[2019] FWC 6105

The attached document replaces the document previously issued with the above code on 2 September 2019, to correct a typographical error at paragraphs [41] and [135].

Associate to Deputy President Mansini

3 September 2019.

Fair Work Act 2009
s.185—Enterprise agreement

Kmart Australia Ltd
(AG2018/6995)

Application for approval of the Kmart Australia Ltd Agreement 2018.

[1] Kmart Australia Ltd (Kmart) has made an application for approval of a single enterprise agreement known as the Kmart Australia Ltd Agreement 2018 (the Agreement) pursuant to s.185 of the Fair Work Act 2009 (the Act).

[2] In summary, Kmart has failed to satisfy the Commission of the matters at ss.188(1)(b), 182(1) and 181(1) of the Act, specifically because employees to be covered and “employed at the time” were excluded from the voting cohort requested to approve the Agreement. This is not a “minor procedural or technical error” and as such may not be overlooked pursuant to s.188(2).

[3] Accordingly, the Commission is not satisfied that the Agreement was “genuinely agreed”. As all of the requirements of ss.186 and 187 are not met, the Agreement must not be approved.

[4] Notwithstanding this conclusion, for completeness, this decision also deals with concerns about whether employees would be “better off overall” under the Agreement, and whether other pre-approval steps were met in accordance with the Act.

[5] The reasons for this decision follow.

Overview

[6] On 29 August 2017, bargaining for an enterprise agreement to replace the existing Kmart Australia Ltd Agreement 2012 (the 2012 Agreement) commenced.

[7] The Australian Workers’ Union (the AWU), the Retail and Fast Food Workers Union (RAFFWU) and the Shop Distributive and Allied Employees’ Association (the SDA), were bargaining representatives of employees who would be covered by the proposed enterprise agreement.

[8] On 12 December 2018, Kmart applied to the Commission pursuant to s.185 of the Act for the Agreement to be approved.
[9] Since the application was filed, concerns about whether the Agreement must be approved in accordance with the Act have been raised by and with the Commission. The concerns relate to whether the Commission can be satisfied that:

a) The Agreement was “genuinely agreed” by the employees to be covered, specifically regarding:

•  the selection of the voting cohort;

•  distribution of the Notice of Employee Representational Rights;

•  access to materials incorporated by reference in the Agreement;

•  the explanation of the terms and effect of the Agreement, and

b) The employees to be covered and prospective employees are “better off overall” under the Agreement than if the relevant award applied.

[10] The bargaining representatives initially indicated the following views about the application:

a) The SDA on its F18 supported the approval of this agreement “on the basis that the FWC determines that it passes the “better off overall test”; 1

b) The AWU in its F18 supported approval but declared that it had not read the Applicant’s statutory declaration; 2 and

c) RAFFWU notified of its intention to object to the application without specifying the reasons at that time. 3

[11] Following a series of correspondence, a hearing took place on 5 April 2019. The parties were directed to file and serve consolidated submissions detailing all objections to the application and responses in advance of the hearing, along with any evidence or other material on which they respectively sought to rely. At the conclusion of the hearing, the parties sought to make closing submissions in writing and provide consolidated undertakings and did so by 29 April 2019.

[12] On 28 June 2019, a Mention was convened to offer Kmart the opportunity to address the Commission about the voting cohort concern. Kmart sought to file further evidence and submissions. Such material was exchanged over the period 5 to 23 July 2019, documents were produced on 18 and 23 July 2019 and the parties requested the matter be determined on the papers, without need for a further hearing.

[13] In the course of the proceedings, Kmart has filed eight statutory declarations in support of its application. An index is at Attachment 1.

[14] This decision is made on the basis of all the materials that are before the Commission.

PART A: WAS THE AGREEMENT GENUINELY AGREED?

The voting cohort issue

[15] Kmart’s application for approval of the Agreement identified:

32,039 employees will be covered by the Agreement (Kmart’s Voting Cohort);

23,110 employees cast a valid vote; and

21,191 employees voted to approve the Agreement. 4

[16] The application also included a declaration that, of the 32,039 employees comprising Kmart’s Voting Cohort, 21,881 are casual employees. 5

[17] These circumstances necessitate careful consideration of the cohort of employees requested to vote (and perhaps also those who cast a valid vote) before the Commission can reach the requisite satisfaction to approve the Agreement. In this case, the issues are whether:

a) Kmart requested persons to vote who were not employed at the time of the voting period (or the access period) and would be covered by the Agreement, such that its net was cast too wide and a broader than eligible pool was requested to vote; and

b) Kmart did not request employees to vote who were employed at the time of the voting period and would be covered by the Agreement, such that its net was cast too narrow and eligible persons were excluded from the voting pool.

[18] These issues are considered in the legislative and factual context, below.

Statutory framework

[19] The starting point under the legislation is that the Commission is required to approve an enterprise agreement if the requirements of ss.186 and 187 are met.

[20] Section 186(2)(a) provides that the Commission must be satisfied that the Agreement has been “genuinely agreed” by the employees covered by the agreement.

[21] Section 188 defines when employees have genuinely agreed. It establishes a set of requirements, each of which must be satisfied if the necessary finding is to be made under s.186(2)(a). 6 Relevant to the voting cohort issue, s.188(1)(b) requires compliance with:

•  s.182(1), which provides that if employees have been requested to vote to approve an enterprise agreement under s.181(1), the enterprise agreement is “made” when a majority of those employees cast a valid vote to approve it; and, in turn

•  s.181(1), which provides that an employer that will be covered by a proposed enterprise agreement may request the employees employed at the time who will be covered by the agreement to approve the agreement by voting for it.

[22] A Full Court in Swinburne 7 considered the meaning of “employees employed at the time” in this context, applied by a Full Bench of the Commission in Noorton8 as follows:

“The effect of the Full Court’s reading of s.181(1) is that an employer should only make a request under s.181(1) to employees who are employed “at the time”, as opposed to those who are not employed at the time but might otherwise be regarded as “usually employed”.

[…]

The cohort of employees entitled to be asked to vote under s.182(1) are those who were: “employed at the time” (of the request to vote or perhaps also during the access period) and “who will be covered” by the agreement (the employees that fall within the coverage, however described, of the Agreement”. 9

[23] It will not necessarily be fatal if persons not entitled to vote were so requested or indeed cast a vote. The question in those circumstances is whether a valid majority of those who were entitled to vote and did vote approved the agreement. 10

[24] The authorities referenced provide guidance on the Commission’s obligation to reach, as well as the evidence and the factual inquiry that may be necessary to establish, the requisite satisfaction having regard to the circumstances of each case. 11 In circumstances where the agreement would cover a large proportion of casuals, an analysis of the nature of the employment relationship and the enterprise is required to determine the factual question of whether the employees requested to vote were employed “at the time”, as distinct from “usually employed”.

[25] A further consideration has arisen since the decision in Swinburne. 12 The introduction of s.188(2)13 provides a means for the Commission to conclude that an enterprise agreement has been genuinely agreed for the purposes of s.186(2)(a), despite “minor procedural or technical errors” as follows:

“(2) An enterprise agreement has also been genuinely agreed to by the 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 errors 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.”

[26] An assessment of the genuineness of agreement under s.188(1) and (2) involves an evaluative assessment. A Full Bench of the Commission in Huntsman enunciated a number of propositions regarding the proper construction of s.188(2), including to clarify that the “latitude as to the choice of the decision to be made is quite narrow in that the decision maker is required to conclude that the agreement was genuinely made if he or she forms a particular opinion or value judgement”. 14 And, in assessing whether there is a “minor procedural or technical error”:

“4. A single error may have both procedural and technical components.

5. The impact of the errors is to be assessed by reference to the objects of the requirements in ss.188(2)(a), 188(1)(b), 173 or 174.

6. 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.

