Brockfield Enterprises Pty Ltd and Ors
[2015] FWC 7863
•17 NOVEMBER 2015
| [2015] FWC 7863 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
Brockfield Enterprises Pty Ltd and Ors
(AG2015/4222)
DEPUTY PRESIDENT ASBURY | BRISBANE, 17 NOVEMBER 2015 |
Application for approval of the Bos and Brockfield Enterprise Agreement 2012 –Agreement does not pass the better off overall test (BOOT) – Voluntary additional hours – Case law regarding principles of BOOT in considering proposed Agreements with voluntary additional hours clauses well settled – No submissions to warrant departure from settled principles - Application for approval refused.
BACKGROUND
[1] Brockfield Enterprises Pty Ltd, Bos Pty Ltd and Bos 2 Pty Ltd (the Applicants) apply in accordance with Part 2-4 of the Fair Work Act 2009 (the Act) for approval of the Bos and Brockfield Enterprise Agreement 2012 (the Agreement). The Applicants are represented by Mr Mossman of M+K Lawyers. On 23 September 2015, I caused correspondence to be forwarded to Mr Mossman raising a number of concerns I had with the Agreement and in particular whether it passed the better off overall test (BOOT) as set out in s. 193 of the Act. A response to those matters was provided by email from Mr Mossman on 24 September 2015.
[2] On 24 September 2015, I conducted a Hearing in relation to the application for approval of the Agreement, at which I elaborated further on my concerns about the Agreement. At that Hearing, I indicated that notwithstanding the emailed response on behalf of the Applicant, I continued to have concerns about whether the Agreement passes the BOOT and expressed a preliminary view that it did not appear that there were any exceptional circumstances so that approval of the Agreement could be sought under s. 189 of the Act. Mr Mossman of M+K Lawyers, on behalf of the Applicants, sought an adjournment to enable a written response to the issues I raised to be provided.
[3] On 29 September, Mr Mossman corresponded with the Commission providing a signed statement of Mr Brockfield, a Director of the Applicants, and proposing undertakings to address my concerns about whether the Agreement passed the BOOT. After considering the statement and the proposed undertakings, I caused further correspondence to be forwarded to Mr Mossman advising that I continued to hold the view that the Agreement did not pass the BOOT. The correspondence went on to request the Applicants to confirm whether they sought approval of the Agreement on the grounds set out in s. 189 of the Act in relation to exceptional circumstances.
[4] By email dated 14 October 2015, Mr Mossman advised that the Applicants would not be seeking approval of the Agreement pursuant to s. 189 of the Act and requested reasons for the Decision that the Agreement does not pass the BOOT notwithstanding the proposed undertakings. Those reasons are set out below.
ISSUES
[5] To provide context for my concerns with the Agreement, including whether it passes the BOOT, it is necessary to set out some of the terms of the Agreement and the Forms F16 and F17 filed with the Agreement. It is also necessary to set out some of the additional information provided in the statement made by Mr Brockfield, which was filed on 29 September 2015.
[6] The Form F16 indicates that there are three employers covered by the Agreement - Brockfield Pty Ltd, Bos Pty Ltd and Bos 2 Pty Ltd – and that it is a single enterprise agreement. In this regard it is asserted that the employers are single interest employers as defined in s. 172(5) of the Act. Mr Brockfield states that the three employers are in a partnership to supply labour in the Childers area in Queensland and that he is a Director of all three companies. There is no information about how the three companies interact in supplying labour and whether they will draw employees from a common labour pool.
[7] The Form F17, which is a Statutory Declaration, states that for the purpose of the BOOT, the reference instruments that cover the employer and the employees covered by the Agreement are:
● Horticulture Award 2010;
● Clerks - Private Sector Award 2010;
● Road Transport and Distribution Award 2010; and
● Cleaning Services Award 2010.
[8] In relation to translating classifications, the Form F17 states that none of the classifications in the Agreement are different from the classifications in any of the reference instruments. It is stated that the Agreement does not contain any terms or conditions of employment that are more beneficial than equivalent terms and conditions in the reference instruments and that the Agreement does not contain any terms that are less beneficial than equivalent terms and conditions in the reference instruments. Further, it is stated that the Agreement does not confer any entitlements that are not conferred by those reference instruments. For reasons which will be apparent, these statements are at best inaccurate and at worst, misleading.
[9] The primary business of the employers is said to be “Labour Hire” and it is stated that the Agreement will operate in Queensland. The Agreement provides for five levels of Horticultural Employees, and the classification definitions are consistent with those in the Horticulture Award 2010. There is a single classification for Administrative Employees that, by virtue of clause 15.1, has a minimum hourly rate of pay for ordinary hours, for a casual employee, of $25.07. It is not clear how this classification translates with respect to the classifications in the Clerks – Private Sector Award 2010. The rate for Drivers under the Agreement is the same as the rate for a level 2 employee under the Road Transport and Distribution Award 2010. There is no classification for cleaners in the Agreement notwithstanding that the Cleaning Services Award 2010 is nominated as a reference instrument for the Agreement. In submissions, the Applicants state that the reference to the Cleaning Services Award in the Form F17 is an error and that the Agreement is not intended to cover cleaning staff.
[10] At the point the Agreement was distributed to employees, the wage rates in the Agreement were in excess of those in the relevant Awards by amounts ranging from $0.01 per hour for employees covered by the Horticulture Award 2010, to $0.05 per hour in excess of the rates in the Clerks - Private Sector Award. In respect of drivers, the rates were $0.45 per hour above the rates in the Road Transport and Distribution Award 2010, if it is assumed that drivers are classified at level 3 under that Award. However, at the point the application for approval of the Agreement was made, the wage rates in the Agreement were below those in the relevant modern awards that are reference instruments for the purposes of the BOOT because of increases to those award rates following from the 2015 Annual Wage Review.
