No judgment structure available for this case.

[2016] FWC 6825

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Business Security & Management Solutions Pty Ltd T/A BSMS Security
(AG2016/2925)

COMMISSIONER GREGORY

MELBOURNE, 22 SEPTEMBER 2016

Application for approval of the Business Security & Management Solutions Pty Ltd (BSMS Security) Enterprise Agreement 2016-2019.

[1] This decision deals with an application for approval of an enterprise agreement known as the Business Security & Management Solutions Pty Ltd (BSMS Security) Enterprise Agreement 2016–2019 (“the Agreement”). The application is made under s.185 of the Fair Work Act 2009 (Cth) (“the Act”) by the Employer, Business Security & Management Solutions Pty Ltd (“BSMS”).

[2] The application and the accompanying Employer Statutory Declaration indicate that at the time the application was made BSMS employed 35 employees, who are apparently engaged primarily in providing crowd control, event security, and gatehouse security services. The Statutory Declaration indicates the Agreement is intended to apply in all States and Territories, however, the employees are primarily working at locations in Sydney and in regional New South Wales. The Statutory Declaration also indicates 25 of the employees are employed on either a part-time or full-time basis, with the remaining 10 employees engaged as casuals.

[3] The terms and conditions contained in the Agreement are based around what are often described as “rolled up arrangements,” whereby a higher hourly rate is provided for compared to the ordinary time rates in the underlying Award. The relevant Award in this case is the Security Services Industry Award 2010. The Agreement proposes five different wage rates, depending upon the roster being worked. While the wage rates proposed in each case are different from those in the Award, the Agreement does not provide for the additional penalty rates that apply under the Award for work performed in the evenings and at weekends.

[4] The Statutory Declaration provided by Mr Karan Babuta, the Managing Director of BSMS, states that the wage rates are “more beneficial” for the employees compared to the ordinary time rates in the Award. It also indicates that all Award provisions are incorporated into the Agreement, and there are no terms in the proposed Agreement that are “less beneficial” for the employees.

[5] After reviewing the application and the terms and conditions contained in the Agreement the Commission forwarded correspondence to BSMS highlighting various issues to do with satisfaction with the requirements of the “better off overall” test. BSMS provided correspondence in response, and indicated that various undertakings could be provided to respond to concerns raised by the Commission.

[6] However, after reviewing these materials the Commission indicated it continued to have concerns about satisfaction with the relevant statutory requirements. It also provided some examples of those concerns, which included the following matters:

It was unclear whether the proposed wage rates would leave employees better off, particularly in circumstances where they were working at weekends.

The Agreement does not appear to provide additional entitlements for work on public holidays, whereas the Award provides for penalty rate entitlements of double time and a half.

The proposed salary rate for the Security Manager position does not appear to be adequate in circumstances where the employee is working extended hours.

The part-time employment provisions in the Agreement do not appear to replicate or provide benefits equivalent to those in the Award.

Employees can work additional hours under the terms in the Agreement without payment of overtime entitlements.

In addition, despite the statement in the Employer’s Statutory Declaration that all of Award provisions are incorporated, the Agreement indicates instead, at sub clause 1.3.3, that “the provisions of this Agreement completely exclude the Award.”

It was also noted that despite the statement in the Statutory Declaration that there are no terms in the Agreement that are “less beneficial,” there appear to be a number of areas in which the Agreement does not provide for terms and conditions contained in the Award.

[7] The Commission indicated in conclusion that given the various issues identified it now proposed to list the application for hearing in order to allow BSMS an opportunity to provide further submissions and evidence in support of the application.

[8] The application was subsequently listed for hearing on 12 September 2016. The Applicant’s representative, Mr Gregory Christodoulou, provided correspondence to the Commission prior to the hearing which proposed various additional undertakings in response to the further concerns raised by the Commission. Mr Christodoulou was also given permission to appear on behalf of BSMS under s.596(2)(a) of the Act, as the matter involves a degree of complexity and his involvement might enable it to be dealt with more efficiently. Mr Christodoulou appeared with Mr Babuta. Both appeared in the proceedings by telephone.

The Issue to be Determined

[9] Section 186(1) of the Act requires that the Commission must approve an Agreement if it is satisfied that each of the various requirements in ss.186 and 187 are met. Section 186(2)(d) requires that the Commission must be satisfied the Agreement passes the “better off overall test.” The test is set out in s.193(1). It states:

“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.”

