S & R Harvey Pty Ltd T/A SRH Milk Haulage

[2018] FWC 1931

[2018] FWC 1931

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

S & R Harvey Pty Ltd T/A SRH Milk Haulage
(AG2017/3904)

S & R HARVEY PTY LTD ENTERPRISE AGREEMENT 2017

Road transport industry
DEPUTY PRESIDENT KOVACIC	CANBERRA, 4 APRIL 2018

Application for approval of the S & R Harvey Pty Ltd Enterprise Agreement 2017.

[1] An application has been made for approval of an enterprise agreement known as the S & R Harvey Pty Ltd Enterprise Agreement 2017 (the Agreement). The application was received by the Fair Work Commission (the Commission) on 30 August 2017 and made by S & R Harvey Pty Ltd T/A SRH Milk Haulage (SRH – the Applicant) pursuant to s.185 of the Fair Work Act 2009 (the Act). The Agreement is a single enterprise agreement.

[2] The Transport Workers’ Union of Australia (TWU) in its Form F18 – Statutory Declaration of employee organisation in relation to an application for approval of an enterprise agreement (other than a greenfields agreement) stated that it did not support approval of the Agreement and that it disagreed with one or more of the answers given in the Form F17 – Employer’s statutory declaration in support of an application for approval of an enterprise agreement (other than a greenfields agreement). In short, the TWU contended that the Agreement did not pass the better off overall test (BOOT). Whilst the TWU was not involved in the negotiations for the Agreement, based on a comparison of membership details it provided to the Commission on a confidential basis with a list of the Applicant’s employees similarly provided to the Commission on a confidential basis, I am satisfied that the TWU was a default bargaining representative for the Agreement.

[3] On 18 December 2017 the Commission’s Member Support Research Team sent an email to the Applicant setting out the Commission’s preliminary views regarding the Agreement. Among other things, the email set out a number of BOOT related issues concerning the Agreement and sought an indication from the TWU as to whether it wished to be heard in respect of its concerns/objections. With regard to the Commission’s BOOT related concerns, the email read as follows:

“7. Rates of Pay

The agreement appears to offer two pay schemes as per schedule 2. The First is the ‘Base Rate of Pay’. This rate is taken from Grade 7, 8 and 9 of the RTD Award and applied to employees classified at grade 6, 7 and 8 respectively. The second rate is the ‘Common Hourly Rate’ and is a loaded rate which is inclusive of overtime, weekend and public holiday penalties and is paid to employees engaged on a roster as per Clause 17.

•  The ‘Base Rate of Pay’ is 1.48% to 2.91% above award wage for employees not engaged on a roster as per Clause 17 or Long distance work as per Schedule 4, 5 & 6 of the agreement. The Deputy President is concerned that as the agreement is silent on most conditions these employees would not be better off.

•  Long distance work as per Schedule 4, 5 and 6 receives an hourly rate which is 1.45% to 2.92% above the relevant Road Transport (Long Distance Operations) Award 2010 award rate. Employees engaged under these schedules are not entitled to the allowances as per Clause 12 of the agreement. The Deputy President is concerned that employees engaged in Long distance work as per Schedule 4, 5 and 6 may not be considered better of overall.

•  The Deputy President notes that the ‘Common Hourly Rate’ appears to account for an uncapped amount of overtime, however employees may not be better off depending on the amounts of overtime required.

•  Schedule 2 of the Agreement states that the ‘Casual Ordinary Time Rate of Pay’ is the base rate of pay plus 65%, however the table in schedule 2 does not appear to take into account the additional 65% loading and it is unclear what the ‘Casual Ordinary Time Rate of Pay’ should be. The Deputy President is seeking clarification as to the correct rates of pay for the ‘Casual Ordinary Time Rate of Pay’.”

[4] On 20 December 2017 the TWU advised the Commission by email that it wished to be heard in respect of the application. Against that background, the matter was listed for mention and directions on 11 January and 15 February 2018 and subsequently for substantive hearing on 5 March 2018. Permission was granted for the Applicant to be represented at those hearings, with Mr Maurice Baroni of Counsel appearing for the Applicant at the hearing of 5 March 2018 and Ms Therese Walton, National Industrial Officer, appearing for the TWU.

[5] In other developments, on 25 January 2018 the Applicant responded to the various preliminary issues regarding the Agreement identified by the Commission in its email of 18 December 2017 and proffered a number of undertakings to address some of those issues.

