[2018] FWC 3974 [Note: An appeal pursuant to s.604 (C2018/4075) was lodged against this decision.]

Fair Work Act 2009

s.238 - Scope order

"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)

Application for a scope order - jurisdiction - whether bargaining continued after enterprise agreement was made but not approved.

[1] Application has been made under section 238 of the Fair Work Act 2009 (Cth) (the Act) by the "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) for a scope order covering Broadspectrum (Australia) Pty Ltd in respect of its employees on defence materiel maintenance contracts in Victoria.

[2] The application is made in the context where bargaining for an enterprise agreement to replace the Transfield Services LMM Greenfields Enterprise Agreement 2013-2016 (the LMM Agreement) resulted in a vote to approve the Broadspectrum DMSS Enterprise Agreement 2017 (the DMSS Agreement). On 14 March 2018, I decided that the DMSS Agreement was incapable of approval under the Act because particular requirements in relation to the giving of a notice of employee representational rights (Notice) had not been met.[1]

[3] The AMWU says that because the DMSS Agreement was not approved, bargaining for the DMMS Agreement continues. It says the Commission can make a scope order to further the efficient conduct of bargaining in the circumstances.

[4] Broadspectrum says that the Commission cannot make a scope order because bargaining ended when the DMSS Agreement was made and it has not since agreed to bargaining, and nor is it compelled to bargain by a majority support determination.

[5] Both parties agreed that a scope order can only be made if bargaining has commenced for a proposed agreement under the Act. I proceed on that basis.

[6] Section 172 of the Act provides for the making of single enterprise agreements.

[7] Under section 182, an enterprise agreement is made if employees that will be covered by a proposed single-enterprise agreement have been asked to approve the agreement under subsection 181(1) and a majority of those employees who cast a valid vote approve it.

[8] Section 181 of the Act provides as follows:

"181 Employers may request employees to approve a proposed enterprise agreement

(1) An employer that will be covered by a proposed enterprise agreement may request the employees employed at the time who will be covered by the agreement to approve the agreement by voting for it.

(2) The request must not be made until at least 21 days after the day on which the last notice under subsection 173(1) (which deals with giving notice of employee representational rights) in relation to the agreement is given.

(3) Without limiting subsection (1), the employer may request that the employees vote by ballot or by an electronic method."

[9] In AMWU v Saunders International Ltd (Saunders)[2] a Full Bench of this Commission considered the effect of not complying with the 21 day period in section 181(2). It held as follows:

"The employer's request to employees for approval of the Agreement was not made at least 21 days after the day on which the last notice of representational rights was given. It follows that the Agreement was not properly "made" in accordance with s.182 of the Act, nor was it genuinely agreed to as defined in s.188. In those circumstances, the Commissioner had no jurisdiction to approve the Agreement, and erred in doing so." (footnotes omitted)

[10] A subsequent Full Bench in Uniline Australia Limited[3] considered the effect of issuing a Notice that did not meet other mandatory requirements in the Act on bargaining for an enterprise agreement. For the purpose of section 181(2) of the Act, the majority held that reference to the 'last notice' in section 181(2) was reference to the last 'valid' notice issued in accordance with the Act.

[11] The majority contemplated the possibility of the Commission being satisfied that the requirements in section 181(2) were met even though a Notice was issued more than 14 days after the notification time for the agreement, as occurred in this case. It went on to say:

"[113] In our view there is no substance in these submissions. Artificial though it may be, an employer that discovers it had issued an invalid Notice, would cease bargaining with its employees and would agree to bargain or initiate bargaining afresh thus triggering a notification time and a new period within which a valid Notice may be issued. There is nothing in the Act which compels a conclusion to the contrary, except perhaps in circumstances where a majority support determination has been made. Where an employer initially agreed to bargain for an agreement with a particular scope and later agreed to bargain for an agreement with a broader scope, that agreement to bargain in our view, triggers a notification time and a requirement thereafter to issue a Notice to relevant employees who are to be covered by the broader scope agreement. We do not need, for present purposes to decide whether, having regard to s.173(4) such a Notice needs to give to employees who received a Notice for the proposed agreement with a more limited scope.

