Capricornia Pty Ltd t/a Quality Hotel Batman's Hill on Collins

[2011] FWA 727

[2011] FWA 727

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement

Capricornia Pty Ltd t/a Quality Hotel Batman's Hill on Collins
(AG2010/18900)

COMMISSIONER GOOLEY MELBOURNE, 10 FEBRUARY 2011

Batman's Hill on Collins Enterprise Agreement 2010.

[1] Capricornia Pty Ltd trading as Quality Hotel Batman’s Hill on Collins (the employer) applied pursuant to section 185 of the Fair Work Act 2009 (FW Act) for approval of a single enterprise agreement (the Agreement) on 26 October 2010.

[2] On 12 November 2010 I wrote to the employer’s bargaining representative outlining a number of concerns about the Agreement.

[3] A hearing was conducted on 24 November 2010. Ms Sally Stonier and Mr Robert Cannell appeared with permission on behalf of the employer.

[4] The Statutory Declaration filed with the application attached the notice of representational rights (the notice) and a memo (the memo) provided to employees at the same time. The notice complied with the FW Act. However the memo advised employees that a consultative committee was to be established to provide the necessary support network for the negotiation and approval of the Agreement. It called for nominations for “one employee to act as a bargaining representative from reception, administration, housekeeping, food & beverage and kitchen areas”. The memo advised that if more than one nomination was received from an area then an election would be held. The memo further advised that only full time or part time employees could be nominated as a bargaining representative. It further provided that alternatively if the employee was a “member of a Union you may wish to engage them as your bargaining agent”. The consultative committee would review and reach agreement on the proposed changes to the current agreement.

[5] I was concerned that the memo circulated to employees at the same time as the notice misled employees about their rights under the FW Act.

[6] In submissions, Ms Stonier advised that only one employee nominated from each area so there was no person who was prevented from participating in the process. She also submitted that at the meeting where the notice and the memo were circulated to employees, employees were able to indicate if they were interested in participating and were asked whether there was likely to be more than one representative interested and there wasn’t. Further she submitted that the memo advised employees that they could ask questions of her or Mr Cannell if they wished.

[7] However this response missed the point which was that the information provided in the memo was in direct conflict with the provisions of Section 174 of the FW Act and misled employees about their rights.

[8] Section 173 of the FW Act provides that an employer must provide employees with a notice of representational rights. Section 174 sets out the requirements of the notice.

[9] The circulation of the notice of representational rights to employees is a pivotal step in the bargaining process. It advises employees that the employer wishes to bargain for an enterprise agreement and informs the employees of their right to appoint a bargaining representative. The Explanatory Memorandum states that the “bargaining representatives have a more significant formal role in the bargaining process compared to bargaining agents under the WR Act.” 1

[10] An employer who advises employees that they will only recognise one bargaining representative per work group and that casual employees are not able to be bargaining representatives misleads employees about their rights.

[11] I have concluded that the memo and the notice together constitutes the notice required to be circulated under section 173 of the FW Act and as these documents do not comply with the requirements set out in section 174, no notice of representational rights has been provided to employees and therefore the procedural requirements of section 181 of the FWA have not been complied with and therefore the Agreement cannot be approved.

Better off overall test

[12] In any event I had significant concerns about whether the Agreement passed the better off overall test.

[13] The reference instruments are the Hospitality Industry (General) Award 2010 (the Hospitality Award) and the Commercial Sales Award 2010 (the CS Award).

[14] Mr Yann Duroselle, the General Manager for the employer, provided a Statutory Declaration in which he deposed at question 3.4 that there were no terms which were less beneficial to employees than the equivalent terms in the reference instruments.

[15] In my letter of 12 November 2010 I identified the following provisions in the Agreement as being less beneficial than the equivalent provisions in the Hospitality Award.

1. Rates of pay

[16] The base rates of pay in the Agreement are inclusive of applicable shift, weekend and public holiday penalties, annual leave loading and allowances. 2 This is not accurate. The rates of pay in the Agreement are inclusive of the annual leave loading and allowances and include an amount for the lesser shift, weekend and public holiday penalties provided in the Agreement.

