1
Fair Work Act 2009
s.604 - Appeal of decisions
AKN Pty Ltd t/a Aitkin Crane Services
(C2015/172)
VICE PRESIDENT HATCHER
SENIOR DEPUTY PRESIDENT WATSON
COMMISSIONER LEE SYDNEY, 15 APRIL 2015
Appeal against decision [[2015] FWC 105] of Commissioner Ryan at Melbourne on 7
January 2015 in matter number AG2014/8089.
Introduction and background
[1] AKN Pty Ltd t/a Aitkin Crane Services (AKN) has applied for permission to appeal,
and appeals, a decision of Commissioner Ryan issued on 7 January 20151 (Decision). In the
Decision, the Commissioner dismissed an application made by AKN under s.185 of the Fair
Work Act 2009 (FW Act) for the approval of an enterprise agreement known as AKN Pty Ltd
National Employee Services Agreement 2014 (Agreement).
[2] AKN is a crane hire company that operates nationally across Australia. On or about 13
October 2014 AKN commenced bargaining with its employees for an enterprise agreement. It
was not in dispute that the bargaining process was conducted in accordance with the
requirements of the FW Act. The Agreement which resulted from this covers a range of local,
“Fly in, Fly out” and “Drive in, Drive out” employees including mechanics, crane operators,
crane supervisors, rigger/dogger operators and truck drivers. The Agreement having been
approved by the employees covered by it, on 5 November 2014 AKN lodged in the
Commission an application for approval of the Agreement. This application was accompanied
by the required statutory declaration made by AKN’s National Business Manager, Mr Peter
Rice. This declaration stated that the there were three modern awards which covered the
company and its employees: the Vehicle Manufacturing, Repair, Services and Retail Award
20102, the Road Transport and Distribution Award 20103 and the Mobile Crane Hiring
Award 20104.
[3] The application was allocated to the Commissioner for determination. On 3 December
2014, apparently without there having been any prior communication between the
Commissioner and AKN concerning the application, the Commissioner issued a document
1 [2015] FWC 105
2 MA000089
3 MA000038
4 MA000032
[2015] FWCFB 1833
DECISION
E AUSTRALIA FairWork Commission
[2015] FWCFB 1833
2
entitled “Statement” (Statement). The Statement was published on the Commission’s website
and assigned a medium neutral citation.5 The Statement commenced by stating that the
Commission was currently considering AKN’s application for approval of the Agreement,
and had “a number of concerns with the content of the Agreement”. Thereafter were set out
the concerns which the Commissioner had, under the subheadings “Hours of Work”,
“Deduction from pay”, “Part-time employment”, “Casual employment”, “Restraint of trade”
and “National Employment Standards”.
[4] In relation to “Hours of Work”, the Commissioner expressed in the Statement the
concern that clause 14 of the Agreement provided for “patterns of work which appear to be
significantly less beneficial to employees than the pattern of hours of work permitted under
any of the three relevant modern awards”, and identified a number of examples about this,
including that clause 14 “permits the employer to require the employee to work ordinary time
comprising 28 consecutive days each of 12 hours”. The Commissioner also referred to clause
15 of the Agreement, and said “The combined effect of both clauses 14 and 15 is to remove
many of the protections found in the three relevant awards in relation to hours of work and
shift work.” The conclusion of this section of the Statement was:
“[4] The Commission notes that the Agreement contains rates of pay which are higher
than the award rates but the impact and operation of clauses 14 and 15 raise significant
issues as to whether the Agreement passes the Better Off Overall Test (BOOT).
[5] How does the employer contend that the Agreement passes the BOOT?”
[5] In relation to “Deduction from pay”, the Commissioner referred to clause 16.5 of the
Agreement, which was characterised as allowing the employer to make deductions from pay
“where the employer asserts that the employee has caused damage to company property or
any accommodation provided by the company” and clause 16.6, which was said to provide
the employer “with an entitlement to deduct from the final wages of an employee ‘a
proportion of the training costs incurred by the Company’”. In relation to both of these
provisions, the Commissioner asked: “How does the employer contend that this is not an
unreasonable deduction for the benefit of the employer and that s.326 does not apply?” There
was also reference to clause 18.12, which provided that if an employee failed to give the
required period of notice of termination of employment, or gave or was given notice but left
before the end of the notice period, the employee was required to forfeit to the employer an
amount equal to the pay the employee would have been entitled to had the employment
continued to the end of the required notice period. The Commissioner referred to the decision
in Hydro Chem Pty Ltd6 and asked “How does the employer argue that this provision of the
Agreement is permitted by the Act and should be retained in an approved agreement?”
