DECISION

Fair Work Act 2009
s.185—Enterprise agreement

S C Hydro Pty Ltd
(AG2021/5801; AG2021/5818)

SC HYDRO PTY LTD - AWU TUNNEL AND ASSOCIATED WORKS GREENFIELD AGREEMENT 2021-2025; S C HYDRO PTY LTD AWU AND CFMMEU SURFACE WORKS GREENFIELD AGREEMENT 2021-2025

Applications for approval of the SC Hydro Pty Ltd - AWU Tunnel and Associated Works Greenfield Agreement 2021-2025 and the S C Hydro Pty Ltd AWU and CFMMEU Surface Works Greenfields Agreement 2021-2025

[1] S C Hydro Pty Ltd (SC Hydro) has made applications pursuant to s 185 of the Fair Work Act 2009 (the Act) for approval of two greenfields agreements, the SC Hydro Pty Ltd - AWU Tunnel and Associated Works Greenfield Agreement 2021-2025 (Tunnel Agreement) and the S C Hydro Pty Ltd AWU and CFMMEU Surface Works Greenfields Agreement 2021-2025 (Surface Works Agreement) (together, the Agreements).

[2] The Agreements will apply to employees of SC Hydro who will be employed to work on the Snowy 2.0 Pumped Hydro Electric Upgrade Scheme, a construction project that entails a major expansion of the Snowy Hydro Scheme and that will create a capacity to generate and store renewable energy. The project will link two existing dams by 27 kilometres of tunnels and construct an underground pumped hydro power station some 800 meters below the surface.

[3] The Tunnel Agreement covers SC Hydro, the Australian Workers’ Union (AWU), and employees of SC Hydro who fall within the classification structure in the agreement and perform ‘tunnel and associated works’ as defined in clause 2.3. The AWU supports the application for approval of the Tunnel Agreement.

[4] The Surface Works Agreement covers SC Hydro, the AWU, the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU), and employees of SC Hydro who fall within the classification structure in the agreement and who are not covered by the Tunnel Agreement. The AWU and CFMMEU support the application for approval of the Surface Works Agreement.

[5] SC Hydro’s declarations in support of its applications state that the company is a genuine new undertaking that has been established for the purpose of employing building and construction workers whose labour will be supplied to the Future Generation Joint Venture (FGJV), the successful tenderer to perform the project works. The FGJV comprises Salini Impregilo S.p.A., now known as Webuild S.P.A. (Salini), Clough Projects Australia Pty Ltd (Clough), and the Lane Construction Corporation (Lane). The declarations state that SC Hydro has to date not employed any building and construction workers. They further state that approval of the Agreements would be in the public interest because they will provide fairness and certainty in the industrial arrangements for employees engaged by SC Hydro to work on a project that is expected to create some 4,000 direct jobs and contribute to economic growth in the region.

[6] The AWU, the CFMMEU and the Australian Manufacturing Workers’ Union (AMWU) filed form F21 declarations in connection with the applications for approval of the Agreements, affirming that the relevant unions, taken as a group, were entitled to represent a majority of employees who will be covered by the Agreements. Such declarations are made pursuant to rule 24 and schedule 1 of the Fair Work Commission Rules in respect of greenfields agreements made under s 182(3) of the Act. Section 182(3) provides that a greenfields agreement is made when it has been signed by each employer and each relevant organisation that the agreement is expressed to cover. In correspondence to the parties, I noted that the Agreements were not expressed to cover the AMWU, nor had it signed the Agreements, and that there is no mechanism in the Act akin to the process under s 183 that would allow a union to become covered by a greenfields agreement.

[7] The AMWU then sought to be heard in relation to the applications on the basis that it had made numerous unsuccessful attempts to be included in the bargaining for the greenfields agreements, that the Agreement would likely cover its members currently working on the project as employees of contractors, and that the union was now concerned that the project had been underway for some time and that the Agreements might therefore not satisfy the statutory requirements of a greenfields agreement.

