Fair Work Act 2009

s.185 - Enterprise agreement

Application for approval of the Viridian Glass Pty Ltd - Newcastle Enterprise Agreement 2022 - whether agreement genuinely agreed - whether agreement meets better off overall test - agreement not genuinely agreed (s.186(2)(a)) - application dismissed.

• [1] An application has been made for approval of an enterprise agreement known as the Viridian Glass Pty Ltd - Newcastle Enterprise Agreement 2022 (the 2022 Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act). It has been made by Viridian Glass Pty Ltd (the Applicant). The 2022 Agreement is a single enterprise agreement.

• [2] A notice of employee representational rights was provided to employees on 20 June 2022 and the notice complied with the regulations. The Applicant states that employees were provided with access to the 2022 Agreement and information about the effect of the terms of the 2022 Agreement on 4 July 2022.

• [3] The Applicant states that employees were notified of the time, place and method of voting via a hard copy of an explanatory memorandum on 4 July 2022 and that voting occurred on 12 July 2022. A majority of those who voted approved the 2022 Agreement.

• [4] The Applicant filed a statutory declaration in support of the 2022 Agreement. The statutory declaration noted that the relevant award for the purpose of the better off overall test (the BOOT) was the Joinery and Building Trades Award 2020[1] (the Award).

• [5] The statutory declaration noted that some provisions in the 2022 Agreement were more beneficial than the Award or were not conferred by the Award. No less beneficial terms were identified.

• [6] The Construction, Forestry, Mining, Maritime and Energy Union (CFMMEU) wrote to the Fair Work Commission (the Commission) on 27 July 2022 requesting access to documents filed by the Applicant and seeking to be heard in relation to the application. On allocation of the application for approval of the 2022 Agreement to my chambers, correspondence was sent to the CFMMEU on 16 August 2022 seeking confirmation as to whether it pressed an objection to approval of the 2022 Agreement and sought to be heard. On receipt of confirmation from the CFMMEU on 18 August 2022 that it wished to be heard on the application, directions were issued requiring the CFMMEU to file submissions and material in respect of both its request to be heard and its objection to approval of the 2022 Agreement.

• [7] The CFMMEU filed submissions on 26 August 2022 in accordance with the directions. The Applicant filed its submissions and material in reply on 2 September 2022. The matter was listed for hearing on 6 September 2022.

• [8] Before turning to consider the application it is necessary for me to deal with the CFMMEU's request to be heard in relation to the matter. The request to be heard is not opposed by the Applicant.

• [9] The CFMMEU concede that they do not believe they are a bargaining representative for the 2022 Agreement and acknowledge that they do not have standing to appear as of right[2]. The CFMMEU contend, however, that they should be heard by virtue of s.590(1) of the Act. The Commission may, in the exercise of its powers under s.590 of the Act, choose to hear from an employee organisation about the approval of an agreement even though the employee organisation may not otherwise have a right to be heard.[3]

• [10] Section 590 of the Act confers on the Commission a broad power to inform itself in relation to any matter in such manner as it considers appropriate, including (but not limited to) by inviting oral or written submissions from a person or organisation; by taking evidence under oath or affirmation; and by requiring a person to provide copies of documents or records.

• [11] The CFMMEU have a long history of industrial representation in the building industry and the industrial right to represent employees of the Applicant who would be covered by the 2022 Agreement. As a consequence, they have a high degree of familiarity with the reference Award, the work arrangements in the building and joinery sector, and enterprise agreement terms and conditions similar to those contained in the 2022 Agreement. The CFMMEU can provide a perspective independent of the proponent of the 2022 Agreement.

• [12] I am satisfied that the CFMMEU may provide information relevant to my deliberations as to whether the BOOT is satisfied, whether any undertakings are appropriate, and whether the 2022 Agreement was genuinely agreed.

• [13] In the particular circumstances of this matter, I am satisfied that the CFMMEU has established a basis upon which it should be invited to be heard. Thus, the CFMMEU shall be entitled to be heard in respect to the application. I will now proceed to consider the application based on the submissions and materials filed by the parties pursuant to Directions previously issued.

