Barlina Pty Ltd T/A Cagemaker
[2014] FWC 8887
•10 DECEMBER 2014
| [2014] FWC 8887 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
Barlina Pty Ltd T/A Cagemaker
(AG2014/9706)
Manufacturing and associated industries | |
COMMISSIONER RYAN | MELBOURNE, 10 DECEMBER 2014 |
Application for approval of the Cagemaker Enterprise Agreement 2014.
[1] An application for approval of the Cagemeker Enterprise Agreement 2014 was filed with the FWC on 29 October 2014 by Barlina Pty Ltd T/A Cagemaker.
[2] On 27 November 2014 the FWC issued a statement [2014] FWC 8546 in which the Commission identified a number of concerns it had with the Agreement. The applicant was given an opportunity to make submissions to the Commission on the issues raised. On 3 December 2014 the Australian Industry Group filed with the Commission a submission and a letter from the applicant which offered a number of undertakings to the Commission in relation to the Agreement.
[3] The issues raised by the Commission in its statement of 27 November 2014 fell into three distinct groups. The first concerned the application of the Better Off Overall Test (BOOT), the second asked whether the Agreement could be approved if certain clauses were retained and the third asked for further explanation from the applicant.
BOOT Issues
[4] The following issues raised by the Commission all concern the application of the BOOT and the applicant’s submissions and undertakings are included.
Policies and procedures
[5] The Commission identified the issue as follows:
“[2] A number of clauses of the Agreement (6.1, 6.12, 6.13.1, 6.14 and 7.8(b)) require an employee to comply with procedures, policies, site rules, codes of conduct and management systems. In each instance non compliance with a policy, procedure, site rule, etc would mean that an employee has breached a term of the Agreement and therefore the employee could be subject to civil penalty proceedings before a court. Given that an employee covered by a modern award could not be subject to civil penalty proceedings for breach of company policies, procedures, etc the operation of the several clauses of the Agreement raises significant issues in relation to the Better Off Overall Test (BOOT).
[3] The employer may wish to consider giving an undertaking in relation to each clause that non compliance with the relevant policy procedure etc does not constitute non compliance with a term of the Agreement. Such an undertaking would allow the employer to deal with non compliance with policies, procedures etc under usual disciplinary practices but without subjecting employees to civil penalty proceedings before a court.”
[6] The employer offered the following undertaking to the Commission:
“Policies and Procedures
1. In respect of clauses 6.1, 6.12, 6.13.1, 6.14 and 7.8(b) of the Agreement, (which deal with employee compliance with policies, procedures, rules, codes of conduct and management systems), the non-compliance of an employee with a policy, procedure, rule, code of conduct or management system referenced by those clauses will not constitute non-compliance with a term of the Agreement.”
Consideration
[7] The undertaking offered by the employer addresses the concern of the Commission.
Part-time employment
[8] The Commission identified the issue as follows:
“[5] Clause 6.5 provides for part time employment as follows:
“6.5 Part-time Employment
A part-time Employee is an Employee engaged to work on a part-time basis. The hours of a part-time Employee shall be less than an average of 38 ordinary hours per week.
A part-time Employee’s rate of pay shall be calculated by dividing the weekly rate by 38.
Part-time Employees may be required to work reasonable additional hours in excess of their rostered hours and/or in excess of 38 ordinary hours. Part-time Employees shall accrue a pro-rata entitlement to personal/carer’s leave, annual leave and long service leave.
A part-time Employee shall be entitled to the payment of the ordinary hours of work, in accordance with the Agreements on a proportional basis.
The ordinary working hours of a part-time Employee may be changed by the Employer.”
[6] Clause 8.2 also deals with part time employment and is as follows:
“8.2 Varying start and finish time
Each Employee will be advised what their usual start and finish times are to be as required by the project. Full-time and part-time Employees will be advised upon commencement of their start and finish times, casuals will be advised from time-to-time when they are required to attend for work. Starting times of all Employees may vary to suit the operational requirements of the business.
The Employer may, to suit the needs of the business, alter start and finish times. If necessary this may result in staggered start and finish times whereby some Employees may fall outside of the ordinary roster times as noted above.” (emphasis added)
[7] The provisions of clause 6.5 and 8.2 are significantly less beneficial to employees than the provisions of clause 13 of the Manufacturing and Associated Industries and Occupations Award 2010 (the Award) which provides as follows:
“13. Part-time employment
13.1 An employee may be engaged to work on a part-time basis involving a regular pattern of hours which average less than 38 ordinary hours per week.
13.2 A part-time employee must be engaged for a minimum of three consecutive hours a shift. In order to meet their personal circumstances, a part-time employee may request and the employer may agree to an engagement for less than the minimum of three hours.
13.3 Before commencing part-time employment, the employee and employer must agree in writing:
(a) on the hours to be worked by the employee, the days on which they will be worked and the commencing and finishing times for the work; and
(b) on the classification applying to the work to be performed in accordance with Schedule B.
13.4 The terms of the agreement in clause 13.3 may be varied by consent in writing.
13.5 The agreement under clause 13.3 or any variation to it under clause 13.4 must be retained by the employer and a copy of the agreement and any variation to it must be provided to the employee by the employer.
13.6 Except as otherwise provided in this award, a part-time employee must be paid for the hours agreed on in accordance with clauses 13.3 and 13.4.
13.7 The terms of this award will apply pro rata to part-time employees on the basis that ordinary weekly hours for full-time employees are 38.
13.8 A part-time employee who is required by the employer to work in excess of the hours agreed under clauses 13.3 and 13.4 must be paid overtime in accordance with clause 40—Overtime.
13.9 Public holidays
(a) Where the part-time employee’s normal paid hours fall on a public holiday prescribed in the NES and work is not performed by the employee, such employee must not lose pay for the day.
(b) Where the part-time employee works on the public holiday, the part-time employee must be paid in accordance with clauses 32.4(e), 36.2(f), 37.5 and 40.9.”
[8] How does the employer contend that the Agreement passes the BOOT in relation to part time employees?”
[1] The employer offered the following undertaking to the Commission:
“Part-Time Employees
3. In respect of clause 6.5 of the Agreement, (which deals with part-time employment), the following sentences should be added to the clause:
“Part-time employees will be engaged for a minimum of three (3} consecutive hours a shift. In order to meet their personal circumstances, a part-time Employee may request and the Employer may agree to an engagement for less than the minimum of three {3} hours”; and
“Before commencing part-time employment, the Employer and Employee must agree in writing:
(a) on the hours to be worked by the Employee, the days on which they will be worked and the commencing and finishing times for the work; and
(b) on the classification applying to the work to be performed.
The hours of work of a part-time Employee may be varied by consent in writing. Any such variation to the hours of work will be retained by the Employer and a copy provided to the Employee”; and
“A part-time Employee who is required by the Employer to work in excess of the agreed ordinary hours of work will be paid overtime in accordance with clause 8.5”.
Consideration
[2] The undertaking offered by the employer addresses the concern of the Commission.
Casual employment
[3] The Commission identified the issue as follows:
“[9]Clause 6.6 provides for casual employment and is as follows:
“6.6 Casual Employment
A casual Employee is an Employee engaged and paid on an hourly basis and their rate of pay shall be paid prescribed by this Agreement. The rate of pay shall be the ordinary rate of pay prescribed plus a loading of 25 per cent.
The Casual Rate will compensate for all leave, notice of termination, redundancy and any other employment entitlements that do not apply to casual Employees. Casual Employees are engaged on an hour by hour basis with no expectation of ongoing work.”
