| [2021] FWCFB 171 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604–Appeal of decisions
Construction, Forestry, Maritime, Mining and Energy Union; The Australian Maritime Officers' Union
v
Broome Marine and Tug Pty Ltd
(C2020/8871)
JUSTICE ROSS, PRESIDENT |
MELBOURNE, 23 MARCH 2021 |
Appeal against decision to approve the Broome Marine Enterprise Agreement 2020 of Commissioner Williams at Perth on 23 November 2020 in matter number AG2020/2872.
[1] The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) and the Australian Maritime Officers Union (AMOU) (collectively the Appellants) have applied for permission to appeal and have appealed a decision1 made by Commissioner Williams on 23 November 2020 (the Decision) to approve the Broome Marine Enterprise Agreement 2020 (the Agreement).
[2] Section 604(1) of the Act permits a “person aggrieved” to make an application for permission to appeal a decision of the Fair Work Commission (the Commission). We are satisfied that the Appellants are persons aggrieved by the Decision.
[3] In the notice of appeal lodged on 8 December 2020, the Appellants advanced the following grounds of appeal:
1. The Commissioner erred by refusing to exercise his discretion under s 590 of the Act and allow the CFMMEU to be heard.
2. The Commissioner denied the appellants procedural fairness by:
a. failing to provide them with a copy of the material and submissions provided by the Respondent to the Commission for its consideration; and
b. determining the matter without giving the Appellants an opportunity to make submissions in response to the Applicant’s material or to test the Applicant’s evidence.
3. The Commissioner erred by failing to consider submissions that were central to the case put by the Appellants at first instance as to why the Agreement should not be approved.
4. The Commissioner erred by failing to give adequate reasons for his decision to approve the Agreement.
5. The Commissioner erred in finding that the Agreement was genuinely agreed to for the purposes of s 186(2)(a) of the Fair Work Act 2009 (FW Act).
6. The Commissioner erred in finding that the Agreement passed the better off overall test as required by s 186(2)(d) of the FW Act.
[4] Permission to appeal and the merits of the appeal were listed for hearing on 18 January 2021.
[5] Before turning to the appeal it is necessary to set out the background to the Decision.
[6] Prior to the approval of the Agreement, the terms and conditions of employment of Broome Marine and Tug Pty Ltd (Broome Marine) employees were regulated by the Marine Towage Award 20202 (the Award).
[7] Broome Marine issued a notice of representational rights (NERR) to employees on 17 July 2020 and bargaining commenced for the Agreement.3 The Form F16 application identified that an employer bargaining representative was appointed by Broome Marine; that there were no union bargaining representatives involved; and that one employee bargaining representative was appointed.4
[8] According to the Form F175, Broome Marine took the following steps to explain the terms and the effects of the terms of the Agreement to employees:
• On 10 September 2020 employees were provided with a copy of the proposed Agreement, a copy of the Award and a document titled “Replacement Enterprise Agreement – Explanation Sheet” (Explanation Sheet) which sought to explain the terms and effects of the terms of the Agreement.
• Between 10 – 18 September 2020 Broome Marine representatives met with employees and “went through the Agreement clause by clause, with the aid of the Agreement Explanation Sheet”.
• In providing an explanation to employees Broome Marine explained each clause of the agreement and likely effect of each clause and compared each clause of the Agreement against the relevant Award terms.
• During briefings, “employees asked, and the employer answered questions (to the satisfaction of employees)…”
• Throughout the access period employees were able to contact Mr Dean Thornton of Broome Marine if they had any questions in relation to the Agreement.
[9] The Explanation Sheet6 dated 9 September 2020 consists of a 3 page document which comprises an introductory page followed by a brief 2 page summary of each of the Agreement’s 10 clauses. The introduction states that the explanation “does not constitute a complete explanation, and may contain minor, unintended errors”. The Explanation Sheet encourages employees to attend an information session, states that employees are expected to read the text of the Agreement in conjunction with the explanation provided and further states that the Award contains a number of terms and conditions not provided for in the Agreement.
[10] Clause 4.2 of the Agreement has the effect of incorporating the Award and clause 4.4 of the Agreement states that in the event of any inconsistency between terms of the Agreement and the Award, the terms of the Agreement will prevail.
[11] A ballot for approval of the Agreement was conducted by SMS/email on 18 September 2020, at which time there were 19 employees eligible to vote. A valid majority of employees who participated in the ballot voted to approve the Agreement. The Agreement was ‘made’ on 18 September 20207 and the application for approval of the Agreement was filed by Broome Marine on 23 September 2020.
[12] On the 28 September the CFMMEU wrote to the Commission seeking documents that had been filed by Broome Marine in support of its application for approval of the Agreement. The CFMMEU also advised that it wished to be heard in relation to the application.
[13] On the 30 September 2020 the Commission sent the following documents to the CFMMEU; the Form F16, the Form F17 Declaration, a copy of the Agreement, the notice of employee representational rights (the NERR) and the Explanation Sheet provided to employees at the commencement of the ‘access period’.
