JY Food & Entertainment Group Pty Ltd

[2014] FWC 2408

[2014] FWC 2408

FAIR WORK COMMISSION

DECISION

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

JY Food & Entertainment Group Pty Ltd
(AG2014/3430)

COMMISSIONER BULL SYDNEY, 14 APRIL 2014

Application for approval of the JY Food & Entertainment Group Enterprise Agreement 2013 - employer declaration not accurate - not genuinely agreed - undertakings not appropriate - BOOT not met - notice of employee representational rights not provided - application dismissed.

[1] This is an application for the approval of an enterprise agreement known as the JY Food & Entertainment Group Agreement 2013 (the Agreement) by JY Food & Entertainment Group Pty Ltd (the Applicant).

[2] The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act). The Agreement is a single-enterprise agreement.

[3] The Applicant’s business is a frozen yoghurt store operating seven days a week. 1

[4] The application was lodged with the Fair Work Commission (the Commission) on 21 January 2014. Following lodgement, the Commission’s Registry sent an email to the Applicant’s solicitor and representative, Ms Jacinta Bayard, requesting the Applicant provide a signed copy of the Agreement as this was not attached to the application.

[5] The Commission received a copy of the Agreement on 22 January 2014 from Ms Bayard. The Agreement that was provided contained a signature page signed by the Director of the Applicant, Ms Jung Won Gong which was dated 22 January 2014. There was no employee signature as required by Regulation 2.06A of the Fair Work Regulations 2009 (the Regulations).

[6] On 7 February 2014, my Chambers sent an email to Ms Bayard requesting information that had not been provided in the Form F17 - Employer’s Declaration in Support of Application for Approval of Enterprise Agreement (Statutory Declaration). In particular, at question 2.8 of the Statutory Declaration, the dates had not been provided as to when the last notice of representational rights was given to an employee and the date on which the voting for the Agreement commenced. The Applicant was also requested to provide correspondence as to why the period of time between the date on which the Agreement was made and the date on which the application was lodged exceeded 14 days. A copy of the notice of employee representational rights was also requested as this was not attached to the application.

[7] The Applicant was asked to respond by no later than 14 February 2014.

[8] No response was received from the Applicant by this date. A further email was sent by my Chambers on 27 February 2014, requesting the Applicant respond to the previous email.

[9] On 28 February 2014, Ms Bayard sent an email to my Chambers and attached a copy of the Notice of Employee Representational Rights (NERR). In her email, Ms Bayard stated that the NERR was provided to all employees with the Agreement and was also displayed on the notice board of the Applicant’s shop. No response was given, or explanations proffered by Ms Bayard concerning the late filing of the application, nor were dates provided in respect to the voting process and notification of the NERR.

[10] Upon review of the NERR, my Chambers informed Ms Bayard on 3 March 2014, the NERR did not contain the following paragraph as prescribed by the Regulations, at schedule 2.1:

“If you are a member of a union that is entitled to represent your industrial interests in relation to the work to be performed under the agreement, your union will be your bargaining representative for the agreement unless you appoint another person as your representative or you revoke the union's status as your representative.”

[11] As the NERR did not conform with s.174 of the Act and Schedule 2.1 of the Regulations, it was therefore not a legitimate notice for the purposes of meeting the criteria as prescribed by s.173(1) and s.181(2) of the Act and Ms Bayard was asked to provide any comments in relation to this matter or alternatively file a notice of discontinuance by 7 March 2014.

[12] On 10 March 2014, Ms Bayard sent an email to my Chambers which stated, inter alia, as follows:

“Further to my e-mail of 28 February 2014, I am instructed that the notice on my client’s notice board to all staff contained this paragraph as prescribed by the Fair Work Regulations 2009.”

[13] No other comment or document was provided.

