Packing Shed & Others

[2019] FWC 6905

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.185—Enterprise agreement

Packing Shed & Others

(AG2018/2373 AG2018/6224 AG2018/6665 AG2018/6757 AG2019/246 AG2019/333 AG2019/342 AG2019/465 AG2019/714 AG2019/1139)

BTS ENTERPRISE AGREEMENT 2018 & ORS

Agricultural industries
Commissioner McKinnon	MELBOURNE, 8 OCTOBER 2019

Application for approval of enterprise agreements in the horticulture industry.

Introduction

Application has been made for approval of the enterprise agreements set out in the Schedule to this Decision (the Agreements). The applications were each made pursuant to s.185 of the Fair Work Act 2009 (the Act) by the applicants set out in the Schedule. The Agreements are all single enterprise agreements.

The Australian Workers’ Union (AWU) is not a bargaining representative in relation to the Agreements. It opposes the approval of the BTS Enterprise Agreement 2018[1] (the BTS Agreement) and the JC & LM Mauro Enterprise Agreement 2018[2] (the Mauro Agreement). It contends that these two Agreements cannot be approved, including because they do not pass the better off overall test and have not been genuinely agreed. It also submits in relation to the BTS Agreement that the employer is not a national system employer with capacity to make an enterprise agreement under the Act.

By way of background, all of the Agreements were made at a time when changes to the Horticulture Award 2010 (the Award) were in contemplation in connection with the 4 yearly review of modern awards.[3] It is not in dispute that the Award has now been varied to create new overtime entitlements for casual employees in certain circumstances and that these changes had not been made at the each time application for approval of the Agreements was made.

On 15 February 2019, I issued a Decision[4] dismissing 10 similar applications and providing an opportunity for undertakings in relation to a further 31 applications. The Decision was overturned by a Full Bench of the Commission on appeal in Australian Workers’ Union v Gray Australia & Ors[5] (Gray). The Full Bench dismissed 30 of 31 remaining matters and remitted the BTS Agreement to me for rehearing.

This decision deals with the application for approval of the Agreements.

The application for approval of the Agreements under section 185

AG2018/2373 - BTS Agreement

Capacity of BTS Packing Shed to make an enterprise agreement

In my initial Decision, I raised a concern that the BTS Agreement may have been made by a partnership in Western Australia which did not have capacity to make an enterprise agreement under the Act.

BTS Packing Shed filed a submission in response to the concern on 22 February 2019. Having considered the matter further, the Agreement was approved on 15 March 2019.[6]

On appeal, the Full Bench found no evidence that the matter had been resolved before the Agreement was approved and remitted the matter to me. It is apparent that the submission of 22 February 2019 was not brought to the attention of the Full Bench before the decision in Gray was issued.

The matter was the subject of further hearing on 30 September 2019. A Director of BTS Packing Shed, Hans-Christian Bloecker, gave evidence about the partnership between Artemis Agriculture Pty Ltd (Artemis) and David and Karen Menzel (the Menzels). Artemis and the Menzels each operate horticultural businesses that grow and sell melons and pumpkins in the Ord Valley. The partnership known as BTS Packing Shed was formed to share the cost of a packing shed which they operate together, including for the purpose of contract packing.

As the AWU now concedes, it is evident that the partnership is engaged in trading activity and that Artemis is a trading corporation both independently of and in connection with the partnership. Having regard to the decisions in McInnes v North Perth Vet Centre[7]; Williams v Goldendays Pty Ltd & Ors[8] and Greville v Combined Metal Industries[9] as well as the evidence before me, I am satisfied that the partnership is a national system employer with the capacity to make enterprise agreements under the Act.

Approval requirements

BTS Packing Shed maintains its application for approval of the BTS Agreement which was lodged on 4 June 2018 after the BTS Agreement was made on 28 May 2018. This was two months into its busy season, and the BTS Agreement was made with 14 employees. All voted in favour of its approval.

In my initial Decision, I set out certain concerns in relation to whether the BTS Agreement passed the better off overall test. Those concerns were resolved by undertakings which BTS Packing Shed continues to rely upon in support of its application. I accept the undertakings because they resolve my concerns about whether the Agreement passes the better off overall test for the reasons set out in my initial Decision.

Section 186(2)(a) of the Act requires the Commission to be satisfied that the enterprise agreements have been genuinely agreed to by relevant employees.

Section 188 deals with when an enterprise agreement has been “genuinely agreed” to by employees. In summary, it requires the Commission to be satisfied of three matters:

1.The employer must have complied with the pre-approval steps set out in sections 180(2), (3) and (5) and section 181(2) of the Act;
2.The Agreement must have been “made” in accordance with section 182 of the Act; and
3.There must be no other reasonable grounds for believing that the Agreement has not been genuinely agreed to by the employees.

The developing law on “genuinely agreed” was summarised in Mechanical Maintenance Solutions Pty Ltd (MMS).[10] Under section 180(5), an employer must take all reasonable steps to ensure that the terms of the proposed agreement, and the effect of those terms, are explained to relevant employees. The explanation must be provided in an appropriate manner, taking into account the particular circumstances and needs of relevant employees, including those from culturally and linguistically diverse backgrounds, young employees and those who did not have a bargaining representative for the agreement (section 180(6)).

What is required in a particular case to establish that all reasonable steps have been taken to explain an enterprise agreement and its effect on employees will depend on the facts and circumstances of the case. The requisite level of detail varies relative to those facts and circumstances. However, the task of the Commission remains to understand the content of the explanation provided to employees and then to determine whether the explanation was adequate. The explanation must have put employees in a position to know what they are being asked to agree to and to understand how wages and working conditions might be affected by their voting to approve the enterprise agreement.

It will not always be necessary for an employer to have explained the minutiae of every difference between a modern award and an enterprise agreement, or every detriment or benefit. A range of matters giving context both to the proposed agreement and the explanation provided to employees can be relevant in determining whether an explanation is sufficient. Those matters include the effectiveness of an employer’s communication and what has not been communicated. Material or significant changes are likely to require more explanation than minor or trivial matters, both in terms of their operative effect and the consequences of implementation (for example, the displacement of existing rights or obligations, or the creation of new ones).

As I noted in MMS, it can sometimes be a high bar to establish that an enterprise agreement has been genuinely agreed and depending on the circumstances, the evidence required to satisfy the Commission in this regard can be substantial.

I was initially satisfied that the test had been met in relation to the BTS Agreement. My conclusions in that regard were shortly stated as follows:

“The employees who voted to approve these Agreements were employed under the Award at the time. The Agreement, and its likely effect on employees, was explained to them as required by the Act. The explanation dealt with the nature of pending changes to the Award, including in relation to overtime for casual employees, and the rationale for making the Agreement in that context in each case. There are no other reasonable grounds before me to consider that the Agreements were not genuinely agreed.”[11]

The Full Bench held that a more detailed explanation was necessary under section 180(5) of the Act for each of the 31 enterprise agreements under consideration[12], including the BTS Agreement. It found as follows:

“[93]We agree with the Appellant that in order to comply with s 180(5) of the Act in relation to the Agreements, the explanation to employees must have addressed, at the very least, the following:

· the details of the decisions already made by the Full Bench concerning the Award and specifically that the Award will be varied to prescribe a maximum of 12 ordinary hours per day for casual employees and that maximum weekly ordinary hours would also be prescribed for casual employees but an averaging period will apply to ensure overtime rates are not payable when large amounts of hours are worked in a short period. The Full Bench’s provisional view was that an averaging period of eight weeks would apply and this had been agreed by the AWU, NUW, NFF and AIG;

· the changes to the Award arise from an award review process whereby the Commission independently assesses what constitutes a fair and relevant safety net of minimum conditions for employers and employees working in the industry. The Commission received detailed evidence from employers and their representatives about the nature of the industry and potential responses to the imposition of casual overtime conditions and was taking this into account in assessing the appropriate award conditions; and

· the effect of approving the Agreements is that casual employees will receive less beneficial hours of work conditions than the minimum applying under the Award from when the award variations take effect until at least the end of the nominal four-year term of each Agreement.”[13]

On a rehearing of the application, BTS Packing Shed rely on the same evidence it put before the Commission at first instance. It submits that it was required to explain the practical application of the pending changes to the Award, which it says it explained. It submits that during bargaining employees had access to the Commissions’ website setting out proposed changes to the Award. It notes that the volume of material dealing with proposed changes to the Award on that website is over 5000 pages and that it is a “huge burden” to put on an employer to require such volume of material to have been explained in detail to employees in order to demonstrate genuine agreement.

It seems well established that what is necessary to explain in each case depends on the particular facts and circumstances there arising.[14] In Gray, the Full Bench was dealing with separate enterprise agreements between 31 rural farm enterprises and their employees for the purpose of confirming existing arrangements between them. Some were proposing enterprise agreements that would replace the Award. Others were seeking to renegotiate existing enterprise agreements in circumstances where the Award did not apply. All were aware that there were pending changes to the Award in relation to casual overtime, but few evinced a detailed knowledge of the circumstances giving rise to those changes, or the precise terms of an earlier Full Bench’s provisional view about what those changes should be. In those with a test time prior to August 2018 (more than half of the 31 matters), neither the full detail of the Full Bench’s provisional view nor the consensus among relevant industry bodies had yet been made known.

