Brittney Pilcher
[2022] FWCA 3732
•28 OCTOBER 2022
| [2022] FWCA 3732 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.225—Enterprise agreement
Brittney Pilcher
(AG2022/4201)
Tennant Property Management Pty Ltd ATF the Tennant Family Trust Collective Workplace Agreement
| Retail industry | |
| COMMISSIONER HUNT | BRISBANE, 28 OCTOBER 2022 |
Application for termination of the Tennant Property Management Pty Ltd as trustee for the Tennant Family Trust Collective Workplace Agreement
On 5 October 2022, Ms Brittney Pilcher made an application pursuant to s.225 of the Fair Work Act 2009 (the Act) to terminate the Tennant Property Management Pty Ltd as trustee for the Tennant Family Trust Collective Workplace Agreement (the Agreement). The Agreement has passed its nominal expiry date. The Employer is Tennant Property Management Pty Ltd as trustee for the Tennant Family Trust (the Employer).
Ms Pilcher completed a Form F24B application, however, on account of the Agreement being a collective agreement, I requested she complete a Form F28 application to terminate a collective agreement-based transitional instrument (CABTI) in accordance with the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Act). Ms Pilcher did so on 26 October 2022, and I exercise my discretion at s.586 of the Act to allow a correction or amendment of an earlier application.
The application is made pursuant to s.225(b) of the Act and under Schedule 3, Item 16 of the Transitional Act. For applications brought under schedule 3, item 16, the application is dealt with pursuant to s.225 of the Act, with the same considerations required as if it were an agreement made under the Act.
The application was supported by a Form F24C statutory declaration of Ms Pilcher, which declared, amongst other things, Ms Pilcher’s views that employee rights and entitlements will revert to the Fast Food Industry Award 2020 (the Award). Ms Pilcher is of the view that casual employees are being paid less than the minimal wage outlined in the Award and are not paid any weekend rates and also public holidays are paid at time and a half, which is less than the Award. She advised that employees are being paid at the same rates on weekends as work performed on any day, Monday to Friday. Ms Pilcher is of the view that the Agreement is outdated and causes employees to be worse off than if they were covered and paid in accordance with the Award.
On 7 October 2022, I directed the Employer to communicate in writing to each of the employees covered by the Agreement, inviting them to correspond by email with my chambers in the event they wished to provide their views. On 10 October 2022, I received confirmation from the Employer that it had complied with the above directions. The Employer informed the Commission that it has 11 employees at the Bowen Hills Subway and 18 employees at the Windsor Subway. The employees covered by the Agreement were invited to provide any views relevant to the application. I only received correspondence from two employees.
Employees’ views
The views of the first employee are as follows:
“Dear Chambers,
I have been an employee of David Tennant for over 8 years. I am one of number of employees that have stayed long with the business.
David is a fantastic franchisee, he is constantly supportive, communicative, pays us on time, provides us free and discounted goods, allows us to listen to our own music and doesn't pressure us to make upsells. He genuinely cares about staff members, often covering shifts when staff are unwell, supporting staff training by providing extra labour budgeting so that new staff can work with a number of trained staff instead of throwing them in the deep end, unlike other franchisees I have worked under previously.
I do not agree with the termination of the agreement. I believe it is in place to support small businesses like David especially after COVID and the hiring difficulties at present.”
The views of the second employee are as follows:
“Dear …
I missed the deadline because I have been working flat-out most days. I have been underpaid Monday-Friday for Level 2 at $28.76 per hour, even taking in account their optional "free sub" during a shift.
I had typed a long draft (with evidence), but I won't there much longer, so I don't care (any more).”
On the evidence before the Commission, the employee at [7] remains employed.
Employer views
The Employer was invited to respond to the application. Mr David Tennant, Director, provided a witness statement including rates of pay payable to employees of various ages, rosters across the two stores, sales figures from a recent weekend and a quarterly profit and loss statement.
The Employer stated if the Commission were inclined to terminate the Agreement, a period of three months was sought in order to prepare the Employer for the move to the Award. Various reasons were given for the request.
Termination of an enterprise agreement after its nominal expiry date
As earlier noted, item 16 of Schedule 3 to the Transitional Act provides that Subdivision D of Division 7 of Part 2-4 of the Act applies in relation to a collective agreement-based transitional instrument as if a reference to an enterprise agreement included a reference to a collective agreement-based transitional instrument.
