DOF Management Australia Pty Ltd

[2016] FWCA 4654

[2016] FWCA 4654

FAIR WORK COMMISSION

DECISION

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

DOF Management Australia Pty Ltd
(AG2016/2924)

DOF MANAGEMENT AUSTRALIA PTY LTD MARITIME OFFSHORE OIL AND GAS INDUSTRY ENTERPRISE AGREEMENT 2016

Oil and gas industry
DEPUTY PRESIDENT BINET	PERTH, 1 AUGUST 2016

Application for approval of the DOF Management Australia Pty Ltd Maritime Offshore Oil and Gas Industry Enterprise Agreement 2016.

[1] On 29 April 2016 DOF Management Australia Pty Ltd (DOF) filed an application (Application) pursuant to section 185 of the Fair Work Act 2009 (Cth) (FW Act) for the approval of the DOF Management Australia Pty Ltd Maritime Offshore Oil and Gas Industry Enterprise Agreement 2016 (Proposed Agreement).

[2] The Proposed Agreement is a single enterprise agreement with an expiry date four years after the date on which the Fair Work Commission (FWC) approves the Proposed Agreement.

[3] On 3 May 2016, the FWC received an application from the Maritime Union of Australia (MUA) requesting that the MUA be heard in relation to the Application.

[4] On 14 June 2016, an interim decision (PR581473, [2016] FWC 3792) (Standing Decision) granted standing for the MUA to be heard with respect to the Application.

[5] In accordance with Directions issued on 16 June 2016, the parties filed outlines of submissions, witness statements and the documentary evidence on which they respectively relied.

[6] In their materials the MUA sought to oppose DOF’s Application for the registration of the Proposed Agreement on the following grounds:

(a) DOF engaged in deliberate manipulation of the agreement making procedures and therefore the FWC cannot be satisfied that the group of employees to be covered by the Proposed Agreement were fairly chosen as required by section 186(3) of the FW Act.

(b) The Proposed Agreement did not pass the better off overall test as required by section 186(2)(d) of the FW Act (BOOT).

[7] The matter was listed for hearing on Monday 11 July 2016. At the outset of the hearing the MUA withdrew from the proceedings. The hearing of the Application proceeded in the absence of the MUA, however Counsel for DOF addressed the objections to the Application which the MUA had earlier raised. I have taken the written materials filed by the MUA into account pursuant to my powers under section 590 of the FW Act to inform myself.

[8] Sections 186 and 187 of the FW Act set out the conditions which must be met for an agreement to be approved by the FWC. Section 186 and 187 provide as follows:

“186 When the FWC must approve an enterprise agreement—general requirements

Basic rule

(1) If an application for the approval of an enterprise agreement is made under section 185, the FWC must approve the agreement under this section if the requirements set out in this section and section 187 are met.

Note: The FWC may approve an enterprise agreement under this section with undertakings (see section 190).

Requirements relating to the safety net etc.

(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; and

(b) if the agreement is a multi-enterprise agreement:

(i) the agreement has been genuinely agreed to by each employer covered by the agreement; and

(ii) no person coerced, or threatened to coerce, any of the employers to make the agreement; and

(c) the terms of the agreement do not contravene section 55 (which deals with the interaction between the National Employment Standards and enterprise agreements etc.); and

(d) the agreement passes the better off overall test.

Note 1: For when an enterprise agreement has been genuinely agreed to by employees, see section 188.

Note 2: The FWC may approve an enterprise agreement that does not pass the better off overall test if approval would not be contrary to the public interest (see section 189).

Note 3: The terms of an enterprise agreement may supplement the National Employment Standards (see paragraph 55(4)(b)).

Requirement that the group of employees covered by the agreement is fairly chosen

(3) The FWC must be satisfied that the group of employees covered by the agreement was fairly chosen.

(3A) If the agreement does not cover all of the employees of the employer or employers covered by the agreement, the FWC must, in deciding whether the group of employees covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.

Requirement that there be no unlawful terms

(4) The FWC must be satisfied that the agreement does not include any unlawful terms (see Subdivision D of this Division).

Requirement that there be no designated outworker terms

(4A) The FWC must be satisfied that the agreement does not include any designated outworker terms.

Requirement for a nominal expiry date etc.

(5) The FWC must be satisfied that:

(a) the agreement specifies a date as its nominal expiry date; and

(b) the date will not be more than 4 years after the day on which the FWC approves the agreement.

Requirement for a term about settling disputes

(6) The FWC must be satisfied that the agreement includes a term:

(a) that provides a procedure that requires or allows the FWC, or another person who is independent of the employers, employees or employee organisations covered by the agreement, to settle disputes:

(i) about any matters arising under the agreement; and

(ii) in relation to the National Employment Standards; and

(b) that allows for the representation of employees covered by the agreement for the purposes of that procedure.

