Federal Court of Australia

Construction, Forestry, Maritime, Mining and Energy Union v Mechanical Maintenance Solutions Pty Ltd [2022] FCAFC 15

ORDERS

THE COURT ORDERS THAT:

The application be dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

RANGIAH J:

1    On 7 May 2018, the first respondent, Mechanical Maintenance Solutions Pty Ltd (the employer) applied to the Fair Work Commission (the Commission) for approval of the MMS Latrobe Valley Enterprise Agreement 2018 (the New Enterprise Agreement).

2    On 13 December 2019, the Commission made a decision approving the New Enterprise Agreement: see Application by Mechanical Maintenance Solutions Pty Ltd [2019] FWCA 8471 (the Approval Decision).

3    The applicants have applied under s 39B of the Judiciary Act 1903 (Cth) for orders quashing the Approval Decision and requiring the Commission to determine the application for approval according to law.

4    The applicants submit that the Commission fell into jurisdictional error in deciding that it was satisfied that the requirements of ss 186(2)(a), 188(1)(a) and 180(5) of the Fair Work Act 2009 (Cth) (the Act) were satisfied; and in construing s 190 of the Act as permitting the Commission to accept certain undertakings offered by the employer. The employer submits that no such errors have been demonstrated and, further, that relief should be refused for discretionary reasons.

5    For the reasons that follow, I would grant the relief sought by the applicants.

Factual background

6    The employer provides maintenance services to power stations in the Latrobe Valley in Victoria. In 2018, the employer proposed to make a new enterprise agreement. At that time, there were five employees who would be covered by the proposed new agreement.

7    The proposed new enterprise agreement was intended to replace two existing enterprise agreements, namely:

    the Mechanical Maintenance Solutions P/L (MMS) Latrobe Valley Power Stations (AMWU and CFMEU) Greenfields Enterprise Bargaining Agreement 2012–2016 (the Greenfields Maintenance Agreement); and

    the Mechanical Maintenance Solutions Pty Ltd (MMS) Latrobe Valley (Victoria) Power Industry and Electrical (ETU) Greenfields Enterprise Agreement 2013 (the Greenfields Electrical Agreement).

(Collectively, the Existing Greenfields Agreements.)

8    On 15 February 2018, the employer issued a notice of representational rights to the employees, and bargaining commenced for the proposed new agreement. The employer appointed a consultant, Ryan Murphy, to assist in the conduct of bargaining with the employees.

9    The proposed new agreement was put to a vote on 4 May 2018, and four of the five employees voted to approve it. The New Enterprise Agreement was signed on 6 May 2018 by the managing director of the employer, and on 7 May 2018 by an employee representative.

10    On 7 May 2018, the employer applied to the Commission for approval of the New Enterprise Agreement. The application stated that Mr Murphy had met with each of the five employees and explained the terms of their agreement and their effect. It indicated that Mr Murphy had explained each clause and answered questions that arose, and that each employee was provided with a copy of the agreement. The application stated that all the employees had sufficient literacy to understand the content and effect of the agreement. It is apparent that Mr Murphy gave the explanation verbally to each employee, but not in writing.

11    On 14 December 2018, the Commission approved the New Enterprise Agreement. The first applicant sought permission to appeal. On appeal, the principal issue was that the employee who signed the New Enterprise Agreement had not been appointed in writing to act as a bargaining representative so that his authority to sign was unexplained. A Full Bench of the Commission quashed the decision of 14 December 2018 and remitted the application for re-determination: Construction, Forestry, Maritime, Mining and Energy Union v Mechanical Maintenance Solutions Pty Ltd [2019] FWCFB 3585.

12    In the new hearing, Mr Murphy provided a statement dated 23 July 2019 elaborating upon the explanations of the New Enterprise Agreement he had provided to the employees. He stated that between 28 February and 4 May 2018, there were a number of discussions held with employees about the proposed agreement and that he was directly involved in some of those discussions. Mr Murphy stated that on 5 April 2018, he took the employees through a clause-by-clause analysis of the revised version of the proposed agreement. He continued:

I also explained how the Agreement differed in any material or significant way to the: Greenfields Agreement; the Manufacturing Award; the CFMEU Yallourn Power Station and Open Cut Agreement – Victoria; the AMWU Yallourn Power Station and Open Cut Agreement – Victoria; and the Workshop Agreement…

13    In cross-examination during the new hearing on 13 August 2019, Mr Murphy was asked a series of open-ended questions about what he had discussed with the employees. He was not directly questioned about his statement that he had, “explained how the Agreement differed in any material or significant way to the…Greenfields Agreement…”. Mr Murphy did not give any oral evidence to the effect that he had explained how the New Enterprise Agreement differed from the Existing Greenfields Agreements.

14    Following the hearing, the Commission published reasons on 2 October 2019 indicating that it was not satisfied that the New Enterprise Agreement had been genuinely agreed and that, accordingly, it could not be approved. However, the employer was offered the opportunity to provide undertakings to address the deficiencies that had been identified in the reasons.

15    The employer subsequently offered a series of undertakings. Following a further hearing, the Commission made the Approval Decision of 13 December 2019, accepting the undertakings and approving the New Enterprise Agreement.

16    On 24 April 2020, a Full Bench of the Commission rejected an application by the first applicant for permission to appeal against the Approval Decision.

17    It may be noted that the originating application filed in this Court seeks judicial review of only the Approval Decision, and not the decision of the Full Bench to refuse permission to appeal.

18    The application has been referred to a Full Bench of this Court by the Chief Justice pursuant to s 20(1A) of the Federal Court of Australia Act 1976 (Cth).

The Approval Decision

19    The Commission’s reasons for the Approval Decision of 13 December 2019 must be understood in the context of its preceding reasons of 2 October 2019. It is enough to summarise the parts of the reasons relevant to the issues raised by the applicants.

20    The Commission commenced the reasons of 2 October 2019 by noting that three unions (which are the present applicants) opposed the application for approval of the New Enterprise Agreement. The Commission observed that the New Enterprise Agreement covered the employer and its employees in the classifications listed in Appendix 1 to the reasons and that some of the employees who would be covered by that agreement were covered by the Existing Greenfields Agreements.

21    The Commission noted at [41] of its reasons that for the New Enterprise Agreement to be approved, it was necessary that the Commission be satisfied under s 186(2)(a) of the Act that the agreement had been “genuinely agreed” by the relevant employees. The Commission observed at [43] that s 188 deals with when an enterprise agreement has been “genuinely agreed”, and requires the Commission’s satisfaction that:

(1)    the employer has complied with the pre-approval steps set out in ss 180(2), (3) and (5) and 181(2);

(2)    the enterprise agreement has been made in accordance with s 182;

(3)    there are no other reasonable grounds for believing the enterprise agreement has not been genuinely agreed to by the employees.

22    The Commission proceeded to consider from [50] the case law dealing with whether an enterprise agreement has been “genuinely agreed”, particularly the requirements of s 180(5) that the employer must take all reasonable steps to ensure that the terms of the agreement, and the effect of those terms, are explained to the relevant employees.

23    The Commission then considered what explanations of the terms of the New Enterprise Agreement and their effect were given to the relevant employees. The Commission stated at [74] that the employer had provided detailed information to the Commission about how the terms of the agreement and their effect were explained to employees, as well as information about the particular circumstances of the employees.

24    The Commission noted at [83] that the evidence indicated that the explanation provided to employees comprised of Mr Murphy going through the draft agreement clause-by-clause, explaining what each clause meant, its effect and operation for each of the five employees. The explanation began in general terms, and varied according to the employee involved.

25    The Commission found at [84] that Mr Murphy gave detailed evidence about his explanation of a range of terms of the New Enterprise Agreement and how they would operate. The Commission was satisfied that Mr Murphy went through each clause with each employee. The discussion of each term, and the depth of that discussion, varied. There was limited discussion about some of the National Employment Standards, the flexibility term and consultation term except in reference to the Act. There was detailed discussion about other matters, such as ticketed training, hours of work and rostered days off. The classification structure, and the appropriate relativities for certain roles, was a focus of some of the employees. The Commission was satisfied that Mr Murphy took all reasonable steps to explain the New Enterprise Agreement to the employees, and to ensure that the explanation was tailored to the individual circumstances of employees.

26    The Commission then observed that:

[85]    The discussion canvassed key differences between the Agreement and the Manufacturing Award, as well as some of the differences between the Agreement and the Greenfields Maintenance Agreement (although some differences, such as the omission of union rights under the dispute resolution term, were not explained). Mr Murphy conceded, however, that it did not deal with the Greenfields Electrical Agreement, despite its overlapping coverage with the Agreement in relation to electricians.

27    The Commission then considered at [86] the significance or otherwise of Mr Murphy omitting to explain the differences between the New Enterprise Agreement and the Greenfields Electrical Agreement. Mr Murphy had explained that as the Existing Greenfields Agreements were similar, he only needed to explain the changes to one of the two brought about by the New Enterprise Agreement. The Commission at [87] accepted that the Greenfields Electrical Agreement and the Greenfields Maintenance Agreement were substantially similar in terms of their content. The Commission noted that the differences were of a relatively minor nature, and with one exception, would not render the explanation inadequate for the purposes of s 180(5).

28    The Commission noted at [89] that the Greenfields Maintenance Agreement incorporated the Manufacturing Award, as well as large sections of the pre-reform Metal, Engineering and Associated Industries Award 1998 (Parts I and IV), the pre-reform Metal, Engineering and Associated Industries (Accident Pay, Victoria) Award 1998 and the pre-reform Metal, Engineering and Associated Industries (Superannuation) Award 2000 as they stood on 1 March 2006 (collectively the “historical Awards”). The Commission found at [90] that, except in relation to the Manufacturing Award, there was no evidence of any discussion about the consequences of making the New Enterprise Agreement in relation to the displacement of the various instruments incorporated by reference in the Greenfields Electrical Agreement and the Greenfields Maintenance Agreement. The breadth of terms and conditions regulated by those instruments made this a material omission. The Commission was unable to be satisfied that employees were put in a position to fully appreciate the effect on their existing conditions of employment in voting to approve the New Enterprise Agreement.

29    The Commission found at [91] that it was not presently satisfied that the New Enterprise Agreement was genuinely agreed for the purposes of s 188(1)(a) of the Act because the evidence did not establish that all reasonable steps were taken to ensure the explanation given to employees under s 180(5) was adequate.

30    The Commission concluded at [136] that as it was not satisfied that the New Enterprise Agreement had been genuinely agreed, it could not be approved. The Commission indicated at [137] that the employer should provide any further undertakings to address the deficiencies set out in the reasons.

31    On 10 December 2019, the employer provided a series of undertakings. It is unnecessary to reproduce them. Their effect was to incorporate into the New Enterprise Agreement the beneficial terms of the historical Awards that had been incorporated into the Existing Greenfields Agreements.

32    In the Approval Decision of 13 December 2019, the Commission noted:

[4]    The Decision of 2 October 2019 sets out my concern that Mechanical Maintenance Solutions had not taken all reasonable steps to ensure the explanation given to employees under section 180(5) was adequate. In summary, I held:

1.    It was a material omission that there was no discussion with employees about how the Agreement would displace the various instruments incorporated by reference in two existing greenfields agreements.

2.    Given the omission, I was not satisfied that employees were put in a position to fully appreciate the effect on their existing conditions of employment in voting to approve the Agreement.

33    The Commission referred to s 188(2) of the Act:

[37]    Section 188(2) of the Act allows the Commission to be satisfied that an enterprise agreement has been genuinely agreed despite certain minor procedural or technical errors or failures in relation to the notice of employee representational rights as long as employees were not likely to have been disadvantaged by the errors.

[38]    In this case, the failure to explain the effect of the Agreement in relation to each of the matters identified above cannot fairly be characterised as a minor procedural or technical error or one that is not likely to disadvantage employees. The failure was procedural but as I noted in my earlier Decision, it was a material omission. Left alone, it would mean employees no longer had access to certain entitlements in circumstances that were not explained, most significantly in relation to accident pay and allowances. The deficiency is not within the scope of section 188(2). The question is whether undertakings can be given to remedy the concern.

34    The Commission then considered the undertakings offered by the employer. The Commission found:

[39]    A Full Bench of the Commission has recently clarified that undertakings can be accepted in appropriate cases to deal with a concern about whether an enterprise agreement has been genuinely agreed. In this case, undertakings have been given in a bid to remedy the failure to explain that certain employee entitlements would be displaced by the Agreement.

[40]    The undertakings have the protective purpose of ensuring that employees are not disadvantaged by the failure to adequately explain the relationship between the Agreement and the instruments it will displace. I have already found that employees will be better off overall under the Agreement than the modern award by a significant margin. The undertakings will enhance, rather than detract from, this position. Except in relation to the nominal expiry date (which meets a separate statutory condition), each of the undertakings will operate to the benefit of employees and will have the result that the detriments which required explanation no longer exist. For these reasons, the undertakings resolve my concern about the failure to explain the effect of the Agreement in relation to the Electrical Award and incorporated terms of the Greenfields Manufacturing Agreement. I am satisfied that the effect of accepting the undertakings is not likely to cause financial detriment to any relevant employee.