[17] Table 1 compares the base rates for weekly employees in the Agreement with the base rates in the Award plus the hourly amount for the annual leave loading:

Hospitality Award	Annual leave loading	Total Award	Agreement
Level 1	15.43	.21	15.64	15.60
Level 2	16.03	.22	16.25	16.20
Level 3	16.58	.22	16.80	16.80
Level 4	17.46	.24	17.70	17.70
Level 5	18.55	.25	18.80	18.80
Level 6	19.06	.26	19.32	19.30

[18] Table 2 compares the night shift rates for weekly employees in the Agreement and the Hospitality Award:

Time	Hospitality Award	Agreement
7pm to 7am Monday to Friday	7pm to 7am Monday to Friday
Level 1	17.08/17.81	16.70
Level 2	17.68/18.41	17.30
Level 3	18.23/18.96	17.90
Level 4	19.11/19.84	18.90
Level 5	20.20/20.93	20.00
Level 6	20.71/21.44	20.60

[19] Table 3 compares the Saturday rates for weekly employees in the Agreement and the Hospitality Award:

Saturday	Hospitality Award	Agreement
Level 1	19.29	21.23
Level 2	20.04	22.04
Level 3	20.72	22.79
Level 4	21.82	23.99
Level 5	23.19	25.49
Level 6	23.82	26.21

[20] Table 4 compares the Sunday rates for weekly employees in the Agreement and the Hospitality Award:

Sunday	Hospitality Award	Agreement
Level 1	27	21.23
Level 2	28.05	22.04
Level 3	29.02	22.79
Level 4	30.56	23.99
Level 5	32.48	25.49
Level 6	33.36	26.21

[21] Table 5 compares the Public Holiday rates for weekly employees in the Agreement and the Hospitality Award:

Public Holidays	Hospitality Award	Agreement
Level 1	38.58	31.20
Level 2	40.08	32.40
Level 3	41.45	33.60
Level 4	43.65	35.40
Level 5	46.38	37.60
Level 6	47.65	38.60

[22] Table 6 compares the casual rates in the Agreement and the Hospitality Award:

Hospitality Award	Agreement
Level 1	19.29	20.16
Level 2	20.04	20.91
Level 3	20.72	21.60
Level 4	21.82	22.70
Level 5	23.19	24.08
Level 6	23.82	24.70

[23] Table 7 compares night shift rates for casual employees in the Agreement and the Hospitality Award:

Hospitality Award	Agreement
7pm to 7am Monday to Friday	7pm to 7am Monday to Friday
Level 1	19.64/19.81	20.16
Level 2	20.39/20.56	20.91
Level 3	21.07/21.24	21.60
Level 4	22.17/22.34	22.70
Level 5	23.54/23.71	24.08
Level 6	24.17/24.34	24.70

[24] Table 8 compares the Saturday and Sunday rates for casual employees in the Agreement and the Hospitality Award:

Hospitality Award	Agreement
Saturday	Sunday	Saturday	Sunday
Level 1	23.15	27	23.15	27
Level 2	24.05	28.05	24.05	28.05
Level 3	24.87	29.02	24.87	29.02
Level 4	26.19	30.56	26.19	30.56
Level 5	27.84	32.48	27.84	32.48
Level 6	28.59	33.36	28.59	33.36

[25] Table 9 compares the Public Holiday rates for casual employees in the Agreement and the Hospitality Award:

Hospitality Award	Agreement
Level 1	42.43	38.58
Level 2	44.08	40.08
Level 3	45.60	41.45
Level 4	48.02	43.65
Level 5	51.04	46.40
Level 6	52.42	47.65

2. Salaried employees

[26] The Agreement provides for salaried employees at levels 4-7. The wage rates for salaried employees includes compensation for overtime, public holidays and any travel which may need to be taken out of ordinary hours in position responsibilities and duties. 3 In fact the wage rates for salaried employees also include a payment for night shift penalties, Saturday and Sunday penalties and any allowances payable under the Hospitality Award.

