Freshcare Harvest Pty Ltd
[2024] FWCFB 192
•27 MARCH 2024
| [2024] FWCFB 192 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 7, Item 30(4) - Application to extend default period for enterprise agreements made during the bridging period
Freshcare Harvest Pty Ltd
(AG2023/4966)
FRESHCARE HARVEST PTY LTD ENTERPRISE AGREEMENT 2009
| Agricultural industry | |
| DEPUTY PRESIDENT GRAYSON | SYDNEY, 27 MARCH 2024 |
Application to extend the default period for Freshcare Harvest Pty Ltd Enterprise Agreement 2009
On 5 December 2023, Freshcare Harvest Pty Ltd (the Applicant) made an application under subitem 30(4) of Sch 7 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act) to extend the ’default period’ for the Freshcare Harvest Pty Ltd Enterprise Agreement 2009 (the Agreement). The application seeks to extend the default period until 30 June 2024
The Agreement was made in 2009 in the ‘bridging period’ as defined in the Transitional Act. It is a ‘zombie agreement’ for the purposes of item 30 of Sch 7 to that Act and it will cease to operate on 6 December 2023 unless extended by the Commission.
The main aspects of the statutory framework for applications for the extension of zombie agreements were detailed in the Full Bench decision in Suncoast Scaffold Pty Ltd.[1] The Full Bench there dealt with an application to extend a ‘WR Act agreement’ under item 20A of Sch 3 to the Transitional Act. The terms of item 20A of Sch 3 are relevantly the same as item 30 of Sch 7. The Full Bench’s analysis of those provisions applies equally to item 30 of Sch 7 and it is not necessary to repeat it here.
The application is made in accordance with subitem 30(6)(b) on the grounds that it is reasonable in the circumstances to do so.
The Applicant’s Case
The Applicant provided a statement from David Ost, Director, which provides the following:
The Applicant is an agricultural and farming business.
The Applicant is in the process of starting bargaining for a replacement agreement. At the time of filing the Application the Applicant had not yet distributed a Notice of Representational Rights to employees but submitted that it intended to do so shortly.
The size and operations of the Applicant’s business creates a level of complexity in respect to bargaining for the proposed replacement agreement. This is due to the number of pieceworkers and casual employees; the inherently seasonal nature of the Applicant’s business and the different terms and conditions contained in the Horticulture Award 2020 (Award).
It will take until June 2024 for the Applicant to complete the consultation and bargaining process. This includes meeting and negotiating with any designated bargaining representatives, issuing the draft version of the proposed replacement agreement, conducting a ballot and then seeking approval in the Fair Work Commission.
The Applicant will also need to comply with the Statement of Principles on Genuine Agreement. It will take a significant period to give each employee a reasonable opportunity to consider the proposed replacement agreement as well as a reasonable opportunity to vote.
The seasonal nature of the Applicant’s business results in a cyclical pattern of work that can vary quite significantly for each employee. This is likely to delay bargaining for the proposed replacement agreement, as relevant employees involved in the enterprise bargaining process may not be performing work currently. Further, it is common for the Applicant’s employees to work varying rosters such that they are performing work on different days and/or at different times.
The Applicant will need to significantly change their payroll system to cater for the expiry of the Agreement and the implementation of the proposed replacement agreement once the bargaining process is completed.
The Applicant’s existing payroll system is only aligned with the Agreement and its current rates of pay. There will need to be considerable adjustment to handle the payroll and administrative changes when the Agreement expires.
If the Agreement is not extended, the Applicant will face a significant challenge and extensive costs to update their payroll system to the Award. This process would then need to be repeated once bargaining for the proposed replacement agreement is finalised.
A direct comparison between the Agreement and the Award would see the Agreement fail the Better Off Overall Test (BOOT). However, the Applicant undertakes to maintain the rates of pay currently afforded to employees which are either equal to, or higher than, the Award, until the approval of the proposed replacement agreement, or the expiry date of any order to extend the default expiry date of the Agreement (whichever is the earlier).
