Cafe Yaringa Pty Ltd T/A Cafe Yaringa
[2009] FWA 1388
•1 DECEMBER 2009
[2009] FWA 1388 |
|
DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
(AG2009/15030)
Liquor and accommodation industry | |
COMMISSIONER WHELAN | MELBOURNE, 1 DECEMBER 2009 |
Application for approval of a single-enterprise agreement—Cafe Yaringa Pty Ltd Enterprise Agreement 2009-2014—application refused.
[1] This is an application made under section 185 of the Fair Work Act 2009 for approval of an enterprise agreement. Section 185 is part of Part 2–4 of the Act which provides for the making of enterprise agreements between an employer and their employees who are employed at the time the agreement is made and who will be covered by the agreement.
[2] The Explanatory Memorandum for the Act in dealing with Part 2–4 – Enterprise Agreements, states in paragraph 640:
‘640. Part 2-4 provides for the making of enterprise agreements through collective bargaining primarily at the enterprise level. It enables employers and employees, and their bargaining representatives, to bargain in good faith to make an enterprise agreement.’
[3] It is clear from the Explanatory Memorandum that enterprise agreements are collective agreements that will cover a group of employees:
‘642. Enterprise agreements are collective agreements that will cover a group of employees. Part 2-4 provides for the making of two types of enterprise agreement – single-enterprise agreements and multi-enterprise agreements. A single-enterprise agreement or multi-enterprise agreement relating to a genuine new enterprise may also be a greenfields agreement.’
[4] The document submitted by the bargaining representative for approval in this matter has a covering page with the following title: ‘Fair Work Enterprise Agreement 2009-2014 between Café Yaringa Pty Ltd t/as Café Yaringa, 1 Lumeah Road, Somerville Victoria 3192 and Various Employees’.
[5] It further states, ‘This agreement will nominally remain in force for four years from the approved date’.
[6] The first page of the Agreement is headed, ‘Fair Work Enterprise Agreement between the Cafe Yaringa and Various employees’.
[7] The statutory declaration lodged in support of the application states that the agreement was made on ‘19.09.09’.
[8] In relation to compliance with section 180(2)(a), the declaration states:
‘Each individual employee was informed by written and verbal notice of the desire to enter bargaining, each was provided with a copy of the proposed agreement, Notice of employee representational rights and a consultation letter informing of the proposed terms and effect of the terms’.
[9] In relation to compliance with section 180(3) the declaration states:
‘Each individual employee was notified of the intent to carry out a vote by individual agreement of each employee returning or failing to return a signed, dated and witnessed copy of the proposed agreement’.
[10] In relation to compliance with section 180(5) the declaration states:
‘Each employee was provided with a consultation letter explaining the terms and the effect of the terms of the agreement. Each was requested in the letter and verbally to notify of any specific individual needs of explanation or representation’.
[11] The date on which the employees were first requested to approve the agreement by voting on it is given as ‘19.9.09’ and the date on which the last notice of employee representation rights was given is ‘22.8.09’.
[12] At the request of Fair Work Australia, Mr Chalker provided copies of the documents given to the employees. The following documents were provided:
(a) An undated document headed Schedule 2.1 – Notice of employee representational rights. This document is in the form set out in Schedule 2.1. However it contains the additional following paragraphs:
‘How and When Approved
Your employer must allow you a reasonable opportunity to decide whether you want to approve the making, variation or termination of the enterprise agreement.
The employer, Cafe Yaringa Pty Ltd, will use the following method to approve the making, variation or termination of the enterprise agreement:
Have each employee agreeing with the enterprise agreement, after receiving all required documentation including a copy of the agreement at least 21 days before signing the agreement, sign, date and have witnessed their signature agreeing to the Enterprise Agreement with a return from a majority of employees approving the agreement’.
(b) A document on the letterhead of the bargaining representative headed, ‘Consultation with employees of Cafe Yaringa Pty Ltd’:
‘Your management has appointed Industrial Relations Developments to deal with the implementation of an Enterprise Agreement for the business. An Enterprise Agreement, in simple terms, is an agreement regarding the employment of people in an individual business that takes the place of an award.
It is a legal requirement that the terms and the effects of the terms of the agreement are explained to you.
The proposed agreement is a template agreement intended to simplify the rules of employment in this business, has been used by other industry participants and has been approved by the Workplace Authority Director previously as passing the No Disadvantage Test for the same employment terms as yours. This means that the award terms and conditions have not been disadvantaged in this agreement.
