Sapikawa Pty. Ltd. T/A RSS Personnel

[2015] FWC 4301

[2015] FWC 4301

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Sapikawa Pty. Ltd. T/A RSS Personnel
(AG2015/2386)

COMMISSIONER GREGORY MELBOURNE, 10 JULY 2015

Application for approval of the RSS Personnel - Enterprise Agreement - 2015.

[1] Sapikawa Pty Ltd T/A RSS Personnel (“RSS Personnel”) has made application for approval of a single enterprise Agreement entitled the RSS Personnel – Enterprise Agreement 2015 (“the proposed Agreement”). The Employer’s Statutory Declaration that accompanies the application indicates the proposed Agreement is intended to cover around 30 employees, with the overwhelming majority employed on a part-time basis. The Agreement also indicates it is intended to cover employees engaged as Security Guards with five classification levels provided for, ranging from Guard Level 1 to Guard Manager.

[2] It is also acknowledged in the application that the relevant Award for the purposes of the application of the “better off overall” test is the Security Services Industry Award 2010 1(“the Award”).

[3] Following receipt of the application the Commission sought further clarification from the Applicant’s representative about various aspects of the proposed Agreement. That correspondence was forwarded on 25 May. It was also indicated at the same time that the application would be set down for hearing. It was initially listed for 5 June but subsequently adjourned to 17 June at the request of the Applicant’s representative. The Applicant’s representative also provided a written response on 28 May to the Commission’s earlier correspondence.

[4] Mr Robert Graham was granted leave to appear in the proceedings on behalf of the Applicant under s.596(2)(b) of the Act on the basis his involvement would enable the Applicant to be represented more effectively. Mr Graham appeared with Mr Wayne McDonald, a Director of RSS Personnel, and Mr Glenn McGowan, a Security Officer employed by the Applicant who is the appointed Employee Bargaining Representative.

Consideration

[5] In considering an application for approval of an enterprise agreement s.186(2) of the Fair Work Act 2009 (Cth) requires that, inter alia, “the agreement passes the better off overall test.” 2

[6] Section 193 continues to state:

“(1) An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.” 3

[7] Section 193 concludes by indicating:

“(6) The test time is the time the application for approval of the agreement by the FWC was made under section 185.

(7) For the purposes of determining whether an enterprise agreement passes the better off overall test, if a class of employees to which a particular employee belongs would be better off if the agreement applied to that class than if the relevant modern award applied to that class, the FWC is entitled to assume, in the absence of evidence to the contrary, that the employee would be better off overall if the agreement applied to the employee.” 4

[8] The terms and conditions contained in the proposed Agreement are structured around what can be described as loaded rates of pay in place of the various entitlements that exist under the Security Services Industry Award 2010. Different rates are provided depending on the days on which work is performed and the nature of the employees’ engagement. The Agreement also structures the wage rates on the basis of an averaging arrangement extending over a 12 month period. In this context it is noted the underlying Award only provides for averaging arrangements to be established over a more limited maximum period of 8 weeks.

[9] The proposed Agreement also intends that the various allowances provided for under the Award are encompassed by the loaded hourly rates. The Award entitlement to the annual leave loading is also intended to be covered in this way. The Agreement also proposes that employees can work additional hours over and above those normally worked on the basis of agreement about what are described as “reasonable additional hours.” In some circumstances additional overtime penalty rate entitlements are also to apply.

[10] As indicated at the outset after receiving the application the Commission proceeded to raise a number of issues with the Applicant’s representative. These can be summarised as follows:

● Some examples of rosters provided to the Commission in conjunction with the application appear to indicate various rosters do not satisfy the requirements of the “better off overall” test when the provisions in the Agreement are compared to those in the underlying Security Services Industry Award 2010. This was a particular issue in regard to work performed at weekends in circumstances where the Award provides for double time on Sunday and time and a half on Saturday for work performed at those times, whereas the Agreement provides a weekend loaded rate that is significantly less than these amounts.

● Sub clause 4.2.4 in the Agreement provides for a salary to be paid to “Guard Managers,” but does not indicate what that amount is. The Commission was therefore concerned about how it could be satisfied about the requirements of the “better off overall” test in regard to these employees, without understanding what their salary entitlements are, particularly when this salary arrangement is indicated to be “inclusive of working reasonable additional hours and any entitlement to be paid overtime penalties.”

