1
Fair Work Act 2009
s.604 - Appeal of decisions
Transport Workers' Union of Australia & Anor
v
ALDI Foods Pty Limited as General Partner of ALDI Stores (A Limited
Partnership)
(C2015/6904 and C2015/6909)
VICE PRESIDENT WATSON
DEPUTY PRESIDENT KOVACIC
COMMISSIONER WILSON
MELBOURNE, 22 FEBRUARY 2016
Appeal against decision [2015] FWCA 6373 of Deputy President Bull at Sydney on 22
September 2015 in matter number AG2015/3510 – permission to appeal – standing – single
enterprise agreement or greenfields agreement – fairly chosen – better off overall test – Fair
Work Act 2009, ss.52, 53, 172, 182, 185,186, 604.
Introduction
[1] This decision concerns an application for permission to appeal by the Transport
Workers’ Union of Australia (TWU) and the Shop, Distributive and Allied Employees
Association (SDA) against a decision of Deputy President Bull handed down on 22
September 2015.1 The decision of the Deputy President under s.185 of the Fair Work Act
2009 (the Act) was to approve the ALDI Regency Park Agreement 2015 (the Agreement).
[2] At the hearing of the matter on 20 November 2015 Mr G Hatcher, SC, and Ms A
Perigo of counsel appeared on behalf of ALDI Foods Pty Limited as General Partner of ALDI
Stores (A Limited Partnership) (ALDI). Mr W Friend QC appeared on behalf of the SDA with
Mr D Macken and Mr J Tierney. Mr D Blair appeared by video link from Adelaide on behalf
of the TWU.
[3] At the hearing of the matter the SDA, the TWU and ALDI sought and were granted
leave to adduce fresh evidence that was not before Deputy President Bull. That evidence
comprised witness statements and documents concerning the operations covered by the
Agreement and the engagement of employees in those operations.
Background
[4] ALDI made an application for approval of the Agreement on 4 August 2015. The
matter was listed for “eHearing”, in chambers, before Deputy President Bull on 21 September
2015. Any party wishing to be heard in the matter was to contact the chambers of Deputy
President Bull prior to the hearing and the matter would be listed for an attendance hearing.
[2016] FWCFB 91 Note: refer to the High Court decision dated 6
December 2017 [2017] HCA 53
DECISION
E AUSTRALIA FairWork Commission
http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/2017/53.html?context=1;query=%5b2017%5d%20HCA%2053;mask_path=au/cases/cth/HCA
http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/2017/53.html?context=1;query=%5b2017%5d%20HCA%2053;mask_path=au/cases/cth/HCA
[2016] FWCFB 91
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No such contact was made and on 22 September 2015 Deputy President Bull approved the
Agreement on receiving an undertaking from ALDI concerning the hourly rate of pay for one
of the classifications in the Agreement.
[5] The scope of the Agreement covers employees of ALDI in ALDI’s Regency Park
Region in South Australia (and parts of NSW and Victoria). Clause 5 of the Agreement
contains the following explanation of its scope:
“ALDI operates Regions based on a Distribution Centre and stores within that Region.
The Regency Park Region is defined as the Distribution Centre operated by ALDI in
Gallipoli Drive Regency Park ("The Distribution Centre"), and all ALDI Stores which
operate in South Australia and the Broken Hill City Council Local Government Area
in New South Wales and the Rural City of Mildura Local Government Area in
Victoria.
At the time of commencement of this Agreement, the Regency Park Region will
include the stores listed in Schedule 5. This Agreement will apply to these stores and
any new stores which open in the Regency Park Region as defined in this clause.”
[6] Schedule 5 provides:
As at the commencement of this Agreement, the following stores are in the Regency
Park Region. Additional stores which open within the boundaries of the Regency Park
Region as defined in Clause 5 of the Agreement will also form part of the Regency
Park Region.
City Address
Seaford Heights Cnr Robinson Road and Vista Parade. Seaford Heights SA
Parafield
Gardens
88-94 Lavender Drive, Parafield Gardens SA
[7] The classifications of employees covered by the Agreement are described in clause 5
as:
“This Agreement will apply to the following classifications of Employees of ALDI
employed in the Regency Park Region:
Employees engaged in a retail store operated by ALDI ("a Store") in the positions of
Store Manager, Assistant Store Manager, Store Management Trainee, Store
Assistant. and Stock Replenisher;
Employees engaged in the Distribution Centre operated by ALDI in the positions of
Warehouse Operator, Warehouse Mechanic, Warehouse Caretaker, and Palletiser;
and
Employees engaged in the transport and distribution operations of ALDI ("Transport
and Distribution") in the position of Transport Operator operating from the
Distribution Centre.”
[2016] FWCFB 91
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[8] The Agreement identifies 16 employee signatories to the Agreement. The application
for approval of the Agreement states that it covers 17 employees based on agreement by a
postal ballot of the employees at which 16 employees cast a valid vote, 15 of which were in
favour of the Agreement. Neither the SDA nor the TWU were involved in the making of the
agreement or in its approval.
[9] The additional evidence led by the parties establishes that at the time the Agreement
was voted on, the Distribution Centre at Regency Park was still under construction and no
stores in the region had commenced trading. The employees who voted for the Agreement
were employed by ALDI at other locations. They appear to have each submitted an expression
of interest to transfer into the Regency Park Region and accepted a written offer of
employment to work in the Regency Park Region. Acceptance of the offer was on the express
premise that they would be able to participate in the enterprise agreement voting process for
an enterprise agreement to cover the Regency Park Region. The offer of employment also
stated that the date of transfer to the new region would be notified subsequently and in the
meantime the terms and conditions applying to their current roles would continue to apply.
Each of contracts contained the following introductory paragraph:
“I am pleased to advise that Aldi Stores (a limited partnership) wishes to offer you
ongoing employment as [position] in our new Regency Park region in South Australia,
commencing when the new region opens. At this stage, we anticipate this will occur
around October 2015, however you may be invited to commence in the new region
earlier than this time, depending on the need to train new employees. You will
continue to be employed until that date in your current region and will be covered by
that region’s enterprise agreement.”
