84 It must be accepted that these clauses in the Existing Greenfields Agreements were beneficial or potentially beneficial to employees covered by the New Enterprise Agreement. It must also be accepted that the New Enterprise Agreement either omitted or replaced these clauses with less beneficial clauses.
85 An examination of the applicants' written and oral submissions and an aide memoire provided to the Commission reveals that the applicants relied upon some, but not all, of these clauses in support of its argument that the New Enterprise Agreement should not be approved. It is unnecessary, for the purposes of this appeal, to consider whether there can be jurisdictional error in circumstances where the Commission is satisfied that an enterprise agreement should be approved without having considered detrimental changes to working conditions that were not the subject of submissions. It is enough that there were a number of detrimental changes that the applicants had specifically submitted were not explained by the employer. It is convenient to refer to the omitted and replaced clauses that were the subject of specific submissions as the "Beneficial Greenfields Clauses".
86 The obligation under s 180(5) to take all reasonable steps to explain the effect of the terms of the New Enterprise Agreement required the employer to take all reasonable steps to explain to the relevant employees the omissions from, and detrimental modification of, the Beneficial Greenfields Clauses. The question of whether the Commission considered whether the employer complied with that obligation requires close examination of the Commission's findings in its reasons of 2 October 2019.
87 The Commission found at [74] that the employer had provided detailed information to the Commission about how the terms of the New Enterprise Agreement and their effect were explained to employees. The Commission proceeded to describe at [75] to [83] how the explanations were given. The Commission then concluded:
[84] Mr Murphy gave detailed evidence about his explanation of a range of terms of the Agreement and how they would operate. I am satisfied that he went through each clause of the Agreement with each employee. The discussion of each term, and the depth of that discussion, varied. There was limited discussion about some of the National Employment Standards, the flexibility term and consultation term except in reference to the Act. There was detailed discussion about other matters, such as ticketed training, hours of work and rostered days off. The classification structure, and the appropriate relativities for certain roles, was a focus of some of the employees. I am satisfied that Mr Murphy took all reasonable steps to explain the Agreement to the employees, and to ensure that the explanation was tailored to the individual circumstances of employees. His approach was informed by his understanding of those circumstances…
88 In this passage, the Commission found that Mr Murphy had gone through each clause of the draft New Enterprise Agreement with each employee, and taken all reasonable steps to explain the New Enterprise Agreement. However, the Commission only found that Mr Murphy had given evidence about his explanation of "a range of terms" of the New Enterprise Agreement and how they would operate. There was no finding here that Mr Murphy had explained the effect of all the terms.
89 The Commission then observed:
[85] The discussion canvassed key differences between the Agreement and the Manufacturing Award, as well as some of the differences between the Agreement and the Greenfields Maintenance Agreement (although some differences, such as the omission of union rights under the dispute resolution term, were not explained). Mr Murphy conceded, however, that it did not deal with the Greenfields Electrical Agreement, despite its overlapping coverage with the Agreement in relation to electricians.
[86] Mr Murphy explained this omission on the basis that because the Greenfields Electrical Agreement and the Greenfields Maintenance Agreement are very similar, one only needed to explain the changes from one of the two. It is also the case that none of the employees were employed as electricians, although one appears to have advanced electrical instrumentation qualifications.
[87] I accept, and it is not seriously in dispute, that the Greenfields Electrical Agreement and the Greenfields Maintenance Agreement are substantially similar in terms of their content. There are a number of differences of a relatively minor nature, and with one exception, in my view the failure to explain those matters would not render the explanation inadequate for the purposes of section 180(5). However, there is one key difference that falls into such a category.
[88] The Greenfields Electrical Agreement incorporates the Electrical, Electronic and Communications Contracting Award 2010 (the Electrical Award), except in relation to the model dispute resolution, flexibility and consultation terms. It does not appear to be the case that the Electrical Award would otherwise cover or apply to employees of MMS, because it is not in the industry of providing electrical services.
[89] In a similar vein, the Greenfields Maintenance Agreement incorporates the Manufacturing Award, as well as large sections of the pre-reform Metal, Engineering and Associated Industries Award 1998 (Parts I and IV), the pre-reform Metal, Engineering and Associated Industries (Accident Pay, Victoria) Award 1998 and the pre-reform Metal, Engineering and Associated Industries (Superannuation) Award 2000 as they stood on 1 March 2006. It also provides for the continuation of a range of unspecified "existing over Agreement payments and conditions of employment".
[90] Except in relation to the Manufacturing Award, there is no evidence of any discussion about the consequences of making the Agreement in relation to the displacement of the various instruments incorporated by reference in the Greenfields Electrical Agreement and the Greenfields Maintenance Agreement. The breadth of terms and conditions regulated by those instruments makes this a material omission. It falls in the category of concern identified in One Key No. 2 and later in Diamond Offshore, in that despite the industry experience of the employees and their varying levels of familiarity with working conditions in the Latrobe Valley, I cannot be satisfied that employees were put in a position to fully appreciate the effect on their existing conditions of employment in voting to approve the Agreement.
