Construction, Forestry, Maritime, Mining and Energy Union v C&H Acquisition Pty Ltd [2020] FWCFB 3134 (16 June 2020)

[2020] FWCFB 3134

Fair Work Act 2009

s.604 - Appeal of decision

Construction, Forestry, Maritime, Mining and Energy Union

Appeal against decision [2020] FWCA 1612 of Commissioner Wilson at Melbourne on 27 March 2020 in matter number AG2019/4028 - whether the effect of accepting an undertaking is not likely to result in substantial changes to an enterprise agreement - whether reconciliation undertaking necessary - permission to appeal granted - appeal dismissed.

[1] By its notice of appeal lodged on 17 April 2020, the Construction, Forestry, Maritime, Mining, and Energy Union (Appellant) seeks permission to appeal and appeals a decision made on 27 March 2020 by Commissioner Wilson to approve a single-enterprise agreement with undertakings[1] (Decision). The agreement is titled the C&H Gencon Enterprise Agreement 2020 (Agreement).

[2] C&H Acquisition Pty Ltd (Respondent) conducts a labour hire business in the building and construction industry. It made the Agreement with the employees covered by it on 11 October 2019. Coverage of the Agreement is governed by clause 4:

1. This Agreement applies to and is binding on the Company in relation to all of its Employees, engaged across Australia, who are covered by the Building and Construction General On-Site Award 2010.

2. For the avoidance of doubt, this Agreement will not apply to:

4. Employees who exceed the high income threshold as defined by the Fair Work Act 2009 (Cth) ('Act); or

1. A reference to the "Relevant Award" in this Agreement shall mean the Modern Award, as listed in clause 4(a) that would have applied to an Employee but for this Agreement."

[3] The Appellant was not a bargaining representative for the Agreement. The Appellant sought to be heard in relation to the application to approve the Agreement. The Commissioner was satisfied that the Appellant had a material interest in the matter and notified the parties that the views of the Appellant would be sought prior to the application for approval of the Agreement being determined.[2]

[4] At first instance, the Appellant made submissions in relation to a range of matters, including whether the Agreement passed the better off overall test and whether the group of employees covered by the Agreement was 'fairly chosen' within the meaning of s.186(3A) of the Fair Work Act 2009 (Cth) (Act). In his initial decision made on 20 March 2020,[3] the Commissioner found that the group of employees covered by the Agreement was not 'fairly chosen' because employees who are covered by the Building and Construction General On-Site Award 2010 (Award) but whose remuneration exceeds the high income threshold are not covered by the Agreement. The Commissioner concluded that these high income employees were not geographically, operationally or organisationally distinct.[4] The Commissioner then invited the Respondent to provide an undertaking to overcome his 'fairly chosen' concern.[5] In response, the Respondent provided the following undertaking (Coverage Undertaking):

"1. Clause 4(b)(iv) will be removed from the Agreement."

[5] The effect of the Coverage Undertaking, if accepted, was that employees who were covered by the Award but whose remuneration exceeded the high income threshold would be covered by the Agreement.

[6] The Respondent also provided a range of other undertakings to address concerns raised by the Commissioner. One such concern was communicated to the Respondent from the Commissioner's chambers on 22 November 2019, in the following terms:

Clause 26 (regarding Market Arrangements) appears to make provision for reconciliation as follows:

"The total payment to the Employee will not be less than that which the Employee would have received under this Agreement. Where the Employer relies on this clause, the Employer must outline its calculations comparing the Higher Rate of Pay to the Employee's entitlement to wages, penalties and allowances under the Agreement in writing (for example, attached to the notice of offer for a particular assignment), and showing how the Higher Rate of Pay ensures that the Employee is receiving no less than the Employee would otherwise have received under this Agreement."