[8] SC Hydro, the AWU and the CFMMEU opposed the AMWU’s request to be heard. After hearing briefly from the parties at a telephone mention, I determined to inform myself in relation to the application by hearing from the AMWU (see s 590). Pursuant to my directions, the AMWU filed an outline of submissions and witness statements of Mr Daniel White, an AMWU organiser, and Ms Kathryn Presdee, its legal officer. SC Hydro and the AWU then filed written submissions. SC Hydro filed witness statements from Mr Keith Ritchie, who is employed by Clough to work as part of the FGJV project team in the role of industrial relations manager for the joint venture, and Mr Michael Borlase, who prior to 29 March 2021 was the group employee relations manager for Clough. On 10 August 2021 the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) advised the Commission that it sought to be heard but did not seek to file submissions and evidence and proposed instead to align itself with the position of the AMWU and be represented by the same counsel. At the commencement of the hearing, I determined that I would hear from the CEPU in this manner.

[9] The AMWU’s objections to the approval of the Agreements were twofold. First, it contended that neither Agreement was a greenfields agreement within the meaning of s 172(2)(b), because they do not relate to a genuine new enterprise. Secondly, it contended that the Commission could not be satisfied that it is in the public interest to approve either Agreement, as required by s 187(5)(b).

The evidence

[10] Mr White said in his witness statement that the AMWU has members who are employed as casual fitters and boilermakers by NX Blue Pty Ltd (NX Blue), a contractor undertaking work on the project, and that the employment of these employees is covered by the NX Blue Enterprise Agreement 2019 (NX Blue Agreement). Mr White said that the members in question are engaged in work in connection with the operation of the tunnel boring machine, the creation of concrete segments for the tunnel, and the assembly of plant and machinery for a filtration plant. Mr White said that he understood that NX Blue may also employ employees in ‘construction type trades’, as well as plumbers and electricians. He said that another contractor working on the project, Austunnel Pty Ltd (Austunnel), employs fitters and boilermakers who work side by side with employees of NX Blue.

[11] Mr White’s evidence was that in mid-December 2020 he visited the project site and spoke with AMWU members, some of whom were concerned about their pay and conditions, and that he noticed during this visit that early civil and earth works on the project had been completed, and that the site appeared to be moving from a construction to an operational phase with a focus on boring and tunnelling. Mr White said that during a site safety visit in February 2021 he spoke with a Mr Tan Truong, whose position was ‘IR coordinator, Future Generation’. Mr Truong told Mr White that he did not believe that the AMWU had coverage of workers on site, that bargaining had been taking place with the AWU, and that an agreement was nearly completed. No mention was made of SC Hydro.

[12] In February 2021, the AMWU lodged an application in the Commission seeking assistance in relation to a bargaining dispute. Mr White said that the purpose of the application was to procure the AMWU’s access to the bargaining process, but that this did not eventuate and the dispute remained unresolved. The AMWU then made further efforts to become involved in the bargaining but these were unsuccessful.

[13] Mr White said that on a visit to the project site in early June 2021, he was informed by workers that boring had commenced. He said that he was provided with a copy of an AWU member communication dated 26 June 2021, which stated that SC Hydro would be offering employment to current employees of NX Blue and Austunnel, and that employment would be on a permanent basis. Mr White also said that in March 2021, two AMWU members working on site for NX Blue said to him that they had been told that they would be ‘converted’, meaning, as I understand Mr White’s evidence, that they would become employees of SC Hydro.

[14] Mr Ritchie’s evidence was that he was appointed by the directors of SC Hydro as its bargaining representative for the company in relation to the negotiations with the AWU and CFMMEU. Mr Ritchie said that the FGJV was established for the purpose of tendering to undertake the project works and that its tender was successful. He said that the FGJV is an unincorporated joint venture and does not employ anyone, and that instead it is Salini and Clough that employ personnel who work for the FGJV. Such employees are professional staff such as engineers, or perform technical, managerial, and administrative roles. None of the employees of Salini or Clough are ‘blue collar’ workers such as labourers or tradespersons.

[15] Mr Ritchie attached to his witness statement a copy of the constitution of SC Hydro and noted that the purpose of the company is stated at clause 2.1 to be to provide labour for the relevant construction works on the project, and that this labour would be provided to the FGJV in order for it to deliver the project. Mr Ritchie said that SC Hydro had entered into a service agreement with the FGJV for the provision of the labour. The agreement was tendered in evidence. Mr Ritchie described the work already undertaken by the FGJV on the project as preparatory and said that this work had been performed by various contractors and labour hire companies, and had included certain civil works, drilling and blasting, assembling the tunnel boring machines, and construction of accommodation, camps and roads.