• [14] In reviewing the 2022 Agreement for approval, the Commission identified a number of concerns. These included pre-approval requirements, National Employment Standards (NES) compliance and better off overall test (BOOT) assessment considerations. The Commission wrote to the Applicant on 1 August 2022 and raised the following issues that required a response:

1. It was unclear whether the Notice of Employee Representational Rights (NERR) had properly identified the group of workers that would be covered by the proposed agreement.

1. Clause 32.2 which dealt with Public Holidays, impermissibly allowed for the substitution of public holidays by majority agreement of the workforce which was contrary to s.115(3) of the Act. It was noted that the 2022 Agreement has an NES Precedence Clause which remedied the deficiency.

1. Copies of emails sent to employees that distributed the NERR and 2022 Agreement explanatory documents were requested to assist the Commission determine whether the Applicant had complied with relevant statutory requirements.

1. A series of BOOT concerns were raised including;

• Level 4 rates appeared below equivalent Award rates of pay;

• Supported Wage rates of pay were equivalent to the Award;

• Shiftwork overtime provisions were less beneficial than the Award which gave rise to a BOOT concern in circumstances of slim margins between 2022 Agreement and Award base rates of pay; and

• Early morning shift penalty provisions were confusing.

• [15] The CFMMEU contend that the Commission cannot be satisfied that the 2022 Agreement has been genuinely agreed to, taking into account that all reasonable steps were not taken by the Applicant to explain the terms and effect of the terms of the 2022 Agreement as required by s.180(5) and s.188(1)(a)(i) of the Act. The CFMMEU further contend that the Commission cannot be satisfied that the 2022 Agreement passes the BOOT and have identified a number of provisions which give rise to that concern.

• [16] In respect to the contention that the 2022 Agreement was not genuinely agreed, the CFMMEU submit that there a number of provisions in the 2022 Agreement that materially depart from the Award and current agreement, which is the CSR Limited Viridian Cardiff Workplace Agreement 2017[4] (the 2017 Agreement), and that those differences were not properly explained. The explanation concerns raised by the CFMMEU were in respect of the following matters;

• [17] On incorporation of the Award, the CFMMEU contend that the explanation of the change from the 2017 Agreement in which the Award is incorporated at clause 7, to the 2022 Agreement in which the Award is excluded at clause 6, constitutes a significant change. The effects of that change were, according to the CFMMEU, not properly explained when regard is had to the brief description of that change in the explanatory document (the Agreement Explanation) provided to employees on 4 July 2022.

• [18] Turning to clause 17.5 of the 2022 Agreement which deals with payment for 'higher duties', the operation of that clause is limited to the circumstances of employees covered by the 2022 Agreement acting up in a staff position. The CFMMEU contrast the narrow scope of that clause with the 2017 Agreement which incorporates clause 19.7 of the Award which provides for payment for 'higher duties' in any circumstances where an employee is required to act up in a higher classification. This change, both in terms and its effects, was not properly explained to employees according to the CFMMEU.

• [19] Clause 23.2 'Rest period/Tea breaks' in the 2022 Agreement reduces the rest period entitlement of dayworkers from 20 minutes provided for in 2017 Agreement to 10 minutes. According to the CFMMEU the new clause also extends the discretion of the employer to schedule the rest period to any time within the ordinary hours whereas the 2017 Agreement limited the employer's discretion to alter the time of the rest period to within the first half of the shift. The CFMMEU contend that the changes described are significant and were not properly explained to employees.

• [20] Dealing with shiftworker overtime payments, the CFMMEU submit that the Applicant failed to adequately explain, if at all, a reduction in shiftworker overtime entitlements conferred by the 2022 Agreement. Specifically, clauses 22.3(d) and 24.3(a) of the 2022 Agreement operate so as to provide overtime penalty rates that are less favourable than that provided by clause 17 of the 2017 Agreement. That reduction was material and not explained to employees according to the CFMMEU.

