[2019] FWCA 6451
The attached document replaces the document previously issued with the above code on 16
September 2019.
The corrections to the document are as follows
1. Footnote 12 changed to ‘Ibid [154].’
2. A Full stop inserted at end of footnote 40.
3. At [22], ‘that Act’ amended to ‘the Act’.
4. Quote following [47], ‘non-judicial bod’ amended to ‘non-judicial body’.
5. At [54], comma inserted between A1 and GB11.
6. Spacing between [62] and [63].
7. At [64], ‘downer’ corrected to ‘Downer’.
8. Table following [78], capitalisation of headings corrected.
9. At [85], line 8, ‘one consider’ corrected to ‘one considers’.
Rhys James
Associate to Deputy President Beaumont
Dated 17 December 2019.
1
Fair Work Act 2009
s.185—Enterprise agreement
Karijini Rail Pty Limited
(AG2018/3844)
KARIJINI RAIL PTY LTD RAIL OPERATIONS PILBARA
ENTERPRISE AGREEMENT 2018
Mining industry
DEPUTY PRESIDENT BEAUMONT PERTH, 16 SEPTEMBER 2019
Application for approval of single-enterprise agreement – whether non-compliance with s
180(5) was excused by s 188(2) as considered in ‘Huntsman’ – s 190 undertaking may meet a
s 180(5) concern
[1] Karijini Rail Pty Ltd (Karijini) made an application to the Commission for the
approval of an enterprise agreement known as the Karijini Rail Pty Ltd Rail Operations
Pilbara Enterprise Agreement 2018 (the Agreement). The Construction, Forestry, Maritime,
Mining, and Energy Union (Union) objected to the approval of the Agreement on several
grounds. A hearing was held on 14 December 2018 and subsequently a decision was
published on 30 April 2019 (First Decision).1 I rejected the Union’s numerous objections
except for one.
[2] I concluded that the requirements in s 180(5) of the Fair Work Act (2009) (Cth) (Act)
were not met. Observing that satisfaction of the requirements under s 186(2)(a) was a
jurisdictional prerequisite for the approval of any enterprise agreement, I concluded that if
s 180(5) had not been satisfied, I could not be satisfied the Agreement had been genuinely
agreed to and it followed I could not at that stage approve the Agreement.
[3] On account of non-compliance with s 180(5), the question turned to whether the
Agreement would have been genuinely agreed to but for a minor procedural or technical error
made in relation to the requirements mentioned in s 188(1)(a), and whether the error was such
that it was not likely to have disadvantaged the two employees (the train drivers). In
addition, there was the issue of whether an undertaking under s 190 may meet the concern that
the Agreement had not been genuinely agreed to under s 188 (1)(a)(i).
[4] Both parties were directed to file further materials on the issue of whether the non-
compliance was excused by s 188(2) of the Act, and to address the matter of whether an
undertaking under s 190 may meet the concern. Having already filed a draft undertaking in
1 [2019] FWC 2907.
[2019] FWCA 6451 [Note: This decision and the associated agreement has
been quashed - refer to Full Bench decision dated 3 March 2020 [2020]
FWCFB 958]
DECISION
E AUSTRALIA FairWork Commission
https://www.fwc.gov.au/documents/decisionssigned/html/2020fwcfb958.htm
https://www.fwc.gov.au/documents/decisionssigned/html/2020fwcfb958.htm
https://www.fwc.gov.au/documents/documents/agreements/fwa/AE505317.pdf
[2019] FWCA 6451
2
the initial proceedings, Karijini submitted a further draft undertaking that purported to address
the issue raised.
[5] In short, I have approved the Agreement with undertakings. My reasons for doing so
follow.
THE UNDERTAKING
Karijini’s submissions
[6] In addition to the undertakings that Karijini had already proffered in the application, it
proffered to provide all employees covered by the Agreement at least the flat hourly rates
contained in the train drivers’ employment contracts, and to provide a roster undertaking that
reflected the current roster practice, therefore protecting the roster.
[7] Karijini submitted that the effect of the new pay undertaking was that a Railway
Worker Level 3 (i.e. a mainline-qualified train driver) would now be entitled under the
Agreement to an annualised remuneration in excess of $157,000. This, it said, was 53%
higher than the remuneration that otherwise would be provided by the Mining Industry Award
2010 (Award).2
[8] Karijini pressed that the Commission should now find that an explanation of the pay
components in comparison to the Award, should no longer be considered a necessary part of
the explanation of the Agreement, in light of the new pay undertaking. It continued that the
new pay entitlement effectively rendered the original base rates, penalties and loadings in the
Agreement irrelevant in a practical sense, to an employee’s consideration of whether to
approve the Agreement. In other words, submitted Karijini, had the Agreement contained a
term to the effect of the new pay undertaking at the time of the vote, it was plain that the two
employees would not have cared about the base rates, loading and penalties under the
Agreement.
The Union’s submissions
[9] The Union’s argument was that Karijini’s undertakings could not satisfy the concerns
of the Commission with respect to the findings made in its decision of 30 April 2019 that the
requirement in s 180(5) had not been met. Succinctly put, the Union’s view was that the new
undertaking with respect to starting times would appear to have nothing to do with explaining
pay rates, or other conditions, nor, did the new pay undertaking, which appeared to have the
effect of increasing pay rates. Neither, stated the Union, achieved the purpose of the pre-
approval step that all reasonable steps were taken to explain the terms of the Agreement and
their effect.
Relevant statutory provisions
[10] An employer that will be covered by a proposed agreement may request employees
who are employed at the time and who will be covered by the agreement to approve the
agreement by voting for it.3 However, before making such request, the employer must comply
2 MA000011.
3 See Fair Work Act 2009 (Cth) s 181(1).
[2019] FWCA 6451
3
with the requirements of s 180.4 In this case, the relevant subsection of s 180 is s 180(5),
which provides that the employer must take all reasonable steps to ensure that: (a) the terms
of the agreement, and the effect of those terms, are explained to the relevant employee; and
(b) the explanation is provided in an appropriate manner taking into account the particular
circumstances and needs of the relevant employees.
[11] On receipt of an application for approval of an enterprise agreement, the Commission
must approve an agreement if it is satisfied that each of the requirements set out in ss 186 and
187 are met. If, however, the Commission has a concern that the agreement does not meet
those requirements, it may exercise a discretion to approve the agreement (subject to the
limitations in s 190(3)), if satisfied that an undertaking it accepts under s 190 meets the
particular concern.
[12] Set out in full, s 190 reads:
190 FWC may approve an enterprise agreement with undertakings
Application of this section
(1) This section applies if:
(a) an application for the approval of an enterprise agreement has
been made under subsection 182(4) or section 185; and
(b) the FWC has a concern that the agreement does not meet the
requirements set out in sections 186 and 187.
