DECISION

Fair Work Act 2009
s 604 - Appeal of decisions

Australian Workers' Union, The
v
Professional Traffic Solutions Pty Ltd
(C2018/4409)

Appeal against a decision [2018] FWCA 4525 of Commissioner Gregory at Melbourne on 1 August 2018 in matter number AG2017/2243 – Agreement approved with undertakings – whether employees ‘genuinely agreed’ to Agreement – whether pre-approval steps complied with – whether Agreement satisfied the Better Off Overall Test – Commissioner could not have been satisfied the terms of the Agreement and the impact of any changes were explained to employees – Agreement not ‘genuinely agreed’ – appeal upheld – error cannot be cured by undertaking – decision to approve Agreement must be quashed – unnecessary to consider other grounds of appeal – orders made.

INTRODUCTION

[1] This decision will determine an application for permission to appeal and appeal lodged by The Australian Workers’ Union (the ‘appellant’ or the ‘Union’) of a decision of Commissioner Gregory ([2018] FWCA 4525) (the ‘Decision’) made on 1 August 2018, under s 185 of the Fair Work Act 2009 (the ‘Act’), to approve the Professional Traffic Solutions Pty Ltd Enterprise Agreement 2017 [AE429396] (the ‘Agreement’).

[2] The Decision to approve the Agreement with undertakings is to be read in conjunction with an interim decision published by the Commissioner on 21 February 2018; see: Professional Traffic Solutions Pty Ltd [2018] FWC 1007; [PR600453] (the ‘Interim Decision’). We shall return to the details of the two Decisions shortly.

[3] An appeal under s 604 of the Act is an appeal by way of rehearing and the Commission’s powers on appeal are exercisable only if there is error on the part of the primary decision-maker; see: Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at [17] per Gleeson CJ, Gaudron and Hayne JJ. There is no automatic right to appeal and an appeal may be made only with the permission of the Commission. Subsection 604(2) requires the Commission to grant permission to appeal if satisfied that it is ‘in the public interest to do so’. Permission to appeal may otherwise be granted on discretionary grounds.

[4] Other than the public interest grounds in s 604(2), the grounds for granting permission to appeal are not specified. Considerations which have traditionally been treated as justifying the grant of permission to appeal include that the decision is attended with sufficient doubt to warrant its reconsideration and that substantial injustice may result if leave is refused: see also; Construction, Forestry, Mining & Energy Union v Australian Industrial Relations Commission (1999) 93 FCR 317; and Wan v Australian Industrial Relations Commission (2001) 116 FCR 481.

[5] The appeal was heard by the Full Bench on 18 September 2018 in Sydney. Mr A Sage appeared for the appellant and Mr A Britt of Counsel with Mr D Murray (AIG) appeared for the respondent. We granted permission for the respondent to be legally represented, having found the requirements of s 596 of the Act were satisfied and noting the appellant did not oppose Mr Britt’s appearance. There was no appearance for the Traffic Management Association of Australia (‘TMAA’), an industry organisation which had appeared in the proceedings before the Commissioner, and which had provided submissions opposing the Agreement’s approval by the Commission. We note that by letter to the Commission, dated 20 August 2018, the Agent for the TMAA advised it did not wish to further participate in the appeal proceedings, but remained generally supportive of the Union’s appeal.

BACKGROUND

[6] Professional Traffic Solutions Pty Ltd (‘PTS’ or the ‘respondent’) is engaged in the traffic control sector of the civil construction industry in New South Wales. There is a history of the respondent and its employees being covered by an enterprise agreement; the last agreement, which had a nominal expiry date of 28 December 2014, was approved, with undertakings, by Commissioner Macdonald on 21 December 2012 in [2012] FWAA 10747.

[7] The respondent employer has a workforce of 12 employees at five locations in NSW – Medowie, Wyong, Taree, Port Macquarie and Coffs Harbour. All the employees are engaged on a casual basis in the classifications of Traffic Controller, Traffic Supervisors and Traffic Attenuator Operators.

