FWAFB 8461
FAIR WORK AUSTRALIA
Fair Work Act 2009
s.604 —Appeal of decisions
VICE PRESIDENT WATSON
SYDNEY, 17 OCTOBER 2012
Appeal against decision  FWAA 2717 of Commissioner Roberts at Sydney on 30 March 2012 in matter number AG2012/890 - appeal against decision to approve enterprise agreement - agreement approval process and procedural fairness - natural justice - permission to appeal - public interest - requirements for approval of enterprise agreements - whether agreement excludes National Employment Standards - whether employees covered by the agreement fairly chosen - scope of the agreement - whether agreement contains unlawful terms - Fair Work Act 2009, s 55,183, 185, 186.
 This decision concerns an application for permission to appeal by the Construction, Forestry, Mining and Energy Union (CFMEU) against the decision of Commissioner Roberts 1 at Sydney on 30 March 2012 approving a single-enterprise agreement known as the ResCo Labour and Training Pty Ltd New South Wales Trainee Enterprise Agreement (the Agreement) under s.185 of the Fair Work Act 2009 (the Act).
 The appeal relates to procedural fairness in the hearing of the matter and the requirements for approval of agreements. The first issue is an apparent administrative oversight which led to the CFMEU being denied the opportunity to be heard by the Tribunal as to whether the Agreement should be approved and an erroneous statement that the CFMEU had given notice that it wished to be covered by the Agreement. The disposition of the appeal relates to the arguments raised by the CFMEU in opposition to the approval of the Agreement and requires a consideration of whether certain terms in the Agreement contravene s.186 and other provisions of the Act.
 The appeal was conducted by way of an initial hearing, subsequent evidence before the presiding member and full written submissions. Mr A Slevin of counsel, instructed by Mr K Endacott appeared on behalf of the CFMEU and Mr A Moses with Mr S Meehan, both of counsel, appeared on behalf of the company, ResCo Labour and Training Pty Ltd (ResCo).
Background and decision under appeal
 ResCo provides a range of supplementary labour services to the coal mining industry. A part of its commercial offering to its clients is a traineeship program, conducted in association with the Vocational Institute of Australia, which is designed to respond to skills shortages in the coal mining industry by providing training opportunities to employees and trainee labour to its clients. Upon completion of the traineeship, ResCo trainees are qualified to accept skilled roles in the coal mining industry either in other parts of ResCo’s business or with other operators. Its trainee workforce is approximately 136 employees. ResCo provides supplementary labour to a number of clients across the Hunter Valley.
 On 9 March 2012 ResCo made an agreement with its trainees which is the subject of these proceedings. The agreement applies to trainees employed in the coal mining industry in New South Wales at a company or a customer site. On 22 March 2012, ResCo made an application to Fair Work Australia under s.185 of the Act for approval of the Agreement.
 Accompanying the application was an Employer Declaration in Support of the Application for Approval of Enterprise Agreement (Employer Declaration) as well as a copy of the Agreement signed by Ms Antoinette Archer, in the capacity of trainee representative on behalf of the trainees, and Mr Craig Ransley, Chairman of ResCo Group for ResCo.
 A notice of listing regarding approval of the Agreement was issued for 3.30pm on 30 March 2012 by Commissioner Roberts. On 29 March 2012, the notice of listing was sent by facsimile to Mr Peter Murray at ResCo and Mr Greg Sharp at the CFMEU. The listing contained a note that the parties were not required to attend the Tribunal on the 30 March 2012 and that anyone wishing to be heard in relation to the matter should contact the chambers of Commissioner Roberts by no later than 9.00am on 30 March 2012.
 The Agreement was subsequently approved on 30 March 2012 and a decision was issued. Relevant to the appeal, are the following paragraphs of the decision:
“ I am satisfied that each of the requirements of ss.186, 187 and 188 of the Act as are relevant to this application for approval have been met.
 The Construction, Forestry, Mining and Energy Union, Mining and Energy Division, being a bargaining representative for the Agreement, has given notice under s.183 of the Act that it wishes to be covered by the Agreement. In accordance with s.201(2) of the Act, I note that the Agreement covers that organisation.”
