DECISION

Fair Work Act 2009
s.604 - Appeal of decisions

Construction, Forestry, Maritime, Mining and Energy Union
v
Karijini Rail Pty Ltd
(C2019/6117)

Appeal against decision [[2019] FWCA 6451] of Deputy President Beaumont at Perth on 16 September 2019 in matter number AG2018/3844.

Introduction and Background

[1] On 14 August 2019 Karijini Rail Pty Ltd (Karijini) applied to the Fair Work Commission (Commission) for approval of the Karijini Rail Pty Ltd Rail Operations Pilbara Enterprise Agreement 2018 (Agreement). The Agreement was approved by Deputy President Beaumont with undertakings on 16 September 2019 (Approval Decision).¹ The Construction, Forestry, Maritime, Mining, and Energy Union (CFMMEU) opposed the approval of the Agreement on several grounds and while it was not a bargaining representative for the proposed agreement, the Deputy President decided to hear from the CFMMEU.  The Agreement covers employees engaged in one of three classifications described as Railway Worker Levels 1, 2 and 3. Karijini supplies rail crew labour to Roy Hill Infrastructure Pty Ltd in connection with the Roy Hill iron ore mine (Roy Hill) in the Pilbara region of Western Australia. Karijini’s employees drive trains hauling iron ore from the mine to the Port of Port Hedland.

[2] Karijini is one of a group of related companies and is a subsidiary of Railtrain Group Pty Ltd (Railtrain) which operates a labour hire business and relevantly supplies train drivers in the rail and mining industry in Queensland, New South Wales, Victoria, South Australia and Western Australia². Another subsidiary of Railtrain is TRRC Pty Ltd (TRRC).³ As at December 2018, the Railtrain Group had about 400 employees throughout Australia.⁴

[3] In 2018 TRRC had a contract to provide a rail crew workforce to Roy Hill Infrastructure Pty Ltd to work in connection with Roy Hill (TRRC Contract).⁵ This contract involved the provision of approximately 50 train crew who were employed by TRRC to drive trains hauling iron ore. The termination date of the contract was 31 October 2018.

[4] The employment of the TRRC drivers was covered by TRRC Pty Ltd Operations Agreement 2014, the nominal expiry date of which was 21 January 2019.

[5] During discussions in May or June of 2018, Roy Hill indicated that a further 4 year contract would be offered if an enterprise agreement covering the workforce was in place for the duration of the new contract.⁶ Railtrain determined to incorporate Karijini and to seek to make an enterprise agreement through it.⁷ One reason for using Karijini was that it created an opportunity to negotiate a new enterprise agreement, which in turn would allow a further contract with Roy Hill to be obtained.⁸ Karijini was registered as a company on 22 June 2018.

[6] On or about 9 July 2018 Karijini employed two employees. Both employees were well known to Railtrain’s Director of Business Transformation, Mr Graham Butler, as experienced train drivers with more than 15 years’ experience in driving trains in the Pilbara.⁹ Both had previously registered their interest to work at Railtrain.¹⁰

[7] The two employees started paid work at Karijini on 9 July 2018. For the first 14 days, they carried out compulsory training required by Roy Hill, attending in accordance with their normal roster pattern.¹¹ Before the Agreement commenced operation and during their employment with Karijini the Mining Industry Award 2010 (Award) applied to the employment of the two employees.

[8] The contracts of employment of these employees were ‘maximum term’ contracts, so that their employment term could be aligned with the commercial agreement that Karijini anticipated entering with Roy Hill.¹² The end of term for each employment contract was 30 April 2022.¹³ The employment contracts provided for flat rates of pay inclusive of all applicable penalties and allowances.¹⁴

[9] On 2 August 2018 Karijini “made” the Agreement when the two employees voted to approve it.¹⁵ Clause 2.1(b) of the Agreement provides that it covers employees employed in the classifications in clause 5 of the Agreement when engaged in rail operations at the Roy Hill Operations in the Pilbara Region. The classifications in the Agreement are noted earlier in this decision.

[10] On about 3 September 2018 Karijini entered into a contract with Roy Hill, to provide the rail crew workforce that had previously been provided by TRRC.¹⁶ The term of the contract was 1 November 2018 to 30 April 2022.¹⁷

[11] Self-evidently, when the Agreement was made, and until about 1 November 2018, Karijini had no work falling within clause 2.1(b) of the Agreement as the contract with Roy Hill for the supply of labour had not commenced. During the early period of their employment, the two employees who voted to approve the Agreement were ‘seconded’ to TRRC to perform work at Roy Hill alongside the other TRRC employees.¹⁸ The secondment was from 6 August 2018 (on completion of training) until about 1 November 2018, when the contract commenced. The circumstances of the secondments were explained in the evidence as follows. The TRRC Contract obliged TRCC to supply to Roy Hill 50 drivers at all times. By early July 2018, TRRC’s driver numbers were down to 48, leaving two vacancies.¹⁹  Given the approaching expiry of the TRRC Contract, a business decision was made to fill the vacancies by having the newly formed Karijini employ two train drivers who would be seconded to TRRC until 1 November 2018.²⁰

[12] With effect from about 1 November 2018, a number of TRRC employees (approximately 48 full-time and four casual employees) who had worked at Roy Hill transferred to Karijini to perform, in essence, the same work at Roy Hill they had performed for TRRC.²¹ All full-time TRRC employees were offered maximum-term contracts with the same flat rates as the two existing Karijini employees; the casual TRRC employees were offered casual contracts with the higher casual flat rates; all of the employees accepted the offer.²²

[13] The reasons for the Deputy President’s approval of the Agreement with undertakings are found in the Approval Decision, which deals with undertakings, and in an earlier decision published on 30 April 2019 which deals with the various matters raised by the CFMMEU in opposition to the approval application (April 2019 Decision).²³

[14] As already noted, the CFMMEU objected to the approval of the Agreement on a number of grounds and the Deputy President upheld one of these grounds (in part), namely that the requirement in s.186(2)(a) of the Act (genuinely agreed) had not been met because she was not satisfied that Karijini had complied with s.180(5). This was because Karijini had not explained how the base rate of pay was made up and how it compared to the rates of pay and allowances under the Award.²⁴ The Deputy President directed that further materials be filed addressing whether s.188(2) had application; and whether an undertaking under s.190 could be accepted to address any ‘concern’ about the requirement in s.186(2)(a) because of a failure to comply with s.180(5).²⁵

[15] Karijini had previously proffered undertakings to address the ‘Better Off Overall Test’ (BOOT) concerns.²⁶ In response to the Deputy President’s finding concerning the requirement in s.186(2)(a) and s.180(5), Karijini proffered amended undertakings which relevantly provided that employees would be paid all-inclusive flat rates ranging from $55.30 to $71.94 per hour for maximum term employees, and $60.52 to $77.97 per hour for casual employees.²⁷

[16] In the Approval Decision the Deputy President determined that her concern about Karijini’s failure to comply with s.180(5) could be addressed by an undertaking under s.190, and that the undertaking noted above met her concern.

[17] The Deputy President held, in the event she was wrong as to the undertaking conclusion, that Karijini’s failure to comply with s.180(5) was a minor procedural error within the meaning of s.188(2)(a).

[18] The CFMMEU seeks permission to appeal, and if permission is granted appeals the decision of the Deputy President to approve the Agreement.

Decision to approve the Agreement

The April 2019 Decision

[19] The April 2019 Decision deals with, inter alia, matters raised by the CFMMEU in opposition to the approval of the Agreement. These matters concerned, in summary, whether the employees who made the Agreement were covered by it at the time of the vote to approve the Agreement; whether the Agreement has been genuinely agreed to by the relevant employees (by reason of an alleged failure by Karijini to comply with s.180(5) of the Act and because there were said to be other reasonable grounds for believing the Agreement has not been genuinely agreed to by the relevant employees); whether the Agreement passed the BOOT; and whether the terms of the Agreement contravened s.55 of the Act.

[20] At [1]-[74] of the April 2019 Decision the Deputy President sets out the procedural history of the application, the issues raised by the CFMMEU, some of the background factual matters and the statutory framework relevant to the issues requiring determination.

[21] The Deputy President then turns to consider the coverage issue. The parties’ submissions are summarised at [75]-[81]. The Deputy President determined that the two employees were covered by the Agreement. This determination is not challenged on appeal, so we need not consider this aspect further.

[22] At [108] the Deputy President begins to deal with the genuinely agreed matters. The parties’ submissions are summarised at [108]-[116]. As to the s.180(5) point, the Deputy President concluded that she was not satisfied that Karijini had complied with s.180(5). After considering some relevant authorities and some of the evidence ([117]-[139]) the Deputy President reasoned as follows:

“[140] I have considered the experience of the two employees as purported by Karijini, and the evidence of their familiarity with with processes, and employment terms and conditions relevant to their industry.  As to their knowledge of the relevant modern award, I have observed that for the purpose of the BOOT, the two employees were informed it was the Award.

[141] While the two employees were informed of the Award, and undoubtedly had extensive experience within the Pilbara driving trains, I am not convinced that such circumstances negated all reasonable steps including more than what was provided in the content of the Explanatory Document and the discussion with Mr Butler concerning the final terms of the Agreement. I have taken into consideration the discussions held with Mr Elston, notwithstanding their occurrence during bargaining and training, because I consider such discussions inform as to the needs of the relevant employees. Further, I consider that the two employees were afforded opportunities to ask questions about the Agreement. My conclusion, however, remains unchanged.

[142] In the Form F17, the response to whether the Agreement provided more beneficial terms and conditions to the equivalent in the Reference Instrument was in the affirmative, and reference was made to clauses 5, 7, and 9 of the Agreement. Clause 5 relevantly provided the base rates of pay per hour for the three levels of ‘Railway Worker’. Clauses 7 and 9 dealt with overtime and shift work respectively.

[143] It can be seen then that cl 5 was one of only three clauses considered more beneficial than the terms of the Reference Instrument. Nevertheless, evidence of the explanation provided concerning the base rates of pay was limited. There was limited information regarding how this clause provided an entitlement that was more beneficial than that provided in the Award, and limited explanation given how the base rate of pay compensated for allowances that would otherwise be provided by the Award. Mr Butler clearly went into some detail with the two employees about pay, when asked. However, the content of the discussion for the most part centred on the operation of the IFA. On this point he stated:

…So, effectively, they were asking me, “Do we get paid day shift, night shift, penalties, whatever?”  And I said, “No, you'll vary with an IFA, individual flexibility arrangement, that we pay a one-off all-up rate, all-inclusive rate.” 

[144] In the Explanatory Document under the section ‘What is the remuneration under this agreement?’ there was no reference to the minimum base rates of pay including or excluding any allowances provided by the Award.

[145] While the Explanatory Document stated that shift workers would receive a 25% shift loading on top of the base rate of pay, there was a paucity of explanation concerning what this compensated for in comparison to the loadings, penalties, or allowances in the Award. In a later part of the Explanatory Document concerning allowances, it simply stated ‘there are no other additional allowances applicable under this Agreement’.

[146] Karijini submitted:

In circumstances where enterprise agreements commonly apply in the Pilbara iron ore industry, comparisons to the reference award could confuse employees about their entitlements rather than improve their understanding of the effect of the terms of the Agreement. 

