28 JULY 2022
| [2022] FWCA 2508 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
WorkPac Construction Pty Ltd
(AG2022/1502)
Yarwun Services Agreement 2021
| Building, metal and civil construction industries | |
| DEPUTY PRESIDENT GOSTENCNIK | MELBOURNE, 28 JULY 2022 |
Application for approval of the Yarwun Services Agreement 2021
By its application lodged on 18 May 2022 the applicant, WorkPac Construction Pty Ltd, applies under s 185 of the Fair Work Act 2009 (Act) for the approval of the Yarwun Services Agreement 2021 (Agreement). The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) is a bargaining representative for the Agreement and has given notice pursuant to s 183 that it wants to be covered by the Agreement. The CFMMEU supports the approval of the Agreement. The “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) is also a bargaining representative for the Agreement, but it does not support the approval of the Agreement and has positively indicated that it does not give notice that it wishes to be covered by the Agreement. The Australian Workers’ Union (AWU) is not a bargaining representative for the Agreement and has indicated that it does not support the approval of the Agreement. Although not a bargaining representative, the AWU now has members employed by the applicant whose employment will be regulated by the Agreement should it be approved. There was no objection to the AWU being heard in relation to the approval application.
At the time that employees voted to approve the Agreement and until such time as the Agreement commences operation, assuming it is approved, the Engineering Services Agreement 2016 applies to these employees. That agreement commenced operation on 3 March 2016 and its nominal expiry date of 3 March 2020 has since passed.
The AMWU and the AWU filed joint submissions in opposition to the Agreement’s approval. The objections raised are essentially twofold. The first concerns whether the Agreement has been genuinely agreed to by the employees covered by the Agreement as required by s 186(2)(a) of the Act. The second concerns whether there can be satisfaction that the Agreement passes the better off overall test (BOOT) as required by s 186(2)(d). There are a few other matters also raised and to which I shall later return.
The AMWU and the AWU contend that I cannot be satisfied that the Agreement has been genuinely agreed to by the employees covered by it as the applicant did not comply with its obligation under s 180(5) of the Act because:
· the Agreement covers employees engaged in shutdown work;
· such employees are covered by the Manufacturing and Associated Industries and Occupations Award 2020 (Manufacturing Award);
· the applicant was required by s 180(5) to take all reasonable steps to ensure that the terms of the Agreement, and the effect of those terms, are explained to the relevant employees in an appropriate manner taking into account the particular circumstances and needs of the relevant employees;
· the applicant did not identify that the Manufacturing Award covers employees engaged in shutdown work in its explanation to employees;
· in the result, this omission renders the explanation about the terms of the Agreement and the effect of those terms inaccurate and incomplete.
Section 186(2) of the Act contains certain approval requirements about which the Commission must be satisfied before an enterprise agreement must be approved. Relevantly the Commission must be satisfied that a non-greenfields agreement has been genuinely agreed to by the employees covered by the agreement. Section 188(1) sets out the circumstances when employees have genuinely agreed to an enterprise agreement, including, when the Commission is satisfied that the employer covered by the agreement complied with s 180(5) and there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.
It is uncontroversial that the purpose of the “the obligation imposed on employers under s 180(5) is to enable the relevant employees to cast an informed vote: to know what it is they are being asked to agree to and to enable them to understand how wages and working conditions might be affected by voting in favour of the agreement”. [1] In short, its purpose is to ensure informed voting by relevant employees on whether to approve an enterprise agreement.[2]
Section 180(5) of the Act is concerned with an employer taking all reasonable steps to explain the terms of an agreement and the effect of those terms to relevant employees. The steps that need to be taken and the adequacy of the explanation given necessarily depend on the circumstances.[3] As s 188(1) makes clear, the applicant’s compliance with s 180(5) need only be established to the satisfaction of the Commission. Actual compliance with s 180(5) is not a jurisdictional fact. Its objective existence is not a precondition to the Commission’s power to approve the Agreement.[4] But satisfaction as to, inter alia, the applicant’s compliance with s 180(5) must be based on material sufficient to enable the Commission to reach the requisite satisfaction, and so satisfaction properly based is a condition precedent to the exercise of the power to approve the Agreement. Put another way, the approval of an enterprise agreement absent any evidence, or upon insufficient evidence, about an employer’s compliance with s 180(5) results in the agreement having been approved without authority and so there will be jurisdictional error.[5]
Here, AMWU and the AWU contend that applicant did not comply with its obligation under s 180(5) of the Act because the applicant should have but failed to explain the terms of the Agreement and the effect of those terms by reference to the Manufacturing Award, at least in so far as that award applied to employees performing shutdown work. Compliance with s 180(5) will not always require an employer to explain the terms of an agreement or the effect of those terms by reference an award which covers the employees or any other reference instrument. The need to do so to comply with s 180(5) is entirely dependent on the circumstances.[6]
As earlier noted, the employment of employees covered by the Agreement is presently and was at the time compliance with s 180(5) arose, regulated by the Engineering Services Agreement 2016. That agreement excludes the operation of any award. Accepting for present purposes that the Manufacturing Award covers employees that are covered by the Agreement performing shutdown work, the Manufacturing Award had and has no application to those employees because the Engineering Services Agreement 2016 applies to the exclusion of the Manufacturing Award. When the applicant provided employees with an explanation of the terms of the Agreement and the effect of those terms, this was done to enable employees to understand how wages and working conditions might be affected by voting in favour of the Agreement. The relevant comparison was thus with the Engineering Services Agreement 2016 which then regulated wages and working conditions. Reference to the Manufacturing Award as a reference point to determine how wages and working conditions might be affected by voting in favour of the Agreement would be unhelpful since the Manufacturing Award did not regulate wages and working conditions. Comparisons by reference to changes as between the Agreement and the Manufacturing Award would provide no meaningful comparison at all and moreover would be apt to confuse rather than inform employees.
