[2019] FWCFB 6960
FAIR WORK COMMISSION

DECISION


Fair Work Act 2009
s.604 - Appeal of decisions

The Australian Workers' Union
v
Rigforce Pty Ltd t/a Rigforce
(C2019/2792)

VICE PRESIDENT HATCHER
DEPUTY PRESIDENT CLANCY
DEPUTY PRESIDENT COLMAN

SYDNEY, 23 OCTOBER 2019

Appeal against decision [2019] FWCA 2332 of Commissioner Lee at Melbourne on 5 April 2019 in matter number AG2019/835.

Introduction

[1] The Australian Workers’ Union (AWU) has lodged an appeal, for which permission to appeal is required, against a decision of Commissioner Lee issued on 5 April 2019 1 (Decision) in which he approved the RFD Enterprise Agreement 2019 (RFD Agreement). The AWU contends that the approval of the RFD Agreement was in error because the Commissioner could not have been satisfied on the material before him that:

(1) the RFD Agreement had been genuinely agreed to by the employees covered by it, as required by s 186(2)(a) of the Fair Work Act 2009 (FW Act); and

(2) the group of employees covered by the RFD Agreement was fairly chosen, as required by s 186(3) of the FW Act.

Extension of time

[2] The AWU’s appeal was lodged on 1 May 2019. Rule 56(2) of the Fair Work Commission Rules 2013 relevantly requires that a notice of appeal against a decision of a single Commission member be lodged within 21 days after the date of the decision being appealed against, or within such further time allowed by the Commission on application by the appellant. Because the appeal was lodged five days outside the 21-day time limit, it is necessary for the AWU to obtain an extension of time in order to prosecute its appeal. The AWU submits that an extension should be granted because:

•  the AWU was not aware that an application had been filed by Rigforce Pty Ltd (Rigforce) for approval of the RFD Agreement, and consequently was not involved in the first instance proceedings;

•  the AWU had only become aware of the existence of the RFD Agreement on 25 April 2019, and consequently was not reasonably able to file its notice of appeal within the 21-day period upon becoming aware of the Decision;

•  the delay was minimal and would not significantly prejudice Rigforce, the respondent to the appeal; and

•  if any of the AWU’s grounds of appeal merited success, the potential injustice that would arise from the decision not being quashed would be substantial and would outweigh the importance of compliance with the 21-day period in all the circumstances.

[3] Rigforce opposed the grant of an extension of time on the basis that:

•  it had already submitted and been awarded tenders on the basis of the RFD Agreement, and the commercial and industrial certainty of an in-term agreement ought not be displaced by an appeal brought out of time;

•  the AWU, as a sophisticated employee organisation with an in-house legal and industrial team with the capacity to review, in real time, agreement applications on the Commission’s website, did not in the circumstances have an acceptable reason for the delay; and

•  the appeal itself lacked merit.

[4] We have decided to grant the AWU the necessary extension of time. First, for reasons set out later in this decision, we consider that one of the AWU’s appeal grounds has significant merit. Second, given that the AWU was not a participant in the first instance proceedings and did not become aware of the existence of the RFD Agreement until the day before the 21-day period expired, we consider that it has provided a reasonable explanation for the delay. In the circumstances which we will shortly describe, the AWU had no basis to know that Rigforce had entered into an agreement which might be the subject of an approval application, and in any event the lack of an apparent relationship between the name of the RFD Agreement and Rigforce is likely to have hindered the capacity of the AWU to identify the application, and the Decision, on the Commission’s website as being of interest to it. Third, the delay is a short one, and it is not suggested that it has adversely affected the capacity of Rigforce to respond to the appeal.

