The Fair Work Commission’s (FWC) refusal to approval a mining company’s enterprise agreement has highlighted the importance of submitting accurate documentation and following proper procedures to ensure agreements meet all requirements of the Fair Work Act.

AT a hearing last week (14 September 2016), FWC Deputy President Ingrid Asbury found that Falcon Mining Pty Ltd’s enterprise agreement did not meet requirements for approval under sections 186 and 187 of the Fair Work Act 2009.

The agreement covering employees of Falcon’s coal operations in New South Wales was objected to by the CFMEU on a number of grounds, including:

• irregularities in the Form F16 and F17, making the application for approval invalid;
• the Notice of Employee Representational Rights (NERR) did not correctly name the employer and was not provided to employers in accordance with the Act.
• reasonable steps were not taken during the access period for the agreement to provide employees with a copy of the agreement, or to explain the terms of the agreement;
• the terms of the agreement contravene 55 of the Act by excluding provisions of the National Employment Standards (NES) in relation to carers’ leave and public holidays;
• the agreement contains a term about settling disputes that does not meet the requirements set out in s.186(2) of the act; and
• the agreement does not pass the Better Off Overall Test (BOOT) when compared to theBlack Coal Mining Industry Award 2010.

Cumulative effect of errors

To begin with, DP Asbury found there were errors in paperwork submitted by the company. In particular, Falcon’s HR manager had incorrectly stated the company name on the application for approval of the agreement, while the accompanying employer declaration form came with the incorrect version of the NEER.

Further, it was found that on the employer declaration form, the HR manager incorrectly answered ‘no’ in response to a question asking whether the agreement contains terms less beneficial than those in the Black Coal Mining Industry Award 2010.

The HR manager admitted to misinterpreting the question, believing the question referred to whether terms and conditions were less beneficial to those in the Award on an ‘overall basis’ rather than the correct meaning of whether the agreement contains ‘any’ less beneficial terms and conditions.

DP Asbury also found that Falcon failed to take all reasonable steps to provide an explanation to relevant employees about the effect of the agreement, and failed to address rostering issues that made employees unavailable to attend meetings where the agreement was explained to employees.

In reference to the application errors, DP Asbury pointed out that in isolation they do not invalidate the application for approval of the agreement. However, when considering the series of events together, the impact could not be discounted.

“The cumulative effect of errors made in the application documentation and other omissions, while individually not fatal to an application for approval, are reasonable grounds for the commission to believe that the agreement was not genuinely agreed,” DP Asbury said when summarising her decision.

Exclusion of NES and failure to pass BOOT

In her decision, DP Asbury highlighted that under the Act, a pre-condition for approval of an enterprise agreement is that it must not exclude the NES or any provision of the NES.

DP Asbury took issue with a couple of clauses relating to an employee’s requirements to notify of an absence, as well as the nomination of a project manager as having sole discretion as to whether or not to accept particular evidence provided by an employee to support an application for personal/carer’s leave. However, DP Asbury was satisfied that these matters could be addressed by undertakings provided by Falcon.

In considering whether the agreement passes the BOOT, DP Asbury identified a range of beneficial terms of the agreement and those that are detrimental to award covered, and potential award covered, employees when compared to the Black Coal Industry Award 2010.

While finding that the agreement did not pass the BOOT, DP Asbury did accept that undertakings could be provided by Falcon to address outstanding matters.

Ultimately, however, DP Asbury concluded that the undertakings which would be required to address her concerns about whether the agreement meets the requirements of the Act would substantially change the agreement, which would mean it could not be approved under section 190(3) of the Act.

“I have reached the conclusion that the undertakings offered by Falcon are so substantial, both in scope and in number, that they will substantially change the agreement. More undertakings than those offered by Falcon will be required in order to meet the outstanding concerns I have about the agreements,” DP Asbury said.

“…Falcon has had the opportunity to respond to clearly articulated concerns about the agreement, including the pre-approval processes, and to make, in effect a second bit to address those matters, but has not provided an adequate response that addresses these matters.

“Accordingly, I am unable to accept the undertakings and as a result, the agreement does not meet the requirements in ss.186 and 187 of the Act.”

Click here to view the decision.

Implications for employers

This decision serves as an example of how a series of errors and omissions, which if considered in isolation may not always invalidate an enterprise agreement, could have the cumulative effect of the agreement being refused by the FWC.

Employers should make every effort to ensure all documentation for submission to the FWC is correct, and that all requirements under the Fair Work Act are met, including considerations of the National Employment Standards and BOOT.

AREEA’s workplace relations consultants are experienced in drafting enterprise agreements in accordance with the Act, and in guiding employers through the appropriate steps to achieve approval.

For assistance, contact an AREEA consultant near you.