H&H Security Australia Pty Ltd
[2024] FWCFB 208
•12 APRIL 2024
| [2024] FWCFB 208 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 3, Item 20A(4) - Application to extend default period for agreement-based transitional instruments
H&H Security Australia Pty Ltd
(AG2023/4476)
H&H SECURITY PTY LTD EMPLOYEE COLLECTIVE AGREEMENT
| Security services | |
| DEPUTY PRESIDENT WRIGHT | SYDNEY, 12 APRIL 2024 |
Application to extend the default period for H&H Security Pty Ltd Employee Collective Agreement
H&H Security Australia Pty Ltd (the Applicant) has applied, pursuant to item 20A(4) of Sch 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act2009 (Cth) (Transitional Act), to extend the default period for the H&H Security Pty Ltd Employee Collective Agreement (Agreement). The application seeks to extend the Agreement for a period of 12 months until 6 December 2024.
The Agreement was made in 2009 and approved under the Workplace Relations Act 1996 (Cth) (WR Act). The Agreement is a ‘WR Act Instrument’ within the meaning of item 2(2) of Sch. 3 to the Transitional Act. It is classified by item 2(5)(c)(i) of Sch. 3 as a ‘collective agreement-based transitional instrument’.
Item 20A of Sch 3 to the Transitional Act provides for the automatic sunsetting of agreement-based transitional instruments by the end of the default period on 6 December 2023, subject to the capacity to apply to the Commission for an extension of that period for up to four years in prescribed circumstances. The agreements to which these provisions apply are known 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 (Suncoast)[1] and we rely upon what is said in that decision.
When an application is made under subitem (4) of item 20A of Sch 3 to the Transitional Act, the Commission is required, under subitem (6), to extend the default period if the Commission is satisfied that:
(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.
This application has been made on the basis that subitem (7) applies, and it is otherwise appropriate in the circumstances to extend the default period. The Applicant did not contend that either of subitems (8) or (9) applied to the application. Subitem (7) provides as follows:
(7) This subitem applies if:
(a)the application is made at or after the notification time for a proposed enterprise agreement; and
(b)the proposed enterprise agreement will cover:
(i)if the application relates to an individual agreement based transitional instrument—the employee covered by the individual agreement based transitional instrument; or
(ii)if the application relates to a collective agreement based transitional instrument—the same, or substantially the same, group of employees as the collective agreement based transitional instrument; and
(c)bargaining for the proposed enterprise agreement is occurring.
Background and Submissions
The Applicant is based in Sydney, New South Wales, and provides security services including security guards, closed-circuit television and guard dogs to private consumers. The Applicant’s employees that are covered by the Agreement would otherwise be subject to the terms of three Awards, being:
The Security Services Industry Award 2020;
The Miscellaneous Award 2020; and/or;
The Animal Care and Veterinary Services Award 2020.
The Agreement’s coverage clause at clause 4 provides that it applies to the Applicant and their “current and future employees performing functions as defined in this agreement.” The Agreement has three classifications within which these functions are organised, being security officers, administration staff, and animal attendants.
All 13 of the Applicant’s current employees are covered by the Agreement and are intended to be covered by any future or proposed Agreement, subject to the completion of the bargaining process. The Applicant applied for the Agreement to be extended on 18 November 2023, by way of a Form 81 that read:
Bargaining will be occurring for a new enterprise agreement. Employees have been notified
We do pay current Fair work award rates but all conditions are taken from our collective agreement.
On 30 November 2023, the Commission wrote to the Applicant to seek further material in support of its application, including, inter alia, a copy of any Notice of Employee Representational Rights (NERR) that had been issued to the Applicant’s employees at the commencement of bargaining for a new enterprise agreement.
On 5 December 2023, the Applicant provided its submissions to the Commission in support of its application. These submissions confirmed that the Applicant had not issued a NERR to its employees and no bargaining representatives had been appointed. The Applicant’s submissions indicated that the Applicant was notified on 5 November 2023 that the Agreement was potentially classified as a zombie agreement. On 24 November 2023, the Applicant notified its employees that the current agreement would be coming to an end and bargaining would commence at some time in the near future. The Applicant submitted that bargaining for the new agreement was proposed to commence on 11 January 2024, with the issue of a NERR on 25 January 2024, the commencement of the vote on 28 March 2024, the conclusion of the vote on 30 April 2024, and the lodgement of the application for the approval of the new agreement on 13 May 2024.
Further, the Applicant submitted that it currently pays wages to its employees at the applicable Modern Award rates, and that while some current agreement conditions are better for the employees, some employees would be better off under the Modern Award. The Applicant sought that the Agreement be extended to allow time for bargaining to occur and conclude, and to allow the business and employees to move either to the new agreement or to observing the Modern Award. The Applicant also acknowledged that it believed that a 6-month extension would be sufficient.
