The complexities of enterprise agreement making has again been highlighted in a recent decision by the Fair Work Commission (FWC) in DOF Subsea Australia Pty Ltd[1] (DOF Decision). This case reconsiders the eligibility of casual employees to vote on an enterprise agreement, having regard to the new definition of a casual employee in the Fair Work Act (FW Act).
The DOF Decision has broadened the categories of casual employees who are eligible to vote on an agreement, and has increased the difficulty for employers in correctly assessing which casuals may be entitled to vote, as well as the risks of getting it wrong.
Legislative Framework
The FW Act provides a comprehensive framework for the making of enterprise agreements. The process, at a high level, involves:
- A proposed enterprise agreement is agreed through bargaining;
- Eligible employees are requested to vote on the proposed agreement (Request). The Request encompasses a 7 day ‘Access Period’ where employees are provided information about the proposed agreement;
- For an employee to be eligible to vote on an agreement, the Employee must be:
- employed at the time the employer Request is made; and
- an employee who will be covered by the agreement.
- Employees vote on the agreement. If a majority of eligible employees vote to support the agreement, the agreement is ‘made’; and
- An application for approval by the FWC must be submitted within 21 days of the agreement being made.
Parties, including unions, can object to the approval if they consider the requirements, including the correct determination of eligible employees have not been satisfied.
The DOF Decision
DOF Subsea Australia Pty Ltd (DOF) operates a fleet of offshore and subsea vessels. Two of the fleet operate in Australian waters and are variously deployed to work on specific client projects.
DOF engages casual employees (Casuals) to work on these two vessels when required for various projects. DOF’s process for engaging casuals is:
- DOF engages Casuals who may work on these vessels with a ‘Short Term Engagement Agreement’ (STEA) which contains the overarching terms and conditions of employment. This is effectively a casual pool; and
- when a project arises the Casual is issued a ‘Project Engagement Confirmation’ (PEC) which confirms the period of the Casual’s engagement for that project with a start and end date and the relevant conditions including the vessel, time and place.
Between March and September 2024, DOF bargained for an enterprise agreement with the Casuals who worked on these two vessels. This appears to have been contentious bargaining. The proposed DOF Subsea Australia Pty Ltd Maintenance, Construction and Decommissioning Enterprise Agreement 2024 (Agreement) went to vote between 29 September 2024 and 1 October 2024 seemingly without union support.
The Agreement was ultimately voted up 20 – 12.
In putting the Agreement to vote, DOF identified 34 Casuals it considered eligible to participate (Voting Cohort). Of these:
- all 34 had STEAs and a PEC. The PECs included a start date which predated the vote;
- 22 were rostered to work during the Access Period;
- 12 were rostered to work before and/or after (but not during) the Access Period.
DOF applied for approval of the Agreement. The Application was opposed by the Australian Workers’ Union and the Australian Manufacturing Workers’ Union (Unions) on several grounds, including relevantly, whether the Voting Cohort for the Agreement was correct.
The Unions’ Challenge
The Unions contended that only Casuals who worked during the Access Period should have been allowed to vote, as they were the only employees employed at the time of the Request.
On this analysis, the 12 employees who were rostered to work before and/or after the Access Period would be ineligible as they were not employed at the time of the Request and their inclusion may have undermined the validity of the vote.
The Employer’s Position
DOF contended that the Voting Cohort should include the 22 employees who worked during the Access Period and the additional 12 employees who worked before and/or after the Access Period. They argued these Casuals were employed at the time and would be covered by the Agreement, entitling them to vote to approve it.
The FWC’s Findings
The FWC considered the history of decisions on this issue and the new section 15A definition of casual employment in concluding that the correct position was:
- Casual employees can vote if they are employed at the time of the Request;
- Casual employees who are engaged on an ongoing basis are employed and can vote, even if they do not work during the Access Period;
- Casual employees working shifts during the Access Period are eligible to vote; and
- Casual employees who are not rostered to work the Access Period, or who do not have ongoing engagements are not eligible to vote.