[6] In relation to “Part-time employment”, the Commissioner referred to clause 18.2,
which established conditions for part-time employees, and observed that the Mobile Crane
Hiring Award 2010 did not permit part-time employment and that the provisions of clause
18.2 “are significantly less beneficial to employees than the provisions of clause 13 of the
Manufacturing and Associated Industries and Occupations Award 2010 and clause 12.4 of
the Road Transport and Distribution Award”. He then asked “How does the employer
contend that the Agreement passes the BOOT in relation to part time employees?”
5 [2014] FWC 8690
6 [2014] FWCA 5163
[2015] FWCFB 1833
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[7] In respect of “Casual employment”, the Commissioner referred to clause 18.4(c),
under which casual employees “may be required to start work at any time”, stated that it
would appear that this provision was less beneficial than under the relevant modern awards
because casual employees would not be entitled to any penalties or loadings for working
outside the ordinary hours of work, and asked: “How does the employer contend that the
Agreement passes the BOOT in relation to casual employees?”7
[8] After dealing with the other identified matters, the Statement finished with the
direction: “Any submissions or undertakings should be filed in the Commission by noon on
Friday 12 December 2014”.
[9] AKN responded to the Statement by way of a submission it sent to the Commission
dated 12 December 2014. In this submission, by way of preamble, AKN said:
“AKN Pty Ltd refers to the Statement published by the Commission in this matter,
dated 3 December 2014. Notwithstanding the publication of the Statement (and its
content); the Company has undertaken significant analysis in developing this
Agreement, and in having it voted up and approved by its employees, to ensure
that it does pass the Better Off Overall Test (BOOT) - under s.193 of the Act.
Accordingly; as a general response, the Company submits that each of its employees
would, on an overall assessment, be significantly better off under the terms of the
proposed Agreement than they would be if only the minimum standards in the relevant
award applied to them [see Re Armacell Australia Pty Ltd (2010) 202 IR 38].”
[10] AKN’s submission then responded to the specific issues raised in the Statement. In
relation to the hours of work issue, the submission referred to and attached “some example
rosters with associated pay rates comparing the Agreement to the relevant award’s base rate
of pay ... [which] demonstrate that the wage rates provided for in the Agreement are
significantly higher when the relevant award rates are taken into consideration”. It then stated
that:
AKN undertook to treat as having been deleted the words “but not exceeding a 26
week period” in clause 14.1;
under clause 14.5 any changes to work patterns would be subject to the fatigue
management guidelines of AKN and its customers; and
in the mining services industry in which AKN operated, there was typically a
requirement that as a minimum every 14th day of a work roster is a rest day.
[11] In relation to clause 15, the submission referred to and attached a sample roster which
was said to show “that the wage rates provided for in the Agreement are higher than when the
relevant award rates are taken into consideration”.
[12] On the issue of deduction of pay, AKN pointed to reg.2.12 of the Fair Work
Regulations 2009, which provided that an employer could reasonably recover costs directly
7 Decision at [14]-[16]
[2015] FWCFB 1833
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incurred by the employer as a result of the voluntary private use of the employer’s property by
an employee, and submitted:
“The Company submits that recovery of the reasonable cost of wilful damage caused to
property or accommodation falls within this Regulation. For example; where it is
found that an employee has wilfully punched a hole in, or smeared faeces on, the wall
of accommodation provided for them by the Company (whether owned by the
Company or not), the reasonable cost of repairs could be recovered under the
Agreement’s cl.16.5 - provided the terms of sub-clauses b) & c) were otherwise
complied with.”
[13] We hasten to interpolate at this point that the behaviour referred to in the above
submission was not suggested to be the typical behaviour of AKN’s employees.
[14] AKN also made submissions in defence of the training costs deduction provision in
clause 16.6, but notwithstanding this undertook that any deduction from an employee’s final
payment in clause 16.6 would only apply if authorised by the employee. In relation to clause
18.12, AKN submitted that it was “almost identical” to similar provisions in the three
reference awards and was authorised by ss.118 and 324 of the FW Act, and taking into
account the higher pay rates in the Agreement the Commission would be satisfied that the
better off overall test would be satisfied. AKN also undertook that “non-compliance by an
employee with the provisions in clauses 16.5, 16.6 & 18.12 will not be treated by the
Company as a contravention of a term of the Agreement - for the purposes of section 50 of
the Act, but without limitation to usual disciplinary practices”.
