The Case

In July 2016, the Fair Work Commission (FWC) approved Sparta Mining Service Pty Ltd’s (SMS) Enterprise Agreement. The Construction, Forestry, Mining and Energy Union (CFMEU) lodged an appeal. It asserted that SMS had not complied with the requirements of s180(2) of the Fair Work Act 2009 (Cth) in that SMS had failed to provide employees with a copy of any other material incorporated by reference in the Agreement.

The CFMEU argued clauses 2.5, 6.1, 6.2 and 14.4.2 of the agreement incorporated, by reference, external documents. Clause 2.5 stated: “This Agreement is supported by policies and procedures determined by the Employer from time to time…”

Clauses 6.1, 6.2 and 14.4.2 stated as follows:

6.1: “The Employer agrees to comply with State and Commonwealth Occupational Health & Safety laws and any relevant industry codes of practice.”

6.2: “The Employee agrees to carry out any instructions, policies and decisions made to promote and maintain a safe workplace required by relevant occupational Health and Safety legislation…”

14.4.2: “You will not be required to work more than 5 hours … in accordance with the site ‘Fitness for Work’ and ‘Fatigue Management Policy’.”

SMS argued that the reference to the documents in these clauses did not incorporate them and the documents needed to be specifically described.

The Verdict

The Full Bench of the FWC rejected SMS’s argument and found that clauses 6.2 and 14.4.2 both “establish entitlements or obligations which operate by reference to documents external to the Agreement”. The Full Bench indicated there was no rule against incorporation where the external document had only been generally described. It held that clauses 6.2 and 14.4.2 referred to policies that were sufficiently described to be incorporated into the Agreement.

The Full Bench indicated that as it did not have any knowledge as to how accessible the industry codes or practices were as referred to in clause 6.1, SMS’s failure to provide these codes to employees should have been considered by the FWC in the context of its compliance with section 180(2) in deciding whether to approve the Agreement.

Lessons

The Full Bench’s decision in this case is problematic for the approval process of enterprise agreements. The wording used in clauses 6.1 and 6.2 (“the employee agrees to comply” and “the employee agrees to carry out”) are common in enterprise agreements and reflect an employee’s duty to comply with workplace policies and codes of practice.

This decision means agreements may not be approved if employees are not provided with copies of all external documents referred to in an enterprise agreement during the access period.

The Full Bench also did not rule out that wording such as that contained in clause 2.5 would not be an incorporation by reference.

This means if all external documents referred to in an enterprise agreement are not provided to employees to consider, in addition to the enterprise agreement, the agreement may not be approved.

Even more alarming is the potential implication if an employer fails to follow any of its policies or other external documents that are incorporated into the agreement, they may be found to have breached the enterprise agreement.

What should you do?

Prior to having your workforce vote on an enterprise agreement, check whether your enterprise agreement incorporates a policy or other external document. If it does, check your business intends this and:

• if it is intended, distribute a copy of the relevant external documents to employees with the enterprise agreement; or
• if it is not intended, change the wording of the relevant clause to make the intent clear.

Please note: Case law is reported as correct and current at time of publishing. Be aware that cases in lower courts may be appealed and decisions subsequently overturned.