Moxons Bakery Pty Ltd Enterprise Agreeement
[2010] FWA 621
•9 FEBRUARY 2010
[2010] FWA 621 |
|
DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
(AG2009/23510)
COMMISSIONER MCKENNA | SYDNEY, 9 FEBRUARY 2010 |
Moxons Bakery Pty Ltd Enterprise Agreement
[1] Moxons Bakery Pty Ltd (“the applicant”) has made an application, pursuant to s.185 of the Fair Work Act 2009 (“the Act”), for the approval of a single-enterprise agreement titled the Moxons Bakery Pty Ltd Enterprise Agreement (“the agreement”). The applicant’s representative is the Baking Industry Association (NSW Employers) (“BIA”).
[2] I listed the matter initially on 21 January 2010, given that some of the information in the statutory declaration comprising the Form F17 (Employer’s Declaration in Support of Application for Approval of Enterprise Agreement) was incomplete and to raise a potential concern about the leave provisions of the agreement. In particular, cl.2.4 of the statutory declaration referred to a letter dated 19 November 2009. That letter formed part of the application and, in turn, referred to an “attached document that is important in the process”. That attachment was not, however, filed with the other papers in support of this application.
[3] Mr A Duc of the BIA undertook to arrange for the provision of additional supporting information. To that end, Roger Bourke, Director, affirmed an affidavit on 27 January 2010 deposing that, on 19 November 2009, he, in effect, arranged for the distribution of a copy of a notice concerning representational rights with employees’ payslips. It remains unclear to me from the face of the affidavit whether this was the attachment to the letter dated 19 November 2009, as that was not addressed specifically in the affidavit – albeit the affidavit did address the provision of notice of representational rights.
PRE-APPROVAL REQUIREMENTS
[4] The matter was listed for hearing on 29 January 2010. At the outset of proceedings, I raised with Mr Duc my concerns as to whether certain statutory prerequisites for the approval of an agreement had been met, particularly given the tension between responses provided in the Form F17 and some of the content of the letters given to employees in the lead-up to the vote for the agreement. For example, cl.2.4 of the Form F17 records the following information:
2.4 Please specify the steps taken by the employer (at least 7 days before the start of the voting process) to notify all relevant employees of the time and place at which the vote was to occur and the voting method to be used.
Please refer to attached letters dated 19 November 2009, 3 December 2009 and 14 December 2009 which indicate the time and other details of the vote.
[5] I reproduce the letters referred to in cl.2.4 of the Form F17. The letter dated 19 November 2009 from Mr Bourke to the employees relevantly read as follows:
We hereby notify you that the Company intends to negotiate an enterprise agreement with all employees that perform baking production, shop retail duties and clerical duties.
The proposed timeframe is:
1. In 14 days time the Company will give you access to a copy of the proposed agreement and the material to be incorporated
2. 7 days after that the Company will ask you to approve the agreement.
In that seven days the Company will explain its effects.
The Company, if the agreement is approved, will then apply to Fair Work Australia to have the agreement approved.
Please find attached a document that is important in the process. Please read carefully and return to the Company.
If you have any question please contact me.
[6] The next letter, dated 3 December 2009, read as follows:
We refer to our letter to you dated 19 November 2009 regarding a proposed enterprise agreement between the company and employees.
In accordance with that letter, we have organized for [named individual] from Forsyths to attend a meeting of all employees at the Mann Street premises at 5.15pm on Tuesday 15th December 2009 to discuss the agreement and conduct a vote on acceptance of the agreement.
The agreement effectively locks in the award provisions you are currently employed under. The relevant awards will be circulated between the 3 locations over the next week for you to peruse.
The purpose of proposing the agreement is to provide certainty between the company and employees with regards to employment conditions going forward.
Thank you for your support of the business. If you have any questions please contact me.
[7] The last of the letters was dated 14 December 2009. It read as follows:
We refer to our letter to you dated 19 November 2009 and 3 December 2009 regarding a proposed enterprise agreement between the company and the employees.
We have become aware that not all employees have had an opportunity to review the hard copy of the current award.
As a consequence we have decided to defer the vote on acceptance of the Agreement until Tuesday 22 December 2009. We will organize for a ballot box to be circulated between locations on that day.
[Named individual] from Forsyths will still attend a meeting of all employees at the Mann Street premises at 5.15pm on Tuesday 15th December 2009 to discuss the agreement.
[8] The letters indicate the voting date for the agreement was changed. In a letter dated 3 December 2009, the employees initially were advised the vote would be held on 15 December 2009. By further letter dated 14 December 2009, the employees subsequently were advised the date of the vote would be 22 December 2009.