The Applicant’s case

[6] The Applicant relied on its Form F17, the undertakings it had proffered and the statement of Ms Nicole Greedy 1, who is employed as an accountant by SRH, in contending that the Agreement should be approved and the TWU’s objections dismissed. More specifically, the Applicant submitted that the Agreement passed the BOOT for the following reasons:

•  the Agreement and undertakings satisfied the concerns raised by the Commission;

•  the undertakings proffered did not result in substantial changes to the Agreement;

•  Annexure A to Ms Greedy’s statement, which compares what employees would have earned under the Agreement and the Road Transport and Distribution Award 2010 2 (the Award) based on the rosters actually worked by employees at test time, showed that employees were better off financially under the Agreement;

•  the rates of pay provided in the Agreement, together with the undertakings proffered, on balance put the employees in a better position than they would otherwise be under the Award, adding that this was clear from Annexure A to Ms Greedy’s statement; and

•  Ms Greedy had in her statement dealt with most, if not all, of the TWU’s concerns.

[7] The Applicant further submitted that the TWU’s submissions and evidence should be rejected for several reasons, including that Annexure TW1 to Ms Walton’s statement 3 was of no probative value as it did nothing more than recite various clauses of the Agreement compared to the Award. The Applicant added that Annexure TW2 to Ms Walton’s statement similarly lacked any probative value as it was premised on a roster which was nothing more than an assumption and failed to take into account the undertakings that had been proffered.

[8] Ms Greedy in her statement responded to the BOOT analysis provided at Annexure TW1 to Ms Walton’s statement and disagreed with the calculations set out at Annexure TW2 to Ms Walton’s statement. As mentioned above, annexed to Ms Greedy’s statement 4 were comparison calculations for a sample of employees engaged under the 4 on/2 off roster and the 7 day roster arrangements used by the Applicant. Those calculations indicated that employees were between $53.46 and $536.60 better off overall over a period of 8 weeks covering the period commencing the week ending 9 July 2017 to the week ending 27 August 2017.

[9] At the hearing of 5 March 2018 the Applicant largely reiterated its written submissions and responded to Ms Walton’s concern regarding fatigue management laws (discussed below). On the latter issue, the Applicant contended that fatigue management legislation was not an issue which the Commission could have regard to in deciding whether or not to approve the Agreement.

[10] Following the hearing, the Applicant provided an updated version of elements of Annexure A to Ms Greedy’s witness statement to more clearly set out the calculations where overtime was payable in accordance with the undertaking proffered. The updated version did not result in a different monetary outcome to that outlined above. With regard to those updated calculations, the TWU questioned the accuracy of those calculations contending that the calculations should be discounted to reflect the fact that as per clause 19 of the Agreement all meal breaks were unpaid. The Applicant subsequently responded indicating that it paid employees for meal breaks and that if required it was prepared to offer an undertaking to that effect.

The TWU’s case

[11] The TWU submitted that the application for approval of the Agreement ought to be dismissed as the Commission could not be satisfied that the Agreement passed the BOOT. More specifically, the TWU submitted that the Applicant had not provided any rosters with shift lengths for employees currently working which would enable the Commission to give consideration to whether the BOOT is satisfied. The TWU also relied on Ms Walton’s statement which it contended demonstrated that when the Award was properly applied to the roster referred in Ms Walton’s statement employees would be materially worse off under the Agreement than they would be under the Award. The TWU posited that this would be the case for a number of reasons including that work performed outside the span of hours in the Award attracted overtime payments and that penalty rates were applicable under the Award for work on weekends and public holidays. The TWU further submitted that the Commission could not be satisfied that the undertakings proffered by the Applicant are not likely to result in significant changes to the Agreement.

[12] In her statement 5 Ms Walton deposed among other things that the undertakings proffered by the Applicant did not address all of the issues of concern set out at Annexure TW1 to her statement (a table setting out various provisions of the Agreement and the equivalent Award provision). Ms Walton also deposed that while the Applicant’s response of 25 January 2018 set out the hourly rate for casual employees no undertaking was provided to give effect to those rates and that the undertaking proffered in respect of overtime would provide no benefit or protection for casual employees. Also annexed to Ms Walton’s statement6 was a table comparing what a Grade 8 employee under the Award would have earned under the Agreement and the Award for working a 7 day fortnight roster for 14 hours per day. The table indicated that the employee would be $72.01 worse off under the Agreement.