Subdivision D of Division 7 of Part 2-4 of the Act provides for the termination of an enterprise agreement after its nominal expiry date. This subdivision consists of ss.225, 226 and 227, the terms of which are as follows:
“225 Application for termination of an enterprise agreement after its nominal expiry date
If an enterprise agreement has passed its nominal expiry date, any of the following may apply to the FWC for the termination of the agreement:
(a) one or more of the employers covered by the agreement;
(b) an employee covered by the agreement;
(c) an employee organisation covered by the agreement.
226 When the FWC must terminate an enterprise agreement
If an application for the termination of an enterprise agreement is made under section 225, the FWC must terminate the agreement if:
(a) the FWC is satisfied that it is not contrary to the public interest to do so; and
(b) the FWC considers that it is appropriate to terminate the agreement taking into account all the circumstances including:
(i) the views of the employees, each employer, and each employee organisation (if any), covered by the agreement; and
(ii) the circumstances of those employees, employers and organisations including the likely effect that the termination will have on each of them.
227 When termination comes into operation
If an enterprise agreement is terminated under section 226, the termination operates from the day specified in the decision to terminate the agreement.”
Terms of the Agreement
The Agreement provides the following payment provisions:
Public holidays: Full-time and part-time employees
250% with a minimum payment of 3 hours
Casual employees
273% with a minimum payment of 3 hours
Saturday: Full-time employees 125%
Sunday: Full-time employees 125%
Late work: Full-time and part-time employees
Monday – Friday: 11:00pm – 12:30am
An additional $1.2390 per hour
All employees
Monday – Friday: 12:30am – 5:00am
An additional $1.8625 per hour
Additional hours: Full-time and part-time employees
150% for the first 3 hours, 200% thereafter
Casual employees
173% for the first 3 hours, 223% thereafter
Laundry allowance: Casual employees: 45 cents per day
The Agreement provides an ‘Election of Preferred Hours Form’ permitting employees to voluntarily elect to work hours which would attract penalties under the Agreement to instead be paid the base rate of pay only.
The Agreement does not prescribe a casual loading to be paid. The casual wage rates within the Agreement when it was made appear to be 23% higher than the full-time/part-time rates of pay. Mr Tennant corresponded with Ms Pilcher to inform her that the Agreement provides for a 23% casual loading.
If Ms Pilcher is correct and employees have been paid only time and a half for work on public holidays, it would appear that such payment is not in accordance with the Agreement.
Rate differentials for casual employees
The Award provides a helpful table of rates payable during ordinary hours, late at night, on weekends and on public holidays. I have included, below, the casual adult rates for a fast food employee Level 1 only:
Casual adult employees—ordinary and penalty rates
Ordinary hours Evening work – Monday to Friday – between 10.00 pm and midnight Evening work – Monday to Friday – after midnight and before 6.00 am Saturday Sunday – level 1 Sunday – levels 2 and 3 Public holiday % of minimum hourly rate 125% 135% 140% 150% 150% 175% 250% $ $ $ $ $ $ $ Fast food employee level 1 29.23 31.56 32.73 35.07 35.07 – 58.45
In contrast, the Agreement provides for the current base rate of pay of $23.38 for a Level 1 employee, multiplied by 123% to total just $28.76 per hour for all hours worked except for public holidays and Monday – Friday between 12:30am and 5:00am. The differential pay rates are as follows:
Ordinary hours Evening work – Monday to Friday – between 10.00 pm and midnight Evening work – Monday to Friday – after midnight and before 6.00 am Saturday Sunday – level 1 Sunday – levels 2 and 3 Public holiday % of minimum hourly rate 125% 135% 140% 150% 150% 175% 250% $ $ $ $ $ $ $ Fast food employee level 1 29.23 31.56 32.73 35.07 35.07 – 58.45
Rates payable 123% 123% +$1.8625 123% 123% - 273% per the 12:30am-
Agreement 5:00am
$28.76 $28.76 $30.63 $28.76 $28.76 - $63.83
Differential -$0.47 -$2.80 -$2.10 -$6.31 -$6.31 - +$5.38
Casual Level 1 employees receive less per hour for every hour of the week when paid pursuant to the Agreement when compared with the Award, except on a public holiday. The difference is most stark on Saturdays and Sundays where casual employees at this classification receive $6.31 per hour less when compared with the Award.
Casual employees at other grade levels or being paid junior rates are all paid less than the Award.
Full-time and part-time Level 1 employees are disadvantaged on Saturday and Sunday by receiving payment of 125% of the base rate pursuant to the Agreement when they would be entitled to 150% of the base rate in accordance with the Award.
