McMahon Services Australia (NT) Pty Ltd
[2022] FWCA 2868
•23 AUGUST 2022
[2022] FWCA 2868
The attached document replaces the document previously issued with the above code on 23 August 2022.
The enterprise agreement publication identifier inserted next to the print number at the end of the decision.
Associate to Deputy President Gostencnik
23 August 2022
| [2022] FWCA 2868 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
McMahon Services Australia (NT) Pty Ltd
(AG2022/1656)
McMahon Services Australia (NT) Pty Ltd Enterprise Agreement 2022
| Building, metal and civil construction industries | |
| DEPUTY PRESIDENT GOSTENCNIK | MELBOURNE, 23 AUGUST 2022 |
Application for approval of the McMahon Services Australia (NT) Pty Ltd Enterprise Agreement 2022
The applicant, McMahon Services Australia (NT) Pty Ltd applies under s 185 of the Fair Work Act 2009 (Act), for the approval of the McMahon Services Australia (NT) Pty Ltd Enterprise Agreement 2022 (Agreement). The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) claims to be a bargaining representative for the Agreement, which the applicant disputes. The CFMMEU opposes the approval of the Agreement, and the applicant does not object to the CFMMEU being heard in relation to the application. Both the applicant and the CFMMEU have filed written submissions and are content for me to determine the application for approval on the papers. Given the disputed status of the CFMMEU as a bargaining representative for the Agreement I consider it necessary to resolve this dispute because it is relevant for the purposes of considering any undertakings that might be proffered to resolve concerns about whether the Agreement meets the approval requirements and, if the CFMMEU is a bargaining representative then it should be given an opportunity to give notice as to whether it wishes to be covered by the Agreement if it is to be approved.
To this end I requested that the applicant provide me with a list of employees covered by the Agreement and that the CFMMEU provide me with a list of persons who are members of the CFMMEU and who are said to be employed by the applicant, together with the date on which those persons became members. Upon reviewing and comparing the lists provided I am satisfied that the CFMMEU is a bargaining representative for the Agreement.
In summary the CFMMEU opposes the approval of the Agreement on two bases. First, that it does not pass the better off overall test (BOOT). Second, that the applicant has not complied with s 180(2) of the Act and so there cannot be satisfaction that employees genuinely agreed to the Agreement as required by s 186(2)(a). The CFMMEU has also raised concerns about the way the Agreement was signed on behalf of employees.
It is convenient to deal with that issue first. The signatory page of the Agreement provides that it is “signed for and on behalf of the employees” by Peter Harding who has describes himself as “Workshop Supervisor”. Since the Agreement does not cover forepersons or supervisors and the applicant’s materials filed disclose that there were no bargaining representatives for the employees involved, the CFMMEU says that it is unclear if the signing requirements have been met. In response, the applicant has provided material establishing that Mr Harding is employed as an operator and paid as such.[1] The position of operator is covered by the Agreement.
Section 185 relevantly provides:
“Bargaining representative must apply for the FWC's approval of an enterprise agreement
Application for approval
(1) If an enterprise agreement is made, a bargaining representative for the agreement must apply to the FWC for approval of the agreement.
. . .
Material to accompany the application
(2) The application must be accompanied by:
(a)a signed copy of the agreement; and
(b)any declarations that are required by the procedural rules to accompany the application.
. . .
Signature requirements
(5) The regulations may prescribe requirements relating to the signing of enterprise agreements.
. . .”
Regulation 2.06A of the Fair Work Regulations 2009 provides:
“Bargaining representative must apply for FWC approval of an enterprise agreement--requirements for signing agreement
(1)For subsection 185(5) of the Act, this regulation prescribes the requirements for the signing of an enterprise agreement.
(2)For paragraph 185(2)(a) of the Act, a copy of an enterprise agreement is a signed copy only if:
(a)it is signed by:
(i)the employer covered by the agreement; and
(ii)at least 1 representative of the employees covered by the agreement; and
(b)it includes:
(i)the full name and address of each person who signs the agreement; and
(ii)an explanation of the person’s authority to sign the agreement.
Note: Paragraph 185(2)(a) of the Act requires an application for approval of an enterprise agreement to be accompanied by a signed copy of the agreement.
(3)Unless the representative of the employees covered by the agreement is an employee in a class of employees who will be bound by the agreement, the representative's signature is not taken to indicate that the representative intends to be bound by the agreement.”
A “representative of the employees covered by the agreement” for the purposes of the signing requirements does not need to be a bargaining representative. An employee who is covered by the Agreement may sign it and state his or her authority to sign as a representative of the employees covered by the Agreement. A “representative of the employees covered by the agreement” in reg 2.06A includes an employee who is covered by the Agreement. Such an employee is representative of the employees covered by the Agreement in the sense that the employee is within the class of employees covered by the Agreement.[2] I am therefore satisfied that Mr Harding is covered by the Agreement and purported to sign the Agreement in the capacity of an employee covered by it. His authority would be as a representative of the employees covered by the Agreement in the sense just discussed.