Additional evidence

[5] Both parties sought to adduce additional evidence in the appeal. The AWU sought the admission of a witness statement made by Daniel Cain, who is the National Organiser (Offshore Oil and Gas) for the AWU as well as the Divisional Branch Assistant Secretary of the Maritime Union of Australia Division of the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU). Mr Cain described events relevant to the circumstances in which the RFD Agreement was made and explains how it was that the AWU first became aware of the RFD Agreement only after it had already been approved in the Decision. We have decided to admit this statement because, firstly, the AWU was not aware of the first instance proceedings and therefore did not have the opportunity to adduce Mr Cain’s evidence before the Commissioner and, secondly, we consider that the statement is probative as to matters requiring determination in this appeal.

[6] Rigforce sought the admission of a witness statement made by Mr Conor O’Brien, the Managing Director of Rigforce. This statement described the circumstances in which the terms of the RFD Agreement were explained to relevant employees, and was responsive to an issue raised during the hearing of the appeal (not considered at first instance) concerning an evident problem in Rigforce’s explanation of the rates of pay (which we identify and consider in greater detail later). We will accordingly admit this witness statement into evidence also.

Statutory framework

[7] An enterprise agreement only becomes legally effective if and when it is approved by the Commission. 2 Section 186(1) of the FW Act establishes a “basic rule” that, where an application for approval of an enterprise agreement has been made, the Commission must approve the agreement if the requirements set out in ss 186 and 187 are met. One of those approval requirements, set out in s 186(2)(a) and applicable only to non-greenfields agreements, is that the Commission must be satisfied that the agreement has been “genuinely agreed to” by the employees covered by the agreement. Section 188 defines when employees may be considered to have genuinely agreed to an enterprise agreement as follows:

188  When employees have genuinely agreed to an enterprise agreement

(1) 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.

(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.

[8] The pre-approval step in s 180(5), which is an element of the “genuinely agreed” definition in s 188(1)(a)(i), is expressed as follows:

Terms of the agreement must be explained to employees etc.

(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.

[9] The other agreement approval requirement relevant to this appeal is the “fairly chosen” requirement. This is set out in s 186(3) and (3A) as follows:

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.

[10] If the Commission is not satisfied that a non-greenfields enterprise agreement meets the “genuinely agreed” requirement in s 186(2)(a) or the “fairly chosen” requirement in s 186(3) and (3A), the agreement cannot be approved unless the Commission accepts an undertaking under s 190 that addresses the Commission’s concern about the requirement.

Background circumstances

[11] Rigforce is a labour hire provider to the offshore drilling industry, and trades under that name. It carries the Australian Company Number (ACN) 142 037 198. Rigforce was previously named Interpeople Contracting Services Pty Ltd (ICS). In 2013 ICS, as Rigforce then was, entered into the ICS Enterprise Agreement 2013 (ICS Agreement). Clause 2.1 of the ICS Agreement provides that it covers ICS and its employees engaged to work in drilling rigs in the classifications listed in Appendix A. The classifications, and rates of pay, set out in Appendix A of the ICS Agreement are as follows:

FULL TIME EMPLOYEES

CASUAL EMPLOYEES

[12] The ICS Agreement does not confer upon employees any entitlement to have the above rates of pay increased while the agreement is in operation. Clause 14.4 simply states:

14.4 The Company will review the classification pay scales in Appendix A annually. Upon review, the Company may, at its complete discretion, increase the classification pay scales.

[13] The Form F17 statutory declaration which accompanied ICS’s application for approval of the ICS Agreement was signed by Mr Conor O’Brien, gave his business address as Level 2, Suite 8, 99-10 Frances Street, Northbridge WA, and disclosed that three casual employees voted to approve the ICS Agreement.

[14] In 2015, an entity named RF Managed Services Pty Ltd (RFMS), ACN 144 937 968, entered into the RFMS Enterprise Agreement 2015 (RFMS Agreement). It is not in dispute that RFMS is a related entity of Rigforce/ICS. The nominal expiry date of the RFMS Agreement is 6 August 2019. Clause 2(b) of the RFMS Agreement provides that its “parties” are RFMS and its employees covered in the classifications in the RFMS Agreement. The classifications, and the rates of pay, are contained in Appendix A as follows:

[15] It may be observed that the RFMS Agreement covers the same classifications as the ICS Agreement, and that the rates of pay are significantly lower.

