1 Fair Work Act 2009 s.185 - Application for approval of a single-enterprise agreement Skilled Workforce Solutions (Nsw) Pty Ltd (AG2024/1255) Coal industry DEPUTY PRESIDENT SLEVIN SYDNEY, 2 OCTOBER 2024 Application to approve the Skilled Workforce Solutions (NSW) Pty Ltd Enterprise Agreement 2023. Applicant failed to take reasonable steps to explain the effect of the Agreement and so the Agreement was not genuinely agreed to by employees – s 186(1)(a). Agreement does not pass the better off overall test in s186(1)(d). Casual production and engineering employees - BOOT considerations. Genuine Agreement where s 206 of the FW Act operates on existing rates. Application dismissed [1] Skilled Workforce Solutions (NSW) Pty Ltd (Skilled) has applied for approval of an enterprise agreement known as the Skilled Workforce Solutions (NSW) Pty Ltd Enterprise Agreement 2023 (the Agreement). The application is made pursuant to s.185 of the Fair Work Act 2009 (the Act). The Agreement is a single enterprise agreement. The Commission must approve the Agreement if satisfied that the requirements in ss 186 and 187 are met. [2] The Mining and Energy Union (MEU) was a bargaining representative for the Agreement. The MEU opposes the application on the basis the Commission cannot be satisfied that the requirements in s 186 are met. [3] Mr Brad Mills was also a bargaining representative for the Agreement. Mr Mills also opposes approval. Mr Mills opposes the approval of the Agreement on a similar grounds to the MEU. [4] A hearing was conducted to deal with the objections. Skilled sought and was granted permission to be represented by counsel. Skilled relied upon an amended form F17A statutory declaration and witness statements of Mike Zoetbrood, Industrial Relations Manager, which provided background to the Agreement, information about the employees covered, analysis of the benefits of the Agreement for employees, and the steps followed in explaining the Agreement and seeking employee agreement. The MEU relied upon a form F18 statutory declaration of Chad Hanson, District Vice President. The declaration set out the objections taken by the MEU to approval. Written and oral submissions were also provided. [2024] FWC 2625 DECISION [2024] FWC 2625 2 Background [5] Skilled provides labour to other businesses. The Agreement covers Skilled and its employees engaged to work at black coal mining sites in the Northern Districts Coal Fields of New South Wales. The modern award covering the black coal mining industry is the Black Coal Mining Industry Award 2020 (BCMIA). [6] The Agreement is described by Mr Zoetbrood as a rollover agreement to replace the Skilled Workforce Solutions (NSW) Pty Ltd Enterprise Agreement 2019 (2019 Agreement). Mr Zoetbrood explained that by roll over agreement he means that the Agreement will not substantially change the terms and conditions of employment for the employees other than providing some enhanced conditions, such as higher rates of pay. [7] Mr Zoetbrood said Skilled conducted votes seeking employee approval for earlier versions of the Agreement in August 2023 and October 2023. Those votes were unsuccessful. After each vote the company enhanced the terms and conditions offered. A third vote in April 2024 resulted in a majority of employees voting to approve the Agreement. [8] Mr Zoetbrood explained the pre-approval steps taken by Skilled commencing on 13 March 2024, when he emailed all employees, thereby initiating the access period for the Agreement. That email: a) Summarised the key changes between the Agreement and the version of the Agreement that was voted down in October 2023. b) Described the key points of the Agreement as including wage increases, and changes to terms dealing with sick/carers’ leave, long service leave, accident pay, agreement term, incorporation of the Award and National Employment Standards (NES), notice for changed rosters, public holidays, superannuation and rates of pay. c) Attached two documents prepared by the ballot agent responsible for conducting the vote, CiVS, that explained the dates the ballot would open and for how long, how a valid vote could be cast, and who could assist them if they had any technical issues in casting their vote. d) Attached an explanatory document that Mr Zoetbrood had prepared explaining the effect of each term of the Agreement, how the term differed to the corresponding term in the 2019 Agreement, and how the term differed to the corresponding Award term. e) Attached a clean version of the Agreement for review. f) Included links to the Award and to the National Employment Standards. g) Invited employees to direct any questions regarding the Agreement to their Site Manager or to Mr Zoetbrood directly. [9] Mr Zoetbrood said he received around 10 queries about the Agreement on the following three topics: a) First, how the pay increase in the Agreement would operate given the Award rates of pay had caught up to the base rates of pay provided for under the 2019 Agreement. He said he responded to those queries by explaining that the Agreement provided for a 14% pay increase to the base rates of pay provided for [2024] FWC 2625 3 in the 2019 Agreement, which resulted in base rates of pay that were nearly 8% higher than the Award. b) Second, how the personal leave payment in the Agreement would operate. He explained that employees would receive payment for personal leave at their flat rate under the terms of the Agreement, rather than their base rate of pay provided for under the terms of the 2019 Agreement. c) Third, the potential application of a Regulated Labour Hire Arrangement Order covering employees following the legislative amendments enacted under the Closing Loopholes reforms to the FW Act. He responded to the employees who asked this question but also prepared an email to be sent to all employees on this topic. [10] The text of the email concerning the Regulated Labour Hire Arrangement Order was provided. It was prepared on 19 March 2024 and circulated to site managers to provide to employees. It was in the following terms: To all SWS EA Employees, Following the Company’s revised Agreement proposal, a number of questions have been raised about the interaction between the proposed new SWS Agreement and the “same job same pay” legislation. The ‘same job same pay’ legislation does not automatically apply to a workplace. An application to the Fair Work Commission (FWC) for a “Regulated Labour Hire Arrangement Order” (“Order”) is first required. This application is made against the Host employer (i.e. BHP or Glencore not SWS who is the Labour Provider) and can be made by the Union (MEU) or affected employees. FWC will make an “Order” if they are satisfied that the labour provider supplies employees to the Host and those employees would be covered by the Host’s agreement (if they were employed by the host). If made, such an “Order” requires the labour hire provider to pay its employees no less on an overall total basis. For example: if the full rate of pay (paid to the Host’s own employees) is $2,000/week then the Labour Hire Provider is obliged to pay no less than $2,000/week to their employees performing the same work. The Labour Hire provider’s own Agreement otherwise continues to apply. The Host’s site Agreement does not apply to the Labour Provider’s employees. Such an “Order” does not come into force before 1 November 2024. In short, the proposed new SWS Agreement cannot override or nullify the “same job same pay” legislation - the proposed new SWS Agreement will not prevent or hinder the MEU from making an application for an “Order” against the Host Employer(s) of your workplace. This email is intended to provide a simple overview of lengthy and complex legislation. [2024] FWC 2625 4 [11] Mr Zoetbrood also explained that site managers held discussions with employees about the Agreement and the ballot in pre-start toolbox meetings during the access period. There was no account of what was said at those meetings. [12] The voting period commenced on 2 April 2024 and concluded on 5 April 2024. At the time of the vote the Agreement covered 946 employees, 220 of whom were engaged as casual employees. Of the 946 employees, 655 cast a valid vote and 470 voted to approve the Agreement. Of the 220 casual employees who would be covered by the Agreement 156 worked during the access period and were afforded the opportunity to vote. Concerns raised [13] A number of concerns have been raised about the Agreement. Initial concerns were raised by the Commission. The MEU also raised concerns. Some of those repeated the concerns raised by the Commission. [14] The MEU submits that the Agreement cannot be approved for the following reasons: a) Casual employees are not better off overall when the casual provisions of the BCMIA are applied to them for the purpose of the better off overall test. b) The Agreement does not provide for payment for a rostered day off falling on a recognised public holiday. c) Clause 19.2 of the Agreement excludes casual employees who are not required to work on a public holiday, which would otherwise have been a working day, receiving their pay for that day. d) The flat payment rates in Appendix A to the Agreement do not align with the rates pursuant to the Agreement. e) Skilled has not taken all reasonable steps to ensure that the Agreement and the effects of the same, were explained to the employees. f) The Agreement was not genuinely agreed to by the employees. Casual Employees [15] The first matter raised by the MEU concerns the issue of how casual production and engineering employees in the black coal mining industry are to be treated in the tests for approval. The issue is not straight forward because the BCMIA does not provide for casual production and engineering employees. The MEU contends that the question is relevant to the test in s 186(2)(a), the genuine agreement test, and s 186(2)(d), the better off overall test (BOOT). Determining the correct test for the purpose of the BOOT may impact on a consideration of whether reasonable steps were taken to explain the effect of the Agreement to casual employees for the purpose of s 180(5). [16] In relation to the BOOT in One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FCAFC 77 (One Key) the Full Court of the Federal Court said this about the way the test in s 186 should