Ipsum Mining Pty Ltd
[2021] FWCA 3672
•24 JUNE 2021
| [2021] FWCA 3672 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
Ipsum Mining Pty Ltd
(AG2021/4674)
IPSUM MINING PTY LTD ENTERPRISE AGREEMENT 2021
Coal industry | |
DEPUTY PRESIDENT SAUNDERS | NEWCASTLE, 24 JUNE 2021 |
Application for approval of an enterprise agreement – explanation of terms of the enterprise agreement and their effect – BOOT – enterprise agreement approved.
Introduction and background
[1] On 13 April 2021, Ipsum Mining Pty Ltd (Ipsum), a small labour hire provider to the black coal mining industry, applied for approval of the Ipsum Mining Pty Ltd Enterprise Agreement 2021 (Enterprise Agreement), which covers employees of Ipsum, employed in New South Wales, who are covered by the classifications in Schedule A of the Black Coal Mining Industry Award 2010 (BC Award) and who work in the classification of Inexperienced Mineworker, Mineworker, Inexperienced Tradesperson, or Tradesperson. 1
[2] The CFMMEU accepts that it is not, and was not at any time, a bargaining representative for the Enterprise Agreement. I exercised my discretion under s 590 of the Fair Work Act 2009 (Cth) (Act) to permit the CFMMEU to be heard in relation to Ipsum’s application for approval of the Agreement.
[3] The CFMMEU filed and served submissions dated 10 May 2021 (amended), 18 May 2021, and 2 June 2021, together with a witness statement of Robert Timbs, District Vice President of the CFMMEU, dated 10 May 2021. In addition to its Form F16, Form F17 and other material filed with its application for approval of the Enterprise Agreement, Ipsum filed and served submissions dated 12 May 2021, 25 May 2021 and 8 June 2021, together with witness statements made by Dylan Robertson, Managing Director of Ipsum, on 12 May 2021 and 25 May 2021, and undertakings dated 8 June 2021 (Undertakings). I have read and had regard to all of that material. Neither the CFMMEU nor Ipsum took up the opportunity offered to them to have a hearing in relation to the application for approval of the Enterprise Agreement. Accordingly, I have determined the application on the basis of the material filed by Ipsum and the CFMMEU.
Undertakings
[4] Mr Robertson has provided the following Undertakings to address a number of concerns raised by the Commission and the CFMMEU (Undertakings):
“1. I have the authority given to me by Ipsum Mining Pty Ltd to provide this undertaking in relation to the application before the Fair Work Commission.
2. If, despite clause 18.6 of the Agreement, an Employee is required to work afternoon or night shiftwork for a period fewer than three consecutive working days, overtime rates will be paid for any afternoon or night shiftwork (except where the requirement is caused by the failure of any other Employee to come on duty at the proper time).
3. Clause 9.1 of the Agreement will be applied so that ordinary hours are averaged evenly between shifts for the duration of the roster cycle.
4. For the purpose of calculating the weekend and shiftwork penalties and loadings for casual Employees employed as Inexperienced Mineworkers at projects other than in the Southern Coalfield region in clauses 16 and 18.2 of the Agreement, the Company will apply the amount of the penalty or loading payable under the Agreement to the loaded casual rate (being the rate in clause 14.4 of the Agreement plus a 25% loading).
5. Clause 20.6 of the Agreement will be applied consistently with clause 23.6(f) of the Black Coal Mining Industry Award 2010 such that where a rostered day off falls on a public holiday, an Employee will be paid at the employee’s ordinary hourly rate for that day.”
Outline of CFMMEU’s remaining concerns
[5] The CFMMEU raised and later withdrew a number of concerns on the basis of information provided by Ipsum. The CFMMEU’s remaining concerns, and the basis on which it contends that the Enterprise Agreement should not be approved, are as follows:
(a) First, the Fair Work Commission (Commission) could not be satisfied that Ipsum has taken all reasonable steps to ensure that the terms of the Enterprise Agreement relating to casual employees, and the effect of those terms, were explained to the relevant employees (s 180(5) of the Act); and
(b) Secondly, the Commission could not be satisfied that the Enterprise Agreement passes the better off overall test (BOOT) as required by s 186(2)(d) of the Act.
Reasonable steps to explain
[6] Section 180(5) of the Act requires an employer to take all reasonable steps to ensure that the terms of the enterprise agreement, and the effect of those terms, are explained to the relevant employees. Further, the explanation must be provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.
[7] The purpose of the requirement in s 180(5) is to ensure that employees are as fully informed as is practicable about the terms and effect of the terms of a proposed enterprise agreement before voting on it. 2
[8] There is no legislative or other requirement that in every case an employer must explain to its employees the differences between the terms of a proposed enterprise agreement and an existing enterprise agreement or underlying award. Whether such an explanation is required for an employer to satisfy its obligation under s 180(5) of the Act to take all reasonable steps to ensure that the terms of the proposed enterprise agreement, and the effect of those terms, are explained to relevant employees, will depend on the circumstances. 3 The focus of the enquiry is on the steps actually taken to comply and to consider whether the steps taken were reasonable in the circumstances and whether these were all the reasonable steps that should have been taken in the circumstances.4 This directs attention to the content of the explanation given to employees.5
Evidence in relation to explanation provided to employees
[9] There were six employees covered by the Enterprise Agreement at the time it was made. They were all full-time employees. Each of them appointed themselves as their bargaining representative for the purpose of negotiating the Enterprise Agreement. Each of them has experience working for contractors operating in the black coal mining industry in the Illawarra region, including with contractors who employ casual employees under enterprise agreements which provide for casual employment. 6 This experience does not say anything about the familiarity or otherwise of the employees in question with the BC Award.
[10] Bargaining meetings took place on 1, 2, 11 and 12 March 2021, during which the terms of the Enterprise Agreement were negotiated and discussed. Each of the six employees covered by the Enterprise Agreement attended all four bargaining meetings in person, save for one occasion when one of the employees participated in a bargaining meeting by telephone. 7
[11] The employees raised claims in relation to a range of matters in the bargaining process. Ipsum accepted some of those claims and made corresponding amendments to the enterprise agreement being negotiated. 8 On the basis of the claims raised by the six employees and the positions they took during bargaining, Mr Robertson considered, reasonably in my view, that the six employees had knowledge and experience of some common terms and conditions of employment for employees of contractors in the black coal industry.9
[12] On 27 March 2021, the employees covered by the Enterprise Agreement were sent a document, by email, explaining the terms of the Enterprise Agreement and the effect of those terms (Written Explanation), which relevantly provided as follows: 10
PROPOSED IPSUM MINING PTY LTD ENTERPRISE AGREEMENT – TERMS AND EFFECTS
Purpose of this document
This document explains the terms, and the effect of the terms, of the proposed Ipsum Mining Pty Ltd Enterprise Agreement 2021 (the Agreement).
This document is a summary only and you are encouraged to read the full clauses in the proposed Agreement. The Agreement applies to the exclusion of the Black Coal Mining Industry Award 2010 (Award). It is important that you understand how the terms of the Agreement operate and the differences there will be to the Award. The Award can be accessed here and the Company encourages you to have regard to the Award when reviewing this explanation document.
If you have any questions about the terms of the Agreement and/or its effects (including how it operates with the Award), please raise them with [redacted] on [redacted] or by email at [redacted].
Clause | Summary of terms | Effect of term | |
1. | Title | The Agreement will be known as the Ipsum Mining Pty Ltd Enterprise Agreement 2021. | The term contains the name of the Agreement. |
2. | Coverage | The Agreement covers the Company and Employees of the Company employed in New South Wales who are covered by the classifications set out in Schedule A of the Award and working in the classifications set out in the Agreement. | The term identifies the parties covered by the Agreement. |
3. | Term | The Agreement will commence operation days after approved by the Fair Work Commission (FWC). It has a four year nominal term from the date the Agreement is approved by the FWC. | The effect of this term is to provide the nominal term of the Agreement. The Agreement will operate 7 days after approval. |
4. | Relationship with other instruments | The Agreement operates to the exclusion of any modern award or other industrial instrument that may have otherwise applied to Employees covered by the Agreement. | This term confirms that the terms of any modern award or prior enterprise agreement will not apply while the Agreement is in operation, including the Award. |
…
9. | Types of Employment | Employees may be employed on a full-time, part-time, casual, fixed term or maximum term basis. | The effect of this term is to set out the methods by which the Company can employ Employees on a full-time, part-time, casual, fixed term or maximum term basis. |
…
13. | Termination of Employment – redundancy | An Employee is made redundant at the Company’s initiative where an Employee’s job is no longer required to be performed by anyone, except where this is due to the ordinary and customary turnover of labour. • notice period: a minimum of four weeks’ notice, unless the Employee is aged over 45 years and has five years continuous service with the Company, in which case the Employee will receive a minimum of five weeks’ notice; These payments will not be made where, within 14 days, the Company obtains alternative employment (or causes alternative employment to be made) which an Employee is competent to perform, in a position that | The effect of this term is to provide Employees with severance and retrenchment entitlements in circumstances where their role is made redundant. This term does not apply to casual Employees or fixed term Employees employed under the Agreement. |
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24. | Compassionate Leave | Employees may be granted a maximum of up to two days paid compassionate leave for each occasion a member of the Employee's immediate family contracts, develops or sustains a personal illness or injury that poses a serious threat to his or her life, or dies. Compassionate leave must be applied for and an Employee may be required to substantiate the basis of the leave. | This clause allows for up to two days of paid compassionate leave at ordinary time for ordinary hours for each occasion of personal illness or injury (that poses a serious threat to life) or death of an Employee’s immediate family. |
…
29. | Casual conversion | Casual Employees who are employed for at least 12 months (from the day the employment commenced) and who, for a period of 6 months ending the day such a request is given, worked a regular pattern of hours on an ongoing basis, will be eligible to make a request to the Company to convert to permanent employment. For casual Employees who work 35 hours or more per week, the request can be to convert to full-time employment. For casual Employees who work less than 35 hours per week, the request can be to convert to part-time employment. | The effect of this clause is to allow casual Employees who have been employed for a period of 12 months and, for a period of 6 months before such a request is made have worked a regular pattern of hours on an ongoing basis, to make a request to the Company to convert to permanent employment. |
[13] On 30 March 2021, two sessions were held with employees covered by the Enterprise Agreement to explain the terms, and the effect of the terms, of the Enterprise Agreement to the employees. The sessions took place remotely with each of the six employees participating by telephone or video conference. Ipsum held two sessions to accommodate the different shifts worked by the employees. Mr Robertson attended both sessions, which were led by Mr Michael Kelly, a consultant and bargaining representative engaged by Ipsum. I accept the following unchallenged information provided by Mr Robertson in his witness statement dated 25 May 2021 in relation to these sessions:
“13. Mr Kelly led the sessions and worked through the Agreement by providing an explanation of each term and the effect of that term. Employees had the opportunity to ask questions during the explanation.
14. Mr Kelly prepared speaking notes for the explanation he gave during the 30 March 2021 sessions. I have been provided with, and reviewed, a copy of Mr Kelly’s notes. I confirm that during the sessions Mr Kelly spoke to each of the matters outlined in the notes.”
[14] Mr Kelly’s speaking notes contain the following relevant entries:
“9. Types of Employment
casuals 25% ord time only – vs Award 25% on all hours incl. OT – Ipsum rates much > than Award hence payment on ord. hrs only of 25% loading”
CFMMEU’s submissions re explanation given to employees
[15] The CFMMEU accepts that the Written Explanation contained an appropriate explanation of the terms of the Enterprise Agreement with respect to casual employment. However, the CFMMEU contends that the explanation of the effect of those terms was deficient. In particular, the CFMMEU raises two matters which it contends were reasonable steps that were not explained.
[16] First, the CFMMEU contends that no explanation was given to the employees in relation to the effect of including casual employees within the coverage of the Enterprise Agreement. Because the BC Award does not permit the engagement of casual employees within the classifications in Schedule A to the BC Award, absent a term of the Enterprise Agreement permitting the engagement of casual employees in any of the classifications specified in clause 14 of the Enterprise Agreement, all employees engaged by Ipsum would be entitled to access the benefits afforded to full-time or part-time employees under the BC Award, including personal leave, annual leave, notice of termination and redundancy payments. The CFMMEU submits that a reasonable step in explaining the effect of the Enterprise Agreement was to have squarely put to the employees that in accepting the terms of the Enterprise Agreement, the employees were trading the rates of pay in the Enterprise Agreement, including the 25% loading, for the BC Award entitlements for full-time or part-time employees.
[17] Secondly, the CFMMEU contends that the employees were not told that the terms and conditions of the Enterprise Agreement as it applies to casual employees were such that for certain casual employees, the Enterprise Agreement would potentially be disadvantageous as compared to the BC Award. The CFMMEU accepts that if it does not persuade the Commission in relation to its BOOT arguments, this alleged deficiency in the explanation falls away.
Consideration re explanation given to employees
[18] On the first page of the Written Explanation employees were informed that the Enterprise Agreement would apply “to the exclusion of the Black Coal Mining Industry Award 2010”. The Written Explanation went on to expressly deal with the fact that “casual employment under the Award is limited to staff employees under the classifications in Schedule B”, whereas under the Enterprise Agreement “casual employment is available for all employees covered by the Agreement, including those who would be covered by Schedule A of the Award”. 11 The consequence of being engaged as a casual employee under the Enterprise Agreement was also explained in the Written Explanation, namely that casuals “are paid a 25% loading on ordinary hours only in lieu of all forms of paid leave (including long service leave), and public holidays”. I am satisfied on the basis of this information that reasonable steps were taken to ensure that the employees were aware of the following:
• The BC Award does not permit the employment of casual employees in classifications within Schedule A of the BC Award.
• The Enterprise Agreement does permit the employment of casual employees in classifications within Schedule A of the BC Award.
• If the Enterprise Agreement was made and approved, it would apply to the exclusion of the BC Award.
• A casual employee to whom the Enterprise Agreement applies will be entitled to a 25% loading in lieu of all forms of paid leave, which are available for full-time and part-time employees.
[19] A clear and obvious inference arises from these facts and matters: if the Enterprise Agreement was not made or approved, then the employees would continue to be covered by the BC Award and any person employed by Ipsum in the black coal mining industry as a Mineworker or Tradesperson, whether experienced or not, could not be employed as a casual and would have to be employed as, and receive the benefits of, a full-time or part-time employee under the BC Award. In all the circumstances, I reject the CFMMEU’s contention that it would have been a reasonable step for Ipsum to have made this point explicitly to the employees.
[20] Having regard to the facts and circumstances set out in paragraphs [9] to [14] and [18]-[19] above, I am satisfied that Ipsum complied with its obligation under s 180(5) of the Act to take all reasonable steps to ensure that the terms of the Enterprise Agreement, and the effect of those terms, were explained to the employees, and the explanation was provided in an appropriate manner taking into account the particular circumstances and needs of the employees.
[21] For the reasons given below, I am satisfied that the Enterprise Agreement passes the BOOT. It follows that the CFMMEU’s criticism set out in paragraph [17] above falls away.
BOOT
General principles
[22] I must be satisfied that the Enterprise Agreement passes the BOOT before I can approve it. 12 Section 193(1) of the Act provides that an enterprise agreement passes the BOOT if the Commission is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the enterprise agreement would be better off overall if the enterprise agreement applied to the employee than if the relevant modern award applied to the employee. The “test time” is when the application for approval of the enterprise agreement is made.13
[23] In Armacell Australia Pty and Othersthe application of the BOOT was explained by the Full Bench in the following manner: 14
“The BOOT, as the name implies, requires an overall assessment to be made. This requires identification of terms which are more beneficial for an employee, terms which are less beneficial and an overall assessment of whether an employee would be better off under the agreement.”
[24] The BOOT is not applied as a line by line analysis. It is a global test requiring consideration of advantages and disadvantages to award covered employees and prospective award covered employees. 15 An enterprise agreement may pass the test even if some award benefits have been reduced, as long as overall, those reductions are more than offset by the benefits of the enterprise agreement.16
[25] Ultimately the application of the BOOT is a matter that involves the exercise of discretion, and it involves a degree of subjectivity or value judgement. 17
[26] It is clear from the references to “each … employee” in section 193(1) of the Act that every employee to whom the enterprise agreement will apply, if approved, must be better off overall than if the relevant modern award applied to the employee. It is not enough that a majority or most of the employees to whom the enterprise agreement will apply, if approved, will be better off overall than if the relevant modern award applied. 18
[27] Section 193(7) of the Act is a facultative provision which permits the Commission to be satisfied, in particular circumstances, that all employees in a class of employees will be better off if the agreement applied to that class than if the relevant modern award applied to that class. Section 193(7) provides as follows:
“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.”
[28] Section 193(7) was explained in the Explanatory Memorandum to the Fair Work Bill 2008 as follows:
“818. Although the better off overall test requires FWA to be satisfied that each award covered employee and each prospective award covered employee will be better off overall, it is intended that FWA will generally be able to apply the better off overall test to classes of employees. In the context of the approval of enterprise agreements, the better off overall test does not require FWA to enquire into each employee’s individual circumstances.”
[29] The selection of a class for the purpose of s 193(7) of the Act will only be of utility if the enterprise agreement affects the members of the class in the same way such that there is likely to be a common BOOT outcome. 19
[30] It is also important to recognise that the BOOT is hypothetical, because it requires an assessment of whether each employee, and each “prospective award covered employee”, would be better off overall if the enterprise agreement applied to him or her than if the relevant award did. 20
CFMMEU’s contentions re BOOT
[31] The CFMMEU contends that the Commission could not be satisfied that casual employees would be better off under the Enterprise Agreement compared to the BC Award. In summary, the CFMMEU makes that submission for the following reasons:
(a) The appropriate comparator for the purposes of the BOOT for a casual employee covered by the classifications in Schedule A of the BC Award must be a Schedule A employee of a kind that can be engaged under the BC Award, namely a full-time or part-time employee.
(b) Even if the introduction of casual employment can be considered to be a general benefit by an individual employee in certain circumstances, this will not always be the accepted view of each prospective award covered employee and will depend on the circumstances of the engagement of these employees.
(c) Personal/carer’s leave under the BC Award differs from the National Employment Standards (NES) entitlement in three ways. First, the entitlement is to an equivalent of three ordinary weeks’ personal/carer’s leave, rather than the NES entitlement of 10 days. Secondly, it is available on commencement of employment, and on each anniversary of commencement. That is, it accrues on an annual basis, rather than the progressive accrual that occurs under the NES. Thirdly, it is paid out in circumstances of retrenchment, retirement or death.
(d) While it is arguable that the accruing entitlements can be met by the casual loading which is also accrued, the same cannot be said of the entitlements that are available on commencement under the BC Award, including:
(i) 105 hours of paid personal/carer’s leave, including an entitlement to have that paid out on termination of employment in many circumstances;
(ii) entitlement to be absent for fewer than half the ordinary hours of a shift on personal leave, with no deduction;
(iii) notice of termination of employment, including an entitlement to 4 or 5 weeks in the event of termination by way of redundancy;
(iv) an entitlement to redundancy at a minimum of two ordinary weeks’ pay, regardless of length of service;
(v) the job security which is inherent in an ongoing employment relationship;
(vi) compassionate leave; and
(vii) in the case of an employee engaged to work fewer than 35 hours per week:
(A) reasonably predictable hours of work;
(B) an agreement as to the regular pattern of work and starting and finishing times each day; and
(C) the requirement for any variation to be by agreement and recorded in writing.
(e) On leave entitlements alone, an employee will not be better off overall if engaged as a casual under the Enterprise Agreement unless, at a minimum, their engagement is guaranteed for a certain number of hours over a certain time frame.
(f) Some reduction may be made due to the contingent nature of personal/carer’s leave, but the incidence of personal/carer’s leave is significant enough to maintain a comparable financial benefit to the value of the leave available under the BC Award. This is particularly so where that leave is payable on termination of employment in many circumstances.
(g) Personal and annual leave have an intrinsic benefit which goes beyond whatever financial benefit one may ascribe to the entitlement. The benefit of these entitlements takes on a broader quality which must be considered for the purpose of the BOOT. The statutory purpose of these forms of leave is to provide a break from work to facilitate rest and recreation, in the case of annual leave, and to provide an employee with access to a break from work to address a personal illness or injury, or for the employee to provide care to a member of the employee’s immediate family or household. The protections inherent in these forms of leave facilitate more than just the existence of the prospect of taking the leave, but the capacity to access that leave when it is required or convenient to take that leave.
(h) Job security and regular employment are substantial benefits for permanent employees. They are not available to casual employees. Similarly, the benefits of redundancy payments and notice, or payments in lieu of notice, being available on termination of employment provide further security against unpredictable economic and social circumstances.
(i) Clause 9.4 of the Enterprise Agreement provides that a casual employee will be paid “an ordinary hourly rate plus a 25% loading on ordinary hours only in lieu of all forms of paid leave”. The effect of this clause is that the 25% casual loading is not paid on overtime, and is similarly not calculated in a compounding fashion for other penalties (that is, for ordinary hours only, it will be cumulative). This is different to the BC Award, where the ordinary time rate for casual employees includes the 25% loading.
(j) The CFMMEU does not accept that the 25% loading which applies to casual staff employees is the appropriate comparator or reference point when determining what loading is to apply to casual production and engineering employees. Should that be wrong, and it is accepted that 25% is the appropriate loading when considering the loading which applies for a casual staff employee, it is further submitted that that loading is incapable of establishing a scenario where the relevant employees would be better off under the Enterprise Agreement than if the BC Award applied to their employment because, in the hypothetical comparator under the BC Award, an employee would have an ordinary time rate of 125% of 1/35th of the appropriate weekly rate, not 1/35th of the appropriate weekly rate, plus a 25% loading on a maximum of 35 hours. This is best shown through a hypothetical roster of seven days on, working night shifts, with 12.5 hour shifts worked, the kind of which can be worked under clause 18 of the Enterprise Agreement. Relevantly, there is no guarantee that a casual employee will be engaged across any period of time, including for the duration of a roster cycle so the averaging ordinary hours of work across the roster cycle available under clause 18.1 of the Enterprise Agreement is not relevant for these workers. The CFMMEU models the comparison as follows:
64. Under the BCMI Award that employee would receive:
Award Ordinary Time Rate (Inexperienced Mineworker) | $ 24.89 | ||
Casual rate (125% of Permanent Ordinary Time Rate) | $ 31.11 | ||
| Hours | Loading | Weekly Total | |
Ordinary Hours on shift | 35 | 115% | $ 1,252.28 |
| Overtime - M - Sat first 3 hours | 11.5 | 115% | $ 411.46 |
Overtime - M - Sat after 3 hours | 28.5 | 200% | $ 1,773.41 |
Overtime - Sunday | 12.5 | 200% | $ 777.81 |
TOTAL | $ 4,214.97 |
65. Under the Agreement that same employee would receive:
Agreement Ordinary Rate (Inexperienced Mineworker) | $28.50 | ||
Hours | Loading | Weekly Total | |
Ordinary Hours | 35 | 125% | $1,246.88 |
Shift work | 35 | 15% | $149.63 |
Overtime - M - Sat first 3 hours | 11.5 | 115% | $376.91 |
Overtime - M - Sat after 3 hours | 28.5 | 200% | $1,624.50 |
Overtime - Sunday | 12.5 | 200% | $712.50 |
TOTAL | $ 4110.41 |
(k) While the differential changes depending on the roster worked, where any roster is available to be worked under the Enterprise Agreement, and those rosters include a significant component of shiftwork, weekend work and overtime, a casual production employee will not be better off under the Enterprise Agreement when compared with what casual employment is accommodated under the BC Award.
Consideration of CFMMEU’s BOOT concerns
[32] The CFMMEU has not raised any BOOT concerns in relation to full-time or part-time employees covered by the Enterprise Agreement. That is no doubt because such employees are clearly better off overall under the Enterprise Agreement than they would be if the BC Award applied to them. The main (but not only) reason for that conclusion is the fact that hourly rates of pay under the Enterprise Agreement are between 14.5% and 54.6% higher than the BC Award, depending on the particular classification and whether the employee works on projects in the Southern Coalfield region or outside that region. Other relevant differences are spelt out in the Form F17 filed by Ipsum. Having weighed the more and less beneficial terms of the Enterprise Agreement, I am comfortably satisfied that all full-time and part-time employees, and prospective employees, covered by the Enterprise Agreement will be better off overall under the Enterprise Agreement than if the BC Award applied to them.
[33] My analysis below will focus on casual employees covered by the Enterprise Agreement.
[34] As was the case in CFMMEU v SESLS Industrial Pty Ltd 21 and CFMMEU v SRSW Pty Ltd t/a Stellar Recruitment,22 in the present case the CFMMEU and Ipsum have proceeded on the footing that the BOOT test for prospective casual employees requires a comparison between casual employment under the Enterprise Agreement and part-time or full-time employment under the BC Award. I will adopt the same approach in assessing the BOOT.
Relevant detriments and benefits
[35] As stated above, the hourly rates of pay under the Enterprise Agreement are between 14.5% and 54.6% higher than the BC Award, depending on the particular classification and whether the employee works on projects in the Southern Coalfield region or outside that region. The higher hourly rates of pay under the Enterprise Agreement compared to the BC Award weigh in favour of the Enterprise Agreement passing the BOOT for prospective casual employees.
[36] Under the Enterprise Agreement, a 25% casual loading is added to the hourly rates of pay for casual employees. 23 The presence in the BC Award of a 25% loading for casual staff employees is a matter which I take into account in considering the adequacy of the 25% loading in the Enterprise Agreement for BOOT purposes.24
[37] The higher hourly rates stipulated in the Enterprise Agreement are applied to overtime and various penalties and loadings under the Enterprise Agreement. This provides a further benefit to casual employees covered by the Enterprise Agreement when compared to the BC Award.
[38] A full-time or part-time employee covered by the BC Award is engaged for 35 ordinary hours a week (for a full-time employee) or an agreed number of hours (for a part-time employee). In comparison, a casual employee covered by the Enterprise Agreement may be engaged (or paid) for a minimum of four hours on each engagement, but there is correspondingly less commitment required of a casual employee compared to a full-time or part-time employee. 25 Full-time and part-time employees will not necessarily have more job security than casual employees, although this will often be the case.26 I will attribute weight to these matters in my assessment of the BOOT.
[39] A casual employee covered by the Enterprise Agreement is not entitled to benefits including notice of termination, redundancy pay and paid leave such as personal/carer’s leave, annual leave, and compassionate leave. When compared to a full-time or part-time employee under the BC Award, these differences are material (for the reasons explained by the CFMMEU in its submissions) and will be given appropriate weight. 27 It must also be recognised that benefits such as personal/carer’s leave are contingent (even though they are paid out in certain circumstances under the BC Award), and this impacts the amount of weight to be attributed to the benefit.28 Because personal leave/carer’s leave is a contingent benefit, I do not propose to give it a financial value when making my evaluative assessment as to whether casual employees would be better off overall under the Enterprise Agreement compared to the BC Award.
[40] Given that I am comparing a casual employee under the Enterprise Agreement with a full-time or part-time employee under the BC Award, the differences between the casual provisions of the BC Award, which only apply to staff employees, and the casual provisions of the Enterprise Agreement are less important than would be the case if I was comparing the position of a casual staff employee under the Enterprise Agreement against a casual staff employee under the BC Award. I do accept, however, that those differences are relevant to my consideration as to whether the 25% casual loading provided for in the Enterprise Agreement is adequate as part of my assessment of the BOOT. I have had regard to the submissions made by the CFMMEU and Ipsum in relation to those matters, together with the Undertakings provided by Ipsum which address some of those issues.
[41] The modelling undertaken by the CFMMEU and shown in paragraph [31(j)] above compares a casual inexperienced mineworker employed outside the Southern Coalfield region under the BC Award and the Enterprise Agreement. I consider that analysis to be fundamentally flawed because it assumes that the hypothetical casual inexperienced mineworker would receive a 25% casual loading under the BC Award. But that is not the case. The BC Award does not contain any provisions relating to casual employees within the classifications in Schedule A to the BC Award, which includes inexperienced mineworkers. That is why the CFMMEU has, both in this case and the full bench decisions to which I have referred, proposed a comparison between a casual employee under the Enterprise Agreement and a full-time or part-time employee under the BC Award. 29 A full-time or part-time inexperienced mineworker under the BC Award is not entitled to a 25% casual loading. Once the 25% casual loading is removed from the CFMMEU’s analysis, the hypothetical casual inexperienced mineworker is better off financially (on the assumptions and roster proposed by the CFMMEU) under the Enterprise Agreement than under the BC Award. The removal of the 25% casual loading from the calculation in paragraph [64] of the CFMMEU’s submissions dated 18 May 2021 brings the BC Award total payment down from $4,214.97 to $3,364.97, which is well below the Enterprise Agreement total payment of $4,110.41 in paragraph [65] of the CFMMEU’s submissions dated 18 May 2021. The same conclusion is reached even having regard to the correction in the CFMMEU’s calculations in Schedule A to its submissions dated 2 June 2021.30 The significant impact of the erroneous inclusion of the 25% casual loading when considering the position of a full-time or part-time employee under the BC Award means that it is unnecessary to deal with the range of criticisms made by Ipsum in relation to the CFMMEU’s modelling.
[42] The Enterprise Agreement provides that Ipsum will determine the starting and finishing times of each shift. In comparison, the BC Award provides that shifts in excess of 10 ordinary hours will be worked between the starting and finishing times that are agreed between the employer and the employee. This is a detriment which I will accord appropriate weight in my assessment of the BOOT.
[43] The Enterprise Agreement does not impose an obligation on Ipsum to pay a bonus to any employee. It is therefore a neutral consideration in my assessment of the BOOT.
[44] Having regard to all the circumstances, I am satisfied that each prospective casual employee of Ipsum would be better off overall if the Enterprise Agreement applied to them than if the BC Award applied to them. I have reached this evaluative assessment because the aspects of the Enterprise Agreement which are more beneficial than the BC Award, considered together with the Undertakings, outweigh the aspects of the Enterprise Agreement which are less beneficial than the BC Award. The most significant of these benefits are the hourly rates of pay under the Enterprise Agreement. They are significantly higher than the pay rates prescribed by the BC Award for the same classifications. They are paid for every hour worked by an employee in Ipsum’s employ. They are enhanced by a 25% casual loading, which I consider to be adequate as part of a range of benefits to ensure casual employees will be better off overall under the Enterprise Agreement compared to the BC Award. Some of the detriments are of a contingent nature (e.g. personal leave) and others arise from the fact that permanent employees receive a range of benefits which casual employees do not (e.g. notice of termination), but are offset sufficiently by the 25% casual loading and higher rates of pay. Full-time and part-time employees will often, but not necessarily, have more job security than casual employees. I accept that this weighs against the proposition that all prospective casual employees will be better off overall under the Enterprise Agreement, however it does not, in my assessment, justify or warrant an overall conclusion that the Enterprise Agreement fails the BOOT. The Undertakings address a number of issues raised by the Commission and the CFMMEU in terms of differences between the Enterprise Agreement and the BC Award. I am satisfied that they assist in ensuring that all employees will be better off overall under the Enterprise Agreement than under the BC Award.
Undertakings
[45] In accordance with s 190(3) of the Act, I may only accept the Undertakings if I am satisfied that the effect of accepting the Undertakings is not likely to:
(a) cause financial detriment to any employee covered by the Enterprise Agreement; or
(b) result in substantial changes to the Enterprise Agreement.
[46] The Undertakings have been provided to address various issues identified by the Commission and the CFMMEU. The purpose of the Undertakings is to provide additional protection and/or benefits to employees. I am satisfied that accepting the Undertakings would not be likely to cause financial detriment to any employee covered by the Enterprise Agreement.
[47] As to whether the effect of accepting the Undertakings would be likely to result in substantial changes to the Enterprise Agreement, it is necessary to consider the number and breadth of the Undertakings. 31
[48] Ipsum has provided four separate Undertakings to the Commission. They have been provided to address concerns raised about the BOOT and differences between the Enterprise Agreement and the BC Award. Having carefully considered each of the four Undertakings individually and collectively, I am satisfied that the effect of accepting them would not be likely to result in substantial changes to the Enterprise Agreement.
[49] In accordance with section 190(2) of the Act, I am satisfied that the Undertakings will meet the concerns I have identified above in relation to whether the Enterprise Agreement meets the requirements set out in sections 186 and 187 of the Act.
[50] No comments in relation to the Undertakings were received from any of the employees covered by the Enterprise Agreement.
[51] Pursuant to subsection 190 of the Act, I accept the Undertakings. A copy of the Undertakings is attached in Annexure A to this decision.
Satisfaction of other requirements
[52] Subject to the Undertakings, I am satisfied that each of the requirements of ss 186, 187, 188 and 190 as are relevant to this application for approval have been met.
[53] The Enterprise Agreement is approved and, in accordance with s 54 of the Act, will operate from 1 July 2021. The nominal expiry date of the Enterprise Agreement is 23 June 2025.
DEPUTY PRESIDENT
Annexure A
1 Clause 2 and 14 of the Enterprise Agreement
2 CFMMEU v LS Precast Pty Ltd[2019] FWCFB 1431 at [52]
3 Ibid at [53]; Diamond Offshore General Company v Baldwin & Ors[2018] FWCFB 6907 at [28]-[37]
4 CFMMEU v LS Precast Pty Ltd[2019] FWCFB 1431 at [53]
5 Ibid; One Key Workforce Pty Ltd v CFMEU [2018] FCAFC 77 at [112]
6 Statement of Dylan Robertson dated 25 May 2021 at [5]
7 Ibid at [6]
8 Ibid at [7]-[9]
9 Ibid at [10]
10 Document attached to the F17 lodged by Ipsum
11 Explanation in relation to clause 9 of the Enterprise Agreement
12 s.186(2)(d) of the Act
13 s.193(6) of the Act
14 [2010] FWAFB 9985 at [41]
15 SDA v Beechworth Bakery Employee Co Pty Ltd[2017] FWCFB 1664 at [12]
16 Re Australia Western Railroad Pty Ltd T/A ARG – A QR Company [2011] FWAA 8555 at [8]; NTEIU v University of New South Wales[2011] FWAFB 5163 at [47]
17 TWU v Jarman Ace Pty Ltd[2014] FWCFB 7097 at [28]
18 Loaded Rates Agreements [2018] FWCFB 3610 at [100]
19 Loaded Rates Agreements [2018] FWCFB 3610 at [115(2)]
20 SDA v Aldi Foods Pty Ltd [2016] FCAFC 161 at [33] per Jessup J, who was in the minority but no issue was taken by the majority with this part of Jessup J’s reasons.
21 [2017] FWCFB 3659 (SESLS) at [39]
22 [2020] FWCFB 2052 (SRSW) at [7]
23 Clause 9.4 of the Enterprise Agreement
24 SESLS at [45]; SRSW at [15]
25 SESLS at [41]
26 SESLS at [41]; SRSW at [14]
27 SESLS at [41]-[46]; SRSW at [14]
28 CFMMEU v Mobilise Group Pty Ltd[2021] FWCFB 552 at [47]
29 CFMMEU’s submissions dated 18 May 2021 at [28]-[34]
30 The correction relates to the fact that under both the BC Award and the Enterprise Agreement the penalty rate for overtime payable for the first 3 hours on a Saturday is 150%, not 115% (CFMMEU’s submissions dated 2 June 2021 at [36])
31 ALDI Foods Pty Ltd v TWU[2012] FWCFB 9298 at [54]
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