[15] On the part-time employment issue, AKN submitted that while the Mobile Crane
Hiring Award did not expressly refer to part-time employment, it did not prohibit it either,
and that the part-time employment provisions in the Agreement allowed more flexible and
family friendly arrangements for employees which would allow employees to be better off.
AKN also submitted that, to the extent that mobile crane operators were engaged on a part-
time basis, they were not covered by the Mobile Crane Hiring Award but were award-free,
and referred to Re Sunnyhaven Ltd8 as authority for the proposition that there was nothing in
the FW Act which prevented approval of an enterprise agreement which covered award-free
employees. AKN went on to make the following undertaking:
“However; and to avoid doubt, the Company will undertake that it will apply the
relevant reference instruments’ provisions regarding agreement (in writing) as to the
hours to be worked, the days to be worked, the commencement and finishing terms
for the work, and the classification applying to the work to be performed – before any
employee commences part-time employment.”
[16] In response to the issue raised about casual employment, AKN’s submission simply
stated:
“Clause 18.4 deals with casual employment. See attached an analysis of casual
employment under the Agreement compared to the relevant Awards. This analysis
shows that a casual employee is better off overall under the Agreement’s rates of pay.”
8 [2012] FWAFB 9086
[2015] FWCFB 1833
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[17] After dealing with the other issues raised in the Statement, AKN’s submission finished
with the following:
“Do not hesitate to contact the Company with any further queries or concerns you may
have arising out of these Submissions and undertakings.”
[18] There was no further communication between the Commissioner and AKN prior to the
Decision being issued.
The Decision
[19] In the Decision, the Commissioner commenced by referring to the Statement he had
issued and AKN’s submission in response and, in relation to the concluding sentence of that
submission, said:
“[5] The direction given at paragraph [27] of the Commission’s Statement was not an
invitation to engage in an ongoing dialogue. The Commission gave AKN Pty Ltd an
opportunity of presenting to the Commission the case it wanted to put in support of the
application and having received both submissions and undertakings the Commission
will determine the application.”
[20] The Commissioner then noted that “there are a number of areas where the contents of
the Agreement provides terms and conditions of employment which are more beneficial to an
employee than is provided for by the relevant modern award” and that the ordinary wage rates
in the Agreement were “significantly higher than the corresponding wage rates in the relevant
modern award”9. The Commissioner then turned to the specific issues raised in the Statement
and AKN’s responses thereto. In relation to deduction of training costs from final pay (clause
16.6), restraint of trade and the National Employment Standards, it is sufficient to say that the
Commissioner was satisfied with AKN’s response in its submission, and accepted the
undertakings offered by AKN. The Commissioner then dealt with the remaining matters
under the heading “Concerns which were not addressed”.
[21] In relation to hours of work, the Commissioner concluded that he was not satisfied by
AKN’s response concerning this issue, and referred to the provision in clause 14.4 which
permitted, in relation to the permissible patterns of working hours, “any other reasonable
combination as determined by the Company, or by agreement” as negating the undertaking
offered by AKN. 10 The Commissioner further stated that the undertaking did not deal with his
concern “in relation to patterns of work which may involve lengthy periods of 12 hour shifts
and the amount of ‘reasonable additional hours’ which employees will be required to work”,
and noted that the fatigue management guidelines referred to in clause 14.5 were not part of
the Agreement or presented to the Commission.11 The Commissioner concluded on this issue:
“[29] Whilst the level of remuneration is a significant factor in assessing the Better Off
Overall Test non monetary factors are also important. There are significant quality of
life and health and safety issues arising where AKN Pty Ltd reserves to itself the right
to require employees to either start or end night shift work without a specific period of
9 Decision at [6]
10 Decision at [23]-[25]
11 Decision at [26]-[28]
[2015] FWCFB 1833
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notice having been given to the employee. The combined effect of clauses 14 and 15 of
the Agreement is that they permit AKN Pty Ltd to constantly move an employee
between day work and night shift work without any period of advance notice. The only
requirement of the Agreement is that an employee must have 10 hours off work
between periods of work.
[30] Notwithstanding the higher wage rates in the Agreement as compared to the
relevant award the Commission concludes that no employee would be better off
overall if employed under the terms of this Agreement as against being employed
under the terms of the relevant modern award.”
