Costco Wholesale Australia Pty Ltd

[2017] FWCA 19

[2017] FWCA 19

FAIR WORK COMMISSION

DECISION

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

Costco Wholesale Australia Pty Ltd
(AG2016/5644)

COSTCO WHOLESALE AUSTRALIA ENTERPRISE AGREEMENT 2016-2019

Retail industry
DEPUTY PRESIDENT BULL	SYDNEY, 25 JANUARY 2017

Application for approval of the Costco Wholesale Australia Enterprise Agreement 2016-2019 – BOOT considered – undertakings provided – access period and reasonable steps to notify of time, place and method of vote

[1] An application has been made by Costco Wholesale Australia Pty Ltd (the applicant) for the approval of an enterprise agreement known as the Costco Wholesale Australia Enterprise Agreement 2016-2019 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act). The Agreement is a single enterprise agreement.

[2] The Agreement covers all employees of the Company performing work in all States and Territories of Australia. As per the requirement under s.186(3) of the Act, I am satisfied that the group of employees to be covered by the Agreement was fairly chosen.

[3] The National Union of Workers (NUW) was an employee organisation involved in the agreement making process as a bargaining representative. The NUW has filed a statutory declaration (F18) stating that it supports the approval of the Agreement.

[4] The Shop, Distributive and Allied Employees’ Association (SDA) was also an employee organisation involved in the agreement making process as a bargaining representative. The SDA has filed a statutory declaration (F18) stating that it supports the approval of the Agreement subject to any undertakings required to rectify the SDA’s concerns relating to the better off overall test (BOOT).

[5] In addition to the concerns identified by the SDA the Commission wrote to the applicant seeking a response or undertakings in relation to a number of concerns it identified. Those concerns relate to:

● Pre-approval requirements being met;

● Genuine agreement;

● The flexibility terms; and

● The BOOT.

Pre-approval requirements

[6] Among a number of pre-approval steps that must be complied with before an employer requests that employees vote on an agreement, is the requirement that the employer take all reasonable steps to notify relevant employees of the time and place at which the vote will occur and the method of voting which will be used by the start of the access period, being the 7-day period ending immediately before the start of the voting process. 1

[7] The Commission wrote to the applicant, noting that it did not appear to have complied with this requirement, in that the applicant had indicated that employees were notified of the time, place and method of voting from 15-23 August 2016, with the vote commencing on 24 August 2016. The applicant’s evidence suggested to the Commission that some employees were only notified of the date, place and method of voting one day before the voting commenced.

[8] The applicant responded to the Commission by email on 25 October 2016. In its response the applicant submitted that it took all reasonable steps to notify the relevant employees of the time, place and method of voting by the start of the access period. The reasonable steps taken, included:

● Holding the first information session, or “Employee Roadshow” advising of the date, place and method of voting at the Auburn Warehouse on 12 August 2016;
● Holding subsequent information sessions at the Auburn Warehouse on 13 August 2016 and Monday 15 August 2016 through to Friday 19 August 2016;
● Holding the first information session at 9 of Costco’s other locations on either Monday 15 August 2016 or Tuesday 16 August 2016;
● Holding subsequent information sessions at the 9 other locations from Monday 15 August 2016 through to Saturday 20 August 2016;
● At Costco’s final location, the “Wet Depot” an information session was held on 17 August 2016 for the 40 employees working there.

[9] The applicant submitted that the sessions were scheduled in this manner, firstly because it was not reasonable to deliver the information to all employees across all sites simultaneously and secondly, the most suitable days were selected at each location having regard to the operational impact of employees attending information sessions. Further, the applicant stated that it was not able to deliver this information via electronic means because the majority of its employees do not have a Costco email address.

