[2014] FWC 1024

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.236—Majority support determination

Textile, Clothing and Footwear Union of Australia
v
Jeanswest Corporation Pty Ltd
(B2013/1270)

DEPUTY PRESIDENT KOVACIC

MELBOURNE, 11 FEBRUARY 2014

Bargaining - majority support determination.

[1] The Textile, Clothing and Footwear Union of Australia (TCFUA - the Applicant) made an application on 26 September 2013 under s.236 of the Fair Work Act 2009 (the Act) seeking a majority support determination in respect of employees who are members or are eligible to be members of the TCFUA and who are employed by Jeanswest Pty Ltd T/A Jeanswest (the Respondent) at its Moorabbin Airport Distribution Centre (the Distribution Centre) in Victoria. The Respondent opposed the application, primarily on jurisdictional grounds, submitting that the TCFUA was not able to cover the employees at the Distribution Centre. The matter was listed for hearing on 3 October 2013, with directions issued on 8 October 2013. The application was heard on 13 November 2013, with final oral submissions made on 12 December 2013.

Background

[2] The Respondent operates over 200 clothing retail stores and employs over 1100 retail employees (excluding support office staff) throughout Australia. 1 The Respondent also operates a Distribution Centre at Moorabbin Airport in Victoria which is an off-site storage and distribution facility for the Respondent’s retail stores. The Distribution Centre also services online sales and receives items returned from stores and online customers. While some products are manufactured in Australia (though not at the Distribution Centre), around 90 per cent are manufactured overseas, primarily in South East Asia. Specifically, the Respondent outsources the manufacture of its specific designs to its parent company’s manufacturing arms, or their factories, as well as other factories.2

[3] Employees at the Distribution Centre are employed under the Storage Services and Wholesale Award 2010. 3

[4] Work at the Distribution Centre is organised into the three departments - Receiving, Picking/Packing and Online. 4 There is also an Administration area at the Centre.5 The Respondent also employs a number of designers at its national support centre in South Yarra, Victoria. These employees include both graphic and garment designers.6

[5] At times workers at the Distribution Centre are required to, among other things, re-label and re-tag product, check items when a potential stock-wide problem is identified and inspect returned items for a number of purposes, including identifying and assessing any faults notified by the customer and assessing whether the item could be resold. 7 It is disputed that quality checking and control is required to be undertaken by employees and that the tasks performed by employees at the Centre constitute processing, preparing or finishing and/or selling from factory outlets for the purposes of the Applicant’s Rules, in particular Rules 4(c) and 4(e) or whether any of these activities is performed at the Distribution Centre for the purpose of Rule 4(l)(iii).

[6] The Applicant has since September 2012 been discussing with employees at the Distribution Centre their support for bargaining with the Respondent. This culminated in the endorsement of a log of claims by workers in 2013 and the subsequent circulation of a petition headed:

“PETITION IN SUPPORT OF TCFUA, AS OUR BARGAINING REPRESENTATIVE, NEGOTIATING AN ENTERPRISE AGREEMENT

We the undersigned employees of JEANSWEST CORPORATION PTY LTD hereby declare that we wish to collectively bargain with our employer for an enterprise agreement and we nominate the Textile, Clothing and Footwear Union of Australia (TCFUA) as or bargaining representative.” 8

[7] The petition was signed by a number of workers (this aspect will be canvassed in further detail below).

[8] The Applicant emailed the Respondent on 16 August 2013 indicating that “employees at Jeanswest are interested in bargaining for an Enterprise Agreement and have requested the TCFUA to be their bargaining representative.” This followed a conversation the previous day with Mr Paul Menz, the Distribution Centre Manager, on the issue of employees’ interest in bargaining. Ms Byrdy, General Manager Human Resources for Jeanswest, initially responded on 28 August 2013 indicating that “Entering into enterprise bargaining is a strategic decision, and one that we would need to give due consideration to.” Ms Byrdy undertook to respond once the Respondent had made a decision on the issue. Ms Byrdy ultimately responded on 23 September 2013 advising “that Jeanswest will not be initiating enterprise bargaining at this time.” 9

The Applicant’s Submissions and Evidence

[9] The Applicant submitted that employees at the Distribution Centre are engaged in or in connection with preparing, processing and finishing products of the kind referred to in Rule 4(c), being hats and beanies, and Rule 4(e)(i)-(iii) and (v), being male or female garments, wearing apparel, neckwear and fashion accessories. In addition, employees at the Centre were engaged in or in connection with selling these products from a factory outlet via online purchases. 10 It was further submitted on behalf of the Applicant that Rules 4(c), 4(e) and 4(l) were all vocational rules, though Rule 4(c) was also in part an industry rule. As such, “... it is not necessary to determine for the purposes of this application, the industry of the respondent. It also follows that the discrimen for the purposes of construing the relevant rules is the work described in the relevant sub-rules, and not by reference to the industry of the employer.”11 The Applicant submitted that well established rules regarding the interpretation of union eligibility rules required that rules “should be given a wide meaning and interpreted according to ordinary or popular denotation rather than by reference to some narrow or formal construction” (citation not included).12

[10] Beyond this, the Applicant submitted that:

(i) quality checking during picking, quality checks in online customer returns and quality checks of items in respect of potential stock-wide issues were all activities in or in connection with processing and finishing;

(ii) employees performing work in the Online department are selling stock from the Distribution Centre as a factory outlet direct to customers;

