Mr Irving Warren

[2017] FWC 5503

[2017] FWC 5503

FAIR WORK COMMISSION

DECISION

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

Mr Irving Warren
(AG2017/1682)

COMMISSIONER CAMBRIDGE SYDNEY, 17 NOVEMBER 2017

Application for approval of the All Districts Coating Enterprise Agreement 2017.

[1] This Decision has been issued further to the Interim Decision 1 made in this matter on 19 September 2017. The matter involves an application for approval of an enterprise agreement known as the All Districts Coating Enterprise Agreement 2017 (the Agreement). The application was made pursuant to s. 185 of the Fair Work Act 2009 (the Act). The application has been made by Irving Warren (the applicant or Mr Warren), and the employer to be covered by the Agreement is All Districts Coating (NSW) Pty Ltd (the employer or All Districts). The Agreement is a single-enterprise agreement.

[2] The application, made in the prescribed Form F16, was lodged at Sydney on 15 May 2017. The application included a Statutory Declaration made in the prescribed Form F17, of Carlos Habibeh, made on behalf of the employer and dated 15 May 2017 (the F17 Declaration). The F17 Declaration stated that the Agreement was made on 10 May 2017. Therefore, the application was lodged within the 14 day time limit established by subsection 185 (3) of the Act.

[3] The chronology of relevant events which broadly involved concerns raised first by the Fair Work Commission (the Commission) regarding the application, and particular terms of the Agreement, and secondly the identified opposition to the application from the Construction, Forestry, Mining and Energy Union (the CFMEU) can be found in the Interim Decision. The Interim Decision granted the CFMEU standing as an intervener in the matter. Following the Interim Decision, Directions were made for the filing and service of all material in preparation for a Hearing of the substantive matter which was held on 24 October 2017.

[4] At the Hearing held on 24 October, Mr Warren, as the applicant, continued his appearance on behalf of the employer, and Mr Fischer continued his appearance on behalf of the CFMEU as an intervener.

The Submissions of Mr Warren

[5] Mr Warren relied upon documentary submissions which were marked as “Warren - 17 September”. The submissions made by Mr Warren maintained broad criticism of the CFMEU. According to Mr Warren, the CFMEU was an organisation that should be considered to be unreliable, and therefore the submissions of the CFMEU on anything other than factual issues, should be disallowed. Further, Mr Warren submitted that “the value of the overall thrust of the submission must be measured against the history of the CFMEU’s actions and attitude, that has been publicly noted by the Federal Court.”

[6] The submissions made by Mr Warren included rejection of the various concerns that had been raised by the CFMEU in its Outline of Submissions document. Relevantly, the submissions of Mr Warren included rejection of concerns raised about whether particular terms contained in the Agreement individually or in combination, passed the Better Off Overall Test (BOOT).

[7] The submissions made by Mr Warren included documented proposed Undertakings contemplated to be made under s. 190 of the Act. The Undertakings were proposed to specifically address certain concerns that had been identified as not satisfying the requirements of subsection 186 (2) (d) of the Act, regarding the BOOT. In addition to the documented Undertakings dated 7 July 2017, Mr Warren indicated that further Undertakings could be provided to address further concerns that were identified in the CFMEU Outline of Submissions document. Mr Warren also advised that additional Undertakings could be provided to address a particular concern that had been raised by the Commission during the Hearing.

[8] In summary, Mr Warren submitted that many of the issues that had been raised by the CFMEU were pedantic and related to issues that were unlikely to ever affect the employer and its employees. In any event, the submissions made by Mr Warren included three documented Undertakings and an indication that further Undertakings could be provided if requested. Mr Warren submitted that the CFMEU had raised no issues that would prevent the Commission from approving of the Agreement.

The Submissions of the CFMEU

[9] Mr Fischer made short oral submissions which relied upon written material which had been filed by the CFMEU on 5 June 2017. The oral submissions made by Mr Fischer reiterated particular points of concern contained in the CFMEU Outline of Submissions of 5 June 2017.

[10] Mr Fischer made submissions which asserted that the superannuation clause contained in the Agreement did not comply with the Superannuation Guarantee Act 1992. In particular, Mr Fischer submitted that the rates that were paid as superannuation under the terms of the Agreement were inferior to those that would apply to an Award covered employee, and that no Undertakings had been provided to address this particular concern.

