LS Precast Pty Ltd

[2018] FWC 7163

[2018] FWC 7163

FAIR WORK COMMISSION

DECISION

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

LS Precast Pty Ltd
(AG2018/4643)

COMMISSIONER MCKINNON MELBOURNE, 22 NOVEMBER 2018

Application for approval of the LS Precast Pty Ltd Enterprise Agreement 2018.

[1] Application has been made for approval of a single enterprise agreement known as the LS Precast Pty Ltd Enterprise Agreement 2018 (the Agreement). The application was made under s.185 of the Fair Work Act 2009 (the Act) by LS Precast Pty Ltd (LS Precast). The Agreement excludes the Concrete Products Award 2010 (the Award).

[2] The application is opposed by the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) and The Australian Workers’ Union (AWU). The CFMMEU and the AWU are not bargaining representatives in relation to the Agreement.

[3] On 18 October 2018 the matter was listed for hearing to deal with the CFMMEU and AWU requests to be heard. At the conclusion of the hearing, I decided to hear from the CFMMEU and AWU in relation to the Agreement and whether it passes the better off overall test. While LS Precast and the CFMMEU each filed materials in that respect, the AWU did not.

Better Off Overall Test

[4] Section 193(1) of the Act provides as follows:

“193(1) An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.”

[5] The rates of pay offered by the Agreement are more beneficial than the Award rates of pay by a margin of 30.15% to 35.47%.

Casual Conversion

[6] The CFMMEU says clause 4.7 of the Agreement, dealing with casual conversion to full time or part time employment, is less beneficial to employees than comparable terms of the Award. It points to what it says is a higher bar for employers to meet under the Award in order to refuse a request to convert to permanent employment.

[7] I do not accept the submission. On its terms, the clause confers a right of conversion on employees. LS Precast does not have the right to refuse the request. The term requires the employee and LS Precast to “discuss and agree” on whether the conversion will be to full time and part time, and if part time – the number of hours to be worked. There is no capacity for LS Precast to refuse a request for conversion to permanent employment under clause 4.7. In a more truncated, but comparable sense to the Award, the default position for employees under the Agreement is that casual employees who work on a full time basis have the right to elect to convert to permanent full time employment and part time casual employees have the right to convert to permanent part time employment, unless the parties mutually agree to a different arrangement.

Hours of Work

[8] The CFMMEU says that the different span of hours in the Agreement (5.00am – 6.00pm) compared to the Award (6.00am – 6.00pm) is less beneficial to employees because the span of hours under the Agreement can be altered by one hour either way by mutual agreement or by the employer on 7 days’ notice. Under the Award, the spread of hours may be altered by mutual agreement between an employer and a majority of employees in the relevant area of work. There is no limit on the extent to which the spread of hours may be varied under the Award.

[9] The CFMMEU also says that clause 10.4 of the Agreement is detrimental to employees because it permits shift rosters to be changed with 24 hours’ notice in an emergency. The Award defines ‘rostered shift’ as a shift in relation to which an employee has had at least 48 hours’ notice. It also provides that shift rosters may be varied by majority agreement of the employer and employees concerned or if no agreement can be reached, on the giving of 7 days’ notice. 1

[10] The Agreement is more beneficial to employees than the Award in the sense that it limits the extent to which the spread of hours can be altered by agreement. However, the Agreement is less beneficial than the Award in relation to the amount of notice required to change hours of work and rostered shifts. These are matters to be weighed in the balance in the overall assessment of the better off overall test.

Rostered Days Off

[11] The CFMMEU says the Agreement is less beneficial to employees because it allows LS Precast to require the banking of rostered days off (RDOs) over a 12 month period, where no equivalent power is conferred on employers under the Award. It says clause 22.6(f) of the Award limits the circumstances in which an RDO can be worked as an ordinary day without penalty.

[12] Clause 22.7(a) of the Award allows employers to require the accrual of up to 5 RDOs. The detriment thus appears to relate to accrual of one additional RDO in any 12 month period. In my view, clause 22.6 of the Award is dealing with a different scenario where RDOs are fixed by the employer under clause 22.6(b) and there is no accrual.

[13] The default position under the Agreement is that RDOs accrue and are taken once every four weeks. The value of those RDOs, whether taken each month or in an accrued ‘block’, is the same. There is no evidence before me about the extent to which the accrual of one additional RDO each year would operate detrimentally to employees. For some employees, it may operate beneficially by allowing a longer combined period of absence from work when accrued RDOs are taken. I am not persuaded that the matter gives rise to the detriment asserted.

Meal Breaks

[14] The CFMMEU says that the Agreement provides for meal breaks in a way that has potential to cause significant disadvantage to employees compared to the Award, because employees may not take their breaks until after 7 hours of work, while the Award requires meal breaks to be commenced between the fourth and sixth hour of work.

[15] The default position in the Agreement mirrors the Award by requiring meal breaks to commence between the fourth and sixth hour of work. An issue arises in relation to employees who commence work at 5.00am, and only where affected employees agree. For those employees, the maximum period of work before a meal break can be taken is 6.5 hours. The result is a potential detriment to employees, which is contained by the requirement for agreement. It is a matter to be weighed in the balance in the assessment of the better off overall test.

Redundancy

[16] The CFMMEU says the Agreement is detrimental to employees because it does not ensure that a redundant employee who terminates their employment during their notice period will retain their entitlement to severance pay, and because the amount of time off to search for alternate employment during the notice period in circumstances of redundancy is limited to one day, compared to the Award provision for one day per week.