[14] On 7 October 2020 the application for approval of the Agreement was allocated to Commissioner Williams’ Chambers.
[15] On 19 October 2020 an email was sent from the chambers of the Commissioner to the CFMMEU advising that the application had been allocated to the Commissioner and that the CFMMEU were to file and serve by Monday 26 October 2020 any submissions it wished to make in relation to its right to be heard and any other matters in respect of the application for approval of the Agreement.
[16] On 23 October 2020 the CFMMEU filed submissions in accordance with the Commissioner’s directions in respect of both seeking to be heard and on the substantive merits of the application. The submissions were served on Broome Marine.
[17] On 27 October 2020 the AMOU filed a Form F18 and in doing so opposed approval of the Agreement on the following 5 grounds:
• Clause 8.6 in the Dispute Settlement Procedure (DSP) stated that the making of a recommendation by the Commission to resolve a dispute required the consent of both parties;
• Clause 8.7 of the DSP provided for arbitration of a dispute by the Commission but only with the consent of both parties;
• Clause 8.8 of the DSP has the effect of removing powers of the Commission in that it requires that the Commission must not make a decision that is inconsistent with the Agreement or any other legislative obligations;
• Clause 10 Consultation places no obligation on the employer to notify an employee in writing of major change; and
• A member of the AMOU, who was an employee of the Respondent, was not supplied with a copy of the NERR.
[18] On the 28 October 2020 an email was sent from Chambers to Broome Marine’s representative in the following terms:
“Dear Mr Hudston,
Please find attached a copy of the submissions filed by the CFMMEU and the form F18 filed by the AMOU in relation to the above application.
The Commissioner directs you to provide any submissions in response to the CFMMEU’s application to be heard and to their specific objections to the agreement being approved and to the AMOU’s objections by Monday, 9 November 2020.
Your submissions should be filed directly with chambers by email to chambers.williams.c@fwc.gov.au”
[19] On the 9 November 2020 Broome Marine filed a response to the CFMMEU submissions seeking to be heard and in doing so served the response on the CFMMEU. On the same day Broome Marine also filed separate submissions dealing with the CFMMEU and AMOU objections to approval of Agreement. These latter submissions were not served on either the CFMMEU or AMOU nor were they subsequently provided by the Commissioner to either union.
[20] On the 15 November 2020 the CFMMEU wrote to the Commissioner’s chambers seeking an update on whether the Commissioner intended to conduct a hearing in relation to the matter and whether he intended to hear from the CFMMEU at any such hearing. No response was provided by the Commissioner. We discuss this later.
[21] On 23 November 2020 the Decision to approve the Agreement was issued.
[22] In the Decision to approve the Agreement the Commissioner declined the CFMMEU’s request to be heard for the following reasons:
“[5] The issues raised by the CFMMEU’s proposed intervention are:
a. whether the Agreement was genuinely agreed to by the employees covered by the Agreement because of compliance with s.180(5) of the Act;
b. whether the Agreement passed the better off overall test; and
c. whether the Agreement contains terms that are not about permitted matters within the meaning of s.172(1) of the Act.
[6] The CFMMEU submits it is eligible to represent employees employed in the marine towage industry as defined in the Marine Towage Award 2020 [MA000050] including employees whose employment may fall within the coverage of the above proposed Agreement.
[7] Consequently, the CFMMEU submits that some of Applicant’s employees or prospective employees that may be employed under the Agreement are eligible to be members of the CFMMEU.
[8] The CFMMEU then submits that approval of the Agreement and its effect concern the CFMMEU. Such concern, it is submitted, is why the CFMMEU has sought and should be granted permission to make submissions to the Commission at first instance to oppose approval of the Agreement.
[9] The CFMMEU submits the Commission should exercise its discretion under s.590 of the Act and allow it to be heard in this matter.
[10] The Applicant opposes the CFMMEU being heard in this matter.
[11] In this case the CFMMEU was not involved in the bargaining process.
[12] The CFMMEU has not demonstrated that it has any right, interest or legitimate expectation concerning the approval of the Agreement. Neither the CFMMEU’s interests nor its members will be directly affected by the outcome of this application.
[13] Given the CFMMEU was not a participant in the bargaining process the CFMMEU has no particular knowledge of relevant events. Reflecting this much of the submission it has put forward concerning whether the Agreement was genuinely agreed to by the employees is in generic terms only.
[14] In my view the CFMMEU has not put forward a sound reason why the Commission should exercise its discretion under s.590 of the Act and allow it to be heard in this matter.
[15] Consequently, I have decided that the CFMMEU will not be heard further regarding this application.”
[23] The Commissioner then dealt with the merits of the application as follows:
“[16] The Australian Maritime Officers’ Union (the AMOU) has filed a F18 Declaration and therein advised that it opposes approval of the Agreement and criticises the Dispute Settlement clause and the Consultation clause. These concerns are however not a barrier to the Agreement being approved.