(iii) re-labelling and re-tagging product were activities in or in connection with finishing and preparing;

(iv) the bundling and unbundling of orders for stores and individual customers was an activity in or in connection with processing; and

(v) as employees at the Distribution Centre were engaged in the activities of preparing, processing, finishing and selling from a factory outlet in accordance with Rules 4(c) and 4(e), they were also eligible to be members of the TCFUA in accordance with Rule 4(l)(iii). 13

[11] In short, the Applicant submitted that “The Respondent is a corporation operating in the clothing industry. It designs, procures, manufactures and sells clothing, worn apparel, hats and accessories.” 14

[12] For all these reasons, the Applicant submitted, the TCFUA was entitled to represent the industrial interests of employees of Jeanswest at the Distribution Centre. 15

[13] As to the requirements set out in s.237 of the Act, the Applicant submitted that the application satisfied the requirements of s.236(2) of the Act and similarly that the requirements set out in s.237(2)(a)-(c) of the Act had been met and that it was therefore reasonable in all the circumstances to make the determination as per s.237(2)(d) of the Act. With particular regard to evidence to support the submission that a majority of employees wished to bargain, the Applicant tendered the abovementioned petition signed by 23 workers out of a workforce of approximately 33 employees at the time the application was made on 26 September 2013. 16 During the course of the hearing on 13 November 2013, the Applicant tendered a further eleven signatures to the petition17 (the Respondent’s evidence was that at that time the workforce at the Distribution Centre had increased to 47 employees).18

[14] The Applicant relied on witness evidence from Ms Michele O’Neil, National Secretary of the TCFUA; Ms Kathleen Morgan, an Organiser with the Victoria-Queensland Branch of the TCFUA; and Ms Levaai Toelau and Ms Tepua Temu, both of who are employees of the Respondent working at the Distribution Centre and members of the TCFUA.

[15] Ms O’Neil’s evidence outlined the TCFUA eligibility rules, asserting that in her view the Respondent’s employees working at the Distribution Centre were eligible to be members of the TCFUA. 19 In this regard, Ms O’Neil attested the following, based on her more than 20 years experience with the TCFUA:

“15. Preparing, in industry terms, means doing anything to an item, material or product, to prepare it either for manufacture or sale. This includes tagging and labeling items (including re-attaching them or re-marking them if required).

16. Processing, in industry terms, means doing anything to a product to move it through a workplace. This could include receiving items, unpacking, order processing, bundling and unbundling, picking and packing orders, and checking for quality.

17. Finishing, in industry terms, means doing anything to a product to ready it for movement to a customer or client. This could include such activities as pressing, clipping threads, labelling, and tagging, wrapping, inspecting, applying quality control, packaging or packing.

18. ... In industry terms, checking for quality ... is part of preparing, processing and finishing.

19. All these activities are typical of a worker in a warehouse/distribution centre in the textile, clothing and footwear industry.” 20

[16] Ms O’Neil also cited a number of enterprises where the TCFUA has members and is party to enterprise agreements covering distribution centres and warehouses similar to the Respondent’s. Finally, Ms O’Neil referred to her and Ms Morgan’s meeting with workers on 4 October 2013, attesting that workers confirmed “that they still wanted to bargain” and she believed that “workers understood what it means to bargaining [sic] for an enterprise agreement is, and understood the petition they signed.” 21

[17] Under cross-examination Ms O’Neil:

(i) indicated that her understanding of the terms factory outlet was “that it is where the company that is the product, the seller of the product, retails that to customers either online directly, or via a retail outlet that they may describe as a factory outlet ... it’s about the direct sale from the point of distribution of the company ...”; 22

(ii) responded that she understood that goods delivered to the Distribution Centre were not always ready for sale; 23

(iii) confirmed that she was aware that the Respondent does not apply the Textile, Clothing, Footwear and Associated Industries Award 2010 at the Distribution Centre; 24

(iv) advised that the TCFUA had undertaken an extensive rule review exercise about five years ago, with Rule 4 being amended in a number of ways including picking “up on the issue of it being explicit about factory outlets, for example, that hadn’t been explicit in the rule prior to that”; 25 and

(v) acknowledged there were some differences in the work performed at some of the enterprises cited in her statement and the Distribution Centre, for instance, Ms O’Neil acknowledged that “there is some machine work that happens at the Triumph site.” Ms O’Neil did not consider those differences to be significant. 26

[18] Ms Morgan’s evidence was that, based on her own observations and discussions with workers, workers at the Distribution Centre “... prepare, process and finish product for the Jeanswest stores to sell ... also sell direct to customers as a factory outlet through online purchases.” 27 Ms Morgan also cited several warehouse and distribution centres where she has organised and signed up members, described in somewhat more detail aspects of the work undertaken by the Respondent’s employees at the Distribution Centre and outlined the history of her discussions with workers at the Distribution Centre regarding bargaining, including the development of the log of claims endorsed by and the petition signed by some employees.

