Epona Pty Ltd
[2020] FWC 1707
•30 MARCH 2020
| [2020] FWC 1707 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
Epona Pty Ltd
(AG2018/7411)
COMMISSIONER JOHNS | SYDNEY, 30 MARCH 2020 |
Application for approval of the Epona Pty Ltd Enterprise Agreement 2019.
[1] This is a decision about an application that has been made for approval of an enterprise agreement (Application) known as the Epona Pty Ltd Enterprise Agreement 2019 (Epona Agreement). The Application was made pursuant to s.185 of the Fair Work Act 2009 (Cth) (FW Act) by Epona Pty Ltd (Epona/Applicant). The Epona Agreement is a single enterprise agreement.
[2] I have decided not to approve the Epona Agreement because:
a) I am not satisfied that Epona Agreement passes the better off overall test (BOOT);
b) the current version of the undertakings offered by Epona do not address outstanding BOOT issues; and
c) I would not accept any further undertakings offered by Epona because the undertakings would, in my view, result in substantial changes to the Agreement.
[3] These are my reasons for refusing to approve the Agreement.
History of the Application
[4] The history of the Application is as follows:
a) On 12 December 2019:
i. Epona lodged its F16 application for approval of the Epona Agreement with the Fair Work Commission (Commission)
ii. a statutory declaration in support of the Application was lodged by Michael Dorahy, the Applicant’s General Manager.
b) On 23 December 2019 the Australasian Meat Industry Employees Union (AMIEU) filed a Form F18 Statutory Declaration declared by Grant Courtney, its Communications and Research Officer. The AMIEU indicated that it did not support the approval of the Agreement.
c) On 30 December 2019 the matter was allocated to me.
d) On 9 January 2020 I provided Epona with a copy of the Single Enterprise Agreement Legislative Checklist (Checklist) prepared internally within the Commission. I made it known at the time that I had not formed any view about the identified issues. I explained that, as a matter of procedural fairness, the Applicant was being invited to make submissions or offer undertakings to address the issues that had been identified. I further explained that:
i. whether an employer gives an undertaking is entirely a matter for them;
ii. undertakings are invited; and
iii. undertakings are not mandatory.
e) On 23 January 2020 Epona filed in the Commission submissions and undertakings in answer to the Checklist.
f) Because:
i. not all of the issues identified in the Checklist were addressed; and
ii. the AMIEU continued to object to the approval of the Epona Agreement the matter was listed for hearing on 27 February 2020 (later adjourned to 10 March 2020).
g) The parties filed and served submissions and Epona filed further undertakings in accordance with the Directions issued on 9 January 2020.
h) On 25 February 2020 I wrote to Epona in the following terms,
“1. On page 3 of the [17 February 2020] submissions Epona submits that “Epona Pty Ltd currently do not and at no time during the life of the agreement have any intention to work a 7 day roster….” Would Epona be prepared to include an undertaking to that effect?
2. On page 4 of the [17 February 2020] submissions Epona submits that “Epona Pty Ltd currently do not and at no time during the life of the agreement have any intention to employ pieceworkers/daily hire.” Would Epona be prepared to include an undertaking to that effect?
i) On 28 February 2020 Epona proffered further undertakings to address the roster and the piecework/daily hire issues.
j) Notwithstanding the proffering of the further consolidated undertakings the AMIEU maintained its objection to the approval of the Agreement. It was necessary that the matter proceed to a contested hearing.
The Hearing
[5] At the hearing on 10 March 2020:
a) The Applicant was represented by Mr Dorahy. He also gave evidence on behalf of Epona and made himself available for cross-examination.
b) The AMIEU was represented by Mr O’Loughlin. Mr O’Loughlin called Graham Smith, the union’s Federal Secretary Treasurer, to give evidence and be cross-examined.
[6] Following the hearing on 10 March 2020, Epona was provided with an opportunity to file in the Commission and serve on the AMIEU a final form of the undertakings it was prepared to offer. It did so on 13 March 2020.
