Fair Work Act 2009

s.604 - Appeal of decisions

Construction, Forestry, Mining and Energy Union

Appeal against decision [2017] FWCA 2262 of Commissioner Gregory at Melbourne on 24 April 2017 in matter number AG2017/687.

[1] The Construction, Forestry, Mining and Energy Union (CFMEU) has, pursuant to s.604 of the Fair Work Act 2009 (FW Act), lodged an appeal, for which permission to appeal is required, against a decision Commissioner Gregory issued on 24 April 2017[1] (Decision) in which he approved the Concrete Constructions Enterprise Agreement 2017 (Agreement). The Decision in its entirety was as follows:

"[1] An application has been made for approval of an enterprise agreement known as the Concrete Constructions Enterprise Agreement 2017 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act). It has been made by Concrete Constructions (WA) Pty Ltd. The Agreement is a single enterprise agreement.

[2] The Applicant 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.

[3] Subject to the undertakings referred to above, I am satisfied that each of the requirements of ss.186, 187, 188 and 190 as are relevant to this application for approval have been met.

[4] The Agreement is approved and, in accordance with s.54 of the Act, will operate from 1 May 2017. The nominal expiry date of the Agreement is 23 April 2021."

[2] The CFMEU was not a bargaining representative for the Agreement. Nonetheless, having become aware of the application made by Concrete Constructions (WA) Pty Ltd (Concrete Constructions) for approval of the Agreement, it made a number of objections to approval of the Agreement in correspondence to the Commission dated 14 March 2017 and 31 March 2017. The objections included that the Agreement did not pass the Better Off Overall Test (BOOT) as required by s.186(2)(d) of the FW Act. The Commissioner obtained the response of Concrete Constructions to those objections, and having done so caused the following correspondence to be sent to the CFMEU on 19 April 2017 (formal parts omitted):

"The Commissioner has received the submissions sent by the CFMEU on the 14th, 22nd and 31st of March 2017 and has taken such into account. The Commissioner has put several issues raised by the CFMEU to the Applicant and requested a response in relation to such. The Commission thanks the CFMEU for their submissions and having now received submissions from the Applicant, the Commissioner will consider the application for approval."

[3] It may be seen that neither the Decision nor the above correspondence specifically addressed any of the issues raised by the CFMEU.

[4] The CFMEU's notice of appeal identified four grounds of appeal which were elaborated upon in its written and oral submissions. Before we turn to the grounds of appeal, it is necessary to deal with a challenge by Concrete Constructions to the competency of the CFMEU's appeal. Concrete Constructions submitted that because the CFMEU was not a bargaining agent for the Agreement, it was not a "person who is aggrieved by a decision" under s.604(1) and therefore did not have standing to bring the appeal. We reject that submission. It was not in dispute that the CFMEU's rules permitted it to enrol as members employees of Concrete Constructions covered by the Agreement, and we consider that there is a likelihood that members of the CFMEU will be engaged by Concrete Constructions in the future and will be covered by the Agreement. That is sufficient to confer standing on the CFMEU to appeal the Decision: CEPU v Main People Pty Ltd[2]; MUA v Toll Energy Logistics Pty Ltd[3]; CFMEU v MGI Piling (NSW) Pty Ltd[4]; TWU v ALDI Foods Pty Limited[5]; CFMEU v CSRP Pty Ltd[6].

[5] The CFMEU's first challenge to the Decision was that the Commission could not properly have been satisfied that the Agreement was genuinely agreed to, as required by s.186(2)(a) of the FW Act. The elements of this argument were as follows:

• s.188(b) provides that an element of the requirement for genuine agreement is that, in the case of a single-enterprise non-greenfields agreement, the agreement has to have been "made" in accordance with s.182(1);

• s.182(1) requires that an agreement is "made" when a majority of those employees who would be covered by it cast a valid vote to approve it;

• Concrete Construction's Form F17 statutory declaration contained no response to the standard-form questions "How many employees will be covered by the agreement?", "How many employees have cast a valid vote?" and "How many employees voted to approve the agreement?";

• there was therefore no basis upon which the Commissioner could have concluded that the Agreement was genuinely agreed.

[6] We do not consider that the CFMEU submission on this point has any merit. It is apparent that the initial version of the Form F17 filed by Concrete Constructions erroneously omitted the required answers to a number of questions. This was pointed out by the Commission's staff in an email dated 21 March 2017, and on the same day Concrete Constructions filed a revised Form F17. Among other things, this identified that six employees would be covered by the Agreement and had cast valid votes to approve it. The Commissioner was plainly entitled to rely upon the revised Form F17.[7] We refuse permission to appeal with respect to the first ground of appeal.

