| [2019] FWCFB 4253 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604—Appeal of decision
The Australian Workers’ Union
v
Gray Australia Pty Ltd as trustee for The Gray Family Trust T/A Ceres Farm & Kenrose Co Pty Ltd and Others
(C2019/1487)
VICE PRESIDENT CATANZARITI |
SYDNEY, 21 AUGUST 2019 |
Appeal against decisions [2019] FWC 1016 and [2019] FWCA 1321 of Commissioner McKinnon at Melbourne on 15 February 2019 and 8 March 2019 in AG2018/2112, and others.
[1] On 15 February 2019, Commissioner McKinnon issued a decision concerning 41 applications for approval of enterprise agreements (the Initial Decision). 1 In the Initial Decision, the Commissioner dismissed ten of the applications; this appeal is not concerned with such applications.
[2] The current appeal is concerned with the 31 applications (the Applications) not dismissed in the Initial Decision, and the decisions issued on 8 March 2019 approving each application (the Final Decisions). 2 This appeal therefore has 31 Respondents, representing each of the employers who applied for approval of an enterprise agreement and had this application approved by Commissioner McKinnon.3
[3] On 29 May 2019, the Full Bench heard the parties on permission to appeal and the substantive appeal. Mr S Crawford and Mr A Sage appeared for the Appellant and Mr M Waters and Ms K Yarro appeared for 28 of the Respondents. 4 Permission to appear was granted pursuant to s 596(2)(a) of the Fair Work Act 2009 (Cth) (the Act) as, taking into account the complexity of the matter, the appeal would be dealt with more efficiently with legal representation.
[4] The legal representatives for the remaining three Respondents requested permission to be excused from appearing at the appeal hearing. 5 This request was acceded to by the Full Bench and these Respondents rely on the written submissions filed in accordance with the directions.
[5] In the Initial Decision, the Commissioner provides a brief background to all the matters covered by the Final Decisions. 6 The Applications filed pursuant to s 185 of the Act were largely identical in terms and proposed agreements (Agreements) for enterprises which all relate to the horticulture industry. The reference instrument for the purposes of the better off overall test (BOOT) is the Horticulture Award 2010 (the Award).
[6] The Applications that were the subject of the Initial Decision were made at a time when changes to the Award were in contemplation in connection with the four yearly review of modern awards. In respect of this, the Commissioner said: “The Commission has indicated that the Award will be varied to provide overtime entitlements for casual employees in certain circumstances. Such changes had not been made at the time application for approval of each of the Agreements was made.” 7 We set out a detailed review of the lead up to such changes below, in paragraphs [73] – [79] of this decision.
[7] We note that during the approval process, a number of hearings were held by the Commissioner. The first hearing was held following a request of the Appellant to be heard on the applications. Following this hearing, limited leave was granted to the Appellant to intervene and further directions were issued for the filing of material by both the Appellant and the employers in each application.
[8] In the Initial Decision, the Commissioner begins with consideration of whether the Agreements were genuinely agreed to:
“[4] The applications filed in the Commission are largely identical in terms, with some tailoring to reflect the individual circumstances of each business. Three of the applications are made in support of similar, but different Agreements and their supporting material is relevantly different in each case. The statutory declarations filed in support of the majority of Agreements also commonly identify ‘higher wage rates’ as an improvement in terms and conditions and indicate that there are no less beneficial terms and conditions compared to the Award. However, an analysis of the Agreements indicates that there are some less beneficial terms and conditions in the Agreements compared to the Award.” (Footnotes omitted)
[9] Additional information about the nature and context of the explanation of the Agreements to employees in each was sought from the employers, where the Form F17 statutory declarations (Form F17) were inadequate or factually incorrect. 8 The Commissioner also conducted ex parte hearings with the employers in relation to whether the Agreements had been genuinely agreed to (Individual Hearings). Having received the additional information, the Commissioner said “The information now before me counters the notion that employees were told that the proposed Agreements contained no less beneficial terms than the Award in the majority of cases”.9 The Commissioner was satisfied that 31 of the Agreements were genuinely agreed to, and dismissed those applications for Agreements that were found not to have been genuinely agreed to.10
[10] In paragraphs [13] – [62] of the Initial Decision, the Commissioner gave consideration to the BOOT, addressing a number of matters relevant to this analysis. It was concluded that “The assessment of the remaining Agreements in relation to the better off overall test, and whether the undertakings given can be accepted, will be finalised once the opportunity for further undertakings has been provided.” 11
[11] Under the heading “Casual employees and overtime”, the Commissioner concluded:
“[39] The Full Bench expressed the view that the Award should provide for overtime for casual employees in a way that is a sustainable for the horticulture industry, including without the application of overtime penalty rates to seasonal casual employees who were required, and wanted to, work large amounts of hours in a short period of time.
[40] A fair reading of its decision leads to the conclusion that the Full Bench was satisfied that casual employees are not currently entitled to overtime under the Award, including because there was no proper foundation for its calculation, and has decided that this position will be altered to give effect to the modern awards objective.
[41] It follows that there was no overtime entitlement for casual employees in the Award at the test time for each of the Agreements, and nor was there any relevant averaging period for ordinary hours of work for casual employees. To the extent that the Agreements do provide for overtime for casual employees, the Agreements are more beneficial than the Award.”
[12] The Commissioner then gave consideration to whether the group of employees for the Agreements were fairly chosen. The Commissioner found that each of the group of employees to be covered by the Agreements was fairly chosen. The Commissioner also noted:
“[64] I am satisfied on the material before me, and consistent with the observations of the Full Bench referred to earlier in this decision, that the horticulture industry has a particular reliance on casual employment during peak and harvest periods because of the seasonal nature of produce and the need to plant and harvest at times that are responsive to the surrounding environment. Such labour requirements are often only able to met by reliance on short term, casual employment. For that reason, many employers only engage casual employees to do the work that will be covered by the Agreements.
[65] Context is important in considering whether a group of employees was fairly chosen. I am satisfied that there is a legitimate business rationale for the choice to cover casual employees only under the Agreements referred to above, having regard to the nature of the business and the workforce in each case. Pending changes to the Award in relation to overtime for casual employees are such that the applicants for those Agreements foresee adverse effects both for their business and the available working hours of their employees. Those consequences have been explained to employees, who have endorsed the Agreements. A concern of the same kind does not arise in relation to permanent employees, whose entitlements are unaffected by the proposed changes.”
[13] In concluding the Initial Decision, the Commissioner sets out the applications that were dismissed and set out the Applications afforded the opportunity to provide undertakings or further information on certain identified matters. 12
[14] The Appellant submitted nine grounds of appeal, summarised as follows:
Genuine Agreement
[15] The Appellant contends that the Commissioner erred in finding that the Agreements were genuinely agreed as required by s 188 of the Act because the employers did not take all reasonable steps to explain the terms of the Agreements in accordance with s 180(5) of the Act. The Form F17’s relied upon by the employers indicated that the Agreements did not contain any terms that are inferior to the Award. That statement was clearly incorrect given the conclusions of the Commissioner in the Initial Decision.
[16] Further, the transcripts of the Individual Hearings between the Commissioner and representatives of the employers covered by the Agreements indicate that employees covered by the Agreements were informed they may receive less hours of work if they did not vote in support of the Agreements. Such statements to employees arguably constitute a threat to take adverse action against employees if they exercised their workplace right to vote against the approval of the Agreements. In such circumstances, it is difficult to characterise the agreement of employees as genuine, and the Commissioner erred in concluding that there was genuine agreement.
[17] The Commissioner granted the Appellant leave to intervene in the proceedings with respect to whether the Agreements were genuinely agreed to and whether the Agreements passed the BOOT. In accordance with the directions issued, the Appellant was served with the submissions filed on behalf of the employers on 21 January 2019, but it was not served with any of the additional evidence subsequently filed on support of the applications. The failure to provide further evidence contravened the directions issued by the Commissioner and prevented the Appellant from “mak[ing] submissions on an issue of fact”. 13 The Commission owes a duty of procedural fairness to the Appellant as an organisation granted a right to participate in proceedings14 and the breach of procedural fairness here amounts to a jurisdictional error.
Casual Loading and Minimum Wage Increases
[18] The Appellant submits that at test time, the wage rates in the Agreements are either the same as those appearing in the Award or were very marginally above the Award rates. With no wage increases provided for in the Agreements, the rates of pay in the Agreements would fall below the Award during the four-year nominal terms.
[19] The Appellant accepts that s 206 of the Act will prevent the base rate of permanent employees falling below the base rate in the Award. However, given casual loadings are excluded from the definition of “base rate of pay”, it is possible that a casual employee may receive a rate of pay that is above the base rate of pay in the Award but below the minimum rate of pay a casual employee would be entitled to under the Award. The Commissioner erred in finding that this issue was not relevant to the application of the BOOT in the Initial Decision.
