DECISION

Fair Work Act 2009
s.604 - Appeal of decisions

Construction, Forestry, Maritime, Mining and Energy Union
v
CPB Contractors Pty Limited
(C2018/2635)

[1] The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) has lodged an appeal pursuant to s 604 of the Fair Work Act 2009 (FW Act), for which permission to appeal is required, against a decision issued by Commissioner Riordan on 9 May 2018 1 (Decision) to approve the CPB Contractors NSW Civil Works Enterprise Agreement 2017-2021 (Agreement) on the basis of the acceptance of a number of undertakings. The CFMMEU had sought to be heard in opposition to approval of the Agreement before the Commissioner, but its application in that respect was refused by the Commissioner in an interlocutory decision issued on 29 March 20182 (interlocutory decision). The CFMMEU contends in its further amended notice of appeal that the Commissioner erred in approving the Agreement on the following grounds:

(1) The CFMMEU was denied procedural fairness, in circumstances where it was covered by the preceding enterprise agreement, the Leightons Contractors (NSW/ACT) Civil Projects CFMEU, AWU, AMWU Enterprise Agreement 2012-2016 (predecessor agreement) which ceased to have application upon approval of the Agreement.

(2) The Commissioner erroneously refused to hear the CFMMEU on the basis that the Australian Workers’ Union (AWU) was the principal union in the civil construction industry and would act as the natural contradictor in the matter.

(3) The Commissioner erroneously accepted an undertaking which impermissibly reduced the scope of the Agreement as provided for in clause 3.3.

(4) Clause 3.3 of the Agreement was contrary to ss 53 and 58 of the FW Act because it purported to exclude the operation of the Agreement in areas covered by later greenfields and project agreements. It was an unlawful term under s 194(ba) because it provided a method by which the employer, CPB Contractors Pty Ltd (CPB) and its employees could elect, unilaterally or otherwise, not to be covered by the Agreement, and permitted a variation to the Agreement in a manner not permitted by Div 7 of Pt 2-4 of the FW Act.

(5) The Commissioner erred in determining there were no reasonable grounds for believing the Agreement had not been genuinely agreed to for the purposes of s 188(c), in circumstances where:

● clause 3.3, which purported to allow for the negotiation of new project-specific agreements to the exclusion of the Agreement, could not be effective because it was contrary to ss 53 and 58 of the FW Act and was unlawful for the purposes of s 194(ba);

● CPB included erroneous information in its Form F17 statutory declaration filed together with its application for approval of the Agreement concerning the better off overall test (BOOT) and the National Employment Standards (NES), and failed to disclose to employees that there were provisions of the Agreement which were less beneficial than the BOOT and which excluded the NES; and

● CPB informed employees that unions could be parties to the Agreement and would be invited to become parties once the application for approval of the Agreement was lodged, in circumstances where the FW Act did not allow for this.

(6) The Commissioner erred in determining there was a legitimate business rational for the scope of the Agreement in light of clause 3.3 constituting an unlawful term.

(7) The Commissioner erred in being satisfied that s 180(5) of the FW Act had been complied with in circumstances where:

● CPB included erroneous information in its Form F17 statutory declaration filed together with its application for approval of the Agreement concerning the BOOT and the NES, and failed to disclose to employees that there were provisions of the Agreement which were less beneficial than the BOOT and which excluded the NES;

● CPB failed to explain to employees that clause 3.3 was unenforceable to the extent that it allowed for subsequent project/site agreements to be made which excluded the operation of the Agreement; and

● CPB failed to explain material differences between the Agreement and the predecessor agreement.

(8) The Commissioner erred in being satisfied that the Agreement did not contravene s 55, in circumstances where:

● clauses 22 and 24, read in light of clause 6, operated so that adult employees would not receive the benefit of s 62 of the FW Act; and

● clause 26.10 operated so that employees would not receive the benefit of s 107(3) of the FW Act.

(9) The Commissioner erred in accepting an undertaking relating to the abandonment of employment provision in clause 9 of the Agreement, which could not meet the concern about the clause operating to deprive employees of the benefit provided by s 117.

(10) The Commissioner erred in accepting an undertaking in relation to clause 9 that was aspirational and uncertain.

(11) The Commissioner erred in accepting an undertaking in relation to clause 14 that was ambiguous and contradictory, as well as aspirational.

(12) The Commissioner erred in accepting an undertaking in relation to clause 13 that was ambiguous and contradictory.

(13) The Commissioner erred in accepting an undertaking in relation to clause 17 that was not capable of meeting any concern about the clause not complying with s 186(2)(c)-(d). 3

Relevant provisions of the Agreement

[2] It is necessary to set out a number of provisions of the Agreement which were the subject of the CFMMEU’s grounds of appeal. First, clause 3.3 sets out the coverage of the Agreement in the following terms:

3.3 Application

This Agreement covers all classifications referred to in Appendix "A" of this Agreement and operates in the State of New South Wales on CPB civil engineering projects and related works other than in relation to tunnelling excavation works on any such project.

In addition, this Agreement will cover any other construction related classifications that are not expressly referred to in this Agreement other than classifications involved in tunnelling work. Further, the Parties agree that any of these other construction related classifications can be included at any time in this Agreement to allow coverage of any construction work that was not foreseen at the time this Agreement was made. The Parties agree to reasonably ascribe a rate of pay to these classifications.

