Dunbrae Pty Ltd T/A Global Food Equipment
[2010] FWA 212
•15 JANUARY 2010
[2010] FWA 212 |
|
DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
(AG2009/16083)
COMMISSIONER GAY | MELBOURNE, 15 JANUARY 2010 |
Employee Collective Agreement.
[1] This s.185 application seeks approval of the Dunbrae Pty Ltd trading as Global Food Equipment - Employee Collective Agreement (the Agreement), said to have been reached between Dunbrae Pty Ltd t/a Global Food Equipment (Global, the employer) and their employees in relation to employees’ performance of “Service, Manufacture and Stores” work. The primary activity undertaken by Global is given as the supply and repair of food processing equipment.
[2] This application has some history. It was made on 8 October 2009 and follows an application made on 20 July 2009 which was considered by his Honour, Watson SDP in AG2009/10613, which application was not approved by virtue of its non compliance with s.181(2) of the Fair Work Act 2009 (the Act).
[3] Notwithstanding a series of communications between my office and Global seeking clarification of a range of aspects of the Agreement, difficulties persisted in FWA gaining an understanding of how the Agreement was to operate so that approval pursuant to ss. 186 and 187 could be considered.
[4] Following difficulties in making telephonic contact with the employer, on 12 November 2009 my Associate emailed Global’s Human Resources Manager, Ms Downes, in the following terms: “... As we do not seem to catch each other by telephone I thought I would write in relation to the above matter. Would you please advise Fair Work Australia what awards have been displaced by the Agreement, or previously had application?”.
[5] This query arose by virtue of the agreement being in operation in the ACT, NSW, Queensland, Victoria and Western Australia and the employer’s response at question 3.1 of Form F17, the Employer’s Declaration in Support. It may be recalled that question 3.1 under the heading “Comparison Data” reads, “Please identify all relevant awards or notional agreements preserving State awards to be used for the purposes of the no-disadvantage test.”. In response to question 3.1 the employer replied, “MTIA and State Electrical Award”. While taking a purposive approach it might be thought that this was intended to be a reference to the Metal, Engineering and Associated Industries Award 1998 (the Metals Award) and the various, but un-referenced State electrical awards relevant to electrical contracting work, nothing whatever was put in relation to the need for “Comparison Data” for the stores work undertaken by Global.
[6] It is apparent that following the decision of SDP Watson, employees were advised by a memorandum of 7 August 2009 that agreement was again sought as to the proposed agreement then attached and for this purpose voting was to occur on Monday 21 September 2009. The application for approval also contained a copy of an advice to managerial staff of 25 September 2009 from the Human Resources Manager declaring the ballot as follows; of the 86 employees whose employment was to be covered by the Agreement, 63 votes in favour and one vote against.
[7] The Agreement provides at page 1 (there being no numbered clauses or sections) that it operates “to the exclusion and complete displacement of any other industrial instruments, including, but not limited to, any Previous Agreements, Notional Agreements Preserving State Awards or Modern Awards that would otherwise apply. For the avoidance of any doubt, all Award provisions that are about Protected Award Conditions have no effect in relation to the employees covered by this Agreement, and are expressly excluded by this Agreement in accordance with the Act.”
[8] The Agreement also provides, as one might expect of a stand alone instrument, for “Progression through Classifications”. At page one of the Agreement under that heading, there appears the following, “Progression through the grades in your classification is a function of your level of skill and experience. A guideline of the required skills and experience for each grade is set out in the GFE handbook. Your progression through the grades will be at the discretion of GFE”. While the implications of this provision for the classification and progression of employees are clear enough, that is, the displacement of the competency based classification standards and entitlements to review implicit in the Metals Award’s grading regime, together with the explicit onus considerations provided for at clause 5.1.3(c)(i) of the Metals Award (or, at clause 24.3(h) of the Manufacturing and Associated Industries and Occupations Award 2010, as varied, PR985120) the position of gradings under the Agreement, as a function of skill levels and experience, is further affected by the Definitions provisions of the Agreement.
[9] While progression through the grades is at Global’s discretion, the ‘guideline’ of required skills and experience is contained in the employer’s Handbook. It is relevant that the Definitions provision of the Agreement provides that “the Employee Handbook does not form part of this Agreement” and further makes clear that the Handbook may be amended from time to time.
[10] In a redundant reference to the Workplace Relations Act the Agreement at page 6 provides that “Protected Award Conditions and Entitlements are defined in Part 8 Division 7 of the Act. This Agreement expressly excludes all such Award Conditions and Entitlements including but not limited to rest breaks, penalty rates, allowances, public holiday rates, incentive based payments and bonuses, superannuation and jury service. Please note that the Agreement and the Handbook may make alternative provision for the above items.” (emphasis mine).
