Berry Pays Pty Ltd
[2022] FWC 913
| [2022] FWC 913 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
Berry Pays Pty Ltd
(AG2022/99)
| COMMISSIONER LEE | MELBOURNE, 9 MAY 2022 |
Application for approval of the Berry Pays Pty Limited Enterprise Bargaining Agreement, 2021 – voluntary additional hours – ‘better off overall test’ not met – s.189 considered – not satisfied exceptional circumstances – not satisfied approval would not be contrary to the public interest – application dismissed.
An application has been made for approval of an enterprise agreement known as the Berry Pays Pty Limited Enterprise Bargaining Agreement, 2021 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act). It has been made by Berry Pays Pty Ltd (the Applicant). The Agreement is a single enterprise agreement. The AWU opposes the approval of the Agreement.
Background
On 18 January 2022, the Australian Workers’ Union (AWU) emailed the Fair Work Commission to request the relevant documents filed with the application and indicated that it wished to be heard.
On 15 February 2022 this matter was allocated to my Chambers. On 17 February 2022, my Chambers emailed the AWU seeking submissions to assist in my consideration as to whether the AWU should be heard in relation to the application. The AWU provided its response, and I subsequently sought the views of the Applicant regarding whether the AWU should be heard. I considered the submissions of both the AWU and the Applicant on this point. On 8 March 2022, my Chambers sent an email to the parties indicating that I have determined that the AWU will be heard on the matter as a contradictor. The AWU was subsequently provided the unredacted application, supporting documentation and correspondence.
Also on 17 February 2022, the Applicant and employee bargaining representatives were sent an email identifying numerous concerns in relation to the Agreement and supporting documentation. The concerns included the following:
· Agreement signature page: The Agreement signature page did not comply with s.185(2) of the Act and reg 2.06A of the Fair Work Regulations 2009.
· Voting cohort: Further information was required to determine whether all of the casual employees that were included in the voting cohort were employed at the time of the access period.
· Section 180(3) and 180(5): There was insufficient information to be satisfied that all reasonable steps had been taken to notify the relevant employees of the voting details as required by s.180(3) of the Act. Furthermore, there was insufficient information to be satisfied that all reasonable steps had been taken to explain the Agreement as required by s.180(5) of the Act.
· Flexibility term: The flexibility term in the Agreement did not comply with s.203 of the Act.
The correspondence also raised a number of BOOT concerns about the Agreement, and these are dealt with in more detail below.
Better Off Overall Test (BOOT) concerns
The relevant Award for the application of the BOOT at test time is the Horticulture Award 2020 (the Award). The rates of pay in the Agreement were 2.11% to 2.56% above the Award rates at the time the application for approval of the Agreement by the Commission was made. There are no additional pay increases provided for in the Agreement. Therefore, in the event that future adjustments pursuant to the Annual Wage Review are made to the Award rates in excess of the 2.11% to 2.56% increases, the employees will receive from that time the minimum rates under the Award pursuant to s.206 of the Act. The entitlements in the Agreement appear to be substantially equal to the Award, save for the terms below which gave rise to BOOT concerns, and were raised with the Applicant as follows:
“Overtime trigger
Clause 20.1(d) of the Agreement provides that all time worked by full-time and part-time employees in excess of the ordinary hours is overtime, however the Agreement does not specify that time worked outside the ordinary hours is also overtime, as per clause 13.1(iv) of the Award. Employees working overtime may not be better off as a result.
The Commissioner invites submissions and/or undertakings to address this issue.
Voluntary additional hours
Clauses 8.3.4 and 22.4 of the Agreement provide that voluntary additional hours shall be paid at the employee’s base rate. This is less beneficial than clauses 10.4, 13, 21 of the Award, which provide for overtime penalties to be applied for all hours worked in excess of or outside ordinary hours.
We note that clause 10.4 of the Award allows for “mutually arranged” hours for part-time employees. However, the voluntary additional hours under the Agreement are considered to be a more flexible arrangement that permits more regularity of changes to hours and less foresight for employees about which additional hours they would work than otherwise contemplated under clause 10.4 of the Award.
Employees working “voluntary additional hours” may not be better off as a result.
The Commissioner invites submissions and/or undertakings to address this issue.”
On 7 March 2022, the Applicant responded to the concerns raised. The Applicant provided a revised signature page, and submissions to address the issues raised in relation to the casual cohort, s.180(3) and s.180(5). The Applicant’s response on those matters satisfies my concerns.
In response to the BOOT concerns raised, the Applicant provided the following undertaking in relation to the overtime trigger issue, which also satisfies my concern in relation to this issue:
“The Employer undertakes that clause 20.1(d) of the Agreement, as follows:
(d) All time required to be worked by full-time and part-time employees in excess of the ordinary hours will be deemed overtime.
shall be considered void and to have no effect and be replaced with the following clause in its stead:
(d) All time required to be worked by full-time and part-time employees in excess of or outside of the ordinary hours will be deemed overtime.”