[8] On 19 April 2017, employees of the respondent were provided with a Notice of Employee Representational Rights (NERR). None of the employees were nominated as Employee Bargaining Representatives. There was no Union bargaining representative, as the Union had no members amongst the workforce.

[9] There was no evidence of any negotiations with the employees during the period between the issuance of the NERR until 24 May 2017, when a hard copy of the proposed agreement was provided to employees together with a written notice of the date, time, place and method of voting (a secret ballot on 2 June 2017).

[10] On 9 June 2017, Ms Pamela Brewer, Managing Director on behalf of the respondent, completed the Form F16 and the F17 statutory declaration in support of the application for approval of the Agreement. The F17 set out at question 2.6 the steps taken by PTS to explain the terms of the Agreement to the employees to be covered by it. The answer was expressed as follows:

‘The agreement was explained to all relevant employees at the time that it was handed out, on 24 May 2017. All employees were encouraged to ask questions, and to get back to company management if they did not understand any of the content.’

[11] The declaration states that the Agreement contains some more beneficial terms and conditions when compared to the reference instrument (the Building and Construction General On-Site Award 2010 (the ‘Award’)) and that there are no less beneficial, or non-conferred terms or conditions. Accordingly, it was said that the Agreement satisfies the requirements, under s 187 of the Act in respect to meeting the Better Off Overall Test (‘BOOT’). The application for approval of the Agreement was filed on 15 June 2017, whereupon it underwent analysis by the Commission’s Enterprise Agreement Triage Team. During this time, both the Union and the TMAA advised the Commission that they objected to the approval of the Agreement on various grounds, including that the Agreement did not satisfy the BOOT. The respondent foreshadowed proposed undertakings it was prepared to provide and sought time to respond to the matters raised by the objectors.

[12] The application was remitted to Commissioner Gregory and the Commissioner conducted two telephone hearings on 22 and 28 September 2017. The Commissioner issued an Interim Decision on 21 February 2018. Arising from the Interim Decision and further concerns raised during the proceedings, the respondent was provided a further opportunity to submit additional undertakings. These undertakings were considered by the Commissioner and he published his approval Decision on 1 August 2018.

THE COMMISSIONER’S DECISIONS

[13] As the Commissioner’s approval Decision was relatively brief, we set it out in full below:

‘[1] An application has been made for approval of an enterprise agreement known as the Professional Traffic Solutions Pty Ltd Enterprise Agreement 2017 (“the Agreement”). The application is made under s.185 of the Fair Work Act 2009 (Cth) (“the Act”) by Professional Traffic Solutions Pty Ltd. It is a single enterprise agreement.

[2] Following receipt of the application the Commission was advised by the Traffic Management Association of Australia and the Australian Workers’ Union that they both objected to approval of the proposed Agreement. The matter was accordingly set down for hearing and an interim decision was handed down on 21 February 2018 in [2018] FWC 1007. In that decision, the Commission noted that the Applicant had proposed to provide further undertakings, and the Commission would again give further consideration to the application when those proposed undertakings had been received.

[3] Those written undertakings have now been received. I am satisfied in response that they deal with the concerns that were raised by the Commission in its interim decision. A copy of the undertakings is attached in Annexure A. I am satisfied that they will not cause financial detriment to any employee covered by the Agreement, and will not result in substantial changes to the Agreement. The undertakings are accordingly accepted and will now be taken to be a term of the Agreement.

[4] I am otherwise satisfied that each of the requirements of ss.186, 187, 188 and 190 of the Act, as are relevant to this application for approval, have been met.

[5] The application is approved and in accordance with s.54 of the Act will operate from 8 August 2018. The nominal expiry date of the agreement is 7 August 2022.’

[14] Reading this Decision with the Interim Decision, we summarise the Commissioner’s observations and conclusions as follows.

[15] At paragraphs [10] and [11] of the Interim Decision the Commissioner summarised the submissions of the TMAA in which it was said that the Agreement failed the BOOT because of ‘the vast number of provisions’ (14 in all) which were less beneficial, or not provided for in the Agreement when compared to the Award.