Twelve Hour Shifts and Ordinary Hours on Saturdays
[20] The Appellant submits that the Commissioner erred in concluding that conditions in the Agreements which permit employers to direct permanent employees to work 12-hour shifts and ordinary hours on a Saturday were not inferior to the comparative conditions in the Award. The Award permits such working conditions “by arrangement between the employer and the majority of employees in the section/s concerned”. 15 This extended flexibility for employers constitutes a condition that is inferior to the Award and the Commissioner erred in not concluding that it was a factor against the Agreements passing the BOOT.
Shiftwork Loadings for Casual Employees
[21] The Appellant submits that the Commissioner erred in finding that the condition in the Agreements excluding casual employees from the shift work loadings was not a condition that was inferior to the Award and a factor weighing against a finding that the Agreements passed the BOOT.
[22] In the Award, casual employees are explicitly excluded from Clause 22.1 of the Award, prescribing the ordinary hours of work for day work employees. In contrast, the shift work conditions in Clause 22.2 of the Award are not expressly confined to “full-time and part-time employees” as in Clause 22.1. As a beneficial instrument, there is no basis for the Award to exclude casual employees from the definition of a “shiftworker” and hence from the additional loadings that apply for afternoon and night shifts.
Limits to Superannuation Payments
[23] The Appellant submits that most of the Agreements contain a term which limits superannuation payments to 38 hours of work per week. There is no corresponding limitation in clause 21.2 of the Award. It is well established that superannuation contributions are payable on an employee’s ordinary hours of work. 16
[24] In the Initial Decision, the Commissioner determined that there are no overtime entitlements for casual employees under the Award because a maximum of averaging period for ordinary hours is not provided. It follows therefore that all hour worked by a casual employee are ordinary hours and hence superannuation is payable on all hours work.
[25] Therefore, the term in the Agreements that limits superannuation payments to 38 hours of work per week is a condition which is inferior to the Award and a factor against a finding that the Agreements passed the BOOT.
Other BOOT Considerations
[26] The Appellant submits that the Commissioner, in her application of the BOOT, did not consider the following less beneficial terms. The Commissioner concluded that the Agreements passed the BOOT even though “the margins are small” 17 and therefore there is a real prospect that the failure to take these further provisions into consideration affected the ultimate result.
No Right to Voluntary Employee Superannuation Contributions
[27] Clause 21.3 of the Award requires the employer to permit an employee to make post-taxation contributions to their superannuation account via payroll deduction, subject to certain procedural constraints. No such entitlement exists in the Agreements. As such, an employer can refuse to allow payroll deduction of additional superannuation contributions, constituting a minor, but non-trivial, detriment to employees.
No Named Default Superannuation Fund
[28] The Agreements contain no default superannuation fund, leaving the right to determine the default fund for employees with the employers. Rather than having to choose from one of the five identified funds in Clause 21.4 of the Award, which have historical coverage of the horticulture industry, the Agreements permit the employer to unilaterally select an entirely different fund. The provision is less beneficial because it removes the protection of access to a default fund which has historical involvement in the industry and the inclusion of which was supported by industrial parties during the award modernisation process. 18
No Employee Right to Request Access to Excessive Accrued Annual Leave
[29] Clause 25.10 of the Award provides a scheme by which an employee aggrieved by an employer’s refusal to permit the taking of annual leave by agreement can give notice to an employer of the taking of sufficient leave to resolve the excessive accrual. The employer “must” grant paid annual leave requested by such a notice. In dealing with the annual leave common issues during the four-yearly Award Review, the Full Bench envisaged these provisions to benefit employees. 19 The Agreements omit this provision and contain none that are comparable. This is an employee detriment for the purposes of the BOOT.
No Entitlement to Higher Rate of Jury Service Reimbursement than the NES
[30] This ground of appeal contrasts the Award to the National Employment Standards (NES). The relevant Award provision is Clause 27.2, titled Reimbursement for jury service. The relevant NES provision is section 111. The Appellant submits that the benefit in the Award is greater than that provided for by the NES in two respects:
• The award entitlement creates an entitlement to payment “in respect of the employee’s attendance for such jury service” without qualification by reference to the number of days of absence. As such, it appears to extend the entitlement beyond the 10-day limit prescribed by the NES; and
• The award entitlement is to be reimbursed the difference between the jury service pay paid by the Crown and the “the wages the employee would have received in respect of the ordinary hours the employee would have worked had the employee not been on jury service.” That amount may exceed the employee’s base rate of pay, as it does not take into account allowances and penalty rates.
[31] The Commissioner’s consideration of whether the group of employees covered by each of the Agreements were fairly chosen is contained within paragraph [63] – [67] of the Initial Decision. A number of the Agreements are limited in scope to casual employees, and the Commissioner accepted that that the primary or sole consideration leading the employers to select groups of employees comprising only casual horticulture employees were the imminent changes to the Award’s overtime provisions for casual employees. The Commissioner concluded that this was a “legitimate business rationale”.
[32] The Appellant submits that the Commissioner has fallen into error here because the employer’s interest in avoiding the effect of the imminent Award changes could not constitute a positive factor in the assessment of whether a group of employees was fairly chosen. An attempt to prevent employees from accessing safety-net entitlements for the next four years cannot count towards a finding that those employees were a fairly chosen group. Factors relating to the employers self-interest are either irrelevant or negative in the fairly chosen assessment and undermine the object of the Act.
[33] The Appellant further submits that the Commissioner did not take into account the mandatory considerations in s 186(3A) of the Act in reaching the conclusion on the fairly chosen test. The Appellant relies on CFMEU v Hamberger [2011] FCA 719 at [103]. The Commissioner misdirected herself in law in confining her analysis of relevant factors to the employers’ decision to seek continuity in industrial arrangements due to their concern about “adverse effects” on their business, and not addressing the mandatory factors in s 186(3A) directly.
[34] At paragraph [67] of the Initial Decision, the Commissioner correctly identified that the employer covered by BTS Packing Shed Enterprise Agreement 2018 was a partnership based in Western Australia. Given Western Australia has not referred its jurisdiction over sole traders and partnerships to the Commonwealth, the relevant employer is not a national system employer and the Commission had no jurisdiction to approve that Agreement.
[35] BTS Packing Shed (the Respondent to whom this ground of appeal solely relates), submit that the partnership is made up of two entities: Artemis Agriculture Pty Ltd and D & K Menzel. Artemis Agriculture Pty Ltd is a company registered under the Corporations Act 2001 (Cth) and is undoubtedly a trading corporation and therefore a National System Employer under the Act. D & K Menzel is either a National System Employer or, to the extent that there is an inconsistency between State and Commonwealth laws, s 109 of the Constitution applies allowing the Commonwealth laws to prevail.
[36] BTS Packing Shed also rely in Pierina McInnes v North Perth Vet Centre (2015) FWC 2720, as it provides that where one partner is a trading corporation, that is sufficient to find that the employer is a National System Employer even where the other two employers were individuals.
[37] An appeal under s 604 of the Act is an appeal by way of rehearing and the Commission’s powers on appeal are only exercisable if there is error on the part of the primary decision maker.20 There is no right to appeal and an appeal may only be made with the permission of the Commission. Subsection 604(2) requires the Commission to grant permission to appeal if satisfied that it is in the public interest to do so. Permission to appeal may otherwise be granted on discretionary grounds.
[38] The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment.21 The public interest is not satisfied simply by the identification of error, or a preference for a different result.22 In GlaxoSmithKline Australia Pty Ltd v Makin a Full Bench of the Commission identified some of the considerations that may attract the public interest:
“... the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters...”23
[39] Other than the special case in s 604(2), the grounds for granting permission to appeal are not specified. Considerations which have traditionally been treated as justifying the grant of permission to appeal include that the decision is attended with sufficient doubt to warrant its reconsideration and that substantial injustice may result if leave is refused.24
[40] It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of appealable error.25 However, as earlier stated the fact that the Member at first instance made an error is not necessarily a sufficient basis for the grant of permission to appeal.
[41] With respect to permission to appeal, the Appellant submits that the error of the Commissioner in finding that the Agreements satisfied the statutory prerequisites for approval attracts permission to appeal as it bears upon the legal capacity of the Commission to exercise its agreement approval powers. Further, the appeal is in the public interest as it raises questions of general importance and the Initial Decision and Final Decisions are attended with sufficient doubt to warrant their reconsideration.
[42] We find that permission to appeal should be granted in this matter. We are satisfied that the appeal enlivens the public interest as it is critical that the agreement approval requirements set out in the Act are properly considered, applied and administered. Further, particularly given the large number of Respondents and relevant workplaces, appellate intervention is warranted to examine the errors alleged by the Appellant to have been made by the Commissioner. Accordingly, permission to appeal is granted.
