[2024] FWCFB 381

Fair Work Act 2009

s.604 - Appeal of decisions

Australian Municipal, Administrative, Clerical and Services Union

City of Darebin, Australian Nursing and Midwifery Federation and Association of Professional Engineers, Scientists and Managers Australia

Appeal against decision [2024] FWCA 1160 of Commissioner Connolly at Melbourne on 3 April 2024 in matter number AG2024/805 - appeal filed out of time - extension of time granted - in the public interest and the interests of all parties that the status of the agreement be clarified - whether the model term for dealing with disputes for enterprise agreements was taken to be a term of enterprise agreement - whether Commissioner satisfied that approval requirements had been met - consequences of Commissioner not being satisfied agreement contained term meeting the requirements of s 186(6) - jurisdiction to approve an enterprise agreement dependent on forming a state of satisfaction that approval requirements have been met - agreement not validly approved - decision to approve the agreement quashed - application for approval of agreement referred to single member of the Commission

[1] The Australian Services Union (the ASU) and the City of Darebin Council (the Council) are in dispute in relation to an ongoing restructure being implemented in relation to the Council's operations. Affected employees are presently covered, or at least appear to be covered, by an enterprise agreement known as the Darebin City Council Enterprise Agreement 2022-2025 (the Agreement).

[2] The dispute uncovered an issue in relation to the initial approval of the Agreement. The Agreement was approved by a Commissioner of the Fair Work Commission (the Commission) on 3 April 2024.[1] The ASU now seeks permission to appeal, and to appeal, from the approval decision under s 604(1) of the Fair Work Act 2009 (Cth) (the Act). The appeal raises a question as to whether the Commissioner erred by finding that the model term for dealing with disputes for enterprise agreements was taken to be a term of the Agreement.

[3] The ASU lodged its notice of appeal on 4 September 2024. That is, obviously enough, well outside the time limit of 21 days set by rule 128(2)(a) of the Fair Work Commission Rules 2024 (the Rules). The reasons for the ASU seeking permission to appeal out of time are explained by events which have occurred more recently. The Council strongly opposes further time being allowed for the ASU to file its notice of appeal and, for similar reasons, opposes permission to appeal being granted.

[4] Both the ASU and the Council sought to have new evidence admitted on hearing of the application for an extension of time and in relation to the question of permission to appeal. The ASU tendered a statement of an industrial officer, Deeana Predic, dated 10 September 2024. The Council tendered a witness statement of its Chief People Officer, Yvette Fuller, dated 12 September 2024. Both witness statements were admitted without objection.

[5] For the reasons that follow, further time should be allowed for the ASU to lodge its notice of appeal, permission to appeal granted and the appeal upheld. The decision to approve the Agreement must be quashed and the application for approval of the Agreement redetermined. The appropriate course is to refer the application for approval of the Agreement to a member of the Full Bench.

[6] Although bargaining commenced in September 2022, the Agreement was ultimately made on 1 March 2024. An application was then made under s 185 of the Act for the Agreement to be approved by the Commission. The application was allocated to the Commissioner.

[7] By email sent on 22 March 2024, the Commissioner identified a number of issues in relation to the Agreement and requested that the parties respond to those concerns. One of the concerns set out in the email related to the dispute term which is clause 27 of the Agreement. The email contained the following:

Clause 27 states that during the 'internal process' the employee may be represented by their union, however, the clause does not appear to allow for representation during the 'external process'. If the intention is for the union representation to extend to the external process, this appears more restrictive than s.186(6)(b) of the Act which does not limit who can represent an employee.

The Commissioner advises that the Model Dispute Term will be taken to be a part of this Agreement, should it be approved. No further action is required.

Noted. It was not the intention of the parties to restrict access to representation during either the external or internal process noting also that clause 27.1 of the Agreement covers matters that are wider in scope than the Model Dispute Term.

[8] The text in the lefthand column of the table represents the concern raised by the Commissioner and the text in the righthand column is the response from the Council to the issue raised in relation to the dispute term contained in an email sent on 27 March 2024.

[9] The email sent by the Council on 27 March 2024 in response to the Commissioner's concerns also attached two proposed undertakings in accordance with s 190 of the Act. The ASU responded by email later on 27 March 2024 and indicated that it had no objection to the undertakings provided. It did not otherwise comment in relation to the dispute term. No undertaking was sought or proffered in relation to the dispute term.

