1 [Note: refer to the Federal Court decision dated 4 February 2013 [2013] FCA 139 for result of appeal.] [2012] FWAFB 6302 DECISION Fair Work Act 2009 s.604 - Appeal of decisions National Union of Workers HP DISTRIBUTION PROPRIETARY LIMITED GREENFIELDS AGREEMENT 2011 (C2012/149) SENIOR DEPUTY PRESIDENT DRAKE DEPUTY PRESIDENT McCARTHY COMMISSIONER ROBERTS SYDNEY, 3 OCTOBER 2012 Appeal against decision PR519687 of Commissioner Cambridge at Sydney on 31 January 2011 in matter number AG2011/14309. [1] This is an appeal pursuant to section 604 of the Fair Work Act 2009 (the Act) arising from a decision of Commissioner Cambridge1 by which the Commissioner approved an application pursuant to Section 185 of the Act in relation to the HP Distribution Proprietary Limited Greenfields Agreement 2011 (the Agreement). The Agreement was presented to the Commissioner as a Greenfields Agreement and the Commissioner relied on the materials lodged by the parties in that respect. [2] The parties to the Agreement are HP Distribution Proprietary Limited (HPD) and the Shop, Distributive and Allied Employees’ Association (SDA). As this Agreement was approved as a Greenfields Agreement it does not cover the National Union of Workers, New South Wales Branch (NUWN). [3] Section 604 of the Act is set out below: “(1) A person who is aggrieved by a decision: (a) made by FWA (other than a decision of a Full Bench or the Minimum Wage Panel); or f_p_n_1_ [2012] FWAFB 6302 2 (b) made by the General Manager (including a delegate of the General Manager) under the Fair Work (Registered Organisations) Act 2009; may appeal the decision, with the permission of FWA. (2) Without limiting when FWA may grant permission, FWA must grant permission if FWA is satisfied that it is in the public interest to do so. Note: Subsection (2) does not apply in relation to an application for an unfair dismissal (see section 400). (3) A person may appeal the decision by applying to FWA.” (our emphasis) [4] The principles applicable to an appeal pursuant to section 604 of the Act are: “An appeal under s.604 of the Act may only be pursued with the permission of FWA. This would normally require an appellant to demonstrate an arguable case of appealable error and refer to other considerations which would justify the granting of permission to appeal. Subsection 604(2) requires FWA to grant permission to appeal if it is satisfied that it is in the public interest to do so. Where permission to appeal is granted, the appeal proceeds by way of rehearing, with the powers of the Full Bench being exercisable only if there is error on the part of the primary decision-maker: see Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission.”2 [5] This appeal does not concern whether or not the Agreement passes the Better Off Overall Test (the BOOT). That was conceded. By this appeal the NUWN seeks to correct an error in Commissioner Cambridge's decision. The NUWN submitted that the Commissioner’s error was his finding that the Agreement was a Greenfields Agreement, and that this error arose from the Commissioner not having had all the relevant material before him. The only evidence before the Commissioner on this issue was the affirmative answer provided in the statutory declaration lodged with the application on behalf of HPD. The NUWN submitted that this answer was incorrect and that it went unchallenged because the NUWN did not appear. [6] We decided to hear the parties as to permission to appeal, to give consideration as to whether or not new evidence should be admitted and considered in the appeal, and to consider the Grounds of Appeal. f_p_n_2_ [2012] FWAFB 6302 3 [7] The NUWN Amended Notice of Appeal3 sets out the NUWN’s Grounds of Appeal. These are extracted below: “(a) The learned Commissioner erred in finding the jurisdictional facts required under section 172(2)(b) to have been made out sufficiently under the Fair Work Act 2009 (the Act) to allow approval of the HP Distribution Pty Ltd Greenfields Agreement 2011 (the Agreement). (b) The jurisdictional error and/or error of legal principle arose because the Agreement is not an agreement meeting the description in sections 173(sic)(2)(b)(i) and (ii) (sic) of the Act. The agreement did not meet either or both of those statutory criteria on 9 December 2011 such that it properly met the definition of a ‘greenfields agreement’ as defined in the Act. (c) The learned Commissioner mistook the facts and/or failed to ask himself the correct question in that he did not enquire as to whether the Distribution Centres to be covered by the agreement were in fact ‘new’ or were already in operation, and whether the employer had already engaged or employed persons who would be necessary for the operation of the enterprise and who would be covered by the agreement. (d) The Agreement applies to two distribution centres located at Hoxton Park, Sydney. (e) The National Union of workers, New South Wales Branch (NUWN) represents members who are covered by the Agreement and thus claims it is a ‘person aggrieved’ for the purposes of section 604(2) applying the principles in Tweed Valley Fruit Processors Pty Ltd v Ross and ors (1996) 137 ALR 70. (f) The employer party to the agreement is a company named HP Distribution Pty Limited. It was established on 6 December 2011 and is a wholly owned subsidiary of Woolworths