• [21] The CFMMEU also point to a potential monetary and non-monetary disadvantage in respect to the crib break entitlement when an employee is required to work more than two hours beyond the end of their ordinary hours of work. Specifically, employees under the Agreement would receive a shorter crib break of 10 minutes compared to the current entitlement of 20 minutes under the 2017 Agreement if they were required to work more than 2 hours beyond the completion of their ordinary hours of work. That material detriment was not, according to the CFMMEU, explained to employees.

• [22] Turning finally to the annual close down provisions which are set out at clause 28.9 of the 2022 Agreement, the CFMMEU identify a material change from the 2017 Agreement in that the required notice of an annual close down required to be provided to employees would be reduced from two months to one month if the 2022 Agreement were approved in its current form. The CFMMEU submit that the notice period reduction is a significant detriment which ought to have been properly explained and was not.

• [23] The CFMMEU further contend that the Commission cannot be satisfied that the 2022 Agreement passes the BOOT and identified several provisions which give rise to that concern, those provisions dealing with;

• penalty payment for delayed or untaken meal break.

• [24] The CFMMEU contend that given the slim margin between the base rates of pay in the 2022 Agreement and Award rates, the BOOT issues raised by them are of significance. This is particularly the case in circumstances where employees covered by the 2022 Agreement would not receive penalty rates otherwise payable under the Award.

• [25] In relation to whether the Applicant complied with the requirements set out at s.180(5) of the Act such that the Commission could be satisfied that the 2022 Agreement had been genuinely agreed, the Applicant variously submits that;

• the 2022 Agreement and all its clauses were discussed and bargained on with all employees;

• local management explained all terms to employees during the access period;

• the Agreement Explanation was developed and provided to employees for their review;

• the purpose of the Agreement Explanation document was not to provide a detailed word for word description of the 2022 Agreement; and

• the effects of the 2022 Agreement were discussed at bargaining meetings.

• [26] As regards the specific explanation deficiencies pointed to by the CFMMEU, the Applicant submits that;

• on the issue of incorporation of the Award, employees were advised that any Award entitlements would not be included in the 2022 Agreement;

• the Applicant does not require employees to act up in higher classifications covered by the proposed agreement, that being due to the operators already being paid at the highest operator classifications under the agreement and drivers are limited to their particular driver classifications by their license requirements;

• the reduction of the rest period entitlement from 20 minutes in the 2017 Agreement to 10 minutes in the 2022 Agreement was an administrative error and an undertaking to remedy that error is proposed;

• in terms of the shiftworker overtime penalty payment difference between the 2022 Agreement and 2017 Agreement the Applicant has already provided an undertaking said to align the 2022 Agreement with the Award, although noting that it does not currently engage in shiftwork at the Newcastle site;

• while the crib break in the 2022 Agreement was less than that provided in the 2017 Agreement, there was no detriment as the reduced length of the break was offset by the break being paid at overtime rates which was more beneficial than the Award; and

• while acknowledging that the annual close-down notice period of one month in the 2022 Agreement was less than the two months' notice provided by the 2017 Agreement, the Applicant submits that the notice period of one month is consistent with manufacturing practice, as opposed to on-site construction.

• [27] Section 186 of the Act requires, amongst other things, that in order for an enterprise agreement that not is 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.

• [28] Section 188 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

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."

• [29] 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 of the ballot process. The relevant provisions are as follows:

"180 Employees must be given a copy of a proposed enterprise agreement 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.

• [30] Before turning to consider the specific matters raised by the CFMMEU going to whether the Commission can be satisfied that the 2022 Agreement was genuinely agreed, it is necessary to say something about the task before the Commission.