[19] Under cross-examination Ms Morgan:

(i) confirmed that in discussing bargaining with workers at the Distribution Centre she had never guaranteed them that there would be an outcome from bargaining; 28

(ii) acknowledged she had not completed a detailed comparison of the work performed at the Distribution Centre and the businesses referred to in her statement; 29

(iii) disagreed with the proposition that goods arrived at the Distribution Centre ready for sale; 30

(iv) indicated that workers are required to identify faults when picking products; 31 and

(v) agreed “that placing a sticker on a label constitutes finishing a garment”, later indicating that an incorrect tag has implications for stock control and that an inconsistency between the barcode/tag and the garment would preclude the sale of the garment. 32

[20] Both Ms Toelau’s and Ms Temu’s evidence set out in some detail the nature of tasks performed in their respective roles and alluded to the discussions with Ms Morgan regarding bargaining. On the issue of bargaining, Ms Toelau outlined her role in collecting signatures for the petition signed by workers, attesting that she believed that “a majority of workers ... want to bargain collectively for an enterprise agreement” and that “everyone who signed the petition knew and understood what they were signing.” 33 Ms Temu attested, inter alia, that “I want to bargain with Jeanswest about my terms and conditions of employment.”34

[21] Under cross-examination Ms Toelau:

(i) confirmed that in discussing bargaining with her co-workers at the Distribution Centre “I just said to them that it could get us better conditions, not that it definitely would get it”; 35

(ii) conceded that her knowledge of picking and packing activities was limited to how they were performed at the Respondent’s Mulgrave distribution centre, which was one of the predecessors to the Moorabbin Distribution Centre; 36

(iii) acknowledged that prior to these proceedings she had not previously referred to the Distribution Centre as a factory outlet; 37

(iv) indicated that the Distribution Centre is not a factory outlet; 38

(v) acknowledged that employees would report a product fault which they may observe when picking and packing but that it is not the role of the Distribution Centre to actively look for faults; 39

(vi) agreed that workers were not directed at toolbox meetings to perform a particular quality control function; 40 and

(vii) responded that if a worker did not report a fault they saw with a product that the product “would just get sent to the store.” 41

[22]

Under cross-examination Ms Temu:

(i) acknowledged that prior to these proceedings she had not previously referred to the Distribution Centre as a factory outlet; 42

(ii) agreed that when faulty products are returned to the Distribution Centre workers are not required to assess the remaining product line of that item for the same fault; 43

(iii) confirmed that, when picking, items are not removed from their poly-bags to check for quality; 44 and

(iv) indicated that re-ticketing does not occur very frequently. 45

The Respondent’s Submissions and Evidence

[23] In short, the Respondent submitted that, as “the character of the enterprise is that of retail, not clothing and textiles”, the TCFUA’s “Rules do not provide coverage for the Respondent’s Distribution Centre employees.” This in the Respondent’s submission meant that the Applicant was not eligible to represent the industrial interests of employees at the Distribution Centre and therefore had no standing to bring an application under s.236 of the Act for a majority support determination. 46

[24] In the alternative, the Respondent submitted that:

(i) the petition “cannot be relied upon as a reliable indicator of majority support on the basis that employees were not informed of the bargaining process and/or the purpose of the petition”; and

(ii) it was not reasonable in all the circumstances to make a determination because as it is approaching the “peak trading time for the Respondent” employee numbers at the Distribution Centre are likely to increase with any new employees possibly not wanting to bargain and further “the Respondent is unlikely to have either the time or resources to dedicate to the bargaining process.” 47

[25] The Respondent did not dispute that it had not agreed to bargain nor initiated bargaining.

[26] The Respondent relied on witness evidence from Mr Dean Brough, a Senior Fashion Lecturer and Course Coordinator at the Queensland University of Technology; Ms Byrdy; Mr Andrew Prior, an employee at the Distribution Centre; and Mr Santo Felino, the Distribution Centre Operations Manager.

[27] Mr Brough’s statement reflected a focus on manufacturing, invariably defining terms in a manufacturing context, and acknowledged that “traditional notions of manufacturing are shifting rapidly.” 48 In his statement, Mr Brough attested that “Many manufacturers are also retailers, retailers can be manufacturers, and wholesalers now manufacture and retail ... The key to this issue is the context in which particular functions are performed.”49 Key aspects of Mr Brough’s evidence were that:

(i) manufacture does not include the distribution and retail/sale phase;

(ii) “preparing” means making an item ready for a subsequent operation of manufacture;

(iii) applying a new sticker on an existing garment tag, unpacking boxes of completed garments, picking and packing orders to be distributed to stores and/or quality checking at the point of distribution would not constitute preparing;

(iv) “processing” means undertaking an in-stage and final stage activity and involves movement from one stage to the next stage of manufacture;

(v) packing goods as part of the manufacture process would be an example of processing;

(vi) “finishing” means finishing an item ready “for distribution/collection to client/customer”;

(vii) examples of finishing include quality control by the manufacturer at the end stage and applying tags whilst in the manufacture process;

(viii) a “factory outlet” is a retail outlet where the general public can purchase discount apparel and other items, generally outdated or excess items; and

(ix) the terms factory outlet is “now used very loosely in retail terms, but there is a sense that items are discounted for sale to the general public.” 50

[28] Under cross-examination Mr Brough agreed that:

(i) different parts of the manufacturing process can occur at different physical locations; 51

(ii) the term “preparing” is broad enough to include replacing or correcting faulty tags prior to distribution, acknowledging that this “could happen in a retail environment, a distribution environment, a manufacturing environment, and a design environment”; 52

(iii) “processing” could occur outside the manufacturing process, for example in the distribution phase, acknowledging that the act of moving goods from the production line to another location would fall within the description of processing in the textile, clothing and footwear industry; 53

(iv) the term “processing” would include the bundling of items that come off a production line for the purposes of distribution, the unbundling and sorting of items in a distribution centre, the processing and dispatch of goods sold by online order and the picking and packing of goods for the purpose of online sales - though acknowledging that the margins between manufacturing and distribution “could be blurred at times”; 54 and

