AWAQ Pty Ltd

[2022] FWC 2187

[2022] FWC 2187

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.185—Enterprise agreement

AWAQ Pty Ltd

(AG2022/2139)

AWAQ Pty Ltd Enterprise Agreement 2021

Restaurants
COMMISSIONER MATHESON	SYDNEY, 17 AUGUST 2022

Application for approval of the AWAQ Pty Ltd Enterprise Agreement 2021 – application dismissed.

1. An application has been made for approval of an enterprise agreement known as the AWAQ Pty Ltd Enterprise Agreement 2021 (Agreement). The application was made by AWAQ Pty Ltd (Applicant) pursuant to s.185 of the Fair Work Act 2009 (Cth) (Act). The Agreement is a single enterprise agreement.

1. The Restaurant Industry Award 2020 (Award) is the relevant instrument for the purposes of the better off overall test. The base rates of pay in the Agreement for full-time and part-time employees are between 8.20% and 8.33% above the relevant base rates of pay in the Award. The base rates of pay for casual employees are between 4.78% and 4.87% above the relevant base rates of pay in the Award.

1. Notwithstanding this, when the terms of the Agreement are considered as a whole and compared to the Award, there is a concern that the Agreement does not pass the better off overall test. Section 186(2)(d) of the Act requires the Commission to be satisfied that the Agreement passes the better off overall test in order to approve the Agreement. Relevantly, s.193(1) of the Act provides:

“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.”

1. A number of concerns were raised with the Applicant in relation to the better off overall test and undertakings were provided by the Applicant to address some of these concerns but not all.

Concerns regarding the better off overall test

Weekend penalty rates

1. Among the concerns raised with the Applicant was a concern that employees working Sundays may not be better off overall under the Agreement. This is because clause 8.1 of the Agreement provides that ordinary hours of work will not exceed 38 hours per week, averaged over 4 weeks, and may be worked on any days, Monday – Sunday, including public holidays. However, the Award, at Table 8 of clause 24.2, contains the following weekend penalty rates for working ordinary hours on weekends:

·  permanent employees: 125% for work performed on a Saturday and 150% for work performed on a Sunday;

·  casual employees – Introductory to Level 2: 150% for work performed on a Saturday or a Sunday (inclusive of casual loading); and

·  casual employees – Level 3 to Level 6: 150% for work performed on a Saturday and 175% for work performed on a Sunday (inclusive of casual loading).

1. The rates of pay in the Agreement are not high enough to compensate employees for the loss of these penalty rates such that employees working Sundays, or a combination of Saturdays and Sundays, would be better off overall compared to what they would receive under the Award. The Commission invited submissions and/or undertakings to address this concern. In response, the Applicant submitted that:

·  the flat rate of pay for ordinary hours of work not exceeding 38 hours per week averaged over 4 weeks is in line with an agreement previously approved in 2013; and

·  all employees are engaged for a minimum of 3 days per week with only one Saturday/Sunday shift per week.

1. The Applicant operates on weekends, which is understandable given the industry in which it operates. However, even with the explanation provided above, it appears that employees covered by the Agreement are not better off overall if working three weekdays and a Sunday. The Commission provided calculations to the Applicant demonstrating this and invited undertakings to address the concern or, if the Applicant did not agree with the Commission’s calculations and analysis, invited the Applicant to provide its own calculations and analysis.

Casual overtime and penalty rates

1. The Commission also raised the concern that, under the Agreement, casual employees do not receive penalties or loadings for overtime, weekends or working at the times described in clause 24.2 of the Award, other than the 25% loading, and that this meant they were not better off overall. The Commission directed the Applicant to clause 23.1(c) of the Award for casual entitlements to overtime and clauses 23.2, 23.4 and 24 of the Award for penalty rates.

1. In response, the Applicant has submitted that the Agreement does not need to deal with penalty rates for hours worked from 10pm to midnight or from midnight to 6am, Monday to Friday, as the Employer’s operating hours are between 8am to 5pm, Monday to Saturday, and 8am to 4pm on Sunday. However, this explanation only deals with a very specific overtime trigger and not the other overtime triggers in the Award that have application to casual employees. In particular:

·  Clause 23.1(c) of the Award provides that an employer must pay a casual employee in the circumstances specified in clause 11.5 (Casual employment).

·  Clause 11.5 of the Award provides that an employer must pay a casual employee at the rates prescribed in clause 23.4 – Overtime rate for all time worked in excess of the hours prescribed in clause 11.2.

·  Clause 11.2 provides that a casual employee may be engaged to work:

oa maximum of 12 hours per day or per shift;

oa maximum of 38 hours per week of, if the casual employee works in accordance with a roster, an average of 38 hours per week over the roster cycle (which may not exceed 4 weeks).

·  Further, clause 23.2 of the Award deals with situations in which an employee works overtime and is next rostered to start work less than 8 hours after the employee finishes working overtime. In these circumstances, an employee may delay their start, without loss of pay, until 8 hours after they finished working the overtime or, if they do not have an 8 hour break, be paid at the overtime rate until they have had a break of at least 8 hours.