[17] The AMOU, being a bargaining representative for the Agreement, has given notice under s.183 of the Act that it wants the Agreement to cover it. In accordance with s.201(2) I note that the Agreement covers the organisation.
[18] I am satisfied that each of the requirements of ss.186, 187 and 188 as are relevant to this application for approval have been met.
[19] I note clause 10 Consultation does not provide for representation of employees for the purposes of consultation. Consequently, pursuant to s.205(2) of the Act, the model consultation term prescribed by the Fair Work Regulations 2009 is taken to be a term of the Agreement.
[20] The Agreement is approved and, in accordance with s.54 of the Act, will operate from 30 November 2020. The nominal expiry date of the Agreement is 22 November 2024.”
[24] An appeal under s 604 of the Act is an appeal by way of rehearing and the Commission’s powers on appeal are only exercisable if there is error on the part of the primary decision maker.8 There is no right to appeal, and an appeal may only be made 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.
[25] The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment.9 The public interest is not satisfied simply by the identification of error, or a preference for a different result.10 In GlaxoSmithKline Australia Pty Ltd v Makin a Full Bench of the Commission identified some of the considerations that may attract the public interest:
“... the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters...”11
[26] 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.12
[27] It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of appealable error.13 However, as earlier stated, the fact that the Member at first instance made an error is not necessarily a sufficient basis for granting permission to appeal.
[28] We also note the observation of the Full Bench in Diamond Offshore General Company v Baldwin & Ors14 (Diamond Offshore) when dealing with the decision making process required to approve an agreement:
“[25] To the extent that part of the decision-making process required to approve an agreement involves the exercise of discretion or satisfaction in relation to statutory criteria, the principles relevant to appealable error in relation to such decisions are well established. An appealable error in a decision involving the exercise of discretion is an error of the kind identified in House v The King. An error in relation to satisfaction is a question as to whether the decision maker has reached a “state of mind which must be formed reasonably and on a correct understanding of the law.”
[29] We are satisfied that it is in the public interest to grant permission to appeal on the basis that the appeal raises issues of general application regarding the assessment of the requirement for ‘genuine agreement’.
[30] For reasons which will become apparent it is convenient to deal with ground 5 first.
[31] The Appellants submit that the Commissioner fell into jurisdictional error in that he could not have reached the requisite state of satisfaction that Broome Marine had taken all reasonable steps to explain the terms of the Agreement and the effect of those terms as required by s 180(5) of the Act and by extension had not complied with s 188 of the Act.
[32] The Appellants refer to the following matters in support of this ground of appeal:
• the Explanation Sheet is correct to the extent that it states that it does not constitute a complete explanation and in fact contains no explanation at all;
• the statement in the Explanation Sheet that the Agreement ‘operates to the incorporation of the Award’ is not supported by a plain reading of the Agreement, clause 4.2 of the Agreement is unclear and potentially does not incorporate the Award;
• while the Form F17 refers to meetings with employees during the access period held to explain the terms and effects of the terms of the Agreement, there is no detail of when or where these meetings were held; who was present; or the content of the explanations provided; and
• the Form F17 contains a number of errors in the responses provided by Broome Marine at questions 12, 13 and 14 which go to terms of the Agreement that are different to or less beneficial than the Award, and in the circumstances of such errors Broome Marine could not have taken all reasonable steps to explain the terms and effects of the terms of the Agreement.
[33] The Appellants also refer to errors or omissions in the explanation of the Agreement and that there was no evidence before the Commissioner that Broome Marine had drawn its employees’ attention to particular content of the Agreement, namely:
• the explanation provided in relation to clause 5 (Total Hourly Rate of Pay) and clause 6 (Annual Salary) is deficient as it does not detail that under the Agreement such arrangements may be put in place at Broome Marine’s sole discretion whereas clause 14.2 of the Award requires the agreement of a majority of employees;
• clause 7 (Responsibilities) of the Agreement sets out responsibilities of employees which are not contained in the Award and no explanation is provided of the consequences of breaches of those responsibilities;
• clause 8 (Dispute Settlement Procedure) of the Agreement provides that disputes may only be arbitrated with consent of all parties, unlike the Award which allows arbitration even if one party does not consent;
• clause 9 (Individual Flexibility Agreements) of the Agreement provides for a far wider range of matters that may be covered by an Individual Flexibility Agreement (IFA) than the matters set out at clause 5.1 of the Award; and
• clause 10 (Consultation) allows Broome Marine to change an employee’s regular roster or ordinary hours of work after consultation whereas clause 12.2(b) of the Award requires agreement with a majority of employees.