[43] Having read all the materials and submissions filed by the parties prior to the appeal hearing, we formed the view that there appeared, prima facie, to be an issue at the threshold point with respect to genuine agreement under s 188 of the Act. More specifically, our view was that there were arguably concerns about the extent of the evidentiary basis upon which the Commissioner found the Agreements had been genuinely agreed. This was particularly in light of the forthcoming changes to the Award, and whether reasonable steps had been taken by employers to explain the terms of the Agreement and the effect of those terms in accordance with s 180(5) of the Act.
[44] Accordingly, at the appeal hearing, we raised our threshold concerns relating to the genuine agreement of the Agreements, based on the evidence before the Commissioner. It was agreed that new directions would be issued in the matter, allowing the parties to respond to our more specific, identified concerns.
[45] On 29 May 2019, further directions were issued in the matter. Submissions filed in accordance with such directions were to address the following (Further Directions):
1. Where in the proceedings below is there evidence that each detriment on the award, e.g. superannuation and casual overtime, and other, was identified and fully explained in the case of each agreement. The Full Bench’s preliminary view is that this was not done. Construction, Forestry, Mining and Energy Union v One Key Workforce Pty Ltd [2017] FCA 1266 (One Key) paragraphs 103-115 requires more than a general statement that casual changes, for example, was addressed. (Further Direction 1)
2. Why does not the statement made to employees that if the agreement is not approved this would lead to lesser hours mean that there was no genuine consent. (Further Direction 2)
3. The Full Bench is also concerned that the decision making steps required by paragraphs 103-115 of One Key are absent, and that reasons for decision are not adequate. (Further Direction 3)
[46] The parties were also provided with the opportunity to file submissions in relation to Australian Nursing and Midwifery Federation v Domain Aged Care (QLD) Pty Ltd T/A Opal Aged Care (Domain). 26
[47] It was agreed at the appeal hearing that upon the filing of all materials in accordance with the Further Directions, the issue of genuine agreement would be dealt with on the papers. Further, it was made clear to the parties that we would determine whether the Agreements were genuinely agreed to prior to considering the grounds of appeal that extend beyond this point. Such other grounds become enlivened when and if we are satisfied at the threshold point that each of the respective Agreements had in fact been genuinely agreed.
[48] The submissions filed in accordance with the Further Directions are summarised below, addressing each of the three questions posed by the Full Bench. The legal representatives for the Respondents, being three in total, each filed submissions on behalf of their client(s) and we have summarised the Respondents submissions in accordance with such groups.
The Respondents’ Submissions
Gray Australia Pty Ltd as trustee for The Gray Family Trust T/A Ceres Farm and Others 27
[49] In respect of Further Direction 1, the Respondents submit that One Key confirms that s 190(3) of the Act provides the Commission with an alternative means to approve an agreement, despite concerns that the agreement does not meet the genuine agreement of other requirements, 28 provided that undertaking(s) meet that concern. S 190(3) of the Act can therefore cure BOOT concerns and s 180(5) concerns. All concerns the Commissioner had regarding detriments in the Agreement not being explained to employees were cured by s 190(3) undertakings.
[50] The Respondents submit that s 190(3) undertakings alone are not sufficient to satisfy all requirements of s 180(5), but it does not remove any presumption that there can be no genuine agreement where detriments were not explained to employees. In this regard, the Respondents submit that there was ample evidence before the Commissioner to reach the conclusion that the employers had taken all reasonable steps to explain the terms and effect of the Agreements to employees.
[51] In respect of Further Direction 2, the Respondents submit that those employers who did refer to lesser hours were genuinely expressing how they would operate business if the proposed changes to the Award were introduced. Employers who made statements to employees about changing their operation so that employees worked 38 hours per week or less were merely reflecting the submissions made to the Full Bench throughout the award modernisation process. Further, employers making comment that hours will be reduced to 38 per week expresses a practical consequence of the Award change that is in line with the National Employment Standards.
[52] In respect of Further Direction 3, the Respondents note the evidence before the Commissioner, submitting that the large quantity before her cannot be compared to the information before the Commission Member in One Key. To compare materials between the two would be a “quantum leap”, making the question: “how much information and how many pages must a Commissioner be presented with before he/she has sufficient material to rely on and find “genuine agreement’”. 29 The Commissioner’s decision to approve the Applications was made pursuant to s 190(2) of the Act, involving two discretionary aspects (“may” and “satisfied”), and accordingly “there is a distinct likelihood that this Full Bench shall become the “repository of the power”” if it were not satisfied with the Commissioner’s decision in the present case based on the quantity of materials.
[53] Further, the Respondents note the Commissioner’s consideration of s 180(5) and genuine agreement, being several pages of the Initial Decision, and submit that such consideration is adequate and significantly more than what has been accepted previously by the Commission. 30
Atta Farms Pty Ltd and Kool Country Packers Ballandean Pty Ltd 31
[54] In respect of Further Direction 1, the Appellant’s submissions alleged three areas where the respective Agreements for these Respondents were detrimental compared to the Award: casual loading and minimum wage increases, ordinary hours for permanent employees and shift work loadings for casual employees.
[55] In relation to casual loading and minimum wage increases, these Respondents rely on case law and submit that since the wage rates and casual loading under the Agreements were not inferior to the Award at test time, there was no relevant detriment for the employers to explain to employees. 32
[56] In relation to ordinary hours for permanent employees, the Respondents submit that the Agreements do not permit the employers to direct employees to work 12 hour shifts. In the Initial Decision, the Commissioner said “in my view, the Agreements are not less detrimental to employees than the Award in relation to the capacity for ordinary hours to be worked on Saturday…”. 33
[57] In relation to shift work loadings for casual employees, the Respondents submit that as the Award is consistent with the position “that casuals cannot be engaged as shift workers under the current provisions of the award”, 34 then none of the areas pressed by the Appellant amounts to detriment for the purposes of the BOOT, or require explanation under s 180(5).
[58] In respect of Further Direction 2, the Respondents quote the contents of the Individual Hearing with the representative of the employers, and submit that the extract expresses the representative’s opinion of what the employees covered by the agreement knew. The Respondent’s quote the following extract from a Commission decision:
“that the fact that an employer makes negative comments about the economic environment in which it is operating in an attempt to persuade employees to approve an enterprise agreement, is not of itself a reasonable ground on which to form a belief that an agreement has not been genuinely agreed.” 35
[59] In respect of Further Direction 3, the Respondents direct the Full Bench to those paragraphs in the Initial Decision in which the Commissioner gave reasons for her findings in respect of the alleged deficiencies contained in the Agreements as compared to the Award.
Propick Pty Ltd 36
[60] In respect of Further Direction 1, the Respondent submits that the Individual Hearing evidences that the Respondent explained to employees that there could be additional overtime charges under the Award for casuals, pending the proposed variations; and casual workers are not entitled to additional overtime charges under the Agreement. The explanation by the Respondent to employees should be distinguished from One Key.
[61] In respect of Further Direction 2, the Respondent relies on the Individual Hearing in support of their position that it was explained to employees that overtime rates may apply under the Award pending the proposed variations, whereas the proposed Agreement did not entitle casuals to receive overtime rates. The Respondent submits that one potential effect of the Agreement taking effect in place of the varied Award “would be that because there continues to be an absence of additional overtime rates for casual employees, their average working hours would remain largely similar as those under the Award as at test time of the Agreement”. 37 Variations to the Award would see employers take measures to avoid incidents of overtime work performance, including by reducing the number of hours of work to be performed by each casual employee. This was explained to employees, and rather than being an express threat to reduce working hours if the agreement is not approved, the statement offers an explanation of the possible effects of the Agreement’s approval or otherwise that takes into account the realities of the industry.
[62] In respect of Further Direction 3, the Respondent notes the materials before the Commissioner in respect of whether the employer had complied with its obligation under s 180(5). Such materials indicate that the Commissioner had been mindful of the decision-making steps required in One Key and that should be seen as a factor in support of the conclusion that such decision-making steps were followed by the Commissioner in the Initial and Final Decisions.
The Appellant’s Submissions in Response
[63] In respect of genuine agreement, the Appellant addresses three issues with the Applications as follows.
[64] First, the Appellant addresses the Award changes in respect of casual conditions. The Appellant notes that, in relation to the “prevailing circumstances” for these Applications, none of the Respondents have disputed the Appellant’s contention that their primary motive in making the relevant enterprise agreements was to avoid the application of the imminent Award changes. Further, the nature of the horticulture industry is another relevant “prevailing circumstance” to the filing of the Applications. The Casual and Part-time Employment Full Bench recognised that compliance with workplace laws is widespread problem in the horticulture industry 38 and that the use of overseas labour is common39. These factors support the approval processes for the agreements being closely scrutinised by the Commission particularly given the motivation of the employers in making the agreements, their pro forma content and the lack of employee bargaining representatives.
