Fair Work Act 2009

s 185 - Enterprise agreement

Application for approval of the IAS Enterprise Agreement 2024 - voter cohort all casual employees - voter cohort not sufficiently representative - enterprise agreement covers full-time and part-time employees - enterprise agreement not genuinely agreed to - application dismissed.

• [1] Innovative Asset Solutions Pty Ltd trading as IAS has applied for the approval of an enterprise agreement known as the IAS Enterprise Agreement 2024 (2024 Agreement). The application was made under s 185 of the Fair Work Act 2009 (Cth). The 2024 Agreement is a single enterprise agreement. The Commission can only approve the 2024 Agreement if the requirements in ss 186 and 187 are met.

• [2] The Australian Workers' Union and Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia oppose the application on several grounds.

• [3] In support of its application for approval, IAS relies on evidence from Mr Geoff Weaver (Industrial Relations Manager) through its Form F17B and Mr Weaver's supplementary witness statement, as well as witness statements from Ms Tamara Wheatcroft (Senior People & Culture Business Partner), Mr Doug Cochrane (Operations Manager) and Mr Neil Pickwell (Business Manager). The AWU provided a witness statement of Mr Ross Kumeroa (Organiser), and the CEPU provided a witness statement of Mr Ian Gill (Organiser).

• [4] I heard the matter on Thursday 19 December 2024. I granted permission for Mr Chris Gianatti of KHQ Lawyers to represent IAS.

• [5] Having considered the evidence and submissions of the parties, I find the 2024 Agreement was not genuinely agreed to. The application must be dismissed.

• [6] The detailed reasons for my decision follow.

• [7] IAS is a labour hire company that services a variety of industries both offshore and onshore.[1] It was acquired by UGL in 2021.[2]

• [8] In July 2023, IAS commenced bargaining for an enterprise agreement to replace the IAS Group Enterprise Agreement 2019-2023 (2019 Agreement). There is no contest that the AWU and the CEPU are default bargaining representatives for the 2024 Agreement and were in fact involved in the bargaining process.

• [9] Since bargaining commenced, there have been four unsuccessful votes for a replacement enterprise agreement. The fifth vote was successful.

• [10] In this matter, the following facts are not controversial:

• (a) The 2024 Agreement covers IAS and IAS employees who are covered by the classifications in Schedule B, throughout Australia.[3]

• (b) The 2024 Agreement covers employees who are employed on a full-time, part-time or casual basis.[4]

• (c) But for the 2024 Agreement, the Hydrocarbons Industry (Upstream) Award 2020, the Manufacturing and Associated Industries and Occupations Award and the Electrical, Electronic and Communications Contract Award 2020 (together, the Awards) would cover IAS and the employees covered by the 2024 Agreement.[5]

• (d) All of the employees who voted on the 2024 Agreement were employed on a casual basis.[6]

(e) The employees who voted on the 2024 Agreement were engaged to perform work at the following facilities:

(i) The Jadestone Montara Venture FPSO;

(ii) The Jadestone Stag CPF;

(iii) The Woodside Pyrenees Venture FPSO;

(iv) The Chevron Wheatstone Platform; and

(v) IAS' Canning Vale workshop.

• [11] Ms Wheatcroft's evidence included the payslips of every employee who was eligible to vote on the 2024 Agreement.[7] The payslips show that the employees are engaged in the following positions:
  • Instrument Electrician
  • Mechanical Fitter
  • Tube Fitter
  • Welder
  • Advanced Rigger
  • Supervisor
  • Senior Trade Technician
  • Pipefitter
  • Painter Blaster

• [12] Mr Cochrane's evidence is that some of the employees engaged in particular positions have different classifications or more specialised skillsets.[8] I do not find that this materially changes Ms Wheatcroft's evidence.

• [13] In IAS' initial Form F17, it indicated that at the time of the vote on the 2024 Agreement, there were 56 employees covered by the 2024 Agreement. All 56 voted, with 32 voting 'yes' to approve.