[10] Under the heading “Leave Entitlements” the letter provides:
“The hours you have accrued as entitlements to annual, personal/carer’s and long
service leave will transfer with you to the new region…”
[11] The operations of ALDI throughout Australia are organised on a regional basis.
Various other Agreements covering operational regions have been approved by the
Commission.2 On 3 June 2013, the Commission approved the ALDI Minchinbury Agreement
2012, the ALDI Stapylton Agreement 2012 and the ALDI Derrimut Agreement 2012.3
[12] In the 2013 decision, Boulton J provides a summary of the evidence given with respect
to the operational characteristics of ALDI:
“[22] On the evidence in the proceedings, ALDI has traditionally operated each of its
regions as distinct undertakings. Each region has its own Managing Director and group
of operational directors, and operates and reports as an independent profit centre. The
only national function is the buying function, except in relation to fresh produce which
is sourced locally by each region. ALDI’s business development plan, applied
internationally as well as in Australia, is to start with a distribution centre in an area
and then to grow the number of stores serviced by that distribution centre.”
[13] The ALDI Brendale Agreement 2015 was approved and commenced on 6 July 2015.4
The region was created by the transfer of a number of retail stores out of the Stapylton Region
[2016] FWCFB 91
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together with the establishment of a new distribution centre. The new distribution centre had
not commenced at the time of the commencement of the Agreement.
Nature of the Appeal
[14] The decision to approve the Agreement involves the application of a number of
statutory tests, many of which involve the exercise of discretion as described by the High
Court in Coal and Allied v AIRC.5 In that case Gleeson CJ, Gaudron and Hayne JJ said6:
“"Discretion" is a notion that "signifies a number of different legal concepts". In general
terms, it refers to a decision-making process in which "no one [consideration] and no
combination of [considerations] is necessarily determinative of the result." Rather, the
decision-maker is allowed some latitude as to the choice of the decision to be made.
The latitude may be considerable as, for example, where the relevant considerations
are confined only by the subject-matter and object of the legislation which confers the
discretion. On the other hand, it may be quite narrow where, for example, the decision-
maker is required to make a particular decision if he or she forms a particular opinion
or value judgment.” (references omitted)
[15] Discretionary decisions are subject to review on the grounds expressed by the High
Court in House v The King7:
“The manner in which an appeal against an exercise of discretion should be determined
is governed by established principles. It is not enough that the judges composing the
appellate court consider that, if they had been in the position of the primary judge, they
would have taken a different course. It must appear that some error has been made in
exercising the discretion. If the judge acts upon a wrong principle, if he allows
extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he
does not take into account some material consideration, then his determination should
be reviewed and the appellate court may exercise its own discretion in substitution for
his if it has the materials for doing so. It may not appear how the primary judge has
reached the result embodied in his order, but, if upon the facts it is unreasonable or
plainly unjust, the appellate court may infer that in some way there has been a failure
properly to exercise the discretion which the law reposes in the court of first instance.
In such a case, although the nature of the error may not be discoverable, the exercise of
the discretion is reviewed on the ground that a substantial wrong has in fact occurred.”
[16] Insofar as any aspect of the decision is not properly considered a discretionary
decision we are required to determine whether the decision is correct8.
The Grounds of Appeal
[17] The grounds of appeal advanced by the SDA may be divided into three categories:
the purported agreement should have been made as a greenfields agreement under
s.172(2)(b) of the Act because ALDI was/is establishing a new enterprise and had
not, and has not, employed any of the persons who would be necessary for the
normal conduct of the enterprise
[2016] FWCFB 91
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the employees who were selected to approve the agreement were not fairly chosen,
and
the agreement does not pass the better off overall test (BOOT).
[18] The grounds of appeal advanced by the TWU are essentially that the Agreement
should have been negotiated as a greenfields agreement.
[19] Both the TWU and the SDA submit that it is in the public interest for the Commission
to grant permission to appeal for a number of reasons, including the following:
the issues in the appeal are likely to have significance to the practice of industrial
relations beyond the parties to the proceedings, as they put in issue the extent to
which a prospective employer of the employees can avoid the enterprise bargaining
protections afforded by s.172(2)(b) of the Act
the decision is attended with sufficient doubt, and actual appealable error, to warrant
its consideration on appeal and substantial injustice would result if permission to
appeal was not granted, particularly for those employees affected
if permission to appeal is not granted the Agreement will deprive potentially large
numbers of employees from the benefits of the Act and will undermine the system of
award and agreements which are underpinned by the Act.
Standing
[20] ALDI challenges the standing of the SDA and TWU to institute an appeal as neither
appeared before the Commission at the time the Agreement was approved. ALDI submits that
neither the SDA nor the TWU is a “person aggrieved” for the purposes of s.604 of the Act and
so neither have standing to appeal against the decision. ALDI submits that the two relatively
recent Full Bench decisions cited by the SDA in support of their proposition are plainly
wrong, and accordingly, should not be followed by this Full Bench.
[21] The SDA submits that despite the fact that it was not involved in the making of the
agreement or in the approval of it, it has standing to bring the appeal.9 The TWU generally
adopted the SDA’s submissions on this point.
[22] In similar circumstances as the present, Full Benches of the Commission have
accepted the standing of organisations to appeal against decisions to approve agreements.10 In
CEPU v Main People, neither union was a bargaining representative for the Agreement and
nor was there any evidence that any employee of the respondent at the time of the vote to
approve the Agreement was a member of either union. Further there was no evidence that any
subsequent employees of the respondent had asked the appellants to represent their interests in
relation to the Agreement. Nevertheless the Full Bench determined that the unions were
persons aggrieved and had standing to institute the appeal. It said:
“[7] The appellants have the right to represent employees under the terms of the
Agreement. Moreover, given the nature of the respondent’s business, and the industry
within which it operates, we are satisfied that it is likely that some members of the
appellants will be employed by the respondent in the future, in classifications covered
[2016] FWCFB 91
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by the Agreement. In the circumstances of this case we consider that this gives the
appellants an interest in the decision to approve the Agreement beyond that of an
ordinary member of the public. Accordingly, we are satisfied that the appellants have
standing to appeal the decision to approve the Agreement.”
