Fair Work Commission|2024-08-28

Enermech Pty Limited [2024] FWC 2300 (28 August 2024)

s.185 - Enterprise agreement

ENERMECH PTY LIMITED NORTH WEST SHELF ENTERPRISE AGREEMENT 2024

Application for approval of the EnerMech Pty Limited North West Shelf Enterprise Agreement 2024

[1] Enermech Pty Limited (the Applicant) has made an application for the approval of an enterprise agreement known as the EnerMech Pty Limited North West Shelf Enterprise Agreement 2024 (the Agreement). The application was made under s 185 of the Fair Work Act 2009 (Cth) (the Act). The Agreement is a single enterprise agreement.

[2] The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (Amending Act) made a number of changes to enterprise agreement approval processes in Part 2-4 of the Act, that commenced operation on 6 June 2023. The notification time for the Agreement under s 173(2) was 15 September 2023 and the Agreement was made on 11 April 2024. Accordingly, both the genuine agreement and the better off overall test requirements are those applying on and from 6 June 2023.

[3] The Agreement purportedly covers employees of the Applicant who perform both offshore and onshore work in Western Australia above the 25th parallel and adjacent waters off the North West Coast of Western Australia in three industries - mechanical, maintenance, and hydrocarbons. The modern awards that would otherwise cover and apply to the employees to be covered, are - the Manufacturing and Associated Industries and Occupations Award 2020[1] (Manufacturing Award) and the Hydrocarbons Industry (Upstream) Award 2020[2] (Hydrocarbons Award).

[4] The Agreement is said to cover eleven employees at the time of the vote and of the nine employees who voted, all voted in favour of the Agreement being made.[3] Three employees included in the voting cohort were casual employees.

[5] The Australian Workers' Union (AWU) requested a copy of the Applicant's application and the supporting materials. Copies of documents filed by the Applicant were provided to the AWU. I considered the provision of such documents in the circumstances uncontroversial. The relevant documents were disclosed on request consistent with rule 130 of the Fair Work Commission Rules 2024 (Cth) and the principles stated in the Full Bench decision in CFMEU v Ron Southon Pty Ltd.[4]

[6] On 21 May 2024, the AWU requested to be heard under s 590 of the Act in respect of the application. Whilst not a bargaining representative for the Agreement, the AWU submitted that as the principal union in the hydrocarbons sector it had the capacity to represent the industrial interests of all employees performing work covered by the proposed Agreement. The AWU further added that as the principal union in the sector, it had been largely responsible for setting and maintaining the prevailing rates of pay and conditions for workers in the sector for at least the past few years.

[7] The Full Bench has observed that the Commission may choose, in a particular case, to hear from an employee organisation or any other person about the approval of an agreement even though the organisation or person may not otherwise have a right to be heard.[5] The exercise of discretion is not such that there is a requirement for a 'compelling reason', but rather in the particular circumstances of the matter before the Commission, the Commission considered it appropriate to inform itself, by, for example, inviting oral or written submissions from a person of an organisation. The AWU's submissions raised issues in respect of several pre-approval requirements including:

a) whether the employees had a sufficient interest in the terms of the Agreement (s 188(2)(a));

b) whether the employees were sufficiently representative, having regard to the employees the Agreement is expressed to cover (s 188(2)(b));

c) that some employees who will be covered by the Agreement had not been provided with a notice of employee representational rights (NERR), in this respect the AWU referred to a cohort of employees covered by the Stork Technical Services Australia Pty Ltd WA Operations Enterprise Agreement 2021[6] (Stork Agreement) (ss 181 and 55);

d) that employees who were not covered by the scope of the Proposed Agreement at the time of voting on the Agreement were asked to vote on the Agreement (s 181); and

e) the Applicant did not take all reasonable steps to ensure that the terms of the Agreement and the effect of those terms, were explained to the employees who will be covered by the Agreement (s 180(5)).

[8] In addition, the AWU took issue with the voting method, observing that voting was conducted by a show of hands in the Applicant's office, overseen by an employee who had purportedly nominated himself to be his own bargaining representative.

[9] Having considered the issues raised by the AWU, including contentions that those employees covered by the Stork Agreement arguably would be covered by the scope of the Agreement and as such should have been issued with an NERR, I considered that I would be assisted by the AWU's submissions and evidence. The matter was listed for hearing, and I heard from both the Applicant and the AWU.

[10] For the reasons that follow, I am not satisfied that the Agreement has been genuinely agreed to by the employees covered by it pursuant to s 186(2)(a) of the Act. I am not satisfied that the Applicant took all reasonable steps to explain the terms of the proposed Agreement (see ss 188(4A) and 180(5)). However, the Applicant will be extended the opportunity to proffer undertakings to address the issue. Accordingly, the Applicant is directed to file and serve any undertaking(s) it wishes to rely on in support of its application for the approval of the Agreement by 4:00PM on Monday, 2 September 2024. If undertakings are proffered, the AWU will be given the opportunity to provide responsive views.

[11] The Applicant called upon the evidence of several witnesses in support of its case. The witnesses were:

a) Mr Craig Cordall, Employee Bargaining Representative;

b) Mr Dean Orr, Project Manager;

c) Mr Benjamin Kennedy, Process Technician Level 3 covered by the Agreement; and

d) Ms Michaela Jastremski, Human Resources Advisor.

[12] The AWU drew upon the evidence of Mr Jason Lipscombe, an Organiser employed by the AWU and the Maritime Union of Australia.[7]

[13] All witnesses provided evidence in a candid manner absent obfuscation. This is notwithstanding that at times the evidence revealed, what was, in my view, procedural or technical errors in the pre-approval process.

