Validity of the Harrison certification order
101 Part VIB of the Workplace Relations Act deals within certified agreements. Division 1 (ss170L to 170LG) deals with preliminary matters. They include the object of the Part, stated in s170L to be "to facilitate the making, and certifying by the Commission, of certain agreements, particularly at the level of a single business or part of a single business". In relation to the private sector, the term "single business" is defined by s170LB(1) to mean "a business, project or undertaking that is carried on by an employer". Section 170LB(3) says:
"a part of a single business includes, for example:
a geographically distinct part of the single business; or
a distinct operational or organisational unit within the single business".
102 Section 170LE deals with the concept of "valid majority". It relevantly provides:
"For the purposes of this Part, a valid majority of persons employed at a particular time whose employment is or will be subject to an agreement:
(a) make or genuinely make the agreement; or
(b) approve or genuinely approve:
(i) the agreement; or
(ii) …
(iii) …
if:
(c) the employer gives all of the persons so employed a reasonable opportunity to decide whether they want to make the agreement or give the approval; and
(d) …
(ii) if the decision is made by a vote - a majority of the persons who cast a valid vote;
decide, or genuinely decide, that they want to make the agreement or give the approval."
103 Division 2 of Part VIB relates to the making of agreements between employers who are constitutional corporations (as is Mine Management) or the Commonwealth, on the one hand, and organisations of employees or employees on the other. Section 170LJ(1) provides that, for an application to be made to the Commission about such an agreement, it must be an agreement in writing "about matters pertaining to the relationship between (such an employer) and all persons who, at any time when the agreement is in operation, are employed in a single business, or a part of a single business, of the employer and whose employment is subject to the agreement".
104 Section 170LK(1) provides:
"The employer may make the agreement with a valid majority of the persons employed at the time whose employment will be subject to the agreement."
Subsection (2) requires that the employer take reasonable steps to ensure that every person employed at the time, whose employment will be subject to the agreement, has at least 14 days' notice in writing of the intention to make the agreement. Under subs (4) the notice must also state that if:
"(a) any person whose employment will be subject to the agreement is a member of an organisation of employees; and
(b) the organisation is entitled to represent the person's industrial interests in relation to work that will be subject to the agreement;
the person may request the organisation to represent the person in meeting and conferring with the employer about the agreement".
Subsection (5) obliges the employer to give such an organisation a reasonable opportunity to "meet and confer with" the employer about the agreement before it is made.
105 Division 3 of the Act concerns agreements about industrial disputes and industrial situations. It is not presently material.
106 Division 4 deals with certification. The key provision is s170LT. It provides that, if an application is made to the Commission in accordance with Division 2 or 3 to certify an agreement, "the Commission must certify the agreement if, and must not certify the agreement unless, it is satisfied that the requirements of this section are met". The first of those requirements is that the agreement must pass the "no-disadvantage test". That term is explained by Part VIE of the Act. The main provision of that Part is s170XA which provides (in subs (1)) that "[a]n agreement passes the no-disadvantage test if it does not disadvantage employees in relation to their terms and conditions". Subsection (2) states that, subject to ss170XB, 170XC and 170XD,
"an agreement disadvantages employees in relation to their terms and conditions of employment only if its approval or certification would result, on balance, in a reduction in the overall terms and conditions of employment of those employees under:
(a) relevant awards or designated awards; and
(b) any other law of the Commonwealth, or of a State or Territory, that the … Commission … consider relevant."
107 A "relevant award" is an award:
"(a) regulating any term or condition of employment of persons engaged in the same kind of work as that of the person under the agreement; and
(b) that, immediately before the initial day of the agreement, is binding on the person's employer."
A "designated award" is one selected by the Commission, in the absence of any relevant award, as appropriate for deciding whether the agreement passes the no-disadvantage test.
108 The other important requirement of s170LT is that, if the agreement was made in accordance with s170LK, "a valid majority of persons employed at the time whose employment would be subject to the agreement must have genuinely made the agreement": see subs (6).
109 Section 170LU provides further criteria which an agreement must satisfy. In the main these deal with issues of freedom of association and discrimination.
