[2019] FWCFB 6307
The attached document replaces the document previously issued with the above code on 11
September 2019.
Name in appearances corrected.
Associate to Vice President Hatcher
Dated 13 September 2019
1
Fair Work Act 2009
s.604 - Appeal of decisions
Construction, Forestry, Maritime, Mining and Energy Union and others
v
Specialist People Pty Ltd
(C2019/3597; C2019/3600; C2019/3601)
Manufacturing and associated industries
VICE PRESIDENT HATCHER
DEPUTY PRESIDENT COLMAN
COMMISSIONER LEE
SYDNEY, 11 SEPTEMBER 2019
Appeal against decision [2019] FWCA 3535 of Deputy President Beaumont on 22 May 2019
– approval of agreement – scope of agreement extends to work covered by various awards –
application to amend agreement to remove ambiguity – agreement not ambiguous or
uncertain – appeal upheld – company to have opportunity to give undertakings
Introduction
[1] This decision concerns three appeals made under s 604 of the Fair Work Act 2009
(FW Act) against a decision issued by Deputy President Beaumont on 22 May 20191
(Decision) to approve the Specialist People Enterprise Agreement 2018 (Agreement). The
appellants in the first appeal (C2019/3597) are the Construction, Forestry, Maritime, Mining
and Energy Union (CFMMEU) and the Australian Workers’ Union (AWU). The appellants in
the second and third appeals (C2019/3600 and C2019/3601) are respectively the Automotive,
Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU) and the
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied
Services Union of Australia (CEPU). The appellants (“unions”) advanced a common position
with respect to each of the appeals.
[2] In the Decision the Deputy President concluded that the Agreement met the various
approval requirements in the FW Act, including that it passed the “better off overall test”, and
approved the Agreement subject to twelve undertakings.
[3] The unions were not bargaining representatives for the Agreement. They became
aware of the Decision following its publication. The unions contended, and we are satisfied,
that the unions are persons aggrieved by the Decision for the purpose of s 604(1), having
regard to their ability to enrol as members persons covered by the Agreement.
1 [2019] FWCA 3535
[2019] FWCFB 6307
DECISION
E AUSTRALIA FairWork Commission
2
[4] The three notices of appeal variously advance four grounds of appeal. First, they
contend that the Deputy President failed to properly assess the “better off overall test”
because she compared the terms of the Agreement only with the Manufacturing and
Associated Industries and Occupations Award 2010 (Manufacturing Award), which the
company had asserted was the only relevant award, and failed to consider other relevant
awards, namely the Building and Construction General On-Site Award 2010 (Building and
Construction Award), the Hydrocarbons Industry (Upstream) Award 2010 (Hydrocarbons
Award), and the Electrical, Electronic and Communications Contracting Award 2010
(Electrical Contracting Award). This appeal ground proceeds on the unions’ interpretation of
the scope of the Agreement, which they say clearly extends to work covered by these awards.
Secondly, the unions contend that the Deputy President erred in reaching satisfaction that the
requirement of s 180(2)(b) was met, namely that employees who voted on the Agreement had
received or had had access to all incorporated awards during the access period (s 180(2)(b)).
However the Agreement does not incorporate any awards and the unions’ did not make any
submissions on this ground of appeal. It appears therefore to have been abandoned. Thirdly,
the unions submit that the Agreement and the effect of its terms were not adequately
explained to employees as required by s 180(5), and that the Deputy President could not have
been satisfied that the Agreement was genuinely approved. Finally, the unions sought and
were granted leave to amend their notices of appeal to include a fourth ground, namely that
the undertakings accepted by the Deputy President involved substantial change to the
Agreement, contrary to s 190(3) of the FW Act.
[5] At the appeal hearing, Specialist People Pty Ltd (the company), the applicant for
approval of the Agreement, sought and was granted leave to lead further evidence in the form
of an affidavit of Mr Matthew Prendergast, an executive general manager of AusGroup
Limited, which is the parent company of Specialist People. Further, at the conclusion of the
proceedings, the company requested an opportunity to make an application to the Full Bench
to vary the Agreement under s 217 of the FW Act to remove uncertainty or ambiguity in
clause 2 of the Agreement, such that the scope of the Agreement would be expressly confined
to work covered by the Manufacturing Award. We advised the parties that we would consider
any application under s 217 made by the company concurrently with our deliberations on the
parties’ submissions in the appeal.
