AAA Traffic Control Pty. Limited

[2019] FWC 7955

[2019] FWC 7955

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement

AAA Traffic Control Pty. Limited
(AG2019/773)

DEPUTY PRESIDENT CROSS SYDNEY, 22 NOVEMBER 2019

Application for approval of the AAA Traffic Control Pty Limited Employee Collective Agreement 2019 - 2022.

[1] An application has been made for the approval of a single-enterprise agreement (the “Application”) known as the AAA Traffic Control Pty Ltd Enterprise Agreement 2019-2022 (the “Agreement”). The application was made by AAA Traffic Control Pty Ltd (the “Applicant”) pursuant to s.185 of the Fair Work Act 2009 (the “Act”).

[2] On 11 July, 2019, the Australian Workers’ Union (New South Wales Branch) (the “AWU”) sought to be heard in relation to the approval proceedings and notified the Commission of their intention to file a Form 18 shortly.

[3] On 12 July, 2019, my Chambers received the following correspondence from the AWU:

“Dear Associate,

AG2019/773 - Re AAA Traffic Control Pty Ltd Enterprise Agreement 2019-2022

I refer to the above approval application.

I write to advise that the AWU no longer presses its claim to be heard in relation to this application.

The AWU notes the recent decision in AWU v Retro Traffic Pty Ltd [2019] FWCFB 1068, which deals with shiftwork conditions in the traffic control industry.”

[4] On 20 August, 2019, my Chambers issued correspondence to the Applicant in the following terms:

“Dear Parties,

RE: APPLICATION BY AAA TRAFFIC CONTROL PTY LTD ENTERPRISE AGREEMENT 2019-2022 (AG2019/773)

I refer to the above matter.

The Deputy President has requested that attention, and submissions, be directed to the following issues:

Incorporation of the Award and BOOT Concerns

The Agreement reflects that the rates of pay are 0.01% above the Award, yet it purports to exclude a number of areas below (see below). It is therefore not clear as to how affected employees are, in fact, ‘better off’ overall.

Rates of Pay:

•  Level 1 Rates of Pay: Rate of pay for Level 1 employees appears to fall below the Award rate when matched to a ‘CW2’ Level under the Award (noting that all employees were matched to a CW2 Level under the Award as employees appear to perform the work of ‘traffic controllers’).

•  Level 2 Rates of Pay: Rates of pay for Level 2 employees are at Award rates (or 0.01% above). In light of the BOOT issues raised below, most employees at this level would not appear to be better off overall under the Agreement.

Due to the abovementioned rates of pay and the following BOOT issues raised below, most employees at this level would not appear to be better off overall under the Agreement.

Due to the abovementioned rates of pay and the following BOOT concerns, most employees would not appear to be better off overall under this Agreement.

1. Daily hours: The Award provides for a maximum of 8 daily ordinary hours (Clause 33.1). However, the Agreement provides for a maximum of 8 hours per day “unless otherwise agreed” (Clause 9.1.1). The Award also provides overtime penalties for work beyond an employee’s ordinary time of work (Clause 36.2). This may cause some employees not to be better off if they agree to work over 8 ordinary hours in a day and do not receive overtime penalties for these additional hours. It is noted that the Agreement provides overtime rates for “overtime after 8 hours Mon-Fri” as per Clause 9.5.1. However, this may not be applicable to employees whose ordinary hours are over 8 per day.

2. Minimum payment/engagement: The Agreement provides a minimum payment of 4 hours, however a number of exclusionary circumstances are listed in Clause 9.2.3, including where employees work split shifts or ‘running shifts’ and where the employee is required to attend safety meetings that are not held directly before or after a shift. The Award provides the following minimum payment entitlements, without such exclusions:

•  4 hours for casuals (Clause 14.4);

•  3 hours on Saturday for overtime (Clause 37.2);

•  4 hours on Sunday for overtime (Clause 37.5);

•  4 hours of public holidays (Clause 37.9);

•  3 hours for call outs (shift workers in the civil construction sector) (Clause 34.2(n)); and

•  3 hours for being called over overtime (Clause 36.3).