[23] In this matter we have formed a similar view. We find that the unions have standing to
institute the appeal.
Single enterprise agreement or greenfields agreement
[24] The SDA and TWU submit that the circumstances of voting and approval of the
Agreement in advance of commencement of the operations is inconsistent with the scheme of
the Act. They submit that the Act demonstrates a clear intention to allow employers to have
terms and conditions of employment set before they start a new enterprise. It does this by
providing a protection for the position of future employees by requiring that an agreement
must, in those circumstances, be made with a relevant employee organisation. Once an
employee who will be necessary for the normal conduct of the new enterprise has been
employed a greenfields agreement is not available.
[25] The SDA and TWU submit that the first question is whether the new stores constitute
a genuine new enterprise. They submit that they do because they represent the
commencement of a significant new operation. It is submitted to be uncontroversial that the
respondent’s business model operates on the basis of separate, discrete geographical
enterprise locations or regions and that ALDI regards each individual region as a separate
enterprise. The unions rely on clause 5 of the Agreement to establish this proposition.
[26] The SDA and TWU submit that the new evidence discloses that the relevant
workplaces are presently nothing more than construction sites, and were not operating in any
sense at the time the agreement was purportedly made.
[27] The SDA and TWU dispute ALDI’s contention in its employer’s statutory declaration
that 17 employees have been employed. The SDA and TWU submit that while it may be the
case that each of the 17 employees who voted is an employee of ALDI, it appears that none of
them were employed to work in the new enterprise at the time because the new enterprise had
not commenced to operate.
[28] The SDA and TWU submit that it is clear that the circumstances involve:
the construction of new stores which were in no way complete at the time the offers
of employment were made
offers of new employment which was expressly stated not to commence until the
new stores opened
the continuation of existing employment in the existing positions of the employees in
the existing regions pursuant to the provisions of existing enterprise agreements
pending the transfer to the new region.
[29] The unions submit that in these circumstances the Act only permits the approval of a
Greenfields agreement, with the necessary involvement of at least one employee organisation.
[2016] FWCFB 91
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[30] ALDI submits that these submissions should be rejected. It relies on the definition of
Greenfields agreement in the Act. Section 172 essentially defines a Greenfields agreement as
one that relates to a genuine new enterprise that the employer is establishing or proposing to
establish and the employer has not employed any of the persons who will be necessary for the
normal conduct of the enterprise. The term ‘enterprise’ is defined in section 12 as a business
activity, project or undertaking.
[31] ALDI submits that the Act gives priority to single enterprise agreements and does not
permit an agreement to be made with organisations unless the limited circumstances in s.172
exist. It submits that conducting its traditional operations in a new geographical area is not a
genuine new business, and employees have been employed in the enterprise covered by the
Agreement.
[32] Section 172 is properly construed as an enabling provision that sets out the
circumstances in which an agreement can be made in accordance with the Enterprise
Agreement Part of the Act. Although different types of agreements can be made in different
circumstances it should not be assumed that an agreement can be made in all circumstances or
that the categories are necessarily mutually exclusive. When the two alternatives in s.172(2)
are compared however it is clear that the employee factor is highly unlikely to be satisfied for
both alternatives at the same time. If there are employees employed at the time the agreement
is made, a single enterprise agreement can be made with them. If the employer has not
employed any of the persons who will be necessary for the normal conduct of that enterprise
and who will be covered by the Agreement, and the other criterion is satisfied, a Greenfields
agreement can be made with an employee organisation. This provision sets up a regime in
which agreements with employees are available in the normal situation of an existing
enterprise with existing employees and only when no such employees are employed in a
genuine new enterprise can the alternative of a Greenfields agreement be made.
[33] The Agreement was purported to be made as a single enterprise agreement with
employees rather than a Greenfields agreement. The critical question is whether the criterion
for a single enterprise employee agreement is satisfied – not whether an agreement could have
been made as a Greenfields agreement with an employee organisation. The essential
requirements are whether the employees who voted to approve the agreement are “employees
who are employed at the time the agreement is made and who will be covered by the
Agreement” (s.172(2)) and whether the employees who voted were “employees of the
employer… that will be covered by the agreement” (s.182(1)). In our view the concepts are
relevantly identical. Two elements are involved. The employees must be employed at the time
the agreement is made and they must be covered by the agreement. Both elements involve
questions of fact.
[34] In this case employees of ALDI engaged in the Eastern Seaboard States were
canvassed to see if they wished to transfer to South Australia (and Western Australia). Some
employees who expressed an interest in a transfer to South Australia received a letter of offer
of on-going employment in the new Regency Park Region commencing when the new region
opens. The employees who accepted that offer were permitted to vote for the agreement.
There were no other employees working at Regency Park at the time as the distribution centre
and the stores had not commenced to operate.
[2016] FWCFB 91
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[35] In Cimeco v CFMEU11 a Full Bench considered the situation of an agreement made
with employees some of whom had not been “mobilised” to the new area of operation at the
time a vote was taken. The Full Bench considered the meaning of the phrase ‘the
employees…that will be covered by a proposed single enterprise agreement’ in s.182(1) of the
Act. It said:
“[49] As we have already noted, fourteen Cimeco employees voted to approve the
Midwest Agreement on 16 September 2011. Hence, in the usual course, the agreement
would be taken to have been ‘made’ on 16 September 2011. But at the time the
Midwest Agreement was purportedly made four of the Cimeco employees who voted
to approve the agreement did not fall within the area and scope of the Midwest
Agreement as set out in clause 3(a) of that agreement.