 On 3 April 2012, Mr Sharp wrote to the Commissioner informing him that he had not provided Fair Work Australia with a notice under s.183 and that the CFMEU did not agree with the matters contained in the Employer Declaration and therefore did not wish to be covered by the Agreement. He also advised that the CFMEU had not received the notice of listing scheduled to approve the Agreement. He advised that if the CFMEU had received the notice, he would have sought to make submissions to Fair Work Australia that the Agreement should not be approved.
The Substantive Matters in the Appeal
 It is common ground that the CFMEU was not given an opportunity to make submissions in relation to the approval of the Agreement, that permission to appeal is warranted, and that the appeal bench should consider the reasons advanced by the CFMEU as to why the Agreement should not be approved to determine whether providing an opportunity to the CFMEU would have made a difference to the outcome. The CFMEU contends that the Commissioner’s conclusions were in error for the following reasons:
● The requirements in s.186(2)(c) of the Act had not been met because the Agreement contains terms that exclude the provisions of the National Employment Standards and are therefore contrary to s.55 of the Act. 2
● The requirements in s.186(3) of the Act had not been met as the group of employees to be covered by the Agreement was not fairly chosen. 3
● The requirement in s.186(4) of the Act had not been met as the Agreement contained unlawful terms. 4
 These matters are the substantive matters in the appeal. We now turn to consider them.
Relevant Legislative Provisions
 Section 186 of the Act relevantly provides:
“186 When FWA must approve an enterprise agreement—general requirements
(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).
Requirements relating to the safety net etc.
(2) FWA must be satisfied that:
(a) if the agreement is not a greenfields agreement—the agreement has been genuinely agreed to by the employees covered by the agreement; and
(b) if the agreement is a multi-enterprise agreement:
(i) the agreement has been genuinely agreed to by each employer covered by the agreement; and
(ii) no person coerced, or threatened to coerce, any of the employers to make the agreement; and
(c) the terms of the agreement do not contravene section 55 (which deals with the interaction between the National Employment Standards and enterprise agreements etc.); and
(d) the agreement passes the better off overall test.
Note 1: For when an enterprise agreement has been genuinely agreed to by employees, see section 188.
Note 2: FWA may approve an enterprise agreement that does not pass the better off overall test if approval would not be contrary to the public interest (see section 189).
Note 3: The terms of an enterprise agreement may supplement the National Employment Standards (see paragraph 55(4)(b)).
Requirement that the group of employees covered by the agreement is fairly chosen
(3) FWA must be satisfied that the group of employees covered by the agreement was fairly chosen.
(3A) If the agreement does not cover all of the employees of the employer or employers covered by the agreement, FWA must, in deciding whether the group of employees covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.
Requirement that there be no unlawful terms
(4) FWA must be satisfied that the agreement does not include any unlawful terms (see Subdivision D of this Division).
 Sections 55 and 56 of the Act state:
“55 Interaction between the National Employment Standards and a modern award or enterprise agreement
National Employment Standards must not be excluded
(1) A modern award or enterprise agreement must not exclude the National Employment Standards or any provision of the National Employment Standards.
Terms expressly permitted by Part 2-2 or regulations may be included
(2) A modern award or enterprise agreement may include any terms that the award or agreement is expressly permitted to include:
(a) by a provision of Part 2-2 (which deals with the National Employment Standards);
(b) by regulations made for the purposes of section 127.
Note: In determining what is permitted to be included in a modern award or enterprise agreement by a provision referred to in paragraph (a), any regulations made for the purpose of section 127 that expressly prohibit certain terms must be taken into account.
(3) The National Employment Standards have effect subject to terms included in a modern award or enterprise agreement as referred to in subsection (2).
Note: See also the note to section 63 (which deals with the effect of averaging arrangements).
Ancillary and supplementary terms may be included
(4) A modern award or enterprise agreement may also include the following kinds of terms:
(a) terms that are ancillary or incidental to the operation of an entitlement of an employee under the National Employment Standards;
(b) terms that supplement the National Employment Standards;
but only to the extent that the effect of those terms is not detrimental to an employee in any respect, when compared to the National Employment Standards.
Note 1: Ancillary or incidental terms permitted by paragraph (a) include (for example) terms:
(a) under which, instead of taking paid annual leave at the rate of pay required by section 90, an employee may take twice as much leave at half that rate of pay; or
(b) that specify when payment under section 90 for paid annual leave must be made.
