DECISION

Fair Work Act 2009
s.604—Appeal of decision

Construction, Forestry, Maritime, Mining and Energy Union
v
Square Ceilings Pty Ltd
(C2020/8101)

DEPUTY PRESIDENT MASSON
DEPUTY PRESIDENT YOUNG
COMMISSIONER LEE

MELBOURNE, 22 APRIL 2021

Appeal against decision [2020] FWCA 5431 of Commissioner Platt at Adelaide on 13 October 2020 in matter number AG2020/2033 - Application for approval of an enterprise agreement under s 185 on rehearing

Introduction

[1] This decision concerns an application made by Square Ceilings Pty Ltd (Square Ceilings) under s 185 of the Fair Work Act 2009 (the Act) for the Commission to approve the Square Ceilings Pty Ltd Enterprise Agreement 2020 (the Agreement) upon rehearing of the application. The background is as follows.

[2] The application was initially approved by Commissioner Platt in a decision issued on 13 October 2020 1 (the Approval Decision). The Commissioner concluded that the Agreement met the various approval requirements in the Act, including that it passed the “better off overall test” (the BOOT), and approved the Agreement subject to 10 undertakings.

[3] Appeals from the Approval Decision and an earlier preliminary decision 2 (the Preliminary Decision) were brought by the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU).

[4] The first appeal ground raised by the CFMMEU was that the Commissioner erred by determining that Square Ceilings had taken all reasonable steps to explain the terms and conditions of the Agreement to the employees and that the Agreement was genuinely agreed to by employees.

[5] On 1 March 2021, we granted permission to appeal, upheld the appeal and quashed both the Preliminary Decision and Approval Decision (the Appeal Decision) 3. We considered that the Commissioner could not have been reasonably satisfied that Square Ceilings had taken all reasonable steps to explain the terms and effects of the terms of the Agreement and consequently the Agreement was not genuinely agreed.

[6] In upholding the first ground of appeal we were concerned that Square Ceilings had made an incorrect statement to employees to the effect that ordinary hours of work under the Agreement were 7.6 hours per day (that being the stated trigger for overtime) when no such provision was contained in the Agreement. The inaccurate statement made by Square Ceilings to its employees was not cured by an undertaking subsequently accepted by the Commissioner, that being that the ordinary hours of work per day were 8 ordinary hours. We relevantly said as follows;

“[55] While we are not otherwise persuaded any error is disclosed in the Commissioner’s conclusion that Square Ceilings had taken all reasonable steps to explain the terms and effect of the terms of the Agreement both in the form and content of the explanation, the error in relation to the explanation of the maximum ordinary hours per day and the overtime threshold is a matter of substance.

[56] An accurate explanation of the maximum ordinary hours per day and the threshold at which overtime would be payable was a reasonable step that ought to have been taken by Square Ceilings. In these circumstances we are not satisfied that Square Ceilings has taken all reasonable steps to explain the terms and effects of the terms of the Agreement. The undertaking provided to the Commissioner failed to remedy the incorrect explanation. Consequently, there was insufficient material before the Commissioner necessary for him to reach the requisite satisfaction as to Square Ceilings’ compliance with s 180(5) and that the Agreement was ‘genuinely agreed’. We uphold ground 1 of the appeal.” 4

[7] The second appeal ground raised was that the Commissioner did not apply the correct test to determine whether an undertaking was capable of acceptance and erred by accepting undertakings in circumstances where he could not have been reasonably satisfied that the undertakings were not likely to cause a financial detriment or result in substantial change. The third ground of appeal was that the Commissioner erred by not providing adequate reasons for his decision. Appeal grounds 2 and 3 were both rejected.

[8] In our rehearing of the application for approval of the Agreement, Square Ceilings were invited to file further submissions and/or undertakings to address the specific concern we identified in relation to compliance with s 180(5). The CFMMEU were also afforded an opportunity to make submissions in reply.

[9] We now address the further written submissions of the parties and the rehearing of the application for approval of the Agreement.

Square Ceilings further submissions

[10] Square Ceilings’ further submissions included the provision of a revised undertaking dealing with the ordinary hours of work issue. The proposed undertaking which is attached to this decision states that “The maximum ordinary hours worked on any one day will be seven hours and thirty six minutes (i.e. 7.6 hours)”.
[11] In filing its further submissions, Square Ceilings seeks to rely on all previous submissions and materials both before the Commissioner and before the Full bench on appeal. It further submits that with the exception of the ordinary hours explanation, the Full Bench should remake all of the findings made by the Commissioner including that;

• The Agreement was genuinely agreed;

• With the undertakings offered, the Agreement passes the better off overall test (BOOT); and

• The Agreement otherwise meets all requirements under the Act necessary for approval.

