[2014] FWC 5783

[2014] FWC 5783 [Note: An appeal pursuant to s.604 (C2014/6309) was lodged against this decision - refer to Full Bench decision dated 13 November 2014 [[2014] FWCFB 7560] for result of appeal.]

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

OneSteel Recycling Pty Limited T/A OneSteel Recycling
(AG2014/1562)

COMMISSIONER RYAN

MELBOURNE, 21 AUGUST 2014

Application for approval of the OneSteel Recycling Victoria Enterprise Agreement 2014.

[1] An application has been made for approval of an enterprise agreement known as the OneSteel Recycling Victoria Enterprise Agreement 2014 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act) and was made by OneSteel Recycling Pty Limited T/A OneSteel Recycling (the Employer). The agreement is a single-enterprise agreement.

[2] I raised a series of concerns with the content of the Agreement by letter dated 16 July 2014 addressed to the employer, The Australian Workers’ Union (AWU) and Mr J. Wallman, as the bargaining representatives for the Agreement.

[3] The Employer responded to my correspondence by letter dated 6 May 2014.

Are the employees to be covered by the Agreement fairly chosen - s.186(3)

The Commission’s Concern

[4] I outlined my concern as follows:

“Clause 1.2 of the Agreement describes the coverage of the Agreement. The Agreement covers employees of the employer who are employed in any one of the 5 grades identified in Schedule 1 of the Agreement and who are employed at any one of 4 specified sites at Brooklyn, Eaglehawk, Somerton or Wendouree in Victoria.

In the employer’s statutory declaration in support of an application for approval of an enterprise agreement, Form F17, the employer declared that the group of employees to be covered by this enterprise agreement was fairly chosen because:

‘Consistent with previous Enterprise Agreements, the Agreement covers all Operational wages employees engaged in classifications listed in the Agreement at:

Somerton: 70 Cliffords Road, Vic 3062

Brooklyn: 750 Old Geelong Road, Vic 3012

Eaglehawk: 5 Baldock Court, Vic 3556

Ballarat: 5 Coronet Street, Vic 3355

However the Agreement does not cover salaried staff (administrative, technical and managerial employees).’

There is in operation another enterprise agreement known as the OneSteel Recycling (Dandenong and Coolaroo) Enterprise Agreement 2013-2016 which was approved by me on 28 August 2013. That Agreement covers employees of the employer employed at the Dandenong and Coolaroo sites of the employers recycling business. The employees covered by the OneSteel Recycling (Dandenong and Coolaroo) Enterprise Agreement 2013-2016 appear to have a high degree of commonality in terms of classifications to those employed under the OneSteel Recycling Victoria Enterprise Agreement 2014.

There is a real question as to whether the group of employees to be covered by the OneSteel Recycling Victoria Enterprise Agreement 2014 was fairly chosen having regard to s.186(3) and (3A). All of the 6 sites covered by the two agreements are in Victoria. There is no geographic connection between Coolaroo and Dandenong which would explain why Somerton and Brooklyn were treated differently. At least these 4 sites are in Melbourne whereas Eaglehawk and Ballarat are in regional Victoria. There also appears to be little difference in the classification structure at all of the sites.

The Applicant will be given an opportunity of providing submissions in support of its contention that the group of employees to be covered by the OneSteel Recycling Victoria Enterprise Agreement 2014 has been fairly chosen.”

The Employer’s Response

[5] The Employer provided the following response:

“The OneSteel Recycling Victoria Enterprise Agreement 2014 coverage is the product of negotiations with the Australian Workers Union, who were the default bargaining representative of their members under the Fair Work Act bargaining regime, and one employee appointed bargaining representative.

The coverage was the same as the predecessor agreement and involved a process of fair and efficient bargaining. At no stage during the negotiations was coverage of the agreement an issue or called into question by either of the bargaining representatives or by any of the salaried staff at those sites covered who were not participating in the negotiations.

The agreement applies to an organisationally, geographically and operationally distinct group of employees (ie operators), which does include salaried clerical, supervisory, and managerial roles. The salaried staff group have a separate and distinct salary review and determination processes, which has historically always been the case.

The Company submits that group of employees covered by the OneSteel Recycling Victoria Enterprise Agreement 2014 was fairly chosen, consistent with the Fair Work Act provisions.