[14] The Applicant provides services works such as industrial services, nitrogen purging and pressure testing to oil and gas companies along with mining companies based on and around the North West Shelf, in Western Australia. Mr Kennedy, a Process Technician who gave his evidence whilst offshore, explained that his particular work involved site work, and work on offshore and onshore processing facilities where the Applicant provides lead testing, hydro testing, flushing, chemical cleaning, and those sort of services.[8]

[15] The Applicant began negotiations for the proposed Agreement with the relevant employees to be covered by the Agreement in October 2024. Those same employees had been issued with a NERR on 15 September 2023.

[16] It was understood that if approved, the Agreement would replace the EnerMech Pty Limited North West Shelf (Pilbara) Enterprise Agreement 2018 (2018 Agreement) that currently covered and applied to the employees.

[17] Mr Cordall gave evidence that on 29 September 2023, he emailed Ms Jastremski advising that he would be the employee representative by acting as a 'spokesman' in the process.[9]

[18] Mr Cordall said that he attended three negotiation meetings on 20 October 2023, 1 November 2023 and 7 February 2024.[10] Mr Cordall said that in respect of the first meeting he attended that alone, but at the subsequent meetings other employees were present.[11] Mr Cordall said he was unable to attend the bargaining meeting on 27 March 2024.[12]

[19] Mr Cordall detailed that during the negotiation process, the terms of the proposed Agreement were discussed with employees including specific clauses such as scope, redundancy, overtime meal allowance, superannuation, hourly rates, wage increases, working hours and specific rosters and the Applicant's allowance policy.[13]

[20] Ms Jastremski gave evidence that on 2 April 2024 she sent all employees who were proposed to be covered by the Agreement and were eligible to vote, the documents required to commence the access period prior to voting.[14] The documents that Ms Jastremski referred to included the Awards, the final copy of the proposed Agreement, a 'Briefing Document' to highlight the major changes, and the National Employment Standards (NES).[15]

[21] Ms Jastremski stated that on 3 April 2024 she sent a meeting invite to employees to advise them that the vote on the proposed Agreement would take place in a meeting to be held in the Perth boardroom on 11 April 2024.[16]

[22] Between the notification of the vote and the day of the vote, Ms Jastremski coordinated two briefing meetings on 5 and 9 April 2024 to provide employees with an opportunity to discuss any terms that were uncertain and/or unclear.[17]

[23] On 11 April 2024, the Agreement was voted on by the employees, with a majority of employees voting in support of the Agreement. Notably, of the eleven employees to be covered by the Agreement, nine voted in favour of the Agreement.

[24] In respect of the vote, it was supervised by Mr Cordall and conducted by a show of hands. Mr Cordall gave evidence, similar to that of Ms Jastremski, that the vote for the proposed Agreement was held on 11 April 2024 in the Perth boardroom of the Applicant. Nine out of eleven employees attended the vote meeting and when Mr Cordall asked the group who voted 'yes' and who voted 'no' for the proposed Agreement, all nine employees voted 'yes'.[18] By way of clarification, at hearing, Mr Cordall explained that one casual employee did not attend the vote meeting on 11 April 2204, however provided his vote to Mr Cordall via the 'messenger' app.

[25] On 12 April 2024, the Agreement was signed by the Applicant and Mr Cordall. It was submitted to the Commission for approval on 24 April 2024.

[26] As identified, the AWU objected to the approval of the Agreement on the grounds outlined in correspondence to the Commission on 21 May 2024. Relevantly, the AWU argued that the Agreement was not genuinely agreed to by the employees, amongst other things, including that the Agreement may not have been made by a majority of 'employees employed at the time' who cast a valid vote.

[27] An enterprise agreement requires approval by the Commission in order to have legal effect under the Act. Section 186(1) of the Act establishes that where an application for approval of an enterprise agreement has been 'made', the Commission must approve the agreement if the requirements set out in ss 186 and 187 are met.

[28] As to whether a single-enterprise agreement has been made, s 182(1) sets out the following:

If the employees of the employer, or each employer, that will be covered by a proposed single enterprise agreement that is not a greenfields agreement have been asked to approve the agreement under subsection 181(1), the agreement is made when a majority of those employees who cast a valid vote approve the agreement.

[29] Subsection 181(1) of the Act provides that an employer that will be covered by a proposed enterprise agreement may request the employees 'employed at the time' who will be covered by the agreement to approve the agreement by voting for it. Section 181 is set out in full below:

181 Employers may request employees to approve a proposed enterprise agreement

(1) An employer that will be covered by a proposed enterprise agreement may request the employees employed at the time who will be covered by the agreement to approve the agreement by voting for it.

(2) The request must not be made until at least 21 days after the day on which the last notice under subsection 173(1) (which deals with giving notice of employee representational rights) in relation to the agreement is given.

(3) Without limiting subsection (1), the employer may request that the employees vote by ballot or by an electronic method. (bold my emphasis)

[30] Under s 188(4) of the Act, the Commission cannot be satisfied that the agreement has been genuinely agreed to by the employees covered by the agreement unless the FWC is satisfied that the employer complied with the following provisions in relation to the agreement:

(a) sections 173 and 174 (which deal with giving notice of employee representational rights)

(b) subsection 181(2) (which requires that employees not be requested to approve certain enterprise agreements until 21 days after the last notice of employee representational rights is given).

[31] Presumedly, the request as referred to in s 181(2) of the Act, refers to a request to approve certain enterprise agreements being provided to 'employees employed at the time'.

[32] It is uncontroversial that enterprise agreements were intended by the legislature to be capable of covering casual employees. However, a difficulty that has arisen is ascertaining when a casual employee ought to be regarded as an employee 'employed at the time' within the meaning of s 181(1). In relation to permanent employees, it is of course a relatively straightforward exercise.

