MP Resources Pty Ltd

[2015] FWC 6820

[2015] FWC 6820

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement

MP Resources Pty Ltd
(AG2015/4158)

DEPUTY PRESIDENT BARTEL ADELAIDE, 2 OCTOBER 2015

Application for approval of the MP Resources Pty Ltd Enterprise Agreement 2015.

[1] An application for approval of an enterprise agreement known as the MP Resources Pty Ltd Enterprise Agreement 2015 (the Agreement) has been made by MP Resources Pty Ltd (the employer or MP Resources). The application has been made pursuant to s.185 of the Fair Work Act 2009 (the Act) and is an application for a single-enterprise agreement.

[2] The application was heard on 31 August 2015. Part of the reason for conducting a hearing was incorrect documentation filed with the application for approval.The Notice of Employee Representational Rights (the NERR), an undated memorandum to employees and a comparative table all referred to the employer as AWX Pty Ltd and the enterprise agreement as the AWX Labour Pty Ltd Enterprise Agreement 2015.

[3] Mr Tom Reardon, a Director of MP Resources, gave evidence at the hearing. He provided copies of an email to employees dated 27 May 2015 which attached the NERR and bargaining representative nomination form. 1 These documents identified the correct employer and correct name of the agreement. Mr Reardon also provided a copy of an email circulated to employees in advance of the vote, which attached the text of the agreement to be voted upon (“the proposed Agreement”).2

[4] The title of the proposed Agreement cites the correct employer. However, the proposed Agreement is not the Agreement which has been signed and filed with the application for approval. There are a number of minor differences in drafting and changes in formatting. For example ordinary hours of work are dealt with at clause 10 in the proposed Agreement and in clauses 10 and 11 in the Agreement. There are also more significant differences. Clause 12.3 of the Agreement provides that employees will receive the shift loading payable under the relevant modern award whereas the proposed Agreement provides at clause 11.3 that shift-workers will be paid 15% more than the ordinary rates of pay under the proposed Agreement. The following examples are not exhaustive of the differences between the documents:

● The description of the employees to be bound;

● The definition and minimum engagement of a part time employee;

● The inclusion of a probationary period of six months for new employees under the Agreement;

● A provision in the Agreement enabling the employer to suspend employment with or without pay.

[5] Section 180(2)(a)(i) of the Act requires that the employer take all reasonable steps to ensure that employees have a copy of the text of the agreement during the access period. This requirement has not been met. Consequently the employees have not genuinely agreed to the Agreement 3 and in these circumstances the application for approval must fail.4

[6] Nonetheless, for reasons that will become clear, it is appropriate to canvass the substance of the Agreement as filed and the basis on which approval is sought.

[7] The main business of MP Resources is the supply of labour. It currently has five employees who are within the scope of the Agreement, each of whom is engaged in a small meat processing enterprise in Queensland (three employees), New South Wales (one employee) and Victoria (one employee). 5

[8] The proposed coverage of the Agreement, as set out in the NERR is employees of the employer engaged in the horticultural, cotton ginning, pastoral, poultry, meat works and seafood processing industries in all States and Territories. The modern awards relevant to the proposed coverage (collectively referred to as “the relevant modern awards”) are as follows:

Horticulture Award 2010 (the Horticulture Award)

Poultry Processing Award 2010 (the Poultry Award)

Pastoral Award 2010 (the Pastoral Award)

Cotton Ginning Award 2010 (the Cotton Award)

Seafood Processing Award 2010 (the Seafood Award)

Meat Industry Award 2010 (the Meat Industry Award)

[9] The Form F17 indicates that the employer considers that the Agreement passes the better off overall test (the BOOT), but also identifies a number of exceptional circumstances that apply in the event that the Agreement does not pass the BOOT, as follows:

● The employer supplies labour to seasonal industries which are characterised by peaks and troughs in workflow due to weather and natural events;

● The industries that the employer supplies labour to are often affected by strong international competition; and

● The employer will predominantly employ short term labour to work at a particular place for a season. These employees generally prefer to work as many hours as they can to maximise their income while work is available to support themselves in non-peak seasons.

In addition, Mr Reardon’s witness statement addresses the drought conditions being experienced in the meat industry and attached journal articles on this topic.

The substantive terms of the Agreement and the BOOT

[10] The Agreement excludes the operation of the relevant modern awards unless expressly referred to in a clause of the Agreement (clause 5).

The contract of employment and hours of work

[11] Employees may be engaged on a permanent full-time or part-time basis, as a fixed term employee, as a casual or pieceworker and, in respect to employees who are engaged in meat processing establishments, as a daily hire employee (clause 6).