[147] While Karijini noted that comparison to the Award could confuse employees, this proposition lacks lucidity in the current context. Karijini itself identified only three Agreement terms that were either more beneficial than, or not conferred by, the Award. If an explanation of the effect of the terms in the Agreement is to be provided then the logical comparator in the circumstances of this case was the Reference Instrument. There has been no prior enterprise agreement in place within the organisation and the two employees had not previously been involved in an agreement making process within the company. A suggestion that such explanation may confuse is not reason enough to conclude it is a step that is not reasonable. If confusion were to arise that reflects not on the reasonableness of the step, but perhaps on the competence of those explaining the terms.

[148] To ascertain compliance with s 180(5), the evaluation in this case must extend beyond an assessment of the steps taken; it should include the content of the explanation, in light of the circumstances and needs of the relevant employees. The requirement to explain something entails the provision of information, which has more detail than the content of the Agreement, and makes the Agreement terms and their effect, clearer – except of course where the term of the Agreement is evidently self-explanatory. As observed, this does not mean that every term of an enterprise agreement must be explained in a forensic detail. Further, the circumstances and needs of the relevant employees might be such that where an agreement is being rolled over with an established workforce, the explanation may be limited. Perhaps it might entail a one page memorandum, or evidence providing detail of the content of a discussion held only about the proposed changes to the agreement’s final terms.

[149] An employee’s entitlement as far as base rates of pay, penalties and allowances are concerned, are fundamental considerations for any employee. This was reflected in the question of one of the two employees concerning how the salary was made up. And yet, when this questioned was asked the explanation was, with respect, lacking in clarity.

[150] In this case, compliance with s 180(5) necessarily entailed a description of how the base rate of pay was made up and how it compared to the rates of pay and allowances in the Award. It may be the case the penalties are compensated for by the provision of a loading. Again, that required an explanation as to how that loading was arrived at. This is particularly so when the employer, having used such form of rates would have, in any event, determined the rates (allowances rolled in) and loading, and then assessed whether the Agreement passed the BOOT. As it is, the Form F17 requires that the employer indicate if it thinks the Agreement passes the BOOT. While the two employees were involved in the negotiations for the Agreement, it is not at all apparent that an explanation in the aforementioned terms was given during negotiations, or thereafter.

[151] Section 186(2) requires that the Commission must be satisfied that the enterprise agreement has been genuinely agreed to and in that respect the term ‘genuinely agreed to’ is given meaning by s 188(1). Section 188(1) informs the reader that an enterprise agreement has been genuinely agreed to by the employees covered by the agreement if the Commission, is, amongst other matters, satisfied that the employer has complied with s 180(5). No such state of satisfaction has been reached.”²⁸ [Endnotes omitted]

[23] As to the CFMMEU’s contention that for the purposes of s.188(1)(c) of the Act there were several grounds for believing that the Agreement had not been genuinely agreed to the Deputy President rejected these and reasoned:

“[157] While I have concluded I am not satisfied there was compliance with s 180(5) of the Act, I am unable to reach the conclusion that there are other reasons for believing that the Agreement was not genuinely agreed to because of the explanation provided. While the steps taken fell short of ‘all reasonable steps’, it is not the case that the consent of the employees was not informed. It was evident that at material times the employees were asked whether they had any questions, and were provided with opportunities to query answers provided. While it may have been the case that there were some shortcomings with the answers provided, the evidence of Mr Butler was that the two employees asked about the ‘BOOT test’ and what it stood for. Mr Butler had explained that it was a better off overall test where the two employees’ conditions and rates of pay were measured against the Award.  Evidence was given that one of the employees asked about the low rates of pay in comparison to the salary. Mr Butler said he had responded that while the base rate was low if Saturdays, Sundays, weekends, shift work, overtime to that rate were applied, it was tested against the Award to give an all-up rate, and Karijini exceeded that. The Agreement did pass the BOOT.

[158] When determining whether or not there are other reasonable grounds for believing that the enterprise agreement has not been genuinely agreed to, consideration of the authenticity of the enterprise agreement, its soundness,  and whether the employees who will be covered by the enterprise agreement are informed of its terms so it can be said that their ‘consent’ is informed, are relevant considerations. The use of the word ‘genuinely’ in the phrase ‘genuinely agreed’ in ss 186(2)(a) and 188(1)(c) of the Act, indicates that mere agreement will not suffice, and that consent of a higher quality is required.

[159] There is no statutory requirement for the employer to provide a full explanation, by explaining every feature or clause in a proposed enterprise agreement. As has been observed much will turn on the circumstances of each case regarding what constitutes ‘all reasonable steps’. In this case I have concluded that the consent of the two employees was informed notwithstanding the evident inadequacies concerning the steps taken under s 180(5) regarding the explanation about the beneficial terms. This is because ultimately, the two employees were informed that the base rates of pay and loading in the Agreement exceeded the monetary compensation provided by in the Award; their understanding of this is clear from the evidence.

[160] While the CFMMEU referred to flaws concerning the explanations provided, I do not find that the flaws were such to render the two employees absent an informed and genuine understanding of the Agreement. Again, the two employees were at all relevant times afforded the opportunity to ask questions. If an answer provided failed to satisfy their curiosity as to what they were getting themselves into, the two employees could have sought further explanation. That was readily apparent, and yet the evidence is that they did not.

[161] The second ground that the CFMMEU relied upon was that because the employees were not performing work covered by the Agreement they did not have ‘actual experience of the work and its place of performance’. 

[162] The CFMMEU said that in the situation where the employees had no actual experience of the work and location, it could not be said that the employees had brought the requisite moral authority and authenticity necessary to be able to genuinely agree to the Agreement (as referred to in Gordonstone.

[163] However, it is difficult to reconcile the CFMMEU’s second contention with what the High Court determined in Aldi. Plainly, an enterprise agreement for a new enterprise can be ‘made with existing employees of the employer who have agreed to work, but are not at that time actually working, as employees in the new enterprise’.  Therefore, the mere fact that the two employees had not yet commenced work driving the trains at the Roy Hill Operations does not alone provide grounds alone for the conclusion that they were incapable of given authentic agreement.

[164] In its closing submissions, the CFMMEU advanced a further the argument centred on authenticity, or the lack there of. In this respect it referred to the decision of the Full Bench in KCL Industries (KCL),  where it was found that the employees had no ‘stake’ in the agreement because they were to be paid a higher rate of pay regardless of the rate in the agreement. In effect, the CFMMEU considered the situation analogous to that of Karijini. In doing so, it relied upon analogy with the following:

In summary, the position is that the Agreement covers a wide range of classifications most of which have no relevance to the work performed by KCL’s three existing employees, encompasses industries in which KCL does not currently operate, and contains rates of pay which, even in respect of those classifications relevant to the current employees, are not to apply to those employees. In those circumstances we do not consider that any authenticity could attach to the agreement of the two employees to the rates and conditions in the Agreement. The employees had no “stake” in the Agreement’s rates of pay, since they were assured that their existing, higher rates of pay would remain in place (subject to “operational needs and satisfactory performance”), and they could not have given informed consent in relation to occupation and industries in which they did not work and presumably had no experience. 

[165] In KCL, the Full Bench was confronted with an agreement that set out classifications and pay rates for private sector clerical employees, manufacturing employees, and production and staff employees in the black coal mining industry (with the last category including classifications for surveyors, safety officers, deputies, forepersons, open cut overseers, geologists, chemists, production supervisors and undermanagers).  To state the obvious, the Agreement before me covers only the classification of train driver, distinguished by three different levels, in an industry in which Karijini was to operate. It can be ascertained from the evidence that the two employees were experienced train drivers, and had worked previously in the iron ore industry. There is no obvious disjunction between the content of the Agreement and the characteristics of those who entered it.

[166] In its submissions, Karijini observed that the assurance of higher rates of contractual pay in KCL was one single factor in a factual setting which, viewed as a whole, revealed a lack of authenticity attaching to the agreement of the employees. The general proposition that an employee must be incapable of giving genuine agreement to a proposed enterprise agreement if employed on contractual terms more generous than the minimum entitlements he or she would have under the proposed agreement, is problematic.

[167] Pragmatically, it would require the Commission in each case to evaluate the more and less advantageous aspect of each employee’s contract in comparison to the enterprise agreement. The suggestion that an employee lacks a stake in an enterprise agreement where the minimum terms negotiated are better off overall when compared to those in the relevant modern award cannot be correct. While the rate of pay in the contract may be higher, and perhaps other terms in the contract are advantageous in comparison, it remains the case that the employees have negotiated a new safety net of minimal conditions better than those otherwise afforded through a reference instrument. Had it been the intent of parliament to preclude employers from offering more generous contractual conditions one would expect that this would be articulated expressly in the legislation.  It is not.

[168] Karijini submitted that the CFMMEU’s submissions suggested, at various points, that there was something unusual or even untoward about the manner in which the Agreement was made. Karijini went on to say that it was unclear to it whether the CFMMEU relied on the suggestions in support of its contention that the Agreement lacked ‘moral authority or authenticity’.

[169] At paragraph 26 of this decision, I outlined some of the CFMMEU’s closing submissions regarding factual circumstances.

[170] Karijini submitted that there was nothing untoward about the selection of the two employees as Karijini’s first employees.  Two vacancies had to be filled to meet the requirements of the TRRC contract, and apparently employing TRRC drivers would not have resolved the issue. Railtrain’s decision to have Karijini secure the Roy Hill contract was said to have reflected the commercial reality that Roy Hill required the labour supplied to have an enterprise agreement of an appropriate duration in place to ensure continuity of production.

[171] The TRRC drivers are, however, worth mentioning. The CFMMEU observed that on or about 1 November 2018, 52 train drivers from TRRC transferred their employment to Karijini. In his evidence Mr Butler touched on the matter of planning to transfer the employees from TRRC to Karijini subject to their acceptance of an offer (and of course Karijini winning the contract). In fact, according to Mr Butler one of the two employees had asked questions about the effect of the agreement on the employees of TRRC, who it appeared from the question asked, and answer given, were already contemplated as being intended to be covered by the Agreement, notwithstanding TRRC having the contract at Roy Hill rather than Karijini.

[172] On the same day that the operator of Roy Hill informed TRRC of the cessation of the contract, Karijini was informed by letter it had secured the contract to supply the rail crew workforce for the Roy Hill Operations. Interestingly, that letter of 5 September 2018 to Karijini referred to the continuity of rail crew supply being important. Reference was made to an agreement in the following terms, ‘[A]s agreed, Karijini will use its best endeavours to engage the existing TRRC employees over the period from now until 1 November 2018’.

[173] During the Agreement making process, Mr Butler had contemplated that the TRRC employees would be covered by the Agreement in the future, and before 5 September 2018, Karijini had agreed to use its best endeavours to engage the existing TRRC employees over a specified period. There was no evidence before the Commission on the date when that agreement to use best endeavours was reached.

[174] The CFMMEU submitted that the vast majority of the TRRC drivers would continue doing the same work they had always done, but they would be covered by an enterprise agreement over which they had no input. The evidence showed that this occurred.

[175] This particular scenario, or as the CFMMEU termed it, ‘manoeuvring’, was not parked under one of the various subsections of s 188 or, for that matter, another section of the Act. However, somewhat central to the controversy before me, was the making of the Agreement by the two employees in circumstances where the TRRC workforce had no input into its contents.

