[2011] FWAFB 1759

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FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.604 - Appeal of decisions

Building, metal and civil construction industries
SENIOR DEPUTY PRESIDENT HARRISON SENIOR DEPUTY PRESIDENT RICHARDS COMMISSIONER WILLIAMS	MELBOURNE, 10 MAY 2011

Appeal against decision [[2010] FWAA 8707] of Senior Deputy President Cartwright at Sydney on 22 November 2010 in matter number AG2010/13022.

[1] The Australian Workers’ Union (AWU) has appealed a decision made by Senior Deputy President Cartwright to approve an enterprise agreement. The agreement is the Roadworx Surfacing Pty Ltd Traffic Controllers Agreement 2010-2013 (the Agreement). The appeal is lodged under s.604 of the Fair Work Act 2009 (the Act). That section allows a person who is aggrieved by a decision of a member of Fair Work Australia (FWA) to appeal the decision, provided permission to do so is granted by FWA.

[2] We are satisfied the AWU is a person aggrieved by the decision of the Senior Deputy President. For reasons that appear later in this decision we have decided that it was a bargaining representative of employees who will be covered by the Agreement. In the alternative if it was not a bargaining representative nonetheless we are persuaded that, due to the peculiar facts in this matter, it is appropriate to find it is a person aggrieved. In deciding it has the requisite status we have relied on the fact its officials had numerous consultations with employees about the Agreement prior to its being voted upon and amongst those employees are members who will be covered by the Agreement. We note that it notified Roadworx more than two weeks prior to the day of the vote for the Agreement that employees had asked it to represent them and later a number of those employees revoked instruments of self appointment they had earlier signed. The AWU appeared before Senior Deputy President Cartwright and opposed the approval of the Agreement. Its appearance was not opposed by Roadworx. It seems clear that this Honour accepted the AWU was entitled to appear in the proceedings before him.

[3] At the commencement of the hearing of the appeal Roadworx sought to tender an affidavit of Mr Gillies, its Chief Executive Officer. We refused to allow the tender of that affidavit. A copy of it had been sent to the AWU (and to FWA) at around 7.30pm the night before the appeal. The affidavit addressed revocation notices provided by employees to Roadworx “on or about 30 July 2010”. We say more about these later in this decision. In making our ruling we took into account a number of factors. The first was the late filing and service of the affidavit. The AWU had little opportunity to consider its content however Mr Gibian said its assertions were likely to be contested. We also noted that evidence as to matters asserted in the affidavit was available and could have been led before the Senior Deputy President at first instance. Not only was it not there led Roadworx had specifically accepted evidence to the contrary contained in an affidavit of Mr Kerley, an AWU Organiser. Roadworx did not cross examine him. In these circumstances we were not persuaded to admit any further evidence. We should note that insofar as the affidavit raised a challenge to the accuracy of an hourly rate of pay contained in a schedule to the notice of appeal that error was conceded by the AWU.

[4] We turn now to the grounds of appeal. The AWU summarised the errors made by his Honour in the following terms:

“The Agreement did not satisfy the "better off overall test" as required by s 186(2)(d) of the Act.

The Agreement was not genuinely agreed to by the employees covered by the Agreement as required by s 186(2)(a) of the Act.

The Agreement was approved on the basis of undertakings given by Roadworx in circumstances in which it was not open to do so because the undertakings were such as to result in substantial changes to the agreement for the purposes of s 190(3)(b) of the Act.

The Agreement was approved on the basis of undertakings given by Roadworx without the Senior Deputy President having sought the views of each person known to be a bargaining representative as required by s 190(4) of the Act.” 1

[5] In order to understand these grounds it is necessary to first refer to the manner in which the application for approval was made and dealt with by his Honour.

[6] On 4 August 2010 Roadworx filed a Form 16, being an application seeking approval of an enterprise agreement. The application was accompanied by a Form 17 which is an employer’s statutory declaration in support of approval. The declaration in this matter was made by Mr Gillies. He was identified in both forms as being the contact person for Roadworx. Neither form was in the terms contained in the rules in operation at the time. They appear to have been in terms required by a 2009 version of the rules. That earlier version was applicable to a time when the relevant test was the no-disadvantage test. The rules and forms had been revised to reflect the terms of the legislation and required the employer to answer questions to enable the better off overall test to be applied. Another important feature of the current forms relates to information about the identity of bargaining representatives be they union bargaining representatives or individual employees who had appointed themselves or another as a bargaining representative. The Form 16 which was filed indicated there had been no union bargaining representative for the Agreement and had no details of any employees who, in their own right, were bargaining representatives. In our opinion the AWU was a bargaining representative and, had the correct form been completed, the names and addresses of employees who had appointed themselves as a bargaining representative would have been required of Roadworx. The implications of this are addressed later in this decision.