Note 1: The FWC or a person must not settle a dispute about whether an employer had reasonable business grounds under subsection 65(5) or 76(4) (see subsections 739(2) and 740(2)).

Note 2: However, this does not prevent the FWC from dealing with a dispute relating to a term of an enterprise agreement that has the same (or substantially the same) effect as subsection 65(5) or 76(4).”

“187 When the FWC must approve an enterprise agreement—additional requirements

Additional requirements

(1) This section sets out additional requirements that must be met before the FWC approves an enterprise agreement under section 186.

Requirement that approval not be inconsistent with good faith bargaining etc.

(2) The FWC must be satisfied that approving the agreement would not be inconsistent with or undermine good faith bargaining by one or more bargaining representatives for a proposed enterprise agreement, or an enterprise agreement, in relation to which a scope order is in operation.

Requirement relating to notice of variation of agreement

(3) If a bargaining representative is required to vary the agreement as referred to in subsection 184(2), the FWC must be satisfied that the bargaining representative has complied with that subsection and subsection 184(3) (which deals with giving notice of the variation).

Requirements relating to particular kinds of employees

(4) The FWC must be satisfied as referred to in any provisions of Subdivision E of this Division that apply in relation to the agreement.

Note: Subdivision E of this Division deals with approval requirements relating to particular kinds of employees.

Requirements relating to greenfields agreements

(5) If the agreement is a greenfields agreement, the FWC must be satisfied that:

(a) the relevant employee organisations that will be covered by the agreement are (taken as a group) entitled to represent the industrial interests of a majority of the employees who will be covered by the agreement, in relation to work to be performed under the agreement; and

(b) it is in the public interest to approve the agreement.”

[9] DOF filed Forms F16, F17 and F18A detailing the Proposed Agreement approval process. I am satisfied that the Proposed Agreement was genuinely agreed to by the employees covered by the Proposed Agreement in accordance with subsection 186(2)(a) of the FW Act. I am also satisfied, in accordance with subsection 187(2) of the FW Act, that approving the Proposed Agreement is not inconsistent with, or would undermine, good faith bargaining.

[10] It was not contested, and I am satisfied that, the terms of the Proposed Agreement do not contravene section 55 of the FW Act and that the Proposed Agreement does not contain any unlawful or designated outworker terms.

[11] I am satisfied that the nominal expiry date complies with subsection 186(5) of the FW Act.

[12] Clause 10 of the Proposed Agreement contains a dispute resolution provision which complies with subsection 186(6) of the FW Act.

[13] I am satisfied that subsections 186(2)(b) and 187(3)-(6) of the FW Act do not apply to the Proposed Agreement.

[14] Therefore the two remaining issues which I need to be satisfied of are whether the group of employees to be covered by the Proposed Agreement were fairly chosen, as required by section 186(3) of the FW Act, and whether the Proposed Agreement passes the BOOT, as required by section 186(2)(d).

Was the Group of Employees to be Covered by the Agreement Fairly Chosen?

[15] Before the FWC can approve an agreement, it must be satisfied that the group of employees covered by the agreement was fairly chosen. 1 If the agreement does not cover all of the employees of the employer the FWC must decide whether the group of employees covered was fairly chosen, taking into account whether the group is geographically, operationally or organisationally distinct.2

[16] The Full Court of the Federal Court has determined that the reference in the FW Act to the ‘group of employees covered by the agreement’ is a reference to:

“… the whole class of employees to whom the agreement might in the future apply, rather than a group of employees which actually voted on whether to make the agreement.” 3

[17] The Proposed Agreement is proposed to cover:

“4. Coverage

This Agreement covers:

(a) The Employer; and

(b) The Employees employed by the Employer to work in the Maritime Offshore Oil and Gas Industry:

(i) in any of the classifications contained in the Schedules to this Agreement, whether or not they are at a particular point in time performing duties on rostered work time on a vessel; or

(ii) in any pre-mobilisation, training, Employer approved leave or on-shore duties that the Employer requires the Employee to undertake before after commencing work in any of the said classifications.”

