Douglas Labour Services Pty Ltd
[2010] FWA 555
•10 FEBRUARY 2010
[2010] FWA 555 |
|
DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
(AG2009/16529)
COMMISSIONER LEWIN | BRISBANE, 10 FEBRUARY 2010 |
Douglas Labour Services Pty Ltd Agreement 2009.
The application
[1] This decision concerns an application made by Douglas Labour Services Pty Ltd for approval of the Douglas Labour Services Pty Ltd Agreement 2009 (the agreement) pursuant to s.185 of the Fair Work Act 2009 (the Act) on 14 October 2009. The file was received in my chambers on 23 November 2009. Approval of the Agreement is subject to the Agreement satisfying the no-disadvantage test as set out in Schedule 7, Part 2, Division 1 of the Fair Work (Transitional Provisions & Consequential Amendments) Act 2009.
[2] The reference instruments to be used for the purposes of comparison for determining whether or not the Agreement passes the no-disadvantage test are the Building Services (Victoria) Award 2003 (AP822844CRV) and the Cleaning and Building Services Contractors (State)–Award (NSW)–AN120123. Upon consideration of the Agreement, in light of the provisions of the reference instruments, I was concerned that the Agreement did not meet the no-disadvantage test. The matter was listed for Hearing at 4.00 pm on 17 December 2009.
The proceedings
[3] At the Hearing on 17 December 2009 Mr Hunter and Ms Griffiths appeared on behalf of the company. The employees were not represented.
[4] At the Hearing I expressed my view that while some positive differences between the Agreement and the reference instruments in the rates of pay were apparent, I was not inclined to approve the Agreement because it was my view that the Agreement did not, looked at overall, pass the no-disadvantage test. The company representatives were provided with a copy of a synopsis prepared in relation to various aspects of the agreement which gave rise to the concerns that the Agreement did not meet the no-disadvantage test. Those concerns about the terms of the Agreement are summarised below:
- the rates of pay for day shift workers;
- the treatment of part-time working penalties in relation to hours of part-time work;
- the operation of an annualised salary provision;
- the operation of shiftwork provisions;
- the existence of a trainee or an entry level classification and rate of pay in the Agreement which does not exist in the reference instruments and which is lower than the lowest rate of pay in the reference instrument;
- the lack of provision of night shift penalties for casual employees; and
- the existence of junior rates of pay where none are provided for under one of the reference instruments.
[5] At the Hearing, on my understanding, Mr Hunter who appeared for Douglas Labour Services Pty Ltd acknowledged the basis of the Tribunal’s concerns. It was suggested at the Hearing that the Company could propose undertakings to address the deficits that the Agreement faced in passing the no-disadvantage test for the consideration of the Tribunal. Section 190 of the Act contains provisions for the Tribunal to accept undertakings and is set out below:
“190 FWA may approve an enterprise agreement with undertakings
Application of this section
(1) This section applies if:
(a) an application for the approval of an enterprise agreement has been made under section 185; and
(b) FWA has a concern that the agreement does not meet the requirements set out in sections 186 and 187.
Approval of agreement with undertakings
(2) FWA may approve the agreement under section 186 if FWA is satisfied that an undertaking accepted by FWA under subsection (3) of this section meets the concern.
Undertakings
(3) FWA may only accept a written undertaking from one or more employers covered by the agreement if FWA is satisfied that the effect of accepting the undertaking is not likely to:
(a) cause financial detriment to any employee covered by the agreement; or
(b) result in substantial changes to the agreement.
FWA must seek views of bargaining representatives
(4) FWA must not accept an undertaking under subsection (3) unless FWA has sought the views of each person who FWA knows is a bargaining representative for the agreement.
Signature requirements
(5) The undertaking must meet any requirements relating to the signing of undertakings that are prescribed by the regulations.”
[6] Undertakings were subsequently proposed after the Hearing in the Company’s Submissions of 22 January 2010. However, in my view, those undertakings would not adequately address the disadvantages which gave rise to the Tribunal’s concerns.
[7] At the Hearing of 17 December 2009 it was noted that the Tribunal could consider approving the Agreement on the grounds relating to the public interest despite the Agreement not meeting the no-disadvantage test pursuant to s.189(2) of the Act which is set out below:
“189 FWA may approve an enterprise agreement that does not pass better off overall test—public interest test
Application of this section
(1) This section applies if:
(a) FWA is not required to approve an enterprise agreement under section 186; and
(b) the only reason for this is that FWA is not satisfied that the agreement passes the better off overall test.
Approval of agreement if not contrary to the public interest
(2) FWA may approve the agreement under this section if FWA is satisfied that, because of exceptional circumstances, the approval of the agreement would not be contrary to the public interest.