[16] Similarly, at paragraph 12 the Commissioner set out the matters raised by the Union in respect to the Agreement not passing the BOOT. At paragraph 13, he outlined PTS’s responses to the following matters:

● Averaging of ordinary hours;

● Night work;

● Travel entitlements;

● Distant work; and

● Public Holidays.

[17] The respondent’s submissions then addressed the other Award entitlements, not included in the Agreement, by putting that they were either inapplicable to the nature of the employer’s business (casual conversion, inclement weather), offset by other benefits (meal allowance) or had been addressed in reply to the Union’s objections and otherwise addressed by undertakings PTS was prepared to provide in respect to a number of concerns; namely, four hour minimum engagements, overtime being payable at double time on afternoon shifts and a revised dispute settlement clause.

[18] Under the heading ‘Consideration’, the Commissioner deals firstly, with the standing of the Union and TMAA to be heard in the proceedings (an issue not raised on appeal). The Commissioner then set out the relevant statutory provisions governing the approval of enterprise agreements, referring particularly to ss 186, 188 and 193. We observe the Commissioner makes no reference to s 180(5) of the Act, going to whether the Agreement was ‘genuinely agreed’ by the employees, although we note in paragraph 13 he refers to the submissions of the respondent in response to the TMAA’s submissions and said ‘It [PTS] also rejects any assertion that the terms of the Agreement were not explained to the employees during the access period’. This observation can only be a reference to s 180(5) of the Act.

[19] The Commissioner then turns to the BOOT issues by noting firstly, the rates of pay at the time of filing the application were 3.83% higher than the CW2 Traffic Controller classification in the Award. Turning to ordinary hours of work and the overtime provisions (cl 14) the Commissioner concluded that cl 14.4 ‘Any averaging of hours will be over a period not exceeding 26 weeks’ injects a degree of confusion or lack of clarity between that clause and cl 14.3 ‘All time worked in excess of ordinary hours will be paid overtime rates as set out in clause 15’. The Commissioner proposed an undertaking or the removal of cl 14.4 when he said at [28]:

‘If this is the intention then I am satisfied that PTS might want to consider providing an undertaking to clarify this intention because there does seem to be a degree of confusion between the respective provisions. If clause 14 is intended to apply in the way PTS submits then it is difficult to understand what sub clause 14.4 is intended to do. It is suggested that any undertaking should make clear that in any circumstances when more than 38 hours are worked in a week, Monday – Friday, or more than 8 hours are worked in a day, then overtime entitlements apply. The other option might be for the undertaking to indicate that sub clause 14.4 no longer has any application.’

[20] The Commissioner next deals with shift work and said:

‘[29] The next issue concerns the conflicting submissions made about the shift work arrangements. In this context PTS has already provided an undertaking in regard to the hours of work that would apply in clause 16 “Shift Work.” It is as follows:

“Day Shift means any shift starting on or after 6.00 am and before 10.00 am

Afternoon Shift means any shift starting at or after 10.00 am and before 8.00 pm

Night Shift means any shift starting at or after 8.00 pm and before 6.00 am.”’

[21] At paragraphs [31] to [33] the Commissioner discussed the lack of a casual conversion clause and by relying on Re Mk2 Recruitment Pty Ltd [2015] FWC 6600 decided that a lack of such a clause did not prevent the Agreement being approved.

[22] At paragraph [34], the Commissioner noted an apparent conflict between cl 14.1(c) which makes clear employees will receive a minimum of four hours payment for each engagement and cl 14.2 which states ‘Employees will only be paid for actual hours worked’. An undertaking was suggested to make clear the four hour minimum engagement applies, notwithstanding cl 14.2. The Commissioner then dealt with cl 36.3 dealing with employees working from a depot, other than their home depot, and said at paragraph [38]:

‘I am not satisfied, in conclusion, that it is appropriate to approve the Agreement while it contains this sub clause. Firstly, there are not sufficient other benefits in the Agreement to offset the potential disadvantage that stems from this sub clause. Secondly, I am concerned about the potential implications that might result from the application of a clause of this kind. It clearly could have the effect of encouraging employees to elect to travel further distances to work than they might otherwise, and also cause them to spend more time away from home than they would normally do. These outcomes could contribute to health and safety concerns associated with fatigue and other related factors. In short, I am not satisfied that the Agreement should be approved while it contains this clause. However, PTS should now be given the opportunity to consider whether it wishes to propose an undertaking in response. Any such undertaking might, for example, make clear that while the Agreement is in operation PTS will not seek to rely on sub clause 36.3.’

Ultimately, this subclause was not pressed by the respondent; see: undertaking (6) below.

[23] We set out below the undertakings that were subsequently provided by the respondent, and which were accepted by the Commissioner in his Decision of 1 August 2018.

‘1. That the expiry date of the Agreement will be taken to be 4 years from the date of approval.

2. That in relation to cl.7 Dispute Resolution, a party to a dispute may appoint a representative of their choice at any stage of the dispute resolution process.

3. That cl. 14.4 is subject to cl. 14.1, and that therefore where more than 8 hours is worked a day, Monday – Friday, overtime entitlements shall apply to the additional hours.

4. That cl.14.2 is subject to cl. 10.1(c), meaning that casual employees will be paid a minimum of four hours payment for each engagement.

5. That in relation to cl.16 Shift Work the definitions of Day Shift, Afternoon Shift and Night Shift will be as follows:

Day Shift means any shift starting on or after 6.00 am and before 10.00 am

Afternoon Shift means any shift starting at or after 10.00 am and before 8.00 pm;

Night Shift means any shift starting at or after 8.00 pm and before 6.00 am;

And that where employees are engaged on an afternoon shift which extends for fewer than five days, they will be paid in those circumstances at the rate applicable to night shift.

6. That cl 36.3 of the Agreement will not be applied.’

LEGISLATIVE PROVISIONS

[24] We set out below the statutory provisions relevant to this appeal.

[25] Section 180(5) of the Act states:

(5)  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 employees; and
(b)  the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.

[26] Sections 186 and 187 set out the general and additional requirements of whether the Commission must approve an agreement. The sections read:

186 When the FWC must approve an enterprise agreement—general requirements

Basic rule

(1) If an application for the approval of an enterprise agreement is made under section 185, the FWC must approve the agreement under this section if the requirements set out in this section and section 187 are met.

Note: The FWC may approve an enterprise agreement under this section with undertakings (see section 190).

Requirements relating to the safety net etc.

(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; and

(b) if the agreement is a multi enterprise agreement:

(i) the agreement has been genuinely agreed to by each employer covered by the agreement; and

(ii) no person coerced, or threatened to coerce, any of the employers to make the agreement; and

(c) the terms of the agreement do not contravene section 55 (which deals with the interaction between the National Employment Standards and enterprise agreements etc.); and

(d) the agreement passes the better off overall test.

Note 1: For when an enterprise agreement has been genuinely agreed to by employees, see section 188.

Note 2: The FWC may approve an enterprise agreement that does not pass the better off overall test if approval would not be contrary to the public interest (see section 189).

Note 3: The terms of an enterprise agreement may supplement the National Employment Standards (see paragraph 55(4)(b)).

Requirement that the group of employees covered by the agreement is fairly chosen

(3) The FWC must be satisfied that the group of employees covered by the agreement was fairly chosen.

(3A) If the agreement does not cover all of the employees of the employer or employers covered by the agreement, the FWC must, in deciding whether the group of employees covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.

Requirement that there be no unlawful terms

(4) The FWC must be satisfied that the agreement does not include any unlawful terms (see Subdivision D of this Division).

Requirement that there be no designated outworker terms

(4A) The FWC must be satisfied that the agreement does not include any designated outworker terms.

Requirement for a nominal expiry date etc.

(5) The FWC must be satisfied that:

(a) the agreement specifies a date as its nominal expiry date; and

(b) the date will not be more than 4 years after the day on which the FWC approves the agreement.