• [31] The following relevant summary was provided by the Full Bench in CFMMEU v Broome Marine and Tug Pty Ltd[5] (Broome Marine) when they said as follows in determining an appeal of a decision of Williams C to approve the relevant agreement;

"[34] The Commissioner was required to determine whether Broome Marine took all reasonable steps to ensure that the terms of the Agreement and the effects of those terms were explained to employees. Section 188(1) of the Act makes clear that compliance with s 180(5) must be established to the satisfaction of the decision maker. Reaching a state of satisfaction as to compliance with s 180(5) is a jurisdictional fact and in order to reach the requisite state of satisfaction there must have been material before the Commissioner to support the requisite state of satisfaction in respect of compliance with s 180(5). As made clear by the Federal Court in One Key Workforce Pty Ltd v CFMEU, an absence of material or an insufficiency of material relied on in reaching the state of satisfaction is no evaluation at all and will not provide a sufficient basis for being satisfied as to compliance with s 180(5)."

• [32] Also relevant are the comments of the Full Bench in Australian Workers Union v Rigforce Pty Ltd[6] (Rigforce);

"[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 (Ditchfield Mining), 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 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...""

• [33] As made clear by the above-referred authorities, reaching the requisite state of satisfaction as to compliance with s.180(5) of the Act depends on the circumstances of the case to which I turn firstly to consider. The particular circumstances in which the explanation of the 2022 Agreement was provided to employees of the Applicant were as follows;

• employees are presently covered by the 2017 Agreement which incorporates the Award;

• the 2022 Agreement by contrast is expressed to be a "complete agreement" and excludes the operation of the Award;

• at the time of the ballot conducted to approve the 2022 Agreement, there were five employees that would be covered by the proposed agreement;

• all five employees participated in the bargaining for the proposed agreement; and

• according to the Applicant's Form F17, none of the five employees that would be covered by the 2022 Agreement fell into a demographic group (e.g. Non-English speaking background) that might constitute 'particular circumstances' warranting adoption of alternate or additional explanation steps.

• [34] Having regard to the circumstances described above, reasonable steps that ought to have been taken to explain the terms and effects of the terms of the 2022 Agreement would in my view include;

• explaining the change and the particular effects of the change from Award incorporation in the 2017 Agreement to Award exclusion in the 2022 Agreement; and

• explaining the material changes and effects of the changes in the terms of the 2022 Agreement relative to the 2017 Agreement.

• [35] According to the Applicant's Form F17, the explanation provided to employees consisted of the Agreement Explanation document which was supplemented by discussions held with employees on 4 July 2022 by the Sales Centre Manager. There is however no probative evidence before me as to the content of those discussions. Consequently, the evidence before me on the substance of the explanation provided to employees is limited to the Agreement Explanation document.

• [36] The absence of evidence on the content of the discussions held with employees by the Sales Centre Manager does not necessarily mean there is insufficient material before me to be satisfied as to compliance with s.180(5). That is so long as the written explanation provided to employees in the Agreement Explanation was such that that the terms and effects of the terms of the 2022 Agreement were clearly explained to employees in an appropriate manner. In this regard I note the following comments of the Full Bench in Rigforce;

"[37] Leaving aside the issue of the incorrect statement in the explanatory document, to which we will return, we do not accept the AWU's submission that the information before the Commissioner was insufficient to permit him to form a conclusion concerning compliance with s 180(5). As we have earlier set out, Mr O'Brien's statutory declaration set out in considerable detail the means by which the terms of the RFD Agreement and their effect was explained to the employees. This was done by means of the explanatory document sent to each employee, which addressed each of the terms in the RFD Agreement and described how they differed from the ICS Agreement and the Award. The explanatory document itself was annexed to the declaration. Mr O'Brien described how he spoke to each individual employee, took them through the explanatory document, and answered any questions which they had. We do consider that it was necessary for the Commissioner to inquire what was said in the individual discussions with each employee, since (leaving aside the error) we consider that it was open to conclude that the provision of the explanatory document itself was sufficient to comply with s 180(5). In any event, Mr O'Brien did give a broad description of what transpired, and this was sufficient in the circumstances.

[38] The position here could not be more different than that applying in the One Key Workforce litigation, where the employer simply asserted in the Form F16 statutory declaration that s 180(5) had been complied with, when in fact the employer had done little more than read out the terms of the agreement the subject of the proceedings to employees. Here, but for the incorrect statement in the explanatory document, it might be said that the approach taken by the employer was a model of its kind."

