Northern Territory Commissioner for Public Employment
[2018] FWCA 2084
•23 MAY 2018
| [2018] FWCA 2084 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
Northern Territory Commissioner for Public Employment
(AG2017/6767)
NORTHERN TERRITORY PUBLIC SECTOR 2017 - 2021 ENTERPRISE AGREEMENT
Northern Territory | |
DEPUTY PRESIDENT MASSON | MELBOURNE, 23 MAY 2018 |
Application for approval of the Northern Territory Public Sector 2017 - 2021 Enterprise Agreement.
[1] An application has been made for approval of an enterprise agreement known as the Northern Territory Public Sector 2017 - 2021 Enterprise Agreement (the Agreement). The application was made pursuant to s 185 of the Fair Work Act 2009 (the Act). It has been made by the Northern Territory Commissioner for Public Employment (the Applicant). The Agreement is a single enterprise agreement.
[2] A notice of employee representational rights was provided to employees on 30 March 20171 and the notice complied with the regulations.2 Employees were provided with access to the proposed Agreement and information about the effect of the terms of the Agreement along with a notice of the time and place and method of voting which was provided to employees on 17 November 2017. Voting occurred in the period 27 November to 14 December 2017 and a majority of those who voted approved the Agreement.3
[3] The Applicant filed a statutory declaration in support of the Agreement. The statutory declaration noted that the relevant award for the purpose of the better off overall test (BOOT) was the Northern Territory Public Sector Enterprise Award 2016 (the Award).4
[4] The statutory declaration noted that some of the provisions in the proposed Agreement were more beneficial than the Award or were not conferred by the Award. Some less beneficial terms were also identified.
[5] United Voice, the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU), the Australian Education Union, and The Association of Professional Engineers, Scientists and Managers, Australia, being bargaining representatives for the Agreement, filed statutory declarations supporting approval of the Agreement.
[6] The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (the CEPU), being a bargaining representative for the Agreement, filed a statutory declaration on 18 January 2018, and in doing so, objected to approval of the Agreement. The CEPU stated that they did not believe the Agreement was a good outcome for their members but did not assert that the Agreement failed to satisfy the BOOT or should not be approved for any other reason.
[7] The Australian Nursing and Midwifery Federation (ANMF), being a bargaining representative for the Agreement, filed a statutory declaration on 8 January 2018, and in doing so, objected to approval of the Agreement. They did so on the grounds that Schedule 4, Clause 4.1.1 of the Agreement failed to reference the ANMF. They further stated that if an undertaking were provided that addressed that omission then the ANMF would support approval of the Agreement.
[8] The Community and Public Sector Union (the CPSU), being a bargaining representative for the Agreement, filed a statutory declaration on 10 January 2018, and in doing so, objected to approval of the Agreement. They did so on two grounds. Firstly, that clause 55.6 Part Time Overtime and equivalent provisions applying to part-time shiftworkers were ambiguous and as a consequence could be interpreted and applied in a manner that was less beneficial than the Award. Secondly, they contended that provisions in the Agreement dealing with recreation leave were less beneficial than the Award in respect of payment of shift penalties when recreation leave fell on a public holiday.
[9] In reviewing the Agreement for approval, the Fair Work Commission (the Commission) identified a number of BOOT issues. The Commission wrote to the Applicant on 16 February 2018 requesting a response on the issues raised by the ANMF and CPSU and also on the following BOOT issues the Commission had identified as requiring a response:
(1) Classification matching and establishment of the appropriate underpinning Award applying to correctional/prison officers to enable conduct of the BOOT assessment in relation to those classifications;
(2) Apprentice rates of pay referenced in Schedule 4 Department of Health Employees – United Voice Provisions, Clause 4.2 Apprentices and Schedule 5 General Employees – United Voice Provisions Clause 5.2 Apprentices in the Agreement may not ensure that apprentices are better off overall;
(3) Trainee rates of pay provided for in Schedule 8 Drafting Supervisory Technical and Other Employee Provisions did not appear to be referenced to any correlating Award provisions that would enable a BOOT assessment to be conducted.
[10] The Applicant provided submissions to the Commission on 22 February 2018 in order to address the matters raised by the Commission and unions. In doing so the Applicant declined to provide an undertaking in response to the ANMF’s concern observing that the rights of the ANMF to represent persons covered by the Agreement were not impacted by the omission of reference to the ANMF in Schedule 4, Clause 4.1.1 of the Agreement. On the basis of the submissions made by the Applicant in relation to the apprentice and trainee rates, the Commission was satisfied that its concerns had been addressed. On determination of the appropriate award for the purpose of conducting the BOOT assessment with respect to correctional/prison officer classifications, and after further analysis, the Commission was also satisfied that its concerns regarding those classifications had been addressed.
[11] The CPSU were not satisfied that the Applicant’s responses to the Commission adequately addressed the concerns raised by them in their F18 Statutory Declaration and pressed their objection to approval of the Agreement. A telephone hearing was subsequently conducted on 19 April 2018 at which the Applicant and the CPSU attended, following which the Applicant and CPSU were invited to file further submissions and materials on which they sought to rely, following receipt of which the Commission would proceed to determine the matter.