[50] Counsel for the appellant contended that the task of identifying who will be
covered by the agreement is ‘in a sense a factual exercise’. The four Cimeco
employees employed on the Marandoo Project were included in the vote because at
that time they had been ‘mobilised’ to go to the De Grussa Copper Plant. It was put to
counsel that the expression ‘will be covered’ means those actually falling within the
coverage clause at the time of the vote as opposed to those it was anticipated would be
covered by the agreement on the basis that they had been ‘mobilised’ to perform work
in the region covered by the agreement. Counsel responded to this suggestion in the
following terms:
“One runs the risk then of an argument that there’s not been a genuine
agreement because you’ve actually excluded people from the voting process,
people that you’ve identified who are going to be because - they’re mobilising.
If you know these people are going to - they will be covered and you exclude
them from the vote, then you run into an argument that the agreement hasn’t
been properly made, there’s no genuine agreement because you’ve excluded a
group of people who are to be covered. Just from a factual point of view, in our
respectful submission, the suggestion which appears to have been taken up by
his Honour that because it was anticipated that at a future point, employees
who were working on other projects, who were employees of this company
working on other projects outside of the area - the fact that at some future point
they are to be deployed, mobilised in and work at Meekatharra - that, in no
way, could affect, in our respectful submission, either of the two questions:
namely, was the group that was geographically distinct fairly chosen and it
would not affect in any way the genuine making of the agreement because all
those persons who had been identified as who would be covered participate in
the agreement-making process.”
[51] We do not find counsel’s submission persuasive. As we have previously
mentioned the expression ‘will be covered by the agreement’ in s.182(1) does not
indicate future likelihood but rather expresses a determinate or necessary consequence.
[52] It follows that the four employees working on the Marandoo agreement were not
entitled to vote to approve the Midwest Agreement because at the time of the vote they
did not fall within the area and scope of the agreement.”
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[36] Since that Full Bench decision the Federal Court has been called on to consider
aspects of the reasoning of this and other Full Bench decisions and the overall interpretation
of the relevant provisions of the Act. In Construction, Forestry, Mining and Energy Union v
John Holland Pty Ltd12 (John Holland) a Full Court of the Federal Court adopted a different
interpretation to the phrase ‘covered by the agreement’ in the context of the fairly chosen test
in s.186(3). Buchanan J (with whom Barker J agreed) said:
“A question of construction
34. One question which has troubled me is whether it is correct to accept, as
appears to have been the case, that the reference in s 186(3) to “the group of
employees covered by the agreement” is a reference to the whole class of employees
to whom the agreement might in future apply, rather than the group of employees
which actually voted on whether to make the agreement.
35. It may at once be observed that the second-mentioned group is fixed in time
and known, whereas the wider, potential group is not fixed at any point in time and
may be very difficult to evaluate or assess, depending on the breadth of coverage
specified by the terms of the agreement and, perhaps, the nature and complexity of the
employer’s business.
36. The virtual impossibility of knowing with certainty the composition of the
whole group within the potential coverage of the agreement, compared with the
complete certainty about those to whom a vote is in fact offered, makes the choice of
the first alternative construction an attractive one unless such a construction is
excluded by the terms of the statute. However, that is not the construction which has
so far been accepted and there appear to be sound reasons for preferring the other,
wider construction.
37. First, the traditional concepts of application and coverage, which are now
reflected in ss 52 and 53 of the FW Act, recognise the difference between actual
application (i.e. to then present employees) and potential coverage (extending to the
whole class of employees at any point in time). The procedural steps required for
making an agreement with employees focus, of necessity, on the need for majority
support by those present employees who will be covered by the agreement but once an
agreement is made the matters which require consideration by the FWC in relation to
whether an agreement must be approved are not necessarily confined in the same way.
38. Secondly, there are other indications in the FW Act that a distinction must be
made between the group of present employees who will be covered by an agreement
and the wider group who will be covered if the agreement is made. Indications of that
sort may be seen in the procedures to assist “good faith bargaining”, whereby a
bargaining representative (which may be a union – s 176(1)(b)) may apply to the FWC
for a “majority support determination” or a “scope order”. In either case, the FWC
must address the question (similarly to s 186(3) and (3A)) whether “the group of
employees who will be covered by the agreement was fairly chosen” and whether the
group is geographically, operationally or organisationally distinct (s 237(2)(c), (3A); s
238(4A)). In context, it appears clear that this is a wider group (corresponding to
potential coverage) than the group of present employees who wish to bargain or whose
immediate interests are those being represented.
[2016] FWCFB 91
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39. Thirdly, and perhaps most decisively, as counsel for the respondent pointed out
in the present case, s 186(3) and (3A) apply to both greenfields agreements and
agreements made with employees. They would have no context or operation in
relation to a greenfields agreement unless the wider view was taken.
40. That wider view is the one which has been taken by the FWC, and it was
accepted by all parties to the present appeal.
41. One reason I have spent some time examining the correctness of the common
assumption about this issue is that upon the view that the group to be considered under
s 186(3) and (3A) reflects potential (not present) coverage it will often (perhaps
usually) be impossible to state with much precision or certainty what that coverage
might entail in a practical sense in the years to come, or how the group might at any
particular point in time be composed. However, that seems to me to be the
consequence of the legislative scheme. The evaluation which the legislature has
committed to the FWC must therefore be carried out with that consequence being
understood and accepted. That is relevant to an examination of some of the findings of
the Full Bench.”
[37] Besanko J said:
1. I have had the advantage of reading in draft the reasons for judgment of
Buchanan J. I agree with his Honour that the appeal should be dismissed. Subject to
two matters, I agree with his Honour’s reasons.
2. First, I did not share his Honour’s doubts about whether the reference in s
186(3) of the Fair Work Act 2009 (Cth) (“the Act”) to “the group of employees
covered by the agreement” was a reference to the whole class of employees to whom
the agreement might in the future apply, rather than the group of employees which
actually voted on whether to make the agreement. In my opinion, the former
construction is clearly the correct one. That was the basis upon which this matter has
proceeded, and I did not understand either party on the appeal to argue to the contrary.
