[2014] FWC 6601 [Note: An appeal pursuant to s.604 (C2014/6789) was lodged against this decision - refer to Full Bench decision dated 23 December 2014 [[2014] FWCFB 8899] for result of appeal.]
FAIR WORK COMMISSION

DECISION


Fair Work Act 2009

s.236 - Application for a majority support determination

National Union of Workers
v
Cotton On Group Services Pty Ltd
(B2014/937)

COMMISSIONER ROE

MELBOURNE, 24 SEPTEMBER 2014

Application for a majority support determination.

[1] The NUW has applied for a majority support determination. The parties agree, and I am satisfied, that the application has been properly made (Section 236 of the Fair Work Act 2009 (the Act)) and that the employer who will be covered by the proposed agreement, Cotton On Group Services Pty Ltd (Cotton On) has not agreed to bargain (Section 237(2)(b) of the Act). The two primary matters which are disputed and which must be determined are:

[2] If the answer to either of these questions is “no” I cannot issue the determination. If I am satisfied that the answer to these questions is “yes” I must issue the determination operative from today’s date provided that I also consider it is reasonable in all of the circumstances to make the determination (Section 237(2)(d) of the Act).

[3] The original application referred to the employer as Cotton On Clothing Pty Ltd T/A Cotton On. The Respondent says that the correct name of the employer is Cotton On Group Services Pty Ltd. With the consent of the parties I have decided to amend the application to reflect the correct name of the employer.

Was the group of employees who will be covered by the agreement fairly chosen?

[4] I will first consider whether or not the group chosen is geographically, organisationally or operationally distinct., I will then consider what are the relevant considerations and then I will determine whether or not I am satisfied that the group was fairly chosen after considering any other relevant factors.

a. Is the group chosen geographically, organisationally or operationally distinct?

[5] Cotton On has two logistics and warehousing centres in Australia. One employing approximately 220 employees is at Lara Victoria and the other employing approximately 118 employees is at Wacol in Queensland. There are six other distribution centres at overseas locations. Each of these distribution centres has a Manager in charge of their operations. Those managers report to the Distribution Centre Global Operation Manager who is located at the Cotton On Head Office in Geelong.

[6] The NUW is seeking an agreement to cover the non-salaried warehouse employees who perform storage service work in the warehouse at the Wacol location. Cotton On argue that this group is not fairly chosen. Cotton On agree that non-salaried warehouse employees who perform storage service work is a group which is fairly chosen in that these employees are operationally and organisationally distinct from other Cotton On employees such as those engaged in retail work or those who have salaried or managerial roles. Cotton On also accepts that if the group chosen by the NUW had included the non-salaried warehouse employees at both Wacol and Lara it would have been fairly chosen. However, Cotton On do not agree to bargain for an agreement with that group.

[7] It is accepted that the group chosen is geographically distinct. There is a significant distance between the sites and relatively little transfer of employees between the sites. Cotton On argues that the Wacol distribution centre is not organisationally or operationally distinct.

[8] I have considered the evidence concerning the operational and organisational distinctiveness of the Wacol site.

[9] The evidence established that the employees at the two warehouses undertake similar but not identical work. There is no difference in the skills required by the warehouse employees at the two sites. The work is organised into teams which handle particular brand lines. Each of the warehouses has its own Manager and under that there are Brand Managers at each of the warehouses who supervise the brand line in which that team works. One brand line, Supre, is handled at Wacol but not at Lara. Several brand lines are handled at Lara but are not handled at Wacol. Although an order from a particular Cotton On Store may be filled by either Wacol or Lara regardless of the location of the store in Australia, generally orders from Melbourne will be filled by Lara unless the item is unavailable at Lara.

[10] There is a significant difference in the base rate of pay applicable to the same warehouse work at the same level between the two sites. The way in which casual employees are utilised differs between the two sites. At Lara there is much greater use of casuals on a seasonal basis than in Wacol. There is a night shift at the Lara site but not at the Wacol site. The classification of employees on pay slips for Wacol includes a QLD designation whilst those for employees at Lara include a VIC designation.

[11] Employee transfers do occur between Lara and Wacol however such transfers of warehouse employees are not common. There have been three recent transfers. There is little direct contact between the warehouse employees who will be covered by the proposed agreement in Wacol and their counterparts at Lara. There is greater contact between the salaried employees in the two centres.

