[2018] FWCFB 6907

Fair Work Act 2009

s.604 - Appeal of decisions

Michael Baldwin; Corey Billows; Brett Slocum; Craig Sandler; Daryl Byron; Adam Williams; James Richardson

Appeal against decision [2018] FWC 3949 of Deputy President Kovacic at Canberra on 4 July 2018 in matter number AG2018/105 - Whether agreement genuinely agreed by employees - Whether employer took reasonable steps to provide an explanation of terms of agreement and effect of terms - Requirements of s. 180(5) - Permission to appeal refused.

[1] Diamond Offshore General Company (Diamond Offshore) has lodged an appeal, for which permission to appeal is required, against a decision[1] of Deputy President Kovacic (Decision) made on 4 July 2018, under s. 185 of the Fair Work Act 2009 (FW Act) dismissing an application for approval of the Diamond Offshore General Company Enterprise Agreement 2018 - 2022 (Agreement). The Deputy President dismissed the application for approval of the Agreement on the basis that he was not satisfied that the Agreement was genuinely agreed to by employees.

[2] The Deputy President's finding in this regard was that there were key differences between the terms of the Agreement and a predecessor agreement, the effect of which should have been explained to employees. The Deputy President concluded that given the material nature of those changes which were not highlighted to employees, and the effect of some of the other changed terms in the Agreement, Diamond Offshore had not taken all reasonable steps to ensure that the terms of the Agreement were explained to relevant employees as required by s. 180(5) of the FW Act. As a result, the Deputy President determined that he was unable to be satisfied that the Agreement had been genuinely agreed to by employees as required by s. 188(a)(i) of the FW Act and that the Agreement could not be approved because s. 186(2)(a) of the FW Act was not satisfied.[2]

[3] The notice of appeal advances two principal grounds of appeal. First, Diamond Offshore contends that the Deputy President erred in the exercise of his discretion by acting on a wrong principle and taking into account an irrelevant consideration in concluding that s. 180(5) of the FW Act required Diamond Offshore to explain to its employees the extent to which the terms of the Agreement differed from the terms of the agreement it was to replace and that in the absence of such explanation the Commission could not be satisfied under s. 188(a)(i) of the FW Act that the relevant employees had genuinely approved the Agreement. Second, it is contended that the Deputy President failed to afford procedural fairness to Diamond Offshore by not providing an opportunity for the Company to make submissions, either orally at a telephone hearing conducted on 18 May 2018 or subsequent to the hearing, in relation to the necessity, nature or extent of the explanation to employees that is required by s. 180(5) of the FW Act and the finding as to the explanation that was required but was not provided.

[4] The Australian Institute of Marine and Power Engineers (AIMPE), the Australian Maritime Officers Union (AMOU) and the Construction, Forestry, Maritime, Mining, and Energy Union (CFMMEU) were given permission to be heard in the proceedings before the Deputy President and also sought to be heard in the appeal. The Australian Workers' Union (AWU) was not involved in the first instance proceedings but sought to be heard in the appeal on the grounds that the union has broad constitutional coverage of offshore drilling operations and the oil and gas industry more generally, and is entitled to represent the industrial interests of a significant number of employees covered by the Agreement.

[5] We decided to grant permission for the AIMPE, the AMOU and the CFMMEU to be heard in the appeal on the basis that those unions were heard in the proceedings at first instance and have a legitimate interest in terms and conditions of employment in the industry in which the Agreement would operate. It is generally accepted that where the Commission has decided at first instance to hear from an organisation of employees in relation to whether an agreement should be approved, that organisation is a "person aggrieved" by a subsequent adverse decision for the purposes of an appeal and has standing to bring an appeal. It follows that the same principle is applicable to an organisation of employees seeking to be heard in response to an appeal. We also decided to hear from the AWU notwithstanding that the AWU did not seek to be heard at first instance. We decided to hear from the AWU on the basis of that union's interest in the industry in which the Agreement would operate. We are also of the view that it would assist in the efficient conduct of the appeal to have contradictors. The unions opposed the approval of the Agreement at first instance and maintained in the appeal that the Decision of the Deputy President was correct and that the appeal should be dismissed.

[6] For the purposes of determining this appeal the relevant background as set out in the Decision of the Deputy President can be summarised as follows. The AIMPE, the AMOU and the then Maritime Union of Australia (later the CFMMEU) corresponded with the Commission seeking to be heard in relation to the application for approval of the Agreement and raising a number of issues with respect to whether the Agreement passed the Better Off Overall Test (BOOT). Notwithstanding that none of the unions were bargaining representatives for the Agreement, the Deputy President determined - after seeking the views of Diamond Offshore - that he would be assisted in determining the application by hearing from the unions.