The major reasons for the proposed implementation are to bring the business into modern terms of employment while taking into account the serious implications of the economic crisis faced by all businesses at the present time and in the near future, particularly small business.
Current employees are guaranteed that their present entitlements will not be changed. This agreement is intended to put in place the future practices of this business with all current employees being seen as senior employees for the future. All new employees will enter under the new rules.
The major changes are:
• A flexibility clause is now a mandatory component of enterprise agreements. The clause allows employees/employers to agree to be individually flexible depending on the needs of each employee and the business. The effect of this clause also means that Saturdays & Sundays can be seen as the same as any other day with a 6th and 7th day worked (of any day) to be penaltied.
• Clauses rolling all leave & public holiday payment entitlements in to the rate paid per hour. The entitlement to the leave remains for whenever required to be taken. Extra leave taking entitlements have been added into the agreement. It is seen that two benefits flow from this practice – the employee has the ability to bank early the payment received and has surety of payment should the business possibly fold while taking the liability away from the employer.
• An embedded ability for an employee to negotiate employment conditions after 12 months
• Employment reward to be based on certified training, individual productivity and business success and profitability.
• The agreement term nominally remaining in force for four years from the approved date.
All legal requirements of the Fair Work Act and the National Employment Standards, together with the Fair Pay Scale/Minimum Wages Orders remain.
Each employee is most welcome to discuss any matter with the business, with Industrial Relations Developments or, if appointed, their own bargaining representative. Should you need specialist assistance, particularly juniors or employees from culturally diverse backgrounds, don’t hesitate to ask.’
(c) A document described by the bargaining representative as an ‘Individualised Copy of the Enterprise Agreement’. The covering page contains the following title, ‘Fair Work Individual Work Contract between Cafe Yaringa Pty Ltd t/as Cafe Yaringa, 1 Leumeah Road. Somerville, Victoria, 3192 and [name of employee] [address of employee]’ and the words, ‘This contract will remain in force whilst employed by Cafe Yaringa until replaced and commences at the time of signing and dating’. The first page of the document is then headed, ‘Contract of employment between Cafe Yaringa and [name of employee]’.
[13] It is abundantly clear from a reading of the Fair Work Act 2009 and the Explanatory Memorandum that the Act makes no provision for statutory individual employment contracts. I would have thought that it was abundantly clear that a collective agreement is not simply a collection of individual contracts bundled together and relabelled as an ‘enterprise agreement’. There was not, and it would appear obvious that nor was there intended to be, any collective bargaining associated with the exercise undertaken by the employer’s bargaining representative. The employees in this case were simply asked to sign individual employment contracts which the bargaining representative somewhat misleadingly rebadged as an enterprise agreement for the purpose of obtaining the approval of Fair Work Australia.
[14] The content of the document is equally enlightening.
[15] The first paragraph states that the basis of the agreement is the ‘Fair Work Act (2010) including the National Employment Standards and the Hospitality Industry (General) Award 2010 (as varied from time to time in a National Minimum Wage Order)’. It further states ‘where there is inconsistency between the Standards and this Agreement, the Agreement shall prevail’.
[16] It should be noted in relation to this paragraph:
(a) The Fair Work Act came into operation in 2009;
(b) The Hospitality Industry (General) Award 2010 does not come into effect until 1 January 2010, its contents are still subject to applications to vary and it may not be the relevant award for the business which is currently covered by the Liquor and Accommodation Industry – Restaurants – Victoria – Award 1998. 1
(c) Under the provisions of section 56 of the Act, a term of an agreement has no effect to the extent that it contravenes section 55. A term of the agreement cannot therefore after 1 January 2010 override a provision of the National Employment Standards.
[17] The agreement then states, “The award flexibility provisions of the Hospitality Industry (General) Award 2010 (Clause 7 in its entirety) are taken to be a provision of this agreement’.
[18] It is assumed that this is intended to meet the requirements of section 202 and 203 of the Act. There is some doubt that this would, in fact meet the requirements of section 203(2)(b) as those provisions are not expressly contained in clause 7 of the Award referred to in the Agreement.
[19] The Agreement then goes on to specify a particular flexible hours arrangement which would provide for an employee to work on any five days in seven at ordinary rates provided that if they did work on the two days specified as ‘days off’ it would attract certain penalty rates.
