Fair Work Act 2009

s.185 - Enterprise agreement

Application for approval of the CME Resources Pty Ltd Single Enterprise Agreement 2023

• [1] CME Resources Pty Ltd (CME) applies for approval of the CME Resources Pty Ltd Single Enterprise Agreement 2023 (Agreement) under s 185 of the Fair Work Act 2009 (Act). The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) is a bargaining representative for the Agreement, which does not support the approval of the Agreement.

• [2] Notification time for the Agreement was before 6 June 2023, namely 17 March 2023. The Agreement was made after 6 June 2023, namely 17 November 2023.

• [3] Shortly stated, the CEPU contends that:

• CME did not comply with the pre-approval requirements in s 180(5) and so the Agreement was not genuinely agreed to by the relevant employees;
• some National Employment Standards (NES) terms are not included in the Agreement;
• the Agreement does not include a definition of 'shiftworker' for the purpose of the NES; and
• the Agreement contains some less beneficial terms when compared to the Electrical, Electronic and Communications Contracting Award 2020 (Award) - specifically, as to annual leave, casual loading and overtime - and says that the detriments were not explained to employees and result in the Agreement not passing the better off overall test (BOOT).

• [4] I deal with these below, commencing with the NES-related matters.

• [5] The CEPU's contention that the Agreement does not include a definition of 'shiftworker' for the purpose of the NES is incorrect.

• [6] Clause 3 of the Agreement relevantly provides the following:

"Shift worker, is defined for the purpose of the NES, as an employee regularly engaged to work in a system of consecutive shifts throughout the 24 hours of each of at least five (5) consecutive days without interruption (except during breakdown or meal breaks or due to unavoidable causes beyond the control of the employer) and who is regularly rostered to work those shifts."

• [7] The real issue is that this definition is different to and more onerous than that for which the Award provides. In the result, the definition does not meet the requirement in s 196 of the Act. Clause 21.1(b) of the Award provides that:

"For the purpose of the additional week of annual leave provided for in the NES , a shiftworker is a 7 day shiftworker who is regularly rostered to work on Sundays and public holidays."

• [8] CME has since proposed an undertaking as follows:

The definition of shiftworker for the purposes of receiving an extra week of annual leave provided for in the NES is as follows;

A shiftworker is a 7 day shiftworker who is regularly rostered to work on Sundays and public holidays."

• [9] The undertaking meets the concern and will be accepted if the Agreement meets the other approval requirements. Section 196 of the Act will therefore be satisfied.

• [10] To the extent there are deficiencies the NES-like entitlements for which the Agreement provides, these do not result in the exclusion of the more beneficial terms of the NES about which complaint is made. This is because clauses 8.3 and 8.4 of the Agreement provides:

"8.3. The Parties acknowledge that this Agreement shall represent the totality of all matters in the employment relationship with the only exceptions being the NES and the Company policies, which should be read in conjunction with this Agreement. The Company policies shall be distributed to the Employees under separate cover of this Agreement and may be amended by the Company from time to time.

8.4. This Agreement will be read and interpreted in conjunction with the National Employment Standards (NES). Where there is an inconsistency between this Agreement and the NES, and the NES provision provides a greater benefit, the NES provision will apply to the extent of the inconsistency."

• [11] Together, these provisions protect the NES entitlements as they operate in the Act and ensure that any inconsistency is cured in favour of the NES. Thus, where any Agreement term provides for a lesser benefit or does not include a particular benefit for which the NES provides, the NES benefit will apply.

• [12] CME has proposed undertakings to deal with the NES issues raised. If the Agreement otherwise meets the approval requirements, I propose to accept the undertakings to meet any lingering concerns that clauses 8.3 and 8.4 of the Agreement do not fully resolve the NES concerns. With those undertakings, there will be no room to doubt that the Agreement does not contravene s 55 of the Act and the approval requirement in s 186(2)(c) will be met.

• [13] Turning next to the BOOT issues - the Agreement provides rates of pay which are between 32.45% and 60.63% higher than the Award. In that context that the Agreement provides for a minimum overtime shift of 3 hours compared to 4 hours under the Award overtime shifts on Saturdays, Sundays or public holidays, that the casual loading is not all-purpose and the requirement for notice for taking annual leave, does not result in a failure to pass the BOOT. The annual leave provision will have no effect to the extent that it is inconsistent with the NES entitlement to annual leave, the rates of pay under the Agreement for a casual employee before loading is added is higher than the loaded all-purpose rate for which the Award provides, and the one-hour shortfall on overtime minimum for certain overtime shifts is more than compensated by the higher rate for every hour worked.