[…]

8. Whether an incidence of non-compliance is characterised as a ‘minor error’ also depends on the nature of the requirement which has not been complied with. For example, the need to inform employees of the time and date of the vote (s.180(3)(a)) is more significant than informing them of the ‘voting method’ (s.180(3)(b)) – the first requirement may impact on the employees’ capacity to participate in the voting process, the second may not.

9. Some species of error are unlikely to be classified as ‘minor’, for example the deletion of the prescribed text of the NERR which deals with an employee’s right to appoint a bargaining representative and the role of the unions as the default bargaining representatives. But, again, it may depend on the circumstances (see paragraphs [77] - [78] above).” 15

Who did Kmart request to vote?

[27] As highlighted above, Kmart’s original application included a declaration that, of the 32,039 employees comprising Kmart’s Voting Cohort, 21,881 are casual employees. 16

[28] Kmart engaged a ballot agent, CorpVote, to conduct the vote by electronic ballot commencing at 12.00am on 21 November 2018 and concluding at 11.59pm on 30 November 2018.  17

[29] With no other relevant information in the application materials or materials subsequently filed in support, the Commission made inquiries of Kmart. At a Mention on 28 June 2019, Kmart (through its representative) undertook to comprehensively set out particulars of the voting pool, how the voting pool was established including consideration of casuals, and to provide the documents that support the propositions in the statutory declaration. Kmart requested some time to do this, to provide a further statutory declaration of Ms White which “would go into some detail with documentation”. 18

[30] Over the period 5 to 18 July 2019, Kmart filed a series of submissions, a further 4 statutory declarations (the Fifth, Sixth, Seventh and Eighth Statutory Declarations of Suzanne White) and, on 18 and 23 July 2019, bundles of documents in relation to this issue.

The Fifth Statutory Declaration

[31] In responding to the Commission’s inquiry, Ms White identified a typographical error in her First Statutory Declaration to the effect that Kmart’s Voting Cohort included significantly more casual employees than first declared. According to the Fifth Statutory Declaration, there were 25,881 casuals (not 21,881) within Kmart’s Voting Cohort. 19

[32] She went on to explain how Kmart’s Voting Cohort of 32,039 was selected:

“The Cohort formed the basis for those employees that Kmart believed were eligible to vote on the agreement and the Cohort formed the “electoral roll” for the vote.

The Cohort was made up of the persons that I regarded as employed by Kmart at the time. I regarded this to be those employees regarded as employed by Kmart during the ‘access period’ (14-21 November 2018) and those employees recruited during the voting period (22 (midnight on 21)-30 November 2018) and who would be covered by the Agreement. The Cohort included new hires, hired during the access period and any new hires engaged before the CorpVote cut-off date to update the Voter Roll at the end of 28 November 2018. No further updates were made to the Voter Roll due to the practicalities of the CorpVote system.” 20

[33] In explaining further how she came to regard Kmart’s Voting Cohort as employed by Kmart, Ms White declared as follows:

“I formed the view that those 25,881 casual employees were ‘employed by Kmart’ for relevant purposes of the vote because these casuals:

(a) were either live on the books as current employees prior to the access period who had worked one or more shifts in the preceding three months, or who had been engaged during the access period or the voting period (who had already worked one or more shifts or who had been hired but yet to have worked any shift);

(b) subject to the casual’s nominated availability (as recorded at their store), able to accept any offer to work a shift or shifts that Kmart may make to them;

(c) such casuals as Kmart employees, retain a Kmart uniform, retain an employee discount card (or in the case of new hires are entitled to receive an employee discount card);

(d) remain contractually bound by Kmart’s policies and procedures;

(e) have entered into a contract of employment that governs the employment relationship between the casual and Kmart, until such relationship is ended either by the resignation of the casual or by Kmart initiating a termination process if the casual has not worked any shift for a three-month period or for some other reason;

(f) have undergone the requisite training prior to working a shift that is mandatory and for which the casual is entitled to payment. The requisite training involves the following modules:

•  Welcome to Kmart;

•  Working Safely Modules;

•  Code of Conduct;

•  Social Media;

•  Privacy;

•  Payment Credit Industry;

•  Equal Opportunity and Workplace Bullying; and

•  Automated Clearances and Information Security;

(g) are eligible for service recognition under Kmart’s service recognition milestones and recognition of service gifts, regardless of the irregularity of shifts worked;

(h) have access to staff-only areas of their store so they can check rosters in store;

(i) have been allocated and utlitize their unique employee numbers, which is used by them to access the team member Kiosk in store or to download the Team Member App;

(j) are granted and use a unique access code to clock on and off and to access registers; and

(k) are able to utilize Kmart’s Employee Assistance Program.” 21

[34] A single, sample casual letter of engagement was provided to the Commission. 22 It is marked with a footer “Casual Letter of Engagement – Wages team member – July 2017”. A copy is at Attachment 2.

[35] In giving effect to Ms White’s approach, a “Voter Roll” was prepared by Kmart and initially supplied to CorpVote on 15 November 2018. It included 31,660 employees as at 14 November 2018. The Voter Roll was updated by Kmart, with the “intention” of reflecting terminations and new hires in the intervening periods, as follows:

a) 31,947 employees as at 21 November 2018; and

b) 32,039 employees as at 28 November 2018. 23

[36] In preparing the Fifth Statutory Declaration, Ms White became aware that 573 persons whose employment was terminated during the month of November 2018 and up to 28 November 2018 had “inadvertently remained on the Voter Roll”. Of whom: 130 were removed by CorpVote on information supplied by Kmart (presumably in advance of the vote though this is not clear), 443 were “active” and able to participate in the vote and 125 did participate in the vote (but whether they voted yes or no is unknown).  24

The Sixth Statutory Declaration

[37] In reply to RAFFWU’s submissions, Kmart filed the Sixth Statutory Declaration of Suzanne White which presented the voting statistics, broken down to depict casuals who worked during either and each of the voting and access periods (table extracted at Attachment 3). 25

[38] Ultimately, Ms White’s Sixth Statutory Declaration takes the data at Attachment 3 and makes some assumptions to arrive at the following “worst case” 26 vote outcome:

Number of casuals who worked during the voting period and assumed eligible to vote on that basis	21,161
Ballot outcome assuming: • all 4,464 casual employees who did not work in the vote period were ineligible; and • the 4,464 all voted ‘Yes’ (and accordingly deducted from the ‘Yes’ vote)	• Eligible Voter Roll – 27,575 (32,039 less 4,464) • Number of employees who would have cast a valid vote – 18,646 (23,110 less 4,464) • Number of employees who would have voted to approve the agreement – 16,727 (21,191 less 4,464) • Percentage approval – 89.71% (16,727 divided by 18,646)

[39] Ms White footnotes, in relation to the data said to represent the casuals who were employed during the access period (and calculated as at 21 November 2018) and employed during the voting period (and calculated as at 30 November 2018):

“This is the number on the date specified. The number of casual employees on Kmart’s books is constantly changing with new hires and terminations occurring on a daily basis, so there is no one figure will correspond to the full period.” 27

[40] After the Sixth Statutory Declaration was filed, the Commission afforded the bargaining representatives an opportunity to respond to the new evidence filed in reply. The Commission also sought to be informed by the provision of the documents, records and/or other information held by Kmart’s Remuneration and Benefits Manager, CorpVote and otherwise referred to, or that may support the statements made, in the Sixth Statutory Declaration. 28
[41] On 18 July 2019, Kmart responded to the Commission that “it is our strong view that this objection has been met overwhelmingly, by the documents we filed and served on behalf of Kmart on 17 July 2019” (which could only be a reference to the Sixth Statutory Declaration and related Reply Submissions) but also produced the following to the Commission, in redacted form:

a) Eleven PDF documents, comprising one data summary and 10 spreadsheets;

b) Email chain involving Ms White, Tim Jones of CorpVote and Meena Aboud (Kmart, Finance Manager – Projects) dated 3 to 15 July 2019; and

c) A letter from Kmart’s lawyer dated 18 July 2019, stating that the information at paragraph 6 of the Sixth Statutory Declaration was derived from the documents referred to at (a) and (b) above.