[16] Mr Ritchie’s evidence was that SC Hydro would employ employees to undertake the main project works, which comprise tunnelling and associated civil works, including excavations, installation of tunnel support, and construction and maintenance of a water treatment plant. Mr Ritchie said that SC Hydro will also undertake various other civil work, but that it will be primarily engaged in the main project works. He said that once the main project works are underway, the supply of labour by existing contractors and labour hire providers would reduce, as the work they are performing concludes and the supply of labour by SC Hydro increases, but that some of their work would continue, such as the construction of accommodation, and certain specialist works. Mr Ritchie said that SC Hydro currently employs no one, that it has no employment policies and procedures, and that the equipment that employees of SC Hydro would use to perform work was owned or leased by the FGJV partners.

[17] Mr Ritchie said that following the making of the Agreements, SC Hydro advertised for labour. The first recruitment intake will be for the tunnelling and associated works and a second intake, commencing in August 2021, will be for the surface works. All applicants must apply for positions online and are required to attend an interview. Mr Ritchie said that no guarantees of employment had been given to any employees of contractors or labour hire companies currently working on site. He said that he was not aware of any communications having been made to contractors or their employees about the possibility of employment with SC Hydro, and that any such communications were not authorised by SC Hydro. He said that SC Hydro did not discuss its recruitment process with the AWU or CFMMEU. In respect of Mr White’s evidence about certain labour hire workers’ belief as to the existence of a transfer process, Mr Ritchie said that none in fact exists. He said that SC Hydro has already received many applications for employment, including from employees of existing contractors.

[18] In a witness statement in reply, Mr White said that he disagreed with Mr Ritchie’s evidence that the work done on the project to date had been preparatory. He said that the civil works, including the construction and maintenance of roads and accommodation, had been substantial, that at least one tunnel boring machine had been fully assembled, and that 50 meters of the planned 27 kilometre tunnel had been bored. He said that the work described by Mr Ritchie as tunnelling and associated civil works was well underway: excavation of tunnels and caverns had been in train since he visited the site in December 2020, that workers are currently installing tunnel supports, and that the construction of the water treatment plant had begun.

[19] I accept Mr Ritchie’s evidence about the establishment of SC Hydro, the work that its employees will perform, its recruitment processes, and its negotiations with the AWU and CFMMEU for the Agreements. I accept his evidence that SC Hydro has not made or authorised any communications to employees of current contractors and labour hire companies about employment with SC Hydro. I also accept the evidence of Mr White about the AMWU’s activity on the project site, what he saw on site, and his discussions with members. That does not mean that I accept the truth of statements made to Mr White by third persons. I return to the hearsay nature of some of Mr White’s evidence below.

Legislative framework

[20] Section 172 of the Act provides for the making of ‘greenfields agreements’, either as single-enterprise agreements or multi-enterprise agreements (s 172(4)). In respect of single-enterprise agreements, 172(2)(b) states:

“(2) An employer, or 2 or more employers that are single interest employers, may make an enterprise agreement (a single-enterprise agreement):

…

(b) with one or more relevant employee organisations if:

(i) the agreement relates to a genuine new enterprise that the employer or employers are establishing or propose to establish; and

(ii) the employer or employers have not employed any of the persons who will be necessary for the normal conduct of that enterprise and will be covered by the agreement.

Note: The expression genuine new enterprise includes a genuine new business, activity, project or undertaking (see the definition of enterprise in section 12).”

[21] Section 172(2)(b) presents jurisdictional facts. If those facts are not present, a greenfields agreement cannot be said to have been ‘made’ within the meaning of s 172, and there is no valid application before the Commission (see National Union of Workers v HP Distribution Pty Ltd [2013] FCA 139 (HP Distribution) at [29]). As the AMWU rightly emphasised, the reference to a ‘genuine’ new enterprise in s 172(2)(b)(i) is to be understood as a term of limitation. In this regard, the explanatory memorandum states, at [692]:

“The use of the word ‘genuine’ in paragraphs 172(2)(b) and 172(3)(b) is intended to make it clear that the enterprise must be a new enterprise rather than an existing enterprise that the employer or employees acquire, or propose to acquire, as a going concern (see the decision of the AIRC in Re Patrick Cargo Pty Ltd Certified Agreement 2002 (2002) 115 IR 443). In other words, a genuine new enterprise is not an enterprise which has been previously carried out by another employer. For example, a supermarket operator could not make a greenfields agreement if it acquired a chain of liquor stores in a transfer of business situation. Similarly, a new employer cannot make a greenfields agreement where it acquires or proposes to acquire an enterprise that has previously been conducted by another employer.”