Provided that any other classifications already included in other existing CPB enterprise agreements (and which cover work outside of the application of this Agreement) cannot be added during the term of this Agreement. Any Greenfields or Project Specific Agreement made by the Company or Joint Venture which the Company is part and which is approved by FWC, will cover the Company and any Employees at that particular Project/site to the exclusion of this Agreement.

[3] Second, there were a number of provisions which the CFMMEU contends excluded the NES. These provisions were as follows:

9. ABANDONMENT OF EMPLOYMENT

9.1 The absence of an Employee from work for a continuous period without notification exceeding three (3) working days and without the consent of CPB or a reasonable explanation shall be prima facie evidence that the Employee has abandoned their employment.

9.2 If an Employee is absent from work for 3 working days as described above, the Employee will have a period of seven (7) working days from their last attendance at work (or from the date of their last absence where notification was given or consent was granted) to establish to the satisfaction of CPB that they were absent with reasonable cause. If the Employee is not able, within this 7 day period, to establish to CPS's satisfaction that they were absent with reasonable cause, the Employee will be deemed to have abandoned their employment.

9.3 Termination of employment by abandonment in accordance with this Clause shall operate as from the date of the last attendance at work or the last day's absence in respect of which consent was granted, or the date of the last absence in respect of which notification was given to CPB, whichever is the later.

22. OVERTIME (Monday to Friday)

. . .

22.2 An Employee recalled to work overtime after leaving CPB's business premises (whether notified before or after leaving the premises) shall be paid for a minimum of four ( 4) hours work at the appropriate rates for each time the Employee is so recalled. Except in the case of unforeseen circumstances arising, the Employee shall not be required to work the full four (4) hours if the job the Employee was recalled to perform is completed within a shorter period.

. . .

22.5 Employees under the age of eighteen (18) years shall not be required to work overtime or shift work unless the Employee so desires.

. . .

22.8 If, on the instructions of CPB, such an Employee resumes or continues to work without having had such ten (1 0) consecutive hours off duty, the Employee shall be paid at double time rates until the Employee is released from duty for such period and shall then be entitled to be absent until the Employee has had ten (10) consecutive hours off duty without loss of pay for ordinary working time occurring during such absence.

. . .

22.11 Except as provided in this clause CPB may require any Employee to work reasonable overtime.

24. WEEKEND WORK (Saturday and Sunday)

. . .

24.5 All time worked on Sundays shall be paid for at the rate of double time. An Employee required to work overtime on a Sunday shall be afforded at least four (4) hours work or paid for four (4) hours at the appropriate rate.

. . .

24.7 An Employee working overtime on a Saturday or working on a Sunday shall be allowed a paid crib time of twenty (20) minutes after four (4) hours work, to be paid for at the relevant overtime rate, but this clause shall not prevent any arrangements being made for the taking of a 30 minute meal period, the time in addition to the paid twenty (20) minutes being without pay.

24.8 In the event of an Employee being required to work in excess of a further four (4) hours, the Employee shall be allowed to take a paid crib time of 30 minutes which shall be paid at the ordinary rate of pay.

26. PERSONAL/CARERS LEAVE AND COMPASSIONATE LEAVE

. . .

26.10 Notice and evidence requirements

(a) Personal leave

(i) An Employee shall as soon as reasonably practicable, inform CPB of the Employee's inability to attend for work and, as far as practicable, state the nature of the illness or injury and the estimated duration of the Employee's absence.

(ii) Where an Employee takes a period of personal leave, the Employee must, if required, prove to CPB's satisfaction that the Employee is unable to attend for work because of a personal illness or injury.

(iii) If an Employee claims paid personal leave for one (1) day only in circumstances where the Employee has, during that same anniversary year, claimed paid personal leave for at least two other single day absences, the Employee must produce to CPB a certificate from a qualified medical practitioner stating that the Employee was unable to attend for work because of a personal illness or injury. CPB may agree to accept from the Employee, in lieu of a medical certificate, a statutory declaration stating that the Employee is unable to attend for work because of a personal illness or injury.

(b) Carer's leave

(i) An Employee shall, wherever practicable, give CPB notice prior to an absence on carer's leave of the intention to take such leave, the name of the person requiring their care and the person's relationship to the Employee, the reason for taking carer's leave and the estimate length of absence. If it is not practicable for the Employee to give prior notice of absence, the Employee must notify CPB by telephone of such absence at the first opportunity on the day of absence.

(ii) Where an Employee takes a period of carer's leave, the Employee must, if requested by CPB provide CPB with a medical certificate or statutory declaration establishing that the leave was taken for a reason entitling the Employee's to take carer's leave.

The Decision

[4] In the interlocutory decision, the Commissioner’s reasons for declining to permit the CFMMEU were as follows:

“[10] I have taken into account that the AWU is a principal union in the NSW civil construction industry, who can provide the Commission with any assistance which may be required in relation to the intricacies of the industry.

[11] I have taken into account that the AWU opposes the approval of the Agreement. As such, the AWU will act as the natural “contradictor” to CPB.