The FWC found this approach was consistent with the requirement in the definition of ‘casual employee’ to assess the true nature of the casual employment having regard to the real substance, practical reality of the employment relationship as well as the terms of any contract or mutual understanding drawn from how the contract is performed.
To undertake this assessment, the FWC found it necessary to consider the individual circumstances of those who may have been eligible to vote.
The FWC considered the STEAs, PECs and the existing rosters to determine which of the Casuals were eligible. In doing so, the FWC concluded:
- The STEAs were effectively an agreement for a future engagement under a PEC. The STEAs put a casual employee ‘on the books’ but of themselves did not demonstrate a casual was ‘employed’;
- The PECs demonstrated a commitment to engagement on an ongoing basis between the commencement and end date and this demonstrated employment at the time of the Request; and
- The Rosters provided further context as to whether there was ongoing employment, particularly where the PEC did not specify an end date. Where an employee was rostered to work after (but not during) the Access Period, this indicated that the Casual was employed at the time of the Request and that they would be covered by the Agreement.
After assessing the factual evidence, the FWC concluded that:
- Casuals with a current PEC who were rostered to work during or after the Access Period were eligible to vote. Importantly, this included employees who were rostered to work up to 2 – 3 months after the vote occurred, noting that rosters were being prepared up to 5 months in advance; and
- Casuals with a current PEC who were rostered to work before, but not during or after the Access Period were not eligible to vote.
This assessment led the FWC to conclude there were 41 potentially eligible casuals. Of those, the FWC found 35 were entitled to vote. As the FWC disagreed with DOF’s approach to eligibility, it further found:
- 5 employees (rostered to work after, but not during or before the Access Period) who were eligible to vote were not asked; and
- 4 employees (who were rostered to work before, but not during or after the Access Period) who were asked to vote were not eligible.
Having determined that the Voting Cohort was incorrect, the FWC then determined whether the incorrect Voting Cohort impacted the validity of the vote. The FWC concluded that in the actual vote, a majority of the 34 invited to vote was 17. Of this there were 20 ‘yes’ votes. Once the potential discrepancy of 9 votes was considered, the outcome of the vote was capable of being impacted and the outcome was accordingly unsound.
The FWC refused to approve the Agreement on this basis.
Importantly, the FWC further noted that even if the outcome of the vote was not impacted by the error, it would still not have approved the Agreement on the basis that the exclusion of 5 eligible voters, from a cohort of 35 could not be considered a minor procedural or technical error even if it did not impact the outcome. This is a departure from previous cases which found that errors which would not impact the outcome could be considered minor or technical.
Key Takeaways from the Decision
The decision highlights the critical importance of correctly determining the voting cohort for an agreement, including eligible casuals and the significant risks of getting this wrong.
The assessment of casuals endorsed by this decision is complex. It requires consideration of the contract, the practical realities of the engagement and whether there is evidence of ongoing employment. It is not as simple, or as definite, as considering who worked the Access Period but seemingly requires consideration of circumstances and post-vote working patterns in determining eligibility.
This represents a potentially onerous and complex task to be completed during the Access Period to finalise the correct Voting Cohort.
An equally significant takeaway from this Decision is that the consequences of an error in the Voting Cohort have increased. On the view expressed in this Decision, denying a single or small group of employees the right to participate in and influence a vote is not a minor or technical error which can be overlooked, but in and of itself may be a basis to refuse to approve an Agreement.
It may be that this approach gives rise to the type of practical difficulties, such as determining with certainty the point at which those post voting work patterns are to be assessed and determined, that the Full Bench of the FWC have previously criticised. However, in the absence of a challenge to this approach, it is one that employers with casual and roster-based workforces will need to grapple with.
The views expressed in this article are general in nature only and do not constitute legal advice. Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.