Note: FWA may approve an enterprise agreement under this section with undertakings (see section 190).
(3) An example of a case in which FWA may be satisfied of the matter referred to in subsection (2) is where the agreement is part of a reasonable strategy to deal with a short-term crisis in, and to assist in the revival of, the enterprise of an employer covered by the agreement.
Nominal expiry date
(4) The nominal expiry date of an enterprise agreement approved by FWA under this section is the earlier of the following:
(a) the date specified in the agreement as the nominal expiry date of the agreement;
(b) 2 years after the day on which FWA approved the agreement.”
[8] It was proposed that the Agreement be approved under s.189(2) of the Act despite concerns of the Tribunal that the Agreement did not meet the no-disadvantage test, on the basis that the Company would be unable to be commercially competitive with other organisations operating in the same market unless it was able to remunerate its employees on the terms prescribed by the Agreement.
[9] At the conclusion of the Hearing, the company was invited to file Submissions in writing to persuade the Tribunal to approve the Agreement on whatever grounds available under the legislation.
[10] On 12 January 2010 my Associate wrote to the Company indicating that no Submissions had been received in the Tribunal on behalf of the Company. The Company was further invited to file Submissions on any ground available under the legislation to persuade the Tribunal to approve the Agreement, by the close of business on 22 January 2010.
Undertakings
[11] In a Submission to the Tribunal filed by facsimile transmission on 22 January 2010, the Company elaborated upon it’s proposal that the Tribunal approve the Agreement despite the Agreement failing to meet the no-disadvantage test and proposed the two written undertakings that the Company would be prepared to make, which have been referred to above. The major substance of those undertakings was to the effect that between 1 January 2011 and 1 January 2014 the company would gradually bring the terms and conditions of employment of its employees up to the level prescribed by the relevant modern award.
[12] I decline to approve the Agreement notwithstanding the proposed undertakings. Those undertakings do not adequately address the Tribunal’s concerns that the Agreement does not pass the no-disadvantage test. Moreover, such undertakings would constitute substantial changes to the terms of the agreement 1.
Public Interest
[13] The Applicant also seeks approval of the Agreement on the ground that it would not be contrary to the public interest to approve the Agreement because of the existence of an Agreement applicable to one of its competitors, which provides for similar terms and conditions of employment and was approved by the Workplace Authority. That approval was given by that Authority under different legislative provisions than those which apply to the Agreement subject to the application before me. That Agreement was not referred to or produced. I proceed upon the basis of the Applicant’s submissions in relation to that Agreement.
[14] The Applicant indicated that it was not contentious that the Agreement approved by the Workplace Authority was subject to the requirements of the Workplace Relations Act 1996, prior to the introduction of the fairness test which took effect from 7 May 2007. The test of the terms and conditions of employment to be provided by that Agreement, under the relevant provisions of the Workplace Relations Act 1996, at the time the Agreement was approved, was acknowledged by the Applicant to be significantly different and less demanding that the test to be applied both under the fairness test of the Workplace Relations Act 1996 and the applicable no-disadvantage test provisions of the Fair Work Act 2009 during the bridging period.
[15] The Applicant submits that, in the interests of its economic competitiveness, it is not contrary to the public interest to approve an Agreement which would disadvantage the employees whose employment would be covered by the terms of the Agreement now proposed for approval by comparison to the reference instruments. In essence, this submission is to the effect that the terms and conditions of employment of the employees whose employment would be covered by the terms of the Agreement before me should be less than those provided for by the reference instruments, looked at all around, because this will enable the employer to operate profitably and competitively in the marketplace for the services it provides, and to compete against the company subject to the Agreement referred to and approved by the Workplace Authority.
[16] In my view, this Submission cannot be accepted for the following reasons.
[17] The Act prescribes a complex system of Agreement making and approval as part of a major legislative reform of the Australian Industrial Relations System. Inherent in that reform is a concept of a “bridging period”. The application for approval of the Agreement is made during the bridging period. During the bridging period agreements are generally not approved unless they meet a no-disadvantage test. That no-disadvantage test is in broadly similar terms to the fairness test which was adopted by the parliament with effect from 7 May 2007. Prior to the introduction of the fairness test what might be described as a lesser or less demanding test of the terms of conditions of employment to be provided for by collective agreements 2 applied, in order for such agreements to be approved and given statutory force by Federal Legislation. That test operated between 26 March 2006 and 7 May 2007. From 1 January 2010 a more demanding test known as the better off overall test has been introduced by the enactment of the Fair Work Act 2009.