[6] The central contest in this matter concerns the scope of the Agreement. Clause 2 states
that the Agreement applies to employees of the company employed to perform work in
Australia, onshore or offshore, including but not limited to twenty-nine types or areas of
work, among which appear civil and concrete works, fabrication, construction, maintenance,
assembly, repairs and associated work. The company contends that the only award that is
relevant for the purposes of the BOOT is the Manufacturing Award because the company’s
business is ‘in the manufacturing industry’, and it is therefore covered by the Manufacturing
Award and not the other awards, including by virtue of various ‘carve out’ provisions in those
awards. The unions contend that the work covered by the Agreement falls within the coverage
of the other awards and is not excluded by any ‘carve out’ provisions or otherwise.
[7] An appeal under s 604 of the FW Act is an appeal by way of rehearing and the
Commission’s powers on appeal are exercisable only if there is error on the part of the
primary decision maker. There is no right to appeal and an appeal may be made only with the
3
permission of the Commission. Subsection 604(2) requires the Commission to grant
permission to appeal if satisfied that it is in the public interest to do so. Permission to appeal
may otherwise be granted on discretionary grounds. Other than the special case in s 604(2),
the grounds for granting permission to appeal are not specified. Considerations which have
traditionally been treated as justifying the grant of permission to appeal include that the
decision is attended with sufficient doubt to warrant its reconsideration and that substantial
injustice may result if leave is refused.
Coverage and classification provisions of the Agreement
[8] We turn first to the relevant provisions of the Agreement. Clause 2 states:
“2. PARTIES BOUND AND APPLICATION OF AGREEMENT
2.1 This Agreement shall apply to:
a) Specialist People Pty Ltd (Company), trading as Specialist People; and
b) employees of the Company employed to perform work in Australia (onshore or
offshore), including but not limited to earth works, civil works, concrete works,
infrastructure, utilities, fabrication, preassembly, assembly, disassembly, construction,
maintenance, breakdowns, shutdowns, turnarounds, access of any type (including by
rope), preparatory, repair, demolition, modification, pre-commissioning,
commissioning, de-commissioning, hook-up, hook-up and commissioning,
completions, local service upgrades, minor capital or capital works and all associated
works for all areas listed above (employees).
However, this Agreement does not apply to employees engaged or currently working
on or at locations, sites, projects or undertakings which are covered by an in term
agreement for the duration of that in term agreement (e.g. until the nominal expiry date
of that agreement).”
[9] Clause 5 deals with classifications and wage rates. Clauses 5.1 to 5.2 provide as
follows:
“5. CLASSIFICATIONS AND WAGE RATES
5.1 The classification structure is set out in the table below. Employees must be
prepared to perform all tasks as required of their classification level or any lower level
for which they have the required skills and competence.
5.2 Employees will be paid no less than the following full time adult hourly rates of
pay:
Level Classification Minimum all-inclusive
hourly rate of pay
Level 1 Labourer
Trades Assistant (Entry Level)
$29.21
4
Level 2 Trades Assistant (with at least 1 year’s experience)
Lagger
Driller
Operator (Basic)
$30.77
Level 3 Storeperson
Forklift Operator
Basic or Intermediate Scaffolder or Rigger
Electrical Trades Assistant
Insulator (with qualifications and experience
recognised by the Company and with less than 4
years’ experience)
Refractory Assistant
Non-destructive testing technical assistant
Brush hand (painting of iron work using brush or
spray)
Electrical Trades Assistant
Dogperson
Machinist
Concreter
Fixing steel (including tack welding steel
reinforcement)
Concrete worker
Yardperson
Operator (Other)
$34.54
Level 4 Advanced Scaffolder or Rigger
Insulator (with qualifications and experience
recognised by the Company and with 4 years’
experience or more)
Cryogenic Insulator (with qualifications and
experience recognised by the Company and with
less than 4 years’ experience)
Linesman Grade 2 (less than 3 years’ experience)
Crane Operator 0 – 80 tonnes
$35.58
Level 5 Tradesperson (Other)
Mechanical Fitter
Welder
Painter / Blaster
Boilermaker
Sheet Metal Worker
Plasterer
Carpenter
Cryogenic Insulator (with qualifications and
experience recognised by the Company and with 4
years’ experience or more)
Refractory Tradesperson
Linesperson
$38.05
5
Pipe Fitter
Mechanic
Crane Operator 81 – 180 tonnes
Level 6 Electrical Fitter / Installer
Instrument Fitter
Crane Operator 181 to 220 tonnes
$40.00
Level 7 Electrician Special Class
Welder Special Class
Crane Operator over 220 tonnes
Tradesperson Special Class
$42.21
Level 8 Electronics Tradesperson
Instrumentation Tradesperson
$45.46
[10] The unions contend that clause 2 gives the Agreement a very wide scope, applying to
“all employees of the Company employed to perform work in Australia”. It says that the long
list of types of work then set out in clause 2.1 is inclusive and therefore only illustrative of
work covered by the Agreement, and that the Agreement does not stipulate any particular
industry in which the work will be performed. We agree.
