1
Fair Work Act 2009
s.604 - Appeal of decisions
Construction, Forestry, Maritime, Mining and Energy Union
v
Macmahon Contractors Pty Ltd
(C2018/2003)
VICE PRESIDENT HATCHER
DEPUTY PRESIDENT COLMAN
COMMISSIONER LEE
SYDNEY, 27 JULY 2018
Appeal against decision [2018] FWCA 1838 of Commissioner Williams at Perth on 28 March
2018 in matter number AG2017/4173.
Application to vary the Macmahon Byerwen Agreement 2017
Introduction
[1] The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) has
lodged an appeal, for which permission to appeal is necessary, against a decision of
Commissioner Williams issued on 28 March 20181 (Decision) in which he approved, subject
to the acceptance of an undertaking, the Macmahon Byerwen Agreement 2017 (Agreement).
The CFMMEU’s notice of appeal identifies three grounds of appealable error. First, it
contends that the Commissioner erred in finding that the Agreement passed the better off
overall test (BOOT), as required by s 186(2)(d) of the Fair Work Act 2009 (FW Act), in that it
was determined that the wage rates in Schedule A were sufficient to pass the BOOT in respect
of the various rostering arrangements permissible under clause 10.16 of the Agreement.
Second, it contends that clause 13, Abandonment of Employment of the Agreement was an
unlawful term pursuant to ss 186(4) and 194 of the FW Act or, alternatively, contravened s 55
of the FW Act because it was inconsistent with s 117(1) and (2), and the Commissioner erred
in finding otherwise. Third, it contends that the Commissioner erred in failing to find that the
undertaking which he accepted constituted a substantial change to the Agreement and was
incapable of acceptance under s 190(3)(b) of the FW Act, with the result that the application
for approval of the Agreement should have been dismissed.
[2] We will deal with each of the grounds of appeal in turn.
1 [2018] FWCA 1838
[2018] FWCFB 4429
DECISION
E AUSTRALIA FairWork Commission
[2018] FWCFB 4429
2
First appeal ground
[3] The CFMMEU’s first contention of error turns on an issue of the proper interpretation
of clause 10.16 of the Agreement read together with the wage rate schedule in Schedule A (as
modified by increased rates provided for in the undertaking). The wage rate schedule sets out,
for the specified classifications, a “Minimum All Purpose Hourly Rate”, as well as a
“Minimum Base Rate”, applicable to each of three identified roster patterns: “7 days 7 off 7
nights 7 off”, “7 days 7 off”, “5 days 2 off”. Clause 19.1 provides that all categories of
employees will be paid at least the applicable all purpose hourly rate in Schedule A for each
“Rostered Hour” worked. The expression “Rostered Hours” is defined in clause 2 as follows:
“Includes an Employee's Ordinary Hours plus Rostered Overtime”. “Rostered Overtime” is
defined in clause 2 to mean: “…additional hours (additional to Ordinary Hours) which the
Company reasonably requires the Employee to work as part of a Roster Cycle”. The all
purpose hourly rates specified in the Agreement may be characterised as “loaded rates” which
provide for a single hourly rate incorporating penalty rates and allowances which would
otherwise be payable under the relevant modern award (the Black Coal Mining Industry
Award 2010).
[4] The CFMMEU does not contest that, in respect of the roster patterns identified in
Schedule A, the rates provided for in the undertaking passed the BOOT. However it pointed
to clause 10.16 of the Agreement, which provides:
“10.16 The Employee agrees to work Shift Work and a Roster Cycle as determined by
the Company (in its absolute discretion) from time to time and as appropriate
for the Company's operational requirements. The Employee agrees to work a
reasonable amount of Rostered Overtime and Overtime as required to perform
their duties. The Company reserves the right to introduce any pattern of Shift
Work or Roster Cycles or working arrangements from time to time at its
absolute discretion, subject to consultation with Employees affected by the
proposed alternative shift or rosters as per clause 9 of the Agreement.”
[5] The expression “Roster Cycle” used in the above provision is defined to mean “…the
period over which a roster repeats and is comprised of Working Days and Non-Working Days
to suit the Mine (includes Continuous Shift Work)”.
