Jellifish! Pty Ltd

[2012] FWA 9640

[2012] FWA 9640

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement

Jellifish! Pty Ltd
(AG2012/979)

COMMISSIONER ASBURY BRISBANE, 13 NOVEMBER 2012

Application to approve the JelliFish! Enterprise Agreement 2012 - Better Off Overall Test - consideration of public interest.

BACKGROUND

[1] This is an application by JelliFish! Pty Ltd for approval of the JelliFish! Pty Ltd Enterprise Agreement 2012 (the Agreement). The application is made pursuant to Chapter 2, Part 2-4 of the Fair Work Act 2009 (the Act). JelliFish! is a labour hire company supplying labour to clients in the horticulture industry. During a telephone hearing on 1 June 2012, I outlined a number of concerns I had with respect to the terms of the Agreement and whether it passed the better of overall test (BOOT) as set out in s.193 of the Act, when considered against the terms of the Horticulture Award 2010 (the Award).

[2] JelliFish! was represented by Mr Clifford, a Solicitor of Clifford Gouldson Lawyers, appointed as a bargaining representative. At the conclusion of the hearing, Mr Gouldson was granted an adjournment to enable him to take instructions and provide further submissions. Those submissions were received on 10 September 2010 and on the basis that they did not fully address the issues raised at the hearing on 1 June 2012, the application was re-listed for a further telephone conference on 21 September 2012. At that conference, Mr Gouldson advised that his client was overseas, and that he may have difficulty in obtaining instructions. Mr Gouldson initially sought that the application be held in abeyance until February 2013, when his client would return from overseas. That request was refused on the grounds that the application needed to be dealt with expeditiously and the period of the adjournment sought was not reasonable.

[3] Directions were issued requiring a response to the concerns relating to whether the Agreement passes the BOOT by 8 October 2012. An extension to 9 October 2012 was granted at the request of Mr Clifford, and the submissions were received on 10 October 2012.

CONCERNS RELATING TO WHETHER AGREEMENT PASSES THE BOOT

[4] My concerns in relation to whether the Agreement passes the BOOT, as communicated to the applicant employer’s bargaining representative, can be summarised as follows:

• The Agreement provides for “daily hire” employment which defines such employees as “employed on the same principle as a permanent part-time employee under the Horticulture Award” in circumstances where there is no provision for daily hire employment under the Award;



• The Agreement allows for averaging of ordinary hours over a 12 month period rather than a maximum of four weeks as provided under the Award;



• The Agreement purports to remove rights employees may have to make a claim against the employer for compensation or damages in respect of termination of employment (unless conferred by legislation);



• The Agreement provides for employees to be paid at a loaded rate which is stated to include all payments for:



• Voluntary overtime/penalty rates



• Allowances (if applicable)



• Annual leave loading



• Annual leave entitlements



• Personal/carer’s leave entitlements.



• The loading is 20% for permanent full time employees and 10% for “daily hire employees;”



• The Agreement purports to require employees to pay for property of the client or the employer damaged or broken by them and to constitute authorisation on the part of employees for such costs to be deducted from their wages;



• The Agreement purports to require employees to indemnify the employer or the client for loss or damage suffered as a result of damage to a company motor vehicle caused by the employee.

EVIDENCE

[5] An affidavit deposed by Mr Shane David Ridley, Managing Director of JelliFish! was tendered, in support of the approval of the Agreement. According to Mr Ridley, JelliFish! is a labour hire company, providing labour to clients in the horticultural industry, who grow crops that include tomatoes, blueberries, grapes, macadamia nuts and leafy vegetables. The industry is seasonal in nature.

[6] In relation to the daily hire classification, Mr Ridley states that he wants to make it clear to employees that due to seasonal fluctuations in the horticultural industry, inclement weather and machinery break down, that there may be less hours of work available to be performed by an employee during the working week. According to Mr Ridley, the Agreement contains provisions for daily hire employees that are similar to permanent part time employees whose employment would be governed by the Award. The additional monetary benefit provided to permanent full time employees who are paid a 20% loading and not the 10% loading payable to “daily hire” employees, is to encourage them to remain with JelliFish! and not to cease work in the low season, so that there is some stability in the provision of labour to clients.

[7] In relation to voluntary overtime, Mr Ridley states that seasonal fluctuations mean that a client will have more work available at some times of the year - for example harvest time - and employees wish to take advantage of those fluctuations and request further work to maximise their earnings. Penalty payments on public holidays and overtime increase costs significantly for JelliFish! if employees wish to perform work at such times. Costs arrangements with clients provide for a fixed price per hour, in order for JelliFish! to remain financially viable. If JelliFish! is required to pay penalty and overtime payments, it will bear the additional labour costs directly. These are in the amount of $10 to $25 per hour per employee permitted to work additional hours.

[8] In peak periods of the year, the demand by employees to work overtime at the penalty rates in the Award, would adversely affect the Company’s profit margin and it cannot justify these additional costs on a regular basis. JelliFish! is unable to pass these costs on to its clients, as to do so would render its services unaffordable.

[9] Mr Ridley also said that certain employees of JelliFish! would like to work additional hours to be able to maximise their earnings, on the basis that employees tend to relocate to where a particular crop to which they have been assigned is located for the duration of the work. To justify the relocation and the downtime in the non-peak periods of a season, employees request to work additional hours to make the relocation worthwhile from a monetary perspective.

[10] Factors such as weather, the personal circumstances of employees and travel requirements impact on the practicalities of employees being available to work on multiple crops with JelliFish! throughout the year.

[11] At certain times of the year, JelliFish! requires its employees to perform overtime or work on a public holiday and for this reason payment for this work at the applicable penalty rates under the Award is provided for in the Agreement. To balance the needs of clients, the commercial viability of the business and the financial circumstances of employees, Mr Ridley is of the belief that enabling those employees to work reasonable additional hours at the loaded rate of pay contained in the Agreement is a way of achieving this.

SUBMISSIONS

Daily Hire Employees

[12] The Agreement provides for employment categories of permanent full time and “daily hire” employees. Daily hire employees are defined in clause 1.3 as: “employees employed on the same principle as a permanent part-time employee under the Award.” The Agreement also provides that permanent full time employees are required to work an average of 38 hours per week and daily hire employees not more than 12 ordinary hours in a day and “it is anticipated” less than 38 ordinary hours per week. Ordinary hours of work under the Agreement are to be performed between the hours of 5.00 am and 5.00 pm Monday to Saturday.

[13] The Agreement also provides that employees agree that due to the seasonal nature of their work, they may be notified by the employer up to 24 hours prior to the commencement of their shift, of their ordinary hours of work. There is no category of casual employee under the Agreement.

[14] Daily Hire employees receive an over award payment of approximately 10% of their hourly rate, which is said to include all payments for:

• Voluntary overtime/penalty rates;



• Allowances if applicable;



• Annual leave loading;



• Annual leave entitlements; and



• Personal/carers’ leave entitlements.