[16] The Form F17 statutory declaration which accompanied RFMS’s application for approval of the RFMS Agreement discloses that the RFMS Agreement was made with three casual employees.

[17] Mr Cain’s statement of evidence disclosed, for relevant purposes, the following matters which occurred after the RFMS Agreement was made:

•  in 2018 the AWU had formed an “Offshore Alliance” (Alliance) with the CFMMEU, and the Alliance commenced a targeted campaign to lift wages and conditions in the offshore drilling sector;

•  the campaign’s objective was to stop a “race to the bottom” in respect of wages and conditions for employees in the sector and deliver AWU-negotiated enterprise agreements with every rig operator and labour hire business;

•  it was identified by the AWU and the CFMMEU that Rigforce had the lowest terms and conditions in the drilling sector via the RFMS Agreement;

•  a decision was made to gear the campaign to the re-negotiation of the RFMS Agreement, and it was intended to start discussions with Rigforce in June 2019 shortly before the nominal expiry date of the RFMS Agreement;

•  the AWU recruited as members about 25 persons in the workforce utilised by Rigforce in the period November 2018 to June 2019, and it engaged in extensive public communications concerning its campaign and intention to seek a replacement agreement with Rigforce;

•  the AWU sent a letter addressed to Martin Flojgaard, the Principal Advisor, Employee and Industrial Relations to “Rigforce Global” dated 25 April 2019, in which it advised that it understood that bargaining for an agreement to replace the RFMS Agreement would soon commence and sought recognition of the AWU as bargaining representative in that process;

•  on the same date the AWU became aware of the Decision approving the RFD Agreement, which it previously had no knowledge of;

•  in an email dated 6 May 2019, Mr Flojgaard (with “Rigforce” above his name) responded by saying that RFMS was not in a position to agree to bargain at that stage, was happy to continue informal discussions with the AWU, and was not in a position to recognise the Alliance at that stage; and

•  Mr Cain had been provided with two employee payslips which showed a change in the employing entity from RFMS (in the pay period 11-24 February 2019) to Rigforce (in the pay period 8-21 April 2019).

[18] The RFD Agreement was made on 5 April 2019. Clause 3.1 of the RFD Agreement provides that it covers Rigforce and employees of Rigforce employed in the classifications contained in the agreement. Annexure A of the RFD Agreement sets out the classifications, and the starting-point rates of pay for those classifications, as follows:

[19] In respect of increases to the above rates of pay, clause 18.3 of the RFD Agreement provides:

18.3 The minimum rates of pay set out in Annexure A - Classification and Pay Scales are subject to annual increase (if any) from 1 July 2020 and for each year thereafter (until the Agreement's nominal expiry date) in accordance with the Australian CPl.

[20] The Form F16 application for approval of the RFD Agreement was signed by Mr O’Brien on behalf of Rigforce. It identified that three employees had acted as their own bargaining representatives. The Form 17 statutory declaration was made by Mr O’Brien as the Managing Director of Rigforce. It can be discerned from the declaration that there were three employees covered by the RFD Agreement at the time it was voted upon (one of whom was a casual employee), and all three voted to approve the agreement. In respect of the steps taken to explain the terms of the agreement, and the effect of those terms, to the relevant employees, Mr O’Brien stated in his declaration as follows:

[21] In respect of what Rigforce did to take into account the particular circumstances and needs of relevant employees in explaining the terms of the agreement and their effect, Mr O’Brien said the following things were done on 6 March 2019 in relation to all relevant employees:

“Each individual employee covered by the Agreement nominated themselves as their bargaining representative.

[22] The explanatory document referred to above (explanatory document), which was annexed to Mr O’Brien’s Form F16 declaration, gave an explanation of various terms of the Agreement in a table with four columns, which were headed “RFD Agreement clause”, “Explanation”, “How does the RFD Agreement change from the ICS Agreement”, and “How does the RFD Agreement differ from the Hydrocarbons (Upstream) Award 2010 (Award)” respectively. In relation to the classifications and rates of pay set out in Annexure A, the statement in the third column of the explanatory document concerning how the RFD Agreement changed from the ICS Agreement relevantly includes the following (underlining added):

“The minimum rates of pay in the RFD Agreement have been increased.