[22] In relation to the remaining issues concerning deduction from pay, the Commissioner
said in relation to clause 16.5:
“[39] The language of clause 16.5 does not require that a court or tribunal be satisfied
that the employee has caused “wilful damage to Company property or accommodation
provided by the Company”. Rather the wording of clause 16.5 would appear to allow
the employer to determine whether or not the actions of the employee are “wilful” and
where AKN Pty Ltd decide that an employee has caused “wilful damage to Company
property or accommodation provided by the Company” then AKN Pty Ltd is entitled
to deduct an amount of money from the pay of the employee. In such circumstances
the deduction of pay for the benefit of the employer could not be reasonable.
[40] Additionally the circumstances dealt with in clause 16.5 are very different from
the issues dealt with in Regulation 2.12 of the Regulation which is relied on by AKN
Pty Ltd. Regulation 2.12 deals with instances of an employee’s voluntary use of the
employer’s assets. Clause 16.5 includes instances where the employer is required to
use the employer’s property and where the employee is required to use
accommodation provided by the employer.
[41] The concern of the Commission in relation to an employer giving itself the right
to deduct pay from an employee who has failed to give the required notice of
termination was put to AKN Pty Ltd through drawing the attention of AKN Pty Ltd to
the decision in Hydro Chem Pty Ltd, [2014] FWCA 5163.”
[23] In relation to clause 18.12, the Commissioner concluded, after some analysis, that
“the enforcement mechanism within clause 18.12 of the Agreement is an exercise of a power
which is judicial and which can only be exercised by the Courts”12, but notwithstanding this
went on to consider whether the provision was permitted by s.326 and said:
“[60] As s.324(1)(b) makes clear a deduction from pay can be authorised by an
employee in accordance with an enterprise agreement. The deduction sought by clause
18.12 would be acceptable if the employee authorises the deduction.
[61] An undertaking from the employer that clause 18.12 would only be applied where
the employee consented to the deduction would have been acceptable.
12 Decision at [57]
[2015] FWCFB 1833
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[62] In the present matter AKN Pty Ltd has chosen not to give an undertaking but
rather to argue that clause 18.12 is permitted.
[63] On the basis of the above consideration the Commission does not consider that
clause 18.12 is a clause permitted by s.326.”
[24] On the issue of part-time employment, the Commissioner concluded that the
undertaking offered by AKN did not address the Commission’s concerns in relation to
persons who would otherwise be covered by the Mobile Crane Hiring Award. The
Commissioner said:
“[75] It is not clear whether the undertaking offered by AKN Pty Ltd in relation to part-
time employment was intended to provide any benefits for employees who would
otherwise be covered by the Mobile Crane Hiring Award. Even if the undertaking
operated so that employees who would otherwise be covered by the Mobile Crane
Hiring Award and who were to be employed as part-time employees with the
protections offered by clause 13 of the Manufacturing and Associated Industries and
Occupations Award 2010 that group of employees would still not be better off overall.
[76] If AKN Pty Ltd was entitled to offer part-time employment to riggers and crane
drivers the reality would be that such part-time employees could not gain additional
part-time employment under the Mobile Crane Hiring Award as part-time employment
is not a feature of that award.
[77] The very structure of the Agreement and the wording of clause 18.2 makes clear
that AKN Pty Ltd could offer part-time employment even when a prospective
employee wanted fulltime employment. There is a considerable body of literature and
statistical data on the underemployment of part-time employees in Australia. Not all
part-time employees want part-time employment. Many part-time employees are
working part-time because they cannot get full time employment.
[78] There is nothing in the Agreement which suggests that the default types of
employment for riggers and crane drivers is either full time or casual as provided for
in the Mobile Crane Hiring Award and there is nothing in the Agreement to suggest
that part-time employment of riggers and crane drivers would only occur where a
rigger or crane driver who was either employed or had been offered employment as a
full time employee specifically sought part-time employment.
[79] The Commission is satisfied that the Agreement would fail the BOOT in relation
to part-time employees who would otherwise be covered by the Mobile Crane Hiring
Award.”
