Fair Work Act 2009_

s.185 - Enterprise agreement

Application for approval of the SGS Australia Pty Ltd Enterprise Agreement 2014; not satisfied employees genuinely agreed as employer did not comply with s. 180(2); application for approval dismissed.

[1] On 7 August 2014 SGS Australia Pty Ltd (SGS) made an application pursuant to s. 185 of the Fair Work Act 2009 (Act) for the approval of a single enterprise agreement titled "SGS Australia Pty Ltd Enterprise Agreement 2014" (Agreement). A statutory declaration completed by Mr Steve McCartney the WA Secretary of the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU) supporting the application for approval was also filed with the application.

[2] By correspondence dated 17 October 2014 the National Office of the AMWU advised my Chambers that despite the statutory declaration filed in support of the application, the AMWU had a number of concerns about the Agreement relating to its scope and whether the Agreement passed the better off overall test. Consequently I convened a number of hearings to deal with the issues raised by the AMWU. SGS and the AMWU have also exchanged correspondence about the issues raised and SGS has provided certain undertakings to the Commission designed to meet the issues raised by the AMWU. Pursuant to directions issued by me, the parties also filed written submissions concerning the issues raised. It is unnecessary for me to canvass each issue that was raised and it is sufficient for present purposes to indicate that many of the issues raised by the AMWU have been resolved by agreement.

[3] I have also found it unnecessary to resolve each of the outstanding issues raised by the AMWU for the purposes of determining whether the Agreement can be approved because I am not satisfied that each of the preapproval requirements has been satisfied and consequently I am not satisfied that the Agreement has been genuinely agreed (within the meaning of section 188) to by the employees covered by the Agreement for the purposes of s. 186(2). This is because SGS as the employer covered by the Agreement has not complied with s. 180(2). These are my reasons for that conclusion.

[4] Section 180 of the Act sets out some of the preapproval steps that must be completed before employees are asked to vote to approve an agreement. Relevantly s. 180(2) provides as follows:

Employees must be given copy of the Agreement etc.

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

(a) during the access period for the Agreement, the employees (the relevant employees) employed at the time who will be covered by the Agreement are given a copy of the following materials:

(ii) any other material incorporated by reference in the Agreement; or

(b) the relevant employees have access, throughout the access period for the Agreement, to a copy of those materials.

[5] Section 186 of the Act deals with some of the matters about which the Commission must be satisfied before being required to approve an agreement. Relevantly section 186 (2)(a) provides the following:

(a) if the Agreement is not a greenfields agreement - the Agreement has been genuinely agreed to by the employees covered by the Agreement; and

[6] The meaning of genuinely agreed is dealt with in section 188 of the Act, which relevantly provides the following:

188 When employees have genuinely agreed to an enterprise agreement

An enterprise agreement has been genuinely agreed to by the employees covered by the Agreement if the FWC is satisfied that:

(a) the employer, or each of the employers, covered by the Agreement complied with the following provisions in relation to the Agreement:

(i) subsections 180(2), (3) and (5) (which deal with pre-approval steps);

[7] As is apparent from the above provisions, among the various steps that must be taken before employees are asked to vote to approve the Agreement, the employer must take all reasonable steps to ensure that the employees that will be covered by the Agreement have been given a copy of both the written text of the Agreement and any material incorporated by reference into the Agreement, or that the employees have access to the Agreement and incorporated material throughout the access period. The failure to take reasonable steps to do so means that the employees covered by the Agreement cannot be said to have genuinely agreed to the Agreement within the meaning of s. 188 of the Act, with the consequence that the Commission cannot be satisfied as required by s. 186(2) of the Act.

[8] Clause 31 of the Agreement deals with leave entitlements and provides that the leave entitlements provisions of the Agreement are "to be read in conjunction with the SGS Australia Leave Policy".

[9] Clause 33 of the Agreement deals with an employee's health and safety obligations and provides that employees must, inter alia, "comply with Fitness for Work and Drug and Alcohol Policies, including Rules for Life".

[10] Clause 36 of the Agreement deals with fitness for work and provides, inter alia, that employees are required to "comply with any health and safety policies, requirements or the like of clients or customers of the Company when working on any of their sites or projects".

[11] The question whether the policies referred to in each of the above-mentioned clauses of the Agreement are incorporated into the Agreement by reference may, for present purposes, be answered by asking whether the provisions of these clauses of the Agreement impose any obligation on employees who are covered by the Agreement to comply with the policies to which reference is made. I have not been provided with a copy of the SGS Australia Leave Policy and it is therefore not clear to me what effect reading the leave provisions of the Agreement in conjunction with the policy will have, and for reasons which follow it is unnecessary for me to express a view about whether or not the SGS Australia Leave Policy is incorporated by reference into the Agreement.

[12] The provisions of clause 33 and 36 of the Agreement seem to me to make clear that employees covered by the Agreement, when it is in operation, are obliged by the terms of the Agreement to comply with the terms of the policies mentioned in each of clauses 33 and 36. A breach of any mentioned policy by an employee will amount to a breach of the Agreement. I am therefore satisfied that the terms of the policies mentioned in clauses 33 and 36 of the Agreement are incorporated by reference into the Agreement.

[13] I am satisfied based on the material set out in the employer's statutory declaration filed in support of its application to approve the Agreement that the employer took all reasonable steps to either provide copies of the Agreement to employees and to make the Agreement readily accessible to employees during the access period.

[14] However I am not satisfied that the employer took any step, let alone all reasonable steps, to ensure that the employees were either given a copy of the incorporated policies or had access to those policies during the access period. In correspondence dated 27 November 2014 (and reiterated in correspondence dated 15 December 2014) SGS accepts that it did not issue employees with the policies as part of the preapproval process, but says that the policies apply to the employees nonetheless and do so irrespective of whether employees are covered by the Agreement or not.

[15] That may be the case, but there is no material before me which would suggest that employees were alerted to the fact that these policies were now incorporated into the Agreement with the consequence that a breach of an incorporated policy by an employee will constitute a breach of the Agreement. There is not material before me suggesting that employees were advised that policies may be viewed at a particular location, for example, on an intranet site. Moreover there is no material from which it may be concluded that particular client or customer policies that operate at particular sites were identified by SGS to employees or that any information was given to any employee about how such policies could be accessed or reviewed.

[16] By incorporating the policies of SGS and of others into the Agreement with the consequence that a failure to comply with a policy would become a breach of the Agreement, the Agreement creates substantial obligations on employees about which they should not only be aware but become familiar. There is simply no material from which it can be concluded that the employer took all reasonable steps to provide employees with a copy of the incorporated material or to ensure that the employees had ready access to that material during the access period. Consequently I cannot be satisfied that the employees covered by the Agreement genuinely agreed to it.

[17] It seems to me that it is wholly unnecessary to incorporate into an agreement policies of the kind identified in clauses 33 and 36 of the Agreement. By doing so, an employer is simply placing additional and unnecessary compliance burdens on itself in order to have an agreement approved. Policies of the kind identified in clauses 33 and 36 of the Agreement seem to me more than able to be dealt with by a direction to comply given to employees by the employer or by including a requirement to comply in an employee's employment contract.

[18] For completeness I should note that the AMWU suggested in its written material that the issue of policy incorporation might be dealt with by an undertaking given to the Commission by SGS. No undertaking was proffered and as the point was not argued it is unnecessary for me to express a view about whether any such undertaking could be accepted as curing the defect identified above.

[19] For the reasons given the application to approve the Agreement is dismissed. An order to that effect is separately issued in PR561405.

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