M.J.M. VENTURES PTY. LTD T/A ANCHOR SECURITY

[2015] FWC 3762

[2015] FWC 3762

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

M.J.M. VENTURES PTY. LTD T/A ANCHOR SECURITY
(AG2015/1908)

COMMISSIONER GREGORY MELBOURNE, 10 JUNE 2015

Application for approval of the Anchor Security Enterprise Agreement 2015.

Introduction

[1] MJM Ventures Pty Ltd T/A Anchor Security has made application for approval of the Anchor Security Enterprise Agreement 2015 (the Agreement) under s.185 of the Fair Work Act 2009 (the Act). The Applicant is a business involved in the security industry and the Form F17 – Employer’s Statutory Declaration (Form F17) indicates 36 employees are to be covered by the proposed Agreement. It also states that 30 of those employees are engaged on a casual basis, with 3 engaged on a part-time basis. This decision deals with the application for approval of the Agreement.

[2] The proposed Agreement, in summary, is intended to cover full-time, part-time and casual Security Officers variously engaged in the Level 1 – 5 classifications provided for in the Agreement. The rates of pay in the Agreement are generally intended to apply in place of the range of entitlements that apply in the underlying Security Services Industry Award 2010 [MA000016] (the Award). In summary, the Agreement provide for rates of pay that are between 9 – 12% above those contained in the Award for full-time employees, and between 6 – 11% above those provided for in the Award for casual employees. However, as indicated these additional rates apply in a place of various Award entitlements, including night shift, weekend and overtime penalty rate entitlements. The rates in the Agreement are also intended to apply in place of the annual leave loading, and a range of allowances provided for in the Award in specific circumstances.

[3] The proposed Agreement also provides for ordinary hours to be averaged over 52 weeks with so-called “reasonable additional hours,” when worked, to be paid at the normal hourly rate provided for in the Agreement.

[4] Upon receipt of the application the Commission initially sought further clarification from the Applicant about various aspects of the proposed Agreement. It was noted in correspondence to the Applicant that the Agreement does not appear to contain an ordinary time span of hours, simply providing instead that “Ordinary hours of work for all Employees occur any day of the week, and upon any hour of each day,” (clause 35.1). It was also noted that sub clause 35.5 indicates, “Employees may be rostered to work during the day or night, including rotating or non– rotating shifts, as required, at a number of locations to meet the operational requirements of Anchor Security’s clients.”

[5] The correspondence also noted that under the terms of the proposed Agreement employees are required to purchase necessary clothing, and participate in additional Employee Development Meetings at ordinary time rates. In addition, no additional remuneration is provided for when employees are required to attend in-house training sessions.

[6] The Applicant subsequently responded in regard to a number of these issues. It indicated it would not implement the uniform deposit requirement, and stated employees would not be required to attend Employee Development Meetings or training on a day that is not an ordinary day of work. It also indicated the hours of work clause “may have been poorly drafted,” and it was the intention that ordinary hours of work be consistent with clause 21 of the Award. It also provided a sample roster which it submits indicates employees are better off overall under the Agreement than under the terms and conditions contained in the Award. It also proposed to conduct a regular review of the wages paid to employees on a six monthly basis, and to make appropriate repayments to any employee who, as a result of this exercise, is found to not be “better off overall.” It also indicated most employees do not regularly work weekends or public holidays and overtime is rarely required 1.

[7] In further exchanges with the Applicant the Commission indicated the proposal to have clause 21 of the Award apply, instead of the existing hours of work provisions in the Agreement, appeared to be a substantial change to the terms and conditions contained in the Agreement. It also indicated the application of these conditions in the Award would, in any case, arguably do little to respond to the issues concerning the requirements of the better off overall test, and work performed outside the Award spread of hours, because the proposed Agreement did not contain any provision for additional overtime, weekend or shift penalty rate entitlements to apply. The Commission also indicated it still wanted to gain a better understanding about the number of employees who are required to regularly work on weekends or public holidays, or to work overtime, and how often this occurs.