[10] It is well established that the application of the test requires identification of terms in the proposed Agreement that are more beneficial for the employees, and those which are less beneficial, with an overall assessment then being made about whether the employees would be “better off overall” under the terms and conditions in the Agreement, compared with those in the underlying Award. As indicated, in this case the relevant Award is the Security Services Industry Award 2010.

[11] The recent Full Bench decision in Duncan Hart v Coles Supermarkets Australia Pty Ltd and Bi-Lo Pty Limited T/A Coles and Bi Lo 1 also makes clear that the assessment must be carried out in a way that ensures each employee, and each prospective employee, would be “better off overall” under the Agreement. It is not sufficient for the Commission to simply be satisfied a majority of the employees would be better off. The Full Bench made this clear in the following terms:

“However the application of the BOOT requires satisfaction, as at the test time, that each Award covered employee and each prospective employee would be better off overall under the Agreement.” 2

[12] Therefore the Commission is now required to determine whether the terms and conditions contained in the Agreement satisfy the requirements of the “better off overall test” when compared with those contained in the underlying Security Services Industry Award 2010.

The Evidence and Submissions

[13] Mr Christodoulou indicated at the outset that he did not seek to provide further submissions or evidence in support of the application, however, he and Mr Babuta both provided responses to various matters raised by the Commission. In addition, Mr Babuta provided correspondence in advance of the hearing about some of the matters raised by the Commission in its earlier correspondence.

[14] BSMS indicated the employees to be covered by the Agreement are generally involved in crowd control, events security, and the gatehouse security work. This can involve rosters over any day in the week, depending on the nature of the work.

[15] BSMS also said it now proposed that an undertaking be provided to the effect that sub clause 3.2.3, which provides that employees can be paid a salary, rather than the hourly rates in the Agreement, would have no application. This was in response to an earlier issue raised by the Commission, which suggested the proposed salary rate for a Security Manager was not sufficient to satisfy the requirements of the “better off overall test.”

[16] The Commission also raised an issue about the part-time work arrangements in the Agreement, and whether they are different from those in the Security Services Industry Award 2010. The Commission referred, in particular, to the averaging arrangements in the Agreement, which allow for part-time work hours to be averaged over a 12 month period. BSMS indicated in response that the employees engaged on a part-time basis typically work for approximately 20 hours each week, but these hours are averaged over a full 12 month period. This means, for example, at some times in the year these employees could be working hours that are well in excess of 20 each week, but at other times they could be rostered off because there is no work available. It was also indicated that the rosters are generally provided to employees around 4 – 8 weeks in advance of the work being performed.

[17] The Commission also raised an issue about the person who was indicated to be the employee representative. It was noted that the application indicates this person is employed as the Operations Manager. It was also noted that when signing the Agreement he indicated his title is “Manager”. This is the same title as indicated to apply to Mr Babuta when he signed the Agreement on behalf of BSMS. The Commission, in turn, queried whether a person employed as the Operations Manager of the business could, at the same time, be the employee representative. There was also a question about whether that person was actually covered by the Agreement. BSMS indicated in response that the person was employed as a “Site Manager” and acknowledged there was some doubt about whether that position was covered by the Agreement.

[18] The correspondence provided to the Commission prior to the hearing by BSMS also makes reference to amended wage rates that had been proposed previously, and confirmed it was now intended to provide an undertaking to the effect that those rates were to replace the rates set out in the Agreement.

[19] The letter also made reference to sub clause 5.6.1 of the Agreement, which makes clear that employees are entitled to additional penalty rates in circumstances where they are required to work on public holidays. This dealt with an earlier issue highlighted by the Commission in its previous correspondence.

[20] BSMS also proposed a further undertaking suggesting the original wording in the Agreement to do with part-time work be replaced. The new wording proposed is as follows:

“4.1.2 What are the hours of work for a part-time Employee?

(a) The arrangement of hours of work for part-time Employees will be agreed in writing on commencement and implemented as follows:

(i) A minimum of 3 hours per week and a maximum of 37 hours per week over an averaging period of up to 12 months;

(ii) Other than for unpaid breaks, a minimum of 3 hours per shift and a maximum of 12 hours per shift;

(iii) All ordinary time worked to be within a span of 12 hours per day;

(iv) A maximum of 10 consecutive days may be worked with 4 non-working days; and

(v) Broken shifts may be worked with a maximum of one break of more than 1 hour between work periods per day, in which case an additional 2.5% loading will be paid on the hours worked after the break.