The BTS Agreement was one such enterprise agreement. At the time it was made and lodged in the Commission, the full detail of the Commission’s provisional view about new casual overtime entitlements in the Award had not yet been published. What was known had been set out by a Full Bench of the Commission on 5 July 2017,[15] where it had provisionally decided that the Award should be varied to:

1.Introduce overtime penalty rates for work in excess of 12 hours per day;[16] and
2.Retain the capacity for casual employees to work up to 38 hours per week.[17]

The averaging period and whether overtime penalty rates should apply for work in excess of 38 hours per week remained as “critical issues to be resolved”. The Full Bench had expressed a provisional view on these critical issues, suggesting that weekly hours of work for casual employees be averaged over a period of 8 weeks so that overtime penalty rates would only be payable for work in excess of 304 hours over an 8 week period.[18]

No decision had yet been made to vary the Award in relation to the averaging of hours “to ensure that overtime rates are not payable when large amounts of hours are worked in a short period”. There was not yet an agreement between unions and industry bodies on the matter. It was then not possible for all of the explanation found necessary in Gray to have been conveyed to employees in relation to the BTS Agreement.

Mr Bloecker made a statutory declaration in the matter on 22 November 2018. It sets out the explanation given to employees about the BTS Agreement, which refers in passing to an explanation that “any further changes presently proposed to the Horticulture Award will not apply to them”, without providing evidence of the detail of discussions about pending changes to the Award. It refers to the preference of BTS Packing Shed for averaging of hours for casual employees over a 12 month period. It refers to the absence of any limit on averaging of hours under the Award as it stood at the time, but does not refer to pending changes in that regard.

Mr Bloecker gave the following additional evidence during a hearing of the application on 8 February 2019[19]:

“THE COMMISSIONER: Yes, got it. All right, so tell me a bit about why you decided to make the agreement and the discussions that you had with your employees.

MR BLOECKER: Trying to simplify it for everyone, so the employees and for us as well, there is the working holiday visa holders, they come from not everywhere but mainly Europe, Japan or Europe and Japan are probably the main nationalities that we get. Some can speak English really well, others not so well and trying to explain - a lot of them don't understand or don't have a very good understanding of the Hort Award and we do our best to try and explain to them and I try my best to explain it to them as well and same as with these changes that with the - that we're trying to bring through.

I tried my best to explain to them what the current state is, why we wanted to change it and tried my best to answer their questions and then pointed them and advised them to go and find your own information as well to inform themselves.

THE COMMISSIONER: Great. When you talk about why you wanted to change the current situation, tell me a bit more about that. What did you try and explain to them in that way?

MR BLOECKER: Because that work is highly seasonal, so we do the majority of our hours in that April through to October period, the working holiday visa holders they generally they want to save up as much money as they and get their 88 days so they can apply for their second year which - and then we - it's been very beneficial for us because we've always struggled, so this is my 10th year now back on the farm, in the beginning we struggled to get enough people to pick the fruit that we had and this has made it a lot easier with people wanting to get those 88 days and wanting to save as much money as possible in that time.

I explained to them - so roughly they do about 50 hours a week and with the new Hort Award, with the changes that were coming in, we would probably end up splitting those 50 hours into two 25 hour teams, as such, which would mean though that especially the casuals, that means they'd only be getting 25 hours they're not getting their days ‑ they're not saving up as much as possible and what probably would happen then is they'd move away.

They'd go to somewhere else where - or a different industry, not agriculture, where they could get their as many hours as possible or try and save up as much money as possible and - - -

THE COMMISSIONER: How did that go down with your employees? Did they have any questions? Did they understand what you were talking about?

MR BLOECKER: I think so, yes. They couldn't understand ‑ because they're already getting paid much more here picking or packing fruit than what they were in their home country so they couldn't understand why the changes are coming in, which tried to explain, and they were all for a situation where they could get their days as quickly as possible and save enough money.”

The evidence lacks sophistication but it reveals that employees were told that changes were coming to the Award and that was why BTS Packing Shed was proposing the BTS Agreement. It was explained that in response to the Award changes, the business was likely to split its workforce into two teams working 25 hours per week each, rather than the current arrangement of one team working up to 50 hours per week. Employees had the opportunity to ask questions and were pointed in the direction of more information.

The evidence of Mr Bloecker as to the explanation he gave only makes sense if the changes being discussed were the proposals linked to the introduction of overtime for casual employees. It is to be remembered that only limited information about the nature of those proposals was known at the time. The business response to split its workforce arose in the context of an extended peak season of 7 months each year and with a transient casual workforce of working holiday makers wanting to work 88 days to qualify for their second visa and to save up as much money as possible in the meantime. It is not apparent that employees worked more than 12 hours on any day.

For BTS Packing Shed, the proposed averaging period of 8 weeks would not have absolved it of the obligation to pay overtime to casual employees whose tenure was likely to be 88 days or closer to 13 weeks. Faced with that scenario, it planned on a course of action that the Full Bench in the 4 yearly review of modern awards[20] found was the likely industry response to new overtime entitlements for casual employees.

The BTS Agreement was its alternative proposal, because it would have meant that the Award changes had no operative effect at least for the life of the Agreement. In the circumstances, it was not available to BTS Packing Shed to explain to employees, as was held necessary in Gray, that “the effect of approving the [BTS Agreement] is that casual employees will receive less beneficial hours of work conditions than the minimum applying under the Award”. The capacity for casual employees to work up to 38 hours per week had been retained in the Award. It was the effect of not approving the BTS Agreement which was likely to be that casual employees would receive less beneficial hours of work conditions, because the workforce would be split into two teams.

According to the Form F17, in explaining the BTS Agreement and its effect to employees, Mr Bloecker offered to engage an interpreter to those employees from non-English speaking backgrounds but who spoke English fluently. The offer was declined by employees.

In the circumstances, I am satisfied on balance that BTS Packing Shed took all reasonable steps to ensure that the BTS Agreement and its effect were explained to relevant employees as required by section 180(5) and section 188(1)(a) of the Act.

One other reasonable ground for believing that the BTS Agreement was not genuinely agreed to for the purpose of section 188(1)(c) is disclosed on the materials. Specifically, the Form F17 filed with the application answers “No” to the question about whether the BTS Agreement contains any less beneficial terms than the Award. As the history of the matter has shown, the answer is incorrect. The inference drawn in similar cases has been that detriments in the enterprise agreement compared to the modern award were not (or were not adequately) explained to employees for the purposes of section 180(5).

In this matter, undertakings have been given to remedy the identified detriments to employees compared to the Award. Those undertakings also resolve the concern arising under section 188(1)(c).

It follows that I am satisfied that the BTS Agreement was genuinely agreed.

AG2018/6224 - The Mauro Agreement

On 8 November 2018, JC & LM Mauro applied for approval of the JC & LM Mauro Enterprise Agreement 2018 (the Mauro Agreement). The Mauro Agreement was made with two employees on 26 November 2018.

The application for approval was accompanied by a signed copy of the Agreement, but it was not a “signed copy” for the purposes of section 185(2)(a) of the Act and regulation 2.06A of the Fair Work Regulations 2009 (the Regulations).[21] The deficiency has since been remedied by the filing of an amended signature page. I will accept the amendment under section 586 of the Act because the employer signatories are JC Mauro and LM Mauro. The address of each individual is clearly set out in the text of the Agreement at clause 4.1. There is no evident detriment arising to employees as a result of the amendment.

The nominal expiry date in clause 3.2 of the Mauro Agreement is more than four years from the date of approval. This is contrary to section 186(5) of the Act. An undertaking is necessary to address the concern.

Clause 4.2 of the Mauro Agreement may operate as an ‘opt out term’ because it excludes from coverage “employees who are paid an annual salary”. On one reading of that exclusion, an employee may be compelled, or elect, to opt out of coverage by accepting remuneration in the form of an annual salary. An undertaking has been given to address the concern.

The flexibility term in clause 11 of the Mauro Agreement does not comply with section 203(6) of the Act because the notice period required to terminate an individual flexibility arrangement is more than the maximum 28 day period. If the Agreement is approved, the model flexibility term will apply as a term of the Mauro Agreement.

In relation to the better off overall test, rates of pay are the same as the Award, except for casual employees and pieceworkers whose rates of pay are marginally higher. Clause 25.2 of the Mauro Agreement confers a more beneficial 10 minute paid rest break in the afternoon. The minimum engagement period for casual employees is more beneficial under the Mauro Agreement.

A number of differences between the Mauro Agreement and the Award were identified by the AWU and separately by the Commission. Some of those issues are no longer pressed having regard to the findings of the Full Bench in Gray. Some do not arise in relation to the better off overall test, for example, in relation to overtime entitlements for casual employees which were not terms of the Award at the ‘test time’. Undertakings have been given to address relevant concerns and I accept them.

With the undertakings now given, there is a benefit conferred on each group of employee covered by the Mauro Agreement. The benefit is marginal but it is quantifiable. I am satisfied that the Mauro Agreement passes the better off overall test.

