Gasp Jeans Australia Pty Ltd
[2011] FWA 1091
•22 FEBRUARY 2011
[2011] FWA 1091 |
|
DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
Gasp Jeans Australia Pty Ltd
(AG2011/5098)
COMMISSIONER GOOLEY | MELBOURNE, 22 FEBRUARY 2011 |
Gasp Jeans Australia Pty Ltd Employee Enterprise Agreement 2010.
[1] Gasp Jeans Australia Pty Ltd (Gasp Jeans) applied on 10 January 2011 pursuant to section 185 of the Fair Work Act 2009 (FW Act) for approval of a single enterprise agreement (the Agreement).
[2] On 8 February 2011 I wrote to Mr Eddie Yilmaz, the General Manager of Gasp Jeans, outlining a number of concerns about the Agreement and advising that I would list the matter for hearing to enable him to make submissions as to why the Agreement should be approved.
[3] As the Agreement provided for “preferred hours” I drew his attention to the decision of the Full Bench in Bupa Care Services Pty Ltd 1. Further, as the Agreement provided for employees to be paid a loaded rate which enabled employees to forgo their entitlement to paid annual leave and personal leave, I drew his attention to the decision of Commissioner Thatcher in Or-Tak Pty Ltd.2
[4] On 8 February 2011 Mr Yilmaz responded and asked about the process for making the necessary amendments. I advised Mr Yilmaz that I was required to determine if the Agreement passed the better off overall test. I further advised that if the Agreement did not pass the better off overall test then Fair Work Australia could accept undertakings provided the undertakings did not result in substantial changes to the Agreement or cause financial detriment to the employees. I again advised that I would list the matter for hearing. Mr Yilmaz asked if a determination could be made in his absence as he could not, for personal reasons, attend the hearing. I advised Mr Yilmaz that the hearing could be held at a time convenient to him but he asked that the matter be determined in his absence.
The Agreement
[5] Gasp Jeans is a retail business and hence the relevant award for the purposes of the better off overall test is the General Retail Industry Award 2010 (the Award). 3
[6] The Statutory Declaration declared by Mr Yilmaz and filed with the application advised that there were no less beneficial terms and no more beneficial terms than provided in the Award.
[7] The Agreement in fact provides for a significant number of terms which are less beneficial than provided in the Award.
[8] The Agreement provides for full time employees to work an average of 38 hours per week averaged over 12 months.
[9] Part time employees under the Agreement work not less than four hours per week and not more than an average of 38 hours per week averaged over a 12 month period.
[10] Casual employees have no minimum call and will not work more than 38 hours per week averaged over a 12 month period.
[11] The Agreement provides at Schedule A Part 1 for a rate of pay for all hours worked as follows:
Sales Assistant Level 1 | $18.40 |
Assistant Manager | $18.85 |
Juniors Under 16 | $8.29 |
16 years | $9.20 |
17 years | $11.05 |
18 years | $12.88 |
19 years | $14.72 |
20 years | $16.55 |
[12] In addition, the Agreement provides that permanent employees can elect to be paid a loaded rate and the employee is not entitled to paid annual leave and paid personal leave. The Agreement at Schedule A Part 2 provides that the rate of pay for all hours worked is then as follows:
Sales Assistant Level 1 | $19.67 |
Assistant Manager | $20.14 |
Juniors Under 16 | $8.86 |
16 years | $9.83 |
17 years | $11.81 |
18 years | $13.77 |
19 years | $15.74 |
20 years | $17.69 |
[13] Further the Agreement provides for employees to work preferred hours. Annexure A provides that the employee can indicate the days of the week and the times of the day they would prefer to work. The employee can terminate this arrangement by giving one week’s notice in writing.
[14] If an employee is rostered to work her or his preferred hours Schedule B Part 1 provides that she or he is paid the following rates for all hours worked:
Sales Assistant Level 1 | $16.47 |
Assistant Manager | $16.87 |
Juniors Under 16 | $7.42 |
16 years | $8.24 |
17 years | $9.89 |
18 years | $11.53 |
19 years | $13.18 |
20 years | $14.82 |
[15] In addition if an employee works preferred hours and elects to forgo her or his entitlement to annual leave and paid personal leave Schedule B Part 2 provides that the rate of pay for all hours worked is as follows:
Sales Assistant Level 1 | $17.74 |
Assistant Manager | 18.16 |
Juniors Under 16 | $7.99 |
16 years | $8.87 |
17 years | $10.65 |
18 years | $12.42 |
19 years | $14.20 |
20 years | $15.96 |
[16] The rate of pay for a retail worker grade 1 in the Award is $16.47. It is not possible to determine on the information provided if the Assistant Manager would be classified as a Retail Worker Grade 3 or Retail Worker Grade 4.
[17] The Agreement does not provide for any casual loading. It appears that casual employees are paid the same rate as weekly employees. Even if casual employees are paid the rates in Part 2 of Schedule A or B the rates are still less than the casual rates in the Award.
[18] While the Agreement provides that employees other than those on preferred hours agreements can be required to work additional hours there is no provision in the Agreement for the payment of overtime.
[19] The Agreement provides that employees must comply with all written Gasp Jeans policies.
[20] The Agreement does not provide for night penalties, Saturday and Sunday penalties or penalties for working on a public holiday.
[21] The Agreement does not provide for notice of change of roster, rest breaks, higher duties, breaks between work, any allowances or accident make up pay.
[22] There is no annual leave loading provided in the Agreement.
[23] The dispute resolution procedure does not provide for the settlement of disputes in relation to the National Employment Standards (NES) and provides that disputes may be referred to arbitration within the Magistrate’s Court.
