Lindsay Brothers Management Pty Ltd T/A Lindsay Transport

[2014] FWC 161

[2014] FWC 161

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Lindsay Brothers Management Pty Ltd T/A Lindsay Transport
(AG2013/2497)

COMMISSIONER ROBERTS SYDNEY, 13 JANUARY 2014

Application for approval of the Lindsay Transport Enterprise Agreement 2013 .

[1] This decision concerns an application made under s.185 of the Fair Work Act (the Act) for the approval of a single enterprise agreement. The application was made by Lindsay Brothers Management Pty Ltd (Lindsay or the Company). The title of the agreement is the Lindsay Transport Enterprise Agreement 2013 (the Agreement). The application for approval of the Agreement was opposed by the Transport Workers’ Union of Australia (the TWU) which was a bargaining representative for the Agreement.

[2] The Agreement contains a number of common terms and specific arrangements (clauses 1-30) applying to all Lindsay employees. Schedule 1 of the Agreement applies specifically to Linehaul drivers with the reference instrument being Road Transport (Long Distance Operations) Award 2010. Schedule 2 of the Agreement applies specifically to all other Lindsay employees who are not Linehaul drivers. Schedules 3 and 4 set out the pay rates which will apply from July 2014 and July 2015 respectively. The Agreement covers full time, part-time and casual employees. Clause 6(a) (Application of Agreement) provides that:

“(a) This Agreement operates to the exclusion of any other industrial instrument which may otherwise have applied to the employment relationship between LT [Lindsay Transport] and any Lindsay Employees.”

[3] Lindsay states that the relevant modern awards are the Road Transport and Distribution Award 2010 and the Road Transport (Long Distance Operations) Award 2010. The Road Transport and Distribution Award 2010 contains transitional provisions and Lindsay nominated the Transport Workers (Long Distance Operations) Award 2000 and the NSW Transport Industry (State) Award as being the relevant pre-reform instruments.

[4] In its form F17 (Employer’s Declaration in Support of Application for Approval of Enterprise Agreement), Lindsay set out the following terms or conditions of employment that are more beneficial than equivalent terms and conditions in the two reference instruments:

“(a) Cashing in of personal leave (all employees)

• Clause 18.2

• Loading and Unloading (Linehaul Drivers)



• Schedule 1 Clause 8



• Saturday overtime (Forklift and PUD staff)



• Schedule 2 Clause 2(g)



• Higher base rate (All employees)



• Schedule 1 Clause 6



• Schedule 2 Clause 7



• AM Shift Allowance (Forklift and PUD staff)



• Schedule 2 clause 31.1a

(b) Annual increase of 3.5% (Higher than historical award increases)

• Clause 12

• Banking of overtime (Linehaul Drivers)



• Schedule 1 clause 4.2”

[5] The Company’s form F17 also identifies terms or conditions of employment that are less beneficial than equivalent terms and conditions in the two reference instruments:

“(a) Overtime rate (Forklift Drivers and PUD Employees)

• Schedule 2 clause 2 (f)

• Shift Allowance



• Schedule 2 clause 3.1 (e,f)



• Leave Loading



• Clause 19



• Casual loading



• Schedule 1 clause 5



• Schedule 2 clause 3.2”

[6] In attachment A to its form F18 (Declaration of Employee Organisation in relation to an Application for Approval of Enterprise Agreement), the TWU submitted:

“PART 1

Clause 7(B) - Part time employment: The Road Transport & Distribution Award provides at clause 12.4 that at the time of engagement of a part-time employee, the employer and employee will agree on the hours per day, the days per week to be worked and the start and finish times. The Award also states that any time worked in excess of the agreed hours will attract overtime rates. This agreement is silent on the conditions of employment for part-time employees other than providing for pro rated leave entitlements in cl 17, 18, 19 and 20. There is no base provided from which prorating can be accurately calculated. Part-time employees under this agreement are disadvantaged.

The Road Transport (Long Distance Operations) Award makes no provision for parttime employment.

Clause 20: Payment for Statutory Holidays: This provision appears to be in conflict with Schedule 1, clause 7(c) and Schedule 2, clause 2.l(i). The latter clauses specify how payment for a public holiday will be paid but make no mention that the payment for time worked is in addition to payment for the day. The document is confusing in that five separate clauses have to be read to determine the appropriate payment for a public holiday.