The classification of “Non-Drilling Support Functions” has been renamed to “Drilling Support Functions” for clarity.

The RFD Agreement no longer includes the classification of “Processing and Operations” which was included in the ICS Agreement…”

[23] It is apparent, and Rigforce has conceded, that the underlined part of the statement is incorrect. The hourly and daily rates for permanent employees in all three classifications under the RFD Agreement are lower than the equivalent rates in the ICS Agreement that was entered into in 2013, at least until the first CPI increase is due on 1 July 2020 (and, having regard to the current low rate of inflation, almost certainly not even then for the Drilling Functions classification).

[24] Mr O’Brien’s witness statement gave the following information concerning the explanation of the terms of the RFD Agreement given to relevant employees:

•  the RFD Agreement was with the three employees of Rigforce in the classifications in the agreement at the relevant time, two of whom were permanent employees and one of whom was a casual;

•  on 6 March 2019 Mr O’Brien sent an email to the three employees which attached the explanatory document, and the email contained web links to the ICS Agreement, the Hydrocarbons Industry (Upstream) Award 2010 (Award), and two other recent offshore drilling enterprise agreements entered into by competitors;

•  Mr O’Brien had individual discussions with each of the three employees about the RFD Agreement (one in person, and two by telephone), he went through the agreement with each employee using the explanatory document;

•  each employee was at the time paid significantly in excess of the rates specified in the RFD Agreement, and both the permanent employees raised a concern that their actual rates might be reduced to the rates in the agreement once it was approved;

•  in response, Mr O’Brien said (in substance) that the rates in the RFD Agreement were the minimum rates, and they could be dropped back to them to ensure that Rigforce was able to compete for future work in what was a very competitive market; and

•  Mr O’Brien also said that the rates in the RFD Agreement were higher than for the agreements for the two competitors against which it benchmarked itself, and this is what the rates explanation in the explanatory document was meant to say.

The Decision

[25] The Decision was brief, as is common in the case of uncontested agreement approval applications, and relevant to the matters raised in this appeal only stated that: “I am satisfied that each of the requirements of ss 186, 187 and 188 as are relevant to this application for approval have been met”. 3

Appeal submissions

[26] The AWU submitted generally that the material before the Commissioner disclosed that there were only three employees covered by the RFD Agreement, the employees had appointed themselves as bargaining representatives, discussions about the agreement were held with employees individually and there were no collective meetings, no information was given about what was discussed, information was provided by means of links to the internet, the agreement covered a large number of classifications, and the work under the agreement would be performed in all states and territories. There was no explanation why the agreement only covered Rigforce’s blue collar employees or why it was fair to exclude maritime workers. These matters, it was submitted, should have given rise to concerns and further inquiries about the agreement-making process and whether the coverage of the RFD Agreement was fairly chosen. However the Commissioner only made the “sweeping” finding in paragraph [2] of the Decision and there is no indication that he considered the specific requirements in s 186(2) and (3).

[27] In relation to the “genuinely agreed” ground of appeal, the AWU submitted:

•  the Commissioner could not be satisfied that Rigforce complied with the pre-approval step in s 180(5);

•  in this case the Commissioner needed the information about what the employees had been told in their individual discussions before voting, but no such information was provided;

•  the Commissioner also failed to consider whether there were no other reasonable grounds for believing the agreement had not been agreed to, as required by s 188(1)(c);

•  there were a number of questions that could logically bear upon whether the agreement of the relevant employees was genuine, and there were reasonable grounds to believe that the agreement of the employees was not real or authentic in the sense of the employees having an appreciation of the terms and conditions provided by the enterprise agreement across the range of employees covered;