[34] The Commissioner was required to determine whether Broome Marine took all reasonable steps to ensure that the terms of the Agreement and the effects of those terms were explained to employees. Section 188(1) of the Act makes clear that compliance with s 180(5) must be established to the satisfaction of the decision maker. Reaching a state of satisfaction as to compliance with s 180(5) is a jurisdictional fact and in order to reach the requisite state of satisfaction there must have been material before the Commissioner to support the requisite state of satisfaction in respect of compliance with s 180(5). As made clear by the Federal Court in One Key Workforce Pty Ltd v CFMEU15, an absence of material or an insufficiency of material relied on in reaching the state of satisfaction is no evaluation at all and will not provide a sufficient basis for being satisfied as to compliance with s 180(5).
[35] Reaching the requisite state of satisfaction as to compliance with s 180(5) depends on the circumstances of the case. The nature of the requirement was recently summarised by a Full Bench of the Commission in The Australian Workers Union v Rigforce Pty Ltd16 (Rigforce) as follows:
“[35] In considering the “genuinely agreed” ground of appeal, it is necessary for reasons which will become apparent to consider in detail only the question of compliance with the pre-approval step in s 180(5). The nature of the requirement in s 180(5) was analysed in detail by the Federal Court (Flick J) in CFMEU v One Key Workforce Pty Ltd. We adopt the summary of that analysis set out in CFMMEU v Ditchfield Mining Services Pty Limited (Ditchfield Mining), which reduced it to the following four propositions:
(1) whether an employer has complied with the obligation in s 180(5) depends on the circumstances of the case;
(2) the focus of the enquiry whether an employer has complied with s 180(5) is first on the steps taken to comply, and then to consider whether:
• the steps taken were reasonable in the circumstances; and
• these were all the reasonable steps that should have been taken in the circumstances;
(3) the object of the reasonable steps that are to be taken is to ensure that the terms of the agreement, and their effect, are explained to relevant employees in a manner that considers their particular circumstances and needs. This requires attention to the content of the explanation given; and
(4) an employer does not fall short of complying with the obligation in s 180(5) of the FW Act merely because an employee does not understand the explanation provided.
[36] Additionally, we also adopt the analysis of Gostencnik DP in BGC Contracting Pty Ltd concerning the nature of a statutory obligation to take “all reasonable steps” as follows (footnote omitted):
“[43] A requirement or obligation to take “all reasonable steps” seems to me to require the identification of the steps a reasonable person would regard as reasonable in the circumstances that apply. Whether particular steps are reasonable will depend on the particular circumstances existing at the time the obligation arises. A requirement to take all reasonable steps does not extend to all steps that are reasonably open in some literal or theoretical sense…””
[36] Returning to the present matter, the particular circumstances in which the explanation was provided by Broome Marine to its employees were as follows:
1. Prior to approval of the Agreement no enterprise agreement was in place and as such the Award applied.
2. The Agreement is limited to only 10 clauses and incorporates the Award although the Appellants contend that such incorporation is not clear, that is a submission with which we do not agree.
3. There were 19 employees employed at the time of the ballot and those employees were, according to Broome Marine, familiar with the terms of the Award.
[37] As the Award covered Broome Marine and its employees at the time of the ballot, the explanation of the terms necessary to enable employees to make a considered and informed decision on the proposed Agreement included, in our view, a comparison between the Agreement and the Award.
[38] As previously stated, the explanation of the Agreement terms and the effects of those terms consisted of the Explanation Sheet 17 provided to employees at the commencement of the access period; along with a copy of the Agreement and Award; and information sessions with the 19 employees conducted in the access period. Broome Marine state that during the information sessions representatives read through the Agreement clause by clause, took questions and offered to receive any follow-up questions prior to the ballot.
[39] The gravamen of this ground of appeal is the Appellant’s contention that the Commissioner could not have been satisfied as to compliance with s 180(5) given the brevity, inaccuracies and omissions in the Explanation Sheet and the absence of any other evidence going to the specific explanation provided to employees of the terms of the Agreement and the effect of those terms.
[40] We accept that there was no probative evidence before the Commissioner as to the detail of the content of the explanations provided to employees during the information meetings.
[41] Consequently, the evidence before the Commissioner of the explanation provided to employees was limited to the Explanation Sheet. The absence of evidence in respect of the explanation provided by Broome Marine to employees in the information sessions does not necessarily mean there was insufficient material before the Commissioner for him to be satisfied as to compliance with s 180(5); provided the written explanation provided to employees in the Explanation Sheet was such that the terms and effects of the terms of the Agreement were clearly explained in a manner that had regard to the particular circumstances of employees. We note the comments of the following Full Bench in Rigforce;
“[37] Leaving aside the issue of the incorrect statement in the explanatory document, to which we will return, we do not accept the AWU’s submission that the information before the Commissioner was insufficient to permit him to form a conclusion concerning compliance with s 180(5). As we have earlier set out, Mr O’Brien’s statutory declaration set out in considerable detail the means by which the terms of the RFD Agreement and their effect was explained to the employees. This was done by means of the explanatory document sent to each employee, which addressed each of the terms in the RFD Agreement and described how they differed from the ICS Agreement and the Award. The explanatory document itself was annexed to the declaration. Mr O’Brien described how he spoke to each individual employee, took them through the explanatory document, and answered any questions which they had. We do consider that it was necessary for the Commissioner to inquire what was said in the individual discussions with each employee, since (leaving aside the error) we consider that it was open to conclude that the provision of the explanatory document itself was sufficient to comply with s 180(5). In any event, Mr O’Brien did give a broad description of what transpired, and this was sufficient in the circumstances.
