Drilled Foundations Contracting Pty Ltd
[2023] FWCFB 172
•18 SEPTEMBER 2023
[2023] FWCFB 172
Previously published with MNC [2023] FWCA 3011.
Associate to Deputy President Wright
Dated 21 September 2023
| [2023] FWCFB 172 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 3, Item 20A(4) - Application to extend default period for agreement-based transitional instruments
Drilled Foundations Contracting Pty Ltd
(AG2023/1693)
Piled Foundations Contracting Pty Ltd
(AG2023/1695)
DRILLED FOUNDATIONS CONTRACTING PTY LTD AND CFMEU UNION COLLECTIVE AGREEMENT 2007
PILED FOUNDATIONS CONTRACTING PTY LTD AND CFMEU COLLECTIVE UNION AGREEMENT 2007
| Building, metal and civil construction industries | |
| DEPUTY PRESIDENT WRIGHT | SYDNEY, 18 SEPTEMBER 2023 |
Application to extend the default period for the Drilled Foundations Contracting Pty Ltd and CFMEU Collective Union Agreement 2007 and the Piled Foundations Contracting Pty Ltd and CFMEU Collective Union Agreement 2007
Introduction
Drilled Foundations Contracting Pty Ltd and Piled Foundations Contracting Pty Ltd (together, the Applicants) have applied under item 20A(4) of Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act2009 (Cth) (Transitional Act) to extend the default period for the Drilled Foundations Contracting Pty Ltd and CFMEU Collective Union Agreement 2007 and the Piled Foundations Contracting Pty Ltd and CFMEU Collective Union Agreement 2007 (together, the Agreements) for a period of four years. The applications were initially made under item 30(4) of Schedule 7 to the Transitional Act which deals with applications to extend the default period for an enterprise agreement made during the bridging period, but this was later corrected to item 20A(4) of Schedule 3 by the Applicants.
The Agreements are in almost identical terms and cover daily hire and casual employees working in Queensland in foundation and related construction work and engaged in classifications now covered by the Building and Construction General On-site Award 2020 (Award). The Agreements commenced in 2007 and have identical nominal expiry dates of 1 June 2009. The Agreements also cover the Construction, Forestry, Mining and Energy Union, now the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU).
The applications to extend the Agreements were made on 1 June 2023.
The Agreements are collective agreement-based transitional instruments within the meaning of item 2(5)(c) of Schedule 3 of the Transitional Act which continue to apply to employees of Drilled Foundations and Piled Foundations because of item 3 of Schedule 3.
The Transitional Act was amended by the Fair Work Legislation Amendment (Secure Jobs, Better Pay)Act 2022 to provide for the automatic termination of all remaining transitional instruments. Pursuant to item 20A(1) and (2) of Sch 3 of the Transitional Act, the Agreements will terminate on 6 December 2023 unless they are extended under items 20A(6) or (11)(e). The main features of item 20A of Sch 3 of the Transitional Act are described in detail in the Full Bench decision in Suncoast Scaffold Pty Ltd[1] and we rely upon what is said in that decision.
The applications are made under item 20A(4)(a). Under item 20A(6), the Commission is required to extend the default period for an Agreement for a period of no more than 4 years if the Commission is satisfied that:
(a)subitem (7), (8) or (9) applies and it is otherwise appropriate in the circumstances to do so; or
(b)it is reasonable in the circumstances to do so.
Subitem (7) applies to an application which is made at or after the notification time for a proposed enterprise agreement. Subitem (8) applies to an individual agreement-based transitional instrument. The Applicants do not contend that subitem (7) and subitem (8) apply to the applications.
The Applicants rely on subitem (9) which applies if:
(a) the application relates to a collective agreement-based transitional instrument; and
(b) it is likely that,as at the time the application is made, the award covered employees for the instrument under subitem (10), viewed as a group, would be better off overall if the instrument applied to the employees than if the relevant modern award or awards referred to in that subitem applied to the employees.
For the purposes of paragraph (9)(b) the instrument under subitem (10) is the Award.