[114] The Appellant also submitted that if an enterprise agreement was not approved by the Commission on the basis of failure to strictly comply with s.173(3), the parties would be at risk of having any subsequent proposed agreement rejected because the employer would have typically initiated or agreed to bargain months before and the timeframe in s.173(3) would be calculated from that earlier time.

[115] There is no substance to this submission. Once an application is made to the Commission, bargaining for the agreement has concluded albeit that the agreement might not be approved for a variety of reasons, including for example, that it does not pass the better off overall test. In that event, the employer could if it wished, initiate bargaining for a proposed agreement, the effect of which will be to trigger a notification time following which a valid Notice must be given."

[12] In AMIEU v Coles Supermarkets Australia Pty Ltd[4], Commissioner Platt observed as follows:

"[38] It appears to me that the Parliament intended that the making of an Agreement would conclude the bargaining process. That can be inferred from the considerable reliance on the existence of a proposed agreement as detailed above. If the making of an agreement did not stop the bargaining process, then parties would be able to (for example) take industrial action in support or opposition to the Commission approving the Agreement. Such an approach would be inconsistent with the objects in Part 2-4 of the Act.

[39] If the employer determines not to commence bargaining and thus enliven the notification time, a bargaining agent may pursue alternative methods to commence the notification time as provided in s.193(2)(b)-(d).

[40] I have considered if this construction would result in unintended consequences. I note that Part 2-4, Division 4 provides the Commission with a range of options to address deficiencies in enterprise agreements that have been made. I recognise that this construction of the Act will require parties to an agreement that has been made and which cannot be approved, start the entire bargaining process afresh. Fortunately, as a result of the Commission's powers to remedy deficient agreements, the cases where this occurs are few.

[41] In my view, the statutory construction which best achieves the purpose and objects of the Act is that at the point the bargaining processes ceases (by the making of an Agreement) the notification time under the Act must cease to have effect in relation to the specific proposed agreement."

[13] The Full Bench in Saunders was dealing with the limited circumstance where it was conceded that contrary to section 181(2), of the Act there was not "at least 21 days" from the day of the giving of the last notice of employee representational rights to the day on which the employees were requested to approve the agreement under appeal. I do not read its findings as a broader statement on the capacity to make enterprise agreements where any of the various requirements relating to the issue of a Notice are not met.

[14] The facts in this case are that Broadspectrum did issue valid Notices to employees in bargaining for the DMSS Agreement.[5] That meant that it could request employees to vote on the DMSS Agreement under section 181. No party contended that the 21 day period between issue of the last valid Notice and the date the request to approve the DMSS Agreement was made had not been met. I find that the DMSS Agreement was made in compliance with the requirements of sections 181 and 182 of the Act.

[15] I agree with the observations of Commissioner Platt in AMIEU v Coles Supermarkets Australia Limited. In accordance with the majority decision in Uniline, bargaining for the DMSS Agreement concluded when the DMSS Agreement was approved by a majority of employees and application was made to the Commission for its approval. The alternative construction would leave the parties bargaining aimlessly for an enterprise agreement that could never be approved. The result would be plainly inconsistent with the scheme of the Act.

[16] There is no evidence of any circumstance that has yet triggered a 'notification time' for the purposes of section 173(2) in the present case. The evidence, including correspondence between the parties since March 2018, is to the contrary. I am satisfied that a new round of bargaining for a proposed agreement to replace the LMM Agreement has not yet commenced. In that circumstance, it is hard to see how bargaining (which is not even occurring) could be made fairer or more efficient. It is a matter for the parties to once again agree to bargain, or if needs be, obtain a majority support determination to compel it. However, until that happens, there is no jurisdiction to make a scope order.

[17] The application is dismissed.

[18] I have decided not to decide the substantive merits of the proposed scope order sought by the AMWU and instead to make a recommendation to assist the parties in future bargaining. The recommendation will be published separately to this decision.

M Nicolaides for the "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)

B Avallone of counsel for Broadspectrum (Australia) Pty Ltd

[1] [2018] FWC 1516

[2] [2013] FWCFB 6557

[3] [2016] FWCFB 4969

[4] [2016] FWC 4870

[5] Broadspectrum (Australia) Pty Ltd [2018] FWC 1516

Printed by authority of the Commonwealth Government Printer