Mining Pro Services Pty Ltd
[2022] FWCA 499
•15 FEBRUARY 2022
| [2022] FWCA 499 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
Mining Pro Services Pty Ltd
(AG2021/8402)
Mining Pro Services Enterprise Agreement 2021
| Coal industry | |
| COMMISSIONER SIMPSON | BRISBANE, 15 FEBRUARY 2022 |
Application for approval of the Mining Pro Services Enterprise Agreement 2021
On 16 November 2021, Mining Pro Services Pty Limited (the Applicant/Mining Pro) filed an application with the Fair Work Commission (the Commission) under s.185 of the Fair Work Act2009 (the Act) for the approval of the Mining Pro Services Enterprise Agreement 2021 (the Agreement).
On 24 November 2021, the Construction, Forestry, Maritime, Mining and Energy Union (the CFMMEU) advised the Commission that it wished to be heard on the matter. The CFMMEU did not contend it was a bargaining representative for the employees who voted on the Agreement at the time the Agreement was made, however filed submissions setting out basis for its application to be heard.
At a Directions Hearing on 16 December 2021, the CFMMEU was granted permission to be heard and Directions were issued for the CFMMEU to file submissions by 5pm Friday, 24 December 2021, and for the Applicant file its submissions by 5pm Monday, 17 January 2022. Both the CFMMEU and the Applicant filed submissions in accordance with the Directions.
The CFMMEU opposes the Application as they believe the Agreement does not pass the better off overall test (BOOT) as is required by s.186(2)(d) of the Act.
On 4 February 2021 the Applicant advised the Commission that the undertakings that were offered as described in its submissions filed on 17 January 2022, had been provided to all bargaining representatives. On 11 February 2021 the Applicant filed with the Commission signed undertakings.
SUBMISSIONS CONCERNING THE BOOT
The CFMMEU submitted that Clause 3 of the Agreement provides that the Agreement covers employees of the Applicant who are covered by the classifications set out in Schedule A of the Award and employed in the classifications set out in the Agreement. Clause 16.11 of the Agreement provides for an allowance (MMSA) of $350 to be paid to the Applicant’s employees who work at the Middlemount Mine or Middlemount Coal Preparation Plant. As the Agreement covers employees at sites other than at the Middlemount Mine or Middlemount Coal Preparation Plant, the CFMMEU contend that the BOOT must be conducted with respect to employees that would not benefit from the MMSA.
Casual employment
The CFMMEU submitted that the introduction of casual employment for production and engineering employees covered by the Black Coal Mining Industry Award 2010 (the Award), (whether actual or prospective) is a relevant consideration that the Commission is bound to consider when assessing section 193(1) of the Act.
It was submitted by the CFMMEU that Clause 10.1(c) of the Award precludes an employer engaging an individual covered by the Award as a casual employee in the classifications outlined in Schedule A to the Award. Schedule A to the Award outlines the production and engineering classifications. Ordinarily, one would assess the BOOT for a casual employee by reference to casual employment under both the agreement and the Award. However, in the case of the Award, one cannot compare ‘like for like’ because the Award does not permit the use of casual employment for production and engineering employees. In the circumstances, the appropriate comparator for casual employment under the Agreement is full time or part-time employment under the Award.
The CFMMEU cited Construction, Forestry, Mining and Energy Union v SESLS Industrial Pty Ltd,[1] where a Full Bench of the Commission took note of the 25% loading provided to casual employees under the Award when assessing the BOOT with respect to an agreement that provided for casual employment in production and engineering classifications.
While not accepting that SESLS was correctly decided, the CFMMEU submitted that if the Commission follows SESLS, it must holistically consider how casual loading operates in the Award. Under the Award, casual loading is applied to the minimum rate to obtain the minimum casual rate; as such, casual loading compounds with all other loadings and penalties in the Award.
