[2017] FWCFB 5826
The attached document replaces the document previously issued with the above code on 27
November 2017.
Typographical error in paragraph [27]
Associate to Vice President Hatcher
Dated 24 May 2018.
1
Fair Work Act 2009
s.604 - Appeal of decisions
Aerocare Flight Support Pty Ltd t/a Aerocare Flight Support
v
Transport Workers' Union of Australia;
Australian Municipal, Administrative, Clerical and Services Union
(C2017/5221)
VICE PRESIDENT HATCHER
DEPUTY PRESIDENT BINET
COMMISSIONER CAMBRIDGE SYDNEY, 27 NOVEMBER 2017
Appeal against decision [2017] FWC 4311 of Commissioner Wilson at Melbourne on 31
August 2017 in matter number AG2017/1424.
Introduction
[1] Aerocare Flight Support Pty Ltd (Aerocare), a provider of aviation ground handling
services, has applied for permission to appeal and appealed a decision of Commissioner
Wilson issued on 31 August 20171 (Decision). In the Decision, the Commissioner dismissed
an application made by Aerocare for the approval of the Aerocare Collective Agreement
2017 (2017 Agreement) on two bases: first, he was not satisfied for the purpose of s 186(3) of
the Fair Work Act 2009 (FW Act) that the group of employees covered by the 2017
Agreement was “fairly chosen” and, second, he was also not satisfied for the purpose of s
186(2)(d) that the Agreement passed the “better off overall test” (BOOT). In respect of both
of these grounds of rejection, the Commissioner found that it was not appropriate to ask
Aerocare for undertakings to address these matters as any undertakings would lead to
substantial changes to the 2017 Agreement.
[2] Aerocare’s notice of appeal contained three grounds of appeal, the first two of which
were supported by detailed sub-grounds or particulars. The first ground contended that the
Commissioner erred in finding that the employees covered by the 2017 Agreement were not
fairly chosen, the second that he erred in finding that the 2017 Agreement did not pass the
BOOT, and the third that he erred in concluding that any undertakings about his BOOT
concerns would amount to substantial changes to the 2017 Agreement without first
identifying the content of those undertakings or giving Aerocare an opportunity to be heard on
the issue.
1 [2017] FWC 4311
[2017] FWCFB 5826
DECISION
E AUSTRALIA FairWork Commission
[2017] FWCFB 5826
2
[3] On 12 October 2017, prior to the hearing of the appeal, lawyers acting for Aerocare
sent correspondence to the Commission which advised that Aerocare had that day instituted
proceedings in the Federal Court of Australia seeking declarations concerning the proper
construction of the Airline Operations - Ground Staff Award 2010 (Award) in connection
with its use of “split shifts”. The correspondence contended that proper interpretation of the
Award in this respect was fundamental to whether the Agreement passed the BOOT and the
disposition of grounds 2 and 3 of Aerocare’s appeal. On that basis it was requested that the
determination of those grounds of the appeal be adjourned pending the Federal Court’s
determination of Aerocare’s application, and that the appeal hearing should proceed in
relation to ground 1 only.
[4] The application was opposed by the respondents to the appeal, the Transport Workers'
Union of Australia (TWU) and the Australian Municipal, Administrative, Clerical and
Services Union (ASU). On 13 October 2017 the parties were advised that the Commission
would not at that stage grant Aerocare’s adjournment request in relation to grounds 2 and 3 of
its appeal, but that the issue could be re-agitated at the hearing of the appeal on 20 October
2017. When the appeal hearing commenced on that day, Aerocare again pressed its
application for the adjournment of the hearing of grounds 2 and 3 pending the determination
of its Federal Court application, and this was again opposed by the TWU and the ASU. After
hearing the parties’ submissions concerning Aerocare’s adjournment application, we
determined that we would proceed to hear the parties’ submissions concerning ground 1 of the
appeal, issue a decision in relation to that ground, and then give the parties an opportunity to
be heard further in relation to how the rest of the appeal should be determined. The appeal
proceeded on that basis, and this decision is accordingly concerned with ground 1 of
Aerocare’s appeal only.
Relevant provisions of the Agreement
[5] Clause 2, Parties of the 2017 Agreement identifies that it was made between Aerocare
and “Collectively, the Company Employees who perform the work in one of the classifications
contained in this Agreement (referred to as the employee or employees)”. Clause 3, Coverage,
Scope and Recognition provides, in subclause 3.3, that “The parties to the Agreement will be
the Company and the employees employed by it throughout Australia and deployed in
Australia and temporarily overseas in the classifications contained in this Agreement”. There
is no special definition given to the term “employee” as used in these two provisions. Clause
7, Classifications/Grading Structure, requires in subclause 7.2 that employees upon
engagement be graded into one of the classifications in Schedule A, and subclause 7.3 and 7.4
set out processes by which such a grading may be reviewed and an employee may progress
into a higher classification. Schedule A sets out the appointment criteria and duties of the
classifications in the 2017 Agreement, namely “Airline Service Trainee”, “Airline Service
Agent”, “Advanced Airline Service Agent”, employees performing various identified
categories of “Special Duties”, “Supervisor” and “Senior Supervisor”.