[41]    As to whether the effect of accepting the undertaking is likely to result in substantial changes to the Agreement, I am satisfied that the answer is no. The matters to be preserved by way of undertakings have been identified with certainty because of the extensive analysis that has now been undertaken of what remains of the incorporated agreement terms discussed above. The subject matter of the undertakings is confined in nature to matters of detail that supplement existing terms of the Agreement and as I have said, overwhelmingly for the benefit of employees. The Agreement remains substantially as it was when it was made.

35    The Commission concluded:

[42]    The undertakings attached at Annexure A are accepted. With these undertakings, and for the reasons set out both above and in my earlier Decision, I am satisfied that each of the requirements of the Act conditioning the power to approve the Agreement are met.

…

[44]    The Agreement is approved and will operate from 20 December 2019. The nominal expiry date of the Agreement is 12 December 2023.

The legislative provisions

36    Part 2–4 of the Act has the heading, “Enterprise Agreements”.

37    Division 2, which consists only of s 172, describes the types of enterprise agreements that may be made. Section 172(2) provides for the making of a single-enterprise agreement, while s 172(3) provides for the making of multi-enterprise agreements. Section 172(4), describes as “greenfields agreements”, agreements relating to a proposed genuine new enterprise which does not presently have any relevant employees, made with one or more employee organisations. For present purposes, it is unnecessary to discuss the provisions dealing with multi-enterprise agreements and greenfields agreements.

38    Division 3 (ss 173-178B) describes the processes for bargaining and representation during bargaining for an enterprise agreement.

39    Division 4 is concerned with approval of enterprise agreements by the Commission. Subdivision A (ss 179–185A) deals with pre-approval steps and applications for approval. Subdivision B (ss 186–192) deals with requirements for approval.

40    It is convenient to start with the relevant provisions of Subdivision B. Section 186 of the Act provides, relevantly:

186    When the FWC must approve an enterprise agreement—general requirements

Basic rule

(1)    If an application for the approval of an enterprise agreement is made under subsection 182(4) or section 185, the FWC must approve the agreement under this section if the requirements set out in this section and section 187 are met.

Note:    The FWC may approve an enterprise agreement under this section with undertakings (see section 190).

Requirements relating to the safety net etc.

(2)    The FWC must be satisfied that:

(a)    if the agreement is not a greenfields agreement—the agreement has been genuinely agreed to by the employees covered by the agreement; and

…

(c)    the terms of the agreement do not contravene section 55 (which deals with the interaction between the National Employment Standards and enterprise agreements etc.); and

(d)    the agreement passes the better off overall test.

Note 1:    For when an enterprise agreement has been genuinely agreed to by employees, see section 188.

Note 2:    The FWC may approve an enterprise agreement that does not pass the better off overall test if approval would not be contrary to the public interest (see section 189).

Note 3:    The terms of an enterprise agreement may supplement the National Employment Standards (see paragraph 55(4)(b)).

…

41    It may be seen that s 186(2)(a) requires that the Commission must be satisfied that a non-greenfields enterprise agreement has been “genuinely agreed to” by the employees covered by the agreement. Section 188 describes when the employees can be taken to have “genuinely agreed” to an enterprise agreement:

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.

42    It may be seen that s 188(1)(a) requires the Commission’s satisfaction that the employer complied with ss 180(2), (3) and (5), which deal with pre-approval steps.

43    Section 180 is found in Subdivision A of Division 4, which deals with pre-approval steps and applications for approval. Section 180 provides, relevantly:

180    Employees must be given a copy of a proposed enterprise agreement etc.

Pre-approval requirements

(1)    Before an employer requests under subsection 181(1) that employees approve a proposed enterprise agreement by voting for the agreement, the employer must comply with the requirements set out in this section.

Employees must be given copy of the agreement etc.

(2)    The employer must take all reasonable steps to ensure that:

(a)    during the access period for the agreement, the employees (the relevant employees) employed at the time who will be covered by the agreement are given a copy of the following materials:

(i)    the written text of the agreement;

(ii)    any other material incorporated by reference in the agreement; or

(b)    the relevant employees have access, throughout the access period for the agreement, to a copy of those materials.

(3)    The employer must take all reasonable steps to notify the relevant employees of the following by the start of the access period for the agreement:

(a)    the time and place at which the vote will occur;

(b)    the voting method that will be used.

…

Terms of the agreement must be explained to employees etc.

(5)    The employer must take all reasonable steps to ensure that:

(a)    the terms of the agreement, and the effect of those terms, are explained to the relevant employees; and

(b)    the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.

(6)    Without limiting paragraph (5)(b), the following are examples of the kinds of employees whose circumstances and needs are to be taken into account for the purposes of complying with that paragraph:

(a)    employees from culturally and linguistically diverse backgrounds;

(b)    young employees;

(c)    employees who did not have a bargaining representative for the agreement.

44    Section 181(1) provides that an employer, “that will be covered by a proposed enterprise agreement may request the employees employed at the time who will be covered by the agreement to approve the agreement by voting for it”. Under s 182(1), for a single-enterprise non-greenfields agreement, the agreement is “made” when a majority of those employees who cast a valid vote approve the agreement.

45    Section 185(1) provides that if an enterprise agreement is made, a bargaining representative for the agreement must apply to the Commission for approval of the agreement.

46    Section 190 provides that where the Commission has a concern that an enterprise agreement does not meet the requirements set out in ss 186 and 187, the Commission may accept an undertaking offered by the employer that meets that concern and may, in certain circumstances, approve the agreement. Sections 190 and 191 will be set out later in these reasons.

The grounds of review

47    In their originating application filed on 24 June 2020, the applicants allege that the Commission’s Approval Decision of 13 December 2019 is affected by jurisdictional error. In their outline of submissions, the applicants describe the issues arising in the application as follows:

a.    Whether the Commissioner fell into jurisdictional error by misconceiving or failing to perform the statutory task, or misunderstanding her duty as to the nature of the opinion she was required to perform (sic), under ss 186(2)(a), 188(1)(a) and 180(5) of the of the Fair Work Act 2009 (Cth) (FW Act) by:

(i)    failing to take into account or identify relevant material, namely the full extent of the differences between the terms of the Agreement and the terms of the enterprise agreements which would otherwise have covered and applied to employees had the Agreement not been approved, in assessing satisfaction that the Respondent had taken all reasonable steps to ensure that the terms of the Agreement and their effect were explained to relevant employees; and/or

(ii)    alternatively, given the extent of the differences between the terms of the Agreement and the terms of the enterprise agreements which would otherwise cover and apply to employees, she could not have been satisfied that the Respondent had taken all reasonable steps to ensure that the terms of the Agreement and their effect were explained to relevant employees; and/or;

(iii)    failing to make any finding as required by ss 186(2)(a), 188(1)(a) and s 180(5)(b) of satisfaction that the Respondent had taken all reasonable steps to ensure that explanation was provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees (Explanation Issues).

b.    Whether, if the failure to meet the requirements of s 180(5) is confined to the lack of explanation found by the Commissioner, she fell into jurisdictional error by misconstruing s 190 of the FW Act and misconceiving her power to accept undertakings in pursuance of that section, in holding that an undertaking under s 190 of the FW Act was capable of being given to address the concerns she had about non-compliance with the pre-approval steps taken by the Respondent under s 180(5) of the FW Act (Undertaking Issue).

48    The applicant’s expression, “enterprise agreements which would otherwise have covered and applied to the employees had the Agreement not been approved”, refers to the Existing Greenfields Agreements.

49    The applicants’ outline of submissions particularises the differences between the Existing Greenfields Agreements and the New Enterprise Agreement that were allegedly not explained to the employees, as follows:

•    Union rights under the dispute resolution clause;

•    Eligibility of permanent employees for 5% pay increase after 12 months;

•    A shift loading of 100% for employees during their first 7 ordinary days of a posted afternoon and night shift roster, including where employees move from dayshift to nightshift and where employees are directed to perform work or major tasks not contained in the original program;

•    Provisions concerning engagement of contractors;

•    First aid training for all employees;

•    Payment for medical attendances during work hours, including for all expenses reasonably incurred, for work related injuries not resulting in workers compensation;

•    Paid union picnic day;

•    Designation of the following working days as public holidays where a public holiday falls on a weekend, and Easter Tuesday as a public holiday;

•    Requirement to obtain agreement to vary shiftwork rosters without notice; and

•    Payments for standing by.

50    The employer’s outline raises an additional issue, namely whether the Court should exercise its discretion to refuse relief in the absence of any challenge to the decision of the Full Bench to refuse permission to appeal against the Approval Decision.

The submissions

51    The applicants allege that the Commission fell into jurisdictional error by arriving at the state of satisfaction required under s 186(2) of the Act without taking into account “the full extent of” the material differences between the New Enterprise Agreement and the Existing Greenfields Agreements. The applicants submit that many terms of the Existing Greenfields Agreements which were beneficial to the employees were either omitted from, or detrimentally changed in, the New Enterprise Agreement, but were not identified or considered by the Commission.

52    The applicants submit that s 180(5) cannot be satisfied through the employer merely explaining the terms of an enterprise agreement but failing to discuss their effect by reference to the terms of such agreements as remained applicable at the time of the explanation. The applicants submit that the Commission erred by failing to assess the adequacy of the explanation of the effect of the New Enterprise Agreement by failing to have regard to many of the detrimental changes to conditions in comparison to the Existing Greenfields Agreements that would be brought about.

53    The applicants observe that Mr Murphy made a general statement to the Commission that he had explained to the employees how the New Enterprise Agreement “differed in any material or significant way” from the Maintenance Greenfields Agreement. However, the applicants submit that Mr Murphy failed to identify the content of any explanation that he gave concerning these differences. The applicants contend that Mr Murphy’s bald statement that an explanation was given as to material or significant differences was insufficient to allow the Commission to be satisfied that s 180(5) had been met.

54    The applicants submit, alternatively, that the employer’s failure to provide evidence that it identified to the relevant employees all the material effects of the New Enterprise Agreement compared to the terms and conditions of employment under the Existing Greenfields Agreements meant that the Commission could not have been satisfied that the New Enterprise Agreement had been genuinely agreed to by the employees.

55    The applicants also contend that the Commission failed to make any finding that it was satisfied that the requirement under s 180(5)(b) had been met. In other words, the Commission did not find that it was satisfied that the explanation was provided in an appropriate manner taking into account the particular circumstances and needs of the employees.

56    The applicants further submit that the Commission, having found that it could not be satisfied that the New Enterprise Agreement had been genuinely agreed to by the employees, erred in accepting the undertakings offered by the employer. The applicants submit that s 190, properly construed, does not allow an undertaking to cure any failure in the pre-approval steps for an enterprise agreement. The applicants point out that the references to “the enterprise agreement” in s 190 are in the present tense, which is said to reflect a focus on the terms and content of the agreement before the Commission, and not on circumstances pre-dating the approval of the agreement.

57    The applicants submit that if the Commission’s construction of s 190 is correct, the provision could be applied to fix even the most egregious defaults in the agreement-making process, which would encourage disregard for proper procedures and compromise the integrity of the decision-making process, and would be inconsistent with the objects of Pt 2–4 of the Act. The applicants also submit that their construction is supported by the Explanatory Memorandum to the Fair Work Bill 2008 (Cth).

58    The employer submits that a reviewing Court would not ordinarily quash a first instance decision for jurisdictional error unless such error had also been established in a relevant decision of the Full Bench of the Commission. It is submitted that, accordingly, any relief should be refused in the discretion of this Court.

59    The employer submits that the Commission accepted at [85]–[87] that while the Electrical Greenfields Agreement was not explained to employees, that was of no material consequence because the Electrical Greenfields Agreement was substantially similar to the Maintenance Greenfields Agreement, with the exception that the employer had not explained that the New Enterprise Agreement would displace certain Awards that were incorporated into the Existing Greenfields Agreements. However, the Commission found this omission to have been cured by the undertakings given by the employer.

60    The employer accepts that the Commission did not expressly identify the particular differences between the Existing Greenfields Agreements and the New Enterprise Agreement that are relied upon by the applicants. The employer contends that it should not, however, be inferred that the Commission failed to have regard to, or evaluate, or assess those differences.

61    The employer submits that account should be taken of the terms of the statement of reasons for the Commission’s decision of 2 October 2019 and the processes then engaged in before the Commission before the Approval Decision was made. The employer points out that the parties argued about the extent and materiality of the differences between the New Enterprise Agreement and the Existing Greenfields Agreements.

62    The employer also submits that the applicants’ contention assumes that each and every departure between a proposed agreement and the underpinning instrument is a mandatory relevant consideration, and such a conception is wrong.

63    The employer submits that the Commission “obviously enough” did not accept that the omissions or modifications of the beneficial clauses in the Existing Greenfields Agreements were “material deleterious impacts”.

64    The employer also submits that the Commission must have accepted Mr Murphy’s evidence that he had also, “explained how the [New Enterprise] Agreement differed in any material or significant way to the…Greenfields Agreement”.

65    The employer submits that s 190 of the Act cannot be construed such that undertakings cannot remedy concerns about the pre-approval process. The employer submits that there is no warrant for reading such a limitation into the provision.