[22] Section 186 states that if an application for approval of an enterprise agreement is made under s 185, the Commission must approve the agreement if the requirements of ss 186 and 187 are met. The requirements of s 186 relevantly include that the agreement must pass the ‘better off overall test’ as defined in s 193. Section 187(5) provides that, if an agreement is a greenfields agreement, the Commission must, before approving the agreement, be satisfied that the relevant employee organisations that will be covered by the agreement are entitled to represent the industrial interests of a majority of employees who will be covered by the agreement in relation to work to be performed under the agreement (s 187(5)(a)); and that it is ‘in the public interest’ to approve the agreement (s 187(5)(b)).

Contentions of the parties

[23] The AMWU contended that the Agreements do not relate to a genuine new enterprise. First, it submitted that the Commission should reject SC Hydro’s contention that a genuine new enterprise had been established to supply labour to the FGJV, because this enterprise was not new, or genuinely new, as such an enterprise already exists, in the form of the contracting entities that are currently working on the project. The AMWU submitted that the company’s enterprise will simply see it acquire part of the business carried on by the existing contractors, and that while this business might be ‘new’ for SC Hydro, in the sense that it has not undertaken this business before, it is not in and of itself a genuine new enterprise.

[24] The AMWU contended that the circumstances were analogous to those that came before the Full Bench of the Australian Industrial Relations Commission in Re Patrick Cargo. In that case, the applicant had acquired from the administrator of the Ansett group the whole of Ansett’s former international cargo handling business, which formed part of Ansett’s broader airfreight business. The Full Bench concluded that the relevant enterprise was an existing business that was being conducted by the administrator on behalf of Ansett, and that Patrick had acquired that business as a going concern. It rejected the contention that it was sufficient for a business to be new for the particular employer and concluded that the proper focus was on whether the enterprise was itself new. The AMWU contended that, as in Patrick Cargo, SC Hydro had simply acquired part of the business of an existing business of businesses, namely that of the current contractors. It said that more was needed to warrant a conclusion that a new enterprise has been established than the creation of a new company or employing entity, and that in the present case, this is all that had occurred: a new corporation will be used to engage workers on an existing project.

[25] Secondly, the AMWU contended that the relationship between the parties was such that in truth the relevant enterprise that SC Hydro sought to describe as ‘new’ was that of the FGJV parties. The AMWU submitted that the joint venture partners had merely rearranged their operations so that in future all or some of their labour would be supplied by a related entity, and that this was simply a different way of conducting an existing enterprise, whereby the relevant work would be brought ‘in house’.

[26] The AMWU said that there was no apparent difference between the work that is presently being performed for the benefit of the FGJV for the purposes of the project and that which will be covered by the Agreements. It pointed to Mr White’s evidence that representations had been made to employees that they will move to SC Hydro and continue to perform the same work once the Agreements are approved, and that given the nature and scale of the project, it would be surprising if a substantial portion of the existing labour hire workforce were not subsequently engaged to perform this work for SC Hydro. The AMWU also said that what appeared to have occurred was that the AWU had been negotiating with SC Hydro for a pay increase for existing workers.

[27] In relation to the question of the public interest, the AMWU submitted that the Commission must be positively satisfied that approving the Agreements is in the public interest, and that such a conclusion must be based on some sufficiency of material. It contended that many of the matters relied on by SC Hydro in support of its contentions on the public interest, such as the Agreements’ provision of certainty and conditions of employment that are above the safety net, were simply the inevitable consequences of the approval of any greenfields agreement. It said that the fact that the project is a major project has nothing to do with the Agreements because the project has been underway for some time and will continue regardless of the fate of the Agreements. It also contended that SC Hydro’s submission that the Agreements provide for good terms and conditions went no further than assertion and was not supported by any comparison to prevailing industry rates.

[28] The AMWU submitted that, contrary to SC Hydro’s contentions, the approval of the Agreements would not promote the objects of the Act, because the approach of the company had been to exclude the AMWU from bargaining, which had had the result that a particular cohort of prospective employees had been deprived of representation by the union of their choice, and that this was not consistent with the part of the object of the Act in s 3(e), which is to facilitate ‘representation at work’ (s 3(e)). The AMWU said that it is active on the site and has significant membership amongst workers who are performing the work that will be covered by the Agreements, and who are likely to become employed by SC Hydro, and that to lock these workers in to agreements in which neither they nor their representative had had any input could not be said to be in the public interest.

