POM Weld Pty Ltd T/A NuGroup Pty Ltd

[2015] FWC 1678

[2015] FWC 1678

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

POM Weld Pty Ltd T/A NuGroup Pty Ltd
(AG2015/2095)

Manufacturing and associated industries
COMMISSIONER RYAN	MELBOURNE, 12 MARCH 2015

Application for approval of the POM Weld Pty Limited National Enterprise Agreement 2015 - 2018.

[1] Application has been made pursuant to s.185 of the Fair Work Act 2009 (the Act) by POM Weld Pty Ltd T/A NuGroup Pty Ltd (the Applicant) for approval of the POM Weld Pty Limited National Enterprise Agreement 2015 - 2018 (the agreement). The application for approval was supported by a Statutory Declaration (Form F17) of Mr Mark Handley, Administrative Officer, on behalf of the Applicant.

The “access period” and the voting process

[2] The Form F17 identified that on 20 January 2015 the employer hand delivered to each employee on 5 January 2015 correspondence which included a covering letter advising of the date and method of voting which will occur together with a copy of the ballot paper and envelope and a copy of the proposed Enterprise Agreement (the pack of information).

[3] The covering letter was in the following terms:

“This letter serves as advice that the company now intends to call for a vote on the proposed Enterprise Agreement (copy attached).

As provided for under the Fair Work Act an Employer must provide at least 7 days notice of the intention to vote.

Therefore it is intended to hold the vote on 20th February 2015 the method of voting will be as follows:

A ballot paper and envelop (sic) is enclosed with this letter.

A ballot box will be at your work site on 20th February 2015 you will need to place your ballot in the box by 13:00 on the 13th February 2015.

Votes will be counted after 13:00 on the 20th February 2015.

Notification of the result will be made as soon as the vote count has taken place.”

[4] I have considered the application in this matter in light of the decision in Australian Char Pty Ltd, [2011] FWA 1627, which dealt with a similar circumstance to the present matter. I adopt what I said in that decision in relation to the employer providing a pack of information to the employees when the pack of information is addressing the requirements on the employer arising under ss 180(2), 180(3), 180(5) and 181.

[5] The essence of the failure to comply with the requirements of the Act in the present matter is that the Applicant cannot start the voting process by giving employees a ballot paper at the same time as the Applicant is commencing the “access period” by giving the employees a copy of the Agreement. As the information pack (containing both a copy of the Agreement and the ballot paper) was sent out to employees on 5 January 2015 there was therefore non compliance by the Applicant with the requirements of s.180(2)(a), 180(2)(b) and 180(3) of the Act. Non compliance with any one of ss.180(2)(a), 180(2)(b) or 180(3) means that the employer could not, because of s.180(1), make a request under s.181(1) to employees to approve the agreement and thus the employees could not make the agreement by voting for it under s.182.

Removal of public holiday entitlements

[6] Clause 28.3 contains the following provision:

“Provided that where an employee is absent from the employment on the working day before or after a public holiday without a reasonable excuse or without the consent of the employer, the employee will not be entitled to payment for such public holiday.”

[7] Part 2-2 of the Act contains the National Employment Standards and s.116 provides:

“116 Payment for absence on public holiday

If, in accordance with this Division, an employee is absent from his or her employment on a day or part-day that is a public holiday, the employer must pay the employee at the employee’s base rate of pay forthe employee’s ordinary hours of work on the day or part-day.

Note: If the employee does not have ordinary hours of work on the public holiday, the employee is not entitled to payment under this section. For example, the employee is not entitled to payment if the employee is a casual employee who is not rostered on for the public holiday, or is a part-time employee whose part-time hours do not include the day of the week on which the public holiday occurs.”

[8] Clause 16.2 of the Agreement has the effect of excluding the entitlement that an employee has under s.116 of the Act.

[9] The Commission is required by s.186 of the Act to approve an enterprise agreement in certain circumstances. Relevantly s.186 provides as follows:

“186 When the FWC must approve an enterprise agreement—general requirements

Basic rule

(1) If an application for the approval of an enterprise agreement is made under section 185, the FWC must approve the agreement under this section if the requirements set out in this section and section 187 are met.

Note: The FWC may approve an enterprise agreement under this section with undertakings (see section 190).

Requirements relating to the safety net etc.

(2) The FWC must be satisfied that:

(a) if the agreement is not a greenfields agreement—the agreement has been genuinely agreed to by the employees covered by the agreement; and

(b) if the agreement is a multi-enterprise agreement:

(i) the agreement has been genuinely agreed to by each employer covered by the agreement; and
(ii) no person coerced, or threatened to coerce, any of the employers to make the agreement; and

(c) the terms of the agreement do not contravene section 55 (which deals with the interaction between the National Employment Standards and enterprise agreements etc.); and

(d) the agreement passes the better off overall test.