The Applicant submitted that the Award does not provide for employees employed in classifications in Schedule A of the Award to be employed on a casual basis, but rather the Award provides for employees employed in staff classifications in Schedule B to be employed on a casual basis. The Applicant submitted that nonetheless, the Full Bench of the Commission has accepted that an enterprise agreement can provide for an employer in the black coal mining industry to employ employees in classifications in Schedule A of the Award on a casual basis, and that payment of a 25% casual loading to these employees in an enterprise agreement is a relevant factor to be taken into account for the purpose of determining whether employees are better off overall under the terms of an enterprise agreement when compared to the Award.
The Applicant submitted that the nature of the CFMMEU’s objection in this instance is that the casual loading payable to employees employed in classifications in Schedule B of the Award is applied to the minimum hourly rate in the Award with loadings and penalties to be determined having regard to that rate. The Applicant submitted that this submission appears to adopt comments made by the Full Bench in the context of award modernisation proceedings that weekend penalties and shift loadings in the Award ought to be based on the rate paid to casual employees inclusive of the 25% loading. Further, the Applicant submitted that to the extent the submission suggests this is not how the Agreement operates, the submission is misplaced. The Agreement provisions with respect to the application of weekend penalty and shift loadings to minimum rates inclusive of the 25% loading are consistent with the views of the Full Bench.
The Applicant submitted that clause 1 of the Agreement defines the term “Casual Ordinary Hourly Rate” to be the ordinary hourly rate of pay for an employee inclusive of the 25% casual loading. Clauses 18.2 and 19.3 have effect so that weekend penalties and shift loadings are calculated on this “Casual Ordinary Hourly Rate”. As such, the Applicant contended that there is no difference that arises between the Award and the Agreement, and the Commission can be satisfied that this is not a relevant consideration in the circumstances.
I accept the Applicant’s submission that the Agreement will apply as contended for by the Applicant regarding the calculation of casual rates of pay, and is not a basis to be concerned that the Agreement does not satisfy the BOOT.
The interaction of shift loadings and weekend penalties for ordinary hours of work
The CFMMEU submitted that under the Award, shift loadings compounded with weekend loadings. The CFMMEU further provided that the below formula outlines the method for calculating the rate payable to employees working shift work on a weekend if the Award applies to their employment:
Award Weekend Shift Rate = Minimum rate (1+ Weekend Loading x Shift Loading)
Clause 18.1 of the Agreement outlines the loading payable to employees for working afternoon and rotating night shift or permanent night shift. Clause 18.1 of the Agreement provides:
| Afternoon and rotating night shifts | |
| Ordinary hours | 115% of the Ordinary Hourly Rate |
| Overtime hours 6 or 7-day roster | Overtime penalty plus 15% of the Ordinary Hourly Rate for time worked |
| All others | Overtime penalty rate |
| Permanent night shift | |
| Ordinary hours | 125% of the Ordinary Hourly Rate |
| Overtime hours 6 or 7-day roster | Overtime penalty plus 25% of the Ordinary Hourly Rate for time worked |
| All others | Overtime penalty rate |
Clause 1 of the Agreement defines Ordinary Hourly Rate as:
“the hourly rate of pay for ordinary hours of work up to an average of 35 hours per week across the Roster Cycle.”
The CFMMEU contended that considering the meaning of Ordinary Hourly Rate, the operation of clause 18.1 of the Agreement is ambiguous, and when construing an ambiguous agreement provision, evidence of what the employees were told pursuant to s.180(5) of the Act is of assistance.
The Applicant’s Form F17, filed in support of the Application, annexes a document that explains the terms and effects of the Agreement (Explanatory Document). The Explanatory Document was provided to employees during the access period and indicates how clause 18.1 is to operate. The Explanatory Document explains clause 18 of the Agreement in the following way:
“This effect of this term is to provide for shift loadings that are payable on top of an Employee’s base rate of pay.”
Clause 14 of the Agreement provides the pay rates applicable for each classification of an employee to whom the Agreement applies. The Explanatory Document explains clause 14 of the Agreement in the following way:
“The effect of this term is to set out the minimum ordinary hourly rate of pay for Employees covered by the Agreement. The minimum ordinary hourly rate will be the base from which shift loadings and penalties are calculated.”