[176] In Aldi, the High Court said that consistent with the view of s 186(3) taken in John Holland,  the references in sub-s (2) to ‘covered by’ may be read as ‘those persons currently employed who fall within the whole class of employees to whom the agreement might in future apply’ (underlining my emphasis). That was the approach which found favour with the Full Bench, and it is one that the High Court considered correct.

[177] While there has been much made of the position of the employees of TRRC, ultimately the position of those employees would not appear relevant to the approval requirements imposed by the Act. They are not the ‘relevant employees’ because they were not employees of Karijini at the relevant time, albeit the notion of them becoming employees was clearly contemplated. That the Agreement could be made with persons who were not yet employed, and might never be employed, in the relevant single business, would seem, to coin the phrase ‘a strange result’.  Notwithstanding that the phrase was used in regard to s 170LK(1) of the Workplace Relations Act 1996 (Cth), it appears apposite here in light of the legislative framework.”²⁹ [Endnotes omitted]

[24] Next the Deputy President considered whether the Agreement passed the BOOT. The Deputy President’s conclusion as to the BOOT is not challenged on appeal.

[25] Finally, the Deputy President deals with the s.55 point, and her conclusion is also not challenged on appeal.

Approval Decision

[26] In the Approval Decision the Deputy President dealt with whether Karijini’s failure to comply with s.180(5) of the Act in the manner identified in the April 2019 Decision could be excused by s.188(2), and whether an undertaking under s.190 may meet the s.180(5) concern identified. The Deputy President approved the Agreement with undertakings, including an undertaking to meet her concern about Karijini’s compliance with s.180(5). Some procedural background, a summary of submissions as to the undertaking and the relevant statutory provision is set out at [1]-[14]. At [15]-[48] the Deputy President discusses relevant authorities and concludes that an undertaking may be accepted to meet a concern about an employer’s failure to comply with s.180(5) but that each case will turn on the nature of the failure to comply with the pre-approval step.

[27] The Deputy President proceeded next to consider the undertaking proffered by Karijini (set out at [49]) and whether it meets the concern identified. The Deputy President concluded that the undertaking met her concern and relevantly reasoned:

“[57] The effect of the Hourly Rate Undertaking is that the explanation that Karijini provided before requesting that the train drivers approve the Agreement by voting on it, now aligns with the entitlement set out in the Hourly Rate Undertaking. Part of the explanation provided by Mr Butler was given in response to the question of how the salary was made up. It appears that perhaps the use of the word ‘salary’ may have led Mr Butler to discuss the contractual salary notwithstanding that the explanation was provided in the context of an enterprise agreement making process.

[58] When one of the train drivers asked how the salary was made up, I found the explanation was, with respect, lacking in clarity. However, I did not conclude that there were other reasons for believing that the Agreement was not genuinely agreed to because of the explanation provided.

[59] The steps taken fell short of ‘all reasonable steps’. However, it was not the case that the consent of the employees was not informed. It was evident that at material times the employees were asked whether they had any questions and were provided with opportunities to query answers provided.

[60] While it may have been the case that there were shortcomings with the answers provided, such that s 180(5) was not complied with, I am not persuaded that the non-compliance materially affected the bargaining or approval process for the Agreement. The Hourly Rate Undertaking guarantees a flat rate which was explained to the two train drivers prior to them voting on the Agreement. It does not of course alter, that the explanation provided concerned contractual rates that were not included in the Agreement at the time of the vote. However, it is not inconceivable that explanations provided concerning the terms of an enterprise agreement and their effect under s 180(5), may not always reflect the final terms (and their effect) in circumstances where an undertaking has been accepted under s 191(1) to address a s 190(1)(b) concern.

[61] The effect of the Hourly Rate Undertaking is that the explanation that was provided to the train drivers for the purpose of satisfying s 180(5) is now mirrored in the content of the Hourly Rate Undertaking. It was that explanation – notwithstanding it covered information about the contractual salary and the Agreement, which ultimately the train drivers received and thereafter relied upon arguably in part, to vote to approve the Agreement.

[62] The reason for my concern in the First Decision was the lack of explanation concerning the comparison of the rates of pay and allowances between the Award and the Agreement and what the allowances compensated for, regarding Award entitlements. I have concluded that this concern is assuaged by the Hourly Rate Undertaking.

[63] By way of observation, I note that my concern arose in a context where modelling indicated that a Railway Worker Level 4 classification on the roster committed to in Karijini’s initial undertakings proffered, a difference between Agreement and Award of approximately 5.33%.

[64] In Downer EDI Mining – Blasting Services Pty Ltd it was said that the size of the remuneration benefit of an enterprise agreement over the reference instrument was an important factor in determining whether an employer was required under s 180(5) to provide a comparison between the enterprise agreement and the modern award. With the percentage difference between the Agreement and the Award now amounting to approximately 30% for a level 2 train driver and 41% for a level 3 (when working 2 weeks on 2 and weeks off, 12 hours per shift), it is open to find that all reasonable steps to explain the terms of the Agreement and the effect of those terms, did not necessitate the inclusion of comparator information between the Agreement and Award to the level of detail set out in the First Decision.³⁰ [Endnote omitted]

[28] The Deputy President then considered (in the event that her principal conclusion was wrong) whether Karijini’s failure to comply with s.180(5) was a minor procedural error that was unlikely to have disadvantaged employees covered by the Agreement. A submissions summary, the relevant statutory provisions, and a discussion of authority appears at [66]-[82]. The Deputy President concluded that it was a minor procedural error and reasoned as follows:

“[83] As observed, a procedural requirement is one which requires an employer to follow a particular process or course of action. In Huntsman, the Full Bench clearly contemplated that s 180(5) constituted either a procedural or technical requirement, given its reference to the section in Table 2 at paragraph [74] of the decision. The Full Bench described Table 2 as examining each of the procedural or technical requirements covered by s 188(2). Within the Table, reference is made to the requirement in s 180(5)(a), its purpose and how employees may be disadvantaged by non-compliance with the section.

[84] The underlying purpose of the s 180(5)(a) requirement, is said to ensure employees understand the effect of the agreement that is to be voted on, enabling them to make an informed decision. This purpose appears to be in harmony with the notion that s 180(5) falls within the ambit of the protective provisions of Part 2-4, that is, the pre-approval requirements.

[85] Subsection 188(1)(a) of the Act, refers to the pre-approval requirements in ss 180(2), (3) and (5) and states they ‘deal with the pre-approval steps’. The Macquarie Dictionary online (Macquarie) provides an expansive definition of the word ‘step’. That definition includes ‘11. a move or proceeding, as towards some end or in the general course of action: the first step towards peace’. With regard to defining the term ‘take steps’, the Macquarie defines it as ‘to initiate a course of action’. Therefore, I consider that the use of the word ‘steps’ within s 188(1)(a)(i) connotes part of the pre-approval process or course of action required of an employer. Furthermore, it is evident when one considers s 180, subsections (4), (4B), (4C) and (6) could not, on any reading be considered ‘steps’. Albeit, s 180(6) goes some way to provide the kinds of employees whose circumstances are to be taken into account for the purpose of compliance with s 180(5)(b).

[86] When one examines the plain language of s 180(5)(a), there is again reference to ‘steps’, albeit this time there is a qualification that the ‘steps’ are those that are considered to be ‘reasonable’. Clearly, this Commission is charged with an evaluative task of determining, on an objective basis, whether the employer has taken ‘all reasonable steps’ to ensure that the terms of the agreement and their effect have been explained. The fact that s 180(5) contains an inbuilt qualifier of reasonableness, does not mean that non-compliance with s 180(5) cannot be ‘procedural’, or for that matter, a ‘minor’ error within the meaning of s 188(2). As was observed in Karijini’s submissions, in its Senate submission, the ACTU opposed s 188(2) on the basis that ‘many of the requirements caught by the exemption are requirements that are not truly absolute, because they … are obligation[s] that an employer take reasonable steps to do something.’  Evidently, as Karijini submitted, Parliament did not agree.

[87] The Union’s submissions that the ‘reasonable steps’ referred to in the section, were not particular in the sense of being a prescribed number, date or form, but rather were steps whose number and content varied depending on the circumstances in which an agreement was made, appears correct. Certainly, the particular circumstances of the employer and employee may influence what is, or is not, a reasonable step or ‘all reasonable steps’. Afterall, s 180(5)(b) requires the employer to consider those very circumstances. But it remains the case that the Act prescribes a process which requires the employer to explain the terms of the agreement and the effect of those terms. It is evident from s 180, the employer is required to undertake a course of action or follow a particular process. The characterisation of s 180(5) as a pre-approval step, or part of the pre-approval process or course of action, does not in turn mean that the requirement is consigned a mere formality status.

[88] The Full Court of the Federal Court in One Key Workforce Pty Ltd v Construction Forestry, Mining and Energy Union expressed, that 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. It is difficult to conceive why the obligation to consider ‘explanation content’ in s 180(5), precludes it as forming part of a particular process or course of action. Some of the most important legal requirements, where examination of the ‘substantive’ is required, could be said to be procedural – for example the requirement to accord procedural fairness.

[89] Section 188(2) refers to an agreement having been genuinely agreed to within the meaning of s 188(1) but for a minor procedural error or technical error made in relation to the requirements in s 188(1)(a) or (b). Section 188(1)(a)(i) refers to ss 180(2), (3) and (5). That s 180(5) forms one of the three pre-approval ‘steps’ is acknowledged in s188(1)(a)(i). If the Union’s contention is right, s 188(2)(a) would have no work to do regarding minor procedural or technical errors made in relation to the requirements mentioned s 180(5).

[90] Previously in this decision I have cited that when interpreting statutes, no clause, sentence, or word should prove superfluous, void or insignificant.  If one was to adopt the contention pressed by the Union, s 188(2)(a) would be redundant so far as its operation concerns ss 188(1)(a)(i) and 180(5). That s 180(5) is a procedural requirement for the purpose of s 188(2) of the Act, sits comfortably with the language of ss 188(1) and (2), and 180(5), the statutory context, the purpose of the relevant provisions, and the apparent acceptance by the Full Bench in Huntsman that non-compliance with s 180(5) can be excused by s 188(2) in appropriate circumstances.

[91] While I have concluded that s 180(5) constitutes a procedural requirement, the question remains whether the non-compliance with the section constituted a ‘minor error’. The failure of Karijini to provide the Pay Components Comparison is in my view an error as contemplated by the Full Bench in Huntsman. Having considered the evidence of Mr Elston, General Manager – Operations Support Services, and Mr Butler, I find that neither were aware that the failure to provide the Pay Components Comparison would see them fall foul of a procedural requirement under the Act. Mr Butler gave evidence that if he had known that Karijini was required to provide such comparison he would have asked Mr Elston to provide it.  While Mr Elston and Mr Butler engaged in the intentional act of explaining the Agreement in the way in which they did, I am of the view that their intentional act gave rise to the unintentional result of non-compliance with a procedural requirement.

[92] It was put squarely by the Union that it could not be accepted that such a fundamental consideration, namely the Pay Components Comparison, was ‘minor’. It is evident that the word ‘minor’ qualifies the type of errors that s 188(2) can excuse. As explained, what constitutes a minor error, calls for an evaluative judgment having regard to the underlying purpose of the relevant procedural or technical requirement which has not been complied with and the relevant circumstances. 