Approval of agreement with undertakings
(2) The FWC may approve the agreement under section 186 if the FWC
is satisfied that an undertaking accepted by the FWC under subsection (3) of
this section meets the concern.
Undertakings
(3) The FWC may only accept a written undertaking from one or more
employers covered by the agreement if the FWC is satisfied that the effect of
accepting the undertaking is not likely to:
(a) cause financial detriment to any employee covered by the
agreement; or
(b) result in substantial changes to the agreement.
FWC must seek views of bargaining representatives
(4) The FWC must not accept an undertaking under subsection (3) unless
the FWC has sought the views of each person who the FWC knows is a
bargaining representative for the agreement.
Signature requirements
(5) The undertaking must meet any requirements relating to the signing
of undertakings that are prescribed by the regulations.
4 Ibid s 180(1).
[2019] FWCA 6451
4
[13] It is clear that the undertaking proffered must meet the concern that the agreement
does not meet one or more of the identified requirements set out in ss 186 and 187.
Section 186(2)(a) includes the requirement that the Commission must be satisfied that the
agreement has been genuinely agreed to by the employees covered by the agreement. The
employees covered are those persons currently employed who fall within the whole class of
employees to whom the agreement might in future apply.5 Section 188(1) sets out that for an
enterprise agreement to have been genuinely agreed to by the employees covered by the
agreement, the Commission must (amongst other things) be satisfied that the employer
complied with ss 180(2), (3) and (5).
[14] This part of the decision is concerned with the operation and effect of ss 180(5), 186,
188(1), and 190.
CONSIDERATION
Can an undertaking assuage the Commission’s concern about non-compliance with
s 180(5)?
[15] The pre-approval steps in Subdivision B of Part 2-4, in addition to the Better Off
Overall Test (BOOT), are considered the protective provisions of the Act regarding
agreement making. The notion of ‘protective provisions’, was traversed by both the High
Court in ALDI Foods Pty Ltd v Shop, Distributive and Allied Employees Association
(‘ALDI’)6 and the Full Court in One Key Workforce Pty Ltd v Construction, Forestry, Mining
and Energy Union.7
[16] In ALDI, discussion of the ‘protective provisions’ arose in the context of agreements
made by small numbers of employees. The High Court expressed that White’s J concern in
Shop, Distributive and Allied Employees Association v Aldi Foods Pty Ltd,8 that there was
something implausible in the legislature accepting that a small group of employees may be
able to fix the terms and conditions of employment for all the employees who may be
employed in the enterprise in the future, was adverted and rejected in Construction, Forestry,
Mining and Energy Union v John Holland Pty Ltd (John Holland).9 The High Court stated
that it was a concern addressed, and largely allayed, by the protective provisions of the Act
relating to the right to representation, the ‘fairly chosen’ provisions of sub-ss (3) and (3A) of
s 186, and, the need to pass the BOOT.
[17] However, the protective provisions are not limited to the aforementioned sections. The
Full Court of the Federal Court in One Key Workforce Pty Ltd v Construction Forestry,
Mining and Energy Union10 observed that while agreements covering a small group of
employees were not precluded by the Act, this did not in turn mean that ‘the Act is
unconcerned with agreement-making that may undermine or subvert its preference for
5 ALDI Foods Pty Ltd v Shop, Distributive and Allied Employees Association (2017) 270 IR 459; [2017] HCA 53 [83].
6 (2017) 262 CLR 593; 270 IR 459.
7 (2018) 277 IR 23; [2018] FCAFC 77.
8 (2016) 245 FCR 155.
9
(2015) 228 FCR 297, 306-307 [34]-[41].
10 (2018) 277 IR 23; [2018] FCAFC 77; 262 FCR 527.
[2019] FWCA 6451
5
collective bargaining’.11 The Full Court stated that the concern ‘as the High Court observed in
ALDI at [84] and [87], is addressed not by prohibition but by the Fair Work Act’s “protective
provisions”‘. The Full Court continued:
Section 186(3) (the “fairly chosen” requirement) is one example of such a “protective
provision”. A primary purpose of this provision is to avoid the workforce of an
enterprise being broken up into artificial employee groupings with the consequence
that the workforce of the enterprise is unable to bargain as a single collective: see
Aerocare Flight Support Pty Ltd v Transport Workers Union of Australia [2018]
FCAFC 74 at [19] (Jagot, Bromberg and Rangiah JJ). Another example of a protective
provision referred to by the High Court in ALDI is the BOOT. Each of those
provisions is an element of the approval process specified by Sub-division B of Pt 2-4.
Like those provisions, other provisions of that sub-division, including ss 186(2) and
188, have a protective purpose. That s 188 harbours a concern directed at agreements
made by a small number of employees in circumstances where the agreement covers a
wider range of employee classifications is confirmed by [824] of the Explanatory
Memorandum
which provides: Note that where an agreement covers a large number of
classifications of employees in which no employees are actually engaged there may be
a question as to whether the agreement has been genuinely agreed — see clause 188.12
[18] Informed by the Full Court that s 186(2) is a protective provision, it is nevertheless the
case that if the Commission has a concern that the agreement does not meet the requirements
set out in s 186,13 the Commission can still approve the agreement if satisfied that an
undertaking meets the concern.14 This appears uncontroversial given the reliance in the past of
the Commission to rely on undertakings to address concerns that an agreement does not pass
the BOOT.15 And yet, the contrary is true. While there is acceptance of the use of an
undertaking to address a concern about an enterprise agreement not passing the BOOT - a
protective provision - it appears that there is a diversity of views on whether a concern
regarding non-compliance with s 180(5) can similarly be addressed. Clearly however, the
protective purpose of a provision in this Part, does not preclude the use of an undertaking to
meet a concern about an enterprise agreement satisfying or meeting the requirements in s 186.
[19] When construing a statutory provision, it is well accepted that a court must strive to
give meaning to every word of the provision.16 In Project Blue Sky Inc v Australian
Broadcasting Authority17 (Project Blue Sky) the High Court opined ‘a known rule in the
interpretation of statutes that such a sense is to be made upon the whole as that no clause,
sentence, or word shall prove superfluous, void, or insignificant, if by any other construction
they may all be made useful and pertinent.18
11 One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union (2018) 277 IR 23, 57; [2018] FCAFC 77
[153].
12 Ibid [154].
13 Fair Work Act 2009 (Cth) s 190(1).
14 Ibid ss 190(2) and (3).
15 Ibid s 186(2)(d).
16 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355.