[65] The Appellant notes the voting processes for the relevant agreements occurred between April 1 and October 2018, and noted that as at 1 April 2018, the following was known in relation to variations to the Award to improve conditions for casuals:
(i) the Award would be varied to prescribe a maximum of 12 ordinary hours per day for casual employees with overtime rates payable for work in excess of these hours;
(ii) the Award would be varied to include maximum weekly ordinary hours for casual employees. The variations would involve an averaging period to ensure “overtime penalty rates do not become payable in respect of seasonal casual employees who are required, and want to, work large amounts of hours in a short period of time”. The Full Bench’s provisional view was that an averaging period of 8 weeks was appropriate;
(iii) the Full Bench was conscious that employers may seek to reduce hours of work to avoid paying overtime rates to casual employees and was taking this into account in determining appropriate conditions for the industry; and
(iv) the main industrial parties for the horticulture industry: the Australian Workers’ Union, National Union of Workers (“NUW”), the National Farmers’ Federation (“NFF”) and the Australian Industry Group (“AIG”) had reached a consent position in relation to the terms of the variations by the end of March 2018 which included an averaging period of 8 weeks for ordinary hours and a loading of 15% for hours worked within a prescribed span at night by casual day work employees.
[66] Secondly, the Appellant addresses the conditions in the Agreements that it submitted to be inferior to the Award. In relation to the Form F17’s relied on by the relevant employers, none of them identified that the Agreements had any conditions that were inferior to the Award. Relying on relevant authority 40, the Appellant submits that the Commissioner could not have reached the relevant state of satisfaction that the less beneficial terms had been identified or explained to employees in the absence of any evidence in support.
[67] Thirdly, the Appellant addresses the additional material filed and the Individual Hearings. The Appellant submits that the transcripts of the Individual Hearings reveal the representatives of the employers had a minimal understanding of industrial laws, the Award and the terms of the relevant Agreements. This lack of knowledge is problematic in terms of the Commission being satisfied that the terms and effect of the Agreements were properly explained to employees. This is particularly in circumstances where the material filed in support of the Applications is in a pro forma state. The Appellant draws specific attention to the additional statutory declarations filed by the 28 Respondents with the same legal representation as they contain almost identical terms and the evidence given by the representatives of the employers during the Individual Hearings bore little or no resemble to their contents.
The Respondents’ Submissions in Reply
Gray Australia Pty Ltd as trustee for The Gray Family Trust T/A Ceres Farm and Others 41
[68] The Respondents submit that the evidence before the Commissioner is distinguishable to the evidence before the Commission Member in Ditchfield, as the Commissioner had over 15 pages of material and the Individual Hearings that were conducted. Further, in reply to the Appellant’s submissions relating to the reliability of the additional statutory declarations filed, the Respondents note the context of the statutory declarations. The Commissioner specifically requested certain evidence and as such the statutory declarations sought to address all issued raised by the Commissioner in a brief manner, and nothing negative can be derived from their similar nature.
Atta Farms Pty Ltd and Kool Country Packers Ballandean Pty Ltd 42
[69] The Respondents submit that, having cited relevant authority, that the BOOT required an overall comparison of the Agreements and Award conditions that were known at test time. 43 The BOOT and explanations under s 180(5) of the Act do not require speculation as to future changes that are to be made to a modern award. Further, citing CFMEU v Shamrock Civil Pty Ltd [2018] FWCFB 1772, an explanation of the terms of the Agreement and the effect of those terms to employees may not be perfect and may, depending on the circumstances, still satisfy s 180(5) of the Act. In circumstances where employees were aware of the future Award changes in respect of overtime entitlements for casual employees, a detailed explanation by the employer of how that overtime may be calculated is not a requirement of s 180(5) of the Act.
Propick Pty Ltd 44
[70] The Respondent does not agree with the Appellant in respect of what should have been explained by employers to their employees to comply with s 180(5) of the Act. The Respondent submitted that the requirement of s 180(5) of the Act that reasonable steps be taken falls short of requiring a detailed explanation of all of the information surrounding the proposed variations to the Award, including the Full Bench’s provisional view of 5 July 2017 set out below in paragraph [75] of this decision.
[71] In respect of the inferior conditions in the Agreements when compared to the Award, the Respondent submitted that as the Form F17 predated the subsequent concerns raised by the Commissioner, one cannot draw the inference that the Agreement was not genuinely agreed to because the issues rectified by way of undertakings were not specified in the Form F17.
[72] The Respondent further submitted that it had sufficient knowledge and understanding of the relevant industrial laws to enable a proper explanation of the terms and effects of the Agreement to employees.
[73] As the reference instrument for the Agreements, the Award is directly relevant to this appeal, particularly the changes that were forthcoming during the voting and approval processes for the Agreements.
[74] On 5 July 2017, the Full Bench issued a decision in relation to the first four yearly review of modern awards, specifically in respect of casual employment and part-time employment (Principal Decision). 45 The Full Bench said:
“[748] As indicated, we accept the submission of the AWU that the Horticulture Award does not properly prescribe the ordinary hours of employment for casual employees, and therefore does not comply with s.147. This requires rectification…”
[749] We consider that evidence adduced by the NFF and ABI convincingly demonstrates at least the following propositions:
(1) Horticultural businesses tend to be price takers for their product, meaning that they have little or no capacity to pass on any increase of significance in their labour costs. Therefore any award variation which significantly increases labour costs would adversely affect profit margins and potentially affect business viability, which ultimately might have adverse employment effects.
(2) Casual employees are used extensively to perform seasonal harvesting functions. These functions require extensive hours of work to be performed in relatively short periods of time. Weather events may mean that harvesting time which is lost on particular days must be made up in subsequent days, regardless of which day of the week it is.
(3) Casual employees who perform seasonal harvesting work are commonly on work or holiday visas. Their preference is (within reason) to work as many hours, and earn as much income, as they can within a short space of time and then move on.
(4) The most likely response of horticultural employers to the imposition of any onerous overtime penalty rate requirement will be to try to avoid its incidence. Most would try to achieve this by reducing the working hours of their casuals to a level which did not attract any overtime payments, and employ more casuals to cover the hours. However this could be counter-productive because it was likely that the lower incomes per worker this would produce would reduce the supply of persons willing to work casually in the industry. The alternatives mentioned were to move to less labour intensive crops or reduce output.
[750] Additionally the evidence of the AWU demonstrated what we, from our collective experience, already know to be the case, namely that award non-compliance in the horticultural industry is widespread. Therefore the addition of further significant labour costs on award-compliant employers is likely to increase their competitive disadvantage vis-a-vis non-compliant employers, or to lead to greater non-compliance.
[751] It is necessary to bear these matters in mind in the application of overtime penalty rates to casual employees under the Horticulture Award in order to ensure that any variation is not counter-productive and frustrates the achievement of the modern awards objective. We acknowledge the evidence adduced by the AWU to the effect that the horticultural industry is currently in a phase where outputs and profits are generally good. However modern award provisions need to be crafted in a way that makes them sustainable at all stages of the business cycle. We also acknowledge that the AWU’s amended proposed variation removed any concern that the Horticulture Award would impose weekend penalty rates for ordinary hours worked by casual employees on weekends which did not currently exist. This resolves major concerns expressed by a number of the NFF’s witnesses. Nothing in this decision is intended to change the current situation with respect to ordinary-time weekend casual rates.
[752] In respect of daily hours of work, we consider that the ordinary hours of casual employees should be no more than 12 hours per day, and that overtime penalty rates should be payable for work performed in excess of 12 hours. A 12 hour day is consistent with the facilitative maximum daily hours permitted for full-time employees under clause 22.1(c), and we think is reasonable having regards to the physical demands of harvesting work and the work requirements of employers. There is an additional question as to whether the ordinary daily hours of casual employees should be limited to the period of 6.00 am to 6.00 pm, as it is for full-time and part-time employees under clause 22.1(b), with any work performed outside these hours to be paid at overtime rates. We are not satisfied that the evidence or submissions have properly assisted us in respect of this issue. We will invite further submissions about this from interested parties.
[753] In respect of weekly ordinary hours, the position should remain that the hours for casuals are the lesser of an average of 38 hours per week or the hours required to be worked by the employer. There remains 2 critical issues to be resolved: first, over what period may the 38 weekly hours of casual employees be averaged and, second, should overtime penalty rates be payable for work in excess of those hours? We consider that those issues should be resolved in a way in which overtime penalty rates do not become payable in respect of seasonal casual employees who are required, and want to, work large amounts of hours in a short period of time.”