•  the use of the Rigforce entity to bargain for a new agreement to replace the ICS Agreement rather than bargaining for a new agreement with the much larger workforce employed by the RMFS entity, with the subsequent transfer of at least one employee from RMFS to Rigforce, was indicative of a lack of genuine agreement, particularly as none of this was ever explained to the three employees of Rigforce;

•  the inaccurate information concerning the rates of pay in the explanatory document went to the essence of agreement-making, given that for agreement-covered employees it is the agreement-making process which leads to wage increases; and

•  Rigforce’s reliance on the fact that the three employees were paid rates in excess of those in the RFD Agreement also suggested a lack of genuine agreement, since (as found in KCL Industries 4) they had no stake in the agreement’s rates of pay and their assent to those rates was therefore not authentic.

[28] As to the “fairly chosen” ground, the AWU submitted that the fact that:

•  there were only three employees who made the RFD Agreement;

•  the RFD Agreement had a broad coverage; and

•  the Rigforce business had the bulk of its workforce employed by a different entity under the RFMS Agreement, who were now likely to be moved to employment by Rigforce under the RFD Agreement;

should have raised a “red flag” concerning whether the coverage of the agreement was fairly chosen and led to a broader inquiry into this question. They also indicated that the business rationale for the selection of the coverage of the RFD Agreement was a sham.

[29] Rigforce submitted, in relation to the “genuinely agreed” appeal ground, that:

•  the evidence before the Commissioner showed that the explanation given to the employees by Rigforce was detailed and extensive, in that Rigforce (with the aid of the explanatory document) discussed the RFD Agreement clause by clause and highlighted the differences with both the ICS Agreement and the Award, and also allowed employees to ask questions, answered the questions asked, and provided links to recently-approved agreements entered into by employers operating similar businesses in the industry;

•  the AWU had been unable to identify any reasonable step for the purpose of s 180(5) which should have been, but was not, taken;

•  the fact that the RFD Agreement was made with three employees, each of whom appointed himself as bargaining representative, or that Rigforce met with them individually, could not legitimately give rise to any concern about the genuineness of agreement; and

•  there was no matter identified by the AWU which could properly give rise to any reasonable grounds for believing that the RFD Agreement was not genuinely agreed to for the purposes of s 188(1)(c).

[30] In relation to the incorrect statement concerning the rates of pay in the RFD Agreement compared to the ICS Agreement, Rigforce submitted that an explanation of the terms of an agreement and their effect does not have to be perfect in order to comply with s 180(5), and mistakes and omissions will inevitably occur. The incorrect statement did not give rise to reasonable grounds for believing that the RFD Agreement had not been genuinely agreed to by employees, since it was a “one-word error” which concerned only one aspect of the agreement and was only part of the information provided by Rigforce; Rigforce had responded squarely to the questions of employees about the rates and the employees had still voted for the agreement; the significance of the rates in Annexure A for the employees was diminished because their actual rates of pay were significantly higher; Annexure A was not hard to understand and a link to the ICS Agreement was provided which meant that employees could undertake their own comparison; the employees as bargaining representatives were directly involved in bargaining and therefore could be assumed to have a reasonable understanding of the terms of the agreement they bargained for; and the error was unintentional and would readily have been noticed by the employees. Accordingly there was no basis to conclude that the incorrect statement deceived employees into voting for something they would not otherwise have voted for. In the alternative, Rigforce submitted that the incorrect statement was an error of a “minor procedural or technical nature” which did not disadvantage the employees, and thus the “genuinely agreed” requirement was capable of satisfaction under s 188(2).

[31] In relation to the “fairly chosen” ground of appeal, Rigforce submitted that the AWU had failed to articulate how the Commissioner had erred. There was evidence that the classifications covered by the RFD Agreement were operationally distinct, since it comprised the traditional blue collar roles performed on offshore drilling facilities and was reflective of the coverage in the previous ICS Agreement and the coverage of the Award. The fact that the agreement was made with a small group of employees did not by itself support the conclusion that the coverage was not fairly chosen.