(v) factory outlets are these days not necessarily connected to factories, adding that from a customer’s perspective the goods available from a factory outlet would “have some sort of discount associated with it.” 55

[29] However, Mr Brough disagreed that the act of tagging is an act of finishing. On this issue Mr Brough’s evidence was:

“... it’s certainly not finishing. You could argue it’s processing because it could be getting it ready for a next point, which could be consumption. It could be preparing ready for retail consumption. But it’s certainly not finishing.” 56

[30] Ms Byrdy’s evidence provided a general overview of the Respondent’s operations, the Distribution Centre (including award coverage), and the Applicant’s request to bargain (including the impact on key personnel “required to be included in negotiations”). Ms Byrdy attested that as at the date of her statement (8 November 2013), there were 47 employees at the Distribution Centre (excluding management). Ms Byrdy further attested that, as a result of discussions on 23 September 2013 with a number of employees at the Distribution Centre regarding the Applicant’s request to commence bargaining, it became “apparent that a number of employees signed the petition without understanding why they were doing so, or under the false belief that if a majority of employees signed the petition, they would receive additional benefits.” In addition, the feedback from employees in those discussions that they “were very happy with the working conditions at the Distribution Centre and didn’t see a need to change anything.” 57

[31] Under cross-examination Ms Byrdy:

(i) agreed that the following statement which appeared on the Respondent’s website applied to workers at the Distribution Centre 58

“Every Jeanswest team member is personally responsible for maintaining the highest quality standard and receives the best training to ensure these standards are constantly improving”; 59

(ii) confirmed that not all of the Respondent’s senior managers cited in her statement as being required to be included in the negotiations would participate in the day-to-day negotiations for an enterprise agreement; 60

(iii) was unable to advise whether all of the 47 employees listed as working at the Distribution Centre as at 8 November 2013 61 were currently on the “active daily roster”, though she did confirm that one employee was currently on maternity leave;62

(iv) indicated that to her knowledge no quality control occurs at the Distribution Centre; 63

(v) agreed that there was nothing in her statement that any employee at the Distribution Centre had told her that they were coerced into signing the petition; 64 and

(vi) stated “that there were some employees who strongly objected to the approach and that some, after rejecting the request to sign the petition, they were prompted further.” 65

[32] Mr Prior’s evidence was that there was no quality control of items at the Distribution Centre. Under cross-examination Mr Prior stated that while employees did not actively look for faults in garments, they were expected to report any quality problems/faults that they identified in the course of their work. 66 Mr Prior also confirmed that in certain circumstances, for example where labels are incorrect, items need to be re-priced, or where the barcode scan and item do not match, items will sometimes need to be re-ticketed, re-labelled, re-tagged or re-coded.67

[33] On the issue of bargaining, Mr Prior attested that when approached by Ms Toelau to discuss enterprise bargaining, she had indicated to him “that we would get a pay rise.” 68 However, under cross-examination Mr Prior conceded that Ms Toelau did not say that “you would get a pay rise” but rather had said that “you might get a pay rise.” Further, he stated that when he indicated that he was not prepared to sign the petition he was not approached regarding the petition again.69

[34] Mr Felino’s evidence provided an overview of the duties performed and the operations at the Distribution Centre and also covered other tasks performed at the Distribution Centre and online purchases. Key aspects of Mr Felino’s evidence were that:

(i) there is no manufacturing or design work undertaken at the Distribution Centre; 70

(ii) as at the date of his statement (8 November 2013), there were 47 employees at the Distribution Centre (excluding management), with up to four additional staff expected to be recruited by 13 November 2013; 71

(iii) no quality control is performed by any Distribution Centre employees; 72

(iv) the requirement for Distribution Centre employees to check a particular product line for an issue occurs very infrequently; 73

(v) re-ticketing only occurs about six times per year; 74

(vi) there is no difference in the items available for purchase on-line and in-store and in the price of those items; 75 and

(vii) no sales are processed at the Distribution Centre as customers are not permitted to access the Centre. 76

[35] Under cross-examination Mr Felino:

(i) stated that the core number of employees ordinarily employed at the Distribution Centre was between 37 and 40; 77

(ii) indicated that in respect of the 10 per cent of product that is locally sourced “we double check the price ticket on the garment is correct. If we are identifying an issue with that, then the process is what we call a re-ticket or a mark down ...” and confirmed that a re-ticket is necessary before that item could be sold; 78

(iii) reaffirmed that Distribution Centre employees are not required to actively quality check garments; 79

(iv) agreed that if a worker did observe a problem with the quality of an item they would be required to report it to him; 80 and

(v) stated that quality is not checked as part of a cycle count or stocktake. 81

The Threshold Issue to be Determined

[36] The threshold issue that needs to be determined is whether the TCFUA is entitled to represent the industrial interests of employees working at the Distribution Centre. This is because s.176 of the Act provides that:

“176 Bargaining representatives for proposed enterprise agreements that are not greenfields agreements

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:

(a) an employer that will be covered by the agreement is a bargaining representative for the 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; and

(ii) in the case where the agreement is a multi-enterprise agreement in relation to which a low-paid authorisation is in operation—the organisation applied for the authorisation;

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) ...