[11] The unions further submit that nothing in clause 2.1 or any other provision in the
Agreement limits its operation to the classifications in clause 5. On this we disagree.
Although there is no express link between clause 2.1 and clause 5, it is clear that clause 5 is
intended to establish a classification structure for employees who can be covered by the
Agreement, and that the scope of the Agreement is confined accordingly. The contrary
interpretation would have the Agreement applying to employees covered by clause 2.1 for
whom no rate of pay was set under clause 5. It seems to us improbable that this could have
been intended. Moreover, clause 5.1 states that “the classification structure” is set out in the
table below, suggesting a comprehensive structure, and clause 5.2 states generally that
“employees will be paid no less than” the rates set out in the table. All employees appear here
to be contemplated, rather than some special classes of employees for whom rates of pay are
prescribed. Had clause 5 applied only to a subset of employees covered by the Agreement,
leaving the remainder with no rate of pay, some explanation of such a curious arrangement
would have been expected. Further, the unions’ written submissions on standing to appeal
stated that the unions are able to enrol as members persons falling within a number of the
“occupational classifications” specified in the Agreement, a clear reference to clause 5, and
an indication that they too attributed significance to clause 5 in construing the coverage of the
Agreement2.
[12] Therefore, we consider that the coverage of the Agreement, as well as the question of
which awards are to be considered for the purpose of the better off overall test and other
approval requirements, are to be considered by reference to clause 2.1 read in conjunction
with clause 5.
2 Appellant’s submissions, paragraph 3
6
[13] The unions’ submissions arranged their appeal grounds and contentions concerning
alleged error on the part of the Deputy President into three principal areas: the better off
overall test, pre-approval requirements and undertakings.
First appeal ground - the better off overall test
[14] The unions contended that the Deputy President erred in concluding that the
Agreement passed the better off overall test, such that the requirement of s 186(2)(d) of the
FW Act had not been met. Section 193 requires that the Commission be satisfied, at the “test
time”, that “each award covered employee” and “each prospective award covered employee
for the agreement” would be better off overall if the agreement applied to the employee than
if “the relevant modern award” applied to the employee (see also 193(4)(b) and 194(5)(b)).
[15] The unions note that the Decision does not, other than by recording the Commission’s
satisfaction as to the requirements of s 186, set out an analysis of the application of the better
off overall test, nor state the Commission’s reasons for reaching its state of satisfaction with
respect to the better off overall test.
[16] However, it is important to recognise that the Deputy President’s decision represents
the culmination of her process of consideration of the approval requirements, and the file
material clearly reveals that she engaged in an analysis of these requirements and raised with
the company a number of concerns in relation to them, including in respect of the better off
overall test. The company then filed a revised form F17 statutory declaration sworn by Mr
Prendergast, and offered a number of undertakings in relation to the Deputy President’s
concerns about the better off overall test, as measured against the Manufacturing Award.
However, the Deputy President was also concerned to understand whether indeed the
Manufacturing Award was the only relevant reference instrument.
[17] The Deputy President wrote to the company noting that its revised F17 had stated that
the primary activity of the company was “maintenance” and that, in answer to question 3.1 in
the revised F17, the company had stated that the award currently covering the employer and
employees covered by the agreement was the Manufacturing Award. She asked the company
to confirm that this was the only relevant reference instrument. The company’s response is not
evident from the file but it appears to have been affirmative.3
[18] The unions contend that this affirmative response was erroneous. They submit that,
even accepting that the scope of the Agreement is confined to the classification structure in
clause 5, the work to be performed under the Agreement is covered not only by the
Manufacturing Award but also by the Building and Construction Award, the Electrical
Contracting Award, and the Hydrocarbon Award.
[19] The unions’ written submissions contended that the Agreement failed the better off
overall test in relation to all four awards, however at the appeal hearing the unions conceded
that the Agreement passed the test in relation to the Manufacturing Award. For its part, the
company conceded in its written submissions that the Agreement would not pass the better off
3 Respondent’s submissions, paragraph 26
7
overall test against the Building and Construction Award or the Hydrocarbons Award,4 and at
the hearing also conceded that the Agreement would not pass the better off overall test against
the Electrical Contracting Award. It says however that it need not do so, because these awards
are not relevant awards for the purposes of the test.
[20] On the face of clause 2 and the classification structure in clause 5, the scope of the
Agreement would plainly cover employees undertaking work covered by each of the
additional three awards. For example, the Electrical Contracting Award would cover work
performed by an electrician special class at level 7 of the Agreement’s classification structure,
the Hydrocarbons Award would cover offshore commissioning work undertaken by a level 1
labourer, and the Building and Construction Award would cover the work undertaken by a
forklift operator or dogperson at level 3.
