Marine Civil Contractors Pty Ltd
[2018] FWC 3976
•5 JULY 2018
| [2018] FWC 3976 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
Marine Civil Contractors Pty Ltd
(AG2017/6739)
COMMISSIONER SIMPSON | BRISBANE, 5 JULY 2018 |
Application for approval of the Marine Civil Contractors Employee Agreement 2018.
[1] On 22 December 2017 Marine Civil Contractors Pty Ltd (the Applicant) lodged an application for approval of the Marine Civil Contractors Employee Agreement 2018 (the Agreement). The Maritime Union of Australia (MUA) as it then was wrote to the Fair Work Commission (FWC) requesting documents relating to the application. On 12 January 2018 the FWC provided the MUA copies of the F16, F17 and Notice of employee representational rights (NERR).
[2] On 17 January 2018 the MUA wrote to the FWC seeking to be heard in relation to the application, and stating that the MUA had concerns that the Applicant had failed to comply with section 180(2)(a) when seeking approval, and believed the Agreement failed to meet the requirements of s.193 of the Fair Work Act 2009 (FW Act). Later that day the Applicant’s representative Ms Moltoni of IRIQ wrote the FWC advising that the Applicant objected to the MUA’s request to be heard, as they were not at any time a bargaining representative and had no standing in relation to the application.
[3] In the period after the MUA registered its objection to the application, the FWC approved the amalgamation resulting in the CFMMEU taking on former obligations of the MUA.
[4] On 4 April 2018 the file was allocated to my chambers. On 24 April the FWC sent correspondence to the Applicant and their representative setting out an extensive list of concerns regarding the application. The correspondence from the FWC requested that a response be provided by 1 May 2018.
[5] On the same day the FWC sent correspondence to Mr Luke Edmonds of the CFMMEU seeking an outline of its grounds of objection to the Agreement, and any submission it wished to make on the Applicant’s objection to the CFMMEU being heard. The FWC requested a response by 1 May 2018.
[6] On 25 April 2018 the CFMMEU provided to the FWC and the Applicant’s representative an outline of submissions including on its standing to be heard and grounds of opposition to the approval of the Agreement.
[7] On 8 May 2018 the Applicant provided a 17 page written submission (8 May submissions) in response to the concerns raised by the FWC. The submissions sought to address each of the issues of concern raised by the FWC.
[8] The 8 May submissions were accompanied by 11 separate undertakings offered by the Applicant to address concerns raised by the FWC. I will not set out in detail each of the responses in the 8 May submissions and the undertakings offered at that time because subsequent to that material the Applicant withdrew the 8 May undertakings and filed further submissions and undertakings which I will address in more detail below.
[9] On 11 May 2018 I issued directions listing the matter for hearing on 22 May 2018. The listing notice advised the parties that the FWC would hear submissions on;
(i) The CFMMEU’s right to be heard;
(ii) Whether the Agreement was genuinely agreed; and
(iii) Whether the Agreement passed the Better off Overall Test (BOOT) and met the requirements of the Act.
[10] On the afternoon of 21 May 2018 the Applicant filed in the FWC and provided to the CFMMEU a further seven page submission (21 May submissions) with an attached document setting out the FWC concerns raised on 24 April and the proposed resolution of each of those concerns. The Applicant also filed 20 revised undertakings, and advised as stated it no longer sought to rely on the previous undertakings offered on 8 May. 1
Hearing 22 May 2018
[11] At the commencement of the hearing I granted leave for the Applicant to be legally represented. Mr Williams of Counsel represented the Applicant. Mr Edmonds a Legal Officer with the CFMMEU represented the Union.
[12] The CFMMEU relied on its written submission of 25 April 2018 regarding its standing to appear in the matter, particularly paragraphs 3 to 10 and made a brief oral submission on the point. The Applicant, whilst it opposed the CFMMEU being heard, did not press its objection in the strongest of terms. I exercised my discretion under s.590 to allow the CFMMEU to be heard for reasons given in transcript.
[13] The Applicant requested that the Annexure SM 1 to the statement of Mr Maiden be redacted to the extent that it disclosed private email addresses of employees. I exercised power under s.594 that the first page of annexure SM 1, and not the second page attached to the statement of Mr Maiden be prohibited from publication. The Applicant confirmed it withdrew the first set of undertakings offered and relied upon the second set of undertakings.
[14] I have set out below the matters raised by the FWC on 24 April and the most current response of the Applicant set out in its material filed on 21 May in the Annexure A to its submissions.
[15] I have set out each of them below with the response in Annexure A.
More Beneficial Terms/Less Beneficial Terms (Q 3.4 & 3.5 of the F17)
[16] The FWC noted that the Applicant’s response to Question 3.4 of the Form F17 indicates that that the 10% night shift allowance and the Saturday and Sunday rates at clause 19.2 of the agreement are benefits under the agreement. However, under the Professional Diving Industry (Industrial) Award 2010 (“the Award”), inshore diving employees get overtime for work outside Mon-Fri 6am – 6pm. Thus, the night shift allowance could be a detriment rather than a benefit and the weekend rates provided are not any more beneficial than what employees are entitled to under the Award. The FWC also noted that a number of less beneficial terms noted in the BOOT analysis below where not mentioned in the F17.
