233 Victoria Square Hotel Pty Ltd T/A Hilton Adelaide
[2023] FWCFB 163
•19 SEPTEMBER 2023
| [2023] FWCFB 163 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 3A, Item 26A(4) - Application to extend default period for Division 2B State employment agreements
233 Victoria Square Hotel Pty Ltd T/A Hilton Adelaide
(AG2023/1477)
HILTON ADELAIDE ENTERPRISE AGREEMENT 2006
[AG865384]
| Hospitality industry | |
| DEPUTY PRESIDENT WRIGHT DEPUTY PRESIDENT SLEVIN | SYDNEY, 19 SEPTEMBER 2023 |
Application to extend the default period for Hilton Adelaide 2006 Certified Agreement
233 Victoria Square Hotel Pty Ltd (Applicant) has applied under item 20A(4) of Sch 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act2009 (Cth) (Transitional Act) to extend the default period for the Hilton Adelaide 2006 Certified Agreement (Agreement) for a period of four years.
The Agreement was certified by the Australian Industrial Relations Commission under s170LT of the Workplace Relations Act 1996 on 31 May 2006. It is a collective agreement-based transitional instrument within the meaning of item 2(5)(c) of Sch 3 to the Transitional Act. Such instruments continue to apply because of item 3 of Sch 3.
The Transitional Act was amended by the Fair Work Legislation Amendment (Secure Jobs, Better Pay)Act 2022 (Cth) to provide for the automatic termination of all remaining transitional instruments. The Amendment Act referred to such instruments as ‘zombie’ agreements. Pursuant to the amendments, items 20A(1) and 20A(2) of Sch 3 to the Transitional Act mean the Agreement will terminate on 6 December 2023 unless it is extended by the Commission. The main features of item 20A of Sch 3 to the Transitional Act are described in detail in the Full Bench decision in Suncoast Scaffold Pty Ltd[1] and we rely upon what is said in that decision.
The application is made under subitem (4) of item 20A of Sch 3. Under subitem (6), upon application, the Commission is required to extend the default period for an agreement for a period of no more than four years if the Commission is satisfied that:
(a) Subitem (7), (8) or (9) applies and it is otherwise appropriate in the circumstances to do so; or
(b) it is reasonable in the circumstances to do so.
The application to extend the default period for the Agreement is made by reference to subitem (6)(a) on the basis that subitem (9) applies and it is otherwise appropriate to do so.
Subitem (9) applies if:
(a) the application relates to a collective agreement-based transitional instrument and;
(b) it is likely that,as at the time the application is made, the award covered employees for the instrument under subitem (10), viewed as a group, would be better off overall if the instrument applied to the employees than if the relevant modern award or awards referred to in that subitem applied to the employees.
Under subitem (10) of item 20A, ‘award covered employees’ for a collective agreement-based transitional instrument are those employees covered by the instrument who, at the time an extension application is made under subitem (4), are covered by one or more modern awards that are in operation in relation to the work to be performed under the instrument, and are employed at that time by an employer who is covered by the instrument and the modern award(s).
In addition to the information in the application, the Applicant provided witness statements from Ms Barbara Mula, Director – Human Resources and submissions going to the nature of the workforce, the better off overall test and the undertakings. Submissions were also made by the United Workers Union (UWU). It is not in dispute that the Applicant is covered by the Hospitality Industry (General) Award 2020 (Hospitality Award) and that is the relevant modern award for the purpose of the better off overall test (BOOT) in subitem 9(b).
