Melbourne Nursing Agency Pty Ltd
[2010] FWA 4133
•8 JUNE 2010
[2010] FWA 4133 |
|
DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
Melbourne Nursing Agency Pty Ltd
(AG2010/838)
COMMISSIONER MCKENNA | SYDNEY, 8 JUNE 2010 |
Melbourne Nursing Agency Pty Ltd Enterprise Agreement 2010.
[1] Melbourne Nursing Agency Pty Ltd (“the applicant”) has made an application, pursuant to s.185 of the Fair Work Act 2009 (“the Act”), seeking the approval of an enterprise agreement titled the Melbourne Nursing Agency Pty Ltd Enterprise Agreement 2010 (“the Agreement”). The Agreement is a single-enterprise agreement.
[2] Clause 2.7 of the statutory declaration comprising the Form F17, namely, the employer’s declaration in support of the application for the approval of the enterprise agreement (“the employer’s declaration”), indicates that four employees will be covered by the Agreement. Of those four, two employees cast a valid vote to approve the Agreement.
[3] Clause 2.8 of the employer’s declaration further indicates that the Agreement does not cover all employees of the applicant. In response to the question at cl.2.9 of the employer’s declaration, the following information (in italics) was provided:
“2.9 If the answer to question 2.8 is “No”, specify the groups(s) of employees covered by the agreement and how FWA can be satisfied that such group(s) were fairly chosen, including by reference to the geographical, operational or organisational distinctness of such group(s): (s.186(3) and (3A))
The employees to be covered by this enterprise agreement are as follows:
1. all Clerical Employees; and
2. all Patient Services Employees who are Trainees
Patient Services Employees who are not Trainees are not covered by this enterprise agreement, and are instead covered by the Modern Award
Nursing staff and other support staff of the Employer, who are of a casual status, are not covered by this enterprise agreement. The decision of the Employer to cover only Clerical Employees and Patient Services Employees who are Trainees was fairly chosen, based on the fact that these particular employees are a distinct group by reference to their operational and organisational distinctness from the other groups of employees (i.e. the nursing staff and other support staff employed by the Employer).”
[4] At the initial listing of the matter on 3 May 2010, one of the first issues I raised with the applicant’s representative, Enterprise Initiatives Pty Ltd/EI Legal (which was represented by both Ms A Grant and Ms P Ryan at different stages of the proceedings), was whether the Agreement was envisaged as covering a larger number of employees than the four employees specified in cl.2.7 of the employer’s declaration.
[5] I raised that query on the basis the Agreement contains more than two pages of rates and classifications for the four employees that the employer’s declaration at cl.2.7 said will be covered by the Agreement.
[6] Clause 4.4 of the employer’s declaration indicated that the primary activity of the employer is in the area of “Clerical and Health & Welfare Services”. In this respect, I note Enterprise Initiatives confirmed the applicant is “essentially” a labour hire agency - which places health professionals within a range of public, private and community-based health care organisations. Enterprise Initiatives further submitted that the applicant matches its staff to the specific requirements of its clients.
[7] Enterprise Initiatives’ submissions confirmed that at the time the Agreement was made, the applicant did not employ any trainee patient services employees, being employees who would be placed by the applicant at its clients’ workplaces under labour hire arrangements. I note also that at cl.4.1 of the employer’s declaration, all four existing employees were identified as being part-time employees. That being the case, no full-time or casual clerical employees participated in the vote for the Agreement. There is insufficient information to ascertain whether any part-time, trainee clerical employees participated in the vote.
Making of an enterprise agreement
[8] Section 186 of the Act specifies as follows in relation to the making of an enterprise agreement:
“186 When FWA must approve an enterprise agreement—general requirements
Basic rule
(1) If an application for the approval of an enterprise agreement is made under section 185, FWA must approve the agreement under this section if the requirements set out in this section and section 187 are met.
Note: FWA may approve an enterprise agreement under this section with undertakings (see section 190).
Requirements relating to the safety net etc.