The Mauro Agreement covers all employees in Levels 1 to 5 in all horticulture facilities operated by JC & LM Mauro. To the extent that it is necessary to decide, I am satisfied that the group of employees covered by the Mauro Agreement was fairly chosen.

As to whether the Mauro Agreement has been ‘genuinely agreed’, it was made with two casual employees approximately 4 months before the Award was varied to introduce overtime for casual employees.

There is no entitlement to overtime for casual employees in the Mauro Agreement and the entitlement is expressly excluded by clause 14.1(c)(iv).

According to the Form F17 statutory declaration filed with the application, Loretta Mauro held a meeting with employees on 22 October 2018 where employees were given a “written notice” of “the terms of the agreement and how it will differ from the Horticulture Award. This notification included the clauses as they appear in the award and the changes sought to be made for the terms of this agreement.”

Ms Mauro filed a supplementary statutory declaration in the proceedings about the explanation given to employees for the purposes of section 180(5) of the Act.[22] According to the statutory declaration:

1.The business is a member of Growcom, an industry representative body.
2.Members of Growcom receive a monthly newsletter “Workplace Essentials” containing information and updates on industrial relations issues.
3.Ms Mauro followed with interest updates about the Commission’s review of the Award over the preceding year, and the competing views of the unions and employer representative bodies about changes to the Award to allow overtime for casuals.
4.Employees were also aware of the proposed changes to the Award, and would discuss this with Ms Mauro from time to time
5.In mid-October 2018, she received the October “Workplace Essentials” update. She followed a link in the newsletter to Growcom’s website dealing with updates to the Award. She read the draft determination setting out casual overtime changes that had been agreed to by all “bodies” and the Commission.
6.On 22 October 2018, she met with her 2 employees in the shed and explained the Mauro Agreement to them and the differences from the Award on a line by line basis and the effect of “the changed terms”.
7.She had the Growcom Award updates document with her and she discussed each of the proposed changes to casual overtime with the employees, including how the changes had come about. She made it clear that if employees voted for the Mauro Agreement, they would not be entitled to the casual overtime changes to the Award while it applied.

In addition to the two statutory declarations filed in support of the application, Ms Mauro gave evidence about the making of the Mauro Agreement. According to Ms Mauro, the business is a small enterprise and her motivation for making the Mauro Agreement was partly in response to the proposed casual overtime rules and also for the future security of the business in the years to come, so everyone knew where they stood, “keeping employees in the loop”. She was unsure what was going to happen with the Award in the future and felt that it was time for the business to move forward and make an enterprise agreement. It gave them the flexibility of engaging employees on any day, not just Monday to Friday. It also meant employees could work on the days they wanted.

Ms Mauro was cross-examined by the AWU. She recalled that the proposed changes to the Award involved 12 hour maximum days, averaged over 8 weeks. She said that when she met with employees, they sat around a table and she explained the Mauro Agreement to both of them. They spoke about the days and hours of work in the business. She had a full list of the Award changes, which she gave to them. She clarified that the document given to employees on 22 October 2018 was the Growcom “Workplace Essentials” October update attached to her statutory declaration of 24 September 2019.

The main things discussed were the differences between the Mauro Agreement and the proposed Award including the 12 hour day maximum and overtime after 8 weeks. She went through it “step by step” and felt employees could relate to the discussion. She did not discuss all effects of the proposed Award changes on the business, for example because the business does not work 12 hour days. She told employees that they would not earn less than the Award rate, which would go up over time.

The Growcom “Workplace Essentials” October update explains that there had been a conciliated agreement reached between “all bodies” and the Commission dealing with casual overtime in the Award. It sets out what how the Commission’s draft determination would change the Award, including 7 dot points summarising the conciliated agreement. It contains sample calculations for the proposed arrangements. It notes the option for employers of negotiating an enterprise agreement and provides a link to the Growcom website.

It is clear that Ms Mauro was not directly involved in, or experienced with, the nature of Commission proceedings including the 4 yearly review of modern awards. Her response to a question about who she meant by the reference to “all bodies” to the proposed Award changes in her statutory declaration was telling, with Ms Mauro assuming it meant government departments when the reference was actually to union and industry representative bodies. However, it also illuminates her reliance on the information she received from Growcom to explain the proposed Award changes to employees. The October update also uses the term “all bodies” and does not specifically name any of the unions or employer representatives involved in the 4 yearly review. This was the information she had available to her at the time the explanation was given to employees.

The AWU submits that the evidentiary basis in support of the Mauro Agreement is unsatisfactory and it is not clear what was explained to employees. It points to discrepancies between the Form F17 and the statutory declaration filed by Ms Mauro, which it says are significant. In this respect, the Form F17 refers to a “written notice” of “the terms of the agreement and how it will differ from the Award, including the clauses as they appear in the Award and the changes sought to be made “for the terms of this agreement”. The statutory declaration does not refer to any document being given to employees. It refers only to the Growcom document being “with” Ms Mauro during the meeting, in “the file”.

It is necessary to read the documents fairly together with the oral evidence of Ms Mauro. While the responses could have been more carefully expressed, I am not satisfied that the discrepancies are so significant that they discredit Ms Mauro’s evidence generally. Ms Mauro was not shaken in cross-examination and I accept her evidence. Where there is a discrepancy between her written and oral evidence, I prefer the oral evidence.

I am satisfied having regard to the evidence of Ms Mauro took all reasonable steps to ensure that her explanation to employees for the purposes of sections 180(5) and 188(1)(a) of the Act was both adequate and appropriate. It was substantially as contemplated in Gray, including that employees were told:

1.About the proposed Award changes, including specifically that there would be a maximum of 12 hours per day and an averaging of hours over 8 weeks;
2.That the changes emerged from a process involving an agreed approach of “all bodies” and the Commission; and
3.That making the Mauro Agreement would mean that future changes to implement casual overtime in the Award would not apply to employees.

It follows that I am satisfied that the Mauro Agreement was genuinely agreed for the purposes of section 180(5) of the Act.

There are two separate grounds for believing that the Mauro Agreement was not genuinely agreed. Firstly, the Form F17 states that the Mauro Agreement does not contain any terms or conditions of employment that are less beneficial than equivalent terms and conditions in the Award. As is apparent from the fact that undertakings were required to address concerns in relation to the better off overall test, that answer was incorrect. The undertakings also remedy this separate ground for concern by eliminating the identified detriments compared to the Award.

Secondly, clause 6.1 of the Mauro Agreement states as follows:

“6.1 For the purposes of complying with the Better Off Overall Test provisions under the Fair Work Act 2009 the terms of this Agreement, on balance do not and would not result in any reduction in the overall terms and conditions of employment of the employees, subject to this Agreement in comparison to any applicable reference instrument relating to those employees.” [emphasis added]

The applicable reference instrument is defined in clause 6.2 as the Award.

A plain reading of the term, and in particular the assurance that the Mauro Agreement “would not” result in any reduction in overall terms and conditions of employment for employees, gives the impression that it will at least be equivalent to the Award for its duration. For casual employees, that is plainly wrong.

The business submits that the term did not mislead employees, because it deals with the application of the better off overall test at a point in time, being the “test time”. At that time, employees can be said to have been better off overall. The term is plainly dealing with “compliance with the better off overall test” (so much is clear from the title). However, its substantive content makes no mention of the ‘test time’. If it were only referring to a single point in time, the words “do not” would be sufficient to convey the suggested intention. The only apparent work of the words “and would not” is to expand the assurance given to a time that extends beyond the present.

Whether intentional or not, the misdirection is a reason for believing that the Mauro Agreement may not have been genuinely agreed to by employees having regard to section 188(1)(c) of the Act, because it suggests this is what employees were led to believe.

However, the detailed evidence before me negates the inference so far as future changes to the Award are concerned. I have set out above the nature of the explanation given to employees and its content.

I am satisfied that the Mauro Agreement was genuinely agreed.

AG2018/6757 - The Paradise Orchards Agreement

On 3 December 2018, Paradise Orchards applied for approval of the Paradise Orchards Enterprise Agreement 2018 (the Paradise Agreement). The Paradise Agreement was made with two employees on 25 November 2018.

The application for approval was accompanied by a signed copy of the Agreement, but it was not a “signed copy” for the purposes of section 185(2)(a) of the Act and regulation 2.06A of the Fair Work Regulations 2009 (the Regulations).[23] The deficiency is that there is no address provided for the employer signatory. The matter is one that can be remedied by the exercise of discretion under section 586 of the Act. I have decided to exercise my discretion in this way because the address of the employer is clearly set out in the text of the Agreement at clause 4.1 and there is no evident detriment arising to employees as a result of the omission. To this end, a replacement signature page has been provided.

The nominal expiry date of the Paradise Agreement is more than four years from the date of approval. This is contrary to section 186(5) of the Act. If the Agreement is to be capable of approval, an undertaking will be required.

Clause 4.2 of the Paradise Agreement may operate as an ‘opt out term’ because it excludes from coverage “employees who are paid an annual salary”. For the same reasons as set out above in relation to the Mauro Agreement, an undertaking will be necessary to address the concern.

