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National Union of Workers v PMFresh Pty Ltd [2019] FWC 6374 (2 October 2019)

Last Updated: 2 October 2019

Fair Work Act 2009

s.437—Protected action
National Union of Workers
v
PMFresh Pty Ltd

(B2019/759)

Proposed protected action ballot of employees of PMFresh Pty Ltd.

[1] On 10 September 2019 the National Union of Workers (NUW) applied under s.437 of the Fair Work Act 2009 (Act) for a protected action ballot order in relation to certain employees of PMFresh Pty Ltd (PMFresh). PMFresh objected to the making of an order on two broad bases. At the conclusion of a hearing conducted on 19 September 2019 I announced my decision to grant the application and to make the order sought.[1] Later that day I made the order.[2] In announcing my decision I said I would publish my reasons in due course.[3] These are my reasons.

[2] Although PMFresh’s initial opposition to the application was based on its contention that the NUW has not been, and is not, genuinely trying to reach an agreement with it, in subsequently filed submissions and in the hearing, PMFresh opposed the application on the ground there has not been a notification time in relation to the proposed agreement as is required pursuant to s.437(2A) of the Act. This, according to PMFresh arises because, although it has been bargaining with the NUW, a valid notice of representational rights (NERR) has not been issued to employees in accordance with s.174(1A) of the Act.

[3] The invalidity of the NERR is said to arise because of a misdescription of the employer. It is said that a “major restructure” comprising a change in the name of the company and a change in shareholding resulting in a change in effective control of the company, had the result that the company described in the NERR was a different legal entity or employer to that which is the company that is the employer of the employees the subject of this application. These contentions are absurdly misconceived and are rejected for the reasons that follow.

Background

[4] PMFresh conducts a business of salad processing, specialising in creating and producing fresh ingredients and salads for the domestic market.[4] This application concerns their production facility located at 1 Manton St, Morningside Queensland.[5]

[5] Since May 2019, the NUW and PMFresh have been bargaining for a proposed enterprise agreement to cover employees currently covered by the PMFresh Pty Ltd – NUW – Employees – Enterprise Agreement 2016. On or about 10 May 2019, PMFresh issued a NERR to employees of PMFresh.[6] It is uncontroversial that the NERR issued to employees incorrectly named the employing entity by its previous company name, Primo Moraitis Fresh Pty Ltd.[7]

[6] Since the issuing of the NERR, the NUW has sent PMFresh its log of claims and the parties have conducted three bargaining meetings. After the first of these meetings the NUW lodged an application for the Commission to deal with a dispute in accordance with a dispute settlement procedure regarding the payment of allowances and part-time hours of work. At the third bargaining meeting PMFresh adopted the position that it would not entertain any of the NUW’s claims until the dispute was withdrawn or otherwise resolved. Subsequently PMFresh applied under s.240 of the Act for the Commission to deal with a bargaining dispute. PMFresh cancelled the fourth meeting on the basis that it was only prepared to negotiate in front of the Commission. [8]

[7] A conference was held before Deputy President Lake, where the Deputy President enquired whether the NUW would be willing to participate in alternative interest-based bargaining. However, after consulting its members the NUW refused. After a second conference the parties agreed to schedule two further bargaining meetings before 18 September 2019 and to then update the Commission as to whether further intervention is required.[9]

[8] The objections raised by PMFresh require a determination whether there has been a notification time in relation to the proposed agreement as required by s.437(2A) of the Act, and whether the NUW as bargaining representative for the proposed agreement has been, and is, genuinely trying to reach an agreement with PMFresh as required by s.443(1)(b).

Legislative Scheme

[9] The legislative provisions that regulate the making of a protected action ballot order are set out in Part 3-3, Division 8 of the Act. Section 437 of the Act sets out when someone may apply for a protected action ballot order:

“437 Application for a protected action ballot order

Who may apply for a protected action ballot order

(1) A bargaining representative of an employee who will be covered by a proposed enterprise agreement, or 2 or more such bargaining representatives (acting jointly), may apply to the FWC for an order (a protected action ballot order) requiring a protected action ballot to be conducted to determine whether employees wish to engage in particular protected industrial action for the agreement.

