Communications, Electrical, Electronic, Energy, Information, Postal,... [2022] FWCFB 42 | Case summary

Communications, Electrical, Electronic, Energy, Information, Postal,... [2022] FWCFB 42 | Case summary | Zoe

[2] Although appeal ground 3 above appears to relate to the Deputy President's dismissal of the application for a bargaining order, the appellants in their written and oral submissions effectively abandoned any challenge to this aspect of the decision and confined their appeal to the Deputy President's dismissal of the applications for a scope order.

[3] The application before the Deputy President arose from the following non-contentious factual circumstances. Utilities Management is a company which operates in the electrical power industry in South Australia. It operates two businesses via subsidiary corporate entities. The first, SA Power Networks (SAPN), is the monopoly distributor of electricity in South Australia and operates subject to regulation by the Australian Energy Regulator, the Essential Services Commission of SA and the Office of the Technical Regulator. The second business, Enerven, engages in electrical, telecommunications and renewable energy infrastructure development and maintenance, and operates in a non-regulated contestable market. Utilities Management is the employing entity for both businesses. The Utilities Management Pty Ltd Enterprise Agreement 2018 (2018 Agreement) currently applies to employees of Utilities Management within the specified classifications in that agreement in both the SAPN and Enerven businesses. The classifications in the 2018 Agreement are not defined, but it may be inferred from the salary levels for the higher classifications that they encompass professional, supervisory and perhaps managerial personnel.

[4] The 2018 Agreement reached its nominal expiry date on 31 December 2020. On or about 5 June 2020, Utilities Management issued a Notice of Employee Representational Rights to 2131 of its employees pursuant to s 173 of the FW Act (first NERR). The first NERR relevantly stated that Utilities Management was giving notice that it was bargaining in relation to an enterprise agreement to be known as the "Utilities Management Pty Ltd Enterprise Agreement 2021" (proposed UM agreement) that was proposed to cover the same classes of employees as were covered by the 2018 Agreement - that is, employees of Utilities Management employed in both the SAPN and Enerven businesses. Subsequent bargaining for the proposed UM agreement, which involved Professionals Australia and the CEPU (among others) acting as bargaining representatives, proved to be difficult and protracted. Up to and including 7 October 2021, at least 18 bargaining meetings were held without any agreement being reached between Utilities Management and the bargaining representatives about the terms of the proposed UM agreement. Three versions of the proposed UM agreement were put to a vote by Utilities Management (in September and December 2020 and June 2021), and on each occasion they were rejected by employees by a significant majority. Protected industrial action was undertaken by employees, including members of Professionals Australia and the CEPU, on intermittent occasions in the period April-July 2021.

[5] On 16 September 2021, Utilities Management issued a further Notice of Employee Representational Rights to 409 employees working in its Enerven business (second NERR) and announced, at a bargaining meeting being held the same day and without prior notice, that it had formed the view that there should be two agreements to cover the SAPN and Enerven businesses respectively and that it had issued the second NERR. The second NERR relevantly stated that Utilities Management was giving notice that it was bargaining in relation to a proposed agreement known as the "Enerven Enterprise Agreement 2021" (proposed Enerven agreement) which was to cover "employees that are South Australia based who provide major infrastructure, energy and telecommunications work in the competitive market for Enerven Energy Infrastructure Pty Ltd covered by the classification structure in this agreement". The second NERR did not include, nor was it accompanied by, any draft agreement or other document which permitted identification of the classification structure referred to in the second NERR. On the same day, Utilities Management sent a letter to a number of employees confirming that they would not be covered by the proposed Enerven agreement since they were "currently providing a shared service to Enerven". Soon after the second NERR was issued, some 22 employees working in the Enerven business, some or all of whom had not been bargaining representatives in the previous bargaining, nominated themselves or were nominated as bargaining representatives. This included some senior managerial personnel such as the Commercial and Risk Manager, the Commercial and Contracts Manager, the Metering Services Manager, the Lead Construction Manager - Substations, the Operations Manager URD & Public Lighting, the Commissioning Manager and the Bid & Proposal Manager.

[6] The evidence before the Deputy President at the time of the hearing (which commenced on 18 November 2021) was that there had been four bargaining meetings concerning the proposed Enerven agreement (in which Professionals Australia and the CEPU, among others, had participated as bargaining representatives) since the second NERR was issued, and there had also been two further bargaining meetings for the proposed UM agreement (or, from Utilities Management's perspective, its now-proposed SAPN-only agreement).

[7] On 13 October 2021, the CEPU sent email correspondence to Utilities Management contending that Utilities Management was not complying with the good faith bargaining requirements in s 228 of the FW Act and requesting that it retract the second NERR, refrain from progressing with bargaining for the proposed Enerven agreement, and resume bargaining in good faith for the proposed UM agreement. In a reply email sent the same day, Utilities Management rejected these concerns and refused to retract the second NERR or cease bargaining for the proposed Enerven agreement.

[8] On 18 October 2021, the CEPU filed its application for a bargaining order pursuant to s 229 of the FW Act. In this application, the CEPU contended, in summary, that Utilities Management had failed to comply with the good faith bargaining requirement in s 228(1)(e) in that it had engaged in capricious or unfair conduct that undermined freedom of association or collective bargaining when it issued the second NERR and engaged in separate bargaining pursuant to it.

[9] On 19 October 2021, the CEPU sent a letter to Utilities Management stating its concerns about the progress of bargaining arising from the issuance of the second NERR. This letter included the following:

[15] Utilities Management said in its response that it would not retract the second NERR and stated it would continue to bargain in good faith.

[16] On 28 October 2021, the CEPU filed its application for a scope order. In its application, the CEPU contended, in summary, that:

bargaining was not proceeding efficiently because Utilities Management had issued two Notices of Employee Representational Rights (NERRs) with differing scopes;

the second NERR was not clear as to who it would cover, which had led to confusion over which agreement would cover which employees, who was able to nominate bargaining representatives, and whom the bargaining representatives were representing;

the prior 15 months of negotiations had been disregarded;

the scope of the second NERR was not fairly chosen;

the terms of employment of certain employees would depend on which agreement was negotiated quicker;

the issuing of the second NERR was causing a delay in the negotiations for the proposed UM agreement and was dividing the workforce;

employees could be transferred between the two agreements, which would alter their terms and conditions of employment;

the workers in SAPN and Enerven were not organisationally, operationally or geographically distinct and employees were shifted between the two, in some cases even in the same day;

carving out a section of the workforce so late in the negotiations was unfair and inefficient, and the making of the scope order sought would resolve these issues.

[17] The CEPU sought an order that the scope of any proposed agreement would cover "employees that are employed by Utilities Management Pty Ltd and whose classifications are covered by Appendix 1A and Appendix 1B of Attachment 2 of the Utilities Management Pty Ltd Enterprise Agreement 2018". The following day, Professionals Australia filed its application for a scope order, which was relevantly in the same terms as the CEPU's application.

[18] On 3 November 2021, the CEPU and the ASU gave notice of their intention to take protected industrial action, and their members took the foreshadowed action on 11 November 2021.

[32] After dealing with introductory matters, recording his findings about the credibility of witnesses, reproducing the parties' agreed statement of facts, summarising the parties' submissions and setting out the relevant provisions of the FW Act, the Deputy President turned to his consideration of the two scope order applications (which he considered conjointly since they were advanced on the same basis). The Deputy President quoted the summary of the principles governing the application of s 238 in AMWU v Thiess Pty Ltd[2] and then noted that there was no dispute that the scope of the proposed agreement being bargained for under the first NERR was fairly chosen, with the principal disagreement being the reasonableness of Utilities Management issuing the second NERR by which it signalled an intention to commence bargaining for a separate agreement covering the Enerven business only.[3]

[33] The Deputy President found that the "formal" requirements in subsections (1)-(3) of s 238 were satisfied[4] (in a manner that is not controversial in this appeal), and then dealt with the "discretionary" considerations in s 238(4).[5] In relation to s 238(4)(a), the Deputy President was satisfied that the CEPU and Professionals Australia, being the applicant bargaining representatives, had meet the good faith bargaining requirements and that this requirement was therefore satisfied. As to s 238(4)(b), the Deputy President first noted that it was not necessary to find that bargaining was not operating fairly or efficiently in order to conclude that making a scope order would promote the fair and efficient conduct of bargaining and said that although bargaining over the preceding 15 months for a replacement agreement had been "protracted, disagreeable, heavily disputed, disrupted and litigious", the scope of the proposed agreement had not been in issue until the second NERR.[6] The Deputy President found that making the scope order applied for would have utility "in that it provides guidance to the bargaining representatives that a replacement agreement covering the Utilities Management workforce as a whole would be a fairly chosen scope" and to "that limited extent and in the abstract may promote fair and efficient bargaining by allowing a re-focus on settling disputed future terms and conditions of employment".[7] The Deputy President then qualified this by saying:

