[2014] FWCFB 4011

FAIR WORK COMMISSION

DECISION


Fair Work Act 2009
s.604 - Appeal of decisions

Construction, Forestry, Mining and Energy Union
v
St John of God Health Care Inc; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia; "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)
(C2013/1770)

SENIOR DEPUTY PRESIDENT HARRISON
COMMISSIONER BLAIR
COMMISSIONER WILLIAMS

SYDNEY, 17 JUNE 2014

Appeal against decision [2013] FWCA 7552 by Commissioner Cloghan in matter number AG2013/2817, model consultation clause, compliance with s.201 and s.205 of the Fair Work Act 2009 (Cth).

[1] This decision concerns an appeal under s.604 the Fair Work Act 2009 (the Act) by the Construction, Forestry, Mining and Energy Union (CFMEU). The appeal is against a decision 1 of Commissioner Cloghan in which he approved an enterprise agreement known as the St John of God Health Care Maintenance Caregivers Agreement 2013 (the Agreement).2 The grounds of appeal are confined to the Commissioner’s findings regarding the consultation term of the Agreement.

Relevant legislative provisions

[2] The application for approval of the Agreement was made under s.185 of the Act. Sections 186 and 187 set out a number of requirements about which the Commission must be satisfied before approving an agreement. Pursuant to s.190, the Commission may approve an enterprise agreement with undertakings where it has a concern that the agreement does not meet the requirements of ss.186 and 187. Division 5 of Part 2-4 of the Act contains additional provisions, described as mandatory terms, which must be in an enterprise agreement. A consultation term is one such provision. Section 205, at the time that the Agreement was approved, read as follows: 3

[3] As is clear from s.205(2), where an enterprise agreement does not include a consultation term which meets the requirements of s.205(1), the model consultation term is taken to be a term of the agreement. In that case, s.201 is relevant. We reproduce part only of that section below:

[4] Regulation 2.09 of the Fair Work Regulations 2009 (the Regulations) provides that for the purposes of s.205(3) the model consultation term is that which is set out in Schedule 2.3 of the Regulations. We have reproduced in Annexure A to this decision the relevant model consultation term. 4

The Commissioner’s decision

[5] An application was made by St John of God Health Care Inc. (the respondent) under s.185 of the Act for approval of the Agreement. The Agreement covers “caregivers” engaged in the respondent’s hospitals in Western Australia. A “caregiver” is defined by clause 6.1(a) of the Agreement as being an employee of the respondent. Broadly speaking, these employees are classified as either metal or building trades employees. They may be engaged on a full-time, part-time, or casual basis.

[6] The CFMEU, being a bargaining representative for the Agreement, filed a F18 ‘Declaration of Employee Organisation in relation to an Application for Approval of Enterprise Agreement’, giving notice that it wanted to be covered by the Agreement. The union indicated in its declaration that it supported approval of the Agreement and did not raise any objections in relation to the application. Similarly, the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) filed F18 forms, indicating their support for approval of the Agreement. Consequently, the Commissioner’s decision notes that the CFMEU, AMWU and CEPU are covered by the Agreement.

[7] Clause 44 of the Agreement is titled “Introduction of Change and Redundancy”. It deals with the respondent’s obligation to consult where it has decided to take action that is likely to have a significant effect on a caregiver or it has decided to make a caregiver’s position redundant. It also contains redundancy entitlements, which are superior to those that are found in the Act under the National Employment Standards. 5 Relevantly, a caregiver is defined for the purposes of clause 44 as excluding employees engaged on a casual or temporary basis, and those on a fixed term contract. We reproduce clause 44 in its entirety:

[8] The Commissioner formed the view that the above clause did not comply with s.205(1), to the extent that it does not allow for the representation of employees covered by the Agreement for the purposes of consultation. The Commissioner, through email correspondence sent by his chambers, sought an undertaking from the respondent in this regard. The respondent advised that the right to representation was purportedly recognised by clause 44(3). That subclause is reproduced above.

[9] The CFMEU wrote to the Commissioner’s chambers regarding his request for an undertaking from the respondent. It expressed the view that neither clause 44(3), nor any other provision in that clause, satisfied the requirements of s.205(1)(b) and that this could not be addressed by an undertaking given under s.190 of the Act. That section only envisaged undertakings in circumstances where the Commission had concerns that an agreement did not meet the requirements of ss.186 and187. Additionally, the CFMEU submitted clause 44 did not extend the entitlement to be consulted to all of the employees under the Agreement. It excluded casual, temporary and fixed term employees. In this regard it was submitted that the clause did not meet the requirements of s.205(1)(a). This too could not properly be rectified by an undertaking given pursuant to s.190 of the Act. The union submitted that the Commissioner should approve the Agreement and note in his approval decision, as required by s.201(1)(b)(ii), that the model consultation term is taken to be a term of the Agreement. The AMWU and CEPU supported the CFMEU’s submissions.