[14] In response to the correspondence received from Ms Bayard, my Chambers sent an email to her on the same day to inform the Applicant that the NERR that was provided to the Commission on 28 February 2014 did not contain the content as prescribed by the Regulations. Ms Bayard was invited to make any further comments (by 11 March 2014). Additionally, Chambers informed Ms Bayard that on the basis of the documents before the Commission at that time, the application for approval would be dismissed or alternatively the Applicant could file a notice of discontinuance.

[15] Ms Bayard telephoned my Chambers on 11 March 2014 and advised that the NERR that was put on the notice board and attached to the Agreement did contain the content as prescribed by the Regulations. My Chambers advised Ms Bayard that the only NERR before the Commission was the one that was provided on 28 February 2014, which did not contain the required content. Following the conversation Ms Bayard emailed my Chambers attaching to that correspondence a second NERR and stated the following:

“.... I am instructed that the following notice was given to all employees at the time they were given copies of the JY Food & Entertainment Group Agreement 2013.”

[16] The NERR that Ms Bayard forwarded to my Chambers on 11 March 2014 contained the omitted paragraph in relation to the appointment of a union bargaining representative. In addition to the omitted paragraph, the NERR also contained the following paragraph:

“Fair Work Commission has granted a low-paid bargaining authorisation in relation to this agreement. This means the union that applied for the authorisation will be your bargaining representative for the agreement unless you appoint another person as your representative, or you revoke the union’s status as your representative, or you are a member of another union that also applied for the authorisation.”

[17] Following receipt of the second NERR my Chambers advised Ms Bayard on 11 March 2014, by email, that the matter would be listed for a hearing on 20 March 2014. Ms Bayard was advised that evidence would be needed to demonstrate what NERR was provided to employees and why the application for approval was filed three months after the Agreement was made, as s.185(3)(a)(b) of the Act states that the Agreement must be filed within 14 days after it is made. Ms Bayard was also advised that there was no employee representative signature on the Agreement.

[18] The Commission’s email of 11 March 2014 also put the Applicant on notice of additional concerns that would need to be addressed at the hearing. These matters were expressed as follows:

“...

● The nominal expiry date. Sub clause 6.2 states the nominal expiry date of the agreement is first anniversary of the lodgement date. At Page 26 of the Agreement the nominal expiry date is defined as the date 3 years after the lodgement date.

● Reference to Australian Workplace Agreements.

In relation to the better off overall test when compared to the Fast Food Industry Award 2010 (the Award), the Commissioner notes:

● The Agreement contains no rates of pay
● No casual loading
● No allowances
● No rest breaks
● Meal breaks appear less than the Award
● No public holiday penalties
● No overtime 

In relation to the National Employment Standards (NES):

● Sub clause 27.10 - Cashing out of annual leave is not consistent with the NES.
● Clause 28 - Personal Leave is not consistent with the NES.

Individual flexibility arrangement

This clause (17) does not meet the requirements at s.203 of the Act.

Dispute resolution procedure

This clause (36) does not meet the requirements at s.186(6) of the Act.”

[19] On 19 March 2014, Ms Bayard requested the hearing be relisted on the basis that her client required additional time in order to prepare for the hearing.

[20] The matter was relisted for mention via telephone on 20 March 2014. Ms Bayard appeared along with the Applicant’s Director, Ms Jung Won Gong.

[21] During the telephone conference, the Commission reiterated the concerns it had with the application, in particular, the NERR and advised that the matter would be listed for hearing on 1 April 2014, in Sydney. Ms Bayard was advised that she could request for any witnesses to attend, via video link.

[22] On 31 March 2014, Ms Bayard sent the following correspondence to my Chambers in preparation for the hearing:

● Signature pages of the Agreement, which Ms Bayard advised contained the signatures of all employees and the signature of Ms Jung Won Gong, Director.
● A witness statement of Mr Jin Ho You (an employee of the Applicant), dated 23 March 2014.
● A Form F17 which had been witnessed and contained the dates on which the last notice of representational rights was given to employees and when the voting process commenced and concluded.

