| [2020] FWCFB 5011 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604—Appeal of decision
Construction, Forestry, Maritime, Mining and Energy Union & Others
v
The Trustee for Celotti Australia Discretionary Trust T/A Celotti Workforce
(C2020/4764)
VICE PRESIDENT CATANZARITI |
SYDNEY, 6 OCTOBER 2020 |
Appeal against decision [[2020] FWCA 2696] of Deputy President Lake at Brisbane on 1 June 2020 in matter number AG2020/467.
[1] The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU), “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU), The Australian Workers’ Union (AWU) and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) (unions) seek permission to appeal and if granted, appeal a decision of Deputy President Lake dated 1 June 2020 approving a single enterprise agreement, 1 the Celotti Workforce Enterprise Agreement 2020 (Agreement).2
[2] The respondent (Celotti) is a labour hire company. The Agreement covers Celotti’s employees who are on-hired to perform work for its clients nationally that would otherwise be covered by one of 12 awards incorporated into the Agreement. 3
[3] On 26 February 2020, Celotti lodged a Form F16 application for approval of the Agreement. 4 The application was accompanied by the following:
(a) Notice of employee representational rights.
(b) Form F17 – Employer’s statutory declaration dated 26 February 2020 made by Mr Adrian Celotti, director (Form F17).
(c) A document dated 10 February 2020 which contains voting details and hyperlinks to the 12 incorporated awards, the national employment standards (NES), the Code for the Tendering and Performance of Building Work 2016, and contact information including for the Commission and Fair Work Ombudsman.
(d) Copy of the Agreement.
(e) An undated document titled, Explanation of the Terms of the Celotti Workforce Enterprise Agreement 2020 (explanatory document).
(f) Comparative tables between the Agreement and each of the 12 awards (comparative tables). 5
[4] Mr Adrian Celotti, a director of Celotti in his Form F17 declared that the documents listed at (c) to (f) were provided to relevant employees by email on 10 February 2020. These materials are collectively referred to by Celotti as the access pack.
[5] The application provides that there were no employee or union bargaining representatives for the Agreement, although the CEPU had later asserted otherwise. 6
[6] On 18 February 2020, voting for the Agreement was conducted. The Form F17 declares that of the 91 employees said to be covered by the Agreement, 35 cast a valid vote and of these employees 24 voted to approve the Agreement.
[7] In the period between 3 March and 10 March 2020 the AMWU, CFMMEU and AWU sought to be heard in respect of the application, and this was granted by the Deputy President.
[8] On 6 March 2020 the Deputy President identified three preliminary concerns regarding the application. It is sufficient to note that these concerns related to (1) Celotti’s explanation of the Agreement to relevant employees, (2) the voter turnout including the proportion of employees that were engaged on a casual basis, and (3) whether employees remain better off overall when in receipt of an “Over Agreement Payment” intended to offset wages, penalties and allowances that would otherwise apply under the Agreement.
[9] Celotti responded to these matters on 9 March 2020, which included a revised Form F17 made by Mr Celotti and a proposed undertaking. 7 A copy of Celotti’s response was served on the AMWU, CFMMEU and AWU on 10 March 2020.
[10] On 13 March 2020, the CEPU filed a Form F18 statutory declaration in which it advised that it was a bargaining representative for the Agreement, and it does not support its approval. The CEPU did not wish to be covered by the Agreement. 8
[11] On 13 March 2020, each of the interested unions made submissions which broadly contended that the Agreement was not capable of approval on the following bases:
(a) Celotti has not complied with s.180(5) of the Act, being the requirement to take all reasonable steps to explain the terms of the Agreement and the effect of those terms to relevant employees in a manner appropriate to the employees’ circumstances and needs.
(b) Pursuant to s.188(1)(c) of the Act, there are reasonable grounds for believing that the Agreement has not been genuinely agreed to by employees. First, whilst not pressed on appeal, it was said that the Agreement was not made by a valid majority of employees as required by ss.181(1) and 182(1) of the Act. Second, it is contended that employees that cast a vote in respect of the Agreement did not appreciate its broad occupational scope.
(c) Contrary to s.186(2)(d) of the Act, the Agreement does not pass the BOOT. 9
[12] Celotti filed reply submissions on 17 March 2020 together with a witness statement of Mr Celotti. 10 Celotti contended that the matters raised by the unions ought to be rejected for the following reasons:
(a) Each of the 12 awards is incorporated into the Agreement. Where the terms of the Agreement prevail, the explanatory document contained within the access pack summarised the key differences to the relevant award. While components of the Agreement do not apply to all relevant employees, that does not lend support to the conclusion that the Agreement was not genuinely agreed to. In any case, employees were invited by Celotti to seek clarification as required. Further, Celotti’s undertaking of 9 March 2020 resolves compliance with s.180(5) of the Act because it addresses the deficiency in the BOOT identified by the Deputy President, and a concern shared by the unions.
(b) Each incorporated award covers at least one of Celotti’s employees. Accordingly, the broad occupational scope of the Agreement reflects Celotti’s workforce. Further, there is sufficient material before the Commission to determine that the Agreement was made by a valid majority of employees.
