1
Fair Work Act 2009
s.604 - Appeal of decisions
Construction, Forestry, Maritime, Mining and Energy Union
v
Karijini Rail Pty Ltd
(C2019/6117)
DEPUTY PRESIDENT GOSTENCNIK
DEPUTY PRESIDENT MASSON
COMMISSIONER LEE
MELBOURNE, 3 MARCH 2020
Appeal against decision [[2019] FWCA 6451] of Deputy President Beaumont at Perth on 16
September 2019 in matter number AG2018/3844.
Introduction and Background
[1] On 14 August 2019 Karijini Rail Pty Ltd (Karijini) applied to the Fair Work
Commission (Commission) for approval of the Karijini Rail Pty Ltd Rail Operations Pilbara
Enterprise Agreement 2018 (Agreement). The Agreement was approved by Deputy President
Beaumont with undertakings on 16 September 2019 (Approval Decision).1 The Construction,
Forestry, Maritime, Mining, and Energy Union (CFMMEU) opposed the approval of the
Agreement on several grounds and while it was not a bargaining representative for the
proposed agreement, the Deputy President decided to hear from the CFMMEU. The
Agreement covers employees engaged in one of three classifications described as Railway
Worker Levels 1, 2 and 3. Karijini supplies rail crew labour to Roy Hill Infrastructure Pty
Ltd in connection with the Roy Hill iron ore mine (Roy Hill) in the Pilbara region of Western
Australia. Karijini’s employees drive trains hauling iron ore from the mine to the Port of Port
Hedland.
[2] Karijini is one of a group of related companies and is a subsidiary of Railtrain Group
Pty Ltd (Railtrain) which operates a labour hire business and relevantly supplies train drivers
in the rail and mining industry in Queensland, New South Wales, Victoria, South Australia
and Western Australia2. Another subsidiary of Railtrain is TRRC Pty Ltd (TRRC).3 As at
December 2018, the Railtrain Group had about 400 employees throughout Australia.4
1 Karijini Rail Pty Limited [2019] FWCA 6451
2 Appeal Book Tab 9 at [10] - [14], Tab 3 at [21] - [22], Tab 33 at p. 642
3 Appeal Book Tab 3 at [21]
4 Appeal Book Tab 6, at PN374
[2020] FWCFB 958
DECISION
E AUSTRALIA FairWork Commission
2
[3] In 2018 TRRC had a contract to provide a rail crew workforce to Roy Hill
Infrastructure Pty Ltd to work in connection with Roy Hill (TRRC Contract).5 This contract
involved the provision of approximately 50 train crew who were employed by TRRC to drive
trains hauling iron ore. The termination date of the contract was 31 October 2018.
[4] The employment of the TRRC drivers was covered by TRRC Pty Ltd Operations
Agreement 2014, the nominal expiry date of which was 21 January 2019.
[5] During discussions in May or June of 2018, Roy Hill indicated that a further 4 year
contract would be offered if an enterprise agreement covering the workforce was in place for
the duration of the new contract.6 Railtrain determined to incorporate Karijini and to seek to
make an enterprise agreement through it.7 One reason for using Karijini was that it created an
opportunity to negotiate a new enterprise agreement, which in turn would allow a further
contract with Roy Hill to be obtained.8 Karijini was registered as a company on 22 June 2018.
[6] On or about 9 July 2018 Karijini employed two employees. Both employees were
well known to Railtrain’s Director of Business Transformation, Mr Graham Butler, as
experienced train drivers with more than 15 years’ experience in driving trains in the Pilbara.9
Both had previously registered their interest to work at Railtrain.10
[7] The two employees started paid work at Karijini on 9 July 2018. For the first 14 days,
they carried out compulsory training required by Roy Hill, attending in accordance with their
normal roster pattern.11 Before the Agreement commenced operation and during their
employment with Karijini the Mining Industry Award 2010 (Award) applied to the
employment of the two employees.
[8] The contracts of employment of these employees were ‘maximum term’ contracts, so
that their employment term could be aligned with the commercial agreement that Karijini
anticipated entering with Roy Hill.12 The end of term for each employment contract was 30
April 2022.13 The employment contracts provided for flat rates of pay inclusive of all
applicable penalties and allowances.14
[9] On 2 August 2018 Karijini “made” the Agreement when the two employees voted to
approve it.15 Clause 2.1(b) of the Agreement provides that it covers employees employed in
the classifications in clause 5 of the Agreement when engaged in rail operations at the Roy
Hill Operations in the Pilbara Region. The classifications in the Agreement are noted earlier
in this decision.
5 Appeal Book Tab 6 at PN97
6 Appeal Book Tab 3 at [25]; Tab 6, PN78,79, 80, 84,85, 97, 103, 106, 111,118, 121, 696
7 Appeal Book Tab 6, at PN116
8 Appeal Book Tab 6, at PN111, PN118 - PN122
9 Appeal Book Tab 9, p.247 at [37]
10 Appeal Book Tab 6, at PN131-PN137
11 Appeal Book Tab 9, p.248 at [29] - [40]
12 Appeal Book Tab 9, p.246, at [31]
13 Appeal Book Tab 9, p.262 and 269
14 Appeal Book Tab 6, at PN274-PN280
15 Appeal Book Tab 34, p.649 (by reference to the unredacted version)
3
[10] On about 3 September 2018 Karijini entered into a contract with Roy Hill, to provide
the rail crew workforce that had previously been provided by TRRC.16 The term of the
contract was 1 November 2018 to 30 April 2022.17
[11] Self-evidently, when the Agreement was made, and until about 1 November 2018,
Karijini had no work falling within clause 2.1(b) of the Agreement as the contract with Roy
Hill for the supply of labour had not commenced. During the early period of their
employment, the two employees who voted to approve the Agreement were ‘seconded’ to
TRRC to perform work at Roy Hill alongside the other TRRC employees.18 The secondment
was from 6 August 2018 (on completion of training) until about 1 November 2018, when the
contract commenced. The circumstances of the secondments were explained in the evidence
as follows. The TRRC Contract obliged TRCC to supply to Roy Hill 50 drivers at all times.
By early July 2018, TRRC’s driver numbers were down to 48, leaving two
vacancies.19 Given the approaching expiry of the TRRC Contract, a business decision was
made to fill the vacancies by having the newly formed Karijini employ two train drivers who
would be seconded to TRRC until 1 November 2018.20
[12] With effect from about 1 November 2018, a number of TRRC employees
(approximately 48 full-time and four casual employees) who had worked at Roy Hill
transferred to Karijini to perform, in essence, the same work at Roy Hill they had performed
for TRRC.21 All full-time TRRC employees were offered maximum-term contracts with the
same flat rates as the two existing Karijini employees; the casual TRRC employees were
offered casual contracts with the higher casual flat rates; all of the employees accepted the
offer.22
[13] The reasons for the Deputy President’s approval of the Agreement with undertakings
are found in the Approval Decision, which deals with undertakings, and in an earlier decision
published on 30 April 2019 which deals with the various matters raised by the CFMMEU in
opposition to the approval application (April 2019 Decision).23
[14] As already noted, the CFMMEU objected to the approval of the Agreement on a
number of grounds and the Deputy President upheld one of these grounds (in part), namely
that the requirement in s.186(2)(a) of the Act (genuinely agreed) had not been met because
she was not satisfied that Karijini had complied with s.180(5). This was because Karijini had
not explained how the base rate of pay was made up and how it compared to the rates of pay
and allowances under the Award.24 The Deputy President directed that further materials be
filed addressing whether s.188(2) had application; and whether an undertaking under s.190
could be accepted to address any ‘concern’ about the requirement in s.186(2)(a) because of a
failure to comply with s.180(5).25
16 Appeal Book Tab 9, p.243 at [13]
17 Appeal Book Tab 23, p.442
18 Appeal Book Tab 9, p. 248 at [42]
19 Appeal Book Tab 6 at PN101
20 Appeal Book Tab 6 at PN104- PN105
21 Appeal Book Tab 6 at PN52 – PN62, PN983 – PN986
22 Appeal Book Tab 22, p.425 at [4] - [5]
23 Karijini Rail Pty Limited [2019] FWC 2907
24 Ibid at [7] - [15]
25 Karijini Rail Pty Limited [2019] FWCA 6451 at [4]
4
[15] Karijini had previously proffered undertakings to address the ‘Better Off Overall Test’
(BOOT) concerns.26 In response to the Deputy President’s finding concerning the
requirement in s.186(2)(a) and s.180(5), Karijini proffered amended undertakings which
relevantly provided that employees would be paid all-inclusive flat rates ranging from $55.30
to $71.94 per hour for maximum term employees, and $60.52 to $77.97 per hour for casual
employees.27
[16] In the Approval Decision the Deputy President determined that her concern about
Karijini’s failure to comply with s.180(5) could be addressed by an undertaking under s.190,
and that the undertaking noted above met her concern.
[17] The Deputy President held, in the event she was wrong as to the undertaking
conclusion, that Karijini’s failure to comply with s.180(5) was a minor procedural error
within the meaning of s.188(2)(a).
[18] The CFMMEU seeks permission to appeal, and if permission is granted appeals the
decision of the Deputy President to approve the Agreement.
Decision to approve the Agreement
The April 2019 Decision
[19] The April 2019 Decision deals with, inter alia, matters raised by the CFMMEU in
opposition to the approval of the Agreement. These matters concerned, in summary, whether
the employees who made the Agreement were covered by it at the time of the vote to approve
the Agreement; whether the Agreement has been genuinely agreed to by the relevant
employees (by reason of an alleged failure by Karijini to comply with s.180(5) of the Act and
because there were said to be other reasonable grounds for believing the Agreement has not
been genuinely agreed to by the relevant employees); whether the Agreement passed the
BOOT; and whether the terms of the Agreement contravened s.55 of the Act.
[20] At [1]-[74] of the April 2019 Decision the Deputy President sets out the procedural
history of the application, the issues raised by the CFMMEU, some of the background factual
matters and the statutory framework relevant to the issues requiring determination.
[21] The Deputy President then turns to consider the coverage issue. The parties’
submissions are summarised at [75]-[81]. The Deputy President determined that the two
employees were covered by the Agreement. This determination is not challenged on appeal,
so we need not consider this aspect further.
[22] At [108] the Deputy President begins to deal with the genuinely agreed matters. The
parties’ submissions are summarised at [108]-[116]. As to the s.180(5) point, the Deputy
President concluded that she was not satisfied that Karijini had complied with s.180(5). After
considering some relevant authorities and some of the evidence ([117]-[139]) the Deputy
President reasoned as follows:
26 Karijini Rail Pty Limited [2019] FWC 2907 at [190]
27 Karijini Rail Pty Limited [2019] FWCA 6451 at Annexure A at [7].
5
“[140] I have considered the experience of the two employees as purported by Karijini,
and the evidence of their familiarity with with processes, and employment terms and
conditions relevant to their industry. As to their knowledge of the relevant modern
award, I have observed that for the purpose of the BOOT, the two employees were
informed it was the Award.
[141] While the two employees were informed of the Award, and undoubtedly had
extensive experience within the Pilbara driving trains, I am not convinced that such
circumstances negated all reasonable steps including more than what was provided in
the content of the Explanatory Document and the discussion with Mr Butler
concerning the final terms of the Agreement. I have taken into consideration the
discussions held with Mr Elston, notwithstanding their occurrence during bargaining
and training, because I consider such discussions inform as to the needs of the relevant
employees. Further, I consider that the two employees were afforded opportunities to
ask questions about the Agreement. My conclusion, however, remains unchanged.
[142] In the Form F17, the response to whether the Agreement provided more
beneficial terms and conditions to the equivalent in the Reference Instrument was in
the affirmative, and reference was made to clauses 5, 7, and 9 of the Agreement.
