FWAFB 7325
FAIR WORK AUSTRALIA
Fair Work Act 2009
s.604 - Appeal of decisions
SENIOR DEPUTY PRESIDENT HAMBERGER
SYDNEY, 15 DECEMBER 2011
Decision of Senior Deputy President Hamberger
 On 17 May 2010, Newland’s Coal Pty Ltd (Newlands) applied to FWA for the approval of the Newlands Coal Surface Operations Enterprise Agreement 2010 (the agreement). In a decision of 7 July 2010 Commissioner Roe refused to approve the agreement 1. He did so because Newlands failed to provide an undertaking that would satisfy his concerns concerning Clause 2 of the agreement.
 Clause 2 of the agreement provides as follows:
subject to 2.2 below, this Agreement covers:
2.2 Employees Not Covered
This Agreement does not cover:
2.3 Employee Decision whether to be Covered
All persons proposed to be employed by the Company in the classes of work included in Schedule A Production and Engineering Employees of the Black Coal Mining Industry Award 2010 will be covered by this agreement unless they elect in writing not to be covered by this Agreement.
All employees who are covered by an AWA or ITEA shall, following expiry of the nominal term of their AWA or ITEA, be covered by this agreement unless they elect in writing not to be covered by this Agreement.’
 Newlands subsequently appealed the decision to a Full Bench of FWA. By majority decision, the appeal was upheld, and the agreement was approved, after obtaining an undertaking 2.
 The Construction, Forestry, Mining and Energy Union (CFMEU) subsequently applied for writs to quash that decision on the basis that FWA had made a jurisdictional error in approving the agreement.
 On 24 June 2011, Katzmann J of the Federal Court of Australia issued writs quashing the decision of the Full Bench for jurisdictional error and remitting the matter to Fair Work Australia for determination according to law 3. The Court rejected the CFMEU’s principal argument that FWA had no power to approve the agreement because it was not an enterprise agreement within the meaning of the Fair Work Act 2009 (the Act). However it accepted the alternative position put by the CFMEU that the majority of the Full Bench in approving the agreement had erred in applying the “Better off Overall Test” (‘the BOOT’) and constructively failed to exercise their jurisdiction when deciding whether the group of employees covered by the agreement was fairly chosen, because they failed to have regard to a mandatory consideration.
 The issue of whether the agreement should be approved has been referred back to this Full Bench for consideration, in the light of the Federal Court’s decision.
 If an application for the approval of an enterprise agreement has been made under s.185 of the Act FWA must approve the agreement under s.186 if the requirements set out in that section and s.187 are met.
 First, s. 186(2) (a) requires that, as the agreement is not a greenfields agreement, it must have been genuinely agreed to by the employees covered by the agreement. Section 188 sets out when an enterprise agreement has been ‘genuinely agreed’ to by employees covered by the agreement. In particular, FWA must be satisfied that the employer covered by the agreement complied with subsections 180(2), (3) and (5), 181(2), and 182(1), and that subsection 188 (c) applies.
 I am satisfied that the requirements of s.180 (2) (a) have been met as the text of the agreement was supplied to all the employees who would be covered by it and a copy was made available on the intranet.
 I am satisfied that the requirements of s 180(3) were met as Newlands took all reasonable steps to notify the relevant employees of the time and place of the vote and the voting method to be used.
 I am satisfied that the requirements of s. 180(5) are met as Newlands took reasonable steps to explain the terms to the relevant employees and the explanation was appropriate given the particular circumstances of the employees.
 I am satisfied that the requirements of s. 181(2) are met as the employees were not asked to approve the agreement until at least 21 days after the day on which the last notice of employee representational rights had been given.
 I am satisfied that the requirements of s. 182(1) are met as a majority of the relevant employees who cast a valid vote approved the agreement and thereby made the agreement. Finally I am satisfied that there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.
 Next s.186 (2) (c) requires that FWA be satisfied that the terms of the agreement do not contravene s.55 which deals with the interaction between the National Employment Standards and enterprise agreements. I am satisfied that the agreement does not contravene s.55, as it does not exclude the National Employment Standards or any provision of the National Employment Standards.
 Subsection 186 (2) (d) requires that the agreement passes the BOOT. Section 193 explains what the requirements are to meet the BOOT.