However, neither person signing the Agreement has explained their authority to sign the Agreement as required by reg 2.06A despite there being provision on the signatory page of the Agreement to do so.
Section 185(2) of the Act is expressed in mandatory terms. Section 186(1) empowers approval of an enterprise agreement only if “an application for the approval of an enterprise agreement is made under section 185 …”. An application “under” s 185 must be one made in accordance with it. The copy of the Agreement lodged with the application for its approval did not meet the signing requirements as so the application was not made in accordance with the Act. Section 586 empowers the Commission to deal with errors and irregularities in applications and associated documents and provides as follows:
586 Correcting and amending applications and documents etc.
The FWC may:
(a) allow a correction or amendment of any application, or other document relating to a matter before the FWC, on any terms that it considers appropriate; or
(b) waive an irregularity in the form or manner in which an application is made to the FWC.
An agreement is signed after employees have voted to approve it. Allowing a correction to the signatory page of an agreement does not alter the terms of the agreement as approved by employees. It is amenable to correction under s 586 of the Act. I provided the applicant with an opportunity to provide a signatory page which complies with the signing requirements. It has since done so, and I allow the correction. I am therefore satisfied that a copy of the signed Agreement has been lodged, so the application to approve the Agreement is made in accordance with Act.
Genuine agreement
It is convenient next to deal with the CFMMEU’s genuine agreement approval requirement objection. By clause 2.1 of the Agreement employees are required to comply with the applicant’s policies and procedures (as amended), its Occupational Health, Safety and Welfare Policy (as amended) and its Drug and Alcohol policy. There is no dispute that these policies and procedures are incorporated by reference as terms of the Agreement. Although clause 2.1 of the Agreement provides that the employer’s policies “do no form part of this Agreement”, it is a term of the Agreement that employees comply with the stipulated policies. Access to the materials is thus an important step in employees gaining an understanding of the obligations that the Agreement imposes on them and so they are able to make an informed choice about whether to approve the Agreement.
Section 180(2) relevantly provides that the employer must take all reasonable steps to ensure that during the access period for the agreement, the employees employed at the time who will be covered by the agreement are given a copy of any other material incorporated by reference in the agreement; or that the employees have access, throughout the access period for the agreement, to a copy of those materials. An employer complies with this obligation either by providing copies of materials during the access period to employees or by ensuring the employees have access to those materials throughout the access period.
Compliance by the applicant with s 180(2) of the Act is one of the matters about which the Commission must be satisfied in order to assess whether the Agreement has been genuinely agreed to by the employees covered by the Agreement as required by s 186(2)(a).
Correspondence attached to the applicant’s declaration in support of its application for the approval of the Agreement shows that on 9 May 2022, some nine days before the ballot of employees to approve the Agreement was to be held, the applicant wrote to employees advising them, inter alia, that if any employee “would like a hard copy of the Agreement, or any document incorporated by reference in the proposed agreement” they should make contact with the applicant’s Executive General Manager who will arrange for the employee to be provided with a copy. As should be evident from the text of s 180(2) of the Act, compliance with the obligation may occur in one of two ways. Relevantly the second way in which an employer may fulfil its obligation is by ensuring that employees have access to materials incorporated by reference into an enterprise agreement throughout the access period.
The access period for a proposed enterprise agreement is the seven-day period ending immediately before the start of the voting process. In the instant case the voting process commenced on 18 May 2022. The access period therefore ended at the end of 17 May 2022 and began on 10 May 2022. The method adopted by the applicant allowed employees access to all materials incorporated by reference into the Agreement since 9 May 2022. Therefore, relevant employees had access to those materials throughout the access period and so the applicant complied with its obligation under s 180(2) of the Act and I am so satisfied.
No other issue is taken about whether the Agreement has been genuinely agreed to by relevant employees. At the time of voting and currently, the relevant employees had their terms and conditions of employment covered by the McMahon Services (NT) Pty Ltd Enterprise Agreement 2014 (2014 Agreement). The Agreement if approved and when in operation, will replace the 2014 Agreement which will then cease operating. The relevant reference awards for the purposes of assessing whether the Agreement passes the BOOT are the Building and Construction General On-Site Award 2020 (Building Award) and the Manufacturing and Associated Industries and Occupations Award 2020 (Manufacturing Award). The materials filed by the applicant in support of the Agreement’s approval disclose that on 9 May 2022 it provided employees with comprehensive explanatory material setting out the various terms of the Agreement and an explanation of those terms with comparisons to the 2014 Agreement and the Building and Manufacturing Awards. At the same time, it provided the employees with a copy of the Agreement, access to incorporated materials and information about the time, place and method of voting to approve the Agreement. Between 5 and 11 May 2022, the applicant held meetings and explanation sessions with relevant employees during which it explained the provisions of the Agreement, clause by clause, and provided comparisons with the 2014 Agreement. During those sessions, the applicant explained the changes the Agreement was proposing to make to employees’ terms and conditions of employment and the effect of those changes. Various efforts were made by the applicant to contact all relevant employees prior to the voting process commencing to answer any questions that employees might have about the Agreement.