Requirement relating to employee organisations

(3) Despite subsections (1) and (2):

(a) an employee organisation; or

(b) an official of an employee organisation (whether acting in that capacity or otherwise);

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.” (Underlining added)

[37] If I find that the TCFUA is entitled to represent the industrial interests of employees working at the Distribution Centre, the Commission then needs to decide whether or not to make the majority support determination sought by the Applicant in accordance with the relevant provisions of the Act. I will deal with the threshold issue first.

The Relevant Provisions of the TCFUA’s Rules

[38] The relevant provisions of the TCFUA’s Rules are set out below:

“3 - INDUSTRY

The industries in or in connection with which the Union is registered are the textile, clothing and footwear industries, including but not limited to those parts of the industries referred to in Rule 4.

4 - CONDITIONS OF ELIGIBILITY FOR MEMBERSHIP

The Unions shall consist of:

(a) ...

(c) Without limiting the generality of any other part of this rule, all persons wholly or partly engaged in or usually engaged in or in connection with the Felt Hatting Industry, and the designing, preparing, patternmaking, manufacturing, making, processing, repairing, altering, trimming, blocking, pressing, finishing and/or selling from factory outlets the whole or any part of all articles of headwear and/or millinery including but not limited to hats, caps, berets, hoods and helmets.

(d) ...

(e) Without limiting the generality of any other part of this rule, all persons wholly or partly engaged in or usually engaged in or in connection with designing, preparing, patternmaking, manufacturing, making, processing, repairing, altering, trimming, blocking, pressing, finishing and/or selling from factory outlets the whole or any part of:

(i) any male or female garment;

(ii) any article of wearing apparel whatsoever, made from material of any description;

(iii) any article of neckwear;

(iv) handkerchiefs;

(v) any fashion accessory whatsoever.

(f) ...

(l) Without limiting the generality of any other part of this rule, all persons other than electrical workers, and fitters (including persons performing the job of fitters where these persons are described as mechanical and fabrication tradespersons, and including howsoever ‘fitters’ are termed in the future, wholly or partly engaged in or usually engaged in or in connection with:

(i) ...

(ii) Receiving, dispatching, packing, unpacking, storing and/or otherwise handling goods at any premises referred to in any other part of this rule, or at any premises where any of the processes or activities referred to in any other part of this rule occurs. 82” (Underlining added)

[39] The Rules do not define the terms preparing, processing, finishing or factory outlet.

Is the TCFUA entitled to represent the industrial interests of employees working at the Distribution Centre?

[40] I have set above out in some detail the evidence that was lead on the nature of work performed by employees at the Distribution Centre and the whether or not that work constitutes preparing, processing, finishing and selling from factory outlets as required by the TCFUA’s rules.

[41] Guidance on the interpretation of union eligibility rules is provided in several cases, including The Queen v Aird; Ex parte Australian Workers’ Union (Aird’s Case) 83 and the Queen v Isaac and others: Ex parte Transport Workers’ Union/ the Queen v Isaac and others: Ex parte Argyle Diamond Mines Proprietary Limited and Others (Argyle Diamond Mines Case)84.

[42] In Aird’s Case when considering the meaning of the eligibility clause in question in that matter, Barwick CJ said:

“This is a legal question to be solved by legal consideration. But those considerations will, in relation to the present question, include any industrial meaning or usage of the words of the clause to be construed. As with all construction, the nature of the instrument in which the words appear and the purposes the instrument is evidently intended to serve or effect must be kept in mind.”

[43] In the Argyle Diamond Mines Case Wilson J canvassed the issue of construing an eligibility clause. In doing so, he drew on Aird’s Case and further said:

“It follows that the words of the rule should be given a wide meaning and interpreted according to their ordinary or popular denotation rather than by reference to some narrow construction. Nevertheless, not withstanding this generosity of approach, the meaning of the words remains a legal question to be determined by the application of the ordinary rues which govern the construction of written documents.” (Citations not included)

[44] Following the approaches set out in Aird’s Case and the Argyle Diamond Mines Case, a close examination of the Rules 3 and 4 of the TCFUA’s rules indicate that they are intended to have wide application. The words “including but not limited to those parts of the industries referred to in Rule 4” in Rule 3 and the words “Without limiting the generality of any other part of this rule ...” which are used throughout Rule 4 reflect this intent.

[45] It was not disputed that the Distribution Centre handled items that fell within those described in Rule 4(c) and 4(e), the exception being handkerchiefs which are referred to in Rule 4(e)(iv) where it was not submitted by the TCFUA that the Respondent received/retailed handkerchiefs. Similarly, it was not disputed that employees at the Distribution Centre were engaged in the receiving, dispatching, packing, unpacking, storing and/or otherwise handling goods. However, it was disputed that employees at the Distribution Centre perform preparing, processing, finishing and/or selling from factory outlets as per the TCFUA’s Rules.

[46] As indicated in both Aird’s Case and the Argyle Diamond Mines Case, in construing such terms considerations should include “any industrial meaning or usage of the words of the clause to be construed” and “the words of the rule should be given a wide meaning and interpreted according to their ordinary or popular denotation rather than by reference to some narrow construction.” In this regard, I note that the relevant modern award, the Textiles, Clothing, Footwear and Associated Industries Award 2010, in defining the clothing industry at clause 3 refers to the terms preparing, processing, finishing but does not define these terms.

[47] It is against that background that the evidence of Ms O’Neil and Mr Brough is particularly relevant, given that together they have over 50 years experience in the industry.