[18] Prior to 26 March 2006, despite some technical differences, a test of approval relevant to the effect of a collective Agreement on an employee’s terms and conditions of employment applied, which was substantially similar to the no-disadvantage test which I am required to apply in this matter. That test operated between 31 December 1996 and 26 March 2006. That test was for my purposes substantially similar to the test for approval of agreements by the Australian Industrial Relations Commission operating between 30 March 1994 and 31 December 1996.
[19] It will therefore be seen that between 26 March 2006 and 7 May 2007, the Parliament, relatively briefly, varied the test of what terms and conditions of employment a collective agreement must provide in order to gain statutory force under Federal Industrial Law, to a level lower than that which applied prior to 26 March 2006. With effect from 7 May 2007, the Parliament decided to revert to a test which is substantially similar to that which I must apply in this matter.
[20] The Applicant submits that because a competitor was fortunate to avail itself of the window of opportunity to apply and have approved a collective agreement against the lesser or less demanding test of approval operating between 26 March 2006 and 6 May 2007, it would not be contrary to the public interest to approve an agreement which fails the no-disadvantage test prescribed by the Fair Work Act 2009. The potential implication of accepting this Submission should be starkly apparent. It is difficult to see how, if adopted, such an approach should not also apply to any employer which operates in an industry in which competitor companies operate with existing agreements approved under the test which applied under the Workplace Relations Act 1996 in the period between 26 March 2006 and 6 May 2007. This would give rise to what would seem to be a new and exotic basis for the approval of enterprise agreements made during the bridging period. One which would have particular rather than general application and arise serendipitously for some employers and not for others operating in the same marketplace, depending upon what agreements were approved in the period between 26 March 2006 and 7 May 2007 and remain in operation.
[21] To introduce such a novel test of approval against what appears to be the clear and determined policy of the Parliament in the circumstances would seem to me to be contrary to a well established and considered view of the legislature of what the public interest requires in respect of the level of terms and conditions of employment to be provided by collective agreements between employers and employees, in order to be given statutory force by Federal legislation.
[22] Moreover, I can see nothing in the relevant parts of the Explanatory Memorandum regarding the terms of the Fair Work Act 2009 and the Fair Work (Transitional Provisions & Consequential Amendments) Act 2009 which would indicate that approval of the Agreement before me, on the basis proposed by the Applicant, is an approach intended by the Parliament which enacted those legislative provisions. The relevant parts of the Explanatory Memorandum are set out below:
“Clause 189 – FWA may approve an enterprise agreement that does not pass better off overall test – public interest test
798. This clause enables FWA to approve an enterprise agreement that does not pass the better off overall test if, because of exceptional circumstances, approval of the agreement would not be contrary to the public interest (subclause 189(2)).
799. Subclause 189(1) provides that this clause applies where the only reason why FWA is not required to approve an agreement under clause 186 is that it does not pass the better off overall test.
800. The legislative note following subclause 189(2) makes it clear that FWA may approve an agreement in exceptional circumstances with undertakings under clause 190 in relation to a concern about whether the agreement meets the approval requirements.
801. Subclause 189(3) provides an example of a case in which FWA may approve an agreement under this clause.
802. Subclause 189(4) provides that the nominal expiry date of an agreement approved under this clause is either the date specified in the agreement as its nominal expiry date, or two years after the day on which FWA approved the agreement, whichever is earlier.”
[23] The basis upon which the approval of the Agreement is sought does not fit within the explanation of the intention of the legislature referred to in the Explanatory Memorandum and in s.189(3) of the Fair Work Act 2009, which is set out previously.
[24] Finally, approval of the Agreement on the basis upon which it is sought would be an exercise of a discretionary power by the Tribunal. Such discretion should be exercised carefully and with proper regard to the terms of the Fair Work Act 2009, the intention of the legislature as expressed by those terms, and the extrinsic material to the legislation where relevant. In this respect, I consider the exercise of the discretion vested in the Tribunal in the manner sought would be confusing, novel, highly questionable and a hazardous extension of the general effect of the legislation. Such a course of action would not, in my view, accord with public policy.
[25] For all these reasons I have decided not to approve the Agreement because in my view the agreement does not meet the no-disadvantage test. The proposed undertakings would not overcome the disadvantages identified. It would be contrary to the public interest to do so.
COMMISSIONER
Appearances:
Mr Steven Hunter, representing Douglas Labour Services Pty Ltd
Hearing details:
Melbourne
17 December
2009
Final written submissions:
Mr Steven Hunter, representing Douglas Labour Services Pty Ltd, 22 January 2010.
1 Section 190(3)(b) Fair Work Act 2009.
2 Now styled “enterprise agreements”.
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