[6] The CFMMEU submitted that the effect of clause 10.16 is that the employer,
Macmahon Contractors Pty Ltd (Macmahon) has an absolute discretion to determine the
roster cycle to be worked, and is not confined to the roster patterns for which Schedule A (as
modified) sets minimum all purpose hourly rates. The Commissioner, the CFMMEU
submitted, did not consider whether the Agreement passed the BOOT in respect of roster
patterns other than those provided for in Schedule A, and could not have been satisfied that
the Agreement passed the BOOT because it did not provide for minimum wage rates for
roster patterns other than those specified in Schedule A.
[7] Macmahon submitted that clause 10.16, read in context, did not confer upon it the
discretion to choose any roster pattern at all; instead, having regard to the terms of Schedule
A, it was to be read as meaning that the discretion was confined to a choice of the three roster
patterns identified in Schedule A.
[2018] FWCFB 4429
3
[8] During the hearing of the appeal, Macmahon made an oral application pursuant to s
217 of the FW Act to vary the Agreement to remove any ambiguity that might be identified in
clause 10.16 (without resiling from its primary position that clause 10.16 was not ambiguous).
The variation it sought in that respect was identified in writing in email correspondence dated
31 May 2018. The variation it sought was as follows (with the additional words to be added
emphasised):
“10.16 The Employee agrees to work Shift Work and a Roster Cycle as set out in
Schedule A as determined by the Company (in its absolute discretion) from
time to time and as appropriate for the Company’s operational requirements.
The Employee agrees to work a reasonable amount of Rostered Overtime and
Overtime as required to perform their duties. The Company reserves the right
to introduce any pattern of Shift Work or Roster Cycles or working
arrangements as set out in Schedule A from time to time at its absolute
discretion, subject to consultation with Employees affected by the proposed
alternative shift or rosters as per clause 9 of the Agreement.”
[9] In response to this application, the CFMMEU submitted that:
there was no ambiguity or uncertainty in clause 10.16, and thus there was no power
for the Commission to vary the provision pursuant to s 217;
Macmahon’s application was self-serving and designed to re-write the provision in
order to remove a ground of appeal;
clause 10.16 in clear and unambiguous terms confers an absolute discretion upon
Macmahon to determine the roster patterns of employees;
this was confirmed by the definition of “Roster Cycle” in clause 2, which was not
confined to the roster patterns specified in Schedule A; and
there was nothing in Schedule A which suggested it was intended to confine the
operation of clause 10.16.
[10] Section 217 of the FW Act provides:
217 Variation of an enterprise agreement to remove an ambiguity or uncertainty
(1) The FWC may vary an enterprise agreement to remove an ambiguity or uncertainty
on application by any of the following:
(a) one or more of the employers covered by the agreement;
(b) an employee covered by the agreement;
(c) an employee organisation covered by the agreement.
(2) If the FWC varies the enterprise agreement, the variation operates from the day
specified in the decision to vary the agreement.
[11] As the CFMMEU submitted, a finding of ambiguity or uncertainty in an enterprise
agreement is a condition precedent for the exercise of power under s 217. We consider that
[2018] FWCFB 4429
4
that clause 10.16 is clearly ambiguous in the sense that it is susceptible of more than one
meaning.2 Viewed in isolation, clause 10.16 in terms invests Macmahon with an absolute and
unconfined discretion to determine the roster patterns of employees to whom the Agreement
applies. Additionally, insofar as the provision uses the expression “Roster Cycle” to identify
the subject matter of the discretion, the definition of that term in clause 2 does not contain any
limitation upon the types of roster patterns which may be utilised, and the fact that under the
definition a roster cycle is comprised of working and non-working days “to suit the Mine”
suggests otherwise. These are matters which make the interpretation of clause 10.16 advanced
by the CFMMEU strongly arguable. However, as made clear by the Full Bench in AMWU v
Berri Pty Limited,3 the context of the text of an enterprise agreement viewed as a whole must
be taken into account in resolving a dispute about the construction of a particular provision of
that agreement.4 Schedule A, which has the crucial function in the Agreement of setting the
rates of pay, only specifies wage rates for three identified roster patterns. It is unlikely that
those who made the Agreement intended to set wage rates for some roster patterns permitted
by the Agreement but not to set any wage rates at all for other permitted roster patterns. This
contextual consideration lends support to the interpretation advanced by Macmahon, which is
also well arguable for that reason.
