[2011] FWAFB 6106 |
FAIR WORK AUSTRALIA |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
SOMERVILLE MAINTENANCE ENTERPRISE AGREEMENT 2011
[AE885367 PR508873]
SENIOR DEPUTY PRESIDENT ACTON |
MELBOURNE, 8 SEPTEMBER 2011 |
Appeal against decision [[2011] FWAA 2606] of Commissioner Hampton at Adelaide on 3 May 2011 in matter number AG2011/838.
Introduction
[1] The “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) (AMWU) has appealed the decision 1 of Commissioner Hampton of 3 May 2011 approving the Somerville Maintenance Enterprise Agreement 2011 (the Somerville Agreement).2
[2] In summary, the AMWU maintains it was denied procedural fairness in respect of the approval of the Somerville Agreement, Inghams Enterprises Pty Ltd (Inghams) which was the applicant for approval of the Somerville Agreement failed to comply with its duty to fully and frankly disclose to Fair Work Australia (FWA) matters relevant to the approval of the Somerville Agreement, and the Somerville Agreement did not meet several of the requirements in the Fair Work Act 2009 (Cth) (FW Act) for approval.
[3] The AMWU makes no appeal in respect of the content of the Somerville Agreement which is in almost identical terms to the Inghams Enterprises (Thomastown Maintenance) Enterprise Agreement 2010 3 and which covers the AMWU.
[4] This decision deals with the AMWU’s grounds of appeal. In doing so, we set out relevant factual matters and decisions before turning to the AMWU’s bases of appeal.
[5] The issues covered in this decision include:
Relevant factual matters
[6] On 18 May 2010, the AMWU gave notice to Inghams of “its intention to make an enterprise agreement ... with Ingham Enterprises Pty Ltd ... with respect to employees at Grant Road, Somerville covered by the Metal, Engineering and Associated Industries Award.” 4
[7] On 21 June 2010, Inghams replied to the AMWU advising that it only had two employees in its maintenance department, individual agreement-based transitional instruments with unpassed nominal expiry dates covered the two employees, and while such an instrument applies to an employee an enterprise agreement does not apply to the employee. Accordingly, Inghams went on to advise, it did not agree to commence bargaining for an enterprise agreement. 5
[8] On 30 June 2010, the AMWU made an application to FWA for a protected action ballot order. The employees sought to be balloted were the “employees of [Inghams] who will work in maintenance roles at Ingham’s Grants Road, Somerville plant and are members of the [AMWU] and who would be subject to the proposed agreement”. 6 (Underlining added) The application was heard by FWA on 13 and 14 September 2010.
[9] On 6 October 2010, the AMWU made applications to FWA for a majority support determination 7 and a bargaining order.8
[10] The application for a majority support determination said the employees to be covered by the proposed enterprise agreement were “[t]hose employees of Ingham Enterprises Pty Ltd (“Ingham”) who will work in mechanical maintenance roles at Ingham’s Grant Road, Somerville plant.” (Underlining added) The grounds for the application stated that:
“3.1 On 18 May 2010, a Victorian based organiser of the applicant gave notice to the respondent of the applicant’s intention to commence negotiations for an enterprise agreement for mechanical maintenance employees of the respondent who were based at the Grant Road plant (“Plant”).
3.2 On 21 June 2010, Alan Wilson, the respondent’s Group Executive General Manager Victoria and Tasmania replied in writing saying that the respondent does not agree to commence bargaining.
3.3 The group of employees who will be covered by the proposed agreement are in an operationally discrete part of the respondent’s business, namely, the mechanical maintenance function. This is performed by employees who customarily carry on trades grades level work (including a leading hand) in or in connection with the Plant.
3.4 This segregation of the relevant employees from other employees and workers who customarily work at the Plant, such as process workers in the poultry industry, managers and supervisors, electricians, etc follows established award coverage (with the exception of electricians) and it is commonplace in enterprise agreements throughout Australia – although, it is not unusual for electricians to be covered in maintenance agreements; however, the electricians who customarily perform maintenance at the Plant have indicated to the applicant that they are not interested in enterprise bargaining.
3.5 It is reasonable in all the circumstances to make the determination because the relevant employees were, on two occasions, but most recently on 4 October 2010, constructively given notice by the respondent that they will be laid off. The recent notice of lay offs will terminate the relevance employees’ employment on 7 October 2010.
3.6 The applicant alleges that the lay off was precipitated by the respondent because of, or partly because of the relevant employees’ intentions to engage in enterprise bargain and to associate and bargain collectively. The making of the determination will allow the applicant to seek a bargaining order to restrain the proposed lay off, or reverse it, as the case may be.”
[11] The application for a bargaining order sought an order that Inghams must:
“a not dismiss;
b reinstate as an employee of Ingham Enterprises Pty Ltd with no loss in pay,
as the case may be, persons who were given notice of termination of their services in August and October 2010 as mechanical maintenance workers at or about Ingham’s Grant Road, Somerville, Victoria plant.”
[12] The grounds for the bargaining order application stated:
“5.1 On 18 May 2010, a Victorian based organiser of the applicant gave notice to the respondent of the applicant’s intention to commence negotiations for an enterprise agreement for mechanical maintenance employees of the respondent who were based at the Grant Road plant (“Plant”).