Note 2: Supplementary terms permitted by paragraph (b) include (for example) terms:
(a) that increase the amount of paid annual leave to which an employee is entitled beyond the number of weeks that applies under section 87; or
(b) that provide for an employee to be paid for taking a period of paid annual leave or paid/personal carer’s leave at a rate of pay that is higher than the employee’s base rate of pay (which is the rate required by sections 90 and 99).
Note 3: Terms that would not be permitted by paragraph (a) or (b) include (for example) terms requiring an employee to give more notice of the taking of unpaid parental leave than is required by section 74.
Enterprise agreements may include terms that have the same effect as provisions of the National Employment Standards
(5) An enterprise agreement may include terms that have the same (or substantially the same) effect as provisions of the National Employment Standards, whether or not ancillary or supplementary terms are included as referred to in subsection (4).
Effect of terms that give an employee the same entitlement as under the National Employment Standards
(6) To avoid doubt, if a modern award includes terms permitted by subsection (4), or an enterprise agreement includes terms permitted by subsection (4) or (5), then, to the extent that the terms give an employee an entitlement (the award or agreement entitlement) that is the same as an entitlement (the NES entitlement) of the employee under the National Employment Standards:
(a) those terms operate in parallel with the employee’s NES entitlement, but not so as to give the employee a double benefit; and
(b) the provisions of the National Employment Standards relating to the NES entitlement apply, as a minimum standard, to the award or agreement entitlement.
Note: For example, if the award or agreement entitlement is to 6 weeks of paid annual leave per year, the provisions of the National Employment Standards relating to the accrual and taking of paid annual leave will apply, as a minimum standard, to 4 weeks of that leave.
Terms permitted by subsection (4) or (5) do not contravene subsection (1)
(7) To the extent that a term of a modern award or enterprise agreement is permitted by subsection (4) or (5), the term does not contravene subsection (1).
Note: A term of a modern award has no effect to the extent that it contravenes this section (see section 56). An enterprise agreement that includes a term that contravenes this section must not be approved (see section 186) and a term of an enterprise agreement has no effect to the extent that it contravenes this section (see section 56).
56 Terms of a modern award or enterprise agreement contravening section 55 have no effect
A term of a modern award or enterprise agreement has no effect to the extent that it contravenes section 55.”
Interaction with the National Employment Standards
 Appeal grounds 2.3(a) to (e) contend that the Agreement should not be approved because it contains terms that exclude the National Employment Standards (NES). Submissions are only advanced in relation to appeal grounds 2.3(a) (Annual Leave), 2.3((c) (Carer’s Leave) and 2.3(d) (Compassionate Leave - Notification of inability to commence work).
 Clause 11.2 of the agreement provides:
“When Annual Leave Can be Taken
Trainees acknowledge and accept that regular attendance is an essential part of completing the competencies required in the specified time allotted in their respective training contracts and in doing so acknowledge and accept that annual leave must be applied for by giving 28 days’ notice in writing. The employer will grant that leave unless, in the employer’s opinion, the granting of such leave will have a negative impact on the operations and or training commitments of the employer/trainee.”
 The CFMEU contends that the requirement in the Agreement that employees apply for annual leave by giving 28 days notice in writing excludes a benefit of the NES in s.88 that leave may be taken for a period agreed between the employer and the employee. The CFMEU contends that the agreement precludes an employee from seeking leave on short notice and precludes an employer from granting leave sought in such circumstances.
 ResCo submits that clause 11.2 identifies the circumstances in which an application for leave will be granted and does not constrain an employer agreeing with an employee to take leave on short notice.
 We do not believe that the clause excludes the operation of the NES. Rather the clause can clearly operate in harmony with s.88 and we note ResCo’s acknowledgement of this. The clause alerts employees to the operational restraints that may impact on leave being granted at a particular time but does not require an employer to refuse an application for leave where such a refusal would be unreasonable.
 Clause 13.6 of the Agreement provides:
“Unpaid Carer’s Leave
If authorised by the Company, unpaid carer’s leave can be used when the Trainee has used up their paid personal leave.
All Trainees are entitled to two (2) days unpaid carers’ leave each time a member of their immediate family or household required care and support due to illness, injury or an unexpected emergency.
Trainees are only eligible for unpaid carer’s leave if they do not have any personal leave left.
Unpaid carer’s leave can be taken in 1 continuous period (eg. 2 consecutive working days).
