| [2021] FWC 1016 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
Master Builders’ Association of New South Wales, The
(AG2020/3474)
LIPMAN PTY. LTD COLLECTIVE AGREEMENT 2020-2023
Building, metal and civil construction industries | |
COMMISSIONER JOHNS |
SYDNEY, 24 FEBRUARY 2021 |
Application for approval of the Lipman Pty. Ltd Collective Agreement 2020-2023.
[1] An application has been made for approval of an enterprise agreement known as the Lipman Pty. Ltd Collective Agreement 2020-2023 (Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (FW Act) on 17 November 2020. The application was made by The Master Builders’ Association of New South Wales (MBA NSW), on behalf of the employer, Lipman Pty Ltd (Limpan/Employer). The Agreement is a single enterprise agreement.
[2] Until it is replaced the employees are covered by the Lipman Pty Ltd / CFMEU Collective Agreement 2018 (AG2018/6188) (2018 Agreement). The 2018 Agreement passed its nominal expiry date on 31 December 2018. Lipman commenced bargaining when it issued a Notice of Employee Representational Rights on 25 February 2020.
[3] On 18 November 2020, correspondence was received from the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU/Union) requesting to be provided with copies of the application documents and requesting to be heard in the matter. In line with Fair Work Commission’s (Commission’s) usual practice the application documents were provided to the Union on 20 November 2020.
[4] The application was accompanied by a Form F17 Employer’s Declaration in support of an application for approval of an enterprise agreement (Form F17) declared by Darren Chignell, Limpan’s Group Manager – People & Culture. In answer to the question “What steps were taken by the employer to explain the terms of the agreement, what was explained and how was the effect of those terms explained to the relevant employees”, Mr Chignell declared,
• “23 – 27 October 2020: All Employees were invited to attend a Formal Discussion Meeting on 27 October 2020 to explain the terms of the Lipman Collective Agreement 2020-2023, and the effect of those terms. Why employees were provided with copies of, or access to the written text of the agreement and any other material incorporated by reference in the agreement (see documents attached and marked “K” to “U” inclusive)”
• 27 October 2020: All Employees were present at a Formal Discussion Meeting on 27 October 2020. During the Formal Discussion Meeting:
• what a PowerPoint presentation was presented to EMPLOYEES which provide them with an overview of the preparation of the Lipman Collective Agreement 2020-2023
• a page turner the Lipman Collective Agreement 2020-2023 was conducted, with amended items from the Lipman Pty Ltd CFMMEU Collective Agreement 2018 highlighted (in yellow) for discussion.
• A discussion question session was provided
• the terms of the Lipman Collective Agreement 2020-2023 and the effect of those terms were explained successfully.
• Employees actively participate in the Formal Discussion Meeting with all their questions being answered to their satisfaction. (Relevant materials used to gain Women Collective Agreement 2020-2023 to employees attached and marked “V” and “W”).”
[5] Other than the simple assertion that the terms of the Agreement “were explained successfully”, no other information was provided about what was explained. Self-serving statements by an employer about compliance are not sufficient to discharge the proof required in relation to s.180(5) of the FW Act.
[6] An administrative legislative assessment of the Agreement, including compliance with the necessary pre-approval steps, was conducted. In accordance with my usual practice, on 1 December 2020, I sent a copy of the Legislative Checklist to the MBA NSW /Employer. The Legislative Checklist noted that,
“Explanation of Agreement: The response to Question 22 [in] the Form F17 indicates that a formal discussion meeting was held where the agreement was explained. While explanatory documents and presentations during the meeting were provided, no information has been provided on any additional steps taken to explain the agreement. Unclear if the requirements of s.180(5) of the Act and the One Key decision have been satisfied. Further information/submissions invited.”
[7] The reference to One Key was a reference to the decision of the Federal Court of Australia (Flick J) in Construction, Forestry, Mining and Energy Union v One Key Workforce Pty Ltd. 1 In that decision his Honour was required to address what it means to comply with s.180(5) of the FW Act.
[8] Section 180(5) provides that,
The employer must take all reasonable steps to ensure that:
(a) the terms of the agreement, and the effect of those terms, are explained to the relevant employees; and
(b) the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.
(my emphasis)
[9] His Honour held that,
“[108] The response provided to the Commission in para 2.6 of the F17 Statutory Declaration was misleading to the extent that it asserted on behalf of One Key Workforce that the “terms of the Agreement and the effect of the terms were explained to the relevant employees” by means of either the 25 August 2015 email or during the “telephone conversations”.
[109] Such reasons as were provided by the Commissioner at para [9] of his reasons for decision expose jurisdictional error. Little, if any, consideration was given to what were the “steps” in fact taken by the employer or the adequacy of those steps. Such consideration as was given was more directed to the subject-matter of the information communicated rather than to the content of the information communicated or the effectiveness of the communication of that information or (for that matter) what was not communicated.
[110] Separate from that source of jurisdictional error is the further conclusion that there must in fact be compliance with s 180(5) before the power of the Commission to “approve” the agreement arises. Although the Commission must form a state of “satisfaction” for the purposes of s 188(a)(i) of the Fair Work Act as to whether an employer has “complied with” s 180(5), its statement of having reached that state of “satisfaction” cannot transform a manifestly inadequate explanation process into one which complies with s 180(5). That factual inquiry, on this alternative basis, remains a matter that this Court can examine.
[111] On this alternative basis, it is further concluded that the approval process entrusted to the Commission miscarried.”