[11] Clause 4 of the Agreement specifying its nominal expiry date is not consistent with the requirements of s. 186(5)(b) of the Act in that it states that the Agreement will operate for a period of four years from a date which is seven days after approval by the Commission, rather than from the date the Agreement is approved. The consultation term in clause 23 of the Agreement does not meet the requirements in s. 205(1A)(b) of the Act.
[12] My concerns about whether the Agreement passes the BOOT centre on clauses relating to hours of work, overtime, banking of hours and public holidays, and in particular clauses which provide that employees will be paid at ordinary rates when they “volunteer” to work at times or on days which would entitle them to be paid at overtime or penalty rates under a relevant modern award for such work. In this regard, clauses 18.3 and 19.3 of the Agreement provide that employees “who can establish a genuine need” and who “request” to work ordinary hours on Saturdays or Sundays, or to work overtime, will be paid at ordinary rates for such work. There is a similar provision in clause 20.3 with respect to public holidays. I refer to these clauses as voluntary hours provisions.
[13] I also had concerns with provisions of the Agreement relating to piecework, which appeared to remove protections offered to employees working under such arrangements under the Horticulture Award 2010 and which extended piecework arrangements to employees covered by other modern awards which do not allow piecework arrangements to be entered into. Further, I had concerns about provisions of the Agreement relating to part time employees and the failure to include provisions from the relevant modern awards in relation to setting ordinary hours of work for part time employees and overtime payments for hours worked in excess of, or outside of, those ordinary hours. In addition to those matters, the superannuation clause in the Agreement may be an unlawful term pursuant to s. 194(h) of the Act as it does not require the default fund to be a complying fund.
[14] A number of these issues, which were raised in the original email I caused to be sent to the Applicants on 23 September, have been addressed by the Applicants’ response sent by email on 24 September 2015, which included proposed undertakings. These issues and undertakings proposed by the Applicants to address these can be summarised as follows:
● The Applicants have proposed that the Commission accept an undertaking that superannuation contributions will only be made to funds which are provided for in relevant modern awards;
● The Applicants have proposed that the Commission accept an undertaking to the effect that piecework provisions in the Agreement will only apply to employees who would otherwise be covered by the Horticulture Award 2010 and that it will apply the terms of a number of subclauses in clause 15 of that Award that provide protection to employees in relation to piecework arrangements;
● The Applicants have proposed that the Commission accept an undertaking that they will not apply the provisions of clauses 10.3 and 10.4 of the Agreement, which allow agreement to be reached for permanent employees (ie full time and part time empllyees) to work ordinary hours on Saturdays and Sundays and to alter the daily spread of their ordinary hours by individual agreement;
● The Applicants have proposed that the Commission accept an undertaking that clause 12 of the Agreement, which provides for banking of hours over a 26 week period so that hours worked in excess of 38 per week can be taken as time off, will only apply to employees who would otherwise be covered by the Horticulture Award 2010;
● The Applicants have proposed that the Commission accept an undertaking that voluntary hours provisions in relation to work on Saturdays, Sundays, public holidays and overtime hours will not apply to full time or part time employees.
[15] In relation to the term of the Agreement specifying the nominal expiry date, the Applicants have advised that there is a typographical error in clause 4.1 of the Agreement and that it is intended to operate for four years from the date it is approved by the Fair Work Commission. Other issues I have with the mandatory terms and minimum wages in the Agreement are addressed by provisions of the Act which deal with deficiencies in enterprise agreements by default. In this regard, by virtue of s. 202 of the Act, the wage rates in the Agreement cannot fall below the rates in the relevant modern award. An additional concern I have about clause 7.12.2, on the basis that it purports to limit redundancy entitlements, can be addressed either by undertaking or on the basis that it is intended to mirror s. 122(4) of the Act and cannot be inconsistent with that section because it is part of the National Employment Standards. The non-conformance of the consultation term with the requirements in s. 205(1A)(b) of the Act can be addressed by the inclusion of the model term in the Fair Work Regulations 2009 in accordance with s. 205(2) of the Act which provides that where an Agreement does not contain a consultation term consistent with legislative requirements, the model term in the Fair Work Regulations is taken to be a term of the Agreement.
[16] The undertakings proposed by the Applicants have not addressed all of the concerns I have about whether the Agreement passes the BOOT. While the undertakings have attempted to address the application of voluntary hours provisions to full time and part time employees, my concerns about the voluntary hours provisions, insofar as they relate to casual employees, have not been addressed. The ordinary hours of work for casual employees are prescribed in clause 11 of the Agreement, which is in the following terms:
“11. ORDINARY HOURS OF WORK – CASUAL EMPLOYEES
11.1 The ordinary hours for a casual Employee shall not exceed 38 hours in any given week.
11.2 A maximum of 8 hours per day may be worked on any one day however, by agreement with the employee concerned this can be extended to ten (10) hours. The minimum ordinary hours for any rostered shift will be two hours.
11.3 Ordinary hours may be worked within a spread between 6:00am and 6:00pm) (sic) inclusive of meal breaks, Monday to Friday inclusive provided that where an Employee makes a request and the Employer agrees, the days on which ordinary hours are worked may include Saturday and/or Sunday. Only an Employee who can establish a genuine need can make such a request pursuant to this clause.
11.4 The spread of hours provided for in clause 11.3 may, by mutual agreement between the Employer and the Employee(s) concerned, be varied to any other such times as the Employer and Employee(s) may agree provided that any such spread of hours will not exceed a spread of more than 12 hours.