PART 2

Schedule 1: Reference Instrument: Road Transport (Long Distance Operations) Award 2010

Cl. 2.4 - If a linehaul driver takes longer than 38 hours to travel 2650 kms, 2515 kms or 2300 kms (for grades 4, 6 and 8 respectively) in any week, this clause results in inferior provisions to the NES. The agreement appears to rely on hourly rate conditions from the Award but remunerates drivers on a cents per kilometre basis. The establishment of minimum daily kilometres is less beneficial than the Award, potentially in breach of the NES and an unsafe method of remuneration.

Cl. 2.4 - The provisions of this clause clearly indicate the flip-flopping between the hourly rate method of payment and the cents per kilometre payment method. The Award, at clause 13.3, provides that payment must be made according to one method or other and at clause 13.3(b) specifies that the method of remuneration is to be nominated at the time of the employee's engagement.

Cl. 4.2 - Optional Banking of Hours: Defeats the ‘minimum fortnightly payment’ prescribed in the Award and incorrectly categorises kilometres travelled, in excess of those above, as overtime. There is no discernible difference between the rate of remuneration, for ‘ordinary’ and ‘overtime’ hours in either the agreement or the Award as both the hourly driving rate and cents per kilometre rates have a 20% overtime loading factored into the rate and payable for all hours worked or kilometres travelled.

Cl. 4.6: Using the calculation method prescribed under this clause will result in an underpayment for annual leave for grade 8 employees under this agreement when compared to the provisions of clause 23.2 of the Award.

Cl. 5(c): Award clause 10.3(d) provides for a minimum engagement/payment of 8 hours.

Cl. 6(a) is misleading as it describes the rates provided as ‘minimum weekly retainers in recognition of, and remuneration for, ordinary hours of work, irrespective of kilometres travelled.’ When read in conjunction with clause 4.2(b) it is clear that there is no ‘minimum weekly retainer’ and is a further example of the confusion between hourly driving rates and cents per kilometre rates of payment.

Cl 6(a) and (b): The rates contained in these two clauses are identical. The Award provides a rate of remuneration for all driving work that includes the 30% disability allowance and 20% overtime loading. An attempt to separate ordinary hours from overtime hours through the language of the document is designed to minimise the company’s superannuation obligations and is a significant disadvantage to employees with respect to superannuation entitlements.

Cl. 6(a) and (b): The Award rates are based on a 40 hour week and provide for a rostered day off each month. If no RDO is afforded to a driver, the rates should be recalculated on the basis of the NES requirement of a maximum 38 hours per week.

When the calculations are performed based on 38 hours per week, the cpk rates are as follows:

Gr 4 = 39.04 cpk Gr 6 = 40.76 cpk Gr 8 = 41.45 cpk

It is evident that the existing rates paid to grade 4 and grade 9 drivers are below Award rates. Alternatively, drivers should receive the benefit of a rostered day off each month or the equivalent in remuneration. The agreement provisions are less beneficial than the Award.

Cl.·6(c): The provisions of this clause are less beneficial than the Award provisions at clause 14.

Cl.7(b): It is unclear if or how PUD work performed by a linehaul driver counts towards the daily base kilometres in cl.6(a). If this work is not considered in the calculation of daily base kilometres, the employee will be penalised by the provisions of clause 4.2(b).

Cl.7(c): Appears to conflict with the terms of Schedule 2, Clause l(c).

Cl.8: Award clause 13.6 provides for a minimum payment of one hour loading and one hour unloading per trip where loading/unloading duties are required. The provisions in this agreement are less beneficial than the Award.

Schedule 2: Reference Instrument: Road Transport & Distribution Award 2010

Cl.2(f): The Award, clause 12.5(d) provides that casuals are to be paid overtime at the rate of 160% for first two hours and 210% thereafter. The provisions within the agreement are less beneficial than the Award.

Cl.2(g): Less beneficial than Award condition at clause 28.1

Cl.2(h): Less beneficial than Award condition at clause 28.1

Cl.2(i): Award cl. 28.2(c) and (d) provides for payment of time and a half for work performed as well as payment for the day. Christmas Day and Good Friday attract double time plus payment for the day. This clause in the agreement does not mention payment for the day in addition to payment for work performed.

Cl.3.1: The shift penalties prescribed are less than the Award penalties at clause 24.3.

Cl.3.2: The Award casual loading is 25%. The Award also provides for casual conversion at clause 12.6.

