Gina Louise Lawrence
[2023] FWCA 1275
•4 MAY 2023
| [2023] FWCA 1275 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.225—Enterprise agreement
Gina Louise Lawrence
(AG2023/602)
BALPAR PTY LTD EMPLOYEE COLLECTIVE AGREEMENT 2007
| Hospitality industry | |
| DEPUTY PRESIDENT CROSS | SYDNEY, 4 MAY 2023 |
Application for termination of the Balpar Pty Ltd Employee Collective Agreement 2007
Introduction
Ms Gina Louise Lawrence and Mr Jordan Thomas Mackinley Kent Ryan (the Applicants) made an application (the Application) to the Fair Work Commission to terminate the Balpar Pty Ltd Employee Collective Agreement 2007 (the Agreement) after the nominal expiry date of the Agreement. The Agreement expired in 2012.
The Agreement covers Balpar Pty Ltd (the Employer) and employees covered by the Agreement.
Pursuant to Item 16 of Schedule 3 of the Transitional Provisions and Consequential Amendments Act 2009 (The Transitional Act), Subdivision D of Division 7 of Part 2-4 of the Fair Work Act 2009 (the 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 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 Hospitality Industry (General) Award 2020 (the Award) will apply.
The Application
The Agreement was made as an employer collective agreement under s.327 of the Workplace Relations Act 1996 (the WR Act) and had a commencement date in 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.
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 employees covered by the Agreement.
In the Application, the Applicants submitted the Agreement undermined or reduced employee entitlements. Particular examples given by the Applicants were:
(a) Most if not all employees work less desirable hours under the Agreement than they would under the Award. They work late night/early morning hours or weekends/public holidays for no additional compensation.
(b) The Agreement provides a flat base rate that is higher than the Award, however, the increase from the Award minimum is unlikely to prove better off overall given the nature of the hours worked.
(c) The Award standard for breaks appear better than the Agreement. The Award’s break conditions are superior in the extent of situations they cover, more flexible given the nature of the industry and include incentives for the Employer to provide them as outlined.
(d) While the Agreement outlines that a 30-minute unpaid meal break be provided only after 5 hours of consecutive work (Clause 20.1) should an employee work a shift longer than 5 hours, and a paid 20-minute rest break should the employee be required to work 5 additional hours after that meal break (Clause 20.2), the Award outlines that an unpaid meal break may occur anywhere after 2 hours and no later than 6 hours, providing more flexibility to accommodate meal breaks during a suitable time in an employee’s shift.
The Applicant also submitted that terminating the Agreement would result in a level playing field among employers in the hospitality industry in the local area, as most other hospitality venues in in the area operate under the Award, at least with regards to penalty rates and morning/night loading.
The matter was dealt with by the filing of submissions and evidence pursuant to directions issued by the Commission, and 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. On 14 March 2033, the following directions were issued by the Commission:
1. Jordan Thomas Mackinley Kent Ryan and Gina Louise Lawrence (the Applicants) are to notify the employees and/or organisations covered by the Balpar Pty Ltd Employee Collective Agreement 2007 (the Agreement) via email, of Direction 2 below, by 5:00pm 17 March 2023.
2. Balpar Pty Ltd (the employer) as well as any employees and/or organisations covered by the Agreement, who wish to make any submission in relation to the Applicants’ application to terminate the Agreement pursuant to s.225 of the Fair Work Act 2009 (Cth) (the Application) are to email [email protected] with their submissions, by 4:00pm 24 March 2023.
3. Contemporaneously with sending the above email to employees, the Applicant must attach, or otherwise evidence communication of, the documents relevant to the Application, including but not limited to the Application documents, and the Agreement.
The views of the employees
There were 14 employees (out of an apparent total of 111 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 for all employees. After reviewing the list of employees, I am satisfied that each individual is an employee of the Employer.
Of the 14 employees, four expressed support for termination, five were generally neutral, and six were against termination. The level of detail of their submissions varied greatly.
The views of the Employer
The submission of the Employer was succinct, adopting the contents of a statement of Mr Brischetto the co-owner of the Hotel, and was as follows:
1. The ECA is an agreement based transitional instrument which by virtue of changes to the Fair Work Act 2009 which commenced in December 2022, will expire automatically on 7 December 2023 (Sunset Date). In short, the ECA is what is colloquially called a ‘Zombie Agreement’ and will terminate on the Sunset Date unless terminated earlier by the FWC.