1. The overtime rates are prescribed in clause 23.4 of the Award as follows (worked out as a percentage of the employee’s minimum hourly rate and depending on when overtime is worked):

Table 7—Overtime rates

Column 1 For overtime worked on	Column 2 Overtime rate (% of minimum hourly rate)
Monday to Friday—first 2 hours	150
Monday to Friday—after 2 hours	200
Saturday—first 2 hours	175
Saturday—after 2 hours	200
Sunday—all time worked	200
Rostered day off – all time worked	200

NOTE 1: See clause 24.1 for work performed on a public holiday.

1. The Applicant was invited to provide undertakings to address these concerns.

Meal breaks

1. The Commission raised the concern that the Agreement appears to be silent on an employee’s entitlements when an employer does not allow an employee to take an unpaid meal break and, as a result, employees who would be entitled to unpaid meal breaks under the Award are not better off overall.  Clause 16.5 of the Award provides that, if an employer does not allow the employee to take an unpaid meal break at the rostered time (or at the time agreed under clause 16.4), then the employer must pay the employee 50% of the employee’s ordinary hourly rate extra from when the meal break was due to be taken until either the employee is allowed to take the break or the shift ends.

1. In particular, clause 16.6 of the Award provides that, if the employer does not allow the employee to take an unpaid meal break and there is no rostered time for the break, then the employer must pay the employee 50% of the employee’s ordinary hourly rate extra:

(a)unless an agreement under clause 16.4 applies, from the end of 6 hours after starting work until either the employee is allowed to take the break or the shift ends; or

(b)if an agreement under clause 16.4 applies, from the end of 6.5 hours after starting work until either the employee is allowed to take the break or the shift ends.

1. In response, the Applicant submitted that an agreement previously approved in 2013 was also silent on this issue, but notwithstanding this, the employer does comply with the requirements of clauses 16.5 and 16.6 of the Award. Noting that the Applicant observes that it complies with clauses 16.5 and 16.6 of the Award in practice, the Commission invited undertakings to this effect.

Public holiday penalty rates

1. Clause 15 of the Agreement provides that Permanent Employees performing work on a public holiday will be paid 171% of their ordinary rate of pay and Casual Employees will be paid 149% of their ordinary rate of pay. However, clause 24.2 of the Award provides a 225% public holiday penalty for permanent employees and a 250% public holiday penalty for casual employees (inclusive of casual loading).

1. As a result, permanent and casual employees who work on public holidays are not better off overall. The Applicant submitted that the public holiday penalty rates percentages are in line with an agreement previously approved in 2013 and it was on that basis that those percentages were maintained in the Agreement.

1. Had the remaining better off overall concerns in the Agreement (as identified above) been resolved, the higher rates of pay would likely be enough to compensate for the difference in entitlements in relation to part-time and full-time employees as it will likely be the case that the shortfall will be amortised across the non-public holiday hours across a period. However, a concern remains in relation to casual employees as this is a different type of engagement and casual employees may be rostered in a way that means that they are not better off overall in comparison to what they would have been paid under the Award and, due to the sporadic nature of their engagement, reliance cannot be placed on this deficit being amortised across the balance of their paid hours.

1. The Applicant was invited to provide undertakings to address this concern.

Meal allowances

1. Clause 21.2(a) of the Award states that an employer must supply an employee with a meal, or pay an employee a meal allowance of $13.95, if the employee is required to work overtime for more than 2 hours without being notified of that requirement on or before the previous day. Clause 11.1 of the Agreement provides that employees will be entitled to one free drink and a 50% discount on the retail price of one meal for each shift worked, but otherwise the Agreement does not appear to provide a meal allowance.

1. The Commission noted that, as a result, employees who are required to work more than 2 hours of overtime without notice may not be better off overall.

1. The Applicant submits that drinks sold are in excess of $4 and all meals are an average cost of $20. Therefore, the Applicant submits that the one free drink and 50% discount on the retail price of one meal for each shift worked equates to a value of more than $14.

1. Had the remaining better off overall concerns in the Agreement (as identified above) been resolved, it is likely that the higher rates of pay may be enough to compensate for the difference in entitlements. However, while the other better off overall concerns remain unaddressed, this further difference in Award and Agreement entitlements means that employees are not better off overall under the Agreement.

Conclusion

1. The Applicant was invited to provide responses to the above concerns, including the provision of any undertakings, by 20 July 2022. The Applicant did not provide a response. The Commission sent a follow up email on 26 July 2022, requesting a response by 28 July 2022. The Applicant did not provide a response. The Commission sent a further follow up email on 3 August 2022, directing the Applicant to provide a response by 5 August 2022 and noting that, if the Applicant did not comply with this direction, the Commission would determine the application based on the materials before it, which may mean the application would be dismissed if the Commission cannot be satisfied that the Agreement passes the better off overall test.

1. The Applicant has not responded to the Commission’s residual concerns regarding the better off overall test as set out above and, based on the material before me, I am not satisfied that the Agreement passes the better off overall test. There are no exceptional circumstances that arise in relation to the application that would otherwise enable me to approve the Agreement pursuant to s.189(2) of the Act.

1. As I am not satisfied that the Agreement passes the better off overall test, I am not satisfied that the requirements in s.186 of the Act have been met. The application is dismissed.

COMMISSIONER

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