Ranidash Pty Ltd T/A The Coffee Club Gladstone, Gladstone Yacht Club Restaurant & Bar
[2024] FWCFB 170
•19 MARCH 2024
| [2024] FWCFB 170 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 3, Item 20A(4) - Application to extend default period for agreement-based transitional instruments
Ranidash Pty Ltd T/A The Coffee Club Gladstone, Gladstone Yacht Club Restaurant & Bar
(AG2023/4997)
RANIDASH PTY LTD COLLECTIVE AGREEMENT 2006
| Hospitality industry | |
| DEPUTY PRESIDENT SLEVIN COMMISSIONER LIM | SYDNEY, 19 MARCH 2024 |
Application to extend the default period for the Ranidash Pty Ltd Collective Agreement 2006
Introduction
Ranidash Pty Ltd (the Applicant) has applied under item 20A(4) of Sch 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act2009 (Cth) (Transitional Act) to extend the default period for the Ranidash Pty Ltd Collective Agreement 2006 (Agreement) until 30 June 2025.
The Agreementis a collective agreement-based transitional instrument within the meaning of item 2(5)(c) of Sch 3 to the Transitional Act. Such instruments continue to apply to the Applicant because of item 3 of Sch 3 of that Act.
The Transitional Act was amended by the Fair Work Legislation Amendment (Secure Jobs, Better Pay)Act 2022 (Cth) to provide for the automatic termination of all remaining transitional instruments. Pursuant to subitems 20A(1) and (2) of Sch 3 to the Transitional Act, the Agreement was to terminate on 6 December 2023 unless extended by the Commission. The main features of item 20A of Sch 3 to the Transitional Act are described in detail in the Full Bench decision in Suncoast Scaffold Pty Ltd[1] and we rely upon what is said in that decision.
When an application is made under subitem (4) of item 20A of Sch 3 to the Transitional Act, the Commission is required, under subitem (6)(a), to extend the default period if the Commission is satisfied that subitem (7), (8) or (9) applies and it is otherwise appropriate in the circumstances to do so. Put briefly, subitem (7) applies if, at the time of the application, the applicant is bargaining for a replacement agreement. Subitem (8) applies to individual agreement-based transitional instruments. And subitem (9) applies if it is likely the employees covered by the Agreement would be better off overall if the Agreement continued to apply rather than the applicable modern award. This is the better off overall test (BOOT).
The Commission must also extend the default period under subitem (6)(b) if satisfied it is reasonable in the circumstances to do so.
The application does not expressly identify the grounds on which an extension to the default period is sought. However, it does suggest that an extension is sought on the basis of subitem (9), in that the employees would be better off overall if the Agreement continued to apply to them than if the Award applied. For completeness, we will also consider the application in light of subitem (6)(b) and whether it is reasonable in the circumstances to extend the default period.
Background
The Applicant operates a Coffee Club franchise in Gladstone and the Gladstone Yacht Club in Queensland. It employs approximately 43 employees under the Agreement. Of these employees, seven are employed on a full-time basis and the rest are employed on a casual basis. If the Agreement did not apply, the Restaurant Industry Award 2020 (the Award) would apply to the employees.
The Applicant submits that their application should be granted as it would give them time to:
(a)negotiate more reasonable rent and lease arrangements for both premises;
(b)commence bargaining with employees for a new enterprise agreement;
(c)actively search for alternative cost-effective suppliers of their goods and services;
(d)investigate solar energy installation to reduce rising costs (once leases have been negotiated);
(e)pursue other methods of streamlining the businesses;
(f)ride out the cyclical boom/bust wave of the Gladstone economy; and
(g)return both businesses to profitability.
The Applicant provided information on the accounts of the two businesses and how both businesses are currently operating at a loss. The Applicant submits that if the Agreement is not extended, it could be the catalyst for the potential closure of the businesses.
The ‘Better Off Overall Test’
There was some confusion as the Applicant submitted a version of the Agreement that is not the same as the Agreement in the Commission’s records (Applicant’s Version). We have proceeded with our analysis and consideration using the version of the Agreement on the Commission’s records.
There is a lengthy list of issues with the Agreement. The major issues can be summarised as follows:
(a)Rates of pay under the Agreement are paid as an all-inclusive rate in full satisfaction of ordinary hours, overtime, weekends, annual leave loading, allowances, public holidays, any other relevant award allowances or penalties. The agreement does not provide how the all-inclusive rates are calculated.
(b)The all-inclusive rates fall below the Award. Clauses 13 and 16 of the Agreement, along with Item 13 of Schedule 9 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth), provide hourly rates of pay under the Agreement will be no less than the minimum wage as set from time to time by the Australian Fair Pay Commission. Wages under the Agreement are therefore taken to be equal to the Award.
