DECISION

Fair Work Act 2009
s.604 - Appeal of decisions

Donnybrook Holdings Pty Ltd t/a TES Electrical
v
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
(C2021/158)

Appeal against decision [2020] FWC 5520 of Deputy President Beaumont at Perth on 21 December 2020 in matter number B2020/400.

Introduction and background

[1] Donnybrook Holdings Pty Ltd, which trades as TES Electrical (TES), has applied for permission to appeal and appealed a decision made by Deputy President Beaumont on 21 December 2020 1 in which she granted an application made by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) under s 236 of the Fair Work Act 2009 (FW Act) for a majority support determination

[2] An application for a majority support determination - that is, a determination that a majority of employees who will be covered by a proposed single-enterprise agreement want to bargain with their employer - may be made under s 236 of the FW Act by a bargaining representative. The significance of the making of such a determination for an employer includes that:

•  it constitutes a “notification time” under s 173(2)(b) of the FW Act and thus obliges the employer to issue to relevant employees a notice of employee representational rights within 14 days (s 173(1) and (3));

•  it satisfies one of the conditions for the making of a bargaining order applicable to an employer under s 230 (s 230(2)(b)); and

•  it allows (by virtue of constituting a notification time) an application for a protected action ballot order to be made (s 437(2A)).

[3] Section 237(1) of the FW Act requires the Commission to make a majority support determination upon application if it is satisfied as to the matters set out in s 237(2). Section 237(2) provides

(2)  The FWC must be satisfied that:

(a) a majority of the employees:

(i) who are employed by the employer or employers at a time determined by the FWC; and

(ii) who will be covered by the agreement;

want to bargain; and

(b) the employer, or employers, that will be covered by the agreement have not yet agreed to bargain, or initiated bargaining, for the agreement; and

(c) that the group of employees who will be covered by the agreement was fairly chosen; and

(d) it is reasonable in all the circumstances to make the determination.

[4] In relation to s 237(2)(c), s 237(3A) provides:

(3A) If the agreement will not cover all of the employees of the employer or employers covered by the agreement, the FWC must, in deciding for the purposes of paragraph (2)(c) whether the group of employees who will be covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.

[5] In the proceedings before the Deputy President, the primary matter in contest was paragraph (c) of s 237(2). 2 The decision suggests there was also an issue concerning paragraph (d).3

[6] The factual background to this matter is as follows. TES is an electrical services business operating in Western Australia. It employs approximately 80 electricians. Its business operates in two “banners”: Commercial construction (Construction), and Commercial construction and building maintenance (CBM). The CEPU’s application sought a majority support determination in respect of TES’s electricians working in Construction, of which there were about 70 at the time the application was made and 38 of whom had signed a petition in support of bargaining. TES contended that this group of employees was not “fairly chosen” as required by s 237(2)(c), including because the group was not geographically, operationally or organisationally distinct within the meaning of s 237(3A). The Deputy President rejected these contentions, finding that she was satisfied as to the matters specified in s 237(2), and made the majority support determination sought by the CEPU. 4 TES contends in its appeal that the Deputy President erred in doing so.

The decision

[7] In her consideration of s 237(2)(c) in the decision, the Deputy President first stated the applicable principles in a way that is not the subject of criticism in TES’s appeal. 5 The Deputy President then considered whether employees in Construction were geographically, operationally or organisationally distinct, as required by s 237(3A).6 The Deputy President found that they were not geographically or operationally distinct, 7 but accepted that they were organisationally distinct.8 The reasons given by the Deputy President for this last conclusion, and for the overall conclusion that the group of employees the subject of the application was fairly chosen, were:

•  there was a “clear delineation” between Construction and CBM in the business; 9

•  jobs were usually allocated under the banner of Construction or CBM based on the value of the project, the capacity of the various teams to undertake the project at the time, and the length of time and complexity of the work involved; 10

•  it was “abundantly evident” that any maintenance work fell under the CBM banner; 11

•  electricians in the business work on jobs either under the Construction or CBM banner at any one time, and this was reflected in employees’ timesheets; 12

•  TES’s Service Manager was the employee who managed the CBM banner, and this term was used to separate “service” (maintenance) from construction; 13 and

•  although TES had a project structure, whereby project managers were not on the tools, and underneath them were supervisors who looked after particular sites, there was a significant degree of organisational distinctness in the business that was not cancelled out by the level of integration described or the existence of lower-level supervision such as to render the choice of the relevant employees unfair. 14

[8] In relation to s 237(2)(d), the Deputy President said:

“[79] Before making a determination, I must be satisfied it is reasonable in all the circumstances to make the determination sought. The Respondent provided several reasons as to why the Commission could not be satisfied that it was reasonable in all the circumstances to make the determination and pressed this as a stand-alone ground, making reference to the petition numbers that had been presented. In reaching the decision made, I have given much thought to those reasons, including the potential impact of the determination concerning a business with 80 electricians.

