Fair Work Act 2009

s.604 - Appeal of decisions

Appeal against decision [2023] FWCA 65 of Deputy President Dobson at Brisbane on 9 January 2023 in matter number AG2022/5280

[1] The Australian Workers' Union (AWU or union) has lodged an appeal, for which permission is required, from a decision of Deputy President Dobson on 9 January 2023 to approve an enterprise agreement known as the MOAG Enterprise Agreement 2022 (Agreement) under s 185 of the Fair Work Act 2009 (Act). The AWU contends that it is a person aggrieved for the purposes of s 604 and has standing to appeal the decision because it has members who are now employed by the respondent, Moag Pty Ltd (Moag or company), under the Agreement. It submits that permission to appeal should be granted in the public interest or otherwise and that the decision should be quashed. Its primary contentions are that the Deputy President erred in concluding that the Agreement passed the 'better off overall test' (BOOT) because she failed to apply the test against all of the relevant awards, and because the Agreement was not genuinely agreed to by employees. Pursuant to the Fair Work Commission Rules 2024, an appeal under s 604 must be brought within 21 days after the date of the decision that is appealed. The AWU submits that the Commission should extend time and seeks to adduce fresh evidence in the appeal in the form of a witness statement of its organiser, Ross Kumeroa.

[2] The background to this matter can be briefly summarised as follows. Moag is an entity within the Monadelphous group which provides maintenance contracting services. In October 2022, it issued a notice of employee representational rights (NERR) to employees in respect of a proposed enterprise agreement. Between October and December 2022, Moag met with the relevant employees and provided them with documents which compared the proposed agreement with the existing enterprise agreement, the MOAG Enterprise Agreement 2017 (2017 Agreement), and with the Building and Construction General On-site Award 2020 (Building Award). No unions were involved in bargaining for the Agreement. Moag's F17 declaration in support of its application under s 185 stated that on 13 December 2022, the four employees covered by the Agreement voted in favour of approving the Agreement. An application for approval of the Agreement was made on 15 December 2022 and on 9 January 2023 the Deputy President approved the Agreement subject to undertakings. The AWU did not become aware of the Agreement until mid-February 2024, at which time it obtained the approval materials from the Commission's file. The appeal was filed shortly thereafter, on 4 March 2024.

[3] We are satisfied that the AWU is a person aggrieved for the purpose of s 604 on the basis that it has members who are employed under the terms of the Agreement whose interests are affected by the decision under appeal. However, having examined the AWU's grounds of appeal, we have decided not to grant an extension of time.

Grounds 1 and 3: Relevant awards not identified; Agreement failed the BOOT

[4] By ground 1 of its notice of appeal, the AWU contended that the Deputy President erred in concluding that the only relevant modern award for the purposes of the BOOT was the Building Award, when in fact the BOOT should also have been assessed against the Hydrocarbons Industry (Upstream) Award 2020 (Hydrocarbons Award), the Electrical, Electronic and Communications Contracting Award 2020 (Electrical Award), and the Manufacturing and Associated Industries and Occupations Award 2020 (Manufacturing Award). In correspondence between chambers and the company, the Deputy President noted that the 2017 Agreement had been benchmarked for BOOT purposes against the Building Award, the Electrical Award and the Manufacturing Award. The company responded that the Agreement was not intended to apply to work covered by the Electrical and Manufacturing Awards, and the Deputy President evidently accepted this submission.

[5] The AWU contended that, because the Commission has no discretion in relation to which award or awards should be used for the purposes of the BOOT, it would be a sufficient condition for allowing the appeal that the Full Bench reached a different conclusion from the Deputy President about which awards were the relevant benchmarks. We reject this proposition. It is true that whether an award is a relevant award for the purposes of s 193 is a question of law to which there can only be one correct answer. If a member failed to identify a relevant award, this would amount to a failure to take into account a relevant consideration or an error of law and in principle constitute an appealable error. However, it would not necessarily follow from this that an appeal from the decision would be upheld, for the simple reason that the error might be inconsequential, in which case permission to appeal would ordinarily be refused because the appeal would lack utility. This would be the case if it was clear to the Full Bench that the agreement passed the BOOT despite the error.