Progress of the application
On 27 October 2022, I provided calculations to the parties, pointing out the rates differential, particularly on weekends. I informed the parties that my preliminary view is that the Agreement is capable of being terminated and an indicative period of two weeks seemed appropriate in order for the Employer to prepare to begin paying in accordance with the Award. I inquired if any of the parties sought a hearing.
The Employer corresponded to the effect that it did not oppose termination of the Agreement but would seek to have it occur at the end of the weekly pay cycle to provide for the Award to commence at the beginning of the relevant pay cycle, at the Commission’s discretion.
CONSIDERATION
Not contrary to the public interest (s.226(a))
I will first consider whether I am satisfied that termination of the Agreement is “not contrary to the public interest”.
In his decision to approve the termination of the McDonald’s Australia Enterprise Agreement 2013, Deputy President Colman observed that:[1]
“Section 226(a) does not require the Commission to be satisfied that the termination of an enterprise agreement is in the public interest. It sets a lower requirement. The Commission must be satisfied that it is not contrary to the public interest to terminate the agreement.” (emphasis is in the original)
The Agreement was made more than 12 years ago and has less beneficial terms and conditions to employees than those contained within the Award. I am satisfied it is not contrary to the public interest to terminate the Agreement.
Appropriate (s.226(b))
I must consider whether it is “appropriate” to terminate the Agreement, taking into account all the circumstances, including the views of the employees, each employer and each employee organisation covered by the Agreement, and the circumstances of those employees, employers and organisations, including the likely effect that the termination will have on each of them.
The Employer initially opposed termination of the Agreement, asserting that increased wage costs on a weekend might result in it having to reduce weekend hours for employees.
The likely effect on the Employer is that it will need to comply with the Award. It will be put in the same position as other employers in the fast food industry complying with the Award. There is no doubt its wages costs will increase.
There are no employee organisations covered by the Agreement.
The views of the employees include Ms Pilcher. She recognises that employees are working weekends without the payment of penalty rates. For an adult casual employee, this is a loss of $6.31 per hour. It is substantial.
The views of the employee at [6] are taken into account, however it is noted that this employee, on the evidence before the Commission which includes one week’s roster, does not work weekends. Additionally, the employee is a manager. It is difficult to reconcile how the employee considers that the Agreement in in place to assist the Employer in light of difficulty finding employees to work, when the Agreement provides for substantially lower rates of pay than the Award, particularly on weekends. It is not surprising that some potential employees, upon learning that penalty rates are not payable on weekends might choose to work elsewhere.
It is, of course, available to the Employer to have paid greater than the Agreement to attract employees, but the Employer has chosen not to do so.
The employee at [7] appears to be most concerned with allegedly being underpaid as a Level 2 employee. The Agreement provides for employees becoming Level 2 employees after 15 weeks. It is not clear if the affected employee is a Level 2 employee within the Award.
The likely effect on employees will be that they will become entitled to penalty rates in accordance with the Award. They will also become entitled to a 25% casual loading for all hours worked.
Taking into account the views of the persons (including the Employer) referred to in s.226(b) that have been presented to the Commission, and the circumstances of those persons, as well as the effect that termination will have on each of them, I consider that it is appropriate to terminate the Agreement.
The operative date of the termination
Section 227 provides that, if an enterprise agreement is terminated under s.226, the termination ‘operates from the day specified in the decision to terminate the agreement.’
I accept it is a significant change for the Employer to accommodate in its business to pay penalty rates pursuant to the Award and to increase the casual loading to 25%. It is, however, a significant comparative advantage it has enjoyed over other employers for a substantial period of time.
I also have consideration for employees who will soon become entitled to improved wages. They should not need to wait a substantial period of time for this to occur.
I have determined it is appropriate to terminate the Agreement and for the termination to take effect on 9 November 2022. The Agreement will apply up until 8 November 2022, with the Award having application from 9 November 2022.
Conclusion
For the reasons given above, in consideration of s.226(a), I am satisfied that the termination of the Agreement is not contrary to the public interest. There is nothing before me which raises public interest considerations which might militate against the termination of the Agreement.
For the reasons given above, in consideration of the material before me relevant to ss.226(b)(i) and (ii), I consider that it is appropriate to terminate the Agreement.
In accordance with s.226, I must terminate the Agreement. The application to terminate the Agreement is approved.
For the reasons given above, the termination will take effect from 9 November 2022.
COMMISSIONER
[1] [2019] FWCA 8563 at [16].
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