[10] The Commissioner published his decision to approve the Agreement on 3 April 2024. In relation to the dispute resolution term, the decision stated as follows:

[9] As the Agreement does not contain a dispute resolution term which meets the requirements of s.186(6) of the Act, the model term for dealing with disputes for enterprise agreements is taken to be a term of the Agreement.

[11] The ASU did not, at that time, seek permission to appeal. A concern in relation to the impact of paragraph [9] of the approval decision only arose later.

[12] The clause 27 of the Agreement is entitled "Dispute Prevention and Settlement Procedure" and provides as follows:

27. DISPUTE PREVENTION AND SETTLEMENT PROCEDURE

27.1 In the event a dispute arises about a matter in respect of this Agreement, the NES, or other matters (as defined below) between an employee and Council, the parties must genuinely consult in an endeavour to reach a consensus. These other matters relate to s. 65 of the Fair Work Act (Requests for flexible work options), s. 76 of the Fair Work Act (extending period of unpaid parental leave-extending for up to 12 months beyond available parental leave period), and disciplinary matters where a show cause or a final written warning is issued.

27.2.1 The parties to the dispute must genuinely attempt to resolve the dispute through the processes set out in this clause and must cooperate to ensure that these processes are carried out expeditiously. Council will ensure a fair process is conducted in these matters.

27.2.2 Whilst a dispute is being dealt with in accordance with this clause, work must continue in accordance with usual practice, provided that this does not apply to an employee who has a reasonable concern about an imminent risk to their health or safety, has advised Council of this concern and has not unreasonably failed to comply with a direction by Council to perform other available work that is safe and appropriate for the Employee to perform.

27.2.3 No party will be prejudiced as to the final settlement. The pre-dispute status quo will remain until the dispute is withdrawn, an agreement reached or the steps in the procedure have been exhausted.

27.3.1 It is the expectation of the parties to this Agreement that disputes will be resolved within a reasonable timeframe. Timeframes may vary dependent on the issue in dispute. The employee and their representative will be advised of the expected timeframe following receipt of the dispute by Council. Where the timeframe needs to be extended, the Employee and their representative will be notified of the adjusted timeframe.

27.4.1 The parties encourage the timely resolution of disputes contemplated under clause 27.1 at the local level, wherever possible, in accordance with the following steps:

1. Should any matter occur which gives cause for concern to an employee, they shall raise the matter with their immediate supervisor or an appropriate officer.
2. If the matter is not settled to the employee's satisfaction, they may raise the matter with the relevant department manager.

1. If the matter remains unresolved the employee may raise the matter with the relevant General Manager.

1. If the matter remains unresolved, the General Manager will refer the matter to the Chief Executive Officer.

27.4.2 Where a matter of policy is concerned, the matter may be referred by management to the next meeting of the Consultative Committee.

27.4.3 The Employee may at any stage be represented by their Union.

27.4.4 Senior management, the Chief People Officer, or their delegate, and/or a union representative may participate at any stage of the process outlined in clause to assist in the achievement of a timely and effective resolution of the matter.

27.5.1 Should a matter remain unresolved following the internal process determined in clause 27.4, either party may refer the matter to FWC.

27.5.2 The parties agree that FWC shall deal with the dispute in two stages as follows:

1. In the first instance, FWC may attempt to resolve the dispute through mediation, conciliation, expressing an opinion or by making a recommendation; and
2. If FWC is unable to achieve a consensus between the parties, FWC may arbitrate the dispute.

27.5.3 The parties shall not raise any jurisdictional argument pertaining to the powers of FWC to settle any dispute by arbitration. All parties will abide by any decision resulting from a matter being referred to FWC for arbitration.

27.5.4 The parties agree that clause 27.4 and 27.5.2. shall genuinely be followed in an endeavour to reach a consensus on any dispute between Council and an employee about a matter/s pertaining to the employment relationship in this Agreement, the NES, or other matters as defined in 27.1. of this clause and below. These other matters relate to s. 65 of the Fair Work Act (Requests for flexible work options), s. 76 of the Fair Work Act (extending period of unpaid parental leave-extending for up to 12 months beyond available parental leave period), and disciplinary matters where a show cause or a final written warning is issued.

[13] Relevantly, clause 27.2.3 of the Agreement (as it was made) provides that "the pre-dispute status quo" will remain until the dispute is withdrawn, an agreement reached or the steps in the procedure have been exhausted. Clause 27.5.2 also provides that, if a dispute is otherwise unable to be resolved, the Commission may arbitrate the dispute.