Consideration

Whether the Commission erred in failing to consider all material, detrimental differences between the Existing Greenfields Agreements and the New Enterprise Agreement

66    Section 186(1) provides, relevantly, that if an application for approval of an enterprise agreement is made under s 185, the Commission must approve the agreement if the requirements set out in ss 186 and 187 are met. The corollary is that the Commission must not approve an agreement if those requirements are not met, except in a case where the Commission accepts an undertaking under s 190.

67    Section 186(2) requires that the Commission must be satisfied, relevantly, that an enterprise agreement has been “genuinely agreed to” by the employees covered by the agreement. Section 188(1)(a) provides that an enterprise agreement has been “genuinely agreed to” if the Commission is satisfied that the employer covered by the agreement complied with a number of provisions including, relevantly, s 180(5). Section 180(5) requires that, before requesting that the relevant employees approve an enterprise agreement:

(5)    The employer must take all reasonable steps to ensure that:

(a)    the terms of the agreement, and the effect of those terms, are explained to the relevant employees; and

(b)    the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.

68    Accordingly, the Commission cannot (subject to ss 188(2) and 190) approve an enterprise agreement unless it is satisfied that the employer took all reasonable steps to ensure that the terms, and the effect of those terms, were explained to the relevant employees; and that the explanation was provided in an appropriate manner taking into account the particular circumstances and needs of those employees.

69    The applicants argue that the Commission could not, as a matter of law, have been satisfied that the employer took all reasonable steps to ensure that the effect of the terms of the New Enterprise Agreement were explained to the relevant employees without considering whether “the full extent of the differences” between the Existing Greenfields Agreements and the New Enterprise Agreement were explained. The applicants’ counsel clarified in oral argument that the only differences relied upon are those that were material and detrimental to the employees.

70    The Commission found that Mr Murphy (the consultant engaged by the employer) had explained some of the differences between the Existing Greenfields Agreements and the New Enterprise Agreement to the employees. What is in issue is whether the Commission was required, but failed, to consider whether the employer had taken all reasonable steps to ensure that all the differences that were material and detrimental were explained.

71    The applicants’ argument raises for consideration:

(1)    Whether, as a matter of construction of ss 186(2), 188(1) and 180(5), the Commission must be satisfied that an employer took all reasonable steps to ensure that all material, detrimental differences between a proposed enterprise agreement and an existing enterprise agreement were explained to the relevant employees.

(2)    Whether, as a matter of fact, the Commission failed to consider whether the employer took all reasonable steps to ensure that all material, detrimental differences between the Existing Greenfields Agreements and the New Enterprise Agreement were explained to the relevant employees.

(3)    Whether any such failure amounted to a jurisdictional error.

72    The first of these issues turns upon the proper construction of s 180(5), read in the context of ss 186(2) and 188(1) of the Act.

73    These provisions were considered by the Full Court in One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union (2018) 262 FCR 527. The Full Court held at [96] and [103] that, for s 188(1), the relevant jurisdictional fact is the Commission’s state of satisfaction that s 180(5) has been complied with.

74    In One Key, the Commission had relied upon the employer’s bare assertion that it had explained the terms and the effect of the terms to the relevant employees in approving an enterprise agreement. The Full Court held:

112    It is common ground that the Commission was never told what was said to the relevant employees. It was simply told that they had been given an explanation of the terms of the Agreement and the effect of those terms. In effect, this amounted to little more than a self-serving statement that the employer had complied with its obligation under the Act. [The employer] contended that the fact that it made such a statement in a statutory declaration was significant. It is not. As the CFMEU argued, whether all reasonable steps were taken to ensure that the effect of the terms of the Agreement was explained in an appropriate manner is a question of substance, not form. The recital of a conclusion on the very question the Commission was required (through an evaluative process) to determine is not, without more, a sufficient basis for the satisfaction of the statutory test. In other words, a bare statement by an employer that an explanation has been given is an inadequate foundation upon which to reach a state of satisfaction. [The employer] submitted that if the Commission had erred in this respect, it was an error in fact finding or an error in process, which would be an error within its jurisdiction. We reject this submission. 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) 162 CLR 24 at 39-44 (Mason J).

113    A consideration of the subject-matter, scope and purpose of the relevant provisions of the Fair Work Act indicates that the content of the explanation and the terms in which it was conveyed were relevant considerations to which the Commission was bound to have regard. The absence of that information meant that the Commission was not in a position to form the requisite state of satisfaction. Put differently, without knowing the content of the explanation, it was not open to the Commission to be satisfied that all reasonable steps had been taken to ensure that the terms and their effect had been explained to the employees who voted on the Agreement or that they had genuinely agreed to the Agreement.

114    The following considerations point inexorably to that conclusion.

115    The Commission was required to be satisfied that [the employer] had taken “all reasonable steps to ensure” that both the terms and the effect of the terms had been explained to the relevant employees as an element in the inquiry as to whether “genuine” agreement had been obtained from them. The agreed purpose of the obligation imposed on employers by s 180(5) is to enable the relevant employees to cast an informed vote: to know what it is they are being asked to agree to and to enable them to understand how wages and working conditions might be affected by voting in favour of the agreement.

116    In order for the employer to comply with the obligation it must take into account the particular circumstances and needs of those employees, including their cultural and linguistic backgrounds, their youth, and the absence of a bargaining representative. That is made explicit in s 180(6). How could the Commission decide whether the steps the employer had taken were “all reasonable steps” unless it knew what the employees had been told before they cast their votes? Without knowing the terms in which the explanation had been conveyed how could the Commission form an opinion on the sufficiency of the explanation, particularly having regard to the considerations mentioned in s 180(6)? Ultimately, how could the Commission decide that a genuine agreement had been reached without having evidence upon which it could answer both these questions?

117    As there was no evidence of these matters before the Commission, it necessarily follows that the Commission purported to be satisfied that [the employer’s] obligations under s 180(5) had been discharged without taking those matters into account. That was a jurisdictional error because the Commission did not have authority to make the decision unless its satisfaction had been informed by them. As is often the case, there are several ways of describing the error. It could be characterised as a misconception as to what the exercise of the statutory power entails or an error “as to an important attribute of the decision to be made”: Graham at [68]. Equally it could be seen as a misunderstanding on the part of the Commission of the nature of the opinion it was required to form: Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at [31] (Gleeson CJ, Gaudron and Hayne JJ). Had the Commissioner applied his mind to the question of what the putative explanation entailed, he would inevitably have inquired into its content and terms.

(Underlining added.)

75    The Full Court held that [113] that without knowing the terms in which the explanation had been conveyed (that is, the content of the explanation), the Commission could not have been satisfied that the enterprise agreement had been genuinely agreed to by the employees.

76    The employer’s obligation under s 180(5) is to take all reasonable steps to ensure that “the terms of the agreement” and “the effect of those terms” are explained to the relevant employees, and that the explanation is provided in an appropriate manner. The expressions, “the terms” and “those terms” must refer to all the terms, not merely some of them. What is required is that all reasonable steps be taken to ensure that all the terms and the effect of all the terms are explained. It is implicit that the explanation must be an accurate, and not misleading, explanation.

77    As the Full Court observed in One Key at [115], the purpose of s 180(5) is to, “enable the relevant employees to cast an informed vote: to know what it is they are being asked to agree to, and to enable them to understand how wages and working conditions might be affected by voting in favour of the [proposed] agreement”. The importance attached by the legislature to the employer placing the employees in a position to make an informed decision is emphasised by the use of imperative language like “must”, “take all reasonable steps” and “ensure” to describe the employer’s obligations. That importance is also reflected in the requirement that the employer give the explanation, “in an appropriate manner taking into account the particular circumstances of the relevant employees”. An employer proposing an enterprise agreement may, for example, seek to trade off beneficial provisions of a modern award made by the Commission (described in s 134(1) as providing a fair minimum safety net of terms and conditions) for different benefits and obligations negotiated directly with the relevant employees. In that context, it is unsurprising that the legislature was concerned to ensure that employers take all reasonable steps to allow employees to make an informed decision upon the proposed agreement.

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.

80    The obligations of the Commission when considering an application for approval of an enterprise agreement must be distinguished from the obligations of an employer under s 180(5). Under ss 186(2)(a) and 188(1)(a)(i), the Commission must be satisfied that an enterprise agreement has been “genuinely agreed to”, which in turn requires the Commission to be satisfied that the employer complied with s 180(5) by taking all reasonable steps to ensure that all the terms, and the effect of all the terms, were explained in an appropriate manner. That requirement is qualified by s 188(2), which allows the Commission to be satisfied that an agreement was “genuinely agreed to” where any errors made in relation to the requirements of s 180(5) are minor procedural or technical errors and were not likely to have disadvantaged the employees. In this way, s 188(2) allows the Commission to ameliorate the effect of an employer’s non-compliance with s 180(5) by disregarding some immaterial errors.

81    Accordingly, the Commission is required under ss 186(2)(a), 188(1)(a)(i) and 180(5) to consider whether it is satisfied, first, that the employer took all reasonable steps to ensure that all the terms of a proposed enterprise agreement, and the effect of all the terms, were explained to the relevant employees in an appropriate manner; and, second, that any errors in relation to that requirement are immaterial in the sense described in s 188(2). The effect is that the Commission cannot approve an enterprise agreement unless it is satisfied that the employer took all reasonable steps to ensure that, relevantly, all the detrimental effects of the proposed terms upon existing employment conditions were explained in an appropriate manner; or, if not, that the employer’s error in failing to do so was immaterial in the relevant sense.

82    The next question is whether the applicants have established that in this case, the Commission failed to consider whether the employer took all reasonable steps to ensure that all the detrimental effects of the terms of the New Enterprise Agreement in comparison to the Existing Greenfields Agreements were explained to the relevant employees.

83    The appropriate starting point is the applicants’ submission that there were clauses in the Existing Greenfields Agreements beneficial to the employees which were omitted from, or changed to the detriment of the employees in, the New Enterprise Agreement. The first and second columns of the Table below compare the clauses relied on by the applicants. The third column assesses the applicants’ submission that they relied upon these clauses in submissions before the Commission.

84    It must be accepted that these clauses in the Existing Greenfields Agreements were beneficial or potentially beneficial to employees covered by the New Enterprise Agreement. It must also be accepted that the New Enterprise Agreement either omitted or replaced these clauses with less beneficial clauses.

85    An examination of the applicants’ written and oral submissions and an aide memoire provided to the Commission reveals that the applicants relied upon some, but not all, of these clauses in support of its argument that the New Enterprise Agreement should not be approved. It is unnecessary, for the purposes of this appeal, to consider whether there can be jurisdictional error in circumstances where the Commission is satisfied that an enterprise agreement should be approved without having considered detrimental changes to working conditions that were not the subject of submissions. It is enough that there were a number of detrimental changes that the applicants had specifically submitted were not explained by the employer. It is convenient to refer to the omitted and replaced clauses that were the subject of specific submissions as the “Beneficial Greenfields Clauses”.

86    The obligation under s 180(5) to take all reasonable steps to explain the effect of the terms of the New Enterprise Agreement required the employer to take all reasonable steps to explain to the relevant employees the omissions from, and detrimental modification of, the Beneficial Greenfields Clauses. The question of whether the Commission considered whether the employer complied with that obligation requires close examination of the Commission’s findings in its reasons of 2 October 2019.

87    The Commission found at [74] that the employer had provided detailed information to the Commission about how the terms of the New Enterprise Agreement and their effect were explained to employees. The Commission proceeded to describe at [75] to [83] how the explanations were given. The Commission then concluded:

[84]    Mr Murphy gave detailed evidence about his explanation of a range of terms of the Agreement and how they would operate. I am satisfied that he went through each clause of the Agreement with each employee. The discussion of each term, and the depth of that discussion, varied. There was limited discussion about some of the National Employment Standards, the flexibility term and consultation term except in reference to the Act. There was detailed discussion about other matters, such as ticketed training, hours of work and rostered days off. The classification structure, and the appropriate relativities for certain roles, was a focus of some of the employees. I am satisfied that Mr Murphy took all reasonable steps to explain the Agreement to the employees, and to ensure that the explanation was tailored to the individual circumstances of employees. His approach was informed by his understanding of those circumstances…

88    In this passage, the Commission found that Mr Murphy had gone through each clause of the draft New Enterprise Agreement with each employee, and taken all reasonable steps to explain the New Enterprise Agreement. However, the Commission only found that Mr Murphy had given evidence about his explanation of “a range of terms” of the New Enterprise Agreement and how they would operate. There was no finding here that Mr Murphy had explained the effect of all the terms.

89    The Commission then observed:

[85]    The discussion canvassed key differences between the Agreement and the Manufacturing Award, as well as some of the differences between the Agreement and the Greenfields Maintenance Agreement (although some differences, such as the omission of union rights under the dispute resolution term, were not explained). Mr Murphy conceded, however, that it did not deal with the Greenfields Electrical Agreement, despite its overlapping coverage with the Agreement in relation to electricians.

[86]    Mr Murphy explained this omission on the basis that because the Greenfields Electrical Agreement and the Greenfields Maintenance Agreement are very similar, one only needed to explain the changes from one of the two. It is also the case that none of the employees were employed as electricians, although one appears to have advanced electrical instrumentation qualifications.

