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Loaded Rates Agreements

Loaded Rates Agreements

Case [2018] FWCFB 3610 28 June 2018

Breach of Contract

Unjust Enrichment

Compensatory Damages

Better Off Overall Test (BOOT)

Labour Law

Administrative Law

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[2018] FWCFB 3610

FAIR WORK COMMISSION

DECISION

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

Loaded Rates Agreements
(AG2017/1925 AG2017/1943 AG2017/3865 AG2017/4096 AG2017/4671)

VICE PRESIDENT HATCHER
VICE PRESIDENT CATANZARITI
DEPUTY PRESIDENT GOSTENCNIK
COMMISSIONER LEE
COMMISSIONER HARPER-GREENWELL

SYDNEY, 28 JUNE 2018

Introduction and statutory framework

[1] This decision concerns five applications for the approval of enterprise agreements which share a common feature, namely they provide for “loaded” or higher rates of pay which are intended to incorporate, in part or whole, penalty rates and other monetary benefits for which separate provision is made in the applicable modern awards. The applications were referred to this Full Bench by the President, Justice Ross, for consideration as to how the better off overall test (BOOT), the satisfaction of which is a requirement for approval of an enterprise agreement under s 186(2)(d) of the Fair Work Act 2009 (FW Act) (subject to ss 189 and 190), is properly to be applied to agreements containing loaded rates. This issue has become particularly pertinent since the Full Bench decision in Hart v Coles Supermarkets Australia Pty Ltd, 1 (Hart) in which a first instance decision to approve an agreement applying to a major Australian retailer and its employees was quashed on appeal. The agreement in question provided for loaded ordinary hourly rates which were higher than those in the relevant modern award and were intended to compensate for lower penalty rates for evenings, weekends and public holidays.2 The Full Bench found that the agreement did not pass the BOOT because the loaded rates in the agreement disadvantaged those employees who worked primarily at times which attracted lower penalty rates under the agreement as compared to the award.3 We discuss Hart in greater detail later in this decision.

[2] Originally a total of eight agreement approval applications were referred to us, but three of the applications were discontinued after the applicants were informed of the Full Bench referral. The remaining agreements for which approval was sought were as follows:

(1) Allied Security Management Enterprise Agreement 2017 (Allied Agreement) 4

(2) JWT Group Services Enterprise Agreement 2017 (JWT Agreement) 5

(3) PSA Security Pty Ltd Enterprise Agreement 2017 (PSA Agreement) 6

(4) ALDI Prestons Agreement 2017 (Aldi Prestons Agreement) 7

(5) ALDI Stapylton Agreement 2017 (Aldi Stapylton Agreement). 8

[3] Enterprise bargaining is a central feature of the FW Act. The object of the FW Act set out in s 3 identifies a number of matters (in paragraphs (a)-(g)) which are intended to “provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians”, one of which (in paragraph (f)) is “achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action”. However, significantly, another matter (in paragraph (b)) is “ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: Loaded Rates Agreements [2018] FWCFB 3610
Case: [2018] FWCFB 3610
Decision Date: 28 JUNE 2018

CaseChat Overview and Summary

The decision concerns five applications for the approval of enterprise agreements, each of which provides for “loaded” or higher rates of pay, intended to incorporate, in part or whole, penalty rates and other monetary benefits for which separate provision is made in the applicable modern awards. The issue before the Full Bench was how the better off overall test (BOOT) is to be applied to agreements containing loaded rates. The Full Bench found that the loaded rates in the agreements disadvantaged those employees who worked primarily at times which attracted lower penalty rates under the agreements compared to the award. This finding followed the Full Bench’s decision in Hart v Coles Supermarkets Australia Pty Ltd, which found that a first instance decision to approve an agreement was quashed on appeal because the agreement did not pass the BOOT. The Full Bench concluded that the agreements in the present case did not pass the BOOT, and therefore were not approved. The Full Bench found that the loaded rates in the agreements provided for higher base rates of pay, but disadvantaged employees who worked primarily at times which attracted lower penalty rates under the agreements as compared to the award. The Full Bench found that the loaded rates were not sufficient to compensate employees for the absence of penalty rates under the agreements. The Full Bench concluded that the agreements did not pass the BOOT, and therefore were not approved.

Orders