[6] The AWU's third ground of appeal was that it was not open to the Deputy President to conclude that the Agreement passed the BOOT in light of the other three awards being relevant awards for BOOT purposes. It is necessary then to determine whether these were indeed relevant awards. The AWU's submissions on this matter focused on the wording of the coverage provision in clause 2 of the Agreement. This states that the Agreement covers all employees of the company employed in the classifications in Schedule 1 who are engaged to perform 'onshore construction work' within Australia. The AWU submitted that this gave the Agreement a very wide coverage. First, schedule 1 covers 38 classifications across 7 groups, including electrical trades, metal trades, crane operators, plumbing trades, technicians, painters, store persons and concreters, as well as more general classifications such as tradespersons and labourers. Further, the expression 'onshore construction work' was defined broadly in clause 3, without any geographical or other limitation that would confine coverage to work performed onshore. Clause 3 of the Agreement reads as follows:

"Onshore Construction Work" means on-site and off-site building, engineering and civil construction related-work, including ancillary duties or any other skills of the occupations covered by this Agreement in Schedule 1. This definition includes coverage of early works, works in support of tenders, off-site pre-project work or preparation for construction projects, depot duties, commissioning, decommissioning and associated works on or in connection with construction projects (whether that project has commenced or not).

[7] The AWU noted that the Agreement covers work extending beyond the scope of the Building Award. It covered off-site work as well as on-site work, whereas the Award was confined to the latter; it covered building, engineering and civil construction 'related-work', rather than work 'in' the on-site industry, as the Award provides; and it extended to 'ancillary duties or any other skills of the occupations covered by this Agreement ...'. The union submitted that classifications in the Building Award overlap with those in the Hydrocarbons, Electrical and Manufacturing Awards, and that the latter three awards only have different coverage because they apply to different industries; but because the definition of 'onshore construction work' in the Agreement was so wide, it too must be understood as covering the industries of these other awards. The AWU said that the witness statement of Mr Kumeroa indicated that employees of the company engaged under the Agreement were working on an extension to an electrical substation at an LNG plant on Barrow Island, which was work covered by the Hydrocarbons Award, as it entailed the modification or upgrading of facilities used in the production and processing of LNG (see clause 4.2(e) of the Hydrocarbons Award).

[8] Moag submitted that the coverage provision in clause 2 of the Agreement was intended to be limited, and was in fact limited, to employees engaged in work covered by the Building Award. It said that the crux of the AWU's contention that the coverage of the Agreement extended beyond that award rested on an incorrect interpretation of clause 2 which failed to take account of the industrial context, which was that the company had in place another enterprise agreement that applies to employees in the hydrocarbons sector, the MOAG Pty Ltd Enterprise Agreement 2021 (Hydrocarbons Agreement). The company said that it had advised the Deputy President on 29 December 2022 that the Agreement did not cover all of its employees but only those engaged to work in 'onshore construction work', and had told her that another agreement applied to employees engaged to work in or in connection with the hydrocarbons industry. As to the work that was described in the statement of Mr Kumeroa (the admission of which was opposed), the company said that this was ordinary building work covered by the Building Award, and that it was notorious that the dividing line between the Building Award and the Hydrocarbons Award was that the latter commenced to apply only upon the commissioning of a new structure or plant (see clause 4.2(e) of the Hydrocarbons Award, which covers the commissioning, servicing, maintaining, modification, upgrading or repairing of relevant plant and equipment).