[18] The ‘classifications’ include the full scope of employees who may be assigned to work in a deck department of a vessel’s crew, namely: Chief IR, IR/Crane Operator, IR, Chief Cook, Cook, Chief Steward, Steward, Bosun’s Mate, TIR and PIR. These classifications form the Deck Department, which is one of three departments of seafarers which make up the crew on DOF vessels operated in Australia. 4

[19] The other two departments which make up the crew on DOF vessels operated in Australia are the Deck Officer Department and the Engineering Department. The Desk Officer Department is composed of Deck Officers who have ultimate responsibility for the management of the vessel. The Deck Officers are eligible to be members of the Australian Maritime Officers Union. The Engineering Department is composed of Engineering Officers who have responsibility for keeping the ship and its machinery running. The Engineering Officers are eligible to be members of the Australian Institute of Marine and Power Engineers. 5

[20] The Deck Department is composed of Deck Ratings employees who complete tasks delegated by the Deck Officers and also include catering personnel. Deck Ratings employees are eligible to be members of the MUA. 6

[21] The MUA has not suggested that the coverage of the Proposed Agreement is not geographically, operationally or organisationally distinct for the purposes of section 186(3A) of the FW Act.

[22] Despite the large number of classifications contained in the Proposed Agreement the Agreement was approved by only four employees, who between them, are covered by only two classifications in the Proposed Agreement (IR and Caterers). 7

[23] These were the first four employees directly hired by DOF whose industrial interests the MUA were entitled to represent. 8 Historically DOF have contracted labour-hire companies, including Programmed Marine Pty Ltd (Programmed), to provide MUA-covered employees to perform work on vessels owned or operated by DOF in the Australian maritime offshore oil and gas industry.9

[24] The evidence before me is that there has been ongoing bargaining between the MUA and the industry, represented by the Australian Mines and Metals Association (AMMA), since late 2012. 10 DOF was not involved in this bargaining because DOF did not at that time employ any employees whose industrial interests the MUA were entitled to represent.11

[25] In November 2015 and February 2016, several industry employers, including Programmed, requested MUA covered employees to vote to approve enterprise agreements in similar terms to the Proposed Agreement. The MUA recommended that members vote no to these enterprise agreements and a majority employees subsequently voted not to approve the agreements. 12

[26] In March 2016 Mr Michael Llewellyn, as bargaining representative for DOF, approached a number of individuals to make an agreement directly with DOF. 13 On or about 31 March 2016 those individuals were offered (and accepted) employment with DOF and appointed themselves or each other as bargaining representatives for the Proposed Agreement.14

[27] Although the four individuals signed employment agreements on 31 March 2016 15 and were paid from 1 April 201616 they did not perform any work on a vessel until at least 14 May 2016. The only work that these employees performed was to undertake training courses provided by DOF.17 The employees did eventually commence work on a vessel and each of the four employees remains employed by DOF.18

[28] The four employees voted to approve the Proposed Agreement. The results of the ballot were confirmed on 28 April 2016. 19

[29] Almost immediately after the Proposed Agreement was approved by the four employees, DOF notified Programmed that it no longer required its labour-hire services and began to directly recruit a larger DOF workforce, including by approaching Programmed employees working on the Scandi Singapore.

[30] In Construction, Forestry, Mining and Energy Union v John Holland and Another [2015] FCAFC 16 at [33], Buchanan J accepted that it was legally possible for an agreement to be made with as few as three employees voting in favour of it, but acknowledged that:

“Nevertheless obviously questions may arise about the extent to which it is fair for a very small group of employees to fix the terms and conditions of a larger group of employees who may be engaged in a period of years into the future. Whatever position is taken, once an agreement is approved it endures for up to 4 years and no protected industrial action is possible during the term of an agreement. Future employees, therefore, have less (if any) opportunity to bargain.
…
There is no requirement that employees who vote to make an agreement must have been employment for any length of time, and there is no requirement that they remain in employment after the agreement is made. Presumably, the presently employed members of such a group will act from self-interest, rather than from any particular concern for the interest to future employees. The potential for manipulation of the agreement making process is, accordingly, a real one. However, no suggestion of that kind is made in the present case and the possibility may therefore be put to one side for the purpose of the discussion. That is an important consideration because it suggests, as a primary judge thought, the determination of whether the group of employees was fairly chosen in the present case needed to bring to account the business rationale for the choice as well is deal with the possibility of unfair exploitation.”

[31] This passage was considered by the Full Bench in CEPU v Sustaining Works Pty Ltd[2015] FWCFB 4422 at [24] which accepted that:

“… deliberate manipulation of the agreement making procedures under the FW Act might found a conclusion that the group of employees covered by the agreement was not fairly chosen.”

However the Full Bench found that there was no deliberate manipulation of the agreement making process on the facts of that particular case.

[32] The passage was also considered by the Full Bench in CEPU and AMWU v Main People Pty Ltd[2015] FWCFB 4467. At paragraph [32] the Full Bench stated that:

“[32] Merely because, at the time an agreement is negotiated and made, the employer only has a small number of employees with whom to negotiate, and the coverage of the resultant agreement encompasses a much wider range of employees, it does not follow that the processes been manipulated and the ‘fairly chosen’ requirement has not been met. This situation may simply reflect the hopes and ambitions of a small business which desires to become a much larger business.”