Note 1: For when an enterprise agreement has been genuinely agreed to by employees, see section 188.
Note 2: The FWC may approve an enterprise agreement that does not pass the better off overall test if approval would not be contrary to the public interest (see section 189).
Note 3: The terms of an enterprise agreement may supplement the National Employment Standards (see paragraph 55(4)(b)).”

[10] Section 186(2)(c) requires that the Commission must be satisfied that the terms of the Agreement do not contravene s.55.

[11] Section 55 is as follows:

“55 Interaction between the National Employment Standards and a modern award or enterprise agreement

National Employment Standards must not be excluded

(1) A modern award or enterprise agreement must not exclude the National Employment Standards or any provision of the National Employment Standards.

Terms expressly permitted by Part 2-2 or regulations may be included

(2) A modern award or enterprise agreement may include any terms that the award or agreement is expressly permitted to include:

(a) by a provision of Part 2-2 (which deals with the National Employment Standards); or
(b) by regulations made for the purposes of section 127.

Note: In determining what is permitted to be included in a modern award or enterprise agreement by a provision referred to in paragraph (a), any regulations made for the purpose of section 127 that expressly prohibit certain terms must be taken into account.

(3) The National Employment Standards have effect subject to terms included in a modern award or enterprise agreement as referred to in subsection (2).

Note: See also the note to section 63 (which deals with the effect of averaging arrangements).

Ancillary and supplementary terms may be included

(4) A modern award or enterprise agreement may also include the following kinds of terms:

(a) terms that are ancillary or incidental to the operation of an entitlement of an employee under the National Employment Standards;
(b) terms that supplement the National Employment Standards;
but only to the extent that the effect of those terms is not detrimental to an employee in any respect, when compared to the National Employment Standards.

Note 1: Ancillary or incidental terms permitted by paragraph (a) include (for example) terms:

(a) under which, instead of taking paid annual leave at the rate of pay required by section 90, an employee may take twice as much leave at half that rate of pay; or

(b) that specify when payment under section 90 for paid annual leave must be made.

Note 2: Supplementary terms permitted by paragraph (b) include (for example) terms:

(a) that increase the amount of paid annual leave to which an employee is entitled beyond the number of weeks that applies under section 87; or

(b) that provide for an employee to be paid for taking a period of paid annual leave or paid/personal carer’s leave at a rate of pay that is higher than the employee’s base rate of pay (which is the rate required by sections 90 and 99).

Note 3: Terms that would not be permitted by paragraph (a) or (b) include (for example) terms requiring an employee to give more notice of the taking of unpaid parental leave than is required by section 74.

Enterprise agreements may include terms that have the same effect as provisions of the National Employment Standards

(5) An enterprise agreement may include terms that have the same (or substantially the same) effect as provisions of the National Employment Standards, whether or not ancillary or supplementary terms are included as referred to in subsection (4).

Effect of terms that give an employee the same entitlement as under the National Employment Standards

(6) To avoid doubt, if a modern award includes terms permitted by subsection (4), or an enterprise agreement includes terms permitted by subsection (4) or (5), then, to the extent that the terms give an employee an entitlement (the award or agreement entitlement) that is the same as an entitlement (the NES entitlement) of the employee under the National Employment Standards:

(a) those terms operate in parallel with the employee’s NES entitlement, but not so as to give the employee a double benefit; and
(b) the provisions of the National Employment Standards relating to the NES entitlement apply, as a minimum standard, to the award or agreement entitlement.

Note: For example, if the award or agreement entitlement is to 6 weeks of paid annual leave per year, the provisions of the National Employment Standards relating to the accrual and taking of paid annual leave will apply, as a minimum standard, to 4 weeks of that leave.

Terms permitted by subsection (4) or (5) do not contravene subsection (1)

(7) To the extent that a term of a modern award or enterprise agreement is permitted by subsection (4) or (5), the term does not contravene subsection (1).

Note: A term of a modern award has no effect to the extent that it contravenes this section (see section 56). An enterprise agreement that includes a term that contravenes this section must not be approved (see section 186) and a term of an enterprise agreement has no effect to the extent that it contravenes this section (see section 56).”

[12] For the purposes of the present matter s.55(1) is relevant. The Agreement must not exclude any provision of the National Employment Standards which are dealt with in Part 2-2 of the Act.

[13] Section 116, which is set out above, is in Part 2-2 of the Act and is part of the National Employment Standards. Clause 16.2 of the Agreement excludes in part the operation of s.116. Therefore the Agreement excludes a provision of the National Employment Standards.