[9] We agree with the company that the coverage clause in the Agreement is to be read and understood in its industrial context, and that it is relevant to take into account that another recently made enterprise agreement binding on the company explicitly applies to its employees who work in the hydrocarbons sector (see clause 4(b) of the Hydrocarbons Agreement). Of course, it is possible for two enterprise agreements covering the same employer to have overlapping coverage, but in this case, where the two agreements were made relatively close in time, it would be industrially unrealistic to ignore the fact of the other's existence. We also consider it to be clear on the face of the Agreement that it is intended to apply to onshore work. Clause 2(b) plainly says so. Although the definition of 'onshore' in clause 3 has omitted words that confine the coverage to onshore work, the fact that it is called 'onshore construction work' makes clear what is meant and is sufficient in this case to anchor the instrument's coverage to the terra firma. The Hydrocarbons Award is not confined to offshore work, and the fact that the Agreement's coverage extends to 'offsite work' might be read as contemplating work such as that described in clause 4.2(e) of the Hydrocarbons Award; however, in light of the existence and coverage of the Hydrocarbons Agreement, we consider the better view to be that the Agreement does not extend to such work. To the extent that the witness statement of Mr Kumeroa might indicate (for it is not clear) that employees of the company employed under the Agreement are performing work that is covered by the Hydrocarbons Award, the implication would be that those employees should be paid in accordance with the Hydrocarbons Agreement. But that is a compliance issue, not a matter impugning the decision under appeal.

[10] However, we consider that, because the definition of onshore work in clause 3 extends to off-site work, and therefore beyond the confines of the Building Award, it embraces work that is covered by the Manufacturing and Electrical Awards. Clause 4.4(a) of the Building Award states that it does not cover employers that are covered by the Manufacturing Award or the Electrical Award (by which it means that employees covered by those awards are not covered by the Building Award). In other words, these three awards have overlapping scope, and coverage is determined by industry, with the Building Award ceding ground to the Manufacturing and Electrical Award where those awards apply. We accept the company's submission that it had intended to narrow the scope of the 2017 Agreement, which had referred in its terms to the Manufacturing and Electrical Awards and was benchmarked also against those instruments for BOOT purposes. This object of narrowing the scope is clear enough from amendments made to the 2017 Agreement relating to the definition of continuous shift workers. This was also the representation that the company made to the Deputy President. However, as it transpired, the company did not succeed in narrowing the scope of the new agreement. The coverage clause of the Agreement, together with the definition of onshore construction work, remained the same as it was in the 2017 Agreement.

[11] The result is that the relevant awards for the purposes of assessing whether the Agreement passed the BOOT were the Building Award, the Electrical Award, and the Manufacturing Award, as was the case in relation to the 2017 Agreement. The Deputy President did not consider the latter two awards in assessing the BOOT. This is an error (one that was not the Deputy President's fault, as she was inadvertently misled). The error falls within the first category of House v The King and is an appealable error. But as we have said, not all such errors result in an appeal being upheld. In this case, the error was without consequence because the Agreement clearly passed the BOOT against both awards, and for that matter against the Hydrocarbons Award, had it been a relevant award.

[12] The grounds on which the AWU said the Agreement did not pass the BOOT were the following. First, it said that the Agreement narrowed the circumstances when employees would receive redundancy payments. Clause 13(d) of the Agreement excludes employees who are terminated for reasons other than project completion, whereas the awards do not contain this restriction. Secondly, it said that employees covered by the Hydrocarbons Award would not receive the special arrangements for cycle work under clauses 13.4 and 25.4 of the Hydrocarbons Award. Thirdly, it said that employees who would otherwise be covered by the Manufacturing Award would not receive the ship trials entitlements that are provided for in clause 19 of that award.

[13] However, it is clear to us that the rates of pay provided to employees under the Agreement are comfortably high enough to render all employees who would otherwise be covered by these awards, and all reasonably foreseeable employees, better off overall under the Agreement than under the award. We agree with the company that the rates of pay provided to employees under the Agreement, as at the 'test time', were more than 50% higher than those in the Hydrocarbons Award, and exceeded the rates in the Electrical and Manufacturing Awards by an even greater margin. Any detriments are clearly outweighed by the substantially more beneficial rates of pay provided to employees under the terms of the Agreement.