[10] The applicant made further submissions by email dated 7 November 2016. The applicant initially accepted that some employees had not been notified of the time, place and method of the vote by the start of the access period, but maintained that it took all reasonable steps to comply with the requirement. The applicant’s submission in this respect is that s180(3) of the Act does not impose an obligation that all employees be informed of the time, place and method of voting by the start of the access period, but rather, that all reasonable steps must be taken to inform employees of these matters. The applicant also submitted that it was not reasonable to have all employees attend their relevant locations before the commencement of the access period, but did not offer any explanation as to why this was the case.

[11] On 9 December 2016 the Commission, at the invitation of Costco, attended its head office in Lidcombe, NSW. Also present were representatives of the SDA and the NUW and employee bargaining representatives. At this meeting the agreement approval process was discussed.

[12] On 12 December 2016 the Commission received an email from the applicant advising that it had received further instructions from Costco’s warehouses in relation to its compliance with s.180(3). The applicant advised that it had become aware that at the one location where the information session was not held before the access period (The “Wet Depot”) the administration manager for that Depot, Ms Mona Bamta, posted a document on the lunch room notice board which advised the time, place and method of voting, before the access period. A statement from Ms Bamta and a copy of this document were provided to the Commission.

[13] On 23 January 2017 the Commission wrote to the applicant requesting to know the date that the document was posted by Ms Bamta, and on 24 January 2017 the applicant forwarded an amended statement from Ms Bamta, confirming she had posted the information at the depot on 16 August 2016, the last day before the commencement of the access period, ahead of the first information session on 17 August 2017.

[14] The applicant submitted that at other depots further steps were taken to ensure that s.180(3) was complied with. The applicant filed a statement from Kylie Jansen, Assistant Warehouse Manager at the Adelaide Warehouse, and Kim Beardsell, Assistant Warehouse Manager at the Crossroads 105 Warehouse, indicating that they had posted documents and posters at those sites before the start of the access period, which indicated the time, place and method of voting. The applicant filed copies of those documents.

[15] The relevant section of the Act is in the following terms:

“ 180(3) The employer must take all reasonable steps to notify the relevant employees of the following by the start of the access period for the agreement:

(a) the time and place at which the vote will occur;

(b) the voting method that will be used.”

[16] Section 180(4) defines the access period as follows:

“180(4) The access period for a proposed enterprise agreement is the 7-day period ending immediately before the start of the voting process referred to in subsection 181(1).”

[17] The question to be answered is whether the employer took all reasonable steps to notify the relevant employees of the voting details by the start of the access period. It is not whether all employees were notified, or whether all possible steps were taken, but whether all the reasonable steps which were open to the employer to take were taken.

[18] The steps which are considered reasonable is contingent upon circumstances which exist at the time at which the obligation to take such steps arises. It may be that a great number of steps could have been taken by the employer, but it does not necessarily follow that all steps that could be taken, are reasonable in the circumstances.

[19] In The Maritime Union of Australia v Northern Stevedoring Services 2 the Full Bench canvassed what may be derived from the expression “all reasonable steps”:

“[33] The expression “all reasonable steps”, and the case authorities concerning that and similar expressions were discussed at length in the decision of the Industrial Relations Commission of NSW in Court Session Bluescope Steel Ltd v The Australian Workers' Union, New South Wales 5. The following propositions may be derived from the Court’s analysis:

● reasonable steps are what a reasonable man or woman would regard as being reasonable steps in the circumstances which apply;

● the obligation to take “reasonable steps” depends on the particular circumstances existing at the time the obligation arises; and

● a requirement to take all reasonable steps does not extend to all steps that are reasonably open in some narrow or theoretical sense (such as, for example, matters not directly within the particular knowledge or experience of a relevant party).

[34] Additionally in Parland Pty Ltd & Ors v Mariposa Pty Ltd 6 the Tasmanian Supreme Court said, in relation to a requirement for a party to use its best endeavours to achieve a particular object, that a failure to take a particular step had to be assessed by reference to its materiality to the failure to achieve the relevant object. The Court said:

“In any event quite apart from authority it would seem to me to be an untenable proposition that a party could be held to have failed to satisfy a condition requiring it to use its best endeavours in relation to an application because it failed to take some particular step if in fact the application would have been unsuccessful even had that step been taken.” 