Hearing

[23] At the hearing on 1 April 2014, Ms Bayard (as a solicitor) was granted leave to appear on behalf of the Applicant pursuant to s.596(2)(a) and (b) of the Act. The Applicant called Mr Jin Ho You, a casual employee of the Applicant to give evidence. Ms Bayard advised that she did not intend to call Ms Jung Won Gong the Applicant’s Director to give evidence. 2

[24] Mr Jin Ho You tendered a witness statement which was marked as Exhibit 1. It stated that the Agreement was made on 21 October 2013 and the NERR was given to him on 20 August 2013 and a further NERR was placed on the notice board (no date was provided).

[25] Mr Jin Ho You’s statement went on to say that a further addendum was sent to him containing the following:

● Rates of pay for casual employees - Please see the wage rate sheet at Attachment 1;
● Casual loading: The rate of pay is already for the casual employees only;
● Allowances: 25% Discounted yoghurt, 25%-50% discounted drinks;
● Rest breaks: All the employees are allowed 10 min rest break for a 3 hour continual shift;
● Meal breaks: If an employee works more than 5 hours, they will receive 30min meal breaks;
● Public holiday penalties - Please see the wage rate sheet at Attachment 1; and
● Overtime is not applicable.

[26] Attachment 1 was annexed to Mr Jin Ho You’s witness statement and contained pay rates for casual employees for weekdays, weekends and public holidays. No classification levels were specified for the adult pay rate. Mr Jin Ho You initially advised that Attachment 1 was the addendum referred to in his witness statement; 3 this was confirmed by Ms Bayard.4 Mr Jin Ho You subsequently changed his position and advised that Attachment 1 was not the addendum referred to in his witness statement and that he did not have a copy of the addendum,5 but had received the addendum about a week ago.6 Following this evidence Ms Bayard also changed her position stating that Attachment 1, was not the addendum.7

[27] Mr Jin Ho You in his evidence stated that he was given one copy of the NERR and one NERR was placed on a whiteboard. 8 His evidence did not say that he was given a second copy. He was unable to distinguish which of the two copies he had received.9

[28] Mr Jin Ho You advised that he attended the employer’s worksite in October 2013, around Labour Day 10 where he met the owner’s daughter and a copy of the Agreement was provided to him which he read and signed. Mr Jin Ho You said there were approximately four other persons who were to be covered by the Agreement. Mr Jin Ho You did not refer to any voting process having taken place, but did refer to being given the opportunity to read the Agreement and deciding whether to sign it, which he did.11

[29] Mr Jin Ho You stated that he did not become an employee until the first week of February 2014. 12 His evidence was that the owners operated the shop and that other employees were not employed until 2014. This situation was confirmed by Ms Bayard at the commencement of the hearing:

THE COMMISSIONER: All right. So there were no employees until the end of January? That's what you're saying?

MS BAYARD: That's right. That's my understanding. 13

[30] Mr Jin Ho You’s witness statement said that most of the employees including him were not in the Australian Capital Territory between 21 October 2013 and 21 January 2014.

Notice of employee representational rights

[31] Ms Bayard submitted that she had realised the NERR did not contain the correct content and forwarded a second copy of the NERR to the Applicant. Ms Bayard said she was not aware of who had prepared the first copy of the NERR which had omitted reference to advice regarding union representation. The exact dates when this occurred was not made clear to the Commission. While Mr Jin Ho You’s witness statement stated that the NERR was sent out to all employees around 20 August 2013, and a copy placed on the employer’s notice board, his evidence was that he received a copy in October 2013, with approximately four other persons at “Hog’s Breath” when he was not an employee.