[33] The Full Bench did go on to note at paragraph [33] that:

“[33] The position might be different if, for example, the small group of employees with whom the agreement was negotiated were not employed at the time of the bona fides business reasons but rather only for a short period for the purpose of negotiating and making agreement which was disadvantageous to genuine future employees. In that circumstance, it might be concluded that the group of employees covered by the agreement was not fairly chosen. But there is no evidence of anything like this here.”

[34] The Full Bench has therefore at least been prepared to contemplate that, in the absence of a bona fide business reason, the fact that a small number of employees has approved an agreement which will apply to a much broader number later could result in a conclusion that the group of employees covered by the agreement was not fairly chosen.

[35] However, provided a bona fide business reason exists as to why only a small number of employees were engaged at the time an agreement with much broader coverage was approved, then evidence that the employer was motivated by other reasons will not of itself mean the bargaining process has been manipulated and the fairly chosen requirement has not been satisfied.

[36] See for example Maritime Union of Australia v Toll Energy Logistics Pty Ltd[2015] FWCFB 7272 at [65] where the Full Bench of the FWC found that, provided a bona fide business reason existed, evidence that the employer was also endeavouring to exclude a union from the bargaining process wouldn’t result in a finding that the bargaining process had been manipulated and that the fairly chosen requirement had not been met:

“[65] We consider it is arguable that a reason that the decision to use Toll Energy Logistics was made was in order to exclude the MUA from the bargaining process or make it likely that the MUA would be excluded from the process. If there was no other legitimate business reason it would be arguable that this was a manipulation of the bargaining process. However, it is not necessary to determine this matter because we have found that there were other legitimate business reasons for Toll Group to decide to use Toll Energy Logistics as the employer of the crew of the new build vessels vessels.”

[37] The MUA may be able to establish that DOF’s motivation in deciding to commence direct hire of crew rather than continue to rely on contracted labour-hire companies for the provision of labour and to offer an agreement to the first few employees it employed was to exclude the MUA from the bargaining process. However, I am bound by the decision of the Full Bench in Maritime Union of Australia v Toll Energy Logistics Pty Ltd[2015] FWCFB 7272 and I am unable to find that the fairly chosen requirement is not satisfied if DOF are able to demonstrate that a bona fide business reason existed for why only a small number of employees voted on the Proposed Agreement despite DOF intending that a larger group of employees be employed pursuant to the Proposed Agreement.

[38] DOF led evidence of what they say are bona fide business reasons for their decision to commence directly hiring employees. DOF say that the Australian offshore oil and gas industry is experiencing a substantial decline due to a variety of factors including an unanticipated and sustained reduction in international oil prices, the winding down of a large number of sizeable construction projects in the Australian offshore industry and a significant decline in future investment in offshore oil and gas projects in Australia. 20 This is consistent with the evidence of the MUA.21

[39] As a result of these factors DOF’s Australian operations have reduced from three vessels to one. Since January 2016 the Skandi Singapore has been the only vessel DOF has operated in Australian waters. 22 The client for the Skandi Singapore contract has requested that DOF reduce its total contract operating costs for the Skandi Singapore by 20%.23

[40] DOF say that as a result of this decline in the industry it made a business decision to reduce costs by employing labour directly and by expanding its business to provide seafaring labour to others. According to DOF, transitioning to direct hire will result in savings of around $3.5 million per year in relation to the crewing of the Skandi Singapore. 24

[41] DOF also say that it was motivated by other benefits which they say would be associated with direct hire of labour including:

(a) potential for improvements in productivity and efficiency;

(b) credibility with clients arising from being a true ‘full service’ operator;

(c) gaining a competitive advantage over competitors; and

(d) establishing consistency in workplace culture and management practices. 25

[42] According to DOF, its only remaining customer in Australia required it to supply a crew covered by an enterprise agreement. DOF also say that if it were to provide labour to others then it believes that this would be best achieved with an enterprise agreement in place because most vessel contracts in Australia contain clauses requiring enterprise agreements to be in place. 26

[43] On 2 February 2016 DOF made two enterprise agreements which between them covered all the other classifications of direct hire employees employed on the Skandi Singapore except for those eligible to be covered by the MUA (ie the Deck Officer Department and the Engineering Department but not the Deck Department). 27

[44] According to DOF, to ensure employees working on the Skandi Singapore enjoy consistent terms and conditions of employment, a draft agreement in substantially the same terms was offered to the first four direct hire employees eligible to be covered by the MUA employed by DOF. This draft agreement was modified following negotiations with those employees and eventually became the Proposed Agreement. 28

[45] DOF also led evidence of what they say are bona fide business reasons for only a small number of employees being employed as at the date the approval process occurred. According to DOF the direct hire employees were employed in tranches. They say this was necessary for the following reasons.

