MSKP Pty Ltd T/A Caltex Starsop Beechboro

[2016] FWC 7114

[2016] FWC 7114

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.210—Enterprise agreement

MSKP Pty Ltd T/A Caltex Starsop Beechboro
(AG2016/5534)

Vehicle industry
COMMISSIONER WILLIAMS	PERTH, 5 OCTOBER 2016

Application for variation of the MSKP PTY LTD Collective Agreement 2016.

[1] This decision concerns an application made by MSKP Pty Ltd T/A Caltex Starsop Beechboro (the applicant) for the approval of a variation of the MSKP PTY LTD Collective Agreement 2016 [AE420491](the Agreement).

Background

[2] The Agreement was approved on 12 August 2016 in a decision of Deputy President Gostencnik [[2016] FWCA 5608]. The approval was subject to the Commission accepting a written undertaking by the applicant. That undertaking was provided to the Commission as a document headed Annexure A. A copy of Annexure A is appended to this decision. It is readily apparent from the nature of the written undertaking that was required and given that it was necessary to address concerns at the time that the Agreement did not meet the Better Off Overall Test requirements for approval as prescribed in section 193 of the Fair Work Act 2009 (the Act).

[3] This application for the approval of a variation currently before the Commission concerns a variation to Annexure A of the Agreement so that Annexure A would read as follows:

• An employee may be engaged in night shift work only, if the employee has made such a request to the employer to suit their availability.



• Part-time employee may be engaged in weekend work exceeding 45% of his or her hours provided, the employee has made such a request to the employer to suit their availability.

All the other terms and conditions as specified in Annexure A will have no effect upon implications of the above variations to the agreement if approved by the Commission.”

[4] It is apparent that the proposed variation involves negating the particular elements of the undertaking in Annexure A for employees engaged in night shift work only or engaged in weekend work exceeding 45% of their hours in circumstances where that employee had requested to work these arrangements to suit their availability. Separately the final sentence of the variation seems intended to negate all the other terms and conditions in the undertaking which is Annexure A.

[5] Directions were issued for the applicant to provide calculations comparing the payments to be received by an employee under the Agreement, as it would be if the variation was approved, with the payments to be received under the relevant award for an employee engaged to work night shifts only and an employee working more than 45% of their hours on the weekend. The relevant award is the Vehicle Manufacturing, Repair, Services and Retail Award 2010 [MA000089] (the Award).

[6] The applicant has provided calculations in accordance with those directions which they agree demonstrate that the Agreement if varied compared to the Award would not pass the Better Off Overall Test under section 193 of the Act.

Consideration

[7] Sections 210 of the Act prescribes the requirements for applying to the Commission for the approval of a variation of an enterprise agreement and section 211 prescribes when the Commission must approve such a variation.

[8] In Veolia Environmental Services (Australia) Pty Ltd [[2016] FWCA 5055] (Veolia Decision) Commissioner Hampton summarised the requirements of section 211 as follows:

“[11] In general terms, under s.211 of the Act, the Commission is required to approve a variation to an enterprise agreement where:

• the application is made in accordance with the requirements of the Act and the Fair Work Regulations 2009 (the Regulations);

• the agreement to vary the enterprise agreement has been genuinely made between the employer and a majority of the relevant group of employees in the same manner as required to make an enterprise agreement that is approvable under s.186 of the Act, including ss.180, 186 and 188 as modified (these also include the provisions of Subdivision E, dealing with approval requirements relating to particular employees);

• the enterprise agreement as modified by the proposed variation is such that it would meet the relevant approval requirements of s.186 of the Act (with appropriate modifications) including the Better Off Overall Test of s.193 of the Act and compliance with the National Employment Standards;

• the group of employees covered by the enterprise agreement is fairly chosen, the agreement as modified does not contain any unlawful terms, the agreement includes a term that provides a procedure for settling disputes and meets other form and content requirements; and

• the agreement as varied does not specify a nominal expiry date of more than four years after the day on which the Commission initially approved the agreement; unless

• it is satisfied that there are serious public interest grounds for not approving the variation.”

[9] The central consideration in this particular application is whether or not the Agreement if it was varied would meet the approval requirements of section 186 of the Act including the Better Off Overall Test of section 193.

[10] In J. Reynolds Holdings Pty. Ltd. T/A John Reynolds Electrics [[2014] FWCA 2661] Deputy President Gostencnik considered the application of the Better of Overall Test for applications to vary agreements and set out the requirements of the Act as follows:

“Better off overall test objection

[26] The CEPU’s objection based on the better off overall test is founded principally upon a comparison between the Agreement and the Agreement as varied. This approach misunderstands the better off overall test.

[27] If the variation to Agreement is to be approved by the Commission the varied Agreement must inter alia pass the better off overall test. Further, if the Commission has concerns that the varied Agreement does not pass the better off overall test, the Commission may accept a written undertaking and approve the variation.

[28] Section 193 as modified by s. 211 (4) provides as follows:

193 Passing the better off overall test

When a non-greenfields agreement passes the better off overall test

(1) An enterprise agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.

FWC must disregard individual flexibility arrangement

(2) If, under the flexibility term in the relevant modern award, an individual flexibility arrangement has been agreed to by an award covered employee and his or her employer, the FWC must disregard the individual flexibility arrangement for the purposes of determining whether the agreement passes the better off overall test.
…
Award covered employee

(4) An award covered employee for an enterprise agreement is an employee who:

(a) is covered by the agreement; and

(b) at the test time, is covered by a modern award (the relevant modern award) that:

(i) is in operation; and

(ii) covers the employee in relation to the work that he or she is to perform under the agreement; and

(iii) covers his or her employer.