Consideration

The fairly chosen ground

[32] It is convenient to deal with this ground first. We consider that it has insufficient merit to justify the grant of permission to appeal. Although the Commissioner made no explicit finding to this effect, the material before him supported the conclusion that the group of employees covered by the RFD Agreement was at least operationally if not geographically distinct. The RFD Agreement, as we comprehend the position, covers all of Rigforce’s employees who perform “blue collar” functions on offshore drilling platforms, and it is self-evident that such employees would be both operationally and geographically distinct from any onshore employees of Rigforce. The only group of Rigforce employees that the AWU suggested might have been included in the coverage in order to render it fair were maritime (that is, seagoing) employees, but the operational difference between such employees and those covered by the RFD Agreement is equally self-evident. A conclusion that the group of employees covered by an agreement is operationally or geographically distinct favours, but is not determinative of, a conclusion that the coverage of an agreement was fairly chosen. 5

[33] The other relevant factors support the conclusion that the coverage of the RFD was fairly chosen. The coverage is the same (less an obsolete classification) as the predecessor ICS Agreement approved by the Commission (as well as the RFMS Agreement), which assists to explain the business rationale for the choice of coverage. 6 It has a logical relationship with the coverage of the Award. The mere fact that the RFD Agreement was made with only three employees is not of itself demonstrative that the group was not fairly chosen.7 Questions may arise where a small group of employees make an agreement with their employer covering a much wider group in terms of classifications and geography,8 but contrary to the submissions of the AWU, the coverage of the RFD Agreement was not significantly wider than the group of employees who made the agreement. The RFD Agreement only contains three classifications discrete to the business function of off-shore drilling and, as the statement of Mr O’Brien revealed, the three employees who made the agreement are spread across the three classifications. The Australia-wide geographical coverage of the RFD Agreement is more nominal than real, since the areas in which off-shore drilling activity actually occurs are limited.

[34] There is no evidence that the coverage was chosen arbitrarily or in a discriminatory fashion, or in order to manipulate the group of employees of Rigforce who were to participate in the bargaining process. The real complaint of the AWU is that the Rigforce business has changed the corporate entity it uses to employ its workforce and make enterprise agreements in order to avoid bargaining with the substantial portion of its existing workforce, for many of whom the AWU would have been the default bargaining representative. It may be accepted that an inference could be drawn from the available material that this is what has occurred, although we note that Rigforce’s position is that it wished to consolidate its employment in one single corporate entity. However, it seems to us that the “fairly chosen” requirement in s 186(3) and (3A) is concerned with the selection of the group of employees employed by the employer or employers who made the agreement in question, and does not deal with a situation where a group of companies selects (and perhaps manipulates) different employing entities within the group at different times for the purpose of making enterprise agreements and operating as the employer of the relevant part of the workforce. In other words, taking the AWU’s case at its highest, it is not demonstrative of any error in the conclusion that the “fairly chosen” requirement was satisfied.

The genuinely agreed ground

[35] In considering the “genuinely agreed” ground of appeal, it is necessary for reasons which will become apparent to consider in detail only the question of compliance with the pre-approval step in s 180(5). The nature of the requirement in s 180(5) was analysed in detail by the Federal Court (Flick J) in CFMEU v One Key Workforce Pty Ltd. 9 We adopt the summary of that analysis set out in CFMMEU v Ditchfield Mining Services Pty Limited,10 which reduced it to the following four propositions:

(1) whether an employer has complied with the obligation in s 180(5) depends on the circumstances of the case;

(2) the focus of the enquiry whether an employer has complied with s 180(5) is first on the steps taken to comply, and then to consider whether:

•  the steps taken were reasonable in the circumstances; and

•  these were all the reasonable steps that should have been taken in the circumstances;

(3) the object of the reasonable steps that are to be taken is to ensure that the terms of the agreement, and their effect, are explained to relevant employees in a manner that considers their particular circumstances and needs. This requires attention to the content of the explanation given; and

(4) an employer does not fall short of complying with the obligation in s 180(5) of the FW Act merely because an employee does not understand the explanation provided.

