Secom Australia Pty Ltd

[2014] FWC 9097

[2014] FWC 9097

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Secom Australia Pty Ltd
(AG2014/7612)

COMMISSIONER GREGORY MELBOURNE, 16 DECEMBER 2014

Application for approval of the Secom Security Australia Employee Enterprise Agreement 2014-2017.

Introduction

[1] An application has been made for approval of an enterprise Agreement known as the Secom Security Australia Employee Enterprise Agreement 2014-2017 (“the Agreement”). The application was made pursuant to s.185 of the Fair Work Act 2009 (“the Act”) by Secom Australia Pty Ltd (“Secom”). It is a single-enterprise Agreement.

[2] The application for approval of the Agreement was lodged on 23 September 2014 by Secom. The Employer’s Statutory Declaration provided in support of the application indicates the Agreement covered 168 employees at the time of filing. It also indicated 116 employees had voted in the ballot when the Agreement was put up for approval, with 88 voting in favour.

[3] United Voice was a bargaining representative for the Agreement and has given notice under s.183 that if the Agreement is approved it wants to be covered by it. However, it’s F18 Statutory Declaration indicated it did not support approval of the Agreement, and set out a series of grounds in support of its objection. It has continued to maintain its opposition to approval of the proposed Agreement.

[4] The Commission subsequently wrote to Secom seeking a response to the issues raised by United Voice in its F18 Statutory Declaration, and a detailed response was received on 4 November. Secom indicated in that response it believed the proposed Agreement met the requirements of the “better off overall” test. It also indicated,

“Secom would like to state that this Agreement is a result of extensive negotiations with the employees and United Voice over a period of almost 2 years and was overwhelmingly voted for by the employees.” 1

[5] A copy of Secom’s response was provided to United Voice who indicated it continued to oppose the approval of the Agreement. The application was therefore set down for hearing on 24 November. Mr Tim McDonald from Moray & Agnew Lawyers was granted leave to appear on behalf of Secom under s.596(2)(a) of the Act on the basis that the application involved a degree of complexity and his involvement might assist in enabling it to be dealt with more effectively. Mr Stefan Russell-Uren from the ACT branch of United Voice appeared on behalf of the Union. He also indicated he was authorised to appear by the National Office of the Union, and by both the New South Wales and ACT branches.

[6] The parties made some initial submissions in those proceedings. However, a question then arose about whether both parties were working from the same documentation and had the same copy of the proposed Agreement. It was therefore agreed the proceedings be adjourned to enable this question to be resolved. It was also agreed that the Commission would issue directions about the filing of further submissions with the intent of enabling it to determine the matter. The Commission issued those Directions later that day. They provided:

“1. The Applicant’s representative will by close of business tomorrow, 25 November 2014, provide a copy of the proposed Agreement to United Voice. In addition, the parties will, if necessary, confer to ensure that each has all copies of other relevant documents and/or correspondence.

2. United Voice will by close of business on Friday, 28 November 2014, provide any further submissions it wishes to make in regard to the application for approval of the proposed Agreement. Copies of those submissions will be provided to the Commission and to the Applicant’s representative.

3. The Applicant will by close of business on 2 December 2014 provide any further submissions it wishes to make in support of the application.

4. The Commission will then proceed to determine the application. In doing so it will give consideration to whether the matter can be determined on the basis of the submissions already provided, or whether a further hearing is required. It will take into account the views of the parties in terms of how the matter proceeds.

N.B. if either party believes it requires further time in which to provide its submissions it should advise the Commission accordingly.” 2

[7] Both Secom and United Voice provided submissions in accordance with these directions. United Voice continues to oppose the application for approval of the Agreement.

The Evidence and Submissions

[8] Both parties provided some general comments about the application for approval of the proposed Agreement, and also made submissions going to particular aspects of the terms and conditions contained in the Agreement. The following paragraphs detail both the general and specific submissions provided by each party in regard to these various matters.

General submissions

[9] United Voice submits that the proposed Agreement is underpinned by a “philosophical outlook” that employees should be excluded from the underlying benefits of the Award, being the Security Services Industry Award 2010. It submits that this intent takes effect immediately the Agreement is approved and becomes more pronounced over time.

[10] It also submits the terms and conditions contained in the Agreement fall well below the requirements of the “better off overall” test and accordingly the application for approval should be dismissed. It also submits there is “a neat distinction within the better off overall test,” and continues to state:

“12. On the one hand the Section 193(1) requires the Commission to evaluate whether or not the terms and conditions will leave the employees better off. On the other hand the Commission would fall into error if it considered the prospective position of the workers through the lens of how the terms and conditions might influence an employer to act in the future.

13. The submissions advanced by the Applicant assess the agreement's terms and conditions in the context of how the employer might act in the future. That is; the employees will only be better off if the employer acts in a certain way.

