Adams Jones Pty Ltd

[2021] FWCA 233

[2021] FWCA 233

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Adams Jones Pty Ltd
(AG2020/3035)

ADAMS JONES PTY LTD ENTEPRISE AGREEMENT 2020

Building and construction industry
COMMISSIONER MCKINNON	MELBOURNE, 19 JANUARY 2021

Application for approval of the Adams Jones Pty Ltd Enterprise Agreement 2020.

[1] Application has been made by Adams Jones Pty Ltd for approval of a single enterprise agreement between Adams Jones Pty Ltd and its employees to be known as the Adams Jones Pty Ltd Enterprise Agreement 2020 (the Agreement). The Agreement will replace the Adams Jones Pty Ltd Enterprise Agreement 2018 1when its nominal expiry date of 31 July 2021 has passed, unless the 2018 Agreement is terminated earlier by agreement.

Whether the Agreement was genuinely agreed

[2] The Construction, Forestry, Maritime, Mining and Energy Union objects to approval of the Agreement, including on the basis that the 2018 Agreement has not been terminated and is still some time from reaching its nominal expiry date. It submits that the effect of this does not appear to have been explained to employees, with the result that the Agreement was not genuinely agreed to by employees.

[3] I do not accept the submission. The nominal expiry date is set out a term clearly in the Agreement, just as the nominal expiry date of the 2018 Agreement has been set out in that instrument. Whatever the legal position might be, Adams Jones and its employees have operated on the basis that the terms of the Agreement will be given practical effect once the Agreement is approved. Indeed, the very reason for the Agreement having been made when it was that the company reviews rates of pay in August/September each year having regard to a longstanding arrangement with its employees that pay rises will be passed on each September. The first pay rise under the Agreement has already been passed on to employees, at a time when the Agreement had not yet been approved.

[4] This is not a case where employees were told one thing in the making of the Agreement and given something quite different. The company is a small business and the vast majority of its employees have been employed for more than 10 years. This is the fourth enterprise agreement in largely similar terms and employees are familiar with its content.

[5] The Agreement was explained to employees with changes to the earlier agreement highlighted both in the document itself and in a cover letter. Evidence of the steps taken to explain the Agreement and its effect is provided both in the statutory declaration of Roley Jones, Director, and in supporting materials filed with the application both at the time it was made and after that time. The Agreement was approved unanimously by employees who participated in the voting process.

[6] I am satisfied that the Agreement has been genuinely agreed.

The National Employment Standards

[7] A number of terms of the Agreement appear to exclude the National Employment Standards in part. Adams Jones has given an undertaking to remedy the concern.

Whether the Agreement passes the better off overall test

[8] The relevant modern award for the purposes of the better off overall test is the Building and Construction General On-Site Award 2010 as it applies to the general building and construction industry.

[9] Employees work a 36 hour week under the Agreement and their rates of pay are generally above the Award by a margin of 17-40%, except in the case of new employees. There are a range of other terms in the Agreement conferring entitlements that are more beneficial than the Award including in relation to superannuation, income protection, redundancy pay and travel allowance.

[10] The Agreement may operate to the detriment of new employees, whose rates of pay are set at $5.00 below the otherwise applicable Agreement rate for the first two years. A detriment may also accrue to employees working afternoon shift in certain circumstances because of the different treatment of shift work in the Agreement compared to the Award. The Agreement provides for piece rate work by agreement without the various safeguards in the Award. An undertaking has been given to address each of these concerns so that employees can be considered better off overall under the Agreement.

[11] The Union submits that the Agreement does not pass the better off overall test because:

1. The rates of pay for employees who are new to the company are less than modern award rates and operate in a way that potentially compounds the detriment for employees who are both new to the company and to the industry;

2. The Agreement defines shift work more narrowly than the Award, and it is foreseeable that workers who would receive a loading under the Award would not under the Agreement; and

3. The Agreement omits conditions which are payable under the Award including accident pay and superannuation for workers who have workers compensation injury.

[12] As noted above, undertakings have been given to address concerns in relation to the rate of pay for new employees and for shift work. The undertakings are adequate to deal with the concerns of the Union in this regard, having regard to the rates of pay and other more beneficial terms in the Agreement compared to the Award. The company does not work in the civil construction sector and the definition of afternoon shift in the Agreement generally aligns with the Award definition applicable to the general building and construction sector (though differently worded).

[13] The Agreement does not provide for accident pay and payment of superannuation while employees are in receipt of workers’ compensation. Instead, the Agreement provides for a voluntary income protection insurance scheme covering up to 104 weeks absence due to illness or accident at the rate of $1000 per week or such higher amount nominated by the employee. Adams Jones also points to its separate obligations under the Return to Work Act 2014 (SA), which require it to maintain the average wages of an injured worker for at least 12 months, and its contribution of 10.5% superannuation, calculated on the Agreement’s higher rates of pay. Taken together, Adams Jones submits that employees will be better off overall under the Agreement even though the entitlement to accident pay is different to that provided under the Award.

[14] Obligations arising separately under State return to work legislation are unable to be taken into account for the purposes of the better off overall test because they sit outside both the Agreement and the Award. However, I accept the submission that overall, the terms and conditions of employment under the Agreement are more beneficial to employees than the terms of the Award. The potential for detriment to arise in relation to contingent accident pay and workers’ compensation entitlements is outweighed by the range of more beneficial entitlements that apply to employees in connection with work performed under the Agreement.

[15] I am satisfied that employees will be better off overall under the Agreement.

Conclusion

[16] The undertakings now given at Annexure A are not likely to cause financial detriment to any employee covered by the Agreement and will not result in substantial changes to the Agreement. The undertakings are taken to be terms of the Agreement.

[17] I am satisfied that each of the requirements of ss.186, 187, 188 and 190 as are relevant to this application for approval have been met. The Agreement must be approved.

[18] The Agreement is approved and, in accordance with s.54 of the Act, will operate from 26 January 2021. The nominal expiry date of the Agreement is 25 January 2023.

COMMISSIONER

Appearances:

R Jones for the Applicant.
P Russell for the Construction, Forestry, Maritime, Mining and Energy Union.

Hearing details:

2020.
Melbourne (video hearing):
November 18.

<AE510128  PR726247>

Annexure A

 1   AE504069

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