[33] The Applicant's Form F17B[19] indicated that at the time of the vote eleven employees were covered by the Agreement, with nine casting a valid vote and nine voting in favour to approve the Agreement.[20] Of the eleven employees, four were employed on a casual basis. The inclusion of the casual employees in the voting cohort gave rise to a concern that the Agreement may not have been made by a majority of 'employees employed at the time' who cast a valid vote.[21]

[34] In the decision of St John of God Health Care Inc (St John),[22] I traversed the authorities that have considered the phrase 'employed at the time'. I do not intend to repeat here what was said in St John. I simply add that in Woolworths Group Limited[23] (Woolworths) the Full Bench expressed the following at paragraphs [27] and [28]:

[27] In Appeal by Kmart Australia Limited (Kmart), the Full Bench concluded that the 'time' at which employees covered by the agreement had to be employed in order to be requested to vote referred to in s 181(1) encompassed the whole of the access period in s 180(4) and was to be equated with the 'time' referred to in s 180(2)(a). The Full Bench in Kmart concluded that casual employees who had been engaged for the first time during the voting period had not been 'employed at the time' at which employees were requested to vote. The Full Bench did not say that existing casuals who did not work during the access period were ineligible to do so. In our view, Woolworths' contention that category 2 casuals were eligible to vote has merit. These were not just casuals 'on the books' who might or might not have been given further shifts. The fact that these employees had been allocated shifts on the roster is evidence of the actuality and currency of their casual employment during the access period.

[28] However, it is not necessary for us to reach a concluded view on this matter. If ineligible

employees were allowed to participate in a vote on an enterprise agreement, it is necessary to

consider whether their votes could have affected the outcome. In Kmart, it was clear that they

[35] The AWU submits that the Applicant has declared to the Commission that the proposed Agreement covers 11 employees. However, in response to an order by the Commission to produce payslips for each of these 11 employees for the period of 2-11 April 2024 (the week up to and including the voting date for the Proposed Agreement), the Applicant was unable to do so for three of these employees:

a) Employee number 102271;

b) Employee number 102174; and

c) Employee number 102053.

[36] The AWU observes that each of these three employees is noted as a casual employee on their respective payslips and that because they did not perform work within the scope of the proposed Agreement when they were asked by the Applicant to approve the agreement, the judgment of the plurality in Swinburne[24] must be applied so as to remove these three casual employees from the voting cohort in accordance with s 181.

[37] The Applicant observes that the issue of casual employees being included in the total number of employees who were served with the NERR and were included in the vote was ventilated at the hearing. It submitted that casual employees are considered employees for all intents and purposes and that despite three employees not having performed work for the Applicant for some time, this did not mean that these employees were no longer interested in the bargaining. In short, the Applicant argued that the three employees may be given work in the future and are still considered to be legitimately included in the negotiations process as their work conditions would be affected by the changes.

[38] The case before me differs to that presented in Woolworths. It is not apparent from the evidence filed that there was, as was referred to in Woolworths, evidence of the actuality and currency of their casual employment during the access period. The three employees in question had not worked for the Applicant in some time and the evidence was not suggestive of them having been allocated shifts on the roster in or around the access period.

[39] The evidence has shown that only one casual employee voted on the proposed Agreement on 11 April 2024. Notwithstanding, assuming that all casual employees voted, the ultimate result of the vote would not have changed. Put simply, all permanent employees, being eight in total, voted in support of the Agreement and as such I find there was a valid majority.

Sufficient interest and sufficiently representative

[40] Section 186(2)(a) of the Act requires that the Commission be satisfied that an agreement was genuinely agreed. Section 188 goes on to set out certain matters that the Commission must take into account or be satisfied of in determining whether an agreement has been genuinely agreed.

Sufficient interest and sufficiently representative

(2) The FWC cannot be satisfied that an enterprise agreement has been genuinely agreed to by the employees covered by the agreement unless the FWC is satisfied that the employees requested to approve the agreement by voting for it:

(a) have a sufficient interest in the terms of the agreement; and

(b) are sufficiently representative, having regard to the employees the agreement

[42] Relevantly for present purposes, s 188(1) also requires the Commission to take into account the Fair Work (Statement of Principles on Genuine Agreement) Instrument 2023 (Statement of Principles) made under s 188B in determining whether it is satisfied that the Agreement was genuinely agreed. Principle 17 of the Statement of Principles provides that in considering whether employees have a sufficient interest in the terms of an enterprise agreement as required by s 188(2)(a) and whether the employees are sufficiently representative as required by s 188(2)(b), the Commission may take into account:

(a) whether the employees entitled to vote on the enterprise agreement are to be paid

the rates of pay provided for in the agreement, and

(b) the extent to which the employees entitled to vote on the enterprise agreement are

ii. types of employment in the agreement (for example, full-time, parttime

iii. geographic locations the agreement covers, and

iv. industries and occupations the agreement covers.

Sufficiently representative - respective contentions and consideration

[43] The AWU observes that the Agreement has a broad scope, which, although bound geographically, purports to displace all classifications within two Modern Awards - the Hydrocarbons Award and the Manufacturing Award.

[44] The AWU submits that given three employees did not perform work within the scope of the proposed Agreement when they were asked to approve the Agreement, the result is that there were only eight employees purported to be covered by the proposed Agreement at the time of the vote.

[45] It follows, according to the AWU, that as a result of the removal of the three casual employees:

b) the work performed by the employees is specialist work, including pressure testing and nitrogen purging of gas plants;[25] and

the employees covered primarily perform work at the Applicant's workshop at Henderson and at sites onshore, but generally not offshore.

[46] The AWU further submits that whilst Mr Kennedy was offshore at the time of the hearing, he confirmed in cross examination that when he works offshore the hours of work are 12 hours per day seven days per week. However, said the AWU, there were no payslips produced by the Applicant in response to the Order that both: (a) covered the period 2-11 April 2024; and (b) reflected such hours of work.

[47] The AWU submits that given these points, and absent any evidence to the contrary, there were no employees engaged at the time of the vote in a role offshore.