Conclusion

[12] I can see no valid reason to exercise my discretion and grant the request from the CFMEU to be heard in relation to the approval of the CPB Agreement. The CFMEU was not nominated as a bargaining agent and had no members employed by CPB at the time that the Agreement was negotiated or endorsed. I am of the view that the issues that the CFMEU wishes to raise as to why the Commission should not approve the Agreement can be argued by the AWU.

[13] After taking into account the obiter in Collinsville, the request by the CFMEU to be heard is denied.”

[5] The Decision in its entirety was as follows:

“[1] An application has been made for approval of an enterprise agreement known as the CPB Contractors NSW Civil Works Enterprise Agreement 2017 - 2021 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009(the Act). It has been made by CPB Contractors Pty Ltd (the Applicant). The Agreement is a single-enterprise agreement.

[2] The Australian Workers’ Union, New South Wales Branch (AWU) has given notice under s.183 of the Act that they wish to be covered by the Agreement. In accordance with s.201(2) of the Act, I note that the Agreement covers the organisation.

[3] The Fair Work Commission (FWC) received correspondence dated 24 April 2018, which included further material in support of the application together with Undertakings made by and duly signed by the Industrial Relations Manager NSW/ACT, of the Applicant, pursuant to s.190 of the Act (the Undertakings).

[4] I am prepared to accept these Undertakings. As provided by s.191 of the Act, the Undertakings are taken to be terms of the Agreement.

[5] I am satisfied that each of the requirements of ss.186, 187 and 188 of the Act as are relevant to this application for approval have been met.

[6] The Agreement is approved and, in accordance with s.54 of the Act, will operate from seven days after the issuing of this decision. The nominal expiry date of the Agreement is 8 May 2022.”

[6] There were five undertakings accepted by the Commissioner. Only the first two are relevant to the CFMMEU’s grounds of appeal. The first was that the second paragraph of clause 3.3 of the Agreement, which we have earlier set out, was to have no effect. The remaining undertakings were as follows:

“2. Regarding the application of clause 9 Abandonment of employment, CPD commits to ensuring that the Company shall make every reasonable endeavor to contact any employee concerned within three days of their first day of unscheduled absence.

Further, the Company shall in the absence of any response, advise the employee in writing of any decision by the Company to deem the employee has abandoned their employment. The date of termination shall be the date the decision is communicated, that is, no less than 7 days after the employee’s last missed shift.

3. To mitigate any question, dispute or difficulty in relation to casual employees engaged under the Agreement, the award clause 14 Casual employment shall be applied, subject the Agreement prevailing in the event of any inconsistency. Further, CPB expressly commits to:

a. Casuals be engaged for a minimum of 4 hours

b. Casuals be advised prior to commencement of the anticipated duration of their employment and

c. Casuals have the same right to convert to permanent employment after six months continuous service, as provided by the award clause 14.8.

4. To mitigate any question, dispute or difficulty, in relation to part-time employees engaged under the Agreement, the award clause 13 Part-time Weekly Hire shall be applied, subject the Agreement prevailing in the event of any inconsistency and substituting “38” with “36” ordinary hours in clause. 13.1

5. Clause 17 Redundancy does not undermine any rights or entitlements as prescribed by the Fair Work Act 2009 or National Employment Standards.”

Submissions

[7] The CFMMEU submitted that:

● the Commissioner’s acceptance of an undertaking which circumscribed the coverage of the Agreement altered one of the Agreement’s fundamental terms, and necessarily resulted in a substantial change to the Agreement contrary to s 190(3)(b);

● the closing paragraph of clause 3.3 purported to permit a later agreement to cover CPB and its employees to the exclusion of the Agreement during the nominal term of the Agreement, contrary to s 58 which provides that a later agreement does not apply until an earlier agreement passes its nominal expiry date;

● clause 3.3 also provided a mechanism by which CPB and its employees could elect not to be covered by the Agreement, and thus was an unlawful term under s 194(ba);

● the Commissioner erred by not considering the application of s 186(4) in concluding that the Agreement was capable of approval;

● clause 3.3 also rendered the coverage of the Agreement uncertain and incapable of enforcement, which meant that the group of employees covered by the Agreement was not “fairly chosen” as required by s 186(3) because it was not objectively or rationally premised;

● clause 9 of the Agreement operated as an automatic termination provision which deprived employees of their NES entitlement to notice of termination, or payment in lieu, under s 117 of the FW Act, and thus excluded the NES contrary to s 55(1);

● the undertaking accepted by the Commissioner did not resolve this difficulty since it reinforced clause 9 as an automatic termination provision and did not require the provision of any notice for the termination of employment;

● clause 9 as modified by the undertaking would also bring about a deemed renunciation of the employment contract by the employee without there being a dismissal, which would exclude the employee’s unfair dismissal rights under Pt 3-2 of the FW Act and thus render clause 9 an unlawful term under s 194(d) of the FW Act;

● clauses 22.2, 22.8, 22.11, 24.5 and 24.8 of the Agreement conferred power on CPB to require employees to work overtime in specified circumstances, and deprived employees of their NES right under s 62(2) to refuse to work additional hours if they are unreasonable having regard to the matters set out in s 62(3) contrary to s 55(1);

● clause 26.10 of the Agreement provides that it is a matter for CPB as to whether it accepts the sufficiency of an employee’s evidence concerning the taking of personal leave, and thus removes the NES entitlement in s 107(3) of the FW Act that such evidence is to be assessed by reference to the standard of a reasonable person contrary to s 55(1);