[25] On the final issue of casual employment, the Commissioner said that in the absence of
an undertaking he could not be satisfied that the wage calculations in the comparative table
were actually payable under the terms of the Agreement, but “If the methodology used by
AKN Pty Ltd to prepare the comparative table for a casual employee had been reduced to
writing in the form of an undertaking the Commission would have considered its concerns
addressed.”13
13 Decision at [82]-[83]
[2015] FWCFB 1833
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[26] The Commissioner then stated: “Having considered all of the material presented and
relied upon by AKN Pty Ltd and having regard to the provisions of s.193 of the Act the
Commission cannot be satisfied that the agreement passes the better off overall test”14. He
dismissed the application for approval of the Agreement on that basis.
AKN’s submissions
[27] AKN contended that the Decision was attended by appealable error, and pressed four
propositions in this respect. The first, and primary, proposition was that the Commissioner
erred by failing to take into account, as required by s.578(a), one of the objects of Part 2-4
stated in s.171, namely to be facilitative in agreement-making. This object should have led the
Commissioner, contrary to paragraph [5] of the Decision, to engage in ongoing dialogue with
AKN, particularly as the conclusion of AKN’s submission in response to the Statement had
invited such dialogue. A facilitative approach, AKN submitted, should have led the
Commissioner to seek further information in relation to the fatigue management guidelines
and the wage calculations for casual employees, to clarify the intention of any proposed
undertakings, and suggest acceptable undertakings if they have been contemplated by the
Commission.
[28] The remaining propositions advanced by AKN were as follows:
(1) The Commissioner misconstrued and misapplied the better off overall test by
dealing with issues such as hours of work and part-time work on a “line by
line” basis rather than taking his findings as to those matters and then
conducting a cumulative balancing exercise between the relevant modern
awards and the Agreement.
(2) The Commissioner erred in respect of the deduction from pay issue by
misconstruing the approval requirements in ss.186 and 187 as if they included
a requirement that any deduction from pay provisions in an enterprise
agreement complied with s.326. Section 326(1) renders a non-complying
provision of no effect, but it is not an approval requirement.
(3) The Commissioner denied AKN procedural fairness by failing to take
reasonable steps to engage in the requisite dialogue, not providing AKN with
an opportunity to be heard in relation to the Commissioner’s continuing
concerns and failing to give AKN an opportunity to provide further
undertakings and information which may have addressed the Commissioner’s
concerns.
[29] AKN submitted that permission should be granted, the appeal upheld, the Decision
quashed, and its application for approval of the Agreement remitted to a member of the Full
Bench for re-hearing.
Consideration
The primary argument
14 Decision at [86]
[2015] FWCFB 1833
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[30] We reject AKN’s primary argument that when considering an application to approve
an enterprise agreement the Commission is under a general obligation to be “facilitative” and
to engage in “ongoing dialogue” with the applicant. An enterprise agreement is an instrument
which establishes terms and conditions in relation to the matters specified in s.172(1) of the
FW Act. Where it is not a greenfields agreement, an enterprise agreement is the product of
bargaining carried out between the employer (or in some cases employers) and any bargaining
representatives of the employees then employed who will be covered by the agreement in
accordance with the procedures prescribed by Div.3 of Pt.2-4. Section 182(1) provides that
such an agreement is “made” when a majority of the current employees who will be covered
by the agreement cast a valid vote in favour of the agreement. Under s.185(1), it is only when
the enterprise agreement is “made” that there arises an obligation for a bargaining
representative to apply to the Commission for approval of the enterprise agreement.
[31] The primary function of the Commission, when considering an application for
approval of an enterprise agreement, is to assess whether the agreement that has been made
satisfies the criteria for approval specified in ss.186 and 187. If the criteria are satisfied, the
Commission is obliged under s.186(1) to approve the agreement unless, under s.192(1), the
Commission considers that compliance with the terms of the agreement may result in a person
committing an offence under or being liable to pay a pecuniary penalty for a contravention of
a law of the Commonwealth.
[32] Where an agreement does not satisfy the approval criteria specified in ss.186 and 187,
the Commission has no power to approve the agreement except by the exercise of the limited
discretions conferred by ss.189 and 190. Under s.189, the Commission may, in respect of an
agreement which does not satisfy the better off overall test requirement in s.186(2) but
otherwise satisfies the approval requirements in ss.186 and 187, approve the agreement if it is
satisfied, because of exceptional circumstances, that the approval of the agreement would not
be contrary to the public interest.