The flexibility term in the Paradise Agreement does not comply with section 203(6) of the Act because the notice period required to terminate an individual flexibility arrangement is more than the maximum 28 day period. If the Agreement is approved, the model flexibility term will apply as a term of the Agreement.

The dispute settlement term in clause 13 of the Agreement covers disputes arising “about a matter under this award”. The terminology is incorrect, apparently because the term has been adapted from the Award. However, in my view the obvious intention of the parties is that reference to the “award” is, and should be read as, a reference to the “agreement” for the purposes of clause 13.1. I am satisfied that the dispute settlement term meets the requirements of the Act.

In relation to the better off overall test, rates of pay are the same as the Award, except for casual employees and pieceworkers whose rates of pay are marginally higher. Clause 25.2 of the Agreement confers a more beneficial 10 minute paid rest break in the afternoon, which is likely to apply to all permanent full-time employees whose hours of work are 38 hours per week, but may not apply to permanent part-time employees if they are only employed to work in the morning.

Rates of pay for supported wage system employees and trainees appear to be at the same level as the Award. An undertaking has been given to address the concern.

There is provision for the working of voluntary additional hours at the ordinary time rate of pay in clause 26.4 and Schedule F to the Paradise Agreement. A similar clause was found to operate to the detriment of employees in Bupa Care Services Pty Ltd[24] to the extent that it permitted payment for overtime at ordinary rates, rather than at the overtime rate prescribed by the Award. That finding is apposite to the present case. An undertaking has been given to omit terms dealing with voluntary additional hours from the Paradise Agreement.

Even with the undertakings now provided, I am not satisfied that the Paradise Agreement passes the better off overall test in relation to part-time employees. For the remaining employees, the test appears to be met although the benefit to employees is marginal at best.

The Paradise Agreement covers all employees in Levels 1 to 5 in all horticulture facilities operated by Paradise Orchards. To the extent that it is necessary to decide, I am satisfied that the group of employees covered by the Paradise Agreement was fairly chosen.

As to whether the Paradise Agreement has been ‘genuinely agreed’, it was made approximately three weeks before peak season commenced in mid‑December but more than four months before the Award was varied to introduce overtime for casual employees. It was made with two employees: one part time and one casual.

Similarly to the enterprise agreements considered in Gray, there is no entitlement to overtime for casual employees in the Paradise Agreement – to the contrary, the entitlement is expressly excluded by clause 14.1(c)(iv).

In addition to the Form F17 filed in support of the application, Paradise Orchards relies on two statutory declarations of Jose Moreno, Farm Owner on 14 May 2019 and 23 September 2019[25], to establish the content of the explanation given to employees about the proposed Paradise Agreement and its likely effect on them.

The statutory declarations attest to Mr Moreno explaining the imminent changes to the Award and that overtime for casuals would not apply to them if the Paradise Agreement was approved. Mr Moreno says as a member of industry body Growcom, he also “took a keen interest” in developments related to the introduction of overtime for casual employees. Mr Moreno says that he explained to the two employees “the terms of our Paradise Orchards Enterprise Agreement 2018, where those terms differed from the Award and what impact it would have on their employment conditions”. He also says he explained to employees that the Commission had conducted several hearings over the past year regarding overtime for casuals, that the unions and employer bodies had different views, but they had now agreed to proposed changes to the Award in a draft determination. Casual employees would be entitled to overtime under the Award but not the Paradise Agreement if it was approved.

It is apparent that the statutory declarations provided by Mr Moreno are relied upon to establish that the explanation provided to employees for the purposes of section 180(5) of the Act was adequate. The first statutory declaration of 14 May 2019 was provided in response to a request from the Commission that further detail of the explanation under section 180(5) be provided. The second statutory declaration dated 23 September 2019 followed the decision one month earlier in Gray. The contents of the second statutory declaration seem to me to suffer from the deficiency identified in One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union[26] (One Key No. 2) in that all it does is attest to the assertion that Paradise Orchards has complied with its obligation under the Act in the manner outlined in Gray.

While it may be that the explanation given to employees was as Mr Moreno says, there was no mention of the detail of discussions about future award changes or casual overtime in the original Form F17 provided. The first supplementary statutory declaration was provided in response to a request from the Commission relating to whether the Agreement was genuinely agreed, and specifically whether changes to the Award regarding overtime for casual employees was discussed. It states that employees were told that “imminent changes to the Horticulture Award and the overtime provisions of overtime for casuals, will not apply to them if the agreement is approved.” It did not go into any more detail. It was only once the detail of the necessary explanation in Gray became known that further detail of the content of the explanation was provided in the form of the second statutory declaration.

Taken as a whole, and without more, the evidence is inadequate to persuade me that the explanation for the purposes of the section 180(5) of the Act was provided to employees as required by Gray. It can be distinguished from the evidence received in relation to the Mauro Agreement involving Ms Mauro’s account of her explanation during the hearing which was tested in cross-examination.

Separately, clause 6.1 of the Paradise Agreement suffers from the deficiency identified in relation to the Mauro Agreement in that it appears to contain an ‘opt out’ term.

Whether intentional or not, for the same reasons as set out in relation to the Mauro Agreement, the misdirection is a reason for believing that the Paradise Agreement was not genuinely agreed to by employees having regard to section 188(1)(c) of the Act.

It follows that I am not presently satisfied that the Paradise Agreement was genuinely agreed to by employees because I am not satisfied that it was explained to employees as required by sections 180(5) and 188(1)(a) of the Act to the standard established in Gray and I am not satisfied that there are no other reasonable grounds for believing that the Paradise Agreement was not genuinely agreed.

AG2019/246 - The Berry Pays Agreement

On 4 February 2019, Nicholas King applied for approval of the Berry Pays Pty. Ltd. Enterprise Agreement 2018 (the Berry Pays Agreement) which was made with employees on 18 January 2019.

The application for approval was accompanied by documents including:

a. a signed copy of the Agreement for the purposes of section 185(2)(a) of the Act and regulation 2.06A of the Fair Work Regulations 2009 (the Regulations)[27]; and
b. a Form F17 statutory declaration. The Form F17 is not made by an officer or authorised employee of Berry Pays as required by Rule 24 of the Fair Work Commission Rules 203. It is made instead by Mr King, who was the employer’s bargaining representative. As Mr King was the formally appointed agent of the employer in bargaining, I waive compliance with the rules in this respect.

The application was lodged outside of the statutory 14 day timeframe. Mr King has explained the reasons for delay. I consider it appropriate to extend the time for making the application.

The Notice of Employee Representational Rights filed with the application states that the proposed enterprise agreement will cover employees employed on a casual basis. The scope of the Berry Pays Agreement was later varied to include permanent employees. On the authority in Re Uniline Australia Limited[28], that triggered a second ‘notification time’ under section 173 of the Act. It is not apparent that a second Notice of Employee Representational Rights was issued to all employees employed at that time and containing the expanded scope of the Berry Pays Agreement. It is also not clear whether compliance with the requirement in section 173 is capable of remedy by the exercise of discretion under section 188(2) in this case. An opportunity was provided for submissions on the matter. No further material was received within the timeframe provided.

The nominal expiry date in clause 3 of the Berry Pays Agreement is more than four years from the date of approval, contrary to section 186(5) of the Act. An undertaking has been given to address the concern.

Clause 4.2 of the Berry Pays Agreement may operate as an ‘opt out term’ because it excludes from coverage “employees who are paid an annual salary”. I am concerned that an employee may cease being covered by the Berry Pays Agreement simply by accepting remuneration in the form of an annual salary. An undertaking may address the concern.

The flexibility term in clause 11 of the Berry Pays Agreement does not comply with section 203(6) of the Act including because the notice period required to terminate an individual flexibility arrangement is more than the maximum 28 day period. If the Agreement is approved, the model flexibility term will apply as a term of the Agreement.

The dispute settlement term in clause 13 of the Agreement covers disputes arising “about a matter under this award”. The terminology is incorrect, referring to the “award” rather than the “agreement”. The obvious intention of the parties is that reference to the “award” is, and should be read as, a reference to the “agreement” for the purposes of clause 13.1. I am satisfied that the dispute settlement term meets the requirements of the Act.

In relation to the better off overall test, rates of pay for all employees are higher than the Award with the undertakings now given. Junior employees are paid at the adult rate of pay. However, there is provision for the working of voluntary additional hours at the ordinary time rate of pay in clause 26.4 and Schedule F to the Berry Pays Agreement. A similar clause was found to operate to the detriment of employees in Bupa Care Services Pty Ltd.[29] The small margin of wage increases is not sufficient to overcome this likely detriment to employees, especially during peak times of the year. I am not satisfied on balance that the Berry Pays Agreement passes the better off overall test. Undertakings may resolve the concern.

The Berry Pays Agreement covers all employees in Levels 1 to 5 in all horticulture facilities operated by Berry Pays. To the extent that it is necessary to decide, I am satisfied that the group of employees was fairly chosen.

I now turn to consider whether the Berry Pays Agreement has been ‘genuinely agreed’.