[6] Clause 9 of the Agreement provides “Employees will be engaged in the PSE category
of employment and work may be performed in one or more shifts per day”. “PSE” is an
acronym for “Permanent Secure Employee”, although incongruously clause 5, Explanation of
terms used in this Agreement, contains the following definition:
[2017] FWCFB 5826
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“Permanent Secure Workers (PSE), for purposes of this Agreement means an
employee who is available for shifts at any time of the day over 7 days of the week,
who may be permanent part-time or full time (see clause 9.5.2).”
[7] Clause 9, Engagement, provides in subclause 9.1 that “Employees will be engaged in
the PSE category of employment and work may be performed in one or more shifts per day”.
Subclause 9.2 contains a commitment by Aerocare to “long term sustainable and permanent
jobs and ongoing career development opportunities”. Clause 9 otherwise sets out the terms
and conditions of engagement for PSEs, including that they are entitled to a minimum of 60
hours pay for each roster period of four weeks (except in specified circumstances) and to be
rostered for four consecutive hours on any shift. The 2017 Agreement contains no provisions
pertaining to casual employment.
[8] Item 2.1 of Schedule A sets out the rates of pay for PSEs only. The rates are expressed
as “all-inclusive” hourly rates of pay for Monday-Friday, Saturday, Sunday and Public
Holidays. No provision is made for any increase in pay during the operation of the 2017
Agreement, although all classifications except that of Airline Service Trainee have additional
pay increments for each year of service in the classification up to 7 years. The rates appearing
in the 2017 Agreement are, according to the submissions made, 5% higher than the existing
rates in the currently applicable agreement, the Aero-Care Collective Agreement 2012 (2012
Agreement).
Relevant statutory provisions
[9] Subdivision B of Div 4 of Pt 2-4 of the FW Act is concerned with the approval of
enterprise agreements by the Commission. The general requirements for approval of
enterprise agreements are set out in s 186, and additional requirements are set out in s 187.
Section 186(1) provides for the following “Basic rule” concerning approval:
(1) If an application for the approval of an enterprise agreement is made
under subsection 182(4) or section 185, the FWC must approve the agreement under
this section if the requirements set out in this section and section 187 are met.
[10] The “fairly chosen” approval requirement is set out in s186(3) and (3A) as follows:
Requirement that the group of employees covered by the agreement is fairly chosen
(3) The FWC must be satisfied that the group of employees covered by the agreement
was fairly chosen.
(3A) If the agreement does not cover all of the employees of the employer or
employers covered by the agreement, the FWC must, in deciding whether the group of
employees covered was fairly chosen, take into account whether the group is
geographically, operationally or organisationally distinct.
[11] Section 186(2)(a) requires that the Commission be satisfied that, if an enterprise
agreement is not a greenfields agreement, it was “genuinely agreed” to by the employees
covered by it, and s 188 sets out when employees can be said to have genuinely agreed to an
agreement. The requirement that the Commission be satisfied that an agreement passes the
BOOT is set out in s 186(2)(d), and the operation of the BOOT is explicated in s 193. The
[2017] FWCFB 5826
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capacity to address concerns that an enterprise agreement does not meet the requirement of ss
186 and 187 by the provision of undertakings is dealt with in s 190. It is not necessary to set
out these provisions since they do not arise directly for consideration in relation to ground 1
of the appeal.
The Decision
[12] It is only necessary to refer to those parts of the Decision which are relevant to the
Commissioner’s conclusion concerning the “fairly chosen” requirement. At the hearing, the
TWU and the ASU mounted an argument that the Agreement was not genuinely agreed
because casual employees employed by Aerocare, who it was contended were covered by the
Agreement, had not been given the opportunity to vote upon it. In his consideration of this
argument, the Commissioner firstly found that the Notices of Employee Representational
Rights issued by Aerocare on 27 January and 3 March 2017, because they indicated that the
scope of coverage of the proposed new agreement would be the same as for the 2012
Agreement then in operation, included casual employees, except for “Leader 3” employees.2
However on 15 March 2017 Aerocare sent to “relevant employees” a draft agreement which
would cover only PSEs (below the level of Leader 3) and not casual employees. The
Commissioner said in this respect (footnote omitted):
“[85] Why the second NOERR [Notice of Employee Representational Rights] was sent
to all employees, but within 2 weeks Aerocare decided to narrow the scope of its
bargaining to only part-time employees, deliberately excluding more than 500
employees from the bargaining process has been inadequately explained. At best, its
evidence about this change is thin – it wanted to incentivise casual employees to shift
to part-time status. There is no evidence before the Commission to the effect that
Aerocare notified those covered by the 2012 Agreement that it proposed to restrict the
2017 Agreement to a class of employees narrower than that notified in the NOERRs.”
[13] The Commissioner ultimately rejected the unions’ “genuinely agreed” argument on
the basis that, upon an analysis of the coverage terms of the 2017 Agreement, whilst it was
poorly drafted it was to be understood as not covering casual employees.3 There is no
challenge to that conclusion in the appeal.