Cl.3.3(a) and (b): Provides for a change to the employee’s starting time with 12 hours notice which is an inferior provision to clause 25.1 of the Award.

Cl.5(b): Provides for ordinary hours to be worked on Saturday or Sunday but does not prescribe a rate of pay. Clause 2.l(g) provides a rate that appears to relate to working overtime on Saturday. However, using the formula in clause 2.l(g) and (h), and applying the rates at clause 7.1 of the agreement (for Victoria, Queensland and South Australia), the agreement rates fall below the applicable award rates. This is a less beneficial provision than the Award provision at clause 24.8.

Cl.7.3(c): The provisions regarding RDOs are inferior to those at clause 22.5(a) of the Award.”

[7] On 10 September 2013, I supplied the parties with a Key Issues Summary (the Summary) prepared by the Fair Work Commission which addressed issues in relation to the Better Off Overall Test (the BOOT) and the concerns raised by the TWU in their form F18.

[8] The Summary analysed both Schedule 1 and Schedule 2 of the Agreement.

[9] In relation to the wage rates in Schedule 1, it said:

“The wage rate in the agreement is based on a relevant retainer amount that is paid on the number of kilometres travelled (not the number of hours worked) with all additional kilometres (overtime) being paid at the cents per kilometre method. The relevant award at clause 13.3 states that at the time of engagement an employee must be paid either by the cents per kilometre method or the hourly rate method.

It could be argued that the remuneration in this agreement is purely on the cents per kilometre method, it is just that the first daily base kilometre rate is expressed as equivalent hourly rate. For example a single driver on $982.88 must travel 2,650 Ks per week before additional remuneration is payable. This equates to 982.88/2650 = $0.3709 per kilometre.”

[10] It compared both the wage rate and the cents per kilometre rate in the agreement against the award. That analysis showed that Grade 4 drivers would be no better off under the Agreement, Grade 6 drivers would be 2.6% better off and Grade 7 drivers would be 10% better off. Casual employees would overall be better off.

[11] The Agreement does not provide a rostered day off, whereas the Award provides for an RDO each month. The removal of a paid RDO would require a 3.82% increase in the wage rate to compensate for its removal.

[12] In relation to Schedule 2, calculations showed that the base rate of pay for transport and distribution employees are between 6.9% and 21% higher than the award rate. However, the increased base rate of pay must be set off against reduced overtime, weekend and shift penalties. The net effect on employees was that, except for overtime performed on a Sunday, employees are overall better off.

[13] Modelling of the effect of the Agreement on part-time employees found that such employees would be worse off by $5.88 or 1.32% per week based on a Grade 1 employee having 20 agreed hours per week and then working an additional 4 hours more than agreed. In relation to casual employees, modelling noted that those employees would be better off under the Agreement as compared with the Award in terms of their based hourly rates. However, the Agreement provision for a 20% loading, as opposed to 25% in the Award, and lower overtime, shift and penalty rates under the Agreement would provide a less beneficial result for employees except in the case when ordinary hours are undertaken after the first 3 hours of work on a Saturday within ordinary hours. Modelling evidenced a negative financial effect on casual employees in Schedule 2 if the Agreement was to apply to them.

[14] The Agreement is silent in relation to requests for flexible working arrangements, community service leave and the provision of a Fair Work Information Statement.

[15] In summary:

“Schedule 1 Employees

• The agreement contemplates the engagement of part time employees where the relevant award for employees covered by Schedule 1 only contemplates full time or casual employment.

• Modelling shows that employees engaged as line haul drivers single and b-double are not better off under the agreement when consideration is given to a RDO.

• Set distribution employees perform multiple deliveries and pick-ups. It is a little unclear what is meant by drop-off and pick-up and if this would trigger the loading and unloading allowance under the award for comparative purposes. It may be appropriate to seek clarification on how a set distribution single and set distribution b-double drivers are better off under the agreement as opposed to the award.

Schedule 2 Employees

• Under the terms of the agreement part time employees work less hours than full time employees and receive overtime penalties in accordance with full time employees. (i.e. in excess of 7.6 hours per shift) The relevant award provides that part time employees must have agreed hours of work with agreed starting and finishing times and that any time worked in excess of or outside the agreement hours would be paid at the appropriate overtime rates.

