[2019] FWCFB 6307

The attached document replaces the document previously issued with the above code on 11 September 2019.

Name in appearances corrected.

Associate to Vice President Hatcher

Dated 13 September 2019

[2019] FWCFB 6307

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.604 - Appeal of decisions

Construction, Forestry, Maritime, Mining and Energy Union and others
v
Specialist People Pty Ltd
(C2019/3597; C2019/3600; C2019/3601)

Manufacturing and associated industries
VICE PRESIDENT HATCHER DEPUTY PRESIDENT COLMAN COMMISSIONER LEE	SYDNEY, 11 SEPTEMBER 2019

Appeal against decision [2019] FWCA 3535 of Deputy President Beaumont on 22 May 2019 – approval of agreement – scope of agreement extends to work covered by various awards – application to amend agreement to remove ambiguity – agreement not ambiguous or uncertain – appeal upheld – company to have opportunity to give undertakings

Introduction

[1] This decision concerns three appeals made under s 604 of the Fair Work Act 2009 (FW Act) against a decision issued by Deputy President Beaumont on 22 May 2019 1 (Decision) to approve the Specialist People Enterprise Agreement 2018 (Agreement). The appellants in the first appeal (C2019/3597) are the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) and the Australian Workers’ Union (AWU). The appellants in the second and third appeals (C2019/3600 and C2019/3601) are respectively the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU) and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU). The appellants (“unions”) advanced a common position with respect to each of the appeals.

[2] In the Decision the Deputy President concluded that the Agreement met the various approval requirements in the FW Act, including that it passed the “better off overall test”, and approved the Agreement subject to twelve undertakings.

[3] The unions were not bargaining representatives for the Agreement. They became aware of the Decision following its publication. The unions contended, and we are satisfied, that the unions are persons aggrieved by the Decision for the purpose of s 604(1), having regard to their ability to enrol as members persons covered by the Agreement.

[4] The three notices of appeal variously advance four grounds of appeal. First, they contend that the Deputy President failed to properly assess the “better off overall test” because she compared the terms of the Agreement only with the Manufacturing and Associated Industries and Occupations Award 2010 (Manufacturing Award), which the company had asserted was the only relevant award, and failed to consider other relevant awards, namely the Building and Construction General On-Site Award 2010 (Building and Construction Award), the Hydrocarbons Industry (Upstream) Award 2010 (Hydrocarbons Award), and the Electrical, Electronic and Communications Contracting Award 2010 (Electrical Contracting Award). This appeal ground proceeds on the unions’ interpretation of the scope of the Agreement, which they say clearly extends to work covered by these awards. Secondly, the unions contend that the Deputy President erred in reaching satisfaction that the requirement of s 180(2)(b) was met, namely that employees who voted on the Agreement had received or had had access to all incorporated awards during the access period (s 180(2)(b)). However the Agreement does not incorporate any awards and the unions’ did not make any submissions on this ground of appeal. It appears therefore to have been abandoned. Thirdly, the unions submit that the Agreement and the effect of its terms were not adequately explained to employees as required by s 180(5), and that the Deputy President could not have been satisfied that the Agreement was genuinely approved. Finally, the unions sought and were granted leave to amend their notices of appeal to include a fourth ground, namely that the undertakings accepted by the Deputy President involved substantial change to the Agreement, contrary to s 190(3) of the FW Act.

[5] At the appeal hearing, Specialist People Pty Ltd (the company), the applicant for approval of the Agreement, sought and was granted leave to lead further evidence in the form of an affidavit of Mr Matthew Prendergast, an executive general manager of AusGroup Limited, which is the parent company of Specialist People. Further, at the conclusion of the proceedings, the company requested an opportunity to make an application to the Full Bench to vary the Agreement under s 217 of the FW Act to remove uncertainty or ambiguity in clause 2 of the Agreement, such that the scope of the Agreement would be expressly confined to work covered by the Manufacturing Award. We advised the parties that we would consider any application under s 217 made by the company concurrently with our deliberations on the parties’ submissions in the appeal.