[80] The matter is finely balanced. However, on the basis of the material before me and taking into account the evidence, submissions and conclusions reached in relation to s 237(3A), I consider it reasonable in all the circumstances to make the determination sought.”

TES’s appeal grounds and submissions

[9] TES’s notice of appeal identifies two grounds of appeal. Appeal ground 1 is formulated in two ways. The first formulation is as follows:

“The Commissioner’s decision [sic] was manifestly unreasonable in that in exercising her discretion under section 237(2)(d) of the Fair Work Act 2009 (Act), she failed to consider whether it was reasonable in all the circumstances to make the determination as a standalone ground.”

[10] The notice of appeal set out particulars in support of this ground, which contend in substance that the Deputy President placed excessive reliance on Construction being an organisationally distinct group, when organisational distinctiveness was not a determinative consideration in circumstances where the two banners had a commonality of purpose in the provision of electrical services to clients.

[11] Appeal ground 1 is alternatively formulated as follows:

“The Commissioner’s decision [sic] is manifestly unreasonable in that it failed to consider, or properly consider, whether it was reasonable in all the circumstances to make the determination in accordance with section 237(2)(d) of the Act.”

[12] The particulars provided contend that the Deputy President failed to take any, or any sufficient, account of material considerations including (in summary) that:

•  electrical employees were employed as one homogenous group with a commonality of purpose to provide electrical services to clients;

•  all electrical employees were employed for their electrical skills, training and qualifications in the provision of the full array of electrical services offered by TES;

•  the provision of electrical services by all electrical employees of TES was an integral part of TES’s organisational structure and all employees worked in an integrated way, with employees supporting each other in delivering the end product to the client;

•  the divide of electrical employees would create two disparate groups of electrical employees while working alongside each other, often in the same physical location at the same time;

•  such a divide has the potential to adversely impact a harmonious workplace culture, create “workplace silos” and unnecessary demarcation disputes which may in turn lead to industrial discontent and conflict and unnecessary risks to health and safety, and create an artificial and unreasonable administrative burden as to the pay entitlements of employees and which employees would be entitled to take protected industrial action;

•  such a divide would also result in reduced flexibility and productivity of employees;

•  currently all electrical employees are remunerated on the same pay rates and structure, while creating a divide would cause a “them and us” culture and introduce unnecessary competition between the two groups as to which group has superior skills and pay; and

•  any divide would require TES to cause its payroll structure to be completely overhauled because of the need to process and enforce different terms and conditions under separate industrial instruments.

[13] Additionally, it is contended in relation to the second formulation of appeal ground 1 that the Deputy President was required to be satisfied in making the determination that it would not result in an outcome that was unreasonable or plainly unjust, and that she failed to adequately consider the significant effect that the creation of an artificial schism within the workforce would have upon employees and the continued viability of the business, and would therefore be unreasonable and unjust at the enterprise level.

[14] Appeal ground 2 is:

“The Commissioner [sic] erred in finding that the group of electrical employees of the company who would be covered by an enterprise agreement was fairly chosen in accordance with section 237(2)(c) of the Act by virtue of being organisationally distinct from the other electrical employees within the meaning of section 237(3A) of the Act.”

[15] In the particulars for this ground, TES contends that the Deputy President failed to consider the way in which TES organised its business, being:

•  all electrical contracting work performed by the business was undertaken by the “Commercial Division”, with the previous “Residential Division” having been abolished;

•  the existence of separate banners within the Commercial Division was implemented purely for administrative reasons based on the monetary value of a project and the availability of various teams of electricians to undertake the work required;

•  all electrical employees fall under the direct responsibility of the Operations Manager;

•  TES utilised its electrical employees as one pool of blue-collar workers with a commonality of purpose, which established maximum flexibility and ensured the success of the integrated business model;

•  all electrical employees worked on construction sites and were subject to the site requirements;

•  all electrical employees completed the same sign on and time sheet process and forms; and

•  all electrical employees were paid under the same remuneration structure.

[16] TES also contends in relation to this ground that the Deputy President failed to adequately consider the fairness, or otherwise, to the electrical employees who would be excluded from coverage in the proposed enterprise agreement, including the operational and organisational integration between those excluded employees and the employees covered. Finally, it contends that the Deputy President failed to take into account, or properly into account, the objects of the FW Act, particularly those in s 3(a), (e) and (f).

