FWAA 3758
Fair Work Act 2009
s.185—Approval of enterprise agreement
ANZ STADIUM CASUAL EMPLOYEES ENTERPRISE AGREEMENT 2009
VICE PRESIDENT LAWLER
MELBOURNE, 26 MAY 2010
Approval of enterprise agreement – requirement in s.186(3) – whether group of employees covered by the agreement was fairly chosen.
 An application has been made for approval of an enterprise agreement known as the ANZ Stadium Casual Employees Enterprise Agreement 2009 (Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (Act). The Agreement is a single-enterprise agreement.
 The Agreement was made during the bridging period and accordingly sections 186(2)(d) and 189(1)(b) are modified in their operation to the present application by item 2 of Schedule 7 to the Transitional Act. That is, the Agreement has to pass the “no disadvantage test” in Division 2 of Schedule 7 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act) rather than the “better off overall test” in s.193 of the Act.
 The group of employees chosen to be covered by the Agreement were all casual employees performing work in one of the classifications in the agreement (other than casual employees performing work maintaining the grounds of the stadium) - more than 1700 casual staff. The employer declaration describes the covered employees as working in “hospitality, retail, customer service, food and beverage and other operational functions”.
 A number of employees contacted the FWA to object to the approval of the agreement. One of those employees, Mr Eastman, was appointed as a bargaining representative by several employees and became the de facto spokesperson for the objectors.
 During the telephone hearings in this matter Mr Eastman contended that the employees covered by the agreement fell into two broad categories: food and beverage staff and customer service staff. The Company raised no objection to this categorisation. I proceed on the basis that the categories referred to in paragraph 0 fall within Mr Eastman’s two categories. How they are divided into those two categories is immaterial. For convenience I will adopt Mr Eastman’s categorisation in the balance of these reasons.
 Food and beverage staff make up about three quarters of the covered employees and customer service staff the remaining quarter.
 Mr Eastman submitted that the customer service staff have not had a pay increase for six years and that under the Agreement many customer services staff will actually see their pay fall for working equivalent, hours and this notwithstanding that the Agreement was negotiated with the AWU. The Company did not challenge the submission that customer service staff had not had a pay increase for six years and accepted that the hourly rates currently being paid to customer service staff for Monday to Friday between 7am and midnight were reduced under the agreement (and, I would note, in some instances significantly reduced) but contended that the weekend and public holiday rates were increased such that, overall, it was incorrect to say that most customer service staff will actually see their pay packets fall under the Agreement. I am not in a position to make a precise determination as to area of contest between Mr Eastman and the Company. It is certainly the case than a customer service employee who worked all or almost all their ordinary hours between 7am and midnight Monday to Friday would suffer and actual fall in take home pay when compared to existing pay levels. Why the AWU would agree to such an outcome is not clear to the objectors or, for that matter, to me.
 Mr Eastman indicated that from his discussions with other customer service staff there was general disapproval of the Agreement among customer service staff. The objectors complained that food and beverage staff received material wage increases under the Agreement and, because they constitute three-quarters of the employees covered by the Agreement, were in a position to outvote the customer service staff (and were likely to do so) – even if all of the customer service staff voted against the Agreement. The effect of Mr Eastman’s contention was that this was a case of the tyranny of the majority over the minority. He and few others nevertheless sought to organise a ‘no’ vote notwithstanding the difficulties of communication presented by the casual nature of the workforce and their patterns of work and the fact that he did not have access to a list of customer service employees and their contact details (all of which meant that it was intrinsically difficult to identify and speak to all affected employees).
 There were 1760 employees covered by the Agreement who were eligible voters in the approval ballot. The votes cast were as follows:
Total valid votes
Votes in favour
 Mr Eastman saw these results as confirming a significant level of disapproval from customer service employees and a realisation of his fears that, irrespective of the fact of an overwhelming ‘no’ vote among customer service staff, the Agreement would be approved because those ‘no’ votes would be swamped by ‘yes’ votes from food and beverage staff would vote to approve the Agreement in order to secure the material wage increases provided to them under the Agreement.
 The fact that the customer service staff have not received a wage increase for six years and than many or most customer service staff will see their actual income fall under the Agreement does not, in and of itself, provide a basis for refusing approval of the Agreement.
