Fair Work Act 2009

s.185 - Application for approval of a single-enterprise agreement

Trustee for LCR Mining Group Trust T/A LCR Mining Group Trust

Application for approval of the Material Handling & Bulk Haulage Services Agreement (National) 2019.

[1] LCR Mining Group Trust T/A LCR Mining Group Trust (LCR or the Applicant) has applied to the Commission for approval of a single-enterprise agreement known as the Material Handling & Bulk Haulage Services Agreement (National) 2019 (the Agreement). The application has been made pursuant to s.185 of the Fair Work Act 2009 (the Act). The application for approval is opposed by the Construction, Forestry, Maritime, Mining and Energy Union (the CFMMEU).

[2] This is the second application that has been made by LCR for approval of a single-enterprise agreement known as the Material Handling & Bulk Haulage Services Agreement (National) 2019. The first application,[1] which was also objected to by the CFMMEU, was made on 21 January 2019 and ultimately discontinued by the Applicant on 5 September 2019, the day before a Hearing was listed to commence before Commissioner Johns.

[3] I convened a telephone conference in relation to the matter on 15 October 2019. Following that conference, I issued directions as follows:

"Leave is granted for the CFMMEU to make written submissions pursuant to s. 590 of the Fair Work Act 2009 in respect of the approval of the proposed enterprise agreement;

By 5:00pm AEST on Wednesday 23 October 2019, the CFMMEU is to file with the Commission (copying in the Applicant) its submissions in respect of the approval of the proposed enterprise agreement (the CFMMEU's submissions);

By 5:00pm AEST on Wednesday 30 October 2019, the Applicant is to file with the Commission (copying in the CFMMEU) any witness statements, other documents, proposed undertakings and submissions with respect to the CFMMEU's submissions."

[4] A significant amount of time was spent raising objections to the CFMMEU's involvement in the application. At one level such a stance is understandable because the CFMMEU is a stranger to the application; it is not and was not a bargaining representative for the Agreement. At another level, the authorities are straightforward about when a third party might be involved in agreement approval processes. In the end, the CFMMEU was provided with all documentation in relation to the application and has had an opportunity to make submissions concerning the application.

[5] I have received written submissions from both the Applicant and the CFMMEU. The Applicant has not filed any witness statements or other documents. Further, the Applicant has sought that the Commission determine the application on the papers, that is, without the need for a hearing. Consequently, I am proceeding on the basis that the Applicant has filed all the submissions and evidence it wishes to rely upon in relation to the application. The CFMMEU has submitted that the Commission should give "serious consideration" to a hearing of the application but given that I am in a position, on the material before me, to deal with at least a portion of the CFMMEU's objections in a way that in my view deals with the whole application, a hearing is not necessary and would likely just lead to further delay.

[6] Ultimately, I have determined that the Commission cannot approve the Agreement. I have reached this decision because:

• I find that the Agreement does not cover all of the employees of the employer;

• The group of employees covered is not geographically, operationally or organisationally distinct;

• Whilst that finding is not determinative, it is a factor telling against a finding that the group of employees was fairly chosen;

• The Applicant has not submitted, or established by way of evidence, that there are any other relevant considerations which weigh in favour of a finding that the group is fairly chosen;

• I am not satisfied that the group of employees covered by the Agreement was fairly chosen; and

• The undertaking proffered by the Applicant is likely to result in substantial changes to the Agreement and for that reason I cannot accept it.

[7] Clause 2 of the Agreement is headed "Parties" and provides:

LCR Mining Group Pty Ltd (ABN 42 135 447 506) ("the Company"); and it's employees in accordance with clause 4."

[8] Clause 4 of the Agreement is headed "Application" and provides:

"a) This Agreement applies to and is binding on the Company in relation to all of its employees engaged across Australia in duties which are carried out at or about a place where black coal is mined and are directly connected with the day to day operation of a black coal mine and who are employed in a classification set out in this Agreement.

b) For the avoidance of doubt, this Agreement will not apply to Employees who exceed the high income threshold as defined by [the Act]; or

c) A reference to the "Relevant Award" in this Agreement shall mean the Black Coal mining Industry Award 2010."