[7] In coming to this decision, the Commission, as presently constituted, has had regard to the following:
Exhibit No. | Description |
1. | Epona Pty Ltd Enterprise Agreement 2019 |
2. | Enterprise Agreement checklist prepared 20 December 2019 |
3. | Form F16 – Application dated 12 December 2019 (amended 24 January 2020) |
4. | Form F17 – Employer Statutory Declaration dated 11 December 2019 |
5. | Form F18 – Statutory Declaration by the AMIEU dated 20 December 2019 |
6. | Applicant’s submissions dated 23 January 2020 |
7. |
|
8. | Applicant’s submissions dated 30 January 2020 |
9. | Negotiation committee meeting minutes filed by the Applicant on 30 January 2020 |
10. |
|
11. | AMIEU’s submissions dated 6 February 2020 |
12. | Applicant’s submissions dated 17 February 2020 |
13. |
|
14. |
|
15. | AMIEU’s submissions dated 6 March 2020 |
16. | Statement of Graham Smith dated 6 March 2020 |
Post hearing materials | |
N/A | Undertakings dated 13 March 2020 (Fifth Version of Undertakings) |
Resolved issues
[8] The Checklist identified issues for Epona to respond to. Having regard to the materials filed by the Applicant I am satisfied that:
a) The forms and signature requirements were resolved by the filing of an amended F16.
b) The nominal expiry date and commencement date issues were resolved by undertakings.
c) The dispute settlement procedure (DSP) issue has been resolved by an undertaking that extends the operation of the DSP to disputes arising under the Epona Agreement and the National Employment Standards (NES).
d) The identified potential unlawful term about deductions has been resolved by an undertaking (Undertaking c).
e) Epona has addressed each of the NES issues with specific undertakings and also a general undertaking noting that if the NES is more beneficial than the provision in the Epona Agreement the NES will prevail.
f) The better off overall test (BOOT) issue about piecework/daily hire employees has been resolved by an undertaking that Epona “do not and at no time during the life of the agreement have any intention to employ pieceworkers/daily hire” employees.
g) The BOOT issue about 7 day rosters has been resolved by an undertaking that Epona “do not and at no time during the life of the agreement have any intention to work a 7 day roster. Epona have no intention to regularly roster to work public holidays or Sundays.”
h) The absence of a junior rate for employees 19 years of age and over has been addressed by an undertaking.
i) The absence of a casual conversion clause has been addressed by an undertaking.
j) The absence of a meal allowance has been addressed by an undertaking.
k) The stand-down provision has been improved by an undertaking that allows employees access to leave entitlements during any period of stand-down. The provision in the Epona Agreement now replicates the provision that was contained in the 2015 predecessor enterprise agreement that was approved 5 by his Honour Senior Deputy President Hamberger on 25 August 2015 and which passed its nominal expiry date on 1 September 2019.
l) The vagueness around what powers are invested in the Commission in respect of disputes that come before it has been resolved by an undertaking that expressly invests the Commission with powers of “mediation and/or conciliation or by arbitration.”
[9] Having regard to the submissions and additional information filed by Epona I am further satisfied that Epona took all reasonable steps to ensure that the terms of the Epona Agreement and the effect of those terms were explained to the relevant employees. Consequently, Epona complied with the pre-approval step mandated by section 180(5)(a). For this reason the Epona Agreement can be approved if the other statutory requirements have been satisfied.
[10] I also note that the model flexibility term and the model consultation term would have applied in relation to the Agreement.
[11] In its Form F18 the AMIEU also raised issues for Epona to respond to. Having regard to the materials filed by the Applicant I am satisfied that the following issues identified by the AMIEU have been resolved:
a) Personal/carer’s leave,
b) The stand-down provision (as discussed above), and
c) Meal allowance.
[12] Consequently, by the time the matter came to be decided (i.e. after the filing of the Fifth Version of Undertakings) the last remaining issue to be determined was whether the Epona Agreement passed the BOOT.
[13] An important aspect (but not the only aspect) of the BOOT analysis is the increase in the spread of hours contained in the Epona Agreement as opposed to the Meat Industry Award 2010 (MI Award). The AMIEU correctly identified the issue in its Form F18 as follows:
“The AMIEU has concerns for the spread of ordinary hours proposed in the Agreement.
Clause 7.3 in the Agreement states:
“7.3 The spread of ordinary hours of work (except Hygiene Labourers) may be worked between 4.00 am to 3.00 am Monday to Saturday.”
