Melbourne Recycling Centres Pty Ltd

[2015] FWCA 3771

[2015] FWCA 3771

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Melbourne Recycling Centres Pty Ltd
(AG2015/2137)

MELBOURNE RECYCLING CENTRES PTY LTD WASTE MANAGEMENT AGREEMENT 2014

Waste management industry
COMMISSIONER GREGORY	MELBOURNE, 10 JUNE 2015

Application for approval of the Melbourne Recycling Centres Pty Ltd Waste Management Agreement 2014.

Introduction

[1] Melbourne Recycling Centres Pty Ltd (“Melbourne Recycling”) has made application for approval of the Melbourne Recycling Centres Pty Ltd Waste Management Enterprise Agreement 2014 (the Agreement). Following receipt of the application the Australian Workers’ Union (“the AWU”) advised the Commission it sought to be heard in regard to the matter. The application was accordingly listed for hearing on 8 April 2015.

[2] Melbourne Recycling submitted at the outset in those proceedings that the AWU should not be heard because it was not a bargaining representative for any of the employees to be covered by the proposed Agreement. The Commission accordingly decided the AWU should be precluded from making submissions about the application until such time as the issue concerning its right to be heard had been determined.

[3] A decision in regard to that matter was subsequently handed down on 14 May 2015. It determined, in summary, that the AWU was at the relevant time a bargaining representative of employees to be covered, and it was therefore appropriate for it to be heard about the application for approval of the Agreement. The matter was accordingly listed for hearing again on 22 May 2015.

[4] Mr Colin Milne, who was previously granted leave under s.596 to appear on behalf of Melbourne Recycling, continued to appear on its behalf. Mr Craig Winter appeared on behalf of the AWU.

The Evidence and Submissions

[5] The Form F16 - Application for Approval of an Enterprise Agreement, lodged by Melbourne Recycling, indicates it is involved in the waste management collection, recycling and management industry. The Form F17 - Employer’s Statutory Declaration, (Form F17), also indicates 29 employees are intended to be covered by the proposed Agreement, with 8 engaged on a casual basis. It also indicates the Modern Award that now covers the Employer and the Employees is the Waste Management Award 2010[MA000043] (“the Award”).

[6] The Form F17 also indicates, at Q.3.4, that the following terms and conditions in the proposed Agreement are more beneficial than those contained in the underlying Award:

“Clause 17 – Wage Rates and increases
Clause 32 – Protective Clothing
Clause 37 – Long Service Leave explanation
Clause 39 – Heat Policy.”

[7] It also indicates in response to Q.3.5 in the Form F17 that there are no terms in the proposed Agreement that are less beneficial than those in the Award.

[8] Melbourne Recycling obviously supports approval of the proposed Agreement. However, the AWU submits it should not be approved, in essence, because it does not satisfy the requirements of the “better off overall” test. Neither party provided evidence in support of their respective positions, however, the AWU provided a brief written submission, (marked as exhibit “AWU 1”). It also made further oral submissions in opposing the application. Melbourne Recycling also provided further oral submissions in response to those of the AWU.

[9] As indicated, the AWU submits the proposed Agreement fails to satisfy the requirements of the “better off overall” test. It also submits the Commission should not accept any undertakings that might be offered, and relies on the provisions in s.190 in support of this submission. It provides, in summary, that the Commission may only accept a written undertaking if satisfied the effect is not likely to cause financial detriment to any employee, or result in substantial changes to the agreement. The AWU also relies on the decision in National Protection Group t/as NPG Australia re the National Protection Group Australia – Enterprise Agreement [2010] FWA 9351 1 in support of these submissions.

[10] The AWU also submits that while the Commission found in the decision handed down on 14 May 2015 that it was a bargaining representative for the employees to be covered by the proposed Agreement, it has not been part of any of the negotiations involved in making the Agreement.

[11] The AWU also provided various responses to questions raised by the Commission. It submits, firstly, that the pay rates in the Agreement are the same as those in the underlying Award 2, and will be less than those in the Award when the Commission hands down its next Minimum Wage Review decision. It also submits it is unclear about what mechanism is provided in regard to wage adjustments.