[34] On the basis of the above reasoning, the Deputy President found that the requirement in s 238(4)(b) was not made out. In relation to s 238(4)(c), the Deputy President found that the group of employees who will be covered by the agreement proposed to be specified in the scope order was fairly chosen. Apart from the fact that this was not in contest, the Deputy President found that s 238(4)(c) was made out on the basis that:

all previous collective agreements had covered the entire workforce of Utilities Management and its pre-privatisation predecessors without being considered unfair;

bargaining had proceeded without contention as to scope for 15 months under the first NERR;

all employees were employed by a single employer notwithstanding that they work for two different businesses;

the group was in certain respects geographically, operationally and organisationally distinct;

the regulatory changes which required a clear functional division between SAPN and Enerven came into effect during the term of the 2018 Agreement and did not require that the SAPN and Enerven businesses have separate employing entities or industrial instruments; and

• an agreement with the Utilities Management workforce as a whole is a collective choice of relevant employees, as expressed through their union bargaining representatives.[8]

[35] The Deputy President then said that it did not follow from his finding concerning s 238(4)(c) that the narrower group proposed by Utilities Management in bargaining under the second NERR was not also fairly chosen, since it is well established that more than one proposed scope can be fairly chosen.[9] In light of the second NERR being the underpinning issue in dispute, the Deputy President considered whether the scope proposed by Utilities Management for the proposed Enerven Agreement was fairly chosen, since he considered this to be relevant to whether it was reasonable in the circumstances to make the order sought for the purpose of s 238(4)(d).[10] His consideration also extended to whether an agreement covering the SAPN business only would be fairly chosen, as he made clear in the following passage:

[44] The appellants contended that the Deputy President made three errors of law in reaching his conclusion that the criteria in s 238(4)(b) and (d) were not satisfied:

The Deputy President failed to consider the uncertainty of Utilities Management's preferred scope in reaching his conclusion that this preferred scope was fairly chosen, a consideration which informed his conclusion about s 238(4)(d).

The Deputy President took into account irrelevant considerations when assessing both s 238(4)(b) and (d).

The Deputy President failed to consider other important relevant considerations when assessing both s 238(4)(b) and (d), including the views of employees.

[45] In relation to the first of these contentions, the appellants submitted that the Deputy President had no regard to related important aspects of the evidence, including that:

the work SAPN assigns to Enerven (which constitutes about 10 per cent of all Enerven's work) is almost always precisely the same work that SAPN would otherwise do;

Utilities Management determines in its discretion which, and how much, work SAPN assigns to Enerven (save that this must occur via a competitive tender process); and

Utilities Management determines in its discretion whether an employee is assigned to work for SAPN or Enerven, with the employee's consent being immaterial.

[46] These facts, it was submitted, meant that the true scope of the proposed Enerven Agreement is merely Utilities Management's fiat about which entity an employee works for, and any "SAPN worker" may in future become an "Enerven worker" without any material change to their work. Utilities Management's proposed scope therefore had an arbitrary or subjective basis and was not fairly chosen. It was submitted that a scope that employees may be moved in or out of at the employer's discretion, without any non-cosmetic change to the nature of their work, is an artificial grouping, based on subjective criteria that undermines bargaining certainty and the object of collective bargaining.

[47] The appellants also submitted that part of a scope being "fairly chosen" is that it must indeed be chosen. Utilities Management's proposed scope failed to effectively account for the whole Enerven workforce. It was submitted that the proposed scope made it impossible to discern whether it would cover those employees, especially white-collar employees, who work simultaneously for Enerven and SAPN - the evidence about which the Deputy President had overlooked.

[48] The appellants' submissions in support of their second contention separately addressed the Deputy President's findings in relation to s 238(4)(b) and (d). In relation to s 238(4)(d), it was submitted that the four factors which caused the Deputy President to conclude that making the scope order sought would not be reasonable in all the circumstances in reality constituted a single consideration, namely that it is not appropriate to make a scope order where two contested scopes are both fairly chosen. This proposition, it was submitted, was misconceived and constituted an error of law, and the Deputy President's reliance on CFMEU v ResCo to support this proposition was misplaced because that decision concerned the Commission's power under s 186 to approve an enterprise agreement, which involves the Commission determining whether an agreement's scope is fairly chosen, not whether it is optimal. The appellants referred to the Full Bench decision in United Firefighters Union of Australia v Metropolitan Fire and Emergency Services Board[29] (UFUA v MFESB), in which an argument that scope orders should only be made when one side of the bargaining is pursuing an "unfair" scope was rejected, and to a number of other decisions in which scope orders have been made despite there being two fairly chosen competing proposals.

[49] In relation to s 238(4)(b), the appellants submitted that the Deputy President's view that a scope order should not be made where there are two fairly chosen scopes also infected his consideration under this provision, which was compounded by a further erroneous understanding of the consequences of a scope order. The Deputy President had incorrectly proceeded on the assumption that the making of a scope order would merely provide "guidance" as to whether the scope is fairly chosen, when in fact a scope order would for practical purposes resolve the controversy as to scope because:

[50] The appellants further submitted that, because the Deputy President erroneously found that the gain to fairness and efficiency occasioned by a scope order would be insubstantial because it only provided "guidance", he concluded this was outweighed by his erroneous concern that making a scope order would "tilt... the scales" and involve picking a winner between two fairly chosen scopes.

[51] As to its third contention of error, the appellants submitted that the Deputy President erred in that the views of employees, while taken into account under s 238(4)(c), were not considered in relation to s 238(4)(d). This consideration was treated as determinative under s 238(4)(d) in the Full Bench decision in Australian Workers' Union v BP Refinery (Kwinana) Pty Ltd[30] (AWU v Kwinana). The Deputy President had also, it was submitted, not taken into account as a factor in favour of a finding of reasonableness that the scope order merely sought to maintain the status quo of the last 20 years, in circumstances where maintenance of the status quo was affirmed as being the decisive consideration in favour of reasonableness in Tasmanian Water and Sewerage Corporation Pty Ltd v CEPU[31] (Tasmanian Water v CEPU). In relation to s 238(4)(b), the appellants submitted that the Deputy President erred by not taking into account the following relevant considerations:

The effect of the overlap between the SAPN and Enerven businesses on the efficiency of bargaining, which created practical inefficiencies and unfairness in negotiating - particularly as for many employees there was a lack of certainty as to which agreement would cover them and therefore uncertainty as to which agreement they should bargain for and who would ultimately be entitled to vote upon each agreement.

The prima facie practical efficiencies of negotiating one agreement rather than two were not considered. This was a decisive consideration in AWU v Kwinana.

The extensive bargaining which has already occurred, in circumstances where to start bargaining again with a blank canvas would cause the progress made to this point to be lost and thus affect the efficiency of bargaining.

[52] The appellants submitted that permission to appeal should be granted because the decision under appeal was disharmonious with the Full Bench decisions in UFUA v MFESB, AWU v Kwinana and Tasmanian Water v CEPU. They sought that the appeal should be upheld and that the scope order sought in the initiating applications be made.

[53] Utilities Management submitted that the decision under appeal involved the exercise of a significant level of discretion, requiring the Deputy President to weigh a number of factors based on the evidence and submissions, in circumstances where no one particular outcome was prescribed. As a result, it was submitted, the appellants are required to demonstrate error in the House v The King[32] sense. The appellants contend that the Deputy President erred in law by failing to consider matters or considering irrelevant matters but, it was submitted, these cannot amount to errors of law when s 238 does not say that consideration of these matters was either required or prohibited, and none of the appeal grounds alleges that the Deputy President failed to comply with the express requirements of s 238. Utilities Management submitted that in the absence of a statutory command to consider (or not consider) particular matters, it is for the decision-maker to determine what is relevant or not relevant to the decision-making process, and it is also up to the decision-maker to determine the weight to be given to matters considered relevant.

[54] In relation to ground 1 of the appeal, Utilities Management submitted that s 238 did not require the Deputy President to take into account the "uncertainty as to scope" occasioned by the similar nature of work performed by SAPN or Enerven workers and, accordingly, the appeal ground must fail for this reason. In any event, it was submitted, the Deputy President addressed the issue raised concerning the alleged uncertainty and made findings about this issue. To the extent that the Deputy President found at paragraph [205] of the decision that there had initially been confusion about coverage, this had occurred only "in the early weeks", which was consistent with the evidence given by Mr Scott McFarlane (an organiser for the ASU) that there was no current confusion.