[15] The over award payment is 20% for full time permanent employees and includes all payments for the same entitlements as are encompassed by the over award payment for daily hire employees. The rates including the over award payments are referred to in the Agreement as the “Full Rates of Pay”. The Agreement provides that the Full Rates of Pay provide for the maximum annual leave and personal/carers’ leave entitlements that an employee has in any one year, pro-rated to an hourly rate equivalent, and is paid regardless of whether an employee uses only part of their entitlement. Leave taken during the course of employment is unpaid at the time it is taken, because the employee has already been paid for it.

[16] It is submitted that the use of the term “daily hire employee” is to make obvious the seasonal factors present in the horticultural industry and the fact that it is usual for labour to be supplied on a daily basis because of interruptions such as inclement weather or machinery breakdown during an ordinary working week. Further JelliFish! wishes to make it clear that as it provides labour hire to clients within the horticultural industry, seasonal and other variances may result in work being available only on a daily basis, and not more regularly. The terms and conditions of such employees are “in principle” similar to those of permanent part time employees.

[17] It is further submitted that daily hire employees have been recognised in the construction industry and the meat industry and in the latter case this category of employment takes seasonal factors into consideration. Seasonal variances in the meat industry can be likened to the various seasonal demands present in the horticultural industry.

[18] In relation to the different loadings for permanent full time employees and daily hire employees, it is submitted that the higher rate for permanent full time employees is to recognise and encourage their contribution to the workforce and to encourage them to continue in employment at times when there is not much work to be performed.

Voluntary Overtime/Work on Public Holidays

[19] The Agreement provides that employees who “volunteer” to work overtime and/or on Public Holidays, are paid the applicable rate of pay in Schedule A. In all other circumstances, the employee is paid the “applicable overtime rates”. Presumably these are the rates in the Award, although this is not specified.

[20] In relation to these provisions, it was submitted that the BOOT is a global test and requires a balanced consideration of the relevant advantages and disadvantages to employees. Reference was made to the decision of Commissioner Deegan in Canberra Building Services Pty Ltd 1 where it was observed that taken as a whole, the benefits under an agreement more than made up for any loss of award conditions.

[21] The ability of employees to perform overtime or work on public holidays on a voluntary basis, was said to enable employees to maximise their earnings if they so wish, by performing additional hours without rendering it unprofitable for the employer. It was also submitted that due to the fixed margins the employer is required to maintain to remain competitive, penalty and overtime payments during the peak season are not economically viable.

[22] Further, it was pointed out that the loaded rates of pay provided in the Agreement for each ordinary hour worked provide for an apportionment of voluntary overtime/penalty rates for employees, so that ultimately it could be the case that there is no detriment to an employee voluntarily electing to perform overtime or public holiday work.

[23] Some calculations provided on behalf of JelliFish! in supplementary submissions are said to evidence that the rates of pay in the Agreement place daily hire employees in a better off overall position if they work 40.5 hours in a week, and in relation to permanent full time employees the cut off figure is 43.5 hours in a week. JelliFish! concedes that employees may work more or less than this number of hours but contends that the rates of pay in the Agreement include:

• Payment for overtime (calculated on an average working week) and/or



• An apportionment of a penalty rate per hour in the event an employee works a public holiday during the year.

[24] The ability to work voluntary additional hours was further said to be a method by which employees could make relocation to areas where particular crops are harvested, financially worthwhile. Reference was also made to the higher taxation rates which would apply if employees obtained additional employment with another employer to supplement their remuneration, because JelliFish! was not able to offer them additional hours.

[25] It was contended that should the Tribunal require an undertaking from JelliFish! to the effect that an annual reconciliation would be conducted by the employer for each employee to ascertain whether that employee received less under the Agreement than he or she would have received for working the same hours under the Award, such undertaking would be ineffective because of the transient nature of the workforce, the varying hours of work due to peak and low periods and the impact of weather and machinery breakdown on work being available to be performed throughout the year.

[26] As an alternative, JelliFish! indicated that it is prepared to offer an undertaking to complete a reconciliation on termination of an employee’s employment, where requested by the employee.

[27] In support of the proposition that the inclusion of voluntary additional hours would not prevent the approval of the Agreement, extensive reference was made to the decision of Deputy President Bartel in Top End Consulting Pty Ltd. 2It was submitted that the circumstances of the employer in that case are analogous with those of JelliFish! in that the stated purpose of the employer was to allow the business to offer additional hours to employees to enable them to maximise their income during peak times. There was evidence from a client of the employer in that case that the profit margin for the business would evaporate if penalty rates under the award were paid, and an employee gave evidence to the effect that she would rather work additional hours without payment of overtime, than not work extra hours at all. It was submitted that the same considerations applied in the present case.

Common law claims

[28] Clause 6.1.7 of the Agreement provides that if an employee’s employment is terminated under clause 6.1.5, the employee will not have any claim against the employer for compensation or damages in respect of the termination, unless conferred by legislation. Clause 6.1.5 of the Agreement, referred to in clause 6.1.7, provides as follows:

“The Employees acknowledge and understand that due to the seasonal nature of their employment, if a client’s contract with the Employer ceases, then an employee may no longer be required to perform their role and their employment with the Employer may come to an end in accordance with clause 6.1.1 of the Agreement.”

[29] It is submitted that clause 6.1.7 is necessary to recognise the seasonal demand of the industry and that due to fluctuating demand in certain circumstances where no work may be available for an employee to perform. It is further submitted that the clause is an acknowledgement that termination of employment is not due to performance or conduct on the part of the employee.

Deductions from employees’ wages

[30] Clause 9.1.3 of the Agreement provides as follows:

“If Employees damage stock or break property of the Employer or the Client, then they must pay for any associated repairs or replacement of that item.”

[31] Clause 9.1.4 is in the following terms:

“Employees acknowledge and agree that the cost of the repair or replacement of the property may be deducted from the Employee’s pay as a permitted deduction as prescribed by the Act.”

[32] In support of the contention that such clauses are about permitted matters and do not cause the Agreement to fail the BOOT, reference was made to the decision of Commissioner Gooley in Radaploy Pty Ltd. 3It is submitted that the clauses in the Agreement under consideration in the present case can be distinguished from those in Radaploy and that the consent provided by employees pursuant to clause 9.1.4 is consistent with authorisation for the purposes of s. 324(1)(b) of the Act. It is further submitted that in the decision in Radaploy Commissioner Gooley stated that in approving an agreement, the Tribunal is not required to determine if the terms offend s. 324 or 326 of the Act or whether a clause is enforceable. Commissioner Gooley also held that even if a clause is not enforceable, the Tribunal is not entitled on that basis to decline to approve the agreement.4

[33] It is submitted that whether clauses 9.1.3 and 9.1.4 on their face provide for a reasonable deduction (or not) within the meaning of s. 326 of the Act, is not a matter that ought to be taken into consideration in deciding whether the Agreement should be approved. It is also submitted that the inclusion of these clauses in the Agreement is to turn an employee’s mind to these matters so that they are careful in the use of the employer’s and the client’s property. Further, it is contended that the authorisation from the employee to deduct these costs is a benefit, because the employer and the employee can plan together which pay cycle or cycles the costs should be deducted and the employee can budget and adjust for the costs accordingly.