Requirement for a term about settling disputes

(6) The FWC must be satisfied that the agreement includes a term:

(a) that provides a procedure that requires or allows the FWC, or another person who is independent of the employers, employees or employee organisations covered by the agreement, to settle disputes:

(i) about any matters arising under the agreement; and

(ii) in relation to the National Employment Standards; and

(b) that allows for the representation of employees covered by the agreement for the purposes of that procedure.

Note 1: The FWC or a person must not settle a dispute about whether an employer had reasonable business grounds under subsection 65(5) or 76(4) (see subsections 739(2) and 740(2)).

Note 2: However, this does not prevent the FWC from dealing with a dispute relating to a term of an enterprise agreement that has the same (or substantially the same) effect as subsection 65(5) or 76(4).

187 When the FWC must approve an enterprise agreement—additional requirements

Additional requirements

(1) This section sets out additional requirements that must be met before the FWC approves an enterprise agreement under section 186.

Requirement that approval not be inconsistent with good faith bargaining etc.

(2) The FWC must be satisfied that approving the agreement would not be inconsistent with or undermine good faith bargaining by one or more bargaining representatives for a proposed enterprise agreement, or an enterprise agreement, in relation to which a scope order is in operation.

Requirement relating to notice of variation of agreement

(3) If a bargaining representative is required to vary the agreement as referred to in subsection 184(2), the FWC must be satisfied that the bargaining representative has complied with that subsection and subsection 184(3) (which deals with giving notice of the variation).

Requirements relating to particular kinds of employees

(4) The FWC must be satisfied as referred to in any provisions of Subdivision E of this Division that apply in relation to the agreement.

Note: Subdivision E of this Division deals with approval requirements relating to particular kinds of employees.

Requirements relating to greenfields agreements

(5) If the agreement is a greenfields agreement, the FWC must be satisfied that:

(a) the relevant employee organisations that will be covered by the agreement are (taken as a group) entitled to represent the industrial interests of a majority of the employees who will be covered by the agreement, in relation to work to be performed under the agreement; and

(b) it is in the public interest to approve the agreement.

[27] Section 188 deals with when an agreement has been ‘genuinely agreed’ to by employees. The section reads:

188 When employees have genuinely agreed to an enterprise agreement

An enterprise agreement 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:

(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 by the employees.

[28] Section 190 and 191 deal with undertakings proposed to address any concerns the Commission might have with the requirements for approval of agreements set out in ss 186 and 187. The sections read:

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 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.

191 Effect of undertakings

(1)  If:

(a)  the FWC approves an enterprise agreement after accepting an undertaking under subsection 190(3) in relation to the agreement; and

(b)  the agreement covers a single employer;

the undertaking is taken to be a term of the agreement, as the agreement applies to the employer.

(2)  If:

(a)  the FWC approves an enterprise agreement after accepting an undertaking under subsection 190(3) in relation to the agreement; and

(b)  the agreement covers 2 or more employers;

the undertaking is taken to be a term of the agreement, as the agreement applies to each employer that gave the undertaking.

GROUNDS OF APPEAL

[29] The Union’s Notice of Appeal advances seven principal grounds of appeal, all of which contend that the Commissioner erred by approving the Agreement. First, the Union contends that the Agreement could not have been ‘genuinely agreed’ by the employees, in circumstances where the F17 contained erroneous information in relation to the BOOT. Second, the Agreement excluded the National Employment Standards (NES) by not providing employees with the benefits under s 102 of the Act dealing with unpaid carers’ leave. Third, the Agreement could not have passed the BOOT when compared to the relevant Modern Award. Fourth, the conclusion the group of employees covered by the Agreement - being all casual traffic control employees – was fairly chosen, was not open to the Commissioner, as the group was not geographically, operationally or organisationally distinct from permanent employees performing the same work. Fifth, the Agreement’s flexibility term had the effect of being able to be varied by an Individual Flexibility Arrangement (IFA). Sixth, significantly altering the shiftwork provisions and the remuneration structure through undertakings, resulted in a substantial change to the Agreement, which meant the Agreement could not be approved (s 190(3)). Seven, there were insufficient reasons given by the Commissioner for his conclusion that the employer’s undertaking addressed the concerns raised in the Interim Decision.