[29] SC Hydro contended that the AMWU’s objections to the Agreements’ approval were without any foundation. First, it said that the Agreements related to a genuine new labour hire company that would provide labour to the FGJV partners. SC Hydro denied having acquired any business or part of a business from a third party and said that the fact that it is an entity related to the FGJV venture parties is unremarkable and irrelevant. SC Hydro said that its genuine new labour hire enterprise was not to be conflated with the existing enterprises of the FGJV parties, or with those of the existing contractors and labour hire companies.

[30] Secondly, SC Hydro said that approving the Agreements was in the public interest because it would provide commercial and industrial certainty for a project of national significance which will facilitate the creation of new jobs and economic growth in the Snowy Mountains region. It said that the terms of the Agreement, negotiated with and supported by two employee organisations with majority coverage of the work to be performed, were far higher than those provided under relevant awards. It submitted that the fact that the AMWU did not participate in bargaining and might in future have members employed by SC Hydro did not give rise to any relevant public interest consideration.

[31] The AWU supported the contentions of SC Hydro and made additional submissions in respect of the public interest. It contended that the Agreements contained substantial employee benefits and that this engaged the public interest. It noted in this regard the observation of Rares J in HP Distribution at [40] that the Commission’s task under s 187(5)(b) involved consideration of the interests and welfare of employees. The AWU said that the Commission should take notice of the current economic situation in New South Wales, which has been adversely affected by the responses to the COVID-19 pandemic. It said that the approval of the Agreements would serve the public interest by providing high-paying, secure jobs to many employees in regional New South Wales in difficult economic times.

Do the Agreements relate to a genuine new enterprise?

[32] To ascertain whether the Agreements relate to a genuine new enterprise it is relevant to consider the ‘objective character and identity of the enterprise to which the agreement will apply and its novelty in relation to the employer’s business’ (HP Distribution at [34]). I am satisfied that the relevant enterprise is a genuine new labour hire enterprise that will supply building and construction labour to the FGJV for the purpose of completing the project works.

[33] I agree with the AMWU that simply placing an existing business in the hands of a new employer would not make that business new. But that is not what has occurred here. SC Hydro is establishing its own labour hire enterprise. The company’s constitution identifies its purpose, which is to provide labour to the project, including anything that is ancillary or incidental to that purpose. The company has directors, who appointed Mr Ritchie to be the company’s bargaining representative. Through Mr Ritchie, SC Hydro negotiated with the AWU and the CFMMEU in relation to the making of two new greenfields agreements that will govern the employment of its future employees. The company has a service agreement with the FGJV partners for the provision of labour to the project. It is not alleged, and it is not the case, that the company is a sham, or that its constitutive document and contracts with third parties are something other than what they purport to be. The company is a genuine new labour hire enterprise. It does not matter whether, as the AMWU contends, the work of its employees will be the same as that currently being undertaken by employees of other contractors and labour hire companies.

[34] The circumstances of this case are not analogous to those in Patrick Cargo. SC Hydro is not a recipient of an existing enterprise or part of an enterprise from the contractors or labour hire companies presently supplying labour to the project. It has made no acquisition of those businesses or received any assignment. There is no arrangement between them, whether about future employment or any other matter. The work undertaken by contractors and labour hire companies currently working on the project will reduce and the work undertaken by SC Hydro will grow. Employees of the current contractors and labour hire companies are likely to be among those persons who are employed by SC Hydro. But none of this entails any assignment or transfer of business.

[35] The AMWU’s contention that SC Hydro has acquired part of the existing business or businesses of current contractors because it will undertake the same work as those contractors is reminiscent of the argument put to the High Court in Gribbles Radiology Pty Ltd v HSUA [2005] HCA 9, to the effect that the transmission of business provision in s 149 of the Workplace Relations Act 1996 extended to the ‘succession of work’ that was said to have occurred when one radiology business ceased to operate from a particular medical practice, from which it had leased premises and equipment, and another business took its place. The Court rejected this contention and held that in order to be the successor to a business, it was necessary for the second entity to enjoy some part of the actual business of the former employer, and that it was not enough that it pursued the same kind of ‘business activity’ (Gleeson CJ, Hayne, Callinan and Heydon JJ, Kirby J dissenting). The business of an employer extended well beyond its particular activity (see [37] to [44]). Similarly, in the present context, the focus of s 172(2)(b) is on whether there is a new enterprise, not whether there is new work. I accept that the nature of the work to be undertaken by the employer may be relevant to the characterisation of the enterprise and whether it is new, particularly where the enterprise is a labour hire company. However, an enterprise and its work are not the same thing. It is not the case that SC Hydro’s enterprise is being undertaken by the existing contractors. The contractors are running their own businesses that are undertaking work on the project.