be applied in circumstances where an enterprise agreement in the black coal mining industry provides for casual employment for production and engineering employees: [209] The introduction of casual employment for production and engineering employees covered by the BCMIA (whether actual or prospective) was a relevant [2024] FWC 2625 5 consideration that the Commissioner was bound to take into account; it was a step in the process of applying the BOOT. In failing to take it into account, the Commissioner erred in law in a way that affected the exercise of his power. It indicates that he failed to conduct the requisite comparison and so failed to apply himself to the question prescribed by ss 186(2)(d) and 193(1), at least in relation to those employees (as in United Voice v MSS Security Pty Ltd [2016] FCAFC 124; (2016) 153 ALD 200) or, at least, failed to complete his statutory task (as in Htun v Minister for Immigration and Multicultural Affairs (2001) 233 FCR 136 at [42], [44] per Allsop J, with whom Spender and Merkel JJ agreed). Whichever way it is characterised, the error is jurisdictional. [17] The Full Bench of this Commission in CFMMEU v Corestaff NSW Pty Ltd [2019] FWCFB 5916 was asked to consider whether reasonable steps were taken to explain an agreement to casual employees in production and engineering roles if it was not explained to those employees that they would be permanent employees if the BCMIA applied. The matter was decided without the question being determined with the Full Bench noting: [22] Our rejection of the CFMMEU’s construction point is sufficient therefore for us to refuse permission to appeal and dismiss the appeal. It is not necessary for us to proceed to consider further the question of what precisely were the terms and conditions of employment provided for in the 2014 Agreement in respect of casual employees in the black coal mining industry, or whether CoreStaff’s explanation to employees of the 2018 Agreement and the effect of its terms pursuant to s 180(5) comprehended, or needed to comprehend, the legally correct answer to that question. The CFMMEU’s appeal did not proceed beyond the coverage point to raise that question. We would note however the question is not without complexity [18] As can be seen from the cases referred to where an enterprise agreement does provide for production and engineering employees in the black coal mining industry to be engaged on a casual basis determining whether those employees would be better off overall if the agreement applied than the relevant modern award is not straight forward. [19] The relevant provisions in the Agreement concerning casual employees are clause 5.4 of the Agreement which provides: 5.4 Casual Employment 5.4.1 A casual employee is one engaged in accordance with the Company’s casual contract of employment, and as such. 5.4.2 A casual employee shall be engaged by the hour. For each ordinary hour worked, a casual employee shall be entitled to the minimum ordinary rate of pay as prescribed at clause 8.1.1 in this agreement plus 25%. The 25% casual compensates for and is in lieu of leave entitlements (excluding Long Service Leave), except in the case of casual employees in accordance with the NES. 5.4.3 All casual engagements are for a minimum period of four (4) hours each in duration, except where otherwise provided in this Agreement. [2024] FWC 2625 6 5.4.4 The Company recognises that on occasion casual employees may not be available for shifts offered. The Company manages a forecasted roster for our clients and as such requires reasonable notice of any planned unavailability. To ensure minimum disruption to client operations, Casual Employees are encouraged to provide as much notice as possible or at least four (4) weeks’ notice where reasonable. [20] The BCMIA does provide for casual employment, but it does not provide for employees engaged in production and engineering roles to be employed as casuals. The relevant provisions in the BCMIA are; Types of employment 8.1 Employees under this award will be employed in one of the following categories: (a) full-time; (b) part-time; or (c) in the case of classifications in Schedule B —Staff Employees , casual. … 11. Casual employees 11.1 A casual employee must be paid for a minimum of 4 hours on each engagement. 11.2 Casual loading For each ordinary hour worked, a casual employee must be paid: (a) the minimum hourly rate; and (b) a loading of 25% of the minimum hourly rate, for the classification in which they are employed. This rate (inclusive of the 25% loading) is the casual minimum hourly rate. NOTE: The casual loading is payable instead of annual leave, personal/ carer’s leave and paid community service leave entitlements under this award. 11.3 When a casual employee works overtime, they must be paid the overtime rates in clauses 21.2(a) and 21.2(c). 11.4 Offers and requests for casual conversion Offers and requests for conversion from casual employment to full-time or part-time employment are provided for in the NES. NOTE: Disputes about offers and requests for casual conversion under the NES are to be dealt with under clause 32 — Dispute resolution . [21] The treatment of the casual loading provided for in clause 11.2 elsewhere in the BCMIA is regulated by the following terms: a) Clause 2 includes the definition of casual minimum hourly rate means the minimum hourly rate for a casual employee for the employee’s classification [2024] FWC 2625 7 specified in Schedule B —Staff Employees , inclusive of the 25% casual loading set out at clause 11.2 . b) Clause 11.2(b) provides that the loaded rate is the casual minimum hourly rate c) Clause 11.3 provides that when a casual employee works overtime, they must be paid the overtime rates in clauses 21.2(a) and 21.2(c). d) Clause 21.2(a) provides that references to overtime rates being calculated as a percentage of the minimum hourly rate, will for a casual employee be taken to be a reference to the casual minimum hourly rate. e) Clause 21.2(c) that a casual employee working a 6 day or 7 day roster or regularly on weekends will be paid at the rate of 200% of the casual minimum hourly rate for all time worked in excess of, or outside, the ordinary hours of the shift they are working, except on public holidays where the rate is 300% of the casual minimum hourly rate. f) Clause 23.1 provides that all additional penalties for shift work and weekend work as being calculated as a percentage of the casual minimum hourly rate. g) Clause 29.4(c) provides for additional shift penalties for work on public holidays to be calculated as a percentage of the casual minimum hourly rate. h) The tables in Schedule B of the Award which describe the treatment of all penalties as a % of the casual minimum rate. [22] The parties take different views of how I should deal with the casual issue. Skilled contends that as the BCMIA does not apply to casual production and engineering employees there is no relevant Award comparator and so the BOOT cannot be applied. The MEU contends that the correct approach to making the comparison is to apply clause 11 of the Award, which does deal with casual employees, albeit not production and engineering employees, as if it applied to production and engineering employees. I will deal with the MEU contention first. [23] The MEU approach requires the BOOT comparison under s 193(1) to be done on the basis that the Commission must be satisfied that the production and engineering casual employees would be better off under the Agreement had the casual provisions in the BCMIA applied to them. If this were the case, then, it is argued, the test would involve comparing the casual provisions in the Agreement to the casual provisions in the BCMIA. A significant difference is that the 25 % casual loading in the Agreement only applies to the minimum hourly rate for ordinary hours worked while the 25% loading in the BCMIA is applied for all purposes. The casual minimum rate in the BCMIA is the 125% rate which is used as the basis for the calculation of all overtime, penalties and shift loadings. Taking that approach the casual employees are not better off overall under the Agreement. [24] The MEU submissions in support of its proposition commence with the decision of the Full Federal Court of Australia in Health Services Union v Catering Industries (NSW) Pty Ltd [2023] FCAFC 82 (HSU). The Full Court set out the relevant provisions of the Act concerning application, coverage and operation of modern awards at [19]. The MEU submission is that, consistent with the Court’s analysis, the BCMIA may cover but it does not apply to the employment of Skilled’s casual employees in production and engineering classifications. The BCMIA does not apply because the 2019 Agreement applies to the exclusion of the BCMIA (because of the operation of s 57 of the Act). The consequence of this is that the comparison in not between benefits that do apply under the Award to benefits that will apply if the Agreement is approved. Instead, what is required is a hypothetical consideration of what the affected employees would be paid if the BCMIA did apply. [2024] FWC 2625 8 [25] So much was accepted by the Full Bench in CFMEU v SESLS Industrial Pty Ltd [2017] FWCFB 3659 (SESLS) which considered the question of how the BOOT should be applied to an enterprise agreement to casual employees in production and engineering roles in an enterprise agreement in black coal mining industry. It is worth setting out the passages of that decision that considered the issue. The Full Bench in SESLS said at [34] – [39]: [34] If a prospective casual production or engineering employee were employed under the Award, such an employee would fall within the coverage provision in clause 4 of the Award. The employer would evidently be in breach of the limitation on casual employment in clause 10.1 – it is only ‘in the case of classifications in Schedule B – Staff Employees’ that casual employment can be used. However, this does not necessarily mean that the casual employee would not be covered by the award. [35] Returning again to the wording of s193(1), the next question is whether this employee would be better off overall if the agreement applied to him or her than if the relevant modern award applied. Section 47 of the Act explains when an award applies to an employee, namely if