5.2 On 21 June 2010, Alan Wilson, the respondent’s Group Executive General Manager Victoria and Tasmania replied in writing saying that the respondent does not agree to commence bargaining.
5.3 On 30 June 2010 the applicant made an application under s.437 of the Fair Work Act 2009 for a protected action ballot order (B2010/102).
5.4 On or about 12 August 2010, the respondent constructively gave notice of instant lay offs to about 5 of its mechanical maintenance employees. The applicant alleges that these lay off were instigated by the respondent capriciously to undermine freedom of association and collective bargaining.
5.5 On 13 and 14 September 2010 Fair Work Australia conducted a hearing of the applicant’s protected ballot application. By this stage, the respondent had re-engaged several of the employees laid off on or about 12 August, and others so laid off had found work elsewhere.
5.6 Commissioner Ryan has reserved his decision in the ballot order application, the principal issue before Ryan C being whether the relevant employees are in law employees of the respondent or whether they are someone else’s employees or independent contractors.
5.7 As detailed in an accompanying application for a majority support determination, the applicant alleges that the respondent has arranged for further lay offs of the relevant employees and the lay offs are capricious and unfair conduct by the respondent that undermines freedom of association and collective bargaining.
5.8 The applicant seeks that this application be heard immediately after the making of the majority support determination sought in the accompanying application.”
[13] On 13 October 2010, Commissioner Ryan issued a decision 9 and order10 in respect of the AMWU’s protected action ballot order application. The order provided for the AMWU to hold a protected action ballot of the employees of Inghams “who will be covered by the proposed enterprise agreement and are represented by the bargaining representative who is the applicant for this protected action ballot order.”
[14] The decision and order of Commissioner Ryan in respect of the protected action ballot order application were the subject of an appeal by Inghams. One of the grounds of appeal was that Inghams’ Somerville plant was not operating at the time the protected action ballot order application was either made, heard or determined and so there was no valid application made under s.437 of the FW Act.
[15] On 5 January 2011, a Full Bench of FWA accepted this ground of appeal, allowed the appeal and quashed the decision and order 11 in respect of the protected action ballot order application.
[16] Some time subsequently Inghams initiated bargaining with two of its employees employed to conduct engineering maintenance and repairs at its Somerville plant. On 21 March 2011 the last notice of representational rights was given to one of these employees. The two employees each appointed a person other than the AMWU as a bargaining representative. On 12 April 2011 voting for the Somerville Agreement commenced and the Somerville Agreement was made as a result of the two employees voting to approve it. On 20 April 2011 Inghams made an application to FWA for approval of the Somerville Agreement. The application for approval was accompanied by a conditional termination instrument, made pursuant to item 18 of Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (the TPCA Act), which was signed by one of the two employees and Inghams. Such a conditional termination instrument had the effect of terminating an individual agreement-based transitional instrument applying to the employee on the coming into operation of an enterprise agreement covering the employee and Inghams. The Somerville Agreement was approved by FWA on 3 May 2011 and came into operation on 10 May 2011. It has a nominal expiry date of 22 August 2014.
Relevant decisions
[17] The decision of the Full Bench in Re Inghams Enterprises Pty Ltd, 12 which dealt with the appeal by Inghams against the protected action ballot order issued by Commissioner Ryan, is worth outlining in detail. In the decision, the Full Bench said:
“[9] Inghams operates chicken processing plants. One of them is at Grant Road, Somerville and another at Thomastown. The order under appeal concerns the Somerville plant, albeit that is not apparent on the face of the order. Prior to it being almost completely destroyed by fire in January 2010, the Somerville plant had employed a large number of process workers who operated sophisticated complex processing machinery to turn live chickens into the packaged product. Production work was carried out from Monday to Friday across two shifts. The machinery required constant maintenance in order that the production line could run continuously. To this end, mechanical and electrical tradesmen worked across the two shifts to provide such maintenance as was necessary whilst the plant was running. Maintenance work was also performed on weekends, when the plant was not running to do work that could not be done whilst production was taking place. Other maintenance works would occur on an as needs basis.
[10] Inghams directly employed only two maintenance workers, both of whom it asserted were covered by individual agreement-based transitional instruments. The other maintenance workers, of whom there were approximately twelve, were engaged by labour hire companies; the mechanical tradesmen through Willing & Able Pty Ltd and the electrical tradesmen through AEV Contracting Pty Ltd.
[11] A significant issue in the case was whether the tradesmen engaged through these companies were sub-contractors or employees, and if employees, whether they were employees of the sub-contractors or of Inghams. The Commissioner found that only the Monday to Friday maintenance workers were employees of Inghams, and made his order in respect of them. He made no express findings as to the employment status of the others, nor did he explain why he confined his findings only to that category of worker.
[12] After the fire the workers were dispersed. Some 50% of the production workers were made redundant. Others were relocated to other Ingham plants or to temporary facilities that were not necessarily operated by Inghams. Other than possibly the two directly employed maintenance workers, no maintenance workers continued to work at the Somerville site after the fire. Some worked at temporary facilities to repair some of the fire damaged plant and equipment, others worked at other Ingham facilities and yet others at a facility that had been set up by Willing & Able.
