Goodearth Hotels Australia (Cairns) Pty Ltd T/A Cairns Colonial Club
[2024] FWCFB 209
•12 APRIL 2024
| [2024] FWCFB 209 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 3, Item 20A(4) - Application to the extend default period for agreement-based transitional instruments
Goodearth Hotels Australia (Cairns) Pty Ltd T/A Cairns Colonial Club
(AG2023/3929)
CAIRNS COLONIAL CLUB RESORT - COLLECTIVE AGREEMENT 2008 - 2013
PALM ROYALE CAIRNS - COLLECTIVE AGREEMENT 2008 – 2013
| Hospitality industry | |
| DEPUTY PRESIDENT WRIGHT | SYDNEY, 12 APRIL 2024 |
Application to extend the default period for Cairns Colonial Club Resort - Collective Agreement 2008 - 2013 and Palm Royale Cairns - Collective Agreement 2008 - 2013
Goodearth Hotels Australia (Cairns) Pty Ltd (Applicant) has applied pursuant to subitem 20A(4) of Sch 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (the Transitional Act), to extend the default period for the Cairns Colonial Club Resort - Collective Agreement 2008 - 2013 (AC313899) and Palm Royale Cairns - Collective Agreement 2008 – 2013 (AC313909) (the Agreements).
The application sought to extend the default periods under item 30 of Schedule 7 to the Transitional Act. Schedule 7 applies to agreements made during the bridging period being the period from 1 July 2009 to 1 January 2010 however the Agreements were not made during the bridging period. The Agreements are collective agreements made under the Workplace Relations Act 1996 (Cth) (WR Act) and approved under that Act by the Workplace Authority. The Agreements are ‘WR Act instruments’ within the meaning of item 2(2) of Sch 3 of the Transitional Act. They are classified by item 2(5)(c)(i) of Sch 3 as collective agreement-based transitional instruments. Consequently, we will consider the applications as if they were made under subitem 20A(4) of Sch 3.
The Agreements were varied by the Commission on 20 April 2011[1]. Those variations were made under subitem 26 of Sch 3 to the Transitional Act to resolve issues related to the National Employment Standards. The variations however did not change the nature of the Agreements being collective agreement-based transitional instruments for the purpose of item 20A.
The applications arise as a result of amendments to the Transitional Act. The Transitional Act was amended by the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (SJBP Act) to provide for the automatic termination of all remaining transitional instruments. The SJBP Act refers to agreements of this kind as ‘zombie agreements.’ The main features of item 20A of Sch 3 are described in detail in the Full Bench decision in Suncoast Scaffold Pty Ltd.[2] Pursuant to items 20A(1) and (2) of Schedule 3 to the Transitional Act, the Agreements would have terminated on 6 December 2023 (the end of the default period) unless extended by the Commission. The Agreements continued to apply pursuant to item 20A(11) pending our decision in this matter.
Under subitem 20A(6) of Sch 3, where an application is made for the default period to be extended, the Commission must grant the application for a period of no more than four years if either (a), subitem (7), (8) or (9) applies and it is otherwise appropriate in the circumstances to do so, or (b), it is reasonable in the circumstances to do so. Subitem (7) applies if bargaining for a replacement agreement is occurring. Subitem (8) relates to individual agreement-based transitional instruments. Subitem (9) applies if the application relates to a collective agreement-based transitional agreement and it is likely that as at the time the application is made the award covered employees, viewed as a group, would be better off overall if the agreement continued to apply than if the relevant modern award applied.
The Applicant is not engaged in bargaining for a replacement agreement so subitem (7) does not apply. The Agreements are collective agreements and subitem (8) does not apply. The Applicant does not contend that the employees would be better off under the agreements than the Award. Although it does make submissions that it is willing to apply the Agreements in a manner which would address any concerns associated with the deficiencies in the Agreements compared to the Award. The test in subitem (9) does not involve a comparison of actual terms and conditions. It is directed at the terms and conditions provided for in the Agreements. We are satisfied that subitem (9) does not apply.
The Applicant seeks to have the Agreements apply on an ongoing basis as the Applicant simply wishes to continue to pay its employees under current arrangements. We take the applications as proceeding on the basis that it is reasonable in the circumstances to extend the default period under subitem 6(b). The application does not specify a time frame for the extensions. The Commission may extend the default periods of the Agreements for no more than four years. We take the application to be that the default periods be extended to 6 December 2027.