[12] Having further considered the submissions of the Applicant and the CPSU, the Commission again wrote to the Applicant and CPSU on 14 May 2018 inviting them to specifically address part-time additional hours earnings modelling undertaken by the Commission. The parties were also invited to make submissions in relation to the implications of that modelling including the weight that should be accorded to less beneficial provisions in the Agreement in the conduct of the BOOT assessment. The Applicant and CPSU provided responses to the Commission’s invitation on 16 May 2018.
Applicant Undertakings
[13] Subsequent to the hearing conducted on 19 April 2018, the Applicant provided the following undertaking in relation to elements of the CPSU objections to the Agreement’s approval:
“Undertaking – Section 190 Fair Work Act 2009
…….
2. That clause 55.6(c) of the Agreement (part-time overtime, non-shift workers) and clause 70.5 (part-time overtime for shiftworkers) will be read subject to clauses 28.2 and 28.3 (part-time employment) of the Agreement.
3. The additional hours referenced in clauses 55.6(c) and 70.5 will be paid at ordinary time when the employee elects to work additional hours and overtime will be paid for additional hours worked by direction.
…….”
CPSU Case
Part-time overtime
[14] The CPSU’s first objection to approval of the Agreement was based on a concern with respect to the operation of Clause 55.6 Part-time Overtime (Non-Shiftworkers) and the equivalent part-time shiftworker provisions which they contended were ambiguous and as a consequence could be interpreted and applied in a manner that was less beneficial than the Award.
[15] The CPSU submitted that Clauses 55.6 (a) in respect of non-shift workers and clause 70.3 in respect of shiftworkers, enabled a part-time employee to elect to work additional hours in excess of their agreed hours, i.e. overtime, at ordinary time rates of pay. The CPSU referred to Clause 28.3 of the Agreement which specified that a part-time employee’s hours of work must be agreed in writing and could only be varied by written agreement and that per Clause 55.2, any hours worked by a part-time employee beyond agreed hours were defined as additional hours.
[16] The CPSU submitted that the Award prevented a part-time employee from electing to work additional hours at ordinary time rates of pay and that any hours worked beyond agreed hours under the Award would entitle a part-time employee to payment of overtime penalty rates. Consequently, the Agreement provision diminished an Award entitlement and as such the Agreement failed to satisfy the BOOT.
[17] In comparing penalty payment entitlements of part-time employees under the Agreement versus the Award, the CPSU rejected the Applicant’s construction of clause 15.3 of the Award as provided in its Form F17 Statutory Declaration. 5 Specifically, the CPSU did not agree with the Applicant that a part-time employee required to work overtime that was continuous with their agreed hours would only receive ordinary time payment under the Award.
[18] In support of its submissions, the CPSU referred to a Full Bench authority of Bupa Care Services Pty Ltd (Bupa). 6In that case, the Full Bench confirmed that a provision in the particular agreement before it that allowed an employee to request and voluntarily work overtime at ordinary time rates of pay was less beneficial than the relevant Award which did not provide for overtime to be paid at less than the appropriate penalty rate.
[19] The CPSU also submitted that Clause 55.6(c) operated in a manner that allowed the employer to unilaterally review and increase part-time employees’ agreed hours in line with the pattern of additional hours actually worked by an employee. The CPSU contended that the employer’s right to compel a part-time employee to increase their agreed hours was not provided for under the Award and was in direct conflict with Clause 6.4(f) of the Award which prevented the variation or revocation of a part-time employee’s agreed hours of work without the employee’s consent.
[20] The CPSU acknowledged that the Applicant Undertaking went some way to address their concerns over the operation of Clauses 55.6, 70.3 and 70.5, but its fundamental concerns remained, that an employee could elect under the Agreement to work additional hours at ordinary time rates of pay, which was less beneficial than the Award.
[21] The CPSU submitted that the impact of the part-time employee additional hours provisions would be particularly felt by female staff of the Applicant in lower paid roles given the greater representation of women in such roles.
[22] In responding on 16 May 2018 to the invitation to address the Commission’s part-time employee’s additional hours earnings analysis, the CPSU simply restated their position on the less beneficial aspects of the provisions, referred to the Bupa decision and again submitted that the BOOT could not be satisfied by reason of the less beneficial provisions. The CPSU did not make any submissions as to the weight that should be given to the part-time additional hours provision in the Commission’s conduct of the BOOT assessment.
Public holidays falling in a period of recreation leave
[23] The CPSU’s second objection was based on a concern with respect to the operation of Clause 42.6 Public Holidays and Clause 71 Recreation Leave, which the CPSU contended operated so as to deprive employees of more beneficial entitlements available under the Award.
[24] The CPSU submitted that Clauses 14.4 and 18.7 of the Award entitled an employee engaged as a shiftworker on annual leave to the payment of shift and public holiday penalty rates for shifts that fell during the period of annual leave. In circumstances where a rostered shift during a period of annual leave fell on a public holiday, the CPSU submitted that under the Award an employee would be entitled to payment of what the employee would have received had they been at work, including shift and public holiday penalties for such day.
[25] The CPSU submitted that the interaction of clauses 42.6 and 71.2 of the Agreement was ambiguous and operated such that a shiftworker on recreation leave would not be entitled to payment of shift and public holiday penalties for a public holiday in circumstances where the public holiday fell on what would otherwise have been a rostered shift. The CPSU submitted that this was consequently less beneficial than the Award.
