1
Fair Work Act 2009
s.604 - Appeal of decisions
The Australian Workers' Union
v
MC Labour Services Pty Ltd
(C2017/4403)
VICE PRESIDENT HATCHER
DEPUTY PRESIDENT COLMAN
COMMISSIONER HARPER-GREENWELL SYDNEY, 4 OCTOBER 2017
Appeal against decision [[2017] FWC 4075] of Commissioner McKinnon at Melbourne on 3
August 2017 in matter number C2017/3200.
Introduction
[1] The Australian Workers’ Union (AWU) has lodged an appeal, for which permission is
required, against a decision issued by Commissioner McKinnon on 3 August 2017
(Decision).1 The Commissioner decided that she did not have jurisdiction to deal with a
dispute that had been submitted to the Commission under clause 10 of the MC Labour
Services Pty Ltd and the CFMEU (Victorian Construction and General Division) Labour Hire
Industry Enterprise Agreement 2016-2018 (Agreement). The Commissioner concluded that
certain mandatory steps in the disputes procedure had not been followed, and that these were
a precondition for the dispute being referred to the Commission. She decided that the
Commission therefore had no power to deal with the dispute.
[2] The AWU contends that the Decision is wrong, and that, regardless of whether the
procedures in the clause were adhered to, the Commission has a discretion under the Fair
Work Act 2009 (FW Act) to deal with a dispute referred to it under the Agreement. In support
of its position, the AWU refers to decisions of Commissioner Ryan in AMWU v CBI
Constructors Pty Ltd (CBI)2 and AMWU v Unilever Australia Trading Limited (Unilever),3
where it says the approach for which it contends was adopted.
Permission to appeal
[3] An appeal under s.604 of FW Act is an appeal by way of rehearing. The
Commission’s powers on appeal are exercisable only if there is error on the part of the
1 [2017] FWC 4075
2 [2016] FWC 4896
3 [2016] FWC 7600
[2017] FWCFB 5032
DECISION
E AUSTRALIA FairWork Commission
[2017] FWCFB 5032
2
primary decision maker.4 Unless an enterprise agreement provides otherwise, there is no right
to appeal and an appellant must seek the permission of the Commission. Subsection 604(2)
requires the Commission to grant permission to appeal if satisfied that it is “in the public
interest to do so”. Permission to appeal may otherwise be granted on discretionary grounds.
[4] The task of assessing whether the public interest test is met is a discretionary one
involving a broad value judgment.5 In GlaxoSmithKline Australia Pty Ltd v Makin6 a Full
Bench of the Commission identified some of the considerations that may attract the public
interest. These include where a matter raises issues of importance and general application, or
where there is a diversity of decisions at first instance so that guidance from a Full Bench is
required.7
[5] The appeal in this matter puts at issue the correct approach to be adopted by the
Commission in dealing with a matter referred to it under a dispute settlement procedure in an
enterprise agreement. The FW Act requires enterprise agreements to contain procedures to
settle disputes. Such procedures commonly involve steps that are to be taken prior to the
involvement of the Commission or another third party.
[6] We agree with the AWU that there is a divergence of views on the jurisdiction of the
Commission in cases such as the present, at least as between the Decision and the two
decisions of Commissioner Ryan that are invoked by the union. In our view the public interest
would be served by the Full Bench determining the correct approach.
[7] Accordingly, we are satisfied that it is in the public interest that permission to appeal
be granted, and we do so.
Background
[8] The background to this matter can be briefly stated. The AWU filed an application in
the Commission concerning alleged non-payment of overtime in relation to employees whose
employment is covered by the Agreement. The AWU is not covered by the Agreement, but
has members whose employment is covered by the Agreement.
[9] MC Labour Services Pty Ltd (MC Labour) objected to the application on the basis that
the dispute settlement procedure in clause 10 of the Agreement had not been followed, and
that the Commission’s involvement in the dispute was contingent upon compliance with the
procedure set out in that clause. The parties agreed that the Commissioner should determine
the jurisdictional objection on the papers.
[10] Clause 10 of the Agreement reads as follows:
“10 Disputes Settlement Procedure
4 Coal and Allied Operations Pty Ltd v AIRC (2000) 203 CLR 194 at [17] per Gleeson CJ, Gaudron and Hayne JJ
5 O’Sullivan v Farrer (1989) 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch
(2011) 85 ALJR 398 at [69] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; Coal & Allied Mining Services Pty
Ltd v Lawler and others (2011) 192 FCR 78 at [44] - [46]
6 [2010] FWAFB 5343, 197 IR 266
7 [2010] FWAFB 5343, 197 IR 266 at [27]
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10.1 A major objective of this Agreement is to eliminate lost time and/or production
arising out of disputes or grievances. Disputes over any work related or industrial
matter or any matters arising out of the operation of the Agreement or incidental to the
operation of the Agreement should be dealt with as close to its source as possible.