Taking these matters into account I am satisfied that the applicant has complied with s 180(5), and that there are no other reasonable grounds for believing that the employees did not genuinely agree to the Agreement. I am also satisfied based on the material the applicant has filed in support of its application, and it is not in contest, that the applicant has complied with ss 180(3) and 181(2), and that the Agreement was made in accordance with s 182(1). I am therefore satisfied for the purposes of s 186(2)(a) that the Agreement has been genuinely agreed to by the employees covered by the Agreement.
BOOT
The CFMMEU contends that the Agreement does not pass the BOOT and sets out several provisions of the Agreement which it says are less beneficial than provisions of the relevant reference instruments to make good its point. I deal with each of these below but before doing so it is necessary to say something about the proper application of the BOOT.
First, to restate that which is required by s 193(1) – for an enterprise agreement to pass the BOOT the Commission must be satisfied that each award covered employee and prospective employee would be better off under the agreement than under the relevant modern award.[3] The requirement that “each” such employee and prospective employee be better off overall is a rigorous one. The ordinary meaning of “each” is “every, of two or more considered individually or one by one”.[4] In the result, there must be satisfaction that every award covered employee or prospective employee must be better off overall, with the corollary that if any such employee is not better off overall, the relevant enterprise agreement does not pass the BOOT.
Second, satisfaction that an employee or prospective employee is better off overall under the enterprise agreement than under the applicable award requires an evaluative overall assessment after considering the provisions of the award and the agreement that may have been more beneficial to employees and those that may have been less beneficial.[5] As the High Court of Australia in ALDI Foods Pty Limited v Shop, Distributive & Allied Employees Association[6] observed:
“. . . This assessment is a matter of the kind which has been described in other contexts as:
‘a question, not of principle or of positive findings of fact or law, but of proportion, of balance and relative emphasis, and of weighing different considerations. It involves an individual choice or discretion, as to which there may well be differences of opinion by different minds.’”[7]
Third, except perhaps for enterprise agreements covering small enterprises, the examination of the circumstances of each individual employee to reach a state of satisfaction that the BOOT is passed would be an exhaustive task. Section 193(7) substantially relieves the Commission of this burden by permitting it to assume, if a class of employees to which a particular employee belongs would be better off under the agreement than under the relevant modern award, that employee would be better off overall in the absence of evidence to the contrary.
Dispute Resolution Training Leave
The CFMMEU contends that the dispute resolution process at clause 1.10 of the Agreement does not provide for employee representative training which exists in both the Building and the Manufacturing Awards. In the result employee representatives are worse off under the Agreement as are the employees they represent than if the Building and the Manufacturing Awards applied.
There is no dispute that the Agreement does not provide for up to five (5) days of paid leave per year for dispute resolution training leave as is found in the Building and the Manufacturing Awards. The Building Award provision allows for such leave to be taken by an eligible employee representative – that is an employee who is a shop steward, a delegate, or an employee representative duly elected or appointed by the employees in an enterprise or workplace or part of an enterprise or workplace for the purpose of representing those employees in the dispute resolution procedure. The Manufacturing Award contains an additional limitation on the number of eligible employee representatives who may take the leave each year based on the number of employees employed by the employer in an enterprise or workplace who are covered by the award. The benefit for which the awards provide may properly be described as a contingent benefit. There may for example be no employees who meet the definition of “eligible employee representative” or such employee might not apply for leave or dispute resolution procedure training may not be available or conveniently accessed. There is no evidence that any employee covered by the Agreement is an eligible employee representative.
Assessing the significance of a contingent award benefit on the question whether an agreement passes the BOOT involves making an impressionistic assessment, taking into account any evidence about the significance to particular classes of employees covered by the Agreement of changes to terms which render them less beneficial than the reference award or awards. As I have already noted there is no evidence about the existence of any eligible employee representative, or if such employee exists how many, whether training has already been received or whether there is any desire on the part of such an employee to undertake dispute resolution procedure training. What is known, is that at the time that employees voted to approve the Agreement, there were 12 employees covered by the Agreement. The cohort of employees that might be represented by an eligible employee representative is small and so it is unlikely that any more than one employee would be elected or appointed as an eligible employee representative. The applicant has also provided modelling which shows that taking into account the paid leave that might be taken, an eligible employee representative will nonetheless be better off overall if the Agreement applied than if the relevant reference award applied to that employee’s employment. In the circumstances although the absence of such leave from the Agreement is a detriment compared to the provisions in the Building and the Manufacturing Awards, having regard to the nature of the entitlement, the size of the workforce to be represented and the applicant’s modelling, which was not disputed, the weight to be assigned this detriment in the overall assessment of whether the Agreement passes the BOOT is not significant.
