Cummins South Pacific Pty Ltd T/A Cummins South Pacific

[2019] FWCA 1245

[2019] FWCA 1245

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Cummins South Pacific Pty Ltd T/A Cummins South Pacific
(AG2018/3278)

CUMMINS SOUTH PACIFIC PTY LTD - LAVERTON ENTERPRISE AGREEMENT 2018

Manufacturing and associated industries
COMMISSIONER GREGORY	MELBOURNE, 25 FEBRUARY 2019

Application for approval of the Cummins South Pacific Pty Ltd - Laverton Enterprise Agreement 2018.

[1] An application has been made for approval of an enterprise agreement known as the Cummins South Pacific Pty Ltd - Laverton Enterprise Agreement 2018 (the Agreement). The application was made under s.185 of the Fair Work Act 2009 (“the Act”) by Cummins South Pacific Pty Ltd T/A Cummins South Pacific. The Agreement is a single enterprise agreement.

[2] After reviewing the application, together with the F17 Employer’s Statutory Declaration, and the terms and conditions contained in the proposed Agreement, the Commission sought further clarification from the Applicant about various matters. It has since provided written undertakings in response to some of those matters. However, the Commission also raised a concern about the operation of sub clause 14.2.2.3 “Standby Allowance” in the proposed Agreement which states:

“Employees required to hold themselves in readiness to work after ordinary hours are to be paid a minimum of $75.00 per week for every week that they are on Standby.”

[3] This concern was raised in the context of the relevant provision contained in the underlying Manufacturing and Associated Industries and Occupations Award 2010 at sub clause 40.6 “Standing by” which states:

“Subject to any custom prevailing at an enterprise, where an employee is required regularly to hold themselves in readiness to work after ordinary hours, the employee must be paid standing by time at the employee’s ordinary time rate for the time they are standing by.”

[4] The Applicant indicated in its initial response to the Commission that its existing standby practices constitute a prevailing custom in accordance with the above Award clause, and the relevant provision in the Agreement should accordingly be viewed in this context. However, the Commission decided that it was appropriate to set the matter down for hearing to enable any further submissions or evidence to be provided.

[5] The Applicant subsequently advised that it intended to be represented by Counsel in the hearing. It also indicated that it would be seeking to rely upon the decision of a Full Court of the Industrial Relations Court of Australia in Logan v Otis Elevator Co Pty Ltd [1999] IRCA 4 (“Otis Elevator”).

[6] The hearing took place on 21 February 2019 with the parties appearing by telephone. The Commission granted permission to appear to Mr J. Forbes of Counsel under s.596(2)(a) of the Act as the matter involved a degree of complexity and his involvement might enable it to be dealt with more efficiently.

[7] The Applicant indicated in its submissions that the standing by allowance was primarily applicable to those employees employed as Field Service Technicians, and to a lesser extent those employed as Parts Interpreters. The Field Service Technicians are primarily employed to provide services to customers of the business off-site, and this is an essential part of their responsibilities. This often involves emergency work associated with repairs and replacement parts. Apart from working their normal rosters the Field Service Technicians are also regularly rostered on standby on either one week in three, or one week in four, for the purpose of carrying out any emergency work that arises outside of their normal working hours. It is submitted that during these rostered standby periods it is intended that sub clause 40.6 of the Award has application, and the employees are to be paid “a minimum of $75.00 per week” during these standby periods.

[8] It is also submitted that this practice has been in place since at least 2005, and should be considered to be a custom that comes within the exception contained in the Award provision referred to above (sub clause 40.6) when it states, “Subject to any custom prevailing at an enterprise…”.