We note that Mr Ost acknowledges that the Applicant has been aware of the legislative changes regarding ‘zombie’ agreements announced in December 2022. However, Mr Ost cites the logistical context outlined above as the reason why the Applicant has not facilitated bargaining and finalised a replacement agreement before 7 December 2023.
Upon request from chambers, the Applicant informed the Commission that it employs approximately five employees.
Consideration
We now turn to consider the Applicant’s arguments in the context of whether it is reasonable in the circumstances to grant an extension of the default period pursuant to subitem (6)(b). In Suncoast Scaffold Pty Ltd the Full Bench described the ‘reasonable’ criterion in item 20A(6)(b) of Sch 3 to the Transitional Act in this way:
Subitem (6)(b) of item 20A constitutes an independent pathway to the grant of an extension. The ‘reasonable’ criterion in the subitem should, in our view, be applied in accordance with the ordinary meaning of the word – that is, ‘agreeable to reason or sound judgment’. Reasonableness must be assessed by reference to the ‘circumstances’ of the case, that is, the relevant matters and conditions accompanying the case. Again, a broad evaluative judgment is required to be made.
While each application will turn on its own circumstances, recent Full Bench decisions provide some guidance as to how the broad evaluation judgment required by subitem 6(b) is to be exercised:
In Peter Frick,[2] the Full Bench considered that the default position of the statute to automatically terminate transitional instruments on 6 December 2023 suggests a policy preference for employees covered by transitional instruments to be regulated by contemporary instruments.[3]
In Kalfresh Management Services Pty Ltd,[4] the Full Bench expressed the view that where an agreement contains inferior and outdated terms and conditions, this weighs strongly against a conclusion that it is reasonable in the circumstances to extend a default period.[5]
In Karpay Pty Ltd,[6] the Full Bench refused to extend an Agreement where it was contended that an extension was required as there was some complexity in introducing software to manage the new arrangements under the relevant modern award. The Full Bench balanced the harshness associated with the employees enduring ongoing inferior penalty rates in the agreement with the inconvenience claimed by the applicant. The failure of the employer to commence bargaining for a replacement agreement was also a factor.
With these considerations in mind, we are not satisfied that it is reasonable to extend the default period for the Agreement. The application seeks an extension of the default period on the basis that the Applicant will need to negotiate a replacement agreement in accordance with the Act, and that this would be logistically difficult for the Applicant as its employees work varying rosters, and some are pieceworkers or casuals, actively performing work at one
stage, but then having periods of limited work. Whilst we consider that these are significant factors in considering whether it is reasonable in the circumstances to extend the Agreement in the circumstances of this application, given that the Applicant only employs five employees, we do not consider this to be a compelling reason to extend the default period. We note that there has been no evidence provided regarding the commencement of bargaining. Further, the Award contains superior conditions to the Agreement, such as higher rates of pay; casuals receive overtime rates; casuals receive an additional loading for work performed between 8:31pm and 4:50am; and provisions for shiftworkers. This weighs against the exercise of the discretion to extend the default period.
We have taken into account that the Applicant is a small business and will need to change its payroll practices. However, the changes to the legislation occurred in December 2022, the Applicant by its own admission knew about these legislative changes , and we find that they have had the opportunity to have prepared their payroll system.
As we are not satisfied that it is reasonable in the circumstances to extend the default period of the Agreement, the application is dismissed.
As our decision is to refuse to extend the default period under subitem 20A(6) of Sch 3 and our decision is made after the sunset date in the Transitional Act, subitem (11)(e) provides that we must extend the default period to the day of this decision or specify a day that is not more than 14 days after the day of this decision. We have decided that, to enable the Applicant to make the necessary administrative arrangements to give effect to the sunsetting of the Agreement, the default period is extended to 10 April 2024.
DEPUTY PRESIDENT
<AE877261 PR772791>
[1] [2023] FWCFB 105 at [3]-[18].
[2] [2023] FWCFB 137.
[3] Ibid, [32].
[4] Kallium Management Services Pty Ltd As Trustee For The Kalium Labour Trust T/A Kalfresh Pty Ltd [2023] FWCFB 217.
[5] Ibid, [14].
[6] [2023] FWCFB 240.
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