I am satisfied on the materials before me that Berry Pays has complied with its obligations under sections 180(2) and (3) of the Act in relation to the provision of information about the proposed agreement and the voting process. However, I am not satisfied that there were at least 21 days after the last notice of employee of representational rights was given before employees were asked to vote as required by section 181(2), because there is no material before me to evidence the second notification time (that is, when the expanded scope of the Berry Pays Agreement was proposed).

The Berry Pays Agreement was made as the January harvest was coming to an end. That was approximately 2.5 months before the Award was varied to introduce overtime for casual employees. 163 employees were employed on the farms of Berry Pays in the week of voting for the Berry Pays Agreement. 77 of those employees cast a valid vote and 65 of those voted to approve it. There were 6 employee bargaining representatives.

Similarly to the enterprise agreements considered in Gray, there is no entitlement to overtime for casual employees in the Berry Pays Agreement. The entitlement is expressly excluded by clause 14.1(c)(iv).

The responses provided in the Form F17 statutory declaration filed with the application indicate that changes that were relevant to employees were explained to them at each farm site. The parties collectively worked through the draft agreement and reached agreement. In meetings on 3 and 4 January 2019, Mr King says he “worked through” the better off overall test, “to show that casual employees would receive 3% more in pay than are on currently”. Steps taken to ensure that the explanation was provided in an appropriate manner included the engagement of Mr King as an independent intermediary in bargaining, the giving of time for translation of what was being said for those who did not speak English fluently and reading out sections of the draft agreement to assist employees who did not have good reading skills.

In addition to the Form F17 filed in support of the application, Berry Pays relies on a supplementary statutory declaration of Mr King. It attests to discussions with employees on 19 and 20 December 2018 about proposed changes to the Award and overtime allocation to casual staff under the Award going forward. Mr King says he answered questions as they were asked. In meetings with employee bargaining representatives on 3 and 4 January 2019, Mr King went through the proposed agreement draft and showed the differences to the Award. He explained the better off overall test and how employees had to be better off overall. He explained the proposal for a flat rate set 3% above the Award and that the Berry Pays Agreement would be valid for four years and supersede any Award changes, including overtime being paid. A draft agreement was then posted on noticeboards on all sites along with the physical notice to vote.

Mr King gave evidence that there is a turnover of staff at Berry Pays every 6 weeks. He held meetings at its four sites. He explained that under the Award there could be overtime in the future after 38 hours per week, while the proposed agreement would have a flat rate, “continuing as we are now”. Employees at one of the sites asked about overtime but for the most part Mr King says he found it hard to keep people interested. Many did not want to vote and were amused at the notion that farms would pay overtime to employees.

There is insufficient material before me to establish that the detailed explanation required by Gray was given to employees of Berry Pays. There is no detail of the content of the explanation about what future Award changes were to be superseded except by reference to overtime “after 38 hours per week”. There is no reference to the 4 yearly modern award review or its relevant participants and their respective roles. There is evidence that employees were told that they would have less favourable hours of work conditions under the Berry Pays Agreement compared to the Award.

The Berry Pays Agreement also suffers from the deficiency identified in relation to the Mauro Agreement in that clause 6.1 contains an assurance that the Agreement “would not” result in any reduction in overall terms and conditions of employment for employees, despite the exclusion of future overtime entitlements for casual employees.

For these reasons, I am not satisfied that the Berry Pays Agreement was genuinely agreed to by employees.

AG2019/465 - The Cuillins Agreement

Mr King is also the applicant for approval of the CUILLINS Pty. Ltd. Enterprise Agreement 2019 (the Cuillins Agreement) made on 14 February 2019. The application was made to the Commission on 25 February 2019.

The Form F17 statutory declaration accompanying the application is not made by an officer or authorised employee of Cuillins as required by Rule 24 of the Fair Work Commission Rules 203. It is made by Mr King as the employer’s bargaining representative. I waive compliance with the rules in this respect.

The Notice of Employee Representational Rights filed with the application sets out that the proposed enterprise agreement will cover employees employed on a casual basis. The scope of the Cuillins Agreement was later varied to include permanent employees. That triggered a second ‘notification time’ under section 173 of the Act. [30] It is not apparent that a second Notice of Employee Representational Rights was issued to all employees employed at that time and reflecting the expanded scope of the Cuillins Agreement. An opportunity will be provided for submissions on whether compliance with the requirement in section 173 is capable of remedy by the exercise of discretion under section 188(2) in this case.

The nominal expiry date in clause 3 of the Cuillins Agreement is more than four years from the date of approval, contrary to section 186(5) of the Act. An undertaking has been given to address the concern.

Clause 4.2 of the Cuillins Agreement may operate as an ‘opt out term’ because it excludes from coverage “employees who are paid an annual salary”, so that an employee may cease being covered by the Cuillins Agreement simply by accepting remuneration in the form of an annual salary. An undertaking may be necessary to address the concern.

The flexibility term in clause 11 does not comply with section 203(6) of the Act including because the notice period required to terminate an individual flexibility arrangement is more than the maximum 28 day period. If the Agreement is approved, the model flexibility term will apply as a term of the Agreement.

The dispute settlement term in clause 13 of the Agreement covers disputes arising “about a matter under this award”. In my view the obvious intention of the parties is that reference to the “award” is, and should be read as, a reference to the “agreement” for the purposes of clause 13.1. I am satisfied that the dispute settlement term meets the requirements of the Act.

In relation to the better off overall test, rates of pay for all employees are higher than the Award with the undertakings now given. Junior employees are paid at the adult rate of pay. However, there is provision for the working of voluntary additional hours at the ordinary time rate of pay in clause 26.4 and Schedule F to the Cuillins Agreement. A similar clause was found to operate to the detriment of employees in Bupa Care Services Pty Ltd[31] to the extent that it permitted payment for overtime at ordinary rates, rather than at the overtime rate prescribed by the Award. The small margin of wage increases is not sufficient to overcome this likely detriment to employees, especially during peak times of the year. I am not satisfied on balance that the Cuillins Agreement passes the better off overall test. Undertakings may resolve the concern.

The Cuillins Agreement covers all employees in Levels 1 to 5 in all horticulture facilities operated by Cuillins. To the extent that it is necessary to decide, I am satisfied that the group of employees covered was fairly chosen.

As to whether the Cuillins Agreement has been ‘genuinely agreed’, I am satisfied on the materials that there has been compliance with the obligations under sections 180(2) and (3) of the Act in relation to the provision of information about the proposed agreement and the voting process. However, I am not satisfied that there were at least 21 days after the last notice of employee of representational rights was given before employees were asked to vote as required by section 181(2), because there is no evidence that any steps were taken after the second notification time to issue a second Notice of Employee Representational Rights.

The Cuillins Agreement was made approximately 1.5 months before the Award was varied to introduce overtime for casual employees. 163 employees were employed on Cuillins’ farms in the week of voting for the Cuillins Agreement. 87 of those employees cast a valid vote and all voted to approve it. There were 6 employee bargaining representatives, each having filed a Form F18A statutory declaration in support of the Cuillins Agreement. There was at least one employee bargaining representative fluent in each native language of employees on the farm.

As with the enterprise agreements considered in Gray, there is no entitlement to overtime for casual employees in the Cuillins Agreement. The entitlement is expressly excluded by clause 14.1(c)(iv).

The responses provided in the Form F17 statutory declaration filed with the application indicate that changes that were relevant to employees were explained to them and that the parties collectively worked through the draft agreement and reached agreement. In meetings on 2 and 4 February 2019, Mr King says he worked through the better off overall test with employees, “to show that casual employees would receive 3% more in pay than are on currently”. Steps taken to ensure that the explanation was provided in an appropriate manner included the engagement of Mr King as an independent intermediary in bargaining, the use of bargaining representatives fluent in other languages as translators, and reading out sections of the draft agreement to assist employees who did not have good reading skills.

In addition to the Form F17 filed in support of the application, Cuillins relies on a supplementary statutory declaration of Mr King. It attests to discussions with employees on 2 and 4 February 2019 about proposed changes to the Award and overtime being to casual staff under the Award going forward. Mr King says he answered questions as they were asked. He went through the proposed agreement draft and showed the differences to the Award. He explained the better off overall test and how employees had to be better off overall. He explained the proposal for a flat rate set 3% above the Award, that the Cuillins Agreement would be valid for four years and would supersede any Award changes, including overtime being paid. A final draft agreement was then circulated among employees on 6 February 2019, along with the notice to vote.

Mr King gave evidence that many employees at Cuillins were already aware of the proposed changes to the Award in relation to casual overtime and had access to the Commission’s website on their phones containing the proposed changes so they “could see it themselves”. Meetings were conducted in the smoko room and employees had their phones. Employees asked what was happening and Mr King responded that there was a proposal for overtime after 38 hours of work for casual employees, compared to the flat rate proposal in the Cuillins Agreement which would mean continuing as now. In the meeting on 2 February 2019, participants had a copy of the Award and a skeleton agreement draft. Mr King showed them the differences in the future. There was a discussion about whether employees would get overtime and Mr King indicated that he could follow up with Cuillins, but none of the employees asked him to. He observed some nervousness among employees about the overtime issue.