[26] The CPSU noted that the Award was silent on the requirement for the deduction of a day of recreation leave in circumstances where a public holiday fell on what would otherwise have been a rostered shift but for the recreation leave.
Applicant Case
Part-time overtime
[27] The Applicant acknowledged that Clause 55.6(a) was in some respects less beneficial than the Award and in doing so drew attention to its F17 Statutory Declaration in which it had identified the clause as less beneficial for the purposes of the BOOT. 7 The Applicant drew a distinction between a part-time employee’s election to work overtime and a management direction to work overtime. In the latter circumstances, the employee would receive overtime penalty payments in accordance with clause 55.6(b) under the Agreement.
[28] The Applicant also submitted that while the Agreement enabled an employee to elect to work additional hours at ordinary time rates of pay, there were also circumstances where part-time employees engaged under the Agreement working additional hours on a voluntary basis would receive overtime penalty payments which would not be payable under the Award. The contended differences between the Agreement and Award in terms of penalty payment entitlements were summarised in its submission dated 22 February 2018. 8
[29] The Respondent contended that the circumstances in which the working of “additional hours” by a part-time employee that attracted ordinary time payment which was less beneficial than the Award were, in the case of a day worker, where the overtime was:
(1) Not directed by the employer; and either
(2) Not continuous with agreed hours and within the span of hours; or
(3) Continuous with agreed hours and within the span of hours but not more than the daily or weekly maximum of a full time equivalent employee.
[30] The Respondent also contended that the Agreement provided for overtime penalty payments to part-time employees that were more beneficial than the Award in circumstances where the overtime was;
(1) Directed by the employer; and either
(2) Continuous with agreed hours and within the span of hours but more than the daily maximum of full-time equivalent but less than the weekly maximum of full-time equivalent; or
(3) Continuous with agreed hours and within the span of hours but not more than the daily or weekly maximum of full-time equivalent employee.
[31] In correspondence dated 16 May 2018, the Applicant provided its earnings analysis in response to the Commission’s analysis which sought to compare the earnings of part-time employees electing to work additional hours beyond their agreed part-time hours in a range of scenarios. Those scenarios in the Applicant’s analysis covered part-time employees working on the basis of agreed 16 ordinary hours, 24 ordinary hours and 30 ordinary hours per week working arrangements with further additional hours worked up to a maximum of 8 hours per week at the employee’s election.
[32] The analysis prepared by the Applicant highlighted what it believed to be errors in the Commission’s analysis. The Applicant’s own analysis revealed that under each scenario, a part-time employee electing to work up to eight additional hours per week at ordinary rates of pay would receive higher earnings under the Agreement than under the Award. This was due, the Applicant submitted, to the higher base rates available under the Agreement which offset the less beneficial elements of the Agreement provisions, i.e. ordinary time payment for the additional hours worked.
[33] With respect to the CPSU’s contention that the Agreement enabled a part-time employee’s agreed hours of work to be unilaterally reviewed and increased, the Applicant submitted that such an interpretation was not intended by clauses 55.6(c) and 70.5. The Applicant stated that the intention of those clauses was to enable a review of agreed hours but that no change to a part-time employee’s agreed hours could occur unless mutually agreed in writing in accordance with clause 28.3(a) of the Agreement.
[34] To address any uncertainty or ambiguity with the operation of clauses 55.6(c) and 70.3, the Applicant offered to provide an undertaking. 9 The contended effect of the undertaking was to make clear that while a review of a part-time employee’s agreed hours could occur under clauses 55.6(c) and 70.5, any change to agreed hours could only be made by mutual agreement recorded in writing as required under clause 28.3(a) of the Agreement.
Public holidays falling in a period of recreation leave
[35] The Applicant submitted that the CPSU’s concern was simply a further ventilation by the CPSU of a claim raised by them (the CPSU) and rejected by the Applicant during bargaining.
[36] The Applicant further submitted that public holidays falling within a period of recreation leave of a shiftworker on a day that would otherwise have been a rostered shift did not attract the payment in lieu of penalties (PILS) pursuant to clause 71.2 of the Agreement. This was because such day would not be deducted from an employee’s accrued recreation leave balance and would be paid in accordance with clause 42.6 of the Agreement. That clause provided for no deduction of the public holiday from an employee’s recreation leave entitlement and payment for such day at the “employee’s full rate of pay” which the Applicant submitted had a unique and accepted meaning within its operations, that being the base salary exclusive of shift and other penalty payments.
[37] The Applicant submitted that, as the public holiday was not subject to deduction from an employee’s recreation leave balance, then the public holiday was not treated as recreation leave and consequently would not give rise to an entitlement to shift and public holiday penalty payments under the Award as contended by the CPSU. The Applicant submitted that in these circumstances the provisions could not be regarded as less beneficial than the Award.
Agreement and Award Provisions
Part-time overtime
[38] Clause 28 of the Agreement deals with part-time employment arrangements and relevantly provides as follows:
“28. Part-Time Employment
….
28.2 Part-time arrangements are less than full-time hours, with the hours and days to be work to be agreed by the CEO and the employee.
28.3 At the time of engagement to part-time employment, or conversion from full-time employment, the CEO and the employee will agree in writing on a regular pattern of part-time work (agreed hours), specifying at least the hours worked each day, which days of the week the employee will work, and the actual starting and finishing times each day.