110 Section 170LV provides that if, under s170LT or s170LU, the Commission has grounds to refuse to certify an agreement, it may nevertheless certify it on an undertaking that meets the Commission's concerns. Further,
"(b) in any case, before refusing to certify the agreement, the Commission must give the persons who made the agreement an opportunity to take any action that may be necessary to make the agreement certifiable."
111 Division 5 of Part VIB specifies the effect of certification. Section 170LX(1) provides that a certified agreement comes into operation when it is certified and, subject to the section, remains in operation thereafter. Subsections (2), (3) and (4) of that section deal respectively with cessation of operation, termination and the employer ceasing to be a constitutional corporation.
112 Under s170LY a certified agreement generally prevails over any award or order of the Commission. Section s170LZ permits it to prevail over most State laws and industrial instruments, and also over certain Commonwealth legislation.
113 Some facts relevant to the validity of Senior Deputy President Harrison's certification order have already been stated: see paras 43 to 49 above. It may be recalled that, from 21 December 1998, Mine Management employed 22 employees. None of those employees was involved in the operation of the mine, which was still being managed by Gordonstone. Notwithstanding that fact, on that day Mine Management gave to its 22 employees what purported to be "notices of intention to make an agreement" under s170LK(2) of the Act. The agreement was approved by a ballot conducted on 6 January 1999. On the following day, Mine Management made application C No.40017 of 1999 asking the Commission "to determine an appropriate award or awards for the purpose of deciding whether a certified agreement passes the no-disadvantage test". It identified the kind of work that the persons under the proposed agreement are engaged in as "mine operation and management".
114 In connection with that application, on 21 January 1999, Mine Management's Employee and Community Relations Manager, Mr McCrea, declared that:
(a) Mine Management is a subsidiary of Pacific Coal Pty Limited which in turn is a subsidiary of Rio Tinto.
(b) Rio Tinto, through an associated company, had entered into a conditional contract for the purchase of ARCO's interest in the Gordonstone Joint Venture.
(c) If Rio Tinto is successful in finalising the purchase of ARCO's interest in the Gordonstone Joint Venture then it will propose that the Gordonstone Joint Venture terminate the arrangement with Gordonstone to manage the mine and install Mine Management as the manager of the Gordonstone Joint Venture.
In those proceedings Mr McCrea gave oral evidence that:
· Mine Management had 26 employees, 23 of those being production, engineering and staff employees.
· At the time of giving evidence the "work" of the production and engineering employees consisted of induction, first aid courses, and training courses.
· Mine Management had also offered employment to 22 other persons whose employment would commence on the day that the company began managing the mine. Those persons would perform production, engineering and staff functions at the mine.
· After being appointed the manager of the mine, Mine Management would implement a timetable for recruitment at the mine. The timetable involved appointing 20 employees per month for the first three months and then continuing to recruit every two months until the workforce reached 150.
115 The following statements were also made to the Commission on 21 January 1999 on behalf of Mine Management:
"Mine Management is a subsidiary of Pacific Coal which is in turn a subsidiary of Rio Tinto. As the Commission may be aware Rio Tinto is purchasing ARCO's interest in the Gordonstone Joint Venture. However the purchase arrangements has [sic] yet to be completed, its still a conditional arrangement and we still cannot assist the Commission in explaining when that is going to occur. There are still technical issues being sorted out between the parties. We are hopeful it will be soon.
…
[I]f the purchase had been completed, there would not be any need to designate any award because Mine Management would have become the successor to Gordonstone Coal Management Pty Ltd. As that has not occurred, and we do wish the certification of the agreement to proceed, it is therefore a statutory requirement for us to seek the designation of these awards.
These are the very awards that would apply to Mine [M]anagement Pty Ltd if it was a successor today. It will, touch wood, become a successor when the sale is completed, shortly.
Mine Management is a company established for the singular purpose of being the manager of the Gordonstone Joint Venture when the purchase by Rio Tinto is finalised…In our submission the role of its employees will be to work at that mine."
It was not suggested that the employees were, at the time of hearing, working at Gordonstone mine, or that this would be possible before completion of the purchase from ARCO.