[7] The statutory declaration of Mr Gillies identified the following matters that are relevant to this appeal.

• The last s.173 notice about representational rights was given to employees on 8 July 2010. On that same day employees were given a copy of the Agreement, details of the voting method, the time and place of the ballot, a list of ‘frequently asked questions”, a contact persons details and a ballot paper.

• Employees were encouraged to have “one on one discussion sessions” with their manager “with prior appointment”. These sessions were “made available” on 23 and 26 July and employees were also invited to email their questions. The Agreement was made 2 on 30 July 2010.

• Of the 53 employees who would be covered by the Agreement, 33 cast a valid vote and, of those, 17 voted in support and 16 against. The Building and Construction General On-site Award 2010 (the Award) was identified as the relevant transitional instrument for the purposes of the no disadvantage test. We here interpose to comment that it was in fact the relevant modern award which was to be used for the application of the better off overall test.

• The Agreement was said to contain no terms or conditions of employment that were less beneficial than the terms and conditions contained in the Award. It was also said that it was “better than the existing” Award. We again interpose here to observe that these assertions are difficult to understand given the numerous provisions the AWU referred to which identified terms which were inferior to those in the Award and for which the higher hourly rates would not be likely to provide a sufficient compensating counter balance. 3 As this issue was subsequently addressed in the proceedings before his Honour we need say no more about it here.

[8] On 5 August the AWU wrote to Fair Work Australia requesting an opportunity to be heard in relation to the application for approval of the Agreement. The AWU and Roadworx apparently met soon after that date to try and resolve the concerns of the union. The application for approval was called on for hearing before his Honour on 13 September. Ms Angus then appeared for the AWU and Mr Duggan, from the Civil Contractors Federation (CCF), appeared for its member Roadworx.

[9] Mr Duggan informed his Honour that Roadworx was prepared to give undertakings in order to meet any concerns about the Agreement passing the better off overall test. He also referred to the two lowest level classifications and conceded that the rates for them may fall below the Award rates. 4 He submitted that in accordance with custom and practice in the company “due to performance appraisals those rates will be increased in a minimum compliance with CPI”.5 Although not entirely clear it seems it was intended to be a guarantee of a CPI adjustment and that it would apply to all wage rates in the Agreement. Ms Angus indicated that such an undertaking would not be adequate to address the numerous other provisions in the Agreement that were inferior to the Award.

[10] We observe that there seems to have been some confusion between the parties and indeed his Honour as to which version of undertakings each was referring to. Mr Duggan first referred to a recent submission (it appears it had been placed on bar table on the morning of the hearing) and was described as an undertaking about an adjustment to the wage rates in the terms we have referred to in the previous paragraph. Ms Angus referred to different undertakings forwarded to the union on the previous Friday afternoon (the hearing was on Monday morning) about which she said they only addressed amendments to the hours clause. 6 His Honour indicated he was not sure he had seen any separate undertakings but noted that undertakings were referred to in the employer's written submissions which were marked exhibit A1.7

[11] We will return again to the issue of undertakings but for the time being it is sufficient to note that during the hearing before his Honour, quite apart from the lack of clarity as to the terms of any undertakings being offered by Roadworx, there was no evidence that the terms of any undertakings had been provided to any employee of Roadworx who had appointed themselves as a bargaining representative. Additionally, there was no document which contained undertakings which was signed by Roadworx.

[12] It appearing unlikely that the AWU and Roadworx would be able to reach agreement in relation to the asserted deficiencies in the Agreement, Mr Duggan said he would “press ahead” and rely on his written submissions (these were the ones marked A1). 8 No witness evidence was called by Roadworx. Ms Angus then made submissions identifying why his Honour should not approve the Agreement and why undertakings in the terms described by Mr Duggan would not result in the better off overall test being met. In this respect the union tendered a document which comprised a table comparing numerous provisions in the Agreement with those in the Award.