• [37] Having regard to the above it is necessary for me to consider the accuracy and extent of the explanation provided to employees in the Agreement Explanation to determine whether the Applicant has met the requirements of s.180(5). It is to that explanation I now turn.

• [38] As set out above, one of the particular circumstances relevant to consideration of whether the Applicant has complied with s.180(5) relates to the issue of Award incorporation which, while a feature of the 2017 Agreement, would be removed by the 2022 Agreement. Clause 6 of the 2022 Agreement relevantly states as follows;

6.1 Other than individual flexibility agreements reached in accordance with clause 9 - AGREEMENT FLEXIBILITY this Agreement is intended to replace (to the extent permitted by law) other laws, awards, agreements (whether registered or unregistered), custom and practice and like instruments or arrangements.

• [39] The above clause in the 2022 Agreement is to be contrasted with and represents a meaningful change from the 2017 Agreement, which incorporates the Award as can be seen at clause 7 of that latter agreement as follows;

This agreement shall wholly incorporate the Joinery and Building Trades Award 2010 ('"the Award"). In the event there is any inconsistency between the Award and this agreement, this agreement shall take precedence.

• [40] The explanation of the Award incorporation change from the 2017 Agreement to the 2022 Agreement was limited to the following statement in the Agreement Explanation document which states as follows when referring to Clause 6 of the 2022 Agreement;

"This clause defines this agreement as standalone agreement, not read with the award.

• [41] The removal of Award incorporation in the 2022 Agreement was a change of substance to the terms of the current instrument, meaning that a reasonable step the Applicant ought to have taken was to provide employees with an explanation of the effects of that change. The explanation actually provided was confined to the simple statement in the Agreement Explanation document which fails to detail the effects of the Award no longer being incorporated into the 2022 Agreement, that being an identification of those entitlements contained in the Award that would no longer be conferred to employees and the effects on employees of such changes. I am not satisfied that the Applicant has taken the reasonable step that I have identified it ought to have taken.

• [42] Clause 17.5 of the 2022 Agreement relevantly states as follows;

(a) An employee appointed by the employer as a Team Leader for a whole shift must be paid the corresponding base rate of pay, plus applicable allowances (eg. Shift allowances).

(b) If an employee is appointed to higher duties for a salaried role not covered by this Agreement on a temporary basis on a day/shift, then the employee shall be paid an allowance equal to 10% of their ordinary classification's base rate for all hours worked that day/shift. Such allowance shall be paid for all purposes."

• [43] The above clause is to be contrasted with clause 19.7 of the Award which is incorporated as a term of the 2017 Agreement and states as follows;

(a) An employee engaged for more than 2 hours during one day on duties carrying a higher minimum rate than the employee's ordinary classification must be paid the higher minimum rate for such day.

(b) If engaged on higher duties for 2 hours or less during one day, the employee must be paid the higher minimum rate for the time worked at the higher level."

• [44] The Agreement Explanation document relevantly explained clause 17.5 of the 2022 Agreement as follows;

"This provides for the duties of both the employer and the employee.

Clause not previously included in the 2017 agreement.

Clause 15 of the Award covers duties. Higher duties outlined by the EBA is more beneficial than the Award, providing for 10% if covering a salaried role."

• [45] The explanation provided by the Applicant was not correct in that clause 17.5 of the 2022 Agreement only applies to employees acting up in a staff role whereas the Award covers any circumstance in which an employee acts up in a higher classification. The Applicant acknowledges that the narrowing of the application of the higher duties clause to only those circumstances of employees acting up in a staff role was not accurately explained to employees. It submits however that the broader higher duties clause that was present in the 2017 Agreement has no work to do because the operators are already in the highest operator classification in the Agreement and the drivers are constrained by the licenses held by them. While no evidence was led on this point, I accept that the Applicant's failure to properly explain the narrowing of the application of the higher duties provision was a minor omission on the part of the Applicant and does not call into question whether the 2022 Agreement was genuinely agreed.

