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[2021] FWC 4672
General information, not legal advice.
Fair Work Commission
2021-08-03
Original judgment source is linked above.
s.185 - Enterprise agreement
Application for approval of the LMATS (Melbourne) Collective Agreement 2021 - 2024.
[1] An application has been made for approval of the LMATS (Melbourne) Collective Agreement 2021 - 2024 (the Agreement). The application was made pursuant to section 185 of the Fair Work Act 2009 (the Act). It has been made by LMATS Pty Ltd (the Applicant). The Agreement is a single enterprise agreement.
[2] The Applicant declared in its Form F17 that a notice of employee representational rights (NERR) was provided by the Applicant to employees on 23 June 2021 and also states that employees were provided with access to the Agreement on 23 June 2021.
[3] The Applicant further states that employees were notified of the time, place and method of voting on 23 June 2021 by way of an email sent to employees and that voting occurred in the period 1-5 July 2021. A majority of those who voted approved the Agreement.[1]
[4] The Applicant filed an F17 declaration in support of the Agreement. The declaration noted that the relevant award for the purpose of the better off overall test (BOOT) was the Manufacturing and Associated Industries and Occupations Award 2020[2] (the Award). The declaration noted (incorrectly) that there are no provisions in the Agreement more beneficial than the Award. No less beneficial terms were identified.
[5] In reviewing the Agreement for approval, the Fair Work Commission (the Commission) identified several concerns in relation to the Agreement and supporting documentation. These included pre-approval requirements and whether the Agreement met the BOOT. The Commission wrote to the Applicant on 19 July 2021 and identified several issues requiring a response.
[6] A response to the Commission's preliminary concerns was received from the Applicant on 26 July 2021 which included a revised Form F17 that sought to address the Commission's preliminary concerns. The Commission on receipt and review of the revised F17 and accompanying material wrote to the Applicant on 27 July 2021 setting out a number of threshold concerns in the following terms;
AG2021/6140 - Application for approval of the LMATS (Melbourne) Collective Agreement 2021 - 2024
We refer to the abovementioned application and response received in relation to the concerns raised by the Deputy President on 19 July 2021.
The Deputy President advises that the material provided continues to raise fundamental pre-approval issues, particularly in relation to the following:
Having regard to the above, the Deputy president has formed a preliminary view that the Agreement is incapable of approval and should be withdrawn.
Should the Applicant seek to be heard, you are required to advise Chambers by close of business Wednesday, 28 July 2021."
[7] The Applicant responded on 28 July 2021 indicating that it wished to be heard in relation to the application for approval of the Agreement. The Applicant subsequently forwarded further material on 30 July 2021 in response to directions from the Commission. The matter was set down for hearing on 2 August 2021.
[8] At the hearing conducted on 2 August 2021 the Applicant was represented by Mr M Topliss who is the Branch Manager for the Applicant. Three employee bargaining representatives also attended, those being Mr N Hildebrand, Mr J Rai and Ms J Serrano.
[9] Section 186 of the Act requires, amongst other things, that in order for an enterprise agreement, that is not a greenfields agreement to be approved, the Commission must be satisfied that employees have genuinely agreed to it. Section 186 relevantly provides as follows:
"186 When the FWC must approve an enterprise agreement - general requirements
(1) If an application for the approval of an enterprise agreement is made under subsection 182(4) or section 185, the FWC must approve the agreement under this section if the requirements set out in this section and section 187 are met.
Note: The FWC may approve an enterprise agreement under this section with undertakings (see section 190).
(a) if the agreement is not a greenfields agreement - the agreement has been genuinely agreed to by the employees covered by the agreement; an
(b) if the agreement is a multi-enterprise agreement:
(i) the agreement has been genuinely agreed to by each employer covered by the agreement; and
(ii) no person coerced, or threatened to coerce, any of the employers to make the agreement; and
(c) the terms of the agreement do not contravene section 55 (which deals with the interaction between the National Employment Standards and enterprise agreements etc.); and
(d) the agreement passes the better off overall test.
[10] Section 188 of the Act prescribes when employees are held to have genuinely agreed to an enterprise agreement where it states:
"188 When employees have genuinely agreed to an enterprise agreement
(1) An enterprise agreement has been genuinely agreed to by the employees covered by the agreement if the FWC is satisfied that:
(a) the employer, or each of the employers, covered by the agreement complied with the following provisions in relation to the agreement:
(i) subsections 180(2), (3) and (5) (which deal with pre-approval steps);
(ii) subsection 181(2) (which requires that employees not be requested to approve an enterprise agreement until 21 days after the last notice of employee representational rights is given); and
(b) the agreement was made in accordance with whichever of subsection 182(1) or (2) applies (those subsections deal with the making of different kinds of enterprise agreements by employee vote); and
(c) there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.