[20] There are two observations to be made about those provisions. First, an individual flexibility clause is intended to facilitate individual flexibility arrangements in order to meet the genuine needs of the employee and the employer. It is a facilitative clause not one which specifies what the flexibility arrangement will be. It provides what terms may be varied but not how they may be varied. Second, the penalty rates provisions of the Liquor and Accommodation Industry – Restaurants – Victoria – Award 1998 specify particular penalties to apply to work on Saturday or Sunday. There is a long history to these types of provisions associated with the inconvenience to employees of working at times when their children and families might reasonably expect to be able to enjoy their company. It is not a penalty for being required to work on more than five days per week.
[21] In my view the ‘flexibility’ proposed by the Agreement would not pass the No Disadvantage Test.
[22] The next six paragraphs of the agreement begin with the words, ‘I agree . . .”, the following two with the words ‘I specify . . .’ and the next paragraph also begins with the words ‘I agree’. While the agreement (that is the copy given to Fair Work Australia) states that ‘I’ includes the plural ‘We’ it is clear that each employee signed a document agreeing individually to those provisions as the terms of their individual contract.
[23] In paragraph 3/ the employee agrees to work an ordinary working week of any five days in seven as rostered two weeks in advance with hours being averaged annually at 40 rostered hours between 7.00 a.m. and 1.00 a.m. Monday to Sunday with paid time of 37.5 hours and any hours in excess of 38 being voluntary hours paid at the hourly rate ‘being greater than the base rate and better off overall’.
[24] This paragraph contains a number of matters which would not pass the no disadvantage test:
• The award provides for an average of 38 hours to be averaged over a period of up to four weeks not 52;
• The award provides for payment of overtime which varies dependent upon the time at which the overtime is worked. It makes provision for time off in lieu of overtime but does not provide for an exemption from the payment of overtime on the basis that the employee has agreed that ‘all reasonable additional hours’ worked by them will be regarded as voluntary and therefore not subject to the penalty provisions for overtime.
[25] On these grounds alone I would consider that the clause failed the no disadvantage test, however in addition I am not satisfied that rates provided would compensate the employee for the ordinary hours worked. Based on the employer’s advertised hours of operations (Monday to Sunday 11.00 a.m. to 11.00 p.m.) and the relevant penalties under the Award, the average hourly rate for a 38 hour week would be $17.99 compared to an average hourly rate under the Agreement of $17.27. If more hours are worked on the weekends and during the evenings the difference would be greater.
[26] Paragraph 4/ of the Agreement differs from paragraph 4/ of the ‘contract’ given to the employee. In substance however it provides that as a part-time employee, the employee agrees to work (x hours – being less than 38) per week, averaged annually, on various days of the week, various hours of the day, various starting and finishing times as long as approximate hours are rostered and notified two weeks beforehand. The hours are to be worked again, between the hours of 7.00 a.m. and 1.00 a.m. Monday to Sunday. “Where greater than those hours are worked (being reasonable additional hours) they are voluntary hours . . .”.
[27] Again, I fail to see how this clause could meet the requirements of the no disadvantage test by comparison with clause 13.3—Regular part-time employees; clause 23—Hours of work; or clause 25—Overtime.
[28] Paragraph 5/ provides for rates of pay to be expressed on an hourly, weekly or annual basis.
[29] Paragraph 6/ provides for a shift to be of a minimum duration of two hours with no maximum shift length. A part-time employee, under clause 13.3.5 of the Award cannot be employed for less than three consecutive hours and under clause 23.3.1 a maximum of 11½ hours can be worked in any one day.
[30] Paragraph 7/ provides for meal breaks to be taken at the discretion of the duty manager with the work not to exceed six hours between breaks. Under clause 24.2 of the Award if an unpaid meal break is rostered to be taken after five hours of starting work, the employee must be given an additional 20 minutes paid meal break. Under clause 24.4 if an employee is required to work more than five hours after he or she is given an unpaid meal break, he or she must be given an additional twenty minute paid break.
[31] Paragraph 8/ of the Agreement (which I note is expressed in different terms in the ‘individual contract’) provides:
‘I agree that the accruing and crediting of personal/compassionate leave takes place weekly (which is better off overall for me). I agree to take personal/compassionate leave where authorised. I agree that for personal leave to be authorised, a medical certificate is to be produced to the employer. Unpaid personal leave of 10 days is available where authorised. An individual employee may opt out of this clause at any time by written agreement between the employer and the individual employee.’
[32] Paragraph 9 is in similar terms with respect to annual leave and again it differs from the wording in the ‘individual contract’.
[33] The effect of these clauses is stated as being a ‘pre payment’ of the award entitlement. According to the explanation given to employees: ‘It is seen that two benefits flow from this practice – the employee has the ability to bank early the payment received and has the surety of payment should the business possibly fold while taking the liability away from the employer’.
