Paradise Palms NQ Pty Ltd

[2013] FWCA 2572

[2013] FWCA 2572

FAIR WORK COMMISSION

DECISION

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 3, Item 16 - Application to terminate collective agreement-based transitional instrument

Paradise Palms NQ Pty Ltd
(AG2012/8561)

Amusement, events and recreation industry
DEPUTY PRESIDENT ASBURY	BRISBANE, 26 APRIL 2013

Application to terminate collective agreement-based transitional instrument - Dispute about which modern Award would apply to employees if Agreement terminated - Insufficient material before the Commission to determine Award coverage - Not necessary to determine Award coverage - Termination of Agreement will not affect rights with respect to award coverage - Employer and employees support termination of Agreement - Union does not oppose termination of Agreement - Agreement outdated - Commission satisfied in relation to required considerations - Agreement terminated.

Background

[1] This is an application by Paradise Palms NQ Pty Ltd to terminate the Paradise Palms Golf Course Certified Agreement 2004 - 2007 (the Agreement). The Agreement is a Collective Agreement-based Transitional Instrument by virtue of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the TPCA Act). The application is under Subdivision D of Division 7 of the Fair Work Act 2009 (the FW Act) as it applies under item 16 of Schedule 3 of the TPCA Act.

[2] The application indicates that the Australian Workers Union (AWU) is covered by the Agreement and it is stated that the AWU agrees to the termination of the Agreement and that employees should be covered by the modern award. Appended to the application is supporting information including undertakings from Paradise Palms NQ Pty Ltd in the following terms:

“The employer provides an undertaking to each employee (that is employed at the date of termination of collective agreement) that their gross payment over each pay cycle will be no less than what they would currently receive under the collective agreement. If the employee’s gross wages are higher as per the modern award (due to overtime, penalties, allowances etc), then this will be paid in accordance with the modern award. This undertaking will be for a period of 12 months, commencing on the termination date of the collective agreement.

The employer provides an undertaking to calculate the leave loading entitlement for each employee (as at the date of termination of collective agreement) and ensure it is made payable to the employee upon the taking of annual leave or at termination of employment, whichever occurs first.”

[3] Prior to the application being listed for hearing, my Associate corresponded with the AWU seeking confirmation of the views of the Union in relation to the application.

[4] In response to the request for information, a statutory declaration executed by Mr Benjamin Charles Swan, Acting Branch Secretary of the AWU was received. The statutory declaration indicated that there was a “residual issue” as to what modern award would apply to employees if the Agreement was terminated.

[5] The matter was listed for hearing on 11 February 2013. At that hearing, Australian Business Lawyers and Advisors Pty Ltd sought permission under s.596 if the FW Act to represent Paradise Palms NQ Pty Ltd. There was no appearance by the AWU. Permission was granted for Paradise Palms NQ Pty Ltd to be legally represented on the basis that it would enable the matter to be dealt with more efficiently taking into account its complexity.

[6] A copy of the Statutory Declaration executed by Mr Swan was provided to the legal representative, who sought an adjournment to seek instructions from Paradise Palms NQ Pty Ltd in relation to the matters raised in the statutory declaration. The Commission also requested further information from Paradise Palms NQ Pty Ltd in relation to the matters in s.226 of the Act required to be considered by the Commission in deciding whether to terminate the Agreement. Further information was also requested about what modern award the Company believed would apply to employees if the Agreement was terminated.

[7] A statutory declaration in relation to these matters was filed on behalf of Paradise Palms NQ Pty Ltd and served on the AWU on 25 February 2013. On 1 March 2013, correspondence was received from the AWU indicating an intention to make further submissions regarding the matter and undertaking to forward those submissions as soon as possible. Those further submissions were received on 4 April 2013.

[8] As foreshadowed at the hearing of 11 February 2013, I intend to determine this matter on the basis of the material filed by the parties.

Submissions

[9] The Statutory Declaration filed by Paradise Palms NQ Pty Ltd on 25 February 2013 was made by Ms Rose-Marie Dash, General Manager. Ms Dash states that the Company has received advice that following termination of the Agreement, the applicable modern award will be the Amusement, Events and Recreation Award 2010. Ms Dash also states that the operations of Paradise Palms NQ Pty Ltd do not fall within the hospitality industry and are not covered by the Hospitality Industry (General) Award 2010 as asserted by the AWU.