[14] On 13 August 2024, the ASU filed a dispute with the Commission concerning the proposed restructure. The application to the Commission provided a summary of the background to and progress of the dispute. Among other things, the application recorded:

5. On 23 July 2023 the Applicant notified the Respondent that the matter was in dispute as per clause 26 of the Enterprise Agreement. The Applicant asked that the Respondent maintain the status quo while the dispute was resolved in accordance with clause 27 (see Attachment D).

6. Despite the obligation on the Respondent to maintain the pre-dispute status quo, it has continued to progress the consultation process

[15] By letter dated 14 August 2024, the Council informed the ASU that it did not believe it is bound by an obligation to maintain the status quo whilst attempts were being made to resolve the dispute. The letter stated as follows:

In addition I think its important to highlight that in Council Enterprise Agreement there is no dispute resolution term which meets the requirements of s.186(6) of the Act. Clause 26 of the Agreement document, as circulated, does not apply and the model term for dealing with disputes for enterprise agreements is taken to be a term of the Agreement, as set out in clause 9 of the Commissioner's decision approving the Agreement.

As there is no reference to "status quo" in the model clause, Council has continued to consult with staff on the proposed changes ...

[16] The reference to clause 26 of the Agreement in the Council's correspondence appears to be an error. The letter should have referred to clause 27.

[17] On 23 August 2024, the ASU filed an application seeking to vary the Agreement to correct an error under s 218A of the Act or to correct an error or defect in the decision of the Commissioner under s 602. The ASU also sought that an undertaking be inserted into the Agreement. That application was listed for mention before another member of the Commission. Following the mention, the ASU formed the view that that application would not permit the relief sought to be obtained and withdrew that application. The notice of appeal was subsequently lodged.

[18] What has occurred in this matter is relatively straightforward. The Council proposed to its employees that they make an enterprise agreement including clause 27. Among other things, clause 27 provided that it would maintain the pre-dispute status quo in the event of a dispute in respect of the Agreement, the NES, or other matters. When the ASU called upon the Council to maintain the status quo in relation to the proposed restructure, the Council has formed the view that the effect of the approval decision is that the Agreement is in operation, but that clause 27 does not form part of the Agreement and was replaced by the model term. As the model term does not contain a status quo provision, the Council's view is that it has no obligation to maintain the pre-dispute status quo pending the determination of the dispute.

[19] Section 609(1) of the Act allows for the President of the Commission to make procedural rules in relation to the practice and procedures to be followed by the Commission and the conduct of business in relation to matters allowed or required to be dealt with by the Commission. Rule 128 of the Rules provides in part:

(1) A person seeking to institute an appeal under section 604 of the Act against a decision of:

(a) a single FWC Member; or

(b) the General Manager; or

(c) a person exercising a delegation from the President or the General Manager; must do so by lodging a notice of appeal.

Note 1: The notice of appeal must be in the approved form: see rule 9.

Note 2: Section 604 of the Act allows a person aggrieved by a decision of the FWC (other than a decision of a Full Bench or an Expert Panel), or of the General Manager (including a delegate of the General Manager) under the Registered Organisations Act, to appeal the decision, with the permission of the FWC.

(a) within 21 days after the date of the decision being appealed against; or

(b) if the decision was issued in the form of an order - within 21 days after the date of the order; or

(c) within such further time allowed by the FWC on application by the appellant.

Note: Subsection 598(4) of the Act provides that a decision may be made as an order.

[20] Rule 128(2)(a) provides that a notice of appeal must be lodged within 21 days after the date of the decision being appealed against. Rule 128(2)(c) permits the Commission to allow further time to file a notice of appeal. The discretion to allow further time is unconfined. The Commission must simply be satisfied that there is sufficient reason to allow further time to appeal.

[21] Time limits in relation to appeals permit parties to arrange their affairs confident that a decision will not be disturbed on appeal. A time limit in relation to an appeal should only be extended where there are good reasons for doing so[2] and not as a matter of course.[3] A range of factors are commonly taken into account in assessing whether further time should be allowed for a party to lodge a notice of appeal. Matters that may be relevant to the exercise of the discretion to extend time include:[4]

(a) whether there is a satisfactory reason for the delay;

(b) the length of the delay;

(c) the nature of the grounds of appeal and the likelihood of one or more of those grounds being upheld if time was extended; and

(d) any prejudice to the respondent if time were extended because of developments after the time for lodgement had expired.

[22] The Council strongly opposed further time being allowed for the ASU to lodge its notice of appeal. It pointed to the fact that the delay in bringing the appeal was considerable as the ASU required an extension of approximately five months. The Council asserted that it had arranged its affairs assuming that the Agreement covered and applied to it and relevant employees and would be prejudiced by an extension of time being granted. If approval of the Agreement is now quashed, the Council may have inadvertently contravened the previous enterprise agreement and will lose the benefit of the dispute resolution term that it contends is currently part of the Agreement.