While it is clear that the introduction of casual overtime was discussed and that employees were told it would not apply to them if the Cuillins Agreement was made, there is insufficient material before me to establish that the detailed explanation required by Gray was given to employees of Cuillins. They were told about the application of overtime after 38 hours per week, without the additional detailed workings of the new regime. There is very limited evidence of any discussion about the 4 yearly review of modern awards process or its participants or any advice to employees that the hours of work conditions under the Cuillins Agreement were less beneficial for employees than under the Award.

The Cuillins Agreement also suffers from the same deficiency identified in relation to the Mauro Agreement in that clause 6.1 contains an assurance that the Agreement “would not” result in any reduction in overall terms and conditions of employment for employees, despite the exclusion of future overtime entitlements for casual employees.

For these reasons, I am not satisfied that the Cuillins Agreement was genuinely agreed to by employees.

AG2019/714 - The McCrystal Agreement

On 15 March 2019, McCrystal Agricultural Services Pty Ltd applied for approval of the McCrystal Agricultural Services Pty Ltd Enterprise Agreement 2019 (the McCrystal Agreement) made on 5 March 2019.

The application for approval was accompanied by documents including a signed copy of the McCrystal Agreement, which was not a “signed copy” for the purposes of section 185(2)(a) of the Act and regulation 2.06A of the Fair Work Regulations 2009 (the Regulations).[32] The deficiency is that there is no address provided for the employer signatory. The matter is one that can be remedied by the exercise of discretion under section 586 of the Act. I have decided to exercise my discretion in this way because the address of the employer is clearly set out in the text of the Agreement at clause 4.1 and there is no evident detriment arising to employees as a result of the omission.

The nominal expiry date in clause 3 of the McCrystal Agreement is more than four years from the date of approval, contrary to section 186(5) of the Act. An undertaking has been given to address the concern.

Clause 4.2 of the McCrystal Agreement may operate as an ‘opt out term’ because it excludes from coverage “employees who are paid an annual salary”. For the same reasons as set out above, a plain reading of the exclusion permits an employee to cease being covered by the McCrystal Agreement simply by accepting remuneration in the form of an annual salary. An undertaking may be necessary to address the concern.

The flexibility term in clause 11 does not comply with section 203(6) of the Act including because the notice period required to terminate an individual flexibility arrangement is more than the maximum 28 day period. If the Agreement is approved, the model flexibility term will apply as a term of the Agreement.

The dispute settlement term in clause 13 of the Agreement covers disputes arising “about a matter under this award”. The terminology is incorrect, apparently because the term has been adapted from the Award. However, in my view the obvious intention of the parties is that reference to the “award” is, and should be read as, a reference to the “agreement” for the purposes of clause 13.1. I am satisfied that the dispute settlement term meets the requirements of the Act.

In relation to the better off overall test, rates of pay for employees are marginally higher than the Award except in relation to supported wage employees and trainees. There is no other relevant benefit or detriment arising on the material before me. I am not presently satisfied that the McCrystal Agreement will leave each employee better off overall than if the Award applied to them. Undertakings may resolve the concern.

The McCrystal Agreement covers all employees in Levels 1 to 5 in all horticulture operations of McCrystal. To the extent that it is necessary to decide, I am satisfied that the group of employees covered was fairly chosen.

As to whether the McCrystal Agreement has been ‘genuinely agreed’, I am satisfied on the materials that there has been compliance with the obligations under sections 180(2) and (3) and section 181(2) of the Act in relation to the provision of information about the proposed agreement and the voting process.

The McCrystal Agreement was made as the summer peak season was coming to an end and approximately 1 month before the Award was varied to introduce overtime for casual employees. 33 employees were employed at the time the request to vote was made and all voted to approve it. There were 4 employee bargaining representatives who each filed a Form F18A statutory declaration confirming the support of employees they represented for the McCrystal Agreement.

As with the enterprise agreements considered in Gray, there is no entitlement to overtime for casual employees in the McCrystal Agreement. The entitlement is expressly excluded by clause 14.1(c)(iv).

The responses provided in the Form F17 statutory declaration filed with the application and the subsequent evidence of Russell McCrystal demonstrate that there were two meetings on 7 February 2019 where current award conditions and pending changes to the Award were discussed. Employees were advised “the pay details of the current Award, the pending Award changes of overtime for casual employees and our proposed changes in the Agreement of increasing the hourly rate by 25c per hour to all workers under the Horticultural Award”. The pending Award changes were “unpacked”, and the better off overall test was discussed. Employees were told that the Award changes would mean overtime after 12 hours per day, outside a new span of hours or after 152 hours over four weeks. Mr McCrystal described a good engagement process with employees where he explained the proposal to replace the Award and pending changes to the Award, which was “what the process was all about”. By accepting the proposed agreement, the better off overall test was accepted as sufficient to compensate for the pending award changes.

On 12 February 2019, employees were sent information about where to access the Award and the National Employment Standards. On 19 February 2019, there was a further meeting to discuss and ask if anyone had questions relating to the Award, the current Award conditions, pending changes to the Award, proposed changes and the ability to select a representative. On 20 February 2019, information about the voting process was provided to employees. Some of the employees were seasonal workers from Vanuatu. The Seasonal Worker Team Leader explained the information given to employees in the local Vanuatu language in the meetings described above.

I accept the evidence of Mr McCrystal that he was upfront with employees about the proposal to increase the base hourly rate for all employees in return for replacing the Award and pending changes to the casual overtime rules with the McCrystal Agreement. Employees voted unanimously in favour of the McCrystal Agreement, and each of the employee bargaining representatives supported the application for approval.

The process seems to me to have engaged appropriately with employees in a way that was transparent about the proposed enterprise agreement and its purpose. However, there is insufficient material before me to establish that the detailed explanation required by Gray was given to employees of McCrystal. In particular, there was no detailed background explanation provided about the 4 yearly review of modern awards. Employees may also have been given the wrong impression that overtime under the Award was to be averaged over a 4, rather than 8, week period.

The McCrystal Agreement is affected by the deficiency identified in relation to clause 6.1, which contains an assurance that it “would not” result in any reduction in overall terms and conditions of employment for employees, despite the exclusion of future overtime entitlements for casual employees. Together with Mr McCrystal’s evidence that he told employees that accepting the McCrystal Agreement would mean that the better off overall test was met, including in relation to the future casual overtime changes, I am concerned that employees may not have been in a position to properly understand how their wages and working conditions were likely to be affected by the McCrystal Agreement.

For these reasons, I am not able to be satisfied that the McCrystal Agreement was genuinely agreed to by employees.

AG2018/6665 - The Lerch Agreement

On 29 November 2018, GD & LJ Lerch ATF The Greg Lerch Family Trust applied for approval of the Greg Lerch Family Trust Enterprise Agreement 2018 (the Lerch Agreement) made on 26 November 2018.

The application for approval was accompanied by documents including a signed copy of the Lerch Agreement for the purposes of section 185(2)(a) of the Act and regulation 2.06A of the Fair Work Regulations 2009 (the Regulations).[33]

In relation to the better off overall test, rates of pay for employees are marginally higher than the Award. However, there is no provision for conversion of casual employment to permanent employment as is provided in clause 10.5 of the Award (presumably because all employees are employed on a casual basis). As the Lerch Agreement only applies to casual employees, all employees within its scope are potentially affected by the omission.

Employees are entitled to overtime under the Lerch Agreement which is more beneficial than the Award as it applied at test time. However, the averaging period for overtime is 12 months and the method of reward for overtime is paid time off in lieu at ordinary rates unless an election is made for payment in advance. As a practical matter, the requirement for the election for payment of overtime to be at the time the work is offered may negate the option entirely, since it is unlikely that at the precise point at which an employee transitions from ordinary hours to overtime, an election of the necessary type will be made and effectively communicated to the employer, and an agreement made in writing to that effect. Such an election should be capable of being made at any time before the overtime is worked, consistent with the Award.

On balance, I am not presently satisfied that the Lerch Agreement will leave employees better off overall than the Award. Undertakings may be capable of resolving the concern.

As noted above, the Lerch Agreement only covers casual employees. It does not cover apprentices or trainees. It appears that casual employment is the only mode of employment used within the business to perform the work covered by the Lerch Agreement. As a result, and to the extent that it is necessary to decide, I am satisfied that the group of employees was fairly chosen.

As to whether the Lerch Agreement has been ‘genuinely agreed’, I am satisfied on the materials that there has been compliance with the obligations under sections 180(2) and (3) and section 181(2) of the Act in relation to the provision of information about the proposed agreement and the voting process.

The Lerch Agreement was made during a quiet period for the business, once the peak period from March to October had wound down. It was made approximately 4 months before the Award was varied to introduce overtime for casual employees. 11 employees were employed at the time the request to vote was made and all voted to approve it. There were no employee bargaining representatives.

As with some of the enterprise agreements considered in Gray, to the extent that casual employees have an entitlement to overtime under the Lerch Agreement, it is remunerated as paid time off instead of overtime or at ordinary rates.