[87]    I accept, and it is not seriously in dispute, that the Greenfields Electrical Agreement and the Greenfields Maintenance Agreement are substantially similar in terms of their content. There are a number of differences of a relatively minor nature, and with one exception, in my view the failure to explain those matters would not render the explanation inadequate for the purposes of section 180(5). However, there is one key difference that falls into such a category.

[88]    The Greenfields Electrical Agreement incorporates the Electrical, Electronic and Communications Contracting Award 2010 (the Electrical Award), except in relation to the model dispute resolution, flexibility and consultation terms. It does not appear to be the case that the Electrical Award would otherwise cover or apply to employees of MMS, because it is not in the industry of providing electrical services.

[89]    In a similar vein, the Greenfields Maintenance Agreement incorporates the Manufacturing Award, as well as large sections of the pre-reform Metal, Engineering and Associated Industries Award 1998 (Parts I and IV), the pre-reform Metal, Engineering and Associated Industries (Accident Pay, Victoria) Award 1998 and the pre-reform Metal, Engineering and Associated Industries (Superannuation) Award 2000 as they stood on 1 March 2006. It also provides for the continuation of a range of unspecified “existing over Agreement payments and conditions of employment”.

[90]    Except in relation to the Manufacturing Award, there is no evidence of any discussion about the consequences of making the Agreement in relation to the displacement of the various instruments incorporated by reference in the Greenfields Electrical Agreement and the Greenfields Maintenance Agreement. The breadth of terms and conditions regulated by those instruments makes this a material omission. It falls in the category of concern identified in One Key No. 2 and later in Diamond Offshore, in that despite the industry experience of the employees and their varying levels of familiarity with working conditions in the Latrobe Valley, I cannot be satisfied that employees were put in a position to fully appreciate the effect on their existing conditions of employment in voting to approve the Agreement.

[91]     It follows that I am not presently satisfied that the Agreement was genuinely agreed for the purposes of section 188(1)(a) (sic) of the Act, because the evidence does not establish that all reasonable steps were taken to ensure the explanation given to employees under section 180(5) was adequate.

(Underlining added.)

90    At [85], the Commission made four findings. First, the Commission found that Mr Murphy had explained the key differences between the Manufacturing Award and the New Enterprise Agreement. Second, Mr Murphy had explained some of the differences between the Existing Greenfields Agreements and the New Enterprise Agreement. Third, Mr Murphy had not explained some of the differences between the Existing Greenfields Agreements and the New Enterprise Agreement, including the omission of union rights under the dispute resolution term. Fourth, Mr Murphy had not dealt with the Greenfields Electrical Agreement at all in his explanations to employees.

91    The Commission’s focus at [86] and [87] was upon the consequence of its fourth finding, that Mr Murphy had failed to deal with the Greenfields Electrical Agreement. The Commission concluded that since Mr Murphy had dealt with the Greenfields Maintenance Agreement and it was substantially similar in content to the Greenfields Electrical Agreement, that omission did not affect the adequacy of the explanation for the purposes of s 180(5).

92    The Commission then returned to its third finding, that Mr Murphy had not explained some of the differences between the Existing Greenfields Agreements and the New Enterprise Agreement. The Commission focussed at [88]-[90] upon the absence of any explanation that certain historical Awards incorporated into the Existing Greenfields Agreements would be displaced under the New Enterprise Agreement. It was solely that error which led to the Commission finding at [91] that it was not satisfied the New Enterprise Agreement had been genuinely agreed. The subsequent Approval Decision was concerned with whether the undertakings offered by the employer would meet the Commission’s concerns about displacement of the historical Awards.

93    However, the Commission’s reasons gave little attention to whether other differences between the Existing Greenfields Agreements and the New Enterprise Agreement had been explained to the employees. The entirety of the Commission’s discussion of that issue is found in [85] where the Commission stated that:

The discussion canvassed…some of the differences between the Agreement and the Greenfields Maintenance Agreement (although some differences, such as the omission of union rights under the dispute resolution term, were not explained).

94    In this passage, the Commission expressly acknowledged that some of the differences between the Existing Greenfields Agreements and the New Enterprise Agreement were not explained to the employees. The only differences the Commission identified as having not been explained were, “the omission of union rights” (presumably a reference to the first of the Beneficial Greenfields Clauses identified in the Table at [83] above) and the displacement of the historical Awards. While the Commission evidently accepted that there were other differences not explained, it did not identify them. The Commission did not explain whether such differences were beneficial or detrimental to the relevant employees.

95    In considering whether it was satisfied that s 180(5) had been complied with, the Commission would naturally be expected to follow up its finding that “some differences…were not explained” by identifying those differences and examining the materiality of the failure to explain them. However, apart from discussing the displacement of the historical Awards, the Commission made no further reference to those differences. The Commission did not refer to the Beneficial Greenfields Clauses (other than the union rights clause), even though these were differences which the first applicant had submitted had not been not explained to the relevant employees and were material. The consequence of the employer having only explained some of the differences was not discussed by the Commission.

96    The employer submits that it should be inferred that the Commission must have accepted Mr Murphy’s evidence that he had, “also explained how the Agreement differed in any material or significant way to the…Greenfields Agreement”. There are three difficulties with accepting that submission.

97    First, the Commission in fact rejected that aspect of Mr Murphy’s evidence. Rather, the Commission expressly found that Mr Murphy had not explained that the historical Awards incorporated into the Existing Greenfields Agreements were displaced under the New Enterprise Agreement, and found that error to be material.

98    Second, the statement made by Mr Murphy was a bare, self-serving assertion of compliance with the obligation under s 180(5) to take all reasonable steps to ensure that the effect of the terms was explained. Mr Murphy did not elaborate upon what material and significant differences he had explained. As the Full Court held in One Key at [112], the recital of a conclusion on the very question the Commission is required to determine is not, without more, a sufficient basis for the satisfaction of the statutory test. The Full Court held that a bare statement that an explanation of the terms and the effect of the terms was given is an inadequate foundation upon which to reach the requisite state of satisfaction.

99    Third, Mr Murphy’s statement that he explained how the New Enterprise Agreement “differed in any material or significant way” infers that there were some differences he did not explain because he regarded them as immaterial or insignificant. Mr Murphy did not identify which terms he failed to explain the effect of. Without the Commission identifying those terms and considering their materiality for itself, the Commission could not reasonably have been satisfied that the employer had taken all reasonable steps to ensure that the effect of all the terms were explained in an appropriate manner as was required by s 180(5), nor that any non-compliance was an immaterial error within s 188(2).

100    It would have been an error for the Commission to have concluded that on the basis of Mr Murphy’s evidence, that it was satisfied that the employer had complied with s 180(5) and that the New Enterprise Agreement was “genuinely agreed to”. However, as has been discussed, the Commission did not accept Mr Murphy’s evidence that he had explained how the New Enterprise Agreement “differed in any material or significant way” from the Existing Greenfields Agreements.

101    The employer next submits that the Commission “obviously enough” did not accept that the omissions or modifications of the Beneficial Greenfields Clauses were “material deleterious impacts”.

102    The Commission did not discuss the Beneficial Greenfields Clauses, nor whether the omission or detrimental modification of the Beneficial Greenfields Clauses had been explained to the employees, nor why it was satisfied that the employer had complied with s 180(5) other than in respect of the historical Awards. The omissions and modifications were clearly detrimental to employees covered by the New Enterprise Agreement. The employer has not pointed to any reasons why the omissions could have been regarded by the Commission as immaterial.

103    It cannot be inferred that the Commission considered the employer’s failure to explain to the relevant employees the omissions or modifications of the Beneficial Greenfields Clauses, but then decided that it was nevertheless satisfied that the failure was immaterial in the sense described in s 188(2). To draw such an inference would be to read far more into the Commission’s reasons than is available. The Commission simply failed to explain why it disregarded the employer’s omissions. It is difficult to imagine that the Commission considered that the employer’s failure to explain the omission of terms like those entitling qualified employees to a 5% wage increase after 12 months, or to a shift loading of 100% for each afternoon or night shift worked for their first seven ordinary days of a posted roster, was a merely minor procedural or technical error not likely to disadvantage the employees. The Commission did not give the slightest indication that it gave consideration to the employer’s failure to explain the effect of the omission of, or detrimental modifications to, the Beneficial Greenfields Clauses but then decided that it was nevertheless satisfied that the errors were immaterial.

104    The employer’s submission that the Commission did not accept that the omission of or modifications to the Beneficial Greenfields Clauses were “material deleterious impacts” must be rejected.

105    In summary, the Beneficial Greenfields Clauses were omitted from, or detrimentally modified in, the New Enterprise Agreement. In its reasons of 2 October 2019, the Commission recognised that some differences between the Existing Greenfields Agreements and the New Enterprise Agreement were not explained to the employees. However, the Commission only identified two of the differences that were not explained. These were the omission of the union rights clause (which was one of the Beneficial Greenfields Clauses) and the historical Awards. The Commission referred to the materiality of only the second difference it identified. The Commission’s reasons reveal no examination of whether the employer had explained to the employees that the other Beneficial Greenfields Clauses had been omitted from or modified in the New Enterprise Agreement. It is inconceivable that if the Commission had considered the omissions or modification of all the Beneficial Greenfields Clauses and found that they had been explained to the employees, or alternatively, that the omissions and modifications had been explained but the errors were immaterial, the Commission would not have expressly said so.

106    Sections 186(2) and 188(1)(a) imposed a duty upon the Commission to approve the New Enterprise Agreement if, and only if, it reached a state of satisfaction that the employer had, relevantly, complied with s 180(5). The Commission was required to consider whether all reasonable efforts had been made to ensure that the effect of all the terms of the New Enterprise Agreement were explained to the relevant employees in an appropriate manner. This required consideration of whether all the differences detrimental to employees between the New Enterprise Agreement and the Existing Greenfields Agreements were explained. The Beneficial Greenfields Clauses were contained in the Existing Greenfields Agreements but had been omitted from, or detrimentally modified in, the New Enterprise Agreement.

107    The only appropriate inference is that the Commission failed to consider whether the employer explained the New Enterprise Agreement’s omissions (other than omission of the union rights clause) from, and detrimental modifications to, the relevant employees. Therefore, the Commission could not have considered whether the employer had taken all reasonable steps to give that explanation.

108    In One Key, the Full Court observed at [109] that where a statute vests power in, or imposes a duty upon, an administrative decision-maker to do something upon reaching a state of satisfaction, and matters that the statute requires the decision-maker to take into account are not considered, then, as a matter of law, the requisite state of satisfaction is not reached. Since the Commission was required under ss 186(2) and 188(1) to consider whether the employer had taken all reasonable steps to explain all the terms of the proposed enterprise agreement, but failed to do so, the requisite state of satisfaction was not lawfully reached.

109    It is necessary to consider whether the Commission’s error was material and, accordingly, a jurisdictional error. In MZAPC v Minister for Immigration and Border Protection [2021] HCA 17; (2021) 390 ALR 590, the High Court at [2] confirmed that an error is material if it involves a realistic possibility that the decision in fact made could have been different had the breach of the relevant condition not occurred. It is apparent that if the Commission had considered whether the employer had taken all reasonable steps to explain the omission or detrimental modification of the Beneficial Greenfields Clauses, there was a significant chance that it would have gone on to conclude that the New Enterprise Agreement had not been genuinely agreed to, and, subject to the question of any undertakings offered and accepted, could not be approved. The Commission’s error was jurisdictional.

Whether the Commission erred in not making a finding that an explanation “in an appropriate manner” requires an explanation be given in writing

110    The applicants’ remaining argument concerning s 180(5) may be dealt with briefly. The applicants argue that the Commission did not make any finding that it was satisfied the explanation of the terms of the New Enterprise Agreement and the effect of those terms was provided, “in an appropriate manner taking into account the particular circumstances and needs of the relevant employees”, within s 180(5)(b). However, the Commission found at [84] that it was satisfied that Mr Murphy took all reasonable steps to ensure that his explanation of the New Enterprise Agreement was tailored to the individual circumstances of the five employees. That is a sufficient answer to the applicants’ argument.

111    The applicants, in oral argument, clarified that their real complaint concerning s 180(5)(b) was that the explanation had only been given to the employees verbally, whereas giving the explanation “in an appropriate manner” required that the explanation also be given in writing. It is enough to say that s 180(5) does not compel the giving of an explanation in writing. It was for the Commission to decide whether, in the absence of any written explanation, it was satisfied that all reasonable steps have been taken to explain all the terms and their effect in an appropriate manner. The Commission’s conclusion that an entirely verbal explanation was adequate in the circumstances of the case has not been demonstrated to be affected by any error.

Whether the Commission erred in accepting undertakings from the employer

112    The Commission was not satisfied that the New Enterprise Agreement was “genuinely agreed to” because, contrary to the requirements of ss 188(1)(a) and 180(5), there was no discussion with the employees about the consequences of the New Enterprise Agreement displacing historical Awards which were incorporated into the Existing Greenfields Agreements.

