Construction, Forestry and Maritime Employees Union

ZENITH WORKFORCE AUST PTY LTD T-AS ZENITH CIVIL / CFMEU COLLECTIVE AGREEMENT 2024-2027

Application for approval of the Zenith Workforce Aust Pty Ltd t-as Zenith Civil / CFMEU Collective Agreement 2024 - 2027

[1] An application has been made for approval of an enterprise agreement known as the Zenith Workforce Aust Pty Ltd t-as Zenith Civil / CFMEU Collective Agreement 2024 - 2027 Agreement). The application was made the Construction, Forestry and Maritime Employees Union (Applicant) pursuant to s.185 of the Fair Work Act 2009 (Cth) (Act). The Agreement is a single enterprise agreement. The employer covered by the Agreement is Zenith Workforce Aust Pty Ltd (Employer).

[2] The Agreement will replace the Zenith Workforce Aust Pty Ltd t-as Zenith Civil/CFMEU Collective Agreement 2019 - 2023[1] (Current Agreement) which is a greenfields agreement made between the Applicant and employer and which was approved on 8 November 2023.

[3] The Agreement covers a small cohort consisting of two employees and was voted up by two employees who cast an eligible vote.

[4] Section 188(2) provides that the Fair Work Commission (Commission) cannot be satisfied that an enterprise agreement has been genuinely agreed to by the employees covered by it unless the Commission is satisfied that the employees requested to approve the agreement by voting for it:

• (a) have a sufficient interest in its terms; and

• (b) are sufficiently representative, having regard to the employees the agreement is expressed to cover.

[5] A note appearing under s.188 in the Act states:

'Note: In One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FCAFC 77 (2018) 262 FCR 527, a Full Court of the Federal Court observed that whether an agreement has been genuinely agreed involves consideration of the authenticity of the agreement of the employees, including whether the employees who voted for the agreement had an informed and genuine understanding of what was being approved'.

[6] Section 188(1) of the Act provides that the Commission must take into account the statement of principles made under s.188B (SoPs) in determining whether it is satisfied that an enterprise agreement has been genuinely agreed to by the employees covered by it_._ In relation to s.188(2), Principle 17 of the SoPs relevantly provides:

'In considering whether employees have a sufficient interest in the terms of an enterprise agreement as required by section 188(2)(a) of the Fair Work Act, and whether the employees are sufficiently representative as required by section 188(2)(b), the FWC may take into account:

(a) whether the employees entitled to vote on the enterprise agreement are to be paid the rates of pay provided for in the agreement, and

(b) the extent to which the employees entitled to vote on the enterprise agreement are employed across the full range of:

(ii) types of employment in the agreement (for example, full-time, part-

(iii) geographic locations the agreement covers, and

(iv) industries and occupations the agreement covers'.

[7] Given the small cohort covered by the Agreement the Commission sought submissions from the Applicant concerning whether the employees who voted on the Agreement had a sufficient interest in the terms of the enterprise agreement as required by s.188(2)(a) of the Act and were sufficiently representative as required by s.188(2)(b) of the Act. The Applicant filed submissions in response.

[8] The Employer's General Manager, Nick Mitsoulis, provided a statutory declaration and gave evidence to the Commission. By way of summary and context, Mr Mitsoulis gave evidence that:

• the Employer supplies its clients with labourers;

• the Employer is currently only engaged on one project, being the M7 - M12 integration project (Project);

• due to a downturn in work, the Employer only had two employees employed in classifications under the Current Agreement and both of these employees are working on the Project;

• the two employees are employed on a permanent part time basis;

• the two employees have each been employed by the employer for almost one year;

• the two employees are both covered by the CW2 classification under the Current Agreement;

• the Employer anticipates that approximately 15 - 30 employees of the Employer will be engaged on the project within the next 12 months and all of these employees will fall within the CW2 classification in the Agreement;

• the Employer may tender for work on other projects and if this occurs, the employees will also be employed in the CW2 classification;

• the employees will be paid the rates in the Agreement and will be provided with the entitlements prescribed by the Agreement if it is approved.

[9] The Applicant submitted:

• the classifications in the Current Agreement and Agreement are substantially similar;

• the employees covered by the Agreement were entitled to and received the benefit of the Current Agreement and are being paid in accordance with the classifications in the Current Agreement;

• the employees are classified at the CW2 level under the Current Agreement and will be paid at that classification level under the Agreement.

[10] The Applicant submitted that the employees had a sufficient interest in the Agreement within the meaning of s.188(2)(a) (guided by Principle 17(a) of the SoPs) because they are to be paid the rates of pay provided by the Agreement.