[13] Ms Angus also made submissions as to why his Honour should not be satisfied that the Agreement had been genuinely agreed by the relevant employees. We do not intend to discuss these submissions in any detail. They included references to inconsistencies in dates given by or on behalf of Roadworx about when the last notice of an employee's representational rights was given. Mr Gilles statutory declaration identified it as being 8 July 2010 but subsequently the CCF, in a letter to the union, advised that it was 21 October 2009. About this Mr Duggan had said to his Honour that he would like to correct certain answers given by Mr Gillies in his statutory declaration. He said that the notices were in fact given between October 2009 to May 2010. We observe this unsatisfactory development becomes even more so in that the written submissions of Roadworx indicated that it had been consulting with bargaining representatives on an individual basis from May 2009. This is not the occasion for us to do other than comment upon this being an entirely unacceptable way in which an erroneous answer given in a statutory declaration, albeit one that may have been given as a result of misunderstanding the question, might be revisited.

[14] Ms Angus tendered a statement of Mr Kerley, an AWU organiser. Mr Duggan indicated that he did not oppose the tender of the statement and did not wish to cross-examine him. We should summarise the relevant facts established by that statement.

• Employees had received a notice of representational rights in October 2009. With that notice was a document for each employee to sign. It was a document as envisaged by s.176(1)(c) and s.176(4) of the Act appointing themselves as a bargaining representative. It appears each employee signed the document. Based on what Mr Kerley had been told by these employees they had believed it was a requirement under the Act for them to sign such a document.

• In or around December 2009, an agreement was proposed by Roadworx to cover all its employees but was rejected by a vote of employees. Subsequently a number of employees sought the advice of the AWU and it held numerous discussions with them. Several joined the AWU however, prior to that, they had already signed a notice appointing themselves as a bargaining representative for the Agreement.

• On or around 8 July 2010, Roadworx circulated a further proposed agreement to cover traffic control employees. Employees were advised that a vote would be held on 30 July 2010. An employee had given a copy of these documents to Mr Kerley. No meetings of the employees and Roadworx management had occurred. Employees were informed they could meet their Manager, Mr Serna, on an individual basis and by appointment.

• The AWU wrote to Roadworx on 12 July 2010 informing the company that it was a bargaining representative for employees to be covered by the proposed agreement and that it wished to commence bargaining. On 19 July 2010 the CCF responded advising that representative notices had been given to all employees on 21 October 2009, that 87 employees had been appointed as bargaining representatives and that no revocations of those appointments had been received. Accordingly, it was Roadworx view that the AWU was unable to represent any employees.

• On or about 30 July 2010, approximately 19 employees signed instruments revoking their previous appointments as bargaining representatives and gave those documents to Roadworx. Even though the precise number who gave these revocations to Roadworx is not clear it was not in issue that, at the very least, some had. The exact time this occurred is also not clear but importantly it appears to have been prior to 2.49pm on that day. We here interpose to note that in the CCF written submission tendered to the Senior Deputy President it was acknowledged that on 30 July 2010 revocation of bargaining representative notices, in compliance with s.178A, had been served on Roadworx.

• At 2.49pm on 30 July 2010 the AWU sent an email to Roadworx referring to the revocation notices the company had received that morning. The AWU said it was the default bargaining representative. It advised that a significant portion of the employees were members of the AWU and they had revoked their prior individual appointments. It asked that no further step be taken to seek approval of the Agreement until Roadworx had discussions with the AWU.

• The vote proceeded on 30 July 2010 and the Agreement was approved by a vote of 17-16. The vote closed at 5pm on that day.

[15] We return to the concluding submissions before his Honour. Mr Duggan again returned to the issue of undertakings. He said he wanted to give three undertakings and to place them on the record correctly 9. The first two concerned the hours of work and the meal allowance. The third was that with each class of employees the "nominal rates of pay will increase equal or better than CPI".10 In relation to rates we note that Mr Duggan said that Roadworx conceded the point made by the AWU that the first two wage levels contained only marginal increases in compensation for numerous amounts that would otherwise be payable under the Award. As earlier noted by us these undertakings were not provided in a written form, were not signed by a person authorised by Roadworx to do so and there was no evidence that they had been provided to any employees who had appointed themselves as a bargaining representative, and had not revoked that appointment. There was no indication about what Roadworx proposed to do about these undertakings following the hearing. The hearing before his Honour then concluded.