In relation to voluntary additional hours, the Applicant provided the following submissions:
“We submit that the Voluntary Additional Hours clause is a necessary inclusion in the Agreement.
The nature of the clause
The clause provides employees with the opportunity to voluntarily elect to work additional hours at ordinary rates of pay, if such hours are available. This option is at the full discretion of the employee and operates on a per opportunity basis. That is, employees would nominate, in writing to be offered such hours if available. If such hours become available, the employees who have nominated to be offered such hours would be advised of the availability of such hours and the employee may in each such occasion either accept or reject the offer to suit their personal circumstances.
The nature of the workforce
Employees of Berry Pays are predominantly seasonal workers and/or employees on an international labour scheme. The employees live on site in accommodation provided by the Employer. The work sites are located in regional areas.
Employees approached Berry Pays to request the opportunity to work additional hours. The vast majority of seasonal workers on international labour schemes are in Australia to maximise their earnings before returning to their home country. Seasonal workers not on international labour schemes, such as “backpackers” work in the Horticultural Industry for a number of reasons, including to earn sufficient money to continue their travels in Australia. This group therefore is generally focused on earning as much remuneration as is reasonably possible in the time available to them.
The Award
The scheme of the Award is such that employees would become eligible for overtime payments if they were allowed to work in addition to the ordinary hours provided for in the Award.
The margins in the business are such that overtime payments are not a viable option to meet seasonal hours requirements.
Therefore, Berry Pays seeks to ensure that it employs sufficient seasonal workers to restrict working hours to ordinary hours only. This means that the earning capacity of the employees is capped at the maximum ordinary hours (average of 38 per week).
Competitive environment
The Horticulture Industry competes with other industries for employees. Therefore, it is important that employers in this industry are able to equitably compete for available labour. In this regard it is important to note that voluntary additional hours are already operating in the Horticulture Industry. A direct competitor of Berry Pays, NQ Powertrain has an Agreement approved by the Fair Work Commission which contains a Voluntary Additional Hours clause in the same terms as that sought by Berry Pays. This agreement was approved by the Fair Work Commission, with this same clause on 20 May 2020 (NQ Powertrains Pty Ltd Workplace Agreement 2020 (AG2020/945)).
Berry Pays has engaged labour hire employees through NQ Powertrains, who are then covered by the NQ Powertrains Agreement and can maximise their income through voluntary additional hours, when such hours are available. This creates inequity on Berry Pays sites as employees who are employed directly by Berry Pays, and therefore not covered by that Agreement, are unable for business viability reasons, to be offered work beyond the ordinary hours provided by the Award. Employees working side by side with employees covered by the NQ Powertrains Agreement, who did not have access to the voluntary additional hours arrangements, approached Berry Pays seeking equitable access to such additional hours on the same basis as the NQ Powertrains employees.
There may well be many other Agreements in the sector which also contain the same or similar provisions.
Better Off Overall Test.
It is not possible to undertake a comprehensive BOOT analysis of the Voluntary Additional Hours clause as it is not possible to identify the number of hours, if any, which might become available to employees to elect to work on this basis.
Berry Pays is offering employees an additional 50 cents per hour under the proposed agreement. It is acknowledged that this additional payment would not compensate employees in a BOOT test if they were to work significant amounts of time under a voluntary additional hours scheme, however there is no way to identify how many such hours might become available for employees to elect to work. Therefore, it is also possible that the additional hourly rate would adequately compensate employees in a BOOT analysis if such hours were not significant.
Further, the Award provides for employees to work additional hours and to take TOIL at ordinary rates of pay as compensation for those additional hours. Such an arrangement would result in the same financial outcome for the employee as being paid ordinary time for the additional hours. The seasonal nature of the work is such that employees do not wish to take time off as their intention is to maximise their income over the period of employment. It is acknowledged that the TOIL provisions do allow for payment at overtime rates if time is unable to be taken within 6 months of it being worked. Given the seasonal nature of the employment employees would not normally be working for a period in excess of 6 months. It is acknowledged however that this capacity to be paid after 6 months at over time rates is not provided in the Voluntary Additional Hours provisions.
This is not an issue which could be resolved with an undertaking.”
The Applicant also provided submissions that:
“If the Commission is of the view that it is not possible to approve the proposed Agreement under section 186 of the Fair Work Act, 2009 we submit that the Agreement could be approved under section 189 of the Fair Work Act, 2009.”
The response provided by the Applicant did not satisfy my BOOT concern in relation to voluntary additional hours. The matter was subsequently listed for hearing on 11 March 2022, where the directions for the filing of material were set. The matter was also listed for Hearing on 5 April 2022.