[14] In his consideration of the “fairly chosen” issue, the Commissioner began by referring
in detail to Aerocare’s submission that the exclusion of casual employees was justifiable by
reference to its “strategic decision” to phase out casual employment, and in this respect
quoted Aerocare’s written submissions to the following effect:
“54. The Applicant submits that:
A There has been no unfairness to casuals employed by Aerocare; and
B There is no unfairness to the employees who are covered by CA17 [the Agreement],
namely the PSEs; because:
(a) Casual employment is being phased out of Aerocare;
2 Decision at [81]-[83]
3 Decision at [90]-[93]
[2017] FWCFB 5826
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(b) Significant numbers of Aerocare casuals have already converted to PSE (currently
387 casuals – down from 1014 at the time of making CA12 [2012 Agreement]);
(c) More conversions to PSE are expected after CA17 is approved.
(d) The casuals who remain will administratively receive enhanced pay upon approval
of CA17;
(e) Secure permanent employment has long been advocated by the union movement in
Australia; and
(f) The Aerocare business model no longer accommodates the hiring of further
casuals.”4
[15] The Commissioner also referred to the evidence of Mr Gregory Shelley, Aerocare’s
General Manager Employee Operations, to the effect that at the commencement of the access
period for the Agreement Aerocare had 1370 PSEs and 597 casual employees but this had
reduced to 389 by 5 July 2017, and that this was part of a deliberate strategy to move
employees from one category of employment to another and the shift was expected to
continue.5
[16] In relation to the matters required to be taken into account under s 186(3A), the
Commissioner made the following findings:
“[112] In this regard there is no geographic distinction between the group chosen to be
covered by the 2017 Agreement and casual employees. The evidence does not support
a finding that casual employees and PSEs do not physically work alongside one
another. There is no evidence that some ports employ only casual employees and
others only PSEs. There is no evidence that certain positions or classifications or jobs
are performed by casual employees and others only by PSEs.
[113] It is also the case that there is insufficient evidence for the Commission to find
that there is an operational distinction between the group as chosen to be covered by
the 2017 Agreement and casual employees.
[114] Finally it is the case that there is insufficient evidence that there is an
organisational distinction between the group to be covered by the 2017 Agreement and
those who are not. While the argument may be put forward that, by the very nature of
their contract of employment, there is an organisational distinction between persons
employed on a casual basis and those employed on a part-time or full-time basis, there
is insufficient evidence that this goes beyond the nature of the contract of employment
and into the work which is undertaken for Aerocare by the employees in the different
contractual categories of employment.”
[17] The Commissioner then expressed the following conclusions about the “fairly chosen”
requirement:
4 Decision at [109]
5 Decision at [110]
[2017] FWCFB 5826
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“[115] On the basis of the material before the Commission, I am not persuaded that the
group of employees covered by the 2017 Agreement was fairly chosen. There is no
evidence before the Commission of a sufficient nature that would cause me to be of
the view that the restriction of the 2017 Agreement to PSEs beneath the Leader 3 level
allows a finding that the group of employees to be covered by the Agreement was
fairly chosen, taking into account whether it is geographically, operationally or
organisationally distinct. Instead the finding is available to the Commission that the
selection of the group was arbitrary and discriminatory.
[116] Cimeco, referred to above, held that it is appropriate to have regard to the
interests of the employer, such as enhancing productivity. In this matter, Aerocare’s
case included the proposition that it desired to incentivise the shift from casual
employment to part-time, PSE employment, and that approval of the 2017 Agreement
would do that. I accept that it might. However, incentivisation in the form put forward
by Aerocare comes at the price of excluding casual employees from bargaining for a
new agreement and ultimately excluding them from the benefits, such as they may be,
of the 2017 Agreement. The only basis of their exclusion from the 2017 Agreement is
that they are employed as casual employees. By all accounts they work in the same
locations as PSE employees and they perform the same work, for the same
supervisors.
[117] On no objective analysis of the evidence before the Commission can it be found
that the work of Aerocare’s PSE employees is either geographically, operationally or
organisationally distinct to its casual employees.
[118] As a result the Commission is not satisfied that the group of employees covered
by the 2017 Agreement was fairly chosen.”