[9] As I have noted earlier, cl.2.4 of the Form F17 adverted to these letters in identification of the steps that had been taken by the employer to notify the employees of the time and date of the vote, and voting method. Therefore, it was the letter dated 14 December 2009 to employees which advised the vote would be conducted on 22 December 2009, albeit without actually specifying the time the circulating ballot box would be available at each of the three workplaces for voting purposes.
[10] The information provided at cl.2.1 of the Form F17 indicated the agreement was made on 23 December 2009, one day later than specified in the letter to employees dated 14 December 2009. I initially considered that the date of 23 December 2009 in cl.2.1 of the Form F17 may have been a simple, typographical error. However, it transpires the voting date was changed, for a third time, to 23 December 2009; the information at cl.2.1 of the Form F17 was correct as to the vote having been conducted on that date. After taking telephone instructions, Mr Duc submitted the employees were given verbal advice the date of the vote was 23 December 2009 and, in this respect, noted there had been a high percentage of voter participation.
[11] Accepting Mr Duc’s submissions confirming the vote occurred on 23 December 2009, then the information in cl.2.4 of the Form F17 cannot be accepted to the extent it suggests that the steps taken to advise the employees of the vote on 23 December 2009 were as outlined in the letters dated 19 November, 3 December and 14 December 2009. The date or dates on which verbal advice was communicated to each of the 29 employees across three workplaces was not the subject of further submissions, but I infer this advice was conveyed on an indeterminate date or dates within the “access period”, as defined in s.180 of the Act. Certainly, there was no suggestion to the contrary in Mr Duc’s submissions. It is also unclear whether employees were advised as to the method of voting (and in this respect, I note that different methods were advised to employees in relation to the first two dates on which votes had been scheduled).
[12] For completeness, I note Mr Duc’s submissions indicated the date of the vote was rescheduled by the applicant from 22 December 2009 to 23 December 2009 in a well-intentioned endeavour to address potential concerns about whether certain pre-approval requirements had been satisfied; the applicant was endeavouring here to try to meet requirements for approval of the agreement. However, in what seems to be a paradox of unintended consequences, the appointment by the applicant of a new date for the vote re-enlivened the pre-approval requirements in s.180 of the Act, pertinently including s.180(3). Those requirements are as follows:
180 Employees must be given a copy of a proposed enterprise agreement etc.
Pre-approval requirements
(1) Before an employer requests under subsection 181(1) that employees approve a proposed enterprise agreement by voting for the agreement, the employer must comply with the requirements set out in this section.
Employees must be given copy of the agreement etc.
(2) The employer must take all reasonable steps to ensure that:
(a) during the access period for the agreement, the employees (the relevant employees) employed at the time who will be covered by the agreement are given a copy of the following materials:
(i) the written text of the agreement;
(ii) any other material incorporated by reference in the agreement; or
(b) the relevant employees have access, throughout the access period for the agreement, to a copy of those materials.
(3) The employer must take all reasonable steps to notify the relevant employees of the following by the start of the access period for the agreement:
(a) the time and place at which the vote will occur;
(b) the voting method that will be used.
(4) The access period for a proposed enterprise agreement is the 7-day period ending immediately before the start of the voting process referred to in subsection 181(1).
[13] I asked Mr Duc if he had anything to put on behalf of the applicant as to why the application ought not be dismissed for an apparent failure to meet the pre-approval requirements. Apart from noting the approach of Fair Work Australia in the body of case law developing in relation to the pre-approval requirements of the Act, he relevantly submitted there was nothing further to put. Mr Duc submitted he did not otherwise have instructions to withdraw the application and further submitted, in those circumstances, it was appropriate that there be a decision on the application.
[14] I consider there are various aspects of the application and agreement that would have been problematic in terms of approval, putting aside the difficulties concerning the pre-approval requirements. While it is unnecessary to develop these matters fully or form a concluded view about them, in circumstances where the agreement otherwise cannot be approved due to the failures concerning certain pre-approval requirements, I highlight the following matters for the information of the parties in the event a new agreement is proposed.
THE REFERENCE INSTRUMENT/S
[15] Part 3 of the Form F17 is concerned with comparison data for the purposes of the no disadvantage test. At clause 3.1 of the Form F17, the following information was given in support of this application for approval:
3.1. Please identify all reference instruments (relevant awards or notional agreements preserving State awards (NAPSAs) to be used for the purposes of the no-disadvantage test: [See items 4 an 5 of Part 2 of Schedule 7 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009.