[9] As indicated, the Applicant also places reliance on the decision in Otis Elevator in support of its submissions, and submits that the circumstances considered by the Full Court in that matter are on “all fours” with the circumstances in the present matter. The Full Court in that matter was also required to consider the circumstances of an employee providing services in the field to customers within a particular geographical area. The employee was also required to regularly make themselves available to attend to emergency breakdowns and the like. The circumstances also involved a similar Award provision. It stated:

“Standing by

(g) Subject to any custom now prevailing under which an employee is required regularly to hold himself in readiness for a call back, an employee required to hold himself in readiness to work after ordinary hours shall until released be paid standing-by time at ordinary rates from the time which he is so to hold himself in readiness.” 1

[10] It is also submitted that there are further similarities to the present matter in that the underlying Awards under consideration in the matter before the Full Court can be said to be antecedents to the Modern Award under consideration in the present matter.

[11] The Applicant’s submissions made particular reference to the following extracts from the decision of the Full Court when it considered the opening words of the above Award provision. Firstly, to the following extract from paragraph 18:

“The qualification in the opening words is intended to exempt from its operation employees who traditionally and regularly might be required to return to work by way of a callback. As I have just discussed, local representatives were of this latter class.” 2

[12] It next referred to paragraph 21 of the decision when the Full court stated:

“It seems to us the opening words of the sub-clause do no more than emphasise this interpretation; the sub-clause does not apply where there is a ‘‘custom’’ under which the employee is regularly required to hold himself in readiness for a call back. In this context the word ‘‘custom’’ means no more than a prevailing and accepted practice. Moore J held there was such a practice in relation to Otis’ local representatives.” 3

[13] It is also noted that the Full Court rejected submissions by Counsel for the Applicant that in considering the use of the word “custom” it required a demonstration that the relevant practice is “notorious, reasonable and certain,” and must have existed “from time immemorial, or at least from a date before the insertion of the clause in the Award.”

[14] The Australian Manufacturing Workers’ Union also appeared in the current proceedings and indicated that it did not take issue with the submissions made on behalf of the Applicant.

[15] I am satisfied in response that the decision in Otis Elevators is directly relevant to the circumstances involved in the present matter. I am also satisfied that the existing practice involving the Field Service Technicians and the Parts Interpreters being regularly rostered on standby, and receiving a flat amount of payment during that time, can be considered to be a “custom prevailing at an enterprise,” given that it appears they have been regularly rostered on standby at the Applicant business for a period of time that extends back to at least 2005. It follows as a consequence of this conclusion that the better off overall test assessment does not need to be carried out against the background of the Award provisions that would otherwise provide, in the absence of any custom prevailing at an enterprise, that an employee must be paid standing by time at the employee’s ordinary time rate for the time they are standing by.

[16] It is also noted in the context of the circumstances that apply at the Applicant’s business that where an employee is called back during a standby period the employee will then be entitled to the benefit of the call back provisions contained in sub clause 40.5 “Call back” of the underlying Manufacturing and Associated Industries and Occupations Award 2010. This is because the Award is incorporated into the Agreement to the extent that its conditions are not inconsistent with those contained in the Agreement. The Award call back provisions contain a series of entitlements that are to apply depending upon the particular circumstances associated with the call back, and include entitlements to periods of minimum engagement and additional overtime rates.

[17] As indicated, the Employer has 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 or result in substantial changes to the Agreement.

[18] Subject to the undertakings referred to above I am otherwise satisfied that each of the requirements of ss.186, 187, 188 and 190, as are relevant to this application for approval, have been met.

[19] The “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union,” otherwise known as the Australian Manufacturing Workers’ Union (AMWU), 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.

[20] The Agreement is approved and, in accordance with s.54 of the Act, will operate from 4 March 2019. The nominal expiry date of the Agreement is 1 August 2021.

COMMISSIONER

Appearances:

J Forbes of Counsel for the Applicant.

Hearing details:

2019.

Melbourne:

February 21.

Printed by authority of the Commonwealth Government Printer

<AE501991  PR705301>

Annexure A

 1   Logan v Otis Elevator Co Pty Ltd [1999] IRCA 4, [15].

 2   Ibid, [18].

 3   Ibid, [21].