Construction, Forestry, Maritime, Mining and Energy Union v SRSW Pty Ltd t/a Stellar Recruitment
[2020] FWCFB 2052
•21 APRIL 2020
| [2020] FWCFB 2052 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
Construction, Forestry, Maritime, Mining and Energy Union
v
SRSW Pty Ltd t/a Stellar Recruitment
(C2020/231)
VICE PRESIDENT HATCHER | SYDNEY, 21 APRIL 2020 |
Appeal against decision [2019] FWCA 8699 of Commissioner Spencer at Brisbane on 23 December 2019 in matter number AG2019/2117 – casual employment in black coal industry – better off overall test – whether agreement excludes NES – whether undertakings result in substantial change
Introduction
[1] The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) has brought an appeal under s 604 of the Fair Work Act 2009 (FW Act) against a decision of Commissioner Spencer made on 23 December 2019 1 to approve the SRSW Enterprise Agreement 2019 (Agreement). The application for approval of the Agreement was made by SRSW Pty Ltd t/a Stellar Recruitment (SRSW). The CFMMEU was a bargaining representative for the Agreement and objected to its approval in the proceedings before the Commissioner.
[2] An appeal under s 604 of the FW Act is an appeal by way of rehearing and the Commission’s powers on appeal are exercisable only if there is error on the part of the primary decision maker. There is no right to appeal and an appeal may be made only with the permission of the Commission. Subsection 604(2) requires the Commission to grant permission to appeal if satisfied that it is “in the public interest to do so”. Permission may otherwise be granted on discretionary grounds.
[3] The CFMMEU’s notice of appeal raised five grounds which contended that the Commissioner erred in approving the Agreement. The second ground was not pressed. The remaining grounds were the subject of written submissions and oral argument before us. The first and fourth grounds contend that the Commissioner erred in concluding that the Agreement passed the better off overall test (BOOT). The third contends that the Commissioner erred in her assessment of whether the Agreement excluded the National Employment Standards (NES) in respect of public holidays. The fifth ground contends that the various undertakings accepted by the Commissioner constituted substantial change, contrary to s 190(3) of the FW Act. The CFMMEU amended its notice of appeal with the leave of the Commission, which was unopposed, to include a sixth ground that contended that the Commissioner had erred in failing to note in her decision that the model consultation clause was taken to be a term of the Agreement in accordance with s 205(2).
Ground 1: The better off overall test
[4] The first ground of appeal contends that the Commissioner erred by concluding that the Agreement passed the BOOT against the Black Coal Mining Industry Award 2010 (Award) in respect of prospective casual production and engineering employees employed under the Agreement.
[5] The Agreement allows for production and engineering employees to be engaged as casuals. The Award makes no such provision, confining the possibility of casual employment to staff employees, who are covered by Schedule B of the Award.
[6] Before the Commissioner, the CFMMEU contended that the possibility of a casual mode of engagement for production and engineering employees constituted a detriment that needed to be weighed in the assessment of the BOOT, and that the 25% casual loading afforded to casual production and engineering employees under the Agreement was not sufficient to outweigh various detriments associated with casual employment. These detriments included the loss of job security; the removal of certain conditions of employment available to permanent employees, including generous personal leave entitlements; and safety-related detriment arising from the deployment of casual employees in a safety-critical environment.
[7] The CFMMEU’s contentions were premised on a BOOT analysis that involved comparing casual employment of production and engineering employees under the Agreement with permanent employment under the Award. We note that in CFMEU v SESLS Industrial Pty Ltd,2 a Full Bench considered an appeal involving an agreement in the black coal industry which, like the Agreement, allowed for production and engineering employees to be engaged on a casual basis. In considering the BOOT, as it applied to casual production employees otherwise covered by Schedule A of the Award, the Full Bench in SESLS stated that it assumed, but did not necessarily accept, that the test requires a comparison between casual employment under the agreement and part-time or full-time employment under the Award. We adopt the same approach.
