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EBA STEPS

15-09-15	Ballot - Union divided - nationally Union and NSW P&T supported Telstra
15-09-15	Ballot - Union Divided - T&S Vic, P&T Vic and T&S NSW opposed ballot 
21-09-15	Ballot Closed 59% voted YES
08-10-15	Ken Hardisty Challenge lodged (on behalf of T&S Vic, P&T Vic and T&S NSW)
29-10-15	Hearing of Challenge 
29-10-15	National part of union and P&T NSW supported Telstra
05-11-15	Decision to approve EBA - challenge lost
12-11-15	EBA commences
30-09-18	Nominal Expiry Date of EBA

Extract from Decision below

FWC APPROVAL

The Telstra EBA was challenges because some 9000 AWA covered employees were allowed to vote on acceptance of the EBA. The Decision is below. The EBA was approved.

    [39] The CEPU, CPSU and CEPU and APESMA have each given notice under s.183 of the Act that they wish to be covered by the Agreement. In accordance with s.201(2) of the Act I note that the Agreement covers the organisations.

    [40] The Agreement is approved and, in accordance with s.54 of the Act, will operate from 12 November 2015. The nominal expiry date of the Agreement is 30 September 2018.

FWC DECISION

[2015] FWCA 7487 FAIR WORK COMMISSION

DECISION

Fair Work Act 2009 s.185 - Application for approval of a single-enterprise agreement

Telstra Corporation Limited (AG2015/5763)

TELSTRA ENTERPRISE AGREEMENT 2015 - 2018

Telecommunications services

VICE PRESIDENT WATSON

MELBOURNE, 5 NOVEMBER 2015

Application for approval of the Telstra Enterprise Agreement 2015-2018 – Fairly chosen – Genuine agreement – Fair Work Act ss.186, 188.

Introduction

[1] An application has been made for approval of an enterprise agreement known as the Telstra Enterprise Agreement 2015–2018 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act) by Telstra Corporation Limited (Telstra). The agreement is a single enterprise agreement.

[2] The Agreement was made on 21 September 2015. Fifty-nine per cent of Telstra employees who participated in the vote, voted in favour of the Agreement. Each of the employee organisations entitled to represent the employees covered by the Agreement filed a statutory declaration indicating their support for the Agreement, including:

  • The Association of Professional Engineers, Scientists and Managers, Australia (APESMA)
  • CPSU, the Community and Public Sector Union (CPSU), and
  • The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU).

    [3] On 8 October 2015, Mr Ken Hardisty sent a letter to the Fair Work Commission (the Commission) stating that he is a bargaining representative for a number of Telstra employees and that he objects to the application for approval. The grounds of Mr Hardisty’s objection are that the group of employees that the Agreement would cover was not fairly chosen.

    [4] The matter was listed for hearing on 29 October 2015. Mr C O’Grady of counsel appeared on behalf of Telstra, Mr P Massarani appeared on behalf of the CEPU and Mr D O’Dwyer appeared on behalf of Mr Hardisty.

    [5] The scope of the Agreement is set out in clause 4.1, which provides that the Agreement covers Telstra and all employees of Telstra, except for members of the Telstra Executive Team, employees in Band 1, and qualified legal practitioners working in Telstra’s Legal Services business unit. The Agreement also covers the CEPU, CPSU and APESMA.

    [6] Mr Hardisty submits that the group was not fairly chosen as Telstra has included employees who are bound by an Australian Workplace Agreement (AWA) or an Individual Transitional Employment Agreement (ITEA) in the scope of the Agreement. Mr Hardisty did not submit that the Agreement failed to pass any other test for approval. He did not submit that the Agreement was not genuinely agreed to by employees.

    [7] Telstra and the CEPU submit that Mr Hardisty may not be free from control or improper influence and therefore is potentially unable to be a bargaining representative under regulation 2.06 of the Fair Work Regulations 2009.

    [8] Mr Hardisty initially participated in the bargaining negotiations as an elected official and representative of the CEPU. He stopped attending bargaining meetings after the CEPU elections took place and he was not re-elected to any position within the CEPU. After a short period, Mr Hardisty notified Telstra that he had been appointed as an individual bargaining representative for a number of Telstra employees.