[36] In any event, I do not accept the AMWU’s contention that there is no difference between the work to be performed under the Agreement and that which is presently being performed by contractors and labour hire companies for the FGJV. Mr Ritchie described in his evidence the work that has been undertaken by various contractors and labour hire companies on the project to date. It has included work performed by MAAS Group, Symal Group and Leed Engineering & Construction Pty Ltd, which have performed civil works; work performed by Geover, which has undertaken specialist drill, blast and boring works; work undertaken by Austunnel Pty Ltd, which has assembled tunnel boring machines; and work carried out by NX Blue, which has constructed accommodation camps and roads. I consider that the businesses currently working on site are, as SC Hydro described them, a ‘patchwork’ of contractors and labour hire providers, which have largely undertaken what the company referred to as the project’s ‘preliminary works’, although a small amount of boring has also been undertaken. Under its Agreements, SC Hydro’s new enterprise will deploy its workforce to perform the tunnelling and associated civil and surface works, as well as other works. It will also be a substantial provider of labour to the project, although it will not provide all of the labour. In my view, the work that will be performed by employees of SC Hydro, taken as a whole, will have a different character to that which has been carried out by contractors to date, at least insofar as it will be broader in scope than that undertaken by any single contractor to date.

[37] The AMWU contended that there was no meaningful basis to draw a distinction, as the company did, between preparatory works and the main project works, and that the project was fundamentally a construction project that had well and truly commenced. But the enterprise in this case is not the project. It is the new labour hire enterprise that will provide workers to the project. Whether the project works can be divided into preliminary works and main project words is of little relevance.

[38] The AMWU contended that it would be antithetical to the conception of a new enterprise that employees currently undertaking the work for the existing contractors will, either pursuant to some arrangement or understanding or simply by reason of practical convenience, continue to perform this work for SC Hydro. I do not accept this proposition. I see no reason why a genuine new labour hire enterprise cannot be established in such a context. Further, there is no arrangement or understanding. The evidence that is advanced by the AMWU to suggest that there is some arrangement whereby employees of existing contractors will become employees of SC Hydro comprises several statements by Mr White to the effect that he was told by unidentified AMWU members employed by NX Blue that certain other unidentified persons had told them that they would be ‘converted’ to SC Hydro after the Agreements were approved. It is unattributed hearsay. It is also contradicted by Mr Ritchie’s evidence, which I accept. As to the AWU member communications referred to in Mr White’s evidence, these may reflect the belief of the AWU that employees of current contractors will be offered employment by SC Hydro, but they do not establish that any arrangement or transfer process exists. SC Hydro is recruiting labour from the market, which obviously includes persons currently working on site. The fact that some or even many of the employees of current contractors might eventually become employed by SC Hydro would not be surprising, nor would it affect the novelty of the company’s labour hire enterprise. The AMWU did not develop its contention that the AWU was negotiating a pay increase for employees of existing contractors and labour hire companies. I find it unsubstantiated.

[39] The AMWU contended that the corporate relationship between SC Hydro and the FGJV partners is indicative of an absence of genuineness in the new enterprise. It contended that SC Hydro had gone to great lengths to argue that its relationship with the FGJV is just a labour hire relationship and that SC Hydro was a normal labour supplier like any other, but that this ‘seemed unlikely’ given that SC Hydro was controlled by two of the three parties to the FGJV, the engagement was on a ‘cost-only’ basis involving no profit to SC Hydro, the company serves no apparent purpose except to provide labour for the project, and, according to its constitution, the company will be wound up at the completion of the project.