(a) Changes to agreed hours of work originally established may be made in writing by mutual agreement between the CEO and the employee.
(b) An agreement for conversion to part-time employment may be for a fixed period or an ongoing basis.
(c) Where part-time is for a fixed period, the period must be agreed in writing.
28.4 The span of hours during which a part-time employee may work their agreed hours will be the same span applicable to the equivalent full-time employees.
28.5 A part-time employee will be entitled to all conditions of employment applicable to a full-time employee on a pro rata basis.”
[39] The Agreement provides for penalty payments for overtime where an employee is directed to work additional hours. In the case of part-time employees, additional hours are defined in the following terms:
“55.2 Definitions
(a) Additional hours is work performed in excess of ordinary hours of duty or, in the case of part-time employees, work performed in excess of agreed hours.”
[40] Clause 55.6 Part-time Overtime (Non-Shiftworkers) of the Agreement provides an ability for part-time employees to elect to work overtime at ordinary time rates of pay as opposed to at penalty rates in certain circumstances and relevantly provides as follows:
“55.6 Part-time Overtime (Non-Shiftworkers)
(a) A part-time employee meeting the overtime eligibility requirements of clause 55.4 may elect to undertake additional hours and will be paid at ordinary time in respect of duty performed outside the agreed hours, subject to the duty:
(i) being within the span of hours; and
(ii) not exceeding on any day a maximum of the period of duty as
applicable to an equivalent full-time employee; and
(iii) not exceeding in any week a maximum of either 36 hours and 45 minutes or 38 hours regular and extra duty as applicable to an equivalent full-time employee.
(b) A part-time employee meeting the eligibility requirements of clause 55.4, who is directed to perform duty which is outside their agreed hours will be paid overtime at the applicable overtime rates.
(c) Where a part-time employee is regularly performing overtime or additional hours at the ordinary time, the part-time employee’s agreed hours may be reviewed and increased in line with the overtime or additional hours regularly being performed. The review should consider the ability of the employee to be able to complete the additional hours and whether there are other options to meet the additional hours. Where the manager and employee cannot agree on the increased hours then the regular extra hours identified in the review shall only be paid at ordinary time.”
[41] The relevant Award provision that describes part-time employment arrangements is Clause 6.4 Part-time employment, and relevantly provides as follows:
“6.4 Part-time employment
(a) A part-time employee is an employee who works an agreed number of regular hours that is less than the ordinary hours of work applicable to an equivalent full-time employee under this award.
(b) Part-time employees will receive, on a pro rata basis, equivalent pay and conditions to those of full-time employees engaged for the same kind of work and classification. In relation to expense related allowances, the employee will receive entitlements specified in the relevant clauses of this award.
……..
(d) Before part-time duty commences, the employer will issue a notice in writing to the employee which will specify:
(i) the agreed weekly ordinary hours of duty;
(ii) duration of the agreement (where applicable); and
(iii) the pattern of hours to be worked including starting and finishing times for employees other than shiftworkers, on each or any day of the week, within the limits of the span of hours specified for an equivalent full-time employee.
…………
(f) The agreed weekly hours and the pattern of hours specified in clause 6.4(d) will not be varied, amended or revoked without the consent of the employee. Any agreed variation to the regular pattern of hours will be recorded in writing.
(g) A part-time employee may be required to work reasonable additional hours in excess of the employee’s agreed hours of work. Payment in relation to additional hours of work, including overtime, will be in accordance with clause 15- Overtime of this award.
……..”
[42] The Award also provides for a range of penalty payments for working overtime. Overtime is defined in the following terms for part-time employees:
“15.3 Definition of overtime – employees other than shiftworkers
……..
(b) Part-time employee
Work will be considered overtime for a part-time day worker where the employee is directed to perform work:
(i) which is not continuous with the employee’s ordinary hours of work as prescribed in clause 6.4(a);
(i) on any day which is continuous with the employee’s ordinary hours of work as prescribed in clause 6.4(a), and in whole or in part, falls outside the span of ordinary hours applicable to an equivalent full-time employee, and where the employee also completes the ordinary hours of duty on that day; or
(ii) on any day which is continuous with the employee’s ordinary hours of work as prescribed in clause 6.4(a), and falls wholly within the span of ordinary hours applicable to an equivalent full-time employee and exceeds, in any one week, the employee’s prescribed weekly ordinary hours of work as prescribed in clause 6.4(a).
……….
15.5 Definition of overtime –shiftworkers
…….
(c) Part-time shiftworkers
Work will be considered overtime for a part-time shiftworker where it is performed:
(i) on any day beyond the normal rostered hours of duty on that day; and
(ii) it is performed in excess of the employee’s ordinary weekly hours of work as prescribed in clause 6.4(a).”
Public holidays falling in a period of recreation leave
[43] Necessary to consideration of the CPSU’s second objection are the relevant Agreement and Award provisions which are provided below.
[44] Clause 42.6 of the Agreement states as follows:
“42.6 Public Holidays
(a) Where a public holiday occurs during recreation leave (including recreation leave at half pay taken under Schedule 1.2), the employee is entitled to the employee’s full rate of pay that the employee would have been paid had the public holiday fallen on a day that the employee was not on recreation leave; and
(b) the period of the public holiday is not deducted from the employee’s recreation leave entitlement.”