This reconciliation clause does not appear be consistent with all of the requirements established in the decision of Beechworth ([2017] FWCFB 1664); some of which include:

1. the clause should state that the reconciliation will be conducted at the initiative of the employer;

2. the clause should indicate when such a reconciliation will be conducted (i.e. each pay cycle or otherwise) noting that the Commissioner must be satisfied that the reconciliation is both frequent and definitive;

1. the clause should set out that in circumstances where it is revealed after a reconciliation is conducted that there is a shortfall between what that employee received under the Agreement compared to what that employee would have received under the Award, the employee will be reimbursed for that shortfall; and

1. in addition to being reimbursed for any shortfall the employee will also be paid a nominal amount above what they would have received if they were covered by the Award, so as to ensure employees will be better off after a reconciliation is conducted."

[7] In response to this concern, the Respondent provided the following undertaking (Reconciliation Undertaking):

"6. Clause 26(c): after 'The total payment to the Employee will not be less than that which the Employee would have received under this Agreement.', replace with "Clause26 (c)(i): where the Employer relies on this clause (and additionally, where requested by an employee who is paid in accordance with the provisions of this clause), the employer will undertake a review of the hours worked by that employee over the applicable assignment and will assess:

1. What the Employee would be entitled to be paid for the Period to Date if the Employee was paid in accordance with the Agreement (Period to Date Earnings - Agreement); and
2. What the Employee would be entitled to be paid for the Period to Date if the Employee was paid in accordance with their reference Award (Period To Date Earnings -Award).

Clause 26(c)(ii): If the Period to Date Earnings -Award amount is higher than the Period to Date Earnings -Agreement amount, the Employee will be paid, for the applicable pay period:

1. the amount payable under the Agreement for the hours worked in that pay period; plus
2. the difference between the Employee's actual Period To Date earnings and the Period to Date Earnings -Award amount plus $1.00."

[8] On receipt of all undertakings proffered by the Respondent in support of its application for approval of the Agreement, the Appellant did not make any submissions in relation to the Reconciliation Undertaking but did contend that the Coverage Undertaking should not be accepted by the Commissioner because "an undertaking seeking to remove clause 4(b)(iv) of the Agreement would constitute a substantial change for the purposes of s.190(3)(b) of the Fair Work Act 2009".[6] The Commissioner rejected this argument, reasoning as follows:

"[6] It is well accepted that s.190 of the Fair Work Act 2009 (Cth) suggests that minor changes to an agreement from a written Undertaking are permissible.2 On the other hand a wholesale reshaping of an agreement such that it bears no resemblance to the pre-Undertaking agreement would not be. Pertinent to the subject of financial detriment, the Full Bench has held the following:

"[39] The changes brought about by the undertaking provided by Kaefer remove, rather than cause financial detriment to employees. However, the CFMEU contends that the undertakings resulted in significant changes to the Agreement, including by replacing several allowances and the minimum ordinary hourly rates of pay, and inserting clauses related to apprentice rates. The CFMEU refers to the decision in Perth Access Scaffolding Pty Ltd, in which it was found that the significant number of undertakings provided by the employer had resulted in the agreement bearing no resemblance to the instrument on which employees had voted. The Commissioner found that the essential character of the agreement in question was that it would exclude the award, and that employees would instead receive a small margin above the award rate. The Commissioner found that this essential character would have been changed by accepting the numerous undertakings.

[40] In our view, simply increasing the quantum of various benefits will not ordinarily result in "substantial changes" for the purposes of s.190(3). It seems to us that the legislative concern is to avoid imposing on employees arrangements that they have not approved; employees are not likely to object to higher monetary amounts. The position might be more complex in relation to the reintroduction through undertakings of award-based benefits that were otherwise excluded by the agreement, if this were to have a significant s. However, this does not arise in the present matter.