3. Meal breaks:

(a) Day workers: Award entitles day worker employees to meal break of not less than 30 minutes where working over 5 hours (Clause 35.1). However, the Agreement requires a minimum 6 hours to be worked (Clause 9.3.1);

(b) Shift workers: Award entitles shift workers to 30 min paid meal break no later than 5 hours after commencement (Clause 35.2) (see also Clause 34.2(c)). The Agreement omits this entitlement.

(c) The Agreement omits Award entitlement to be paid where working through a meal break per Clause 36.5.

4. Crib breaks: Agreement provides entitlement to crib breaks of 20 minutes (Clause 9.4.4. The Award provides entitlement to 20 minutes crib break after conclusion of ordinary hours and a 30 minute crib break after every 4 hours of work thereafter (Clause 35.3). It is also noted that the Award provides that where shift work comprises three continuous and consecutive shifts of eight hours per day inclusive of time worked, a crib time of 20 minutes in duration must be allowed without deduction of pay in each shift (Clause 35.3). However, the Agreement appears to omit this entitlement.

5. Part time hours of work: The Award provides that a part time employee has reasonably predictable hours of work, that the employer will inform the part time employee of the ordinary hours of work and the starting and finishing times, and at the beginning of employment the employee and employer will agree in the part time hours and days of work and commencing times (Clause 13.3). The Agreement omits these entitlements. It is noted that the Award provides overtime penalties for work beyond an employee’s ordinary time of work Monday to Friday, which would appear to include agreed hours of work under Clause 13.3 (Clause 36.2).

6. Additional hours for part time employees: The Agreement provides that part time employees “must be available for shift allocation of a minimum of 20 hours per week of ordinary hours and may also be requested to work additional hours up to an average of 38 per week (averaged over a 4 week period).” The Agreement also states that there is no entitlement to overtime where a part time employee works such additional hours. The lack of penalty provided for ‘additional hours’ under the Agreement may cause some employees not to be better off noting that that the Award provides overtime penalties for work beyond an employee’s ordinary time of work Monday to Friday, which would appear to include agreed hours of work per Clause 13.3 (Clause 36.2).

7. Saturday penalties: The Agreement indicates that ordinary hours for “day work” and “night work” are Monday-Friday (6.00am to 6.00pm, and 6.00pm to 6.00am respectively), and indicates that “afternoon work” is any shift starting at/after 10.00am and before 4.00pm (Clause 1). The Agreement however does not indicate whether ordinary hours for afternoon work are also Monday to Friday. Presumably, employees may work ordinary hours on Saturday noting that Clause 9.1.4 of the Agreement provides that ordinary hours worked on Saturday must be paid at 150%. However, employees who work ordinary hours on Saturday under the Award appear to be entitled to overtime rates of 150% (first 2 hours) and 200% (thereafter) (or 200% for hours worked after 12pm) (Clause 37.1) (unless they are shift workers in the Civil construction sector in which case Award provides flat Saturday penalty of 150% (for ordinary hours worked) (Clause 34.2(k))).

8. Shift work / shift penalties: Note the following issues pertaining to shift work and shift penalties where employees are working in the General building and construction sector or the Civil construction sector.

General building and construction:

(a) Shift penalties: Agreement provides a shift penalty (30%) for afternoon work which is “any shift starting at/after 10.00am and before 4.00pm’ and night work which is ‘all hours worked between 6.00pm and 6.00am).’ (Clause 8.2). Whereas under the Award (Clause 34.1), employees who are employed continuously for five shifts Monday to Friday, they are entitled to the following penalty rates:

•  25% for shifts commencing at or after 4.30am and before 6.00am (morning shifts);

•  25% for shifts commencing on/after 11.00am and before 1.00pm (early afternoon shifts);

•  50% for shifts commencing at/after 1pm and before 3pm (afternoon shifts);

•  50% for shifts commencing at/after 3pm and before 11pm (night shifts);

Some employees may not be better off where they are entitled to a shift penalty under the Award as outlined above, but are entitled to a lower penalty or no penalty under the Agreement.