[12] Square Ceilings submit that in relation to the ordinary hours of work issue specifically identified by the Full Bench, the revised undertaking cures the deficient explanation provided to employees, furthermore it (the undertaking) does not cause any financial detriment, nor result in substantial change to the Agreement.

CFMMEU further submissions

[13] The CFMMEU submissions may be shortly summarised as follows;

• there is insufficient evidence as to the explanation of the terms and effects of the terms of the Agreement to employees to permit a reasonable satisfaction being reached that the Agreement was genuinely agreed;

• the evidence as to what Mr Zheng said to employees during Agreement information briefings does not inform the Commission as to the accuracy or sufficiency of the explanation provided to employees;

• contrary to the Full Bench’s description, Mr Zheng’s evidence is challenged by the CFMMEU;

• the evidence of the explanation provides little basis for understanding whether the workforce had any underlying understanding of the Award;

• the explanation provided in written materials in respect of Agreement provisions versus Award provisions were deficient in relation to; meal break overtime provisions, redundancy, dispute resolution, types of employment and classifications;

• the revised undertaking on ordinary hours of work offered by Square Ceilings is not capable of addressing the substance of the Commission’s concern, that being whether the Agreement was genuinely agreed;

• the proposed undertakings represent substantial changes to the Agreement and absent those undertakings the Agreement would not pass the BOOT.

Consideration

[14] The CFMMEU have largely reagitated objections to approval of the Agreement that were raised both before the Commissioner and before us on appeal. For the reasons set out at length in the Appeal Decision we are not persuaded by the CFMMEU submissions. While we find it unnecessary to deal with the CFMMEU submissions at length we do make the following comments.

[15] Turning firstly to whether the Agreement was genuinely agreed, we summarised in the Appeal Decision the explanation that was provided to employees of the terms and effects of the terms of the Agreement as follows;

“[35]……An 11 page explanatory document was provided to employees at the commencement of the “access period” which included links to the Award and relevant award clauses. Information sessions with the 13 employees were conducted prior to and during the access period. At the information sessions Mr Zheng read through the Agreement clause by clause, took questions from and offered to receive any follow-up questions from employees prior to the ballot. The sessions were conducted in both English and Mandarin and the Respondent offered to arrange for translators if required by employees. Employees were also asked if they required the documents to be translated into Mandarin.” 5

[16] Contrary to the CFMMEU submission, we are satisfied that that the explanations provided to employees both as to substance and form (save for the ordinary hours of work issue with which we deal below) are sufficient to reach the requisite satisfaction as to Square Ceilings’ compliance with s 180(5) of the Act. While we accept that there were some minor errors or omissions in the explanation provided to employees 6 we would observe that the Explanation of Terms document provided to employees was 11 pages in length and dealt with each of the 44 clauses in the Agreement. The errors identified by us are not significant such as to lead us to a conclude that employees did not genuinely agree to the Agreement.

[17] As to the CFMMEU’s submission that it challenges the evidence of Mr Zheng, it did not lead any evidence in the proceedings before the Commissioner to rebut Mr Zheng’s evidence. Nor has it filed any evidence in the proceedings before us either on appeal or on redetermination of the application for approval of the Agreement. We accept the evidence of Mr. Zheng as to the steps he took to explain the terms of the Agreement.

[18] Turning to the explanation provided by Square Ceilings to employees in respect of ordinary hours of work, as we set out in the Appeal Decision, that explanation was incorrect in that the stated trigger for the payment of overtime was after 7.6 hours when no maximum daily ordinary hours of work was provided for in the Agreement. Square Ceilings have now provided a revised undertaking which seeks to remedy the deficient explanation.

[19] The CFMMEU contend that the revised undertaking in relation to the ordinary hours of work is not capable of addressing the “genuinely agreed” concern that we have raised. That submission is rejected. As we observed in the Appeal Decision, the Full Bench decision in CFMMEU v Specialist People 7 (Specialist People) stands as authority for the proposition that an undertaking may be accepted to address a concern held by the Commission in respect of ss 186 & 187 under the Act. That is not to say that an undertaking may be accepted to address all concerns that arise in relation to compliance with s 180(5) of the Act. The Specialist People authority was endorsed in CFMMEU v Karijini Rail Pty Ltd8 (Karijini) where the Full Bench relevantly stated as follows;

“[105] The CFMMEU also contends that the “concern” where s.180(5) has not been complied with is not about the terms of the agreement, but rather about the fact that an essential pre-approval step has not been taken. It says as a matter of logic, this concern cannot be remedied by an undertaking about a different matter, that being the terms of the agreement. We also reject this submission.