Background
The Applicant runs two hospitality establishments in far north Queensland, the Cairns Colonial Club and the Palm Royale Cairns.
The Cairns Colonial Club is a low-rise resort property situated in Cairns. The resort has 345 rooms with 2 restaurants and bars, 3 swimming pools, and a conference centre. The resort also has an onsite laundry that manages all the inhouse laundry for both Cairns Colonial Club and Palm Royale Cairns. The business operates 7 days per week over 24 hours per day. 142 employees are employed at the resort. They are engaged as fulltime (30 employees), parttime (105 employees) and casual (7 employees). The employees are engaged in roles including purchasing manager, online sales administrator, function and event sales coordinator, assistant food and beverage manager, food and beverage team leaders, food and beverage attendants, chefs, cooks, kitchen attendants, payroll clerk, assistant managers, front desk team leader, receptionists and reservations clerks, housekeeping manager, assistant housekeeping manager, laundry supervisor, housekeeping team leaders, laundry and room attendants, public areas cleaners, maintenance supervisor, electrician and air conditioning technician, painters, gardeners and handypersons, and pool cleaner handyperson.
Palm Royale Cairns is also located in Cairns. It is a 150 room resort. The business operates 7 days per week over 24 hours per day. 22 employees are engaged at the resort who are engaged as fulltime (4 employees), parttime (17 employees) and casual (1 employee). The employees include limited food and beverage staff, housekeeping staff and assistant managers looking after the front desk and day to day operations of the resort.
The Agreements provide identical terms and conditions. They apply to managerial and non-managerial staff. They cover salaried full-time, non-salaried fulltime, part time and casual employees who are otherwise covered by the Hospitality Industry (General) Award 2020 (the Award).
The Commission’s Agreements Team provided an analysis of the terms of the Agreements compared to the terms of the Award. We set out the conclusions from that analysis.
Clause 1.7 of each Agreement states that it operates to the exclusion of any and all Awards and supersedes any previous arrangements or agreements. None of the terms of the Award apply to the employees.
Rates of pay
Clause 3.2 of the Agreements provide three types of rates of pay. Rates are set for Salaried employees, Permanent employees (fulltime and parttime), and Casual employees. These rates are calculated on the ‘Permanent Scale A P Time’ rate that appears in Schedule 1b to the Agreements. Salaried employees are full-time employees who are paid a loaded annualised salary which is in lieu of overtime, weekend, public holidays, late work penalty and allowances. Clause 3.2.1 of the Agreements provide that annualised salary is calculated at Base Rate x 107.5% x 38 hours x 52 weeks. Clause 3.2.2 of the Agreements provide that a permanent employee means a full-time or part-time employee, and all hours worked will be paid at the appropriate base hourly rate. Clause 3.2.3 of the Agreements provide that casual employees are paid a 25% loading for all hours worked. Clause 3.5 of the Agreements provide that employees are always paid at either the minimum (Scale A) or maximum (Scale B) of each classification with Scale B being always 2.5% higher than Scale A. Clause 3.3 of the Agreements provide that the base rates of pay specified in Schedule 1b, which are the Hospitality Award rates as at 1 July 2010, will increase by 3.25% on the first full pay period on or after 1 April each year for the duration of the Agreements.
The minimum hourly base rates of pay currently paid under the Agreements are in excess of the Award. The differences are around 16 – 17.5 % higher for permanent and casual employees who are not paid on salaries. This figure increases to 21.5% for managerial staff. For those paid salaries, the difference is higher, at 25.5% for non-managerial employees and 30.5% for managerial staff. The Applicant informs us that in some years it has paid wage increases higher than the Award increases and so actual rates are higher still. On the figures provided they are not significantly higher.
While the rates for full-time employees receiving an annualised salary under clause 3.2.1 of the Agreements appear high enough to compensate for many of the allowances and penalties foregone, the Agreements do not contain the safeguards otherwise set out in Schedule I of the Award including matters such as limits on hours of work. Nor are the arrangements under clause 3.2.1 of the Agreements limited to certain classifications as is the case under the Award.
For non-salaried full-time employees, the above Award rates of pay appear to compensate for the reductions in entitlements such as penalties and allowances in the Agreements and employees who are non-salaried full-time employees are better off in terms of pay under the Agreement rather than the Award.