[7] Consideration of the application for approval of the Agreement proceeded by way of a combination of correspondence between the Commission (from the Deputy President and the Member Support Research Team) and Diamond Offshore and the unions. On 22 February 2018 the Member Support Research Team corresponded with Diamond Offshore only requesting the views of the Company with respect to the union requests to be heard; the nominal expiry date of the Agreement; whether the manner in which redundancy entitlements were expressed resulted in those entitlements falling below those in the National Employment Standards; and whether the Agreement passed the BOOT, with reference to the Maritime Offshore Oil and Gas Award 2010 (Award).

[8] The application was listed for hearing by telephone for the purpose of mention and directions. A hearing was held by telephone on 18 May 2018. On 20 June 2018 the Deputy President caused an email to be sent to the parties seeking information regarding a number of issues. Relevantly, the email requested Diamond Offshore to advise whether during rig presentations undertaken in late November and early December 2017, casual employees were advised that the casual loading would reduce from 25% under the Diamond Offshore General Company Enterprise Agreement 2014 (the 2014 agreement) to 20% under the proposed Agreement. We interpolate that rig presentations were one of the mechanisms by which Diamond Offshore asserted (both in the Form F17 Employer statutory declaration filed with the Agreement and in submissions in support of its approval) that the Company met its obligation to provide an explanation of the terms of the Agreement and their effect to employees. The email went on to state:

"Finally, given that the Full Federal Court decision in One Key Workforce Pty Ltd v CFMEU [2018] FCAFC 77 was handed down after this application was heard, I would invite the parties to make any further submissions they may wish to make regarding the implications of the decision for this matter."

[9] The email concluded by indicating that the provision of the responses by a certain date would assist the Deputy President to finalise his decision. The Deputy President recorded in the Decision that Diamond Offshore responded to the email stating that during the rig presentations employees were specifically advised about the reduction in casual loading from 25% to 20% and that the Company submitted that there was nothing in One Key Workforce Pty Ltd v CFMEU that impacted the approval of the Agreement.[3] The Deputy President also recorded a number of BOOT issues raised by the unions and that these issues were said to go to the accuracy of the Form F17 Declaration completed by the employer and in turn to raise questions about the explanation of the terms of the Agreement that was given to employees by Diamond Offshore.

[10] The Decision indicates that the Deputy President had regard to a power point presentation and other documentation given to employees to explain the terms of the Agreement and their effect that was provided to him in response to the request for further information on this issue. After noting the submissions of the unions to the effect that Diamond Offshore had failed to draw to the attention of employees the differences between the Agreement and the Award, the Deputy President observed:

"[55] The circumstances in this case are that the Agreement is not a first time agreement but at least a second round agreement and perhaps even a third or fourth generation agreement. As such, the CFMMEU's focus in its submissions regarding whether the Agreement was genuinely agreed to by employees on the Applicant having to explain the differences between the Agreement and the Award is in my view somewhat misplaced. Rather, given the circumstances in this case, the focus should be on whether the Applicant explained to employees the terms of the Agreement and the effect of those terms having regard to the key differences between the Agreement and the predecessor Agreement, i.e. the 2014 Agreement, and where relevant the Award."

[11] The Deputy President went on to note that an inaccurate or incorrect response by an employer to the relevant question in the Form F17 Declaration does not of itself automatically mean that an employer has not appropriately explained the terms of an agreement and the effect of those terms to employees, and endorsed the observation of Deputy President Gostencnik in BCG No. 2 that it is what is communicated to employees that is critical in the Commission determining whether or not the requirements set out in s. 180(5) of the FW Act have been met.[4] The Deputy President said:

"[57] I turn now to consider that issue, i.e. what was communicated to employees. As previously noted the Agreement replaces the 2014 Agreement which passed it nominal expiry date on 27 May 2018. While the Agreement reflects the approach adopted in the 2014 Agreement in respect of a number of issues, e.g. the approach to leave (though the quantum is different), it also varies a number of aspects of the 2014 Agreement. Specifically, the Agreement when compared to the 2014 Agreement includes the following material changes:

• a reduction in the level of casual loading from 25 per cent to 20 per cent;

• a reduction in the minimum salary rate from $117,352 to $113,370.89 per annum;

• the level of superannuation contributions is reduced from 12 per cent to 9.5 per cent;

• the scope for the Commission to arbitrate in respect of disputes brought under the dispute settlement procedure is removed;

• the provision relating to even time cycles (clause 9.2 of the 2014 Agreement) has been deleted;

• the Foreign Service Premium (clause 7.5 of the 2014 Agreement) is not included in the Agreement but rather is referred to in the Employee Policy document and has been reduced from 25 per cent to 20 per cent; and

• the living away from home allowance of $37.70 paid for each day an employee was on a rig (clause 7.1 of the 2014 Agreement) has been removed.