[30] At the outset of proceedings, we amended the Union’s second ground of appeal which had been foreshadowed in the AWU’s filed submissions. That amendment contended for a further error in the Commissioner’s decision, in respect to s 104 of the Act; the National Employment Standard dealing with ‘compassionate leave’.

[31] We note that grounds five and seven were not ultimately pressed by the Union.

CONSIDERATION

[32] The Union’s first ground of appeal contended that the Commissioner erred by failing to properly assess whether he was satisfied that the Agreement had been ‘genuinely agreed’ by the employees, as a statutory requirement mandated by s 186(2)(a) of the Act. Section 188 relevantly provides that an agreement has been ‘genuinely agreed’ to if the Commission is satisfied that the employer complied with the pre-approval steps set out in s 180. The Union pressed this ground on three related bases.

[33] Firstly, s 180(5) of the Act requires that an employer must take all reasonable steps to ensure that the terms of an agreement and the effect of those terms are explained to the relevant employees, prior to the request to approve the Agreement. In One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union (‘One Key’) [2018] FCAFC 77, the Full Court of the Federal Court of Australia considered the requirements of s 180(5) of the Act and said at paragraph 113:

‘A consideration of the subject-matter, scope and purpose of the relevant provisions of the Fair Work Act indicates that the content of the explanation and the terms in which it was conveyed were relevant considerations to which the Commission was bound to have regard. The absence of that information meant that the Commission was not in a position to form the requisite state of satisfaction. Put differently, without knowing the content of the explanation, it was not open to the Commission to be satisfied that all reasonable steps had been taken to ensure that the terms and their effect had been explained to the employees who voted on the Agreement or that they had genuinely agreed to the Agreement.’

[34] The Union submitted that the only evidence before the Commissioner of the employer’s compliance with the requirement in s 180(5) was the answer to question 2.6 in its F17 which we recorded earlier as:

‘The agreement was explained to all relevant employees at the time that it was handed out, on 24 May 2017. All employees were encouraged to ask questions, and to get back to company management if they did not understand any of the content.’

[35] Secondly, in response to question 3.5 in the F17 in respect to whether the Agreement contained any less beneficial terms than the terms and conditions in the Award, and/or conferred any entitlements not conferred by the Award, the employer stated it did not. This answer can only have been predicated on a view that the Agreement contained no less beneficial terms than the Award. As this view was plainly incorrect, it must follow that the employer’s explanation could not amount to the taking of all reasonable steps to explain the terms of the Agreement and their effect, as required by s 188(a)(i) and there were reasonable grounds to believe the employees did not ‘genuinely agree’ to the Agreement, as required by s 188(c); see: Construction, Forestry, Mining and Energy Union v Dawsons Maintenance Contractors Pty Ltd [2018] FWCFB 2992 at [49] and [54] and One Key at [141]-[142].

[36] It is apparent that the Commissioner, in his Interim Decision, did not consider the employer’s answer to Q 2.6 of the F17 as to the explanation of the terms of the Agreement to the employees and its effect on them, or at the very least, he did not record having done so in the Decision. In his approval Decision of 1 August 2018, he did not set out any consideration or conclusions as to whether this explanation met the statutory test, other than being satisfied that ‘each of the requirements of ss 186, 187, 188 and 190 of the Act, as are relevant to this application for approval, have been met’.

[37] However, that of itself might not necessarily prove fatal to the Agreement being approved. As was said by the Full Bench of the Commission in Health Services Union v Clinpath Laboratories Pty Ltd & Strath and Others [2018] FWCFB 5694, at [20], an absence of reasons in this respect ‘does not necessarily point to error’; and if it was apparent that the employer had, in fact taken all reasonable steps to explain the Agreement and its effect, it might be concluded that the Commission member did have regard to the content of the explanation and reached a relevant level of satisfaction of the requirements in this regard.