[17] In relation to appeal ground 1, TES submitted that the Deputy President was required to consider on a “stand alone” basis and be satisfied, on the balance of probabilities, that, it was reasonable in all the circumstances to make the determination as required by s 237(2)(d). To reach the requisite state of satisfaction, it was submitted, the Deputy President was required to consider all relevant factors including the matters raised by the CEPU and TES, the relevant statutory objects, the effect a determination would have on the financial and operational position of TES, and the impact on other electrical employees of TES who would not be subject to any future enterprise agreement. TES submitted that the Deputy President erred by failing to “adequately explain” the evidence put forward by TES concerning the integration of the electrical workforce, the significant impact the creation of an artificial split in the workforce would have on the business and the workforce, the frequency with which employees moved between the two banners, the common pay structure of the employees, and the fact that all employees reported to the same Operations Manager. Nor did the Deputy President take into account the medium size of TES’s business and the impact that an arbitrary division between its electrical employees would have, any fairness for employees undertaking the same electrical services work who are not proposed to be covered by the future enterprise agreement and upholding their right to freedom of association, and the need to promote harmonious and productive workplaces.

[18] In relation to appeal ground 2, TES submitted that the Deputy President erred in finding that the relevant group of employees was fairly chosen in circumstances where she had found that they were not operationally distinct as all the relevant employees provided electrical service work on construction sites for the purpose of meeting the needs of TES’s clients. Despite the Deputy President accepting that integration existed between the two banners, the Deputy President erred by failing to take or properly take into account that 21 percent of all TES’s electrical employees worked under both banners on a regular basis. It was further submitted that the Deputy President erred in finding that the Construction and CBM banners were organisational structures of any significance or meaning to justify them being considered distinct parts of the workforce, and also erred in failing adequately to consider the fairness or lack thereof for those electrical employees performing identical or substantially the same work. Finally, in its written submissions, TES submitted that the Deputy President erred in finding that the group was organisationally distinct in circumstances where it was not clearly definable and, as a result, the scope of employees to be covered could not be stated with sufficient particularity. However, in its oral submission, counsel for TES confirmed that it did not challenge the Deputy President’s finding of organisational distinctness itself, but rather contended that this should not have been treated as a matter of significance in the consideration of whether the group of employees was fairly chosen.

[19] TES submitted that permission to appeal should be granted because the decision was attended by errors raising doubt as to its “correctness and justiciability”, and it was in the public interest to ensure that the requirements of which the Commission must be satisfied when granting a majority support determination are properly considered, administered and applied.

Consideration

[20] The Deputy President’s task in determining whether the group of employees the subject of CEPU’s majority support determination application was fairly chosen, and whether it was reasonable in all the circumstances to make the determination sought, involved a very broad value judgment based on her “satisfaction” as to these matters. 15 The Deputy President’s decision as to these matters can therefore be characterised as discretionary in nature, with the consequence that the House v The King standard of appellate review applies.16 For the reasons which follow, we do not consider that TES’s grounds of appeal, and the particulars and submissions advanced in support of those grounds, properly identify any error of the House v The King type. Accordingly, we are not satisfied that it would be in the public interest to grant permission to appeal such as to require the grant of permission under s 604(2) of the FW Act, nor do we consider that permission should be granted on discretionary grounds.

[21] Two preliminary observations may be made about TES’s appeal. First, it is not contended that the Deputy President misunderstood the nature of her task under the FW Act, misconstrued the relevant parts of the FW Act, applied the incorrect principles in her application of s 237 to the facts of the matter, or made any error in her findings of primary fact. Second, notwithstanding the way in which the appeal grounds are formulated, the substance of TES’s contentions of error in its appeal are that the Deputy President failed to take certain matters which TES considered favoured its case into account or, alternatively, to give them sufficient weight. In circumstances where the only matters which the Deputy President was required to take into account under s 237(2)(c) or (d) were those specified in s 237(3A) (in respect of s 237(2)(c)), these contentions do not bespeak of appealable error in the House v The King sense. The Deputy President plainly took into account the s 237(3A) matters, and the assessment of which other matters were of relevance and significance was part of the broad evaluative judgment reposed in her. In substance, we consider, TES’s case on appeal is a plea for a different result to pertain based upon a re-exercise of the discretion. This is not a permissible course on appeal absent the identification of appealable error in the proper sense.