[10]The provisions of clause 6.6 are significantly less beneficial to casual employees than the provisions of clause 14 of the Award which provides as follows:
“14. Casual employment
14.1 A casual employee is one engaged and paid as such. A casual employee for working ordinary time must be paid an hourly rate calculated on the basis of one thirty-eighth of the minimum weekly wage prescribed in clause 24.1(a) for the work being performed plus a casual loading of 25%. The loading constitutes part of the casual employee’s all purpose rate.
14.2 On each occasion a casual employee is required to attend work the employee must be paid for a minimum of four hours work. In order to meet their personal circumstances a casual employee may request and the employer may agree to an engagement for less than the minimum of four hours.
14.3 An employer when engaging a casual must inform the employee that they are employed as a casual, stating by whom the employee is employed, the classification level and rate of pay and the likely number of hours required.
14.4 Casual conversion to full-time or part-time employment
(a) A casual employee, other than an irregular casual employee, who has been engaged by a particular employer for a sequence of periods of employment under this award during a period of six months, thereafter has the right to elect to have their contract of employment converted to full-time or part-time employment if the employment is to continue beyond the conversion process.
(b) Every employer of such an employee must give the employee notice in writing of the provisions of clause 14.4 within four weeks of the employee having attained such period of six months. The employee retains their right of election under clause 14.4 if the employer fails to comply with clause 14.4(b).
(c) Any such casual employee who does not within four weeks of receiving written notice elect to convert their contract of employment to full-time or parttime employment is deemed to have elected against any such conversion.
(d) Any casual employee who has a right to elect under clause 14.4(a), on receiving notice under clause 14.4(b) or after the expiry of the time for giving such notice, may give four weeks notice in writing to the employer that they seek to elect to convert their contract of employment to full-time or part-time employment, and within four weeks of receiving such notice the employer must consent to or refuse the election but must not unreasonably so refuse.
(e) Once a casual employee has elected to become and been converted to a fulltime or part-time employee, the employee may only revert to casual employment by written agreement with the employer.
(f) If a casual employee has elected to have their contract of employment converted to full-time or part-time employment in accordance with discuss and agree on:
(i) which form of employment the employee will convert to, being fulltime or part-time; and
(ii) if it is agreed that the employee will become a part-time employee, the number of hours and the pattern of hours that will be worked, as set out in clause 13—Part-time employment.
(g) An employee who has worked on a full-time basis throughout the period of casual employment has the right to elect to convert their contract of employment to full-time employment and an employee who has worked on a part-time basis during the period of casual employment has the right to elect to convert their contract of employment to part-time employment, on the basis of the same number of hours and times of work as previously worked, unless other arrangements are agreed on between the employer and employee.
(h) Following such agreement being reached, the employee converts to fulltime or part-time employment.
(i) Where, in accordance with clause 14.4(d) an employer refuses an election to convert, the reasons for doing so must be fully stated to and discussed with the employee concerned and a genuine attempt made to reach agreement.
(j) Subject to clause 8.3, by agreement between the employer and the majority of the employees in the relevant workplace or a section or sections of it, or with the casual employee concerned, the employer may apply clause 14.4(a) as if the reference to six months is a reference to 12 months, but only in respect of a currently engaged individual employee or group of employees. Any such agreement reached must be kept by the employer as a time and wages record.
Any such agreement reached with an individual employee may only be reached within the two months prior to the period of six months referred to in clause 14.4(a).
(k) For the purposes of clause 14.4, an irregular casual employee is one who has been engaged to perform work on an occasional or non-systematic or irregular basis.
14.5 An employee must not be engaged and re-engaged to avoid any obligation under this award.”
[11]Whilst the Agreement provides a higher wage rate to casual employees than does the Award the Agreement contains no minimum engagement nor does it permit conversion to permanent employment.
...
[14]How does the employer contend that the Agreement passes the BOOT in relation to casual employees?”
[4] The employer offered the following undertaking to the Commission:
“Casual Employees
5. In respect of clause 6.6 of the Agreement, (which deals with casual employment), the following sentence will be added to the clause:
“On each occasion a casual Employee is required to attend work, the Employee will be paid for a minimum of four (4) hours work. In order to meet their personal circumstances, a casual Employee may request and the Employer may agree to an engagement for less than the minimum of four (4) hours”.
6. Further, in respect of clause 6.6 of the Agreement, clause 14.4 of the Manufacturing and Associated Industries and Occupations Award 2010, (which deals with the right to elect casual conversion full-time or part-time employment), is taken to be a term of the Agreement.”
Consideration
[5] The undertaking offered by the employer addresses the concern of the Commission.
Fixed term employment
[6] The Commission identified the issue as follows:
“[15]Clause 6.7 provides for Fixed Term Employment but the structure of the clause appears to provide a single hourly rate for a fixed term employee regardless of when the work is performed. In other words the clause appears to deny a fixed term employee penalty rates and loadings and overtime. This is a significant BOOT issue. How does the employer contend that the Agreement passes the BOOT?”
[7] The employer offered the following undertaking to the Commission:
“Fixed Term Employees
7. In respect of clause 6.7 of the Agreement, fixed-term employees are entitled to all employment entitlements contained elsewhere in the Agreement;”
Consideration
[8] The undertaking offered by the employer addresses the concern of the Commission.
Summary Dismissal
[9] The Commission identified the issue as follows:
“[16] Clause 6.10.2 deals with Summary Dismissal and provides a list of conduct that is included in the concept of serious misconduct. Most of the included conduct would fall within the meaning of serious misconduct as defined in Reg. 1.07. However, one of the specific inclusions, namely, “Practical jokes or acts of horseplay” would not necessarily be serious misconduct.”
[17] To the extent that the Agreement purports to include as serious misconduct all “Practical jokes or acts of horseplay” the Agreement misrepresents the rights and obligations of both the employer and the employee. How does the employer contend that the Agreement passes the BOOT?
[10] The employer offered the following undertaking to the Commission:
“Summary Dismissal
8. Whilst the Agreement is in operation, the ninth bullet point of the clause, (“practical jokes or acts of horseplay”), will be taken as having been deleted from the Agreement.”
Consideration
[11] The undertaking offered by the employer addresses the concern of the Commission.
Hours of work
[12] The Commission identified the first issue in relation to hours of work as follows:
“[25] The title to clause 8 of the Agreement is “Hours of work, Shiftwork, Weekend work and Overtime” yet there are no specific shiftwork provisions within clause 8. It is not clear whether the Agreement is intended to permit shiftwork and if so, what conditions will apply to shiftwork.
[13] The employer offered the following undertaking to the Commission:
“Hours of Work
13. In respect of clause 8 of the Agreement, the words “shiftwork” should be deleted from the heading, so that the heading reads: “Hours of Work, Weekend Work and Overtime”.”
Consideration
[14] The undertaking offered by the employer addresses the concern of the Commission.
[15] The Commission identified the second issue in relation to hours of work as follows:
“[26] Clause 8.1 and 8.2 deal with the hours of work. Clause 8.2 which has been set out earlier in this statement permits the employer, without notice, to unilaterally alter the start and finish times of employees including setting start and finish times which are outside the span of ordinary hours otherwise set by clause 8.1. This raises a significant BOOT issue in relation to all employees. How does the employer contend that the Agreement passes the BOOT?