Indemnity

[34] Clause 9.1.7 of the Agreement provides that employees acknowledge and agree that they will indemnify the employer or the client for any loss it suffers as a result of damage to a company motor vehicle caused by the employee. In the hearings in relation to the approval of the Agreement I indicated my concerns that this clause does not pertain to the relationship between the employer and employee but rather the relationship between the employer and the employer’s insurer.

[35] In its submissions, the employer provided an undertaking that it would not refer to, rely on or apply clause 9.1.7.

Exceptional Circumstances

[36] It was submitted that if the submissions in relation to the Agreement passing the BOOT are not accepted, then the Tribunal should accept that exceptional circumstances exist and approve the agreement on the grounds in s. 189(2) of the Act. In this regard, reference was made to the decision of Deputy President Bartel in Top End Consulting where it was stated that the test in s. 189(2) is whether the Agreement, because of exceptional circumstances, is not contrary to the public interest, which is a lower test than whether approval of the Agreement is in the public interest. 5

[37] Reference was also made to the decision in Samphie Pty Ltd T/A Black Crown Organics 6where one of the reasons for approving an agreement pursuant to s. 189(2) was exceptional circumstances associated with the fact that the employer is in a seasonal industry and is subject to peaks and troughs in workload. It was submitted that although it was relevant that the agreement in that case was made during the bridging period and the approval was to assist the employer to transition to the modern award, the decision in Top End Consulting was handed down after the cessation of the bridging period, and no distinction was drawn in this regard. It was also submitted that the example in s. 189(3) does not limit the Tribunal to approving an agreement under that section only where it is to deal with a short term crisis.

COMPARISON OF THE AWARD AND AGREEMENT PROVISIONS

[38] In the present case, for the purposes of assessing whether the Agreement passes the BOOT, the relevant modern award is the Horticulture Award 2010 (the Award). There were no submissions on behalf of JelliFish! in relation to whether the Transitional Provisions in Appendix A of the Award had application or should be used in the assessment of whether the Agreement passes the BOOT, however the calculations provided by the employer in support of the approval of the Agreement are based on the Award rates as at 1 July 2011. On that basis, I have taken the same approach, and I am also of the view that the difference in the transitional rates and the current Award is not material in this case.

[39] The Award provides for employment on a full time, part time or casual basis. Full time employees are engaged to work an average of 38 ordinary hours per week and part time employees to work less than an average of 38 ordinary hours per week, at mutually agreed times. Part time employees receive on a pro rata basis, equivalent pay and conditions to those of full time employees who do the same work and are entitled to overtime payments for all work in excess of the mutually arranged hours. Casual employees’ ordinary hours of work are the lesser of an average of 38 hours per week or the hours required to be worked by the employer. Casual employees receive a loading of 25% instead of annual leave, personal/carers’ notice of termination, redundancy benefits and other entitlements of full-time or part-time employment provided for in the Award.

[40] The Award requires that ordinary hours for day workers will not exceed 152 over a four week period and provides for those hours to be worked from Monday to Saturday, between the hours of 6.00 am and 6.00 pm except where otherwise agreed. Ordinary hours are 8 per day provided that by agreement ordinary hours not exceeding 12 per day may be worked.

[41] Payment of overtime is dealt with in clause 24 of the Award. An employee may elect to take time off in lieu of overtime. Where the employee elects to be paid for the overtime, the rate of pay is 150% except for time worked on a Sunday which is paid at 200%, other than during the harvest period. Where employees are required to work on a Saturday and the majority elect to work on Sunday instead, then such work is paid for at the rate of 150% rather than 200%. During the harvest period, the first 8 hours of overtime in a week may include 5 hours on a Sunday at the rate of 150% but all Sunday work in excess of the 8th overtime hour worked in the week, or in excess of 5 hours on a Sunday, is paid at the rate of 200%.

[42] The Award also contains leading hand, wet work, tool and equipment, first aid allowances, and provides for employees required to travel from place to place, to be paid for travelling and reimbursed for suitable accommodation where they are compelled to spend the night away from home or the property at which they are employed.

[43] The Award provides for annual leave in accordance with the National Employment Standards (NES) and a loading of 17.5% for full-time and part-time employees. Such employees are also entitled to Personal/carers’ leave and compassionate leave; Community Service leave and public holidays in accordance with the NES. The Award provides for substitution of public holidays for other days by agreement between the employer and the employee, and the rate of pay for work performed on public holidays is 200%.

[44] The classification structure in the Award has five levels, as does the classification structure in the Agreement. The Agreement does not contain classification definitions. For the purpose of the assessment I have used Level 1 in the Award, which is the level for employees performing routine duties including labouring and picking fruit and vegetables. I have made the assumption that Level 1 in the Award is equivalent to Level 1 in the Agreement. I have used this classification because the evidence and submissions on behalf of JelliFish! indicate that the majority of employees who will be covered by the Agreement will be performing this type of work.

[45] The minimum hourly rate under the Award for a weekly employee classified at Level 1 is $15.51 per hour. By virtue of clause 15, the Award provides for piecework and any agreement for work to be performed on this basis must result in the average competent employee being able to earn at least 15% more than the minimum hourly rate prescribed in the Award for the type of work being performed. Clauses of the Award dealing with ordinary hours of work, rostering, overtime and meal allowances do not apply to employees on a piecework rate.

[46] Therefore, the minimum piecework rate for a weekly employee under the Award is $17.83 per hour. A weekly employee who is on a piecework rate, is also entitled to other Award provisions such as annual leave, Personal/carers’ leave and allowances. The minimum piecework rate for a casual employee includes the casual loading. There is no indication that the casual loading is compounded by the piecework loading, and the fact that the piecework loading is to compensate for the non-application of hours of work and overtime provisions, is indicative that the piecework loading is not absorbed into the casual loading. Therefore the piecework rate for a casual employee under the Award is calculated by adding 40% (comprising the piecework rate of 15% and the casual loading of 25%) to the hourly rate, and for a Level 1 is $21.71 per hour.

[47] The minimum hourly rate for a Level 1 employee under the Agreement is $21.14 for a permanent full time employee and $19.21 for employees designated as “daily hire employees”. According to clause 5.2 of the Agreement, the hourly rates for permanent full time employees include a 20% loading to include all payments for voluntary overtime/penalty rates; allowances (if applicable); annual leave loading; annual leave entitlements; and personal/carers’ leave entitlements. The loading for a Level 1 employee (on the basis of 20% of $21.14) is $4.22, and the unloaded hourly rate is $16.92.

