Dawsons Maintenance Contractors Pty Ltd
[2018] FWCA 802
•6 FEBRUARY 2018
| [2018] FWCA 802 [Note: An appeal pursuant to s.604 (C2018/974) was lodged against this decision.][Note: This decision has been quashed - refer to Full Bench decision dated 11 July 2018 [[2018] FWCFB 2992] |
| FAIR WORK COMMISSION |
| decision |
Fair Work Act 2009
s.185—Enterprise agreement
Dawsons Maintenance Contractors Pty Ltd
(AG2017/3581)
Dawsons Maintenance Contractors Enterprise Agreement 2017
| Mining industry | |
| COMMISSIONER MCKINNON | MELBOURNE, 6 FEBRUARY 2018 |
Application for approval of the Dawsons Maintenance Contractors Enterprise Agreement 2017.
An application has been made for approval of a single enterprise agreement known as the Dawsons Maintenance Contractors Enterprise Agreement 2017 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act) by Dawsons Maintenance Contractors Pty Ltd (Dawsons).
On 24 August 2017 the Construction, Forestry, Mining and Energy Union, Mining and Energy Division (CFMEU) emailed the Commission requesting copies of the Form F16 and Form F17 filed in support of the application. The CFMEU sought to be heard on the agreement making process and the contents of the Agreement, noting its particular interest in the agreement’s “application to work and employees in the mining industry and in the classifications identified in the Agreement”.[1] Copies of the Form F16, Form F17 and Notice of Employee Representational Rights relating to the Agreement were provided to the CFMEU on 1 September 2017.
The CFMEU sought clarification from Dawsons about whether the Agreement applied to work in the black coal mining industry. Dawsons confirmed that the Agreement did not apply to “any work in black coal mining”.[2] It opposed the CFMEU’s application to be heard in relation to the Agreement.
On 1 September 2017 the Commission sought information from the CFMEU about whether it was a bargaining representative for the Agreement for the purposes of section 176 of the Act. On 6 September 2017 the CFMEU confirmed it was not a bargaining representative in relation to the Agreement.
On 28 November 2017 the CFMEU made submissions on its right to be heard in relation to the application. After considering those submissions, I decided to hear only from the CFMEU on the application of the better off overall test (BOOT) to the Agreement. This decision was made because I considered the CFMEU likely to have particular knowledge of relevant modern awards that might inform my consideration of the BOOT, but on the material before me, I was not satisfied it had relevant knowledge or information about the agreement-making process in relation to the Agreement.
On 8 December 2017 and 21 December 2017, the CFMEU filed submissions in relation to the BOOT. The CFMEU argued that the Agreement does not pass the BOOT because it contains a number of less beneficial provisions. Specifically the CFMEU took issue with agreement terms dealing with rail allowance, payment for off the job training, apprentices and trainees, excessive leave, “obligations to employer” and drug and alcohol testing, casual conversion, redundancy, abandonment of employment, inclement weather, frequency of payment and deductions from pay.
On 18 December 2017, Dawsons filed reply submissions dealing with the CFMEU concerns and proposing to give certain undertakings in relation to the Agreement.
On 22 December 2017, the Commission wrote to Dawsons outlining its preliminary concerns with the application.
Dawsons circulated proposed undertakings in relation to the Agreement to each of the bargaining representatives on 2 January 2018 and subsequently filed proposed undertakings in the Commission. On 12 January 2018, the CFMEU made submissions on the proposed undertakings. Dawsons replied to the CFMEU’s further submissions on 16 January 2018.
Better Off Overall Test
Section 193(1) of the Act provides as follows:
“193(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.”
The relevant modern awards in relation to the Agreement are:
· the Manufacturing and Associated Industries and Occupations Award 2010 (Manufacturing Award);
· the Mining Industry Award 2010 (Mining Award);
· the Building and Construction General On-Site Award 2010 (Building Award);
· the Professional Employees Award 2010 (Professional Award); and
· the Clerks – Private Sector Award 2010 (Clerks Award).
Rates of pay
Rates of pay in the Agreement are generally higher than relevant award rates of pay by a range of approximately 1.3% - 7.2%.
However, the rates of pay in the Agreement for casual employees in C10, C9, C8 and C7 classifications appear to be lower than comparable rates of pay in the Manufacturing Award.
Dawsons has given an undertaking that these rates of pay will “not fall below the award plus 2%”. The CFMEU notes that the proposed undertaking increases the relevant wages in the range of 2.65-5.19% and that the increases would apply on an all-purpose basis.
Rail allowance
The CFMEU submitted that there is no rail allowance in the Agreement for locomotive drivers and that this category of employee falls within the scope of the Agreement. The CFMEU notes that the Mining Award contains such an allowance.
Clause 3.6.2(b)(iv) of the Agreement states that “Rail Allowance is not applicable to the Agreement”. Dawsons confirmed in subsequent submissions that it has “never operated in the rail industry or employed railway operators”[3] and that it “owns no trains and employs no rail operators”.[4] I have no reason to doubt these submissions.