[38] In this case, we consider that an answer to this proposition might have been ascertained by any evidence, or submissions put by the employer in the Agreement approval proceedings below, or any further information disclosed by the employer in the appeal (assuming such new evidence was admitted). That said, we are assisted in this respect by the transcript record of the proceedings over two hearings of the application. Upon review of the transcript, we can find no reference to any more detailed explanation of the Agreement than was recorded in the answer to question 2.6, cited above. Similarly, in the respondent’s appeal submissions, it was submitted firstly, as this concern of the Union was not raised in the proceedings before the Commissioner, it was impermissible to raise it on appeal. Secondly, it was put that the Act only requires the Commission to be satisfied that reasonable steps had been taken to explain the terms and conditions of the Agreement to employees. There is no statutory requirement for the employer to provide a full explanation, by explaining every feature or clause in the Agreement, and the Commission would adopt a practical approach to this obligation. Thirdly, it does not follow that a failure to point out where an agreement is less beneficial than the Award that is was not ‘genuinely agreed’ to by employees. However, it may be a matter the Commission takes into account in being satisfied the Agreement was ‘genuinely agreed’.

[39] We address each of these submissions in turn.

[40] Firstly, a failure of the Commission to make findings, to the requisite standard, that s 180(5) has been satisfied, is a matter going directly to the jurisdiction of the Commission to approve an enterprise agreement. A failure of a party to raise the matter at first instance, is irrelevant. It does not absolve the Commission from determining, on appeal, whether the Commissioner had acted beyond jurisdiction in approving the Agreement. This is so, because an agreement cannot be approved, if there is no jurisdiction to do so. In Australian Municipal, Administrative, Clerical and Services Union v Yarra Valley Water Corporation [2013] FWCFB 7453, the Full Bench clearly put the position this way:

‘[24] Ordinarily that conclusion would lead to permission to appeal being refused. The usual principle is that a party should not be permitted to argue a case on appeal which it did not raise at first instance. This principle, and the policy rationale which supports it, was explained in Coulton v Holcombe the following way:

“To say that an appeal is by way of rehearing does not mean that the issues and the evidence to be considered are at large. It is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial. If it were not so the main arena for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish.”

[25] However the position is different if the new issue being raised is jurisdictional in nature. The Commission has an overriding duty to ensure that it acts within the scope of the powers conferred upon it by its governing statute. Ground 5 of the ASU’s appeal contends that the Commissioner had no jurisdiction to approve the Agreement because, on the evidence, there were for the purpose of s.188(c) reasonable grounds for believing that the Agreement had not been genuinely agreed to by the employees covered by it. We consider that it is necessary for us to consider this jurisdictional argument even though we have concluded it was not properly raised before the Commissioner.’

(References omitted)

[41] The respondent’s second submission, that the employer is not required to provide a full explanation of any single term of an agreement, is difficult to reconcile with the answer in the F17 declaration that the Agreement was explained to the relevant employees, without any further details and with no further submissions put providing additional information. The only reference to this matter is in the Commissioner’s Interim Decision (para [13]) where he noted PTS rejected any assertion that the terms of the Agreement were not explained to the employees during the access period.

[42] We agree with the Union’s submission that if there is a failure to identify any less beneficial terms in the Agreement to those in the relevant Award, and that further, in circumstances where the F17 declaration expressly states there are no less beneficial terms, then the only inference which can be drawn (in the absence of any evidence to the contrary) is that the pre-approval explanation cannot amount to the taking of all reasonable steps to explain the terms of the Agreement and their effect on employees.

[43] Accordingly, we consider the explanation in question 2.6 could not have been sufficient for the Commissioner 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. This was a significant matter in the exercise of the Commission’s jurisdiction in approving the Agreement. A failure to take this matter into account amounted to error of the kind in House v King (1936) 55 CLR 499, warranting permission to appeal.