Consultation
Both the Building and the Manufacturing Awards deal with consultation about major workplace change and require that information about the change be provided to affected employees in writing. The Agreement, while requiring information to be provided about changes, does not require the information to be provided to an affected employee in writing. The CFMMEU contends that the absence of such a requirement is detrimental to employees.
The Agreement requires that affected employees be provided with all relevant information about the change, the expected change, and any other information reasonably required by employees. In substance, during consultation about major changes an affected employee will be given the same information about change under the Agreement as the employee would be given under the applicable reference awards. The detriment is more imagined than real. The object of a consultation provision is to arm employees with sufficient information about the proposed change so that they can understand the change and the impact that the change might have on their employment, and so they may have an input into the proposed change and perhaps influence the final decision through discussions about the change. A key to effective consultation is the provision of information. The Agreement requires the provision of all relevant information. The object of the consultation provision is not undermined merely because the information required to be provided does not need to be provided in writing. I am not persuaded that the mere absence of a requirement that information be provided to relevant employees in writing is detrimental taking into account the overall obligations imposed on the applicant under the consultation provisions of the Agreement.
Saturday Work
Clause 2.1.10 of the Agreement provides that “[e]mployees must make themselves available to work on Saturdays unless special circumstances exist”. The CFMMEU contends that this requirement is not consistent with either the Building or the Manufacturing Award because both only require employees to work a reasonable amount of overtime and so is a provision which is detrimental compared to the relevant reference instrument. Clause 1.6 of the Agreement provides that the Agreement will be read and interpreted in conjunction with the National Employment Standards (NES) and that in the event of any inconsistency between the Agreement and the NES providing a greater benefit, the NES provision will apply to the extent of inconsistency. Section 62 of the Act makes provision for the maximum number of weekly hours that an employer may require or request an employee to work. Relevantly for a full-time employee the number of hours that such an employee may be required or requested to work must be no more than 38 hours per week unless the additional hours are reasonable. An employee may refuse to work additional hours if the additional hours are unreasonable. Determining whether additional hours are reasonable or unreasonable is to be assessed by reference to the enumerated matters in s 62(3). Clause 2.1.10 is plainly inconsistent with s 62 to the extent that it requires an employee to be available to work and presumably to work on Saturdays other than in special circumstances, when such work would be additional hours as it does not accommodate the capacity of an employee to refuse hours absent special circumstances where the additional hours are nonetheless objectively unreasonable taking into account the matters in s 62(3). The effect of clause 1.6 of the Agreement is that to the extent of that inconsistency the NES provisions will apply. In the result an employee may refuse to work additional hours if those hours are unreasonable. Properly construed, the provision does not have a detrimental impact on employees compared to the relevant reference instruments (or the NES).
Training
The CFMMEU highlights several of the training provisions of the Agreement in clauses 2.5, 10 and Appendix 1 which it contends results in lesser remuneration compared to the remuneration that would be payable to an employee under the relevant reference instruments and imposes obligations on employees “not seen in these industries [and] not contained in” the reference instruments. Specifically, the CFMMEU identify the following provisions of the Agreement:
· Clause 2.5.4 which provides that all hours undertaking training are paid at the ordinary rate of pay and do not attract penalty rates;
· The obligation that employees teach other employees if requested by the employer in clause 2.5.5;
· Employees required to attend training will receive no extra travel time pay under clause 2.5.6;
· Employer initiated training may be undertaken in an employee’s own time and on a non-paid basis under clause 10.2.3; and
· The requirement that all training provided, even that undertaken at the insistence of the employer, is to be covered by a bond of service and be paid back upon termination as set out in clause 10.2.8 and Appendix 1.
The Agreement provides for employee requested training, which is paid by the employer but undertaken outside in the employee’s own time at clause 2.5.3. It provides for employer directed training, which is paid at ordinary rates at clause 2.5.4. Clause 10.2.3 provides that if an employee agrees and is consulted, training may be undertaken in the employee’s own time on a non-paid basis.
Clause A.5 of the Building Award relevantly provides:
(c) Where, as a result of consultation in accordance with clause A.5 it is agreed that additional training should be undertaken by the employee, that training may be taken either on or off the job. Provided that if the training is undertaken during normal working hours the employee concerned will not suffer any loss of pay. The employer must not unreasonably withhold such paid training leave.
(d) Any costs associated with standard fees for prescribed course and prescribed textbooks (excluding those textbooks which are contained in the employers technical library) incurred in connection with the undertaking of training pursuant to clause A.5(c) will be reimbursed by the employer upon the production of evidence of such expenditure. Provided that reimbursement will be subject to the presentation of reports of satisfactory progress.
(e) Travel costs incurred by an employee undertaking training in accordance with clause A.5 which exceed those normally incurred travelling to and from work will be reimbursed by the employer.