This is in contrast with Part 5 – Hours of Work and Related Matters, clause 31.2 in the Meat Industry Award 2010 which states:
“Ordinary hours of work
(i) The following table show the spread of ordinary hours for these establishments:
Days Spread of hours
Monday to Friday 6.00 am – 8.00 pm
(ii) The following table show the spread of ordinary hours for these establishments:
Days Spread of hours
Monday to Friday 6.00 am – 6.00 pm
There are clear discrepancies between the proposed Agreement and the Meat Industry Award making the Award plainly superior.’
[14] In its submissions on 23 January 2020 Epona contended that,
“The span of hours were agreed upon and signed off by the bargaining representatives during bargaining. The employees wanted to move to the 9.5 hour, 4 day roster to enable one day off a week. This was again minuted and signed off. The AMIEU were present and had a representative at all these meetings.”
[15] It may well be the case that the employees wanted to move to the increased span of hours. The best evidence of this is that out of the 226 employees to be covered by the Agreement, 207 voted (91.5%) and 114 (55%) of those who voted, voted in favour of the Epona Agreement (which contained the increase in the span of hours).
[16] However, agreement by bargaining representatives and employee assent is no response if an enterprise agreement does not pass the BOOT. Employees cannot agree to an enterprise agreement that does not pass the BOOT. The fact that “the span of hours were agreed and signed off by bargaining representatives during bargaining” is irrelevant when it comes to assessing the BOOT.
Legislative scheme – BOOT
[17] The FW Act provides that,
“193 Passing the better off overall test
When a non greenfields agreement passes the better off overall test
(1) An enterprise agreement that is not a greenfields 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.
…
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 agreement by the FWC was made under section 185.
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.”
BOOT (including span of hours) Submissions
[18] On 23 January 2020 Epona submitted that:
• “The employees voted to alter the spread of hours for the early start under the 9.5hr day, to accommodate the 4 day rotating roster, enabling the one day off per week.
• Overtime entitlements commence immediately at the completion of working the 9.5 ordinary hours. Time worked following this will be at time and ½ for the first 3 hours and double time thereafter.
• Saturday and Sunday work attracts the penalty rates, Saturday time and ½ for the first 3 hours and double time thereafter, Sunday double time. See undertaking a.” 6
[19] On 30 January 2020 Epona provided a wage comparison chart comparing the Epona Agreement to the MI Award. Further, it submitted that:
• “During negotiations the employees opted for the extension in the spread of hours to accommodate the 9.5 hour, 4 day a week lifestyle roster.
• The employees voted on the agreement as they believed the terms conditions better in the agreement also better suited to the family lifestyle.
• In support of the employees voting for the above, as well as the AMIEU’s support during negotiations we have attached the minutes to the negotiation meetings. And to further highlight the AMIEU support of the Agreement Jason Roe requested the new rates and 9.5 hour roster commence on the first day back in January 2020.
• The AMIEU representative Wei Yao on plant today and told us that the employees are loving the new roster 7, the new rates as well as the opportunity of doing more overtime to earn more money.”
[20] On 6 February 2020 the AMIEU submitted that:
2. “In regards to 9.4 Additional Hours in the proposed Agreement;
“It is the intention of the company to operate additional shifts on some Saturdays, this will be no more than 8. On these Saturdays each employee is required to make themselves available to work their additional 8 shifts.”
2.1 The AMIEU would to draw the Commissioner’s attention to this sub- clause which would enable compulsory Saturday attendance, which in effect may be in conflict with the NES.
3. In regards to Appendix 2 – Remuneration Structure in the proposed Agreement;
“Under this structure the employer undertakes that no employee will be paid less than the award rate for their equivalent classifications”
3.1 The AMIEU would like to address the phrase “less than the award rate”. The proposed Agreement offers rates of pay that under most grades are higher than the corresponding Award rate of pay. However, as addressed extensively by the Commissioner, the majority of entitlements and allowances provided by the proposed Agreement are either inferior to the Award or have not been addressed at all.