(2) FWA 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; and
(b) if the agreement is a multi-enterprise agreement:
(i) the agreement has been genuinely agreed to by each employer covered by the agreement; and
(ii) no person coerced, or threatened to coerce, any of the employers to make the agreement; and
(c) the terms of the agreement do not contravene section 55 (which deals with the interaction between the National Employment Standards and enterprise agreements etc.); and
(d) the agreement passes the better off overall test.
Note 1: For when an enterprise agreement has been genuinely agreed to by employees, see section 188.
Note 2: FWA may approve an enterprise agreement that does not pass the better off overall test if approval would not be contrary to the public interest (see section 189).
Note 3: The terms of an enterprise agreement may supplement the National Employment Standards (see paragraph 55(4)(b)).
Requirement that the group of employees covered by the agreement is fairly chosen
(3) FWA must be satisfied that the group of employees covered by the agreement was fairly chosen.
(3A) If the agreement does not cover all of the employees of the employer or employers covered by the agreement, FWA must, in deciding whether the group of employees covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct. … [My underlining]
[9] Further, s.188 of the Act provides as follows as to when Fair Work Australia may be satisfied that the employees covered by an agreement have genuinely agreed to the agreement:
“188 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 FWA 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.”
[10] In Delcorp (SA) Pty Ltd T/A De Luca’s on The Park [2010] FWA 2952, Hampton C recently considered an application for the approval of an enterprise agreement which had been made with the participation of one employee. The applicant in that matter was in the process of establishing a new coffee and wine bar. Hampton C noted that his concerns about the agreement were primarily associated with the fact the employer’s declaration indicated there was only one employee who was at the time to be subject to the agreement, thereby raising concern about whether there were grounds to believe the agreement has not been genuinely agreed to by the group of employees. He commented:
“[4] The concerns about the content of the Agreement involved, amongst other matters, the need to understand the practical intended operation of the instrument given its reliance upon a loaded salary rate for most employees. In addition, the arrangements applying to part-time and casual employees had to be further considered.
…
[7] I have determined that the application for approval should not be granted. My reasons for that conclusion are set out hereunder.
[8] Section 186(2) of the Act requires that in order to approve an enterprise agreement, (not being a greenfields agreement) an agreement must have been genuinely agreed between the employer and the employees who are to be covered. In that context, the employees concerned for the purposes of s.186 are those already employed rather than those who may be employed at a later date and become bound by the agreement. This is made clear in s.181 of the Act.
[9] Section 188 of the Act also provides that for an enterprise agreement to be approved, Fair Work Australia must be satisfied that the agreement has been genuinely agreed to by the relevant employees having regard to specific statutory requirements.
…
[14] It was clear that the new coffee and wine bar would employ more than the single employee cited in the application. It was also evident that the bar was not yet operational and this raised the question as to whether the agreement was validly made under the Act.
[15] This is an important question given that considerable emphasis is placed by the Act upon the process leading to the agreement. This is evident from the various information, negotiation and endorsement requirements of the Act that are designed to enable the employees to form an informed and genuine position on any proposed agreement. It is also evident that the Act provides that this assessment and endorsement is to be made (except in the case of a greenfields instrument) by those who are employed at the time and who will be subject to the agreement. A process whereby that endorsement is made by a single employee on behalf of a group of employees who are yet to be employed must be carefully considered.” [My underlining]
[11] While Hampton C considered that the sole employee who had voted for the agreement before him was not genuinely employed as part of the group of employees in the enterprise (whereas the four clerical employees in this application are existing employees who would be covered by the Agreement), it seems to me that the issues he traversed in the decision have some bearing on the application before me. That is, the votes of two part-time clerical employees are relied on in support of the making of an agreement that would also cover an indeterminate number of patient services employees who are trainees - being employees who would be placed with the applicant’s clients under labour hire arrangements, as well as full-time and trainee clerical employees.