The only likely occasion when reference to the Manufacturing Award might have been relevant for the purposes of discharging the obligation under s 180(5) would be in circumstances where there might be serious questions whether the Agreement passed the BOOT. In that case the benefits and detriments as between the Agreement and the Manufacturing Award as a reference award might be relevant in enabling employees to make an informed choice. But that is not the case here. There is no suggestion that there is any concern that the Agreement does not pass the BOOT by reference to the Manufacturing Award.
In the circumstances there was no requirement for the applicant to have made any reference to the Manufacturing Award in the steps that it took to ensure that the terms of the Agreement and the effect of those terms are explained to relevant employees. Reference to that award in any explanation was not relevant and as I have already noted would likely have resulted in confusion rather than helping to inform employees.
For substantially the same reasons I am also satisfied that the applicant’s failure to refer to the Manufacturing Award in its explanation given to employees does not provide any reasonable grounds for believing that the Agreement has not been genuinely agreed to by the employees. It is accepted that s 188(1)(c) is intended to capture anything not caught by paragraphs 188(1)(a) and (b) and that any circumstance which could logically bear on the question of whether the agreement of the relevant employees was genuine would be relevant. The AMWU and the AWU contend, in essence, that the failure to refer to the Manufacturing Award in the explanation given to the employees means that the applicant has provided misleading or at least incomplete information and/or failed to fully disclose relevant information. The contention is rejected. The absence of an explanation involving the Manufacturing Award and the terms and conditions thereunder does not in my view logically bear upon the question whether the employees genuinely agreed to the Agreement. The Manufacturing Award did not determine their wages and conditions. If employees voted in favour of the Agreement, the Manufacturing Award would continue to have no application in determining their wages and conditions. If the employees voted against approving the Agreement, the Manufacturing Award would also continue to have no application in determining their wages and conditions. In short, the terms and conditions for which the Manufacturing Award provided had no bearing on the terms and conditions that would apply to employees whether they voted in favour of or against approving the Agreement. In that respect it was wholly irrelevant and the absence of any reference to the Manufacturing Award in the explanations given to employees about the Agreement’s terms and their effect was not misleading nor incomplete.
In all other respects, as the applicant’s material filed in support of its application discloses, on 3 May 2022 the applicant provided employees with comprehensive explanatory material setting out the various terms of the Agreement and an explanation of those terms with comparisons to the Engineering Services Agreement 2016, and the Aluminium Industry Award 2020 (Aluminium Award) and the Building and Constructions General On-Site Award 2020 (Building Award) which awards were incorporated by reference as terms of the Agreement. In addition, site meetings and virtual meetings took place between 21 April 2022 and 28 April 2022 during which explanations of the terms of the Agreement and the effect of those terms were given and questions and feedback were invited. Moreover, on 20 April 2022 all employees aged under 21 were contacted and were offered assistance, should they require it, to further their understanding of the Agreement.
Taking these matters into account I am comfortably satisfied that the applicant has complied with s 180(5), and that there are no other reasonable grounds for believing that the employees did not genuinely agree to the Agreement.
I am also satisfied based on the material the applicant has filed in support of its application, and it is not in contest, that the applicant has complied with ss 180(2) and (3), and s 181(2), and that the Agreement was made in accordance with s 182(1). I am therefore satisfied for the purposes of s 186(2)(a) that the Agreement has been genuinely agreed to by the employees covered by the Agreement.
