Hanson Construction Materials Pty Ltd

[2019] FWCA 1409

[2019] FWCA 1409

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Hanson Construction Materials Pty Ltd
(AG2018/7124)

HANSON CONSTRUCTION MATERIALS PTY LTD EASTERN REGION - NSW COUNTRY BATCHERS' ENTERPRISE AGREEMENT 2018

Cement and concrete products
DEPUTY PRESIDENT MASSON	MELBOURNE, 4 MARCH 2019

Application for approval of the HANSON CONSTRUCTION MATERIALS PTY LTD EASTERN REGION - NSW COUNTRY BATCHERS' ENTERPRISE AGREEMENT 2018.

[1] An application has been made for approval of an enterprise agreement known as the Hanson Construction Materials Pty Ltd – Eastern Region – NSW Country Batchers’ Enterprise Agreement 2018 (the Agreement). The application was made pursuant to s 185 of the Fair Work Act 2009 (the Act). It has been made by Hanson Construction Materials Pty Ltd (the Applicant). The Agreement is a single enterprise agreement.

[2] A notice of employee representational rights (NERR) was provided to employees on 7 March 2018 1 and the notice complied with the regulations.2 Employees were provided with access to the proposed Agreement and information about the effect of the terms of the Agreement along with a notice of the time and place and method of voting was provided to employees on 6 December 2018. Voting occurred in the period 14 to 17 December 2018 and a majority of those who voted approved the Agreement.3

[3] The Applicant filed a statutory declaration in support of the Agreement. The statutory declaration noted that the relevant award for the purpose of the better off overall test (BOOT) was the Premixed Concrete Award 2010 (the Award). 4

[4] The statutory declaration noted that some of the provisions in the proposed Agreement were more beneficial than the Award or were not conferred by the Award. No less beneficial terms were identified.

[5] The Australian Workers Union (the AWU) filed a statutory declaration on 21 February 2019, in which they objected to approval of the Agreement. In doing so the AWU identified National Employment Standard (NES) concerns and less beneficial terms that were relevant for the purpose of the Commission’s consideration of whether the Agreement satisfied the BOOT.

[6] In reviewing the Agreement for approval the Fair Work Commission (the Commission) identified a number of issues in relation to the Agreement and supporting documentation. These included pre-approval requirements and National Employment Standards (NES) compliance concerns. The Commission wrote to the Applicant on 19 February 2019 regarding the following issues:

(1) Conflicting dates were provided in the Form F17 regarding the distribution of the Notice of Employee Representational Rights (NERR);

(2) Clause 8.7.1 dealing with causal employees defines “casual employees” in a manner that is inconsistent with the meaning of that phrase as determined by a Full Court of the Federal Court in Workpac Pty Ltd v Skene; 5

(3) Clause 8.12 which deals with the requirements for notification of absence from work for personal/carers leave, compassionate leave and unpaid family and domestic violence leave appears contrary to s 107 of the Act;

(4) Clause 19.2 which deals with payment for public holidays appears to be contrary to s. 116 of the Act.

[7] In addition to the matters raised by the Commission, the AWU raised objections in their Form F18 to approval of the Agreement and provided written submissions regarding the following NES and BOOT issues:

(1) The annual leave entitlement in clause 13.1 is expressed in hours (152) rather than in weeks, which is inconsistent with the NES;

(2) There are a number of entitlements in the Award (which is not incorporated) which are not conferred by the Agreement;

a. Casual conversion rights;

b. Flexible working arrangements; and

c. Family and domestic violence leave provisions.

(3) There are a number of less beneficial provisions in the Agreement relative to the Award;

a. Notice of change of shift start times in the Award provides for seven days’ notice whereas the Agreement at clause 10.1.2(a) provides for notice to be given to the employee on the “evening prior”;

b. Annual leave provisions in the Agreement are less prescriptive and offer fewer protections than the Award in dealing with excessive annual leave accruals;

c. Higher duties provisions in the Award provide for the payment of higher duties for a whole shift after an employee has worked two hours or more in a higher classification. By comparison, the Agreement provides that payment for higher duties is not made until a full shift is worked in a higher classification;

d. Travel provisions in the Agreement are less beneficial in terms of temporary transfers, reimbursement of reasonably incurred expenses, payment for excess travel when employees are temporarily transferred and the circumstances in which reimbursement at the ATO rate for use of private vehicle is made;

e. The Agreement does not appear to provide for meal and rest breaks.