THE LEGISLATIVE FRAMEWORK

The approach to assessing whether an agreement passes the BOOT

[48] Provisions of the Act relevant to determining whether an agreement passes the BOOT are found in s. 193 which provides as follows:

“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 FWA 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.

FWA must disregard individual flexibility arrangement

(2) If, under the flexibility term in the relevant modern award, an individual flexibility arrangement has been agreed to by an award covered employee and his or her employer, FWA must disregard the individual flexibility arrangement for the purposes of determining whether the agreement passes the better off overall test.

When a greenfields agreement passes the better off overall test

(3) A greenfields agreement passes the better off overall test under this section if FWA is satisfied, as at the test time, that each prospective award covered employee for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.

Award covered employee

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

(a) is covered by the agreement; and

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

(i) is in operation; and

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

(iii) covers his or her employer.

Prospective award covered employee

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

(a) would be covered by the agreement; and

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

(i) is in operation; and

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

(iii) covers the employer.

Test time

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

FWA may assume employee better off overall in certain circumstances

(7) For the purposes of determining whether an enterprise agreement passes the better off overall test, if a class of employees to which a particular employee belongs would be better off if the agreement applied to that class than if the relevant modern award applied to that class, FWA 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.”

[49] In Armacell Australia Pty Ltd 7 a Full Bench of Fair Work Australia said:

“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.”

[50] In Topend Consulting Pty Ltd 8Deputy President Bartell noted that the BOOT is expressed in slightly different terms to the previous “no disadvantage test”. However, the Deputy President went on to hold that the approach outlined by the Full Bench in Bupa Care Services Pty Ltd with respect to the application of the no-disadvantage test, also applied to the application of the BOOT. It was noted that in Bupa Care Services Pty Ltd9a Full Bench of Fair Work Australia held that the no-disadvantage test is to assessed by a comparison of the terms of the Agreement as against the terms of the reference instrument(s) and that the effect that the terms and conditions may have on the actions of the employees or the employer is not relevant to the assessment.10

[51] In Solar Systems Pty Ltd 11a Full Bench of Fair Work Australia stated that the approach of Deputy President Bartel in Top End Consulting Pty Ltd was not incorrect and affirmed the approach of the Full Bench in Armacell Australia Pty Ltd. The Full Bench in Solar Systems Pty Ltd went on to express the view that there is a danger in seeking to place a gloss on the legislative test in relation to the BOOT beyond the words of the section, and that the task is best expressed as applying those words.12

[52] The agreements under consideration in Bupa all provided for hours of work termed “preferred hours”and for employees who “elected” to work “preferred hours” to be paid for such hours at basic or ordinary rates, rather than overtime or loaded rates that would have otherwise applied. The Full Bench in that case made it clear that in considering whether an agreement containing such provisions passed the previously applicable no-disadvantage test, factors extraneous to the terms of the agreement and the relevant reference instrument, are not taken into account. That approach continues to be apposite with respect to the application of the BOOT, as evidenced by the decisions in Top End Consulting and Armacell Australia.

[53] Accordingly, considerations including that an employee chooses to work hours which would otherwise attract penalty or overtime payments; or that an employer would not roster the employee to work those hours if the employer was required to make those payments; or the fact that the employee would rather receive some income for working the hours than not be rostered to work them at all; are not relevant considerations for determining whether an agreement passes the BOOT. As the Full Bench in Bupa observed, overtime under the relevant award in that case, is paid at the rate of time and a-half for the first two hours and double time thereafter, regardless of whether the request to work the hours in question is at the initiative of the employee.

[54] An enterprise agreement that provides for hours that would otherwise be paid at overtime rates if the employee was covered by a modern award, to be paid at a base or ordinary rate that is less than the overtime rate under the modern award, contains a provision that is less beneficial than the modern award. In order for that agreement to pass the BOOT, it is necessary for the Tribunal to be satisfied, that at the test time, the Agreement contains provisions that are more beneficial than equivalent terms in the modern award or are not conferred by the modern award, that offset those provisions that are less beneficial, so that on balance, employees are better off overall if the agreement applied to them than they would be if the modern award applied.

[55] Thus an agreement that provides for a loaded hourly rate payable for all hours worked, may result in employees being better off overall notwithstanding that they are working some hours that would be paid at overtime rates if they were covered by a modern award. This is because the loaded rate is payable for all hours worked and not just those payable at overtime rates. There may also be a cut off point where employees work so many hours that the loaded rate ceases to result in employees being better off overall than they would be if the award applied.

Agreement provisions not in modern awards and the BOOT

[56] The Agreement in the present case contains a number of provisions which place obligations on employees that are not found in the Award. Some of those obligations are onerous or could impact on the rights of employees under the Act or at common law. In this regard, clause 6.1.7 purports to remove entitlements of employees to make claims against the employer for compensation or damages on termination of employment, unless conferred by legislation.

[57] Clauses 9.1.3 and 9.1.4 provide for the employee to have costs of repair or replacement of the employer’s property lost or damaged by the employee deducted from the employee’s pay as a permitted deduction under the Act. Clause 9.1.7 provides that employees acknowledge and agree to indemnify the employer or the client for any loss suffered as a result of damage to a company motor vehicle caused by the employee. As previously noted, the employer has proffered an undertaking to the effect that it will not refer to, rely on or apply clause 9.1.7.

[58] In Radploy Pty Ltd 13Commissioner Gooley considered whether provisions of an agreement imposing obligations on employees with respect to restraint of trade, not found in the relevant modern award, were relevant in determining whether the agreement passed the BOOT. In relation to those provisions, Commissioner Gooley said:

“Clause 33 imposes obligations on employers not found in the Award. I do not accept ... submissions that an employee who performs work covered by the Agreement for another employer breaches their common law obligations to Radploy. The imposition of a restraint of trade on employees via a collective agreement is a matter to be considered in assessing whether the Agreement passes the BOOT. The inclusion of such a provision in an enterprise agreement imposes on existing employees and future employees an obligation not imposed at common law and potentially exposes employees to civil penalties if he or she breaches the provision.” 14

[59] I agree with the views expressed by Commissioner Gooley in that case and in the earlier decision in Smith & Nephew Pty Ltd. 15Further, for the reasons I set out in Glen Eden Thoroughbreds Pty Ltd T/as Ray White Shailer Park16I remain of the view that such provisions not generally found in modern awards, such as the clause in the Agreement under consideration in this case, which requires employees to indemnify employers for accidental loss and damage caused by an employee, are all matters capable of being considered in determining whether an Agreement passes the BOOT.