[10] Further, Ms Dash states that the effect of terminating the Agreement and reverting to the Amusement Events and Recreation Award 2010 results in employees being better off overall, because that Award compares favourably to the Agreement in terms of higher duties pay, greater allowances and flexibility provisions. In relation to views of employees, Ms Dash said that during negotiations for a new enterprise agreement, bargaining representatives advised that the preference of employees was to terminate the Agreement and revert to the Amusement, Events and Recreation Award 2010.

[11] A memo setting this out was provided to all employees, and at meetings on 25 and 26 July 2012, 60% of employees covered by the Agreement were in favour of the proposal to terminate the Agreement. Following a further opportunity to ask questions and raise objections none were received. The Company is prepared to provide an undertaking that an employee’s gross hourly pay will not be less than they would be entitled to receive under the Agreement and will calculate the leave loading entitlement for each employee covered by the Agreement (as at the date of the termination of the Agreement) and ensure it is made payable to employees upon the taking of annual leave or termination of employment, whichever occurs first.

[12] In the Statutory Declaration made by Mr Swan, reference is made to the absence of the relevant or designated modern award for the purposes of the application or the appendix to the Application. Mr Swan states that a major obstacle encountered by the parties in negotiating for an enterprise agreement is identification of the relevant underpinning industrial instrument to apply to the employer. The position of the AWU as articulated to Paradise Palms NQ Pty Ltd in a letter of 14 November 2012 is:

“a. The preferred position of the AWU is to pursue enterprise bargaining negotiations with the employer; and

b. The AWU does not ordinarily support applications for the termination of enterprise bargaining agreements; and

c. There remains a residual difference of opinion between the AWU and the employer as to the most appropriate federal modern award coverage; and

d. The AWU does not support the making of an application by the employer for the termination of the Agreement, however taking the views of the employees and the background circumstances into consideration, the AWU will not oppose the making of an application by the employer for such a termination; and

e. The AWU notes the undertakings advanced by the employer at Appendix A to the material provided to the AWU on or about 31 July 2012; and

f. The AWU provided a draft “without prejudice” enterprise agreement for further negotiations to the employer, including the designation of the Hospitality Industry (General) Award 2010 as the relevant federal modern award applying to the employer’s business and to the employees’ callings.”

[13] Mr Swan also states that no response was received to the AWU’s correspondence of 14 November and the AWU was not served or provided with a copy of the application in the present proceedings, or any other documentation relied on by the employer.

In its submission filed on 4 April 2013, the AWU states:

“The Australian Workers’ Union (AWU) is not opposed to the termination of the Paradise Palms Golf Course Certified Agreement (2004) (the Agreement). The main issue we dispute in this matter is what Modern Award is the most relevant should the Commission be mindful to allow the application. The second point is that if the Commission were to accept the Applicant’s assertion that the Amusement, Events and Recreation Award (the Amusement Award) is the correct Award, does it pass the BOOT?”

[14] The AWU submission also states that the terms of the Hospitality Industry (General) Award 2010 are superior to those in the Amusement, Events and Recreation Award 2010 in a number of areas that would satisfy the better off overall test, including overtime and penalty rates. The undertaking to employees provided by Paradise Palms NQ Pty Ltd should be viewed as an indication that the employer is not certain that reverting to the Amusement, Events and Recreation Award 2010 would satisfy the better off overall test.

[15] The AWU submits that the higher duties pay in the Amusement, Events and Recreation Award 2010 does not contribute to employees being better off overall, and additional allowances for meals and first aid and flexibility provisions in that Award make little difference in this regard.

[16] The AWU goes on to assert that the correct modern award that would apply if the Agreement was terminated is the Hospitality Industry (General) Award 2010. It is also asserted that the fact that the employees’ preference is for the termination of the Agreement and to revert to a modern award, does not mean that employees have accepted that the correct modern award is the Amusement, Events and Recreation Award 2010. The memo given to employees simply states that this is the correct award without providing necessary information upon which employees could base an informed decision.

