Nine2Three Employment Solutions Pty Ltd t/a CIRCLE Recruitment & HR
[2023] FWCFB 126
•17 JULY 2023
| [2023] FWCFB 126 |
| 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
Nine2Three Employment Solutions Pty Ltd t/a CIRCLE Recruitment & HR
(AG2023/1009)
NINE2THREE EMPLOYMENT SOLUTIONS PTY LTD EMPLOYEE COLLECTIVE AGREEMENT 2007
| Clerical industry | |
| JUSTICE HATCHER, PRESIDENT DEPUTY PRESIDENT WRIGHT DEPUTY PRESIDENT SLEVIN | SYDNEY, 17 JULY 2023 |
Application to extend the default period for the Nine2Three Employment Solutions Pty Ltd Employee Collective Agreement 2007.
Nine2Three Employment Solutions Pty Ltd (Nine2Three) has made an application pursuant to item 20A(4) of Sch 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act2009 (Cth) (Transitional Act), to extend the default period for the Nine2Three Employment Solutions Pty Ltd Employee Collective Agreement 2007 (Agreement).[1] The Agreement is an agreement-based transitional instrument to which Sch 3 applies, since it was made as an collective workplace agreement under the Workplace Relations Act 1996 (Cth).
Item 20A of Sch 3 to the Transitional Act provides for the automatic sunsetting of agreement-based transitional instruments by the end of the default period on 6 December 2023, subject to the capacity to apply to the Commission for an extension of the default period for up to four years in prescribed circumstances. The main features of item 20A of Sch 3, and principles concerning its proper construction and application, are described in detail in the Full Bench decision in Suncoast Scaffold Pty Ltd,[2] and we rely upon without repeating what is said in that decision.
Apart from covering employees of Nine2Three, the Agreement does not specify in express terms whom it covers. However, it may be inferred from clauses 2, 4.2, 4.4, 5.1 and Schedule A that the Agreement was intended to apply to on-hired employees performing temporary clerical work assignments who would otherwise have been covered by the State or federal clerical awards then operating in each State and Territory (which are set out in the definition of ‘Award’ in clause 2). Clause 3.2 of the Agreement provides that ‘All Protected Allowable Award Matters as defined are expressly excluded from operation by this Agreement’. Clause 2 defines ‘Protected Allowable Award Matters” to mean:
Are as defined in s 354 of the [Workplace Relations] Act and include provisions of the Award dealing with rest breaks, incentive based payments and bonuses, annual leave loading, State and Territory specific public holidays, allowances, loadings for overtime and shift work, penalty rates, outworker conditions and any other matters specified in the Regulations.
The rates of pay are set out in Schedule A to the Agreement, which provides for hourly rates of pay for permanent full-time, permanent part-time and casual employees in each State and Territory. The casual hourly rates are 20 per cent higher than for permanent full-time employees, implying a 20 per cent casual loading. All rates are significantly lower than under the modern award which now covers employees under the Agreement, the Clerks—Private Sector Award 2020 (Award). Clause 9.1 of the Agreement provides that the rates shall be ‘as adjusted by the Australian Fair Pay and Conditions Standard from time to time’, but the Australian Fair Pay and Conditions Standard was abolished in 2009. Item 13 of Sch 9 to the Transitional Act has the effect that the base rates under the Agreement are to be treated as not less than the base rates under the Award. Clause 8.1 of the Agreement provides that ordinary hours of work shall not exceed 38 per week averaged over 52 weeks. Clause 8.4 provides for overtime to be paid at time and a half for the first two hours and double time thereafter, but clause 8.5 allows employees to ‘request or agree’ to work additional hours and be paid their ordinary rate of pay. The Agreement makes no provision for weekend penalty rates, nor does it provide for an annual leave loading. Clause 5.6 purports to declare that the employee agrees not to accept any offer of employment from a client or former client of the employer ‘to whom the Employees had been introduced’ for a period of six months following the cessation of the employee’s assignment.