The Applicant was asked to provide further information in order to address the above.
[17] The Applicant responded as follows:
1. It was not ever intended that this entitlement would apply instead of overtime. Rather, it was intended to apply in addition to overtime.
2. However, it is conceded that this clause may have been confusing, and so, given the increase to the hourly rates of all employees offered pursuant to the undertakings, it is proposed to delete, by undertaking, the entirety of clause 20.4.
Unauthorised Deduction (Clause 23)
The Fair Work Commission identified that clause 23 of the Agreement provides that where an employee resigns, they will be subject to repayment of the cost of any training provided by the Applicant.
[18] The Fair Work highlighted a concern that this may be an unauthorised deduction. It highlighted that s.324 of the Act provides as follows:
“324 Permitted Deductions
(1) An employer may deduct an amount from an amount payable to an employee in accordance with section 323(1) if:
(a) the deduction is authorised in writing by the employee and is principally for the employee’s benefit; or
(b) the deduction is authorised by the employee in accordance with an enterprise agreement; or
(c) the deduction is authorised under a modern award or an FWC order; or
(d) the deduction is authorised by or under a law of the Commonwealth, a State or a Territory, or an order of a court.”
[19] In particular, the FWC noted that, unlike under a modern award, for employees covered by an enterprise agreement monies can only be deducted from an employee’s wage if it is authorised by an employee in accordance with the enterprise agreement. In other words, unlike a modern award, the enterprise agreement cannot itself authorise the deduction. The clause may therefore be unenforceable were the Agreement to be approved.
[20] As such, the FWC requested an undertaking stating that this clause will not be relied upon.
[21] In its response the Applicant agreed, by undertaking, to remove this clause from the Agreement.
Dispute Settlement Term (Clause 12)
[22] The FWC noted that the dispute settlement term at clause 12 of the agreement does not appear to allow for representation of employees at all stages of a dispute, only for a “support person” to be present. Thus, the FWC raised the concern it may be inconsistent with section 186(6) of the Act.
[23] The Applicant was invited to provide an undertaking in relation to this issue.
[24] In its response the Applicant agreed, by undertaking, to amend clause 12 to allow employees and the employer to appoint a representative at any stage of the dispute resolution process, and submitted that this provision now meets the requirements of s 186 of the Act.
Annual Leave (Clause 25)
[25] The FWC noted that clause 25 of the agreement provides that an employee may agree to cash out their annual leave. Section 93(2)(a) of the Act provides that if an enterprise agreement allows for the cashing out of annual leave, such cashing out must not result in the employee’s remaining accrued leave being less than 4 weeks.
[26] The FWC raised a concern that by not stating an employee’s leave balance must remain at a minimum of 4 weeks after cashing out the agreement may be detrimental when compared to the NES. The Applicant was invited provide an undertaking to address this issue.
[27] The Applicant responded that it has agreed, by undertaking, to amend clause 25 to require that a minimum of 4 weeks annual leave must remain after any ‘cashing out’ of annual leave by an employee, and that this provision now meets the NES.
Part Time Employees
[28] The FWC noted that the Agreement appears to allow for the engagement of part time employees, whereas the Award only provides for full time and casual employment.
[29] The FWC sought further information as to how the Applicant believes part time employees will be better off overall under the agreement given the Award doesn’t allow for part time employment.
[30] The Applicant was invited to provide submissions or undertakings to address this concern.
[31] The Applicant agreed, by undertaking, to amend clauses 13.1(b) and 13.3 to remove all reference to part time employees from the Agreement, and submitted that his provision is now consistent with the Award.
Inshore Diving – BOOT Issues
Modern Award Classification | Agreement Classification | Modern Award Rate | Agreement Rate | Percentage Difference |
Diving Supervisor | Diving Supervisor | $34.48 | $34.48 | 0.00% |
Diver | Diver | $25.58 | $28.00 | 9.48% |
Diver’s Attendant | Diver’s Attendant | $21.03 | $22.00 | 4.62% |
[32] The FWC noted that as above, Diving Supervisors appear to receive pay rates that are equal to the Award. Given the below reductions, it is unclear how these employees are better off overall under the agreement.
[33] Additionally, as the pay rates for other employees are between 4.62% - 9.48% above the Award, the FWC was of the view that the pay rates are not high enough to compensate for the following reductions:
Casual Employees (Clause 13.4(c))
[34] The FWC identified that Clause 13.4(c) of the agreement provides casual employees with a minimum engagement period of four hours whereas under clause 10.3(b) of the Award, casual employees are provided a minimum engagement period of eight hours.
[35] The Applicant responded that it has agreed, by undertaking, to:
1. Increase all of the rates of pay set out in the Agreement; and
2. To adopt almost all of the Award entitlements initially not included in the Agreement and identified by the Commissioner – see below.
Following the undertaking referred to in item 1, above, the rates of pay offered under the Agreement compare to the Award as follows:
Modern Award Classification | Agreement Classification | Modern Award Rate | Agreement Rate | Percentage Difference |
Diving Supervisor | Diving Supervisor | $34.48 | $37.00 | 7.309% |
Diver | Diver | $25.58 | $28.40 | 11.024% |
Diver’s Attendant | Diver’s Attendant | $21.03 | $23.40 | 11.270% |
[36] The Applicant submitted the rates of pay now substantially exceed the Award entitlement.