[33] Under s.190, where the Commission has a concern that an enterprise agreement for
which approval has been applied for does not meet the approval requirements in ss.186 and
187, it may approve the agreement on the basis of an undertaking accepted under s.190(3) if
the undertaking meets the concern. Section 190(3) permits the Commission to accept an
undertaking from an employer covered by the agreement if satisfied that the affect of
accepting the undertaking is not likely to cause financial detriment to any employee covered
by the agreement or result in substantial changes to the agreement. Under s.190(4), the
Commission must not accept any such undertaking unless the Commission has sought the
views of each person the Commission knows is a bargaining representative for the agreement,
and under s.190(5) any requirements for the signing of undertakings prescribed by the
regulations must be met.
[34] The statutory scheme therefore requires the application by the Commission of the
provisions of ss.186-190 to an enterprise agreement that has been already bargained for,
approved by employees and “made” under Div.3 and Subdiv.A of Div.4 of Part 2-4. That is to
say, in relation to non-greenfields enterprise agreements, the Commission is discharging its
functions by reference to an agreement which has already been developed and finalised by a
process of collective bargaining at the enterprise level. The Commission’s approval functions
are not intended to be a process by which an employer, in a process of dialogue with the
Commission, can seek to develop the agreement further so that it may eventually satisfy the
[2015] FWCFB 1833
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approval requirements in ss.186 and 187. The undertaking facility in s.190 provides an
opportunity to an employer to proffer an undertaking to address any concern which the
Commission may have concerning the satisfaction of the approval requirements in ss.186 and
187. Because any such undertaking may not result in substantial changes to the agreement, the
opportunity provided is necessarily limited in nature and cannot involve a wholesale
reshaping of the agreement which has already been made.
[35] It may be accepted that, insofar as s.190 is constructed on the basis of the
Commission having a “concern” about whether an agreement satisfies the approval
requirements of ss.186 and 187 which an undertaking may seek to address, it is implicit that
the Commission will identify that “concern” to the applicant for approval and other parties as
relevant in order to provide a reasonable opportunity for the concern to be addressed.
However, there is no requirement in the FW Act for an employer to be given multiple
opportunities to provide an undertaking which addresses the Commission’s concern, or for the
employer effectively to be allowed to bargain with the Commission as to the terms of an
appropriate undertaking.
[36] Under s.577(b) the Commission is required to perform its functions and exercise its
powers in a manner which is “quick, informal and avoids unnecessary technicalities”, and
under s.590 may “inform itself in relation to any matter before it in such manner as it
considers appropriate”. In the context of an application for the approval of an enterprise
agreement about which the Commission has a concern in relation to satisfaction of the
approval requirements in ss.186 and 187, there is no single method by which the
Commission’s concern may be appropriately communicated to the applicant for approval and
any other relevant parties. Whether the Commission’s concern is most appropriately
communicated at a formal hearing, a conference, a telephone hearing or conference, by
correspondence, or by use of a combination of these means may depend upon a number of
factors including the complexity or otherwise of the issue underlying the concern, the
geographical location of the parties, and whether the parties are sophisticated or legally
represented.
[37] In this case the Commissioner had a number of concerns which he communicated
through the Statement. Although this mechanism was somewhat unusual, noting that there is
no requirement under the FW Act for a communication of this nature to be published,
nonetheless AKN was provided with a clear written statement of the Commissioner’s
concerns that in a number of respects the Agreement did not satisfy the approval requirements
of ss.186 and 187. Consistent with s.190, we consider that the Statement provided AKN with
a reasonable opportunity to respond to the identified concerns by way of the provision of
further submissions or undertakings by a specified date.
[38] Having filed a response to the Commissioner’s Statement within the specified time,
there was no legitimate basis for AKN to expect a further opportunity to make submissions or
offer undertakings. The addition of the statement “Do not hesitate to contact the Company
with any further queries or concerns you may have arising out of these Submissions and
undertakings” to AKN’s response did not impose any obligation upon the Commissioner to
explain why AKN’s response, including its proposed undertakings, did not address all his
concerns, nor could AKN have reasonably expected that the Commissioner would do so. In
effect, AKN should have understood that, in respect of any proposed undertakings, it had to
put its best foot forward in its response to the Statement rather than merely entering its
opening bid.
[2015] FWCFB 1833
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[39] Reference to the objects of Part 2-4, which the Commission is required by s.578 to
take into account, does not assist AKN’s case in this respect. Those objects are set out in
s.171 as follows:
171 Objects of this Part
The objects of this Part are:
(a) 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; and
(b) to enable the FWC to facilitate good faith bargaining and the making of enterprise
agreements, including through:
(i) making bargaining orders; and
(ii) dealing with disputes where the bargaining representatives request
assistance; and
(iii) ensuring that applications to the FWC for approval of enterprise
agreements are dealt with without delay.
