Melchor Contracting Pty Ltd

[2017] FWCA 3613

[2017] FWCA 3613

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Melchor Contracting Pty Ltd
(AG2017/755)

MELCHOR CIVIL BASE ENTERPRISE AGREEMENT 2017

Building, metal and civil construction industries
COMMISSIONER GREGORY	MELBOURNE, 11 JULY 2017

Application for approval of the Melchor Civil Base Enterprise Agreement 2017.

Introduction

[1] This decision deals with an application for approval of an enterprise agreement known as the Melchor Civil Base Enterprise Agreement 2017. The application is made under s.185 of the Fair Work Act 2009 (Cth) (“the Act”) by the employer, Melchor Contracting Pty Ltd (“Melchor”). It is a single enterprise agreement.

[2] The documentation provided by Melchor indicates that at the time of making the application the proposed Agreement was intended to cover 4 employees located in Western Australia. It also indicated that each of the employees had nominated as an employee bargaining representative. There was no Union bargaining representative.

[3] After reviewing the application and the terms and conditions contained in the proposed Agreement, together with the Employer’s F17 Statutory Declaration, the Commission sought clarification from Melchor about certain aspects of the proposed Agreement. The Commission also had regard to a range of issues that were raised in correspondence by the Construction, Forestry, Mining and Energy Union. Melchor responded by indicating that it was prepared to provide certain undertakings about matters that had been raised. However, after further consideration the Commission sent correspondence to the Applicant’s representative highlighting various issues about which additional clarification was sought, and indicating that the matter would now be set down for hearing to enable further submissions and evidence to be provided in support of the application.

[4] Mr Steven Scott from Strategic Human Resources was given permission to appear on behalf of the Applicant under s.596(2)(a) of the Act as the matter involves a degree of complexity and his involvement might enable it to be dealt with more efficiently. Mr Scott appeared together with Ms Linda Devereux, the Applicant’s Corporate Services Manager, and Mr Dylan Ogilvie, the Civil Operations Manager. Mr Scott provided additional oral submissions in the hearing in support of the application. Some additional documentation was also provided in advance of the hearing, and additional materials were subsequently provided after the hearing as a consequence of issues raised in the proceedings.

Relevant Legislation

[5] Section 186(1) of the Act requires that the Commission must approve an Agreement if it is satisfied that each of the various requirements in ss.186 and 187 are met. Section 186(2)(d) requires that the Commission must be satisfied the Agreement passes the “better off overall test.” The test is set out in s.193(1) in the following terms:

“193 Passing the better off overall test

When a non greenfields agreement passes the better off overall test

(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.” 1

[6] It is well established that the application of the test requires identification of terms in the proposed Agreement that are more beneficial, and those which are less beneficial, with an overall assessment then being made about whether the employees would be “better off overall” under the terms and conditions contained in the Agreement, compared to those in the underlying Award. In this case the Applicant contends that the relevant Awards for the purpose of the assessment are the Building and Construction General On – site Award 2010 (“Building Award”) 2 and the Plumbing and Fire Sprinklers Award 2010 (“Plumbing Award”).3 Neither of the Awards are incorporated into the Agreement.

Consideration

[7] As indicated at the outset, after reviewing the application and the terms and conditions contained in the proposed Agreement, the Commission raised various issues with the Applicant for the purpose of seeking further clarification about those matters. The following sub paragraphs deal with each of those issues and the responses provided by the Applicant’s representative.

[8] Assignment specific conditions – clause 5 provides that the Agreement applies to all work performed by employees of Melchor within Australia “while they are engaged in classifications contained in this Agreement.” However, sub clause 5.2 continues to indicate that employees may be required to work at locations under different terms and conditions of employment to those contained in the Agreement. It continues to indicate that, “[i]n such cases the Company will specify those changed terms and conditions in writing to that employee in the form of a Project Assignment letter or another enterprise agreement where permitted by law. The Company will ensure that those changed terms and conditions of employment are no less favourable overall than those contained in this Agreement.” In addition, Melchor has previously proposed an undertaking which confirms that any different rates of pay and/or terms and conditions of employment provided in the context of a Project Assignment would be overall no less favourable than those contained in the Agreement.

[9] Melchor also provided additional oral submissions in the hearing about these provisions and indicated that it did so, having regard to the requirements in s.194(ba) of the Act, which provide that “a term that provides a method by which an employee or employer may elect (unilaterally or otherwise) not to be covered by the agreement” 4 is an unlawful term. It indicated in its submissions that the Agreement is intended to be “a base agreement”5 and sets out the minimum entitlements that could apply to any employee covered by the Agreement. However, when an employee is sent on a project assignment as a distant worker they are then entitled to receive terms and conditions of employment that are in excess of the minimum contained in the Agreement. However, the terms and conditions contained in the Agreement would remain as part of the employee’s contract of employment and the assignment conditions would exist over and above those set out in the Agreement. Its submissions continued to indicate that “Where the assignment conditions are silent, the agreement applies.”6 It was indicated, in conclusion, that rather than being an opt out provision, which s.194 is designed to prevent, the conditions set out in sub clause 5.2 of the Agreement can more properly be described as “jump up provisions.”7

[10] The Commission was also provided with a series of spreadsheets in advance of the hearing, detailing a comparison between the entitlements that would apply under the Agreement at each classification, compared with the entitlements that would be received under the relevant Awards. This was done in respect of both the “yard based” employees and those engaged as “fixed task project employees.” The comparisons indicate in each case that employees would be better off under the terms and conditions contained in the proposed Agreement.

