Argyris Trading Pty Ltd TA Gloria Jeans Colonnades
[2024] FWCFB 117
•28 FEBRUARY 2024
| [2024] FWCFB 117 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 7, Item 30(4) – Application to extend default period for enterprise agreement made during bridging period
Argyris Trading Pty Ltd TA Gloria Jeans Colonnades
(AG2023/4078)
GLORIA JEANS COLONNADES ENTERPRISE AGREEMENT 2009
Restaurants
| DEPUTY PRESIDENT WRIGHT | SYDNEY, 28 FEBRUARY 2024 |
Applications to extend the default period for the Gloria Jeans Colonnades Enterprise Agreement 2009
Argyris Trading Pty Ltd TA Gloria Jeans Colonnades (Applicant) has made an application under the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act) to extend the default period for the Gloria Jeans Colonnades Enterprise Agreement 2009 (Agreement). The application seeks to extend the default period for the Agreement to 6 December 2027.
The Agreement was made during the bridging period as defined in Sch 7 of the Transitional Act. It was approved by Fair Work Australia on 21 December 2009[1]. Item 30 of Sch 7 to the Transitional Act applies to the application.
Sch 7 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 the provisions allowing for the extension of the default period for zombie agreements are described in detail in the Full Bench decision in Suncoast Scaffold Pty Ltd (Suncoast).[2] The Full Bench was dealing with item 20A of Schedule 3. The provisions in item 30 of Sch 7 are in similar terms and the reasoning applies equally here. We rely upon what is said in that decision.
Under subitem 30(6) of Sch 7, where an application is made under subitem 30(4) for the default period to be extended, the Commission must extend the default period for a period of no more than four years if, under subitem (6)(a), either subitem (7) or (8) applies and it is otherwise appropriate to do so, or, under subitem (6)(b), it is reasonable in the circumstances to do so. Subitem (7) applies if bargaining for a replacement agreement is occurring. Subitem (8) applies if it is likely that as at the time the application is made the award covered employees, viewed as a group, would be better off overall if the agreement continued to apply than if the relevant modern award applied.
Grounds for application
The application identifies the following grounds for extension of the Agreement:
·Discussion occurred with staff giving them the choice to move to the modern award rate, provided links and information outlining the modern award and their current enterprise agreement.
·Overall consensus was that staff would prefer to remain on current EA agreement.
The Applicant was invited to provide further detail of its application but did not do so.
Consideration
There is no indication from the Applicant that bargaining is occurring, so subitem (7) does not apply.
The relevant award for consideration of the better off overall test under subitem (8) is the Restaurant Industry Award 2020 (Award). Rates of pay under the Agreement are covered by an undertaking given at the time the Agreement was approved which requires that payments be reviewed on a quarterly basis against the award minima and any shortfall will be addressed accordingly. Each employee is to be provided with a copy of this reconciliation on a quarterly basis. On this basis, the employees should ultimately be getting award rates of pay (potentially after a review is conducted) and cannot therefore be said to be better off if the Agreement applied rather than the Award.
The Agreement states at clause 12.1.1 that an hourly rate will apply that incorporates all allowances, penalty rates and expenses that an employee may otherwise be entitled to under any award. A casual loading of 20% applies. As penalty rates and allowances are not payable under the Agreement and the casual loading is less than the Award loading, we consider that employees are worse off than if the Award applied. Consequently, subitem (30)(8) does not apply and the default period for the Agreement cannot be extended on that basis.
The default period may be extended under subitem 30(6)(b) if the Commission considers that it is reasonable in the circumstances to do so. The reasonableness test involves the application of a broad evaluative judgement.
In Suncoast, 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.
In Peter Frick,[3] 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 zombie agreements to be regulated by contemporary instruments made under the Act.[4] In Kalfresh Management Services Pty Ltd [5] 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.[6]
Applying these observations to the present matter weighs heavily against granting the application. The Applicant does not go so far as to suggest that the employees would be better off if the Agreement continued to apply. We are of the view that they would not be. There is no suggestion that a replacement agreement will be negotiated. The terms of the Agreement are outdated and do not reflect contemporary standards. We are of the view that the Agreement should be replaced by a modern instrument that meets the requirements of the FW Act.
For these reasons 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 20(6) of Sch 7 and our decision is made after the sunset date in the Transitional Act, subitem (10)(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 13 March 2024.
DEPUTY PRESIDENT
[1] [2009] FWAA 1802.
[2] [2023] FWCFB 105.
[3] [2023] FWCFB 137
[4] Ibid, [32]
[5] Kallium Management Services Pty Ltd As Trustee For The Kalium Labour Trust T/A Kalfresh Pty Ltd [2023] FWCFB 217
[6] Ibid, [14]
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