Ecotech Building Services Pty Ltd; “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)

[2013] FWCA 2874

[2013] FWCA 2874

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Ecotech Building Services Pty Ltd; “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)
(AG2012/12872)

ECOTECH BUILDING SERVICES PTY LTD AMWU ON-SITE CONSTRUCTION COLLECTIVE AGREEMENT FOR NEW SOUTH WALES 2012-2015

Building, metal and civil construction industries
COMMISSIONER BULL	SYDNEY, 13 MAY 2013

Application for the approval of the Ecotech Building Services Pty Ltd AMWU On-site Construction Collective Agreement for New South Wales 2012-2015; mandatory flexibility term lacks flexibility, model flexibility clause inserted.

[1] An application has been made for approval of an enterprise agreement known as the Ecotech Building Services Pty Ltd AMWU On-site Construction Collective Agreement for New South Wales 2012-2015 (the Agreement) by Ecotech Building Services Pty Ltd (the Applicant).

[2] The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act). The Agreement is a single-enterprise agreement.

[3] The Form F16 - Application for Approval of Enterprise Agreement was completed by Mr Milad Zivanovic, a Director of the Applicant. Question 5 of the form asks were any employee organisations bargaining representatives for the Agreement. The response states “yes” but no details of the employee organisation are provided as requested.

[4] Mr Zivanovic states in response to question 2.9 of Form F17 that the Agreement covers one employee only, and that the one employee voted in favour of the Agreement. 1

[5] The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) filed a Form F18 - Declaration of Employee Organisation in relation to an Application for Approval of Enterprise Agreement (From F18) stating that it was bargaining agent for the Agreement and supporting the application for approval and gave notice pursuant to s.183 of the Act that it wished to be covered by the Agreement.

[6] On 1 February 2013, the Commission sent an email to the employer’s contact person Mr Zivanovic and the AMWU as a bargaining representative for the Agreement in relation to concerns the Commission had with respect to clause 12 - Hours of work/rostered days off and clause 35 - Flexibility term etc requesting a response by 5 February 2013.

[7] Neither party responded to the request for additional information, a further email was sent on 13 February 2013, requesting a response no later than close of business 15 February 2013.

[8] As no response was received by close of business 15 February 2013 my Associate called the Applicant employer on 18 February 2013 and was advised that Mr Zivanovic was out of the office and would call my Chambers back in one hour, no return phone call was received. On 19 February 2013, my Associate attempted again to call the employer and left a voice message for Mr Zivanovic on his mobile, a return call from Mr Zivanovic was not received.

[9] On 20 February 2013, my Associate contacted the AMWU as a bargaining representative for the Agreement and advised of the difficulties the Commission was having contacting the Applicant. The AMWU requested the Commission resend the email it had sent to the employer and the AMWU and they would speak to the official that deals with the employer to follow up on the Commission’s concerns.

[10] On 22 February 2013, the Commission received an email from Ms Saunders, Legal Officer of the AMWU, responding to the Commission’s concerns.

[11] Following receipt of the AMWU email the Commission listed the matter for conference on 5 March 2013, to discuss the issues with the employer and bargaining representative present. The employer and the AMWU did not appear at the conference. A voice message was left for both the employer and the AMWU advising the matter had been set down for a conference and neither had attended.

[12] The AMWU advised it had not received the notice of listing as it was sent to a generic system email address of the AMWU and not to the officer responsible for the Agreement. No return phone call was received from the employer.

[13] The Commission listed the matter for hearing on 26 March 2013 at 9:00am in a final attempt to hear from the employer on the concerns raised by the Commission. Ms Saunders from the AMWU attended the hearing; however, the employer was not present.

[14] My Associate called Mr Zivanovic on his mobile at approximately 9:00am to see if he would be attending the hearing. Mr Zivanovic advised he had received the notice of listing but had not done anything about it. Mr Zivanovic confirmed he would not be attending the hearing. My Associate asked Mr Zivanovic if he had spoken to the AMWU in relation to the correspondence the AMWU had sent to the Commission addressing the Commission’s concerns. Mr Zivanovic advised he had a “missed called from a guy at the union” but had not had time to return his call. Mr Zivanovic asked for the hearing not to take place and he would call the AMWU that morning to speak to them. Mr Zivanovic was advised the hearing would take place as previously advised.

