Compass Group (Australia) Pty Ltd T/A ESS; Compass Group Healthcare Hospitality Services Pty Ltd T/A Medirest (Australia) Pty Ltd

[2020] FWCA 2105

[2020] FWCA 2105

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Compass Group (Australia) Pty Ltd T/A ESS; Compass Group Healthcare Hospitality Services Pty Ltd T/A Medirest (Australia) Pty Ltd
(AG2019/1253)

COMPASS GROUP - MEDIREST (ROYAL VICTORIAN EYE & EAR HOSPITAL) ENTERPRISE AGREEMENT 2018

Health and welfare services
COMMISSIONER LEE	MELBOURNE, 29 APRIL 2020

Application for approval of the Compass Group - Medirest (Royal Victorian Eye & Ear Hospital) Enterprise Agreement 2018.

[1] An application has been made for approval of an enterprise agreement known as the Compass Group - Medirest (Royal Victorian Eye & Ear Hospital) Enterprise Agreement 2018 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act). It has been made by Compass Group (Australia) Pty Ltd T/A ESS; Compass Group Healthcare Hospitality Services Pty Ltd T/A Medirest (Australia) Pty Ltd. The Agreement is a single enterprise agreement.

[2] The application was lodged on 16 April 2019. The application states that two employers are to be covered by the Agreement, Compass Group (Australia) Pty Ltd trading as ESS and Compass Group Healthcare Hospitality Services Pty Ltd trading as Medirest (Australia) Pty Ltd (the Applicants).

[3] At question 3.1 of the Form F17 - Employer's declaration in support of enterprise agreement (F17), the Applicants identify the Hospitality Industry General Award 2010 (the HIG Award) as the Modern Award (Award) that covers the employer and any of the employees covered by the Agreement.

[4] The Health Services Union Victoria No. 1 Branch of the Health Services Union of Australia (HSU) trading as the Health Workers Union (HWU) is a bargaining representative for the Agreement and have submitted a Form F18 – Statutory declaration of employee organisation in relation to an application for approval of an enterprise agreement (F18). In the F18, the HSU indicates support for the approval of the Agreement. However, the HSU disagreed with the Applicants’ assertion that the HIG Award is the appropriate Award that covers the employers and its employees. The HSU states as follows in the F18:

“7.1 We disagree with the responses to item 3.1. The HWU submits that the appropriate modern award that covers employees is the Health Professional and Support Services Award 2010 (MA000027) (HPSS Award). We say that the HPSS Award is the most appropriate award, having regard to the work performed by the employees and to the environment in which the employees normally perform their work, being a Hospital.

7.2 In the event that the Commission were to consider that the appropriate modern award that covers the employees is the HPSS Award and not the Hospitality Industry (General) Award 2010 (MA000009) (the Hospitality Award), we would also disagree with the subsequent and ancillary responses in the Employer's Declaration in relation to the Hospitality Award, where they are not otherwise aligned with the HPSS Award.” 1

[5] On 13 September 2019 I issued a decision where I determined that the HPSS Award is the relevant Modern Award that covers the Applicants. 2 This was upheld on appeal to a Full Bench of the Fair Work Commission dated 11 March 20203 . Subsequently the application was referred back to me by the Full Bench to address the remaining concerns.

[6] I identified several Better of Overall Test (BOOT) concerns in the Agreement when compared to the aligned HPSS Award. Furthermore, as the Agreement had been explained to employees using the erroneous comparison to the HIG Award, confirmation that the HPSS Award is the relevant Award raised genuine agreement concerns in relation to s180(5) of the Act;.

Does the Agreement pass the BOOT?

[7] Before the Commission may approve an enterprise agreement, it must be satisfied that the Agreement passes the better off overall test (s.186(2)(d)).

[8] Section 193 of the Act is as follows:

“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.

FWC must disregard individual flexibility arrangement

(2) If, under the flexibility term in the relevant modern award, an individual flexibility arrangement has been agreed to by an award covered employee and his or her employer, the FWC must disregard the individual flexibility arrangement for the purposes of determining whether the agreement passes the better off overall test.

When a greenfields agreement passes the better off overall test

(3) A greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that 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.

Award covered employee

(4) An award covered employee for an enterprise agreement is an employee who:

(a) is covered by the agreement; and

(b) at the test time, is covered by a modern award (the relevant modern award) that:

(i) is in operation; and

(ii) covers the employee in relation to the work that he or she is to perform under the agreement; and

(iii) covers his or her employer.