 FWA does not have a general discretion to refuse to approve an enterprise agreement. Rather, under s.186(1) of the Act FWA “must approve the agreement… if the requirements set out in [s.186] and section 187 are met.”
 There is no requirement in the Act that prevents employees being worse off when compared to whatever arrangements under which they were employed prior to a new enterprise agreement being made. True it is than an enterprise agreement must pass the no disadvantage test or the better off overall test (depending on whether the agreement was made before or after 1 January 2010), however, those tests are applied by reference to an award (and the associated Australian Pay and Classification Scale) or a modern award – not by reference to the actual pre-existing terms and conditions of employment of the employees covered by the agreement. Where the actual pre-existing terms and conditions of employment are superior to those in the relevant reference instrument, a new enterprise agreement can see actual wages and conditions reduced but nevertheless pass the no disadvantage test or better off overall test as the case may be. I am satisfied that this is the position in this case.
Whether group of employees covered by the Agreement was fairly chosen
 Do the objectors’ concerns provide a basis under the Act for refusing approval? The only potentially relevant requirement is the requirement in s.186(3). Subsections 186(3) and (3A) provide:
“Requirement that the group of employees covered by the agreement is fairly chosen
(3) FWA must be satisfied that the group of employees covered by the agreement was fairly chosen.
(3A) If the agreement does not cover all of the employees of the employer or employers covered by the agreement, FWA must, in deciding whether the group of employees covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.”
 The issue is whether the objections raised by Mr Eastman and the other objectors provide a basis for preventing me from being satisfied that “the group of employees covered by the agreement was fairly chosen”. It is necessary to consider the proper construction of s.186(3).
 It is trite that the language of a statutory provision must be construed in the context of the statute as a whole. The terms of ss.237 and 238, which deal with majority support determinations and scope orders, are obviously relevant to the proper construction of s.186(3) because one of the requirements of which FWA must be satisfied before making a majority support determination or a scope order is that “the group of employees who will be covered by the agreement proposed to be specified in the scope order was fairly chosen”: s.237(2)(c) and 238(4)(d).
 The terms of s.238 call for particular consideration because of the logical and practical link between the considerations arising in relation to the making of a scope order and the requirement in s.186(3). Section 238 relevantly provides:
“238 Scope orders
Bargaining representatives may apply for scope orders
(1) A bargaining representative for a proposed single enterprise agreement may apply to FWA for an order (a scope order) under this section if:
(a) the bargaining representative has concerns that bargaining for the agreement is not proceeding efficiently or fairly; and
(b) the reason for this is that the bargaining representative considers that the agreement will not cover appropriate employees, or will cover employees that it is not appropriate for the agreement to cover.
When FWA may make scope order
(4) FWA may make the scope order if FWA is satisfied:
(a) that the bargaining representative who made the application has met, or is meeting, the good faith bargaining requirements; and
(b) that making the order will promote the fair and efficient conduct of bargaining; and
(c) that the group of employees who will be covered by the agreement proposed to be specified in the scope order was fairly chosen; and
(d) it is reasonable in all the circumstances to make the order.
Matters which FWA must take into account
(4A) If the agreement proposed to be specified in the scope order will not cover all of the employees of the employer or employers covered by the agreement, FWA must, in deciding for the purposes of paragraph (4)(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.”
 I note that the disjunctive “efficiently or fairly” in s.238(1)(a) means that a bargaining representative may apply for a scope order on the basis of concerns “concerns that bargaining for the agreement is not proceeding… fairly…[because] the agreement… cover employees that it is not appropriate for the agreement to cover.” It follows that it cannot be the case that the group ‘all employees of the employer’ or ‘all casual employees of the employer’ must always be regarded as “fairly chosen”.
 Returning to s.186(3), in the Fair Work Bill 2008, as introduced, clause 186(3) read:
“Requirement that the group of employees covered by the agreement is fairly chosen
(a) the agreement does not cover all the employees of the employer or employers covered by the agreement; and
(b) the group of employees covered by the agreement is not geographically, operationally or organisationally distinct
FWA must be satisfied that the group was fairly chosen.”
