Enterprise agreements
64 In Bombardier (No 1) at [55]-[56] I noted that some of Bombardier's employees were employed under enterprise agreements and that it may have been necessary at the second hearing to consider issues such as the interaction between orders made under s 413 of the Act and the legislative character of enterprise agreements made under the Fair Work Act 2009 (Cth) (FWA). Bombardier made further submissions to me on that subject before and at the second hearing.
65 As the submissions noted, in Toyota Motor Corporation Australia Ltd v Marmara [2014] FCAFC 84; (2014) 222 FCR 152 at [89], the Full Court (Jessup, Tracey and Perram JJ) held that the legal efficacy of the terms of an enterprise agreement arises under statute and not the common law of contract. It may further be observed that the terms can be binding on employees who never agreed to them, even by way of voting to approve an enterprise agreement or a variation to it: see Toyota at [88]-[89]. The Full Court went so far as to say (also at [88]) that 'an enterprise agreement is an agreement in name only'. At [90] their Honours said, '[a]n enterprise agreement is a statutory artefact made by persons specifically empowered in that regard, and under conditions specifically set down, by the FW Act. It is enforceable under that Act, and not otherwise.' And at [97] they said that an enterprise agreement 'is a specific instrument made only under the detailed regime for which Pt 2-4 [of the FWA] provides and enforceable only as provided by the FW Act'. In Ridd v James Cook University [2021] HCA 32 at [11] the High Court cited Toyota at [89] in support of the proposition that the FWA gave statutory force to the terms of the relevant enterprise agreement and applied those terms to the relevant employer and all of its employees.
66 A question that arose was whether, in view of all that, orders under s 413(1) of the Act can be effective to transfer the rights and obligations of Bombardier as the present employer under the enterprise agreements to Alstom Transport as the new employer, and the rights and obligations of the employees. The intent of the Scheme is to effect those transfers while preserving all employees' rights, and a question also arose as to what form of orders were necessary to achieve that outcome.
67 The researches of counsel for Bombardier and my own researches revealed no prior judicial consideration of those questions. Bombardier referred to Re Stork ICM at [96]-[99] in which Lindgren J expressed the view that a scheme could transfer a right of insurance indemnity by operation of law and so not engage a '"no assignment of interest without consent" provision'. But that was a purely contractual right, so the case does not shed direct light on the issue.
68 Bombardier submitted, and I accepted, that the mere fact that the enterprise agreements have a legislative character does not mean that an order under s 413(1) of the Act will be ineffective to transfer the rights and obligations under them. It is routine to transfer rights and obligations having a statutory character under schemes of arrangement. The transfers of Commonwealth and State statutory petroleum interests considered in Chevron (No 2) at [71]-[75] are an example. Bombardier also gave the example, somewhat more removed from the present context, of the transmission by operation of law to an executor of a deceased's 'title' to a distribution under the Wool Realisation (Distribution of Profits) Act 1948 (Cth): National Trustees Executors and Agency Company of Australasia Ltd v Federal Commissioner of Taxation (Cain's Case) (1954) 91 CLR 540.
69 The issue arose not at that general level of principle but at the level of statutory interpretation. It arose because, as the passages from Toyota set out above indicate, the FWA contains detailed provisions for the making, approval and coming into effect of enterprise agreements and variations to enterprise agreements. It also makes specific provision for transfers of business: FWA Part 2-8. The issue in light of those detailed provisions is whether and how an order under the more generally applicable provisions of s 413 of the Act can have effect to transfer rights and obligations under enterprise agreements.
70 This was an unopposed application in which the Court did not have the benefit of a contradictor to argue the issue fully. It was also an application in which notice of the Scheme and the second hearing had been given to employees and unions representing them, and none decided to appear to oppose the orders or to make submissions about their terms. In those circumstances, it is appropriate to express the following views about the issue on the basis that they gave the Court sufficient confidence that the orders proposed by Bombardier would be efficacious, so as to permit them to be made. The liberty to apply already mentioned was extended to employees and unions, so that if that confidence proves to be misplaced, the situation can be remedied.