[6] The central contest in this matter concerns the scope of the Agreement. Clause 2 states that the Agreement applies to employees of the company employed to perform work in Australia, onshore or offshore, including but not limited to twenty-nine types or areas of work, among which appear civil and concrete works, fabrication, construction, maintenance, assembly, repairs and associated work. The company contends that the only award that is relevant for the purposes of the BOOT is the Manufacturing Award because the company’s business is ‘in the manufacturing industry’, and it is therefore covered by the Manufacturing Award and not the other awards, including by virtue of various ‘carve out’ provisions in those awards. The unions contend that the work covered by the Agreement falls within the coverage of the other awards and is not excluded by any ‘carve out’ provisions or otherwise.

[7] An appeal under s 604 of the FW Act is an appeal by way of rehearing and the Commission’s powers on appeal are exercisable only if there is error on the part of the primary decision maker. There is no right to appeal and an appeal may be made only with the permission of the Commission. Subsection 604(2) requires the Commission to grant permission to appeal if satisfied that it is in the public interest to do so. Permission to appeal may otherwise be granted on discretionary grounds. Other than the special case in s 604(2), the grounds for granting permission to appeal are not specified. Considerations which have traditionally been treated as justifying the grant of permission to appeal include that the decision is attended with sufficient doubt to warrant its reconsideration and that substantial injustice may result if leave is refused.

Coverage and classification provisions of the Agreement

[8] We turn first to the relevant provisions of the Agreement. Clause 2 states:

“2. PARTIES BOUND AND APPLICATION OF AGREEMENT

2.1 This Agreement shall apply to:

a) Specialist People Pty Ltd (Company), trading as Specialist People; and

b) employees of the Company employed to perform work in Australia (onshore or offshore), including but not limited to earth works, civil works, concrete works, infrastructure, utilities, fabrication, preassembly, assembly, disassembly, construction, maintenance, breakdowns, shutdowns, turnarounds, access of any type (including by rope), preparatory, repair, demolition, modification, pre-commissioning, commissioning, de-commissioning, hook-up, hook-up and commissioning, completions, local service upgrades, minor capital or capital works and all associated works for all areas listed above (employees).

However, this Agreement does not apply to employees engaged or currently working on or at locations, sites, projects or undertakings which are covered by an in term agreement for the duration of that in term agreement (e.g. until the nominal expiry date of that agreement).”

[9] Clause 5 deals with classifications and wage rates. Clauses 5.1 to 5.2 provide as follows:

“5. CLASSIFICATIONS AND WAGE RATES

5.1 The classification structure is set out in the table below. Employees must be prepared to perform all tasks as required of their classification level or any lower level for which they have the required skills and competence.

5.2 Employees will be paid no less than the following full time adult hourly rates of pay:

Level	Classification	Minimum all-inclusive hourly rate of pay
Level 1	• Labourer • Trades Assistant (Entry Level)	$29.21
Level 2	• Trades Assistant (with at least 1 year’s experience) • Lagger • Driller • Operator (Basic)	$30.77
Level 3	• Storeperson • Forklift Operator • Basic or Intermediate Scaffolder or Rigger • Electrical Trades Assistant • Insulator (with qualifications and experience recognised by the Company and with less than 4 years’ experience) • Refractory Assistant • Non-destructive testing technical assistant • Brush hand (painting of iron work using brush or spray) • Electrical Trades Assistant • Dogperson • Machinist • Concreter • Fixing steel (including tack welding steel reinforcement) • Concrete worker • Yardperson • Operator (Other)	$34.54
Level 4	• Advanced Scaffolder or Rigger • Insulator (with qualifications and experience recognised by the Company and with 4 years’ experience or more) • Cryogenic Insulator (with qualifications and experience recognised by the Company and with less than 4 years’ experience) • Linesman Grade 2 (less than 3 years’ experience) • Crane Operator 0 – 80 tonnes	$35.58
Level 5	• Tradesperson (Other) • Mechanical Fitter • Welder • Painter / Blaster • Boilermaker • Sheet Metal Worker • Plasterer • Carpenter • Cryogenic Insulator (with qualifications and experience recognised by the Company and with 4 years’ experience or more) • Refractory Tradesperson • Linesperson • Pipe Fitter • Mechanic • Crane Operator 81 – 180 tonnes	$38.05
Level 6	• Electrical Fitter / Installer • Instrument Fitter • Crane Operator 181 to 220 tonnes	$40.00
Level 7	• Electrician Special Class • Welder Special Class • Crane Operator over 220 tonnes • Tradesperson Special Class	$42.21
Level 8	• Electronics Tradesperson • Instrumentation Tradesperson	$45.46

[10] The unions contend that clause 2 gives the Agreement a very wide scope, applying to “all employees of the Company employed to perform work in Australia”. It says that the long list of types of work then set out in clause 2.1 is inclusive and therefore only illustrative of work covered by the Agreement, and that the Agreement does not stipulate any particular industry in which the work will be performed. We agree.