(a) It would not have been possible to provide an entire Deck Department with the necessary training and vessel familiarization at once.

(b) Providing the necessary training takes some time and the vessel is in constant use therefore the second tranche of employees were not recruited until they were required.

(c) DOF was subject to lengthy notice periods and penalty payments for early termination of labour hired from labour-hire providers.

(d) A gradual transition avoided the risk of an entire crew undertaking protected industrial action.

(e) A gradual transition allowed for the business to transition its payroll systems. 29

[46] Mr Llewellyn gave sworn evidence that each of the employees chosen in the first tranche and who voted to approve the Proposed Agreement had previously worked for DOF in a labour-hire role and have been trained by DOF or were known to or referred to by Mr Llewellyn as having a reputation as a hardworking member of crew. According to Mr Llewellyn each of the employees was fully qualified for the roles they were employed to perform at the time they were offered employment with DOF. 30 These employees all remain employed by DOF and have since been joined by a further tranche of direct hire employees.31

[47] Based on the evidence before me I am satisfied that bona fide business reasons existed for DOF to directly hire employees and ensure an agreement was in place for these employees. DOF could have potentially achieved this goal by entering into a greenfields agreement with the MUA. However it has been held that the FW Act does not prioritise one form of agreement over another 32 so DOF are within their statutory rights to select a non-greenfields agreement as its preferred industrial instrument.

[48] I therefore find that the group of employees to be covered by the Proposed Agreement was fairly chosen as required by section 186(3) of the FW Act.

Does the Proposed Agreement Satisfy the BOOT?

[49] The circumstances in which an agreement will pass the BOOT are set out in section 193 of the FW Act.

“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.”

[50] The Reference Award for the purposes of the BOOT is the Maritime Offshore Oil and Gas Industry Award 2010 (Award).

[51] The test to be applied when determining if the BOOT is satisfied is:

“[41] The BOOT, as the name implies, requires an overall assessment to be made. This requires the identification of terms which are more beneficial for an employee, terms which are less beneficial and an overall assessment of whether an employee would be better off under the agreement.” 33

[52] The application of the BOOT is a matter that involves the exercise of discretion and a degree of subjectivity or value judgement. 34

[53] The MUA assert that the Proposed Agreement fails the BOOT in one or more of the following three ways:

(a) A number of contingent allowances in the Award are superior to the corresponding allowances in the Proposed Agreement. 35

(b) The Proposed Agreement introduces casual employment which is an inherently inferior class of employment and, since the Award does not provide for casual employment, the BOOT comparison must be conducted as against a full-time or relief employee under the Award which the Proposed Agreement fails in respect to certain entitlements for casual employees. 36

(c) The Proposed Agreement introduces a probationary period which undermines job security.

Contingent Allowances

[54] The MUA asserted that the Proposed Agreement did not pass the BOOT because a number of contingent allowances in the Award are superior to the corresponding allowances in the Proposed Agreement. 37

[55] The first contingent allowance which the MUA say fails the BOOT is the allowance which compensates employees who must share cabins which is contained in clause 14.9(c) of the Award and clause 19.1(b) of the Proposed Agreement. 38

[56] The detriment only arises when an employee is accommodated in a four bed cabin. In all other circumstances the Proposed Agreement is favourable. Where a four bed cabin is provided the detriment according to DOF is $4.16 per day 39. Across the year, assuming for the purpose of the exercise that an employee always shares with three other seafarers, the aggregate detriment will be $855.93.40

[57] The second detriment identified by the MUA involves a comparison between clause 14.7(d) of the Award and clause 20.6(d) of the Proposed Agreement which both provide for a study allowance. 41 The Award sets the rate of the allowance at 75% of aggregate salary while the Proposed Agreement caps the study leave at 75% of the 100% salaries in sub clause 1 of Schedule 1 of the Proposed Agreement.

[58] For the classification with the lowest salary disparity, that of an 18 year or older PIR employee working on a self propelled vessel, according to the sworn evidence of DOF the weekly study allowance under the Award would be $806 and for the Proposed Agreement $726. Therefore, over the period of one year, a PIR employee could potentially be $4,160 worse off. Mr Llewellyn gave uncontested evidence that PIR employees spend at least 24 weeks of the year at sea so the differential in reality would be far less. 42

[59] In addition the MUA point out that the Award provides in clause 14.7(c)(iii) that employees may be required to give an undertaking that they will remain in employment for a period of 12 months after sitting for the certificate in question. The Agreement provides in clause 20.6(i) that if an employee terminates their employment within 24 months of completing study leave the employee may be required to repay a portion of the study leave allowance. 43 In this regard the Award provides for a more beneficial entitlement.