As with paid carer’s leave, the Company requires a medical certificate or a statutory declaration when a Trainee is taking, or has taken unpaid carer’s leave.”
 The CFMEU submits that this clause excludes the unfettered right of an employee to take unpaid carer’s leave on each occasion described in s.102 of the Act.
 ResCo submits that the CFMEU submissions ignore the introductory words of clause 13 which provide:
“All trainees are entitled to 2 days unpaid carer’s leave for each occasion they need it.”
 ResCo also submits that the Act specifies notice and evidentiary requirements for unpaid carer’s leave and the agreement reflects the operation of such provisions.
 We agree with the submissions of ResCo. The provisions of the Agreement are consistent with the provisions of the Act in relation to unpaid carer’s leave.
 Clause 14.2 of the Agreement provides:
“Each Trainee is required to notify their supervisor before the designated start time of their shift of their inability to commence work and are required to notify the company of the nature of their illness or injury and an estimated duration of the absence.”
 The CFMEU submits that the requirement in clause 14.2 to notify the employer before the designated start time of a shift excludes the provision in s.107 that notice for taking leave must be given as soon as practicable and may be given after the leave has started.
 ResCo submits that clause 14.2 does not disentitle an employee to leave where notice has not been given in advance when it is not practicable to do so.
 We agree that the clause does not have the effect contended for by the CFMEU. Nevertheless we believe that it is preferable that the employer’s preparedness to apply the NES in conjunction with the Agreement be recorded by virtue of this decision so that there is no doubt about this.
Scope of the Agreement
 The Agreement covers employees engaged as trainees to perform work in the coal mining industry in New South Wales (NSW). The trainees are covered by a training contract governed by NSW legislation. ResCo otherwise engages employees who have completed traineeships to perform mine work functions similar to those being undertaken by trainees under their training contracts.
 The CFMEU submits that the trainees covered by the Agreement are not geographically, operationally or organisationally distinct and this tells against a finding that the group of employees covered by the agreement were fairly chosen. The CFMEU submits that several other features also tell against a finding that the group was fairly chosen. The other factors include the wider scope of the previous Agreement, the broader application of the award, the commonality of work, the 12 month length of traineeships and the four year duration of the Agreement, the trainees being a majority of the employees, and aspects of the content of the Agreement.
 ResCo led evidence in support of its contention that the trainees are operationally and organisationally distinct and the group of employees is fairly chosen. That evidence establishes the nature of classroom and work-based training, the usual fixed term of employment, the role of the training supervisor, the inclusion of training hours within shift rosters, the different levels of proficiency between trainees and other ResCo employees, specialist recruitment, induction and assessment processes, and distinct supervisory arrangements.
 A useful discussion of the history and operation of legislative requirements relating to the coverage of agreements is contained in the Full Bench decision of Cimeco Pty Ltd v CFMEU and Others (Cimeco). 5
 In Cimeco the Full Bench said:
“ Given the context and the legislative history it can reasonably be assumed that if the group of employees covered by the agreement are geographically, operationally or organisationally distinct then that would be a factor telling in favour of a finding that the group of employees was fairly chosen. Conversely, if the group of employees covered by the agreement was not geographically, operationally or organisationally distinct then that would be a factor telling against a finding that the group was fairly chosen.
 It is important to appreciate that whether or not the group of employees covered by the agreement is geographically, operationally or organisationally distinct is not decisive, rather it is a matter to be given due weight, having regard to all other relevant considerations.
 It is not appropriate to seek to exhaustively identify what might be the other relevant considerations. They will vary from case to case and will need to be demonstrated to the satisfaction of the tribunal. The word ‘fairly’ suggests that the selection of the group was not arbitrary or discriminatory. For example, selection based upon employee characteristics such as date of employment, age or gender would be unlikely to be fair. Similarly, selection based on criteria which would have the effect of undermining collective bargaining or other legislative objectives would also be unlikely to be fair. It is also appropriate to have regard to the interests of the employer, such as enhancing productivity, and the interests of employees in determining whether the group of employees was fairly chosen ...”
