AFF Properties Pty Ltd ATF the Rural Property Trust
[2010] FWA 793
•8 FEBRUARY 2010
[2010] FWA 793 |
|
DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
(AG2009/19421)
COMMISSIONER LARKIN | SYDNEY, 8 FEBRUARY 2010 |
Application for approval of the Australian Food & Fibre Enterprise Agreement 2009 – no-disadvantage test – application refused.
[1] AFF Properties Pty Ltd ATF the Rural Property Trust (the employer) lodged with Fair Work Australia (FWA) an application pursuant to s.185 of the Fair Work Act 2009 (the Act) for approval of a single enterprise agreement. The agreement is titled the Australian Food & Fibre Enterprise Agreement 2009.
[2] The Agreement was made during the bridging period 1 as defined in the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Act), accordingly, when considering whether to approve the Agreement I have taken into account the provisions of Part 2–4 of Chapter 2 of the Act as modified by Schedule 7 of the Transitional Act.
[3] The industry of the employer was stated to be mixed farming and administrative support. The agreement is to operate in New South Wales. The reference instruments for the purpose of the no-disadvantage test were stated as the Pastoral Industry Award 1998 and the Clerical and Administrative Employees (State) Award. The agreement is said to cover 40 employees in the classification of farm hand, manager and support operations being clerical and is to operate for a period of four years.
[4] The application was listed for hearing before FWA on 2 February 2010. On request of the employer’s representative, Industrial Mediation Services, the hearing was vacated and the application dealt with by correspondence.
[5] The correspondence forwarded to the employer’s representative raised questions in relation to the requirements of s.181, ss.186(6) and ss.186(2)(d) of the Act.
[6] The submissions lodged on behalf of the employer clarified the issues raised in relation to s.181 of the Act and provided a written undertaking in relation to ss.186(6) of the Act. The submission then addressed the questions raised in relation to the no-disadvantage test. In summary, those submissions were:
- “The minimum rates in the agreement will be subject to the minimum award rates as adjusted from time to time. The National Employment Standard requires that no rate shall fall below the minimum rates as adjusted”.
- The allowances provided for in the reference instruments are not applicable to the various properties operated by the employer and were subject to negotiation during the negotiation of the agreement.
- The stand down clause contained in the agreement reflects s.524 of the Act.
- In relation to the overtime provisions for clerical employees, it was submitted:
“With respect to the first 2 hours versus 3 hours, this appears to have been an oversight. A suitable undertaking has been attached for your consideration. With respect to Saturday it is felt that clause 10.2(ii) adequately covers this possibility provides benefits that are in fact greater than the reference instrument. With respect to Sundays, these are simply not required to be worked by support staff. As the agreement reflects the unique operations of a business it is considered unreasonable to cover off those award conditions that simply never have and can reasonably be expected not to apply during the life of the agreement.”
- The agreement does not provide for the payment of work performed on a public holiday but provides for a substitute day off within one month of such day. The following was submitted on this point:
“The question of payment versus time off in lieu for work on public holidays was a matter of negotiation. Farm hands regularly work extensive additional hours and the provision of a day off in lieu rather than payment at the required rate was the agreed outcome. Support staff are not required to work public holidays and were in support of this outcome. It is felt the flexibility in allowing employees to take time off within a short period of the day worked benefits the employees and assists in the work lifestyle balance that is sometimes difficult to achieve. There is no financial loss incurred by any employee in providing this benefit.”
- In relation to the agreement provision associated with redundancy, it was submitted:
“The redundancy provisions in the agreement are as per the National Employment Standard. Whilst they may at the time the agreement is approved be less than the clerical award, they will become the National standard over the life of the agreement. It is further considered that when considering the no disadvantage test monetary amounts that are non guaranteed weekly amounts and payable only under certain limited circumstances should not be given the same weight as those definite entitlements, this being the case employers would be at liberty to ‘load up’ such provisions as redundancy and claim the offset against more certain entitlements in the knowledge that payment of such amount would unlikely occur. The employer in this case has retained a stable workforce for a number of years and does not anticipate the issue of redundancies occurring.”
[7] The agreement at paragraph (iii) of subclause 10.3, General, contained a requirement for employees to work reasonable additional hours. The provision, however, was silent in relation to the payment for such hours. The submission lodged on behalf of the employer stated that the agreement at subclauses 10.1(ii) and 10.2(ii), hours of work and overtime, clearly set out the payment to employees who work additional hours.
[8] FWA must be satisfied that the agreement passes the no-disadvantage test, as required by ss.186(2)(d). That test, in my view, can not be met by a submission that the matter was subject to negotiation. The Explanatory Memorandum to the Fair Work (Transitional Provisions and Consequential Amendments) Bill, states:
“Item 4 – When does an agreement pass the no-disadvantage test?
326. This item provides that an enterprise agreement made during the bridging period must pass the no-disadvantage test. An enterprise agreement passes the no-disadvantage test if FWA is satisfied, that an enterprise agreement would not result, on balance, in a reduction in the employees’ overall terms and conditions of employment under any reference instrument relating to one or more employees. A reference instrument is defined in subitem 5(1). This is the same test that applied to the approval of workplace agreements under Division 5A of Part 8 of the WR Act.”
[9] In considering the material before me and having regard to the submissions lodged on behalf of the employer, with the attached undertakings referred to above, I am not satisfied that the agreement passes the no-disadvantage test. Following are my reasons.