[18] The Commissioner then addressed the question of whether his lack of satisfaction that
the “fairly chosen” requirement was met could be addressed by the provision of undertakings
pursuant to s 190:
“[121] I do not consider it appropriate in the circumstances to ask for an undertaking in
respect of my finding that the group of employees covered by the 2017 Agreement
was not fairly chosen because the result of seeking such an undertaking would, in my
view, lead to substantial changes to the 2017 Agreement. Many hundreds more
employees would be brought into the Agreement and its contents would need to be
modified in substantial regards to provide for casual rates of pay and other provisions
specific to the employment of casual employees. Further, it is a matter of fact that
none of the employees in question were afforded an opportunity to vote on the
Proposed Agreement.”
The appeal ground and submissions
[19] Appeal ground 1 in its entirety was as follows:
“Ground 1- the erroneous "fairly chosen" finding at [115]-[118] and [193] of the
Decision
[2017] FWCFB 5826
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In concluding that he was not satisfied that the group of employees to be covered
by the Agreement (the chosen group) was fairly chosen for the purposes of
s.186(3) of the FW Act, the Commissioner erred in the following respects:
a) in finding that the chosen group, being the permanent secure employees
(PSEs), was not organisationally distinct from the casual employees:
1) the Commissioner imported an unnecessary requirement to provide
evidence beyond the distinct nature of the engagement of PSEs versus
casuals;
2) the Commissioner misapplied s 186(3A) and failed to take into
account a mandatory consideration;
b) further, the Commissioner, having made the finding that the group of
employees was not geographically, operationally or organisationally distinct,
failed to give that matter due weight and then have regard to all other
relevant considerations in deciding whether the group was fairly chosen.
c) the Commissioner failed to take into account the following relevant
considerations:
1) the appellant had a logical business rationale for excluding casuals from
the scope of the Agreement - it did not want to employ operational
employees as casuals anymore and wanted to encourage the casual
employees to join the PSE ranks;
2) the commitment to employees covered by the Agreement in clause 9.2
of "long term, sustainable and permanent jobs and ongoing career
development opportunities".
3) the appellant was only going to employ operational employees as PSEs
and was not going to employ any more of them as casuals;
4) the appellant gave casual employees the option of transferring to a PSE
(including after approval of the Agreement) and being covered by the
Agreement or remaining as casuals under the existing enterprise
agreement;
5) casual employees were and were to continue to be paid a loading
on their wages to compensate for the casual nature of their work and be
engaged on an hourly basis;
6) the casual employees were to receive a 5% pay increase on approval of
the enterprise agreement backdated to 19 February 2017;
7) the casual employees would no longer have to pay the car parking co-
contribution on approval of the enterprise agreement.
[2017] FWCFB 5826
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d) the Commissioner's conclusion was based on the following erroneous
findings and irrelevant considerations:
1) finding at Decision [115] that the selection of the chosen group was
"arbitrary", despite the evidence of the appellant as to the logical
business rationale;
2) finding at Decision [115] that the selection of the chosen group was
"discriminatory" (presumably in an adverse sense), in the absence of
evidence or consideration of any adverse impact on casuals caused by
the selection of the chosen group that would render the selection of the
chosen group unfair in respect of casual employees;
3) finding at Decision [116] that the selection of the chosen group
meant that casual employees were "excluded from bargaining for a
new agreement", when there was no evidence or available inference
that the selection of the chosen group had any such effect on casuals.”
[20] In support of this appeal ground, Aerocare submitted firstly that the Commissioner
misunderstood and misapplied the concept of organisational distinctiveness in that, while
acknowledging that PSEs and casual employees were engaged in different contractual
categories, he proceeded on the basis that Aerocare had to prove that the work performed by
the employees was organisationally distinct. This, it was submitted, imported an extraneous
requirement not found in the natural meaning of the text and structure of s 186(3A). The
requirement for organisational distinctiveness was concerned with whether the group of
employees were distinct in an organisational sense, with “organisation” bearing the broad
meaning of any process or act of organising, or anything which is organised and with one
relevant definition being “a body of person organised for some end or work”. Section 186(3A)
required the Commission to consider whether the group chosen by the parties to be covered
was based on a “legitimate business related characteristic” as opposed to arbitrary or
extraneous criteria. Aerocare had traditionally organised its labour force by employing PSEs
and casuals, and the two groups had distinct bases for engagement and were recognised as
distinct types of employment under the relevant modern award and under the 2012
Agreement. Aerocare, it was submitted, made a legitimate business decision as to the choice
of the scope of the 2017 Agreement, in that it no longer wanted its labour to be organised as
comprising both PSEs and casuals, and wanted to encourage the existing casual employees to
agree to become PSEs. By importing a requirement of distinctiveness as to work, the
Commissioner misapplied s 186(3A), erroneously discarded Aerocare’s legitimate business
decision as to scope, and failed to take into account a mandatory consideration that the chosen
group was organisationally distinct.