[11] Following the hearing the Commission was also provided with further documentation in regard to the plumber classification and how that rate sits with the relevant classification in the Plumbing Award. It again included some spreadsheet assessments of comparative earnings under the terms and conditions contained in the Agreement and those contained in the Award. Those assessments indicate that the proposed rates in the Agreement are in excess of those contained in the Award. It is also noted that the Agreement does not provide for a tool allowance on the basis that all tools are supplied.

[12] Allowances – the Agreement does not provide for specific allowances, but instead loads all allowances into the wage rate. The Commission accordingly sought clarification about whether employees in all classifications would be better off under the Agreement than under the terms and conditions contained in the underlying Awards on the basis of this arrangement.

[13] Melchor submits, in response, that the spreadsheets provided in conjunction with the revised F17 Employer’s Statutory Declaration are intended to demonstrate satisfaction with the requirements of the “better off overall test.” In its submission Appendix 3 demonstrates that an employee employed under the terms and conditions set out in the Agreement would be better off than an employee working under the terms and conditions contained in the Award. It also indicated in its submissions that employees are compensated for any disabilities that occur on site under the project assignment conditions.

[14] Permanent night shift – it was noted that the Agreement provides a night shift loading but does not provide for further arrangements in regard to permanent night shift work. The Commission accordingly sought clarification about whether it was possible for employees to work a permanent night shift.

[15] Melchor indicated in response that it was most unusual for a permanent night shift to be worked by civil contractors and its Operations Manager could not recall any circumstances in which a permanent night shift was worked. However, it was possible that a rotating afternoon and night shift could be worked and any conditions attaching to such arrangements would be contained in the project assignment conditions. The Agreement simply confirmed that if shift work was to be worked then as a minimum a 15 per cent shift loading would apply.

[16] Industry Specific Redundancy – the Commission noted that the Agreement makes provision for the application of the redundancy entitlements contained in the National Employment Standards, rather than those in the industry specific scheme contained in the underlying Building Award. It was suggested that this could disadvantage some employees, and it referred, in particular, to the example of an employee made redundant with less than 12 months service.

[17] Melchor again made reference in its submissions to the details contained in Appendix 3 and 4 that are attached to its revised F17 and submits that this again demonstrates that employees are better off under the Agreement than under the Award.

[18] Award comparison – it was noted that the Agreement indicates that the Building Award is the relevant Award in terms of the wage rates in each classification and the application of the “better off overall” test. However, the Commission indicated that it appeared that the Agreement also includes classifications that would be covered by the Plumbing Award, the Mobile Crane Hiring Award 2010, 8 and the Electrical Power Industry Award 2010,9 and that potentially the rates in the Agreement fell below some of these Award classification rates. It was also possible that the conditions in the Agreement would be less beneficial than the conditions contained in those other Awards.

[19] Melchor indicated, in response, that the classifications in the Agreement were intended to “cover the field,” 10 regardless of what work it was engaged to do. It continued to submit that the business is not involved in the mobile crane hiring industry or the electrical contracting industry, and the Building Award covers all the classifications that are contained in the Agreement, with the exception of the plumbing classifications. It subsequently provided a further written submission setting out its assessment of the earnings of the plumber classification under the Agreement with the entitlements contained in the Plumbing Award. It submits that this demonstrates that the better off overall test has been satisfied for this classification.

[20] Melchor has now provided a series of written undertakings. After reviewing the terms of those undertakings I am satisfied that they will not cause financial detriment to any employee to be covered, or result in substantial changes to the Agreement. The undertakings, contained in Annexure A, are accordingly accepted and in accordance with s.191 of the Act will now be taken to be a term of the Agreement.

[21] It is also noted that the terms of the Consultation clause in clause 13 of the Agreement do not comply with the current statutory requirements in that they do not contain specific reference to “a change to their regular roster or ordinary hours of work.” Therefore, in accordance with s.205(2) of the Act are all the model consultation term prescribed by the Fair Work Regulations2009 (Cth) is instead taken to be a term of the agreement.

Conclusion

[22] I am otherwise satisfied that each of the requirements contained in ss.186, 187 and 190 of the Act, as are relevant to this application for approval, have been met.

[23] The Agreement is approved and in accordance with s.54 of the Act will operate from 18 July 2017. The nominal expiry date of the Agreement is 17 July 2021.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

<Price code G, AE424862  PR594399>

ANNEXURE A

 1   Fair Work Act 2009 (Cth) s 193.

 2   MA000020.

 3   MA000036.

 4   Fair Work Act 2009 (Cth) s 194(ba).

 5   Transcript at PN14.

 6   Transcript at PN16.

 7   Transcript at PN15.

 8   MA000032.

 9   MA000088.

 10   Transcript at PN37.