113    The employer then offered undertakings to the Commission. The effect of the employer’s undertakings was to effectively reinstate the beneficial conditions of the displaced historical Awards. In the Approval Decision of 13 December 2019, the Commission accepted the employer’s undertakings. The Commission was satisfied that the undertakings met the requirements of s 190(3) and resolved the Commission’s concerns.

114    The applicants submit that s 190 does not allow acceptance of an undertaking relating to a concern held by the Commission that an employer failed to comply with requirements that had to be fulfilled prior to approval of an enterprise agreement by the employees. The applicants submit that an error by an employer in complying with s 180(5) cannot be made good by an undertaking. They argue that the references to “the agreement” in s 190 reflect a focus on the terms and content of the enterprise agreement that is before the Commission, and not upon the circumstances pre-dating approval of the enterprise agreement. In particular, they point out that in ss 180 and 181 the expression “proposed agreement” is used, in contrast to s 190 where the word “agreement” is used. The applicants submit that if it was intended that s 190 apply to requirements placed upon an employer before voting by the employees, the expression “proposed agreement” would have been used.

115    Section 190 provides:

190    FWC may approve an enterprise agreement with undertakings

Application of this section

(1)    This section applies if:

(a)    an application for the approval of an enterprise agreement has been made under subsection 182(4) or section 185; and

(b)    the FWC has a concern that the agreement does not meet the requirements set out in sections 186 and 187.

Approval of agreement with undertakings

(2)    The FWC may approve the agreement under section 186 if the FWC is satisfied that an undertaking accepted by the FWC under subsection (3) of this section meets the concern.

Undertakings

(3)    The FWC may only accept a written undertaking from one or more employers covered by the agreement if the FWC is satisfied that the effect of accepting the undertaking is not likely to:

(a)    cause financial detriment to any employee covered by the agreement; or

(b)    result in substantial changes to the agreement.

FWC must seek views of bargaining representatives

(4)    The FWC must not accept an undertaking under subsection (3) unless the FWC has sought the views of each person who the FWC knows is a bargaining representative for the agreement.

Signature requirements

(5)    The undertaking must meet any requirements relating to the signing of undertakings that are prescribed by the regulations.

116    Section 191 describes the effect of the Commission’s acceptance of undertakings as follows:

191    Effect of undertakings

(1)    If:

(a)    the FWC approves an enterprise agreement after accepting an undertaking under subsection 190(3) in relation to the agreement; and

(b)    the agreement covers a single employer;

the undertaking is taken to be a term of the agreement, as the agreement applies to the employer.

…

117    The express terms of s 190 are against the applicants’ argument. There are two conditions described in s 190(1) that must be satisfied if the section is to apply. One condition is under s 190(1)(b), and requires that the Commission have a concern that, “the agreement does not meet the requirements set out in sections 186 and 187”. Section 186(2) provides, relevantly, that the Commission must be satisfied an enterprise agreement has been “genuinely agreed to”. In turn, s 188(1)(a) provides that an enterprise agreement has been “genuinely agreed to” if the Commission is satisfied that, relevantly, the employer complied with sections 180(2), (3) and (5) (which deal with pre-approval steps). Further, under s 188(1)(b), the Commission must be satisfied that the enterprise agreement is made in accordance with whichever of s 182(1) or (2) applies (which deal with the making of different kinds of enterprise agreements by employee vote). The matters of which the Commission must be satisfied under subsections 188(1)(a) and (b) are steps required to be taken by the employer before approval of an enterprise agreement by the relevant employees. The application of s 190 to a concern by the Commission that the enterprise agreement does not meet the requirements set out in s 186 is quite inconsistent with the applicants’ submission that the Commission may only accept a written undertaking in relation to requirements that are not pre-approval requirements.

118    Further, the condition under s 190(1)(a) that must be satisfied for s 190 to apply is that an application for the approval of an enterprise agreement has been made under s 182(4) or s 185. Section 185 (1) provides that if an enterprise agreement is “made”, an application must be made to the Commission for approval of the agreement. Section 182(1) provides that, in the case of a proposed single-enterprise agreement that is not a greenfields agreement, the agreement is “made” when a majority of those employees who cast a valid vote approve the agreement. The validity of the vote is not, or is not necessarily, conditioned upon compliance with pre-approval steps such as s 180(5). Accordingly, even if the employer has failed to comply with s 180(5), s 190 may be enlivened. That position is consistent with a construction of s 190 which allows the Commission to accept an undertaking that resolves a concern that the employer has failed to comply with s 180(5).

119    The change of language from “proposed agreement” in ss 180 and 181 to “agreement” in s 190 is explained by s 182(1). Once an agreement is approved by a vote of the relevant employees, it is “made”, and ceases to be described in the Act as a “proposed agreement”, and is instead described as an “agreement”. In ALDI Foods Pty Limited v Shop, Distributive and Allied Employees Association (2017) 262 CLR 593, the majority observed at [34] that, “once the agreement is made in accordance with s 182(1), the agreement is treated by the Act as covering the employers and employees to whom it refers”. The majority went on to observe at [42] that, “those employees are accurately described as being covered by it, even though it does not yet apply to them in the sense of being in operation so as to create rights and liabilities in relation to work actually performed under it”. If the Commission does not approve an enterprise agreement that has been “made”, the consequence is that the rights and liabilities provided for do not come into operation. The Act does not provide for an agreement to be “unmade” if the Commission declines to approve the agreement. Accordingly, the use of the word “agreement’ in s 190 (and in ss 186, 188 and other provisions dealing with steps taken after the employees have approved the agreement) does not reflect any intention to exclude the application of the provision to steps required to be taken before the agreement was made.

120    The applicants submit that a construction allowing the Commission to accept undertakings which remedy failures to comply with pre-voting requirements would allow s 190 to be applied, “to fix even the most egregious defaults”, which would encourage disregard for proper procedures and compromise the integrity of the decision-making process, and be inconsistent with the objects of Pt 2–4 of the Act. That submission cannot be accepted. Section 190(3) provides that the Commission may only accept an undertaking if satisfied that the effect of accepting the undertaking is not likely to result in “substantial changes” to the enterprise agreement. The circumstances in which the Commission may approve an agreement by accepting an undertaking where pre-voting requirements are not complied with are, accordingly, limited. Further, the Commission has a discretion under s 190(2) as to whether to accept an undertaking. The suggestion that employers could use s 190 to fix even the most egregious defaults must be rejected.

121    The applicants also submit that their construction is supported by cl 806 of the Explanatory Memorandum to the Fair Work Bill. That clause stated, “Subclause 190(2) enables FWA to approve the agreement under clause 186 or clause 189 where it is satisfied that the undertaking clarifies the intended operation of the agreement”.

122    The applicants argue that cl 806 indicates that the Commission may only approve an enterprise agreement through the acceptance of an undertaking where the effect of the undertaking is to clarify the intended operation of the enterprise agreement. However, cl 806 simply provides an example of a circumstance in which the Commission might accept an undertaking and, on that basis, approve an enterprise agreement. That is demonstrated by cll 804 and 805 which give another example of a circumstance in which the Commission might accept an undertaking, namely where the Commission has a concern that the agreement might breach a National Employment Standard. Accordingly, cl 806 is not intended to exhaustively describe the circumstances where the Commission can accept an undertaking.

123    For these reasons, the applicants’ submission that s 190 does not permit the Commission to accept an undertaking to resolve a concern about failure to comply with a pre-approval requirement must be rejected.

Relief

124    In my opinion, the applicants have succeeded in demonstrating jurisdictional error on the part of the Commission at first instance. The grant of orders in the nature of certiorari and mandamus is discretionary: Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at [5], [17], [49] [52], [54], [145], [172] and [217]. The employer submits that relief should be refused in the discretion of the Court since no challenge has been made to the decision of the Full Bench of the Commission to refuse permission to appeal.

125    The employer relies upon the judgment of Mortimer J in Dafallah v Fair Work Commission (2014) 225 FCR 559. In that case, the Full Bench of the Commission had refused permission to appeal. Her Honour held at [54] that the Court, “should begin with an examination of the decision of the Full Bench and, unless and until it appears that decision is affected by jurisdictional error…it is not appropriate to embark on a fresh and detailed consideration of the decision of the Commissioner.” The employer submits that ordinarily relief should not be granted unless error is established in the decision of the Full Bench of the Commission.

126    In Dafallah, Mortimer J relied, in part, upon the majority judgment of Katzmann and Rangiah JJ in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union v Abigroup Contractors Pty Ltd [2013] FCAFC 148. In Abigroup, the applicant sought judicial review of both the decision of the Commission at first instance and the decision of the Full Bench dismissing the appeal after granting permission to appeal. Justices Katzmann and Rangiah indicated at [176] that they would refuse relief in respect of the first instance decision unless they were to conclude that the Full Bench’s decision also involved jurisdictional error. That was because, “it would be futile to grant relief in respect of a decision at first instance when the appellate decision stands and is conclusive and operative”.

127    In Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2016) 247 FCR 138 (ABCC v CFMEU), the Full Court at [45] distinguished the judgment of Katzmann and Rangiah JJ in Abigroup on the following basis:

In the present application before the Court, where the Full Bench did not grant permission to appeal, there is no appellate decision which stands and which is conclusive and operative. There does not appear to be any particular reason, therefore, why prohibition and mandamus may not go either to the Full Bench decision or to the first instance decision.

128    The position in the present case is analogous to that in ABCC v CFMEU, the Full Bench having refused permission to appeal. As permission to appeal was refused, there is no appellate decision upholding the decision at first instance which stands and is conclusive and operative. There is, accordingly, no discretionary basis for the refusal of relief.

Summary

129    In my opinion, the applicants should have the relief they seek. I would make orders in the nature of certiorari quashing the Approval Decision and in the nature of mandamus remitting the matter to the third respondent for consideration of the application for approval of the New Enterprise Agreement according to law.

Associate:    

Dated:    16 February 2022

REASONS FOR JUDGMENT

O’CALLAGHAN AND WHEELAHAN JJ:

Introduction

130    The applicants seek relief in the original jurisdiction of the court under s 39B of the Judiciary Act 1903 (Cth) in relation to a decision of the Fair Work Commission. The Chief Justice made a direction under s 20(1A) of the Federal Court of Australia Act 1976 (Cth) that the original jurisdiction of the court in relation to the whole of the matter be exercised by a Full Court. The application raises the question whether a decision of the Fair Work Commission to approve a single enterprise agreement, the MMS Latrobe Valley Enterprise Agreement 2018, was affected by jurisdictional error on either of two bases. The first is whether there was jurisdictional error by the Commission in forming a state of satisfaction about the requirements for approval of the enterprise agreement under the Fair Work Act 2009 (Cth) (FW Act), and the second is whether there was jurisdictional error by the Commission in acting on an undertaking to address concerns that the Commission held about whether there had been satisfaction of the requirement in s 180(5) to explain the terms of the proposed enterprise agreement and their effect to the relevant employees. For the reasons that follow, in our view the application should be dismissed.

Background

131    The first respondent (the employer) supplies maintenance services to power stations in the Latrobe Valley in Victoria. On 15 February 2018, the employer issued a notice of representational rights to its employees under s 173 of the FW Act, and bargaining then commenced for a new enterprise agreement to replace two existing greenfields agreements which covered at least some of the employees. The existing agreements were the Mechanical Maintenance Solutions Pty Ltd (MMS) Latrobe Valley Power Stations (AMWU and CFMEU) Greenfields Enterprise Bargaining Agreement 2012–2016 (Greenfields Maintenance Agreement), and the Mechanical Maintenance Solutions Pty Ltd (MMS) Latrobe Valley (Victoria) Power Industry Electrical (ETU) Greenfields Enterprise Agreement 2013 (Greenfields Electrical Agreement). In turn, the two greenfields agreements incorporated as provisions of those agreements the terms of several Award instruments as they stood at various points in time.

132    The employer appointed a consultant, Mr Ryan Murphy, to assist it in the conduct of the bargaining with the employees. The employer had five employees over the bargaining period, although the composition of the workforce changed between the time the notice was served and the time of the vote. Two of the employees were full-time, and three were casual employees. When the agreement was put to a vote on 4 May 2018, four of the five employees who would be covered voted to approve it, and the enterprise agreement was then signed.

133    The application before the Commission for approval was contested by the applicant unions (the CFMMEU, the AMWU, and the CEPU), and by the second respondent union to this proceeding (the AWU), and they advanced a number of objections. The approval took a lengthy path, including two applications for permission to appeal to the Full Bench, the first of which was successful, and which resulted in a remittal to the Commissioner for reconsideration: CFMMEU v Mechanical Maintenance Solutions Pty Ltd [2019] FWCFB 3585. Upon remittal, the Commission made two determinations: an interim determination dated 2 October 2019, and a second determination dated 13 December 2019. By the second determination, the Commission approved the enterprise agreement, but subject to some undertakings by the employer: Application by Mechanical Maintenance Solutions Pty Ltd [2019] FWCA 8471. The CFMMEU sought permission of the Full Bench of the Commission to appeal the decision approving the enterprise agreement, but on 24 April 2020 permission was refused: CFMMEU v Mechanical Maintenance Solutions Pty Ltd [2020] FWCFB 1918. The applicants now seek judicial review of the decision of the Commission made on 13 December 2019 by which the enterprise agreement was approved.