[48] Ms O’Neil’s definitions of processing and preparing are set out at paragraph [15] above. Under cross-examination, Mr Brough acknowledged that his statement “was predominantly ... about what is manufacture” 85 and the margins between manufacture and distribution “could be blurred at times.”86 Further, his evidence under cross-examination saw him move beyond a focus on manufacture with, as a result, his descriptions of the meaning of the terms preparing” and “processing” moving to more closely align with the meaning attributed to the terms by Ms O’Neil - see in particular paragraph [28](ii)-(iv).

[49] Drawing on the evidence of Ms O’Neil and Mr Brough, there emerges an alignment around the following issues:

(i) “preparing” can include replacing or correcting faulty tags prior to distribution and can occur in a manufacturing or distribution environment; and

(ii) “processing” includes the unbundling and sorting of items in a distribution centre.

[50] As to whether tagging was part of “finishing” was not agreed, with Ms O’Neil submitting that it was and as Mr Brough definite that it was not. This issue is discussed further below.

[51] With regard to whether employees at the Distribution Centre are wholly or partly engaged in or usually engaged in or in connection with “preparing”, Mr Prior confirmed that in certain circumstances, for example where labels are incorrect, items need to be re-priced, or where the barcode scan an item do not match, items will sometimes need to be re-ticketed, re-labelled, re-tagged or re-coded. Further, Mr Felino’s evidence was that in respect of the 10 per cent of product that is locally sourced “we double check the price ticket on the garment is correct. If we are identifying an issue with that, then the process is what we call a re-ticket ...” and confirmed that a re-ticket is necessary before that item could be sold. Mr Felino also indicated that re-ticketing only occurs about six times per year, which is consistent with Ms Temu’s evidence that re-ticketing does not occur very frequently. Drawing on the alignment set out at paragraph [49] above as to what “preparing” entails, the evidence supports a finding that employees at the Distribution Centre are involved in “preparing”.

[52] Turning to whether employees at the Distribution Centre are wholly or partly engaged in or usually engaged in or in connection with “processing”, it was not disputed that employees at the Distribution Centre were engaged in traditional distribution functions such as receiving stock, storing stock and picking and packing stock for distribution to the Respondent’s retail stores. It was also not disputed that these functions involved bundling and unbundling orders for stores. However, it was disputed whether or not this constituted “processing.”

[53] The Applicant submitted that the bundling and unbundling of orders for stores and individual customers was an activity in or in connection with “processing” (see paragraph [10](iv) above. In support of that view, the Applicant cited Drake SDP’s decision Textile, Clothing and Footwear Union of Australia v GSM Operations Pty Ltd T/A Billabong Australia (Billabong) 87. In her decision, Drake SDP stated at [38]:

“Bundling and unbundling orders for shops ... is, in my opinion, part of processing.”

[54] The Respondent submitted that Drake SDP erred in finding this. 88 However, as noted above, Ms O’Neil and Mr Brough aligned around the view that “processing” includes the unbundling and sorting of items in a distribution centre. That view, when considered together with Drake SDP’s approach on this issue in Billabong, supports a finding that employees at the Distribution Centre are involved in “processing.”

[55] The Applicant submitted that re-labelling and re-tagging product were activities in or in connection with finishing and preparing (see paragraph [10](iii) above). On the issue of “finishing”, Ms Morgan’s evidence (see paragraph [19](v) above) was “that placing a sticker on a label constitutes finishing a garment”, indicating that an incorrect tag has implications for stock control and that an inconsistency between the barcode/tag and the garment would preclude the sale of the garment. The Applicant also cited Drake SDP’s decision in Billabong. In her decision, Drake SDP stated at [38]:

“I am also satisfied that replacing the tags and labels onto garments when they have become detached is part of finishing garments referred to in the rules. If the garment is identified with a tag before sending it to retailers that action is simply part and parcel of the process.”

[56] On the other hand, the Respondent’s evidence on the implications of an incorrect or missing tag was somewhat inconsistent with Mr Felino confirming that if there was an issue with the price ticket “a re-ticket is necessary before that item could be sold” (see paragraph [35](ii) above). However, Ms Byrdy’s evidence under cross-examination was that in circumstances where an item in a store was missing a swing tag, there were alternative approaches which would enable the sale to be scanned. Those alternatives were to scan the swing tag on an identical garment or scan the barcode in the inside seam of the Respondent’s garments. 89

[57] In my view, were re-tagging or re-labelling essential to enable a sale to proceed in store these activities would in my view constitute finishing. However, based on the evidence on this aspect I am not satisfied that re-tagging or re-labelling is in fact critical for this purpose in this case. Accordingly, I cannot be satisfied that employees at the Distribution Centre are wholly or partly engaged in or usually engaged in or in connection with “finishing” products of the kind referred to in Rule 4(c) and Rule 4(e)(i)-(iii) and (v). While I note Drake SDP’s decision in Billabong, it is worth pointing out that no reference is made in that decision as to how critical or otherwise the tag or label in that case is to sales proceeding at the retail outlets of respondent in that matter.

[58] Much evidence was led on the issue of whether employees at the Distribution Centre undertook quality control activities given Ms O’Neil’s evidence that “... In industry terms, checking for quality ... is part of preparing, processing and finishing.” Mr Felino’s evidence was that no quality control is performed by any Distribution Centre employees and that the requirement for Distribution Centre employees to check a particular product line for an issue occurs very infrequently. However, Mr Felino did agree that if a worker did observe a problem with the quality of an item they would be required to report it to him. Consistent with that was Ms Toelau’s evidence which was to the effect that it is not the role of the Distribution Centre to actively look for faults and that staff were not directed at toolbox meetings to perform a quality control function. Similarly, Ms Temu’s evidence was that, when picking, items are not removed from their poly-bags to check for quality and that when faulty products are returned to the Distribution Centre workers are not required to assess the remaining product line of that item for the same fault. This evidence supports a finding that workers at the Distribution Centre are not undertaking quality control activities.