[12] From a management point of view the two Australia warehouses are not separate from the overseas warehouses. The Head Office executive management and human resources personnel are responsible for the warehouses as a whole. Payroll is managed at the Head Office in Geelong for both warehouses. If an employee at Lara has a concern about their pay they can approach a local manager who may get information and corrective action from Head Office and then relay the information and outcome to the employee. Alternatively the employee may contact Head Office payroll direct. Recruitment is coordinated by Head Office for both sites. However, interviews for warehouse employees will be conducted by local managers.

[13] Ms Newton, Group Human Resources Manager for Cotton On, gave evidence about common work health and safety and training between the sites. The common training which had been conducted related to salaried staff and not to those who will be covered by the proposed agreement. The Metfast training system currently applies at the Wacol site but not to the Lara site although it is proposed to roll out the system to the Lara site. Common work health and safety systems apply to the warehouses globally and these are managed from Head Office. There is a central information technology system including the intranet which applies to both sites. There is a specific page for the distribution centres generally. There are not separate intranet pages for each distribution centre.

[14] A group of employees within an enterprise will rarely be operationally distinct in an absolute sense. It will often be a matter of degree. I am satisfied that factors such as different shift patterns, different rates of pay, and different methods of utilisation of casuals suggest operational distinctiveness particularly given that these characteristics may be relevant in bargaining. The lack of direct contact between warehouse employees at different sites as part of the performance of their normal duties also suggests operational distinctiveness.

[15] From an organisational perspective the fact that the Wacol site is part of a group headed by the Distribution Centre Global Operation Manager which also includes the Lara site suggests a lack of distinctiveness. However, there are some features which suggest distinctiveness including:

[16] The evidence concerning the extent to which the distribution group is integrated at an international level through the Geelong Head office was mixed. Overall the evidence demonstrated integration in respect to planning, IT, training of salaried staff, and OHS systems but not in respect to other aspects of the operations.

b. What are the relevant considerations?

[17] Both parties refer to the decision of the Full Bench in Cimeco Pty Ltd v CFMEU and Ors1 That decision related to an agreement approval however the requirements in respect to fairly chosen are essentially the same for agreement approval and majority support determinations. Cimeco requires that the Fair Work Commission in determining the question of fairly chosen:

[18] In dealing with a scope order it will often be relevant for the Fair Work Commission to consider whether one way of choosing the group to be covered is fairer than an alternative way proposed by another party. The context for considering reasonableness is different to that which applies to majority support and there is also a requirement to take into account the promotion of the fair and efficient conduct of bargaining in considering a scope order. For the purposes of a majority support determination and for the purposes of agreement approval there is no requirement to decide what would be the fairer or the fairest group. There may be a number of alternative groups which could be fairly chosen.

[19] The scope of an agreement is sometimes the subject of vigorous bargaining and can be a matter for protected industrial action. The Full Bench in Cimeco endorsed the observations of VP Lawler that: “the group of employees to be covered by a proposed agreement - the scope of the agreement- will typically be chosen at or shortly after the commencement of bargaining.” It is obvious that where an employer has refused to bargain any majority support determination will reflect the scope desired by the employee bargaining representative seeking the determination and the actual scope of the agreement which is the outcome of the bargaining may be quite different. In making a majority support determination the Fair Work Commission determines the starting point of the bargaining and the group for the notice of representational rights. The Fair Work Commission is not determining the scope of any final agreement.

[20] Cotton On referred to the Full Bench decision in AWU v BP Refinery (Kwinana) Pty Ltd: 2

[21] The group preferred by Cotton On is not the whole of the enterprise. It is a part of the enterprise which Cotton On argues is geographically, operationally and organisationally distinct. The NUW is seeking a group which is also a part of the enterprise and it argues that the smaller group is also geographically, operationally and organisationally distinct. The group preferred by Cotton On is not the broader group from an occupational perspective in that it does not include supervisors and administrative employees and it is not the broader group from an organisational perspective in that it does not include the retail operations. The group preferred by Cotton On is geographically the broader group in that it covers both of the warehouses which could be covered by an agreement.

[22] The decision in BP Refinery is authority for a proposition that if there was an application for a majority support determination to cover all the warehouses which could be covered by an agreement (in this case Wacol and Lara), and this was opposed on the grounds that a single warehouse coverage should be preferred because it is geographically distinct this would not be a compelling argument unless there were particular features or circumstances associated with that distinctness which would render the broader group one that is not fairly chosen.