 Katzmann J said:
‘...s.193 (1) requires that at the “test time” each award covered employee and each prospective award covered employee would be better off overall. The test time is when the application for approval is made to Fair Work Australia: s 193(6). It is not the time after the election not to be covered by the agreement is made. The purpose of the BOOT is to guarantee the benefit of its superior terms to employees who at the time are covered by the agreement and prospective employees who would be covered. A right to choose not to be covered is not a benefit or entitlement conferred by the agreement. It is a right to forfeit the benefits or entitlements which the agreement guarantees.’ 4
 Her Honour added at paragraph 96
‘...the BOOT is concerned with the terms and conditions that will apply to employees, not to the means by which they will acquire them. The exercise of the election means that the employee may be no better off than if the modern award applied.’
 The BOOT is applied in relation to the “test time” - the time when the application for approval of the agreement by FWA was made (s.193 (6)). In this case, this was 17 May 2010. The test is applied in relation to award covered employees (s.193 (4)) and prospective award covered employees (s.193 (5)). In effect, award covered employees are employees who are covered by the agreement, and at the test time are covered by a modern award. Prospective award covered employees are persons who if they had been employees at the test time, would have been covered by the agreement and a modern award. Of course any employee who has ‘opted out’ is not covered by the agreement. The BOOT would not apply to them. However, as already noted, the BOOT has to be applied at the test time. No employees had as a matter of fact ‘opted out’ at that time. Nevertheless, the opting out provision was part of the agreement at that time and must therefore be considered as part of the BOOT. My understanding of Katzmann J’s decision is that Her Honour found in effect that the existence of this capacity to opt out means that ‘the employee may be no better off than if the modern award applied.’ I observe that an employee voluntarily opting out from an agreement such as the one under consideration in order to receive conditions no better than those provided by the modern award is at best a theoretical possibility rather than something that would be at all likely in practice. Nevertheless FWA is bound to follow Katzmann J’s decision.
 It appears therefore that Katzmann J was concerned that employees covered by the agreement at the test time (or who would have been covered if they had been employed at that time) had a clause in their agreement that might lead them subsequently (after they had made the choice to opt out) to be no better off than the award. This would be inconsistent with what Her Honour describes as the ‘purpose of the BOOT’ which she said was ‘to guarantee the benefit of its superior terms to employees who at that time are covered by the agreement and prospective employees who would be covered.’ I note that it cannot be the intention of the Act that the BOOT ensure that employees covered by an enterprise agreement always remain better off than the modern award throughout the life of the agreement. It is clear from the Act that when agreements are submitted to FWA for approval they are to be assessed against the modern award as it applied at the time the application was made. An agreement can have a life of up to four years (and indeed continue on after that until terminated 5). It is highly likely that the modern award will be varied during that time. Clearly the BOOT cannot be expected to anticipate such movements. I take it therefore that the ‘guarantee’ referred to by Her Honour can only be in relation to the modern award as at the test time.
 Applying the decision of Katzmann J (as I am required to do) I am not satisfied that the agreement passes the BOOT. This is because the agreement does not guarantee to employees who are covered by the agreement at the test time, and prospective employees who would be covered, that they would be better off overall. Employees who choose to ‘opt out’ are only guaranteed the terms and conditions of the modern award. To pass the BOOT the agreement needs to ensure that such employees would be better off overall than if the modern award (as at the test time) applied. Before the agreement could be approved there would need to be an undertaking to that effect. Particular consideration to how such an undertaking would be enforceable might need to be given, as the employee(s) to whom it would relate would cease to be covered by the agreement once they had opted out.
 Subsection 186(3) requires that FWA must be satisfied that the group of employees covered by the agreement was fairly chosen. Subsection 186 (3) (a) states that 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.
 Clause 2.1 refers to an organisationally distinct group of employees - those employees of the Company engaged at the Newlands Surface Operations in the classes of work included in Schedule A of the Black Coal Mining Industry Award 2010. However, clause 2.2 permits any employee who might otherwise be covered by the agreement to ‘opt out’. The combined effect of clauses 2.1 and 2.2 is that the employees covered by the agreement may - once one or more employees have exercised the election to ‘opt out’ - not be geographically, operationally or organisationally distinct. The effect of the clause could be that there will be two groups of employees, with the group who are covered by the agreement not being geographically, operationally or organisationally distinct from the group of employees who are not covered by the agreement. Does that mean that the group of employees covered by the agreement was fairly chosen?
 Paragraph 776 of the Explanatory Memorandum states that:
‘The effect of paragraph 18693) 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.’