The legislation

134    The provisions of the FW Act relating to the making and approval of enterprise agreements were summarised by the Full Court in One Key Workforce Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union [2018] FCAFC 77; 262 FCR 527 (One Key Workforce) at [6] to [33] (Bromberg, Katzmann and O’Callaghan JJ). Of relevance to the present application is that s 186(1) of the FW Act provides that the Commission must approve an enterprise agreement if the requirements set out in s 186 and s 187 are met. Amongst a number of requirements is the following requirement in s 186(2)(a), requiring satisfaction by the Commission that the agreement has been genuinely agreed to –

(2)    The FWC must be satisfied that:

(a)    if the agreement is not a greenfields agreement – the agreement has been genuinely agreed to by the employees covered by the agreement; and

…

135    Section 188(1) of the FW Act provides that an enterprise agreement has been “genuinely agreed to” by the employees covered by the agreement if the Commission is satisfied that the employer complied with a number of provisions relating to pre-approval steps, and that there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees. The pre-approval steps include those referred to in s 180(5), which provides –

(5)    The employer must take all reasonable steps to ensure that:

(a)    the terms of the agreement, and the effect of those terms, are explained to the relevant employees; and

(b)    the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.

136    There are two alternative bases on which the Commission might approve an enterprise agreement notwithstanding that it is not satisfied that there was compliance with the pre-approval steps referred to in s 188(1)(a) or (b). The first is where there are minor procedural or technical errors, and where under s 188(2) the Commission is satisfied that the employees covered by the agreement were not likely to be disadvantaged by the errors –

(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.

137    The second is where the Commission has a concern that the agreement does not meet the requirements set out in s 186 and s 187, and pursuant to s 190 it approves an enterprise agreement if it is satisfied that an undertaking accepted by the Commission would meet its concern –

190    FWC may approve an enterprise agreement with undertakings

Application of this section

(1)    This section applies if:

(a)    an application for the approval of an enterprise agreement has been made under subsection 182(4) or section 185; and

(b)    the FWC has a concern that the agreement does not meet the requirements set out in sections 186 and 187.

Approval of agreement with undertakings

(2)    The FWC may approve the agreement under section 186 if the FWC is satisfied that an undertaking accepted by the FWC under subsection (3) of this section meets the concern.

Undertakings

(3)    The FWC may only accept a written undertaking from one or more employers covered by the agreement if the FWC is satisfied that the effect of accepting the undertaking is not likely to:

(a)    cause financial detriment to any employee covered by the agreement; or

(b)    result in substantial changes to the agreement.

…

The proceeding before the Commission following remittal by the Full Bench

138    After remittal by the Full Bench following its first decision, the parties filed written submissions with the Commission ahead of a hearing that took place on 13 August 2019. The CFMMEU filed detailed submissions dated 9 July 2019, which were adopted by the CEPU, the AWMU, and the AWU. Relevant to this application, the CFMMEU submitted to the Commission that the agreement had not been genuinely agreed to for the purposes of s 180(5) of the FW Act. It submitted that the evidence that the employer had taken all reasonable steps in compliance with the requirements of s 180(5) was exiguous. The CFMMEU pointed to the fact that the employer had identified in the statutory declaration of Mr Timothy Brown, Managing Director of the employer, annexed to its Form F16 application to the Commission, terms and conditions of the proposed agreement that were less beneficial than equivalent terms in two Awards that were listed in the declaration as reference instruments for the purposes of the better off overall test. The CFMMEU submitted that there was no evidence that these matters were explained to the employees. In addition, it submitted that there was no evidence that the differences between the proposed agreement and existing industrial instruments were explained to the employees, and that there were some key differences between the proposed agreement and the Greenfields Maintenance Agreement. A non-exhaustive table was set out in an aide mémoire to the CFMMEU’s submissions to the Commission that listed a number of provisions of the proposed enterprise agreement, alongside corresponding provisions of the Greenfields Maintenance Agreement, and with accompanying comments.

139    The steps taken by the employer towards meeting the requirements of s 180(5) of the FW Act were the subject of Mr Brown’s statutory declaration. The material substance of the declaration was that Mr Brown engaged the employer’s industrial consultant, Mr Murphy, to meet with the employees, and to explain to them the terms of the agreement, and the effect of the terms, and that Mr Murphy did so by meeting with the employees and explaining the terms of the agreement and the effects of the terms to them. Mr Brown stated that Mr Murphy had advised him that –

… he had explained each clause of the proposed agreement, with particular focus on casual loading on overtime, as this had the largest effect on the [employees’] existing terms and conditions, and the difference between a flat and an all purpose allowance and loadings as this also has the largest effect on the [employees’] conditions.

140    Mr Murphy gave evidence before the Commission at the hearing on 13 August 2019. Mr Murphy’s evidence was contained in three written statements that were tendered. The third statement dated 23 July 2019 was prepared and filed after the CFMMEU’s written submissions of 9 July 2019, and was more detailed than the earlier statements. Without going into all the elements of Mr Murphy’s third statement, Mr Murphy stated that he held a number of meetings with the employees, and that between 19 and 25 April 2018, he met with each of the voting employees in person. At [56]-[58] of his third statement, Mr Murphy said –

56.    At each of the meetings I had a pack containing a hard copy of the following documents for each employee:

a)    the proposed Agreement;

b)    the Manufacturing Award; and

c)    the Code for the Tendering and Performance of Building Work 2016.

57.    During each of these meetings:

a)    the employees and I went through the proposed Agreement clause by clause;

b)    I also explained how the Agreement differed in any material or significant way to the: Greenfields Agreement; the Manufacturing Award; the CFMEU Yallourn Power Station and Open Cut Agreement – Victoria; the AMWU Yallourn Power Station and Open Cut Agreement – Victoria; and the Workshop Agreement;

c)    I can recall discussing the following matters in some detail:

i.    casual loading;

ii.    redundancy pay;

iii.    crib breaks; and

iv.    the difference between all-purpose allowances and flat allowances;

d)    the employees and I discussed how the proposed Agreement compared to other enterprise agreements in the industry, including the EnergyAustralia Yallourn Agreement, the TOP Welding & Construction Latrobe Valley Power Industry Agreement 2017-2021 (TOP Agreement) and the Stable Engineering Workshop Agreement 2015 (Stable Agreement). I can recall that when I met with two of the voting employees on 21 April 2018, they asked for copies of the EnergyAustralia Yallourn Agreement (which, by this time, had been approved by the Commission), the TOP Agreement and the Stable Agreement. These documents were provided to the two employees later that afternoon;

e)    each of the voting employees were given the opportunity to ask questions about the terms and effect of the proposed Agreement. The vast majority of the questions related to whether casual loading would be paid in respect of overtime hours, whether work performed at the Hazelwood power station would be covered by the proposed Agreement and the move from an all-purpose allowance system to a flat allowance system;

f)    the voting employees were advised that MMS intended to put the proposed Agreement out for ballot; and

g)    relatedly, each of the voting employees were provided with a letter which advised them of the details of the ballot, including the time, place and voting method to be used.

58.    On 1 May 2018, one of the voting employees contacted me to query whether night shift work would attract the casual loading under the proposed Agreement. I responded to [this] query that day. On 2 May 2018, I sent a text message to this employee to check to see whether he/she had any more questions about the proposed Agreement in advance of the ballot. I also followed up the employee later that day by phone. The employee advised that he/she did not have any further questions.

141    Mr Murphy also stated that hard copies of the two existing greenfields agreements were available at the workshop on the site.

142    Mr Murphy was cross-examined at the hearing by a representative of the CFMMEU and by a representative of the CEPU. In cross-examination he confirmed that, other than the documents referred to at [56] and [57] of his third statement, he did not provide a copy of any other documents to the employees. Otherwise, the tenor of the cross-examination by the representative of the CFMMEU was to seek to exhaust Mr Murphy’s memory as to what was discussed with the employees. Mr Murphy clarified that he had attended three meetings with the employees, although not all voting employees had been present at the first meeting. He was asked a number of questions that invited him to elaborate on what he said to the employees about the proposed agreement –

Q:    As for the proposed agreement, and I'll refer to it as the 2018 agreement, what in these meetings did you say to these employees about the 2018 agreement?

A:    The first – I took them through clause by clause analysis. So what we did, was each employee had their pack and I had my own copy of the agreement and we'd go through it clause by clause to talk about what each clause meant, what its effect was and what its operation was. So that's how I explained it, so – my apologies, Commissioner, the passage of time I don’t have a verbatim recollection of what we discussed but I'm happy to go through.

…

Yes, so all five actively questioned it and probed it and perhaps – in terms of the explanation of the agreement I took every single one of the five through a clause by clause explanation of the agreement and the operation of that agreement.

143    Mr Murphy reiterated in answer to other questions in cross-examination that he took the employees through a clause-by-clause analysis of the proposed agreement, explained its terms and their effects, that he did so sequentially, and that he also explained the interrelationship of some clauses with others. He referred to explanations to varying degrees that he gave to individual employees on topics including coverage, classifications, casual loadings, overtime, first aid, superannuation, income protection, the right of the employer to dismiss an employee for serious misconduct, abandonment of employment, the location of work, payments for training that were available only to full-time and part-time workers, personal leave, rostered days off, public holidays, long service leave, community service leave, redundancy allowances, crib allowances, individual flexibility arrangements, adult apprenticeships, flat allowances and other allowances that would be incorporated into the base rate of pay, smoking in the workplace, the tool list, protective clothing, and the dispute settlement procedure. Mr Murphy stated that the time he spent with each employee on particular topics varied according to their individual circumstances, and that on some topics he did not go into much detail. He stated that there was a base line explanation that was consistent across all the employees, but account was then taken of individual circumstances. As part of his discussions, he answered questions that were raised by individual employees. Mr Murphy confirmed that there were no explanatory documents given to the employees, and that the explanations were verbal. The nature of Mr Murphy’s oral evidence was largely descriptive of topics that he covered, and his evidence did not amount to a verbatim account of the discussions that he held with the employees.

144    Mr Murphy also confirmed that none of the employees was employed as an electrician, although one employee had completed an electrical apprenticeship. He expressed the opinion that the Greenfields Mechanical Agreement and the Greenfields Electrical Agreement were very similar, and that he did not make any explicit references to the Greenfields Electrical Agreement in his discussions, but that in effect he covered that agreement by his reference to the other agreement.

145    After the conclusion of evidence on 13 August 2019, the Commission heard oral submissions from the representatives of the parties. The representatives of the employer on the one hand, and the unions on the other, made competing submissions, including as to whether the Commission could be satisfied that the requirements in s 180(5) of the FW Act had been met. The representative of the CFMMEU emphasised that it was incumbent upon the employer to explain departures from terms and conditions under existing agreements, and that there was insufficient evidence that this had occurred, referring to the aide mémoire that the CFMMEU had filed. The oral submissions were supplemented by subsequent written submissions in which the opposing positions of the parties were maintained.

The Commission’s interim decision

146    In an interim decision of 2 October 2019, the Commission held that it was not satisfied that the agreement had been genuinely agreed. The basis for that conclusion was that the Commission was not satisfied that the employer had taken all reasonable steps to ensure that the terms of the proposed agreement, and the effect of those terms, had been explained to the employees to the extent that Award terms incorporated into the greenfields agreements were to be displaced.

147    In its reasons for the interim decision, the Commission referred to this court’s decisions in One Key Workforce at first instance (Flick J), and on appeal, and reviewed a number of decisions of the Full Bench of the Commission which had considered in the circumstances of those applications whether there had been compliance with s 180(5). The Commission then stated –

[72]    As is clear from the above, while there is a degree of tension in the authorities, what is required in a particular case to establish that all reasonable steps have been taken to explain an enterprise agreement and its effect on employees will depend on the facts and circumstances of the case. The requisite level of detail varies relative to those facts and circumstances. However, the task of the Commission remains to understand the content of the explanation provided to employees and then to determine whether the explanation was adequate. The explanation must have put employees in a position to know what they are being asked to agree to and to understand how wages and working conditions might be affected by their voting to approve the enterprise agreement.

[73]    It will not always be necessary for an employer to have explained the minutiae of every difference between a modern award and an enterprise agreement, or every detriment or benefit. A range of matters giving context both to the proposed agreement and the explanation provided to employees can be relevant in determining whether an explanation is sufficient. Those matters include the effectiveness of an employer’s communication and what has not been communicated. Material or significant changes are likely to require more explanation than minor or trivial matters, both in terms of their operative effect and the consequences of implementation (for example, the displacement of existing rights or obligations, or the creation of new ones).

148    The findings of fact made by the Commission included the following –

[74]    [The employer] has provided detailed information to the Commission about how the terms of the Agreement and their effect were explained to employees, as well as information about the particular circumstances of employees. This information has been supplemented by a detailed account of the explanation given to employees by Mr Murphy.

[75]    Employees who participated in the agreement-making process did so directly. They are experienced workers in a range of classifications and were all performing work that will be covered by the Agreement at the time it was made. There were discussions, including questions asked and answers given, about how the Agreement would apply both to the employees participating in bargaining as well as future employees.