Submissions
The Australian Workers’ Union
In their submissions, the AWU contend that the Agreement does not pass the BOOT, and hence could only be approved by the Commission pursuant to the discretionary power in s.189 of the Act. The AWU highlight that:
“Although the Form F17 declaration made by Mr Richard McGruddy attempts to euphemistically describe the voluntary additional hours clause in the Agreement as an ‘entitlement that the modern award… does not provide’, it is plainly a condition that is less beneficial than the equivalent terms of the Horticulture Award 2020 (‘Horticulture Award’).”[1]
The AWU’s submissions in relation to voluntary additional hours are as follows:
“Clause 21.3 and 21.4 of the Award prescribe overtime penalty rates that are payable to full-time, part-time and casual employees in various circumstances. The voluntary additional hours clause in the Agreement is specifically designed to allow Berry Pays to avoid paying overtime penalty rates for hours that would attract these higher payments under the Horticulture Award.
As the ‘Explanation of the Proposed Agreement’ document prepared by Berry Pays correctly points out, this is ‘the most significant change in the Proposed Agreement compared to the Award’.
On 11 March 2022, the AWU filed a spreadsheet which identifies relevant hourly rates under the Agreement and the Horticulture Award and includes two examples of working patterns for a Level 1 casual employee. The examples demonstrate that a casual employee working a 16-hour shift will not be better off under the Agreement and nor will a casual employee working a total of 360 hours over eight weeks.
The working of these levels of hours is reasonably likely because, as Berry Pays has pointed out in its written submissions, ‘employees of Berry Pays are predominantly seasonal workers and/or employees on an international labour scheme’ and ‘the vast majority of seasonal workers on international labour schemes are in Australia to maximise their earnings before returning to their home country.’
Berry Pays’ submissions properly concede the slightly higher base rates in the Agreement ‘would not compensate employees in a BOOT test if they were to work significant amounts of time under a voluntary additional hours scheme’. The submission goes on to state ‘there is no way to identify how many such hours might become available for employees to elect to work’. This is precisely why the Agreement fails the BOOT. Berry Pays as the applicant bears the onus and it cannot satisfy the Commission that each award covered employee would be better off overall under the Agreement because there are conceivable and realistic working patterns that would result in financial detriment.
The AWU also notes there are no wage increases prescribed in the Agreement. This means the benefits derived from the higher base rates will inevitably evaporate over the nominal term, due to the Commission awarding increases to the minimum rates in the Horticulture Award in annual wage reviews.
Therefore, as appears to be effectively conceded by Berry Pays, the Agreement fails the BOOT.”[2]
The AWU also make submissions as to why approval of the Agreement would be contrary to the public interest, and hence the discretion in s.189 cannot be utilised to approve the Agreement. Those submissions can be summarised as follows:
· For the meaning of “exceptional circumstances” in ss.189(1) and (2) of the Act, the AWU refers to the decision of the Full Bench in Cheyne Leanne Nulty v Blue Star Group Pty Ltd.[3]
· The AWU refers to the wording in s.189(3) of the Act, which “sheds some light on the intended work of the discretionary provision”. The AWU contend that there has been no evidence led by the Applicant “regarding any short-term crisis or need to revive its business. Berry Pays’ case appears to rise no higher than a desire to be cost-competetive (sic) against another business, NQ Powertrain.” [4]
· The AWU point to the decision of then Commissioner Asbury in Poolhaven Enterprise Agreement 2011[5] as illustrative of the of the type of factual scenario that may justify the use of the discretion in s.189 of the Act. In that matter, the employer presented evidence about the weather in the Cairns region, Queensland floods and Cyclone Yasi. The AWU assert that the evidence about extensive natural disasters and short nominal term of that agreement sits more comfortably with the example given under s.189(3) compared to the current Agreement.[6]
· The AWU assert that the facts of this matter are analogous to those in the decision of then Senior Deputy President O’Callaghan in The Andrew Crawford Group Pty Ltd T/A Crawford Security & Investigations,[7] where the employer in that case was also pointing to competitors being able to pay below award conditions. The AWU submit that the reasoning of the Senior Deputy President in that matter is “sound and apposite to this case”.[8]
· The AWU also refer to the 4 yearly review of modern awards – Part-time and Casual Employment,[9] where the Full Bench in that case considered extensive evidence and submissions about the financial impact of the variation on employers. Furthermore, the AWU submit that “the casual overtime conditions that were inserted into the Horticulture Award are already very generous to employers compared with other industries.” [10]
· Furthermore, that the submission from the Applicant that “seasonal workers want to maximise their earnings, also potentially casts doubt about the extent to which the relevant employees understand the terms of the Agreement, given they would logically be better placed to maximise their earnings if they were receiving higher overtime penalty rates.” [11]
· Finally, the AWU submit that “employees are being told they will not be offered overtime hours if they exercise a workplace right and decline to forfeit the higher overtime rates. Seasonal workers voting up an enterprise agreement out of fear that they will otherwise lose hours of work is not something that should be condoned by the Commission. It is contrary to the public interest.”[12]
The AWU ultimately submit that the application must be dismissed.
The Applicant
The Applicant filed submissions, as well as affidavits from Mr Diment and Mr Taukapo, employees that will be covered by the Agreement and who gave evidence that they were bargaining representatives for the Agreement. In relation to the voluntary additional hours, the Applicant made the following submissions:
“This clause was included in the Agreement at the request of the employees who would be covered by the Agreement.
