Application by Amity Health Limited T/A Amity Health
[2023] FWCFB 250
•14 DECEMBER 2023
| [2023] FWCFB 250 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch 3, Item 20A(4)—Application to extend default period agreement‑based transitional instrument
Application by Amity Health Limited T/A Amity Health
(AG2023/4272)
| AMITY HEALTH LIMITED EMPLOYEE COLLECTIVE AGREEMENT 2007 | |
| DEPUTY PRESIDENT WRIGHT | SYDNEY, 14 DECEMBER 2023 |
Application to extend the default period for the Amity Health Limited Employee Collective Agreement 2007
Amity Health Limited T/A Amity Health (the Applicant) has applied, pursuant to 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 Amity Health Limited Employee Collective Agreement 2007 (Agreement). The application seeks to extend the Agreement for a period of 12 months until 7 December 2024.
The Agreement was made in 2007 and approved under the Workplace Relations Act 1996 (Cth) (WR Act). The Agreement is a ‘WR Act Instrument’ within the meaning of item 2(2) of Sch 3 to the Transitional Act. It is classified by item 2(5)(c)(i) of Sch. 3 as a ‘collective agreement-based transitional instrument’.
Item 20A of Sch 3 to the Transitional Act provides for the automatic sunsetting of agreement-based transitional instruments by the end of the default period on 6 December 2023, subject to the capacity to apply to the Commission for an extension of that period for up to four years in prescribed circumstances. The agreements to which these provisions apply are known as zombie agreements. The main features of item 20A of Sch 3 are described in detail in the Full Bench decision in Suncoast Scaffold Pty Ltd (Suncoast)[1] and we rely upon what is said in that decision.
When an application is made under subitem (4) of item 20A of Sch 3 to the Transitional Act, the Commission is required, under subitem (6), to extend the default period 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.
This application has been made on the basis that subitem (7) applies, and it is otherwise appropriate in the circumstances to extend the default period. The Applicant did not contend that either of subitems (8) or (9) applied to the application.
Background and Submissions
The Applicant is based in Western Australia and is a not-for-profit organisation providing allied health services. The Applicant’s employees covered by the Agreement would otherwise be subject to the terms of either the Nurses Award 2020 or the Health Professionals and Support Services Award 2020 (HS Award). The Agreement’s coverage clause at clause 3 provides that it applies to the Applicant and its salaried employees.
The Applicant’s 71 employees are all covered by the Agreement (and any future or proposed Agreement subject to bargaining) across a broad range of roles and disciplines. In support of a 12-month extension, the Applicant indicated that it has been receiving advice in respect of negotiating a new Agreement, and that it understood that a draft Agreement was to be provided at the commencement of bargaining. The Applicant referred to a concern that its employees have sufficient time to both understand the terms of, and bargain effectively for, an agreement to replace the one subject to this application.
The Applicant submitted that it has been working with the Western Australia Chamber of Commerce Workplace Relations Unit (WACCIWR) to assist in drafting and negotiating a new agreement since January 2023. The Applicant indicated that WACCIWR had completed a review of the provisions of the Applicant’s current agreement against both the Nurses Award 2020 and the HS Award. The Applicant said that a draft agreement was being reviewed at the time of making this application. However, the Applicant did not submit that it had commenced bargaining for the proposed agreement, no Notice of Employee Representational Rights (NERR) had been distributed and as a result no bargaining representatives had been nominated. The Applicant also referred to a proposed timeline for negotiations, with the provision of the first draft agreement foreshadowed to accompany the NERR to be provided to employees by email. The Applicant indicated that, one week following the provision of these documents, it would hold meetings where the terms of the draft agreement would be discussed, allowing opportunities for staff members across disciplines to provide feedback. The Applicant then described that within a month of providing the draft Agreement, responses would be ‘collated and addressed’, and employees would have the opportunity to nominate bargaining representatives, and negotiations would commence before the final agreement was to be provided to employees for consensus before its submission for approval to the Fair Work Commission (Commission). Further than this, the Applicant did not identify any basis for the Commission to extend its agreement.
The Applicant further indicated that the provisions of the Agreement were closely aligned to the current provisions of the Fair Work Act 2009 (Cth) (the FW Act). The Applicant also referred to its organisational policies being updated to reflect ‘recent legislative workplace changes’ and claimed that all salaries sat above the minimum wage. It referred to an across-the-board percentage increase of 5.8% to all employees from 1 July 2023.
Subitem (7) Consideration
The Full Bench in ISS Health Services Pty Ltd[2] described the three requirements for subitem (7) to apply. The first is the requirement that the application is made at or after the ‘notification time’ for a proposed agreement as defined in s.173(2) of the FW Act. The second is that the proposed agreement must cover the same or substantially the same group of employees as the zombie agreement. The Full Bench stated that this could be established by comparing the NERR for the proposed agreement to the coverage clause of the zombie agreement. Relevantly, the third is that bargaining for the proposed agreement has commenced.