[14] By excluding the operation of s.116 of the Act the Agreement appears to contain a provision which contravenes s.55 of the Act.

[15] Clause 4 of the Agreement contains a number of definitions including the following:

“NES means the National Employment Standards, as set out in or determined pursuant to the Act, as amended from time to time. The NES will prevail over this agreement where, in a particular respect it provides a more favourable outcome for the employees as prescribed in accordance with the Act.”

[16] The first sentence of the definition of NES is definitional in nature and simply directs attention back to the Act. However, the second sentence of the definition is not definition in nature but rather operates to explain the interaction between the NES provisions of the Act and the terms of the Agreement. It would appear from the words used in the second sentence of the definition that it is the intention of the Agreement not to exclude an NES provision nor to have any term of the Agreement operate in a manner that is detrimental to an employee when compared to the NES.

[17] In an application to approve the Teachers (Catholic Independent Schools - List D) Enterprise Agreement 2011, [2010] FWAA 10027, VP Lawler considered the operation of a clause similar to the second sentence of the definition of NES in the present matter:

“[6] Section 55(1) provides that an enterprise agreement must not exclude the NES or any provision of the NES. I am required to be satisfied that the terms of the Agreement do not contravene section 55 (s.186(2)(c)). Under the Agreement, it would seem (unsurprisingly) that personal/carer’s leave, parental leave, bereavement Leave and compassionate leave entitlements do not accrue in relation to de facto opposite sex partners or same sex partners (and in the case of parental leave, on one view, is confined to fathers). To the extent that the NES confers an entitlement that extends greater than the entitlements conferred by the Agreement, prima facie s.55(1) is contravened. In such a case the NES operates and the terms in question have no effect (s.56). However, clause 3.2 of the Agreement provides:

‘3.2 Relationship between the National Employment Standards and this Agreement
The National Employment Standards apply to teachers covered by this agreement, except where this agreement provides for a more favourable outcome for the teacher in a particular respect.’

[7] A construction that avoids illegality (a contravention of s.55(1)) is to be preferred. I construe clause 3.2 as meaning that the NES prevails over terms of the Agreement unless the entitlement provided in the Agreement provides a more favourable outcome.”

[18] In the matter before VP Lawler the exclusion of NES entitlements to defacto partners was not by way of specific exclusion but appeared to be by way of omission. In the context of the enterprise agreement before him the approach adopted by VP Lawler appears to be correct.

[19] However in the present matter clause 28.3 of the Agreement provides a very specific exclusion of an NES entitlement. The approach adopted by VP Lawler is not appropriate in the present matter. The present matter is not a case of omitting an NES entitlement but rather it is a case where the employer is making it explicitly clear that the employer does not intend to pay employees for public holidays in certain circumstances.

[20] For the reasons given in [2] to [5] above the Commission dismisses the application in this matter.

Observations

[21] I make the following observations in relation to this application. These observations are not part of the decision to dismiss the application in this matter but are made to assist the parties if they wish to make an enterprise agreement and seek to have it approved by the Commission.

[22] Clause 3 sets out the coverage of the Agreement. The wording in this clause is too loose and does not properly describe the group of employees to be covered by the Agreement.

[23] Clause 4 sets out the relationships encompassed by the term “immediate family”, however those relationships do not include:

• a former spouse of an employee;



• a former de facto partner of an employee;



• a child, parent, grandparent, grandchild or sibling of a former spouse or of a former de facto partner of an employee.

[24] Copying the definition of “immediate family” from the Act and inserting it into an enterprise agreement as the exhaustive definition of “immediate family” is the cause of the problem.

[25] When the Act refers to “immediate family” in the several provisions of the National Employment Standards the totality of the relationships which comprise the concept of “immediate family” is to be understood by considering four specific definitions in the Act.

[26] The relevant definitions from s.12 are “immediate family”, “spouse”, “defacto partner” and the relevant definition from s17(1) is “child”.

[27] When an enterprise agreement such as in the present matter contains an exhaustive definition of “immediate family” which is defined solely in terms of the definition of “immediate family” appearing in s.12 of the Act the result is that the Agreement creates a list of relationships which is significantly smaller than what is comprehended by the term “immediate family” when used in the NES.

[28] The definition of immediate family in s.12 of the Act and in clauses 9.3 and 9.3.1 is expressed so that it is limited to specific relationships with the employee and specific relationships with the employee’s current spouse or defacto partner.

[29] However the concept of “immediate family” in the NES is comprised of specific relationships with the employee and specific relationships with the employee’s current spouse or defacto partner, and specific relationships with any of the employee’s former spouses or former defacto partners.

[30] The following example illustrates the practical outcome of the difference between the Agreement and the NES.