● the Commissioner could not have been satisfied under s 188(c) that there were no other reasonable grounds for believing the agreement had not been genuinely agreed to by the employees, because employees were presumably not told that the final paragraph of clause 3.3 could not override s 58, was unlawful, and was consequently ineffective;

● additionally, there could have been no basis for satisfaction under s 188(c) in circumstances where employees were presumably not told that there were provisions of the Agreement which excluded the NES, and were misled to believe that unions could be invited to be parties to the Agreement when it was lodged for approval with the Commission;

● similarly, the Commission could not have been satisfied that s 180(5) had been complied with, in circumstances where CPB had filed a statutory declaration which incorrectly stated that no provisions of the Agreement excluded the NES, where employees were presumably not told about the unenforceability of the final paragraph of clause 3.3;

● the third undertaking was merely aspirational because it used the verb “commit”, and it was contradictory because it provides that clause 14 of the relevant Award is to apply subject to the Agreement prevailing to the extent of any inconsistency, but then provides that the casual conversion right in clause 14.8 of the relevant Award is to apply even though the Agreement contains no casual conversion provision;

● the fifth undertaking did not appear to be referable to any concern of the type identified in s 190(1)(b), and did not contain any enforceable obligation;

● the Commission erred in denying the CFMMEU a right to be heard in circumstances where approval of the Agreement affected the CFMMEU’s rights in a direct and immediate way by depriving it of the substantive and procedural rights conferred by the predecessor agreement; and

● the discretion under s 590 of the FW Act to hear from an employee organisation miscarried, because the Commissioner relied upon the AWU being a contradictor in circumstances where it did not oppose approval of the Agreement, and premised his refusal of the CFMMEU’s request to be heard on the basis that the AWU would assist him in dealing with the intricacies of the civil construction industry when what he need to be satisfied was the matters in s 186(2) of the FW Act.

[8] CPB submitted that:

● the CFMMEU had no members covered by the Agreement, was not a bargaining representative, and had no express right to be heard under the FW Act at the hearing for the approval of the Agreement;

● the CFMMEU’s rights under the predecessor agreement, which were not specified by it, at best affected it indirectly and consequentially, and were not sufficient to confer upon it a right to a hearing;

● the Commissioner’s reliance on the expected role of the AWU in refusing the CFMMEU a hearing was not attended by appealable error, noting that the AWU intended to oppose approval of the Agreement at the time of the interlocutory decision;

● clause 3.3 was a term common to the building and construction industry, and was contained in the agreement approved by the Federal Court Full Court in CFMEU v John Holland Pty Ltd 4;

● s 58 contemplates that an employee may be covered by more than one agreement at a time, and clause 3.3 was not inconsistent with this, nor did it constitute an “opt-out” clause contrary to s 194(ba);

● clear and compelling evidence was needed to support a finding or inference that the employer had sought to manipulate the coverage of an agreement, and a legitimate business rationale can include having an enterprise agreement in place to avoid the threat of protected industrial action;

● satisfaction regarding compliance with s 180(5) required an evaluative judgment which needs to be established only to the satisfaction of the decision maker, and non-compliance with s 180(5) could not be concluded simply on the basis of inaccuracies or errors in a form;

● there was no evidence to establish that there was a reasonable ground to conclude that there had not been genuine agreement for the purpose of s 188(c) or that s 180(5) had not been complied with;

● clause 9 of the Agreement provided a standard protocol and a prima facie standard for dealing with cases of abandonment of employment, which did not involve a termination of employment at the initiative of the employer and thus did not engage s 117;

● there was nothing in clauses 22 or 24 which operated to deprive employees of the benefit of s 62 of the FW Act, and they did not require the performance of overtime as a strict obligation;

● the CFMMEU’s submission concerning clause 26.10 of the Agreement and s 107(5) of the FW Act ignored s 107(5), which allows for an enterprise agreement to include a term relating to the kind of evidence the employee must provide in order to be entitled to be paid personal carer’s leave, unpaid carer’s leave and compassionate leave, and clause 26.10 was a provision which operated consistent with s 107(5);

● the undertaking concerning the second paragraph of clause 3.3 which the Commissioner accepted, and which was responsive to concerns raised by the AWU, only served to make clear the classifications covered by the Agreement, and did not result in a significant change to the scope of the Agreement;

● the submission that other undertakings were unclear or aspirational were advanced without any regard for the context of the Agreement or the discussions which occurred involving the AWU which led to the undertakings being provided; and

● permission to appeal should be refused because none of the grounds of appeal disclosed any appealable error, a number of the grounds were contrary to authority and misconceived, and the appeal was in reality a collateral attack on the Agreement in circumstances where the CFMMEU had no members and was not at any stage a bargaining representative.

[9] The AWU submitted that it supported the CFMMEU’s position that the Commissioner erred in not permitting the CFMMEU to be heard in circumstances where the CFMMEU had been covered by the predecessor agreement, but otherwise submitted to any order which the Full Bench might make with respect to the substantive grounds of appeal.