[12] Having raised my concerns on 3 May 2010 about the practical scope of employees proposed to be covered by the Agreement, Enterprise Initiatives drew attention, on the resumption of proceedings on 17 May 2010, to the explanatory memorandum to the Fair Work Bill 2008 (“the explanatory memorandum”) where this was said at item 824:
“824. The better off overall test also refers to prospective award covered employees because sometimes an agreement may cover classifications of employees in which no employees are actually engaged at the test time. Extending the application of the better off overall test to these types of employees guarantees the integrity of the safety net. …”
[13] Enterprise Initiatives submitted the Act does not preclude the possibility of providing classifications in an agreement where there are no employees in those classifications at the time the agreement is made. An agreement, Enterprise Initiatives submitted, needs to be made with the employees employed at the time the agreement is made and who will be covered by the agreement. In this respect, Enterprise Initiatives further submitted the Act does not specifically exclude or include only existing employees - and the Act otherwise contemplated prospective employees. Enterprise Initiatives submitted the fact the legislation contemplated prospective employees, read in combination with the explanatory memorandum, means that is “a possibility for Fair Work Australia to consider”. In further written submissions filed on 25 May 2010, Enterprise Initiatives again drew attention to these provisions as well as to item 823 of the explanatory memorandum as it concerns the operation of s.193(5) of the Act in relation to the meaning of a “prospective award covered employee”.
[14] Enterprise Initiatives referred only to the words extracted above in paragraph [12] from item 824 of the explanatory memorandum and an illustrative example in support of the submission that the Agreement should be approved. I note, however, that the full text of item 824 continued as follows:
“… Note that where an agreement covers a large number of classifications of employees in which no employees are actually engaged there may be a question as to whether the agreement has been genuinely agreed – see clause 188.”
[15] The Agreement, if approved, would cover two distinct and unrelated classes of employees. The first group comprises the four clerical employees the applicant employs in its own office. In this respect, I note the submissions did not suggest the applicant would be using the clerical employee pay and conditions under the Agreement for clerical employees, including clerical trainees, it may place with clients under labour hire arrangements (albeit I note there would be nothing, apparently, that would preclude such extension). As I have noted, two of those four clerical employees voted in favour of the Agreement.
[16] The second group of employees who would be covered by the Agreement comprises, as noted in the employer’s declaration, “all Patient Services Employees who are Trainees”. In this respect, Enterprise Initiatives submitted that patient services employees who are trainees would be working in a healthcare setting other than at the location of the applicant’s primary business; they would be working within healthcare organisations on traineeships. No trainee patient services employees participated in the ballot at all, as the applicant did not employ any such employees at the time the proposed Agreement was put to a vote.
[17] In circumstances where the Agreement does not cover all the employees of the applicant, Fair Work Australia must, in deciding whether the group of employees was fairly chosen, take into account, pursuant to s.186(3) of the Act, whether the group is geographically, operationally or organisationally distinct. Moreover, as noted in the explanatory memorandum, if an agreement covers a large number of classifications of employees in which no employees are actually engaged there may be a question as to whether an agreement has been genuinely agreed within the meaning of s.188 of the Act.
[18] I accept Enterprise Initiatives’ submission that an agreement may be made that would cover prospective employees and may be made by employees who were not themselves engaged in the particular classifications under an agreement. In this application, however, the votes of two employees are being relied on, as a type of beach head, for an agreement that would cover all future trainee patient services employees who would be performing work for the applicant’s clients under labour hire placements.
[19] I doubt the Act properly envisages an applicant employer which is a labour hire agency relying on the votes of two of its office employees to approve an agreement that would apply not only to the (four) clerical employees directly concerned but also to all the employees engaged in unrelated, trainee patient services work with host companies. Moreover, the conditions of employment for the trainees are referable to industrial instruments which differ from those applicable to the clerical employees. Shortly stated, on the materials before me, I have not been satisfied the group of employees proposed to be covered by the Agreement has been fairly chosen within the meaning of s.180(3)-(3A) of the Act. I have not been satisfied the group of employees who would be covered by the Agreement and those who were balloted represent a group of employees that has been constituted in a “fair and appropriate way” (see item 778 of the explanatory memorandum).
[20] Item 793 of the explanatory memorandum notes a “non-exhaustive list of the matters” for Fair Work Australia to consider when determining whether an enterprise agreement has been genuinely agreed by employees covered by an agreement. On a consideration of the characteristics of this application and the classifications in the Agreement, I have not been satisfied the Agreement has been genuinely agreed within the meaning of s.188 of the Act. In so concluding, I have had particular regard to the commentary in the explanatory memorandum about questions arising where, as is the case here, an agreement covers a large number of classifications of employees in which no employees are actually engaged.