4. The AMIEU is satisfied with the Commissioner’s concerns and requirements addressed in the provided Checklist.”
[21] On 17 February 2020 Epona made a number of submissions about various matters highlighted in the Checklist. In relation to penalties and span of hours, Epona submitted that:
“SUBMISSION
Weekend/Penalties/Shift Penalties:
• Clause 9 Additional Hours, 9.1 of the Agreement states "All time worked outside the Employee's ordinary hours shall be paid at the rate of 1/38 th of the Ordinary Weekly Remuneration and shall be deemed to be additional hours and shall be paid for at time and one half for the first three hours and double time thereafter."
• Additional shifts on Saturdays are covered by 9.4 and further 9.4.3: "Payment for these additional hours will be at additional hour rates set outin 9.1."
• The Agreement is silent regarding Sunday. Where the Agreement is silent we revert to the Modem Meat Industry Award 2010 for rates. Sunday work is and will always be paid at 200% (double Time). See also Undertaking A 8
• As Epona does not and will not employ shift workers the pay rate and penalties the AMIEU have made reference are not applicable.
SUBMISSION
Increased Span of Hours: UNDERTAKING
Clause 7 Hours of Work: See attached Undertaking I.
• The employees voted to alter the spread of hours for the early start under the 9.5hr day, to accommodate the 4 day rotating roster, enabling the one day off per week.
• Overtime entitlements commence immediately at the completion of working the 9.5 ordinary hours. Time worked following this will be at time and ½ for the first 3 hours and Double time thereafter.
• Saturday and Sunday work attracts the penalty rates, Saturday time and ½ for the first 3 hours and Double time thereafter, Sunday Double time. See undertaking [A].
SUBMISSION
• During negotiations the employees opted for the extension in the spread of hours to accommodate the 9.5 hour 4 day a week lifestyle roster.
• The employees voted on the agreement as they believed the terms conditions better in the agreement also better suited the family lifestyle.
• In support of the employees voting for the above, as well as the AMIEU's support during negotiations we have attached the minutes to the negotiation meetings. And to further highlight the AMIEU support of the Agreement Jason Roe requested the new rates and 9.5 hour roster commence on the first day back in January 2020.
• The AMIEU representative Wei Yao was on plant today and told us that the employees are loving the new roster, the new rates as well as the opportunity of doing more overtime to earn more money.”
[22] On 6 March 2020 the AMIEU submitted that:
“Better Off Overall Test (BOOT)
5. We continue to rely upon the matters raised in our F18 to this application.
6. Pursuant to section 193(1) of the Act, the better off overall test will be passed where the Commission is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, would be better off overall if the agreement, rather than the relevant modern award, applied to the employee. Whether or not the better off overall test is passed depends on a factual assessment of the standard imposed by s.193: United Firefighters' Union of Australia v Country Fire Authority [2015] FCAFC 1, [260].
7. In the matters of Duncan Hart v Coles Supermarkets Australia Pty Ltd and Bi-Lo Pty Limited T/A Coles and Bi Lo (C2015/4999) and Australasian Meat Industry Employees Union, The v Coles Supermarkets Australia Pty Ltd and Bi-Lo Pty Limited T/A Coles and Bi Lo (C2015/6084) [2016] FWCFB 2887, the Full Bench of the Fair Work Commission stated:
[6]…It is well established that the test requires the identification of terms which are more beneficial for an employee, terms which are less beneficial for an employee, and an overall assessment of whether an employee would be better off under the agreement.1
…
[15] It should not be assumed that all employees suffer a disadvantage or that disadvantages are limited to these examples. However the application of the BOOT requires satisfaction, as at the test time, that each Award covered employee and each prospective employee would be better off overall under the Agreement.
8. The test requires ‘an assessment of the overall benefit to an employee employed under an enterprise agreement as compared to the relevant award’: National Tertiary Education Industry Union v University of New South Wales [2011] FWAFB 5163, [46]. The Commission is required to be satisfied that, weighing the agreement provisions as a whole against the award provisions, an employee is better off overall: National Tertiary Education Industry Union v University of New South Wales [2011] FWAFB 5163, [47]. It is necessary that what is considered in the weighing process is, in fact, a benefit or a detriment: see CFMEU v FWA [2011] FCA 719, [91]. A provision must, in fact, be advantageous or disadvantageous before it can be said to be relevant to the test: Solar Systems Pty Ltd [2012] FWAFB 6397, [15].
