Ms Susan Edmondson
[2024] FWCFB 205
•9 APRIL 2024
| [2024] FWCFB 205 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 3, Item 20A(4) - Application to extend default period for agreement-based transitional instruments
Ms Susan Edmondson
(AG2023/4681)
| Commonwealth employment | |
|
DEPUTY PRESIDENT SLEVIN | SYDNEY, 9 APRIL 2024 |
Application to extend the default period for an Australian Workplace Agreement by Ms Susan Edmondson
Ms Susan Edmondson (the Applicant) has lodged an application to extend the default period for an individual agreement-based transitional instrument pursuant to subitem (4) of item 20A of Sch 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act). The relevant instrument is an Australian Workplace Agreement (AWA) made under the Workplace Relations Act 1996 (Cth) (WR Act) in 2008. The parties to the AWA are Ms Edmondson and her employer, the Australian Maritime Safety Authority (the Respondent). The application seeks to extend the operation of the AWA to 31 March 2025. The application is opposed by the Respondent.
The main aspects of the statutory framework applicable to this application were detailed in the Full Bench decision in Suncoast Scaffold Pty Ltd.[1] In short, the AWA—the subject of the application—is an agreement-based transitional instrument preserved in operation after the repeal of the WR Act and the commencement of the Fair Work Act 2009 (Cth) (FW Act) by item 2 of Sch 3 to the Transitional Act. The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 amended Sch 3 to add item 20A. Item 20A provides for the automatic sunsetting of remaining agreement-based transitional instruments at the end of the ‘default period’. The default period is the period ending on 6 December 2023 unless extended by the Commission. Subitem (6) of item 20A provides that, on application under subitem (4), the Commission must extend the default for a period of no more than four years if either:
(a) subitem (7), (8) or (9) applies and it is otherwise appropriate in the circumstances to do so, or
(b) it its reasonable in the circumstances to do so.
The application is advanced pursuant to subitem (7). Subitem (7) applies only where the application is made at or after the notification time for a proposed enterprise agreement that, in the case of an individual agreement-based transitional instrument, will cover the Applicant covered by the instrument, and bargaining for the proposed enterprise agreement is occurring.
The Full Bench in ISS Health Services Pty Ltd[2] described the requirements that must be met for an application to extend the default period where bargaining for a replacement agreement is made.
A Notice of Employee Representational Rights (NERR) was issued to employees of the Respondent on 28 September 2023. The NERR notified of an intention to bargain for an enterprise agreement the scope of which will cover the Applicant. The proposed enterprise agreement is intended to cover 463 employees of the Respondent, most of whom are covered by an enterprise agreement, the AMSA Enterprise Agreement 2016-2019. The Applicant filed her application on 29 November 2023, which was after the notification time for the proposed enterprise agreement.
Employee bargaining representatives have been appointed and two meetings held in 2023. Further meetings were scheduled to occur in 2024.
We are satisfied that the requirements in item 20A(7) of Schedule 3 to the Transitional Act are met.
Accordingly, we must consider whether it is appropriate in the circumstances to extend the AWA.
Applicant’s submissions
The Applicant contends that it is appropriate in the circumstances to extend the default period for the AWA for the following reasons:
1. It would be appropriate to extend the default period until the conclusion of the bargaining period of the replacement enterprise agreement. This would avoid breaking the continuity between the AWA and the start of the new and more modern enterprise agreement better allowing the Applicant to negotiate a transition to the closest equivalent classification level in the replacement enterprise agreement without disadvantage.
2. In emails dated 17 November 2023 and 26 November 2023 the Respondent advised that it will transition the Applicant to interim terms and conditions being a combination of the expired AMSA Enterprise Agreement and an AMSA remuneration determination (‘the interim terms and conditions’).
3. The interim terms and conditions disadvantage the Applicant as follows:
(a)The Applicant will be paid a salary that is 3% less than the salary paid to the Applicant under the AWA with no change to Applicant’s duties or responsibilities.
(b)The Respondent has stated incorrectly that the salary being offered is in excess of what the Applicant is currently paid, interpreting the meaning of “salary” in the AWA narrowly and disregarding the non-discretionary cash component reflected in the calculation of what is described as the “superannuation salary”.
(c)The reduction in the Applicant’s salary would also cause a reduction in the value of the Applicant’s leave entitlements accrued under the AWA including recreation leave and long service leave.