[13] At the hearing the TWU reiterated aspects of its written submissions. In addition, the TWU also highlighted concerns regarding the number of shifts in Annexure A to Ms Greedy’s statement which exceeded 14 hours. Specifically, the TWU contended that this contravened fatigue management laws.

[14] As mentioned above, in response to updated calculations provided by the Applicant after the hearing the TWU sent an email to the Commission on 7 March 2018 in which it disputed the accuracy of the calculations. Specifically, the TWU contended that the calculations should be discounted to reflect the fact that as per clause 19 of the Agreement all meal breaks were unpaid.

Consideration of the issues

[15] A key issue in dispute in this case is whether the Agreement passes the BOOT. In this regard I note that the Applicant has proffered undertakings to address a number of the BOOT related issues set out in the Commission’s email of 18 December 2017. Further, as previously noted, Annexure 1 to Ms Greedy’s witness statement indicates that employees would have been between $53.46 and $536.60 better off overall under the Agreement over a period of 8 weeks covering the period commencing the week ending 9 July 2017 to the week ending 27 August 2017. The Commission has checked the accuracy of those calculations and is satisfied that they are correct. Those calculations are preferred to the calculations provided at Annexure TW2 to Ms Walton’s statement because they are based on the rosters actually worked by employees as at test time (as opposed to the hypothetical roster which underpins Annexure TW2) and they have regard to the undertakings proffered by the Applicant. Beyond this I note that the calculations in respect of Employees 1, 3 and 5 at Annexure 1 of Ms Greedy’s statement compare a Grade 8 employee under the Agreement to a Grade 8 employee under the Award. However, Annexure A to the Form F17 submitted by Ms Greedy states that under the Agreement employees are classified one grade above the relevant Award classification (e.g. a Transport Worker Grade 8 under the Award would be classified as Transport Worker Grade 9 under the Agreement). Accordingly, the calculations annexed to Ms Greedy’s statement in respect of Employees 1, 3 and 5 understate the pay differential between the Agreement and the Award for those employees.

[16] With particular regard to the undertakings proffered by the Applicant in respect of the various BOOT related issues identified by the Commission, I am satisfied that those undertakings address a number of the issues identified by the Commission. As noted above, the Applicant indicated in response to the TWU’s concerns regarding the accuracy of the calculations at Annexure A to Ms Greedy’s statement that it paid employees for meal breaks and that if required it was prepared to offer an undertaking to that effect. Given the relevance of the issue for the purposes of the BOOT, I would indicate that such an undertaking is required. Further, as pointed out by Ms Walton in her statement, the Applicant in its response of 25 January 2018 set out the hourly rates for casual employees but did not provide an undertaking to give effect to those rates. The Agreement at Schedule 2 sets out the Casual Ordinary Time Rate of Pay and defines the term as “the Base Rate of Pay plus 65%”. However, the Casual Ordinary Time Rates of Pay specified at Schedule 2 mirror the Base Rates of Pay set out in the Schedule and are equivalent to the minimum hourly rate of pay specified in the Award for the equivalent classification. Therefore to ensure that casual employees are better off overall under the Agreement I require an undertaking which gives effect to hourly rates of pay for casual employees set out in the Applicant’s response of 25 January 2018. Having regard to the undertakings provided by the Applicant and the further undertakings requested by the Commission, I am satisfied that the Agreement passes the BOOT.

[17] As mentioned above, the TWU contended that the Commission cannot be satisfied that the undertakings are not likely to result in significant changes to the Agreement. The issue of whether or not undertakings result in substantial changes to the Agreement was consider by Commissioner Roe in Perth Access Scaffolding Pty Ltd 7in which heobserved that:

“[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] … 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.

…

[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.” (Underlining added)

[18] In AKN Pty Ltd t/a Aitkin Crane Services 8 a Full Bench of the Commission observed that:

“[34] The statutory scheme therefore requires the application by the Commission of the provisions of ss.186-190 to an enterprise agreement that has been already bargained for, approved by employees and “made” under Div.3 and Subdiv.A of Div.4 of Part 2-4. That is to say, in relation to non-greenfields enterprise agreements, the Commission is discharging its functions by reference to an agreement which has already been developed and finalised by a process of collective bargaining at the enterprise level. The Commission’s approval functions are not intended to be a process by which an employer, in a process of dialogue with the Commission, can seek to develop the agreement further so that it may eventually satisfy the approval requirements in ss.186 and 187. The undertaking facility in s.190 provides an opportunity to an employer to proffer an undertaking to address any concern which the Commission may have concerning the satisfaction of the approval requirements in ss.186 and 187. Because any such undertaking may not result in substantial changes to the agreement, the opportunity provided is necessarily limited in nature and cannot involve a wholesale reshaping of the agreement which has already been made.” (Underlining added)