[38] The position here could not be more different than that applying in the One Key Workforce litigation, where the employer simply asserted in the Form F16 statutory declaration that s 180(5) had been complied with, when in fact the employer had done little more than read out the terms of the agreement the subject of the proceedings to employees. Here, but for the incorrect statement in the explanatory document, it might be said that the approach taken by the employer was a model of its kind.”
[42] In circumstances where the specific information before the Commissioner in relation to the explanation of the Agreement was limited to the Explanation Sheet it is necessary for us to consider the accuracy and extent of the explanation provided to employees in the Explanation Sheet to properly assess whether the requirements of s 180(5) were met. We turn to that issue now.
[43] The Appellants challenge Broome Marine’s compliance with s 180(5) in respect of the explanation provided in relation to clause 5 (Total Hourly Rate of Pay) and clause 6 (Annual Salary). According to the Appellants, the explanation was deficient in that it did not make clear that remuneration arrangements put in place pursuant to clauses 5 and 6 of the Agreement may be done at Broome Marine’s sole discretion, whereas clause 14.2 of the Award requires agreement of a majority of employees to implement such arrangements. The relevant clauses of the Agreement and the Award are set out below.
[44] Clause 5 (Total Hourly Rate of Pay) of the Agreement relevantly states as follows:
“5.1 Compensation for the applicable base Hourly Rate of Pay for all ordinary and additional hours worked (and any applicable allowances, overtime payments, penalty payments and loadings payable under the Award) may be given by payment of a higher composite Total Hourly Rate of Pay over a given period (Total Hourly Rate of Pay.
……………” (our emphasis added)
[45] Clause 6 (Annual Salary) of the Agreement also relevantly states as follows:
“6.1 The Employer may pay an employee an annual salary in satisfaction of any or all of the amounts payable pursuant to the Award.
……………..” (our emphasis added)
[46] The equivalent Award provision states as follows:
“14.2 Option for aggregate wage or annual salary – full time and part -time employees
(a) As an alternative to being paid the minimum wage rate plus overtime and penalty payments (in accordance with clauses 19 and 25.2), an employer may agree to pay an aggregate wage or annual salary provided the employer obtains the agreement of a majority of its employees who are covered by this award.
………………” (our emphasis added)
[47] The explanation of clause 6 (Annual Salary) in the Explanation Sheet stated that an Annual Salary “is where Employer may pay an employee an annual salary in satisfaction of any or all of the amounts payable pursuant to the Award.” As to the difference between Award and Agreement provision the Explanation Sheet simply described the differences in the following terms; “Clause 14.2 of the Award is an option for an annual salary”. The explanation of the differences between clause 5 (Total Hourly Rate of Pay) and the equivalent ‘aggregate wage’ clause in the Award was similarly brief, describing the differences between the provisions as follows; “Clause 14.2 of the Award is an option for an aggregated wage.”18
[48] While there appear to be some other differences of substance between clauses 5 and 6 of the Agreement and clause 14.2 of the Award, the Appellants’ particular criticism is that the relevant explanations of clauses 5 and 6 of the Agreement contained in the Explanation Sheet did not explain that clause 14.2 of the Award only enables aggregate wage or annual salary arrangements to be implemented where a majority of employees in the workplace agree, whereas the Agreement permits the implementation of such arrangements at Broome Marine’s discretion.
[49] Broome Marine reject the proposition that the Agreement permits the introduction of Total Hourly Rates of Pay or Annual Salary arrangements solely at its discretion. It submits that by reason of the incorporation of the Award at clause 4.2 of the Agreement, the relevant Award provision (clause 14.2(a)) continue to apply. As a consequence, an explanation detailing the difference between the Agreement and Award on that point was not required.
[50] We are not persuaded by Broome Marine’s submission on this point. We accept that the Award is incorporated by reason of clause 4.2 of the Agreement, but clause 4.4 states that in the event of inconsistency between Agreement and Award provisions, the Agreement provision prevails. Clauses 5 and 6 do not merely supplement clause 14.2 of the Award. Clauses 5 and 6 include 8 sub-clauses and deal in a comprehensive manner with Total Hourly Rates of Pay and Annual Salary arrangements that may be put in place under the Agreement. It is plain that these provisions are intended to comprehensively regulate their subject matter and displace clause 14.2 of the Award, to the extent of any inconsistency.
[51] The language in clauses 5 and 6 of the Agreement is clear and on a plain reading permits Broome Marine to implement Total Hourly Rate of Pay and Annual Salary arrangements at its initiative rather than only by agreement of a majority of employees. This should have been explained to employees.