[15] The Commission had raised concerns with respect to clause 12 - Hours of work/rostered days off and in particular the ordinary span of hours vis a vis the better off overall test required to be met under s.186(2) of the Act (the BOOT). The Agreement provides for an ordinary span of hours between 6:00am to 6:00pm. The Building and Construction General On-site Award 2010 (the Award), being the relevant modern award for the application of the better off overall test as per s.193(1) of the Act, provides for an ordinary span of hours from 7:00am to 6:00pm. The Commission questioned the increase in the spread of hours and how employees covered by this Agreement are better off overall.

[16] The AMWU in its email dated 22 February 2013 advised that the rates of pay in the Agreement are significantly higher, and compensate for the additional increase in the span of ordinary working hours. It was further put that the increased span of hours was consistent with sub clause 33.1 (viii) of the Award. Although, I have not heard from the employer; on the basis of the AMWU submission I am satisfied that the increase in the ordinary span of hours satisfies the BOOT.

Flexibility Term

[17] The Act requires at s.202(1) that an enterprise agreement must include a flexibility term. The terms of the agreement that may be varied must be included in the flexibility term.

[18] The Commission raised concerns with respect to clause 35 - Flexibility term etc of the Agreement. Sub clause 35.6 is in the following terms:

35.6 The terms that may be subject to an individual flexibility arrangement are:

33.6.1 clause 22: Each employee covered by this agreement and nominated by the union shall be allowed up to 12 days’ paid leave per annum to attend trade union training courses conducted or approved by Trade Union Training Australia Inc or the Union; and

33.6.2 clause 30: The maximum period of leave will be 4 hours per occasion.

(Note clause 22 of the Agreement refers to Trade Union Training Leave and clause 30 refers to Blood Donors Leave)

[19] Leaving aside the incorrect numbering which appears to arise from the use of a template (see for example where this clause is reproduced in [2011] FWAA 3153, [2010] FWAA 4759) the flexibility sought appears to be the ability for the employer and employee to enter into an individual flexibility arrangement to increase the minimum agreement entitlement to trade union training leave and blood donors leave.

[20] The Agreement provides at clause 22 an entitlement up to 10 days paid trade union training leave, which the flexibility term purports to allow via an individual flexibility arrangement for up to 12 days paid trade union training. The Agreement at clause 30 allows for a maximum of 3 hours leave with pay for each occasion an employee attends a recognised blood donation clinic. The flexibility term purports to allow via an individual flexibility arrangement up to 4 hours leave per occasion.

[21] The Commission has queried how the provision of additional trade union training and blood donor leave via an individual flexibility term, provides any additional flexibility when it would not be a breach of the Agreement to provide such an increase without entering into an individual flexibility arrangement. That is, the Agreement does not restrict the employer from granting superior benefits to employees, the Agreement provides guaranteed minimum entitlements which are not impugned by the granting of additional entitlements.

[22] As noted above, the Commission was not given the benefit of any submission on this point from the employer. Ms Saunders of the AMWU advised the Commission in her email of 22 February 2013:

In relation to the question about why the clause is needed when it would not be a breach of the agreement to provide additional trade union training leave or blood donor leave, I respectfully submit that this is not relevant to whether the clause complies with the statutory requirements. It is sufficient that the relevant terms are capable of being varied; further inquiry is not necessary.

[23] At the hearing Ms Saunders maintained this position stating:

Regardless if it’s capable of varying the effect of the term of the agreement, it’s a valid IFA clause. 2

[24] The AMWU object to the model flexibility clause being inserted into the Agreement, although no reason was provided for maintaining this objection.

[25] I am unable to accept that simply because the flexibility term allows the Agreement to be varied it therefore meets the mandatory requirement to include a flexibility term and that no further enquiry by the Commission is necessary. On this argument, a flexibility term that varied any clause of an agreement would suffice, e.g. arrangement, no extra claims, signatories, agreement renewal and title clauses of an agreement could be referenced as flexibility terms.

[26] The Act at s.202(1) describes the mandated flexibility term as being a term that:

(a) enables an employee and his or her employer to agree to an arrangement (an individual flexibility arrangement) varying the effect of the agreement in relation to the employee and the employer, in order to meet the genuine needs of the employee and employer; and

(b) complies with section 203.

