Application by Australian Comfort Group Pty Ltd [2016] FWC 2430 (21 April 2016) [2016] FWC 2430 FAIR WORK COMMISSION DECISION Fair Work Act 2009 s.185 —Enterprise agreement Australian Comfort Group Pty Ltd T/A Sleepmaker (AG2015/6830) COMMISSIONER GREGORY MELBOURNE, 21 APRIL 2016 Application for approval of the Sleepmaker (Brisbane) Enterprise Agreement 2015. Introduction [1] An application has been made for approval of an enterprise agreement known as the Sleepmaker (Brisbane) Enterprise Agreement 2015 . The application is made under s.185 of the Fair Work Act 2009 (“the Act”) by the employer, Australian Comfort Group Pty Ltd (“ACG”). [2] After the application was lodged the Queensland/Northern Territory branch of the Construction, Forestry, Mining and Energy Union (“CFMEU”) advised the Commission it wished to be heard in regard to the application. The Commission subsequently convened a teleconference to decide how the application should be progressed, and after consulting with the Applicant’s representative and the CFMEU, directions for filing of submissions and evidence were issued on 15 January 2016. Both parties also agreed that the matter could be determined “on the papers.” [3] The issues raised by the CFMEU include concerns about whether the Agreement was “genuinely agreed,” whether it complies with the requirements of the National Employment Standards and the “better off overall” test, and whether the employees to be covered can be said to have been “fairly chosen.” [4] Mr Dominic Fleeton from Ashurst Australia was given permission to appear on behalf of the Applicant under s.596(2)(a) as the matter involves a degree of complexity and his involvement might enable it to be dealt with more effectively. Ms Roseanne Huskie appeared on behalf the CFMEU. The Issues to be Determined [5] The CFMEU objects to approval of the proposed Agreement on the following grounds: it has not been “genuinely agreed” in accordance with s.186(2)(a) of the Fair Work Act 2009 ; it includes terms that are in breach of s.55 of the Act for the purposes of s.186(2)(c) ; it does not satisfy the requirements of the “better off overall” test, as required by s.186(2)(d) ; and the group of employees to be covered have not been fairly chosen, as required by s.186(3). [6] The Applicant rejects each of these objections and submits the Agreement should be approved. This decision deals with each of the grounds of objection. The Evidence and Submissions ● “The proposed Agreement has not been genuinely agreed to for the purposes of section 186(2)(a) of the FW Act.” [7] The CFMEU raises two issues in regard to the pre-approval steps. The first concerns employees who were on annual leave at the time. It submits ACG did not take any steps to provide a copy of the proposed Agreement to those employees as required by s.180(2), and did not take steps to notify them of the time and place of the vote during the access period, as required by s.180(3). In addition, it submits it did not take any steps to explain the terms of the Agreement to those employees, as required by s.180(5). [8] It accordingly submits the Commission cannot be satisfied the Agreement has been “genuinely agreed” to by the employees to be covered by it, as required by s.188. [9] ACG submits, in response, that the CFMEU has overstated the obligations imposed by s.180, and the obligation is instead only to take “all reasonable steps” to ensure compliance. In its submission this does not require ACG to ensure every employee has, in fact, been informed. It refers to the Full Bench decision in McDonald’s Australia Pty Ltd v Shop, Distributive and Allied Employees Association 1 at [25] in support of this submission. [10] ACG also relies on a witness statement provided by Ms Christine Armstrong, its Manager, People and Culture. She said nine employees were on leave on the day of the vote, but only two of those were absent from work on annual leave during the entire access period. She also said one of those employees informed the business that she was travelling overseas and would not have email or mobile phone access while she was away. Ms Armstrong also said that another employee, who was to be on leave on the day of the vote, asked whether he could attend the site to vote on the day of the ballot, and was told he was welcome to do so. [11] The second issue raised by the CFMEU under this heading relates to s.182(1) of the Act, which provides that the an “agreement is made when a majority of those employees who cast a valid vote approve the Agreement.” It submits that a number of employees who were not entitled to vote, as they were not covered by the proposed Agreement, did vote. [12] The CFMEU relies on three witness statements in support of this submission. Mr Arturo Menon is an Organiser with the Queensland/NT branch of the CFMEU. He said he was on leave on the day of the vote but was told by another Organiser that several salaried Supervisors voted in the ballot. [13] Mr John Tucker is also an Organiser with the State branch of the CFMEU. He said he attended the factory on the day of the vote as an observer, and made repeated requests to have a copy of the roll of eligible voters, but these requests were refused. He also said he