[16] The employer offered the following undertaking to the Commission:
“4. In respect of clause 8.2 of the Agreement, (which deals with varying start and finish times of Employees), the following words will be added to the end of the third and fourth sentences: “subject to mutual agreement between the Employer and the Employee concerned”, so that the sentences read:
“Starting times of all Employees may vary to suit the operational requirements of the business, subject to mutual agreement between the Employer and the Employee concerned. The Employer may, to suit the needs of the business, alter start finish times, subject to mutual agreement between the Employer and the Employee concerned”.
Consideration
[17] The undertaking offered by the employer addresses the concern of the Commission.
Call backs
[18] The Commission identified the issue as follows:
“[27]Clause 8.3 is a Call Back provision and is as follows:
“8.3 Call Back
An Employee recalled to work overtime after leaving the Employer’s enterprise is to be paid at the rate of time and one half for the first three hours and double time thereafter four the hours performed on a call back. There are a number of conditions which apply to this provision:
• =
This subclause does not apply where it is customary for an Employee to return to perform a specific job outside the Employee’s ordinary working hours or where the overtime is continuous with ordinary working time.
Time worked as part of this subclause is not to be regarded as overtime for the purpose of a rest period after overtime, where the actual time worked is less than three (3) hours on the call back or on each call back.”
[28]Whilst the first paragraph of clause 8.3 indicates that “there are a number of conditions which apply to this provision”, no such conditions have been included.
[29]The language of the first paragraph of clause 8.3 raises a number of issues.
[30]How can the Commission consider clause 8.3 in the context of the BOOT when it appears that relevant information is missing?”
[19] The employer offered the following undertaking to the Commission:
“Call Backs
14. Whilst the Agreement is in operation, the sentence: “There are a number of conditions which apply to this provision:
• =”
will be taken as having been deleted from the Agreement.”
Consideration
[20] The undertaking offered by the employer addresses the concern of the Commission.
Overtime
[21] The Commission identified the issue as follows:
“[34]Clause 8.5 deals with Overtime. The clause provides a lesser entitlement for employees than does clause 40 of the Award. In particular the Agreement does not provide for a minimum payment for overtime on Saturday. This raises a BOOT issue. How does the employer contend that the Agreement passes the BOOT?
[35]Clause 8.6 of the Agreement provides for a rest period between shifts. Whilst the clause provides a general entitlement to a 10 hour break between periods of work the clause specifically permits the employer to approve a lesser period. However, clause 8.6 does not have the protections provided for by clause 40.4 of the Award. This is a BOOT issue. How does the employer contend that the Agreement passes the BOOT?
[22] The employer offered the following undertaking to the Commission:
“Overtime
16. In respect of the second paragraph of clause 8.5 of the Agreement, (which deals with overtime), the following sentences should be added to the paragraph:
“An Employee required to work overtime on a Saturday will be afforded at least four (4) hours work or be paid for four (4) hours at the appropriate overtime rate. An employee required to work overtime on a Sunday will be afforded at least three (3) hours work or be paid for three (3) hours at the appropriate overtime rate”.
17. In respect of the clause 8.6 of the Agreement, (which deals with rest periods), the following paragraphs should be added to the clause:
“Where an Employee, (other than a casual Employee), has not had at least ten (10) consecutive hours rest period, the Employee will be released from work until the Employee has had ten (10) consecutive hours off work without loss of pay for ordinary hours occurring during the absence. If, on the instructions of the Employer, the Employee resumes or continues work without having had ten (10) consecutive hours off duty, the Employee will be paid at the rate of double time until the Employee is released from duty for such period. The Employee is then entitled to ten (10) consecutive hours off duty without loss of pay for ordinary hours occurring during such absence”.”
Consideration
[23] The undertaking offered by the employer addresses the concern of the Commission.
Leave
[24] The Commission identified the issue as follows:
“[36] Clause 9.2 deals with Annual Leave and provides, inter alia, as follows:
“Annual leave is exclusive of all penalty rates, overtime rates, allowances and other amount that may be paid in additional to the Employee’s ordinary time rate of pay.”
[37] This would appear to be a lesser entitlement than provided for by clause 41.4 of the Award which is as follows:
“41.4 Payment for period of annual leave
(a) Instead of the base rate of pay as referred to in s.90(1) of the Act, an employee under this award, before going on annual leave, must be paid the wages they would have received in respect of the ordinary hours the employee would have worked had the employee not been on leave during the relevant period.
(b) Subject to clause 41.4(c), the wages to be paid must be worked out on the basis of what the employee would have been paid under this award for working ordinary hours during the period of annual leave, including allowances, loadings and penalties paid for all purposes of the award, first aid allowance and any other wages payable under the employee’s contract of employment including any overaward payment.
(c) The employee is not entitled to payments in respect of overtime, special rates or any other payment which might have been payable to the employee as a reimbursement for expenses incurred.”
[38] This raises a BOOT issue. How does the employer contend that the Agreement passes the BOOT?”
[25] The employer offered the following undertaking to the Commission:
“Annual Leave
18. In respect of the fifth paragraph of clause 9.2 of the Agreement, (which deals with annual leave), the fifth paragraph will be taken as having been deleted from the Agreement, and the Employee, for a period of annual leave, will be paid any wages, allowances, loadings or penalties payable under the Agreement for working ordinary hours during the period of annual leave along with any other wages payable under the employee’s contract of employment including any overaward payment.”
Consideration
[26] The undertaking offered by the employer addresses the concern of the Commission.
Wages
[27] The Commission identified the issue as follows:
“[52] Appendix B to the Agreement contains the wage rates for employees covered by the Agreement. Appendix 2 provides separate wage rates for “Cagemaker’s” and “Workshop/Fabrication Classifications”. The wage rates for Cagemaker’s are above the award rate. However the wage rates for “Workshop/Fabrication Classifications” are only equal to the current award rate.
[53] How does the employer contend that the Agreement passes the BOOT for “Workshop/Fabrication Classifications”.
[28] The employer offered the following undertaking to the Commission:
“Wages
25. In respect of the wage rates for Workshop I Fabrication classifications contained in Appendix B of the Agreement, the hourly wage rates should be amended so they are increased by 5 cents an hour so that the wage rate should be:
Wage Group | Weekly | Permanent P/Hour | Casual Per Hour |
Level C13 | $661.20 | $17.40 | $21.74 |
Level C12 | $686.66 | $18.07 | $22.57 |
Level C11 | $710.22 | $18.69 | $23.35 |
Level C10 | $748.22 | $19.69 | $24.50 |
Consideration
[29] The undertaking offered by the employer has the effect of creating wage rates which are only 5 cents per hour more than the Award rates. The undertaking would mean that Workshop/Fabrication employees will receive $1.90 per week more than the Award when working 38 ordinary hours without penalties or loadings.
[30] It is quite possible for an enterprise agreement to pass the BOOT even when the enterprise agreement is only paying 5 cents per hour more than the Award rate.
[31] The BOOT is dealt with by s.193 of the Act which is as follows:
“193 Passing the better off overall test
When a non-greenfields agreement passes the better off overall test
(1) 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.
FWC must disregard individual flexibility arrangement
(2) If, under the flexibility term in the relevant modern award, an individual flexibility arrangement has been agreed to by an award covered employee and his or her employer, the FWC must disregard the individual flexibility arrangement for the purposes of determining whether the agreement passes the better off overall test.
When a greenfields agreement passes the better off overall test
(3) A greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that 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.
Award covered employee
(4) An award covered employee for an enterprise agreement is an employee who:
(a) is covered by the agreement; and
(b) at the test time, is covered by a modern award (the relevant modern award) that:
(i) is in operation; and
(ii) covers the employee in relation to the work that he or she is to perform under the agreement; and
(iii) covers his or her employer.