[23] The Full Bench BP Refinery decision raises another important consideration in the following passage:

[24] The considerations in Section 238(4A) are identical to those in Section 237(3A). The considerations in Section 238(4)(c) and (d) are the same as those in Section 237(2)(c) and (d). Considered in context the observations of the Full Bench are most relevant to these common considerations, that is, the matter of fairly chosen and the question of whether or not it is reasonable in all the circumstances to make the order. The additional considerations in Section 238(4) do not affect the general applicability of the observations made by the Full Bench to a majority support determination.

[25] The relevant object of the Enterprise Agreements part of the Act is “to provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits” (Section 171(a) of the Act). Collective bargaining would not be enabled if majority support determinations were made more difficult to achieve because the employer was able to oppose the electorate on the grounds that it’s choice of electorate should be preferred or that it better suited it’s bargaining interests. The only constraints which apply to the choice being made by the employee bargaining representatives are that the group be fairly chosen and that the Fair Work Commission considers that it is reasonable to make the determination.

[26] Cotton On referred to the decision of Siopis J in John Holland Pty Ltd v CFMEU and FWC3 This decision related to the approval of an agreement not to a majority support application. Siopis J considered that the criteria in Section 186(3A) concerning geographic, organisational or operational distinctiveness to be “legitimate business related characteristics”. He considered that this was “to preclude approval of an agreement which excludes an employee or number of employees from the benefit of being covered by an agreement for an extraneous characteristic”. Cotton On argues that to exclude others who have the same legitimate business related characteristic would therefore mean that the group had not been fairly chosen. Cotton On argues that because the distribution centre managers in each centre report to a common manager and the distribution centres are in other ways integrated operationally and organisationally they have a common business related characteristic and all employees with that common characteristic must be included for the group to have been fairly chosen.

[27] I do not accept that argument. The legislation specifically provides that a group which is geographically distinct but not organisationally or operationally distinct could be fairly chosen. The legislation does not say that the Fair Work Commission must take into account whether the group is geographically, operationally and organisationally distinct. If it is argued that the group is fairly chosen because it is geographically distinct that is not an argument based upon an extraneous or illegitimate characteristic. Effectively Cotton On is arguing that the group chosen is not operationally and organisationally distinct and therefore the group has not been fairly chosen. However, I am satisfied that if I were to find that the group is not operationally and organisationally distinct this would be a relevant factor in determining whether or not the group was fairly chosen but it would not be determinative.

c. Conclusion as to fairly chosen?

[28] I am satisfied that the group chosen is geographically and operationally distinct. I am satisfied that there is a degree of organisational integration and also a degree of distinctness. It is common for a national and multi-national enterprise to have a number of separate site specific agreements. It is also common for national and multi-national enterprises to have agreements which cover more than one site. Depending upon the circumstances the employees in either case can be fairly chosen. Where there is a separate site specific agreement it will be common for there to be a lack of organisational distinctness in respect to matters such as IT, planning, training of salaried staff and OHS systems as occurs in this case. These matters are commonly managed at an enterprise level. I am not satisfied that the degree of organisational integration between the Wacol distribution centre and other distribution centres renders the group chosen unfair.

[29] Cotton On argues that I should consider the interests of those employees who have been excluded as a consequence of the group chosen by the NUW. I agree that this is a relevant consideration. In the absence of any evidence about the interests of those not chosen it is difficult to take this into account. If there was evidence that the majority of employees at the Lara site wished to be included in the group bargaining for the agreement then this might be relevant to a finding that the group was not fairly chosen. If they did not then it might conversely be relevant to a finding that the group was fairly chosen. However, there is no evidence one way or another and therefore this consideration is a neutral factor.

[30] I am not satisfied that the employer’s argument that a different group would be more fairly chosen is, in the circumstances of this case, sufficient reason to find that the group is not fairly chosen. In this regard I have had regard to the approach taken by the Full Bench in Cimeco and BP Refinery.

[31] After taking into account whether the group is geographically, operationally or organisationally distinct and other relevant factors I am satisfied that the group has been fairly chosen.

Do the majority of the employees, at a relevant time determined by FWC, who will be covered by the agreement, want to bargain?