[12] The hours of full-time employees are an average of 38 hours per week (clause 10.1). There is no period specified over which the average is to be calculated. Part-time employees are engaged to work between five and 37 hours per week (clause 6.1(c)), with a minimum engagement of four hours (clause 10.2). This is equal to or exceeds the minimum engagement for part-time employees under the relevant modern awards.

[13] The hours for casual employees are not to exceed 38 per week (clause 11.1). There is a minimum engagement of two hours for casual employees (clause 11.2). This is inferior to the Meat Industry Award, 6 the Seafood Award, the Poultry Award and the Pastoral Award

[14] The provisions for daily hire employees (clause 6.1(e)) reflect the provisions of the Meat Industry Award, save that payment is by the hour rather than payment by the day.

[15] Full-time, part-time or casual employees can be engaged on a piecework basis under the Agreement. The Agreement states that for the purposes of the NES, the base rate of pay and full rate of pay for pieceworkers are as defined in the NES. Only the Pastoral Award and Horticulture Award make provision for employees to be engaged on a piecework basis, although the Meat Industry Award has a “payment by results scheme” which is superior in its benefits. 7

Penalty payments and overtime

[16] Weekend penalties for ordinary hours on a Saturday and Sunday, overtime and public holiday rates reflect ‘standard’ award conditions and are generally equivalent to or superior than the corresponding provisions in the relevant modern awards. The significant aspect of these provisions is the absence of penalty payments in circumstances where an employee volunteers to work certain hours as follows:

● Weekend Work: Where employees request to work ordinary hours on Saturdays and/or Sundays, no penalties apply (clause17.3);

● Overtime: Where an employee “voluntarily agrees” to perform overtime, ordinary rates of pay will apply (clause 18.3). This provision is limited to the category of employee listed in Appendix A of the Agreement (see below);

● Public Holidays: If an employee “chooses voluntarily” to work on a public holiday then ordinary rates of pay will apply (clause 19.3). This provision is limited to Appendix A employees.

[17] Appendix A provides as follows:

“The operation of the voluntary hours provisions in this Agreement is only available to Employees who can establish a genuine need and are:

(a) Employees engaged at meat manufacturing, processing and retail establishments who would have otherwise (but for the operation of the Agreement) been covered by the Meat Industry Award 2010 where those businesses are subject to seasonal fluctuations;

(b) Employees who would have otherwise (but for the operation of this Agreement) been covered by the Horticulture Award 2010 where those employees work at businesses which are seasonal in nature;

(c) Employees who would have otherwise (but for the operation of the Agreement) been covered by the Poultry Processing Award 2010 where those employees work at businesses which are seasonal in nature;

(d) Employees who would have otherwise (but for the operation of the Agreement) been covered by the Pastoral Award 2010 where those employees work at businesses which are seasonal in nature;

(e) Employees who would have otherwise (but for the operation of the Agreement) been covered by the Cotton Ginning Award 2010 where those employees work at businesses which are seasonal in nature; and/or

(f) Employees who would have otherwise (but for the operation of the Agreement) been covered by the Seafood Processing Award 2010 where those employees work at businesses which are seasonal in nature.”

[18] It is not clear what is required to establish a “genuine need” and whether this is a cover-all arrangement or whether the “genuine need” would have to be established on each occasion that voluntary hours are to be worked. The practicality of the provision is questionable given that the employee could be in a different State from the employer and, on the evidence of Mr Reardon, the peaks and troughs in workload in small meat processing facilities are variable at short notice. 8

[19] The businesses that are “seasonal in nature” or suffer “seasonal fluctuations” would be the rule rather than the exception for businesses under the relevant modern awards. In view of the indication in the Form F17 that employees generally seek to maximise their hours, I find that the voluntary hours provisions are intended to have expansive application. 9

Classifications and rates of pay

[20] Clause 13 of the Agreement is in the following terms

“13 CLASSIFICATIONS

13.1 There are 200 levels of payment in this Agreement arranged in order from 1 to 200 to reflect the varying duties of an employee which may be required to be performed for the Employer.

13.2 The Employer must, when engaging an Employee, take into consideration the appropriate Modern Award that would have covered the Employee but for the operation of this Agreement and then assign the Employee to a level where the employee’s hourly rate of pay is equivalent or better than the relevant Modern Award base hourly rate of pay for ordinary hours of work which would have been payable to the Employee pursuant to that Modern Award. For the purposes of ascertaining a casual Employee’s hourly rate of pay the applicable Modern Award’s casual loading for ordinary hours will also be taken into account including which would have been payable to the casual employee pursuant to that Modern Award.