It is clear on the face of clause 22.4 and consistent with the information provided to employees who were eligible to vote on the proposed Agreement, that the Voluntary Hours clause is limited to situations where an employee has genuinely requested to be offered additional hours, if such hours are available. The employee is then able to accept or reject any offer on a case-by-case basis.
It is clear from the Agreement, supported by the information provided to employees who were eligible to vote on the proposed Agreement, if employees do not wish to be offered voluntary hours, or they decline a particular offer of voluntary hours, but the Employer requires them to undertake additional hours, such hours will be paid at overtime rates.
The assertion by the AWU that Voluntary Hours are “specifically designed to allow Berry Pays to avoid paying overtime penalty rates” is not correct. If employees do not wish to work voluntary hours, at all or on a case-by-case basis, and they are required to work beyond their ordinary hours, they will be paid overtime which is equivalent in penalty rates to that contained in the Award.
Berry Pays acknowledge that it is conceivably possible for an employee who elects to work voluntary hours at ordinary rates of pay under the Agreement, which are 50 cents higher per hour than the Award rates, may be worse off when compared with an employee who worked the same hours under the Award. However, there is no evidence such hours would be available to be worked. The hours asserted by the AWU have no factual basis. It is not possible to determine what hours may be available, if any, for voluntary hours, as historically such employees have not worked overtime and have only worked ordinary hours. Berry Pays have historically ensured that they employ sufficient employees so that all hours can be worked as ordinary hours.
The approval of the Agreement consistent with the Fair Work Act, 2009 is on the basis of an assessment undertaken at the test time. Thereafter, section 206 of the Fair Work Act 2009 applies to ensure that the base rate of pay in the Award is maintained irrespective of the content of an Enterprise Agreement. Therefore, the submissions from the AWU regarding that there is only one increase in the proposed Agreement is irrelevant to the decision to approve the proposed Agreement.”
Mr Diment gave evidence that he “represented all of the employees” and stated that employees told him they would rather do extra work at ordinary rates of pay than to have management employ more staff and that there was a strong desire to work longer hours. Mr Diment said that in explaining the proposed Agreement to staff:
“…the message has always been very clear that, if the proposed agreement was to be approved, only those employees who volunteered would be offered additional hours at ordinary rates of pay, if there were additional hours available to be worked and that there was no obligation to do any voluntary hours even if they were offered if it did not suit the employee.”[13]
During the Hearing, Mr Taukapo gave evidence that he was an employee representative. Similar to Mr Diment, his evidence was that workers want less staff employed so that more hours would be available to be worked by existing staff members. Mr Taukapo’s evidence included the following:
“I had numerous conversations with other employees about the proposed agreement. These conversations were mostly around how we would benefit from the voluntary hours if it came in and how it will allow us to have more flexibility. We were all excited about being able to work more hours, and work on the weekend if we wanted to and the management had work for us to do. We discussed that no one was forced to work the additional voluntary hours if they did not want to.”
I spoke about how the agreement will provide the farm with permission to provide more additional working hours above the 38 hours a week they currently work. I explained that the agreement doesn't mean that the farm can force employees to work additional hours. I explained that if employees wanted to nominate to work additional hours, then they needed to formally do this in writing and then if there were additional hours, they could be offered to the employees who had volunteered. I explained that if you do not wish to work the additional hours, you will not be required to.”[14]
In relation to the discretionary power under s.189 of the Act, the Applicant indicated that it continues to rely on its previous submissions regarding approval under s.189 and made further submissions which can be summarised as follows:
· The Applicant cites the decision of then Commissioner Asbury in Jellifish! Pty Ltd, where she made observations that the employer operates in an environment where “there are peaks and troughs associated with the seasonal nature of its clients’ businesses and where employees are working in remote rural areas. There is well established precedent to the effect that these types of operational constraints are not generally faced by employers and constitute exceptional circumstances.”[15] The Applicant submits that its circumstances are congruent with those identified in Jellifish! Pty Ltd, as it also operates in such an environment.[16]
· The Applicant also relies on the decision of Deputy President Bartel in Top End Consulting Pty Ltd, where she accepted that “there is an exceptional circumstance in the convergence of the profile of the employees, the provision of labour to seasonal industries (as opposed to the provision of labour to cover the regular peaks and troughs of activity that occurs in many businesses) and the employer’s business operating predominantly within the tropical areas.”[17] The Applicant states that its circumstances are congruous with that of Top End Consulting Pty Ltd.[18]