[17] It is also asserted that the fact that Paradise Palms NQ Pty Ltd received no queries or objections from employees reflects the fact that the Agreement was outdated rather than acceptance by employees of a particular modern award. Paradise Palms NQ Pty Ltd should not be able to rely on the blind acceptance of employees of a proposal put to them about which modern award would apply upon termination of the Agreement.

[18] The AWU submits that if the Commission is satisfied that the application to terminate the Agreement should be approved, then the correct modern award that applies is the Hospitality Industry (General) Award 2010.

Legislation

[19] By virtue of Item 16 of Schedule 3 of the TPCA Act, Subdivision D of Division 7 of Part 2-4 of the FW Act, dealing with termination of enterprise agreements after their nominal expiry date, applies in relation to collective agreement-based transitional instruments, as if a reference to an enterprise agreement included a reference to a collective agreement-based transitional instrument.

[20] The provisions in Subdivision D of Division 7 of Part 2-4 of the FW Act are as follows:

“225 Application for termination of an enterprise agreement after its nominal expiry date

If an enterprise agreement has passed its nominal expiry date, any of the following may apply to the FWC for the termination of the agreement:

(a) one or more of the employers covered by the agreement;

(b) an employee covered by the agreement;

(c) an employee organisation covered by the agreement.

226 When the FWC must terminate an enterprise agreement

If an application for the termination of an enterprise agreement is made under section 225, the FWC must terminate the agreement if:

(a) the FWC is satisfied that it is not contrary to the public interest to do so; and

(b) the FWC considers that it is appropriate to terminate the agreement taking into account all the circumstances including:

(i) the views of the employees, each employer, and each employee organisation (if any), covered by the agreement; and

(ii) the circumstances of those employees, employers and organisations including the likely effect that the termination will have on each of them.

227 When termination comes into operation

If an enterprise agreement is terminated under section 226, the termination operates from the day specified in the decision to terminate the agreement.”

Consideration

[21] The submissions of the parties focused on whether employees would be better off overall if the Agreement was terminated. In my view, both submissions misunderstand the application and the relevance of the better off overall test and the effect of modern awards and their interaction with the Agreement.

[22] The better off overall test applies in cases where an application is made for approval of an enterprise agreement and involves a comparison of the terms of the modern award that would apply to employees if the agreement for which approval is sought did not apply. The better off overall test has no relevance to the question of whether a particular modern award covers employees. It is also the case that the better off overall test is not a mechanism to compare the terms of one modern award with the terms of another or to determine which of a number of modern awards should apply to employees.

[23] In the present case determining whether employees are covered by the Hospitality Industry (General) Award 2010 or the Amusement, Events and Recreation Award 2010 does not require the application of the better off overall test. A modern award covers, or applies to employees by virtue of its terms and those in the FW Act. The interaction of ss. 47 and 48 with respect to modern awards and ss. 51, 52 and 53 with respect to enterprise agreements is as follows:

● A modern award covers employees that it is expressed to cover, notwithstanding that an enterprise agreement applies to those employees;
● A modern award does not apply to employees where an enterprise agreement applies to those employees; and
● An enterprise agreement applies to employees if it is in operation and covers them, and no other provision of the FW Act provides or has the effect that the agreement does not apply to those employees.

[24] If, as asserted by the AWU, the Hospitality Industry (General) Award 2010 covers employees to whom the Agreement applies, then the termination of the Agreement will result in that Award applying to those employees. Conversely, if the Events and Recreation Award 2010 covers the employees then that Award will apply if the Agreement is terminated. The effect of terminating the Agreement will be that the modern award that covers the employees will apply regardless of whether that modern award compares favourably to another modern award.

[25] The question of which of the two awards applies will not be determined by terminating the Agreement. If a modern award covers employees, notwithstanding that an enterprise agreement applies to them, then by virtue of s.206 of the Act the base rate of pay payable to employees under the agreement must not be less than the base rate under the modern award, if the modern award applied to the employee, and the lower agreement rate has no effect.

[26] The effect of these provisions is that the base rates for each employee in the Agreement, as is subject of these proceedings, must currently not be less than the relevant base rate in the modern award that covers the employees. This will be the case if the termination of the Agreement is not approved.

[27] If Paradise Palms NQ Pty negotiates and seeks approval of a new enterprise agreement, then the question of which is the correct modern award for the purposes of the better off overall test will arise.