[21] However the company contends that its business is in the manufacturing industry and
that therefore, by operation of the terms of the Manufacturing Award and exclusionary
provisions in the other awards, it is the Manufacturing Award alone that covers work within the
scope of the Agreement. The company’s argument runs as follows.
[22] A modern award covers an employer or employee if the award is expressed to cover
them (s 48(1)). Clause 4.1 of the Manufacturing Award states that it covers “employers
throughout Australia of employees in the Manufacturing and Associated Industries and
Occupations who are covered by the classifications in this award and those employees”.
Clause 4.9 then defines these industries and occupations in subparagraphs (a), (b), and (c).
Clause 4.9(a)(iii) reads:
“(iii) the repair, refurbishment, reconditioning, maintenance, installation, testing and
fault finding of:
any of the items referred to in clause 4.9(a)(i); or
floor covering; or
plant, equipment and buildings (including power supply) in the industries and
parts of industries referred to in clauses 4.9(a)(i) and (ii); or
plant, equipment and buildings (including power supply) in any other
industry.”
[23] The company says that its business is one that involves “the repair, refurbishment,
reconditioning, maintenance, installation, testing and fault finding of” what appears in the last
dot point, namely “plant, equipment and buildings (including power supply) in any industry”.
The company says that it is therefore covered by the Manufacturing Award.
[24] To this point, the company’s argument meets no objection from the unions, because
they acknowledge that the company is covered by the Manufacturing Award and that this is
one of the relevant reference instruments for the better off overall test. What is contentious is
the second plank in the company’s argument, namely that the other awards are not also
relevant for the purposes of the better off overall test. The company’s submissions in respect
of the three awards are as follows.
4 Ibid, paragraph 37
https://www.fwc.gov.au/documents/documents/modern_awards/award/ma000010/ma000010-05.htm#P239_23667
https://www.fwc.gov.au/documents/documents/modern_awards/award/ma000010/ma000010-05.htm#P235_23293
https://www.fwc.gov.au/documents/documents/modern_awards/award/ma000010/ma000010-05.htm#P235_23293
8
Building and Construction Award
[25] Clause 4.1 of the Building and Construction Award states that it “covers employers
throughout Australia in the on-site building, engineering and civil construction industry and
their employees in the classifications set out within Schedule B – Classifications Definitions to
the exclusion of any other modern award.” Clause 4.9 then defines “on-site building,
engineering and civil construction industry” to mean “the industry of general building and
construction, civil construction and metal and engineering construction, in all cases
undertaken on-site”. Importantly, clause 4.2 contains a “carve-out” stating that “without
limiting the generality of the exclusion, this award does not cover employers covered by”
eight listed awards, the first of which, at subparagraph (a), is the Manufacturing Award.
[26] The company says that, where the Manufacturing Award covers Specialist People with
respect to relevant employees, no question arises as to which of the two awards is more
appropriate: the Manufacturing Award will necessarily cover Specialist People to the
exclusion of the Building Award because of clause 4.2(a). We note at this point that, clearly,
the exclusion in clause 4.2 of the Building and Construction Award must, as the company’s
submissions acknowledge, be read as attaching to employers covered by the Manufacturing
Award not generally, but with respect to relevant employees.
Hydrocarbons Award
[27] The Hydrocarbons Award covers employers throughout Australia who are engaged in
the hydrocarbons industry, as defined, in respect of employees falling within the
classifications listed. It too contains a carve-out for work covered by the Manufacturing Award,
although there is an exception to it. Clause 4.3(e) states that the Hydrocarbons Award does
not cover “employers in respect of their operations or activities covered by the Manufacturing
and Associated Industries and Occupations Award 2010, except for work covered by clause
4.2 above”.
[28] Clause 4.2(e) of the Hydrocarbons Award covers the following:
“(e) the commissioning, servicing, maintaining (including mechanical, electrical,
fabricating or engineering and preparatory work) modification, upgrading or repairing
of facilities, plant and/or equipment used in the activities set out above by employees
principally employed to perform work on an ongoing basis at a location where the
activities described above are being performed;”
[29] The company says that although “commissioning, servicing, maintaining (including
mechanical, electrical, fabricating or engineering and preparatory work) modification,
upgrading or repairing of facilities, plant and/or equipment” could fairly be said to describe
some of the work that can be undertaken by employees under the Agreement, employees were
not at test time, nor will they be, “principally employed to perform work on an ongoing basis
at a location where the activities described above are being performed”. Therefore the
exception to the “carve out” for the Manufacturing Award is not engaged.