116 On 28 January 1999 Senior Deputy President Harrison issued a Decision and Determination with respect to the application C No.40017 of 1999, finding the application to be competent and consistent with the provisions of s170XF and designating the Gordonstone Coal Mine Consent Award 1993 and the Coal Mining Industry (Supervision and Administration) Interim Consent Award 1990, Queensland - Clause 32 Enterprise Agreement - The Gordonstone Staff Agreement 1996 as appropriate awards for the purpose of the no disadvantage test.
117 As mentioned in para 47 above, Senior Deputy President Harrison heard the certification application on 1 February 1999. At the conclusion of the hearing she announced the agreement would be certified, operative from that day for two years. A formal order was issued on 9 February. ARCO had still not sold its interest in the mine to Rio Tinto. This event apparently took place at some time between 10 and 14 February.
118 It will be apparent from the foregoing that all steps taken in relation to certification of the agreement occurred before Mine Management acquired any role in the operation of the business to which it was designed to relate. Counsel for CFMEU argue that, under those circumstances, the certification order was invalid. They say that, leaving aside a "greenfields agreement", covered by s170LL, Division 2 of Part VIB is concerned with agreements in respect of existing businesses. They point to the definition of "single business", cited in para 101 above, which is couched in the present tense and they emphasise the words in s170LK(1) "a valid majority of the persons employed at the time whose employment will be subject to the agreement". More generally, counsel argue any other conclusion would be inimical to the policy of the Act. The Act contemplates that employees will continue to have the benefit of awards, subject only to their exclusion by Australian Workplace Agreements, made and approved pursuant to Part VID of the Act, or agreements made, and certified by the Commission, under Part VIB. The notion underlying the certified agreement provisions, counsel argue, is that a valid majority of employees may elect to substitute for their award rights and benefits available to them under a certified agreement. In order to ensure this is an informed decision, the Act requires the employer to give not less than 14 days notice of intention to make the proposed agreement and gives employee organisations a right of access to relevant information. These protections would be rendered nugatory, say counsel, if an employer was free, before taking over a business, to make an agreement with a small number of employees and have the result bind all employees subsequently employed by that employer in the business. There is no guarantee, say counsel, that the employees involved in the agreement will be representative of the range of persons subsequently employed in the business; they may be only a small number of senior staff who enjoy special rights under the agreement.
119 Counsel for Mine Management argue this case falls squarely within the terms of the Act; the agreement was made, as the Act requires, with "a valid majority of the persons employed at the time whose employment will be subject to the agreement" (s170LK(1)); it was, accordingly, duly certified. As such, it bound the employer and "all persons whose employment is, at any time when the agreement is in operation, subject to the agreement": s170M(1). It would prevail over the Hodder award to the extent of any inconsistency: s170LY(1).
120 We accept the submissions of CFMEU on this issue. It is clear the intention of the parties to the agreement was that it should apply to the employment of persons in "production, engineering, supervision and administration roles" (cl 3 of the agreement) at the Gordonstone mine. It was suggested in argument that Mine Management had a "single business" of the operation of coal mines generally. However, this suggestion cannot stand with the contemporaneous evidence and understanding of Mine Management's representatives. In any case, in January 1999 no employee was shown to be working in the operation of any coal mine.
121 The question is, therefore, whether an agreement regulating terms and conditions of employment in a proposed single business, made with employees who may, in the future, be employed in that business but are not yet so employed, qualifies as an agreement that may be certified under the Act. In our view, the preferable conclusion, as a matter of both textual and purposive interpretation of the Act, is that it does not.
122 Textual matters that cast some light on the subject are these. When s170LK(1) says that "the employer may make the agreement with a valid majority of the persons employed at the time whose employment will be subject to the agreement", the phrase "the time" clearly means the time of making the agreement. The phrase "whose employment" equally clearly means the employment of the persons employed at that time. The natural meaning of a reference to the employment of such persons is to the type or nature of that employment at that time. Thus the natural meaning of s170LK(1) is that the agreement may be made with employees whose employment is then of a type or nature that will be subject to the agreement.