[8] Both the Applicant and the AWU were requested to advise the Commission whether they sought to be formally heard in relation to the application and declined.

Statutory Provisions

[9] Section 186(1) of the Act establishes a “basic rule” that where an application for approval of an enterprise agreement is made under s 185 of the Act (which prescribes the time in which such an application must be made and its content), the Commission must approve the agreement if the requirements in ss 186 and 187 of the Act are met. Sections 186 and 187 of the Act set out a range of approval requirements. Section 186(2) of the Act sets out approval requirements in relation to the safety net, and relevantly provides as follows:

“186 When the FWC must approve an enterprise agreement—general requirements

…

(2) The FWC must be satisfied that:

(a) if the agreement is not a greenfields agreement—the agreement has been genuinely agreed to by the employees covered by the agreement; an

(b) if the agreement is a multi-enterprise agreement:

(i) the agreement has been genuinely agreed to by each employer covered by the agreement; and

(ii) no person coerced, or threatened to coerce, any of the employers to make the agreement; and

I. the terms of the agreement do not contravene section 55 (which deals with the interaction between the National Employment Standards and enterprise agreements etc.); and

(d) the agreement passes the better off overall test.

[10] Section 193 prescribes what is necessary to pass the better off overall test. It relevantly provides:

“193 Passing the better off overall test

When a non-greenfields agreement passes the better off overall test

(1) An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section .if the FWC is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.

…

Award covered employee

(4) An award covered employee for an enterprise agreement is an employee who:

(a) is covered by the agreement; and

(b) at the test time, is covered by a modern award (the relevant modern award) that:

(i) is in operation; and

(ii) covers the employee in relation to the work that he or she is to perform under the agreement; and

(iii) covers his or her employer.

Prospective award covered employee

(5) A prospective award covered employee for an enterprise agreement is a person who, if he or she were an employee at the test time of an employer covered by the agreement:

(a) would be covered by the agreement; and

(b) would be covered by a modern award (the relevant modern award) that:

(i) is in operation; and

(ii) would cover the person in relation to the work that he or she would perform under the agreement; and

(iii) covers the employer.

Test time

(6) The test time is the time the application for approval of the agreement by the FWC was made under section 185.

FWC may assume employee better off overall in certain circumstances

(7) For the purposes of determining whether an enterprise agreement passes the better off overall test, 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, the FWC 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”.

Does the Agreement comply with the NES?

[11] In response to the Commission’s concerns raised regarding provisions of the Agreement failing to comply with the NES, the Applicant proffered the following undertaking:

“The following undertaking is provided with respect to clauses:

i. Casual employees – Clause 8.7.1

ii. Personal/carers leave, compassionate leave and unpaid family and domestic violence leave, notice and evidence requirements – Clause 8.12

iii. Payment for absence on public holiday – Clause 19.2

The Agreement will be read and interpreted in conjunction with the National Employment Standards (NES). Where there is an inconsistency between this agreement and the NES, and the NES provides a greater benefit, the NES provisions will apply to the extent of the inconsistency.”

[12] I am satisfied that the undertaking proffered by the Applicant addresses the concerns raised by the Commission.

[13] As regards the AWU concerns regarding the expression of the annual leave entitlement in clause 13.1 in hours rather than weeks, I reject that concern. Contrary to the AWU submission, the entitlement is expressed in weeks with a clarifying expression of the entitlement in hours. This is evident on a clear reading of the clause which relevantly states as follows:

“13.1.1 Employees are entitled to four weeks (152 hours) paid annual leave for each period of twelve months continuous service and shall accrue in accordance with the provisions of the NES. Continuity of service will not be broken by any authorised absence.”

[14] The reference to 152 hours merely clarifies the entitlement to four weeks annual leave based on the average ordinary hours per week of 38 hours, which is to be found at clause 10.1.1a of the Agreement. I am satisfied that there is no conflict in the expression of the annual leave entitlement in the Agreement with that of the NES.

Does the Agreement satisfy the BOOT?