· The Applicant outlines a range of exceptional circumstances that apply, in addition to the matters already raised. Those broadly include that the majority of employees are on visas under government approved labour schemes who work and live on site in regional areas. These employees apply for work in this industry in Australia to maximise their income during the period in which they are able to work. The voluntary additional hours arrangements were requested by the employees, and if employees do not participate, they cannot be required to and will be paid overtime rates for additional hours worked. Employees who have indicated that they wish to participate and decline an offer to work additional hours, but are still requested to work, will be paid at overtime rates for such hours. Finally, that the Applicant can continue to engage sufficient staff to ensure that only ordinary hours are available to be worked.[19]
The Applicant also makes submissions that approval of the Agreement would not be contrary to the public interest. The Applicant again cites the decision in Jellifish! Pty Ltd where the Commissioner stated:
“It may also be the case that there is a public interest consideration in maintaining a level playing field among employees in a particular industry or sector.”[20]
The Applicant contends that there would be a significant continuation of an already existing unfair playing field if this Agreement was not to be approved. Noting that the agreement in Jellifish! Pty Ltd was not approved, the Applicant states that the circumstances in that matter can be contrasted with the current matter. Namely, the agreement in Jellifish! Pty Ltd proposed to remove entitlements for a 20% increase in the rates of pay, whereas the proposed Agreement provides for a base rate which is 50 cents per hour higher than the Award and retains all other Award entitlements. The only exception to this is where an employee genuinely requests to be offered voluntary additional hours.[21]
In relation to the scope of s.189(3), the Applicant again points to the decision in Jellifish! Pty Ltd where the Commissioner accepted “that the circumstances in which the discretion to approve an agreement on the ground in s189 are not limited to cases where the agreement is part of a reasonable strategy to deal with a short term crisis or to assist in the revival of an enterprise.”[22] The Applicant accepts that while its circumstances are not consistent with the example under s.189, they constitute exceptional circumstances which are not contrary to the public interest. [23]
The Applicant states that its application can be distinguished from that in The Andrew Crawford Group Pty Ltd T/A Crawford Security and Investigations,[24] where the sole reason argued for exceptional circumstances was the existence of other agreements which contained similar rates of pay. The Applicant contends that this only one of the reasons in this matter, and outline once again a range of circumstances which they consider exceptional which are analogous to those already mentioned above.[25]
The Applicant refers to the AWU’s submissions noting the variations to the Award, and state that aside from the opportunity to undertake voluntary additional hours, the Agreement retains the Award entitlements.
Furthermore, the Applicant refers to the AWU’s assertion that employees do not understand the effect of the voluntary hours clause, and state that the AWU have no evidence to support that assertion. The Applicant also states that the AWU has no evidence to support a false presumption that employees are being told they will not be offered overtime hours if they exercise a workplace right and decline to forfeit the higher overtime rates. The Applicant reiterates the same sentiment in relation to employees voting for the proposed Agreement “in fear” that they will lose hours.[26]
Finally, the Applicant makes an application to correct a significant number of claimed typographical errors in the Agreement pursuant to s.586 of the Act. However, for reasons that follow, it is not necessary to consider that application.
Consideration
The Legislation
Section 186(1) and (2) of the Act is as follows:
“186 When the FWC must approve an enterprise agreement—general requirements
Basic rule
(1) If an application for the approval of an enterprise agreement is made under section 185, the FWC must approve the agreement under this section if the requirements set out in this section and section 187 are met.
Note: The FWC may approve an enterprise agreement under this section with undertakings (see section 190).
Requirements relating to the safety net etc.
(2) The FWC must be satisfied that:
(a) if the agreement is not a greenfields agreement—the agreement has been genuinely agreed to by the employees covered by the agreement; and
…
(c) the terms of the agreement do not contravene section 55 (which deals with the interaction between the National Employment Standards and enterprise agreements etc.); and
(d) the agreement passes the better off overall test.
Note 1: For when an enterprise agreement has been genuinely agreed to by employees, see section 188.
Note 2: The FWC may approve an enterprise agreement that does not pass the better off overall test if approval would not be contrary to the public interest (see section 189).
Note 3: The terms of an enterprise agreement may supplement the National Employment Standards (see paragraph 55(4)(b)).
…”
Section 193 of the Act 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.
…
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.”
Section 189 of the Act is as follows:
“189 FWC may approve an enterprise agreement that does not pass better off overall test—public interest test
Application of this section
(1) This section applies if:
(a) the FWC is not required to approve an enterprise agreement under section 186; and
(b) the only reason for this is that the FWC is not satisfied that the agreement passes the better off overall test.
Approval of agreement if not contrary to the public interest
(2) The FWC may approve the agreement under this section if the FWC is satisfied that, because of exceptional circumstances, the approval of the agreement would not be contrary to the public interest.
Note: The FWC may approve an enterprise agreement under this section with undertakings (see section 190).
(3) An example of a case in which the FWC may be satisfied of the matter referred to in subsection (2) is where the agreement is part of a reasonable strategy to deal with a short term crisis in, and to assist in the revival of, the enterprise of an employer covered by the agreement.
…”
Consideration – Does the Agreement pass the BOOT?
