Major hospitality group under fire for ‘sham’ enterprise agreement

The Full Bench of the Fair Work Commission (the FWC) has in a recent decision requested that the General Manager of the FWC refer a senior HR executive to the Australian Federal Police for deliberately falsifying and providing misleading information in a Form F17 declaration – a document which accompanies the application for approval of an enterprise agreement.

Facts

Hot Wok Food Makers Pty Ltd (Hot Wok), an entity under the Mantle Group Hospitality business, made an application for approval of the Hot Wok Food Makers 2021 enterprise agreement (the Agreement). The Agreement included a term where workers could ‘voluntarily’ waive penalty rates for the weekends and public holidays.

The application was supported by a Form F17 statutory declaration made by Mr Darren Latham, Chief HR Officer of Mantle Group Hospitality. Mr Latham identified the steps that had been taken to explain the Agreement to employees. This included providing employees with a notice of employee representational rights for the Agreement in the first instance. A vote to approve the agreement took place two months after this. Mr Latham disclosed that four out of a total of five employees who were covered by the agreement, cast valid votes and voted in favour of approval.

When approving enterprise agreements, the FWC use the better off overall test (BOOT) which requires an assessment of whether each award covered employee and prospective award covered employee would be better off overall if the Agreement applied than if the relevant modern award applied. In his declaration, Mr Latham further stated that he thought the Agreement contained no employment terms and conditions less beneficial than those equivalent in the Restaurant Industry Award 2020 or the Hospitality Industry (General) Award 2020 (collectively, the Awards) and argued that the Agreement passed the BOOT.

The Appeal

In 2022, the United Workers’ Union (UWU) appealed Deputy President Mansini’s decision to approve the Agreement on the following grounds, including but not limited to:

1. that the Deputy President failed to undertake the global analysis of the terms of the Agreement required by the BOOT, and had she done so, it would have been clear the Agreement did not pass; and
2. that the Agreement could not be said to have been genuinely agreed to as the employees who voted had no interest in and were indifferent to the broader range of classifications covered by the Agreement.

The Full Bench of the FWC reiterated a long-recognised principle that ‘voluntary hours’ agreements place employees in a monetarily disadvantageous position, which must be taken into account in the BOOT. Applying this to the present circumstance, the FWC considered the ‘voluntary hours’ clauses in the Agreement and concluded that it presented an apparent disadvantage to employees. The FWC further contended that there could be no alternative view about the BOOT approval requirement ‘because the assessment required to be undertaken produces a mathematically certain outcome’. In any event, the Agreement failed the BOOT.

Relevantly, the UWU adduced evidence that suggested the four employees who purportedly voted to approve the Agreement performed work in either management or administrative tasks. These employees held positions such as ‘Payroll Manager’, ‘Area Manager’, and ‘Venue Manager’, which significantly detracted from their performance of bar and/or hospitality or clerical work. The witnesses’ evidence contained numerous inconsistencies, improbabilities and evasions, which in turn strengthened UWU’s submission that the Agreement was not ‘genuinely agreed to by employees covered by the agreement’.

Notwithstanding the above, the evidence further suggested that the four employees received salaries well above the rates stipulated in the Agreement and accordingly had no stake in the Agreement. The FWC branded the selection of four relatively high-paid managers to vote for the Agreement a ‘deliberate manipulation of the statutory process for making enterprise agreements’. Their approval of the Agreement meant that the Agreement applied to a host of employees who were deprived of any opportunity to bargain or vote. This, according to the FWC, ‘was entirely lacking in authenticity and moral authority’.

The FWC also found it necessary to make an adverse finding about Mr Latham’s credibility as to the veracity and candour of the information provided in his Form F17 declaration, citing this as a significant factor in the consideration of the appeal. For example, Mr Latham asserted in his declaration about regular meetings to explain the Agreement to those voting. However, the evidence demonstrated to the FWC’s satisfaction that the employees had no independent recollection of their attendance at meetings nor demonstrated any contemporaneous discussions in relation to the Agreement.

When called to give evidence, Mr Latham refused to answer almost all questions pertaining to his declaration on the ground of an apprehension of self-incrimination. The FWC inferred that the documentation produced by Hot Wok in respect of the purported information sessions, the voting process and the number of employees covered by the Agreement appeared deceiving and contrary to Mr Latham’s declaration. Absent corroboration, Mr Latham’s evidence could not be accepted as accurate and truthful.

It is for the reasons above the Full Bench of the FWC ultimately dismissed Hot Wok’s application for approval of the Agreement.

Having regard to Mr Latham’s position, knowledge and experience, the FWC were highly critical of Mr Latham’s conduct, branding it a ‘deliberate’ abuse of process. They stated that he ‘knew what the true position was but chose to misrepresent or falsify’ his declaration. Accordingly, the General Manager of the FWC was requested to consider whether Mr Latham could be the subject of a referral to the Australian Federal Police. This was determined on the basis that a person who knowingly gives or produces a false or misleading information or document in support of an application for approval of an enterprise agreement is guilty of an offence under the Commonwealth Criminal Code.

Take Home Messages

The Form F17 declaration and any documents accompanying it are, in most cases, the principle source of information upon which the FWC relies upon when determining whether an enterprise agreement meets the legislative approval criteria. It would not be an appropriate use of the FWC’s resources to investigate for itself the truth of the matters asserted in such declarations. In other words, the process for approving enterprise agreements is to be regarded as a reputable process, built on the foundations of good faith.

HR officers or other officers involved in enterprise agreement negotiations and subsequent approval processes should turn their minds to these factors to ensure that best endeavours are used to fairly negotiate enterprise agreements. A person who knowingly gives or produces false information in support of an application for the approval of an enterprise agreement may be criminally sanctioned, given the gravity of this conduct.

Should you require assistance in your enterprise agreement negotiations, or tailored training relating to the appropriate approval process, please contact Sathish Dasan on +61 8 8210 1253 or sdasan@normans.com.au or Anastasia Gravas on +61 8 8217 1331 or agravas@normans.com.au or Li-shern Sim on +61 8 8217 1362 or lsim@normans.com.au.