[21] I would dismiss the application for these reasons.
Other concerns
[22] I note that at cl.1.6 of the employer’s declaration, there is a question which reads:
“1.6 Is the applicant aware of other agreement(s) in identical or substantially identical terms having been dealt with by FWA?”
The answer given to this question in the employer’s declaration is “No”.
[23] It may well be the case that the deponent of the employer’s declaration was not aware of any other agreement in identical or substantially identical terms having been dealt with by Fair Work Australia. Nonetheless, I note the decision of Cambridge C in Margin Brothers Pty Ltd T/A Campbell IGA Friendly Grocer [2010] FWA 2105 indicated that Enterprise Initiatives/EI Legal also represented the applicant for an enterprise agreement in those proceedings. From the description of the clauses in the decision, it appears the Agreement before me follows a template with terms that are similar indeed to the agreement considered and rejected by Cambridge C in Margin Brothers. While there appear to be some differences in aspects of the Agreement before me, it is surprising that various of the provisions of an agreement which were found to be so deficient by Cambridge C in Margin Brothers such as to lead to a dismissal of the application should be re-presented in a similar template in the application before me.
[24] I would note, in particular, the comments of Cambridge C under the heading of the decision “Averaged Ordinary Hours Inclusive of All Penalties and Allowances”:
“Averaged Ordinary Hours Inclusive of all Penalties and Allowances
[22] The hours of work prescriptions contained in Clause 7 of the Agreement represented perhaps the most contentious issue for consideration. Clause 7.1 provided for ordinary hours of work at any time on any day if not in excess of 38 hours per week averaged over 26 weeks.
[23] The Employer contended that higher hourly rates of pay compensated for all penalty rates and other allowances that were contained in the Award. A number of “spread sheet” documents were said to demonstrate the compensation that encompassed all penalty rates in the Award that might apply to Saturday, Sunday, Public Holiday, and night/early morning work, as well as any allowances (uniform allowance was said to be the only allowance that would be applicable). These “spread sheet” documents compared the Award with the Agreement over a 52 week period and were based upon “average weekly working patterns” of employees. During the Hearing an examination of the spread sheet comparison documents was undertaken.
[24] The corollary of the analysis using two particular examples from the “spread sheet” comparison documents was that after 52 weeks of working the assumed pattern of engagement, an employee would be paid $199.28 or $299.98 more under the Agreement as opposed to the Award. This annual amount translated to 10 or 16 cents per hour and as such provided support for the Employer’s assertion that there was no disadvantage created by the “loading” of all penalties and allowances into the rate to apply to ordinary hours which can be worked at any time of the day or night on any day of the week.
[25] However, the advantageous outcome relied upon the assumed pattern of engagement over a 52 week period being maintained. If the pattern changes to include say, more Saturday or Sunday work, or more night work, or extended engagements (which under the Award attracted overtime), or if more than the assumed number of 4 Public Holidays are worked, then there is real prospect that the result would be a loss in pay under the Agreement when compared to the Award. Further, periods of employment of less than 52 weeks may also distort any valid comparisons, particularly if the period involved work on a number of Public Holidays and or weekends and nights.” [My underlining]
[25] In relation to the Agreement before me, I raised the operation of cl.7.3 of the Agreement - which reads as follows:
“7.3 Penalties for working additional hours must be claimed by the Employee and approved by the Employer in advance and in writing. Penalties for working approved additional hours are paid at time and a half for the first two hours and double time thereafter for each subsequent hour worked, except for additional hours worked on Sundays, which are paid at double time.”