[42] The documents produced on 18 July 2019 were not identified, marked or otherwise explained.

The Seventh Statutory Declaration

[43] On 19 July 2019, Kmart filed a Seventh Statutory Declaration of Ms White in response to criticisms of RAFFWU that the documents produced on 18 July 2019 “..identified no causal link between the work records of the applicant and the tabulated information. That is, there is no evidence of how the documents were created”. 29

[44] The Seventh Statutory Declaration provides an explanation of the inquiries Ms White made of Kmart’s Remuneration and Benefits Manager, now identified as Craig Parry, and CorpVote and how the requested information was prepared. It describes that Mr Parry sourced his information from Kmart’s time and attendance system and then tallied and filtered that information to respond to Ms White’s requests. 30 Further, that CorpVote provided the data from its records which contain details of all the information recorded through the vote process, including the employment status of each employee who voted, and otherwise from the ballot result declaration.31

[45] The documents that had been produced on 18 July 2019 were not identified, marked or explained in any further detail in the Seventh Statutory Declaration.

The Eighth Statutory Declaration

[46] Later on 19 July 2019, the Commission wrote to Kmart requesting unredacted documents along with the identification and a brief explanation of the documents produced on 18 July 2019. 32

[47] On 23 July 2019, an Eighth Statutory Declaration of Ms White was filed to identify and explain the documents produced on 18 July 2019. Unredacted records were also produced to the Commission, subject of a Confidentiality Order. 33

Consideration of the voting cohort issue

[48] It should be noted at the outset that RAFFWU’s challenges to Ms White’s evidence about the voting cohort issue were by way of submission and not supported by any evidence. The SDA expressly supported, and the AWU did not oppose or express views about, Kmart’s responses.

[49] In any event, despite the express invitations of the Commission,   the parties sought the voting cohort issue be determined on the papers and without need for a further hearing. 34 Accordingly, I have determined the question on the basis of the materials that are before the Commission.

Did Kmart request the employees employed at the time, who would be covered by the Agreement, to vote?

[50] As summarised above, for the purposes of s.188(1)(b), the requirement at s.182(1) will be met if the cohort of employees asked to vote are the employees who were employed at the statutorily designated time and who fall within the coverage, however described, of the Agreement. These are questions of fact to be determined by reference to the evidence.

[51] “The time” in this context means the period during which the employees were requested to vote to approve the Agreement. Whether it also includes the 7 (clear) day statutory access period occurring immediately prior to the vote may not be conclusively resolved but makes no difference to the outcome in this case. 35 Accordingly, in the present case, I have taken both periods into account such that the designated time is the period from 12.00am on 14 November 2018 to 11.59pm on 30 November 2018.

[52] There is then the question of who exactly is employed at the designated time, and whether all of the casual employees in Kmart’s Voting Cohort can be considered to have been employed at this time.

[53] The meaning of “employee” in Part 2-4 of the Act, of which ss.188(1)(b), 182(1) and 181(1) form part, includes “an individual, in so far as he or she is employed, or usually employed”. 36 However a majority of the Full Court in Swinburne concluded that the meaning of employed at the time in s.181(1) limited the word “employees” as to exclude those usually employed but not employed at the time the agreement was made.

[54] A casual employee typically has no firm advance commitment from the employer to continuing and indefinite work according to an agreed pattern of work. Nor does a casual employee provide a reciprocal commitment to the employer. Irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability are the usual features of a casual employment relationship. Although there are some cases where a casual employee has been found to have been engaged under a single continuing contract of employment, this is rare and at odds with the accepted features of a casual employment relationship as outlined above. 37

Did Kmart cast its net too wide?

[55] On the evidence, Kmart considered it must request an employee who had worked even one shift in the 3 months prior to the commencement of the access period (being prior to the commencement of the designated time for this purpose) to vote, among other factors. 38

[56] In this respect, Kmart invited the Commission to accept that its casuals remain “employed” for a period of 3 months after their last worked shift. It pointed to the terms of the single, unsigned, unaddressed and undated sample casual employment contract at Attachment 2, specifically the termination provision at clause 9 which provides for termination on one hours’ notice or otherwise a “deemed termination”, triggered where the employee has not worked a shift for a period of 3 months or more.

[57] There are a number of difficulties with this submission. First, it places insufficient weight on the clear and unambiguous terms of engagement at clause 2 of the sample employment contract, which reflects the essence of casual employment:

“As a casual employee, the nature of the engagement is irregular and uncertain and accordingly you are employed on a day-to-day basis as determined by Kmart’s work requirements. Kmart may prescribe your hours of work in a roster. Despite Kmart drawing up a roster, this should not be interpreted as giving you an expectation of ongoing employment.”

[58] Second, the other provisions in the sample contract are not sufficient to establish ongoing employment. 39 For example, the obligation to “undertake work for Kmart when and as required by the business” appears immediately after the explanation of the necessity to perform work during evenings, at night and on weekends and is not inconsistent with an employment relationship that terminates at the end of each shift. Further, even a deemed termination under the contract on its face becomes effective as at the last shift worked.

[59] There is no actual evidence of a firm advance commitment from Kmart for continuing and indefinite work according to an agreed pattern of work which was given to any particular casual employee. Even if it were useful to demonstrate an ongoing employment relationship, one sample employment contract could not be said to be representative of the terms of engagement of 25,881 casuals. Indeed, Ms White did not suggest that all casual employment contracts are in identical terms to the sample contract; her evidence is that “a similar (termination) provision has existed in Kmart’s casual employment contracts dating back to at least 2013”. 40

[60] The other factors identified by statutory declaration of Ms White (at [33](b) to (k) of this decision) are not (when considered collectively, together with the factors at [33](a), or separately) sufficient to establish that each of the 25,881 casuals was employed on an ongoing basis and/or at the time he or she was asked to vote or during the access period. Even taking these additional factors into account, the evidence in this case is distinguishable from that in McDermott 41 in which the critical conclusion was that the casual employees had accepted ongoing employment, such that they were employed at the time the Agreement was made; the effect being that the true character of their employment was not casual at all (but rather, ongoing permanent employment).42

[61] Kmart also asked the Commission to accept that those casuals within the 25,881 who were live on the books because they had been hired during the access or voting period but had not yet worked any shift, when considered together with the other factors at [33](b) to (k) of this decision, should also be considered to be “employed” at the designated time. There is simply insufficient evidence before the Commission to make such finding.

[62] For completeness, although it does not appear to be in issue, the 443 former (terminated) employees who were requested and able to participate in the vote, some of whom did in fact participate in the vote, were obviously not “employed” at the designated time and similarly not covered by the Agreement.

[63] Having regard to the above, it is apparent that Kmart cast the net too wide such that it requested employees to vote who were not eligible within the scope of ss.188(1)(b), 182(1) and 181(1). However this is not necessarily fatal to the success of the application in circumstances where it is established that a valid majority of those who were entitled to vote and did vote approved the agreement despite the error.

[64] In this respect, I accept the evidence derived from Kmart’s payroll system that of its Voting Cohort 22,587 casuals was employed at the time because they worked in either the voting period or the access period between 14 to 30 November 2018.

[65] As the data at Attachment 3 shows, even deducting the ineligible broader pool from Kmart’s Voting Cohort and assuming all ineligible persons voted and voted yes to approve the Agreement, the Agreement was approved by a majority.

Did Kmart cast its net too narrow?

[66] Ms White expressly declared the issue as follows:

“The Cohort included new hires, hired during the access period and any new hires engaged before the CorpVote cut-off date to update the Voter Roll at the end of 28 November 2018. No further updates were made to the Voter Roll due to the practicalities of the CorpVote system.” 43(emphasis added)

[67] It is plain from this statement that a deliberate decision was taken by Kmart to stop updating the Voter Roll from which its agent, CorpVote, was requesting employees to vote before the end of the voting period.