• Employees who may be engaged on shift work are not better off under the agreement when compared to the relevant award. Casual employee have a reduced casual loading and are therefore not better off when working shift work, on public holidays and on Sundays.

• Modelling shows that a casual employee working more than 44 hours per week may not be better off under the agreement when compared to the relevant award. The amount of additional hours that could be worked would of course be reduced if the employee were to work on shift work, Sundays and / or on a public holiday.

No further issues have been identified in relation to the BOOT or the NES.”

[16] Directions were issued on 13 September 2013 for the filing of submissions and documentary material. That process was completed on or about 26 September 2013. The application came on for hearing before me in Sydney on 27 September 2013. At the hearing Lindsay was represented, by permission, by Mr T Longwill of McCullough Robertson Lawyers. The TWU was represented by Ms T Walton with Ms S Kaltoum.

[17] At the hearing, the TWU stated that it did not allege any technical defects in either the agreement making process or the application for approval of the Agreement. The basis of the TWU’s objection to approval lies in the content of the Agreement. The parties made brief submissions at the hearing but have largely relied upon their written submissions, filed in accordance with my directions.

Written submissions from Lindsay

[18] As noted above, Lindsay filed written submissions 1. Those submissions replied to the points raised in the Summary.

Schedule 1 employees

[19] The Company submitted that historically and currently it has had no need for part-time employees in the classifications covered in ‘Schedule 1’. Lindsay offered the following undertaking in this regard:

“LT undertakes to apply all provisions concerning part-time employees only to employees covered by Schedule 2.”

[20] In relation to linehaul drivers, the Company disagreed with the outcome of the modelling done by the Commission and provided its own modelling for both linehaul and B double drivers:

“The analysis shows that due to the increase in base rate; rate per kilometre and increase in remuneration for PUD transactions EA employees across all configurations are better off overall when compared with the LOD Award within a range of 3.4% and 4.4%. The most significant difference in these circumstances is the allowance given for pick up and drop which is based on a conservative two pick ups and two drops for those working base kilometres and travelling up to 3,500 kilometres per week and three pick ups and three drops for those employees travelling between 4,500 kilometres per week and 5,500 kilometres per week. Annexure A also provides the same analysis for B-Double drivers where the EB result is greater being between 5.5% and 6.1% again making the conservative assumption concerning PUD transactions.”

[21] In relation to Set Distribution employees performing multiple deliveries and pick ups, the submissions conceded that “in certain circumstances” such drivers would fall behind award remuneration levels:

“LT therefore proposes to increase the hourly rate prescribed in Schedule 1 clause 6(a) for Set Distribution Drivers for PUD work to Single - $26.75 per hour and to provide the undertaking:

‘LT will pay Set Distribution single drivers an hourly rate of $26.75 for PUD work instead of the rate contained in Schedule 1 clause 6(a).’”

[22] Further in relation to Set Distribution drivers, the submissions provided an analysis which allegedly “demonstrates that in all circumstances Set Distribution drivers are better off overall.”

Schedule 2 employees

[23] In relation to concerns expressed by the Commission concerning part-time employees, the submissions said:

“To accommodate this concern, the Applicant is prepared to provide the following undertaking:

‘Any employee covered by Schedule 2 of this agreement employed on a part time basis will have agreed hours of work with agreed starting and finishing times. Those employees will be entitled to overtime for work performed in addition to these hours paid in accordance with schedule 2, clause 2.1(f).’”

[24] In relation to employees engaged in shift work, the Company provided its own modelling which allegedly showed that on each occasion employees remunerated under the Agreement are better off overall when compared with the reference award.

[25] In relation to casual employees working more than 44 hours per week, Lindsay conceded “that in some circumstances including that nominated by the Commission, there was potential for casual employees to fall below comparative award remuneration.” The Company went on to offer the following undertaking to cure this problem:

“Lindsay Transport will pay Casual Lindsay Employees to whom Schedule 2 clause 3.2(b) applies, a 25% loading in addition to the applicable base ordinary rate set out at clause 7 of Schedule 2 of the Lindsay Transport Enterprise Agreement instead of the 20% loading prescribed in that clause.”

[26] The submissions went on to argue that in totality “casual employees are better off under the EB.”

Written submissions from the TWU

[27] As noted above, the TWU filed written submissions 2. Those submissions replied to those from Lindsay.