11.5 A casual Employee is entitled to received a 10 hour break between shifts provided that any Employee may be given a shorter break between shifts having regard to the duration of the shift that has been worked, the time it would take for the Employee to reach their place of abode and the wishes of the Employee themselves. If a dispute arises with respect to the use of this subclause the matter shall be dealt with under the dispute resolution clause in this Agreement.
11.6 A casual Employee may be required to work a “broken shift” provided that the Employee will be paid not less than 8 hours in any one shift. The shift will be spread over not more than 12 hours and not more than 2 periods inclusive of meal breaks.
11.7 Casual Employees shall be entitled to a meal break of up to thirty five (35) minutes on each day where six (6) hours or more are to be worried, such meal break shall be in the Employee’s time.
11.8 Casual Employees shall be entitled to one (1) rest break of twenty five (25) minutes where eight (8) or more hours are worked on any one day, provided that only fifteen (15) minutes of the said twenty five (25) shall be without deduction of pay. Provided further that rest breaks may be taken as mutually agreed between the Employer and the Employee so long as the rest break does not interfere with the work being performed.”
[17] Clause 12 of the Agreement provides for Banking of Hours and is in the following terms:
“12. BANKING OF HOURS
12.1 The parties recognise that business activity and production will vary significantly throughout the year because of seasonal variations in the industry. It is for this reason that the parties have agreed to the flexile (sic) working arrangements in this clause. These arrangements are designed to allow the Employer to provide more regular and systematic employment to its employees.
12.2 Employees hours may be “banked” over a 26 week period or such longer period as agreed by an Employer and an Employee. Hours worked over 38 hours per week may be added to the Employee’s “bank.” Hours worked less than 38 hours per week may be taken from the Employee’s “bank.” The banking of hours is completely up to the option of the Employee.
12.3 An Employee can request in any given week that they be paid for additional hours in their “bank.” For every hour banked the Employee is entitled to be paid for that hour at the applicable ordinary hourly rate of pay. Every hour than an employee banks will be equal to on ordinary hour of work.”
[18] Clause 18 of the Agreement deals with weekend work and is in the following terms:
“18. WEEKEND WORK
18.1 Any ordinary hours worked on a Saturday will be paid for at a rate of time and a half.
18.2 Any ordinary hours worked on a Sunday will be paid for at a rate of double time.
18.3 If an Employee makes a request to work ordinary hours on a Saturday and/or Sunday in accordance with clauses 10.3 or 11.3 then they will be paid for such hours worked at the rates provided for in clause 15. The provisions in this clause will only apply to those Employees who can establish a genuine need to perform their ordinary hours on a Saturday and/or Sunday.”
[19] Clause 19 of the Agreement deals with overtime as follows:
“19. OVERTIME
19.1 The Employer may request that an Employee performs a reasonable amount of overtime. All time worked in excess of the ordinary hours or outside the spread of hours as defined in clauses 10 or 11 will be deemed overtime.
19.2 All overtime will be paid for at the rate of double time.
19.3 Notwithstanding the above clauses, an Employee may voluntarily agree to perform overtime. If such Employee agrees to voluntarily perform overtime then they will be paid at the rates provided for in clause 15 of 16 (sic) of this Agreement. The provisions in this clause will only apply to those Employees who can establish a genuine need to work voluntary overtime.”
[20] Clause 20 of the Agreement deals with public holidays. Public holidays to which full time and part time employees are entitled without loss of pay are set out in clause 20.1. Clause 20.2 prescribes a rate of double time and a-half for employees who are required to work on public holidays. Clause 20.3 provides as follows:
“Notwithstanding the provisions of clause 20.3, an Employee may choose voluntarily to work on a Public Holiday. If an Employee does choose to voluntarily work on a Public Holiday then they will be paid the hourly rates contained in Clause (sic) 14 or 15 of this Agreement. The provisions in this clause will only apply to those Employees who can establish a genuine need to perform their ordinary hours on a public holiday.”
[21] Mr Brockfield provided a statement in support of the approval of the Agreement, Mr Brockfield states that the three companies who made the Agreement are in the business of supplying labour to tomato, peach, nectarine, zucchini and other small crop farms in the Childers area in Queensland. According to Mr Brockfield there is currently a shortage of Australian labour in the Childers region for fruit and vegetable picking and packing. This means that most farms are heavily reliant on “backpacker” or foreign labour.
[22] Mr Brockfield has a Labour Agreement with the Commonwealth Government which allows citizens from certain Pacific Island Nations into Australia to work on a temporary basis. Under the Labour Agreement, and the Commonwealth Government’s seasonal work programme, workers from some Pacific Island Nations can work for up to six months per year. Workers from Kirabati, Nauru or Tuvulu can work in Australia for up to nine months. A “Question and Answer” document tendered by Mr Brockfield indicates that approved employers are responsible for paying for the entire return international airfare and domestic transfer costs for seasonal workers to and from their work location, but can recover an amount of up to $500 for the journey to and from Australia (ie. a total of $1,000) from the wages paid to such employees.
[23] Mr Brockfield states that as part of the Labour Agreements, the Companies must guarantee that employees will work a minimum average of 30 hours each week. Mr Brockfield further states that opportunities for employment in the Pacific Islands are very limited and wages are extremely low. The wage that Pacific Islanders receive in Australia is much higher than what they would earn at home. Workers are engaged as casuals and want to work as much as possible to provide for their families at home. After the initial six or nine months stay, workers must return home for a period of five months and are then eligible to return to Australia for a further six or nine month period.
