Kalari Pty Ltd
[2016] FWC 525
•1 FEBRUARY 2016
| [2016] FWC 525 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
Kalari Pty Ltd
(AG2015/5992)
Road transport industry | |
COMMISSIONER ROBERTS | SYDNEY, 1 FEBRUARY 2016 |
Application for approval of the Kalari Pty Ltd (South Australia Bulk Liquids) Enterprise Agreement 2015.
[1] An application was made on 29 October 2015 for approval of an enterprise agreement known as the Kalari Pty Ltd (South Australia Bulk Liquids) Enterprise Agreement 2015 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act) by Kalari Pty Ltd (Kalari or the Company). The Agreement is a single-enterprise agreement.
[2] On 13 November 2015 the Transport Workers Union of Australia, SA/NT Branch (the TWU or the Union) gave notice pursuant to s.183 of the Act that it wishes to be covered by the Agreement. However in its form F18 (Statutory declaration of employee organisation in relation to an application for approval of an enterprise agreement), the Union stated that the TWU did not participate in bargaining for the Agreement and did not support its approval. The Union alleges deficiencies in Kalari’s form F17, a failure by Kalari to meet the good faith bargaining requirements of the Act and failure of the Agreement to meet the Better Off Overall Test (the BOOT). There were no employee bargaining representatives appointed but three individuals were involved in the bargaining process. Each of those persons filed a form F18A supporting the Company’s application.
[3] A Directions hearing was held in Sydney on 27 November 2015. Ms T Walton appeared for the TWU. Mr W Swain and Mr D Haynes appeared for the Company by telephone link. At the hearing, the parties agreed that the application be dealt with ‘on the papers’ and directions were subsequently issued for the filing of written submissions. That process ended on 15 December 2015.
Background
[4] The Agreement which is the subject of these proceedings is to replace the Kalari Pty Ltd (South Australia Bulk Liquids) Enterprise Agreement 2012 (the 2012 Agreement). The Agreement covers employees of the Company engaged as drivers in its operations in South Australia. The TWU is covered by the 2012 Agreement, which has a nominal expiry date of 12 March 2016.
[5] The relevant modern award and reference instrument is the Road Transport and Distribution Award 2010 (the Award).
[6] In its form F17 (Employer’s statutory declaration in support of an application for approval of an enterprise agreement), Kalari set out the following terms or conditions of employment that are allegedly more beneficial than equivalent terms and conditions in the Award:
“Clause 18 & 21 Rates of pay and increases
Clause 32.1 Overtime rest break/allowance
Clause 35.5 Annual leave at half pay
Clause 43.1 paid Maternity leave
Clause 45 Overnight allowance
Clause 16 Dangerous Goods allowance
Clause 49 Salary sacrifice
Clause 52 Reimbursement of car parking costs
Clauses 67 & 68 Redundancy”
[7] The Company’s form F17 does not identify any terms or conditions of employment that are less beneficial than equivalent terms and conditions in the Award.
[8] In its form F18, the TWU identified the following items which it alleged were inferior to provisions in the Award:
“1. Clause 31.1(c): The night shift definition appears not to cover an employee engaged on a 12 hour shift that commences between 8.30pm and 10.00pm. This is a less beneficial provision than the Award.
2. Clause 31.3: The shift allowances are inferior to those in the Award and the undertaking offered by the company should be applied.
3. Clause 31.6 and 31.7: The reduced notice required for a change of shift is a less benefical provision than the Award.
4. Clause 31: The absence of a penalty for non-consecutive shifts is a less beneficial provision than the Award.
5. Clause 35.1: The agreement provides an annual leave loading of 17.5%, however, shiftworkers are entitled to either the 17.5% or the shift penalty, whichever is greater. This provision is less beneficial than the Award provision for night shift employees.
6. Clause 35.1: The agreement does not allow for payment of annual leave loading in the cashing-out arrangements which is contrary to the NES provisions in s.93(2)(C).
7. Clause 35.1: The Agreement does not allow for payment of annual leave loading on accrued annual leave paid out on termination. This is contrary to the NES provision in s.90(2).
8. The accident make-up pay provisions in the existing agreement have been removed from the proposed agreement.”
[9] The Commission also raised several matters with Kalari relating to agreement provisions which appeared to be less beneficial than the Award.
Written submissions from the TWU
[10] The TWU in written submissions argues that it was not informed by Kalari of negotiations for the Agreement under consideration and is the default bargaining representative for TWU members employed by Kalari. The Union submits that approval should be refused on the ground that the Company did not meet the good faith bargaining requirements prescribed by ss.228(1)(e) and (f) of the Act. The submissions go on to deal with the Act’s provisions concerning default bargaining representatives and I have paid regard to that material as I have also done in relation to the TWU’s further arguments concerning good faith bargaining.