Limited. (g) The agreement was signed by the SDA on 7 December 2011 and by HP Distribution Pty Limited on 9 December 2011. (h) The two distribution centres that are covered by the Agreement were not a ‘genuine new enterprise’ as at 9 December 2011 in that they were both DC’s were already carrying out Distribution functions before 9 December 2011. (i) The work being performed at the two DC’s (largely for Big W and Dick Smith, two wholly owned Woolworths’ businesses) both prior to 9 December 2011 and after 9 December 2011 was existing work being done elsewhere in Australia by or on behalf of Woolworths Limited or its subsidiaries. (j) Some persons who became employees of HP Distribution Pty Limited during January 2012 (and thereafter were covered by the agreement) were working as storepersons at the two DC’s covered by the agreement for some months prior to 9 December 2011. They were, at that time, performing the same work as they are now performing after the approval of the agreement but prior to 31 January 2012 were engaged through a labour hire agency. f_p_n_3_ [2012] FWAFB 6302 4 (k) By virtue of the matters raised in paragraph (j) above the persons referred to therein were already employed for the purposes of section 172(2)(b)(ii) of the Act. (l) In the alternative to paragraph (k) above, HP Distribution Pty Ltd was not an employer at the relevant time for the purposes of section 172(2) of the Act. (m) The decision is plainly unjust in that persons who were working as storepersons at the time of the agreement being made (albeit through labour hire agencies) are now required to work in accordance with employment conditions about which they were not consulted.” [8] Subsection 172(2) is set out below: “(2) An employer, or 2 or more employers that are single interest employers, may make an enterprise agreement (a single-enterprise agreement): (a) with the employees who are employed at the time the agreement is made and who will be covered by the agreement; or (b) with one or more relevant employee organisations if: (i) the agreement relates to a genuine new enterprise that the employer or employers are establishing or propose to establish; and (ii) the employer or employers have not employed any of the persons who will be necessary for the normal conduct of that enterprise and will be covered by the agreement.” [9] The NUWN contends that both Distribution Centres covered by the Agreement were already existing Distribution Centres carrying on distribution functions before 9 December 2011 and that the employer had already engaged or employed persons necessary for the operation and who were proposed to be covered by the Agreement. [10] As an organisation which has members covered by the Agreement, the NUWN claims to be a person aggrieved pursuant to section 604 (2) of the Act, applying the principles in Tweed Valley Fruit Processors Pty Ltd v Ross and ors.4 “......The decision of Commissioner Redmond did not affect AFME/PKIU’s legal interests. But the union had an interest in the decision beyond that of an ordinary member of the public. Its position was much like that of AIMPE in the case heard by Gummow J: it was concerned with the maintenance of members’ conditions of employment, it had participated in the decision complained of by making submissions (pursuant to a statutory right: see s 170NB(2) of the Industrial Relations Act) and the decision was one containing potential for industrial disputation. Having regard to these decisions, and the other authorities discussed by the judges who made them, it seems to us that the formula ‘person aggrieved’ covers the position of AFME/PKIU in this case, unless there is something about this particular statute that indicates otherwise.”5 f_p_n_4_ [2012] FWAFB 6302 5 [11] HPD was established on 6 December 2011. The SDA executed the Agreement on 7 December 2011 and HPD executed the Agreement on 11 December 2011. Commissioner Cambridge approved the Agreement on 31 January 2012 to operate from 7 February 2012 to 31 January 2016. [12] The NUWN contends that there was a deliberate attempt to exclude it, as an organisation with members employed at the relevant site, from the consultative processes and negotiations for the Agreement and that the lodgement of the application as a Greenfields Agreement was undertaken to ensure that it was not required to be notified of the listing or covered by the Agreement. [13] The NUWN alleges that the work being performed at the two Distribution Centres prior to 9 December 2011, and afterwards, was work already being done in Australia by or on behalf of Woolworths Limited and its subsidiaries, and, in some cases, by persons who became employees of HPD in January 2012, and who are therefore covered by the Agreement. These workers were performing work through labour hire agencies, which work was the same work for which they are engaged by HPD in January 2012. [14] Mr Town is employed by Woolworths Limited and his current role is as Logistics Manager Hoxton Park Precinct. Mr Town’s statement6 covered the nature of his role, an overview of that role, the work at the Hoxton Park Precinct prior to 9 December 2011, the movement of stock through the Hoxton Park Precinct, the movement of employees across the Hoxton Park Precinct and a response to the statements lodged by the NUWN. [15] Mr Fernon made the following submission