• [14] When the matter was allocated to my Chambers, I asked IAS to provide information on the all-casual voting cohort so that I could be satisfied that the casual employees who voted were employed at the time and were entitled the vote as per the Full Bench authority in Kmart.[9] Ms Wheatcroft and Mr Pickwell reviewed the list of voters and realised that 10 employees who had voted on the 2024 Agreement had not worked during the access period.[10]

• [15] Ms Wheatcroft conferred with Vero - the ballot agent for the vote on the 2024 Agreement - on whether there was a way to remove the 10 employees from the ballot results without affecting the anonymity of the vote. Vero confirmed that if all 10 employees did not vote the same way, then it was possible to maintain voting anonymity.[11]

• [16] After removing the 10 identified employees from the ballot results, Vero provided a revised Declaration of Result which show that out of 46 eligible voters, 29 voted 'yes' and 17 voted 'no'.[12]

• [17] The AWU's objections to the 2024 Agreement's approval can be summarised as follows:

(a) The employees who voted to approve the 2024 Agreement were not sufficiently representative of those who will be covered by it, inconsistent with s 188(2)(b) of the Act.

(b) IAS provided employees with an opportunity to vote on the 2024 Agreement when they were not entitled to do so, inconsistent with s 181 of the Act.

(c) As a result of IAS' non-compliance with s 181, the 2024 Agreement was not validly made in accordance with s 182 of the Act, which affects genuine agreement; and

(d) IAS did not take all reasonable steps to explain the terms and effect of the terms of the 2024 Agreement in comparison to the industrial instrument that currently applies to the cohort of employees (the 2019 Agreement), inconsistent with ss 180(5) and 188(4A) of the Act.

• [18] The CEPU adopts the AWU's objections and further raises the following contentions:

(a) IAS made misrepresentations about the application of the 2024 Agreement. This compromises Principles 17 and 18 of the Statement of Principles on Genuine Agreement.

(b) The 2024 Agreement does not satisfy the 'better off overall test'.

4. Was the 2024 Agreement genuinely agreed to?

• [19] Before approving an enterprise agreement under s 185 of the Act, the Commission must be satisfied that the agreement has been, 'genuinely agreed to by the employees covered by the agreement.[13] Section 188 sets out that in determining whether an enterprise agreement has been genuinely agreed to by employees, the Commission must take into account the Principles made under s 188B.

• [20] Relevant to this matter, Principle 17 of the Principles states:

1. In considering whether employees have a sufficient interest in the terms of an enterprise agreement as required by section 188(2)(a) of the Fair Work Act, and whether the employees are sufficiently representative as required by section 188(2)(b), the FWC may take into account:

1. whether the employees entitled to vote on the enterprise agreement are to be paid the rates of pay provided for in the agreement, and

1. the extent to which the employees entitled to vote on the enterprise agreement are employed across the full range of:

1. classifications in the agreement
2. types of employment in the agreement (for example, full-time, part-time and casual)
3. geographic locations the agreement covers, and
4. industries and occupations the agreement covers.

• [21] The application of the Principles was considered by the Full Bench in SDA v Allen Family Pty Ltd at [76] as follows:[14]

The important point to be made is that 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. Where an employer follows pre-approval steps that are consistent with the Statement of Principles, that would weigh more favourably towards a conclusion that an agreement has been genuinely agreed. The converse is equally true of course. The requirement to take into account the Statement of Principles does not displace the requirement to consider each of the other matters set out in s 188 in determining whether an agreement has been genuinely agreed. In the present case, the SDA submits that there are various grounds upon which we should find that the Agreement has not been genuinely agreed. We turn to those matters now.

• [22] Section 188(2) also requires that the Commission cannot be satisfied that an enterprise agreement has been genuinely agreed to by the employees covered it unless the Commission is satisfied that the employees requested to approve the enterprise agreement by voting for it, 'have a sufficient interest in the terms of the agreement... [and] are sufficiently representative, having regard to the employees the agreement is expressed to cover.'