Consideration

[10] We are satisfied that the Decision is attended by appealable error as contended by the CFMMEU in its fourth ground of appeal as earlier set out. The starting point for consideration is the FW Act’s provisions concerning when enterprise agreements cover and apply to employees and employers. Section 53(1) deals with the concept of coverage as follows:

Employees and employers

(1)  An enterprise agreement covers an employee or employer if the agreement is expressed to cover (however described) the employee or the employer.

[11] Section 52(1) deals with the application of enterprise agreements as follows:

When an enterprise agreement applies to an employee, employer or organisation

(1)  An enterprise agreement applies to an employee, employer or employee organisation if:

(a)  the agreement is in operation; and

(b)  the agreement covers the employee, employer or organisation; and

(c)  no other provision of this Act provides, or has the effect, that the agreement does not apply to the employee, employer or organisation.

[12] Section 52(1)(b) makes it clear a condition of an agreement applying to (relevantly) an employee or employee is that it must cover them.

[13] Section 58(1) provides:

Only one enterprise agreement can apply to an employee

(1)  Only one enterprise agreement can apply to an employee at a particular time.

[14] In the High Court decision in ALDI Foods Pty Limited v Shop, Distributive & Allied Employees Association, 5 it was observed, having regard to the above provisions, that the FW Act contemplated that although more than one agreement could cover employees at a particular time, only one could apply:

[33] Because an employee may be covered by more than one agreement at one time, s 58(1) of the Act provides that only one enterprise agreement can apply to an employee at a particular time. That is because only one set of rights and obligations can be in operation in relation to the work actually performed by the employee at that time in relation to particular employment. Given the terms of ss 52 and 53, it is apparent that an employee may be covered by an agreement that applies to him or her, and by an agreement that does not, at that time, apply to him or her. Furthermore, an employee may be covered by more than one agreement at any one time. To speak of an employee being covered by an agreement is to speak of the agreement providing terms and conditions for the job performed by, or to be performed by, the employee.

[15] Section 58(2) establishes a “general rule” for the determination as to which of an earlier and later agreement that are both expressed to cover a particular employee applies at a particular time. It provides:

General rule--later agreement does not apply until earlier agreement passes its nominal expiry date

(2)  If:

(a)  an enterprise agreement (the earlier agreement ) applies to an employee in relation to particular employment; and

(b)  another enterprise agreement (the later agreement ) that covers the employee in relation to the same employment comes into operation; and

(c)  subsection (3) (which deals with a single-enterprise agreement replacing a multi-enterprise agreement) does not apply;

then:

(d)  if the earlier agreement has not passed its nominal expiry date:

(i)  the later agreement cannot apply to the employee in relation to that employment until the earlier agreement passes its nominal expiry date; and

(ii)  the earlier agreement ceases to apply to the employee in relation to that employment when the earlier agreement passes its nominal expiry date, and can never so apply again; or

(e)  if the earlier agreement has passed its nominal expiry date--the earlier agreement ceases to apply to the employee when the later agreement comes into operation, and can never so apply again.

[16] It is clear, we consider, that the final paragraph of clause 3.3 of the Agreement, properly construed, offends s 58(2)(d)(i). In the terms in which the paragraph is expressed, it operated before as well as after the nominal expiry date of the Agreement. It provides that a later enterprise agreement approved by the Commission will cover CPB and its employees at a particular project or site “to the exclusion of this Agreement”. The provision is premised on the proposition that such a project or site is one which falls within the coverage of the Agreement as set out in the first paragraph of clause 3.3, since the rationale of the provision is plainly to resolve a situation in dual coverage. The final paragraph purports to exclude the coverage of the Agreement (being the earlier agreement) in favour of the later agreement for a specific project or site. As earlier explained, an agreement cannot apply to employees unless it covers them. The intended effect of the final paragraph of clause 3.3 is therefore that the later agreement will apply and the Agreement will not at the specific project or site in question. While the Agreement remains within its nominal term, that is a result which is directly contrary to that mandated by s 58(2).

[17] It follows, we consider, that the final paragraph of clause 3.3 is rendered unlawful by s 194(ba), which provides:

194 Meaning of unlawful term

A term of an enterprise agreement is an unlawful term if it is:

. . .

(ba)  a term that provides a method by which an employee or employer may elect (unilaterally or otherwise) not to be covered by the agreement; ..

[18] Section 194(ba) could not, of course, be understood as proscribing a term which merely contemplates the making, in accordance with the FW Act, of a new enterprise agreement which overlaps in coverage with an existing agreement and has application after the nominal term of the existing agreement has passed in accordance with s 58 of the FW Act. That would not constitute a method for an election not to be covered by an agreement, but simply the taking of a course expressly permitted by the FW Act under which an existing agreement may wholly or partially be replaced in its operation by a new agreement made in accordance with the FW Act once its nominal expiry date has passed. However, the final paragraph of clause 3.3 does something different: it uses the mechanism of the making and approval of a new project or site/specific enterprise agreement as a means by which CPB and a subset of employees covered by the Agreement may cease to be covered by the Agreement before its nominal expiry date. This would clearly involve a mutual election not to be covered on the part of CPB and the relevant employees (effected, in the case of CPB, by proposing a new agreement and, in the case of the relevant employees, by voting to approve the new agreement). That an election under a method proscribed by s 194(ba) may be mutual is made clear by the words “unilaterally or otherwise” in the provision.