[11] The unions further submit that nothing in clause 2.1 or any other provision in the Agreement limits its operation to the classifications in clause 5. On this we disagree. Although there is no express link between clause 2.1 and clause 5, it is clear that clause 5 is intended to establish a classification structure for employees who can be covered by the Agreement, and that the scope of the Agreement is confined accordingly. The contrary interpretation would have the Agreement applying to employees covered by clause 2.1 for whom no rate of pay was set under clause 5. It seems to us improbable that this could have been intended. Moreover, clause 5.1 states that “the classification structure” is set out in the table below, suggesting a comprehensive structure, and clause 5.2 states generally that “employees will be paid no less than” the rates set out in the table. All employees appear here to be contemplated, rather than some special classes of employees for whom rates of pay are prescribed. Had clause 5 applied only to a subset of employees covered by the Agreement, leaving the remainder with no rate of pay, some explanation of such a curious arrangement would have been expected. Further, the unions’ written submissions on standing to appeal stated that the unions are able to enrol as members persons falling within a number of the “occupational classifications” specified in the Agreement, a clear reference to clause 5, and an indication that they too attributed significance to clause 5 in construing the coverage of the Agreement 2.

[12] Therefore, we consider that the coverage of the Agreement, as well as the question of which awards are to be considered for the purpose of the better off overall test and other approval requirements, are to be considered by reference to clause 2.1 read in conjunction with clause 5.

[13] The unions’ submissions arranged their appeal grounds and contentions concerning alleged error on the part of the Deputy President into three principal areas: the better off overall test, pre-approval requirements and undertakings.

First appeal ground - the better off overall test

[14] The unions contended that the Deputy President erred in concluding that the Agreement passed the better off overall test, such that the requirement of s 186(2)(d) of the FW Act had not been met. Section 193 requires that the Commission be satisfied, at the “test time”, that “each award covered employee” and “each prospective award covered employee for the agreement” would be better off overall if the agreement applied to the employee than if “the relevant modern award” applied to the employee (see also 193(4)(b) and 194(5)(b)).

[15] The unions note that the Decision does not, other than by recording the Commission’s satisfaction as to the requirements of s 186, set out an analysis of the application of the better off overall test, nor state the Commission’s reasons for reaching its state of satisfaction with respect to the better off overall test.

[16] However, it is important to recognise that the Deputy President’s decision represents the culmination of her process of consideration of the approval requirements, and the file material clearly reveals that she engaged in an analysis of these requirements and raised with the company a number of concerns in relation to them, including in respect of the better off overall test. The company then filed a revised form F17 statutory declaration sworn by Mr Prendergast, and offered a number of undertakings in relation to the Deputy President’s concerns about the better off overall test, as measured against the Manufacturing Award. However, the Deputy President was also concerned to understand whether indeed the Manufacturing Award was the only relevant reference instrument.

[17] The Deputy President wrote to the company noting that its revised F17 had stated that the primary activity of the company was “maintenance” and that, in answer to question 3.1 in the revised F17, the company had stated that the award currently covering the employer and employees covered by the agreement was the Manufacturing Award. She asked the company to confirm that this was the only relevant reference instrument. The company’s response is not evident from the file but it appears to have been affirmative. 3

[18] The unions contend that this affirmative response was erroneous. They submit that, even accepting that the scope of the Agreement is confined to the classification structure in clause 5, the work to be performed under the Agreement is covered not only by the Manufacturing Award but also by the Building and Construction Award, the Electrical Contracting Award, and the Hydrocarbon Award.

[19] The unions’ written submissions contended that the Agreement failed the better off overall test in relation to all four awards, however at the appeal hearing the unions conceded that the Agreement passed the test in relation to the Manufacturing Award. For its part, the company conceded in its written submissions that the Agreement would not pass the better off overall test against the Building and Construction Award or the Hydrocarbons Award, 4 and at the hearing also conceded that the Agreement would not pass the better off overall test against the Electrical Contracting Award. It says however that it need not do so, because these awards are not relevant awards for the purposes of the test.