Linda Lerch, who is a partner in the business, filed a statutory declaration in support of the application. It sets out how the pre-approval steps were met and how the Lerch Agreement was explained to employees. According to Ms Lerch, all staff were assembled in the main shed on 16 November 2018 for the explanation of the Lerch Agreement, which took approximately 30 minutes. The content of the explanation is detailed. The only reference to future award changes is shortly stated as “An EA replaces the Horticulture Award and any further changes presently proposed to the Horticulture Award will not apply to them.”

A Question & Answer document handed to employees deals with a number of matters said to relate to the Lerch Agreement, including an explanation of overtime work for permanent employees. The difficulty of course is that permanent employees are not covered by the Lerch Agreement. There is no reference to the effect of the Lerch Agreement on future changes to the Award.

During the hearing on 30 September 2019, Ms Lerch gave evidence that she met with employees and explained that the Award had some changes coming, and that would influence the pay employees would receive. She explained all terms of the Lerch Agreement as best she could. She did not know a lot about the proposed Award changes but spoke to her lawyer about it and he helped her through the process. That included the impending changes to overtime for casual employees after 38 hours. According to Ms Lerch, all employees understood how that would work and what was of most interest to them was the ability to work extra hours and bank those hours for quiet times. Ms Lerch explained that the Award would not apply to them and that under the Lerch Agreement, they could work the hours they wanted at the same rate, without overtime after 38 hours. There was discussion about averaging hours over 12 months so employees can have time off.

There is insufficient material before me to establish that the detailed explanation required by Gray was given to employees. In particular I am not satisfied that employees were fully appraised of the detail of the pending Award changes or of relevant background in relation to the 4 yearly review of modern awards. It follows that I am not able to be satisfied that the Lerch Agreement was genuinely agreed to by employees.

AG2019/333 - The Dangleberry Agreement

On 13 February 2019, Ashleahy Pty Ltd applied for approval of the Dangleberry Farms Enterprise Agreement 2019 (the Dangleberry Agreement) made on 9 February 2019.

The application for approval was accompanied by documents including a signed copy of the Dangleberry Agreement for the purposes of section 185(2)(a) of the Act and regulation 2.06A of the Fair Work Regulations 2009 (the Regulations).[34]

In relation to the better off overall test, rates of pay for employees are marginally higher than the Award. Casual employees are entitled to one weeks’ paid leave each year, which is more beneficial than the Award. Casual employees are also entitled to overtime which is more beneficial than the Award as it applied at test time.

On balance, I am satisfied that the Dangleberry Agreement will leave employees better off overall than the Award.

The Dangleberry Agreement covers all Level 1 to Level 5 employees but does not apply to apprentices or trainees. The exclusion of apprentices and trainees has not been adequately explained. An opportunity for submissions or undertakings in relation to whether the group of employees covered by the Dangleberry Agreement was fairly chosen will be provided.

As to whether the Dangleberry Agreement has been ‘genuinely agreed’, I am satisfied on the materials that there has been compliance with the obligations under sections 180(2) and (3) and section 181(2) of the Act in relation to the provision of information about the proposed agreement and the voting process.

The Dangleberry Agreement was made during a relatively quiet period for the business which peaks over the winter months. It was made approximately 2 months before the Award was varied to introduce overtime for casual employees. 4 employees were employed at the time the request to vote was made and all voted to approve it. There were no employee bargaining representatives.

As with some of the enterprise agreements considered in Gray, to the extent that casual employees have an entitlement to overtime under the Dangleberry Agreement, it is generally remunerated as paid time off instead of overtime or at ordinary rates. Penalty rates apply after 1976 hours work in any 12 month period.

Marcus Ashley, Director, gave evidence for the business as the person who drove the process. According to Mr Ashley, Ashleahy Pty Ltd is a young business being established. He was aware of pending changes to the Award which would mean penalty rates after 38 hours per week. The business has a short intense season and then there are three months with no work. He explained to employees that while he was not aware of the precise nature of penalty rate changes, from what he had heard, it sounded like it would be costly to the business if overtime after more than 38 hours per week on average, over an 8 week averaging period, was introduced. It would have meant the “not ideal” option of putting an extra person on rather than giving the extra work to existing employees. The business had decided to look at an enterprise agreement so that employees could earn the money they wanted to earn and to retain their good staff. He explained that if the Dangleberry Agreement was voted on and approved, the business would be bound to it rather than the Award. Employees accepted the proposal.

A Question & Answer document handed to employees dealt with a number of matters in the Dangleberry Agreement, including an explanation of overtime work for permanent employees. There is no reference to the effect of the Dangleberry Agreement on future changes to the Award and no reference to overtime for casual employees.

The statutory declaration filed by Mr Ashley in the matter summarises the content of an explanation given to employees on 23 January 2019. In relation to the pending Award changes, it states as follows:

“There are changes proposed to the Horticulture Award to be introduced sometime in the future. These changes will not apply to Employees if the EA is approved by the Fair Work Commission. We do not know what the new Horticulture Award will say but some of the changes proposed by interested parties are better than the current Award and better than our draft EA.”

The statutory declaration also states that the “EA closely follows the current Horticulture Award”. It refers to the averaging of hours for casual employees over a 12 month period in the Dangleberry Agreement, noting that the Award (at that time) did not state over what period hours may be averaged.

There is insufficient material before me to establish that the detailed explanation required by section 180(5) of the Act and the decision in Gray was given to employees. There is, for example, no mention of the 12 hour maximum or the 4 yearly review of modern awards or the participants in that process and their position in relation to the proposed Award changes.

It follows that I am not able to be satisfied that the Dangleberry Agreement was genuinely agreed to by employees.

AG2019/342 - The Oakumgold Agreement

On 14 February 2019, Oakumgold Pty Ltd applied for approval of the Oakumgold Enterprise Agreement 2019 (the Oakumgold Agreement) made on 30 January 2019.

The application for approval was not lodged within the requisite 14 day period and was not accompanied by a signed copy of the Oakumgold Agreement for the purposes of section 185(2)(a) of the Act and regulation 2.06A of the Fair Work Regulations 2009 (the Regulations).[35] The Form F17 statutory declaration does not appear to have been properly made. An opportunity will be given to remedy these procedural errors.

In relation to the better off overall test, rates of pay for employees are marginally higher than the Award. Casual employees are entitled to one weeks’ paid leave each year, which is more beneficial than the Award. Casual employees are entitled to overtime in circumstances where there was no equivalent provision under the Award at test time.

On balance, I am satisfied that the Oakumgold Agreement will leave employees better off overall than the Award.

The Oakumgold Agreement covers all employees other than apprentices or trainees. The exclusion of apprentices and trainees has not been adequately explained. An opportunity for submissions or undertakings in relation to whether the group of employees covered by the Oakumgold Agreement was fairly chosen will be provided.

As to whether the Oakumgold Agreement has been ‘genuinely agreed’, I am satisfied on the materials that there has been compliance with the obligations under sections 180(2) and (3) and section 181(2) of the Act in relation to the provision of information about the proposed agreement and the voting process.

The business operates all year round and the Oakumgold Agreement was made approximately 3.5 months before the Award was varied to introduce overtime for casual employees. 17 employees were employed at the time the request to vote was made and all voted to approve it. There were no employee bargaining representatives. The Oakumgold Agreement will replace an existing enterprise agreement made in 2009.

As with some of the enterprise agreements considered in Gray, to the extent that casual employees have an entitlement to overtime under the Oakumgold Agreement, it is generally remunerated as paid time off instead of overtime or at ordinary rates. Penalty rates may apply after 1976 hours in any 12 month period.

Ms Kellie Cauchi, Farm Manager, gave evidence in support of the application. She explained that there were a couple of meetings held with employees and agreement cases given to employees to read. She explained that the business was looking to make a new enterprise agreement because there were a few changes coming “with the new laws about 38 hours”. She explained that after 38 hours, employees would either have to go home or hours would have to be rostered on an 8 week cycle. She told employees that the proposed agreement would mean that the Award would not apply. She understood that casual employees could only be paid up to a set amount of hours, and took employees through their payslips to help them understand. She advised employees to let her know if they did not understand what was being proposed. She gave evidence that most employees know what they should be entitled to.

A Question & Answer document handed to employees dealt with a number of matters in the Oakumgold Agreement, including an explanation of overtime work for permanent employees. There is no reference to the effect of the Oakumgold Agreement on future changes to the Award and no reference to overtime for casual employees.

The statutory declaration filed by Ms Cauchi in the matter summarises the content of an explanation given to employees on 30 January 2019. In relation to the pending Award changes, it contains the same explanation set out in the statutory declaration of Mr Ashley, above.

There is insufficient material before me to establish that the detailed explanation required by section 180(5) of the Act and the decision in Gray was given to employees. It follows that I am not able to be satisfied that the Oakumgold Agreement was genuinely agreed to by employees.

AG2019/1139 - The Serra Agreement

On 9 April 2019, Serra Farming Pty Ltd applied for approval of the Serra Farming Enterprise Agreement 2019 (the Serra Agreement) made on 4 April 2019.