9. In Armacell Australia Pty Ltd and others [2010] FWAFB 9985 (Armacell) a Full Bench of the Commission described the test as requiring ‘an overall assessment’ which ‘requires the identification of terms which are more beneficial for an employee, terms which are less beneficial and an overall assessment of whether an employee would be better off under the agreement’: at [41].
10. In Teys Australia Beenleigh Pty Ltd v Australasian Meat Industry Employees Union (No 2) [2016] FCA 2 (5 January 2016) Bromberg J observed that while the test time ‘is the time for application of the approval of the agreement (s 193(6)), the Commission is clearly required to engage in a forward-looking analysis, in that the question is whether the relevant employees ‘would be’ better off if covered by the agreement rather than the modern award’: at [73].
11. Bromberg J also observed that:
a. the Commission’s role in relation to the scrutiny of agreements as at the time of approval is immense: at [74];
b. the legislature has invested in the Commission great responsibility in ensuring that the process of making the agreement has been satisfactory and that its content complies with the detailed requirements of the Act: at [74]; and
c. in many cases, including whether the employees would be better off overall and whether “reasonable steps” were taken in relation to the provision of information to employees, the process of assessment calls for value judgment: at [74].
12. The effect that terms and conditions contained in an agreement may have on the actions of the employees or the employer is not relevant to the assessment of whether an agreement passes the test: Bupa Care Services Pty Ltd [2010] FWAFB 2762, [25].
13. The AMIEU respectfully submits that the Agreement does not satisfy the BOOT for the primary reason that the agreement rates are ‘rolled up rates’ that encompass penalty rates for hours that under the award would be either outside the span of hours and therefore overtime, work that under the award would be shift work, and various allowances, and that the rates in the agreement are not sufficiently buffered to provide sufficient compensation.
14. A further complicating factor when assessing the BOOT is that the classifications within the agreement do not necessarily line up with the same work when performed under the award.
15. The Agreement also seeks to utilise broad unpaid stand down provisions, while categorising workers as permanent weekly hire, with insufficient compensation to various classes of workers for such flexibility.
Classification Matching.
16. Our modelling, which is attached to this submission as “U.1”, takes various classifications from Appendix 2 of the agreement and compares them to the award classifications for the same work. Many classes do not line up simply by increasing the classification by 1 level in the award. Some work which is grade 2 under the agreement lines up with MI4 of the award, some at grade 4 of the agreement line up at MI6 of the award etc.
17. We respectfully submit that these factors affect the utility of the companies modelling which on most occasions relies upon a generic ‘bump’ of one level within the award to compare each agreement grade.
Rolled Up Rates.
18. U.1 also then factors in loadings for the performance of shift work. Shift work is performed at the plant.
19. Employees falling within grades 1 – 3 of the agreement are substantially disadvantaged by the agreement rates if performing shift work, as opposed to what they would be paid under the award.
20. We respectfully submit that a monetary undertaking by the employer is the equivalent to a renegotiation of rates of pay and therefore a substantial change to the agreement and not capable of being accepted as an undertaking.
…
Other Disadvantages
40. We continue to rely on all of our submissions to date, including those of the 6th February, and note the following additional disadvantages of the agreement:
• Span of ordinary hours clause 7 provides for a 23 hour span of 4am to 3am on six days of the week.
• Clause 8 no 10min paid break as per the award.
• Clause 8 no payment for working through a meal break as per the award.
• Cleaners who would be paid a shift allowance under the award (as per clause 33.9 (f) of the award) have not been considered in any undertakings.
• Wages and allowances are only increased in the first year which will likely trigger s.206 of the Act later on as the award rates increase.
• Junior wages are below the award on a number of different pay rates and when on shift.
• Clause 20.4 public holiday not worked should be paid, we submit that the company undertakings have not addressed the concerns raised by the Commission.
• Clause 31 allows for unpaid suspensions.
• Clause 31 also allows the consultative committee to down grade employees despite the agreement providing in Appendix 2 of the agreement ‘All employees shall be advised on commencement of their employment what grade they have been appointed, and where relevant the requirements for promotion to a higher grade’
• Mandatory provisions have been exempted from the agreement including casual conversion and domestic violence leave.
Summary
41. In the AMIEU’s respectful submission, the Agreement cannot be approved for the reasons outlined in these submissions.