• [14] I am comfortably satisfied that the Agreement passes the BOOT.

• [15] Turning next to the issue whether the relevant employees genuinely agreed to the Agreement, the CEPU contends that such explanations as were given were not completely accurate. Moreover, it contends that an explanation of the effect of the terms of the Agreement by reference to the Award that otherwise applies to the employees was not given and the summary negotiation documents on which CME relies is not a complete explanation of all material terms of the Agreement. Conversely, CME contends that it took all reasonable steps to ensure the terms were adequately explained considering the circumstances of the employees. In this regard, it relies on various spreadsheets, which appear to summarise the various stages of the negotiations, the positions of some bargaining representatives in respect of particular terms and amendments sought, CME's responses and whether particular terms had been settled or agreed. It also contends that the spreadsheets and other information provided to employees and some toolbox meetings allowed employees to ask questions and facilitated discussion about the Agreement.

• [16] The Award currently applies to the employees covered by the Agreement. This is not a case where the Agreement will replace an existing enterprise agreement that regulates the terms and conditions of employment of the employees.

• [17] Section 180(5) of the Act required that, in relation to the Agreement, CME take all reasonable steps to ensure that the terms and effect of the Agreement are explained to the relevant employees, and that the explanation is provided in an appropriate manner, taking into account the particular circumstances and needs of the relevant employees. The evident purpose of the obligation is to enable the relevant employees to cast an informed vote: to know what it is they are being asked to agree to and to enable them to understand how wages and working conditions might be affected by voting in favour of the Agreement.[1]

• [18] Satisfaction as to CME's compliance with s 180(5) of the Act requires me to evaluate whether, in all the circumstances, CME took all reasonable steps to ensure that the terms of the Agreement, and the effect of those terms, were explained to the relevant employees in a manner appropriate, taking into account the particular circumstances and needs of the relevant employees. As s 188(1) made clear, CME's compliance with s 180(5) need only be established to the satisfaction of the decision-maker. Actual compliance with s 180(5) is not a jurisdictional fact. Its objective existence is not a precondition to the Commission's power to approve the Agreement.[2] But, whether there was compliance with s 180(5) on material sufficient to enable me to reach the requisite satisfaction is a condition precedent to the exercise of the power to approve the Agreement. The approval of an agreement, absent any evidence, or upon insufficient evidence, about an employer's compliance with s 180(5) results in the Agreement having been approved without authority and so there will be jurisdictional error.[3] Arriving at a state of satisfaction as to whether an employer has complied with the obligations in s 180(5) depends on the circumstances of the case. The focus of the enquiry involves considering and evaluating the steps taken by the employer to comply, and then assessing whether such steps taken were reasonable in the circumstances and were all the reasonable steps that must have been taken in the circumstances.[4]

• [19] That assessment necessarily also requires an examination of the content of the explanation given by the employer through the steps taken.[5] The extent to which an explanation involving a comparison between an agreement and an award covering relevant employees needs to be given was discussed in CFMMEU v Ditchfield Mining Services Pty Limited,[6] in which the Full Bench said:

"[71] Compliance with s.180(5) will not always require an employer to identify detriments in an agreement vis-à-vis the reference instrument, or for the employer to provide an analysis between the agreement and the relevant reference instrument, particularly in circumstances where an existing enterprise agreement, not a reference instrument, applies to the employees in their employment with the employer. The question of compliance with s.180(5) is to be judged against the circumstances that pertain at the time at which compliance was required. Section 57 of the Act makes clear that a modern award does not apply to an employee in relation to particular employment at a time when an enterprise agreement applies to the employee in relation to that employment. In the present case, when the explanations were given, no enterprise agreement applied to the employees and the Award did apply. An explanation of the effect of the terms of the Agreement vis-à-vis the Award was therefore capable of being relevant to the evaluative assessment of whether all reasonable steps were taken to explain the terms of the Agreement and the effect of those terms.