71 On that basis, I accepted Bombardier's submission that neither the detailed provisions in the FWA as to variation of an enterprise agreement, nor the detailed provisions as to transfers of businesses, evidence a legislative intention that those provisions set out the only ways that variations or transfers of enterprise agreements can occur. The two legislative regimes, being the regime for enterprise agreements under the FWA and the regime for corporate reorganisations by schemes of arrangement under Part 5.1 of the Act, both of which address the subject matter of corporate reorganisation, should be read to operate rationally, efficiently and justly together: see Trajkoski v Director of Public Prosecutions (WA) [2010] WASCA 119; (2010) 41 WAR 105 at [50]-[52]. The main provision that opens the regimes to a reading of that kind is s 53(3)(c) of the FWA.
72 Section 53(3)(c) appears in Chapter 2 Part 2-1 Division 2 Subdivision D of the FWA. It is that subdivision that gives legal efficacy to an enterprise agreement. It does so by providing in s 50 that a person must not contravene a term of an enterprise agreement. A contravention of s 50 can attract a civil penalty: see s 539. However other conditions need to be satisfied before a person can contravene an enterprise agreement or have an entitlement under it. The enterprise agreement must apply to the person: s 51. An enterprise agreement applies to an employee, employer or employee organisation only if it is 'in operation' and it 'covers' the employee, employer or organisation: s 52(1)(a) and s 52(1)(b). That concept of coverage is therefore central to the legal efficacy of the agreement.
73 An enterprise agreement covers an employee or employer if the agreement is expressed to cover them: s 53(1). The enterprise agreements that are relevant here are expressed to cover Bombardier and its employees at certain sites or on certain projects, but are not expressed to cover Alstom Transport or its employees. So after the Scheme is implemented, the coverage for which s 53(1) provides will be incomplete. (There is some confusion in an enterprise agreement known as the Dry Creek Rail Car Depot Enterprise Agreement 2021, because it names as the employer party 'Alstom Transportation [sic] Australia Pty Ltd', but the Fair Work Commission decision approving the agreement names Bombardier as the employer, so I will assume that is what was intended by the instrument.)
74 However s 53(3) allows for other ways in which coverage may apply. It provides:
Effect of provisions of this Act, FWC orders and court orders on coverage
(3) An enterprise agreement also covers an employee, employer or employee organisation if any of the following provides, or has the effect, that the agreement covers the employee, employer or organisation:
(a) a provision of this Act or of the Registered Organisations Act;
(b) an FWC order made under a provision of this Act;
(c) an order of a court.
75 The word 'court' is not defined in the FWA, so it must be taken to have its ordinary meaning and clearly to include the Federal Court. So by s 53(3)(c) the FWA, at least, contemplates that an order of this Court may provide for or have the effect that an enterprise agreement covers a given employer and/or employees. Section 53(4)(c) provides, in a similar way, for a court order to say when an employee, employer or employee organisation is not covered by an enterprise agreement.
76 The question of construction which then arises is: under what power can the Court make such an order? There are at least three possible sources of the power. The first is another provision or provisions of the FWA. However it does not appear that any other section of that Act provides for court orders about the coverage of enterprise agreements. The second is s 53(3)(c) itself. And the third is any other law that confers power, such as s 413 of the Act.
77 While it was not necessary to reach a concluded view, I am inclined to think that the third source is the one that the drafters of s 53(3)(c) should be taken to have had in mind. If they had intended to give all courts potentially wide ranging power to change the coverage of enterprise agreements, it would be surprising that they would have done so in a sub-paragraph that is expressed as stating the consequence of an order, rather than as conferring the power to make it, and which makes no provision for applications to be made, and states no criteria or guidelines for the exercise of the power.
78 Bombardier pointed to the fact that s 53(3)(b) only permits a Fair Work Commission order to affect coverage if it is an order 'made under a provision of this Act', while s 53(3)(c) does not contain such a limitation. Bombardier submitted that this indicates that in the case of a court order there is no need to find a source of power elsewhere in the FWA, so s 53(3)(c) is the source of such power. But it could equally be explicable as a recognition that unlike the Fair Work Commission, a court is not a creature of the FWA, and may well derive relevant powers from other sources. Bombardier submitted that the conferral of jurisdiction on federal courts in s 562 and s 567 gives reason to suppose that the legislature had in mind the possibility of curial supervision of changes in coverage of enterprise agreements. That is so, and is consistent with the evident contemplation of that possibility that is reflected in s 53(3)(c). But it does not follow that s 53(3)(c) confers the power to change coverage on the courts.