[20] On the face of clause 2 and the classification structure in clause 5, the scope of the Agreement would plainly cover employees undertaking work covered by each of the additional three awards. For example, the Electrical Contracting Award would cover work performed by an electrician special class at level 7 of the Agreement’s classification structure, the Hydrocarbons Award would cover offshore commissioning work undertaken by a level 1 labourer, and the Building and Construction Award would cover the work undertaken by a forklift operator or dogperson at level 3.

[21] However the company contends that its business is in the manufacturing industry and that therefore, by operation of the terms of the Manufacturing Award and exclusionary provisions in the other awards, it is the Manufacturing Award alone that covers work within the scope of the Agreement. The company’s argument runs as follows.

[22] A modern award covers an employer or employee if the award is expressed to cover them (s 48(1)). Clause 4.1 of the Manufacturing Award states that it covers “employers throughout Australia of employees in the Manufacturing and Associated Industries and Occupations who are covered by the classifications in this award and those employees”. Clause 4.9 then defines these industries and occupations in subparagraphs (a), (b), and (c). Clause 4.9(a)(iii) reads:

“(iii) the repair, refurbishment, reconditioning, maintenance, installation, testing and fault finding of:

• any of the items referred to in clause 4.9(a)(i); or

• floor covering; or

• plant, equipment and buildings (including power supply) in the industries and parts of industries referred to in clauses 4.9(a)(i) and (ii); or

• plant, equipment and buildings (including power supply) in any other industry.”

[23] The company says that its business is one that involves “the repair, refurbishment, reconditioning, maintenance, installation, testing and fault finding of” what appears in the last dot point, namely “plant, equipment and buildings (including power supply) in any industry”. The company says that it is therefore covered by the Manufacturing Award.

[24] To this point, the company’s argument meets no objection from the unions, because they acknowledge that the company is covered by the Manufacturing Award and that this is one of the relevant reference instruments for the better off overall test. What is contentious is the second plank in the company’s argument, namely that the other awards are not also relevant for the purposes of the better off overall test. The company’s submissions in respect of the three awards are as follows.

Building and Construction Award

[25] Clause 4.1 of the Building and Construction Award states that it “covers employers throughout Australia in the on-site building, engineering and civil construction industry and their employees in the classifications set out within Schedule B – Classifications Definitions to the exclusion of any other modern award.” Clause 4.9 then defines “on-site building, engineering and civil construction industry” to mean “the industry of general building and construction, civil construction and metal and engineering construction, in all cases undertaken on-site”. Importantly, clause 4.2 contains a “carve-out” stating that “without limiting the generality of the exclusion, this award does not cover employers covered by” eight listed awards, the first of which, at subparagraph (a), is the Manufacturing Award.

[26] The company says that, where the Manufacturing Award covers Specialist People with respect to relevant employees, no question arises as to which of the two awards is more appropriate: the Manufacturing Award will necessarily cover Specialist People to the exclusion of the Building Award because of clause 4.2(a). We note at this point that, clearly, the exclusion in clause 4.2 of the Building and Construction Award must, as the company’s submissions acknowledge, be read as attaching to employers covered by the Manufacturing Award not generally, but with respect to relevant employees.

Hydrocarbons Award

[27] The Hydrocarbons Award covers employers throughout Australia who are engaged in the hydrocarbons industry, as defined, in respect of employees falling within the classifications listed. It too contains a carve-out for work covered by the Manufacturing Award, although there is an exception to it. Clause 4.3(e) states that the Hydrocarbons Award does not cover “employers in respect of their operations or activities covered by the Manufacturing and Associated Industries and Occupations Award 2010, except for work covered by clause 4.2 above”.

[28] Clause 4.2(e) of the Hydrocarbons Award covers the following:

“(e) the commissioning, servicing, maintaining (including mechanical, electrical, fabricating or engineering and preparatory work) modification, upgrading or repairing of facilities, plant and/or equipment used in the activities set out above by employees principally employed to perform work on an ongoing basis at a location where the activities described above are being performed;”

[29] The company says that although “commissioning, servicing, maintaining (including mechanical, electrical, fabricating or engineering and preparatory work) modification, upgrading or repairing of facilities, plant and/or equipment” could fairly be said to describe some of the work that can be undertaken by employees under the Agreement, employees were not at test time, nor will they be, “principally employed to perform work on an ongoing basis at a location where the activities described above are being performed”. Therefore the exception to the “carve out” for the Manufacturing Award is not engaged.