Note: It is essential that you set out the names of such awards and NAPSAs accurately in full and include the “AP” or “AN” number of each such instrument. The numbers can be located via a title search on the Find and award search facility at:
name=awardsfind.]
Baking Industry (State) Award
Shop Employees (State) Award
Despite the fact the Form F17 emphasises the need to set out the name of the relevant instruments accurately, in full and with the relevant AP or AN number of each such instrument, that information was not provided. I will refer in this decision to the reference instruments in the manner in which they were named in the Form F17 and the agreement, namely the Baking Industry (State) Award and the Shop Employees (State) Award, albeit the retail instrument applicable at this workplace would appear to have been a notional agreement preserving a State award, numbered AN120499.
[16] More generally, I knew of no instrument titled the Baking Industry (State) Award that would have been applicable to employees working in Armidale in the State of New South Wales. Additional checking on the websites maintained by Fair Work Australia and the NSW Office of Industrial Relations did not uncover any such named instrument that would have applied in New South Wales. Further inquiries have been made with the BIA, confirming the inclusion of an instrument titled the Baking Industry (State) Award in the documentation was erroneous and that a different instrument should have been named.
[17] Consistently with the responses the Form F17, cl.1 and cl.2 of the agreement describe the parties to the agreement and effect of the agreement as follows:
1. Who is bound by the Agreement?
The parties to the Agreement are:
Moxons Bakery Pty Ltd [ABN number and address]
and
the employees performing work covered by the parent award.
2. Effect of Agreement
This agreement incorporates the terms and conditions of the following award [sic] into this agreement.
Baking Industry (State) Award
Shop Employees (State) Award
[18] There are miscellaneous direct and indirect references to both the Baking Industry (State) Award and the Shop Employees (State) Award in the Form F17 and the agreement. For example, at cl.2.12 of the Form F17, the following information is provided:
2.12 Please identify any terms of the agreement that deal with the matters contained in the National Employment Standards:
The awards that are incorporated contain like terms, and the agreement provides for annual leave, personal carer’s leave etc.
and at cl.2.30 of the Form F17:
2.30 Does the agreement cover any shiftworkers? (s.196)
[x] Yes
[ ] No
If the answer is “Yes”, please identify any terms of the agreement that define or describe the employees as a shiftworker for the purposes of the National Employment Standards:
Clause 2, incorporating the awards.
[19] The references to the Baking Industry (State) Award in the agreement and the Form F17 raise a range of issues militating against the approval of the application, not least the application of the no disadvantage test to one of the reference instruments nominated by the applicant.
[20] Questions necessarily also arise about the information said to have been given to employees to explain the agreement. For example, as a pre-approval requirement, s.180(2)(c) of the Act provides that, during the access period, the employer must ensure that employees are given a copy of any material incorporated by reference in the agreement. Self-evidently, the applicant could not have given the employees a copy of the Baking Industry (State) Award, the terms of which are said to be incorporated in the agreement. Nonetheless, the Form F17 provides the following response:
2.3 Please specify the steps taken by the employer (at least 7 days before of the start of the voting process) to ensure that the relevant employees were given, or had access to, the written text of the agreement and any other material incorporated by reference in the agreement: (s180(2)(a))
The agreement was provided to all staff and staff were advised of the location of the awards in the bakery for their perusal.
[21] The inclusion of references to the Baking Industry (State) Award also raises question about the understanding of the applicant and its employees as to what they thought they were agreeing to in the agreement. As noted in the letter dated 3 December 2009, employees were relevantly advised that: “The agreement effectively locks in the award conditions you are currently employed under”. If the employees collectively or the applicant, or both, considered the effect of the agreement was to lock-in current entitlements, that view was obviously misplaced - at least in relation to employees otherwise thought to have been covered by an instrument titled the Baking Industry (State) Award.
[22] Section 188 of the Act deals with the circumstances when Fair Work Australia can be satisfied that an agreement has been “genuinely agreed”. The agreement contains provisions in relation to the Baking Industry (State) Award that could not, on any view of it, have been the subject of properly informed agreement between the applicant and its employees. This raises issues about whether there would be reasonable grounds, within the meaning of s188(c) of the Act, to doubt whether the employees genuinely agreed to the agreement.
[23] The purported inclusion in the agreement of terms and conditions of an instrument that does not exist raises further problems going squarely to the validity of the vote. That is, if the agreement can properly apply only to employees engaged under what was identified in the Form F17 and the agreement as the Shop Employees (State) Award, then other classes of baking-type employees not covered by the retail instrument participated in a vote for an agreement that had no relevance to their conditions of employment. The employees who were thought to have been covered by the Baking Industry (State) Award apparently could not, within the meaning of s.182 of the Act, have cast a “valid vote” to approve this agreement.