[27] The Hospitality Award provides for annualised salaries for non managerial staff at clause 27. For non managerial staff an employer and employee can agree to be paid 25% more than the minimum award rate which will then exclude overtime and penalty rates payable under the Hospitality Award. The Hospitality Award however provides that the amount paid over a year must be at least what the employee would have earned if all award entitlements had been paid. Further on termination of employment prior to the completion of a year in which the salary is payable there must be reconciliation to ensure the amounts payable under the Hospitality Award have been complied with.

[28] No such protections are provided in the Agreement.

[29] Table 10 sets out the minimum rate to be paid to salaried employees at level 4, 5, and 6 of the Hospitality Award compared with the Agreement rates:

Level	Hospitality Award	Agreement
4	829.35	816.62
5	881.6	868.06
6	905.35	891.45

[30] Managerial staff under the Hospitality Award can be paid a salary provided it exceeds $45,462. Under the Agreement the rate for salaried managerial staff is $47,152.

3. Part time employees

[31] Under the Agreement, upon engagement the employer and employee will agree on the ordinary hours per four week cycle, work availability and the “preferred hours roster option, and scheduling of additional hours of work and meal break arrangements. Any change to this must be agreed.”

[32] Under the Agreement part time employees are regularly rostered to work a range of ordinary hours up to 152 hours per four week cycle with a minimum of six days off. 4

[33] The preferred hours rosters include working a range of up to 100 ordinary hours per four week cycle with a minimum guarantee of eight ordinary hours per week (Roster A) or a minimum of 60 ordinary hours up to 152 ordinary hours per four week cycle with a minimum guarantee of 15 ordinary hours per week. In addition by mutual agreement part time employees may request to work additional ordinary hours within the preferred grid range. A minimum shift is three hours. 5

[34] Under the Hospitality Award a part time employee and the employer must agree in writing at the commencement of employment on the regular pattern of work , specifying at least the hours worked each day, which days of the week the employee will work and the actual starting and finishing times each day. Any variation of hours of work will be recorded in writing. There is a minimum call of three hours and any hours worked in excess of the agreed hours are paid at overtime rates.

4. Termination of employment

[35] The Agreement provides that employees on probation can be terminated at any time during the probationary period. 6

5. Overtime

[36] Overtime under the Agreement is payable if the employee works more than 11.5 hours (full time employees) or in excess of 152 hours (weekly employees) and is paid at the rate of time and three quarters. 7

[37] Under the Hospitality Award overtime is paid for work outside of the hours set in clause 29. For example if a full time employee’s ordinary hours of work are 7.6 hours per day then overtime is paid for all work in excess of 7.6 hours. Overtime is payable at 150% for the first two hours Monday to Friday and double time thereafter, between midnight Friday and midnight Sunday overtime is at double time and overtime worked on a rostered day off is at double time with a minimum call of four hours. Also part time employees are paid overtime if they work outside of their agreed hours.

[38] Salaried employees under the Agreement are paid at single time after 172 hours per four week cycle. 8

6. Rosters

[39] The Hospitality Award provides that rosters can be changed by mutual agreement or by seven days notice if there is no agreement. The Agreement provides that the roster can be changed on 48 hours notice. Further in certain circumstances the employer can shorten an employee’s shift.

7. Superannuation

[40] The Hospitality Award provides for superannuation to be paid if the employee’s income exceeds $350. Under the Agreement superannuation is payable only if the employee’s income exceeds $450. 9

8. Accident make up pay

[41] The Hospitality Award provides for accident make up pay. The Agreement provides that the employer “will continue to pay the employee a percentage of their pre-injury pay under this Agreement in accordance with the Act.” 10

[42] As accident make up pay is not provided under the Accident Compensation Act 1985 the Agreement clause did not appear to provide for accident make up pay.

9. Public Holidays

[43] The Hospitality Award provides for weekly employees to be paid 250% for working on a public holiday or they can have another day off and receive a 50% penalty. Casual employees are paid 275% of the base rate for their classification.