Clause 5 relevantly provided the base rates of pay per hour for the three levels of
‘Railway Worker’. Clauses 7 and 9 dealt with overtime and shift work respectively.
[143] It can be seen then that cl 5 was one of only three clauses considered more
beneficial than the terms of the Reference Instrument. Nevertheless, evidence of the
explanation provided concerning the base rates of pay was limited. There was limited
information regarding how this clause provided an entitlement that was more
beneficial than that provided in the Award, and limited explanation given how the base
rate of pay compensated for allowances that would otherwise be provided by the
Award. Mr Butler clearly went into some detail with the two employees about pay,
when asked. However, the content of the discussion for the most part centred on the
operation of the IFA. On this point he stated:
…So, effectively, they were asking me, “Do we get paid day shift, night shift,
penalties, whatever?” And I said, “No, you'll vary with an IFA, individual
flexibility arrangement, that we pay a one-off all-up rate, all-inclusive rate.”
[144] In the Explanatory Document under the section ‘What is the remuneration under
this agreement?’ there was no reference to the minimum base rates of pay including or
excluding any allowances provided by the Award.
[145] While the Explanatory Document stated that shift workers would receive a 25%
shift loading on top of the base rate of pay, there was a paucity of explanation
concerning what this compensated for in comparison to the loadings, penalties, or
allowances in the Award. In a later part of the Explanatory Document concerning
allowances, it simply stated ‘there are no other additional allowances applicable under
this Agreement’.
[146] Karijini submitted:
6
In circumstances where enterprise agreements commonly apply in the Pilbara
iron ore industry, comparisons to the reference award could confuse employees
about their entitlements rather than improve their understanding of the effect of
the terms of the Agreement.
[147] While Karijini noted that comparison to the Award could confuse employees,
this proposition lacks lucidity in the current context. Karijini itself identified only
three Agreement terms that were either more beneficial than, or not conferred by, the
Award. If an explanation of the effect of the terms in the Agreement is to be provided
then the logical comparator in the circumstances of this case was the Reference
Instrument. There has been no prior enterprise agreement in place within the
organisation and the two employees had not previously been involved in an agreement
making process within the company. A suggestion that such explanation may confuse
is not reason enough to conclude it is a step that is not reasonable. If confusion were to
arise that reflects not on the reasonableness of the step, but perhaps on the competence
of those explaining the terms.
[148] To ascertain compliance with s 180(5), the evaluation in this case must extend
beyond an assessment of the steps taken; it should include the content of the
explanation, in light of the circumstances and needs of the relevant employees. The
requirement to explain something entails the provision of information, which has more
detail than the content of the Agreement, and makes the Agreement terms and their
effect, clearer – except of course where the term of the Agreement is evidently self-
explanatory. As observed, this does not mean that every term of an enterprise
agreement must be explained in a forensic detail. Further, the circumstances and needs
of the relevant employees might be such that where an agreement is being rolled over
with an established workforce, the explanation may be limited. Perhaps it might entail
a one page memorandum, or evidence providing detail of the content of a discussion
held only about the proposed changes to the agreement’s final terms.
[149] An employee’s entitlement as far as base rates of pay, penalties and allowances
are concerned, are fundamental considerations for any employee. This was reflected in
the question of one of the two employees concerning how the salary was made up.
And yet, when this questioned was asked the explanation was, with respect, lacking in
clarity.
[150] In this case, compliance with s 180(5) necessarily entailed a description of how
the base rate of pay was made up and how it compared to the rates of pay and
allowances in the Award. It may be the case the penalties are compensated for by the
provision of a loading. Again, that required an explanation as to how that loading was
arrived at. This is particularly so when the employer, having used such form of rates
would have, in any event, determined the rates (allowances rolled in) and loading, and
then assessed whether the Agreement passed the BOOT. As it is, the Form F17
requires that the employer indicate if it thinks the Agreement passes the BOOT. While
the two employees were involved in the negotiations for the Agreement, it is not at all
apparent that an explanation in the aforementioned terms was given during
negotiations, or thereafter.
[151] Section 186(2) requires that the Commission must be satisfied that the enterprise
agreement has been genuinely agreed to and in that respect the term ‘genuinely agreed
7
to’ is given meaning by s 188(1). Section 188(1) informs the reader that an enterprise
agreement has been genuinely agreed to by the employees covered by the agreement if
the Commission, is, amongst other matters, satisfied that the employer has complied
with s 180(5). No such state of satisfaction has been reached.”28 [Endnotes omitted]
[23] As to the CFMMEU’s contention that for the purposes of s.188(1)(c) of the Act there
were several grounds for believing that the Agreement had not been genuinely agreed to the
Deputy President rejected these and reasoned:
“[157] While I have concluded I am not satisfied there was compliance with s 180(5) of
the Act, I am unable to reach the conclusion that there are other reasons for believing
that the Agreement was not genuinely agreed to because of the explanation provided.
While the steps taken fell short of ‘all reasonable steps’, it is not the case that the
consent of the employees was not informed. It was evident that at material times the
employees were asked whether they had any questions, and were provided with
opportunities to query answers provided. While it may have been the case that there
were some shortcomings with the answers provided, the evidence of Mr Butler was
that the two employees asked about the ‘BOOT test’ and what it stood for. Mr Butler
had explained that it was a better off overall test where the two employees’ conditions
and rates of pay were measured against the Award. Evidence was given that one of the
employees asked about the low rates of pay in comparison to the salary. Mr Butler said
he had responded that while the base rate was low if Saturdays, Sundays, weekends,
shift work, overtime to that rate were applied, it was tested against the Award to give
an all-up rate, and Karijini exceeded that. The Agreement did pass the BOOT.
[158] When determining whether or not there are other reasonable grounds for
believing that the enterprise agreement has not been genuinely agreed to, consideration
of the authenticity of the enterprise agreement, its soundness, and whether the
employees who will be covered by the enterprise agreement are informed of its terms
so it can be said that their ‘consent’ is informed, are relevant considerations. The use
of the word ‘genuinely’ in the phrase ‘genuinely agreed’ in ss 186(2)(a) and 188(1)(c)
of the Act, indicates that mere agreement will not suffice, and that consent of a higher
quality is required.
[159] There is no statutory requirement for the employer to provide a full explanation,
by explaining every feature or clause in a proposed enterprise agreement. As has been
observed much will turn on the circumstances of each case regarding what constitutes
‘all reasonable steps’. In this case I have concluded that the consent of the two
employees was informed notwithstanding the evident inadequacies concerning the
steps taken under s 180(5) regarding the explanation about the beneficial terms. This is
because ultimately, the two employees were informed that the base rates of pay and
loading in the Agreement exceeded the monetary compensation provided by in the
Award; their understanding of this is clear from the evidence.
[160] While the CFMMEU referred to flaws concerning the explanations provided, I
do not find that the flaws were such to render the two employees absent an informed
and genuine understanding of the Agreement. Again, the two employees were at all
relevant times afforded the opportunity to ask questions. If an answer provided failed
28 Karijini Rail Pty Limited [2019] FWC 2907 at [140] - [151]
8
to satisfy their curiosity as to what they were getting themselves into, the two
employees could have sought further explanation. That was readily apparent, and yet
the evidence is that they did not.
[161] The second ground that the CFMMEU relied upon was that because the
employees were not performing work covered by the Agreement they did not have
‘actual experience of the work and its place of performance’.
[162] The CFMMEU said that in the situation where the employees had no actual
experience of the work and location, it could not be said that the employees had
brought the requisite moral authority and authenticity necessary to be able to
genuinely agree to the Agreement (as referred to in Gordonstone.
[163] However, it is difficult to reconcile the CFMMEU’s second contention with
what the High Court determined in Aldi. Plainly, an enterprise agreement for a new
enterprise can be ‘made with existing employees of the employer who have agreed to
work, but are not at that time actually working, as employees in the new
enterprise’. Therefore, the mere fact that the two employees had not yet commenced
work driving the trains at the Roy Hill Operations does not alone provide grounds
alone for the conclusion that they were incapable of given authentic agreement.
[164] In its closing submissions, the CFMMEU advanced a further the argument
centred on authenticity, or the lack there of. In this respect it referred to the decision of
the Full Bench in KCL Industries (KCL), where it was found that the employees had
no ‘stake’ in the agreement because they were to be paid a higher rate of pay
regardless of the rate in the agreement. In effect, the CFMMEU considered the
situation analogous to that of Karijini. In doing so, it relied upon analogy with the
following:
In summary, the position is that the Agreement covers a wide range of
classifications most of which have no relevance to the work performed by
KCL’s three existing employees, encompasses industries in which KCL does
not currently operate, and contains rates of pay which, even in respect of those
classifications relevant to the current employees, are not to apply to those
employees. In those circumstances we do not consider that any authenticity
could attach to the agreement of the two employees to the rates and conditions
in the Agreement. The employees had no “stake” in the Agreement’s rates of
pay, since they were assured that their existing, higher rates of pay would
remain in place (subject to “operational needs and satisfactory performance”),
and they could not have given informed consent in relation to occupation and
industries in which they did not work and presumably had no experience.
[165] In KCL, the Full Bench was confronted with an agreement that set out
classifications and pay rates for private sector clerical employees,
manufacturing employees, and production and staff employees in the black
coal mining industry (with the last category including classifications for
surveyors, safety officers, deputies, forepersons, open cut overseers, geologists,
chemists, production supervisors and undermanagers). To state the obvious,
the Agreement before me covers only the classification of train driver,
distinguished by three different levels, in an industry in which Karijini was to
operate. It can be ascertained from the evidence that the two employees were
9
experienced train drivers, and had worked previously in the iron ore industry.
There is no obvious disjunction between the content of the Agreement and the
characteristics of those who entered it.
[166] In its submissions, Karijini observed that the assurance of higher rates of
contractual pay in KCL was one single factor in a factual setting which, viewed as a
whole, revealed a lack of authenticity attaching to the agreement of the employees.
The general proposition that an employee must be incapable of giving genuine
agreement to a proposed enterprise agreement if employed on contractual terms more
generous than the minimum entitlements he or she would have under the proposed
agreement, is problematic.
[167] Pragmatically, it would require the Commission in each case to evaluate the
more and less advantageous aspect of each employee’s contract in comparison to the
enterprise agreement. The suggestion that an employee lacks a stake in an enterprise
agreement where the minimum terms negotiated are better off overall when compared
to those in the relevant modern award cannot be correct. While the rate of pay in the
contract may be higher, and perhaps other terms in the contract are advantageous in
comparison, it remains the case that the employees have negotiated a new safety net of
minimal conditions better than those otherwise afforded through a reference
instrument. Had it been the intent of parliament to preclude employers from offering
more generous contractual conditions one would expect that this would be articulated
expressly in the legislation. It is not.
[168] Karijini submitted that the CFMMEU’s submissions suggested, at various
points, that there was something unusual or even untoward about the manner in which
the Agreement was made. Karijini went on to say that it was unclear to it whether the
CFMMEU relied on the suggestions in support of its contention that the Agreement
lacked ‘moral authority or authenticity’.
[169] At paragraph 26 of this decision, I outlined some of the CFMMEU’s closing
submissions regarding factual circumstances.
[170] Karijini submitted that there was nothing untoward about the selection of the
two employees as Karijini’s first employees. Two vacancies had to be filled to meet
the requirements of the TRRC contract, and apparently employing TRRC drivers
would not have resolved the issue. Railtrain’s decision to have Karijini secure the Roy
Hill contract was said to have reflected the commercial reality that Roy Hill required
the labour supplied to have an enterprise agreement of an appropriate duration in place
to ensure continuity of production.