regarding the public interest. “MR FERNON: ------ On the permission question, the commission would direct itself in particular to whether there's any public interest in granting permission. In this respect it's important, in our submission, to look at the terms of the agreement and the effect of what is sought to do in the appeal. In this appeal, there's no suggestion that the terms of the agreement are inferior. The evidence that was before the tribunal on public interest, there was evidence of Mr Pocket in the employer's declaration that the approval of the agreement will lead to employment opportunities in the Hoxton Park area; stimulate the economy; it's consistent with the objects of the Act; doesn't inhibit the right of an employee to be represented by the employee organisation of their choice; the agreement provides f_p_n_5_ [2012] FWAFB 6302 6 significantly better terms and conditions of employment than does the relevant award. There's no challenge to any of those individual matters, all of which in our submission are beneficial matters for employees covered by the agreement. The declaration of the employee organisation was to the effect that the agreement provides certainty of terms and conditions for the employees covered by the agreement, as well as the company. It provides fair wages and conditions, and exceeds the standards of employment in the National Employment Standards in the Storage Services Wholesale Award 2010. That's in paragraph 5. The evidence that was before the tribunal as far as public interest is concerned is demonstrably of matters that are in the public interest, that benefit the employees covered by the agreement, and there's no challenge to those facts at all. On the public interest question, that question which would agitate the commission as to whether to grant permission in the first instance, there's no suggestion of prejudice to any employee that's covered by the agreement. If evidence were to be admitted and if the tribunal were to take that evidence into account on the permission question, the tribunal would also know that there are 150-odd SDA members employed at the site. The NUW evidence is that there are some 30 NUW members at the site. If the tribunal admitted evidence at all, whether on the permission question or generally, the tribunal would not have any evidence of any person expressing dissatisfaction with the terms and conditions that apply. If evidence were admitted on the permission question or the appeal question, the tribunal would learn that there was one member apparently who would have tried for better and would not have voted for the agreement, but the evidence also is - in respect of that employee - that the employee became an employee of HP Distribution after the making of the agreement. When one looks at the fundamental public interest question, whether or not evidence is admitted, the evidence is in our submission all one way that the agreement and the maintenance of the agreement is in the public interest and to appeal the approval of the agreement and to uphold the appeal, would be seriously prejudicial to the employees covered by the agreement.”7 [16] We have considered the matters raised by Mr Fernon, but we are persuaded that there is a weightier issue involving the public interest. A deliberate attempt to exclude an organisation such as the NUWN from negotiations, by either failing to inform it of negotiations or lodging an application as a Greenfields Agreement in doubtful circumstances, and thereby excluding its submissions from the deliberations of this Tribunal, is a very serious allegation. Such conduct might amount to a breach of what we consider is the parties’ positive obligation to provide all relevant materials for the consideration of the Tribunal in its deliberations. We consider that the resolution of this issue is a matter justifying a grant of permission to appeal in the public interest. Was Commissioner Cambridge prevented from having all the material before him necessary to exercise his discretion whilst in full possession of the facts? We have decided to grant permission to appeal and to admit the new evidence f_p_n_6_ [2012] FWAFB 6302 7 sought to be admitted by the NUWN and the evidence provided in response by the SDA and HPD. [17] Having considered the evidence provided by all parties at the appeal, we are satisfied that there was no overt conduct by HPD or the SDA to exclude the NUWN from appearing before the Commissioner and presenting its submissions. Neither HPD nor the SDA brought the listing of this application to the attention of the NUWN. Neither did they provide a copy of the Agreement to the NUWN, although both were aware that the NUWN had members whose conditions of employment would be governed by the Agreement. They were not required to do either of those things if the agreement was a Greenfields Agreement. Although the evidence of Mr Malcolm was that an offer of employment was made to him by HPD and that that offer was brought to the attention of an official of the NUWN, HPD was a brand-new Woolworths Limited subsidiary and that information would not necessarily have alerted an NUWN official to a listing in relation to the Hoxton Park Precinct. What HPD and the SDA did was to proceed very softly. They crept very softly and legally past the sleeping tiger of the NUWN which, on