[44] The Agreement provides that normally an employee will not work more than five public holidays per year. The employee who works on the public holiday can have an additional day off with pay or an additional day’s pay. Part time employees who are not rostered to work are only entitled to public holiday pay if they have regularly worked the day on at least three occasions over the previous four week period. Casual employees are paid the rate set out in Appendix 2 to the Agreement.

10. Allowances

[45] There are no allowances provided in the Agreement. The Hospitality Award provides for meal allowances, clothing, equipment and tools, vehicle, working late and first aid allowances. In addition if an employee works a broken shift an allowance is payable.

11. Additional obligations

[46] Clauses 11.3 (alcohol and drug policy) 11.4 (acceptance of gifts and benefits) 11.5 (conflict of interest) and 11.6 (confidential information) impose obligations on employees not provided for in the Hospitality Award.

12. Deductions from employee wages

[47] The Agreement provides for deductions from an employee’s wages without their consent.

More beneficial terms

[48] The Agreement provides for more beneficial terms as follows:

1. Wage increases

[49] The Agreement provides for a 3% wage increase on 1 July each year.

2. Annual leave

[50] Weekly employees are entitled to an additional 1 weeks annual leave.

Exceptional Circumstances

[51] In answer to question 3.6 of the Statutory Declaration which requires the employer, should the employer consider the Agreement does not pass the BOOT, to advise Fair Work Australia of any exceptional circumstances that should be taken into account when deciding whether the Agreement should be approved, Mr Duroselle referred to the following:

1. Paid Parental Leave

[52] Paid parental leave is payable on a sliding scale if an employee has two years or more continuous service. If the employee is paid parental leave under the Australian Government Paid Parental Leave scheme than the employee receives make up pay.

2. Part time employee hours

[53] The guaranteed minimum payment for part-time employees in accordance with clause 8.2.2

Submissions of the Applicant

[54] At the hearing Ms Stonier and Mr Cannell made submissions about the BOOT.

[55] Mr Cannell provided calculations 11 which took into account that employees received an additional one week’s paid annual leave. The spreadsheets modelled the outcomes for employees who worked Monday to Friday between 7am to 7pm and five public holidays as the Agreement provides that employees would not normally be rostered to work more than five public holidays. Mr Cannell’s calculations showed that the employees would be better off under the Agreement by between 96 cents and $3.87 per week.

[56] Spreadsheets were provided for employees who work night shifts for 25 hours per week. These calculations showed that employees would be between 0 cents and $4.12 per week better off under the Agreement.

[57] Spreadsheets were provided for employees who work Saturday and Sunday each week. Some employees were better off and others worse off under the Agreement.

[58] Spreadsheets were provided for salaried employees which showed that salaried employees at levels 4, 5 and 6 were paid the same under the Agreement as they would be paid under the Hospitality Award. Managerial employees are paid $725 per year more.

[59] It was further submitted that while the overtime rate in the Agreement was below the overtime rate in the Hospitality award after two hours work, the rate for overtime for the first two hours was higher under the Agreement. Mr Cannell submitted that little or no overtime is worked and that for the first eight hours overtime worked the employees were better off under the Agreement than the Hospitality Award.

[60] Salaried employees it was said are better off as they are paid an additional amount when they work more than 172 hours per month.  12

[61] Ms Stonier submitted that the employer sought to modify the provisions in the Hospitality Award around part time employees. It was said that part time employees want some guarantee of rostered hours per week and wanted an ability to work additional hours and generate additional income for themselves. 13 Further the employer has need for flexibility and rostering of employees according to their weekly and daily variations.14

[62] In relation to probationary employees Ms Stonier submitted that these employees were not excluded from the notice provisions in the Agreement. 15

[63] Ms Stonier submitted that it was the intention of the parties to pay accident make up pay. 16

[64] In addition Ms Stonier indicated that the employer was prepared to give undertakings about some of the matters raised.

Conclusion on BOOT

[65] I have, in this decision, made reference to the Hospitality Award. While I was advised that the CS Award applied, given my decision that the Agreement does not pass the BOOT for the hospitality staff it is not necessary for me to decide if the one employee under the CS Award is better off.

[66] I have had regard to the submissions made by the employer in this matter.

