Employee X
[2022] FWCA 2561
•29 JULY 2022
| [2022] FWCA 2561 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.225—Enterprise agreement
Employee X
(AG2021/8884)
Business risks international pty limited nsw employee collective agreement 2007
| Security services | |
| COMMISSIONER P RYAN | SYDNEY, 29 JULY 2022 |
Application for termination of the Business Risks International Pty Limited NSW Employee Collective Agreement 2007
Introduction
Employee X (Applicant) made an application to the Fair Work Commission to terminate the Business Risks International Pty Limited NSW Employee Collective Agreement 2007 (Agreement) pursuant to Item 16 of Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act).
The Agreement covers Certis Security Australia Pty Ltd (Employer) and the New South Wales based employees falling with the scope of the classifications set out in clauses 19 to 25 of the Agreement.
Pursuant to Item 16 of Schedule 3 of the Transitional Act, Subdivision D of Division 7 of Part 2-4 of the Fair Work Act 2009 (FW Act) applies in relation to the termination of a collective agreement-based transitional instrument after its nominal expiry date, as if a reference to an enterprise agreement is a reference to collective agreement-based transitional instrument.
Subdivision D of Division 7 of Part 2-4 of the FW Act provides as follows:
‘225 Application for termination of an enterprise agreement after its nominal expiry date
If an enterprise agreement has passed its nominal expiry date, any of the following may apply to the FWC for the termination of the agreement:
(a) one or more of the employers covered by the agreement;
(b) an employee covered by the agreement;
(c) an employee organisation covered by the agreement.
226 When the FWC must terminate an enterprise agreement
If an application for the termination of an enterprise agreement is made under section 225, the FWC must terminate the agreement if:
(a) the FWC is satisfied that it is not contrary to the public interest to do so; and
(b) the FWC considers that it is appropriate to terminate the agreement taking into account all the circumstances including:
(i)the views of the employees, each employer, and each employee organisation (if any), covered by the agreement; and
(ii)the circumstances of those employees, employers and organisations including the likely effect that the termination will have on each of them.
227 When termination comes into operation
If an enterprise agreement is terminated under section 226, the termination operates from the day specified in the decision to terminate the agreement.’
If the Agreement is terminated, the terms and conditions of the Security Services Industry Award 2020 (Security Award) will apply.
The matter was listed for hearing on 30 June 2022. On the day prior to the hearing, the Employer confirmed that a consent position had been reached with the United Workers Union (UWU) and some of the employees that the Agreement be terminated with effect from 16 October 2022.
Notwithstanding the consent position, I maintained the listing of the matter to ensure any other employee who intended to participate in the hearing was afforded the opportunity to be heard.
The hearing proceeded by way of oral submissions, supplementing the materials filed by the parties.
The Application
The Agreement was made as an employer collective agreement under s.327 of the Workplace Relations Act 1996 (WR Act) and had a commencement date of 18 January 2007.
In accordance with s.352(1)(b) of the WR Act, and clause 3.1 of the Agreement, the nominal expiry date of the Agreement is the fifth anniversary of its commencement date. This means the Agreement passed its nominal expiry date on 18 January 2012.
The Applicant requested that their name be kept confidential. I was satisfied it was appropriate to do so, and on that basis, I required the Employer to provide my chambers with a list of employees covered by the Agreement as of 10 December 2021, the date the application was made. After reviewing the materials provided, I am satisfied that the Applicant was an employee covered by the Agreement when the application was made.
Accordingly, I am satisfied that the Agreement is a collective agreement-based transitional agreement, that it has passed its nominal expiry date, and that the application was made by an employee covered by the Agreement.
The Agreement
As noted above, the Agreement commenced in 2007 and passed its nominal expiry date in 2012.
Clauses 26 and 27 of the Agreement state the (span of) hours for all Employees shall be on any day of the week 24 hours per day, and that a full-time employee’s standard hours of work will be an average of 38 hours per week within a work cycle not exceeding 7 consecutive days.