 The Act does not require that the group of employees covered by the agreement be geographically, operationally, or organisationally distinct, as long as the group covered is fairly chosen. The Explanatory Memorandum gives an ‘illustrative example’ of where a group of employees was not fairly chosen.
‘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 from another organisational unit that has a total of 30 employees.’
 In other words, the choice of who is covered in this example comes down at least partly to whether the employees are in a union or not. This is quite different from the agreement currently under consideration. The only distinction between those who would be covered and those who would not is that the latter have made an election not to be covered. I do not consider that there is anything unfair about such a process (or such an outcome). The membership of each group depends upon the choice of each employee to be covered, or not to be covered, by the agreement. Logically, given it us up to the employees themselves to decide whether to be covered or not, there can be no suggestion that membership of the group was chosen to disadvantage employees in the group, or unfairly to exclude employees from the group. Indeed the capacity to have a ‘voice’ in the decision whether or not to be covered can be seen as inherently consistent with the concept of ‘fairness’. I observe that the ‘organizational justice’ literature includes the capacity to exercise ‘voice’ as a key part of what makes a process fair. 6 While the effect of the ‘opt out’ clause might be to create two groups of employees who might be working in the same organisational area, with some covered by the agreement and some not, given that this would arise out of a fair process, I find that the requirements of s.186(3) are met.
 Subsection 186(4) requires that there be no unlawful terms in the agreement. I am satisfied that there are no such unlawful terms.
 Subsection 186 (4A) requires that the agreement does not include any designated outworker terms. I am satisfied that there are no such terms.
 Subsection 186 (5) requires that the agreement must specify a date as its nominal expiry date; and the date will not be more than 4 years after the day on which FWA approves the agreement. Clause 4 of the agreement specifies that the agreement shall commence 7 days after it has been approved by FWA and shall nominally expire 2 years from commencement. The CFMEU submitted that the agreement does not specify its nominal expiry date as required by s.186 (5).
 It is common for enterprise agreements to express their nominal expiry date by reference to the end of a period of time after the agreement’s commencement or approval. There is no ambiguity in such an approach and it allows the provisions of the Act relating to the nominal expiry of agreements to work effectively. I consider that clause 4 of the agreement meets the requirement contained in s.186 (5).
 Subsection 186(6) requires that the agreement must contain a dispute settlement procedure. I am satisfied that Clause 16 of the agreement meets this requirement.
 Section 187 of the Act contains additional requirements that must be met before FWA can approve an enterprise agreement. None of the circumstances referred to in subsections 187 (2), (3) or (5) are relevant to the application before us. Subsection 187 (4) requires that any of the provisions of sections 196 to 200 that are applicable are met. The only relevant section is s.196 (which relates to shiftworkers). I am satisfied that the requirements of this section are met by Clause 17 of the agreement.
 I am satisfied that the agreement includes the mandatory terms required by sections 202 and 205. I am also satisfied that the base rate of pay under the agreement is not less than the equivalent rate in the applicable modern award, as required by s.206.
 In summary, therefore, the only obstacle to approval of the agreement is that I am not satisfied that the agreement passes the BOOT. I invite the applicant to give FWA a written undertaking in accordance with s.190 to address these concerns with regard to the BOOT. The applicant has five working days from the date of this decision to give such an undertaking. The applicant should serve any such undertaking on the bargaining representatives. The bargaining representatives will then have five working days to forward their views on the undertaking.
SENIOR DEPUTY PRESIDENT
Decision of Deputy President McCarthy
 I have read and agree with the decision of Senior Deputy President Hamberger with respect to all matters other than the meeting of the requirements of s.182(d) of the Fair Work Act 2009 (the FW Act), mandating that Fair Work Australia (FWA) be satisfied that an enterprise agreement passes the Better Off Overall Test (the BOOT) for it to be able to be approved.
 It is unnecessary to further canvas the history and background of the application. In a Federal Court judgment7, Justice Katzmann dealt with and decided a number of matters arising from an earlier consideration by this Full Bench of the application. She found that the agreement sought to be approved had been made in accordance with the terms of s.180(2)(3) & (5) and s.182(1) of the FW Act.8 The effect of this finding is that Her Honour agreed with the majority of the Full Bench that the agreement was one properly made and capable of being approved by FWA. Her Honour also decided that the Full Bench had not discharged its obligation to properly deal with the requirements of s.186(3A).