[171] The TRRC drivers are, however, worth mentioning. The CFMMEU observed
that on or about 1 November 2018, 52 train drivers from TRRC transferred their
employment to Karijini. In his evidence Mr Butler touched on the matter of planning
to transfer the employees from TRRC to Karijini subject to their acceptance of an offer
(and of course Karijini winning the contract). In fact, according to Mr Butler one of
the two employees had asked questions about the effect of the agreement on the
employees of TRRC, who it appeared from the question asked, and answer given,
were already contemplated as being intended to be covered by the Agreement,
notwithstanding TRRC having the contract at Roy Hill rather than Karijini.
10
[172] On the same day that the operator of Roy Hill informed TRRC of the cessation
of the contract, Karijini was informed by letter it had secured the contract to supply the
rail crew workforce for the Roy Hill Operations. Interestingly, that letter of
5 September 2018 to Karijini referred to the continuity of rail crew supply being
important. Reference was made to an agreement in the following terms, ‘[A]s agreed,
Karijini will use its best endeavours to engage the existing TRRC employees over the
period from now until 1 November 2018’.
[173] During the Agreement making process, Mr Butler had contemplated that the
TRRC employees would be covered by the Agreement in the future, and before
5 September 2018, Karijini had agreed to use its best endeavours to engage the
existing TRRC employees over a specified period. There was no evidence before the
Commission on the date when that agreement to use best endeavours was reached.
[174] The CFMMEU submitted that the vast majority of the TRRC drivers would
continue doing the same work they had always done, but they would be covered by an
enterprise agreement over which they had no input. The evidence showed that this
occurred.
[175] This particular scenario, or as the CFMMEU termed it, ‘manoeuvring’, was not
parked under one of the various subsections of s 188 or, for that matter, another
section of the Act. However, somewhat central to the controversy before me, was the
making of the Agreement by the two employees in circumstances where the TRRC
workforce had no input into its contents.
[176] In Aldi, the High Court said that consistent with the view of s 186(3) taken in
John Holland, the references in sub-s (2) to ‘covered by’ may be read as ‘those
persons currently employed who fall within the whole class of employees to whom the
agreement might in future apply’ (underlining my emphasis). That was the approach
which found favour with the Full Bench, and it is one that the High Court considered
correct.
[177] While there has been much made of the position of the employees of TRRC,
ultimately the position of those employees would not appear relevant to the approval
requirements imposed by the Act. They are not the ‘relevant employees’ because they
were not employees of Karijini at the relevant time, albeit the notion of them
becoming employees was clearly contemplated. That the Agreement could be made
with persons who were not yet employed, and might never be employed, in the
relevant single business, would seem, to coin the phrase ‘a strange
result’. Notwithstanding that the phrase was used in regard to s 170LK(1) of the
Workplace Relations Act 1996 (Cth), it appears apposite here in light of the legislative
framework.”29 [Endnotes omitted]
[24] Next the Deputy President considered whether the Agreement passed the BOOT. The
Deputy President’s conclusion as to the BOOT is not challenged on appeal.
29 Ibid at [157] - [177]
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[25] Finally, the Deputy President deals with the s.55 point, and her conclusion is also not
challenged on appeal.
Approval Decision
[26] In the Approval Decision the Deputy President dealt with whether Karijini’s failure to
comply with s.180(5) of the Act in the manner identified in the April 2019 Decision could be
excused by s.188(2), and whether an undertaking under s.190 may meet the s.180(5) concern
identified. The Deputy President approved the Agreement with undertakings, including an
undertaking to meet her concern about Karijini’s compliance with s.180(5). Some procedural
background, a summary of submissions as to the undertaking and the relevant statutory
provision is set out at [1]-[14]. At [15]-[48] the Deputy President discusses relevant
authorities and concludes that an undertaking may be accepted to meet a concern about an
employer’s failure to comply with s.180(5) but that each case will turn on the nature of the
failure to comply with the pre-approval step.
[27] The Deputy President proceeded next to consider the undertaking proffered by Karijini
(set out at [49]) and whether it meets the concern identified. The Deputy President concluded
that the undertaking met her concern and relevantly reasoned:
“[57] The effect of the Hourly Rate Undertaking is that the explanation that Karijini
provided before requesting that the train drivers approve the Agreement by voting on
it, now aligns with the entitlement set out in the Hourly Rate Undertaking. Part of the
explanation provided by Mr Butler was given in response to the question of how the
salary was made up. It appears that perhaps the use of the word ‘salary’ may have led
Mr Butler to discuss the contractual salary notwithstanding that the explanation was
provided in the context of an enterprise agreement making process.
[58] When one of the train drivers asked how the salary was made up, I found the
explanation was, with respect, lacking in clarity. However, I did not conclude that
there were other reasons for believing that the Agreement was not genuinely agreed to
because of the explanation provided.
[59] The steps taken fell short of ‘all reasonable steps’. However, it was not the case
that the consent of the employees was not informed. It was evident that at material
times the employees were asked whether they had any questions and were provided
with opportunities to query answers provided.
[60] While it may have been the case that there were shortcomings with the answers
provided, such that s 180(5) was not complied with, I am not persuaded that the non-
compliance materially affected the bargaining or approval process for the Agreement.
The Hourly Rate Undertaking guarantees a flat rate which was explained to the two
train drivers prior to them voting on the Agreement. It does not of course alter, that the
explanation provided concerned contractual rates that were not included in the
Agreement at the time of the vote. However, it is not inconceivable that explanations
provided concerning the terms of an enterprise agreement and their effect under
s 180(5), may not always reflect the final terms (and their effect) in circumstances
where an undertaking has been accepted under s 191(1) to address a s 190(1)(b)
concern.
12
[61] The effect of the Hourly Rate Undertaking is that the explanation that was
provided to the train drivers for the purpose of satisfying s 180(5) is now mirrored in
the content of the Hourly Rate Undertaking. It was that explanation – notwithstanding
it covered information about the contractual salary and the Agreement, which
ultimately the train drivers received and thereafter relied upon arguably in part, to vote
to approve the Agreement.
[62] The reason for my concern in the First Decision was the lack of explanation
concerning the comparison of the rates of pay and allowances between the Award and
the Agreement and what the allowances compensated for, regarding Award
entitlements. I have concluded that this concern is assuaged by the Hourly Rate
Undertaking.
[63] By way of observation, I note that my concern arose in a context where modelling
indicated that a Railway Worker Level 4 classification on the roster committed to in
Karijini’s initial undertakings proffered, a difference between Agreement and Award
of approximately 5.33%.
[64] In Downer EDI Mining – Blasting Services Pty Ltd it was said that the size of the
remuneration benefit of an enterprise agreement over the reference instrument was an
important factor in determining whether an employer was required under s 180(5) to
provide a comparison between the enterprise agreement and the modern award. With
the percentage difference between the Agreement and the Award now amounting to
approximately 30% for a level 2 train driver and 41% for a level 3 (when working 2
weeks on 2 and weeks off, 12 hours per shift), it is open to find that all reasonable
steps to explain the terms of the Agreement and the effect of those terms, did not
necessitate the inclusion of comparator information between the Agreement and
Award to the level of detail set out in the First Decision.30 [Endnote omitted]
[28] The Deputy President then considered (in the event that her principal conclusion was
wrong) whether Karijini’s failure to comply with s.180(5) was a minor procedural error that
was unlikely to have disadvantaged employees covered by the Agreement. A submissions
summary, the relevant statutory provisions, and a discussion of authority appears at [66]-[82].
The Deputy President concluded that it was a minor procedural error and reasoned as follows:
“[83] As observed, a procedural requirement is one which requires an employer to
follow a particular process or course of action. In Huntsman, the Full Bench clearly
contemplated that s 180(5) constituted either a procedural or technical requirement,
given its reference to the section in Table 2 at paragraph [74] of the decision. The Full
Bench described Table 2 as examining each of the procedural or technical
requirements covered by s 188(2). Within the Table, reference is made to the
requirement in s 180(5)(a), its purpose and how employees may be disadvantaged by
non-compliance with the section.
[84] The underlying purpose of the s 180(5)(a) requirement, is said to ensure
employees understand the effect of the agreement that is to be voted on, enabling them
to make an informed decision. This purpose appears to be in harmony with the notion
30 Karijini Rail Pty Limited [2019] FWCA 6451 at [57] - [64]
13
that s 180(5) falls within the ambit of the protective provisions of Part 2-4, that is, the
pre-approval requirements.
[85] Subsection 188(1)(a) of the Act, refers to the pre-approval requirements in
ss 180(2), (3) and (5) and states they ‘deal with the pre-approval steps’. The
Macquarie Dictionary online (Macquarie) provides an expansive definition of the
word ‘step’. That definition includes ‘11. a move or proceeding, as towards some end
or in the general course of action: the first step towards peace’. With regard to defining
the term ‘take steps’, the Macquarie defines it as ‘to initiate a course of action’.
Therefore, I consider that the use of the word ‘steps’ within s 188(1)(a)(i) connotes
part of the pre-approval process or course of action required of an employer.
Furthermore, it is evident when one considers s 180, subsections (4), (4B), (4C) and
(6) could not, on any reading be considered ‘steps’. Albeit, s 180(6) goes some way to
provide the kinds of employees whose circumstances are to be taken into account for
the purpose of compliance with s 180(5)(b).
[86] When one examines the plain language of s 180(5)(a), there is again reference to
‘steps’, albeit this time there is a qualification that the ‘steps’ are those that are
considered to be ‘reasonable’. Clearly, this Commission is charged with an evaluative
task of determining, on an objective basis, whether the employer has taken ‘all
reasonable steps’ to ensure that the terms of the agreement and their effect have been
explained. The fact that s 180(5) contains an inbuilt qualifier of reasonableness, does
not mean that non-compliance with s 180(5) cannot be ‘procedural’, or for that matter,
a ‘minor’ error within the meaning of s 188(2). As was observed in Karijini’s
submissions, in its Senate submission, the ACTU opposed s 188(2) on the basis that
‘many of the requirements caught by the exemption are requirements that are not truly
absolute, because they … are obligation[s] that an employer take reasonable steps to
do something.’ Evidently, as Karijini submitted, Parliament did not agree.
[87] The Union’s submissions that the ‘reasonable steps’ referred to in the section,
were not particular in the sense of being a prescribed number, date or form, but rather
were steps whose number and content varied depending on the circumstances in which
an agreement was made, appears correct. Certainly, the particular circumstances of the
employer and employee may influence what is, or is not, a reasonable step or ‘all
reasonable steps’. Afterall, s 180(5)(b) requires the employer to consider those very
circumstances. But it remains the case that the Act prescribes a process which requires
the employer to explain the terms of the agreement and the effect of those terms. It is
evident from s 180, the employer is required to undertake a course of action or follow
a particular process. The characterisation of s 180(5) as a pre-approval step, or part of
the pre-approval process or course of action, does not in turn mean that the
requirement is consigned a mere formality status.
[88] The Full Court of the Federal Court in One Key Workforce Pty Ltd v Construction
Forestry, Mining and Energy Union expressed, that to reach the requisite state of
satisfaction that s 180(5) had been complied with, the Commission was required to
consider the content of the explanation and the terms in which it was conveyed. It is
difficult to conceive why the obligation to consider ‘explanation content’ in s 180(5),
precludes it as forming part of a particular process or course of action. Some of the
most important legal requirements, where examination of the ‘substantive’ is required,
14
could be said to be procedural – for example the requirement to accord procedural
fairness.