[60] MUA also assert that since the Proposed Agreement does not have an equivalent provision to clause 14.1(c)(i) of the Award, which provides two days clear rest and recreation in Port, this should weigh against the benefits in the Proposed Agreement for the purposes of the BOOT. 44 In this regard the Award provides for a more beneficial entitlement.

[61] MUA also assert that the Award provides in clause 14.1(c)(iii) for a higher rate of compensation for living expenses while in Port than clause 19.8 of the Proposed Agreement and that this should weigh against the benefits in the Proposed Agreement for the purposes of the BOOT assessment. 45 Clause 14.1(c)(iii) provides for the payment of an allowance of $139.79 plus breakfast as compared to the Proposed Agreement which provides for the payment of $96.90 for all meals. However, the Proposed Agreement provides that if the allowance does not cover the actual cost of meals DOF will meet the reasonable costs on production of receipts. I am therefore satisfied that the Proposed Agreement provides for an entitlement which is at least equivalent to the Award entitlement.

[62] MUA also assert that the allowance in clause 19.4 of the Proposed Agreement is less than the rate provided by the equivalent allowance in the Award at clause 14.1 and that this should weigh against the benefits in the Proposed Agreement for the purposes of the BOOT. 46

[63] Clause 19.4 of the Proposed Agreement provides for the payment of an allowance in certain circumstances when a vessel is wrecked or stranded. Clause 14.1 of the Award provides for a meal and accommodation allowance. Therefore the cited clauses are not comparable. The equivalent to clause 19.4 of the Proposed Agreement is clause 14.4 of the Award. Clause 19.4 of the Proposed Agreement provides for the payment of $22.45 per hour whereas clause 14.4 of the Award provides for the payment of an allowance of $24.31 per hour. Therefore the Award provides for a more generous entitlement in those presumably rare circumstances in which a vessel is wrecked or stranded.

[64] The equivalent clause in the Proposed Agreement to clause 14.1 of the Award is clause 19.7. A comparison of the relative rates between these two clauses indicated that the Proposed Agreement provides for a higher rate than the Award.

[65] MUA also assert that the Award provides, in clause 14.2(c), better provision of hotel accommodation while travelling than clause 26.3 of the Proposed Agreement and that this should weigh against the benefits in the Proposed Agreement for the purposes of the BOOT. 47 Whether this is the case is arguable and, in any event, clause 26.7 of the Proposed Agreement provides that any travelling expenses reasonably incurred shall be reimbursable.

[66] Finally the MUA also assert that, since the Proposed Agreement does not have an equivalent provision to clause 14.11 of the Award which provides for allowances to increase, this should weigh against the benefits in the Proposed Agreement for the purposes of the BOOT assessment. 48

[67] The MUA’s submissions identify individual terms which are less beneficial however the BOOT requires an overall assessment of whether an employee would be better off overall under an agreement. 49

[68] The BOOT assessment conducted by DOF reveals that all classifications of employees are substantially better off on the basis of non-contingent monetary benefits to the following degree: 50

Classification	Better off (%)	Better off ($)
Chief IR	59%	$61,569
IR/Crane Operator	93%	$78,192
IR	87%	$73,635
Chief Cook	59%	$61,569

[69] In fact, in the case of all classifications other than PIR Over 18s, employees are better off under the Agreement in terms of their base salary. DOF concede that PIR Over 18s have a lower prescribed annual salary under the Proposed Agreement of $50,344 as opposed to $55,929 under the Award. However, when mandatory allowances and other financial entitlements are factored in, DOF say that this classification of employee is better off by $9,044 or 14%. The entitlements taken into account by DOF in this calculation include specified short course training that PIR’s are required to undertake. The Proposed Agreement provides, in clause 20.1(f), that an employee who resigns or abandons employment within 12 months of undertaking an employer funded short course, may be required to reimburse DOF the total costs of such training.

[70] To ensure that the BOOT is satisfied DOF have provided an undertaking that it will not seek to enforce DOFs entitlement under the Proposed Agreement to require an TIR or PIR employee who resign or abandon their employment within 12 months of undertaking an employer funded short course, to reimburse DOF the total costs of such training (DOFs Undertaking). A copy of DOF’s Undertaking is attached to this decision as Attachment A.

