RA Jordan Pty Ltd T/A Jordan Plumbing
[2015] FWCA 4436
•6 JULY 2015
| [2015] FWCA 4436 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.210 - Application for approval of a variation of an enterprise agreement
RA Jordan Pty Ltd T/A Jordan Plumbing
(AG2015/2794)
RA JORDAN PTY LTD ONSITE CONSTRUCTION ENTERPRISE AGREEMENT 2012 - 2016
Plumbing industry | |
SENIOR DEPUTY PRESIDENT O'CALLAGHAN | ADELAIDE, 6 JULY 2015 |
Application for variation of the RA Jordan Pty Ltd Onsite Construction Enterprise Agreement 2012 - 2016 - variation to cl. 3.11.4 ; 4.1.1.1 ; 7.1.1 ; 7.3.3.2.
[1] On 25 May 2015 RA Jordan Pty Ltd T/A Jordan Plumbing (Jordan Plumbing) applied for approval of a variation to the RA Jordan Pty Ltd Onsite Construction Enterprise Agreement 2012-2016 (the Agreement).
[2] That variation application was opposed by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (the CEPU). The matter was the subject of a telephone conference on 5 June 2015 and a hearing on 16 June 2015. At this hearing Jordan Plumbing was represented by Mr Earls, of counsel pursuant to an unopposed grant of permission made under s.596(2)(a). Ms Rogers and Mr Buchanan represented the CEPU. Signed undertakings and further submissions were subsequently received.
[3] The Agreement was approved on 4 December 2012. It has a specified nominal expiry date of 31 October 2016. The CEPU is covered by the Agreement.
[4] The intention of the Agreement variation is to cap wage rates and allowances under the Agreement at their current level for the life of the agreement rather than providing for specified ongoing wage and allowance increases.
[5] Division 7 of Part 2-4 of the Fair Work Act 2009 (the FW Act) sets out arrangements for the variation of enterprise agreements. Section 211 states:
“211 When the FWC must approve a variation of an enterprise agreement
Approval of variation by the FWC
(1) If an application for the approval of a variation of an enterprise agreement is made under section 210, the FWC must approve the variation if:
(a) the FWC is satisfied that had an application been made under section 185 for the approval of the agreement as proposed to be varied, the FWC would have been required to approve the agreement under section 186; and
(b) the FWC is satisfied that the agreement as proposed to be varied would not specify a date as its nominal expiry date which is more than 4 years after the day on which the FWC approved the agreement;
unless the FWC is satisfied that there are serious public interest grounds for not approving the variation.
Note: The FWC may approve a variation under this section with undertakings (see section 212).
Modification of approval requirements
(2) For the purposes of the FWC deciding whether it is satisfied of the matter referred to in paragraph (1)(a), the FWC must:
(a) take into account subsections (3) and (4) and any regulations made for the purposes of subsection (6); and
(b) comply with subsection (5); and
(c) disregard sections 190 and 191 (which deal with the approval of enterprise agreements with undertakings).
(3) The following provisions:
(a) section 180 (which deals with pre-approval steps);
(b) subsection 186(2) (which deals with the FWC’s approval of enterprise agreements);
(c) section 188 (which deals with genuine agreement);
have effect as if:
(d) references in sections 180 and 188 to the proposed enterprise agreement, or the enterprise agreement, were references to the proposed variation, or the variation, of the enterprise agreement (as the case may be); and
(e) references in those provisions to the employees employed at the time who will be covered by the proposed enterprise agreement, or the employees covered by the enterprise agreement, were references to the affected employees for the variation; and
(f) references in section 180 to subsection 181(1) were references to subsection 208(1); and
(g) the words “if the agreement is not a greenfields
agreement—” in paragraph 186(2)(a) were omitted; and
(h) paragraph 186(2)(b) were omitted; and
(ha) references in paragraphs 186(2)(c) and (d) to the agreement were references to the enterprise agreement as proposed to be varied; and
(hb) subparagraph 188(a)(ii) were omitted; and
(j) the words “182(1) or (2)” in paragraph 188(b) were omitted and the words “209(1) or (2)” were substituted.