[40] It is not clear to me why the AMWU considers it unlikely that SC Hydro is a labour hire company like any other, or why it is suspicious about the corporate structure in this case. The relationship between the parties seems unexceptional to me. It is perfectly normal for related entities to contract with one another. Under its service agreement with the FGJV, SC Hydro is to provide specified services to the FGJV partners. It is responsible for the ‘recruitment, employment and management’ of employees and to deliver the prescribed services. It assumes obligations and gives warranties as to the suitability of the employees who will be provided to work on the project. The service agreement contains mechanisms for the acquisition of services by request and purchase order, and for the payment of fees. SC Hydro must hold relevant insurances. All of these are consistent with a genuine agreement between a labour hire company and a client. Further, the use of a special purpose entity to operate a new enterprise is a very ordinary circumstance. Such entities commonly make greenfields agreements. The AMWU submitted that SC Hydro had not explained the reason for its incorporation, but no explanation is required. It is also unsurprising that an entity might be wound up when its purpose has been achieved and the relevant project has been completed. I would not draw the conclusion, as the AMWU does, that the services agreement is a cost-only agreement generating no profit for SC Hydro. The schedule to the agreement refers to the fee including costs for the provision, recruitment and engagement of personnel as well as their employment. But it would not matter that SC Hydro did not generate profit. Not-for-profit enterprises can make greenfields agreements.

[41] The AMWU submitted that it would not have been possible for SC Hydro to make the Agreement without the project operators being involved. The contention appears to be that the company was created by others. But any new company must be established by someone. It cannot spontaneously materialise. The AMWU submitted that the reality of the situation was that SC Hydro is a vehicle established by the FGJV to change the way in which it engages labour. But even if this characterisation were correct at some level of abstraction, there is no basis to conclude that a change of this kind would be preclusive of the establishment of a new enterprise. Nor is there any substance to the AMWU’s alternative contention that SC Hydro’s enterprise is the same as that of the FGJV parties, for they too have different and distinct businesses.

[42] The AMWU contended that if SC Hydro’s applications were approved, it would mean that any employer could set up a new corporate vehicle and make a greenfields agreement, without any reference to its existing workforce or employees’ representatives. It is not clear precisely what scenario the AMWU has in mind here. The suggestion appears to be that the employer could transfer its pre-existing workforce to a new company covered by a greenfields agreement, and in this way avoid bargaining with its employees. How this could be done in practice is obscure. In any event, this is not what has occurred in the present matter. SC Hydro had no pre-existing workforce. Neither, in the relevant sense, did the FGJV partners. And contrary to the AMWU’s submissions, it is not the case that the new enterprise entails nothing more than the creation of a new employer and a ‘shirt change’ for employees currently working on the project. SC Hydro is a genuine new labour hire company for the project. Many employees of existing contractors may well receive new shirts, and very decent ones they would be, as we will see in a moment. But this does not detract from the novelty of SC Hydro’s enterprise.

[43] In HP Distribution, Rares J stated that ‘it is one thing for an employer to take over or re-badge an existing “enterprise” … and another for it to create a new one’ (at [34]). It is clear that SC Hydro has not taken over or rebadged an existing enterprise. It has created a new one.

[44] Section 172(2) directs attention to the time immediately before the employer ‘makes’ a greenfields agreement with one or more unions. Such an agreement is made when it has been signed by each employer and union that the agreement is expressed to cover (s 182(3)). I am satisfied that the Agreements that SC Hydro made with the AWU and CFMMEU related to a genuine new enterprise that SC Hydro was establishing, and that SC Hydro had not employed any of the persons who would be necessary for the normal conduct of that enterprise and who would be covered by the Agreements. Both of the jurisdictional facts prescribed by s 172(2)(b) are established in this case.

Is approval of the Agreements in the public interest?

[45] This brings me to the question of whether it is in the public interest to approve the Agreements. I am satisfied that it is.

[46] One consequence of the approval of the Agreements is that employees who will perform the work covered by the Agreements will receive good conditions of work. The AMWU contended that it had not been established that the Agreements provide for fair conditions. I disagree. A cursory reading is sufficient to conclude that the conditions are indeed fair. Of course, the AMWU is correct to say that any greenfields agreement, and indeed any enterprise agreement, must provide for conditions that exceed the safety net, because all agreements must pass the better off overall test. But the Agreements do not merely pass this test. They pass it by a substantial margin.

[47] Further, the conditions in the Agreements compare favourably to those of other companies currently working on the project. The AMWU submitted that no comparative data had been submitted, however all enterprise agreements approved by the Commission are available on the Commission’s website and it is not a difficult exercise to compare key conditions, such as rates of pay. I have ascertained for myself that the rates in the Agreement are substantially higher than those in the Austunnel Agreement, and I have confirmed that, as the AWU pointed out, the rates of pay in the Agreements exceed those in the NX Blue Agreement by nearly $11.00 per hour at the closest margin. But irrespective of the comparative position, it is clear to me that the work performed under the Agreements will be well-paid. A significant number of persons will undertake this well-paid work. These matters weigh in favour of a conclusion that it is in the public interest to approve the Agreements.