Prospective award covered employee

(5) A prospective award covered employee for an enterprise agreement is a person who, if he or she were an employee at the test time of an employer covered by the agreement:

(a) would be covered by the agreement; and

(b) would be covered by a modern award (the relevant modern award) that:

(i) is in operation; and

(ii) would cover the person in relation to the work that he or she would perform under the agreement; and

(iii) covers the employer.

Test time

(6) The test time is the time the application for approval of the agreement by the FWC was made under section 185.

FWC may assume employee better off overall in certain circumstances

(7) For the purposes of determining whether an enterprise agreement passes the better off overall test, 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, the FWC 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.”

[9] Section 190 of the Act provides as follows:

“190 FWC may approve an enterprise agreement with undertakings

Application of this section

(1) This section applies if:

(a) an application for the approval of an enterprise agreement has been made under section 185; and

(b) the FWC has a concern that the agreement does not meet the requirements set out in sections 186 and 187.

Approval of agreement with undertakings

(2) The FWC may approve the agreement under section 186 if the FWC is satisfied that an undertaking accepted by the FWC under subsection (3) of this section meets the concern.

Undertakings

(3) The FWC may only accept a written undertaking from one or more employers covered by the agreement if the FWC is satisfied that the effect of accepting the undertaking is not likely to:

(a) cause financial detriment to any employee covered by the agreement; or

(b) result in substantial changes to the agreement.

FWC must seek views of bargaining representatives

(4) The FWC must not accept an undertaking under subsection (3) unless the FWC has sought the views of each person who the FWC knows is a bargaining representative for the agreement.

Signature requirements

(5) The undertaking must meet any requirements relating to the signing of undertakings that are prescribed by the regulations.”

[10] The matter was listed for mention on 24 March 2020. Directions were set allowing the Applicants to file submissions and undertakings on the Commission and HSU by 31 March 2020 regarding the BOOT concerns as well as the s.180(5) concerns raised in relation to the HPSS Award. The HSU was to respond to these submissions and undertakings by 3 April 2020.

[11] On 1 April 2020 the Applicants’ submissions and proposed undertakings were received by my Chambers. The matter was listed for hearing on 3 April 2020, prior to which an email was sent from my Chambers, to the Applicants and HSU, providing my provisional view in relation to the materials provided by the Applicants. My provisional view was that the undertakings and submissions provided did not satisfy my concerns.

[12] Following the hearing further undertakings and submissions were requested from the Applicants in relation to concerns that the undertakings provided had the effect of establishing rates for Level 4 and Level 5 employees to be equal to those of the HPSS Award. Furthermore, there was a concern conveyed to the Applicants regarding the shift work allowance at clause 28.3 of the Agreement which appeared to render employees worse off than the Award when working shift times and penalties as contemplated at clause 29 of the HPSS Award.

[13] Subsequently, the matter was listed for further hearing on 21 April 2020 following receipt of the further submissions and further draft undertakings proffered by the Applicants.

[14] The undertakings now provided satisfied me that employees are better off overall. All of the employees under the Agreement with the exception of Level 4 and Level 5 employees are paid rates between 0.91% and 4.47%% greater than the Award. Level 4 and Level 5 employees are the exception as they would have been entitled to a payment below award rates. However, the undertaking proffered by the Applicants has the effect of making these rates equal to those in the HPSS Award. In addition to this Applicants’ representative Mr Longland advised in submissions and the hearing on 21 April 2020 that the Agreement contains a variety of benefits which ensured that although level 4 and 5 employees would be paid equal to the Award rate they will would be better off overall.

[15] I agree with this assertion by Mr Longland and list these more beneficial aspects of the Agreement as follows:

● Clause 21.1 – Increased meal allowance

● Clause 21.4 – First aid allowance

● Clause 22.1 – Increased laundry allowance

● Clause 28.1 – Increased Sunday penalty rate

● Clause 28.2.1 – Minimum engagement of four hours on a Public Holiday

● Clause 31.2.3(b) – Increased personal leave in an employee’s sixth and subsequent years.

[16] In the mention hearing on 21 April 2020, Mr Granger of the HSU indicated that they had considered the undertakings proffered by the Applicants and the benefits as listed above and that the HSU agrees that employees are better off overall and supports approval of the Agreement.

[17] As the Full Bench of the Fair Work Commission noted in Hart v Coles Supermarkets Australia Pty Ltd, 4s.193 of the Act requires the Commission to be satisfied that a “consideration of all the benefits and detriments under the Agreement results in each employee and each prospective employee being better off overall under the Agreement compared to the Award”.5

[18] Therefore; taking into account the more beneficial aspects of the Agreement in combination with the undertakings proffered I am satisfied that each Award and prospective Award covered employee is better off overall under the Agreement than they would be under the HPSS Award.