Ground 2: Agreement not genuinely agreed to by employees

[14] The AWU's second ground of appeal contended that the Deputy President erred in concluding that the Agreement was genuinely agreed to by employees. We note at the outset that the statement of principles made under s 188B of the Act is not relevant to this appeal as the Agreement was approved before the relevant amendments to the Act commenced. The AWU's argument on genuine agreement was essentially threefold.

[15] First, the AWU said that the employees who voted on the Agreement did not have a sufficient interest in the terms of the Agreement and were not representative of the employees who would be covered by it. It said that an enterprise agreement is genuinely agreed where the Commission is satisfied that there are no other reasonable grounds for believing that it has not been genuinely agreed to by the employees covered by it, and that, consistent with the decision of the Full Federal Court in One Key Workforce Pty Ltd v CFMEU [2018] FCAFC 77 (One Key) at [142], anything that could logically bear on the question of whether the agreement of the employees was genuine must be considered. One such matter was whether a small voting cohort had sufficient appreciation of the appropriateness of the terms and conditions proposed for disparate occupational classifications (One Key at [34]). The AWU said that the four employees who occupied four occupations out of the 39 listed in Schedule 1 could not have been familiar with the conditions of the other classifications, and had no stake in the bulk of the Agreement's terms such that the Agreement lacked authenticity (see KCL Industries Pty Ltd [2016] FWCFB 3048). It said that this was a matter that needed to be considered under s 188(1)(c) but was not considered, which amounted to error.

[16] Secondly, the AWU contended that the company had failed to comply with s 180(5) by taking all reasonable steps to explain the terms of the Agreement and the effect of those terms to employees because it did not explain the differences between the Agreement and the other three awards that it said were relevant awards. Further, the union contended that the company did not explain to employees the terms of the undertakings that it had provided to the Commission. It also said that the company failed to explain the interaction between the Agreement and the Hydrocarbons Agreement under s 58 of the Act, which, according to the AWU, was that because both agreements applied to the same employees, and the Hydrocarbons Agreement was made first, the Agreement would not apply to the employees until the Hydrocarbons Agreement passed its nominal expiry date in 2025.

[17] Thirdly, the AWU submitted that the explanation of the Agreement to employees did not address clause 13(d), discussed above, which represented a change as against the 2017 Agreement. The AWU said that the narrowing of the circumstances when employees would receive redundancy pay was a significant change, that the absence of any explanation of it was misleading, and that this was another reason for concluding that the Agreement was not genuinely agreed to by employees.

[18] We reject the first contention. In our opinion, although there was a small voting cohort, it was not the case that they had no stake in the Agreement, nor were they unrepresentative. A critical point of context was that the employees were employed under the predecessor agreement which was being rolled over with a significant wage increase. They had an obvious stake in the agreement, and they were representative of its coverage, in the sense that they were all of the employees employed at the time who were covered by the previous agreement and hence would be covered by the new one. There is no suggestion in this case of the Agreement being an artifice designed to serve as an instrumental Trojan horse, one in which a small few would vote into existence a framework soon to apply to a large and disparate group. The voting group was covered by an agreement that had existed for a number of years and was now voting on a new agreement with the same coverage.

[19] We also reject the submission that the company failed to comply with s 180(5). Again, a critical point of context was that the Agreement was a rollover that replaced the 2017 Agreement. The changes to the existing agreement were explained to employees. The differences between the Agreement on the one hand and the Electrical and Manufacturing Awards on the other were not explained but we do not consider this to be a significant matter. The explanation properly focused on the actual changes in employees' terms of employment. An explanation of the differences between a proposed agreement and relevant awards assumes a particular importance in relation to a first enterprise agreement, which has the practical effect, for employees covered by it, of excluding the actual application to their employment of the award safety net. That was not the case here.