[93] In the First Decision, I stated that an employee’s entitlement as far as base rates of pay, penalties and allowances are concerned, are fundamental considerations for any employee. Undoubtedly, they are important considerations, and it therefore followed that I considered ‘taking all reasonable steps’ would include the provision of the Pay Components Comparison.

[94] In Huntsman the Full Bench referred to the purpose of s 180(5) as ensuring that employees understand the effect of the agreement that is to be voted on, and enabling them to make an informed decision. However, it is plain that a failure to take all ‘reasonable steps’ does not on every occasion mean that the relevant employees have been deprived from genuinely agreeing to the enterprise agreement. Despite the non-compliance with s 180(5), I arrived at the conclusion that the two train drivers had an ‘informed and genuine understanding of the Agreement and were able to give ‘informed’ consent.  I observed:

While the steps taken fell short of ‘all reasonable steps’, it is not the case that the consent of the employees was not informed. It was evident that at material times the employees were asked whether they had any questions and were provided with opportunities to query answers provided. While it may have been the case that there were some shortcomings with the answers provided, the evidence of Mr Butler was that the two employees asked about the ‘BOOT test’ and what it stood for. Mr Butler had explained that it was a better off overall test where the two employees’ conditions and rates of pay were measured against the Award. 

[95] Having regard to the underlying purpose of s 180(5), the requirement which has not been complied with, and the relevant circumstances of this matter, I am satisfied that the error made by the Applicant was minor. 

[96] In Huntsman, the Full Bench gave an example of the disadvantage that may arise from non-compliance with s 180(5). That disadvantage was that the employees might not be able to make an informed decision about the terms of the agreement upon which they were eligible to vote. The Full Bench explained that the word ‘disadvantaged’ suggested a deprivation which manifested in the employees covered by the agreement being prevented from substantively exercising their rights within the bargaining regime in Part 2-4.  Of course, the disadvantage that s 188(2) speaks to is one qualified by the phrase ‘were not likely to have been’, with the word ‘likely’ meaning ‘probable’.

[97] In light of my findings in the First Decision, as set out in paragraph [2] of this decision, there is no uneasiness arriving at the conclusion that the two train drivers were not likely to have been disadvantaged by Karijini’s error in relation to the requirement in s 180(5).

[98] It is therefore the case that I have concluded that the Agreement has been genuinely agree to by the two train drivers. I am satisfied that the error made was a minor procedural error in relation to one of the requirements of s 188(1)(a) of the Act and that the relevant employees covered by the Agreement were not likely to have been disadvantaged by the error.”³¹ [Endnotes omitted]

Grounds of Appeal

[29] The Notice of Appeal lodged by the CFMMEU on 4 October 2019 contains 8 appeal grounds. Ground 4 is not pressed.³² It also seeks permission to amend its appeal grounds, which we grant, in the terms set out in schedule 1 to its outline of submissions. Many of the grounds of appeal as amended contain a number of sub-paragraphs and in the interest of brevity, they may be summarised as follows.

[30] Grounds 1 and 1A deal with the bases on which the CFMMEU says that the Deputy President ought to have found that Karijini did not comply with s.180(5). Briefly, these grounds contend Karijini:

•  failed to explain the other Agreement terms in comparison to the Award;

•  failed to provide employees with a copy of the Award, or advice as to how to access it;

•  misled employees about or failed properly to explain the effect of the Agreement entitlement to redundancy payment given the employees were engaged on 'maximum term' contracts; and/or

•  misled employees about or failed properly to explain the effect of the Agreement in that it represented or implied that employees who transferred from TRRC would receive benefits under the Agreement as set out in [40] of the April 2019 Decision.

[31] The contention in Ground 1 (and logically in Grounds 1A and 3(b)) that Karijini misled the employees about or failed properly to explain the role of individual flexibility agreements (IFAs) under the Agreement is not pressed.³³

[32] The scope of the non-compliance with s.180(5) is said to have a consequential effect on the Deputy President’s consideration of the s.190 undertaking, the application of s.188(1)(c) and the application of s.188(2).

[33] The extent of non-compliance with s.180(5) is said to be relevant to:

•  Grounds 2 and 3 which concern whether the Deputy President erred in accepting an undertaking to meet a concern about compliance with s.180(5) of the Act;

•  Grounds 5 and 6 which concern whether the Deputy President erred in law, or erred in reaching the requisite satisfaction in finding that a failure of the employer to comply with s.180(5) could constitute or was a minor procedural or technical error within the meaning of s.188(2)(a).

[34] Grounds 7 and 7A concern the Deputy President’s satisfaction of s.188(1)(c) of the Act, namely whether there were no other reasonable grounds for believing that the relevant employees did not genuinely agree to the Agreement.

[35] Grounds 8 and 8A concern the fairly chosen requirement under s.186(3). The matters raised in respect of s.186(3) were not raised by the CFMMEU in the proceeding before the Deputy President.

[36] We consider these grounds below.

Consideration

Permission to appeal

[37] We are persuaded that it is in the public interest to grant the CFMMEU permission to appeal. We consider that there is a public interest in ensuring that the requirements about which the Commission must be satisfied when approving an enterprise agreement are properly considered, administered and applied and the appeal grounds engage with these matters. Additionally, important questions are raised by some of the appeal grounds about undertakings under s.190 of the Act and the nature of some of the errors alleged are jurisdictional.

[38] We therefore grant permission to appeal.

Preliminary matter

[39] Before dealing with the grounds of appeal it is necessary to determine a preliminary matter concerning the order in which the grounds of appeal should be considered. Karijini contends that Ground 2 should be considered before Grounds 1 and 1A because it determines the factual matrix in which s.180(5) compliance falls to be assessed.³⁴ We disagree.

[40] In the April 2019 Decision the Deputy President concluded that Karijini’s failure to comply with the explanation obligation in s.180(5) of the Act concerned the failure to take the step of providing the pay comparison, namely, a description of how that base rate of pay in the Agreement was made up and how it compared to the rates of pay and allowances in the Award. The Deputy President’s assessment of the undertaking proffered by Karijini was founded on this concern.

[41] Appeal Grounds 1 and 1A contend that Karijini had not complied with s.180(5) on a much broader basis than that identified by the Deputy President. The failure to comply is said to extend beyond a failure to provide the pay comparison explanation. The Deputy President is said to have been required, but failed, to take this wider area of non-compliance into account. In short it is contended that there were other reasonable steps that Karijini was required by s.180(5) to take to ensure the relevant explanations were given. If these appeal grounds are upheld, we agree as submitted by the CFMMEU, that the subsequent steps taken by the Deputy President as to the undertaking and approval of the Agreement are necessarily affected by the error.³⁵

[42] Moreover, 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.

[43] We also agree with the CFMMEU’s submission that if Ground 1 or 1A is upheld, there may be no need to deal with any further grounds to determine the appeal.³⁶ However, as will be evident shortly, we deal with most of the appeal grounds nonetheless.

Grounds 1 and 1A

[44] The essence of the contention in Grounds 1 and 1A is that the Deputy President erred in confining her finding that Karijini did not comply with s.180(5) of the Act to its failure to take the step of explaining how the base rate of pay under the Agreement was made up and how it compared to the rates of pay and allowances under the Award. The CFMMEU contends the Deputy President did not consider, or make any findings about the other matters it raised in respect of s.180(5). These matters concerned the failure to take the following steps which are said to be reasonable steps:

•  providing employees with an explanation of the other Agreement terms in comparison to the Award; and

•  providing employees with a copy of the Award, or advice (such as a link) about how to access it.

[45] The CFMMEU contends that a broader comparison between the Agreement and the Award was a necessary step in light of the following:

•  Karijini was a new entity and the employees were new employees;

•  the Award was the industrial instrument in effect at the time;

•  the Agreement significantly departed from the Award as set out in Schedule 3 to its submission, and some of the changes were detrimental;

•  the difference in base rates of pay between the Agreement and the Award was small and depended on roster arrangements. For example, the difference was less than 1% for non-shiftworkers working 38 ordinary hours per week; and

•  there was no evidence that the employees were familiar with the Award or its terms.

[46] The CFMMEU also contends that in assessing Karijini’s compliance with s.180(5) of the Act, the Deputy President did not consider or make a finding that Karijini misled employees about or failed properly to explain:

•  the effect of the Agreement entitlement to redundancy payment given the employees were engaged on 'maximum term' contracts; and

•  the effect of the Agreement in that it represented or implied that employees who transferred from TRRC would receive benefits under the Agreement as set out in [40] of the April 2019 Decision.

[47] The CFMMEU says that instead, the Deputy President expressed a view that it is not the case that the employer is to provide an explanation that specifically addresses each and every term of an enterprise agreement in forensic detail. In so doing, it says the Deputy President did not consider the nature of the changes made by the Agreement compared to the Award and the requirement for explanation of those matters, any further.

[48] The CFMMEU therefore contends the Deputy President erred in respect of her assessment of s.180(5) in that she:

•  failed to take into account relevant considerations which she was required to consider, namely the explanation given (or not given) by Karijini in respect of the terms of the Agreement other than remuneration and thereby failed to perform the statutory task required of her; and/or

•  found that s.180(5) was otherwise satisfied when such a satisfaction was not available on the material before her having regard to the matters set out below.

[49] It contends that the failure to take into account a relevant consideration gives rise to jurisdictional error, the effect of which is that no satisfaction may lawfully be reached.

[50] Karijini joins issue with these contentions on a general and on a specific level.

[51] On a general level, Karijini criticises the CFMMEU’s approach to these and other appeal grounds raised as failing to show how the matters about which it complains identify appealable error. In summary Karijini contends that almost all of the findings that the CFMMEU challenges are discretionary decisions in the sense that they “call for value judgments in respect of which there is room for reasonable differences of opinion, no particular opinion being uniquely right”. It says that an appeal against a decision of this kind is subject to the principles in House v The King,³⁷ and make the obvious and well settled point that a Full Bench dealing with an appeal from a discretionary decision cannot set aside the decision merely because it disagrees with it. Appealable error must first be shown and such error is not shown merely by persuading a Full Bench on appeal to prefer a different decision to the one reached at first instance.

[52] Karijini contends that the CFMMEU lists a series of factual matters it asserts militate against the finding it seeks to overturn and then seeks to deploy those factual matters in two ways. First, in the event that the identified matters were taken into account, by asserting that the Deputy President’s finding was not available or was not open. Secondly, if the matters were not taken into account, the CFMMEU contends that these matters are mandatory relevant considerations that the Deputy President did not take into account. Karijini says that the Deputy President considered the matters about which the CFMMEU complains and further, that almost all of the matters to which the CFMMEU refers are not relevant considerations, in the sense that the Deputy President was bound to take them into account on proper construction of the Act.