[10] An appeal against the decision of Flick J was dismissed by the Full Federal Court of Australia (Bromberg, Katzman and O’Callaghan JJ) in One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union. 2 The Full Court observed that,
“[111] The only material before the Commission on compliance with s 180(5) was contained in Ms Ind’s statutory declaration. Although the statutory declaration was silent as to the content of the explanation or, indeed, as to the substance of the communications, OKW submitted that the declaration itself was some evidence upon which the Commission could form the requisite state of satisfaction. That may be so, but it was by no means enough to enable the Commission to lawfully reach that state.
[112] It is common ground that the Commission was never told what was said to the relevant employees. It was simply told that they had been given an explanation of the terms of the Agreement and the effect of those terms. In effect, this amounted to little more than a self-serving statement that the employer had complied with its obligation under the Act. OKW contended that the fact that it made such a statement in a statutory declaration was significant.
It is not. As the CFMEU argued, whether all reasonable steps were taken to ensure that the effect of the terms of the Agreement was explained in an appropriate manner is a question of substance, not form. The recital of a conclusion on the very question the Commission was required (through an evaluative process) to determine is not, without more, a sufficient basis for the satisfaction of the statutory test. In other words, a bare statement by an employer that an explanation has been given is an inadequate foundation upon which to reach a state of satisfaction. OKW submitted that if the Commission had erred in this respect, it was an error in fact finding or an error in process, which would be an error within its jurisdiction. We reject this submission. In order to reach the requisite state of satisfaction that s 180(5) had been complied with, the Commission was required to consider the content of the explanation and the terms in which it was conveyed, having regard to all the circumstances and needs of the employees and the nature of the changes made by the Agreement. It is true that the Act does not expressly say that. But the question of whether an administrative decision-maker is required to consider a matter is not determined only by the express words of the Act; it may also be determined by implication from the subject-matter, scope and purpose of the Act: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24 at 39–44 (Mason J).
[113] A consideration of the subject-matter, scope and purpose of the relevant provisions of the Fair Work Act indicates that the content of the explanation and the terms in which it was conveyed were relevant considerations to which the Commission was bound to have regard. The absence of that information meant that the Commission was not in a position to form the requisite state of satisfaction. Put differently, without knowing the content of the explanation, it was not open to the Commission to be satisfied that all reasonable steps had been taken to ensure that the terms and their effect had been explained to the employees who voted on the Agreement or that they had genuinely agreed to the Agreement.
[114] The following considerations point inexorably to that conclusion.
[115] The Commission was required to be satisfied that OKW had taken “all reasonable steps to ensure” that both the terms and the effect of the terms had been explained to the relevant employees as an element in the inquiry as to whether “genuine” agreement had been obtained from them. The agreed purpose of the obligation imposed on employers by s 180(5) is to enable the relevant employees to cast an informed vote: to know what it is they are being asked to agree to and to enable them to understand how wages and working conditions might be affected by voting in favour of the agreement.
[116] In order for the employer to comply with the obligation it must take into account the particular circumstances and needs of those employees, including their cultural and linguistic backgrounds, their youth, and the absence of a bargaining representative. That is made explicit in s 180(6). How could the Commission decide whether the steps the employer had taken were “all reasonable steps” unless it knew what the employees had been told before they cast their votes? Without knowing the terms in which the explanation had been conveyed how could the Commission form an opinion on the sufficiency of the explanation, particularly having regard to the considerations mentioned in s 180(6)? Ultimately, how could the Commission decide that a genuine agreement had been reached without having evidence upon which it could answer both these questions?
[117] As there was no evidence of these matters before the Commission, it necessarily follows that the Commission purported to be satisfied that OKW’s obligations under s 180(5) had been discharged without taking those matters into account. That was a jurisdictional error because the Commission did not have authority to make the decision unless its satisfaction had been informed by them. As is often the case, there are several ways of describing the error. It could be characterised as a misconception as to what the exercise of the statutory power entails or an error “as to an important attribute of the decision to be made”: Graham at [68]. Equally it could be seen as a misunderstanding on the part of the Commission of the nature of the opinion it was required to form: Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194 at [31] (Gleeson CJ, Gaudron and Hayne JJ). Had the Commissioner applied his mind to the question of what the putative explanation entailed, he would inevitably have inquired into its content and terms.
[11] One Key mandates the Commission to focus its enquiry on the steps actually taken to comply s.180(5) and to consider whether:
a) the steps taken were reasonable in the circumstances; and
b) these were all the reasonable steps that should have been taken in the circumstances. 3
[12] The task before the Commission “requires attention to the content of the explanation given.” 4
[13] If the explanation is in writing the task of assessing the reasonableness of the explanation is relatively easy. If it was not in writing (as in the present case) then it is vitally necessary to understand what words were spoken.
[14] I directed that the MBA NSW /Employer respond to the concerns raised in the Legislative Checklist, including the One Key Issue, by 15 December 2020. I also programmed the matter for hearing on 7 January 2021. On 4 December 2020 the MBA NSW and the CFMMEU (unusually in agreement), by consent, asked that the matter be listed for hearing after 27 January 2021. I obliged. 5
[15] On 16 December 2020, the Applicant provided submissions and undertakings. It also submitted a Statutory Declaration from Mr Chignell. Mr Chignell declared that,
4. Further to my responses to item 22 in the Form F17, I confirm the following steps taken by Lipman to explain the terms of the Proposed Agreement, and the effect of the terms of the Proposed Agreement to Lipman Construction Workers:
a) Lipman held a formal discussion meeting at the Ranch Hotel comer of Epping Road and Herring Road Eastwood NSW 2122 at 2pm on 27 October 2020 (Discussion Meeting).