saw several employees in orange reflective clothing cast votes in the ballot, and had since been advised these vests are only worn by salaried Supervisors. [14] Mr Andrew Temoho is also an Organiser with the CFMEU in Queensland, and also attended the factory on the day of the vote. His evidence is similar to Mr Tucker in regard to his observations about what he now believes to be salaried Supervisors participating in the vote. He also states he was advised by someone from ACG at the time that 12 employees were not able to vote because they were on leave, and had not been notified about the ballot. [15] The CFMEU also submits a petition has since been signed by more than 50 percent of the employees covered by the Agreement, who state they do not agree with its approval and want a vote taken again. [16] ACG rejects these submissions. It submits it ensured all employees to be covered had the opportunity to vote, and no other employees voted in the ballot. It also submits that as a consequence of the CFMEU’s earlier protected action ballot application it compiled a list of all employees to be covered, and ensured on the day of the ballot each employee who cast a ballot was on that list. [17] It again relies on the evidence of Ms Armstrong in support of these submissions. She stated that prior to the ballot she obtained a list from the payroll office of those employees employed in the classifications covered by the Agreement. She said she reviewed the list and was satisfied it did not include any employees whose positions fell outside of that classification structure. She also said she was asked by Mr Tucker for a copy of the list, but did not provide him with a copy because it included personal information about employees who were not members of the CFMEU. She said she did, however, inform him that 111 employees were eligible to participate in the ballot. [18] She also said that several employees covered by the Supervisor classification in the Agreement did vote in the ballot, but these did not include those in senior salaried positions, such as the Assembly Supervisor and Dispatch Manager, who are not covered by the Agreement because of their management responsibilities. [19] ACG also submits that representatives from the CFMEU were present in the room when the ballot was conducted, and did not raise any concerns at the time about the eligibility of any employees to participate in the ballot. ● “Breaches of section 55 of the Fair Work Act .” [20] The CFMEU submits that various provisions in the proposed Agreement may be in breach of the National Employment Standards. In this context it make reference to sub clause 21.3 dealing with cashing out of Annual Leave; sub clause 22.11 dealing with cashing out of Personal/Carers Leave; and sub clause 26.1, which concerns entitlements to Public Holidays. [21] Without acknowledging that the CFMEU is correct in regard to the submissions that it makes about each of these matters, ACG submits, in response, that it is prepared in each case to provide an undertaking to deal with the issues raised. ● “Better off Overall Test” [22] The CFMEU submits the proposed Agreement contains a classification system that is different from that in the underlying Manufacturing and Associated Industries and Occupations Award 2010 2 . It has concerns about how employees progress between the classifications when the Award provides for progress based on skills and qualifications acquired. It concludes, in summary, “We submit due to the lack of clarity of being able to compare the proposed task classification system with its proposed conditions and the skills based classification outlined in the Award leads to uncertainty as to whether the proposed agreement can in fact satisfy the BOOT.” [23] ACG submits, in response, that the classification system has been in place at the plant in Brisbane for some time, and the CFMEU representatives involved at the site understand how it operates. It also denies that the classification system does not provide for progression based on skills and qualifications acquired. It also submits the CFMEU’s concerns about potential changes in the future are misconceived in that the conduct of the “better off overall” test requires an assessment as at the “test time”. ● “Fairly Chosen” [24] The final issue raised by the CFMEU again deals with the Supervisor classification. It submits that despite the Employer’s Statutory Declaration indicating the proposed Agreement covers production floor and warehouse employees only, the classification structure in Appendix A indicates Supervisors are also covered. [25] The CFMEU submits the Supervisors are salaried employees and the Agreement does not cover them. It also notes the Supervisor classification in the Agreement does not distinguish between Supervisors located “on the floor” and those “in the office.” [26] ACG submits in response that the Supervisor classification is the most senior classification in the Agreement, and those employees work at the shop floor level. It submits these classifications can be distinguished from the more senior salaried positions, which include the Assembly Supervisor and Dispatch Manager. It also submits that the Union did not raise any concerns