It is the approach taken in previous cases dealing with s 186(3) of the Act. More to the
point, it is the construction which accords with the other provisions in the Act. Section
53(1) of the Act provides that an enterprise agreement covers an employee or
employer, if the agreement is expressed to cover (however described) the employee or
the employer, and is to be contrasted with when an enterprise agreement applies to an
employee (s 52(1)). I agree that the other two matters identified by Buchanan J
(paragraphs 38 and 39) support the construction which I think is the correct one.
[38] In our view the concepts of ‘coverage’ and ‘application’ in sections 52 and 53 of the
Act provide the key to the interpretation of the phrase ‘who will be covered by the agreement’
in s.172(2)(a) and s.182(1). An enterprise agreement covers an employee if it is expressed to
cover the employee. An enterprise agreement applies to an employee in relation to particular
employment if the agreement covers them and the agreement is in operation.
[39] It is also relevant to consider the terms of s.186(2). In order to approve a single
enterprise employee agreement the Commission must be satisfied that the agreement has been
“genuinely agreed to by the employees covered by the agreement.”
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[40] Ascertainment of the correct interpretation might be assisted by considering the
following hypothetical example. Twenty employees from an existing operation are offered
on-going employment at a new location of the business. Twenty new employees are also
engaged for that business and commence employment prior to the existing employees
commencing employment in the new business. The twenty new employees are asked to vote
to approve an enterprise agreement and by majority they do so. The existing employees are
not given an opportunity to vote. It is unlikely in these circumstances that the Commission
could be satisfied that the agreement has been genuinely agreed to by the employees covered
by the agreement because half of the current employees covered by the agreement were not
permitted to vote. It is not relevant that the agreement does not apply to them at the time of
the vote.
[41] Hence for the purposes of giving logical and consistent meaning to common phrases in
the Act we consider it appropriate to apply the approach adopted by the Federal Court in
relation to the fairly chosen test. That approach, in over view, supplants the approach adopted
in Cimeco. The Federal Court’s approach entails two elements. The first involves determining
whether the persons are employees, while the second entails determining whether the
employees will be covered by the agreement after it is made. Application of the agreement is
not relevant.
[42] In the facts of this case we are of the view that the employees who accepted on-going
employment in the Regency Park region were employed by ALDI at the time the agreement
was made. Further, as their employment comprehended work within the scope of the Regency
Park Agreement they were covered by the Agreement. It was legitimate and necessary for
them to be included in the group of employees asked to approve the agreement. The resultant
agreement was made under s.182(1). It was a single enterprise agreement available to be
made under s.172(2)(a). The Agreement has been genuinely agreed to by the employees
covered by the Agreement. The first ground of appeal must therefore fail.
Fairly Chosen
[43] The SDA submits that the selection of the group was unfair because it undermined
collective bargaining in a manner which was not compatible with Part 2–4 of the Act and was
contrary to the purpose and policy of the Act. The basis for the submission is that a group of
seventeen employees were selected to make an agreement for a much larger group of
employees.
[44] The SDA submits that there is no indication in the materials filed with the application
for approval that the employees are appropriately representative of the employees ultimately
to be covered by the agreement, that is that they comprise a group which includes a
representative sample of those who are to be covered. The SDA submits that it is noteworthy
that seven of the seventeen selected by the employer to vote on the Agreement are Managers
or Assistant Store Managers. One is a Deputy Manager. The balance is made up of two store
assistants, three warehouse operators and three transport operators. The SDA submits that in
the circumstances, the Commission cannot be satisfied that the group of employees had been
fairly chosen.
[2016] FWCFB 91
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[45] The SDA submits that to the extent that its arguments are inconsistent with the Full
Court judgement in John Holland, it submits that the decision is wrong and should not be
followed.
[46] Further and in the alternative, the SDA submits that to the extent that John Holland is
correct, regard should be had to Buchanan J’s comments at [33]:
“There is no requirement that employees who vote to make an agreement must have
been in employment for any length of time, and there is no requirement that they
remain in employment after the agreement is made. Presumably, the presently
employed members of such a group will act from self-interest, rather than from any
particular concern for the interests of future employees. The potential for manipulation
of the agreement-making procedures is, accordingly, a real one. However, no
suggestion of that kind is made in the present case and the possibility may therefore be
put to one side for the purpose of the discussion. That is an important consideration
because it suggests, as the primary judge thought, that determination of whether the
group of employees was fairly chosen in the present case needed to bring to account
the business rationale for the choice, as well as deal with any possibility of unfair
exploitation. It was not irrelevant in that assessment to bear in mind, as the primary
judge said, that the agreement provided benefits, not detriments, for those to whom it
would apply.”
[47] The SDA submits that there was no evidence before the Deputy President which
would enable the Commission to determine whether there was a legitimate business rationale
for choosing the 17 employees. The Deputy President seems to have been informed, and
arguably proceeded upon the assumption, that the number of employees to be covered by the
agreement was only 17. The SDA submits that this is clearly incorrect. The SDA submits that
the use of past and present tense in the employer’s statutory declaration, for instance that there
are employees who are already “engaged in a retail store operated by ALDI…” arguably was
to convey the impression to the Deputy President that there was an existing enterprise
employing existing employees, and appears calculated to mislead.
[48] ALDI submits that permission to appeal ought not be granted in relation to the “fairly
chosen” issue. It contends that the SDA urges the Full Bench to depart from the law as
explained by the Full Court in John Holland. It says that this is an invitation to error which
must be rejected. It submits further that the SDA appears to concede that John Holland is an
insurmountable obstacle to success on the “fairly chosen” issue. This being so, permission to
appeal on this ground ought to be rejected.