17 Ibid.
18 Ibid 382.
[2019] FWCA 6451
6
[20] In Taylor v The Owners – Strata Plan No 1156419 (Taylor), Gageler and Keane JJ
discussed the relationship between grammatical meaning, context and purpose:
Statutory construction involves attribution of legal meaning to statutory text, read in
context. “Ordinarily, that meaning (the legal meaning) will correspond with the
grammatical meaning… But not always”. Context sometimes favours an
ungrammatical legal meaning. Ungrammatical legal meaning sometimes involves
reading statutory text as containing implicit words. Implicit words are sometimes
words of limitation. They are sometimes words of extension. But they are always
words of explanation. The constructional task remains throughout to expound the
meaning of the statutory text, not to divine unexpressed legislative intention or to
remedy perceived legislative inattention. Construction is not speculation, and it is not
repair.20 (underlining my emphasis).
[21] The purposive approach to construction is required by s 15AA of the Acts
Interpretation Act 1901(Cth). It requires that a construction that would promote the purpose
of object of the Act is to be preferred to one that would not promote that purpose or object.
The purpose or object of the Act is to be taken into account even if the meaning of a provision
is clear. However, while s 15AA requires the Act to be construed in light of its purpose, this
does not in turn mean rewriting the Act. The Commission is obliged under s 578 to take into
account the object of the Act (set out in s 3), and any object of the part of this Act. Section
171, which I do not intend to detail, sets out the object of Part 2-4.
[22] With respect to the undertaking proffered by Karijini on 18 June 2019, the Union
submitted that the undertaking appeared to have been proffered primarily to remedy the found
deficiency with respect to s 180(5) of the Act. The Union continued that if that were the basis
for the proffering of the undertaking, Full Bench authority appeared to be clear, that a failure
to take all reasonable steps to explain the terms of the enterprise agreement and their effect,
cannot be remedied by an undertaking. Reference was made to three decisions of the Full
Bench and the findings arrived at by each.21 Those three decisions are further considered.
[23] In Diamond Offshore General Company v Baldwin (Diamond Offshore)22 the
Appellant appealed the decision of the Deputy President at first instance who had dismissed
the application for the approval of the Diamond Offshore General Company Enterprise
Agreement 2018-2022 (Diamond Agreement). Briefly put, the application was dismissed
because the Deputy President found that the Appellant had not taken all reasonable steps to
ensure that the terms of the Diamond Agreement were explained to relevant employees as
required in s 180(5) of the Act.
[24] Relevant to the matter before me, was the first ground of appeal. Namely, the Deputy
President had erred by concluding that s 180(5) required the Appellant to explain to the
relevant employees the extent to which the terms of the Diamond Agreement differed from its
predecessor. The Appellant submitted that to explain the effect of a term of an agreement, an
employer need only articulate the operative outcome that its text produces and that in many
19 (2014) 253 CLR 531.
20 Ibid [65].
21 Diamond Offshore General Company v Baldwin [2018] FWCFB 6907; Construction, Forestry, Maritime, Mining and
Energy Union v Dawsons Maintenance Contractors Pty Ltd [2018] FWCFB 2992; Australian Workers’ Union v
Professional Traffic Solutions Pty Ltd [2018] FWCFB 633.
22 [2018] FWCFB 6907.
[2019] FWCA 6451
7
cases there will be no difference between an explanation of a term and an explanation of its
effect.
[25] The Full Bench did not accept the Appellant’s proposition concerning the ‘operative
outcome’. The Full Bench expressed that an explanation of the terms of an agreement and the
effect of those terms was not limited to the operative outcome that the text of the term
produces.23 With respect to explaining the difference between the Diamond Agreement and its
predecessor, the Full Bench stated that the Act did not prescribe such a requirement.
However, on a fair reading of the Deputy President’s decision in Diamond Offshore, the Full
Bench concluded that the Deputy President made no such finding and did not establish such a
rule.
[26] In its second ground of appeal the Appellant contended that it had been denied
procedural fairness albeit the Full Bench was disinclined to agree. In some of its concluding
remarks the Full Bench expressed that even if there had been a denial of procedural fairness,
not every such denial at first instance entitled an aggrieved appellant to a new hearing.24
[27] However, more importantly as far as this decision concerns the matters in dispute
before me, the Full Bench stated, ‘a failure to meet the requirements of that section of the FW
Act is not a matter that can be cured by way of an undertaking given pursuant to s 190 of the
FW Act’.25 The basis for arriving at this conclusion was not traversed by the Full Bench and
no reasoning was provided to support the conclusion. There was no suggestion in the decision
that the employer was prepared to offer an undertaking, and the issue of whether a relevant
undertaking could be considered part of the factual matrix when determining what
explanation was required by s 180(5) simply did not arise.
[28] In Construction, Forestry, Maritime, Mining and Energy Union v Dawsons
Maintenance Contractors Pty Ltd26 (Dawsons) there were several grounds of appeal. One of
the grounds included an error in finding that the employer had taken all reasonable steps to
ensure relevant employees were given copies of, or had access to, material incorporated by
reference into the agreement (s 180(2) step), and had explained to them the terms of the
agreement (s 180(5) step).27
[29] In its consideration of the s 180(2) step, the Full Bench concluded that the s 180(2)
step was a foundational matter because it was an element of the requirement that an enterprise
agreement be genuinely agreed.28 The Full Bench found that in such circumstances,
undertakings were incapable of addressing any concern that may have existed about
compliance with s 180(2).29 The Full Bench’s consideration was limited to the concern
regarding the s 180(2) step.
[30] When it came to the consideration of whether there was a sufficient basis for the
Commissioner at first instance to conclude that all reasonable steps were taken to explain the
23 Ibid [28].
24 Ibid [41].
25 Ibid.
26 [2018] FWCFB 2992.
27 Ibid [24].
28 Ibid [36].
29 Ibid.
[2019] FWCA 6451
8
terms of the Agreement and their effect, the Full Bench did not address whether an
undertaking could remedy a concern regarding the s 180(5) step. It simply observed that none
of the undertakings given by the company were the subject of any explanation within the
material provided by the company to its employees before the ballot.