Section 180(5) issue – explanation of the terms and effect of the Agreement

[19] Subsequent to the mention on 24 March 2020 the Applicants provided submissions regarding the requirements of s 180(5) of the Act. The Applicants’ contention was that they took all reasonable steps to explain the terms of the Agreement in the circumstances, and the FWC can be satisfied that the requirement in s 180(5) was complied with in all respects.

[20] The Applicants’ assertion was that were no other reasonable steps for the Applicants to take in the particular circumstances and it had not been a reasonable prospect to assume the Applicant would have explained the Agreement by reference to the HPSS Award in circumstances where there was a previous agreement in place which had been assessed by the FWC against the HIG Award.

[21] Furthermore; the Applicants submitted that if I would be inclined to find that it would have been a reasonable step to explain the terms of the Agreement by reference to the HPSS Award, the undertakings proposed by the Applicants would address my statutory concerns and I would be satisfied that the Agreement was genuinely agreed to by the relevant employees.

[22] Having regard to s.180(5), I note that the Agreement was explained to employees with reference to the HIG Award. I do not accept that the Applicants had taken all reasonable steps to ensure that the terms of the Agreement, and the effect of those terms, were explained to the relevant employees, for the purposes of s.180(5)(a) of the Act, in circumstances where their category of employment was not, on its terms, covered by the HIG award. This gives rise to a genuine agreement concern.

[23] Section 186(2)(a) provides as follows:

“(2) The FWC must be satisfied that:

(a) if the agreement is not a greenfields agreement—the agreement has been genuinely agreed to by the employees covered by the agreement.”

[24] Section 188(a)(i) provides as follows:

“…An enterprise agreement has been genuinely agreed to by the employees covered by the agreement if the FWC is satisfied that:

(a) the employer, or each of the employers, covered by the agreement complied with the following provisions in relation to the agreement:

(i) subsections 180(2), (3) and (5) (which deal with pre approval steps).”

[25] Section 180(5) provides as follows:

“(5) The employer must take all reasonable steps to ensure that:

(a) the terms of the agreement, and the effect of those terms, are explained to the relevant employees; and

(b) the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.”

[26] Satisfaction under s.186(2)(a) is a jurisdictional prerequisite for the approval of any enterprise agreement. If s.180(5) is not satisfied, then the Commission cannot be satisfied that the Agreement has been genuinely agreed to pursuant to s.188(a)(i) and consequently the Commission cannot attain satisfaction of the requirement at s.186(2)(a) of the Act.

[27] The meaning of s.180(5) and what is required, particularly in regards to s.180(5)(a) was subject to detailed consideration in the recent decision of his Honour Justice Flick Construction, Forestry, Mining and Energy Union v One Key Workforce Pty Ltd (One Key Workforce (No 1)). 6

[28] His Honour Justice Flick said in One Key Workforce (No 1):

“91…A failure to comply with a “[p]re-approval requirement”, in this case the failure to “take all reasonable steps” for the purposes of s 180(5), precluded the proposed Agreement from being an agreement susceptible of subsequent approval by the Commission. And a failure to take the necessary steps to secure the agreement of those “employees covered by the agreement” (s 186(2)(a)) – be it genuine agreement or otherwise – again precluded the proposed Agreement from being an agreement in respect to which the Commission need reach any state of satisfaction.”

…

97…Section 180(5) is not a section which is expressed in terms of whether the Commission is “satisfied” that “all reasonable steps” have been taken. That subsection is expressed as a statement of objective fact as to that which must occur before approval is sought. If “all reasonable steps” have not in fact been taken, the Commission lacks power to “approve” the agreement.”

…

103 The requirement imposed by s 180(5) to “take all reasonable steps to ensure that … the terms of the agreement, and the effect of those terms, are explained” is an important obligation imposed upon an employer to ensure that employees are as fully informed as practicable. The requirement is not a mere formality. Whatever steps may be necessary will depend upon the facts and circumstances of each particular case; but those steps are not satisfied by a person reading – without explanation – the terms of an agreement to an employee.” 7

[85] That the content of the explanation given is an important consideration in assessing whether all reasonable steps were taken for the purposes of s.180(5) is made clear by the Full Court of the Federal Court in One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union (One Key Workforce (No 2)). 8In this regard, the Full Court made the following observations about the Commission’s function in considering under s.188(a)(i) whether it is satisfied that the employer has complied with s.180(5):

“…In order to reach the requisite state of satisfaction that s 180(5) had been complied with, the Commission was required to consider the content of the explanation and the terms in which it was conveyed, having regard to all the circumstances and needs of the employees and the nature of the changes made by the Agreement….” 9 

[29] I agree with and adopt the reasoning of the Full Court in One Key Workforce (No 2).