[12] The AWU also makes reference to the circumstances of casual employees under the terms contained in the proposed Agreement, and submits there is a reduction in the casual loading when employees engaged on casual basis work overtime. It also submits the casual conversion provisions have been diminished in that the onus in the Agreement is on the employee, rather than the employer, to initiate discussion about the option of casual conversion 3.

[13] The written submission from the AWU also raises a number of additional matters. In particular, it submits the provisions to do with the flexibility arrangements, consultation and dispute resolution do not comply with the requirements of the Act. It also submits the higher duties provisions are inferior to those contained in the Award, and the Agreement does not provide for some of the allowances contained in the Award. It also submits the provisions in the Award providing for RDO’s do not appear in the Agreement. 4

[14] The Commission also raised an issue about provisions in the Agreement which enable Melbourne Recycling “in unusual circumstances altering on a daily basis, start and finish times.” 5 The AWU agreed, in response, this provision is not contained in the underlying Award.

[15] Melbourne Recycling provided various oral submissions in response. It submits at the outset that the original application and attached Agreement should, in its words, “be amended” 6 because the Agreement did not contain a signature page with the address of the signatories, as required by the Fair Work Regulations.

[16] It next refers to the Objects contained in s.3 of the Act, and the particular provisions in s.171, noting the emphasis on productivity through an emphasis on enterprise level bargaining, as well as the emphasis on small and medium-sized businesses. In this context it submits Melbourne Recycling is a small business 7 and this should be taken into account in not adopting an overly technical approach to consideration of the present application.

[17] Melbourne Recycling also referred to the submissions by the AWU about the Union being a bargaining representative on behalf of employees to be covered by the Agreement. It submits, in response, it has not been provided at any time with notice that the AWU was to be a bargaining representative for any of the employees.

[18] The Commission also raised a number of issues with Melbourne Recycling in order to clarify the intent of the Agreement. The first matter concerned the overtime entitlement of casual employees and, in particular, the 10% loading that exists in the Award. This entitlement did not appear to be provided for in the Agreement. Melbourne Recycling indicated, in response, it proposed to deal with this matter by way of an undertaking. 8

[19] The next matter concerned the provisions in the Agreement to do with casual conversion. The Commission suggested there appears to be some confusion about the intent of the provisions in sub clause 13.2. It refers, on the one hand, to a casual employee who does not within 4 weeks of completing 12 months employment request to convert from casual to full or part-time being deemed to have elected not to convert. However, the Agreement continues to state, “The employee retains the right to request to convert to full time employment during the course of his/her her employment after the initial 12 month period.” 9 Melbourne Recycling submits, in response, this actually provides a benefit to casual employees in that it enables them to request to convert at any time after an initial period of employment has been completed.

[20] The next matter raised by the Commission concerns the rates of pay in the Agreement, and the entitlements in the Award to an industry allowance of 11% calculated on what is described as “the standard rate,” being the Level 6 rate. 10 This entitlement did not appear to be reflected in the Agreement. Melbourne Recycling again indicated this was an “oversight,” and was also proposed to be dealt with by way of an undertaking.11

[21] The next matter concerned the leading hand allowance, and the failure of the Agreement to replicate this Award entitlement. Melbourne Recycling indicated in response there are no leading hands engaged, and there would not be at any time in the future. 12

[22] The next matter deals with the ability to change start times. Melbourne Recycling indicated this was a matter that had been canvassed in the negotiations, and the ability to enable changes to start times was proposed to enable changes in circumstances involving days of extreme heat.

[23] The next matter concerned the wage increases provided for under the terms of Agreement. Melbourne Recycling submits there is no requirement for an Agreement to have a pay increase applying from the date of approval of the Agreement. However, it submits the Agreement provides for Minimum Wage Review increases to be passed on from 1 July in each year because of the provisions in sub clause 17.1 which state, in part:

“However should the minimum weekly wage for any of the above levels at any time fall below the comparable rate in the relevant Award then the Award rate shall apply. For the purposes of determining whether the Award rate exceeds the rate in this Agreement there shall be a comparison of the Award Minimum Weekly Wage with be Minimum Weekly Wage under this Agreement at the operative date of the Award increase. To avoid any doubt the intention of this provision is twofold; (1) to ensure that employees rates of pay are never less than the relevant Award for the life of this agreement, and (2) to ensure that employees do not ever have an entitlement to increases under both the Award and this agreement.”