[35] That proposition appears to us to be equally applicable to consideration of whether an obligation to take all reasonable steps has been complied with.”

[20] As outlined by the applicant, the circumstances that existed at the time that the obligation to notify employees included:

● there were 2365 relevant employees to be notified by the employer;
● those employees worked out of at least 10 warehouse sites across New South Wales, Queensland, South Australia, Victoria and Canberra;

● rostering of employees is not uniform between warehouse locations;

● at least 70% of the relevant employees to be notified do not have a Costco email address.

[21] The vote commencing on 24 August 2016 puts the start of the access period at 16 August 2016. By the start of the access period then, all but one depot had held its initial information session notifying employees of the time place and method of voting, and the depot that had not commenced information sessions by the start of the access period (The “Wet Depot”), had already notified employees by way of documents posted at the site, as per the statement of Ms Bamta. Two other warehouses, the Adelaide and the Crossroads warehouses, had also notified employees by the start of the access period by posting notifications at those sites.

[22] I am satisfied that in the circumstances above the employer took reasonable steps to notify relevant employees of the time, place and method of voting by the start of the access period by scheduling an information session either before or on 16 August 2016 at all but one warehouse.

[23] I am satisfied that at the warehouse where it was not possible for the employer to hold an information session by the start of the access period, reasonable steps were taken to notify employees of the time, place and method of voting by this time by posting notifications on noticeboards within the workplace.

Flexibility term

[24] The flexibility term at clause 9.5 of the Agreement deviates from several of the requirements of a flexibility term under the Act 3, including that it does not require the employer to ensure that individual flexibility arrangements will be about permitted matters and will not include unlawful terms. Further, it does not require the employer to ensure the employee will be better off overall under an individual flexibility arrangement.4

[25] Pursuant to s.202(4) of the Act, the model flexibility term at Schedule 2.2 of the Fair Work Regulations 2009 will be taken to be a term of the Agreement. A copy of the model consultation term is attached at Annexure A of this decision.

Better off overall test (BOOT)

[26] With respect to the better off overall test (BOOT) under s.186 of the Act, the Commission and the SDA was concerned that the Agreement may leave some employees worse off overall than they would be under the relevant Award covering them. The relevant instruments for the purposes of the BOOT include the:

● General Retail Industry Award 2010 (GRIA)
● Storage Services and Wholesale Award 2010 (Storage Services Award)
● Vehicle Manufacturing, Repair, Services & Retail Award 2010
● Clerks – Private Sector Award 2010 (Clerks Award)
● Pharmacy Industry Award 2010 (Pharmacy Award)

Part-time employees

[27] The Commission wrote to the applicant with the concern that the Agreement does not provide part-time employees with various protections afforded by the Awards, including the requirement for agreement between the employer and employee at the commencement of employment as to the regular pattern of work of the employee, including the days and hours to be worked each week. The Awards allow for the agreed pattern of hours to be varied only by written agreement by the employer and employee and specify that any hours worked in excess of the agreed hours will attract payment of overtime.

[28] Under the Agreement employees do not have a fixed work schedule or roster and part-time employees may be rostered within the parameters of no less than 24 hours to a maximum of 38 hours per week in accordance with clause 4.2.2. There is also no Agreement provision that entitles part-time employees to payment of overtime for hours worked in excess of the scheduled hours, however part-time employees are entitled to overtime in accordance with clause 6.6.2, which reads:

“ 6.6.2 Overtime:

Overtime is paid at a rate of time-and-one-half (150%) of the Employee’s base rate of pay.