 The commentary section of the Explanatory Memorandum for the Fair Work Bill 2009 states:
“Approval of agreements
r.155. Under the Bill, all enterprise agreements must be lodged with FWA for approval before they commence operation. The approval process is a simple, point in time assessment of the enterprise agreement and the circumstances under which it was made.
r.156. Once an agreement has received employee approval, FWA will ensure that:
 The clause note for cl.186(3) states:
“776. The effect of paragraph 186(3) is that where an agreement covers a group of employees that do not work in a geographically, operationally or organisationally distinct part of an employer's enterprise, FWA is required to assess whether the group covered by the agreement was fairly chosen.
777. It is intended that in assessing whether the group of employees covered by the agreement is fairly chosen, FWA might have regard to matters such as:
778. This subclause allows an agreement to cover a group of employees that is constituted in any fair and appropriate way (e.g., all the electricians employed by the employer or employers).
A single employer operates five organisationally distinct units within its enterprise. The employer makes an agreement with all of the employees in two organisationally distinct units, as well as ten employees who are the only non-union members within from another organisational unit that has a total of 30 employees. FWA is required to decide whether the group of employees covered by the agreement is fairly chosen.
In this example, the group of employees covered by the agreement is likely to be unfair, particularly as the employees were unfairly chosen.”
 Clause 186(3) of the Bill was amended in the Senate to the form that was enacted as s.186(3). The Supplementary Explanatory Memorandum states:
132. This group of items sets out amendments to the Bill in relation to the bargaining process. The key amendments: specifically provide for the revocation of the appointment of bargaining representatives; remove the civil penalty provision in clause 179 of the Bill and instead insert into the good faith bargaining requirements in clause 228 a requirement that bargaining representatives recognise and bargain with other bargaining representatives for an agreement; amend the operation of the ‘fairly chosen’ criterion in majority support determinations and scope orders to require FWA to be satisfied in all cases that the group of employees is fairly chosen.
133. The remaining items in this group are consequential to these changes or deal with technical amendments relating to other aspects of the bargaining process.
Item 6 – Subclause 186(3)
142. This item omits subclause 186(3) of the Bill and substitutes two further subclauses that require FWA to be satisfied that before approving an enterprise agreement, first, the group of employees covered by the agreement was fairly chosen and second, that if the agreement does not cover all of the employer’s employees, FWA must, in deciding whether the group of employees was fairly chosen, take into account whether the group of employees is geographically, operationally or organisationally distinct.”
 The change to clause 186(3) must be seen as one of the “technical amendments” referred to in paragraph 133.
 The conjunctive requirement in para 186(3)(b) in the Bill as introduced meant that the requirement that FWA be satisfied that the group of employees covered by an agreement was fairly chosen did not arise if the agreement covered all employees of the employer. That state of affairs was altered by the Senate amendment. An analogous amendment was made to para 238(4)(c) of the Bill as introduced which read:
“(c) if the agreement will not cover all the employees of the employer or employers, and the group of employees that will be covered is not geographically, operationally or organisationally distinct—the group was fairly chosen; and”
 Changes similar to those made to clause 186 were also made to clause 237, which deals with majority support determinations.
 The Supplementary Explanatory Memorandum states:
“Item 9 – Clause 237
Item 10 – Clause 237
Item 11 – Clause 238
Item 12 – Clause 238
143. Item 9 omits paragraph 237(2)(c) and substitutes a new paragraph requiring FWA to be satisfied before making a majority support determination that the group of employees to be covered by the proposed enterprise agreement was fairly chosen. Item 10 inserts new subclause 237(3A), which provides that if the proposed agreement will not cover all of the employer’s employees, FWA must take into account whether the group of employees is geographically, operationally or organisationally distinct in deciding whether the group of employees was fairly chosen.
144. Items 11 and 12 make similar changes in relation to the matters of which FWA is required to be satisfied before it makes a scope order under clause 238. Item 11 also makes clear that the agreement being referred to is the one that is the subject of the scope order, not the one that triggered the application.”
 The better inference is that the Parliament recognised that in particular circumstances it may not be fair to choose all of the employees of an employer as the group to be covered by an Agreement and that the relevant amendments to clauses 186, 237 and 238 reflect that recognition.
 On the plain words of the provision, the requirement in s.186(3) is concerned with the fairness of the choice of group of employees to be covered by an agreement rather than the fairness of the content of the agreement. It seems to me that since the concern is with the fairness of the choosing, a consideration of the requirement in s.186(3) should be directed at the time the group was chosen. If the group was fairly chosen at that time then the requirement is satisfied. I proceed on the basis that the group of employees to be covered by a proposed agreement is “chosen” when the employer and the main employee bargaining representatives agree on a particular scope or the bargaining representatives commence bargaining on a shared assumption as to scope (as is often the case when bargaining proceeds by reference to the terms of an existing agreement that is to be replace by the a proposed new agreement).