Disputes over matters arising from this Agreement (or any other dispute related to the
employment relationship or the NES, including subsections 65(5) or 76(4) of the Fair
Work Act) shall be dealt with according to the following procedure.
10.2 Work shall continue without interruption from industrial stoppages, bans and/or
limitations while these procedures are being followed. The pre-dispute status quo shall
prevail while the matter is being dealt with in accordance with this procedure.
10.3 All Employees have the right to appoint a representative in relation to a dispute.
It is the express priority of all Parties to attempt to settle a dispute at the workplace
level at first instance.
10.4 In the event of any work related grievance arising between the Employer and an
Employee or Employees, the matter shall be dealt with in the following manner:
(a) The matter shall be first submitted by the Employee/s or his/her job
delegate/Employee representative or other representative, to the site
foreperson/supervisor or the other appropriate site representative of the
Employer, and if not settled, to a more senior Employer representative.
(b) Alternatively, the Employer may submit an issue to the Employee/s who
may seek the assistance and involvement of the job delegate/ Employee
representative or other representative.
(c) If still not resolved, there may be discussions between the relevant Union
official (if requested by the Employee/s), or other representative of the
Employee, and senior Employer representative.
(d) Should the matter remain unresolved, either of the parties or their
representative shall refer the dispute at first instance to the Victorian Building
Industry Disputes Panel (which shall deal with the dispute in accordance with
the Panel Charter).
(e) Either party or their representative may, within 14 days of a decision of the
Panel, refer that decision to FWC for review. FWC may exercise conciliation
and/or arbitration powers in such review.
10.5 This procedure shall be followed in good faith without unreasonable delay.
10.6 If any party fails or refuses to follow any step of this procedure the non breaching
party will not be obligated to continue through the remaining steps of the procedure,
and may immediately seek relief by application to FWC.
10.7 All Parties will cooperate with the requests of the Disputes Panel including
requests to provide substantiating information or undertaking an independent audit of
[2017] FWCFB 5032
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matters arising from this Agreement. For the avoidance of doubt, an affected
Employee may appoint a representative in relation to such matters.”
[11] MC Labour’s National Industrial Relations Manager, Mr Rod Currie, filed a witness
statement in the proceedings before the Commissioner. He stated that he first became aware
of the alleged dispute when he received a copy of the AWU’s application for the Commission
to deal with a dispute. He was not aware of the matter having been submitted to any
representative of MC Labour by or on behalf of employees covered by the Agreement.8
[12] Further, although the matter was not addressed in evidence, it is clear from the
submissions of the parties that, at the time the dispute was submitted to the Commission, it
had not been referred to the Victorian Building Industry Disputes Panel (VBIDP), as
contemplated by clause 10.
[13] No evidentiary material was filed by the AWU. It does not contest the accuracy of Mr
Currie’s statement. There is no apparent factual contest between the parties.
[14] The Commissioner reached the following conclusion:
“[23] I find that the alleged dispute has not been submitted by the employee(s) or their
representatives to the relevant site foreperson, supervisor or other appropriate site
representative. This is not an optional step in the dispute procedure. It is a mandatory
term and a precondition for the dispute to then be referred to the Disputes Panel, and
eventually, to the Commission.
[24] It follows, and I find, that the disputes procedure in clause 10 of the Agreement
has not been followed. The Commission has no present jurisdiction to deal with the
alleged dispute.”
Consideration
[15] The approach of a Full Bench to the determination of an appeal depends on the nature
of the decision below. In the present matter, the Commissioner was considering whether she
had jurisdiction to deal with a dispute under the terms of an enterprise agreement. This task
did not involve the exercise of discretion. Accordingly, the Full Bench must determine
whether the Commissioner’s conclusion as to jurisdiction was correct.
[16] We first consider the requirements of clause 10.4, and then examine whether, as the
AWU contends, there is any discretion for the Commission to deal with a dispute irrespective
of the terms of the enterprise agreement.
Requirements of the Agreement
[17] Clause 10.4 sets out what is to occur in the event of a “work related grievance arising
between the Employer and an Employee or Employees”. As the Commissioner observed, the
clause provides for an escalating process for dealing with such disputes.9 It states that “first,”
the matter will be submitted by the employee to the site foreperson or supervisor (clause
8 Decision at [22]
9 Decision at [18]
[2017] FWCFB 5032
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10.4(a)). If the matter is “still not resolved”, there may be discussions between the relevant
union official or other representative and senior company representatives (clause 10.4(c)).