[7] The second ground of appeal was that the Agreement had not genuinely been agreed to because Concrete Constructions had not complied with the requirement in s.188(a)(i) to comply with s.180(5), which required the employer to take all reasonable steps to explain the terms of the Agreement and the effect of those terms to the relevant employees. The CFMEU submitted that there was "no evidence before the Commissioner" that Concrete Constructions had drawn to the employees' attention the effect of clauses 5.1(c), 9.2, 16, 24.7 and 27.7, which it characterised as being disadvantageous compared to the corresponding provisions of the reference instrument for the BOOT, the Building and Construction General On-site Award 2010 (Award). Again, we consider this submission is without merit. The Form F17 filed by Concrete Constructions, in both its original and revised form, in response to the question "What steps were taken by the employer to explain the terms of the agreement, and the effect of those terms, to the relevant employees?", gave the answer "Discussions were held with employees, went through the agreement clause by clause explaining each clause asking for questions and resolving any issues, making employees aware of what each of the clauses meant and answering there questions [sic]". It was open to the Commissioner, based on this statement in the statutory declaration, to conclude that s.180(5) had been complied with. Further, additional evidence adduced by Concrete Constructions in the appeal, which was not objected to or contradicted, confirmed that the terms of the Agreement were explained to the employees. Permission to appeal in relation to the second ground of appeal is also refused.

[8] The third ground of appeal was that the Agreement did not pass the BOOT, and the Commissioner erred in concluding otherwise. The CFMEU pointed out that the Agreement did not contain a number of allowances that were contained in the Award, including the underground allowance, the laser operation allowance, the carpenter-diver allowance and the refractory bricklayer allowance. We do not consider that the fact that an enterprise agreement does not contain specialist allowances which may have no relevance to the employer's operations necessarily demonstrates that the BOOT has not been passed. The CFMEU also pointed out that the rates in the Agreement were to be increased at Concrete Constructions' discretion and not in accordance with the Commission's annual wage reviews. However, the BOOT is only concerned with the position applying at "test time" (that is, the time the application for approval of the relevant agreement was made[8]), not what happens after that time. More persuasively, the CFMEU provided a comparative pay analysis of a weekly-hire employee working in the CW3 classification (which appears in both the Award and the Agreement) who worked 50 hours per week which demonstrated that the employee would be $18.66 worse off under the Agreement compared to the Award. A copy of this analysis appears in the annexure to this decision. In that analysis a shortfall arises because, even though the Agreement provides for a higher base rate of pay, that base rate is expressed as absorbing all allowances (unless otherwise specified) and does not adequately compensate for the non-payment of meal allowance, crib time payments and "pro-rata redundancy".

[9] Concrete Constructions contended that the CFMEU's analysis was incorrect only in limited respects, which we deal with later. Additionally, it sought to rely upon an affidavit sworn by Mr Ivan Gojak, the Operations Manager of Concrete Constructions, on 14 June 2017 in which he stated (among other things) that the business was prepared to provide additional undertakings "in order to satisfy the Commission". The proposed undertakings are set out in an annexure to his affidavit. However, to the extent that the CFMEU's analysis identified a BOOT deficiency, its appeal cannot be deflected by the offer of further undertakings. Under s.190 of the FW Act, the Commission may approve an agreement where (relevantly) an application has been made for approval of an enterprise agreement, the Commission has a concern that the approval requirement in ss.187 and 187 are not met, and an undertaking offered by the employer meets the concern. Under s.191, an undertaking is taken to be a term of an agreement if the Commission approves an agreement after accepting an undertaking. The FW Act only contemplates the Commission receiving and acting upon undertakings prior to approving agreements, and an undertaking accepted after an agreement has been approved is not given any legal effect by the FW Act. Therefore consideration could only be given to the proposed further undertakings if we upheld the appeal and quashed the Decision approving the Agreement.[9] That makes it necessary to consider the CFMEU analysis.

[10] The CFMEU's analysis was modelled on a work pattern of 50 hours per week. We accept that that is a common work pattern in the construction industry. The first shortfall identified was that the Agreement did not provide for payment of crib time. Under clause 35.3(b) of the Award, an employee required to work two or more hours of overtime is entitled to a crib break, without deduction of pay, of 20 minutes after the normal finishing time. Where the break is not taken, the clause provides that the employee is regarded as having worked 20 minutes more than the actual time worked and is paid accordingly (which effectively makes the 20 minutes payable at double time). The CFMEU submitted that the crib break is commonly paid out this way in the construction industry, and we accept this is the case at least outside the house building sector. Accordingly we accept that the non-provision of crib time in the Agreement, for the CW3 classification, leads to a shortfall of about $14.24 per day.[10]

[11] The second claimed shortfall concerns the meal allowance of $14.78 which, under clause 20.2(a) of the Award, is payable whenever an employee is required to work overtime for at least one and a half hours. As Concrete Constructions pointed out, clause 7.3 of the Agreement provides for a meal allowance of the same amount as the Award. However it adds the condition that, for the meal allowance to be payable, the employee must not have had prior notification of the overtime on the day before. That condition is not contained in the Award. The CFMEU pointed out that under a regular 50 hour per week work pattern, the employer would always be in a position to notify the employee of the overtime in advance and thus, under the Agreement, would be able to avoid payment of the allowance. We accept that the Agreement permits this to occur.