[26] As to the lack of additional rates concerning Saturday work, Enterprise Initiatives submitted that at the time the Agreement was made the employees did not work on Saturdays. Enterprise Initiatives elaborated this submission on 17 May 2010, submitting that “there were no Saturdays worked by the employees at the test time”; and added that the principal of the applicant company herself “has always done the Saturday shift”. The submission that the principal of the applicant company ordinarily works Saturdays is beside the point; it is the Agreement itself which is under consideration, not the weekend working practices of the principal of the company. Moreover, even if the typical weekend working practices of the existing, part-time clerical employees were accepted as being relevant to an assessment of the Agreement, those practices could not reasonably be imputed to the trainees who may be working pursuant to the Agreement for the applicant’s clients under labour hire arrangements. In this regard, it may be noted that cl.8.2 the Agreement specifically contemplates weekend work in the following terms:
“8.2 The Employer will ordinarily roster Employees in a manner that is both fair and equitable to ensure that, where applicable, the allocation of weekend and public holiday hours are equally divided between employees on a rotating basis.”
[27] Enterprise Initiatives submitted that on a proper reading of the Agreement, employees would receive time-and-a-half for the first two hours and double time thereafter for Saturday work. I do not accept that characterisation. That is, the Agreement does not contain a Monday to Friday framework for rostering purposes. In circumstances where the Agreement does not provide additional rates for Saturdays but otherwise provides additional rates for Sunday work, I would read the Agreement as providing the ordinary rates on Saturdays. Despite having raised the matter of Saturday rates, no undertaking has been proposed in relation to that aspect of the Agreement notwithstanding the submission that this was the intended operation of the Agreement.
[28] I would note also that in final written submissions filed on 25 May 2010, Enterprise Initiatives submitted as follows in relation to the calculation of rates of pay in the Agreement:
“3. Calculation of the Rates of Pay within Schedule A of the Agreement
The hourly rates of pay in the Agreement, as set down in Schedule A of the Agreement, have been specifically calculated to accommodate the average working patterns of all Employees covered by the Agreement. As Annexure A to the Employer Declaration demonstrates, the average weekly hours worked by Employees in each of the penalty periods attracted by the Award have been factored into the hourly rates of pay provided in Schedule A of the Agreement. These hourly rates of pay calculate the monetary value of the average weekly hours worked in each penalty period which, when combined with the annual value of any relevant loading or allowance under the Award, have been used to calculate an annual salary. This annual salary has been converted into an hourly rate as provided for within Schedule A of the Agreement.
As outlined in the Employer Declaration lodged with the application, it is strongly contended that a better off overall fair compensation application has been made, by taking into account the above calculations. As specified in clause 8.2 of the Agreement, the Employer is required to roster employees fairly and equitably to ensure that, where applicable, the allocation of weekend and public holiday hours are divided between Employees on a rotating basis. This thereby ensures that no employee will be financially disadvantaged under the Agreement as compared to the Award.
As demonstrated in calculations submitted at lodgement, an additional $200 annual advantage as been made in all relevant Agreement calculations to additionally compensate all employees subject to this Enterprise Agreement in a manner outside any parameters set down by the Award. This further signifies that a better off overall fair compensation application has been made to this Agreement, as required under section 193 of the Fair Work Act 2009 (“the Act”).
4. Calculation of the Loaded Rates of Pay within Schedule A of the Agreement
Schedule A of the Agreement, in terms of the permanent Clerical Employees, provides for both unloaded and loaded hourly rates of pay. The key difference between the unloaded and loaded rates is that the loaded hourly rate includes annual leave and sick leave entitlements. Permanent Employees who are paid a loaded hourly rate of pay, whilst entitled to take their accrued annual leave and sick/carer’s leave entitlement, do not get paid for any annual leave or sick/carer’s leave taken as their hourly rate of pay already compensates them for this paid entitlement.
We note under the National Employment Standards (“the NES”), the annual leave entitlement in 7.6923% and the sick leave entitlement is 3.84615%. As such, under the NES, the difference between the loaded and unloaded hourly rate of pay is 11.54%. The permanent loaded rates of pay within the Agreement for Clerical Employees are 12% higher than the unloaded rates. The loaded rates for trainees (both Clerical and Patient Services Employees) are 20% higher than the unloaded trainee rates. As such, we submit that the loaded rates within the Agreement provide greater compensation for the payment of annual leave and sick leave when compared to the NES.
