Mr Gerald Fanning
[2010] FWA 3251
•21 APRIL 2010
[2010] FWA 3251 |
|
DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
(AG2009/14396)
COMMISSIONER LEWIN | MELBOURNE, 21 APRIL 2010 |
Fair Work Act Enterprise Agreement, AML Pty Ltd & AML Employees 2009-12.
[1] This decision concerns an application made by Gerald Fanning, a bargaining representative of the Company, for approval of the Enterprise Agreement, AML Pty Ltd & AML Employees 2009 - 2012 (the agreement) pursuant to s.185 of the Fair Work Act 2009 (the Act) on 27 November 2009. The file was received in my chambers on 9 December 2009.
[2] The Agreement was made during the bridging period 1 as defined in the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Act), accordingly, when considering whether or not to approve the Agreement I have taken into account the provisions of Part 2–4 of Chapter 2 of the Act as modified by Schedule 7 of the Transitional Act. The application is subject to the Agreement passing the no-disadvantage test contained in Item 4 of Schedule 7 of the Transitional Act.
[3] The reference instrument for the purposes of comparison in determining whether or not the Agreement passes the no-disadvantage test is the Security Employees (VIC) Award (AP796143CRV). On reading the terms of the terms of the Agreement and the reference instrument I became concerned that the Agreement did not pass the no-disadvantage test.
[4] On 5 February 2010 I wrote to the applicant to notify the applicant of my concerns that the Agreement did not pass the no-disadvantage test noting that the wage rates contained in the Agreement were less than those in the reference instrument, the absence of overtime provisions, penalty rates, loadings and allowances. AML Pty Ltd filed a response to my letter of 5 February in the Tribunal on 11 February 2010 in the form of an undertaking in the following terms:
“PURSUANT to section 190 of the Fair Work Act 2009 AML Pty Ltd hereby undertakes that the Casual Rates clause of the Agreement shall be amended to ensure compliance with Section 186(2)(d) in terms of the better off overall test.
AML Pty Ltd give the undertaking the Agreement is only for the employment of casuals.”
[5] On 22 February 2010 I wrote to Mr Fanning stating that I considered the above undertaking to be general in nature and that the effect of accepting the undertaking would constitute significant changes to the terms of the Agreement in order that the employees covered by the undertaking not be disadvantaged having regard to the no-disadvantage test prescribed by the Act. In Particular, the undertaking would seem to require changes to the terms of the Agreement, incorporating terms of the reference instrument, dealing with ordinary hours of work performed on the weekends, overtime rates, shiftwork allowances and allowances generally, among other things. Mr Fanning was invited to file any Submissions to satisfy me that the undertaking filed on 11 February 2010 would not result in substantial changes to the Agreement by 1 March 2010.
[6] On 24 February 2010 Mr Fanning requested an extension of time to file materials in response to my letter of 22 February 2010, until 5 March 2010. An extension was granted accordingly. On 5 March 2010, AML Pty Ltd filed a second undertaking in response to my letter of 22 February 2010 in the following terms:
“PURSUANT to section 190 of the Fair Work Act 2009 AML Pty Ltd hereby undertakes that the Casual Rates (Clause 1) of the Agreement shall be amended to ensure compliance with Section 186(2d) in terms of the better off overall test. In effect, this will require AML Pty Ltd to adjust the casual loading by 2% each year for five years commencing on 1st July 2010 to 25% as from 1st July 2014 as per sub clause A.5.4 of the Security Services Industry Award 2010 (MA 000016).
Further, AML Pty Ltd undertakes to amend the weekend rates of pay in the agreement to reflect the rates payable in the Award (Clause 23.3).
AML Pty Ltd Employees Agreement is only for the employment of casuals.”
[7] For the reasons outlined in paragraph [5] above, I was still not satisfied that the Tribunal could accept the second undertaking proposed by the Company. I considered that the second undertaking was also expressed in general terms and that the effect of accepting the undertaking would constitute substantial changes to the terms of the Agreement. On 25 March 2010, the application was listed for Hearing on 30 March 2010.
[8] At the Hearing on 30 March 2010 Mr Gerald Fanning appeared for AML Pty Ltd. Mr Andrew Duffy of AML Pty Ltd also appeared. At the Hearing I explained in some detail my concerns that the Agreement did not pass the no-disadvantage test and issues relating to the giving of undertakings in this application. I expressed the view that, in order to address the extent of the numerous disadvantages identified under the terms of the Agreement, when compared to the terms of the reference instrument, the necessary undertakings would most likely lead to substantial changes in the terms of the Agreement.
[9] At the Hearing on 30 March 2010 the Company maintained a desire to have the Agreement approved with undertakings. I directed the Company to file in the Tribunal any such undertakings for my consideration by 12 April 2010.