[32] The NUW has provided petitions which indicate employees’ support for bargaining. During the period when signatures were collected a notice was placed on the notice board authorised by the NUW delegates explaining the purpose of the petition and urging employees to sign. NUW organisers made a number of visits to the site to collect petitions. The vast majority of the signatures were collected by the NUW organisers who took the signed petitions away with them when they left the site. The remainder of the signatures were collected by NUW delegates. There are a number of duplicate signatures. The NUW says that in some cases this was due to the names not being clearly legible. The signatures were collected between 27 May 2014 and 9 July 2014; primarily on 27 May, 11 June, 2-4 July and 9 July. The application for a majority support determination was made on 7 July 2014. The delay in finalising this matter was not the responsibility of the NUW. The NUW has also conducted a bargaining survey in more recent times and a further 6 employees have completed that survey and signed a commitment that they want the NUW to bargain for an agreement with the scope sought. These additional signatures are dated 8 September 2014.

[33] The NUW have also provided the details of a further employee whom they say did not sign the petition. The NUW argue that this employee should be presumed to want to bargain for the agreement as they are a member of the union. It was not necessary to consider this argument as I am satisfied that the member in question did in fact sign the petition.

[34] At the conclusion of the hearing it was agreed that Cotton On would provide a list of the employees as at 9 September 2014 and would also if possible provide a list of employees who have left in recent months and those casual employees who have not worked in the previous three months. I proposed and the parties accepted that those employees should be excluded from consideration.

[35] Cotton On submits that because of the length of time since the signatures were first collected it is possible that employees may have changed their mind. Cotton On also submits that the signatures were not collected in a private or confidential setting.

[36] There is no evidence before me of employees signing under duress or based on false information. I was satisfied by the evidence of the union organisers that they made all reasonable efforts to ensure that employees were properly informed prior to completing the petition. The petitions have been kept reasonably secure as they were mainly collected by the organisers and removed from the site. There is no evidence to suggest that employees have changed their mind and there are no circumstances which might lead to such an inference or apprehension. If there was such evidence then the lengthy period of time since the first petitions were gathered would give rise to concern and might lead me to decide that a further expression of view was required.

[37] Cotton On suggests that the number of duplicate signatures and the evidence that the NUW organisers visited and approached employees on a number of occasions suggests that it would be difficult for these employees to resist the approach of the NUW particularly as a number of these employees are young. Where an employer does not agree to bargain the matter of bargaining may become a contentious matter in a workplace. There is nothing in the legislation which prevents a union from strongly advocating in favour of bargaining. Often the views of the employer will have a strong influence upon employees and on occasion employees will be anxious about being seen to express a view contrary to that of their employer. There is no evidence that this was a factor in this particular case. Of course if there was coercion or the threat of adverse action by either the employer or the union then the petition may not be a reliable or appropriate expression of opinion. There is no evidence of anything out of the ordinary or inappropriate in the actions of the NUW in the circumstances of this case.

[38] Cotton On submit that there should be a private AEC ballot as this would give employees time to consider the matter carefully and if necessary obtain other advice and enable their expression of views to be confidential. The legislation requires that I be satisfied that a majority want to bargain. There is no requirement that employees have time to consider the matter carefully, that they be able to express a view in private or that they should have access to alternative advice from those who oppose collective bargaining. The objects of the relevant part of the legislation do not suggest that such requirements should be imposed unless there are particular circumstances which warrant it. I do not consider that the circumstances in this case warrant such an approach.

[39] Cotton On submits that the number of duplicate signatures is a matter of concern. They argue that Mr Kenny for the NUW gave evidence that he was aware that one or two signatures were illegible and that he had therefore asked the employees to sign the petition again. I did not take Mr Kenny to have given evidence that there were only one or two duplicate signatures. When organisers returned to the site after some time it is not surprising that they would not necessarily remember the faces and names of those who had signed on a previous occasion. In the absence of any evidence I see a duplicate signature as no more than evidence that an employee is seeking to reaffirm their support for bargaining. I see no reason why duplicate signatures undermine the integrity of the petition as an expression of employee views.

[40] Cotton On raised two concerns about the NUW document identifying the duplicated signatures. I consider that these are simply errors in recording. (Both employee 18 and 29 are stated as being duplicated at page 8 line 2. This is an error in the NUW’s submission - employee 18 is in fact duplicated at line three on page 8. There was another error in the NUW submission in that employee 23 is not duplicated at page 9 line 12 but is duplicated at page 8 on line 12.) There was one duplicate listed which is not crossed off (line 17 on page 10). I also found two other duplicates which were not listed (Number 35 and Number 71). These are not problems with the petition but relatively minor issues with the accuracy of the NUW submission.