[40] The reference in paragraph (b) of s.171 to “facilitat[ing] good faith bargaining and the
making of enterprise agreements” cannot be read as indicating a duty of “facilitation” in the
Commission’s consideration of an application to approve an enterprise agreement as
contended for by AKN, since the “facilitation” referred to is in connection with good faith
bargaining and the making of agreements - which, as earlier discussed, are steps prior to the
lodgement of an approval application. To the extent that anything the Commission does in its
consideration of an approval application may aid in the achievement of this object,
s.171(b)(iii) indicates what that is - namely to deal with approval applications “without
delay”. A putative duty to engage in “ongoing dialogue” with an applicant for approval and to
provide multiple opportunities to address identified concerns is clearly inconsistent with this
aspect of the object.
Procedural fairness
[41] We also reject AKN’s associated submission that the Commissioner failed to afford
AKN procedural fairness. We consider that the Commissioner’s Statement identified his
concerns and gave AKN a reasonable opportunity to respond, as earlier discussed. The fact
that AKN may not have fully taken advantage of this opportunity in the mistaken belief that it
would be given further chances to make submissions and proffer undertakings does not mean
that it was denied procedural fairness. Procedural fairness requires the Commission to give a
party a reasonable opportunity to present its case, not to ensure that a party takes the best
advantage of that opportunity.15
15 Re Coldham; Ex parte Municipal Officers Association of Australia (1989) 84 ALR 208 at 220 per Gaudron J; Sullivan v
Department of Transport (1978) 20 ALR 323 at 343 per Deane J; Secretary, Department of Family and Community Services
v Verney [2000] FCA 570 at [45], Soames v Secretary, Department of Social Services [2014] FCA 295 at [41]
[2015] FWCFB 1833
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Appealable error
[42] We do however consider that the Decision was attended by appealable error in two
respects. Firstly, we accept AKN’s submission that the Commissioner failed to properly to
apply the better off overall test. That test, as it applies in respect of non-greenfields
agreements, is articulated in s.193(1) as follows:
When a non-greenfields agreement passes the better off overall test
(1) An enterprise agreement that is not a greenfields agreement passes the better off
overall test under this section if the FWC is satisfied, as at the test time, that each
award covered employee, and each prospective award covered employee, for the
agreement would be better off overall if the agreement applied to the employee than if
the relevant modern award applied to the employee.
[43] In the Full Bench decision in Armacell Australia Pty Ltd16 the requirements of the
proper application of the better of overall test were described in the following way:
“[41] The BOOT, as the name implies, requires an overall assessment to be made. This
requires the identification of terms which are more beneficial for an employee, terms
which are less beneficial and an overall assessment of whether an employee would be
better off under the agreement. The approach adopted by the Commissioner includes
an identification of terms which might, on his view of the term, be less beneficial for
an employee. There is nothing on the face of the Commissioner’s decision to indicate
what account if any he took of any terms which might be more beneficial for an
employee.”
[44] In the Decision, the Commissioner recognised at the outset that the ordinary rates of
pay provided by the Agreement were significantly higher than those provided for in the three
relevant modern awards. Then, in the way earlier explained, he identified various aspects of
the Agreement which he considered to be less beneficial than the corresponding provisions of
the relevant awards and which had not been satisfactorily addressed by the provisions of
undertakings. However, in reaching the conclusion that the Agreement did not satisfy the
better off overall test, the Commissioner did not explain how, in his overall assessment, the
less beneficial provisions of the Agreement outweighed those which were found to be more
beneficial. There was, for example, no analysis as to how employees generally or in particular
categories or scenarios would fare financially under the Agreement as compared to the
relevant award. And, in respect of the various aspects of the Agreement which were found to
be less beneficial, the Commissioner appears to have taken the approach that the failure to
provide an undertaking that addressed that particular aspect led to the Agreement as a whole
failing the better off overall test without considering whether any deficiency in that respect
might be outweighed by the other more beneficial provisions of the Agreement. This
approach involved error of the type identified by the Full Bench in Solar Systems Pty Ltd,
namely taking a line by line rather than a global approach to the application of the better off
overall test.17
16 [2010] FWAFB 9985
17 [2012] FWAFB 6397 at [10]-[15]
[2015] FWCFB 1833
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[45] For example, in relation to part-time employment, the Commissioner found that “the
Agreement would fail the BOOT in relation to part-time employees who would otherwise be
covered by the Mobile Crane Hiring Award”18 merely because it provided for part-time
employment whereas the Mobile Crane Hiring Award 2010 did not. In reaching this
conclusion, it is apparent that the Commissioner considered that the provision of part-time
hours would be disadvantageous as compared to the options of full-time or casual
employment provided for in that Award without ever bringing into the overall balance the
higher hourly pay rates in the Agreement. Even if the Commissioner considered that the mere
provision of part-time employment in the Agreement was less beneficial than the lack of any
such provision in the Mobile Crane Hiring Award then it remained necessary for him at least
to go on to consider how a part-time employee engaged under the terms of the Agreement,
including its higher pay rates, for a given number of hours per week would compare in overall
financial terms to a casual employee engaged for the same number of hours under the Award.