[37] The Applicant agreed, by undertaking, to amend clause 13.4(c) to provide a minimum engagement period of eight hours for casual employees. The Applicant submitted this entitlement is now equal to the Award entitlement.
Inshore Allowance - 6am – 6pm (Clause 20.4)
[38] The FWC identified that clause 20.4 of the Agreement provides that employees doing inshore work after 6am to 6pm will be paid a 10% allowance. Under clause 24 of the Award, employees performing work outside the Award span of hours would be paid at overtime rates (150% first 2 hours and 200% thereafter)
[39] The Applicant responded as follows:
1. It was not ever intended that the additional allowance for inshore work undertaken after 6am to 6pm would apply instead of overtime. Rather, it was intended to apply in addition to overtime.
2. However, it is conceded that this clause may have been confusing, and so, given the increase to the hourly rates of all employees offered pursuant to the undertakings, it is proposed to delete, by undertaking, the entirety of clause 20.4.
3. Under the Agreement, ordinary hours of work are between 5 am to 7pm, Monday to Friday, and will not exceed 38 hours per week.
4. Pursuant to clause 17.1 of the Agreement, all employees will be paid overtime rates for hours worked in addition to their ordinary hours.
[40] It was submitted that, notwithstanding that the Agreement provides for a slightly wider span of ordinary hours, employees are well compensated for this by the substantially higher rates of pay provided for by the Agreement. It was submitted overtime entitlements in the Agreement are otherwise equal to the Award entitlement.
Public Holidays (Clause 17)
[41] The FWC identified that clause 28.2 of the Award provides that inshore divers will be paid 250% with a minimum payment of 4 hours’ work. The agreement does not appear to provide a minimum engagement period of 4 hours on public holidays and only provides a penalty if employees work overtime on a public holiday (Clause 17.1(c)), not for working ordinary hours on a public holiday.
[42] The Applicant responded that it has agreed, by undertaking that an Inshore Diver will be paid at the rate of double time and a half with a minimum payment for 4 hours’ work when required to work on a public holiday. The Applicant submitted this entitlement is now equal to the Award entitlement.
Annual Leave Loading
[43] The FWC identified that clause 25.5 of the Award provides a 17.5% annual leave loading, in addition to the employees’ rate of pay while on annual leave. The Agreement does not contain any such term.
[44] The Applicant responded that the Agreement does not provide for annual leave loading however, employees are well compensated for the removal of this entitlement by the substantially higher hourly rates payable under the Agreement.
Diving/Depth Allowance (Clause 20.3)
[45] The FWC identified that the diving depth allowance in clause 20.3 of the Agreement appears to function similarly to the diving allowance under clause 15.1 of the Award. However, clause 15.1 the Award provides an allowance of $4.18/metre, whereas clause 20.3 of the Agreement only provides an allowance of $4.05/metre.
[46] The Applicant responded as follows:
1. The Applicant has agreed, by undertaking, to pay a rate a $4.20 per metre, which exceeds the rate under the award; and
2. The Applicant has agreed, by undertaking, to pay this allowance on every metre (provided the dive exceeds the 15m threshold requirement) calculated from the surface to the deepest depth reached on any given day.
3. It was identified, upon further review, that the Award conferred an entitlement to this payment from the surface to the greatest depth reached (provided the dive exceeds the 15m threshold), while the Agreement (inadvertently) conferred that entitlement only from 15m to the greatest depth.
[47] The Applicant submitted this entitlement now exceeds the Award entitlement.
Vehicle Allowance (Clause 20.8)
[48] The FWC identified clause 20.8 of the Agreement provides a vehicle allowance of $0.50/km whereas clause 15.7(f) of the Award provides a vehicle allowance of $0.78/km.
[49] The Applicant responded that it has agreed, by undertaking, to pay a vehicle allowance of $0.78 per km and this entitlement is now equal to the Award entitlement.
Distant Work Allowance (Clause 21)
[50] The FWC identified that the distant work term in clause 21 of the Agreement may be less beneficial than distant work allowance provided in clause 15.7 of the Award depending on when and how much travelling occurs:
[51] The FWC noted the agreement provides a flat rate of $250 whereas the Award allows travelling time to be paid at ordinary rates and time and a half for public holidays and Sunday travel. The Agreement gives the same maximum travel times that are paid consistent with the Award but depending on how much travel is done and when it is done the Award may be more beneficial under certain circumstances.
[52] The Applicant responded that it has agreed, by undertaking, to pay the flat rate of $250 for up to 4 hours travel for a Diving Supervisor and 5.5 hours travel for other employees, and to pay all excess time at ordinary rates, or in the case of public holidays and Sundays, at time and a half. The Applicant submitted that this entitlement now exceeds the award entitlement.
Nightshift Allowance (Clause 20.4)
[53] The FWC identified that clause 20.4 of the Agreement provides that Inshore employees working outside the hours of 6am to 6pm will be paid a 10% allowance. Under clause 24 of the Award, employees performing work outside the Award span of hours would be paid overtime penalties.