[9] A number of criticisms could be made of the drafting of this clause, but the obvious difficulty is ascertaining who this Agreement does, or does not, cover and apply to at any given moment and whether that group is fairly chosen?

[10] Section 186 of the Act sets out the general requirements to be met such that the obligation to approve, in that the Commission "must approve", arises. One of those requirements is that the Commission must be satisfied that the group of employees covered by the Agreement is "fairly chosen". Section 186 relevantly provides:

"186 When the FWC must approve an enterprise agreement - general requirements

(3) The FWC must be satisfied that the group of employees covered by the agreement was fairly chosen.

(3A) If the agreement does not cover all of the employees of the employer or employers covered by the agreement, the FWC must, in deciding whether the group of employees covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct."

[11] The Commission's assessment of whether or not a group of employees to be covered by an agreement was fairly chosen involves a degree of subjectivity or value judgment.[2] In respect of an agreement that does not cover all of the employees of the employer, the Commission must take into account whether the group is geographically, operationally or organisationally distinct.[3]Whether the Commission is satisfied that a group is or is not geographically, operationally or organisationally distinct is not determinative but rather is a factor telling in favour of or against a finding of a group being fairly chosen as the case may be.[4] Whether or not a group is geographically, operationally or organisationally distinct is a matter to be given due weight, having regard to all other relevant considerations.[5] There is no exhaustive list of what other relevant considerations might be but whatever relevant consideration is relied upon must be demonstrated to the satisfaction of the Commission.[6]

[12] The first task I must perform in determining whether the group is fairly chosen is to establish whether the Agreement covers all employees of the Applicant.[7] I agree with the CFMMEU that the coverage clause is susceptible to a number of interpretations and it is difficult to accurately assess who is or is not covered by this Agreement.

[13] As to whether the group of employees was fairly chosen, the Applicant has submitted:

"With respect to clause 4(b) of the Agreement, the Applicant does not accept that this clause is inconsistent with the Act, in the interests of expediting the approval of this Agreement however, the Applicant has provided an undertaking to remove this clause from the Agreement. Any uncertainty around the application of this provision has been removed. It is also unnecessary to further enquire as to whether this group was fairly chosen.

With respect to paragraphs 19-23 of the Unions submissions, the Applicant submits that the removal of this clause means that the group of employees to be covered is clearly identifiable. Even if the clause had not been removed, the phrase "high income threshold" is defined in clause 333 of the Act. It is clear from this section that high income threshold, for the purposes of the Act means employees earning more than $148,700 per year. This is a clearly defined group of employees.

Further, with respect to paragraphs 19-23 of the Unions submissions, there is nothing unlawful about excluding employees earning above the high-income threshold from the operation of an Agreement. The Employees are distinct by reason of the fact that they are on a significantly higher income. High income employees create a higher operational cost, as such they are operationally distinct.

Furthermore, it is the prerogative of the Employer to determine whether it hires an employee within the coverage of the Enterprise Agreement. Where an Enterprise Agreement has clear rules around the coverage of Employees, the Employer may, prior to engaging an employee, determine whether or not they wish for an employee to take on a role within the scope of the Agreement (and therefore the employee be covered by the Agreement)."[8]

[14] The final submission made, that it is the Applicant's prerogative, as employer, to determine whether it hires an employee within the coverage is only partly correct. It is correct in the sense that an employer may decide to hire an employee to perform work to which a classification in an enterprise agreement extends or not but is incorrect in the sense that enterprise agreements apply to or cover employees by operation of law. That is not something that an employer has any prerogative in respect of. In fact, amendments have been made to the Act to explicitly prevent employers, and employees, making such elections.[9]

[15] The Applicant does not submit, and I do not find, that the group is geographically distinct. The distinction concerning income is clearly not a geographical distinction in the sense of a separateness of the Applicant's various worksites or work locations.[10]

[16] The Applicant does not submit, and I do not find, that the group is organisationally distinct either. The Applicant has had an opportunity to lead evidence before the Commission. There is no evidence before me, apart from what might be gleaned from the Form F17, about the Respondent's organisational arrangements.