[21] Secondly, Aerocare submitted that, separate from s 186(3A), the Commissioner failed
to take into account a range of relevant factors, including that it had a business rationale for
excluding casuals, the commitment in subclause 9.2 of the 2017 Agreement, the intention not
to employ any more operational employees as casuals, the option given to casuals to convert
to PSEs or remain under the 2012 Agreement, the fact that casual employees were to continue
to be paid a loading on their wages and in addition would receive a 5% pay increase back-
dated to 19 February 2017 and would no longer have to pay the carparking contribution once
the 2017 Agreement was approved, and that the number of casual employees had dropped
[2017] FWCFB 5826
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significantly and was expected to continue to drop. The failure of the Commissioner to even
advert to those matters in his reasons demonstrates that they were not taken into account.
[22] Thirdly, Aerocare submitted that the finding in paragraph [115] of the Decision that
“...the finding is available to the Commission that the selection of the group was arbitrary and
discriminatory” was contrary to the evidence, given that the selection was the result of a
deliberate business strategy and there was no evidence that the casuals would be
disadvantaged by their exclusion. Additionally, the Commissioner incorrectly found that
Aerocare’s decision as to scope had excluded casual employees from bargaining for a new
agreement, when in fact the choice of scope of the 2017 Agreement did not exclude casuals
form bargaining for a new agreement.
[23] Against this, the TWU submitted that:
permission to appeal should be refused because Aerocare had not demonstrated a
sufficiently arguable case of error to warrant reconsideration in the public interest, or
in the alternative the appeal should be dismissed;
the considerations required to be taken into account under s 186(3A) were not
necessarily determinative, and were to be treated as neutral considerations absent
something more;
in referring to the work of casual employees not being distinct, the Commissioner did
erect an extraneous requirement that the work had to be distinct in order for a finding
that the chosen group was organisationally distinct;
the evidence demonstrated that Aerocare’s rationale for its choice about coverage was
no more than that it no longer wanted casuals in its labour force and shut them out of
the 2017 Agreement to give them an incentive to become PSEs;
this business decision, including its effect on the existing casual employees, was taken
into account by the Commissioner, and in doing so he was entitled to review its
fairness;
the determinative task undertaken by the Commissioner was of a discretionary
character and involved the making of a broad evaluative judgment, and it is not
enough that a different conclusion might have been reached if the matter had been
heard at first instance by the Full Bench; and
no appealable error had been demonstrated by Aerocare.
[24] The ASU supported and adopted the TWU’s submissions, and additionally submitted
that:
permission to appeal should be refused because the appeal did not raise any important
question about the meaning and application of organisational distinctiveness in s
186(3A), which had been the subject of consideration in a number of previous Full
Bench decisions and by the Federal Court Full Court;
[2017] FWCFB 5826
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the Commissioner, in determining whether he was satisfied as to the “fairly chosen”
requirement, was making a discretionary decision, and accordingly it was necessary
for Aerocare to demonstrate error of the House v The King6 type;
the expression “organisationally distinct” in s 186(3A) should be construed
consistently with the accepted meaning of the same expression in ss 237(3A) and
238(4A), that is, it concerns the manner in which the employer has organised its
enterprise;
the mere fact that some employees were casual and others permanent was incapable of
demonstrating organisational distinctiveness in accordance with that interpretation;
the Commissioner did not actually find that Aerocare’s choice of coverage was
arbitrary and discriminatory, although if such a finding had been made, it would have
been reasonably open to the Commissioner;
the decision to exclude casuals from the agreement making process to aid a process
where casuals have little choice but to change the status of their employment and
thereby become covered by the Agreement could reasonably be characterised as
arbitrary and discriminatory; and
the selection of the group to be covered was entirely inconsistent with the FW Act’s
objects and undermined collective bargaining.
Consideration
Permission to appeal
[25] Because ground 1 of Aerocare’s appeal raises a question which is novel and of
potentially wider application, namely whether the coverage of an enterprise agreement has
been fairly chosen in circumstances where employees have been excluded from coverage
based only on their casual status, we have decided to grant permission to appeal with respect
to that ground.