[13] On 18 May 2010 the union gave notice to Inghams of its ‘intention to make an enterprise agreement ... with Ingham Enterprises Pty Ltd ... with respect to employees at Grant Road, Somerville covered by the Metal, Engineering and Associated Industries Award.’
[14] On 21 June 2010 Inghams replied advising that ‘we only have two employees in our maintenance department, both of whom are covered by individual agreement-based transitional instruments as defined in the Fair Work (Transitional Provisions and Consequential Amendments) Act. The earliest nominal expiry date of these agreements is mid 2011 In accordance [with] the Act while an individual agreement-based transitional instrument applies to an employee an enterprise [agreement] can not apply. Given those circumstances we do not agree to commence bargaining for an enterprise agreement.’ By operation of Item 2 of Schedule 13 of that Act the two employees referred to by Inghams could not be employees in respect of whom an enterprise agreement could be made.
[15] It is clear that at the time of the exchange of the above correspondence there were no maintenance employees actually working at the Somerville plant who were capable of being covered by an enterprise agreement. Indeed, there were none at the time of the application for the protected ballot order or at the time of the hearing. There was no evidence that there were any such maintenance workers at the Somerville plant at the date of the order...
[19] It can be seen that s 443 requires, first, that Fair Work Australia make a protected action ballot order if an application has been made under s 437. That section sets out the several requirements for making the application, including;
Section 437(5) provides that a group of employees specified under paragraph 3(a) is taken to include only employees who:
(a) will be covered by the proposed agreement; and
(b) are represented by a bargaining representative who is an applicant for the protected action ballot order.
[20] The initial factual matter to be ascertained is who are the employees who will be covered by the proposed agreement. That enquiry first directs attention to the application for the protected action ballot order. In the application the group or groups of employees to be balloted was described as being:
‘Those employees of [Inghams] who work in maintenance roles at Ingham’s Grants Road, Somerville plant and are members of the [AMWU] and who would be subject to the proposed enterprise agreement, except an employee who is bound by an individual agreement-based transitional instrument that has not passed its nominal expiry date on the day this ballot order is made, unless such an employee has made a conditional termination of that instrument.’
[21] It is readily apparent that the two employees of Inghams to whom reference has been made are not intended to be balloted. At the hearing at first instance, Mr Terzic referred to his outline of submissions that had been filed in accordance with the Commissioner’s directions. In that submission he amended the group of employees to be balloted by the insertion of the word will between who and work in the description of the group. Thus the opening words read:
‘Those employees of [Inghams] who will work in maintenance roles at Ingham’s Grants Road, Somerville plant and are members of the [AMWU] and who would be subject to the proposed enterprise agreement,’ etc.
[22] The reason given for the amendment, which was not opposed by Inghams, was that ‘the Somerville plant is currently being re-built after being severely damaged by fire in 2010. The regular Grants Road maintenance workers are deployed in other roles at the moment.’
[23] Mr Terzic accepted that at least one of the two people whom Inghams asserted was employed on an individual agreement-based transitional instrument was so employed, and did not seek to challenge the assertion of Inghams in relation to the other person. He then contended that there were other persons engaged by Inghams ‘who are, at law, properly classed as the respondent’s employees and they have carried out the sort of maintenance work to be covered by the proposed agreement.’ He went on to assert that they ‘comprise a group which has enrolled as members of the AMWU and they performed mechanical and fabrication work at the respondent’s Grants Road plant.’ (Our emphasis) Mr Terzic’s submissions then dealt with the issue of whether those persons were employees of Inghams.
[24] The use of the past tense was necessary because, as we have observed, none of those people was performing work at Somerville at the relevant time.
[25] Speaking to his application at first instance Mr Terzic said:
‘This application is framed with the view that the plant at Somerville will resume operations later this year and that persons who have been employed at Ingham for some time ... are persons who will on the balance of probabilities continue to be engaged in the highly specialised maintenance work required to make the plant operate.’ ...
[27] Mr McDonald’s submission is fairly straightforward. It is that there were no eligible employees working at the Somerville plant at any relevant time, the application did not, and indeed could not, specify the group or groups of employees who are to be balloted. Although it was the case that some of the persons who had worked there before the fire were likely to return once the plant had been rebuilt, the evidence was clear that no individual person had been identified as a person who would definitely return. Therefore, as required by s 437(1) of the Act, no employee who will be covered by the proposed enterprise agreement could be identified and, consequently, the group could not be specified in accordance with s 437(3)(a) as it is taken by s 437(5)(a) to include only employees who will be covered by the proposed enterprise agreement...
[29] This analysis further demonstrates that neither the original nor the amended application specified the group or groups of employees who are to be balloted, as required by s 437(3)(a) in order that there could be a valid application.
[30] The union, upon realising that its application in respect of persons who worked at Somerville had fundamental problems, seems to have exacerbated the position by amending its application so that the ballot would be of those persons who will work at Somerville once it re-opens. As we have seen there was no evidence as to the identity of any one such person...