Next, “should the matter remain unresolved”, a party may refer it to the VBIDP (clause
10.4(d)). Then, “within 14 days of the decision of the Panel”, either party may refer the
decision to the Commission for review, where the Commission may exercise conciliation or
arbitration powers (clause 10.4(e)).
[18] The first question is whether there existed a grievance of the relevant kind. MC
Labour was unaware of any dispute until the AWU filed its application in the Commission. It
is still unclear precisely which employees or group of employees were said to have a
workplace grievance with MC Labour. However, even accepting that a “work related
grievance [had arisen] between the Employer and Employees”, it is clear that the process laid
down by clause 10.4 was not followed. The grievance was not first submitted to the site
foreperson or supervisor. Critically, it was not referred to the VBIDP. That body had not
issued a decision at the time when the AWU sought to have the matter dealt with by the
Commission. The Commission’s role under clause 10.4 is confined to the review of such a
decision. In the present case, there was nothing to be referred to or reviewed by the
Commission under clause 10.4(d).10
[19] Furthermore, clause 10.6 specifically contemplates a situation where a matter may be
referred to the Commission, despite the steps in the process not having been complied with.
When one party “refuses or fails to follow any step of this procedure”, the “non-breaching
party” may immediately seek relief by application to the Commission.11 The AWU is not the
“non-breaching party” in this matter; it is the party that has not followed the steps in the
procedure. (We leave to one side the question of whether, not being covered by the
Agreement, the AWU can be a “party” to the dispute.)12 Before the Full Bench, the AWU
acknowledged that there was no suggestion that MC Labour had not complied with the
requirements of clause 10.4. Accordingly, the AWU was not able to refer the dispute directly
to the Commission under clause 10.6.
[20] Clause 10 allows the Commission to deal with a grievance only in the context of
conducting a review of a decision of the VBIDP, and subject to the steps set out in the clause.
In the circumstances that came before Commissioner McKinnon, the preconditions for the
Commission’s involvement in the dispute had not been met. Clause 10.4 did not authorise the
Commission to deal with the dispute.
[21] It is necessary then to consider the AWU’s contention that the Commission
nevertheless has a discretion to deal with the dispute in question.
Was there a discretionary power to deal with the dispute?
[22] The notice of appeal advances two principal grounds in support of the contention that
the Commissioner erred in deciding that she had no discretion to deal with the dispute. First, it
10 The VBIDP has apparently made a determination since the Decision was issued. See Submissions of the Respondent on
Appeal, paragraph 25.
11 It is somewhat unclear what the Commission might then do by way of ‘relief’, but it is not necessary for us to consider this
question.
12 Note that s.739(6) provides that the Commission may deal with a dispute referred to it under an enterprise agreement only
on application by a party to the dispute.
[2017] FWCFB 5032
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is contended that the Commissioner did not properly take into account the legislative
framework of the FW Act. Secondly, it is submitted that she failed to take into account the
decisions in CBI and Unilever.
[23] In considering the legal framework, Commissioner McKinnon commenced by citing
s.595 of the FW Act.13 This provision is found in Division 3 of Part 5-1 of the FW Act, which
concerns the conduct of matters before the Commission generally. Section 595 provides that
the Commission may deal with a dispute “only” if it is “expressly authorised to do so under
or in accordance with another provision of (the Act)”.
[24] The Commissioner then noted s.739 of the FW Act,14 which applies if a term of an
enterprise agreement requires or allows the Commission to deal with a dispute.15 Section
739(3) provides that, in dealing with a dispute under a term in an enterprise agreement, the
Commission “must not exercise any powers limited by the term”. Section 739(4) states that, if,
in accordance with a term in an enterprise agreement, the parties have agreed that the
Commission may arbitrate a dispute, the Commission may do so. Section 739(5) states that
the Commission “must not make a decision that is inconsistent with” (relevantly) an
enterprise agreement, or with the FW Act.
[25] Section 739 makes clear that the Commission’s function (if any) in dealing with a
dispute referred to it under an enterprise agreement depends on the terms of that agreement,
and that the parties to the agreement may structure or limit the role of the Commission (or
other person).
[26] If the Commissioner had purported to exercise a discretion to deal with the matter in
the circumstances of the present case, she would have acted contrary to the terms of the
Agreement. By doing so she would have acted contrary to s.739(4) and s.739(5) of the FW
Act. The Commissioner’s conclusion that she had no jurisdiction to deal with the dispute took
into account, and was consistent with, the legislative framework.