[58] The Applicant's response of 27 June 2018 indicated that employees were advised of the reduction in casual loading during the rig visits in late November and early December 2017. Further, the presentation circulated to employees on 18 December 2017 states that:

• "Superannuation contributions will change to 9.5% ..." but does not refer to contributions being 12 per cent under clause 7.4 of the 2014 Agreement; and

• if a dispute cannot be resolved at the workplace level that "the matter can be referred to the Fair Work Commission for resolution" but does not mention that the Commission will only be able to arbitrate a dispute with the consent of both parties whereas under clause 16.5(ii) of the 2014 Agreement consent was not required before the Commission could arbitrate.

[59] Further, as mentioned above, the Foreign Service Premium is not included in the Agreement but rather is set out in the Employment Policy document circulated to employees. The Employee Policy document does not highlight this shift which has the practical effect of making the payment unenforceable nor does it highlight that the level of the payment has been reduced from 25 to 20 per cent.

[60] Beyond the above references, there is no material before the Commission which points to or indicates that the other changes highlighted above were drawn to the attention of employees who would be covered by the Agreement."

[12] The Deputy President went on to conclude that:

"[61] Given the material nature of the changes which have not been highlighted and the limited explanation of the effect of some of the other changed terms in the Agreement, I am not satisfied that the Applicant has taken all reasonable steps to ensure that the terms of the Agreement, and the effect of those terms, were explained to the relevant employees as required by s.180(5)(a) of the Act. As such, I cannot be satisfied that the Agreement was genuinely agreed to by employees as per s.188(a)(i) of the Act and am therefore unable to approve the Agreement as s.186(2)(a) of the Act is not satisfied."

[13] While not making findings in relation to BOOT issues, the Deputy President went on to set out concerns about a number of terms of the Agreement on the basis that it might provide guidance should Diamond Offshore seek to recommence negotiations for an agreement to replace the 2014 agreement.

[14] Diamond Offshore's first ground of appeal contended that the Deputy President erred by concluding that s. 180(5) of the FW Act required that the Company explain to the employees whose employment would be covered by the Agreement the extent to which its terms differed from the agreement that it was to replace. In relation to this ground, Diamond Offshore submitted that s. 180(5) does not require employers to provide, in the course of explaining the effect of a proposed agreement's terms, some (or any) analysis of similar or equivalent terms in other instruments. It was also submitted that to explain the effect of a term of an enterprise agreement an employer need only articulate the operative outcome that its text produces and that in many cases there will be no difference between an explanation of a term and an explanation of its effect. It was further submitted that the effect of a term does not extend to comparative analysis of other instruments, and discharge of the obligation for which s. 180(5) provides does not require that employees be educated about any consequences that arise externally to the effect of a proposed agreement's terms; there is nothing to that effect in the words of the section or the explanatory memorandum, and no authority supportive of that proposition other than the Decision the subject of the present appeal.

[15] Diamond Offshore also submitted that reading s. 180(5) in the way the Deputy President did opens potentially unnavigable consequences on the basis that the terms of a proposed agreement may visit effects on employees in a manner that is unlimited and employers will need to somehow identify and take reasonable steps to explain all of those effects, including some the employer does not know about. This potential for absurd and unworkable outcomes demonstrated, it was submitted, the error in the Deputy President's construction of s. 180(5) of the FW Act. It is submitted that by having regard to the failure (as he saw it) the Deputy President took account of an irrelevant consideration and thereby committed error of the kind described by the High Court in House v The King.[5]

[16] It was also submitted by Diamond Offshore that even if the effect of the terms of the Agreement extended to considerations of how they compare against equivalent terms in other instruments, those comparisons did not require separate express explanation, in circumstances where there was no ambiguity about the casual loadings, salaries and superannuation contributions under the current 2014 agreement, and the proposed Agreement and the dispute resolution procedure is clear. Other terms identified by the Deputy President as not having been explained were not terms at all, but rather an absence of terms. It was accepted by Diamond Offshore that it could have taken steps to alert employees to the matters that were the subject of the terms identified by the Deputy President and that the steps which could have been taken to do this could not be described as beyond reasonable. However, it is submitted that the steps are disqualified from description as reasonable on the basis that the steps required to be taken with respect to the relevant terms identified by the Deputy President were unnecessary and in respect of the absent terms, had no connection to the terms of the Agreement. Accordingly, the Deputy President's assessment under s. 188(a)(i) of the FW Act took account of an irrelevant consideration, namely Diamond Offshore's failure to do that which was not required.