[24] The Agreement permits Gasp Jeans to search an employee’s personal property including the employee’s car without the employee’s consent and permits deductions from wages without the employee’s consent.
Better off overall test
[25] The employer provided no evidence to support the all in rate proposed in the Agreement. A retail worker grade 1 under the Agreement is paid $1.93 an hour in compensation for all penalties and allowances in the Award. I am not satisfied that the rates in the Agreement provide compensation for employees who work hours when penalties are payable.
[26] The Agreement provides that employees who work preferred hours are paid at the minimum rate payable under the Award. In Bupa Care Services the Full Bench concluded that a term of an agreement that permitted an employee to work preferred hours without the payment of overtime meant that the Agreement did not satisfy the no disadvantage test as it applied at that time. The Award does not permit employees to forgo their entitlements to penalties for working outside of ordinary hours or on Saturday, Sunday and public holidays. Employees who work on the preferred hours rate in the Agreement will be paid less than employees working those same hours under the Award.
[27] Casual employees are worse off under the Agreement as they do not get paid a casual loading and do not have a minimum call. Further under the Award casual employees are paid a loading of 100% for working on Sunday. No such loading exists under the Agreement.
[28] Permanent employees have lesser entitlements under the Agreement in that their hours are averaged over 12 months whereas under the Award full time employees hours are rostered over a maximum of four weeks. Part time employees under the Award have agreed hours of work which can only be varied by agreement in writing. A part time employee has a minimum call of three hours and any hours in excess of the agreed hours are overtime.
[29] As set out above there are other terms in the Agreement which provide for less beneficial terms than provided for in the Award.
[30] Fair Work Australia is required to consider whether each award covered employee or prospective award covered employee would be better off under the Agreement. In doing so 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, then Fair Work Australia 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.
[31] Given the less beneficial terms and the lack of any more beneficial terms in the Agreement, I find that the Agreement does not pass the better off overall test.
The National Employment Standards
[32] The Agreement provides for probationary employees to be terminated without notice. This contravenes the NES.
[33] The Agreement provides for employees to have 40 hours personal leave in the first year of employment and 76 hours in each subsequent year of service. The provision for personal leave in the first year of service contravenes the NES.
[34] Annual leave under the Agreement is available only after the completion of one year’s service. The NES provides that an employee is entitled to annual leave for each year of service. In other words in the first year of service the employee works 48 weeks and has four weeks annual leave. The Agreement provision contravenes the NES.
[35] The Agreement provides for employees to be paid a loading in lieu of annual leave and personal leave. In Draper Cleaning Services Pty Ltd 4 the agreement provided for a loading as payment in advance for annual leave, annual leave loading, personal leave and public holiday ordinary hours. Deputy President Bartel found as follows:
“[22] To the extent that I am required to make a determination as to whether the relevant terms of the Agreement reflect terms that have the same or substantially the same effect as the provisions of the NES, I conclude that they do not. In Or-Tak Pty Ltd and Lida ACMI Pty Ltd the issue of a loaded rate of pay in lieu of payment for annual leave was considered. In that matter, Commissioner Thatcher stated that:
“Further, I do not accept that, for the purposes of s.55(5), such loading of minimum rates of pay and an entitlement to unpaid leave has the same effect, or substantially the same effect, as the NES entitlement of paid annual leave. Whilst the incorporation of an amount equivalent to the payment for annual leave into the rate of pay may compensate employees financially for the loss of pay at the time of such leave, it may discourage them from actually taking leave as they will receive no income for the period of leave at the relevant time. Such financial compensation does not adequately recognise the importance of paid annual leave in the NES, namely for employees to have a financial incentive to take such leave for the purposes of rest and recreation.”
[23] I respectfully concur with the Commissioner’s reasoning that the absence of payment of wages for the period of the leave is a significant disincentive to the taking of the annual leave. While the Agreement provides that permanent employees must take at least half of their Annual Leave accrual each year there is a serious concern that low paid employees will not be in a financial position to avail themselves of the full entitlement.
[24] Having determined that the provisions of the Agreement that specify annual leave without pay do not meet the requirements of ss.55 (4) or 55(5) of the Act, I conclude that such provisions contravene the NES. I have reached the same conclusion in relation to the provision in the Agreement that provides no payment for public holidays.” 5
[36] I adopt the approach of Deputy President Bartel and find that the term in the Agreement which provides6 for a loaded rate in lieu of annual leave and personal leave contravenes the NES.
Exceptional Circumstances
[37] Mr Yilmaz did not depose in the Statutory Declaration to any exceptional circumstances that would cause the Agreement to be approved notwithstanding the failure of the Agreement to satisfy the better off overall test.
Undertakings
[38] Section 190 of the FW Act provides that if Fair Work Australia forms the view that the Agreement does not meet the requirements set out in section 186, and in this case sections 186(2) (c) and (d), Fair Work Australia may accept written undertakings provided the undertakings are not likely to cause financial detriment to any employee covered by the Agreement or would not result in substantial changes to the Agreement.
[39] Even had Mr Yilmaz wished to provide undertakings, the undertakings required to ensure the Agreement passed the better off overall test would have resulted in substantial changes to the Agreement.
[40] In those circumstances and in light of Mr Yilmaz’s request that the matter be determined without a hearing I have determined not to provide Mr Yilmaz with a further opportunity to provide undertakings.
[41] The application for approval of the Agreement is therefore dismissed.
COMMISSIONER
1 [2010] FWAFB 2762
2 [2010] FWA 5235
3 MA000004
4 [2010] FWA 9520
5 Ibid at [22]-[24]
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