[44] Despite some suggestion that this error could be cured by an undertaking, this cannot be a remedy open to the Commission. This is so for two reasons.

[45] Firstly, there was no stay of the Commissioner’s approval decision. It is therefore not open to an appeal bench to accept further undertakings in respect to an appeal of an Agreement which has been approved, and is obviously in current operation and effect.

[46] Secondly, we do not see how any undertaking can prospectively cure an error arising from the Commissioner’s consideration of the pre-approval steps of the Agreement. Put another way, it is not possible to prospectively rectify an error found in respect to the Commission’s satisfaction of the Agreement being ‘genuinely agreed’ to by employees. Regrettably, it is fatal to the application for the Agreement being approved. The only course open is for the process to be recommenced for the approval of an Agreement and, if approved by the relevant employees, a fresh application for approval being filed.

[47] It follows from our conclusion that the Union’s first ground of appeal must be upheld, as the Commissioner’s decision in this jurisdictional respect, is infected by appealable error. On this basis, permission to appeal is granted, the appeal is upheld and the Commissioner’s approval Decision is quashed. In these circumstances, it is unnecessary for us to determine the Union’s second, third, fourth and sixth grounds of appeal. However, we make these further short observations.

[48] It cannot be doubted that the negative answers to question 3.5 of the F17 statutory declaration, going to whether the Agreement contains any less beneficial terms than the equivalent terms in the reference Award, is incorrect. From the respondent’s own reply submissions and its acknowledgement of the long list of terms and conditions identified in the Award, by the TMAA and the Union, as not being included in the Agreement, PTS readily conceded that there were a number of excluded terms.

[49] In our view, this admission not only goes to concerns we have as to the correctness of the information in the statutory declaration, but raises a real concern as to whether these omissions were properly explained, or at all to the employees as required by s 180(5) of the Act. It follows that we have real doubts as to whether the employees had ‘genuinely agreed’ to the Agreement.

[50] It is necessary for the Full Bench to once again stress the possible ramifications if a deponent to a statutory declaration does not ensure that the information contained in the declaration, is accurate and/or not misleading. At the risk of stating the obvious, we remind the parties that under s 11 of the Statutory Declarations Act 1959 (Cth) it is a criminal offence for a person to intentionally make a false statement in a statutory declaration. That said, we do not attribute to Ms Brewer any intention to knowingly provide false information or mislead the Commission. We simply observe that the answers to a number of questions in the F17 should have been more carefully considered and accurately answered.

[51] We note the required consultation clause (s 205(1)) does not include consultation in respect to changes to regular rosters or ordinary hours of work as required by the model term. Although the model consultation term is taken to be a term of the Agreement, s 201(b) requires the Commission to ‘note’ in its decision to approve the Agreement, that the model term is included in the Agreement. There is no ‘note’ of this in the Commissioner’s Decision.

[52] In respect to appeal ground 2, we accept that the omission of the words ‘for each permissible occasion’ in the entitlement to 10 days’ unpaid personal leave and two days’ unpaid compassionate leave, is inconsistent with the NES. Such an omission may give rise to an assumption that the said leave is only available on an annual basis, or only once during the life of the Agreement. At the very least, it must give rise to some confusion as to the relevant entitlements. While terms in an Agreement cannot override or replace any corresponding NES provision, by virtue of s 55 of the Act and cl 5 of the Agreement itself, in the absence of any evidence to the contrary, it is unlikely this distinction was explained to the employees. This reinforces our view that the Commissioner could not have been satisfied that the terms of the Agreement and their effect had been adequately explained to the employees to be covered by the Agreement.

[53] For the reasons we have set out above, the Full Bench orders:

1. Permission to appeal is granted;

2. The appeal is upheld;

3. The Decision [2018] FWCA 4525 is quashed; and

4. The application for approval of the Agreement, AG2017/2243 is dismissed.

DEPUTY PRESIDENT

Appearances:

A Sage for the Appellant.

A Britt of Counsel and D Murray for the Respondent.

Hearing details:

2018.

Sydney:

September 18.

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