(4) Section 193 (which deals with passing the better off overall test) has effect as if:
(a) the words “that is not a greenfields agreement” in subsection (1) were omitted; and
(b) subsection (3) were omitted; and
(c) the words “the agreement” in subsection (6) were omitted and the words “the variation of the enterprise agreement” were substituted; and
(d) the reference in subsection (6) to section 185 were a reference to section 210.
(5) For the purposes of determining whether an enterprise agreement as proposed to be varied passes the better off overall test, the FWC must disregard any individual flexibility arrangement that has been agreed to by an award covered employee and his or her employer under the flexibility term in the agreement.
Regulations may prescribe additional modifications
(6) The regulations may provide that, for the purposes of the FWC deciding whether it is satisfied of the matter referred to in paragraph (1)(a), specified provisions of this Part have effect with such modifications as are prescribed by the regulations.”
[6] It is also appropriate that I note that s.212 states:
“212 FWC may approve a variation of an enterprise agreement with undertakings
Application of this section
(1) This section applies if:
(a) an application for the approval of a variation of an enterprise agreement has been made under section 210; and
(b) the FWC has a concern that the variation does not meet the requirements set out in section 211.
Approval of agreement with undertakings
(2) The FWC may approve the variation under section 211 if the FWC is satisfied that an undertaking accepted by the FWC under subsection (3) of this section meets the concern.
Undertakings
(3) The FWC may only accept a written undertaking from one or more employers covered by the agreement if the FWC is satisfied that the effect of accepting the undertaking is not likely to:
(a) cause financial detriment to any affected employee for the variation; or
(b) result in substantial changes to the variation.
Signature requirements
(4) An undertaking must meet any requirements relating to the signing of undertakings that are prescribed by the regulations.”
[7] The Jordan Plumbing position is that the agreement variation was reached through a process which met the necessary requirements of the FW Act and that the variation itself meets the necessary prerequisites for approval. Jordan Plumbing provided undertakings to clarify the operation of the various changes to the Agreement.
[8] The CEPU position was that the Agreement, as varied, had the potential to entirely remove existing entitlements and that this was not explained to employees. The CEPU position was that this meant there was no genuine employee agreement to the Agreement variation. Additionally, the CEPU argued that the undertakings provided by Jordan Plumbing resulted in substantial changes to the variation such that they should not be accepted pursuant to s.212(3)(b).
The Evidence
[9] In the hearing on 16 June 2015, Mr Anderton, the Managing Director of Jordan Plumbing, gave evidence. His evidence confirmed an affidavit and detailed the process adopted by Jordan Plumbing to make the agreement variation.
[10] Mr Anderton’s evidence was that Jordan Plumbing had experienced a significant reduction in work over the past year and anticipated that, notwithstanding that approximately one third of its staff had been made redundant, further reductions were very possible. In April 2015 Jordan Plumbing concluded that forgoing rate increases under the agreement would provide the company with the best chance of securing contract work and hence better stability in employment. This proposal was discussed with employees in toolbox meetings on 24 April 2015. On 6 May 2015 Mr Anderton met with all of the employees and further detailed the basis for the wage freeze proposal and the voting process that would be required to endorse it. 1 Mr Anderton contacted Mr Buchanan from the CEPU on 7 May 2015 and advised him of the agreement variation proposals. Managers from Jordan Plumbing met with the employees on 11 May 2015 and provided each employee with a letter explaining the proposed variation. This letter stated:
“ENTERPRISE AGREEMENT VARIATION
As recently discussed, the industry is currently experience a difficult and prolonged downturn in work. The result of this is that R A Jordan Pty Ltd have found it difficult to win projects. In an effort to avoid our competitive position declining further, we are proposing a wage freeze for the agreement.
Attached is a copy of the proposed variation agreement. We will be holding a ballot at 7:00am on Tuesday 19th May on your work site. Balloting will be take place via ballot forms. Should you be on leave or not on a construction site you can vote via text to my mobile on xxxx xxx xxx.