2. The ECA will terminate on the Sunset Date. The Respondent submits that there are real and genuine advantages for the casual employees at the Hotel in preserving the ECA for as long as possible and ideally until the Sunset Date.
3. We are instructed the Respondent operates weekly pay period commencing on a Monday and taking into account section 227 of the Fair Work Act 2009 and section 36 of the Acts Interpretation Act 1901, it is submitted that the day specified in any decision to terminate the agreement be a Sunday. In the alternative, the Respondent requests that the ECA remain in operation for a further period of 4 months (commencing from Sunday 2 April 2023) and terminating on Sunday 6 August 2023.
4. The Respondent relies of the attached Statement of Mr Michael Brischetto in support of the submissions. Mr Brischetto is the licensee and co-owner of the Hotel.
Regarding the issues raised in the Application, the evidence of Mr Brischetto was as follows:
Loss of Casual Shifts
10.I have undertaken a revenue/wage ratio review for work on Sundays over a 12 month period in which I compared the wages as percentage of revenue under ECA and the Award. A copy of the review is attached as annexure MB-1.
11.Under the ECA, the (average) wages as a percentage of revenue is 34.81%. Under the Award, that ratio will increase to (an average) 48.73% for Sunday work. In my view, this is financially unsustainable and changes will need to be made to rostering arrangements particularly in respect of casuals. A necessary consequence of changing from the ECA to the Award will be that the amount of shifts offered to casuals on weekends and public holidays will reduce significantly. The preservation of the ECA until the Sunset Date will likely preserve weekend shifts for the predominantly casual workforce at the Hotel. This will not be a long term solution but will at least maintain a beneficial status quo for as long as possible.
12.Similar issues potentially arise for casuals in relation to the Forward Bookings the majority of which are on a Saturday or Sunday. The Hotel has accepted these bookings on a fixed cost basis based on its anticipated operating costs including wages costs under the ECA (up to 7 December 2023). The Hotel had assumed that these costs would be ‘locked in’ until the Sunset Date. If the ECA is terminated prior to the Sunset Date, the revenue/wages ratio for weekend work will increase on the basis outline in paragraph 7 above. As a consequence, the wages increase will need to be absorbed by the Hotel and costs savings achieved elsewhere. Regrettably, this is likely to result in a loss of shifts for casual employees on the weekend. Again, this will not be a long term solution but will at least maintain a beneficial status quo for as long as possible.
Worse Off
13.In preparing this response, I Selected a sample of 7 employees from various departments and modelled what their pay would have been if they had worked last week’s roster under the Award. All of the employees in the sample were causals except one who was permanent part time. Of the 7 employees, 4 were worse off. The pay reductions ranged from $5.94 to $122.24. One of the Applicants (Jordan Ryan) would have received less pay. The pay increases for the casual employees were reliant on them continuing to be offered weekend shifts which for the reasons stated above, is unlikely to occur when the Award commences.
The Applicants’ Reply
The Applicant’s submitted that, relying on comments allegedly made by the Employer, most employees would be moved to part-time or full-time contracts if the Agreement was terminated. The calculations at [13] of Mr Brischetto’s statement do not calculate the position of the example employees as part-time or full-time employees.
The Applicants further submitted that the Employer submission does not address the concerns of lack of overtime payment for salary employees or the competitive advantage the Employer holds over other local businesses (which either close or pay penalty rates on public holidays).
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 below what would otherwise apply under the Award.
The Employer’s calculations and submissions regarding the effect on employees are based on a very limited sample, and an assumption that the subject employees will remain casuals.
The Employer’s contention that it will be negatively impacted by bookings 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. Pursuant to the provisions of the Transitional Act (as recently amended), the Agreement would automatically terminate on 7 December 2023 (the Sunset Date).
Taking into account all of the submissions received, I am satisfied that it is not contrary to the public interest to terminate the Agreement prior to the Sunset Date.
Conclusion
For the reasons set out above, I have decided to terminate the Agreement. However, 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 have decided to terminate the Agreement with effect from midnight on Sunday 6 August 2023.
DEPUTY PRESIDENT
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