Applications by Patterson Enterprises Pty Ltd
[2023] FWCFB 129
•26 JULY 2023
| [2023] FWCFB 129 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 3, Item 20A(4)—Application to extend default period for agreement-based transitional instruments
Applications by Patterson Enterprises Pty Ltd
(AG2023/1163 and AG2023/1164)
| JUSTICE HATCHER, PRESIDENT DEPUTY PRESIDENT WRIGHT DEPUTY PRESIDENT SLEVIN | SYDNEY, 26 JULY 2023 |
Applications to extend the default period for the Patterson Enterprises Pty Ltd Trades Employees (Tradesperson) Collective Agreement and the Patterson Enterprises Pty Ltd Employee Collective Agreement.
Patterson Enterprises Pty Ltd (Patterson Enterprises) has made two applications pursuant to the Fair Work (Transitional Provisions and Consequential Amendments) Act2009 (Cth) (Transitional Act) to extend the default period for the Patterson Enterprises Pty Ltd Trades Employees (Tradesperson) Collective Agreement (Trades Agreement) and the Patterson Enterprises Pty Ltd Employee Collective Agreement (Non-Trades Agreement) (together, the Agreements) for a period of four years. The applications, as filed on 21 April 2023, indicated that they were made pursuant to item 30(4) of Sch 7 to the Transitional Act. However, the two agreements the subject of the applications are agreement-based transitional instruments to which Sch 3 to the Transitional Act applies, since they were made as collective workplace agreements under the Workplace Relations Act 1996 (Cth). Accordingly, the applications should have been made pursuant to item 20A(4) of Sch 3 to the Transitional Act. We will allow a correction of the applications pursuant to s 586 of the Fair Work Act 2009 (Cth) (FW Act) to ensure that they are considered under the correct provision.
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 the default period for up to four years in prescribed circumstances. The main features of item 20A of Sch 3, and principles concerning its proper construction and application, are described in detail in the Full Bench decision in Suncoast Scaffold Pty Ltd[1] (Suncoast), and we rely upon, without repeating, what is said in that decision.
The sole ground of the applications is that employees covered by the Agreements will continue to be better off overall if the two Agreements continue to operate. One of the bases for extending the default period under subitems 20A(6)(a) and (9) of Sch 3 is that the Commission is satisfied that the employees covered by a collective agreement-based transitional instrument would be better off overall if the instrument applied to the employees instead of the relevant modern award, and it is otherwise appropriate to do so. The applicable modern award is the Mining Industry Award 2020 (Award).
In Suncoast[2] the Full Bench described the better off overall criterion as follows:
[15] The requirement for the better off overall criterion in subitem 9(b) to be assessed by reference to the award covered employees ‘viewed as a group’ appears to allow for the possibility that the criterion may be satisfied, notwithstanding that some individual employees are not better off overall than under the relevant award, as long as there is a discernible advantage for the employees considered as a collective. Further, there only needs to be satisfaction as to the ‘likelihood’ of such a discernible collective advantage; that is, it only needs to be probable rather than certain. Taking these matters together, it is apparent that the better off overall criterion is less stringent that the BOOT in s 193 of the FW Act. However, beyond these broad observations, subitem 9(b) discloses no methodology as to how the criterion is to be applied. All that can be said is that a broad evaluative judgment is required based upon an overall comparison of the terms of the transitional instrument and the relevant award(s) in their application to the cohort of award covered employees.
Mr Patterson, who described himself as the owner/manager of Patterson Enterprises, appeared for the applicant. He described the nature of the business. Patterson Enterprises is based in the town of Greenbushes in Western Australia. It provides labour to a nearby mine. It engages casual employees for this purpose who are provided to the mine as supplementary labour. The employees include trade assistants who perform maintenance shutdown work and operators who perform cleaning duties and other entry level work. The workforce is transitional. Of the 72 employees engaged in the last 12 months only 12 have been employed for the whole of that period. It is not uncommon for employees of Patterson Industries to go on to be engaged directly by the mine.