the award covers the employee, is in operation, and no other provision of the Act has the effect that the award does not apply (for example, by virtue of an agreement applying to the person). It appears then that the Award could apply to a prospective casual production employee. The above suggests that, at least on one analysis, the BOOT could be conducted in relation to a prospective award covered casual employee [36] The BOOT, in relation to prospective employees, addresses a hypothetical scenario. It is established for the purposes of comparing the position of the notional employee under the agreement on the one hand and the award on the other. The hypothetical scenario is a construct. It does not require that one work backwards to construct a realistic narrative about the employer’s hypothetical decision to engage an employee either under the award or the agreement. [37] Against this, it could be contended that, because of the limitation on the use of casual employment for production and engineering employees in the Award, the prospective casual employees is not covered by the Award. On this argument, the question of coverage is defined not simply by the ‘coverage clause’, but by the terms of the Award as a whole. The presence of a prohibition on the use of casual employment should inform the construction of award in relation to the question of whom it covers. However, if this argument is correct, the consequence is that the casual employee is not covered by the Award at all, and the BOOT test cannot be undertaken. [38] The union’s position is that the BOOT test can be undertaken, and that the appropriate comparator is the position of a full time or part time employee under the Award. This may seem reasonable. But is it right? We have some difficulty in identifying how the analysis of s193 leads to this outcome. Perhaps the hypothetical scenario requires a reasonable accommodation to be made of the practical circumstances that might underpin the hypothesis, and that such an accommodation could go so far as to assume that the employee had been employed on some other lawful basis under the Award – that one compare casuals under the agreement with whatever is possible under the award. [39] We were not addressed on these issues at hearing. Given the conclusions we have reached further below, it is not necessary for us to decide them. We proceed to consider the union’s contentions in relation to the BOOT assuming (but not necessarily accepting) that the BOOT test for prospective casual employees requires a [2024] FWC 2625 9 comparison between casual employment under the Agreement and part-time or full- time employment under the Award. [26] The award clauses have been renumbered since SESLS was decided and the reference in [34] of the Full Bench decision to clause 10.1 is now clause is 8.1. The MEU, at the time SESLS was decided, was a Division of the CFMEU and was relevantly the union referred to by the Full Bench. The union in this matter does not take the same approach it took in SESLS. Be that as it may, the MEU submits that the “reasonable accommodation to be made of the practical circumstances that might underpin the hypothesis” for the purpose of applying the BOOT must be, as postulated by the Full Bench at [35], that the terms and conditions afforded to casual production and engineering employees covered by the Agreement are compared to the terms and conditions afforded to those employees who may be employed as causals under the BCMIA. [27] I do not accept that it must follow that the casual provisions in the Award must be the source of comparison. The Full Bench suggested three ways the omission of a category of casual production and engineering employee in the Award might be accommodated for the purpose of the BOOT. At [38] the Full Bench determined to apply the approach urged by the union in that case of making an assumption that the notional casual employee may still be employed under the Award on some other basis. It follows, as the Full Bench suggested, that a basis upon which the employee could be engaged was as a part-time or full-time employee. Consequently, one way of dealing with the test in s190(1) is to compare the terms and conditions afforded by the enterprise agreement to casual employees with the terms and conditions the employee would be afforded by the BCMIA if employed as a part time or full time employee. [28] The Full Bench in CFMEU v SRSW Pty Ltd t/a Stellar Recruitment [2020] FWCFB 2052 (SRSW), also considered the application of the BOOT to casual production and engineering employees in the black coal mining industry, again without determining the matter, the Full Bench took the same approach as the Full Bench in SESLS1. The same approach was taken by the Full Bench in CFMMEU v Mobilise Group Pty Ltd [2021] FWCFB 552 at [50]. [29] There have been a number of single member decision of this Commission where the same approach was taken. Commissioner Roe did so in Re Site Fleet Services Pty Ltd [2017] FWC 2163. As did Deputy President Saunders in Application by CoreStaff NSW Pty Ltd T/A CoreStaff NSW [2019] FWCA 4403 and Ipsum Mining Pty Ltd [2021] FWCA 3672. In Re Falcon Mining Enterprise Agreement 2021 [2021] FWC 6424 Deputy President Colman postulated that the employees might be regarded as award free but ultimately took the same approach as the Full Bench in SESLS. [30] I am not convinced by the MEU’s submission that the approach to be taken is the approach described at [35] of SESLS. I can see no reason to depart from the approach ultimately taken in SESLS which is also the approach taken in a number of decisions of the Commission where this issue has arisen. I do so because, as will be seen, I believe the better hypothesis is that if the Award did apply then it would operate such that production and engineering employees would be characterised as part-time or full-time employees and thus be entitled to the terms and conditions applicable to those categories of employees. That does not mean that the manner in which casual staff employees are treated in other classifications is not relevant. I deal with that later. [2024] FWC 2625 10 [31] I am equally not convinced by Skilled’s submissions that I take a different approach to the Full Bench’s approach in SESLS. Skilled submits that the correct approach is that there is no comparator for a casual production worker under the Agreement because there is no such thing as a casual production worker under the Award. It contends that for BOOT purposes, casual production workers are to be considered award free. In those circumstances, Skilled reasons, the BOOT should be applied on the basis that the employees are award free. Skilled referred to this as the approach that Deputy President Colman posited in Re Falcon Mining Enterprise Agreement 2021 [2021] FWC 6424 at [23] where the Deputy President, after setting out paragraphs [38] and [39] from SESLS, said: [23] As will be apparent from these passages, the Full Bench did not determine that the appropriate comparator for a casual production worker under a black coal industry enterprise agreement should necessarily be that of a permanent employee under the Award. Rather, it proceeded on the assumption that this was the case without deciding the matter, and compared the benefits afforded to casuals under the agreement with the entitlements of the same classifications of employees employed on a permanent basis under the Award. Another possible application of the BOOT in such circumstances is that there simply is no comparator, because there is no such thing as a casual production worker under the Award, and the situation is analogous, for BOOT purposes, to an employee who is award free. In this regard, unlike the framework that applied under the Workplace Relations Act 1996, the Act makes no provision for the designation of an award for benchmarking enterprise agreements for employees who are not covered by an award. Nevertheless, I propose to proceed in the same manner as the Full Bench in SESLS and assume, without deciding, that the CFMMEU’s proposed Award comparator for BOOT purposes is correct. [32] Skilled acknowledged that the Deputy President ultimately did not decide the matter, concluding that the relevant enterprise agreement satisfied the BOOT, adopting the full time or part time employee under the Award as the relevant comparator. [33] The starting point of Skilled’s submission is that casual production and engineering employees are not covered by the BCMIA because they are not caught by the coverage clauses in the award. I do not accept the submission. [34] Clause 4 of the BCMIA relevantly reads: 4. Coverage 4.1 This award covers: (a) employers of coal mining employees as defined in clause 4.1(b) ; and (b) coal mining employees. Coal mining employees are: (i) employees who are employed in the black coal mining industry by an employer engaged in the black coal mining industry, whose duties are directly connected with the day to day operation of a black coal mine and who are employed in [2024] FWC 2625 11 a classification or class of work in Schedule A —Production and Engineering Employees or Schedule B —Staff Employees of this award; (ii) employees who are employed in the black coal mining industry, whose duties are carried out at or about a place where black coal is mined and are directly connected with the day to day operation of a black coal mine and who are employed in a classification or class of work in Schedule A —Production and Engineering Employees or Schedule B —Staff Employees of this award; and (iii) employees employed by a mines rescue service. [35] Skilled submits that the words “and who are employed in a classification or class of work in Schedule A —Production and Engineering Employees or Schedule B —Staff Employees of this award” must be read with clauses 8, 12 and Schedules A and B of the award. Clause 8 is set out earlier. It has the effect that production and engineering employees cannot be employed as casual employees. Clause 12 relevantly provides: 12. Classifications 12.1 The classifications in which employees may be employed are set out in the following schedules: (a) Schedule A —Production and Engineering Employees; and (b) Schedule B —Staff Employees. [36] Schedule A provides: A.1 Preamble and principles A.1.1 The classification structure in this award