[45] Clauses 71.1 and 71.2 of the Agreement state as follows:
“71. Recreation Leave and Shiftwork Penalties
71.1 A shiftworker on approved paid recreation leave will receive shiftwork penalties as if they were rostered on to perform duty during the period of recreation leave. Such payments will be referred to as ‘penalties in lieu of shiftwork’ payments (PILS).
71.2 The payment of PILS is subject to the following:
(a) the employee is approved to take at least one day’s recreation leave;
(b) recreation leave has been deducted for the shift that the employee would have worked on that day;
(c) where a forecasted roster has not been provided with a recreation leave application then PILS will be calculated based on the employee’s previous six months of shiftwork payments under clause 68.”
[46] Clause 14 of the Award deals with payment of penalty rates for shiftwork and relevantly provides with respect to payment while on annual leave as follows:
“14. Penalty rates – shiftworkers
……………..
14.4 Shiftwork payments will be made in respect of any shift duty the employee would have performed had the employee not been on approved annual leave.
……………..”
[47] Clause 18 of the Award also provides for certain payments for annual leave to shiftworkers and relevantly provides as follows:
“18. Annual leave
………..
18.7 Payment for annual leave
(a) An employee on annual leave will, for the period of the annual leave, be paid at the employee’s ordinary hourly rate plus any allowances payable on annual leave under this award.
(b) Subject to clause 18.10 – Annual leave loading, a shiftworker on approved annual leave will, for the period of the annual leave, receive shift penalty payments in relation to any shifts the employee would have worked if the employee was not on approved annual leave.
(c) Refer clause 11.24– allowances payable on annual leave.
(d) Refer clause M.18.4 – Payment for annual leave for terms applicable to Power and Water employees.
…………….
18.10 Annual leave loading
(a) Annual leave loading entitlement
(i) An employee is entitled to an annual leave loading on 1 January each year. Subject to clause 18.10(b), the amount of the loading will be the lesser of:
● seventeen and a half per cent of the value of the annual leave accrued over the previous year based on the employee’s salary, including allowances in the nature of salary; or
● a maximum payment the equivalent of the Australian Statistician’s Northern Territory male average weekly total earnings [ABS 6302.0] for the June quarter of the previous year.
(ii) In the case of a shiftworker who would have been entitled to shift penalties in excess of the maximum payment referred to in clause 18.10(a)(i) had the employee not been on annual leave, the amount of the annual leave loading will be equivalent to the shift penalties.
Statutory Provisions
[48] Section 186(1) of the Act establishes a “basic rule” that where an application for approval of an enterprise agreement is made under s 185 (which prescribes the time in which such an application must be made and its content), the Commission must approve the agreement if the requirements in ss 186 and 187 of the Act are met. Sections 186 and 187 set out a range of approval requirements. Section 186(2) of the Act sets out approval requirements in relation to the safety net, and relevantly provides as follows:
“186 When the FWC must approve an enterprise agreement—general requirements
…
(2) The FWC must be satisfied that:
(a) if the agreement is not a greenfields agreement—the agreement has been genuinely agreed to by the employees covered by the agreement; an
(b) if the agreement is a multi-enterprise agreement:
(i) the agreement has been genuinely agreed to by each employer covered by the agreement; and
(ii) no person coerced, or threatened to coerce, any of the employers to make the agreement; and
(c) the terms of the agreement do not contravene section 55 (which deals with the interaction between the National Employment Standards and enterprise agreements etc.); and
(d) the agreement passes the better off overall test.
[49] Section 193 prescribes what is necessary to pass the BOOT. It relevantly provides:
“193 Passing the better off overall test
When a non-greenfields agreement passes the better off overall test
(1) An enterprise agreement that is not a greenfields 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.
…
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 agreement by the FWC was made under section 185.
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.”
Does the Agreement satisfy the BOOT?
Part-time overtime
[50] The CPSU’s fundamental objection is that the Agreement if approved would enable a part-time employee to voluntarily work additional hoursat ordinary time rates of pay which the Award does not allow. The Applicant in reply does not contest that elements of clause 55.6 and 70.3 are less beneficial than the Award. That is made clear in the Applicant’s Form F17 Statutory Declaration and submissions which were summarised above. 10 The CPSU has also challenged the Applicant’s contention that the Agreement is more beneficial than the Award in certain respects, as also summarised above.11
[51] In order to properly consider and weigh for the purposes of the BOOT the less beneficial aspects of the part-time employee additional hours arrangements it is necessary to determine whether and to what extent the Agreement terms are less beneficial than the Award.
[52] Firstly, I am satisfied that in circumstances where an employee is directed to work additional hours, the Agreement provides for penalty payments that are comparable to or more beneficial than the Award. For example, with respect to Schedule 2 of the Agreement which applies to CPSU covered designations, the Agreement provides at clause 64.2 for payment of additional hours at time and a half for the first three hours and double time thereafter for additional hours performed on a Monday to Friday. By comparison the Award provides at clause 15.4(f) for penalty payments for Monday to Friday of time and a half for all overtime hours worked on those days.