• [46] Clause 23.2 of the 2022 Agreement states as follows;

(a) An employee is entitled to a paid rest period of 10 minutes for every ordinary shift.

(b) Rest periods are scheduled at the discretion of the employer.

(c) Rest periods shall be counted as ordinary time worked."

• [47] Clause 12 of the 2017 Agreement provides as follows;

(a) Day workers - 20 minutes paid break during the first half of the day.

(b) Shift workers - 10 minutes paid break during the first half of the shift.

(c) The time of the rest pauses shall be at the discretion of the Company.

(d) The rest pause prescribed by this clause shall be counted as time worked."

• [48] The Agreement Explanation document stated as follows in relation to clause 23 of the 2022 Agreement;

"This clause outlines break entitlements, including meal breaks, rest periods/team breaks

Conditions are outlined in the 2017 agreement within cluses 11 and 23.

Clause 18 of the Award outlines applicable breaks and provides for a 30-minute meal break whereas the EBA provides 20 minutes."

• [49] The Applicant submits that the reduction of the entitlement expressed in the 2022 Agreement from 20 minutes to 10 minutes was an error and in support of that submission refers to the Agreement Explanation document where it refers to the EBA providing for "20 minutes". The explanation by the Applicant of the alleged error is however problematic as the reference to the "20 minutes" in the Agreement Explanation document immediately follows a description of the Award entitlement of a "30-minute meal break". On one view, the explanation appears to convey, inaccurately albeit, that the meal break entitlement in the 2022 Agreement is only 20 minutes as opposed to the Award entitlement of 30 minutes. Alternately the explanation may confusingly conflate a comparison of the meal break entitlement in the Award of 30 minutes with an explanation of the intended rest break entitlement in the 2022 Agreement of 20 minutes. In either case, the explanation was at best both confusing and inaccurate.

• [50] Telling against the claimed error in drafting of the 2022 Agreement is the apparent conscious re-write of the rest period clause. For example, the previous distinction between dayworkers and shiftworkers seen at clause 12(a) & (b) of the 2017 Agreement is removed in clause 23.2 of the 2022 Agreement. In removing that distinction, the drafters of the agreement have applied the rest period break of 10 minutes that currently applies to shiftworkers only.

• [51] It follows from the above that I am not satisfied that the expressed reduction of the rest period entitlement from 20 minutes in the 2017 Agreement to 10 minutes in the 2022 Agreement was an error. The reduction in the rest period entitlement is a matter of substance and ought to have been accurately explained to employees. On the basis of the content of the Agreement Explanation document, an accurate explanation of the rest period entitlement in the 2022 Agreement was not provided.

• [52] Turning now to the explanation of changes to overtime penalty payment entitlements for shiftworkers, clause 22.3(d) and clause 24.3 of the 2022 Agreement relevantly state as follows;

(d) Weekend, Overtime and Public Holiday rates

A shiftworker who works on a weekend, works in excess of their ordinary hours, or on a public holiday must be paid overtime in accordance with clause 24 - OVERTIME.

(a) Subject to clause 24.1(a) and the remainder of clause 24.3, overtime for work performed outside the ordinary hours of work shall be paid at the rate of 150% for the first two hours and 200% thereafter.

(b) Saturday overtime must be paid for at the rate of 150% for the first two hours and 200% thereafter. Where the employee does not request to finish sooner, the minimum payment for such hours is four hours.

(c) Sunday overtime must be paid for at the rate of 200%. Where the employee does not request to finish sooner, the minimum payment for such hours is four hours.

(d) Public Holiday overtime must be paid for at the rate of 250%. Where the employee does not request to finish sooner, the minimum payment for such hours is four hours."

• [53] By contrast, the 2017 Agreement provides as follows in respect of overtime for shiftworkers;

All work done outside of ordinary hours by a day worker the overtime rate is 150% for the first two hours and 200% thereafter and for all work done outside of ordinary hours by a shiftworker the overtime rate is 200%."