42. The rolled up rates leave some workers disadvantaged monetarily as compared to the award.
43. The undertakings required to rectify the defects would result in substantive changes to the agreement.
44. The undertakings provided by the company to date do not adequately address the disadvantages of the agreement.
45. The AMIEU is of the respectful view that the rates of pay do not compensate workers adequately for those flexibilities and conditions gained by the employer via the Agreement.
46. In the absence of surety that all workers will be better off under the agreement and our concerns about undertakings, the Commission should not approve the agreement.”
Consideration – BOOT
[23] As many decisions have held and as the Commission has made clear, 9 the better off overall test considers the terms that are more beneficial and less beneficial to employees in an agreement, compared to the terms in the relevant modern award.
[24] The better off overall test requires the identification of agreement terms which are more beneficial, and the terms which are less beneficial, and then an overall assessment is made as to whether employees would be better off under the agreement than under the relevant award. 10
[25] The better off overall test is not applied as a line by line analysis. It is a global test requiring consideration of advantages and disadvantages to award covered employees and prospective award covered employees. The application of the better off overall test therefore requires the identification of the terms of an Agreement which are more beneficial to employees when compared to the relevant modern award, and the terms of an Agreement which are less beneficial and then an overall assessment of whether an employee would be better off under the Agreement. 11
[26] The Commission must be satisfied that each award covered employee and each prospective award covered employee would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee. 12
[27] The question posed by the better off overall test is not whether each employee is better off under the Epona Agreement compared to their particular existing working arrangements but whether they are better off overall if the Epona Agreement applied rather than the relevant modern award. 13
[28] An agreement may pass the test even if some award benefits have been reduced as long as, overall, those reductions are more than offset by the benefits of the agreement. 14
[29] Assessing the Epona Agreement against the reference instrument I am satisfied that the rates of pay are:
a) 12.59% to 44.55% above the Award for employees paid the full adult rates; and
b) 16.54% to 32.46% above the Award for juniors.
[30] However, rates of pay are only one element to be considered in the BOOT analysis.
[31] I also observe (as I have above) that some of the BOOT issues identified in the Checklist have been resolved by undertakings, including:
a) Pieceworkers/daily hire employees paid below Award rates;
b) Junior rates falling below Award rates;
c) Missing rates of pay for junior employees 19 years and older;
d) Absence of casual conversion entitlement; and
e) Stand down.
[32] It is also to be noted that the employees to be covered by the Epona Agreement will now have access to arbitration in the Commission. This is a more beneficial term than the consent arbitration provided for in the MI Award.
[33] While accepting that the BOOT is not a line by line analysis, there remain two BOOT issues that are of continuing concern, principally:
a) The increased span of hours: The span of hours in the Epona Agreement is 4.00 am – 3.00 am, Monday to Saturday. This contrasts with the Award at clause 31(f) which indicates that the span of ordinary hours would be from 6.00 am – 8.00 pm Monday to Saturday; and
b) Weekend penalties/shift penalties: The Epona Agreement is silent in relation to weekend penalties and shift work. It appears that employees can work ordinary hours on weekends and work shift work and therefore it would appear that these penalties are applicable to employees covered by the Agreement. Appendix 2 of the Epona Agreement appears to indicate that the rates at Table 1 and Table 2 are inclusive of all penalties and allowances not provided for in the Agreement.
[34] Relevantly under the Award entitlements include the following:
i. Clause 31.2(f)(iii) of the Award provides that ordinary hours worked on Saturday and Sunday are paid at 150% and 200% respectively.
ii. Clause 33.9 of the Award provides that an afternoon shift is paid at 115%, a night shift is paid at 125%, a permanent night shift is paid at 130%, and less than 5 consecutive afternoon or night shifts is paid at 150% for the first 3 hours and 200% thereafter.
[35] In relation to the increased span of hours, both the Epona Agreement and the Award provide that overtime applies outside the spread of hours. However, given that the spread under the Epona Agreement is from 4am-3am, it appears that the overtime trigger under the Epona Agreement is far more restrictive than the Award. For this reason I am not satisfied that the rates of pay are high enough to ensure that employees will be better off overall when compared with the MI Award.