[31] In his submissions on appeal Mr Terzic emphasized the futurity inherent in s 437 with its reference to an employee who will be covered by a proposed enterprise agreement. Whilst that is correct insofar as it goes, there is still the requirement that an application for a protected action ballot may only be made by a bargaining representative for such an employee. Identification of at least one such employee is necessary. That was not possible on the evidence before the Commissioner. The only evidence before the Commissioner was by Mr Ennis, who was a member of the AMWU who was intended to be caught by the scope of the ballot order. But Mr Ennis candidly accepted under cross examination that he had no idea as to his circumstances once the plant recommenced operation.
[32] Whilst it is true that in many workplaces there may well be a change to some of the persons who constitute the group between the time of the application and the making of the order that does not overcome the problem faced by the AMWU in this matter. In the generality of cases the group of employees to be balloted will be readily identifiable and capable of specification. That was not the case here...
[33] The potential difficulties with the making of the order sought were raised with the Commissioner to demonstrate why it could not validly be made. When it was put to the Commissioner that without knowing who was to be employed a respondent could not comply with the order, the Commissioner took the view that that was something that would be sorted out by the AEC. In our view, that is not the appropriate manner in which to deal with such an issue. The Act requires that the group or groups be specified and it is necessary that Fair Work Australia ensure that that has been done before it makes an order.
[34] There being no valid application, s 443(2) of the Act precluded the making of the protected action ballot order. The Commissioner exceeded his jurisdiction by making the order and thereby erred.
[35] In our view, it is in the public interest to grant permission to appeal and we do so. We allow the appeal and quash the decision and order.” (Endnotes omitted)
[18] Having set out relevant factual matters and decisions, we now turn to deal with the AMWU’s bases of appeal in respect of the approval of the Somerville Agreement.
Bargaining representative status
[19] The AMWU submits it had a right to be notified of and/or appear in the proceedings before the Commissioner for approval of the Somerville Agreement and it was not notified of or given the opportunity to appear in those proceedings. The AMWU submits it had such a right because it was a bargaining representative of persons who would, but for their terminations by Inghams, have a legitimate expectation of doing work covered by the Somerville Agreement. Further, the AMWU submits its application for a bargaining order to reinstate those persons is confounded by the approval of the Somerville Agreement. The AMWU also points to its application for a majority support determination in support of its alleged right to have been notified of and/or appear in the proceedings.
[20] Section 176 of the FW Act sets out the persons who are bargaining representatives. It provides that:
“Bargaining representatives
(1) The following paragraphs set out the persons who are bargaining representatives for a proposed enterprise agreement that is not a greenfields agreement: ...
(b) an employee organisation is a bargaining representative of an employee who will be covered by the agreement if:
(i) the employee is a member of the organisation...
unless the employee has appointed another person under paragraph (c) as his or her bargaining representative for the agreement, or has revoked the status of the organisation as his or her bargaining representative for the agreement under subsection 178A(2); or
(c) a person is a bargaining representative of an employee who will be covered by the agreement if the employee appoints, in writing, the person as his or her bargaining representative for the agreement...
Requirement relating to employee organisations
(3) Despite subsections (1) and (2), an employee organisation cannot be a bargaining representative of an employee unless the organisation is entitled to represent the industrial interests of the employee in relation to work that will be performed under the agreement.
Employee may appoint himself or herself
(4) To avoid doubt, an employee who will be covered by the agreement may appoint, under paragraph (1)(c), himself or herself as his or her bargaining representative for the agreement.
Note: Section 228 sets out the good faith bargaining requirements. Applications may be made for bargaining orders that require bargaining representatives to meet the good faith bargaining requirements (see section 229).”
[21] To be a bargaining representative, therefore, the AMWU had to have, at least, a member “who will be covered by the agreement”. 13
[22] The decision of the appeal Full Bench in Re Inghams Enterprises Pty Ltd 14 indicates the AMWU had no such member on 18 May 2010 when the AMWU gave Inghams notice of its intention to make an enterprise agreement, on 21 June 2010 when Inghams replied to that notice, on 30 June 2010 when the AMWU made its protected action ballot order application, on 13 and 14 September 2010 when that application was heard or on 13 October 2010 when the protected action ballot order application was determined. There is no evidence the AMWU had such a member at any time from 18 May 2010. Accordingly, we are not satisfied the AMWU was or is a relevant bargaining representative.
[23] Sections 229(1) and 236(1) of the FW Act provide that only a bargaining representative can apply for, respectively, a bargaining order and a majority support determination. The relevant majority support determination and bargaining applications were made by the AMWU on 6 October 2010 at a time when we are not satisfied the AMWU was a relevant bargaining representative.
[24] We, therefore, dismiss the AMWU’s ground of appeal that it had a right to be notified of and/or appear in the FWA approval proceedings in respect of the Somerville Agreement, as the so called “right” was based on a wrongful assumption that the AMWU was or is a bargaining representative and its bargaining order and majority support determination applications were or are valid.
Full and frank disclosure
[25] The AMWU also submits that Inghams failed to comply with its duty to disclose fully and frankly to Commissioner Hampton all the matters relevant to his decision to approve the Somerville Agreement. Such matters were the dismissal of about a dozen persons engaged by Inghams to perform the sort of work covered by the Somerville Agreement and the AMWU’s applications for a majority support determination and bargaining order.