[48] According to the Applicant eleven employees will be covered by the Agreement and in respect of those eleven employees, detailed evidence has been provided as to their classification levels under the Agreement, position titles, and nature of employment.

[49] Mr Orr provided an exhaustive list of all positions held by employees who will be covered by the Agreement, the classification levels of the employees ranging between classification levels 3 and 5.

[50] Clause 2.1 of the Agreement sets out the coverage clause of the Agreement:

i. that perform work (both onshore and offshore) in the state of Western Australia

(above the 25th parallel) and adjacent offshore waters off the 'North West Coast'

iii. whose classifications are provided for under the following awards:

a. Manufacturing and Associated Industries and Occupations Award 2020; and/or

[51] Clause 3 of the Agreement sets out that employees covered by the Agreement will be required to work at locations or places of business operated and accessed by the 'Company' to perform required work for 'Company' clients in accordance with clause 2.1 of this Agreement.

[52] It is apparent that the AWU submits that the relevant employees who voted to approve the Agreement do not have a sufficient interest in it. In short, I reject this contention.

[53] Schedule 1 of the Agreement provides the Classification Structure. The Classification Structure in Schedule 1 sets out: (a) a range of key activities performed within classifications Level 1 to Level 5; (b) roles that fall within the classification levels; and (c) the training and competencies required for each level. The relevant employees who will be covered by the Agreement and voted on the same, fall within the following classifications in the Agreement (a) Level 3 Technician Intermediate; (b) Level 4 Technician Advanced; (c) Level 5 Advanced Mechanical Tradesperson. It follows that the Agreement provides five levels of classification and as such, the voting cohort occupied three of those levels.

[54] The relevance of the AWU's assertion that at the time of the vote or during the access period no employees were performing offshore work is unclear. The coverage of the Agreement clearly contemplates work both onshore and offshore, and any suggestion that the relevant employees do not perform offshore work was clearly rebutted by the evidence of Mr Kennedy and Mr Cordall.

[55] Mr Kennedy gave evidence of having been a Process Technician for two years, in which time he had worked for the Respondent, both onshore and offshore. He elaborated on the classification levels providing detail on the changes in classification level from the 2018 Agreement to the Agreement. Similarly, Mr Cordall provided evidence of having worked offshore for extended periods, particularly when there was a 'big shut down'. Mr Cordall referred to a working period offshore that ranged from three to six months and that it was possible for employees to work four to six months of the year 'away'.

[56] Although there was a small voting cohort, it is not the case that the employees were not sufficiently representative, as alleged by the AWU. Based on material before me, I am satisfied that the employees requested to approve the Agreement by voting for it were representative of its coverage, in the sense that they were the employees employed at the time who were covered by the 2018 Agreement and hence would be covered by the new Agreement.

Sufficient interest respective contentions and consideration

[57] The AWU submits that the Agreement sets terms and conditions well below those currently prevailing in the 'sector' for similar work, with a discrepancy in rates in some circumstances exceeding $20/hour.[26]

[58] The AWU's submission was supported by the evidence of Mr Lipscombe, who gave evidence that he had compiled a table comparing the rates payable to day shift employees of the same classification in accordance with the terms of the Agreement and three other current enterprise agreements.[27] Mr Lipscombe stated that the table he had prepared clearly demonstrated that the rates as set out in the Agreement were significantly below those payable in accordance with other enterprise agreements in the sector.[28]

[59] In short, the AWU considered the Agreement to be a 'baseline agreement', that is an agreement where there is a low rate of pay set and then the employer 'tops up' those rates and additional conditions, via individual employment contracts. The AWU submits that even prior to s 188(2)(a) being inserted into the Act, the Commission found that employees who are paid rates in excess of those found in an agreement they voted on suggested a lack of genuine agreement as the employees had no stake in the agreement's rates of pay, making their agreement not authentic.

[60] While employees may be paid higher rates of pay than those provided by an enterprise agreement upon which they have voted, this is not solely determinative of whether the employees in question have a sufficient interest in the terms of the Agreement. While the Commission is required to take into account the Statement of Principles in determining whether an agreement has been genuinely agreed, it does not operate as a set of mandatory rules that must be complied with by an employer absent which the Commission cannot be satisfied that an agreement has been genuinely agreed. In RE LAF Contracting (NSW) Pty Ltd[29] (LAF) the Commissioner considered circumstances where it was said that the employees who were to be covered by the agreement would not have their rates of pay affected by the rates of pay in the enterprise agreement upon which they voted. The Commissioner observed that it is common practice in the construction industry for employees to be paid rates when working on particular sites that may be higher than those that would be paid under the instrument that coves them.[30]

[61] However, the Commissioner found that the higher rates of contractual pay may well be impacted, if the circumstances of the employer were to change. If circumstances changed, then there may be reversion to the rates of pay in the agreement. It was in these circumstances that the Commissioner was satisfied that the employees in question had an actual stake in the terms of the agreement.

[62] The situation in LAF is not analogous to the circumstances before me. First, the Applicant refutes the assertion by the AWU that the Agreement is a baseline agreement. Modelling of pay rates under the Agreement as against the two Modern Awards shows a significant percentage difference, with the Agreement rates in the vicinity of 76.77% up to 100.84% above the two Modern Awards.

[63] Second, the base rates of pay in clause 20.2 of Agreement are, for at least some of the employees if not a majority, higher than those currently afforded to employees pursuant to their employment contracts and are similarly higher than those provided by the EnerMech Pty Limited North West Shelf (Pilbara) Enterprise Agreement 2018.[31]

[64] It was therefore not the case that the relevant employees had no stake in the Agreement. A critical point of context was that the employees were employed under the predecessor agreement which was being rolled over with a wage increase. Further, Mr Cordall provided some reasoning as to why the pay structure under the Agreement was of benefit to the employees covered by it. In my view, the employees had an obvious stake in the agreement. It does not strike me that this is the case of an agreement being an 'artifice designed to serve as an instrumental Trojan horse, one in which a small few would vote into existence a framework soon to apply to a large and disparate group'.[32] The voting group was covered by an agreement that had existed for a number of years and was now voting on a new agreement with a similar coverage over which they had a vested interest.