However, it is at least arguable that the Agreement covers locomotive drivers, having regard to the classification of Mining Industry Surface Mining and Haulage Employees, whose tasks include “operating equipment used in the transportation handling and loading (or discharge) or ores, metals, minerals and/or product (including rail activities).[5] Such prospective employees may not be better off overall under the Agreement if no rail allowance is payable.
Dawsons has given an undertaking to address the concern identified by the CFMEU.
Payment for off the job training
The CFMEU submitted that clause 2.10.3(d) of the Agreement, which provides for employees to participate in “off the job” training outside of ordinary hours without pay, means that employees will not be better off when compared to relevant modern awards.
Dawsons has given an undertaking to address the concern.
Apprentices and trainees
The CFMEU expressed concerns about clause 3.4.1 of the Agreement in relation to rates of pay for apprentices and trainees, particularly when paid under “flat rate” arrangements in clause 1.13.4(d) of the Agreement.
Clause 3.4.1 provides for apprentices and trainees to be “engaged in accordance with the applicable modern award plus 2 cents for each hour work paid as a flat payment.”
Clause 1.13.4(d) is a facilitative provision which allows employees to be paid an “All Inclusive Flat rate, (that includes all wage rates and penalties, loadings, overtime and allowances), paid as Hourly or Daily or Weekly or Fortnightly or Monthly.” Safeguards in the Agreement ensure that flat rates agreed under such an arrangement will be no less than the amount an employee would receive overall under the Agreement.[6]
The CFMEU submitted that the effect of the Agreement is that apprentices and trainees are paid “the same rate regardless of when the work is performed or whether ordinary time or overtime” is worked. I do not agree with this construction.[7]
The term “flat payment” in clause 3.4.1 is not defined in the Agreement and takes its ordinary meaning, which here means a payment “without modification”.[8] The flat payment is payable in addition to other award-derived entitlements (such as overtime or weekend penalties). Other terms of the Agreement also deal with flat rates of pay, but not in a way that is presently relevant. I note that the term “All Inclusive Flat rate” is defined in clause 3.1.1 of the Agreement, but the definition does not apply to clause 3.4.1.
Clause 3.4.1 is clear on its terms. It provides for apprentices and trainees to be engaged accordance with the relevant award and to receive a small additional payment calculated according to the number of hours worked. The evident purpose of the clause is to ensure that engagement of apprentices and trainees under the Agreement is not a barrier to approval of the Agreement. I have also had regard to the various overtime and penalty provisions of the Agreement. Absent clause 3.4.1, these terms would apply to apprentices and trainees where applicable. However, the effect of clause 3.4.1 is that the relevant award terms apply in their stead and apprentices and trainees are entitled to relevant penalties under the award.
It follows that I am not satisfied that apprentices and trainees are paid the same rate regardless of when their work is performed, or whether ordinary time or overtime is worked under the Agreement.
The CFMEU also submitted that a small increase in rates of pay for apprentices and trainees under the Agreement compared to the Award was insufficient for the purposes of the BOOT. It argued that the Commission should apply the BOOT “in the real world to practical circumstances” and not only to theoretical ones. However, it led no evidence of any such practical circumstances and nor was there any material of that nature before the Commission.
In a particular case, an overall assessment of the BOOT may lead to the conclusion that a small increase in wages is not enough to overcome perceived detriment when compared to relevant award(s). However, the Act does specify how much better off an employee must be. There is no requirement, for example, that employees be “substantially” or “significantly” better off. That an enterprise agreement might leave employees better off overall by only a small margin is not a barrier to its approval. It follows that I do not agree with the CFMEU’s submission on this issue.
The Agreement provides that employees will be engaged in accordance with the Award and in addition will receive 2 cents per hour worked. I am satisfied that the rates of pay in the Agreement are more beneficial to employees than the rates of pay in the Award (albeit only just).
Dawsons offered an undertaking to ensure that apprentices and trainees will not employed under “Alternative Remuneration Arrangements” under the Agreement. The undertaking would address any remaining concern about the effect of clause 1.13.4(d) of the Agreement in relation to apprentices and trainees.
Excessive leave
The CFMEU submitted that employees are not better off overall under the Agreement because excessive leave terms inserted into the Mining Award[9] as part of the four yearly modern award review are not contained in the Agreement.
Dawsons has given an undertaking dealing with excessive leave, and the CFMEU agrees the undertaking would address its concern. However, the CFMEU raised further concerns about the wording of the undertaking and whether it was easy enough for employees to understand. I am satisfied that the wording of the proposed undertaking is sufficiently clear.
“Obligations to employer” and drug and alcohol testing
The CFMEU expressed concern about the inclusion of clauses 10.1 and 10.2 of the Agreement in circumstances where there were no equivalent terms in the relevant modern awards. It argued, in summary, that because the Agreement creates new, binding obligations for which an employee could be prosecuted for breach, employees will be in a less beneficial position than they would be under the relevant award.
Clause 10.1 sets out three clear expectations of employees relating to: conduct that harms or conflicts with Dawson’s business; bringing firearms or domestic animals to work; and use or possession of alcohol and other drugs or intoxicating substances.