[17] In relation to the second appeal ground Diamond Offshore submitted that the Deputy President's central conclusion about Diamond Offshore's explanation of the Agreement to employees was not the subject of submission below. It was submitted that the Deputy President did not give any indication prior to the Decision that he might incline to the view that explanations as to the effect of terms required, for the purposes of s. 180(5) of the FW Act, the sort of comparative analyses the absence of which led him to the conclusion he reached. It was also submitted that the Deputy President did not inquire whether Diamond Offshore had, in any event, satisfied his "expanded construction" of s. 180(5). It was further submitted that the Deputy President based his decision about a matter of principle upon which no submission was received or invited and, by doing so, "diverted from his obligation to advise [Diamond Offshore] of any adverse conclusion which [was] arrived at and which would not obviously be open on the known material."[6] Diamond Offshore also tendered an affidavit made by Ms Madeleine Jane Clohessy, a Solicitor employed by Clayton Utz, who deposed that, during the telephone hearing conducted on 18 May 2018, at no time was there raised, nor were the parties given an opportunity to respond, to the propositions that:

• (a) it was a requirement of s. 180(5) of the FW Act that Diamond Offshore explain to employees whose employment would be covered by the Agreement the extent to which the Agreement's terms differed from the predecessor 2014 agreement; or

• (b) if the above was a requirement, the extent to which, if at all, Diamond Offshore had failed to comply with that requirement.

[18] Ms Clohessy further stated that when she attempted to obtain a copy of the transcript of the hearing, she was informed that the hearing had not been recorded due to malfunction of the Commission's recording devices.

[19] The questions with which this appeal is concerned turn on the operation and effect of ss. 180(5), 186 and 188 of the FW Act. By virtue of s. 181(1) of the FW Act an employer that will be covered by a proposed enterprise agreement may request employees who are employed at the time and who will be covered by the agreement to approve the agreement by voting for it. Before such a request can be made, the employer must comply with the requirements of s. 180 which include at subsection (5) that the employer must take all reasonable steps to ensure that:

• (a) the terms of the agreement and the effect of those terms are explained to the relevant employees; and

• (b) the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.

[20] Section 180(5) is also read in conjunction with s. 180(6) which provides:

(6) Without limiting paragraph (5)(b), the following are examples of the kinds of employees whose circumstances and needs are to be taken into account for the purposes of complying with that paragraph:

(a) employees from culturally and linguistically diverse backgrounds;

(c) employees who did not have a bargaining representative for the agreement.

[21] When an application for approval of an enterprise agreement is made to the Commission, the FW Act requires that the Commission approve the agreement in certain circumstances but gives the Commission discretion to do so in other circumstances. The Commission must approve an agreement if it is satisfied that each of the requirements set out in ss. 186 and 187 are met. If the Commission has a concern that the agreement does not meet those requirements, it may exercise a discretion to approve the agreement if it is satisfied that an undertaking it accepts pursuant to s. 190 of the FW Act meets the particular concern. Relevantly in the present appeal, s. 186(2)(a) includes the requirement that the Commission be satisfied that the agreement has been genuinely agreed to by the employees covered by the agreement, being those persons currently employed who fall within the whole class of employees to whom the agreement might in future apply.[7] Section 188(a)(i) of the FW Act provides that, for an enterprise agreement to have been genuinely agreed to by the employees covered by the agreement, the Commission must (among other things) be satisfied that the employer complied with ss. 180(2), (3) and (5).

[22] In Construction, Forestry, Mining and Energy Union v One Key Workforce Pty Ltd[8] the Federal Court (Flick J) observed that the nature of the task of the Commission under s. 180(5) of the FW Act and other terms requiring its satisfaction or otherwise about a state of affairs is to make a broadly-based value judgment.[9] On appeal from that decision,[10] the Full Court of the Federal Court held that the matters in s. 180(5) were matters to which the employer was required to attend but were not jurisdictional facts for the purpose of the exercise of the Commission's approval powers. The Full Court went on to hold that a condition precedent to the exercise by the Commission of its jurisdiction under s. 186 to approve an enterprise agreement was its satisfaction that the employer had complied, among other things, with s. 180(5). The Full Court determined that satisfaction as to whether s. 180(5) had been complied with involved an evaluative judgment as to whether "reasonable steps" were taken by the employer. The Full Court went on to state:

"112 It is common ground that the Commission was never told what was said to the relevant employees. It was simply told that they had been given an explanation of the terms of the Agreement and the effect of those terms. In effect, this amounted to little more than a self-serving statement that the employer had complied with its obligation under the Act. OKW contended that the fact that it made such a statement in a statutory declaration was significant. It is not. As the CFMEU argued, whether all reasonable steps were taken to ensure that the effect of the terms of the Agreement was explained in an appropriate manner is a question of substance, not form. The recital of a conclusion on the very question the Commission was required (through an evaluative process) to determine is not, without more, a sufficient basis for the satisfaction of the statutory test. In other words, a bare statement by an employer that an explanation has been given is an inadequate foundation upon which to reach a state of satisfaction. OKW submitted that if the Commission had erred in this respect, it was an error in fact finding or an error in process, which would be an error within its jurisdiction. We reject this submission. In order to reach the requisite state of satisfaction that s 180(5) had been complied with, the Commission was required to consider the content of the explanation and the terms in which it was conveyed, having regard to all the circumstances and needs of the employees and the nature of the changes made by the Agreement. It is true that the Act does not expressly say that. But the question of whether an administrative decision-maker is required to consider a matter is not determined only by the express words of the Act; it may also be determined by implication from the subject-matter, scope and purpose of the Act: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24 at 39-44 (Mason J).

