Downer EDI Works Pty Ltd
[2010] FWA 8333
•28 OCTOBER 2010
Note: An appeal pursuant to s.604 (C2010/5574) was lodged against this decision - refer to Full Bench decision dated 24 December 2010 [[2010] FWAFB 9985] for result of appeal.
[2010] FWA 8333 |
|
DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
Downer EDI Works Pty Ltd
(AG2010/208)
COMMISSIONER RYAN | MELBOURNE, 28 OCTOBER 2010 |
Downer EDI Works (Tamworth) Enterprise Agreement 2010.
[1] An application has been made for approval of an enterprise agreement known as the Downer EDI Works (Tamworth) Enterprise Agreement 2010 (the agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act). It has been made by Downer EDI Works Pty Ltd (Works). The agreement is a single-enterprise agreement applying to a geographically and functionally distinct group of employees of Works located at Tamworth in New South Wales.
[2] The application was filed with Fair Work Australia on 29 January 2010.
[3] On 17 June 2010 I wrote to Works seeking additional information in relation to answers given by the employer in the Form F17 and to raise with Works 33 concerns I had in relation to the terms of the agreement. One of those concerns was in relation to clause 11.10 of the agreement which is in the following terms:
“11.10 Can I cash out my annual leave?
Yes. You can cash out some of your annual leave by agreement with Works. Your request to have annual leave cashed out must be in writing. Up until 31 December 2009 a maximum of half your annual leave accrual can be cashed out in any one year of employment. From 01 January 2010 onwards you can cash out all of your accrued annual leave so long as you keep a balance of at least 20 days. When annual leave is cashed out it is paid the same rate as if you were taking the annual leave at the time it is cashed out.
Your unused annual leave will also be paid out when your employment terminates.”
[4] In my letter of 17 June 2010 I expressed my concern in relation to clause 11.10 as follows:
“Clause 11.10
How is it argued that a provision which allows for the cashing out of annual leave is more beneficial to an employee than the provisions of the Award? How does this pass the BOOT?”
[5] In my letter of 17 June 2010 I expressly offered Works the opportunity to offer undertakings to the Tribunal under s.190 of the Act to address any of the concerns raised in that letter.
[6] Works responded by letter dated 20 July 2010 in which they addressed the issues I raised in relation to the Form F17 and the concerns I had raised in relation to the terms of the agreement. Works offered 24 undertakings in relation to specific issues.
[7] Works prefaced their response on the individual issues I raised with a broad comment about agreements within the Downer EDI group of companies.
“Preliminary
Works is an employer with a range of enterprise agreements already approved by the Australian Industrial Relations Commission, Workplace Authority and now, Fair Work Australia. Where possible, Works seeks to include consistent provisions in its various agreements. Fair Work Australia has approved the following of Downer EDI Works Pty Ltd (Works) Agreements pursuant to the Fair Work Act 2009 (Cth) (FW Act):
(1) Downer EDI Works Victorian Construction Operations Workplace Agreement 2009 (Application for approval of Downer EDI Works Victorian Construction Operations Workplace Agreement 2009 [2009] FWA 272, Senior Deputy President Watson);
(2) Downer EDI Works Significant Projects Workplace Agreement 2009 (Application for approval of Downer EDI Works Significant Projects Workplace Agreement 2009 [2009] FWA 308, Commissioner Gay);
(3) Downer EDI Works. Sydney Operations AWU Enterprise Agreement 2009
(Application for approval of Downer EDI Works Sydney Operations AWU Enterprise Agreement 2009 [2010) FWAA 3350, Senior Deputy President Acton);
(4) Downer EDI Works Rail Industry Contracting NSW Enterprise Agreement 2009 (Application for approval of Downer EDI Works Rail Industry Contracting NSW Enterprise Agreement [2010) FWAA 4339, Commissioner Harrison); and
(5) Downer EDI Works Sydney Support Operations & Recycling AWU Enterprise
Agreement 2009 (Application for approval of Downer EDI Works Sydney Support Operations & Recycling AWU Enterprise Agreement 2009 [2010] FWAA 3194, Senior Deputy President Cartwright).
Works is one employer in a corporate group comprising a number of employers. That corporate group has established terms, conditions and policies based on current, approved enterprise agreements. It is operationally important for Works and the Group to seek consistency in the way agreements are expressed.”
[8] Two specific comments need to be made in relation to these “Preliminary” comments.
[9] Firstly, whilst decisions of other members of the Tribunal to approve other enterprise agreements which apply to other parts of Works operation may be of assistance they do not absolve me from the necessity of considering this agreement in accordance with the statutory requirements placed on me by the Fair Work Act.
[10] Secondly, the assertion by Works that “it is operationally important for Works and the (Downer EDI) Group to seek consistency in the way agreements are expressed” appears to be directly contradicted by the fact that I have approved enterprise agreements for other parts of the Downer EDI Group where the terms of those agreements bear no relationship to or have any commonality with the terms of this agreement.