[68] This admission is significant given that Ms White also declared her understanding that the voting cohort should be regarded as including employees employed during the access period and recruited during the voting period and who would be covered by the Agreement. 44 To the extent of any generic references in the materials that may appear inconsistent, I consider the evidence of the cut-off date is specific and consistent with the objective documentary evidence.
[69] The time of the cut-off on 28 November 2018 and the number of employees engaged after this cut-off date is not before the Commission. The evidence before the Commission confirms the total number in the Voting Cohort as 32,039. That number is consistent with the declaration of ballot results, and also Ms White’s declaration of the number in the final Voter Roll provided to CorpVote on 28 November 2018 said to include new hires and terminations “between 21 November and 28 November 2018”. 45

[70] On the evidence, it is therefore apparent that the 32,039 employees in the Voting Cohort does not include employees who were engaged and worked on at least the last two days of the voting period (that is, at least 29 and 30 November 2018 and perhaps also all or part of 28 November 2018).

[71] A number of factors point to the likelihood that this category includes a number of employees, including: the evidence before the Commission that employees are engaged and requested to complete paid induction training, from home or in store, within 24 hours of signing their contract of employment; 46 the data which shows an increasing workforce in the days leading up to the vote;47 and Ms White’s evidence of the difficulty in providing precise data on any given day due to sheer volume of recruitments and terminations.48 Accordingly, it is conceivable that there are a number of employees who worked during the voting period (at least on 29 and 30 November 2018) but who were not requested to vote.

[72] Section 181(1) of the Act expresses the employer’s obligation as to request “the” employees employed at the time and who will be covered by the Agreement to approve the agreement by voting for it, in mandatory terms. The Act does not contemplate that an employer can elect to request a vote of some but not all employees who will be covered by the agreement and are employed at the time. In my view, the circumstance where an employer requests a narrower cohort to vote (such that each of “the” employees was not requested to vote, and some were excluded from the vote) is distinguishable from the earlier cases to which I have referred where materiality was considered relevant. That is because, in those other cases involving a broader voting pool, there was no question that the employees who would be covered and were employed at the time were also requested to vote.

[73] I note that little attempt was made to explain or argue this issue despite Ms White’s own admission of the decision to “cut-off” the Voter Roll. If there is any other evidence to explain this issue, it is not before the Commission.

[74] In summary, the evidence before the Commission reveals three main errors in the selection of Kmart’s Voting Cohort:

a) Kmart requested employees to vote who were not employed at the time of the voting period or the access period and possibly would be covered by the Agreement;

b) Kmart requested former employees to vote that were not employed at the time of the voting period or the access period and would not be covered by the Agreement; and

c) Kmart did not request employees to vote who were employed at the time of the voting period and would be covered by the Agreement.

[75] In the circumstances, and on the evidence that is before the Commission, I consider that the decision to exclude employees employed at the time and would be covered by the Agreement means that I am not able to be satisfied that the Agreement was genuinely agreed to by the employees covered by the Agreement (s.186(2)(a)) because I am not satisfied the Agreement was made in accordance with s.182(1) and as required by s.188(1)(b).

[76] To the extent that this is, at least theoretically, a concern about which an undertaking may be accepted under s.190 I note that Kmart was afforded every opportunity but instead requested that the Commission exercise its discretion to determine the application on the materials that are before it. In any event, it is difficult to imagine how an undertaking could be framed or crafted as to appropriately satisfy the Commission having regard to the nature of the concern.

[77] In the alternative, for the foregoing reasons, there may be a question as to whether the Agreement was “made” in accordance with the Act at all.

Is the error of a kind that can be overlooked?

[78] The Act allows the Commission to overlook certain “minor procedural or technical errors” where the employees covered by the agreement are “not likely to be disadvantaged by the error” (s.188(2)).

[79] Kmart’s error in casting the net too narrow is “procedural” in that it was required to follow a particular process or course of action, by requesting the employees employed at the time and who would be covered by the Agreement to approve it by vote, which it failed to do. It may also be said to include technical components.

[80] In considering whether the error is “minor”, regard must be had to the nature of the requirement that has not been complied with. Section 181 appears in Part 2-4, Division 4 - Approval of Enterprise Agreements. An enterprise agreement is only “made” if it is approved by a valid majority of the employees to be covered by it and who were employed at the time. The purpose and object of the obligation at s.181 is to ensure that an employer affords the opportunity for the relevant employees to have their say on terms and conditions that will apply to their employment by voting on what is proposed. This is an important democratic right which is inherent in the scheme of enterprise bargaining and directed towards facilitating the objects of Part 2-4 of the Act. 49

[81] However the error here, to exclude some employees who would be covered by the Agreement and were employed at the time, was seemingly intentional. That is because the evidence before the Commission shows that Kmart was aware that employees in this category should have been requested to vote, it knew of its obligation to keep updating the Voter Roll during the vote period. It chose to adopt an approach whereby, although its business employs many new hires on a daily basis, it ceased updating the Voter Roll and permitted the cut-off on 28 November 2018, at least 2 days prior to the vote closing on 30 November 2018. No explanation was proffered for why this decision was made other than “due to the practicalities of the CorpVote system”.

[82] Huntsman provides guidance as to the distinction to be made between:

a) an intentional act which unintentionally results in non-compliance with the procedural and/or technical requirements for the making of an enterprise agreement and which may depending on the circumstances be characterised as an error; and

b) intentional non-compliance with those requirements, which will not constitute an error,

for the purpose of s.188(2).

[83] I consider this to be an error of intentional non-compliance which does not constitute an error for the purposes of s.188(2)(a) given the true knowledge held and the deliberate action not to adopt a course of action consistent with this true knowledge. Rather than an error this course of action is best described as a conscious decision not to comply. 50

[84] Even if it were, having regard to the underlying purpose and nature of the procedural (and/or technical) requirement which has not been complied with, this could not be classified as a “minor error” within contemplation of s.188(2)(a).

[85] Kmart argued “given the significant margin by which the Agreement was voted up, any error involving persons who should or should not have voted are insignificant and in Kmart’s submission constitute a minor procedural or technical error”. 51 However, having concluded that there is no minor error, s.188(2) can not come to the rescue even in those circumstances.

[86] No doubt Kmart’s motivation was borne out of convenience and the not insignificant challenge of taking steps otherwise to ensure that all relevant employees were provided with an opportunity to vote. For a large employer, these challenges are real and obvious. But, in the circumstances, it is not open to the Commission to take such matters into account.

Other genuine agreement concerns

[87] Relevant to whether the Commission can be satisfied that employees “genuinely agreed” are concerns about whether Kmart took all reasonable steps to:

a) give notice of the right to be represented by a bargaining representative to each employee who would be covered by, and was employed at the notification time for, the Agreement, as required by s.173(1); and

b) ensure that the relevant employees were given a copy of the materials incorporated by reference in the Agreement or had access throughout the access period to those materials as required by s.180(2); and

c) explain the terms and effect of the terms of the Agreement as required by s.180(5).

[88] These are additional matters of which the Commission must be satisfied in considering whether it must approve an enterprise agreement under ss.186(2)(a), 188(1), 180(2) and (5) of the Act.

Did Kmart take all reasonable steps to give the NERR as required?

[89] It is not contentious that the step(s) taken by Kmart to “give” the Notice of employee representational rights (NERR) to the relevant employees involved causing the NERR to be posted on team member notice boards in all retail stores. 52

[90] Whether this complies with Regulation 2.04 was disputed. Specifically, whether the NERR was displayed in a “conspicuous location” at the workplace that is “known by and readily accessible to the employee” as required by Regulation 2.04(7).