Reading the above explanations, the CFMMEU submitted that it is clear that under the Agreement shift loading and weekend loading are applied to the minimum hourly rate on an accumulative basis rather than on a compounding basis. Further, the CFMMEU provided the below formula outlining the method for calculating the rate payable to employees working shift on a weekend if the Agreement applies to their employment:
Agreement Weekend Shift Rate = Minimum rate x (1+ Weekend Loading + Shift Loading)
In Annexure 1 to their submissions, the CFMMEU included a series of tables. The tables outlined the rates payable to casual and full-time Inexperienced Mineworkers under both the Agreement and the Award. The CFMMEU indicated that in tables 1 to 6, the Agreement fails the BOOT with respect to casual Inexperienced Mineworkers, and as outlined by tables 7 to 9, the Agreement fails the BOOT with respect to full-time Inexperienced Mineworkers working a roster that requires them to work permeant night shift on weekends.
The Applicant contended that the CFMMEU have identified an instance where the amounts paid to employees employed in the classification of Inexperienced Mineworker would not be better off under the Agreement when compared to the Award when working arrangements that require the payment of a shift loading on a weekend. The Applicant submitted that this arises as a result of the compounding nature of weekend penalty rates and shift loadings which have been the subject of comment by the Full Bench in award modernisation proceedings.
The Applicant submitted that the CFMMEU has provided the example of a 12-hour weekend permanent night shift roster worked by an Inexperienced Mineworker (which itself is unusual in the industry) where a $20.26 difference per week is said to arise under the Agreement when compared to the Award. The Applicant further provided that the matter put in issue is narrow, and the CFMMEU analysis is limited to instances where shift loadings are payable to an Inexperienced Mineworker for work performed in excess of 4 hours on a Saturday and work performed on a Sunday. The Applicant submitted that in every other instance, the rate paid to employees employed as Inexperienced Mineworkers under the Agreement exceeds the minimum rate payable under the Award. This is apparent from the ordinary hourly rate for an Inexperienced Mineworker under the Agreement being set at a rate which is 6.82% higher than the equivalent Award classification.
The Applicant submitted that the matter does not arise in respect of any other classification in the Agreement, as is apparent from the example modelling submitted in conjunction with the Applicant’s submissions.
The Applicant contended that the CFMMEU modelling in respect of Inexperienced Mineworkers employed on a casual basis assumes that such employees would also be entitled to receive a 25% loading on the minimum $25.51 ordinary hourly rate payable under the Award and that the resulting $27.25 ordinary hourly rate would then be used as the basis to calculate weekend penalties and shift loadings. The Applicant highlighted that this approach to presenting modelling has previously been rejected by the Commission in Ipsum Mining Pty Ltd [2021] FWCA 3672 at [41] where Deputy President Saunders found:
“The modelling undertaken by the CFMMEU […] compares a casual inexperienced mineworker employed outside the Southern Coalfield region under the BC Award and the Enterprise Agreement. I consider that analysis to be fundamentally flawed because it assumes that the hypothetical casual inexperienced mineworker would receive a 25% casual loading under the BC Award. But that is not the case. The BC Award does not contain any provisions relating to casual employees within the classifications in Schedule A to the BC Award, which includes inexperienced mineworkers. That is why the CFMMEU has, both in this case and the full bench decisions to which I have referred, proposed a comparison between a casual employee under the Enterprise Agreement and a full-time or part-time employee under the BC Award. A full-time or part-time inexperienced mineworker under the BC Award is not entitled to a 25% casual loading. Once the 25% casual loading is removed from the CFMMEU’s analysis, the hypothetical casual inexperienced mineworker is better off financially (on the assumptions and roster proposed by the CFMMEU) under the Enterprise Agreement than under the BC Award. The removal of the 25% casual loading from the calculation in paragraph [64] of the CFMMEU’s submissions dated 18 May 2021 brings the BC Award total payment down from $4,214.97 to $3,364.97, which is well below the Enterprise Agreement total payment of $4,110.41 in paragraph [65] of the CFMMEU’s submissions dated 18 May 2021. The same conclusion is reached even having regard to the correction in the CFMMEU’s calculations in Schedule A to its submissions dated 2 June 2021. The significant impact of the erroneous inclusion of the 25% casual loading when considering the position of a full-time or part-time employee under the BC Award means that it is unnecessary to deal with the range of criticisms made by Ipsum in relation to the CFMMEU’s modelling.”