(b) Broken shifts: Under the Award, shift workers who work broken shifts (i.e. less than 38 ordinary hours worked over five consecutive shifts Monday to Friday) are entitled to penalty rates of 150% (first 2 hrs) and 200% (thereafter) (Clause 34.1(i)). The Agreement omits this entitlement. (It is noted that employees affected by the abovementioned shift penalty issue may be further affected by this).

(c) Shift work performed by day workers: Day worker employees who work shifts as defined under the Award may be entitled to overtime rates under the Award of 150% (first 2 hrs) and 200% (thereafter or on Sundays) (Clause 36.2; 36.16). The Agreement provides rate of 150% for afternoon and night shifts that are not “shift work”. (It is noted that employees affected by the abovementioned shift penalties issue may be further affected by this).

Civil construction sector

(a) Shift penalties: Agreement provides a shift penalty (30%) for afternoon work which is ‘any shift starting at/after 10.00am and before 4.00pm’ and night work which is ‘all hours worked between 6.00pm and 6.00am).’ (Clauses 1 and 8.2). Whereas under the Award, employees are entitled to the following penalty rates:

a. 115% for any shift starting at or after 10.00am and before 8.00pm (afternoon shift);

b. 115% for any shift starting at or after 8.00pm and before 6.00 am (night shift);

c. 130% for night shift which does not rotate or alternate with another shift or with day work so as to give the employee at least one third of their working time off night shift in each cycle (permanent night shift);

Some employees may not be better off where they are entitled to a shift penalty under the Award as outlined above, but are entitled to a lower penalty or no penalty under the Agreement.

(b) Less than 5 afternoon/night shifts: The Award provides penalty rate of 150% for any afternoon or night shift which does not continue for at least five successive afternoons or nights (Cloause 34.2(m)). The Agreement omits this entitlement. (It is noted that employees affected by the abovementioned shift penalties issue may be further affected by this).

(c) Call outs: The Award provides that a shift worker called out to work after the expiration of their customary working time and after they have left work for the shift, or is called out to work on a day on which they are rostered off, must be paid for a mininmum of 3 hrs at 200% (Clause 34.2(o)). The Agreement omits this entitlement.

(d) Transport after overtime: The Award provides that when a shift worker works overtime or a shift for which they have not been regularly rostered, the employer will provide transport home or to public transport, if reasonable means of transport are not available (cl 34.2(p)). The Agreement omits this entitlement.

9. Afternoon shift overtime: The Agreement provides overtime penalties for night work employees (Clause 9.5.3 and Clause 9.5.5), however the Agreement is silent with regards to overtime penalties for employees who work afternoon shifts. It is noted that the Award provides overtime penalties for all types of shift work (Clause 34.2, cl 36).

10. Overtime for shift workers in Civil construction sector: The Agreement provides overtime penalties to night work employees where they work outside ordinary hours (Clause 9.5.3) as does the Award, however under the Award shift workers in the Civil construction sector also receive overtime for hours worked on a shift other than a rostered shift (Clause 34.2(i)).

11. Annual leave loading: The Agreement provides leave loading entitlement of 17.5% calculated on ordinary time hours and leading hand allowance (Clause 10.3.5), however the Award provides entitlement to 17.5% (or shift loading if higher) calculated on leading hand allowance and a number of other allowances (see Clause 39.2).

12. Reduced allowances: The Agreement contains the following reduced allowances (and other entitlements) when compared to the Award:

(a) Fares allowance provided under both the Agreement (Clause 8.5.5) and the Award (Clause 25.2). The Agreement rate is $20 per day, but the Award rate is $17.43 per day, however:

a. Allowance is not provided under the Agreement in certain circumstances as outlined in Clause 8.5.5.5 including where an employee is provided with a vehicle, or on an RDO.

b. Under the Agreement, the allowance is paid where site of work is within radius of 60km of GPO/principal post office/place where employee performing distant duty is accommodated. However, under the Award, the fares allowance is paid for travel within 50km of such areas and employees receive payment for travel time (and expenses) for travel outside that area (Clauses 25.2, 25.5). This may be a detriment depending on amount of time spent traveling in excess of 50km of areas referred to.