[12] We consider that we should exercise our discretion under s 217 to grant Macmahon’s
application to vary clause 10.16. The grant of the variation is in the interests of employees to
whom the Agreement applies, in that it confines the roster patterns which they may be
required to work to those specifically identified in Schedule A of the Agreement they voted
upon and ensures that there is an enforceable rate of pay for each such roster pattern which
passes the BOOT. The variation is acceptable to Macmahon. And, from the CFMMEU’s
perspective, it entirely resolves the legitimate concern raised in its first ground of appeal. The
CFMMEU’s submissions in response to the s 217 application did not suggest that the terms of
the variation proposed by Macmahon failed to resolve the ambiguity or the BOOT difficulty it
had identified, and therefore the application will be granted in the terms sought.
[13] This variation to clause 10.16 vitiates the merit and utility of the first ground of
appeal. Permission to appeal is therefore refused in respect of the first appeal ground.
Second appeal ground
[14] The CFMMEU’s second appeal ground concerns clause 13.1 of the Agreement, which
provides:
“13 Abandonment of Employment
13.1 In the event that an Employee is absent for more than three (3) consecutive
Working Days or shifts without notifying the Company and is unavailable for
contact by Company representatives, then the Company will assume the
Employee has abandoned their employment from the last day of work attended
and the Company will consider the contract of employment to have been
terminated at the initiative of the Employee effective from the last day of work
attended.”
2 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352 per Mason J.
3 [2017] FWCFB 3005
4 Ibid at [114(1)]
[2018] FWCFB 4429
5
[15] The CFMMEU submitted that:
clause 13.1 is an unlawful term within the meaning of s 194(d), because it deems a
termination of employment to be at the initiative of the employee in identified
circumstances, and thus excludes from the operation of the unfair dismissal regime in
Pt 3-2 of the FW Act employees who have in fact been terminated at the initiative of
the employer;
s 186(4) requires, as a prerequisite for the approval of an enterprise agreement, that the
Commission be satisfied that the agreement does not include any unlawful terms, with
the result that clause 13.1 ought to have caused the application for approval of the
Agreement to be dismissed;
alternatively, clause 13.1 excluded the NES, in contravention of s 55, in that it
deprived persons who may have been terminated at the initiative of the employer of
the notice entitlements conferred by s 117 by deeming the termination not to be at the
initiative of the employer; and
consequently the Agreement should not have been approved, since s 186(2)(c)
requires that the Commission be satisfied that the terms of an enterprise agreement do
not contravene s 55 before approving it.
[16] Macmahon submitted that clause 13.1 did not deem an employee to have abandoned
employment and resigned; it merely stated the view that Macmahon would take in the event
that an employee was absent for more than three consecutive days without explanation. The
fact that Macmahon might assume and consider the contract of employment to have been
terminated at the initiative of the employee in those circumstances did not result in any
particular legal consequence. That subjective position, it was submitted, could not of itself
bring the employment relationship to an end; Macmahon would still need to take the positive
step of giving the employee notice terminating the employment relationship or accepting the
employee’s repudiation, and nothing in clause 13.1 relieved Macmahon of its notice
obligations.
[17] Macmahon also applied, in the alternative, for clause 13.1 to be varied pursuant to s
217 so that it would read as follows (with the variation emphasised):
“13.1 In the event that an Employee is absent for more than three (3) consecutive
Working Days or shifts without notifying the Company and is unavailable for
contact by Company representatives, then the Company will assume the
Employee has abandoned their employment from the last day of work attended
and the Company may consider the contract of employment to have been
terminated at the initiative of the Employee effective from the last day of work
attended.”
[18] The CFMMEU opposed this application. It submitted that clause 13.1 was neither
ambiguous nor uncertain. It also submitted that even if the application was granted, it would
not resolve the issue raised by its second ground of the appeal, since the substitution of “may”
for “will” did not remove Macmahon’s capacity to treat an employee who had abandoned
their employment as if they had voluntarily resigned. Clause 13.1, it was submitted, would
[2018] FWCFB 4429
6
therefore remain an unlawful term and one that contravened s 55 even if the application was
granted.