[54] The Applicant responded as follows:
1. It was not ever intended that this entitlement would apply instead of overtime. Rather, it was intended to apply in addition to overtime.
2. However, it is conceded that this clause may have been confusing, and so, given the increase to the hourly rates of all employees offered pursuant to the undertakings, it is proposed to delete, by undertaking, the entirety of clause 20.4.
Allowances
[55] The FWC noted that the Agreement appears to be silent as to some allowances that are provided under the Award, such as the non-destructive testing allowance, hyperbaric welding allowance, annual medical exam allowance, meal allowance, and fares and travelling time allowance for employees not on distant work which is provided for under clause 15 of the Award.
[56] The Applicant responded as follows:
“Non-destructive testing allowance
For inshore divers, this allowance equates to $63.27 per day (see clause 15.2 of the Award). (6.51% of the standard rate of $971.90.)
The Applicant has agreed, by undertaking, to pay a rate of $65 per day and submitted that this entitlement now exceeds the award entitlement.
hyperbaric welding allowance
The Applicant has agreed, by undertaking, to incorporate this Award entitlement into the Agreement.
The Applicant notes that this entitlement was not included in the Agreement because the Applicant does not undertake, and has no plans to undertake, this type of work. Notwithstanding that, the Applicant understands the Commission’s concerns and therefore offers the undertaking, and submitted that this entitlement is now equal to the Award entitlement.
annual medical exam allowance
The Applicant has agreed, by undertaking, to incorporate this Award entitlement into the Agreement and that this entitlement is now equal to the Award entitlement.
meal allowance
The Applicant has agreed, by undertaking, to incorporate this Award entitlement into the Agreement. The Applicant notes that this entitlement was not included in the Agreement because the Applicant always provides all meals to employees in such circumstances, but notwithstanding, the Applicant understands the Commission’s concerns and therefore offers the undertaking, and that this entitlement is now equal to the Award entitlement.
fares and travelling time allowance for employees not on distant work which is provided for under clause 15 of the Award
1. The entitlement to be paid for travel time set out in cl 15.6 of the Award is now incorporated into the Agreement by undertaking.
2. The entitlement to be reimbursed actual fares for travel beyond the radius, where work is commenced and finished beyond a 50km radius of the GPO, is now incorporated in the Agreement by undertaking. Such an obligation will arise where the employer does not provide that travel.
3. The entitlement to a flat fare allowance (of $11.63 per day) where work is commenced and finished within a 50km radius of the GPO is not reflected in the Agreement.
4. Given the substantially higher rates of pay offered under the Agreement, it is submitted that the Commission can be satisfied that employees remain substantially better off under the terms of the proposed Agreement, notwithstanding the non-inclusion of the entitlement to the fare allowance of $11.63 per day for travel to a worksite less than a 50km radius from the GPO.”
Accident Pay
[57] The FWC identified that clause 17 of the Award provides for accident pay under certain circumstances, whereas the Agreement does not appear to provide for any such entitlement.
[58] The Applicant responded that it has agreed, by undertaking, to incorporate this Award entitlement into the Agreement and this entitlement is now equal to the Award entitlement.
Higher Duties (Clause 20.9)
[59] The FWC identified that clause 20.9 of the Agreement provides that employees are entitled to higher duty rates of pay if they work for 4 hours or more under the higher classification for the time so engaged whereas under clause 18 of the Award, employees appear to be paid at the higher rate for a whole day regardless of how long they work at the higher classification so long as they perform higher duties on that day.
[60] The Applicant responded that it has agreed, by undertaking, to pay higher duty rates of pay for the whole of any day regardless of how long the employee works at the higher classification and that this entitlement is now equal to the Award entitlement.
Job Search Entitlement
[61] The FWC identified that clause 11.3 and 12.4 of the Award provides a job search entitlement for employees whose employment has been terminated or made redundant. This does not appear to have been provided for under the Agreement.
[62] The Applicant respondent that it has agreed, by undertaking, to incorporate this Award entitlement into the Agreement and that this entitlement is now equal to the Award entitlement.
Transfer to Lower Paid Duties
[63] The FWC identified that it is unclear if employees are entitled to transfer to lower paid duties in the event of a redundancy, as provided by clause 12.2 of the Award.
[64] The Applicant responded that it has agreed, by undertaking, to incorporate this Award entitlement into the Agreement and that this entitlement is now equal to the Award entitlement.
TOIL (Clause 17.2)
[65] The FWC identified that clause 24.3(k) of the Award provides that TOIL must be paid out on termination at overtime rates. Clause 17.2 of the Agreement does not appear to provide for this.
[66] The Applicant has agreed, by undertaking, to incorporate this Award entitlement into the Agreement and submitted that this entitlement is now equal to the Award entitlement.
Meal Break (Clause 15.3)
[67] The FWC identified that clause 15.2 of the Agreement provides that employees will be entitled to a meal break after working at least 5 hours whereas under clause 23 of the Award, employees are entitled to a meal break after working for 3 hours.