[19] Section 186(4) provides, as a condition of approval of an agreement, that the agreement not contain any unlawful terms. There could not be the requisite satisfaction under s 186(4) where, as here, the Agreement contained a provision which was plainly unlawful under s 194(ba).

[20] As earlier stated, CPB pointed out in its submissions that the enterprise agreement which was the subject of consideration in the Federal Court Full Court decision in CFMEU v John Holland Pty Ltd 6 contained a coverage term very similar to the final paragraph of clause 3.3 of the Agreement here. John Holland involved an agreement which was the subject of an application for approval lodged on 13 February 2012 and was approved by a single member of Fair Work Australia on 22 May 2012. Section 194(ba) was added to the FW Act by Schedule 5 of the Fair Work Amendment Act 2012 (Cth), which took effect on 1 January 2013. Accordingly s 194(ba) was not applicable to the approval of the agreement under consideration in John Holland. Nor did the Full Court give any consideration to the relevant coverage term vis-à-vis s 58 of the FW Act. Accordingly we do not consider that John Holland is inconsistent with or precludes the conclusion that we have reached.

[21] A similar issue to that raised here by the CFMMEU was considered in the earlier Full Bench decision in CFMEU v TR Construction Services Pty Ltd. 7 In that decision the Full Bench said (footnote omitted):

“[29] The final ground asserts that clause 2.2 of the Agreement offends s. 194(ba) (and accordingly s.186(4)) of the FW Act, because it operated as an “opt out” clause from the coverage of the Agreement and therefore should not have been approved. Clause 2.2 provides as follows:

“Any future project or site specific arrangement entered into under the Fair Work Act 2009 (FW Act) by the Company or by any Joint Venture or similar business arrangement of which the Company is a part, will cover and apply to the Company and any employees at that particular project or site to the exclusion of this Agreement.”

[30] The Respondent argued that the clause mirrored the clause approved in CFMEU v John Holland Pty Ltd & Anor (John Holland). It contended that clause 2.2 does not permit variation of the Agreement nor is it an “opt out” clause, and contrary to the CFMEU’s submissions, clause 2.2 was consistent with s.58 which was upheld in John Holland. The Respondent contended that the clause did not permit it, or the employees, to unilaterally or otherwise “opt out” of the Agreement, and that any new agreement would require approval by the Commission in accordance with Part 2-4 of the Act.

[31] The CFMEU submitted that while the terms of clause 2.2 of the Agreement are similar to that in John Holland, it was not identical, and in any event the decision in John Holland was not relevant to a consideration as to whether clause 2.2 of the Agreement was an unlawful term, because the agreement in John Holland was approved before the insertion of s.194(ba) of the FW Act. 

[32] Clause 2.2 is drafted in terms that lack clarity. The Respondent’s submission appears to be that the reference in the clause to “any future project or site-specific arrangement entered into under the Fair Work Act” is to be understood as meaning a future enterprise agreement entered into under the FW Act, so that the clause in effect restates what the legal effect of the approval of any such future enterprise agreement would be. If so, the clause does not accurately state the effect of s.58 of the FW Act, which identifies, when two enterprise agreements cover an employee, which agreement applies to the employee. Section 58(2)(d) provides that the earlier of the two agreements applies until its nominal expiry date has passed. Accordingly, on one view, the clause does purport to allow an “opt out” contrary to the provisions of the FW Act. As submitted by the CFMEU, this issue did not arise for consideration in John Holland.

[33] We think that in all the circumstances it is preferable not to grant permission to appeal in relation to this issue. As earlier stated, as a result of the appeal being upheld in respect of ground 5 of the appeal, the application for approval of the Agreement will have to be heard afresh and re-determined. That will give the Respondent an opportunity to address any concerns that arise with respect to this clause through the provision of an undertaking. That makes it unnecessary to resolve the issue now. Permission to appeal is therefore refused in relation to ground 8.”

[22] The agreement under consideration in TR Construction Services was subsequently approved on the basis, among other things, of an undertaking that clause 2.2 was omitted from the agreement in its entirety. 8 The conclusion we have reached here is therefore consistent with the decision and outcome in TR Construction Services. It follows from our conclusion that the Commissioner erred in approving the Agreement while it contained the final paragraph of clause 3.3. This is an error of a nature which, we consider, requires the grant of permission to appeal. The appeal is upheld with respect to the fourth ground of appeal.

[23] Contrary to the submissions of the CFMMEU, this does not however require that CPB’s application for approval of the Agreement be dismissed. The CFMMEU contended that the identified difficulty in the final paragraph of clause 3.3 was incapable of being remedied by an undertaking to remove it from the Agreement because this would necessarily result in substantial change to the Agreement, meaning that the undertaking could not be accepted in accordance with s 190(3)(b) of the FW Act. It relied upon the following passage in the Full Bench decision in CEPU v Main People 9 in support of this proposition:

“[34] We consider that in two respects the Deputy President erred in approving the Agreement on the basis of the undertaking proposed by Main People. First, we consider that acceptance of paragraph 1 of the undertaking, which confined the coverage of the Agreement to work covered by the Metals Award, resulted in a significant change to the Agreement contrary to the requirement in s.190(3)(b) of the FW Act. It may be accepted that an undertaking which clarifies an ambiguous provision of an agreement for which approval is sought in accordance with the intention of the parties will not be likely to cause a significant change in that agreement. However, this was not a case of ambiguity. The breadth of the classifications in the Agreement, and the geographical scope of its coverage, made it apparent that it had application beyond work covered by the Metals Award. The first Full Bench made a clear finding to that effect in the Appeal Decision with which we agree.