[67] Fair Work Australia is required to consider whether each award covered employee or prospective employee would be better off. In doing so if a class of employees to which a particular employee belongs would be better off if the agreement applied to that class than if the relevant modern award applied to that class, then Fair Work Australia is entitled to assume, in the absence of evidence to the contrary, that the employee would be better off overall if the agreement applied to the employee.

[68] The rates of pay in the Agreement, even when regard is had to the additional week of annual leave, offer a tiny increase when compared with the Hospitality Award. The assumptions which underpin the calculations are not derived from the Agreement. Small changes to the assumptions made in the calculations i.e. an increase in the number of hours worked after 7pm or on Sunday could quickly reduce to zero the increase provided by the Agreement.

[69] The inclusion of paid maternity leave is of course a benefit but the qualifying period and the introduction of the government’s paid parental leave scheme means that the value of the provision is diminished. For a level 1 employee paid maternity leave is worth between $98.04 and $294.12 depending on their length of service.

[70] The provisions for part time employees in the Agreement are mixed. The minimum weekly engagement for part time employees is between 8 and 15 hours per week. This is clearly a more beneficial term. However the Agreement lacks the certainty around hours which the Hospitality Award provides. Without their consent under the Agreement a part time employee could work anywhere between 32 and 100 hours per four week cycle or between 60 and 152 hours per four week cycle.

[71] When considering the provisions for part time employees in the Restaurant Industry Award 2010 which are similar to those in the Hospitality Award the Full Bench said this:

“[198] We have adopted the part-time provision in cl.13.3 of the Victorian Restaurant Award, but we have modified it in light of the requirement in clause 53 of the consolidated request (added on 26 August 2009) to ensure that the hours of work and associated overtime and penalty arrangements in the retail, pharmacy and any similar industries do not discourage employers from offering additional hours of work to part-time employees or from employing part-time employees rather than casual employees. Clause 12 of the exposure draft requires the pattern of part-time hours to be agreed, but cl.12.4 permits a variation to working hours by agreement, provided it is recorded. Clause 12.7 provides that overtime is payable for hours in excess of the agreed hours or the hours as varied under cl.12.4, subject to the general overtime provision in cl.30.1 of the exposure draft.

[199] The requirement for written evidence of any variation of hours is important to ensure that part-time employees are genuinely free to accept or decline either an ongoing variation of hours, or a one-off increase in hours on a particular occasion in light of operational circumstances. Absent such agreement the regular and predictable nature of part-time work and the capacity of part-time employees to enter into agreements for working arrangements which meet their family or other responsibilities would be at risk of severe compromise.”

[72] I agree with the Full Bench. An Agreement which provides part time employees with no certainty about when he or she will be rostered is not part time employment. The part time employee provisions in the Agreement represent a significant diminution in conditions for part time employees under the Agreement. I do not consider that the increased guaranteed minimum hours of work and other benefits sufficiently offsets this loss of certainty for part time employees.

[73] Given the modelling on wages provided for weekly employees I am not satisfied that the wage rates and other benefits in the Agreement compensate sufficiently for the lesser penalties.

[74] Given the modelling for salaried employees below level 7, I am not satisfied that the wage rates and other benefits sufficiently compensate these salaried employees for the loss of the protections found in clause 27 of the Hospitality Award.

[75] I have had regard to both the more beneficial provisions of the Agreement and the less beneficial provisions and I am not satisfied that the each award covered employee and each prospective award covered employee would be better off if the Agreement applied to the employee rather than the Hospitality Award.

Undertakings

[76] Section 190 of the Fair Work Act 2009 provides that if Fair Work Australia forms the view that the Agreement does not meet the requirements set out in section 186, and in this case section 186(d), that Fair Work Australia may accept written undertakings provided the undertakings are not likely to cause financial detriment to any employee covered by the Agreement or would not result in substantial changes to the Agreement.

