Application by O’Shea

[2020] FWCA 1875

[2020] FWCA 1875

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.225—Enterprise agreement

Application by O’Shea
(AG2019/4186)

IPCA ENTERPRISE AGREEMENT 2013

Fast food industry
DEPUTY PRESIDENT MILLHOUSE	MELBOURNE, 12 MAY 2020

Application for termination of the IPCA Enterprise Agreement 2013.

[1] Mr Liam O’Shea has applied under s.225 of the Fair Work Act 2009 (Cth)(Act) to terminate the IPCA Enterprise Agreement 2013 (Agreement). The Agreement nominally expired on 28 November 2017. 1

[2] For the reasons that follow, I have decided that it is appropriate to terminate the Agreement.

Context

[3] A single interest employer authorisation was made by the Commission in respect of the Agreement on 17 September 2013. The authorisation lists at Attachment A the names of 57 employer parties to the Agreement. 2

[4] The Agreement applies to each of these employers and their employees engaged in the job classifications of sandwich artist, senior sandwich artist, and restaurant supervisor/manager. 3

[5] Mr O’Shea is employed by YMC Holdings Pty Ltd, being one of the employer parties, at the Subway Ermington site. He has been employed since around 26 September 2017. Mr O’Shea has appointed the Shop, Distributive and Allied Employees’ Association (SDA) to act on his behalf. 4

[6] The Agreement reached its nominal expiry date on 28 November 2017. Mr O’Shea has standing to make the application because, pursuant to s.225(b) of the Act, he is an employee covered by the Agreement. Accordingly, the jurisdictional prerequisites for the making of an application under s.225 of the Act are satisfied.

Service of the application

[7] To provide an opportunity for interested parties to respond to the application, a dedicated page on the Commission’s public website was created making accessible the Form F24B application, Form F24C statutory declaration made by Mr Gerard Dwyer, National Secretary of the SDA, a comparison between the Agreement and the Fast Food Industry Award 2010 (FFIA), and the directions of the Commission. All relevant material filed in this application was published to the website. 5

[8] Mr Angelo Pardo, National Industrial Officer of the SDA, undertook an Australian Securities and Investments Commission (ASIC) search of each employer party to ascertain details of service. The result of each ASIC search was provided to the Commission. 6 The Commission sent correspondence by post to each registered employer (and also by email where such contact details were known) advising them of the application with a link to the dedicated page on the Commission’s public website.

[9] In the circumstances, and at the SDA’s request on behalf of Mr O’Shea, 7 I have decided to deal with the application on the papers without conducting a hearing.

Consideration

[10] Section 226 of the Act provides:

“When the FWC must terminate an enterprise agreement

If an application for the termination of an enterprise agreement is made under section 225, the FWC must terminate the agreement if:

(a) the FWC is satisfied that it is not contrary to the public interest to do so; and

(b) the FWC considers that it is appropriate to terminate the agreement taking into account all the circumstances including:

(i) the views of the employees, each employer, and each employee organisation (if any), covered by the agreement; and

(ii) the circumstances of those employees, employers and organisations including the likely effect that the termination will have on each of them.”

Public interest – s.226(a)

[11] The notion of public interest refers to matters that might affect the public as a whole, as distinct from the interests of the parties. 8 In the context of s.226 of the Act, public interest considerations are directed to the consequences of terminating the Agreement and particularly those consequences which are likely foreseeable.9 The question is whether the Commission is satisfied that termination of the Agreement is not contrary to the public interest.

[12] The SDA contends that the terms and conditions of employment under the Agreement have fallen below the minimum terms and conditions of the FFIA. It is submitted that increases in the rates of pay under the Agreement have not kept up with the rate of increases in the FFIA, so that over time the buy-out of penalty rates has been absorbed. As a consequence, the base rate of pay under the Agreement no longer compensates for lower penalty rates in the Agreement for work performed in the evening, Saturdays, Sundays and public holidays when compared to the FFIA. 10 As a consequence, employees under the Agreement are said to suffer a disadvantage in respect of their rates of pay and terms and conditions of employment.11

[13] Further, it is contended that the maintenance of proper industrial standards bears upon the notion of public interest. Relevant to this consideration is the fact that the Agreement nominally expired more than two years ago. 12

[14] One employer party filed submissions. None of the matters raised in these submissions address the question of public interest.

[15] There is nothing before me which raises public interest considerations that might militate against termination of the Agreement, such as the achievement or otherwise of the various objects of the Act, employment levels, inflation, and the maintenance of proper industrial standards. 13

[16] Based on the material filed with the Commission, I am satisfied that termination of the Agreement is not contrary to the public interest.

Section 226(b) – appropriateness of terminating the Agreement

[17] Mr O’Shea, as an employee covered by the Agreement, supports its termination. The SDA filed with the Commission a document which compares entitlements between the Agreement and the FFIA. It contends that the analysis contained in the comparison document supports termination of the Agreement. The SDA submits that reverting to the FFIA will restore the safety net of protections and will deliver material advantages to the employees covered by the Agreement. 14

[18] It is observed that the Agreement enables an employer to engage an employee under one of six minimum rate schedules, options A to F. Each option contains different minimum ordinary wage rates. An employer may nominate a different option for different employees in the same workplace. 15 The ordinary time rates under each option (which are subject to increases in accordance with clause 26 of the Agreement) vary markedly. The rates payable for work performed on weekends and public holidays also vary according to the selected option, and in the case of option A the ordinary time rates continue to apply for such work.  