[27] The Commissions requirement to look beyond a term that simply allows for a variation of an agreement as put by the AMWU was highlighted by the Full Bench in Minister for Employment and Workplace Relation (FWAFB 3552 (19 May 2010) at [23]). In examining a flexibility term that provided for an individual flexibility arrangement relating to a term in the agreement that proscribed “one in, all in overtime” the Full Bench stated:

[23] ... A term which does not provide for change in the effect of any of the terms of the agreement cannot be a flexibility term. Furthermore, the change provided for must be of the nature identified in ss.202 and 203.

[26] The second element of the clause is the requirement that the principle of “one in, all in” is not to apply in relation to overtime. While it is not difficult to envisage the effect of that prohibition being altered by individual arrangement, it is very difficult to envisage the circumstances in which such an alteration would meet the genuine needs of the employer and the employees as required by s.202(1)(a). ...  3

[28] The Full Bench held that it was not sufficient that a flexibility term provide for a change in the effect of an agreement, it must be a change of the nature identified in ss.202 and 203 of the Act.

[29] The flexibility said to be provided in respect of trade union training leave and blood donor leave is an upward movement in employee entitlements, it does not remove or overcome any Agreement restriction to provide these additional entitlements where otherwise agreed. The minimum Agreement entitlements in respect of the relevant clauses remain unaltered. An examination of the illustrative examples provided in the Explanatory Memorandum of the Fair Work Bill refers only to outcomes that would not otherwise be permissible under an enterprise agreement.

[30] There is no statutory restriction on employers and employees agreeing to increase agreement entitlements. An employer is free to remunerate employees above agreement rates which is not an uncommon occurrence or improve any other term of an agreement without the need to enter into an individual flexibility arrangement. In other words the workplace relations system does not limit upwards flexibility without the need for an individual flexibility arrangement being entered into.

[31] In the decision of the Full Bench in Request from the Minister for Employment and Workplace Relations –28 March 2008 Award Modernisation (AM2008/1) [2008] AIRCFB 550 the Full Bench confirms this approach when stating at PN163.

[163] It is evident from the scheme of the legislation that award terms prescribing wages and conditions are to operate as minimum entitlement of employees. It follows that there is no statutory restriction on employers and employees agreeing to increase those minimum entitlements and an individual flexibility provision is unnecessary for agreements of that kind. The purpose of a model flexibility provision is to permit a reduction in one or more minimum award entitlements as part of an agreement which meets the genuine individual needs of the employer and the employee without disadvantaging the individual employee. This is the underlying basis on which we have approached the drafting of the model clause.

[32] More recently the Full Bench repeated these comments in the Modern Awards Review 2012—Award Flexibility decision [2013] FWCFB 15 April 2013 at paragraph 44.

[33] While these comments relate to awards of the Commission I cannot see why they are not apposite for enterprise agreements of the Commission. On one view the proposed flexibility term imposes a restriction by stating that only up to 12 days paid train union training and 4 hours blood donor leave per occasion can be agreed, whereas without these terms the employer and employee are not restricted to agreeing to increase these entitlements by any amount.

[34] I am of the view therefore that clause 35 of the Agreement is not a flexibility term as described and required under the Act; it does not provide any flexibility the Agreement does not already allow.

[35] Section 202(4) of the Act states that if an enterprise agreement does not include a flexibility term, the model flexibility term is to be taken to be a term of the agreement.

[36] The model flexibility term found at Schedule 2.2 of the Fair Work Regulations 2009 will be taken to be a term of the Agreement. A copy of the model flexibility term is attached at Annexure A.

[38] I am satisfied that each of the requirements of ss.186, 187 and 188 of the Act as are relevant to this application for approval have been met.

[39] The “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) being a bargaining representative for the Agreement, has given notice under s.183 of the Act that it wants the Agreement to cover it. In accordance with s.201(2), I note that the Agreement covers this organisation.

[40] The Agreement is approved. In accordance with s.54(1) the Agreement will operate from 20 May 2013. The nominal expiry date of the Agreement is 30 June 2015.

COMMISSIONER

Annexure A

 1   Agreement coverage of only one employee is no longer permissible as per the Fair Work Amendment Act 2012 commencing 1 January 2013.

 2   Transcript at PN78

 3   The flexibility term in this agreement was ultimately held to meet the Act’s requirements but not in relation to the overtime reference.

Printed by authority of the Commonwealth Government Printer

<Price code C, AE401159  PR536448>