[24] Lastly, in relation to the reference instruments, I note there is at least a suggestion that clerical or administrative employees were also intended to be covered by the agreement. For example, in the letter dated 19 November 2009, the applicant notified employees that it intended to negotiate an enterprise agreement with all employees who perform baking production, shop retail duties and clerical duties. Similarly, cl.1.5 of the Form F17 seems to contemplate that a discrete group of employees engaged in administrative work would be covered by the agreement, in addition to bakery and retail employees, i.e:
1.5 What kind of work is to be done by employees under the agreement?
Baking & ancillary duties, shop retail & ancillary duties, administration & ancillary duties.
and at cl.2.15 and 2.16:
2.15 Does the agreement cover all employees of the employer or employers?
[x] Yes
[ ] No
2.16 If the answer to question 2.15 is “No”, please provide details of the geographical, operational or organisation basis for choosing the group of employees to be covered by the agreement: (s.186(3)) and (3A))
N/A
[25] If it is the case that clerical and administrative employees were also intended to be covered by the agreement (and perhaps participated in the vote for the agreement), it seems unlikely that their existing terms and conditions properly would have been set by a retail instrument – unless, for example, the clerical and administrative duties were merely incidental to their retail sales jobs in the bakery outlets.
LEAVE PROVISIONS
[26] I turn now to the second main area of potential concern, namely, the leave provisions of the agreement, which I will address by reference to the Shop Employees (State) Award. The Shop Employees (State) Award deals with annual leave in the following way:
28. NOTATIONS
(i) Annual Holidays
See Annual Holidays Act 1944. Provided that a full-time employee shall be entitled to not less than a total period of annual leave equivalent to 152 ordinary hours of work and pro rata thereof in the case of part-time employees.
[27] Hence, to the extent the Shop Employees (State) Award addresses annual leave, those entitlements are cross-referenced to the Annual Holidays Act 1944 (NSW). As noted earlier, the employees were advised the purpose of the agreement was to lock-in existing conditions. However, the agreement does not lock-in existing conditions concerning annual leave. Clause 6.1 of the agreement deals with annual leave entitlements in the following way:
6.1 Annual Leave
Permanent employees accrue the equivalent of four weeks of paid annual leave each year. If an employee’s hours are part-time[,] accrued annual leave will be paid on a pro-rata basis. Annual leave accrues for each completed four week period of continuous service. Credit of annual leave will occur on a monthly basis.
Annual leave continues to accumulate, however the Company may direct employees to take leave in certain circumstances.
A loading of 17.5% is payable when an employee takes annual leave.
This agreement allows employees to cash out annual leave. In order to cash out leave, an employee must elect to cash out leave in writing to the employer. An employee must have accumulated the amount of leave that they wish to cash out. The rate will be paid at the applicable hourly rate. The employer must authorise the amount of leave to be cashed out. [TBA]
An employee may request annual leave at any time, but the company may refuse due to operational or seasonal requirements, particularly school holidays, Christmas and Easter.
Casual employees are not entitled to take annual leave. Annual leave is included in the hourly rate of pay.
[Note: paragraph 4 italicised in original; “[TBA]” in original]
[28] Under cl.6.1 of the agreement, annual leave entitlements accrue only for each completed four weeks of service, with credit of annual leave occurring on a monthly basis. This part of cl.6.1 of the agreement suggests, potentially at least, that if employment terminated, the employee may not have an enforceable claim to payment for, by way of example, 25 days’ accumulated service in circumstances where a full period of four weeks’ service had not been completed from the relevant start-date for that monthly cycle – contrary to entitlements that would otherwise have arisen on a proportionate approach to the period of service and in a way that otherwise raises issues about entitlements that would apply under the National Employment Standards.
[29] Although cl.2.30 of the Form F17 indicates the agreement applies to shift workers, cl.6.1 of the agreement does not provide for additional annual leave for this classification of workers – indicating only that permanent employees accrue the equivalent of four weeks of paid annual leave each year. Industrial instruments dealing with annual leave for shift workers typically provide more beneficial annual leave entitlements than the standard four weeks’ leave and annual leave for shiftworkers is a matter also addressed in the National Employment Standards.
[30] Clause 6.1 of the agreement allows cashing-out of annual leave, subject only to the employee having accumulated the amount of leave he or she wishes to cash-out, without any limitation whatsoever on the retention of a minimum balance of annual leave. Cashing-out of annual leave is not contemplated under the Annual Holidays Act and the unlimited cashing-out of annual leave is otherwise contrary to the National Employment Standards.