[19] We do not accept that clause 13.1 is an unlawful term for the purpose of the approval
criterion in s 186(4). The relevant part of the definition of “unlawful term” in s 194 is as
follows:
194 Meaning of unlawful term
A term of an enterprise agreement is an unlawful term if it is:
. . .
(d) a term that excludes the application to, or in relation to, a person of a provision of
Part 3-2 (which deals with unfair dismissal), or modifies the application of such a
provision in a way that is detrimental to, or in relation to, a person; or
[20] Clause 13.1 does not purport to exclude or modify the application of any provision of
Pt 3-2 to or in relation to any employee to which it might apply. In particular, it does not
purport to deem what is in fact a termination at the initiative of the employer to be a
termination at the initiative of the employee for the purpose of Pt 3-2 so that an employee
cannot be regarded as having been dismissed for the purpose of s 386(1) and cannot therefore
make an application pursuant to s 394(1). As Macmahon submitted, it does no more than
identify the approach Macmahon will take in the event that the specified circumstances occur.
[21] The position with respect to s 55 is somewhat different. The section provides: “A
modern award or enterprise agreement must not exclude the National Employment Standards
or any provision of the National Employment Standards”. A provision will exclude the
operation of the NES if its operation results in an outcome whereby an employee does not
receive in full or at all a benefit provided by the NES.5 It appears to us that, considered in
isolation, the effect of clause 13.1 is that, if an employee is absent for more than three
consecutive working days without notification or contact being made, Macmahon will
proceed upon the premise that the employment has been terminated at the initiative of the
employee effective from the last day worked by the employee. That necessarily means that
Macmahon will not provide the notice benefits provided for in s 117 of the FW Act applicable
to the termination by the employer of an employee’s employment. Those benefits are twofold.
First, s 117(1) requires the employer to provide written notice of the day of the termination,
which cannot be before the day the notice is given. Second, s 117(2) requires the employer to
give the minimum period of notice as prescribed by the scale based on years of continuous
service set out in s 117(3), or to make a payment equal to the amount the employee would
have earned during the prescribed notice period.
[22] It is clearly possible that an employee may not have abandoned their employment in
the circumstances described in clause 13.1 – for example, if an employee suffers a serious
illness or injury which prevents them from contacting work or being contactable and leads to
an absence from work from three days or more. In that situation, if the employer treats the
employment relationship as having terminated, it will in fact be a termination at the initiative
of the employer. Clause 13.1 provides that the employer will treat any situation where the
prescribed circumstances have occurred as an abandonment of employment, with the
necessary result that it will not provide the benefits afforded by s 117. It does not allow for
5 Canavan Building Pty Ltd [2014] FWCFB 3202, 244 IR 1 at [36]
[2018] FWCFB 4429
7
any departure from that position even where it may subsequently be established that the
employee has in fact not abandoned their employment. Clause 13.1, considered in isolation,
may therefore in its operation exclude s 117, and for that reason ostensibly offends s 55.
[23] However the position is confused by clause 12, Termination of Employment. Clauses
12.2 and 12.3 operating together require Macmahon to provide, in the case of the termination
of an employee, notice or payments in lieu of notice equal to those provided in s 117(2) and
(3) of the FW Act. Clause 12.5 provides that these requirements for notice or payment in lieu
thereof do not apply in the case of an employee who is terminated as a result of serious
misconduct justifying summary dismissal, or who is engaged for a specified period of time,
for a specific task or the for the duration of a specified project, or as a casual employee, and
clause 12.7 provides in effect that they also do not apply where an employee is dismissed for
serious misconduct as defined in reg 1.07 of the Fair Work Regulations 2009. There is no
exemption referable to an employee who is assumed to have abandoned their employment and
considered to have terminated the employment at their own initiative under clause 13.1.
Because clause 12 is expressed in objective terms so that its obligations apply regardless of
what Macmahon’s subjective position may be, it will require notice or payment in lieu to be
provided in respect of any termination of employment at the initiative of the employer, apart
from those the subject of the exemptions in clauses 12.5 and 12.7. That may result in a
contradiction with clause 13.1, which mandates that Macmahon is to treat any case where an
employee has been absent for three consecutive days without notification or contact being
made as a termination at the initiative of the employee for which no provision for notice is
required, even if objectively speaking there has been no abandonment of employment.