The NERR was not issued to those employees covered by the Stork Agreement

[65] The AWU submits it has members who are employees of the Applicant and who are covered by another enterprise agreement - the Stork Agreement. According to the AWU, these members currently perform work on the Pyrenees Venture FPSO17, which is currently fixed within the geographical bounds of the proposed Agreement.

[66] These employees were not provided a Notice of Employee Representational Rights for

the proposed Agreement or given an opportunity to vote for or against it.

[67] The AWU says it is concerned that the scope of the proposed Agreement may be sufficiently broad enough for the Applicant to potentially claim that the work currently covered by the Stork Agreement is covered by the proposed Agreement as well, with the consequence of this being that on 24 November 2025, when the Stork Agreement nominally expires, the proposed Agreement will automatically apply to the employment of AWU members on the Pyrenees Venture by the operation of s 58 of the Act. The proposed Agreement will so apply without the employees covered by the Stork Agreement having any input into the terms and conditions of the proposed Agreement.

[68] The Stork Agreement sets out the following in respect of its coverage:

(a) Stork Technical Services Australia Pty Ltd (ACN 102 981902) ("Company");

(b) Employees of the Company engaged in Western Australia in non-destructive testing and heat treatment and employed in the classifications in clause 10 ("Employees"); and

(c) The Australian Manufacturing Workers Union ("AMWU") subject to the Union applying to be covered by the Agreement pursuant to Section 183 of the Fair Work Act 2009 ("FW Act"). (bold omitted)

[69] Clause 2.1 of the Agreement confines coverage of the Agreement to one employing entity, namely the Applicant, 'Enermech Pty Limited' and its employees. The Stork Agreement extends coverage to Stork Technical Services Australia Pty Ltd (Stork) and its employees engaged in Western Australia in non-destructive testing and heat treatment. Whilst it may be the case that the Applicant and Stork are associated entities, this does not mean, in the context of this application, that employees of Stork will be covered by the Agreement.

[70] Section 188(3) of the Act provides that s 188(4) of the Act applies if an employer was required by s 173(1) (which deals with giving notice of employee representational rights) to take all reasonable steps to give notice in relation to the agreement.

[71] Section 173(1) requires an employer that will be covered by a proposed single-enterprise agreement (other than a greenfields agreement) to take all reasonable steps to give notice of the right to be represented by a bargaining representative to each employee who: (a) will be covered by the agreement; and (b) is employed at the notification time for the agreement. The evidence before me does not support a finding that at the 'notification time' for the Agreement, employees of Stork will be covered by the Agreement and there is nothing but mere speculation that these 'Stork' employees may be covered by the Agreement at some future point. It follows that the AWU's concern is misconceived.

[72] As noted, s 186(2) of the Act requires the Commission must be satisfied of certain factors in order for the application for the approval of an agreement to be approved, one of which is that the Commission is satisfied that the agreement had been genuinely agreed to by the employees covered by the Agreement. In determining whether the agreement has been genuinely agreed, reference is had to the Statement of Principles, which relevantly provides at principle 15:

Providing employees with a reasonable opportunity to vote on a proposed agreement in a free and informed manner, including by informing the employee of the time, place and method of the vote

15. Employees should be given a reasonable opportunity to vote on a proposed enterprise agreement in a free and informed manner. This should include:

a) a voting process that ensure the vote of each employee is not disclosed or ascertainable by the employer; and

b) a method and period of voting that provide all employees entitled to vote with a fair and reasonable opportunity to case a vote.

[73] Section 181 of the Act sets out the following regarding the approval of an agreement by voting:

(1) An employer that will be covered by a proposed enterprise agreement may request the employees employed at the time who will be covered by the agreement to approve the agreement by voting for it.

(2) If the employer is required by subsection 173(1) (which deals with giving notice of employee representational rights) to take all reasonable steps to give notice in relation to the agreement, the request must not be made until at least 21 days after the day on which the last notice under subsection 173(1) in relation to the agreement is given.

(3) Without limiting subsection (1), the employer may request that the employees vote by ballot or by an electronic method.

[74] The Applicant submitted that the voting method adopted by the Applicant was highly irregular and raised the concern whether the Agreement had been made within the meaning of s 182 of the Act. The Applicant pressed that in this case there was no probative evidence of the ballot outcome provided to the Commission.

[75] Addressing first that the voting method adopted was highly irregular, I consider that not to be the case. Cases of this Commission demonstrate the methodology of a vote by way of show of hands is not irregular.[33]

[76] Second, there was probative evidence of the ballot outcome provided to the Commission by Mr Cordall and Ms Jastremski. Mr Cordall provided detailed evidence[34] about the vote and confirmed having emailed Ms Jastremski on 11 April 2024 in respect of the results.[35]

[77] Principle 15 of the Statement of Principles makes clear, allowing employees to vote on a proposed agreement free from the possibility of any pressure or influence from the employer as to the content of the vote ultimately cast is an important component in ensuring that the will of the majority of the voting cohort is properly reflected in the outcome and that any approval is in fact genuinely given. In my view, based on the evidence before me, that occurred. As observed, Mr Cordall and Ms Jastremski provided their evidence in a candid and compelling manner, with no reason arising to disbelieve their accounts. It follows that the AWU's contention cannot be sustained.

Reasonable steps to explain the Agreement's terms and their effect

[78] Section 186(2)(a) of the Act requires that the Commission is satisfied that an agreement was genuinely agreed. Section 188 sets out certain matters that the Commission must take into account or be satisfied of, in determining whether an agreement has been genuinely agreed.