b) The purpose of the Discussion Meeting was to explain the terms of the Proposed Agreement and the effect of the terms of the Proposed Agreement to Lipman Construction Workers.
c) All of the Lipman Construction Workers attended the Discussion Meeting.
d) At the Discussion Meeting the Lipman Construction Workers were aware 6, recognised and understood that the Proposed Agreement is substantially similar to the existing agreement that covers the Lipman Construction Workers, the Lipman Pty. Ltd / CFMEU Collective Agreement 2018 (AG2018/6188) (Existing Agreement).
e) During the Discussion Meeting the Lipman Construction Workers were provided with a clean copy of the Proposed Agreement, and additionally a marked up copy of the Proposed Agreement which highlighted in yellow text the changes to the Proposed Agreement from the Existing Agreement, attached and marked "W" to the Form F17 (Comparison Agreement).
f) During the Discussion Meeting we conducted a page-by-page review of the Proposed Agreement and the Comparison Agreement with the Lipman Construction Workers and verbally explained the terms of the Proposed Agreement, and the effect of the terms of the Proposed Agreement as follows …
[16] I do not repeat here the remainder of the paragraph. That is because it said little more than “the effect of [insert subject matter] was explained with reference to the [insert clause] noting that …”. That is, having been provided with a further opportunity to detail the content of the explanation given to employees, Mr Chignell did not do so (although he later clarified the intention of his declaration).
[17] On 17 December 2020 the CFMMEU wrote to the Commission to provide assistance about what, it contended, remained deficient with the material filed by the Employer. It concluded that,
“In light of the CFMMEU’s concerns about the failure of the employer to meet its obligations pursuant to s.180(5) of the Act, the CFMMEU submits that the enterprise agreement has not been genuinely agreed within the meaning of s.188 of the Act. …”
[18] On 22 December 2020 Mr Chignell made a third attempt at providing the necessary information via the filing of a witness statement. He sought to “set out further details…” in answer the concerns raised by the CFMMEU. Mr Chignell explained the events of 27 October 2020. He further explained what information was provided to employees or made available to them (including 5 leaver arch folders of documents referred to in the Agreement).
[19] At paragraph 16 Mr Chignell claimed he “highlighted and explained what the key changes to the existing agreement where and together we did a page turn of the documents.” Mr Chignell then explained (to the Commission) key terms in the Agreement. He did not clarify that those explanations were provided to employees at the meeting on 27 October 2020. For example, in relation to clause 8 of the Agreement which deals with No Extra Claims, Mr Chignell stated,
“19. Clause 8 of the Proposed Agreement - the No Extra Claims clause, was drafted by the MBA NSW and is a boilerplate clause in a MBA NSW template EBA which is used by different industry contractors from time to time. It has been included in many EBAs approved by the Fair Work Commission for other entities and is designed to ensure compliance with the 2016 Building Code.
20. Section 15 of the Building Code states:
"if a dispute settlement term of an enterprise agreement in respect of building work provides for arbitration of a dispute or other binding outcome, the entity must ensure that the term requires any decision of the arbiter to be consistent with this code of practice."
21. Clause 8(c) of the Proposed Agreement which refers to matters inconsistent with the Building Code 2016, was highlighted as a change in the Proposed Agreement and explained by me to the CWs at the Discussion Meeting.”
[20] The Statement left me none the wiser about what Mr Chignell explained to the CWs. Accordingly, Lipman, yet again, failed to provide evidence about the actual content of the explanation given to employees. Consequently, it was necessary for the matter to proceed to hearing.
The hearing
[21] The matter was heard on 27 January 2021. The Applicant was granted permission to be represented pursuant to s. 596 of the FW Act by Mr R Goot of Senior Counsel. 7 I also determined that I would be assisted by the participation of the CFMMEU. I granted the Union a limited opportunity to participate in the proceedings pursuant to s.590 of the FW Act.8 The Union was represented by Mr R Reitano of Counsel.
[22] In coming to my decision, I have had regard to all of the material filed in this matter, including the following documents:
EXHIBIT DOCUMENT
1 Form 16 dated 17 November 2020
2 Form 17 dated 17 November 2020
3 How and When to vote for Approval
4 Appointment of Employer Bargaining Representative dated 12 February 2020
5 Notice of Appointment of Bargaining Agent dated 27 October 2020
6 NERR and Attachments dated February 2020
7 The Proposed Agreement
8 Form F54 dated 7 December 2020
9 Form F53 dated 7 December 2020
10 Form 1 from CFMEU dated 16 December
11 Letter from the Applicant dated 16 December 2020
12 Undertaking Section 190 dated 16 December 202
13 Statutory Declaration of Darren Chignell dated 16 December 2020
14 Updated Lipman Pty Ltd Collective Agreement 2020 - 2023
15 Comparison EBA dated 27 October 2020
16 Witness Statement of Darren Chignell dated 22 November 2020
17 Attachment A to Statement – Meeting minutes dated 7 September 2020
18 Attachment B to Statement – Meeting minutes dated 25 September 2020
19 Submissions by Employee Bargaining Representatives dated 18 January 2021
20 Outline of Submissions by the CFMMEU dated 18 January 2020
21 Outline of Submissions in Reply by the Applicant dated 25 January 2021
22 Statement of Darren Chignell in Reply dated 25 January 2021
23 Fair Work Commission Agreement Checklist
24 Aide-Memoire compiled by the CFMMEU
The status of the Mr Chignell’s evidence
[23] Lipman was represented by an experienced industrial practitioner, namely the MBA NSW. Consequently, it was surprising that, in the context of the well-known authority of One Key, the Form F17, the Statutory Declaration of Mr Chignell dated 16 December 2020 and his Witness Statement of 22 December 2020 all failed to properly detail the content of the explanation given to employees.