[34] One of the factors which distinguishes an ongoing employee from a casual one is the entitlement to take paid sick/personal leave and annual leave. While the loading paid to a casual employee is in compensation for matters others than non-payment of sick/personal and annual leave, it is a significant component of that loading.
[35] What, in effect, this clause in conjunction with other clauses in the agreement does is to create a category of employee who sits somewhere between a ‘regular part-time employee’ and a ‘casual employee’. They do not have a regular pattern of work specifying ‘at least the hours worked each day, which days of the week they will work and the actual starting and finishing times each day’ 2 and nor do they receive payment at the time they take sick/personal leave or annual leave. They do not get paid overtime for work outside of their ‘average rostered hours’ because it is ‘voluntary’ and yet they do not have the capacity – as a casual does – to refuse work when it is offered. Indeed the agreement specifies that absence from work for a period exceeding three days ‘without cause or consent’ will be prima facie evidence of abandonment of employment (clause 16/ of the Agreement).
[36] I further note clause 13.3.6 of the Award which states, ‘An employee who does not meet the definition of a regular part-time employee and who is not a full-time employee will be paid as a casual employee in accordance with 13.2.’
[37] The award and the Australian Fair Pay and Conditions Standards (AFPC) currently provide for four weeks annual leave. Currently the AFPC allow for up to two weeks of annual leave to be ‘cashed out’ under the terms of a workplace agreement and under the National Employment Standards this will be changed to provide that an award or agreement may provide for cashing out only where the employee’s remaining accrued entitlement exceeds four weeks. Section 90 of the Fair Work Act 2009 also provides:
‘(1) If, in accordance with this Division, an employee takes a period of paid annual leave, the employer must pay the employee at the employee’s base rate of pay for the employee’s ordinary hours of work in the period.’ (My emphasis)
[38] The current Award also provides at clause 27.2:
‘The pay rate for annual leave is the employee’s pay rate at the time the employee takes the annual leave, plus 17.5 per cent of that rate.’ (My emphasis).
[39] I am not satisfied that clause 9/ of the Agreement can pass the no disadvantage test by reference to these provisions. The existence of paid annual leave and leave loading is designed to encourage employees to take a break from work, to spend time in rest and relaxation and with their families. It is also a positive benefit to the economy and the domestic tourism industry. These provisions would discourage an employee from taking leave as it would, at the time of taking it, be unpaid.
[40] Similarly with clause 8/, paid personal leave is designed to assist an employee to recover from illness or to take care of ill family members while at the same time being paid their regular income. Because such leave can be accrued it enables an employee who has a reasonable period of service with an employee to access more than the 10 days paid leave per annum if they have a major illness or non–work related injury without the stress of surviving without any income. Clause 8/ would remove this benefit.
[41] Clause 10/ provides for an all in rate of pay based on working any five days in seven including accrued personal/compassionate leave, accrued annual leave and leave loading payment and including extra payments where required to work public holidays. Nothing in the document specifies the number of public holidays which might be worked.
[42] The Agreement lodged with Fair Work Australia contains provisions for allowances in relation to overtime meal allowance, tool allowance and laundering of special clothing. These are not in the document provided to the employee.
[43] It further provides for penalties to apply to ‘required overtime hours on rostered days’, on the ‘sixth day’ and the ‘seventh day’. These are also not in the document provided to the employee.
[44] The Agreement provided to the employee makes no provision for work performed after 6.00 p.m. Monday to Friday, on Saturdays or Sundays or on public holidays. In addition, both documents provide under the heading ‘Employee Choice of Hours’ that the employees may nominate their ‘preferred hours’ and in developing rosters the employer will give all reasonable consideration to ‘employee choice’. ‘Where the employer has provided the preferred hours of the employee the rates of pay for this work will be at the normal hourly rate’.
[45] Businesses, particularly those in the hospitality industry (as is the case here) and retail sector, employ a large number of part-time and casual employees. While in this case no employees are said to be casual employees, six of the 10 employees are described as part-time. Such businesses also operate across a range of hours including evenings and weekends. It has been a longstanding practice in these industries for employees – many of whom are students or women with family responsibilities – to nominate their available hours and for rosters to be developed which take this into account.
[46] The award provides for certain hours to attract penalty rates because those hours have traditionally been regarded as ones during which employees might otherwise be sleeping, spending the time with their families or enjoying recreational activities with friends. Some employees because of study or family responsibilities can only work during those times. The award does not exempt the employer from paying the penalty because the employee is only able to work during those hours. Many families have one parent working day shift and another working afternoon or night shift in order to provide care for children and pay their mortgage. Provided the employer has a need for employees to work those hours, should the coincidence of those needs provide an escape from the liability to pay the prescribed rate? I do not believe so.