We submit that the NES does not preclude an arrangement for having loaded rates of pay within an Enterprise Agreement. In terms of the Better Off Overall Test (“the BOOT”), as the loaded rates of pay provide for greater compensation than the value of the annual and personal/carer’s leave provided for under the NES, and makes payment for such leave in advance, we submit that the loaded rate arrangement passes the BOOT pursuant to section 193 of the Act.”
[29] I do not consider I can accept the submissions as advanced. That is, the employer’s declaration notes that the four employees who would be covered by the Agreement are part-time employees. Hence, to the extent the submissions and calculations use a divisor of 38 full-time hours a week, those submissions and calculations are not in point because these employees are part-time employees. Perhaps the simplest illustration in this respect concerning the invalidity of the assumptions would arise from an examination of the part-time employment provisions of the Clerks Private Sector Award 2010. Clause 11.3 of the Clerks Private Sector Award provides that, at the time of engagement, the employer and the part-time employee will agree in writing on a regular pattern of work, specifying at least the numbers of hours worked each day, which days of the week the employee will work and the actual starting and finishing time each day. Clause 11.6 of the Clerks Private Sector Award further provides that all time worked in excess of the hours agreed under cl.11.3 will attract the overtime rates and penalties contained in cl.27 of the Agreement. Hence, if the four part-time, clerical employees in question worked more than part-time hours, they would have an entitlement to overtime payments and penalties under the modern award – and this has not, apparently, been taken into account in the calculations and submissions in relation to the proposed rates.
[30] Moreover, to the extent the Agreement proposes to cover the labour hire employees who may be placed with the applicant’s clients, there is no information on which the assumptions in the calculations could be considered to be representative of the time of day or night, or day of the week, that would be worked by those employees, i.e., the applicant did not employ any patient services employees who are trainees. In this respect, the observations by Cambridge C in Margin Brothers at paragraph [25] from the earlier quote seem particularly relevant.
[31] Further cl.7.4 is in the style of a “preferred hours” clause and appears to be the same as that already criticised by Cambridge C in Margin Brothers and also of the style considered in Bupa Care Services Pty Ltd [2010] FWAFB 2762. The provision reads:
“7.4 Notwithstanding clause 7.3, Employees may request to work additional hours and be paid their ordinary hourly rate. An example of when an employee may request to work additional hours at the ordinary hourly rate is when an employee wants to earn more money and they would otherwise be limited to working ordinary hours.”
I note, however, the applicant has proposed an undertaking to the effect that this provision would be void and of no effect.
[32] I note also that at cl.2.29 of the employer’s declaration the deponent indicated the Agreement contains terms providing for school-based apprentices or trainees to receive loadings in lieu of paid leave. The employer’s declaration identified the pay scales and other provisions of the Agreement. Given the employer’s declaration indicated the Agreement contains terms providing for school-based apprentices or trainees to receive loadings in lieu of paid leave, the provisions of s.199 of the Act arise. That section reads as follows:
“199 School-based apprentices and school-based trainees
Application of this section
(1) This section applies if:
(a) an employee who is a school-based apprentice or a school-based trainee is covered by an enterprise agreement; and
(b) the agreement provides for the employee to be paid loadings (the agreement loadings) in lieu of any of the following:
(i) paid annual leave;
(ii) paid personal/carer’s leave;
(iii) paid absence under Division 10 of Part 2-2 (which deals with public holidays); and
(c) a modern award that is in operation and covers the employee provides for the employee to be paid loadings (the award loadings) in lieu of leave or absence of that kind.
No detriment test
(2) FWA must be satisfied that the amount or rate (as the case may be) of the agreement loadings is not detrimental to the employee when compared to the amount or rate of the award loadings.”
[33] On raising the response given at cl.2.29 of the employer’s declaration, Enterprise Initiatives submitted that it was not the intention of the Agreement to cover school-based trainees despite the information initially provided in the employer’s declaration (and would appear to be correct, given the rates are referable to employees who have left school). This response was an example of incorrect or incomplete information in the employer’s declaration.