The Applicant lodged its application to extend the default period for the Agreement on 14 November 2023. At Part 2.6 of the application, the Applicant indicated as follows:
In January 2023 legal support from the Chamber of Commerce and Industry WA Workplace Relations unit was sought to assist in re-draft of a new collective agreement. This included review against two of the awards we believe may cover our diverse workforce, being the Nurses Award 2020 and the Health Professionals and Support Services Award 2020. The diversity of our workforce, a mixed team of predominantly allied health clinicians, two nurses, and administration support team, has encouraged us for team cohesion and organisation culture, to continue to work under one agreement only. To date the work undertaken has been to ensure that the proposed new agreement will stand well against a BOOT test against the awards. The final draft agreement is currently being reviewed by the CCIWA lawyer ready for comprehensive review by all employees. We anticipate receiving this in the coming weeks, but concern [sic] to provide sufficient time for all staff to provide feedback necessitates this application.
On 23 November 2023, the Commission wrote to the Applicant to seek further material in support of its application, including a copy of any NERR that had been issued to the Applicant’s employees at the commencement of bargaining for a new enterprise agreement.
Later that day on 23 November 2023, the Applicant provided further material to the Commission in response to its request, which included:
(a)a document prepared by the WACCIWR containing its advice following its review of the Agreement terms against the Better Off Overall Test (BOOT) and assessment of its compliance against the current provisions of the FW Act;
(b)A BOOT comparison of the Agreement against the Nurses Award 2020;
(c)A BOOT comparison of the Agreement against the HS Award; and
(d)A Microsoft Excel workbook containing the figures for each Award comparison against the terms of the Agreement.
The Applicant has received advice that at least one of the support employee classifications, and at least seven of its professional employee classifications as contained in its Agreement fall below those in the HS Award.
The remainder of its classifications are above their counterparts in the HS Award or the Nurses Award 2020. A number of the Agreement provisions are more beneficial than the minimums provided under the Awards, including:
(a)the majority of the rates of pay;
(b)a maximum 37.5 hours per week (compared to the Awards provisions of 38 hours per week);
(c)a shorter span of ordinary hours; and,
(d)additional compassionate leave of five days in limited circumstances.
However, many of the agreement provisions are either less beneficial or capable of improvement, including:
(a)Only a 20% casual loading, compared to the Awards’ 25%;
(b)No minimum engagement for casual staff;
(c)No paid tea breaks;
(d)No annual pay progression;
(e)Inferior higher duty provisions when compared with the Awards;
(f)Comparatively low travel allowances;
(g)Significantly inferior provisions regulating time-off-in-lieu (‘TOIL’);
(h)No provisions for the cashing out of annual leave;
Inferior rates of accrual for annual leave by one week (when compared to the Nurses Award 2020); and
(j)National Employment Standards (NES) and mandatory Agreement term non-compliance.
The Agreement provisions do not align with the advisory documents received by the Applicant and subsequently provided to the Commission by the Applicant in support of its application, with respect to the comparison of Award and Agreement salaries. This may be because the Applicant is either paying above the minimum rates provided in the Agreement, or as a result of the Agreement’s discretionary salary review mechanism. In either case, it is not clear on the face of the document or from the documents subsequently provided to the Commission what the rates payable by the Applicant to its employees currently are.
The advice provided by the WACCIWR was dated 7 June 2023. No further documentation beyond email correspondence and the supporting documentation set out at [13] was provided by the Applicant in support of its extension application establishing why it sought an extension of 12 months to bargain for a new agreement.
The FW Act provides a series of definitions of ‘notification time’ for the purposes of a proposed enterprise agreement. At s.173(2)(a), it provides that the notification time for a proposed enterprise agreement is the time when ‘the employer agrees to bargain, or initiates bargaining, for the agreement’. None of the material before us supports a finding that this definition or any of the alternative definitions have been met (such as those relating to majority support determinations or scope orders). The Applicant has indicated that it has yet to commence bargaining. Accordingly, the application was not made ‘at or after the notification time for a proposed enterprise agreement’ in accordance with the requirement at subitem (7)(a) of the Transitional Act. Consequently, we find that subitem (7) does not apply and the default period cannot be extended pursuant to subitem (6)(a).
Item 6(b) Consideration
As subitem (7) cannot be met, the Commission may consider whether to extend the default period pursuant to subitem 6(b), requiring a consideration of whether it is otherwise reasonable in the circumstances to extend the default period. This involves the application of a broad evaluative judgement.