[52] Given the significance of these terms in establishing the remuneration arrangements for employees and the absence of a clear explanation of the effects of clauses 5 and 6 of the Agreement and the equivalent Award provisions, we are not persuaded that Broome Marine took all reasonable steps to explain the terms of the Agreement and the effects of those terms. The Commissioner erred in concluding otherwise.
[53] The Appellants further contend that clause 7 (Responsibilities) of the Agreement sets out responsibilities of employees which are not contained in the Award and that no explanation is provided of the consequences of breaches of those responsibilities. Those responsibilities relevantly include:
• complying with lawful and reasonable directions;
• using best endeavours and at all times act faithfully, honestly and diligently;
• devoting the whole of their time and attention to performing solely work-related activities in work time;
• ensuring the highest levels of safe working practices are maintained;
• exhibiting a professional and courteous attitude in all interactions; and
• carrying out services for third parties faithfully, diligently and with all due care, competence and skill.
[54] The explanation provided in the Explanation Sheet states there is no “corresponding clause in Award” and that “This clause explains an employee’s duties and responsibilities to your employer and service to third parties”.19
[55] We accept that the description of clause 7 of the Agreement in the Explanation Sheet does not include an explanation of the implications of an employee failing to comply with the obligations set out. We would observe however that the breach exposure the Appellants refer to is more theoretical than real in our view. In our experience is it not the usual practice for explanations to be provided by employers to their employees of the consequences of breaching terms of an enterprise agreement more generally. We accept that such an explanation may be a theoretical step that was not taken by Broome Marine, but we are not persuaded that such a step was a reasonable step in the circumstances. Consequently we are not persuaded that the Commissioner erred in the manner contended by the Appellants.
[56] Turning to clause 8 (Dispute Settlement Procedure) of the Agreement, the explanation provided in the Explanation Sheet is limited to the following: “This provision sets out the procedure for you to follow when you have a grievance arising out of the Agreement”. In describing the differences between the Agreement and the Award clause it states that “clause 28 sets out Award dispute clause in detail matters arising under Award or in relation to the NES”. 20
[57] The Appellants submit that there are significant differences between the Award and Agreement dispute settlement procedures that required explanation. In our view this submission is misconceived. Both the Agreement and Award dispute settlement procedures provide for the resolution of matters arising under those respective instruments and in respect of the NES. Both procedures provide for progressive escalation of the matter where unresolved at the previous step, culminating in the potential referral of the dispute to the Commission. Neither provision allows the Commission to arbitrate an unresolved dispute without the consent of the parties.
[58] We discern no significant differences between the Agreement and Award provisions. We are not persuaded that the explanation of the Agreement dispute settlement procedure in the Explanation Sheet was an error or omission of the type that would call into question whether the Agreement was genuinely agreed. Nor are we persuaded that the Commissioner erred by so finding.
[59] The Appellants also contend that the explanation provided in relation to clause 9 (Individual Flexibility Agreements) of the Agreement was inadequate in that it failed to explain that the clause provides for a far wider range of matters that may be modified by an IFA than the matters set out at clause 5.1 of the Award. Clause 5.1 of the Award limits the matters that may be the subject of IFA to 5 matters; arrangements for when work is performed, overtime rates, penalty rates, allowances and annual leave loading. Clause 9 of the Agreement imposes no limitation on the matters in the Agreement that may be covered by an IFA.
[60] In respect of the matters that may be covered by an IFA under the Agreement clause 9.1 of the Agreement relevantly states as follows:
“9.1 Subject to the FW Act the Employer and an Employee covered by the Agreement may agree to make an Individual Flexibility Arrangement (IFA) to modify the application of terms of this Agreement that relates to terms and conditions of employment if:
……………………”
[61] The balance of clause 9.1 of the Agreement contains similar protective provisions to those found in clause 5.1 of the Award including in relation to the content of the IFA, that it (the IFA) must result in an employee being better off overall, signature requirements and IFA termination provisions.
[62] In dealing with the IFA clause the Explanation Sheet states that “This provision allows you and the Employer to negotiate flexibility arrangements around certain terms contained in this Agreement.” It goes on to describe the Award IFA clause in the following manner; “Clause 5 sets out Award individual flexibility arrangements clause in detail.” 21
[63] We agree with the Appellants that the explanation provided by Broome Marine in relation to the Agreement IFA clause was inaccurate in that failed to highlight the differences between the potential scope of an IFA made under the Agreement versus an IFA made under the Award. Further, use of the words “certain terms” in the Explanation sheet convey that there are limits on the matters that can be dealt with by an IFA under the Agreement when clause 9.1 imposes no such limitations. It simply refers to terms that “relates to terms and conditions of employment…” that may be varied by an IFA under the Agreement. In contrast the Award confines the matters that may be dealt with in an IFA to 5 particular matters.