[75] Following the above statements, the Full Bench in the Principal Decision provisionally decided that the Award should be varied to provide overtime penalty rates for casual employees on the basis of a 12 hour day and a 38 hour week. 46 The Full Bench reserved the question of averaging the hours over a season’s period, and expressed the view that the averaging of hours over eight weeks should be permitted in this respect. Interested parties were directed to file further evidence and submissions in respect of this issue.47
[76] On 9 August 2018, the Full Bench issued a decision concerning the outstanding issues from the Principal Decision, including overtime penalty rates for casual employees in respect of the Award (August Decision). 48 The submissions of interested parties were summarised, and it was noted that following a conciliation and follow up conferences conducted by a Commission Member with some of the interested parties, a proposal for the implementation of the Principal Decision emerged (the Proposal).49 The Proposal was as follows:
“• a requirement for the ordinary hours of casual employees not to exceed 304 hours over an 8-week period;
• the ordinary hours of a casual employee to be worked between 5.00am and 8.30pm on any day of the week, and paid at the employee’s minimum hourly wage plus the casual loading of 25%;
• in any State or Territory which does not observe daylight saving time, the capacity for an employer and a majority of employees to agree to permit the daily spread of hours to be moved forward to 4.00am to 7.30pm during the period in which daylight saving time is in operation in States and Territories which observe it;
• ordinary hours worked outside of the daily span of hours to attract a penalty rate of 15% in addition to the 25% casual loading;
• a maximum of 12 ordinary hours is able to be worked on any one day;
• all time worked in excess of 12 hours per day or 304 hours over an 8-week period is overtime, and will be paid at the rate of 175% of the employee’s ordinary hourly rate of pay for his or her classification (inclusive of the casual loading); and
• any hours worked by a casual employee on a public holiday (whether ordinary hours or overtime) will be paid at the rate of 225% of the employee’s ordinary hourly rate for his or her classification (inclusive of the casual loading).” 50
[77] Following the follow up conferences, the parties that “advised that they would not oppose or object” to the Award being varied to reflect the proposal were the Australia Workers’ Union (AWU), the National Union of Workers (NUW), the Australian Industry Group (Ai Group) and the National Farmers Federation (NFF). 51 The Full Bench acknowledged that not all interested parties attended the conciliation from which the Proposal emerged, and therefore it proposed to publish a draft determination to give effect to the Proposal and provide interested parties time to make further submissions in relation to it.52 The draft determination was published on 30 August 2019.
[78] On 2 April 2019, the Full Bench issued a decision addressing the form of the variation to be made to the Award, following the Proposal and the submissions filed by interested parties in relation to it. 53 The submissions of such interested parties were summarised, and the Full Bench noted the variations that would be made to the Award.54
[79] Also on 2 April 2019, a final determination was published and the Award was varied in respect of overtime entitlements for casual employees (the Final Determination). 55 Such changes came into operation on 15 April 2019.56 Among other changes, a new clause 22.2 and 24.3 were inserted as follows:
“22.2 The ordinary hours of work for casual employees other than shiftworkers will not exceed 304 ordinary hours over an eight week period provided that:
(a) Ordinary hours of work for casual employees can be worked at any time.
(b) Each ordinary hour of work worked by a casual employee on any day of the week (excluding public holidays) between 5.00 am and 8.30 pm will be paid at the employee’s minimum hourly wage for his or her classification plus a casual loading of 25%.
(c) In a State or Territory that does not observe daylight saving time, by agreement between the employer and a majority of affected casual employees, the 5.00 am to 8.30 pm daily spread of hours can be moved forward one hour (4.00 am to 7.30 pm) for the period of daylight saving time in other States and Territories.
(d) Each ordinary hour worked by a casual employee on any day of the week (excluding public holidays) between 8.31 pm and 4.59 am (or 7.31 pm and 3.59 am in accordance with clause 22.2(c)) will attract a loading of 15% of the employee’s minimum hourly wage for his or her classification (in addition to the casual loading of 25%).
(e) The maximum number of ordinary hours which a casual employee may work per engagement, or on any day, is 12 ordinary hours.
(f) All time worked in excess of 12 hours per engagement, 12 hours in a single day or 304 ordinary hours over an eight week period will be deemed overtime.
…
24.3 Payment for overtime—casual employees
Each hour worked in excess of 12 hours per engagement, 12 hour in a single day or 304 ordinary hours over an eight week period will be paid at a rate of 175% of the employee’s minimum hourly wage for his or her classification (inclusive of the casual loading).”
[80] Given the nature of this appeal, and the large number of Respondents, the materials relevant to and filed in the matter are extensive. In reaching our conclusions, we have considered all the material filed by the parties. The parties each filed submissions in accordance with the initial directions, the Further Directions and in relation to the Domain decision.
[81] Further, we have carefully read the Initial Decision and the Final Decisions for each of the individual Agreements. To satisfy herself that the Agreements were genuinely agreed to, the Commissioner conducted the Individual Hearings, and we have read the transcripts of each respective hearing. The Commissioner also relied on amended Form F17 statutory declarations, additional statutory declarations and undertakings, and we have read all such materials.
[82] First, we consider appeal ground nine advanced by the Appellant. The Appellant submitted that the employer covered by BTS Packing Shed Enterprise Agreement 2018 (BTS Agreement) 57 is a partnership based in Western Australia. Given Western Australia has not referred its jurisdiction over sole traders and partnerships to the Commonwealth, the Appellant submitted that the relevant employer is not a National System Employer and the Commissioner had no jurisdiction to approve the Agreement. The Respondent submitted, as set out above58, that the employer is a national system employer and the Commissioner did have jurisdiction to approve the Agreement.
[83] In the Initial Decision, the Commissioner said:
“Capacity to make the Agreement
[68] One of the Agreements is made by what appears to be a partnership in Western Australia. If that is the case, it may not be able to make an enterprise agreement under the Act. An opportunity will be provided for submissions on the question.” (Footnotes omitted).
[84] We have reviewed the relevant materials, including the additional information filed by the appropriate Respondent, the Individual Hearing transcript 59 and the Final Decision60, and it is evident that the jurisdictional issue was not further addressed prior to the approval of the BTS Agreement.
[85] Accordingly, to the extent that the Commissioner did not inquire further into the capacity for the Agreement to be made given the relevant employer is a partnership based in Western Australia, appeal ground nine is upheld. The Final Decision approving the BTS Agreement 61 is quashed for this reason, and the application will be remitted back to the Commissioner to determine this jurisdictional point. Upon determining the jurisdictional point, the application to approve the Agreement will remain with the Commissioner to determine, consistent with the full reasons relevant to all matters the subject of this appeal.
[86] We turn now to consider the issue of genuine agreement.
[87] In Loaded Rates Agreements [2018] FWCFB 3610 (Loaded Rates), a five member Full Bench clarified a number of matters going to the application of the BOOT, particularly in respect of loaded rate agreements. Loaded Rates established 11 principles which apply to the application of the BOOT to a loaded rates agreement. 62 The Full Bench considered the requirement to assess the BOOT at “test time”, taking into account existing and prospective employees:
“[111] The submission made by the ARA that the requirement to assess the BOOT as at the “test time” (being the time at which the application for approval of the relevant agreement is made) means that only the operational circumstances of the employer (such as its work rosters) as at that time may be considered is also rejected. The requirement to assess the BOOT in respect of prospective as well as existing employees tells against the adoption of such an approach. Because, as the Full Court decision in John Holland made clear, it is open to make an enterprise agreement covering classifications, occupations and work locations that are not part of the employer’s operations as at test time, the requirement to assess the BOOT with respect to prospective employees who might fall within such future classifications, occupations and/or work locations must necessarily take into account how the agreement might in practice apply when such employees are engaged in the future. The application of the BOOT would be rendered nonsensical and ineffective with respect to such prospective employees if only the employer’s existing operations, which did not involve the use of prospective employees in the categories permitted by the agreement, could be taken into account. The statutory purpose of the requirement to assess the BOOT as at the test time is, we consider, to permit rates of pay and other conditions of employment in the agreement and the relevant award to be compared at a fixed point of time when the terms of both are known. Absent such a temporal requirement, the application of the BOOT would require speculation about future changes to the provisions of the award, in circumstances where the agreement to be assessed may also involve agreed changes such as increases in rates of pay at defined intervals, and would involve the impossible task of making multiple comparisons for the whole of the period in which the agreement remains in operation.” (Emphasis added)
[88] In Australian Nursing and Midwifery Federation v Domain Aged Care (Qld) Pty Ltd T/A Opal Aged Care [2019] FWCFC 1716 (Domain), the Full Bench said:
“[27] Section 193 provides than an enterprise agreement passes the better off overall test if the Commission is satisfied, as at the test time, that each award covered employee and each prospective award covered employee would be better off overall if the agreement applied to the employee than if the relevant award applied to the employee. Although the test time is the date the application was lodged, the Commission is required to conduct an overall comparison, for each existing and prospective employee, of agreement and award conditions. This necessarily requires a consideration of the rates of pay under the agreement and the award that apply to existing and prospective award covered employees assessed ‘as at the test time’. A ‘point-in-time test’ is necessary because the award benchmark may change over the nominal life of the agreement, although its base rate of pay would always be the relevant minimum because of s 206. To our mind, this is the anchoring work of the ‘test-time’. The BOOT analysis occurs at this time, taking account of all that is known at this time, including all of the terms of the agreement that will apply over its nominal life. In our view, the ‘test-time’ does not confine the BOOT analysis to provisions of an agreement that are applicable only at its inception; employees must be better off overall under the agreement, not just better off at ‘test-time’.”