[26] We dismiss this ground appeal because, for the foregoing reasons, we are not persuaded that the AMWU was a bargaining representative who could make the applications for a majority support determination or bargaining order or that the persons who the AMWU claims were dismissed are persons who, but for the cessation of their engagement at Inghams, would have been entitled to be included amongst those involved in the processes involved in the making of the Somerville Agreement.
Enterprise agreement made with one employee
[27] The AMWU further maintains in respect of its appeal that one of the two employees with whom the Somerville Agreement was made is not covered by it, that the Somerville Agreement was not genuinely agreed to by the employees covered by it and that an enterprise agreement cannot be made with only one employee.
[28] These submissions are made on the basis that while the Somerville Agreement is said to cover an employee who is a Maintenance Co-ordinator employed at Inghams’ Somerville plant, as a matter of law it does not cover such an occupation.
[29] The Maintenance Co-ordinator position is responsible for purchasing supplies for Inghams’ maintenance department and scheduling work for Inghams’ maintenance employees and contractors at the Somerville plant. We are not persuaded, however, that such a position is not covered by the Somerville Agreement. The Somerville Agreement covers classification levels C12, C11, C10 and C8 and above. Such classification levels are those contained in the Manufacturing and Associated Industries and Occupations Award 2010 15 (the modern Manufacturing Award) and in our view their definitions extend to the work performed by the employee in question. We reject the contention that the definitions in the modern Manufacturing Award do not extend to classification levels in the Somerville Agreement. Without the classification definitions from the modern Manufacturing Award, the classification levels in the Somerville Agreement would be meaningless.
[30] We add that we are not persuaded an enterprise agreement cannot be made with only one employee. There is nothing explicitly in the FW Act to suggest an enterprise agreement cannot be made with only one employee and it would not be consistent with the objects of the FW Act or Part 2-4 of the FW Act concerning enterprise agreements to so construe the FW Act. Such objects include “achieving productivity ... through an emphasis on enterprise-level collective bargaining” 16 and “to provide a ... framework that enables collective bargaining ..., particularly at the enterprise level, for enterprise agreements that deliver productivity benefits”.17 A conclusion that an enterprise agreement cannot be made with only one employee would mean that both an employer with only one employee and that employee would be deprived of a potential source of productivity benefits. Although an individual flexibility arrangement can be agreed between an employer and an employee pursuant to the flexibility term of a modern award, such an arrangement can be terminated by either party giving written notice of not more than 28 days.18
[31] We were referred to the decision in Re Fourth Furlong Motel 19 wherein a single member of FWA concluded an enterprise agreement could not be made with a single employee. With respect, we are unable to concur with the Commissioner’s conclusion.
[32] The Commissioner in the Fourth Furlong Motel case noted that s.23 of the Acts Interpretation Act 1901 (Cth) provides that in any statute, unless the contrary intention appears, words in the singular include the plural and vice versa. The Commissioner came to the view that a contrary intention appeared because the FW Act uses the word “employee” in some instances in its Part 2-4 concerning Enterprise Agreements and the word “employees” in other instances. We think it is apparent, however, that the word “employee” rather than the word “employees” is used in Part 2-4 when it is intended that the action concerned applies in respect of each employee. For example, s.172(1)(c) in Part 2-4 provides that an enterprise agreement may be made about deductions from wages authorised by an “employee”. It is understandable that the FW Act would provide that only the individual employee could authorise a deduction from their wages. The use of the word “employee” in that way is not sufficient to indicate a contrary intention with respect to the use of the word “employees” in Part 2-4.
[33] Further the Commissioner referred to an International Labour Organisation publication on collective bargaining. However, that publication defines collective bargaining quite differently to the manner in which bargaining can take place under the FW Act.
[34] The Commissioner also relied on the use of the word “group” in ss.186(3) and (3A) of the FW Act and noted that a group denotes more than one employee. We are not persuaded, however, that this prevents an enterprise agreement being made with one employee, so long as the enterprise agreement covers a group of employees. For example, an enterprise agreement may be made with the one employee who is a fitter employed by the employer at the time the enterprise agreement is made, so long as the enterprise agreement covers employees of the employer in the position of fitter. With such coverage although the enterprise agreement is made with the one employee employed at the time who is a fitter, it also covers future employees of the employer employed as fitters.
[35] Accordingly, we dismiss this ground of appeal having regard to the basis on which it was made. We add that it has not been unusual for FWA, on the application of a union or otherwise, to approve an enterprise agreement made with only one employee. 20
Fairly chosen group of employees
[36] Sections 186(1), (3) and (3A) of the FW Act provide as follows:
“Basic rule
186(1) If an application for the approval of an enterprise agreement is made under section 185, FWA must approve the agreement under this section if the requirements set out in this section and section 187 are met.
Note: FWA may approve an enterprise agreement under this section with undertakings (see section 190)...
Requirement that the group of employees covered by the agreement is fairly chosen
186(3) FWA must be satisfied that the group of employees covered by the agreement was fairly chosen.
186(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.”