Merits of appeal ground 1
[26] The following principles may be gleaned from earlier decisions concerning s 186(3)-
(3A):
the expression “the group of employees covered by the agreement” in s 186(3) refers
to the whole class of employees to whom the agreement might in future apply, not the
group of employees who actually voted on whether to make the agreement;7
the references in s 186(3) and (3A) to whether “the group of employees covered by
the agreement was fairly chosen” are, in the case of a non-greenfields agreement made
6 (1936) 55 CLR 499
7 CFMEU v John Holland Pty Ltd [2015] FCAFC 16, 228 FCR 297 at [34]-[41]
[2017] FWCFB 5826
11
with a group of employees, particularly a small group, references to a choice made by
the employer;8
a Member’s decision as to whether or not they are satisfied that the group of
employees covered by an agreement was “fairly chosen” involves a degree of
subjectivity and the exercise of a very broad judgment or value judgment, and in a
broad sense can be characterised as a discretionary decision;9
in an appeal from a decision of that nature, it will be necessary for the appellant to
demonstrate error in the decision-making process of the type identified in the House v
The King in order for the Full Bench to set aside the decision;10
once it has been determined that an agreement does not cover all of the employees of
the employment, it is necessary for the Commission to make a finding as to whether
the group of employees who are covered is geographically, operationally or
organisationally distinct, and then take that matter into account and give it due weight,
having regard to all other factors;11
if the group of employees covered by the agreement is geographically, operationally or
organisationally distinct then that would be a factor telling in favour of a finding that
the group of employees was fairly chosen; conversely, if the group of employees
covered by the agreement was not geographically, operationally or organisationally
distinct then that would be a factor telling against a finding that the group was fairly
chosen;12
however while the question of whether the group of employees covered is
geographically, operationally or organisationally distinct must be evaluated and given
due weight having regard to all other relevant considerations, that is not a
determinative consideration in that it is not necessary to make a finding that the group
is geographically, operationally or organisationally distinct in order to be satisfied that
it was fairly chosen;13
the selection of the group of employees to be covered on some objective basis, as
opposed to an arbitrary or subjective basis, is likely to favour a conclusion that the
group was fairly chosen;14
the relevant considerations will vary from case to case, but the word “fairly” suggests
that the selection of the group covered was not arbitrary or discriminatory, so that for
example selection based upon employee characteristics such as date of employment,
age or gender would be likely to be unfair;15 and
8 Ibid at [28]-[32]
9 Ibid at [60]-62]; Cimeco Pty Ltd v CFMEU [2012] FWAFB 2206, 219 IR 139 at [8]
10 Cimeco Pty Ltd v CFMEU [2012] FWAFB 2206, 219 IR 139 at [8]
11 Ibid at [10]
12 Ibid at [19]
13 Ibid at [15], [20]; Australian Maritime Officers’ Union v Harbour City Ferries Pty Ltd [2016] FWCFB 1151 at [31]
14 Cimeco Pty Ltd v CFMEU [2012] FWAFB 2206, 219 IR 139 at [16]
15 Ibid at [21]
[2017] FWCFB 5826
12
it is appropriate to have regard to the interests of the employer, such as enhancing
productivity, and the interests of both the employees included in the agreement’s
coverage and the employees excluded.16
[27] Additionally, guidance may be obtained as to how to interpret and apply the
expression “organisationally distinct” in s 186(3A) from decisions concerning the use of the
same expression in ss 237(3A) and 238(4A). The following propositions are relevant:
the term “organisation” refers to the manner in which the employer has organised its
enterprise in order to conduct its operations;17
the performance by a group of employees of duties which are qualitatively different
from duties performed by other employees may justify a conclusion that the group is
organisationally distinct;18
however the mere performance by a group of employees of different tasks or roles to
others may not be sufficient to render it organisationally distinct where the employees
work in an integrated way with the other employees to perform a particular business
function;19 and
most businesses have organisation structures which will allow organisationally distinct
groups to be identified.20
[28] Having regard to these principles and propositions, we do not consider that Aerocare
has demonstrated any appealable error in the Commissioner’s conclusion that the group of
employees covered by the 2017 Agreement was not fairly chosen. We consider that the
Commissioner’s conclusion in this respect was reasonably open to him in the exercise of the
broad value judgment he was required to make. Furthermore, we agree with the
Commissioner’s conclusion. Our reasons are as follows.
[29] First, there were a number of matters of significance that were not in dispute or not the
subject of any challenge in the appeal:
(1) The pre-existing 2012 Agreement covered casual employees as well as PSEs.
(2) The Notices of Employee Representational Rights (NERRs) issued by
Aerocare to initiate the bargaining process for the 2017 Agreement were sent
to casual employees as well as PSEs, and identified the proposed coverage of
the proposed new agreement to be the same as the 2012 Agreement except for
the exclusion of the Leader 3 classification. That is, at the commencement of
16 Ibid at [21]-[22]; CFMEU v Resco Labour & Training Pty Ltd [2012] FWAFB 8461, 228 IR 5 at [34]
17 QGC Pty Ltd v Australian Workers’ Union [2017] FWCFB 1165 at [44]
18 United Firefighters’ Union v Metropolitan Fire & Emergency Services Board [2010] FWAFB 3009, 193 IR 293 at [60]
19 QGC Pty Ltd v Australian Workers’ Union [2017] FWCFB 1165 at [44]-[45]
20 Australian Workers’ Union v BP Refinery (Kwinana) Pty Ltd [2014] FWCFB 1476, 242 IR 238 at [15]; see also National
Union of Workers v Cotton On Group Services Pty Ltd [2014] FWC 6601 at [15]-[16] (permission to appeal refused in [2014]
FWCFB 8899) and ASU v Shine Lawyers Pty Ltd [2017] FWC 4158 at [68]-[71] as examples of where the employer’s
organisational structure was used to determine organisational distinctiveness.