Prospective award covered employee

(5) A prospective award covered employee for an enterprise agreement is a person who, if he or she were an employee at the test time of an employer covered by the agreement:

(a) would be covered by the agreement; and

(b) would be covered by a modern award (the relevant modern award) that:

(i) is in operation; and

(ii) would cover the person in relation to the work that he or she would perform under the Agreement; and

(iii) covers the employer.

Test time

(6) The test time is the time the application for approval of the variation of the enterprise agreement by the FWC was made under section 210.

FWC may assume employee better off overall in certain circumstances

(7) For the purposes of determining whether an enterprise agreement passes the better off overall test, if a class of employees to which a particular employee belongs would be better off if the agreement applied to that class than if the relevant modern award applied to that class, the FWC is entitled to assume, in the absence of evidence to the contrary, that the employee would be better off overall if the agreement applied to the employee.

[29] The test time for purposes of assessing whether the Agreement as varied passes the better off overall test is 26 March 2014, the date on which the application for approval of the variation was made.

[30] Relevantly the varied Agreement will pass the better off overall test if the Commission is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the varied Agreement would be better off overall if the varied Agreement applied to the employee than if the relevant modern award applied to the employee.

[31] The application of the better off overall test is not to be applied as a line by line analysis. Rather it is a global test requiring consideration of the advantages and disadvantages to award covered employees and prospective award covered employees. The application of the better off overall test therefore requires the identification of terms of the varied agreement which are more beneficial to the relevant employees when compared to the relevant modern award, the terms of the varied Agreement which are less beneficial and then an overall assessment of whether each relevant employee would be better off under the varied Agreement.” (Reference omitted)

[11] A relevant matter in this current application to vary an agreement is the fact that the Agreement was originally approved subject to an undertaking under section 190 of the Act.

[12] The effect of such an undertaking has previously been considered by Commissioner Hampton in the Veolia Decision. Commissioner Hampton considered a circumstance where an agreement had been approved with an undertaking and found that the effect of that was as follows:

“[76] The effect of the undertaking provided during the initial approval process is set out in s.191 of the Act as follows:

“191 Effect of undertakings

(1) If:

(a) the FWC approves an enterprise agreement after accepting an undertaking under subsection 190(3) in relation to the agreement; and

(b) the agreement covers a single employer;

the undertaking is taken to be a term of the agreement, as the agreement applies to the employer.

(2) If:

(a) the FWC approves an enterprise agreement after accepting an undertaking under subsection 190(3) in relation to the agreement; and

(b) the agreement covers 2 or more employers;

the undertaking is taken to be a term of the agreement, as the agreement applies to each employer that gave the undertaking.”

[77] Accordingly, the undertaking is taken to be a term of the enterprise agreement as approved by virtue of the operation of the Act. It has also been noted in the enterprise agreement approval decision 21 as required by the Act.

[78] I must initially consider the legal impact of the non-inclusion of the s.196 undertaking in the supplied version of the variation. Depending upon the view taken about that issue, I may need to consider whether this meant that the employees were not provided with a copy of the variation as required by s.180(2) and/or whether the absence of a reference to the non-inclusion of the undertaking was itself part of the variation that should have been explained under s.180(5) and (6) of the Act.

[79] In my view, the s.196 undertaking is and remains a term of the Agreement by virtue of s.191 of the Act. I leave aside for present purposes whether it would be possible for parties to agree to remove an undertaking that led to the approval of an Agreement and became a term in that way. In any event, even if that were feasible, a variation of that nature would need to be explicit and there is no suggestion in the process that any variation to the s.196 undertaking was contemplated.

[80] Whatever the consequences of its omission from the supplied version of the Agreement might be, the s.196 undertaking remains a term of the Agreement.” (References omitted)

[13] I adopt the reasoning of Commissioner Hampton on this issue. Consequently in this particular case the undertaking given by the applicant when the Agreement was approved, which was Annexure A, is a term of the Agreement. Significantly what the applicant seeks to do by this variation is in particular circumstances exclude the operation of Annexure A, or at least elements of it. Elements of the undertaking in Annexure A would not apply where an employee has requested to be rostered in a particular manner to suit their personal availability. The difficulty with this is it would result in these employees not being Better Off Overall in terms of what they would receive under the varied Agreement compared to what they would be entitled to have received under the Award, which is why the undertaking was necessary for the Agreement to be approved.

[14] Whilst the Commission is sympathetic to the difficulties the undertaking that was given may cause in practice within the applicant’s business the Agreement if it was varied as the applicant seeks would no longer pass the Better off Overall Test. As a consequence of this the Commission cannot approve this application to vary the Agreement. Because of the unique nature of this application this failure to meet the requirements of section 211 of the Act cannot properly be cured by the giving of an undertaking under section 212 of the Act.

[15] This application to vary the Agreement does not meet the requirements of section 211 of the Act and accordingly this application is hereby dismissed.

[16] The Agreement including the undertaking in Annexure A continues to operate unchanged as it was originally approved by the Commission in August 2016.

COMMISSIONER

Appearances:

S. Katdhare on behalf of the applicant.

Hearing details:

2016.

Perth:

October 4

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<Price code C, AE420491  PR586083 >