ALDI Foods Pty Limited as General Partner of ALDI Stores (A Limited Partnership) T/A Aldi Stores

[2019] FWCA 6816

[2019] FWCA 6816

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

ALDI Foods Pty Limited as General Partner of ALDI Stores (A Limited Partnership) T/A Aldi Stores
(AG2017/1925 & AG2017/1943)

VICE PRESIDENT CATANZARITI SYDNEY, 16 OCTOBER 2019

Application for approval of the ALDI Prestons Agreement 2017 and the ALDI Stapylton Agreement 2017.

[1] This decision concerns two of five applications that were made pursuant to s 185 of the Fair Work Act 2009 (the Act) for the approval of an enterprise agreement made by ALDI Foods Pty Limited as General Partner of ALDI Stores (the Applicant) and considered as part of the Fair Work Commission’s (the Commission) ‘Loaded Rates Agreement Case’ 1 by the Full Bench on 28 June 2018.

[2] These applications were referred to the Full Bench by the President, Justice Ross, as they all had a degree of commonality, namely that they provided for loaded rates of pay which are intended to incorporate, in part or in whole, penalty rates and other monetary benefits for which separate provision is made in the applicable modern awards. The Full Bench was tasked with considering how the better off overall test (BOOT) was to be applied to agreements that contain loaded rates pursuant to s.186(2)(d) of the Act (subject to ss.189 and 190).

[3] The agreements in question this decision relates to are the:

•  ALDI Prestons Agreement 2017, AE505554 (Aldi Prestons Agreement); 2 and

•  ALDI Stapylton Agreement 2017, AE505555 (Aldi Stapylton Agreement). 3

[4] At the commencement of this matter there were several issues to be resolved. However, throughout the various proceedings and discussions between the parties and the Applicant proffering undertakings received to date, a number of these issues have been resolved. Subsequently, this decision appears settled to address two distinct and narrow points.

Background

[5] At the hearing before the Full Bench, it was observed that there were four issues which required resolution in respect of approval for the Aldi Prestons Agreement and Aldi Stapylton Agreement. These concerned whether:

(1) the agreements pass the BOOT with respect to store managers, assistant store managers and trainee store managers covered by Schedule 1 of each agreement, having regard to the analysis of the loaded salary rates compared to the provisions of the General Retail Industry Award 2010 (Retail Award) contained in the witness statement of Rebecca Patena and the range of duties required to be performed by trainee store managers;

(2) the pay rate for part-time employees under the unique “bankable hours arrangements” under the agreements are capable of passing the BOOT;

(3) the “make good” provision in clause 14 of the agreements provides an effective mechanism to remedy any BOOT concern that might arise; and

(4) the use of “notional shift hours” in respect of the payment of leave entitlements excludes the NES in contravention of s 55 of the FW Act

[6] At the conclusion of the hearing, the Full Bench determined that the application for approval of the Aldi Prestons Agreement and Aldi Stapylton Agreement would be remitted to a single member of the Commission for further hearing and determination. The Applicant was issued with directions to file and serve any evidence in reply to the witness statement of Ms Rebecca Patena – National Industrial Officer of the Shop, Distributive and Allied Employees Association (SDA), written submissions in reply to the SDA’s submissions based on the BOOT analysis in Ms Patena’s witness statement, evidence or written submissions in response to the BOOT analysis provided in Schedule B of the Loaded Rates Agreement Case, and any submissions or proposed undertakings addressing the issue of payment for leave entitlements. Accordingly, the SDA and the National Union of Workers (NUW), along with any other interested party, were instructed to file and serve any evidence or written submissions in response to any of the evidence and material filed by the Applicant. 4

[7] The parties filed their respective submissions with respect to the remitted applications. The hearing was held 20 August 2019.

Hearing of 20 August 2019

[8] At commencement of the hearing, the Applicant drew attention to the undertakings that were filed with their submissions on 9 August 2018 and proffered further undertakings to address the matters raised by the SDA pursuant to the directions of the Full Bench.