[89] In this appeal, the first matter to be determined is whether the Agreements were genuinely agreed to under s 188 of the Act and fundamental to determining this matter are consideration of the forthcoming changes to the Award and the explanation of such changes to employees under s 180(5) of the Act. Genuine agreement is separate to issues relating to the BOOT, and award changes generally are not to be looked upon as BOOT issues as they are not operative at test time. However, with the forthcoming changes to the Award known in precise detail, the changes are ones that would be part of the obligation on employers to inform employees about how the proposed Agreements modify the Award changes and explain its terms and effects accordingly. The forthcoming changes to the Award should, in our view, go to the matter of explanation under s 180(5) of the Act for the purposes of satisfying the question of genuine agreement under s 188 of the Act.
[90] The Principal Decision conveys the Full Bench’s view that the Award, as it was at that time, did not properly prescribe the ordinary hours of employment for casual employees. The Full Bench acknowledged that this issue required rectification within the Award. It follows then that the relevant parties, including employers, in the horticulture industry were, following the issuing of the Principal Decision, on notice that the Full Bench held this view. Following the Principal Decision, the Full Bench provided interested parties the opportunity to make further submissions in respect of their provisional view regarding the averaging of weekly hours over eight weeks for casual employees. 63
[91] In One Key 64 the Full Court of the Federal Court considered an application for approval of an enterprise agreement. The Commission at first instance approved an agreement made with the three employees employed when the agreement was made. The Court said:
“112 It is common ground that the Commission was never told what was said to the relevant employees. It was simply told that they had been given an explanation of the terms of the Agreement and the effect of those terms. In effect, this amounted to little more than a self-serving statement that the employer had complied with its obligation under the Act. OKW contended that the fact that it made such a statement in a statutory declaration was significant. It is not. As the CFMEU argued, whether all reasonable steps were taken to ensure that the effect of the terms of the Agreement was explained in an appropriate manner is a question of substance, not form. The recital of a conclusion on the very question the Commission was required (through an evaluative process) to determine is not, without more, a sufficient basis for the satisfaction of the statutory test. In other words, a bare statement by an employer that an explanation has been given is an inadequate foundation upon which to reach a state of satisfaction. OKW submitted that if the Commission had erred in this respect, it was an error in fact finding or an error in process, which would be an error within its jurisdiction. We reject this submission. In order to reach the requisite state of satisfaction that s 180(5) had been complied with, the Commission was required to consider the content of the explanation and the terms in which it was conveyed, having regard to all the circumstances and needs of the employees and the nature of the changes made by the Agreement. It is true that the Act does not expressly say that. But the question of whether an administrative decision-maker is required to consider a matter is not determined only by the express words of the Act; it may also be determined by implication from the subject-matter, scope and purpose of the Act: Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39–44 (Mason J).
113 A consideration of the subject-matter, scope and purpose of the relevant provisions of the Fair Work Act indicates that the content of the explanation and the terms in which it was conveyed were relevant considerations to which the Commission was bound to have regard. The absence of that information meant that the Commission was not in a position to form the requisite state of satisfaction. Put differently, without knowing the content of the explanation, it was not open to the Commission to be satisfied that all reasonable steps had been taken to ensure that the terms and their effect had been explained to the employees who voted on the Agreement or that they had genuinely agreed to the Agreement.” (Emphasis added).
[92] Therefore, in this appeal, to satisfy ourselves that the Agreements were genuinely agreed to in accordance with s 188 of the Act, the explanation provided to employees in respect of the forthcoming changes to the Award must reflect the actual nature of the forthcoming changes.
[93] We agree with the Appellant 65 that in order to comply with s 180(5) of the Act in relation to the Agreements, the explanation to employees must have addressed, at the very least, the following:
• the details of the decisions already made by the Full Bench concerning the Award and specifically that the Award will be varied to prescribe a maximum of 12 ordinary hours per day for casual employees and that maximum weekly ordinary hours would also be prescribed for casual employees but an averaging period will apply to ensure overtime rates are not payable when large amounts of hours are worked in a short period. The Full Bench’s provisional view was that an averaging period of eight weeks would apply and this had been agreed by the AWU, NUW, NFF and AIG;
• the changes to the Award arise from an award review process whereby the Commission independently assesses what constitutes a fair and relevant safety net of minimum conditions for employers and employees working in the industry. The Commission received detailed evidence from employers and their representatives about the nature of the industry and potential responses to the imposition of casual overtime conditions and was taking this into account in assessing the appropriate award conditions; and
• the effect of approving the Agreements is that casual employees will receive less beneficial hours of work conditions than the minimum applying under the Award from when the award variations take effect until at least the end of the nominal four-year term of each Agreement.
[94] Section 180(5) of the Act provides that:
“(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.
[95] Therefore, the explanation provided to employees must have identified that the Award would be varied so as to prescribe the precise nature of the overtime entitlements for casuals, and further explained that the effect of the Agreements is that such entitlements will not be available to the casual employees covered by the Agreements. In our view, an explanation by the employers to employees that did not set out the changes to the Award and the effect of the Agreement in respect of such changes will mean that the Agreement was not genuinely agreed to.
[96] Accordingly, our analysis with respect to each of the Agreements and whether there was genuine agreement was specifically concerned with the changes and the adequacy of any explanation of such changes to employees at the relevant times. Critical to this analysis was the material filed in this appeal, and the evidence before the Commissioner in relation to the forthcoming changes to the Award and the explanation provided to employees in relation to such changes.
[97] It is common ground between the Agreements that it was stated to employees that a change to the Award with respect to overtime entitlements to casuals was forthcoming. However, we are of the view that the changes explained did not either correctly or adequately reflect the contents of the Principal Decision. In the Principal Decision, the Full Bench formed the view that the Award did not adequately address overtime entitlements for casuals, and this required rectification. In provisionally deciding that the Award should be varied to provide overtime entitlements for casuals, on the basis of a 12 hour day and a 38 hour week, the Full Bench was aware of the nature of the horticulture industry and expressly acknowledged this in the Principal Decision. This included acknowledgement of the high number of casual employees performing seasonal work, the preference of such employees to often work as many hours and earn as much income possible within a short amount of time, and the widespread non-compliance across the industry. 66 The Full Bench had regard to such matters “to ensure that any variation is not counter-productive and frustrates the achievement of the modern awards objective” and that “modern award provisions need to be crafted in a way that makes them sustainable at all stages of the business cycle”.67 Therefore, the Full Bench expressed the view that the averaging of hours over eight weeks should be permitted. Having considered the relevant material, the employers in this appeal either set out the forthcoming changes inadequately and without precise detail, or explained to employees that if the Award with the forthcoming changes were to operate, then the hours casual employees would be rostered per week would not surpass 38 hours per week as employers could not afford to pay the overtime entitlements. However, a correct reading of the Full Bench’s Principal Decision and Proposal, and the eventual issuing of the Final Determination, notes the averaging of the ordinary hours for casual employees, the effect of which is that overtime entitlements are only payable to casual employees who work more than 12 hours in a single day or 304 hours over an eight week period.
[98] Further, it is to be noted that the evidence provided by the Respondents that went to the question of genuine agreement followed the Commissioner’s request for such additional information. The additional materials filed, and the Individual Hearings conducted, were to address the nature and context of the explanation of the Agreements to employees. 68 In this regard it is necessary to bear in mind the context in which such material was provided, being at the request of the Commissioner following the identification of her concerns. In contrast, the genuine agreement provisions of the Act relate to the genuine agreement by employees to the relevant agreement, with that agreement being formed well before the Commissioner’s enquiry. The Commission’s role in this regard comes at a later time, after the agreement has been made, and after an approval application has been lodged, at which time the Commission must be satisfied that in each case there was genuine agreement at the time the agreement was made.
[99] We are not satisfied that the forthcoming changes to the Award were accurately or adequately explained to employees in accordance with s 180(5) of the Act. Accordingly, we find that absent to each of the Agreements is the requirement of genuine agreement as set out in s 188 of the Act. It is critical that the statutory requirements for approving enterprise agreements are consistently applied and adhered to, and as such we must uphold the Appellant’s appeal.