Clause 10.2 deals with drug and alcohol testing.
Enterprise agreements are not, and are not intended to be, simple replicas of modern awards. I am unable to accept that an enterprise agreement dealing with matters that are not also dealt with in relevant modern awards is, by default, detrimental to employees for the purposes of the BOOT.
The BOOT requires a comparison of terms of the enterprise agreement and relevant modern award(s) at the test time – that is, when the application for approval of the agreement is made.[10] It does not require a broader assessment of any possible detriment that might flow from the fact of being employed under an enterprise agreement instead of a modern award. I also note that the test time is before an enterprise agreement commences operation[11] when no potential breach of the Agreement can yet have occurred. Arguably, on that basis, concerns relating to future potential breaches are irrelevant to the assessment of the BOOT.
It follows that I am not satisfied that either clauses 10.1 or 10.2 of the Agreement are detrimental to employees for the purposes of the BOOT.
Casual conversion
The CFMEU expressed concern that the Agreement does not provide for casual conversion rights and accordingly is less beneficial to employees than both the Building Award and the Manufacturing Award.
Dawsons has given an undertaking to address what I consider to be a valid concern. The CFMEU has indicated that the proposed undertaking removes its concern.
Redundancy
The CFMEU raised concerns about clause 2.6 of the Agreement on the basis that it provides less beneficial redundancy terms than those in the Building Award.
Dawsons has given undertakings to address those concerns by ensuring that for relevant employees, entitlements to redundancy under the Agreement will be no less beneficial than the Building Award. The CFMEU has indicated that the proposed undertaking removes its concerns in relation to redundancy.
Abandonment of employment
The Agreement deals with abandonment of employment and there is a concern that the term might exclude the National Employment Standards (NES) in relation to notice of termination, having regard to the Full Bench decision in Bienias v Iplex Pipelines Australia Pty Limited[12].
Dawsons has given an undertaking to address the concern. The CFMEU has indicated support for the proposed undertaking in substance although it considers the wording to be unclear. I am satisfied that the wording of the proposed undertaking is sufficiently clear.
Inclement weather
The CFMEU expressed concern that clause 2.11.2 of the Agreement is less beneficial than clause 23 of the Building Award in relation to inclement weather.
Dawsons has given an undertaking to address the concern by ensuring that relevant terms of the Agreement will not be less favourable than those in the Building Award for affected employees. The CFMEU indicated that the proposed undertaking removes a “barrier to approval” although expressed concern about the precise wording. I am satisfied that the wording of the proposed undertaking is sufficiently clear.
Frequency of payment
The CFMEU expressed concern that clause 2.12.1 of the Agreement is less beneficial than clause 31.3 of the Building Award because it provides for payment of wages on a “not longer than” monthly, rather than weekly, basis.
Dawsons has given an undertaking that directly addresses the concern and the CFMEU has advised that the proposed undertaking removes what it considered to be a barrier to approval.
Deductions from pay
The CFMEU submitted that clause 2.12.2 of the Agreement, which deals with deductions from overpayment of wages, contains no safeguards against any financial detriment that might arise from its operation. Accordingly, it said the term placed employees in a less beneficial position than one of the relevant modern awards, noting that the Mining Award contains a similar term to clause 2.12.2 of the Agreement.
As the CFMEU noted, enterprise agreement terms dealing with deductions from wages in a manner that is inconsistent with the Act are of no effect. While the potential for financial detriment to arise from a disadvantageous deduction of wages provision may be a relevant BOOT consideration in a particular case[13], the inclusion of such terms in an enterprise agreement does not create an insurmountable barrier to agreement approval.
In this matter, Dawsons has given an undertaking that no deduction from wages will be made under clause 2.12.2 that would result in an employee receiving less than they would receive under the relevant modern award.
Undertakings
The written undertakings offered by Dawsons in relation to the Agreement are set out in Annexure A. I am satisfied that these 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.
Subject to the undertakings referred to above, on balance I am satisfied that the agreement passes the BOOT and that each of the additional requirements in ss.186, 187, 188 and 190 as are relevant to this application for approval have been met.
The Agreement is approved and, in accordance with section 54 of the Act, will operate from 13 February 2018. The nominal expiry date of the Agreement is 5 February 2022.
COMMISSIONER
ANNEXURE A
[1] CFMEU submission, 28 November 2017
[2] Email from S Dawson, 4 December 2017
[3] Submission, 18 December 2017
[4] Submission, 16 January 2018
[5] Agreement, clause 3.2.6(b)(ii)
[6] Agreement, clause 1.13.6
[7] The approach to construction of agreements is set out in The Australian Meat Industry Employees Union v Golden Cockerel Pty Limited[2014] FWCFB 7447; Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers Union (AMWU) v Berri Pty Limited [2017] FWCFB 3005
[8] Macquarie Dictionary Online, 2017
[9] Mining Award, clauses 23.7 – 23.9
[10] Act, s.193(6)
[11] Act, s.54
[12] [2017] FWCFB 38
[13] AKN Pty Ltd t/a Aitkin Crane Services [2015] FWCFB 1833
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