[9] Accordingly, this decision is significantly narrowed to determine the following:

(1) Firstly, whether by having regard to the undertakings proffered by Applicant, the undertakings pass the BOOT; and

(2) Secondly, with regard to s.190 of the Act, whether the amount of undertakings render the agreements incapable of being approved as they result in substantial changes.

Statutory Framework

[10] The requirements for passing the BOOT are set out in s.193, which provides:

“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.

When a greenfields agreement passes the better off overall test

(3) A greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that 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.

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.”

[11] The task of applying the BOOT has been recognised as being summarised in various Full Bench decisions as follows:

“[100] There are two well-established propositions concerning the application of the BOOT which may be derived from previous Full Bench decisions. The first, which is essentially a restatement of s 193(1), is that the BOOT requires a finding that each award covered employee and prospective employee would be better off under the agreement than under the relevant modern award. 5 The requirement that “each” such employee and prospective employee be better off overall is a rigorous one. The ordinary meaning of “each” is “every, of two or more considered individually or one by one”.6 Thus, every award covered employee or prospective employee must be better off overall, with the corollary that if any such employee is not better off overall, the relevant enterprise agreement does not pass the BOOT. Thus, in an agreement containing loaded rates in whole or partial substitution for award penalty rates, it is not sufficient that the majority of employees - even a very large majority - are better off overall if there are any employees at all who would not be better off overall.”7

[12] Further, the principles when applying the BOOT to a loaded rate agreement has also been summarised by the Full Bench:

“[115] In summary, the following principles apply to the application of the BOOT to a loaded rates agreement:

(1) The BOOT requires every existing and prospective award covered employee to be better off overall under the agreement for which approval is sought than under the relevant modern award. If any such employee is not better off overall, the agreement does not pass the BOOT.

(2) Section 193(7) permits the Commission to assume that if a class of employees to which a particular employee belongs would be better off under the agreement than under the relevant modern award, then the employee would be better off overall in the absence of evidence to the contrary. However, the selection of class for the purpose of s.193(7) will only be of utility if the agreement affects the members of the class in the same way such that there is likely to be a common BOOT outcome. If the Commission is not satisfied on the evidence that an existing or prospective award covered employee is not better off overall, the Commission cannot approve the agreement at least not without undertakings or in the confined circumstances set out in s.189.

(3) The application of the BOOT to a loaded rates agreement will, in order for a meaningful comparison to be made, require an examination of the practices and arrangements concerning the working of ordinary and overtime hours by existing and prospective employees that flow from the terms of the agreement. This will likely require classed to be identified based on common patters of working hours, raking into account evening, weekend and/or overtime hours worked.

(4) The starting point for the assessment will necessarily be an examination of the terms of the agreement in order to ascertain the nature and characteristics of the employment for which the agreement provides or permits. For example if an enterprise agreement makes express provision for employees to be required to work ordinary hours on weekends, those provisions cannot be ignored for BOOT purposes simply because the employer asserts it does not currently utilise those working hours or roster patterns.

(5) In the case of existing employees, this may involve an examination of existing roster patterns worked by various classed of employees as at the test time. The use of same rosters to compare remuneration produced by a loaded rate pay structure compared to the relevant modern award may be an effective method of doing this. There may be objective evidence that a particular patter of working hours of roster pattern permitted by an enterprise agreement is not practicable, or cannot or is unlikely to be worked.

(6) In the case of prospective employees, the assessment will necessarily involve a degree of conjecture. In the case of an enterprise operating at a defined workplace or workplaces, the Commission may be in a position to make sensible predictions about the basis up which prospective employees might be engaged based on the roster patterns worked by existing employees. However if a business is small and/or still at the development stage, or the agreement would cover a wider range of classifications, work locations and/or roster patterns that are not in existence as at the test time, useful predictions may not readily be drawn from the way in which the existing workforce operates. In that situation the assessment will require an examination of the terms of the agreement in order to ascertain the nature and characteristics of the employment which the agreement provides for or permits.

(7) If the information concerning patterns of working hours needed to assess whether a loaded rates agreement passes the BOOT is not contained in the employer’s Form F17 statutory declaration accompanying the approval application, it may be necessary for the Commission to request or require the production of such information.