(b) Any agreed variation to the hours of work for a part-time Employee will be recorded in writing and is subject to the minimum and maximum hours limitations in (a) above.

(c) Any variation to the agreed hours in writing under part (a) & (b) not made in advance of the release of the roster will be subject to overtime penalties provided in clause 4.2.3.” 3

[21] The earlier correspondence from BSMS also suggested another undertaking could be provided to the effect that the voluntary overtime provisions in sub clause 5.2.5 of the Agreement no longer have application.

[22] The correspondence also made reference to two other matters previously raised by the Commission. The first concerned the contradiction between the Employer’s Statutory Declaration and the terms contained in the Agreement regarding whether the Award is incorporated. BSMS submits in its correspondence that despite what is contained in the Employer’s Statutory Declaration, the Agreement does not incorporate the Award conditions, and it is instead intended to apply in place of the Award.

[23] The letter from BSMS also makes clear that when the Employer’s Statutory Declaration states there is nothing in the Agreement that is “less beneficial” when compared to the Award, this is not strictly correct, and there are a number of Award conditions not replicated in the Agreement. However, the letter continues to state that the wage rates in the Agreement are set at a level that is intended to ensure all employees will be “better off overall.”

Consideration

[24] As indicated, the wage rate arrangements in the Agreement are intended to simplify the wage structure by providing a single wage rate to apply for all time worked, in place of the ordinary time rates and additional penalty rates that apply for work performed in the evenings and at weekends under the Award. Five different “rolled up” wage rates are proposed, depending upon when an employee is rostered to work. These different rosters, set out in sub clause 3.2, are as follows:

“ Non-Rotating Day Worker – works between 0600 hrs to 1800 hrs, Monday to Friday.

Rotating Weekday/Weeknight Worker – works Monday to Friday with less than half ordinary hours worked outside day worker hours.

Non-Rotating Weeknight Shift Worker – works Monday to Friday, outside 0600 hrs to 1800 hrs only.

Rotating Weekday/Weeknight/Weekend Worker – works weekdays, weeknights and weekends but with the least a third of hours worked between 0600 hrs to 1800 hrs, Monday to Friday.

Rotating Weeknight/Weekend Worker – works weeknights and weekends.” 4

[25] The hourly rates set for each of these rosters, based on the undertaking now proposed by BSMS, are as follows:

Non—Rotating Day Worker – $19.73.

Rotating Weekday/Weeknight Worker – $21.70.

Non—Rotating Weeknight Shift Worker – $25.00.

Rotating Weekday/Weeknight/Weekend Worker – $25.34.

Rotating Weeknight/Weekend Worker – $28.10.

[26] In dealing with the requirements of the “better off overall test” there are obviously a range of examples and models that can be examined when comparing the rates in the Agreement and those in the underlying Security Services Industry Award 2010. The following examples have been selected from a number that could be used. Based on these examples I am not able to conclude that the Agreement satisfies the requirements of the “better off overall test.” The examples appear instead to indicate that in some situations employees would earn more if engaged under the terms and conditions contained in the Award than they would if employed under the terms and conditions in the Agreement. They also indicate that these are not isolated instances.

[27] In an endeavour to ensure the calculations are based on a similar starting point the calculations are based on the Award rates that applied prior to the most recent minimum wage adjustment increase, together with the rates now proposed in the undertaking provided by BSMS. The Award rates have since been increased by 2.5% by the recent minimum wage adjustment decision, 5 and the Agreement provides for increases of 2.5% on 1 July each year as well.

[28] The first example is based on the Rotating Weekdays/Weeknight/Weekend Worker roster. The conditions attached to this roster require that at least one third of the hours worked are worked during ordinary day time hours on Monday – Friday. The example selected is based on an employee working for 21 hours in a week on a part-time basis, with 7 of those hours rostered during day time hours – Monday to Friday, another 7 hours being worked on a weeknight, and the remaining 7 hours worked on Saturday.

[29] Under the terms of the Agreement an employee would be entitled to an amount of $532.14 if employed at the Level 1 classification, based on 21 hours worked at the hourly rate of $25.34.