[91] It follows that I am not presently satisfied that the Agreement was genuinely agreed for the purposes of section 188(1)(a) (sic) of the Act, because the evidence does not establish that all reasonable steps were taken to ensure the explanation given to employees under section 180(5) was adequate.
(Underlining added.)
90 At [85], the Commission made four findings. First, the Commission found that Mr Murphy had explained the key differences between the Manufacturing Award and the New Enterprise Agreement. Second, Mr Murphy had explained some of the differences between the Existing Greenfields Agreements and the New Enterprise Agreement. Third, Mr Murphy had not explained some of the differences between the Existing Greenfields Agreements and the New Enterprise Agreement, including the omission of union rights under the dispute resolution term. Fourth, Mr Murphy had not dealt with the Greenfields Electrical Agreement at all in his explanations to employees.
91 The Commission's focus at [86] and [87] was upon the consequence of its fourth finding, that Mr Murphy had failed to deal with the Greenfields Electrical Agreement. The Commission concluded that since Mr Murphy had dealt with the Greenfields Maintenance Agreement and it was substantially similar in content to the Greenfields Electrical Agreement, that omission did not affect the adequacy of the explanation for the purposes of s 180(5).
92 The Commission then returned to its third finding, that Mr Murphy had not explained some of the differences between the Existing Greenfields Agreements and the New Enterprise Agreement. The Commission focussed at [88]-[90] upon the absence of any explanation that certain historical Awards incorporated into the Existing Greenfields Agreements would be displaced under the New Enterprise Agreement. It was solely that error which led to the Commission finding at [91] that it was not satisfied the New Enterprise Agreement had been genuinely agreed. The subsequent Approval Decision was concerned with whether the undertakings offered by the employer would meet the Commission's concerns about displacement of the historical Awards.
93 However, the Commission's reasons gave little attention to whether other differences between the Existing Greenfields Agreements and the New Enterprise Agreement had been explained to the employees. The entirety of the Commission's discussion of that issue is found in [85] where the Commission stated that:
The discussion canvassed…some of the differences between the Agreement and the Greenfields Maintenance Agreement (although some differences, such as the omission of union rights under the dispute resolution term, were not explained).
94 In this passage, the Commission expressly acknowledged that some of the differences between the Existing Greenfields Agreements and the New Enterprise Agreement were not explained to the employees. The only differences the Commission identified as having not been explained were, "the omission of union rights" (presumably a reference to the first of the Beneficial Greenfields Clauses identified in the Table at [83] above) and the displacement of the historical Awards. While the Commission evidently accepted that there were other differences not explained, it did not identify them. The Commission did not explain whether such differences were beneficial or detrimental to the relevant employees.
95 In considering whether it was satisfied that s 180(5) had been complied with, the Commission would naturally be expected to follow up its finding that "some differences…were not explained" by identifying those differences and examining the materiality of the failure to explain them. However, apart from discussing the displacement of the historical Awards, the Commission made no further reference to those differences. The Commission did not refer to the Beneficial Greenfields Clauses (other than the union rights clause), even though these were differences which the first applicant had submitted had not been not explained to the relevant employees and were material. The consequence of the employer having only explained some of the differences was not discussed by the Commission.
96 The employer submits that it should be inferred that the Commission must have accepted Mr Murphy's evidence that he had, "also explained how the Agreement differed in any material or significant way to the…Greenfields Agreement". There are three difficulties with accepting that submission.
97 First, the Commission in fact rejected that aspect of Mr Murphy's evidence. Rather, the Commission expressly found that Mr Murphy had not explained that the historical Awards incorporated into the Existing Greenfields Agreements were displaced under the New Enterprise Agreement, and found that error to be material.
98 Second, the statement made by Mr Murphy was a bare, self-serving assertion of compliance with the obligation under s 180(5) to take all reasonable steps to ensure that the effect of the terms was explained. Mr Murphy did not elaborate upon what material and significant differences he had explained. As the Full Court held in One Key at [112], the recital of a conclusion on the very question the Commission is required to determine is not, without more, a sufficient basis for the satisfaction of the statutory test. The Full Court held that a bare statement that an explanation of the terms and the effect of the terms was given is an inadequate foundation upon which to reach the requisite state of satisfaction.
99 Third, Mr Murphy's statement that he explained how the New Enterprise Agreement "differed in any material or significant way" infers that there were some differences he did not explain because he regarded them as immaterial or insignificant. Mr Murphy did not identify which terms he failed to explain the effect of. Without the Commission identifying those terms and considering their materiality for itself, the Commission could not reasonably have been satisfied that the employer had taken all reasonable steps to ensure that the effect of all the terms were explained in an appropriate manner as was required by s 180(5), nor that any non-compliance was an immaterial error within s 188(2).