Clause 30.6 of the Manufacturing Award deals with training costs and relevantly provides:
(a) Any costs associated with standard fees for prescribed courses and prescribed textbooks (excluding those textbooks which are available in the employer’s technical library) incurred by an employee in connection with training agreed to by the employer must be reimbursed by the employer on the production of evidence of such expenditure by the employee, provided that reimbursement may be on an annual basis subject to the presentation of reports of satisfactory progress.
(b) Travel costs incurred by an employee undertaking training agreed to by the employer, which exceed those normally incurred in travelling to and from work, must be reimbursed by the employer.
The Manufacturing Award does not expressly deal with the payment of wages for undertaking training during or outside working hours except for apprentices, trainees and cadets.
The applicant contends that the payment for time spent undertaking training under the Building Award is limited to ordinary hours because the award provides that if “the training is undertaken during normal working hours the employee concerned will not suffer any loss of pay”. “Normal working hours” is not defined in the Building Award nor is that phrase used elsewhere in that award. Had the phrase been intended to be confined to ordinary hours, then ordinary hours would likely have been used instead of “normal working hours”. The phrase “normal working hours” is apt to include scheduled or rostered overtime hours which the employee undertaking training would otherwise have worked. It would plainly apply to hours of work which attract other penalties such as shift penalties. That while undertaking training the employee will not suffer any loss of pay under the Building Award underscores the fact that the phrase “normal working hours” is capable of embracing hours of work of an employee which normally include overtime hours. Thus, under the Agreement if an employee is required to undertake training during hours of work which are scheduled and which would otherwise have been paid at overtime rates or would attract other penalties, then payment for those hours at ordinary time rates would likely result in a detriment in comparison to the Building Award.
The significance of this potential detriment needs to be weighed against the higher rates of pay for which the Agreement provides and in respect of which the employee would be entitled for every hour worked and the fact that training undertaken at the direction of the employer during normal working hours which might otherwise attract overtime payments or other penalties is likely to be very infrequent. In those circumstances I do not consider this matter to be particularly significant.
The requirement in clause 2.5.5 that employees teach work skills and procedures to other employees as and when required by the applicant does not in my view create any concern referable to the BOOT. Provided that the skills and procedures are within the knowledge of the relevant employee required to teach those to other employees, there is no provision in either of the reference awards which prevents an employer requiring employees to undertake these duties from time to time. Moreover, a direction to that effect is more than likely to be a lawful and reasonable direction in those circumstances and is one that could be given to employees now, whether the Agreement applied or not.
That an employee does not receive travel time pay for training under clause 2.5.6 of the Agreement is of no significance in circumstances where neither of the reference awards make provision for travel time pay for training. Both awards make provision for reimbursement of travel costs which are in excess of those which would otherwise be incurred, and which are in excess of the cost incurred by the employee undertaking travel to work. In any event under clause 2.5.6 of the Agreement when an employee is required to travel to attend for training within their ordinary hours of work the employee will receive a normal day’s pay. It is for that reason that there is no additional time paid for travel. No discernible detriment is identified.
As to the issue of a deduction of a proportion of training costs incurred by the employer above a specified amount if the employee resigns from his or her employment within a specified period, this is unlikely to result in a BOOT concern, save for very new employees who have undertaken expensive training and resigned from employment shortly after completing it. It would not give rise to a BOOT concern at all if the deduction were properly authorised and meets the conditions in s 324 of the Act and the term of the Agreement is not rendered of no effect by s 326. The more relevant consideration is the question of the deduction from what amount of money? A provision in the Agreement allowing a deduction from an amount that would otherwise be payable under the NES to an employee on the termination of the employee’s employment would have the effect of excluding the NES. But the Agreement contains an effective NES precedence clause which avoids this result. In these circumstances I am not persuaded that any relevant detriment has been identified.
Daily hire
The CFMMEU contends the Agreement makes provision for daily hire employees to be engaged in circumstances for which the Building Award does not provide. First, because it extends daily hire employees beyond a tradesperson or labourer. Second, because it makes provision for part-time and daily hire employees. Accepting for the purposes of the consideration that the Agreement provides for the engagement of daily hire employees more broadly than the confined circumstances for which the Building Award provides, that in and of itself does not mean that the Agreement does not pass the BOOT. The relevant assessment in respect of employees who under the Agreement would be daily hire employees but under the award would not be, is to compare their position under the Agreement with a casual employee under the Building Award. This would be the case in respect of employees engaged as “part-time” daily hire employees for which the Agreement provides.
On this basis in many cases a daily hire employee under the Agreement would receive an hourly rate of pay for each hour worked which is less than the casual loaded rate for which the Building Award would provide and would not likely be better off overall.
That said, a daily hire employee under the Building Award may be engaged on a part time basis – they may be engaged for 3 days in a week instead of 5. However, a person who is engaged for part of a day, is not a daily hire employee under the Building Award. Depending on the circumstances, that person would be either a part time or a casual employee. Different considerations would apply if these purported part time daily hire employees were treated as part time employees and given notice of termination on the same basis as other full and part time employees. In that case the BOOT concern would fall away.