● The proposed Agreement does not provide for various allowances or the annual leave loading entitlement contained in the Award. In other cases the Award provides more generous provisions than those contained in the Agreement. The higher duties allowance entitlement is one example of this.

● Sub clause 15.11 of the Award also provides that where an employee is required to wear a uniform the employer must provide or reimburse the employee for the cost of that uniform. However, the Agreement obliges employees to wear certain clothing and provides for shirts to be made available on payment of a deposit. It also requires laundering and maintenance of the uniform at the employee’s expense, and enables deductions from the entitlements due on termination for the value of any uniform provided not returned in good condition.

● The Commission also raised a particular issue about the circumstances of part-time employees, given the Employer’s Statutory Declaration lodged with the application indicates the employees to be covered by the Agreement are almost all to be engaged on a part-time basis. The Commission suggested in response the terms in the Agreement appear to be significantly different from those in the Security Services Industry Award 2010 in regard to these entitlements. For example, sub clause 10.4(d) in the Award provides that all hours worked in excess of agreed hours, or as subsequently varied (with any such arrangement to be recorded in writing), will be overtime and paid at the penalty rates prescribed in the Overtime clause. This provision does not appear to be replicated in the Agreement. This appears to mean the hours of work for a part-time employee can be varied in the same way as the hours of a casual employee might be varied, but without the entitlement to the loading that applies to employees engaged on a casual basis.

● A further issue concerns the respective overtime entitlements with the Agreement enabling reasonable additional hours to be worked when an individual flexibility agreement has been negotiated, in place of the overtime entitlement that otherwise applies under the Award.

● The Commission also raised a range of additional matters to do with compliance with the statutory requirements, including the terms of the proposed consultation clause, the entitlements of shift workers to additional annual leave, and whether the public holiday provisions reflect those contained in the National Employment Standards.

[11] The Applicant provided various responses to these matters, both in its correspondence and in the submissions provided in the hearing. It handed up further examples of rosters to be worked under the Agreement. It also indicated other Agreements approved by the Commission contained similar provisions. It also proposed what it describes as “an automatic audit” to be conducted every 8 weeks to ensure any issues to do with compliance with the requirements of the “better off overall” test, in terms of the minimum entitlements provided by the Security Services Industry Award 2010, have been satisfied.

[12] During the course of the proceedings the Commission also sought further clarification about the arrangements to do with part-time employees, given they are the principal category of employee to be engaged under the proposed Agreement, if approved. The Commission made particular reference to the part-time provisions in the Award which require employees to have reasonably predictable hours of work, and for those hours to be confirmed in advance. In addition, where variations to those arrangements occur the Award provides for overtime entitlements to apply.

[13] The Commission also sought information about the typical number of hours to be worked in the week by a part-time employee engaged under the proposed Agreement. The following response was provided.

“THE COMMISSIONER:  In terms of the typical number of hours that would be worked in a week by one of these employees, would there be a typical or an average number of hours that they would work each week?

MR MCDONNELL:  I would say your average week because there’s like five eight-hour shifts or four 12-hour shifts.  So it would be anywhere between 40 hours and 48 hours, probably the average I would estimate to be about 42.5 hours.

THE COMMISSIONER:  Are these people that you're still calling part-time employees?

MR MCDONNELL:  Yes.

THE COMMISSIONER:  And they're working 40 to 48 hours a week?

MR MCDONNELL:  Yes.

THE COMMISSIONER:  They seem more like full-time employees to me than part-time employees.

MR GRAHAM:  But they're still getting the same hourly rate as a full-time employee, in any event.

THE COMMISSIONER:  All right.

MR GRAHAM:  They're getting pro rata annual leave.

MR MCDONNELL:  That's right, yes.

MR GRAHAM:  But is that consistent or is that depending on the needs and requirements?

MR MCDONNELL:  Dependent on needs and requirements, yes.” 5

[14] Itwas also indicated that in circumstances where employees work beyond their regular rostered hours a flexibility arrangement might be negotiated. It was also indicated that where part-time employees are required to work at a weekend they would generally be provided with the following weekend off, although this was not always possible.

[15] At this point it is appropriate to set out in full the part-time provisions in the Security Services Industry Award 2010. They are contained in clause 10, “Types of employment” which states in the relevant sub clauses:

“10. Types of employment

10.1 Employees under this award will be employed in one of the following categories:

(a) full-time;
(b) part-time; or
(c) casual.