[8] The Applicant provided a further response confirming the proposed undertakings it indicated it was prepared to provide. It also indicated it believed the Award allows for ordinary hours of work to be performed at all times during the week, and the proposed Agreement was consistent with those arrangements. It also pointed to a number of other Agreements, which it submits contain similar provisions to those contained in this Agreement. 2 However, the Commission indicated in response it still had concerns about how the requirements of the “better off overall test” can be satisfied in the context of the present application.

[9] The Commission also noted the indication from the Applicant that, “The spread of ordinary hours in the Award allows for ordinary hours of work to be performed 24/7 and our Agreement is consistent with that.” 3 However, the Commission indicated, in response, that while the Award might enable hours to be rostered at any time in the week, it also provides for various penalty rates to be provided, depending upon when that work is performed. For example:

● Night span – (6 p.m. – 6 a.m., Monday to Friday) – 21.7% penalty rate,
● Permanent night span – 30% penalty rate,
● Saturday span – 50% penalty rate,
● Sunday span – 100% penalty rate,
● Public holidays span – 150% penalty rate.

[10] The Commission continued to indicate that it was difficult to see how employees working at any of these times can be better off under the terms of the proposed Agreement, particularly as the proposed rates also encompass leave loading, and many of the allowances provided for in the Award. The Award also provides for overtime penalty rates of time and a half for the first two hours and double time thereafter, whereas there are no additional overtime penalty rate entitlements provided for in the Agreement. Sub clause 40.4 also provides that employees may be required to work additional time for operational reasons.

[11] The application was subsequently listed for hearing on 19 May 2015. Mr Michael Malligan, the Managing Director of Anchor Security, appeared in those proceedings on behalf of the Applicant.

[12] Mr Malligan again referred in those proceedings to the proposed undertakings suggested in his previous correspondence. He also indicated that full-time employees generally work set rosters and are only required to work overtime hours on limited occasions. He also said the proposed Agreement was generally supported by the employees to be covered, and it was not the intention to take advantage of the employees. He also referred again to the proposed undertaking which would involve a comparison carried out every six months of the employees’ earnings under the terms contained in the Agreement, and their earnings had they been covered by the terms in the Security Services Industry Award 2010. In the event of any shortfall following that comparison the amount would be made up to the relevant employee(s).

[13] The Commission also asked Mr Malligan during the course of that hearing about the extent to which casuals were engaged by the business. He indicated in response that this requirement varied from time to time depending upon business needs.

Consideration

[14] In considering an application for approval of an enterprise agreement s.186(2) of the Fair Work Act requires that, inter alia, “the agreement passes the better off overall test.”
Section 193 continues to state:

“(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.”

S. 193 concludes by indicating:

“(6) the test time at the time the application for approval of the agreement by the FWC was made under section 185.

(7) for the purposes of determining whether an enterprise agreement passes the better off overall test, if a class of employees to which a particular employee belongs would be better off if the agreement applied to that class than if the relevant modern Award applied to that class, the FWC is entitled to assume, in the absence of evidence to the contrary, that the employee would be better off overall if the agreement applied to the employee.”

[15] I have examined in detail the provisions contained in the proposed Agreement and those contained in the underlying Security Services Industry Award. The Agreement states at the outset that it is intended to be a stand-alone arrangement that exists in place of any other Award or Agreement. The Agreement does contain wage rates that are generally between 9 – 12% in excess of those contained in the Award, although this differential is slightly less when the rates provided for casual employees are examined. The Form F17 also indicates that the proposed Agreement provides for longer breaks between shifts than the Award, and also provides for a higher rate of reimbursement when employees are required to use their own motor vehicle for work purposes.

[16] However, despite the answer provided in the Form F17 at Q.3.5 indicating that the proposed Agreement does not contain any terms that are less beneficial than those in the Award, there do seem to be a number of entitlements that fall into this category. For example, the proposed Agreement does not provide for any of the allowances or the annual leave loading entitlement contained in the Award. It also does not contain any provision for overtime penalty rate entitlements in circumstances where the Award provides for time half for the first two hours, and double time thereafter, when overtime is worked. The Agreement also provides the same hourly rate for all work performed at weekends, in circumstances where the Award provides for time and a half for work performed on Saturday and double time on Sunday.