[55] As to ground 2, it was submitted that it was framed as a challenge to the Deputy President's exercise of the discretion in considering what was reasonable and, in circumstances where the appellants do not submit that there was any error in the exercise of the discretion, the ground must fail. As to ground 3, Utilities Management submitted that it was framed by reference to the Deputy President's refusal to make a bargaining order and, because the appellants' submissions make clear that they do not challenge the Deputy President's conclusion as to the bargaining order nor any related finding of fact, the ground cannot be maintained.

[56] Utilities Management submitted, in relation to appeal ground 4, that it was manifestly incorrect that the Deputy President had failed to consider the views of the employees, as demonstrated in paragraph [121] of the decision, and that, in any case, this was not a consideration which the Deputy President was bound to take into account.

[57] In relation to the appellants' three contentions of error in their submissions, Utilities Management submitted:

It was not correct that any employee or employer could elect not to be covered by either the proposed SAPN agreement or the proposed Enerven agreement. Notwithstanding the appellants' submissions concerning "arbitrary or subjective" scopes, they do not challenge the Deputy President's findings on this ground nor any finding about organisational, operational, and geographical distinction or the objectively rational approach taken by the employer in choosing this scope.

The appellants had not explained why the fact that the two competing scopes were both fairly chosen was an irrelevant consideration in the sense of being prohibited. The presumption that words in different places in a statute should bear the same meaning was not displaced in this case in respect of the expression "fairly chosen", and accordingly it should be treated as bearing the same meaning in s 238 as in s 186, making the decision in CFMEU v ResCo applicable. The Deputy President's characterisation of a scope order as providing "guidance" was to be understood as referring to the fact that it would be of little utility in resolving the disputatious bargaining that had occurred prior to the second NERR and, to that extent, there was no error in his conclusion that a scope order would only promote fair and efficient bargaining to a "limited extent and in the abstract".

There was no statutory basis for the views of employees to be elevated to the extent of being determinative. The decisions in UFUA v MFESB, AWU v Kwinana and Tasmanian Water v CEPU turned on their own particular facts and circumstances and involved no statement of law in this respect. The appellants' submissions that the Deputy President had failed to have regard to the practical difficulties arising from SAPN and Enerven workers performing the same duties, the practical efficiencies of negotiating one agreement rather than two, and the bargaining which had already occurred, were incorrect since all of these matters had been considered. Utilities Management submitted that:

[61] Before we directly address the appellants' grounds of appeal and contentions of error, we propose to make some general observations about s 238 and the purpose and function of scope orders in the scheme for enterprise agreements established by Pt 2-4 of the FW Act. It may be accepted consistent with the submissions made by Utilities Management that, subject to the satisfaction of the prerequisites contained in subsections (1)-(3) of s 238, the power conferred in s 238(4) to make a scope order involves the exercise of a discretion. There are (at least potentially) two decision-making steps required under s 238(4). The first is that the Commission must be "satisfied" as to each of the matters in paragraphs (a)-(d). Because the judgment to be made about each of these matters "involves a degree of subjectivity" and there is "some latitude as to the choice of decision to be made",[33] it is discretionary in nature. The exercise of the discretion in respect of paragraph (c) of s 238(4) is guided by the requirement in s 238(4A) to take into account the matter there specified. The second decision-making step required, dependent on satisfaction as to all of the four matters in paragraphs (a)-(d) of s 238(4), is to determine whether the overall discretion (signified by the word "may" in the chapeau) should be exercised in favour of making a scope order.

[62] Apart from s 238(4A), s 238 does not prescribe the relevant matters to be taken into account in the discretionary decision-making process just described; accordingly such matters, and any limitations upon them, are to be inferred from the subject matter, scope and purpose of the legislative scheme.[34] These may be gleaned from the text of the relevant provisions and the relevant objects of the legislation. Additionally, in the context of the FW Act specifically, s 578(a) requires that the Commission take into account the objects of the FW Act or of the relevant part of the FW Act in performing its functions and exercising its powers.

[63] We have earlier set out the relevant objects of the FW Act. That part of the overall object of the FW Act in s 3(f), insofar as it refers to the bargaining process, emphasises collective bargaining at the enterprise level underpinned by simple good faith bargaining obligations, and the specific object in s 171 likewise emphasises collective good faith bargaining. Section 171(b) addresses the role of the Commission in bargaining, being to facilitate good faith bargaining. It may be inferred from the objects, therefore, that the facilitation of good faith collective bargaining is a necessarily relevant consideration in the exercise of the Commission's functions and powers under s 238.

[64] The specific purpose of s 238 may be gleaned from the prescription in subsection (1) as to the circumstances in which an application for a scope order may be made. An application may be made if, by reason of an issue about which employees should appropriately be covered by a proposed agreement, a bargaining representative has concerns that bargaining is not proceeding "efficiently or fairly". The use of the disjunctive "or" indicates that the concern may be about either efficiency or fairness and not necessarily both. Subsection (1) therefore points to the purpose of scope orders as constituting the means by which such concerns, if substantiated, may be resolved. In other words, scope orders are the remedy for bargaining that has become inefficient or unfair because of a scope issue. This purpose is reinforced by subsection (3), which requires as a prerequisite for a valid application that the bargaining representative has given notice of the concerns to the other relevant bargaining representatives and has not received what is considered to be an appropriate response within a reasonable time. This points to the centrality of the applicant's concerns as a consideration under s 238(4). As the Full Bench put it in UFUA v MFESB:

[68] It may be inferred that the choice of coverage which must be fair is the choice of the applicant bargaining representative. In this respect, the "fairly chosen" concept in s 238(4)(c) is distinct from the "fairly chosen" agreement approval requirement in s 186(3), which is concerned with the choice of the employer reflected in the coverage terms of the agreement which the employer asks relevant employees to approve.[38]

[69] No part of s 238 requires consideration of whether any proposal for coverage of an agreement other than that contained in the scope order sought by the applicant is "fairly chosen". In a number of cases, this has been treated as a relevant consideration, either under paragraph (b) or (d) of s 238(4) or in relation to the exercise of the overall discretion. However, such a consideration of any competing coverage proposal necessarily proceeds in the abstract, since its consideration is tethered to any provision of the FW Act in the same way that s 238(4A) guides the consideration required under s 238(4)(c) (or s 186(3A) guides the consideration required by s 186(3)). The relevance and parameters of any such consideration will therefore be a matter for the member considering the scope order application. It is certainly not a matter required to be given determinative weight and, in a number of decisions, scope orders have been issued even where competing proposals concerning the scope of coverage of a proposed agreement have both been found to be fairly chosen.[39]

[70] Paragraph (d) of s 238(4) requires satisfaction that the making of the scope order sought is "reasonable in all the circumstances". The relevant meaning of "reasonable" is "agreeable to reason or sound judgement".[40] The provision clearly requires the exercise of a broad judgment, subject only to the requirement to take into account all the relevant circumstances. It may be observed however that the requirement in s 238(4)(d) should not be conflated with the overall discretion at the second step of the decision-making process, and is concerned with the identification of a sound rational basis for the making of the scope order sought rather than the more general question as to whether a scope order should be made.

[71] We have earlier referred to the facilitation of good faith collective bargaining and the concerns of the applicant bargaining representative as being necessarily relevant considerations under s 238(4). In respect of the former consideration, it has been held that it infers that the collective choice of employees as to the scope of coverage for the purpose of bargaining is a matter of significant weight. In UFUA v MFESB, the Full Bench said:

[73] It is sufficient to say for present purposes that the required consideration under s 238 of the need to facilitate good faith collective bargaining will necessitate giving significant weight to the collective views of employees as to their preferred coverage scope.

[74] The need to give central consideration to the applicant bargaining representative's concerns will necessarily involve an assessment of the validity of those concerns - that is, whether the identified scope issue exists and whether it is causing bargaining not to proceed efficiently or fairly. Where the concerns are assessed to be valid, that will be a powerful factor weighing in favour of the making of a scope order. In particular, if bargaining has reached an impasse because of competing proposals as to the scope of coverage of the proposed agreement, a scope order is likely to be necessary in order to "break that impasse".[43]

[75] It will also be relevant, in considering whether to exercise the discretion to make a scope order, to consider the consequences that will flow from the making of such an order. A scope order is not enforceable under the FW Act and does not itself impose any binding obligation on any bargaining representative. Such an order will have three potential direct consequences under Pt 2-4 of the FW Act:

The coming into operation of the order will give rise to a notification time in relation to a proposed agreement within the meaning of s 173(2)(c), and thus enliven the obligations upon the employer under s 173(1) and (3) to issue a NERR within 14 days (unless such a notice has already been given a reasonable time beforehand). It may be presumed, although it is nowhere stated, that the description of the coverage of the proposed agreement in the NERR must align with the terms of the scope order. This consequence will be of significance if the employer has previously refused to bargain for a proposed agreement with the scope of coverage identified in the scope order. Once the NERR is issued, the good faith bargaining requirements in s 228 will be applicable.