SUBMISSIONS
[24] The Applicants submit that if the proposed undertakings are accepted, the provisions in relation to voluntary overtime and work on public holidays being paid for at ordinary rates will be limited to casual employees. In this regard it is submitted that hours of work for casual employees are not regulated in the Horticulture Award 2010, other than in clause 10.4(a) which provides that:
“A casual employee is one engaged and paid as such. A casual employee’s ordinary hours of work are the lesser of an average of 38 hours per week or the hours required to be worked by the employer.”
[25] The Applicants further submit that clause 22 of the Horticulture Award 2010, which deals with hours of work and rostering only has application to full time and part time employees. That clause is in the following terms:
“22. Ordinary hours of work and rostering
22.1 The ordinary hours of work for all full-time and part-time employees other than shiftworkers will not exceed 152 hours over a four week period provided that:
(a) The ordinary hours will be worked between Monday and Friday inclusive except by arrangement between the employer and the majority of employees in the section/s concerned that the ordinary hours will be worked between Monday and Saturday inclusive.
(b) The ordinary hours will be worked between 6.00 am and 6.00 pm except if varied by arrangement between the employer and the majority of the employees in the section/s concerned.
(c) The ordinary hours will not exceed eight hours per day except by arrangement between the employer and the majority of employees in the section/s concerned in which case ordinary hours should not exceed 12 hours on any day.
(d) All time worked by full-time and part-time employees in excess of the ordinary hours will be deemed overtime.
22.2 The ordinary hours of work for a shiftworker will not exceed 152 hours over a four week period provided that:
(a) The ordinary hours will be worked between Monday and Friday inclusive.
(b) For the purposes of this award:
(i) afternoon shift means any shift finishing after 6.00 pm and at or before midnight; and
(ii) night shift means any shift finishing after midnight and at or before 8.00 am.
(c) If an employee is directed to work on shifts the shift must not exceed eight hours without the payment of overtime.
(d) Shiftworkers whilst on afternoon and night shifts will be paid 15% more than the ordinary rates for such shifts.
(e) Where shiftwork is adopted, shifts will, as far as practicable, rotate regularly where two shifts are worked one will be regarded as day shift and the second the afternoon or night shift. Where three shifts are worked they will be divided into day, afternoon and night shifts.
(f) The employer has the right to decide before the commencement of such shiftwork which of the shifts will be the day shift and will notify each employee accordingly.
(g) The employer will keep a roster at the workplace that specifies the times which each shift will commence and finish and which shifts are deemed to be day shift.
(h) All time worked in excess of the ordinary hours will be deemed overtime.”
[26] Clause 24 of the Horticulture Award 2010 deals with overtime as follows:
“24. Overtime
24.1 Time off instead of payment for overtime
(a) An employee will be allowed time off duty, with pay for a period equal to the overtime worked. Such time allowed off duty will be given and taken within the succeeding three weeks unless the employer and employee mutually agree that it be taken at some other time; or
(b) instead of taking time off duty the employee may elect to be paid for the overtime worked provided that this election is made clear to the employer or the employer’s representative at the time that overtime is offered.
24.2 Payment of overtime
(a) The rate of pay for overtime will be 150%, except for overtime worked on a Sunday.
(b) The rate of pay for overtime worked on a Sunday, except during harvest period, will be 200%.
(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 eight hours of overtime in a week may include five hours work on a Sunday at the rate of 150% but all Sunday work in excess of the eighth overtime hour worked in the week, or in excess of five hours on a Sunday, will be paid at the rate of 200%.
(e) All employees required to work on a Sunday will be paid for a minimum of three hours.
24.3 Meal allowance
An employee required to work overtime for more than two hours after the employee’s ordinary ceasing time without having been notified before leaving work on the previous day that the employee will be required to work overtime, will be entitled to a payment of $11.79 for each meal not supplied or will be provided a suitable meal without cost. If the work extends into a second or subsequent meal break, this meal allowance will again apply.”
[27] The Applicants point to clause 22(1)(d) of the Horticulture Award 2010, which defines overtime as time worked by full time and part time employees in excess of the ordinary hours and submit that overtime penalty rates in clause 24 only apply to full time and part time employees. As a result, the Applicants submit that there is a benefit to casual employees under the Agreement because the Agreement provides for a defined spread of hours and days in which ordinary hours can be worked, in circumstances where the Horticulture Award 2010 provides no such restrictions. According to the Applicants, if casual employees are compelled to perform work on weekends, they will be paid penalty rates under the Agreement to which they would not be entitled under the Horticulture Award 2010. If casual employees covered by the Agreement volunteer to work on weekends and are paid for that work at ordinary rates, there is no detriment when compared to the Horticulture Award 2010.
[28] It is further submitted by the Applicants that even if the Horticulture Award 2010 is interpreted in a manner that entitles casual employees to overtime payments, in accordance with clause 24 of the Award, they are not guaranteed such payments because they work more than 38 hours in a particular week. Clause 10.4(a) of the Horticulture Award 2010 defines ordinary hours for casual employees as the lesser of an average of 38 per week or the hours required to be worked by the employer. However the Horticulture Award 2010 does not specify the period in which the hours are to be averaged for casual employees. In the absence of an express provision, the employer and the casual employee would be required to come to an agreement as to the length of the averaging period, and, provided the casual employee worked an average of 38 hours per week over that period, the casual employee would not be entitled to overtime. Under the Horticulture Award 2010, the employer and the casual employee could agree to a twelve month averaging period, whereby the employee could work 60 hours per week over a three month period but over the course of a year the average would still be less than 38, so that there would be no obligation on the employer to pay any penalty rate at all.