For part-time employees, while the rates of pay may compensate for most of the reductions in penalties and allowances, the Agreements are less beneficial for part-time employees who consistently work weekends, or Sundays in isolation, or if required to consistently work at times when they would otherwise receive penalties (7pm to 11pm Mon-Fri).
Part-time employees would also be disadvantaged by the lack of part-time safeguards provided for in clause 10 of the Award, the less beneficial averaging of hours (38 hours averaged over 12 months by agreement) and rostering provisions. We note, across both businesses, parttime employees make up the biggest pool of employees.
The Applicant provided rosters which indicate that the majority of part-time employees who work weekend shifts generally work shifts during the week and while the Agreements do not provide that part-time employees are paid when working in excess of their guaranteed hours as per the Award, the Agreements do provide overtime penalties when working in excess of daily rostered hours.
For casual employees, while the rates of pay appear to compensate for the loss of many entitlements, there would be times when casual employees would be better off on the Award. Casual employees who consistently work weekends or Sundays in isolation or if required to consistently work at times when they would otherwise receive penalties (7pm to 11pm Mon-Fri) would be better off being paid under the Award. The Agreements do provide that casual employees are paid their casual loading for all hours worked. This means that casual employees would be paid weekend and overtime penalty rates on a cumulative basis with the casual loading which is more beneficial than the Award, which only provides for weekend penalties to be cumulative with the casual loading.
Other benefits
The Agreements provide some provisions similar to the Award for employees with slightly less beneficial hours of work provisions, shift provisions and overtime provisions. The Agreements are silent on penalties for working ordinary hours on weekends and nearly all Award allowances.
Other specific concerns raised in the Commission’s analysis include:
a)The Agreements allow for split shifts to be worked and allow for daily ordinary hours to be worked over a 16 hour spread. The Award limits split shifts to a maximum spread of 12 hours and provides a split shift allowance. Any employee who consistently works split shifts would not be better off overall.
b)The Agreements provide that full-time salaried employees can work an average of 38 hours per week to be worked over a 4-week period, but provide that the hours can be averaged over a period of up to 12 months by agreement between parties. The Award does not allow for the averaging of hours to exceed a 4-week period.
c)The Agreements provide that full-time non-salaried and part-time employees are engaged for a minimum of 2 ordinary hours and a maximum of 12 ordinary hours per shift, whereas clause 15.1(c) of the Award provides a minimum engagement of 6 ordinary hours and a maximum of 11.5 ordinary hours for full-time employees and clause 15.2 of the Award provides a minimum engagement of 3 ordinary hours and a maximum of 11.5 ordinary hours for part-time employees.
d)The Agreements provide that full-time non-salaried and part-time employees are entitled to at least 8 full days off work in each four week period consistent with the Award, but provide that ordinary daily working hours may be worked within a 16 hour spread per day and that split shifts can be worked. Clause 15.1(c)(v) and Clause 15.2(e) of the Award provide that the maximum spread of hours for an employee who works a split shift is 12.
e)The Agreements further provide that for part-time employees, a maximum of 10 consecutive days may be worked prior to RDOs being taken. The Agreements do not appear to provide this provision for full-time employees as per clause 15.1(d)(i) of the Award.
f)The Agreements do not provide that a full-time non-salaried or part-time employee who is rostered to work more than 10 ordinary hours on more than 3 consecutive days is entitled to a break of at least 48 hours after the last consecutive day on which the employee works more than 10 ordinary hours as per clause 15.1(c)(iii) of the Award and that the maximum number of days on which an employee may work more than 10 ordinary hours in a 4 week cycle is 8 as per clause 15.1(c)(iv) of the Award.
g)For full-time non-salaried employees, the Agreements do not provide that if an employer rosters an employee to work on more than 20 days in a 4-week period, the employer must pay the employee at the overtime rate for each day worked in excess of 20 in that period as per clause 15.1(d)(ii) of the Award.