113 A consideration of the subject-matter, scope and purpose of the relevant provisions of the Fair Work Act indicates that the content of the explanation and the terms in which it was conveyed were relevant considerations to which the Commission was bound to have regard. The absence of that information meant that the Commission was not in a position to form the requisite state of satisfaction. Put differently, without knowing the content of the explanation, it was not open to the Commission to be satisfied that all reasonable steps had been taken to ensure that the terms and their effect had been explained to the employees who voted on the Agreement or that they had genuinely agreed to the Agreement.

114 The following considerations point inexorably to that conclusion.

115 The Commission was required to be satisfied that OKW had taken "all reasonable steps to ensure" that both the terms and the effect of the terms had been explained to the relevant employees as an element in the inquiry as to whether "genuine" agreement had been obtained from them. The agreed purpose of the obligation imposed on employers by s 180(5) is to enable the relevant employees to cast an informed vote: to know what it is they are being asked to agree to and to enable them to understand how wages and working conditions might be affected by voting in favour of the agreement.

116 In order for the employer to comply with the obligation it must take into account the particular circumstances and needs of those employees, including their cultural and linguistic backgrounds, their youth, and the absence of a bargaining representative. That is made explicit in s 180(6). How could the Commission decide whether the steps the employer had taken were "all reasonable steps" unless it knew what the employees had been told before they cast their votes? Without knowing the terms in which the explanation had been conveyed how could the Commission form an opinion on the sufficiency of the explanation, particularly having regard to the considerations mentioned in s 180(6)? Ultimately, how could the Commission decide that a genuine agreement had been reached without having evidence upon which it could answer both these questions?"

Principles governing an appeal under s. 604 of the FW Act

[23] The Commission must grant permission to appeal if it is in the public interest to do so.[11] The test of assessing whether a matter is in the public interest is discretionary and involves a broad value judgement.[12] In GlaxoSmithKline Australia Pty Ltd v Colin Makin,[13] the Full Bench summarised the test for determining the public interest as follows:

"[26] Appeals have lain on the ground that it is in the public interest that leave should be granted in the predecessors to the Act for decades. It has not been considered useful or appropriate to define the concept in other than the most general terms and we do not intend to do so. The expression 'in the public interest', when used in a statute, classically imports a discretionary value judgment to be made by reference to undefined factual matters, confined only by the objects of the legislation in question. [Comalco v O'Connor (1995) 131 AR 657 at p.681 per Wilcox CJ & Keely J, citing O'Sullivan v Farrer [1989] HCA 61; (1989) 168 CLR 210]

[27] Although the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters, it seems to us that none of those elements is present in this case."

[24] Alternatively, other grounds on which permission to appeal may be granted include the decision being attended with sufficient doubt to warrant its reconsideration and that substantial injustice may result if permission is refused.[14] It will rarely, if ever, be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated, as an appeal cannot succeed in the absence of such error.[15] However, the mere identification of some error in the decision under appeal may not by itself constitute a sufficient basis for the grant of permission to appeal.[16]

[25] To the extent that part of the decision-making process required to approve an agreement involves the exercise of discretion or satisfaction in relation to statutory criteria, the principles relevant to appealable error in relation to such decisions are well established. An appealable error in a decision involving the exercise of discretion is an error of the kind identified in House v The King. An error in relation to satisfaction is a question as to whether the decision maker has reached a "state of mind which must be formed reasonably and on a correct understanding of the law."[17]

[26] There is an element of overlap between error in relation to a discretionary decision in the House v The King sense and satisfaction error. For the reasons that follow, we are of the view that it matters not to the outcome of this case whether the Deputy President's Decision is characterised as discretionary or a state of mind.

[27] In determining whether permission to appeal should be granted, we have reviewed and considered all material filed by the parties including all submissions, correspondence and relevant authorities. We now turn to consider whether permission to appeal should be granted.

[28] The first appeal ground is based on a number of premises that we do not accept. We do not accept that the obligation placed on an employer to provide an explanation of the terms of an agreement and the effect of those terms is limited to the operative outcome that the text of the term produces. While in some cases the operative outcome of a term of an enterprise agreement will be synonymous with the effect of the term that is not always the case. The operative outcome of a term with respect to employees covered by an enterprise agreement is that it provides a right or an entitlement to employees or places an obligation on employees. The effect of a term may also be that it displaces another previously operative term either explicitly or by omission or that the obligation it places on employees is one that they would not otherwise be subject to. Where a material or significant change is brought about by a term of a proposed agreement, an explanation of the effect of that term may be required to extend beyond its operative outcome. Whether this is so will depend on the circumstances of a particular case such as those we have set out below.