123 This conclusion is fortified by Part VIB's reference to a "single business". The Part does not envisage certified agreements operating in an abstract way. For an agreement to be the subject of an application to the Commission, it must be an agreement pertaining to the relationship between the employer and "all persons who, at any time when the agreement is in operation, are employed in a single business, or a part of a single business, of the employer …". Leaving aside the greenfields situation for which the Part makes special provision, it would be a strange result if the relevant agreement could be made with persons who were not yet employed, and might never be employed, in the relevant single business.
124 In the present case it can be said that any employee bound by the terms of the certified agreement would be an employee who participated in the ballot or a person who sought employment at the mine after the agreement was made; and who therefore, knew - or at least had the opportunity of knowing - the terms of the agreement. But this is true only because of the unusual circumstance that the mine was closed at the time of Mine Management's assumption of responsibility. If Mine Management's legal argument is correct, it would equally apply to a take-over of an operating business. Consider, for example, a business actively operated by company X. X employs a large number of employees who work under award conditions. X agrees to sell the business to company Y. Before completion of the agreement, Y enters into an agreement with its existing handful of employees (all senior administrative staff) in relation to the terms and conditions of employment that will apply in the business. Y has the agreement certified by the Commission pursuant to Part VIB of the Act and then completes its purchase. If the argument for Mine Management is correct, the terms of the agreement displace the terms of the award, not only in relation to the handful of employees who participated in the ballot at which it was approved, but also in relation to the much greater number of persons who were employed in the business at the date of take-over but had no say on the issue of approval.
125 Further, application of the "no-disadvantage" test appears to be predicated upon the assumption that there will be employees in the relevant employment - that is, the single business - at the time of certification. Section 170XA(2) speaks of employees being disadvantaged if "…certification would result, on balance, in a reduction in the overall terms and conditions of those employees under [relevant or designated awards and other legal sources of employment conditions]". A non-existent quantity can hardly be "reduced".
126 Section 170LT(6) requires that a "valid majority of persons employed at the time whose employment would be subject to the agreement must have genuinely made the agreement". This plainly betokens a concern with the authenticity and, as it were, the moral authority of the agreement. It is perfectly understandable - indeed, one might reasonably think, plainly necessary - this be so. The principal object of the Act as a whole, as set out in s3, is "to provide a framework for cooperative workplace relations" by, among other things,
"(d) providing the means:
(i) for wages and conditions of employment to be determined as far as possible by the agreement of employers and employees at the workplace or enterprise level upon a foundation of minimum standards; and
(ii) to ensure the maintenance of an effective award safety net of fair and enforceable minimum wages and conditions of employment; and
(e) providing a framework of rights and responsibilities for employers and employees, and their organisations, which supports fair and effective agreement-making and ensures that they abide by awards and agreements applying to them" (emphasis supplied)
There can hardly be fair agreement-making between employer and employees about wages and employment conditions in a workplace (a mine is a good example) before both sets of parties have actual experience of the work and its place of performance. Without that, cooperative workplace relations are unlikely to be achieved. An agreement prematurely made is unlikely to be effective; measuring effectiveness in this context by such matters as durability, aptness and comprehensiveness. Established "safety net" standards are less likely to be respected and maintained, because the range of conditions in relation to which such standards exist may not have been fully comprehended.
127 In short, the Act clearly indicates a concern for fairness and efficacy in agreement-making, as well as flexibility. The subject matter of the Act makes it understandable Parliament had such concerns. A consideration of those concerns supports the interpretation we consider preferable on more narrow grounds.
128 It follows that the agreement submitted to the Commission in January 1999, and certified by Senior Deputy President Harrison on 1 February 1999, was not an agreement of the type contemplated by Part VIB of the Workplace Relations Act. There was no valid application for certification before the Commission. The certification order made by Senior Deputy President Harrison was ineffective. No certified agreement came into existence as a result of the proceedings before her.
129 It remains only to add that the opportunities for rectification of a defective application provided by s170LV are inapplicable. Section 170LV(1) operates where, "under s170LT or s170LU, the Commission has grounds to refuse to certify an agreement"; but here there is no relevant agreement. The agreement proferred to the Commission is uncertifiable for reasons more fundamental than non-compliance with s170LT or s170LU.