[24] It is simply not sufficient for a witness to state “I explained”, or “it was explained by me” without going on to provide the content of the explanation. It is not necessary to produce a video or audio recording, or transcript of the meeting at which the effect of the terms of the agreement was explained. However, some attempt needs to be made to adduce cogent evidence about the content of the explanation given to employees.
[25] In advance of the hearing scheduled for 27 January 2021, on 25 January, Mr Chignell filed a further witness statement. At paragraph 8 he stated,
“In the Statutory Declaration, I deal with the Discussion meeting on 27 October 2020, in part by using the word “noting” or the words “was explained with.” In using those words, I intended to convey that at the Discussion Meeting, I said to the employees words to the effect of those which followed the word “noting” or “was explained with”, contained in the Statutory Declaration.
[26] Attachment “W” to the Form F17 was a version of the Agreement that had yellow highlighting to reflect changes from the 2018 Agreement. It was this document that was a part of the page turn exercise with employees on 27 October 2020.
What explanations were given to the employees?
[27] Accepting (as Mr Chignell explained in his 25 January 2021 Witness Statement) that the Statutory Declaration of 16 December 2020, the Witness Statement of 22 December 2020 and the Witness Statement of 25 January 2021 are intended to be statements about the content of the explanation given to employees, and reading those statements in conjunction with Attachment “W” to the Form F17, I make the following findings:
Clause |
What changed from 2018 Agreement? |
What was explained to the employees? |
What is the effect of the clause and was it explained? | |||
1. Title |
New Title of the Agreement |
No evidence that this was explained. |
Inconsequential change. Obvious effect (it changes the name of the Agreement). Not a material change. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)). | |||
2. Definitions |
The definition of Agreement |
No evidence that this was explained. |
Inconsequential change. Obvious effect. Not a material change. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)). | |||
Inclusion of “NES”, National Employment Standards |
No evidence that this was explained. |
Inconsequential change. Obvious effect. Not a material change. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)). | ||||
3. Parties |
At the request of the CFMMEU, the Union no longer listed as a party. |
The CFMMEU is not a party. 9 |
Not an inconsequential change. The effect of the CFMMEU not having the Agreement apply to it is that it could not commence a civil penalty proceeding in respect of a breach of the Agreement (see s.539, Item 4, FW Act). It could have in respect of the 2018 Agreement. This was not explained to the employees. | |||
5. Duration of Agreement |
New nominal expiry date (NED) of 31 December 2023. |
The Agreement shall remain in force until 31 December 2023. 10 |
Not an inconsequential change. The effect of a NED is that it makes “unprotected” any industrial action engaged in during the life of the Agreement (see ss. 408, 409, FW Act). Industrial action that is not protected industrial action can be the subject of a stop order by the Commission (see s.418, FW Act). This was not explained to the employees. | |||
Discussions for replacement agreement to occur 3 months before expiration. |
No evidence that this was explained. |
Inconsequential change. Obvious. No substantive effect. Not a material change. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)). | ||||
8. No extra claims |
New clause included in the Agreement. The Clause states: a) “The Employees covered by this Agreement undertake that they will not pursue any further claims against the Company during its period of operation. b) Notwithstanding the provisions of this clause, any party to this Agreement may apply to the FWC to vary the Agreement in accordance with the relevant provisions of the FW Act. However, such variations shall be compliant with the Building Code 2016. c) If, subject to approval of this Agreement by the FWC, any clause of this Agreement is deemed inconsistent with the Building Code 2016, the parties agree to vary the Agreement pursuant to the FW Act to address any inconsistency.” |
Any variation to the Proposed Agreement would have to take place in accordance with the Fair Work Act 2009. 11 Highlighted as a change in the Proposed Agreement. 12 In Mr Chignells’ Witness statement of 25 January 2021, he outlined: “This clause has been added to protect you as CWs and allows the agreement to be varied if it is found at any time to be inconsistent with the Building Code. It can only be varied if they CWs agree to a variation and the FWC approves the variation. This process will be managed through the Consultative Committee and they would have to access to professional advice if required to assist the navigator process. At no time can Lipman management maker change the agreement without following the above process.” 13 |
Putting aside the fact that the purported effect of the clause is problematic (it appears to seek to bind employees into varying the Agreement if it becomes inconsistent with the Building Code 2016), there is no evidence that the explanation given to employees explained the Building Code 2016; what it is, why it is important or why it might be desirable to amend an agreement in the future. It is unclear how the clause protects CWs or why that was included as a part of the explanation. Nothing in the clause refers to the Consultative Committee, yet it formed a part of the explanation to employees. Nothing in the clause refers to access to professional advice, yet it formed a part of the explanation to employees. No explanation was given about the process of varying an agreements. Employees cannot be compelled to vary an agreement to comply with the Building Code 2016 as sub-para (c) suggests. The explanation given does not properly clarify the operation of the clause. There is little semblance between what the clause says and what was explained to employees. The explanation was inadequate. | |||
10. Objectives |
New objective included, “To promote fair, cooperative and productive workplace relations in the construction industry.” |
The objective is to promote fair, cooperative and productive workplace relations in the construction industry. 14 |
Consequential change. No substantive effect. Not a material change. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)). | |||
11.2 Protective Clothing |
Sub-clause (a) extends the entitlement to footwear to Apprentices. Sub-clause (b) “All Employees” entitled to protective clothing. |
Employees covered by the Proposed Agreement including apprentices covered by the Proposed Agreement are entitled to appropriate footwear on commencement of employment in accordance with the Building and Construction General On-site Award 2010 (BCGOA). All employees covered by the Proposed Agreement will be provided with protective clothing in accordance with Appendix C1 of the Proposed Agreement. All clothing/PPE must meet the relevant AS/NZS standards. 15 |