[41] Section 190(3) does not permit undertakings that result in the wholesale reshaping of the agreement, such that it bears no resemblance to the pre-undertaking agreement that was approved by employees. In considering the application of s.190(3), each case will turn on its own circumstances. However, in the present case, we do not consider that the undertakings provided to date have resulted in substantial changes."3 (references removed)

[7] Further context to the operation of s.190(3) was given by Deputy President Gostencnik in the matter of Kore Construction Pty Ltd:

"[30] An undertaking which is intended to overcome concerns about whether an agreement passes the better off overall test will often need to take the form of varying the operation of the agreement, for example, by undertaking that a term of the agreement which provides a disadvantage when compared with the relevant modern award will not apply or will apply in a particular way. Once an undertaking is accepted by the Commission and an agreement is approved, the undertaking will have that effect because it will become a term of the agreement. An undertaking that is expressed as varying a particular provision in a proposed agreement should be taken to be a promise by the employer that a particular term in an agreement about which concern has been expressed, will not be applied and the term as set out in the undertaking will be applied. Moreover, the fact that section 190 itself requires that a written undertaking not "result in substantial changes to the agreement", suggests that minor changes to an agreement resulting from a written undertaking are permissible. To view the proposed written undertakings as a variation to an agreement rather than an undertaking within the meaning of section 190 of the Act merely because of the expression used in the undertakings is to adopt an unnecessarily technical approach to the giving undertakings and is not one that is warranted when regard is had to the express requirements of the form and effect of an undertaking that are set out in sections 190 and 191 of the Act."4

[8] While the contest reported from the above decisions was largely associated with whether an Undertaking may result in financial detriment, the debate in this application is whether it would result in substantial change, because a group of employees otherwise not covered by the Agreement is brought within its scope.

[9] There is, of course, a circularity to the argument before me, at least as it has played out in submissions to me. Initially, it was argued that the Agreement could not be approved because it excluded coverage of high-income earners, with that leading to a finding by me that the group to be covered by the Agreement was not "fairly chosen". When an Undertaking was proposed to ensure that such employees (and the evidence is that there are none) are included in the Agreement's coverage, it is argued that the inclusion of a group initially excluded becomes a substantial change to the Agreement.

[10] The overall context of the application and the evidence before me does not satisfy me that this is an argument of substance. The fact that there are presently no high-income earners employed by the Applicant who would otherwise be covered by this Agreement, and none employed at the time it was made, leaves me satisfied accepting an Undertaking on the subject is not a substantial change. The inclusion within the Agreement of high-income earners disturbs the operation of no provision of the Agreement. No rights, entitlements or obligations of any other employee is affected. There are no high-income earners who could be considered to have been disenfranchised either during bargaining or at the time of the ballot. Since there are no presently employed high-income earners to be brought within the scope of the Agreement, or to be considered as to whether their vote at the time of making it would have changed the balance of voting, there is no meaningful enquiry to be made about how their conditions of employment might be affected as a consequence of the Undertaking. In relation to future high-income employees, they will, of course be covered by the Agreement and there is no evidence before me as to that such could be either a financial detriment for the individuals concerned or a substantial change to the Agreement. I note as well that the CFMMEU has not made any submissions or provided any evidence as to how it may be said that the change made by the Undertaking is a substantial change to the Agreement.

[11] I am satisfied therefore the Undertaking may be accepted by me, and that the relevant statutory tests for approval of the Agreement have been met.

[12] The Employer has provided written Undertakings. A copy of the Undertakings is attached in Annexure A. I am satisfied that the Undertakings will not cause financial detriment to any employee covered by the Agreement and that the Undertakings will not result in substantial changes to the Agreement. The Undertakings are taken to be a term of the agreement."[7]

[9] We agree with the Appellant's submission that it is a person who is aggrieved by the Decision for the purpose of s.604(1) of the Act and has standing to bring the appeal. The Respondent did not contend otherwise.

[10] The Appellant's notice of appeal contains four appeal grounds. The first and second grounds contend that the Commissioner erred in accepting the Coverage Undertaking.

[11] Ground 3 contends that the Commissioner erred in failing to give any or adequate reasons for his conclusion that the Respondent complied with s.180(5) of the Act. The Appellant withdrew this ground of appeal at the hearing of the appeal.