[64] It follows from the above that the explanation provided by Broome Marine in respect of the IFA clause in the Agreement was deficient. A reasonable step would have been to accurately explain the changes in the Agreement provisions against the Award. Broome Marine failed to do this in relation to the IFA clause and it follows that the Commissioner erred by failing to so conclude.
[65] The final matter raised by the Appellants relates to the explanation of clause 10 (Consultation). The appellants contend that clause 10 allows Broome Marine to change an employee’s regular roster or ordinary hours of work after consultation whereas clause 12.2(b) of the Award requires agreement with a majority of affected employees. We would simply observe that clause 12.2(b) of the Award is not concerned with changes to an employee’s regular roster or ordinary hours of work but rather is concerned with changes to the span of hours which may occur by agreement of a majority of affected employees. Furthermore, the effect of clause 12.2(b) of the Award is not in our view displaced by the effect of the Agreement consultation clause and continues to apply by reason of the Award’s incorporation into the Agreement. The Commissioner did not err in the manner contemplated by the Appellants.
[66] In conclusion, an accurate explanation of the remuneration arrangements under clause 5 and 6 and IFAs at clause 9 of the Agreement were reasonable steps that ought to have been taken by Broome Marine, but were not. There was a failure to comply with s 180(5). In such circumstances it was not open to the Commissioner to conclude that the “genuinely agreed” approval requirement in s 186(2)(a) were satisfied absent; the application of s 188(2), which was clearly not considered by the Commissioner.
[67] We uphold the appeal in respect of the “genuinely agreed” ground.
[68] Given our conclusion in respect of ground 5 it is not necessary for us to address the remaining grounds. However, as the other grounds were fully argued and to assist the rehearing of the approval application on remittal we consider the other grounds below.
[69] We wish to make some comments in relation to the procedural fairness grounds which are covered by grounds 1 – 3. These grounds amount to a complaint that the Commissioner denied the Appellants procedural fairness and failed to consider submissions that were central to the Appellants’ objections. The Appellants conceded during oral submissions that these concerns were largely cured on appeal although the inability to cross-examine witnesses at first instance constrained the Appellants arguments on appeal. 22
[70] The first thing to be said is that the CFMMEU did not establish a right to be heard at first instance and was unable to persuade the Commissioner that he should hear from it pursuant to s 590 of the Act. In contrast to the position of the CFMMEU, the Commissioner apparently accepted that the AMOU had a right to be heard given his acceptance of the AMOU as a bargaining representative. However employee details filed by Broome Marine and union membership information submitted by the AMOU to the Commission as part of the appeal failed to establish that the AMOU had any members employed by Broome Marine at the time of the ballot. It follows that the AMOU may not have had a right to be heard at first instance.
[71] Despite the absence of a right to be heard, the Commissioner invited submissions from the CFMMEU both as to their seeking to be heard and on the merits of the Agreement’s approval. As set out above at [18], on receipt of those submissions the Commissioner invited a response from Broome Marine in respect of the CFMMEU’s application to be heard, their specific objections to the agreement being approved and to the AMOU’s objections. Curiously, Broome Marine’s response to the Commissioner’s invitation was provided in two separate submissions on 9 November 2020. The first submission filed was in relation to the CFMMEU’s application to be heard and was served on the CFMMEU. The second submission on the Appellants’ objections to approval of the Agreement was filed on the same day directly with the Commissioner’s chambers and was not copied to the Appellants.
[72] In filing their submissions with the Commissioner’s chambers on 9 November 2020 in respect of the Appellants objections, Broome Marine stated that they had not copied in the CFMMEU or AMOU “in accordance with the directions issued”. 23 As previously set out above, the Commissioner’s directions relevantly stated as follows:
“………………
The Commissioner directs you to provide any submissions in response to the CFMMEU’s application to be heard and to their specific objections to the agreement being approved and to the AMOU’s objections by Monday, 9 November 2020.
Your submissions should be filed directly with chambers by email to chambers.williams.c@fwc.gov.au”
[73] It is unclear to us why Broome Marine chose to file one set of submissions with the Commissioner’s chambers, copied to the CFMMEU while the second set of submissions, which were responsive to the same directions issued by the Commissioner, were not copied to the Appellants. Broome Marine were unable to satisfactorily cast any light on this issue during the course of oral argument before us. 24
[74] Importantly, the Appellants were denied an opportunity to review or respond to Broome Marine’s 9 November 2020 submissions at a time when the Commissioner had not yet made a decision as to whether he would hear from either or both the Appellants. The Commissioner’s decision to decline to hear from the CFMMEU pursuant to s 590 of the Act was not determined until the Decision was issued on 23 November 2020. No decision was made by the Commissioner to not hear from the AMOU. In these circumstances it would have been appropriate, and necessary from a procedural fairness perspective, for the Commissioner to have provided copies of Broome Marine’s submissions to the Appellants.