[29] A further premise upon which the Diamond Offshore's contentions in relation to the first appeal ground are based is that the Deputy President found that s. 180(5) of the FW Act requires that an employer explain to employees, whose employment would be covered by an enterprise agreement, the extent to which the agreement's terms differ from a predecessor enterprise agreement, by way of a clause-by-clause comparison. We accept the submission of Diamond Offshore that s. 180(5) of the FW Act does not prescribe such a requirement in absolute terms and that there is no rule to this effect when the Commission is deciding whether the requirements of s. 180(5) have been met. However, on a fair reading of the Decision under appeal in the present case, the Deputy President made no such finding and did not purport to establish such a rule. To the contrary, it is clear from the Decision that the Deputy President considered whether, in the particular circumstances of the application he was considering, the requirement in s. 180(5) had not been met.

[30] Those circumstances included that the Agreement would bring about material changes to the terms and conditions of employment of employees covered by the Agreement which had either not been highlighted or which had been explained in a limited way. The most significant of these was the reduction in the casual loading from 25% to 20%, which would necessarily have a direct and substantial effect on the earnings of casual employees. The Deputy President's conclusion in relation to s. 180(5) was also reached in the context of other findings that the response to a question in the Form F17 Employer statutory declaration in support of approval of the Agreement in relation to whether the Agreement contained any terms and conditions less beneficial than the relevant reference instrument had not been as fulsome as it could have been and there were some potential disadvantages to employees from the terms of the Agreement when compared to the Award. In taking this approach, the Deputy President cited the principle set out by Flick J in Construction, Forestry, Mining and Energy Union v One Key Workforce Pty Ltd[18] that in respect of the requirements established by s. 180(5) of the FW Act:

"[103] ...The requirement imposed by s. 180(5) to 'take all reasonable steps to ensure that...the terms of the agreement and the effect of those terms, are explained' is an important obligation imposed upon an employer to ensure that employees are as fully informed as practicable. The requirement is not a mere formality. Whatever steps may be necessary will depend upon the facts and circumstances of each particular case: but those steps are not satisfied by a person reading - without explanation - the terms of an agreement to an employee."[19]

[31] This principle is also apparent from the decision of the Full Court of the Federal Court in the appeal of that decision (One Key v CFMEU) which makes clear that it may be necessary for the Commission to know the content of any explanation of the terms of an enterprise agreement, and their effect, in order to form the necessary state of mind in relation to whether the requirements in s. 180(5) have been met.

[32] We do not accept the proposition advanced by Diamond Offshore that the existing terms and conditions under which employees to be covered by a proposed agreement are working are irrelevant to the consideration of whether the requirement in s. 180(5) has been met. Existing terms and conditions may be relevant regardless of whether those terms and conditions are prescribed by the relevant reference instrument, a current enterprise agreement, statute, contract or common law. For example, if a proposed enterprise agreement would impose an obligation on employees which is not imposed by a relevant modern award, and thereby expose employees to civil penalty for breach of the agreement, the Commission may consider whether that obligation causes detriment to employees and determine that reasonable steps to explain the effect of that term should have included an explanation of the potential detriment. The fact that a particular term has been provided for in predecessor agreements may also be relevant to the extent of the explanation of the term that is required.

[33] We see no reason why, in reaching a state of satisfaction about whether the employer has taken all reasonable steps to ensure the terms of a proposed agreement and the effect of those terms are explained to employees, the Commission should not consider the terms of a current agreement and the extent to which their effect has been changed by the proposed agreement. To form the necessary state of satisfaction about whether reasonable steps were taken by an employer to explain the terms of an enterprise agreement and their effect, the Commission may consider it relevant to take into account a range of facts and circumstances including: the terms of the agreement itself; the context in which it was negotiated; the history of instruments regulating terms and conditions of employment of employees; other relevant statutes particular to the employees or the work covered by the agreement or the industry in which that work is performed; the nature of the work covered by the agreement; the identity and work history of the employees who were requested to approve the proposed agreement; and matters particular to the employees to whom the explanation was provided, such as their qualifications, skills and other considerations of the kind referred to in s. 180(6) of the FW Act.

[34] We also do not accept the submission that consideration of effects of the terms of an agreement in the manner undertaken by the Deputy President exposes employers to unnavigable consequences or unworkable outcomes. Where an employer has negotiated an enterprise agreement which brings about a material change to terms and conditions of employment which could be detrimental to employees, we see nothing unworkable or unreasonable in a requirement that the employer take reasonable steps to explain the effect of the relevant terms to employees. The extent of the explanation that will be necessary will depend on the circumstances of the case and the relevant considerations that we have set out above.