[12] Ground 4 contends that the Commissioner erred in accepting the Reconciliation Undertaking.

[13] We turn then to consider the appeal grounds.

Appeal grounds 1 and 2 - the Coverage Undertaking

[14] The Appellant contends that the Commissioner failed to apply the proper test when considering whether the effect of accepting the Coverage Undertaking was not likely to result in substantial changes to the Agreement. In support of this argument, the Appellant relies on a decision in Re Hyatt Ground Engineering Pty Ltd[8] (Re Hyatt) in which Commissioner Ryan opined:

"[30] The sense in which the word "substantial" appears in s.190(3)(b) is in my view to describe changes to the agreement as a result of undertakings offered where the changes are not "trivial or minimal" or "ephemeral or nominal".

[31] In this sense "substantial" is not a quantitative term but a qualitative term. A number of trivial or minimal changes to the agreement may not constitute a substantial change to the agreement. However even a single change to a provision of the agreement where the change was not trivial or minimal would constitute a substantial change to the agreement."[9]

[15] The Appellant also submits that the Commissioner had regard to a number of irrelevant considerations, in particular:

• there were no high income earners currently employed by the Respondent who would otherwise be covered by the Agreement;

• there were no high income earners employed by the Respondent at the time the Agreement was made and during the course of bargaining;

• no meaningful inquiry could be made about how the terms and conditions of employment of high income earners would be affected as a consequence of the undertaking as no high income earners were presently within the Agreement's coverage; and

• there was no evidence of substantial change to the Agreement by expansion of its coverage.

[16] It is contended by the Appellant that these matters were irrelevant because they were not directed to the effect of the change on the totality of the terms of the Agreement itself.

[17] The Appellant accepts that s.190(1)(b) of the Act indicates that the Commission can accept an undertaking to address a concern that the group of employees to be covered by an enterprise agreement has not been 'fairly chosen' for the purposes of s.186(3) of the Act, but submits that the ability to do so only arises in very limited circumstances. In this regard, the Appellant relies on the following decisions.

[18] First, a decision of a Full Bench of the Commission in CEPU v Main People Pty Ltd[10] (Main People) in which the Full Bench said:

"[34] ... First, we consider that acceptance of paragraph 1 of the undertaking, which confined the coverage of the Agreement to work covered by the Metals Award, resulted in a significant change to the Agreement contrary to the requirement in s.190(3)(b) of the FW Act. It may be accepted that an undertaking which clarifies an ambiguous provision for which approval is sought in accordance with the intention of the parties will not be likely to cause a significant change in that agreement. However, this was not a case of ambiguity. The breadth of the classifications in the Agreement, and the geographical scope of its coverage, made it apparent that it had application beyond work covered by the Metals Award. The first Full Bench made a clear finding to that effect in the Appeal Decision with which we agree.

[35] The scope of coverage of an enterprise agreement is one of its fundamental features. The coverage provision of an agreement serves to identify the class of persons who will be entitled to its benefits while it is in operation. The importance of an agreement's coverage is signified by the fact that, under the FW Act, s.186(3) requires the group of employees to be covered by the agreement to be fairly chosen. For that reason an undertaking which purports to alter the coverage of an enterprise agreement by excluding classes of persons who, on the face of the agreement, would be covered by it, will always be likely to be a significant change."

[19] Secondly, in Retail and Fast Food Workers Union Incorporated v Hungry Jack's Australia Pty Ltd t/a Hungry Jack's[11] (Hungry Jack's) a Full Bench of the Commission accepted an undertaking which sought to restrict coverage of the relevant agreement, but in doing so expressed an unwillingness to depart from the general principle established in Main People. The Appellant submits that the Full Bench appears to have accepted the circumstances giving rise to the applicant providing an undertaking in that case as being an example of the limited circumstances in which an undertaking that alters coverage can be accepted.