[31] The Full Bench in Australian Workers’ Union, The v Professional Traffic Solutions
Pty Ltd (Professional Traffic) 30 addressed the issue of whether a failure to take all
reasonable steps to explain the terms of an enterprise agreement and their effect could be
remedied by an undertaking. It found that the respondent’s explanation could not have been
sufficient for the Commissioner at first instance to be satisfied that all reasonable steps had
been taken by the employer to explain the terms of the agreement and their effect on the
relevant employees. As such, the Full Bench concluded this was a significant matter in the
Commission’s exercise of jurisdiction in approving the agreement. Consequently, the
Commission decided that a failure to take the matter into account amounted to error of the
kind in House v King.31
[32] Attention turned to whether the error could be cured by an undertaking. The Full
Bench stated that such remedy cannot be open to the Commission for two reasons.32 The first
was that there was no stay of the Commissioner’s approval decision.33 Therefore, it was not
open to an appeal bench to accept further undertakings in respect to an appeal of an agreement
which had been approved and was obviously in current operation and effect.34
[33] The second reason was that the Full Bench could not see how any undertaking could
prospectively cure an error arising from the Commissioner’s consideration of the pre-approval
steps of the agreement.35 The Full Bench concluded that it was not possible to prospectively
rectify an error found in respect to the Commission’s satisfaction of the agreement being
‘genuinely agreed’ to by the employees.36 According to the Full Bench, it was fatal to the
application for the agreement being approved.37
[34] In Professional Traffic the employer had relied on a simple statement confirming that
the agreement in question was explained to relevant employees when handed out, and the
same employees were encouraged to ask questions. When responding to whether the
agreement contained any less beneficial terms than those in the reference instrument, the
employer stated it did not. The Full Bench stated that the response could only have been
predicated on a view that the agreement contained no less beneficial terms than the relevant
modern award.38 The Full Bench considered that the view expressed was incorrect and it
therefore followed that the employer’s explanation could not amount to a taking of all
reasonable steps to explain the terms of the agreement and their effect.39
30 [2018] FWCFB 6333.
31 (1936) 55 CLR 499.
32 Australian Workers’ Union, The v Professional Traffic Solutions Pty Ltd [2018] FWCFB 6333 [44].
33 Ibid [45].
34 Ibid.
35 Ibid [46].
36 Ibid.
37 Ibid.
38 Ibid [55].
39 Ibid.
[2019] FWCA 6451
9
[35] The circumstances encountered by the Full Bench were specific to that case. Evidence
adduced by the employer was limited to what was in effect, a bare statement about the
explanation, and the explanation provided had not traversed the less beneficial terms. It was in
those circumstances that the Full Bench expressed that it could not see how any undertaking
could prospectively cure such an error regarding the pre-approval steps. Their perspicacity
perhaps did not extend beyond the facts which were before them – understandably so.
[36] In the decision of BGC Contracting Pty Ltd T/A BGC40 (BGC), BGC, referring to the
role of undertakings, aptly observed in its submissions that whilst the application process is
clear in respect of concerns about the BOOT, the process with respect to other requirements
such as compliance with s 186(2)(a), which is the subject of the genuine agreement
undertaking, is perhaps less clear.41 The company continued with its submission asking
rhetorically, how the Commission could be satisfied that an undertaking accepted under
s 190(3) would meet a concern about genuine agreement in circumstances where that concern
relates to events prior to the vote.42 In answering its rhetorical question, the company
contended, according to the Deputy President, that it was no answer to suggest, as the unions
had in that case, that such concerns were incapable per se of being met with an undertaking.43
[37] It is a correct proposition that a literal and contextual reading of s 190(1)(b) shows that
Part 2-4 comprehends that concerns about each of the approval requirements set out in ss 186
and 187 are at least capable in-principle of being addressed by an undertaking.44 As was
observed by the Deputy President in BGC, were s 186(2)(a) intended to have been immune
from s 190, parliament would have dealt with it as a standalone approval requirement.45
[38] It is therefore not entirely clear why previous Full Benches have determined that
s 190(1)(b) has no work to do when the concern emanates from the agreement not meeting the
requirements in s 186(2)(a) – specifically ss 188 and 180(5). I have, while writing this
decision, seen fit to refer to the decision in Project Blue Sky. This decision of the High Court
informs this Commission that a known rule of the interpretation of statutes is that no clause,
sentence or word shall prove superfluous, void or insignificant – if by other construction they
may all be made useful and pertinent.46 The Deputy President adopts such an approach in
BGC:
One can readily conceive of circumstances which might cause concern about whether
an agreement has been genuinely agreed to by the relevant employees but be
amenable to an undertaking capable of acceptance and meeting the concern, thus
enabling the agreement to be approved. Whether an undertaking can meet a concern
about genuine agreement must, it seems to me, depend on the reason for the concern.
A simple example will suffice. Consider the position of an enterprise agreement the
subject of an approval application which makes provision for employees working on a
Sunday to receive penalty payments in accordance with the employer’s “policy on
working on Sundays”. The agreement makes provision for the employer’s “policy on
40 [2018] FWC 6936.
41 Ibid [31].
42 Ibid.
43 Ibid.
44 Ibid.
45 Ibid.
46 (1998) 194 CLR 355, 382.
[2019] FWCA 6451
10
working on Sundays” to be incorporated by reference. The policy sets out that
ordinary time work on a Sunday will be payable at double time and overtime work on
a Sunday will be on a voluntary basis but, if worked, employees will be paid at treble
time. Consider that the employer did not comply with s.180(2) in relation to the policy
incorporated by reference. Consider also that the employer, in discharging its
obligation under s.180(5), provided an explanation to relevant employees that the
agreement made provision for the employer’s “policy on working on Sundays” to be
incorporated into the agreement by reference, that the effect of that term would be that
the policy bound the employer and the employees covered by the agreement and that
as a consequence ordinary hours worked on a Sunday by employees would be paid at
double time, that overtime work on a Sunday would be voluntary and if such overtime
is worked, employees so working would be paid at treble time.
On its face, the failure to provide a copy to relevant employees of the employer’s
policy raises a concern that the employees did not genuinely agree to the agreement
because of the employer’s failure to comply with s.180(2). Does it follow that the
agreement cannot be approved if an appropriate undertaking is proffered and accepted
by the Commission? It seems to me the answer is likely to be no. One can readily
envisage an undertaking being proffered to meet the concern. The employer could
proffer an undertaking that the employer’s “policy on working on Sundays” will not
be incorporated as a term of the agreement. In addition, the employer could undertake
that overtime work on a Sunday will be voluntary, and that it will pay any employee
working ordinary hours on a Sunday at double time and will pay any employee
working overtime on a Sunday at treble time.
The effect of the undertaking is that the document which was incorporated by
reference but not supplied to relevant employees, does not form part of the agreement.
The effect of the undertaking is also to confirm the terms of the agreement about
which the relevant employees received an explanation as required by s.180(5), and
upon which the relevant employees voted to approve the agreement. The effect of the
undertaking seems to me not likely to cause financial detriment to any employee
covered by the agreement, nor likely to result in substantial changes to the agreement.
