Workpac Construction Pty Ltd

[2021] FWCA 4731

[2021] FWCA 4731

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Workpac Construction Pty Ltd
(AG2021/5601)

CONSTRUCTION SERVICES AGREEMENT 2021

Building, metal and civil construction industries
DEPUTY PRESIDENT SAUNDERS	NEWCASTLE, 3 AUGUST 2021

Application for approval of an enterprise agreement – material incorporated by reference in the agreement – BOOT – undertakings accepted – enterprise agreement approved.

Introduction and background

[1] On 14 June 2021, WorkPac Construction Pty Ltd (WorkPac), a labour hire provider to the building and construction industry, applied for approval of the Construction Services Agreement 2021 (Enterprise Agreement), which covers employees of WorkPac who are principally engaged in construction work within any state or territory of Australia and whose classifications and pay rates are contained in the Enterprise Agreement.

[2] The CFMMEU accepts that it is not, and was not at any time, a bargaining representative for the Enterprise Agreement. I exercised my discretion under s 590 of the Fair Work Act 2009 (Cth) (Act) to permit the CFMMEU to be heard in relation to WorkPac’s application for approval of the Enterprise Agreement.

[3] The CFMMEU filed and served submissions dated 24 June 2021, 16 July 2021 and 19 July 2021. In addition to its Form F16, Form F17 and other material filed with its application for approval of the Enterprise Agreement, WorkPac filed and served submissions dated 28 June 2021, 13 July 2021 and 15 July 2021, together with a witness statement made by Mr Paul Douglas, Industrial Relations Advisor for WorkPac, on 13 July 2021, and consolidated undertakings dated 2 August 2021 (Undertakings). I have read and had regard to all of that material.

[4] At the hearing on 20 July 2021, Mr Douglas was not required for cross examination. His witness statement was tendered without objection.

Undertakings

[5] WorkPac has provided Undertakings to address a number of concerns raised by the Commission and the CFMMEU (Annexure A to this decision).

Incorporated material

[6] The CFMMEU raised a number of concerns, many of which it accepts have been appropriately addressed by the Undertakings. The CFMMEU’s principal remaining concern is that the Fair Work Commission (Commission) could not be satisfied that WorkPac has taken all reasonable steps to ensure that during the access period for the Enterprise Agreement, employees who will be covered by the Enterprise Agreement were given a copy of, or had access to, material incorporated by reference in clause 6.14.4 of the Enterprise Agreement (s 180(2) of the Act).

[7] Clause 6.14.4 of the Enterprise Agreement provides:

“The FTM(s) bound by this Agreement will be required to adhere to the Company’s and/or Client’s site alcohol and other drugs procedures, which may include pre-employment, random and for cause testing on site. Random testing for the purposes of this Clause will be done in paid work time.”

[8] The CFMMEU contends that WorkPac’s, and its client’s, site alcohol and other drugs procedures are incorporated by reference in the Enterprise Agreement. Given there is no evidence that WorkPac provided employees with, or gave them access to, such material during the access period, it is contended that WorkPac did not comply with s 180(2) of the Act.

[9] The relevant test is whether the term in the Enterprise Agreement establishes an entitlement or obligation which operates by reference to documents external to the Enterprise Agreement. 1 Clause 6.14.4 of the Enterprise Agreement does not meet this test. It provides that relevant employees “will be required to adhere to” various “site alcohol and other drugs procedures” [emphasis added]. It does not state that employees are required to, or must, comply with the procedures. No obligation to comply with the unspecified alcohol and other drugs procedures is imposed by the Enterprise Agreement. The clause speaks to a future requirement. It does not specify how the requirement will be imposed. For example, it may be imposed by a lawful and reasonable direction by WorkPac, by a provision in a contract of employment, or alternatively as a condition of entry onto a particular work site. Clause 6.14.4 is “advisory” or “informational’ in nature, in that it informs employees of requirements that will in the future be imposed on them. It follows that the alcohol and other drugs procedures are not incorporated by reference in the Enterprise Agreement. Accordingly, there has been no failure on the part of WorkPac to comply with s 180(2) of the Act.

BOOT

[10] I must be satisfied that the Enterprise Agreement passes the BOOT before I can approve it. 2 Section 193(1) of the Act provides that an enterprise agreement passes the BOOT if the Commission is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the enterprise agreement would be better off overall if the enterprise agreement applied to the employee than if the relevant modern award applied to the employee. The “test time” is when the application for approval of the enterprise agreement is made.3

[11] In Armacell Australia Pty and Othersthe application of the BOOT was explained by the Full Bench in the following manner: 4

“The BOOT, as the name implies, requires an overall assessment to be made. This requires identification of terms which are more beneficial for an employee, terms which are less beneficial and an overall assessment of whether an employee would be better off under the agreement.”