(b) Transfer during working hours: Under the Award, an employee transferred from one site to another during working hours will be paid for the time travelling and fares (Clause 25.9). However, under the Agreement, an employee is entitled to travel fare of $20 if shift is a “split shift” (Clause 9.6) or is entitled to payment for time between shifts but not fares if shift is a “running shift” (Clause 9.7). These may be reduced in some instances.

(c) Meal allowance (provided after 9.5 hrs work only under the Agreement (Clause 8.5.2.1), however is provided after 1.5 hrs of overtime under the Award (Clause 20.2). This may be may be less beneficial depending on how many ordinary hrs worked);

(d) First aid allowance ($3.01 per day for minimum qualifications, or $4.77 per day for higher than minimum qualifications (Clause 20.10), however $15 per week or $3 per day under Agreement (Clause 8.5.4).

(e) Inclement weather: Here, the Agreement and Award contain inclement weather procedures which differ. A key difference is that the Award provides that where an employee is not able to perform any work at any location because of inclement weather, the employee will receive payment at the ordinary time hourly rate for ordinary hours (Clause 23.7). The Agreement omits this entitlement (Clause 12.2).

(f) Team leader: The Agreement provides rate of $1.10 per hour (Clause 8.5.1). The Award however provides leading hand allowance of up to $1.90 per hour depending on how many employees are supervised (see Clause 19.2).

(g) Living Away From Home – The Award entitles employee to allowance or board and lodging with 3 meals per day (Clause 24.3). The Agreement entitles employee to allowance or board and lodging only (Clause 8.5.2).

13. Omitted allowances/entitlements: The Agreement omits most allowances (or other entitlements) provided under the Award including the following which may be applicable to employees performing traffic control work (excluding the all-purpose special and industry allowances which have been taken into account in the pay rate comparison):

•  Fares allowance for:

◦  Country radial areas (Clause 25.4)

◦  Travelling between radial areas (Clause 25.7)

•  Casual conversion entitlement (Clause 14.8)

•  Provision of transport home after working overtime when reasonable means of transport are not available (Clause 36.8) (note this is a separate entitlement to that provided at Clause 34.2(p) for civil construction sector shift workers)

•  Accident pay (Clause 27)

•  Higher duties pay (Clause 30)

•  Presenting for work but not required (Clause 19.4)

•  Compensation for clothes and tools (Clause 20.3)

•  Hot work (Clause 22.2(b)

•  Cold work (Clause 22.2(c))

•  Dirty work (Clause 22.2(h))

•  Toxic substances (Clause 22.2(i))

•  Fumes (Clause 22.2.(j))

•  Powdered lime dust (Clause 22.4(b)) (civil construction sector)

•  Washing time (Clause 33.1(c))

14. Travelling outside radial areas allowance: The Agreement provides entitlement to payment for expenses incurred in travel time ‘outside radial areas’ in respect of travel from the designated radial boundary to the job and return to that boundary (Clause 8.5.6.1), as does the Award (Clause 25.5), however whilst the Award provides that such expenses will be $0.47 per km, the Agreement states that the rate per km is ‘set out in the table below’, however there does not appear to be such table.

15. Split shifts and running shifts: The Agreement provides for split shifts and running shifts to be worked (Clauses 9.6 and 9.7). The Award does not explicitly refer to the working of such shifts. As such, it is unclear as to how the working of such shifts would be treated under the Award and as a result it may cause some employees not be to better off overall. For instance, the second portion of the split shift is paid at overtime rates under the Award.

16. Other:

(a) Deductions for training costs: The Agreement provides that employer/ee may come to arrangement to cover costs of a training course whereby the employer can deduct money from an amount payable to the employee in relation to the performance of work (see Clause 15.2). The ward does not allow for such deduction.

(b) Annual leave:

a. The Award provides an entitlement to take annual leave in advance per Clause 38.4. The Agreement omits this entitlement.

b. The Agreement provides that the employer may require the employee to take annual leave (Clause 10.3.2), as does the Award (cl 38.7), but the Agreement omits or reduces the safeguards provided under the Award including that the employer must give 8 weeks notice of the requirement to take the leave (it is noted that the Agreement only requires 4 weeks or mutual consent).