Your copy of the proposed agreement as varied accompanies this letter, if you would like a copy of any document incorporated by reference, please contact me and I will arrange them for you.
If you have any queries about the proposed variation or the ballot, please contact me to discuss.
Yours sincerely,
Dale Anderton
Managing Director” 2
[11] In addition, employees were provided with a copy of the variation agreement proposal which explained the proposed variations in the following terms:
Clause 3.11.4 Delete the second sentence.
Clause 4.1.1.1 Delete the final two rows from the table.
Clause 7.1.1 Delete the final two rows from the table.
Clause 7.3.3.2 Delete the final sentence.
[12] The employees were also provided with a copy of the Agreement in its varied form.
[13] The proposed ballot arrangement was altered on 12 May 2015 following concerns expressed to Jordan Plumbing by Mr Buchanan. The balloting arrangements were determined to be a secret ballot with alternative options available for people who could not vote on that day. Employees were advised of these voting arrangements via text messages on 12 May 2015. Mr Anderton also provided site managers with additional advice about the variation proposal and instructed those managers to discuss these issues with the employees.
[14] Mr Anderton advised that he, and another Jordan Plumbing manager, visited each of the worksites between 6 and 19 May 2015 and discussed the agreement variation proposal with the employees. Mr Anderton’s evidence was that “I understood from my conversations with employees that they understood the intention of the variation was to stop all monetary increases for the remainder of the agreement.” 3
[15] Mr Buchanan was in attendance when the secret ballot votes were counted on 20 May 2015. The Employer’s Declaration in support of the variation application (Form F23A) confirms that there are 32 employees covered by the agreement. 31 of these employees voted in the secret ballot and, 16 voted to approve the variation. One employee lodged a late vote in favour of the agreement variation on the following day but this vote was not counted for the purposes of this application.
[16] The CEPU did not call anyone as a witness in this matter but advised that it had adopted this position because of its concern, and that of employee members, that the provision of evidence in this matter may disadvantage those employees in terms of possible redundancy selection.
[17] Central to my consideration of the Agreement variation application are the varied terms of the Agreement. To assist in explaining the dispute between the parties I have set out the relevant Agreement provisions in the existing terms but have marked the content of the existing clauses which are proposed to be deleted.
3.11.4 Once the maximum of 16 weeks redundancy pay entitlement has been reached after 8 years of service, the company will provide a weekly payment of $50.00 to the eligible employee. This payment will increase to $52.00 on and after 1/7/2016. This payment can be paid in the weekly wage or paid into the employee’s superannuation fund, at the discretion of the employee, but a maximum only of two “switches” will be allowed in any calendar year. These payments are additional to the employee’s entitlement set out in clause 3.11.2”
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4.1.1.1 Classification / Rate of Pay
On and From up to | Registered Sanitary Plumber & Registered Class 2 Gas Fitter $ per hour | Registered Sanitary Plumber $ per hour | Non Registered Sanitary Plumber $ per hour | CDA Consolidated Disability Allowance $ per hour |
6/6/2012 to 8/4/2013 | *31.75 | *$31.25 | *$23.80 | $1.55 |
9/4/2013 to 30/6/2014 | *$32.50 | *$32.00 | *$24.00 | $2.00 |
1/7/2014 to 29/6/2015 | *$34.00 | *$33.50 | *$24.20 | $2.00 |
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7.1.1 ....
On and From FARES ALLOWANCE | Registered Sanitary Plumber & Registered Class 1 Gas Fitter $ per day | Registered Sanitary Plumber $ per day | Non Registered Sanitary Plumber $ per day |
6/6/2012 to 8/4/2013 | *15.00 | *$15.00 | *$15.00 |
9/4/2013 to 30/6/2014 | *$17.50 | *$17.50 | *$17.50 |
1/7/2014 to 29/6/2015 | *$18.00 | *$18.00 | *$18.00 |
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7.3.3.2 Pay an allowance in this Agreement of $770.00 per week of seven days or 4110.00 per day in the case of broken parts of a week until 29/6/2015. From 30/6/2015 this amount will increase to $115.00 per day, and from 5/7/2016 to $120.00 per day; or
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[18] The undertakings provided by Jordan Plumbing, at my request, stated:
“1. The rates, allowance and other monetary amount applicable to employees as at the date of making this undertaking will remain the applicable rates and allowances until the agreement is varied, rescinded or replaced in accordance with the Fair Work Act 2009.
