Perth Access Scaffolding Pty Ltd

[2016] FWC 8042

[2016] FWC 8042

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Perth Access Scaffolding Pty Ltd
(AG2016/5740)

COMMISSIONER ROE MELBOURNE, 8 NOVEMBER 2016

Application for approval of the PAS Enterprise Agreement 2016. Section 188 genuine agreement. Undertakings required to meet the BOOT would result in substantial changes to the Agreement. Agreement not approved.

[1] An application has been made for approval of an enterprise agreement known as the PAS Enterprise Agreement 2016 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act). It has been made by Perth Access Scaffolding Pty Ltd (PAS). The Agreement is a single enterprise agreement.

[2] The Construction, Forestry, Mining and Energy Union (CFMEU) objected to the approval of the Agreement on a number of grounds. The CFMEU was not a bargaining representative for the Agreement. The CFMEU has not established a right to intervene in the process of approval of the agreement. However, I decided that I would be assisted in reaching a conclusion about the issues of genuine agreement and the Better off Overall Test (BOOT) if I had submissions from the CFMEU because the CFMEU has a significant level of membership in the industry and it is therefore likely that employees who may be engaged in the future under the agreement will be members of the CFMEU. The CFMEU also has expertise in the nature of the industry and the Building and Construction General On-Site Award 2010 (Award) provisions. This is particularly the case given only five employees are currently covered by the Agreement, who are employed in Western Australia, while the Agreement includes an extensive range of classifications and is to operate throughout Australia.

[3] The rates of pay under the Agreement are between 2% and 3.5% above the rates applicable under the Award, however, there are a number of matters which are detrimental to employees when compared to the Award. These include:

• Absence of casual loading on overtime and other penalty payments.

• Redundancy entitlements in accordance with the NES rather than the industry specific scheme. The industry specific scheme applies in a much wider range of circumstances than the NES.



• Ordinary hours of work can be averaged over an undefined work cycle whilst the Award limits this to four weeks.



• A number of allowances which are applicable under the Award are not included in the Agreement. It is possible that some of the conditions under which these allowances are applicable are not generally encountered by employees of the company. However, the Agreement is not restricted in the scope of its operations and employees may be required to work under such conditions.



• No compensation for tools and clothes and their protection.



• A mechanism for the adjustment of expenses allowances is not included in the Agreement but is included in the Award.

• Some of the allowances which are included in the Agreement are inferior to the Award: (E.g. restrictions on when fares and travel allowances apply, meal allowance payable after two hours rather than 1.5 hours of overtime, absence of living away from home provisions, no provision for additional twenty minutes pay where employees working overtime do not receive crib break).



• No annual leave loading.



• Absence of inclement weather provisions.



• No casual conversion clause.

• No accident make up pay provision.

• Provisions to allow employees to be directed to take annual leave without the protections under the Award.

• Inferior meal break provisions which allow for work of up to seven hours without a meal break. The seven hours may be extended under the Agreement by agreement.



• Part time workers hours are not agreed and defined in writing as required by the Award and as a consequence part time employees under the Agreement will not be entitled to overtime in circumstances where they would be under the Award.



• Employees required to meet the cost of drug and alcohol testing where there is a positive test result.

[4] I consider that these matters are significant. In the context of the relevant Award and industry, inclement weather, accident make up pay, redundancy, casual conversion and meal break provisions are particularly valuable to many employees. This value cannot be exclusively considered in monetary terms. In the context of the relevant Award and industry the absence of allowances or their more restricted application can have a significant financial detriment. I am satisfied that the detriments under the Agreement when compared to the Award far outweigh the benefits.

[5] The Agreement does include a provision that: “Pay rates will be reviewed by the company on an annual basis starting on the second year anniversary of approval of this Agreement. The employer’s will review remuneration annually to ensure that the rates above meet any award obligations including any award increase due to the Fair Work Commission’s National Wage Decision.”

[6] PAS contend clause 6.5 purports to remove disadvantage. I do not consider that this provision contains a certain and enforceable mechanism to overcome any of the matters of concerns. I consider that this provision does no more than reflect the requirement under the Act for the base rates of pay to not drop below the Award base rates.

