Bendy Q P/L t/s Jamaica Blue Knox City & Ors
[2009] FWA 1869
•22 DECEMBER 2009
[2009] FWA 1869 |
|
DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
(AG2009/13758)
Subway Sandwiches Central Pty Ltd T/A Subway Central
(AG2009/13797)
SumoSalad Eastgardens
(AG2009/13856)
A & F Pilikas T/A Muffin Break Wodonga
(AG2009/13930)
Westfield Berjaya Holdings Pty Ltd T/A Jamaica Blue Riverton
(AG2009/14140)
W & Y Group Pty Ltd T/A Subway Leichhardt
(AG2009/14391)
Twentyto Pty Ltd T/A Subway Westfield Tuggerah, Tuggerah, Mingara
(AG2009/14509)
COMMISSIONER WHELAN | MELBOURNE, 22 DECEMBER 2009 |
Applications to approve single enterprise agreements—applications refused—procedural requirements; no disadvantage test.
[1] These are all agreements lodged by the same bargaining representative. They all follow a common template although there are slight variations in the content depending upon the relevant industrial instrument which would otherwise apply. In each case the Agreement has two common features. There is a flat rate of pay which is said to incorporate all public holidays, overtime, weekend and late night penalties, annual leave loading and allowances. There is, in addition what is called a ‘preferred hours’ rate which is said to incorporate annual leave loading, casual loadings, allowances and public holiday penalties rates.
[2] Other common features of the Agreements are an averaging of hours over 52 weeks. All Agreements provide for a nominal expiry date four years from the date of commencement. There is only one wage rate specified although clause 11 does state that ‘pay rates will be adjusted in line with changes to the Australian Fair Pay and Conditions Standard and the applicable Pay Scale as made from time to time’. As these will cease to exist on 31 December 2009 there is no provisions for wage adjustments over the life of the Agreements.
[3] In each Agreement, clause 4 headed ‘Flexibility Clause’, fails to meet the requirements of section 203(2)(b) and section 203(4). There is no requirement that the Agreement be about permitted matters and not about unlawful ones. The Agreement provides that the individual flexibility agreement will ‘not disadvantage’ the individual employee. This is not the same test as set out in the Act which requires that the employee must be ‘better off overall’.
[4] Clause 6, which is the dispute resolution clause, makes no specific reference to whether it is intended to deal with disputes in relation to the National Employment Standard (NES). It does not allow for the representation of employees, although it does refer to ‘an employee being able to agree to involve other employees on a confidential and informal basis’. Further it refers to the ‘involvement of an impartial third party from outside the company’ who can assist in reaching a mutually acceptable outcome. It does not specify the capacity of this person to ‘settle disputes’ or how they are to be paid, although Mr Sharp stated that normally the company would pay.
[5] Clause 10 provides for employees who are rostered to work on public holidays to be paid at ‘their ordinary rate of pay’. There is no limit on the number of public holidays an employee can work. A document headed ‘Additional Information – No Disadvantage Test’ in each case states ‘one holiday per year is worked on average by employees’.
[6] Clause 12—Overtime, states that ‘employees that work in excess of 38 hours in any one week will be paid at their ordinary rates of pay’. The Additional Information, again in each case, states, ‘No overtime hours are worked by employees’. Mr Sharp stated that many of the employees are students whose visa requirements do not permit them to work more than 20 hours per week.
[7] Clause 13 is headed ‘Preferred hours arrangement’. It provides, in essence, that if an employee ‘elects to work preferred hours’, they will be paid the hourly rate set out in Attachment B which excludes late night and weekend penalty rates. If they agree to swap a rostered shift with another employee this is also deemed to be ‘their’ preferred hours.
[8] Clause 16 provides that employees may be required to wear a uniform and to provide a deposit for such uniforms. It is the employee’s responsibility to maintain uniforms ‘to an agreeable standard at all times’. There is however no laundry allowance paid as this is said to be incorporated into the rate.
[9] Clause 18 provides for the cashing out of ‘up to 1 week’s’ annual leave. This would not comply with section 93 of the Fair Work Act 2009.
[10] Clause 25—Termination, provides a right to the employer to dismiss an employee without notice in a range of circumstances. This would be contrary to section 117 and 123 of the Act.
[11] In relation to each agreement the bargaining representative states that the rates of pay are based on ‘an average wage that would be expected to be earned if the average span of hours of the business was worked by the average employee’.
AG2009/13758
[12] In this case the relevant award is the Liquor and Accommodation Industry –Restaurants – Victoria Award 1998. 1 An analysis of the rates for those paid under ‘Attachment A’ shows that if an employee was to work across the business’s trading hours their average rate of pay would be in excess of the award. However, an employee who worked predominantly on weekends would be worse off. Mr Sharp suggested that only a minority of employees would work a 38 hour week. An employee paid the ‘preferred hours’ rate would be significantly worse off than if they were paid under the award. In addition, there is no provision in the Agreement for accident make-up pay.