[10] The respondent indicated that it would be content for the model consultation term to apply to the extent of any inconsistency with clause 44 and that this could be achieved by either an undertaking or, in accordance with the CFMEU’s submission, the decision noting that the model consultation term is taken to be a term of the Agreement. It expressed its concern regarding the implications of the model term applying, so far as the term might expand the group of employees who would have an entitlement to the enhanced redundancy provisions in clause 44.

[11] No further correspondence was exchanged between the Commissioner and the parties. The Commissioner approved the Agreement and in his decision doing so said:

The grounds of appeal

[12] The CFMEU bases its appeal on three grounds, characterising each as an error of law. It submits that we should grant permission to appeal, quash the Commissioner’s decision and approve the Agreement, noting that the model consultation term is taken to be a term of the Agreement. The AMWU and CEPU support the submissions of the CFMEU.

[13] Firstly, the CFMEU submits that the Commissioner erred by failing to find that the Agreement does not include a consultation term that complies with s.205(1) of the Act. Citing the extract of the Commissioner’s decision that we have reproduced earlier, the CFMEU submits that the Commissioner failed to explicitly find that clause 44 does not meet the requirements of s.205(1). It argues that clause 44 is deficient in two respects: it excludes casual, temporary and fixed term employees from the requirement that the respondent must consult with its employees, and it does not entitle employees covered by the Agreement to representation for the purposes of consultation. Although the Commissioner identified that the clause did not meet the requirements of s.205(1)(a), he does not make explicit in his decision that the clause does not satisfy s.205(1). The respondent does not dispute the CFMEU’s submissions in this regard.

[14] Secondly, the CFMEU submits that the Commissioner erred by failing to note in his decision, as required by s.201(1)(b)(ii), that the model consultation term is taken to be a term of the Agreement, as the Agreement does not contain a term that complies with s.205(1). The respondent does not dispute this argument.

[15] Finally, the CFMEU submits that the Commissioner erred in finding that the consultation term applies to the extent of any inconsistency with clause 44 of the Agreement. The union argues that such a finding was not consistent with s.205(2) which states that where an Agreement does not contain a consultation term the model consultation clause is taken to be a term of the Agreement. The respondent does not contest this argument but maintained, as it did below, its concern that the provisions relating to the quantum of redundancy payments should not be extended to all employees covered by the Agreement. They should remain available only to the specific group of employees referred to in clause 44(1).

Extension of time

[16] Before we deal with the grounds of appeal we should first attend to the application by the CFMEU to extend the time for filing its appeal. Appeals are to be instituted within 21 days after the date of the decision being appealed, however, the Commission has a discretion to allow an extension of time for filing. 6 The CFMEU appeal was lodged 24 days out of time. It seeks an extension of time on the basis it did not receive fair and adequate notification of the Commissioner’s decision.

[17] We note that the Commissioner’s decision was sent via email to a CFMEU organiser, who, we accept, was not the person who had been involved in the approval process of the Agreement and was not in a position to appreciate the significance of the decision. He was not the person named in the CFMEU’s F18 as the appropriate contact person. All previous correspondence regarding the approval of the Agreement between the Commissioner’s chambers and the CFMEU was sent to or from Mr Michael Buchan, the WA Branch Secretary or Mr Jack Nicholas, a Senior Lawyer of the CFMEU however the decision was not sent to them. It was as a result of some enquiries Mr Nicholas had made that the fact the decision had been published came to his attention. The appeal was lodged on the next business day.

[18] The CFMEU submits that the above facts provide a satisfactory explanation for the delay. It submits that the length of the delay should not, of itself, preclude an extension from being granted and that there would be no significant prejudice to the respondent. It submits that the grounds of appeal relate to the statutory task which the Commissioner was obliged to undertake in approving the Agreement and that it is likely, in its view, that the appeal will be upheld.

[19] The respondent did not make any submissions with respect to whether the CFMEU should be granted the extension of time sought.

Our decision

[20] We have decided to extend the time for filing the appeal. The explanation for the delay in filing the appeal is acceptable and the delay is not significant. The respondent does not oppose the extension of time being granted and identifies no prejudice it will suffer if time was to be so extended. For reasons we will shortly give, the grounds of appeal raise matters which are sufficient to warrant the grant of permission to appeal.