[2017] FWCFB 5826
13
bargaining, it was intended by Aerocare that casual employees be covered by
the same enterprise agreement covering PSEs as before.
(3) At some time between 3 March 2017, when the last NERRs were issued, and
15 March 2017, when a draft agreement was sent to PSEs below the Leader 3
classification only21, Aerocare made a decision to exclude casual employees
from the bargaining process and its proposed agreement.
(4) The casual employees performed the same duties at the same locations as the
PSEs, worked alongside them, had in the past worked similar rosters as PSEs,
reported to the same supervisors as PSEs, and were paid through the same
payroll and human resources system.22
(5) The PSEs who constituted the group of employees covered by the 2017
Agreement were not geographically or operationally distinct (as the
Commissioner found).23
[30] These were all matters which, we consider, the Commissioner was entitled to regard as
weighing strongly in favour of the conclusion that the group of employees covered by the
2017 Agreement was not fairly chosen. The picture which emerges is of an abrupt decision to
change from the pre-existing position whereby PSEs and casual employees were covered by
the same agreement, without any apparent difficulty, and to exclude casuals in circumstances
where they were functionally indistinguishable from PSEs. Absent any countervailing
considerations, these matters would make reasonably available a conclusion that the group of
employees covered was not fairly chosen.
[31] Second, we do not consider that, on a fair reading of the Decision, the Commissioner
established and proceeded on the basis of a test or requirement for organisational
distinctiveness that the work of the group of employees had to be distinct from that of other
employees. We consider that what the Commissioner did in paragraph [114] of the Decision
was to take into account as potentially relevant to organisational distinctiveness the difference
in the contract of employment between casual employees and PSEs, but then to conclude that
this was outweighed by the lack of any difference in the work performed by the two groups.
That is, the Commissioner took into account, and gave determinative weight to, the fact that
there was no difference in the work, but he did not treat this as the sole criterion for
organisational distinctiveness.
[32] In substance, the first limb of Aerocare’s appeal ground 1 sought that appealable error
be found on the basis that the Commissioner did not find that the difference in employment
contracts between PSEs and casual was sufficient by itself to demonstrate that the groups
were organisationally distinct. That is in truth not a contention of appealable error, but rather a
plea for us to re-decide the “organisationally distinct” issue ourselves and to give decisive
weight to the different nature of the employment contracts as between the two groups. If the
Commissioner had failed to take this matter into account at all, that arguably might have
constituted appealable error, but it was not contended that the Commissioner failed to take it
into account and, as earlier stated, he plainly did.
21 See affidavit of Gregory Luke Shelley affirmed 5 July 2017, paragraphs [25]-[26]
22 Agreed statement of facts, paragraph [14]
23 Decision at [112]-[113]
[2017] FWCFB 5826
14
[33] As the authorities to which we have earlier referred demonstrate, there are a range of
considerations which may be relevant to the issue of whether the group of employees covered
by an agreement is organisationally distinct. This includes whether the duties of the group are
different to that of employees who are excluded from coverage. In considering and giving
significant weight to this, the Commissioner took into account what was clearly a relevant
consideration. There was no error on this score. The conclusion reached by the Commissioner
that the PSEs covered by the 2017 Agreement were not organisationally distinct from the
casual employees we find to be completely unsurprising. There was no evidence that, in its
organisation structure, PSEs and casuals performing the same work were placed into different
organisational units, had different reporting lines or were managed differently. As earlier
stated, for functional purposes they were, on the agreed facts, indistinguishable. That a
different model of remuneration was used for groups of persons who had otherwise performed
the same work on similar rosters in order to discharge the same business function could not by
itself be sufficient to demonstrate that the groups were organisationally distinct.