[68] The Applicant responded that this remains the case under the Agreement, however the Applicant notes:
1. The entitlement under the Award is to an unpaid meal break after 3 hours, while under the Agreement, the entitlement is to a paid meal break after working 5 hours; and
2. The Applicant is bound by, and will observe, its obligations in relation to fatigue management and the wellbeing of its employees.
[69] The Applicant submitted this entitlement now exceeds the Award entitlement, in that the meal break is paid under the Agreement, but unpaid under the Award.
Onshore Diving – Classification Matching
Modern Award Classification | Agreement Classification | Modern Award Rate | Agreement Rate | Percentage Difference |
Diving Supervisor | Diving Supervisor Workshop | $34.48 | $34.48 | 0.00% |
Diver | Diver Workshop | $25.58 | $28.00 | 9.48% |
Diver’s Attendant | Diver’s Attendant Workshop | $21.03 | $22.00 | 4.62% |
Diver’s Attendant | Workshop Assistant | $21.03 | $25.00 | 18.88% |
Diver | Workshop Assistant | $25.58 | $25.00 | -2.27% |
[70] The FWC identified that no information has been provided on how onshore employees are to be matched against the Award, and conducted a pay rate comparison based on a tentative matching of onshore employees to Inshore Divers, as per s13.4 of the Award. The FWC advised that in the event the matching was incorrect, the Applicant was invited to provide a classification matching each category of onshore employees to the appropriate classification under the Award.
[71] Based on the FWC’s classification matching, Diving Supervisor Workshop employees and Workshop Assistant employees do not appear to receive pay rates higher than the Award. As such, the FWC was unclear as to how these employees are better off overall under the Agreement.
[72] Additionally, as the pay rates for other employees are between 4.62% - 18.88% above the Award, the FWC was of the view that the pay rates do not appear to be high enough to compensate employees for the reductions mentioned in Point 4 above as well as the following additional area of concern:
[73] The Applicant responded as follows:
1. The Applicant accepts the tentative matching undertaken by the Commissioner in all respects save that a Workshop Assistant under the Agreement ought to be matched to a Diver’s Attendant under the Award, not to a Diver under the Award.
2. Upon undertaking the analysis, using the higher rates of pay, and the amended matching in relation to a Workshop Assistant, the results are as follows:
Modern Award Classification | Agreement Classification | Modern Award Rate | Agreement Rate | Percentage Difference |
Diving Supervisor | Diving Supervisor Workshop | $34.48 | $37.00 | 7.309% |
Diver | Diver Workshop | $25.58 | $28.40 | 11.024% |
Diver’s Attendant | Diver’s Attendant Workshop | $21.03 | $23.40 | 11.27% |
Diver’s Attendant | Workshop Assistant | $21.03 | $25.40 | 20.78% |
[74] Given (i) the substantially higher rates of pay offered pursuant by undertaking (ii) the adoption, by undertaking, of almost all of the Award entitlements initially not included in the Agreement and identified by the Commissioner and (ii) rectification of the mis-matching of a Workshop Assistant, it is now the case that all classifications of onshore employees are paid substantially in excess of the Award rate of pay, and this entitlement exceeds the Award entitlement.
Weekend Penalties (Clause 19.2)
[75] The FWC noted that it is unclear if onshore employees are entitled to weekend penalties, as clause 19.2 of the Agreement does not appear to apply to onshore employees. If onshore employees are not entitled to weekend penalties, the FWC was concerned that their rates of pay may not be high enough to compensate for this reduction in entitlement. The Applicant was invited to provide submissions or undertakings to address this concern.
[76] The Applicant said that it agrees by undertaking to pay weekend penalties to all employees (including, of course, inshore divers) and that the entitlement is now equivalent to the Award entitlement.
Special Rates (Clause 20.7)
[77] The FWC identified that clause 20.7 and Table 3 of the Agreement provide special rates of pay where the employee works away from head office and it is completely impractical for an employee to return home on a daily basis. These rates are what appear to be daily rates of pay paid in lieu of their clause 19 and Table 1 entitlements. While these rates are significantly high, the FWC required further information on the operation of these special pay rates and how employees are better off overall under these rates of pay.
It is noted that the following areas are of particular concern with respect to the special rates:
• Unclear on the number of hours worked by employees
• Unclear whether the special rates are daily or weekly rates
• Whether these special rates are to compensate for the agreement weekend penalties. If these rates are payable instead of weekend penalties, the Commissioner notes that employees may not be better off overall under the agreement, depending on the number of hours they work particularly if they are working on a Sunday.
• If these special rates are to substitute the distant work allowance in the agreement.
• If employees are entitled to receive any other applicable allowances while on these special rates.
[78] The Applicant was advised it may wish to provide submissions and or undertakings in relation to this concern to address the FWC’s concerns.
[79] The Applicant responded as follows:
“The flat rate for travel time (and now, rates for excess travel time beyond the cl 21.2 – Distant Work), apply in addition to the special rates of pay enlivened by cl 20.7 and set out in Table 3.
By undertaking, the Applicant has agreed that the special rates shall not apply on Saturdays and Sundays, and that Overtime Rates shall apply to all such work conducted on weekends.