10.2 At the time of engagement, an employer will inform each employee of the terms of their engagement and in particular whether they are to be full-time, part-time or casual. Such decision will then be recorded in a time and wages record.


10.3 Full-time employees

A full-time employee is an employee who is employed in a classification in Schedule C—Classifications and engaged to work 38 ordinary hours per week, or, where the employee is employed on a roster, an average of 38 hours per week over the roster cycle.

10.4 Part-time employees

(a) A part-time employee is an employee who is employed in a classification in Schedule C—Classifications and who:

(i) is engaged to work fewer than 38 ordinary hours per week or, where the employer operates a roster, an average of fewer than 38 hours per week over the roster cycle; and
(ii) has reasonably predictable hours of work; and
(iii) receives, on a pro rata basis, equivalent pay and conditions to those of full-time employees who do the same kind of work.


(b) At the time of engagement the employer and the part-time employee will agree in writing on a regular pattern of work either:

(i) specifying at least the hours worked each day, which days of the week the employee will work and the actual starting and finishing times each day; or
(ii) specifying the roster that the employee will work (including the actual starting and finishing times for each shift) together with days or parts of days on which the employee will not be rostered.


(c) Any agreed variation to the hours of work will be recorded in writing.

(d) All time worked in excess of the hours as agreed under clause 10.4(b) or varied under clause 10.4(c) will be overtime and paid for at the rates prescribed in clause 23—Overtime.

(e) An employee who does not meet the definition of a part-time employee and who is not a full-time employee will be employed as a casual employee.

(f) A part-time employee employed under the provisions of this clause must be paid for ordinary hours worked at the rate of 1/38th of the weekly rate prescribed for the class of work performed.” 6

[16] By contrast the terms and conditions of employment for part-time employees under the terms of the proposed Agreement are dealt with, firstly, in sub clause 2.1.1 which relevantly indicates:

“The Employer will give all Employees on engagement a letter setting out the following:

(a) Employment Category (full-time/part-time, casual);

(b) Job Level (Level 1, 2, 3, 4 and Security Manager);

(c) Base Rate of Pay (Full-time/part-time, Casual Rate, and the Security Manager Salaried Rate);

(d) Roster Availability; and

(e) If you are employed after the date of operation of the Agreement, reference to a probationary period.” 7

[17] Sub clause 4.1.2 continues to set out the following arrangements for part-time employees under the heading, “What are the hours of work for a part-time Employee?”

“(a) The arrangement of hours of work for part-time Employees will be agreed in writing on commencement and implemented as follows:

A minimum of 4 hours per week and a maximum of 37 hours per week over an averaging period of up to 12 months;

Other than for unpaid breaks, a minimum of 4 hours per shift and a maximum of 12 hours per shift;

All ordinary time worked to be within a span of 12 hours per day;

A maximum of 10 consecutive days may be worked with 4 non-working days; and

Broken shifts may be worked with a maximum of one break of more than 1 hour between work periods per day, in which case an additional 2.5% loading will be paid on the hours worked after the break.

(b) Any agreed variation to the hours of work for a part time Employee will be recorded in writing.” 8

[18] Sub clause 4.2 “Reasonable Additional Hours” in the proposed Agreement also contains the following:

“4.2.1 What are reasonable additional hours?

Reasonable additional hours are hours in excess of clauses4.1.1, 4.1.2, or 4.1 .3 of this Agreement, will be confirmed in writing pursuant to Clause 6.4 -Individual Flexibility Agreement.

4.2.2 Are Employees required to work reasonable additional hours?

All Employees, other than those appointed as Security Managers under this Agreement, will be given at least 24 hours notice of the Employer's requirement to work reasonable additional hours unless both parties otherwise mutually agree to a lesser period of notice.

4.2.3 Are Employees paid an additional payment for working reasonable overtime hours?

All Employees who work overtime hours will be paid 50% in addition to the ordinary hourly rate for the first 2 hours of overtime and 100% in addition to their ordinary hourly rate for all hours worked thereafter.