[24] Sub clause 17.1 also states under the heading, “Increases during term of agreement:”

“The above wage rates will be adjusted on the anniversary date of this agreement in years 2015, 2016, 2017 and 2018 by: Australian Bureau of Statistics published CPI index capped at 3% per annum.”

[25] Melbourne Recycling also submits that given the delay in the Agreement being approved, it is proposed that once approved the Agreement would be deemed to take effect from the date specified, being 1 December 2014, and employees would then get an increase under sub clause 17.1 on 1 December 2015. As indicated, they would also be entitled to an increase from 1 July 2015 as a result of any Minimum Wage Review increase handed down by the Minimum Wage Review panel.

[26] A further issue was also raised about the entitlement of shift workers, however, Melbourne Recycling indicated in response that no shift workers are currently employed, and there was no intention to introduce shift work in the future. 13

[27] Melbourne Recycling submits, in conclusion, that there is no financial disadvantage for its employees under the terms of the Agreement, and the increases in wage rates will “move slowly but surely” 14 to provide a better outcome for the employees when compared to the Award entitlements. It also submits the undertakings being proposed do not act to substantially modify the terms of the Agreement.

[28] However, the AWU in closing submits the wage increases will only flow to employees at some point in the future. It also takes issue with the submission that Melbourne Recycling is a small business, and submits instead it is part of a larger national group. 15 It also highlights issues to do with the entitlements for work on weekends, and the provisions concerning protective clothing for casual employees, particularly given the nature of the working environment.

Consideration

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

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

Section 193 concludes by stating:

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

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

[30] I have examined in detail the provisions contained in the proposed Agreement and those in the Waste Management Industry Award 2010. The Agreement is indicated at the outset to be a stand-alone Agreement and, accordingly, applies to the exclusion of all other Awards and Agreements. As the AWU highlights in its submissions it is also evident that the Agreement contains little, if anything, by way of benefits or entitlements over and above those contained in the Award. Indeed, as a result of perhaps inadvertence or omission the Agreement contains some conditions that are inferior to those in the Award.

[31] One area of particular focus in the submissions of both parties concerns the pay rates in the Agreement. Again, as the AWU correctly points out the rates of pay are the same as those currently provided for in the Award. However, Melbourne Recycling submits in response that the provisions in the Agreement dealing with increases to wage rates are one aspect, in particular, that provide a better financial outcome when compared to the Award.

[32] There are two aspects to these provisions and they have already been referred to at an earlier part of this decision. Firstly, sub clause 17.1 provides the rates of pay in the Agreement shall not, at any time, fall below those contained in the Award and, if this does occur, the Award rates will instead apply. This outcome simply reflects the scheme of the Act in guaranteeing the rates of pay in an Agreement approved by the Commission cannot fall below those contained in the relevant Award. It also means, given that the rates in the Award and the Agreement are the same at this point, that the rates in the Agreement will increase from July 2015 by the amount of the increase handed down in the 2015 Minimum Wage Review decision.

[33] Secondly, the Agreement also provides for wage rates to be adjusted on the anniversary date of the Agreement. Melbourne Recycling in its submissions confirms that the initial anniversary date will be 1 December 2015, regardless of the date of approval of the Agreement by the Commission, because of the provision in Clause 2 of the Agreement: “The Commencement and the Period of Operation.” This means that in 2015, if the Agreement is approved, it will provide employees with two wage increases; the first in July 2015, reflecting the amount of the increase handed down by the Minimum Wage Review panel, and the second on 1 December 2015, based on the relevant movement in the CPI index capped at a maximum amount of 3%. I am satisfied, in response that this will provide a significant benefit to the employees, over and above that provided for in the Award, in the event that the Agreement is approved.

[34] In dealing with the issue of pay rates it is also noted that the Agreement does not currently reflect the appropriate calculation of the all-purpose industry allowance, however, Melbourne Recycling has proposed a further undertaking to deal with this discrepancy.

[35] A range of other issues have been highlighted in the submissions. They are referred to now in no particular order. The AWU has made submissions about the casual conversion entitlement. This is significant because a number of employees to be covered by the proposed Agreement are indicated to be employed on a casual basis. The provisions contained in sub clause 13.2 of the Agreement do appear, on the one hand, to be inferior to those in the Award because they don’t reflect the obligation in sub clause 15.2 of the Award requiring Melbourne Recycling to give a casual employee notice in writing of the right to elect to convert. However, on the other hand, the Agreement provides an ongoing entitlement to employees to request to convert at any time in the future after the entitlement has initially accrued. On balance, this is a neutral consideration in terms of the present application.