[106] First, section 190(1) does not provide that the section applies if the Commission has a concern that “the terms of the agreement” do not meet the requirements set out in ss.186 and 187 - it provides that the section applies if the Commission has a concern that “the agreement” does not meet the requirements. In the instant case the Deputy President’s concern was that the Agreement did not meet the requirement in s.186(2)(a) because she was not satisfied that Karijini had complied with s.180(5) as set out in s.188(1)(a)(i).

[107] Secondly, a concern about whether an employer has complied with s.180(5) and therefore whether the agreement has been genuinely agreed to by the relevant employees, may as a matter of logic be remedied depending on the nature of the concern. It is accepted that in a number of cases concerns about genuine agreement will not be able to be met by an undertaking. But it is not the case, as a matter of logic, that any such concern could never be met. Why for example, could not a concern that an employer explained the effect of a term of the agreement as to shift work was that an afternoon shiftworker would receive a 15% loading under the agreement, when the agreement only provides for a 10% loading, be met by an undertaking that the employer would pay an afternoon shiftworker a loading of 15%? We consider that such an undertaking would remedy the concern since the agreement operating with the undertaking is consistent with the explanation given.

[108] Our conclusion is consistent with the approach adopted in the most recent Full Bench authority dealing with the subject, namely Construction, Forestry, Maritime, Mining and Energy Union and others v Specialist People Pty Ltd.” 9

[20] The comments of the Full Bench in Karijini, particularly at [107] of that decision, are directly analogous to the present circumstances in respect of the inaccurate statements made by Square Ceilings to its employees in relation to daily ordinary hours of work and the relevant trigger for the payment of overtime. Square Ceilings explained to employees during information sessions held prior to the conduct of the Agreement ballot that the daily trigger for the payment of overtime would be 7.6 hours. That explanation occurred in circumstances where the Agreement did not specify the maximum daily ordinary hours of work beyond which overtime would be payable. As we found in the Appeal Decision, that explanation went to a substantive provision of the Agreement and was inaccurate. That meant that Square Ceilings had not met the requirements of s 180(5) of the Act, the undertaking provided to the Commissioner at first instance failed to remedy the concern and the Agreement was not capable of approval 10.

[21] The undertaking now provided by Square Ceilings that maximum daily ordinary hours of work shall be 7.6 hours, satisfies our concern as to the inaccurate explanation of the daily ordinary hours of work. The undertaking will ensure that the Agreement will operate in a manner consistent with the explanation provided to employees.

[22] Finally, we have reviewed the other undertakings that were accepted by Commissioner Platt in his decision to approve the Agreement. We share the concerns that were raised by the Commissioner and consider that the undertakings offered by the company adequately address those concerns. As to the CFMMEU submission that the undertakings provided by Square Ceilings constitute substantial change to the Agreement, we reject those submissions for the reasons that are set out in the Appeal Decision 11. Having rejected the CFMMEU submission that the undertakings, if accepted, would constitute substantial change to the Agreement, it is unnecessary for us to engage with the CFMMEU submission that absent acceptance of the undertakings the Agreement would not satisfy the BOOT.

[23] It follows from the above that we accept the undertakings, which remain before the Commission in connection with the application for approval of the Agreement, as well as the new undertaking that has been offered in the redetermination of the application. We are satisfied that none of the undertakings cause financial detriment to any employee covered by the Agreement, and the undertakings do not result, individually or collectively, in substantial changes to the Agreement.

Conclusion

[24] Subject to the undertakings referred to above, and on the basis of the material contained in the application, the accompanying statutory declaration and statement of Mr Zheng, as well as the submissions of Square Ceilings, we are satisfied that each of the requirements of ss 186, 187, 188 and 190 as are relevant to this application for approval have been met.

[25] The Agreement is approved as at the date of this decision and, in accordance with s 54, will operate from 29 April 2021. The nominal expiry date of the Agreement is 21 April 2025.

al of the Fair Work Commission with member’ signature.