An undertaking may be required to meet this concern.
Casual employees
The CFMMEU says that casual employees under the Agreement are not entitled to be provided written information when they commence employment resulting in this clause failing to meet either of the reference awards. The Building Award requires an employer, when engaging a person for casual employment, to inform the employee, in writing, that the employee is to be employed as a casual, stating by whom the employee is employed, the job to be performed, the classification level, and the relevant rate of pay. Although the absence of such a provision is a detriment, its significance needs to be assessed taking into account the higher rates of pay that a casual employee will receive under the Agreement, compared to the award.
Minimum engagement
The CFMMEU correctly contend that the Agreement does not contain a minimum of a 4 hour engagement for part time employees as is provided for under the Manufacturing Award. It also points to the absence of any obligation for the employer to agree to hours to be worked by the part time employee, the days on which they will be worked and the commencing (and finishing) times for the work as set out in the reference instruments. Both matters are relevant to the assessment and raise concerns about whether the Agreement passes the BOOT.
The applicant has provided a draft undertaking which if formerly given will address the first concern. As to the second matter, the fixing of agreed working hours for a part-time employee is an important protection for which the reference instruments provide. Amongst other things, the fixing of agreed hours at the commencement of the engagement of a part-time employee delineates that employee’s ordinary hours of work. Hours in excess of ordinary hours attract overtime payments. However, in my view the Agreement contains a provision which is substantially to the same effect as the provisions in the reference awards. Clause 3.3.3 of the Agreement provides that the “actual ordinary hours of part-time work will be less than 38 per week, as arranged or varied as applicable by mutual written agreement between the employer and the employee”. There are still some elements of the reference award provisions such as starting and finishing times for which the Agreement does not provide, whilst potentially detrimental, these are not matters that weigh significantly in the overall assessment.
Ordinary hours
The CFMMEU contends that clause 4.1.2, which allows for 10 ordinary hour days, may be detrimental in some cases, and it has provided modelling to show the detriment. This matter legitimately raises concerns about whether the Agreement passes the BOOT vis-à-vis the Building Award.
Clause 4.1.2 of the Agreement provides that where an agreement is reached between the employer and its employees the normal daily hours may be worked in an alternative arrangement provided that the ordinary hours of work on any day must not exceed 10 hours. In this sense the provision appears to be a facilitative provision which allows for a variation of the way in which ordinary hours of work are undertaken. It might have been better for the employer to have included this in the individual flexibility arrangements because of the protection afforded to employees by reference to the requirement that the employees would be better off overall than if no flexibility arrangement had been made. To meet this concern the applicant has provided a draft undertaking in the event that an agreement is made under clause 4.1.2 of the Agreement, which will have the effect of treating hours in excess of eight hours a day as overtime hours for the purposes of those employees who would otherwise be covered by the Building Award. This would meet the concern.
Averaging hours
The CFMMEU contends that the averaging of hours provisions of clause 4.2 of the Agreement fall below the Building Award which requires all rostering arrangements agreed by a majority of affected employees to be in writing. This contention as to the effect of the Building Award is not correct. It does not require agreement in writing for “all rostering arrangements”.
Clause 16.8 of the Building Award deals with a particular species of arranging for working hours which does not make provision for a rostered day off in every four-week cycle. It provides:
Where an employer and the majority of employees employed at a particular enterprise agree that due to the nature of an employer’s operations it is not practicable for an employee to be provided with an RDO in each 4 week cycle, they may agree to an alternate method of arranging working hours, provided that the ordinary hours worked in any one week from Monday to Friday are within the spread of hours set out in clause 16.1 and that no more than 8 ordinary hours are worked in any one day. Any such agreement shall be recorded in writing.
The applicant says that the undertaking given in response to the ordinary hours concern also addresses this issue. I do not agree since the undertaking given is confined to the circumstance where “agreement is reached in accordance with clause 4.1.2 of the Agreement”. This concern arises because of the clause 4.2 arrangements for averaging working hours which have the result of allowing those hours to be worked within the spread of ordinary hours but which on any day may exceed more than eight ordinary hours. This raises real concern about whether employees consistently working such a pattern and to whom the Building Award would otherwise apply would be better off overall. An undertaking to resolve this concern would likely be necessary. If such an undertaking were given, then I agree with the applicant that the remainder of the concern about the operation of clause 4.2 of the Agreement does not raise any materially significant BOOT concern.
Meal breaks
The CFMMEU points out that under the Agreement the arrangements for employees who would be otherwise covered by the Building Award in respect of the timing of meal breaks and the payment to such employees if the breaks are not taken within the time prescribed is detrimental. This is a legitimate concern relevant to the assessment of whether the Agreement passes the BOOT.