Better Off Overall Analysis
Ms Mula gave evidence that the Applicant employed 317 employees under the Agreement. Forty-one employees were employed on salary arrangements, 40 as full-time employees, 83 as variable part time employees, 6 as fixed part time employees and 142 as casual employees. Ms Mula expressed the view that the employees were better off under the Agreement as the following terms provided benefits in excess of the Award:
a. Clause 24 - which effectively provides a guarantee of minimum payment rates of 1 % above the Hospitality Modern Award.
b. Clause 23 - which provides that employees classified at Levels 2, 3 and 4 are able to attain an additional classification level (being Levels 2A, 3A and 4A) to recognise their experience and wages are adjusted above the classification level below.
c. Clause 17(g)(i) - which effectively provides that full-time employees receive a penalty of 150% of minimum rates for work performed on a Saturday and a penalty of 175% for work performed on a Sunday.
d. Clause 17(g)(i) - which effectively provides variable part-time employees receive a penalty of 110% for all hours performed during Monday to Friday.
e. Clause 17(g)(iii) - which effectively provides that all part-time employees receive a penalty of 150% of minimum rates for work performed on a Saturday and a penalty of 175% for work performed on a Sunday.
f. Clause 17(g)(iv) - which effectively provides that all casual employees receive a penalty of 150% for all hours.
An issue arises concerning clause 24 of the Agreement which deals with wage rates. Clause 24 sets wage rates. The introduction to clause 24 of the Agreement reads:
What is my wage rate?
You will be paid at the rate appropriate to your classification level according to the table below. Provided that the Hotel guarantees that the applicable ordinary hourly rate will always exceed the minimum rate provided in the Hotels Clubs Etc Award (SA) or (when implemented) the Australian Fair Pay Commission Minimum Wage rate by 1.0%. Where there is no equivalent award Classification (Level 2A, 3A, 4A) the wage will be adjusted to maintain the relativities existing between the appropriate level and the level below (Level 2, 3 and 4 respectively).
On its face, the clause does not set rates at 1% higher than the Hospitality Award. The Applicant was asked to address this issue and did so in a witness statement of Ms Mula directed at the issue and by providing submissions. The UWU also made submissions on the issue.
That material explains that when the Agreement was certified it did not apply to the Applicant. It applied to Sitehost Pty Ltd trading as Hilton Adelaide (Sitehost) and to persons employed by Sitehost who performed work which would otherwise have been within the scope of the Hotels, Clubs, Etc.,Award, or the Clerks Clubs, Hotels, Motels (SA) Award.
In or around mid-2022 there was a transfer of business from Sitehost to the Applicant. At that time the Applicant made application to the Commission under s.319 of the Fair Work Act 2009 (FW Act) for an order that the Agreement cover the Applicant and non-transferring employees who performed work that was the same, or substantially the same, as work performed for Sitehost (Transfer Order). The Agreement transferred and applied to employees who met the description of transferring employees by operation of s.313 of the FW Act. An order was necessary to ensure that persons employed by the Applicant after the transfer, described in s.314 as non-transferring employees, would also be covered by the Agreement.
The Transfer Order was made[2]. The Commission’s decision setting out the reasons for making the Transfer Order recorded the following:
[8] On 27 May 2022, I conducted a conference, by telephone, in respect of both applications. Mr Nicholas Linke was granted permission under s.596 of the Act to represent the Applicant at the conference and appeared with Ms Barbara Mula. Ms Louise Dillon represented the United Workers’ Union (UWU). The UWU are entitled to represent employees covered by the Hilton Agreement[3].
[9] During the conference, the Applicant gave an undertaking that:
·The Hilton Agreement will be read and interpreted in conjunction with the National Employment Standards (NES), and where there is any consistency between the Agreement and the NES and the NES provides a greater benefit, the NES will prevail to the extent of the inconsistency.
·The Hilton Agreement will be read and interpreted such that any reference to an Award is a reference to the Hospitality Award.
·The Applicant will ensure that a copy of these undertakings is made available to all employees covered by the Hilton Agreement, and ensure that a copy of the instrument is attached to any copy of the Hilton Agreement provided to employees or made available in the workplace.
[10] On the basis of the above undertakings provided by the Applicant, the UWU did not object to the application in respect of the Hilton Agreement.
[11] Having considered each of the matters outlined in s.319(3) of the Act and the material that has been filed, I am satisfied that orders pursuant to s.319(1)(b) of the Act should be made in respect of both applications. The orders will be issued concurrently with this decision.
