Propick Pty Ltd T/A Propick

[2017] FWC 3321

[2017] FWC 3321

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Propick Pty Ltd T/A Propick
(AG2017/407)

Agricultural industry
COMMISSIONER HARPER-GREENWELL	MELBOURNE, 20 JUNE 2017

Application for approval of the Propick Pty Ltd Enterprise Agreement.

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

[2] In order for an enterprise agreement to be approved, the Fair Work Commission (Commission) must be satisfied of certain matters that are specified in the Act. Two of those requirements are those contained in s.186(2)(c) and (d) as follows:

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

…

Requirements relating to the safety net etc.

(2) The FWC must be satisfied that:

…

(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.”

[3] Section 55 of the Act relevantly provides 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.

…

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.”

[4] The Commission wrote to the Applicant outlining various concerns that I had with the Agreement.

[5] The Applicant offered to provide undertakings for a number of these concerns, however declined to provide undertakings addressing my concerns regarding clauses 8.2 and 10 of the Agreement.

[6] Clause 8.2 of the Agreement provides as follows:

“8.2 No full-time or part-time Employee will be required to perform work overtime. However, a full-time or part-time employee may voluntarily seek to earn additional income by working additional voluntary hours (Additional Voluntary Hours). Where an employee performs Additional Voluntary Hours he/she will be paid for each one of those hours at the flat rates of pay provided in clause 7 above. This clause will only operate from October to December and April to August during the life of the Agreement.”

[7] The Commission advised the Applicant that I was not satisfied that the rates of pay in the Agreement, being 9.15% above the Award rates of pay, were sufficient to compensate for this reduction in overtime penalties.

[8] The Applicant provided submissions that, based on their calculations of the average hours worked, employees would remain better off overall. I was not satisfied with these submissions as any employees working greater than this average of hours, or working a different composition of ordinary and overtime hours, would not be better off overall.

[9] Clause 10 of the Agreement provides as follows:

“10.1 Employees shall be entitled to annual leave and parental leave or any other leave subject to and in accordance the provisions of the relevant legislation. Payment for annual leave is made progressively in advance and is incorporated into the wage rates prescribed in clause 7.”

[10] The Commission advised the Applicant that this clause contravened the NES, consistent with the decision of the Full Bench of the Commission in Canavan Building Pty Ltd 1 (Canavan).

[11] In Canavan, the Full Bench of the Commission considered a similar clause and found as follows:

“[38] There is an immediate reason why the Agreement cannot be approved in its current form, irrespective of whether the Act allows for the payment of annual leave in advance or whether the Agreement provides for the cashing out of annual leave in a manner not permitted by the Act. The obligation for payment for annual leave in s.90(1) requires that the payment be made at the employee’s base rate as it is at the time the leave is taken. This is made clear by the words “must pay the employees at the employee’s base rate of pay for the employee’s ordinary hours of work in the period” (underlining added), the “period” being the “period of paid annual leave” taken by the employee. The ACCI and Ai Group accepted this was the case, and no party submitted otherwise. Because the Agreement provides for payment for annual leave on a progressive basis in advance rather than when annual leave is taken, and also provides for increases in the rates of pay during the life of the Agreement, it permits annual leave to be paid for, at least in part, at an earlier and lower rate of pay rather than the rate of pay applicable at the time that leave is taken. Therefore compliance with the terms of the Agreement does not require compliance with the payment obligation in s.90(1), and may result in that obligation not being complied with. To that extent, the NES provision in s.90(1) is excluded, contrary to s.55(1) of the Act.

….

[44] Section 90(1) therefore confirms that the statutory scheme is founded on there being a temporal connection between the taking of annual leave and the payment for such leave.” (endnotes omitted) 2

[12] The Full Bench further noted:

“[54] The interpretation of relevant provisions of the Act advanced by Mr Warren and the various employer groups (and as stated in Hull-Moody) would in application have consequences which are entirely improbable. For example (and as was conceded by the ACCI), if pre-payment of annual leave was permissible under the Act, that would include the capacity to pre-pay for annual leave for any number of years in the future at the commencement of employment or at some other time, regardless of whether such leave was ever taken or not. It would further follow that, in connection with bargaining for an enterprise agreement, it would be available for employees to take protected industrial action in support of a claim that annual leave entitlements over the life of the proposed agreement be paid to employees “in advance” by way of a single payment regardless of whether such annual leave is ever actually taken or not. Such a consequence is so far removed from the ordinarily-understood concept of “paid annual leave” that it cannot have been intended by the legislature, and constitutes a further reason why that interpretation cannot be accepted. The requirement for payment in s.90(1), as we have earlier interpreted it, avoids such consequences in a way which provides mutual protection for employers and employees.

…

[56] Additionally we consider that the scheme of “pre-payment” of annual leave in the Agreement constitutes cashing out of annual leave in a manner inconsistent with s.93, with the result that the prohibition in s.92 is excluded. Once it is understood that “paid annual leave” means annual leave accompanied by pay when it is taken, then the prohibition in s.92 must be understood as prohibiting the making of a payment which would lead to the employee forgoing his or her entitlement to later take annual leave with pay (unless such cashing out is authorised by s.93 or s.94). This is what the Agreement if approved would do. Mr Warren did not contend that the annual leave payment provisions in the Act constituted a cashing out provision in an enterprise agreement which complied with s.93, and it is clear that it does not because the Agreement does not contain any provision which would ensure a minimum accrual of four weeks’ paid leave would remain in place, and does not require a written separate agreement between the employer and the employee in order for the cashing out to occur.” (endnotes omitted) 3

[13] The Applicant filed submissions in relation to this clause advising that as the term had been previously approved in a 2012 agreement for a company that operated in the same region and industry, it should be accepted “from a viewpoint of fairness and fair competition”.

[14] The Applicant did not file any submissions outlining any basis on which I could approve the Agreement despite its contravention of the NES.

[15] The Applicant was given numerous opportunities to provide satisfactory undertakings and has chosen not to do so. Accordingly, I advised the Applicant that I was unable to approve the Agreement.

[16] The Applicant was given a further opportunity to provide submissions or undertakings to address my concerns or to request that the matter proceed to hearing, however no such request was made.

[17] I cannot be satisfied for the purposes of s.186(2)(c) that the terms of the Agreement do not contravene s.55, nor can I be satisfied for the purposes of s.186(2)(d) that the Agreement passes the better off overall test.

[18] For the above reasons I cannot approve the Agreement. The application is dismissed.

COMMISSIONER

 1   [2014] FWCFB 3202

 2   Ibid

 3   Ibid

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