[34] By way of further example in this respect, I note that cl.3.1 and cl.3.2 of the employer’s declaration nominated the following instruments for the purposes of assessment of the better off overall test:
AP7730322 – Clerical and Administrative Employees (Victoria) Award 1999;
AP783872 – Health and Allied Services – Private Sector – Victorian Consolidated Award 1998;
AP790899 – National Training Wage Award 2000;
MA 000027 Health Professionals and Support Services Award 2010; and
MA000002 – Clerks – Private Sector Award 2010.
Clause 3.4 of the employer’s declaration asks whether the Agreement contains any terms or conditions of employment that are less beneficial than the equivalent terms and conditions in the reference instruments identified in clauses 3.1 and 3.2. The employer’s declaration provided the following response:
“The terms and conditions of employment (not including Saturday, Sunday, public holiday, evening or other penalty and shift allowance/penalty, which are transitional) for all Employees to be covered by the Agreement are made by reference to the relevant Modern Award. There are no terms and conditions of these reference instruments that are more beneficial than this Enterprise Agreement.” [My underlining]
[35] The assertion in cl.3.4 of the employer’s declaration that there are no terms and conditions of these instruments that are more beneficial than the Agreement has now been acknowledged in submissions to be incorrect. On 17 May 2010, Enterprise Initiatives enumerated various provisions where the Agreement would constitute a disadvantage considered in the context of the modern awards, including some fundamental matters going to the terms and conditions of employment – such as minimum engagement provisions and hours of work-related provisions. Enterprise Initiatives submitted that even though the Agreement does not have those types of “work parameters”, the Agreement allowed flexibility for both the employer and the employee and mirrored the Australian Workplace Agreements under which the employees had been working. Although Enterprise Initiatives’ submissions indicated a range of disadvantages that had not been identified initially in the employer’s declaration, the submissions did not address how the Agreement would satisfy the better off overall test given the belated identification of these disadvantages. That is, the matters said to be advantages were those, in effect, initially relied on in the employer’s declaration. I would note that there are many provisions in the modern awards which are more beneficial other than those enumerated by Enterprise Initiatives and the submissions did not otherwise address the instruments other than the modern awards.
[36] Clause 9.1 of the Agreement provides that the minimum rates of pay for each hour worked are set out in Schedule A of the Agreement, “and are subject to minimum wage adjustments by Fair Work Australia as made from time to time”. It may be noted that Schedule A specifies rates in the following way for the following classes of employees. Part 1 of Schedule A deals with hourly pay rates for clerical employees employed on a permanent basis, on a casual basis, and as trainees. Part 2 of Schedule A specifies hourly rates of pay for trainee patient services employees, based on a graduated scale referable to whether the employee is a school leaver, the number of years out of school and the highest level of schooling completed. The rates in both Part 1 and Part 2 of Schedule A are sub-categorised into rates that are loaded to compensate for payment of annual leave and sick/carer’s leave and rates that are not so loaded. Clause 9.4 provides for further adjustments on the hourly rate ranging from 7-31 cents per hour effective 31 July each year; this applies only to the clerical employees.
[37] I queried the mechanism for adjustment as it concerned the loaded rate. In this respect, Enterprise Initiatives referred to s.206 of the Act, which reads as follows:
“206 Base rate of pay under an enterprise agreement must not be less than the modern award rate or the national minimum wage order rate etc.
If an employee is covered by a modern award that is in operation
(1) If:
(a) an enterprise agreement applies to an employee; and
(b) a modern award that is in operation covers the employee;
the base rate of pay payable to the employee under the agreement (the agreement rate) must not be less than the base rate of pay that would be payable to the employee under the modern award (the award rate) if the modern award applied to the employee.
(2) If the agreement rate is less than the award rate, the agreement has effect in relation to the employee as if the agreement rate were equal to the award rate.
If an employer is required to pay an employee the national minimum wage etc.
(3) If:
(a) an enterprise agreement applies to an employee; and
(b) the employee is not covered by a modern award that is in operation; and
(c) a national minimum wage order would, but for the agreement applying to the employee, require the employee’s employer to pay the employee a base rate of pay (the employee’s order rate) that at least equals the national minimum wage, or a special national minimum wage, set by the order;
the base rate of pay payable to the employee under the enterprise agreement (the agreement rate) must not be less than the employee’s order rate.