Prospective award covered employee
(5) A prospective award covered employee for an enterprise agreement is a person who, if he or she were an employee at the test time of an employer covered by the agreement:
(a) would be covered by the agreement; and
(b) would be covered by a modern award (the relevant modern award) that:
(i) is in operation; and
(ii) would cover the person in relation to the work that he or she would perform under the agreement; and
(iii) covers the employer.
Test time
(6) The test time is the time the application for approval of the agreement by the FWC was made under section 185.
FWC may assume employee better off overall in certain circumstances
(7) For the purposes of determining whether an enterprise agreement passes the better off overall test, if a class of employees to which a particular employee belongs would be better off if the agreement applied to that class than if the relevant modern award applied to that class, the FWC is entitled to assume, in the absence of evidence to the contrary, that the employee would be better off overall if the agreement applied to the employee.”
[32] The Agreement does not incorporate any clauses of the Award (although some of the undertakings have the effect of incorporating specific Award terms into the Agreement).
[33] I have considered the position of that class of employees who are full time adult employees not employed under an apprenticeship or traineeship and who are employed in any of the Workshop/Fabrication Classifications of C13 to C10
[34] Remuneration of an employee in this class, if employed under the Award, is a combination of the base rate of pay of the employee as provided for by clause 24 of the Award and any loadings provided for by clause 36 of the Award and any allowances or special rates as provided for by clause 32 of the Award and any overtime as provided for by clause 40 of the Award.
[35] Remuneration of an employee in this class, if employed under the Agreement, is a combination of the base rate of pay of the employee as provided for by Appendix B of the Agreement, as altered by the undertaking offered by the employer, and any loadings provided for by clause 8 of the Agreement, as altered by the undertaking offered by the employer and any overtime as provided for by clause 8.5 of the Agreement, as altered by the undertaking offered by the employer.
[36] What is clearly missing in the Agreement is the provision of any allowances or special rates as provided for by clause 32 of the Award. There are many of the allowances and special rates provided for in clause 32 of the Award which it would appear have no relationship to the work performed by the Workshop/Fabrication employees of the employer. However, there is a very real possibility that a number of the allowances and special rates provided for in clause 32 of the Award would be directly relevant to work performed by Workshop/Fabrication employees of the employer.
[37] The Commission cannot be satisfied that for the princely sum of 5 cents per hour or $1.90 per week that a Workshop/Fabrication employee of the employer would be better off overall if employed under the terms of the Agreement without the possibility of receiving allowances or special rates as against being employed under the Award, and not receiving the princely sum of 5 cents per hour or $1.90 per week but being entitled to be paid for any allowance and special rates provided for in clause 32 of the Award.
Non BOOT issues
Prospective employees
[38] The Commission identified the issue as follows:
“[4]The fourth paragraph of clause 6.1 and 6.15(i) both relate to prospective employees. An enterprise agreement can deal with matters pertaining to the relationship between an employer and the employer’s employees. However an enterprise agreement cannot contain provisions which deal with pre-employment issues such as medical checks by prospective employees as such matter do not pertain to the employer/employee relationship. How does the employer contend that clauses 6.1 and 6.15(i) are permitted in an enterprise agreement?”
[39] The employer offered the following undertaking to the Commission:
“Prospective Employees
2. Whilst the Agreement is in operation, the fourth paragraph of clause 6.1 and clause 6.15(i) will be treated as having been deleted from the Agreement.”
Consideration
[40] The Agreement contains two provisions which relate to prospective employees.
[41] Clause 6.1 contains the following provision:
“All prospective Employees shall be required to complete the Employer’s pre-employment application form and undertake the Employer’s Safety Induction Program. Employees may also be required to undertake a pre-placement medical examination.”
[42] Clause 6.15 relevantly provides as follows:
“6.15 Medical Examinations
To ensure that the Employer provides a safe working environment for all employees, the Employer:
(i) may require prospective Employees to undertake a medical examination by a qualified and practising medical practitioner prior to the Employer offering employment;
[43] As each of the above two provisions relate to prospective employees it gives rise to two questions: Firstly, are the provisions permitted matters and secondly, can the Agreement be approved if it contains terms which are not permitted matters.
[44] Section 172(1) provides that an enterprise agreement can be made about certain matters. The subsection is as follows:
“172 Making an enterprise agreement
Enterprise agreements may be made about permitted matters
(1) An agreement (an enterprise agreement) that is about one or more of the following matters (the permitted matters) may be made in accordance with this Part:
(a) matters pertaining to the relationship between an employer that will be covered by the agreement and that employer’s employees who will be covered by the agreement;
(b) matters pertaining to the relationship between the employer or employers, and the employee organisation or employee organisations, that will be covered by the agreement;
(c) deductions from wages for any purpose authorised by an employee who will be covered by the agreement;
(d) how the agreement will operate.
Note 1: For when an enterprise agreement covers an employer, employee or employee organisation, see section 53.
Note 2: An employee organisation that was a bargaining representative for a proposed enterprise agreement will be covered by the agreement if the organisation notifies the FWC under section 183 that it wants to be covered.”
[45] The question as to whether an enterprise agreement made under the Fair Work Act can contain non permitted matters has been considered by at least two members of the Commission.
[46] Roe C in Monash Student Association (Clayton) Inc Enterprise Agreement 2010 [2011] FWAA 624 said:
“[3] Clause 2.10.2 provides that “Should the employer propose to contract out work it shall obtain the consent of the union prior to a contract being entered into. Such consent shall not be unreasonably withheld.”
[4] A requirement to consult about contracting out is clearly a permitted matter. However, a court might find that Clause 2.10.2 constitutes an effective veto or prohibition. The High Court has found that a provision which has that effect is not a matter pertaining and the Full Bench of this Tribunal has also reaffirmed this approach in the context of the Fair Work Act 2009. I am however satisfied that save for this one matter about which there is doubt the agreement is about permitted matters and hence it can be regarded as “an enterprise agreement” within the meaning of Section 172 of the Act. This is because Section 253 of the Act provides that:
“253 Terms of an enterprise agreement that are of no effect
(1) A term of an enterprise agreement has no effect to the extent that:
(a) it is not a term about a permitted matter; or
(b) it is an unlawful term; or
(c) it is a designated outworker term.
Note 1: A term of an enterprise agreement has no effect to the extent that it contravenes section 55 (see section 56).
Note 2: A term of an enterprise agreement permitting or requiring deductions or payments to be made has no effect if it benefits the employer and is unreasonable in the circumstances (see section 326).
(2) However, if an enterprise agreement includes a term that has no effect because of subsection (1), or section 56 or 326, the inclusion of the term does not prevent the agreement from being an enterprise agreement.
[5] It is clear that the inclusion of Clause 2.10.2 does not prevent this agreement from being an enterprise agreement.
[6] The Act makes it clear that I cannot approve an agreement or that I may seek undertakings prior to approving or rejecting an agreement where there are issues in respect to conflict with the NES (Section 55 and 56), or where there are unlawful terms or where certain required clauses are not present. However, the Act does not require me to be satisfied that all terms in the agreement are about permitted matters prior to approving an agreement. No one has made any submissions to me that in fact Sections 186 and 187 read in conjunction with Section 253(2) do not permit me to refuse to approve an agreement because it might contain matters which are not permitted matters. Section 190 allows me to seek undertakings where I have a concern that the agreement does not meet the requirements set out in Section 186 and 187 and hence there is also no requirement to seek undertakings in respect to this matter.”