100 It would have been an error for the Commission to have concluded that on the basis of Mr Murphy's evidence, that it was satisfied that the employer had complied with s 180(5) and that the New Enterprise Agreement was "genuinely agreed to". However, as has been discussed, the Commission did not accept Mr Murphy's evidence that he had explained how the New Enterprise Agreement "differed in any material or significant way" from the Existing Greenfields Agreements.
101 The employer next submits that the Commission "obviously enough" did not accept that the omissions or modifications of the Beneficial Greenfields Clauses were "material deleterious impacts".
102 The Commission did not discuss the Beneficial Greenfields Clauses, nor whether the omission or detrimental modification of the Beneficial Greenfields Clauses had been explained to the employees, nor why it was satisfied that the employer had complied with s 180(5) other than in respect of the historical Awards. The omissions and modifications were clearly detrimental to employees covered by the New Enterprise Agreement. The employer has not pointed to any reasons why the omissions could have been regarded by the Commission as immaterial.
103 It cannot be inferred that the Commission considered the employer's failure to explain to the relevant employees the omissions or modifications of the Beneficial Greenfields Clauses, but then decided that it was nevertheless satisfied that the failure was immaterial in the sense described in s 188(2). To draw such an inference would be to read far more into the Commission's reasons than is available. The Commission simply failed to explain why it disregarded the employer's omissions. It is difficult to imagine that the Commission considered that the employer's failure to explain the omission of terms like those entitling qualified employees to a 5% wage increase after 12 months, or to a shift loading of 100% for each afternoon or night shift worked for their first seven ordinary days of a posted roster, was a merely minor procedural or technical error not likely to disadvantage the employees. The Commission did not give the slightest indication that it gave consideration to the employer's failure to explain the effect of the omission of, or detrimental modifications to, the Beneficial Greenfields Clauses but then decided that it was nevertheless satisfied that the errors were immaterial.
104 The employer's submission that the Commission did not accept that the omission of or modifications to the Beneficial Greenfields Clauses were "material deleterious impacts" must be rejected.
105 In summary, the Beneficial Greenfields Clauses were omitted from, or detrimentally modified in, the New Enterprise Agreement. In its reasons of 2 October 2019, the Commission recognised that some differences between the Existing Greenfields Agreements and the New Enterprise Agreement were not explained to the employees. However, the Commission only identified two of the differences that were not explained. These were the omission of the union rights clause (which was one of the Beneficial Greenfields Clauses) and the historical Awards. The Commission referred to the materiality of only the second difference it identified. The Commission's reasons reveal no examination of whether the employer had explained to the employees that the other Beneficial Greenfields Clauses had been omitted from or modified in the New Enterprise Agreement. It is inconceivable that if the Commission had considered the omissions or modification of all the Beneficial Greenfields Clauses and found that they had been explained to the employees, or alternatively, that the omissions and modifications had been explained but the errors were immaterial, the Commission would not have expressly said so.
106 Sections 186(2) and 188(1)(a) imposed a duty upon the Commission to approve the New Enterprise Agreement if, and only if, it reached a state of satisfaction that the employer had, relevantly, complied with s 180(5). The Commission was required to consider whether all reasonable efforts had been made to ensure that the effect of all the terms of the New Enterprise Agreement were explained to the relevant employees in an appropriate manner. This required consideration of whether all the differences detrimental to employees between the New Enterprise Agreement and the Existing Greenfields Agreements were explained. The Beneficial Greenfields Clauses were contained in the Existing Greenfields Agreements but had been omitted from, or detrimentally modified in, the New Enterprise Agreement.
107 The only appropriate inference is that the Commission failed to consider whether the employer explained the New Enterprise Agreement's omissions (other than omission of the union rights clause) from, and detrimental modifications to, the relevant employees. Therefore, the Commission could not have considered whether the employer had taken all reasonable steps to give that explanation.
108 In One Key, the Full Court observed at [109] that where a statute vests power in, or imposes a duty upon, an administrative decision-maker to do something upon reaching a state of satisfaction, and matters that the statute requires the decision-maker to take into account are not considered, then, as a matter of law, the requisite state of satisfaction is not reached. Since the Commission was required under ss 186(2) and 188(1) to consider whether the employer had taken all reasonable steps to explain all the terms of the proposed enterprise agreement, but failed to do so, the requisite state of satisfaction was not lawfully reached.
109 It is necessary to consider whether the Commission's error was material and, accordingly, a jurisdictional error. In MZAPC v Minister for Immigration and Border Protection [2021] HCA 17; (2021) 390 ALR 590, the High Court at [2] confirmed that an error is material if it involves a realistic possibility that the decision in fact made could have been different had the breach of the relevant condition not occurred. It is apparent that if the Commission had considered whether the employer had taken all reasonable steps to explain the omission or detrimental modification of the Beneficial Greenfields Clauses, there was a significant chance that it would have gone on to conclude that the New Enterprise Agreement had not been genuinely agreed to, and, subject to the question of any undertakings offered and accepted, could not be approved. The Commission's error was jurisdictional.