[17] The Agreement also provides for 38 ordinary hours to be averaged over 52 weeks, with “reasonable additional hours” to be paid for at the Agreement rate of pay only. This arrangement allowing for total hours to be averaged over the year can be compared with the Award which only enables hours to be averaged over a maximum of 8 weeks. In addition, there is no ordinary time spread of hours provided for in the Agreement, unlike the Award, and hours can be rostered at any time, including in a broken shift arrangement if required by the client.

[18] It is also noted that the Form F17 indicates some employees to be covered by the proposed Agreement are to be employed on a part-time basis. Under the terms of the Award at the time of engagement the employer and a part-time employee must agree in writing on a regular pattern of work, and any agreed variation to hours of work is to be recorded in writing. In addition, any time worked in excess of the agreed hours is to be considered overtime and paid at the overtime penalty rate. However, the Agreement does not appear to provide for any overtime entitlements for part-time employees, (or any overtime penalty rate entitlements at all). It also appears to enable the hours of part-time employees to be unilaterally reduced by the Employer.

[19] The Form F17 also indicates that a significant number of the employees to be covered by the proposed Agreement are to be employed on a casual basis. However, while these employees would receive a higher hourly rate under the terms of the Agreement, they would again not be entitled to any of the penalty rates for working at nights or at weekends that apply under the terms and conditions contained in the Award. As a consequence, any casual employee working a majority of their hours at these times would inevitably be disadvantaged under the Agreement, when compared with the conditions contained in the Award.

[20] It is also noted that the Agreement proposes to provide for wage increases of 1.5% on each 12 month anniversary date of approval of the Agreement. Given the level of Minimum Wage Review adjustments in recent years this would again suggest the entitlements under the Agreement will not keep pace with those contained in the Award. In addition, the Agreement does not contain a number of the allowances that are provided for in the Award.

[21] In coming to a decision in this matter the Commission has made various comparisons between the Agreement and the Award, including various possible roster arrangements based on the example of a Level 1 employee. They indicate, for example, that an employee at that level, with hours of work averaged over Monday to Sunday would be approximately 8% worse off when compared with the Award entitlements. The same employee working in the evenings from Monday – Friday would be approximately 9% worse off. A casual employee working 4 hours each Thursday and Saturday night would also be 14% worse off when compared with the Award entitlements.

[22] I have considered whether the Commission might be prepared to accept any undertakings in response to the issues identified in this decision. These include the suggestion that a review be conducted every 6 months to ensure employees are, in fact, better off overall under the terms of the Agreement when compared with the terms provided for in the Award. However, I am reluctant to consider this type of arrangement in circumstances where the examples indicated suggest the entitlements provided for under the proposed Agreement are, prima facie, inferior to those contained in the Award. Section 190(3) also provides that the Commission may only accept a written undertaking if satisfied that the effect is not likely to:

“(a) cause financial detriment to any employee covered by the agreement; or

(b) result in substantial changes to the agreement.”

[23] I am not satisfied that it is possible to accept any undertakings that would respond to the issues identified in this decision without also resulting in substantial changes to the Agreement. In those circumstances I do not believe it appropriate to consider or accept any undertakings that might be proposed.

[24] In coming to a decision in this matter I have noted the submissions made by the Applicant about the acceptance of the proposed Agreement by the employees who are to be covered by it. I also note the submissions indicating it is not intended to deprive the employees of any entitlements, and I have no reason to doubt any of these submissions. However, I am required to have regard to the particular statutory requirements that must be complied with in considering an application of this kind. In conclusion, I am not satisfied the proposed Agreement satisfies the requirements of the “better off overall” test contained in s.186(5). I therefore decline to approve the Agreement. The application is dismissed.

COMMISSIONER

Appearances:

M Malligan for the Applicant

Hearing details:

2015

Melbourne

May, 19

 1   Applicant response 13 April 2015

 2   Applicant response 29 April 2015

 3   Ibid

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