[47] More recently SDP Richards in Mirvac Hamilton Park South (Reedy Creek) Project Union Greenfields Agreement [2013] FWC 912 said:
“[22] In all, other than in respect of forklift drivers, clause 23 may have no operation as a term of the Agreement because arguably it is not a permitted matter as it does not pertain to the relationship between an employer that will be covered by the Agreement and that employer’s employees who will be covered by the agreement.
[23] Notwithstanding, I have not pursued this issue to the point of making determinative findings as I might otherwise (for example, in respect of an issue arising for purposes of s.443 of the Act) as the Act does not ascribe to the existence of non-permitted terms any particular status for the approval process. Indeed the Explanatory Memorandum to the Act suggests the following is the intended effect of the Act:
...is not intended to that FWA will have to scrutinise each enterprise agreement to ensure that all its terms are about permitted matters as this would unduly delay the agreement approval process.
[24] I have been mindful of not delaying the approval process by instigating processes that would delay the approval of the Agreement before me.
[25] I note too, that s.253 of the Act provides as follows:
“253 Terms of an enterprise agreement that are of no effect
(1) A term of an enterprise agreement has no effect to the extent that:
(a) it is not a term about a permitted matter; or
(b) it is an unlawful term; or
(c) it is a designated outworker term.
[...]
(2) However, if an enterprise agreement includes a term that has no effect because of subsection (1), or section 56 or 326, the inclusion of the term does not prevent the agreement from being an enterprise agreement.”
[26] It follows that notwithstanding that whilst it is arguable that clause 23 of the agreement (other than in relation to persons engaged as forklift drivers) is not a term about a permitted matter (though the CFMEU begs to differ in its view), the inclusion of a term to that effect does not prevent the agreement from being an enterprise agreement. It further follows that the inclusion of the term does not invalidate the application nor cannot give the Commission reason to not approve the agreement, despite the term being of no effect. The Full Court of the Federal Court put it this way:
Section 253(1) and s 356 of the FW Act have the effect of preserving the overall bargain reached and approved by the employees. Insofar as the two may have both lawful and a potentially unlawful operation, those provisions limit the operation of the term only to that which is lawful. [references omitted]
[27]The matter, then, may ultimately be one for the parties to consider themselves as a matter of legal risk, when and if the clauses are acted upon.”
[48] The effect of the approach adopted by both SDP Richards and Roe C tends to diminish the need for the parties to an enterprise agreement to consider whether the terms are permitted matters and to downplay the necessity for the Commission to consider whether terms of an enterprise agreement are permitted matters.
[49] The Explanatory Memorandum to the Fair Work Bill 2008 (as relied on by SDP Richards) certainly contains the explanation at para 664 that:
“It is not intended that FWA will have to scrutinise each enterprise agreement to ensure that all of its terms are about permitted matters as this would unduly delay the agreement approval process.”
[50] However this statement needs to be read and considered in context. The Explanatory Memorandum contains the following explanation:
“Clause 172 – Making an enterprise agreement
660. This clause provides for the making of enterprise agreements. Enterprise agreements can be made about ‘permitted matters’ (subclause 172(1)). The permitted matters are:
● matters pertaining to the relationship between an employer or employers and employees (paragraph 172(1)(a));
● matters pertaining to the relationship between an employer or employers and an employee organisation or employee organisations (paragraph 172(1)(b));
● deductions from wages authorised by an employee (paragraph 172(1)(c)); or
● how the agreement will operate (paragraph 172(1)(d)).
661. In Electrolux Home Products Pty Limited v The Australian Workers‟ Union and others (2004) 221 CLR 309 the High Court found, when considering a provision similar to clause 172(1), that industrial action could not be taken in support of claims that could not be validly included in an agreement under the WR Act as in force at the time.
662. After the High Court’s decision, the AIRC carefully checked whether each term of an agreement pertained to the employment relationship in order to determine whether the application before it for certification of the agreement was valid.
663. To resolve any uncertainty following the High Court’s decision, the Parliament enacted the Workplace Relations Amendment (Agreement Validation) Act 2004 to ensure that agreements that contained non-pertaining terms were valid to the extent that they contained pertaining terms.
664. Clause 253 will have the effect that an agreement will still be valid even where it includes terms that are not about permitted matters. It is not intended that FWA will have to scrutinise each enterprise agreement to ensure that all its terms are about permitted matters as this would unduly delay the agreement approval process.
665. However, to the extent that a term of an enterprise agreement is not about permitted matters, the term will be of no effect.
666. It is intended that each substantive term of an enterprise agreement must be about one or more of the permitted matters in order for the agreement to be characterised as about permitted matters. This would not prevent an enterprise agreement from containing other, valid, terms where the term is ancillary or incidental to, or a machinery provision, relating to a permitted matter (Electrolux ibid. at [96]-[97], per McHugh J).
667. Whether an enterprise agreement is about permitted matters is also significant in the context of protected industrial action for the purpose of clause 409 (which deals with employee claim action). Employees and their bargaining representatives cannot organise or take protected industrial action in support of claims for a proposed enterprise agreement that will include terms that are not about permitted matters.
668. Paragraph 172(1)(a) refers to ‘matters pertaining to the relationship between an employer that will be covered by the agreement and that employer’s employees who will be covered by the agreement’, referred to after this as ‘matters pertaining to the employment relationship’.
669. The matters pertaining to the employment relationship formulation is of long standing. Under both the Industrial Relations Act 1988 and the WR Act prior to 27 March 2006, collective agreements had to be about matters pertaining to the employment relationship. Since 27 March 2006, a term of a workplace agreement that was not about such matters was ‘prohibited content’. Between 1904 and 2006, the formula was also used in the definition of ‘industrial dispute’ under successive Commonwealth industrial relations statutes.
670. Although the precise words used have changed from time to time, the courts have construed each manifestation of the formula in a similar way. There is substantial jurisprudence about what the phrase means. It is intended that paragraph 172(1)(a) should be read in line with that jurisprudence. The courts’ interpretation of the formulation has evolved over time in line with changing community understandings and expectations about the kinds of matters that pertain to the employment relationship, and it is expected that this approach will continue.
671. Whether a particular term is about matters pertaining to the employment relationship will depend on its precise construction, as well as the circumstances surrounding the particular employment relationship. Frequently, it will be obvious that a term pertains to the employment relationship – e.g., a term about the payment of wages or a term about hours of work and shift patterns. However, there are some terms where it is not so immediately clear whether the terms are about matters pertaining to the employment relationship (see, e.g., the discussion in Re Schefenacker Vision Systems Australia Pty Ltd, AWU, AMWU Certified Agreement 2004 [2004] AIRC 1064.”
[51] I adopt a slightly different approach to that adopted by Roe C and Richardson SDP.
Both the plain language of s.172(1) and the Explanatory Memorandum make clear that an enterprise agreement can only be made about ‘permitted matters’.
[52] Section 253 does not permit an enterprise agreement to be made about matters which are not ‘permitted matters’. Rather s.253 simply saves an enterprise agreement if it does contain a term or terms that are not ‘permitted matters’.
[53] The Explanatory Memorandum makes clear that the presence of s.253 means that “(i)t is not intended that FWA will have to scrutinise each enterprise agreement to ensure that all of its terms are about permitted matters as this would unduly delay the agreement approval process”. However, this cannot be taken to imply that the Commission does not need to or should not examine an enterprise agreement to ascertain whether it contains terms that are not about permitted matters. It is certainly possible and quite desirable for the Commission to carefully scrutinise each application for approval of an enterprise agreement without unduly delaying the approval process. Within that process the Commission should be scrutinising an enterprise agreement to see that it does not contain terms about non permitted matters.