The applicant has indicated that it would provide an undertaking to the effect that if the applicant requires such an employee to work for more than 5.5 hours without a meal break, the employee will be paid at a rate of 200% for the period from 5.5 hours after the starting time until the commencement of the meal break. The provision of such an undertaking would meet the concern.
Allowances
The CFMMEU contends that the Agreement’s failure to include many allowances found in both the reference awards means that some employees will not be better off overall and has provided modelling to support its contention.
An entitlement to particular allowances for which the reference awards and in particular the Building Award provide is circumstantial. That is, allowances are only payable when the circumstances for the payment arises. Although the Building Award makes provision for a large array of allowances for different circumstances (although it must be acknowledged – far fewer that existed before the Building Award was subjected to the 4 yearly review process) it is plainly the case that not all or even most of the allowances for which the Building Award provides become payable to an employee at the same time. The applicant has also provided modelling which appears to correct some errors in the CFMMEU modelling and in the result shows that in most cases employees would be better off overall. I accept the applicant’s modelling, the results of which appear to be consistent with modelling undertaken by the Commission and which also identifies that problems with the Agreement passing the BOOT may arise in respect of CW3 daily hire employees. Several other matters are also relevant in assessing whether the Agreement passes the better off overall test by reference to the reference awards’ allowances that are omitted. As I have already indicated the prospect of all the allowances at issue becoming payable to any employee is remote. And as the applicant has correctly pointed out the prospect of the allowances claimed becoming payable in respect of high-rise buildings and large service cores extending beyond the main structure is not significant given the Agreement operates in the Northern Territory and the significant lack of high-rise structures in that territory.
The applicant has indicated that it will provide an undertaking to address the circumstances in which the daily hire employees will not be better off under the Agreement when they would be entitled to receive the first aid, multistorey, service core and scaffolding allowances. If such an undertaking is given this will meet the concern.
Superannuation
The CFMMEU raises concerns about the level of superannuation contributions that would be payable under the Agreement to an employee who is off work and in receipt of workers compensation payments. It says that such employees would be better off under the reference awards.
Under the Agreement an employee would have superannuation contributions made on their behalf in respect of ordinary time earnings and for an employee who is injured in receipt of workers compensation payments, the ordinary time earnings would be those payments. The applicant contends, having regard to the higher rates of pay for which the Agreement provides and on which workers compensation payments will be calculated, that an employee who is off work and in receipt of workers compensation payment will not be better off overall only in circumstances where the ordinary time earnings under the Agreement are less than 10.5% higher than under the applicable reference award. I agree. To that extent the applicant has proposed an undertaking which is to the effect that if an employee is paid less than 10.5% above the applicable award minimum rate, clause 28.5 of the Onsite Award or 31.5 of the Manufacturing Award (as the case may be) will apply. This would appear to resolve the concern.
Redundancy
The CFMMEU points to the fact that the reference awards contain industry specific redundancy schemes whereas the Agreement provides for redundancy to be paid in accordance with the NES. In the result the entitlements for redundancy pay are in some respects less under the Agreement compared to the reference awards and the definition of redundancy is narrower meaning that persons who might under the Building Award be entitled to redundancy are not entitled to redundancy under the Agreement. The applicant accepts that this may be a relevant detriment. The entitlements under the Building Award for employees who are redundant in the first three years of service are likely in most cases to be superior marginally to those for which provision is made under the Agreement. At four years and up to five years of service the entitlement is the same but beyond five years of service the entitlement is superior under the Agreement than under the Building Award. Of course during actual employment the relevant employees will be earning a higher rate of pay and so the longer the service the less likely there is to be any material detriment and the more likely it is that an employee will nonetheless be better off overall. After the first year of service any employee earning a 4.61% higher ordinary time rate under the Agreement compared to the Building Award will be better off overall. That is likely to be the case in respect of all employees particularly when account is taken of the compound factor in respect of shift penalties, overtime, and paid annual leave attributable to the higher rate of pay. A significant deviation arises from the definition of redundancy which under the Building Award means a situation where an employee ceases to be employed by an employer to whom this award applies, other than for reasons of misconduct or refusal of duty. Thus the ending of employment by reason of resignation triggers the redundancy entitlement under the Building Award but would not do so under the Agreement. There is no entitlement in the first year and thereafter for the reasons I have indicated an employee resigning from his employment would not likely be better off under the Building Award notwithstanding there being no entitlement to redundancy pay under the Agreement. This is particularly so given the contingent nature of a redundancy entitlement – the employment must end for the entitlement to trigger.
Inclement weather
The CFMMEU contends that the absence of inclement weather provisions akin to those found in the Building Award result in a detriment. Specifically, the CFMMEU contends that the detriment is in the following areas:
· the Building Award provides for payment at double time for concreters stuck doing a concrete pour at clause 24.6;
· the Building Award allows employees who become wet as a result of working in the rain to go home for the rest of the day in the absence of available dry clothes at clause 24.6;
· the Building Award contains an additional wet weather procedure at clause 24.14(a);
· the Building Award deals with rain at starting time at clause 24.14(b).