[17] The Applicant does submit that the group is operationally distinct because high-income employees create a higher operational cost. I would not find that it is impossible for this to be the case in every circumstance but in the absence of any evidence about the Applicant's enterprise and how operationally it deals with high income employees it is not possible to make that finding. There is no evidence before me at all about what this clause was intended to do and its purpose in the context of the Respondent's operations.

[18] I find that the group is not geographically, operationally or organisationally distinct.

[19] As discussed above this finding alone is not determinative. It is a factor telling against a finding that the group was fairly chosen but it is a matter to be given due weight, having regard to all other relevant considerations. The Applicant has not submitted any other relevant considerations that might be a factor telling in favour of a finding that the group was fairly chosen.

[20] The distinction between what might be called high-income employees and not high-income employees is, on the evidence before me, entirely arbitrary and subjective. It is dependent on the employer designating people as such. The thrust of the Applicant's submission is that who would or would not fall within this category is within the prerogative of the employer. There is no evidence before the Commission as to how that prerogative would be applied and by what objective criteria.

[21] I am not satisfied, on the material now before me, that the group of employees covered by the Agreement was fairly chosen.

[22] Although not accepting that this is an issue, the Applicant has nonetheless offered an undertaking to address it. The proposed undertaking is:

[23] Amongst other things, the Commission may only accept an undertaking if it is not likely to result in substantial changes to the agreement.[11]

[24] There are decisions of this Commission that deal with proposed undertakings related to a coverage clause. In MI&E Holdings Pty Ltd[12] a Full Bench of the Commission, in considering an undertaking offered to address concerns regarding a coverage clause, said this:

"Additionally, such an undertaking would be such as to result in a substantial change to the Agreement."[13]

[25] In Main People Pty Ltd[14] a differently constituted Full Bench of the Commission said this:

"[35] The scope of coverage of an enterprise agreement is one of its fundamental features. The coverage provision of an agreement serves to identify the class of persons who will be entitled to its benefits while it is in operation. The importance of an agreement's coverage is signified by the fact that, under the FW Act, s.186(3) requires the group of employees covered by the agreement to be fairly chosen. For that reason an undertaking which purports to alter the coverage of an enterprise agreement by excluding classes of persons who, on the face of the agreement, would be covered by it, will always be likely to be a significant change."

[26] The proposed undertaking cannot remedy the issue.

[27] For these reasons the application for approval of the Material Handling & Bulk Haulage Services Agreement (National) 2019 is dismissed.

[2] Cimeco Pty Ltd v Construction, Forestry, Mining and Energy Union [2012] FWAFB 2206 (Ross J, Hamilton DP, Spencer C, 12 April 2012) at para. 8.

[3] Fair Work Act 2009 (Cth) s.186(3A).

[4] Cimeco Pty Ltd v Construction, Forestry, Mining and Energy Union [2012] FWAFB 2206 (Ross J, Hamilton DP, Spencer C, 12 April 2012) at para. 19 - 20.

[8] Submissions on behalf of the Applicant filed 28 October 2019 at paragraphs 17 to 20.

[9] Fair Work Act 2009, s.194(ba).

[10] The Australian Workers' Union v BP Refinery (Kwinana) Pty Ltd [2014] FWCFB 1476 (Catanzariti VP, Lawler VP, Lewin C, 3 April 2014) at para. 13.

[11] Fair Work Act 2009 (Cth) s.190(3)(b).

[12] Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia and Ors v MI&E Holdings Pty Ltd [2013] FWCFB 2142.

[14] Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia and Ors v Main People Pty Ltd [2015] FWCFB 4467.

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