[20] The Appellant also contends that the recent decision of Deputy President Lake in Trustee for LCR Mining Group Trust T/A LCR Mining Group Trust[12] (LCR Mining) determined that the general principle arising from Main People similarly applies to undertakings that would have the effect of expanding the coverage of an enterprise agreement. In LCR Mining, the relevant enterprise agreement contained a clause which similarly sought to exclude 'high-income earners' from its coverage. The Deputy President determined that by virtue of the exclusion, he could not be satisfied that the group of employees to be covered by the agreement was fairly chosen. Further, the Deputy President found that an undertaking purporting to remove the offending subclause could not be accepted to remedy the concern because it would, if accepted, constitute a 'substantial change' to the agreement.

[21] The Appellant submits that whilst the Coverage Undertaking accepted by the Commissioner at first instance did the converse of that considered in Main People by expanding the scope of the Agreement, it nevertheless altered the Agreement's coverage. By parity of reasoning, the Appellant submits that this constituted a substantial change and an error on the part of the Commissioner.

[22] The Respondent contends that the meaning to be given to the word 'substantial' must be considered in the context of s.190 and Part 2-4 of the Act. The work of s.190(3)(b), so the Respondent submits, is to provide a basis upon which the Commission may accept an undertaking when the Commission has a concern that an enterprise agreement does not meet the requirements set out in ss.186 and 187 of the Act. Given that one of the grounds on which the Commission may not be prepared to approve an enterprise agreement is because it is not satisfied that the group of employees covered by the Agreement was fairly chosen, it necessarily follows that a change in coverage is capable of coming within s.190(3)(b). Therefore, the Respondent submits that the mere fact that an undertaking expands the coverage of an enterprise agreement is not enough to render it incapable of coming within s.190(3)(b) of the Act.

[23] The Respondent submits that the context in which s.190(3)(b) is found also explains why the Commission may conclude that an undertaking which purports to alter the coverage of an enterprise agreement by excluding classes of persons who would be otherwise covered by it may be likely to be a significant change. This is because persons who would otherwise be better off overall when being compared to the underlying award are being excluded. In the present case, the opposite applies. The inclusion of a class of persons increases the potential group who, subject to the better off overall test being satisfied, will be better off overall compared to the Award. Thus, the Respondent submits there is no 'imposition' on employees such as that referred to in CFMEU v KAEFER Integrated Services Pty Ltd (KAEFER).[13]

[24] The Respondent contends that each case will turn on its own circumstances. Main People can be distinguished on the basis that the undertaking in that case sought to exclude classes of persons who, on the face of the agreement, would be covered by it. LCR Mining is also distinguishable, but in any event should not, so the Respondent submits, be followed; it did not deal in any detail with, or explain, how the reasoning in Main People applied to the facts of that case.

[27] Section 190(3)(b) of the Act is the central provision under consideration in connection with grounds 1 and 2. It provides:

"(3) The FWC may only accept a written undertaking from one or more employers covered by the agreement if the FWC is satisfied that the effect of accepting the undertaking is not likely to:

(a) cause financial detriment to any employee covered by the agreement; or

(b) result in any substantial changes to the agreement."

[28] The principles applicable to the construction of a statute are not in issue in this appeal. The starting point is to construe the words of a statute according to their ordinary meaning having regard to their context and legislative purpose.[14]

[29] Grounds 1 and 2 focus on the proper construction of the word 'substantial' in s.190(3)(b) of the Act. The adjective "substantial" conveys variable meanings depending on the context in which it is used. It may, for example, describe something that is of corporeal or material nature or that is real or actual or as relating to such a thing. It may describe something that is ample or of a considerable amount, quantity or size. It may describe something that is sturdy, solid or strong. It may convey the real worth or value of a thing. Substantive may also be used as relating to the essence of a thing in the sense of the thing being essential, material or important. In the context of trade practices legislation, the meaning of the word 'substantial' has been given detailed consideration in various cases in the Federal Court of Australia. In Dowling v Dalgety Australia Ltd (Dowling),[15] Justice Lockhart referred back to his observations in a previous case concerning the meaning of the word 'substantial' in the expression 'substantial degree of market power':