    [9] Telstra and the CEPU contend that Mr Hardisty is associated with the Victorian Branch of the Communications Division of the CEPU and/or the Australian Communications Workers’ Alliance. Mr Hardisty states that he is free from control or improper influence of any other bargaining representative.

    [10] I have not found it necessary to deal with this matter further. I have considered the arguments put forward on behalf of Mr Hardisty because in order to approve the Agreement I must be satisfied that the group of employees covered by the agreement was fairly chosen. His submissions deal with that issue and I consider it important that I have regard to the matters he has raised. I turn to consider that matter.

    Fairly Chosen

    [11] Telstra employs approximately 28,000 employees other than members of the Telstra Executive Team, employees in Band 1, and qualified legal practitioners working in Telstra’s Legal Services business unit. Approximately 8,400 of these are employed under expired individual arrangements that continue to apply to the exclusion of the collective agreement unless terminated by the Commission. During the course of the last enterprise agreement approximately 1,000 employees terminated individual arrangements and became covered by the collective instrument.

    [12] The group of employees to be covered in the Agreement is broadly all employees except for members of the Telstra Executive Team, employees in Band 1, and qualified legal practitioners working in Telstra’s Legal Services business unit. Relevantly, it does not exclude employees to whom individual agreements apply at the time of the ballot.

    [13] The requirement that the group of employees covered by the Agreement must be fairly chosen is set out in ss.186(3) and 186(3A) of the Act, which provide as follows:

    [14] Although there have been various Full Bench decisions dealing with the “fairly chosen” requirement, the leading case on the issue is now the Full Federal Court decision in Construction, Forestry, Mining and Energy Union v John Holland Pty Ltd (John Holland) 1. The first point that comes from that case is the conclusion adopted by the Court that the reference in s 186(3) to “the group of employees covered by the agreement” is a reference to the whole class of employees to whom the agreement might in future apply.2 That conclusion was based on the agreed position of the parties reinforced by an analysis of the statute.

    [15] The analysis included a consideration of the traditional concepts of application and coverage, which are now reflected in ss.52 and 53 of the Act, and recognition of the difference between actual application (i.e. to then present employees) and potential coverage (extending to the whole class of employees at any point in time). The court noted that the procedural steps required for making an agreement with employees focus, of necessity, on the need for majority support by those present employees who will be covered by the agreement. Once an agreement is made the matters which require consideration by the Commission in relation to whether an agreement must be approved are not necessarily confined in the same way.

    [16] Building on these notions, Buchanan J, with whom the other members of the Court agreed, then said:

    [17] The facts of John Holland included the initial coverage of a small number of employees and an exclusion of employees covered by a subsequent site specific agreement. In that case it was not possible to ascertain the numbers or identities of future employees, or the extent to which some employees might be excluded from coverage by the application of a site specific agreement. The effect of the Court’s decision is that speculation on these matters is not appropriate. It is necessary to consider the “group of employees to be covered” rather than how many employees may be covered. The “group of employees” involves an appreciation of the nature of the work to be regulated by the agreement.

    [18] Item 2 of Schedule 13 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the FW (TPCA) Act) sets out when an employee covered by an individual agreement-based transitional instrument is taken to be an employee who will be, or who is, covered by an enterprise agreement. The relevant provision is as follows:

      2 Employee covered by individual agreement-based transitional instrument or individual Division 2B State employment agreement is taken not to be an employee who will be, or who is, covered by enterprise agreement in certain circumstances

      (1) This item applies to an employee at a particular time if, at that time, an individual agreement-based transitional instrument or an individual Division 2B State employment agreement covers the employee.

      (2) The employee is only taken, for the purposes of the FW Act, to be at that time an employee who is or will be covered by an enterprise agreement or a proposed enterprise agreement, if one of the following applies:

      (a) the nominal expiry date of the individual agreement-based transitional instrument or the individual Division 2B State employment agreement has passed;

    [19] The effect of the provision is explained by the accompanying notes in the following terms:

      Note: The main effect of this subitem is that an employee who is covered by an individual agreement-based transitional instrument or an individual Division 2B State employment agreement will not be able to do any of the following until the nominal expiry date of the instrument passes or a conditional termination of the instrument is made under subitem 18(2) of Schedule 3 or subitem 25(2) of Schedule 3A:
      (a) be represented in bargaining for an enterprise agreement;
      (b) vote on the agreement;
      (c) be in a group of employees covered by a protected action ballot order in relation to the agreement;
      (d) have the agreement apply to the employee.”