[30] The company says that although it might, on a project basis, provide manufacturing
and maintenance services to offshore oil and gas clients whose operations fall within the scope
9
of the hydrocarbons industry as defined in the Hydrocarbons Award, this would not alter the
fact that the Manufacturing Award applies to the exclusion of the Hydrocarbons Award.
Electrical Contracting Award
[31] The company’s contention in relation to the Electrical Contracting Award is more
straightforward. Clause 4.1 of that award states that it applies “in the industry of electrical
services provided by electrical, electronics and communications contractors and their
employees in the classifications within Schedule B—Classification Definitions to the exclusion
of any other modern award”. The company says that it is quite simply not an “electrical,
electronics and communications contractor”. It submits that, although electrical services form
one aspect of Specialist People’s manufacturing and maintenance business, they do not form
its substantial character, and nor can it be said that Specialist People is an “electrical,
electronics and communications contractor”.
[32] More generally, the company says that the type of work that it performs and hopes to
perform under the terms of the Agreement is directed toward producing a “final product” for
a client.5 The Agreement covers employees working in metal trades, boilermakers, welders,
fitters and associated trades such as crane drivers, riggers, painters and blasters, and the
company contends that each of them is involved in metal manufacturing and maintenance
work. The company says that the employees with whom it made the Agreement were, at the
time of its making, performing work including maintenance, structural steel fabrication and
associated surface treatment works.6 At the test time, the substantive character of Specialist
People’s business was that of manufacturing and maintenance. The company says that it did
not then and does not now intend to conduct another enterprise that falls outside the
“manufacturing industry”, as that term is defined in the Manufacturing Award.
Disposition of the BOOT point
[33] We reject the company’s contention that the Manufacturing Award was the only
relevant award for the purposes of the better off overall test. Its argument does not engage
with the terms of the Agreement. Based on the affidavit of Mr Prendergast, it may be accepted
that Specialist People is, and wishes to remain, an employer that is engaged in work in the
manufacturing industry. However, nothing in the Agreement manifests this intention, or
otherwise anchors the company’s business to the manufacturing industry in respect of the
work that employees employed under the Agreement may perform. The Agreement does not
say that the company is in the manufacturing industry or that the instrument will only have
application to employees if or to the extent that the company undertakes work in the industry.
[34] The company contended that at the test time, if the employees had been undertaking
any of the work covered by the Agreement, the Manufacturing Award alone would have
applied to them, because the Award focuses on the company’s industry, and the exclusions in
the other awards apply. However, the better off overall test, as expressed in s 193(1), asks
whether each award covered and prospective award covered employee for the agreement
would be better off overall under the agreement than the award, and ss 193(4) and (5) define
5 Respondent’s submissions, paragraph 19
6 Ibid, paragraph 17
https://www.fwc.gov.au/documents/documents/modern_awards/award/ma000025/ma000025-42.htm#P1368_138989
https://www.fwc.gov.au/documents/documents/modern_awards/award/ma000025/ma000025-42.htm#P1368_138989
10
“award covered employee” and “prospective award covered employee” as employees who are
or would be covered by a modern award that is in operation and which covers the employee in
relation to the work that he or she is to perform.’ It is not enough to identify the industry of
the employer and the Award that applies to it at the time it makes the agreement. The scope of
work that may be undertaken under the agreement is a central part of the analysis.
[35] As noted earlier, the Agreement on its plain terms covers work that falls within the
scope of the other three awards. Further, there is nothing in the Agreement to prevent the
company having employees work such that the exclusions in the other awards do not apply.
For example, it could have employees “principally employed to perform work on an ongoing
basis at a location where the [hydrocarbon-related] activities described above are being
performed”, such that the exception to the carve-out in the Hydrocarbons Award is engaged
and the carve-out will not apply. Similarly, the company could under the Agreement provide
services in a manner akin to an electrical contractor, such that the relevant work would fall
squarely within the coverage of the Electrical Contracting Award. Contrary to the company’s
submission, this is not an exercise in speculation, but of ascertaining objectively the scope of
the work that is covered by the enterprise agreement.
[36] The better off overall test must be assessed in light of the work that may be performed
under an agreement, measured against the relevant awards. If an agreement allows for work to
be performed in a manner that would bring it within the coverage of a particular award, this
must be taken into account. Fanciful or improbable working arrangements can of course be
put to one side in conducting the analysis required by the better off overall test. But there is
nothing fanciful about the possibility of work under this Agreement falling within the scope
of the other three awards. The terms of the Agreement expressly permit this to occur. On the
company’s argument, its link with the manufacturing industry prevents this from occurring,
but the Agreement makes no reference to this at all. The company says that it will maintain
the link as a matter of operational fact, but the Commission cannot content itself with
informal statements of intention.