"The word 'substantial' is imprecise and ambiguous. Its meaning must be taken from its context. It can mean considerable or big: Palser v Grinling [1948] AC 291 at 371 per Viscount Simon. It can also mean not merely nominal, ephemeral or minimal. Sometimes it is used in a relative sense, and at other times to indicate an absolute size or quantity."[16]

[30] Justice Lockhart's analysis of the word 'substantial' in Dowling was applied by the Full Court of the Federal Court in Monroe Topple & Associates Pty Ltd v Institute of Chartered Accountants in Australia.[17]

[31] Turning now to the context in which the word 'substantial' is used in s.190(3)(b) of the Act, Part 2-4 of the Act is concerned with enterprise agreements. Division 4 of Part 2-4 deals with the approval of enterprise agreements. Subdivision B of Division 4 of Part 2-4 is specifically concerned with the role of the Commission in approving enterprise agreements. Subdivision B includes ss.186 and 187, which set out the general and additional requirements about which the Commission must be satisfied in order to approve an enterprise agreement, s.188, which governs when employees have genuinely agreed to an enterprise agreement, s.189, which permits the Commission to approve an enterprise agreement in particular circumstances even though the Commission is not satisfied that it passes the better off overall test, and ss.190 and 191, which permit the Commission to approve an enterprise agreement with undertakings if particular requirements are met. It is within this context, as well as the Act as a whole, that s.190(3)(b) of the Act must be construed.

[32] The Commission may only accept an undertaking, in the context of approving an enterprise agreement, if the following conditions are satisfied:

• the Commission has a concern that the agreement does not meet the requirements set out in ss.186 and 187 (s.190(1)(b) of the Act);

• the Commission is satisfied that the undertaking meets the concern that the agreement does not meet the requirements set out in ss.186 and 187 (s.190(2) of the Act);

• the Commission is satisfied that the effect of accepting the undertaking is not likely to cause financial detriment to any employee covered by the agreement (s.190(3)(a) of the Act);

• the Commission is satisfied that the effect of accepting the undertaking is not likely to result in substantial changes to the agreement (s.190(3)(a) of the Act). Put another way, the Commission may not accept an undertaking if the effect of accepting it is likely to result in substantial changes to the agreement; and

• the group of employees covered by the agreement was not fairly chosen (s.186(3)). An undertaking which resolves such a concern may result in a change to the scope of those covered by the agreement;

• the agreement includes unlawful terms or designated outworker terms (s.186(4) & (4A)). An undertaking which resolves such a concern may result in a term of an agreement having no effect or a different effect; and

• the dispute settlement term in the agreement does not meet the requirements of s.186(6). Such a concern may be resolved by accepting an undertaking that the range of disputes which may be dealt with in accordance with the dispute settlement term is broader than that which is provided for by the dispute settlement term in the agreement.

[35] As to the purpose of s.190(3)(b) of the Act, we agree with the observation by the Full Bench in KAEFER that the "legislative concern is to avoid imposing on employees, arrangements that they have not approved." [19]

[36] It is clear from the context and purpose to which we have referred that the effect of accepting a whole range of undertakings to meet one or more concerns that the agreement does not meet the requirements set out in ss.186 and 187 would be likely to result in changes to the agreement which were more than 'merely nominal, ephemeral or minimal'. Indeed, the very fact that an undertaking is proffered to assuage a concern that might otherwise result in the agreement not being approved and that an undertaking accepted becomes an enforceable term of the agreement suggests that by their nature all undertakings given and accepted are important. In this sense a change to an agreement brought about by an undertaking could never properly be described as 'merely nominal, ephemeral or minimal'. For example, the acceptance of an undertaking to increase the rates of pay in an agreement in order to resolve a better off overall concern would plainly result in changes to the agreement which were more than 'merely nominal, ephemeral or minimal'.