[30] The company says that although it might, on a project basis, provide manufacturing and maintenance services to offshore oil and gas clients whose operations fall within the scope of the hydrocarbons industry as defined in the Hydrocarbons Award, this would not alter the fact that the Manufacturing Award applies to the exclusion of the Hydrocarbons Award.

Electrical Contracting Award

[31] The company’s contention in relation to the Electrical Contracting Award is more straightforward. Clause 4.1 of that award states that it applies “in the industry of electrical services provided by electrical, electronics and communications contractors and their employees in the classifications within Schedule B —Classification Definitions to the exclusion of any other modern award”. The company says that it is quite simply not an “electrical, electronics and communications contractor”. It submits that, although electrical services form one aspect of Specialist People’s manufacturing and maintenance business, they do not form its substantial character, and nor can it be said that Specialist People is an “electrical, electronics and communications contractor”.

[32] More generally, the company says that the type of work that it performs and hopes to perform under the terms of the Agreement is directed toward producing a “final product” for a client. 5 The Agreement covers employees working in metal trades, boilermakers, welders, fitters and associated trades such as crane drivers, riggers, painters and blasters, and the company contends that each of them is involved in metal manufacturing and maintenance work. The company says that the employees with whom it made the Agreement were, at the time of its making, performing work including maintenance, structural steel fabrication and associated surface treatment works.6 At the test time, the substantive character of Specialist People’s business was that of manufacturing and maintenance. The company says that it did not then and does not now intend to conduct another enterprise that falls outside the “manufacturing industry”, as that term is defined in the Manufacturing Award.

Disposition of the BOOT point

[33] We reject the company’s contention that the Manufacturing Award was the only relevant award for the purposes of the better off overall test. Its argument does not engage with the terms of the Agreement. Based on the affidavit of Mr Prendergast, it may be accepted that Specialist People is, and wishes to remain, an employer that is engaged in work in the manufacturing industry. However, nothing in the Agreement manifests this intention, or otherwise anchors the company’s business to the manufacturing industry in respect of the work that employees employed under the Agreement may perform. The Agreement does not say that the company is in the manufacturing industry or that the instrument will only have application to employees if or to the extent that the company undertakes work in the industry.

[34] The company contended that at the test time, if the employees had been undertaking any of the work covered by the Agreement, the Manufacturing Award alone would have applied to them, because the Award focuses on the company’s industry, and the exclusions in the other awards apply. However, the better off overall test, as expressed in s 193(1), asks whether each award covered and prospective award covered employee for the agreement would be better off overall under the agreement than the award, and ss 193(4) and (5) define “award covered employee” and “prospective award covered employee” as employees who are or would be covered by a modern award that is in operation and which covers the employee in relation to the work that he or she is to perform.’ It is not enough to identify the industry of the employer and the Award that applies to it at the time it makes the agreement. The scope of work that may be undertaken under the agreement is a central part of the analysis.

[35] As noted earlier, the Agreement on its plain terms covers work that falls within the scope of the other three awards. Further, there is nothing in the Agreement to prevent the company having employees work such that the exclusions in the other awards do not apply. For example, it could have employees “principally employed to perform work on an ongoing basis at a location where the [hydrocarbon-related] activities described above are being performed”, such that the exception to the carve-out in the Hydrocarbons Award is engaged and the carve-out will not apply. Similarly, the company could under the Agreement provide services in a manner akin to an electrical contractor, such that the relevant work would fall squarely within the coverage of the Electrical Contracting Award. Contrary to the company’s submission, this is not an exercise in speculation, but of ascertaining objectively the scope of the work that is covered by the enterprise agreement.

[36] The better off overall test must be assessed in light of the work that may be performed under an agreement, measured against the relevant awards. If an agreement allows for work to be performed in a manner that would bring it within the coverage of a particular award, this must be taken into account. Fanciful or improbable working arrangements can of course be put to one side in conducting the analysis required by the better off overall test. But there is nothing fanciful about the possibility of work under this Agreement falling within the scope of the other three awards. The terms of the Agreement expressly permit this to occur. On the company’s argument, its link with the manufacturing industry prevents this from occurring, but the Agreement makes no reference to this at all. The company says that it will maintain the link as a matter of operational fact, but the Commission cannot content itself with informal statements of intention.