 Her Honour also found that the Full Bench majority decision had not properly dealt with the BOOT. It is that issue that I deal with in this decision. Apart from the issue of whether the employees were fairly chosen and a new issue raised regarding the expiry date of the agreement, other matters that FWA needs to be satisfied about have previously been decided and not the subject of challenge and thus, not in contention. I adopt the previous reasons to be satisfied of the meeting of the requirements for approval of the agreement other than those issues that arise from Her Honour's judgment and another matters raised subsequent to that judgment. For the matter other than the BOOT, I agree with and adopt the reasoning and findings of Senior Deputy President Hamberger in his decision.
 With respect to the BOOT, Her Honour decided that:
‘But, as the majority recognised (and Newlands’ submissions overlook), s 193(1) requires that at the “test time” each award covered employee and each prospective award covered employee would be better off overall. The test time is when the application for approval is made to Fair Work Australia: s 193(6). It is not the time after the election not to be covered by the agreement is made. The purpose of the BOOT is to guarantee the benefit of its superior terms to employees who at that time are covered by the agreement and prospective employees who would be covered. A right to choose not to be covered is not a benefit or entitlement conferred by the agreement. It is a right to forfeit the benefits or entitlements which the agreement guarantees. What the majority described was no benefit at all. For these reasons I am satisfied that the majority fell into error.’9
 What the Majority in the Full Bench had found was that:
‘It is not in contention that, putting the “opt out” clauses to one side, the Agreement contains terms and conditions that are superior to those contained in the relevant modern award. Employees who exercise the option not to be covered by the Agreement would lose their statutory right to those terms and conditions. They would however be covered by the terms of the relevant modern award, and would be entitled - as a minimum - to the terms and conditions contained therein. Clearly, the Agreement cannot lead to an employee being disadvantaged in relation to the modern award - but are they “better off overall”? The effect of the “opt out” clause is that each employee has a choice - either receive the terms and conditions contained in the Agreement or opt out and be entitled - as a minimum - to receive the conditions of the modern award. Indeed one can consider it in reverse. Each employee can choose to be covered by the award or to receive the terms and conditions contained in the Agreement. Put that way it is clear that such an employee - as long as he or she has a genuine choice - is better off than someone who is simply covered by the modern award. We should add that the undertaking proffered by the employer that it would not be made a condition of employment that a prospective employee “opts out” would be necessary for us to be satisfied that each prospective employee will have this choice.’10
‘The Agreement does not allow for further agreements to be made that override the terms and conditions it contains. By contrast employees who elect to “opt out” cease to be covered by the Agreement at all, and are then covered by the relevant modern award.
We are satisfied that the agreement meets the BOOT.’11
 As stated above, I need not again deal with the matters that FWA must be satisfied about except for the BOOT.
 I also indicate that it was my preference that a hearing be conducted to deal with the issues in contention, however, a hearing was not conducted and as a consequence, I have dealt with the application on the papers and the content of previous proceedings.
 Consideration of the BOOT needs to be approached from the terms of the section(s) of the FW Act defining the test and the framework and objects of the FW Act as a whole,12 together with the context of the judgement of Justice Katzmann.
 The BOOT is provided for in Subdivision B of Division 4 of Part 2-4 of Chapter 2 of the FW Act. Chapter 2 deals with terms and conditions of employment. Part 2-4 of Chapter 2 deals with enterprise agreements. Division 4 of Part 2-4 deals with approval of enterprise agreements. Subdivision B of Division 4 of Part 2-4 deals with approval of enterprise agreements by FWA.
 The core provisions of Chapter 2 provide that National Employment Standards apply to all national system employees at all times but only one instrument, being an award, enterprise agreement or workplace determination, can apply at a particular time.13 A modern award or an enterprise agreement applies if it is in operation, covers the employer and employee and nothing in the FW Act provides or has the effect that it does not apply.14
 The BOOT is provided for in s.193(1). What it requires is that FWA be satisfied that at the test time, each award covered employee or each prospective award covered employee is better off when compared to the award if the agreement applied. It is a test involving an assumption that the circumstances for the agreement to apply exist in order for the comparison to be made. It is not a test that involves dealing or considering any other circumstances.
 The test time is the time the application was made.15 Here then the test time would be 17 May 2010.