[53] With respect to additional hours that employees may elect to perform there are no Award provisions that allow for payment for such hours at ordinary time rates. By contrast, I am satisfied that the Agreement does allow payment for additional hours worked at a part-time employee’s election at ordinary time rates of pay in the following circumstances:
(1) The period for which the ordinary time payment is made must be within the span of hours; and
(2) The period for which the ordinary time payment is made must not exceed on any day the maximum period of duty for an equivalent full time employee; and
(3) The period for which the ordinary time payment is made must not exceed in any week the maximum regular hours and extra duty applicable to an equivalent full time employee.
[54] I am satisfied that the effect of the relevant Agreement provisions are that a part-time employee may elect to work additional hours beyond their agreed part-time hours and up to an equivalent full-time employee’s ordinary hours and in these circumstances would be paid at ordinary time rates, subject to such additional hoursbeing within the span of hours. An election by a part-time employee to work additional hoursat ordinary time rates would not require mutual agreement to changes to their agreed hours or to be recorded in writing as required under clause 28.3 of the Agreement.
[55] I now turn to consider whether there are circumstances in which there are more beneficial provisions in the Agreement with respect to the working of additional hours by part-time employees relative to the Award as contended by the Applicant.
[56] The Applicant has advanced a construction of clause 15.3 of the Award to the effect that part-time employees may be directed in some circumstances to work overtime but would only receive ordinary time rates of pay under the Award. The Applicant further submitted that there were no circumstances where a part-time employee directed to work additional hours would receive less than the appropriate penalty payments under the Agreement.
[57] Clause 15.3 of the Award is clear in my view. It firstly provides for penalty payments to be made to part-time employees in circumstances where the overtime directed to be performed is non-continuous with the part-time employee’s agreed ordinary hours. Secondly, in circumstances where the overtime directed to be performed is continuous with an employee’s agreed ordinary hours of work, then the hours will be treated as overtime where such hours are either on a daily basis outside the span of an equivalent full time employee’s ordinary hours of work or on a weekly basis are in excess of the part-time employee’s agreed ordinary hours of work. The net effect of the Award provisions are, in my view, that any hours directed to be performed by a part-time employee beyond their agreed weekly ordinary hours must be treated as overtime and consequently would attract the appropriate overtime penalty payments.
[58] The Applicant contended in its submission regarding the operation of clause 15.3 of the Award, that a reference point for the purpose of establishing an entitlement to payment of overtime penalty rates for a part-time employee under the Award was that of a full-time equivalent employee’s ordinary weekly hours. That construction is, in my view, misconceived. The clear reference points for establishing a part-time employee’s entitlement to overtime penalty rates under the Award are, with respect to a daily calculation, an equivalent full time employee’s ordinary hours of work and; with respect to a weekly calculation, the part-time employees agreed hours of work. The Applicant’s contended construction of clause 15.3 of the Award appears to ignore the purpose and effect of clause 6.4(g) of the Award, which provides for a part-time employee to have mutually agreed ordinary hours of work, working beyond those hours which would attract overtime penalty payments.
[59] It follows from the above that I do not accept the construction of clause 15.3 advanced by the Applicant in its submissions. In summary, I am satisfied that with respect to part-time overtime or additional hours entitlements under the Agreement:
(1) the Agreement provisions are more beneficial than the Award with respect to some penalty payments for overtime in circumstances where the overtime is initiated at management direction; and
(2) the Agreement provisions are less beneficial than the Award in respect to payments made to part-time employees where they elect to undertake additional hours.
[60] Having reached this conclusion regarding the respective Agreement and Award entitlements, it is appropriate to then assess the impact of the less beneficial provisions under the Agreement versus the Award under a range of earnings scenarios. The agreed and additional hours scenarios that were put to the Applicant and CPSU involved 16 agreed ordinary hours, 24 agreed ordinary hours and 30 agreed ordinary hours per week working arrangements with additional hours worked of up to a maximum of 8 hours per week at the employee’s election.
[61] I am satisfied that the scenarios used for the analysis are neither fanciful nor unrealistic. Importantly, the analysis was conducted using one of the lower paid classifications in the Agreement that being an AO1 Administrative Officer on a base rate of $47,350 which compares with the equivalent Award AO1 rate of $39,548. It was considered by the Commission that the selection of an Agreement classification with a lower above-Award margin was more likely to expose any BOOT concerns. The analysis further assumed that the additional hours worked under the Agreement are paid at ordinary time rates, whereas the comparative earnings under the Award are calculated on the basis of the Award penalty rate for Monday to Friday overtime, that being time and a half.