(c) The unions have not provided any basis for the assertion that the Agreement fails the BOOT. Rather, the base rates of pay under the Agreement are a minimum of $1.00 per hour above the corresponding award rates. Penalties for overtime and other work are calculated on the higher Agreement rates. In respect of casuals, the 1% additional loading in lieu of the entitlement to casual conversion was addressed in the explanatory document provided to employees. 11
[13] On 27 March 2020, the unions filed aide memoires pursuant to the Deputy President’s directions. The aide memoires elaborated upon the unions’ concerns as addressed above. 12
[14] The application proceeded to a conference before the Deputy President on 3 April 2020, 13 following which further directions were issued for the parties to file consolidated submissions and evidence. The directions confirmed that “a telephone hearing, of 2 hours in length, is listed for 1pm AEST, Friday 17 April 2020.”14
[15] Pursuant to the 3 April 2020 directions:
(a) The same day, Celotti filed and served its tablulated response to the unions’ respective contentions. 15
(b) On 8 April 2020, the unions provided further written submissions. 16
(c) On 15 April 2020, Celotti filed and served “full and final submissions.” 17 These submissions were supplemented with a further witness statement of Mr Celotti,18 which was served on the unions in redacted form.19
[16] On 16 April 2020 pursuant to further directions issued by the Deputy President on 14 April 2020, the unions filed a combined summary of disputed questions of fact and a schedule of objections. 20 Broadly, the unions’ questions sought to ascertain the steps taken by Celotti to explain the access pack to relevant employees, whether the 12 incorporated awards covered such employees, and how Celotti says the Agreement was approved by a valid majority.
[17] The matter proceeded to a telephone hearing on 17 April 2020. The hearing was not recorded and therefore no transcript is available. To explain what occurred the unions rely upon a witness statement of Mr Luke Edmonds, National Legal Officer for the CFMMEU Maritime Union of Australia Division (MUA). 21 Mr Edmonds is said to have submitted to the Deputy President that there were a significant number of evidentiary issues to be resolved, and the two hours allocated for the hearing provided insufficient time to deal with such matters. It was proposed that the hearing be adjourned and Celotti be directed to file evidence in response to the unions’ combined summary of disputed questions of fact. Mr Edmonds records that the Deputy President advised the parties he would review all the documents and put questions to Celotti as to the matters about which he wished to be satisfied. The Deputy President would also consider whether such questions and Celotti’s response would be provided to the unions. The hearing was adjourned on this basis.
[18] On 21 April 2020, Celotti filed with the Commission a “Payroll Activity [Summary] Access Period” and “Access Period Timesheets.” Each of these documents purported to identify the employees engaged by Celotti during the access period for the Agreement, which commenced on 10 February 2020. This material was not served on the unions.
[19] The payroll summary identifies the wages paid to 89 of Celotti’s employees in the fortnight 10 February to 23 February 2020. Celotti’s covering email advises that two of its employees are not included in the payroll summary. Celotti explains that the first employee was not employed during the access period and was therefore not entitled to cast a vote. The second employee is paid monthly and evidence of that employee’s eligibility to vote is said to be supported by its timesheets. Further, Celotti says that there were no timesheets that could be produced for three of its employees, however each is identified in the payroll summary.
[20] On 21 April 2020, the Deputy President invited Celotti to explain what its payroll summary and timesheets sought to establish. Further, the Deputy President requested that Celotti produce an excel document outlining which employees were engaged on 18 February 2020, being the date of the vote. The unions were not copied to this correspondence.
[21] On 24 April 2020, Celotti refiled its payroll summary and timesheet documents. This was supplemented by:
(a) revised “full and final submissions” within which Celotti identifies the evidence produced to the Commission to support its contentions;
(b) an excel spreadsheet of all 91 employees setting out the dates worked by employees;
(c) additional timesheets for 16 of Celotti’s employees; and
(d) Mr Celotti’s supplementary statement dated 16 April 2020, which identifies at annexure A the employees engaged by Celotti, each employee’s respective classification and the award which underpins their employment. 22
[22] A copy of Celotti’s 24 April 2020 material was not provided to the unions.
[23] On 18 May 2020, the CFMMEU sent an email to the Deputy President’s chambers requesting an update on the status of the matter. 23 On 19 May 2020, the CFMMEU was advised that “at this point the Deputy President is considering the material and no request has been made of the Applicant for the further production of any documentation. All parties will be informed of any progress as, and when, it occurs.”24
[24] On 22 May 2020, the Deputy President’s chambers contacted Celotti’s representative requesting a final undertaking be provided.
[25] The Agreement was approved on 1 June 2020 without an undertaking.
[26] At [4] to [15] of the decision the Deputy President summarised the matter history. Specifically, as to the material filed by Celotti on 24 April 2020 but not served, the Deputy President said:
“On 24 April 2020, the Applicant provided copies of payroll information and timesheets to my Chambers only which included a spreadsheet of employees who worked during the access period. The Applicant requested the material be kept confidential due to confidentiality of the employee data, timesheets, and pay rates. The material was accompanied by revised submissions which referred to the specific documentation provided rather than the more generalised final submissions provided to parties. Having reviewed the material, I have determined to keep the material confidential but indicated I have considered the fact it was not provided to all parties and given the evidence due weight accordingly.”
[27] The Deputy President proceeded by identifying the outstanding issues in the application at [16] to [19] of the decision.
[28] At [24] to [40], the Deputy President summarised the parties competing contentions as to whether Celotti complied with s.180(5) of the Act. The Deputy President said:
“[42] I am not persuaded with the Union’s contentions that sufficient explanation was not provided explaining the difference between the Agreements and Awards. Whilst I acknowledge there was a significant amount of documentation provided by emails, the differences were addressed in sufficient detail in the Applicant’s explanation.”
[29] Further, the Deputy President determined at [44] of the decision that if employees were not aware of the modern award that applied to them there was an opportunity to contact Celotti to seek clarification. The Deputy President was satisfied that the explanatory material “whilst lengthy, was sufficient” and was written in a manner that employees could understand.
[30] At [45] and [46] the Deputy President concluded that all reasonable steps were taken by Celotti to explain the terms of the Agreement and their effect to the relevant employees.