The grounds of the application are as follows:
Nine2Three is a very small recruitment and HR consultancy. This agreement applies to our on-hired workers under the [C]lerks [A]ward only.
We have a headcount of 9 internal staff and a turn over of less than $1 mil. We have been severely affected in the last 3 years with the pandemic, inability to hold staff; inability to recruit new staff; client base diminishing due to current economic conditions – increase in interest rates and wages demands from staff. We are in a highly precarious position.
If we do not continue to operate, our 10 staff will all become unemployed and our on-hired staff may lose their jobs also. We use our ECA to minimise our administration and are at all times compliant with the NES and current pay rates.
Sunsetting of our agreement will add further burden to our already tight situation.
We will have to engage in all new contracts, as well as new processes in our HR system to generate all our documents that refer to our ECA – including our payroll system.
We have no unionised workforce, we treat all our workers exceptionally well, we are compliant with the Fair Work Act in all aspects.
We cannot afford the legal costs to update our agreement.
Please grant this extension, so you do not place another small business under further stress than we are already trying to cope with.
The application does not, in terms, identify whether it is advanced under paragraph (a) or (b) of subitem (6) of item 20A, nor in respect of paragraph (a) does it contend in terms that subitem (7), (8) or (9) is applicable. At the hearing on 30 June 2023, Nine2Three contended that employees were better off overall under the Agreement than under the Award. This was said to be on the basis that the wage rates paid to employees covered by the Agreement are increased in line with increases to the Award rates, and are set so that they are ‘slightly’ or ‘minimally’ higher than the Award rates. However, that appears to be an administrative practice adopted by Nine2Three; it does not arise through the operation of the terms of the Agreement. As earlier stated, the rates actually provided for in the Agreement are below those in the Award, and the base rates for which the Agreement provides are only equal to the base rates in the Award by operation of item 13 of Sch 9 to the Transitional Act. Other terms of the Agreement are less beneficial for employees than under the Award. Accordingly, we could not be satisfied that subitem (9) applies on the basis that the employees covered, viewed as a group, would be better off overall if it applied to them than if the Award applied. There is no evidence that subitem (7) applies, and subitem (8) is not relevant.
Accordingly, the application only succeeds if we are satisfied under subitem (6)(b) that it is reasonable in the circumstances to extend the default period. The case advanced by Nine2Three, as explained at the hearing, was that it needs an extension because it currently faces difficult commercial circumstances. Nine2Three is a labour hire and recruitment business, and rising interest rates have caused a reduction in demand for labour while a lack of recruits to fill roles has meant that it is more difficult, time-consuming and expensive to supply labour. It was submitted that Nine2Three is a small business which is struggling to survive, and it was difficult in the current environment to deal with the termination of the Agreement because it would necessitate retraining the staff responsible for supplying on-hire labour in a new instrument at a time when the focus was on the survival of the business.
We are satisfied, on the basis of the matters advanced, that it would be reasonable in the circumstances to extend the default period with respect to the Agreement. As a result of this conclusion, we are required under subitem (6) to extend the default period; however, we have a discretion as to the length of the extension (subject to the limitation of a four-year maximum extension) and we are not bound to grant the period of extension sought in the application.[3] In its application, Nine2Three sought the maximum extension allowable of four years. However, at the hearing, it was submitted that ‘another 12 months would be perfect’. We are not minded to grant a lengthy extension for the principal reason that it is likely that the Agreement is less beneficial to the employees covered by it than the Award. We consider that an extension of the default period until 1 July 2024 will provide Nine2Three with a reasonable period to take the administrative steps necessary to apply the Award to its on-hire employees.
An order to give effect to this decision will be published separately. The Agreement is published, in accordance with subitem (10A)(c), as an annexure to this decision.
PRESIDENT
[1] Nine2Three’s application, as filed on 8 April 2023, incorrectly indicated that the application was made pursuant to item 30(4) of Sch 7 to the Transitional Act. On this error being identified, Nine2Three amended its application to identify the correct provision at the initial hearing on 30 June 2023.
[2] [2023] FWCFB 105.
[3] Ibid at [18].
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