[59] Finally, as to the issue of selling from factory outlets, while the growth on online shopping and the emergence of retail centres such as DFO (Direct Factory Outlets) has implications for how consumers interpret the term factory outlet, I accept Mr Brough’s evidence that while factory outlets are these days not necessarily connected to factories, from a customer’s perspective the goods available from a factory outlet would “have some sort of discount associated with it.” However, I also note that under cross-examination Mr Brough accepted the proposition that goods sold from a factory outlet are not always sold at a discounted price. 90 On this issue, Mr Felino’s evidence was that there is no difference in the items available for purchase on-line and in-store and in the price of those items, while the evidence of both Ms Toelau and Ms Temu was that prior to these proceedings neither had previously referred to the Distribution Centre as a factory outlet. Taken together, this evidence supports a finding that employees working at the Distribution Centre are not involved, either wholly or partly, in selling from factory outlets.

[60] Taking into account all of the factors canvassed above, I find that employees at the Distribution Centre:

(i) are wholly or partly engaged in or usually engaged in or in connection with “preparing” and “processing” in respect of products of the kind referred to in Rule 4(c), being hats and beanies, and Rule 4(e)(i)-(iii) and (v), being male or female garments, wearing apparel, neckwear and fashion accessories;

(ii) are not wholly or partly engaged in or usually engaged in or in connection with “finishing and/or selling from factory outlets” products of the kind referred to in Rule 4(c) and Rule 4(e)(i)-(iii) and (v); and

(iii) are wholly or partly engaged in or usually engaged in or in connection with receiving, dispatching, packing, unpacking, storing and/or otherwise handling goods at premises where preparing and processing activities are occurring in accordance with Rules 4(c) and 4(e) of the TCFUA’s Rules.

[61] Further, based on the evidence before the Commission, I am not satisfied that employees at the Distribution Centre are undertaking quality control activities for the purposes of “preparing”, “processing” and/or “finishing” within the meaning of the TCFUA’s Rules.

[62] I therefore find that employees at the Distribution Centre are eligible to be members of the TCFUA and that, accordingly, the TCFUA is entitled to represent the employees for the purposes of s.176(3) of the Act.

The Provisions of the Act Relating to Majority Support Determinations

[63] Sections 236 and 237 of the Act deal with majority support determinations. These provisions are set out below.

“236 Majority support determinations

(1) A bargaining representative of an employee who will be covered by a proposed single-enterprise agreement may apply to the FWC for a determination (a majority support determination) that a majority of the employees who will be covered by the agreement want to bargain with the employer, or employers, that will be covered by the agreement.

(2) The application must specify:

(a) the employer, or employers, that will be covered by the agreement; and

(b) the employees who will be covered by the agreement.

237 When the FWC must make a majority support determination

Majority support determination

(1) The FWC must make a majority support determination in relation to a proposed single-enterprise agreement if:

(a) an application for the determination has been made; and

(b) the FWC is satisfied of the matters set out in subsection (2) in relation to the agreement.

Matters of which the FWC must be satisfied before making a majority support determination

(2) The FWC must be satisfied that:

(a) a majority of the employees:

(i) who are employed by the employer or employers at a time determined by the FWC; and

(ii) who will be covered by the agreement;

want to bargain; and

(b) the employer, or employers, that will be covered by the agreement have not yet agreed to bargain, or initiated bargaining, for the agreement; and

(c) that the group of employees who will be covered by the agreement was fairly chosen; and

(d) it is reasonable in all the circumstances to make the determination.

(3) For the purposes of paragraph (2)(a), the FWC may work out whether a majority of employees want to bargain using any method the FWC considers appropriate.

(3A) If the agreement will not cover all of the employees of the employer or employers covered by the agreement, the FWC must, in deciding for the purposes of paragraph (2)(c) whether the group of employees who will be covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.

Operation of determination

(4) The determination comes into operation on the day on which it is made.”

The Issues to be Determined

[64] Having determined that the TCFUA is eligible to represent the industrial interests of the employees in relation to work that will be performed under the agreement, I now turn to the issue whether or not to make a Majority Support Determination. The matters which the Commission must be satisfied of before making a Majority Support Determination are set out in s.237(2) of the Act. I will deal with each of those matters separately.

(a) A majority of employees who are employed by the employer or employers at a time determined by the FWC and who will be covered by the agreement want to bargain

[65] At the hearing of 13 November 2013 the Applicant tendered the petition signed by 23 workers at the time the application was made on 26 September 2013. The Applicant submitted that at the time the application was made there was a workforce of approximately 33 employees at the Distribution Centre. The Applicant submitted that the petition demonstrated that a majority of employees wished to bargain and that the time the application was made was the appropriate point in time to determine the issue.

[66] During the course of the hearing on 13 November 2013, the Applicant tendered a further eleven signatures to the petition bringing the total number of signatures to 34.