[35] In the circumstances of the case under appeal, it was open to the Deputy President to consider the terms of the current 2014 agreement and whether there was a failure on the part of Diamond Offshore to explain the difference between certain of those terms and the terms of the proposed Agreement in forming his view about whether the requirements of s. 180(5) had been met. This was particularly the case having regard to the significance of the reduction in the casual loading to which we have earlier referred. We see no error in principle with the approach adopted by the Deputy President in this regard. We also do not accept that in taking this matter into account the Deputy President had regard to an irrelevant consideration.

[36] In forming his view that Diamond Offshore had not met the requirements of s 180(5) of the FW Act, the Deputy President considered the Form F17 Employer declaration and a Power Point presentation forwarded to him by Diamond Offshore. The Form F17 and Power Point presentation were provided in response to a query about whether there would be a reduction in the quantum of casual loading to which employees were entitled under the 2014 agreement when they were asked to approve the proposed agreement which reduced that entitlement. The Power Point presentation did not refer to the casual loading which had been the subject of enquiry by the Deputy President. An unsworn statement was made in an email to the effect that the relevant employees were informed that the casual loading in the Agreement was reduced from 25% to 20%, but this rose no higher than the level of assertion. On the basis of the evidence before the Deputy President it was open to him to find that Diamond Offshore had not established that the requirements in s. 180(5) had been met.

[37] In the circumstances of the case before the Deputy President, we can discern no error in the approach to considering whether the requirements of s. 180(5) had been met. The Deputy President did not act on a wrong principle or mistake the facts. The Deputy President did not allow extraneous or irrelevant matters to guide him in the exercise of the discretion under s. 180(5) of the FW Act or in forming his state of satisfaction about whether those requirements had been met. This is also not a case where the Decision imposes an unreasonable or unjust outcome so that it could be inferred, in the absence of apparent error, that there has been a failure on the part of the Deputy President to exercise the discretion entrusted to him to determine whether the requirements in s. 180(5) had been met so that the agreement had been genuinely approved as required by s. 188 of the FW Act.

[38] In relation to the second ground of appeal, we do not accept that the manner in which the Deputy President dealt with the application for approval of the Agreement resulted in Diamond Offshore being denied procedural fairness. The email sent by the Deputy President to Diamond Offshore on 20 June 2018 invited a response to the question of whether employees had been advised that the casual loading would be reduced. The email also drew attention to the decision of the Full Federal Court of the Federal Court in One Key v CFMEU and invited submissions on the implications of that decision. Diamond Offshore responded to this request indicating that employees were advised of the reduction in casual loading and also provided a Power Point presentation which did not refer to this matter or the other reductions in existing terms and conditions which would result from approval of the proposed agreement.

[39] As a Full Bench of the Commission observed in AKN Pty Ltd t/a Aitken Crane Services:[20]

"[36] Under s.577(b) the Commission is required to perform its functions and exercise its powers in a manner which is "quick, informal and avoids unnecessary technicalities", and under s.590 may "inform itself in relation to any matter before it in such manner as it considers appropriate". In the context of an application for the approval of an enterprise agreement about which the Commission has a concern in relation to satisfaction of the approval requirements in ss.186 and 187, there is no single method by which the Commission's concern may be appropriately communicated to the applicant for approval and any other relevant parties. Whether the Commission's concern is most appropriately communicated at a formal hearing, a conference, a telephone hearing or conference, by correspondence, or by use of a combination of these means may depend upon a number of factors including the complexity or otherwise of the issue underlying the concern, the geographical location of the parties, and whether the parties are sophisticated or legally represented."

[40] We consider that the email sent by the Deputy President on 18 June 2018 provided a clear written statement of the Deputy President's concerns about whether the requirements in s. 180(5) had been met. Diamond Offshore was placed on notice that the Deputy President had concerns about the adequacy of the explanation of the terms of the Agreement and their effect which it had provided to employees with respect to the quantum of the casual loading. It was also on notice that the concerns related to the genuineness of the agreement of employees, consistent with the Full Court decision in One Key v CFMEU. Diamond Offshore was given an opportunity to respond to those concerns and did so. The response did not address the concerns of the Deputy President, and he went on to form a view that the requirements of s. 180(5) had not been met. The Deputy President was not obligated to give a further opportunity to Diamond Offshore. Although made in the context of the provision of undertakings, the observation of the Full Bench in AKN Pty Ltd t/a Aitken Crane Services[21] that the applicant for approval of an enterprise agreement should have known to "put its best foot forward ... rather than merely entering its opening bid" in response to correspondence from the Commission expressing concerns in respect of the approval requirements in the FW Act is apposite here. Procedural fairness requires that the Commission give a party a reasonable opportunity to present its case, not to ensure that the party takes advantage of that opportunity.[22]