[30] In this case, the group of employees who voted for the Agreement are covered by the HPSS Award, however, those employees voted on an Agreement which was explained to them in the context of the HIG Award. This raises the question as to whether they voted on an Agreement that did not have the terms and their effect adequately explained to them.

[31] The Applicants submitted that the decision of the Full Bench of the Fair Work Commission in CFMEU v Specialist People Pty Ltd[2019] FWCFB 7919 was an appropriate precedent in the current application. In particular that in the decision it was concluded that the undertakings which rectified our BOOT concerns also met the s180(5) concern.

[32] Furthermore; I agree with the Applicants assertion that the conclusion is somewhat stronger in the present case where, unlike in CFMEU v Specialist People Pty Ltd, the employees who voted on the agreement had been performing the work that it was to cover, in all of its classifications.

[33] In CFMEU v Specialist People Pty Ltd 10, the Full Bench of the Fair Work Commission held that an undertaking could rectify its concern in that case that the employer had failed to take all reasonable steps to explain the terms of the Agreement. The Full Bench was concerned that employees had not been informed of terms detrimental in the relevant reference awards.

[34] The Full Bench reasoned as follows:

[22] We do nonetheless have a concern about compliance with s 180(5) arising from our conclusion about the coverage of the Agreement. Our concern is not that the explanatory document incorrectly described the coverage of the Agreement; as earlier stated we consider on the contrary that it accurately set out, albeit in a summary way, the classes of work that were covered. However, what the document omitted to do was to explain the differences between the rates and conditions of employment provided for in the Agreement as compared to those under the four awards the Agreement was intended to displace in their application to Specialist People’s employees. That step was one reasonably necessary to be taken at least in respect of the Building and Construction Award, the Hydrocarbons Award and the Electrical Contracting Award because, as Specialist People has conceded, employees would not be better off overall under the Agreement than under those awards when applicable. That was something the employees obviously needed to know before they were asked to vote to approve the Agreement.

[23] The undertaking proposed by Specialist People to address our BOOT concern would also address our concern about compliance with s 180(5). That is because, by ensuring that employees are better off overall under the Agreement by a significant margin when performing work covered by the Building and Construction Award, the Hydrocarbons Award and the Electrical Contracting Award, it effectively renders moot the omission we have identified in that the detriment which required explanation would no longer exist. Acceptance of the undertaking would therefore allow us to be satisfied that s 180(5) was complied with.

[24] We do not consider that acceptance of the undertaking would be likely to cause financial detriment to any employee covered by the Agreement or result in substantial changes to the Agreement. Pursuant to s 190(4) we have sought the views of the bargaining representatives, but have received no response. In those circumstances we accept the proposed undertaking. 11

[35] In respect to this matter, I am satisfied that the undertaking provided to address the BOOT concerns raised also removes my concerns in relation to compliance with s180(5) of the Act as the undertakings render moot the omission in the explanation identified.

Conclusion

[36] The Applicants have provided written undertakings. A copy of the undertakings is attached in Annexure A. I am satisfied that the undertakings will not cause financial detriment to any employee covered by the Agreement and that the undertakings will not result in substantial changes to the Agreement. The undertakings are taken to be a term of the Agreement.

[37] The Health Services Union of Australia being a bargaining representative for the Agreement, has given notice under s.183 of the Act that it wants the Agreement to cover it. In accordance with s.201(2) I note that the Agreement covers the organisation. The HSU support the approval of the Agreement.

[38] Subject to the undertakings referred to above, and on the basis of the material contained in the application and the accompanying submissions of the Applicants. I am satisfied that each of the requirements of ss 186, 187, 188 and 190 as are relevant to this application for approval have been met.

[39] The Agreement is approved and, in accordance with s.54 of the Act, will operate from 6 May 2020. The nominal expiry date of the Agreement is 29 April 2023.

COMMISSIONER

Annexure A

 1   Form F18 – Statutory declaration of employee organisation in relation to an application for approval of an enterprise agreement filed by HWU, 16 May 2019.

 2   [2019] FWC 6186 at [70]

 3   [2020] FWCFB 504

 4   Hart v Coles Supermarkets Australia Pty Ltd[2016] FWCFB 2887

 5   [2016] FWCFB 2887 at [33]

 6   Construction, Forestry, Mining and Energy Union v One Key Workforce Pty Ltd [2017] FCA 1266

 7 [2017] FCA 1266 at [91], [97] and [103]

 8   One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FCAFC 77

 9 [2018] FCAFC 77 at [112]

 10   CFMEU v Specialist People Pty Ltd[2019] FWCFB 7919

 11   [2019] FWCFB 7919 [22], [23] and [24]

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