FWA 3527
Fair Work Act 2009
Hyatt Ground Engineering Pty Ltd
Building, metal and civil construction industries
MELBOURNE, 3 JUNE 2011
Hyatt Ground Engineering Pty Ltd Enterprise Agreement 2011-2014.
 Application was made by Hyatt Ground Engineering Pty Ltd (the Applicant) on 9 March 2011 for approval of the Hyatt Ground Engineering Pty Ltd Enterprise Agreement 2011 - 2014 (the Agreement) pursuant to s.185 of the Fair Work Act 2009 (the Act).
 I had a number of concerns that the Agreement did not meet the requirements of sections 186 and 187 and I issued a statement on 13 April 2011 1 which identified those concerns.
 The Master Builders Association of New South Wales (MBANSW), as representative for the Applicant, filed a comprehensive response together with statements from 6 persons. The response included a number of undertakings which the applicant was prepared to give to FWA to satisfy the concerns raised.
 On further examination of the Agreement I identified additional concerns. By letter dated 3 May 2011 I conveyed these additional concerns to the Applicant’s representative.
 On 12 May 2011 the MBANSW filed a detailed response to the concerns raised in my letter of 3 May 2011 and the Applicant provided information through a signed statement from the General Manager of the Applicant. The response included a number of undertakings which the Applicant was prepared to give to FWA to satisfy the concerns raised.
 On the basis of the undertakings offered I am satisfied that the combination of the two sets of undertakings proposed by the Applicant address my concerns in relation to the enterprise agreement.
 I am satisfied that each of the requirements of ss186, 187 and 188 as are relevant to this application for approval have been met.
 In this matter I have carefully considered the number of undertakings offered and the effect of each of them. The attached version of the enterprise agreement contains each undertaking given in relation to each clause of the enterprise agreement (Appendix A).
 Section 190 of the Act provides a specific mechanism to enable FWA to approve enterprise agreements which would otherwise have to be refused approval because the enterprise agreement does not meet the requirements of s 186 or s 187. In this sense the provision is clearly a beneficial provision for an applicant seeking approval of an enterprise agreement and thus the provision should be applied broadly rather than narrowly. However within s190 is a very specific limitation on FWA’s capacity to accept undertakings. That limitation is found in s.190(3) which provides:
190(3) FWA may only accept a written undertaking from one or more employers covered by the agreement if FWA is satisfied that the effect of accepting the undertaking is not likely to:
(a) cause financial detriment to any employee covered by the agreement; or
(b) result in substantial changes to the agreement.
 If either of the elements of s.190(3) are met then FWA is prohibited from exercising the discretion otherwise granted to it under s.190 to accept undertakings from the employer.
 In the present matter I am only concerned with s.190(3)(b) of the Act.
 What constitutes “substantial changes to the agreement” is not defined in the Act.
 The meaning of “substantial” as a qualifier or descriptor has been considered on many occasions by the courts.
 In Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees' Union 2, Deane J in considering the meaning to be attributed to the phrase “substantial loss or damage” in the Trade Practices Act, said:
“14. The word "substantial" is not only susceptible of ambiguity: it is a word calculated to conceal a lack of precision. In the phrase "substantial loss or damage", it can, in an appropriate context, mean real or of substance as distinct from ephemeral or nominal. It can also mean large, weighty or big. It can be used in a relative sense or can indicate an absolute significance, quantity or size. The difficulties and uncertainties which the use of the word is liable to cause are well illustrated by the guidance given by Vscount Simon in Palser v. Grinling (1948) AC 291 where, after holding that, in the context there under consideration, the meaning of the word was equivalent to "considerable, solid or big", he said: "Applying the word in this sense, it must be left to the discretion of the judge of fact to decide as best he can according to the circumstances of each case . . . " (1948) AC, at p 317 . (See also A.E. Terry's Motors Ltd. v. Rinder (1948) SASR 167, at p 180 and Granada Theatres Ltd. v. Freehold Investment (Leytonstone) Ltd. (1958) 1 WLR 845, at p 848 .) (at p348)
15. In the context of s. 45D (1) of the Act, the word "substantial" is used in a relative sense in that, regardless of whether it means large or weighty on the one hand or real or of substance as distinct from ephemeral or nominal on the other, it would be necessary to know something of the nature and scope of the relevant business before one could say that particular, actual or potential loss or damage was substantial. As at present advised, I incline to the view that the phrase, substantial loss or damage, in s. 45D (1) includes loss or damage that is, in the circumstances, real or of substance and not insubstantial or nominal. It is, however, unnecessary that I form or express any concluded view in that regard since the ultimate conclusion which I have reached is the same regardless of which of the alternative meanings to which reference has been made is given to the word "substantial" in s. 45D (1).”
 In the same matter Bowen CJ expressed the similar sentiments:
“31. The word "substantial" would certainly seem to require loss or damage that is more than trivial or minimal. According to one meaning of the word the loss or damage would have to be considerable (see Palser v. Grinling (1948) AC 291, at pp 316-317). However, the word is quantitatively imprecise; it cannot be said that it requires any specific level of loss or damage. No doubt in the context in which it appears the word imports a notion of relativity, that is to say, one needs to know something of the circumstances of the business affected before one can arrive at a conclusion whether the loss or damage in question should be regarded as substantial in relation to that business.”
