PAN Flooring Pty Ltd T/A Rubaroc

[2019] FWC 6252

[2019] FWC 6252

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

PAN Flooring Pty Ltd T/A Rubaroc
(AG2018/6117)

Building, metal and civil construction industries
COMMISSIONER LEE	MELBOURNE, 9 SEPTEMBER 2019

Application for approval of the PAN Flooring Pty Ltd Enterprise Agreement 2018.

[1] An application has been made for approval of an enterprise agreement known as the PAN Flooring Pty Ltd Enterprise Agreement 2018 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act). It has been made by PAN Flooring Pty Ltd T/A Rubaroc (the Applicant). The Agreement is a single enterprise agreement.

[2] In reviewing the Agreement for approval, the Commission wrote to the Applicant identifying a number of concerns in relation to the Agreement and supporting documentation. I had concerns with relation to genuine agreement and whether the Agreement passes the better off overall test. The Applicant provided a response in relation to the matters raised however the response did not address the concerns raised. I wrote to the Applicant on 30 July 2019 date advising that I still had concerns with respect to the Agreement and requested that submissions and undertakings be provided. The Applicant requested an extension and one was granted until 28 August 2019.

[3] On 4 September 2019, I wrote to the Applicant advising that if no response is receieved by close of business 6 September 2019, the application may be dismissed with no further notice to the parties. No response has been received.

Genuine Agreement

[4] Section 180 (5) provides as follows:

“(5) The employer must take all reasonable steps to ensure that:

(a) the terms of the agreement, and the effect of those terms, are explained to the relevant employees; and

(b) the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.”

[5] The response at question 2.6 of the Form F17 – Employer’s statutory declaration in support of an application for approval of an enterprise agreement (F17) provides that “an information session was held at 4/37 – 39 Rushdale Street Knoxfield 3180 on 12/10/2019.” Question 2.7 of the F17 stated that “the agreement was explained, and employees were encouraged to discuss any inclusions in the Agreement with management. Management outlined the Companies limitations with varying workflow and offered to discuss with all employees their work availability and needs.”

[6] His Honour Justice Flick said in One Key Workforce (No 1):

“The requirement imposed by s 180(5) to “take all reasonable steps to ensure that the terms of the agreement, and the effect of those terms, are explained” is an important obligation imposed upon an employer to ensure that employees are as fully informed as practicable. The requirement is not a mere formality. Whatever steps may be necessary will depend upon the facts and circumstances of each particular case…” 1

[7] Whilst the F17 states that an information session was held where the Agreement was explained, it is not clear what was explained in relation to the effect of the terms of the Agreement and how employees will be better off overall when compared to the Award. I note that the response to Q3.5 of the F17 provides that the Agreement does not contain any terms and conditions of employment that are less beneficial than the Award, however I also to refer to the less beneficial terms detailed below.

[8] For this reason, I am not satisfied that the steps taken by the Applicant in this case constitute reasonable steps. It follows that I cannot be satisfied that the Applicant complied with s.180(5) of the Act. As s.180(5) is not satisfied, I cannot be satisfied that the Agreement has been genuinely agreed to pursuant to s.188(a)(i) and consequently I cannot attain satisfaction of the requirement at s.186(2)(a) of the Act.

Better Off Overall Test

[9] I also indicated that I had concerns with respect to employees being better off overall.

[10] Section 193 of the Act is as follows:

“193 Passing the better off overall test

When a non greenfields agreement passes the better off overall test

(1) An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.

FWC must disregard individual flexibility arrangement

(2) If, under the flexibility term in the relevant modern award, an individual flexibility arrangement has been agreed to by an award covered employee and his or her employer, the FWC must disregard the individual flexibility arrangement for the purposes of determining whether the agreement passes the better off overall test.

When a greenfields agreement passes the better off overall test

(3) A greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each prospective award covered employee for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.

Award covered employee

(4) An award covered employee for an enterprise agreement is an employee who:

(a) is covered by the agreement; and

(b) at the test time, is covered by a modern award (the relevant modern award) that:

(i) is in operation; and

(ii) covers the employee in relation to the work that he or she is to perform under the agreement; and

(iii) covers his or her employer.

Prospective award covered employee

(5) A prospective award covered employee for an enterprise agreement is a person who, if he or she were an employee at the test time of an employer covered by the agreement:

(a) would be covered by the agreement; and

(b) would be covered by a modern award (the relevant modern award) that:

(i) is in operation; and

(ii) would cover the person in relation to the work that he or she would perform under the agreement; and

(iii) covers the employer.

Test time

(6) The test time is the time the application for approval of the agreement by the FWC was made under section 185.

FWC may assume employee better off overall in certain circumstances

(7) For the purposes of determining whether an enterprise agreement passes the better off overall test, if a class of employees to which a particular employee belongs would be better off if the agreement applied to that class than if the relevant modern award applied to that class, the FWC is entitled to assume, in the absence of evidence to the contrary, that the employee would be better off overall if the agreement applied to the employee.”

[11] As the Full Bench noted in Hart v Coles Supermarkets Australia Pty Ltd, 2s.193 requires the Commission to be satisfied that a “consideration of all the benefits and detriments under the Agreement results in each employee and each prospective employee being better off overall under the Agreement compared to the Award”.

[12] Rates of pay under the Agreement are between 0.01% - 29.23% above the rates contained in the Building and Construction General On-site Award 2010 (the Award). The concerns with respect to the better off overall test include:

•  The Agreement provides a “loaded” hourly rate. Clause 6.1.2 of the Agreement provides that rates of pay compensate for tool allowances, work related allowances and disability allowances. The rates of pay are not high enough to compensate for such reductions.

•  Overtime is paid in excess of 10 hours per day or 45 in any one week under the Agreement, compared to 8 hours and 38 hours respectively under the Award.

•  The Agreement does not provide rates of pay for full time and part time employees. The Agreement incorporates the Award. Therefore, to the extent that part time or fulltime employees are engaged under the terms of the Agreement, they appear to receive rates of pay equal to the Award.

[13] In the absence of any submissions or undertakings from the Applicant that address the abovementioned concerns, I am unable to be satisfied that employees engaged under the Agreement will be better off overall when compared against the relevant award. As a consequence, I am not satisfied that the requirements of s. 186(2)(d) of the Act are met.

Conclusion

[14] For the above reasons I cannot approve the Agreement as I cannot be satisfied with respect to the requirements of ss. 186(2)(a) 186(2)(d) of the Act. Therefore, the application is dismissed.

COMMISSIONER

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 1   Construction, Forestry, Mining and Energy Union v One Key Workforce Pty Ltd, [2017] FCA 1266

 2   [2016] FWCFB 2887 at [33]