[29] The Applicants contrast the provisions of the Horticulture Award 2010 with those in the Agreement and contend that the Agreement limits the ordinary hours of casual employees to 38 per week with no averaging. According to the Applicants, the voluntary hours provisions for casuals under the Agreement must be construed in light of the provisions of the relevant Award. There is no averaging of hours for casual employees under the Agreement and accordingly those employees cannot be required to work more than 38 hours per week. Casual employees under the Agreement can only work hours in excess of 38 per week where they volunteer to do so. The Applicants further contend that Decisions of the Commission refusing to approve agreements containing voluntary hours clauses can be distinguished, on the basis that the Awards against which the BOOT was applied in those cases did not allow for ordinary hours to be averaged over extended periods.
[30] In relation to casual employees being paid for voluntary work on public holidays at ordinary rates, the Applicants submit that this arrangement does not infringe the principles in Decisions of the Commission in relation to voluntary hours, as those Decisions concerned overtime hours and not work on public holidays. It is further submitted that the Horticulture Award 2010 allows for agreement between the employer and an employee to swap a public holiday for another day. If a casual employee works on a public holiday and then swaps that day for another day, the effect is that the casual employee will not work on the swapped day and receive no payment for that day. Accordingly the provisions of clause 20.3 of the Agreement are “not less detrimental” than the Award.
APPROACH TO THE APPLICATION OF THE BOOT
[31] There have been numerous decisions of the Commission, including Full Bench Decisions, where the consistent view has been expressed that in applying the BOOT test – and previously the no disadvantage test (NDT) – consideration is given to a comparison between the terms of the relevant award and the terms of the agreement.1 Where the award does not distinguish between hours worked on a voluntary basis and those directed by the employer – and most awards do not make such a distinction – the analysis does not involve consideration of the wishes of the employees or that they may have volunteered to work at the particular time for ordinary rates. Similarly, the comparison does not involve consideration of the fact that employees will not be offered overtime work if they do not agree to do that work at ordinary rates. As Senior Deputy President Harrison observed in Mondex Group Pty Ltd,2earlier Full Bench Decisions have held that:
“The application of the NDT did not involve an analysis of matters or considerations other than those between the enterprise agreement and the comparable terms and conditions of the award. It was not to the point that if employees had to be paid at overtime rates the employer may not offer them additional hours.”
[32] Her Honour went on to hold that the same principles apply to consideration of whether an enterprise agreement passes the BOOT. These principles have been applied to voluntary hours provisions however described. I do not accept the submissions of the Applicants that these principles do not apply to voluntary hours worked on public holidays. In my view the principles relating to voluntary hours are clear and they apply whenever a relevant award or reference instrument for the purpose of the BOOT contains a penalty payment or an additional payment however described, for work performed in particular circumstances, or at particular times of the day, or on particular days of the week, or on public holidays, or outside hours that are the ordinary working hour for an employee or employees. Quite simply, it is irrelevant for the purposes of the BOOT that an employee has volunteered, chosen or agreed to work hours that would attract a penalty payment, loading, allowance or additional payment under a relevant modern award or reference instrument.
[33] The BOOT (as with the NDT before it) is applied on a global basis rather than line by line. A provision of a proposed agreement that when considered alone, may be less beneficial than a corresponding provision in a relevant modern award, will not result in the proposed agreement failing the BOOT if there are other more beneficial provisions in the proposed agreement which offset the less beneficial provision such that employees are better of overall. For example, a modern award that is a reference instrument for the purposes of applying the BOOT to a proposed agreement may provide that overtime is payable at the rate of time and a-half for the first three hours and double time thereafter. The proposed agreement may provide that a flat hourly rate that is less than the overtime rates in the relevant modern award, is payable for all hours worked including those that would be ordinary hours and those that would be treated as overtime hours under the modern award.
[34] In this scenario, employees may be better off overall if they are paid the loaded rate for all time worked and if their total remuneration is more than it would have been if the award rates, including overtime and other penalty payments or loadings, had applied. It may also be relevant to a consideration of whether a proposed agreement passes the BOOT in those circumstances that the flat hourly rate feeds into other entitlements under the proposed agreement such as the rate at which employees are paid for leave. Employees may volunteer to work overtime in this scenario and be paid a flat hourly rate for such overtime, and be better off overall than they would have been under the relevant award.
CONSIDERATION
[35] In order to properly apply the BOOT in the present case, it is necessary to construe the terms of the Horticulture Award 2010. The approach to the construction of Awards and relevant case law was extensively considered by a Full Bench of the Commission in AMIEU v Golden Cockerel Pty Ltd3and relevant principles can be summarised as follows.
● The construction of an award, like that of a statute, begins with the consideration of the ordinary meaning of the words;4
● Regard must be paid to the context and purpose of the provision or expression being construed5 including the legislative background against which it was made and in which it is to operate;6
● A narrow, pedantic approach should be avoided and meanings which avoid inconvenience or injustice may reasonably be strained for;7 and
● The exercise is not one of giving effect to some anteriorly derived notion of what would be fair or just regardless of what is written in the Award.8
[36] In the present case, the Applicants contend that hours of work for casual employees under the Horticulture Award 2010 are unregulated other than by clause 10.4(a) which requires that casual employees work the lesser an average of 38 hours per week or the hours required by the employer, and that the overtime provisions clause 22 of the Agreement do not apply to casual employees. In my view, this submission is intuitively unsound and is inconsistent with both the text and the context of the Horticulture Award 2010. The full text of clause 10.4 of the Award is as follows:
“10.4 Casual employment
(a) A casual employee is one engaged and paid as such. A casual employee’s ordinary hours of work are the lesser of an average of 38 hours per week or the hours required to be worked by the employer.
(b) For each hour worked, a casual employee will be paid no less than 1/38th of the minimum weekly rate of pay for an employee in that classification in clause 14—Minimum wages, plus a casual loading of 25%.