• [54] The material difference in the shiftworker overtime entitlement found in the 2022 Agreement versus the 2017 Agreement was not dealt with in the Agreement Explanation document. The Applicant states in defence of its acknowledged explanation deficiency that it does not currently undertake shiftwork at site and as such its explanation of changes in entitlements in the 2022 Agreement to employees was focussed on changes that would affect the employees. The omission of an explanation of shiftwork overtime penalty payment changes was acknowledged.

• [55] While the 2022 Agreement permits the working of shiftwork and an explanation of changes to overtime penalty payments for shiftworkers ought to have been provided, I accept the submission of the Applicant that the change was not material to employees as they do not work shiftwork, at least currently. In these circumstances, the absence of an explanation was a minor omission on the part of the Applicant and does not call into question whether the 2022 Agreement was genuinely agreed.

• [56] Turning to the crib break entitlements that apply in circumstances where an employee works beyond their normal finishing time, clause 24.7 of the 2022 Agreement states as follows;

(a) An employee required to work less than two hours after the usual ceasing time for the day will not be entitled to a crib break.

(b) An employee required to work overtime for two or more hours after the usual ceasing time for the day or shift is entitled to:

(i) a paid 10 minute crib break immediately after the usual ceasing time. Such break shall be paid at overtime rates and shall count as time worked; and Illustrative example: Some employees ordinarily finish at 10.00pm but they are asked to perform 3 hours overtime. The employees take a break from 10.00pm to 10.10pm. The employees are paid at 150% between 10.00pm and 12.00am, and 200% from 12.00am to 1.00am.

(ii) After each four hours of continuous overtime, a further paid 30 minute crib break shall be observed if the employee is to continue overtime after the crib break. Crib breaks taken shall be paid at the employee's ordinary rate of pay.

• [57] By comparison clause 24.7 of the Award which is incorporated into the 2017 Agreement relevantly states as follows;

An employee required to work overtime for 2 or more hours after the usual ceasing time for the day or shift is entitled to a paid 20 minute crib break immediately after such ceasing time or payment at overtime rates for the 20 minute crib break. After each 4 hours of continuous overtime, the employee is also entitled to a paid 30 minute crib break."

• [58] There is potential disadvantage, at least in a non-monetary sense, in that under the 2022 Agreement employees would receive a shorter crib break compared to the Award entitlement that is incorporated in the 2017 Agreement, in circumstances where they are required to work more than 2 hours beyond the completion of their ordinary hours of work. I am satisfied that this material detriment was not explained to employees and ought to have been.

• [59] Clause 28.9 of the 2022 Agreement relevantly states as follows;

(a) Notwithstanding section 88 of the Act and clause 28.5, the Company may close down an enterprise or part of it during the Christmas-New Year period for the purpose of giving the whole of the annual leave owing to all or the majority of the employees in the enterprise or part concerned, provided that:

(i) the employer gives not less than one months' notice of intention to do so;

• [60] By contrast, Clause 27.9 of the Award which is an incorporated term of the 2017 Agreement states as follows;

Notwithstanding section 88 of the Act and clause 27.5, an employer may close down an enterprise or part of it during the Christmas-New Year period for the purpose of giving the whole of the annual leave owing to all or the majority of the employees in the enterprise or part concerned, provided that:

(a) the employer gives not less than 2 months' notice of intention to do so;

• [61] The Explanatory document filed in support of the application fails to explain that employees covered by the 2022 Agreement would no longer be entitled to two months' notice of an annual close-down if the Applicant decides to shut down the plant or part of the plant. I am satisfied that a reduced period of notice of annual close-down represents a material detriment for employees. Such detriment can arise in a number of ways. For example, the reduced notice of an annual close-down may adversely impact an employee's ability to make appropriate annual leave travel and accommodation arrangements at shorter notice. A reduced notice period may also have implications for leave decisions taken by employees in circumstances where, had greater notice been provided, employees may have had sufficient leave accrued to cover the annual close-down period.

• [62] I am satisfied that the reduced annual close-down notice period is a matter of substance and ought to have been explained to employees but was not.