It otherwise appears to meet the concern namely, that employees may not have
genuinely agreed to the agreement by reason of the employer’s failure to comply with
s.180(2) of the Act. There has been compliance with that subsection because the
relevant material is not to be incorporated. But the terms as to Sunday work in the
Agreement are the same, both before and after the undertaking is accepted, there can
thus be satisfaction as to s.186(2)(a) of the Act.47
[39] BGC does not stand for the proposition that every breach of the pre-approval
requirements can be met by an undertaking. Each case will of course turn on its own facts.
The Deputy President elaborated upon this point:
…[N]ot every defect which has the effect of not satisfying the Commission as to the
matter in s.186(2)(a) is capable of being rectified by way of undertaking. Each case
will turn on the nature of the defect in compliance, the Commission’s consequent
concern, and the nature of the undertaking proposed. It further accepts that in most
cases, a concern that an agreement does not meet the requirement in s.186(2)(a) will
be incapable of being met by an undertaking, however this is not because such
concerns are incapable in principle of being the subject of an appropriate undertaking,
47 BGC Contracting Pty Ltd T/A BGC [2018] FWC 6936 [32] – [34].
[2019] FWCA 6451
11
rather it is because the policy purpose to which s.186(2)(a) is directed is unable to be
met by the undertaking proposed in all of the circumstances.48
[40] That undertakings can be used to address concerns about each of the approval
requirements set out in ss 186 and 187, appears to have been accepted by the Full Bench in
Construction, Forestry, Maritime, Mining and Energy Union v Ditchfield Mining Services Pty
Limited (Ditchfield).49
[41] The purpose or policy of those provisions dealing with enterprise agreements, bears on
the question of whether an undertaking can meet the Commission’s concern that the employer
did not comply with ss 180(2), (3) or (5) (pre-approval steps). The objects of Part 2-4 include
the provision of a simple, flexible and fair framework that enables collective bargaining in
good faith, particularly at the enterprise level, for enterprise agreements that deliver
productivity benefits.
[42] 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.50 As explained,
s 186(2) requires the Commission to be satisfied that the agreement is ‘genuinely agreed to’
by the employees covered by it. The Act informs us that ‘genuinely agreed to’ in this context
requires the Commission to be satisfied that the employer complied with s 180(5).
[43] In Ditchfield the Full Bench stated that the evident purpose of the section was 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.51 The Full
Bench continued that an employer’s discharge of it 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.
[44] While s 186(2) is a protective provision, and while there appears to have been
consternation on the part of the Union that an undertaking cannot be relied upon to overcome
a deficiency in an explanation given to employees in the period leading up to a vote on an
enterprise agreement (ss 188(1)(a)(i) and 180(5)), I am satisfied in principle that it can. Such
an interpretation is not, in my view, inconsistent with the statutory purpose of s 186(2). To
conclude otherwise would read into s 190(1)(b) a fetter or limitation not otherwise expressed
regarding the concern not meeting the requirements set out in s 186, with particular reference
to ss 188(1)(a)(i) and 180(5). As was stated in Taylor, the constructional task remains
throughout to expound the meaning of the statutory text, not to divine unexpressed legislative
intention or to remedy perceived legislative inattention.
[45] Of course, my view is predicated upon the acceptance that each case will turn on the
nature of the defect regarding compliance with a pre-approval step (the reason for the
concern),52 the Commission’s consequent concern, and the undertaking proposed.53
48 Ibid [36].
49 [2019] FWCFB 4022 [92].
50 Ibid [72].
51 Ibid.
52 BGC Contracting Pty Ltd T/A BGC [2018] FWC 6936 [32].
53 Ibid [36].
[2019] FWCA 6451
12
Consideration of whether the undertaking meets the aforementioned concerns would include
taking into account whether the protective purpose of ss186(2) and 188 is not rendered
nugatory. Where the undertaking operates to defeat or circumvent the statutory purpose, then
it may not be concluded that an undertaking meets the concern. As was observed in BGC, in
most cases, a concern that an agreement does not meet the requirement in s 186(2)(a) will be
incapable of being met by an undertaking.
[46] In BGC, the applicant advanced that the Commission’s acceptance of an undertaking
is predicated upon an analysis under s 190(3) of the undertaking’s practical effect. It
continued that the Act does not impose the requirements set out in ss 186 and 187 for their
own sake, rather each requirement seeks to avoid particular negative effects or consequences
that might otherwise arise from the application of an enterprise agreement. This contention
aligns with the ‘protective’ nature of the pre-approval steps to ensure that the relevant
employees are
fully informed as practicable about the terms and effect of the terms of a proposed enterprise
agreement before voting on whether to approve it.
[47] Quite rightly, the Union made the submission that BGC is a single member decision,
and the Commission as constituted in this matter, should not depart from the position of the
Full Bench decisions to which the Union has kindly referred me to. As the Full Bench of the
Australian Industrial Relations Commission observed in Cetin v Ripon Pty Ltd (T/as Parkview
Hotel:
Although the Commission is not, as a non-judicial body, bound by principles of stare
decisis, as a matter of policy and sound administration it has generally followed
previous Full Bench decisions relating to the issue to be determined, in the absence of
cogent reasons for not doing so.54
[48] Yet in Ditchfield, it was evident that the Full Bench considered that undertakings can
be used to address concerns about each of the approval requirements set out in ss 186 and
187. And while the Full Bench in Professional Traffic provided reasons on whether a failure
to take all reasonable steps to explain the terms of an enterprise agreement and their effects,
could be remedied by an undertaking, such reasoning appears limited to the facts before the
Full Bench at that time. The decision of Professional Traffic mirrored not the perspicacity
demonstrated by the Deputy President in BGC – where further thought and cogent reasoning
was given to the issue. I therefore have no hesitancy in departing, if it is the case I am, from
the obiter in Diamond Offshore, Dawsons and Professional Traffic.
Does Karijini’s new pay undertaking address the Commission’s concern about the
s 180(5) non-compliance
[49] In addition to the undertakings that Karijini had already proffered in the application, it
proffered an additional undertaking to remove, what it referred to as the ‘Pay Components
Comparison’, which was the need to provide a comparison of the rates, penalties, loadings
and allowances in the Agreement as against the Award . The undertaking reads:
Without limiting the pay entitlements that employees otherwise have under the Agreement,
the total gross amount that Karijini will pay an employee covered by the Agreement with
respect to every pay cycle (not including superannuation) will be at least H x R where:
54 [2003] AIRC 1195; (2003) 127 IR 205 [48].
