Otraco International Pty Ltd

[2024] FWCA 2301

[2024] FWCA 2301

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.185—Enterprise agreement

Otraco International Pty Ltd

(AG2024/1507)

OTRACO INTERNATIONAL PTY LTD ENTERPRISE AGREEEMENT – COAL 2023

Coal mining industry
DEPUTY PRESIDENT SLEVIN	SYDNEY, 20 JUNE 2024

Application for approval of the Otraco International Pty Ltd Enterprise Agreement - Coal 2023

1. An application has been made for approval of an enterprise agreement known as the Otraco International Pty Ltd Enterprise Agreement - Coal 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. I raised concerns 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 38.4 relating to the circumstances where annual leave can be cashed out and clause 54.6 setting out the entitlements owing to an employee who is made redundant may be read so as to operate in a manner inconsistent with the NES. Undertakings have been provided in relation to those matters. Consequently, 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 s186(2)(c) is met.

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 Vehicle Repair, Services & Retail Award 2020 and the Black Coal Mining Industry Award 2020 (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.

1. A matter was raised with the applicant in respect to the Agreement appearing to be silent on how casual employees will be eligible for any of the entitlements provided for at clause 19.1 and 19.2 of the Agreement and whether these deficiencies may result in financial and non-financial detriment. This may be an issue when considering the cumulative penalties provided for in the Vehicle Repair Award. The applicant explained that it does not currently employ casual employees who would otherwise be covered by the Vehicle Repair Award and that the only employees who are covered by the Vehicle Repair Award are Trainees, who are engaged in that capacity for a period of 4 to 6 weeks while they undertake training. The nature of that training is such that the Trainee cannot be engaged as a casual for that period. The applicant indicated it only engages Cert II Tyre Technicians as casual employees. A further concern was raised in respect to the Agreement appearing to be silent on a minimum engagement period. To address the concerns, an undertaking has been provided that the applicant will pay employees the Flat Hourly Rate plus 25% and casual employees will be provided with a minimum engagement period of 4 hours and will be paid for that at least 4 hours, regardless of the hours worked.

1. I sought clarity as to whether it is the intention of the applicant to engage employees on the Aggregate Annualised Salary instead of engaging employees on the Base Hourly Rates. I observed that Schedule 1 provides for both Annualised Aggregate Salary Rates (Tables 1-4) and Base Rates of pay (Table 5) and the definitions at clause 1 provide that the ‘Base hourly rate means the hourly rate of pay which forms the basis of the calculations to determine the Aggregate Annualised Wage’. In its response, the applicant explained that clause 22 of the Agreement clarifies that employees’ remuneration is based on an Aggregated Annualised Salary and that all employees (excluding casual employees) will be paid and engaged in accordance with the Aggregated Annualised Salaries as outlined in table one, two and three of Schedule 1.

1. In response to a query about the definition of a night shift and consistency with the relevant Award, the applicant has provided an undertaking which provides for a definition of night shift under clause 23. In response to a matter I raised in relation to the Agreement appearing to be silent on the definition of an afternoon shift, the applicant provided an undertaking to set out a definition and the relevant entitlements owed to an employee who works an afternoon shift.

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. 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. 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.

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. 

1. 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 Agreement was approved on 20 June 2024, and, in accordance with s.54, will operate from 27 June 2024. The nominal expiry date of the Agreement at clause 4.2 is 20 June 2027. 

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<AE525129  PR776239>

ANNEXURE A