[62] The analysis provided by the Applicant, which I accept, reveals the following earnings differentials across a range of additional hours scenarios:
Scenario 1 – 16 Agreed Ordinary Hours (4 days x 4 hours per day M-F)
(i) Plus four additional hours (4 days x 1 additional hour per day)
Agreed Hours (16) | Additional Hours (4) | Total | |
Award | $330.06 | $119.70 | $449.76 |
Agreement | $396.68 | $99.17 | $495.85 |
(ii) Plus eight additional hours (4 days x 2 additional hours per day)
Agreed Hours (16) | Additional Hours (8) | Total | |
Award | $330.06 | $239.40 | $569.46 |
Agreement | $396.68 | $198.34 | $595.02 |
Scenario 2 – 24 Agreed Ordinary Hours (4 days x 6 hrs per day M-F)
(iii) Plus four additional hours (4 days x 1 additional hour per day)
Agreed Hours (24) | Additional Hours (4) | Total | |
Award | $495.09 | $119.70 | $614.70 |
Agreement | $595.02 | $99.17 | $694.19 |
(iv) Plus eight additional hours (4 days x 2 additional hours per day)
Agreed Hours (24) | Additional Hours (8) | Total | |
Award | $495.09 | $239.40 | $734.49 |
Agreement | $595.02 | $198.34 | $793.35 |
Scenario 3 – 30 Agreed Ordinary Hours (5 days x 6 hours per day M-F)
(i) Plus five additional hours (5 days x 1 additional hour per day)
Agreed Hours (24) | Additional Hours (4) | Total | |
Award | $618.86 | $149.63 | $768.49 |
Agreement | $743.77 | $123.96 | $867.73 |
(ii) Plus eight additional hours (5 days x 1.6 additional hours per day)
Agreed Hours (24) | Additional Hours (8) | Total | |
Award | $618.86 | $239.40 | $858.27 |
Agreement | $743.77 | $198.34 | $942.11 |
[63] I am satisfied that the analysis demonstrates that in a range of credible and not unrealistic scenarios, part-time employees electing to work additional hours would receive higher earnings under the Agreement when compared with earnings they would receive under the Award. This outcome arises from the effect of the higher base rates combined with ordinary time payment under the Agreement versus a higher penalty rate applied to lower base rates under the Award.
[64] I am further satisfied that, while clauses 55.6 and 70.3 are unquestionably less beneficial than the Award in circumstances of additional hours being worked by part-time employees at their election, the negative impact of the provision on earnings is mitigated by the higher base rates of pay contained in the Agreement. Furthermore, any deleterious impact of the provisions applying to additional hours worked at employee election needs to also be considered in the context of the more beneficial provisions that apply under the Agreement where overtime by part-time employees is worked at management direction, of which I have made findings above. 12 That is not to say that each cancels out the other, but further scenarios could be presented that highlighted that overtime worked by part-time employees at management direction may yield higher earnings under the Agreement versus the Award by reason of the greater penalty rates available under the Agreement for Monday to Friday additional hours.
[65] The second limb of the CPSU’s concerns regarding part-time overtime arrangements is in respect to clauses 55.6(c) and 70.5 of the Agreement. The CPSU contend that the clauses allow the Applicant to unilaterally review and alter the agreed working hours of part time employees, which would render the Agreement less beneficial than the Award.
[66] The applicant has responded to the CPSU’s concern by the provision of an undertaking 13 that explicitly refers to the requirement for any change to a part-time employee’s agreed hours to be subject to the operation of clauses 28.2 and 28.3(a) of the Agreement. That is, any change in agreed part-time ordinary hours must be mutually agreed and in writing. I am satisfied that the proffered undertaking would, if accepted, ensure that the Agreement was not less beneficial than the Award and is consequently a neutral consideration for the purpose of the BOOT assessment.
Public holidays falling in a period of recreation leave
[67] The CPSU position on this issue can be summarised as follows. Under the relevant Award provisions, clauses 18.7 and 18.10, a public holiday falling during a period of recreation leave of a shiftworker would attract shift and public holiday penalty payments in circumstances where the day would have been a rostered shift but for the period of recreation leave. The CPSU contend that under the Agreement, the shiftworker in those same circumstances would not be entitled to shift or public holiday penalties, consequently the Agreement is less beneficial than the Award.
[68] The Applicant’s position is that such public holiday while falling within a period of recreation leave is not treated as recreation leave and is not deducted from an employee’s recreation leave balance, per clause 42.6 of the Agreement. Consequently the payment of PILS pursuant to clause 71.2 of the Agreement does not arise.
[69] The Award in the above scenario does not provide for or require a deduction of the public holiday from a shiftworker’s recreation leave balance. This is a key point of difference between the Award and Agreement entitlements. Were a deduction for the public holiday from the recreation leave balance required under the Agreement, then the CPSU contention would have greater force. But that is not the position. A shiftworker under the Agreement is entitled to receive the employee’s “full rate of pay” for the public holiday without deduction from the employee’s recreation leave balance in accordance with clause 42.6 of the Agreement.
[70] I am consequently not persuaded that the interaction of clauses 42.6 and 71.2 of the Agreement operate so as to deprive shiftworkers of a more beneficial entitlement available under clauses 18.7 and 18.10 of the Award. The interaction and operation of clauses 42.6 and 71.2 of the Agreement are consequently a neutral consideration in the conduct of the BOOT assessment.