[23] The Council alleged that the conduct of the ASU in failing to object to the Commissioner's proposal to include the model dispute resolution term in the Agreement and its failure to file a notice of appeal within 21 days of the decision amounted to a waiver of rights or gave rise to an assumed state of affairs from which the ASU should not be permitted to resile. Although it referred to principles of waiver and estoppel,[5] the Council indicated in oral submissions that it accepted the Full Bench had jurisdiction to allow further time to appeal. It rather contended that, by analogy, those principles are relevant to the exercise of the Commission's discretion in relation to the extension of time.

[24] We accept that considerations akin to those which might, in other contexts, give rise to a waiver of rights or an estoppel, are likely to be relevant to the exercise of the discretion as to whether to allow further time to appeal. If a party has acted in a manner that induces the other party to assume that there will be no appeal and the other party has, to the knowledge of the first party, relied on that assumption, that circumstance may be relevant to whether it is appropriate to allow further time to appeal. However, in each case where an extension of time to appeal is sought, the Full Bench will need to exercise that discretion in light of the whole of the circumstances.

[25] In this matter, there are two considerations which have persuaded the Full Bench it is appropriate to allow the ASU further time to lodge its notice of appeal. First, we accept that the ASU has provided an explanation for the delay. The ASU acknowledged that it was aware of the Commissioner's email of 22 March 2024 advising that the model dispute term will be taken to be a part of the Agreement and paragraph [9] of the decision indicating that the model term for dealing with dispute for enterprise agreement was taken to be a term of the Agreement.

[26] However, it was not necessarily apparent on the face of the Commissioner's email or from the decision that the Council considered that the effect of the decision was to displace clause 27 of the Agreement entirely. It only became apparent that the Council regarded itself as unconstrained by the status quo provision in clause 27 after its letter dated 14 August 2024 and communication to the Commission on 22 August 2024. Although the ASU's evidence could have been clearer, Ms Predic's evidence was that it was only on 22 August 2024 that the issue was brought to the attention of the ASU's legal team. The ASU then acted promptly. It filed an application to vary the Agreement or the decision on 23 August 2024 and, upon realising that avenue was not appropriate, filed a notice of appeal on 4 September 2024.

[27] Second, and more significantly, the appeal raises a substantial question as to whether the Agreement was ever validly approved. If there is reason to doubt that the Agreement was validly approved, it is in the interest of all parties and in the public interest that any doubt as to the effective operation of the Agreement be resolved. If a defect in the approval of the Agreement is found to exist, it can be remedied by the Full Bench. We understand that the Agreement purports to cover approximately 1,200 employees. It is obviously undesirable that any doubt exists in relation to the instrument which sets the terms and conditions of employment of such a substantial group of employees.

[28] The Council implicitly accepted that there was at least a potential defect in the decision to approve the Agreement. If the Agreement was not validly approved, that situation is not solved by the Full Bench refusing to allow further time for the ASU to appeal. If that is the case, the prejudice which the Council fears has already occurred. Doubt as to the validity of the approval will only be addressed by the Full Bench quashing the decision and the application for approval being redetermined. The submission that the Full Bench should just ignore doubt as to the validity of the decision is an appeal to burying one's head in the sand. In our opinion, it is clearly in the public interest to consider and, if necessary, address the defect that has been identified in the decision to approve the Agreement.

[29] For these reasons, further time should be allowed for the ASU to file its notice of appeal until 4 September 2024.

[30] The ASU requires permission to appeal under s 604(1) of the Act. The Full Bench is required to grant permission to appeal if it considers it is in the public interest to do so.[6] Otherwise, the Full Bench has a general discretion as to whether to grant permission to appeal. In this matter, the considerations relevant to whether permission to appeal should be granted substantially overlap with the matters already addressed in relation to the application for an extension of time to appeal.

[31] The notice of appeal alleges that the Commissioner erred in finding that the model term for dealing with disputes for enterprise agreements is taken to be a term of the Agreement. Sections 186(1) and (6) of the Act provides that the Commission must approve an agreement only if satisfied that the agreement includes a term which complies with the requirements of s 186(6). In those circumstances, the ground of appeal gives rise to some doubt that the Agreement has been properly approved. For the reasons we have explained, it is in the public interest that any doubt as to the approval of the Agreement be considered by the Full Bench and, if necessary, remedied. Permission to appeal should be granted.