 The time of the choosing is a factual issue to be determined in the usual way. The group of employees to be covered by a proposed agreement - the scope of the agreement - will typically be chosen at or shortly after the commencement of bargaining. Of course, there may be disagreement between the bargaining representatives over the scope of a proposed agreement in which case the scope may itself be the subject of bargaining.
 The mere fact that one subgroup of the group of employees covered by an agreement is smaller in number, even much smaller, than another subgroup cannot, of itself, lead to a conclusion that the overall group was chosen unfairly: it would be possible identify such subgroups in relation to almost every enterprise agreement.
 I can see no warrant in the language of s.186(3), when construed in context, for utilising that requirement to determine that the group of employees covered by an agreement was not fairly chosen merely because at the conclusion of bargaining one subgroup of employees has fared relatively worse than another subgroup of employees when compared to the actual terms and conditions of employment of both subgroups that obtained before the agreement was made. It may well be that in particular circumstances unfairness in the content of an agreement could be relevant to determining whether the group was fairly chosen at the time it was chosen. It is conceivable that unfairness of the sort complained of by the objectors in this case may be evident at the time the group of employees to be covered by a proposed agreement is chosen because, for example, the employer provides a full draft agreement at or before the time the group is chosen.
 In this case a draft agreement prepared on behalf of the Company was presented to the AWU at the outset of bargaining and had the same scope as the Agreement as made. I am satisfied that the group of employees covered by the Agreement was chosen at the outset of bargaining.
 That draft agreement also contained the same starting rates as appear in the Agreement as made. The AWU successfully negotiated for higher wage increases over the life of the Agreement.
 The group of employees covered by the Agreement is described at paragraphs 0-0 above. Almost all of the employer’s operational staff are employed on a casual basis. The nature of event scheduling at a venue like ANZ Stadium makes it rational and not obviously unreasonable for the employer to operate on that basis. The group chosen was essentially ‘all casual employees’ (there is no suggestion that the exclusion of casual ground maintenance staff is relevant to the present application). The group chosen was a rational choice. It consists of a series of operationally distinct subgroups all of whom work at the one geographical location. I am not persuaded on the material before me that the group covered was chosen with the intent of prejudicing customer service staff in the way that the objectors complain of. Rather, the Company prepared the draft agreement with the intent of removing what is saw as anomalies in the different classifications and rates applicable to the various categories of staff and creating a single set of broad banded classifications covering all of its casual staff and providing for a greater commonality conditions. It was the pursuit of this object that saw the food and beverage rates increase and some rates for customer service staff decrease. For whatever reason, the AWU was prepared to agree to that outcome. Approaching s.186(3) in the manner that I have indicated, I am satisfied that the group of employees covered by the Agreement was fairly chosen and that the requirement in s.186(3) is met.
 The real remedy for a subgroup of employees, such as the customer service employees in this case, who perceive themselves to be unfairly disadvantaged by a proposed agreement, is for one or more of their bargaining representatives to seek a scope order under s.238. Such an order can be sought if bargaining is “proceeding… unfairly” because “the agreement… will cover employees that it is not appropriate for the agreement to cover”. In circumstances where there is a clear risk of the tyranny of the majority prejudicing the minority in a proposed agreement, it may well be open to FWA to find that if bargaining is proceeding unfairly towards the minority this makes it inappropriate that they be covered by the agreement and appropriate to make a scope order.
 This will no doubt be cold comfort to Mr Eastman and the other objectors in this case in circumstances where it may be presumed that none of those employees had a sufficient knowledge of the legislative regime to appreciate that applying for a scope order was the course they should have followed. Under s.238(1), a scope order is only available in relation to a “proposed agreement” and, therefore, not in relation to an agreement that has been made (an agreement is made the day on which the voting process by which employees approved the agreement concludes: see s.182). Necessarily, the Agreement had been made before the present application for approval was lodged and so a scope order is no longer available in relation to the customer service employees.