Voluntary Additional Hours
Clause 22.4 of the Agreement allows employees to work “voluntary additional hours” and states as follows:
“22.4 Voluntary Additional Hours
Voluntary additional hours may be undertaken by employees where the employer states that additional work is available to the employees. No employee can be required or directed to undertake additional voluntary hours under this clause. Employees must make written and signed application to undertake voluntary additional hours, where such work is available. All time voluntarily worked by an employee in excess of their ordinary hours of work, at the employee’s specific request, shall be deemed voluntary additional hours. Such voluntary additional hours shall only be worked by the employee with the consent of the employer. The application shall remain in force until varied in writing by the employee. Voluntary additional hours shall be paid at the employee’s ordinary time rate as set out in Clause 12 herein.”
Clause 8.3.4 of the Agreement states as follows in relation to part-time employees:
“Subject to voluntary additional hours applying, all time worked in excess of the hours mutually arranged will be overtime and paid for at the appropriate overtime rate.”
The Award contains several provisions outlining when overtime penalties are payable. Clause 13 is headed “Ordinary hours of work and rostering arrangements”. Clause 13.1(iv) relates to full-time and part-time employees, and states as follows:
“All time worked by full-time and part-time employees in excess of the ordinary hours or outside of the ordinary hourswill be deemed overtime.”
Clause 13.2(f) relates to casual employees (other than shiftworkers), and states as follows:
“All time worked in excess of 12 hours per engagement, 12 hours in a single day or 304 ordinary hours over an eight week period will be deemed overtime.”
Clause 13.3(h) relates to shiftworkers, and states as follows:
“All time worked in excess of the ordinary hours will be deemed overtime paid in accordance with clause 21—Overtime.”
In relation to part-time employees, clause 10.4 of the Award provides as follows:
“All time worked in excess of the hours mutually arranged will be overtime and paid for at the appropriate overtime rate in accordance with clause 21—Overtime.”
Clause 21 defines overtime as “All time worked by employees in excess of their ordinary hours will be deemed overtime.” It also outlines the relevant payment for overtime as follows:
“21.3 Payment of overtime—other than casual employees
(a) The rate of pay for overtime on Monday to Saturday will be 150% of the ordinary hourly rate.
(b) The rate of pay for overtime worked on a Sunday, except during harvest period, will be 200% of the ordinary hourly rate.
(c) Should employees be required to work on a Saturday and the majority of such employees elect not to work on the Saturday but rather on the Sunday then such work performed on that Sunday will be paid for at the rate prescribed for Saturday work.
(d) During harvest period, the first 8 hours of overtime in a week may include 5 hours’ work on a Sunday at the rate of 150% of the ordinary hourly rate but all Sunday work in excess of the 8th overtime hour worked in the week, or in excess of 5 hours on a Sunday, will be paid at the rate of 200% of the ordinary hourly rate.
(e) All employees required to work on a Sunday will be paid for a minimum of 3 hours.
21.4 Payment for overtime—casual employees
Each hour worked in excess of 12 hours per engagement, 12 hour in a single day or 304 ordinary hours over an eight week period will be paid at a rate of 175% of the employee’s ordinary hourly rate for his or her classification (inclusive of the casual loading).”
The Award contains clear provisions for the payment of overtime rates depending on the engagement of employees. While the Agreement contains overtime provisions at clause 22, it also allows employees to work voluntary additional hours at the ordinary time rate. Where employees work voluntary additional hours, these hours may be in excess of the ordinary hours of work (or mutually arranged) as defined under the Award. Employees will not be better off where they work voluntary additional hours under the Agreement and do not attract the overtime rates they would otherwise be entitled to under the Award. However, all aspects of the Agreement must be considered when applying the BOOT, including the more beneficial terms.
With the exception of clause 22.4, the terms of this Agreement largely mirror those in the Award. The Agreement contains rates of pay which are above the Award, but only marginally so, by 50 cents per hour, or 2.11% - 2.56% above the Award rates. The result of this is that the Agreement does not contain benefits which outweigh the detriment arising pursuant to clause 22.4, that is the reduction of overtime rates otherwise payable under the Award where employees work volunatry additional hours under the Agreement.
A permanent Level 1 employee who works, for example, 2 hours of additional overtime in a 38-hour week would earn $833.53 under the Award, whereas they would earn $833.20 under the Agreement, even where the additional 50 cents per hour is taken into account. A casual Level 1 employee working 3 hours of additional overtime in a 38-hour week would earn $1,072.41 under the Award, whereas they would earn $1,067.54 under the Agreement, once again, even where the additional 50 cents per hour is taken into account. Clearly, the extent to which employees would be worse off would be greater in the event that more “voluntary additional hours” are worked than the examples above.
I have taken into account the submission of the Applicant that there is no evidence as to the quantum of voluntary additional hours that would be worked, and the submission that the modelling of the AWU has no factual basis. There are two key problems with this submission. Firstly, the evidence supports a finding that the additional hours provision would be utilised. The evidence of Mr Taukapo was that employees had discussed the benefits of the voluntary hours provision and were excited about being able to work more hours.[27] The submission that employees would still be better off overall because there is no evidence as to the amount of voluntary hours that would be worked (if any) does not align with the evidence.