The Applicant submitted that the CFMMEU has repeated methodology in these proceedings notwithstanding the Commission’s earlier rejection of this approach, and the CFMMEU analysis of the 12-hour weekend permanent night shift roster also fails to correctly identify how weekend penalties would likely be paid in practice. For example, the Applicant submitted that the CFMMEU calculations fail to apply overtime at double time under both the Award and the Agreement under the example roster identified, and the CFMMEU also do not apply the permanent night shift loading to overtime hours that is also required under the Award and the Agreement.
Notwithstanding the limitations of the modelling and calculations presented by the CFMMEU, the Applicant submitted that Mining Pro is prepared to give an undertaking that it will calculate weekend penalties and shift loadings for employees in the Inexperienced Mineworker classification on a compounding basis. The Applicant submitted that this is reflected in the proposed undertakings lodged with its outline of submissions. Mining Pro is prepared to extend its undertaking to employees employed on a casual basis as Inexperienced Mineworkers in order to fully resolve this matter, despite such an approach not being required having regard to the comments in the Ipsum Mining decision above.
Having considered the respective submissions provided by the CFMMEU and the Applicant, I am satisfied that the undertaking that has been offered with regard to this issue, if accepted, would put beyond any doubt that the issues raised by the CFMMEU concerning the compounding of shift weekend penalties would be resolved for the purposes of the BOOT.
Flat hourly rates for casual employees
Clause 15 of the Agreement allows the Company to pay its casual employees a ‘Flat hourly rate’. The ‘Flat hourly rate’ described by clause 15.1 of the Agreement is a loaded rate. The CFMMEU cited the Loaded Rates Agreement Decision, where a Full Bench of the Commission noted:[2]
“[121] …As discussed in the Casual and Part-time Employment Case, the contractual and practical incidents of casual employment under the FW Act may vary greatly. Casual employment may consist of engagement under hourly or daily fixed term contracts, and be used for the performance of short-term and/or intermittent work on an “on-call” basis. It may also consist of longer-term contracts or an ongoing contract of indefinite duration (terminable in either case on short notice) and be used for the performance of long term work with regular, rostered hours. In the former case, the casual employee is not guaranteed work on any specified days or for any specified duration. In an enterprise agreement which provides or permits casual employment of this nature, it is difficult to envisage how it would be possible to provide for a loaded rate for casual employees that was capable of passing the BOOT. This is because it would always be possible for the casual employee, in a given pay period, to be engaged to work on a day or at a time which would attract the payment of penalty rates under the relevant Award and not to be engaged on any other hours or at any other times. In that circumstance, if the agreement provided for a loaded rate which was less than the highest penalty rate provided for in the relevant Award, the employee would necessarily be disadvantaged as compared to the Award. This result could only be avoided if the agreement provided for some other benefit to the casual employee which offset the disadvantage, and/or imposed some restriction on when a casual employee could be engaged to work, and/or required the hours of work of a casual employee to be balanced over time between hours which would attract the payment of penalty rates under the relevant Award and hours which would not. Any such additional provisions would amount to a significant departure from the concept of the “on-call” casual.”
The CFMMEU submitted that to the extent that the Agreement permits the Applicant to pay casual employees a loaded rate, the Commission would not be satisfied that the Agreement passes the BOOT.
The Applicant submitted that the Full Bench also observed at [121] how this concern could be overcome through providing benefits which offsets the nature of any disadvantage or including other restrictions in the enterprise agreement as to when a casual employee could be engaged to work.