h)While the Agreements provide that the employer will, upon engagement, provide employees details of their employment, they do not specify that, for part-time employees, the employer and employee will agree in writing on guaranteed hours which is the number of hours of work which is guaranteed to be provided and paid to the employee each week or, where the employer operates a roster, the number of hours of work which is guaranteed to be provided and paid to the employee over the roster cycle as per clause 10.4(a) of the Award. The employer and employee must also agree on the employee’s availability which is the days of the week on which, and the hours on those days during which, the employee is available to work the guaranteed hours as per clause 10.4(b) of the Award. Clause 10.5 of the Award further provides that any change to a part-time employee’s guaranteed hours may only be made with the written consent of the employee.
i)The Agreements provide that for all hours worked, a casual employee will be paid at the appropriate hourly rate plus a 25% loading. The hourly rate for casual employees is detailed at Schedule 1b which is inclusive of the 25% casual loading.
j)The Agreements also provide that for a casual employee, the ordinary hours of work will be up to 152 hours per 4-week cycle plus reasonable additional hours as rostered or requested and provides a minimum engagement of 2 hours per shift.
k)The Agreements do not provide that a casual can only be engaged to work a maximum of 12 hours per shift as per clause 11.2(a) if the Award.
l)The Agreements provide that rosters may be varied by the employer at any time, taking into account the employee’s personal circumstances, provided that at least 2 hours’ notice must be given for a change to starting time. The Agreements further provide that employees, other than casuals, are entitled to an 8 hour minimum break between shifts. Clause 15.5(b) and 15.5(c) of the Award provides that for full-time and part-time employees, the employer must prepare a roster showing for each employee their name and the times at which they start and finish work, and post the roster in a conspicuous place that is easily accessible by the employees. Clause 15.5(d) and Clause 15.5(e) further provides that the roster of an employee may be changed at any time by the employer and employee by mutual agreement or by the employer giving the employee 7 days’ notice of the change and an employee must have a minimum break of 10 hours between when the employee finishes ordinary hours on one day and starts ordinary hours on the next and a minimum break of 8 hours for a changeover of rosters.
m)The Agreements are silent on penalties for working ordinary hours on weekends. Clause 29.2 of the Award provides that for all work done on a Saturday, full-time and part-time employees must be paid 125% of the ordinary hourly rate and casual employees must be paid 150% (inclusive of the casual loading) of the ordinary hourly rate and for all work done on a Sunday, full-time and part-time employees must be paid 150% of the ordinary hourly rate and casual employees must be paid 175% (inclusive of the casual loading) of the ordinary hourly rate.
n)The Agreements provide a penalty of 250% of the pre-loaded base rate (Award rate) for all time worked on a public holiday for full-time non-salaried and part-time employees with a minimum engagement of 4 hours. They also provide that full- time salaried employees who work on a public holiday are entitled to a day in lieu with an additional loading of 50% of their relevant pre-loaded base rate for Christmas Day. Casual employees who work on a public holiday are paid a penalty of 275% inclusive of casual loading on the pre-loaded base rate (Award rate). Clause 29.2 of the Award provides that for all work done on a public holiday, full time and part time employees must be paid 225% of the ordinary hourly rate and casual employees must be paid 250% of the ordinary hourly rate which is inclusive of the casual loading. Clause 29.4 provides that a full-time or part-time employee who works on a public holiday must be paid for a minimum of 4 hours’ work and casuals must be paid for a minimum of 2 hours’ work even if they work for a shorter time.
o)The Agreements provide that time worked by full-time non-salaried and part-time employees in excess of 152 hours up to 160 hours per 4 week period will be banked as ordinary hours on a hour for hour basis with time worked in excess of 160 hours per 4 week cycle deemed overtime and paid on Monday to Saturday at 150% (first 3 hours) and 200% (thereafter) and on Sunday and RDOs at 200%. The Agreements provide that time worked by employees in excess of daily rostered hours will be paid at the overtime penalties above. The Agreements further provide that for full- time non-salaried and part-time employees, they may choose to be paid the appropriate hourly rate and bank an amount equal to the loading in lieu of receiving the overtime payment. Clause 28.4 of the Award provides an overtime penalty of 150% (first 2 hours) 200% (thereafter) Monday to Friday and an overtime penalty of 200% on midnight Friday to Midnight Sunday and on rostered days off. Clause 28.2 of the Award further provides that an employee required to work overtime on a rostered day off must be paid for a minimum of 4 hours’ work even if they work less than 4 hours, except where the work is part of a normal roster that began on the day before the rostered day off or accrued day off or is overtime that is continuous from the previous day’s duty.
p)The Agreements provide that employees who spend more than 50% of their shift engaged in duties of a higher level will be paid that higher rate for the length of the shift. Clause 22 of the Award provides that the higher rate must be paid for the whole of the day when performing 2 hours or more at the higher classification and also must be paid the higher rate for the hours worked when working at the higher classification for 2 hours or less.
q)The Agreements are silent on all allowances provided for in the Award.
