JMP One Pty Ltd
[2024] FWCA 988
•19 MARCH 2024
| [2024] FWCA 988 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
JMP One Pty Ltd
(AG2024/138)
APPLICATION FOR APPROVAL OF THE JMP ONE ENTERPRISE AGREEMENT 2023
| Fast food industry | |
| DEPUTY PRESIDENT SAUNDERS | NEWCASTLE, 19 MARCH 2024 |
Application for approval of the JMP One Enterprise Agreement 2023
Introduction and background
An application has been made for approval of an enterprise agreement known as the JMP One Enterprise Agreement 2023 (Agreement). The application was made pursuant to section 185 of the Fair Work Act 2009 (Act). The Agreement is a single enterprise agreement.
The Applicant operates a Grill’d franchise restaurant in Wagga Wagga. The Agreement covers full-time and part-time employees of the Applicant who are employed in the classification of Team Member, Team Leader, Assistant Business Manager, or Business Manager. The Applicant does not employ any casual employees to work in its Grill’d restaurant.
The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (Amending Act) made a number of changes to enterprise agreement approval processes in Part 2-4 of the Act that commenced operation on 6 June 2023.
Under transitional arrangements, amendments made by Part 14 of Schedule 1 to the Amending Act in relation to genuine agreement requirements for agreement approval applications apply where the notification time for the agreement was on or after 6 June 2023. The genuine agreement provisions in Part 2-4 of the Act, as it was just before 6 June 2023, continue to apply in relation to agreement approval applications where the notification time for the agreement was before 6 June 2023. The notification time for the Agreement was after 6 June 2023.
Under transitional arrangements, amendments made by Part 16 of Schedule 1 to the Amending Act in relation to the better off overall test (BOOT) requirements for agreement approval applications apply where the agreement was made on or after 6 June 2023. The better off overall test provisions in Part 2-4 of the Act, as it was just before 6 June 2023, continue to apply in relation to agreement approval applications where the agreement was made before 6 June 2023. The Agreement was made on 14 January 2024 when 100% of the 25 employees who voted on the Agreement voted to approve it.
The Shop, Distributive and Allied Employees’ Association (SDA) is not a bargaining representative for the Agreement, but I exercised my discretion to permit the SDA to make submissions as to whether or not the Agreement passes the BOOT. The SDA submitted that the Agreement does not pass the BOOT and the Commission should not accept the Applicant’s undertakings. It provided a statement of Mr Ali Amin, Industrial Officer, dated 26 February 2024, together with submissions, to support its position.
Undertakings
The Applicant has provided written undertakings (Undertakings) to address concerns raised by the SDA and the Commission. A copy of the Undertakings is attached in Annexure A to this decision. I am satisfied that the effect of accepting the Undertakings is not likely to:
(a) cause financial detriment to any employee covered by the Agreement; or
(b) result in substantial changes to the Agreement.
As to the question of financial detriment, the Undertakings give rise to employees receiving financial benefits in particular circumstances; they do not impose financial detriments.
I do not accept the SDA’s submission that the effect of accepting the Undertakings is likely to result in substantial changes to the Agreement. As the Full Bench explained in CFMMEU v C&H Acquisition Pty Ltd,[1] “the word ‘substantial’ in s190(3)(b) signifies a degree or quality of change that is substantial in the sense that it would alter the essence or nature of the agreement. It is concerned with change that is transformative of the agreement so as to raise concern that change may have affected the way in which employees chose to vote in approving the agreement.” In the present case it is relevant that the Undertakings do not seek to alter the structure of remuneration paid under the Agreement.[2] The Undertakings use the remuneration structure built into the Agreement and enhance benefits for part-time employees by ensuring that, over a four-week period, they work enough hours during the week (at which times their hourly rate of pay exceeds the Fast Food Industry Award 2020 (Fast Food Award)) to compensate for work performed on a weekend or public holiday (at which times the rates of pay under the Fast Food Award are superior to the rates of pay under the Agreement). I do not accept the SDA’s contention that the Undertakings “permit employers to engage in wholesale revision of working arrangements”. The flexibility for part-time employees to work within their notified available times is not diminished by the Undertakings. Further, the Undertakings also include an appropriate reconciliation clause to ensure that salaried employees remain better off overall under the Agreement compared to the Fast Food Award. My evaluative judgment is that the Undertakings do not change the “essence or nature” of the Agreement;[3] they do not result in substantial changes to the Agreement.
The views of each person who the Fair Work Commission knows is a bargaining representative for the Agreement have been sought in relation to the Undertakings.
Pursuant to subsection 190(3) of the Act, I exercise my discretion to accept the Undertakings. The Undertakings are taken to be a term of the Agreement.
BOOT
I must be satisfied that the Agreement passes the BOOT before I can approve it.[4] 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 reasonably foreseeable 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.[5]
In Armacell Australia Pty and Others the application of the BOOT was explained by the Full Bench in the following manner:[6]
“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.”
This principle is now enshrined in s 193A(2) of the Act.