(8) The BOOT involves the making of an overall assessment as to whether an employee would be better off under the agreement, which necessitates identification of the terms in the agreements which are more and less beneficial to the employee than under the relevant award.

(9) The overall assessment required will essentially be a mathematical one where the terms being compared related directly to remuneration. The assessment will be more complex where the agreement contains some superior entitlements which are non-monetary in nature, accessible at the employee’s option or which are contingent upon specified events occurring.

(10) In respect of non-monetary, optional or contingent entitlements in an agreement, the assumption cannot be readily be made that they have the same value for all employees. In the case of a continent benefit, it will be necessary to make a realistic assessment about the likelihood of the benefit crystallising during the period in which the agreement will operate.

(11) Where a loaded rates agreement results in significant financial detriment for existing or prospective employees compared to the relevant award, it is unlikely that a non-monetary, option or contingent entitlement under the agreement will sufficiently compensate for the detriment for all affected employees such as to enable the agreement to pass the BOOT.” 8

Consideration

Passing the better off overall test (BOOT)

[13] The SDA advised in oral submissions that the evidence of Ms Patena would not be tendered and took the Commission to a pay rate comparison created by the Applicant which was described as:

“…being typical of most rosters worked throughout the year by employees in each classification.” 9

[14] It was asserted by the SDA that there is a difficulty that arises where typical rosters are produced and undertakings are subsequently proffered to address any arising BOOT concerns in that there is uncertainty as to whether other rostering arrangements would also pass the statutory tests outlined in the BOOT. The SDA also submitted that there was no evidence to be submitted of how other rosters may be comprised but drew attention to the capacity of the Applicant to recover monies owing under the bankable hours arrangements within the agreements while conceding that factoring in the issue is part of the balancing exercise undertaken by the Commission when applying the BOOT.

[15] The NUW also drew attention to the recovery of monies flowing from the bankable hours provisions in the agreement in that employees are deprived of the capacity to provide input into rostering decisions made by the employer.

[16] In reply to the submissions of the SDA and NUW, the Applicant asserted that they do not operate to a rostering system which would be typically utilised by similar retailers. The Applicant utilises a needs-based approach to rostering while considering the needs of the store, each individual employee, as well as the larger employee body to ensure that fair and equitable working arrangements are set in place which accommodate the needs of all interested parties. This often results in employee’s hours being different from week to week. Therefore, reference made to typical rosters are merely relative to how employees may stand to be rostered during particular periods.

[17] Given that no roster was submitted in evidence that demonstrated a situation whereby the loaded rates contained in each respective agreement would be lower than what employees would stand to receive, I can see no situation that would arise that would cause sufficient doubt as to whether these agreements pass the BOOT. Therefore, and on the material before me, I am satisfied that the loaded rates contained within the Aldi Prestons Agreement and the Aldi Stapylton Agreement are sufficiently high enough than what would otherwise be paid to employees under the relevant modern awards had the agreements not be in place. The requirements laid out in section 193 are therefore appropriately addressed.

Substantial Change

[18] Section 190 provides that the Commission may approve an enterprise agreement with undertakings:

“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.”

[19] In the decision of Re Hyatt Ground Engineering Pty Ltd, 10 the Commission said:

“[30] The sense in which the word substantial appears in s.190(3)(b) is in my view to describe changes to the agreement as a result of undertakings offered where the changes are not ‘trivial or minimal’ or ‘ephemeral or nominal’.

[31] In this sense, ‘substantial’ is not a quantitative term but a qualitative term. A number of trivial or minimal changes to the agreement may not constitute a substantial change to the agreement. However, even a single change to a provision of the agreement where the change was not trivial or minimal would constitute a substantial change to the agreement.”

[20] The Applicant has provided written undertakings. A copy of the undertakings associated with the Aldi Prestons Agreement are attached in Annexure A. A copy of the undertakings associated with the Aldi Stapylton Agreement are attached in Annexure B.