[47] The Fair Work Act 2009 makes specific provision for clauses enabling individual flexibility arrangements to be included in enterprise agreements. Such clauses have specific requirements in relation to genuine agreement. There is a requirement, that the employee is ‘better off’ than if there was no individual flexibility arrangements. Paragraph 868 of the Explanatory Memorandum cautions in relation to the application of this test the following:
‘868. Because the value that a particular employee may place on a non-monetary benefit is important, it is less likely that an employee would be better off overall where the employer has initiated a request to agree an individual flexibility arrangement under which the employee gives up a monetary benefit in exchange for a non-monetary benefit. Similarly, it is less likely that an individual flexibility arrangement would result in an employee being better off overall where the monetary benefit given up by the employee had a substantial value, or if the value of the monetary benefit was, in the view of a reasonable person, disproportionate to the non-monetary benefit for which it was exchanged.’
[48] The fact that an employee nominates their available or preferred hours of work and the employer in making up a roster is able to accommodate that does not, in my view, mean that the employee is not disadvantaged if the employer does not pay the penalty rates which, under the award, must be paid when certain hours are worked.
[49] Where an employee has particular family responsibilities which might cause them to seek working arrangements outside of the normal roster pattern, the Fair Work Act 2009 makes specific provision for that in section 65.
[50] The Agreement provided to Fair Work Australia also has clauses headed, ‘Community Service Leave & Jury Leave’ and ‘Redundancy’. Neither of these are in the ‘Individual Workplace Contract’ given to the employee.
[51] Further clause 11/ of the document given to Fair Work Australia states, ‘This agreement will nominally remain in force for four years from the approved date’ while the document given to the employee states, ‘This agreement will remain in force whilst employed from the stated date’.
[52] In the notice provided to employees headed ‘Consultation with employees of Café Yaringa Pty Ltd’ Mr Chalker states,
‘The proposed agreement is a template agreement intended to simplify the rules of employment in this business, has been used by other industry participants and has been approved by the Workplace Authority Director previously as passing the No Disadvantage Test for the same employment terms as yours. This means that the award terms and conditions have not been disadvantaged in this agreement.’
[53] I am unable to say whether the Workplace Authority did or did not find that the ‘template’ agreement submitted by Mr Chalker passed the No Disadvantage Test or not. If it did so it was within the context of a different statutory regime and, I suspect from the wording of the document, it was assessed as an Australian Workplace Agreement under the WorkChoices provisions.
[54] I am unable to come to the same view. Even if the maths did add up, and I am not satisfied that they do, the No Disadvantage Test is not simply a mathematical exercise. As Justice Kevin Bell said recently in relation to the ‘no net detriment test’, ‘But it was Albert Einstein who said that not everything you can count counts and you cannot count everything that counts’. 3
Conclusions
[55] The application for approval of this agreement is refused for the following reasons:
• The document provided to Fair Work Australia is not the document provided to each of the employees and which they were asked to accept by individually signing their own ‘individual work contract’.
• The Act makes no provision for a ‘Fair Work Individual Workplace Contract’ and a collective enterprise agreement is not simply a collection of such contracts.
• The document provided to employees does not contain the actual written text of the agreement and nor were they provided with other material incorporated by reference in the agreement.
• It is apparent that the document headed ‘Consultation with employees of Café Yaringa Pty Ltd’ does not explain the terms of the agreement and the effect of those terms by reference to the effective differences between the Award and the Agreement. Further it specifically states that ‘Current employees are guaranteed that their present entitlements will not be changed’.
• A number of the provisions of the Agreement do not pass the No Disadvantage Test and collectively they do not ensure that each employee, including prospective employees would not suffer, on balance, a reduction in the overall terms and conditions of employment by comparison with the relevant award-based transitional instrument.
• I am satisfied that there are no undertakings which could be given which enable me to approve this agreement.
• I am satisfied that what has been presented to Fair Work Australia for approval is not ‘an enterprise agreement’ within the meaning of the Act and therefore could not be approved under the provisions of section 185.
COMMISSIONER
1 Liquor and Accommodation Industry – Restaurants – Victoria – Award 1998 [AP787213CRV]
2 AP787213CRV at clause 13.3.3.
3 Romsey Hotel Pty Ltd v Victorian Commissioner for Gambling Regulations and others [2009] VCAT 2275
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