Overtime is payable:

For any hours worked in excess of (8) hours per day (Monday to Saturday);
For all hours worked in excess of 38 hours per week (Monday to Saturday);
For all hours worked on the second roster, when an employee has not received a ten (10) hour break between rosters (other than in the event of an Employee meeting)…”

[29] The applicant responded to the Commission with a detailed explanation of the process and method of scheduling part-time employees. The applicant informed the Commission that when applicants apply for a part-time position they are asked to complete an “Availability Form” indicating the days that the employee is available to work, including the times available throughout those days. Once an applicant is appointed to a part-time role, the employer uses the Availability Form to create the employees roster each week. The applicant submits that the rosters and pattern of work in the rosters are regular and fairly consistent, but may be amended with 24 hours’ notice and mutual agreement with the employee to meet the needs of the business.

[30] The applicant further submits that employees are entitled to vary the regular pattern of work by requesting a permanent roster change and updating their availability.

[31] In relation to overtime, the applicant responded that, in accordance with the process outlined above, a part-time employee “agrees” at the commencement of employment that their “agreed hours” will be no more than 38 hours per week. In these circumstances the applicant submitted that a part-time employee performs work across the span of ordinary hours which they have agreed and which is set out in the roster, and has agreed to work up to 38 hours without payment of overtime.

[32] The Commission communicated to the applicant that in respect of the entitlement to overtime for part-time employees, the Agreement appeared less beneficial to employees. The Commission provided calculations indicating that an employee who agrees to work a number of hours per week which is less than 38, and nonetheless works up to 38 hours in a week would be worse off under the Agreement than they would be under the Award. Following the conference the applicant provided an undertaking providing that:

● Part-time employees’ weekly roster will specify the regular pattern of work including the days or work and the hours to be worked each day;
● The roster can be varied only with the agreement of the employee;
● The varied roster will be recorded in writing and all hours worked will be ordinary hours unless there is a requirement to work overtime in accordance with clause 6.6.2;
● Employees may be requested to work overtime at the end of the employees’ regular shift without 24 hours’ notice;
● Any agreed variation to the hours will be ordinary hours unless there is a requirement to work overtime in accordance with clause 6.6.2, however, without mutual agreement a variation will not have occurred and any hours worked beyond the rostered hours will constitute overtime and will be paid as such.

(My underline)

[33] Clearly, there are differences in the wording of the entitlements in the Award and those in the Agreement for part-time employees; however the Commission is satisfied the effect is substantially the same. The conditions in the Award and the Agreement are predicated on part-time employees having an agreed “reasonably predictable” pattern of ordinary hours. While the Agreement provides for a parameter of hours which the employees’ ordinary hours may be worked within, the ordinary hours themselves will be those rostered each roster cycle or varied by mutual agreement of the employer and employee. It follows that if the ordinary hours are those hours which are rostered or mutually varied, then all hours worked in excess of those hours will attract the payment of overtime in accordance with the undertaking provided.

[34] The Commission is satisfied that the undertaking provided and the rostering process employed by the applicant preserves, albeit in a modified form, the requirement for mutual agreement in respect of the pattern of ordinary hours for part-time employees, as well as the entitlement to overtime payment for hours worked in excess of a part-time employee’s ordinary or varied hours.

Retail employees working evening shifts

[35] Under the GRIA permanent employees receive a 25% loading on ordinary hours worked after 6pm. The evening shift clause in the Agreement also provides for an evening shift loading, however this is only paid for hours worked after 11pm. The Commission expressed to the applicant its concern that in scenarios where employees perform a significant number of their hours during evening shifts the Agreement may leave them worse off. The Commission noted the rostering principles and indicative rosters provided by the applicant, which showed that such a scenario would not eventuate, however, the Commission remained concerned that the Agreement itself did not ensure that this would be the case.

[36] To address the concern the applicant has provided an undertaking that permanent hourly employees will be paid a 107.5% premium on hours worked between 6.00pm and 11.00pm on weekdays.