[32] The ASU ultimately relied upon a single ground of appeal, being ground 2 in the notice of appeal, which is in the following terms:

Further and in the alternative, the Commission erred by finding that the model term for dealing with disputes for enterprise agreements is taken to be a term of the Agreement.

1. The Commissioner reasoned at [9] of the Decision that "As the Agreement does not contain a dispute resolution term which meets the requirements of s.186(6) of the Act, the model term for dealing with disputes for enterprise agreements is taken to be a term of the Agreement."

2. Unlike the consultation and flexibility clauses (s 201 of the FW Act), the model term for dealing with disputes is not a default clause. There is no basis for the model term for dealing with disputes to be "taken to be a term" of the Agreement.

1. To the extent the Commissioner was not satisfied that the agreement did not meet the requirements for a term about settling disputes set out in s 180(6) of the FW Act, that concern ought to have been addressed by way of a satisfactory undertaking under s 190(2) of the FW Act.

[33] The fundamental submission advanced by the ASU is that the Act contains no provision by which the model term for dealing with disputes for enterprise agreements is taken to be a term of an enterprise agreement. That submission is correct and was not disputed by the Council.

[34] Section 186(1) of the Act sets the "basic rule" that the Commission must approve an enterprise agreement if the requirements in that section and s 187 are met. Among the requirements in s 186 is that referred to in s 186(6) as follows:

(6) The FWC must be satisfied that the agreement includes a term:

(a) that provides a procedure that requires or allows the FWC, or another person who is independent of the employers, employees or employee organisations covered by the agreement, to settle disputes:

(i) about any matters arising under the agreement; and

(ii) in relation to the National Employment Standards; and

(b) that allows for the representation of employees covered by the agreement for the purposes of that procedure.

[35] The Commission must approve an enterprise agreement if satisfied the agreement includes a term that meets the requirements set out in s 186(6). Equally, the Commission cannot approve an agreement if it is not so satisfied.

[36] Section 737 of the Act requires that the regulations must prescribe a model term for dealing with disputes for enterprise agreements. However, no provision of the Act provides that, if an agreement does not contain a term about settling disputes which meets the requirements of s 186(6), the model term is taken to be a term of the agreement. This contrasts with the position with respect to the model flexibility term and the model consultation term. If an enterprise agreement does not contain a flexibility term or consultation term that complies with the requirements of the Act, the model flexibility term or the model consultation term is taken to be part of the agreement.[7] The same provision is now made with respect to a delegates' rights term.[8]

[37] In that event, s 201(1) provides as follows:

Approval decision to note model terms included in an enterprise agreement

(i) the model flexibility term is taken, under subsection 202(4), to be a term of the agreement;

(ii) the model consultation term is taken, under subsection 205(2), to be a term of the agreement;

the FWC must note in its decision to approve the agreement that those terms are so included in the agreement.

[38] No equivalent provision exists with respect to a term about settling disputes. If the Commission is not satisfied that an enterprise agreement includes a term about settling disputes that complies with the requirements of s 186(6), the agreement may nonetheless be approved if the Commission accepts an undertaking that meets the concern under s 190. However, the Act does not provide that the model term is taken to be a term of the agreement in that situation.

[39] The parties agreed that it was an error for the Commissioner to record that the model term was taken to be a term of the Agreement. The Council nonetheless submitted that the decision should be affirmed. It submitted that the question posed by the appeal is whether the correct conclusion was reached by the Commissioner. It submitted that, whilst the power intended to be exercised by the Commissioner was not clearly articulated, a power to include the model term in the Agreement existed under either ss 190 and 191 (permitting undertakings) or ss 191A and 191B (permitting approval with amendments). Either the Commissioner exercised one of these powers or he could have arrived at his conclusions by a different route. If the latter, the Council submitted that the decision should be affirmed on grounds other than those relied on by the Commissioner.

[40] Neither avenue for affirming the decision is available. The Commissioner could have sought an undertaking to address the concern that the dispute settlement term did not meet the requirements of s 186(6). The difficulty is that this did not occur.