[7] Prior to the hearing of this matter PAS offered undertakings which address the casual overtime/penalty rates issue, the redundancy issue and averaging of hours over a four week cycle. They also offered an undertaking which partially addressed the allowances issue. At the hearing of this matter on 7 November 2016 PAS offered undertakings which, subject to finalisation of the wording, would resolve all of the matters listed above except for annual leave loading and payment for drug tests. I am satisfied that the rates of pay are sufficient to ensure that employees would be better off overall notwithstanding these remaining disadvantages.

[8] However, prior to the hearing and at the hearing I asked PAS to address two concerns which arise from this long list of undertakings.

a) Would accepting these undertakings be contrary to the requirement in Section 190 of the Act that “the effect of accepting the undertaking is not likely to … result in substantial changes to the agreement” and

b) Mr Di Iusto a Director of PAS made a statutory declaration in the F17 application for approval of the Agreement 1 that the agreement did not contain any terms that are less beneficial than equivalent terms and conditions in the Award. The employer also did not identify any less beneficial terms which are not in the Award. In these circumstances how can I be satisfied that employees were properly informed about the effect of the terms of the Agreement as required by Section 180(5)?

[9] Section 188(a) provides that I must be satisfied that the employer has complied with Section 180(5) in order to be satisfied that the Agreement has been genuinely agreed to as required by Section 186(2).

[10] I sought information from PAS about the steps taken to inform employees of the impact of the Agreement. On 31 October 2016 Mr Di Iusto advised that there had been three meetings with employees about the Agreement and that employees had been provided with the award and the NES as a reference point. Mr Di Iusto wrote that he “discussed the agreement at length with the employees and compared the award clauses to those contained in the agreement explaining and answering questions on both and pointing out if there was any difference.” I put PAS on notice of the issues referred to in the preceding paragraph prior to the hearing on 7 November 2016 and provided them with the opportunity to address these matters at the hearing. Mr Di Iusto did not give evidence. Mr Hudston who was representing PAS at the hearing did not provide any explanation as to why the F17 Form should not be taken to be the considered view of the company and Mr Di Iusto in particular. I am therefore satisfied that Mr Di Iusto told employees what he told the Fair Work Commission (FWC) and that is that there were no terms in the Agreement that are less beneficial than equivalent terms and conditions in the Award.

[11] I accept that those making Agreements are not required to be experts on every detail of the Award. If those making an F17 statutory declaration fail to identify a particular advantage or disadvantage in an Agreement when compared to the Award this is not sufficient basis to conclude that employees were not properly informed. However, in this case the omissions are so obvious and so extensive that I cannot be satisfied, in the absence of probative evidence to the contrary, that employees were properly informed of the effect of the Agreement. I am not satisfied that the Agreement was genuinely agreed to for this reason. As a consequence the requirements of Section 186 are not met and I cannot approve the Agreement.

[12] Having regard to the objects of the Act concerning facilitating the making of agreements I am inclined to see the requirement that “the effect of accepting the undertaking is not likely to … result in substantial changes to the agreement” as a relatively high bar.

[13] In some cases a matter which might seem substantial is not in the context of agreement making in a particular enterprise. For example, this Agreement does not include multi-story or height allowances. Such allowances have a substantial effect on the income of workers who perform work which entitles them to the allowance. The employer says that currently they do not perform work which would entitle employees to such an allowance. However, the scope of the agreement does not restrict the type of work which can be performed and hence the BOOT could not be met, given the rates of pay and conditions are otherwise so close to the Award, without an undertaking that such work would not be performed or an undertaking that the allowance will be paid in the event that such work is performed. Given the circumstances the incidence of multi-story and height allowances is likely to be low and the undertaking in respect to this matter would not result in a substantial change to the Agreement. I have approved agreements with undertakings which cover a significant number of entitlements but which I have concluded do not result in a substantial change to the agreement.