[37] The word 'substantial' in s.190(3)(b) of the Act appears to us to describe changes to an agreement resulting from the undertaking in a qualitative and relative sense, the notion of "changes to" the agreement importing relativity. In order that s.190(3)(b) would proscribe accepting the undertaking, the changes to the agreement brought about by an undertaking must be substantial, in the sense that the undertaking would change the essence of the agreement. It is to be remembered that s.190(3)(b) is a protective provision. Its purpose was discussed in KAEFER. Whether accepting an undertaking would result in "substantial changes" to an agreement is not assessed simply by examining the number of undertakings given or the number of resulting changes. "Substantial changes" does not mean a numerically large number of changes to the agreement simpliciter. In the context of the Act and the agreement making provisions of Part 2-4, it is the quality of the changes with which the word "substantial" is concerned. It follows, in our view, that the word 'substantial' in s.190(3)(b) signifies a degree or quality of change that is substantial in the sense that it would alter the essence or nature of the agreement. It is concerned with change that is transformative of the agreement so as to raise concern that change may have affected the way in which employees chose to vote in approving the agreement. Accordingly, s.190(3)(b) of the Act permits the Commission to accept an undertaking if it is satisfied that the effect of accepting it is not likely to result in substantial changes to the agreement in the sense discussed.

[46] The Appellant contends that the Commissioner erred in accepting the Reconciliation Undertaking because it does not specify a timeframe in which reconciliations are to occur, the payment of $1 in addition to any top up payments required to bring an employee's remuneration equal to that required by the Award is not sufficient to ensure employees would be better off overall, and the Reconciliation Undertaking is not reasonably capable of satisfying a concern that the Agreement, or the provisions of the Agreement to the extent they apply to employees 'on an assignment', will leave employees better off overall than under the Award.

[47] Before turning to the terms of the Reconciliation Undertaking, it is necessary to have regard to the relevant provisions of the Agreement and the better off overall concern which it is said to address.

[48] Not surprisingly in the context of a labour hire business, the Agreement deals with circumstances in which an employee covered by the Agreement is placed on a work assignment with one of the Respondent's clients. For example, clause 5(b) provides:

"b) The rates of pay, terms and conditions in this Agreement represents the minimum that will be provided to an Employee. The Company may pay an Employee a higher rate of pay or provide more beneficial terms. Given the nature of the work, any increase above the minimums may vary from assignment to assignment and will be entirely at the discretion of the Company."

[49] Clause 21 deals expressly with 'assignments'. It provides:

1. At the commencement of each assignment, an Employee will receive a notice of offer that will confirm the details of the assignment including remuneration (together with any Market Arrangement that may apply in accordance with subclause 26(c)), the classification under the Agreement, type of employment (i.e. Casual, permanent/part­ time) and a guide to the duration of the particular assignment. This will be based on the needs of the Client..."

[50] Clause 26(c) addresses the 'market arrangements' to which reference is made in clause 21(a), as follows:

Where an Employee is placed on an assignment and the Company pays the Employee more in wages or allowances than is required in this Agreement (the Higher Rate of Pay), the Higher Rate of Pay will be received by the Employee in satisfaction of any wages, penalties and allowances which might otherwise apply to the Employee under this Agreement, to the extent that the Higher Rate of Pay exceeds the ordinary rate of wages and/or allowances otherwise payable to the Employee. The total payment to the Employee will not be less than that which the Employee would have received under this Agreement... Where the Employer relies on this clause, the Employer must outline its calculations comparing the Higher Rate of Pay to the Employee's entitlement to wages, penalties and allowances under the Agreement in writing (for example, attached to the notice of offer for a particular assignment), and showing how the Higher Rate of Pay ensures that the Employee is receiving no less than the Employee would otherwise have received under this Agreement."