The prerequisite for the making of a bargaining order in s 230(2) will be satisfied (see paragraph (c)). However, this will have less significance if the employer has already agreed to or initiated bargaining for an agreement with the same scope as that specified in the scope order, since the prerequisite in s 230(2) will already be satisfied (see paragraph (a)).

If an agreement is ultimately made with a scope different to that specified in the scope order, then the agreement will be incapable of satisfying the approval requirement in s 187(2) unless the Commission is satisfied that approving the agreement would not be inconsistent with or undermine good faith bargaining by one or more bargaining representatives for a proposed agreement with the coverage specified in the scope order. The Commission might not be so satisfied if, for example, the employer had refused to bargain in respect of an agreement with the coverage specified in the scope order and had made the agreement in disregard of any such bargaining.

[76] The making of a scope order may also, indirectly, facilitate the making of a bargaining order if a bargaining representative does not meet the good faith bargaining requirements in respect of a proposed agreement with the coverage specified in the scope order. It is not possible to exhaustively describe the circumstances in which this might, in practice occur but, as an example, if the employer refused to meet and bargain with bargaining representatives for an agreement with the specified scope, that would be likely to constitute non-compliance with the good faith bargaining requirements in s 228(1)(a), (c), (d) and/or (f). In that circumstance, a bargaining order might require the employer to take certain steps, or cease to do certain things, in order to achieve compliance with the requirements of s 228. Such an order is enforceable.

[77] However, a scope order does not, by itself, require the employer (or any bargaining representative) to make an agreement with the coverage specified in the scope order, or prohibit the making of an agreement with a different scope. Subject to the bargaining representatives complying with the good faith bargaining requirements, a scope order is not determinative of the scope of coverage of the agreement which may be bargained for.

[78] Section 238(7) authorises the Commission to make further orders consequential upon the making of a scope order. This may include (in paragraph (a)) amending any existing bargaining orders and (in paragraph (b)) making or varying other such orders, determinations or other instruments made by the Commission, or take such other actions, as the Commission considers appropriate. Paragraph (b) is expressed in very broad terms, but its operation must be understood as limited in at least two respects. First, because paragraph (a) deals specifically with bargaining orders, and allows only for the amendment of an existing bargaining order, we do not consider that paragraph (b) can be read as authorising the making of a bargaining order. The provision is not to be read an extending the power to make a bargaining order beyond the circumstances prescribed by s 230. Second, we do not consider that the capacity to take "such other actions" as considered appropriate can be read in an unconfined way; to give it a sensible scope of operation, it must, we consider, be read as referring to actions that the Commission is otherwise empowered to take under the FW Act.

[81] It is clear, as the appellants submitted, that the Deputy President's findings concerning the fairness of Utilities Management's coverage position were fundamental to his conclusion under s 238(4)(d) that it would not be reasonable in all the circumstances to make the scope order sought by the appellants. Of the four factors which caused the Deputy President to reach this conclusion, all were premised on those findings, as was the Deputy President's statement that the proper role of the Commission under s 238 is "not to pick a winner between two fairly chosen scopes".[44] However, the Deputy President's "fairly chosen" findings were also central to his conclusion under s 238(4)(b) that he was not satisfied that a scope order would promote fair and efficient bargaining. This is made most clear in paragraph [109] of the decision, in which the Deputy President adopted his reasons in respect of his s 238(4)(d) conclusion as reasons for his s 238(4)(b) conclusion.

[82] The Deputy President's "fairly chosen" findings were twofold. His principal finding was that the coverage of Utilities Management's proposed Enerven agreement would, if made, be fairly chosen. However, he also made a further finding, apparently as a corollary of this principal finding, that a "replacement agreement" that covered the SAPN business only would have a fairly chosen scope. This is made apparent in paragraphs [124] and [215] of the decision, which have earlier been set out.

[83] We consider that both of these findings were based upon an incorrect factual premise. In respect of the principal finding, the Deputy President appears to have proceeded on the basis that the second NERR had specified the coverage for the proposed Enerven agreement as applying to employees in the Enerven business generally and that this was the "choice" of coverage which he assessed to be fair. This is simply not the case. We have earlier set out the description of the coverage of the proposed Enerven Agreement in the second NERR. There are three criteria in that description of the employees to be covered:

they must be "South Australia based";

they must "provide major infrastructure, energy and telecommunications work in the competitive market for Enerven Energy Infrastructure Pty Ltd"; and

they must be "covered by the classification structure in this agreement".

[84] As to the first criterion of coverage, the evidence suggested, but did not make clear, that not all employees working in the Enerven business were South Australia-based. Mr Richard Amato, Executive General Manager of Enerven, gave evidence that "[m]ost of the work undertaken by Enerven is based in South Australia but opportunities for expansion into other jurisdictions are increasing". However, the question of the exclusion of any non-South Australia-based employees in the Enerven business was not considered by the Deputy President in his assessment of the fairness of choice of coverage.

[85] The second criterion is expressed in a way which is conducive of uncertainty as to its meaning and practical application. On its face, it encompasses any employee of Utilities Management who performs any work of a particular character for the corporate entity through which the Enerven business is operated. The evidence is clear, and the Deputy President found, that (1) apart from a core group of employees dedicated to the business, Enerven sources labour from the SAPN business for temporary periods as short as part of a day, and (2) there is a group of employees engaged in "back of house" white-collar support functions such as payroll, information technology, training, legal and senior governance who perform work for both businesses. Utilities Management has not made clear whether or how the proposed Enerven agreement would cover employees in the first category. In its appeal submissions, as earlier stated, Utilities Management cited the evidence of Mr McFarlane concerning whether there was "confusion" about the coverage of the proposed Enerven agreement. It is instructive to examine this evidence. The first question and answer referred to was as follows:

[86] It is clear from the above passagIn regards to the second category of white-collar support function employees, a number of them as earlier stated were sent an email "confirming" that they would not be covered by the proposed Enerven Agreement because they were providing a shared service to Enerven. It is not clear why this excluded them from the description of coverage in the second NERR, unless it was because the white-collar nature of their work meant that they were not providing "major infrastructure, energy and telecommunications work in the competitive market". However, at the same time, it is apparent that senior managers in Enerven have been sent the second NERR because they have nominated themselves as bargaining representatives. One of these, the Commercial and Risk Manager, simultaneously nominated himself as his own employee bargaining representative and offered to be a representative of the Enerven business in the bargaining.

[88] For the reasons outlined above, it is clear that in respect of "crossover" employees there has been no coherent choice of coverage capable of rational assessment as to its fairness. The proposition that the coverage of the proposed Enerven agreement is defined and is ascertainable by who the second NERR happened to be sent to is untenable, since this appears to be the result of an arbitrary decision to send the second NERR to persons based on their email address. The second criterion of coverage in the second NERR does not reflect any actual choice that has been made in relation to "crossover" employees. We therefore accept the appellants' submissions in this respect.

[89] As to the third criterion of coverage, as previously stated, no draft agreement or classification structure accompanied the second NERR, and there is no evidence of this being provided to date. It is therefore unknowable who satisfies the third criterion. As earlier outlined, the notice of concerns which the CEPU and Professionals Australia sent in order to satisfy the scope order prerequisite in s 238(3)(a) referred to the fact that no classification structure had been identified or provided, and stated that one of the concerns was that there was confusion over "[w]hat the scope of the Enerven Proposed Agreement actually is, given the lack of provision of a classification structure". As stated above, Utilities Management's response, apart from asserting that the scope of the proposed Enerven agreement was clearly stated in the second NERR, was that "the classification structure of this agreement will be the subject of negotiation between the parties", that this was "a matter for bargaining", and that Utilities Management was "unaware of [any] obligation to provide a classification structure at issuance of a NERR or prior to the commencement of the bargaining process".

[90] The failure to specify the classification structure in or in association with the second NERR renders it defective. Because it is not knowable from the notice who will be covered by the proposed Enerven agreement, it does not describe that coverage as required by Schedule 2.1 of the FW Regulations and is thus non-compliant with the content requirement in s 174(1A) of the FW Act.[47] In the current context, this makes unavailable a finding that the scope of the proposed Enerven agreement is "fairly chosen" because (as the appellants submitted) it has not yet been chosen at all, but is apparently to be determined at some later stage arising from negotiations. The fairness or otherwise of the scope is clearly incapable of assessment at a stage when that scope is yet to be decided. If it were to be ultimately determined, for example, that the classifications in the proposed Enerven agreement would cover only a subset of Enerven employees, that would necessarily raise a range of "fairly chosen" considerations which the Deputy President did not and could not consider in the decision. The factually incorrect assumption made by the Deputy President concerning the choice of coverage for the proposed Enerven agreement by itself necessarily vitiates his principal "fairly chosen" finding.

