[2017] FWCFB 2459 [Note: refer to the Federal Court order dated 9 November 2017 NSD840/2017 for result of appeal].
FAIR WORK COMMISSION

DECISION


Fair Work Act 2009

s.604 - Appeal of decisions

Thiess Pty Ltd
v
Construction, Forestry, Mining and Energy Union
(C2017/1073)

DEPUTY PRESIDENT GOSTENCNIK
DEPUTY PRESIDENT CLANCY

COMMISSIONER LEE

MELBOURNE, 23 MAY 2017

Appeal against decision [2017] FWC 718 of Commissioner Roe at Melbourne on 6 February 2017 in matter number AG2016/7396; whether the Commissioner erred in finding that employees who voted to approve an enterprise agreement were not covered by it; whether the Commissioner erred in concluding s.186(2)(a) had not been satisfied; construction of coverage provision of enterprise agreement; error established; permission to appeal granted; appeal upheld; decision quashed; application remitted for determination by another Member.

Background

[1] On 29 November 2016 an enterprise agreement titled the MTP Enterprise Agreement 2016 (Agreement) was purportedly made when three employees of Thiess Pty Ltd (Thiess) who are said to be covered by the Agreement approved the Agreement by voting for it. By application lodged on 1 December 2016 Thiess applied to the Fair Work Commission (Commission) under s.185 of the Fair Work Act 2009 (Act) for the approval of the Agreement.

[2] The Construction, Forestry, Mining and Energy Union (CFMEU) was not a bargaining representative for the Agreement but it was given an opportunity to make submissions and to be heard by Commissioner Roe, the Member of the Commission to whom the application for approval had been allocated, in relation to the question whether the Agreement should be approved.

[3] The Commissioner determined by a decision published on 6 February 2017 (Decision) that the application be dismissed. 1 By its notice of appeal lodged on 27 February 2017 Thiess seeks permission to appeal and appeals the Decision.

[4] The notice of appeal sets out seven grounds of appeal, which variously deal with:

[5] The Commissioner’s Decision is succinctly set out at [41] – [42] of the Decision as follows:

[6] Although the Commissioner devoted many paragraphs of the Decision to the question whether the group of employees covered by the Agreement was fairly chosen, and also a few paragraphs to the question whether there are reasonable grounds for believing that the Agreement had not been genuinely agreed to by the employees, it seems to us, on the basis of the paragraphs set out above that the Commissioner decided to dismiss the application on the basis that the employees who voted for the Agreement were not covered by it. Once he had dismissed the application, as the Commissioner apparently did at [41] there was nothing more to consider so far as the application was concerned. It ended there. We therefore propose to deal with the question of whether permission to appeal should be given, and if so whether the appeal should be upheld by reference to the one ground of appeal raised by Thiess relating to the coverage issue.

[7] The scope or coverage of the Agreement is dealt with in clause 3 and provides the following:

[8] It is uncontroversial that at the time the employees voted to approve the Agreement, Thiess did not have a contract to perform any work at the Mt Pleasant Mine and so none of the employees who voted to approve the Agreement were working at the Mt Pleasant Mine. It has since entered into a contract to perform work at Mt Pleasant Mine. 7

[9] The Commissioner commences his consideration of the question whether the three employees who voted to approve the Agreement were covered by it at [17] of the Decision. At [18] and [19] the Commissioner refers to the statutory provision concerning coverage and the provision in the Agreement which sets out coverage, and at [20] the Commissioner sets out, the submissions of Thiess concerning the work performed by the three employees. It appears on the face of the Decision that the Commissioner accepted the matters set out at [20].The Commissioner thereafter sets out his analysis and conclusion as to the coverage issue as follows:

Ground of appeal and contentions

[10] The ground of appeal raising the coverage issue is essentially as follows.

[11] The Commissioner’s conclusion that he was not satisfied that the employees who voted for the Agreement were covered by it, with the consequence that he was not satisfied that the Agreement was genuinely agreed to by the employees covered by the Agreement, as required by s.186(2)(a) of the Act is wrong because the Commissioner:

[12] In summary, Thiess contends that the Commissioner erred at [22] of the Decision in concluding that the three employees who voted for the Agreement were not covered by the Agreement for the purposes of s.186(2)(a) of the Act. 9 It says that pursuant to s.53(1) of the Act, an enterprise agreement covers an employee or employer if the agreement is expressed to cover (however described) the employee.10 By clause 3 of the Agreement, it expressed to cover the three employees because the employees were engaged to work in connection with, the Mt Pleasant Mine Project on work necessary for or preparatory to work at the Mt Pleasant Mine Project.11 It maintains that the description in clause 3 of the Agreement of “work necessary for or preparatory to work at the Mt Pleasant Mine Project” is not limited to work that it is necessary for or preparatory to, work at the project in relation to which Thiess has a contract.12 Rather, it includes work carried out before the primary work occurs, and work in anticipation or expectation of that work (or in anticipation or expectation of entering into a contract to perform work).13 Such work is described by the Agreement by its purpose as necessary or preparatory work.