[89] Section 188(2) refers to an agreement having been genuinely agreed to within the
meaning of s 188(1) but for a minor procedural error or technical error made in
relation to the requirements in s 188(1)(a) or (b). Section 188(1)(a)(i) refers to ss
180(2), (3) and (5). That s 180(5) forms one of the three pre-approval ‘steps’ is
acknowledged in s188(1)(a)(i). If the Union’s contention is right, s 188(2)(a) would
have no work to do regarding minor procedural or technical errors made in relation to
the requirements mentioned s 180(5).
[90] Previously in this decision I have cited that when interpreting statutes, no clause,
sentence, or word should prove superfluous, void or insignificant. If one was to adopt
the contention pressed by the Union, s 188(2)(a) would be redundant so far as its
operation concerns ss 188(1)(a)(i) and 180(5). That s 180(5) is a procedural
requirement for the purpose of s 188(2) of the Act, sits comfortably with the language
of ss 188(1) and (2), and 180(5), the statutory context, the purpose of the relevant
provisions, and the apparent acceptance by the Full Bench in Huntsman that non-
compliance with s 180(5) can be excused by s 188(2) in appropriate circumstances.
[91] While I have concluded that s 180(5) constitutes a procedural requirement, the
question remains whether the non-compliance with the section constituted a ‘minor
error’. The failure of Karijini to provide the Pay Components Comparison is in my
view an error as contemplated by the Full Bench in Huntsman. Having considered the
evidence of Mr Elston, General Manager – Operations Support Services, and Mr
Butler, I find that neither were aware that the failure to provide the Pay Components
Comparison would see them fall foul of a procedural requirement under the Act.
Mr Butler gave evidence that if he had known that Karijini was required to provide
such comparison he would have asked Mr Elston to provide it. While Mr Elston and
Mr Butler engaged in the intentional act of explaining the Agreement in the way in
which they did, I am of the view that their intentional act gave rise to the unintentional
result of non-compliance with a procedural requirement.
[92] It was put squarely by the Union that it could not be accepted that such a
fundamental consideration, namely the Pay Components Comparison, was ‘minor’. It
is evident that the word ‘minor’ qualifies the type of errors that s 188(2) can excuse.
As explained, what constitutes a minor error, calls for an evaluative judgment having
regard to the underlying purpose of the relevant procedural or technical requirement
which has not been complied with and the relevant circumstances.
[93] In the First Decision, I stated that an employee’s entitlement as far as base rates
of pay, penalties and allowances are concerned, are fundamental considerations for
any employee. Undoubtedly, they are important considerations, and it therefore
followed that I considered ‘taking all reasonable steps’ would include the provision of
the Pay Components Comparison.
[94] In Huntsman the Full Bench referred to the purpose of s 180(5) as ensuring that
employees understand the effect of the agreement that is to be voted on, and enabling
them to make an informed decision. However, it is plain that a failure to take all
‘reasonable steps’ does not on every occasion mean that the relevant employees have
15
been deprived from genuinely agreeing to the enterprise agreement. Despite the non-
compliance with s 180(5), I arrived at the conclusion that the two train drivers had an
‘informed and genuine understanding of the Agreement and were able to give
‘informed’ consent. I observed:
While the steps taken fell short of ‘all reasonable steps’, it is not the case that
the consent of the employees was not informed. It was evident that at material
times the employees were asked whether they had any questions and were
provided with opportunities to query answers provided. While it may have
been the case that there were some shortcomings with the answers provided,
the evidence of Mr Butler was that the two employees asked about the ‘BOOT
test’ and what it stood for. Mr Butler had explained that it was a better off
overall test where the two employees’ conditions and rates of pay were
measured against the Award.
[95] Having regard to the underlying purpose of s 180(5), the requirement which has
not been complied with, and the relevant circumstances of this matter, I am satisfied
that the error made by the Applicant was minor.
[96] In Huntsman, the Full Bench gave an example of the disadvantage that may arise
from non-compliance with s 180(5). That disadvantage was that the employees might
not be able to make an informed decision about the terms of the agreement upon
which they were eligible to vote. The Full Bench explained that the word
‘disadvantaged’ suggested a deprivation which manifested in the employees covered
by the agreement being prevented from substantively exercising their rights within the
bargaining regime in Part 2-4. Of course, the disadvantage that s 188(2) speaks to is
one qualified by the phrase ‘were not likely to have been’, with the word ‘likely’
meaning ‘probable’.
[97] In light of my findings in the First Decision, as set out in paragraph [2] of this
decision, there is no uneasiness arriving at the conclusion that the two train drivers
were not likely to have been disadvantaged by Karijini’s error in relation to the
requirement in s 180(5).
[98] It is therefore the case that I have concluded that the Agreement has been
genuinely agree to by the two train drivers. I am satisfied that the error made was a
minor procedural error in relation to one of the requirements of s 188(1)(a) of the Act
and that the relevant employees covered by the Agreement were not likely to have
been disadvantaged by the error.”31 [Endnotes omitted]
Grounds of Appeal
[29] The Notice of Appeal lodged by the CFMMEU on 4 October 2019 contains 8 appeal
grounds. Ground 4 is not pressed.32 It also seeks permission to amend its appeal grounds,
which we grant, in the terms set out in schedule 1 to its outline of submissions. Many of the
grounds of appeal as amended contain a number of sub-paragraphs and in the interest of
brevity, they may be summarised as follows.
31 Ibid at [83] - [98]
32 CFMMEU Outline of Submissions at [19]
16
[30] Grounds 1 and 1A deal with the bases on which the CFMMEU says that the Deputy
President ought to have found that Karijini did not comply with s.180(5). Briefly, these
grounds contend Karijini:
failed to explain the other Agreement terms in comparison to the Award;
failed to provide employees with a copy of the Award, or advice as to how to access
it;
misled employees about or failed properly to explain the effect of the Agreement
entitlement to redundancy payment given the employees were engaged on 'maximum
term' contracts; and/or
misled employees about or failed properly to explain the effect of the Agreement in
that it represented or implied that employees who transferred from TRRC would
receive benefits under the Agreement as set out in [40] of the April 2019 Decision.
[31] The contention in Ground 1 (and logically in Grounds 1A and 3(b)) that Karijini
misled the employees about or failed properly to explain the role of individual flexibility
agreements (IFAs) under the Agreement is not pressed.33
[32] The scope of the non-compliance with s.180(5) is said to have a consequential effect
on the Deputy President’s consideration of the s.190 undertaking, the application of
s.188(1)(c) and the application of s.188(2).
[33] The extent of non-compliance with s.180(5) is said to be relevant to:
Grounds 2 and 3 which concern whether the Deputy President erred in accepting an
undertaking to meet a concern about compliance with s.180(5) of the Act;
Grounds 5 and 6 which concern whether the Deputy President erred in law, or erred
in reaching the requisite satisfaction in finding that a failure of the employer to
comply with s.180(5) could constitute or was a minor procedural or technical error
within the meaning of s.188(2)(a).
[34] Grounds 7 and 7A concern the Deputy President’s satisfaction of s.188(1)(c) of the
Act, namely whether there were no other reasonable grounds for believing that the relevant
employees did not genuinely agree to the Agreement.
[35] Grounds 8 and 8A concern the fairly chosen requirement under s.186(3). The matters
raised in respect of s.186(3) were not raised by the CFMMEU in the proceeding before the
Deputy President.
[36] We consider these grounds below.
Consideration
33 CFMMEU Submissions in Reply at [78]
17
Permission to appeal
[37] We are persuaded that it is in the public interest to grant the CFMMEU permission to
appeal. We consider that there is a public interest in ensuring that the requirements about
which the Commission must be satisfied when approving an enterprise agreement are
properly considered, administered and applied and the appeal grounds engage with these
matters. Additionally, important questions are raised by some of the appeal grounds about
undertakings under s.190 of the Act and the nature of some of the errors alleged are
jurisdictional.
[38] We therefore grant permission to appeal.
Preliminary matter
[39] Before dealing with the grounds of appeal it is necessary to determine a preliminary
matter concerning the order in which the grounds of appeal should be considered. Karijini
contends that Ground 2 should be considered before Grounds 1 and 1A because it determines
the factual matrix in which s.180(5) compliance falls to be assessed.34 We disagree.
[40] In the April 2019 Decision the Deputy President concluded that Karijini’s failure to
comply with the explanation obligation in s.180(5) of the Act concerned the failure to take
the step of providing the pay comparison, namely, a description of how that base rate of pay
in the Agreement was made up and how it compared to the rates of pay and allowances in the
Award. The Deputy President’s assessment of the undertaking proffered by Karijini was
founded on this concern.
[41] Appeal Grounds 1 and 1A contend that Karijini had not complied with s.180(5) on a
much broader basis than that identified by the Deputy President. The failure to comply is said
to extend beyond a failure to provide the pay comparison explanation. The Deputy President
is said to have been required, but failed, to take this wider area of non-compliance into
account. In short it is contended that there were other reasonable steps that Karijini was
required by s.180(5) to take to ensure the relevant explanations were given. If these appeal
grounds are upheld, we agree as submitted by the CFMMEU, that the subsequent steps taken
by the Deputy President as to the undertaking and approval of the Agreement are necessarily
affected by the error.35
[42] Moreover, the capacity to accept an undertaking to meet concerns about a failure by an
employer to comply with s.180(5) of the Act does not alter, add to or determine the factual
matrix in which compliance is assessed. Self-evidently the assessment occurs in light of the
circumstances which pertained at the time compliance is required.
[43] We also agree with the CFMMEU’s submission that if Ground 1 or 1A is upheld, there
may be no need to deal with any further grounds to determine the appeal.36 However, as will
be evident shortly, we deal with most of the appeal grounds nonetheless.
Grounds 1 and 1A
34 Karijini’s Submission at [48]
35 CFMMEU Submissions in Reply at [26]
36 Ibid at [28]
18
[44] The essence of the contention in Grounds 1 and 1A is that the Deputy President erred
in confining her finding that Karijini did not comply with s.180(5) of the Act to its failure to
take the step of explaining how the base rate of pay under the Agreement was made up and
how it compared to the rates of pay and allowances under the Award. The CFMMEU
contends the Deputy President did not consider, or make any findings about the other matters
it raised in respect of s.180(5). These matters concerned the failure to take the following
steps which are said to be reasonable steps:
providing employees with an explanation of the other Agreement terms in
comparison to the Award; and
providing employees with a copy of the Award, or advice (such as a link) about how
to access it.
[45] The CFMMEU contends that a broader comparison between the Agreement and the
Award was a necessary step in light of the following:
Karijini was a new entity and the employees were new employees;
the Award was the industrial instrument in effect at the time;
the Agreement significantly departed from the Award as set out in Schedule 3 to its
submission, and some of the changes were detrimental;
the difference in base rates of pay between the Agreement and the Award was small
and depended on roster arrangements. For example, the difference was less than 1%
for non-shiftworkers working 38 ordinary hours per week; and
there was no evidence that the employees were familiar with the Award or its terms.
[46] The CFMMEU also contends that in assessing Karijini’s compliance with s.180(5) of
the Act, the Deputy President did not consider or make a finding that Karijini misled
employees about or failed properly to explain:
the effect of the Agreement entitlement to redundancy payment given the employees
were engaged on 'maximum term' contracts; and
the effect of the Agreement in that it represented or implied that employees who
transferred from TRRC would receive benefits under the Agreement as set out in
[40] of the April 2019 Decision.
[47] The CFMMEU says that instead, the Deputy President expressed a view that it is not
the case that the employer is to provide an explanation that specifically addresses each and
every term of an enterprise agreement in forensic detail. In so doing, it says the Deputy
President did not consider the nature of the changes made by the Agreement compared to the
Award and the requirement for explanation of those matters, any further.