[35] The scope of coverage of an enterprise agreement is one of its fundamental features. The coverage provision of an agreement serves to identify the class of persons who will be entitled to its benefits while it is in operation. The importance of an agreement’s coverage is signified by the fact that, under the FW Act, s.186(3) requires the group of employees covered by the agreement to be fairly chosen. For that reason an undertaking which purports to alter the coverage of an enterprise agreement by excluding classes of persons who, on the face of the agreement, would be covered by it, will always be likely to be a significant change.”

[24] That passage is not applicable here. Main People was concerned with an undertaking which would exclude classes of employees from the coverage as provided for in the agreement in question from the moment it took operation. Here, an undertaking to remove or treat of no effect the final paragraph of clause 3.3 of the Agreement would not exclude anyone from the coverage of the Agreement, but would merely remove a method by which CPB and a subset of employees could at some future time opt out of the coverage of the Agreement. We consider such an undertaking to be capable of acceptance under s 190(3)(b). We consider that the appropriate course is to quash the Decision and remit the application for approval of the Agreement to a single member for rehearing, at which CPB will have the opportunity to offer an undertaking of the type accepted in the TR Constructions matter.

[25] The CFMMEU in its seventh ground of appeal also contended that s 180(5) of the FW Act could not have been complied with in relation to the final paragraph of clause 3.3 because it may be presumed that CPB did not inform employees prior to them voting to approve the Agreement that the provision was ineffective and unenforceable. Section 180(5) provides:

(5)  The employer must take all reasonable steps to ensure that:

(a)  the terms of the agreement, and the effect of those terms, are explained to the relevant employees; and

(b)  the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.

[26] Compliance with s 180(5) is necessary in order for a non-greenfields agreement to be approved because s 186(2)(a) requires that the Commission be satisfied that “the agreement has been genuinely agreed to by the employees covered by the agreement”, and s 188(a) requires the Commission to be satisfied that the employer has complied with, among other things, s 180(5) in order for there to have been the requisite genuine agreement.

[27] The difficulty here is that because the CFMMEU was not heard at first instance, and the issue of the final paragraph of clause 3.3 was as a result not raised in the proceedings before the Commissioner, there is simply a lack of evidentiary material as to what, if anything, was explained to employees concerning clause 3.3 beyond some generic statements to be found in paragraph [2.6] of the statutory declaration made in support of the application for approval of the Agreement. We are not prepared to presume, in the absence of any such evidentiary material, that clause 180(5) was not complied with. This is an issue which may be the subject of further attention and, if necessary, evidence, at the rehearing of the application for approval of the Agreement. The same conclusions equally apply to the other bases upon which the CFMMEU contends s 180(5) was not complied with in its seventh ground of appeal. Accordingly we will refuse permission to appeal in relation to the seventh ground of appeal.

[28] In its fifth ground of appeal, the CFMMEU also contends that the presence in the Agreement of the legally ineffective final paragraph of clause 3.3 meant that the Commissioner could not have been satisfied that the relevant employees genuinely agreed to the Agreement by reference to s 188(c). Section 188(c) provides that a necessary element of such genuine agreement is that the Commission is satisfied that “there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees”. Again, there was a lack of evidentiary material before the Commissioner addressing this issue because it was not raised before him. It would not be fair, we consider, to conclude that s 188(c) was incapable of satisfaction in circumstances where CPB has not been afforded a proper opportunity to address that issue. The same conclusion applies to the other grounds upon which the CFMMEU contends that there could not have been satisfaction in relation to s 188(c). These are, again, matters which may be the subject of further attention at the rehearing. We consider that permission to appeal should be refused in relation to the fifth ground of appeal.

[29] In relation to the ninth ground of appeal, we consider the Commissioner’s acceptance of the undertaking concerning clause 9 of the Agreement constituted appealable error, and that permission to appeal should be granted and the appeal upheld in respect of this ground. We have earlier set out clause 9 of the Agreement in full. The clause is very similar in effect to clause 21 of the Manufacturing and Associated Industries and Occupations Award 2010, which provides:

21. Abandonment of employment

21.1 The absence of an employee from work for a continuous period exceeding three working days without the consent of the employer and without notification to the employer is prima facie evidence that the employee has abandoned their employment.

21.2 If within a period of 14 days from their last attendance at work or the date of their last absence in respect of which notification has been given or consent has been granted an employee has not established to the satisfaction of their employer that they were absent for reasonable cause, the employee is deemed to have abandoned their employment.

21.3 Termination of employment by abandonment in accordance with clause 21—Abandonment of employment operates as from the date of the last attendance at work or the last day’s absence in respect of which consent was granted, or the date of the last absence in respect of which notification was given to the employer, whichever is the later.