[8] The Commissioner concluded that the Agreement passed the BOOT. In relation to the position of prospective production and engineering employees engaged on a casual basis under the Agreement, she said the following:
“[57] The issue of casual employment and whether the Agreement passes the BOOT is a matter for consideration. I accept that consistent with the Decision of the Full Bench in the SESLS Industrial Pty Ltd, the Agreement passes the BOOT with respect to prospective casual employees. In this regard, as was the case in SESLS Industrial Pty Ltd, while casual employment is not permitted, a 25% loading applicable to employees, as set out in the aforementioned case authority was considered an acceptable loading. Further, the undertakings provided by the Applicant include a reconciliation process that respond to the BOOT concerns. Accordingly, I am satisfied that the Agreement also passes the BOOT in this regard.”
[9] The CFMMEU submitted that the Commissioner understood the decision in SESLS to be authority for the proposition that a 25% casual loading will be sufficient to satisfy the BOOT in respect of casual production and engineering employees otherwise covered by the Award, whereas the decision only went so far as to conclude that the existence of a 25% casual loading in the Award for staff employees was a matter that could be taken into account for BOOT purposes, and that there had been no error in the particular decision under appeal in that case.
[10] We agree with the CFMMEU that the decision of the Full Bench in SESLS did not establish any general rule. However, there is nothing in the paragraph from the Commissioner’s decision extracted above, or elsewhere in her decision, that suggests to us that the Commissioner misunderstood the decision in the manner suggested by the CFMMEU, or in any other way. The Commissioner noted certain similarities between the case before her and the facts in SESLS and observed that in SESLS a 25% loading had been considered acceptable by the member who approved the agreement. These were relevant observations. They do not suggest to us that the Commissioner believed that the presence of a 25% casual loading in the Agreement meant that it necessarily passed the BOOT for casual production and engineering employees. Further, at [33] of her decision the Commissioner refers to the particular BOOT calculations for casual production employees as at test time and at 18 December 2019. 3 She clearly considered the particular circumstances of the case before her.
[11] The CFMMEU further contended that, although the Commissioner referred to its argument about the unavailability of casual employment for production and engineering employees, she did not address in her reasons the CFMMEU’s contention that the entitlements associated with permanent employment had not been adequately compensated, particularly the Award entitlement to 105 hours of personal leave upon commencement of employment. The CFMMEU submitted that there was no indication in the decision that the Commissioner had weighed the matters raised by the CFMMEU in considering whether the Agreement passed the BOOT and that she had therefore erred in her assessment of whether she could be satisfied that the Agreement passed the BOOT in relation to prospective casual production and engineering employees.
[12] We reject the contention that the Commissioner failed to conduct the weighing exercise required by the BOOT. The Commissioner clearly understood the CFMMEU’s contention that the Agreement did not pass the BOOT in relation to prospective casual production and engineering employees, and the central controversy that the Award does make any provision for casual engagement of such employees. The Commissioner noted the Full Bench decision in SESLS and stated that her conclusion was “consistent” with this decision. In this regard, we note that several of the arguments advanced by the CFMMEU before the Commissioner had also been put before the Full Bench in SESLS and were rejected. The Commissioner did not set out her own analysis of each of the relevant provisions and record precisely how she considered them to weigh in the balance of the better off overall test. However, it is clear that she accepted SRSW’s submission that the 25% loading was sufficient for the Agreement to pass the BOOT in relation to prospective casual production and engineering employees.
[13] The fact that the Agreement allows for casual employment of production and engineering employees, when the Award does not, was clearly a matter which the Commissioner was required to consider in her assessment of the BOOT. It is evident from paragraph [48], and her decision as a whole, that she did so. She did not refer separately to the various subcomponents of the CFMMEU’s contention on the BOOT, but this does not mean that the Commissioner failed properly to consider the contention or the subcomponents. Importantly, the subcomponents were not entitled to any particular weight in the analysis of the BOOT.
[14] First, the CFMMEU’s contentions about the loss of job security associated with casual employment were similar to those advanced in SESLS. They were the subject of argument before the Commissioner. The Full Bench in SESLS took note of these contentions and observed that permanent and part-time employment will not necessarily be more secure than casual employment, although this will often be the case.4 We concur with these observations.