[13] Thiess contends that the evidence accepted by the Commissioner, as is apparent from his reasons at [20] and [22], was that:

[14] Thiess contends that on the accepted evidence, the work conducted by the three employees appointed to the mobilisation team was ‘necessary for and preparatory to work’ at the Project and on its construction clause 3 of the Agreement it was not necessary for Thiess to have secured the work by entering into a contract and it is sufficient for the work performed by the three employees to fall within clause 3 if the work in relation to which the employees were engaged to perform was carried out in anticipation or expectation that Thiess would secure the work at the Project. 17

[15] The CFMEU contends the Commissioner’s Decision was correct and that on proper construction of clause 3 of the Agreement, the assignment by Thiess of the three employees who voted to approve the Agreement to carry out the pre-mobilisation work, did not have the result that the employees were “engaged to work at, or in connection with, the Mt Pleasant Mine Project (including work necessary for and prepatory to work at the Mt Pleasant Mine)”. 18 This is because as no contract to carry out work at the Mt Pleasant Mine had been signed when the vote occurred, there were no employees who could be said to be engaged to work at, or in connection with, the project, whether such work was prepatory or otherwise.19

[16] The CFMEU contends that the Commissioner’s consideration of the nature of the employees’ employment was also relevant in the context of considering whether the three employees were engaged in accordance with clause 3 of the Agreement. 20 The nature of the employees’ employment and its context included the following:

[17] It says that these matters were clearly relevant to a consideration of whether there had been the requisite engagement under clause 3 of the Agreement. It says that the three employees were otherwise engaged by Thiess and appointed to perform work on pre-mobilisation duties pending the work being secured and contends that the best that could be said was that the employees may become covered by the Agreement once a contract awarding work at the Mt Pleasant Mine had been awarded. 24 However at the time when the three employees voted to approve the agreement they were not covered by it.


Consideration

[18] At [23] of the Decision the Commissioner said as follows:

[19] Three things are apparent from the passage above. First, the Commissioner construed the words “Mt Pleasant Mine Project” in clause 3 of the Agreement as meaning a state of affairs which required Thiess to have a contract for work at the Mt Pleasant Mine. Secondly, if work at the Mt Pleasant Mine had been secured, the pre-mobilisation work in which the three employees were then engaged would fall within the scope of clause 3 of the Agreement with the consequence that the three employees would be covered by the Agreement. Thirdly, its seems to follow on the evidence accepted by the Commissioner, which was not challenged by the CFMEU on appeal, that if clause 3 of the Agreement did not require a contract to perform work at the Mt Pleasant Mine to have been secured, the pre-mobilisation work in which the three employees were engaged fell within the scope of clause 3 with the consequence that these employees were covered by the Agreement when they voted for it.

[20] Accordingly the issue that falls for determination is whether the words “work at, or in connection with, the Mt Pleasant Mine Project” read with the words “including any work necessary for and preparatory to work at the Mt Pleasant Mine Project” require there to have been a contract in existence for Thiess to carry out work at the Mt Pleasant Mine in order for the three employees to be covered by the Agreement at the relevant time. That is an exercise of agreement construction.

[21] Without reciting at length the principles applicable to the construction of an enterprise agreement, much like the approach to construing a statute, the construction of an enterprise agreement begins with a consideration of the ordinary meaning of the words used, having regard to the context and evident purpose of the provision or expression being construed. Context may be found in the provisions of the agreement taken as a whole, or in their arrangement and place in the agreement being considered. The statutory framework under which the agreement is made may also provide context, as might an antecedent instrument or instruments from which particular provisions might have been derived.