[91] The evidence before the Commission is, relevantly:

a) The Team Member Notice Board is an important means of communication between Kmart and its Team Members, used to post important information related to employment such as wage increase information, rosters, bargaining matters, job vacancies; information about processes that Kmart wants team members to learn; local content of interest to team members such as events and Christmas parties, service milestones and recognition;

b) Every Kmart store in Australia has a Team Member Notice Board;

c) The look, size and location may vary from store to store:

•  In 156 stores, the Team Member Notice Board is located in the tea room together with another Team Member Notice Board located in another position in the store;

•  In 26 stores, the Team Member Notice Board is located in a location other than the tea room,

however in each case is large and clearly visible and located in the “back-of-house” area where team members are required to perform their duties including “clocking on and clocking off”;

d) A typical store induction tour for new employees would include a tour including of the back-of-house areas and pointing out notice boards;

e) The Team Member Notice Board is not the only system for communication, other methods of communication exist as follows:

•  Team Huddles, used to communicate day to day messages about local operational issues and matters for which two-way communication is important;

•  The Team Member App, not accessed by all relevant employees and specifically only 19,253 team members as at 1 October 2017 (of the then 29,232 team members);

•  KIT, a management communication system which issues communications from national office to store managers (not accessible by team members covered by the Agreement);

•  individual methods of communications, such as email however this is not a normal method of communications other than for pay slips (where nominated by an employee as the preferred method) noting team members in stores do not have a Kmart email address and that the use of individual emails for vote communications was deployed via third party ballot agent CorpVote;

•  Safety Notifications which are posted on a specific Safety Notice Board,

f) On 7 September 2017, there were 205 Kmart stores operating in Australia and each was instructed to post the NERR on its Team Member Notice Board;

g) Instructions to post other important communications related to bargaining on the Team Member Notice Boards were issued on 12 November 2018 (regarding how to vote and explanatory materials) and 3 December 2018 (confirming the vote outcome). 53

[92] The Third Statutory Declaration of Suzanne White attached a schedule listing the location of Team Member Notice Boards in each Kmart store, photographs of Team Member Notice Boards in 11 sample Kmart stores, and declared, based on Ms White’s role and her 11 years of experience at Kmart, that the Team Member Notice Boards are conspicuous, readily accessible by and known to team members.

[93] RAFFWU objected on the basis that there was insufficient evidence such that the Commission is not able to be satisfied of whether compliance with Regulation 2.04(7) was achieved. Further, RAFFWU submitted that there are a number of readily available means by which employees regularly receive communications from Kmart, including the Kmart Team Member App and emails, being methods used to inform the relevant employees of the vote on the Agreement. It argued that the issue is significant, given the large numbers of employees under 21 years of age and casual employees. Further, that the purpose of the legislative provision is not achieved if employees do not know the location of the NERR as a method for receipt of communications.

[94] Kmart denied that it has failed to discharge the obligation. The SDA supported Kmart’s position and further argued that it is reasonable for the Team Member Notice Boards to be the method for giving the NERR having regard to the short timeframe for distribution of the NERR, the number of Kmart stores and the size of Kmart’s workforce. The SDA criticised RAFFWU’s objection which it submitted was not cast in any evidence to contradict the evidence of Kmart on this issue. 54 The SDA’s submissions were in turn supported by the AWU.55

[95] A similar objection was considered by a Full Bench in Woolworths delivered after the hearing and closing submissions in this matter. 56 It was held to be irrelevant in considering compliance with Regulation 2.04 that there were other conceivable ways in which the NERR might have been given. Further, that Regulation 2.04(7) does not require that the notice actually be read or even seen by all employees, let alone that it be read or seen by them at a particular time.

[96] Unlike Woolworths, in this case there is a complete absence of any evidence to contradict that of Ms White. In Woolworths, the use of the notice boards for a NERR in previous bargaining rounds was considered important. Similarly here I consider the evidence of the other important bargaining communications distributed on the Team Member Notice Boards to be compelling.

[97] On the evidence that is before the Commission, I am of the view that Kmart used a prescribed method pursuant to Regulation 2.04(7) and that this constitutes all reasonable steps in the circumstances of this matter.

[98] Accordingly, I am satisfied that the distribution of the NERR was consistent with the requirement at s.173(1) and is not a reason to consider that the Agreement was not “genuinely agreed” under s.188(1)(c).

Did Kmart take all reasonable steps to ensure employees were given or had access to incorporated materials during the access period?

[99] The Agreement as made provides an entitlement to superannuation, at clause 7.8. The clause was the subject of some scrutiny in the context of objections to the better off overall test (detailed below).

[100] The obligation at clause 7.8 of the Agreement is partly expressed as follows:

“Kmart shall be a participating employer of the Retail Employees Superannuation Trust (REST) and shall participate in accordance with the Fund Trust Deed.”

[101] Kmart argued that the REST Fund Trust Deed is not a document incorporated by reference in the Agreement as contemplated by s.180(2) such that no obligation arose to give or provide access to it. I accept that interpretation is available on a plain reading of the clause.

[102] In any event, I note that there is now evidence before the Commission that employees did have access through a hyperlink in a video presentation (at 18:25 minutes), available to employees to view on televisions in stores or the Team Member App and, also, that it is available in the public domain. The evidence of Ms White is that more than 31,246 employees had downloaded the Team Member App and had access to this information by October 2018. 57

[103] Accordingly, there is no concern that the Agreement was not “genuinely agreed” within the meaning of ss.188(1)(a) and 180(2) in this regard.

Did Kmart appropriately explain the terms and effect of the Agreement to employees?

[104] Also in the context of concerns raised about the better off overall test (detailed below), RAFFWU queried whether the Commission is able to be satisfied that Kmart took all reasonable steps to explain the terms and effect of the Agreement to employees as required by ss.188(1)(a), (c) and 180(5). The focus of the objection was on whether appropriate explanation was given to young, casual employees particularly to explain the “complex clauses about span of hours, overtime” and “the elimination of superannuation choice”. 58

[105] In One Key the approach to satisfaction of compliance in this context was confirmed as involving an evaluative judgement, including because an assessment is to be made as to whether “reasonable steps” were taken by the employer. 59 RAFFWU also referred the Commission to Dawsons Maintenance Contractors60 in which the obligation for an applicant to satisfy the Commission was explained as logically requiring “cogent evidence on the part of the applicant employer as to the nature and detail of the explanation given”.

[106] The original application in this matter declared a multitude of steps taken to meet the obligation at s.180(5). It attached a large volume of explanatory materials, including in written and video formats and in multiple languages. Those materials and subsequently filed materials include transparent explanations about the terms and effect of the Agreement including the provisions for superannuation, overtime and increased span of ordinary hours under the Agreement as compared to the relevant award. 61

[107] On the evidence before the Commission, I am satisfied that there is no cause for concern about whether employees genuinely agreed in accordance with ss.188(1)(a), (c) and 180(5) in this regard.

PART B: ARE EMPLOYEES BETTER OFF OVERALL?

[108] The Agreement, if approved, would replace the 2012 Agreement and is Kmart’s first enterprise agreement to be assessed against the General Retail Industry Award 2010 (the Award). 62

[109] It is common ground that the wage rates in the Agreement are higher under the Agreement than in the Award. 63 However, the gap is narrow for a number of classes of employee, as set out below.

[110] Some classes of Trainee under the Agreement would earn 1 cent per hour more under the Agreement than if the Award applied.

[111] The following classes of employee would earn 4 cents per hour more under the Agreement than if the Award applied:

a) Existing permanent – Level 1A;

b) Existing permanent – Higher Duties Grade C;

c) New permanent – Level 1;

d) New permanent – Level 1A;

e) New permanent – Level 2 Clerical;

f) New permanent – Higher Duties Grade A;

g) New permanent – Higher Duties Grade B;

h) New permanent – Higher Duties Grade C;

i) Existing casual – Level 1A.

[112] There are also classes of existing casual employees who would earn 5 cents per hour more under the Agreement than if the Award applied.