Hours of Work

[15] The Agreement provides for “flexible work place practices” and that in respect to ordinary hours of work it relevantly states as follows:

“10.1.2(a) Employees shall be required to start work at any time between the hours of 5.00 am and 9.00 am as required by Hanson from day to day. Notice of start time will be communicated by the evening prior to the shift…..”

[16] The Applicant submits that given the nature of concrete batching operations in responding to orders, seven days’ notice of change of roster is unworkable. The flexible start times also gives control over start times to employees.

[17] The Award, by comparison, at clause 20.4 requires seven days’ notice of change of roster although lesser notice of the evening prior to the shift is allowed at clause 20.5 in “unforeseen circumstances”.

[18] I accept that the Award provides for a greater period of notice of change of roster than the Agreement and that the notice of roster changes on the evening prior under the Award is clearly not intended to be the norm. By comparison, the Agreement explicitly provides for notice of roster on or by the evening prior to the shift. The Agreement allows and requires a greater degree of flexibility than is available under the Award.

[19] While I am satisfied that the flexibility required under the Agreement may be mutually beneficial for the Applicant and employees, no evidence was adduced by either the Applicant or the AWU as to the incidence of roster changes and what benefits are enjoyed or disabilities suffered by employees working under these arrangements as they appear to be currently.

[20] On balance, however, I regard the provision under the Agreement as less beneficial than the Award which weighs against a finding that the Agreement satisfies the BOOT.

Annual Leave

[21] The Agreement allows the employer to direct an employee to take annual leave where the employee has accrued an entitlement of more than 25 days (five weeks) of annual leave. The employer may direct when such leave is to be taken. The employer may not direct an employee to take excessive leave accrued such that it would result in the employee’s leave balance falling below 20 days (four weeks).

[22] The Award, by comparison, at clause 24.6 enables an employer to direct the taking of excessive annual leave accruals only when an employee has accrued eight weeks (or 10 weeks in the case of a defined shift worker) and the minimum leave balance to be retained after such direction is that of six weeks. The Award also requires the employer and the affected employee to “confer and genuinely try and reach agreement” on the time of taking the excessive annual leave accrual.

[23] The AWU contend that the lower threshold for triggering a direction to take annual leave and the lower minimum leave balance to be retained under the Agreement, combined with the absence of a requirement to attempt to reach agreement on the time of taking such leave, means that the Agreement is less beneficial than the Award. No meaningful response to the AWU submission was provided by the Applicant.

[24] In the circumstances, I accept that the Agreement provisions dealing with excessive annual leave balances and the direction to take leave are less beneficial than the Award. No submissions were made by the AWU as to what weight I should attach to the less beneficial entitlement. In the circumstances, I attach limited weight to the less beneficial element of the annual leave entitlement given that the entitlement to annual leave in terms of weeks remains consistent with the Award and NES.

Higher Duties

[25] Clause 9.3 Higher Duties under the Agreement provides for payment of the higher rate of pay where an employee is required to work in a higher classification for at least one complete shift. By comparison, clause 18 of the Award provides for payment of higher duties for the whole shift where an employee is required to work in a higher classification for at least two hours.

[26] Self-evidently, the higher threshold for the payment of higher duties under the Agreement is less beneficial than the Award. However, the weighting to be given was not the subject of evidence or submissions. Under the Agreement, if a Tier 1 employee being paid $26.2317 per hour was required to act up in a Tier 2 position for only four hours of a shift, the employee would not receive the higher hourly rate of $27.6123 per hour, whereas under the Award the employee would be entitled to receive the higher hourly rate for the full shift. In percentage terms, this represents a 5% uplift for the shift. While the incidence of higher duties was not subject to submissions or evidence, if this particular scenario arose once per week it would represent an approximate differential of 1.25% over the week based on eight hour shifts being worked Monday to Friday.

[27] In the circumstances, I regard the higher duties provisions of the Agreement as less beneficial than the Award which weighs against the Agreement satisfying the BOOT. I do, however, place limited weight on the less beneficial entitlement in the BOOT assessment having regard to the absence of evidence that would establish a high incidence of higher duties circumstances arising.