[27] The decisions in CBI and Unilever support the AWU’s contention that the
Commission has a residual discretion to deal with disputes referred to it under an enterprise
agreement, despite the requirements of the agreement. The rationale for these decisions is
based on s.186(6), which sets out one of the requirements of which the Commission must be
satisfied before it approves an enterprise agreement under s.185, namely:
(6) The FWC must be satisfied that the agreement includes a term:
(a) that provides a procedure that requires or allows the FWC, or another
person who is independent of the employers, employees or employee
organisations covered by the agreement, to settle disputes:
(i) about any matters arising under the agreement; and
(ii) in relation to the National Employment Standards.’
13 Paragraph 6 of the decision
14 Paragraph 7 of the decision
15 See section 739(1); it also applies in the other circumstances set out in s.738.
[2017] FWCFB 5032
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[28] The AWU contended that, if a dispute resolution provision subjects the role of the
Commission or other independent person to conditions or limitations, it does not meet the
requirements of s.186(6). In CBI, Commissioner Ryan stated (emphasis added):
“[37] Where a term of an enterprise agreement contains a dispute resolution process
which has several steps for dealing with the dispute at the workplace and lastly
provides for the dispute to be referred to the Commission, or another person who is
independent of the employers, employees or employee organisations covered by the
agreement to settle the dispute, the steps for dealing with the dispute at the workplace
cannot operate as a bar to the Commission, or another person who is independent of
the employers, employees or employee organisations covered by the agreement,
having jurisdiction to settle the dispute. If such was allowed to occur then the term
would not be a term that met the requirements of s.186(6) of the Act.”16
[29] The dispute resolution clause that was considered in CBI provided for four internal
steps before the dispute could be referred to the Commission. It is convenient to set out the
clause in question:17
“15.1 The parties to this Agreement concur that disputes should be resolved on the
Construction Site wherever possible, in accordance with the procedure set out in this
clause.
15.2 In the event of a dispute between the Employer and an Employee or Employees
about any matters (other than disputes concerning safety) arising under this
Agreement, or in relation to the NES, the dispute shall be dealt with in the following
manner:
15.2.1 In the first instance, the dispute shall be taken up with the supervisor of
the Employee(s) involved;
15.2.2 If the dispute cannot be resolved with the supervisor, the matter may be
referred to the relevant superintendent;
15.2.3 If the dispute cannot be resolved with the relevant superintendent, the
matter may be referred to the site Construction Manager;
15.2.4 If the dispute cannot be resolved with the site Construction Manager, it
shall be referred to a senior Company management representative and a senior
representative of that Union party to the dispute. Where the dispute involves
more than one (1) Union, an agreed representative may be appointed to resolve
the dispute on their behalf;
15.2.5 If the dispute cannot be resolved with the involvement of a senior
Company management representative and the senior Union representative, the
matter may be referred to the FWC by the Company or the Union party to the
dispute for conciliation;
15.2.6 If the dispute is not resolved by conciliation the dispute may be
arbitrated subject to the normal rights of appeal.”
16 The same statement is found at paragraph 62 in Unilever.
17 See Decision at [3]
[2017] FWCFB 5032
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[30] Commissioner Ryan stated that it was the two last-mentioned sub provisions in the
clause that “meet the requirements of s.186(6) and thus create the jurisdiction for the
Commission to deal with unresolved disputes”.18 He concluded:
“[40] Non-compliance with any or all of subclauses 15.2.1 to 15.2.4 cannot deny the
Commission jurisdiction to deal with a dispute under sub clause 15.2.5 and 15.2.6.”
[31] We do not agree with this analysis. It fails to take into account the provisions of the
FW Act set out earlier, and misapprehends the requirements of s.186(6).
[32] Section 186(6) does not mandate an unconditional or universal role for the
Commission or other independent person in the settlement of disputes arising under an
agreement.19 It requires the inclusion of a term in an enterprise agreement that requires or
allows the Commission or other person to settle disputes about any matters arising under the
agreement or about the NES. Clause 10.4 of the Agreement is such a clause. It allows the
VBIDP and the Commission to settle work related grievances, subject to the conditions
agreed by the parties.
[33] In considering whether a clause meets the description in s.186(6), it is necessary to
consider the clause as a whole. There is no basis to disaggregate the clause and inquire
whether, at each stage in the relevant procedure, and in particular factual circumstances, the
clause requires or allows the Commission or other person to settle disputes.