79 It appears to me that the more sensible reading of the sub-paragraph is that it reflects a recognition that other statutes or laws may confer a power to make orders that change the position of employers or employees who are subject to enterprise agreements, and that it can be expected that a court of law exercising those powers will do so with due regard to the objectives of fairness that are inherent in the enterprise bargaining regime (see FWA s 3(f)). Section 53(3)(c) thus provides a mechanism by which court orders concerning coverage can operate for the purposes of the central provisions of Chapter 2 Part 2-1 Division 2 Subdivision D of the FWA that give enterprise agreements their legal effect.
80 Providing for such a mechanism would be pointless if the regimes found elsewhere in the FWA for variation of enterprise agreements, and for transfers of businesses, detailed and prescriptive as they are, provide for the only ways in which the coverage of an enterprise agreement can be changed. Neither of those specific regimes contemplate that coverage can be changed by court order. To give s 53(3)(c) any effect, it must be taken to admit of the possibility that the power to alter coverage is found elsewhere or, conceivably, in s 53(3)(c) itself.
81 It was not necessary to reach a concluded view on which of those two possibilities is correct because, whichever the source of the power, in the circumstances the Court would exercise the power having regard to the same objectives of fairness, so as to minimise any risk that employees will suffer any prejudice as a result of the Scheme. That is how the Court has sought to exercise the power under s 413(1) of the Act in this case. The orders Bombardier ultimately proposed included an order that was designed specifically to engage s 53(3)(c) and s 53(4)(c) of the FWA, and I was satisfied that it was appropriate to make that order.
82 Bombardier also drew my attention to two categories of specific terms in the enterprise agreements. The first category of terms imposed consultation requirements. These were in essentially identical terms in each enterprise agreement. They are engaged if the employer 'has made a definite decision to introduce a major change to production, program, organisation, structure or technology in relation to its enterprise that is likely to have a significant effect on the employees': e.g. cl 9(1)(a) of the Bombardier Transportation Australia Pty Ltd (Dandenong) Enterprise Agreement 2020. There is express provision in cl 9(9) of the above agreement (for example), that a major change is likely to have a significant effect on employees if it results in, relevantly, a 'major change to the composition, operation or size of the employer's workforce or to the skills required of employees'.
83 Bombardier advanced several arguments as to why it has not been in breach of these provisions, even assuming that it has not consulted employees about the Scheme. For example, the terms are engaged by a major change in relation to the employer's enterprise, and there is reason to believe that each enterprise covered by the enterprise agreements will continue unchanged. But I did not consider that it was necessary or appropriate to comment or rule on those arguments. I note the approach that Barker J took in Barrick (Australia Pacific Exploration) Pty Limited v Barrick (PD) Australia Pty Limited, in the matter of Barrick (Australia Pacific Exploration) Pty Limited (No 2) [2017] FCA 1076 at [94] in connection with possible breaches of financial reporting requirements in the Act by the proponent company there.
84 Consistently with that approach, for the following reasons I did not consider that a possible breach of the consultation requirements in the employee agreements presented an impediment to the s 413(1) orders:
(a) if there has been any breach of these provisions, it has already occurred and that will not be changed by the implementation of the Scheme;
(b) Bombardier and Alstom Transport each confirmed satisfaction of all conditions precedent to the Scheme and so may be taken to be willing to assume any risks to which they are each exposed by reason of any breach of the consultation provisions;
(c) the employees and unions were notified of the Scheme in advance of its implementation, and were given an opportunity to appear at the second hearing, and none decided to do so, so the likelihood that anybody wishes to complain about any alleged breach of the consultation requirements is low;
(d) for the reasons given above and also outlined in Bombardier (No 1) at [56], it does not appear that the interests of employees are likely to be adversely affected by the Scheme, further lowering the likelihood that anyone will complain; and
(e) the orders require further notice to employees and unions of the approval of the Scheme and the proposed deregistration of Bombardier, so that in the unlikely event that anyone does wish to complain specifically about the conduct of that company, they have advance notice of the need to do so before it is deregistered.
85 The other category of relevant provisions in the enterprise agreements are those that make provision for the transfer or transmission of the employer's business or undertaking. These vary between the different enterprise agreements. It is not necessary to set out their terms or address them in detail. I was satisfied that none of them present any impediment to the implementation of the Scheme. To the contrary, some of them will help with that implementation, or may help to achieve its stated objectives, for example by making express provision for the preservation of employees' accrued entitlements and continuity of service.