Thus, to apply the BOOT to the special ‘daily flat’ rate payable Monday through Friday, one ought to compare that flat rate with the amount payable to an employee under the Award for a 12 hour workday (the maximum number of hours that can be worked in a day and therefore, the ‘worst case scenario’). The Applicant submitted its analysis demonstrates that the flat rate of pay is:
1. Substantially in excess of the Award entitlement for the Diver classification;
2. Vastly in excess of the Award entitlement for the Diver’s Attendant classification; and
3. Marginally (but still sufficiently) in excess of the Award entitlement for the Diving Supervisor classification.
It is submitted that, given that this comparison arises on a ‘worst case scenario’ of a 12 hour day, where an employee works anything less than 12 hours in that day, they will be incrementally ‘better off’ than the analysis indicates for each hour less than 12 hours worked in a day.”
[80] The Applicant submitted that on the basis of the undertakings offered on 21 May 2018 employees would be vastly better off.
[81] A short statement of Mr Steven Maiden, the Manager of the Applicant of some 10 paragraphs was filed and admitted into evidence unopposed. 2 It is not in dispute that employees were issued a NERR on 23 November 2017.
[82] It is also not contested that 19 employees were provided the following documents via email on 13 December 2017;
(a) A copy of the proposed Agreement;
(b) A ballot notice, advising the employees of the date, time and method by which the ballot was to take place and providing comprehensive instructions on how to submit a valid vote;
(c) A link to the Award;
(d) A link to the National Employment Standards;
(e) An explanatory document that explained the terms and effect of the Agreement, in plain English.
[83] The 21 May submissions relied on the information at Annexure A to make its case that on the basis of the undertakings offered the Agreement satisfied the BOOT. Otherwise the remainder of the submissions addressed the matter of whether Agreement was genuinely agreed.
Genuine Agreement
[84] The FWC noted that only 7 out of 15 employees cast a valid vote for an agreement. Out of the 7 that voted, 6 employees voted to approve the agreement. Whilst this technically complies with section 182(1) of the Fair Work Act 2009 (“the Act”), the Commission noted it is a low number of employees for an agreement that is to bind the company throughout Australia, especially when taken in consideration with the other pre-approval issues.
[85] The Applicant submitted in relation to genuine agreement, in relation to only 7 employees voting, that the employees were highly transient and even though the full spectrum of those entitled to vote did not it was highly likely some employees may have been engaged with another employer at the time given the highly transient nature of the workforce and that may explain why some did not vote. The Applicant relies on the annexures attached to the evidence of Mr Maiden in support of its case that employees were provided a copy of the draft agreement and ballot instructions.
[86] The response to Q2.6 of the form F17 indicated that employees were emailed explanation documents and that management made themselves available to employees to answer questions.
[87] The FWC sought further information regarding any steps taken by the employer to explain the terms/effect of the terms of the agreement to employees as required by s.180(5) of the Act. Based on the current information the FWC was not yet satisfied that section 180(5) has been complied with.
[88] The Applicant conceded that certain entitlements under the Award were not included in the Agreement and were not the subject of analysis or advice to employees in the explanatory document. The Applicant said in nearly all respects those conditions are now proposed to be incorporated into the Agreement by undertaking. Further some of the conditions would not have applied to employees such as hyperbaric welding.
[89] The Applicant submitted that it had taken all reasonable steps to explain the terms of the Agreement and the effect of those terms as required by s.180(5). It submitted that at the time of the access period some employees were working remotely, and some were not permanently engaged on a project, either local or distant work and a copy of the proposed Agreement was emailed to all employees with a document that explained the terms of Agreement.
[90] The Applicant submitted that the explanation document expressly invited employees to direct any questions or concerns to Ms Beverley Jackson of management by email or telephone call. The Applicant submitted that where the Agreement diverts significantly from the Award, this is raised in the explanation.
[91] The CFMMEU submitted that similar to the Full Bench decision in Construction, Forestry, Mining and Energy Union v Shamrock Civil Pty Ltd 3there is no evidence before the FWC that at any time before approval of the Agreement, the Applicant drew to the attention of employees’ the fact that:
(a) Clause 13.4(c) of the Agreement reduces the minimum shift length for casual employees from 8 hours to 4 hours;
(b) Clause 15.1 of the Agreement increases the span of hours in which ordinary hours are worked from 6am – to 6pm to 5am – 7pm;
(c) Clause 15.2 of the Agreement increases the time employees must work before a meal break from three hours to five hours;
(d) Clause 20.9 of the Agreement provides that employees will only be paid for performing higher duties if they perform those duties for four hours or more and then will only be paid for the hours they perform those duties. In contrast, clause 18 of the Award provides that employees who perform higher duties for a day or part thereof, will be paid at the higher classification for the day and for an equivalent day in their off duty period;
(e) Clause 17 of the Award provides for the payment of accident pay. There is no equivalent benefit in the Agreement;
(f) Clause 15 of the Award provides for employees to be provided the following benefit for which there is no equivalent in the Agreement;
(i) Non-destructive testing allowance;
(ii) Hyperbaric welding allowance;
(iii) Annual medical allowance;
(iv) Meal Allowance;
(v) Fare and Travelling time allowance.