[2019] FWCA 6451
13
H is the number of hours that the employee worked (or took as paid leave) during that pay
cycle; and
R is the relevant flat hourly rate set out below:
For Railway Worker Level 3 (maximum-term): $71.94 per hour
For Railway Worker Level 2 (maximum-term): $56.99 per hour
For Railway Worker Level 1 (maximum-term): $55.30 per hour
For Railway Worker Level 3 (casual): $77.97 per hour
For Railway Worker Level 2 (casual): $62.37 per hour
For Railway Worker Level 1 (casual): $60.52 per hour
To avoid doubt, the hours rates set out above are all-inclusive flat rates. For the purposes of
calculating the minimum amount that Karijini undertakes to pay under this undertaking, no
penalties, loadings or allowances of any kind are to be applied to these rates. These rates are
fixed and are not subject to indexation under clause 5.3 of the Agreement (the Hourly Rate
Undertaking).
[50] Karijini submitted that the further undertaking resulted in a new pay entitlement that
far exceeded the train drivers’ pay entitlements that would otherwise exist under the
Agreement – that is base rates, penalties, and loadings as they would have applied to the
roster structure protected by the previous undertakings. In Karijini’s view, the new pay
entitlement effectively rendered the original base rates, penalties and loading in the
Agreement irrelevant, in a practical sense, to an employee’s consideration of whether to
approve the Agreement.
[51] According to Karijini, providing a comparison between the penalties, loadings and
allowance in the Award as against the Agreement should no longer be considered to be a
reasonable step required by s 180(5) because of the overwhelming superiority of the
remuneration under the Agreement (with the further undertaking) compared to the Award. To
support its contention, Karijini turned to the decision of the Commission in Downer EDI
Mining – Blasting Services Pty Ltd55 in which 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 agreement and award.
[52] At the initial hearing, evidence was given by Mr Graham Butler, Karijini’s Director,
about the train drivers’ salary. Attached to his witness statement (Exhibit A1), were the letters
of offer for the two train drivers. The schedules to the letters of offer (Exhibit A1 GB11 and
GB12) provided:
Hourly rates (gross) ALL HOURS WORKED IN THE FORTNIGHT WILL BE PAID
AT THE FLAT RATE OF $56.99 PER HOUR UNTIL SUCH
TIME AS YOU BECOME ROUTE QUALIFIED THEN THE
RATE OF PAY WILL BE $71.94.
55 [2018] FWCA 2888 [59].
[2019] FWCA 6451
14
[53] In the First Decision at paragraph [133], I set out some of Mr Butler’s evidence
regarding the information he conveyed to the two train drivers about their salary. It is timely
to provide further detail of that purported dialogue:
Employee B Do we get paid hours worked each swing or same
every fortnight?
Me (Mr Butler) You get paid the actual hours worked each swing so
some pays will vary
Employee A How is the salary made up for different shift patterns
such as night shift, afternoon shift and weekend work?
Me Your IFA varies the way the allowances are paid to
create a flat rate, this rate will encompass all penalties,
the current rate in your LOO is well in advance of the
enterprise agreement rate and need to pass the BOOT
Test.
Employee A What is the BOOT Test and an IFA?
Me The BOOT Test stands for Better Off Overall Test,
this is done by the Commission to ensure that with the
appropriate roster and with all allowances applied that
you are not worse off than the appropriate Mining
Industry Award. The IFA stands for Individual
Flexibility Agreement.
Employee A Yes, we had these when I was working for Rio.
Me Yes, they are very common now.
Employee A That’s good so I know the rates in the enterprise
agreement are a lot less than our actual salary is this
because this is a base rate and does not have penalties
applied to it?
Me Yes, this is correct….
Employee B In relation to Level 2 versus Level 3 for main line
allowance, what level do we start and when do we
move to level 3?
Me You will start at Level 2. Once you are route
competent and assessed by Roy Hill Supervisors you
will move to RW 3.
Employee A So this the same has the Main Line Allowance like at
Rio?
Me Yes, this is the same principle.
[54] The flat rates that are proffered in the Hourly Rate Undertaking match those that are
provided in the letters of offer (Exhibit A1, GB11 and GB12). Further, those rates in the
Hourly Rate Undertaking are, as is the case with the letter of offer, flat rates of the same
amounts. The letters of offer clearly set out that such rates are in excess of the minimum pay
rates under the modern award and ‘absorb all entitlements’ arising under the modern award.
At clause 3.3 of the letter of offer, the entitlements from the modern award that are absorbed
into the flat hourly rates are clearly detailed, with reference to the clauses where such
entitlements can be found in the relevant modern award. The dialogue between Mr Butler and
the two train drivers, includes Mr Butler informing the train drivers that the ‘current rate in
your LOO is well in advance of the enterprise agreement rate and needs to pass the BOOT
Test’.
[2019] FWCA 6451
15
[55] In the First Decision, I expressed that an employee’s entitlement as far as base rates of
pay, penalties and allowances are concerned, are fundamental considerations for any
employee.
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 to’ is given
meaning by s 188(1). Section 188(1)(a)(i) 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). I had
concluded, in light of the explanation provided, that no such state of satisfaction had been
reached.
[56] Karijini had imparted an explanation concerning the rates of pay to the train drivers.
However, the explanation provided focused on the rates of pay in the letters of offer (or
‘IFA’) rather than those detailed in the Agreement. Mr Butler went to some length to specify
the operation of the flat rate, and that it would encompass all penalties, was well in advance of
the enterprise agreement rate and needed to pass the BOOT. The letters of offer clearly
specified the award entitlements for which the hourly rate compensated the employee. Yet,
the explanation concerning the rates of pay in the Agreement fell short of taking all
reasonable steps to ensure that the terms of the Agreement and their effect were explained.
Notwithstanding, I concluded that the train drivers understood that the Agreement passed the
BOOT.
[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.
[2019] FWCA 6451
16
[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 Ltd56 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.
[65] If I am wrong that the Hourly Rate Undertaking meets the concern regarding the
s 180(5) non-compliance, it remains the case that such non-compliance is excused by s 188(2)
of the Act for the following reasons.
WHETHER A FAILURE TO COMPLY WITH S 180(5) CAN BE EXCUSED BY
S 188(2)
Submissions of Karijini
[66] Karijini submitted that if despite the Hourly Rate Undertaking, s 180(5) required it to
provide the train drivers with the Pay Components Comparison, Karijini’s failure to do so was
excused by s 188(2). The basis for Karijini’s contention – the non-compliance with s 180(5)
was a minor procedural error that is unlikely to have disadvantaged the train drivers in
relation to the requirement in s 180(5).
Submissions of the Union
[67] The Union submitted that when one considered the description of ‘procedural
requirement’ in the Full Bench decision of Huntsman Chemical Company Australia Pty
56 Ibid.
[2019] FWCA 6451
17
Limited T/A RMAX Rigid Cellular Plastics & Others57 (Huntsman), the requirement differed
in character from the requirement in s 180(5). The Union’s contention was that s 180(5) did
not require a particular process or course of action. 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.