[11] Mr Fischer also made submissions about concerns that arose in respect to the inclusion of all allowances into the loaded hourly rates that were provided for in the Agreement. Mr Fischer said that it may well be the case that some of these allowances were not relevant to the current operations of the employer, but the Agreement covered a period of time during which the operations of the employer could expand and these allowances would then not be payable. Mr Fischer submitted that no Undertakings had been provided which could address this prospect that could logically emerge over time.

[12] In summary, Mr Fischer submitted that the Agreement provided for inferior superannuation payments, and that it also failed to pass the BOOT in respect to various other terms. Mr Fischer urged the Commission to refuse the application for approval of the Agreement.

Consideration

[13] The proceedings in respect to this matter have been somewhat tortuous and beset with manifest animosity towards the CFMEU. Notwithstanding these difficulties, the determination of the application can be dealt with in short compass and specifically regarding the question of the satisfaction required under subsection 186 (2) (d) of the Act (the BOOT).

[14] In broad terms the Agreement is an instrument that prescribes payment by way of what are known as loaded hourly rates. In this case the loaded hourly rates involve work for all hours up to 50 hours per week over a six month cycle. The Agreement provides for no specified daily or weekly ordinary hours of work other than a requirement that no employee is to work more than 12 hours on any day, or more than 10 hours per day on more than four consecutive days. There are no prescribed Saturday or Sunday rates. Only in the event that an employee works more than an average of 50 hours per week over an eight week cycle then such employee would be paid an additional $6.00 per hour for the hours which exceed the 50 hour average. There are no other overtime or allowance payments prescribed by the Agreement.

[15] The Agreement includes an appendix B which contains terms that provide the rationale upon which the loaded hourly rates have been calculated having regard for a predicted pattern of engagement. The predicted pattern of engagement recognises and “factors-in” various Award derived components such as overtime, meal allowance, crib time, redundancy, fares and travelling patterns, etc. A notional Award derived outcome for the predicted pattern of engagement is used as the basis to establish the loaded hourly rate. In this way it is then said that the loaded hourly rate provides an outcome that satisfies the BOOT.

[16] However, as was identified during the Hearing, engagement on a particular basis that departs from the predicted pattern of engagement will provide for a circumstance where an individual would receive substantially less than what would have been payable under the Award. As a simple example that was provided by the Commission during the Hearing, a daily hired labourer engaged to work for 12 hours on a Saturday would, under the Agreement receive $294.00, and under the Award she or he would have been paid $488.30.

[17] This particular difficulty with loaded hourly rates that have been established upon a predicted pattern of engagement is a BOOT concern that is not a recent revelation. On 15 March 2010, the concern was identified in a Decision 2 which refused the approval of an enterprise agreement for a variety of reasons but which relevantly included the following observations:

“However, the advantageous outcome relied upon the assumed pattern of engagement over a 52 week period being maintained. If the pattern changes to include say, more Saturday or Sunday work, or more night work, or extended engagements (which under the Award attracted overtime), or if more than the assumed number of 4 Public Holidays are worked, then there is real prospect that the result would be a loss in pay under the Agreement when compared to the Award. Further, periods of employment of less than 52 weeks may also distort any valid comparisons, particularly if the period involved work on a number of Public Holidays and or weekends and nights.” 3

[18] The particular example that was used during the Hearing as basis for the BOOT concerns was said to be a circumstance that could be addressed by way of a further Undertaking from the employer. However, one can contemplate an almost infinite number of alternative scenarios involving engagement patterns that involved working overtime and weekend work, and which would demonstrate that there could be no satisfaction of the BOOT.

[19] The Commission has given consideration to providing the applicant with a further Hearing and other opportunity as a means to further attempt to redress the various on-going concerns. However, upon reflection, the proposed Undertakings or any subsequently developed permutation of these or other Undertakings which could, on any objective contemplation, provide rectification of the concerns that have been identified, would result in substantial changes to the Agreement.

[20] Consequently, any objectively determined prognosis for the application would create a circumstance that offended subsection 190 (3) (b) of the Act.

[21] In such circumstances, and in the interests of efficiency and avoidance of additional costs to the applicant and the employer, as the application is not capable of satisfying the relevant requirements of ss.186, 187, 190 and 193 of the Act, the application for approval of the Agreement must be dismissed.

COMMISSIONER

Appearances:

Mr I Warren appeared for the employer.

Mr T Fischer appeared for the Construction, Forestry, Mining and Energy Union.

Hearing details:

2017.

Sydney:

October, 24.

 1   [2017] FWC 4787.

 2   [2010] FWA 2105.

 3 Ibid @ paragraph [25].

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