In any event, the primary consideration which arises from the assessment of the BOOT is a comparison between the total renumeration which would be earned by existing and prospective employees under the agreement as compared to the relevant award.[28] On this, it is clearly apparent that if additional hours are worked under the Agreement, even beyond just 2 hours, employees are worse off if those hours are worked as voluntary additional hours pursuant to clause 22.4 of the Agreement. I note that, as alluded to by the AWU, considering the Agreement is to operate over 4 years, in the event the “one off” increase of 50 cents per hour is exceeded by future increases in the Award rates flowing from the Annual Wage Review, this would eliminate the increase in wages when compared to the Award. Employees will then be paid the wage rates in the Award pursuant to s.206 of the Act, and any additional hours worked as voluntary additional hours would lead to employees not being better off overall. However, whether or not this will occur is not known, as the quantum of any adjustment to Award wages is not known. For that reason, I have not taken this into account in my determination of whether the Agreement passes the BOOT.
What is clear, heaving regard to the analysis above, is that at test time employees engaged to work voluntary additional hours pursuant to clause 22.4 would not be better off, and therefore I cannot be satisfied that the Agreement passes the better off overall test.
In summary, I am unable to be satisfied that employee engaged under the Agreement will be better off overall when compared against the relevant Award as required by s.193(1) of the Act. Therefore, I am not satisfied that the requirement under s.186(2)(d) of the Act is met.
Can the Agreement be approved pursuant to s.189?
The expression “exceptional circumstances” was considered in the well-known case of Cheyne Leanne Nulty v Blue Star Group Pty Ltd:
“In summary, the expression “exceptional circumstances” has its ordinary meaning and requires consideration of all the circumstances. To be exceptional, circumstances must be out of the ordinary course, or unusual, or special, or uncommon but need not be unique, or unprecedented, or very rare. Circumstances will not be exceptional if they are regularly, or routinely, or normally encountered. Exceptional circumstances can include a single exceptional matter, a combination of exceptional factors or a combination of ordinary factors which, although individually of no particular significance, when taken together are seen as exceptional. It is not correct to construe “exceptional circumstances” as being only some unexpected occurrence, although frequently it will be. Nor is it correct to construe the plural “circumstances” as if it were only a singular occurrence, even though it can be a one off situation. The ordinary and natural meaning of “exceptional circumstances” includes a combination of factors which, when viewed together, may reasonably be seen as producing a situation which is out of the ordinary course, unusual, special or uncommon.”[29]
I am not satisfied that there are exceptional circumstances in this matter. Firstly, in respect of the submissions that the business operates in peaks and troughs associated with the seasonal nature of its business and employees work in rural areas, I do not accept these are exceptional circumstances. These are circumstances, while not normally encountered by employers generally, are regularly encountered by employers in the horticulture industry, the relevant industry in this matter. The same can be said of the fact that employees are working on visas under a government approved labour scheme.
I agree with the tenor of the submission of the AWU:
“When workers are engaged on approved visas, I mean that happens in virtually any sector. There's a seasonal environment, yes; again that's far from uncommon. Working in regional areas; again lots of people work in regional areas. So we would say that those factors get nowhere near satisfying the exceptional circumstances threshold.”[30]
Secondly, the submission that employees are in favour of the Agreement because they desire to work additional hours and have requested the voluntary additional hours arrangement is not an exceptional circumstance. I agree with the observations of Deputy President Colman in Casinos Austria International (Cairns) Pty Ltd T/A The Reef Hotel Casino:
“The only circumstance in which the Commission may approve an agreement that does not meet the better off overall test is set out in s.189. Under this provision the Commission may approve an agreement that does not pass the better off overall test if it is satisfied that, because of exceptional circumstances, the approval of the agreement would not be contrary to the public interest (s.189(2)). An example of when the Commission might be so satisfied is where the agreement is part of a reasonable strategy to deal with a short term crisis in, and to assist in the revival of, the enterprise of an employer covered by the agreement (s.189(3)).
There was no suggestion in the present matter that exceptional circumstances existed that would justify the exercise of the Commission’s discretion under s.189. I do not consider it to be exceptional that employees might request particular working arrangements that lead to their disadvantage vis-a-vis the relevant award."[31]
(emphasis added)
I agree with the Deputy President’s reasoning on that point. In this matter, the fact that employees are supportive of the Agreement, and indeed have requested the arrangement, are not exceptional circumstances.
Thirdly, the fact that another agreement has been approved, NQ Powertrains Pty Ltd Workplace Agreement 2020 (NQ Powertrains),[32] which provides for voluntary hours on a similar basis, is not an exceptional circumstance. I agree with Senior Deputy President O’Callaghan in The Andrew Crawford Group Pty Ltd T/A Crawford Security and Investigations (Crawford), where he found as follows:
“Crawford argues that the circumstances are not simply exceptional in terms of the differential application of the BOOT, but are exceptional in that this has created a situation where Crawford alleges it is now competing on a commercially unsustainable basis with other firms which are able to pay employees below award rates and Crawford is accordingly disadvantaged.