13.3 To remove any doubt, the phrase “Modern Award base hourly rate of pay for ordinary hours of work” will include any increase to the relevant Modern Award base rate during the operation of this Agreement and an Employee’s classification will be adjusted to any corresponding increase to the base rate in the Modern Award during the term of this Agreement.”

[21] Clause 14 sets out the 200 hourly rates of pay, commencing at $17.29 per hour at pay point 1 and increasing by 5 cents per hour at each pay point, until the maximum rate of $27.40 per hour appears at pay point 200.

[22] Clause 15 sets out the rate for pieceworkers as follows:

“15 PIECEWORKERS

15.1 A pieceworker will receive a piece work rate fixed by the Employer and the Employee which will enable the average competent employee to earn during ordinary working hours at least 20% above the minimum hourly rate for the level of work performed as prescribed in clauses 13 and 14 of this Agreement.

15.2 Clauses 10, 11, 12, 13, 14, 17, 18 and 19 of the Agreement will not apply to pieceworkers.

15.3 Nothing in this Agreement guarantees a pieceworker will earn at least the minimum hourly wage in this Agreement for the classification level of the Employee, as the Employee's earnings are contingent on their productivity.”

[23] The inclusion of 200 separate pay points that apply to the employees, the absence of any classification definitions or reference to the relevant award that applies and the poor drafting combine to make it extremely difficult to ascertain the appropriate rate of pay for the work performed. The inclusion of casual loadings compounds the degree of difficulty. The process of a casual worker negotiating piecework rates in the context of clause 15 of the Agreement and the 200 pay points in clause 14 is so complicated as to effectively deprive any such employees of an enforceable rate of pay.

[24] Junior rates of pay are in some cases equivalent to 10 or higher than the relevant modern award,11 but are lower than the rates prescribed in the Cotton Ginning Award, the Poultry Award and Part 7 of the Pastoral Award which applies to employees engaged in shearing operations.

[25] The Agreement specifies that apprentice rates are the relevant modern award apprentice rates of pay. All other terms and conditions for apprentices are in accordance with the terms of the Agreement. The Agreement is inferior to the terms of the Meat Industry Award which prohibits payment by results, provides payment of wages while training and covers travel costs, training fees (see below) and the cost of text books.

Other provisions

[26] The Agreement provides that all tools and equipment required for the performance of work are to be provided by the employee, and if the employer provides such tools and equipment the cost can be deducted from any amount earned by the employee. The cost of training may similarly be deducted from any amounts owed to the employee.

[27] The Agreement does not contain any allowances or the higher duties provisions applicable under the relevant modern awards.

Consideration

[28] For the reasons outlined in a number of decisions of this Commission and its predecessors, I am satisfied that the Agreement does not pass the better off overall test as required in s.186(2)(d) and explained in s.193 of the Act. Several of these decisions concern applications by labour hire companies for approval of enterprise agreements operating in primary industries, and which bear more than a passing similarity to the present application – see for example Top End Consulting Pty Ltd   , 12 Mondex Group Pty Ltd13and Agri Labour Pty Ltd.14 No submission was put to explain how it was considered that the Agreement meets the better off overall test.

[29] The employer has not established, or attempted to establish that exceptional circumstances exist in the industries covered by the relevant modern awards, save for small meat processing businesses. Mr Mossman, the solicitor representing the employer, has been involved in two of the applications by labour hire companies for approval of agreements in the aforementioned decisions. It is difficult to understand on what basis he could have considered that the Commission would approve the Agreement in its current form based on exceptional circumstances.

[30] Senior Deputy President Harrison made the following observation in Mondex Group Pty Ltd (Mondex) which is apposite to the current application and with which I respectfully agree. The scope of the proposed enterprise agreement in Mondex (the Mondex agreement) was the supply of labour for meat, poultry and seafood processing. Her Honour stated:

“At the time of the hearing before me the employer was engaging labour only in "abattoirs and boning rooms in Junee, Gosford, Young and South western Sydney."  Despite this, the Agreement is proposed to cover any employees throughout Australia with the exception of the ACT. No evidence or submissions persuaded me that it would be appropriate that the Agreement should extend beyond the current activities undertaken by the employer. Had I been persuaded that there were exceptional circumstances, it was likely that I would find it would be contrary to the public interest to approve it extending its inferior provisions to future employees who may be engaged by the employer throughout Australia.” 15

[31] If I was satisfied that exceptional circumstances requirements of s.189 of the Act had been met in the case of small meat processing businesses that are experiencing drought conditions, the scope of the Agreement could not be narrowed to this sector by an undertaking pursuant s.190 of the Act. This would represent a substantial change to the Agreement and would therefore be an impermissible undertaking under s.190(3) of the Act. 16

[32] In addition, the nature and extent of the undertakings required in order to enable the Agreement to meet the BOOT in respect to areas other than small meat processing businesses would also in my view represent a substantial change to the Agreement.