[24] For these reasons we consider that there is uncertainty in the way clauses 12 and 13.1
operate and interact with each other and therefore we can give consideration to a variation to
the Agreement to remove that uncertainty pursuant to s 217. The vice in clause 13.1 is the use
of the word “will”: it mandates that Macmahon will treat as an abandonment of employment
any case where the employee has been absent for three consecutive days without notification
or contact, even where after subsequent inquiry by Macmahon and/or explanation by the
employee it becomes apparent that in fact there has been no abandonment of employment. It
is this mandatory aspect of the provision which causes the potential for conflict with the
requirements of clause 12 (as well as causing the potential for the exclusion of s 117).
Macmahon’s proposed substitution of “may” for “will” would accommodate the situation that
an employee may not have abandoned their employment in the circumstances described in
clause 13.1 and accordingly will not be treated as having terminated the employment at their
own initiative. In that situation, if Macmahon nonetheless chooses to treat the employment as
having been terminated, the notice provisions of clause 12 will be applicable (as well as of
course those in s 117).
[25] The variation proposed by Macmahon will therefore be granted. It resolves the
uncertainty we have identified, removes the apparent potential for the exclusion of s 117, and
is in the interests of the employees to whom the Agreement applies.
[26] In those circumstances, permission to appeal with respect to the second ground of
appeal is also refused. The issue raised by that ground is resolved by the variation, and there
would be no practical utility in determining it.
[2018] FWCFB 4429
8
Third appeal ground
[27] We do not consider that the third appeal ground has sufficient merit to justify the grant
of permission to appeal. The CFMMEU submitted that the increase to the wage rates effected
by Macmahon’s undertaking ranged from 2% to 62.2%, with some 40% of the increases being
greater in amount than 20%, and that the Commissioner erred in accepting this undertaking
because it could not satisfy the condition in s 190(3)(b) that an undertaking must not be likely
to result in substantial changes to the agreement. It also submitted that the other parts of the
undertaking also reinforced the conclusion that, considered in total, the undertaking amounted
to a substantial change to the Agreement.
[28] Whether the Commission can be satisfied that an undertaking is not likely to lead to
substantial changes to an enterprise agreement involves the making of an evaluative
judgment. Simply increasing the quantum of wages payable to employees without changing
the remuneration structure will not ordinarily result in any substantial change to the
Agreement; were it otherwise, it would not be possible for BOOT concerns to be addressed
through an undertaking.6 We do not consider that there is any reasonably arguable case that
the Commissioner erred in accepting the undertaking.
Orders
[29] We order as follows:
(1) Permission to appeal is refused.
(2) The Macmahon Byerwen Agreement 2017 is varied, effective from the date of
this decision, as follows:
(a) Clause 10.16 is deleted and replaced with the following:
10.16 The Employee agrees to work Shift Work and a Roster Cycle
as set out in Schedule A as determined by the Company (in its
absolute discretion) from time to time and as appropriate for
the Company’s operational requirements. The Employee
agrees to work a reasonable amount of Rostered Overtime and
Overtime as required to perform their duties. The Company
reserves the right to introduce any pattern of Shift Work or
Roster Cycles or working arrangements as set out in Schedule
A from time to time at its absolute discretion, subject to
consultation with Employees affected by the proposed
alternative shift or rosters as per clause 9 of the Agreement.
(b) Clause 13.1 is deleted and replaced with the following:
6 CFMEU v KAEFER Integrated Services Pty Ltd [2017] FWCFB 5630 at [40]-[41]; CFMMEU v Lightning Brick Pavers
[2018] FWCFB 3825 at [23]-[25]
[2018] FWCFB 4429
9
13.1 In the event that an Employee is absent for more than three (3)
consecutive Working Days or shifts without notifying the
Company and is unavailable for contact by Company
representatives, then the Company will assume the Employee
has abandoned their employment from the last day of work
attended and the Company may consider the contract of
employment to have been terminated at the initiative of the
Employee effective from the last day of work attended.
VICE PRESIDENT
Appearances:
A. Pollock of Counsel on behalf of Macmahon Contractors Pty Ltd
A. Thomas on behalf of the Construction, Forestry, Maritime, Mining and Energy Union
Hearing details:
2018.
Sydney:
30 May.
Printed by authority of the Commonwealth Government Printer
PR609483
OF THE FAIR WORK MISSION THE