[22] Part 2-4 of the Act regulates making, approval and variation of enterprise agreements. The objects of that Part include “to provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements to deliver productivity benefits”. 26 “Enterprise” is defined broadly as meaning “a business, activity, project or undertaking”.27 The scheme established by Part 2-4 contemplates, inter alia, the making of “single enterprise agreements” made with employees who are employed at the time the agreement is made and who will be covered by the agreement, or with one or more relevant employee organisations, the later described as a greenfields agreement.28 It is thus apparent that as an enterprise is a “business, activity, project or undertaking”, the legislative scheme contemplates that a single enterprise agreement may be made covering employees in respect of work undertaken in contemplation of or as part of the process to enable, work for which a tender has been or will be submitted, to be secured. The same Agreement may also cover employees performing work on a project won through the tender. So much, we think is not controversial.

[23] Requirements concerning the giving of a notice of employee representational rights to employees are set out in ss.173 and 174 of the Act, while provisions governing the appointment and revocation of appointment of bargaining representatives are to be found in ss.176 to 178A. Section 180 of the Act contains a number of preapproval requirements with which an employer must comply before making a request that employees approve an agreement. Section 181 sets out when and by what means the employer may request employees employed at the time who will be covered by the agreement to approve the agreement by voting for it.

[24] Section 182 of the Act relevantly provides that an enterprise agreement that is a single enterprise agreement but not a greenfields agreement is made when a majority of employees that will be covered by a proposed single enterprise agreement who had been asked to approve the agreement under subsection 181(1) cast a valid vote approving the agreement.

[25] Section 185 of the Act regulates the process by which an application for approval of an enterprise agreement by the Commission is to be made and ss.186 and 187 are the provisions by which the Commission has power to approve an enterprise agreement. These provisions set out the various matters about which the Commission must be satisfied before approving an agreement. One of these matters is whether the agreement, the subject of the approval application, has been genuinely agreed to by the employees covered by the Agreement. 29

[26] As the recent decision of a Full Court of the Federal Court in Shop, Distributive & Allied Employees Association v ALDI Foods Pty Ltd 30(Aldi) makes clear, the matter with which the enquiry in s.186(2)(a) of the Act is concerned:

[27] How and when an enterprise agreement “covers” (as distinct to “applies” to) an employee, is relevantly set out in s.53(1) of the Act as follows:

[28] Section 256A of the Act makes provision for the description in an enterprise agreement of, relevantly, employees as follows:

[29] A reference in the Act to an enterprise agreement covering an employee is, as s.53(6) makes clear, a reference to the agreement covering the employee in relation to particular employment.

[30] Putting to one side the question of whether the group of employees covered by an enterprise agreement was fairly chosen, there is nothing in the legislative scheme that we have described above, which would limit an enterprise agreement in expressing, for example that the agreement covers particular classes of employees who are engaged to work at a particular location and as well as those classes of employees who are engaged to perform work in connection with a bid or tender for work to be carried out at that location (or in anticipation of the work the subject of the tender, being secured). In essence this is how Thiess says clause 3 of the Agreement operates.

[31] We have earlier set out the full terms of clause 3 of the Agreement. The manner in which that clause describes the employees covered by the Agreement is first, by reference to their engagement in work at a particular project, or work in connection with that project. Secondly, by reference to that work falling within a classification for which provision is made. Clause 3 also describes the employees who are not covered by the Agreement by reference to the principal nature of the duties in which an excluded employee is engaged.

[32] There is nothing in clause 3 of the Agreement which suggests that work “in connection with, the Mt Pleasant Mine Project” requires Thiess to have entered into a contract to carry out work at the Mt Pleasant Mine. The words “in connection with” are notoriously of wide import, but are subject to the context in which they are used and to words with which they are associated. 32 We consider that these words used in the context of clause 3 can, and do, describe work carried out in furtherance of securing work at the Mt Pleasant Mine. Although Mt Pleasant Mine is an identifiable location, the word “Project”, though capitalised in the Agreement, is itself not defined. Contextually, the word “Project” used in conjunction with Mt Pleasant Mine is a noun and there is no reason apparent to us that it should not carry its ordinary meaning. The ordinary meaning of “project” when used as a noun is “something that is contemplated, devised, or planned; a plan, a scheme, an undertaking”.33

[33] It seems to us therefore that that description in the Agreement of the “Mount Pleasant Mine Project” is capable of including the work associated with winning work, work undertaken in anticipation of winning work and work in readying or preparing for the commencement of work at Mt Pleasant Mine in the event that work for which a tender was submitted, is awarded. Such work is necessarily limited to work capable of being carried out by employees in classifications for which the Agreement provides and the exclusion of work carried out by employees by reason of the principal functions of duties in which they are engaged identified in clause 3.