 Each award covered employee is an employee who is covered by the agreement who:
‘ (a) is covered by the agreement; and
(b) at the test time, is covered by a modern award (the relevant modern award) that:
(i) is in operation; and
(ii) covers the employee in relation to the work that he or she is to perform under the agreement; and
(iii) covers his or her employer.’16
 A prospective award covered employee is a person who if he or she was an employee and the conditions of the above paragraph is met.17
 An enterprise agreement covers an employee or employer if the agreement is expressed to cover (however described) the employee or the employer18 and only one enterprise agreement can apply to an employee at any particular time.19 A modern award does not apply at a time when an enterprise agreement applies.20
 It can be readily seen that there are three main tiers to terms and conditions of employment. National Employment Standards apply at all times to all national system employers and national system employees, regardless of whether any other instruments cover the employer or employee.
 A modern award may cover an employee and an enterprise agreement may also cover an employee at the same time. Indeed a number of agreements may cover an employee at the same time as well as a modern award covering that employee. A modern award cannot apply to an employee at the same time as an enterprise agreement applies to an employee and only one enterprise agreement can apply to an employee at the one time.
 There is no direction in the FW Act as to what instrument is to take priority in applying where there is multiple coverage (apart from an enterprise agreement applying to the same circumstances where an earlier enterprise agreement is still within term) it being left to the instruments themselves to identify in what circumstances and at what times they will apply.
 There is also no direction in the FW Act that once an enterprise agreement covers an employee the terms of that agreement must always apply. The FW Act provides that that agreement must be in operation and it must cover the employee and the employer for it to apply.21 Whether the agreement is in operation and whether it covers the work being performed, the employer for whom work is being performed and the employee performing that work depends entirely on what the agreement itself says.
 What the legislation allows is flexibility by providing for employers and employees to have multiple instruments covering different, or even the same, operations with the terms and conditions applying to particular work for employees covered by the agreement, dependent on the scope and operation of the relevant instruments. There may be multiple enterprise agreements covering the one employee and that the terms of the enterprise agreement will determine when the agreement applies to that employee.
 Thus, when the BOOT is applied it must be considered in the context of what the FW Act allows and provides for, with respect to different instruments that may cover an employee and when a particular instrument may apply.
 The satisfying of the BOOT is a condition precedent to the agreement being approved but only on the basis of if the agreement is applied. At the test time an agreement can cover or not cover an employee. The condition precedent for the test is that the agreement covers the employee and meets the BOOT when it is applied.
 Once approved, an agreement covers employees that it is stated to cover and the circumstances required to exist for it to apply to those employees.
 The terms of the agreement provide what the conditions are for the agreement to cover employees and when it is to apply to employees. There is nothing in the FW Act explicitly, or by reliance on the objects and purpose of the FW Act, that requires conditions subsequent to approval regarding either the coverage of the agreement or the application of the agreement other than the terms of the agreement itself.
 It seems to me that the context of the BOOT that FWA must apply in considering who the agreement will cover is similar to that in considering whether a Majority Support Determination22 should be made. In considering that issue, the Full Bench in CBI Constructors Pty Ltd v Construction, Forestry, Mining and Energy Union23 observed:
‘When consideration is given to the many contexts in which the expression “employees who will be covered by [an] agreement” is used, we are compelled to the conclusion that the legislature used that expression merely as a way of conveniently referring to the group or groups of employees who are proposed to be covered by an agreement (and who, therefore, will be covered when the agreement is made) rather than as a requirement that calls for a prediction as to which particular employees in the group will, when the agreement is made, be covered by the agreement.’24
 If an agreement covers an employee but does not apply to an employee, then the test is one of assuming that if the agreement applies and that the employee is better off overall when compared to the Award.
 If the agreement does not provide within its operation and scope for it to cover a person, a class of persons, a class of work, a place of work or any other circumstance that must exist for it to cover the employee, then the test is not relevant for that person.
 If the agreement covers a person, a class of persons, a class of work, a place of work or any other circumstance that must exist for it to cover an employee but it does not apply to that person unless other specific circumstances exist, then the test is one of assuming those specific circumstances exist for when it is to apply to those persons that it covers. It is common for an agreement to provide circumstances when the agreement will apply and circumstances when it won’t.
 What the BOOT requires is a comparison of the terms of the agreement compared to the award for employees that the agreement covers if the agreement is applied. The agreement can only be applied to the employees it covers and prospective employees who would be covered by the agreement. It requires is an assumption that it applies to those that it covers. It requires that assumption as the FW Act provides for multiple agreements to cover an employee at the one time, but allowing only one agreement to apply at the one time.