(4) If the agreement rate is less than the employee’s order rate, the agreement has effect in relation to the employee as if the agreement rate were equal to the employee’s order rate.”
[38] I sought clarification concerning the adjustment of the loaded rates in Schedule A of the Agreement, as outlined in the transcript:
“THE COMMISSIONER: To the extent that the wages component is the only component that is adjusted by the national minimum adjustment figures, how does that then impact on the loading component which is said to compensate for various other entitlements? Does that mean that over time that although the wages might go up the loading component would go down?
MS GRANT: The rates of pay, schedule A of the agreement, would - not really looking at clause 9.4 and those sort of adjustments, but just in terms of the schedule A rates of pay, if they fell below the base rates of pay under the award they would need to be adjusted in line with what section 206 of the Act requires.
THE COMMISSIONER: I’m not making myself clear. The wages over the life of the agreement would be adjusted by the national adjustments.
MS GRANT: If required, yes.
THE COMMISSIONER: To the extent that the hourly rates that are proposed contain a loading component, would there be adjustment of that?
MS GRANT: We would submit that that is not required under section 206 of the Act and what that means in terms of adjusting rates in an agreement in line with the base rates under the award in that regard.
THE COMMISSIONER: What would it mean for example … if the loading is actually specified at these money amounts rather than, say, percentage amounts, that the money value of these would not necessarily keep pace with adjustments in the hourly rate of pay. They would in effect begin to fall backwards.
MS GRANT: Would I be able to provide further submissions on that point?”
[39] On 17 May 2010, Ms Ryan submitted that “with the increase in the national minimum wage the rates in the award would also – if they needed to increase would do so in accordance with that, but the difference between the loaded and the unloaded rates would always remain at 12 per cent to adequately compensate”. If this is the intended effect of the provisions, it is not included in the Agreement itself and no undertaking has been given to that effect.
[40] As to public holidays, the Agreement provides at cl.11 that permanent employees are entitled to payment if not required to work on a public holiday where their regular rostered hours fall on such public holiday. Employees who are not permanent employees do not received any amounts additional to those that ordinarily apply for work performed on a public holiday. On 3 May 2010, Ms Grant submitted that the rates in Schedule A of the Agreement load in an average of four public holidays worked; she submitted this average had been based on the “current work patterns” of all employees. The current work patterns of the four part-time employees in connection with public holidays do not appear to be relevant to an assessment of the Agreement in overall terms. On 17 May 2010, Ms Ryan, on the other hand, submitted the “the employees do not currently and never have worked the public holidays” and that “allowance was made” for penalties on four public holidays over the year. There is an unresolved tension in the submissions made by Enterprise Initiatives in this respect. In any event, there are more than four public holidays each year.
[41] Lastly, I note that cl.13 of the Agreement deals with annual leave. Enterprise Initiatives made submissions on 17 May 2010 to the effect that the annual leave provisions as they concern cashing-out were not problematic when considered in terms of the National Employment Standards and the reference instruments – which I accept appears to be the case. Despite this submission, the written undertakings now propose that cl.13.3 and cl.13.4 (which deal with cashing-out) would be “void and of no effect”. The difference in approach between the submissions and the subsequent, proposed undertaking has not otherwise been addressed.
[42] The submissions advanced on behalf of the applicant addressed a range of other issues going to the assessment of the Agreement for the purposes of the better off overall test. Further, the applicant proposed written undertakings concerning various aspects of the Agreement. In view of my findings concerning the matters addressed above, it is, however, unnecessary to further consider the better off overall test and the proposed undertakings.
Conclusion
[43] I have not been satisfied the group of employees proposed to be covered by the Agreement has been fairly chosen or that the Agreement could be considered to have been genuinely agreed. I would dismiss the application for that reason. In any event, on what has been put before Fair Work Australia, I could not be satisfied that the better off overall test has been met.
[44] I decline to approve the agreement.
COMMISSIONER
Appearances:
A. Grant, solicitor and P. Ryan, solicitor, for the applicant.
Hearing details:
Sydney
2010
May 3, 17.
Final written submissions:
25 May 2010
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