[76]    A particular matter of interest to employees was where the Agreement would leave them compared to employees of other employers in the Latrobe Valley. [The employer] went to some lengths to provide this additional information to employees including by sourcing comparable agreements for employees to review, including an EnergyAustralia agreement which was a focus of the negotiations.

…

[83]    In summary, the effect of the evidence is that the explanation provided to employees over the course of these meetings comprised of Mr Murphy going through the draft Agreement clause by clause, explaining what each clause meant, its effect and operation “for every single one of the five” employees. The explanation began in general terms, and varied according to the employee involved. For example, Mr Silvester and “Employee 2” are full time employees, and while the operation of casual loading under the Agreement was explained to them, it had no “operative effect to them”. The same explanation was a lot more detailed for “Employee 3”, who was a casual employee. For him, the explanation expanded on the interaction of casual loading and other entitlements such as shift loading.

[84]    Mr Murphy gave detailed evidence about his explanation of a range of terms of the Agreement and how they would operate. I am satisfied that he went through each clause of the Agreement with each employee. The discussion of each term, and the depth of that discussion, varied. There was limited discussion about some of the National Employment Standards, the flexibility term and consultation term except in reference to the Act. There was detailed discussion about other matters, such as ticketed training, hours of work and rostered days off. The classification structure, and the appropriate relativities for certain roles, was a focus of some of the employees. I am satisfied that Mr Murphy took all reasonable steps to explain the Agreement to the employees, and to ensure that the explanation was tailored to the individual circumstances of employees. His approach was informed by his understanding of those circumstances:

“I knew what the position for each of the employees was relative to their own experience, their own tickets, where they sat within the classifications and things like that.”

[85]    The discussion canvassed key differences between the Agreement and the Manufacturing Award, as well as some of the differences between the Agreement and the Greenfields Maintenance Agreement (although some differences, such as the omission of union rights under the dispute resolution term, were not explained). Mr Murphy conceded, however, that it did not deal with the Greenfields Electrical Agreement, despite its overlapping coverage with the Agreement in relation to electricians.

[86]    Mr Murphy explained this omission on the basis that because the Greenfields Electrical Agreement and the Greenfields Maintenance Agreement are very similar, one only needed to explain the changes from one of the two. It is also the case that none of the employees were employed as electricians, although one appears to have advanced electrical instrumentation qualifications.

[87]    I accept, and it is not seriously in dispute, that the Greenfields Electrical Agreement and the Greenfields Maintenance Agreement are substantially similar in terms of their content. There are a number of differences of a relatively minor nature, and with one exception, in my view the failure to explain those matters would not render the explanation inadequate for the purposes of section 180(5). However, there is one key difference that falls into such a category.

149    In the last sentence of [87] set out above, the key difference to which the Commission referred was the question whether there was evidence of any discussion of the displacement of Award terms that were incorporated into the greenfields agreements. In that respect, the Commission went on to say –

[90]    Except in relation to the Manufacturing Award, there is no evidence of any discussion about the consequences of making the Agreement in relation to the displacement of the various instruments incorporated by reference in the Greenfields Electrical Agreement and the Greenfields Maintenance Agreement. The breadth of terms and conditions regulated by those instruments makes this a material omission. It falls in the category of concern identified in One Key No. 2 and later in Diamond Offshore, in that despite the industry experience of the employees and their varying levels of familiarity with working conditions in the Latrobe Valley, I cannot be satisfied that employees were put in a position to fully appreciate the effect on their existing conditions of employment in voting to approve the Agreement.

[91]    It follows that I am not presently satisfied that the Agreement was genuinely agreed for the purposes of section 188(a) of the Act, because the evidence does not establish that all reasonable steps were taken to ensure the explanation given to employees under section 180(5) was adequate.

The Commission’s approval decision

150    By its interim decision, the Commission gave the employer an opportunity to provide undertakings to address the matters of concern set out in the decision. The employer then proposed undertakings by which it undertook to provide the employees with the benefit of any terms of the other instruments that were incorporated into the two greenfields agreements –

The employer will provide employees with any term in the Incorporated Terms [as defined in the undertaking] that are more beneficial or favourable than the equivalent term(s) that employees would receive under this Agreement, or that are not conferred by this Agreement, provided that if there is any inconsistency between an express provision of this Agreement and the Incorporated Terms, the provisions of this Agreement shall prevail to the extent of the inconsistency. This undertaking will not operate to reduce wages or conditions of employees.

151    Further written submissions were filed with the Commission on behalf the employer, the CFMMEU, the CEPU, and the AMWU. The employer and the Commission itself prepared tables identifying terms of the Awards incorporated into the greenfields agreements that might be affected by the enterprise agreement. A further hearing took place before the Commission on 25 November 2019.

152    On 13 December 2019, the Commission determined to approve the enterprise agreement. In the approval decision the Commission determined to act on undertakings offered by the employer as a way of remedying the failure to explain to the employees that certain entitlements arising under the Award instruments that were incorporated into the greenfields agreements would be displaced by the enterprise agreement. In acting on the undertakings, the Commission followed a decision of the Full Bench of the Commission in CFMMEU v Specialist People Pty Ltd [2019] FWCFB 7919, where the Commission accepted undertakings in like circumstances involving concerns about compliance with the pre-agreement steps in s 180(5) of the FW Act. In a subsequent decision of the Full Bench in CFMMEU v Karijini Rail Pty Ltd [2020] FWCFB 958 the Commission also acted on undertakings in circumstances where there had been concerns about non-compliance with the pre-agreement steps in s 180(5).

153    In its application for permission to appeal to the Full Bench of the Commission in this case, the CFMMEU sought to raise the question whether s 190 could be engaged in relation to pre-approval steps, but in refusing permission to appeal, the Full Bench declined to reconsider its decision in CFMMEU v Karijini Rail Pty Ltd. The Full Bench also rejected other submissions advanced on behalf of the CFMMEU, including a more general submission that there had been error in the Commission’s evaluation of whether there had been compliance with the requirements of s 180(5) of the FW Act.

The application to this court

154    By their originating application in this proceeding, the applicants seek certiorari and mandamus directed to the approval decision of the Commission made 13 December 2019. The grounds relied on by the applicants were set out in an accompanying affidavit. It is unnecessary to recite the grounds, because in written submissions counsel for the applicants refined the questions, and submitted that the application gave rise to two sets of issues, identified respectively as the Explanation Issues and the Undertaking Issue  –

(a)    Whether the Commissioner fell into jurisdictional error by misconceiving or failing to perform the statutory task, or misunderstanding her duty as to the nature of the opinion she was required to perform, under ss 186(2)(a), 188(l)(a) and 180(5) of the of the Fair Work Act 2009 (Cth) (FW Act) by:

(i)    failing to take into account or identify relevant material, namely the full extent of the differences between the terms of the Agreement and the terms of the enterprise agreements which would otherwise have covered and applied to employees had the Agreement not been approved, in assessing satisfaction that the Respondent had taken all reasonable steps to ensure that the terms of the Agreement and their effect were explained to relevant employees; and/or

(ii)    alternatively, given the extent of the differences between the terms of the Agreement and the terms of the enterprise agreements which would otherwise cover and apply to employees, she could not have been satisfied that the Respondent had taken all reasonable steps to ensure that the terms of the Agreement and their effect were explained to relevant employees; and/or;

(iii)    failing to make any finding as required by ss 186(2)(a), 188(1)(a) and s 180(5)(b) of satisfaction that the Respondent had taken all reasonable steps to ensure that explanation was provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees (Explanation Issues).

(b)    Whether, if the failure to meet the requirements of s 180(5) is confined to the lack of explanation found by the Commissioner, she fell into jurisdictional error by misconstruing s 190 of the FW Act and misconceiving her power to accept undertakings in pursuance of that section, in holding that an undertaking under s 190 of the FW Act was capable of being given to address the concerns she had about non-compliance with the pre-approval steps taken by the Respondent under s 180(5) of the FW Act (Undertaking Issue).

155    We will address the Explanation Issues first.

The Explanation Issues

Submissions of the applicants

156    Counsel for the applicants submitted that the requirement under s 180(5)(a) to take all reasonable steps to explain the effect of the terms of a proposed enterprise agreement requires, at the very least, an explanation of material deleterious effects from a comparison of the proposed agreement with existing instruments. Counsel submitted that the only differences between the greenfields agreements and the enterprise agreement that were identified by the Commission were some of the existing terms and conditions derived from the Awards that were incorporated into the greenfields agreements. It was submitted that apart from the omission of union rights under the dispute resolution clause, to which the Commission referred at [85] of its reasons for the interim decision, the Commission did not expressly identify the full extent of the differences between the enterprise agreement and the greenfields agreements, and that the differences were not considered by the Commission in either of its decisions.

157    It was submitted that the employer did not provide anything in writing to the employees setting out the differences between the enterprise agreement and the greenfields agreements, and that as a result the only evidence of any explanation that could be relied on by the employer was in relation to the discussions which occurred during the negotiation period. It was submitted that Mr Murphy gave evidence by way of a bald general statement or conclusion that he had explained to the voting employees how the agreement “differed in any material or significant way” to a number of different industrial instruments including, relevantly, the Greenfields Maintenance Agreement, but not the Greenfields Electrical Agreement. Counsel submitted that the state of the evidence was such that there was no detail of anything about numerous conditions contained in the greenfields agreements that were not included in the enterprise agreement. Counsel submitted that Mr Murphy’s evidence failed to identify any explanation with respect to a number of material differences between the enterprise agreement and the greenfields agreements, which the applicants identified as follows –

    union rights under the dispute resolution clause;

    eligibility of permanent employees for 5% pay increase after 12 months;

    a shift loading of 100% for employees during their first 7 ordinary days of a posted afternoon and night shift roster, including where employees move from dayshift to nightshift and where employees are directed to perform work or major tasks not contained in the original program;

    provisions concerning engagement of contractors;

    first aid training for all employees;

    payment for medical attendances during work hours, including for all expenses reasonably incurred, for work related injuries not resulting in workers compensation;

    paid union picnic day;

    designation of the following working days as public holidays where a public holiday falls on a weekend, and Easter Tuesday as a public holiday;

    requirement to obtain agreement to vary shift work rosters without notice; and

    payments for standing by.

158    Senior counsel for the applicants accepted in argument that not all the above claimed differences were the subject of submissions to the Commission, in particular by the aide mémoire of the CFMMEU to which we referred earlier, although noting that the aide mémoire did not purport to be an exhaustive account of claimed material differences.

159    Counsel for the applicants submitted that the Commission failed to express any concern about these omissions, failed to seek undertakings in relation to them, and failed to consider or pay any regard to them in approving the enterprise agreement. Counsel relied on the Full Court’s decision in One Key Workforce to support a submission that merely telling the Commission that an explanation was given as to the effects of the terms of the enterprise agreement compared to the current terms and conditions of employment was not sufficient to give the Commission jurisdiction to be satisfied that s 180(5) had been satisfied. It was submitted that this absence of jurisdiction was not remedied by evidence identifying some of the effects of the changes but not others.

160    In the alternative, counsel for the applicants submitted that the Commission fell into jurisdictional error in approving the enterprise agreement in circumstances where the Commission could not have been satisfied that the agreement had been genuinely agreed to by the employees who would be covered by it. It was submitted that the applicants failed to provide evidence accurately identifying all of the effects of the enterprise agreement compared to the greenfields agreements. In this regard, it was submitted that the Commission failed to have regard to relevant material and thereby exceeded its authority.

161    Counsel for the applicants further submitted that the Commission had failed to find that it was satisfied that the requirement under s 180(5)(b) of the FW Act had been met, namely that the explanation of the terms of the agreement and their effect was provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.

Analysis

162    The relevant condition in s 186(2)(a) of the FW Act, contributing to the conditions on which approval of an enterprise agreement is required, is the existence of the Commission’s satisfaction that the agreement has been genuinely agreed to by the employees covered by the agreement, and not whether as a matter of objective fact it was genuinely agreed to: see, One Key Workforce at [103]-[106]. In turn, the question whether the agreement has been genuinely agreed to for the purposes of the defined content in s 188(1)(a) of the FW Act rests on the Commission’s satisfaction that there was compliance with the pre-approval steps referred to and not whether, objectively, there was compliance. In relation to the requirement in s 180(5), the Commission is to be satisfied that all reasonable steps were taken by the employer to ensure the outcomes set out therein. An alternative basis on which approval of an enterprise agreement may be authorised is provided by s 190(2), which applies where the Commission has a concern that the agreement does not meet the requirements set out in s 186 and s 187, but is satisfied that an undertaking meets the concern. At each of these levels, what is involved is an evaluative judgment by the Commission, including as to whether it has any concerns about non-compliance that would engage s 190: see One Key Workforce at [105].