 There is no presumption that the agreement will always apply to a person covered by it. What the FW Act requires is that at the test time those that are covered, and if the agreement is applied, are better off overall. It is implicit that those that remain covered and who meet the conditions for the agreement to apply to them, that they remain better off overall but it does not require that they remain better off even though they may not be covered or if the agreement does not apply.
 What FWA is then required to do is to consider the coverage at the test time and to apply the terms of the agreement to the employees it covers at that time. There is nothing that the FW Act provides that requires the test to be applied to those persons it covers on any presumption that it will always cover them. There is nothing in the FW Act, nor can I see how it can be read through consideration of the Objects of the FW Act and the context of the provisions in it, that the BOOT also requires an assumption that it always covers the employees after the test time.
 The test is no more than to determine whether or not the agreement at the test time is more favourable than the modern award. Any speculation about what may happen after the agreement is approved in respect of its coverage or its application is not necessary. Speculation is also not warranted to determine whether or not prospective award covered employees are better off overall at the test time.
 Here, the award that is in operation is the Black Coal Mining Industry Award 2010. It covers the employees in relation to the work to be performed under the agreement and it covers Newlands.
 The terms of the enterprise agreement here involve an agreement made with employees that it covers and circumstances that must exist for it to continue to cover those employees. Apart from the opt-out of coverage clause, it is not contested that when the agreement is applied to those employees that it covers at the test time, the agreement passes the BOOT. It can be presumed then that if the agreement is approved, that it will continue to satisfy the BOOT for those that it covers and applies to.
 In any event, for this agreement, given its favourable terms, employees would be better off if they were covered by it because the election not to be covered is a matter of future consideration of each employee. Thus, at the test time those employees who are covered by a modern award and those who are prospectively covered by the agreement will always be better off at the test time when compared to that award. There must be a net benefit as the terms and conditions of the agreement far outweigh any net detrimental conditions, let alone any neutral conditions.
 What the CFMEU is actually contesting is its disagreement with the terms of a clause of the agreement in a similar way that it might disagree with other terms employees may have agreed upon. It may be a clause that deals with coverage of the agreement and to conditions consequent to approval but it is nevertheless a clause in an agreement that has been made between an employer and the employees that it covers at the test time. If consequent to approval the agreement does not cover employees upon certain conditions being met, then that is a condition that the employees have agreed upon and should be treated the same as any other provision in the agreement. There is no prohibition or limitation on employees agreeing to operational and scope terms within their capacity to agree. Indeed it seems to me that the FW Act envisages flexibility for agreements with those matters.
 The test does not involve assessing whether an employee covered by it, and when it is applied, will be better off for the duration of the term of the agreement. It would be impossible for a test to be undertaken for a test of that nature to be properly undertaken as it is not known what variations to the wages and conditions in the award will be. The test is thus quite logically one at a specific time and not for a period of time. The BOOT is a test involving conditions precedent, not one involving a test regarding circumstances or events subsequent.
 I do not consider the judgment of Justice Katzmann is at odds with my analysis and conclusions. What Her Honour examined was the test time in the context of s.193(6) and its purpose. Her Honour’s reference to a guarantee seems to me to be a reference to a guarantee if the agreement applied. If the agreement did not apply there can be no guarantee. If the agreement does not cover an employee then it cannot be applied as if it does.
 At the test time the agreement covers the employees it is stated to cover. If the agreement subsequently does not cover an employee it did cover at the test time then that is not a matter for the test as it does not relate to the test time. The reason the agreement may subsequently not cover an employee that it did previously cover could be by the invoking of a term similar to the coverage provisions in this agreement or it could be for any number or variety of provisions in the coverage terms of the agreement.
 I am satisfied that the agreement here passes the BOOT.
 Thus, I would not require any undertaking in order for me to be satisfied that the agreement passes the BOOT.
 As stated above, I also agree with the decision of Senior Deputy President Hamberger in all other respects. I would therefore approve the agreement.
Decision of Commissioner Blair
 I have had the opportunity to read the judgments of SDP Hamberger and DP McCarthy and, with respect, I disagree with their findings in regards to the BOOT.
 The Tribunal does so on the basis that the opt-out provision must be considered in the context of the BOOT at the test time, being 17 May 2010.