[68] Referring to the decisions of Flick J in One Key Workforce Pty Ltd v Construction
Forestry, Mining and Energy Union58 and the Full Court of the Federal Court in One Key
Workforce Pty Ltd v Construction Forestry, Mining and Energy Union,59 the Union submitted
that the obligation to take all reasonable steps to explain the agreement was one of substance
and not mere formality, or form.
[69] The Union continued that the Commission had already found that Karijini had failed
to take all reasonable steps to explain the terms and effect of the Agreement. For that purpose,
the Commission had evaluated which steps were reasonably necessary for the agreement to be
genuinely agreed. Therefore, the failure to undertake all reasonable steps to explain the terms
and effect of the Agreement could not be characterised as merely procedural because of the
fundamental considerations that failure to explain disregarded.
[70] If it were the case that the Commission did not accept its contentions and a finding
was made that the requirement under s 180(5) was procedural, then, according to the Union, it
could not be accepted that such a fundamental consideration was minor.
Relevant statutory provisions
[71] Section 186(1) requires the Commission to approve an enterprise agreement if the
requirements in ss 186 and 187 are met. For present purposes, of relevance is s186(2)(a),
which provides:
(2) The FWC must be satisfied that:
(a) if the agreement is not a greenfields agreement – the agreement has
been genuinely agreed to by the employees covered by the
agreement…
[72] Section 188(1) provides that an enterprise agreement has been ‘genuinely agreed to’
by the employees covered by the agreement, for the purpose of s 186(2)(a) if the Commission
is satisfied of the matters set out in s 188(1)(a)-(c) as follows:
188 When employees have genuinely agreed to an enterprise agreement
(1) An enterprise has been genuinely agreed to by the employees covered by the
agreement if the FWC is satisfied that:
(a) the employer, or each of the employers, covered by the agreement
complied with the following provisions in relation to the agreement:
57 [2019] FWCFB 318.
58 [2017] FCA 1266.
59 [2018] FCAFC 77.
[2019] FWCA 6451
18
(i) subsections 180(2), (3) and (5) (which deal with pre-approval
steps);
(ii) subsection 181(2) (which requires that employees not be
requested to approve an enterprise agreement until 21 days after
the last notice of employee representational rights is given); and
(b) the agreement was made in accordance with whichever of subsection
182(1) or (2) applies (those subsections deal with the making of different
kinds of enterprise agreements by employee vote); and
(c) there are no other reasonable grounds for believing that the agreement has
not been genuinely agreed to be the employees.
[73] The new s 188(2) provides a means for finding that an agreement has been genuinely
agreed to despite minor procedural or technical errors:
(2) An enterprise agreement has also been genuinely agreed to by employees covered
by the agreement if the FWC is satisfied that:
(a) the agreement would have been genuinely agreed to within the meaning
of subsection (1) but for minor procedural or technical error made in
relation to the requirements mentioned in paragraph 1(a) or (b), or the
requirements of sections 173 and 174 relating to a notice of employee
representational rights; and
(b) the employees covered by the agreement were not likely to have been
disadvantaged by the errors, in relation to the requirements mentioned in
paragraph (1)(a) or (b), or the requirements of sections 173 and 174.
[74] In the circumstances of this matter, I am satisfied that s 188(2) applies as the
Commission had clearly not decided the application on or before 12 December 2018.
[75] In the decision of Huntsman the Full Bench stated that s 188(2) is engaged only where
the Commission would have been satisfied that an agreement was ‘genuinely agreed’ to
within the meaning of s 188(1) ‘but for’ errors made in relation to the particular bargaining
provisions mentioned in paragraphs (1)(a) or (b). The section does not extend to
circumstances where the Commission is not satisfied that an agreement was genuinely agreed
to in a more general sense, as might arise in considering s 188(1)(c).60 In the First Decision, I
did not conclude that the Agreement had not been genuinely agreed to in the more general
sense as captured by s 188(1)(c) of the Act.
[76] Further, for an agreement to have been genuinely agreed to under s 188(2), the
Commission must be satisfied as to both matters in paragraphs 188(2)(a) and (b) before it can
be said that the agreement has been genuinely agreed.61
[77] The Full Bench explained that s 188(2) does not apply to all procedural or technical
requirements with which an employer must comply when bargaining for an agreement.62 The
procedural or technical requirements must be ‘minor’ and must be errors made in relation to
the requirements mentioned in paragraph (1)(a) or (b).63
60 Huntsman Chemical Company Australia Pty Limited T/A RMAX Rigid Cellular Plastics & Others [2019] FWCFB 318
[43].
61 Ibid [37].
62 Ibid [45].
63 Ibid [45] and [54].
[2019] FWCA 6451
19
[78] The word ‘minor’ is a limitation upon the type of errors contemplated by s 188(2)(a).64
According to the Full Bench, 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.65 The Full Bench in
Huntsman set out a table of procedural or technical requirements covered by s 188(2) and
potential ways in which employees may be disadvantaged in relation to minor errors.66 For
the purpose of this matter the following is relevant:
Procedural or technical requirements covered by s 188(2) and potential ways in
which employees may be disadvantaged in relation to minor errors
Section Procedural or
Technical
Requirement
Underlying
Purpose of
Requirement
How Might
Employees be
Disadvantaged
188(1)(a) Comply with
subsection
180(5)(a) – take all
reasonable steps to
the terms of the
agreement and their
effects are
explained to the
relevant employees
Ensure that
employees
understand the
effect of the
agreement that is to
be voted on,
enabling them to
make an informed
decision
In the circumstances
the steps may have
been taken such that
employees might
not be in a position
to make an
informed decision
about the terms of
the agreement upon
which they are
eligible to vote
[79] Whether a failure to comply with the requirements in paragraph 188(1)(a) or (b), in for
example, s 180(5), constitutes a ‘minor error’, depends on the extent of the non-compliance
and the circumstances.67
[80] When considering the definition of the word ‘error’, the Full Bench referred to the
definition in the Macquarie Dictionary noting that, amongst other meanings, error meant a
deviation from accuracy or correctness; a mistake, as in action, speech, etc.68 The Full Bench
concluded that an act may be intentional, in the sense that it was a deliberate act, but
nevertheless constitute an ‘error’ because the person was unaware of the legal consequences
of their action.69 This type of error is distinguished from circumstances where the employer
embarks on a course of deliberate non-compliance. The Full Bench expressed that a proper
distinction is to be made between an intentional act which unintentionally results in non-
compliance with the procedural and/or technical requirements, and intentional non-
compliance with those requirements, which will not constitute an error for the purpose of