(c) Personal leave: The Award provides that if an employee is terminated by the employer and is re-engaged by the same employer within a period of six months, the employee’s unclaimed balance of sick leave will continue from the date of re-engagement (see cl 39). Agreement omits this entitlement.

(d) Termination: The Agreement omits the Award entitlement that employees who have received notice of termination to up to one day’s time off without loss of pay for the purpose of seeking other employment (Clause 16.3).

(e) Redundancy: The Agreement omits the Award entitlement that an employee terminated in circumstance of redundancy may terminate their employment during the period of notice and, if this occurs, employees will be entitled to redundancy entitlements as provided under the Award until expiry of notice (Clause 17.6).

(f) Superannuation: The Agreement omits Award entitlement that employer must make super contributions while employee is on paid leave and, subject to certain conditions, for the period of absence from work (subject to a maximum of 52 weeks) of the employee due to work-related injury or work-related illness (Clause 32.5).

Further Considerations

•  The Form F17 does not indicate how the NERR was distributed to employees. Would you please provide clarification as to how a copy was distributed and provide to Chambers a copy of same.

•  Responses to questions 2.6 and 2.7 of the Form 17 indicate that digital and hard copies of the Agreement were made available to employees. Please provide further details as to how and/or where copies were made available.

•  Responses to question 2.6 of the Form F17 indicate that employees were supplied with a Notice which stated the time, place and method of the vote. Please provide further details as to how the Notice was provided and kindly file with Chambers a copy of same.

•  Responses to question 4.3 of the Form F17 indicate that 20 of the 30 employees covered by the agreement were casual employees. Noting that question 2.10 indicates 25 employees voted and 20 voted to approve the Agreement, please also provide further details as to whether casual employees who voted were employed at the time of the vote and therefore casted a valid vote, given the requirements set out in section 181 of the Fair Work Act 2009 (Cth).

•  Responses to questions 2.6 and 2.7 of the Form F17 indicate that employees were given an opportunity to ask questions about the Agreement (and were also invited to ask questions). Please provide further details as to how and whether the terms of the Agreement and their effects were explained to employees.”

[5] On 22 August, 2019, the Applicant provided written correspondence to my Chambers in the following form:

“As discussed, we are taking all recommendations on board and are drafting a letter stating so. I will send requested information across when it is completed.”

[6] On 10 September, 2019, correspondence from my Chambers was sent to the Applicant seeking an update as to its submissions. My Chambers, on the same date, received the following correspondence from the Applicant:

“My apologies. My director has been away and out of reception. He is reviewing my changes remotely.

I will get the correspondence back to you as soon as possible. At the end of this week by the latest, however definitely sooner as I believe he is in the final stages. I will send it across as soon as I have it.”

[7] On 30 September, 2019, further correspondence was sent from my Chambers to the Applicant seeking an update as to its submissions.

[8] On 1 October, 2019, my Chambers received the following correspondence from the Applicant:

“We will have this completed and signed off by c.o.b Friday as the director has returned from his remote work today.

Thank you for your patience and apologies for any inconvenience caused.”

[9] No correspondence was received from the Applicant by Friday, 4 October, 2019. As such, my Chambers then issued the following correspondence on 17 October, 2019:

“The Deputy President has conveyed that the matter will be determined on the materials currently before the Commission if no further material is filed the Applicant by 4.00pm tomorrow (18 October 2019).”(Emphasis intended).

[10] On 18 October, 2019, the Applicant filed submissions in the following form, together with a Notice of Employee Representation Rights, a Notice of the Ballot Vote Date with signatures and fifteen numbered Undertakings (the “Undertakings”), though it should be noted that various of the numbered Undertakings by way of separate paragraphs contained up to eight separate undertakings within the one numbered undertaking:

“Firstly we would like to thank the Commission for their patience & understanding. We apologise for the delay in getting a response through, however we have been involved in a few different projects and with the director being away, it has been a drawn-out process to provide the below.