(g) Clause 20.3 of the Agreement provides that divers will be paid a Diving/Depth Allowance of $4.05 for each metre over 15 metres which is less than the allowance of $4.18 paid under the Award for each metre over 15 metres;
(h) Clause 21 of the Agreement provides employees will be paid a flat rate of $250 while the Award provides that employees will be paid for all time spent travelling and paid time and a half on Sundays and Public Holidays;
(i) Clause 20.1 of the Agreement increases the amount of equipment that must be provided by a diver before they will receive the daily clothing and equipment allowance of $7.08 per day; and
(j) Clause 20.4 of the Agreement provides that employees performing work on a shift that commences after 6pm will be paid a nightshift allowance of 10% in contrast to the Award that provides that work performed outside the ordinary hours will be paid time and half for the first two hours and double time thereafter.
[92] The CFMMEU referred to the Applicant’s response to section 3.5 of the Form F17 filed where the Applicant only identified two items as being less beneficial than the Award which were clause 20.8 – Use of a Private Vehicle; and clause 12 – Company Paid Training.
[93] The CFMMEU submitted the F17 declaration shows the Applicant did not consider any other terms of the Agreement, other than the two identified in the F17, are less beneficial than the Award and in such circumstances, it would have been impossible for the Applicant to have taken steps to explain the terms of the Agreement, and their effect, to its employees. On that basis the Commission cannot be satisfied that the Applicant took reasonable steps to explain the terms of the Agreement and the effect of those terms to its employees and the Commission cannot be satisfied the Agreement has been genuinely agreed to.
[94] The Applicant accepted that the F17 was deficient; however in substance the issues have been addressed, or retrospectively cured by the proposed undertakings. It was put to the Applicant that undertakings cannot retrospectively cure issues concerning s.180(5). The Applicant submitted that to the extent that an issue of interest to employees was not brought to their attention it is now resolved.
[95] In determining this application consideration must include the relevant statutory provisions. Section 180(5) reads as follows:
“(5) The employer must take all reasonable steps to ensure that:
(a) the terms of the agreement, and the effect of those terms, are explained to the relevant employees; and
(b) the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.
[96] Section 186(2)(a) reads as follows:
“(2) The FWC must be satisfied that:
(a) if the agreement is not a greenfields agreement—the agreement has been genuinely agreed to by the employees covered by the agreement…”
[97] Section 188 reads as follows:
When employees have genuinely agreed to an enterprise agreement
An enterprise agreement has been genuinely agreed to by the employees covered by the agreement if the FWC is satisfied that:
(a) the employer, or each of the employers, covered by the agreement complied with the following provisions in relation to the agreement:
(i) subsections 180(2), (3) and (5) (which deal with pre-approval steps);
(ii) subsection 181(2) (which requires that employees not be requested to approve an enterprise agreement until 21 days after the last notice of employee representational rights is given); and
(b) the agreement was made in accordance with whichever of subsection 182(1) or (2) applies (those subsections deal with the making of different kinds of enterprise agreements by employee vote); and
(c) there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.
[98] The recent Federal Full Court decision in One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union 4 concluded that in order to reach the requisite state of satisfaction that s 180(5) had been complied with, the Commission was required to consider the content of the explanation and the terms in which it was conveyed, having regard to all the circumstances and needs of the employees and the nature of the changes made by the Agreement.5 The absence of that information meant that the Commission was not in a position to form the requisite state of satisfaction. Without knowing the content of the explanation, it was not open to the Commission to be satisfied that all reasonable steps had been taken to ensure that the terms and their effect had been explained to the employees who voted on the Agreement or that they had genuinely agreed to the Agreement.6
[99] The decision in One Key goes on to observe that the requirement in s 180(5) to take “all reasonable steps to ensure” the relevant explanation is given, and that this is an element in the inquiry as to whether “genuine” agreement had been obtained from employees under s 188(a)(i); the purpose of the obligation imposed on by s 180(5) is to enable the relevant employees to cast an informed vote, that is, to know what it is they are being asked to agree to and to enable the employees to understand how wages and working conditions might be affected by voting for the agreement. 7
[100] The Full Court also found that the language utilised in ss.186(2)(a) and 188(c), particularly the word “genuinely” in the phrase “genuinely agreed”, indicates that mere agreement will not suffice and that consent of a higher quality is required. The Full Court further stated that if “agreement by employees” was all that was required the word “agreed” on its own, suffices to achieve that end, and that the word “genuinely” must be given some additional work to do. 8
[101] The Full Court stated that s.188(c) is cast in very broad terms and is intended to pick up anything not caught by ss.188(a) or (b), and therefore any circumstance which could logically bear on the question of whether the agreement of the relevant employees was genuine would be relevant, and this was a matter which was not only relevant to the question raised by para 188(c), but was a mandatory consideration. 9
[102] Having examined the explanation of the terms of the agreement document attached to the statement of Mr Maiden, it is apparent that the explanation document does not draw to the attention of the employees the vast majority of the reductions or non-application of Award conditions referred to either in the CFMMEU submission or otherwise raised by the FWC. It is also clear from the evidence that there was no separate oral explanation of any substance provided to employees. The evidence was more to the effect that employees were offered an opportunity to make contact with representatives of the Applicant if they had questions or concerns. That does not amount to having taken all reasonable steps to ensure an explanation of the terms of the Agreement as contemplated in the decision in One Key. On that basis the Commission cannot be satisfied in this case that the employer took all reasonable steps to ensure that the terms of the agreement and the effect of those terms, were explained and cannot be satisfied for the reasons considered in One Key that the Agreement was genuinely agreed.