[54] The tension between s.172(1) and s.253 is easily resolved by the Commission carefully considering the terms of an enterprise agreement (as it must do to comply with s.186(2)(c), (2)(d), (3), (4), (5), (6), and s.187(4), s.192, s.202 and s.205) without undertaking such a detailed scrutiny of each term of the enterprise agreement as would be required if the presence of a non permitted matter invalidated the enterprise agreement.
[55] The presence of s.253 cannot operate to prevent the Commission from refusing to approve an enterprise agreement on the basis that it contains terms which deal with non permitted matters. Where the Commission has concluded that an enterprise agreement contains non permitted matters it would be undesirable for the Commission to simply continue to deal with the application. S.172(1) continues to operate to require that an enterprise agreement must only deal with permitted matters and an enterprise agreement that deals with non permitted matters is an agreement that does not meet the requirements of s.172(1) and therefore should not be dealt with by the Commission.
[56] Statutory provisions which are specifically aimed at curing an otherwise invalid act do not and have never operated as a matter of policy and or purpose of encouraging or permitting invalidity to occur in the first place.
[57] In the present matter the Commission has identified two terms of the enterprise agreement which deal with matters which do pertain the employment relationship. The Agreement is therefore not an enterprise agreement for the purpose of s.172(1) and the application should be dismissed.
Withholding of monies
[58] The Commission identified the issue as follows:
“[18] Each of clause 6.3 and 6.10.1 provide that employees will forfeit an amount of pay to the employer if the employee fails to give the employer the required period of notice on termination. I refer the employer to the decision in Hydro Chem Pty Ltd, [2014] FWCA 5163. The employer may wish to argue that both provisions of the Agreement are permitted by the Act and should be retained in an approved agreement, and if so the employer should file submissions with the Commission within 7 days.
[19] Clause 7.5 provides that an employee will only be paid monies due to the employee on termination “subject to the return of Employer property upon termination of employment”. The Act does not permit an employer to withhold payment of wages simply because an employee has not returned the employer’s property. The two matters are very separate issues. Monies owed to the employee must, pursuant to s.323, be paid to the employee in full (subject to permitted deductions under s.324). If an employee has retained an employer’s property then the employer is entitled to take action in a court to recover that property. How does the employer contend that the Agreement can be approved with this provision?
[20] Clause 7.6 provides an entitlement for the employer to recover overpayment of wages. Section 324 permits an enterprise agreement to authorise a deduction from the wages of an employee. However, s.326 provides that a term of an enterprise agreement that permits the employer to make a deduction from the employee’s wages will be of no effect if the deduction is unreasonable in all the circumstances.
[21] How does the employer contend that clause 7.6 does not offend against s.326? How does the employer contend that the Agreement can be approved with this provision?”
[59] The employer offered the following undertaking to the Commission:
“Withholding of Monies
9. In respect of clauses 6.3 and 6.10.1 of the Agreement, (which deal with the Employer’s entitlement to withhold monies upon termination of employment should the employee notice provide notice), these clauses will only be applied where an Employee authorises the deduction.
10. In respect of clause 7.5 of the Agreement, (which deals with payment upon termination of employment), the words “Subject to the return of Employer property upon termination of employment” will be taken as having been deleted from the Agreement.
11. In respect of clause 7.6 of the Agreement, (which deal with overpayment of wages), this clause will only be applied where an employee authorises the deduction.”
Consideration
[60] The undertaking offered by the employer addresses the concern of the Commission.
Employee responsibility for costs associated with use of vehicle in performance of work
[61] The Commission identified the issue as follows:
“[22] Clause 7.8(e) provides that “the Employee will be responsible for the payment of any insurance excess incurred, or damage to the vehicle, and accept any traffic infringement penalties where the Employee is reasonably found by the Employer to be reckless, negligent or otherwise at fault.”
[23] Section 325(1) provides as follows:
“(1) An employer must not directly or indirectly require an employee to spend any part of an amount payable to the employee in relation to the performance of work if the requirement is unreasonable in the circumstances.”
[24] How does the employer contend that clause 7.8(e) does not offend against s.325?”
[62] The employer offered the following undertaking to the Commission:
“Employee Responsibility for Costs Associated with use of Vehicle in Performance of Work
12. In respect of clause 7.8 of the Agreement, (which deals with use of the Employer’s motor vehicles), the subclauses dealing with payment of traffic infringements, insurance costs and damages, (ie: subclauses (e) and (f)), will be taken as having been deleted from the Agreement.”
Consideration
[63] The undertaking offered by the employer addresses the concern of the Commission.
Overtime
[64] The Commission identified the issue as follows:
“[33] Clauses 6.4 and 8.5 both refer to employees working reasonable additional hours. Clause 6.4 provides that an employee “may be required to work reasonable additional hours” whilst clause 8.5 refers to overtime “when the employee is requested to work reasonable additional hours”. The Agreement does not contain any provision in relation to assessing whether a requirement or request to work additional hours is reasonable and the Agreement does not refer to the employee’s right under the NES to refuse to work additional hours where such refusal is reasonable. The language and structure of the Agreement suggests that employees do not have a right to reasonably refuse additional hours. The Agreement does not contain reference to an employee’s right to reasonably refuse additional hours as set out in s.62(3) and s.114(4) of the Act. The effect of the two abovementioned clauses would appear to be that the Agreement is effectively excluding an entitlement that would arise under the National Employment Standards contrary to the requirement of s.55(1) of the Act. If so then the Agreement cannot be approved because of the operation of s.186(2)(c) of the Act. How does the employer contend that the Agreement does not contain a term that contravenes s.55?
[65] The employer offered the following undertaking to the Commission:
“15. In respect of clause 8.5 of the Agreement, (which deals with overtime), the following paragraph is to be added to the clause:
“An Employee may refuse to work additional hours if they are unreasonable. In determining whether additional hours are reasonable or unreasonable the factors listed in section 62(3) of the Fair Work Act 2009 (Cth) will be taken into account:’.”
Consideration
[66] The undertaking offered by the employer addresses the concern of the Commission.
Personal/Carers Leave
[67] The Commission identified the first issue in relation to personal/carers leave as follows:
“[39] Clause 9.3 deals with Personal/Carers Leave and contains in both clause 9.3 and 9.3.1 an exhaustive definition of the term “immediate family” as follows:
“The term “immediate family” of an Employee means:
• a spouse, de facto partner, child, parent, grandparent, grandchild or sibling of the Employee; or
• a child, parent, grandparent, grandchild or sibling of a spouse or de facto partner of the Employee.”
[40] The exhaustive definition of the term “immediate family” in the Agreement is narrower than the concept of ‘immediate family’ as defined in s.12 of the Act. The effect of this would appear to be that the Agreement is effectively excluding an entitlement that would arise under the National Employment Standards contrary to the requirement of s.55(1) of the Act. If so then the Agreement cannot be approved because of the operation of s.186(2)(c) of the Act. How does the employer contend that the Agreement does not contain a term that contravenes s.55?”
[68] The employer did not provide an undertaking in relation to this issue but rather put the following submission to the Commission:
“With respect to your concerns regarding the definition of “immediate family” contained in clauses 9.3 and 9.3.1 of the Agreement, the definition of immediate family contained in the Agreement is identical to the definition of immediate family contained in section 12 of the Act.