[11] The TWU submissions go on to assert that the Agreement under consideration does not pass the BOOT. In that regard, the TWU slightly refined the material set out in its form F18 (see paragraph 8 above) in the following terms:
“a. Clause 31.1(c): The night shift definition (in the proposed agreement) does not cover an employee engaged on a 12 hour shift that commences between 8.30pm and 10pm. This is less beneficial than the award.
b. Clause 31.3: The shift allowances are inferior to those in the Award and the undertaking offered by the company should be applied.
c. Clause 31.6 and 31.7: the reduced notice required for a change of shift is a less beneficial provision than the award.
d. Clause 31: The absence of a penalty for non-consecutive shifts is a less beneficial provision than the award.
e. Clause 35.1: The agreement does not allow for payment of annual leave loading in the cashing-out arrangements which is contrary to the NES provisions in s.93(2)(c).
f. Clause 35.1: The agreement does not allow for payment of annual leave loading on accrued leave paid out on termination. This is contrary to the NES provision in s.90(2).
g. The accident make-up pay provisions in the existing agreement have been removed from the proposed agreement.”
Written submissions from Kalari
[12] Kalari filed three sets of submissions, being Preliminary Submissions (Submission 1), Further Submissions (Submission 2) and Submissions in Reply to TWU Submissions (Submission 3).
[13] In Submission 1, Kalari responded to the Union’s form F18, arguing that there is no evidence that any employee to be covered by the proposed agreement is a member of the Union and accordingly the Union does not have default bargaining representative status under the Act. The submissions go on to deal with the agreement making process in some detail and I have paid regard to that further material.
[14] Submission 1 goes on to deal with the BOOT. Kalari says:
“i. EA cl.31.1(c) – night shift definition:
Kalari is prepared to undertake that, ‘an employee rostered on a shift the major portion of which is performed between 12.30am and 8.30am on Monday to Friday will be paid night shift loading for ordinary hours.’
ii. EA cl.35.1 – annual leave loading on ‘cashed out’ annual leave, or on accrued annual leave paid out on termination of employment:
Kalari is prepared to undertake that, ‘untaken and/or cashed out annual leave will be payable at the rate at which it would have been paid had the employee taken it at the time the employee was eligible for it – i.e. including an additional 17.5% loading on top of the employee’s ordinary pay.’
iii. Accident pay is no longer an Award matter. Accordingly; whether or not it has been removed from 2012 Agreement is not relevant for the purposes of the BOOT.
[15] In Submission 2, Kalari states that it does not have any objection to the TWU being covered by the proposed agreement or to the Union being heard in relation to the application for agreement approval.
“However; … Kalari rejects TWU’s opposition to approval of the Agreement, and its disagreement with the matters contained in Kalari’s Form F17, and repeats that:
a) at no stage did the employee group submit a ‘log of claims’ (or similar) to Kalari, nor were any instruments of appointment of bargaining representatives received by Kalari;
b) Kalari is not aware if any driver sought assistance or representation from TWU. Kalari did not discourage any employee from contacting the union, nor did it refuse to recognise TWU;
c) Instead, the employee group’s own delegates conducted the bargaining on behalf of the drivers and the Agreement was properly approved by a majority of employees when the voting process concluded on 23 October 2015.”
[16] In Submission 3, Kalari argues that neither the TWU nor Kalari is a ‘party’ to the 2012 Agreement. The submissions go on to say that employees were represented in negotiations by three of their number and Kalari did not in any way influence a decision by employees to bypass the TWU. Kalari says that, in any event, an alleged breach of s.228 of the Act only allows the Commission to make good faith bargaining orders pursuant to s.230 of the Act, once the procedures of s.229 are complied with. Kalari argues that the Agreement has already been made and it is too late for the TWU to raise a good faith bargaining argument.
[17] “Kalari submits that the fact that TWU was covered by the 2012 Agreement does not provide the union with an automatic or mandatory right to be involved in negotiations to replace that Agreement. If, as happened in this case, the relevant employees decide to represent themselves and not involve TWU in the bargaining process, having been given the required Notice of employee representational rights by the company, there is no obligation on Kalari to engage with the union against the apparent wishes of its employees.”
[18] “Whilst TWU mayhave the status of a ‘default’ bargaining representative [under s.176(1)(b)], the responsibility lies with the employee(s) to notify Kalari of their desire to be represented – as that provision is only triggered by the employee being a member of the union. There is no obligation on Kalari to inquire of TWU (or any other union) as to whether or not it has members employed by the company.”