163    For the purposes of s 186(2)(a), s 188(1)(a), and s 190(2) of the FW Act, the Commission’s satisfaction must be formed in good faith, be capable of being formed by a reasonable decision-maker, be formed in accordance with a correct understanding of the law under which the decision is made, and be untainted by a material breach of any other express or implied conditions of the decision-making function: R v Connell; Ex parte Hetton Bellbird Collieries Ltd [1944] HCA 42; 69 CLR 407 at 430-432 (Latham CJ); Coal Miners’ Industrial Union of Workers of Western Australia v Amalgamated Collieries of Western Australia [1960] HCA 68; 104 CLR 437 at 446 (Dixon CJ); Buck v Bavone [1976] HCA 24; 135 CLR 110 at 118 (Gibbs J); Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21; 197 CLR 611 at [131]-[137] (Gummow J); Wei v Minister for Immigration and Border Protection [2015] HCA 51; 257 CLR 22 at [33] (Gageler and Keane JJ). Subject to these limitations, which are concerned with the legality of the decision, it is for the Commission and not for the court to be satisfied that an enterprise agreement has been genuinely agreed to, and that any undertakings meet any concerns that the Commission may have.

164    In One Key Workforce, the Full Court held that in reaching a state of satisfaction that s 180(5) of the FW Act had been complied with, the Commission had failed to have regard to the content and terms of the explanation of the enterprise agreement that the employer gave to its employees, and had thereby fallen into jurisdictional error. The only relevant material before the Commission had been the statutory declaration filed on behalf of the employer, which was silent as to the content of the explanation, and indeed the substance of the explanation. It was common ground that the Commission was never told what was said to the relevant employees. The Full Court stated that the Commission was simply told that the employees had been given an explanation of the terms of the agreement, and the effect of those terms, and held that this amounted to little more than a self-serving statement that the employer had complied with its obligations under the FW Act. The Full Court then stated at [112]-[113] –

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) 162 CLR 24 at 39-44 (Mason J).

113    A consideration of the subject-matter, scope and purpose of the relevant provisions of the Fair Work Act indicates that the content of the explanation and the terms in which it was conveyed were relevant considerations to which the Commission was bound to have regard. The absence of that information meant that the Commission was not in a position to form the requisite state of satisfaction. Put differently, without knowing the content of the explanation, it was not open to the Commission to be satisfied that all reasonable steps had been taken to ensure that the terms and their effect had been explained to the employees who voted on the Agreement or that they had genuinely agreed to the Agreement.

165    The Full Court continued at [115]-[117] –

115    The Commission was required to be satisfied that [the employer] had taken “all reasonable steps to ensure” that both the terms and the effect of the terms had been explained to the relevant employees as an element in the inquiry as to whether “genuine” agreement had been obtained from them. The agreed purpose of the obligation imposed on employers by s 180(5) is to enable the relevant employees to cast an informed vote: to know what it is they are being asked to agree to and to enable them to understand how wages and working conditions might be affected by voting in favour of the agreement.

116    In order for the employer to comply with the obligation it must take into account the particular circumstances and needs of those employees, including their cultural and linguistic backgrounds, their youth, and the absence of a bargaining representative. That is made explicit in s 180(6). How could the Commission decide whether the steps the employer had taken were “all reasonable steps” unless it knew what the employees had been told before they cast their votes? Without knowing the terms in which the explanation had been conveyed how could the Commission form an opinion on the sufficiency of the explanation, particularly having regard to the considerations mentioned in s 180(6)? Ultimately, how could the Commission decide that a genuine agreement had been reached without having evidence upon which it could answer both these questions?

117    As there was no evidence of these matters before the Commission, it necessarily follows that the Commission purported to be satisfied that [the employer’s] obligations under s 180(5) had been discharged without taking those matters into account. That was a jurisdictional error because the Commission did not have authority to make the decision unless its satisfaction had been informed by them. …

166    In [117], set out above, the Full Court referred to there being “no evidence” before the Commission of the matters to which it referred, which led to a jurisdictional error that the Full Court held could be described in several ways –

It could be characterised as a misconception as to what the exercise of the statutory power entails or an error “as to an important attribute of the decision to be made”: Graham at [68]. Equally it could be seen as a misunderstanding on the part of the Commission of the nature of the opinion it was required to form: Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at [31] (Gleeson CJ, Gaudron and Hayne JJ). Had the Commissioner applied his mind to the question of what the putative explanation entailed, he would inevitably have inquired into its content and terms.

167    At [118], the Full Court held in the alternative that the error might be regarded as an error of the kind referred to in R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd [1953] HCA 22; 88 CLR 100 at 120, being that the inadequacy of the material supported an inference that the Commission applied the wrong test, or was not really satisfied of the requisite matters. At 119-120, Dixon CJ, Williams, Webb and Fullagar JJ stated –

But the chief point of difficulty in the case lies in the distinction between on the one hand a mere insufficiency of evidence or other material to support a conclusion of fact when the function of finding the fact has been committed to the tribunal and on the other hand the absence of any foundation in fact for the fulfilment of the conditions upon which in point of law the existence of the power depends. It is not enough if the board or the delegate of the board, properly interpreting pars. (a) and (b) of s. 23 (1) and applying the correct test, nevertheless satisfies itself or himself on inadequate material that facts exist which in truth would fulfil the conditions which one or other or both of those paragraphs prescribe. The inadequacy of the material is not in itself a ground for prohibition. But it is a circumstance which may support the inference that the tribunal is applying the wrong test or is not in reality satisfied of the requisite matters. If there are other indications that this is so or that the purpose of the function committed to the tribunal is misconceived it is but a short step to the conclusion that in truth the power has not arisen because the conditions for its exercise do not exist in law and in fact.

168    In our view, in the present case the Commission did not make a jurisdictional error in its evaluation of the material before it concerning the employer’s explanation to the employees of the terms of the proposed agreement, and their effect. We have set out under [147] above [72]-[73] of the Commission’s reasons for the interim decision, where the Commission discussed the principles that it applied in its evaluation. No challenge was made on this application to suggest error in the Commission’s statement of principles at [72]-[73], and senior counsel for the applicants accepted in argument, correctly in our view, that [73] of the Commission’s reasons was a correct statement of general principle.

169    For the purposes of s 180(5), the Commission must be satisfied that “all reasonable steps” were taken to ensure that the terms of the agreement and their effect were explained to the relevant employees. We do not consider that this requirement necessarily involves the identification of the universe of reasonable steps, and requires that the Commission be satisfied that every one of those steps was taken. Often, a requirement to take all reasonable steps to achieve a particular outcome may be met in different ways. The fact that one reasonable path is chosen over others need not result in a conclusion that all reasonable steps were not taken. For instance, it might be reasonable to explain the terms of an agreement by a written document, or by PowerPoint slides, or by face-to-face meetings as occurred here, or by a combination of those means. The choice of one form or words, or one reasonable medium of communication over others may be relevant to the evaluation that the Commission must make. But the legislation contemplates that there be flexibility. That flexibility arises particularly from s 180(5)(b) which requires that the employer take all reasonable steps to ensure that the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the employees. If an employer in a particular case pursues a path of explanation and mode of communication that is reasonable, the standard of reasonableness may not require that the employer pursue all parallel means of explanation and communication to achieve the same end.

170    Further, any explanation of the terms of the agreement and their effect will often be open to challenge on the ground that the explanation could have been made with a greater level of precision or particularity. It is in the nature of most explanations that they could be given in greater detail, or alternatively at a higher level of generality. The same observation can be made about the evidence of an employer’s explanation before the Commission. In the absence of a verbatim record of what was said to the employees, evidence may always be open to a claim that the evidence could have descended into a greater level of detail. These are all matters for the Commission to evaluate in determining whether it reaches the requisite level of satisfaction, and in determining whether it has any concerns that would engage its power to accept undertakings under s 190(2).

171    The central premise of the applicants’ case before this court in relation to the Explanation Issues was to identify a series of claimed differences between the greenfields agreements and the enterprise agreement, not all of which were the subject of submissions to the Commission, and to contend that the Commission was required to consider the explanations, if any, given to the employees in relation to all those claimed differences. In our view, that was not the Commission’s function. The Commission’s function was to form an evaluative judgment about issues that were at a higher level of abstraction, directed to the statutory question whether the employer took all reasonable steps to ensure that the terms of the proposed agreement and their effect were explained to the employees in an appropriate manner. As senior counsel for the applicants must be taken to have recognised by his acceptance of the correctness of [73] of the Commission’s reasons for the interim decision (see [147] above), there was no requirement that every difference between an existing industrial instrument and a proposed enterprise agreement be explained in order that the Commission be satisfied that all reasonable steps were taken. The identification of what reasonable steps were required, and what differences, if any, had to be explained, and if so in what terms, and by what means, were all matters for the Commission to consider.

172    The present case is far removed from the facts considered by the Full Court in One Key Workforce, where there was no evidence at all of what explanations were given to the employees, but a bare ipse dixit that asserted compliance with s 180(5). Here, there was evidence of the steps that Mr Murphy took to explain the terms of the proposed agreement and their effect to the employees. The quality of that evidence varied. On some questions, the evidence was very general. But the quality of the evidence was for the Commission to evaluate, and the inferior quality or absence of evidence about some of the claimed differences that the applicants have identified did not deprive the Commission of jurisdiction to make the overall evaluation that was required.

173    In our view, the Commission lawfully discharged its statutory function in this case. Relevant to the grounds of challenge advanced by the applicants are the following features of the Commission’s reasons for its interim decision. The Commission referred to the greenfields agreements at [6] and [9]. The Commission reviewed decisions of the Commission that had held in other circumstances that not every single departure from the existing terms of a governing industrial instrument had to be explained to employees, and at [72]-[73] accepted this to be a correct approach. Of importance to the Commission’s path of reasoning was its acceptance of Mr Murphy’s evidence that he went through the proposed agreement with the employees clause-by-clause. In relation to differences between the proposed agreement and the greenfields agreements, the Commission held that the discussion canvassed key differences, but the Commission also accepted that some differences were not explained, and at [85] identified as an instance the omission of union rights under the dispute resolution procedure. Contrary to the submissions on behalf of the applicants, the Commission did not substitute a requirement that only “key differences” between the greenfields agreements and the proposed enterprise agreement had to be explained. It is important not to depart from the statutory language of s 180(5), which requires that all reasonable steps be taken to ensure that the terms of the proposed enterprise agreement and their effect be explained to the employees. There was no error by the Commission in acting on evidence that key differences, and not all differences, were explained, which accorded with the principles on which it acted that it had set out at [72]-[73]. The Commission also accepted, consistently with Mr Murphy’s evidence, that the Greenfields Electrical Agreement was not separately dealt with, but held at [87] that this did not render the explanation inadequate for the purposes of s 180(5). Having undertaken that consideration, the issue that caused the Commission concern was the terms of the Awards that were incorporated by reference into the greenfields agreements, and in respect of which the Commission subsequently accepted undertakings as a condition of approval. At [90], the Commission explained that it was the breadth of the terms and conditions of the incorporated Awards which made the omission to explain the differences material.

174    The alternative way in which the applicants’ case before this court was put was, in substance, that having regard to the claimed differences between the greenfields agreements and the enterprise agreement that were the subject of the applicants’ submissions, acting reasonably the Commission was bound to find that not all reasonable steps had been taken by the employer to comply with s 180(5). For the preceding reasons, we are not persuaded that the applicants’ case goes anywhere near the threshold that is required to establish that the Commission’s evaluation of the evidence before it was not reasonable: the applicants’ case in relation to the Evaluation Issues goes no further than to debate the merits of the outcome.

175    As to the applicants’ claim that the Commission had failed to make any finding of satisfaction that the employer had taken all reasonable steps to ensure that an explanation was provided in an appropriate manner, this was argued with commendable brevity by senior counsel for the applicants. The claim boiled down to a submission that at [84] of the Commission’s reasons for the interim decision there was no express finding that the explanation had been provided in an appropriate manner in circumstances where Mr Murphy provided explanations only orally, and not in writing. We do not accept the applicant’s claim. At [84], the Commission referred to Mr Murphy’s evidence about his discussions with the employees, and his explanations. The Commission found at [84] that it was satisfied that Mr Murphy took all reasonable steps to explain the agreement, and to ensure that the explanation was tailored to the individual circumstances of the employees. Having regard to the language of s 180(5)(b), that finding necessarily subsumed a finding that the explanations were given by Mr Murphy in an appropriate manner.

The Undertaking Issue

176    As to the Undertaking Issue, counsel for the applicants submitted that s 190 of the FW Act does not permit the acceptance of an undertaking relating to a concern held by the Commission that an employer failed to fulfil requirements that had to be met prior to approval of an enterprise agreement by the employees. Rangiah J has summarised the applicant’s submissions on this issue at [56]-[57] above. We respectfully agree with Rangiah J’s analysis, and with his Honour’s reasons for rejecting the applicants’ claim that s 190 did not permit the Commission to accept undertakings to resolve a concern about pre-approval steps.

Sundry issue - relief

177    Because the applicants have not established the foundations of their claims for relief, it is unnecessary to address a submission advanced by counsel for the employer, relying on Dafallah v Fair Work Commission [2014] FCA 328; 225 FCR 559 (Mortimer J), that relief should be refused on discretionary grounds because the applicants have not shown jurisdictional error in the decision of the Full Bench of the Commission.

Conclusion

178    The application should be dismissed.

Associate:    

Dated:    16 February 2022