s 188(2).70
64 Ibid [45] and [55].
65 Ibid
66 Ibid [74].
67 Ibid [45] and [79].
68 Ibid [45] and [70].
69 Ibid [45] and [72].
70 Ibid [45] and [73].
[2019] FWCA 6451
20
[81] With respect to section 188(2)(b), the Full Bench stated that in the context of the Act,
the word ‘disadvantaged’ in itself 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 2-4.71 However, the test itself refers to ‘the employees covered
by the agreement were not likely to have been disadvantaged by the errors’.72 The word
‘likely’ in s 188(2)(b), according to the Full Bench in Huntsman, means ‘probable’, in the
sense that there is an odd-on chance of it happening – the meaning being consistent with the
ordinary and natural meaning of the word.73
[82] In assessing whether employees were not likely to have been disadvantaged, the Full
Bench in Huntsman stated that it may be necessary to consider the particular circumstances of
the employees concerned at the time the error occurred and the impact of the error on the
subsequent course of bargaining.74
Consideration
[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 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,
71 Ibid [45] and [104].
72 Ibid [45] and [105].
73 Ibid [45] and [110].
74 Ibid [45] and [113].
[2019] FWCA 6451
21
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.’75 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 Union76 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, 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.77 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.
75 ACTU, Fair Work Amendment (Repeal of 4 Yearly Reviews and Other Measures) Bill 2017: Submission to the Senate
Education and Employment Legislation Committee (7 April 2017) 7.
76 [2018] FCAFC 77.
77 (1998) 194 CLR 355.
[2019] FWCA 6451
22
[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.78 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.79
[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 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.80 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.81
78 Second Witness Statement of Graham Butler [2(a)].
79 Huntsman Chemical Company Australia Pty Limited T/A RMAX Rigid Cellular Plastics & Others [2019] FWCFB 318 [45]
and [55].
80 [2019] FWC 2907 [157] and [159]-[160].
81 Transcript PN [266].
[2019] FWCA 6451
23
[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.82
[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 2-4.83 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.
Conclusion
[99] Karijini has provided written undertakings. A copy of the undertakings is attached in
Annexure A. I am satisfied that the undertakings will not cause financial detriment to any
employee covered by the Agreement and that the undertakings will not result in substantial
changes to the Agreement.
[100] In compliance with s 190(4) of the Act, the bargaining representative’s views
regarding the undertakings proffered were sought. The bargaining representative was
provided with the opportunity to raise and address any objections he or she had to the
undertakings proffered by Karijini. No objection was raised.
[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.
[102] The Agreement was approved on 16 September 2019 and, in accordance with s 54,
will operate from 23 September 2019. The nominal expiry date of the Agreement is four (4)
years from the date of this decision.
82 Huntsman Chemical Company Australia Pty Limited T/A RMAX Rigid Cellular Plastics & Others [2019] FWCFB 318 [45]
and [55].
83 Ibid [45] and [104].
[2019] FWCA 6451
24
DEPUTY PRESIDENT
Appearances:
Mr Wood for the Applicant
Mr Kentish for the CFMMEU
Hearing details:
Perth
2019
26 June
Printed by authority of the Commonwealth Government Printer
AE505317 PR712457
WORK MMISSION
[2019] FWCA 6451
25
Annexure A
IN THE FAIR WORK COMMISSION FWC Matter No. AG2018/3844 Applicant: Karijini Rail Pty Limited ACN: 627 019 489
Undertaking- section 190 I, Graham Butler, Director, Karijini Rail Pty Limited (ACN 627 019 489) (Karijini) give the following undertakings with respect to the Karijini Rail Pty Ltd Rail Operations Pilbara Enterprise Agreement 2018 (Agreement): 1. Karijini will not require any employee to take accrued annual leave under clause 11.5 of the Agreement unless the requirement to take leave is reasonable in all the
circumstances. 2. Karijini will not engage any part-time employees in the classifications covered by the Agreement. 3. Karijini will not roster employees in classifications covered by the Agreement other than in accordance with the following roster arrangements: a. All shifts will be of 12 hours. b The general roster cycle will be 2 weeks "on" and 2 weeks "off" There will be
one roster cycle per year of 1 week "on" and 1 week "off" (slide week). c. With a roster cycle of 2 weeks "on" and 2 weeks "off": 1. the employee's starting time for the second week will be the starting time for the first week shifted by 12 hours; ii. there will be a minimum of a 10-hour break between shifts; and iii. there will be a 24-hour break between the last shift of the first "on" week
and the first shift of the second "on" week. (E.g. if the first "on" week consisted of shifts 3am to 3pm, the second "on" week will consist of shifts of 3pm to 3am, with a 24-hour break between the last shift of the first "on" week and the first shift of the second "on" week.) d. An employee's starting time for the first "on" week of the roster cycle will move forward by 2 to 3 hours with every cycle.
[2019] FWCA 6451
26
- 2- (eg if an employee's starting time for the first "on" week of a roster cycle was 3pm, his or her starting time for the first "on" week of the next roster cycle will be between 5pm and 6pm).
4. Karijini will treat any employee covered by the Agreement who is a continuous shiftworker" within the meaning of the Award as a "continuous shiftworker" within the meaning of the Agreement. 5. Karijini will treat any employee covered by the Agreement as "train crew" within the meaning of clause 8.1 of the Agreement and will provide the employee with a 40- minute paid meal break. 6. Karijini will agree not to apply the following words of clause 9.9 of the Agreement:
"except where an Employee is called upon to work a sixth (6th) shift in not more than one (1) week in any four (4) weeks, when the Employee shall be paid for such shift at time and a half (1.5 times) for the first four (4) hours and double time (2 times) thereafter". 7. Without limiting the pay entitlements that employees otherwise have under the Agreement, the total gross amount that Karijini will pay an employee covered by the Agreement with respect to every pay cycle (not including superannuation) will be at
least H x R where: H is the number of hours that the employee worked (or took as paid leave) during that pay cycle; and . R is the relevant flat hourly rate set out below: For Railway Worker Level 3 (maximum-term): $71.94 per hour For Railway Worker Level 2 (maximum-term): $56.99 per hour
For Railway Worker Level 1 (maximum-term): $55.30 per hour For Railway Worker Level 3 (casual): $77.97 per hour For Railway Worker Level 2 (casual): $62.37 per hour For Railway Worker Level 1 (casual): $60.52 per hour To avoid doubt, the hourly rates set out above are all-inclusive flat rates. For the purposes of calculating the minimum amount that Karijini undertakes to pay under this undertaking no penalties, loadings or allowances of any kind are to be applied to
these rates. These rates are fixed and are not subject to indexation under clause 5.3 of the Agreement. Employer name: Karijini Rail Pty Limited (ACN 627 019 489)
[2019] FWCA 6451
27
- 3- Authority to sign: Director
Graham Dutt. Signature: Date: 26 June 2019