• [23] Section 188(2) was inserted by the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022. The Revised Explanatory Memorandum to this bill provided the following:

Sufficient interest and sufficiently representative

New subsection 188(2) would provide that the FWC cannot be satisfied that an enterprise agreement has been genuinely agreed to unless the FWC is satisfied that the employees requested to vote on the agreement:

• have a sufficient interest in the terms of the agreement; and
• are sufficiently representative, having regard to the employees the agreement is expressed to cover.

A note to subsection 188(2) indicates that in the decision of One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FCAFC 77; (2018) 262 FCR 527, a Full Court of the Federal Court observed that whether an agreement has been genuinely agreed involves consideration of the authenticity of the agreement of the employees, including whether the employees who voted for the agreement had an informed and genuine understanding of what was being approved.

New subsection 188(2) is intended as a safeguard against agreements which are not the result of collective bargaining in good faith, including 'unrepresentative' and 'low voter cohort' agreements. For example, a small cohort of employees offered rates of pay above those provided in the enterprise agreement should not be capable of being found to have genuinely agreed (see, for example, Re KCL Industries Pty Ltd [2016] FWCFB 3048; (2016) 257 IR 266)).

New paragraph 188(2)(a) is directed at ensuring that employees must have a 'sufficient stake' in the terms of the agreement. For example, employees would not have a sufficient interest in the terms of an agreement if no genuine collective bargaining in good faith occurred as part of the agreement-making process.

New paragraph 188(2)(b) is intended to ensure that employees requested to vote on an agreement are sufficiently representative, having regard to the coverage terms or intended coverage of the agreement. For example, employees engaged in one industry, occupation or classification should not be capable of being found to have genuinely agreed to an enterprise agreement intended to cover employees across a substantially wider range of industries, occupations or classifications.

A small cohort of employees would also not be sufficiently representative where the agreement is intended to ultimately cover a much wider workforce following transfers of employment, possibly within a corporate group.

• [24] The AWU and the CEPU submit that the 2024 Agreement sets the terms and conditions for IAS employees in over three dozen classifications across several industries, Australia-wide. The employees who voted on the 2024 Agreement were representative of:
  • a third of the types of employment;
  • less than a third of the industries;
  • a third of the sectors in the hydrocarbons industry;
  • one eighth of the geographical areas; and
  • approximately one sixth of the classifications

• [25] The unions submit that the correct question to ask is not, 'is the cohort inappropriate?', but rather, 'is the cohort representative?'. The unions say, for the reasons outlined above, the answer is 'no'.

• [26] IAS submits that the matters prescribed by the Principles are discretionary and the 'true nature of the inquiry' is to 'explain what vice was actually visited on employees or why that cohort was inappropriate as to vitiate genuine agreement'.[15] IAS further submits that the 2024 Agreement is a rollover of the 2019 Agreement and the enterprise agreement prior to that (the IAS Group Enterprise Agreement 2014-2018).[16]

• [27] IAS contends that in determining whether the 2024 Agreement has been genuinely agreed to, the Commission should direct its inquiry into the authenticity of the bargaining process. This was not a scenario where there was no bargaining or there was a sham bargaining process. There were considerable negotiations for a replacement to the 2019 Agreement involving the AWU, the CEPU and individual bargaining representatives.

• [28] The parties disagreed on the significance of the Full Bench's decision in Australian Workers' Union v Moag[17] for this matter. Moag concerned the AWU's appeal of the decision to approve the Moag Enterprise Agreement 2022. In that matter, the four employees who voted up the enterprise agreement together occupied four occupations out of the 39 occupations covered by the enterprise agreement. The AWU contended that the four employees who voted on the enterprise agreement did not have a sufficient interest in the terms of said enterprise agreement and were not representative of the employees who would be covered by it.[18]

• [29] The Full Bench rejected this argument, and made the following findings:

[18] We reject the first contention. In our opinion, although there was a small voting cohort, it was not the case that they had no stake in the Agreement, nor were they unrepresentative. A critical point of context was that the employees were engaged under the predecessor agreement which was being rolled over with a significant wage increase. They had an obvious stake in the agreement, and they were representative of its coverage, in the sense that they were all of the employees employed at the time who were covered by the previous agreement hence would be covered by the new one. There is no suggestion in this case of the 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. 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 the same coverage.