[79] Section 188(4A) of the Act has the effect that the Commission cannot be satisfied that the Agreement has been genuinely agreed to by the employees covered by it unless the Commission is satisfied that the Applicant complied with s 180(5) of the Act. Section 180(5) requires that the Applicant has taken all reasonable steps to ensure that: (a) the terms of the Agreement, and the effect of those terms, have been explained to the employees employed at the time who will be covered by the Agreement; (b) the explanation was provided in an appropriate manner taking into account the particular circumstances and needs of those employees. Principles 8-14 of the Statement of Principles provide guidance in relation to the requirement in s 180(5) of the Act.

[80] In Shop, Distributive and Allied Employees Association v Allen Family Pty Ltd t/a Subway Clare, Subway Findon, Subway Broken Hill, Subway Kadina, Subway Port Adelaide and Subway Port Pirie[36] (Allens) at paragraph [81], the Full Bench stated that reaching the requisite state of satisfaction as to compliance with s 180(5) of the Act will depend on the circumstances of the case. The Full Bench observed that the nature of the requirement had been helpfully summarised by a Full Bench in Australian Workers' Union v Rigforce Pty Ltd t/a Rigforce[37] in the following terms:

[35] In considering the 'genuinely agreed' ground of appeal, it is necessary for reasons which will become apparent to consider in detail only the question of compliance with the pre-approval step in s 180(5). The nature of the requirement in s 180(5) was analysed in detail by the Federal Court (Flick J) in CFMEU v One Key Workforce Pty Ltd. We adopt the summary of that analysis set out in CFMMEU v Ditchfield Mining Services Pty Limited, which reduced it to the following four propositions:

(1) whether an employer has complied with the obligation in s 180(5) depends on the circumstances of the case;

(2) the focus of the enquiry whether an employer has complied with s 180(5) is first on the steps taken to comply, and then to consider whether:

the steps taken were reasonable in the circumstances; and
these were all the reasonable steps that should have been taken in the

(3) the object of the reasonable steps that are to be taken is to ensure that the terms of the agreement, and their effect, are explained to relevant employees in a manner that considers their particular circumstances and needs. This requires attention to the content of the explanation given; and

(4) an employer does not fall short of complying with the obligation in s 180(5) of the FW Act merely because an employee does not understand the explanation provided.

[81] The Full Bench in Allens adopted the analysis of Gostencnik DP in BGC Contracting Pty Ltd,[38] repeating what the Deputy President had said in respect of the statutory obligation to take 'all reasonable steps':

[43] A requirement or obligation to take "all reasonable steps" seems to me to require the identification of the steps a reasonable person would regard as reasonable in the circumstances that apply. Whether particular steps are reasonable will depend on the particular circumstances existing at the time the obligation arises. A requirement to take all reasonable steps does not extend to all steps that are reasonably open in some literal or theoretical sense...

[82] It follows that the question of compliance with s 180(5) is to be assessed against the circumstances that pertain at the time at which compliance was required.[39] By its written submissions and evidence, the Applicant contends that it took all reasonable steps to explain the terms of the Agreement by reference to the Award. It is therefore necessary to consider the content of the explanation given by the Applicant through the steps taken by it.

All reasonable steps respective contentions and consideration

[83] The AWU highlights that Ms Jastremski:

a) prepared a comparison table dated 2 April 2024 for the purpose of explaining the changes from the 2018 Agreement to the proposed Agreement (Briefing Document);

b) accepted that some of the changes between the 2018 Agreement and proposed Agreement were not included in the Briefing Document, including the removal of an entitlement to the payment of overtime rates and the reduction in shift work rates and availability; and

c) conceded that these changes were due to her oversight.

[84] The AWU submits that the changes between the 2018 Agreement and the proposed Agreement were as follows:

a) at clause 10 of the 2018 Agreement, employees are entitled to overtime rates, which are generally 150% for the first two hours and 200% thereafter;

b) at clause 12.8 of the 2018 Agreement, employees are entitled to shift work penalties of 15% for the afternoon or night shift and 30% for permanent afternoon shift or night shift;

c) in the proposed Agreement, there is no longer any entitlement to overtime rates of pay; and

d) in the proposed Agreement, there is no longer any entitlement to afternoon shift penalties, and the night shift loading of 20% is only payable when working on a site where a night shift roster exists and it is chargeable to the client.

[85] According to the AWU both of these changes are significant and result in employees being worse off.

[86] Additionally, says the AWU, although the Applicant organised two briefing meetings to discuss the terms of the proposed Agreement and answer questions, no employee attended either of these meetings.

[87] In sum, the AWU asserts that the Applicant's evidence establishes the following:

a) not all employees attended the bargaining meetings;

b) Mr Cordall did not recall negotiating in regard to moving from a base plus penalties rate structure to a 'rolled up' rate structure;

c) the 'rolled up' rate structure was already being used by the Applicant despite the 2018 Agreement not providing for such a structure; and

d) Mr Cordall believed that the 'rolled up' rate structure is 'just how [the Applicant's] pay structure is'.

[88] Because of the above evidence cited at paragraph [86], the AWU claims the Applicant must rely on the Briefing Document and the Briefing Document alone, in its attempt to discharge its obligation in relation to s 180(5) of the Act.

[89] The AWU pressed it is not possible for the Applicant to satisfy the Commission that it has taken all reasonable steps to explain the terms of the Agreement and the eﬀect of those terms to the employees who were asked to vote on the Agreement, because the Applicant did not provide an explanation on the removal:

a) of overtime rates of pay in the Briefing Document - particularly in instances where it appears that the employees were unaware of this entitlement in the 2018 Agreement; and

b) of afternoon shift allowances and the amendment of night shift allowance to the detriment of employees.