[53] On a specific level, Karijini says that the steps it took to explain the Agreement fall to be assessed in the context of the needs of the employees. These were experienced train drivers, with previous experience driving trains on heavy haul iron ore networks in the Pilbara region on a fly in/fly out basis.³⁸ It says the terms of the Agreement and their effect were explained to these sophisticated and experienced employees in a tailored and relevant way, which in summary included:

•  conducting two bargaining meetings over a combined period of five hours with the employees;³⁹

•  during a two-week training the employees had the opportunity to ask, and asked questions of Mr Butler, who was training them. The questions were answered;⁴⁰

•  after the second bargaining meeting, Mr Butler called the two employees and asked if they had any further questions about the Agreement. Neither had any more questions;⁴¹

•  the employees were emailed a final version of the Agreement with an explanation document that summarised every clause;⁴²

•  Mr Butler made further calls to each employee and asked if they had further questions about the Agreement. They said that they did not;⁴³

•  the employees were sent a further email with a link to the Commission’s NES explanation sheet and links to legislation referred to in the Agreement. The email stated that the employees should not hesitate to contact Mr Butler or Mr Elston with any questions.⁴⁴

[54] Karijini contends that the Deputy President’s finding about s.180(5) of the Act was a discretionary decision and, in light of the above matters, was open. Moreover Karijini contends that it was open to the Deputy President to find that in the circumstances described above, a comparison between the Agreement and the Award, beyond an explanation of the base rate by reference to rates of pay and allowances under the Award, was not necessary. This is so because:

•  there is no general rule that the employer is usually required to explain the differences between the proposed agreement and the current instrument;

•  the CFMMEU’s contention that there was no evidence that the employees were familiar with the Award or with its terms is wrong given the evidence of Mr Butler about the employees’ experience driving trains in the Pilbara, their familiarity with work patterns similar to those that exist under the Agreement and their having worked under several enterprise agreements for which the Award was the reference instrument;⁴⁵

•  the assertion that the Agreement only provided 1% above Award pay in some circumstances is wrong because the CFMMEU refers to a “non-shift working employee working ordinary hours of 38 hours per week” but this example is irrelevant because it was always intended (and the employees understood) that all employees would be shiftworkers working a fixed roster configuration. Karijini gave undertakings that enshrine this roster configuration;

•  the key detriments on which the CFMMEU relies are misconceived;

•  the other alleged detriments identified in Schedule 3 to the CFMMEU’s submissions are either non-existent or minor on proper analysis. Karijini’s analysis appears as Appendix C to its submissions;

•  apart from the absence of a comparison with the Award, Karijini’s process for explaining the Agreement was extensive and tailored to the employees’ needs; and

•  the size of the remuneration advantage of the Agreement over the Award meant that a comparison was not necessary in the circumstances.

[55] As to the allegations of misleading employees Karijini says these matters were not raised with the Deputy President and should be rejected, but in any event have no substance.

[56] Finally as to the CFMMEU’s contention that the Deputy President did not consider, or make any findings on other matters raised by the CFMMEU in respect of s.180(5) other than the pay comparison explanation, and that this constituted a failure to consider mandatory relevant considerations, Karijini says the submission is without substance because:

•  it is clear that the Deputy President considered the CFMMEU’s complaints about the explanation of the Agreement beyond the Pay Components Comparison;⁴⁶

•  none of the factual matters about which the CFMMEU complains about were mandatory relevant considerations on proper construction of s.180(5).

[57] In arriving at the requisite satisfaction as to Karijini’s compliance with s.180(5) of the Act, the Deputy President was required to evaluate whether in all the circumstances, Karijini has taken all reasonable steps to ensure that the terms of the Agreement, and the effect of those terms, were explained to the relevant employees in a manner appropriate, taking into account the particular circumstances and need of the relevant employees. As s.188(1) makes clear, Karijini’s compliance with s.180(5) need only be established to the satisfaction of the decision-maker. Actual compliance with s.180(5) is not a jurisdictional fact. Its objective existence is not a precondition to the Commission’s power to approve the Agreement.⁴⁷

[58] Nevertheless, that the Deputy President reached the requisite state of satisfaction as to, inter alia, compliance with s.180(5) of the Act on material sufficient to enable her to reach the requisite satisfaction, is a condition precedent to the exercise of the power to approve the Agreement. The approval of an agreement absent any evidence, or upon insufficient evidence, about an employer’s compliance with s.180(5) results in the agreement having been approved without authority and so there will be jurisdictional error.⁴⁸ In reaching the requisite state of satisfaction, there must be material available to the Deputy President to support reaching that state. An evaluative assessment of no or insufficient information in reaching a state of satisfaction is no assessment at all and will not provide a sufficient foundation for being satisfied as to the requisite compliance.

[59] Arriving at a state of satisfaction as to whether an employer has complied with the obligations in s.180(5) of the Act depends on the circumstances of the case. The focus of the enquiry involves considering and evaluating the steps taken to comply, and then assessing whether the steps taken were reasonable in the circumstances and whether these were all the reasonable steps that must have been taken in the circumstances.

[60] As a Full Bench of the Commission in The Australian Workers' Union v Rigforce Pty Ltd⁴⁹ has stated:

“[35] . . . The nature of the requirement in s 180(5) was analysed in detail by the Federal Court (Flick J) in CFMEU v One Key Workforce Pty Ltd. We adopt the summary of that analysis set out in CFMMEU v Ditchfield Mining Services Pty Limited, which reduced it to the following four propositions:

(1) whether an employer has complied with the obligation in s 180(5) depends on the circumstances of the case;

(2) the focus of the enquiry whether an employer has complied with s 180(5) is first on the steps taken to comply, and then to consider whether:

•  the steps taken were reasonable in the circumstances; and

•  these were all the reasonable steps that should have been taken in the circumstances;

(3) the object of the reasonable steps that are to be taken is to ensure that the terms of the agreement, and their effect, are explained to relevant employees in a manner that considers their particular circumstances and needs. This requires attention to the content of the explanation given; and

(4) an employer does not fall short of complying with the obligation in s 180(5) of the FW Act merely because an employee does not understand the explanation provided.

[36] Additionally, we also adopt the analysis of Gostencnik DP in BGC Contracting Pty Ltd concerning the nature of a statutory obligation to take “all reasonable steps” as follows (footnote omitted):

“[43] A requirement or obligation to take “all reasonable steps” seems to me to require the identification of the steps a reasonable person would regard as reasonable in the circumstances that apply. Whether particular steps are reasonable will depend on the particular circumstances existing at the time the obligation arises. A requirement to take all reasonable steps does not extend to all steps that are reasonably open in some literal or theoretical sense…”⁵⁰ [Endnotes omitted]

[61] An assessment whether an employer took all reasonable steps to ensure that the terms of an agreement and the effect of those terms were explained to relevant employees necessarily also requires an examination of the content of the explanation given by the employer through the steps taken. That the content of the explanation given and the terms in which the explanation was conveyed are important considerations in determining whether the Commission is satisfied that an employer has complied with s.180(5) is made clear by the Full Court of the Federal Court in its judgment in One Key Workforce Pty Ltd v CFMEU⁵¹ wherein Full Court said:

“. . . 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] HCA 40; (1986) 162 CLR 24 at 39–44 (Mason J).

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.” ⁵² 

[62] The Full Bench in Ditchfield Mining also dealt with the issue of the extent to which an explanation involving a comparison between an agreement and an award covering relevant employees need be given:

“[71] Compliance with s.180(5) will not always require an employer to identify detriments in an agreement vis-à-vis the reference instrument, or for the employer to provide an analysis between the agreement and the relevant reference instrument, particularly in circumstances where an existing enterprise agreement, not a reference instrument, applies to the employees in their employment with the employer. The question of compliance with s.180(5) is to be judged against the circumstances that pertain at the time at which compliance was required. Section 57 of the Act makes clear that a modern award does not apply to an employee in relation to particular employment at a time when an enterprise agreement applies to the employee in relation to that employment. In the present case, when the explanations were given, no enterprise agreement applied to the employees and the Award did apply. An explanation of the effect of the terms of the Agreement vis-à-vis the Award was therefore capable of being relevant to the evaluative assessment of whether all reasonable steps were taken to explain the terms of the Agreement and the effect of those terms.

[72] The obligation under s.180(5) to take all reasonable steps to explain to relevant employees the terms of an enterprise agreement and the effect of those terms is an important function of the agreement-making scheme established by Part 2-4 of the Act. Its evident purpose, taking into account its role in assessing whether the employees who were asked to vote to approve an agreement genuinely agreed to the agreement, is to ensure that employees are as fully informed as practicable about the terms and effect of the terms of a proposed enterprise agreement before voting on whether to approve it. An employer’s discharge of its obligation under s.180(5) is intended to enable employees to know what they are being asked to agree to, and to understand how their wages and working conditions might be affected by voting in favour of an agreement.”⁵³ [Endnotes omitted]

[63] The Deputy President observed in the April 2019 Decision that:

“. . . If an explanation of the effect of the terms in the Agreement is to be provided then the logical comparator in the circumstances of this case was the Reference Instrument. There has been no prior enterprise agreement in place within the organisation and the two employees had not previously been involved in an agreement making process within the company.”54

[64] The Deputy President later concluded that “[I]n this case, compliance with s.180(5) necessarily entailed a description of how the base rate of pay was made up and how it compared to the rates of pay and allowances in the Award”.⁵⁵ In other words this was a step the Deputy President determined was a reasonable step in the circumstances but one which Karijini did not take. Consequently, the Deputy President was not satisfied that Karijini had complied with s.180(5) of the Act.

[65] Had the Deputy President subsequently dismissed the application for the approval of the Agreement instead of approving it with the undertaking directed to the s.180(5) compliance concern, the matters raised by the CFMMEU on appeal would be moot because upholding the ground would not change the result. But the matters about which complaint is made remain live because, inter alia, if the steps identified by the CFMMEU, but not taken by Karijini, were reasonable steps which in the circumstances should have been taken to ensure the terms of the Agreement and the effect of those terms were explained, this would provide a further basis for concluding that Karijini had not complied with s.180(5). It will not have taken “all reasonable steps” as required. It would follow there would have been a failure to consider whether the undertaking proffered by Karijini addressed or met the concern that the reasonable steps identified were not taken.

[66] As noted in the discussion earlier in this decision, the requirement to take all reasonable steps does not extend to all steps that are reasonably open in some literal or theoretical sense. Rather the question whether particular steps are reasonable will depend on the particular circumstances existing at the time the obligation arises. It seems to us to follow, as the CFMMEU submitted, that if there was a step to be taken by way of explanation which was a reasonable step in the circumstances, but which was not taken by an employer, then it is not open to reach a satisfaction for the purpose of assessing whether an employer has complied with s.180(5).⁵⁶ This is because the relevant question is not confined to assessing whether the steps taken by the employer were reasonable steps. The relevant question about which the requisite state of satisfaction must be reached is - did the employer take “all reasonable steps to ensure” that the terms of the agreement, and the effect of those terms were explained to the relevant employees in an appropriate manner taking into account the particular circumstances and needs of the relevant employees? It is a necessary question that is to be addressed in reaching the overall relevant satisfaction required as to whether an agreement has been genuinely agreed to by the employees covered by the agreement.⁵⁷

[67] We also consider that the assessment of whether all reasonable steps have been taken is not conducted in a vacuum, divorced from a consideration of the steps that were taken. Thus, in determining whether a particular step that was not taken is a reasonable step that must be taken, it is necessary to consider whether it is a reasonable step in the circumstances taking into account, inter alia, the steps that were taken by an employer.

[68] In the present case the relevant circumstances included the following. First, Karijini was a new entity established partly for the purposes of seeking to make an enterprise agreement through it, which in turn would allow a contract with Roy Hill to be obtained.⁵⁸

[69] Secondly and we think self-evidently, Karijini was a new entrant into the market of providing labour hire train drivers to drive trains hauling iron ore in the Pilbara region of Western Australia. It did not have a history of conducting such a business elsewhere.