[31] The Deputy President turned to consider whether a valid majority of employees voted to approve the Agreement. The Deputy President relevantly set out ss.181(1) and 182(1) of the Act before summarising the parties’ submissions in respect of this matter. The Deputy President then concluded:
“[66] I accept the evidence of the Applicant that employees were covered by the Agreement during the voting period, noting that the 91 employees fell under the scope of the one of the 12 Awards.
[67] With respect to the casual cohort, I accept the submissions and evidence of the Applicant over the Union’s, noting that all 90 of the casual employees were engaged at some point doing the 8 hours voting period.”
[32] At [50] of the decision the Deputy President observed that a critical issue under s.188(1)(c) was whether the agreement of the voting cohort “is capable of being described as having authenticity.”
[33] The Deputy President proceeded to consider whether the Agreement passed the BOOT. He determined that the concerns raised by the unions in respect of clauses 9, 10 and 12 of the Agreement were resolved by the NES precedence clause. As to the operation of the Over Agreement Payment at clause 14(c), the Deputy President concluded:
“[70] I corresponded with the Applicant on 6 March 2020, raising issue with clause 14(c) of the Agreement, raising issue whether the overpayment will be high enough to compensate for penalties and allowance and that the review occurs only once a year. Based on the responses and modelling provided by the Applicant, I am satisfied that the Agreement passes the BOOT. I consider this matter is distinguishable from Beechworth as the BOOT has been met in relation to this Agreement, and by virtue of the wording of clause 14(a) and clause 14(c) of the Agreement that the Over Agreement payment must pay rates that are already above the Award.”
[34] The Deputy President was satisfied that each of the requirements of ss.186, 187, 188 and 190 were met. The Agreement was approved without an undertaking. The Agreement commenced operation on 8 June 2020 with a nominal expiry date of 1 June 2024.
[35] The unions appeal the Deputy President’s decision on four bases. They contend the Deputy President erred by:
(a) denying the unions procedural fairness because they were not served with or given an opportunity to respond to critical material that formed the basis of the Deputy President’s decision (appeal ground one);
(b) failing to consider the unions’ submissions central to their objections to the approval application (appeal ground two);
(c) finding the Agreement not genuinely agreed to by the relevant employees, because (1) there is a disjunct between the work performed by employees and the 12 incorporated awards, and (2) Celotti did not take all reasonable steps to explain the terms of the Agreement and its effects to relevant employees (appeal ground three); and
(d) finding the Agreement passed the better off overall test (BOOT) (appeal ground four).
[36] It is convenient to first consider appeal ground three.
[37] By appeal ground three, it is said that the Deputy President erred by concluding that the Agreement was genuinely agreed to within the meaning of s.186(2)(a) of the Act. This appeal ground comprises of two limbs. The first relates to the quality of Celotti’s explanation of the Agreement terms and its effects to employees. The second turns to whether the Agreement was validly made by reference to the voting cohort.
[38] As to the first matter, s.180(5) of the Act requires an employer to take all reasonable steps to ensure the terms of an agreement and the effect of those terms are explained to relevant employees in an appropriate manner taking into account the particular circumstances and needs of those employees. As observed by the Full Bench in Construction, Forestry, Maritime, Mining and Energy Union v Ditchfield Mining Services Pty Limited (Ditchfield), 25 the Commission’s enquiry is two-fold: (1) whether the steps taken were reasonable in the circumstances, and (2) whether these were all the reasonable steps that should have been taken.26 In assessing whether an employer has complied, the Commission must consider, inter alia, the content of the explanation, taking into account the circumstances and needs of the relevant employees.
[39] The explanatory document provided to relevant employees identifies the coverage of the Agreement as applying to all on-hire employees that would otherwise be covered by the 12 awards. As to the terms and conditions of employment, the explanatory document specifies that the award terms are incorporated into the Agreement, however there are terms of the Agreement “that differ from the Award.” These differences are not explained as against each of the 12 awards. Rather, Celotti merely lists the matters dealt with by the Agreement which are asserted to be different.
[40] Furthermore, the explanatory document contains inaccuracies. The dispute resolution procedure is said to “differ from the underpinning Awards,” however reflects “the model term set out in the Fair Work Regulations 2009.” The regulations do not contain a model dispute resolution term and therefore Celotti’s assertion is plainly wrong. In addition, the explanatory document provides that “the Agreement contains extra obligations around safety and fitness for work. These are not included in your Enterprise Agreement.” An employee cannot be expected to reconcile this statement in the absence of further explanation by Celotti.
[41] The unions’ hold particular concerns in respect of the explanation proffered by Celotti about casual conversion and wage provisions under the Agreement.
[42] Clause 6(a) of the Agreement provides that the award provisions concerning conversion from casual to permanent employment are not taken to be terms of the Agreement. Employees are instead compensated by an additional 1% loading payable upon completion of six months continuous service. The explanatory document does not identify the casual conversion entitlements under each of the awards that are offset by the additional 1% loading. Rather, the explanation proceeds on the basis that the entitlement to casual conversion is the same under each of the 12 awards. However, this is not the case. For example, the Building and Construction General On-Site Award 2010 (Building Award) which the unions contend covers the majority of Celotti’s casuals, provides that casual employees, other than those engaged on an irregular basis, have the right to elect that their employment be converted to full-time or part-time employment after a period of six months. This includes the requirement for an employer to give written notice to the casual employee of their right to conversion. 27 By comparison, this entitlement is confined under other awards as a right to request conversion following a period of 12 months regular employment. In this case, conversion to full-time employment may only be sought where the casual employee has worked equivalent full-time hours over the preceding 12-month period.28
[43] Further, the explanatory document suggests that there is no right to request conversion from casual to full-time or part-time employment under the Agreement, because the “extra 1% loading” is “in lieu of casual conversion rights.” 29 Under clause 6(c) of the Agreement, employees are not prevented from making a request to convert to permanent employment upon achieving six months of regular and systematic casual service. It was incumbent upon Celotti to take the reasonable step of explaining the different casual conversion entitlements under the 11 awards (noting that the Maritime Offshore Oil and Gas Award 2010 (Maritime Award) does not contain casual employment provisions at all) so that employees could make an informed decision whether to approve the Agreement. This is particularly so given that 90 of the 91 employees who were covered by the Agreement when it was made were engaged on a casual basis.