[19] Further, in Angove’s Pty Ltd T/A Angove’s Family Winemakers 9 Deputy President Bartel stated:

“[49] Undertakings are taken to be terms of the Agreement. In my view, whether one or more undertakings represent a substantial change to an agreement is a question of fact and degree. It is to be considered in the context of the Agreement as a whole, taking into account the legislative context.

[50] The objects of Part 2-4 of the Act set out in s.171 are as follows:

“171 Objects of this Part

The objects of this Part are:

(a) to provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that d

(b) to enable the FWC to facilitate good faith bargaining and the making of enterprise agreements, including through:

(i) makingbargaining orders; and

(ii) dealing with disputes where the bargaining representatives request assistance; and

(iii) ensuring that applications to the FWC for approval of enterprise agreements are dealt with without delay.”

[51] Accordingly, a liberal approach to the interpretation of “substantial changes” is warranted, i.e. an approach where the benefit of the doubt should be weighed in favour of approving the agreement so that the making of enterprise agreements that meet the other statutory requirements, is facilitated.” (References omitted, underlining added)

[20] From these decisions can be distilled the following key principles to guide consideration of the issue of whether or not undertakings result in substantial changes to an agreement:

1. the requirement that “the effect of accepting the undertaking is not likely to … result in substantial changes to the agreement” is a relatively high bar;

2. the opportunity to provide undertakings is limited in nature and cannot involve a wholesale reshaping of the agreement which has already been made;

3. whether or not one or more undertakings represent a substantial change to an agreement is a question of fact and degree which is to be considered in the context of the agreement as a whole; and

4. a liberal approach to the interpretation of “substantial changes” is warranted, i.e. an approach where the benefit of the doubt should be weighed in favour of approving an agreement.

[21] I will apply those principles in this case.

[22] In this case the undertakings proffered by the Applicant in respect of:

•  the Agreement’s dispute resolution procedure is directed at ensuring that s.186(6) of the Act is satisfied;

•  redundancy is to ensure that the requirements of s.186(2)(c) of the Act is satisfied in circumstances where the Applicant finds alternative employment for a potentially redundant employee(s) (refer s.120 of the Act);

•  rosters provide certainty as to the rosters which full-time employees can be required to work by limiting the rosters to those specified in Clause 17 and Schedules 4-6 of the Agreement;

•  employees performing work which would be covered by the Road Transport (Long Distance Operations) Award 2010 10, overtime and casual employees being required to work on public holidays address BOOT related concerns raised by the Commission to the benefit of employees; and

•  similarly the further undertakings required by the Commission in respect of paid meal breaks and the hourly rates of pay for casual employees address BOOT related concerns raised by the Commission to the benefit of employees.

[23] What is apparent from the above outline of the undertakings proffered by the Applicant is that they overwhelmingly address issues dealt with in the Agreement in a way which is advantageous to employees. In my view, the undertakings do not, having regard to the language in AKN, involve a wholesale reshaping of the Agreement.

Conclusion

[24] For all the above reasons and taking into account the undertakings proffered by the Applicant and the further undertakings requested by the Commission, I am satisfied that the Agreement passes the BOOT. Subject to receiving the further undertakings set out at paragraph [16] above I am prepared to approve the Agreement. Furthermore, I do not consider that the undertakings proffered or sought by the Commission cause or will cause financial detriment to any employee covered by the Agreement or result in substantial changes to the Agreement.

[25] A decision approving the Agreement will be issued once the abovementioned further undertakings are provided in acceptable terms to the Commission.

Appearances:

M. Baroni of Counsel and S. Moran for the Applicant

T. Walton for the TWU

Telephone hearings:

2018

Canberra and Sydney

January 11

February 15

March 5

 1   Exhibit 2

 2   MA000038

 3   Exhibit 1

 4   Exhibit 2 at Annexure A

 5   Exhibit 1

 6   Ibid at Annexure TW2

 7   [2016] FWC 8042

 8   [2015] FWCFB 1833

 9   [2015] FWC 7106

 10   MA000039

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