The Applicant contends that the effect of the Transfer Order, read with the undertaking set out at [9] of the decision (Undertaking) andthe guarantee in clause 24, is that the ordinary hourly rate will always exceed the minimum rate provided in the Hospitality Award by 1%. This has been the practice of the Applicant in setting rates for employees under the Agreement.
A question arises as to whether the Undertaking can be taken into account when conducting the BOOT under subitem (9)(b) of item 20A of the Transitional Act. The Applicant contends that it can, as it is to be regarded as a term of the Agreement.
The Applicant submits, primarily, that the Commission’s decision under Part 2-8 of the Act, which ordered that the Agreement apply to non-transferring employees, should be read as having varied the Agreement to incorporate the undertakings into the Agreement. It is said that this arises because the Commission’s decision had the effect of incorporating a decision to vary the Agreement pursuant to s.320 of the FW Act. We do not agree with this proposition.
Section 320, which deals with variations of transferable instruments, provides the Commission with power to vary a transferable instrument in limited circumstances. These circumstances include to remove terms that are not or will not be capable of meaningful operation because of the transfer of business, or, to remove an ambiguity or uncertainty, or, to enable the instrument to operate in a way better aligned to the working arrangements under the new enterprise. The power to vary transferable instruments under s.320 is only available upon application and in deciding to make the variation the Commission is required to take into account a list of factors.
When the Commission made the Transfer Order it did not have before it an application under s.320 and consequently did not consider the matters that it was required to consider under that section. The Undertaking cannot be regarded as a variation to the Agreement in the way contended for by the Applicant.
The Applicant contends, in the alternative, that because the Undertaking was given to the Commission in proceedings and was referred to in its decision, it arguably has the standing that would be given to an undertaking to a court and should be regarded as binding as a court order. In making this submission the Applicant adopted a submission to the same effect made by the UWU. Again, we disagree.
The nature of the Undertaking can be seen on the face of the Commission’s decision. It was made in conference. It was made in the context of addressing concerns raised by the UWU. Once the Undertaking was given ,the UWU did not object to the order being granted. It does not appear to be an undertaking to the Commission, per se, and, in any event, as the Commission is not a court, there can be no suggestion that it is akin to or has the status of a court order.
Having determined that the Undertaking is not a term of the Agreement, the BOOT analysis we will apply will be on the basis that the Agreement does not include the Undertaking as a term and clause 24, in particular, does not operate to afford wage increases to employees to maintain wages at 1% above the Hospitality Award. We note that this is the practice of the Applicant in accordance with the Undertaking, but we are of the view that it is not a benefit afforded as a term of the Agreement.
It is the Commission’s practice in applications to extend the default period for zombie agreements to seek an analysis of the agreement against the relevant award from the Commission’s Agreements Team for the purpose of the BOOT. This was done in the present case and that analysis was provided to the Applicant and the UWU to comment.
The analysis concerning full time and fixed part time employees was that the Agreement generally provides terms similar to the Hospitality Award for full time and fixed part time employees with more beneficial Saturday and Sunday ordinary hour penalties and less beneficial public holiday penalties. Overtime provisions are less beneficial when compared to the Award. Full time and fixed part time employees cannot be considered better off overall when compared to the Award given the less beneficial Monday to Saturday overtime and public holiday provisions.
The Agreement also provides for variable part time employees. This is not a category of employment provided for in the Award. These employees receive a loading of 10% for work performed Monday to Friday. They also receive more beneficial Saturday and Sunday ordinary hour penalties. The hours of work for variable part time employees in the Agreement are between 782 and 1981 hours per annum which are averaged over a four-week period. This is inconsistent with part time provisions in clause 10.4 of the Award which provides for the setting of guaranteed rather than variable hours. The overtime provisions in the Agreement are less beneficial Monday to Saturday and on public holidays. Whether these employees are better off overall when compared to the Award will depend on the number of overtime hours worked. Given the higher penalties for working ordinary hours on Saturday and Sunday, variable part time employees who consistently work weekends may be considered better off overall.