 The Tribunal concurs with the view of the Construction, Forestry, Mining and Energy Union (CFMEU) which states:
‘In considering the BOOT, FWA must consider all of the terms of the Agreement including the opt out provision. The effect of the opt out provision is that contrary to the purpose of the BOOT, the benefit of the superior terms of the Agreement are not guaranteed.’
 The CFMEU further states:
‘The inclusion of the opt-out provision creates uncertainty as to whether the employees will be better off overall and FWA cannot be satisfied that the employees who will be covered by the Agreement will enjoy the superior terms it offers. Consequently FWA cannot be satisfied that the Agreement passes the BOOT.
If an employee opts out then their employment will be regulated by the Award and the NES. Those conditions do not meet the BOOT. FWA should be concerned that it cannot be satisfied that such an employee would be better off overall if the Agreement applied to the employee than if the relevant modern award applied.
Furthermore, no undertaking is offered by the Applicant as to what conditions will apply to employees who opt out. Consequently, FWA should not approve the Agreement. The Appellant’s refusal to provide an undertaking to address concerns about the opt out provision was the reason Commissioner Roe decline to approve the Agreement (Re Newlands Coal Pty Ltd  FWA 4811 at  and  FWA 4986).’
 The Tribunal concurs with those views. The Tribunal also concurs with the initial reasoning of Commissioner Roe in the first instance in refusing to approve the Agreement with the opt out provision in it and the employer failing to provide undertakings that would address the concerns of the Commissioner in the first instance.
 There is no issue that the proposed Agreement provides substantial benefits as compared to the reference award. Those benefits go to performance rewards, salary sacrificing, accommodation arrangements and work clothing benefits as well as far more beneficial remuneration (to the extent of some $30-40,000 per annum) than the reference award.
 At the test time, with the opt out provisions in the Agreement, it would mean that if that provision were activated the employee who chose to activate that provision would be some $30-40,000 less in remuneration than they would get under the benefits of the Agreement. $30-40,000 is not an insignificant amount. It equates to some employees’ annual income in other industries. The reduction of income of such an amount would not, in the Tribunal’s view, taking into account the other benefits of the Agreement, mean that the employee would be better off when compared to the modern award.
 In determining the BOOT the overall Agreement must be looked at in its proper context and certain parts of it cannot be isolated out for the purposes of the BOOT.
 Judge Samuel B Kent, a United States District Court Judge for the Southern District of Texas, Galvaston Division, once said:
‘But at the end of the day, even if you put a calico dress on it and call it Florence, a pig is still a pig.’
 In other words, it doesn’t matter how you address the argument from the point of trying to convince the Tribunal that the BOOT has been met and how you may want to exclude or include matters in determining the BOOT, the mere fact that the opt out provision is an integral part of the Agreement means that it did not and could not meet the BOOT at the test time. The Tribunal is of the view that any undertaking in whatever form would not be effective.
 In regards to the Tribunal’s initial decision, referred to at point 21 of her Honour’s decision, she states:
 “The dissenting member, Commissioner Blair, accepted the arguments of the CFMEU and the ACTU and held that on a proper construction of ss181(1) and 182(1) of the Act, an opt out clause was impermissible. He took the view that the use of the word “will” denoted a requirement and did not include an option, contrasting it with “may”. He adopted the submission of the ACTU that the Act does not contemplate agreements that might cover employees, only those that will do so.”
 Her Honour then went on to find at point 86 of her decision:
‘I agree that Fair Work Australia is not empowered to approve an agreement unless it is made in accordance with the terms of ss180(2), (3) and (5) and s182(1) of the Act but I am not persuaded that this is an agreement that was not made in accordance with those terms.’
 With respect, that decision must be seen in the context of reference at point 31 of Her Honour’s decision where she deals with Part 2-4 of the Act, Division 1, where the objects of that part are specified in s171 of the Act, which she then makes reference to:
‘(a) 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; and
(b) to enable FWA to facilitate good faith bargaining and the making of enterprise agreements, including through:
(i) making bargaining orders; and
(ii) dealing with disputes where the bargaining representatives request assistance; and
(iii) ensuring that applications to FWA for approval of enterprise agreements are dealt with without delay.’
 It is the Tribunal’s view that the opt out provision undermines the very principles identified in s171(a) of the Act that provides for collective bargaining in good faith, particularly at enterprise level, for enterprise agreements that deliver productivity benefits.