[36] In its 28 February 2020 version of undertakings the Applicant provided an undertaking to the effect that an employee whose ordinary hours finish after midnight shall be paid an additional $30 for that shift. While this is an improvement, having regard to what overtime rates would otherwise apply under the MI Award’s reduced span of hours, the $30 flat rate payment is not enough to satisfy me that the employees are BOO.
[37] In relation to weekend work Epona provided submissions to the effect that work done on Saturday is paid at 150% for the first 3 hours and 200% thereafter, and work done on Sundays is paid at 200%. However, Epona did not provide an undertaking to this effect. It may be that Epona considers undertaking A to encompass the submission, but that is not how undertaking A is drafted. Presently, undertaking A only deals with the NES. Undertaking A does not incorporate the MI Award to the extent of any inconsistency.
[38] In relation to shift work Epona provided submissions to the effect that it does not and will not employ shift workers. Epona provided an undertaking to the effect that it does not and will not have any intention to work a 7-day roster, or to regularly roster employees to work Sundays or public holidays. However, the MI Award does not restrict the entitlement to shift loadings to 7 day shift workers who work regularly on Sundays and public holidays. Therefore, this undertaking does not preclude employees working shifts which would attract shift loadings under the MI Award. Such employees would not be BOO.
Should Epona be invited to provide further undertakings?
[39] Section 190(2) of the FW Act provides:
“Approval of agreement with undertaking
(2) The FWC may approve the agreement under section 186 if the FWC is satisfied that an undertaking accepted by the FWC under subsection (3) of this section meets the concern.
[40] Consequently, before deciding to dismiss the Application because of the outstanding BOOT issues I should consider whether they can be remedied by further undertakings. That may be the case. But, then it would become necessary to consider whether a sixth attempt at providing undertakings (even if those undertakings cured all outstanding issues) would result in substantial changes to the agreement.
[41] This is because s.190(3) provides:
“The FWC may only accept a written undertaking from one or more employers covered by the agreement if the FWC is satisfied that the effect of accepting the undertaking is not likely to:
(a) cause financial detriment to any employee covered by the agreement; or
(b) result in substantial changes to the agreement.”
[42] In relation the Fifth Version of the Undertakings I am satisfied the undertakings offered will not cause any financial detriment to any employee that will be covered by the Agreement. However, that is only half of the statutory test.
[43] That is to say, the Commission cannot accept an undertaking unless the effect of accepting it is not likely to result in ‘substantial changes’ to the agreement. This suggests that minor changes to an agreement resulting from an undertaking are permissible, but nothing more.15
[44] In the decision Re Hyatt Ground Engineering Pty Ltd 16the Commission said:
[30] The sense in which the word ‘substantial’ appears in s.190(3)(b) is in my view to describe changes to the agreement as result of undertakings offered where the changes are not ‘trivial or minimal’ or ‘ephemeral or nominal’.
[31] In this sense ‘substantial’ is not a quantitative term but a qualitative term. A number of trivial or minimal changes to the agreement may not constitute a substantial change to the agreement. However even a single change to a provision of the agreement where the change was not trivial or minimal would constitute a substantial change to the agreement.
[45] As can be observed from the history of this matter Epona has, on 5 separate occasions, offered undertakings. The Fifth Version of Undertakings was filed on 13 March 2020.
[46] The AMIEU submits that the undertakings are so wide ranging that they do in fact create substantial changes to the Agreement.
[47] While accepting that the Commission can accept written undertakings as provided for by section 190(3), the process by which they are received should not involve the Commission, in effect, becoming a bargaining party. It is not the role of the Commission to substitute itself for the role of the bargaining representatives. It is not the role of the Commission to “get the agreement across the line”.
[48] In CEPU v Main People 17 a Full Bench of the Commission allowed an appeal against approval of an agreement on the basis that undertakings offered resulted in a significant change to the agreement contrary to s.190(3(b). In doing so they observed, at [34]:
“It may be accepted that an undertaking which clarifies an ambiguous provision of an agreement for which approval is sought in accordance with the intention of the parties will not be likely to cause a significant change in that agreement. However, this was not a case of ambiguity.”
[49] In that case it was the coverage of the agreement which was amended by the undertaking. The undertakings in this matter do not go to that issue.
[50] The question for the Commission in the present matter is whether the changes in the Agreement, that would be caused by the Fifth Version of Undertakings (or any future additional undertakings), are substantial.