[31] Although cl.6.1 of the agreement deals with matters arising in the National Employment Standards, and detrimentally so, I note that the following information was provided in the Form F17:
2.12 Please identify any terms of the agreement that deal with the matters contained in the National Employment Standards:
The awards that are incorporated contain like terms, and the agreement provides for annual leave, personal carer’s leave etc.
2.13 Please identify any terms of the agreement that exclude in whole, or in part, the National Employment Standards:
N/A
2.14 Please identify any terms of the agreement that are detrimental to an employee in any respect when compared to the National Employment Standards.
N/A
[32] By way of general observation, I note that cl.6.1 of the agreement provides that the applicant may direct employees to take annual leave “in certain circumstances”, without providing any additional information as to the circumstances in which such directions may be given.
[33] I note also, again by way of general observation, that cl.6.1 of the agreement refers to potential refusal of annual leave during school holidays, and at Christmas and Easter. While consideration obviously needs to be given to the applicant’s operational requirements, working parents, equally, understandably typically wish to take annual leave to care for their children when they are on term breaks from school, as well as at Christmas and Easter. In this respect, I would simply note that s.88(2) of the Act provides that an employer must not unreasonably refuse to agree to a request by an employee to take paid annual leave.
WAGES
[34] Clause 5 of the agreement deals with existing wages and future wage adjustments over the life of the agreement in the following way:
5. Wages
Wages are found in the relevant Australian Pay & Classification Scale for the NAPSA named in clause 2 above, or juniors under 18 in the applicable parent award.
Wage increases will be in line with the decisions of Fair Work Australia, and juniors under 18 the NSW Industrial Relations Commission or in accordance with the applicable law.
[35] In my view, there is uncertainty on the face of cl.5 of the agreement of such a degree as would be likely to present difficulties in determining what wages would be said to apply in the event of, say, proceedings concerning an alleged underpayment. For example, cl.5.1 does not identify which type of decisions of Fair Work Australia or the Industrial Relations Commission of New South Wales, or which applicable law, would be used for the adjustment of wages.
PERSONAL CARER’S LEAVE
[36] Clause 6.2 of the agreement provides that “personal/carer’s leave will be in accordance with the Fair Work Act”. The clause then further provides, without qualification, that: “All leave must be accompanied by a medical certificate”. This requirement for a medical certificate would appear to apply even if an employee had a short, sick-leave related absence, such as leaving work a little earlier than usual due to illness or injury. The mandatory nature of this requirement in the agreement may be contrasted with the operation of s.97 and s.107(3) of the Act, which provide an employee must, if required by the employer, give the employer evidence that would satisfy a reasonable person that leave had been taken because of unfitness due to personal injury or illness. Similarly, in the Shop Employees (State) Award at cl.18(iv)(b), the matter is dealt with in the following way: “The employee shall furnish to the employer such evidence as the employer reasonably may desire that he/she was unable by reason of such illness or injury to attend for duty on the day or days for which sick leave is claimed.”
[37] There would be many instances where employers, likely including the applicant, would not mandatorily require a medical certificate in support of every single sick leave-related absence, no matter how short and irrespective of the individual circumstances – but this is what the agreement provides. This provision seems to me to be unduly inflexible considered in the context of the provisions that otherwise would have applied under the Shop Employees (State) Award and now apply under the National Employment Standards; this is something that might be reconsidered in any future agreement.
MISCELLANEOUS MATTERS
[38] Before concluding, I should also note that I was not assisted in my consideration of the application by further aspects of the Form F17 which contained incorrect or incomplete information. For example:
2.34 Please identify the flexibility term in the agreement (ss.202, 203, 204)
N/A
2.35 Please identify the consultation term in the agreement (s.205)
N/A
Flexibility and consultation provisions are, despite the responses in the Form F17, contained at cl7 and cl.8 of the agreement. The Form F17 is, of course, a statutory declaration. It seems reasonable to expect that closer attention should be given to the completion of a statutory declaration.
CONCLUSION
[39] I decline to approve this agreement because at least part of the information in the Form F17 in support of the application in relation to the pre-approval requirements cannot be accepted and I am not satisfied the pre-approval requirements have otherwise been met.
[40] I have noted also that were it not for the dismissal of the application for failure to meet certain pre-approval requirements, there are, in any event, other problems with the application and agreement, including, but not limited to, the examples I have given in relation to the purported incorporation of terms and conditions of an instrument titled the Baking Industry (State) Award and the leave provisions at cl.6.1 of the agreement.
[41] The application is dismissed.
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