[37] The company contends that the Deputy President considered the question of what were the relevant modern awards for the purposes of the BOOT in correspondence with the company, and that she had before her information that was sufficient to substantiate that the company’s primary activity was “maintenance” and that this would remain the case, such that work that will be performed under the Agreement is and will be covered by the Manufacturing Award to the exclusion of the other awards. 7

[38] As we understand that submission, the company’s contention is that the Deputy President’s decision was a discretionary one and that any error was within jurisdiction because she asked herself the right question. In our view, the Commission does not have a discretion to determine the relevant reference instrument for the purpose of the better of overall test. The question of what is the “relevant modern award” is one of law, and is not discretionary in nature. It is not apt to speak, as the company does, of the Deputy President reaching a conclusion on award coverage that was open to her. It was necessary to reach the correct conclusion. On the plain terms of the Agreement, it is not an instrument that applies only to work in the manufacturing industry.

[39] In our view, each of the Building and Construction, the Hydrocarbons and the Electrical Contracting Awards were relevant modern awards for the purpose of assessing whether the Agreement passed the better off overall test. As noted above, the company concedes that the Agreement does not pass the better off overall test against the three other awards. It follows that the Agreement was, in the terms in which it was made, incapable of satisfying the approval requirement in s 186(2)(d). The Deputy President erred in concluding otherwise.

Application under s 217 to remove ambiguity or uncertainty

[40] It is convenient at this point to address the company’s application to the Full Bench to vary the Agreement under s 217 of the FW Act to remove ambiguity or uncertainty. The company contended, should its primary submissions not be accepted, that the grant of this application would be a practical way to resolve any problem that the Agreement fails the better off overall test against the three other awards by confining the scope of the Agreement to work covered by the Manufacturing Award. In this respect, the application sought to effectuate two amendments to clause 2.1(b), so that it would read as follows:

“b) employees of the Company employed in the classifications at clause 5.3 to perform work in Australia (onshore or offshore), including but not limited to earth works, civil works, concrete works, infrastructure, utilities, fabrication, preassembly, assembly, disassembly, construction, maintenance, breakdowns, shutdowns, turnarounds, access of any type (including by rope), preparatory, repair, demolition, modification, pre-commissioning, commissioning, de-commissioning, hook-up, hook-up and commissioning, completions, local service upgrades, minor capital or capital works and all associated works for all areas listed above (employees), in circumstances where such work is covered by the Manufacturing and Associated Industries and Occupations Award 2010.” (emphasis added)

[41] The principles that apply to the Commission’s consideration of such applications are well-settled. 8 First, the Commission must identify whether there is any ambiguity or uncertainty in the agreement. The Commission must make a positive finding as to whether the relevant provisions of the agreement are ambiguous or uncertain. This is a jurisdictional pre-requisite to the exercise of the discretion to vary the instrument. The process of considering whether there is ambiguity or uncertainty involves an objective assessment of the words in question, construed in context. The mere existence of rival contentions as to the proper construction of the terms of an agreement is not a sufficient basis to conclude that there is ambiguity or uncertainty. The competing contentions should have merit.

[42] Once ambiguity or uncertainty has been identified, the Commission must then consider whether to exercise its discretion to vary the agreement. The Commission has discretion to “remove ambiguity or uncertainty”, not to give effect to a new and substantive change to the agreement. Applications that seek the latter must be made under s 210 of the FW Act. A decision of the Commission under s 217 to remove uncertainty or ambiguity should give effect to the substantive agreement that was ambiguously or uncertainly reduced to writing in the terms of the enterprise agreement.

[43] In respect of the first proposed amendment to clause 2.1(b), we would be prepared to accept that the Agreement is textually uncertain, but not ambiguous, in relation to the question of whether the scope of the Agreement is confined by reference to the classification structure in clause 5. Neither clause 2 nor any other provision expressly states that this is so. The text is not clear, even if the intention seems rather obvious. The proposed variation is similar to one accepted by the Full Bench in CFMMEU v Macmahon Contractors Pty Ltd 9, where an appeal from a decision to approve an enterprise agreement contended that the agreement did not pass the better off overall test because the agreement’s rostering provisions conferred an open discretion on the company in relation to the configuration of rosters. The company submitted that it was intended that only three roster patterns could be utilised, namely those for which a rate of pay was prescribed elsewhere in the agreement.10 The Full Bench concluded that the agreement was ambiguous. There were two cogent and competing contentions, and it was appropriate to vary the agreement, which was in the interests of employees and also resolved the concern raised by the appellant union.