about the inclusion of the Supervisor classification in the negotiations for the new Agreement. [27] ACG also relies again on the evidence contained in the witness statement of Ms Armstrong, which provides an explanation about the different roles performed by the Supervisor classification covered by the Agreement, and the salaried Supervisor positions. Consideration [28] I now turn to deal with each of the issues raised by the CFMEU in opposing the application. ● “The proposed Agreement has not been genuinely agreed to do the purposes of section 186 (2) (a) of the Act.” [29] It is noted, firstly, that the Employer’s Statutory Declaration provided with the application contains the following explanation about the processes that the CFMEU takes issue with. “COPIES OF THE PROPOSED AGREEMENT AND THE MANUFACTURING AND ASSOCIATED INDUSTRIES AWARD 2010 WERE PROVIDED TO EMPLOYEES FROM THE 10TH NOVEMBER 2015 THROUGH THE 18TH OF NOVEMBER 2015. THE COPIES WERE AVAILABLE IN THE CANTEEN AREAS AND ALSO ON THE NOTICE BOARDS. EMPLOYEES WERE ADVISED THAT EXTRA COPIES WERE ALSO AVAILABLE SHOULD THEY BE REQUIRED DURING TOOLBOX TALKS ON THE 11TH AND 12TH NOVEMBER 2015.” 3 … “A NOTICE WAS PLACED ON THE NOTICE BOARDS ON THE 10TH NOVEMBER 2015 THAT THE VOTE WAS TO BE HELD ON THE 18TH NOVEMBER 2015 IN THE CANTEEN BY SECREAT (sic) BALLOT. EMPLOYEES WERE ALSO REMINDED IN TOOLBOX TALKS HELD ON THE 11TH AND 12TH NOVEMBER AND BY THERE (sic) SUPERVISORS ON THE 17TH AND 18TH NOVEMBER 2015.” 4 … “WE HELD EMPLOYEE COMMUNICATION MEETINGS ON THE 11TH AND 12TH NOVEMBER 2015. IN THESE MEETINGS WE WENT THROUGH THE AGREEMENT CLAUSES AND EXPLAINED THE EFFECT OF THEM FOR THE EMPLOYEE GROUP. THE EMPLOYEES WERE PROVIDED WITH AN OPPORTUNITY TO ASK QUESTIONS AND ALSO ENCOURAGED TO SPEAK TO THE HR MANAGER, SITE MANAGER, SUPERVISORS, EMPLOYEE BARGAINING REPRESENTATIVES IF THEY HAD QUESTIONS DURING AND AFTER THE MEETINGS. THE HR MANAGER HAD FOLLOW UP ONE ON ONE DISCUSSIONS WITH ALL EMPLOYEES WHO ASKED QUESTIONS TO ENSURE THE EMPLOYEES UNDERSTANDING.” 5 … “MEETINGS WERE HELD WITH ALL EMPLOYEES TO BE COVERED BY THE AGREEMENT. ALL EMPLOYEES WERE ADVISED THAT IF THEY NEEDED TO HAVE A ONE ON ONE DISCUSSION TO FURTHER UNDERSTAND THE TERMS OF THE AGREEMENT OR FURTHER ASSISTANCE THEY COULD TALK TO THE HR MANAGER WHO WAS ON SITE AND WOULD ACCESS THE NEED FOR ANY FURTHER ASSISTANCE IF REQUIRED. THE HR MANAGER ALSO HELD FOLLOW-UP DISCUSSIONS WITH EACH EMPLOYEE WHO ASKED ANY QUESTIONS IN RELATION TO THE AGREEMENT TO ENSURE THE EMPLOYEE HAD A GOOD UNDERSTANDING AND WAS SATISFIED AND UNDERSTOOD THE EXPLANATION. ALL EMPLOYEES WERE PROVIDED WITH AN OPPORTUNITY TO ASK QUESTIONS AND ALSO ENCOURAGED TO SPEAK TO THE HR MANAGER, SITE MANAGER, SUPERVISORS, AND EMPLOYEE BARGAINING REPRESENTATIVES IF THEY HAD FURTHER QUESTIONS OR NEEDED ANY CLARIFICATION DURING AND AFTER EACH MEETING AND THROUGHOUT THE ACCESS PERIOD.” 6 [30] I have also had regard to the Full Bench decision in McDonald’s Australia Pty Ltd v Shop, Distributive and Allied Employees’ Association , which dealt on appeal with an earlier decision of a single member, which had rejected the application to approve the Agreement. Both decisions dealt with a range of matters, some of which are also at issue in the present matter. In reviewing the relevant legislative provisions the Full Bench made reference, at the outset, to s.171 which contains the “Objects” of that part of the Act dealing with the making of enterprise agreements. The Full Bench concluded: “In general we believe that the requirements for approval should be considered in a practical, non-technical manner and that reasonable efforts should be made to clarify matters with the parties and consider undertakings to clarify or remedy concerns to the extent that these may be available under s 190 of the Act.” 7 [31] It then continued to consider the application of particular provisions, including those contained in ss.180(3) and (5). It concluded by indicating that the requirement to “take all reasonable steps” is not an absolute one, but instead involves an obligation to do what is reasonable, given the circumstances of the particular matter. In this context the Full Bench stated at [25]: “It does not appear to us that the approach of the Commissioner is consistent with the requirement in s 188 to be satisfied that the employer took reasonable steps to ensure that certain information was provided to employees. The Commissioner has elevated the test to requiring the applicants to establish in a definitive way that all employees were in fact informed of the matters.” 8 [32] The Full Bench also came to the following conclusion at [29] in regard to the appropriate test under s.180(5)(a) when it stated: “The heading and introductory paragraphs of this aspect of the decision express the test as an absolute requirement to ensure particular outcomes are achieved. The section does not establish any such requirement. It requires only that the employer take reasonable steps to ensure that the terms and conditions are explained to employees. In misstating the test the Commissioner erred.” 