determines the minimum weekly rates payable to employees whose employment is subject to this award. A.1.2 The structure is a single stream structure, which does not contain any demarcations relating to the performance of work. It allows for a list of minesite competencies to be developed. Each mine’s indicative competencies will use as a guide the competency standards contained in the Coal Industry Training Package. A.1.3 The definitions for each of the classification levels are necessarily general and intended to cover the types of work actually performed under this award. To eliminate doubt, the work performed by the employee, the assessment of the employee against minesite standards and, in relevant cases, the appointment of an employee to a particular classification by the employer, are the only relevant matters that determine an employee’s entitlement to wages pursuant to clause A.1 . A.1.4 The employer will make available to employees at a minesite the following: (a) the classification that will be occupied by employees whose employment is subject to this award; and (b) the requirements each employee must meet to occupy those classifications. A.1.5 Whenever an employer alters the requirements that an employee must hold, to occupy a classification, the altered requirements will be published at the minesite. [2024] FWC 2625 12 NOTE: A proposal to alter such requirements will typically be subject to the consultation obligations in clause 30 — Consultation about major workplace change of this award. [37] It goes on at A.2 to define classifications commencing at Mineworker – Induction Level 1 to Mineworker – Specialised. At A. 3 the requirements for employees to advance through the classification structure are set out. At A.4 the minimum rates of pay are set out. A.6 deals with Apprentices. A.7 deals with junior employees. A.8 sets the wage related allowances and reimbursements. [38] Schedule B deals with staff employees. Schedule B defines and sets rates for a range of classifications of employees who perform managerial and clerical type work and includes references to specific job titles such as assistant undermanager, production supervisor, open- cut overseer, engineers. chemists, laboratory technician, paymaster, surveyors, training officers, trainees, clerks and storepersons. The rates of pay are set by grouping different classifications by reference to job title from Group A to Group M. The schedule also sets junior rates and graduate rates and provides for wage related allowances and reimbursements. [39] Skilled’s contention is that reading the expression “and who are employed in a classification or class of work in Schedule A —Production and Engineering Employees or Schedule B —Staff Employees of this award” in clause 4, the coverage clause, with clauses 8, 12, Schedule A, and B leads to the conclusion that the Award does not cover person employed as casual production and engineering employees. I do not accept the submission. [40] Section 48 of the FW Act provides that a modern award covers an employee if the award is expressed to cover the employee. Consequently, coverage of the BCMIA will depend on the correct construction of its terms. The correct approach to construing awards is well settled. It was stated succinctly by the Full Federal Court of Australia in Transport Workers' Union of Australia v Coles Supermarkets Australia Pty Ltd [2014] FCAFC 148; 245 IR 449 The test that should be applied is to discern the objective meaning of the words used bearing in mind the context in which they appear and the purpose they are intended to serve. The construction of an industrial instrument depends on its language, understood in light of its industrial context and purpose [41] Applying that approach to the coverage provisions of the BCMIA I consider that the Award covers all production and engineering employees because they are employed to perform work in a classification in Schedule A —Production and Engineering Employees. I do not read clause 4 as being confined to only part-time and full-time employees. Clause 8 does not deal with the coverage of the award. It regulates the types of employment permitted by the award. It uses the expression categories of employment as distinct from classifications, which is used in clause 4 to delineate coverage. The classification of the employees covered by the Award are determined by reference to the schedules. So much is confirmed by clause 12. For production and engineering employees this involves a consideration of the classification structure in Schedule A. If the work the employee performs is described in Schedule A then the employee is covered by the Award. [42] Clause 8 has no work to do in this exercise. Clause 8 has work to do to delineate how the employment may be characterised for the purpose of the terms and conditions afforded by the Award to the employment. Clause 8 operates so that production and engineering [2024] FWC 2625 13 employees as described in Schedule A may only be engaged in the categories of part-time or full-time and their terms and conditions will be determined accordingly. To find otherwise would be to undermine the operation of the Award and make it possible for employers in the industry to avoid the regulation of the Award by engaging production and engineering employees as casual employees and then claim that as they are so engaged they are not entitled to the entitlements in the Award. This cannot be the intention and it would be contrary to the purpose of having an award which is evident in a number of provisions in the Act including the object at s 3 (b) to ensure a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through awards. Similarly the purpose of awards is to provide minimum terms and conditions for employees for particular industries (s 5(4)). The modern award objective in s 134(1) also requires the Commission ensure that modern awards, together with the National Employment Standards (NES), provide a fair and relevant minimum safety net of terms and conditions. The modern award objective includes at 134(1)(g) the need to ensure a simple, easy to understand, stable and sustainable modern award system. [43] Accepting a construction that would allow employers in the black coal mining industry to avoid the regulatory force of the BCMIA by engaging production and engineering employees as casuals would run counter to the statutory purpose of modern awards. [44] Neither the MEU nor Skilled has convinced me that I should depart from the approach taken in earlier cases that the terms and conditions afforded to casual production and engineering employees must be compared to the terms and conditions in the BCMIA that apply to part-time and full-time employees. [45] I regard this approach as correct because if an employee is engaged in the black coal mining industry in a production and engineering role, there is no doubt they are covered by the Award. The Award requires that such an employee be characterised as part-time or full- time. Which is to say if the BCMIA applied to the employee, then it could only apply such that the employee was a part-time or full-time employee. Consequently, the relevant modern award is the BCMIA and if it applied then the relevant employees would be afforded the terms and conditions of a part-time or full-time employee. Better off overall test [46] Section 186(2)(d) requires the Commission be satisfied the Agreement passes the BOOT. The test is found in s 193 of the Act and it is to be applied in accordance with s 193A. Under s 193 the Commission must be satisfied, as at the time the application for approval was made, that each award covered employee, and each reasonably foreseeable employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied. In applying the test, the Commission is required by s.193A to make a global assessment of whether each employee would be better off having regard to the terms of the agreement which would be more beneficial than the award and the terms which would be less beneficial. In making that assessment, the Commission may have regard to the patterns of work that are reasonably foreseeable at the time of the application. [47] I will approach the test in s 193 for casual production and engineering employees by assessing whether the employees would be better off if the casual provisions in the Agreement applied to them than if the provisions relevant to part-time and full time employees applied. That assessment will be a global assessment as required by s. 193A having regard to the terms [2024] FWC 2625 14 of the Agreement which would be more beneficial to the employees if the Agreement applied and the terms that would be less beneficial. [48] Skilled submits that casual production and engineering employees under the proposed enterprise agreement are better off overall when compared to a permanent award-covered production and engineering employees as the minimum base rates of pay for casual Mineworkers under the 2023 Enterprise Agreement are approximately 8% higher than the equivalent Award classification rates for permanent award-covered production and engineering employees and they receive a 25% loading. The Agreement also contains either the same or superior loadings and penalty rates as the Award. For example, the Award provides loadings of 50% and 72.5% for the first 4 hours of work on a Saturday for day and night shift respectively. The Agreement provides for 100% and 130% loadings for all hours on day and night Saturday work. Accordingly, there are no inferior loadings/penalty rates and the hourly base rates are significantly higher than the equivalent Award rates. [49] There are a number of matters to consider. [50] When dealing with casual production and engineering employees, a key question is whether the 25% loading in the Agreement is sufficient to compensate the employees for the loss of the part time or full time entitlements they would otherwise have as permanent employees under the BCMIA. This question also gives rise to some complexity. [51] The Full Federal Court in One Key2 referred to the decision of Commissioner Roe in Re Site Fleet Services Pty Ltd [2017] FWC 2163 as an indication of how the test might be applied. The Commissioner said at [30](b): The Agreement provides for casual employment in the black coal industry which is not provided for