[11] Based on the information before the Commission it appears likely that these employees will be paid the rates of pay and will be provided with the entitlements prescribed by the Agreement if approved and I find that the employees have a sufficient interest in the Agreement within the meaning of s.188(2)(a) of the Act.

[12] The employees covered by the Agreement fall within the coverage of the Building and Construction General On-site Award 2020 (Award). The Agreement's coverage provisions are set out in clause 3 and have the effect that the Agreement applies to employees who are engaged on work in New South Wales and who are eligible to be members of the Applicant. The Agreement's classifications are set out in Appendix B and there are two classification streams, being 'civil' and 'remediation' streams. Employees can be engaged on a full time, part time or casual basis under the agreement. The two employees who voted to approve the Agreement are only employed in the CW2 classification. The Applicant submitted that this does not preclude a finding that the employees who voted on the Agreement are sufficiently representative on the following bases:

1. the legislative scheme allows for the making of an Agreement with two or more employees[2] and in this regard:

1. it would seldom be the case that an Agreement covering two employees would have those employees engaged in every possible classification under that Agreement;
2. a finding that two employees in the same classification voting on an agreement with multiple classifications were not sufficiently representative would lock out many small employers and their employees from the benefits of the enterprise bargaining regime under the Act and that cannot have been the intention of the Parliament when it passed amended s.188(2);

1. rates of pay and conditions are relevant to the consideration of whether the employees who voted on the Agreement are sufficiently representative because:

a. the clear legislative intention of s.188(2), as evidence from the legislative note and explanatory memorandum, is to prevent a situation like that in One Key[3] or KCL[4] where the enterprise bargaining scheme is subverted by agreements that 'lack authenticity' and 'moral authority';

1. in the Agreement, rates for each of the classifications under the Agreement are in excess of $13 an hour above what those classifications would be entitled to under the Award and allowances are not lower than those prescribed by the Award;

c. the current matter can therefore be contrasted to One Key[5] and KCL[6] where the agreements in question provided only marginal increases to pay, while removing a number of conditions that employees would have been entitled to under the relevant modern award;

1. the circumstances of the current matter are distinctly different to the decisions mentioned in the Explanatory Memorandum in relation to the sufficiently representative test;

3. while it is the case that the only employees who voted for the Agreement are engaged in one classification, the circumstances are distinguishable from One Key[7] and KCL[8] noting that:

a. in One Key[9] the employer made an agreement with three employees and the coverage included any employee covered by 11 awards;

b. in KCL[10] the agreement in question was voted on by two (out of three) employees and covered a wide range of classifications most of which had no relevance to the work performed by the employer's three existing employees and encompassed industries in which the employer did not currently operate, amongst other deficiencies;

1. in the current matter, the position is the opposite in that the Agreement applies only to a narrow band of classifications that are contemplated by one Award, and only to the extent that employees engaged in those classifications are engaged in work already performed by the employer;

1. the Agreement applies only to work performed in New South Wales and each of the employees who voted on the Agreement are engaged in New South Wales;
2. the Agreement covers only one part of the building and construction industry and each of the employees are engaged in that part of the industry.

[13] The Applicant submitted that in these circumstances the employees who voted on the Agreement are sufficiently representative.

[14] While s.172(6) of the Act provides that an enterprise agreement cannot be made with a single employee, there is no prohibition on the making of an agreement with a small cohort consisting of two or more employees. The question that arises in this matter is whether the Commission is satisfied, in accordance with s.188(2), that the employees who voted are sufficiently representative having regard to the employees the agreement is expressed to cover. The note appearing below s.188(2) of the Act provides an indication as to the purpose toward which s.188(2) was directed with reference to One Key[11]and the observation of the Full Court of the Federal Court that whether an agreement has been genuinely agreed involves consideration of the authenticity of the agreement of the employees.

[15] The facts of this matter are clearly distinguishable from those in One Key[12] where in that matter:

• the proposed agreement covered only three employees, with one working in the construction industry and two working in the coal mining industry;

• the coverage provisions of the agreement were very broad with the proposed agreement intended to cover employees employed to work anywhere in Australia whose employment would fall within the coverage of 11 modern awards.