[11] As the Handbook can be changed unilaterally, because it does not form part of the Agreement and can, by an explicit provision of the Agreement, make alternative provision for important aspects of the Agreement it can be seen that there may be real uncertainty as to the standing of terms of the Agreement. The Agreement to be enforceable must set out unambiguously the terms of employment that are to apply at Global. There can be no in-built contracting out provision or, as in this case, capacity for the employer to opt out by varying the Handbook.
[12] In other important respects the Employer’s Form F17 gave either no response or a contentious response. The Agreement was said, in reply to question 2.1, to have been made on 10 July 2009 and yet the vote was said in the Human Resources Manager’s memorandum of 7 August 2009 (attached to the application) to have occurred on Monday September 21, 2009.
[13] At question 2.7 dealing with the date upon which the employer provided the last notice to employees under s.173(1) the employer provided no response other than refer to the Human Resources Manager’s August 7 memorandum which, although addressed to “All Service Technicians & Manufacturing Employees” is clearly directed to branch Managers and possibly to supervisors. The memorandum refers to employees as “them” and reads, in part, “Please find attached final EBA which should be re-distributed to your employees with the attached memorandum which states they may seek advice and have 21 days to undertake this” (emphasis mine). No such attached memorandum formed part of Global’s materials provided to Fair Work Australia.
[14] If one accepts there was a representational rights advice enclosed for the recipients of the Human Resources Manager’s August 7 memorandum, there is nothing to establish the date upon which such advice was actually given to staff. Similarly, no material was provided which established the date upon which the employer first requested that the employees approve the agreement by voting for it.
[15] At question 2.9 of the Employer’s Declaration in Support, the employer indicates that there is a term which deals with the rights of employees in relation to unfair dismissal (s.194(c) and (d)). There is no response to the subsequent question dealing with the terms of the Agreement relevant to this disclosure.
[16] With these aspects of the application in mind, together with a number of provisions of the Agreement to which I will turn shortly, the application was called on for hearing, with the applicant appearing by voicepoint from Sydney, on 4 December 2009.
[17] To assist the application of the no-disadvantage exercise on 2 December my Associate communicated by email with Global in the following terms:
“Dear Ms Downes
Further to our telephone conversation today and to assist the Commissioner prior to the hearing of the above matter at 2.15 pm on Friday 4 December, would you please provide the following information.
• It is understood your operations are conducted in NSW, ACT, Qld, Vic and WA. Could you please advise which classification of employees work in each of these States and the ACT? For example - Electrical tradespersons Qld 1, ACT 1, etc; The provision of this information may be relevant to FWA determining which award or instrument is used for comparison purposes.
• The agreement contains various 'Grades' under the headings 'Manufacturing', 'Warehouse' and 'Service Technician'. The no disadvantage test requires, amongst other things, a comparison of the rates of pay and conditions of employment of employees who are engaged under a proposed agreement with the equivalent rates for similar employees who are properly classified/graded under an award or instrument relevant for comparison purposes. Could you please provide position descriptions for each grade within these functional areas, sufficiently detailed or explicit as to permit an understanding of the skills and responsibilities of your employees at each level. This will then enable the relevant test to be conducted.
o and
• Could you please comment on how it is that an agreement said to have been made on 10 July 2009 could be an agreement that the employees were first asked to approve on 21 September 2009?”
[18] This material was sought to provide a sound basis upon which the classifications contained in the Agreement could be compared with the classifications in the Metals Award, various electrical awards that might ultimately be specified and awards relevant to the stores grades provided in the Agreement. It will be appreciated that structures which are unrelated to a relevant award and which contain no explanation for an employee’s classification at a particular level do not ground an informed comparative exercise. Although there had been frequent queries from Global checking on the progress of the application, no response was received to this request.
[19] The Agreement provides pay rates for Grades 1 to 5 in the Manufacturing stream, Grades 1 to 3 in the Warehouse stream and Grades 1 to 5 in the Service Technician stream. There are no position descriptors attached to any of the ‘Grades’.
[20] In the hearing on 4 December 2009 Ms K Downes appeared with Mr B Mackenzie for Global. As to the non-provision of the information sought, Ms Downes indicated that “I wasn’t aware that I had to respond via email to them, sorry” [transcript PN10]. This was despite the request providing “…to assist the Commissioner prior to the hearing of the above matter at 2pm on Friday 4 December, would you please provide the following information…”.