[71] The MUA’s submissions were limited to identifying terms which were potentially less beneficial than those contained in the Award, however the MUA did not tender any evidence that employees were not better off overall. Nor did the MUA contest the BOOT assessment tendered by DOF. The DOF BOOT assessment is consistent with the FWC assessment. On this basis I am not satisfied that the MUA have established that the Proposed Agreement does not pass the BOOT because a number of contingent allowances in the Award are superior to the corresponding allowances in the Proposed Agreement. 51

Casual Employees

[72] The MUA also submitted that casual employees will be worse off under the Proposed Agreement than under the Award because the Agreement introduces casual employment and casual employment is, of itself, an inferior class of employment. The MUA say furthermore, as the Award does not provide for casual employment, the BOOT comparison must be conducted as against a full-time or relief employee under the Award and can not be satisfied. 52

[73] The MUA identified six entitlements which they say give rise to detriments for casual employees employed under the Proposed Agreement as opposed to the Award:

Award Entitlement	Proposed Agreement Entitlement
Clause 11.1 - Notice of Termination in accordance with the NES	Clause14.1(b) - Seven days’ notice or less.
Clause 12.1 – Redundancy Pay in accordance with the NES	Clause 15.1(b) – No entitlement
Clauses 14.7(d)(i) and 14.7(c)(iii) - Study Allowance paid at 75% of aggregate wages and employees may be required to give undertaking to remain employed for 12 months after sitting certificate.	Clauses 20.6(i) and (d) – Study allowance paid at 75% of 100% rate in sub-clause 1.1 of Schedule 1 which must be repaid if employee terminates employment with 24 months of completing study leave.
Clause 14.8 – Reimbursed cost of employer directed medicals and passport related costs.	Clause 19.6(e) – Only for period of employment and when currently rostered to return to the vessel.
Clause 14.10(c) - (d) – Personal accident insurance and personal illness insurance	Clause 28.2 – No entitlement
Clause 19.1(a) – Accrual of 1.153 days leave for each duty day on a vessel	Clause 29.1 – Accrual of one days leave for each duty day on a vessel.

[74] In relation to both notice and redundancy pay the Award provides for notice and redundancy pay in accordance with the National Employment Standards (NES). By virtue of section 123(1) of the FW Act, casuals are not entitled to notice or redundancy pay under the NES. Therefore casuals employed under the Agreement are better off overall in regards to notice, and the same in regards to redundancy entitlements, as they would be if employed under the Award.

[75] Study allowance is addressed earlier in this decision at paragraph [57]-[59].

[76] In relation to the entitlement to reimbursement for medical and passport related costs the entitlements are comparable and, to the extent they are not, they are addressed by the difference in pay rates set out in paragraph [80] of this decision.

[77] In relation to personal accident insurance and personal illness insurance those particular allowances are payable under the Award only in relation to floating production facilities. The Proposed Agreement does not apply to floating production facilities as defined in the Award. Specifically, the vessel types to which the Proposed Agreement applies as set out in the Schedules to the Proposed Agreement, when read with the relevant definitions at clause 3 of the Proposed Agreement, do not include floating production facilities.

[78] The MUA say casual employees suffer a detriment under the Proposed Agreement in relation to the accrual of leave. Clause 19.1(a) of the Award provides for the accrual of 1.153 days leave for each duty day on a vessel, whereas the comparable position in the Proposed Agreement provides for the accrual of only one days leave for each duty day on the vessel. However, under the Proposed Agreement casual employees are paid a loading of 20%. Therefore the accrual rate of casual employees under the Agreement is actually closer to 1.2 and therefore is in effect higher than the equivalent entitlement under the Award.

[79] MUA also submitted that casual employment is an inferior class of employment because it is characterised by reduced job and income security. They say that this should weigh against the benefits in the Proposed Agreement for the purposes of the BOOT. In Re AKN Pty Ltd (t/as Aitkin Crane Services)[2015] FWCFB 1833 the Full Bench of the Fair Work Commission made it clear that, for the purposes of the BOOT any consideration of casual employment as an inferior class of employment must be balanced against any financial benefits proffered to casual employees under the Proposed Agreement as compared to the Award.

[80] Under the Proposed Agreement casual employees are entitled to 20% loading. This causes the basic income differential between the lower rate of base pay in the Award and the higher rate of base pay in the Proposed Agreement to be exaggerated in relation to other entitlements other than just base pay. The evidence tendered by DOF indicates that when a BOOT is conducted for casual employees, casual employees are better off by between 83% and 115% under the Proposed Agreement than the Award. 53

Classification	Better off (%)	Better off ($)
Chief IR	83%	$80,791
IR/Crane Operator	112%	$95,755
IR	115%	$90,739
Chief Cook	83%	$80,791
Cook	84%	$77,241
Chief Steward	83%	$80,791
Steward	84%	$77,241
PIR	N/A	N/A
TIR	N/A	N/A

[81] The MUA’s submissions were limited to identifying terms in the Proposed Agreement which were potentially less beneficial for casual employees than those contained in the Award however the MUA did not tender any evidence that casual employees were not better off overall. Nor did the MUA contest the BOOT assessment of casual employees tendered by DOF. The DOF BOOT assessment is consistent with the FWC assessment. On this basis I am not satisfied that the MUA have established that the Proposed Agreement does not pass the BOOT because the Proposed Agreement introduces the casual employment or because the BOOT must be conducted as against full time Award employees. 54

Probationary Employment

[82] Finally the MUA assert that clause 12.4 of the Proposed Agreement, which provides for a probationary period, should weigh against the benefits in the Proposed Agreement for the purposes of the BOOT because it provides for a less secure form of employment.