(d)The reduction in the Applicant’s salary would also be reflected in what is reported to the Applicant’s super fund so that the reportable super salary will go backwards and be equivalent to the Applicant’s reportable super salary of 3 years ago if the interim terms and conditions were to apply.
(e)The Respondent is refusing to replicate the Applicant’s eligibility for certain leave arrangements, in particular the removal of 12 leave days under clause 7.15 of the AWA.
(f)The Respondent is refusing to allow the Applicant access to certain leave entitlements already accrued under the AWA (i.e. carers leave under clause 13.21) post 7 December 2023.
(g)The Respondent has indicated that it will transition the Applicant at an AMSA level 8.3 which is not the nearest equivalent classification to the Applicant’s salary paid under the AWA.
(h)The Respondent has offered the Applicant a one off payment of $10,000 but has not adequately explained to the Applicant what that amount is for.
(i)The Respondent has not advised whether it will meet its liability for salary accrued from 1 July 2023 to 7 December 2023 which is salary conditional on competent performance — the Applicant estimates approximately $4000 falls into this category of salary which would ordinarily become a debt owed to the Applicant under the AWA.
4. On 17 November 2023, the Applicant proposed an arrangement that would operate after the sunsetting of the AWA to ameliorate the detriment caused by the transition to the AMSA Agreement, but this proposed agreement was refused by the Respondent.
5. It is reasonable for the Commission to extend the default period so that the Applicant can avoid the imposition of terms and conditions that make the Applicant worse off. This extension will allow more time for consideration of the replacement enterprise agreement and time to conduct further discussions to ameliorate any disadvantage or harshness caused by any lack of equivalency under the replacement enterprise agreement.
6. The Applicant requests the extension of the default period until the commencement of the replacement enterprise agreement for which bargaining has been notified/commenced.
7. The Applicant anticipates (from past observation of bargaining in AMSA) that bargaining will take approximately 12 to 18 months and will most likely be completed by 31 March 2025 for commencement of a new enterprise agreement in July 2025.
Respondent’s submissions
The Respondent opposes the extension of the AWA on the grounds that it would not be appropriate in the circumstances to do so. The Respondent’s view is that the Applicant is better off under the terms of the AMSA EA than the AWA. The Respondent indicated that the Applicant is the only employee who is subject to an AWA and that in the interests of equity, transparency and efficiency, her arrangements should be brought in line with the balance of the Respondent’s employees. The Applicant’s AWA was agreed in 2007 and has not seen any update to its terms since. These terms differ from those under the AMSA EA, including by way of the method of calculation of salary and salary increases, provision for payment of bonuses, and some leave arrangements, as well as other matters not currently canvassed by the application.
Further, the Respondent contended that bargaining for the new EA is expected to be finalised by mid-2024, as opposed to mid-2025 as submitted by the Applicant. The Respondent submitted that the Applicant is not entitled to be engaged in the bargaining process while she remains on an AWA, and that this disadvantage to the Applicant can only be avoided by refusing to extend the default period of her AWA. The Respondent says that the Applicant may only transition to the closest classification in the EA which is level 8.3, as classification 8.4 would require a promotion to that position, and there are no positions available in her work area.
In relation to the specific issues raised by the Applicant the Respondent contends:
The remuneration for the level 8.3 position, being $177,834 per annum, is higher than the AWA base salary, being $174,815 per annum, by $3,019. Should the Applicant not be engaged under the EA when the new enterprise agreement commences, she will not be eligible for the 0.92% bonus payment that may be available, as approved by the Australian Public Service Commission. This bonus will be worth $1,636 for a full-time level 8.3.
The Applicant’s salary calculations included a 5% performance bonus, and the Respondent indicated that it did not agree that this performance bonus should be treated as salary because it is contingent on participation in the Respondent’s performance management arrangements. The Respondent properly acknowledged that the bonus has been paid to the Applicant for each year of operation of the AWA, and that 5% of the Applicant’s salary under the AWA is $8,740.
The Applicant’s superannuation under the EA would move to a calculation based on salary and recognised allowances. The Respondent acknowledged that the Applicant had noted, correctly, that this would not include non-cash benefits that are currently specified as being included for superannuation in the AWA (such as the notional value of a car park). However, the Applicant is a member of the Public Service Superannuation Scheme, and as such, her superannuation salary will be retained and increased by average weekly ordinary time earnings (AWOTE). Accordingly, there is no reduction in super salary – rather, the Applicant’s super salary may be greater under the AWOTE calculation methodology and will not go backwards or be frozen. The Respondent submits that in these circumstances, there is no loss to the Applicant’s superannuation salary, which is maintained in accordance with scheme rules.