    [20] Telstra submits that it is of significance that the coverage of the Agreement replicates the coverage of Telstra’s current enterprise agreement, the Telstra Enterprise Agreement 2012–2015. Mr Hardisty was also involved in the negotiations for the 2012–2015 Agreement as an elected official and representative of the CEPU, and at no time during those negotiations did he object to the group of employees covered by AWAs and ITEAs being included the scope. Telstra submits that it is not unfair for the group of employees covered by the 2012–2015 Agreement to be covered by the Agreement which replaces it.

    [21] Telstra submits that excluding AWA and ITEA covered employees from the scope of the Agreement would be inconsistent with Item 2(2) of Schedule 13 of the FW (TPCA) Act. This item has the effect that those who are covered by an individual agreement-based transitional instrument that has not passed its nominal expiry date are excluded from the scope of a proposed agreement and participation in the ballot process, but employees covered by an industrial agreement-based transitional instrument that has passed its nominal expiry date are not. Telstra submits that as the nominal expiry date of all ITEA and AWAs has passed, those employees should be able to vote on the agreement and have it apply to them.

    [22] Telstra further submits that excluding those employees from the scope of the Agreement would have the effect that they would not be covered by the Agreement should they decide to terminate their AWA or ITEA. Telstra notes that this is not an abstract proposition, as during the life of the 2012–2015 Agreement, over 1,000 Telstra employees chose to terminate their AWA or ITEA and revert to the 2012–2015 Agreement. If AWA and ITEA covered employees are excluded from coverage of the Agreement and later terminate their individual agreement, they will continue to be covered by the 2012–2015 Telstra enterprise agreement which does not provide for any further pay increases.

    [23] Finally, Telstra submits that excluding AWA and ITEA covered employees from coverage would have the result that the group then covered by the Agreement would not be geographically, operationally or organisationally distinct. Telstra employees on AWAs and ITEAs perform the same work, as part of the same teams, at the same locations, as those employees not on AWAs or ITEAs.

    [24] Telstra therefore submit that the objection raised by Mr Hardisty should be rejected and that the Commission should approve the Agreement.

    [25] The CEPU adopts the submissions made by Telstra.

    [26] Mr Hardisty submits that the group of employees covered by the Agreement is not fairly chosen because it is inappropriate and unfair for employees on AWAs or ITEAs to fall under the scope of the Agreement. It is submitted that it is inappropriate to allow these employees, who make up about 30 per cent of the voting electorate, to vote on the Agreement.

    [27] Mr Hardisty submits that it is unfair and inappropriate to include AWA and ITEA covered employees in the scope of the Agreement given that they will not be bound by the Agreement unless they chose to terminate their AWA or ITEA. Mr Hardisty contends that the ITEA and AWA covered employees do not appear to have any intention of terminating their individual agreements given that the nominal expiry date of all AWAs and ITEAs passed some years ago.

    [28] Mr Hardisty further submits that those employees may be motivated to vote in favour of the Agreement given that Telstra appear to have indicated that any increase in wages under the Agreement is likely to result in an increase of wages for the employees on AWAs and ITEAs. It is submitted that this is unfair, given that those employees are exposed to the positive effects of the Agreement whilst being insulated from any negative term of the Agreement, given that they are bound by the terms of their AWA or ITEA.

    [29] Finally, Mr Hardisty submits that a high proportion of staff covered by AWAs and ITEAs are in senior positions and have been tasked to encourage staff to vote in favour of the Agreement, therefore it is inappropriate to include those employees in the scope of the Agreement.

    [30] The facts of John Holland are different to the facts in this case. Nevertheless, the approach adopted in relation to the fairly chosen test is highly relevant. The focus must be on the group of employees to be covered and an assessment made as to whether that scope is a fair coverage of the agreement. This does not involve a consideration of how many employees might have the agreement apply to them at various points in the future. The agreement may apply, or cease to apply, to current or future employees by recruitment or promotion practices, terminations of employment, the terms of the agreement, the continued existence of other agreements and/or the operation of legislation. However the precise application of the agreement is beside the point. The group to be covered within the coverage clause must be fair.