in the Award. I am not satisfied that simply providing the 25% loading is sufficient to compensate for this disadvantage. Of course there is nothing to stop an Agreement meeting the BOOT which includes casual employment in this industry but I consider that the rates or the other benefits would need to be greater than the 25% compensation which is regarded as sufficient in Awards that provide for casual employment. [52] In making that same assessment, the Full Bench in SESLS3 and SRSW4 said, the existence of the 25% casual loading in the Award for staff employees is a matter to be taken into account for BOOT purposes. The loading in the BCMIA, is an indication of what might be regarded as adequate compensation. However, in SESLS, without considering the matter for itself, the Full Bench considered that the finding at first instance that a 25 % loading in the Agreement was sufficient did not amount to appealable error5. In another case Deputy President Colman in Application by Falcon Mining Pty Ltd T/A Falcon Mining [2021] FWC 6424 was satisfied that the 25 % loading in that case was sufficient compensation. My view is that the test will depend on the terms of the Agreement being considered and a relevant consideration will be how any loading will apply. [53] In the Agreement here, the relevant terms are Clause 5.4 which refers to casual employees being engaged in accordance with the company’s casual contract of employment. I was not provided with the contract. The clause goes on to state that casual employees are engaged by the hour. The Agreement also states that the casual employees’ minimum ordinary rate will be the minimum rate in the Agreement for permanent employees plus 25%. [2024] FWC 2625 15 This is said to compensate for and is in lieu of leave entitlements (excluding Long Service Leave). The clause also sets the minimum engagement for casual employees as 4 hours, except where otherwise provided in the Agreement. [54] Clause 13 of the Agreement deals with wages. It reads: 13. WAGES FOR CASUAL EMPLOYEES 13.1 Casual Employees will be paid the rate for their classification in Clause 8 of this agreement plus a casual loading of 25% for working ordinary hours (except in the case of the flat hourly pay rates where the casual loading has already been factored in). The 25% casual loading is in lieu of annual and paid personal/carer's leave, notice of termination and redundancy payments. Other loadings, shift, overtime, weekend, public holiday and penalty rates shall be in addition to the relevant base hourly rate of pay for their classification in Clause 8.1.1 of this agreement. 13.2 Casual Employees will be engaged by the hour with a minimum engagement of 4 hours on each occasion. 13.3 During the life of this Agreement casual wages and loading will not fall below those set out in the Award [55] Two things are made clear about the 25% loading by clause 13.1: First it is to compensate for annual and paid personal/carer's leave, notice of termination and redundancy payments. Second it only applies to ordinary hours worked. As will be seen, when the rates of pay are calculated the loading goes onto the ordinary hour components of a shift. It is not cumulative. That is, overtime and other penalties are calculated on the hourly rate without the 25% loading included. This is different to the approach the BCMIA takes. I will return to this. [56] Other clauses of the Agreement exclude casuals from the following benefits: a) 6 month probationary period (clause 5.5.2) b) Notice of termination (clause 6.1). c) Redundancy pay (clause 6.3) d) Payment for a full shift when stood down due to adverse weather - although payment of 4 hour minimum will be paid (clause 14.7 and 22.2.2) e) Public holiday pay (clause 19.2) f) Annual Leave (clause 20.1) g) Paid Personal/carers’ leave (clause 23.1) h) Redundancy benefits (cl 41.1) [57] If the BCMIA applied, the employees would be entitled to the benefits applying to permanent employees. The relevant BCMIA provisions for permanent employees that would otherwise apply to the employees who are casual under the Agreement are6: i) Ordinary hours of 35 per week for full time employees (clause 14). j) Part time ordinary hours are less than 35 per week and are agreed in writing with a regular pattern of work specified (clause 10). k) Rostering arrangements are subject to the following rules: i. Shifts may be no longer than 10 hours unless agreed. [2024] FWC 2625 16 ii. Where shifts are longer than 10 hours start and finish times are subject to agreement. iii. Start and finish places are to be agreed. iv. Consultation is to occur and notice given in the event of a roster change. v. Where rostered days off apply then notice and other rules protecting employees apply. (clause 15) l) The penalties in clauses 21 and 22 of the BCMIA. Clause 21 provides for overtime penalties which range from time and a half of the ordinary rate of pay for the first three hours of work in excess of or outside ordinary hours on Monday to Saturday to triple time for overtime worked on a public holiday by employees on 6 or 7 day rosters or who regularly work on weekends. Clause provides for shiftwork penalties. The penalties apply to ordinary hours worked and range from 15% for afternoon or rotating shifts on Monday to Friday to 150% for permanent night shift. m) Annual leave in clause 24 which supplements the NES entitlement and provides industry specific entitlements. Employees are entitled to a minimum of 5 weeks annual leave. An additional week applies to 7 day roster employees or employees who work ordinary hours on public holidays and Sundays. Annual leave is accrued weekly. An annual leave loading of 20% on the ordinary rate of pay or an employee’s earnings including rostered overtime and rostered public holidays whichever is greater. Accrued annual leave of more than 4 weeks may be cashed out by written agreement. n) Personal/carer’s leave in clause 25 which supplements the NES entitlement and provides for 105 hours leave per annum, 15 days at 7 ordinary hours per day. Clause 29 provides for public holidays. Work on a public holiday is paid at double time and work and overtime on a public holiday is paid at triple time. Additional shift penalties and overtime penalties for 6 or 7 day also apply on public holidays. o) Termination of employment entitlements which are dealt with in clause 33 which also supplements the NES entitlement. Where termination is for reason of redundancy the notice period is a minimum of 4 weeks with an additional week for employees over 45 years of age. On termination of employment employees are to be paid their accrued annual leave and personal/carer’s leave. An industry specific redundancy scheme applies with entitlement to one week’s severance pay for each year of service and retrenchment pay of 2 weeks per year of service. The latter is capped at 30 weeks pay. [58] The other matter arising from the terms of the BCMIA is the way the casual loading for staff employees applies. The provisions have been set out earlier. The casual loading is cumulative. The 25% is applied to the minimum hourly award rate to create a casual minimum hourly rate and the casual minimum hourly rate is used as the starting put for the calculation of all other penalties. The BCMIA casual loading applies for all purposes and is cumulative. These provisions do not apply to production and engineering employees but they give an indication of how the Award compensates these employees for the loss of permanent entitlements. [2024] FWC 2625 17 [59] Applying these matters to the BOOT and starting with the rates of pay and the application of the 25% loading under the Agreement, clause 8 of the Agreement deals with rates of pay. The ordinarily hourly rate in clause 8.1 is expressed as base rates for permanents and sets casual base rates which are 25% above the permanent rate. Clause 8.3 deals with flat rates of pay. Flat rates of pay are calculated on specific roster patterns. Skilled explained that the flat rates of pay are calculated using the loadings and penalty rates set out in the Agreement (which are equal to or better than the Award) on a base rate of pay which is higher than the Award base rate for the equivalent classification. The base rates for the most common rasters worked by employees are found in Appendix A. [60] Appendix A comprises tables which provide rates of pay including the breakdown of the applicable penalty rates and loadings for particular roster types. The Company also provided flat rate and earnings calculation spreadsheets for both the Agreement and Award to demonstrate that the flat rates exceed the earnings under the Award. On those figures for permanent employees the flat rates in the Agreement are higher than the rates that would be under the Award for working the rosters described in the appendix. For example, the flat hourly rate for a Mineworker Level 3 working a rotating even time roster on 12.5 hour shifts, the Agreement provides a base rate of $32.52 per hour and once all penalties associated with the roster are included the flat or loaded rate is $51.87 per hour. The BCMIA base rate for a Mineworker Level 3 is $30.17 and when applicable award loadings and penalties are included for the same roster the award flat or loaded rate would be $47.38. The flat rate is calculated by taking the total amount paid including penalties and overtime over a roster cycle and dividing it by the hours required to be work on that roster. [61] The tables included calculations for casual employees. For casuals when calculating the total amount to be paid the penalties and overtime were applied such that while the minimum rates of pay were given a 25% loading for ordinary hours, payment for work attracting other penalty rates did not include the 25% loading. The table in Appendix A setting out flat rates of pay for a Mineworker Level 3 working a rotating even time roster on 12.5 hour shifts provides an example. It is as follows: Appendix A – Flat Rates of Pay Mineworker Level 3 - rotating Even time roster – 12.5 hour shifts • 35 ordinary hours per week averaged over roster cycle. • 4 week roster cycle (4 x 35 = 140 ordinary hours). • 14 shifts per 4 week cycle = 10 ordinary hours per shift. • 2.5 hours rostered overtime per shift. [2024] FWC 2625 18 Note: the Award ‘additional shift allowance – open