[15] Secondly, the CFMMEU contended that the 25% casual loading could not offset the loss of relevant leave conditions, particularly the generous personal leave entitlements in the Award. However, in SESLS the Full Bench rejected essentially the same argument, concluding that it was open to the Commissioner to be satisfied that the agreement passed the BOOT for casual production and engineering employees given the 25% loading in the Agreement. In particular, the presence in the Award of a 25% loading for casual staff employees was a matter which could be taken into account in considering the adequacy of the 25% loading for casual production and engineering employees in the Agreement. We agree with this reasoning. We note that the Agreement provides for a 25% casual loading on top of a base hourly rate that will be maintained at a minimum of 3% above the applicable Award rate, and that, at the commencement of the Agreement’s operation, the rates were between 6 and 7% above those in the Award.
[16] Thirdly, the CFMMEU’s argument concerning the safety-related dimensions of casual employment rested on observations of the Full Bench in the 4-yearly review of modern awards about the possibility of introducing casual employment for production and engineering employees covered by the Award. These observations related to whether the Full Bench could be satisfied that such a variation to the Award would be consistent with the modern award objective. They were not concerned with, and are not necessarily relevant to, the question of whether the casual engagement of production and engineering employees at a particular enterprise should be regarded as a safety-related detriment for the purposes of the BOOT. In addition, there was no evidence before the Commissioner to suggest that casual production and engineering workers of SRSW would in fact be faced with particular safety problems, such as to pose a detriment for the purposes of the BOOT in this particular case.
[17] Fourthly, the CFMMEU contended that a further element of casual detriment not weighed in the balance by the Commissioner was the absence of Award entitlements relating to notice of termination of employment. This appears to us to be another dimension of the argument concerning loss of job security. In any event there is no particular value that has to be attributed to the fact that a casual employee need not be provided with notice of termination of employment. Further, in the typical case, where each casual engagement stands contractually alone, a casual will simply not be reengaged, such that there is no termination, and any notice of termination is simply irrelevant.
[18] Fifthly, the CFMMEU contended before the Commissioner that the 25% casual loading was insufficient to compensate for there being no entitlement to public holidays (see clause 5.3 of the Agreement). However, the significance of this for BOOT purposes was not articulated. A permanent employee under the Award would also have no entitlement to a public holiday if they were not rostered to work on that particular day (see clause 27.3), so the value of the benefit is variable. The CFMMEU did not provide any mathematical modelling at first instance or before us to demonstrate that the 25% casual loading, on top of the above-award base rates provided for in the Agreement, was incapable of providing a greater overall benefit than the entitlements of permanent employees under the Award.
[19] The Commissioner was not required to reach any particular conclusion about the implications of casual employment for the BOOT generally, or about the significance of the various dimensions of detriment said by the CFMMEU to be associated with casual employment. The subcomponents of the CFMMEU’s contention that the Agreement failed the BOOT in relation to casuals were not of such significance in their own right necessarily to require a separate analysis in the decision. And the principal contention that the Agreement failed the BOOT in respect of casual employees was considered and rejected.
[20] Whether the Commission is satisfied that an employee is better off overall under an agreement than under the relevant award requires an evaluative assessment after consideration of the provisions of the award and the agreement, including the respects in which each may be more beneficial or less beneficial to the employee. As the High Court noted in Aldi Foods Pty Ltd v SDAEA,5 this kind of assessment has been described in other contexts as “a question, not of principle or of positive findings of fact or law, but of proportion, of balance and relative emphasis, and of weighing different considerations”, involving “individual choice or discretion as to which there may well be differences of opinion by different minds.”
[21] We cannot identify any error in the Commissioner’s assessment of the BOOT in relation to casual employees. Section 186(2)(d) required the Commissioner to decide whether she was satisfied that the agreement passed the BOOT in relation to prospective casual employees.As earlier stated, the CFMMEU does not present any mathematical model that demonstrates that casual employees under the Agreement could not be better off than under the Award and submit on that basis that it was not open to the Commissioner to reach a contrary conclusion. 6 Fundamentally the CFMMEU’s argument in relation to the BOOT advanced no more than a preference that a greater weight be given to the significance of casual employment under the Agreement. However, even if we shared the CFMMEU’s preference, this would not speak to any error on the part of the Commissioner.