[34] Whilst it is clear that in order that an employee is “engaged to work…the Mt Pleasant Mine Project” that employee must be physically working at that Mt Pleasant Mine location, that is not the case in respect of an employee engaged to work “in connection with the Mt Pleasant Mine Project”, because as we have discussed above, that description is apt to include work readying or preparatory work to enable the commencement of work at the Mt Pleasant Mine in the event of a successful tender.

[35] On this construction the words in brackets “including work necessary for and preparatory to work at the Mt Pleasant Mine” are unnecessary. However it seems apparent that the words are included for the avoidance of doubt as to the class of employee covered by the Agreement. The words serve to underscore the construction we discuss above.

[36] For these reasons we consider that the Commissioner erred in concluding that the employees who voted to approve the Agreement were not covered by it because they were not engaged in “work . . . in connection with, the Mt Pleasant Mine Project”. On the facts accepted by the Commissioner as constituting the work undertaken by the three employees, they were covered by the Agreement when voting to approve it.

Disposition

[37] As is apparent from our reasons above we have concluded that Thiess has made good the first ground of its appeal. We are persuaded that permission to appeal should be granted because error in the Decision has been established and the nature of the error identified raises for consideration the proper administration of the agreement approval powers of the Commission. The erroneous construction of the coverage provision of the Agreement resulted in an incorrect conclusion that the requirements in s.186(2)(a) of the Act had not been met. The error is jurisdictional in nature in that satisfaction of that requirement is, amongst other matters, a precondition to the exercise of the enterprise agreement approval power.

[38] For the reasons given we would uphold the appeal and quash the decision. We propose to remit the application for the approval of the Agreement to Commissioner Lee.

Order

We order that:

Seal of the Fair Work Commission with Member's signature

DEPUTY PRESIDENT

Appearances:

Mr A Herbert, Counsel with Mr M Moy and Ms S Fryer for Thiess Pty Ltd.

Mr T Slevin, Counsel with Ms J Short for the CFMEU.

Hearing details:

2017.
Brisbane.
2 May.

 1   [2017] FWC 718.

 2   Form F7 – Notice of Appeal, dated 27 February 2017 at question 2.1.1(a) – (c); see also Appellant’s Outline of Submissions dated 31 March 2017 at [11] – [41].

 3   Ibid at question 2.1.2(a) – (d); Ibid at [42] – [55].

 4   Ibid at question 2.1.5(a) – (b); Ibid at [63] – [70].

 5   [2017] FWC 718.

 6   MTP Enterprise Agreement 2016, at clause 3.

 7   Transcript PN12.

 8   [2017] FWC 718.

 9   Appellant’s Outline of Submissions, dated 31 March 2017 at [11].

 10   Ibid at [13].

 11   Ibid at [12].

 12   Ibid at [16]; see also Transcript PN41 – PN46.

 13   Ibid; see also Transcript PN47.

 14   Ibid at [15(a)].

 15   Ibid at [15(b)].

 16   Ibid at [15(c)].

 17   Ibid at [16]; see also Transcript PN47 – PN48.

 18   Respondent’s Outline of Submissions, undated at [14]; see also Transcript PN272 and PN285 – PN286.

 19   Transcript PN272, PN285 – PN286 and PN296.

 20   Respondent’s Outline of Submissions, undated at [15]; see also Transcript PN321 – PN322.

 21   Appellant’s Outline of Submissions, dated 24 January 2017 quoted in 2017 FWC 718 at [20].

 22   Ibid.

 23   Ibid.

 24   Respondent’s Outline of Submissions, undated at [14]; see also Transcript PN296.

 25   [2017] FWC 718.

 26   Fair Work Act 2009 (Cth) s.171(a).

 27   Fair Work Act 2009 (Cth) s.12.

 28   Fair Work Act 2009 (Cth) s.172.

 29   Fair Work Act 2009 (Cth) s.186(2)(a).

 30   [2016] FCAFC 161.

 31   Ibid at [134] per White J, with whose reasons on this point Katzmann J expressly agreed (see at [54]).

 32   See for example, Perrett v Commissioner for Superannuation (1991) 29 FCR 581; Burswood Management Limited and Others v Attorney-General (Cth) and Another (1990) 23 FCR 144; and Collector of Customs v Pozzolanic Enterprise Pty Ltd (1993) 43 FCR 280.

 33  Susan Butler, Macquarie Dictionary (MacquarieMacquarie Dictionary Publishers Pty Ltd, 5th ed, 2009).

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