[21] Without setting out the detail of the 4 December proceedings it became clear, on the basis of the submissions made for Global or responses to my questions, that the following was the position:
- that an advice was circulated on or shortly after 7 August 2009 to all employees to the effect that a vote was to occur not earlier than 21 days hence (on 21 September) and that employees might obtain “representation for the bargaining of the agreement” [Mr Mackenzie transcript PN27];
- no employee sought to have a bargaining representative represent them and no employee nominated themselves as bargaining representatives either on their own behalves or on behalf of other employees [transcript PN37];
- that, to permit the assessment of potential disadvantage and of the need for employees to be better off, Global indicated it “can provide … a full employee list by states, what grading they’re currently on under the old agreement and their current rate of pay…” [transcript PN41].
[22] As part of this dialogue the fact of the Handbook decisively influencing various key aspects of the Agreement, but not forming part of the Agreement, was put to Global - particularly given classification under the Metals Award being contingent upon an employee obtaining a qualification and performing relevant duties. The application of award entitlements such as rest breaks, penalty rates, allowances, public holiday rates and the capacity for the Handbook to make alternative provision was put to Global as a matter requiring clarification.
[23] The requirements of s.186 of the Act were also put to Global in the context that the Agreement provided, as its’ final step for resolution of a relevant dispute upon which the parties did not agree, for mediation before Ms Downes as Human Resources Manager. Further, the need for the disputes procedure to provide for the resolution of a dispute over the NES was also brought to notice.
Consideration
[24] It may be appreciated from the foregoing that there exists a real difficulty in conducting a comparative exercise where in-house classification structures are not accompanied by position descriptions to permit an understanding of the basis for employees’ classification at a particular level. The potential for an agreement to remove access to an award’s career path is also rendered opaque when a house handbook permits change to some standards and such handbook exists independently of the agreement.
[25] In response to the issues raised at hearing, on 14 December 2009, Global provided a chart which set out the basis for classification of Global’s “EBA employees”. Although there was no explanatory material accompanying the chart it was possible to deduce the correct stream of the Agreement, Manufacturing, Service or Warehouse relevant to each employee.
[26] On the basis of an analysis of the pay rates set out in the employer’s explanatory material provided on 14 December 2009 I am of the view, subject to what follows, that the pay rates, and allowances, to be effective at the commencement of the Agreement and to be adjusted for the CPI at 1 July 2010 and 1 July 2011, do not result in a reduction of pay when compared with the relevant rates in the Metals Award, and, rather, represent pay rates which with allowances constitute earnings higher than those contained in the Metals Award. It follows that insofar as the pay rates for the Global classifications identified within the explanatory chart that those employees, other than potentially for casuals, are not disadvantaged and in fact are advantaged.
[27] It can be seen that pay rates are but one element, undeniably important, which must contribute to Fair Work Australia’s satisfaction necessary for the approval of an agreement.
[28] On my reading of the explanatory chart there are two casuals engaged on the Grade 1 base manufacturing rate. As casuals under the Agreement they receive a loading of 20% rather than the entitlement under the Metals Award at 4.2.3 of 25%. On this basis without some countervailing factor these two employees would be disadvantaged. I will return to their position shortly.
[29] A consideration of the conditions of employment does not lead to a conclusion that employees are disadvantaged. A complication is that this agreement replicates or relies upon some aspects of the Workplace Relations Act as it existed prior to 1 July 2009. As to “Paid Leave” the Agreement refers at page 4 to “… the benefits contained in the Australian Fair Pay and Conditions Standard” and includes a capacity for an employee to cash out up to 10 days annual leave when an employee has accrued in excess of 6 weeks annual leave. It is noted that this aspect of the Agreement conforms with s.94(2). Additionally, from 1 January 2010 the National Employment Standards have had application.
[30] It was anticipated that the material to be provided to Fair Work Australia following the hearing would deal not only with the matter of aligning Global’s in-house pay ‘Grades’ with the relevant classification within the Metals Award and the Employee handbook, but also deal with the following additional issues considered at hearing:
- the inter-operation of the Handbook (expressly not incorporated within the Agreement) and the Agreement where there existed a capacity for such matters as allowances and public holiday rates to be the subject of “alternative provision” by virtue of the Definition of Protected Award Conditions and Entitlement at page 9 [transcript PN109-117];
- the need for a term consistent with s.186(6)(a)(i) about any matters arising under the Agreement and (ii) in relation to the National Employment Standards and the s.186(b) requirement for employee representation during such procedure [transcript PN60-72];
- the casual loading being below 25% [transcript PN83-87];
- the need for an agreement to contain a flexibility term and a consultation term [transcript PN98].