[44] In respect of the wage provisions of the Agreement, clause 14(a) provides that “employees will be paid in accordance with the wage rates and allowances in the Relevant Award…plus an additional $1.00 per hour.” The explanatory document assumes that employees had, at the relevant time, knowledge of (1) the award that applied to their employment, and (2) the wage entitlements that attached to their position under the applicable award. This is because Celotti lists the 12 awards by name and does not otherwise provide employees with any guidance as to which award covers the work they perform. Nor is any information provided to employees to assist them in forming their own view as to award coverage. Absent such explanation, the explanatory document could not have properly assisted employees in understanding which classification under the award captures their role and the corresponding wage entitlements.
[45] Further, the explanatory document states that “any time you are paid at a rate higher than the minimum under the Agreement, the additional payment will be in lieu of any other benefits that would otherwise apply (provided that it does not result in you being worse off overall).” It cannot be said that the operation of the Over Agreement Payment provision in clause 14(c) was adequately explained by this statement. The explanation is broad, and it does not identify the benefits under the Agreement that could be offset by a higher rate of pay. The explanation also fails to identify that an offset can be applied where the employee is paid more in allowances whilst on assignment than what is required under the Agreement. While it is said that this provision of the Agreement will not result in employees being worse off overall, Celotti does not explain how such an assessment will be made or the timing of the review.
[46] Further, employees could not be expected to understand when clause 14(c) might apply because the explanatory document did not provide employees with a sufficient base level of knowledge of their wage entitlements under the Agreement. Accordingly, Celotti’s explanation is entirely deficient, and this deficiency is exacerbated by the dense nature of clause 14(c) as it appears in the Agreement. We observe that while Celotti contended in its 17 March 2020 submissions that any deficiency in the explanation regarding this matter was resolved by its 9 March 2020 undertaking, 30 the Agreement was approved absent the undertaking proffered. As the Full Bench in Construction, Forestry, Maritime, Mining and Energy Union v Karijini Rail Pty Ltd observed:
“. . . the capacity to accept an undertaking to meet concerns about a failure by an employer to comply with s.180(5) of the Act does not alter, add to or determine the factual matrix in which compliance is assessed. Self-evidently the assessment occurs in light of the circumstances which pertained at the time compliance is required.” 31
[47] The explanatory document was provided together with 12 comparative tables which sought to compare the terms of the Agreement to each of the incorporated awards. Celotti contends that each table provided a detailed comparison that assisted employees to determine the extent to which their award entitlements were affected. We disagree. Each table sets out the award clauses and advises that the award term is incorporated as a term of the Agreement. The highwater mark of this explanation is that employees could identify the terms that were incorporated, but not which of those incorporated terms applied to their employment. This is particularly so given that the comparative tables were provided as a bundle which exceeded approximately 1000 pages. In any event, the comparative tables go no way towards explaining the effect of the Agreement terms. Rather, the tables simply contain extracts of clauses from the 12 incorporated awards.
[48] In the context of the above, the provision of hyperlinks to resources including the modern awards and the NES does not overcome the shortcomings identified with the explanatory document and comparative tables.
[49] Further, the material before the Deputy President does not show that in taking steps to explain etc the Agreement, Celotti had regard to the following contextual matters:
(a) There was no existing enterprise agreement which covered Celotti and the relevant employees.
(b) None of the employees proposed to be covered by the Agreement nominated a bargaining representative.
(c) The absence any bargaining meetings in respect of the Agreement.
(d) All but one of the 91 employees were engaged in casual employment.
(e) Celotti’s workforce includes “10% younger workers, 20% older workers, and close to 15% ATSI.” 32
[50] The above matters disclose that employees may not have had a reasonable understanding of how the conditions of their employment might be affected by an enterprise agreement. Unless employees independently sought clarification, provision of the access pack was the only step taken by Celotti to explain the Agreement terms. In this context, Celotti did not have regard to the particular circumstances of its employees given its generalised approach.
[51] Having regard to the above, the steps taken by Celotti to explain the terms of the Agreement and the effect of those terms were not all the reasonable steps that should have been taken. In this case, the Deputy President’s reliance upon Celotti’s contention that employees had the opportunity to seek further clarification is misplaced. This is because Celotti’s invitation to relevant employees to ask questions of management does not cure an otherwise deficient explanation. The material before the Deputy President was not sufficient to support a conclusion that he was satisfied Celotti had complied with s.180(5) of the Act.
[52] In light of these matters, the Deputy President could not have been satisfied that the Agreement had been genuinely agreed to by the relevant employees within the meaning of s.188(1)(a)(i) of the Act and so he could not be satisfied that the approval requirement in s.186(2)(a) had been met.