• [30] At the time of the Moag Full Bench, s 188(2)(b) and the provisions regarding the Principles had not yet been introduced.[19] Instead, the Full Bench had regard to s 188(1)(c) (as it then was), which required the Commission to be satisfied that there were no other reasonable grounds for believing that the enterprise agreement had not been genuinely agreed to.

• [31] IAS submits that regardless of the change in legislation, the principles are still the same i.e. what is sufficiently representative, and the search for authenticity in the manner the agreement was made. IAS submits that the circumstances of Moag are similar to this case in that there is a rollover agreement and the employees who voted on the enterprise agreement were employed under the predecessor agreement.

• [32] The unions submit that as Moag was decided using a different legislative framework through the lens of an appeal, it is not helpful for determining the current matter.[20]

• [33] I find that Moag does provide helpful guidance in assessing the question of whether a voting cohort has sufficient interest or is sufficiently representative. However, regardless of the different statutory framework that Moag was determined under, for reasons I will now detail, the facts in this case do not mirror the situation in Moag.

• [34] As per s 188(1), I must take into account the Principles. Under s 188(2), I cannot be satisfied that the 2024 Agreement has been genuinely agreed to unless I am satisfied the employees who voted on it had a sufficient interest in the terms of the agreement and are sufficiently representative. Principle 17 works in tandem with ss 188(2)(a)-(b). It states that for the purpose of assessing whether employees have a sufficient interest or are sufficiently representative, the Commission may take into account the extent to which the eligible employees are employed across the full range of the types of employment in the agreement (e.g. full-time, part-time and casual).

• [35] I accept IAS' submissions that the inquiry in s 188 is directed to a consideration of the authenticity of the agreement of the employees. So much is plain from the note in s 188(2). However, I find that by inserting ss 188(2)(a) and (b), the parliament defined what the inquiry must involve. This is clearly set out in the extracted paragraphs of the Revised Explanatory Memorandum to the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022, and in particular, paragraph 727, where it provides the following example:

"...employees engaged in one industry, occupation or classification should not be capable of being found to have genuinely agreed to an enterprise agreement intended to cover employees across a substantially wider range of industries, occupations or classifications."

• [36] The language in s 188(2) is not discretionary. I cannot be satisfied that the agreement has been genuinely agreed to if I am not satisfied that the voting cohort had a sufficient interest and are sufficiently representative. The qualifier of 'sufficient/ly' points to an evaluative exercise of the facts.

• [37] As already canvassed, all the eligible employees who were requested to vote on the 2024 Agreement were employed on a casual basis, whilst the 2024 Agreement also covers full-time and part-time employees.

• [38] It would be wrong to say that as a rule, a voting cohort comprising only casuals, or only permanent employees, cannot have a sufficient interest or be sufficiently representative in relation to an enterprise agreement that is expressed to cover all types of employment. This is just one of the considerations in evaluating whether there is genuine agreement, and each case turns on its own facts.

• [39] However, in this matter, I find that it is a relevant consideration. I find that the all-casual cohort that was requested to approve the 2024 Agreement was not sufficiently representative given the 2024 Agreement also covers full-time and part-time employees.

• [40] Though IAS did not draw my attention to it, I am conscious that there is a casual conversion term in the 2024 Agreement. This could possibly address how a casual cohort could have a sufficient interest or be sufficiently representative. However, though IAS was on notice of the unions' contentions regarding the all-casual voting cohort, it did not put substantive evidence to address this. I do not have any information about whether IAS has employed full-time or part-time employees in the past; whether employees are aware of the casual conversion provisions; or even if any employees had ever gone through the casual conversion process.