Please find attached our undertakings. Please also note the below information in regards to the further considerations questions:

1. The NERR form was handed to all traffic controllers in person. Please see an example attached. In the bargaining representative selection form, the form states I have read and understood the “Notice of employee representational rights” and is signed by each employee who elected a bargaining representative.

2. The document was made available in our depot and available to all employees who required access to it. The digital copy was uploaded to our website and a secure link was printed and provided to all employees. All employees who received access to this signed a register that we have on file. This register also advised on the time and place of the vote.

3. All employees, casual and permanent were employed at the time of the vote. Some did not wish to cast a vote or attend the ballot or were not able to attend for other personal reasons.

4. Employees had open access to their bargaining representative elected, as Greg James (the elected representative) sends out crews every morning and is contactable at any times. Employees were also provided with my details, and my number is open to employees 24/7. Any questions/concerns employees had were addressed or explained at any given time. We continually invited any questions or concerns on a daily basis, and I made it a habit of attending regular meetings with the bargaining representative every Friday, to address any concerns so he could report back to our employees.”

[11] The Undertakings that were attached to that correspondence were as follows:

“The following undertakings are provided by AAA Traffic Control Pty Ltd (The Employer) in accordance with the Fair Work Act 2009 and the Building & Construction General on-site Award 2010:

1. The employer undertakes that Level 1 rates of pay refer to a CW 1 employee in the Award, and Level 2 rates of pay in the agreement refer to a CW2 employee in the award.

2. The employer undertakes that any employee will work a maximum of 8 daily ordinary hours as per Clause 33.1 of the Award. After the maximum of 8 daily hours have been worked, the employee will be paid at the applicable overtime rate.

3. The employer undertakes that a minimum payment for a shift will be in line with clause 14.4, clause 37.2, clause 37.5, clause 37.9, clause 34.2(n) and clause 36.3 of the award.

4. The employer undertakes that meal breaks will be entitled to employees as per the below:

(a) Day workers as per clause 35.1 of the award

(b) Shift workers as per clause 35.2 of the award

(c) Employees that work through their meal break will be paid for their break

5. The employer undertakes that crib breaks will be paid as per clause 35.3 of the award.

6. The employer undertakes that any part-time employee will be informed of their ordinary hours or work. Any hours worked outside of the agreed ordinary hours of work will be paid at the applicable overtime rate.

7. The employer undertakes that ordinary hours for afternoon works are Monday to Friday.

8. The employer undertakes that shift work and shift penalties will be paid as per the below:

(a) Shift penalties – Clause 34.1 of the award

(b) Broken shifts - clause 34.1(i) of the award

(c) Shift work performed by day workers - Clause 36.2 & clause 36.16 of the award

(d) Less than 5 afternoon shifts - Clause 34.2(m) of the award

(e) Call outs- Clause 34.2 (o) of the award

(f) Transport after overtime - clause 34.2(p) of the award

9. The employer undertakes that for employees who work afternoon shift overtime will be paid as per clause 34.2 cl36 of the award.

10. The employer undertakes that shift workers in the Civil construction sector will receive overtime as per clause 34.2 (i) for hours worked on a shift other than a rostered shift.

11. The employer undertakes that the annual leave loading entitlement will be paid in accordance with clause 39.2 of the award.

12. The employer undertakes that allowances for the below scenarios will be paid as per the applicable clause in the award:

(a) Fares allowance will be paid as per clause 25.2 of the award

(b) Transfer during work hours will be paid as per clause 25.9 of the award

(c) Meal allowance will be paid after 1.5 hours of overtime as per clause 20.2 of the award

(d) First aid allowance as per clause 20.10 of the award

(e) Inclement weather as per clause 23.7 of the award

(f) Leading hand allowance as per clause 19.2 of the award

(g) Living away from home - employees will be entitled to allowance or board and 3 meals per day.