(2) Subsection (1) does not apply if the proposed enterprise agreement is:

• (a) a greenfields agreement; or
  
• (b) a multi-enterprise agreement.
  

(2A) Subsection (1) does not apply unless there has been a notification time in relation to the proposed enterprise agreement.

Note: For notification time, see subsection 173(2). Protected industrial action cannot be taken until after bargaining has commenced (including where the scope of the proposed enterprise agreement is the only matter in dispute).”

[10] Section 173(2) of the Act defines the different circumstances in which notification time can occur:

“Notification time

(2) The notification time for a proposed enterprise agreement is the time when:

(a) the employer agrees to bargain, or initiates bargaining, for the agreement;”

[11] Section 443 of the Act sets out when the Commission must make an order:

“443 When the FWC must make a protected action ballot order

(1) The FWC must make a protected action ballot order in relation to a proposed enterprise agreement if:

(a) an application has been made under section 437; and

(b) the FWC is satisfied that each applicant has been, and is, genuinely trying to reach an agreement with the employer of the employees who are to be balloted.”

[12] If the conditions under s.443 of the Act are met, the Commission must make an order. I turn to consider the application

Consideration

Notification time

[13] PMFresh contends that the absence of a “valid notification time procedure”, which includes the issuing of a valid Notice, prohibits the making of an application for a protected action ballot. It submits that the NERR issued by it is invalid as it names the ‘wrong employer’.[10]

[14] PMFresh relies on the evidence of Mr Peter Roughan, the Site Operations Manager, that he provided a NERR to employees on or about 10 May 2019 which named the employer as Primo Moraitis Fresh Pty Ltd rather than PMFresh Pty Ltd.[11] It also tendered an ASIC search extract of the company which shows that the company changed its name in 2017, and that the share structure and shareholders changed in 2018.[12]

[15] PMFresh submits that whilst the “companies” (i.e. Primo Moraitis Pty Ltd and PMFresh Pty Ltd) share the same Australian Company Number (ACN) the company was ‘substantially restructured’ in December 2018 as the shareholding and name of the company changed. It argues that when the NERR was issued on 10 May 2019, under the name of Prima Moraitis Fresh Pty Ltd it was issued by an entity that did not exist and did not employ any labour.[13]

[16] It is convenient to deal first with the proposition that the company named in the NERR - Primo Moraitis Fresh Pty Ltd - is a different legal entity to PMFresh Pty Ltd, the company that employs the employees whose views will be sought in any protected action ballot that would be conducted if I were to make an order. To make good this proposition PMFresh relies on a restructure which resulted in a change in the name of the company and a restructured shareholding the result of which was to alter the effective control of the company.

[17] The proposition is rejected because it proceeds upon a fundamental misunderstanding of the legal characteristics of a company. On and from the day that is specified in the certificate of registration of a company, the company is incorporated. This means that after the necessary steps leading to incorporation have been taken and a certificate of registration has been issued, a legal entity is created. This legal entity is separate from its members (shareholders). Assets of the company are not assets of the members and contracts entered into by the company will create legal rights and liabilities which vest in the company but not its members.

[18] Membership or shareholding in a company can change hands, even drastically so as to alter the effective control of the company, but the company does not thereby become a different or new legal entity because of the change in effective control.

[19] It is also possible to change the name of a registered company, subject to the availability of the name to which it is proposed the company name be changed. However, altering the name of the company does not alter its legal identity. It is both before and after the name change the same legal entity. It has the same ACN assigned to it when it was registered as a company. Every company in Australia is issued with a unique, nine-digit number when registered. A company’s ACN must be displayed on all of the company’s public documents and on certain negotiable instruments.

[20] PMFresh remains the same legal entity before and after the so-called restructure involving a change to its name and an alteration of shareholding resulting in a change in effective control of the company. In the result describing the legal entity that is the company by its former name in the NERR is not describing a different legal entity or a non-existent legal entity. Rather it is a misdescription by name of an existing legal entity. It follows that the proposition that there is described in the NERR, a different legal entity to the one that employs the employees is rejected.