The Decision contains no such analysis.
[46] The second error was to treat those provisions in the Agreement (clauses 16.5 and
18.12) permitting deductions from wages which the Commissioner considered were
inconsistent with s.326 of the FW Act and had not been addressed by undertakings as
presenting an insuperable barrier to approval. In respect of deductions for wages, s.324(1)(b)
authorises an employer to deduct from any amount owing to an employee “if the deduction is
authorised by the employee in accordance with an enterprise agreement”. However s.324(1)
operates subject to s.326(1), which provides:
Unreasonable payments and deductions for benefit of employer
(1) A term of a modern award, an enterprise agreement or a contract of employment
has no effect to the extent that the term:
(a) permits, or has the effect of permitting, an employer to deduct an amount
from an amount that is payable to an employee in relation to the performance
of work; or
(b) requires, or has the effect of requiring, an employee to make a payment to
an employer or another person;
if either of the following apply:
(c) the deduction or payment is:
(i) directly or indirectly for the benefit of the employer, or a party
related to the employer; and
(ii) unreasonable in the circumstances;
(d) if the employee is under 18—the deduction or payment is not agreed to in
writing by a parent or guardian of the employee.
18 Decision at [79]
[2015] FWCFB 1833
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[47] There is nothing in ss.186 or 187, or elsewhere in the FW Act, which prohibits the
approval of an enterprise agreement because it contains any provision permitting deductions
from wages which, if the Agreement was approved, would not have effect because of
s.326(1). Section 186(4) provides that, in order for an agreement to be approved, the
Commission must be satisfied that it does not contain any “unlawful terms”. What constitutes
an unlawful term is defined by s.194. It is sufficient to say for present purposes that a
provision which would not have effect because of s.326(1) is not included in the definition of
an unlawful term. Therefore an enterprise agreement may be approved and be otherwise
operative notwithstanding that it contains a provision which does not have effect under
s.326(1). So much was recognised by the Federal Court Full Court in Toyota Motor
Corporation Australia Limited v Marmara.19
[48] It may be that a disadvantageous deduction from wages provision which has a real
potential to cause financial detriment is something that needs to be brought to account in the
application of the better off overall test. However, that is not what the Commissioner did.
Rather he treated clauses 16.5 and 18.12 as simply not permitted by s.326(1) and therefore as
impediments to approval in themselves. We accept AKN’s submission that this approach
constituted appealable error.
[49] As a result of the two errors we have identified, we consider that the Agreement was
not properly assessed for approval by reference to the requirements of ss.186 and 187. That,
we consider, justifies the grant of permission to appeal and requires the appeal to be upheld
and the Decision to be quashed. It will be necessary for AKN’s application for approval of the
Agreement to be re-heard. We will remit the matter to a single member of this Full Bench for
that purpose.
Orders
[50] The following orders are made:
(1) Permission to appeal is granted.
(2) The appeal is upheld.
(3) The Decision is quashed.
(4) The application for approval of the Agreement is remitted to Senior Deputy
President Watson for re-hearing.
VICE PRESIDENT
Appearances:
C. Gianatti solicitor with W. Swain for AKN Pty Ltd t/a Aitkin Crane Services.
Hearing details:
19 [2014] FCAFC 84 at [80]
C MISSION THE THE FAIR WORK SS
[2015] FWCFB 1833
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2015
Melbourne:
27 February.
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