[44] However, in relation to the second proposed amendment to clause 2.1(b), we are not convinced that the Agreement is ambiguous or uncertain in the second respect. In contrast to the first matter, where competing contentions about the proper interpretation of the instrument are grounded in its text, there is nothing in the Agreement to support to the contention that its scope is confined to work that is covered by the Manufacturing Award.

[45] It is relevant to note clause 9 of the Agreement, which was the subject of an undertaking given by the company to the Commission that it would not be relied upon, made provision for special working arrangements. It applied in circumstances where an employee was “engaged in specialised work, as defined by the Employer, particularly construction or maintenance work, which requires work to be organised in a method which is inconsistent with the hours of work provided by this Agreement”. In such a case, clauses 5 (classification and wage rates), 7 (hours of work) and 8 (shift work) would not apply while employees were performing such work. On one view, the presence of this clause in the Agreement as submitted to the Commission suggests that an even broader scope was intended to be given to the Agreement, as not even the classifications in clause 5 would apply in cases where “specialised work” was performed. Further, the clause referred to such work including “construction or maintenance”, disjunctively, which suggests that work might be undertaken exclusively in a construction setting.

[46] A further textual indication of a scope unconfined by reference to the Manufacturing Award is that some of the classifications in clause 5 would appear to be unclassifiable in or untranslatable into the classification structure in the Manufacturing Award. For example, included at level 4 of the table in clause 5 of the Agreement is “cryogenic insulator”. It is not clear to us how such an employee could be covered by the Manufacturing Award. The same can be said for “concreter” or “dogperson” at level 3.

[47] The company submitted that principles of contractual construction governing recourse to extrinsic materials are also relevant to the question of whether the Agreement is ambiguous. It says that regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists. If, after having regard to that evidence, an expression in an agreement is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances cannot be used to contradict its plain meaning. However, recourse to evidence of surrounding circumstances may be necessary to identify the purpose or objects of the agreement, or to determine the proper construction where there is a constructional choice.

[48] In Australian Manufacturing Workers’ Union v Berri Pty Limited 11 the Full Bench noted that evidence of surrounding circumstances is admissible in aid of interpretation of the agreement, but not if the agreement has a plain meaning.12 However, even if one accepts that regard might be had to the surrounding circumstances in order to establish whether the terms of an agreement are ambiguous, we are not persuaded that the relevant materials bear out any ambiguity or uncertainty in the present case. In support of the application for approval of the Agreement, the F17 statutory declaration noted that the Manufacturing Award was the relevant reference instrument, and that the primary activity of the employer was “maintenance”. But this does not suggest any limitation on the scope of work the company was intending to carry out under the Agreement.

[49] The affidavit of Mr Prendergast filed at the hearing attests to the company’s intended field of work and the rationale for making the Agreement. He said that the coverage of the Agreement took into account that clients might require the company to perform ancillary or complementary work on site, but that this would still be manufacturing in nature. He also said that employees employed at the time of making the Agreement were employed in classifications such as boilermaker, painter, blaster and advanced rigger, which were maintenance related roles. But there is no evidence that employees understood that the scope of the Agreement would be confined in the way the company says, by reference to the coverage of the Manufacturing Award. Although there are no “parties” per se to enterprise agreements made under Part 2-4 of the FW Act, any concept of mutual objective intention that might inform the proper interpretation of an agreement would need to take into account the intention or understanding of employees, who after all are those who make the agreement when by majority they approve it under s 182.

[50] As we are not convinced that the Agreement is ambiguous or uncertain in relation to the second point of construction raised in the s 217 application, we have no jurisdiction to vary the Agreement to confine its scope to work that is covered by the Manufacturing Award. We would have been prepared to vary the Agreement under s 217 to give effect to the first proposed variation. However, this would not appear to have any utility, as it would not by itself resolve the problem we have identified and lead to the Agreement passing the better off overall test.