(c)The casual loading in the Agreement is 20%, compared to the Award’s 25%. Further, under the Agreement casuals are only entitled to a minimum engagement of one hour, compared to two hours under the Award.
(d)The percentage amounts for apprentice employees are less than the percentages contained within the Award.
(e)There is no annual leave loading payable under the Agreement.
(f)Other than a discounted staff meal where employees work in excess of six hours, there are no allowances payable under the Agreement.
(g)Ordinary hours of work for a full time employee under the Agreement are 40 hours per week, as opposed to 38 hours per week under the Award.
(h)There are several clauses in the Agreement that are inconsistent with the National Employment Standards (NES). These include clauses that allow termination of probationary employees with one days’ notice; clauses that permit the employer to deduct from monies due to an employee where they fail to give adequate notice; a clause that places a cap on the taking of carer’s lave; and a clause that excludes casual employees from the entitlement to unpaid compassionate leave.
The only condition in the Agreement that is more beneficial compared to the Award is the percentage amounts for junior employees are slightly higher than the percentages contained within the Award.
The Applicant was given the opportunity to respond to the above issues. With regards to the rates of pay, the Applicant’s position is that it pays above the Agreement and Award of its own volition. With regards to the other issues identified, the Applicant indicated that it is willing to amend the Agreement to rectify the issues so that it may be considered better off overall compared to the Award.
Consideration
For the purposes of subitem 6(a) of item 20A there is no indication that bargaining for a replacement agreement is occurring, so subitem (7) does not apply. The Agreement is not an individual agreement-based transitional instrument so subitem (8) does not apply. Based on the above, we cannot be satisfied that the employees would be better off overall if the Agreement continued to apply to them than if the Award applied so subitem (9) does not apply. Consequently, we cannot extend the default period under subitem 6 (a).
We now turn to consider the Applicant’s other arguments in the context of whether it is reasonable in the circumstances to grant an extension of the default period pursuant to subitem (6)(b). In Suncoast Scaffold Pty Ltd the Full Bench described the ‘reasonable’ criterion in item 20A(6)(b) of Sch 3 to the Transitional Act in this way:
[17] Subitem (6)(b) of item 20A constitutes an independent pathway to the grant of an extension. The ‘reasonable’ criterion in the subitem should, in our view, be applied in accordance with the ordinary meaning of the word – that is, ‘agreeable to reason or sound judgment’. Reasonableness must be assessed by reference to the ‘circumstances’ of the case, that is, the relevant matters and conditions accompanying the case. Again, a broad evaluative judgment is required to be made.
While each application will turn on its own circumstances, recent Full Bench decisions provide some guidance as to how the broad evaluation judgment required by subitem 6(b) is to be exercised. In Peter Frick,[2] the Full Bench considered that the default position of the statute to automatically terminate transitional instruments on 6 December 2023 suggests a policy preference for employees covered by transitional instruments to be regulated by contemporary instruments.[3] In Kalfresh Management Services Pty Ltd,[4] the Full Bench expressed the view that where an agreement contains inferior and outdated terms and conditions, this weighs strongly against a conclusion that it is reasonable in the circumstances to extend a default period.[5]
With these considerations in mind, we are not satisfied that it is reasonable to extend the default period for the Agreement. The Agreement contains inferior conditions to the Award. There has been no evidence provided regarding negotiations for a replacement agreement. We have taken into account the hardship that the Applicant is experiencing, particularly with regards to the businesses’ profitability. However, on balance, we are not convinced that we should extend the life of a zombie agreement that provides for terms and conditions that are inferior to the relevant modern award.
As we are not satisfied that it is reasonable in the circumstances to extend the default period of the Agreement, the application is dismissed.
As our decision is to refuse to extend the default period under subitem 20A(6) of Sch 3 and our decision is made after the sunset date in the Transitional Act, subitem (11)(e) provides that we must extend the default period to the day of this decision or specify a day that is not more than 14 days after the day of this decision. We have decided that, to enable the Applicant to make the necessary administrative arrangements to give effect to the sunsetting of the Agreement, the default period is extended to 2 April 2024.
DEPUTY PRESIDENT
<AC304310 PR772527>
[1] [2023] FWCFB 105 (‘Suncoast Scaffolding’).
[2] [2023] FWCFB 137.
[3] Ibid, [32].
[4] Kallium Management Services Pty Ltd As Trustee For The Kalium Labour Trust T/A Kalfresh Pty Ltd [2023] FWCFB 217.
[5] Ibid, [14].
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