[12] The BOOT is not applied as a line by line analysis. It is a global test requiring consideration of advantages and disadvantages to award covered employees and prospective award covered employees. 5 An enterprise agreement may pass the test even if some award benefits have been reduced, as long as overall, those reductions are more than offset by the benefits of the enterprise agreement.6

[13] Ultimately the application of the BOOT is a matter that involves the exercise of discretion, and it involves a degree of subjectivity or value judgement. 7

[14] It is clear from the references to “each … employee” in section 193(1) of the Act that every employee to whom the enterprise agreement will apply, if approved, must be better off overall than if the relevant modern award applied to the employee. It is not enough that a majority or most of the employees to whom the enterprise agreement will apply, if approved, will be better off overall than if the relevant modern award applied. 8

[15] Section 193(7) of the Act is a facultative provision which permits the Commission to be satisfied, in particular circumstances, that all employees in a class of employees will be better off if the agreement applied to that class than if the relevant modern award applied to that class. Section 193(7) provides as follows:

“For the purposes of determining whether an enterprise agreement passes the better off overall test, if a class of employees to which a particular employee belongs would be better off if the agreement applied to that class than if the relevant modern award applied to that class, the FWC is entitled to assume, in the absence of evidence to the contrary, that the employee would be better off overall if the agreement applied to the employee.”

[16] Section 193(7) was explained in the Explanatory Memorandum to the Fair Work Bill 2008 as follows:

“818. Although the better off overall test requires FWA to be satisfied that each award covered employee and each prospective award covered employee will be better off overall, it is intended that FWA will generally be able to apply the better off overall test to classes of employees. In the context of the approval of enterprise agreements, the better off overall test does not require FWA to enquire into each employee’s individual circumstances.”

[17] The selection of a class for the purpose of s 193(7) of the Act will only be of utility if the enterprise agreement affects the members of the class in the same way such that there is likely to be a common BOOT outcome. 9

[18] It is also important to recognise that the BOOT is hypothetical, because it requires an assessment of whether each employee, and each “prospective award covered employee”, would be better off overall if the enterprise agreement applied to him or her than if the relevant award did. 10

[19] The Enterprise Agreement incorporates the BC Award. In the event of inconsistency between the Enterprise Agreement and the BC Award, the provisions of the Enterprise Agreement prevail. 11 These terms of the Enterprise Agreement limit the circumstances in which an employee may not be better off overall under the Enterprise Agreement compared to the BC Award. The focus of the inquiry from a BOOT perspective is on inconsistencies between the Enterprise Agreement and the BC Award. The Undertakings given by WorkPac have resolved the issues raised in relation to such inconsistencies.

[20] Under the Enterprise Agreement, an employee may either be paid (i) a base rate of pay and various penalties or loadings or (ii) a flat rate of pay, which is a loaded rate in the sense that it is paid in lieu of a range of other penalties and loadings. As one would expect, the flat rates of pay are much higher than the base rates of pay. The margins between the base rates of pay under the Enterprise Agreement and the pay rates under the BC Award are small. The tightest margin between such rates is 1.43%. Although this margin is small, the fact that the terms of the BC Award are incorporated into the Enterprise Agreement and the Undertakings address most of the substantive differences between the Enterprise Agreement and the Award, I am satisfied that that each employee and prospective employee of WorkPac who is covered by the Enterprise Agreement and paid a base rate of pay would be better off overall if the Enterprise Agreement applied to them than if the Award applied to them. As for the employees who are paid a flat (loaded) rate of pay under the Enterprise Agreement, modelling undertaken by the Commission and the parties, considered together with the Undertakings, demonstrates that such employees and prospective employees would be better off overall if the Enterprise Agreement applied to them than if the Award applied to them.

[21] Having regard to all the circumstances, I am satisfied that each employee and prospective employee of WorkPac who is covered by the Enterprise Agreement would be better off overall if the Enterprise Agreement applied to them than if the Award applied to them.

Reasonable steps to explain

[22] Section 180(5) of the Act requires an employer to take all reasonable steps to ensure that the terms of the enterprise agreement, and the effect of those terms, are explained to the relevant employees. Further, the explanation must be provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.