[22] For the reasons given above, we reject ground 1.
Ground 3: the undertaking concerning public holidays
[23] Clause 15.8 of the Agreement states that employees “may be required to work all public holidays in accordance with their roster.” The CFMMEU submitted to the Commissioner that, contrary to s 55 of the FW Act, this clause excluded s 114, a provision of the NES, which confers on employees an entitlement to be absent on a public holiday. The CFMMEU further states that an employer may request an employee to work on a public holiday if the request is reasonable; and that an employee may refuse the request if the request is not reasonable, or the refusal is reasonable. Section 186(2)(c) provides that the Commission must, before approving an enterprise agreement, be satisfied that the agreement does not contravene s 55 of the FW Act.
[24] The third ground of appeal contended that the Commissioner erred in accepting the undertaking referred to at [20] of the decision, and which is attached as the sixteenth and last of the undertakings to the Commissioner’s decision. The undertaking states:
“For the purposes of Clause 15.8 Public Holidays of the Agreement, the following shall apply:
The Company utilises rosters that incorporate work on public holidays. In these circumstances, where an employee refuses a request to work on a public holiday, any refusal will be in accordance with section 114 of the Fair Work Act 2009.”
[25] The CFMMEU contended that the Commissioner did not in fact answer the question of whether she was satisfied of the matter in s 186(2) but proceeded simply to accept an undertaking. There is no substance in this submission. It is obvious that the Commissioner had a concern that clause 15.8 did in fact exclude a provision of the NES, as the CFMMEU had contended, and accepted the undertaking to resolve this concern.
[26] The CFMMEU further submitted that the Commissioner could not have been satisfied that the undertaking met the relevant concern because it is not consistent with s 114. In this regard, the CFMMEU noted that the undertaking asserts that SRSW “utilises rosters that incorporate work on public holidays.” The CFMMEU contended that this in itself is antithetical to s 114. However, there is nothing wrong with the undertaking stating that SRSW’s rosters need people to work on public holidays. This is a statement of operational fact. Secondly, and more pertinently, the CFMMEU said that the undertaking was defective because it does not cure the statement in clause 15.8 that employees “may be required to work all public holidays in accordance with their roster”, and also because it related only to an employee’s “refusal” to work on a public holiday, not an employer’s request of an employee to work. The CFMMEU said that the language of the undertaking was nonsensical as it is not at all clear how a “refusal” to work could be said to be “in accordance with” s 114.
[27] The undertaking is poorly drafted. However, an undertaking that is accepted by the Commission becomes a term of the enterprise agreement (s 191) and is to be interpreted in the context of the agreement read as a whole. Clause 3 states that the Agreement “does not exclude the National Employment Standards (‘NES’) or any provision of the NES which shall have effect in accordance with the Fair Work Act 2009”. This is an “NES precedence provision” of the kind that have now become common in enterprise agreements. Unlike other such clauses, it does not go on specifically to state that, to the extent any provision in the agreement is inconsistent with the NES, such provision will have no effect. It is doubtful that a bare statement, such as that in clause 3, simply asserting that an agreement does not exclude the NES, when in fact another provision of the agreement does exclude the NES, would be effective to displace the offending provision.
[28] However, in the present case, clause 3 is of interpretative significance when it comes to understanding the intended meaning of the undertaking. It affirms that the parties did not intend to offend the NES or any of its provisions. An undertaking was given in relation to clause 15.8 which raises a concern as to whether the requirement that employees work on public holidays is compatible with s 114. In our view, it is tolerably clear that, where the undertaking says that “any refusal will be in accordance with section 114”, it really means that the question of employees whether employees can be required to work on public holidays will be dealt with in accordance with s 114. That this was the employer’s intended meaning is confirmed in its correspondence to the Commissioner on 23 December 2019. There, responding to the CFMMEU’s concern that the undertaking did not address the requirements of s 114(2), Mr Paul McCrea stated that the undertaking refers to a refusal to work a holiday and s 114 in its entirety, including s 114(2) which requires that the request to work on a public holiday be reasonable. 7
[29] It would have been better for SRSW to accept the CFMMEU’s criticism of the wording of the undertaking and simply given a new, clearer undertaking. Nevertheless, we find the undertaking, read together with clause 3, to be responsive to the concern about the Agreement’s compliance with the NES in respect of s 114.