[91] For the reasons above, we consider that the Deputy President's principal "fairly chosen" finding proceeded on a factually incorrect apprehension that a choice of coverage of the proposed Enerven agreement has been made. In fact, the choice has effectively not been made, since there is no determinable boundary of coverage about which an assessment can reasonably be made. One thing, however, is clear: the second NERR was not provided to all employees working in the Enerven business. Mr Amato's evidence was that there were about 450 employees working in the business, but it was an agreed fact that the second NERR was given only to some 409 employees. No rational basis for this connected with a choice of the coverage is discernible and, in any event, the Deputy President had no regard in his "fairly chosen" consideration to the fact that the proposed Enerven agreement was apparently intended to cover some but not all employees in that business.

[92] As earlier stated, the fact that the second NERR did not specify the classification structure, which was a critical criterion of the scope of coverage described, was directly raised by the CEPU and Professionals Australia in their concerns notice and thus was a matter requiring consideration by the Deputy President. The appellants did not directly raise this as a ground of error in their appeal, although they did advance the more general contention that the coverage of the proposed Enerven agreement had not, in effect, been chosen at all. For the reasons stated, we consider that the Deputy President erred in finding that there had been a choice of coverage which could be assessed as fair, and we would reach that conclusion on the basis of the failure to identify a coherent choice of coverage in respect of "crossover" employees alone even if the issue concerning the failure to specify the classification structure is set aside.

[93] The Deputy President's secondary finding that a "SAPN-only" agreement would also have a coverage that was fairly chosen was also incorrectly premised on the proposition that a choice of coverage for such an agreement which is clearly relatable to SAPN employees has been made. No NERR for such an agreement has been issued, so in the sense contemplated by the FW Act it is difficult to say that there is a proposed "SAPN-only" agreement at all. Utilities Management appear simply to have assumed, now that it has issued the second NERR in respect of the proposed Enerven agreement, that the existing bargaining emanating from the first NERR will now be concerned with producing a "SAPN-only" agreement[48] notwithstanding that the appellant bargaining representatives are completely opposed to this course. Without any NERR, the proposed scope of coverage of such an agreement is not readily determinable. In its response to the notice of concerns sent by the CEPU and Professionals Australia, Utilities Management indicated (as earlier set out) that the "SAPN-only" agreement would have the coverage specified in the first NERR, except that it would exclude employees covered by the proposed Enerven agreement. If so, two consequences follow:

The coverage of the suggested "SAPN-only" agreement is not determinable, because the scope of the proposed Enerven agreement which will constitute the "carve out" has itself not yet been determined. The Deputy President therefore erred in proceeding on the basis that a choice of coverage has been made which is capable of assessment as to its fairness.

The suggested "SAPN-only" agreement will in fact cover some Enerven employees because, for the reasons already stated, it is apparent that the proposed Enerven agreement is not intended to cover all Enerven employees, so the balance will default to the other agreement to the extent that they are covered by its classifications. In effect, the other agreement will not be a "SAPN-only" agreement at all. The Deputy President erred by assuming otherwise, and he did not take into account that the supposed "SAPN-only" agreement might also cover some Enerven employees.

[94] In summary, the picture which emerges is that Utilities Management wants to divide the existing coverage of the 2018 Agreement into two new agreements, but has not yet determined the boundary of coverage between the two agreements in a such a way that the coverage of either of them can be said to have been "chosen". An assessment of the fairness of any such coverage is therefore not possible or reasonably available to be made. The Deputy President erred by proceeding on the factual premise that such a choice had been made, and further erred by characterising that choice as being between an Enerven-only agreement and a SAPN-only agreement when the evidence indicated that this was not the intended outcome.

[95] One further comment may be made about the Deputy President's "fairly chosen" consideration. Although he was not required by the FW Act to do so, as earlier discussed, he chose to align his consideration with the matters required to be taken into account by s 186(3A) and s 238(4A). In doing so, the Deputy President recognised (at paragraphs [146]-[147]) that findings of geographical, operational or organisation distinctiveness were not determinative of a "fairly chosen" finding and that the appellant unions had submitted that, apart from these matters, the "Enerven-specific" group was not fairly chosen because its selection was arbitrary and discriminatory and was the product of capricious or unfair conduct which undermined collective bargaining and diluted the strength of the workforce. However, the Deputy President did not give consideration to these submissions in respect of the "fairly chosen" issue: he simply noted that "these issues overlap with the grounds on which the CEPU is seeking bargaining orders", which were considered later in the decision in the context of that application, and proceeded to make the finding that an "Enerven-specific" agreement, if made, would be with a group that was fairly chosen (paragraphs [148]-[149]).

[96] Effectively, the Deputy President treated the considerations of geographical, operational or organisation distinctiveness as determinative and failed to consider and make findings with respect to the appellant unions' submissions. This constitutes an error of principle and a failure to consider relevant matters. To the extent that the decision might be read as implicitly incorporating the Deputy President's findings as to the bargaining order application into his "fairly chosen" consideration (something which the decision does not actually say), that would be an impermissible course. We do not consider that the contentions of the CEPU and Professionals Australia that the coverage of the proposed Enerven agreement was not fairly chosen, advanced in the context of their respective scope order applications, can simply be equated with the contention of the CEPU, advanced in connection with its bargaining order application, that Utilities Management had not met certain good faith bargaining requirements and disregarded on that basis.

[97] In his consideration under s 238(4)(b), the Deputy President made a finding concerning the consequences and utility of making a scope order which constituted part of his reasoning for concluding that the making of a scope order would not promote fair and efficient bargaining. The finding is contained in paragraphs [105]-[108] of the decision, which we have earlier set out. Contrary to the submissions of Utilities Management, we consider the finding should be read to mean that, in the Deputy President's view, the making of the scope order sought by the appellants would serve no purpose other than indicate that a new agreement covering all of Utilities Management's workforce would have a coverage that is fairly chosen and that it could have no effect upon the "parallel bargaining process" for the proposed Enerven agreement - a proposition which the Deputy President expressly stated in paragraph [157] in relation to his consideration under s 238(4)(d). That finding is, we consider, in error because it is based on a failure to take into account the potential consequences of the making of a scope order under the FW Act. While it is correct to say that a scope order would not by itself require the "parallel bargaining process" for the proposed Enerven agreement to cease, we accept the appellants' submission that it is likely that the continuation of that process would expose Utilities Management to the making, upon application, of a bargaining order on the basis that the process was unfairly undermining collective bargaining for an agreement with the scope determined in the scope order and was thus in contravention of the good faith bargaining requirement in s 228(1)(e). It also fails to take into account that, if the "parallel bargaining process" resulted in the proposed Enerven agreement being made, there would be a substantial risk that it would not meet the approval requirement in s 187(2) because its approval would plainly be inconsistent with good faith bargaining for an agreement covering the whole Utilities Management workforce in relation to which the scope order would be in operation. This was a matter recognised by the Deputy President at paragraph [158] of the decision in his consideration in relation to s 238(4)(d), but not taken into account in relation to s 238(4)(b).

[98] We accept the appellants' submissions that the Deputy President failed to take into account, in his assessment under s 238(4)(b) in relation to the fairness and efficiency of bargaining, the identical or similar nature of the work performed by workers within the competing scopes, the overlap between the two groups being bargaining for, and the inefficiency associated with the separate bargaining processes for two agreements.

[99] Utilities Management accepted in its submissions that it remains bound to comply with the good faith bargaining requirements in respect of the first NERR. That means that it is required to bargain in good faith for a single agreement which covers its entire workforce, including employees in the Enerven business. At the same time, the result of the issuance of the second NERR is that Utilities Management is also separately conducting bargaining in respect of employees in the Enerven business (howsoever defined). This means that, on paper at least, bargaining for an agreement that covers employees in the Enerven business is occurring simultaneously in two separate bargaining processes. The detrimental implications for efficiency and fairness arising from this situation are patently obvious. They have manifested themselves in the following way:

The union bargaining representatives have been forced to engage in two parallel bargaining processes to represent and protect the interests of their members. In respect of their members in the Enerven business, they are having to represent their interests simultaneously in both bargaining processes. The operation of the good faith bargaining requirements in the FW Act mean that the unions are simultaneously required to bargain in good faith for an agreement covering the entire Utilities Management workforce in one bargaining stream and bargain in good faith for a separate Enerven agreement in the other bargaining stream.