Clause 32 of the Agreement provides for two sets of wage rates. Clause 32.4 applies to employees working a rotating roster which includes weekends and public holidays. Clause 32.5 applies to employees working a non-rotating roster. The penalty rate for working on a public holiday is double time.
Clause 34 of the Agreement provides for an overtime penalty rate of 20%, but does not otherwise provide for any penalty rates, shift loadings or allowances, other than the public holiday penalty rate referred to above.
The casual loading under the Agreement is 20%.
A full-time employee who continuously works the 7-day rotating roster will be entitled to an additional 2 weeks of annual leave each year. However, there is no entitlement to annual leave loading provided for in the Agreement.
The following table illustrates the disparity between the minimum rates of pay under the Security Award and Agreement based on a level 1 full-time employee as at 30 June 2022:
| Mon-Fri | M-F Night Work | M-F Perm. Night Work | Saturday | Sunday | Public Holiday | |
| Security Award | $22.84 | $27.80 | $29.69 | $34.36 | $45.68 | $57.10 |
| Agreement (rotating roster) | $27.42 | $27.42 | $27.42 | $27.42 | $27.42 | $54.84 |
The Employer and employees covered by the Agreement were given an opportunity to provide their views and the likely effect that the termination of the Agreement will have on them.
The views of the Employer
While the Employer initially opposed the termination of the Agreement, the Employer ultimately agreed that the termination take effect from 16 October 2022.
The Employer submitted that the termination of the Agreement will have a negative impact on employees and referred to calculations filed by the Employer that show employees will be worse off under the Security Award compared to the Agreement. The Employer submitted that the Agreement provides a more favourable ordinary hourly rate and more favourable annual leave entitlements for shift workers.
The Employer submits that several key client contracts were costed on the basis of the rates in the Agreement and that the termination of the Agreement will have a negative impact on its profitability.
The Employer submitted that a period of time was required to transition from the Agreement to the Security Award and that a termination date of 16 October 2022 had been agreed between the parties.
The views of the employees
There were nine employees who filed materials with the Commission setting out their views. A number of the employees requested that their name be kept confidential. I was satisfied it was appropriate to do so, and after reviewing the list of employees, I am satisfied that each individual is an employee of the Employer.
Employees X, Y and Z
Employees X, Y and Z were represented by the UWU and support the termination of the Agreement. These employees submitted that the Agreement provides higher rates of pay than the Award on ordinary hours, but lower rates of pay for overtime, weekends and public holidays. It was submitted that this results in employees working unsocial hours not being properly compensated for the disutility of their work.
Employees X, Y and Z support the Agreement being terminated with effect from 16 October 2022.
Employees AA and BB
Employees AA and BB were represented by the New South Wales Branch of the Australian Rail, Tram and Bus Industry Union and support the termination of the Agreement.
Employees AA and BB submitted that the Agreement provides inferior conditions compared to the Security Award in relation to work performed on evenings, weekends and public holidays. Furthermore, Employees AA and BB submitted the Security Award provides more favourable conditions in relation to the triggers for overtime and the overtime penalties, as well as allowances such as the supervisory allowance.
Employees AA and BB support the Agreement being terminated with effect from 16 October 2022.
Abdelkader Bougrassa and Gregory Kostantinidis
Mr Bougrassa and Mr Kostantinidis both filed an identical short submission by email in which they opposed the termination of the Agreement on the basis that it will greatly affect guards employed at corrective service facilities.
Mr Bougrassa and Mr Kostantinidis did not appear at the hearing of the matter.
Robert McMillan and John Vukomanovic
Mr McMillan and Mr Vukomanovic both filed an identical short submission by email in which they opposed the termination of the Agreement on the basis that it will reduce their earnings and result in financial hardship.
Both Mr McMillan and Mr Vukomanovic acknowledge that the Agreement is out of date and needs updating.