Plainly these matters are relevant to the assessment of whether the Agreement passes the BOOT.
As to the first, second and third of the matters, the applicant has proposed undertaking to the effect that it will apply clause 24.6 and 24.14(a) of the Building Award. The undertakings if given would resolve these concerns.
As to the procedure in clause 24.14 (b) of the Building Award, I agree with the applicant that in many cases where the circumstances described therein arise, the limitations on work performance would arise by reference to the applicant’s obligations under work health and safety legislation. Of course, there are some gaps, but given the provision is concerned with conditions for work under inclement weather conditions and the likelihood of those conditions arising frequently in the circumstances in which the Agreement will operate is not high, I do not consider the gaps to be of any significant weight in the assessment of whether the Agreement passes the BOOT.
Higher duties
The CFMMEU contends that the absence of higher duties provisions in the Agreement compared to those in the Building and Manufacturing Awards, is detrimental and that in circumstances where the provisions of the awards would be engaged, employees performing higher duties under the Agreement would be paid less than they would otherwise be paid under the applicable award. The CFMMEU has provided modelling to make good its contention.
The difficulty with the CFMMEU modelling is that it makes a comparison for a higher duties position under the award for which the Agreement does not provide. Thus, it is not possible under the Agreement for an employee to be performing higher duties in respect of a position not covered by the Agreement. In those circumstances an employee performing a role covered by the award but not the Agreement would be entitled to the appropriate payments for which the award provided. As the applicant’s modelling demonstrates, taking into account the undertakings it proposes to give, employees performing higher duties as between classifications for which the Agreement provides, would appear to be better off overall under the Agreement than under the reference awards. Moreover, given the classification structure for which the Agreement provides it is unlikely that an employee performing work in a higher classification would not be entitled to be paid in accordance with that classification. In the context of the Agreement, I do not consider the absence of a higher duties provision as being material to the assessment whether the Agreement passes the BOOT.
Conclusion as to whether the Agreement passes the BOOT
As should be apparent from the discussion above, I have identified a number of issues which taken together raise concerns about whether the Agreement passes the BOOT. To this end I conducted a short hearing on 8 August 2020 during which I outlined the nature of my concerns and invited the applicant after consulting with the CFMMEU to provide undertakings which address these concerns.
The final form of undertakings was provided by the applicant on 17 August 2022. These include undertakings which had earlier been foreshadowed. Taken together the undertakings meet my concerns.
I am also satisfied that known bargaining representatives were consulted about the undertakings, that the undertakings if accepted will not likely cause financial detriment to any employee covered by the Agreement nor result in substantial changes to the Agreement. I therefore accept the undertakings. I am satisfied taking into account the beneficial provisions of the Agreement compared to the reference awards and those detrimental provisions discussed above that with the undertakings given the Agreement passes the BOOT.
Conclusion
Apart from the matters discussed above there are no other issues relating to the approval requirements about which I have any concern. Based on the material filed by the applicant in connection with this application and for the reasons given earlier I am satisfied that each of the requirements of ss 186, 187, 188 and 190 of the Act as are relevant to this application for approval have been met.
A copy of the undertakings given by the applicant is attached in Annexure A. The undertakings are taken to be a term of the Agreement.
For the reasons earlier stated, I am satisfied that the CFMMEU is a bargaining representative for the Agreement, however the CFMMEU has advised that it does not want the Agreement to cover it.
The Agreement is approved and, in accordance with s 54 of the Act, will operate from 30 August 2022. The nominal expiry date of the Agreement is 23 August 2026.
DEPUTY PRESIDENT
Appearances:
Mr T Earls, solicitor for the applicant
Mr P Dunbar on behalf of the CFMMEU
Hearing details:
2022
Melbourne (by Video)
8 August
Written submissions:
Applicant, 13 July 2022
CFMMEU, 29 June 2022
Attachment A
[1] Email from the applicant’s solicitors to my chambers dated 17 August 2022 copied to the CFMMEU and the attachment thereto
[2] See Construction, Forestry, Maritime, Mining and Energy Union v Mechanical Maintenance Solutions Pty Ltd[2019] FWCFB 3585 at [52]
[3] Solar Systems Pty Ltd [2012] FWAFB 6397 at [11]; Hart v Coles Supermarkets Australia Pty Ltd[2016] FWCFB 2887 at [6], [15]; Shop, Distributive and Allied Employees Association v Beechworth Bakery[2017] FWCFB 1664 at [11]
[4] Macquarie Online Dictionary
[5] Re Armacell Australia Pty Ltd (2010) 202 IR 38 at 49 at [41]; ALDI Foods Pty Limited v Shop, Distributive & Allied Employees Association [2017] HCA 53 at [92]
[6] [2017] HCA 53
[7] Ibid at [99]
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