[41] We accept that in his conclusions the Deputy President identified some differences between the proposed Agreement and the current agreement that he did not set out in his email of 18 June 2018, notwithstanding that he had raised the question of the difference in terms of the casual loading. However, even if this resulted in a denial of procedural fairness, not every denial of procedural fairness at first instance entitles an aggrieved appellant to a new hearing. An appellant in that situation has to demonstrate that it was denied the opportunity of a successful outcome. If a new hearing would only lead to the same result as the initial hearing it will not be ordered.[23] We consider that the Deputy President's finding that the reduction in the casual loading had not been explained justified by itself a conclusion that s 180(5) had not been complied with. In the appeal, Diamond Offshore has provided its full response to the issues raised by the Deputy President. No new evidence has been placed before us and no matter has been raised to persuade us that there was any flaw in his analysis of the failure to meet the requirements of s. 180(5). Further, a failure to meet the requirements of that section of the FW Act is not a matter that can be cured by way of an undertaking given pursuant to s 190 of the FW Act.

[42] We are not satisfied that there is an arguable case of error in relation to any ground of appeal asserted by Diamond Offshore. Further, we have considered whether this appeal attracts the public interest and we are not satisfied that:

• (a) there is a diversity of decisions at first instance so that guidance from an appellate body is required;

• (b) the appeal raises issues of importance and/or general application;

• (c) the Decision at first instance manifests an injustice, or the result is counter intuitive; or

• (d) the legal principles applied by the Deputy President were disharmonious when compared with other decisions dealing with similar matters.

[43] For the reasons set out above, we are not satisfied that it would be in the public interest or otherwise warranted to grant permission to appeal.

[44] Permission to appeal is refused.

J. Snaden of Counsel on behalf of Diamond Offshore General Company

L. Edmonds on behalf of the Construction, Forestry, Maritime, Mining and Energy Union

A. Williamson on behalf of the Australian Institute of Marine and Power Engineers

1 [2018] FWC 3949

[4] Ibid at [56] citing [2018] FWC 1466 at [92]

[5] (1936) 55 CLR 499 at 505 (per Dixon, Evatt and McTiernan JJ)

[6] Commissioner for ACT Revenue v Alphaone Pty Ltd [1994] FCA 1074; (1994) 49 FCR 576

[7] ALDI Foods Pty Ltd v Shop, Distributive and Allied Employees Association [2017] HCA 53, 92 ALJR 33, 350 ALR 381, 270 IR 459

[8] [2017] FCA 1266, 270 IR 410

[9] Ibid at [43] - [44] citing the judgement of Buchanan J in Construction, Forestry, Mining and Energy Union v John Holland Pty Ltd [2015] FCAFC 16, 228 FCR 297, 247 IR 55

[10] One Key Workforce Pty Ltd v Construction Forestry Mining and Energy Union [2018] FCAFC 77, 277 IR 2

[11] Fair Work Act 2009 (Cth) s 604(2)

[12] Esso Australia Pty Ltd v AMWU; CEPU; AWU [2015] FWCFB 210, 247 IR 5 at [6]

[13] [2010] FWAFB 5343, 197 IR 266 at [27]

[14] Esso Australia Pty Ltd v AMWU; CEPU; AWU [2015] FWCFB 210, 247 IR 5 at [7]

[15] Wan v Australian Industrial Relations Commission [2001] FCA 1803, 116 FCR 481

[16] GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343, 197 IR 266 at [26] - [27]; Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth [2010] FWAFB 10089, 202 IR 288 at [28], affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler [2011] FCAFC 54; (2011) 192 FCR 78; NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663, 241 IR 177 at [28]

[17] Buck v Bavone [1976] HCA 24; (1976) 135 CLR 110; Wei v Minister for Immigration and Border Protection [2015] HCA 51; (2015) 257 CLR 22 at 35 (per Gageler and Keane JJ)

[18] [2017] FCA 1266, 270 IR 410

[20] [2015] FWCFB 1833, 248 IR 129

[21] [2015] FWCFB 1833, 248 IR 129 at [38]

[22] Re Coldham; Ex parte Municipal Officers Association of Australia [1989] HCA 13; (1989) 84 ALR 208 at 220 per Gaudron J; Sullivan v Department of Transport [1978] FCA 48; (1978) 20 ALR 323 at 343 per Deane J; Secretary, Department of Family and Community Services v Verney [2000] FCA 570 at [45], Soames v Secretary, Department of Social Services [2014] FCA 295 at [41]

[23] Stead v State Government Insurance Commission [1986] HCA 54; (1986) 161 CLR 141

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