cut’ is included in the night shift loading [62] The day shift hourly rate in the Agreement for permanent employees is $32.52 and for casual employees it is 125% of that rate or $40.65. To calculate the Saturday and Sunday ordinary hour rate for casuals under the Agreement the $40.65 rate (125% of the permanent employee rate) is applied to each hour plus the weekend penalty rate of a further 100% of the permanent rate which is $32.52 giving a total of $73.17. The 25% loading is not applied to the weekend penalty. The hourly rates for permanent employees and casual employees for work performed on overtime and public holidays are the same. The 25% loading does not apply to overtime. Similarly, the night shift rates do not include the 25% loading on the shift loading. Applying these various calculations to the roster resulted in a flat casual rate of $58.10 per hour for a Level 3 Mineworker Level 3 – working rotating 12.5 hour shifts on an even time roster. [63] Skilled also provided modelling using the BCMIA base rate, and adding a casual loading of 25% in the same way that it did under the Agreement. The same assumptions were made in this modelling that a 25% loading would only apply only to the base rate and not apply when calculating other penalties such as overtime, shift and weekend and public holiday penalties. Using this modelling Skilled contended that from the Award permanent base rate of $30.17 the flat casual rate per hour for a Level 3 Mineworker Level 3 – working rotating 12.5 hour shifts on an even time roster would be $53.16. [64] The MEU submitted that this did not reflect the treatment of casual loadings in the BCMIA. The MEU contended that the better approach to the modelling in respect of a production and engineering employees employed on a casual basis should assume that such an employee would be entitled to receive compounded loadings meaning the 25% loaded rate becomes the base rate for all purposes. [65] Using the cumulative, or penalty on penalty, approach taken in the BCMIA, the 25 % loading would be applied for all purposes and would result in the casual flat rate being 125% of the permanent flat rate on each roster. Applying this method of calculating casual rates to [2024] FWC 2625 19 the flat permanent rate using Skilled’s calculations for permanent award employees working as Level 3 Mineworker Level 3 on rotating 12.5 hour shifts on an even time roster would result in multiplying the flat permanent rate of $47.38 by 125% to give an award casual flat rate of $59.29. If the agreement permanent flat rate was similarly multiplied by 125% the Agreement casual flat rate for this roster would be $64.84 ($51.87 x 125%) [66] These calculations give the following results: Level 3 Mineworker Level 3 – working rotating 12.5 hour shifts on an even time roster Hourly rates [67] The significance of these figures is that the flat hourly rate for casuals under the Agreement is less than the flat hourly rate that would apply if the Award rates were paid and the award approach to casual loading was used. The relevant figures being the Agreement rate of $58.10 which is less than the hypothetical Award rate using penalty on penalty of $59.25. The exercise is hypothetical in the sense that the rules for the payment of casuals in BCMIA only apply to staff employees. But I accept that the BCMIA approach to the casual BCMIA Agreement Base Rate Permanent 30.17 32.52 Flat Rate Permanent 47.38 51.87 Base Rate Casual 37.71 40.65 Flat rate casual 25% on ordinary hours only 53.16 58.10 Flat rate casual – 25% loading cumulative 59.25 64.84 [2024] FWC 2625 20 loading for staff employees is an indication of the compensation that a casual employee should receive for foregoing the benefits of permanent employment. [68] Another way of considering whether the casual rates are adequate to compensate for the loss of permanent entitlements is to attempt to value those entitlements. The entitlements are annual leave, personal leave and entitlements on termination. Commissioner Roe averted to this in Re Site Fleet Services Pty Ltd [2017] FWC 2163 when he suggested that 25% was insufficient compensation for the loss of entitlements enjoyed by permanent employees in the black coal industry. [69] The standard of 25 % loading across modern awards was adopted by the Full Bench of the Australian Industrial Relations Commission (AIRC) in the Award Modernisation Decision [2008] AIRCFB 1000 at [47]–[50]. The rate was set based on the reasoning in a decision of the Full Bench of the AIRC which considered the level of the casual loading in the Metal, Engineering and Associated Industries Award , 1998 - Part I 7. In setting the loading the Full Bench described the relevant entitlements that were to be compensated as paid leave, long service leave, and a component covering differential entitlement to notice of termination of employment and effects of employment by the hour.8 The Full Bench went on to make an assessment of the value of those entitlements by reference applicable award entitlements of 4 weeks’ annual leave, 10 days’ personal leave, leave loading of 17.5 %, notice of termination of 1 week, 10 public holidays not worked, and long service leave. As can be seen above the equivalent benefits, in the BCMIA are 5 weeks annual leave, 15 days personal leave, 20% annual leave loading and a generous industry specific redundancy scheme. [70] Another factor going to the effect of employment by the hour is casual employees do not have job security. Recently, the Expert Panel in the Annual Wage Review 2022–23 decision9 said the following about job security10: …In the award context, job security is a concept which is usually regarded as relevant to award terms which promote regularity and predictability in hours of work and income and restrict the capacity of employers to terminate employment at will. The award provisions which are likely to be most pertinent in this respect are those which concern the type of employment (full-time, part-time, casual or other), rostering arrangements, minimum hours of work per day and per week, the payment of weekly or monthly rather than hourly wages, notice of termination of employment and redundancy pay (noting that a number of these matters are dealt with in the NES. [71] Taking these matters into account, I agree with the view expressed by Commissioner Roe that a 25% loading is not sufficient to compensate for the award entitlements that apply to permanent employment but are foregone by casual employees in the coal mining industry. [72] Based on the hypothetical exercises of calculating how a casual loading would apply if the approach in the BCMIA to casual staff employee’s entitlements were applied to casual production and engineering employees and an assessment of the benefits that a 25% loading on ordinary rates of pay are inadequate to compensate the casual production and engineering employees for the loss of benefits of permanent employment I do not consider that casual employees are better off under the Agreement than they would be if the BCMIA applied to them. The BOOT is therefore not met. Genuine Agreement [2024] FWC 2625 21 [73] The requirement in s186(2)(a) is that the Commission be satisfied that the Agreement has been genuinely agreed to by the employees covered by it. Section 188 provides the matters which the Commission must take into account when considering whether employees have genuinely agreed to an enterprise agreement. Section 188, along with other provisions relating to genuine agreement, was amended by the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (SJBP Act). The relevant amendments commenced on 6 June 2023. They applied to agreements with a notification time after that date11. The notification time for the Agreement was 14 March 2023. Consequently, the relevant provisions of the Act as they were prior to 6 June 2023 apply to the current application. The MEU addressed me on the requirements as they applied after the SJBP Act came into effect. In particular, I was taken to the requirement in the amended s 188 that refer to the Statement of Principles on Genuine Agreement which was made under s 188B of the Act. I have disregarded those matters. References in this decision to the provision of the Act are therefore references to the provisions as they were before 6 June 2023 [74] Section 188 was in the following terms: 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. [75] An enterprise agreement is genuinely agreed if the Commission is satisfied of a number of matters, including, at s.188(1)(a), that Skilled has complied with s. 180(5). Section 188(1)(c) requires satisfaction that there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees. Section 188(2) provides that where the requisite satisfaction in s. 188(1)(a) is not present an agreement may still be genuinely agreed where the lack of satisfaction arises from a minor procedural or technical error. That error must not disadvantage employees. [2024] FWC 2625 22 [76] Skilled relied upon the material in the witness statement of Mr Zoetbrood which was emailed to the employees at the commencement of the access period and the further communications following that email as the steps taken to explain the effect of terms of the Agreement. The MEU submitted that the Commission cannot be satisfied that the Agreement was genuinely agreed to as the explanatory material and communications were inadequate to meet the requirement in s180(5). [77] The MEU took me to a number of decisions of the Court and Commission where the requirements that an agreement be genuinely agreed were considered, including two decisions of the Full Court of the Federal Court of Australia; CFMMEU v Mechanical Maintenance Solutions Pty Ltd [2022] FCAFC 15 (Mechanical Maintenance) and One Key Workforce Pty Ltd v CFMEU [2018] FCAFC 77 (One Key). [78] In Mechanical Maintenance the Court said at [78]- [79]: [78] To advance the purpose of enabling relevant employees to cast an informed vote, s 180(5) expressly requires that they be given, not only an explanation of the terms of the agreement, but the effect of those terms. A proposed enterprise agreement will almost invariably be intended to affect existing working conditions. The ordinary meaning of the noun “effect” includes “consequence”. The obligation to explain the effect or consequences