[32] The evidence does not appear to be consistent with Ms Bayard’s email of 28 February 2014 to the Commission, wherein she made no reference to a second NERR provided by her. The Applicant’s amended F17 states that the last NERR was provided to employees on 2 September 2014. Whereas Mr Jin Ho You and Ms Bayard both refer to a “further” NERR being provided at a meeting in October 2013. 14

[33] The second NERR that Ms Bayard advised that she had prepared, in any event, contained misleading advice to employees that a low paid bargaining order had been issued by the Commission.

[34] Ms Bayard’s explanation in relation the low paid bargaining reference was that she thought she needed to include the low paid bargaining clause as it “was a standard”. 15

[35] Having regard to the responses received by the Commission as to when the NERR was provided to employees and what it contained, together with the evidence of Mr Jin Ho You and no direct evidence from the employer, I am not satisfied that an NERR was provided to employees at the relevant time, or if it was, that it was in conformity with the requirements of the Act.

Genuinely agreed

[36] Section 172(2) of the Act provides that an employer may make an agreement with employees who are employed at the time. Mr Jin Ho You’s evidence was that he was not an employee when he was given the Agreement and signed it. At the time he was working at the Coffee Guru. 16 His evidence was that he was not employed until approximately three months later and that this was the case with other persons who were at the meeting in October 2013, which was held at Hog’s Breath.17

[37] On asking Ms Bayard as to how an agreement can be voted on and agreed by non-employees, no plausible explanation was provided. 18

[38] Section 186(2) of the Act provides when the Commission must approve an enterprise agreement. Section 186(2)(a) states that if the agreement is not a Greenfields agreement the agreement must be genuinely agreed to by the employees covered by the agreement. Section 188 of the Act provides that an agreement has been genuinely agreed to by the employees if the Commission is satisfied that the agreement was made in accordance with subsection 182(1). Section 182(1) of the Act requires that employees of the employer to have been asked to approve the agreement under s.181(1). Section 181(1) of the Act states that an employer that will be covered by a proposed enterprise agreement may request the employees employed at the time who will be covered by the agreement approve the agreement by voting for it.

[39] On the evidence of Mr Jin Ho You, he was not an employee at the time of making the Agreement and it appears that as there were no employees engaged at the time the Agreement was made, I cannot be satisfied that the Agreement has been genuinely agreed to by employees.

Better off overall test

[40] As noted above, the Agreement, when filed with the Commission, contained no wage rates, penalties, overtime or allowances to enable the better off overall test(BOOT) to be assessed. This was brought to the Applicant’s attention prior to the hearing and Mr Jin Ho You’s evidence was that an addendum was provided to him and other employees that addressed these issues. A copy of this addendum was not provided to the Commission. Ms Bayard and Mr Jin Ho You gave conflicting and confusing statements as to the form of this addendum. It was originally submitted that Attachment 1 of Mr Jin Ho You’s witness statement was the addendum but this position changed when it was made clear that Attachment 1, did not address all the issues which Mr Jin Ho You’s witness statement said it did and which the Commission had raised with the Applicant (replicated in paragraph [24] above).

[41] Further, Mr Jin Ho You’s evidence was that he had only received the addendum a week earlier. 19 On the basis of this evidence, the Agreement that “employees” received and voted on did not contain the wage rates as identified in Attachment 1.

[42] I am not satisfied that any addendum was provided to the individuals at the October 2013 meeting and further that such a reference to an addendum has been fabricated to assist the approval process. This is supported by the addendum items being confined to and reflecting the items of concern and in the same order as those raised in the Commission’s email dated 11 March 2014.

[43] Further to the BOOT, the wage rates provided make no reference to permanent employees despite the Agreement providing for such engagements. Ms Bayard and Mr Jin Ho You stated that only casuals would be employed, this was inconsistent with the Applicant’s Statutory Declaration.

[44] An assessment of the wage rates against the Fast Food Industry Award 2010, (the Award), being the relevant modern award for the purposes of the BOOT, with the casual wage rates provided at Attachment 1 of Mr Jin Ho You’s witness statement demonstrates they are inferior to the Award for the base rate and the weekend, and public holiday rates. There were no identified additional benefits to compensate for the inferior rates other than a reference to discounted drinks and yoghurt in Mr Jin Ho You’s witness statement.