I am unable to regard the situation as exceptional for the purposes of s.189. The reality is that in many circumstances differing agreement provisions impact on competitive situations. If nothing else, this reinforces the importance which the FWC should attach to a consistent application of the BOOT in that, as a general statement, agreement approval decisions or refusals often have a significant commercial impact.
What Crawford seek here is that an agreed and acknowledged BOOT deficiency should effectively be sanctioned on the basis that considerations of commercial equity should be applied. The effect of that would be to sanction the payment of rates of pay less than those provided for under the relevant modern award and, using the same logic, provide a precedent for this to be generally accepted in this sector of the security industry.”[33]
I agree with the reasoning of the Senior Deputy President in Crawford. The fact that NQ Powertrains has a virtually identical voluntary hours provision, and other provisions of the NQ Powertrains are similar to the Agreement under consideration here is not an exceptional circumstance.
Having considered the evidence, I am not satisfied that there are exceptional circumstances. Therefore, there is no basis to approve the Agreement pursuant to s.189 of the Act.
Even if the approval of NQ Powertrains could be said to be an exceptional circumstance, I would not be satisfied the approval of the Agreement would not be contrary to the public interest. While the additional voluntary hours provision was raised as a BOOT concern in the analysis conduct by the Commission of NQ Powertrains, it is not apparent from the decision that the Deputy President raised it as a concern. The Deputy President raised other BOOT concerns and several undertakings were provided by the applicant in response. While the voluntary hours clause is identical in the two agreements, and the rates of pay similar (NQ Powertrains rates were approximately 1% higher than the relevant award rates), there are some other differences in the Agreements. While those differences are not significant one must exercise caution in making comparisons. However, to the extent that the NQ Powertrains is in similar terms to this Agreement, it would not in my view pass the BOOT for the same reasons that the Agreement under consideration here does not pass the BOOT. It does not appear that s.189 was a consideration in the approval of NQ Powertrains. It would not be in the public interest that I approve an agreement in order to provide a level playing field with an agreement already approved, but which in my view, did not pass the BOOT.
Other issues
The AWU submit that in addition to the arguments raised, the is a potential genuine agreement concern regarding the manner which the purported bargaining representatives came to be bargaining representatives. They were approached by Mr McGruddy to nominate as bargaining representatives, which the AWU submit is suggestive that they were not free from control of the employer. Concerns are also raised about whether employees properly understood their entitlements under the Award and hence did not fully understand the effect on their terms and conditions of employment were they to approve the Agreement. However, in light of my determination above, it is not necessary to determine these matters.
Conclusion
I am not satisfied that the Agreement passes the better off overall test. The requirement for approval set out in s.186(2)(d) has therefore not been met. Furthermore, I am not satisfied there are exceptional circumstances and therefore the Agreement cannot be approved pursuant to s.189. Therefore, the application is dismissed.
COMMISSIONER
Appearances:
C Laird, for the Applicant.
S Crawford, for the Australian Workers’ Union.
Hearing details:
2022.
Melbourne (via Microsoft Teams):
April 5.
[1] Outline of Submissions for the Australian Workers’ Union (AWU) dated 17 March 2022 at [5].
[2] Ibid at [6] - [12].
[3] Outline of Submissions for the AWU dated 17 March 2022 at [14]; [2011] FWAFB 975 at [13].
[4] Outline of Submissions for the AWU dated 17 March 2022 at [15] - [16].
[5] [2011] FWAA 4036.
[6] Outline of Submissions for the AWU dated 17 March 2022 at [17] - [20].
[7] [2013] FWC 5858.
[8] Outline of Submissions for the AWU dated 17 March 2022 at [22].
[9] [2019] FWCFB 2108 at [32].
[10] Outline of Submissions for the AWU dated 17 March 2022 at [23] - [24].
[11] Ibid at [26].
[12] Ibid at [27].
[13] Affidavit of Mr Owen Diment dated 25 March 2022 at [15].
[14] Affidavit of Mr Sione Taukapo dated 25 March 2022 at [16] - [17].
[15] [2012] FWA 9640 at [100].
[16] Outline of Submissions for the Employer at [17] - [18].
[17] [2010] FWA 6442 at [43].
[18] Outline of Submissions for the Employer at [19] - [20].
[19] Ibid at [21].
[20] [2012] FWA 9640 at [82].
[21] Outline of Submissions for the Employer at [23] - [25].
[22] [2012] FWA 9640 at [78].
[23] Outline of Submissions for the Employer at [26] - [27].
[24] [2013] FWC 5858.
[25] Outline of Submissions for the Employer at [28].
[26] Ibid at [30] - [32].
[27] Affidavit of Mr Sione Taukapo dated 25 March 2022, at [16] - [17].
[28] [2018] FWCFB 3610 at [107].
[29] [2011] FWAFB 975 at [13].
[30] Transcript at PN175.
[31] [2017] FWC 5247 at [18] - [19].
[32] [2020] FWCA 2630.
[33] [2013] FWC 5858 at [26] - [28].
Printed by authority of the Commonwealth Government Printer
<PR740519>
0
7
0