Terms of Agreement that are of not permitted terms and the BOOT

[60] Consideration of whether the Agreement should be approved also raises issues in relation to terms of the Agreement that are not or may not be permitted terms, and the impact of such terms in assessing whether the Agreement passes the BOOT. Relevant legislative provisions are as follows:

172 Making an enterprise agreement

Enterprise agreements may be made about permitted matters

(1) An agreement (an enterprise agreement) that is about one or more of the following matters (the permitted matters) may be made in accordance with this Part:

(a) matters pertaining to the relationship between an employer that will be covered by the agreement and that employer’s employees who will be covered by the agreement;

(b) matters pertaining to the relationship between the employer or employers, and the employee organisation or employee organisations, that will be covered by the agreement;

(c) deductions from wages for any purpose authorised by an employee who will be covered by the agreement;

(d) how the agreement will operate.

Note 1: For when an enterprise agreement covers an employer, employee or employee organisation, see section 53.

Note 2: An employee organisation that was a bargaining representative for a proposed enterprise agreement will be covered by the agreement if the organisation notifies FWA under section 183 that it wants to be covered.

[61] By virtue of s.326 of the Act terms of a modern award or an enterprise agreement that permit unreasonable payments or deductions have no effect. Section 326 provides as follows:

326 Certain terms have no effect

Unreasonable payments and deductions for benefit of employer

(1) A term of a modern award, an enterprise agreement or a contract of employment has no effect to the extent that the term:

(a) permits, or has the effect of permitting, an employer to deduct an amount from an amount that is payable to an employee in relation to the performance of work; or

(b) requires, or has the effect of requiring, an employee to make a payment to an employer or another person;

if either of the following apply:

(c) the deduction or payment is:

(i) directly or indirectly for the benefit of the employer, or a party related to the employer; and

(ii) unreasonable in the circumstances;

(d) if the employee is under 18—the deduction or payment is not agreed to in writing by a parent or guardian of the employee.

(2) The regulations may prescribe circumstances in which a deduction or payment referred to in subsection (1) is or is not reasonable.

Unreasonable requirements to spend an amount

(3) A term of a modern award, an enterprise agreement or a contract of employment has no effect to the extent that the term:

(a) permits, or has the effect of permitting, an employer to make a requirement that would contravene subsection 325(1); or

(b) directly or indirectly requires an employee to spend an amount, if the requirement would contravene subsection 325(1) if it had been made by an employer.

[62] Section 253 of the Act provides as follows with respect to terms of an enterprise agreement that have no effect:

253 Terms of an enterprise agreement that are of no effect

(1) A term of an enterprise agreement has no effect to the extent that:

(a) it is not a term about a permitted matter; or

(b) it is an unlawful term; or

(c) it is a designated outworker term.

Note 1: A term of an enterprise agreement has no effect to the extent that it contravenes section 55 (see section 56).

Note 2: A term of an enterprise agreement permitting or requiring deductions or payments to be made has no effect if it benefits the employer and is unreasonable in the circumstances (see section 326).

(2) However, if an enterprise agreement includes a term that has no effect because of subsection (1), or section 56 or 326, the inclusion of the term does not prevent the agreement from being an enterprise agreement.

[63] For the reasons I set out in Glen Eden Thoroughbreds Pty Ltd T/as Ray White Shailer Park 17I remain of the view that clauses which purport to place an obligation on an employee after employment ceases, or deal with the relationship between the employer and a third party such as an injured member of the public or the employer’s insurer, are not permitted matters pursuant to s. 172(1)(a) of the Act.

[64] In my view, clause 9.1.7 of the Agreement, which provides that employees acknowledge and agree to indemnify the employer or the client for any loss suffered as a result of damage to a company motor vehicle caused by the employee, is not a matter that pertains to the relationship between the employer and the employee. As previously noted, the employer has proffered an undertaking to the effect that it will not refer to, rely on or apply clause 9.1.7.

[65] The provisions of the Act dealing with deductions from wages are as follows:

324 Permitted deductions

(1) An employer may deduct an amount from an amount payable to an employee in accordance with subsection 323(1) if:

(a) the deduction is authorised in writing by the employee and is principally for the employee’s benefit; or

(b) the deduction is authorised by the employee in accordance with an enterprise agreement; or

(c) the deduction is authorised by or under a modern award or an FWA order; or

(d) the deduction is authorised by or under a law of the Commonwealth, a State or a Territory, or an order of a court.

Note 1: A deduction in accordance with a salary sacrifice or other arrangement, under which an employee chooses to:

(a) forgo an amount payable to the employee in relation to the performance of work; but

(b) receive some other form of benefit or remuneration;

will be permitted if it is made in accordance with this section and the other provisions of this Division.

Note 2: Certain terms of modern awards, enterprise agreements and contracts of employment relating to deductions have no effect (see section 326). A deduction made in accordance with such a term will not be authorised for the purposes of this section.

(2) An authorisation for the purposes of paragraph (1)(a):

(a) must specify the amount of the deduction; and

(b) may be withdrawn in writing by the employee at any time.

(3) Any variation in the amount of the deduction must be authorised in writing by the employee.

325 Unreasonable requirements to spend amount

(1) An employer must not directly or indirectly require an employee to spend any part of an amount payable to the employee in relation to the performance of work if the requirement is unreasonable in the circumstances.

Note: This subsection is a civil remedy provision (see Part 4-1).

(2) The regulations may prescribe circumstances in which a requirement referred to in subsection (1) is or is not reasonable.

[66] Regulation 2.12 of the Fair Work Regulations (2009) deals with what is a reasonable deduction for the purposes of s. 326 of the Act, as follows:

2.12 Certain terms have no effect — reasonable deductions

(1) For subsection 326 (2) of the Act, a circumstance in which a deduction mentioned in subsection 326 (1) of the Act is reasonable is that:

(a) the deduction is made in respect of the provision of goods or services:

(i) by an employer, or a party related to the employer; and

(ii) to an employee; and

(b) the goods or services are provided in the ordinary course of the business of the employer or related party; and

(c) the goods or services are provided to members of the general public on:

(i) the same terms and conditions as those on which the goods or services were provided to the employee; or

(ii) on terms and conditions that are not more favourable to the members of the general public.

Examples

1   A deduction of health insurance fees made by an employer that is a health fund.

2   A deduction for a loan repayment made by an employer that is a financial institution.

(2) For subsection 326 (2) of the Act, a circumstance in which a deduction mentioned in subsection 326 (1) of the Act is reasonable is that the deduction is for the purpose of recovering costs directly incurred by the employer as a result of the voluntary private use of particular property of the employer by an employee (whether authorised or not).

Examples of costs

1   The cost of items purchased on a corporate credit card for personal use by the employee.

2   The cost of personal calls on a company mobile phone.

3   The cost of petrol purchased for the private use of a company vehicle by the employee.

[67] In Radapoly Pty Ltd 18 Commissioner Gooley was considering a clause which provided that employees agreed that it is fair and reasonable to reimburse the employer for professional training and recruitment costs, and that the employer could require the employee to execute a deed providing for the reimbursement of those expenses if the employee resigns within a stipulated period of time.