[36] There is a further issue to do with casual employment in that the Agreement does not contain the penalty rate entitlements that apply to casual employees performing overtime work. However, Melbourne Recycling has again proposed an undertaking in response to this deficiency.

[37] The AWU have also raised differences between the Award and Agreement entitlements in regard to work performed on Saturday and Sunday. Both seem to contain the same penalty rate entitlements, as well as a minimum four hour engagement requirement. However, the Agreement provides that if an employee leaves the site prior to the completion of 4 hours work she/he will only be entitled to payment for the actual hours of work performed. I am satisfied, in response that this represents only a minor difference between the entitlements contained in the Award and the Agreement.

[38] The AWU has also raised an issue to do with Clause 32 “Protective Clothing” in the Agreement, which states that employees will be provided with certain protective clothing after they have completed a period of 4 weeks satisfactory service. Casual employees are excluded from this entitlement. The AWU submits this is significant because of the difficult conditions in which the work is performed. These matters are not dealt with in the Waste Management Award 2010. While the concerns of the AWU can be understood, the provisions in the Agreement can also be seen to provide some form of limited benefit to the employees, given they are not replicated in the Award. Regardless, it is to be presumed Melbourne Recycling ensures, at all times, that all employees are provided with appropriate protective clothing and other necessary safety equipment.

[39] As indicated, Melbourne Recycling also proposes to provide various undertakings in support of the application for approval. They deal with the following issues.

● Clause 7 – “Consultation” – the undertaking in this case proposes to deal with the fact the existing clause does not reflect the current legislative requirements. However, it appears to propose additional wording in regard to sub clauses that do not actually appear to exist in the Agreement. In any case a deficiency in the Agreement in terms of the Consultation Clause can be dealt with by making the model clause a term of the Agreement.

● Clause 8 – “Dispute Resolution” – the undertaking in this case intends to remedy the omission of the reference to a dispute arising under the National Employment Standards being a matter that can be dealt with by the dispute resolution procedure.

● Clause 12 – “Casual Employment” – this undertaking responds to the fact the proposed Agreement does not contain the additional penalty rate provided for casual employees working overtime in the Award.

● Clause 17.1 – “Adult Rates” – the undertaking in this case intends to deal with the fact the wage rates in the proposed Agreement do not contain the correct calculation of the additional industry allowance.

● Clause 21 – “Starting and Finishing Times” – the undertaking in this case intends to provide that variations to starting and finishing times can only occur by agreement between Melbourne Recycling and the employees involved.

[40] In regard to the proposed undertakings the AWU refers to the decision of Commissioner Lewin in the National Protection Group T/A NPG Australia, which dealt with an application for approval of the National Protection Group Australia – Enterprise Agreement 2010. It referred, in particular, to extracts from the decision commencing at [70] when Commissioner Lewin stated:

“[70] Section 190(3) of the Act makes it clear that the Tribunal’s jurisdiction and power to approve an Agreement which does not pass the better off overall test is limited. Among other things, the Tribunal may only accept an undertaking if it is satisfied that the undertaking is not likely to result in substantial changes to the Agreement. Given the extent and scope of the proposed undertakings and the abovementioned effects of the form of the proposed undertakings, I cannot be satisfied that the undertakings are not likely to lead to substantial changes to the terms of the Agreement. On the contrary, I consider that for these same considerations the proposed undertakings would certainly lead to substantial changes to the terms of the Agreement.”

[41] Commissioner Lewin continued to indicate he was satisfied the undertakings would result in both a financial detriment to the employees, as well as making substantial changes to the Agreement. He was, therefore, not prepared to approve the Agreement on the basis of those undertakings, leaving aside any requirements about whether the Agreement satisfied the requirements of the “better off overall” test.