[70] Thirdly, the two employees who voted for the Agreement were new employees.

[71] Fourthly, there had been no prior enterprise agreement in place with Karijini and the two employees had not previously been involved in an agreement making process with Karijini.

[72] Fifthly, the Award was the industrial instrument in operation at the time and applied to the employment of the two employees.

[73] Sixthly, in addition to the need to explain the base rate of pay by reference to Award entitlements identified by the Deputy President, other terms of the Agreement departed from the Award and some of the departures were or could be detrimental including:

•  the absence in the Agreement of provision for ongoing full-time employment or of part-time employment compared to the Award;

•  the differential provisions as to meal breaks in the Agreement compared to the Award;

•  differences in the circumstances in which an employee may be directed to take annual leave;

[74] Seventhly, although the employees were told that the Award was the reference instrument for the purposes of assessing the BOOT⁵⁹ there was otherwise no evidence that the two employees were familiar with the Award or its terms. We do not accept, as Karijini contends, that Mr Butler’s evidence that the employees’ experience driving trains in the Pilbara, their familiarity with work patterns similar to those that exist under the Agreement and their having worked under several enterprise agreements for which the Award was the reference instrument, evinces a familiarity with the Award and its terms. Mr Butler does not say that he spoke to the employees about their familiarity with the Award. That the employees had previously worked for different employers under several enterprise agreements for which the Award was the reference instrument, may be evidence of some familiarity with the several agreements (or as the Deputy President observed, “employment terms and conditions relevant to their industry”⁶⁰), but without more, it says nothing about Award familiarity. Indeed we think it is clear the Deputy President regarded this evidence as going to “their familiarity with with (sic) processes, and employment terms and conditions relevant to their industry”⁶¹ but that the evidence as “to their knowledge of the relevant modern award” was “that for the purpose of the BOOT, the two employees were informed it was the Award.”⁶² The Deputy President continued:

“[141] While the two employees were informed of the Award, and undoubtedly had extensive experience within the Pilbara driving trains, I am not convinced that such circumstances negated all reasonable steps including more than what was provided in the content of the Explanatory Document and the discussion with Mr Butler concerning the final terms of the Agreement . . .”.63

[75] We also do not accept the contention that knowledge of the Award can be inferred, for example, because one of the employees asked questions about base rates and penalties, or from questions about IFAs or shift patterns.⁶⁴ As the CFMMEU, we think correctly points out, the Agreement contained base rates and penalties (including overtime rates and shift penalties), and this was explained at the first meeting.⁶⁵ This gave rise to questions about how the Agreement would apply to the two employees, because the two employees were being paid an ‘all up’ rate under their employment contracts.⁶⁶

[76] As to the departures from the Award made by the Agreement which we have expressly identified earlier, we do not accept Karijini’s contentions that the departures were not detrimental or not material. First, we consider that Karijini wrongly relies on undertakings given in assessing whether there is a detriment or material alteration as between the Agreement and the Award. As we have already stated the assessment whether Karijini has complied with s.180(5) of the Act occurs in light of the circumstances which pertained at the time compliance is required. At that time, any undertakings accepted in approving the Agreement were not taken to be terms of the proposed agreement in relation to which the explanation obligation under s.180(5) arose. Undertakings are relevant for the purposes of meeting concerns about the approval requirements in ss.186 or 187 having been met. Undertakings are not relevant in assessing whether at the time an employer was required to comply with an explanation obligation, the Commission has a concern whether that obligation was met. Indeed, an undertaking cannot be accepted unless first there is a concern about one or more of the approval requirements in ss.186 or 187.

[77] Secondly, as to the absence in the Agreement of provision for ongoing full-time employment or of part-time employment compared to the Award, Karijini says the term is not detrimental because:

•  all it means is that if Karijini were to employ permanent employees, they would not be covered by the Agreement and the Award would therefore apply to them;

•  all current non-casual employees are engaged on maximum-term contracts that end on 30 April 2022 (when the Roy Hill contract ends); and

•  employees knew full well that the Agreement was limited to maximum-term employment.⁶⁷

[78] It also points to Mr Butler’s unchallenged evidence which was that it is impractical for Karijini to employ part-time employees and that it was never intending to engage part-time employees in any event.⁶⁸

[79] We do not find any of these arguments persuasive. We consider the absence of permanent full-time and part-time employment is a substantial difference as between the industrial instruments. These modes of employment were also available under the TRRC Pty Ltd Operations Agreement 2014⁶⁹. Amongst other things, employment pursuant to the Award provision (as to full and part-time categories) ensures redundancy pay is available where an employee’s position becomes redundant and the employment ends as a consequence. The ending of the employment relationship by reason of the expiration of the fixed or maximum term is more than arguably likely to result in no entitlement to redundancy pay. Moreover, whatever Karijini’s intention as to the employment of employees was, the Agreement could nevertheless have made provision for the modes of employment in the Award. Fixed and maximum term engagement are not prohibited by the Award. Such modes would also have been consistent with the Notice of Employee Representational Rights issued by Karijini which advised relevant employees that Karijini was bargaining for an enterprise agreement “which is proposed to cover employees that are engaged in rail operations at the Roy Hill Operations in the Pilbara region”.⁷⁰ There is no limitation to the proposed enterprise agreement covering only employees engaged as casual employees or on fixed or maximum term contracts. The choice made to depart from the modes of employment for which the Award made provision should have been explained by reference to the Award.

[80] Furthermore, it is no answer to the absence of part-time employment provisions that it is impractical for Karijini to employ part-time employees and that it was never intending to engage part-time employees. We cannot see how it is not practical to employ several train drivers each working 2 or 3 full shifts of 12 hours duration. Part-time employment does not merely entail employment on fewer hours in a shift. It may also entail working fewer full shifts in a week. Moreover, a mere assertion that part-time employment is not practical or that Karijini does not intend to engage part-time employment, will not without more, be an answer to a request for such work made by an eligible employee under s.65 of the Act. Furthermore, Mr Butler’s statement about practicability could have, by reference to the difference between the Agreement and the Award, formed part of the explanation of the terms of the Agreement and their effect.

[81] Thirdly, as to the differential provisions for meal breaks in the Agreement compared to the Award, Karijini says that its undertaking at [5] gives all employees a 40-minute paid meal break. It says that the Agreement’s express statement that “work continues” is not a real detriment because it merely makes express what is in any event the universal meal break practice for Pilbara train drivers.⁷¹

[82] We have already addressed the issue of the relevance of undertakings which we need not repeat. Relevantly, we consider the differences in meal break time to be a detriment. Under the Agreement “work will continue” throughout the meal break. Thus, for example, under the Agreement a 12 hour shift work employee is paid to work during the break but does not actually get a break. Under the Award, there is to be a paid meal break for a 12 hour shift employee of 40 minutes duration. Such an employee is paid while not working and receives a break. The suggestion that the Agreement arrangement is not detrimental compared to the Award is frankly absurd. As to the contention that the Agreement requirement that work will continue is a universal practice in the Pilbara, even if correct, is no answer to the fact that this is not a condition imposed by the Award and that the Award applied to the relevant employees at the time the explanation was required, not the “universal practice”. The provision in the Award as to meal breaks was at the time of the explanation, the relevant employees’ entitlement. The Agreement changed that entitlement in a manner that is undeniably detrimental.

[83] Fourthly, and without canvassing the issue in detail, similar observations may be made by the difference between the Award, which limits the time between meal breaks to 5 hours, and the Agreement which does not.

[84] Fifthly, as to the differences in the circumstances in which an employee may be directed to take annual leave Karijini says that:

•  under clause 11.5 of the Agreement, it can only require an employee to take annual leave if “the requirement to take leave is reasonable in the circumstances”;⁷²

•  while the Award provides for a prescriptive process, the practical benefit to the employee is marginal;⁷³

•  clause 11.4 of the Agreement provides that an application for annual leave by an employee will not be unreasonably withheld. Clause 23.9 of the Award creates an entitlement to take a certain amount of leave when “excessive leave” is accrued. But to take advantage of cl 23.9, the employee must have more than 8 weeks of annual leave (or 10 weeks in the case of a shift worker) accrued for more than six months and be unable to reach agreement with the employer about taking that leave. It says this is very unlikely in circumstances where employees are engaged on maximum- term contracts of less than four years.⁷⁴

[85] We do not consider these arguments render the difference to be minor or insignificant. The proposition in the first dot point is as to the effect of the term after the undertaking given by Karijini operates as a term of the Agreement. It was not the effect when the proposed agreement was explained to relevant employees. Moreover, there is a substantive difference for an employee’s rights between, on the one hand Karijini only being permitted to direct an employee to take leave for a shut down or where excessive leave is accrued under the Award, and on the other under the Agreement, where Karijini can simply give an employee two weeks’ notice for any reason. The addition of a reasonableness requirement pursuant to the undertaking still renders the term less beneficial to employees than the Award term.

[86] Furthermore, an employees’ entitlement to take leave where it is “excessive leave” under the Award is not in our view insignificant. The accrual by employees of more than 8 (or 10) weeks untaken leave during the nominal life of an enterprise agreement is hardly “very unlikely”. Relevantly the two employees would have accrued almost 4 (or 5) weeks leave by the time the Agreement commenced operation and the TRRC transferring employees might also be carrying excessive leave as Mr Butler’s evidence was that Karijini would allow the TRRC transferring employees’ accrued entitlements to come across.⁷⁵

[87] Finally, whilst we accept that there may be circumstances where the size of the remuneration advantage of the Agreement over the Award might mean that a comparison is not necessary or a reasonable step, the size of the remuneration advantage on which Karijini relies is only effective after the undertaking is taken into account. This was not the case at the time compliance with s.180(5) was required.

[88] Although we accept that the steps taken by Karijini were reasonable steps to explain the terms of the Agreement they did little to explain the effect of terms of the Agreement which would alter in a detrimental fashion, some of the terms of the Award which then applied to the employees. More steps were required to explain the effect of some of the terms of the Agreement. Given the circumstances discussed above we consider there were other steps that were reasonable steps that Karijini was required by s.180(5) to take. These steps were, first, to explain to the relevant employees the changes to conditions prescribed by the Award (which applied to the employees) made by the Agreement terms. Secondly, to provide the employees with information about how to access a copy of the Award in much the same way at it informed the relevant employees on how to access the NES explanation sheet, the Long service leave Act 1958 (WA), the Fair Work Act 2009 and the Superannuation Guarantee (Administration) Act 1992.⁷⁶ We therefore do not consider that Karijini took all reasonable steps to ensure that the effect of the terms of the Agreement were explained to the two employees in the circumstances.

[89] The Deputy President was in error in concluding that the only additional step required for there to be compliance with s.180(5) of the Act was the one that she identified. Although the Deputy President concluded in the April 2019 Decision that she was not satisfied that Karijini had complied with s.180(5) of the Act, she ultimately approved the Agreement with undertakings in the Approval Decision. The Deputy President did not consider whether the steps taken together with the step she identified were “all reasonable steps”. One of those undertakings was accepted by the Deputy President’s as meeting her concern about Karijini’s compliance with s.180(5). Self-evidently she did not consider whether the undertaking proffered (or any of the other undertakings) met concerns about Karijini’s failure to take “all reasonable steps” as we have identified.