Ground 4: meal breaks and the BOOT
[30] By its fourth ground of appeal the CFMMEU contended that the meal break provision in clause 9.3 of the Agreement gave rise to a concern as to whether the Agreement passed the BOOT and that an undertaking accepted by the Commissioner in relation to this clause did not address the relevant concern.
[31] Clause 9.3 of the Agreement provides for a thirty-minute paid meal break for shifts of 10.5 hours or less, and for a second break for longer shifts, to be taken at mutually convenient times. The CFMMEU submitted that this is disadvantageous when compared to clauses 24.2 and 24.3 of the Award, which provide that an employee is not to be required to work for more than five hours without a meal break, and that where an employee agrees to work longer than five hours without such a break, overtime rates will be paid. The CFMMEU said that there were also fatigue and safety implications arising from the fact that clause 9.3 did not regulate the hours that might be worked before a break was taken.
[32] The Commissioner accepted an undertaking from SRSW that, for shifts longer than 10.5 hours, two thirty-minute paid meal breaks would apply. The CFMMEU contended that this undertaking did not address the timing of the taking of breaks, or the financial detriment arising from the fact that overtime rates would not apply in accordance with clause 24.3 of the Award. The CFMMEU said that these matters should have been weighed on the negative side of the ledger, but that the Commissioner simply treated the matter as having been resolved by the undertaking.
[33] The Commissioner dealt with the CFMMEU’s contentions about clause 9.3 from [39] to [45]. It is true that the Commissioner did not specifically state the particular concern she held in relation to this matter, however it appears to us that she shared the CFMMEU’s concern about the fatigue-related detriment of the clause, as it pertained to the BOOT. And while the Commissioner did not explain in her decision exactly how the undertaking addressed this concern, we consider that it was clearly open to her to conclude that the undertaking did in fact resolve it. The undertaking requires employees working shifts of more than 10.5 hours to receive two paid 30-minute meal breaks.
[34] The CFMMEU’s submission about the extent of the disadvantage associated with clause 9.3 ignores the fact that breaks are to be taken at mutually convenient times, and that SRSW remains subject to strict workplace health and safety requirements, including in relation to the management of the consequences of fatigue. Furthermore, the CFMMEU’s apparent contention that working beyond five hours without a break necessarily poses a fatigue-related or other safety risk is contradicted by the fact that the Award itself contemplates and allows for this, subject to the payment of overtime rates.
[35] As to the financial disadvantage associated with clause 9.3 not providing for overtime rates in relevant circumstances, it is not clear to us that the CFMMEU submitted to the Commissioner that she should not accept the undertaking on that basis. 8 In any event, the CFMMEU did not explain to the Commissioner, or to us, how this financial disadvantage resulted in employees not being better off overall under the Agreement than under the Award, given that the rates in the Agreement were between 6 and 7% in excess of the Award at commencement and could not fall below a margin of 3% in excess of the Award.
[36] We cannot identify any basis for concluding that it was not open to the Commissioner to be satisfied that the Agreement passed the BOOT, or for deciding to accept the undertaking. We find no error in the Commissioner’s consideration of clause 9.3 and its relevance to the BOOT, or her acceptance of the undertaking.
Ground 5: the undertakings and substantial change
[37] The CFMMEU submitted that the Commissioner erred in concluding that the 14 undertakings she accepted did not constitute “substantial change” to the Agreement, for the purpose of s 190(3)(b). It contended that the Commissioner’s consideration of its objection to the acceptance of the undertakings on this basis was scant, comprising, at [90], a rejection together with a brief observation that in some instances the undertakings clarified the relevant provision.