[34] Third, we do not accept that the Commissioner, having found that the group of
employees covered by the 2017 Agreement were not geographically, operationally or
organisationally distinct from casual employees, then failed to take into account all other
relevant considerations or the matters specifically referred to in appeal ground 1 relied upon
by Aerocare. In paragraphs [108] and [109] of the Decision, as earlier set out, the
Commissioner gave an accurate and comprehensive account of the matters advanced by
Aerocare in order to demonstrate the fairness of its choice of coverage. Then, having taken
into account and made findings concerning the s 186(3A) matters, the Commissioner dealt
with Aerocare’s case that its business decision to move away from casual employment
informed its choice of coverage directly in paragraph [116] of the Decision. The conclusion
reached by the Commissioner, in summary, was that while the exclusion of the casual
employees might give them an incentive to shift to employment as PSEs (as desired by
Aerocare), the result was that the casuals were excluded from bargaining for and the benefits
of the 2017 Agreement merely because of their casual status, in circumstances where they
performed the same work in the same locations under the same supervisors as the PSEs. That
was the basis upon which the Commissioner concluded that the choice of coverage was not
fair. In reaching this conclusion, the Commissioner properly engaged with the central
argument advanced by Aerocare. That he did not, in paragraph [116], expressly respond to
every strand of Aerocare’s case does not mean that he did not take all relevant matters into
account.24
[35] Fourth, contrary to the third limb of Aerocare’s appeal ground 1, we do not consider
that the Commissioner actually made a finding that the selection of the group covered by the
2017 Agreement was arbitrary and discriminatory, but merely made the observation that it
would have been available for such a finding to be made. That conclusion is sufficient to
dispose of this aspect of Aerocare’s challenge to the Decision, but it may be added that had
the Commissioner actually made such a finding, we consider it would have been reasonably
available for him to make it. It is clear that the casual employees were excluded from
coverage because of their status as such, and to that extent their exclusion can fairly be
characterised as discriminatory. The circumstances we have earlier set out in paragraph [29]
also tend to demonstrate that the exclusion of casual employees from the coverage of the 2017
Agreement was arbitrary - that is, capricious rather than based on reason. It is clear that
24 See Soliman v University of Technology, Sydney [2012] FCAFC 146; 207 FWC 277; 226 IR 214 at [54]-[55]
[2017] FWCFB 5826
15
Aerocare has made a business decision to phase out casual employment and move to PSE-
only employment, and we accept that there may be a sound and rational basis for this decision
and further that the implementation of this decision has to date resulted in a significant
number of casual employees electing to transfer to employment as PSEs. However, as at the
date of the access period (shortly before the vote upon the 2017 Agreement took place),
Aerocare still had 597 casual employees engaged, apparently on a regular basis, who were
excluded from bargaining for and voting upon the 2017 Agreement. Aerocare has not
suggested that existing casual employees would not continue to be engaged after the 2017
Agreement took effect. While the evidence adduced by Aerocare – particularly the affidavit of
Mr Shelley – explains the rationale for Aerocare’s business decision, what is left unexplained
is exactly how the exclusion of casual employees from the coverage of the 2017 Agreement
was meant to advance the objective of phasing out casual employment. Aerocare’s
submissions characterised its approach as giving casual employees an incentive to transfer to
employment as PSEs, but the better inference is that Aerocare intended to place casual
employees in an inferior position as to their employment rights than PSEs in order to establish
a disincentive to remain in casual employment. That casual employees were, by grace and
favour of Aerocare, to be afforded the same level of pay increase and the same carparking
benefits that the group of employees covered by the 2017 Agreement were to obtain as a
matter of legal right merely highlights the arbitrary nature of their exclusion from coverage.
[36] Finally, we do not accept that the Commissioner erred in finding that Aerocare’s
decision as to scope had excluded casual employees from bargaining for a new agreement.
While it may technically be correct to say that the exclusion of casuals for bargaining for the
2017 Agreement did not mean that they could not seek a new agreement applicable to
themselves only, it is clear that Aerocare’s business strategy meant that there was no prospect
in reality of it agreeing to bargain for and enter into a separate new agreement for the casual
employees. The practical consequence of Aerocare’s choice of coverage was that casual
employees were denied the only realistically available opportunity to participate in bargaining
for and voting upon a new enterprise agreement.
Conclusion
[37] For the reasons given, permission to appeal is granted in respect of appeal ground 1,
but the appeal ground is rejected.
[38] As earlier stated, the Commission’s satisfaction under s 186(3) that the group of
employees covered by an enterprise agreement was fairly chosen is a requirement for
approval of the agreement. We have found that the Commissioner did not err in concluding
that this approval requirement was not satisfied. There is no challenge in Aerocare’s appeal to
the Commissioner’s further conclusion that this could not be remedied by the provision of an
undertaking.
[39] That would appear to result in a position whereby the determination of Aerocare’s
other appeal grounds would have no utility because, even if Aerocare were to succeed on
those appeal grounds, this could not lead to the 2017 Agreement being approved. However
that is only a provisional view and we will give Aerocare and the two unions an opportunity
to make submissions about the further disposition of the appeal in light of our conclusions
with respect to appeal ground 1. We direct that such submissions be made in writing and filed
on or before 5.00pm Monday 4 December 2017.
[2017] FWCFB 5826
16
VICE PRESIDENT
Appearances:
F. Parry QC and R. Dalton of counsel with L. Mumme on behalf of Aerocare Flight Support
Pty Ltd.
A. Howell of counsel with W. Carr on behalf of the Transport Workers’ Union of Australia.
Y. Bakri of counsel with J. Cooney on behalf of the Australian Municipal, Administrative,
Clerical and Services Union.
Hearing details:
2017.
Sydney:
19 October.
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Price code C, PR597510
OF THE FAIR WORK MISSION THE