Substantial changes
[103] Section 190(3) reads as follows:
“(3) The FWC may only accept a written undertaking from one or more employers covered by the agreement if the FWC is satisfied that the effect of accepting the undertaking is not likely to:
(a) cause financial detriment to any employee covered by the agreement; or
(b) result in substantial changes to the agreement.”
[104] The Applicant was also asked to address an issue in connection with s.190(3)(b) concerning undertakings resulting in substantial changes to the agreement. The Applicant said a liberal approach was warranted. It said where all that has been done is to improve conditions of employees, and the vast majority of undertakings introduced additional conditions from the Award and increases to the hourly rates did not amount to a substantial change.
[105] The CFMMEU submitted that as substantial changes are made by offering of undertakings, in this case 20 changes, that constitutes a substantial rewrite of the agreement, and it is not for the employer and the FWC to effectively rewrite the substance of the Agreement without any reference to the employees. The CFMMEU stated this as another ground to submit that the Agreement was not genuinely agreed.
[106] The CFMMEU submitted that is was concerned about proposals to simply delete whole clauses from the Agreement approved by employees, which it argued could not have legal effect and these clauses included 13.1(b), 13.3, 19.2 and 20.4. It was submitted it is not open for the employer to simply undertake to take whole parts of the Agreement out. It was put that the Agreement could not be identified as the same Agreement.
[107] The CFMMEU gave the example of deletion of part time employment. The CFMMEU referred to the explanation of the agreement that referred to part time employment, and that of the employees who voted for the agreement, it may have been in the mind of those who voted in favour of the he Agreement, that they did so because of that aspect of the Agreement. The Applicant submitted in response that if the FWC regarded the proposal to remove part time employment to substantial a change it would be prepared to retain the part time arrangements and withdraw the proposed undertaking.
[108] The CFMMEU said the proposed deletion of clause 19.2 would delete overtime that applies in different circumstances to those in clause 17.1 and the overtime contemplated by 19.2 would apply in some circumstances where the overtime rates in 17.1 would not apply. It was put that fails the test in s.190(3)(a) as it would provide financial detriment to employees if the undertaking were accepted by the FWC.
[109] The CFMMEU said it makes the same submission about the night shift allowance in relation to the proposed deletion of 20.4, and if the Agreement was properly explained, employees would have believed they would have received the night shift allowance in addition to overtime. The Applicant said the removal of this clause was not a significant change.
[110] The CFMMEU said it also had concerns about the proposed undertaking concerning clause 17 and the taking of TOIL. The CFMMEU said it was not clear what happened to TOIL if it was not taken within six months. The Applicant submitted that clause 17.2(c) addressed this issue.
[111] The CFMMEU submitted some 20 changes including additions and substantial changes to rates of pay and overtime and other provisions makes the proposed Agreement completely different from the Agreement discussed and approved by employees, and a substantial rewrite of the Agreement.
[112] The CFMMEU also identified that the Applicant had incorrectly referred to clause 14 in connection with a particular allowance when that clause applied to off shore divers not on shore divers. The Applicant accepted that clause 15.8 and 15.9 were the relevant Award clause however submitted that the rates as proposed would resolve the issue.
[113] The CFMMEU took issue to clauses 10, 14 and 29 because they would leave employees open to enforcement proceedings in a Court.
[114] The FWC cannot accept undertakings unless the effect of accepting the undertakings is not likely to result in substantial changes to the agreement. Some of the changes proposed by the Applicant in this matter are not trivial or minor. It is apparent the Applicant has made a concerted effort to address the wide ranging concerns raised by the FWC about the Agreement passing the BOOT, however similarly to the circumstances in Re: Kore Construction Pty Ltd[2014] FWC 1955, it is clear the breadth of undertakings that would be required in order for the Agreement to satisfy the BOOT would necessarily result in the undertakings in their entirety resulting in substantial change to the Agreement, and on that basis cannot be accepted.
[115] For the reasons set out above the application is dismissed.
COMMISSIONER
Appearances:
Mr M.E.V. Williams of Counsel instructed by IRIQ on behalf of the Applicant
Mr L. Edmonds on behalf of the CFMMEU
Hearing details:
2018,
Brisbane:
May 22
Printed by authority of the Commonwealth Government Printer
<PR608736>
1 Applicant’s submissions 21 May 2018 para 2.
2 Exhibit 1.
3 CFMEU v Shamrock Civil Pty Ltd[2018] FWCFB 1772.
4 [2018] FCAFB 77.
5 [2018] FCAFB 77 para 112.
6 [2018] FCAFB 77 para 113.
7 [2018] FCAFB 77 para 115.
8 [2018] FCAFB 77 para 141.
9 [2018] FCAFB 77 para 142.
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