[28] The TWU reiterated its opposition to approval of the Agreement on the ground that it does not pass the BOOT. It further submitted that the undertakings offered by Lindsay should not be accepted as they “will result in substantial change to the Agreement”.

[29] The submissions went on to set out the legislative requirements and referenced relevant case law. I have paid regard to the case law cited.

Schedule 1

[30] In relation to Schedule 1, the submissions further argued that the Agreement is confusing in many respects and omits reference to various expense related allowances such as work diary, articles of clothing, housing and training. In relation to accident pay, the Agreement does not address employee entitlements which are addressed in the Award.

[31] Other issues raised by the TWU include payment for higher duties, payment of wages, meal breaks, delays, break down or impassable highways, leave in advance, community service and payment for public holidays. In relation to the last matter, the submissions said: “The document is confusing in that five separate clauses have to read to determine the appropriate payment for a public holiday.”

Schedule 2

[32] In relation to Schedule 2 of the Agreement, the TWU raised issues in relation to casual overtime loading, Saturday work, Sunday work, public holiday pay, shift penalties, casual loading, start times and RDOs.

[33] I have not set out the objections raised by the TWU in detail but have paid full regard to them.

[34] The submissions closed by arguing that undertakings from Lindsay should not be accepted and that there are no exceptional circumstances which would invite the Commission to approve the Agreement in the public interest pursuant to s.189 of the Act.

Other issues

[35] In addition to those issues raised in the Summary and by the TWU, my chambers has separately identified issues relating to clause 21 (Dispute and grievance procedure) and clause 30 (consultation and significant change). In both cases the representation of employees is limited to representation by the TWU.

Conclusions and finding

[36] In considering whether to approve an agreement, the Commission must be satisfied that such agreement passes the BOOT.

[37] In Federal Express (Australia) Pty Ltd and Federal Express Corporation 3 Commissioner Cargill helpfully summarised the way in which the BOOT is to be applied:

“As the Armacell 4 and NTEIU5 Full Benches determined, it requires the identification of terms in the Agreement which are more beneficial for an employee when compared with those in the relevant award, the terms which are less beneficial and an overall assessment of whether the employee would be better off under the Agreement.” (citations added)

[38] Lindsay’s application sets out a number of areas where employees under the Agreement will allegedly be better off when their wages and conditions of employment are compared with the relevant Award. The application concedes 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 relevant Award.

[39] In its submissions, Lindsay conceded that ‘in certain circumstances’ Set Distribution employees in Schedule 1 performing multiple deliveries and pick ups could be worse off under the Agreement. It offered the undertaking set out at paragraph 21 above.

[40] In relation to part-time employees covered by Schedule 1, Lindsay offered the undertaking set out at paragraph 19 above. In relation to part-time employees under Schedule 2, Lindsay offered the undertaking set out at paragraph 23 above.

[41] In relation to casual employees under Schedule 2, Lindsay conceded that there was a potential for casual employees to fall below the comparative award remuneration in certain circumstances and offered the undertaking set out at paragraph 25 above.

[42] Based on the modelling done by the Commission and the concessions by Lindsay, it is apparent that the Agreement on its face does not pass the BOOT in that each employee would be better off overall under the Agreement rather than under the relevant awards. Accordingly, the Agreement would not meet the requirements set out in s.186 or 187 of the Act. However, section 190 enables the Commission to approve an agreement based on undertakings from the employer to correct the areas of concern. However, such undertakings must not result in substantial change to the Agreement. In the case before me, the TWU argues that the undertakings offered by Lindsay would result in such substantial change.

[43] After careful consideration, I have decided not to accept the undertakings offered by Lindsay, on the ground that such undertakings would substantially change the terms of the Agreement and would result in an agreement very different to the one that employees voted on. Further, there is nothing before me to show that approval of the Agreement is warranted pursuant to s.189 of the Act on the ground of public interest.

[44] Accordingly, the application for approval of the Agreement is dismissed. The Commission remains available to the parties to assist them in the process of making any new agreement.

COMMISSIONER

Appearances:

T Walton with S Kaltoum for the Transport Workers’ Union of Australia.

T Longwill for Lindsay Brothers Management Pty Ltd.

Hearing details:

2013.

Sydney:

September 27.

 1   Exhibit Lindsay 1.

 2   Exhibit TWU 1.

 3   [2013] FWC 6022.

 4   [2010] FWAFB 9985.

 5   [2011] FWAFB 5163.

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