[113] Penalty rates for all employees under the Agreement are calculated on the penalty rate payable using the base rate in the Award (not the higher rate in the Agreement) plus 1 cent per hour. 64

[114] Accompanying the original application, Kmart filed its comparison of the terms and conditions in the Agreement with the Award. 65 Kmart later summarised the terms and conditions under the Agreement which it says are more beneficial than under the Award, in four main classes. That summary is extracted at Attachment 4.66

[115] Kmart proposed a final, consolidated set of undertakings to address 10 of the concerns raised in the course of these proceedings about whether employees would be “better off overall” under the Agreement than if the Award applied (Proposed Undertakings). 67 A copy of the Proposed Undertakings is at Attachment 5. The SDA and the AWU supported the Proposed Undertakings, RAFFWU opposed.

[116] Even if the Proposed Undertakings sufficiently address the concerns to which they are directed, there remain concerns that are not subject of any proposed undertaking and are in dispute in terms of whether employees are better off overall, in relation to superannuation and the extended span of hours in the Agreement.

Statutory framework

[117] The Commission must be satisfied that the Agreement passes the “better off overall test” in assessing whether it must be approved in accordance with the Act. 68

[118] An enterprise agreement passes the better off overall test if the Commission is satisfied, as at the time the application is made, that each award covered employee and each prospective award covered employee for the enterprise agreement would be better off overall if the enterprise agreement applied, than if the modern award applied. 69

[119] It is clear from the references to “each award covered employee” 70 and “each prospective award covered employee”71 in s.193(1) that every employee and prospective employee must be assessed as better off overall under the Agreement than if the relevant modern award applied to that employee or prospective employee, as at the test time.72 However, s.193(7) permits the Commission to be satisfied, in particular circumstances, that all employees and prospective employees in a class of employees or prospective employees will be better off if the enterprise agreement applied to that class than if the relevant modern award applied to that class.73

[120] The application of the better off overall test requires the identification of agreement terms which are more beneficial, and the terms which are less beneficial, and then an overall assessment is made as to whether employees would be better off overall under the agreement than the relevant award. 74 The difficulties that often arise in assessing contingent, and non-financial, terms is explained in Coles.75

[121] The assessment of the better off overall test will logically focus attention on matters that are objectively verifiable as relative benefits or detriments, including in particular the number of hours that employees can be required to work and the payments employees receive for doing so. The analysis inquires whether employees would be better off overall under the Agreement than under the relevant award, not better off on a line by line or itemised basis. It is plainly permissible under the Act to trade off or vary Award conditions in making an enterprise agreement. 76

The superannuation fund issue

[122] The primary obligation for employers to pay superannuation derives from the Superannuation Guarantee Administration Act 1992 (Cth) (SGA Act), which presently provides that the choice of fund requirements are met if the contribution is made under or in accordance with an enterprise agreement. 77

[123] The Award expressly supplements the superannuation rights and obligations contained in the superannuation legislation and includes a list of nominated funds any of which may be applied to employees covered by the Award if they have not chosen a fund under the superannuation legislation; 78 whereas the Agreement mandates contributions to be paid to one selected fund.79 The selected fund in the Agreement (REST) is one of the funds nominated in the Award.

[124] Given the SGA Act, there is nothing unlawful about the determination of the superannuation fund for employees under clause 7.8 of the Agreement, in effect varying the Award conditions which would otherwise have enabled an employee to choose a fund under the superannuation legislation or any of the nominated funds therein to be applied. 80 However the question in this case is what if any impact the Agreement provision has on the Commission’s ability to be satisfied that the employees are better off overall.

[125] Kmart argued before the Commission that this is not a BOOT issue, the Award does not provide for choice and there is no evidence that this provision operates as a detriment. 81

[126] RAFFWU argued that the abolition of choice of superannuation fund is a detriment which is not offset by the “literally miniscule” wage rate benefit of 1 cent per hour in some cases and limited other benefits in the Agreement. 82 Further, that at least part of Kmart’s submission appears to be contrary to the explanation Kmart provided to its employees, about the terms and effect of the superannuation provision in the Agreement, which was as follows:

“Superannuation

[…]

The Retail Employees Superannuation Trust (REST) is the default fund Kmart contributes superannuation contributions.

[…]

The GRIA as an Award (not an agreement), provides a number of default funds, into which an employer may contribute, include REST and provides for choice of fund as required in awards.” 83

[127] I do not accept Kmart’s contentions in this respect. The Award expressly nominates a list of funds that may be applied to Award-covered employees if they have not made their own choice of fund in accordance with the superannuation legislation. The Award enables a choice to be made under the superannuation legislation and otherwise supplements the legislation by narrowing the applicable funds for Award-covered employees in circumstances where no such choice is made. Under the Agreement there is only one superannuation fund into which employee contributions are paid.

[128] As the better off overall test requires an identification of more and less beneficial terms, the question remains as to whether the superannuation provision is less beneficial, and if so, the weight to be attributed to this issue in making an overall assessment of whether employees are better off overall.

[129] The absence of evidence in relation to this issue has not assisted the Commission in reaching the necessary satisfaction as to the better off overall test. Whilst it was Kmart’s view that it is “not appropriate for the Commission to require any evidence about the performance of the superannuation fund, including REST”, the difficulty in assessing this condition as more or less beneficial to employees, in the absence of any evidence, was raised directly at the hearing, with Kmart ultimately choosing not to file any evidence that may have assisted the Commission on this issue. 84

[130] To the extent that Kmart asks the Commission to rely on s.193(7) to “assume” employees are better off overall in the absence of any evidence, that submission is misplaced. 85 Section 193(7) permits the Commission to make assumptions about certain classes of employees being better off overall (rather than requiring the Commission to inquire into each individual employee’s circumstances)86 however the Commission is still bestowed with the obligation to reach the level of satisfaction in relation to each class of employee and the applicant ultimately bears the onus of achieving that satisfaction.

[131] The Award itself describes the choice that may be made under the superannuation legislation (preserved by its terms) as an “opportunity” strongly suggesting a benefit in the ability to exercise that choice.

[132] The Financial System Inquiry included a recommendation to “provide all employees with the ability to choose the fund into which their Superannuation Guarantee contributions are paid” based on its findings of the detrimental impacts of restrictions on choice of fund including additional fees through maintenance of multiple funds, the longer term impact on superannuation savings and the particular vulnerabilities of casual employees to restrictions on choice. 87

[133] On the materials before the Commission regarding the superannuation provision in the Agreement, I am only able to objectively conclude that the Agreement’s restriction on the choice of superannuation fund that would otherwise exist under the Award is a less beneficial term. On one view this may be non-monetary and accordingly difficult to quantify. It may be monetary to the extent that the performance of the REST fund is less than what an employee might otherwise prefer or that employees required to have multiple funds are required to pay multiple fund fees. Whether the detriment is properly characterised as monetary or non-monetary, the potential for a class of employee or prospective employee to suffer it as against the Award is real notwithstanding the difficulty in its quantification.

The increased span of hours issue

[134] It is not contentious that the Agreement provides for a greater span of hours than that in the Award, and that employees may be rostered for those hours and not able to refuse on the basis of unreasonable overtime. 88 The Award provides a span of ordinary hours of 7am to 9pm Monday to Friday, 7am-6pm on Saturday and 9am-6pm on Sunday; whereas the Agreement permits an increased span of ordinary hours to be worked of 6am-midnight on any day of the week.89

[135] The Agreement includes a penalty (or loading) which is 1 cent more per hour than that which would be payable for ordinary hours worked outside of the span under the Award. 90

[136] Additionally, Kmart and the SDA argue that under the Agreement superannuation is payable on those hours worked as part of the increased span under the Agreement and that the Agreement affords scope for employees to request a family friendly arrangement.