[49] ALDI further submits that even more persuasive, if not compelling, is the fact that the
Commission has already expressly dealt with the way in which ALDI has organised its
operations and Agreements, in proceedings to which the SDA was a party. On 3 June 2013,
the Commission approved the ALDI Minchinbury Agreement 2012, the ALDI Stapylton
Agreement 2012 and the ALDI Derrimut Agreement 2012.13
[50] ALDI contends that given the above, it becomes apparent why ALDI did not see what
transpired in relation to the approval of the present agreement as controversial.
[51] ALDI submits that the requirements of ss.186(3) and (3A) of the Act have been met
with respect to the Agreement and this ground of appeal must fail.
[2016] FWCFB 91
13
[52] John Holland concerned judicial review of a Full Bench decision of this Commission
that found that an agreement made with three employees for a project that was expected to
employ many more employees in the future did not pass the fairly chosen test. The decision
applied an approach to the Fairly Chosen test adopted in various other Full Bench decisions
commencing with Cimeco. At first instance Siopis J said:14
25 At the heart of the applicant’s complaint in relation to its first broad ground of
review, was the contention that the Full Bench fell into jurisdictional error by reason
of a misconstruction of s 186(3) and s 186(3A) of the Fair Work Act.
26 In my view, for the reasons which follow, the Full Bench fell into
jurisdictional error because it misconstrued s 186(3) and s 186(3A) and so
misconceived its task in applying those two subsections.
27 The statutory scheme proceeds on the basis that the power to make an
agreement to which s 186(3) applies, resides in the parties to the agreement, namely,
in this case, the employer and the employees covered by the agreement who were
employed at the same time that the agreement is made (s 172(2) of the Fair Work Act).
Sections 180, 181(1) and 182(1) specifically recognise that an agreement is “made”
when the majority of the employees covered by the agreement who are employed at
that time, vote in favour of the agreement.
28 The Fair Work Act goes on to provide that Fair Work Australia must,
nevertheless, approve the agreement made by those persons. Section 186 and s 187 of
the Fair Work Act set out the matters in respect of which Fair Work Australia must be
satisfied. One of these matters is that the agreement has been genuinely agreed to by
the employees covered by the agreement. This, of course, refers back to the
employees who are covered by the agreement and were employed at the time that the
agreement was made. Also, importantly, Fair Work Australia must be satisfied that
the agreement met the better off overall test.
29 It is in this context that the requirement under s 186(3) that Fair Work
Australia be satisfied that the group of employees covered by the agreement was fairly
chosen, arises. The content of the matters in respect of which Fair Work Australia is
to be satisfied under s 186(3) is, of course, informed by a proper construction of the
Fair Work Act.
30 First, it is appropriate to observe that s 186(3) calls upon Fair Work Australia
to be satisfied that the group of employees covered by the agreement “was” fairly
chosen. It is of significance that the past tense “was” is used. This directs Fair Work
Australia to have regard to the conduct of those persons who made the agreement and
the content of that agreement. In other words, the question is whether the parties that
made the agreement acted fairly in choosing those employees to be covered by the
agreement. The question of fairness of choice arises because those employees who are
“chosen” to be covered by the agreement will, ex hypothesi, be the better off overall
than those employees who were not “chosen” to be covered by the agreement. Thus,
for example, if only some of a group of employees doing the same work and in the
same location were chosen to be covered by an agreement on the basis of their place of
birth or their support of a particular political party, the group of employees chosen to
[2016] FWCFB 91
14
be covered by the agreement would not have been fairly chosen. In this regard, it is
also of some interest to observe that s 186(3) follows immediately after s 186(2)(d),
which is the provision in the Fair Work Act which requires that the agreement satisfy
the better off overall test.
31 In my view, it is also necessary in determining the task to be undertaken by
Fair Work Australia in applying s 186(3) to have regard to the terms of s 186(3A). Of
particular significance is the characterisation of the specific criteria prescribed in s
186(3A) as mandatory considerations to which regard is to be had in assessing
whether the group of employees covered by an agreement has been fairly chosen,
when not all the employees of a single employer are covered by the agreement.
32 Each of the three criteria mentioned as mandatory considerations describes a
legitimate business related characteristic. The reason for this, in my view, is 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 of the kind referred to at [30] above.
33 The Fair Work Act contemplates, therefore, that in applying s 186(3) and s
186(3A), Fair Work Australia will, by reference to the coverage clause, undertake an
examination of the criteria by which the group of employees was chosen. In
determining whether the group was fairly chosen, Fair Work Australia will have
regard to whether the criteria reflect the criteria identified in s 186(3A) or some other
like legitimate business related characteristic, rather than an extraneous characteristic
of the kind referred to at [30] above.
34 In my view, there is nothing in the language of s 186(3) and s 186(3A) of the
Fair Work Act which conditions the exercise by Fair Work Australia of the power
under s 186(3) to approve an agreement, upon Fair Work Australia being satisfied as
to the number of employees who will, or may, during the term of the agreement, be
covered by the agreement.
35 Accordingly, in my respectful view, in finding that it was unable to make the
assessment of whether the group of employees was fairly chosen because it could not
say with any certainty how many employees would, or may, be covered by the
agreement throughout its term, the Full Bench misapprehended its statutory task and
fell into jurisdictional error.
36 It was common cause that there were no agreements of the kind referred to in
cl 1.2 in existence at the time that the agreement was made. There was nothing unfair
in including a clause which contemplated that circumstances may arise when
employees who would otherwise have been covered by this agreement may be covered
by a different agreement. However, in my view, the inclusion of a clause which
contemplated a potential change in circumstances did not affect the fairness of the
criteria chosen as identifying a group of employees who were, in the absence of such
circumstances, to be covered by the agreement. In other words, the inclusion of cl 1.2
did not preclude Fair Work Australia from embarking upon an assessment of the
fairness of the fundamental criteria specified by the makers of the agreement.
37 Further, in my view, the words “was fairly chosen” in s 186(3) are not to be
construed as “was chosen in a manner which would not undermine collective
[2016] FWCFB 91
15
bargaining”. Notwithstanding the patient argument of Mr Reitano at the hearing, I am
of the view that s 578(a) of the Fair Work Act does not support giving that
construction to the words of s 186(3).
