Otraco International Pty Ltd

[2024] FWCA 2489

[2024] FWCA 2489

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.185—Enterprise agreement

Otraco International Pty Ltd

(AG2024/1809)

OTRACO INTERNATIONAL PTY LTD ENTERPRISE AGREEEMENT – METALLIFEROUS 2023

Mining industry
DEPUTY PRESIDENT SLEVIN	SYDNEY, 4 JULY 2024

Application for approval of the Otraco International Pty Ltd Enterprise Agreement – Metalliferous 2023

1. An application has been made for approval of an enterprise agreement known as the Otraco International Pty Ltd Enterprise Agreement - Metalliferous 2023 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act) by Otraco International Pty Ltd. The Agreement is a single enterprise agreement. The Commission must approve the Agreement if satisfied that the requirements in ss. 186 and 187 are met.

1. Some concerns were raised with the applicant about the requirements in the Act. There was a concern that the requirement in s 186(2)(c) that the Agreement not exclude terms of the National Employment Standards (NES) may not be met. In particular, clause 51 relating to the circumstances where an employee is deemed to have abandoned their employment being silent on an employee’s entitlement to payment of notice of termination and clause 52.1 setting out the circumstances where an employer has the right to withhold an amount from an employee’s termination pay on termination may be read so as to operate in a manner inconsistent with the NES. However, noting clause 5.3 of the Agreement, I am satisfied the more beneficial entitlements of the NES will prevail where there is an inconsistency between the Agreement and the NES and the requirement in s 186(2)(c) is met.

1. A further matter was raised about the Agreement appearing to be silent on the definition of a shiftworker and whether this raises an issue of non-compliance with s 196 of the Act. In response the applicant provided an undertaking to provide a definition of shiftworker for the purpose of the NES and Mining Industry Award 2020 (Mining Award) which was one of two relevant modern awards underpinning the Agreement. The applicant explained that the only classification falling under the other, the Vehicle Repair, Services and Retail Award 2020 (Vehicle Services Award), is the Trainee classification which is defined in clause 1 of the Agreement. The applicant indicated that the Trainee works a 5 day, 45-hour/week roster and so is not considered a shiftworker for the purposes of the Vehicle Services Award.

1. Section 186(2)(d) requires the Commission to be satisfied the Agreement passes the better off overall test (BOOT). The test is found in s.193 of the Act and it is to be applied in accordance with s.193A. Under s.193 the Commission must be satisfied, as at the time the application for approval was made, that each award covered employee, and each reasonably foreseeable employee, for the agreement would be better off overall if the agreement applied to the employee than the relevant modern award. Here the relevant awards are the Mining Award and the Vehicle Services Award (the Awards). In applying the test, the Commission is required by s 193A to make a global assessment of whether each employee would be better off having regard to the terms of the agreement which would be more beneficial than the Award and the terms which would be less beneficial. In making that assessment, the Commission may have regard to the patterns or kinds of work, or types of employment, that are reasonably foreseeable at the time of the application. A number of BOOT concerns were raised about the application.

1. Firstly, clarity was sought as to the means of determining the aggregated annualised salaries. Also the Agreement appears silent on the safeguards contained in clause 17 of the Mining Award which deals with annualised salaries. The applicant explained that all employees (excluding casual employees) will be paid and engaged in accordance with the Aggregated Annualised Salaries as outlined in table one, two three and four of Schedule 1 of the Agreement. The applicant further explained that the aggregated annualised salaries are an all-inclusive salary which include allowances, leave loading and penalty rates under the Mining Award and that rates applying during ordinary hours, day shift, night shift, weekends and overtime have been accounted for throughout applicable roster cycles and in the aggregated annualised salaries. The applicant contends that these salaries are high enough to compensate without requiring reconciliation and submits that an enterprise agreement may pass the BOOT even if some modern award arrangements are not included, as long as overall those omissions are offset by the benefits of the enterprise agreement, referring to Re Australia Western Railroad Pty Ltd T/A ARG – A QR Company[2011] FWAA 8555 at [8]. See also Norco Co-operative Limited [2020] FWCA 2869, [14] and Corestaff QLD Pty Ltd [2019] FWC 8247 at [20].

1. Matters were also raised with the applicant in respect to the Agreement appearing to be silent on minimum engagement for casuals and whether any deficiencies in the rates of pay for casual employees may result in financial and non-financial detriment. I raised these concerns in light of the decision Loaded Rates Agreements [2018] FWCFB 3610 which at [121] provides that:

“… In an enterprise agreement which provides or permits casual employment of this nature, it is difficult to envisage how it would be possible to provide for a loaded rate for casual employees that was capable of passing the BOOT. This is because it would always be possible for the casual employee, in a given pay period, to be engaged to work on a day or at a time which would attract the payment of penalty rates under the relevant award and not to be engaged on any other hours or at any other times.”

1. The applicant explained that it does not currently employ casual employees who would otherwise be covered by the Vehicle Repair Award and casual employees are only engaged at the classification of Cert II Tyre Technician and Cert II Tyre Technician – Leading Hand, both underpinned by the Mining Award. The applicant submits that under the Agreement casuals are used to backfill over a full swing, not an individual shift and that casuals have rostered work rather than the performance of short-term and/or intermittent work on an “on-call” basis as referred to in the Loaded Rates in Agreements decision. The applicant indicates that casual rates of pay at Schedule 1 of Table 7 of the Agreement accounts for any applicable loadings or penalties for dayshift, nightshift, weekend work or overtime and it is of the view that over the course of applicable roster swings (as the case may be) casuals are better off under the Agreement than the Mining Award. To address the concerns, undertakings have been provided that casual employees will be engaged and paid for at least 2 consecutive hours and are entitled to 250% of their casual rate of pay when working a public holiday in alignment with the Mining Award.

1. Given the explanations provided by the applicant, the undertakings provided, and having regard to s.193A(6), and in particular the types of employment and patterns of work of the employees covered by the Agreement, I am satisfied that the BOOT is met. A copy of the undertakings in relation to the matters raised is attached in Annexure A. The terms of the undertakings were provided to all bargaining representatives. No objection was raised. I am satisfied that the undertakings will not cause financial detriment to any employee covered by the Agreement and will not result in substantial changes to the Agreement. Pursuant to s.201(3), the undertakings are taken to be terms of the Agreement. I note that should the work patterns, kinds of work or types of employment under the Agreement change, an application under s.227A is available for a reconsideration of the BOOT.

1. The Agreement does not cover all of the employees of the employer, however, taking into account the factors in sections 186(3) and (3A) I am satisfied that the group of employees was fairly chosen. Having regard to the undertakings and the material contained in the application and filed in relation to it, including submissions of the applicant as to intended operation of the Agreement, I am satisfied that each of the requirements of ss.186 and 187 are met.

1. The Australian Workers’ Union, being a bargaining representative for the Agreement, has given notice under s.183 of the Act that it wants the Agreement to cover it. In accordance with s.201(2) I note that the Agreement covers the organisation.

1. The Agreement was approved on 4 July 2024, and, in accordance with s.54, will operate from 11 July 2024. The nominal expiry date of the Agreement at clause 4.2 is 4 July 2027. 

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

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ANNEXURE A