There are different bargaining representatives for employees in the Enerven business in the two bargaining processes, arising from the fact that some employees who have been served with the second NERR have nominated themselves, or been nominated, as bargaining representatives who are not bargaining representatives in respect of the bargaining arising from the first NERR.

Arising from the failure of Utilities Management to determine or "choose" the scope of coverage of the proposed Enerven agreement, there is necessarily doubt as to the employees who are encompassed by the bargaining pursuant to the second NERR and which employees are affected by one or both bargaining processes.

Notwithstanding the obligation upon Utilities Management to bargain in good faith for an agreement covering the whole of its workforce, it is clear from the evidence, and from its submissions in the appeal, that it is now treating the bargaining process arising from the first NERR as one for a SAPN-only agreement, notwithstanding that no NERR for such an agreement has ever been issued. For example, the passage from its submissions quoted at paragraph [57] above expressly distinguishes between the "SAPN negotiations", which will proceed on the basis of the history of the negotiations since the first NERR was issued, and the Enerven negotiations, which are starting from a "blank page". This places Utilities Management at cross-purposes with the union bargaining representatives, who continue to bargain for a single enterprise agreement consistent with the first NERR based on the history of bargaining to date.

[100] All of these matters were the subject of the concerns of the CEPU and Professionals Australia about the efficiency and fairness of the bargaining process which led to the scope order applications being made, and were patently central to the question arising under s 238(4)(b) of whether the making of the scope order would promote the fair and efficient conduct of bargaining. However, none of these matters was taken into account in the Deputy President's consideration under s 238(4)(b).

[101] At paragraph [163] of the decision, as earlier set out, the Deputy President said that the Commission's "proper role under s 238 is to guard against general unfairness, not to pick a winner between two fairly chose scopes being lawfully bargaining for", and cited the Full Bench decision in CFMEU v ResCo[49] in support of that proposition, which plainly informed the Deputy President's consideration under s 238(4)(b) and (d). We consider that this is an incorrect statement of principle which caused the Deputy President's exercise of the discretion to miscarry. Having regard to our earlier analysis of s 238, it is in error in at least three respects:

The Commission's role in s 238 is not properly characterised as being "to guard against general unfairness". Its role is to determine whether the remedy of a scope order should be granted in accordance with requirements of the section in response to the concerns of a bargaining representative that bargaining for a proposed agreement is not proceeding efficiently or fairly. The consideration as to whether those concerns are objectively justified is necessarily central to the Commission's consideration, and those concerns may relate only to efficiency and not to fairness. There is no requirement for a finding of "general unfairness" in order for a scope order to be made.

Whether the scope of coverage proposed in the scope order that is sought is fairly chosen is a mandatory consideration under s 238(4)(c). However, there is no requirement in the section to consider, let alone treat as determinative, the consideration of whether any competing coverage proposal is "fairly chosen". Although this may be a relevant consideration, the Deputy President treated as determinative and a bar to the making of a scope order any finding to the effect that two competing scope proposals are fairly chosen. This approach finds no support in the text of the provision and is inconsistent with authority. When a disagreement about scope has caused inefficiency or unfairness in bargaining, it may be necessary to make a scope order to "break the impasse" notwithstanding that the competing scope proposals may both be fairly chosen.

The Full Bench decision in CFMEU v ResCo is completely inapposite to s 238. The decision was concerned with whether an enterprise agreement which had been made and for which an application for approval had been lodged met the "fairly chosen" requirement for approval in s 186(3) of the FW Act. The consideration required under s 186(3), the purpose of which provision is to ensure that an agreement has not been made as a result of an arbitrary, discriminatory or manipulated choice as to the group of employees covered by it, is entirely distinct from that required under s 238 which, as earlier discussed, is concerned with whether a disagreement about scope has caused bargaining not to proceed efficiently or fairly.

[103] We consider that the efficient course is for us to redetermine the application made by the CEPU and Professionals Australia based on the evidence that was before the Deputy President. For the reasons which follow, we consider that the scope order sought should be made.

[104] In respect of the requirements of subsections (1)-(3) of s 238, and paragraphs (a) and (c) of s 238(4), we agree with and adopt as our own the findings of the Deputy President (and the reasons for those findings) that these requirements for the making of the scope order sought are satisfied.

[105] In relation to s 238(4)(b), we are satisfied that the making of the scope order sought will promote the fair and efficient conduct of bargaining. We find that bargaining is not currently being conducted fairly and efficiently and that the concerns of the CEPU and Professionals Australia on this score which led to their applications for scope orders are objectively justified. This unfairness and inefficiency would likely not have arisen if Utilities Management had chosen to raise and advocate for its alternative proposal concerning two agreements within the framework of the existing bargaining process flowing from the first NERR. However, Utilities Management's choice to pursue its preference for two agreements by issuing the second NERR and establishing a separate bargaining process has resulted in the detriments to fairness and efficiency identified in paragraph [99] above. We consider that the making of the scope order would promote fairness and efficiency in the bargaining for two reasons. First, it would provide a proper foundation for a bargaining representative to seek a bargaining order to prevent Utilities Management continuing to engage in a separate bargaining process which has the intention and effect of undermining good faith bargaining for an agreement with the scope identified in the first NERR and in the scope order. Second, it would endanger the capacity for any Enerven-only agreement that might ultimately be made flowing from this separate bargaining process to satisfy the approval requirement in s 187(2). Both of these considerations are likely to cause a return to a "single bargaining track" and thus remove the instances of unfairness and inefficiency identified in paragraph [99] above. This would plainly promote the fair and efficient conduct of bargaining.

[106] In relation to s 238(4)(d), we are satisfied that the making of the scope order would be reasonable in all the circumstances. The scope of coverage to be specified in the scope order sought is consistent with that in the 2018 Agreement and in all previous agreements and includes the whole workforce of Utilities Management. It is also consistent with the coverage of the new agreement proposed by Utilities Management in the first NERR and which was the subject of bargaining from June 2020 to September 2021 without there being any issue as to scope. It thus represents a continuation of the position which has consensually prevailed at all times until 16 September 2020. Additionally, insofar as it appears based on the finding of the Deputy President at paragraph [121] of his decision that the appellants represent the majority of employees in the Utilities Management workforce, the making of the scope order would be reflective of the view of employees.

[107] It is important to note that the making of the scope order would not prevent Utilities Management seeking Enerven-specific conditions of employment within the bargaining process established by the first NERR. Nor would it prevent Utilities Management, in the context of that bargaining process, advancing proposals for two enterprise agreements and seeking to persuade the other bargaining representatives of the merit of that proposal. The purpose of the making of the scope order would be to overcome the unfairness and inefficiency in bargaining which has arisen as a result of Utilities Management pursuing its scope proposal through a separate "bargaining track" in order to attempt to produce a fait accompli. The scope order would not dictate the outcome of a fair and efficient good faith bargaining process, and thus would be reasonable from the perspective of Utilities Management's interests.

[108] We consider that the overall discretion should be exercised in favour of the scope order sought being made. The scope of the coverage to be specified in the order is fairly chosen, and is rational and functional since it accords with the position established by the current and past agreements, the consistent position of all parties up until 16 September 2021, and the view of the majority of employees. The order would support a return to a fair and efficient bargaining process while not determining the outcome of such a process. There is no identifiable reason, in the face of these considerations, not to make the order. Accordingly, the order will be made, effective from the date of this decision.

[111] In my opinion permission to appeal should be granted on the basis that the appeal provides an opportunity for the Full Bench to address issues of importance concerning the application of s 238 of the FW Act in the form of a review of the relevant cases and principles. I consider however that none of the appeal grounds establishes appealable error and that the appeal should therefore be dismissed.

[112] I adopt the majority's summary of the relevant background and the decision under appeal, as well as defined expressions.

[113] I agree with the majority's general observations concerning scope orders, save that in my view the Commission's consideration under s 238 of the need to facilitate good faith collective bargaining (see s 171(b)) requires the Commission to afford the collective views of employees appropriate, rather than always significant, weight. The Full Bench in AWU v Kwinana stated that the "preferences of employees as to the appropriate collective should be respected unless there is some good reason under the legislation to decide otherwise" (at [29]). If by "respected" the Full Bench meant "adopted", I respectfully disagree. The text and context of s 238 tells against any "default" position. Subdivision 8C of Part 2-4 concerns majority support determinations (ss 236 and 237) and scope orders (ss 238 and 239). The former provisions require the Commission to ascertain the preferences of the majority of relevant employees (see s 237(2)(a)). The latter do not. I cannot identify any statutory basis for a conclusion that the preferences of the relevant "collective" as to scope should be the dispositional default position of the Commission in an application under s 238, or that such preferences should be elevated to the status of a mandatory consideration. Section 238 addresses the matters that the Commission must consider. Other matters may be relevant to the residual discretion under s 238(4). I would note that ILO conventions 87 and 98, referred to in the reasoning of the Full Bench in AWU v Kwinana, are no longer the source of constitutional power for the federal bargaining framework and are therefore of questionable interpretative assistance in respect of Part 2-4 of the FW Act.