Summary on whether 2022 Agreement was genuinely agreed

• [63] An accurate explanation of substantive changes to the terms of the enterprise agreement covering employees of the Applicant was a reasonable step that ought to have been taken. The explanation ought to have addressed key changes in the 2022 Agreement compared to the 2017 Agreement and the effect of those changes. The specific matters of substance that ought to have been accurately addressed in the explanation provided to employees were the removal of Award incorporation, reduced rest period, crib break and annual close-down notice period entitlements.

• [64] It follows from the above that the Applicant failed to take the reasonable step of accurately explaining certain substantive terms of the 2022 Agreement and the effect of those terms to employees. It therefore follows that the Applicant failed to comply with s.180(5) of the Act and as a consequence I cannot be satisfied that employees have genuinely agreed to the 2022 Agreement in accordance with s.188(1)(a)(i).

• [65] I am further satisfied that the nature of the explanation failures are not such as to be amenable to accepting an undertaking to remedy the deficiency. The explanation shortcomings were not of a type highlighted by the Full Bench in CFMMEU v Karijini Rail Pty Ltd[7] (Karijini) where it stated as follows;

"[107] Secondly, a concern about whether an employer has complied with s.180(5) and therefore whether the agreement has been genuinely agreed to by the relevant employees, may as a matter of logic be remedied depending on the nature of the concern. It is accepted that in a number of cases concerns about genuine agreement will not be able to be met by an undertaking. But it is not the case, as a matter of logic, that any such concern could never be met. Why for example, could not a concern that an employer explained the effect of a term of the agreement as to shift work was that an afternoon shiftworker would receive a 15% loading under the agreement, when the agreement only provides for a 10% loading, be met by an undertaking that the employer would pay an afternoon shiftworker a loading of 15%? We consider that such an undertaking would remedy the concern since the agreement operating with the undertaking is consistent with the explanation given.

[108] Our conclusion is consistent with the approach adopted in the most recent Full Bench authority dealing with the subject, namely Construction, Forestry, Maritime, Mining and Energy Union and others v Specialist People Pty Ltd."[8]

• [66] The rhetorical question posed by the Full Bench in Karijini as to the circumstances in which an undertaking could be accepted that addressed a s.180(5) compliance concern focussed on where an explanation to employees of an entitlement in an agreement overstated that entitlement. An undertaking in that example could be accepted that ensured the terms of the agreement matched the more generous entitlement inaccurately detailed in an explanation. The Full Bench in Square Ceilings applied that approach in accepting an undertaking to align the overtime penalty provisions in an agreement with the explanation provided to employees that inaccurately overstated the entitlement[9].

• [67] In the present matter, the 2022 Agreement explanation shortcomings of the Applicant do not involve an overstatement of the entitlements such that they are able to be addressed by an undertaking to match the entitlement with the explanation. Rather, it the absence of an explanation as to the nature and effect of material changes to the 2022 Agreement. In the particular circumstances of this case, those omissions are unable to be remedied by undertakings in my view.

• [68] Not being satisfied that employees genuinely agreed to the 2022 Agreement it is unnecessary for me to deal with the BOOT concerns raised by both the Commission and CFMMEU. Even were those BOOT concerns found to be without merit or that undertakings could remedy any BOOT concerns, the 2022 Agreement would still be unable to be approved due to my conclusion that it was not genuinely agreed as required by s.186(2)(a).

• [69] In order to approve the 2022 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 set out above I am not satisfied that the requirements have been met in relation to whether the 2022 Agreement was genuinely agreed (s.186(2)(a)).

• [70] It follows from the above that the application for approval of the 2022 Agreement must be dismissed. An order reflecting this decision will be separately issued.

D Syron for the Construction, Forestry, Maritime, Mining and Energy Union.

[1] MA000029

[2] CFMEU v Collinsville Coal Operations Pty Limited [2014] FWCFB 7940 at [72].

[3] Section 590, Fair Work Act 2009.

[5] [2021] FWCFB 171

[6] [2019] FWCFB 6960

[7] [2020] FWCFB 958

[9] [2021] FWCFB 1498 at [20]

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