4.2.4 Are Security Managers paid an additional amount for working reasonable additional hours?

No. Security Managers are paid a salary that is inclusive of working reasonable additional hours and any entitlement to be paid overtime penalties. Accordingly they will be paid their usual salary each pay period regardless of the actual hours worked in compensation for the exclusion of their overtime penalties. Where a manager does work overtime a review will be automatically conducted every 8 weeks to ensure the manager is better off overall than the minimum entitlements including overtime penalties provided by the Security Services Industry Award. Any deficit against their salaried amount will be paid in the next pay cycle.” 9

[19] Clearly, there are significant differences between the entitlements contained in the Award and those contained in the Agreement for part-time employees. The Award conditions are predicated on part-time employees having reasonably predictable hours of work. The same commitment is not reflected in the proposed Agreement, although it does indicate the arrangement of hours of work for part-time employees will be agreed in writing on commencement. The Award also provides that all time worked in excess of the hours originally agreed in writing, or as subsequently varied, will be overtime and paid at the overtime penalty rates in the Award. This entitlement does not exist in the Agreement.

[20] It follows that a comparison of the part-time provisions in the Award and the Agreement indicates the terms in the Agreement are less beneficial than those in the Award. This is of particular significance given the Agreement is intended to cover employees who are overwhelmingly to be engaged on a part-time basis.

[21] The particular area of disadvantage centres on the overtime entitlements in the Award that apply when hours are worked over and above those originally agreed to. Under the terms of the Security Services Industry Award those overtime entitlements are time and a half for the first two hours and double time thereafter. This entitlement does not exist under the proposed Agreement. Employees instead work additional hours on the basis of their normal hourly rate, at least until they have worked up to 38 hours in any week. The “reasonable additional hours” provision also means they can continue to work additional hours beyond 38 at the same hourly rate.

[22] I also have a further issue about the current application. As indicated, the Employer’s Statutory Declaration states that the majority of employees are to be engaged on a part-time basis. This was confirmed in the submissions provided by the Applicant in the proceedings. However, other submissions made in the proceedings seem to be at odds with what would normally be expected of arrangements concerning part-time work. In this context I refer, in particular, to the submissions indicating the average hours worked by the employees to be covered by the proposed Agreement are to be between 40 and 48, with an estimated average figure of perhaps 42.5 hours each week.

[23] This is a significant number of hours each week and seemingly at odds with the roster examples provided to the Commission, although it is acknowledged that they were indicated to be examples only. It was also submitted that employees will generally be required to work on every second weekend, and sometimes more often.

[24] In summary, I have concerns about a situation in which it appears employees are to be engaged primarily on a part-time basis, when the reality appears to be that the hours of work are anything but part-time in nature. In addition, a comparison of the wage rates in the Award and the proposed Agreement, based on an average working week of at least 42.5 hours each week, raises issues to do with the requirements of the “better off overall” test. This can be demonstrated by the following examples. They involve comparisons between the entitlements in the underlying Award and the proposed Agreement, based on the rates applicable in the Award at the time the Agreement was made. They do not include the increases to the Award rates that apply post 1 July 2015.

[25] Example 1

Under the terms of the proposed Agreement a Guard Level 1 employee employed on a weekly basis would have a weekly loaded hourly rate of $20.55, or a total rate of $873.37, based on a working week of 42.5 hours each week. Under the terms of the Security Services Industry Award a Security Officer Level 1 has an hourly rate of $18.95. When the overtime entitlement of time and a half for the first two hours beyond 38 hours a week and double time thereafter is factored in the total earnings for a working week of 42.5 hours would be $871.69, slightly less than what the Agreement provides for.

[26] Example 2

Under the terms of the proposed Agreement a Guard Level 2 employee employed on a weekly basis would have a weekly loaded hourly rate of $21.12, or a total rate of $897.60, based on a working week of 42.5 hours each week. Under the terms of the Security Services Industry Award a Security Officer Level 2 has an hourly rate of $19.50. Again, when the entitlement of time and a half of the first 2 hours beyond 38 hours a week and double time thereafter is factored in the earnings for a total working week of 42.5 hours would be $897, an amount almost identical to what would be earned under the Agreement.

[27] However, there are a number of other considerations to be taken into account in this comparison. For example, the ordinary time rates under the Award for weekend work are time and a half on Saturday and double time on Sunday, whereas the proposed Agreement contains a weekend loaded hourly rate that is significantly less than time and a half and certainly much less than double time. The Agreement also does not provide any additional penalty rate for work performed after 6 p.m. and before 6 a.m., whereas the Award provides an entitlement of at least 21.7% for work performed within these hours.