The value of the Applicant’s leave under the AWA compared to the EA or its replacement are not easily measured, as pay increases under an EA under negotiation are hard to predict. In addition, the Applicant is eligible for three additional leave days for Christmas closedown under the EA as compared to the AWA. The value of these days is $2,010 (based on her current AWA salary). The Respondent submits that the leave provisions under the AWA and the EA are essentially the same, with the exception of Professional Hours, which must be approved.
The Respondent offered the Applicant a $10,000 one-off payment to go off the AWA.
There is no liability for a partial payment of the performance bonus under the AWA. It is not an accrued amount – it is only payable after the completion of the performance year or cycle in June each year and is subject to satisfactory performance.
Applicant’s submissions in reply
In response to the Respondent’s contentions the Applicant argues that the Level 8.3 salary ($177,834) under the current EA is equivalent to the Applicant’s AWA salary ($183,555 which comprises $174,815 + 5% being $8740) and disagrees that reverting to the EA would involve no disadvantage to the Applicant. The Applicant submits that this equivalency is dependent on a 3% performance payment and that the Applicant considers that she would be unlikely to be assessed as eligible for this as it requires a rating of “exceeding expectations”. Under the AWA, the Applicant receives a 5% bonus payment if she receives an assessment of “fully competent”, and accordingly, her total package is more than she would be entitled to under the EA, irrespective of the EA’s base salary being higher.
The Applicant submits that she will also lose discretionary carers leave under the AWA (5 days) which, she acknowledged, would probably be offset by extra days of personal leave (3 days) and Christmas and New Year shut down (3 days) under the EA. However, this was offset by the uncertainty arising from the administration of Professional Hours leave (12 days) under the EA which the Applicant contended, would, as a result, be harder to access.
The Applicant also submits that she has not been offered a level 8.4 classification under the EA.
The Applicant contended that if the Commission did not extend the default period for the AWA then this would effectively result in the loss of 5% of her salary (being $8740), as well as potentially losing 12 days of professional hours leave. The possibility of the compensation of $3019 and a sign-on payment of $1636 is insufficient to offset the net loss to the Applicant under the EA as opposed to remaining under the AWA. The Applicant submits that under the AWA, she expected to receive an annual increase of approximately 3.8% of her salary to be applied in September 2024 (per clause 6.2 of the AWA).
The Applicant expressed an interest in being able to review the terms of the final negotiated EA in order to compare them with her AWA and the benefits of the AWA that she might lose if she moved to the current EA.
When the Commission sought the Applicant’s views as to whether a six-month extension would be sufficient, the Applicant made submissions that bargaining would be unlikely to be finalised within 6 months as in the past, negotiations for replacement enterprise agreements have taken several months with 3 unions actively involved. The Applicant estimated that bargaining should end by March 2025 for a new enterprise agreement to commence on 1 July 2025.
Consideration
We are satisfied it is appropriate in the circumstances to extend the default period for the AWA pursuant to subitem 7. However, we do not consider that it is appropriate to extend the default period to 31 March 2025 as sought by the Applicant.
We consider that it is appropriate to extend the default period until the conclusion of the bargaining for the replacement enterprise agreement. We accept the position of the employer that this should likely be achieved by mid- 2024.
We further consider that a comparison of the terms and conditions between the AWA and the AMSA EA demonstrate that there are some beneficial conditions under the EA and likely, some inferior, ones. Some of the conditions under the EA are uncertain or likely contingent on higher performance assessments. On balance, we consider that the terms of the AWA are likely to be more beneficial than the AMSA EA.
We consider that an extension of time until 30 July 2024 will allow the Applicant and the Respondent to negotiate and finalise an effective transition without resulting in any disadvantage to the Applicant in reverting to the existing EA. Whilst we appreciate that the Respondent would prefer to have all of its employees under one agreement we do not consider that the extension that we have determined to grant will require the Respondent to make any special arrangements or entail any new administrative burden as the current procedures and arrangements can remain on foot.
Accordingly, we consider that an extension to the AWA until 30 July 2024 is sufficient time for a replacement agreement to be made and approved.
Pursuant to item 20A(6) of Sch 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth), we order that the default period for the Agreement is extended until 30 July 2024.
DEPUTY PRESIDENT
[1] [2023] FWCFB 105 at [3]-[18].
[2] [2023] FWCFB 122 at [4]
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