[114] Ground 1 of the notice of appeal contended that the Deputy President erred by failing to take into account, or by failing to give due weight to, the "uncertainty as to scope" that was said to be occasioned first by the identical or similar nature of the work performed by workers "within the competing scopes", and secondly by the extent to which the two relevant businesses utilise common labour. As to the first of these matters, the appellants contended that the Deputy President did not have regard to important aspects of the evidence, namely: that the work undertaken by Enerven was almost always precisely the same as the work that SAPN would otherwise do; that the respondent determines at its discretion which and how much work SAPN assigns to Enerven, save that it must occur via a tender process; and that the respondent determines at its discretion whether a particular employee is assigned work for SAPN or Enerven, irrespective of the employee's consent. The appellants contended that the Deputy President's failure to have regard or give due weight to these matters was a critical omission because this evidence demonstrated that the respondent's alternative scope was based merely on its "fiat" about which entity an employee works for. They contended that the scope therefore had an arbitrary or subjective basis and could not be considered fairly chosen. The respondent's proposed scope was said to be akin to an "opt-out clause", which the Full Bench in CFMEU v QBH Pty Ltd[50] (QBH) had found to be inimical to the purposes and policy of the FW Act, and incapable of being the basis for a fairly chosen scope. The appellants contended that in the circumstances, the respondent's proposed scope had not been chosen at all and could therefore not be a "fairly chosen" scope. They contended that the Deputy President had erred in law concluding otherwise.

[115] I do not accept any of the elements of the first ground of appeal. First, the Deputy President did in fact have regard to the evidence referred to by the appellants. From [48] to [52], the Deputy President noted the unions' submissions about the evidence concerning the confusion that was said to arise in connection with the respondent's deployment of labour across the two businesses, or "business units", as the Deputy President described them. At [137], he noted his conclusion that employees working in the two units sometimes did the same work. The Deputy President also noted that SAPN was a client of Enerven and that SAPN and Enerven commonly performed the same activities, evidently not accepting the appellants' contention that the work was almost always precisely the same. At [205], he accepted that there had been some confusion, at least initially, about who could participate in bargaining "under the September 2021 NERR", and that this was consistent with his earlier finding that there was "cross-over" between some SAPN and Enerven workers.

[116] It is not the case that the Deputy President failed to consider the appellants' evidence and contentions about uncertainty regarding the scope of the agreement proposed by the respondent. Further, the submission that the Deputy President failed to give the evidence sufficient weight is not a contention of error, because the weighing exercise was within the Deputy President's discretion: no particular weight was required to be given to the evidence in question, nor is a contention of legal unreasonableness in the apportionment of weight sustainable in this case.

[117] Secondly, the appellants' contention that the respondent's scope was unfair because it was arbitrary or subjective or determined by employer "fiat" travelled beyond the notice of appeal. The relevant "uncertainty" referred to in appeal ground 1 concerned only the similarity of work in the business units and the use of common labour. This is not the only respect in which the appellants overstepped the bounds of the notice of appeal, as we will see.

[118] Grounds of appeal are not mere conceptual markers later to be developed into proper contentions of error in written and oral submissions. They are the four walls of the appeal. Section 585 requires an application to be made in accordance with the rules of the Commission that pertain to the application in question. Rule 8(2) of the Fair Work Commission Rules (Rules) requires that if the President has approved a form for a particular purpose, the approved form must be used for that purpose. The F7 is the approved form for an appeal under s 604. It requires an appellant to identify the appeal grounds. The Commission may grant relief from the requirement to comply with the Rules, either before or after the occasion for compliance arises (r 6). It will not do so as a matter of course. In the present case, there was no application to amend the notice of appeal. The Commission may waive compliance with the Rules on its own motion. However, telling against this course is the fact that the various new contentions are not clearly formulated. The new contention concerning the alleged subjectivity or arbitrariness of the employer's alternative scope is no exception. It posited that because of the scope's subjective character, the Deputy President ought to have found that the respondent's preferred scope was not fairly chosen. This is not a proper contention of appealable error. What is presumably meant is that the Deputy President reached a conclusion that was not available to him, and that because that conclusion formed an important component of his rationale for concluding that the requirements of s 238(4)(b) and (d) were not made out, his discretion in relation to the consideration of those provisions miscarried. But this is not the submission that was made. I would not grant relief from compliance with the Rules to permit the amendment of the notice of appeal so as to include a new contention that requires the interpretation or interpolation of the Full Bench.

[119] In any event, I would reject this new contention. It was open to the Deputy President to conclude that the scope of the respondent's proposed agreement was fairly chosen. There is nothing to compel a conclusion of uncertainty about the scope of an agreement that applies to employees who from time to time work in a particular business unit of a company. Nor does the fact that the employer may direct employees to work in one or another business unit mean that the scope is subjective or uncertain. The scope of such an agreement is plain: it covers employees working in the relevant business unit. The question of when a particular employee may be deployed to work under the proposed agreement, such that the agreement applies to that employee, is a different question, the answer to which will depend on the circumstances, including the terms of an employee's contract of employment. Any uncertainty about the answer to this question has nothing to do with the agreement's scope. The appellants' new contention conflates an agreement's scope with its application.

[120] A related contention not raised in the notice of appeal, or put to the Deputy President, was that the scope of the respondent's proposed agreement was akin to an opt-out clause. This is not the case. The scope comes nowhere near falling within the definition of an opt-out clause in s 194(ba) of the FW Act, nor does it bear any resemblance to the coverage clause that was at issue in the QBH case, which was expressed not to apply to employees who had elected in writing not to be covered by the agreement. The respondent's proposed scope makes no reference to any persons being able to elect not to be covered by it.

[121] The majority identify an error in the Deputy President's finding that the scope of the respondent's proposed agreement was fairly chosen, this error being the assumption of an incorrect factual premise, namely that the second NERR applied to the Enerven business unit generally, when in fact it had a more limited coverage, and one that was also inherently uncertain because it was linked to the classification structure in the proposed agreement, when no classification structure existed.

[122] This matter was not raised in the appeal. It does not relate to either of the two dimensions of alleged uncertainty in the employer's proposed scope that were referred to in the notice of appeal. It was not among the additional matters that the appellants raised, without seeking leave, in their written and oral submissions. It is true that in these submissions, the appellants contended that the Deputy President erred in concluding that the scope was fairly chosen because it was not "chosen" at all. But they did not contend that this was because of the wording in the second NERR, or because of an incorrect factual premise on the part of the Deputy President about the respondent's scope. I would not grant permission to appeal, or uphold the appeal, on the basis of an error that was not squarely raised by the appellants in their appeal. In any event, I respectfully disagree that the Deputy President made the error in question.

[123] When considering an application for a scope order, it stands to reason that the Commission would have regard to any alternative scope proposed by the other bargaining representatives. Although the FW Act does not require the Commission to consider this matter, it is likely to be relevant to the Commission's assessment of whether the requirements in s 238(4) have been met. An alternative scope that is unfair, for example, may support contentions by the applicant that it is reasonable to make a scope order. The Deputy President framed his consideration of the alternative scope by reference to the expression "fairly chosen" found in ss 238(4)(c) and 238(4A). There was nothing wrong with this. Equally, the FW Act did not require him to adopt this approach. It would have been permissible and relevant simply to consider whether the alternative scope appeared to be a fair one. In any event, I do not see anything inherently uncertain about the scope of the second NERR that would make unavailable a conclusion that it was fairly "chosen".

[124] The first two elements of the scope referred to in the second NERR are geographical and operational descriptors of coverage which in my view are unremarkable in the context of a NERR: the proposed agreement would cover employees of the respondent who are "South Australia based" and who "provide major infrastructure, energy and telecommunications work in the competitive market for Enerven ..." The third element of the scope is that employees will be "covered by the classification structure in this agreement". In my view, this component of the second NERR simply foreshadowed that the agreement was expected to have a classification structure. No classification structure was provided, because this would be the product of negotiations between the parties. The respondent confirmed as much to the appellants in correspondence on 22 October 2021. The reference to the classification structure also flagged that the final scope of the agreement remained to be negotiated. The first two components of the scope in the second NERR defined the scope of the proposed enterprise agreement, which was, in essence, anyone working in the Enerven business who was based in South Australia. In this regard, the second NERR was sent to everyone with an Enerven email address. Some of these employees were later told that they would not be covered by the agreement but this simply represented a statement by the employer about its bargaining intentions in respect of the coverage clause in the proposed agreement. It is a legitimate and common practice for a NERR to refer to a broad group of employees in respect of a proposed agreement, and for negotiations then to address and refine the scope clause of the agreement, including the details of any classification structure.

