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FWCFB sheds light on the information employers are required to provide employees for an agreement to be ‘genuinely agreed’
In the case of The Australian Workers’ Union v Skout Solutions Pty Ltd [2021] FWCFB 119, a Fair Work Commission Full Bench (FWCFB) has provided further guidance on the information an employer is required to provide to employees to ensure it has taken all reasonable steps to explain the terms of a proposed enterprise agreement in satisfaction of section 180(5) of the Fair Work Act 2009.
The AWU had applied for permission to appeal against a decision of Deputy President Clancy to approve the Skout Solutions Industrial Enterprise Agreement 2019 (the 2019 Agreement). The 2019 Agreement replaced the Skout Solutions Industrial Enterprise Agreement 2016 (the 2016 Agreement) and wholly displaced any modern awards that would otherwise apply.
There were three grounds of appeal advanced by the AWU, the first of which substantially related to whether the 2019 Agreement had been genuinely agreed. In respect of that ground the union argued his Honour could not have been satisfied as to compliance with section 180(5) of the FW Act (and therefore that the 2019 Agreement had not been genuinely agreed as required by section 186(2)(a) of the FW Act) given the explanation provided to employees of the terms of the 2019 Agreement and the effect of those terms, both relative to the four relevant awards and the 2016 Agreement, had been confined to the distribution of the following documentation:
- A high-level award comparison document that set out a high-level summary of the 2019 Agreement terms relative to the four underpinning awards, as well as copies of the awards.
- A document summarising the changes in the 2019 Agreement from the 2016 Agreement.
- A frequently asked questions document.
The AWU criticised the comprehensiveness, relevance and accuracy of the documents provided, as well as the fact there was no evidence as to what was said to employees in two information sessions.
In considering the appeal, the FWCFB observed that section 188(1) of the FW Act makes clear that compliance with section 180(5), and whether “reasonable steps” were taken, does not need to be objectively proven. Rather, compliance need only be established to the satisfaction of the decision maker based on the material provided (citing Federal Court in One Key Workforce Pty Ltd v CFMEU [2018] FCAFC 77). What is relevant, therefore, is the material that was before the Deputy President to support his finding as to compliance with section 180(5) based on the circumstances of the particular case.
In that regard, the FWCFB noted a detailed explanation of the differences between the 2019 Agreement and various award provisions was not required in circumstances where the terms and conditions of the employees were not regulated by the four awards due to the operation of the 2016 Agreement. The high-level summary the employer provided of the 2019 Agreement provisions versus the awards was enough in the circumstances and a ‘reasonable step’ for it to have taken.
What was required was comparison between the 2016 Agreement and the 2019 Agreement. The FWCFB considered it relevant that the 2019 Agreement was essentially a ‘rollover’ agreement with limited substantive changes and one the relevant employees would have been familiar with. The brief comparison document summarising the changes in the 2019 Agreement from the 2016 Agreement provided by the employer, supplemented by the information sessions, was therefore appropriate in the circumstances.
In response to the union’s submission that the explanation provided to employees failed to include any reference to two minor changes to the 2019 Agreement, the FWCFB observed at [70] that, in this case at least, it was unnecessary to explain every change made from the previous applicable instrument.
A further appeal ground relating to whether the group of employees was fairly chosen was rejected by the FWCFB, however it ultimately considered that permission to appeal ought to be granted in respect of whether the 2019 Agreement met the better off overall test (BOOT). An undertaking provided by the employer was able to address the FWCFB’s concerns.
Employers seeking FWC approval of a replacement enterprise agreement can obtain some comfort from the FWCFB’s decision in this case. Although it is important to keep in mind that the FWC’s inquiry as to whether the steps taken by the employer were ‘reasonable’ will depend on the circumstances, it is reasonable to assume that if a modern award does not apply, and the enterprise agreement has minor derivations from its predecessor, a comprehensive comparison with the underlying reference instrument will not be required in satisfaction of section 180(5) of the FW Act.