Turning then to the question whether the Agreement passes the BOOT. The AMWU and the AWU contend that the Agreement does not pass the BOOT because:
· the Flat Rate for Field Team Members (FTMs) cannot compensate for the amount of entitlements it intends to cover;
· the Industry Standard Trade and Apprentice rates are substantially higher than the rates stipulated in the Agreement, and should the Agreement be approved, it will undermine the employment market in the Gladstone region;
· wage rates, and Annual Leave loading are in a ‘two tier system’ in the Agreement that are less than the stipulated Awards; and
· the Agreement has applied the incorrect award and should be under the Manufacturing Award, and the Aluminium Award.
It is convenient to deal with the second and fourth dot points above first. Whether or not particular rates for which the Agreement makes provision are less than the so-called “industry standard” says nothing about whether the Agreement passes the BOOT. The relevant question is whether at test time all employees and prospective employees covered by the Agreement would be better off overall if the Agreement applied to their employment than if a relevantly applicable award applied. It is not suggested that the industry standard is the standard for which the applicable award or awards make provision. It is not suggested, nor can I identify by reference to the applicable awards that an employee who is or would be an apprentice covered by the Agreement would receive a lesser rate of pay than that for which provision is made under the applicable award(s). Indeed the contrary is the case. In accordance with clause 10.3 of the Agreement, Trainees and Apprentices will be paid $0.50 per hour more than the applicable rates under the incorporated Awards. The joint unions’ submissions do not articulate how the Agreement does not pass the BOOT in respect of Trainees and Apprentices as a result. Otherwise, their submission (referring to wage rates contained in other enterprise agreements) is wholly irrelevant to the BOOT assessment.
As to the contention that the Building Award was not a correct reference instrument for the purposes of assessing whether the Agreement passes the BOOT, this contention is plainly wrong. Clause 1.5.1 of the Agreement makes clear that the Agreement is intended to cover employees employed by the applicant who undertake inter alia “construction” duties. Further, clause 1.5.3 refines the type of construction covered by the Agreement to “civil construction”. This is also made clear by the definition in clause 1.6(f) which defines “construction” to mean “civil construction”, while clause 1.6(g) contains a definition of civil construction, and employees engaged in that work would fall within the coverage of the Building Award. The Agreement is intended to cover employees who engage in work that would otherwise be covered by the Building Award and so that award becomes relevant for the purposes of assessing whether the Agreement passes the BOOT.
As to the issue of the Flat Rates, the AMWU and the AWU identify the circumstances in which they contend employees would not be better off overall. The first concerns casual employees who could work only a Sunday, and in particular a ‘Mechanical Tradesperson/Mechanical Fitter”. The second concerns casual employees who work on a public holiday.
The concern about the Flat Rates raised by the AMWU and the AWU, are respectfully, misconceived. The Flat Rates for which the Agreement provides in the respective schedules to the Agreement apply to employees engaged to work under the specific rosters identified therein. The Flat Rates do not apply to a casual employee engaged for a sporadic or isolated shift as in the examples set out in the joint unions’ submission. So much is clear from the text of Schedule 1 of the Agreement which provides in respect of Flat Rate FTM for Mechanical Tradesperson/Mechanical Fitter:
“The below Flat Rates are for those FTMs engaged on a Flat Rate of pay working the Wilson or Elliot Roster. Roster cycle: 12 hour day (inclusive of paid 30 minute meal break which is not worked), 5 days on 4 days off; 5 days on 5 days off; 4 days on 5 days off; in a 28 day roster cycle.”
And
“The below flat rates are for those FTMs engaged on a flat rate of pay working Monday-Friday up to 45 hours of 9 hours per day.”
Provision to the same effect is made for Flat Rate FTM for Plant Operators, Labourers and Coded Welders.
To similar effect Schedule 2 of the Agreement provides in respect of Flat Rate FTM Crane Driver/Riggers, and supervisors:
“The below Flat Rates are for those FTMs engaged on a Flat Rate of pay working Monday-Friday 45 hour week.”
Therefore, if a casual employee is engaged for a sporadic or isolated shift that employee will under the Agreement be engaged as a casual Base Rate FTM and will receive the applicable loadings and penalties payable to that type of employee under the Agreement. There is no suggestion that a Base Rate FTM is not better off under the Agreement than under an applicable award. The joint unions’ submission about the effect of the recent National Wage Case is irrelevant to the BOOT assessment in the circumstances. The assessment of whether an agreement passes the BOOT is undertaken at ‘test time’ which relevantly was 18 May 2022, the day the application for approval of the Agreement was made.