[36] Additionally, we also adopt the analysis of Gostencnik DP in BGC Contracting Pty Ltd 11 concerning the nature of a statutory obligation to take “all reasonable steps” as follows (footnote omitted):

“[43] A requirement or obligation to take “all reasonable steps” seems to me to require the identification of the steps a reasonable person would regard as reasonable in the circumstances that apply. Whether particular steps are reasonable will depend on the particular circumstances existing at the time the obligation arises. A requirement to take all reasonable steps does not extend to all steps that are reasonably open in some literal or theoretical sense…”

[37] Leaving aside the issue of the incorrect statement in the explanatory document, to which we will return, we do not accept the AWU’s submission that the information before the Commissioner was insufficient to permit him to form a conclusion concerning compliance with s 180(5). As we have earlier set out, Mr O’Brien’s statutory declaration set out in considerable detail the means by which the terms of the RFD Agreement and their effect was explained to the employees. This was done by means of the explanatory document sent to each employee, which addressed each of the terms in the RFD Agreement and described how they differed from the ICS Agreement and the Award. The explanatory document itself was annexed to the declaration. Mr O’Brien described how he spoke to each individual employee, took them through the explanatory document, and answered any questions which they had. We do consider that it was necessary for the Commissioner to inquire what was said in the individual discussions with each employee, since (leaving aside the error) we consider that it was open to conclude that the provision of the explanatory document itself was sufficient to comply with s 180(5). In any event, Mr O’Brien did give a broad description of what transpired, and this was sufficient in the circumstances.

[38] The position here could not be more different than that applying in the One Key Workforce litigation, where the employer simply asserted in the Form F16 statutory declaration that s 180(5) had been complied with, when in fact the employer had done little more than read out the terms of the agreement the subject of the proceedings to employees. 12 Here, but for the incorrect statement in the explanatory document, it might be said that the approach taken by the employer was a model of its kind.

[39] However that incorrect statement changes the position. The existing minimum pay entitlements of the three employees immediately before they made the RFD Agreement were those contained in the ICS Agreement. Any explanation of the effect of the terms concerning the rates of pay in the RFD Agreement necessarily required the identification of how the pre-existing rates of pay in the ICS Agreement were to be altered by the RFD Agreement. It is a statement of the obvious that rates of pay are, to employees, likely to be the most fundamentally important aspect of an enterprise agreement. That position was no different here merely because the employees at that time were receiving actual rates of pay higher than what was proposed in the RFD Agreement because, as the statement of Mr O’Brien revealed, the employees were concerned about the prospect of their pay rates being reduced in the future to those in the agreement, and Rigforce advised them that this could possibly happen.

[40] In the circumstances, the reasonable step required to be taken by Rigforce for the purpose of s 180(5) was to give an accurate explanation of any change in the quantum of the rates of pay that would be effected if the RFD Agreement displaced the ICS Agreement. This step was all the more necessary because the minimum rates of pay for permanent employees were to be reduced at least until 1 July 2020 if not for longer. 13 Rather than the explanatory document clearly identifying the reduction in rates, it incorrectly conveyed to employees that the rates constituted an increase upon those contained in the ICS Agreement. The explanatory statement said that the minimum rates of pay in the “RFD Agreement have been increased”. The clear import of these words is that the rates in the RFD Agreement had been increased as against the ICS Agreement, not simply that they had been increased from some earlier offer. The statement must be read in the context of the table in the explanatory statement, the relevant column of which was concerned with the question “How does the RFD Agreement change from the ICS Agreement?” The evidence of Mr O’Brien before us does not demonstrate that this error was ever identified to employees let alone corrected. It makes unavailable the conclusion that s 180(5) was complied with.

[41] The error in the explanatory document is identifiable on the face of the materials that were before the Commissioner. No doubt the Commissioner, in the absence of a contradictor, assumed that the content of the explanatory document was accurate and did not examine it sufficiently closely. That is understandable. However, the conclusion that the Decision was attended by appealable error in respect of compliance with s 180(5) is regrettably unavoidable.