Mr McMillan and Mr Vukomanovic did not appear at the hearing of the matter.
The views of United Workers Union
It is not in dispute that the Agreement does not cover the UWU and that there is no statutory requirement to consider the views of the UWU. However, that does not prevent the Commission from taking into consideration the views of an employee organisation with membership coverage for the relevant industry.[1]
The UWU submitted that many of the terms and conditions in the Agreement are below the minimum safety net of conditions contained in the Security Award, including weekend and public holiday penalty rates, overtime penalty rates and shift loadings and allowances.
The UWU submitted that the termination of the Agreement is not contrary to the public interest and supported the Agreement being terminated with effect from 16 October 2022.
Consideration
The Agreement passed its nominal expiry date over ten years ago. It is clear that the overall terms and conditions of employment under the Agreement are well below what would otherwise apply under the Security Award.
The Employer’s calculations and submissions that employees will suffer a reduction in wages under the Security Award are largely based on employees working between the hours of 6:00am and 6:00pm on a Monday to Friday basis and being paid in accordance with the 7-day rotating roster provisions.
While the Agreement is more favourable to employees working a higher number of hours during the day Monday to Friday, employees who work a higher proportion of evening, weekend and overtime hours have been worse off under the Agreement for over a decade.
The Employer’s submission that both the employees and Employer will be worse off if the Agreement is terminated is demonstrative that there is a cohort of workers who work a larger number of hours that will attract penalty rates, shift loadings and allowances under the Security Award.
The Employer’s contention that it will be negatively impacted by commercial contracts that are locked in and that have been costed on the Agreement, is indicative that the Employer has obtained a competitive advantage through the Agreement’s inferior terms and conditions.
In Appeal by United Security Enforcement Corp Pty Ltd t/a United Security Enforcement Corporation [2020] FWCFB 5090 (United Security Enforcement), a Full Bench of the Commission stated:
[53] We likewise consider that it would plainly be contrary to the public interest to approve the Agreement to allow United Security to undercut competitors which, it asserts, have undercut it by finding lawful ways to pay their employees rates of pay and conditions inferior to those in the Security Award, The object of the FW Act in s 3(b) includes a reference to “ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders”. Within the context of the current legislative framework, the approval of the Agreement would inevitably invite other businesses (within and outside of Western Australia) to seek the approval of enterprise agreements which provide even less beneficial terms of employment for employees, and the approval of such agreements on the same basis would start (or perhaps continue) a downward wages spiral which would make the Security Award irrelevant to the industry it is intended to regulate. That would be entirely contrary to the object of the FW Act.
While United Security Enforcement concerned an application for approval of an enterprise agreement, I agree with the views of the Full Bench which are apposite to the matter before me.
The Agreement does not reflect current industry standards, it is significantly inferior.
Taking into account all of the submissions received, I am satisfied that it is not contrary to the public interest to terminate the Agreement.
Conclusion
For the reasons set out above, I have decided to terminate the Agreement. I will provide the Employer with a period of time to make the appropriate adjustments to its payroll, administrative and employee arrangements.
In the circumstances, I am satisfied that the agreed position of the parties is an appropriate period. Accordingly, I have decided to terminate the Agreement with effect from 16 October 2022.
COMMISSIONER
Appearances:
Mr S McIntosh of Counsel for the Applicant.
Mr T Whiteside for the United Workers Union and Employees X, Y and Z.
Mr J Hart of the New South Wales Branch of the Australian Rail, Tram and Bus Industry Union for Employees AA and BB.
Hearing details:
2022.
Sydney (via Microsoft Teams video-link):
30 June.
[1] Wilson Security – Western Australian Collective Agreement 2009 [2017] FWCA 1595 at [38]; Lisa Reynolds [2018] FWCA 6804 at [156]-[158].
Printed by authority of the Commonwealth Government Printer
<PR744325>
0
1
0