Furthermore, the Applicant submitted that Clause 15 of the Agreement does not give rise to the same concerns expressed by the Full Bench. The Agreement provides for a flat hourly rate to be paid to compensate employees for their rostered hours for a designated roster. There are additional terms which provide that:
(a) total payment made to an Employee using a flat hourly rate must not be less than would have been received by an employee working the designated roster had the flat hourly rate not been paid;
(b) prior to paying a flat hourly rate to an employee, Mining Pro will provide an explanation in writing to an employee demonstrating how the flat hourly rate has been calculated for the designated roster cycle;
(c) where an employee’s employment ends, or where Mining Pro ceases to pay an employee according to a flat hourly rate, Mining Pro will calculate the amount that would have been payable to the employee for that part of the roster cycle worked had the employee not been paid a flat hourly rate and pay any difference which arises (if any) in the next pay cycle; and
(d) all time worked outside of an employee’s rostered hours that is not compensated for by the flat hourly rate will be paid at overtime rates.
The Applicant submitted that the CFMMEU raised a similar concern relating to the payment of flat hourly rates to casual employees in CoreStaff NSW Pty Ltd T/A Corestaff NSW [2019] FWCA 4403 (CoreStaff Decision). In the CoreStaff Decision, Deputy President Saunders did not accept the CFMMEU submissions concerning similar provisions in an enterprise agreement which permitted casual employees to be paid a flat hourly rate. The CFMMEU appealed the CoreStaff Decision to the Full Bench of the FWC. The majority of the Full Bench refused the CFMMEU permission to appeal.
The Applicant submitted that the same outcome should be reached in the context of this application. Clause 15 of the Agreement does not give rise to the same concerns expressed by the Full Bench in Loaded Rates given the restrictions in clause 15 as to when a flat hourly rate can, and will, be paid, and the protections built into the clause itself.
While the Applicant submits the terms of clause 15 are themselves sufficient to satisfy the Commission that the Agreement meets the requirements of section 186(2)(d) of the Act, it is nonetheless prepared to provide a further undertaking to the effect that a flat hourly rate will not be paid to any casual employee who is not engaged to work other than in accordance with a designated roster. This undertaking will operate in addition to the various protections already provided for in the Agreement, such as overriding protection in clause 15.2 of the Agreement that the total payment made to an employee using a flat hourly rate must not be less than would have been received by an employee under a particular roster had the flat hourly rate not been paid.
I am satisfied that having considered the respective submissions provided by the CFMMEU and the Applicant and the undertaking offered by the Applicant, that the undertaking offered will resolve any potential issue raised by the CFMMEU concerning clause 15 of the Agreement for the purposes of the BOOT.
The timing of meal breaks and overtime payments if meal breaks are not taken
The CFMMEU contended that individuals to whom the Award applies benefit from a 30-minute paid meal break for every five hours worked. Clause 24.3 of the Award provides that, unless otherwise agreed, should an employee work more than five hours without a break, they will be paid overtime rates until their meal break is taken.
Clause 19.9 of the Agreement provides:
“A paid thirty-minute crib break, counted as time worked, will be taken during each normal shift. Employees working shifts in excess of 10.5 hours will receive two thirty-minute crib breaks, counted as time worked during each normal shift.”
The CFMMEU submitted that the Agreement does not outline when an employee’s break is to take place, nor does it provide a right for employees to be paid overtime should they not receive their break, and the lack of overtime when a break is not offered has significant implications on the BOOT.
The CFMMEU submitted that in Loaded Rates Agreements, a Full Bench of the Commission noted that:
“(i)n the case of a contingent benefit, it will be necessary to make a realistic assessment about the likelihood of the benefit crystallising during the period in which the agreement will operate”.
Furthermore, the CFMMEU submitted that the overtime pay to employees who do not receive a break is correctly characterised as a contingent detriment. Given the scope of the Agreement and the prevailing conditions in the industry, the CFMMEU submits that it is highly likely that the detriment would crystallise during the operation of the Agreement, and in circumstances where the detriment did crystallise, the Agreement would fail the BOOT.
The Applicant submitted that the Agreement term is intended to provide employees with the same number of paid meal breaks as would apply under the Award depending on an employee’s shift length. The relevant difference is the absence in the Agreement of a term which provides for the payment of overtime rates if an employee is required to work for more than 5 hours without a meal break, unless otherwise agreed.