(2) An enterprise agreement has also been genuinely agreed to by the employees covered by the agreement if the FWC is satisfied that:
(a) the agreement would have been genuinely agreed to within the meaning of subsection (1) but for minor procedural or technical errors made in relation to the requirements mentioned in paragraph (1)(a) or (b), or the requirements of sections 173 and 174 relating to a notice of employee representational rights; and
(b) the employees covered by the agreement were not likely to have been disadvantaged by the errors, in relation to the requirements mentioned in paragraph (1)(a) or (b) or the requirements of sections 173 and 174."
[11] Section 180 of the Act details the steps that must be taken by the employer to ensure that, prior to a ballot for an agreement, employees are properly informed as to the agreement and are notified as to the ballot process. The relevant provisions are:
"180 Employees must be given a copy of a proposed enterprise agreement etc.
(1) Before an employer requests under subsection 181(1) that employees approve a proposed enterprise agreement by voting for the agreement, the employer must comply with the requirements set out in this section.
Employees must be given copy of the agreement etc.
(2) The employer must take all reasonable steps to ensure that:
(a) during the access period for the agreement, the employees (the relevant employees) employed at the time who will be covered by the agreement are given a copy of the following materials:
(i) the written text of the agreement;
(ii) any other material incorporated by reference in the agreement; or
(c) the relevant employees have access, throughout the access period for the agreement, to a copy of those materials.
Terms of the agreement must be explained to employees etc.
(5) 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.
Provision of notice of employee representational rights (NERR) (s. 173)
[12] As set out in the Commission's correspondence to the Applicant on 27 July 2021, it appeared that the NERR had not been provided to employees at least 21 days prior to the conduct of the ballot for approval of the Agreement. This concern arose from the Applicant's response at question 18 of its revised F17 declared by Mr Topliss on 26 July 2021, where it was stated that the NERR was provided to employees on 23 June 2021, noting that the ballot was conducted from 1-5 July 2021. If the statement in the F17 is correct then 21 days did not elapse between the issuing of the NERR and conduct of the ballot.
[13] In further material filed with the Commission on 30 July 2021 an email was included that revealed that the NERR was initially distributed to employees on 12 March 2021, which was 7 days after the 'notification time' of 5 March 2021. Mr Topliss confirmed that the inclusion of the date of 23 June 2021 at question 18 in the revised F17 was in error and should have been stated as 12 March 2021.
[14] Based on the material filed by the Applicant I am satisfied that the NERR was distributed to employees on 12 March 2021, thus complying with s. 173(3) of the Act.
Provision of or access to incorporated materials (s 180(2))
[15] As set out above s.180(2) requires an employer to take all reasonable steps to ensure copies of the text of an agreement and incorporated materials are provided to employees during the access period or are available to employees throughout the access period. I am satisfied on the basis of the F17 and accompanying materials that employees were provided with copies of the Agreement during the access period.
[16] Clause 4 deals with the relationship of the Agreement to the Award and states that the Award, "or its successor award(s) ("Award"), as varied from time to time, are incorporated into this Agreement." As the Award is incorporated by reason of clause 4 of the Agreement, the Applicant was required to take all reasonable steps to provide a copy of the Award to employees during the access period or ensure employees had access to a copy of the Award throughout the access period for the Agreement.
[17] It was conceded by the Applicant and confirmed by employee bargaining representatives that copies of the Award were not provided to employees. Nor was an electronic link provided to employees that would have enabled them to access a copy of the Award. While Mr Topliss submitted that employees are all issued with an electronic tablet for their work which would have allowed them to search on-line for a copy of the Award, that falls short in my view of meeting the statutory requirement that the employer take all reasonable steps to provide a copy or enable access to a copy of the incorporated Award throughout the access period.
[18] It follows from the above that the Applicant failed to comply with s.180(2) of the Act.
Explanation of the terms and effects of the terms of the Agreement (s.180(5)
"[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:
• the steps taken were reasonable in the circumstances; and
• these were all the reasonable steps that should have been taken in the circumstances;
(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."
[36] Additionally, we also adopt the analysis of Gostencnik DP in BGC Contracting Pty Ltd concerning the nature of a statutory obligation to take "all reasonable steps" as follows (footnote omitted):
"[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..."
[20] It is also established that the question of whether the Applicant complied with s.180(5) requirements depends on the particular circumstances and the focus of the enquiry is whether the steps taken were reasonable and whether they were all the reasonable steps that could have been taken.
[21] Turning to the circumstances of the present matter, the Applicant is located in Williamstown, Victoria and provides services in the area of non-destructive testing, mechanical testing and field inspection work. The Agreement if approved would cover employees who would otherwise fall within the scope of the Award and also administrative staff. At the time of the ballot for approval of the Agreement there were 37 employees who would be covered by the Agreement, 15 of whom were casual employees. No non-English speaking language issues were identified in the F17. The Agreement if approved would replace the current agreement (the 2017 Agreement).[4]
[22] The Applicant stated in response to question 22 of the F17 that the steps taken to explain the terms and effects of the terms of the Agreement took the following form. On 25 June 2021;
"All employees were given the name of the employee representatives to ask any questions they had regarding the draft. The floor of the meeting was open for discussion on anything related to the draft of the LMATS (Melbourne) Collective Agreement 2021 - 2024."