[68] Commissioner Gooley characterised the clause as a vehicle whereby the employer could require the employee to enter into a deed to repay training and recruitment costs through deductions from monies payable to the employee, and found that the repayment of recruitment costs was not a matter pertaining to the relationship between the employer and the employee. The Commissioner also found that the clause provided for deductions from monies payable to employees without their consent, and did not accept that by approving the agreement, employees had brought themselves within s. 172(1)(c).

[69] In this regard, Commissioner Gooley said that the very act of approving the agreement could not constitute authorisation of a deduction from the wages of an employee. Accordingly, a term of an enterprise agreement allowing for deductions from wages of employees, without an individual employee’s approval, is not a permitted matter.

[70] Having made that finding, Commissioner Gooley approached the application of the BOOT in relation to the provision allowing for deductions from employees wages, by assuming that it was a permitted and enforceable term, and finding that it imposed obligations on employees not found in the modern award. The Commissioner held that the substantial deductions allowed by the clause were a significant matter in assessing whether the agreement passed the BOOT. 19

[71] I agree with the approach and conclusions of Commissioner Gooley in Radploy. In my view, the combined effect of s. 172(1)(c) and s. 326(1) is that a term of an enterprise agreement that purports to constitute an up-front or advance agreement on the part of each employee covered by the agreement, to a deduction from his or her wages in stipulated circumstances, is not a permitted matter. Deductions may only be made from the wages of employees in a manner and for purposes that are consistent with the requirements of the Act. An essential requirement is that the individual employee authorises the deduction. An enterprise agreement approved by a valid majority of employees which will cover future employees, is not a valid mechanism authorising in advance a particular deduction from the wages of an employee covered by the agreement. Further, deductions of the kind provided for in the Agreement are not deductions of the kind contemplated in the Act.

[72] The effect of s.253 of the Act is that an enterprise agreement is not prevented from being such because it contains terms that are not permitted. The Tribunal cannot refuse to approve an agreement simply on the basis that it contains some terms that are not permitted terms. Those terms are simply unenforceable. However, I am of the view that the fact that such provisions may be unenforceable, does not prevent them being considered as part of the determination of whether an agreement passes the BOOT. Employees covered by an enterprise agreement which includes non-permitted terms, may not know that such terms are unenforceable, and the matter of whether terms are or are not enforceable may not arise until the point at which the employer seeks to rely on them, or after that point. The issue of whether the provisions are enforceable may never arise.

[73] For these reasons it is appropriate to consider a term which is arguably unenforceable, as a matter relevant to assessing whether an agreement passes the BOOT, by assuming that the employer may take an action in accordance with the term.

APPROVAL OF AGREEMENT THAT DOES NOT PASS THE BOOT ON PUBLIC INTEREST GROUNDS

[74] Section 189 of the Act provides an alternative basis upon which an agreement that does not pass the BOOT can be approved, in circumstances where the Tribunal is satisfied that, because of exceptional circumstances, the approval would not be contrary to the public interest. That section provides as follows:

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 FWA 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.

FWA must disregard individual flexibility arrangement

(2) If, under the flexibility term in the relevant modern award, an individual flexibility arrangement has been agreed to by an award covered employee and his or her employer, FWA must disregard the individual flexibility arrangement for the purposes of determining whether the agreement passes the better off overall test.

When a greenfields agreement passes the better off overall test

(3) A greenfields agreement passes the better off overall test under this section if FWA is satisfied, as at the test time, that each prospective award covered employee for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.

Award covered employee

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

(a) is covered by the agreement; and

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

(i) is in operation; and

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

(iii) covers his or her employer.

Prospective award covered employee

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

(a) would be covered by the agreement; and

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

(i) is in operation; and

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

(iii) covers the employer.

Test time

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

FWA may assume employee better off overall in certain circumstances

(7) For the purposes of determining whether an enterprise agreement passes the better off overall test, if a class of employees to which a particular employee belongs would be better off if the agreement applied to that class than if the relevant modern award applied to that class, FWA 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.

[75] The former Workplace Relations Act 1996 contained a similar provision in relation to the certification of agreements. In this regard, s. 170(LT)(3) of the Workplace Relations Act 1996, provided as follows:

170LT  Certifying an agreement

...

(3)  If:

(a)  the only reason why the Commission must not certify an agreement is that the agreement does not pass the no-disadvantage test; and

(b)  the Commission is satisfied that certifying the agreement is not contrary to the public interest;

the agreement is taken to pass the no-disadvantage test.

[76] Section 170(LT)(4) of the Workplace Relations Act 1996 gave the following example:

...

(4)  An example of a case where the Commission may be satisfied that certifying the agreement is not contrary to the public interest is where making the agreement is part of a reasonable strategy to deal with a short-term crisis in, and to assist in the revival of, the single business or part.

[77] In Appeal against certification of Chubb Security - Darling Harbour Rangers Enterprise Agreement 1998 20a Full Bench of the Australian Industrial Relations Commission held that s.170(LT)(4) set out only an example, and did not limit the Commission’s discretion in determining whether approval of a particular agreement was not contrary to the public interest.

[78] The current legislation requires exceptional circumstances and that approval of the agreement would not be contrary to the public interest because of those circumstances. Notwithstanding that difference, I accept that the circumstances in which the discretion to approve an agreement on the grounds in s.189 are not limited to cases where the agreement is part of a reasonable strategy to deal with a short term crisis or to assist in the revival of an enterprise.

[79] With respect to determining whether a particular case involves “exceptional circumstances” the following passage from a decision Vice President Lawler in CEPU v Australian Postal Corporation 21cited by Deputy President Bartel in Top End Consulting22 is relevant:

“In summary, the expression ‘exceptional circumstances’ requires consideration of all the circumstances. To be exceptional, circumstances must be out of the ordinary course, or unusual, or special, or uncommon but need not be unique, or unprecedented, or very rare. Circumstances will not be exceptional if they are regularly, or routinely, or normally encountered. Exceptional circumstances can include a single exceptional matter, a combination of exceptional factors or a combination of ordinary factors which, although individually of no particular significance, when taken together are seen as exceptional. It is not correct to construe ‘exceptional circumstances’ as being only some unexpected occurrence, although frequently it will be. Nor is it correct to construe the plural ‘circumstances’ as if it were only a singular occurrence, even though it can be a one off situation. The ordinary and natural meaning of ‘exceptional circumstances’ includes a combination of factors which, when viewed together, may reasonably be seen as producing a situation which is out of the ordinary course, unusual, special or uncommon.”