The BOOT is not applied as a line-by-line analysis. It is a global test requiring consideration of advantages and disadvantages to relevant employees.[7] 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.[8]
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.[9]
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.[10]
The Commission must give consideration to any views relating to whether an enterprise agreement passes the BOOT that have been expressed by any of the following:
(a)the employer or employers covered by the agreement;
(b)the award covered employees for the agreement; and
(c)a bargaining representative for the agreement.[11]
Further, the Commission must give primary consideration to a common view (if any) relating to whether the agreement passes the BOOT expressed by all of the following:
(a)the bargaining representative(s) of the employer; and
(b)the bargaining representative(s) of award covered employees for the agreement (other than a bargaining representative that is not an employee organisation).[12]
In considering whether or not an agreement passes the BOOT, the Commission may only have regard to patterns or kinds of work, or types of employment, if they are reasonably foreseeable at the test time. In considering what is reasonably foreseeable, the Commission must have regard to the nature of the enterprise to which the agreement relates.[13]
The Commission must determine whether a particular pattern or kind of work, or type of employment, is reasonably foreseeable for the purposes of s 193A(6) if a view is expressed by any of the following that it is, or is not, reasonably foreseeable:
(a)the employer covered by the agreement;
(b)the award covered employees for the agreement;
(c)a bargaining representative for the agreement.[14]
The Applicant has expressed the view in its form F17B that the Enterprise Agreement does pass the BOOT. I have given consideration to this view.
There are no bargaining representatives for the employees covered by the Agreement. Accordingly, no common view has been, or could be, expressed as to whether the Enterprise Agreement passes the BOOT.
In reaching my satisfaction that the Agreement passes the BOOT, I have undertaken a global assessment of all the benefits and detriments for employees under the Agreement, considered together with the Undertakings, compared to the Fast Food Award. The benefits under the Agreement include higher hourly rates of pay from Monday to Friday (13.5% higher for Team Members and 19.6% higher for Team Leaders), higher overtime rates of pay (because the overtime rates are based on the higher hourly rates of pay), and the right to receive one half-priced item every day in the Grill’d store in which the employee works, regardless of whether or not the employee is working on that day.[15] Relevant detriments include lower rates of pay on a weekend and public holidays, averaging hours of work over an eight week period (as compared with a four-week period under the Fast Food Award), the removal of annual leave loading, and the non-payment of overtime for the first 60 minutes worked after the conclusion of a rostered shift. Many of the detriments identified by the SDA have been resolved, or reduced to a significant extent, by the Undertakings, including:
(a) the imposition of a requirement for the Applicant to pay overtime to non-salaried part-time employees for all time worked in excess of their rostered hours of work;
(b) the requirement for the Applicant to engage part-time employees to work a minimum of three hours per week;
(c) the requirement for a Team Member who works on a Saturday or Sunday to work at least an equivalent number of hours on a weekday over a four-week period;
(d) the requirement for every hour worked by a Team Leader on a Saturday or Sunday to result in the Team Leader working at least 0.5 hours on a weekday over a four-week period;
(e) the requirement for every hour worked by a Team Member on a public holiday to result in the Team Member working at least 5 hours on a weekday over a four-week period; and
(f) the requirement for every hour worked by a Team Leader on a public holiday to result in the Team Leader working at least 2.5 hours on a weekday over a four-week period.
Modelling provided by the Applicant demonstrates that the Undertakings referred to in paragraph [24](c) to (f) above will ensure that the employee will be better off financially under the Agreement compared to the Fast Food Award. For example, a Team Leader is entitled to be paid an hourly rate of $43.62 under the Agreement on public holidays ($42.12 under clause 28.3 plus $1.50 under clause 18.5 = $43.62/hour). Under the Fast Food Award, a Team Leader is entitled to be paid $55.64 per hour. Therefore, if a Team Leader works 1 hour on a public holiday and 2.5 hours on a weekday, they will be paid $117.57 under the Agreement ($43.62 + (2.5 x $29.58) = $117.57). Under the Fast Food Award, the same Team Leader would be paid $ ($55.64 + (2.5 x $24.73) = $117.47). The Applicant’s model also incorporated the impact of including annual leave and annual leave loading into the analysis. The result remains that the Team Leader earns more under the Agreement compared to the Fast Food Award.
The SDA also made the point that the Undertakings require the additional weekday hours to be worked within a four-week period, which may result in the employee being worse off for three weeks until they work the additional weekday hours in the fourth week. It is also possible that the employee may resign or dismiss before they work the additional weekday hours in the four-week period. I have taken these matters into account in my global assessment as to whether each award covered employee, and each reasonably foreseeable employee, for the Agreement would be better off overall if the Agreement applied to the employee than if the Fast Food Award applied to the employee. In my view, these potential detriments are more than offset by the over-award benefits for which the Agreement provides.
Conclusion
Subject to the Undertakings, I am satisfied that each of the requirements of sections 186, 187, 188 and 190 of the Act as are relevant to this application for approval have been met.
The Agreement is approved and, in accordance with section 54 of the Act, will operate from 26 March 2024. The nominal expiry date of the Agreement is 18 March 2028.
DEPUTY PRESIDENT
Annexure A
[1] (2020) 296 IR 294 at [37]
[2] CFMMEU v Macmahon Contractors Pty Ltd[2018] FWCFB 4429 at [28]; CFMMEU v Lightning Brick Pavers (2018) 281 IR 9 at [24]
[3] CFMMEU v C&H Acquisition Pty Ltd (2020) 296 IR 294 at [37]
[4] s.186(2)(d) of the Act
[5] s.193(6) of the Act
[6] [2010] FWAFB 9985 at [41]
[7] SDA v Beechworth Bakery Employee Co Pty Ltd[2017] FWCFB 1664 at [12]; s 193A(2) of the Act
[8] 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]
[9] TWU v Jarman Ace Pty Ltd[2014] FWCFB 7097 at [28]
[10] Loaded Rates Agreements [2018] FWCFB 3610 at [100]
[11] s 193A(3) of the Act
[12] s 193A(4) of the Act
[13] s 193A(6) of the Act
[14] s 193A(6A) of the Act
[15] Clause 21.1 of the Agreement
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