Note: The Commission reads the third paragraph of the employer’s response as if the word “not” appeared before the word “include” on the second line. It is reasonably obvious from the Form F17 and from the terms of the Agreement that clerical, supervisory and managerial roles are not included in the Agreement.”

Consideration

[6] Relevantly, s.186 provides as follows:

“186 When the FWC must approve an enterprise agreement—general requirements

Basic rule

(1) If an application for the approval of an enterprise agreement is made under section 185, the FWC must approve the agreement under this section if the requirements set out in this section and section 187 are met.

Note: The FWC may approve an enterprise agreement under this section with undertakings (see section 190).

Requirement that the group of employees covered by the agreement is fairly chosen

(3) The FWC 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, the FWC must, in deciding whether the group of employees covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.”

[7] In relation to the group of employees covered by the Agreement the employer contends that that group is “an organisationally, geographically and operationally distinct group of employees (ie operators)”.

[8] Nothing was put to the Commission to explain the organisation of the Employer’s business and how the operators employed at the 4 locations of:

70 Cliffords Rd, Somerton, Victoria 3062

750 Old Geelong Road, Brooklyn, Victoria, 3012

6 Baldock Court, Eaglehawk, Victoria, 3556, and

5 Coronet Street, Wendouree, Victoria, 3355,

are organisationally distinct from operators employed by the employer at -

82A Maffra Street, Broadmeadows Victoria 3047 and

21-23 Elliot Street, Dandenong 3175

and who are covered by the OneSteel Recycling (Dandenong & Coolaroo) Enterprise

Agreement 2013-2016.

[9] Nothing was put to the Commission to explain the operations of the Employer’s business and how the operators employed at the 4 locations of:

70 Cliffords Rd, Somerton, Vic, 3062

750 Old Geelong Road, Brooklyn, Vic, 3012

6 Baldock Court, Eaglehawk, Vic, 3556, and

5 Coronet Street, Wendouree, Vic, 3355,

are operationally distinct from operators employed by the employer at

82A Maffra Street, Broadmeadows Victoria 3047 and

21-23 Elliot Street, Dandenong 317

and who are covered by the OneSteel Recycling (Dandenong & Coolaroo) Enterprise

Agreement 2013-2016.

[10] Whilst it is obvious that each of the four sites identified as being covered by the Agreement in this matter are geographically separate from the two sites covered by the OneSteel Recycling (Dandenong & Coolaroo) Enterprise Agreement 2013-2016, that doesn’t shed any light on whether each group of employees is geographically distinct. The employer offers no rationale for placing employees at Broadmeadows and Dandenong together whilst excluding employees at Somerton and Brooklyn when all four locations are within the Melbourne metropolitan area. Equally the employer offers no rationale for placing Somerton and Brooklyn with the two Victorian country locations of Eaglehawk and Wendouree.

[11] The assertion from the employer that the group of employees to be covered by the Agreement is fairly chosen does not address the issue raised by s.186(3).

[12] Equally the assertion from the employer that the coverage was the same as the predecessor agreement does not address the issue raised by s.186(3).

[13] The employer has been given two opportunities to present material to the Commission in order to satisfy the Commission that the group of employees to be covered by the agreement was fairly chosen.

[14] The first opportunity was through the Form F17 - Employer’s statutory declaration in support of an application for approval of an enterprise agreement. In the present matter the Form F17 was sworn by Mr Tristan Cady, Remuneration and Benefits Advisor of the employer.

[15] The Form F17 specifically directs the employer’s attention to the issue raised by s.186(3) and (3A) through question 2.2. In the present matter the Form F17 contains the following question and answer:

Scope of the agreement

2.2 Does the agreement cover all the employees of the employer (other than senior

executives)?

( )Yes

[X ) No

See sections 186(3) and (3A) of the Fair Work Act 2009

If no-what group(s) of employees are covered by the agreement. Explain why you think the Commission should be satisfied that this group(s) was fairly chosen. lf appropriate, describe any geographical, operational or organisational qualities that make the group(s) distinct.

Consistent with previous Enterprise Agreements, the Agreement covers all Operational wages employees engaged In classifications listed In the Agreement at :

Somerton: 70 Cliffords Road, VIC 3062

Brooklyn: 750 Old Geelong Road, VIC 3012

Eaglehawk: 6 Baldock Court, VIC 3556

Ballarat: 5 Coronet Street, Wendouree, VIC 3355

However the Agreement does not cover salaried staff (administrative, technical and managerial employees).