[45] Ms Bayard submitted that it was permissible for the Commission to approve an Agreement with inferior wage rates to the Award as the Canberra economy was not buoyant and the lower wage rates would allow for more employees to be employed and for longer hours.

“MS BAYARD: Well, they're my instructions. They could afford to employ more people, in the shop, on a longer basis, than if they had to pay people over and above - I mean, on the award. 20

...

MS BAYARD: Well, my argument is that they can employ more people if they don't have to pay such a high rate of pay. Be, as I understand it, the economy in Canberra is not doing very well overall, because of the high amount of public servants that have been dismissed” 21

[46] No authority was identified for this submission nor was a submission made pursuant to s.189(1) of the Act that the Agreement could be approved due to exceptional circumstances that would not be contrary to the public interest.

[47] I am not satisfied pursuant to s.193(1) of the Act that each employee would be better off overall if the Agreement applied rather than the relevant modern award.

Other Agreement content

[48] Ms Bayard stated that she had drafted the Agreement but was unable to provide a reason why at clause 8 of the Agreement employees are said to be able to enter into Australian Workplace Agreements which operate to the exclusion of the Agreement. This appears to be an unlawful term pursuant to s.194(ba) of the Act. References in the Agreement at clause 20 - Working Hours to s.226 of the Act and the Fair Work Ombudsman at clause 36 - Disputes seem misplaced.

[49] The Agreement makes reference to a nominal term of one year and then later to three years. 22

[50] The superannuation clause provides that the employer in certain circumstances is able to nominate which fund employer superannuation contributions are made into. The fund is not nominated, nor was the Commission advised what fund this would be, I am unable to assess whether s.194(h) of the Act is met.

[51] Clause 17 - Workplace Flexibility and clause 36 - Dispute Procedure, were not drafted in accordance with s.203 and s.186(6) of the Act respectively.

[52] The cashing out of annual leave clause 27.10 is inconsistent with s.92 of the Act.

Conclusion

[53] It became abundantly clear during the hearing that many of the necessary requirements under the Act for approval of enterprise agreements only occurred after the deficiencies were brought to the Applicant’s attention. By way of example, the lodged Agreement did not contain a signature page. Ms Bayard was advised of this by the Commission on 21 January 2014. The following day a signature page was sent to the Commission purporting to be the last page of the Agreement signed by Ms Jung Won Gong and dated 22 January 2014. While the 22 January 2014, is after the date of filing and the day after the request was made, the signature page did not contain a signature of at least one employee representative. 23 Subsequently seven signature pages were forwarded with various dates in November 2013, containing Ms Jung Won Gong’s signature being inconsistent with the 22 January 2014, dated signature page earlier provided. No explanation for this could be provided at the hearing.24

Statutory Declaration

[54] Section 185(2) of the Act requires applications for approval of agreements to be accompanied by:

(a) a signed copy of the agreement; and

(b) any declarations that are required by the procedural rules.

[55] I have previously referred to the initial absence of a signed copy of the Agreement.

[56] Rule 24 of the Fair Work Commission Rules 2013 requires each employer that is to be covered by the Agreement to lodge a statutory declaration in the approved form in support of the application for approval by an authorised employee within 14 days after the agreement is made. Putting to one side that the Commission’s current forms were not used and that approval was not sought within 14 days after the Agreement was made, the employer’s Statutory Declaration Form F17 was not completed with the degree of candidness befitting a declaration made under the Statutory Declarations Act 1959 where an intentionally false statement in a declaration may result in imprisonment of up to four years. 25

[57] The information sought in the Statutory Declaration is to enable the Commission to assess whether the approval requirements of the Act have been met, consistent with the object at s.171(b)(iii) of the Act to ensure that approval applications are dealt with without delay.