[100] In respect of the disposition of the appeal, it is the view of the Appellant that the appeal is upheld, the Initial Decision and Final Decisions approving the Agreements be quashed and the applications be dismissed. Several of the Respondents submitted that if the Full Bench is not satisfied that the requirements of s 180(5) of the Act have been met, that any issues relating to this are minor procedural or technical errors whereby employees were not likely to be disadvantaged. 69 We do not accept the Respondents’ submission.
[101] The genuine agreement deficiency identified in each of the Agreements is one that cannot be rectified by provisions in the Act that afford the power to rectify minor procedural or technical errors or by way of an undertaking. In a recent decision of this Full Bench, we noted:
“[17] It should be noted that the power to rectify minor procedural or technical errors in s 188(2) does not apply to all matters in ss 180, 186 and 188. Section 188(2) has no application in circumstances where the Commission is not satisfied that an agreement was genuinely agreed to in a general sense, as might arise in considering s 188(1)(c). 70
…
Section 188(2) provides a limited discretion to deal with some ‘minor procedural or technical errors’ relating to the procedural requirements for agreements, and s 190 provides the limited circumstances in which undertakings may satisfy the Commission that particular concerns are met, namely where the undertaking is not likely to cause financial detriment to any employee covered by the agreement or result in substantial changes to the agreement.”.71
[102] The identified deficiency is not a minor procedural or technical error, capable of rectification through s 188(2), nor is it one, in our view, that is capable of rectification through an undertaking under s 190(3) of the Act. Accordingly, we see no utility in remitting the matters to a Member of the Commission for rehearing. The parties filed materials and the matters were heard before the Commissioner.
[103] As we have found that the Agreements were not genuinely agreed to, we do not consider it necessary to consider the remaining grounds of appeal advanced by the Appellant.
[104] In reaching our conclusion, we have considered all the relevant materials filed by the parties and reviewed the individual Applications and additional information that was before the Commissioner. Given the number of Respondents and the extensive materials relevant to this appeal, it follows that whilst we have had regard to all such material, our consideration in this decision does not address the entirety of the materials. The remainder of our consideration below makes observations regarding the issue of genuine agreement in respect of the Agreements in three groups, in accordance with the legal representation of each of the Respondents.
Gray Australia Pty Ltd as trustee for The Gray Family Trust T/A Ceres Farm and Others 72
[105] In filing additional material addressing the concerns raised by the Commissioner in relation to genuine consent, the Respondents in this group filed amended Form F17’s and additional statutory declarations. Both the statutory declarations and the Form F17’s are largely similar in nature. In this appeal, the Respondents submitted that nothing negative can be derived from the similar nature of the additional statutory declarations, as they each addressed the Commissioner’s concern, and did so in a brief manner. In respect of the forthcoming changes to the Award prescribing overtime entitlements for casuals, majority of the additional statutory declarations contained the following, or otherwise similar, passage:
“Casual employees’ ordinary hours are averaged over a 12 month period. The Horticulture Award permits an averaging of hours but does not set a limit on the maximum span of time over which hours can be averaged. The Employer operates on a 12 monthly cycles so the preference is for the hours to be averaged over 12 months in line with the financial year”.
[106] In our view, the amended Form F17’s and additional statutory declarations do not adequately demonstrate that the changes to the Award, and the terms and the effect of the terms of the relevant Agreements were explained to employees in the manner we have identified as necessary to satisfy the requirement of s 180(5) of the Act.
[107] Further, as part of the additional material filed following the request of the Commissioner, the Respondents in this group filed a pro forma ‘Handout’ document, with a ‘Questions & Answers’ section (Pro Forma Document). The Pro Forma Document related to the contents of the relevant Agreements and did not set out information in relation to the forthcoming changes to the Award.
[108] The Individual Transcripts for these Respondents demonstrate that, across the board, employees were told that the forthcoming changes to the Award prescribed overtime entitlements for casual employees working more than 38 hours per week, and that if the Award were to operate in the respective workplaces then the hours rostered for casual employees would likely not exceed the 38 hours per week.
[109] In the case of two Respondents 73, the Individual Hearing transcript revealed that the employer representative was of the understanding that “there was no changes coming to the Horticultural Award for casuals” and that it “was to be the same” for casual employees.74 In these circumstances, the forthcoming changes to employees cannot be said to have been properly explained in accordance with s 180(5) of the Act.
Kool Country Packers Ballandean Pty Ltd and Atta Farms Pty Ltd 75
[110] The Respondents in this group filed amended Form F17’s. Insofar as the amendments addressed the forthcoming changes to the Award, the amendments noted that “the terms of the agreement and their effect were also explained...The pending changes to the Horticulture Award regarding overtime for casuals were also explained”. 76 The amendments addressed the forthcoming changes broadly, and without acknowledging the averaging period that would apply to ordinary hours for casual employees.
[111] The Respondents in this group share the same employer representative, and as such there was one Individual Hearing conduct in respect of both Agreements. The Commissioner discussed each Agreement separately with the employer representative. In regard to the forthcoming changes to the Award, the employer representative acknowledged that employees were “definitely made aware of the changes”, that they knew “the margins are very, very slim in our business” and that “paying overtime would be very detrimental to the business and possibly therefore to their jobs going forward”. 77 The discussions with employees were similar between the two workplaces.78
Propick Pty Ltd 79
[112] The Respondent’s representative confirmed that apart from the proposed Agreement, there was no documentation referred to in the Form F17 and there was no additional documentation provided to employees to explain the agreement.
[113] Upon review of the Form F17, and in particular the Respondent’s answer to question 2.6, it is clear that the Respondent took steps to explain to employees clauses 6(d)(ii) and 6(d)(iii) of the Award which “confer additional entitlements to casual employees which can only be received under certain conditions”. 80 The Form F17 did not refer to the forthcoming changes with respect to overtime entitlements to casuals or the averaging period that would apply to casual ordinary hours under the Award.
[114] In the Individual Hearing for this Respondent, the employer representative stated that employees were told “additional overtime pay rates applied through [the Award]”, and when asked by the Commissioner if employees were told under the Agreement that they would not get such additional overtime pay rates, the employer representative stated “Yes of course…”. 81 The transcript of the Individual Hearing contains no reference to the averaging of ordinary hours for casual employees.
[115] We order as follows:
• Permission to appeal is granted;
• The appeal is upheld;
• The Initial Decision of Commissioner McKinnon ([2019] FWC 1016) and the Final Decisions, listed in Appendix A, are quashed;
• The Application for approval of the BTS Packing Shed Enterprise Agreement 2018 (Matter AG2018/2373) is remitted to Commissioner McKinnon to determine the jurisdictional point raised; and
• The remaining 30 Applications the subject of this appeal are dismissed.
VICE PRESIDENT
Appearances:
Mr A Sage and Mr S Crawford for the Appellant.
Mr M Waters and Ms K Yarro for the Respondents. 82
Hearing details:
2019.
29 May
Melbourne with videolink to Bundaberg.
Final written submissions:
The Appellant’s submissions dated 26 June 2019.
The Respondents’ submissions dated 3 July 2019.