[33] I also note that certain provisions regarding the deductions from employee wages may be unlawful having regard to the terms of s.324 and s.325 of the Act concerning permitted deductions and unreasonable requirements on employees to spend earnings, respectively.

[34] Mr Reardon is a Director of MP Resources and of Agribusiness Pty Ltd (Agribusiness). Agribusiness is party to the Agribusiness Enterprise Agreement 2013 (the Agribusiness Agreement) which was approved on 13 September 2013. 17 The terms of the Agribusiness Agreement are, with some very minor drafting modifications, essentially the same as the terms of the Agreement, including its application to employees of the employer who would otherwise be covered by the relevant modern awards identified earlier. It was approved, with undertakings, under the exceptional circumstances provision of s.189 of the Act, although no reasons for decision were issued.

[35] I queried Mr Reardon as to why two related companies would want to have two Agreements with the same terms and coverage. Initially Mr Reardon became confused between the coverage of the Agribusiness Agreement and an enterprise agreement covering Regional Workforce Management (RWM), a labour hire company which operates as a division of the AWX Group of which Mr Reardon is the CEO. The enterprise agreement to which RWM is bound operates in the meat industry throughout Australia, although I understand its present coverage is limited to one large meat processor, which has a number of sites.

[36] Subsequently, Mr Reardon indicated that MP Resources and Agribusiness are operating in different “spaces”, but I am unclear what this means. In Mondex, SDP Harrison heard evidence that the employees were almost exclusively holders of sub-class 457 visas and that Mondex was competing with Agribusiness, in particular, which sources its labour from the same pool of Taiwanese and Korean backpackers. I am left to speculate as to whether this is the different ‘space’ Mr Reardon was referring to.

[37] There have been a number of applications for approval of enterprise agreements covering labour hire companies in the same industries which appear to be competing against each other on the basis of inferior terms and conditions. No unions or other employee representatives are involved in the negotiation of these enterprise agreements, which are poorly drafted and involve complex wages provisions. The employees are geographically dispersed from each other and from the employer. The agreements are broad reaching in the scope of work covered and in their geographical application.

[38] A common feature of the applications for approval of these agreements appears to be reliance on exceptional circumstances in a small area of the proposed coverage of the agreement to justify the inferior conditions that will apply to all employees.

[39] This approach is contrary to the objects of the Act which provide for the guaranteed safety net of “fair, relevant and enforceable minimum terms and conditions” through, among other things, modern awards and achieving “productivity and fairness” through an emphasis on enterprise agreements. 18 At best, the repeated attempts to gain approval of agreements in terms that have previously been rejected by the Commission or modified by the provision of undertakings is careless, at worst it lacks integrity.

[40] If exceptional circumstances exist in particular sectors, then enterprise agreements specific to those sectors should be developed and the supporting documentation to the Commission needs to be accurate and comprehensive.

[41] For the reasons set out earlier, the application for approval is dismissed.

DEPUTY PRESIDENT

Appearances:

Mr C Mossman with Mr T Reardon for the applicant

Hearing details:

2015:

Adelaide

31 August

 1   Ex E2

 2   Ex E3

 3   Compliance with s.180(2) of the Act is a requirement in order for the Commission to be satisfied that employees have genuinely agreed to an enterprise agreement - see Section 188 of the Act.

 4   Section 186(2)(a) of the Act

 5   At PN 123

 6   Except for casual cleaners for whom a minimum engagement of 2 hours is prescribed

 7   Clause 24 of the Meat Industry Award

 8   PN98, 177

 9   See the discussion of employee requests for additional hours and “genuine need” in Agri Labour Australia Pty Ltd, [2015] FWC 5332 at [8] to [15]

 10   Meat Industry Award

 11   Horticulture Award, Seafood Processing Award, Pastoral Award other than for Part 7

 12   [2010] FWA 662

 13   [2015] FWC 1148

 14   [2015] FWC 5332

 15   Mondex supra at [63]

 16   CEPU v Main People Pty Ltd[2015] FWCFB 4467 at [34], [35]

 17   [2013] FWCA 6970; PR541784

 18   See ss.3(b) and (f) of the Act

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