[72] The obligation under s.180(5) to take all reasonable steps to explain to relevant employees the terms of an enterprise agreement and the effect of those terms is an important function of the agreement-making scheme established by Part 2-4 of the Act. Its evident purpose, taking into account its role in assessing whether the employees who were asked to vote to approve an agreement genuinely agreed to the agreement, is to ensure that employees are as fully informed as practicable about the terms and effect of the terms of a proposed enterprise agreement before voting on whether to approve it. An employer's discharge of its obligation under s.180(5) is intended to enable employees to know what they are being asked to agree to, and to understand how their wages and working conditions might be affected by voting in favour of an agreement."[7] [Endnotes omitted]

• [20] CME says that its approach throughout was to ensure that relevant employees had access to the proposed Agreement and the latest list of negotiations, highlighting the positions of CME and the employee bargaining representatives in relation to terms in contention, whether different from the Award, either more beneficial or less. CME says it took care to address concerns and explain its positions by always providing relevant contact details for employee bargaining representatives and management, should any employee request a specific explanation of any term in the Agreement. CME contends that its employees were able to understand the Agreement and ask questions and that none of these employees fall into groups with special circumstances.

• [21] On 9 April 2024, I invited CME to file any additional submissions or material in support of its contention that the employees genuinely agreed to the Agreement as I was concerned on the material that CME had not complied with s 180(5) of the Act. Bargaining representatives were given the opportunity to file any further material in response. CME informed the Commission that it decided to not submit any further material and instead submitted that it complied with the requirements under s 180(5) based on its submission and materials it had earlier provided to the Commission. On 23 April 2024, the CEPU submitted that the Commission should not be satisfied that CME took all reasonable steps to ensure the terms of the Agreement, and the effect of the terms, were explained to the employees employed at the time of voting who would be covered by the Agreement. The CEPU submitted that CME's negotiation table filed with its application made no reference to the Award and did not describe the effect of the terms of the Agreement by reference to the effect of the Award applicable to the employees. Further, the CEPU claimed no such explanation was contained in other attachments filed with the CME's submissions dated 29 February 2024. The CEPU contended that there is no evidence before the Commission that CME took any steps to explain the effect of the terms of the Agreement and submitted that the CME's mere invitation for employees to ask questions or provide feedback about the Agreement did not constitute an explanation of the terms or their effect.

• [22] Ultimately, I conclude there is no evidence that any steps were taken to provide an explanation of the terms of the Agreement and their effect by reference to the Award. It simply did not happen. Nor is there any evidence that the effect of the terms of the Agreement simpliciter were explained to relevant employees. An object of the reasonable steps requirement in s 180(5) of the Act is to enable relevant employees to know what they are being asked to agree to and to understand how their wages and working conditions might be affected by voting in favour of an Agreement. In circumstances where the relevant employees' wages and conditions are regulated by the Award, a reasonable step that CME should have taken, but did not take, was to explain the terms of the Agreement by reference to the Award, including by explaining how the employees' conditions of employment prescribed by the Award will change when the Agreement operates. Moreover, CME was required to take reasonable steps to explain to relevant employees the effect of the terms of the Agreement upon which they were asked to vote. The material in the various spreadsheets which record the course of the negotiations about particular terms is not an explanation of the effect of each of the terms of the Agreement.

• [23] Consequently, I am not satisfied that CME complied with s 180(5) of the Act and so I am not satisfied that the approval requirement in s 186(2)(a) was met. CME proffered several undertakings directed to concerns about whether other approval requirements had been met. But for my conclusion above, I would have accepted those undertakings.

• [24] I have considered whether any undertaking might address my concern about whether the employees genuinely agreed to the Agreement and have concluded that no undertaking would meet the concern. Taking the step to explain the terms of the Agreement by reference to the Award, including by explaining how the employees' conditions of employment prescribed by the Award will change when the Agreement operates, was in the circumstances both a reasonable and requisite step. As was taking the step to explain to relevant employees the effect of the terms of the Agreement. CME's failure to take these steps before the Agreement was made cannot not be cured by any undertaking. Much less and can it be said that the failure to take these steps amounted to minor procedural or technical errors. The omissions were substantive, and they deprived the relevant employees of an explanation to which they were entitled before being asked to vote for the Agreement. As all the approval requirements have not been met, CME's approval application must be dismissed.

• [25] The application to approve the CME Resources Pty Ltd Single Enterprise Agreement 2023 is dismissed.

[1] One Key Workforce v Construction Forestry Maritime Mining and Energy Union [2018] FCAFC 77, (2018) 262 FCR 527 at [115]

[4] Construction, Forestry, Maritime, Mining and Energy Union v Karijini Rail Pty Ltd [2020] FWCFB 958 at [59]

[5] One Key Workforce v CFMMEU [2018] FCAFC 77, (2018) 262 FCR 527 at [112]- [113]

[6] [2019] FWCFB 4022

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