[21] Turning next to the proposition that the NERR issued is invalid and that a valid NERR is required in order that there be a notification time. This issue was tangentially considered by a Full Bench of the Commission in Maritime Union of Australia v Maersk Crewing Australia Pty Ltd.[14] The issue in Maersk was whether s.437(2A) prevented the making of an application for a protected action ballot order in circumstances where there had been no notification time for the single-enterprise agreement proposed by the applicant union, but the employer had on two earlier occasions proposed single-enterprise agreements, one of which had a wider scope, and both of which had a notification time.

[22] The reasoning and conclusion in respect of this issue was as follows:

“[24] Contrary to Maersk’s contention, we are not persuaded that s.437(2A) requires that there has been a notification time in respect of the enterprise agreement proposed by the PABO applicant. As we have mentioned, the reference to ‘a proposed enterprise agreement’ in s.437(1) refers relevantly to the enterprise agreement proposed by the applicant at the time the PABO application is made. Subsection 437(2A) provides that a PABO application cannot be made ‘unless there has been a notification time in relation to the proposed enterprise agreement’ (emphasis added). The subsection does not require there to have been a notification time for the particular agreement proposed by the PABO applicant. It is sufficient that there has been a notification time ‘in relation to’ the agreement proposed by the PABO applicant.

[25] The expression ‘in relation to’ is one ‘of broad import’. In O’Grady v Northern Queensland Co Ltd McHugh J observed that the expression ‘requires no more than a relationship, whether direct or indirect, between two subject matters’. Context is important in determining the connection to which a statutory provision is referring. In Travelex Ltd v Commissioner of Taxation, French CJ and Hayne J said ((2010) [2010] HCA 33; 241 CLR 510 at [25]):

‘It may readily be accepted that ‘in relation to’ is a phrase that can be used in a variety of contexts, in which the degree of connection that must be shown between the two subject matters joined by the expression may differ. It may also be accepted that ‘the subject matter of the enquiry, the legislative history, and the facts of the case’ are all matters that will bear upon the judgment of what relationship must be shown in order to conclude that there is a supply ‘in relation to’ rights [citations omitted].’

[26] The legislative purpose in the enactment of s.437(2A) is to ensure that protected industrial action cannot be taken until after bargaining has commenced – that is, after the time when the employer agrees to bargain, or initiates bargaining (or one of the other circumstances constituting the ‘notification time’ within the meaning of s.173(2)). To import into s.437(2A) a requirement that the ‘notification time’ must be in respect of the agreement proposed by the PABO applicant would mean (relevantly in the context of the present matter) that the employer must have agreed to bargain or have initiated bargaining for a proposed enterprise agreement with precisely the same scope as that sought by the PABO applicant. Such a construction would have the effect of removing scope from the matters in bargaining in support of which employees can engage in protected industrial action. This would be the case because a bargaining representative would only be able to apply for a PABO in relation to a proposed enterprise agreement containing the scope proposed by, or agreed with, the employer.

[27] A consequence of the construction proposed by Maersk is that by not agreeing on the scope of the proposed enterprise agreement, an employer would be able to prevent employees from engaging in protected industrial action unless they have first obtained a majority support determination, scope order or low paid authorisation. It seems to us that such a consequence is inimical to the scheme of the FW Act. The scope of a proposed enterprise agreement can itself be the subject of bargaining and bargaining within the meaning of the FW Act may have commenced even though the parties disagree about the scope of the proposed enterprise agreement. As the Full Bench observed in Stuartholme School v The Corporation of the Trustees of the Roman Catholic Archdiocese of Brisbane,:

‘[t]he terms of [s237] unambiguously suggest that bargaining may have commenced under the Fair Work Act even though the parties to the bargaining process are in disagreement about the scope of the proposed agreement’.

[28] Importantly, in the absence of a scope order, the parties to a proposed enterprise agreement are entitled to continue to bargain over the scope of the agreement until that matter is settled through bargaining. If there is a notification time in relation to the proposed agreement, protected industrial action in support of a claim for a particular scope may be taken.