[28] The submissions in relation to award coverage are not directly relevant to whether it is appropriate to terminate the Agreement. Further the submissions of both parties have spent an inordinate amount of time canvassing the issue of award coverage, without providing sufficient evidentiary material upon which I could determine the question. The determination of such a question would require:

● Evidence about the nature of the employer’s operations;
● Evidence about the relationship between Paradise Palms NQ Pty Ltd and other entities operating the accommodation and facilities which the AWU relies on as the basis for asserting that the Hospitality Industry (General) Award 2010 applies to Paradise Palms NQ Pty Ltd; and
● The type of work being performed by employees.

[29] In the absence of this material I am not able to determine the question of award coverage. I am also of the view that it is not necessary to determine this question in order to deal with the application to terminate the Agreement. Accordingly, I have considered the circumstance that it is not clear which of two modern awards would apply to employees if the Agreement was terminated, as part of determining whether the general discretion to grant such an application should be exercised.

Conclusions

[30] The application has been made by the employer covered by the Agreement, and the requirements of s.225 are met. The Commission was not provided with a copy of the Agreement by either of the parties but has obtained a copy of an agreement entitled
Paradise Palms Golf Course Certified Agreement 2004-2007, approved by the Queensland Industrial Relations Commission and numbered CA383 of 2004. The nominal expiry date of the Agreement is 1 August 2007.

[31] The Agreement contains a “loaded hourly rate” said to be an annualised hourly rate paid to full time and part time employees, and which is inclusive of weekend penalties, some public holiday penalties and other applicable allowances. The Agreement provides for “extra hours” to be worked by full time and part time employees, which are outside of, or in addition to ordinary hours, but paid at the loaded rate rather than the overtime rate, where the employer and the employee agree that the employee will work those hours. The Agreement does not appear to provide for overtime payments to casual employees or a maximum or minimum of ordinary hours that can be worked by casual employees in any day or shift. The Agreement is made between the employer and the AWU.

[32] Regardless of whether the Hospitality Industry (General) Award 2010 or the Amusement, Events and Recreation Award 2010 covers the employees to whom the Agreement currently applies, it is apparent from a cursory examination of the Agreement that employees will not suffer any reduction in their terms and conditions of employment if the Agreement is terminated. This is the case regardless of which of the two Awards applies.

[33] I am satisfied that it is not contrary to the public interest to terminate what appears to be an out dated Agreement, with the result that a modern award will apply to employees. In relation to the views of employees, I have considered the statutory declaration made by Ms Dash indicating that 60% of employees covered by the Agreement who attended meetings to discuss the termination of the Agreement and related matters, were in favour of the proposal to terminate the Agreement. I have also considered the statutory declaration of Mr Swan and the submission of the AWU, which indicates the acceptance of the Union that the majority of affected employees support the termination of the Agreement. I have further considered the views of the employer in relation to this matter.

[34] I am satisfied that consideration of the views of the employees, the employer and the AWU as an employee organisation covered by the Agreement, support a finding that it is appropriate to terminate the Agreement.

[35] In relation to the circumstances of the employees, the employer and the AWU, and the effect that the termination will have on each of them, I consider that the termination of the Agreement will not affect any rights of the parties with respect to their positions in relation to award coverage. The employer and the AWU are at liberty to pursue their respective arguments, and the termination of the Agreement will have no effect in relation to their rights in this regard. The rights of employees arising from the coverage or application of the relevant modern award are not affected by the termination.

[36] I note the undertaking offered by Paradise Palms NQ Pty Ltd. Although the wording is somewhat confusing, I assume that the employer’s intention is to continue to pay employees higher amounts than they may be entitled to under the Agreement where those amounts exceed the amounts the employee is entitled to under the Award. I have taken the undertaking into account on that basis.

[37] I am satisfied with respect to the matter in s.226(a) and consider it is appropriate to terminate the Agreement taking into account all of the circumstances including those in s.226(b). Accordingly, the Agreement is terminated.

[38] The termination will take effect from the date of this Decision.

DEPUTY PRESIDENT

Appearances:

Ms A. Paterson and Ms S. McIvor on behalf of the Applicant.

Hearing details:

2012.

Brisbane:

February 11.

Final written submissions:

4 April 2013.

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