[13] The Award provides for averaging of hours over four weeks not 52. It also provides for a minimum engagement of six hours for full–time staff. (The Agreement says three).
AG2009/14140
[14] The relevant industrial instrument in this case is the Restaurants, Tearoom and Catering Workers Award, 1979 2, a West Australian NAPSA.
[15] An analysis of the wage rates based on the business trading hours given shows that an employee working across those hours for 38 hours per week would be better off under the Agreement. However employees working predominantly on Saturdays and those on ‘preferred’ hours would be disadvantaged. Many of the employees would not work 38 ordinary hours.
[16] In addition, the Award does not provide for averaging of hours but for ordinary hours to be 76 hours per fortnight. The maximum hours which can be worked in a day are 10. (The Agreement allows for 12). It further provides for two consecutive days off if more than eight ordinary hours are worked on a regular basis.
[17] Further, the Form F17 states that the agreement was made on 2 November 2009 and that the last notice of employee representational rights was provided on 12 October 2009.
AG2009/13930
[18] The relevant industrial instrument in this case is the National Fast Food Retail Award 2000. 3
[19] An analysis of the wage rates based on the trading hours of the business given shows that an employee working across those hours for 38 hours per week would be better off under the Agreement. However, employees working predominantly on a Saturday or under the preferred hours arrangement would be worse off.
[20] In addition the award provides for hours to be averaged over four weeks (the Agreement provides for 52) and for maximum hours on any day of 11 (12 under the Agreement) and not more than nine on more than one day per week (no limit under the Agreement). The Agreement makes no provision for accident make-up pay. There are also a range of other allowances which are not referred to in the Agreement.
[21] The Form F17 states that the Agreement was made on 9 October 2009 and the date on which the employer provided the last notice to employees under section 173(1) was 18 September 2009.
AG2009/13856
[22] The Form F17 states that the Agreement was made on 30 September 2009 and that the last notice under section 173(1) was given to employees on 9 September 2009. The Form F17 nominates two awards, the Shop Employees (State) Award 4 and the National Fast Food Retail Award 2000. The company commenced trading after March 2006. It is therefore not covered by the NAPSA and is not a respondent to the federal award. It will be necessary for an application to be made for Fair Work Australia to designate an award for the purpose of the no disadvantage test.
AG2009/13797
[23] The Form F17 also specifies the same two awards as AG2009/13856 and the same need to apply for an award to be designated applies.
[24] The Form F17 shows the agreement was made on 24 September 2009 and the last notice of representational rights was provided on 3 September 2009.
[25] AG2009/14391 and AG2009/14509 also need to have an application made for an award to be designated for the purposes of the no disadvantage test.
The procedural requirements
[26] The procedural requirements for making an enterprise agreement capable of being approved under the Fair Work Act 2009 are set out in Part 2–4 of the Act.
[27] The first step requires the employer to give notice to the employees of their right to be represented in the bargaining process. The notice is to be given no later than 14 days after the notification time which is defined in section 173(2) of the Act. In the absence of a majority support determination, a scope order or a low–paid authorisation, this is ‘when the employer agrees to bargain, or initiates bargaining for the agreement’.
[28] In these cases the notices were given to the employees at the same time as the agreement and the notice of when voting was to occur. These were given to employees at a staff meeting where the notice and a document headed ‘Notification Time—Enterprise Agreement’ were also gone through. Notice of the meeting was provided by email which is generally the method by which employees are notified of their rosters and employees under 18 years of age were invited to bring their parents or guardians to the meeting.
[29] Mr Sharp stated that at the meeting the content of the Agreement was also gone through and employees were invited to ask questions about it.
[30] Section 181 provides that an employer may request the employees to approve the agreement by voting for it. Section 181(2) provides that the request ‘must not be made until at least 21 days after the day on which the last notice under section 173(1)’ was given.
[31] In Alphington Aged Care and Sisters of St Joseph Health Care Services (Vic) t/as Mary Mackillop Aged Care 5, the notice was given on 6 July 2009 and the vote was taken on 27 July 2009. In determining that the application failed to meet the requirements of section 181(2), I referred to a decision of a Full Bench of the Australian Industrial Relations Commission in Re: White’s Discounts Pty Ltd t/as Everybody’s IGA Everyday and Broken Hill Foodland.6
[32] While that case dealt with the application of section 170LK(2) which required that employees were to have ‘at least 14 days notice’, in writing, of an employer’s intention to make an agreement, the principles to be applied are the same. The Full Bench held that the provisions of section 36(1) of the Acts Interpretation Act applied, and as the vote in that case was taken on the 14th day, the requirements of the relevant legislation were not met. Section 36(1) states:
‘Where in an Act any period of time, dating from a given day, act, or event is prescribed or allowed for any purpose, the time shall, unless the contrary appears to be reckoned exclusive of such day or such act or event’.