[16] We should refer to what occurred after the hearing concerning undertakings. A letter dated 16 November 2010 was sent to his Honour's chambers. It was on Roadworx letterhead and signed by Mr Gillies. He indicated that he was the nominated company representative and had authority to offer three undertakings. The undertakings were set out in the letter. They related first to wage rates and provided that each employee would be awarded at least the yearly CPI and that no class of employee’s rate of pay will fall below the equivalent award classification over the life of the Agreement. In relation to hours of work the undertaking was to “mirror the operation of clause 33-Ordinary hours of work “ of the Award in implementing clause 9 of the Agreement. In respect to the meal allowance clause in the Agreement the undertaking was to mirror the monetary allowance contained in clause 20.2 of the Award. About these undertakings we observe that none of them are in the same terms as those which were annexed to his Honours decision approving the Agreement. The most significant is in relation to the wording of the undertaking concerning the hours of work. Additionally it is significantly different to the manner in which this undertaking was described in proceedings before his Honour and is unclear from its terms how it would operate. As for the undertaking about how rates in the Agreement would be increased during its life it does not address how the rates would be sufficient to compensate for the loss of any penalties that would otherwise be payable under the Award.

[17] The letter of 16 November was not provided to the AWU nor is there any evidence that it was provided to any employees of Roadworx who had appointed themselves as a bargaining representative for the Agreement and who had not revoked that appointment.

[18] We now refer to his Honour’s approval decision. He said he was satisfied that, subject to the written undertakings provided by Roadworx “the requirements of ss.185, 186, 187 and 188 have been met”. As the undertakings had nothing to do with the considerations addressed in ss.186(2)(a) and 188, which required his Honour to be satisfied the Agreement had been genuinely agreed by employees, we are unsure how his Honour decided any of the AWU challenges in this respect. We must assume he was not convinced by any of them however his decision contains no reasons why that was so. Brief reasons indicting why he was not persuaded by any of the AWU’s submissions may well have been adequate. However nothing at all was said by his Honour about this challenge to the Agreement’s approval. The failure to provide adequate reasons was not pleaded as a separate ground of appeal by the AWU rather it proceeded to argue why his Honour was in error in concluding he was satisfied as to the relevant statutory considerations. In these circumstances we have decided to say no more about this aspect of the appeal and we will now turn to the manner in which his Honour dealt with undertakings. In this respect he said in his decision that he was satisfied “that in accordance with s.190 of the Act, the written undertakings attached meet my concerns under s.186”. He also said those undertakings “meet the requirements of s.190(3) and were the subject of argument at the hearing on 13 September such that s.190(4) is also satisfied” 11. We assume these comments relate to the necessity for his Honour to have been satisfied the Agreement passed the better off overall test as required by s.186(2)(d). In the event a member has concerns in this regard the provisions of s.190 of the Act becomes important. That section is in the following terms:

“Application of this section

(1) This section applies if:

(a) an application for the approval of an enterprise agreement has been made under section 185; and

(b) FWA has a concern that the agreement does not meet the requirements set out in sections 186 and 187.

Approval of agreement with undertakings

(2) FWA may approve the agreement under section 186 if FWA is satisfied that an undertaking accepted by FWA under subsection (3) of this section meets the concern.

Undertakings

(3) FWA may only accept a written undertaking from one or more employers covered by the agreement if FWA 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.

FWA must seek views of bargaining representatives

(4) FWA must not accept an undertaking under subsection (3) unless FWA has sought the views of each person who FWA 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.”

[19] It is not surprising that the matters raised in the hearing before his Honour gave rise to concerns about the Agreement and in particular whether it met the better off overall test. We can only assume from his Honour’s reasons for decision his concerns related to the three areas about which undertakings were given in the hearing. There are several difficulties with the undertakings his Honour annexed to his decision. Firstly as we have earlier indicated they are in terms significantly different to those the CCF advocate had submitted Roadworx would be prepared to give. Next they were not the undertakings which Roadworx did in fact give in its letter of 16 November which was signed by Mr Gillies. Another consideration is that it is unclear how they could have been accepted by his Honour as sufficient to meet concerns about the Agreement passing the better off overall test. The numerous clauses of the Agreement identified by the AWU which were inferior to those in the Award provided, at the very least, a strongly arguable case and some reasons needed to be given by his Honour as to why the undertakings he accepted were adequate. In this respect we note the comparison table the AWU provided to his Honour and the submissions of Ms Angus in this regard. They identified several provisions of the Agreement which were less beneficial to employees than the Award. It is not apparent how his Honour could have been satisfied that the limited undertakings given would have met concerns about these provisions. Finally, and although not of great consequence, the undertakings annexed to his Honour’s decision contain typographical errors likely to give rise to interpretation disputes. The undertakings have a number in the left-hand column attached to them and we think it a fair assumption that it is intended the content of that paragraph is referable to the correspondingly numbered clause in the Agreement. Regrettably they do not all do so. The undertaking marked “6” is described as “Employment categories”. We note that clause 6 of the Agreement is titled “No Extra Claims”. It is clause 7 that is titled “Employment Categories”.