[16] The second opportunity provided to the employer was by way of the Commission writing to the employer and seeking a response to a concern raised by the Commission. The response from the employer was given by Mr Stuart Gordon, National Manager - Employee Relations, in [5] above.

[17] Section186(3) and (3A) were considered by a Full Bench in Cimeco v CFMEU, AMWU and CEPU 1.

[18] The Full Bench said:

“[8]A member’s decision as to whether or not they are satisfied that the group of employees covered by the agreement was ‘fairly chosen’ involves a degree of subjectivity or value judgment.

[19] The Full Bench also clearly identified the role of the Commission.

“[10]The Tribunal’s first task under s.186(3) is to establish whether the agreement covers all of the employees of the employer(s) covered by the agreement. If all of the employees are covered then s.186(3A) is irrelevant but the Tribunal must still decide whether the group of employees covered by the agreement (ie. all of the employers’ employees) was ‘fairly chosen’. In some circumstances it may not be fair to choose all of the employees of an employer as the group to be covered by an agreement. If all of the employees are not covered then the Tribunal must make a finding as to whether the group of employees covered by the agreement is geographically, operationally or organisationally distinct. Absent such a finding the Tribunal cannot properly perform its statutory task. Section 186(3A) provides that the Tribunal must take that matter (ie. whether the group is geographically, operationally or organisationally distinct) into account and give it due weight, having regard to all other relevant factors. Finally, the Tribunal must state its reasons for concluding that the group of employees either was or was not fairly chosen.”

and

[16]Curiously the Act does not specify how the matters in s.186(3A) are to be taken into account. The context and legislative history are relevant. In terms of the context each of the characteristics identified in s.186(3A) has a degree of objectivity about them. The selection of the group of employees to be covered by an agreement on some objective basis (as opposed to an arbitrary or subjective basis) is likely to favour a conclusion that the group was fairly chosen.

and

[19]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.

[20]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.

[21] 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 this regard, it is not only the interests of the employees covered by the agreement that are relevant; the interests of those employees who are excluded from the coverage of the agreement are also relevant. We note that there is a suggestion to the contrary in the oral submissions put on behalf of Cimeco when counsel submitted that:

“It was an erroneous approach to introduce the identification of the persons who were relevantly employed at the time of the making of the agreement for the purposes of testing the group chosen.” 12

[22]To the extent that it is suggested that the interests of the excluded employees are irrelevant we reject that submission. In evaluating whether the group to be covered by the agreement has been fairly chosen it is entirely appropriate to have regard to the consequences of that choice, that is, which employees have been excluded from the agreement.”

[footnotes omitted]

[20] As the Full Bench makes clear the Commission must take into account whether the group of employees is geographically, operationally or organisationally distinct. Additionally, the Full Bench observed at [19]:

“[19]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.

[21] The Full Bench makes clear that the Commission must come to a concluded view as to the issue raised by s.186(3A):

“If all of the employees are not covered then the Tribunal must make a finding as to whether the group of employees covered by the agreement is geographically, operationally or organisationally distinct. Absent such a finding the Tribunal cannot properly perform its statutory task.”

[22] In the present matter the paucity of material provided by the employer is such that the Commission cannot conclude that the group of employees to be covered by the agreement is geographically, operationally or organisationally distinct. Therefore the Commission must conclude that the group of employees to be covered by the agreement is not geographically, operationally or organisationally distinct.

[23] This conclusion would, in the words of the Full Bench, “be a factor telling against a finding that the group was fairly chosen”.

[24] It is a factor, but the Commission must take into account all relevant circumstances before coming to a concluded view as to whether the group of employees to be covered by the agreement is fairly chosen.

[25] It is a relevant consideration that (1) the previous agreement had the same coverage provision and (2) that the bargaining representatives for employees have not opposed the coverage of the agreement. These a

re considerations which may support a finding that the group of employees is geographically, operationally or organisationally distinct.

[28] However, considering all of the circumstances of this matter the Commission is not satisfied that the group of employees to be covered by this agreement was fairly chosen.

[29] As I cannot be satisfied that the group of employees is fairly chosen I must not approve the agreement.

[30] The application in this matter is dismissed.

COMMISSIONER

1 [2012] FWAFB 2206.

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