[90] The AWU further presses that if the Commission finds that the Applicant can rely on other meetings or communications in addition to the Briefing Document to discharge its obligation pursuant to s 180(5), there is no evidence that the Applicant informed employees of their current entitlement to overtime rates of pay and shift penalties and explained how that would change if they voted for the proposed Agreement in any forum or at any stage throughout bargaining.

[91] For completeness, the AWU added that the absence of an explanation as to these two significant changes to the current terms and conditions that apply to the employees is not a 'minor error' that may be disregarded in accordance with s 188(5)(aa). Neither can be described as minor, nor technical and both unexplained changes clearly disadvantage employees covered by the Agreement.

[92] The Applicant accepts that Ms Jastremski had not observed certain procedural requirements in the process but contends that must not lead to invalidate the whole process. The Applicant emphasised the small number of employees involved, coupled with the fact that the majority of those employee actually attended negotiation meetings and participated in the negotiation process, supported the Applicant's contention that relevant employees were able to understand the differences between the 2018 Agreement and the proposed Agreement.

[93] Turning first to the evidence of Ms Jastremski. Ms Jastremski gave evidence that she prepared the Briefing Document[40] for the purpose of highlighting the major or significant changes from the 2018 Agreement to the proposed Agreement.[41] She further expressed that at the time of preparing the Briefing Document she did not think any changes had been omitted from it,[42] but noted that having now reviewed the Briefing Document she had omitted the change concerning overtime.[43] Ms Jastremski explained that the oversight regarding overtime had likely occurred because employees were not currently paid in that manner (that is overtime was not paid).[44]

[94] When questioned in cross examination, Ms Jastremski confirmed that under the 2018 Agreement, provision was made for overtime rates and that overtime rates had been removed from the Agreement:[45]

AWU's representative: Yes. See there's various overtime rates payable, overtime shift worker, at 10.2, 'Time and a half for the first two hours, double time thereafter'. 10.3 we've got Saturdays, Sundays and public holidays. We've got overtime for casuals in a separate clause, and then we've got hydrocarbon employees overtime, which would affect most of the employees covered by the agreement. 'One and a half for first two, double thereafter. Double any time on a Sunday. Double time and a half public holiday'. And then there's also a recall. Those rates have been removed, haven't they,

AWU's representative: That doesn't appear in that briefing document, does it? ‑No.[46]

[95] Similarly, Ms Jastremski acknowledged that shift work penalties that had been provided in the 2018 Agreement but had been changed in the Agreement.[47] Regarding those changes, Ms Jastremski confirmed that the Briefing Document did not detail that the Agreement provided for only a conditional shift work penalty (nightshift allowance) at clause 18.3,[48] where previously the 2018 Agreement provided shift work penalties:

[96] Ms Jastremski gave evidence of having emailed the Briefing Document to relevant employees on 2 April 2024, of having held two briefing meetings on 5 and 9 April 2024 where no employee attended, and that employees were in effect currently being paid a flat rate of pay, which, whilst not provided in the 2018 Agreement was now reflected in the terms of the Agreement. Further, Ms Jastremski detailed that during the negotiations for the proposed Agreement, the terms of the proposed Agreement were discussed and explained to the wider group of employees.[49]
[97] The underlying purpose of s 180(5) is to ensure employees understand the effect of a

proposed agreement and to enable them to make an informed decision. Whilst Ms Jastremski gave evidence that the terms of the proposed Agreement were discussed at the bargaining meetings, it is not clear on the evidence that all employees attended those meetings or were provided with an updated version of the proposed Agreement subsequent to each bargaining meeting (although the bargaining team was provided with a copy). Whilst Mr Kennedy spoke of having received updated versions of the proposed Agreement during the negotiations, again it is not evident that all employees received updated versions.

[98] Mr Cordall and Mr Kennedy gave evidence of having sought clarification of certain issues during the negotiations,[50] and Mr Cordall said that the relevant employees had established a 'Messenger' group and after each bargaining meeting, they would text to communicate if there had been any changes.[51] Mr Cordall further noted that as the employee representative during the negotiation process, he attempted to explain the terms of the proposed Agreement to all other employees who were proposed to be covered by the Agreement. Although clear that Mr Cordall and Mr Kennedy participated in the bargaining meetings and that Mr Cordall sought to explain the terms of the proposed Agreement to employees, I am not satisfied that this evidence supports a finding that the Applicant took all reasonable steps to explain the terms of the Agreement and the effect of those terms.

[99] At hearing, Mr Cordall attempted as best he could to explain the absence of overtime from the proposed Agreement. When Mr Cordall was asked to explain the issue around the relevant employees not receiving overtime penalties, he stated that 'I can't really explain that, but it's just - that's how EnerMech's pay structure is'. [52] However, Mr Cordall did note that employees receive a higher hourly rate than two of the Applicant's competitors, but unlike their competitors they did not receive penalties and overtime.[53] Mr Cordall added, when working away there was an upload for night shift and an extra $10.00 an hour for working away or $15.00 per hour when working offshore - both of which did appear to have been detailed in the Briefing Document.[54] Mr Cordall further said that the pay structure that the employees were currently on was more beneficial to the employees because when they worked at the Henderson site they rarely got overtime (hence benefiting from a higher flat rate).[55]

[100] Of course, Mr Cordall had, in circumstances where none of the relevant employee group had stepped forward, taken it upon himself to be a 'spokesperson' and to have encouraged other employees to attend bargaining meetings. However, Mr Cordall was not a bargaining representative as understood by reference to principle 11 of the Statement of Principles and therefore his steps to explain the terms of the proposed Agreement to his colleagues carries little weight when considered against the guiding Statement of Principles.