[137] Kmart points to a dispute in a Western Australia store(s) to demonstrate that some employees prefer to start work outside the span of ordinary hours in the Award. It also offers as relevant that the increased span in the Agreement is the same as the span in the current 2012 Agreement. I find these factors inconclusive in that the former demonstrates no more than a possible individual preference and the latter, whilst relevant to an assessment of non-financial detriments, is just one consideration bearing in mind that the current agreement was not made under this Award. 91

[138] RAFFWU argues that there are non-financial detriments associated with the increased span of hours that may be required to be worked under the Agreement and that the financial benefit is “miniscule” and insufficient to offset this. It cites the limitations on the right to refuse to work in the increased span of hours, in addition to matters that relate to what may be described as individual lifestyle preferences. 92

[139] Again, the absence of evidence including a lack of any scenarios relative to particular rosters, stores or to classes of employees has not assisted the Commission in reaching the requisite satisfaction. Again, I do not consider it the Commission’s task to speculate as to the individual impacts of such provision. However, on the objective material before the Commission, I conclude that there is a detriment to be considered in making an overall assessment of the better off overall test.

An overall assessment of the better off overall test

[140] On an analysis of the materials before the Commission, it is apparent that the Agreement includes the following more beneficial terms:

a) For all classes of employee, a financial benefit by way of higher wage rates, which in some cases is as narrow as 1 cent per hour higher than the Award rates;

b) For some classes of employee, a contingent financial benefit which has already crystallised by way of an upfront payment payable by 19 December 2018; and

c) A series of other contingent benefits outlined at Attachment 4, to which Kmart properly does not seek to attribute a monetary value in terms of assessing whether there is sufficient offset, on the basis that many are applicable to some but not all classes of employee.

[141] In addition to the less beneficial terms details above, Kmart’s Proposed Undertakings have been offered to address 10 less beneficial terms identified in the Agreement regarding:

a) Definition of the adult rate of pay;

b) Payment of wages on termination;

c) First aid allowance;

d) Uniform allowance;

e) Overtime rates of pay – day work team members;

f) Public holidays;

g) Requests for flexible work;

h) Day work and night work shift changes;

i) Union matters (right of entry);

j) Rates of pay as at the test time.

[142] Even if the Proposed Undertakings were accepted, they do not adequately address all of the less beneficial terms in particular the removal of choice of superannuation fund. In circumstances where the value of the objectively verifiable benefits under the Agreement is the minimum possible above Award for certain classes of employees and/or prospective employees to be covered, and in the absence of materials to persuade the Commission otherwise, on an overall assessment I am not able to be satisfied that employees and prospective employees are better off overall under the Agreement than if the Award applied.

[143] Having reached this conclusion, I am of the view that if the Agreement were otherwise able to be approved under the Act, further undertakings in addition to the Proposed Undertakings could be offered to sufficiently address the concerns and satisfy the Commission that the Agreement must be approved in accordance with the Act.

Conclusion

[144] For the above reasons, Kmart has failed to satisfy the Commission of the matters at ss.188(1)(b), 182(1) and 181(1) of the Act, specifically because employees to be covered and “employed at the time” were excluded from the voting cohort requested to approve the Agreement. This is not a “minor procedural or technical error” and as such may not be overlooked pursuant to s.188(2).

[145] Accordingly, the Commission is not satisfied that the Agreement was “genuinely agreed”. As all of the requirements of ss.186 and 187 are not met, the Agreement must not be approved.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<PR711933>

Appearances:

Mr McKenney on behalf of Kmart, with Lander and Rogers

Mr Bruno on behalf of the SDA, with AJ Macken and Co

Mr Cullinan on behalf of RAFFWU

Hearing details:

2019

Melbourne.

5 April.

ATTACHMENT 1 – INDEX OF STATUTORY DECLARATIONS FILED IN SUPPORT OF THE APPLICATION

ATTACHMENT 2 -SAMPLE CASUAL EMPLOYMENT CONTRACT

ATTACHMENT 3 – EXTRACT FROM THE SIXTH STATUTORY DECLARATION OF SUZANNE WHITE

ATTACHMENT 4 – KMART SUMMARY OF BENEFITS UNDER THE AGREEMENT

Existing permanent team members

a) Higher base rates of pay than the GRIA if such employees change rosters and work base rate of pay hours or partly work base rate of pay hours.

b) A $450.00 up-front payment, pro-rated for juniors and for the part-time employees.

c) 15-minute paid tea breaks rather than 10-minute paid tea breaks.

d) A higher severance-pay rate formula in the even that they are ever retrenched.

e) Completely voluntary work on public holidays.

f) More generous paid compassionate leave provisions (3-5 days of paid leave depending on the relative with a single day paid for other close relatives not entitled to compassionate leave as immediate family members).

g) Access to paid natural disaster leave.

h) Two days of paid family and domestic violence leave.

i) Paid blood donor’s leave.

j) Paid emergency services leave.

k) Access to unpaid parental leave at 26 weeks of continuous service, a guaranteed right to return to work on a part-time basis following parental leave and a guaranteed right to request up to 2 years of unpaid parental leave (in certain circumstances).

l) A right to accident-make-up pay for 39 weeks.

m) Unpaid leave of absence provisions.

Prospective permanent team members

a) Higher base rates of pay than the GRIA if such employees change rosters and work base rate of pay hours or partly work base rate of pay hours (albeit lower rates than existing employees).

b) 15-minute paid tea breaks rather than 10-minute paid tea breaks.

c) A higher severance-pay rate formula in the event that they are ever retrenched.

d) Completely voluntary work on public holidays.

e) More generous paid compassionate leave provisions (3-5 days of paid leave depending on the relative with a single day paid for other close relatives not entitled to compassionate leave as immediate family members).

f) Access to paid natural disaster leave.

g) Two days of paid family and domestic violence leave.

h) Blood donor’s leave.

i) Access to unpaid parental leave at 26 weeks of continuous service, a guaranteed right to return to work on a part-time basis following parental leave and a guaranteed right to request up to 2 years of unpaid parental leave (in certain circumstances).

j) A right to accident-make-up pay for 39 weeks.

k) Unpaid leave of absence provisions.

Existing casual team members

a) Higher casual rates of pay than the GRIA if such employees accept shifts and work casual rate of pay hours or partly work casual rate of pay hours.

b) A $450.00 up-front payment, pro-rated for juniors and based on average hours over 12 months.

c) 15-minute paid tea breaks rather than 10-minute paid tea breaks.

d) Completely voluntary work on public holidays.

e) Access to unpaid parental leave at 26 weeks of continuous service and a guaranteed right to request up to 2 years of unpaid parental leave (in certain circumstances).

f) A right to accident-make-up pay for 39 weeks.

Prospective casual team members

a) Higher Casual rates of pay than the GRIA if such employees accept shifts and work casual rate of pay hours or partly work casual rate of pay hours (albeit lower rates than existing employees).

b) 15-minute paid tea breaks rather than 10-minute paid tea breaks.

c) Completely voluntary work on public holidays.

d) Access to unpaid parental leave at 26 weeks of continuous service and a guaranteed right to request up to 2 years of unpaid parental leave (in certain circumstances).

e) A right to accident-make-up pay for 39 weeks.

ATTACHMENT 5 – PROPOSED UNDERTAKINGS

 1   Filed 17 December 2019.

 2   Filed 19 December 2019.

 3   Email from Mr Cullinan to the Commission dated 29 December 2018; F18A filed 2 September 2019.

 4   First Statutory Declaration of Suzanne White at paragraph 2.10 and Attachment C – CorpVote Ballot Result Declaration.

 5   First Statutory Declaration of Suzanne White at paragraph 4.3.

 6   Galintel Rolling Mills Pty Ltd T/A The Graham Group [2011] FWAFB 6772 cited in Ostwald Bros Pty Ltd v CFMEU [2012] FWAFB 9512 at [79].

 7   National Tertiary Education Industry Union v Swinburne University of Technology [2015] FCAFC 98 (Swinburne) at [10].

 8   Construction, Forestry, Maritime, Mining and Energy Union v Noorton Pty Ltd T/A Manly Fast Ferry [2018] FWCFB 7224 (Noorton) at [19].