[125] I do not consider that the Deputy President erred in concluding, for the purposes of his consideration of ss 238(4)(b) or (d), that the alternative scope was fairly chosen. Nor do I consider that the second NERR was defective by reason of uncertainty. It is not entirely clear to me that the second NERR was required by s 173 to be provided to employees, given that the employees covered by it already fell within the scope of the original NERR. If s 173 did require this, on the basis that there was a new proposed agreement, any defect in the NERR or deficiency in its distribution to employees might have been remedied by ceasing bargaining (contemplated by s 239(b)(iv)) and then recommencing it; or, if an application for approval of an agreement were later to be filed under s 185, submissions might have been made to the Commission that it was appropriate to waive minor procedural or technical errors and exercise the discretion in s 188(2). A question also arises as to why a failure of an employer to comply with s 173 in respect of a proposed agreement with an alternative scope would have any necessary relevance to a member's consideration of whether that scope was fair in the context of an application under s 238. Many arguments might have been made in relation to these matters. None were in fact made because the appellants did not contend in their appeal that the Deputy President had proceeded on an incorrect factual premise that the second NERR covered all of the Enerven business, or that the second NERR was defective. Nor did the appellants raise in the appeal contentions of error related to the concurrent existence of bargaining obligations referable to two extant NERRs.

[126] The second ground of appeal contended that the Deputy President erred in concluding that the making of a scope order would be unreasonable, including that it was unreasonable for the Commission to resolve a dispute between two fairly chosen scopes. This ground is without merit. First, the Deputy President decided no such thing. He concluded that he was not satisfied that it would be reasonable to make a scope order, not that it was unreasonable to make the order. Secondly, assuming that the appellants meant to challenge the Deputy President's conclusion that it was not reasonable to make an order, the appeal ground is defective because it does not speak to error. It is a bald assertion that the Deputy President reached the wrong conclusion.

[127] In their written submissions the appellants contended that the Deputy President had erred in his consideration of s 238(4)(b) and (d) (that is, whether making a scope order would promote the fair and efficient conduct of bargaining, and whether it was reasonable in all the circumstances to make a scope order) by stating that the Commission's role under s 238 is to "guard against general unfairness, not to pick a winner between two fairly chosen scopes being lawfully bargained for". Although they do not expressly say so, I infer that the appellants contend that the Deputy President acted on wrong principle. I agree with the majority that this passage could not be regarded as a correct statement of principle. But I do not understand the Deputy President to have purported to make any statements of general principle.

[128] As to the first part of the remark, I consider it to be a fair characterisation of part of the Commission's role in an application under s 238 to "guard against general unfairness", at least at a discretionary level. It is difficult to argue otherwise, given the objects of the FW Act and Part 2-4, and the requirement of s 578 that the Commission exercise its powers with regard to these objects, and to equity, good conscience and the merits of the matter. It would certainly not be correct to say that guarding against general unfairness was the Commission's only role. For one thing, s 238(4)(b) is concerned with the efficiency of the bargaining process as well as the fairness of it. But the Deputy President did not say that this was the Commission's only role. The second part of the remark should in my view be understood in the broader context of the Deputy President's decision. I do not read this as reflecting a misunderstanding that the Commission could not or should not ever make a scope order if both of the competing scopes are fairly chosen. In my view, the import of the Deputy President's remark was that in a case such as the one before him, where it was not otherwise reasonable to make an order, he did not consider it appropriate to pick a winner as between two fairly chosen scopes. Such an approach to the exercise of discretion was open to the Deputy President.

[129] The appellants written and oral submissions on ground 2 travel beyond the notice of appeal. For the reasons given earlier, I would not permit an amendment to the notice of appeal to include the new contentions. I would in any event reject those contentions.

[130] The third ground in the notice of appeal stated that the Deputy President "erred in law and fact" by concluding that the making of a "bargaining order" (presumably the intended reference is to "scope order") would not "increase efficiency or fairness", and that in this regard the Deputy President had regard to the "extraneous consideration" of whether the respondent's scope was fairly chosen. This appeal ground is defective. If an error of law or fact is alleged in a notice of appeal, it is necessary to say, at least in general terms, what that error is. The contention that the Deputy President should have reached a different conclusion in relation to whether an order would promote fairness or efficiency is simply to quibble with the outcome. It is not a valid contention of error. Section 238 affords the Commission a substantial margin within the structured discretion it confers. The only detail of error alleged in ground 3 was no error at all - the Deputy President's consideration of whether the alternative scope was fair was plainly not an irrelevant consideration.

[131] In their written submissions, the appellants contended that the Deputy President had misdirected himself in the course of considering s 238(4)(b) by proceeding on the basis that the only way a scope order would promote fairness and efficiency was to provide "guidance to the bargaining representatives that a replacement agreement covering the Utilities Management workforce as a whole would be a fairly chosen scope" (at [104]). However, contrary to the appellants' contentions, the Deputy President was not making a statement of principle or suggesting that this was the only effect of a scope order. He was explaining his view that a scope order would have utility in the present case insofar as it would confirm to the bargaining representatives that the appellants' proposed scope was fairly chosen. The Deputy President was not persuaded however that in all the circumstances an order would "promote the fair and efficient conduct of bargaining". The appellants have not shown this conclusion to be affected by error.

[132] The appellants suggested in their submissions, unconnected to any of the grounds in their notice of appeal, that the Deputy President had misunderstood the effect of a scope order. I disagree. The Deputy President stated at [157] that an order would not "set aside the parallel bargaining process" for an agreement covering the Enerven business unit. This statement is correct. It does not suggest that the Deputy President believed that a scope order would be of no consequence. At [158], the Deputy President cited s 187(2), noting, in shorthand fashion, that the provision requires the Commission not to approve an agreement that is inconsistent with a scope order (the section states that the Commission must be satisfied that approving the agreement would not be inconsistent with or undermine good faith bargaining for a proposed agreement in relation to which a scope order is in operation). He also noted, at [156], that a scope order would compromise the utility of the employer to advance its preferred scope; at [157], that any parallel bargaining would be "shadowed" by any scope order; and at [158], that the scope order might have the effect of precluding the approval of an agreement reflecting the alternative scope, even though that scope was fair. In my opinion, these passages demonstrate that the Deputy President correctly understood the statutory scheme. To the extent that the Deputy President considered these matters to tell against the making of a scope order, the point might be made that such consequences would accompany any scope order and are therefore neutral considerations. But the appeal does not raise this issue.

[133] The appellants contended that the Deputy President failed to take into account the relevance, for the question of efficiency, of separate bargaining processes for two agreements. This is not the case. At [207] the Deputy President notes that the need for the parties to spread their attention across two bargaining processes "adds to the imposts on time, strategic thought and responsiveness". He concluded that these "bear somewhat on the efficiency of bargaining for the replacement agreement" but not to the extent that he would characterise bargaining as not proceeding efficiently. This evaluative conclusion was open to the Deputy President.

[134] I would not permit an amendment to the third ground in the notice of appeal to include the contentions raised in the written and oral submissions. I would in any event reject those contentions.

[135] The fourth ground of appeal contended that the Deputy President erred in failing to give appropriate weight to the views of employees and their bargaining representatives. Leaving to one side the problem that the weight to be given to these considerations was a matter within the discretion of the Deputy President, it is clear, again, that the Deputy President did precisely that which he is alleged not to have done. At [121], he stated that he gave weight to the fact that an agreement with the respondent's workforce as a whole was the collective choice of relevant employees, as expressed through their unions, and that those views were "significant though not determinative". I reject the fourth ground of appeal.

[136] The respondent commenced bargaining for an enterprise agreement that would apply to employees working in both of its business units. This had been the practice in the past. But the bargaining was protracted and difficult. The respondent decided to negotiate a separate agreement for one of its business units. The appellants wanted to continue negotiating for a single agreement. The Deputy President considered the appellants' proposed scope to be fairly chosen. He concluded that the applicant bargaining representatives had been bargaining in good faith. He was not persuaded however that the making of an order would promote the fair or efficient conduct of bargaining, or that it was reasonable in all the circumstances to make an order. These conclusions were open to him. Having reached those conclusions, he properly dismissed the application. The appeal has not established any error in the Deputy President's decision.

[137] I would dismiss the appeal.

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Judgment (176 paragraphs)

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Legislation Cited (2)