Background
The matters were listed for directions on 16 June 2023. The CFMMEU appeared at the directions hearing and advised that it opposed the applications. Later, on 16 June 2023, the Applicants provided the Commission with the current pay rates which they pay to employees covered by the Agreements.
With the consent of the Applicants, the Commission’s Agreements Team prepared an analysis of the Agreements relative to the Award which was provided to the Applicants and the CFMMEU on 5 July 2023.
The Commission invited the Applicants to review and provide any comments they wished to make on the analysis by 19 July 2023. On 19 July 2023, the Applicants provided submissions in relation to the analysis and some payslips in relation to their employees.
Following receipt of the material from the Applicants, the Commission’s Agreements Team conducted further analysis which was sent to the Applicants on 31 July 2023. The Applicants responded to the further analysis on 2 August 2023.
The CFMMEU did not make any submissions.
Better Off Overall Analysis
Rates of Pay
The rates of pay contained in the Agreements have been compared to the Award based on the limited descriptions set out at clause 4.2 of the Agreements. The Agreements contain 10 classifications, the rates of pay for one of which falls below the Award rates. The rates of pay for all other classifications are above the Award.
Appendix 1 of each of the Agreements contains a rates of pay table with rates set at the date of signing, 7 January 2008, 1 July 2008 and 7 January 2009. Clause 4.1 of the Agreements provides that rates of pay will be increased by 4% in 2007 and 2008, with those increases being paid as 2% increases in July 2007, January and July 2008 and January 2009.
Clause 4.5.5 of the Agreements contains a site/piling allowance. It appears that this allowance is akin to the industry allowance payable under clause 22 of the Award, although the site/piling allowance is not paid for all purposes, unlike the industry allowance.
The Agreements cover daily hire and casual employees. The pay rate comparison below has been performed based upon pay rates under the Award as at 1 June 2023, the date that the applications were made. It includes the industry and piling allowance, the follow-the-job loading applicable under the Award, the casual loadings payable under both the Agreements and the Award and the rates of pay contained in the 7 January 2009 column of the Agreements:
| Modern Award Classification | Agreement Classification | Modern Award Rate | Agreement Rate | Percentage Difference |
| Daily Hire Employees | ||||
| CW/ECW 7 | Working Supervisor | $30.21 | $65.40 | 116.48% |
| CW/ECW 5 | Senior Foundation Operator | $28.69 | $30.25 | 5.44% |
| CW/ECW 4 | Foundation Operator | $27.88 | $29.38 | 5.38% |
| CW/ECW 3 | Foundation Labourer Skilled | $27.08 | $29.38 | 8.49% |
| CW/ECW 1(d) | Foundation Labourer 2 | $25.87 | $28.33 | 9.51% |
| CW/ECW 1(c) | Foundation Labourer 1 | $25.44 | $27.37 | 7.59% |
| CW/ECW 1(b) | Foundation Labourer | $25.12 | $24.63 | -1.95% |
| Casual Employees | ||||
| CW/ECW 7 | Working Supervisor | $36.60 | $81.00 | 121.31% |
| CW/ECW 5 | Senior Foundation Operator | $34.75 | $37.06 | 6.65% |
| CW/ECW 4 | Foundation Operator | $33.79 | $35.98 | 6.48% |
| CW/ECW 3 | Foundation Labourer Skilled | $32.81 | $35.98 | 9.66% |
| CW/ECW 1(d) | Foundation Labourer 2 | $31.34 | $34.66 | 10.59% |
| CW/ECW 1(c) | Foundation Labourer 1 | $30.83 | $33.46 | 8.53% |
| CW/ECW 1(b) | Foundation Labourer | $30.44 | $30.04 | -1.31% |
Based on the classification matching conducted:
(a) the Foundation Labourer classification falls 1.95% to 1.31% below the Award, both as a Daily Hire and Casual employee. The rates of pay for this classification are deemed to be equivalent to the Award in accordance with Item 13 schedule 9 of the Transitional Act which provides that if a transitional instrument rate is less than the Award rate, the transitional instrument has effect in relation to the employee as if the instrument rate were equal to the Award rate.