13. The employer undertakes that allowances or entitlements from the following clauses of the award will be applicable if the situation arises:

•  Clause 25.4 & 25.7

•  Clause 14.8

•  Clause 36.8

•  Clause 27

•  Clause 30

•  Clause 19.4

14. The employer undertakes that employees which travel outside radial areas for a shift will be paid at $0.47 per km as per clause 25.5 of the award.

15. The employer undertakes that the following scenarios supercede those outlined in the agreement:

•  Employees may take annual leave in advance as per clause 38.4 of the award. Employees who are required to take annual leave will be provided with 8 weeks notice to take the leave.

•  Personal leave for employees whom are terminated and re-engaged will have the balance of sick leave continue from the date of re­ engagement as per clause 39 of the award.

•  Employees whom receive a notice of termination are entitled to up to one days time off without loss of pay for the purpose of seeking other employment as per clause 1 6.3 of the award.

•  Employees will be entitled to redundancy as per clause 17.6 of the award.

•  Super contributions will be made for employees as per clause 32.5 of the award.”

The Issues Arising

[12] It is clear from the correspondence from my Chambers dated 20 August, 2019, that the issues for consideration in the Application are:

(a) Incorporation of the Award and better off overall test (“BOOT”) Concerns;

(b) Distribution of the NERR; and

(c) Availability and explanation of the Agreement to employees and voting details.

[13] Upon consideration of the responses received from the Applicant, I am satisfied that the Agreement was genuinely approved. The only outstanding issue is the incorporation of the Award and concerns with whether the Agreement passes the BOOT.

[14] The correspondence from my Chambers dated 20 August, 2019, listed numerous concerns with the terms of the Agreement, not the least of which was that the Agreement reflected rates of pay that were 0.01% above the Award, yet numerous Award provisions were excluded.

The Legislation

[15] If the Agreement is to be approved it must inter alia pass the BOOT. If the Agreement does not pass the BOOT, then the Applicant will need to persuade the Commission that because of exceptional circumstances the approval of the proposed Agreement would not be contrary to the public interest. If the Commission has concerns that the Agreement does not pass the BOOT the Commission may accept a written undertaking (or undertakings) and approve the Agreement.

[16] Section 193 deals with the BOT and relevantly provides the following:

“193 Passing the better off overall test

When a non-greenfields agreement passes the better off overall test

(1) An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.

FWC must disregard individual flexibility arrangement

(2) If, under the flexibility term in the relevant modern award, an individual flexibility arrangement has been agreed to by an award covered employee and his or her employer, the FWC must disregard the individual flexibility arrangement for the purposes of determining whether the agreement passes the better off overall test.

…

Award covered employee

(4) An award covered employee for an enterprise agreement is an employee who:

(a) is covered by the agreement; and

(b) at the test time, is covered by a modern award (the relevant modern award) that:

(i) is in operation; and

(ii) covers the employee in relation to the work that he or she is to perform under the agreement; and

(iii) covers his or her employer.

Prospective award covered employee

(5) A prospective award covered employee for an enterprise agreement is a person who, if he or she were an employee at the test time of an employer covered by the agreement:

(a) would be covered by the agreement; and

(b) would be covered by a modern award (the relevant modern award) that:

(i) is in operation; and

(ii) would cover the person in relation to the work that he or she would perform under the Agreement; and

(iii) covers the employer.

Test time

(6) The test time is the time the application for approval of the agreement by the FWC was made under section 185.

FWC may assume employee better off overall in certain circumstances

(7) For the purposes of determining whether an enterprise agreement passes the better off overall test, if a class of employees to which a particular employee belongs would be better off if the agreement applied to that class than if the relevant modern award applied to that class, the FWC is entitled to assume, in the absence of evidence to the contrary, that the employee would be better off overall if the agreement applied to the employee.”

[17] Section 190 deals with undertakings in relation to enterprise agreements and provides as follows:

“190 FWC may approve an enterprise agreement with undertakings

Application of this section

(1) This section applies if:

(a) an application for the approval of an enterprise agreement has been made under section 185; and

(b) the FWC has a concern that the agreement does not meet the requirements set out in sections 186 and 187.

Approval of agreement with undertakings

(2) The FWC may approve the agreement under section 186 if the FWC is satisfied that an undertaking accepted by the FWC under subsection (3) of this section meets the concern.

