Hartfell Pty Ltd ATF The Haylock Family Trust T/A Emerald Carrying Company

[2017] FWC 4973

[2017] FWC 4973

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Hartfell Pty Ltd ATF The Haylock Family Trust T/A Emerald Carrying Company
(AG2017/1022)

COMMISSIONER GREGORY MELBOURNE, 22 SEPTEMBER 2017

Application for approval of the Emerald Carrying Company (QLD) Enterprise Agreement 2016.

Introduction

[1] An application has been made for approval of an enterprise agreement known as the Emerald Carrying Company (QLD) Enterprise Agreement 2016 (“the Agreement”). The application is made under s.185 of the Fair Work Act 2009 (Cth) (“the Act”) by Hartfell Pty Ltd ATF The Haylock Family Trust T/A Emerald Carrying Company (“the Emerald Carrying Company”). The Agreement is a single enterprise agreement.

[2] The business is involved in the transportation of fuel from ports and fuel terminals to service stations, airport facilities, and various mining operations in different parts of Queensland. It is also involved in the transport of general freight. The bulk of its operations are located at Gracemere, near Rockhampton, and at Mackay. However, it also has other depots in Townsville, Emerald, and in Brisbane. It also has maintenance workshops in each depot. It is also understood that many of its tanker drivers typically work twelve hour shifts based on what is described as a “triple five roster,” involving five day shifts and five night shifts, followed by five days off.

[3] The F16 Application also indicates that the Transport Workers Union (“the TWU”) were a Union bargaining representative for the Agreement. In addition, there were seven individual employee bargaining representatives. The F17 Employer’s Statutory Declaration also indicates that at the time the application was made the Agreement was to cover a total of 195 employees. 171 of those employees voted in the ballot to approve the Agreement, with 88 voting in favour. It also indicates that there are four different Modern Awards covering the employees, being the Road Transport and Distribution Award 2010, 1 the Road Transport (Long Distance Operations) Award 2010,2 the Manufacturing and Associated Industries and Occupations Award 2010,3 and the Clerks—Private Sector Award 20104 (“the Modern Awards”).

[4] The Employer’s Statutory Declaration also makes reference to what are considered to be a number of more beneficial entitlements provided under the terms and conditions contained in the proposed Agreement, compared to those contained in the underlying Modern Awards. It also details a number of less beneficial entitlements, but concludes by indicating that the higher wage rates provided for under the terms of the Agreement generally compensate for these deficiencies.

[5] After reviewing the application and the Employer’s Statutory Declaration, together with the terms and conditions contained in the proposed Agreement, the Commission sought clarification from the Applicant about a number of matters to do with the various statutory requirements that must be satisfied before an agreement can be approved, and a series of communications followed about these matters. The Commission also forwarded an email to the Applicant’s representative on 11 May 2017 following suggestions from some employees that during the access period for the Agreement they were provided with correspondence and/or drafts of individual flexibility arrangements proposing terms and conditions that were different to or more beneficial than those contained in the proposed Agreement. The Commission accordingly sought clarification from the Applicant about this situation, and whether the Agreement can be said to have been “genuinely agreed to” in accordance with the requirements in s.188 of the Act.

[6] The Commission subsequently received correspondence in response from the Emerald Carrying Company dated 16 May 2017 indicating that it had considered entering into individual flexibility agreements in discussions with some employees following approval of the Agreement. It continued to indicate:

“This was to alleviate concerns of employees that the Employer's insertion of minimum entitlements and rates of pay within the Agreement would disadvantage employees in receipt of more beneficial rates of pay, salary arrangements or other conditions of employment.” 5

[7] It also indicated that these were only proposed to be provided to a limited number of employees and:

“It is noted that in a practical sense the implementation of any IFAs will have minimal impact as the affected employees are already in receipt of the more beneficial entitlements. However, in order to provide employees with the desired level of security in relation to the ongoing provision of above Agreement entitlements, ECC was agreeable to providing this guarantee via an IFA following the approval of the Agreement.” 6

[8] The letter indicated in conclusion:

“Additionally, we can confirm that any draft IFAs were only provided to the union delegates/bargaining representatives for the relevant Streams whilst in the negotiation process. These were not provided to employees generally. Instead the affected employees were provided with a letter confirming their existing salary package, or a proposed more beneficial package that the Employer intends to confirm or formally implement by executing an IFA in the future. The intention at all times was to allay any concerns regarding minimum entitlements in the proposed Agreement.

We note that the Commissioner has specifically highlighted that the documentation may have been provided during the access period. It is submitted that any documentation provided during the access period was the result of months of negotiations with affected employees regarding any IFAs and maintaining conditions. ECC confirms that discussions in relation to IFAs have been ongoing throughout the entire negotiation process, and commenced sometime in 2016. Therefore, this process commenced well in advance of the access period in early March 2017, and extended beyond the seven day access period.

It is further submitted that the Commissioner should be satisfied that the proposed Agreement was genuinely agreed to by employees covered by the Agreement, as the employees who received the relevant documentation only form a minority of the overall employees to be covered by the Agreement.” 7

[9] Section 186(1) of the Act sets out the various requirements that the Commission must be satisfied about before an Agreement can be approved. It includes a requirement in s.186(2) that the Commission must be satisfied that “the agreement has been genuinely agreed to by the employees covered by the agreement”. 8

[10] Section 188 of the Act continues to deal with when employees have genuinely agreed to an enterprise agreement. It states:

“188 When employees have genuinely agreed to an enterprise agreement

An enterprise agreement has been genuinely agreed to by the employees covered by the agreement if the FWC is satisfied that:

(a) the employer, or each of the employers, covered by the agreement complied with the following provisions in relation to the agreement:

(i) subsections 180(2), (3) and (5) (which deal with pre approval steps);

(ii) subsection 181(2) (which requires that employees not be requested to approve an enterprise agreement until 21 days after the last notice of employee representational rights is given); and

(b) the agreement was made in accordance with whichever of subsection 182(1) or (2) applies (those subsections deal with the making of different kinds of enterprise agreements by employee vote); and

(c) there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.” 9

[11] The Commission was not provided with any further representations, or other evidence or submissions in the subsequent hearing about whether the Agreement can be said to have been genuinely agreed to by the employees. However, at the very least it does appear that there were some parallel processes going on which, by the Applicant’s own admission, were intended “to allay any concerns regarding minimum entitlements in the proposed Agreement.” 10 These concerns were presumably reflected in the narrow majority vote in favour of the Agreement being approved.

[12] It is also noted that the Applicant indicated that the proposed IFA’s and other documentation were only provided to a limited number of employees, in that these materials were only given to the “union delegates/bargaining representatives for the relevant Streams whilst in the negotiation process.” 11 However, these individuals, while limited in number, were presumably influential in the process given their role as bargaining representatives. However, I am not satisfied that the Commission is able to conclude, based on the evidence now before it, that the Agreement has not been genuinely agreed to. However, it does appear that the Applicant was endeavouring by its actions to shore up support for the approval of the Agreement and to deal with any concerns about what it contained.

[13] The Commission was then in further contact with the Applicant to advise that it continued to have a number of ongoing concerns about whether the requirements of the “better off overall” test were able to be satisfied, and indicated that the matter would be set down for hearing to enable any further submissions and evidence to be provided in support of the application. The TWU also indicated in its F18 Statutory Declaration that it disagreed with a number of the matters set out in the Employer’s Statutory Declaration. It continued to list a series of the additional matters which it also considers to be “less beneficial than the relevant reference instrument.” 12 It also indicated that it wished to be heard in regard to the application. Following a further request from the Applicant’s representative the Commission also provided a detailed list of the potential issues that it had in regard to satisfaction with the requirements of the “better off overall” test. This was provided to the Applicant on 7 August 2017.

[14] The matter was then set down for hearing with each of the bargaining representatives being advised of the hearing date. Two of those bargaining representatives, Mr Paul Ramm and Mr Woolfe Callan, subsequently indicated that they wished to appear in the hearing. Mr Ben Cooper from Livingstones was given permission to appear in the proceedings on behalf of the Applicant under s.596(2)(a) of the Act on the basis that the matter involved a degree of complexity and his involvement might enable it to be dealt with more efficiently. He appeared with Mr Anthony Houghton, Emerald Carrying Company’s Chief Financial Officer. Ms Margarita Cerrato appeared on behalf of the Transport Workers’ Union.

[15] Mr Cooper provided a written submission on behalf of the Applicant and also provided further oral submissions in the proceedings, which took place by way of telephone on 10 August 2017. The following matters were highlighted on behalf of the Applicant in those submissions.

• The test time for the purposes of the Agreement is 28 March 2017 when the application was lodged with the Commission.



• The base ordinary rates set out in the Agreement are intended to operate as a minimum rate only, in order to satisfy the Applicant’s legislative obligations, while allowing the flexibility to apply rates of pay in addition to these rates in order to adequately remunerate employees or satisfy market rates, where required.



• An undertaking was proposed to respond to the Commission’s concerns about the absence of any reference to minimum engagement periods.



• The Agreement does not specify a period in regard to the averaging of ordinary hours, but it was prepared to provide an undertaking that the ordinary hours of work would be averaged over a period of 26 weeks. It indicated in this context that the business is entirely dependent on its contract work, and it needs to have flexibility to be able to cope with the peaks and troughs of business activity that occur from time to time. In its submission a longer averaging period would enable it to respond to these circumstances and at the same time would not be detrimental to the employees.



• The scope to be able to amend the spread of hours for afternoon and night shifts was intended to enable sufficient flexibility to meet client demands.



• The provision that time off in lieu would only be paid at ordinary time rates was intended to act as a deterrent to employees cashing out their accrued entitlements and to instead encourage them to take appropriate breaks from work.



• The absence of certain allowances could be explained by the fact that these did not generally apply to the work performed by the Applicant’s employees.



• It was indicated in response to the absence of a permanent night shift entitlement that employees receive other entitlements that ensure they are adequately compensated in regard to the performance of shiftwork.



• It was acknowledges that the Agreement also does not provide for rest breaks as per the underlying Modern Awards. However the National Heavy Vehicle Regulations already require that appropriate fatigue management processes be in place.

[16] As indicated, the Applicant indicated during the course of the hearing that it proposed to provide further undertakings for the Commission to consider, and it subsequently provided a series of draft undertakings dealing with a range of matters. Those undertakings are expressed in the following terms:

“1. Notwithstanding clause 4.2.3 of the Agreement, employees engaged at Level 1 and 2 of the Administration Stream shall at no time receive less than the minimum rate payable for the performance of ordinary hours and overtime work that is prescribed by the Clerks – Private Sector Award 2010.

2. Notwithstanding clause 4.2.2 of the Agreement, employees engaged at the classification levels of C12, C13 and C13+ Supervisor of the Maintenance Stream shall at no time receive less than the minimum rate payable for the performance of ordinary hours, call backs and overtime work that is prescribed by the Manufacturing and Associated Industries and Occupations Award 2010.

3. Notwithstanding clause 4.2.1.1 of the Agreement, employees engaged at Grades 1, 4 and 6 of the Truck Driving Stream shall at no time receive less than the minimum rate payable for the performance of ordinary hours, night shift and overtime work that is prescribed by the Road Transport and Distribution Award 2010.

4. Notwithstanding clause 4.2.1.1 of the Agreement, employees engaged at Grades 2 and 4 of the Truck Driving Stream shall at no time receive less than the minimum rate payable for the performance of ordinary hours, night shift and overtime work that is prescribed by the Road Transport (Long Distance Operations) Award 2010.

5. The Employer undertakes to average a full-time employee’s ordinary hours of work as provided by clause 2.2.2.1 over a period not exceeding 26 weeks.

6. Casual and part-time employees engaged under the Agreement will be entitled to the minimum engagement periods provided by the applicable Modern Award.

7. During a period of annual leave, employees in receipt of a base ordinary rate of pay and engaged at the classification levels of Grades 1, 4 and 6 of the Truck Driving Stream, shall at no time receive less than the amount payable to an employee under the Road Transport and Distribution Award 2010, inclusive of the applicable annual leave loading.

8. During a period of annual leave, employees in receipt of a base ordinary rate of pay and engaged at the classification levels of Grades 2 and 4 of the Truck Driving Stream to perform long distance work, shall at no time receive less than the amount payable to an employee under the Road Transport (Long Distance Operations) Award 2010, inclusive of the applicable annual leave loading.

9. Notwithstanding clause 4.11.4 of the Agreement, where an employee who is engaged at Grade 2 and 4 of the Truck Driving Stream to perform long distance work and paid a base ordinary rate of pay is entitled to an overnight travel allowance, they shall receive no less than the allowance payable under the Road Transport (Long Distance Operations) Award 2010.” 13

[17] The TWU provided some initial responses to the Applicant’s submissions in the hearing but indicated that it sought additional time in which to respond, and it was agreed that the matter would be set down for further hearing to enable this to occur. The employee bargaining representatives also indicated that they would like further time to consider their position. The application was accordingly set down again for hearing on 12 September 2017. The following employee bargaining representatives also appeared in the proceedings at this time – Mr Alistair Blake, Mr Paul Ramm, Mr Peter Sinclair, Mr Wayne Myers and Mr Woolfe Callan. Ms Margarita Cerrato again appeared on behalf of the TWU.

[18] The Union provided a written submission in advance of the hearing and also made further oral submissions in the proceedings. It indicated at the outset that its submissions were made primarily in regard to its members employed as drivers, and it was not directly involved in the issues to do with clerical or maintenance employees.

[19] In its submission some of the rates contained in the Agreement are less than those provided for in the Modern Awards, and the undertakings now proposed by the Applicant only bring those rates up to the minimum Award levels. This requires, as a consequence, that there be other more beneficial provisions that offset this deficiency. However, the Agreement does not contain other more beneficial entitlements, and there are also other Award conditions which it submits are not replicated in the Agreement.

[20] It also made reference to issues to do with compliance with the requirements of the National Employment Standards noting, firstly, that the Agreement deems up to 24.5 additional hours in any week to be “reasonable additional hours.” It notes the submissions made by the Applicant that any issues to do with employees working excessive hours are regulated by the National Heavy Vehicle Regulations, however, it submits those regulations are not necessarily relevant in terms of the present application, which requires comparisons with the National Employment Standards and the terms and conditions contained in the underlying Awards.

[21] The TWU also made reference to the roster patterns being worked and submits that they indicate that at least some employees are shift workers, as defined by the annual leave provisions in the NES, given that many employees appear to be working rosters which involve both day and night shifts being worked over any seven days in the week and regularly involve work on Sundays and public holidays. It submits that these employees should therefore be entitled to an additional week of annual leave each year in order to comply with the annual leave provisions in the National Employment Standards.

[22] The TWU also made reference to the following provisions in the Agreement which it submits are less beneficial than those contained in the Road Transport and Distribution Award 2010. These include:

• Averaging of hours over 26 weeks, rather than 4 weeks.



• No provision for the payment of a dangerous goods allowance, which is an important entitlement given that the business is primarily involved in transporting and delivering fuel.



• No provision for a higher duties entitlement.



• No minimum engagement provisions.



• A less beneficial overnight travel allowance.



• Meal break provisions which are less beneficial.

[23] It made similar submissions in regard to the following provisions in the Road Transport (Long-Distance Operations) Award 2010.

• Averaging of hours over 26 weeks, rather than 4 weeks.



• No provision for payment of the dangerous goods allowance.



• A requirement under the Award for all driving work to be paid at either the hourly driving rate or the cents per kilometre rate, which are significantly higher than the base rate, is provided for in the Agreement. It also submits that this situation continues to apply in circumstances where the so-called common hourly rates are provided for and, in any case, the provision of those rates is at the Applicant’s discretion, and is only applicable to certain grades, and there is nothing in the Agreement to prevent the Applicant from employing the drivers at the base Award rates.

[24] A range of issues were also raised in submissions provided by the employee bargaining representatives.

• Whether the common hourly rates leave employees better off given some rosters involve shifts of 11/12 hours, with rosters involving 10 days on and 5 days off, with shifts regularly being rostered at nights, on weekends, and on public holidays.



• When accrued time off in lieu of overtime was compensated by being paid out it was only paid out at the ordinary time rates of pay instead of at overtime rates.



• Some drivers engaged at the grade 10 rate can be required to work shifts of up to 14 hours on a single occasion.



• The Agreement does not provide any entitlement to the dangerous goods allowance, which would be an entitlement under the Award given the nature of the work being performed by tanker drafters.



• Drivers involved in shift work should have an entitlement to an additional week of annual leave in accordance with the National Employment Standards.

Consideration

[25] Section 186(1) of the Act requires that the Commission must approve an Agreement if it is satisfied that each of the various requirements in ss.186 and 187 are met. Section 186(2)(d) requires, in particular, that the Commission must be satisfied that the Agreement passes the “better off overall test.” The test is set out in s.193(1) in the following terms:

“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.” 14

[26] It is well established that the application of the test requires identification of terms in a proposed Agreement that are more beneficial, and those which are less beneficial, with an overall assessment then being made about whether the employees would be “better off overall” under the Agreement compared to the Award.

[27] The Full Bench decision in Duncan Hart v Coles Supermarkets Australia Pty Ltd and Bi Lo Pty Ltd T/A Coles and Bi Lo 15 also makes clear that the assessment must be carried out in a way that ensures each employee, and each prospective employee, would be “better off overall” under the Agreement. It is not sufficient for the Commission to simply be satisfied that a majority of the employees would be better off. The Full Bench made this clear in the following terms:

“However the application of the BOOT requires satisfaction, as at the test time, that each Award covered employee and each prospective employee would be better off overall under the Agreement.” 16

[28] The Applicant also made reference in its submissions to the decisions in Armacell Australia Pty Ltd & Ors[2010] FWAFB 9985 and Jellifish! Pty Ltd [2012] FWA 9640. It also submitted that while these authorities provide guidance and principles to be applied in considering the application of the “better off overall” test “every decision is based on its own unique circumstances and a consideration of those terms under the agreement which are more or less beneficial than the relevant award.” 17

[29] The Agreement indicates that it is intended to represent the “complete Agreement between the parties,” 18 and is to be applied to the exclusion of any Awards or other industrial instruments. It also indicates that it is intended to cover employees who are involved in both the “Truck Driving Stream” and the “Maintenance and Administration Stream.” The remuneration structure in the Agreement is based around payment of either “minimum hourly rates of pay” or, where offered by the employer, a Common Hourly Rate or CHR, although this only appears to be available to employees in certain grades. The definitions clause at sub clause 1.8 indicates that this common hourly rate “means a flat hourly rate of pay which is payable to permanent employees for all hours of work, and is inclusive of all overtime, penalties and loadings that may otherwise be payable in accordance with the Agreement.”19

[30] As indicated, the Commission has at the Applicant’s request provided it with an extensive summary of the Commission’s potential issues about the Agreement, and whether it is able to satisfy the relevant statutory requirements. Those matters are not restated in full detail now. However some of the key issues can be summarised on the following basis.

Clerical/Administrative employees

[31] The rates of pay for clerical employees at levels 1–3 in the Agreement generally equate to the relevant rates in the underlying Clerks – Private Sector Award 2010. However, there are a number of Award entitlements that are not replicated in the Agreement. There are no minimum engagement provisions or meal or higher duties allowances, and no set hours for part-time employees. The hours of work of a part-time employee can instead be varied up to 38 hours in any week before any overtime entitlement applies. In addition, there are a number of provisions in the Agreement that are different from those contained in the Award. For example, the shift definitions can be changed in the Agreement to “suit a client’s specific needs,” 20 overtime is payable at a flat rate of time and a half, rather than at time and a half for the first two hours and double time thereafter, as applies under the Award. In addition, time in lieu of overtime, that is not taken as time off, is to be paid out at ordinary time rates rather than overtime rates.

[32] The Agreement originally placed no limit on the averaging of ordinary hours, whereas the Award allows for averaging over a maximum period of only four weeks. In this context it is noted that the Applicant has proposed an undertaking which would enable hours to be averaged over a period of 26 weeks, however, this is still substantially different from the maximum 4 week averaging period in the Award, and could clearly lead to circumstances where employees are denied overtime entitlements that might otherwise apply.

[33] It is also understood that clerical employees are regularly required to work two additional hours each week, making a total working week of 40 hours. No additional overtime entitlement applies for these additional hours, although the Applicant submits in response that the proposed rates of pay are sufficient to cover for this. It is difficult to see how this occurs.

Maintenance employees

[34] Similar issues arise in regard to the provisions for maintenance employees. It is also noted that the call back provisions and the on-call allowance would appear to be less beneficial than the entitlements contained in the Manufacturing and Associated Industries and Occupations Award 2010.

Drivers

[35] The Agreement appears to provide for Grade 1, Grade 4 and Grade 6 employees to be paid at the relevant rate of pay in the Road Transport and Distribution Award 2010, although higher rates are provided for in the Agreement for employees employed at the Grade 8 and Grade 10 levels.

[36] However, many of the issues highlighted previously in respect of the clerical and maintenance employees apply in regard to the employees employed as drivers, in terms of the application of the better off overall test. The averaging arrangements are different from the Award. There is no span of ordinary hours provided for day workers. The night shift penalty is 117.5%, as opposed to 130% under the Award. Shift definitions can also be changed to suit client specific needs, and the overtime entitlement is a flat rate of time and a half for all overtime hours worked whereas the Award would provide for time and a half for the first two hours and double time thereafter. In addition, it appears that the entitlement to overtime only arises on a weekly basis, and there does not appear to be any overtime entitlement for work in excess of 8 ordinary hours per day.

[37] It is also noted that the submissions provided on behalf the Applicant indicate that the employees to be covered by the proposed Agreement are primarily involved in fuel distribution. In this case the distinctions between the provisions contained in the Agreement and those contained in the Road Transport and Distribution Award 2010 become more significant, given that the Award provides for a 35 hour week for employees involved in fuel distribution work. This different divisor impacts on the hourly rates, and also means that overtime entitlements apply at an earlier point under the Award for these employees. It is also noted that sub clause 23.3 of the Road Transport and Distribution Award 2010 continues to provide that, “the ordinary hours of work must not exceed eight hours per day and are to be worked between the hours of 6.30 am and 5.30 pm, Monday to Friday.” The overtime entitlements at the rate of time and a half for the first two hours and double time thereafter then apply for work performed outside of these times. No such entitlement applies under the terms and conditions contained in the Agreement.

[38] The overtime entitlements in the Agreement in fact appear to be structured in a way that only enables an overtime entitlement to apply after 38 hours have been worked, and there is no provision for any overtime entitlement to apply on a daily basis. This discrepancy between the Agreement and the Award in regard to overtime would also be accentuated by the averaging arrangements, which allow hours to be averaged over 26 weeks. This will presumably act to deny overtime entitlements that might otherwise be applicable under the more limited averaging provisions that apply under the relevant Awards. This situation accentuates the differences between the provisions contained in the proposed Agreement and those contained in the underlying Awards.

[39] These concerns are again amplified when consideration is given to the number of hours that appear to be worked on a regular basis by many of the employee drivers. For example, it appears that many drivers are regularly required to work in excess of 55–60 hours per week in circumstances where substantial overtime penalties would apply under the terms of the Award. However, under the terms of the proposed Agreement a flat overtime rate of time and a half applies, unless the employees are working on the basis of the common hourly rate arrangements, which provide for a higher hourly rate, but no additional overtime entitlements. The Agreement also provides for a reduced night shift penalty rate.

[40] It is also noted that both of the Road Transport Awards provide for a dangerous goods allowance of 2.37% of the standard rate per day for employees involved in the transport of bulk dangerous goods. There is no provision for this allowance in the Agreement.

[41] The Agreement also provides for a scheme of payment for employees who would be covered by the Road Transport (Long-Distance Operations) Award 2010, which is similar to that provided to employees covered by the Road Transport and Distribution Award 2010, and does not appear to have regard to either the cents per kilometre or the loaded hourly rate that applies as one of the two remuneration options under the Road Transport (Long-Distance Operations) Award 2010. It is again difficult to conclude on this basis that employees would be better off under the provisions contained in the Agreement, when compared to those contained in the Award.

[42] It is also acknowledged by the Applicant that the travel allowance of $31.66 provided for in the Agreement is considerably less than the amount provided for under the Road Transport (Long-Distance Operations) Award 2010.

[43] The common hourly rates provided for are also described as a loaded rate which is sufficient to offset any other entitlements not specifically provided for. It is understood that the rates are provided to a significant proportion of the drivers and appear to exclude any further obligation to pay overtime or any other penalties or loadings that would otherwise apply. However, it is by no means clear that these rates would cover all of these entitlements, particularly given the number of hours being worked on a weekly basis by the drivers, and the fact that the hourly rates are similar to those provided for in the Road Transport (Long-Distance Operations) Award 2010.

[44] The Agreement also does not provide for rest breaks as set out in the relevant Awards. The Applicant justifies this position on the basis that the National Heavy Vehicle Regulations already require that appropriate fatigue management processes be in place. However, this distinction between the Agreement provisions and those contained in the Award also emphasises the differences that apply in each case.

[45] It is also noted that the annual leave loading is not payable under the Agreement to “employees engaged in the Truck Driving Stream.” 21 This is also a significant difference from the entitlements contained in the transport Awards. For example, the Road Transport and Distribution Award 2010 provides for either a loading of 17.5% or the higher shift penalty if applicable. In addition, the Road Transport (Long-Distance Operations) Award 2010 provides for a 30% annual leave loading entitlement.

[46] As indicated, issues have also been highlighted in regard to the National Employment Standards. In this context it is noted that sub clause 6.1.2 of the Agreement does provide for an entitlement for an additional week of annual leave for shift workers, but qualifies that entitlement by requiring those employees to have worked on at least 34 Sundays and 6 public holidays in any 12 month period. It would appear from the submissions that have been provided in the proceedings that many of these employees should qualify for the additional shift worker annual leave entitlement in s.87(3) of the Act, given that they are employed in an enterprise in which shifts are regularly rostered over 24 hours and 7 days a week and involve employees being regularly rostered to work on Sundays and public holidays.

[47] The Applicant has proposed various undertakings in response to the concerns that have been identified. Those draft undertakings have been set out in detail at an earlier point in this decision. These would provide certain commitments in regard to payment for the performance of ordinary hours, night shift and overtime work. It is also proposed that an averaging system would be introduced whereby hours could be averaged over 26 weeks. As indicated previously this is still substantially different from the provisions contained in the Award, which only provide for averaging over a period of 4 weeks and could result in substantial overtime deficiencies. In addition, there remain a range of entitlements under the Award that are more beneficial than those contained in the Agreement. In this context I refer in particular to the averaging provisions, and the dangerous goods and higher duties allowances.

[48] There is also one further matter that arises in the context of the undertakings that are being proposed. Four of the draft undertakings proposed that employees “shall at no time receive less than the minimum rate payable for the performance of ordinary hours and overtime work” that is prescribed by each of the relevant awards. A similar undertaking was considered by a Full Bench of the Commission in the decision in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia; Australian Manufacturing Workers' Union v Main People Pty Ltd[2015] FWCFB 4467 (Main People). In that matter the Full Bench was considering inter alia an undertaking in the following terms:

“2. All Employees will be paid more under this Agreement than they would have been paid under the Metals Award if it applied to the work carried out by them from time to time.” 22

[49] In considering the undertaking the Full Bench indicated in response at [38]:

“[38] … In considering whether to accept an undertaking relevant to a better off overall test concern, it is necessary to analyse the undertaking to ensure that it is expressed in a way which allows it to be enforced as a term of the Agreement in accordance with s.191. An undertaking which is uncertain, ambiguous or merely aspirational such that it does not establish an enforceable entitlement for the purpose of s.191 is unlikely to meet a concern that an agreement does not pass the better off overall test.

[39] Paragraphs 2 and 6 are incapable of meeting the concern that the Agreement did not pass the better off overall test for the following reasons:

(1) Paragraph 2 is expressed in terms which make it unclear whether it is intended to give rise to an entitlement or is merely an assertion about the effect of the Agreement if approved.

(2) Even if paragraph 2 is read as if it is intended to create an entitlement, it is entirely unclear what the entitlement created by the paragraph is. To the extent that it purports to increase the rates of pay specified in the Agreement by an amount that would make employees better off than under the Metals Award, it is entirely unclear what the amount of that increase is or what the new rates of pay are to which the employees are entitled. In the event that an employee alleged a breach of the Agreement by Main People, it would be impossible for a claimant employee or a court with jurisdiction to enforce the Agreement to quantify how much, if anything, was owed to the employee. Paragraph 2 lacks sufficient certainty to constitute an enforceable entitlement.” 23

[50] Based on the decision of the Full Bench in Main People I am not satisfied that it is appropriate to consider accepting undertakings in the terms set out in the draft undertakings numbered 1 – 4 that are now proposed by the Applicant.

[51] In summary, I am not satisfied in all the circumstances that the Agreement can be approved for the reasons detailed previously as it does not satisfy the requirements of the “better off overall” test set out in s.193(1).

[52] Having come to this conclusion I have also given consideration to whether additional or other undertakings could be sought from the Applicant in an endeavour to satisfy the relevant statutory requirements. However, the Applicant has already proposed a series of additional undertakings. In these circumstances it is necessary to consider whether the provision of these or any other undertakings would result in substantial changes to the Agreement. In the decision in Kore Construction Pty Ltd [2014] FWC 1955 Deputy President Gostencnik considered a series of proposed undertakings put forward to address concerns raised by the Commission. The Deputy President found that the undertakings each sought to address financial disadvantage based on the terms of the proposed Agreement, when compared to the underlying Modern Award. However, he concluded that when examined in their entirety it was clear that the proposed undertakings resulted in substantial changes to the Agreement in that they involved changes to the wage rates attached to the classifications in the Agreement, and the inclusion of substantive new provisions, including various allowances not previously provided for.

[53] The Deputy President accordingly refused to accept the undertakings and declined to approve the Agreement. I am satisfied that a similar situation exists in the present matter. The series of undertakings proposed by the Applicant have been set out at an earlier point in this decision. They involve changes to the rates of pay in each classification level. They introduce changes to the night shift and overtime provisions. They seek to vary and introduce new loadings and allowances, which in some cases were not provided for previously. All of this is sought to be achieved by reference to various entitlements in the underlying Modern Awards. I am satisfied in response that these undertakings, if accepted, would result in substantial changes to the Agreement for the reasons enumerated by Deputy President Gostencnik in the decision referred to above.

[54] However, they also represent a substantial change to what was originally proposed in another sense as well. As indicated previously the terms of the Agreement indicate that it is intended to represent “the complete Agreement between the parties” and to apply to the exclusion of any other Awards or industrial instruments. The undertakings now propose a very different approach by effectively seeking to reference or incorporate a variety of Award provisions. This is a substantial change in approach from that contemplated by the parties when the Agreement was made, and is not something that was in contemplation when the employees voted in the ballot to approve the Agreement.

Conclusion

[55] It is also noted, in conclusion that previous Commission decisions have emphasised that the process of providing and considering proposed undertakings is not intended to be part of an extended process of negotiation between the Applicant and the Commission after an application is lodged for approval. The logic behind this is self evident. The legislation intends that the Commission deal with the terms of an Agreement that have been previously negotiated by and agreed upon by the parties. While undertakings can be accepted in some circumstances it is not the intention that the Commission deal with an outcome that is significantly different from what was in contemplation when the Agreement was made and voted upon. This is evident from the provisions in s.190(3) which provide that an undertaking may only be accepted if it “is not likely to … result in substantial changes to the Agreement.” 24

[56] I am not satisfied, in conclusion, that the terms and conditions contained in the proposed Agreement satisfy the requirements of the “better off overall” test when compared to the terms and conditions contained in the underlying modern Awards. I am also not satisfied for the reasons indicated that it is appropriate to consider any further undertakings in response to this situation. The application is accordingly dismissed.

COMMISSIONER

Appearances:

B Cooper with E Kaupa, A Lynch and A Houghton for the Applicant.

P Sinclair with W Meyers, W Callan, A Blake and P Ramm for the Employee Bargaining Representaties.

M Cerrato for the Transport Workers’ Union of Australia.

Hearing details:

2017.

Melbourne and Brisbane (by telephone):

August 10;

September 12.

 1   MA000038.

 2   MA000039.

 3   MA000010.

 4   MA000002.

 5   Email correspondence from Applicant to Fair Work Commission, dated 16 May 2017 at p 1.

 6   Ibid at p 2.

 7   Ibid.

 8   Fair Work Act 2009 (Cth) s 186(2)(a).

 9   Fair Work Act 2009 (Cth) s 188.

 10   Email correspondence from Applicant to Fair Work Commission, dated 16 May 2017 at p 2.

 11   Ibid.

 12 Transport Workers’ Union of Australia, Form F18–Statutory declaration of employee organisation, signed 29 March 2018 at [5].

 13   Proposed undertakings, received 18 August 2017.

 14   Fair Work Act 2009 (Cth) s 193.

 15   [2016] FWCFB 2887.

 16 Ibid at [15].

 17 Applicant’s submissions, dated 10 August 2017, at [9].

 18   Proposed Emerald Carrying Company (QLD) Enterprise Agreement 2016 at cl 1.6.1.

 19   Ibid at cl 1.8.

 20   Ibid at cl 5.2.1.

 21   Ibid at cl 6.1.4.

 22   Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia; Australian Manufacturing Workers' Union v Main People Pty Ltd[2015] FWCFB 4467 at [13].

 23   Ibid at [38]-[39].

 24   Fair Work Act 2009 (Cth) s 190(3).

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