On this basis, we fail to see how the term immediate family contained in the Agreement “is narrower than the concept of ‘immediate family’ as defined in s. 12 of the Act.”
Cagemaker would be willing to consider the provision of an undertaking to address any concerns you may have regarding this issue if further information can be provided as to why you are of the opinion that the definition of immediate family contained in the Agreement is narrower than the definition of immediate family contained in the Act.”
Consideration
[69] The Commission acknowledges the correctness of the submission of the employer that the definition of “immediate family” in the Agreement is identical to the definition of “immediate family” in s.12 of the Act.
[70] Copying the definition of “immediate family” from the Act and inserting it into an enterprise agreement as the exhaustive definition of “immediate family” is the cause of the problem.
[71] When the Act refers to “immediate family” in the several provisions of the National Employment Standards the totality of the relationships which comprise the concept of “immediate family” is to be understood by considering four specific definitions in the Act.
[72] The relevant definitions from s.12 are “immediate family”, “spouse”, “defacto partner” and the relevant definition from s17(1) is “child”.
[73] When an enterprise agreement such as in the present matter contains an exhaustive definition of “immediate family” which is defined solely in terms of the definition of “immediate family” appearing in s.12 of the Act the result is that the Agreement creates a list of relationships which is significantly smaller than what is comprehended by the term “immediate family” when used in the NES.
[74] The definition of immediate family in s.12 of the Act and in clauses 9.3 and 9.3.1 is expressed so that it is limited to specific relationships with the employee and specific relationships with the employee’s current spouse or defacto partner.
[75] However the concept of “immediate family” in the NES is comprised of specific relationships with the employee and specific relationships with the employee’s current spouse or defacto partner, and specific relationships with any of the employee’s former spouses or former defacto partners.
[76] The following example illustrates the practical outcome of the difference between the Agreement and the NES.
[77] Under the NES an employee could be entitled to carer’s leave in relation to a parent of a former spouse and would be entitled to compassionate leave in relation to a parent of a former spouse. However under the Agreement the employee would have no entitlements to either carer’s leave or compassionate leave in relation to a parent of a former spouse.
[78] The practical way in which this issue can be avoided is for an enterprise agreement to avoid defining “immediate family” or to define “immediate family” as:
immediate family means:
(a) a spouse (including a former spouse, a de facto partner and a former defacto partner), child, parent, grandparent, grandchild or sibling of the employee; or
(b) a child, parent, grandparent, grandchild or sibling of a spouse (including a former spouse, a de facto partner and a former defacto partner) of the employee.
[79] In the present matter the Commission has not sought an undertaking from the employer given the conclusion reached in relation to the application in this matter. Given the preparedness of the employer to offer undertakings to address concerns raised by the Commission I am of the view that had the employer been asked to provide an undertaking to address the concern of the Commission in relation to “immediate family” that the employer would have offered an appropriate undertaking.
[80] The Commission identified the second issue in relation to personal/carers leave as follows:
“[41] Clause 9.3 deals with Personal/Carers Leave and contains the following provision:
“The Employer reserves the right to require Employees to take an amount of personal leave if, in the opinion of the Employer, they are suffering from an illness or injury that precludes them from carrying out duties or assigned tasks as required.”
[42] Section 97 of the Act generally deals with the taking of paid personal/carers leave and nothing in s.97 would specifically permit the above provision of clause 9.3. S.55(4) permits an enterprise agreement to contain terms that are ancillary or incidental to the operation of an NES entitlement “but only to the extent that the effect of those terms is not detrimental to an employee in any respect, when compared to the NES”.
[43] How does the employer contend that the above provision of clause 9.3 is permitted to be in an enterprise agreement?
[81] The employer offered the following undertaking to the Commission:
“19. Whilst the Agreement is in operation, the paragraph of clause 9.3: “The Employer reserves the right to require Employees to take an amount of personal/eave if, in the opinion of the Employer, they are suffering from an illness or injury that precludes them from carrying out duties or assigned tasks as required” will be taken as having been deleted from the Agreement.
Consideration
[82] The undertaking offered by the employer addresses the concern of the Commission.
[83] The Commission identified the third issue in relation to personal/carers leave as follows:
“[44] Clause 9.3.2 deals with both notice and evidence requirements in relation to personal/carers leave. Part of clause 9.3.2 is as follows:
“Employees are required to give notice of absence from work due to personal illness or injury. The notice must be given prior to the start of the shift on the day of the absence or as reasonably practicable unless the circumstances are beyond the Employee’s control.”
[45] Section 107 of the Act deals with the notice and evidence requirements for personal/carers leave. Section 107(5) permits an enterprise agreement to contain “terms relating to the kind of evidence that an employee must provide in order to be entitled to paid personal/carers leave”. However, there is nothing in s.107 which permits an enterprise agreement to contain terms relating to the notice that an employee must give an employer. Section 55(4) permits an enterprise agreement to contain terms that are ancillary or incidental to the operation of an NES entitlement “but only to the extent that the effect of those terms is not detrimental to an employee in any respect, when compared to the NES”.
[46] How does the employer contend that the above provision of clause 9.3.2 is permitted to be in an enterprise agreement?”
[84] The employer offered the following undertaking to the Commission:
“20. In respect of the first paragraph of clause 9.3.2 of the Agreement, (which deals with notice of personal I carer’s leave), the words: “as soon as practicable, (which may be a time after the leave has started)” should be inserted after the first sentence and the words: “The notice must be given prior to the start of the shift of the day of the absence or as reasonably practicable unless the circumstances are beyond the Employee’s control” should be deleted, so that the first paragraph of clause 9.3.2 of the Agreement reads:
“Employees are required to give notice of absence from work due to personal illness or injury as soon as practicable, (which may be a time after the leave has started)”.”
Consideration
[85] The undertaking offered by the employer addresses the concern of the Commission.
Compassionate Leave
[86] The Commission identified the issue as follows:
“[47] Clause 9.5 deals with Compassionate Leave and describes the entitlement to compassionate leave as follows:
“An Employee, other than a casual Employee, is entitled to two (2) days paid leave upon the death or imminent death of a member of the Employee’s immediate family or household.”
[48] The entitlement is expressed as being an entitlement to 2 days paid leave, whereas the NES, in s.104 of the Act, provides an entitlement to 2 days per occasion and which does not limit the occasion to death or imminent death. The effect of this provision of clause 9.5 would appear to be that the Agreement is effectively excluding an entitlement that would arise under the National Employment Standards contrary to the requirement of s.55(1) of the Act. If so then the Agreement cannot be approved because of the operation of s.186(2)(c) of the Act. How does the employer contend that the Agreement does not contain a term that contravenes s.55?”
[87] The employer offered the following undertaking to the Commission:
“Compassionate Leave
21. In respect of the first paragraph of clause 9.5 of the Agreement, (which deals with compassionate leave the words: “or when a member of the Employee’s immediate family or household contracts or develops a personal illness that poses a serious threat to his or her life, or sustains a personal injury that poses a serious threat to his or her life” should be added at the end of the paragraph, so that the paragraph reads:
“An Employee, other than a casual Employee, is entitled to two (2} days paid leave upon the death or imminent death of a member of the Employee’s immediate family or household, or when a member of the Employee’s immediate family or household contracts or develops a personal illness that poses a serious threat to his or her life, or sustains a personal injury that poses a serious threat to his or her life”.”
Consideration
[88] The undertaking offered by the employer addresses the concern of the Commission.