The mine to which Patterson Enterprises supplies supplementary labour runs on a 12-hour continuous shift basis. The applicant’s casual employees work 38 hours per week averaged over a fortnight and overtime is available. The work is performed in 12-hour blocks in two shifts commencing 6.00 am and 6.00 pm. The mine roster is a seven day on, seven day off roster. The casuals are free to reject shifts and work performed by the employees covered by the Agreements can occur on any day of the week, including weekends.
The Trades Agreement provides for loaded rates of pay which are inclusive of a 20 per cent casual loading, and the loaded rate is paid in lieu of all award entitlements including overtime, shift loadings, annual leave loading, allowances, penalty rates and incentive based payments, except where otherwise provided in the Trades Agreement. The loaded rates are $37.11 per hour for dayshift work and $40.48 per hour for nightshift work. The only additional payment provided is a $21.00 allowance per rostered shift. The Trades Agreement provides for ordinary hours to be worked at any time and on any day up to a maximum of 38 ordinary hours per week with a minimum of four hours per shift to a maximum of 12 hours per shift. The Trades Agreement is silent on shift definitions and shift penalties.
The Non-Trades Agreement is in similar terms save that the loaded hourly rate for which it provides is less than the minimum rate in the Award for employees performing the same work. In those circumstances, item 13 of Sch 9 to the Transitional Act requires that the modern award rate apply.
A key benefit provided by the Award which is excluded due to the loaded rates in the Agreements is the penalty rate for overtime. The Award provides for overtime worked from Monday to midday Saturday is to be paid at 150 per cent of the ordinary rate for the first 3 hours and 200 per cent thereafter. On Saturday, after midday, and Sunday, overtime is paid at 200 per cent of the ordinary rate, and on public holidays the rate is 250 per cent. For continuous shiftworkers the overtime rate is 200 per cent.
As the Agreements provide for loaded rates for casual employees, the observations made by the Full Bench in the Loaded Rates Agreements[3] decision are relevant. In that decision the Full Bench observed, at [121], that it will be difficult for casual employees with loaded rates to pass the better off overall test in s 193 of the FW Act, because ‘it would always be possible for the casual employee, in a given pay period, to be engaged to work on a day or at a time which would attract the payment of penalty rates under the relevant award and not to be engaged on any other hours or at any other times’. Even though, as the Full Bench observed in Suncoast, the better off overall test in item 20A of Sch 3 to the Transitional Act appears to be less stringent than the test in s 193 of the FW Act,[4] we consider the Full Bench’s observation in Loaded Rates Agreements assists in the broad evaluative judgment required under item 20A in this case.
With Mr Patterson’s consent, the Commission’s staff undertook modelling, based on information he provided about the way his employees work, comparing employees’ pay and other entitlements under each of the Agreements compared to under the Award. This modelling concluded, taking into account the overtime penalty rates payable under the Award, that employees were worse off under the Trades Agreement. This was so because even though the hourly rate in the Trades Agreement was higher than the Award hourly rate, the difference was insufficient to compensate for lost overtime payments. This was the case for employees working 12-hour shifts only on weekdays and was even more the case for employees working on weekends. The situation under the Non-Trades Agreement was starker as the hourly rates in this agreement were less than the rates in the Award. The modelling showed that employees were not better off under the Agreements. Mr Patterson was given an opportunity to consider the modelling and make submissions in response. Whilst he initially raised issues with the analysis he did not make submissions that the analysis was wrong or should not be relied upon.
For the purpose of subitem 9(b) of item 20A of Sch 3 we are of the view, based on the Commission’s modelling, that it is unlikely,as at the time the applications were made, that the Award-covered employees who are covered by the Agreements, viewed as a group in respect of each of the Agreements, would be better off overall under the Agreements than if the Award applied. Consequently, we have concluded that the first condition of subitem 6(a) is not satisfied in relation to either the Trades Agreement or the Non-Trades Agreement, and we are not required to grant any extensions to the default period.
The applications are therefore dismissed.
PRESIDENT
[1] [2023] FWCFB 105.
[2] Ibid at [15].
[3] [2018] FWCFB 3610.
[4] [2023] FWCFB 105 at [15].
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