Travel Provisions

[28] The Agreement provides for the temporary transfer of employees at the employer’s direction with 48 hours’ notice, in the absence of volunteers. The Agreement further provides that where transport provided by the employer is not available, the employee will be reimbursed the specified ATO kilometre rate where they use their private vehicle. No other benefits are provided for in the Agreement in relation to the temporary transfer of employees. Unlike the Award, the Agreement does not provide for the permanent transfer of employees.

[29] The Award at clause 16.5 provides for additional benefits not conferred by the Agreement in relation to the temporary transfer of employees including:

•  payment for travelling time whilst necessarily travelling between locations;

•  payment for expenses incurred while away from their normal locality;

•  expenses are defined to include meals; and

•  the provision of board and lodging or alternatively payment of a daily or weekly allowance.

[30] The Agreement is silent on the temporary transfer benefits summarised above. The Applicant in its response to the AWU submission, submits that employees do receive reimbursement for such expenses and claimed that “all travel expenses are paid for batchers.” While the Applicant makes that submission, there is nothing in the Agreement that compels such reimbursement nor does the Agreement specify the minimum level of reimbursement to be made. Furthermore, there is no material before me that indicates the frequency of temporary transfers that would require an employee to remain away from their normal locality.

[31] In the circumstances, I am forced to conclude that the Agreement is inferior to the Award with respect to temporary transfer arrangements, although to what extent that weighs against the Agreement is unclear in the absence of material before the Commission. For its part, the AWU raised the complaint but offered no material beyond that to assist the Commission assess the significance of their concern. Nor did the Applicant effectively address the AWU’s concern in their response.

[32] I am satisfied that, notwithstanding the Applicant’s submission that employees do in fact receive payment for temporary transfer expenses, the Agreement is less beneficial than the Award. This weighs against a finding that the Agreement satisfies the BOOT.

Meal and Rest Breaks

[33] The Agreement does not include provisions regarding when meal breaks must be taken, unlike the Award. Rather, the Agreement provides for flexibility as to when meal breaks are taken. Furthermore, the Agreement provides for paid meal breaks at clause 10.4.1 for all employees. By comparison, the Award provides for unpaid meal breaks at clause 21.1 for all employees other than shift workers. Shift workers under the Award are entitled to paid meal breaks in accordance with clause 21.4.

[34] In the circumstances, I regard the Agreement as more beneficial as it provides for paid meal breaks for all employees. This weighs in favour of a finding that the Agreement satisfies the BOOT.

Casual Conversion Rights

[35] The Agreement is silent on casual conversion rights that exist at clause 10.5 under the Award. While the Applicant in its response claimed that they did not employ casual batchers, that submission appears to be contradicted by the Applicant’s Form F17 response to question 4.3 which states there are four casual employees that would be covered by the Agreement.

[36] I am satisfied that the absence from the Agreement of a casual conversion clause means that the Agreement is less beneficial than the Award. I note, however, that the Agreement provides for a 25% casual loading and other penalty rates consistent with the Award. In these circumstances, I accord the absence of a casual conversion clause limited weight.

Flexible Working Arrangements

[37] The Agreement is silent on employee requests for flexible working arrangements which is provided for at clause 23A of the Award. However, by reason of the proffered NES precedence undertaking referred to above at paragraph [11], s 65 of the Act will apply were the undertaking accepted. I acknowledge there are some provisions in the Award which supplement s 65 of the Act, specifically at clause 23A.2 of the Award the employer, before responding to a request for a flexible working arrangement, is required to “discuss the request with the employee and genuinely try and reach agreement.” Section 65 of the Act contains no such obligation. To that extent, the Agreement would be less beneficial were I to accept the NES precedence undertaking.

[38] Subject to acceptance of the proffered NES precedence undertaking, the Agreement would provide for requests for flexible working arrangements in accordance with s 65 of the Act. That would however be less beneficial than the Award in respect to attempts of the employer to reach agreement with an employee who has made a request for flexible working arrangements. This weighs against the Agreement satisfying the BOOT, however, I accord that less beneficial entitlement limited weight.