[29] The construction we have adopted is entirely consistent with the legislative note to s.437(2A). As set out earlier, the Note states:

‘For notification time, see subsection 173(2). Protected industrial action cannot be taken until bargaining has commenced including where the scope of the proposed enterprise agreement is the only matter in dispute.’ (emphasis added)

[30] The Note clearly contemplates that the scope of a proposed enterprise agreement may be the subject of bargaining and that protected industrial action may be taken in support of a claim for a particular scope.”[15] [Endnotes omitted]

[23] In Maersk the Full Bench also rejected a submission that the issue of a NERR was a necessary element of a notification time having arisen. The Full Bench said:

“[31] As we have mentioned, Maersk contends that because the ‘notification time’ in s.173(2) triggers the requirement for the employer to give the NERR in respect of the proposed enterprise agreement it follows that the Commission cannot make a PABO unless the employer has given a valid NERR for the proposed enterprise agreement. We reject this contention. Maersk’s contention imports an additional precondition which simply is not found in the text of section 437(2A).

[32] It is important to appreciate the role of the NERR in respect of a proposed enterprise agreement and the persons who will be covered by that agreement. The NERR provides employees with important information about the nature of a proposed enterprise agreement and the employees’ right to appoint a bargaining representative to assist them in bargaining for the agreement or a matter before the Commission about bargaining for the agreement. The NERR also sets out the default position for union members, that is, they will be represented by their union if they do not appoint a bargaining representative.

[33] Subsection 437(2A) makes no express reference to any requirement that there be a valid NERR in respect of the ‘proposed enterprise agreement’, and nor does such a requirement arise by necessary implication. The ‘mischief’ to which s.437(2A) is directed is quite limited. As we have mentioned, its purpose is to ensure that protected industrial action cannot be taken until after the employer agrees to bargain, initiates bargaining, or is required to bargain by the issue of a relevant majority support determination or scope order.

[34] Contrary to Maersk’s contention, s.437(2A) defines the commencement of bargaining by reference to a ‘notification time’ within the meaning of s.173(2), not by the giving of a NERR . . .

[35] . . . The issuing of an NERR may evidence that the employer has agreed to bargain, but the requirement to issue the NERR arises once the employer has agreed to bargain or has initiated bargaining – it is not a prerequisite for bargaining. Whether an employer has agreed to bargain or has initiated bargaining in relation to a proposed enterprise agreement is a question of fact. An NERR is an indicator of employer intention – but not necessarily the determining factor.

. . .

[37] If accepted, Maersk’s construction of ss 437(1) and (2A) could produce outcomes which are plainly contrary to the scheme of the FW Act and the purpose of s.437(2A). An employer could deny its employees the right to engage in protected industrial action simply by failing to give a valid NERR, even though the employer had agreed to bargain or had initiated bargaining for an enterprise agreement with those employees. The purpose of s.437(2A) is to prevent employees engaging in protected industrial action to pressure an employer to agree to bargain. But once an employer has agreed to bargain, or has initiated bargaining for a proposed enterprise agreement, employees may engage in protected industrial action to support their claims in relation to their proposed enterprise agreement (including a claim about the scope of such an agreement).

[38] Maersk’s construction would also give rise to anomalous outcomes. A PABO application could be made shortly after the ‘notification time’ (i.e. within the 14 day period in which a NERR is to be given: s.173(3)) but before a valid NERR is issued. But no valid PABO application would be made after the 14 day period specified in s.173(3), unless a valid NERR had been issued by the employer.”[16] [Endnotes omitted]

[24] In doing so the Full Bench considered that part of the explanatory memorandum for the Fair Work Amendment Bill 2014 relevant to the interpretation of s.437(2A) and parts of the report of the Fair Work Review Panel to which reference is made in the explanatory memorandum. In setting out Recommendation 31 of the Report the Full Bench said:

“. . . Recommendation 31: The Panel recommends that Division 8 of Part 3-3 be amended to provide that an application for a protected action ballot order may only be made when bargaining for a proposed agreement has commenced, either voluntarily or because a majority support determination has been obtained. The Panel further recommends that the FW Act expressly provide that bargaining has commenced for this purpose despite any disagreement over the scope of the agreement.