The clause gives rise to an entitlement in favour of employees. It is a beneficial term. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)). Explanation is reasonable. | |||
11.3 Inclement weather |
Inclusion of reference to the BCGOA. |
No evidence of explanation. |
Inconsequential change. Obvious effect. Not a material change. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)). | |||
11.4 Company Drug and Alcohol Policy |
Inserts a reference to “the Construction Industry Drug and Alcohol Foundation (CIDAF)”. Commits the Company to encourage employees to use CIDAF. |
The company supports the initiatives offered by the Building Trades Group Drug and Alcohol Safety Rehabilitation Program and CIDAF. 16 |
Inconsequential change. Obvious effect. Not a material change. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)). | |||
Mental Health and Wellbeing |
New clause, a) “The Company and Employees recognise mental health issues have a significant impact on health and safety. Suicide rates in the construction industry are higher than average and is best practice for companies and employees to work to tackle the issue of mental health in the workplace. b) The Company and employees also recognise that following a serious incident personnel may suffer trauma. c) In order to improve mental health outcomes, the Company and the Employees agreed to support the Mates in Construction |
Lipman and Lipman Construction Workers agree to support the Mates in Construction program. 17 |
It is entirely unclear what it means to oblige Employees “to support the Mates in Construction program.” It is doubtful the clause has any substantive operative effect. It is not clear what actual work the clause has to do in the enterprise agreement. In any case it is an inconsequential change and not material. Likely gives rise to no obligation on behalf of employees. Not a material change. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)). | |||
12.3 Site Allowance |
Extended to Apprentices. Sub-clause b) “This allowance we paid weekly each hour worked tracking no premium or penalty and remain in force for the duration of this agreement. This allows is not paid to employees when they leave site due to inclement weather.” |
Employees covered by the Proposed Agreement including apprentices covered by the Proposed Agreement will be paid a site allowance at the rates set out in appendix C1 of the Proposed Agreement. The site allowance will be paid weekly for each hour worked tracking no premium or penalty and remain in force for the duration of the Proposed Agreement. The site allowance will not be paid employees covered by the Proposed Agreement when they leave site due to inclement weather. 18 |
The clause gives rise to an entitlement in favour of employees. It is a beneficial term. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)). Explanation is reasonable. | |||
13.3(c) Resignation/Termination |
The right of a Union Delegate to a 10 day mandatory consultation period re termination has been removed. |
No evidence this was explained. |
This change is not immaterial. It does not matter that it was the CFMMEU who decided not to be a party to the Agreement. The effect of the change should have been explained. | |||
14. Payment of wages |
ACIRT added to the particulars of the details to be included in payment notice. |
ACIRT contributions shall be included in particulars and details of payment provided to employees covered by the Post Agreement. 19 |
The clause gives rise to an entitlement in favour of employees. It is a beneficial term. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)). Explanation is reasonable. | |||
15 Travel |
“See County Boundary Map Appendix C)” added to subclause (b). |
The County Boundary Map Appendix C of the Proposed Agreement identifies the Cumberland, Northumberland and Camden counties. 20 |
Inconsequential change. Obvious. No substantive effect. Not a material change. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)). | |||
16(h) Workplace Impairment Training Procedure |
Impairment awareness and policy information sessions now to be conducted every 5 years instead of yearly. |
Impairment awareness and policy information sessions will be conducted every 5 years. 21 |
Inconsequential change. Obvious effect. Not a material change. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)). | |||
18.4 Cashing Out |
New clauseincluded in the Agreement. The Clause states: “(a) Cashing out of annual leave, subject to the National Employment Standard, s94 of the Fair Work act 2009 and only if an employee requests it.” |
The cashing out of annual leave under the Proposed Agreement will only be allowed subject to the National Employment Standards and the FW Act, and employee covered by the Proposed Agreement requesting to do so. 22 |
The clause refers to the incorrect section in the FW Act. Section 94 of the FW Act applies to award/agreement free employees. The clause should reference section 93 of the FW Act. Section 93 provides that, “ (1) A … enterprise agreement may include terms providing for the cashing out of paid annual leave by an employee. (2) The terms must require that: (a) paid annual leave must not be cashed out if the cashing out would result in the employee’s remaining accrued entitlement to paid annual leave being less than 4 weeks; and (b) each cashing out of a particular amount of paid annual leave must be by a separate agreement in writing between the employer and the employee; and (c) the employee must be paid at least the full amount that would have been payable to the employee had the employee taken the leave that the employee has forgone. Terms about requirements to take paid annual leave (3) A modern award or enterprise agreement may include terms requiring an employee, or allowing for an employee to be required, to take paid annual leave in particular circumstances, but only if the requirement is reasonable.” Accordingly, clause 18.4 in the Agreement is not consistent with the requirements of section 93 of the FW Act. The clause does not reflect the requirements of section 93(2). The clause is poorly drafted and, consequently, poorly explained. None of the requirements of s.93 were explained to employees (for example, that they cannot cash out annual leave if they have less than a 4 week balance). | |||
28 Dispute Resolution |
References in the 2018 Agreement to representation by “job delegate” and “Union” removed. The job delegate had a right to represent an employee under the 2018 Agreement. No mention of them now. Not clear whether an employee could choose as their “Employee representative” the job or union delegate. |
No evidence this was explained. |
This change is not immaterial. It does not matter that it was the CFMMEU who decided not to be a party to the Agreement. The effect of the change should have been explained. | |||