Consideration
Subitem (7)
The Full Bench in ISS Health Services Pty Ltd[2] described the three requirements for subitem (7) to apply. The first is the requirement that the application is made at or after the ‘notification time’ for a proposed agreement as defined in s.173(2) of the FW Act. The second is that the proposed agreement must cover the same or substantially the same group of employees as the zombie agreement. The Full Bench stated that this could be established by comparing the NERR for the proposed agreement to the coverage clause of the zombie agreement. Relevantly, the third is that bargaining for the proposed agreement has commenced.
Turning to consider the first requirement - s. 173 of the Fair Work Act 2009 (the Act) defines “notification time” for the purposes of a proposed enterprise agreement. At s. 173(2)(a), it provides that the notification time for a proposed enterprise agreement is the time when “the employer agrees to bargain, or initiates bargaining, for the agreement”. None of the material before the Full Bench supports a finding that this definition or any of the alternative definitions in s. 173(2) have been met (such as those relating to majority support determinations or scope orders). No NERR was issued by the Applicant and no steps had been taken to initiate bargaining prior to the application being filed. Accordingly, the application was not made “at or after the notification time for a proposed enterprise agreement” in accordance with the requirement at subitem (7)(a) of the Transitional Act.
Accordingly, we find that subitem (7) does not apply and the default period cannot be extended pursuant to subitem (6)(a).
Subitem 6(b)
As subitem (7) cannot be met, the Commission may consider whether to extend the default period pursuant to subitem 6(b). This requires a consideration of whether it is otherwise reasonable in the circumstances to extend the default period. This involves the application of a broad evaluative judgement.
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 made under the Act.[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 Agreement was made and approved in 2009. Clause 3 of the Agreement expressly excludes all other statutes and instruments, including Awards. The Applicant has not provided a detailed analysis of the terms and conditions of the Agreement so as to allow the Commission to form a comprehensive view as to whether it is reasonable to extend the Agreement. However, it appears that the following terms of the Agreement are significantly less advantageous to employees than the Modern Award:
(a)Where additional hours (e.g. overtime) are “volunteered” to be worked by employees, these will be paid at normal hourly rates. There is otherwise no overtime clause in the Agreement;
(b)No allowances are payable under the Agreement;
(c)No shift loading/penalty rates are payable, despite the Applicant’s business being a 24 hour, seven-day-per-week operation;
(d)Casual loading rates are significantly lower than the Modern Award loading rates, being between 5% to 15%; and,
(e)The Agreement departs in a variety of ways from the National Employment Standards (NES), including there being no entitlement to compassionate leave for casuals, as well as clauses permitting the withholding of monies which are inconsistent with Chapter 2 Part 2.2 Division 2 of the Act.
The Transitional Act provides that the base rates of pay payable under agreement-based transitional instruments are not to be less than the base rates payable under a modern award that is in operation and covers an employee.[7] The terms of the Agreement in this case represent the benchmarks created by the legislative scheme under which it came into operation, and that scheme has long since been superseded. The terms fall short of the safety net standards provided for by the Fair Work Act 2009 (Cth) (Act) and Modern Awards made under the Act.
Given the inferior conditions in the Agreement, we think it unlikely that there would be a disadvantage to employees in reverting to award conditions prior to the finalisation of a new agreement. This is a significant factor in our consideration, weighing against the grant of an extension.
Further, the Applicant is a small business with thirteen employees. As of December 2023, the Applicant had not issued a NERR to its employees and no bargaining representatives had been appointed. Bargaining was proposed to commence on 11 January 2024, with the proposed issuance of a NERR on 25 January 2024. We acknowledge that genuine bargaining takes time. However, it has been some five months since the Applicant became aware that the Agreement was a zombie agreement, and it appears to us that bargaining has not proceeded with any alacrity.
On balance, we are not satisfied that it is reasonable in the circumstances to extend the default period of the Agreement.
As our decision is to refuse to extend the default period under subitem 20A(4) of Schedule 3 for the Agreement and our decision is made after the sunset date in the Transitional Act, subitem 20A(11) 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 parties to make the necessary administrative arrangements to give effect to the sunsetting of the Agreement, the default period is extended to 24 April 2024.
The application is dismissed.
DEPUTY PRESIDENT
[1] [2023] FWCFB 105.
[2] [2023] FWCFB 122 at [4].
[3] [2023] FWCFB 137.
[4] Ibid, [32].
[5]& Kallium Management Services Pty Ltd As Trustee For The Kalium Labour Trust T/A Kalfresh Pty Ltd [2023] FWCFB 217.
[6] Ibid, [14].
[7] Item 13 of Sch 9.
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