[90] Consequently, there was a failure to take into account a relevant consideration. The Deputy President failed to consider whether Karijini took “all reasonable steps” to ensure that the terms of the Agreement, and the effect of those terms, were explained to the relevant employees in a manner appropriate, taking into account the particular circumstances and needs of the relevant employees. The Deputy President was also in error in concluding that Karijini had complied with s.180(5) of the Act, taking into account the undertaking, because she did not identify and take into account the failure by Karijini to take the steps we have described above. As we have earlier stated, if a step by way of explanation, that is a reasonable step in the circumstances, was not taken, there cannot be the requisite satisfaction that an employer has taken “all reasonable steps” and therefore an appealable error has been established.

[91] We turn then to the CFMMEU’s contentions that in assessing Karijini’s compliance with s.180(5) of the Act, the Deputy President did not consider or make a finding that Karijini misled employees about or failed properly to explain:

•  the effect of the Agreement entitlement to redundancy payment given the employees were engaged on 'maximum term' contracts; and

•  the effect of the Agreement in that it represented or implied that employees who transferred from TRRC would receive benefits under the Agreement as set out in [40] of the April 2019 Decision.

[92] The CFMMEU accepts that it did not raise the matter described in the second dot point above.⁷⁷ As to the matter in the first dot point, we do not accept Karijini’s contention that this was not raised before the Deputy President, although on appeal the CFMMEU suggest Karijini misled employees whereas below it was said the explanation as to this matter was profoundly inadequate.

[93] As just noted, before the Deputy President, the CFMMEU submitted that the explanation of redundancy entitlements was “profoundly inadequate” because there was uncertainty about redundancy entitlements under the NES (and consequently under clause 20 of the Agreement).⁷⁸ Karijini’s submission to the Deputy President engaged with the CFMMEU’s submission. It contended, inter alia, that the redundancy explanation was sufficient and that Mr Butler confirmed that maximum term employees would be entitled to redundancy benefits if Karijini’s contract with Roy Hill was not renewed, which was not only an indication of Karijini’s intentions but was correct at law.⁷⁹ The entitlements of maximum term employees to redundancy was a live issue.

[94] At [129] of the April 2019 Decision, the Deputy President noted that the “CFMMEU listed in exacting detail the deficiencies regarding the Explanatory Document, observing that it was a ‘precis’ and not an explanation.” Apart from this general reference, and the subsequent observation that “it is not the case that an employer is to provide an explanation that specifically addresses each and every term of an enterprise agreement in forensic detail”, there is no engagement with this issue. Putting to one side the allegation that Karijini misled employees, it seems clear enough that the Deputy President did not deal with the argument that Karijini failed properly to explain the effect of the Agreement entitlement to redundancy payment in respect of employees engaged on maximum term contracts. The issue was a material matter on which the CFMMEU relied to make good its claim that Karijini had not taken all reasonable steps to explain the effect of the terms of the Agreement. The Deputy President erred in not dealing with the matter.

[95] Because we propose to uphold the appeal and to quash the Approval Decision, and as we do not propose to determine the application for ourselves, we intend remitting the matter back to the Deputy President. This issue can be considered by the Deputy President as can the matter raised in the second dot point of [91] of this decision.

[96] For the reasons stated, the Grounds 1 and 1A are upheld, save for Ground 1(e) and the misleading allegation in Ground 1(c).

Ground 2

[97] Although the appeal might be determined without considering Ground 2, we consider that it is important that we determine this ground so that the matter need not be revisited before the Deputy President. By Ground 2 of the Notice of Appeal as amended, the CFMMEU contends the Deputy President erred in law in finding that it was permissible to accept an undertaking under s.190 of the Act in order to overcome the employer's failure to comply with s.180(5). In essence, the CFMMEU contends that the Deputy President’s conclusion is both contrary to Full Bench authority and contrary to the proper construction of the discretionary power in s.190 to accept undertakings.

[98] The power to approve an agreement with undertakings is not at large. It is circumscribed. There are prerequisites before the power may be exercised.

[99] Section 190 of the Act is not engaged unless the Commission has a concern that the agreement does not meet the requirements set out in sections 186 and 187.⁸⁰ The Commission must be satisfied that the undertaking accepted meets the concern.⁸¹ The Commission must be satisfied that the effect of accepting the undertaking is not likely to cause financial detriment to any employee covered by the agreement or result in substantial changes to the agreement.⁸² The Commission cannot accept an undertaking without first seeking the views of each known bargaining representative.⁸³ An undertaking must be in writing⁸⁴ and must meet the signing of undertakings requirements in reg 2.07 of the Fair Work Regulations 2009.⁸⁵

[100] The CFMMEU contends that on the ordinary meaning, the words “the agreement” in s.190(1)(b) is a reference to the enterprise agreement referred to in s.190(1)(a). It says it is not a reference to the pre-approval steps required for the making of an agreement set out in s.180(5) or elsewhere. It says that if Parliament’s intention was that s.190 was to apply to pre-approval steps, this could easily have been said.

[101] Whilst we accept that the reference to “the agreement” in s.190(1)(b) of the Act is a reference to the enterprise agreement referred to in s.190(1)(a), we do not otherwise accept the CFMMEU’s contentions. They read the word “the agreement” in s.190 of the Act in isolation and not in context. Section 190 of the Act is engaged if the Commission has a concern that “the agreement” does not meet the requirements set out in ss.186 and 187. What then are the requirements that “the agreement” must meet? Section 186(1) requires the Commission to approve “the agreement” if the requirements set out in that section and s.187 are met. Relevantly, one requirement is that the Commission must be satisfied that “the agreement” has been genuinely agreed to by the employees covered by the agreement.⁸⁶ “The agreement” will thus not meet this requirement if it has not been genuinely agreed to by the relevant employees. If, in relation to an application to approve an enterprise agreement, the Commission has a concern that “the agreement” the subject of the application does not meet this requirement, s.190 is engaged.

[102] Section 188 of the Act sets out when an enterprise agreement has been genuinely agreed to by the employees covered by the agreement. Relevantly s.188(1)(a)(i) deals with the Commission’s satisfaction that the employer covered by the agreement has complied with certain pre-approval steps, including s.180(5). Thus, if the Commission has concerns that the employer did not take all reasonable steps to ensure that the terms of the agreement or the effect of those terms were explained as required by s.180(5), it follows the Commission has a concern that “the agreement” does not meet the requirement in s.186(2)(a). Consequently s.190 is engaged.

[103] Contrary to the CFMMEU’s contention, the Parliament has expressly said that concerns about certain pre-approval steps may be subject to an undertaking under s.190 of the Act. It did so first by setting out satisfaction as to certain pre-approval steps as a condition of genuinely agreed in s.188. Secondly, it set out “genuinely agreed” as a requirement that “the agreement” must meet and about which the Commission must be satisfied in s.186(2)(a). Thirdly, it made clear that the undertaking provisions in s.190 are engaged if the Commission has concerns that the requirements in ss.186 or 187 have not been met.

[104] The CFMMEU’s contention that its construction finds support in the terms of s.190(3)(a) and (b) of the Act, which it says could only apply to the terms or content of an agreement, not to the pre-approval steps is also rejected. Section 190(3) is an unsurprising limitation on the power to accept an undertaking directed to ensuring that employees are not financially disadvantaged and the agreement is not altered in a substantial way thus preserving the substance of that which was in agreement. Some undertakings given in response to concerns that an agreement does not meet an approval requirement will never engage with s.190(3). Section 190(3) is not to be read as a limitation on the matters of concern about approval requirements having been met that may be the subject of an undertaking. It is a protective provision which limits the acceptance of undertakings responsive to such concerns to those which will not likely cause financial detriment to any employee covered by the agreement and will not likely result in substantial change to the agreement. Self-evidently, an undertaking about a particular pre-approval matter which will not likely cause financial detriment to any employee covered by the agreement and will not likely result in substantial change to the agreement, are not by reason of s.190(3) incapable of acceptance.

[105] The CFMMEU also contends that the “concern” where s.180(5) has not been complied with is not about the terms of the agreement, but rather about the fact that an essential pre-approval step has not been taken. It says as a matter of logic, this concern cannot be remedied by an undertaking about a different matter, that being the terms of the agreement. We also reject this submission.

[106] First, section 190(1) does not provide that the section applies if the Commission has a concern that “the terms of the agreement” do not meet the requirements set out in ss.186 and 187 - it provides that the section applies if the Commission has a concern that “the agreement” does not meet the requirements. In the instant case the Deputy President’s concern was that the Agreement did not meet the requirement in s.186(2)(a) because she was not satisfied that Karijini had complied with s.180(5) as set out in s.188(1)(a)(i).

[107] Secondly, a concern about whether an employer has complied with s.180(5) and therefore whether the agreement has been genuinely agreed to by the relevant employees, may as a matter of logic be remedied depending on the nature of the concern. It is accepted that in a number of cases concerns about genuine agreement will not be able to be met by an undertaking. But it is not the case, as a matter of logic, that any such concern could never be met. Why for example, could not a concern that an employer explained the effect of a term of the agreement as to shift work was that an afternoon shiftworker would receive a 15% loading under the agreement, when the agreement only provides for a 10% loading, be met by an undertaking that the employer would pay an afternoon shiftworker a loading of 15%? We consider that such an undertaking would remedy the concern since the agreement operating with the undertaking is consistent with the explanation given.

[108] Our conclusion is consistent with the approach adopted in the most recent Full Bench authority dealing with the subject, namely Construction, Forestry, Maritime, Mining and Energy Union and others v Specialist People Pty Ltd.⁸⁷

[109] For these reasons this ground of appeal fails.

Ground 3

[110] Ground 3 of the Notice of Appeal as amended, is advanced as an alternative to Ground 2 and contends the Deputy President:

•  erred in finding that the undertaking offered by Karijini was capable of overcoming its failure to comply with s.180(5), having regard to the nature and extent of the failure of Karijini to comply with s.180(5); and/or

•  failed to take into account relevant considerations which she was bound to consider, in determining whether the undertaking offered by Karijini was capable of overcoming Karijini's failure to comply with s.180(5), namely the matters set out in Ground l.

[111] For the reasons we gave in upholding Ground 1, the concern as to whether the employee has genuinely agreed to the Agreement arising from the explanation requirement is more extensive than the issue identified by the Deputy President. The undertaking given by Karijini was directed to that concern and the Deputy President was satisfied that the undertaking met that concern. She did not consider, because she had failed to consider whether “all reasonable steps” had been taken in the circumstances, whether the undertaking met the concern including the steps that we have identified as being reasonable steps that must have been taken.

[112] It follows that this ground of appeal must succeed. On a rehearing before the Deputy President, Karijini may wish to proffer further undertakings or may submit that the existing undertaking meets the concerns we have identified also.

Grounds 5 and 6

[113] By Ground 5 of the Notice of Appeal as amended, the CFMMEU contends the Deputy President erred in law in finding that a failure of the employer to comply with s.180(5) of the Act could constitute a minor procedural or technical error within the meaning of s.188(2)(a). Ground 6 raises, as an alternative, in connection with s.188(2)(a), the same contentions as are advanced in Ground 3.