The Applicant cited Construction, Forestry, Mining and Energy Union v SRSW Pty Ltd t/a Stellar Recruitment[2020] FWCFB 2052 and Construction, Forestry, Mining and Energy Union v Mobilise Group Pty Ltd[2021] FWCFB 552 where the Full Bench identified the limitations in the extent to which contingent benefits or detriments are to be taken into account, at least insofar as it relates to an assessment of ascribing a monetary value to those benefits or detriments.
The Applicant conceded that the CFMMEU correctly identified the extent of any difference between the Agreement and the Award provisions as requiring an assessment of the extent of any contingent detriment which may arise. In practice, it is a detriment only capable of arising in specific working arrangements where an employee works beyond 5 hours without a break and does not otherwise agree not to be paid the overtime rate.
The Applicant submitted that the absence of payment at overtime rates is a common term in the industry and has been approved by the Commission in a number of enterprise agreements which include those covered by the CFMMEU.
In the context of the global assessment to be made under s.186(2)(d), the Applicant submitted that the Commission should be satisfied that the terms of the Agreement pass the BOOT in circumstances where the Agreement provides for a range of additional benefits above those contained in the Award which operate to outweigh the impact of any contingent detriment. For example, there is the non-contingent benefit of the materially higher wage rates in the Agreement which are variously 6.82%, 13.64%, 21.52% and 24.17% higher than the equivalent ordinary hourly rates (these rates themselves being subject to 2% increases on the first, second and third anniversaries of the Agreement). Another example is the payment for personal leave taken during employment is according to an employee’s rostered hours, despite personal leave being deducted in ordinary hours only (this is in circumstances when the National Employment Standards would only require payment to be made for ordinary hours).
In assessing the nature of the contingent detriment, it is also appropriate to have regard to the contingent benefits provided in the Agreement. Relevantly, this includes:
(a)the capacity for Mining Pro to develop and implement site specific allowances or bonus schemes (noting the $350 per week payment for employees at the Middlemount mine is a non-contingent benefit) with terms associated with their use;
(b)the entitlement to severance and retrenchment payments in circumstances wider than what is provided for in the Award;
(c)payment for long service leave at the more favourable rate reflecting the rate which would have been paid had the employee taken annual leave under the Award (this is in circumstances where the Coal Mining Industry (Long Service Leave) Administration Act 1992 (Cth) only requires payment to be made at an employee’s base rate of pay including incentive based payments and bonuses); and
(d)payment for compassionate leave at the more favourable rate reflecting the rate which would have been paid had the employee taken annual leave under the Award (this is in circumstances when the National Employment Standards would only require payment to be made at an employee’s base rate of pay).
The Applicant submitted that the nature and extent of the non-contingent and contingent benefits provided in the Agreement outweighs the effect of the contingent detriment identified by the CFMMEU. The CFMMEU’s attention to the matter identified is in the nature of the ‘line by line’ analysis the FWC has cautioned against when assessing the BOOT. Mining Pro submits on a global assessment, and having regard to the benefits conferred by the Agreement, the Commission can be satisfied that the Agreement meets the requirements of s.186(2)(d) of the Act.
Having considered the respective submissions and compared the contingent detriment concerning the circumstances where the payment of overtime in connection with meal breaks not being taken may arise under the Award and the Agreement, when weighed against the other non-contingent and contingent benefits under the Agreement, I am satisfied on the basis of a global assessment of the Agreement, including in the context of the undertakings that are now offered by the Applicant as set out above, the Agreement passes the BOOT.
CONCLUSION
On the basis of the findings above, I am satisfied that subject to the undertakings referred to above, each requirement of ss186, 187 and 188 as are relevant to this application for approval have been met. The undertakings are taken to be a term of the Agreement.
The Agreement is approved and will operate in accordance with s.54 of the Act.
COMMISSIONER
[1] [2017] FWCFB 3659.
[2] The Loaded Rates Agreements Decision [2018] FWCFB 3610 at [121].
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