2. The model consultation provision will apply.
3. The model flexibility provision will apply.” 4
[19] The undertakings relative to the model consultation and flexibility provisions reflect the fact that the 4 December 2012 approval decision specified that the model flexibility and consultation terms were taken to be a term of the Agreement pursuant to ss.203 and 205 but the variation Agreement did not refer to these model terms. There is no dispute between the parties about the inclusion of these provisions.
[20] In essence, the CEPU position is that, because of the deletion of wage rates and allowances applicable from 30 June 2015 to 31 October 2016, the remaining agreement provisions establish wage rates and allowances that only applied until 29 June 2015. As a consequence, the CEPU expressed concern that the literal effect of the variation was to not provide for any wage rates or relevant allowances after 29 June 2015. Accordingly, the CEPU position was that this variation proposal was not properly explained to employees. Further, that the undertakings proposed were of such moment that they resulted in substantial changes to the variation and should not then be accepted by the Fair Work Commission.
Findings
[21] The Agreement sets out wage rates and allowances which apply over prescribed periods of time. In this respect it reflects the pattern of rates and increases established in this Agreement and its predecessors. There has been no suggestion that because each previous iteration of this Agreement has adopted this approach, this and those Agreements ought not be approved because they provide for wage rates to apply until a certain specified date. Consequently, in practical terms, I think it is sufficiently clear that the Agreement, as varied, provides for wage rates and allowances which apply from 1 July 2014 until the Agreement is replaced. To the extent that there is any uncertainty in this respect, the first of the undertakings provided by Jordan Plumbing make this position transparently clear. In this respect I simply cannot regard the undertakings as resulting in substantial changes to the variation proposal.
[22] The steps taken by Jordan Plumbing to explain the variation proposal make it very clear that what was proposed was a freeze in terms of wage rates and allowances. That is clear from the letter to employees of 11 May 2015 and from the various instructions given to Jordan Plumbing managers for their discussions with employees. It is also clear that Mr Anderton described the variation proposal as “going to a holding pattern and not have any of the future rises for the remaining some 16+ months of the agreements life.” 5 That description is again consistent with simply freezing wages and allowances and is inconsistent with any proposition that the variation had the effect of depriving employees of any wages or allowances.
[23] Accordingly, I am satisfied that the explanation of the variation proposal was both adequate and consistent with the effect of that variation proposal such that a majority of the affected employees who cast a valid vote genuinely agreed to the variation proposal.
[24] Having reached these conclusions, I am satisfied that the variation application would, had it been made under s.185 of the FW Act, required approval. It does not extend the specified nominal expiry date. I am not persuaded that there are serious public interest grounds for refusing to approve the Agreement variation. Notwithstanding that the Agreement variation freezes wage rates and allowances, the Agreement, as varied, meets the requirements of the better off overall test. Accordingly, I am satisfied that the necessary requirements for approval of the Agreement as varied have been met and approve the variation which is attached to this decision as Annexure A.
[25] I note that the CEPU remains an employee organisation covered by the agreement pursuant to s.201.
[26] For the avoidance of any doubt in this respect, and consistent with ss.212 and 213, I have taken the Jordan Plumbing undertakings of 16 June 2015 to be terms of the Agreement as varied. The attached, consolidated copy of the Agreement includes the undertakings. The Agreement, as varied, will operate from the date of this decision.
Appearances:
T Earls counsel for RA Jordan Pty Ltd T/A Jordan Plumbing
J Rogers and D Buchanan for the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
Hearing Details:
2015.
Adelaide:
June 16.
1 Exhibit J1, Annexure DA2
2 Exhibit J1, Annexure DA4
3 Exhibit J1, para 19
4 Letter from Jordan Plumbing with Undertaking, 16 June 2015
5 Exhibit J1, Annexure DA2
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