[114] We propose to uphold Ground 6, because the question whether the non-compliance with s.180(5) of the Act is a minor procedural or technical error, was considered on the narrow non-compliance identified by the Deputy President, which as we have identified earlier, is affected by appealable error. This issue will, if appropriate, need to be considered in light of the matters we have identified together with that identified by the Deputy President.

[115] We would observe however - to the extent Ground 5 contends that any failure to meet the requirement to comply with s.180(5) of the Act in some way could never be a minor procedural or technical error - that we have some difficulty in accepting such a broad contention. Section 188(2)(a) is expressly concerned with determining that an enterprise agreement has been genuinely agreed to by the employees covered by the agreement if it would have been genuinely agreed within the meaning of s.188(1) but for minor procedural or technical errors made in relation to, relevantly, the requirements mentioned in s.188(1)(a). These requirements include whether the employer complied with s.180(5).

Grounds 7 and 7A

[116] These grounds concern whether the Deputy President erred in being satisfied there were no other reasonable grounds for believing that the Agreement has not been genuinely agreed to by the employees. We need not determine this ground of appeal because the matters that we have identified (and any further undertaking proffered) are likely to be relevant in making an assessment under s.188(1)(c) of the Act.

Grounds 8 and 8A

[117] These grounds concern the fairly chosen requirements in s.186(3) and (3A) and although it is accepted that the matters now raised on appeal were not raised with the Deputy President, we are not unsympathetic to the criticism that the Deputy President failed to consider whether she was satisfied that the group of employees covered by the Agreement was fairly chosen. The main criticism raised by Ground 8 is that the Deputy President erred in failing to consider whether, for the purposes of s.186(3) of the Act, the group of employees covered by the Agreement was fairly chosen. This criticism does not rely for its efficacy on whether the CFMMEU raised fairly chosen as an issue in the proceeding before the Deputy President.

[118] The Agreement on its face seems to us to raise a concern whether the employees covered by the Agreement were fairly chosen when clauses 2 and 4 are read together. The only submission made about the fairly chosen requirement was as follows:

“Section 186 (3) relevantly requires the commission to be satisfied that the group of employees covered by the agreement was fairly chosen. The Agreement covered all Karijini employed at the time it was made.”88

[119] In the April 2019 Decision, the Deputy President said:

“[105] At this juncture, I observe that it is not the case that the business rationale for a choice is at all times irrelevant when considering provisions under Part 2-4. For example, had there been controversy over whether the group of employees was fairly chosen, then the taking into account the reason for the choice, and any possibility of unfair exploitation, would have been relevant considerations.  However, this was not an issue in these proceedings.”89 [Endnote omitted]

[120] The only other reference to the fairly chosen requirement is oblique and is captured by the general conclusion in the Approval Decision set out in the following passage:

“[101] Subject to the undertakings referred to above, and on the basis of the material contained in the application and accompanying statutory declaration, I am satisfied that each of the requirements of ss 186, 187, 188, and 190 as are relevant to this application for approval have been met.”90

[121] The submission made by Karijini before the Deputy President and noted above merely addresses the consideration in s.186(3A). The passage at [105] of the April 2019 Decision shows that to the extent the Deputy President considered the issue, she turned her mind only to a consideration of the business rationale for the choice of coverage. Otherwise she proceeded on the basis that fairly chosen was not an issue in the proceeding. That may be so, but the fact that an approval requirement is not put in issue in a contested proceeding does not relieve a Member from the obligation to consider it.

[122] The considerations that are relevant in assessing whether the group of employees covered by the Agreement was fairly chosen will vary from case to case, but the word “fairly” in s.186(3) suggests that the selection of the group covered was not arbitrary or discriminatory, so that for example selection based upon employee characteristics such as date of employment, age or gender would be likely to be unfair.⁹¹  It is appropriate to have regard to the interests of the employer, such as enhancing productivity, and the interests of both the employees included in the Agreement’s coverage and the employees excluded.⁹² On the facts in the present matter it seems at least the matters discussed in the last proposition might arise for consideration. We should observe that the interests of employees not covered by the Agreement was expressly raised as an issue the Deputy President might wish to consider in the agreement checklist prepared by staff of the Commission, which we have reviewed, as an aide to the Deputy President’s consideration of the application.

[123] We are not persuaded that the Deputy President considered whether she was satisfied that the group of employees covered by the Agreement was fairly chosen. We do not accept Karijini’s contention that noting [105] of the April 2019 Decision, the Deputy President was proceeding on the basis of an assumption that the group covered by the Agreement must necessarily be fairly chosen because it covered both of the employees employed at the time. But even if she did, that is not an answer to the question whether the group covered was fairly chosen given the facts of this case.

[124] We consider that the CFMMEU has made good that part of Ground 8 which contends the Deputy President erred in failing to consider whether the group of employees covered by the Agreement was fairly chosen. That part of Ground 8 is therefore upheld. It is unnecessary to consider the alternative proposition in Ground 8A.

[125] We propose to remit the application to the Deputy President to enable her to consider the fairly chosen requirement. The matters the CFMMEU raises on appeal can be raised with the Deputy President and Karijini can respond.

Conclusion

[126] For the reasons stated we uphold the appeal on the grounds identified. Consequently, we propose to quash the Approval Decision and remit of the application for redetermination by the Deputy President taking into account our decision.

Order

[127] We order as follows:

(1) permission to appeal is granted;

(2) the appeal is upheld on Grounds 1 (in part) and 1A, 3, 6 and 8;

(3) the decision in Karijini Rail Pty Limited [2019] FWCA 6451 is quashed; and

(4) the application for the approval of the Karijini Rail Pty Ltd Rail Operations Pilbara Enterprise Agreement 2018 is remitted to Deputy President Beaumont for redetermination in accordance with our decision.

DEPUTY PRESIDENT

Appearances:

C Howell of Counsel for the Appellant
S Wood QC and S Ternovski of Counsel for the Respondent

Hearing details:

2019
Melbourne
3 December

Printed by authority of the Commonwealth Government Printer

<PR716946>

1 Karijini Rail Pty Limited [2019] FWCA 6451

2 Appeal Book Tab 9 at [10] - [14], Tab 3 at [21] - [22], Tab 33 at p. 642

3 Appeal Book Tab 3 at [21]

4 Appeal Book Tab 6, at PN374

5 Appeal Book Tab 6 at PN97

6 Appeal Book Tab 3 at [25]; Tab 6, PN78,79, 80, 84,85, 97, 103, 106, 111,118, 121, 696

7 Appeal Book Tab 6, at PN116

8 Appeal Book Tab 6, at PN111, PN118 - PN122

9 Appeal Book Tab 9, p.247 at [37]

10 Appeal Book Tab 6, at PN131-PN137

11 Appeal Book Tab 9, p.248 at [29] - [40]

12 Appeal Book Tab 9, p.246, at [31]

13 Appeal Book Tab 9, p.262 and 269

14 Appeal Book Tab 6, at PN274-PN280

15 Appeal Book Tab 34, p.649 (by reference to the unredacted version)

16 Appeal Book Tab 9, p.243 at [13]

17 Appeal Book Tab 23, p.442

18 Appeal Book Tab 9, p. 248 at [42]

19 Appeal Book Tab 6 at PN101

20 Appeal Book Tab 6 at PN104- PN105

21 Appeal Book Tab 6 at PN52 – PN62, PN983 – PN986

22 Appeal Book Tab 22, p.425 at [4] - [5]

23 Karijini Rail Pty Limited [2019] FWC 2907

24 Ibid at [7] - [15]

25 Karijini Rail Pty Limited [2019] FWCA 6451 at [4]

26 Karijini Rail Pty Limited [2019] FWC 2907 at [190]

27 Karijini Rail Pty Limited [2019] FWCA 6451 at Annexure A at [7].

28 Karijini Rail Pty Limited [2019] FWC 2907 at [140] - [151]

29 Ibid at [157] - [177]

30 Karijini Rail Pty Limited [2019] FWCA 6451 at [57] - [64]

31 Ibid at [83] - [98]

32 CFMMEU Outline of Submissions at [19]

33 CFMMEU Submissions in Reply at [78]

34 Karijini’s Submission at [48]

35 CFMMEU Submissions in Reply at [26]

36 Ibid at [28]

37 (1936) 55 CLR 499 at 505

38 Appeal Book p.88–89 at PN45 - PN 48, p.97 at PN133 - PN134, p.99 at PN150–PN152, p.254 at [59]

39 Karijini Rail Pty Limited [2019] FWC 2907 at [43] - [46]

40 Appeal Book p.251–254 at [56] - [58]

41 Karijini Rail Pty Limited [2019] FWC 2907 at [48]

42 Ibid at [49], Appeal Book p.686–690

43 Ibid at [50]

44 Ibid at [51], Appeal Book p.693

45 Appeal Book p.106 at PN226, p.107 - 109 at PN235 - PN255

46 Karijini Rail Pty Limited [2019] FWC 2907 at [7], [11], [108]–[112], [119], [122]–[129] and [130]–[135]

47 One Key Workforce v CFMMEU [2018] FCAFC 77, (2018) 262 FCR 527 at [103]

48 Ibid at [117]

49 [2019] FWCFB 6960

50 Ibid at [35]-[36]

51 [2018] FCAFC 77, (2018) 262 FCR 527 at [112]-[116]

52 Ibid at [112]-[113]

53 [2019] FWCFB 4022 at [71]-[72]

54 Karijini Rail Pty Limited [2019] FWC 2907 at [147]

55 Ibid at [150]

56 CFMMEU Submission in Reply at [36]

57 Fair Work Act 2019 (Cth), ss.186(2)(a) and 188(a)(i)

58 Appeal Book Tab 6, at PN111, PN116, PN118 - PN122

59 Appeal Book Tab 9, at [57]; Appeal Book Tab 6, at PN226 and PN706

60 Karijini Rail Pty Limited [2019] FWC 2907 at [140]

61 Ibid

62 Ibid

63 Ibid at [141]

64 Karijini’s Submissions at [88]

65 Appeal Book Tab 20, p.360-361

66 CFMMEU Submission in Reply at [41]

67 Karijini’s Submissions at [92a.]

68 Ibid at Appendix C

69 AE412376 at clause 4

70 Appeal Book Tab 34, p.657

71 Karijini’s Submissions at Appendix C

72 Ibid

73 Ibid

74 Ibid

75 Appeal Book Tab 34, p.646

76 Appeal Book Tab 34, p.693

77 CFMMEU Submissions in Reply at [73]

78 Appeal Book Tab 25, pp.501 – 502

79 Appeal Book Tab 26, at [47.14]

80 Fair Work Act 2019 (Cth), s.190(1)(b)

81 Ibid s.190(2)

82 Ibid s190(3)

83 Ibid s190(4)

84 Ibid s190(3)

85 Ibid s190(5)

86 Ibid s.186(2)(a)

87 [2019] FWCFB 7919 at [19]-[25]

88 Appeal Book Tab 26, p.537

89 Karijini Rail Pty Limited [2019] FWC 2907 at [105]

90 Karijini Rail Pty Limited [2019] FWCA 6451 at [101]

91 Cimeco Pty Ltd v Construction, Forestry, Mining, and Energy Union [2012] FWAFB 2206, (2012) 219 IR 139 at [21]

92 Ibid at [21] - [22]; Construction, Forestry, Mining, and Energy Union v Resco Training and Labour Pty Ltd [2012] FWAFB 8461, (2012) 228 IR 5 at [34]