(c) The casual loading is paid instead of annual leave, personal/carer’s leave, notice of termination, redundancy benefits and the other entitlements of full-time or part-time employment provided for in this award.”
[37] Clause 10.4(a) of the Horticulture Award 2010 refers to “ordinary hours” for casual employees. By implication, any hours that are not within the meaning in clause 10.4(a) are not ordinary hours. Ordinary hours for a casual employee are the lesser of an “average of 38 hours per week” or the hours required to be worked by the employer. Thus the “average of 38 hours per week” is the maximum ordinary hours that can be worked by casual employees. The ordinary meaning of the term “average” is an amount obtained by dividing the total of given amounts by the number of amounts in the set.
[38] In my view, the ordinary meaning of clause 10.4(a) is that the employer must either require a casual employee to work less than an average of 38 hours per week or where a casual employee works more than an average of 38 hours per week the additional hours are not ordinary hours within the meaning in clause 10.4(a). It is axiomatic that the employer must establish a period over which ordinary hours are to be averaged that meets one or the other of these requirements. Without such a period, the term “average” has no effect and the reference to “ordinary hours” is meaningless because there is no benchmark. Further, the language of clause 10.4(a) limits the ordinary hours of casual employees by requiring that those ordinary hours are the lesser of the two options, rather than that ordinary hours of work for casual employees have no limit.
[39] I am also of the view that in order to comply with the requirements of clause 10.4(a) of the Horticulture Award 2010 it is necessary that, as a matter of practical reality, the period set by the employer for the purpose of the averaging of hours must be a period in which it is possible to demonstrate that an average of 38 ordinary hours per week has been worked by the casual employee. An average can only be calculated when there is a total period which is defined in advance, and the employee works for part of that period and has the remainder of the period where work is not performed. It is difficult to envisage circumstances where a period of more than 12 months would be appropriate for the purpose of calculating average hours for casual employees under the Horticulture Award 2010.
[40] In the present case, Mr Brockfield states that casual employees under the Agreement are in Australia pursuant to a labour agreement between the Applicants and the Commonwealth whereby they work for up to six or nine months per year (depending on their country of origin) and then are required to return home for a period of five months before they can come back to Australia for a further six or nine month period. In such circumstances, an averaging period of more than twelve months would not allow for an average to be determined.
[41] This interpretation is consistent with the purpose and context of the provision. The purpose of clause 10.4 of the Horticulture Award 2010 is to establish terms and conditions of employment for casual employees, including their ordinary hours of work. The provision is found in a modern award made by the Commission pursuant to Chapter 2 Part 2-3 of the Act. When making a modern award, the Commission must meet the Modern awards objective found in s. 134 of the Act by ensuring that a modern award provides a fair and relevant minimum safety net of terms and conditions taking into account the need to provide additional remuneration for employees working overtime or on weekends or public holidays.
[42] I accept that clause 10.4(a) of the Horticulture Award 2010 gives the employer a right to establish the period over which the average will be calculated and that there is no explicit limit. I also accept that the industry is seasonal and that this may determine the averaging period adopted by the employer. However, to give effect to the clause a period must be nominated and the period must allow an average to be calculated. For the reasons set out above, it is difficult to envisage how a period in excess of 12 months could be an appropriate period for this purpose
[43] I turn now to the question of what payment casual employees are entitled to under the Horticulture Award 2010 when they perform work in excess of the 38 hour average established as required by clause 10.4(a) of the Award. I accept that clause 22.1 of the Horticulture Award 2010 dealing with ordinary hours of work and rostering applies only to full time and part time employees, including clause 22.1(d) which provides that all time worked by full time and part time employees outside of the ordinary hours is deemed to be overtime. I also accept that restrictions in relation to the weekly and daily spread of hours in clause 22 apply only to full time and part time employees. However, I do not accept that clause 22 of the Award exhaustively defines overtime or that the overtime provisions in clause 24 do not apply to casual employees. There is no indication in the text of clause 24 that overtime provisions do not apply to casual employees or that the overtime payments in clause 24 are limited to full time and part time employees.
[44] It does not follow that because clause 10.4(a) does not contain a general statement to the effect that time worked in excess of the parameters for ordinary hours in the clause is paid for at overtime rates, that casual employees are not entitled to overtime as provided in clause 24. Clause 10.4(a) refers to “ordinary hours” for casual employees. If the effect of the clause was to simply provide for casual employees to work any number of hours that the employer offers, subject only to their physical limitations, then the word “ordinary” would have no purpose or meaning. Such an outcome would also be inconsistent with the modern awards objective and longstanding arrangements whereby awards set parameters within which ordinary hours may be worked with hours in excess of or outside those parameters being paid for at overtime rates.
[45] The effect of accepting the Applicants’ submission would be to accept that there is no penalty payment for casual employees working hours in excess of the average of 38 or those required by the employer (if the hours required by the employer are less than an average of 38 per week). It would follow that if there is no penalty payment for hours in excess of the parameters in clause 10.4 then casual employees are not permitted to work hours in excess of those parameters. Such an outcome would cause inconvenience and injustice to the employers and employees covered by the Horticulture Award 2010.
[46] For these reasons, I adopt the following construction of the hours of work provisions of the Horticulture Award 2010, for the purposes of considering whether the Agreement in the present case passes the BOOT with respect to casual employees:
● The ordinary hours for casual employees are an average of 38 hours per week over a period nominated by the employer of not more than 12 months or a lesser number of hours nominated by the employer as provided in clause 10.4(a);
● Other than the parameters in clause 10.4(a) of the Award, there are no restrictions on the days and times that ordinary hours can be worked by casual employees;
● The ordinary hours of casual employees are not required to be worked within the daily or weekly spread of hours set out in clause 22 of the Award with respect to full time and part time employees;
● For work in excess of the average for ordinary hours calculated as provided in clause 10.4(a), casual employees are entitled to be paid overtime in accordance with clause 24.2 of the Award at the rate of 150% (inclusive of casual loading).