The Agreement is silent on most Award allowances. It does not provide a definition of shift worker for the purposes of additional annual leave. These matters leave the employees worse off.
Employees may receive an annualised salary under clause 17(f) of the Agreement, however, the Agreement is silent on the safeguards provided for at clause 24.2 of the Award. Consequently, these employees cannot be considered better off overall.
The Agreement provides less beneficial shift penalties for shifts worked Monday to Friday, as it provides a premium of $1.39 per hour for work performed between 7pm and 6.59am. The Award provides a penalty of $2.48 for hours worked between 7pm and Midnight and a penalty of $3.71 for hours worked between Midnight and 7am. Full time and fixed part time rates in the Agreement are not high enough to compensate for this reduction.
For casual employees, clause 17(g)(iv) of the Agreement provides that a premium of 50% of the ordinary rate of pay with a minimum engagement of 2 hours, however it expressly excludes casual employees from overtime penalties and premiums.
The casual rate can be taken as being a loaded rate and, as the Full Bench said in Loaded Rates in Agreements[4] at [121], it will be difficult for casual employees with loaded rates to be considered better off overall, because ‘it would always be possible for the casual employee, in a given pay period, to be engaged to work on a day or at a time which would attract the payment of penalty rates under the relevant award and not to be engaged on any other hours or at any other times’. Consequently, casual employees cannot be considered better off overall.
In its response to the analysis conducted by the Commission’s Agreements Team, the Applicant noted that the Agreement provided wages that were higher than the Award. This is a reference to the 1% paid in accordance with the Undertaking. The Applicant accepted that the Agreement provided less beneficial entitlements for permanent employees in relation to overtime on Monday to Saturday and for public holidays. It accepted that the Agreement was silent on almost all Award allowances. It also accepted that the exclusion of casuals from overtime penalties was less beneficial. It accepted that apprentices were worse off. It accepted that the safeguards in clause 15.1 of the Award in relation to the way ordinary hours are worked were not present in the Agreement. It also accepted that there was no definition of shift worker for the purpose of additional annual leave.
The Applicant proposed new undertakings to address these issues (new undertakings). The new undertakings addressed each issue in turn and were in effect that if the default period for the Agreement was extended the Award terms would be applied to ensure the employees were not worse off.
In relation to employees engaged as variable part time employees, the Applicant also submitted that the flexible rostering arrangements for these employees provides a benefit to employees as they are from a demographic that appreciates flexibility. Ms Mula’s witness statement dated 7 August 2023 described the employees as working parents or students who appreciated the flexibility of the rostering system. Regarding annual salaries, the Applicant contended that while the Agreement did not provide protections in clause 25 of the Award, in practice it substantially complies with them. The Applicant submitted that the less beneficial shift penalties were adequately compensated in the higher rates paid in the Agreement.
The Applicant submitted that factoring in the new undertakings the employees were better off overall on a global basis if the Agreement applied rather than the Award.
As to the new undertakings proposed by the Applicant, we are of the view that they can form no part in the assessment of the better of overall test in item 20A(9)(b) of Schedule 3. Subitem (9)(b) requires a finding that it is likely at the time the application to extend the default period is made, the award covered employees, viewed as a group, would be better off overall if the collective agreement based transitional instrument applied to those employees than if the relevant award applied to them. The focus is on a comparison between the instrument, here the Agreement, and the modern award, here the Hospitality Award. If is likely that the employees are not better off overall, then subitem (9) does not apply. There is no mechanism in item 20A that allows the Commission to accept undertakings to remedy any perceived deficiency in the collective agreement-based transitional instrument. The Schedule does not operate in the same manner as Division 4 of Part 2-4 of the FW Act which allows the Commission to approve enterprise agreements with undertakings.