[37] The AMWU submits the group of employees covered by the Somerville Agreement was not fairly chosen as its coverage extends to two employees with no common operational or organisational characteristics and who are not, as a group, geographically, operationally or organisationally distinct. The AMWU’s concerns about the coverage of the Somerville Agreement has highlighted a matter on which we require further submissions.
[38] The Somerville Agreement covers Inghams and “[a]ll employees of the Company for whom classifications and rates of pay are provided herein employed at the Somerville facility, Grants Road Somerville, Victoria.” 21 Clause 5 of the Somerville Agreement contains four classifications, being C12, C11, C10 and C8 or above. However, the Somerville Agreement was and was only able to be made with two employees. Presumably the two employees occupy, at most, two of the classifications in the Somerville Agreement, yet the Somerville Agreement covers at least another two classifications.
[39] In our view, this matter of the Somerville Agreement covering classifications in which Inghams did not have employees at the time the Somerville Agreement was made raises several questions. For example, whether the Somerville Agreement is an agreement within the meaning of s.172(2)(a) of the FW Act, whether the Somerville Agreement was genuinely agreed to by the employees covered by it within the meaning of ss.186(2)(a) and 188 of the FW Act and whether the group of employees covered by the Somerville Agreement was fairly chosen within the meaning of ss.186(3) and (3A) of the FW Act? The matter may also raise other issues relevant to the approval of the Somerville Agreement. Of course, some of the issues are ones on which FWA may be able to accept an undertaking under s.190 of the FW Act.
[40] We will provide the relevant parties with an opportunity to address us in writing on the matter, including whether we can deal with the matter as part of this appeal.
Valid notices of employee representational rights
[41] The AMWU maintains the notice of employee representational rights Inghams gave to one of the employees said to be covered by the Somerville Agreement did not conform with legislation.
[42] The notice of employee representational rights apparently given out by Inghams was as follows:
“Schedule 2.1 Notice of employee representational rights
(regulation 2.05)
Fair Work Act 2009, subsection 174 (6)
Inghams Enterprises Pty Ltd gives notice that it is bargaining in relation to an enterprise agreement “Inghams Enterprises (Somerville Maintenance) Enterprise Agreement 2011” which is proposed to cover employees that are engaged at the Somerville facility employed under the terms of the Manufacturing and Associated Industries and Occupation Award 2010.
What is an enterprise agreement?
An enterprise agreement is an agreement between an employer and its employees that will be covered by the agreement that sets the wages and conditions of those employees for a period of up to 4 years. To come into operation, the agreement must be supported by a majority of the employees who cast a vote to approve the agreement and it must be approved by an independent authority, Fair Work Australia.
If you are an employee who would be covered by the proposed agreement:
You have the right to appoint a bargaining representative to represent you in bargaining for the agreement or in a matter before Fair Work Australia about bargaining for the agreement.
You can do this by notifying the person in writing that you appoint that person as your bargaining representative. You can also appoint yourself as a bargaining representative. In either case you must give a copy of the appointment to your employer.
If you are a member of a union that is entitled to represent your industrial interests in relation to the work to be performed under the agreement, your union will be your bargaining representative for the agreement unless you appoint another person as your representative or you revoke the union’s status as your representative.
Questions?
If you have any questions about this notice or about enterprise bargaining, please speak to either your employer, bargaining representative, go to www.fwa.gov.au, or contact the Fair Work Australia Help Line on 1300 799 675.”
[43] The content of a notice of employee representational rights is set out in s.174 of the FW Act and item 2(3) of Schedule 13 of the TPCA Act and prescribed in regulation 2.05 of the Fair Work Regulations 2009 (the FW Regulations) and Schedule 2.1 to the FW Regulations.
[44] Item 2 of Schedule 13 of the TPCA Act provides as follows:
“2 Employee covered by individual agreement-based transitional instrument or individual Division 2B State employment agreement is taken not to be an employee who will be, or who is, covered by enterprise agreement in certain circumstances
(1) This item applies to an employee at a particular time if, at that time, an individual agreement-based transitional instrument or an individual Division 2B State employment agreement covers the employee.
(2) The employee is only taken, for the purposes of the FW Act, to be at that time an employee who is or will be covered by an enterprise agreement or a proposed enterprise agreement, if one of the following applies:
(a) the nominal expiry date of the individual agreement-based transitional instrument or the individual Division 2B State employment agreement has passed;
(b) a conditional termination of the individual agreement-based transitional instrument or the individual Division 2B State employment agreement has been made under subitem 18(2) of Schedule 3 or subitem 25(2) of Schedule 3A.
Note: The main effect of this subitem is that an employee who is covered by an individual agreement-based transitional instrument or an individual Division 2B State employment agreement will not be able to do any of the following until the nominal expiry date of the instrument passes or a conditional termination of the instrument is made under subitem 18(2) of Schedule 3 or subitem 25(2) of Schedule 3A:
(a) be represented in bargaining for an enterprise agreement;
(b) vote on the agreement;
(c) be in a group of employees covered by a protected action ballot order in relation to the agreement;
(d) have the agreement apply to the employee.