[48] The CFMMEU therefore contends the Deputy President erred in respect of her
assessment of s.180(5) in that she:
19
failed to take into account relevant considerations which she was required to
consider, namely the explanation given (or not given) by Karijini in respect of the
terms of the Agreement other than remuneration and thereby failed to perform the
statutory task required of her; and/or
found that s.180(5) was otherwise satisfied when such a satisfaction was not
available on the material before her having regard to the matters set out below.
[49] It contends that the failure to take into account a relevant consideration gives rise to
jurisdictional error, the effect of which is that no satisfaction may lawfully be reached.
[50] Karijini joins issue with these contentions on a general and on a specific level.
[51] On a general level, Karijini criticises the CFMMEU’s approach to these and other
appeal grounds raised as failing to show how the matters about which it complains identify
appealable error. In summary Karijini contends that almost all of the findings that the
CFMMEU challenges are discretionary decisions in the sense that they “call for value
judgments in respect of which there is room for reasonable differences of opinion, no
particular opinion being uniquely right”. It says that an appeal against a decision of this kind
is subject to the principles in House v The King,37 and make the obvious and well settled
point that a Full Bench dealing with an appeal from a discretionary decision cannot set aside
the decision merely because it disagrees with it. Appealable error must first be shown and
such error is not shown merely by persuading a Full Bench on appeal to prefer a different
decision to the one reached at first instance.
[52] Karijini contends that the CFMMEU lists a series of factual matters it asserts militate
against the finding it seeks to overturn and then seeks to deploy those factual matters in two
ways. First, in the event that the identified matters were taken into account, by asserting that
the Deputy President’s finding was not available or was not open. Secondly, if the matters
were not taken into account, the CFMMEU contends that these matters are mandatory
relevant considerations that the Deputy President did not take into account. Karijini says that
the Deputy President considered the matters about which the CFMMEU complains and
further, that almost all of the matters to which the CFMMEU refers are not relevant
considerations, in the sense that the Deputy President was bound to take them into account on
proper construction of the Act.
[53] On a specific level, Karijini says that the steps it took to explain the Agreement fall to
be assessed in the context of the needs of the employees. These were experienced train
drivers, with previous experience driving trains on heavy haul iron ore networks in the Pilbara
region on a fly in/fly out basis.38 It says the terms of the Agreement and their effect were
explained to these sophisticated and experienced employees in a tailored and relevant way,
which in summary included:
conducting two bargaining meetings over a combined period of five hours with the
employees;39
37 (1936) 55 CLR 499 at 505
38 Appeal Book p.88–89 at PN45 - PN 48, p.97 at PN133 - PN134, p.99 at PN150–PN152, p.254 at [59]
39 Karijini Rail Pty Limited [2019] FWC 2907 at [43] - [46]
20
during a two-week training the employees had the opportunity to ask, and asked
questions of Mr Butler, who was training them. The questions were answered;40
after the second bargaining meeting, Mr Butler called the two employees and asked
if they had any further questions about the Agreement. Neither had any more
questions;41
the employees were emailed a final version of the Agreement with an explanation
document that summarised every clause;42
Mr Butler made further calls to each employee and asked if they had further
questions about the Agreement. They said that they did not;43
the employees were sent a further email with a link to the Commission’s NES
explanation sheet and links to legislation referred to in the Agreement. The email
stated that the employees should not hesitate to contact Mr Butler or Mr Elston with
any questions.44
[54] Karijini contends that the Deputy President’s finding about s.180(5) of the Act was a
discretionary decision and, in light of the above matters, was open. Moreover Karijini
contends that it was open to the Deputy President to find that in the circumstances described
above, a comparison between the Agreement and the Award, beyond an explanation of the
base rate by reference to rates of pay and allowances under the Award, was not necessary.
This is so because:
there is no general rule that the employer is usually required to explain the
differences between the proposed agreement and the current instrument;
the CFMMEU’s contention that there was no evidence that the employees were
familiar with the Award or with its terms is wrong given the evidence of Mr Butler
about the employees’ experience driving trains in the Pilbara, their familiarity with
work patterns similar to those that exist under the Agreement and their having
worked under several enterprise agreements for which the Award was the reference
instrument;45
the assertion that the Agreement only provided 1% above Award pay in some
circumstances is wrong because the CFMMEU refers to a “non-shift working
employee working ordinary hours of 38 hours per week” but this example is
irrelevant because it was always intended (and the employees understood) that all
employees would be shiftworkers working a fixed roster configuration. Karijini gave
undertakings that enshrine this roster configuration;
40 Appeal Book p.251–254 at [56] - [58]
41 Karijini Rail Pty Limited [2019] FWC 2907 at [48]
42 Ibid at [49], Appeal Book p.686–690
43 Ibid at [50]
44 Ibid at [51], Appeal Book p.693
45 Appeal Book p.106 at PN226, p.107 - 109 at PN235 - PN255
21
the key detriments on which the CFMMEU relies are misconceived;
the other alleged detriments identified in Schedule 3 to the CFMMEU’s submissions
are either non-existent or minor on proper analysis. Karijini’s analysis appears as
Appendix C to its submissions;
apart from the absence of a comparison with the Award, Karijini’s process for
explaining the Agreement was extensive and tailored to the employees’ needs; and
the size of the remuneration advantage of the Agreement over the Award meant that
a comparison was not necessary in the circumstances.
[55] As to the allegations of misleading employees Karijini says these matters were not
raised with the Deputy President and should be rejected, but in any event have no substance.
[56] Finally as to the CFMMEU’s contention that the Deputy President did not consider, or
make any findings on other matters raised by the CFMMEU in respect of s.180(5) other than
the pay comparison explanation, and that this constituted a failure to consider mandatory
relevant considerations, Karijini says the submission is without substance because:
it is clear that the Deputy President considered the CFMMEU’s complaints about the
explanation of the Agreement beyond the Pay Components Comparison;46
none of the factual matters about which the CFMMEU complains about were
mandatory relevant considerations on proper construction of s.180(5).
[57] In arriving at the requisite satisfaction as to Karijini’s compliance with s.180(5) of the
Act, the Deputy President was required to evaluate whether in all the circumstances, Karijini
has taken all reasonable steps to ensure that the terms of the Agreement, and the effect of
those terms, were explained to the relevant employees in a manner appropriate, taking into
account the particular circumstances and need of the relevant employees. As s.188(1) makes
clear, Karijini’s compliance with s.180(5) need only be established to the satisfaction of the
decision-maker. Actual compliance with s.180(5) is not a jurisdictional fact. Its objective
existence is not a precondition to the Commission’s power to approve the Agreement.47
[58] Nevertheless, that the Deputy President reached the requisite state of satisfaction as to,
inter alia, compliance with s.180(5) of the Act on material sufficient to enable her to reach the
requisite satisfaction, is a condition precedent to the exercise of the power to approve the
Agreement. The approval of an agreement absent any evidence, or upon insufficient evidence,
about an employer’s compliance with s.180(5) results in the agreement having been approved
without authority and so there will be jurisdictional error.48 In reaching the requisite state of
satisfaction, there must be material available to the Deputy President to support reaching that
state. An evaluative assessment of no or insufficient information in reaching a state of
satisfaction is no assessment at all and will not provide a sufficient foundation for being
satisfied as to the requisite compliance.
46 Karijini Rail Pty Limited [2019] FWC 2907 at [7], [11], [108]–[112], [119], [122]–[129] and [130]–[135]
47 One Key Workforce v CFMMEU [2018] FCAFC 77, (2018) 262 FCR 527 at [103]
48 Ibid at [117]
22
[59] Arriving at a state of satisfaction as to whether an employer has complied with the
obligations in s.180(5) of the Act depends on the circumstances of the case. The focus of the
enquiry involves considering and evaluating the steps taken to comply, and then assessing
whether the steps taken were reasonable in the circumstances and whether these were all the
reasonable steps that must have been taken in the circumstances.
[60] As a Full Bench of the Commission in The Australian Workers' Union v Rigforce Pty
Ltd49 has stated:
“[35] . . . The nature of the requirement in s 180(5) was analysed in detail by the Federal
Court (Flick J) in CFMEU v One Key Workforce Pty Ltd. We adopt the summary of
that analysis set out in CFMMEU v Ditchfield Mining Services Pty Limited, which
reduced it to the following four propositions:
(1) whether an employer has complied with the obligation in s 180(5) depends
on the circumstances of the case;
(2) the focus of the enquiry whether an employer has complied with s 180(5) is
first on the steps taken to comply, and then to consider whether:
• the steps taken were reasonable in the circumstances; and
• these were all the reasonable steps that should have been taken in the
circumstances;
(3) the object of the reasonable steps that are to be taken is to ensure that the
terms of the agreement, and their effect, are explained to relevant
employees in a manner that considers their particular circumstances and
needs. This requires attention to the content of the explanation given; and
(4) an employer does not fall short of complying with the obligation in s
180(5) of the FW Act merely because an employee does not understand the
explanation provided.
[36] Additionally, we also adopt the analysis of Gostencnik DP in BGC Contracting
Pty Ltd concerning the nature of a statutory obligation to take “all reasonable steps” as
follows (footnote omitted):
“[43] A requirement or obligation to take “all reasonable steps” seems to me to
require the identification of the steps a reasonable person would regard as
reasonable in the circumstances that apply. Whether particular steps are
reasonable will depend on the particular circumstances existing at the time the
obligation arises. A requirement to take all reasonable steps does not extend to
all steps that are reasonably open in some literal or theoretical
sense…”50 [Endnotes omitted]
49 [2019] FWCFB 6960
50 Ibid at [35]-[36]
23
[61] An assessment whether an employer took all reasonable steps to ensure that the terms
of an agreement and the effect of those terms were explained to relevant employees
necessarily also requires an examination of the content of the explanation given by the
employer through the steps taken. That the content of the explanation given and the terms in
which the explanation was conveyed are important considerations in determining whether the
Commission is satisfied that an employer has complied with s.180(5) is made clear by the Full
Court of the Federal Court in its judgment in One Key Workforce Pty Ltd v CFMEU51 wherein
Full Court said:
“. . . In order to reach the requisite state of satisfaction that s.180(5) had been complied
with, the Commission was required to consider the content of the explanation and the
terms in which it was conveyed, having regard to all the circumstances and needs of
the employees and the nature of the changes made by the Agreement. It is true that the
Act does not expressly say that. But the question of whether an administrative
decision-maker is required to consider a matter is not determined only by the express
words of the Act; it may also be determined by implication from the subject-matter,
scope and purpose of the Act: Minister for Aboriginal Affairs v Peko-Wallsend Ltd
[1986] HCA 40; (1986) 162 CLR 24 at 39–44 (Mason J).
A consideration of the subject-matter, scope and purpose of the relevant provisions of
the Fair Work Act indicates that the content of the explanation and the terms in which
it was conveyed were relevant considerations to which the Commission was bound to
have regard. The absence of that information meant that the Commission was not in a
position to form the requisite state of satisfaction. Put differently, without knowing the
content of the explanation, it was not open to the Commission to be satisfied that all
reasonable steps had been taken to ensure that the terms and their effect had been
explained to the employees who voted on the Agreement or that they had genuinely
agreed to the Agreement.” 52
[62] The Full Bench in Ditchfield Mining also dealt with the issue of the extent to which an
explanation involving a comparison between an agreement and an award covering relevant
employees need be given:
“[71] Compliance with s.180(5) will not always require an employer to identify
detriments in an agreement vis-à-vis the reference instrument, or for the employer to
provide an analysis between the agreement and the relevant reference instrument,
particularly in circumstances where an existing enterprise agreement, not a reference
instrument, applies to the employees in their employment with the employer. The
question of compliance with s.180(5) is to be judged against the circumstances that
pertain at the time at which compliance was required. Section 57 of the Act makes
clear that a modern award does not apply to an employee in relation to particular
employment at a time when an enterprise agreement applies to the employee in relation
to that employment. In the present case, when the explanations were given, no
enterprise agreement applied to the employees and the Award did apply. An
explanation of the effect of the terms of the Agreement vis-à-vis the Award was
therefore capable of being relevant to the evaluative assessment of whether all
51 [2018] FCAFC 77, (2018) 262 FCR 527 at [112]-[116]
52 Ibid at [112]-[113]
24
reasonable steps were taken to explain the terms of the Agreement and the effect of
those terms.