The Commission’s analysis of the Agreements was provided to the Applicant for comment. The Applicant responded that in many respects it applied terms and conditions in excess of the Agreements and in others it would make changes to the way it applied the Agreements to address the concerns raised and to ensure that employees were afforded terms and conditions that were equal to or more beneficial for employees than the Award. The Applicant believes that most employees would not be better off on the Award if the current arrangements continued and some modifications were made to terms and conditions to address the issues raised. Some of the modifications suggested were:
a)Changes to the calculations for salary staff to ensure the 25% loading and other Award safeguards are met.
b)Directing managers to ensure rostering practices take into account the need to combine weekend work with weekday work so as to not disadvantage employees in terms of Award penalties.
c)Paying additional loadings for employees who perform extra work in different departments.
d)Adopting the Award terms in relation to payment for leave entitlements.
e)Including calculations accommodating penalty rates for salaried staff.
f)Ongoing monitoring of the Award rates of pay to ensure employees do not fall behind.
g)Changing the maximum number of days that may be worked prior to a day off to 10.
h)Making written agreements with part-time employees which set out guaranteed rostered hours.
i)Changing the maximum hours for casuals to 12 per shift.
j)Introducing an evening and early morning shift allowance.
k)Introducing a definition for shiftworkers.
l)Providing greater penalties for casuals working public holidays.
m)Providing a minimum of 4 hours payment when working overtime on rostered days off.
n)Providing a higher duties allowance.
o)Introducing annual leave loading of 17.5%.
The Applicant expressed a desire to work with its staff to introduce the above changes to ensure that the ongoing operation of the Agreements did not disadvantage them.
Consideration
In a number of recent Full Bench decisions, the Commission has refused to extend the default period of transitional instruments that contain inferior conditions to those in the relevant modern award. In Peter Frick,[3] 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.[4] In Kalfresh Management Services Pty Ltd,[5] 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.[6]
The Applicant seeks to maintain the Agreements because it has a preference to continue to apply the Agreements rather than enter into new arrangements. The Applicant has continued to increase wages to keep pace with Award rates of pay. However, the Agreements do not reflect the contemporary standards set by the Award. The agreements date back to 2008. They are old agreements and while they were varied in 2011, they continue to contain outdated terms and conditions.
Having regard to the Full Bench authorities and the material before the Commission in this matter, we have determined it is not reasonable to extend the default periods of the Agreements. It is not reasonable to do so because the inferior conditions in the Agreement mean it is likely that there would be a disadvantage to employees if the Agreement continues to apply. This is especially the case for part-time employees who are the largest classification of employees.
The Applicant currently applies conditions that are in excess of the Agreements and has stated that it will continue to do so. It appears that the current arrangements, while underpinned by the Agreements, do not strictly adhere to the terms of the Agreements. The Applicant has expressed a willingness to work with its employees to ensure they are not disadvantaged in their employment arrangements. Given the willingness of the Applicant to ensure employees are not disadvantaged and continue the current arrangements, our decision will not disadvantage employees. It will be necessary for the Applicant to ensure those arrangements comply with Award and other obligations. We are also of the view that the Applicant’s desire to continue the current arrangements can be met by bargaining for a new enterprise agreement that formalises those arrangements and allows contemporary standards to apply to the employees.
The application is dismissed.
As our decision to refuse to extend the default period 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 assist the parties in entering into the necessary administrative arrangements to give effect to the sunsetting of the Agreement, the default period is extended to 24 April 2024.
DEPUTY PRESIDENT
[1] PR508559 and PR508560.
[2] [2023] FWCFB 105 at [3] to [18].
[3] Peter Michael Frick [2023] FWCFB 137.
[4] Ibid, [32].
[5] Kallium Management Services Pty Ltd as Trustee forthe Kalium Labour Trust T/A Kalfresh Pty Ltd [2023] FWCFB 217.
[6] Ibid, [14].
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