• [41] Ultimately, the only evidence that IAS tendered on this issue was a single sentence from Mr Cochrane's witness statement that, 'IAS employees have employment experience in the project contracting industries in a wide range of roles, engagement types and classifications... at a wide variety of locations throughout Australia and also internationally.'[21] No supporting data or documentation was provided in support of Mr Cochrane's contention regarding types of employment, in contrast with the documentation provided addressing the issues of roles, classifications and geographical engagement. I do not find Mr Cochrane's assertion to be persuasive in these circumstances. IAS also did not make any substantive submission on how I could be satisfied that the all-casual cohort could be sufficiently representative given the 2024 Agreement covers permanent employees.

• [42] In reaching my finding in [39], I have also had regard to the following matters.

• [43] First, contrary to what IAS asserts, the 2024 Agreement is not a 'rollover' of the 2019 Agreement. The wage structure has completely changed between the two instruments. The 2019 Agreement wage structure involves a base hourly rate, with penalties such as overtime and various allowances defined separately. In the 2024 Agreement, there is a 'Flat Hourly Rate' which rolls in penalties and allowances except for shift work penalties. This is a substantial change.

• [44] There are also several changes beyond the new wage structure. The explanatory handout that was given to the employees during the access period supports this.[22] The explanatory handout summarises just shy of 40 changes between the 2019 Agreement and the 2024 Agreement. I accept that some of these are minor changes to wording or structure to clarify meaning, with no effect on substantive meaning. However, many of the changes include the insertion of new clauses and removal of existing clauses.

• [45] This finding is also supported by Mr Cochrane's evidence of the information meetings he held with the eligible employees during the access period. Mr Cochrane tendered the documents he presented at each information meeting, which explain some of the key proposed changes in the 2024 Agreement compared to the 2019 Agreement. These included the new wage structure, the inclusion of a training payment, the inclusion of income protection, the change to the notice period for introducing a new roster, and a reduction in the length of the probation period.[23] Based on this, I cannot find that the 2024 Agreement is a rollover of the 2019 Agreement.

• [46] The significance of this is that contrary to the situation in Moag¸ the voting cohort cannot be sufficiently representative in the sense they have worked under a set of terms and conditions that are being rolled over.

• [47] Second, the 2024 Agreement has changes to conditions that only apply to permanent employees.

• [48] Clause 24.1 of the 2019 Agreement provides that employees (other than casual employees) are entitled to annual leave in accordance with the National Employment Standards. Employees must provide four weeks' notice of their intention to take annual leave, and by written agreement, an employee may elect to cash out part of their accrued annual leave as long as they maintain a minimum of four weeks accrued leave. This is largely mirrored in Clause 24 of the 2024 Agreement.

• [49] Clause 24.2 of the 2019 Agreement provides mechanisms for both IAS and an employee to address excessive annual leave accruals of more than 10 weeks. In such a circumstance, IAS may direct an employee to take annual leave, but only if IAS has genuinely tried to reach agreement with the employee on reducing the leave accrual. Clause 24.2.2(b) also sets up guardrails on what IAS can direct. Clause 24.2.3 similarly provides a mechanism where an employee with an excessive leave accrual can give written notice of a request to take annual leave.

• [50] There is no analogous clause to these provisions in the 2024 Agreement. At best, Clause 24.2 of the 2024 Agreement provides that IAS may direct an employee to take accrued annual leave on one month's notice. It does not have any of the restrictions in Clause 24.2 of the 2019 Agreement, such as the requirement on IAS to genuinely try to reach agreement with the affected employee on taking annual leave.

• [51] A non-casual employee would accrue 10 weeks' annual leave after 2.5 years' employment. Given the term of the 2024 Agreement is three years from the date of commencement, it is entirely possible that this would be an issue if IAS engages employees on a permanent basis in the future.

• [52] I also note that it does not appear that IAS explained the removal of these provisions to the voting cohort. On the annual leave clause in the 2024 Agreement, the explanatory handout states that, 'This updated clause provides employees with greater flexibility to use their annual leave, such as cash out'. Not only does this not mention the removal of the excessive leave accrual provisions, but it is also incorrect considering employees could already cash out annual leave under the 2019 Agreement.