[72] The obligation under s.180(5) to take all reasonable steps to explain to relevant
employees the terms of an enterprise agreement and the effect of those terms is an
important function of the agreement-making scheme established by Part 2-4 of the
Act. Its evident purpose, taking into account its role in assessing whether the
employees who were asked to vote to approve an agreement genuinely agreed to the
agreement, is to ensure that employees are as fully informed as practicable about the
terms and effect of the terms of a proposed enterprise agreement before voting on
whether to approve it. An employer’s discharge of its obligation under s.180(5) is
intended to enable employees to know what they are being asked to agree to, and to
understand how their wages and working conditions might be affected by voting in
favour of an agreement.”53 [Endnotes omitted]
[63] The Deputy President observed in the April 2019 Decision that:
“. . . If an explanation of the effect of the terms in the Agreement is to be provided then
the logical comparator in the circumstances of this case was the Reference Instrument.
There has been no prior enterprise agreement in place within the organisation and the
two employees had not previously been involved in an agreement making process
within the company.”54
[64] The Deputy President later concluded that “[I]n this case, compliance with s.180(5)
necessarily entailed a description of how the base rate of pay was made up and how it
compared to the rates of pay and allowances in the Award”.55 In other words this was a step
the Deputy President determined was a reasonable step in the circumstances but one which
Karijini did not take. Consequently, the Deputy President was not satisfied that Karijini had
complied with s.180(5) of the Act.
[65] Had the Deputy President subsequently dismissed the application for the approval of
the Agreement instead of approving it with the undertaking directed to the s.180(5)
compliance concern, the matters raised by the CFMMEU on appeal would be moot because
upholding the ground would not change the result. But the matters about which complaint is
made remain live because, inter alia, if the steps identified by the CFMMEU, but not taken by
Karijini, were reasonable steps which in the circumstances should have been taken to ensure
the terms of the Agreement and the effect of those terms were explained, this would provide a
further basis for concluding that Karijini had not complied with s.180(5). It will not have
taken “all reasonable steps” as required. It would follow there would have been a failure to
consider whether the undertaking proffered by Karijini addressed or met the concern that the
reasonable steps identified were not taken.
[66] As noted in the discussion earlier in this decision, the requirement to take all
reasonable steps does not extend to all steps that are reasonably open in some literal or
theoretical sense. Rather the question whether particular steps are reasonable will depend on
the particular circumstances existing at the time the obligation arises. It seems to us to follow,
53 [2019] FWCFB 4022 at [71]-[72]
54 Karijini Rail Pty Limited [2019] FWC 2907 at [147]
55 Ibid at [150]
25
as the CFMMEU submitted, that if there was a step to be taken by way of explanation which
was a reasonable step in the circumstances, but which was not taken by an employer, then it is
not open to reach a satisfaction for the purpose of assessing whether an employer has
complied with s.180(5).56 This is because the relevant question is not confined to assessing
whether the steps taken by the employer were reasonable steps. The relevant question about
which the requisite state of satisfaction must be reached is - did the employer take “all
reasonable steps to ensure” that the terms of the agreement, and the effect of those terms were
explained to the relevant employees in an appropriate manner taking into account the
particular circumstances and needs of the relevant employees? It is a necessary question that
is to be addressed in reaching the overall relevant satisfaction required as to whether an
agreement has been genuinely agreed to by the employees covered by the agreement.57
[67] We also consider that the assessment of whether all reasonable steps have been taken
is not conducted in a vacuum, divorced from a consideration of the steps that were taken.
Thus, in determining whether a particular step that was not taken is a reasonable step that
must be taken, it is necessary to consider whether it is a reasonable step in the circumstances
taking into account, inter alia, the steps that were taken by an employer.
[68] In the present case the relevant circumstances included the following. First, Karijini
was a new entity established partly for the purposes of seeking to make an enterprise
agreement through it, which in turn would allow a contract with Roy Hill to be obtained.58
[69] Secondly and we think self-evidently, Karijini was a new entrant into the market of
providing labour hire train drivers to drive trains hauling iron ore in the Pilbara region of
Western Australia. It did not have a history of conducting such a business elsewhere.
[70] Thirdly, the two employees who voted for the Agreement were new employees.
[71] Fourthly, there had been no prior enterprise agreement in place with Karijini and the
two employees had not previously been involved in an agreement making process with
Karijini.
[72] Fifthly, the Award was the industrial instrument in operation at the time and applied to
the employment of the two employees.
[73] Sixthly, in addition to the need to explain the base rate of pay by reference to Award
entitlements identified by the Deputy President, other terms of the Agreement departed from
the Award and some of the departures were or could be detrimental including:
the absence in the Agreement of provision for ongoing full-time employment or of
part-time employment compared to the Award;
the differential provisions as to meal breaks in the Agreement compared to the
Award;
56 CFMMEU Submission in Reply at [36]
57 Fair Work Act 2019 (Cth), ss.186(2)(a) and 188(a)(i)
58 Appeal Book Tab 6, at PN111, PN116, PN118 - PN122
26
differences in the circumstances in which an employee may be directed to take
annual leave;
[74] Seventhly, although the employees were told that the Award was the reference
instrument for the purposes of assessing the BOOT59 there was otherwise no evidence that the
two employees were familiar with the Award or its terms. We do not accept, as Karijini
contends, that Mr Butler’s evidence that the employees’ experience driving trains in the
Pilbara, their familiarity with work patterns similar to those that exist under the Agreement
and their having worked under several enterprise agreements for which the Award was the
reference instrument, evinces a familiarity with the Award and its terms. Mr Butler does not
say that he spoke to the employees about their familiarity with the Award. That the employees
had previously worked for different employers under several enterprise agreements for which
the Award was the reference instrument, may be evidence of some familiarity with the several
agreements (or as the Deputy President observed, “employment terms and conditions relevant
to their industry”60), but without more, it says nothing about Award familiarity. Indeed we
think it is clear the Deputy President regarded this evidence as going to “their familiarity with
with (sic) processes, and employment terms and conditions relevant to their industry”61 but
that the evidence as “to their knowledge of the relevant modern award” was “that for the
purpose of the BOOT, the two employees were informed it was the Award.”62 The Deputy
President continued:
“[141] While the two employees were informed of the Award, and undoubtedly had
extensive experience within the Pilbara driving trains, I am not convinced that such
circumstances negated all reasonable steps including more than what was provided in
the content of the Explanatory Document and the discussion with Mr Butler
concerning the final terms of the Agreement . . .”.63
[75] We also do not accept the contention that knowledge of the Award can be inferred, for
example, because one of the employees asked questions about base rates and penalties, or
from questions about IFAs or shift patterns.64 As the CFMMEU, we think correctly points
out, the Agreement contained base rates and penalties (including overtime rates and shift
penalties), and this was explained at the first meeting.65 This gave rise to questions about how
the Agreement would apply to the two employees, because the two employees were being
paid an ‘all up’ rate under their employment contracts.66
[76] As to the departures from the Award made by the Agreement which we have expressly
identified earlier, we do not accept Karijini’s contentions that the departures were not
detrimental or not material. First, we consider that Karijini wrongly relies on undertakings
given in assessing whether there is a detriment or material alteration as between the
Agreement and the Award. As we have already stated the assessment whether Karijini has
complied with s.180(5) of the Act occurs in light of the circumstances which pertained at the
59 Appeal Book Tab 9, at [57]; Appeal Book Tab 6, at PN226 and PN706
60 Karijini Rail Pty Limited [2019] FWC 2907 at [140]
61 Ibid
62 Ibid
63 Ibid at [141]
64 Karijini’s Submissions at [88]
65 Appeal Book Tab 20, p.360-361
66 CFMMEU Submission in Reply at [41]
27
time compliance is required. At that time, any undertakings accepted in approving the
Agreement were not taken to be terms of the proposed agreement in relation to which the
explanation obligation under s.180(5) arose. Undertakings are relevant for the purposes of
meeting concerns about the approval requirements in ss.186 or 187 having been met.
Undertakings are not relevant in assessing whether at the time an employer was required to
comply with an explanation obligation, the Commission has a concern whether that obligation
was met. Indeed, an undertaking cannot be accepted unless first there is a concern about one
or more of the approval requirements in ss.186 or 187.
[77] Secondly, as to the absence in the Agreement of provision for ongoing full-time
employment or of part-time employment compared to the Award, Karijini says the term is not
detrimental because:
all it means is that if Karijini were to employ permanent employees, they would not
be covered by the Agreement and the Award would therefore apply to them;
all current non-casual employees are engaged on maximum-term contracts that end
on 30 April 2022 (when the Roy Hill contract ends); and
employees knew full well that the Agreement was limited to maximum-term
employment.67
[78] It also points to Mr Butler’s unchallenged evidence which was that it is impractical for
Karijini to employ part-time employees and that it was never intending to engage part-time
employees in any event.68
[79] We do not find any of these arguments persuasive. We consider the absence of
permanent full-time and part-time employment is a substantial difference as between the
industrial instruments. These modes of employment were also available under the TRRC Pty
Ltd Operations Agreement 201469. Amongst other things, employment pursuant to the Award
provision (as to full and part-time categories) ensures redundancy pay is available where an
employee’s position becomes redundant and the employment ends as a consequence. The
ending of the employment relationship by reason of the expiration of the fixed or maximum
term is more than arguably likely to result in no entitlement to redundancy pay. Moreover,
whatever Karijini’s intention as to the employment of employees was, the Agreement could
nevertheless have made provision for the modes of employment in the Award. Fixed and
maximum term engagement are not prohibited by the Award. Such modes would also have
been consistent with the Notice of Employee Representational Rights issued by Karijini
which advised relevant employees that Karijini was bargaining for an enterprise agreement
“which is proposed to cover employees that are engaged in rail operations at the Roy Hill
Operations in the Pilbara region”.70 There is no limitation to the proposed enterprise
agreement covering only employees engaged as casual employees or on fixed or maximum
term contracts. The choice made to depart from the modes of employment for which the
Award made provision should have been explained by reference to the Award.
67 Karijini’s Submissions at [92a.]
68 Ibid at Appendix C
69 AE412376 at clause 4
70 Appeal Book Tab 34, p.657
28
[80] Furthermore, it is no answer to the absence of part-time employment provisions that it
is impractical for Karijini to employ part-time employees and that it was never intending to
engage part-time employees. We cannot see how it is not practical to employ several train
drivers each working 2 or 3 full shifts of 12 hours duration. Part-time employment does not
merely entail employment on fewer hours in a shift. It may also entail working fewer full
shifts in a week. Moreover, a mere assertion that part-time employment is not practical or
that Karijini does not intend to engage part-time employment, will not without more, be an
answer to a request for such work made by an eligible employee under s.65 of the Act.
Furthermore, Mr Butler’s statement about practicability could have, by reference to the
difference between the Agreement and the Award, formed part of the explanation of the terms
of the Agreement and their effect.
[81] Thirdly, as to the differential provisions for meal breaks in the Agreement compared to
the Award, Karijini says that its undertaking at [5] gives all employees a 40-minute paid meal
break. It says that the Agreement’s express statement that “work continues” is not a real
detriment because it merely makes express what is in any event the universal meal break
practice for Pilbara train drivers.71
[82] We have already addressed the issue of the relevance of undertakings which we need
not repeat. Relevantly, we consider the differences in meal break time to be a detriment.