[14] However, in this case the Agreement does not provide any significant terms or conditions which advantage employees when compared to the Award. The matters which disadvantage employees are both numerous and substantial. In my view matters such as meal breaks, inclement weather provisions, accident make up pay, the industry redundancy scheme, the right to take annual leave when it best suits the employee, and appropriate penalty rates and allowances are of great significance to building workers. Some of these issues affect the health and safety of employees in an industry which has one of the highest rates of workplace accidents and injuries. A provision in an agreement which allows a building worker to work more than seven hours without a meal break could not generally result in employees being better off overall than the Award regardless of the higher rates of pay in an agreement. Such higher rates would be akin to the concept of danger money or an additional allowance for working at heights without a harness.

[15] In this particular case, notwithstanding my view that the “substantial change” test in respect to undertakings should be a high bar, I am satisfied that the Agreement, with the undertakings required, would bear no real resemblance to the Agreement which was voted upon by employees. The essential character of the Agreement which employees voted on was that the Agreement would replace and exclude the operation of the Award and they would receive base rates which are the current Award rates plus a small margin in return for forgoing a significant number of Award rights. I am satisfied that it would not be consistent with the requirements of Section 190 for me to accept the undertakings because they would be likely to result in substantial changes to the Agreement. As a consequence the requirements of Section 186 and the BOOT are not met and I cannot approve the Agreement.

[16] There is one final issue which I advised the employer is a potential barrier to the approval of the Agreement. The coverage clause of the Agreement is as follows:

2.1 This Agreement covers:

(a) Perth Access Scaffolding Pty Ltd (ABN: 19 159 078 645) (the Employers); and

(b) All employees of Perth Access Scaffolding Ply Ltd engaged on any work involving or associated with maintenance, modification, construction, building, civil, fabrication, precast, local service contracts and associated works including shutdowns in Australia and who are employed in any of the classifications contained in Clause 6 -Classifications and Wage Rates of this Agreement. (Employees).

c) Any existing or future, project or site specific agreement entered into by the Company or by any Joint Venture or similar business arrangement of which the Company is a part, will cover and apply to the Company and any employees at that particular project or site to the exclusion of this Agreement.

[17] Mr Hudston for PAS submitted that Clause 2.1 (c) was about agreements approved by the FWC under the Act. I am not satisfied that the provision is clearly restricted in this way. An agreement cannot provide for substantial variation to its terms and conditions except in accordance with the variation provisions of the Act or through an individual flexibility agreement. There is nothing more fundamental in an agreement than its coverage. A provision in an agreement which allows the employer to vary the coverage of the agreement without the safeguards provided for in the provisions of the Act concerning variation renders the agreement uncertain. It is an opting out clause which is an unlawful term 2. The FWC cannot approve an Agreement unless it is satisfied that the agreement does not include any unlawful terms. Such a deficiency could potentially be addressed through an undertaking.

[18] Even if the provision is interpreted as being about “any existing or future project or site specific agreement” which has been approved by FWC under the Act I doubt that the provision can stand. For a start the provision is directly contrary to Section 58 of the Act which provides that the Agreement cannot, in respect to an employee or group of employees to which it applies, be displaced by a new agreement prior to its nominal expiry date. Of course, provided the group is fairly chosen, an agreement can carve out from its coverage certain sites or projects and these can be defined by the scope of other agreements which may apply. However, this provision renders the coverage of the Agreement totally uncertain. The coverage clause of an agreement is not something which can generally be rectified by the provision of an undertaking because it will generally result in a substantial change. As I am unable to approve the Agreement for other reasons it is not necessary to finally determine this question.

[19] I am not satisfied that the Agreement has been genuinely agreed to by the employees covered by the agreement and I am also not satisfied that the Agreement passes the BOOT. There has been no submission that circumstances exist such that I should approve the Agreement notwithstanding that it does not pass the BOOT and I am not satisfied that public interest reasons exist in the circumstances of this case. 3 I therefore I cannot approve the Agreement. The application is dismissed.

COMMISSIONER

Appearances:

Mr M Hudston for Perth Access Scaffolding Pty Ltd

Mr M Swinbourne for the CFMEU

Hearing details:

2016.

Melbourne (VC to Perth):

7 November 2016

 1 F17 – Employer’s statutry declaration in support of an application for approval of an enterprise agreement (other than a greenfields agreement) at question 3.5

 2 Fair Work Act 2009 at s.194(ba)

 3 Fair Work Act 2009 at s.189

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