Undertakings

(3) The FWC may only accept a written undertaking from one or more employers covered by the Agreement if the FWC is satisfied that the effect of accepting the undertaking is not likely to:

(a) cause financial detriment to any employee covered by the agreement; or

(b) result in substantial changes to the agreement.

FWC must seek views of bargaining representatives

(4) The FWC must not accept an undertaking under subsection (3) unless the FWC has sought the views of each person who the FWC knows is a bargaining representative for the agreement.

Signature requirements

(5) The undertaking must meet any requirements relating to the signing of undertakings that are prescribed by the regulations.”

[18] The test time for purposes of assessing whether the passes the BOOT is 11 March, 2019, the date on which the Application was made. The Agreement will pass the BOOT if the Commission is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the Agreement would be better off overall if the Agreement applied to the employee than if the relevant modern award applied to the employee.

[19] The application of the BOOT is not to be applied as a line by line analysis. Rather, it is a global test requiring consideration of advantages and disadvantages to award covered employees and prospective award covered employees. The application of the BOOT therefore requires the identification of terms of an Agreement which are more beneficial to the relevant employees when compared to the relevant modern award, the terms of an Agreement which are less beneficial, and then an overall assessment of whether each relevant employee would be better off under the Agreement. 

[20] The relevant modern award that covers the relevant employees is the Building and Construction General On-site Award 2010 (the “Award”). Having regard to the terms of the Agreement, I have concluded that the Agreement as lodged for approval does not pass the BOOT. This is because at least some of the award covered employees and some of the prospective award covered employees would not be better off overall if the Agreement applied to those employees than if the modern award applied to those employees.

[21] The Agreement provides for wage rates that are 0.01% above to 1.97% below the relevant award rates of pay. The Award is not incorporated into the Agreement, and a myriad of beneficial provisions from the Award are not included in the Agreement.

[22] Extraordinarily, the Form F17 Statutory Declaration of Thiolen Naidoo answers “No” to each and every one of Questions 3.3, 3.4, 3.5, 3.6 and 3.7 of that Form. Taken together, those answers mean the provisions of the Agreement is no different to the provisions of the Award. That is patently false, as exhibited by the differences highlighted in the correspondence from my Chambers dated 20 August, 2019.

[23] The Applicant proposed the Undertakings. A written undertaking given pursuant to s.190 of the Act may be accepted if the Commission is satisfied that the undertaking is not likely to cause financial detriment to any employee covered by the Agreement or result in substantial changes to the Agreement.

[24] An undertaking which is intended to overcome concerns about whether an agreement passes the BOOT will often need to take the form of varying the operation of the agreement, for example, by undertaking that a term of the agreement which provides a disadvantage when compared with the relevant modern award will not apply or will apply in a particular way. Once an undertaking is accepted by the Commission and an agreement is approved, the undertaking will have that effect because it will become a term of the agreement. An undertaking that is expressed as varying a particular provision in a proposed agreement should be taken to be a promise by the employer that a particular term in an agreement about which concern has been expressed, will not be applied and the term as set out in the undertaking will be applied.

[25] A Full Bench of the Fair Work Commission found in CFMEU v Kaefer Integrated Services Pty Ltd, that s.190(3) “does not permit undertakings that result in the wholesale reshaping of the agreement, such that it bears no resemblance to the pre-undertaking agreement that was approved by the employees” 1.

[26] Clearly, the Undertakings are designed to ensure that the Agreement, when read with the Undertakings, would pass the Better-Off-Overall test. However, when one examines the Undertakings in their entirety, it is clear that, taken as a whole, the Undertakings result in substantial changes to the Agreement, such that the Agreement read with the Undertakings would bear no resemblance to the pre-undertaking Agreement that was approved by the employees. The Undertakings are therefore not accepted.

Conclusion

[33] The Agreement does not pass the BOOT. Consequently, the Application for the approval of the Agreement is dismissed.

DEPUTY PRESIDENT

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 1   [2017] FWCFB 5630 at [41]