[41] As reflected in the Explanatory Memorandum, s.437(2A) implements the first aspect of recommendation 31.The Note clarifies that bargaining can be taken to have commenced for the purpose of s.437(2A), even where the scope of the proposed enterprise agreement is the only matter in dispute. To that extent the Note relates to the second part of recommendation 31, although as we earlier observed the Note is not part of the FW Act. It follows that if bargaining can begin with an employer proposing a broadly scoped agreement and when scope is in dispute, a bargaining representative proposing a more narrowly scoped agreement may apply for a protected action ballot order in relation to that proposed agreement.”

[46] Subsection 437(2A) was enacted for a limited purpose – to overcome the effect of the decision in J.J Richards and ensure that protected industrial action cannot be taken until after bargaining has commenced – that is, after the time when the employer agreed to bargain, or initiates bargaining (or one of the other circumstances constituting the ‘notification time’ within the meaning of s.173(2)). Hence, for the purposes of s.437(2A), the commencement of bargaining is defined by reference to s.173(2), not by the giving of a NERR.

[47] We reject Maersk’s contention that because the ‘notification time’ in s.173(2) triggers the requirement for the employer to give the NERR in respect of the proposed enterprise agreement, the Commission cannot make a PABO unless the employer has given a valid NERR for the proposed enterprise agreement. The validity of a NERR is not determinative in deciding whether a PABO application can be made under s.437(1). However, a NERR is relevant to the factual enquiry of whether the employer has agreed to bargain in relation to a proposed agreement.”[17]

[25] It seems plain enough from Maersk that the question of whether a NERR is valid or has been issued at all is not determinative of the question whether there has been a notification time. In this case there has plainly been a notification time. Mr Roughan’s evidence was that he gave the NERR to employees on or around 10 May 2019, albeit that it is now contended that the NERR is not valid. It seems accepted by PMFresh, that the purpose of Mr Roughan distributing the NERR to employees was to indicate that PMFresh was initiating bargaining with employees to whom the NERR was issued.[18] This is sufficient to ground a conclusion the notification time was on or around 10 May 2019 and therefore there was a notification time in relation to the proposed agreement when this application was made. Even if that were not the case, PMFresh has engaged in bargaining meetings with the NUW[19] after 10 May 2019 and before the application was made which supports a conclusion that it has agreed to bargain for a proposed agreement therefore there is a notification time in relation to the proposed agreement.

[26] It should also be observed that the misdescription of the employer in the NERR is not as PMFresh contends, fatal to the approval of an agreement which might result from further bargaining. This is because the Commission has a discretion under s.188(2) to conclude that an agreement was genuinely agreed to by the relevant employees notwithstanding minor procedural or technical errors made in relation to, inter alia, the requirements of ss.173 and 174 relating to a notice of employee representational rights.

[27] It follows PMFresh’s objection relating to the existence of a notification time is rejected and I am satisfied that there is a notification time for the proposed agreement and I am otherwise satisfied that an application under s.437 of the Act has been made.

Genuinely trying to reach agreement

[28] In a letter to my Associate dated 11 September 2019 PMFresh submits that an order should not be granted as the NUW has not been genuinely trying to reach an agreement.[20] However, PMFresh has not led any evidence in support of this claim.

[29] The NUW submits that over a period of several months they have repeatedly attempted to engage with PMFresh in relation to their Log of Claims and any lack of progress in negotiations has been the result of PMFresh’s recalcitrance rather than the willingness of the NUW to reach agreement.[21]

[30] It relies on the evidence of the statutory declaration by Mr Andrew Giles, an official of the NUW, which was filed with the application on 10 September 2019[22], and the witness statement of Mr Giles[23] setting out the steps taken by the NUW in bargaining with PMFresh and that it has been, and is, genuinely trying to reach agreement.