[75] The Appellants submit at [41] of their submissions that a number of terms of the Agreement are less beneficial than the Award and that the only above award entitlement is the 5% extra rate of pay per hour. The Appellants submit that the 5% extra rate is not sufficient to meet the BOOT assessment. The Appellants failed to advance any analysis in support of their submissions and in our view the submission lacks merit for the reasons which follow.
[76] Clauses 5 and 6 of the Agreement, which provide for Total Hourly Rate of Pay and Annual Salary arrangements, both require a reconciliation of earnings under such arrangements with the Award to ensure that they continue to receive at least 5% above the earnings they would otherwise receive under the Award. We discern no detriment.
[77] Clause 7 of the Agreement details employee responsibilities under the Agreement. The Appellants contend that this term exposes employees to prosecution in the event of breach. As stated previously, the risk of such a prosecution is theoretical rather than real and to the extent that it may arguably be a detriment we would accord it little if any weight in the BOOT analysis.
[78] The Appellants’ claim that the dispute settlement procedure is detrimental when compared against the Award. We reject this submission for the reasons set out above at [57].
[79] In relation to the claimed detriment of the IFA provision, we accept that the IFA provision under the Agreement allows for a broader range of matters to be subject to an IFA than under the Award. However it is unclear how this could be regarded as a detriment in circumstances where entering into an IFA under the Agreement is subject to an employee being better off overall than if they had not entered into an IFA. 25 Consequently we discern no detriment.
[80] Finally, we have already rejected the Appellants’ claim that the consultation clause has the effect of enabling changes to the ordinary hours of work of employees without the need for agreement of affected employees, thus overriding clause 12.2(b) of the Award (see [65] above). The Agreement does not have the effect claimed by the Appellants and as such we discern no detriment.
[81] It follows from the above that the Appellants’ sixth ground of appeal must be rejected.
[82] For the reasons given, we grant permission to appeal, uphold ground 5 of the appeal and quash the decision.
[83] Having upheld the appeal and quashed the decision, we consider the most appropriate and efficient course is to remit the application to approve the Agreement to Deputy President Masson for re-determination. The redetermination will require consideration as to whether the application of s 188(2) is available to overcome Broome Marine’s non-compliance with s 180(5). Broome Marine will also have the opportunity to offer appropriate undertakings and/or provide any further submissions and evidence addressing s 180(5) and s 188(2).
[84] We order as follows:
(1) Permission to appeal is granted in relation to Ground 5.
(2) The appeal is upheld in relation to Ground 5.
(3) The Decision ([2020] FWCA 6198) is quashed.
(4) The application for approval of the Broome Marine Enterprise Agreement 2020 (AG2020/2872) is remitted to Deputy President Masson for reconsideration in accordance with the above reasons for decision.
PRESIDENT
Appearances:
L Edmonds for the Construction, Forestry, Maritime, Mining and Energy Union.
G Anderson for the Australia Maritime Officers’ Union.
A Pollock of counsel for the respondent.
Hearing details:
2021.
Melbourne and Perth (by video):
January 18.
Final written submissions:
Appellant, 8 January 2021.
Respondent, 15 January 2021.
Printed by authority of the Commonwealth Government Printer
<PR726164>
2 MA000050.
3 Form F17, Question 18, Appeal Book at pg. 47.
4 Form F16, Appeal Book at pp 32-34.
5 Form F17, Questions 23 & 24, Appeal Book at pp 50-53.
6 Appeal Book at pg. 59.
7 Form F17, Questions 20, 25 and 26, Appeal Book at pp 48-54.
8 Coal and Allied Operations Pty Ltd v AIRC (2000) 203 CLR 194, [17] per Gleeson CJ, Gaudron and Hayne JJ.
9 O’Sullivan v Farrer (1989) 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch (2011) 85 ALJR 398, [69] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; Coal & Allied Mining Services Pty Ltd v Lawler and others (2011) 192 FCR 78, [44] – [46].
10 GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343, [26]-[27], 197 IR 266; Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth [2010] FWAFB 10089 [28], 202 IR 388, affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler and others (2011) 192 FCR 78; NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663, [28].
11 [2010] FWAFB 5343, 197 IR 266, [24] – [27].
12 See also CFMEU v AIRC (1998) 89 FCR 200; Wan v AIRC (2001) 116 FCR 481.
13 Wan v AIRC (2001) 116 FCR 481, [30].
15 [2018] FCAFC 77, 277 IR 23.
17 See Appeal Book at pp 59 – 61.
18 Explanation Sheet at Appeal Book pg. 60
19 Ibid at pg. 61.
20 Ibid.
21 Ibid.
22 Transcript of appeal hearing, 18 January 2020, PN31-PN38.
23 Email from M Hudston to Chambers – Williams C, dated 9 November 2020, Appeal Book at pg. 91.
24 Transcript of appeal hearing, 18 January 2020, PN299-PN302.
25 See clause 9.1(c) of the Agreement, Appeal Book at pg. 21.