[31] The material provided on 14 December did not deal with these matters. On 21 December Ms Downes, the Global Human Resources Manager, queried by email the status of the “… EBA that is currently sitting with Commissioner Gay”. To expedite the determination of the application, at 10.52am on 21 December my Associate communicated by email in the following terms:
“Dear Ms Downes
Commissioner would be assisted with the provision of the handbook and further Global Food’s response to this question. For the period of operation of the agreement that Global Food will not reduce (below the level contained within the award) any of the conditions of employment found in the agreement which are also contained in the award such as shift premiums, weekend penalties and any other conditions of employment?”
[32] By the term “any other conditions of employment” which were also contained within the award it was my intention to deal conveniently with those issues which had been highlighted during the 4 December hearing as constituting impediments to approval of the Agreement as they contributed to the potential for individual employees to be disadvantaged.
[33] In replying at 11.13am on 21 December, Ms Downes’ email response was, relevantly, to attach the Global handbook and to advise, “Global will not reduce any amounts below the Award.”.
[34] Ms Downes’ 11.13am communication contained two further emails. The first, originally sent at 11.00am was from Ms Downes to Global’s General Manager, Mr Mackenzie, and read, “They are kidding! I will send them the handbook (new) - how would you like me to answer the rest?”. Mr Mackenzie’s 11.06am reply to Ms Downes, also supplied to Fair Work Australia by Ms Downes, was in the following terms, “I would just go back and say that we will not reduce below the level in the award etc, etc”.
[35] Ms Downes’ rendered Mr Mackenzie’s advice not as Global undertaking to not reduce any of the conditions of employment ‘below the level in the award’ but, rather, that Global would not reduce “any amounts below the Award” (emphasis mine). It will be readily appreciated that Ms Downes’ articulation of Mr Mackenzie’s proposed undertaking is of a narrower, more confined nature than an undertaking as to the level in the award of any condition of employment – as outlined in my Associate’s email set out at paragraph 31 above.
[36] These matters have been set out in some detail to explain to Global not only how one approaches the approval of an agreement but also in an effort to come to a situation where, properly, the Agreement might be approved. I too, am conscious of the passage of time and the reasons, some dealt with in this decision, which have retarded the application of the relevant test as to disadvantage.
[37] To avoid any doubt, the undertaking sought is intended to deal with the following issues which are relevant to approval:
- that the casual loading to be applied to the relevant award rate will be as per the Metals Award, that is 25% not 20%;
- that the public holiday rate and allowances contained in the Agreement will not be reduced during the life of the Agreement by a change to the Employer handbook;
- that in the absence of a disputes settlement provision which satisfies the requirements of s.186(6)(a) and (b) the Metals Award provision or the model clause provision at Schedule 6.1, or some other provision which satisfies s.186, would have application.
[38] Were Mr Mackenzie to confirm the advice, as put in his 11.06am email, it will be clear that Global will apply the Agreement in a way that will ensure that, as to the matters identified in paragraph 37 above, there will be no disadvantage. In raising these impediments to approval I am mindful of the requirements of s.190. Relevantly these are that Fair Work Australia has a concern as to approval, that I might otherwise approve the Agreement, that first the views must be sought of each person known to be a bargaining representative, that there be no financial detriment to any employee and that the effect of accepting the undertaking would not be to substantially change the Agreement.
[39] In my view the elimination of uncertainty as to the Agreement’s existing public holiday provision, the provision of the 25% casual loading and the adoption of the Metal Award’s dispute settlement procedure or the Schedule 6.1 provision (or some other procedure) do constitute clarifications and in some instances changes to the Agreement, but not, in the context of the overall, so significant a change such as to preclude approval.
[40] In the event of Mr Mackenzie confirming in writing (as required by s.190(3)) Global’s undertaking in the terms set out in paragraphs 37 and 38 of this decision I would approve the Agreement as I have concluded that otherwise the requirements of ss.186 and 187 have been met. In so saying I indicate that owing to the Agreement not providing for a satisfactory flexibility term or a satisfactory consultation term, ss, 202 and 205 have application and the model terms will be taken to be terms of the Agreement should it be approved.
[41] In the absence of such an undertaking I would decline to approve the Agreement as there can be no doubt that the Agreement’s term about settling disputes is deficient, failing as it otherwise does, to meet s.186(a)(i) or (ii) or (b).
[42] Conscious that Global’s management may, like the Tribunal, be on a period of annual leave, I will hold over further consideration of the application until 18 January 2010 when further communication can occur and it may be possible to finalise the application.
COMMISSIONER
Printed by authority of the Commonwealth Government Printer
<Price code C, PR992603>
0
0
0