[41] Section 190(2) provides that the Commission may approve an agreement under s 186 if satisfied that an undertaking meets any concern the Commission has that the agreement does not meet the requirements set out in ss 186 or 187. It is apparent from paragraph [9] of the decision that the Commissioner had a concern that the Agreement did not comply with the requirements of s 186(6). However, s 190 contains a number of constraints on the capacity of the Commission to approve an agreement with undertakings. Section 190(3) requires that the Commission must be satisfied that the effect of accepting the undertaking is not likely to cause financial detriment to any employee or result in substantial changes to the agreement. Section 190(4) provides that the Commission must not accept an undertaking unless it has sought the views of each person who the Commission knows is a bargaining representative for the agreement. Section 190(5) requires that the undertaking meets any requirements relating to signing that are prescribed by the regulations.[9]

[42] In this matter, no undertaking was sought from or given by the Council in relation to the disputes term. It is not, as submitted by the Council, merely a matter of an irregularity arising as a result of no signed undertaking being provided. The Commissioner did not consider whether an undertaking would address his concern about the content of the disputes clause for the purposes of s 190(2). There is no suggestion that the Commissioner considered whether any undertaking in relation to that matter would result in substantial changes to the agreement for the purposes of s 190(3)(b) and the Commissioner did not seek the views of other bargaining representatives as required by s 190(4) in relation to an undertaking. It would not have been open for the Commissioner to approve the agreement with an undertaking in relation to the disputes clause without taking those steps.

[43] Section 191A now provides that the Commission can approve an enterprise agreement with amendments in certain circumstances. Section 191A provides:

191A FWC may approve an enterprise agreement with amendments

(a) an application for the approval of an enterprise agreement has been made under subsection 182(4) or section 185; and

(b) the FWC has a concern that the agreement does not meet the requirement set out in paragraph 186(2)(d) (better off overall test).

(2) The FWC may approve the agreement under section 186 if the FWC is satisfied that an amendment specified by the FWC is necessary to address the concern.

(3) If the FWC intends to specify an amendment under subsection (2), the FWC must seek the views of the following:

(a) the employer or employers that are covered by the agreement;

(ba) if the agreement is a single-enterprise agreement that covers one or more employees to whom a supported bargaining agreement or a single interest employer agreement applies - those employees;

[44] As will be apparent, s 191A applies only if the Commission has a concern that an agreement does not meet the better off overall test. The Council submitted that this jurisdictional requirement was met because the Agreement did not meet the better off overall test due to clause 9.5 of the Victorian Local Government Award 2014 requiring an employee be able to be represented by an external person during a dispute.

[45] This submission misunderstands the operation of s 191A. Section 191A applies if the Commission has a concern that the agreement does not meet the better off overall test set out in s 186(1)(d). The application of the section does not depend on whether, in fact, an enterprise agreement does not meet the better off overall test. It applies if the member of the Commission forms a state of mind, namely, a concern that the agreement does not meet the better off overall test. Furthermore, the better off overall test requires a global or overall comparison between the various terms and conditions of the agreement and the relevant modern award.[10] Merely comparing one term of an agreement with the equivalent term of the relevant modern award could not give rise to a concern that the agreement does not meet the better off overall test.

[46] In this matter, there is no evidence the Commissioner had a concern that the Agreement did not pass the better off overall test as a result of the content of clause 27. The Commissioner could not have formed that view on the basis of examining clause 27 alone. The Commissioner did communicate to the Council and other bargaining representatives, in the email dated 22 March 2024, that the model disputes term would be taken to be a part of this Agreement, should it be approved. However, this was not framed as an amendment to the Agreement for the purposes of s 191A. In any event, in circumstances in which the Commissioner does not appear to have formed the state of mind required by s 191A(1)(b), it would not have been open to the Commissioner to approve the Agreement with amendments under that section.

[47] For these reasons, the Commissioner erred in finding that the model term for dealing with disputes for enterprise agreements is taken to be a term of the Agreement. Ground 2 in the notice of appeal must be allowed. The alternative methods of upholding the decision suggested by the Council cannot be accepted.

[48] The parties disagreed about the consequences which flowed from the error. The ASU submitted that it is not necessary to quash the decision to approve the Agreement. It contended that the Full Bench should vary the approval decision under s 607(3)(a) of the Act to accept an appropriate undertaking to address any deficiencies identified in cluse 27 of the Agreement. It provided the terms of an undertaking it suggested would be appropriate. The Council submitted that, if the decision is not upheld on the basis that the Commissioner could have inserted the model disputes term into the Agreement under ss 190 or 191A, it is difficult to envisage any outcome other than that the approval decision must be quashed.

[49] There are at least two potential difficulties with the approach proposed by the ASU. The first difficulty is that s 190 of the Act permits the Commission to approve an agreement with undertakings if it has a concern the agreement does not meet the requirements in ss 186 or 187. It further requires that a process takes place to seek the views of bargaining representatives in accordance with s 190(4). It is not immediately apparent that it is open to the Full Bench to accept an undertaking as a variation to a first instance decision to approve an enterprise agreement. An undertaking must be accepted as part of the process of approving an enterprise agreement.