• [53] Clause 28 of the 2019 Agreement details that employees (other than casual employees) will be entitled to paid leave on public holidays. Where a full-time or part-time employee works on a public holiday, they will be paid at the overtime rate plus accrue a paid RDO in lieu of applying penalty or loading rates.

• [54] Clause 31.2 of the 2024 Agreement provides that any employee required to work on a public holiday will be paid at the applicable Flat Hourly Rate of Pay. The Flat Hourly Rate of Pay in the 2024 Agreement is the same as the Overtime Rate of Pay and includes compensation for work on public holidays.[24] Because of this, it is entirely possible that both clauses result in the same outcome for a permanent employee, just through different pathways. However, no material was submitted breaking down the Flat Hourly Rate of Pay in the 2024 Agreement, so I cannot accurately compare the effect of the two clauses. However, I have decided to give IAS the benefit of the doubt and do not give the changes in the public holiday clause between the 2019 Agreement and the 2024 Agreement weight in my assessment.

• [55] The 2019 Agreement also provides that employees (other than casual employees) may request to work an RDO system. Clause 12.2 of the 2019 Agreement sets out how an agreed RDO system works, including that at the time of termination, any untaken RDO accrual hours shall be paid to the employee at ordinary rates. There is no RDO system in the 2024 Agreement.

• [56] Third, the breadth of the 2024 Agreement's coverage - across the three Awards, and across Australia - is significant in that it opens large opportunity for IAS to tender for work. Indeed, Mr Weaver's evidence is that the broad scope of the IAS enterprise agreements is a deliberate feature so that there can be certainty in IAS' tendering for work.[25] IAS did not lead any evidence that it only engages employees on a casual basis. Given the broad scope and the fact the 2024 Agreement is expressed to cover full-time and part-time employees, I cannot be satisfied that IAS won't engage employees on a full-time or part-time basis in the future.

• [57] For completeness, I note that there does not appear to be any allowances that are specific to permanent or casual employees, beyond the built-in casual loading in the Flat Hourly Rate for casuals. However, I also note that despite Clause 16.4 of the 2024 Agreement stating that the casual loading is 25%, the differences between the permanent rates and casual rates in Schedule A are less than 25%.

• [58] As I am not satisfied that the employees who were requested to vote on the 2024 Agreement were sufficiently representative, I cannot be satisfied that the 2024 Agreement was genuinely agreed to. The 2024 Agreement cannot be approved. Given my findings, it is unnecessary for me to deal with the unions' other objections to the application. The application is dismissed.

C Gianatti for Innovative Asset Solutions Pty Ltd.

J Fox for the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia.

[1] Digital Court Book (DCB), Witness Statement of Neil Pickwell, 566.

[2] Ibid, Witness Statement of Geoff Weaver, 575 [4].

[3] IAS Enterprise Agreement 2024 (2024 Agreement), clause 1.1.

[5] DCB (n 1), Form F17B, 13, question 8.

[7] DCB (n 1), Witness Statement of Tamara Wheatcroft, 179-266.

[8] Ibid, Witness Statement of Doug Cochrane, 521 [21].

[9] Appeal by Kmart Australia Limited t/a Kmart and others [2019] FWCFB 7599.

[10] DCB (n 1), Witness Statement of Tamara Wheatcroft, 175 [11]-[19].

[13] Fair Work Act 2009 (Cth), s 186(2)(a).

[14] [2024] FWCFB 48.

[15] DCB (n 1), IAS Outline of Submissions 6 December 2024, 164-165 [4].

[17] [2024] FWCFB 259.

[19] As acknowledged by the Full Bench in Moag [14].

[20] DCB (n 1), AWU Outline of Submissions in Reply 17 December 2024, 664 [3].

[21] Ibid, Witness Statement of Doug Cochrane, 521 [18].

[22] Ibid, Form F17B, Annexure B 33-41.

[23] Ibid, Witness Statement of Doug Cochrane, 523-526.

[25] DCB (n 1), Witness Statement of Geoff Weaver, 576 [5].

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