 The importance of the principles of collective bargaining are further endorsed by paragraph 38 of a recent full bench decision of the Federal Court, of which her Honour was a member,  FCAFC 91 Construction, Forestry, Mining and Energy Union v Pilbara Iron Company (Services) Pty Ltd, which states:
‘It is possible to discern in Div 2 of Pt 8 of the Workplace Relations Act something of an underlying purpose, when the legislative history is taken into account. AWAs were replaced by ITEAs, which could have only a limited life. As a primary judge said at  of his reasons for judgment, “An emphasis on collective negotiation of terms and conditions of employment was re-introduced into the WR Act”. If the underlying purpose of the legislative scheme that included s.327 of the Workplace Relations Act is to reduce the emphasis on individual negotiation, and to increase the emphasis on collective negotiation, this might assist in the interpretation of s.327. If it were possible for an employer to choose any employees it wishes, and to designate them as the employees in part of its single business with whom it wishes to make a collective agreement, the underlying purpose of promoting collective negotiation might be subverted. The proposition can be tested this way. Instead of entering into an agreement with a group of employees chosen by reference to their date of commencement of work, an employer could use other criteria. Thus an employer wishing to negotiate for terms and conditions of employment more favourable to it, and less favourable to employees, could choose to enter into an agreement only with those employees who were prepared to accept the employer’s proposal. If the resulting agreement bound employees who came to work for the employer at a later date (as the PIEA is intended to do), over time an employer could downgrade terms and conditions of employment without any real opportunity for its relevant workforce at the time of entry into the agreement to raise objection to this. An employer whose proposed agreement is rejected by a majority of a group of employees could simply select as a new group the minority who would have approved the agreement and impose the employer’s choice of terms and conditions on subsequent employees. The group selected could be as small as two employees. Indeed, if the principle found in s.23(b) of the Acts Interpretation Act that, in the absence of contrary intention, the plural indicates the singular, were to be regarded as applicable, the employer could select a group consisting of one employee. In any of these ways, a construction of s.327 of the Workplace Relations Act that permitted arbitrary selection of the group of employees with whom an agreement was to be made would be contrary to the underlying purpose of the legislation that brought the Workplace Relations Act in to the form it was at the time of the events the subject of this case.’
 The Tribunal must question what good faith bargaining there is if a particular party insists that there be an opt out provision in an agreement that provides, at some point in the future when circumstances permit, for them to opt out of an agreement to either achieve a different outcome higher than what the original agreement intended or, alternatively, alter the terms and conditions of that agreement to a lesser outcome because the particular industrial environment at the time allows them to do so. Such a provision undermines the very intent and principles of parties entering into good faith bargaining for the purposes of achieving an agreement that provides for wage outcomes, a period of no extra claims and no industrial disputation (as any disputation under the life of the agreement is unprotected as per s.417 of the Act) and the ability to make long term decisions based on planned and agreed outcomes of the agreement that would benefit the employer and the employee.
 However, as an example, if an employee or employees decided to opt out of an agreement, then s.417 would have no affect for they would be agreement-free, and therefore entitled to take protected industrial action in accordance with the Act if they wished to pursue a new agreement.
 Given what the Tribunal has stated above and in its previous decision, it cannot be said that the opt out provision is a permissible provision under the Act and it cannot be incorporated into any agreement. To do so makes the Agreement invalid and, therefore, cannot be approved.
1 Newlands Coal Pty Ltd  FWA 4986
2 Newlands Coal v CFMEU [2010} FWAFB 7401
3 CFMEU v FWA  FCA 719
4 Ibid para 91
5 See s.54(2)
6 See, for example, Greenberg, J, & Folger, R. (1983) ‘ Procedural justice, participation, and the fair process effect in groups and organizations. In P.B. Paulus (Ed.), Basic group processes (pp. 235-256). New York: Springer-Verlag
7  FCA 719
8 See para 86
9 Ibid para 91
10 Ref para 72
11 Paras 74 and 75
12 Construction, Forestry, Mining and Energy Union v Woodside Burrup Pty Ltd (First respondent) And Kentz E & C Pty Ltd (Second respondent) (C2010/4352), para 21
13 See s.41
14 See ss.47, 52
18 See s.53
19 See s.58
20 See s.57
21 See s.52
22 See s.237(2)
23  FWAFB 7642
24 Ibid para 19
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