9 [33] The submissions provided by ACG indicate that two employees were affected in the way the CFMEU contends out of a total workforce of more than 100 employees. It also submits that one of these employees was without email access and had deactivated their mobile phone while on annual leave overseas. [34] I am satisfied that in a situation where, for example, a significant proportion of the workforce were absent from the workplace, for whatever reason, during an access/voting period it could be expected that the requirement to “take reasonable steps” might require those employees to be contacted to ensure that appropriate information was divided to them or, alternatively, for the process to be deferred until they were again present in the workplace. [35] However, I am satisfied these circumstances do not exist in the present matter. A very small proportion of the workforce is impacted in the way the CFMEU contends. In these circumstances I am not satisfied that the legislation imposes an absolute requirement to establish that all employees have, in fact, been advised and informed. [36] I am satisfied instead that the content of the Employer’s Statutory Declaration and the submissions provided in these proceedings establish that ACG has taken “reasonable steps” to comply with the relevant legislative requirements. [37] In addition, I am not satisfied that the evidence and submissions establish that some employees, who are not covered by the proposed agreement, participated in the ballot. The evidence of the CFMEU Organisers, who were present at the time of the ballot, indicates that they saw no reason to raise this issue at that point. I am also satisfied that the submissions and witness evidence provided by ACG provide an explanation about why some Supervisors participated in the ballot, and what steps were taken to ensure that only those employees to be covered by the proposed Agreement voted. ● “Breaches of s.55 of the Fair Work Act ” [38] I simply indicate in regard to this ground of objection that I have decided to deal with the concerns raised by the CFMEU by taking up the offer from ACG to provide undertakings in respect of each of the matters. It is noted in each case that ACG does not acknowledge the validity of the CFMEU’s grounds of objection, and submits that it already intends to comply with the terms in the Agreement in the way the CFMEU proposes. However, given the objections raised by the CFMEU I am satisfied that ACG’s offer to provide undertakings in each case deals with the matter in a way that satisfies the CFMEU’s concerns. ● “Better off overall test” [39] The Commission has reviewed the skills matrix and classifications in Appendix A, which indicates that “Employees will be classified according to their level of competency (based on skills acquired and utilised) as defined below” 10 . It is then continues to detail the various classification levels and skills required at each level. The Appendix also notes that, “Progression will be by way of acquiring and utilising skills through training which will be competency based with clearly defined performance standards.” 11 [40] It is also noted that the wage rates in the Agreement are well above those contained in the underlying Award, being 5.93% above at the “new starter” classification level, with the difference increasing through the various classification levels until it represents a differential of 67.74% above the Award rates at the Supervisor level. ● “Fairly chosen” [41] I am satisfied that the submissions and the witness evidence of Ms Armstrong, in particular, provide confirmation about those Supervisors that are intended to be covered by the proposed Agreement, and are encompassed within its classification structure, and those salaried Supervisors who are not covered. Conclusion [42] I am satisfied, in conclusion, having had regard to the submissions and evidence provided by the parties, that the Agreement can be approved after the undertakings offered by ACG have been provided. I accordingly request that those undertakings be provided within five days of the date of this Decision. Copies should also be provided to the bargaining representatives. I then propose to allow a further period of three days for any bargaining representatives to provide their views about those undertakings. A further decision approving the Agreement will then be issued providing the Commission is satisfied with the terms contained in the undertakings, and any responses provided from the bargaining representatives. COMMISSIONER Appearances : Mr Dominic Fleeton of Ashurst Australia appeared on behalf of the Applicant. Ms Roseanne Huskie appeared on behalf of the Construction, Forestry, Mining and Energy Union. Final written submissions: Submissions and witness statements were received from the CFMEU on 25 January 2016, further signed copies of the statements were later provided on 29 January 2016. Supplementary submissions as well as a witness statement was received from the Applicant on 29 January 2016. 1 [2010] FWAFB 4602 2 MA000010 3 F17 at question 2.4 4 Ibid at question 2.5 5 Ibid at question 2.6 6 Ibid at question 2.7 7 Above n.i at [13] 8 Ibid at [25] 9 Ibid at [29] 10 Proposed Sleepmaker (Brisbane) Enterprise Agreement 2015 at 38.1 11 Ibod at 38.2(b) Printed by authority of the Commonwealth Government Printer <Price code C, PR579171>