[53] We turn now to consider the second limb of appeal ground three, being the unions’ contention that the Agreement was not genuinely agreed to because there could not be satisfaction as to s.188(1)(c) of the Act. The unions contend that the voting cohort did not have any knowledge or connection with the work performed under many of the following 12 awards, incorporated by clause 5(a) of the Agreement:
• Building and Construction General On-Site Award 2010;
• Cleaning Services Award 2010; 33
• Electrical, Electronic and Communications and Contracting Award 2010;
• Manufacturing and Associated Industries and Occupations Award 2010; 34
• Mobile Crane Hiring Award 2010;
• Mining Industry Award 2010; 35
• Port Authorities Award 2020; 36
• Storage Services Award and Wholesale Award 2010; 37
• Vehicle Manufacturing, Repair, Services and Retail Award 2010; 38
• Hydrocarbons Industry (Upstream) Award 2020; 39
• Maritime Offshore Oil and Gas Award 2010; 40 and
• Plumbing and Fire Sprinklers Award 2010.
[54] The material before the Commission relevant to the determination of award coverage consists of two key documents filed by Celotti on 24 April 2020. The first is a table in which Celotti identifies the full name, role and relevant award for each of the 91 employees said to be covered by the Agreement (summary table). The content as described was redacted in the copy provided to the unions on 16 April 2020. The second is a bundle of timesheets for Celotti’s employees, which broadly records each employee’s full name, position title and hours worked during a particular pay period for a host employer (the identity of which is redacted in the majority of the timesheets).
[55] This material was filed by Celotti in response to the unions’ contention that there was no probative evidence before the Commission to support Celotti’s submission that it engages at least one employee under each of the above awards.
[56] The Deputy President accepted at [66] of the decision that Celotti had at least one employee engaged to perform work under the scope of each of the 12 awards. However, there is no proper basis upon which the Deputy President could have accepted Celotti’s contention. The material relied upon by Celotti in respect of this matter is deficient for the reasons that follow.
[57] Celotti’s summary table and timesheets for its employees do not identify the industries of the host employers which is required information to determine coverage under some of the 12 awards. Further, the Agreement simply incorporates the classification structure of the awards and does not separately define employees’ roles and responsibilities. No material was led by Celotti to explain the characteristics of the work performed by its employees such that the Commission can determine occupational coverage. The material that was before the Deputy President falls short of establishing Celotti’s contention because there is no basis from which the Commission can discern the work performed by employees on assignment, and therefore award coverage.
[58] Further, there are some ambiguities in Celotti’s summary table. Celotti identifies three employees as performing the role of “TA.” It contends that the work performed by two of its TAs is covered by the Manufacturing and Associated Industries and Occupations Award 2010 (Manufacturing Award), and the work performed by the third TA is covered by the Mining Industry Award 2010. Celotti does not explain why its TAs are covered by different awards, and there was no material before the Deputy President which assists to understand this distinction. Further, Celotti submits that three of its employees are engaged as leading hands under the Vehicle Manufacturing, Repair, Services and Retail Award 2010 (Vehicle Manufacturing Award). The substantive roles in which these employees perform leading hand duties are not identified. Notwithstanding this, there was no material before the Deputy President that can ground a conclusion that these employees are covered by the Vehicle Manufacturing Award. We observe that nine of the 12 awards make provision for a leading hand and Celotti does not particularise why the Vehicle Manufacturing Award is nominated as the appropriate award.
[59] The unions contend that a reasonable ground for believing that the Agreement has not been genuinely agreed to by the relevant employees arises from the Agreement’s extraordinarily wide scope. The Agreement is said to capture a broad range of industries and occupations some of which are highly specialised, and therefore “the voting cohort did not have any knowledge or connection with the work performed under many of the Awards.”
[60] In support of this position, the unions rely on Re KCL Industries Pty Ltd. 41 The Full Bench in KCL observed that the authenticity of an enterprise agreement is assessed by reference to the work performed by relevant employees proposed to be covered by its terms as against the scope of the Agreement. Where there is a disjunct between the characteristics of the workforce and the agreement scope, such that relevant employees have no stake in respect of certain terms including rates of pay and industry specific entitlements, then it follows that employees could not have given informed consent regarding matters unrelated to their employment. Where this occurs, there are reasonable grounds for believing that the agreement has not been genuinely agreed to.42 The correctness of the approach in KCL was endorsed by the Full Court in One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union.43
[61] In this appeal, the unions have had the opportunity to interrogate Celotti’s 24 April 2020 material. Having regard to the summary table and timesheets, the unions make the following submissions as to the disjunct between the Agreement’s scope and Celotti’s workforce. For the reasons that follow, we agree with each of the unions’ contentions.
[62] First, the unions contend that there was no material before the Deputy President supporting Celotti’s position that it has one employee engaged as a plumber covered by the Plumbing and Fire Sprinklers Award 2010 (Plumbing Award). It is submitted that Celotti’s contention is inconsistent with the employee’s contracts of employment and payslips, which were not filed by Celotti with the Commission. Relevantly, the employee’s contracts of 15 May 2019 and 6 March 2020 specify that the work performed with the host employer is covered by the Manufacturing Award. 44 Further, the employee’s payslips for the period 17 February to 23 March 2020 describe the employee as a mechanical technician,45 while the timesheet filed by Celotti for the same period identifies the employee as a tubefitter.46
[63] The unions submit that the timesheets of the two employees said to be covered by the Hydrocarbons Industry (Upstream) Award 2010 (Hydrocarbons Award) do not record their respective classification by name. Accordingly, no finding as to occupational coverage could have be made. 47
[64] We accept that neither the role of a tubefitter nor mechanical technician appears in the Plumbing Award as its own classification title. Critically however, there is no material before the Commission that addresses the characteristics of the employee’s role such that an assessment can be made in respect of occupational coverage under the Plumbing Award. Further, Celotti’s contention is at odds with the employment contracts which nominate the Manufacturing Award as applying to the work performed by this employee. In light of these matters, Celotti’s contention that the employee is covered by the Plumbing Award cannot be sustained.