[51] Clause 26(c) of the Agreement is only engaged when an employee covered by the Agreement is placed on an assignment and is paid "more in wages or allowances than is required" by the Agreement. In those circumstances, the "Higher Rate of Pay will be received by the Employee in satisfaction of any wages, penalties and allowances" otherwise payable to the employee under the Agreement. Importantly, clause 26(c) protects an employee on assignment by imposing an obligation on the Respondent to ensure that the "total payment" made to the employee on assignment "will not be less than that which the Employee would have received under this Agreement". It is therefore clear that clause 26(c) of the Agreement does not permit of a circumstance where an employee on assignment may be entitled to receive remuneration which is less than they would have received if they had been paid according to the other terms and conditions of the Agreement. In other words, an employee on assignment will be at least as well off financially as they would have been had they received the wages, penalties and allowances payable under the Agreement.

[52] Apart from the Appellant's submissions concerning the Reconciliation Undertaking, there is no challenge to the Commissioner's finding that employees and prospective employees covered by the Agreement will be better off overall than they would have been had the Award applied to them.[34] It follows that employees on an assignment and paid in accordance with clause 26(c) will also be better off overall than they would have been had the Award applied to them.

[53] It is apparent from the foregoing analysis that the better off overall concern identified in the correspondence dated 22 November 2019 (see paragraph [6] above) from the Commissioner's chambers to the Respondent in relation to clause 26(c) of the Agreement was misplaced. There was no proper basis to seek a reconciliation undertaking from the Respondent in relation to clause 26(c) of the Agreement. The 22 November 2019 correspondence from the Commissioner's chambers refers to the decision of a Full Bench of the Commission in Shop, Distributive and Allied Employees Association v Beechworth Bakery Employee Co Pty Ltd (Beechworth). That case dealt with a reconciliation undertaking which had been provided where there was a realistic possibility that an employee could, in particular circumstances, be paid less under the enterprise agreement than the underlying award. There is no such concern in the present case. Accordingly, the observations made by the Full Bench in in relation to reconciliation undertakings have no application to this case.

[55] Having regard to the analysis above we are persuaded that the public interest is enlivened by grounds 1 and 2 of the appeal because the consideration of the proper construction of 'substantial changes' within the meaning of s.190(3)(b) of the Act is of importance and general application.

[56] For the reasons stated we consider that it is appropriate to grant permission to appeal on grounds 1 and 2 but to dismiss the appeal.

[57] We order as follows:

1. Permission to appeal on grounds 1 and 2 of the notice of appeal is granted but is otherwise refused;

2. The appeal is dismissed.

[1] [2020] FWCA 1612

[2] C&H Acquisition Pty Ltd [2020] FWC 1142 at [2]

[6] [2020] FWCA 1612 at [5]

[8] [2011] FWA 3527

[10] [2015] FWCFB 4467

[11] [2020] FWCFB 1693

[12] [2020] FWC 451

[13] [2017] FWCFB 5630 at [40]

[14] Huntsman Chemical Company Australia Pty Limited T/A RMAX Rigid Cellular Plastics & Others [2019] FWCFB 318 at [9]- [12]

[15] [1992] FCA 35; (1992) 106 ALR 75

[17] [2002] FCAFC 197 at [97]

[18] Kore Construction Pty Ltd [2014] FWC 1955 at [30]

[19] [2017] FWCFB 5630 at [40]

[20] [2011] FWA 3527 at [30]

[21] [2017] FWCFB 5630 at [40]

[22] [2015] FWCFB 4467 at [34]

[23] [2020] FWCFB 1693 at [90]- [91]

[24] [2017] FWCFB 5630 at [41]

[25] Construction, Forestry, Maritime, Mining and Energy Union v Lightning Brick Pavers t/a Lightning Brick Pavers [2018] FWCFB 3825 at [24]

[26] [2017] FWCFB 5630 at [40]

[27] [2015] FWCFB 4467 at [35]

[28] [2015] FWCFB 4467 at [35]

[29] [2020] FWCFB 1693 at [91]

[32] [2020] FWCA 1612 at [10]

[34] [2020] FWCA 1612 at [2] & [13]

[35] [2017] FWCFB 1664

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