[50] The second, and more fundamental difficulty, is that the Agreement was never validly approved at all. Section 186(1) of the Act provides that the Commission must approve an enterprise agreement if the requirements in ss 186 and 187 are met. One of those requirements is that contained in s 186(6). The requirement in s 186(6) is that the Commission must "be satisfied" the agreement contains a term which complies with the requirements in that subsection. In such a case, the jurisdiction of the Commission to approve the relevant agreement is enlivened by it being satisfied that the agreement contains a term that meets the requirements of the subsection.

[51] The jurisdiction of the Commission to approve an agreement does not depend on whether the agreement in fact contains a term answering the description in s 186(6). It depends on the formation of a state of satisfaction by a member of the Commission that it does so. In Mid West Port Authority v Construction, Forestry, Maritime, Mining and Energy Union [2022] FCAFC 53; (2022) 289 FCR 88, for example, the Full Court explained (at [21]):

Returning to s 186, there are a number of other matters about which the FWC must be satisfied if an approval is required to be given under s 186(1). They include that the agreement passes the better off overall test, that the group of employees covered by the agreement is fairly chosen and that the agreement includes a term about settling disputes. These other matters could not be said to be jurisdictional in character. The authority of the FWC to approve the enterprise agreement does not depend upon the employees covered being fairly chosen or the agreement passing the better off overall test. Those aspects of the provision plainly entrust to the FWC a jurisdiction to form the required state of satisfaction as to those matters. The validity of an approval that was given after the FWC formed that state of satisfaction could not be challenged by inviting the Court to make its own findings of fact, but only by way of judicial review, as to matters such as whether the employees had been fairly chosen or the agreement passed the better off overall test.

[52] The validity of the approval of an enterprise agreement depends on the Commission forming a state of satisfaction that the requirements for approval have been met rather than that the requirements be met as a matter of objective fact.[11] Two things flow from that. The first is that a decision to approve an enterprise agreement will not be invalid simply because it might later be established that one of the approval requirements was actually not met. As Basten JA observed in D'Amore v Independent Commission Against Corruption [2013] NSWCA 187; (2013) 303 ALR 242 at [241]:

The language of "satisfaction" or "opinion" is a statutory device to ensure that the matters identified as preconditions to the exercise of power are indeed not jurisdictional facts, but facts which need only be established to the satisfaction of the decision-maker.

[53] The second is that the Commission must form the state of satisfaction that the requirements in ss 186 and 187 are met. The jurisdiction of a member of the Commission to approve an enterprise agreement does not depend on him or her being correct that the requirements for approval are met. It does, however, depend on a member of the Commission forming the opinion that each of the approval requirements are met.

[54] Paragraph [9] of the decision makes abundantly clear that the Commissioner was not satisfied that the Agreement contained a dispute resolution term which met the requirements of s.186(6) of the Act. In those circumstances, it was not open to the Commissioner to approve the Agreement unless his concern was addressed by an undertaking accepted in accordance with s 190. The Commissioner appears to have approved the Agreement not because he was satisfied it met the requirements for approval but as a result of the erroneous view that the model term for dealing with disputes was taken to be a term of the Agreement. Having not formed the state of satisfaction required by s 186(6), the Commissioner had no jurisdiction to approve the Agreement.

[55] The decision must be quashed and the application for the approval of the Agreement must be redetermined by the Commission. That course is necessary because of the defect in the decision to approve the Agreement. It is also the appropriate mechanism by which to provide certainty to the Council, its employees and their representatives going forward.

[56] The application for approval of the Agreement must now be redetermined. There are two potential concerns as to whether clause 27 of the Agreement satisfies the requirement in s 186(6)(b) that an agreement provides for representation of employees for the purposes of the disputes procedure. The concerns are that the clause only provides for representation by three identified unions[12] and that, expressly at least, the clause only provides for representation during "internal process" and does not do so expressly with respect to the "external process".[13]

[57] In the event that the Commission had concerns that clause 27 of the Agreements did not comply with the requirements of s 186(6) of the Act, the Council proffered an undertaking to address such a concern. The Council's preferred form of undertaking is as follows:

The model term about dealing with disputes set out in Schedule 6.1 of the Fair Work Regulations 2009 is taken to be a term of the into the Agreement in place of Clause 27.