[80] With respect to the “public interest” consideration in s. 189(2) it is true, as observed by Deputy President Bartel in Top End Consulting that the requirement is for the Tribunal to be satisfied that the existence of exceptional circumstances makes the approval of the agreement “not contrary to the public interest” rather than to be satisfied in a positive sense that approval of the agreement is in the public interest. It is also the case that the expression “in the public interest” when used in legislation, is to be determined by making a discretionary value judgment on the relevant facts, constrained only by the scope and purpose of the legislation. 23

[81] In relation to public interest in the context of the Fair Work Act 2009, Vice President Lawler in Tahmoor Coal Pty Ltd 24 cited the following passage from the Full Bench decision of the Australian Industrial Relations Commission in Re Kellogg Brown and Root Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000:25

“The notion of public interest refers to matters that might affect the public as a whole such as the achievement or otherwise of the various objects of the Act, employment levels, inflation, and the maintenance of proper industrial standards. An example of something in the last category may be a case in which there was no applicable award and the termination of the agreement would lead to an absence of award coverage for the employees. While the content of the notion of public interest cannot be precisely defined, it is distinct in nature from the interests of the parties. And although the public interest and the interests of the parties may be simultaneously affected, that fact does not lessen the distinction between them.”

[82] In my view, public interest considerations in the context of s. 189 could involve deciding whether a term of an agreement sought to be approved under that provision, undermines or reduces entitlements in a modern award to the extent that members of the public whose employment is regulated by that award may have interests which are impacted by the approval of the agreement. It may also be the case that there is a public interest consideration in maintaining a level playing field among employees in a particular industry or sector. This is particularly so given that the Objects of the Act include at s.3(b):

“ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders.”

CONCLUSIONS

The BOOT test

[83] I am not satisfied that at the test time each award covered employee and each prospective award covered employee would be better off overall if the Agreement applied to the employee than if the Horticulture Award 2010 applied to the employee. I have reached this conclusion for the following reasons.

[84] The 20% loading for full time employees does not appear to be sufficient to compensate those employees for the Award entitlements that have been rolled into that loading. The Agreement provides that the loading includes all payments for voluntary overtime/penalty rates; allowances; annual leave loading; annual leave entitlements; and personal/carers leave entitlements. The notion that 20% is sufficient to compensate for the loss of these Award entitlements is intuitively unsound.

[85] Casual loading under the Award is 25% and is paid instead of annual leave, personal/carer’s leave notice of termination and redundancy benefits, and other entitlements of full time and part time employment. Significantly, the casual loading under the Award does not compensate casual employees for overtime and public holiday penalties, which are payable in addition to the casual loading.

[86] With respect to “daily hire” employees, the proposition that a 10% loading is sufficient to offset entitlements under the Award to overtime/penalty rates; allowances; annual leave loading; annual leave entitlements; and personal/carers leave entitlements is also intuitively unsound. According to the terms of the Agreement, “daily hire” employees are employed on the same principle as permanent part-time employees under the Award. The Agreement also states at clause 5.3.1(b) that “it is anticipated” that daily hire employees will work less than 38 ordinary hours per week.

[87] If a 20% loading is sufficient to compensate full time employees for the stated award entitlements, then part time employees should receive the same loading on a pro rata basis for the hours that they work. The fact that the intention of the higher loading is to ensure that full time employees remain with the company during non-peak periods does not alter the fact that the reduced loading is not sufficient to compensate daily hire employees for the entitlements rolled into that loading.

[88] Further the statement that it is anticipated that “daily hire” employees will work less than 38 hours per week is contrary to the evidence and submissions in support of the approval of the Agreement. The evidence and submissions make it clear that the employer actually anticipates that “daily hire” employees will work as many hours as they are prepared to work and that the entire focus of the Agreement is on facilitating this.

[89] It is also the case that the Award provides for piecework and the loading for pieceworkers in lieu of overtime and hours of work provisions is 15%. That loading is in addition to casual loadings for casual employees and full time and part time employees are entitled to leave benefits in addition to the piecework loading. This further fortifies my view that the loadings for full time and “daily hire” employees are inadequate.

[90] I am also of the view that the concept of daily hire employment in the Agreement is creating a new category of employment that is not provided for in the Award. In this regard, it is apparent from the evidence and submissions in support of the approval of the Agreement that “daily hire” employees will not always have regular work and will be employed from day to day depending on factors such as weather and the availability of machinery. The Agreement provides at clause 5.1 as follows:

5.1 Seasonal Nature of Work

5.1.1 The Employer provides labour to Clients in the horticultural industry. The Employees recognise that the work they perform is seasonal and would like to take all steps available to maximise their earnings for the period in which they work.

5.1.2 Seasonal work is dependent on weather conditions and the life cycle of crops (such as planting and harvesting). This results in the availability of work to be performed by Employees at various times of the year being uncertain and unpredictable due to the seasonal nature of employment. In addition, because the Employees employment with the Employer is subject to the viability of the Client, the Client's ability to withstand seasonal variances may result in no work being available and the Employer no longer requiring work to be performed by the Employees.

5.1.3 With this in mind, the Employer and the Employees have agreed to the following remuneration and hours of work.

[91] As previously noted, the Agreement also appears to provide for employees to be advised of their ordinary working hours the day before each occasion on which they are required to work: refer clause 5.3.4. Such provisions are not usual for full time and part time employees and are not found in the Award.

[92] Essentially the terms of the Agreement, if approved, would appear to allow for “daily hire” employees to be treated as de facto casual employees or pieceworkers in circumstances where the loading paid to them is below that payable to such categories of employee under the Award. If the provisions set out above apply to full time and part time weekly employees - which they arguably do - it would appear that these employees are also treated as de facto casual employees.

[93] That other modern awards applicable in the building or meat industry contain provisions for daily hire employment is irrelevant to the question of whether the Agreement in the present case passes the BOOT. The BOOT is assessed against the relevant modern award and not against modern awards that do not cover or would not cover the employees covered by the Agreement.

[94] The arguments advanced on behalf of the employer with respect to voluntary overtime and work on public holidays, were put to rest conclusively in Bupa and I am surprised that such arguments continue to be advanced. A Full Bench of Fair Work Australia has held that considerations such as the “voluntary” nature of the hours or that employers would not provide an opportunity to work such hours if they were required to pay overtime or penalty rates, are irrelevant to the application of the BOOT. The Full Bench decision in Bupa has been applied consistently since it was handed down and acceptance of the arguments advanced by the employer in this case would require me to ignore that decision and apply the BOOT contrary to the principle it established.

[95] The employer concedes in its submissions that full time employees will cease to be better off overall when they work in excess of 43.5 hours in a week and “daily hire” employees will cease to be better off overall when they work more than 40.5 hours in a week. Based on the evidence and submissions, it is probable that employees will work more than the number of hours at which the will cease to be better off overall under the Agreement. The objective of the Agreement is to facilitate employees working “voluntary overtime” and on public holidays during peak seasons. The rates in the Agreement are not sufficient to compensate employees for the loss of overtime or public holiday penalty rates, and there are no other terms and conditions provided for in the Agreement to offset that loss.