[31] The evidence discloses the following matters. The NUW has sent its log of claims to PMFresh on or about 10 May 2019.[24] The bargaining parties have held three meetings for the purpose of negotiating the terms of the proposed agreement. During these meetings the NUW has changed its bargaining position, including withdrawing claims.[25] At the third bargaining meeting PMFresh adopted the position that it would not entertain any of the NUW’s claims until an application by the NUW for the Commission to deal with a dispute was withdrawn or otherwise resolved. Subsequent to the third meeting PMFresh applied under s.240 of the Act for the Commission to deal with a bargaining dispute. PMFresh cancelled a fourth scheduled meeting on the basis that it was only prepared to negotiate in front of the Commission. The NUW participated in two conferences before Deputy President Lake. After the second conference the parties agreed to schedule two further bargaining meetings before 18 September 2019 and to then update the Commission as to whether further intervention is required.[26]

[32] This evidence was not challenged either through cross-examination or by any evidence led by PMFresh.[27]

[33] The concept of genuinely trying to reach an agreement involves a finding of fact applied by reference to the circumstances of the particular bargaining. The only test or criteria is applying the statutory test as set out in the words of s.443 of the Act. In the course of examining the circumstances it may be relevant to consider related matters but ultimately the test in s.443 must be applied. It is not appropriate or possible to establish rigid rules for the required point of bargaining that must be reached. All the relevant circumstances must be assessed to establish whether the applicant for the order has met the test or not. This will frequently involve considering the extent of progress in bargaining and the steps taken to try and reach an agreement.[28]

[34] Applying this approach to the question requiring determination, I accept the unchallenged and uncontroverted evidence given. From this evidence it seems to me clear and I am satisfied that the NUW has been, and is, genuinely trying to reach an agreement with PMFresh. There is no evidence which would support a contrary conclusion.

Conclusion

[35] For the reasons stated as there is a notification time in relation to the proposed agreement and as the matters in s.443(1) of the Act have been made out, a protected action ballot order in relation to proposed enterprise agreement must be made. As earlier indicated an order in PR712357 was made on 19 September 2019.

DEPUTY PRESIDENT

Appearances:

Mr D Melling for the NUW
Mr S McCarthy for PMFresh

Hearing details:

2019
Melbourne
19 September

Final written submissions:

NUW 18 September 2019
PMFresh 17 September 2019

<PR712356>

[1] Transcript of proceedings dated 19 September 2019 at PN163

[2] PR712357

[3] Transcript of proceedings dated 19 September 2019 at PN163

[4] Submissions of the National Union of Workers dated 13 September 2019 at [1]

[5] Ibid

[6] Exhibit 3, Witness statement of Mr Peter Roughan dated 17 September 2019 at [6], Exhibit 4, Notice of Representational Rights issued by PMFresh Pty Ltd to employees

[7] Exhibit 4, Notice of representational rights issued to employees which identifies that Primo Moraitis Fresh Pty Ltd gives notice.

[8] Exhibit 2, witness statement of Mr Andrew Giles dated 13 September 2019

[9] Ibid at [4]

[10] Outline of submissions of PMFresh Pty Ltd, lodged in the Commission 17 September 2019, at [18].

[11] Exhibit 3 at [6] – [7]

[12] Exhibit 5, Extract from Australian Securities and Investments Commission Database in relation to PMFresh Pty Ltd.

[13] Transcript of proceedings dated 19 September 2019 at PN91

[14]   [2016] FWCFB 1894 

[15] Ibid at [24]-[30]

[16] Ibid at [31]-38]

[17] Ibid at [40]-[41]; [46]-[47]

[18] Transcript of proceedings dated 19 September 2019 at PN116-PN117

[19] Exhibit 1 at p.3 and Exhibit 2 at [4]

[20] Letter from Holman Webb on behalf of the Respondent dated 11 September 2019

[21] Submissions of the National Union of Workers dated 13 September 2019 at [10]

[22] Exhibit 1, Statutory declaration by Andrew Giles Declared on 10 September 2019

[23] Exhibit 2 at [4]

[24] Exhibit 1 at p.3

[25] Ibid

[26] Exhibit 2 at [4]

[27] Transcript of proceedings PN12

[28] See also Esso Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers' Union (AMWU); Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU); The Australian Workers' Union (AWU) [2015] FWCFB 210 at [34]- [35]

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