(b) the Working Supervisor classification is at least 116.8% above the Award;
(c) all other classifications range between 5.38% to 10.59% above the Award.
Employees engaged as Working Supervisors under the Agreements are paid a higher rate which compensates employees for all rates, penalties and allowances contained in clauses 4.5.1 to 4.5.4 and 7.1 of the Agreements. These employees are engaged to work an average of 8 hours per day plus two reasonable additional hours. Rates of the Working Supervisor classification, according to the classification matching above are at least 116.8% above the Award. Having regard to the average hours worked by such employees set out in Appendix 1 of the Agreements, the Working Supervisor rate of pay is likely to be high enough to compensate employees for the lack of penalties and allowances not provided to such employees.
Agreement conditions that are more beneficial than the Award
The following entitlements are more beneficial under the Agreements compared to the Award:
(a) The Agreements contain an 8-hour minimum engagement for casual employees, compared to 4 hours under the Award;
(b) Clause 4.5.4 of the Agreements includes a Workplace Health and Safety Representative allowance of 5% more than their calling, when appointed by the employer. This allowance is not otherwise provided for in the Award;
(c) The definition of early afternoon shift at clause 5.4.1 of the Agreements is slightly broader, and therefore more beneficial, compared to clause 17.1 of the Award;
(d) The Agreements provide 12 days paid personal leave, compared to 10 under the Award and the Act;
(e) The Agreements provide a greater fares and travel allowance of $29 for the metropolitan radial area, compared to $20.32 under the Award.
Agreement conditions that are less beneficial than the Award
The following entitlements were initially identified as less beneficial under the Agreements compared to the Award, however on closer analysis not all of these result in employees being worse off under the Agreements:
(a) Span of Hours (Clause 5.1)
The Agreements provide a broader span of hours compared to the Award. Under clause 5.1 of the Agreements, hours of work are Monday to Friday between 5am and 6pm with the ability to agree with employees for the finishing time to be later, but no later than 9pm. Under the Award, hours of work are Monday to Friday between 7am (or 6am by agreement) and 6pm.
While the rates of pay are not high enough to compensate employees for the earlier start provided for in the Agreements, the higher fares and travel allowance (in particular, the Metropolitan radial area allowance) may result in employees’ pay under the Agreements being above the Award. Further, with respect to the extended finish time, a shift concluding at 9pm would be deemed an afternoon shift, and would attract shift penalties under both the Agreements and Award. Therefore, the extended span of hours does not result in employees being worse off under the Agreements.
(b) Public Holidays (Clause 6.5)
Clause 6.5.4 of the Agreements provides that all time worked on a public holiday outside the ordinary start and ceasing times contained within the Agreements is paid at 200%, rather than the 250% penalty applicable for work engaged in during ordinary hours on a public holiday provided by clause 30.1(e) of the Award. Taking this into consideration over an averaging period, this is unlikely to result in employees failing the better off overall test, given the rates of pay under the Agreements.
(c) Shift Work (Clause 5.4)
The Agreements do not contain a definition for morning shift, as otherwise set out at clause 17.1 of the Award. However, clause 5.4 of the Agreements define early morning shift as any shift starting after 11pm, and at or before 5am. Under the Award, a morning shift is defined as a shift commencing at or after 4:30am and before 6am. Therefore, a morning shift under the Award commencing after 5am would be deemed ordinary hours under the Agreements and paid as such.
Further, an early morning shift worked under the Award is paid at 150% compared to the Agreements under which it is paid at 125%.
In our view, the rates of pay in the Agreements are not high enough to compensate employees for these reductions in entitlements.
(d) All-In Payment (Clause 4.1)
Clause 4.1 of each of the Agreements allows, by agreement, for casual employees to receive an all-in payment which is defined as an ‘hourly rate or piece work rate which is meant to cover wages and/or allowances and/or conditions, such as annual leave, sick leave etc’. The all-in payment is calculated based on the hourly rate of pay contained in the agreement, plus site allowances (if applicable), plus multi-storey allowance and an additional 68% loading to cover entitlements other than Building Unions Superannuation Scheme (BUSS), the Building Employees Redundancy Trust (BERT), Construction Income Protection (CIPS) and Building Employees Welfare Trust (BEWT). Clause 19.6 of the Award allows for payment of piece rates; however the Award provides a requirement that an employee must be paid no less than the amount which the employee would have been entitled to receive under the rates and allowances prescribed by the Award. The Award piece work rate does not compensate for the NES entitlements. No similar minimum guarantee is set out within the Agreements.