[10] I commence by noting that it was submitted that the allowances provided for in the reference instruments have no application to the operations of the employer. That may be so, however, I note that the reference instruments do contain allowances in certain circumstances. It was submitted that the stand down provisions in the agreement reflect those contained in the Act,at s.524. I note that the reference instruments, on my understanding, do not provide for stand down of employees. I further note that the stand down provisions in the agreement do not “reflects those contained within the Act”.
[11] While it may be accepted that clerical employees are “simply not required”to work overtime on a Sunday, the reference instrument, at clause 11.6, provides an entitlement for overtime performed on a Sunday, that “an employee shall be paid double time with a minimum payment of four hours”. Under the agreement, if the undertakings were to be accepted, worked performed by a clerical employee on a Sunday would be paid at the rate of time and one-half for the first two hours and double time thereafter, without a minimum payment for such overtime.
[12] The reference instruments provide an entitlement for payment for work performed on the public holidays listed. For clerical employees that entitlement is payment at the rate of double time and one-half, with a minimum of four hours worked. For station hands the payment for time worked on a public holiday is double time. The public holiday provisions of the agreement, at subclause 11.6, state:
“An employee shall be entitled to be absent from work without loss of pay on a day or part-day that is declared a public holiday in the place where the employee is based for work purposes.
Where an employee is required to work on a public holiday, the employee shall be provided with a substitute day off within one month of such day.”
[13] The agreement is said to operate in the state of New South Wales. The first paragraph of subclause 11.6 appears to reflect the provisions of the National Employment Standards (NES) at ss.114(1) and ss.115(2), which were not in operation during the bridging period when the agreement was made and lodged for approval with FWA. Clearly the NES provisions associated with public holidays and the wording of those NES provisions contemplate differing requirements in the procedures and laws in operation in a State or Territory. This agreement is said to operate in New South Wales only. However, the ambiguity of the provision is not my main concern.
[14] The agreement provision does not allow for an employee to choose as to whether or not she/ he would prefer a substitute day off work as opposed to payment for work performed on a public holiday. Subsection 115(3) of the Act states:
“A modern award or enterprise agreement may include terms providing for an employer and employee to agree on the substitution of a day or part-day for a day or part-day that would otherwise be a public holiday because of subsection (1) or (2).”
[15] An agreement may include terms that are ancillary, incidental and/ or supplement NES entitlements but only to the extent that the effect of those terms are not detrimental to an employee. I note that the NES were not in operation in the period that the agreement was made.
[16] The reference instruments provide for the payment for work performed on a public holiday, as set out above. The NES provide that an agreement may include terms providing for “an employer and employee”to agree to a substitute a day or part-day.
[17] The agreement does not include a term providing for the employer and an employee to agree upon a substitute day off work in lieu of payment for work performed on a public holiday. I am not satisfied that, as it was submitted, time off in lieu of payment for work performed on a public holiday is a benefit, unless an employee and his/her employer agree to a substitute day in lieu of payment.
[18] The submission in relation to the redundancy provisions acknowledges that the agreement provisions, as those redundancy provisions relate to clerical employees, are less than the reference instrument provisions in relation to this entitlement. As stated earlier, the agreement was made during the bridging period. The agreement for the purpose of the no-disadvantage test requires a comparison of the employees’ overall terms and conditions of employment to those applying under the reference instruments. Whether the agreement over its life would be in accordance with the NES is not the test. Further, whether or not the employer has a stable workforce and does not “anticipate”redundancies occurring is also not to the point. This agreement provision is but one part of the overall terms and conditions of the employees covered by the agreement and a relevant consideration in applying the no-disadvantage test.
[19] The following table represents a comparison of the hourly rate of pay under the agreement to the minimum rate of pay under the reference instruments.
Classification | Agreement | Award |
(per hour) | (per hour) | |
Farming Operations | ||
Farm hand level 1 | $14.35 | $14.31 |
Farm hand level 2 | $15.00 | $14.97 |
Farm hand level 3 | $15.65 | $15.63 |
Manager | $20.00 | |
Support Operations | ||
Clerical Employee | $16.10 | $15.30 or $15.90 |
(Grade 1 & 2) |
[20] The agreement rates of pay for a farm hand are between 2 cents and 4 cents per hour above the relevant reference instrument. For clerical employees, depending upon whether an employee is classified as grade 1 or grade 2, the amount over the relevant instrument is approximately 30 cents or 80 cents per hour.
[21] It was submitted that the minimum rates in the agreement would be subject to the NES and, therefore, the agreement rates of pay would not fall below the minimum rates as adjusted. That submission is correct. The NES provides that the NES are minimum standards applying to the employment of employees and cannot be displaced. Further, s.206 of the Act provides that the base rate of pay under an enterprise agreement must not be less than the rate under the modern award or the national minimum wage. The fact that the submission may be correct does not address the requirement of the legislation that FWA must be satisfied that the agreement passes the no-disadvantage test.
[22] As stated in the Explanatory Memorandum, an enterprise agreement passes the test if that agreement would not result, on balance, in a reduction in the employees’ overall terms and conditions of employment under any reference instrument. The rates of pay in the agreement are but one factor in an employee’s overall terms and conditions of employment.
[23] When the terms and conditions of the agreement are considered as a whole and compared to the relevant reference instruments I am not satisfied that, on balance, the agreement passes the no-disadvantage test. I decline to approve the enterprise agreement subject to this application.
COMMISSIONER
1 Item 2, Part 1, of Schedule 2.
Printed by authority of the Commonwealth Government Printer
<Price code C, PR993317>
0
0
0