[21] The SDA submitted orally that the amount of undertakings proffered by the Applicant to date may render the Agreement incapable of being approved as, taken together, it may result in the agreement being substantially different to what employees who were to be covered by the proposed agreements voted on. 11

[22] The Applicant submitted that when having regard to the nature of the undertakings proffered to date, they merely act as confirmatory statements of pre-existing practices with any undertakings affecting payments to employees invariably involving increases in benefits. As such, the undertakings do not impose any onerous obligations on employees. 12

[23] Having had regard to the relevant provisions of the Act and the effect of accepting the undertakings, I am satisfied that they will not cause financial detriment to any employee covered by the Agreement. I am also satisfied that the undertakings will not result in substantial changes to the Agreement. The undertakings are taken to be a term of the agreement in accordance with s.201(3) of the Act.

[24] Subject to the undertakings referred to above, 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.

Further considerations

[25] I observe that certain provisions of the Aldi Prestons Agreement and Aldi Stapylton Agreement are likely to be inconsistent with the National Employment Standards (NES). However, noting the undertakings provided on 26 September 2019, I am satisfied the more beneficial entitlements of the NES will prevail where there is an inconsistency between the Agreement and the NES.

[26] For both the Aldi Prestons Agreement and Aldi Stapylton Agreement, I note that employees who were absent on the date that notification of the vote took place, 28 April 2017, were sent the notice via post which arrived between 28 April 2017 and 5 May 2017. It appears that some employees who received notification of the vote via mail may not have had the requisite seven days between notification of the vote and the time the vote took place. I am satisfied that in all of the circumstances and having regard to Huntsman Chemical Company Australia Pty Limited T/A RMAX rigid Cellular Plastics & Others, 13 that this constitutes a minor procedural or technical error for the purposes of s 188(2)(a). Further, I am satisfied that the employees to be covered by the respective Agreements were not likely to have been disadvantaged by the error. As a result, I am satisfied that the Agreements have been genuinely agreement within the meaning of s 188(2) of the Act.

[27] In relation to the Aldi Prestons Agreement, the Shop, Distributive and Allied Employees’ Association has given notice under s.183 of the Act that they want the Agreement to cover it. In accordance with s.201(2) I note that the Aldi Prestons Agreement covers the organisation.

[28] In relation to the Aldi Stapylton Agreement, the Shop, Distributive and Allied Employees’ Association, the National Unions of Workers and the Transport Workers Unions have given notice under s.183 of the Act that they want the Agreement to cover it. In accordance with s.201(2) I note that the Aldi Stapylton Agreement covers the organisations.

[29] The Aldi Prestons Agreement and Aldi Stapylton Agreement are approved, and in accordance with s.54 of the Act, will operate from 23 October 2019. The nominal expiry date of the Agreements is four years from the date of approval of the Agreements.

VICE PRESIDENT

Appearances:

Mr R Payne for the NUW.

Mr W Friend for the SDA.

Mr GJ Hatcher and Ms A Perigo for ALDI.

Hearing details:

2019.

20 August.

Sydney.

Final written submissions:

Submissions of the NUW dated 5 September 2018.

Submissions of the SDA dated 6 September 2018.

Submissions of the ACTU dated 27 September 2018.

Submissions of ALDI dated 11 October 2018.

Annexure A

Annexure B

 1  [2018] FWCFB 3610.

 2   AG2017/1925.

 3   AG2017/1943.

 4   [2018] FWCFB 3610 at [145].

 5   Solar System Pty Ltd [2012] FWAFB 63997 at [11]; Hart v Coles Supermarkets Australia Pty Ltd[2016] FWCFB 2887 at [6], [15]; SDAEA v Beechworth Bakery[2017] FWCFB 1664 at [11].

 6   Macquarie Online Dictionary.

 7   Loaded Rates Agreements [2018] FWCFB 3610 at [100].

 8   Loaded Rates Agreements [2018] FWCFB 3610 at [115].

 9   Transcript of Proceedings, Application by Aldi Foods Pty Limited as General Partner of ALDI Stores (A Limited Partnership) & Welsh (Fair Work Commission AG2017/1925 AG2017/1943, Catanzariti VP, 20 August 2019) PN46

 10   Hyatt Ground Engineering Pty Ltd [2011] FWA 3527 (Ryan C, 3 June 2011)

 11   Ibid, PN27.

 12   Ibid, PN71.

 13   [2019] FWCFB 318

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