The 68% loading paid in addition to the hourly rate of pay and relevant allowances, is likely to compensate employees for a significant amount of time worked. However, in the absence of information as to work performed, this 68% loading may not be high enough where significant overtime, shift or weekend work is worked by an employee. Further, the clause lacks the required safeguards needed to ensure employees remain better off overall under such an arrangement.
(e) Allowances (Clause 4.5)
The Agreements provide increases to allowances up until January 2009, but do not specify how any future increases, if any, are to be calculated. For the purposes of this comparison, allowances under the Agreements as at January 2009 have been compared to allowances under the Award as at 1 June 2023, the date that the applications were made.
The Agreements provide the following allowances at a rate lower than the Award:
(i)Clause 4.5.2: First aid allowance of $2.42 or $3.81 per pay (depending on qualifications) compared to $3.39 and $5.36 per day under the Award;
(ii)Clause 4.5.3: Reduced leading hand allowance (varies depending on the number of persons am employee is in charge of);
(iii)Clause 5.6: Meal allowance at $15 compared to $16.37 under the Award;
(iv)Clause 7.1.1: Fares and travel allowance (for outside 50 kilometres radial area) at $0.47 per kilometre, compared to $0.55 per kilometre under the Award;
(v)Clause 7.1.1: Fares and travel allowance (travel between sites in employees own vehicle) at $0.84 per kilometre compared to $0.91 per kilometre under the Award;
(vi)Clause 7.2.1: Forward journey meal allowance of $11.85 per meal compared to $16.37 per meal under the Award;
(vii)Clause 7.2.1: Return journey meal allowance of $19.24 per journey compared to $24.27 per journey for daily hire employees;
(viii)Clause 7.2.3: Weekend return home allowance of $32.44 per occasion compared to $41.13 per occasion under the Award;
(ix)Clause 7.3.3: Living away from home allowance of $60 per day compared to $80.19 per day under the Award;
The Agreements do not contain a number of allowances otherwise provided in the Award, including:
(i)industry allowance otherwise provided under clause 22 of the Award, however there is an entitlement to a site/piling allowance under clause 4.5.5 of the Agreements set out above;
(ii)underground allowance;
(iii)lift allowance;
(iv)multistorey allowance;
(v)tool allowance.
It is likely that some of these allowances are not applicable to the work performed by employees covered by the Agreements.
(f) Overtime – Crib time
In accordance with Clause 18.3(b) of the Award, employees engaged to work overtime for 2 hours or more after their usual finish time are entitled to a 20-minute paid crib break after their finishing time, and after each 4 hours of continuous work, a paid crib break of 30 minutes. While the Agreements contain similar crib entitlements for weekends worked and where 3 continuous and consecutive shifts of 8 hours per day are worked (ordinary hours), the Agreements do not appear to contain the same overtime crib entitlement as provided at clause 18.3(b) of the Award. This may result in classifications becoming worse off compared to the Award for classifications that are the closest in margin but only in very specific rostering circumstances having regard to the other reductions in the Agreements.
Applicants’ Case
In response to the analysis conducted by the Commission, the Applicants submitted that the pay rates and allowances in the Agreements have been increased since 2009, including the piling allowance which has increased from $3 to $4, and the travel allowance which has increased from $29 to $40. The Applicants also submitted that there are no all-in payments arrangements in place under section 4.1 of the Agreements.
On 2 August 2023, the Applicants sent the following email to the Commission:
We agree that the EBA does not provide for percentage increase post 2009, however the EBA is still current and we have increased rates on a percentage basis since 2009. This is as shown on previously submitted pay slips. Even using the highest rates in the EBA from Jan 2009 as per Commission table, plus superannuation etc. our employees are better off under the existing EBA rather than the modern award.