[42] In circumstances where there was a failure to comply with s 180(5), it was not jurisdictionally available to the Commissioner to conclude that the “genuinely agreed” approval requirement in s 186(2)(a) was satisfied absent the application of s 188(2), which was clearly not considered by the Commissioner. In those circumstances, we consider it necessary to grant permission to appeal in respect of the “genuinely agreed” ground, uphold the appeal, and quash the Decision.

[43] That makes it unnecessary for us to consider the AWU’s submissions in relation to s 188(1)(c). It is sufficient to say that, leaving aside the question of whether the incorrect statement in the explanatory document might give rise to a “reasonable ground for believing…” under s 188(1)(c), we cannot not identify any arguable ground of appealable error on this score.

[44] Having upheld the appeal, we consider the appropriate and efficient course is to remit the application to approve the RFD Agreement to the Commissioner for re-determination. That re-determination will require consideration to be given as to whether:

(1) the application of s 188(2) is available to overcome Rigforce’s non-compliance with s 180(5); and

(2) the incorrect statement concerning rates of pay in the explanatory document has any consequence for the Commission’s satisfaction or otherwise under s 188(1)(c).

[45] One of the reasons why we consider it more efficient to remit the matter to the Commissioner is that we consider that it may be necessary, among other things, to ascertain the position of the three employees who made the RFD Agreement and who were all bargaining representatives as to the above matters, and to consider any undertakings that the company may wish to offer. As an aside, we observe that this will also provide a continuing opportunity for Rigforce and the AWU to attempt to resolve the larger issues involved in this litigation. If any assistance of the Commission in that endeavour is requested, it will be provided.

Orders

[46] We order as follows:

(1) Time is extended to 1 May 2019 to allow the AWU to lodge its notice of appeal.

(2) Permission to appeal is granted in relation to ground 1 in the AWU’s notice of appeal. Permission to appeal is otherwise refused.

(3) Ground 1 of the appeal is upheld.

(4) The Decision ([2019] FWCA 2332) is quashed.

(5) The application for approval of the RFD Enterprise Agreement 2019 (AG2019/835) is remitted to Commissioner Lee for reconsideration in accordance with the above reasons for decision.

al of the Fair Work Commission with the memeber's signature.

VICE PRESIDENT

Appearances:

A Slevin of counsel on behalf of The Australian Workers' Union

A Pollock of counsel on behalf of Rigforce Pty Ltd t/a Rigforce

Hearing details:

2019.

Melbourne:

25 July.

Printed by authority of the Commonwealth Government Printer

<PR713145>

 1   [2019] FWCA 2332

 2   ALDI Foods Pty Ltd v Shop, Distributive and Allied Employees Association [2017] HCA 53,  270 IR 459 at [34]

 3   [2019] FWCA 2332 at [2]

 4   [2016] FWCFB 3048, 257 IR 266

 5   Aerocare Flight Support Pty Ltd v TWU [2017] FWCFB 5826, 270 IR 385 at [26]

 6   Retail and Fast Food Workers Union Incorporated v Woolworths Group Limited [2019] FWCFB 2355 at [42]

 7   CFMEU v John Holland Pty Ltd [2015] FCAFC 16, 228 FCR 297, 247 IR 55 at [33]

 8   See e.g. KCL Industries [2016] FWCFB 3048, 257 IR 266

 9   [2017] FCA 1266, 270 IR 410 at [94]-[109]; affirmed on appeal: [2018] FCAFC 77, 277 IR 23

 10   [2019] FWCFB 4022 at [64]-[68]

 11   [2018] FWC 1466

 12   [2017] FCA 1266, 270 IR 410 at [99]-[108]

 13   See Diamond Offshore General Company v Baldwin and Ors [2018] FWCFB 6907, 284 IR 1 at [34]-[35] concerning the necessity to identify any reduction in remuneration in order to satisfy s 180(5).