[42] The decision indicates that various communications were exchanged between the Applicant’s representative and the Commission prior to the application being determined. At one point the Applicant conceded that the Agreement did not pass the better off overall test and, accordingly, proposed a range of rate increases. It also proposed that it would not seek to rely upon certain provisions in the Agreement. A further undertaking was then proposed in the following terms:

“It is the intention of the parties, that this Agreement to the extent permitted by law will regulate the terms and conditions of employment of all the “employees” as cited in Clause 10 of this Agreement, to the exclusion of any Award or Industrial Agreement.” 16

[43] An accompanying explanatory letter forwarded to the Commission indicated that the Applicant intended by this undertaking that it would simply not refer or rely upon any clauses in the Agreement to the extent they were not permitted by law.

[44] I have considered the circumstances involved in the matter before Commissioner Lewin. I am satisfied, in response, that they are very different to those involved in the present matter. Firstly, in the proceedings before Commissioner Lewin the Applicant initially conceded the proposed Agreement did not meet the requirements of the “better off overall” test, and sought to provide a range of undertakings in response to try and remedy this deficiency. No such concession has been made in the present matter, and any failure to satisfy the requirements of the “better off overall” test remains to be determined.

[45] The Applicant then proposed that the Agreement would not have application, or not be relied on, to the extent its provisions were not permitted by law. As Commissioner Lewin determined, in response, this created uncertainty and acted to “...create a vacuum, such that those terms would not operate and nothing would replace them.” 17 Again, that situation is very different to the circumstances involved in this matter.

[46] Having considered the nature of the undertakings now being proposed I am satisfied, firstly, that they will not result in financial detriment to the employees to be covered by the proposed Agreement. To the contrary, they generally provide additional entitlements to the extent they deal with monetary matters.

[47] I am also satisfied they do not make substantial changes to the Agreement. While it is acknowledged they do make changes to the terms of the Agreement, for the most part the changes act to remedy mistakes or omissions between the terms contained in the Agreement and those contained in the underlying Award, or between the terms of the Agreement and the relevant statutory obligations. The changes in regard to clause 21 are perhaps one exception, but have been proposed instead to provide a better balance between the rights of the employer and the rights of the employees.

[48] I am therefore prepared to accept the undertakings offered by Melbourne Recycling in considering this application for approval. I am also prepared to approve the Agreement. In coming to this decision I accept the AWU’s submissions that the Agreement provides little by way of benefit, over and above anything contained in the underlying Waste Management Award 2010. However, I am also satisfied it contains little by way of detriment when compared to the Award. I have also had particular regard to the wage adjustments provided for in the Agreement. On the one hand they do simply confirm the statutory requirement that the rates in the Agreement cannot fall below those contained in the relevant Award. However, they also provide for increases of up to 3% to be provided from 1 December each year. I am satisfied this provides a significant benefit to the employees over and above the Modern Award entitlement.

[49] The Commission also notes that Melbourne Recycling has now provided a signature page that complies with the requirements of s.185(2)(a) of the Act and Regulation 2.06A.

[50] It is also noted in conclusion that Melbourne Recycling provided correspondence to the Commission after the hearing confirming its operations to do not include any shiftwork arrangements, and will not in the future. It also indicated that the CPI indicator referred to in clause 17 of the Agreement is the Consumer Price Index, Australia (cat. no. 6401.0).

[51] As indicated, the Agreement is approved. The undertakings contained in the letter dated 22 May 2015 are also accepted and will be taken to be a term of the Agreement. A copy of that letter is attached to this decision. Pursuant to s.205(2) of the Act, the model consultation term prescribed by the Fair Work Regulations 2009 is also taken to be a term of the Agreement. I am also satisfied that each of the requirements of ss. 186, 187 and 188, as are relevant to this application for approval, have been met. The Agreement is approved and, in accordance with s.54, will operate from 17 June 2015. The nominal expiry date of the agreement is 30 November 2018.

COMMISSIONER

 1   AWU Submission at paragraph 27

 2   Ibid at paragraph 10

 3   Ibid at paragraphs [8-9]

 4   Ibid at paragraphs [5-6],[11-12]

 5   Proposed Agreement at clause 21

 6   Ibid at PN 61

 7   Ibid at PN 68

 8   Ibid at PN [116-117]

 9   Ibid at PN [119-120]

 10   Ibid at PN 127

 11   Ibid at PN 130

 12   Ibid at PN 148

 13   Ibid at PN 205

 14   Ibid at PN 216

 15   Ibid at PN 242

 16   [2010] FWA 9351 at paragraph 67

 17   Ibid at paragraph 68

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