[11] In response to my specific concern as to clause 11.10 of the agreement, Works said:
“30 Clause 11.10 - Cashing out of annual leave
30.1 The Tribunal's concern is that the Agreement contains a cashing out of annual leave provision and this does not pass the BOOT.
30.2 The response of Works is:
(1) The FW Act clearly contemplates that this facility may be offered and that, inappropriate circumstances, the requirements of the BOOT will be met.
(2) Works submits that the protections for award-free employees specified in section 94 of the FW Act indicate the level of protection for employees considered by the Parliament to be appropriate.
(3) It is most unlikely that Parliament considered the statutory protections provided for an award-free employee could be less than protections for an award-covered employee, or that award-covered employees should not have the same opportunity to cash out annual leave.
(4) The Agreement provides that the amount of leave able to be cashed out mirrors section 94 of the FW Act. Under the Agreement an employee is not permitted to cash out annual leave if it has the effect of reducing annual leave below a balance of four weeks.
(5) In its Award Modernisation Decision [2008] AIRCFB 1000 at paragraph 99, the Full Bench accepted that caution is appropriate when dealing with the issue of annual leave at the safety net level. For this reason, the Full Bench declined to adopt a model cashing out provision for inclusion in modern awards.
(6) However, the Full Bench made it clear that" ... cashing out arrangements are an appropriate matter for bargaining" and that the absence of cashing out provisions in modern awards is not intended to restrain parties from including cashing out provisions in Agreements having regard to prevailing industry standards and the views of the parties.
(7) This benefit for employees clearly intended and enabled by the FW Act should not be denied to all employees in all circumstances.
(8) Works recognises that it has clear occupational health and safety responsibilities which must be met when considering whether to grant a request for cashing out of annual leave
(9) Having regard to OHS and other applicable statutory protections relevant to a request for cashing out of annual leave Works suggests that an undertaking would be appropriate:
"Before granting any request under clause 11.10 to cash out accrued annual leave, Works will have regard to its obligations under occupational health and safety legislation and whether there are any special or necessitous circumstances which warrant the request being approved."
[12] In a decision concerning the Armacell Australia Enterprise Agreement 2010, [2010] FWA 8283, I considered both the history of annual leave and the modern statutory approach to annual leave I also considered the approach I should adopt to applying the BOOT in relation to annual leave, with particular reference to a decision of Whelan C in Print P6024. I adopt what I said in that matter and apply it in this matter.
[13] An entitlement to paid annual leave is a statutory minimum condition of employment in Australia. Annual leave provides employees with access to paid days away from their workplace each year. The effective management of annual leave, at both strategic and operational levels, is important in maintaining the wellbeing of staff, an organisation’s productivity and its ability to deliver its services efficiently and effectively.
[14] The undertaking offered by Works does not place any limitation on the cashing out of annual leave under this agreement.
[15] Works undertakes to do no more than “have regard to” its obligations under OHS legislation and “have regard to” whether there are any special or necessitous circumstances which warrant the request being approved.
[16] There is no identification within the undertaking of what, if any, obligations are imposed on Works under OHS legislation in relation to annual leave or cashing out of annual leave.
[17] By the very nature of the provision permitting the cashing out of annual leave an employee will make a request to cash out annual leave because they want the money at the time of the request. Thus the employee will inevitably have “special or necessitous circumstances which warrant the request being approved”.
[18] The undertakings offered by Works do not address my concerns in relation to clause 11.10.
[19] Section 186(2) of the Act requires that I must be satisfied that the enterprise agreement passes the better off overall test before the enterprise agreement can be approved under s.186(1).
[20] I am not satisfied that the Downer EDI Works (Tamworth) Enterprise Agreement 2010 passes the better off overall test under s193 of the Act.
[21] Section 190 of the Act permits Fair Work Australia to approve an agreement if it is satisfied that an undertaking offered by the employer and which addresses the concerns of Fair Work Australia that the agreement does not meet the requirements set out in s186 and s187.
[22] In this matter I have given Works the opportunity of offering undertakings to address my concerns that the agreement does not meet the requirements set out in s186 and s187. Works offered undertakings in relation to clauses 3.3, 3.4, 4.2, 5.1, 5.2, 5.3, 7.1, 7.2, 7.5(b)(ii)A, 7.5(b)(ii)B, 7.9, 8.4, 9.2, 9.8(c), 10.1, 10.2, 10.8, 10.16, 11, 11.9(a), 11.17, 17(a) and 17(h). Each of these undertakings addressed my concerns in relation to those provisions of the agreement. Works also offered satisfactory explanations in relation to other clauses of the agreement that I had concerns with. The undertaking offered in relation to clause 11.10 does not meet my concerns that the agreement does not meet the requirements set out in s186 and s187.
[23] The application for approval is refused.
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