Other Agreement Provisions
[71] The Applicant identified within its F17 Statutory Declaration 14 a number of provisions within the Agreement that are less beneficial than the Award. The particular provisions referenced include:
• Dispute Settlement Procedure
• Higher Duties Allowance
• Recovery of overpayments
• Part-time employment
• Individual Flexibility Agreement
• Parental leave
• Recreation leave
• Recreation leave loading
• Part-time overtime
• Span of hours
• Shiftwork penalty rates
• Norther Territory Allowance
• Certain allowances
[72] The Applicant also identified within its F17 Statutory Declaration 15 a significant number of provisions within the Agreement that were more beneficial than the Award including:
• Rates of pay
• Supported wage system
• Pay increments
• Pay progression
• Electricity subsidy
• Higher duties
• Salary sacrifice
• Security of employment
• Work life balance
• Parental leave
• Compassionate leave
• Personal leave
• Domestic and family violence leave
• Recreation leave
• Long service leave
• Professional recruitment incentives
• Redeployment and redundancy
• Hours of work
• Averaging hours
• Overtime for day work and shiftwork
• Hours and shift cycles
• Shiftwork penalty rates
• Excess travel time
• Emergency leave
• Loss or damage to clothing
• Mixed function, leading hand and allowances for construction and maintenance
[73] The CPSU did not challenge or make submissions in relation to the range of other less and more beneficial provisions within the Agreement nor did it, despite being invited to do so by the Commission during hearing of the matter, make submissions as to the weight that should be given to the less beneficial provisions it had identified when balanced against the range of more beneficial provisions within the Agreement.
Summary
[74] It will be seen from the statutory provisions provided above that an enterprise agreement will be found to have passed the BOOT if the Commission is satisfied, that at the test time, each award covered employee and each prospective award covered employee employed under the agreement would be better off overall if the agreement applied to the employee rather than if the award applied to the employee.
[75] The application of the BOOT is not applied as a line by line test. Rather, it is a global consideration of the provisions in the agreement compared to the award, taking into account those provisions that are less beneficial and weighing them against those provisions that are more beneficial.
[76] In conducting its assessment of the Agreement, it is open to the Commission to accept undertakings given pursuant to s 190 of the Act. That is, if the Commission is satisfied that the undertaking or undertakings provided are not likely to cause financial detriment to any employee covered by the Agreement or result in substantial changes to the Agreement.
[77] The Applicant declined to provide an undertaking to address the ANMF’s concern regarding the omission of reference to the ANMF in Schedule 4, Clause 4.1.1 of the Agreement. That omission does not alter the rights of the ANMF to represent persons covered by the Agreement that fall within the ANMF’s eligibility rules. Consequently, I am not persuaded that the omission is a barrier to approval of the Agreement.
[78] The Applicant has provided an undertaking to address a concern raised by the CPSU and to ensure that clauses 55.6(c) and 70.5 operate subject to clauses 28.2 and 28.3(a) of the Agreement. I have considered the undertaking in the context of the Agreement and I am satisfied that the undertaking causes no financial detriment to any employee and does not constitute a substantial change to the Agreement.
[79] I am also satisfied that there are a number of less beneficial provisions in the Agreement including clauses 55.6(a) and 70.3 which deal with payments for additional hours worked by part-time employees at their election. As I have also found, the effect of clauses 55.6(a) and 70.3 are substantially mitigated by the combination of higher base rates paid under the Agreement and the more beneficial penalty rates paid for overtime worked at management direction on Monday to Friday under the Agreement when compared to the Award.
[80] I am further satisfied that the limited number and nature of the less beneficial provisions identified in the Agreement are greatly offset by the substantial number of more beneficial provisions including, importantly, base rates of pay which range from between 10% to 60% above the Award. I note that no party to the Agreement has sought to challenge the veracity of the Applicant’s contentions regarding the more beneficial provisions.
Conclusion
[81] A copy of the Applicant’s undertakings is attached in Annexure A. Having heard from the Applicant and the CPSU, I am satisfied that the Agreement with the undertakings passes the BOOT.
[82] I am further satisfied that the undertakings will not cause financial detriment to any employee covered by the Agreement and that the undertakings will not result in substantial changes to the Agreement.
[83] Subject to the undertakings referred to above, I am satisfied that each of the requirements of ss 186, 187 and 188 as are relevant to this application for approval have been met.
[84] United Voice, the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, United Voice, “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union, Australian Nursing and Midwifery Federation, Australian Education Union, the Community and Public Sector Union and The Association of Professional Engineers, Scientists and Managers, Australia being bargaining representatives for the Agreement, have given notice under s 183 of the Act that they want the Agreement to cover them. In accordance with s 201(2) I note that the Agreement covers the organisations.
[85] The Agreement was approved on 23 May 2018 and, in accordance with s 54 of the Act, will operate from 30 May 2018. The nominal expiry date of the Agreement is 10 August 2021.
DEPUTY PRESIDENT
Annexure A
1 Section 173 of the Act.
2 Section 174 of the Act.
3 Section 180 of the Act.
4 MA000151.
5 Form F17 – Employer’s Statutory Declaration in support of an application for approval of an enterprise agreement (other
than a greenfields agreement), dated 22 December 2017, Attachment G.
6 [2010] FWAFB 2762.
7 Form F17 – Employer’s Statutory Declaration in support of an application for approval of an enterprise agreement (other
than a greenfields agreement), dated 22 December 2017, Attachment F.
8 Applicant Submissions, dated 22 February 2018.
9 Applicant Undertaking, dated 20 April 2018.
10 Ibid at paragraph [29].
11 Ibid at paragraph [30].
12 Ibid at paragraph [59].
13 Ibid at paragraph [12].
14 Form F17 – Employer’s Statutory Declaration in support of an application for approval of an enterprise agreement (other
than a greenfields agreement), dated 22 December 2017, Attachment F.
15 Ibid, Attachment G.
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