38 Section 578(a) relevantly provides that Fair Work Australia must, in exercising
its powers, take into account any objects of the Fair Work Act and the objects of any
part of the Act. However, I am of the view that the general words in s 578(a) do not
permit Fair Work Australia to imbue the words of the statute with concepts which are
not to be found in those words when properly construed. In my view, the proper
construction of s 186(3) is informed by s 186(3A). That section prescribes the nature
of the considerations to which Fair Work Australia is to have regard in exercising its
power under s 186(3). Therefore, in my view, Fair Work Australia is not at liberty to
exercise its s 186(3) powers on some other basis in reliance upon the general
provisions in s 578(a) of the Fair Work Act. In other words, the general words in s
578(a) must yield to the specificity embodied in s 186(3A) in relation to the proper
construction of the words “was fairly chosen” in s 186(3).
39 Further, there are specific provisions in Pt 2-4 of the Fair Work Act which give
Fair Work Australia powers to withhold approval on grounds which reflect conduct
inconsistent with the objects of Pt 2-4 identified in s 171. Thus, for example, s 187(2)
permits Fair Work Australia to withhold approval for an agreement if approval would
not be consistent with, or would undermine, good faith bargaining. It is significant,
therefore, that there is no similar provision permitting Fair Work Australia to withhold
approval on the grounds that it is of the view that the approval of the agreement would
undermine collective bargaining. In the absence of that power having been conferred
expressly on Fair Work Australia, it is, in my view, not open to Fair Work Australia to
exercise such a power under the rubric of s 186(3) of the Fair Work Act.
40 Plainly, the Full Bench was of the view that there was something wrong with
three employees being able to make an agreement which covered work classifications
other than their own. However, if there is a lacuna in the Fair Work Act, on which I
express no view, then the remedy would appear to lie in legislative amendment.
41 In light of the conclusion to which I have come, it is unnecessary for me to
deal with John Holland’s second argument under the first broad ground of review, nor
its second ground of review based on procedural fairness.
[53] On appeal from that decision, Buchanan J (with whom Barker J agreed) said:
62. Although it is important to give full weight to the independent discretion of the
FWC, and the Full Bench, I have come to the view that the findings of the primary
judge with regard to each of the jurisdictional errors which he concluded that the Full
Bench had made should not be disturbed.
63. The first error is revealed by [25] of the Full Bench decision set out earlier. It
is an inevitable consequence of the fact that s 186(3) and (3A) are addressed to
coverage in the wider sense I earlier identified, over a period of up to four years, that
there will be very many cases where it will not be possible to meet the test posed by
the Full Bench. In my respectful view, that test involved a misconstruction and
misapplication of the statutory principles.
[2016] FWCFB 91
16
64. It was not relevant to an assessment of the question posed by s 186(3) that the
Full Bench did not know how many employees would, or might, in future be covered
by site specific agreements and hence excluded from the operation of the enterprise
agreement. The possibility that the agreement might not apply to unknown future
employees on unknown future sites did not alter the “coverage” of the agreement even
though it might have an effect on whether the agreement “applied” to particular
employees at particular sites. The criticism made by the Full Bench would apply with
equal force to any agreement with the capacity to operate at future sites or projects not
in existence, or actual contemplation, when the agreement was made. The extent of
application of the agreement could not be known with certainty. In the words of the
Full Bench, it would not be possible to make “any definitive finding” about that
matter. However, in my respectful view that is a different position from the
ascertainment of the “group of employees to be covered”, a task which involves an
appreciation of the nature of the work to be regulated and rewarded by the agreement
rather than how many employees may, in the years to come, carry out the work, or
where.
65. I therefore agree with the primary judge that the Full Bench made a
jurisdictional error about this issue.
66. The second error found by the primary judge is crystallised in the following
passages in the Full Bench decision:
[30] ... In this case three employees on one site have bargained and agreed on an
agreement with potentially very wide application to other employees who have not
engaged in bargaining under Part 2-4 of the Act and will not be given the
opportunity to bargain. ...
...
[34] ... We also consider that the operation of the Agreement, as made with the
three employees, would undermine collective bargaining by other employees in a
manner not compatible with the objects of Part 2-4, ...
67. Although the Full Bench was directed by s 578(a) to take into account the
objects of Part 2-4 (as stated in s 171) it is far from clear how the Full Bench was able
to conclude that an agreement made with three employees could “undermine”
collective bargaining, or that it was relevant to state any conclusion in such broad
terms.
68. It is not correct, with respect, to say (or suggest or infer) as the Full Bench did
in [30], that there were in fact other employees who had been denied a chance to
bargain. The “other employees” referred to were potential (and unknown) possible
future employees who would never have a chance to bargain unless there was no
agreement in place when they were engaged. Deprivation of that opportunity would
arise in the case of any employee engaged during the term of an agreement.
69. It should be noted that the statutory objective in s 171(a) (which I set out
earlier) refers to “collective bargaining in good faith”, but it is apparent that this
[2016] FWCFB 91
17
statutory objective, and the reference in s 171(b) to “good faith bargaining”, must be
understood in the overall context set by Part 2-4 of the FW Act.
70. Neither “collective bargaining” nor “good faith” is defined by the FW Act.
There are, however, a number of procedural directions and discretions in the FW Act
which concern “good faith bargaining requirements” (see s 228 and following). They
include facilities for bargaining representatives to seek bargaining orders, majority
support determinations and scope orders. None of those procedures was relevant to the
present case.
71. It has not been suggested that it was impermissible for three employees to be
asked to make an agreement or vote to do so. The FW Act permits such an agreement
to be made and requires that it be approved if the statutory tests are met. Unless the
proposed agreement failed to meet a relevant statutory test there could be no basis for
introducing a further, more general, requirement of the kind adopted by the Full
Bench.