[31] Under the NES an employee could be entitled to carer’s leave in relation to a parent of a former spouse and would be entitled to compassionate leave in relation to a parent of a former spouse. However under the Agreement the employee would have no entitlements to either carer’s leave or compassionate leave in relation to a parent of a former spouse.

[32] The practical way in which this issue can be avoided is for an enterprise agreement to avoid defining “immediate family” or to define “immediate family” as:

immediate family means:

(a) a spouse (including a former spouse, a de facto partner and a former defacto partner), child, parent, grandparent, grandchild or sibling of the employee; or

(b) a child, parent, grandparent, grandchild or sibling of a spouse (including a former spouse, a de facto partner and a former defacto partner) of the employee.

[33] Clause 6.9 relates to part-time employment. I note that the clause does not include either a provision for a variation of the agreed hours of work nor a provision for the payment of overtime where the employee is required to work for hours worked outside the agreed hours. Both of those protections are present in clause 13 of the Manufacturing and Associated Industries and Occupations Award 2010 (the Modern Award). This is a BOOT issue.

[34] Clause 7.1 does not include a job search entitlement for employees made redundant as per the provisions of the Modern Award. This is a BOOT issue.

[35] Clause 7.2 contains a provision which permits the employer to withhold monies due to the employee if the requisite notice is not given upon termination, without the employee’s consent. I refer to the reasons set out in Hydro Chem Pty Ltd, [2014] FWCA 5163 in support of the contention that this provision is unenforceable given s.324(1)(b) of the Act.

[36] Clause 9.4 permits the employer to suspend an employee without pay who has been deemed unfit for work as a result drug and alcohol testing. The concern I have is that this provision is too open ended as it would permit the employer to stand down the employee without pay for an indefinite period as the employer has the veto over when it deems the employee to be fit for work.

[37] In addition, the clause in making reference to testing for drug and alcohol suggests that the tests are to be paid for by the employee, but that an employee will be reimbursed the cost of the second test if that test is negative. This term has the effect of requiring an employee to make a payment to an employer in circumstances which may not be reasonable pursuant to s.326 of the Act.

[38] This concern is held also for clause 43(b) wherein a similar provision is repeated.

[39] Clause 13.2 contains a First Aid allowance which is below that of the Modern Award. This is a BOOT issue.

[40] Clause 26.1 refers to superannuation payments being made to “a complying fund”, but does not specify that superannuation fund. Pursuant to s.194(h)(i) of the Act an agreement cannot include a term that requires superannuation contributions for default fund employees to be made to a superannuation fund, unless that fund is a fund that offers a MySuper product.

[41] As the Agreement does not specify the name of the “complying fund”, s.194(h) cannot be satisfied. The details of the “complying fund” to which the employer will pay contributions on behalf of an employee who does not specify their choice of fund should be well defined in the Agreement.

[42] Clause 27 deals with provisions for employees partaking in community service work and I set out below the particular provisions which I have concern with:

“27.5 ...Leave may be refused where the needs of the business make it impractical to release the employee, such as in situations where there is an absence of other personnel or where excessive overtime would have to be worked by other employees in the absence of the employee who applies to be released from duty.

27.6 Leave will not be granted to an employee who is requested to participate in such emergency activities outside the local area where he/she normally works, Inter-State or outside Australia. In such circumstances the employee would be expected to apply for annual leave.”

[43] Section 108 of the Act states:

“108 Entitlement to be absent from employment for engaging in eligible community service activity

An employee who engages in an eligible community service activity is entitled to be absent from his or her employment for a period if:

(a) the period consists of one or more of the following:

(i) time when the employee engages in the activity;
(ii) reasonable travelling time associated with the activity;
(iii) reasonable rest time immediately following the activity; and

(b) unless the activity is jury service—the employee’s absence is reasonable in all the circumstances.”

[44] The Act does not limit an employee’s ability to be absent from work to engage in community service activities only if those activities take place “outside the local area where he/she normally works” and the Act does not permit the employer to refuse such leave for reasons set out in sub-clause 27.5.

[45] I note that clause 27 provided for paid leave for community service work whereas the NES provides for unpaid hours. Whilst the employer cannot restrict an employee’s entitlement to unpaid community service as provided for in the NES, the employer is not required to pay for such leave. A term of an enterprise agreement can place limits of when an employee will be paid for community service leave as any payment for such leave is a benefit to the employee which is in excess of the employee’s statutory entitlements under the NES.

[46] Clause 27.2 contains a cross referencing error.

[47] Clause 37.1 refers to the last step of the dispute settlement process, being referral of a dispute to Fair Work Australia (sic), but it does not particularise what the Fair Work Commission can do in order to settle the dispute, ie conciliation and/or arbitration.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

<Price code A, PR561878>