[58] We do not accept that it is open to the Commission to accept an undertaking in that form. The effect of the undertaking would be to entirely displace clause 27 of the Agreement and replace it with the model term about dealing with disputes. That would, in our opinion, give rise to substantial changes to the Agreement for the purposes of s 190(3)(b).

[59] There are a number of significant differences between clause 27 and the model term. Clause 27.1 indicates that the clause applies to a wider range of disputes by extending to certain "other matters". Clause 27.2.3 requires the pre-dispute status quo be maintained until the dispute is withdrawn, an agreement is reached or the steps in the procedure have been exhausted. The model term does not require that the status quo be maintained pending determination of a dispute. Given these differences, it would not be open to the Commission to accept an undertaking in the terms preferred by the Council.

[60] If the Full Bench did not accept its preferred form of undertaking, the Council indicated it would give an undertaking in the following terms:

Employees will be permitted access to representation under clause 27 for every aspect of the disputes process

[61] The ASU agreed that such an undertaking addressed any concern as to the adequacy of the dispute resolution term. The Full Bench would be inclined to accept an undertaking in those terms. However, to ensure that the views of other bargaining representatives are sought and that the other requirements for approval are considered, the more convenient course is to refer the application for approval to a member of the Full Bench. The application for approval of the Agreement will be referred to Commissioner Matheson under s 607(3)(c) of the Act to be redetermined.

[62] For these reasons, the ASU should be allowed further time to lodge its notice of appeal, permission to appeal should be granted, the appeal allowed and the decision to approve the Agreement quashed.

[63] The Full Bench makes the following orders:

• (a) In accordance with Rule 128(2)(c) of the Fair Work Commission Rules 2024, the ASU be allowed until 4 September 2024 to file its notice of appeal in relation to the decision of the Commissioner in Matter No. AG2024/805;

• (b) Permission to appeal is granted;

• (c) The appeal is allowed;

• (d) The decision to approve the Darebin City Council Enterprise Agreement 2022-2025 in Matter No. AG2024/805 is quashed; and

• (e) The application for approval of the Darebin City Council Enterprise Agreement 2022-2025 is referred to Commissioner Matheson.

A Manos, counsel representing the City of Darebin Council, instructed by Maddocks Lawyers

[1] Darebin City Council Enterprise Agreement 2022-2025 [2024] FWCA 1160.

[2] Dundovich v P & O Ports (unreported, AIRC, FC, PR923358, 8 October 2002), per Ross VP, Hamilton DP and Eames C); SPC Ardmona Operations Ltd v Esam (2005) 141 IR 338 at [43] (SPC Ardmona).

[3] Jobs Australia v Eland [2014] FWCFB 44822 at [5] (Jobs Australia). See also in another context Hunter Valley Developments Pty Ltd v Cohen [1984] FCA 176; (1984) 3 FCR 344 at 348-349.

[4] SPC Ardmona at [42]; Jobs Australia at [5].

[5] By reference to Commonwealth v Verwayen (1990) 170 CLR 394 at 413 (Mason J) and 424 (Brennan J).

[6] Fair Work Act 2009 (Cth), s 604(2).

[7] Fair Work Act 2009 (Cth), ss 202(4) and 205(2). See Teekay Shipping (Australia) Pty Ltd v Auld [2020] FCAFC 206; (2020) 281 FCR 174 at [77]- [79] (Rares and Logan JJ) and [145] (Wigney J); Construction, Forestry and Maritime Employees Union v DP World Melbourne Limited T/A DP World Melbourne [2024] FWCFB 317 at [23] and [27].

[8] Fair Work Act 2009 (Cth), s 205A(2).

[9] Fair Work Regulations 2009 (Cth), clause 2.07.

[10] See, for example, Armacell Australia Pty Ltd v Wilmaridge Pty Ltd [2010] FWAFB 9985; (2010) 202 IR 38 at [41]; Construction, Forestry, Mining and Energy Union v Concrete Constructions (WA) Pty Ltd [2017] FWCFB 3912 at [8].

[11] See also Australian Industry Group v Fair Work Australia [2012] FCAFC 108; (2012) 205 FCR 339 at [43] (North, McKerracher and Reeves JJ); One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FCAFC 77; (2018) 262 FCR 527 at [103] (Bromberg, Katzmann and O'Callaghan JJ).

[12] Clause 27.4.2 of the Agreement (when read with the definition of "Union" in clause 3).

[13] See, for example, Retail and Fast Food Workers Union Inc v Hungry Jack's Australia Pty Ltd (t/as Hungry Jack's) [2020] FWCFB 1693; (2020) 296 IR 1 at [81].

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