72. In my respectful view, the criticism expressed by the Full Bench in [30] and
[34] of its decision which I set out earlier was misplaced. The “employees” to whom
the Full Bench referred were future employees. It was not to the point that an
agreement was made before some employees were engaged: that was a feature of the
process. It would be the inevitable result also of any greenfields agreement when no
employee covered by the agreement would have an opportunity to vote to accept its
terms. Ironically, in a sense, the agreement did provide the possibility of collective
bargaining on a site by site or project by project basis but the Full Bench appeared to
think this a disabling rather than meritorious feature.
…
84. I agree with the conclusion of the primary judge that the Full Bench made a
second jurisdictional error in its reliance upon its specific finding that the agreement
would undermine collective bargaining, for the reasons which it gave.
[54] Besanko J said:
3. Secondly, I think the concept of collective bargaining will have quite a limited role in
determining whether the group of employees covered by the agreement was fairly
chosen. It is true that enterprise-level collective bargaining is referred to in the object
of the Act (s 3(f)), and that s 578(a) requires the Fair Work Commission to take into
account the objects of the Act in performing functions or exercising powers in relation
to a matter under the Act. Furthermore, the special expertise of the Fair Work
Commission must be acknowledged. Nevertheless, it was not argued by the appellant
that an agreement voted on by employees falling within the particular job
classifications could not cover other job classifications. To apply a criterion of
collective bargaining in those circumstances involves a comparison between the
number of employees who voted on the agreement, and the number who might be
covered by the agreement. Reasonable minds not only might differ but are likely to
differ as to when the comparison is such that collective bargaining is engaged as a
relevant consideration under s 186(3). That suggests, to my mind, that if the concept
[2016] FWCFB 91
18
of collective bargaining has a role in the determination of the issue posed by s 186(3)
of the Act, it is quite a limited one.
[55] In our view the submissions of the SDA on this point are misconceived. The test under
s.186(3) as to whether the group of employees covered by the Agreement is fairly chosen
requires consideration of the employees covered by the agreement – not the employees who
vote for the agreement at the time it is made. The arguments proceed on an erroneous premise
and seek to elevate concerns about the objects of the Act in a way that has been expressly
overruled by a single judge and unanimously by a Full Court of the Federal Court. In our view
the second ground of appeal must fail.
Better Off Overall Test (BOOT)
[56] The SDA submits that the BOOT was not properly applied because rosters that were
submitted as typical were not in operation at the relevant operations because they had not, at
that time commenced. It submitted an analysis of entitlements which it submitted established
that open ended provisions reserve a discretion in the employer that raise questions as to
whether the agreement passes the BOOT.
[57] ALDI submits that the Agreement, as with other ALDI Agreements contains the
following clause that it submits contains a mechanism for ensuring that it meets the BOOT:
“The remuneration paid for each classification has been set to ensure employees are
better off overall under this Agreement than under the relevant Modern Award which
would otherwise apply. Where an Employee considers they are not better off overall
under this Agreement than under the relevant Modern Award, they may request a
comparison of the benefits received for a nominated period of time under this
Agreement and the benefits which would otherwise be provided under the relevant
Modern Award. Any shortfall in total remuneration which would otherwise be payable
under the Modern Award will be paid to the Employee in the next pay period after the
review is completed. If the Employee and ALDI cannot reach agreement on the
remuneration which should be paid, the Resolution of Disputes provision of this
Agreement will be followed and the parties will agree to the Fair Work Commission
arbitrating and making a binding determination to resolve the matter.”
[58] This clause creates an enforceable right to payments to employees equal to or higher
than those contained in the award. There is no limitation on its availability. The position is
clearly distinguishable from the undertaking considered by a Full Bench in CEPU v Main
People.15 In our view the Deputy President properly considered the BOOT and reached a
decision based on a sound analysis. It has not been demonstrated that there is any appealable
error in the decision under appeal. We dismiss this ground of appeal.
Conclusions
[59] Given the important interpretation issues arising from the grounds of appeal we have
decided to grant permission to appeal.
[60] As we have decided that each ground of appeal must fail we dismiss the appeal.
[2016] FWCFB 91
19
VICE PRESIDENT
Appearances:
Mr G Hatcher, SC and Ms A Perigo, counsel on behalf of Aldi.
Mr W Friend, QC on behalf of the SDA, with Mr D Macken and Mr J Tierney.
Mr D Blair on behalf of the TWU.
Hearing details:
2015.
Melbourne—Video Link to Adelaide.
20 November.
Final written submissions:
SDA on 30 October 2015.
TWU on 30 October 2015.
ALDI on 13 November 2015.
Printed by authority of the Commonwealth Government Printer
Price code C, PR575862
1 [2015] FWCA 6373.
2 [2013] FWC 3495, [2013] FWCA 4028, [2013] FWCA 8632, [2015] FWCA 4363.
3 [2013] FWC 3495 per Boulton J.
4 [2015] FWCA 4363.
5 Coal and Allied v AIRC [2000] HCA 47; 203 CLR 194; 74 ALJR 1348; 99 IR 309; 174 ALR 585 (31 August 2000).
6 Coal and Allied v AIRC [2000] HCA 47; 203 CLR 194; 74 ALJR 1348; 99 IR 309; 174 ALR 585 (31 August 2000) at [19].
7 House v The King (1936) 55 CLR 499 at [504]-[505] per Dixon, Evatt and McTiernan JJ.
8 Pawel v AIRC (1999) 94 FCR 231.
9 CEPU v Main People [2014] FWCFB 8429 at [5]-[7]; CEPU v Sustaining Works [2015] FWCFB 4422 at [18].
10 CEPU v Main People [2014] FWCFB 8429 at [5]-[7]; CEPU v Sustaining Works [2015] FWCFB 4422 at [18].
11 [2012] FWAFB 2206.
12 [2015] FCAFC 16.
13 [2013] FWC 3495 per Boulton J.
14 [2014] FCA 286.
15 [2015] FWCFB 4467.
OF THE THE SEAT WORK COMMISSION