Printed by authority of the Commonwealth Government Printer
<PR709500>
Respondents represented by MRH Lawyers
1. AG2018/2112: Ceres Farm Enterprise Agreement 2018 [2019] FWCA 1321.
2. AG2018/2123: Acadia Farms Enterprise Agreement 2018 [2019] FWCA 1324.
3. AG2018/2165: ADCO Holdings Pty Ltd Enterprise Agreement 2018 [2019] FWCA 1329.
4. AG2018/2215: Ivanhoe Farms Enterprise Agreement 2018 [2019] FWCA 1334.
5. AG2018/2373: BTS Packing Shed Enterprise Agreement 2018 [2019] FWCA 1361.
6. AG2018/2375: Bothkamp Australia Farm Enterprise Agreement 2018 [2019] FWCA 1339.
7. AG2018/2378: Gympie Packhouse Enterprise Agreement 2018 [2019] FWCA 1346.
8. AG2018/2384: Sandowne Farming Enterprise Agreement 2018 [2019] FWCA 1350.
9. AG2018/2492: Desert Farms Enterprise Agreement 2018 [2019] FWCA 1353.
10. AG2018/2496: Glenellen Enterprise Agreement 2018 [2019] FWCA 1356.
11. AG2018/2654: Gen2 Farming Enterprise Agreement 2018 [2019] FWCA 1357.
12. AG2018/2675: A & A Mango Contracting Enterprise Agreement 2018 [2019] FWCA 1358.
13. AG2018/2817: Kenrose Enterprise Agreement 2018 [2019] FWCA 1359.
14. AG2018/2818: DFI Employment Enterprise Agreement 2018 [2019] FWCA 1362.
15. AG2018/2837: Wallaroo Produce Supplies Enterprise Agreement 2018 [2019] FWCA 1363.
16. AG2018/2850: Moffatt Fresh Produce Enterprise Agreement 2018 [2019] FWCA 1365.
17. AG2018/3762: Mortimers Farms Enterprise Agreement 2018 [2019] FWCA 1325.
18. AG2018/3798: Makhoma Farms Pty Ltd Enterprise Agreement 2018 [2019] FWCA 1327.
19. AG2018/5069: Halt for Holts Pty Ltd Enterprise Agreement 2018 [2019] FWCA 1328.
20. AG2018/5159: Curino Farm Holdings Enterprise Agreement 2018 [2019] FWCA 1332.
21. AG2018/5173: Nangiloc Colignan Farms Pty Ltd Enterprise Agreement 2018 [2019] FWCA 1335.
22. AG2018/5203: Gundablue Farm Produce Enterprise Agreement 2018 [2019] FWCA 1337.
23. AG2018/5223: Nashy’s Produce Enterprise Agreement 2018 [2019] FWCA 1338.
24. AG2018/5515: Akers Employment Enterprise Agreement 2018 [2019] FWCA 1344.
25. AG2018/5531: Dicky Bill Farming Enterprise Agreement 2018 [2019] FWCA 1348.
26. AG2018/5756: Delta Backpackers Enterprise Agreement 2018 [2019] FWCA 1349.
27. AG2018/5781: Berry North Enterprise Agreement 2018 [2019] FWCA 1352.
28. AG2018/5782: Kureen Farming Enterprise Agreement 2018 [2019] FWCA 1354.
Respondents represented by Copeland Workplace Law
29. AG2018/5235: Kool Country Packers Ballandean Pty Ltd Enterprise Agreement 2018 [2019] FWCA 1341.
30. AG2018/5453: Atta Farms Pty Ltd Enterprise Agreement 2018 [2019] FWCA 1342.
Respondent represented by Park & Co Lawyers
31. AG2018/3621: Propick Pty Ltd Enterprise Agreement [2019] FWCA 1320.
2 See Appendix A for a list of the Final Decisions.
3 See Appendix A for a list of the Respondents.
4 See Appendix A, Respondents 1 – 28.
5 The three Respondents excused from appearing at the hearing are Atta Farms Pty Ltd; Kool Country Packers Ballandean Pty Ltd; and Propick Pty Ltd (Respondents 29-31 in Appendix A).
6 Initial Decision at [1] – [3].
7 Initial Decision at [3].
8 Initial Decision at [5].
9 Initial Decision at [5].
10 Initial Decision at [6] – [10].
11 Initial Decision at [62].
12 Initial Decision at [69], [70].
13 Stead v State Insurance Commission (1986) 161 CLR 141 at 145-146.
14 CFMEU v Collinsville Coal Operations (2014) 246 IR 21 at [76].
15 Clause 22.1(a) and (c) of the Award.
16 Australian Workers’ Union v BlueScope Steel (AIS) Pty Ltd [2018] FCA 80; see also Bluescope Steel (AIS) Pty Ltd v Australian Workers' Union [2019] FCAFC 84.
17 Initial Decision at [57].
18 The Appellant cited Re Award Modernisation Request (2009) 187 IR 146, and the inclusion of default funds where there was “a history of award regulation of superannuation in the industry or occupation the modern award covers”.
19 Re Four Yearly Review of Modern Awards (Annual Leave) (2015) 250 IR 119, [209]-[212].
20 Coal and Allied Operations Pty Ltd v AIRC (2000) 203 CLR 194 at [17] per Gleeson CJ, Gaudron and Hayne JJ.
21 O’Sullivan v Farrer (1989) 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch (2011) 85 ALJR 398 at [69] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; Coal & Allied Mining Services Pty Ltd v Lawler and others (2011) 192 FCR 78 at [44] -[46].
22 GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343 at [26]-[27], 197 IR 266; Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth [2010] FWAFB 10089 at [28], 202 IR 388, affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler (2011) 192 FCR 78; NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663 at [28].
23 [2010] FWAFB 5343, 197 IR 266 at [24] – [27].
24 Also see CFMEU v AIRC (1998) 89 FCR 200; and Wan v AIRC (2001) 116 FCR 481.
25 Wan v AIRC (2001) 116 FCR 481 at [30].
27 See Appendix A, Respondents 1 – 27.
28 Sections 186 and 187 of the Act.
29 Submissions filed by Gray Australia Pty Ltd as trustee for The Gray Family Trust T/A Ceres Farm and Others dated 12 June 2019.
30 Health Services Union v Clinpath Laboratories Pty Ltd [2018] FWCFB 5694 at [20].
31 See Appendix A, Respondents 28-30.
32 ANMF v Domain Aged Care (QLD) Pty Ltd T/A Opal Aged Care [2019] FWCFB 1716 at [27]; CFMMEU v Townsville Marine Logistics Pty Ltd & Ors [2019] FWCFB 3598 at [34] – [36].
33 Initial Decision at [24].
34 4 yearly review of modern awards – Award stage – Group 3 [2018] FWCFB 6368.
35 Central Queensland Services Pty Ltd T/A BHP Billiton Mitsubishi Alliance [2015] FWC 1554 at [83].
36 See Appendix A, Respondent 31.
37 Submissions filed by Propick Pty Ltd dated 12 June 2019.
38 [2017] FWCFB 3541 at [750].
39 [2017] FWCFB 3541 at [739](3).
40 Construction, Forestry, Maritime, Mining and Energy Union v Ditchfield Mining Services Pty Limited [2019] FWCFB 4022 and Construction, Foresty, Maritime, Mining and Energy Union v Dawsons Maintenance Contractors Pty Ltd [2018] FWCFB 2992 at [57].
41 See Appendix A, Respondents 1-27.
42 See Appendix A, Respondents 28-30.
43 ANMF v Domain Aged Care (Qld) Pty Ltd T/A Opal Aged Care [209] FWCFB 1716 at [27]; Loaded Rates Agreements [2018] FWCFB 3610 at [111]; CFMMEU v Townsville Marine Logistics Pty Ltd & Ors [2019] FWCFB 3589 at [34] – [36].
44 See Appendix A, Respondent 31.
46 [2017] FWCFB 3541 at [748], [752], [755].
47 [2017] FWCFB 3541 at [752].
49 [2018] FWCFB 4695 at [80] – [82].
50 [2018] FWCFB 4695 at [81].
51 August Decision at [82].
52 [2018] FWCFB 4695 at [82].
54 [2019] FWCFB 2108 at [41].
55 PR706485.
56 PR706485 at ‘B’.
57 See Appendix A, Respondent 5.
58 See paragraph [35] – [36] of this decision.
59 Transcript of the Individual Hearing in AG2018/2373 dated 8 February 2019
60 BTS Packing Shed Enterprise Agreement 2018 [2019] FWCA 1361.
61 BTS Packing Shed Enterprise Agreement 2018 [2019] FWCA 1361.
62 Loaded Rates Agreements [2018] FWCFB 3610 at [115].
63 [2017] FWCFB 3541 at [755].
64 [2018] FCFAC 77.
65 Submissions filed by the Appellant dated 28 June 2019.
66 [2017] FWCFB 3541 at [749], [750].
67 [2017] FWCFB 3541 at [751].
68 Initial Decision at [5].
69 Submissions filed by Atta Farms Pty Ltd and Kool Country Packers Ballandean Pty Ltd dated 12 June 2019 and 3 July 2019.
70 Huntsman Chemical Company Australia Pty Ltd T/A RMAX Rigid Cellular Plastics & Others [2019] FWCFB 318 [35] – [37].
71 Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v e2o Pty Ltd [2019] FWCFB 4023 at [17].
72 See Appendix A, Respondents 1 – 28.
73 Gympie Packhouse and Sandowne Farming, see Appendix A, Respondents 7 and 8.
74 Transcript of the Individual Hearing in AG2018/2378 and AG2018/2384 at PN28-PN30; PN54-PN56.
75 See Appendix A, Respondents 29-30.
76 Amended FormF17 Statutory Declaration’s in AG2018/5235 and AG2018/5453 dated 9 January 2019.
77 Transcript of the Individual Hearing in AG2018/5235 and AG2018/5453 dated 24 January 2019 at PN46; PN50; PN52.
78 Transcript of the Individual Hearing in AG2018/5235 and AG2018/5453 dated 24 January 2019 at PN105-PN110.
79 See Appendix A, Respondent 31.
80 Form F17 filed by Propick Pty Ltd dated 14 December 2018.
81 Transcript of Individual Hearing in AG2018/3621 dated 8 February 2019 at PN22 – PN32.
82 See Appendix A, Respondents 1 -28.