[17] I consider that the Agreement is less beneficial to employees than the Award in each of these respects. LS Precast will be given an opportunity to provide an undertaking to address the concerns, for example by adopting clauses 13.3 and 13.4(a) of the Award as terms of the Agreement.

Meal Allowance

[18] The CFMMEU correctly identifies that the overtime meal allowance of $15.23 in the Agreement is less than the equivalent allowance in the Award of $15.27.

[19] In my view, the higher rates of pay provided in the Agreement are sufficient to compensate for this detriment.

Classification Structure

[20] The CFMMEU says that employee progression through the Agreement’s classification structure operates to the disadvantage of employees compared to the Award. The basis for the concern is not apparent. On a fair reading of the classification structure in the Agreement, it aligns with the mechanisms for progression contained in the Award in relation to training.

Conclusion on better off overall test

[21] Having regard to the terms of the Agreement and the Award as it was at test time, on balance I am satisfied that employees will be better off overall under the Agreement if an undertaking is given to address the identified concern in relation to redundancy.

Other requirements for approval

[22] LS Precast has filed comprehensive material in support of its application for approval of the Agreement. On the materials, I am satisfied that each of the pre-approval steps and timeframes relating to the making of the Agreement were met. The statutory declarations of Mr Day and Mr Costi attest to those matters and to the fact that a valid majority of employees voted to approve the Agreement, as does the supporting material filed in relation to the application. Mr Day and Mr Costi were directly involved in making the Agreement on behalf of LS Precast. I am satisfied that each had relevant knowledge of the facts to which they attest.

[23] I am satisfied that the Agreement and its effect were explained to employees in the agreement making process. Detailed information about what employees were told about the Agreement before it was made has been provided. It is clear that employees were given comprehensive information dealing with a range of matters, including the business of LS Precast, its reasons for seeking to make the Agreement, key terms of the Agreement and differences to the Award. Individual discussions were held with employees about their understanding of the proposal being put and whether they wanted additional information. Contemporaneous notes were kept of those discussions. LS Precast made relevant inquires of the employees about their particular circumstances. It gave them an opportunity to make further inquiries. Many of the employees took the opportunity to ask how the Agreement would, or was likely to, affect them and these questions were answered by LS Precast.

[24] The materials also disclose information about each of the employees who was employed throughout the agreement-making process and the type of work they perform for LS Precast. At the time the Agreement was made, each of the employees was engaged as a Labourer. Their mix of experience and skill was varied, reflective of LS Precast’s decision to source local employees and provide them with training specific to its needs. 2 I am satisfied that each of the employees involved over the period in which the Agreement was made were employees who will be covered by the Agreement.

[25] The material does not give rise to concerns of the nature arising in the matter of Re Phabcast Enterprise Agreement 2017. 3 I am also mindful that those concerns arose in a separate proceeding and from a related, but distinct, agreement-making process. To the extent that the concerns raised questions about whether the conditions for enterprise agreement approval were met, it is not relevant to the matter now before me. The task remains to assess whether the Agreement meets those conditions such that it must be approved.

[26] I am not aware of any other reasonable grounds for believing that the Agreement was not genuinely agreed to by employees. To the contrary, the material discloses a direct and transparent engagement between LS Precast and each of the employees in relation to both the Agreement and the agreement-making process. It is not a barrier to the making of an enterprise agreement that in the future, a larger group of employees will become covered by its terms. Nor is it necessary in each case for an enterprise agreement to be made with at least one employee in each classification. With training and experience, the classification of employees will change but it will always be in production work in the concrete industry within the purview of the Award. In my view each of the employees has an interest in ensuring appropriate terms and conditions of employment for each classification group in the Agreement. Other than in relation to rates of pay, the Agreement’s terms and conditions are largely the same for each classification of employee.

[27] I find that the Agreement was genuinely agreed to by employees.

[28] The Agreement will not cover all employees of LS Precast. It covers employees who would otherwise fall within the classifications in the Award, including employees performing ‘leading hand’ duties, but not Supervisors and Team Leaders. Supervisors and Team Leaders will be responsible for management of the production process as distinct from other employees, who will perform operational production tasks. 4 The group of employees covered by the Agreement is operationally distinct and there is a legitimate business rationale for making the Agreement, related to the development of the Benalla facility. I am satisfied that the group was fairly chosen.

[29] The Agreement does not contain any designated outworker terms and there is no evidence of any scope order in operation in relation to the Agreement such that good faith bargaining might be a relevant matter to be considered in connection with the approval of the Agreement.

[30] The nominal expiry date of the Agreement is 4 years from approval by the Commission.

[31] The Agreement contains a dispute settlement term at clause 25, a flexibility term at clause 26 and a consultation term at clause 24. I am satisfied that each of those terms meet the requirements of the Act for inclusion in the Agreement.

Conclusion

[32] LS Precast is directed to provide any undertaking it wishes to give addressing the concern in relation to redundancy within 7 days of this Decision, and to serve a copy of the undertaking(s) on the CFMMEU, the AWU and any bargaining representatives for the Agreement at the same time. The CFMMEU, the AWU and any bargaining representatives for the Agreement are directed to provide their views to LS Precast and the Commission on any undertaking given by LS Precast within 10 days of this Decision.

[33] I am otherwise satisfied that each of the requirements of ss.186, 187 and 188 of the Act, as are relevant to this application for approval, have been met.

COMMISSIONER

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<PR702555>

 1   Concrete Products Award 2010, clause 25.5

 2   Witness Statement of Zev Costi

 3   AG2017/6736; Re Phabcast Pty Ltd [2018] FWC 2886

 4   Witness Statement of Zev Costi, [22]