[65] A similar conclusion is reached in respect of the two employees said to be covered by the Hydrocarbons Award. Celotti’s summary table provides that these employees are engaged as technicians. However, there is no explanation of the work performed and how such work fits within the classification structure of the award. Accordingly, the material before the Deputy President was not capable of grounding a conclusion that the Hydrocarbons Award covers the two technicians.
[66] Second, the unions submit that in the absence of material identifying the host employer, there was no support for Celotti’s contention that it has an employee covered by the Port Authorities Award 2010 (Port Award). 48 In any event, the employee is classified as a safety officer in the summary table, which is not a classification contained within that award. Similarly, the unions submit that there is no basis for concluding, as contented by Celotti, that its one fitter and two of its crane operators perform work within the scope of the Maritime Award. Again, the industry in which the host employers operate cannot be discerned from the material before the Deputy President such that it could be determined that the award applies.49 Further, the classifications fitter and crane operator are not classifications contained within the Maritime Award. The unions also contend that there was insufficient material before the Deputy President to support a finding that the Storage Services and Wholesale Award 2010 (Storage Award) covers the work performed by the employee identified in the summary table as a storeperson. This is because the host employer is not known.50
[67] We accept that coverage under the Port Award, Maritime Award and Storage Award cannot be determined absent material addressing the industry of the host employers. For there to be coverage under each of these awards, the host employer must operate within the applicable award defined industry. This must be satisfied before turning to consider whether the work performed by the employee falls within the scope of the award’s classification structure. This exercise was not possible on Celotti’s material.
[68] Third, Celotti’s summary table identifies the Mobile Crane Hiring Award 2010 (Mobile Crane Award) as applying to one employee described as a crane operator. The unions contend that the relevant timesheets identify the employee’s position title as operator only. Relevantly, the timesheet produced by Celotti in respect of this employee identifies the host employer as Allroads, 51 being the same host employer that engages other operators who are said to be covered by the Building Award and Mining Industry Award 2010 (Mining Award).52
[69] Celotti’s contention that it employs a crane operator under the Mobile Crane Award is at odds with the relevant timesheet for the employee, in which the employee is described as an operator only. While the distinction between the job titles might be a fine one, there is no other material which serves to support a finding that the work performed by the employee is properly covered by the Mobile Crane Award. This ambiguity is compounded by the fact that the employee is assigned to perform work for Allroads. The summary table otherwise provides that operators on assignment with Allroads are covered by the Building Award and Mining Award. Further, Celotti’s submissions do not deal with the basis for the differential coverage of its operators.
[70] In light of the above matters, the material before the Deputy President was insufficient to conclude that Celotti engaged at least one employee to perform work within the scope of each of the 12 awards. Moreover, we do not consider the Deputy President reached a conclusion as to whether the Agreement was genuinely agreed to within the meaning of s.188(1)(c) of the Act. Rather, the Deputy President’s conclusion sought to address a different matter not the subject of this appeal, being whether the casual workforce that voted on the Agreement were entitled to cast a vote such that the Agreement was made by a valid majority. Although as we earlier noted, the Deputy President identified at [50] of the decision a critical issue under s.188(1)(c) was whether the agreement of the voting cohort is capable of being described as having authenticity, that is where the consideration begins and ends.
[71] Section 188(c) of the Act is expressed in very broad terms and is intended to pick up anything not caught by paragraphs (a) and (b), so that any circumstance which could logically bear on the question of whether the agreement of the relevant employees was genuine would be relevant. 53 Section 186(2)(a) of the Act required the Deputy President to be satisfied that the relevant employees genuinely agreed to the Agreement and this included turning his mind to whether there were other reasonable grounds for believing that the Agreement has not been genuinely agreed to by the relevant employees. The unions contended that there were and the Deputy President erred by not determining the unions’ objection. The matters we have identified above seem to logically bear on the question of whether the agreement of the relevant employees was genuine. In light of the material before the Deputy President, in arriving at the opinion required by s.186(2)(a), the Deputy President did not apply himself to the question raised by s.188(c). The Deputy erred in not doing so. It was therefore not open to the Deputy President to conclude, as he did at [73] of the decision, that he was satisfied, inter alia, the requirement in s.186(2)(a) of the Act had been met.
[72] Appeal ground three is therefore upheld.
Appeal grounds one and two
[73] By appeal ground one, the unions contend that they were denied procedural fairness because Celotti’s 24 April 2020 material was not served on them. This denied the unions the opportunity to respond to or test Celotti’s submissions and evidence prior to the Agreement being approved.
[74] Appeal ground two is related. The unions contend that the Deputy President failed to take into account their submissions as to the evidentiary threshold required to be met by Celotti to have complied with s.188(1)(c) of the Act.
[75] It is not in dispute that Celotti’s 24 April 2020 material was not served upon the unions. We reject Celotti’s contention that this material “adds very little” to that which was filed and served previously to demonstrate coverage under each of the awards. The timesheets are a key feature of the unions’ contention that the Deputy President could not be satisfied that at least one employee was covered by each of the 12 awards. Had the unions received this material when the matter was before the Deputy President, they could have interrogated it as they did as part of this appeal.
[76] By denying the unions the opportunity to be heard, the Deputy President deprived the unions of the possibility of a successful outcome. 54 That is, the Deputy President did not appropriately consider the unions challenge to the approval of the Agreement on the basis of s.188(1)(c) of the Act. In the result, and as we have already concluded above, the Deputy President did not make a finding in respect of this matter at all. Indeed, on the face of the decision the Deputy President did not scrutinise Celotti’s material. Accordingly, we accept that the threshold test urged by the unions was not met.