[22] Specifically in relation to TES’s first appeal ground, to the extent that the contention that the Deputy President did not treat s 237(2)(d) as a “stand alone ground” is to be understood as meaning that she did not consider it separately from the matters in s 237(2)(a)-(c), this contention is plainly wrong. On any reasonable reading of the decision, the Deputy President gave discrete consideration to s 237(2)(d) in paragraph [79]-[80] of the decision. It is also clear that the Deputy President took into account such matters as were raised by TES in connection with s 237(2)(d), since she expressly states that she did in paragraph [79]. It must also be noted that TES’s case with respect to s 237(2)(d) at first instance was at best something of an afterthought, to the extent that we cannot identify in TES’s written or oral submissions before the Deputy President anything which expressly addresses that provision. On one view, TES’s case before the Deputy President was solely concerned with the “fairly chosen” requirement, so the Deputy President’s view in paragraph [79] that TES had provided reasons why it would not be reasonable in all the circumstances to make the determination sought by the CEPU involved a generous interpretation of TES’s submissions. We do not consider in the circumstances described that it is open for the Deputy President to be criticised for dealing with s 237(2)(d) in fairly brief terms, and the matters now raised by TES in connection with s 237(2)(d) appear to us to constitute an attempt to run a new case on appeal. Permission to appeal would not be granted for that purpose.

[23] In any event, the matters now raised by TES are not of a nature that would render the making of the majority support determination by the Deputy President manifestly unreasonable. We have earlier identified the principal direct consequences of the making of a determination under s 237. TES’s submissions are concerned not with these consequences but rather with speculative and, it appears to us, exaggerated second order effects. The TES submissions are based on the assumption that the determination will necessarily lead to the making of an enterprise agreement covering only employees in the Construction banner, thus causing the “schism” in terms of employee wages and conditions about which TES complains. However:

•  TES cannot be compelled to enter into an enterprise agreement, and no enterprise agreement can be made under the FW Act unless TES proposes an agreement for the relevant employees to vote upon;

•  there is no reason to assume that if an agreement is made, it will necessarily provide for higher wages and conditions for Construction employees as compared to CBM employees; and

•  TES can, if it wishes, avoid any “schism” by bargaining with its whole workforce of electricians, which may be done by issuing notices of employee representational rights to all of them or by seeking a scope order pursuant to s 238 of the FW Act to include the CBM employees in the bargaining.

[24] The second appeal ground is not reasonably arguable. We consider that the Deputy President took into account all the matters adverted to by TES in the particulars to this appeal ground. It is not necessary to deal with every matter raised by TES but, by way of example, the allocation of projects to the banners based upon their length, complexity and value was dealt with by the Deputy President in paragraph [74] of the decision, timesheets were dealt with in paragraph [75], the movement of employees between banners was dealt with in paragraph [76], and the role of the Operations Manager was dealt with in paragraph [77]. As earlier stated, no error is identified in the findings with respect to any of these matters. In substance, the real complaint of TES is that these matters should have been weighed in a different manner. This is not a proper contention of appealable error.

[25] We would not grant permission to TES for the purpose of advancing its contention that the Deputy President failed to give adequate consideration to the fairness of the employees in the CBM banner being excluded from coverage in the proposed enterprise agreement. This is not a matter which pertains to TES’s own interests, and the contention is disingenuous to a significant degree in that TES made it clear to us at the appeal hearing that it does not wish to collectively bargain at all. If TES is genuinely concerned about the fairness of CBM employees being excluded from bargaining, that is a matter which it can easily remedy, as we have earlier explained.

[26] Finally, TES’s contention that the Deputy President failed to take into account the object of the FW Act in s 3 has no merit. It is not necessary to make express reference to the object in order to take it into account. Further, TES did not explain how paragraphs (a), (e) and (f) of s 3 favoured its position; indeed the “emphasis on enterprise-level collective bargaining” in s 3(f) would generally support the making of a majority support determination if it is demonstrated that a majority of employees in a fairly chosen group want to bargain.

Conclusion

[27] Permission to appeal is refused.

VICE PRESIDENT

Appearances:

Ms M Saraceni of counsel for the appellant.

Ms C Taylor for the respondent.

Hearing details:

2021.

Sydney (via video-link).

23 March.

Printed by authority of the Commonwealth Government Printer

<PR728355>

 1   [2020] FWC 5520

 2   Ibid at [55]

 3   Ibid at [79]-[80]

 4   Ibid at [6], [80]

 5   Ibid at [56]-[63]

 6   Ibid at [64]-[78]

 7   Ibid at [64], [71]

 8   Ibid at [78]

 9   Ibid at [73]

 10   Ibid at [74]

 11   Ibid

 12   Ibid at [75]

 13   Ibid at [77]

 14   Ibid at [78]

 15   CFMEU v John Holland Pty Ltd [2015] FCAFC 16, 228 FCR 297 at [60], [62]

 16   [1936] HCA 45, 55 CLR 483 at 504-505; Coal and Allied Operations Pty Ltd v AIRC [2000] HCA 47, 203 CLR 194 at [19]-[21] per Gleeson CJ, Gaudron and Hayne JJ; Minister for Immigration and Border Protection v SZVFW [2018] HCA 30, 264 CLR 541 at [35]-[50] per Gageler J