Conclusion re BOOT point

[51] Unless addressed under s 189 or 190, an enterprise agreement cannot be approved if it does not pass the better off overall test approval requirement in s 186(2)(d). Accordingly the Decision was attended by appealable error. We consider therefore that permission to appeal should be granted, the appeal upheld, and the Decision quashed. However we consider that, unless one of the unions’ other appeal grounds is unequivocally made out, the appropriate course is not simply to dismiss the company’s application for approval of the Agreement but to re-hear it such as to give the company the opportunity to resolve the BOOT difficulty by way of appropriate undertakings. It is therefore necessary for us to consider those other appeal grounds.

Other appeal grounds

[52] In relation to the third appeal ground, the unions submitted that the Agreement and the effect of its terms were not adequately explained to employees as required by s 180(5), and that the Deputy President could not therefore have been satisfied that the Agreement was genuinely approved. It contended that the company’s explanation of the terms was contained in a single table summarising the import of some clauses, and that it did not address the range of classifications that the Agreement covers, the roster patterns that would be worked, or the range of modern awards that would otherwise cover the work in question and the relevant benefits that would be provided under the Agreement.

[53] We note that the three employees who voted on the Agreement were provided with an information sheet on 19 November 2018 summarising key terms of the Agreement. Based on the information in the F17s, it appears evident that the employees were actively engaged in bargaining. They were also provided with copies of enterprise agreements of various competitors, to enable them to understand the conditions in the Agreement in a market context. That would normally provide a substantial basis to conclude that the requirement in s 180(5) had been complied with.

[54] However, a question arises as to how the explanation of the terms of the Agreement could have been adequate if the employer proceeded on the basis that there was only one relevant award, namely the Manufacturing Award. Mr Prendergast’s affidavit indicates that the employees who voted on the Agreement were employed in work that was covered by that award, but it does not appear to have been explained to employees that they might undertake work covered by the other awards. This issue was not explored in an evidentiary sense at first instance, nor did the company address us on the significance of this matter in the appeal as its primary contention was that the other awards did not apply. Further, had the issue been raised at first instance, the company would have had the opportunity to advance a case that any deficiency in its explanation of the Agreement in this respect was a minor technical or procedural error to which s 188(2) applied. For these reasons, we do not consider that we are in a position to simply uphold this appeal ground and dismiss the application for the approval of the Agreement. It is a matter which the company may (and will need to) address at a re-hearing of the application.

[55] As to the fourth appeal ground, the unions submitted that the company’s undertaking to, in substance, remove clause 9 from the Agreement constituted a major change to the Agreement approved by employees. As mentioned earlier, the effect of clause 9 was effectively to suspend certain clauses of the Agreement when employees worked on “specialised project work”.

[56] In our view the Deputy President was right to seek an undertaking in relation to this provision. We do not see how the better off overall test could have been reliably undertaken otherwise. However, contrary to the unions’ additional ground of appeal, we do not consider that accepting this or the other undertakings resulted in substantial change to the Agreement. As observed by the Full Bench in CFMEU v Kaefer Integrated Services Pty Ltd, 13 the legislative concern in s 190(3)(b) appears to be to avoid imposing on employees arrangements that they have not approved. They are not likely to object to higher monetary amounts or other modifications that fundamentally protect their interests. We acknowledge that there is a separate requirement in s 190(3) that undertakings not cause financial detriment to any employee covered by the Agreement (s 190(3)(a)), and that an undertaking might meet this condition but still result in substantial change and not be capable of acceptance for this reason alone. However the undertaking in relation to clause 9 is not of this kind. It removed an exception to the Agreement’s ordinary application. The position might be different if an undertaking introduced working arrangements that had not been sanctioned by employees. However, this does not arise in the present matter. We therefore reject the fourth appeal ground.

Conclusion and orders

[57] For the reasons given, we propose to quash the Decision and to rehear the company’s application for approval of the Agreement. The company will have the opportunity to offer appropriate undertakings to address how the Agreement might pass the better off overall test against the other three awards, and to provide any further submissions addressing s 180(5) and s 188(2).

[58] We order as follows:

(1) Permission to appeal is granted.

(2) The appeal is upheld.

(3) The Decision ([2019] FWCA 3535) is quashed.

(4) The Full Bench will re-determine the application for approval of the Specialist People Enterprise Agreement 2018. The company is to send to the chambers of the presiding member any undertakings and further submissions on ss 180(5) and 188(2) in support of its application within 14 days of the date of this decision.

al of the Fair Work Commission with the memeber's signature.