[67] On the other hand, Ms Byrdy’s and Mr Felino’s evidence was that as at 8 November 2013, there were 47 employees at the Distribution Centre (excluding management), with Mr Felino indicating that up to four additional staff were expected to be recruited by 13 November 2013. Under cross-examination Mr Felino further indicated that the core number of employees ordinarily employed at the Distribution Centre was between 37 and 40. The Respondent’s submission was that the Commission should rely on the number of employees as at 8 November 2013 and the number of persons who had signed the petition at the time the application was made (i.e. 26 September 2013) as the basis for determining whether or not a majority of employees wish to bargain. However, this is akin to comparing apples with oranges.

[68] I have thoroughly examined and reconciled the signatures to the petition tendered by the Applicant and the list of employees working at the Distribution Centre as at 8 November 2013 tendered by the Respondent. As a result of that reconciliation, there is one person who is part of the initial 23 signatures to the petition who does not appear on the abovementioned list of employees and one signatory who appears with a different Christian name. I have therefore not included these two signatures in my consideration. This sees the initial number of signatures tendered reduced to 21. Of the further 11 signatures to the petition tendered at the hearing on 13 November 2013, one person is already included in the previous 21 signatures. I have therefore excluded that signature, which reduces the number of further signatures to 10.

[69] If the time determined by the Commission is the date of the application, as proposed by the Applicant, then the number of employees should be the number of employees ordinarily employed at the Distribution Centre, i.e. 40 based on the upper limit of Mr Felino’s evidence. The initial petition has 21 signatures which, based on a workforce of 40 employees, represents a majority of employees. If the number of employees as at 8 November is to be relied upon, then in all fairness the additional 10 signatures to the petition should also be taken into account. This again results in a majority with 31 out of 47 employees expressing a wish to bargain. This remains the case even if the number of staff is increased to 51 based on Mr Felino’s evidence that up to four additional staff are expected to be recruited by 13 November 2013 with 31 out of 51 employees wishing to bargain. In other words, on any of these measures it is clear that a majority of employees wish to bargain.

[70] The Respondent submitted that the petitions submitted by the Applicant “cannot be relied upon as a reliable indicator of majority support on the basis that employees were not informed of the bargaining process and/or the purpose of the petition” (see paragraph [24](i) above). However, the terms of the petition are clear as to their purpose. Further, the evidence supports a finding that in discussing bargaining with employees it was made clear that bargaining may, as opposed to would, result in improved terms and conditions. Mr Prior’s evidence under cross-examination that Ms Toelau did not say that “you would get a pay rise” but rather had said that “you might get a pay rise” supports a finding that employees were not mislead about the process and were adequately informed of the bargaining process.

(b) The employer, or employers, that will be covered by the agreement have not yet agreed to bargain, or initiated bargaining, for the agreement

[71] It is not disputed that the employer has not agreed to bargain or initiated bargaining for the agreement.

(c) The group of employees who will be covered by the agreement was fairly chosen

[72] The group of employees who will be covered by the agreement are all employees at the Distribution Centre excluding managerial staff. It was not disputed that the group had been fairly chosen.

(d) It is reasonable in all the circumstances to make the determination

[73] As alluded to at paragraph [24](ii) above, the Respondent submitted that, were the Commission to find that the Applicant was eligible to represent employees at the Distribution Centre and that a majority of employees wished to bargain, it was not reasonable in the circumstances for the Commission to make the Determination for two key reasons. First, because at the time (November 2013) the Respondent was approaching its peak trading time, i.e. the Christmas period, and would be looking to engage additional employees who may not wish to bargain and second because the Respondent is unlikely to have the time or resources to devote to the bargaining process. 91

[74] The first of these issues goes to the matter of whether or not a majority of employees wish to bargain, which is canvassed at paragraphs [65]-[70] above.

[75] With regard to the second issue, it was acknowledged on the Respondent’s behalf at the hearing on 12 December 2013 that this “is a reference to trading over the Christmas and the new year period and it would be limited to that period.” 92 Further, as noted at paragraph [31](ii) above, under cross-examination Ms Byrdy confirmed that not all of the Respondent’s senior managers cited in her statement as being required to be included in the negotiations would participate in the day-to-day negotiations for an enterprise agreement

[76] Also germane to forming a view on whether or not it is reasonable to make the Determination are the objects of the Act, which include “achieving productivity and fairness through an emphasis on enterprise level collective bargaining ...” 93 That object is reinforced at s.171 of the Act, which sets out the Objects of Part 2-4 of the Act which deals with Enterprise Agreements. Section 171 provides that:

“171 Objects of this Part

The objects of this Part are:

(a) ... ; and

(b) to enable the FWC to facilitate good faith bargaining and the making of enterprise agreements, including through ...”(underlining added)

[77] Further, s.228(2) of the Act provides that:

“228 Bargaining Representatives must meet the Good Faith Bargaining Requirements

(2) The good faith bargaining requirements do not require:

(a) a bargaining representative to make concessions during bargaining for the agreement; or

(b) a bargaining representative to reach agreement on terms that are to be included in the agreement.” (underlining added)

[78] In short, the making of a Determination does not guarantee a bargaining outcome.

[79] Against that background, I am satisfied that it is reasonable in all the circumstances to make the Determination. The Determination has been separately issued.

DEPUTY PRESIDENT

Appearances:

S. Keating of Counsel with O. Tran for the Applicant.

C. Dowling with K. Byrdy for the Respondent.

Hearing details:

2013.

Melbourne:

November 13.

Melbourne and Brisbane (video hearing):

December 12.