The application for approval was accompanied by a signed copy of the Serra Agreement for the purposes of section 185(2)(a) of the Act and regulation 2.06A of the Fair Work Regulations 2009 (the Regulations).[36]

In relation to the better off overall test, rates of pay for employees are marginally higher than the Award. However, there is no minimum engagement for casual employees. The Serra Agreement is otherwise largely consistent with the Award.

On balance, I am not satisfied that the Serra Agreement will leave casual employees better off overall than the Award. Undertakings may resolve the concern.

The Serra Agreement covers all employees other than apprentices, trainees or drilling employees. It is not clear why the exclusion of drilling employees, apprentices and trainees is a fair choice, as opposed to one that is arbitrary in nature. An opportunity for submissions will be given in relation to whether the group of employees covered by the Serra Agreement was fairly chosen.

As to whether the Serra Agreement has been ‘genuinely agreed’, I am satisfied on the materials that there has been compliance with the obligations under sections 180(2) and (3) and section 181(2) of the Act in relation to the provision of information about the proposed agreement and the voting process.

This is the second attempt by Serra Farming to make an enterprise agreement in the context of changes to the overtime provisions of the Award. The Serra Agreement was made approximately one week before the Award was varied to introduce overtime for casual employees. 11 employees were employed at the time the request to vote was made and 8 voted to approve the Serra Agreement. There were no employee bargaining representatives. The Serra Agreement will replace an existing enterprise agreement made in 2009.

As with other enterprise agreements considered in Gray, there is no entitlement to overtime for casual employees under the Serra Agreement.

Mr Andrew Serra, Farm Manager, gave evidence in support of the application, relying on two statutory declarations sworn by him at the time the Serra Agreement was lodged with the Commission. He gave evidence of a meeting on 28 March 2019 when the proposed agreement was explained to employees over a period of approximately one hour. The content of the explanation included the following:

“There are changes proposed to the Horticulture Award to be introduced sometime in the future. These changes will be introduced possibly in mid-2019 or October 2019. These changes will not apply to Employees if our Enterprise Agreement is approved by the Fair Work Commission. These changes have not been inserted into the Horticulture Award so they do not apply yet. Some of the changes proposed by the new Horticulture Award do not suit our business.”

The statutory declaration attests to the explanation of proposed changes to the Horticulture Award including:

a.Overtime for casuals after an average of 38 hours per week over 8 weeks;
b.Work outside a set span of hours attracting a 15% penalty;
c.Maximum 12 hours work per day; and
d.Minimum 2 hours work per day.

It states that employees were told that some of the changes proposed in the Award are better than the current Award and better than the Serra Agreement.

A Question & Answer document handed to employees dealt with a number of matters in the Serra Agreement, including an explanation of overtime for both permanent and casual employees. There is no reference to the effect of the Serra Agreement on future changes to the Award.

There is nothing before me to contradict the evidence of Mr Serra. While there is no mention specifically of the position of industry bodies in relation to the proposed changes, in my view the explanation provided to employees was adequate to place casual employees in particular on notice that voting for the Agreement may operate to their detriment, given pending changes to the Award.

I am accordingly satisfied that Serra Farming took all reasonable steps to ensure that the explanation required by section 180(5) of the Act was given to employees in relation to the Serra Agreement.

There is one other ground before me for believing that the Agreement was not genuinely agreed. The Form F17 filed with the application states that the Serra Agreement does not contain any terms or conditions of employment that are less beneficial than equivalent terms and conditions in the Award. As is apparent from my finding in relation to the better off overall test, the answer is incorrect. Undertakings may be required to resolve the concern.

Other relevant matters

No additional concerns arise in relation to any of the Agreements in relation to unlawful terms or designated outworker terms. There is no evidence of any scope order in operation in relation to any of the Agreements that would render compliance with the good faith bargaining requirements a relevant consideration.

The Agreements each contain dispute settlement terms that meet the requirements of section 186(6) of the Act and consultation terms that comply with section 205. Where the flexibility term does not meet the requirements of section 203, it is separately noted in my reasons above.

Conclusion and disposition

For the reasons set out above, I am satisfied that the BTS Agreement meets the requirements for approval under the Act. The BTS Agreement will be approved by separate decision.

For the reasons set out above, I am not presently satisfied that the remaining Agreements are capable of approval under the Act.

The Applicants in those matters are directed to file any further submissions or undertakings in support of their applications by no later than 4.00pm on 14 October 2019. Where relevant, those submissions or undertakings should also address:

incorrect answers given on the Form F17 statutory declaration lodged with the application in relation to whether the enterprise agreement contains any terms or conditions of employment that are less beneficial than equivalent terms and conditions in the Award; and
whether the undertakings can be accepted under section 190.

Any material filed in relation to the Mauro Agreement is to be copied to the AWU.

The AWU is to file any response to the submissions or undertakings in relation to the Mauro Agreement by no later than 4.00pm on 17 October 2019.

The applications will then be determined.

COMMISSIONER

Appearances:

N King for Berry Pays Pty Ltd and Cuillins Pty Ltd

P Copeland for JM Industries Trust & Piagno Discretionary Trust T/A Paradise Orchards and John C & Loretta M Mauro T/A JC & LM Mauro

M Waters for The Partnership of Artemis Agriculture Pty Ltd & David D. Menzel & Karen F. Menzel trading as BTS Packing Shed, GD & LJ Lerch atf the Greg Lerch Family Trust, McCrystal Agricultural Services Pty Ltd, Ashleahy Pty Ltd, Oakumgold Pty Ltd and Serra Farming Pty Ltd

A Sage and S Crawford for the Australian Workers’ Union

Hearing details:

2019.
Melbourne:
September 30.

SCHEDULE OF AGREEMENT APPLICATIONS

No.	Application	Applicant	Agreement
1	AG2018/2373	The Partnership of Artemis Agriculture Pty Ltd & David D. Menzel & Karen F. Menzel trading as BTS Packing Shed	BTS Enterprise Agreement 2018
2	AG2018/6224	John C & Loretta M Mauro T/A JC & LM Mauro	JC & LM Mauro Enterprise Agreement 2018
3	AG2018/6665	GD & LJ Lerch ATF the Greg Lerch Family Trust	The Greg Lerch Family Trust Enterprise Agreement 2018
4	AG2018/6757	JM Industries Trust & Piagno Discretionary Trust T/A Paradise Orchards	Paradise Orchards Enterprise Agreement 2018
5	AG2019/246	King, Nicholas David	Berry Pays Pty. Ltd. Enterprise Agreement 2018
6	AG2019/333	Ashleahy Pty Ltd	Dangleberry Farms Enterprise Agreement 2019
7	AG2019/342	Oakumgold Pty Ltd	Oakumgold Enterprise Agreement 2019
8	AG2019/465	King, Nicholas David	CUILLINS Pty. Ltd. Enterprise Agreement 2019
9	AG2019/714	McCrystal Agricultural Services Pty Ltd	McCrystal Agricultural Services Pty Ltd Enterprise Agreement 2019
10	AG2019/1139	Serra Farming Pty Ltd	Serra Farming Enterprise Agreement 2019

[1] AG2018/2373.

[2] AG2018/6224.

[3] 4 yearly review of modern awards – Casual employment and Part-time employment [2017] FWCFB 3541; 4 yearly review of modern awards – Award stage – Group 3 [2018] FWCFB 1405 at [121] and [2018] FWCFB 6368.

[4] Ceres Farm Enterprise Agreement 2018 & Ors [2019] FWC 1016.

[5] [2019] FWCFB 4253.

[6] [2019] FWCA 1361.

[7] [2015] FWC 2720.

[8] [2015] FWC 4200.

[9] [2016] FWC 114.

[10] Mechanical Maintenance Solutions Pty Ltd [2019] FWC 6801.

[11] [2019] FWC 1016 at [6].

[12] [2019] FWCFB 4253 at [5] and [93]; the term “Agreements” referred to each of the 31 enterprise agreements under appeal.

[13] Ibid at [93].

[14] One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union (2018) 262 FCR 527.

[15] 4 yearly review of modern awards – Casual employment and Part-time employment [2017] FWCFB 3541.

[16] Ibid at [752].

[17] Ibid at [753].

[18] Ibid at [755].

[19] AG2018/2373, Transcript of 8 February 2019.

[20] [2017] FWCFB 3541 at [749].

[21] [2019] FWCFB 3585 at [55].

[22] AG2018/6224 Exhibit 1 (24 September 2019).

[23] [2019] FWCFB 3585 at [55].

[24] [2010] FWAFB 2762 at [36].

[25] AG2018/6757, Exhibits 1 and 2.

[26] [2018] FCAFC 77 at 112.

[27] [2019] FWCFB 3585 at [55].

[28] [2016] FWCFB 4969.

[29] [2010] FWAFB 2762 at [36].

[30] [2016] FWCFB 4969.

[31] [2010] FWAFB 2762 at [36].

[32] [2019] FWCFB 3585 at [55].

[33] [2019] FWCFB 3585 at [55].

[34] [2019] FWCFB 3585 at [55].

[35] [2019] FWCFB 3585 at [55].

[36] [2019] FWCFB 3585 at [55].

Printed by authority of the Commonwealth Government Printer

[2019] FWC 6905

8 OCTOBER 2019