[58] The Statutory Declaration is relied upon by the Commission to provide the necessary information to enable an enterprise agreement to be approved if possible without the need to obtain additional information or to conduct a hearing. As such, its completion in an open and honest manner is essential. This requirement is all the more crucial where there is no employee bargaining representative, as in this case. The Commission only has before it what is said by the employer to be the circumstances surrounding the making of the Agreement.

[59] The Statutory Declaration was completed by Ms Jung Won Gong, Director of the Applicant.

[60] The Statutory Declaration stated that 10 employees were covered by the Agreement, eight of whom were casuals, thus leaving two employees who were not casuals. This was contradicted by both Mr Jin Ho You and Ms Bayard. 26

[61] The Statutory Declaration at 3.4 advised that the Agreement provided more beneficial terms and conditions than the Award. These beneficial terms and conditions were not identified as the form requires, nor were they brought to the Commission’s attention at any stage other than a reference to discounted yogurt and drinks for employees.

[62] More importantly the Statutory Declaration at 3.6 stated there were no terms and conditions that were less beneficial than the Award. The Commission is entitled to take this declaration as being factually correct, however, clearly it was not. There were no wage rates in the Agreement and when they were provided, they provided less benefit to the employees than those prescribed by the Award.

[63] In an acknowledgement that the Agreement contained terms and conditions less beneficial than the Award Ms Bayard stated:

MS BAYARD: Well, this is the reason why I suppose the client wanted to negotiate an enterprise agreement, a workplace agreement, so they could have some efficiency, and, also, to be able to employ more people and - - - 27

[64] The Statutory Declaration was either completed without care or falsely. The Applicant employer was represented by Ms Bayard a solicitor who filed the application with the Commission and drafted the Agreement. Ms Bayard’s explanations as to the origins and dates associated with the NERR could at best be described as prevarication. It appeared during the hearing that responses provided by Ms Bayard were made simply to overcome the obvious hurdles raised above and without regard to their factual accuracy.

[65] The deficiencies in the Agreement identified with the NERR and the genuinely agreed test are not able to be overcome by the provisions of undertakings as provided for by s.190 of the Act. The deficiencies that could be overcome by the provision of undertakings would in my view result in substantial changes to the Agreement. As such, the Commission would be unable to accept undertakings of this nature. 28 In any event, I am not satisfied that written undertakings would meet the other concerns raised in this decision. Further, it would also be necessary to insert the model clauses such as the dispute resolution, flexibility and consultation.

[66] The Applicant was encouraged on a number of occasions to discontinue the approval application but was determined to continue its application.

[67] For all the above reasons, the application for the Commission to approve the Agreement is dismissed.

COMMISSIONER

Appearances:

Ms Jacinta Bayard, Solicitor for the Applicant.

Hearing details:

2014.

Sydney:

1 April.

 1   Transcript PN81.

 2   Transcript PN360.

 3   Transcript PN168.

 4   Transcript PN171.

 5   Transcript PN179.

 6   Transcript PN184.

 7   Transcript PN198.

 8   Transcript PN84 - 146.

 9   Transcript PN114.

 10   Labour Day in the ACT 2013 was Monday October 7 2013.

 11   Transcript PN79.

 12   Transcript PN64.

 13   Transcript PN47.

 14   Transcript PN77 - 129.

 15   Transcript PN346.

 16   Transcript PN67.

 17   Transcript PN139.

 18   Transcript PN230.

 19   Transcript PN184.

 20   Transcript PN498.

 21   Transcript PN504.

 22   Clauses 6.2 and Part J Definitions.

 23   See Fair Work Regulations 2.06A.

 24   Transcript PN392.

 25 s.11 of the Statutory Declarations Act 1959.

 26   Transcript PN155 - 418.

 27   Transcript PN484.

 28   s.190(3) of the Act.

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