Under the Agreement “work will continue” throughout the meal break. Thus, for example,
under the Agreement a 12 hour shift work employee is paid to work during the break but does
not actually get a break. Under the Award, there is to be a paid meal break for a 12 hour shift
employee of 40 minutes duration. Such an employee is paid while not working and receives a
break. The suggestion that the Agreement arrangement is not detrimental compared to the
Award is frankly absurd. As to the contention that the Agreement requirement that work will
continue is a universal practice in the Pilbara, even if correct, is no answer to the fact that this
is not a condition imposed by the Award and that the Award applied to the relevant
employees at the time the explanation was required, not the “universal practice”. The
provision in the Award as to meal breaks was at the time of the explanation, the relevant
employees’ entitlement. The Agreement changed that entitlement in a manner that is
undeniably detrimental.
[83] Fourthly, and without canvassing the issue in detail, similar observations may be made
by the difference between the Award, which limits the time between meal breaks to 5 hours,
and the Agreement which does not.
[84] Fifthly, as to the differences in the circumstances in which an employee may be
directed to take annual leave Karijini says that:
under clause 11.5 of the Agreement, it can only require an employee to take annual
leave if “the requirement to take leave is reasonable in the circumstances”;72
while the Award provides for a prescriptive process, the practical benefit to the
employee is marginal;73
71 Karijini’s Submissions at Appendix C
72 Ibid
73 Ibid
29
clause 11.4 of the Agreement provides that an application for annual leave by an
employee will not be unreasonably withheld. Clause 23.9 of the Award creates an
entitlement to take a certain amount of leave when “excessive leave” is accrued. But
to take advantage of cl 23.9, the employee must have more than 8 weeks of annual
leave (or 10 weeks in the case of a shift worker) accrued for more than six months
and be unable to reach agreement with the employer about taking that leave. It says
this is very unlikely in circumstances where employees are engaged on maximum-
term contracts of less than four years.74
[85] We do not consider these arguments render the difference to be minor or insignificant.
The proposition in the first dot point is as to the effect of the term after the undertaking given
by Karijini operates as a term of the Agreement. It was not the effect when the proposed
agreement was explained to relevant employees. Moreover, there is a substantive difference
for an employee’s rights between, on the one hand Karijini only being permitted to direct an
employee to take leave for a shut down or where excessive leave is accrued under the Award,
and on the other under the Agreement, where Karijini can simply give an employee two
weeks’ notice for any reason. The addition of a reasonableness requirement pursuant to the
undertaking still renders the term less beneficial to employees than the Award term.
[86] Furthermore, an employees’ entitlement to take leave where it is “excessive leave”
under the Award is not in our view insignificant. The accrual by employees of more than 8
(or 10) weeks untaken leave during the nominal life of an enterprise agreement is hardly “very
unlikely”. Relevantly the two employees would have accrued almost 4 (or 5) weeks leave by
the time the Agreement commenced operation and the TRRC transferring employees might
also be carrying excessive leave as Mr Butler’s evidence was that Karijini would allow the
TRRC transferring employees’ accrued entitlements to come across.75
[87] Finally, whilst we accept that there may be circumstances where the size of the
remuneration advantage of the Agreement over the Award might mean that a comparison is
not necessary or a reasonable step, the size of the remuneration advantage on which Karijini
relies is only effective after the undertaking is taken into account. This was not the case at the
time compliance with s.180(5) was required.
[88] Although we accept that the steps taken by Karijini were reasonable steps to explain
the terms of the Agreement they did little to explain the effect of terms of the Agreement
which would alter in a detrimental fashion, some of the terms of the Award which then
applied to the employees. More steps were required to explain the effect of some of the terms
of the Agreement. Given the circumstances discussed above we consider there were other
steps that were reasonable steps that Karijini was required by s.180(5) to take. These steps
were, first, to explain to the relevant employees the changes to conditions prescribed by the
Award (which applied to the employees) made by the Agreement terms. Secondly, to provide
the employees with information about how to access a copy of the Award in much the same
way at it informed the relevant employees on how to access the NES explanation sheet, the
Long service leave Act 1958 (WA), the Fair Work Act 2009 and the Superannuation
Guarantee (Administration) Act 1992.76 We therefore do not consider that Karijini took all
74 Ibid
75 Appeal Book Tab 34, p.646
76 Appeal Book Tab 34, p.693
30
reasonable steps to ensure that the effect of the terms of the Agreement were explained to the
two employees in the circumstances.
[89] The Deputy President was in error in concluding that the only additional step required
for there to be compliance with s.180(5) of the Act was the one that she identified. Although
the Deputy President concluded in the April 2019 Decision that she was not satisfied that
Karijini had complied with s.180(5) of the Act, she ultimately approved the Agreement with
undertakings in the Approval Decision. The Deputy President did not consider whether the
steps taken together with the step she identified were “all reasonable steps”. One of those
undertakings was accepted by the Deputy President’s as meeting her concern about Karijini’s
compliance with s.180(5). Self-evidently she did not consider whether the undertaking
proffered (or any of the other undertakings) met concerns about Karijini’s failure to take “all
reasonable steps” as we have identified.
[90] Consequently, there was a failure to take into account a relevant consideration. The
Deputy President failed to consider whether Karijini took “all reasonable steps” to ensure that
the terms of the Agreement, and the effect of those terms, were explained to the relevant
employees in a manner appropriate, taking into account the particular circumstances and
needs of the relevant employees. The Deputy President was also in error in concluding that
Karijini had complied with s.180(5) of the Act, taking into account the undertaking, because
she did not identify and take into account the failure by Karijini to take the steps we have
described above. As we have earlier stated, if a step by way of explanation, that is a
reasonable step in the circumstances, was not taken, there cannot be the requisite satisfaction
that an employer has taken “all reasonable steps” and therefore an appealable error has been
established.
[91] We turn then to the CFMMEU’s contentions that in assessing Karijini’s compliance
with s.180(5) of the Act, the Deputy President did not consider or make a finding that Karijini
misled employees about or failed properly to explain:
the effect of the Agreement entitlement to redundancy payment given the employees
were engaged on 'maximum term' contracts; and
the effect of the Agreement in that it represented or implied that employees who
transferred from TRRC would receive benefits under the Agreement as set out in
[40] of the April 2019 Decision.
[92] The CFMMEU accepts that it did not raise the matter described in the second dot point
above.77 As to the matter in the first dot point, we do not accept Karijini’s contention that this
was not raised before the Deputy President, although on appeal the CFMMEU suggest
Karijini misled employees whereas below it was said the explanation as to this matter was
profoundly inadequate.
[93] As just noted, before the Deputy President, the CFMMEU submitted that the
explanation of redundancy entitlements was “profoundly inadequate” because there was
uncertainty about redundancy entitlements under the NES (and consequently under clause 20
of the Agreement).78 Karijini’s submission to the Deputy President engaged with the
77 CFMMEU Submissions in Reply at [73]
78 Appeal Book Tab 25, pp.501 – 502
31
CFMMEU’s submission. It contended, inter alia, that the redundancy explanation was
sufficient and that Mr Butler confirmed that maximum term employees would be entitled to
redundancy benefits if Karijini’s contract with Roy Hill was not renewed, which was not only
an indication of Karijini’s intentions but was correct at law.79 The entitlements of maximum
term employees to redundancy was a live issue.
[94] At [129] of the April 2019 Decision, the Deputy President noted that the “CFMMEU
listed in exacting detail the deficiencies regarding the Explanatory Document, observing that
it was a ‘precis’ and not an explanation.” Apart from this general reference, and the
subsequent observation that “it is not the case that an employer is to provide an explanation
that specifically addresses each and every term of an enterprise agreement in forensic detail”,
there is no engagement with this issue. Putting to one side the allegation that Karijini misled
employees, it seems clear enough that the Deputy President did not deal with the argument
that Karijini failed properly to explain the effect of the Agreement entitlement to redundancy
payment in respect of employees engaged on maximum term contracts. The issue was a
material matter on which the CFMMEU relied to make good its claim that Karijini had not
taken all reasonable steps to explain the effect of the terms of the Agreement. The Deputy
President erred in not dealing with the matter.
[95] Because we propose to uphold the appeal and to quash the Approval Decision, and as
we do not propose to determine the application for ourselves, we intend remitting the matter
back to the Deputy President. This issue can be considered by the Deputy President as can the
matter raised in the second dot point of [91] of this decision.
[96] For the reasons stated, the Grounds 1 and 1A are upheld, save for Ground 1(e) and the
misleading allegation in Ground 1(c).
Ground 2
[97] Although the appeal might be determined without considering Ground 2, we consider
that it is important that we determine this ground so that the matter need not be revisited
before the Deputy President. By Ground 2 of the Notice of Appeal as amended, the
CFMMEU contends the Deputy President erred in law in finding that it was permissible to
accept an undertaking under s.190 of the Act in order to overcome the employer's failure to
comply with s.180(5). In essence, the CFMMEU contends that the Deputy President’s
conclusion is both contrary to Full Bench authority and contrary to the proper construction of
the discretionary power in s.190 to accept undertakings.
[98] The power to approve an agreement with undertakings is not at large. It is
circumscribed. There are prerequisites before the power may be exercised.
[99] Section 190 of the Act is not engaged unless the Commission has a concern that the
agreement does not meet the requirements set out in sections 186 and 187.80 The Commission
must be satisfied that the undertaking accepted meets the concern.81 The Commission must be
satisfied that the effect of accepting the undertaking is not likely to cause financial detriment
79 Appeal Book Tab 26, at [47.14]
80 Fair Work Act 2019 (Cth), s.190(1)(b)
81 Ibid s.190(2)
32
to any employee covered by the agreement or result in substantial changes to the agreement.82
The Commission cannot accept an undertaking without first seeking the views of each known
bargaining representative.83 An undertaking must be in writing84 and must meet the signing of
undertakings requirements in reg 2.07 of the Fair Work Regulations 2009.85
[100] The CFMMEU contends that on the ordinary meaning, the words “the agreement” in
s.190(1)(b) is a reference to the enterprise agreement referred to in s.190(1)(a). It says it is
not a reference to the pre-approval steps required for the making of an agreement set out in
s.180(5) or elsewhere. It says that if Parliament’s intention was that s.190 was to apply to
pre-approval steps, this could easily have been said.
[101] Whilst we accept that the reference to “the agreement” in s.190(1)(b) of the Act is a
reference to the enterprise agreement referred to in s.190(1)(a), we do not otherwise accept
the CFMMEU’s contentions. They read the word “the agreement” in s.190 of the Act in
isolation and not in context. Section 190 of the Act is engaged if the Commission has a
concern that “the agreement” does not meet the requirements set out in ss.186 and 187. What
then are the requirements that “the agreement” must meet? Section 186(1) requires the
Commission to approve “the agreement” if the requirements set out in that section and s.187
are met. Relevantly, one requirement is that the Commission must be satisfied that “the
agreement” has been genuinely agreed to by the employees covered by the agreement.86 “The
agreement” will thus not meet this requirement if it has not been genuinely agreed to by the
relevant employees. If, in relation to an application to approve an enterprise agreement, the
Commission has a concern that “the agreement” the subject of the application does not meet
this requirement, s.190 is engaged.
[102] Section 188 of the Act sets out when an enterprise agreement has been genuinely
agreed to by the employees covered by the agreement. Relevantly s.188(1)(a)(i) deals with the
Commission’s satisfaction that the employer covered by the agreement has complied with
certain pre-approval steps, including s.180(5). Thus, if the Commission has concerns that the
employer did not take all reasonable steps to ensure that the terms of the agreement or the
effect of those terms were explained as required by s.180(5), it follows the Commission has a
concern that “the agreement” does not meet the requirement in s.186(2)(a). Consequently
s.190 is engaged.
