Barlina Pty Ltd T/A Cagemaker

[2014] FWC 8546

[2014] FWC 8546

FAIR WORK COMMISSION

STATEMENT

Fair Work Act 2009
s.185—Enterprise agreement

Barlina Pty Ltd T/A Cagemaker
(AG2014/9706)

Manufacturing and associated industries
COMMISSIONER RYAN	MELBOURNE, 27 NOVEMBER 2014

Application for approval of the Cagemaker Enterprise Agreement 2014.

[1] The Commission is currently considering the application for approval of the Cagemaker Enterprise Agreement 2014 (the Agreement). The Commission has a number of concerns with the content of the Agreement.

Polices and procedures

[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.

Prospective employees

[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?

Part-time employment

[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?

Casual employment

[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 part-time 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 full-time 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 clause 14.4(d), the employer and employee must, subject to clause 14.4(d), discuss and agree on:

(i) which form of employment the employee will convert to, being full-time 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 full-time 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.

[12] The Employer’s Statutory Declaration in support of the application for approval of the Agreement identified that of the 25 employees who will be covered by the Agreement 10 are casual employees.

[13] The employer will need to advise the Commission of the length of service and pattern of work of each of the current 10 casual employees.

[14] How does the employer contend that the Agreement passes the BOOT in relation to casual employees?

Fixed term employment

[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?

Summary Dismissal

[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?

Withholding of monies

[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?

Employee responsibility for costs associated with use of vehicle in performance of work

[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?

Hours of work

[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.

[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?

Call backs

[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?

[31] How could employees approve the Agreement with clause 8.3 not disclosing the conditions attached to call backs?

[32] What explanation, if any, was given by the employer to the employees in relation to clause 8.3?

Overtime

[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?

[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?

Leave

[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?

[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?

[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?

[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?

[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?

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?

Long service leave

[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?

Wages

[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”.

[54] Any submissions or undertakings should be filed in the Commission within 7 days of the date hereof.

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