[30] However, under the Award there would be different hourly rates applying at different times, given the penalty rates that apply for work performed in the evenings and at weekends. Those entitlements under the Award are as follows:

Daytime hours, Monday to Friday – $19.42 x 7 hours = $135.94

Weeknight hours – $23. 63 x 7 hours = $165. 41

Hours worked on Sunday – $38. 84 x 7 hours = $271.93

[31] When these amounts are added together the total earnings under the Award would be $573.28 for the 21 hours worked, or $40 more than what would be earned under the Agreement. It is noted that this differential would only become greater if more of the hours were worked at the weekends, given the higher hourly rates that apply under the Award for work at these times.

[32] A similar outcome results when the rates proposed for the Rotating Weeknight/Weekend Worker roster are modelled. This roster arrangement applies to an employee working only at weeknights and weekends. Again, if the example of a part-time employee working 21 hours a week is examined, with 11 hours worked in the evenings and 10 hours on Sunday, that person under the terms of the Agreement would earn $590.10 per week, based on an hourly rate of $28.10 for all hours worked.

[33] However, a different outcome would result under the rates contained in the Security Services Industry Award 2010. Under the Award the 11 hours worked in the evenings would be paid at the rate of $23.63 per hour for a total amount of $259.93. The remaining 10 hours worked on Sunday would be paid at an hourly rate of $38.84 for a total amount of $388.40. The total of these amounts is $648.33, or around $60.00 more than the employee would have earned under the terms of the Agreement. These do not appear to be extreme examples and, in fact, this discrepancy would only become greater if the employee worked more hours at the weekend, given that the Award rate for work on Saturday is $29.13.

[34] There are a number of other calculations that can be done which produce similar results. It is also noted that the hourly rate in the Agreement for the Non-Rotating Day Worker is only around 1.5% greater than the rate provided for in the Award. While a direct comparison of the hours worked by an employee under the Agreement on this roster suggests the employee might be better off than their counterpart working under the Award, this ignores the fact the Agreement does not provide for a number of the additional benefits in the Award, such as the annual leave loading and various allowances including the first aid, supervision and meal allowances. The higher duties entitlement also only applies under the Agreement when 4 or more hours are worked at the higher level, whereas under the Award the entitlement applies for any work performed at the higher duties level. The averaging provisions for full and part-time employees also apply over an extended 12 month period, meaning overtime entitlements that might otherwise apply under the Award, could be avoided under the Agreement because of this extended averaging period. This is a significant additional consideration in terms of satisfaction with the requirements of the “better off overall test.”

[35] In addition, the Agreement provides for ordinary time to be worked within an extended span of 14 hours per day, whereas the Award provides for an absolute maximum of 12 hours, and only in circumstances where a range of measures, such as proper health monitoring procedures, proper supervision, and adequate breaks are in place.

[36] The part-time work provisions in the Agreement also need to be considered. The Security Services Industry Award 2010 makes clear that a part-time employee is an employee who is engaged to work fewer than 38 ordinary hours per week, and “has reasonably predictable hours of work.” It goes on to state in sub clause 10.4(b):

“(b) At the time of engagement the employer and the part-time employee will agree in writing on a regular pattern of work either:

(i) specifying at least the hours worked each day, which stays of the week the employee will work and the actual starting and finishing times each day; or

(ii) specifying the roster that the employee will work (including the actual starting and finishing times for each shift) together with days or parts of days on which the employee will not be rostered.

(c) Any agreed variation to the hours of work will be recorded in writing.

(d) All time worked in excess of the hours as agreed under clause 10.4(b) or varied under clause 10.4(c) will be overtime and paid for at the rates prescribed in clause 23 –Overtime.” 6

[37] The overtime provisions in clause 23 of the Award then confirm overtime is payable at the rate of time and a half for the first two hours for work performed on Monday to Friday, and at double time thereafter. Different arrangements apply for work at weekends and on public holidays.

[38] These Award provisions make clear that it is intended, firstly, that a regular pattern of work will be agreed upon at the outset. Secondly, any variation to these arrangements will entitle overtime payments.

[39] As indicated the provisions regulating part-time work are set out in sub clause 4.1.2. of the Agreement. BSMS now proposes to provide an undertaking containing a different set of words. It is expressed in the following terms: