ISEC Pty. Limited. T/A ISEC Pty. Limited

[2016] FWC 7103

[2016] FWC 7103

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

ISEC Pty. Limited. T/A ISEC Pty. Limited
(AG2016/602)

COMMISSIONER GREGORY MELBOURNE, 7 OCTOBER 2016

Application for approval of the ISEC Single Enterprise Agreement 2016-2020.

Introduction

[1] This decision deals with an application for approval of an enterprise agreement known as the ISEC Single Enterprise Agreement 2016-2020. It is made under s.185 of the Fair Work Act 2009 (Cth) (“the Act”) by the Employer, ISEC Pty Ltd (“ISEC”).

[2] The application and the accompanying Statutory Declaration provided by ISEC’s CEO, Mr Tony Daou, indicate that at the time the application was made the business employed 11 employees, who are all engaged on either a part-time or casual basis. It was also indicated that the employees work at various locations in Sydney, providing security services at events, and at hotels, licensed clubs and other venues.

[3] After reviewing the application and the terms and conditions contained in the proposed Agreement the Commission forwarded correspondence to ISEC about various issues to do with satisfaction with the requirements of the “better off overall test.” After further exchanges the Commission then decided to list the matter for hearing in order to enable ISEC to provide any further submissions or evidence in support of the application.

[4] Mr Paul O’Halloran from FCB Group was granted permission to appear on behalf of ISEC under s.596(2)(a) of the Act as the matter involves a degree of complexity and his involvement might enable it to be dealt with more efficiently. Mr Frank Bellomo, the General Manager of ISEC, also appeared in the proceedings with Mr O’Halloran.

The Issues to be Determined

[5] Section 186(1) of the Act requires that the Commission must approve an Agreement if satisfied that each of the various requirements in ss.186 and 187 are met. Section 186(2)(d) states that the Commission must be satisfied the Agreement passes the “better off overall test” as part of these requirements. The nature of the “better off overall test” is dealt with in s.193(1). It states:

“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.”

[6] It is well established that the application of the test requires identification of the terms and conditions in the proposed Agreement that are more beneficial for the employees, and those which are less beneficial, with an overall assessment then being made about whether the employees would be “better off overall” under the terms and conditions in the Agreement, compared with those in the underlying Award. As indicated, in this case the relevant Award is the Security Services Industry Award 2010.

[7] The recent Full Bench decision in Duncan Hart v Coles Supermarkets Australia Pty Ltd and Bi-Lo Pty Limited T/A Coles and Bi Lo 1 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.” 2

[8] Therefore, the Commission is now required to determine whether the terms and conditions contained in the proposed ISEC Single Enterprise Agreement 2016 – 2020 satisfy the requirements of the “better off overall test” when compared to those contained in the underlying Security Services Industry Award 2010.

The Evidence and Submissions

[9] The Commission raised a range of matters with ISEC in the correspondence provided to it about satisfying the requirements of the “better off overall test.” It noted, firstly, the information provided about the anticipated roster arrangements, but indicated in response that it was concerned about rosters where the majority of working hours were rostered in the evenings or at weekends. The Commission suggested that the rates proposed in the Agreement in these circumstances did not seem to be sufficient to compensate for the penalty rates provided for in the Award, including the rates of time and a half for work performed on Saturday, and double time for work on Sunday.

[10] The Commission also raised issues about the entitlements for part-time employees and whether they matched those in the Award. It also appeared that the hours of part-time employees can be varied at any time up to 38 hours each week without any overtime obligations applying. A voluntary additional hours option was also provided for part-time and casual employees, which enables work to be performed beyond 38 hours at the casual rates of pay, instead of at the overtime penalty rate.

[11] The Commission also highlighted other areas where there appeared to be significant differences between the proposed Agreement and the Award entitlements. These included the provisions relating to split shifts, taking time in lieu of overtime, being directed to take leave without pay if a client’s business closes, requirements to attend undpaid training, and removal of the annual leave loading entitlement. It was also noted that the wage increases provided for under the terms of the Agreement are less than those awarded in recent Minimum Wage Review decision. 3 A further issue was also raised about whether the proposed superannuation scheme provided a MySuper product.

[12] ISEC provided correspondence in response proposing that a number of undertakings could be provided to deal with concerns raised by the Commission. It also provided a detailed analysis by way of comparison between the Award and the Agreement entitlements.

[13] The undertakings proposed by ISEC dealt with the following matters:

• Confirmation that the default superannuation fund offers a MySuper product.



• The personal leave provisions in the National Employment Standards (“NES”) are to apply in place of clause 48.2 in the Agreement.



• The provisions in the NES are to apply in place of those in clause 50.3.1 of the Agreement.



• Crib breaks are to apply in addition to the meal breaks referred to in clause 32.



• Employees will not be rostered exclusively on permanent night work as defined in the Award. In the event that any such roster is required payment will be provided at the rate provided for in the Award plus an additional 1%.



• An undertaking that employees will not be rostered to work exclusively on weekends. In the event that this does occur the employees will be paid at the applicable Award hourly rate of pay for weekend work plus 1%.



• It will not be mandatory for employees to complete 38 hours of learning and development each year.



• Casual employees will not be rostered to work on a public holiday. In the event that this is necessary they will be paid at the applicable Award rate plus 1%.



• The rates in the Agreement will be increased by 2.4% from the date of approval of the Agreement by the Commission.



• Part time employees are entitled to overtime in accordance with clause 23.3 of the Award.

Consideration

[14] The application and the terms and conditions contained in the proposed Agreement have now been reviewed again in conjunction with the additional undertakings proposed by ISEC. The Commission has had particular regard in this context to the proposed wage rate arrangements. Various provisions in the Agreement are relevant in this context. Firstly, clause 23.1 states that, “Hours of work for all Employees shall be any day of the week 24 hours per day”.

[15] Clause 21, “Span of Hours” then described as the three different shift arrangements in the following terms:

“SPAN	PERIOD
Day shift non-rotating	Monday to Friday 0600hrs to 1800hrs
Night Shift non-rotating	Monday to Friday 1800hrs to 0600hrs
Rotating Hours	0000 to 2400hrs Monday to Sunday (Incl. Public Holidays)” 4

[16] Clause 28 “Rates of Pay” then contains the rates of pay applicable for each of these different shift arrangements at the each of the 5 classification levels for both full-time, part-time and casual employees. A separate set of rates are then indicated to apply for work performed on public holidays. As indicated, ISEC now proposes to provide a further undertaking which would increase the rates set out in the Agreement by 2.4%, being the amount awarded by the Commission in the recent Minimum Wage Review decision. 5 Those rates would now be as follows at the Level 1 classification after they are increased by 2.4%:

• Full Time/Part Time Non-Rotating day – $20.32



• Full Time/Part Time Non– Rotating night – $24.26



• Full Time/Part Time Rotating – $25.96

[17] The following calculations are accordingly based on the above rates, which include the increase of 2.4%. Those rates have been compared to the current rates in the Security Services Industry Award 2010, which also include the 2.4% increase granted by the Minimum Wage Review decision 6 which took effect from 1 July this year. The following examples have been selected from a variety that could have been chosen. However, they are based on part-time work arrangements, given that the Employer’s Statutory Declaration indicates that the majority of employees are to be engaged on a part-time basis. The calculations are also based on a comparison between the rates for the Level 1 classification, given that it is understood the majority of employees are engaged at this classification level.

[18] It is noted, firstly, that the Agreement rate of $20.32 for the Day Shift Non-Rotating roster compares favourably with the hourly rate of $19.89 under the Award. However, this comparison does not necessarily have regard to other entitlements in the Award that are not replicated in the Agreement.

[19] In terms of the Full-Time/Part-Time Non–Rotating Night roster the hourly rate in the Agreement of $24.26 is marginally better than the Award rate of $24.21, although it is also noted that the higher permanent nightwork penalty would also apply under the Award if more than two thirds of the employee’s ordinary shifts include ordinary hours which fall between midnight and 6 a.m.

[20] The next comparison involves the rates proposed in the Agreement for the Full-Time/Part-Time Rotating roster. The following example is based on an employee working 7 hours on Thursday during the day, 7 hours on Saturday, and then 7 hours on Sunday. Under the Award of the employee would be entitled to the following amounts:

• Thursday – 7 hours x $19.89 = $139.23



• Saturday – 7 hours x $29.84 = $208.88



• Sunday – 7 hours x $39.76 = $278.46

[21] These amounts add up to a total of $626.57 for the 21 hours worked. This compares with the entitlements under the Agreement which provide for the hourly rate of $25.96 to be paid for each of the 21 hours worked, representing a total amount of only $545.16.

[22] If the 7 hours on Thursday are worked in the evening instead of during the day a similar outcome results. Under the Award the following entitlements would apply:

• Thursday – 7 hours x $24.18 = $169.47



• Saturday – 7 hours x $29.82 = $208.88



• Sunday – 7 hours x $39.76 = $278.46

[23] This amounts to a total of $656.81 under the Award compared to the corresponding entitlement under the Agreement, which would continue to be $545.16.

[24] This discrepancy would also be accentuated if more of the hours were worked on Sunday. For example, if 10 hours were worked on Sunday, 6 hours on Saturday, and 5 hours on Thursday night, the following outcome would result under the Award:

• Thursday – 5 hours x $24.21 = $121.05



• Saturday – 6 hours x $29.84 = $179.04



• Sunday – 10 hours x $39.78 = $397. 80

[25] This amounts to a total figure of $697.89 compared to the amount of $545.16 that would have been earned under the Agreement if the corresponding hours were worked.

[26] As indicated, these examples are simply based on a direct comparison of the applicable wage rates. There are also other entitlements in the Award, which do not appear to be provided for in the proposed Agreement. For example, the Award contains a broken shift allowance and meal allowance entitlement when additional hours are worked which is not provided for in the Agreement. The Award also contains a higher duties entitlement, which is not provided for in the Agreement. The Agreement also has a minimum 3 hour spread of hours, whereas the Award provides for 4 hours. In addition, the leave loading entitlement does not apply under the Agreement for employees working the Full-Time/Part-Time Rotating roster. The Agreement also provides for overtime to be paid on the basis of time and a half for the first 2 hours and double time thereafter, whereas the Award provides that all overtime on Sunday is to be paid at double time, with double time and a half being the applicable rate for overtime worked on a public holiday. Finally, the Agreement provides for wage increases during the life of the Agreement of 2%, which is less than the amounts that have been awarded in recent Minimum Wage Review decisions.

[27] The Agreement also enables overtime entitlements to be excluded in certain circumstances and for payments for additional hours to be made at the casual rate of pay. There are also additional conditions which would require an employee to attend training without payment. An additional undertaking is also provided in regard to part-time employment, however, it is not entirely clear whether this would still allow part-time hours to be varied providing the Employer provides 7 days’ notice.

[28] On this basis I am not satisfied that it is possible to conclude that the Agreement can satisfy the requirements of the “better off overall test”.

[29] It is also noted that it could be submitted that the examples of rosters that have been used in the above examples are not roster arrangements that are currently in place. However, this does not mean that such rosters could be implemented in the future. They also appear to be reasonable examples to use given that ISEC is a business that is placing security guards in hotels or licensed clubs, or is involved in providing security guards at a number of major events.

Conclusion

[30] In conclusion, I am not satisfied that it is possible to conclude that each of the employees to be covered by the proposed Agreement would be “better off overall” when compared to the terms and conditions contained in the Security Services Industry Award 2010. In coming to this conclusion I have had particular regard to the comparisons made about the wage arrangements. However, it is also noted that there are a number of other aspects of the Agreement that do not match the terms and conditions contained in the underlying Award and, in fact, provide inferior conditions in some cases. It follows, in conclusion, that I am not satisfied the Agreement can be approved because its terms and conditions do not satisfy the requirements of the “better off overall test”. As indicated, in the decision referred to at the outset the application, 7 the test requires satisfaction, as at the test time, that each Award covered employee and each prospective employee would be better off overall under the Agreement. For the reasons indicated I am not satisfied that this is the case in the present matter.

[31] I have also considered whether further undertakings could be sought from ISEC in order to deal with the issues identified. However, undertakings have already been considered. Previous decisions of the Commission have also emphasised that the process of providing and considering undertakings is not intended to be a negotiation process designed to eventually satisfy the statutory requirements. The obvious concern in this regard is that such processes can lead to an outcome that is significantly different from what was in contemplation by the parties when the Agreement was made, and subsequently voted on. I am satisfied that this would be the case in the present matter. The rates, in particular, for work performed on Sundays are significantly different from those contained in the Security Services Industry Award 2010. Therefore, I do not consider it is appropriate in the current circumstances to explore the possibility of obtaining additional undertakings, given that those that have already been proposed and considered.

[32] In conclusion, I am not satisfied that the terms and conditions contained in the proposed Agreement can satisfy the requirements of the “better off overall test.” The application is accordingly dismissed.

COMMISSIONER

Appearances:

P O’Halloran of FCB Group and F Bellomo for the Applicant.

Hearing details:

2016.

Melbourne

July 29

 1   [2016] FWCFB 2887.

 2 Ibid at [15].

 3   Annual Wage Review 2015–16 [2016] FWCFB 3500.

 4   Proposed ISEC Single Enterprise Agreement 2016–2020.

 5   Ibid.

 6   Ibid.

 7   Above n 1.

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