[10] On 12 April 2010 AML Pty Ltd filed in the Tribunal undertakings in the following terms:
“Pursuant to section 190 of the Fair Work Act 2009 AML Pty Ltd hereby undertakes:
1. That the rates for employees, all of whom are employed on a casual basis, shall be maintained sufficiently in excess of the rates in the reference instrument to allow for absorption of such allowances as might be paid from time to time;
2. Clause 1.2 Types of Employment read in conjunction with the “Coverage” clause provides that the shift and weekend work provisions of the reference instrument apply to employees covered by the Agreement;
3. That the transitional provisions set out in clause A2.5 and A5.4 of the Appendix to the Security Services Industry Award 2010 shall be observed to ensure that wages remain sufficiently above the award to give effect to 1. above.*
*The Basic Hourly Rates set out in the Agreement approved by the employees included a transcription error in as much as they were the wage rates as set out in the Australian Pay and Classification Scale operative from 1st October 2007. They should have been taken from the APCS for 1st October 2008 and therefore have read:
Wages Classification | Basic Hourly Rate $ |
Level 1 | 15.74 |
Level 2 | 16.15 |
Level 3 | 16.43 |
Level 4 | 16.72 |
Level 5 | 17.33 |
Notwithstanding this error the casual rates specified in the Agreement are all in excess of 20% above the correct Basic Hourly Rate as against the 15% required by the transitional instrument. As all employees are employed and paid as causals it is the casual rate with which they are familiar.”
[11] For the purpose of considering whether or not the terms of the Agreement pass the no-disadvantage test, a number of critical aspects of the terms of the Agreement can be identified:
• The Agreement does not incorporate the terms of the reference instrument.
• The hourly rates of pay prescribed by the terms of the Agreement are less than the relevant hourly rates of pay for the purposes of the no-disadvantage test.
• The terms of the Agreement do not include an extensive set of allowances prescribed by the reference instrument. Therefore, employees employed under the terms of the Agreement would be disadvantaged by the terms of the Agreement as they would have no entitlement to the relevant allowances prescribed by the reference instrument.
• The Agreement does not prescribe ordinary hours of work or overtime provisions.
• The Agreement is said to apply only to casual employees.
• The casual loading prescribed by the Agreement is less than the casual loading prescribed by the reference instrument.
• The Agreement does not contain provisions regulating weekend work whereas the reference instrument includes such provisions and employees working on weekend would therefore be disadvantaged when working on weekends.
• The Agreement does not provide for minimum payments for causal engagements whereas the reference instrument does so provide, and therefore, the employees employed under the terms of the Agreement could be engaged for a lesser number of hours than under the reference instrument and disadvantaged accordingly.
• The terms of the Agreement do not contain provisions which regulate the rostering of employees such as are contained in the reference instrument.
• The terms of the Agreement do not provide entitlements for casual employees who work on public holidays which are commensurate with those provided by the reference instrument, and therefore, casual employees who perform work on public holidays would therefore be disadvantaged.
[12] In short, the terms of the Agreement fall well short of the substantive terms of the reference instrument.
[13] However, Fair Work Australia may approve an enterprise agreement with undertakings pursuant to s.190 of the Act which is set out below:
“190 FWA may approve an enterprise agreement with undertakings
Application of this section
(1) This section applies if:
(a) an application for the approval of an enterprise agreement has been made under section 185; and
(b) FWA has a concern that the agreement does not meet the requirements set out in sections 186 and 187.
Approval of agreement with undertakings
(2) FWA may approve the agreement under section 186 if FWA is satisfied that an undertaking accepted by FWA under subsection (3) of this section meets the concern.
Undertakings
(3) FWA may only accept a written undertaking from one or more employers covered by the agreement if FWA is satisfied that the effect of accepting the undertaking is not likely to:
(a) cause financial detriment to any employee covered by the agreement; or
(b) result in substantial changes to the agreement.
FWA must seek views of bargaining representatives
(4) FWA must not accept an undertaking under subsection (3) unless FWA has sought the views of each person who FWA knows is a bargaining representative for the agreement.
Signature requirements
(5) The undertaking must meet any requirements relating to the signing of undertakings that are prescribed by the regulations.
[14] In my judgment there are a number of reasons why the undertakings offered cannot or should not be accepted. They are as follows:
• The undertakings would lead to substantial changes to the terms of the Agreement. Accordingly, pursuant to the provisions of s.190(3)(b) of the Act, the Tribunal does not have the discretionary power to accept the undertakings and approve the Agreement accordingly.
• The employer stated at the Hearing on 30 March 2010 that when the terms of the Agreement where explained to employees during the pre-approval process the employees were given to understand that relevant terms of the reference instrument were incorporated into the Agreement. After discussions at the Hearing the employer conceded that this is not the case.
• The undertakings would not, in any event, effectively address all of the disadvantages arising from a comparison between the terms of the Agreement and the terms of the reference instrument.
• The terms of the undertakings are inherently complex, require significant interpretation, are ambiguous and, arguably at least, are so comprehensive as to constitute entirely new and different terms and conditions of employment to those which were subject of the Agreement making process with the employees.
[15] I conclude that the Tribunal does not have the discretionary power to accept the undertakings because it is likely that the undertakings will lead to substantial changes in the terms of the Agreement. In the alternative, if the discretionary power to accept the undertakings exists then I decline to do so for the reasons stated above.
COMMISSIONER
Appearances:
Mr Gerald Fanning, representative for AML Pty Ltd
Mr Andrew Duffy, of AML Pty Ltd
Hearing details:
2009
30 March 2010
Melbourne
1 Item 2, Part 1, of Schedule 2.
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