Long service leave
[89] The Commission identified the issue as follows:
“[51]Clause 9.8 provides for long service entitlements as provided for in the Industrial Relations Act 1999 (Qld). The Agreement does not contain a coverage clause which limits the Agreement to Queensland. The Statutory Declaration of Mr McGurk in support of the application for approval of the Agreement declares that the Agreement will apply in each of Queensland and Western Australia. Given the operation of s.27(2)(g) of the Act how does the employer contend that clause 9.8 can be included in an enterprise agreement that applies outside Queensland?”
[90] The employer offered the following undertaking to the Commission:
“Long Service Leave
24. In respect of clause 9.8 of the Agreement, (which deals with long service leave), the words “or the Long Service Leave Act 1958 (WA)” should be inserted at the end of the clause, so the clause reads:
“An Employee shall be entitled to long service leave pursuant to the terms of the Industrial Relations Act 1999 (Qld) or the Long Service Leave Act 1958 (WA)”.”
Consideration
[91] The issue of long service leave provisions in enterprise agreement has been considered by a Full Bench of the Commission in Armacell Australia Pty Ltd and others[2010] FWAFB 9985 (Armacell), and relevant to the current matter the Full Bench said:
“[28]Dealing first with the position of employees to whom State long service leave laws apply, it is necessary to further examine the manner in which the Fair Work Act interacts with such laws. Section 29 is relevant. It reads:
“29 Interaction of modern awards and enterprise agreements with State and Territory laws
(1) A modern award or enterprise agreement prevails over a law of a State or Territory, to the extent of any inconsistency.
(2) Despite subsection (1), a term of a modern award or enterprise agreement applies subject to the following:
(a) any law covered by subsection 27(1A);
(b) any law of a State or Territory so far as it is covered by paragraph 27(1)(b), (c) or (d).
(3) Despite subsection (2), a term of a modern award or enterprise agreement does not apply subject to a law of a State or Territory that is prescribed by the regulations as a law to which modern awards and enterprise agreements are not subject.”
[29]While s.29(1) provides that as a general rule enterprise agreements prevail over State laws to the extent of any inconsistency, s.29(2) provides an exception in relation to a term of an enterprise agreement which is inconsistent with, relevantly, a law of a State or Territory covered by s.27(1)(c). Section 27(1)(c), as we have already noted, refers to non-excluded matters, one of which is long service leave. 3
[30]The effect of these provisions is that in the event of inconsistency between a term of an enterprise agreement dealing with long service leave and State long service leave legislation the latter prevails. Accordingly, to the extent that a term in an enterprise agreement purports to permit cashing out of long service leave in circumstances where it would not be permitted under the relevant State legislation, the term is of no legal effect. In the cases in point, if the term in either the Armacell agreement or the DPS agreement purports to permit an employee to cash out long service leave in circumstances where the relevant State law does not permit it, the State law prevails and the term of the agreement is of no effect.”
[92] Applying the Full Bench decision in Armacell to the present matter it is clear that clause 9.8 of the Agreement would operate to provide long service leave entitlements to employees in Western Australia in accordance with the provisions of the Industrial Relations Act 1999 (Qld). Thus the operation of clause 9.8 of the Agreement would be directly inconsistent with the operation of the Long Service Leave Act 1958 (WA). The inconsistency between clause 9.8 of the Agreement and the Long Service Leave Act 1958 (WA) is resolved on the basis that “the State law prevails and the term of the agreement is of no effect.”
[93] The Commission cannot accept the undertaking offered by the employer. As the Full Bench made clear in Armacell (at para 31) given the operation of s.29(2), an issue such as that raised by the Commission in this matter is not one on which an undertaking could be given under s.190.
[94] The Agreement can be approved whilst containing clause 9.8 as clause 9.8 is of no effect. Employees of the employer employed in Western Australia will receive long service leave entitlements in accordance with the Long Service Leave Act 1958 (WA) and not in as stated in clause 9.8.
Requests for further information
[95] The Commission identified the issue as follows:
“Public Holidays
[49] Clause 9.6 deals with Public Holidays and contains two separate provisions relating to work on public holidays, namely:
“Any Employee required to work on a public holiday nominated herein shall be entitled to a substituted day as arranged by mutual agreement between the Employer and the Employees affected.”
and
“Where an employee is required to work on a public holiday or a day in substitution for a public holiday they will be entitled to double time and a half the ordinary rate of pay.”
[50] Is it intended that an employee will receive the benefit of both provisions if the “employee works on a public holiday?
[96] The employer offered the following undertaking to the Commission:
“Public Holidays
22. In respect of clause 9.6 of the Agreement, (which deals with public holidays the words “or will be entitled to double time and a half the ordinary rate of pay for hours worked on the public holiday” should be inserted at the end of paragraph 2 of the clause, so the clause reads:
“An Employee required to work on a public holiday nominated herein shall be entitled to a substituted day as arranged by mutual agreement between the Employer and the Employees affected or will be entitled to double time a half the ordinary rate of pay for hours worked on the public holiday”.
23. That whilst the Agreement is in operation, the fifth paragraph of clause 9.6 will be treated as having been deleted from the Agreement.”
Consideration
[97] The statement from the Commission did not raise any concern in relation to the entitlement of employees who worked on public holidays. The Commission only sought confirmation from the employer that the plain language of the clause was the way in which the employer intended to apply the clause. The response from the employer in offering an undertaking shows that the employer did not intend to apply the clause according to its plain meaning but rather sought to alter the clause to limit the entitlements of an employee who worked on a public holiday.
[98] The response from the employer in offering an undertaking is misplaced. In the absence of a concern being raised the employer cannot offer an undertaking to the Commission.
[99] Even if the Commission had raised the matter of clause 9.6 in a way which permitted the employer to offer an undertaking the Commission could not accept the undertaking offered by the employer as such undertaking would cause financial detriment to an employee by denying the employee the benefit of the operation of clause 9.6 according to its plain meaning.
[100] The position adopted by the employer in offering the undertaking in relation to public holiday payments is that the employer clearly does not intend to be bound by the plains words of clause 9.6 of the Agreement.
Conclusion
[101] The application in this matter is dismissed for the following reasons.
[102] Firstly, the enterprise agreement contains matters which are not permitted matters and therefore the enterprise agreement is not an enterprise agreement for the purposes of s.172(1) of the Act. Thus the Commission does not have before it a valid application.
[103] Secondly, the enterprise agreement cannot be approved because the Commission is not satisfied as required by s.186(2)(d) that the enterprise agreement passes the better off overall test in relation to Workshop/Fabrication Classifications, even after the employer took the opportunity to provide an undertaking to the Commission in relation to the concern of the Commission.
[104] Thirdly, the combined effect of the number of undertakings offered by the employer to address the concerns of the Commission does in the view of the Commission result in substantial changes being made to the agreement which was presented to employees and which was voted on by the employees. The agreement which would operate if all of the undertakings were included is a very different agreement from the one which was presented to employees and which was voted on by the employees.
[105] Section 190(3) provides:
“(3) The FWC may only accept a written undertaking from one or more employers covered by the agreement if the FWC is satisfied that the effect of accepting the undertaking is not likely to:
(a) cause financial detriment to any employee covered by the agreement; or
(b) result in substantial changes to the agreement.”
[106] The Commission cannot, given the operation of s.190(3) of the Act and the conclusion reached by the Commission, accept the undertakings offered by the employer. The consequence flowing from this is that at the very least the agreement will fail the better off overall test.
[107] The application in this matter is dismissed.
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