In Suncoast,[3] the Full Bench said:
[17] The ‘reasonable’ criterion in the subitem should, in our view, be applied in accordance with the ordinary meaning of the word – that is, “agreeable to reason or sound judgment”. Reasonableness must be assessed by reference to the circumstances of the case, that is, the relevant matters and conditions accompanying the case. Again,a broad evaluative judgment is required to be made.
The Agreement was made and approved in 2007. It excludes all other statutes and instruments, including Awards. Clause 5.1 of the Agreement provides:
The employee shall be engaged in accordance with the terms and conditions set out in this Agreement. No award, federal or state shall apply to the contracts of employment for employees under this Agreement.
The Transitional Act provides that the base rates of pay payable under agreement-based transitional instruments are not to be less than the base rates payable under a modern award that is in operation and covers an employee.[4] The terms of the Agreement in this case represent the benchmarks created by the legislative scheme under which it came into operation, and that scheme has long since been superseded. The terms fall short of the safety net standards provided for by the FW Act, and modern awards made under the FW Act.
In Peter Frick,[5] the Full Bench considered that the default position of the statute to automatically terminate transitional instruments on 6 December 2023 suggests a policy preference for employees covered by transitional instruments to be regulated by contemporary instruments made under the FW Act.[6] In Kalfresh Management Services Pty Ltd,[7] the Full Bench expressed the view that where an agreement contains inferior and outdated terms and conditions, this weighs strongly against a conclusion that it is reasonable in the circumstances to extend a default period.[8]
The Applicant does not go so far as to suggest that the BOOT is met. It instead argues that the terms of employment in the zombie agreement closely align with the FW Act, and that the Applicant needs 12 months to bargain for a new agreement that has been in progress, at least in conjunction with assistance provided by the WAICCWR, since January 2023. We do not accept this argument. The number of beneficial terms in the Agreement compared to the Awards are relatively limited. In contrast, as set out at [16], the beneficial provisions in the Awards that the 71 agreement covered employees of the Applicant will miss out on if the Agreement’s operation is extended are significant in their number and nature. Given the largely inferior conditions in the Agreement, we think it unlikely that there would be a disadvantage to employees in a reversion to award conditions prior to the finalisation of a new agreement. This is a significant factor in our consideration, weighing against the grant of an extension.
Finally, we are not persuaded by the Applicant’s contention that an effective negotiation process for a new agreement will take 12 months to complete. The Applicant has already had over 12 months to make arrangements for the sunsetting of the Agreement. The Applicant has provided documents to the Commission that indicate that the process has been on foot for at least 11 months. The Applicant has not issued a NERR, and no employee bargaining representatives have been nominated. No draft agreement has been provided to employees or to the Commission.
We acknowledge that genuine bargaining takes time. However, the Applicant has had 12 months to negotiate a replacement agreement and has not even commenced bargaining. We do not consider it sufficiently likely that negotiating a new enterprise agreement would take the twelve months that the Applicant seeks.
In Qualipac,[9] the Full Bench rejected an application for an extension of the default period in circumstances where an applicant wanted to continue to rely on the inferior terms and conditions in a zombie agreement. We consider there to be some parallels with the present case. The Bench in Qualipac said:
[20] We are mindful of the need to ensure that the integrity of the safety net provided for by the Act and modern awards is not undermined by very old agreements that may no longer meet contemporary standards.
We have taken into account that the Applicant has taken material steps to commence bargaining for a new enterprise agreement. We have also factored into our consideration that the Applicant is seeking and obtaining advice that will assist in drafting terms and bargaining an agreement to replace the one subject to this application. These factors however do not convince us that we should extend the life of a zombie agreement that provides for terms and conditions that are inferior to the relevant modern award and fails to reflect contemporary standards.
On balance, we are not satisfied that it is reasonable in the circumstances to extend the default period of the agreement. The Application is dismissed.
As our decision is to refuse to extend the default period under subitem 20A(6) of Sch 3 and our decision is made after the sunset date in the Transitional Act, subitem (11)(e) provides that we must extend the default period to the day of this decision or specify a day that is not more than 14 days after the day of this decision. We have decided that to enable the parties to make the necessary administrative arrangements to give effect to the sunsetting of the Agreement the default period is extended until 28 December 2023.
DEPUTY PRESIDENT
[1] [2023] FWCFB 105.
[2] [2023] FWCFB 122 at [4]
[3] [2023] FWCFB 105.
[4] Item 13 of Sch 9.
[5] [2023] FWCFB 137
[6] Ibid, [32].
[7]& Kallium Management Services Pty Ltd As Trustee For The Kalium Labour Trust T/A Kalfresh Pty Ltd [2023] FWCFB 217
[8] Ibid, [14].
[9] [2023] FWCFB 212
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