[77] In light of these matters, the decision is affected by appealable error. We therefore uphold appeal grounds one and two.
[78] It is contended by appeal ground four that the Deputy President fell into error in being satisfied that the Agreement passed the BOOT for the purposes of s.186(2)(d) of the Act. The application of the BOOT to a non-greenfields agreement requires the Commission to assess whether, as at test time, each award covered employee, and each prospective award covered employee, would be better off overall if the agreement applied than if the relevant award applied. 55
[79] Firstly, the unions contend that the additional 1% loading paid to casuals in lieu of the right to request casual conversion results in the loss or weakening of casual rights. This submission however does not take into account clause 6(c) of the Agreement, which provides that Celotti will make reasonable efforts to accommodate a request by a casual employee to convert to permanent employment. The request can be made upon achieving six months of regular and systematic service. While the circumstances under which a right to request can be made differs to some awards, casual conversion remains a feature of the Agreement. We therefore regard this to be a neutral consideration in the assessment of the BOOT.
[80] Secondly, the unions submit that the Over Agreement Payment at clause 14(c) operates only to an employee’s detriment and outweighs the “one pure benefit” under the Agreement, being rates of pay that are $1.00 per hour above the corresponding award rates. The unions contend that prior to the approval of the Agreement employees on assignment were entitled to their contracted ordinary rate of pay in addition to penalties, allowances and other benefits under the relevant award. Following the Agreement’s approval, the amount of any penalties, allowances and other benefits under the award is said to be reduced by the amount paid in excess of the Agreement minimum (which is the award rate plus $1.00 per hour).
[81] Celotti rejects the unions’ contention on the basis that it is apparent from clause 14(c) that employees will, at all material times, receive at least the Agreement rates.
[82] As to the contractual arrangements that existed prior to the Agreement’s approval, such matters have no bearing upon the Commission’s assessment of the BOOT, which is confined to a question of whether each employee proposed to be covered by the Agreement remains better off overall than if the relevant award applied. We observe that the on-hire contracts of employment filed by the unions in respect of one of Celotti’s employees specify that the assignment hourly rate of pay is a flat rate inclusive of the casual loading, overtime, penalties and allowances. 56 It does not appear, at least from this material, that prior to the approval of the Agreement penalties, allowances and other benefits were paid in addition to the contracted ordinary rate of pay.
[83] In respect of clause 14(c) of the Agreement, we do not accept the unions’ contention as to its operation. The clause requires Celotti to undertake a comparison, in writing, between the wages, penalties and allowances payable under the Agreement as against the “Higher Rate of Pay” received by the employee while on assignment. We understand Higher Rate of Pay to be another term for Over Agreement Payment. This interpretation is consistent with clause 7 of the Agreement, which defines Over Agreement Payment to mean “…any payment that is in excess of the rates contained in this Agreement...” If the comparison discloses that the Higher Rate of Pay is no less than what the employee would have otherwise received under the Agreement, the Higher Rate of Pay is received by the employee in satisfaction of any Agreement wages, penalties and allowances. To the extent that the Agreement yields a more favourable outcome, the minimum entitlements under the Agreement must be met.
[84] Further, clause 14(d) of the Agreement provides for an annual review of wages. The review occurs yearly in line with the Commission’s minimum wage decision. Where Celotti seeks to rely upon clause 14(c) to absorb any increase, this necessitates a further calculation as to whether the Higher Rate of Pay continues to satisfy the minimum Agreement entitlements to wages, penalties and allowances.
[85] The operation of clause 14(c) was raised by the Deputy President as a concern in respect of the BOOT, and an undertaking was sought that satisfied the requirements set out in Shop, Distributive and Allied Employees Association v Beechworth Bakery Employee Co Pty Ltd t/a Beechworth Bakery (Beechworth). 57 An undertaking was provided by Celotti, as requested. However, the Deputy President ultimately found that clause 14(c) is distinguishable from Beechworth on the basis that the Over Agreement Payment already exceeded the award rates. Accordingly, the Agreement was approved without an undertaking.
[86] We accept that the modelling the Deputy President relied upon to address the BOOT was not provided to the unions and nor does the material before the Commission disclose any modelling. Notwithstanding this, the Deputy President did not err by concluding that a reconciliation undertaking was not required. The Deputy President’s approach is consistent with the conclusion of the Full Bench in Construction, Forestry, Maritime, Mining and Energy Union v C&H Acquisition Pty Ltd, 58 which considered the requirement for a reconciliation undertaking in respect of an over agreement payment provision (clause 26(c)). Clause 26(c) was expressed in substantially similar terms to clause 14(c) and was relied upon by an employer in the business of labour hire. There, the Full Bench determined that:59
“[53] There was no proper basis to seek a reconciliation undertaking from the Respondent in relation to clause 26(c) of the Agreement. The 22 November 2019 correspondence from the Commissioner’s chambers refers to the decision of a Full Bench of the Commission in Shop, Distributive and Allied Employees Association v Beechworth Bakery Employee Co Pty Ltd (Beechworth). That case dealt with a reconciliation undertaking which had been provided where there was a realistic possibility that an employee could, in particular circumstances, be paid less under the enterprise agreement than the underlying award. There is no such concern in the present case. Accordingly, the observations made by the Full Bench in Beechworth in relation to reconciliation undertakings have no application to this case.
[54] The Reconciliation Undertaking does not have any work to do to ensure employees and prospective employees covered by the Agreement will be better off overall than they would have been had the Award applied to them. The terms of clause 26(c) of the Agreement, together with the balance of the Agreement, already do that work.”