[37] The company contends that the Deputy President considered the question of what were
the relevant modern awards for the purposes of the BOOT in correspondence with the
company, and that she had before her information that was sufficient to substantiate that the
company’s primary activity was “maintenance” and that this would remain the case, such that
work that will be performed under the Agreement is and will be covered by the
Manufacturing Award to the exclusion of the other awards.7
[38] As we understand that submission, the company’s contention is that the Deputy
President’s decision was a discretionary one and that any error was within jurisdiction
because she asked herself the right question. In our view, the Commission does not have a
discretion to determine the relevant reference instrument for the purpose of the better of
overall test. The question of what is the “relevant modern award” is one of law, and is not
discretionary in nature. It is not apt to speak, as the company does, of the Deputy President
reaching a conclusion on award coverage that was open to her. It was necessary to reach the
correct conclusion. On the plain terms of the Agreement, it is not an instrument that applies
only to work in the manufacturing industry.
7 Respondent’s submissions, paragraphs 23 to 27
11
[39] In our view, each of the Building and Construction, the Hydrocarbons and the
Electrical Contracting Awards were relevant modern awards for the purpose of assessing
whether the Agreement passed the better off overall test. As noted above, the company
concedes that the Agreement does not pass the better off overall test against the three other
awards. It follows that the Agreement was, in the terms in which it was made, incapable of
satisfying the approval requirement in s 186(2)(d). The Deputy President erred in concluding
otherwise.
Application under s 217 to remove ambiguity or uncertainty
[40] It is convenient at this point to address the company’s application to the Full Bench to
vary the Agreement under s 217 of the FW Act to remove ambiguity or uncertainty. The
company contended, should its primary submissions not be accepted, that the grant of this
application would be a practical way to resolve any problem that the Agreement fails the
better off overall test against the three other awards by confining the scope of the Agreement
to work covered by the Manufacturing Award. In this respect, the application sought to
effectuate two amendments to clause 2.1(b), so that it would read as follows:
“b) employees of the Company employed in the classifications at clause 5.3 to
perform work in Australia (onshore or offshore), including but not limited to earth
works, civil works, concrete works, infrastructure, utilities, fabrication, preassembly,
assembly, disassembly, construction, maintenance, breakdowns, shutdowns,
turnarounds, access of any type (including by rope), preparatory, repair, demolition,
modification, pre-commissioning, commissioning, de-commissioning, hook-up, hook-
up and commissioning, completions, local service upgrades, minor capital or capital
works and all associated works for all areas listed above (employees), in
circumstances where such work is covered by the Manufacturing and Associated
Industries and Occupations Award 2010.” (emphasis added)
[41] The principles that apply to the Commission’s consideration of such applications are
well-settled.8 First, the Commission must identify whether there is any ambiguity or
uncertainty in the agreement. The Commission must make a positive finding as to whether the
relevant provisions of the agreement are ambiguous or uncertain. This is a jurisdictional pre-
requisite to the exercise of the discretion to vary the instrument. The process of considering
whether there is ambiguity or uncertainty involves an objective assessment of the words in
question, construed in context. The mere existence of rival contentions as to the proper
construction of the terms of an agreement is not a sufficient basis to conclude that there is
ambiguity or uncertainty. The competing contentions should have merit.
[42] Once ambiguity or uncertainty has been identified, the Commission must then
consider whether to exercise its discretion to vary the agreement. The Commission has
discretion to “remove ambiguity or uncertainty”, not to give effect to a new and substantive
change to the agreement. Applications that seek the latter must be made under s 210 of the
FW Act. A decision of the Commission under s 217 to remove uncertainty or ambiguity
8 See United Voice v MSS Security Pty Ltd [2016] FWCFB 4979 at [19] and Bradnam’s Windows and Doors Pty Ltd [2019]
FWCA 979 at [11].
12
should give effect to the substantive agreement that was ambiguously or uncertainly reduced
to writing in the terms of the enterprise agreement.
[43] In respect of the first proposed amendment to clause 2.1(b), we would be prepared to
accept that the Agreement is textually uncertain, but not ambiguous, in relation to the question
of whether the scope of the Agreement is confined by reference to the classification structure
in clause 5. Neither clause 2 nor any other provision expressly states that this is so. The text is
not clear, even if the intention seems rather obvious. The proposed variation is similar to one
accepted by the Full Bench in CFMMEU v Macmahon Contractors Pty Ltd9, where an appeal
from a decision to approve an enterprise agreement contended that the agreement did not pass
the better off overall test because the agreement’s rostering provisions conferred an open
discretion on the company in relation to the configuration of rosters. The company submitted
that it was intended that only three roster patterns could be utilised, namely those for which a
rate of pay was prescribed elsewhere in the agreement.10 The Full Bench concluded that the
agreement was ambiguous. There were two cogent and competing contentions, and it was
appropriate to vary the agreement, which was in the interests of employees and also resolved
the concern raised by the appellant union.