[23] The purpose of the requirement in s 180(5) is to ensure that employees are as fully informed as is practicable about the terms and effect of the terms of a proposed enterprise agreement before voting on it. 12

[24] There is no legislative or other requirement that in every case an employer must explain to its employees the differences between the terms of a proposed enterprise agreement and an existing enterprise agreement or underlying award. Whether such an explanation is required for an employer to satisfy its obligation under s 180(5) of the Act to take all reasonable steps to ensure that the terms of the proposed enterprise agreement, and the effect of those terms, are explained to relevant employees, will depend on the circumstances. 13 The focus of the enquiry is on the steps actually taken to comply and to consider whether the steps taken were reasonable in the circumstances and whether these were all the reasonable steps that should have been taken in the circumstances.14 This directs attention to the content of the explanation given to employees.15

[25] Mr Douglas gave evidence in his witness statement of the steps taken to explain the terms of the Enterprise Agreement, and their effect, to the employees covered by the Enterprise Agreement. He was not challenged on that evidence. I accept it. On the basis of Mr Douglas’s evidence, I accept that WorkPac took all reasonable steps to ensure that the terms of the Enterprise Agreement, and the effect of those terms, were explained to the relevant employees, and the explanation was provided in an appropriate manner taking into account the particular circumstances and needs of the employees. Alternatively, in the event that there was some deficiency in the explanation provided to the employees, I accept, as does the CFMMEU, that the Undertakings given by WorkPac would resolve any such deficiency.

Undertakings

[26] In accordance with s 190(3) of the Act, I may only accept the Undertakings if I am satisfied that the effect of accepting the Undertakings is not likely to:

(a) cause financial detriment to any employee covered by the Enterprise Agreement; or

(b) result in substantial changes to the Enterprise Agreement.

[27] The Undertakings have been provided to address various issues identified by the Commission and the CFMMEU. The purpose of the Undertakings is to provide additional protection and/or benefits to employees. I am satisfied that accepting the Undertakings would not be likely to cause financial detriment to any employee covered by the Enterprise Agreement.

[28] As to whether the effect of accepting the Undertakings would be likely to result in substantial changes to the Enterprise Agreement, it is necessary to consider the number and breadth of the Undertakings. 16

[29] WorkPac has provided Undertakings to the Commission. They have been provided to address concerns raised about the BOOT, differences between the Enterprise Agreement and the BC Award, and the explanation provided to employees. Having carefully considered each of the Undertakings individually and collectively, I am satisfied that the effect of accepting them would not be likely to result in substantial changes to the Enterprise Agreement.

[30] In accordance with section 190(2) of the Act, I am satisfied that the Undertakings will meet the concerns I have identified above in relation to whether the Enterprise Agreement meets the requirements set out in sections 186 and 187 of the Act.

[31] No adverse comments in relation to the Undertakings were received from the CFMMEU or any of the employee bargaining representatives covered by the Enterprise Agreement.

[32] Pursuant to subsection 190 of the Act, I accept the Undertakings.

Satisfaction of other requirements

[33] Subject to the Undertakings, 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.

[34] The Enterprise Agreement is approved and, in accordance with s 54 of the Act, will operate from 10 August 2021. The nominal expiry date of the Enterprise Agreement is 2 August 2025.

DEPUTY PRESIDENT

Appearances:

Mr S Maxwell, Senior National Industrial Officer, on behalf of the CFMMEU
Mr D Williams, Solicitor of MinterEllison, on behalf of the Applicant

Hearing details:

2021.
Newcastle:
July 20.

Printed by authority of the Commonwealth Government Printer

<AE512596  PR732439>

Attachment A

 1   CFMMEU v Sparta Mining Services Pty Ltd[2016] FWCFB 7057 at [16]; BGC Contracting Pty Ltd [2018] FWC 1466 at [58]-[64]

 2 s.186(2)(d) of the Act

 3 s.193(6) of the Act

 4   [2010] FWAFB 9985 at [41]

 5   SDA v Beechworth Bakery Employee Co Pty Ltd[2017] FWCFB 1664 at [12]

 6   Re Australia Western Railroad Pty Ltd T/A ARG – A QR Company [2011] FWAA 8555 at [8]; NTEIU v University of New South Wales[2011] FWAFB 5163 at [47]

 7   TWU v Jarman Ace Pty Ltd[2014] FWCFB 7097 at [28]

 8   Loaded Rates Agreements [2018] FWCFB 3610 at [100]

 9   Loaded Rates Agreements [2018] FWCFB 3610 at [115(2)]

 10   SDA v Aldi Foods Pty Ltd [2016] FCAFC 161 at [33] per Jessup J, who was in the minority but no issue was taken by the majority with this part of Jessup J’s reasons.

 11   Enterprise Agreement at clause 1.4.2

 12   CFMMEU v LS Precast Pty Ltd[2019] FWCFB 1431 at [52]

 13   Ibid at [53]; Diamond Offshore General Company v Baldwin & Ors[2018] FWCFB 6907 at [28]-[37]

 14   CFMMEU v LS Precast Pty Ltd[2019] FWCFB 1431 at [53]

 15   Ibid; One Key Workforce Pty Ltd v CFMEU [2018] FCAFC 77 at [112]

 16   ALDI Foods Pty Ltd v TWU [2012] FWCFB 9298 at [54]