29.5 Public Holidays and Holiday Work |
New paragraph under sub-paragraph (a), “No payment shall be made for any public holiday declared on a weekend unless the Employee is required to work on those days.” |
No payment shall be made for any public holidays declared on a weekend unless an Employee covered by the Proposed Agreement is required to work on those days. 23 |
The purported explanation is a recitation of the clause. It is not an explanation of its effect. | |||
Clause 31 Representation |
References to the “Union Delegate” in the 2018 Agreement replaced with “Employee Representative”. A Union Delegate had rights of recognition under the 2018 Agreement. They now appear not to. |
No evidence that this was explained. |
This change is not immaterial. It does not matter that it was the CFMMEU who decided not to be a party to the Agreement. The effect of the change should have been explained. | |||
Appendix A |
New sentence, “The Company will provide appropriate training of all Company personnel.” |
Lipman will provide appropriate training relating to discrimination and sexual harassment. 24 |
The clause gives rise to an entitlement in favour of employees. It is a beneficial term. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)). Explanation is reasonable. | |||
Appendix B1 rates of pay |
New rates appendix. |
The rates applicable from the date of approval of the Proposed Agreement by the Fair Work Commission reflect a 1.66% increase per year, totalling a 5% increase over the duration of the Proposed Agreement. 25 |
Obvious effect. The clause gives rise to an entitlement in favour of employees. It is a beneficial term. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)). Explanation is reasonable. | |||
Appendix C1 Extra benefits |
Site allowance for projects valued between $0 - $2.6m equals $0.00 |
The amount of site allowance is zero dollars for a project value of between zero and $2.6 million. 26 |
Obvious effect. Explanation is reasonable. | |||
Appendix D Apprentice rates of pay |
New table. |
Apprentice rates that apply from the commencement of the Proposed Agreement are subject to increase in accordance with the BCGOA. The site allowance applies from the commencement of the Proposed Agreement. 27 Since drafting the Proposed Agreement the Apprentice rates had been amended and would be updated to reflect those changes. 28 |
Obvious effect. The clause gives rise to an entitlement in favour of employees. It is a beneficial term. Unlikely to have any impact on the genuine agreement of employees (s.188(1)(a)(i)). Explanation is reasonable. | |||
Appendix E Family Leisure Days and Public Holidays Calendar |
New tables for 2021, 2022, 2023 |
The calendars are consistent with the Existing Agreement. 29 |
Obvious effect. Explanation is reasonable. |
[28] In BGC Contracting Pty Ltd 30 Deputy President Gostencnik was concerned (amongst other things) with a replacement enterprise agreement that, unlike the predecessor agreement, incorporated the Black Coal Award. He held,
[86] I accept BGC’s contentions that it should not be required to overcome a “higher than usual bar” in respect of the s.180(5) obligation. But s.180(5) is concerned with the taking of all reasonable steps to explain. How many steps and the content of those steps will necessarily depend on the circumstances. Some employers may, by reasons of the prevailing circumstances, need to take more or fewer steps than other employers with different agreements facing different circumstances. The steps which may in a given case be required by “all reasonable steps” is be assessed by reference to the circumstances of the particular case.
[87] I also accept that 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 an agreement and the relevant reference instrument in circumstances where an existing enterprise agreement, not a reference instrument, applies to the employees in their employment with the employer. But as I have already stated, 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. That was the case at the relevant time that explanations were given vis-à-vis the 2012 Enterprise Agreements and the Mining Award, it would continue to be so in relation to the Agreement, if the Agreement is approved by the Commission. That is the effect of an operative enterprise agreement, save in circumstances where an agreement itself incorporates a modern award, but those terms operate in relation to relevant employees as terms of the agreement. Here there was an additional circumstance, the incorporation of the identified provisions of the Coal Award. These were new provisions to be introduced into the Agreement, which were not part of the 2012 Enterprise Agreements and the Coal Award did not cover the relevant employees.
[88] The relevant employees to be covered by the Agreement were at the relevant time, subject to the application of existing enterprise agreements. Insofar as the terms of the Agreement would have had any relevant effect on existing terms and conditions, it was to displace the application of the terms of the existing agreements. That effect was explained to those employees in considerable detail, in particular as set out in the comparative table.
….
[93] With the exception of the terms of the Coal Award incorporated in the Agreement by Schedule A thereof, I would otherwise be satisfied that BGC took all reasonable steps to explain the terms of the Agreement and their effect to the relevant employees. In my opinion, BGC did this through a combination of communications with relevant employees. The evidence is that it did so during return to site meetings, pre-shift meetings and consultative committee meetings. It did so on an ad hoc basis through discussions with individual employees. It did so through a series of FAQ documents. It also did so by providing to employees the Final Information Pack. This included detailed tables comparing the terms of the Agreement and the 2012 Enterprise Agreements, the Reference Document, and information about the Preserved Conditions Contracts.
[94] Turning then to the issue of the explanation of the incorporated terms of the Coal Award. BGC readily conceded that it did not initiate or publish any explanation about the Agreement as it would apply to employees performing work in black coal mining. 96 It is uncontroversial that no relevant employee was working in black coal mining at the time of the explanations and at the time that employees voted to approve the Agreement. There is also no evidence that the relevant employees had any particular or relevant experience in black coal mining. The distinction BGC sought to make between One Key Workforce (No 1) and the circumstances applicable here, by pointing to the differing “effect” vis-à-vis the reference or existing industrial instruments of the impugned agreement in One Key Workforce (No 1) does not assist it. It was required to take all reasonable steps to explain the effect of the incorporated provisions of the Coal Award, but it took no steps to do so.