[44] However, in relation to the second proposed amendment to clause 2.1(b), we are not
convinced that the Agreement is ambiguous or uncertain in the second respect. In contrast to
the first matter, where competing contentions about the proper interpretation of the instrument
are grounded in its text, there is nothing in the Agreement to support to the contention that its
scope is confined to work that is covered by the Manufacturing Award.
[45] It is relevant to note clause 9 of the Agreement, which was the subject of an
undertaking given by the company to the Commission that it would not be relied upon, made
provision for special working arrangements. It applied in circumstances where an employee
was “engaged in specialised work, as defined by the Employer, particularly construction or
maintenance work, which requires work to be organised in a method which is inconsistent
with the hours of work provided by this Agreement”. In such a case, clauses 5 (classification
and wage rates), 7 (hours of work) and 8 (shift work) would not apply while employees were
performing such work. On one view, the presence of this clause in the Agreement as
submitted to the Commission suggests that an even broader scope was intended to be given to
the Agreement, as not even the classifications in clause 5 would apply in cases where
“specialised work” was performed. Further, the clause referred to such work including
“construction or maintenance”, disjunctively, which suggests that work might be undertaken
exclusively in a construction setting.
[46] A further textual indication of a scope unconfined by reference to the Manufacturing
Award is that some of the classifications in clause 5 would appear to be unclassifiable in or
untranslatable into the classification structure in the Manufacturing Award. For example,
included at level 4 of the table in clause 5 of the Agreement is “cryogenic insulator”. It is not
clear to us how such an employee could be covered by the Manufacturing Award. The same
can be said for “concreter” or “dogperson” at level 3.
9 [2018] FWCFB 4429
10 Ibid at [11] and [12]
13
[47] The company submitted that principles of contractual construction governing recourse
to extrinsic materials are also relevant to the question of whether the Agreement is ambiguous.
It says that regard may be had to evidence of surrounding circumstances to assist in
determining whether an ambiguity exists. If, after having regard to that evidence, an
expression in an agreement is unambiguous or susceptible of only one meaning, evidence of
surrounding circumstances cannot be used to contradict its plain meaning. However, recourse
to evidence of surrounding circumstances may be necessary to identify the purpose or objects
of the agreement, or to determine the proper construction where there is a constructional
choice.
[48] In Australian Manufacturing Workers’ Union v Berri Pty Limited11 the Full Bench
noted that evidence of surrounding circumstances is admissible in aid of interpretation of the
agreement, but not if the agreement has a plain meaning.12 However, even if one accepts that
regard might be had to the surrounding circumstances in order to establish whether the terms
of an agreement are ambiguous, we are not persuaded that the relevant materials bear out any
ambiguity or uncertainty in the present case. In support of the application for approval of the
Agreement, the F17 statutory declaration noted that the Manufacturing Award was the
relevant reference instrument, and that the primary activity of the employer was
“maintenance”. But this does not suggest any limitation on the scope of work the company
was intending to carry out under the Agreement.
[49] The affidavit of Mr Prendergast filed at the hearing attests to the company’s intended
field of work and the rationale for making the Agreement. He said that the coverage of the
Agreement took into account that clients might require the company to perform ancillary or
complementary work on site, but that this would still be manufacturing in nature. He also said
that employees employed at the time of making the Agreement were employed in
classifications such as boilermaker, painter, blaster and advanced rigger, which were
maintenance related roles. But there is no evidence that employees understood that the scope
of the Agreement would be confined in the way the company says, by reference to the
coverage of the Manufacturing Award. Although there are no “parties” per se to enterprise
agreements made under Part 2-4 of the FW Act, any concept of mutual objective intention
that might inform the proper interpretation of an agreement would need to take into account
the intention or understanding of employees, who after all are those who make the agreement
when by majority they approve it under s 182.
[50] As we are not convinced that the Agreement is ambiguous or uncertain in relation to
the second point of construction raised in the s 217 application, we have no jurisdiction to
vary the Agreement to confine its scope to work that is covered by the Manufacturing Award.
We would have been prepared to vary the Agreement under s 217 to give effect to the first
proposed variation. However, this would not appear to have any utility, as it would not by
itself resolve the problem we have identified and lead to the Agreement passing the better off
overall test.