[103] Contrary to the CFMMEU’s contention, the Parliament has expressly said that
concerns about certain pre-approval steps may be subject to an undertaking under s.190 of the
Act. It did so first by setting out satisfaction as to certain pre-approval steps as a condition of
genuinely agreed in s.188. Secondly, it set out “genuinely agreed” as a requirement that “the
agreement” must meet and about which the Commission must be satisfied in s.186(2)(a).
Thirdly, it made clear that the undertaking provisions in s.190 are engaged if the Commission
has concerns that the requirements in ss.186 or 187 have not been met.
[104] The CFMMEU’s contention that its construction finds support in the terms of
s.190(3)(a) and (b) of the Act, which it says could only apply to the terms or content of an
82 Ibid s190(3)
83 Ibid s190(4)
84 Ibid s190(3)
85 Ibid s190(5)
86 Ibid s.186(2)(a)
33
agreement, not to the pre-approval steps is also rejected. Section 190(3) is an unsurprising
limitation on the power to accept an undertaking directed to ensuring that employees are not
financially disadvantaged and the agreement is not altered in a substantial way thus preserving
the substance of that which was in agreement. Some undertakings given in response to
concerns that an agreement does not meet an approval requirement will never engage with
s.190(3). Section 190(3) is not to be read as a limitation on the matters of concern about
approval requirements having been met that may be the subject of an undertaking. It is a
protective provision which limits the acceptance of undertakings responsive to such concerns
to those which will not likely cause financial detriment to any employee covered by the
agreement and will not likely result in substantial change to the agreement. Self-evidently, an
undertaking about a particular pre-approval matter which will not likely cause financial
detriment to any employee covered by the agreement and will not likely result in substantial
change to the agreement, are not by reason of s.190(3) incapable of acceptance.
[105] The CFMMEU also contends that the “concern” where s.180(5) has not been complied
with is not about the terms of the agreement, but rather about the fact that an essential pre-
approval step has not been taken. It says as a matter of logic, this concern cannot be remedied
by an undertaking about a different matter, that being the terms of the agreement. We also
reject this submission.
[106] First, section 190(1) does not provide that the section applies if the Commission has a
concern that “the terms of the agreement” do not meet the requirements set out in ss.186 and
187 - it provides that the section applies if the Commission has a concern that “the
agreement” does not meet the requirements. In the instant case the Deputy President’s
concern was that the Agreement did not meet the requirement in s.186(2)(a) because she was
not satisfied that Karijini had complied with s.180(5) as set out in s.188(1)(a)(i).
[107] Secondly, a concern about whether an employer has complied with s.180(5) and
therefore whether the agreement has been genuinely agreed to by the relevant employees, may
as a matter of logic be remedied depending on the nature of the concern. It is accepted that in
a number of cases concerns about genuine agreement will not be able to be met by an
undertaking. But it is not the case, as a matter of logic, that any such concern could never be
met. Why for example, could not a concern that an employer explained the effect of a term of
the agreement as to shift work was that an afternoon shiftworker would receive a 15% loading
under the agreement, when the agreement only provides for a 10% loading, be met by an
undertaking that the employer would pay an afternoon shiftworker a loading of 15%? We
consider that such an undertaking would remedy the concern since the agreement operating
with the undertaking is consistent with the explanation given.
[108] Our conclusion is consistent with the approach adopted in the most recent Full Bench
authority dealing with the subject, namely Construction, Forestry, Maritime, Mining and
Energy Union and others v Specialist People Pty Ltd.87
[109] For these reasons this ground of appeal fails.
Ground 3
87 [2019] FWCFB 7919 at [19]-[25]
34
[110] Ground 3 of the Notice of Appeal as amended, is advanced as an alternative to Ground
2 and contends the Deputy President:
erred in finding that the undertaking offered by Karijini was capable of overcoming
its failure to comply with s.180(5), having regard to the nature and extent of the
failure of Karijini to comply with s.180(5); and/or
failed to take into account relevant considerations which she was bound to consider,
in determining whether the undertaking offered by Karijini was capable of
overcoming Karijini's failure to comply with s.180(5), namely the matters set out in
Ground l.
[111] For the reasons we gave in upholding Ground 1, the concern as to whether the
employee has genuinely agreed to the Agreement arising from the explanation requirement is
more extensive than the issue identified by the Deputy President. The undertaking given by
Karijini was directed to that concern and the Deputy President was satisfied that the
undertaking met that concern. She did not consider, because she had failed to consider
whether “all reasonable steps” had been taken in the circumstances, whether the undertaking
met the concern including the steps that we have identified as being reasonable steps that must
have been taken.
[112] It follows that this ground of appeal must succeed. On a rehearing before the Deputy
President, Karijini may wish to proffer further undertakings or may submit that the existing
undertaking meets the concerns we have identified also.
Grounds 5 and 6
[113] By Ground 5 of the Notice of Appeal as amended, the CFMMEU contends the Deputy
President erred in law in finding that a failure of the employer to comply with s.180(5) of the
Act could constitute a minor procedural or technical error within the meaning of s.188(2)(a).
Ground 6 raises, as an alternative, in connection with s.188(2)(a), the same contentions as are
advanced in Ground 3.
[114] We propose to uphold Ground 6, because the question whether the non-compliance
with s.180(5) of the Act is a minor procedural or technical error, was considered on the
narrow non-compliance identified by the Deputy President, which as we have identified
earlier, is affected by appealable error. This issue will, if appropriate, need to be considered
in light of the matters we have identified together with that identified by the Deputy President.
[115] We would observe however - to the extent Ground 5 contends that any failure to meet
the requirement to comply with s.180(5) of the Act in some way could never be a minor
procedural or technical error - that we have some difficulty in accepting such a broad
contention. Section 188(2)(a) is expressly concerned with determining that an enterprise
agreement has been genuinely agreed to by the employees covered by the agreement if it
would have been genuinely agreed within the meaning of s.188(1) but for minor procedural or
technical errors made in relation to, relevantly, the requirements mentioned in s.188(1)(a).
These requirements include whether the employer complied with s.180(5).
Grounds 7 and 7A
35
[116] These grounds concern whether the Deputy President erred in being satisfied there
were no other reasonable grounds for believing that the Agreement has not been genuinely
agreed to by the employees. We need not determine this ground of appeal because the matters
that we have identified (and any further undertaking proffered) are likely to be relevant in
making an assessment under s.188(1)(c) of the Act.
Grounds 8 and 8A
[117] These grounds concern the fairly chosen requirements in s.186(3) and (3A) and
although it is accepted that the matters now raised on appeal were not raised with the Deputy
President, we are not unsympathetic to the criticism that the Deputy President failed to
consider whether she was satisfied that the group of employees covered by the Agreement
was fairly chosen. The main criticism raised by Ground 8 is that the Deputy President erred
in failing to consider whether, for the purposes of s.186(3) of the Act, the group of employees
covered by the Agreement was fairly chosen. This criticism does not rely for its efficacy on
whether the CFMMEU raised fairly chosen as an issue in the proceeding before the Deputy
President.
[118] The Agreement on its face seems to us to raise a concern whether the employees
covered by the Agreement were fairly chosen when clauses 2 and 4 are read together. The
only submission made about the fairly chosen requirement was as follows:
“Section 186 (3) relevantly requires the commission to be satisfied that the group of
employees covered by the agreement was fairly chosen. The Agreement covered all
Karijini employed at the time it was made.”88
[119] In the April 2019 Decision, the Deputy President said:
“[105] At this juncture, I observe that it is not the case that the business rationale for a
choice is at all times irrelevant when considering provisions under Part 2-4. For
example, had there been controversy over whether the group of employees was fairly
chosen, then the taking into account the reason for the choice, and any possibility of
unfair exploitation, would have been relevant considerations. However, this was not
an issue in these proceedings.”89 [Endnote omitted]
[120] The only other reference to the fairly chosen requirement is oblique and is captured by
the general conclusion in the Approval Decision set out in the following passage:
“[101] Subject to the undertakings referred to above, and on the basis of the material
contained in the application and accompanying statutory declaration, I am satisfied that
each of the requirements of ss 186, 187, 188, and 190 as are relevant to this application
for approval have been met.”90
[121] The submission made by Karijini before the Deputy President and noted above merely
addresses the consideration in s.186(3A). The passage at [105] of the April 2019 Decision
shows that to the extent the Deputy President considered the issue, she turned her mind only
88 Appeal Book Tab 26, p.537
89 Karijini Rail Pty Limited [2019] FWC 2907 at [105]
90 Karijini Rail Pty Limited [2019] FWCA 6451 at [101]
36
to a consideration of the business rationale for the choice of coverage. Otherwise she
proceeded on the basis that fairly chosen was not an issue in the proceeding. That may be so,
but the fact that an approval requirement is not put in issue in a contested proceeding does not
relieve a Member from the obligation to consider it.
[122] The considerations that are relevant in assessing whether the group of employees
covered by the Agreement was fairly chosen will vary from case to case, but the word “fairly”
in s.186(3) 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.91 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.92 On the facts
in the present matter it seems at least the matters discussed in the last proposition might arise
for consideration. We should observe that the interests of employees not covered by the
Agreement was expressly raised as an issue the Deputy President might wish to consider in
the agreement checklist prepared by staff of the Commission, which we have reviewed, as an
aide to the Deputy President’s consideration of the application.
[123] We are not persuaded that the Deputy President considered whether she was satisfied
that the group of employees covered by the Agreement was fairly chosen. We do not accept
Karijini’s contention that noting [105] of the April 2019 Decision, the Deputy President was
proceeding on the basis of an assumption that the group covered by the Agreement must
necessarily be fairly chosen because it covered both of the employees employed at the time.
But even if she did, that is not an answer to the question whether the group covered was fairly
chosen given the facts of this case.
[124] We consider that the CFMMEU has made good that part of Ground 8 which contends
the Deputy President erred in failing to consider whether the group of employees covered by
the Agreement was fairly chosen. That part of Ground 8 is therefore upheld. It is unnecessary
to consider the alternative proposition in Ground 8A.
[125] We propose to remit the application to the Deputy President to enable her to consider
the fairly chosen requirement. The matters the CFMMEU raises on appeal can be raised with
the Deputy President and Karijini can respond.
Conclusion
[126] For the reasons stated we uphold the appeal on the grounds identified. Consequently,
we propose to quash the Approval Decision and remit of the application for redetermination
by the Deputy President taking into account our decision.
Order
[127] We order as follows:
(1) permission to appeal is granted;
91 Cimeco Pty Ltd v Construction, Forestry, Mining, and Energy Union [2012] FWAFB 2206, (2012) 219 IR 139 at [21]
92 Ibid at [21] - [22]; Construction, Forestry, Mining, and Energy Union v Resco Training and Labour Pty Ltd [2012]
FWAFB 8461, (2012) 228 IR 5 at [34]
37
(2) the appeal is upheld on Grounds 1 (in part) and 1A, 3, 6 and 8;
(3) the decision in Karijini Rail Pty Limited [2019] FWCA 6451 is quashed; and
(4) the application for the approval of the Karijini Rail Pty Ltd Rail Operations
Pilbara Enterprise Agreement 2018 is remitted to Deputy President Beaumont
for redetermination in accordance with our decision.
DEPUTY PRESIDENT
Appearances:
C Howell of Counsel for the Appellant
S Wood QC and S Ternovski of Counsel for the Respondent
Hearing details:
2019
Melbourne
3 December
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