In Suncoast Scaffolding Pty Ltd[5] the Full Bench identified differences between the better off criterion in subitem (9)(b) and the better off overall test in s.193 of the FW Act. We would add to those observations that the Transitional Act does not contain a provision equivalent to s.190 of the FW Act which permits the Commission to accept undertakings from an employer to addresses concerns that the BOOT in s.193 has not been met.[6] The criterion in subitem (9)(b) is similar to, but not the same as, the test in s.193 in that it requires a comparison between the agreement and the modern award. The consequence of a finding under subitem (9)(b) that the BOOT has not been met, unlike a similar finding under s.193, cannot be addressed by the Commission accepting undertakings designed to cure the deficiencies in the agreement to ensure that the employees are better off.
As no mechanism is available to either consider or accept the undertakings, the new undertakings can play no role in our consideration of whether the default period should be extended.
The UWU made no submission on the BOOT. It submitted that the Agreement should be read as including the Undertaking to ensure wages were maintained at 1% above the Hospitality Award. It contended that the continued operation of the Undertaking was necessary to ensure the employees were not disadvantaged in relation to their terms and conditions of employment.
Consideration
As the Full Bench said in Suncoast Scaffolding, the better off overall test in item 20A(9) involves a broad evaluative judgment based upon an overall comparison of the terms of the transitional instrument and the relevant award in its application to the award covered employees.
Our view is it is not likely that,as at the time the application was made, the employees, viewed as a group, would be better off overall if the Agreement applied to the employees than if the Hospitality Award applied. Our finding is based on our view that neither the Undertaking nor the new undertakings can be taken into account. The Undertaking does not result in the Agreement providing wages 1% above the Hospitality Award. The rates of pay in clause 24 of the Agreement are referrable to earlier awards that no longer operate. As we note above, the Applicant has applied rates that are referrable to the Hospitality Award but this has occurred in accordance with the Undertaking rather than as a consequence of a term of the Agreement. That finding alone must lead to a conclusion that the better off overall test is not met.
We also find that, taken as a whole, the other terms of the Agreement are less beneficial than the terms of the Award and that the new undertakings cannot operate to cure those deficiencies. The Commission’s analysis identifies the provisions of the Agreement that provide inferior terms and conditions. The Applicant’s response to many of those was to address them by providing the new undertakings. In doing so, it appears the Applicant accepts that those terms are inferior and need addressing. As the Transitional Act differs from the FW Act in that BOOT deficiencies cannot be addressed by undertakings it cannot be said that in relation to those terms the employees will be better off overall under the Agreement.
Ms Mula’s evidence and the submission of the Applicant was that the employees preferred to have the Agreement apply as it provided flexibility and certainty. The Applicant also submitted that in practice it was observing many of the Award conditions that were not reflected in the Agreement. Its undertakings were to the effect that it would do so. These matters may have been relevant if we were required to make an assessment of whether it is appropriate to extend the default period for the Agreement. However, as subitem 9(b) is not met we are not required to do so.
Those additional matters may also be relevant to a consideration of whether it is it is reasonable in the circumstances to extend the default period under subitem 6(b). The Applicant referred to this limb of subitem 6(b) but made no submissions directed to it. Subitem 6(b) also calls for a broad evaluative judgement[7]. We do not find that it would be reasonable to extend the default period in the circumstances. If it is necessary to achieve flexibility and certainty in the working arrangements beyond that provided by the Hospitality Award, then that can be achieved by the making of an enterprise agreement under Part 2-4 of the FW Act. An enterprise agreement would also enable the practice of providing wage rates in excess of the Award to be formalised.
Conclusion
Neither item 20A(6)(a) nor (b) is met so we are not required to extend the default period for the Agreement. The application is dismissed.
DEPUTY PRESIDENT
[1] [2023] FWCFB 105 (‘Suncoast Scaffolding’).
[2] PR742144
[3] [2022] FWC 1364
[4] [2018] FWCFB 3610.
[5] [2023] FWCFB 105 at [15]
[6] There are similar provisions permitting the Commission to accept undertakings in the context of variations to agreements in s212 and upon a reconsideration of the BOOT under s.227B.
[7] Suncoast Scaffolding at [17]
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