[12] The third claimed shortfall concerns redundancy. Clause 17 of the Award contains an industry-specific redundancy scheme. Unusually, clause 17.2 of the Award defines "redundancy" for the purpose of the operation of the scheme as follows:

"For the purposes of this clause, redundancy means a situation where an employee ceases to be employed by an employer to whom this award applies, other than for reasons of misconduct or refusal of duty. Redundant has a corresponding meaning."

[13] This clause does not require a dismissal, and so would apply when the employment of an employee engaged for a fixed-term or a specified task comes to an end. The CFMEU submitted that the Agreement, unlike the Award, specifically allows for employment of this nature (in clause 5.9), and clause 27.7(a) of the Agreement provides that such employees are not eligible for redundancy pay. The CFMEU further submitted that fixed-term or specified-task employment was highly suitable for the construction industry because of its project-based nature. It valued the redundancy at $37.77 or 1.75 hours pay per week. Its methodology in this respect was derived from clause 17.3(b) of the Award, which provides:

"(b) Provided that an employee employed for less than 12 months will be entitled to a redundancy/severance payment of 1.75 hours per week of service if, and only if, redundancy is occasioned otherwise than by the employee."

[14] We accept that the Agreement allows for the postulated detriment to occur, and the scenario under which it might occur is realistic and not fanciful. Concrete Constructions submitted, correctly, that a weekly employee who is not engaged for a fixed term or a specified task would not be subject this detriment, but that is not an answer to the loss of redundancy pay that would be suffered by an employee who is engaged for a fixed term or a specified task.

[15] The three identified shortfalls amount to a weekly shortfall of over $18 per week under the Agreement compared to the Award, even taking into account that the Agreement provides for higher base rates of pay. We cannot identify any other benefit, monetary or otherwise, in the Agreement which would compensate for this shortfall, and none was suggested by Concrete Constructions. Accordingly we accept the CFMEU's submission that the Agreement did not pass the BOOT. We think it appropriate in the circumstances to grant permission to appeal with respect to the CFMEU's third ground of appeal, to uphold the appeal on that ground, and to quash the Decision.

[16] The CFMEU identified other bases upon which it contended that the Agreement did not pass the BOOT. Given the conclusion we have reached concerning the CMFEU's BOOT analysis for the CW3 classification, we do not consider it necessary to form a view about these. The CFMEU's fourth ground of appeal was that the Commissioner erred in disregarding the "false" statement in Concrete Constructions' Form F17 statutory declaration to the effect that the Agreement did not contain any terms that were less beneficial than the equivalent terms and conditions in the Award. Again, given the conclusion we have reached on the BOOT ground, we consider it unnecessary to determine this ground of appeal. Permission to appeal in relation to the fourth ground is therefore refused.

[17] Concrete Constructions' application for approval of the Agreement will need to be re-determined. We consider that the application should be referred to a member of this Full Bench for this purpose. Concrete Constructions will have an opportunity to offer further undertakings to rectify any BOOT deficiencies, including the specific deficiencies identified in this decision, at the rehearing.

[18] We make the following orders:

(1) Permission to appeal is granted in relation to the CFMEU's third ground of appeal. Permission to appeal is otherwise refused.

(2) The appeal is upheld in relation to the CFMEU's third ground of appeal.

(3) The Decision ( [2017] FWCA 2262) is quashed.

(4) Concrete Constructions' application for approval of the Agreement (AG2017/687) is referred to Commissioner Simpson for re-determination.

H Millar of counsel with J Alilovic on behalf of Concrete Constructions (WA) Pty Ltd.

[1] [2017] FWCA 2262

[2] [2014] FWCFB 8429 at [5]- [7]

[3] [2015] FWCFB 7272; 254 IR 353 at [95]- [98]

[4] [2016] FWCFB 2654; 260 IR 244 at [4]

[5] [2016] FWCFB 91; 255 IR 248 at [22]- [23]

[6] [2017] FWCFB 2101 at [8]- [13]

[7] The additional evidence adduced by Concrete Constructions at the appeal hearing indicated that the revised Form F17 statutory declaration had not been properly made, in that the page containing the jurat from the original declaration made on 27 February 2017 had simply been attached to the rest of the revised declaration rather than having the whole document re-declared. This was clearly highly irregular, but it does not cause us to alter our conclusion that the Commissioner was entitled to rely on the information contained in the revised Form F17, particularly in circumstances where that information was not relevantly contradicted.

[9] See ALDI Foods Pty Ltd v Transport Workers' Union of Australia [2012] FWAFB 9398 at [29]

[10] The CFMEU's calculations were based on the Award rate of pay for the CW3 classification as it was at the date of the Decision, inclusive of the special and industry allowances provided for in clauses 21.1 and 21.2 of the Award.

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