    [31] The inclusion of such employees within the coverage of the Agreement is not precluded by the Act as their individual agreements have passed their nominal expiry date. However the converse is not true. The inclusion of employees on expired individual arrangements is not mandated or deemed automatically fair by virtue of their ineligibility for inclusion when their individual agreements are in term.

    [32] The similar coverage of the underpinning award and the predecessor agreement are facts which point to the fairness of the coverage clause of the Agreement. A more significant factor in my view is the inclusion of the group under expired individual agreements gives employees in that class a realistic choice in the future to revert to collective agreement coverage. If they were not included, then any election to have their agreement terminated would leave them in a vacuum.

    [33] However it was open to Telstra to adopt different methods of securing the inclusion of employees who elect to terminate their individual arrangements. It could have included within the coverage employees whose individual arrangements are terminated at any time during the operation of the Agreement and excluded those who remain on individual arrangements. This would have brought the coverage of the Agreement into line with the application of the Agreement. The particular coverage clause it has chosen disregards for coverage purposes the alternative application of individual arrangements and the consequential displacement of the collective agreement. This has had the effect of drawing criticism that employees to whom the agreement does not apply are eligible to vote on the agreement and some have apparently voted. Approximately 19,500 employees are not covered by expired individual arrangements. 20,265 employees voted in the ballot.

    [34] A finding on the fairly chosen test requires a consideration of the correct question and is a different question to the genuineness of agreement. The relevant enquiry must focus on the coverage of the agreement, not its application, over the period of its operation. In my view, given the migration of employees from individual arrangements to the collective instrument, the inevitability of changes in the agreement’s application over time and the adoption of a scope clause in line with the previous agreement and the award, the group of employees covered by the agreement is fairly chosen.

    Other Considerations

    [35] It will be clear from the above that the concerns expressed by Mr Hardisty arose from, and appear to relate to, the dynamics of the vote on the agreement. Although not put in that way, this gives rise to questions as to whether the agreement has been genuinely agreed to by employees covered by the agreement. In essence he contends that employees to whom the agreement does not apply appear to have contributed to the successful vote on the agreement and that the agreement may not have been genuinely agreed to by a majority of employees to whom it would apply at the time of the vote. For completeness I have considered this matter.

    [36] The test of genuine agreement of employees covered by the agreement in s.186 is determined by reference to s.188 of the Act. There are three elements to the definition, all of which must be complied with. The first two relate to compliance with specified sections of the Act and are not disputed here. The third element (s.188(c)) is that there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees. The employees referred to are those identified in the preamble to s.188 and s.186 as “the employees covered by the agreement”.

    [37] Once the coverage of an agreement is established, the focus of genuine agreement is on employees falling within that coverage. It is not relevant to consider whether the agreement applies to them at the time of approval. All employees other than members of the Telstra Executive Team, employees in Band 1, and qualified legal practitioners working in Telstra’s Legal Services business unit are covered by the Agreement. All such employees were able to vote for the Agreement. A majority of those who cast a valid vote approved the agreement. I conclude therefore that the agreement has been genuinely agreed to by the employees covered by the agreement.

    [38] I am satisfied that each of the requirements of ss.186, 187 and 188 of the Act as are relevant to this application for approval have been met.

    [39] The CEPU, CPSU and CEPU and APESMA have each given notice under s.183 of the Act that they wish to be covered by the Agreement. In accordance with s.201(2) of the Act I note that the Agreement covers the organisations.

    [40] The Agreement is approved and, in accordance with s.54 of the Act, will operate from 12 November 2015. The nominal expiry date of the Agreement is 30 September 2018.

    VICE PRESIDENT

    Appearances:
    Mr O'Grady, C of counsel with Mr Tamvakologos, M and Ms Giuliani, J on behalf of Telstra
    Mr Dwyer, D on behalf of Mr Hardisty
    Mr Massarani, P and Ms Khatab, D on behalf of the CEPU

    Hearing details:
    2015. Melbourne. 29 October.
    Final written submissions: Telstra on 28 October 2015. Mr Hardisty on 28 October 2015.

    1 [2015] FCAFC 16.
    2 [2015] FCAFC 16 at [34] – [41].



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