Duomec Mechanical Air Conditioning Pty Ltd

[2018] FWC 5604

[2018] FWCA 5604

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.210—Enterprise agreement

Duomec Mechanical Air Conditioning Pty Ltd
(AG2018/516)

DUOMEC MECHANICAL SERVICES AGREEMENT 2016 - 2019

Plumbing industry
DEPUTY PRESIDENT GOSTENCNIK	MELBOURNE, 5 SEPTEMBER 2018

Application for variation of the Duomec Mechanical Services Agreement 2016 - 2019.

[1] An application has been made for approval of a variation to the Duomec Mechanical Services Agreement 2016 - 2019 (the Agreement). The application was made by Duomec Mechanical Air Conditioning Pty Ltd (the Applicant) pursuant to section 210 of the Fair Work Act 2009 (the Act).

[2] The Agreement was approved on 29 June 2016, after the Applicant provided written undertakings to meet such requirements of ss.186, 187, 188 and 190 as were relevant to the application for approval. Pursuant to s.205(2) of the Act, the model consultation term prescribed by the Fair Work Regulations 2009 was taken to be a term of the Agreement.

[3] The primary activity of the Applicant is as a plumbing contractor. Employees whose employment is covered by the Agreement perform a work that is covered by the Plumbing and Fire Sprinklers Award 2010 (the Award). This is the relevant modern award for the purposes of the ‘better off overall test’ (BOOT) in s.193 of the Act.

Background

[4] On 1 May 2018, an email was sent by the Fair Work Commission (the Commission) to the Applicant’s representative raising a number of concerns in relation to the application for approval of the variation. The Commission made several attempts to obtain a response to the concerns raised.

[5] On 29 May 2018, Mr Craig Langdon, Director of the Applicant, telephoned Commission staff and stated that he would be handling the matter himself. On that same date the Commission received an email from Mr Langdon attaching a revised Form F23A statutory declaration and proposed undertakings.

[6] On 7 June 2018 the Commission sent a further email seeking the provision of a properly made revised Form F23A statutory declaration and inviting revised undertakings. A response was due by close of business 12 June 2018. No response was provided by that date.

[7] Commission staff subsequently made several attempts to contact the Applicant. On 22 June 2018 Mr Langdon telephoned the Commission and stated that the Applicant was unable to provide a response until he had sought and obtained legal advice. Mr Langdon was unable to provide a timeframe in which this would occur and declined to provide this information to the Commission in writing.

[8] On 29 June 2018, Commission staff wrote to Mr Langdon, advising him that if a response was not provided by close of business 13 July 2018, the matter may be determined on the material before the Commission at that date. No response was received to this email.

[9] On 13 August 2018, Commission staff spoke to Mr Langdon by telephone, explaining my concerns in relation to the better off overall test. Mr Langdon again declined to provide a revised undertaking.

The Better Off Overall Test (BOOT)

[10] Before the Commission may approve a variation to an enterprise agreement, it must be satisfied that the Agreement passes the better off overall test 1 (s.186(2)(d) as modified by s.211(3)).

[11] Section 193 of the Act, as modified by s.211(4) provides as follows:

“193 Passing the better off overall test

When a non greenfields agreement passes the better off overall test

(1) An enterprise 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.

…

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 variation of the enterprise agreement by the FWC was made under section 210.

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.”

[12] The BOOT ‘requires a finding that each award covered employee and prospective employee would be better off under the agreement than under the relevant modern award.’ 2 An overall assessment is to be made, a task requiring the identification of terms more and less beneficial to an employee.3

[13] The Agreement as proposed to be varied (‘the varied Agreement’) contains rates of pay for first year trainee apprentices who have completed year 12, and for first year apprentices who were aged 21 years or over at the time of entering into their ‘indenture or apprenticeship contract’ 4 that are below the rates payable to those broad classes of employees under the Award as at test time. The Agreement does not contain any unconditional entitlements sufficient to render these employees better off overall under the varied Agreement.

[14] The rate of pay as at test time for first year adult apprentices and for first year trainee apprentices who have completed year 12 compare to the Award rate as follows:

Modern Award Classification	Agreement Classification	Modern Award Rate	Agreement Rate	Percentage Difference
Adult apprentice 1st year	Apprentice 1st year	$19.07	$13.87	-27.27%
Trainee apprentice year 1 (with year 12)	Apprentice 1st year	$14.32	$13.87	-3.14%

[15] My concern in relation to these groups of employees and consequently the Agreement not passing the BOOT was raised with the Applicant in the Commission’s email of 1 May 2018. The Applicant provided a proposed undertaking that increased the rates payable to both affected groups of employees. However, the rate proposed for first year trainee apprentices was insufficient to address my concern that these employees did not pass the BOOT. The rate of pay proposed for first year trainee apprentices who had completed year 12 compares to the Award rate as follows:

Modern Award Classification	Agreement Classification	Modern Award Rate	Undertaking Rate	Percentage Difference
Trainee apprentice year 1 (with year 12)	Apprentice 1st year	$14.32	$14.26	-0.42%

[16] Further correspondence was sent from the Commission inviting a revised undertaking and no response has been received. Commission staff spoke to the Applicant who declined to provide a revised undertaking or make written submissions. As a consequence, I am not satisfied that Agreement passes the BOOT (s.193 of the Act).

Conclusion

[17] Based on the materials provided, I am not satisfied that the statutory requirements of the Act have been met. Specifically, I am not satisfied that the Varied Agreement passes the BOOT (s.193 of the Act).

[18] The application for approval of variation to the Agreement is dismissed.

DEPUTY PRESIDENT

 1   See Fair Work Act 2009 (Cth), s.186(2)(d); s.211(3).

 2   Loaded Rates Agreements [2018] FWCFB 3610, [100], citing Solar Systems Pty Ltd [2012] FWAFB 6397 at [11]; Hart v Coles Supermarkets Australia Pty Ltd [2016] FWCFB 2887 at [6], [15]; SDAEA v Beechworth Bakery [2017] FWCFB 1664 at [11].

 3   Loaded Rates Agreements [2018] FWCFB 3610, [112], citing ALDI Foods Pty Limited v Shop, Distributive & Allied Employees Association [2017] HCA 53 at [92]; Armacell Australia Pty Ltd [2010] FWAFB 9985 at [41].

 4   See Plumbing and Fire Sprinklers Award 2010, cl.16.1.

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