[21] We turn first to s.205 of the Act. It is, as we have earlier noted, in that part of the Act which deals with mandatory terms which must be in an agreement. Parties are able to agree on the terms of a consultation clause they wish to have in their agreement however it must contain the two key elements in s.205(1). 7 The first is the employer’s obligation to consult. That obligation is in respect of any employee who is relevantly affected by a change. Clause 44 excludes certain employees from the respondent’s obligation to consult in the event there was to be major workplace change which was likely to have a significant effect on them. Such a limitation is not consistent with s.205(1)(a).

[22] The second element in s.205 is the requirement for the consultation clause to allow for all employees covered by an agreement to be represented for the purposes of the consultation envisaged by s.205(1)(a). Again, all employees are to have that entitlement and a consultation term must not limit it. In our opinion, clause 44 did not extend the right to representation to all employees covered by the Agreement.

[23] The consequence of the two deficiencies in clause 44 was that the Agreement did not include a consultation term complying s.205(1). Section 205(2) provides that in those circumstances the model consultation term is taken to be a term of the Agreement. Section 601 required the Commissioner to publish a written decision having decided to approve the Agreement. In doing so, the Commissioner erred by failing to note in his decision, as required by s.201(1)(b), that the model consultation term is taken to be a term of the Agreement.

[24] The comments made by the Commissioner in paragraph [5] were not sufficient to comply with s.201(1)(b) of the Act. Whether the respondent conceded the model consultation term applied or not is not to the point. It was for the Commissioner, having decided for himself the Agreement did not include a consultation term as required by s.205, to note in his decision that the model consultation term was to be taken to be a term of the Agreement. His comment that the model consultation term would apply to the extent of any inconsistency with clause 44 did not satisfy that requirement. Again, in this respect, it matters not that the respondent may have made a concession to that effect.

[25] Although the Commissioner did not refer expressly to the possibility of an undertaking from the respondent being given pursuant to s.190 of the Act, to the extent his comments in paragraph [5] about the respondent’s concession may somehow rely on that section it is sufficient for us to note that s.190 only arises when a member has concerns an agreement does not comply with ss.186 and 187. It is not applicable where an agreement does not contain a consultation term as required by s.205.

[26] For the foregoing reasons we are persuaded that the Commissioner failed to comply with the requirements of ss.201 and 205 of the Act. These are not discretionary matters and in failing to properly apply those sections of the Act the Commissioner made errors of law. They are such as to warrant the grant of permission to appeal and for the appeal to be upheld. Pursuant to s.607(3)(a) we vary the Commissioner’s decision in so far as it purports to comply with s.201(1)(b) of the Act and in lieu find that as the Agreement does not include a consultation term as required by s.205, the model consultation term is taken to be a term of the Agreement.

[27] Finally, we should comment on the concern raised by the respondent as to the practical effect of the ruling we have made. In our opinion, noting in the approval decision that the model consultation term is taken to be a term of the Agreement does not extend access to the enhanced redundancy payments to employees beyond those clause 44 identified as having those entitlements. The model consultation term regulates only the respondent’s obligations in respect of consultations it must undertake and provides for the right of an employee to be represented in those consultations. We should observe that we did not understand the CFMEU to be asserting to the contrary. Certainly we did not take the union to submit that the impact of the model consultation term being taken to be a term of the Agreement was such as to displace all of the provisions of clause 44. If that was so it would exclude the enhanced redundancy payments from those employees identified in the clause. The issues raised in this decision suggest that it may be better in any future enterprise agreements for the parties to separate the consultation term from any term providing for substantive employee entitlements.

SENIOR DEPUTY PRESIDENT

 

Annexure A

 1   [2013] FWCA 7552.

 2   AE404443.

 3   Section 205 of the Act was amended by the Fair Work Amendment Act 2013. It now states that the consultation term must require an employer to consult with employees to whom the agreement applies about a change to their regular roster or ordinary hours of work. That amendment to the Act applies to enterprise agreements made after 1 January 2014.

 4   The model consultation term has since been amended to reflect the amendments to s.205 by the Fair Work Amendment Act 2013.

 5   See ss.119 – 123 of the Fair Work Act 2009 (Cth).

 6   Rule 12 prior to 1 January 2014 and rule 56 after that date.

 7   Consultation clause in modern awards [2013] FWCFB 10165 at paragraph [44].

 

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