(3) Despite subitem (2), an employer must give a notice of employee representational rights to an employee under section 173 of the FW Act, if the employer would have been required to give such a notice but for subitem (2). However, the notice must explain that a person can only become the employee’s bargaining representative for the agreement when one of the following occurs:
(a) the nominal expiry date of the individual agreement-based transitional instrument or the individual Division 2B State employment agreement passes;
(b) a conditional termination of the individual agreement-based transitional instrument or the individual Division 2B State employment agreement is made under subitem 18(2) of Schedule 3 or subitem 25(2) of Schedule 3A.”
[45] Schedule 2.1 to the FW Regulations relevantly contains the following additional paragraph to those contained in the notice of employee representational rights of Inghams:
“[if the employee is covered by an individual agreement-based transitional instrument — include:]
If you are an employee covered by an individual agreement:
If you are currently covered by an Australian Workplace Agreement (AWA), individual transitional employment agreement (ITEA) or a preserved individual State agreement, you may appoint a bargaining representative for the enterprise agreement if:
● the nominal expiry date of your existing agreement has passed; or
● a conditional termination of your existing agreement has been made (this is an agreement made between you and your employer providing that if the enterprise agreement is approved, it will apply to you and your individual agreement will terminate).”
[46] The notice of employee representational rights that Inghams provided did not include the qualification set out in item 2(3) of Schedule 13 of the TPCA Act or the additional paragraph in Schedule 2.1 of the FW Regulations. The question arises as to whether that omission was sufficient to render the notice of employee representational rights invalid.
[47] In Tasker and others v Fullwood and others, 22 the New South Wales Court of appeal enunciated the following propositions in respect of determining whether an act done in breach of a statutory provision is invalid:
“(1) The problem is to be solved in the process of construing the relevant statute. Little, if any, assistance, will be derived from the terms of other statutes or any supposed judicial classification of them by reference to subject matter. (2) The task of construction is to determine whether the legislature intended that a failure to comply with the stipulated requirement would invalidate the act done, or whether the validity of the act would be preserved notwithstanding non-compliance: the Franklins Stores Pty. Ltd. case. (3) The only true guide to the statutory intention is to be found in the language of the relevant provision and the scope and object of the whole statute: Hatton v. Beaumont. (4) The intention being sought is the effect upon the validity of the act in question, having regard to the nature of the precondition, its place in the legislative scheme and the extent of the failure to observe its requirement: Victoria v. The Commonwealth. (5) It can mislead if one substitutes for the question thus posed an investigation as to whether the statute is mandatory or directory in its terms. It is an invitation to error, not only because the true inquiry will thereby be sidetracked, but also because these descriptions have been used with varying significations. (6) In particular, it is wrong to say that, if a statute is couched in directory terms, the act will be invalid, unless substantial performance is demonstrated: the Franklins Stores Pty. Ltd. case. A statute which, on its proper construction, does not nullify the act in question, even for total non-observance of the stipulation, is also described as directory in its terms: Victoria v The Commonwealth.” 23 (Footnotes omitted)
[48] Tasker’s case was cited with approval by the High Court in Project Blue Sky Inc and others v Australian Broadcasting Authority. 24 In the Project Blue Sky case, McHugh, Gummow, Kirby and Hayne JJ in a joint judgment said:
“In our opinion, the Court of Appeal of New South Wales was correct in Tasker v Fullwood in criticising the continued use of the ‘elusive distinction between directory and mandatory requirements’ and the division of directory acts into those which have substantially complied with a statutory command and those which have not. They are classifications that have outlived their usefulness because they deflect attention from the real issue which is whether an act done in breach of the legislative provision is invalid. The classification of a statutory provision as mandatory or directory records a result which has been reached on other grounds. The classification is the end of the inquiry, not the beginning. That being so, a court, determining the validity of an act done in breach of a statutory provision, may easily focus on the wrong factors if it asks itself whether compliance with the provision is mandatory or directory and, if directory, whether there has been substantial compliance with the provision. A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid. This has been the preferred approach of courts in this country in recent years, particularly in New South Wales. In determining the question of purpose, regard must be had to the ‘language of the relevant provision and the scope and object of the whole statute’.” (Footnotes omitted)
[49] An object of the FW Act emphasises “enterprise-level collective bargaining underpinned by simple good faith bargaining obligations” 25 and the objects of Part 2-4 of the FW Act concerning enterprise agreements include providing “a simple, flexible and fair framework that enables collective bargaining in good faith ... for enterprise agreements”26 and enabling “FWA to facilitate good faith bargaining and the making of enterprise agreements, including through ... ensuring that applications to FWA for approval of enterprise agreements are dealt with without delay.”27
[50] Provisions in Part 2-4 of the FW Act require that an employer that will be covered by a proposed enterprise agreement that is not a greenfields agreement must take all reasonable steps to give the notice of the right to be represented by a bargaining representative to each relevant employee 28 and the employer cannot request the relevant employees to approve the proposed enterprise agreement by voting for it until at least 21 days after the day on which the last notice is given.29 Further, in order to approve an enterprise agreement, FWA must be satisfied the enterprise agreement has been genuinely agreed to by the employees covered by it30 and FWA will be so satisfied if it is satisfied the employer, amongst other things, did not request that the relevant employees approve the enterprise agreement until 21 days after giving the last notice of employee representational rights.31
[51] A notice of employee representational rights consistent with Schedule 2.1 of the FW Regulations, except for an omission of the type made by Inghams, still notifies the employee in question that they have a right to appoint a bargaining representative. The failure to include the qualification to that right set out in item 2(3) of Schedule 13 of the TPCA Act and the additional paragraph in Schedule 2.1 of the FW Regulations merely means the employee is not notified through the notice that their right to appoint a bargaining representative or for a person to become their bargaining representative is qualified.