[95] BGC contends that as there were no employees employed by it at the relevant time engaged in the black coal mining industry it was reasonable in the circumstances to make available an opportunity for employees to ask questions of management about all matters concerning the Agreement including the terms and effect of those terms as they would apply to employees who might work in the coal mining sector in the future. BGC did explain to employees that it was seeking an Agreement in order that it may remain competitive in the market and to win new work including in coal mining.
[96] Whether the steps taken by an employer to explain the terms of an agreement and the effect of those terms to relevant employees were reasonable steps or were all reasonable steps is, as I have already indicated, to be assessed in the circumstances faced by the employer. Whilst the fact that there were no relevant employees employed by BGC at the relevant time working in black coal mining is a relevant circumstance, the absence of such an employee does not relieve the employer of the obligation to explain to the relevant employees the terms of the agreement and their effect. This is so even if those terms will have no immediate effect upon the relevant employees. Were it otherwise, an employer would only have an obligation to explain the terms of the agreement and their effect to employees insofar as those terms have any application to the relevant employees who are asked to vote to approve the agreement.
[97] Section 180(5) places an obligation on an employer to take all reasonable steps to explain the terms of an agreement and the effect of those terms to relevant employees. It does not delineate between those terms that may have effect on relevant employees and those terms which will have no effect on relevant employees. As I have already noted, the distinction between the effect of the impugned agreement in One Key Workforce (No 1) and this Agreement sought to be made by BGC does not assist it. The explanation given by an employer is one of the vehicles through which an employee becomes informed about the terms of the agreement and is able to then give informed consent, or to use the statutory phrase, to genuinely agree to the agreement. An employee voting to approve the agreement is not asked to vote to approve only those terms and conditions of an agreement which will have application to that employee. The employee and indeed all employees who will be covered by the agreement are asked to vote for or against the totality of the agreement not just aspects of it. It is for this reason that an employer is obliged by s.180(5) to take all reasonable steps to explain the terms of the whole agreement and the effect of those terms to relevant employees.
[98] The view I have expressed above is reinforced by the Full Court’s judgment in One Key Workforce (No 2).
[99] In this case, it is clear that apart from making available the opportunity at various fora to relevant employees to ask questions, BGC took no other material step to explain to relevant employees the terms of the Coal Award which are incorporated in the Agreement by Schedule A or the effect of those terms. The incorporated terms were not trifling, insignificant, or inconsequential so that no or minimal explanation need have been given. These were substantive terms. That the employees were not working in, nor had experience in, black coal mining, meant that a more not less comprehensive, explanation was warranted in the circumstances in order that informed consent might be given. The employer was required to take all reasonable steps to explain these terms and their effect and it did not do so. It took no step. In these circumstances I am not satisfied that the employer has complied with its obligation under s.180(5) of the Act to explain the terms of the Coal Award that are incorporated in the Agreement by Schedule A or the effect of those terms to relevant employees.
[29] I note that, in this matter, the evidence of Mr Chignell was that,
“This was the 10th Lipman EBA and seven of the CWs present at the Discussion Meeting … had been through several prior Lipman EBA negotiations and were in my view well-versed in the process given the prior experience and involvement. In addition, five of the CWs are, or have recently been, members of the Consultative Committee from previous and the current, EBA negotiations.” 31
[30] This is relevant context. I accept that the knowledge and experience of the relevant employees is relevant to determining whether reasonable steps were taken. 32
[31] I further note Mr Chignell’s evidence that,
“The Proposed Agreement between Lipman which approval is sought in these proceedings is based upon and reproduces the 2018 Agreement except to the extent of the changes have been made to it. …” 33
[32] This too is relevant context. However, the Agreement is not strictly a rollover agreement. Above I have identified material differences between the Agreement and the 2018 Agreement.
[33] I accept that a two-hour toolbox meeting, a page turn exercise, meetings with the Consultative Committee and the Discussion Meeting on 27 October 2020 were all reasonable steps. However, that is not the end of the matter.
[34] Mr Chignell also gave evidence that during the page turn exercise “the employees … did not have any further questions and we continued to do a page turn…”. The fact that employees did not ask questions is not evidence that the explanation was reasonable. There could have been other reasons for the employees’ silence; for example, maybe they thought asking questions would only prolong the meeting.
[35] In the table above I have identified clauses in the Agreement that are not trifling, insignificant, or inconsequential so that no or minimal explanation needed to be given. This is not about requiring a system of perfection. These are substantive terms that required a proper explanation. It would have been reasonable to do so. An omission to explain is of “particular significance in circumstances where there were material differences between” the old and new agreement: see Construction, Forestry, Maritime, Mining and Energy Union v McNab Constructions Pty Ltd. 34 The failure to explain the effect of them means that Lipman did not “take all reasonable steps” as required by s.180(5) of the FW Act.
Conclusion
[36] For the reasons set out above:
a) I am not satisfied that Lipman took all reasonable steps to explain the terms of the Agreement or the effect of those terms to relevant employees.
b) Consequently, I am not satisfied that the relevant employees genuinely agreed to the Agreement as described in s.188 of the FW Act.
c) Accordingly, I am not satisfied as to the matter in s.186(2)(a) of the FW Act.