[33] A vote taken on the 21st day after the day on which the notice under section 173(1) was given, does not meet the requirements of section 181(2).
[34] In matters AG2009/14140, AG2009/13930, AG2009/13856 and AG2009/13797, the vote was taken on the 21st day. The procedural requirements have therefore not been met.
The contents
[35] In each of these matters the applicant has stated in the statutory declaration that the rates of pay are based on a flat rate which incorporates ‘an average wage, if the average span of hours was worked by the average employee’. In the ‘Additional Information’ provided it is stated that no employee works any overtime and they work an average of one public holiday per year.
[36] To pass the no disadvantage test however, no employee (not the average employee) can be disadvantaged by the terms of the Agreement. While it may be convenient for the purpose of calculating rates it is difficult to believe that consistently across all these businesses no employee ever works overtime or more than one public holiday per year. Employees are from time to time late for work or call in at the last moment to say that they cannot attend their rostered shift. In those circumstances it would be most surprising if another employee was not asked to step in to fill the gap.
[37] In each case the hours which an employee can work as ‘ordinary hours’ are longer than those in the Award. Mr Sharp did indicate however that normally shifts were four hours as most of the employees were part-time or casual.
[38] All of these agreements are in the hospitality industry and many in the fast food sector. It is notorious that many of the employees are young and frequently are secondary or post-secondary students. Indeed, Mr Sharp referred to this in the hearing. Their availability to work is, of necessity, constrained by their study commitments. It is common practice in these industries for employees to advise the employer of their availability and for employers to roster the employees they require taking into account when they are available. Such an arrangement does not, in my view, obviate the requirement to pay to an employee the penalty rates which particular hours attract, where the employee provides their labour at a time when the employer requires the work to be performed.
[39] The Act makes particular provisions for individual flexibility arrangements to be made between an employer and an employee. These are subject to the requirements imposed by section 203 and in particular section 203(4). In the Explanatory Memorandum it is stated:
‘868. Because the value that a particular employee may place on a non-monetary benefit is important, it is less likely that an employee would be better off overall where the employer has initiated a request to agree an individual flexibility arrangement under which the employee gives up a monetary benefit in exchange for a non-monetary benefit. Similarly, it is less likely that an individual flexibility arrangement would result in an employee being better off overall where the monetary benefit given up by the employee had a substantial value, or if the value of the monetary benefit was, in the view of a reasonable person, disproportionate to the non-monetary benefit for which it was exchanged.’
[40] In addition, section 65 of the NES makes provision for employees with family responsibilities to request flexible working arrangements.
[41] It is not, in my view, appropriate nor does it pass the no disadvantage test, to include in an agreement a general provision which removes penalty provisions from the employees’ rate of pay on the basis that they have nominated certain hours during which they are available to work. If the employer requires work to be performed during those hours and the employee is able to perform that work then that is a normal incident of employment and not a special arrangement which might be covered by either section 65 or the type of arrangements covered by section 203. It is notable that if employees were to be engaged under these ‘preferred hours’ arrangements they would be paid less than if the relevant award applied.
[42] In the hearing I also raised with Mr Sharp, the failure of the flexibility clause to meet the requirements of section 203; the failure of the dispute settlement clause to meet the requirements of section 186(6); the problem associated with payment of public holidays and overtime at ‘ordinary rates’when the Agreement imposes no limit on the working of public holidays or overtime; the failure to make provision in AG2009/13758 and AG2009/13930 for accident make-up pay and the difficulty in relying on a hypothetical average employee as the basis for applying the no disadvantage test.
[43] With the exception of AG2009/13758, AG2009/14391 and AG2009/14509, these applications must be dismissed because they fail to meet the procedural requirements for approval. Further, I am of the view that they and AG2009/13758 do not meet the requirements of the no disadvantage test.
[44] Further consideration will be given to AG2009/14391 and AG2009/14509 when an appropriate award has been designated for the purpose of the no disadvantage test unless these applications are withdrawn.
[45] For these reasons the applications to approve the agreements in AG2009/13758; AG2009/13797; AG2009/13856; AG2009/13930 and AG2009/14140 are dismissed.
COMMISSIONER
Appearances:
R. Sharp for applicants.
Hearing details:
2009.
Melbourne:
December 21.
1 Liquor and Accommodation Industry –Restaurants – Victoria Award 1998, AP787213CRV.
2 Restaurants, Tearoom and Catering Workers’ Award, 1979, AN160276
3 National Fast Food Retail Award 2000, AP806313CRV
4 Shop Employees (State) Award, AN120499.
5 Alphington Aged Care and Sisters of St Joseph Health Care Services (Vic) t/as Mary Mackillop Aged Care [2009] FWA 301.
6 Re: White’s Discounts Pty Ltd t/as Everybody’s IGA Everyday and Broken Hill Foodland [PR937496].
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