[52] The omission does not affect the legislative entitlement of an employee covered by an individual agreement-based transitional instrument to appoint a bargaining representative or for a person to become the bargaining representative of such an employee. That legislative entitlement is governed by item 2(2) of Schedule 13 of the TPCA Act.
[53] Against this background we have come to the view that the legislature did not intend a notice of employee representational rights to be rendered invalid because of an omission of the type made by Inghams. Given the limited effect of the omission and the centrality under the FW Act of a valid notice of employee representational rights to the making and approval of an enterprise agreement, such a conclusion is the most consistent with the attainment of the objects of the FW Act.
[54] Accordingly, we are not persuaded the omission of the qualification in item 2(3) of Schedule 13 of the TPCA Act or the additional paragraph concerning an employee covered by an individual agreement-based transitional instrument from the notice of employee representational rights given by Inghams affected the validity of the notice or was of any consequence for the making and approval of the Somerville Agreement. We dismiss the AMWU’s ground of appeal concerning the notice of employee representational rights.
Other appeal grounds
[55] The AMWU also submits the good faith bargaining requirements were not met in bargaining for the Somerville Agreement, the Somerville Agreement was not genuinely agreed to and the Somerville Agreement is not a genuine enterprise agreement. The AMWU’s contentions in this respect were based around their majority support determination and bargaining order applications and the grounds for and objectives of those applications which were associated with the termination of the engagement of certain workers and which we made in pursuit of their reinstatement.
[56] We consider the bases for these grounds of appeal are without foundation and we therefore dismiss them. We do so in light of our earlier failure to be satisfied the AMWU was or is a bargaining representative who could have made the majority support determination and bargaining order applications and our earlier finding to the effect that from at least 18 May 2010 the workers in questions were not persons “who will be covered by the agreement”.
Conclusion
[57] As foreshadowed, we will issue directions for relevant parties to file written submissions on the relevance to the determination of this appeal of the Somerville Agreement covering classifications in which Inghams did not have employees at the time the Somerville Agreement was made.
[58] This appeal will then be determined on the basis of this decision and the written submissions filed in accordance with the directions, as well as any material previously made available to FWA in respect of the Somerville Agreement.
SENIOR DEPUTY PRESIDENT
Appearances:
B. Terzic for the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU).
P. O’Grady of counsel for Inghams Enterprises Pty Limited.
Hearing details:
2011.
Melbourne:
July, 27.
Endnotes:
1 Re Somerville Maintenance Enterprise Agreement 2011, [2011] FWAA 2606.
2 Ibid.
4 Re Inghams Enterprises Pty Ltd, [2011] FWAFB 33 at paragraph 13.
5 Ibid at paragraph 14.
6 Ibid at paragraph 21.
7 “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Inghams Enterprises Pty Ltd, B2010/3486.
8 “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Inghams Enterprises Pty Ltd, B2010/3487.
9 “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Inghams Enterprises Pty Ltd, [2010] FWA 7925.
10 “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Inghams Enterprises Pty Ltd, PR502695.
11 Re Inghams Enterprises Pty Ltd, [2011] FWAFB 33 at paragraphs 6, 15, 27, 33-35.
12 Re Inghams Enterprises Pty Ltd, [2011] FWAFB 33.
13 Fair Work Act 2009 (Cth), s.176(1)(b).
16 Fair Work Act 2009 (Cth), s.3(f).
17 Fair Work Act 2009 (Cth), s.171(a).
18 See, for example, Hospitality Industry (General) Award 2010, cl. 7.8(a) and Fair Work Act 2009 (Cth), s.203(6)(a).
20 See, for example, Re Pacific Reofix Pty Ltd and the CFMEU Building and Construction Industry Enterprise Agreement 2011, [2011] FWAA 4575, PR511615 and Re Flynn Air Pty Ltd and ETU Enterprise Agreement 2010-2014, [2011] FWAA 4041, PR510891.
21 Inghams Enterprises (Somerville Maintenance) Enterprise Agreement 2011, AE885367 at cl 2.
22 [1978] NSWLR 20.
23 Ibid at pp. 23-24.
24 [1998] 194 CLR 355.
25 Fair Work Act 2009 (Cth), s.3(f).
26 Fair Work Act 2009 (Cth), s.171(a).
27 Fair Work Act 2009 (Cth), s.171(b).
28 Fair Work Act 2009, (Cth), s.173(1).
29 Fair Work Act 2009, (Cth), ss181(1) and (2).
30 Fair Work Act 2009, (Cth), ss.186(1) and (2)(a).
31 Fair Work Act 2009, (Cth), s.188(a)(ii).
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