No Disadvantage Test
 In this case, the Form F17 employer declaration in support of the application for approval did not provide answers to the questions in Part 3 of the form directed at facilitating an application of the no disadvantage test in relation to the Agreement. This was because
(a) the employer was award free 1 at the relevant time, and, consequently there is no “general reference instrument” as defined in item 5 of Schedule 7 that applies in relation to the employees who are covered by the Agreement and, accordingly, it was necessary for FWA to determined that an award is a designated award pursuant to item 8(2) of Schedule 7 to the Transitional Act as the reference instrument for the purposes of the no disadvantage test in Division 2 of the Transitional Act, and
(b) the employer took the view that it was unable to answer the relevant questions until after FWA had made a determination under item 8(2).
 The employer identified two awards as candidates for designation for the purposes of applying the no-disadvantage test to the Agreement to which the present application relates:
(i) AWU Theme Park and Amusement Award 2001 (AP817297) (Theme Park Award), and
(ii) Hospitality Industry – Accommodation, Hotels, Resorts and Gaming Award 1998 (AP783479) (Hospitality Award).
 There appears to be no other federal award that would naturally apply to the business of the employer.
 I expressed a provisional view that the Hospitality Award was the appropriate award to designate and invited submissions from the parties (I also indicated that I had doubts about whether the Agreement passed the no disadvantage test when measured against that award). I was persuaded by the submissions for the employer that the Theme Park Award was the more appropriate to designate. In particular, I agreed with submissions by the employer to the effect that:
(a) The business of the employer (making the Olympic Stadium in Sydney - now known as ANZ Stadium - available to clients to conduct sporting, musical and other events that attract patronage from the general public) falls naturally within the coverage description of industry clause in the Theme Park Award. By clause 3.2 of that award it covers named respondents “in relation to the setting up, operation, maintenance and administration of theme parks (as defined)”. The expression “theme park” is defined in clause 5.2 to mean “location or enterprises operating attractions or amusements (whether indoor or outdoor) open to the public through either paid or general admission, relying upon sporting, historical, cultural, agricultural, technological or zoological activities to gain patronage, and shall include amusement centres and video arcades.”
(b) The business of the employer is a business that falls squarely within the coverage clause of the Amusement, Events and Recreation Award 2010 such that this is the modern award that now covers the employer. That modern award covers employers in the “amusement, events and recreation industry” which defined in clause 4.2 to mean the operation, inter alia, of:
(i) leisure and recreation facilities and centres; and
(ii) sporting, exhibition, convention and amusement complexes.
(c) The Theme Park Award is an award that has been identified as an award in the industry covered by the Amusement, Events and Recreation Award 2010 and is in the ordinary course will be subsumed by that modern award.
 While it is the case that the functions of the food and beverage staff and customer service staff covered by the Agreement are functions that are a feature of the industry covered by the Hospitality Award they are also a feature of the industry covered by the Theme Park Award.
 For these reasons, on 29 April 2010 I determined pursuant to item 8(2) of Schedule 7 to the Transitional Act that the Theme Park Award is the designated award for employees who are covered by the Agreement.
 I am satisfied that each of the requirements of ss.186, 187 and 188 of the Act as are relevant to this application for approval have been met. In particular, on the basis of the supplementary declaration by Mr Yildiz for the employer and a spreadsheet showing a comparison between the earnings of a random sample of employees for representative pay periods (agreed with Mr Eastman) that the Agreement provides significantly higher wages than the Theme Park Award. Having considered the disadvantages and advantages identified, I think fairly and accurately, by Mr Yildiz, I have concluded that the no disadvantage test in Division 2 of Schedule 7 to the Transitional Act is satisfied in relation to the Agreement.
 The Australian Workers Union, 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) of the Act I note that the Agreement covers that organisation.
 The Agreement is approved and, in accordance with s.54 of the Act, will operate from 2 June 2010. The nominal expiry date of the Agreement is 1 June 2014.
Mr M. Cooper, solicitor, with Mr M. Sant, solicitor, of Gaden’s Lawyers for the applicant.
Mr V. Falconer of The Australian Workers Union.
Mr I. Eastman, bargaining representative.
Sydney via telephone.
March 9, 31.
1 There was a transfer of business from contractors back to the employer in 2007. Various provisions in the WorkChoices
legislation had the effect rendering the employer award free in relation to the employees of the sort covered by the
Agreement following the conclusion of a transitional period that has long since expired.
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