this occasion, did not wake up. We are also satisfied that when HPD’s officer provided an affirmative answer to the question of whether or not HPD was entering into a Greenfields Agreement, in the statutory declaration considered by Commissioner Cambridge, he answered the question honestly on the basis of the facts known to him. [18] Having granted permission to appeal, it is now necessary for this Bench to consider the application for approval of the Agreement. As already indicated, that consideration does not concern whether or not the Agreement passes the BOOT. The issue for our consideration is whether or not HPD’s two Distribution Centres amounted to a Greenfields Site within the meaning of the Act. Was the affirmative answer to this question in the statutory declaration lodged with the application correct? [19] Mr Town described HPD as the "The company now undertaking the logistics business out of Hoxton Park precinct ...”.8 [20] His evidence was that Woolworths Limited and a subsidiary, DSE (Holdings) Proprietary Limited, had been operating a support operation at Shed North of the Hoxton Park Precinct from August 2011 with labour hire staff. f_p_n_7_ [2012] FWAFB 6302 8 “12. Woolworths Limited and/or DSE (Holdings) Pty Limited commenced operating a support operation to the Dick Smith business unit out of a small section of Shed North at the Hoxton Park Precinct from in or about August 2011. The work undertaken was the receipt and distribution of ‘indent’ stock (being goods ordered from overseas). There used to be a small distribution centre operated by DSE (Holdings) Pty Limited in Villawood which distributed ‘indent’ stock for the Dick Smith business unit. The Villawood distribution centre is no longer operating. 13. Woolworths Limited and/or DSE (Holdings) Pty Limited engaged Action Workforce to provide casual labour for this work. None of the labour hire staff provided by Action Workforce were ever employed by Woolworths Limited, DSE (Holdings) Pty Limited or any other member of the Woolworths Group prior to 9 December 2011. 14. The distribution work involved: (a) a contractor called Beechey Carriers ‘de-stuffing’ the containers of stock when they arrived; (b) the agency staff performing ‘put-away’ operations. For example, the staff operated forklifts and put the pallets of stock away in the warehouse; (c) the agency staff retrieving the pallets for on-ward delivery; and (d) on-ward delivery was then undertaken by another contractor, Star Track Express, which was responsible for delivering the stock to stores or individual customers. 15. Initially there were about 8 agency staff performing the above work from the first Monday in August 2011 for about 2 to 3 weeks. One of those agency staff was Robert Malcolm. At the time, the agency staff were undertaking day work. However, the volume of stock started to increase due to the upcoming Christmas period, and so by about October the number of agency staff increased to 15 and there were two shifts. A morning and afternoon shift. After Christmas the number of agency staff engaged decreased significantly.”9 [21] Shed South was commissioned for future work. “16. Various commissioning and testing work was undertaken at the Hoxton Park Precinct prior to 9 December 2011. This work included: (a) completion of the building site and the internal fit out of the buildings, which was undertaken by Mirvac or its subcontractors; (b) automation work, which was undertaken by Dematic as well as 4 agency staff employed by Action Workforce who assisted on the testing and commissioning of the belts and automation in Shed South. One of those agency staff was Eric Williams. The testing and commissioning work undertaken by the agency staff primarily involved them loading products onto and off the belts, and using other equipment in f_p_n_8_ [2012] FWAFB 6302 9 Shed South, to enable tests to be conducted on the systems. The testing and commissioning work was part of the finalisation of the construction and installation phase. The agency staff did not undertake normal distribution work.”10 [22] On balance, on the facts before us, we are persuaded that the HPD Distribution Centres constituted a Greenfields Site. It was a genuine new enterprise within the meaning of ss172(2)(b)(ii) at the time the Agreement was made. [23] We are satisfied that Woolworths Ltd created HPD to operate a distribution business to service a different balance of subsidiaries and its business needs. We are satisfied that the intended client base and the methods of operation were different from that of any existing business and that, for the management of those arrangements, a new business was formed. [24] Permission to appeal is granted. The appeal is dismissed. SENIOR DEPUTY PRESIDENT Appearances: A Joseph Counsel for National Union of Workers J Fernon Senior Counsel for the Shop Distributive and Allied Trades Union G Hatcher Senior Counsel for HP Distribution Pty Ltd Hearing details: 2012 Sydney April 17 f_p_n_9_ [2012] FWAFB 6302 10 Printed by authority of the Commonwealth Government Printer <Price code C, PR527098> 1 PR519687 2 [2012] FWAFB 1891 at [10] Boulton J, Harrison SDP, Deegan C 3 Exhibit NUW 1 4 (1996) 137 ALR 70 5 Ibid at page 91 6 Exhibit HPD 1 7 Transcript PN135 - PN139 8 Exhibit HPD 1 paragraph number 6 9 Exhibit HPD 1 at paras 12 - 15 10 Ibid para 16 f_p_n_10_