[20] The AWU contended that, by not explaining to employees that the Hydrocarbons Award was a relevant award, they were misled about the industry that they were bargaining in. We have concluded that the Hydrocarbons Award was not a relevant award, but to the extent that the same argument might have been raised in respect of the other awards, we note that the company in fact told the employees ('mistakenly' in light of its intention, but in fact correctly) that there would be no change to the coverage of the new agreement. We reject the AWU's submission about the interaction between the Agreement and the Hydrocarbons Agreement. Section 58 had no application and required no explanation to employees, because the two agreements apply to different employees.

[21] To the extent that the decision in CFMMEU v Dawsons Maintenance Contractors Pty Ltd [2018] FWCFB 2992 suggested at [57] that employers are required to explain to employees under s 180(5) the terms of undertakings that they propose to give to the Commission, we respectfully disagree. Section 180(5) has no application to undertakings. It pertains to the period before the employees vote on the agreement. Employees are consulted in other ways in relation to undertakings, namely through the process of the Commission seeking the views of bargaining representatives on proposed undertakings before accepting them (see s 190(4)).

[22] Finally, we do not consider that the company's explanation of clause 13 of the Agreement was misleading. Although clause 13(d) states that employees who are terminated 'for reasons other than project completion' are not entitled to redundancy pay, whereas the predecessor provision applied to employees entitled to redundancy pay under the NES, this is to be read in the context of clause 13(b) of the Agreement, which states that employees' redundancy payment will accrue weekly and 'be paid out upon completion of the Employee's term on the project'. This indicates that it is the end of the employee's role on the project, rather than the end of the project itself, that triggers the payment, and given the nature of the sector, this is likely to cover the majority of the circumstances in which an employee covered by the Agreement would be made redundant. This was not a matter of such significance that it had to be explained to employees for the employer to comply with s 180(5).

[23] The AWU's fourth ground of appeal was that clause 13(d) of the Agreement excluded the National Employment Standards (NES) (s 119), rendering the Agreement incapable of approval (s 186(2)(c)). We reject this. In response to concerns raised by the Deputy President, the company provided an undertaking, which was accepted, that the Agreement is to be read and interpreted in conjunction with the NES, and that where there is an inconsistency between the Agreement and the NES, and the NES provides a greater benefit, the NES provision will apply to the extent of any inconsistency. This undertaking, which is taken to be a term of the Agreement, makes clear that clause 13(d) cannot be read as excluding the NES entitlements of employees to redundancy pay.

[24] Finally, during the hearing, the Full Bench noted that the NERR given to employees stated that the proposed enterprise agreement would apply to employees engaged to perform 'onshore construction work', and that on one view the Agreement extended beyond this because it covered both onsite and offsite construction work. However, we consider that the NERR's reference to construction work is best understood simply as a general descriptor that is broad enough to cover the work that falls within the scope of the Agreement. As we have said, we consider that the Agreement covers onshore work. And although it extends beyond the coverage of the Building Award, the work of the Agreement nevertheless is fairly described in lay terms as 'construction' work, as the NERR said would be the case. Further, any concern here about whether the NERR was narrower than the scope of the Agreement would have been amenable to waiver under s 188(2) and given that it appears that there were no employees employed at the time who did not receive a NERR, no employees could have suffered any disadvantage.

[25] We have concluded that the grounds of appeal do not establish any appealable error of consequence. It is true that the Electrical and Manufacturing Awards were relevant awards for BOOT purposes, but this error was inconsequential because in the present case it is mathematically clear that employees are financially better off under the Agreement than under both of those awards (and the Hydrocarbons Award, if it covered the work, which in our view it does not). There is no basis to apprehend that the Agreement was not genuinely agreed to by employees. The Agreement was a rollover of an existing agreement. The company had in place another enterprise agreement that applies to the hydrocarbons work. There was nothing exploitative or manipulative about the employees voting to approve a rollover of their existing agreement with substantial wage increases.

[26] In these circumstances, we decline to exercise our discretion to extend time for the appeal to be filed, and dismiss the appeal. Had the appeal been filed within time, we would have refused permission to appeal.

Printed by authority of the Commonwealth Government Printer