of the terms of a proposed enterprise agreement requires explanation of how those terms will affect existing conditions. Any detrimental changes to existing conditions will be of particular significance to employees. The employer’s obligation under s 180(5) requires that all reasonable steps must be taken to ensure that the effect of all the terms in bringing about detrimental changes to existing conditions are explained. That means, effectively, that all detrimental changes must be explained, whether through omission or alteration of a favourable existing condition. [79] The obligations cast upon employers under s 180(5) are undoubtedly onerous. However, the clear language and purpose of the provision means that it cannot be read as requiring anything less than that the employer must take all reasonable steps to ensure that all the terms, and the effect of all the terms, are explained. The consequence of non-compliance by the employer is the risk that an enterprise agreement approved by the employees will not be approved by the Commission. [79] In One Key the Court said at [112]: [112] … In order to reach the requisite state of satisfaction that s.180(5) had been complied with, the Commission was required to consider the content of the explanation and the terms in which it was conveyed, having regard to all the circumstances and needs of the employees and the nature of the changes made by the Agreement. It is true that the Act does not expressly say that. But the question of whether an administrative decision-maker is required to consider a matter is not determined only by the express words of the Act; it may also be determined by implication from the subject-matter, scope and purpose of the Act: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24 at 39–44 (Mason J). [80] I was also taken to a number of Full Benches of this Commission including CFMEU v Ditchfield Mining Services Pty Ltd [2019] FWCFB 4022 (Ditchfield), The Australian Workers' Union v Rigforce Pty Ltd [2019] FWCFB 6960, (Rigforce), Huntsman Chemical [2024] FWC 2625 23 Company Australia Pty Limited T/A RMAX Rigid Cellular Plastics & Others [2019] FWCFB 318 (Huntsman), CFMMEU v Karijin Rail Pty Ltd [2020] FWCFB 958 (Karijin) and CFMMEU v Trustees for Celotti [2020] FWCFB 5011(Celotti). [81] The Full Bench in Rigforce said at [35]: [35] … 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. We adopt the summary of that analysis set out in CFMMEU v Ditchfield Mining Services Pty Limited, 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. [82] In Huntsman the Full Bench described the operation of s. 188. At [117] of that decision the Full Bench set out a number of propositions relevant to the construction of the section. The Full Bench emphasised that subsections 188(1) and (2) should be considered sequentially: a consideration of s.188(2) is only necessary if there has been a failure to meet the requirements in s188(1). The term "employees covered by the agreement" includes those employed at the time of the voting request. Both subsections 188(1) and (2) require the Commission to ensure the agreement was genuinely made, but s.188(2) specifically addresses situations where errors occur in the procedural requirements. These errors must be minor and relate to specific requirements, such as the requirement in s180(5). The assessment of "minor errors" requires an evaluative judgment in considering whether procedural or technical errors have occurred, the nature of the errors, whether they might be considered minor errors, and their impact on employees. The Full Bench emphasised the importance of understanding the procedural context and the specifics of non-compliance to determine genuine agreement under s.188. Regard may be had to the objects of Part 2-4 in assessing the context of the non- compliance. [83] The MEU alleges Skilled emphasised the benefits of the Agreement but failed to refer to the detrimental effects of the Agreement. In particular, the email sent on 13 March 2024 emphasised ta 14% increase from the current agreement rates and described it as “inclusive of the 1 July 2023 Award increase. The MEU points out that the increase from the 2019 Agreement was around 14% but that increase was not inclusive of the Award increase. Rather the opposite was true the 14 % increase was exclusive of the 5.75% increase from 1 July 2023. This is said to be the case because the actual increase in rates was actually around 8%. 14% less the 5.75% Award increase. This was the case because the employees were not being paid the rates in the 2019 Agreement at the time of the vote. The base rates in the 2019 had fallen below the Award and s 206(2) of the Act operated such that the 2019 Agreement had [2024] FWC 2625 24 effect as if base rates payable to the employees under the 2019 Agreement were equal to the award rates. [84] As the Full Bench of the Commission said in Ferryman Pty Ltd v The Maritime Union of Australia [2013] FWCFB 8025¸ ‘[t]he effect of s 206(2) is that despite any clause in an enterprise agreement the base rate of pay in the agreement must not be less than the base rate of pay under the relevant modern award.’ [85] On the MEU’s submission it was misleading to tell the employees that the Agreement offered a 14% increase on the 2019 Agreement rates because the 2019 Agreement rates at the time of the vote were the Award rates. [86] The information provided to employees about the wage increases was: a) In the body of the email sent on 13 March 2024: The key points of the proposed agreement are as follows: Wage Increases • The ordinary base rates of pay are increased by 14% on the current Agreement rates (inclusive of the 1 July 2023 Award increase). • This increase in the base rate will result in base rates of nearly 8% above the Award rates. • The increases in flat rates of pay will be higher (due to the loading and penalty rates included in the all-in flat rates of pay). • The increase will apply from the first pay period on or after the date of a successful employee vote of the proposed new Agreement (rather than the later Fair Work approval date) • A further 4% increase in the ordinary base rates of pay to apply from the first pay period 12 months after the successful employee ballot. b) In the 10 page explanatory document attached to the email of 13 March 2024: Updated base rates including a 14% increase in the ordinary hourly rates (from the current Agreement rates as at its expiry date) applying from the first pay period after a successful employee ballot approving the proposed agreement. This increase is inclusive of the 1 July 2023 Award increase. A further 4% increase in the ordinary rates will apply the pay period on or after 12 months from the successful employee ballot. Clause 8.1.2 is deleted in accordance with undertakings given to FWC in 2019. New clause 8.3 reflects the undertakings on flat rates given to FWC in 2019. (emphasis in original) Examples of flat rates of pay are contained in Appendix A of the Agreement. [87] Mr Zoetbrood’s evidence was that he received around 10 queries about the material. He described those queries as follows: [2024] FWC 2625 25 These queries mostly related to how the pay increase in the Proposed Agreement would operate given the Award rates of pay had caught up to the base rates of pay provided for under the 2019 Agreement. I informed each Employee that the Proposed Agreement provided for a 14% pay increase to the base rates of pay in reference to the base rate of pay provided for under the 2019 Agreement, however the Award rates of pay were currently applicable under the 2019 Agreement due to the operation of section 206 of the Fair Work Act 2009 (Cth). I told Employees that the 14% pay increase was inclusive of the increases to the Award that had occurred since the approval of the 2019 Agreement and that the Proposed Agreement provided for base rates of pay that were nearly 8% higher than the applicable Award rates [88] The explanation reveals that the actual increase was in the order of an 8% increase on the rates that applied to the employees at the time of the vote. Not the 14% increase that was highlighted by bold text in both the covering email and in the 10 page explanatory document. [89] The confusion created by the statement that there was a 14% increase to wages was evident in the questions Mr Zoetbrood received from a small number of employees after the information was sent. No step was taken however to inform all of the employees of the issue. By contrast, Mr Zoetbrood also described a query about the impact of changes to the Act providing for Regulated Labour Hire Arrangement Orders. After responding to those queries Skilled sent all employees a detailed email about the potential effect of such orders. This was a reasonable step to take once the issue was raised. It was available for Skilled to take a similar step in relation to the queries about the wage increase. It appears from Mr Zoetbrood’s evidence that that step was not taken and his explanation was confined to the small number of employees who raised the issue. [90] I agree with the MEU’s criticism of the information provided to employees about the wage increases. It was misleading. The need for explanation was made clear to Skilled when a small number of employees raised the issue and were provided an explanation. The majority of employees however were not provided with the further explanation. I regard this an inadequate to meet the requirement in s180(5). Wage increases are an important aspect of any proposed agreement. It is important that the explanation of an agreement make clear the increase that is on offer. Skilled failed to do so and thereby failed to meet the requirement to take reasonable steps to ensure that the terms of the Agreement, and the effect of those terms, were explained to all of the employees employed at the time who were to be covered by the Agreement. [91] The MEU also raised the inadequacy in Skilled’s explanation about casual conditions. It points to the failure to explain that the BCMIA does not permit casual employment for production and engineering employees, that where there is casual employment the casual loading is cumulative on other benefits, and casuals are paid when not working a public holiday in some circumstances. I agree with the MEU that it was reasonable for Skilled to