[77] After the hearing the employer proffered the following undertakings:

(1) Substitute first paragraph of clause 4.2 (Dispute resolution procedure) with the following:

4.2 Dispute resolution procedure

In the event of grievance or dispute between the employer and employee(s), relating to a matter under this Agreement or the NES, the parties shall resolve the issues fairly and equitably using the following procedures:

(2) Replace clause 5.7 in relation to clause 5.6 (Casual engagement) by inserting subclause 5.6.6 with the following:

5.6.6 Evidence supporting claim The employee is required to produce a medical certificate signed by a registered health practitioner or statutory declaration indicating the occurrence of personal injury or illness to a member of the employee's immediate family or household requiring the employee's care or support or in circumstances where an unexpected emergency has occurred affecting the member.

(3) Substitute sub-clause 8.1.2 (Ordinary Hours full time weekly employees) with the following:

8.1.2 A minimum shift of 6 hours up to a maximum of 11.5 hours shall apply.

(4) Substitute sub-clause 8.4.1 (Payment of overtime for additional hours worked) with the following:

8.4.1 Authorised additional hours shall be accrued at the overtime rate of time and three quarters for hours worked in excess of;

(a) 11.5 hours per day; or

(b) in excess of 152 hours per 4 week cycle as provided for in clause 8.1.1 for full time employees; or

(c) in excess of the preferred range of hours outlined in clause 8.2.2(a) and 8.2.1(b) for part time employees.

(5) Substitute second paragraph clause 10.2 (Employer obligations regarding Superannuation) with the following:

If during any monthly contribution period, the aggregate ordinary time earnings for an employee do not exceed $350.00, no contribution shall be made in respect of the employee.

(6) Substitute the sub-clauses 10.3, 10.3.1 and 10.3.2 (Accident make-up pay) with the following:

10.3 Accident Compensation entitlement

10.3.1 Subject to Accident Compensation Act 1985, an employee who suffers an injury in the workplace and is entitled to worker's compensation benefits shall be paid the corresponding percentage of his/her average weekly earnings under the Agreement as provided for by the Act.

10.3.2 The payment is limited to a maximum period of 26 weeks calculated on the average number of hours worked over the 12-month period immediately preceding the injury.

7) Substitute sub-clause11 .3.2 (Alcohol and drug policy) with the following:

11 .3.2 An employee, must not report for duty whilst under the influence of drugs (prescribed or non-prescribed), alcohol, or any other substance which impinges upon the employee's ability to satisfactorily perform normal duties.

8) Substitute sub-clauses 11 .7 (Use and return of property belonging to the employer) with the following:

11.7 Use and return of property belonging to the employer

11 .7.1 The employee must take all reasonable care in the use and protection of any property belonging to or in the care of the employer.

11 .7.2 On termination of the employment the employee shall return in good condition (subject to fair wear and tear) any property in his/her possession and belonging to the employer.

11 .7.3 Arrangements for the return of any property and/or repayment of debt to the employer shall be agreed in consultation with the employee at the time of termination.

9) Substitute sub-clause 13.5.4 a) with the following:

13.5.4 a) medical certificate signed by a registered health practitioner or statutory declaration in the case of personal/carers leave.

[78] The undertakings were endorsed by the bargaining representatives.

Conclusion

[79] Given my finding that the notice of representational rights in the form prescribed by the FW Act was not provided to the employees the Agreement cannot be approved. In the event that this conclusion is incorrect I found that the Agreement did not satisfy the better off overall test.

[80] While the undertakings would satisfy some of my concerns about the Agreement the undertakings do not resolve my concerns about the diminution of terms and conditions for weekly employees that would result if the Agreement was approved. I therefore decline to approve the Agreement and the application for approval is dismissed.

COMMISSIONER

 1   Explanatory Memorandum at [697]

 2   Clause 6.3.1 of the Agreement

 3   Clause 6.3.2

 4   Clause 8.2.1

 5   Clause 8.2.2 and 8.2.3

 6   Clause 5.4.3

 7   Clause 8.4

 8   Clause 9.1.3

 9   Clause 10.2

 10   Clause 10.3

 11   Exhibit A1

 12   Transcript PN 61-62

 13   Ibid PN 65

 14   Ibid PN 66

 15   Ibid PN 83

 16   Ibid PN 111 and 112

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