As to the question of annual leave loading, the AMWU and the AWU contend that clause 10.1.3 of the Agreement, which sets out that Flat Rate FTMs receive the Flat Rate in compensation for, inter alia, annual leave loading ‘where applicable’, means that employees will only be paid annual leave loading in undefined circumstances, and so this is detrimental in comparison to the entitlements under the applicable awards. There is no substance to this contention. Plainly, the reference to “where applicable” is a reference to the circumstances where an employee is otherwise entitled to annual leave loading. Thus, for example in respect of a casual employee who does not receive annual leave and necessarily also does not receive annual leave loading, the flat rate will not be compensation for an entitlement which does not apply to a casual employee. There is nothing uncertain about the use of the phrase “where applicable”. It means where such entitlement applies to a particular employee, and in the case, for example, of a casual employee, annual leave loading is not an entitlement that is applicable.
The AMWU and AWU also raise the use of the definition of ‘plant’ in the Agreement and contend that it should only be defined within the context of the Aluminium Award. The AMWU and AWU do not set out how this issue is relevant to any approval requirements set out in ss 186 or 187 of the Act. They contend there is risk to the said definition ‘blending’ with the Building Award, which should not occur due to the specific definitions being only applicable to the Aluminium Award. Why, even if the concern be real, this has any impact or relevance to any question that I need to decide is not identified and frankly I can see no relevance.
The AMWU and the AWU also submit that the applicable award that covers employees engaged under this Agreement for shutdown work is the Manufacturing Award, and the Aluminium Award. To the extent that this contention involves an assertion that the Manufacturing Award should also have been incorporated as a term of the Agreement, that is simply a complaint that a particular claim that is made has not been agreed to by the applicant. To the extent that the Manufacturing Award may be relevant for the purpose of assessing the BOOT, apart from the matters discussed above, the AMWU and the AWU do not point to any matter arising from the Manufacturing Award which might give rise to a concern that the Agreement does not pass the BOOT, nor am I able to identify any such concern.
The terms of the Aluminium and Building Awards are incorporated into the Agreement, and these apply unless inconsistent with an express term of the Agreement or are otherwise expressly excluded. The base rates of pay in the Agreement in comparison to those for which the Aluminium Award provides are between 4.55% and 34.13% higher and the flat rates for which the Agreement provides are between 32.44% and 109.46% higher than the rates in the Aluminium Award. Similarly, the base rates of pay in the Agreement in comparison to the Building Award are between 25.34% and 26.2% higher, and the flat rates for which the Agreement provides are between 42.33% and 74.54% higher than the rates of pay in the Building Award. The declaratory material provided by the applicant in support of its application for the approval of the Agreement identifies a handful of less beneficial terms in the Agreement compared to the reference awards. The material also identifies several more beneficial terms of the Agreement compared to the relevant awards as well as beneficial terms for which the awards do not make provision. The joint unions’ submission does not identify any other matter which would be relevant to the assessment whether the Agreement passes the BOOT, nor have I been able to identify any other matter. Taking all of these matters into account I am comfortably satisfied that the Agreement passes the BOOT.
No issue has been taken with any other approval requirement set out in ss 186 or 187 of the Act. Based on the material provided by the applicant in support of its application and upon a review of the Agreement and that material, I am satisfied that each of the requirements of ss.186, 187, 188 and 190 as are relevant to this application for approval have been met.
As earlier noted, the Construction, Forestry, Maritime, Mining and Energy Union, a bargaining representative for the Agreement, has given notice under s.183 of the Act that it wants the Agreement to cover it. In accordance with s.201(2) I note that the Agreement covers the organisation.
The Agreement is approved and, in accordance with s.54 of the Act, will operate from 4 August 2022. The nominal expiry date of the Agreement is 28 July 2025
DEPUTY PRESIDENT
Appearances:
Mr D Williams, solicitor for the applicant
Ms K Teague on behalf of the AMWU
Mr A Santelises on behalf of the AWU
Mr P Dunbar on behalf of the CFMMEU
Hearing details:
2022
Melbourne (by Video)
25 July
Printed by authority of the Commonwealth Government Printer
<AE516790 PR744190>
[1] One Key Workforce Pty Ltd v Construction, Forestry, Mining, and Energy Union and Anor [2018] FCAFC 77, 262 FCR 527, 277 IR 23 at [115]
[2] Construction, Forestry, Maritime, Mining, and Energy Union v Karijini Rail Pty Ltd[2021] FWCFB 4522 at [46]
[3] Construction, Forestry, Mining, and Energy Union v Ditchfield Mining Services Pty Limited[2019] FWCFB 4022 at [70]
[4] One Key Workforce Pty Ltd v Construction, Forestry, Mining, and Energy Union and Anor [2018] FCAFC 77, 262 FCR 527, 277 IR 23 at [103]
[5] Ibid ta [117]
[6] Construction, Forestry, Mining, and Energy Union v Ditchfield Mining Services Pty Limited[2019] FWCFB 4022 at [71]
Printed by authority of the Commonwealth Government Printer
<AE516790 PR744190>
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