[51] It does not matter if the changes are improvements: one would expect that undertakings would almost invariably involve improvements since they are directed at addressing concerns about whether an agreement passes the BOOT. It is certainly the case that the Fifth Version of Undertakings have improved the Agreement. One might be entitled to then assume that if the employees voted up the Epona Agreement without the Fifth Version of the Undertakings, they would certainly have voted it up if the Epona Agreement was offered to them with all the improvements contained in the Fifth Version of the Undertakings. But whether employees would have supported the Epona Agreement with the undertakings that have been offered by the employer is not the test.
[52] Noting that substantial is the corollary of insubstantial, the question to be asked is the same as “are the changes not insubstantial”. 18
[53] Having considered the content of the undertakings (as set out in the Fifth Version of Undertakings) in their entirety 19 it is clear that, taken as a whole, they would result in substantial changes to the Agreement. The undertakings do not merely propose minor alterations to the Epona Agreement or clarify the operation of the Agreement. They involve changes to the availability of 7 day rosters and the use of daily hire workers, the availability of arbitration, wage rates for some juniors, the availability of casual conversion, just to highlight some of the changes.
[54] I have concluded that the (at least 15) changes canvassed by the Firth Version of the Undertakings would, if accepted result in substantial changes to the Agreement. It is not so much the number of undertakings, but the content of them that is relevant.
[55] It necessarily follows then that to invite Epona to proffer a sixth version of undertakings would exacerbate the “substantial change to the Agreement” problem. It would therefore be futile to invite Epona to do so.
Conclusion
[56] For the reasons above I am not satisfied that the Epona Agreement passes the BOOT (s.186(2)(d)).
[57] Further, while it might be possible for Epona to meet the concerns about the BOOT (by way for further undertakings), I am not satisfied that, in accepting further undertakings, it would not result in substantial changes to the Epona Agreement (s.190(3)(c)).
[58] The application for approval of the Epona Agreement is dismissed. An order [PR717941] to that effect will be issued concurrently with this decision.
COMMISSIONER
Appearances:
Mr M Dorahy for the Applicant.
Mr M O’Loughlin for the AMIEU.
Hearing Details:
2020.
10 March.
Sydney via telephone.
Printed by authority of the Commonwealth Government Printer
<PR717934>
1 Superseded by undertakings dated 13 March 2020.
2 Superseded by undertakings dated 13 March 2020.
3 Superseded by undertakings dated 13 March 2020.
4 Superseded by undertakings dated 13 March 2020.
5 [2015] FWCA 5890.
6 Undertaking a. filed on 23 January 2020 dealt with the NES. It said nothing about overtime entitlements and penalty rates.
7 It seems the Epona moved to the new roster/span of hours under the Agreement in advance of the Agreement being approved. This may give rise to compliance issues.
8 Undertaking A deals with the NES. It does not incorporate the terms of the MI Award to the extend of any inconsistency. This may have been intended by the undertaking, that that is not how it has been drafted.
9 Fair Work Commission, Enterprise Agreements Benchbook: Better off Overall Test (BOOT) Re Armacell Australia Pty Ltd [2010] FWAFB 9985 (Giudice J, Acton SDP, Lewin C, 24 December 2010) at para. 41, [(2010) 202 IR 38].
11 Ibid.
12 Hart v Coles Supermarkets Australia Pty Ltd and Bi-Lo Pty Limited T/A Coles and Bi Lo [2016] FWCFB 2887 (Watson VP, Kovacic DP, Roe C, 31 May 2016) at para. 6.
13 Re Australia Western Railroad Pty Ltd T/A ARG – A QR Company [2011] FWAA 8555 (Williams C, 14 December 2011) at para. 5.
14 Ibid para 8.
15 Fair Work Act 2009 (Cth) s.190(3)(b).
16 Hyatt Ground Engineering Pty Ltd [2011] FWA 3527 (Ryan C, 3 June 2011).
17 (2015) FWCFB 4467.
18 See UFU v CFA (2015) 228 FR 497 where the two phrases are used interchangeably throughout in an industrial and constitutional context.
19 Re Kore Construction Pty Ltd[2014] FWC 1955 (Gostencnik DP, 24 March 2014.
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