[19] A review of the matters in the comparison document, which have not been disputed by the employers, identifies various deficiencies in the terms and conditions of employment under the Agreement as against the FFIA. In the main, the weekend and public holiday penalties under the Agreement are less than the FFIA for the same work. 16 This issue is compounded by the fact that employees may be rostered to work on any day of the week.17 There is also no entitlement to an evening shift loading in all but one of the options (although in the case of option A the absence of this entitlement does not, of itself, appear to present a detriment).18 Further, the qualifying circumstances giving rise to an overtime payment are more confined under the Agreement.19 In the case of salaried employees there is no entitlement to overtime, or any of the penalty rates prescribed within each of the options (excluding option A, which pays all hours at the ordinary time rate in any event). Rather, salaried employees are paid a weekly salary in satisfaction of all hours worked including reasonable additional hours.20 The Agreement does not provide any method for calculating the salary.

[20] Furthermore, there is no provision for annual leave loading under the Agreement. The Agreement is also silent on allowances including the meal allowance, special clothing allowance and the laundry allowance. While the Agreement contains a reimbursement of expenses clause, it is limited to travel, accommodation and “like” expenses. 21 It does not operate to capture circumstances unrelated to transport and travel.

[21] It is also submitted by way of the comparison document, and I accept, that the FFIA offers more favourable non-monetary entitlements to part-time engagement and casual conversion.

[22] These matters weigh in favour of a finding that it is appropriate to terminate the Agreement.

[23] No other employee views were provided to the Commission and there are no employee bargaining representatives covered by the Agreement from whom views were sought.

[24] As to the employer party’s views, circumstances and the likely effects any termination would have on it, it says that:

“…I was aware the agreement had expired but I have continually kept in contact with Subway Staff Net and always increased my staff wages according to their advice.

My understanding was that the Agreement could still operate until such time one of my staff challenged it and to date they haven’t.

I don’t believe my staff are disadvantaged in anyway as their wages are increased accordingly.

If I was now having to pay penalties I really couldn’t afford to stay in business.

I am only a small store and struggle financially and believe having to pay penalties would severely be detrimental to my business.

I understand that an injustice has occurred but don’t believe it relates to the way I am running my business and due to this request that this agreement my company is running under not be terminated as my staff don’t have any issues with it.” 22

[25] Further, it submits that:

“If this agreement were to be terminated, it would very much limit my ability to afford the wage increase in these particular instances, instead needing to rely on younger, less experienced employees. While I understand and even agree that Option A needs looking over, I believe the agreement is beneficial and even necessary for older and more experienced employees to be afforded the ability to have more shift options including weekends, public holidays and a possible 6th day of work each week.

The termination of this agreement will adversely affect many seasoned employees, most importantly the fact that the Award prices them out of shift opportunities.

I, for one, would not survive with my current work conditions, shift allocations and employees if solely operating under the award.” 23

[26] The employer’s submission provides that “an injustice has occurred,” however contends that any requirement imposed upon it to pay the penalties under the FFIA would be detrimental to its business and may limit its ability to afford wage increases. Further, it says that operating under the FFIA would influence staffing decisions such that “younger, less experienced employees” will be preferred, as the FFIA prices “seasoned employees” out of shift opportunities

[27] The basis for the employer’s submission appears to be that a requirement to comply with the FFIA would affect the viability of its business. No material has been advanced in support of this proposition.

[28] In any event, the submissions support a finding that the FFIA offers more favourable entitlements to penalties and overtime. While wages are “increased accordingly,” this does not adequately offset the identified deficiencies under the Agreement. There are no apparent benefits under the Agreement capable of reconciling any shortfall. This supports a conclusion that the Agreement does not provide an adequate safety net for all employees covered by it, irrespective of their age and experience. This weighs in favour of a finding that it is appropriate to terminate the Agreement, notwithstanding the employer’s submission as to its business viability.

[29] There is no other material before the Commission as to the circumstances including the likely effect of termination on the remaining employer parties.

[30] Having regard to the submissions advanced and all the circumstances as required by ss.226(b)(i) and (ii) of the Act, I consider it is appropriate to terminate the Agreement.

Conclusion

[31] As I have concluded that it is not contrary to the public interest to terminate the Agreement, and that it is appropriate to do so taking into account all the circumstances under ss.226(b)(i) and (ii), I must terminate the Agreement.

[32] The termination will operate from 12 May 2020.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<AE405494  PR718167>

 1   [2013] FWCA 9182 at [8]; Agreement cl.4.1

 2   PR541938

 3   Agreement cl. 2.2, cl.3.6 and cl.10.1

 4   Statutory declaration of Mr Liam O’Shea declared on 25 October 2019 at [1]-[5]

 5     Email from Mr Angelo Pardo dated 20 April 2020; Statutory Declaration of Mr Angelo Pardo declared on 22 January 2020

 7   Submission from the SDA dated 3 March 2020

 8   Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 (2005) 139 IR 34 (Kellogg Brown) at p.40; see also Aurizon Operations Limited; Aurizon Network Pty Ltd; Australia Eastern Railroad Pty Ltd [2015] FWCFB 540at [153]

 9   Kellogg Brown at p.41

 10   Form F24C Statutory declaration of Mr Gerard Dwyer declared on 1 November 2019 (Form F24C), 2.1 at [2]

 11   Form F24C, 2.1 at [3]

 12   Submission filed by SDA on behalf of Mr O’Shea dated 22 January 2020 (22 January submissions) at [10]-[12]

 13   Kellogg Brown at p.41

 14   22 January 2020 submissions at [16]

 15   Agreement cl.23.1

 16   see FFIA cl.25.5(b)-(d) and cl.30.4

 17   Agreement cl.15.1

 18   contra FFIA cl.25.5(a)

 19   Agreement cl.18.2; see FFIA cl.26.2 and cl.26.3

 20   Agreement cl.3.13

 21   Agreement cl.28

 22   Submission dated 17 January 2020

 23   Submission dated 18 January 2020