 In our view the scope of the Agreement is primarily a matter for the parties in the negotiation for an agreement. Enterprise agreements commonly cover sub-groups of employees in the workforce. Indeed it is very rare in our experience that all employees of a private sector employer would be covered by a single enterprise agreement. A common basis for differentiation is employees of a particular occupation or group of occupations that are considered to be sufficiently similar to warrant coverage under one agreement. We caution against the assumption that because an agreement does not cover all employees there are therefore grounds for challenging approval of the agreement on the basis that the coverage is unfair. It is likely that cases involving unfair coverage will not be common. The coverage clauses considered in Cimeco are not present in many agreements with respect to which approval is sought.
 Nevertheless as part of the approval process the tribunal needs to be satisfied that the group of employees covered by the agreement is fairly chosen by reference to the other classes of employee who might have been included in the agreement and the various classes who are included. In determining this question the tribunal is required to consider whether the group of employees is geographically, operationally or organisationally distinct. The inclusion or exclusion of a particular group may operate unfairly in one way or another and this will depend on a consideration of all the circumstances.
 In most enterprises there is unlikely to be only one fair manner of selecting the class of employees to be covered by an enterprise agreement. Different scope provisions may be equally described as fair in the sense that no manifest unfairness arises from their application. That is not to say that the parties may have a particular preference or view about the scope and favour a different formulation. The tribunal’s task however is not to determine the scope clause. Its task is to guard against unfairness by being satisfied that the group can be described, in all the circumstances, as fairly chosen.
 The trainees covered by the Agreement are clearly of a different nature to the trained operators and other employees of the employer not engaged in mine work as such. The traineeships are subject to detailed legislative and contractual requirements. The training is subject to specific responsibilities and particular supervisory and assessment processes. There is some overlap of work with other employees and some activities and responsibilities which are unique to the trainees. Because of the training aspects of the employment and the way in which the work is conducted as an organisational entity within ResCo, we are satisfied that the group is properly described as organisationally and operationally distinct within s.186(3A). None of the examples of unfair coverage considered in Cimeco are relevant to the present case. There is no barrier to the trained employees making an agreement covering their employment. We are not persuaded that the operation of the scope provision results in unfairness. In all of the circumstances we find that the group is fairly chosen.
 The CFMEU submits that a number of the terms of the Agreement derogate from the entitlements arising from the NSW Apprenticeship and Traineeship Act 2001. It submits that following the approval of the Agreement, these rights are no longer available to the trainees and the employer can deny these rights to the trainees. It submits that this amounts to adverse action under the Act.
 ResCo submits that the CFMEU’s analysis is based on a failure to differentiate between the regulation of the employment contract on the one hand and the training contract on the other. It submits that the two concepts are not co-extensive and the provisions applying to each under the NSW Apprenticeship and Traineeship Act 2001 and the Agreement in some respects co-exist and in other respects are legitimately overridden by the Agreement by virtue of ss.28 and 29 of the Act and the Fair Work Regulations 2009 (the Regulations).
 We have considered the detailed submissions of the parties on these matters and we are satisfied that the Agreement does not contain any unlawful terms. We find the contentions of the CFMEU that the Agreement requires or permits a contravention of the general protection provisions of Part 3-1 of the Act, to be founded on several errors of construction and seek to elevate the general protection provisions to safeguarding the terms of State legislation. Properly construed, the Fair Work Act 2009 and the Regulations permit the substitution of terms and conditions of employment arising from other sources, subject to the statutory tests such as the Better Off Overall Test. In our view the Agreement does not contain unlawful terms.
 For the reasons above, we find that although the matters raised by the CFMEU ought to have been considered by the Commissioner, a consideration of those matters would not have led to approval of the Agreement being denied. Hence we grant permission to appeal but dismiss the appeal.
VICE PRESIDENT WATSON
A Slevin with K Endacott for Construction, Forestry, Mining and Energy Union
A Moses SC with S Meehan for ResCo Labour and Training Pty Ltd
Final written submissions:
Construction, Forestry, Mining and Energy Union, 13 August 2012
ResCo Labour and Training Pty Ltd, 26 July 2012
1  FWAA 2717.
2 Exhibit S1 - Appellant’s outline of Submissions at paragraph 16-29.
3 Exhibit S1 - Appellant’s outline of Submissions at paragraph 30-35.
4 Exhibit S1 - Appellant’s outline of Submissions at paragraph 36-51.
5  FWAFB 2206.
Printed by authority of the Commonwealth Government Printer
<Price code C, PR529784>