(citations omitted)
[87] The conclusion of the Full Bench is apposite here. We are satisfied that clause 14(c) operates to ensure that an employee on assignment is paid no less than what the employee is entitled to receive under the Agreement. No undertaking was therefore required. It follows that no appealable error is disclosed, and appeal ground four is rejected.
[88] An appeal under s.604 of the Act is an appeal by way of rehearing and the Commission’s powers on appeal are exercisable only if there is error on the part of the primary decision maker. 60 There is no right to appeal and an appeal may be made only with the permission of the Commission.
[89] Subsection 604(2) of the Act requires the Commission to grant permission to appeal if satisfied that it is ‘in the public interest to do so.’ The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment. 61 The public interest is not satisfied simply by the identification of error, or a preference for a different result.62 In GlaxoSmithKline Australia Pty Ltd v Makin63 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.” 64
[90] 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. 65 However, that the Member at first instance made an error is not necessarily a sufficient basis for the grant of permission to appeal.
[91] Taking into account the above analysis, we consider that it is in the public interest to grant permission to appeal. The matters raised on appeal disclose jurisdictional error amongst other error and there is public interest in ensuring the proper administration of the Commission’s enterprise agreement approval powers under the Act.
[92] We order as follows:
(a) permission to appeal is granted;
(b) appeal grounds one, two and three are upheld;
(c) the decision [2020] FWCA 2696 is quashed;
(d) the application to approve the Celotti Workforce Enterprise Agreement 2020 is remitted to Deputy President Millhouse for redetermination.
VICE PRESIDENT
Appearances:
Ms L Saunders of counsel on behalf of the unions
Mr CJ Murdoch QC on behalf of The Trustee for Celotti Australia Discretionary Trust T/A Celotti Workforce
Hearing details:
2020.
Via teleconference:
18 August.
Printed by authority of the Commonwealth Government Printer
<PR722881>
2 AE508112
3 Clause 5(a) and Appendix 1 of the Agreement
4 Appeal book pp.26-31
5 Ibid pp.32-46 and pp.257-1290
6 Ibid pp. 48 and 86
7 Ibid pp.51-65 and pp.72-76
8 Ibid pp.47-50
9 Ibid pp.77-109
10 Ibid pp.1291-1292
11 Ibid pp.110-127
12 Ibid pp.128-142
13 Ibid p.66
14 Ibid pp.67-68
15 Ibid pp.143-157
16 Ibid pp.158-208
17 Ibid pp.209-239
18 Ibid pp.1299-1307
19 Ibid pp.1293-1298
20 Ibid pp.249-250
21 Exhibit A
22 Appeal book pp.1311-1412
23 Ibid p.1308
24 Ibid pp.1309-1310
26 Ditchfield at [66]; see also Construction, Forestry, Mining and Energy Union v One Key Workforce Pty Ltd (2017) 270 IR 410
27 See for example clauses 14.8(a) and (c) of the Building and Construction General On-Site Award 2010
28 See for example clause 11.4(c) of the Cleaning Services Award 2010
29 Appeal Book p.252
30 Appeal book p.118 at [50]
31 [2020] FWCFB 958, (2020) 293 IR 254 at [42]
32 Ibid pp.26-31 and pp.51- 65
33 The award was varied to the Cleaning Services Award 2020 [MA000022] effective the first full pay period on or after 4 May 2020, PR716564
34 The award was varied to the Manufacturing and Associated Industries and Occupations Award 2020 [MA000010] effective the first full pay period on or after 29 May 2020, PR718704
35 The award was varied to the Mining Industry Award 2020 [MA000011] effective the first full pay period on or after 13 April 2020, PR718074
36 The award was varied to the Port Authorities Award 2020 [MA000051] effective the first full pay period on or after 4 February 2020, PR714165
37 The award was varied to the Storage Services and Wholesale Award 2020 [MA000084] effective the first full pay period that starts on or after 4 May 2020, PR716693
38 The award was varied to the Vehicle Repair, Services and Retail Award 2020 [MA000089] effective the first full pay period on or after 4 May 2020, PR716697
39 The award was varied to the Hydrocarbons Industry (Upstream) Award 2020 [MA000062] effective the first full pay period on or after 4 February 2020, PR714169
40 The award was varied to the Maritime Offshore Oil and Gas Award 2020 [MA000086] effective the first full pay period on or after 13 April 2020, PR716658
41 [2016] FWCFB 3048, (2016) 257 IR 266
42 Ibid at [42]
43 [2018] FWCAFC 77; (2018) 262 FCR 527 at [161]-[165]
44 Exhibit A, Annexures LE-02 and LE-03
45 Ibid Annexure LE-04
46 Appeal book p.1388
47 Ibid pp.1341 and 1401
48 Ibid p.1369
49 Ibid p.1357, 1373 and 1399
50 Ibid p.1338
51 Ibid p.1400
52 See for example appeal book pp.1390-1394, 1398 and 1403
53 One Key Workforce Pty Ltd v Construction Forestry Mining and Energy Union [2018] FCAFC 77; (2018) 262 FCR 527 at [142]
54 Ditchfield at [47]; Minister for Immigration and Border Protection v WZARH (2015) 256 CLR 326 at [59]-[60]
55 ss.193(1) and (6) of the Act
56 Exhibit A, Annexures LE-02 and LE-03
59 Ibid
60 Coal and Allied Operations Pty Ltd v AIRC (2000) 203 CLR 194 at [17] per Gleeson CJ, Gaudron and Hayne JJ.
61 O’Sullivan v Farrer and another (1989) 168 CLR 210 at [216]-[217] per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch (2011) 243 CLR 506 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; (2011) 207 IR 177 at [44]-[46]
62 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]
64 Ibid at [27]
65 Wan v AIRC (2001) 116 FCR 481 at [30]