[16] In One Key[13] the Full Court of the Federal Court found:

'It is not readily apparent why the Commissioner was no longer troubled by his initial concern (raised in his email of 18 September 2015) about whether the agreement had been "genuinely agreed" to. It is clear, however, that the Commissioner did not believe he needed to consider whether, in the light of the small number of employees and the large number of awards, he could be satisfied that the three employees had understood the Agreement and its effect before casting their votes. On the face of the material before the Commission there was a vast disparity of occupational classifications as between those held by the three individuals who voted and the classifications covered by the Agreement. How it was that the three employees might be regarded as having had a sufficient appreciation of the appropriateness of the terms and conditions proposed for the disparate occupational classifications covered, including in industries foreign to their own, was not identified by the Commissioner as a factor relevant to the genuineness of the approval and was not the subject of his consideration. Whether the three employees had appreciated the terms and conditions provided for by the Agreement, beyond those of direct interest and relevance to them, and thereby "genuinely agreed" to its terms (not just those that directly affected them) should have been considered. As the primary judge held, the Commissioner's failure to do that evinced jurisdictional error'.

[17] The Explanatory Memorandum to the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 provides a further indication as to the mischief toward which s.188(2) is directed stating:

'702. New subsection 188(2) is intended as a safeguard against agreements which are not the result of collective bargaining in good faith, including 'unrepresentative' and 'low voter cohort' agreements. For example, a small cohort of employees offered rates of pay above those provided in the enterprise agreement should not be capable of being found to have genuinely agreed (see, for example, Re KCL Industries Pty Ltd [2016] FWCFB 3048; (2016) 257 IR 266)).

704. New paragraph 188(2)(b) is intended to ensure that employees requested to vote on an agreement are sufficiently representative, having regard to the coverage terms or intended coverage of the agreement. For example, employees engaged in one industry, occupation or classification should not be capable of being found to have genuinely agreed to an enterprise agreement intended to cover employees across a substantially wider range of industries, occupations or classifications.

705. A small cohort of employees would also not be sufficiently representative where the agreement is intended to ultimately cover a much wider workforce following transfers of employment, possibly within a corporate group'.

[18] Principle 17(b) of the SoPs requires consideration of the extent to which the employees entitled to vote on the enterprise agreement are employed across the full range of:

• (i) classifications in the agreement

• (ii) types of employment in the agreement (for example, full-time, part-time and casual)

• (iii) geographic locations the agreement covers, and

• (iv) industries and occupations the agreement covers.

[19] In the circumstances of this matter, the employees who voted on the Agreement are:

• employed in only one of the classifications set out in the Agreement in circumstances where the Agreement prescribes a larger number of classifications across civil and remediation classification streams, in addition to trainees;

• are both part time employees despite the Agreement covering casual employees and full time employees.

[20] Despite this, the coverage of the Agreement is relatively narrow compared to the coverage of the agreements in One Key and KCL. It applies only to work performed in New South Wales. The Agreement's classification structure suggests that the Agreement's coverage is not intended to span work in a wide range of industries and unrelated to construction sites and projects and the Employer evidence suggests this is the construction industry is the industry within which employees employed in the future will work. While the employees who voted to approve the Agreement are not employed in the full remit of classifications and employment types under the Agreement, a significant number of agreements come before the Commission and in many of them, employees who voted will not be employed in roles across every possible classification under the Agreement. In my view, this does not in and of itself mean that employees who voted on an agreement are not 'sufficiently representative'. In the circumstances of this matter the employees were not asked to vote on an enterprise agreement intended to cover a wide range of industries foreign to their own and there is no evidence to suggest that that they did not have a true understanding of the consequences of the proposed agreement across the classifications and employment types covered by the Agreement.

[21] Having regard to all the circumstances in this matter, I am satisfied that the employees requested to approve the Agreement by voting on it are, in accordance with s.188(2)(b) sufficiently representative having regard to the employees the Agreement is expressed to cover.

[22] On the basis of the materials before the Commission, I am satisfied that each of the requirements of ss.186, 187 and 188 of the Act as are relevant to the application for approval of the Agreement have been met.

[23] The Construction, Forestry and Maritime Employees Union, being a bargaining representative for the Agreement, has given notice under s.183 of the Act that it wants the Agreement to cover it. In accordance with s.201(2) of the Act, I note that the Agreement covers the organisation.

[24] The Agreement is approved and, in accordance with s.54 of the Act, will operate from 7 April 2025. The nominal expiry date of the Agreement is 4 July 2027.

[2] Fair Work Act 2009 (Cth), s.172(6).

[3] [2019] FWCFB 7599.

[4] Appeal by KCL Industries Pty Ltd [2016] FWCFB 3048.

[5] [2019] FWCFB 7599.

[6] Appeal by KCL Industries Pty Ltd [2016] FWCFB 3048.

[7] [2019] FWCFB 7599.

[8] Appeal by KCL Industries Pty Ltd [2016] FWCFB 3048.

[9] [2019] FWCFB 7599.

[10] Appeal by KCL Industries Pty Ltd [2016] FWCFB 3048.

[11] [2018] FCAFC 77.

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