Family and domestic violence leave provisions

[39] The Agreement is silent on family and domestic violence leave, whereas the Award provides at clause 28 for up to five days unpaid leave each year on a non-accruing basis in defined circumstances. However, by reason of the Applicant’s proffered NES precedence undertaking, s 106A of the Act would apply thus ensuring an entitlement of employees under the Agreement to unpaid family and domestic violence leave consistent with the NES. It is therefore a neutral consideration for the purposes of the BOOT assessment.

More beneficial provisions

[40] Balanced against those provisions that are less beneficial or where there are Award provisions not conferred by the Agreement, there are some provisions within the Agreement that are more beneficial. Those benefits are as follows:

1. Clause 19.3 provides for additional public holidays on Easter Saturday and Easter Tuesday;

2. Night shift penalty provisions;

3. Paid meal breaks; and

4. Rates of pay range between 30-38% above Award rates of pay.

[41] The more beneficial provisions regarding public holidays, night shift penalties and paid meal breaks weigh moderately in favour of a finding that the Agreement satisfies the BOOT.

[42] I turn now to wage rates under the Agreement. On an annualised earnings basis, excluding overtime, shift, weekend and public holiday penalties, an employee classified at Tier 1 under the Agreement would receive base earnings of $51,833.60 which compares with equivalent Award base earnings of $39,697 based on the minimum Award hourly rate of $20.09. At Tier 3, the relevant comparison of base earnings is that of $56,744.48 under the Agreement versus $41,436.72 based on an Award hourly rate of $20.97.

[43] The significant margin of Agreement wage rates above the Award weighs strongly in favour of a finding that the BOOT is met. I reach this conclusion in the particular circumstances where shift, weekend, public holiday and overtime penalty rate provisions in the Agreement are at least equivalent to Award provisions.

Summary on Boot

[44] It will be seen from the statutory provisions provided above that an enterprise agreement will be found to have passed the BOOT if the Commission is satisfied, that at the test time, each award covered employee and each prospective award covered employee employed under the agreement would be better off overall if the agreement applied to the employee rather than if the Award applied to the employee.

[45] The application of the BOOT is not applied as a line by line test. Rather, it is a global consideration of the provisions in the agreement compared to the award, taking into account those provisions that are less beneficial and weighing them against those provisions that are more beneficial.

[46] As identified above there are a number of less beneficial provisions in the Agreement relative to the Award and there are a small number of Award provisions that are not conferred by the Award. While these conditions weigh against the Agreement satisfying the BOOT, that is not the end of the analysis. It is also necessary to weigh those less beneficial elements against the more beneficial provisions. Central to that consideration is the margin of minimum wage rates under the Agreement relative to the Award.

[47] It is clear that at all classification levels under the Agreement, there is a substantial margin between the Agreement and Award, i.e. of at least 30%. The margin in dollar terms would widen if weekend, shift, public holiday and overtime penalties were applied to various additional hours scenarios. This would be so, simply by reason of the higher hourly base rates under the Agreement.

[48] I am satisfied that the significantly higher remuneration available under the Agreement is sufficient to more than compensate and offset the less beneficial elements of the Agreement that have been identified above. I am consequently satisfied that the Agreement passes the BOOT.

Conclusion

[49] A copy of the Applicant’s undertakings is attached in Annexure A. Having considered the material filed by the parties, I am satisfied that the Agreement with the undertakings complies with the NES and passes the BOOT.

[50] I am further satisfied that the undertakings will not cause financial detriment to any employee covered by the Agreement and that the undertakings will not result in substantial changes to the Agreement.

[51] Subject to the undertakings referred to above, I am satisfied that each of the requirements of ss 186, 187, 188 and 190 of the Act as are relevant to this application for approval have been met.

[52] The AWU, being a bargaining representative for the Agreement, has given notice under s 183 of the Act that it wants the Agreement to cover it. In accordance with s 201(2) of the Act, I note that the Agreement covers the organisation.

[53] The Agreement was approved on 4 March 2019 and, in accordance with s 54 of the Act, will operate from 11 March 2019. The nominal expiry date of the Agreement is 1 March 2021.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<AE502117  PR705497>

Annexure A

 1 Section 173 of the Fair Work Act 2009.

 2 Section 174 of the Fair Work Act 2009.

 3 Section 180 of the Fair Work Act 2009.

 4   MA000057.

 5   [2018] FCFAC 131.