 9   Noorton at [19] and [23].

 10   Swinburne at [10].

 11   Swinburne at [26]; Noorton at [24] to [26] and [35].

 12   Also since the decision in McDermott Australia Pty Ltd v The Australian Workers’ Union, & The “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) [2016] FWCFB 2222 and not considered in Noorton.

 13   Fair Work Amendment (Repeal of 4 Yearly Reviews and Other Measures) Act 2018 (commenced on 12 December 2018).

 14   [2019] FWCFB 318 at [41].

 15   Ibid at [117].

 16   First Statutory Declaration of Suzanne White at paragraph 4.3.

 17   First Statutory Declaration of Suzanne White at paragraphs 2.4 and 2.8 and Attachment B – Vote Information.

 18   Mention on 28 June 2019.

 19   Fifth Statutory Declaration of Suzanne White at paragraph 5.

 20   Fifth Statutory Declaration of Suzanne White at paragraphs 3 and 4.

 21   Fifth Statutory Declaration of Suzanne White at paragraph 6.

 22   Annexure SW-1 to the Fifth Statutory Declaration of Suzanne White.

 23   Fifth Statutory Declaration of Suzanne White at paragraphs 13-15.

 24   Fifth Statutory Declaration of Suzanne White at paragraphs 12 and17.

 25   Sixth Statutory Declaration of Suzanne White at paragraph 6.

 26   The absolute worst case is not represented here. The absolute worst case would not discount the “number of employees who would have cast a valid vote”. In this case, that would not impact the result that the Agreement was approved, but rather the percentage by which the Agreement was approved.

 27   Footonotes to rows 4 and 5 of the table at paragraph 6 to the Sixth Statutory Declaration of Suzanne White.

 28   Email from the Commission to the parties dated 18 July 2019.

 29   Email from Mr Cullinan to the Commission dated 19 July 2019.

 30   Seventh Statutory Declaration of Suzanne White at paragraphs 5 to 8.

 31   Seventh Statutory Declaration of Suzanne White at paragraphs 9 to 11.

 32   Email from the Commission to Kmart, copying the bargaining representatives, dated 19 July 2019.

 33   Issued on 19 July 2019.

 34   See, for example, the Directions of 1 July 2019; Email from the Commission to the parties 19 July 2019; Kmart’s letter of 18 July 2019; SDA’s email of 18 July 2019 and RAFFWU’s emails of 18 and 19 July 2019.

 35   Jessup J in Swinburne stated that, although not argued, he was disposed to the view that “at the time” included the whole of the “access period” (at paragraph 25).

 36   ss.170 and 13 of the Act.

 37   Noorton at [20].

 38   Fifth Statutory Declaration of Suzanne White at paragraph 6.

 39   See as referenced in Kmart’s Reply Submissions dated 17 July 2019 at paragraph 5.

 40   Ibid at paragraph 10.

 41   McDermott Australia Pty Ltd v The Australian Workers’ Union, & The “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) [2016] FWCFB 2222.

 42   Noorton.

 43   Fifth Statutory Declaration of Suzanne White at paragraph 4.

 44   Ibid.

 45   Ibid, at paragraph 15.

 46   Ibid, at paragraph 7 and Kmart’s Submissions in Reply dated 17 July 2019 at [14].

 47   Fifth Statutory Declaration of Suzanne White at paragraphs 13 to 15.

 48   Sixth Statutory Declaration of Suzanne White at rows 4 and 5 of paragraph 6.

 49   s.171 of the Act.

 50   Huntsman Chemical Company Australia Pty Ltd t/a RMAX Rigid Cellular Plastics & Others [2019] FWCFB 318.at [72]-[73].

 51   Kmart’s Supplementary Submissions dated 5 July 2019 at [18].

 52   First Statutory Declaration of Suzanne White at 2.3.

 53   Third Statutory Declaration of Suzanne White and Transcript of Hearing of 5 April 2019 at PN427-469.

 54   SDA’s Submissions dated 1 April 2019.

 55   Email from the AWU to the Commission of 2 April 2019.

 56   [2019] FWCFB 2355 (Woolworths).

 57   Transcript of hearing of 5 April at PN329-334 and Fourth Statutory Declaration of Suzanne White at paragraphs 3, 4, 8-11; see Re McDonalds Australia Enterprise Agreement 2009 [2010] FWAFB 4602.

 58   RAFFWU’s Submissions dated 18 April 2019 at paragraphs 24-30.

 59   Construction, Forestry, Mining and Energy Union v One Key Workforce Pty Ltd v One Key Workforce Pty Ltd [2017] FCA 1266

 60   Construction, Forestry, Maritime, Mining and Energy Union v Dawsons Maintenance Contractors Pty Ltd [2018] FWCFB 2992 at [48].

 61   See, for example, Team Member Explanatory Summary at pages 7 and 14 as referenced in First Statutory Declaration of Suzanne White.

 62   Kmart’s Closing Submissions dated 12 April 2019 at paragraph 5.

 63   RAFFWU’s Submissions dated 19 March 2019 at 15-19; Kmart’s Submissions dated 25 March 2019 at 17, 19; noting these rates would apply on the basis of a proposed undertaking which clarifies that the rates as at the test time are the rates on commencement of the Agreement.

 64   Transcript of Hearing of 5 April 2019 at PN294.

 65   Ibid.

 66   Kmart’s Submissions dated 25 March 2019 at paragraphs 21-24.

 67   As filed on 18 July 2019.

 68   Pursuant to s.186(2) of the Act.

 69   ss.193(1) and (6) of the Act.

 70   Defined at s.193(4) of the Act.

 71   Defined at s.193(5) of the Act.

 72   Solar Systems Pty Ltd [2012] FWAFB 6397 at [11]; Hart v Coles Supermarkets Australia Pty Ltd [2016] FWCFB 2887 at [6], [15]; SDAEA v Beechworth Bakery [2017] FWCFB 1664 at [11].

 73   Loaded Rates Agreements [2018] FWCFB 3610 at [102]-[103].

 74   Re Armacell Australia Pty Ltd (2010) 202 IR 38 at [41].

 75   Hart v Coles Supermarkets Australia Pty Ltd and others [2016] FWCFB 2887 (Coles).

 76   [2019] FWCA 5544.

 77   Section 32C(6)(h) of the SGA Act.

 78   Clause 22.

 79   Clause 7.8.

 80   Note: a legislative amendment was proposed pursuant to the Superannuation Legislation Amendment (Choice of Fund) Bill 2016 and the Agreement expressly contemplates the need to accommodate such change, if passed, at cl.7.8.7.

 81   Kmart’s Submissions of 25 March 2019 at paragraphs 25 to 36; Kmart’s Closing Submissions dated 12 April 2019 at paragraph 92.

 82   RAFFWU’s Submissions of 18 April 2019 at paragraphs 9 to 17.

 83   Team Member Explanatory Summary at page 14 referenced in the First Statutory Declaration of Suzanne White.

 84   Ibid at PN 164 and PN405; Kmart’s Reply Submissions of 24 April 2019 at [14].

 85   Kmart’s Closing Submissions of 12 April 2019 at paragraph 90 and Kmart’s Reply Submissions of 24 April 2019 at paragraph 12.

 86   Supplementary Explanatory Memorandum to the Fair Work Bill 2009 (Cth) at [122]-[124].

 87   Final Report of the Financial System Inquiry dated 7 December 2014.

 88   Kmart’s Submissions dated 25 March 2019 at paragraph 61.

 89   See Agreement at clause 10.2 (Day Work).

 90   Transcript of Hearing of 5 April 2019 at PN294.

 91   Kmart’s Submissions of 25 March 2019 at paragraph 45(b).

 92   RAFFWU’s Submissions of 18 March 2019 at paragraphs 18, 34 – 37.