Taking in to account other points, we pay $40 per day travel allowance which is $11 more than the award and our piling allowance is a higher figure.
Consideration
As noted above, the applications relate to collective agreement-based transitional instruments which satisfies the requirements of subitem 9(a).
In relation to the better off overall criterion in subitem 9(b), the Full Bench in Suncoast Scaffold said:[2]
[15] The requirement for the better off overall criterion in subitem 9(b) to be assessed by reference to the award covered employees ‘viewed as a group’ appears to allow for the possibility that the criterion may be satisfied, notwithstanding that some individual employees are not better off overall than under the relevant award, as long as there is a discernible advantage for the employees considered as a collective. Further, there only needs to be satisfaction as to the ‘likelihood’ of such a discernible collective advantage; that is, it only needs to be probable rather than certain. Taking these matters together, it is apparent that the better off overall criterion is less stringent that the BOOT in s 193 of the FW Act. However, beyond these broad observations, subitem 9(b) discloses no methodology as to how the criterion is to be applied. All that can be said is that a broad evaluative judgment is required based upon an overall comparison of the terms of the transitional instrument and the relevant award(s) in their application to the cohort of award covered employees.
The Applicants did not disagree with any specific aspect of the Commission’s analysis of the BOOT, so it is not clear to us the basis upon which the Applicants assert that employees are better off under the existing Agreements rather than the Award. In responding to the analysis, the Applicants have pointed to increases they have applied to the rates of pay and allowances in the Agreements since 2009. It is likely that many of the ‘better off overall’ concerns would fall away if these higher rates of pay were relevant to our consideration of the matter. However, the analysis is based on the question of whether employees would be better off overall if the Agreements continued to apply to them than if the relevant modern award applied, and therefore the better off overall analysis is limited to the terms of the Agreements, and not those that sit outside those instruments.
Having regard to an overall comparison of the terms of the Agreements and the Award, including the lack of morning shift and a reduced early morning shift penalty, the all-in payment arrangement, and the majority of allowances being less than the Award, we are not satisfied that there is likely to be a discernible advantage for the employees considered as a collective to be covered by the Agreements rather than the Award. We therefore do not accept that it is likely that,as at the time the applications were made, the award covered employees viewed as a group, would be better off overall if the Agreements applied to the employees than if the relevant modern award applied to the employees.
Having decided that item 20A(9) does not apply, we do not need to consider whether it is otherwise appropriate to extend the default period of the Agreements under item 20A(6)(a).
We will, however, consider whether it is reasonable in the circumstances to do so under item 20A(6)(b). As observed by the Full Bench in Applications to extend the default period for the One HPA Certified Agreement 2004-2007, the EDS People Agreement 2002 and the Alcatel-Lucent Employment Partnership Agreement 2009[3], the default position of the statutory scheme to automatically terminate transitional instruments on 6 December 2023 suggests a policy preference for employees covered by transitional instruments to be regulated by instruments made under the Fair Work Act 2009 (FW Act).
The current arrangements referred to in the Applicants’ submissions with respect to pay rates and allowances do not rely upon the existence of the Agreements to continue. They are arrangements made outside of the Agreements. There is no reason advanced by the Applicants as to why they cannot continue or be the subject of bargaining for new Agreements. There is no basis for us to conclude that termination of the Agreements will create harsh consequences or otherwise leave employees worse off. Indeed, the fact that the current pay and allowances are not codified in an instrument made under the FW Act potentially disadvantages employees in the event of a dispute arising in relation to such entitlements. For these reasons, and in the absence of any evidence or submissions from or on behalf of employees covered by the Agreements that they wish the Agreements to continue, we do not consider it reasonable to extend the default period of the Agreements.
Conclusion
Accordingly, we decline to grant the applications to extend the default period of the Agreements.
The applications are dismissed.
DEPUTY PRESIDENT
[1] [2023] FWCFB 105.
[2] Ibid, [15].
[3] [2023] FWCFB 137, [34]
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