[83] In light of the evidence as to employees being significantly better off overall under the Proposed Agreement than they would be under the Award I am not satisfied that the MUA have established that the Proposed Agreement does not pass the BOOT because the Proposed Agreement provides for probationary employment. 55

Conclusions

[84] Sections 186 and 187 of the FW Act set out the conditions which must be met for an agreement to be approved by the FWC. For the reasons outlined above I am satisfied that these conditions have been met including being satisfied that the group of employees to be covered by the Proposed Agreement were fairly chosen as required by section 186(3) of the FW Act and that the Proposed Agreement passes the BOOT as required by section 186(2)(d).

[85] The Proposed Agreement is approved. In accordance with section 54(1) of the FW Act, the Proposed Agreement shall commence operation 7 days from the date of this decision.

DEPUTY PRESIDENT

Appearances:

R Dalton and N Burmeister for the Applicant.

E Palmer for the MUA.

Hearing details:

2016.

Perth:
July 11.

Final written submissions:

Applicant,15 July 2016

MUA,27 June 2016

 1   Fair Work Act 2009 (Cwth), s.186(3).

 2 Ibid s.186(3A).

 3   Construction, Forestry, Mining and Energy Union v John Holland Pty Ltd and another [2015] FCAFC 16 per Besanko J at [2] and Buchanan J at [36].

 4   Witness Statement of M Llewellyn dated 5 July 2016 (Witness Statement of M Llewellyn) at [14]-[16].

 5   Ibid.

 6   Ibid.

 7 Ibid at [37].

 8   Witness Statement of W Tracey dated 1 June 2016 (Witness Statement of W Tracey) at [15].

 9   Ibid.

 10   Ibid at [2]-[12].

 11   Ibid at [15] and [24].

 12   Ibid at [11] and [12].

 13 Witness Statement of M Llewellyn at [41].

 14 Ibid at [47].

 15   Redacted Employment Agreements filed by MUA.

 16   Redacted Pay Advices filed by MUA.

 17   Witness Statement of M Llewellyn at [46]-[51].

 18 Ibid at [55].

 19   Ibid at [66]-[67].

 20   Ibid at [17]-[24].

 21   Further Witness Statement of W Tracey dated 27 June 2016 at [2]-[7].

 22 Witness Statement of M Llewellyn at [22].

 23   Witness Statement of D McCormick dated 5 July 2016 (Witness Statement of D McCormick) at [16].

 24   Witness Statement of M Llewellyn at [25]-[27].

 25 Witness Statement of D McCormick at [19].

 26 Ibid at [20].

 27   Witness Statement of M Llewellyn at [28]-[32].

 28   Ibid.

 29   Ibid at [34]-[35].

 30   Ibid at [37]-[45].

 31 Ibid at [55].

 32   Construction, Forestry, Mining and Energy Union v John Holland Pty Ltd [2015] FCAFC 16 at [82].

 33   Armacell Australia Pty Ltd (2010) 202 IR 38.

 34   Aldi Foods Pty Ltd v Transport Workers Union of Australia (2012) 227 IR 120, 123-4.

 35   MUA Submissions filed 27 June 2016 (MUA Submissions) at [47] and MUA Standing Submissions filed 1 June 2016 (MUA Submissions on Standing) at [19].

 36   MUA Submissions at [44]-[46].

 37   Ibid at [47] and MUA Submissions on Standing at [19].

 38 MUA Submissions at [47].

 39   In MUA’s Submissions the differential is only $3.10.

 40   DOF Submissions filed 5 July 2016 (DOF Submissions) at [33]

 41 MUA Submissions at [47].

 42 Witness Statement of M Llewellyn at [68].

 43 MUA Submissions at [45].

 44 MUA Submissions on Standing at [19].

 45   Ibid.

 46   Ibid.

 47   Ibid.

 48   Ibid.

 49   Armacell Australia Pty Ltd (2010) 202 IR 38.

 50 DOF Submissions at [29].

 51   MUA Submissions at [47] and MUA Submissions on Standing at [19].

 52   MUA Submissions [44] – [46].

 53 DOF Submissions at [39].

 54   MUA Submissions at [47] and MUA Submissions on Standing at [19].

 55   Ibid.

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