[23] As to the explanation given to employees the Applicant further stated at question 22 of the F17 that;
"All staff were informed that they could ask any questions at all that they had to management employees as well as employee representatives."
[24] Mr Topliss confirmed that the proposed Agreement was a 'rollover' Agreement and would if approved replace the 2017 Agreement. He identified that there were a number of changes in the Agreement from the 2017 Agreement including with respect to trainees, hours of work, remuneration and advanced NDT provisions. Mr Topliss also confirmed that while employees were given a 'heads up' regarding the Agreement and ballot process in a regularly occurring communications meeting, there was no separate meeting held with employees to go through the proposed Agreement at the commencement of or during the access period. Nor was any documentation provided to employees that explained the terms of the Agreement by reference to the 2017 Agreement or Award.
[25] Bargaining representatives present at the hearing confirmed that a comparison of the terms of the Agreement against the Award and the 2017 Agreement had been undertaken by them and discussed with employees during the bargaining process. They also confirmed that employees were happy with the proposed Agreement as evidenced by the ballot result. They also supported Mr Topliss' submissions that the bargaining process had been open and transparent.
[26] It is apparent that the bargaining process undertaken in respect of the proposed Agreement was constructive. The Agreement is intended to replace the 2017 Agreement and incorporates the terms of the Award. I accept that three employee bargaining representatives were actively involved in the bargaining process and took steps to familiarise themselves with the terms of the Award as well as the 2017 Agreement. I also accept that the bargaining representatives engaged with employees during the bargaining process to provide feedback and answer any questions employees may have had.
[27] While it is clear that employee bargaining representatives undertook the task one would normally expect of their roles during bargaining, the focus of s.180(5) is not on what steps employee bargaining representatives took to explain the terms and effects of the terms of the Agreement. Rather, the focus of the inquiry is on whether the Applicant took all reasonable steps to explain the terms and effects of the terms of the Agreement to employees. Aside from giving employees a 'heads up' at a regular communications meeting regarding the Agreement and circulating a copy of the Agreement to employees on 23 June 2021 in advance of the ballot, there is no material before me to suggest any other steps were taken by the Applicant.
[28] While the Agreement if approved will replace the 2017 Agreement, there was limited evidence before me of the extent of the changes to that agreement beyond Mr Topliss referring to several clauses where some changes had been made. In these circumstances where there were more than merely wage increases provided for in the Agreement, a reasonable step in my view would have been for the Applicant to explain to employees the changes in the Agreement by reference to the 2017 Agreement at the very least. Such an explanation could have been provided by way of presentation or in a written form plus supplementary information sessions depending on the scope and complexity of the changes. These are steps that could have and ought reasonably to have been undertaken but were not.
[29] It is plainly apparent that the explanation of the terms of the Agreement, such as it was, was confined to the provision of a copy of the Agreement with an offer to employees to seek assistance from employee bargaining representatives if they were unsure or didn't understand the terms of the Agreement. That approach falls well short of the requirements of s.180(5). The mere circulation of the Agreement is not an explanation of the Agreement at all let alone meeting the higher standard of taking all reasonable steps.
[30] The failure of the Applicant to take any steps, let alone all reasonable steps, to explain the terms and effects of the terms of the Agreement to employees means that I am not satisfied that the Applicant has complied with s.180(5) of the Act. It consequently follows that employees could not have genuinely agreed to the Agreement as required by s.186(2)(a) and s. 188(1) of the Act.
[31] I have also considered whether to exercise my discretion pursuant to s.188(2) of the Act in the event I were satisfied that the Agreement would have been genuinely agreed to by employees but for minor procedural and technical errors in relation to ss.180(2) & (5) requirements in circumstances where such errors did not disadvantage employees in relation to those requirements. I decline to exercise my discretion do so for the following reasons. Firstly, no submissions were advanced that addressed s.188(2) requirements. Secondly and more importantly, I don't regard a failure of the Applicant to provide any explanation of the Agreement terms to employees as a minor procedural or technical error in the circumstances of this matter where several changes were to be made to the 2017 Agreement.
In order to approve the Agreement, the Commission must, as part of its consideration, be satisfied in respect of the s.186(2) requirements under the Act. For the reasons detailed above I am not satisfied in respect of those requirements. Consequently, the application for approval of the Agreement is dismissed. An order reflecting this decision will be separately issued.
[4] LMATS (Melbourne) Collective Agreement 2017 - 2020, AE427379
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