[28] In addition, the above examples are based on an average working week of 42.5 hours. The evidence indicates that up to 48 hours per week will often be worked. In such cases all of those additional hours would be required to be paid at double time under the terms of the Award, meaning the difference between the Award and the Agreement entitlements is accentuated. This also does not take account of the fact that under both the Award and the Agreement employees engaged on a part-time basis should have a designated number of hours each week, being less than 38 and agreed in writing on commencement. However, under the terms of the Award, but not the Agreement, all hours worked in excess of those agreed hours would be required to be paid at overtime rates.

[29] As indicated, the rates in the Agreement are also provided in place of the annual leave loading. There are also other areas where the terms and conditions contained in the proposed Agreement compare unfavourably with those in the Award. For example, the higher duties entitlement in the Agreement only applies after 4 hours has been worked, whereas in the Award it applies at the very least for all hours worked. The terms to do with provision and wearing of uniforms also fall into this category. It is also noted that the averaging arrangements in the proposed Agreement are based on a twelve month period, whereas under the terms of the Award this period is limited to a maximum of 8 weeks. The provisions to do with overtime can also be considered in this category. Under the terms of the Award overtime is an entitlement that arises when an employee has worked more than 38 hours a week, or in the case of a part-time employee when they have worked in excess of their agreed hours. However, under the terms of the proposed Agreement there is no mandatory entitlement in the same way as the Award and, instead, the provisions related to additional hours are subject to negotiation and agreement in regard to the applicable rates.

[30] There are also a number of other areas where the proposed Agreement is deficient when compared with the statutory requirements. A number of these matters have been raised in previous correspondence and in the hearing. In this context I refer, in particular, to the wording of the consultation clause, the leave entitlements provided for shift workers, the wording of the public holiday provision, and the circumstances in which employees can be required to work on public holidays.

[31] The issues to do with “Guard Managers” are also not resolved. I am still not satisfied about the nature of the entitlements to be provided to these employee who are to receive a salary in circumstances where the Commission does not have any understanding of what that salary entitlement involves, and where it is indicated to be “inclusive of working reasonable additional hours and any entitlement to be paid overtime penalties.”

[32] In coming to a decision in this matter I have considered whether the Commission might be prepared to accept any undertakings in response to the issues identified. These include the suggestion by the Applicant’s representative that a review or “automatic audit” be conducted every eight weeks to ensure any issues to do with compliance with the requirements of the “better off overall” test, and the minimum entitlements provided for by the Security Services Industry Award, have been satisfied. However, I am reluctant to consider this type of “self-regulation” mechanism given the issues highlighted in this decision, and some of the examples provided which indicate at the outset that the entitlements provided for under the proposed Agreement are inferior to those contained in the Award.

[33] Section 190(3) also provides that the Commission may only accept a written undertaking if satisfied that the effect is not likely to:

“(a) cause financial detriment to any employee covered by the agreement; or

(b) result in substantial changes to the agreement.” 10

[34] In all the circumstances I am not satisfied that it is appropriate to accept undertakings in this matter in an attempt to deal with the issues highlighted in this decision without also resulting in substantial changes to the proposed Agreement. I therefore do not believe it appropriate to consider or accept any undertakings that might be proposed.

[35] In conclusion, I have had regard to the statutory requirements that must be complied with in dealing with an application of this kind. I have also made reference to a number of issues concerning the terms and conditions contained in the proposed Agreement and those contained in the underlying Security Services Industry Award 2010. I am not satisfied in response that the Agreement meets the requirements of the “better off overall” test contained in s.186(6). I therefore decline to approve the Agreement. The application is dismissed.

COMMISSIONER

Appearances:

Mr Robert Graham of Worksite Resolutions appeared on behalf of the Applicant.

Hearing details:

2015.

Melbourne:

17 June.

 1   MA000016

 2   Fair Work Act 2009 (Cth) at s.186(2)(d)

 3   Ibid at s.193(1)

 4   Ibid at s.193(6)-(7)

 5   Transcript at PN140 - PN152

 6   Above n.i at 10

 7   Proposed RSS Personnel - Enterprise Agreement – 2015, at cl.2.1.1

 8   Ibid at 4.1.2

 9   Ibid at 4.2

 10   Above n.ii at s.190(3)

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