[41] I am satisfied that the petition and the bargaining forms are a reasonable and appropriate way in which I can be satisfied that as at 9 September 2014 the majority of employees in the group to be covered wish to bargain for an agreement. I am concerned that further delay in determining this matter would not be consistent with the objects of the Act and the enterprise agreements part of the Act in particular.

[42] The results of a comparison of the petitions (including the 6 who signed individual bargaining survey forms) and the Cotton Employee lists are as follows:

NUW PETITIONS

(note 25 duplicates excluded)

 

COTTON ACTIVE EMPLOYEE LISTS

 

First name anglicised or second name abbreviated but sufficiently clear to include

4

Excluded because their job role is not within the scope of NUW application

1

Employees who are on the cotton on inactive or no longer employed list and are therefore excluded.

2

Excluded because they did not commence before 9 September 2014

3

Number of persons who signed petition but could not be clearly matched to Cotton On lists and are therefore excluded.

10

Employees on the list objected to by NUW - 2 employees who will be full time drivers as from 15/9 and 3 employees transferred from Lara.

5

Total Casual employees who signed the petition and who are on active employee list.

17

Casual employees who did not sign petition (including the 2 disputed drivers and 1 transferee from Lara)

11

Total Permanent employees who signed the petition and are on active employee list.

53

Permanent employees who did not sign the petition (including 2 transferees from Lara)

10

Note one other employee who signed the petition and is also on the Cotton On active list was excluded because that person was identified in the submissions as being no longer employed.

[43] I gave the parties an opportunity to provide further written submission about this analysis. There may be a variety of reasons why there are 10 names which could not be matched. There are a number of employees at the site who do not fall within the scope of the proposed agreement and who quite properly were not included on the Cotton On employee lists. A large proportion of the employees are from a non-English speaking background and some of these employees may write their names in differing ways. I do not consider that the names which could not be matched detract from the validity of the names which can be matched in the circumstances of this case. In the absence of any evidence to the contrary I have decided to assume that the transferees from Lara commenced work at Wacol prior to 9 September 2014 and that the employees who are to become full time drivers were working within the scope of the proposed agreement prior to 9 September 2014. Based upon those assumptions I have included those employees and rejected the submissions of the NUW.

[44] As can be seen above at least 70 out of the 91 employees who fall within the scope of the proposed agreement as at 9 September 2014 signed the petition. I am satisfied that this is an adequate basis upon which I can be satisfied that there is majority support.

Is reasonable in all of the circumstances to make the determination?

[45] Cotton On argues that all the warehouse employees, including those at Lara, should have an opportunity to express their view. I do not see that this is a separate consideration from the issue of the interests of those who may be excluded when considering if the group sought is fairly chosen. I have dealt with that matter earlier.

[46] Cotton On argue that if an application was made it is without doubt that a scope order would be made to include both centres. I am not sure what the outcome of a scope determination application might be. There may be a range of matters to be considered including the position of salaried and administrative employees and the views of employees at the Lara site. The making of a majority support determination does not prevent a scope order application from being considered.

[47] Cotton On also argue that a likely consequence of the making of the majority support determination sought would be that the company will end up having to deal with two separate agreements, one for Lara and one for Wacol. The issue of whether or not there are one or two agreements is a matter which can be the subject of further bargaining and other applications. It is not inevitable that there would be two separate agreements and it is not clear what disadvantage, if any, might result from two separate agreements should the parties decide to make them.

[48] Consequently I am satisfied that a majority of the relevant employees wish to bargain for an enterprise agreement as at 9 September 2014. I am also satisfied that each of paragraphs (b), (c) and (d) of section 237(2) of the Act have been made out. As a result, pursuant to section 237(1) I must make a majority support determination which will operate from the date of this decision. It is issued separately.

COMMISSIONER

Appearances:

Ms I Beynon for the NUW

Mr Ian Dixon with permission counsel for the Respondent.

Hearing details:

2014

Melbourne

September 9

 1   [2012] FWAFB 2206.

 2   [2014] FWCFB 1476 at paragraphs 14-16.

 3   (2014) FCA 286 at paragraphs 29-33.

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