Conclusion re BOOT point
11 [2017] FWCFB 3005, 268 IR 285
12 Ibid at [114]
14
[51] Unless addressed under s 189 or 190, an enterprise agreement cannot be approved if it
does not pass the better off overall test approval requirement in s 186(2)(d). Accordingly the
Decision was attended by appealable error. We consider therefore that permission to appeal
should be granted, the appeal upheld, and the Decision quashed. However we consider that,
unless one of the unions’ other appeal grounds is unequivocally made out, the appropriate
course is not simply to dismiss the company’s application for approval of the Agreement but
to re-hear it such as to give the company the opportunity to resolve the BOOT difficulty by
way of appropriate undertakings. It is therefore necessary for us to consider those other appeal
grounds.
Other appeal grounds
[52] In relation to the third appeal ground, the unions submitted that the Agreement and the
effect of its terms were not adequately explained to employees as required by s 180(5), and
that the Deputy President could not therefore have been satisfied that the Agreement was
genuinely approved. It contended that the company’s explanation of the terms was contained
in a single table summarising the import of some clauses, and that it did not address the range
of classifications that the Agreement covers, the roster patterns that would be worked, or the
range of modern awards that would otherwise cover the work in question and the relevant
benefits that would be provided under the Agreement.
[53] We note that the three employees who voted on the Agreement were provided with an
information sheet on 19 November 2018 summarising key terms of the Agreement. Based on
the information in the F17s, it appears evident that the employees were actively engaged in
bargaining. They were also provided with copies of enterprise agreements of various
competitors, to enable them to understand the conditions in the Agreement in a market
context. That would normally provide a substantial basis to conclude that the requirement in s
180(5) had been complied with.
[54] However, a question arises as to how the explanation of the terms of the Agreement
could have been adequate if the employer proceeded on the basis that there was only one
relevant award, namely the Manufacturing Award. Mr Prendergast’s affidavit indicates that
the employees who voted on the Agreement were employed in work that was covered by that
award, but it does not appear to have been explained to employees that they might undertake
work covered by the other awards. This issue was not explored in an evidentiary sense at first
instance, nor did the company address us on the significance of this matter in the appeal as its
primary contention was that the other awards did not apply. Further, had the issue been raised
at first instance, the company would have had the opportunity to advance a case that any
deficiency in its explanation of the Agreement in this respect was a minor technical or
procedural error to which s 188(2) applied. For these reasons, we do not consider that we are
in a position to simply uphold this appeal ground and dismiss the application for the approval
of the Agreement. It is a matter which the company may (and will need to) address at a re-
hearing of the application.
[55] As to the fourth appeal ground, the unions submitted that the company’s undertaking
to, in substance, remove clause 9 from the Agreement constituted a major change to the
Agreement approved by employees. As mentioned earlier, the effect of clause 9 was
15
effectively to suspend certain clauses of the Agreement when employees worked on
“specialised project work”.
[56] In our view the Deputy President was right to seek an undertaking in relation to this
provision. We do not see how the better off overall test could have been reliably undertaken
otherwise. However, contrary to the unions’ additional ground of appeal, we do not consider
that accepting this or the other undertakings resulted in substantial change to the Agreement.
As observed by the Full Bench in CFMEU v Kaefer Integrated Services Pty Ltd,13 the
legislative concern in s 190(3)(b) appears to be to avoid imposing on employees arrangements
that they have not approved. They are not likely to object to higher monetary amounts or other
modifications that fundamentally protect their interests. We acknowledge that there is a
separate requirement in s 190(3) that undertakings not cause financial detriment to any
employee covered by the Agreement (s 190(3)(a)), and that an undertaking might meet this
condition but still result in substantial change and not be capable of acceptance for this reason
alone. However the undertaking in relation to clause 9 is not of this kind. It removed an
exception to the Agreement’s ordinary application. The position might be different if an
undertaking introduced working arrangements that had not been sanctioned by employees.
However, this does not arise in the present matter. We therefore reject the fourth appeal
ground.
Conclusion and orders
[57] For the reasons given, we propose to quash the Decision and to rehear the company’s
application for approval of the Agreement. The company will have the opportunity to offer
appropriate undertakings to address how the Agreement might pass the better off overall test
against the other three awards, and to provide any further submissions addressing s 180(5)
and s 188(2).
[58] We order as follows:
(1) Permission to appeal is granted.
(2) The appeal is upheld.
(3) The Decision ([2019] FWCA 3535) is quashed.
(4) The Full Bench will re-determine the application for approval of the Specialist
People Enterprise Agreement 2018. The company is to send to the chambers of
the presiding member any undertakings and further submissions on ss 180(5)
and 188(2) in support of its application within 14 days of the date of this
decision.
13 [2017] FWCFB 5630, 271 IR 273 at [40]
16
VICE PRESIDENT
Appearances:
T Borgeest of counsel for the appellants
A Pollock of counsel for the respondent
Hearing details:
2019.
Melbourne:
July 22.
Printed by authority of the Commonwealth Government Printer
PR712201
OF THE FAIR WORK MISSION THE