 The High Court in considering the phrase a "substantial common issue of law or fact" in the Federal Court of Australia Act 1976 in Wong v Silkfield Pty Ltd 3, said:
27. The term "substantial" may have various shades of meaning. Having regard to the context, it may mean "large or weighty" or "real or of substance as distinct from ephemeral or nominal.
28. Clearly, the purpose of the enactment of Pt IVA was not to narrow access to the new form of representative proceedings beyond that which applied under regimes considered in cases such as Carnie. This suggests that, when used to identify the threshold requirements of s 33C(1), "substantial" does not indicate that which is "large" or "of special significance" or would "have a major impact on the ... litigation" but, rather, is directed to issues which are "real or of substance".
 More recently the High Court in IceTV Pty Limited v Nine Network Australia Pty Limited 4 considered what constituted the reproduction in a material form of a "substantial part" of a copyright work, within the meaning of s.14(1)(b) of the Copyright Act; and Gummow, Hayne and Heydon JJ said:
154. The effect of s 14(1)(a) of the Act is that an infringement by reproduction of a work may result from the reproduction of "a substantial part of the work". The word "substantial" has been said to be "not only susceptible of ambiguity" but to be "a word calculated to conceal a lack of precision". However that may be, which of the various possible shades of meaning the word bears in a provision such as s 14 of the Act will be determined by the context.
 As the authorities make clear the meaning to be given to a word “calculated to conceal a lack of precision” is to have regard to the context in which that word is used.
 Section 190 exists and operates within the context of Part 2-4 of the Act. That Part is intended to “provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits” (s.171(a)).
 The simple flexible and fair framework includes both the pre-approval steps set out in Division 4 of Part 2-4 as well as the approval requirements set out in sections 186 and 187.
 Some, but not all, of the elements of the framework are that:
 When the framework for making agreements is met then the approval process is relatively straightforward. The Rules of FWA provide a set of simple forms to enable the approval process to be carried out with the minimum of delay.
 In this context the Act is designed to encourage and to facilitate the making and approval of enterprise agreements.
 Section190 can only come into play because the agreement proposed by the employer and agreed to by the employees is deficient in some critical aspect.
 Section190 operates in a similar way to the Monopoly Game with its “Get Out of Jail Free” card.
 Non compliance with provisions of the Act which could lead to a refusal by FWA to approve an enterprise agreement can be overcome by the employer giving undertakings that the agreement will operate in a manner different to that which would have occurred if the agreement as proposed to employees and agreed to by them had operated.
 Section 190 places substantial restrictions upon FWA correcting the effects which would flow from the operation of the agreement in its original form.
 Any undertaking offered by the employer to address a concern by FWA that the agreement does not meet the requirements set out in sections 186 and 187, and which causes financial detriment to any employee covered by the agreement, must be rejected by FWA.
 The very strength of the operation of s.190(3)(a) suggests that the restriction in s.190(3)(b) should not be minimised.
 The sense in which the word “substantial” appears in s.190(3)(b) is in my view to describe changes to the agreement as result of undertakings offered where the changes are not “trivial or minimal” or “ephemeral or nominal”.
 In this sense “substantial” is not a quantitative term but a qualitative term. A number of trivial or minimal changes to the agreement may not constitute a substantial change to the agreement. However even a single change to a provision of the agreement where the change was not trivial or minimal would constitute a substantial change to the agreement.
 This approach is in my considered view consistent with the scheme of the Act and the framework established in Part 2-4.
 Agreements are only made through a process in which an agreement is proposed to employees, explained to employees and where employees are able to genuinely agree to the agreement. The process of approving an otherwise deficient agreement on the basis of undertakings is a significant departure from the agreement making process set out in the Act.
 This alone supports the view that where undertakings offered by an employer to correct deficiencies in the agreement result in more than “trivial or minimal” or “ephemeral or nominal” changes to the agreement then the undertakings should be rejected on the basis that such undertakings “result in substantial changes to the agreement”.
 Importantly the rejection of undertakings on the basis that such undertakings “result in substantial changes to the agreement” does not mean that that an agreement with such changes cannot be approved by FWA. All that will happen is that where FWA rejects an application for approval because the requirements of sections 186 and 187 have not been met and the undertakings offered by the employer “result in substantial changes to the agreement”, the employer can incorporate the undertakings into a revised and redrafted agreement and immediately recommence the process under the Act to have employees agree to the revised and redrafted agreement. Thus consistent with the whole scheme of the Act it is the employees who have the opportunity of agreeing to the revised and redrafted agreement.
 I conclude that the effect of accepting the undertakings offered by the employer in this matter is likely to result in substantial changes to the enterprise agreement.
 Therefore I must not accept the undertakings and thus the concerns I have that the agreement does not meet the requirements of s.186 and 187 remain.
 I am required therefore to refuse to approve the enterprise agreement.
1  FWA 2293 PR508438
2 Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees' Union  FCA 85; (1979) 42 FLR 331 (7 December 1979)
3  HCA 48
4  HCA 14
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