[34] On a plain reading of the provisions, the imposition of limitations on the role of the
Commission contemplated by s.739 is compatible with the requirements of s.186(6). There is
a logical connection between these two provisions, and it is clear that this did not escape the
Parliament’s attention. The introductory words in s.739(1) employ the same formulation
found in s.186(6): s.739(1) applies if a term of an enterprise agreement20 “requires or allows”
the FWC to deal with a dispute.
[35] In CBI, emphasis was placed on the contrast between s.186(6) and the corresponding
provision under the Workplace Relations Act 1996 (WR Act), which specifically required
compliance with any steps that had to be taken under the dispute resolution process in a
workplace agreement, prior to the dispute being referred to the Commission.21 That provision
is not reflected in the FW Act, and it appears that the Commissioner drew from this an
inference that the FW Act no longer contemplates any such requirement. However, s.595 and
s.739 must be accorded their natural meaning, and are not to be read down because a
provision in the earlier legislation was not replicated in the FW Act.
[36] The AWU contended before us that it could not responsibly have complied with the
steps in paragraphs (a), (b) and (d) of clause 10.4 because this would have required it to
provide the names of its members to MC Labour and the VBIDP, with potential adverse
18 Decision at [39]
19 In Re Woolworths Ltd (2010) 192 IR 24, the Full Bench considered a dispute settlement clause that allowed the
Commission to arbitrate only with the consent of the parties to the dispute. It found the provision complied with the
requirements of s.186(6).
20 Or another term referred to in s.738.
21 Section 710 of the WR Act; see discussion at paragraphs 26 to 34 in CBI.
[2017] FWCFB 5032
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consequences for the employees in question. However, the union acknowledged that its
concerns were based only on supposition. Indeed it was not established that either MC Labour
or the VBIDP would actually have required the AWU to identify the names of its members
involved in the alleged dispute. MC Labour for its part rejected any suggestion that
employees would have suffered any detriment in connection with having raised a workplace
grievance.
[37] It may be that situations will arise where it is genuinely impossible for a party to
comply with a mandatory step in a dispute resolution procedure, and that the effect of this is
that the Commission or other independent person cannot attempt to settle the dispute. This
might be an issue for the Commission to examine when considering whether to approve an
agreement under s.185 of the FW Act. However, once an agreement has been approved, and a
dispute is referred to the Commission under it, it would not be permissible for the
Commission to recast or ignore certain components of the dispute settlement procedure.
Section 186(6) is not a source of power to do this. An enterprise agreement comes into
operation seven days after it is approved by the Commission.22 Once in operation, the
agreement is presumed to be valid, until such time as the decision of the Commission to
approve the agreement is overturned on appeal, or the agreement is otherwise found by a
court to be invalid. The various terms of an enterprise agreement are also assumed to be valid,
with the exception only of unlawful and certain other terms, which have no effect as a result
of s.253 of the FW Act.
[38] The requirements of s.186(6) may be relevant in identifying the proper construction of
a dispute resolution clause in an agreement. If the proper meaning of such a clause is
disputed, the resolution of the disputed construction will begin with the ordinary meaning of
the relevant words, considered in context, in accordance with the principles summarised in
AMWU v Berri.23 The legislative framework, including s.186(6), is part of that context.24
There may be cases where, properly construed, the clause allows the Commission to proceed
to deal with a matter, despite certain steps not being satisfied. And of course, there may be
clauses which expressly allow certain steps to be bypassed, or for the Commission to have a
general discretion to deal with disputes.
[39] However, the parties to an enterprise agreement are free to impose limitations on the
role afforded to the body that is to settle disputes about matters arising under the agreement.
Where these limitations are not observed, the Commission (or other persons) has no discretion
to deal with a dispute referred to it under the agreement, unless one is conferred on it under
the terms of the agreement.
Conclusion and orders
[40] Clause 10.4 of the Agreement set pre-conditions for the capacity of the Commission to
deal with a dispute. Those pre-conditions were not met. There is no general discretion
afforded to the Commission under the FW Act to deal with a dispute under an enterprise
agreement. The Agreement affords no such discretion in the present matter.
22 Or such later day specified in the agreement – s.54(1).
23 [2017] FWCFB 3005 at [114]
24 Ibid at [114], principle 1(iii)
[2017] FWCFB 5032
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[41] Commissioner McKinnon therefore had no jurisdiction to deal with the dispute. Her
decision was correct. The appeal must be dismissed.
[42] We order as follows:
(1) Permission to appeal is granted.
(2) The appeal is dismissed.
VICE PRESIDENT
Appearances:
S. Wood on behalf of the Australian Workers’ Union.
C. Leong solicitor on behalf of MC Labour Services Pty Ltd
Hearing details:
2017
Brisbane:
20 September.
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OF THE FAIR WORK MISSION THE