[47] Sundays are not within the ordinary spread of hours for full time and part time employees under clause 22.1(a). For work on Sundays, full time and part time employees are entitled to double time except during harvest periods, subject to whether the provisions in clauses 24.2(c) and (d) apply so that the majority of full time and part time employees agree to work on Sunday at the Saturday rate or during harvest period when the first eight hours of overtime in a week may include five hours on Sunday paid for at the Saturday rate.
[48] Casual employees may work ordinary hours on Sundays and will only be entitled to be paid overtime rates for Sundays where the hours worked on Sundays are in excess of an average of 38 hours over whatever period has been set for the averaging of ordinary hours. It is not necessary for the purposes of the current matter to determine the overtime rate for casual employees on Sundays in the circumstances of this case. It is sufficient to deal with the present case on the basis that I do not accept the Applicants’ submissions about the regulation of ordinary hours of work for casual employees under the Horticulture Award 2010 and that such employees are better off under the Agreement because it provides for a defined spread of ordinary hours and that no work can be performed outside that spread of hours unless the employee volunteers to work at times which are outside that spread of hours.
[49] I also have concerns about the banking of hours provisions in clause 12 interact with the voluntary hours provisions. It is unclear how casual employees who are temporarily working in Australia for six or nine month periods, will avail themselves of banked hours in circumstances where they can do so in “any given week”. Clause 24.1 of the Horticulture Award 2010 provides that time off instead of payment for overtime will be allowed “with pay for the period equal to the overtime worked” and that such time must be taken within the succeeding three weeks unless the employer and the employee agree otherwise. Clause 12 of the Agreement does not reflect the terms of clause 24.1 of the Award and this is to the detriment of employees who will be covered by the proposed agreement.
[50] I am also unable to accept the Applicants’ submissions about the effect of the public holiday provisions in clause 28 of the Horticulture Award 2010. Clause 28.3 makes it clear that all work performed on public holidays will be paid for at the rate of 200% of the ordinary rate. There is no basis for finding that this provision does not apply to casual employees. In my view, a casual employee working on a public holiday under the Horticulture Award 2010 is entitled to be paid 200% of the ordinary rate inclusive of casual loading, for such work.
[51] I do not accept that the substitution of public holidays as provided in clause 28.2 of the Horticulture Award 2010 can have any application to casual employees. In my view, clause 28.2 can only apply to full time or part time employees in circumstances where they are entitled to be absent on a public holiday with pay. Clause 28.2 allows an employer and employees to agree that employees will work on the public holiday and be paid ordinary rates for such work, and take another paid day off in lieu of a public holiday on which the employee would (but for the agreement to work on it at ordinary rates) have been entitled to be absent without loss of ordinary pay. The substitution is one paid day off for another paid day off. Unless an employee is entitled to be absent without loss of pay on a public holiday, there is nothing to substitute.
[52] To submit as the Applicants do, that a casual employee, who has no entitlement to be absent with pay on a public holiday, can work on a public holiday at ordinary rates and take another unpaid day off, is smoke and mirrors. In such a case an employee would be disadvantaged by working on a public holiday for ordinary rates, and then being granted an unpaid day off. Even if I am wrong about the operation of clause 28.2 of the Horticulture Award 2010, then for a casual employee to work at ordinary rates on a public holiday and take an unpaid day off in lieu, is a neutral consideration and is not a benefit that can be weighed in an analysis of whether an agreement passes the BOOT.
[53] Notwithstanding s. 202 of the Act and the Applicants’ undertaking that the “relative wages” will be maintained at these levels above the Award, for clerical and horticultural employees, there is little if any margin in the rates to offset any less beneficial terms and conditions of employment provided for in the Agreement. For casual horticultural workers under the Agreement the ‘margin’ between the wage rates in the Agreement and those in the Award is $1.01 per hour (if the Applicants’ undertaking to maintain that ‘margin’ is accepted) and is nowhere near sufficient to compensate those employees for the removal of entitlements to overtime and public holiday rates under the Horticulture Award 2010. There are no other benefits in the Agreement to offset that reduction. Overall the Agreement is simply a vehicle for the Applicants to be given carte blanche to engage casual horticultural employees for as many hours as they “volunteer” to work, and to pay them less than they would be entitled to under the terms of the Award. This is evidenced by the fact that the Applicants were prepared to give undertakings that they would not apply the voluntary hours provisions to employees who would otherwise be covered by the Clerks – Private Sector Award 2010 or to full time and part time employees covered by the Horticulture Award 2010.
[54] The case law in relation to voluntary hours and the BOOT could not be clearer. The personal wishes and circumstances of employees, or that those employees may have volunteered to work for ordinary rates at times when they would be entitled to overtime or other additional payments under a relevant modern award, is not a relevant matter for consideration of whether an agreement passes the BOOT.
[55] The Applicants in this case are legally represented and the evidence and submissions in support of the approval of the Agreement are surprising. I am particularly surprised at the evidence of Mr Brockfield that employees who will be engaged under the agreement as casual horticultural employees are ‘South Sea Islanders’ who are temporarily in Australia under arrangements between the Applicants and the Australian Government and that these employees will earn more under the Agreement than they would if they were employed in their own countries. Those views are at best irrelevant to the analysis that I am required to conduct in relation to whether the Agreement passes the BOOT and at worst, offensive. If personal preferences of employees are irrelevant to a BOOT analysis then their race and economic circumstances are even more so. All employees working in Australia, regardless of their race or personal financial circumstances, are entitled to at least the terms and conditions of employment in any relevant modern award.