take steps to explain the way the Agreement treats casual employees by reference to the treatment of casuals under the Award. [92] As can been seen from the matters set out above the task of explaining the effect of the Agreement on casual employees was not straight forward. However, this did not mean that Skilled should not have taken steps to give an explanation. The explanatory document sent on 13 March 2024 dealt with the issue briefly. [93] It stated in relation to clause 5 of the Agreement: [2024] FWC 2625 26 This clause sets the type of employment an employee may be engaged in: • Permanent – that is an Employee engaged by the week to work an average of 35 ordinary hours per week; • Casual – that is an engaged by the hour and paid a 25% casual for ordinary hours worked; • Fixed Term or Maximum Term – that is an Employee who is engaged for a specific period of time [94] The comparison with the Award simply stated: The Award sets out the various types of employment at clauses 8, 9, 10 and 11. The Agreement provisions are substantially the same as the Award [95] On casual rates of pay the explanation states on clause 13 of the Agreement: This clause sets out that 25% casual loading is paid in lieu of paid leave, notice of termination and redundancy. The minimum engagement for a casual employee is 4 hours per occasion. [96] The comparison to the Award reads: The Award provides 25% casual loading and minimum 4 hours engagement per occasion [97] Relying upon, but without repeating, the extensive analysis going to the differences between the way casual employment was treated under the Agreement and the Award I am find that this explanation is both misleading and inadequate. [98] The MEU raised a number of other matters concerning the failure of Skilled to properly explain to employees matters such as the way the flat rate of pay was calculated, and the use of standard sample rosters in Appendix A. The MEU contends that the explanatory material failed to explain the specific rosters and how shortfalls in roster payments would be reconciled. A general observation about Skilled’s explanatory material is that it was brief. The MEU’s arguments have some force. However, in finding that the requirement in s180(5) was not met, I consider the failures to adequately explain the claimed 14% wage increase and the treatment of casual employment to have the most force. [99] For the purposes of determining whether there has been genuine agreement by the employees by reference to s 188)(1)(a) I am not satisfied that Skilled has complied with s 180(5) in that Skilled failed to take all reasonable steps to ensure that the terms of the Agreement, and the effect of those terms, were explained to the employees employed at the time who would be covered by the Agreement. I agree with the MEU’s criticism that the explanatory material was deficient because it failed to adequately explain the wage increase. I also find that the effects of the terms and conditions relating to casual employment were not adequately explained. These matters go to important considerations for employees who are deciding whether to approve an agreement. [100] The failures to comply with s 180(5) mean the Agreement cannot be considered to have been genuinely agreed within the meaning of s 188(1)(a). Despite this the Agreement may have been genuinely agreed if the Commission is satisfied that the Agreement would have been so agreed but for minor procedural or minor technical errors made in relation the requirements in paragraph 188(1)(a) and those errors did not disadvantage employees. [2024] FWC 2625 27 [101] I do not consider any of the errors were minor procedural or minor technical errors. As the Court said in Mechanical Maintenance detrimental changes to award conditions will be of particular significance to employees.12 The object of Part 2-4, found in s 171 includes to provide a “simple, flexible and fair framework” for the making of enterprise agreements. That framework allows employers to conduct votes of employees to approve proposed agreements. Prior to conducting the vote an employer must explain the terms of the proposed agreement and the effects of those terms to all relevant employees. The explanation is critical in achieving informed agreement. A failure to provide an adequate explanation will undermine that process. I consider this to be the case here. The failure to take the steps identified above to explain the effect of the Agreement cannot be considered minor errors. [102] As I am not satisfied that Skilled complied with s 180(5) and I do not consider that the non-compliance amounted to minor procedural or technical errors, I am not satisfied that the Agreement has been genuinely agreed and the requirement in s 186 (2)(a) is not met. Other matters [103] Mr Zoetbrood, provided the following undertakings to address a number of concerns raised by the Commission and the MEU (Undertakings): 1. I have the authority given to me by the Employer to provide this undertaking in relation to the application before the Fair Work Commission. 2. In respect of clause 6 of the Agreement: Clause 6 of the Agreement will not apply to employees engaged on a traineeship. 3. In respect of clause 8.3 of the Agreement: A casual employee who is engaged for less than a full roster cycle will not be paid using a flat rate of pay. 4. In respect of clause 16.3 of the Agreement: For the purposes of clause 16.3, the definition of shiftworker will include an employee who works a roster that requires ordinary shifts on: • public holidays and not less than 272 ordinary hours per year on Sundays; or • Saturday and Sunday where the majority of the rostered hours on the Saturday or Sunday shifts fall between midnight Friday and midnight Sunday. 5. In respect of clause 16.3 of the Agreement: All time worked in excess of the Ordinary Hours or on any additional shifts by Employees who are shiftworkers will be paid for at the rate of double time except set out in clause 16.4. 6. In respect of clause 20.4 of the Agreement: For the purposes of clause 20.4, the definition of shiftworker will include an employee who works a roster that requires ordinary shifts on public holidays and not less than 272 ordinary hours per year on Sundays. 7. In respect of clause 20.6 of the Agreement: For the purposes of clause 20.6, the definition of shiftworker will include an employee who is a 7 day roster employee. [2024] FWC 2625 28 8. In respect of clause 21 of the Agreement: The Employer may only give a direction that an employee take annual leave during a period of shutdown if the direction is reasonable. 9. In respect of clause 22 of the Agreement: The stand down clause will only be applied in circumstances permitted under s.524(1) of the Fair Work Act 2009 (Cth). 10. These undertakings are provided on the basis of issues raised by the Fair Work Commission in the application before the Fair Work Commission. [104] The MEU accepts that undertakings 2, 6, 7 meet the concerns raised and submits that undertakings 5, 8, and 9 are deficient. I do not need to address those matters. [105] These undertakings do not meet the other concerns I have about the BOOT and genuine agreement requirements. Skilled asked that if I were to have concerns that went beyond the undertakings already offered it would like to consider making further undertakings. The MEU referred me to the decision of Commissioner Simpson C in Mining Pro Services Pty Ltd [2022] FWCA 499 (Mining Pro Services) where an undertaking by the applicant to calculate weekend penalties and shift loadings for casual employees in a mineworker classification on a compounding basis addressed similar concerns to those raised here. I do not propose to delay the matter further by seeking such an undertaking in this case. [106] Even if I were to accept an undertaking along the lines accepted in Mining Pro Services it would not address the failure to adequately explain the terms of the Agreement under s 180(5). Especially in relation to the treatment of casual employment and the wage increase under the Agreement. Those failures affected all employees. I do not consider that an undertaking could address those concerns. I note the Full Bench in Karijini13 recognised that in appropriate cases undertakings may be given to remedy inaccuracies in an employer’s explanation of an agreement. However, I do not consider this to be such a case. I find that the extent of the inaccuracies and the impact they were likely to have had on the employees’ ability to provide informed consent to the agreement were such that the deficiency cannot be addressed by undertakings. Conclusion [107] For the reasons outlined I am not satisfied that the Agreement the agreement passes the better off overall test for the purposes of s 186(2)(d). [108] I am also not satisfied that the Agreement has been genuinely agreed to by employees for the purposes of s 188(1) or (2) of the Act. As the Agreement was not genuinely agreed to within the meaning of s 188 I cannot be satisfied that the agreement has been genuinely agreed to by employees covered by it for the purposes of s 186(2)(a). [109] The application is dismissed. [2024] FWC 2625 29 DEPUTY PRESIDENT Appearances: L Howard Counsel, on behalf of the Applicant S Mueller Legal Officer, MEU B Mills, Employee Bargaining Representative Hearing details: 16 July 2024. By video link using Microsoft Teams. Written submissions: Submission filed on behalf of the Applicant 29 May 2024. Submissions filed by the MEU in reply 19 June 2024. Submission filed by Mr Mills 20 July 2024 Supplementary submissions filed by the MEU 5 July 2024. Supplementary submissions in reply filed by the Mr Mills, 19 July 2024. Supplementary submissions filed on behalf of the Applicant, 26 July 2024. Printed by authority of the Commonwealth Government Printer <PR779544> 1 At [7]. 2 At [205] 3 At [45] 4 At [9] 5 At [51] [2024] FWC 2625 30 6The summary here is not intended as an exhaustive statement of the entitlements in the BCMIA. In some cases there may be conditions associated with the application of the entitlement. 7 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union - re application for variation of award - T4991 [2000] AIRC 722 8 At [196] 9 [2023] FWCFB 350 10 at [28] 11 See clause 66 of Div 11 to Part 3 of Sch 1 to the SJBP Act 12 Op cit at [78] 13 At [103 to [109]