[101] A critical point of context is that the proposed Agreement was an agreement to replace the 2018 Agreement and the change in the wage structure from the 2018 Agreement to the proposed Agreement was a significant change to a fundamental term of the employees' employment. This is the case even though the Applicant appeared to say that despite the terms of the 2018 Agreement, it had already introduced a flat rate structure and was currently paying employees in accordance with that structure.

[102] Although the Applicant conducted two briefing sessions, none of the employees attended those sessions. It might be inferred that the employees' absence from the two briefing sessions indicated that they understood the terms of the proposed Agreement as presented in the Briefing Document, but of course the Briefing Document failed to provide the detail necessary to ensure that the employees understood the effect of the terms of the proposed Agreement on their rates of pay in comparison to the 2018 Agreement). Were it the case that the Briefing Document explained the changes to overtime and penalties, then notwithstanding the level of absenteeism at the two briefing sessions, I would have, more likely than not, been satisfied that all reasonable steps were taken.

[103] As observed, an object of the reasonable steps requirement in s 180(5) of the Act is to enable relevant employees to know what they are being asked to agree to and to understand how their wages and working conditions might be affected by voting in favour of an Agreement. Of course, in this case it appeared that the Agreement reflected more accurately what the Applicant was doing in actual practice, that is paying a flat rate of pay absent overtime and it would seem allowances. However, that actual practice does not negate the obligation to have taken all reasonable steps to explain the terms of the Agreement and their effect - in this case by comparing the aforementioned changes made to the 2018 Agreement that culminated in the Agreement now before me for approval.

[104] Furthermore, it is not the case that the errors made constitute a minor technical or procedural error for the purposes of s 188(5)(a) of the Act. The failure to explain these differences to the employees represented a significant error, albeit it was a failure to explain a limited number of material differences between the 2018 Agreement and the Agreement.

[105] In this case, I have found that here was a failure of the Applicant, for the purposes of s 188(4A) of the Act, to comply with s 180(5) in relation to the proposed Agreement. Consequently, I am not satisfied the proposed Agreement has been genuinely agreed to by the employees covered by it pursuant to s 186(2)(a) of the Act.

[106] The Commission may accept an undertaking in circumstances where it has a concern that the requirements of ss 186 and 187 have not been met. It is not in dispute that such undertakings may address 'genuine agreement' concerns. A decision to exercise the discretion to accept an undertaking is to be made by reference to the matters in s 190 of the Act, taking into the account the nature of the concern and the circumstances of the particular approval application under consideration.[56]

[107] The Commission must be satisfied that the undertaking meets the concern,[57] and is not likely to cause financial detriment to any employee covered by the agreement or result in substantial changes to the agreement.[58]

[108] It is of course uncontroversial that not all instances of non-compliance with s 180(5) may be curable by undertakings. As observed by the Full Bench in CFMMEU v Mechanical Maintenance Solutions Pty Ltd,[59] where there has been a 'wholesale failure' to comply with s 180(5) of the Act, of the type dealt with in 'One Key', such an issue 'is not capable of rectification'.[60] However, each case will turn on its own facts and as such I will consider whether any undertakings provided (if provided) in this matter cure the defect under ss 186 and 187.

[109] It follows that whilst I am not satisfied that the Agreement has been genuinely agreed to by the employees covered by it pursuant to s 186(2)(a) of the Act, the Applicant will be extended the opportunity to proffer undertakings to address the issue. Accordingly, the Applicant is directed to file and serve any undertaking(s) it wishes to rely on in support of its application for the approval of the Agreement by 4:00PM on Monday, 2 September 2024. If undertakings are proffered, the AWU and any employee bargaining representative will be given the opportunity to provide their responsive views by no later than Friday, 6 September 2024.

[3] Form F17B - Employer's declaration in support of an application for approval of a single enterprise agreement (other than a greenfields agreement) - notification time on or after 6 June 2023, question 29.

[5] Collinsville [2014] FWCFB 7940, [48] & [75].

[7] Witness Statement of Jason Lipscombe (Lipscombe Statement) [1].

[9] Witness Statement of Craig Cordall (Cordall Statement) [6].

[14] Witness Statement of Micaela Jastremski (Jastremski Statement) [8].

[19] Form F17B - Employer's declaration in support of an application for approval of a single enterprise agreement (other than a greenfields agreement) - notification time on or after 6 June 2023, question 6.

[20] Form F17B - Employer's declaration in support of an application for approval of a single enterprise agreement (other than a greenfields agreement) - notification time on or after 6 June 2023, question 29.

[24] NTEU v Swinburne University of Technology [2015] FCAFC 98.

[26] Lipscombe Statement [18]; Annexure JL-1.

[32] Australian Workers' Union v Moag Pty Ltd [2024] FWCFB 259 [18].

[33] For example, Thompsons, Kelly & Lewis Pty Ltd t/a Flowserve Pump Division [2024] GFWCA 2767; Glenn Howard Family Trust T/As Beachside Plumbing Services Pty Ltd T/A Beachside Plumbing [2023] FWCA 2826.

[34] Transcript PN193-204; Cordall Statement [17]-[20].

[35] Digital Hearing Book pg 540 - 542.

[38] Application by BGC Contracting Pty Ltd T/A BGC [2018] FWC 1466, [43] as cited in [2024] FWCFB 48, [81].

[39] CFMMEU v Ditchfield Mining Services Pty Limited [2019] FWCFB 4022 [71]-[72].

[44] Transcript PN420; See also pg 535 of the Digital Hearing Book 'Rates (Schedule 2) - Happy to maintain the current structure, that being a flat rate with the applicable allowances.

[50] Kennedy Statement [6] to [9] and Transcript PN 320, 321 and 324; Cordall Statement [11]-[13].

Enermech Pty Limited [2024] FWC 2300 (28 August 2024)

At a glance

Court

Decision date

Source

Judgment (207 paragraphs)

Enermech Pty Limited [2024] FWC 2300 (28 August 2024)

Legislation Cited (3)