CONCLUSION
[56] The voluntary hours provisions are a substantive part of the Agreement. As previously noted, the Agreement is basically a vehicle for those provisions and has no benefits for casual employees who are covered by the Horticultural Award 2010, to offset the reduction in overtime and public holiday loadings that they would be entitled to under that Award.
[57] For the reasons set out above, and in many Decisions of the Commission I am satisfied that the Agreement does not pass the BOOT as required in s. 186(2)(d) and explained in s. 193 of the Act. I can only echo the observations of Deputy President Bartel in MP Resources Pty Ltd9 to the effect that the agreement subject of the current application bears more than a passing similarity to other applications for approval of agreements in primary industries, which have been found to have failed the BOOT on the basis that they contain voluntary hours provisions. The Applicants, through their legal representative, have put arguments that have been consistently rejected by the Commission in many cases. The Applicants have not attempted to establish that exceptional circumstances exist.
[58] My concerns about this Agreement are heightened by the evidence in relation to the situation of the casual employees the Applicants propose to employ under the Agreement. As employees who are permitted to work in Australia on a temporary visa only, their vulnerability will be heightened. Further, I am concerned that there are three related employer entities, all of whom could operate separate payroll systems and employ persons from the same labour pool, and there is no limit to the number of hours that such employees could work for each employer while they are resident in Australia.
[59] Mr Mossman was involved in MP Resources Pty Ltd and in two cases referred to by Deputy President Bartel in that Decision where approval of agreements containing voluntary hours provisions had been refused on the basis that those agreements did not pass the BOOT. Mr Mossman has also been involved in a number of cases where I have approved agreements containing voluntary hours provisions on the basis that I was satisfied that there were exceptional circumstances. In those cases I made it clear that I did not accept arguments to the effect that agreements with wage rates that were only marginally above those in the relevant reference instrument and with no other benefits to offset the detrimental effect of voluntary hours provisions would pass the BOOT on the basis that employees had volunteered to work those hours, and that the agreements were only approved on the basis that I was satisfied that there were exceptional circumstances and that approval would not be contrary to the public interest as provided in s 189(2) of the Act.10
[60] In the present case, Mr Mossman has again represented employers seeking approval of an agreement which is indistinguishable from the agreements that have previously been refused approval by this Commission. Mr Mossman has submitted that those previous decisions involved agreements where relevant awards for the purposes of the BOOT did not provide for extended averaging and that the present case can be distinguished because it involves employees who would be otherwise covered by the Horticultural Award 2010.
[61] That submission is at best wrong and at worst misleading. The decisions in both MP Resources Pty Ltd and Agri Labour Australia Pty Ltd noted that the modern awards relevant to the employees to be covered by the agreements in those cases included the Horticultural Award 2010. Further, the submission advanced by Mr Mossman in the present case that previous decisions can be distinguished on the basis that they have not considered voluntary work on public holidays is untenable. Plainly, those decisions establish that voluntarism is irrelevant to a consideration of the BOOT and this principle applies to work on any day or at any time when overtime, penalty payments or other loadings would apply under a relevant modern award. In the present case, no attempt has been made to establish that there are exceptional circumstances and that approval would not be contrary to the public interest.
[62] Given the fundamental issues that I have with the Agreement it is doubtful that an undertaking can be provided that will not offend s. 190(3)(b) of the Act on the basis that it will result in substantial changes to the Agreement. Further, the Applicants have already been given an opportunity to address my concerns about the fact that agreements containing voluntary hours provisions and wage rates that are line ball with or marginally above the relevant modern award have been refused approval by the Commission, absent a finding that the provisions of s. 189(2) apply. The response of the Applicants in the present case to these concerns has been to continue to advance submissions that are completely at odds with the objects of the Act and decisions of the Commission in relation to approval of Agreements, in circumstances where those decisions are well known by their representative.
[63] I would also have difficulty in exercising the discretion in s.190 of the Act to accept an undertaking signed by a Director of a company who has also signed a Statutory Declaration in support of approval of an Agreement that is at best incorrect and at work, misleading.
[64] I endorse the comments of Deputy President Bartel MP Resources Pty Ltd that repeated attempts to gain approval of agreements in terms that have previously been rejected by the Commission or modified by undertakings, is at best careless and at worst, lacks integrity. I trust that if the repeated attempts to gain approval of such agreements is carelessness, it will not be repeated.
[65] The application for approval of the Agreement is refused and an Order to that effect will issue with this decision
DEPUTY PRESIDENT
1 Re MSA Security Officers Certified Agreement 2003 PR937654; BUPA Care Services Pty Ltd [2010] FWAFB 2762; Mondex Group Pty Ltd [2015] FWC 1148; Agri Labour Australia Pty Ltd [2015] FEC 5332; MP Resources Pty Ltd [2015] FWC 6820; Samphie Pty Ltd t/a Black Crow Organics [2010] FWAA5060; Top End Consulting Pty Ltd [2010] FWA 6442.
2 [2015] FWC 1148 at [49].
3 [2014] FWCFB 7447 at [19] – [22].
4 City of Wanneroo v Australian Municipal Clerical and Services Union (2006) 153 IR 426.
5 Ibid.
6 Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241.
7 Kucks v CSR Limited (1966) 66 IR 182.
8 Ibid.
9 [2015] FWC 6820.
10 Jellifish! Pty Ltd [2012] FWA 9640; Samphie Pty Ltd t/a Black Crow Organics [2010] FWAA5060;
Printed by authority of the Commonwealth Government Printer
<Price code C, PR573981>
2
8
0