Clerk employees working after 6.00pm

[37] The Commission has a similar concern regarding the absence of an afternoon shift loading entitlement for employees who would be covered by the Clerks Award and who work regularly after 6.00pm. The Commission noted the advice of the applicant that such employees rarely work after 6.00pm, however, the Commission remained concerned that the Agreement itself did not ensure that this would be the case.

[38] To address the concern the applicant has provided an undertaking that employees who would be covered by the Clerks Award will be paid a premium of 107.5% on hours worked after 6.00pm on weekdays.

Pharmacy employees working on Saturdays

[39] The Commission was concerned by the absence of a Saturday penalty for pharmacy employees who regularly work outside 8.00am to 6.00pm and would be entitled to the same under the Pharmacy Award.

[40] The applicant has provided an undertaking that pharmacy employees will not be rostered to work outside this span of hours on any Saturday.

Rostering of 7 consecutive days

[41] The SDA informed the Commission and the applicant of its concern that clause 6.2 of the Agreement allows the employer to roster an employee to work seven consecutive days if the roster for the first week in a cycle ends on the last day of the week and the roster for the second week starts on the first day of the week, with the seventh day paid as ordinary hours. Under the GRIA only six consecutive days of ordinary hours may be worked, regardless of the roster structure.

[42] The applicant has provided an undertaking amending clause 6.2 so that no employer will be required to work more than six consecutive days.

Night and early morning penalties at the Depots

[43] The SDA informed the Commission and the applicant of its concern that Depot Assistants and Depot Clerks who would be covered by the Storage Services Award are not entitled to a night premium or early morning penalty rates which they would receive under the Award.

[44] The applicant has provided an undertaking providing that those employees will be entitled to the night shift and penalty contained in clause 6.6.5 and the evening premium of 107.5% for weekday hours worked after 6.00pm.

Conclusion

[45] The application of the BOOT is an all-embracing and comprehensive test. It requires identification of the terms which are more beneficial and the terms which are less beneficial for an employee. An overall assessment of whether an employee would be better off under the agreement than the relevant award is then undertaken by the Commission. 5

[46] While it is noted that some in some respects the Agreement is less beneficial than the relevant award, for instance it does not provide for annual leave loading, overall, the significantly higher rates of pay for most classifications than the comparable modern award classifications and the undertakings provided by the applicant address the Commission’s and the SDA’s concerns, thus ensuring that the BOOT is satisfied.

Undertakings

[47] The undertakings are taken to be a term of the Agreement and a copy is attached and marked Annexure B. A copy of the undertakings was provided to each of the bargaining representatives who were given the opportunity to make any comment. The SDA indicated by email that it consented to the undertakings and no opposition was made to the undertakings.

[48] The undertakings are not so substantial that if asked to vote again, the employees who voted would not approve the Agreement. I am therefore satisfied that the undertakings do not result in a substantial change to the Agreement, as per s.190(3)(b) of the Act. The undertakings should be brought to the attention of the employees covered by the Agreement by the applicant.

[49] The SDA and NUW have stated that they wish to be covered by the Agreement, and in accordance with s.201(2) of the Act, I note that the Agreement covers these employee organisations.

[50] I am satisfied that each of the requirements of ss.186, 187 and 188 of the Act as are relevant to this application for approval have been met.

[51] The Agreement is approved. In accordance with s.54(1), the Agreement will operate 7 days from approval. The nominal expiry date of the Agreement is 8 September 2019.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<Price code G, AE422867  PR589051>

1   See s.180(4)

 2   [2016] FWCFB 1926

 3   See s.203 for the requirements to be met by a flexibility term in an enterprise agreement

 4   Requirements at s.203(5), 203(6) and 203(7) have also not been met by the flexibility term

 5   AKN Pty Ltd t/a Aitkin Crane Services [2015] FWCFB 1833; Armacell Australia Pty Ltd and others [2010] FWAFB 9985; National Tertiary Education Union v University of New South Wales[2011] FWAFB 5163; Solar Systems Pty Ltd [2012] FWAFB 6397

Annexure A

Annexure B