[48] The AMWU did not dispute SC Hydro’s contention that the project would create many jobs but questioned the link between the approval of the Agreements and those jobs. In my view, the fact that the work to be performed under the Agreements will be well-paid suggests that there should be no difficulty attracting workers to take up employment with SC Hydro to perform the work. I note that Mr White said in his statement that members of the AMWU had told him that NX Blue was having difficulty recruiting workers on their current rates of pay, and that existing employees were reluctant to convert from casual to permanent status because the permanent rate was too low. This evidence highlights the importance of good conditions of work for the supply of labour: well-paid work will be in demand, and this will be a dynamic that is conducive to the timely and efficient completion of the project. This is a further consequence of the approval of the Agreements that supports a conclusion that it is in the public interest to approve the Agreements.

[49] It is true, as the AMWU said, that certainty as to conditions of employment is a consequence of the approval of any greenfields agreement, but that does not mean that its significance in the context of the relevant matter should not be considered. Here, approving the Agreements will provide SC Hydro certainty as to the industrial arrangements that will cover the work that is necessary for it to meet its supply obligations to the FGJV under the service agreement. It will provide certainty to the FGJV that its labour supply will not be disrupted by protected industrial action during the nominal life of the Agreements. Further, the Agreements will cover much of the work that is to be performed on the project and will therefore provide a measure of certainty for the broader project.

[50] The AMWU submitted that the approval of the Agreements would not promote the objects of the Act, because the AMWU had been excluded from bargaining, which meant that a particular cohort of prospective employees had been deprived of representation by the union of their choice, and that this was inconsistent with the object of the Act. I reject this contention. No employee has been precluded from being represented by the union of their choice. When a greenfields agreement is made, there are no employees who might be represented. Negotiations take place between the parties, namely the employer and the relevant unions. It is relevant to consider the position of employees who may later be employed under a greenfields agreement and seek to be represented by a union of their choice. But the Agreements impose no restrictions in this regard. Members of the AMWU who become employees of SC Hydro will be perfectly able to be represented by their union.

[51] As the AWU pointed out, the Agreements contain several provisions that in fact facilitate employee representation by unions. These include the dispute settlement procedure (clause 3.12); the provision for employees to be represented in counselling and disciplinary processes by a representative of their choice (clause 3.13); the establishment of a project consultative committee (clause 3.14); a safety disputes procedure which recognises the role of health and safety representatives (clause 4.4); and the provision of paid leave for elected employee representatives to consult with colleagues and participate in training courses (clause 8.3). The approval of the Agreements will enhance the ability of workers to be represented by a union of their choice, not diminish it.

[52] Section 187(5)(a) provides that the Commission must be satisfied that the relevant unions that will be covered by a greenfields agreement are, taken as a group, entitled to represent the industrial interests of a majority of employees who will be covered by the agreement. This section represents the full extent of the Act’s concern about which unions should be party to a greenfields agreement. Further, s 187(5)(a) recognises and accepts that some unions might have coverage of relevant employees yet not be party to a greenfields agreement. Such a circumstance is not contrary to the object of the Act, because the Act squarely contemplates it.

[53] The Agreements concern work that will be performed on a major renewable energy project that is itself in the public interest. They provide for well-paid work and certainty for the project and facilitate the completion of the project works. In this regard, I note that the objective of the Agreements is set out in clause 2.5 of each instrument, which states that the Agreements ‘establish the relevant and necessary arrangements that are required for the successful and safe completion of the Project on time and within budget forecasts.’ I accept that this is the case.

Conclusion

[54] I am satisfied that the Agreements relate to a genuine new enterprise that SC Hydro is establishing, and that it has not employed any of the persons who will be necessary for the conduct of that enterprise and will be covered by the Agreements. I am satisfied that it is in the public interest to approve the Agreements. I am also satisfied that the other relevant approval requirements in ss 186 and 187 of the Act have been met. I will issue separate decisions approving each of the Agreements.

DEPUTY PRESIDENT

Appearances:

F. Parry QC and A. Pollock of counsel for SC Hydro Pty Ltd
L. Saunders of counsel for the AMWU and CEPU
A. Sage for the AWU
R. Mallia for CFMMEU

Hearing details:

2021
Melbourne
17 August

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