[20] Next we turn to s.190(4). His Honour was not able to accept an undertaking unless he had sought the views of each person he knew was a bargaining representative. Roadworx submitted his Honour could not have known who the bargaining representatives were. It says that the only person who purported to identify themselves as an employee bargaining representative, and incorrectly so in its submission, was the AWU. It submitted that as there was nothing before his Honour that would provide him with the names of such persons s.190(4) did not oblige him to do anything more. We do not accept this submission. The reference to each person who a member knows is a bargaining representative is to be considered in the context of provisions of the Act concerning the appointment and obligations of such persons. In this case the evidence was that all employees had appointed themselves as their own bargaining representative. They did so after Roadworx provided them with a form to do so. Section 178(2) provides that a copy of an employees’ instrument of appointment as a bargaining representative must be given to the employer. Accordingly, Roadworx was in a position to provide the names (and probably addresses) of all such persons. As we have earlier indicated, had it completed the correct form in support of its application for approval of the Agreement all of this information would have been provided. It is not acceptable for it to benefit from, or to take advantage of, its failure to attend to the correct procedure.

[21] It seems his Honour believed it was adequate compliance with s.190(4) for him to accept the undertakings he did as, in the terms of his reasons for decision they “ were the subject of argument at the hearing”. In this respect his Honour was in error. The subject matters of the undertakings were addressed in that hearing but that of itself is not what was required. Before accepting any undertakings he had to seek the views of bargaining representatives. In our opinion, on the evidence before his Honour, he knew the AWU had become a bargaining representative from the time employees had revoked their earlier self appointments. The evidence also established that those revocations were given to Roadworx at a time prior to the vote for the Agreement closing. It was not submitted to his Honour that the AWU had not assumed the status of a bargaining representative for those employees. Section 190(4) required him to seek the views of the AWU about the undertakings. In failing to do so he was in error. Additionally, he knew on the evidence that all employees had appointed themselves bargaining representatives. Other than the 19 who revoked that status he knew the remainder retained that status. In those circumstances we do not read s.190(4) so narrowly as only imposing an obligation on his Honour if he had before him a list of the names of all relevant persons. In this matter, in order to comply with s.190(4), his Honour should have done more. An enquiry of Roadworx about those persons who continued to be their own bargaining representative and who were to be covered by the Agreement should have been made. Either Roadworx could have been asked to assist his Honour in bringing the undertakings to their attention or his Honour could have given directions to Roadworx to provide a copy of its undertakings to those employees together with an indication of how they may say something about them if they wished to do so. In failing to do so he was in error.

[22] Finally we turn to s.190(5) of the Act. It requires any undertakings to meet the signing requirements that are prescribed by the regulations. Regulation 2.07 provides that an undertaking relating to an enterprise agreement must be signed by each employer who gives the undertaking. The undertakings which his Honour accepted, and annexed to his decision, were not signed by any person for or on behalf Roadworx as required by the Act and regulations. His Honour was in error in accepting the undertaking in the form he did.

[23] For the foregoing reasons we are of the opinion his Honour was in error in deciding to approve the Agreement. The matters raised in the grounds of appeal warrant the grant of permission to appeal. The errors are such as to satisfy us the appeal should be upheld. The decision to approve the Agreement is quashed.

SENIOR DEPUTY PRESIDENT

Appearances:

M. Gibian of Counsel for The Australian Workers’ Union.

T. McDonald solicitor for Roadworx Surfacing Pty Ltd.

Hearing details:

2011.
Sydney:
February 22.

 1   Exhibit AWU 1, para 7

 2   See S.182 Fair Work Act 2009

 3   AWU email to Fair Work Australia 5 August 2010 and Exhibit R2 before SDP Cartwright

 4   PN18 and PN344

 5   PN18

 6   PN 33

 7   PN36

 8   PN 38

 9   PM 346

 10   PN 349

 11   [2010] FWAA 8707 PN 4 and 5

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