[19] In relation to the BOOT, Kalari relies on the decision of the Full Bench in AKN Pty Ltd t/a Aitkin Crane Services 1 (AKN) where the Bench held that the BOOT requires “an overall assessment of whether an employee would be better off under the agreement.”2
[20] “Accordingly; as part of the ‘global’ or overall assessment to be made by FWC under s.193(1) - Kalari submits that:
a) as the hourly wage rates under the new Agreement (at cl.18) are higher than the Award’s relevant minimum wage rates of pay [e.g. hourly rate payable under Award (cl.15.2) is $20.69 for Grade 8 transport worker – compared with $22.989 for Driver Single and $24.445 for Driver B-Double & Road Trains];
[NB: Grade 8 transport worker under Award’s Schedule C includes – Drivers of rigid vehicles and trailer(s) or double articulated vehicle exceeding 53.4 tonnes GCM including B-Doubles]
b) and when combined with the other more beneficial terms under the Agreement;
the Commission should be satisfied that each employee would be better off overall under the Agreement - given the remaining relatively minor terms which TWU has asserted … as being less beneficial.”
Conclusions
[21] In considering whether to approve an agreement, the Commission must be satisfied that such agreement passes the BOOT and that the process leading to the making of the agreement, and the subsequent application for approval, were compliant with the Act.
[22] In relation to the BOOT, I respectfully agree with the decision of the Full Bench in AKN.
[23] It is apparent on the facts before me that there are some areas where the provisions in the Agreement would be inferior to those in the Award. The TWU contends that some employees will be worse off, or no better off, under the Agreement than they would be under the Award.
[24] However, Kalari has now offered the attached undertakings 3, which meet with my approval. The TWU says:
“1. The TWU does not oppose the undertakings attached;
2. The TWU relies on its submissions in relation to the subject submitted 11 December 2015;
3. The TWU submits that Clause 31.6 and 31.7 of the Agreement are less than the award provisions in relation to the required notice for a change in a shift; and
4. The TWU submits that Clause 31 of the agreement is less beneficial than the Award provision (Clause 24.10 of the Award) in relation to the rate for non-continuous afternoon or night shift.”
[25] On an overall assessment of the Agreement, I am satisfied that the 13.38% to 15.99% positive differential in wage rates between the Agreement and the Award, combined with the undertakings proffered by Kalari, mean that the Agreement passes the BOOT and I so find.
[26] I now come to the other issues which arose from the parties’ submissions.
[27] Whether the TWU is a ‘party’ to the 2012 Agreement is not of any real moment in these proceedings. I agree with Kalari that the TWU is not a ‘party’ to that agreement but it is covered by it. The term ‘party’ is commonly used in relation to agreements to identify the employer and any relevant unions. In fact, the Agreement filed by Kalari contains a signature page which is headed “Signatures of the Parties”.
[28] I now turn to the question of good faith bargaining during the agreement-making process.
[29] The TWU, on a confidential basis, has supplied me with details of its membership at Kalari which would be covered by the Agreement. Based on that information, I find that the TWU has members at Kalari and that it was a default bargaining representative in relation to the Agreement. Therefore, I further find that the TWU is entitled to be covered by any new agreement which I make.
[30] It is clear to me that Kalari took no steps to advise the TWU of bargaining for a new agreement and certainly did not invite the Union to take part. However, Kalari took no action to exclude the TWU from bargaining. Curiously, the TWU’s members at Kalari did not inform the Union about bargaining. Whether the actions of TWU members at Kalari were an active decision to exclude the Union is unknowable. For its part, the TWU took no action to open a new round of bargaining for an agreement which was approaching its expiry.
[31] Given that the Company did not exclude the TWU from bargaining and now acknowledges the Union’s right to be both a party to these proceedings and to be covered by the Agreement, there is nothing before me that would convince me that the good faith bargaining provisions of the Act were not followed and I so find.
[32] I now come to the question of when the Agreement can become operative.
[33] The 2012 Agreement does not reach its nominal expiry date until 12 March 2016. In that regard, the Act relevantly provides at s.58:
“58 Only one enterprise agreement can apply to an employee
Only one enterprise agreement can apply to an employee
(1) Only one enterprise agreement can apply to an employee at a particular time.
General rule—later agreement does not apply until earlier agreement passes its nominal expiry date
(2) If:
- (a) an enterprise agreement (the earlier agreement) applies to an employee in relation to particular employment; and
(b) another enterprise agreement (the later agreement) that covers the employee in relation to the same employment comes into operation; and
(c) subsection (3) (which deals with a single-enterprise agreement replacing a multi-enterprise agreement) does not apply;
then:
(d) if the earlier agreement has not passed its nominal expiry date:
- (i) the later agreement cannot apply to the employee in relation to that employment until the earlier agreement passes its nominal expiry date; and
(ii) the earlier agreement ceases to apply to the employee in relation to that employment when the earlier agreement passes its nominal expiry date, and can never so apply again; or
[34] There is no application before me to terminate the 2012 Agreement prior to its nominal expiry date. Accordingly, I am unable to approve the new agreement at this time although I am satisfied that the application should be approved. Therefore, I indicate that it is my intention to issue a decision approving the new agreement on or about 6 March 2016 and that the Agreement will therefore operate on and from 13 March 2016, pursuant to s.54(1)(a) of the Act.
COMMISSIONER
Annexure A
1 [2015] FWCFB 1833.
2 Ibid at [41].
3 Annexure A.
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