[37] In BCG (No 2) 35 the Deputy President held,
[43] The evident purpose of ss.180(2) and (5), as is clear from their inclusion in s.188 and thus s.186(2)(a), is to ensure so far as is practicable that employees who are asked to vote to approve an agreement make an informed choice as to whether or not they will vote to approve the agreement. That is, the choice that an employee makes in deciding whether to cast a vote to approve the agreement is to be informed by, relevantly, having access to the agreement and any material incorporated by reference during the relevant period, and importantly by having the terms of that agreement (including incorporated terms) and their effect explained. The failure to take all reasonable steps vis-a-vis the material incorporated and the explanation of the terms and their effect means that employees who voted to approve the agreement were deprived of the benefit of very important pre-approval steps designed to ensure that relevant employees genuinely agree to the agreement.
[45] An employer cannot know which employees will and which will not vote in the agreement approval process, how employees will vote or the reason employees vote in a particular way. Voting is not compulsory. Thus the preapproval steps play an important role in providing information to employees so that the employees can each choose whether or not to participate in the voting process, and if so whether to vote to approve the agreement. The mischief sought to be overcome is to ensure that employees understand the terms of the agreement as a whole upon which they are asked to vote. This mischief and the concern that employees did not genuinely agree to the Agreement is not overcome or met by accepting the genuine agreement undertaking proffered by BGC, which in essence is about the ongoing application of the Agreement (through a self-imposed restraint on employment) in respect of certain classes of employees and not about the fundamental issue of whether the Agreement was genuinely agreed to by employees covered by it. That a future cohort of voting employees may make an informed choice about varying the Agreement (alone or coupled with a restraint on employment until any future variation takes effect) does not meet the concern that those employees asked to approve the Agreement in June 2016 did not have information designed to enable them to make an informed choice about whether to approve the Agreement.
[38] In the BCG matter the Deputy President allowed the employer an opportunity to offer up undertakings to deal with the genuinely agreed issue. Undertakings were offered, but the Deputy President was ultimately not “persuaded that the genuine agreement undertaking, [met] the concern identified in [his] earlier decision.” 36 The application for approval of the decision was dismissed.
[39] In this matter I have decided not to allow Lipman an opportunity to proffer undertakings aimed at curing the genuinely agreed issues. This is because s.180(5) of the FW Act is a pre-approval requirement concerned with ensuring employees have adequate information about the terms of a proposed enterprise agreement to facilitate their genuine agreement in bargaining. I cannot readily envisage an undertaking being proffered to meet the concerns I have raised. As such, I am not satisfied that Lipman is capable of retrospectively curing its non-compliance with s.180(5) by proffering an undertaking at the agreement approval stage. I should not engage in the theatre of providing Lipman with the opportunity to do so.
[40] In the circumstances, given the conclusions I have reached about the failure of Lipman in respect of s.180(5) of the FW Act, the Agreement cannot be approved and the application for its approval is dismissed.
COMMISSIONER
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1 [2017] FCA 1266.
2 [2018] FCAFC 77.
3 BGC Contracting Pty Ltd [2018] FWC 1466, [76].
4 BGC Contracting Pty Ltd [2018] FWC 1466, [77].
5 Noting the proposed legislative requirement contained in clause 255AA of the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (which will require the Commission, ‘as far as practicable’, to determine enterprise agreement approval applications within the ‘decision period’ of 21 working days after the application is made), I doubt I will be so obliging in the future.
6 No evidentiary basis was provided for this contention.
7 Transcript of Proceedings, PN27.
8 Ibid, PN 383.
9 Para 4(f)(ii) Statutory Declaration of Darren Chignell, 16 December 2020.
10 Para 4(f)(iii) Statutory Declaration of Darren Chignell, 16 December 2020.
11 Para 4(f)(iv) Statutory Declaration of Darren Chignell, 16 December 2020.
12 Para 21, Witness Statement of Darren Chignell, 22 December 2020.
13 Para 11, Witness Statement of Darren Chignell, 25 January 2021.
14 Para 4(f)(v) Statutory Declaration of Darren Chignell, 16 December 2020.
15 Para 4(f)(vi) Statutory Declaration of Darren Chignell, 16 December 2020.
16 Para 4(f)(viii) Statutory Declaration of Darren Chignell, 16 December 2020.
17 Para 4(f)(vii) Statutory Declaration of Darren Chignell, 16 December 2020.
18 Para 4(f)(ix) Statutory Declaration of Darren Chignell, 16 December 2020.
19 Para 4(f)(x) Statutory Declaration of Darren Chignell, 16 December 2020.
20 Para 4(f)(xi) Statutory Declaration of Darren Chignell, 16 December 2020.
21 Para 4(f)(xii) Statutory Declaration of Darren Chignell, 16 December 2020.
22 Para 4(f)(xiii) Statutory Declaration of Darren Chignell, 16 December 2020.
23 Para 4(f)(xiv) Statutory Declaration of Darren Chignell, 16 December 2020.
24 Para 4(f)(xv) Statutory Declaration of Darren Chignell, 16 December 2020.
25 Para 4(f)(xvi) Statutory Declaration of Darren Chignell, 16 December 2020.
26 Para 4(f)(xvii) Statutory Declaration of Darren Chignell, 16 December 2020.
27 Para 4(f)(xviii) Statutory Declaration of Darren Chignell, 16 December 2020.
28 Para 20 (second time appearing), Witness Statement of Darren Chignell, 22 December 2020.
29 Para 4(f)(xix) Statutory Declaration of Darren Chignell, 16 December 2020.
31 Para 15, Witness Statement of Darren Chignell, 22 December 2020.
32 Shamrock Civil [2018] FWCFB 1722, [35].
33 Para 5, Witness Statement of Darren Chignell, 25 January 2021.
34 [2020] FWCFB 5080, [26].
36 [2018] FWC 6936, 46.