[30] Clause 21 of the Manufacturing Award has been the subject of extensive consideration in the Full Bench decisions in Boguslaw Bienias v Iplex Pipelines Australia Pty Limited 10 and 4 yearly review of modern awards - Abandonment of Employment.11 In the former decision, the Full Bench determined that clause 21, properly construed, did not bring about the automatic termination of employment in the circumstances described, but rather still required an act of the employer to bring the about the termination of the employee’s employment.12 In the latter decision, the Full Bench determined that clause 21 suffered from a number of difficulties in respect of the FW Act. Relevantly, the Full Bench held that clause 21 operated to exclude the NES, contrary to s 55, in two ways:

(1) clause 21.3, in providing for a retrospective date of termination, operated to exclude s 117(1), which prohibits an employer from terminating an employee’s employment unless the employer has given written notice of the day of the termination; and

(2) to the extent that clause 21.2 authorised dismissal of an employee in circumstances which might not constitute serious misconduct (as defined in reg 1.01(2)(a) of the Fair Work Regulations 2009), it operated to exclude the NES notice of termination provisions in s 117(2) and (3). 13

[31] We consider that the same conclusions are applicable to clause 9 of the Agreement here. Accordingly clause 9 as it appears in the Agreement excludes the NES contrary to s 55(1). Under s 186(2)(c), in order for an agreement to be approved, the Commission must be satisfied that the terms of the agreement do not contravene s 55. An agreement with clause 9 in it was therefore incapable of approval under the FW Act.

[32] The second undertaking accepted by the Commissioner appropriately addressed the first s 55 difficulty identified in the Abandonment of Employment decision. However it did not address the second difficulty, with the result that clause 9 remained in contravention of s 55(1). This may be addressed at the rehearing by the provision of a further undertaking in appropriate terms.

[33] We have determined to refuse permission to appeal in relation to the other grounds of appeal, for the following reasons:

(1) Grounds 1 and 2: Insofar as the CFMMEU contends that it was denied procedural fairness, and that the exercise of the discretion under s 590 as to whether it should be heard miscarried, we do not consider that there is any practical utility in granting permission to appeal. Any denial of procedural fairness has been or will be remedied by the hearing of its appeal and/or the rehearing of the application for approval of the Agreement. We will direct, pursuant to s 607(3)(c)(ii), that the CFMMEU be permitted to make submissions in relation to the matters raised by its grounds of appeal at the rehearing consistent with our reasons for decision.

(2) Ground 3: We consider that the first undertaking operated to remove an ambiguous and confusing element of the coverage provision in clause 3 of the Agreement rather than to narrow its scope of coverage as it would reasonably be understood by those who voted for it. This is consistent with paragraph [34] of Main People. The ground of appeal does not have sufficient merit to justify the grant of permission, and in any case undertakings will have to be considered afresh at the rehearing we intend to order.

(3) Ground 6: As earlier stated, the final paragraph of clause 3.3 may be addressed by an undertaking of the type accepted in the TR Construction Services matter, which means that its consideration in the context of the “fairly chosen” approval requirement in s 186(3) in this appeal would lack utility. We do not consider that there is any basis to conclude that the coverage of employees as expressed in the first paragraph of clause 3.3 lacks a legitimate business rationale.

(4) Ground 8: To the extent that clauses 22 and 24 might be considered to exclude s 62(2) and (3) of the FW Act, or that clause 26.10 might exclude s 107(3) of the FW Act, these are matters which may be addressed at the rehearing including by the provision of appropriate undertakings.

(5) Grounds 10, 11, 12 and 13: Because undertakings will have to be considered afresh at the rehearing, there is no utility in us addressing these matters in the appeal.

Conclusion

[34] We order as follows:

(1) Permission to appeal is granted in relation to the fourth and ninth grounds of appeal. Permission to appeal is otherwise refused.

(2) The appeal is upheld in respect of the fourth and ninth grounds of appeal.

(3) The Decision ([2018] FWCA 2580]) is quashed.

(4) The application for approval of the Agreement (AG2017/5368) is remitted to Commissioner Simpson for rehearing.

(5) We direct, pursuant to s 607(3)(c)(ii), that the CFMMEU shall be permitted to make submissions (in writing and/or orally, as may be determined by the Commissioner) at the rehearing of the application for approval of the Agreement in relation to the matters raised by its grounds of appeal consistent with our reasons for decision.

VICE PRESIDENT

Appearances:

B. Rauf of counsel on behalf of CPB Contractors Pty Ltd

P. Boncardo of counsel on behalf of the Construction, Forestry, Mining, Maritime and Energy Union

Hearing details:

2018.

Sydney:

25 June.

Printed by authority of the Commonwealth Government Printer

<PR700376>

 1   [2018] FWCA 2580

 2   [2018] FWC 1796

 3   The grounds of appeal were misnumbered in the CFMMEU’s further amended notice of appeal. In this decision, we shall refer to the grounds of appeal by the numbering we have set out.

 4   [2015] FCAFC 16, 228 FCR 297

 5   [2017] HCA 53

 6   [2015] FCAFC 16, 228 FCR 297

 7   [2017] FWCFB 1928

 8   [2018] FWCA 3485

 9   [2015] FWCFB 4467; (2015) 252 IR 340

 10   [2017] FWCFB 38, 266 IR 11

 11   [2018] FWCFB 139

 12   [2017] FWCFB 38, 266 IR 11 at [36]-[43]

 13   [2018] FWCFB 139 at [27]-[30]