[38] The CFMMEU submitted that the undertakings were extensive. It said that undertaking 10 altered a fundamental unit of the remuneration structure by providing that agreement rates would at all times remain 3% above the corresponding rates in the Award; and that undertaking 13 altered the method of the application of the rate by introducing a reconciliation process. Other undertakings were also said to relate to fundamental terms, including breaks, shift length, rosters and leave.
[39] We agree with the CFMMEU that the undertakings accepted by the Commission under s 190 should not facilitate a wholesale reshaping of the agreement. But that is not what has occurred in this case. The various undertakings have addressed concerns about the BOOT and the NES. The affected provisions have been remediated by the undertakings. Employees’ minimum entitlements have in each case been enhanced. It is true that, because there are 14 undertakings, one could describe them as extensive. But they do not bring about substantial change to the agreement.
[40] In CFMMEU v Kaefer Integrated Services Pty Ltd 9 the Full Bench stated that simply increasing the quantum of various benefits would not ordinarily result in substantial changes for the purposes of s 190(3).10 The Bench noted that the legislative concern of s 190(3) was evidently to avoid imposing on employees arrangements that they have not approved, but that employees were not likely to object to higher monetary amounts. We agree. The same can be said of changes brought about by undertakings to NES-related conditions that are favourable to employees.
[41] The Commissioner’s decision dealt squarely with the CFMMEU’s contention that the undertakings brought about substantial change to the Agreement. Her reasons were very brief. But it was a short point. The Commissioner did not consider the undertakings to have caused substantial change. In our view, this conclusion was clearly open to her.
Ground 6: the model consultation clause
[42] The final ground of appeal submitted that the Commissioner erred by failing to consider whether the Agreement included a consultation term that met the requirements of s 205(1). It says that the consultation provision in clause 17 of the Agreement does not meet those requirements because it excludes from consultation the circumstance where an employee is regularly required to change their regular roster or ordinary hours of work. We agree with the CFMMEU’s submission.
[43] The Commissioner should have noted in her decision that, in accordance with s 201(1)(b)(ii) of the FW Act, the model consultation term is taken to be a term of the Agreement pursuant to s 205(2). It appears that in previous correspondence with the parties the Commissioner had indicated that she would make the notation contemplated by s 201 but omitted to do so. This omission was an error which will need to be corrected.
Conclusion and orders
[44] We consider that permission to appeal should be granted since the appeal raises a number of issues of importance concerning the application of the approval requirements for enterprise agreements covering employees who are also covered by the Award. However, for the reasons stated, we consider that only the sixth ground of appeal should be upheld. In respect of the error demonstrated by this ground, we propose to exercise our powers on appeal by varying the decision of the Commissioner under s 607(3)(a) to note that the model consultation term is taken to be a term of the Agreement.
[45] We order as follows:
(1) Permission to appeal is granted.
(2) The appeal is upheld in relation to ground 6.
(3) The decision ([2019] FWCA 8699) is varied to add the following note: “Pursuant to s 205(2) of the FW Act, the model consultation term prescribed by the Fair Work Regulations 2009 is taken to be a term of the Agreement”.
VICE PRESIDENT
Appearances:
L Doust of counsel for the Construction, Forestry, Maritime, Mining and Energy Union.
S Meehan of counsel for SRSW Pty Ltd t/a Stellar Recruitment.
Hearing details:
2020.
Sydney (via telephone):
24 March.
Printed by authority of the Commonwealth Government Printer
<PR718418>
1 [2019] FWCA 8699
2 [2017] FWCFB 3659
3 Exhibits 3 and 4
4 Ibid at [41]
5 [2017] HCA 53, 262 CLR 593 at [99]
6 Unlike in other cases such as CFMEU v Concrete Constructions (WA) Pty Ltd [2017] FWCFB 3912 and CFMEU v Levent Painting Pty Ltd [2017] FWCFB 3911.
7 AB356
8 Transcript, 19 December 2019, PNs 225-229
9 [2017] FWCFB 5630
10 At [40]
7
6
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