[96] I do not accept that an undertaking from JelliFish to complete a reconciliation on termination of employee’s employment where requested by the employee, is sufficient to address my concerns about the voluntary hours provisions in the Agreement.

[97] Viewed in the overall context of the Agreement, clause 6.1.7 of the Agreement in purporting to remove entitlements of employees to make claims against the employer for compensation or damages on termination of employment, unless conferred by legislation, is a detrimental provision and one that is not found in the Award. Clauses 9.1.3 and 9.1.4 provide for deductions from employees’ wages for loss or damage to the employer’s property. The clear intent of the clauses is to constitute a general authorisation on the part of employees for such deductions to be made. I do not accept the submission that the clauses provided a benefit to employees because it allows them to plan with the employer the pay cycles in which the deductions will be made. The clauses do not have anything to say about planning when the deductions will be made. The clauses simply purport to authorise the employer to make such deductions at its discretion. In my view the clauses are indistinguishable from those considered in Radaploy¸ 26 and are not permitted terms.

[98] If the clauses are about permitted matters, then they are not found in the Award, and in my view are detrimental to employees so that employees subject to such provisions would not be better off overall than they would be if the Award applied. I accept that JelliFish! is prepared to offer an undertaking in relation to clause 9.1.7 to the effect that it will not rely on or apply that clause in relation to employees agreeing to indemnify the employer for loss suffered as a result of damage to a company motor vehicle. In the context of other significant issues associated with whether the Agreement passes the BOOT, that the employer has proffered such an undertaking does not change the overall outcome - the Agreement does not pass the BOOT.

Approval under s. 189 of the Act

[99] I am not required to approve the Agreement under s. 186 of the Act, and the only reason for this is because it does not pass the BOOT as required by s. 186(2)(d). An alternative submission has been made on behalf of JelliFish! seeking the approval of the Agreement under s. 189 of the Act. It is therefore necessary to consider whether because of exceptional circumstances, the approval of the Agreement would not be contrary to the public interest.

[100] In relation to exceptional circumstances, I accept that JelliFish! operates in an environment where there are peaks and troughs associated with the seasonal nature of its clients’ businesses and where employees are working in remote rural areas. There is well established precedent to the effect that these types of operational constraints are not generally faced by employers and constitute exceptional circumstances.

[101] However, I am unable to accept that approval of the Agreement in its current terms would not be contrary to the public interest. It is one thing to approve an agreement which provides for voluntary additional hours to be worked where employees are being paid at least the minimum award rates for full time, part time, casual or piecework employment. It is another thing entirely to approve an agreement that effectively provides for full time employees to be paid at a rate which is arguably less than the Award rate when all of the entitlements said to be rolled into it are considered, and which purports to create a category of employee not provided for in the Award (“daily hire”) in which employees are paid less than categories of employees under the Award, who are employed on the same or a similar basis.

[102] Under the Award, part time employees are entitled to a proportion of the same entitlements as full time employees. Part time employees work at times that are mutually agreed and are paid overtime for hours outside or in excess of those mutually agreed hours. It is not a feature of part-time or full time employment that employees are informed of whether there is work and the time at which it is to commence, the day prior to being required to attend.

[103] Such flexibility is a feature of casual employment and is one of the components of the casual loading of 25% provided under the Award. It is also the case that employees covered by the Horticulture Award 2010 may be employed under piecework arrangements. These are analogous to daily hire arrangements in other awards and there is a loading of 15% for such employees in addition to leave entitlements or the casual loading where a pieceworker is employed on that basis. I am not satisfied that approval of an agreement with daily hire provisions that would result in employees being paid less than other analogous categories of employees under the Award would not be contrary to the public interest. In my view, the Agreement provides for de facto casual employees who are paid at less than the rate that casual employees would be entitled to under the Award, and that concept, in the context of public interest considerations is a bridge too far.

[104] Employers in the horticultural industry and other industries where there are seasonal fluctuations operate under awards where there are well defined categories of employment: full time, part-time, casual and piecework. Those employers who have had enterprise agreements approved where voluntary additional hours operate on the basis of seasonal fluctuations, have not sought to alter the categories of employment or the base terms and conditions applicable to them. The employer in Samphie 27provided an undertaking that voluntary hours would only be utilised during a particular part of the year from May to November, and there were limitations placed on the use of such provisions in Top End Consulting, by virtue of undertakings. The employees in Samphie were predominantly casual employees and paid a casual loading. Those cases are not authority for the carte blanche approach sought by the employer in this case.

[105] In circumstances where I am required to be satisfied that approval of an agreement would not be contrary to the public interest, I am also of the view that it is not appropriate for that agreement to contain terms which in my view are not permitted and/or terms which place onerous obligations on employees that are not found in awards.

[106] Although the test in s.189(2) is that approval is not contrary to the public interest, I am not satisfied that to allow such a significant departure from the terms of the Award would meet that test. In my view it would undermine the terms of what already are relatively flexible award provisions to an unacceptable degree.

[107] As the Agreement currently stands, I am not satisfied that because of exceptional circumstances, approval of the Agreement would not be contrary to the public interest. Accordingly I am not prepared to approve it pursuant to s. 189 of the Act. I have determined to give the employer a further period of 7 days to consider the matters set out in this Decision and to decide whether to provide undertakings to address the concerns I have raised. Such undertakings will need to be consistent with the requirements in s. 190. If the undertakings do not address the concerns I have raised, I will dismiss the application for approval of the Agreement.

COMMISSIONER

Appearances:

Mr D. Clifford, of Clifford Gouldson Lawyers, for the Applicant

Hearing details:

2012.

1 June and 21 September.

By telephone.

 1   [2011] FWA 318 at [87].

 2   [2010] FWA 6442

 3   [2011] FWA 39

 4 Ibid at [50].

 5 Ibid at [46].

 6   [2010] FWA 5060 at [26].

 7   [2010] FWAFB 9985 at [41]

 8   [2010] FWA 6442

 9   [2010] FWAFB 2762.

 10   Ibid at [25]

 11   [2012] FWAFB 6397.

 12 Ibid at [11].

 13   [2011] FWA 39.

 14 Ibid at [70].

 15   [2010] FWA 2465 at [40] - [43].

 16   [2010] FWA 7217.

 17   Ibid.

 18   Op. cit.

 19   Ibid at [56], [60] and [66].

 20   (1998) 45 AILR

 21 (2007) 167 IR 4.

 22 Op. cit. at [39].

 23   O’Sullivan v Farrer and Another (1989) 168 CLR 210 at 216 cited by Deputy President Bartel in Top End Consulting at [44].

 24   [2010] FWA 6468.

 25 (2005) 139 IR 34 at [23].

 26   Op. cit.

 27   [2010] FWA 5060.

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