14. In the alternative the submissions do not address the comparison between the agreement and the award at the test time instead they examine the position in 16 weeks.” 3

[11] Secom rejects these submissions. It submits that United Voice appears to object, in principle, to the concept of enterprise bargaining, despite the objective in the Fair Work Act 2009 to encourage such outcomes. It also rejects the Union’s submission that Secom is embarking on a deliberate strategy to exclude the operation of the underlying Security Services Industry Award 2010. It submits instead that the terms of the Agreement in sub clause 1.3.3 “Relationship to Award” simply set out the intended operation of the legislative framework in that a Modern Award does not continue to have application when an enterprise agreement indicates it operates in place of the Award. Sub clause 1.3.3 states:

“Relationship to Award

This Agreement is intended to stand alone and cover all terms and conditions of employment of the Employees and applies to the exclusion of the provisions of the Security Services Industry Award 2010 and any other award or agreement which may have application to the parties from time to time.” 4

[12] Secom also submits:

“The Objector wrongly characterizes the Applicant's position at paragraph 13 of its Final Submissions that ‘employees will only be better off if the employer acts in a certain way’. The Applicant's submission is the opposite, that the Agreement should be assessed against the better off overall test (BOOT) at the test time, as per s.193(1) and s.193(6) of the FW Act, having regard to the working pattern and arrangements which the employer has in place. Such an approach is conventional and well settled, and is consistent with the authorities referred to by the Objector in its Final Submissions.” 5

[13] Secom continues to submit,

“The Objector states at paragraph 14 that ‘the submissions do not address the comparison between the agreement and the award at the test time instead they examine the position in 16 weeks.’ We consider that this 16 week period is relevant at the 'test time' for this Agreement. It is reasonable for the Applicant to average hours in this way, particularly given that clause 21.1 of the Award (to which the comparison has to be made) also permits the employer to average an employee's hours of work over a roster cycle of up to 8 weeks.” 6

[14] Secom also submits that United Voice has made reference to specific provisions in the Agreement without comparing the Agreement as a whole against the Award, as the “better off overall” test requires. It also submits that the Agreement is similar in its structure and framework to the Agreement that is currently in place and was previously approved when assessed against the then “no disadvantage test.”

Specific Issues

Annual Leave and Accruals

[15] United Voice submits the approach of building an amount in respect of leave accruals into the wage rates is “fundamentally flawed.” 7 It also submits it is a future obligation which is “intangible and inexact,” and should not be taken into account for the purposes of the “better off overall” test. It also submits that under the Award annual leave loading is payable, whereas this is not the case under the Agreement.

[16] Secom submits in response that United Voice is under a “misapprehension” in suggesting a loaded rate, which encompasses various other entitlements, cannot be considered in any “better off overall” test assessment. 8 It submits that under the terms of the proposed Agreement employees receive a loaded rate which compensates for weekend and shift penalties, as well as 7 hours of overtime each week. It also submits the employees receive this loaded rate while on leave, providing an additional benefit to them in circumstances where annual leave would otherwise be payable at the base rate when taken.

[17] These provisions are set out in sub clause 3.2.2 which states:

“What do the wage rates include

Subject to clauses 3.2.3, 4.2.3 and 5.6.1, the rates of pay set out in clause 3.2.1 of this Agreement include payment for weekend penalty rates, and overtime penalty rates for up to 7 reasonable additional hours per week.” 9

[18] Sub clause 4.2.3 “payments for additional hours” states:

“Employees other than casual employees who work hours in excess of the hours provided for in clauses 4.1.1, 4.1.2 or 4.1.3, as applicable, will be paid a loading of 50% in addition to the ordinary rate of pay as set out in 3.2.1 for the first 2 hours of overtime and a loading of 100% in addition to their ordinary rate of pay and set out in 3.2.1 for all hours worked thereafter. Provided that:

(a) all additional hours worked on a Public Holiday will be paid in accordance with clause 5.6.1; and

(b) all additional hours worked where less than 7 days’ notice of the requirement to work the additional hours has been provided will be paid at a loading of 100%.” 10

[19] Secom also submits that if an employee works extended shifts, i.e. a 12 hour shift, leave will be accrued and taken on the basis of those hours, whereas under the Award the taking and accruing of leave would be based upon 7.6 hours. It submits this again provides an additional benefit to the employees to be covered by the Agreement.

Monday to Friday

[20] United Voice submits the comparisons made by Secom between the day rate for work on Monday – Friday in the Agreement and the Award are “critically flawed.” 11 It submits the spread of hours in the Agreement does not take account of the fact the night shift loading would be payable for the first and last hours of that shift. It also submits it does not take account of the fact that double time would apply for hours worked in excess of 40 under the terms and conditions contained in the Award. United Voice also submits that in the table provided in support of its submissions Secom have used a rate of $26.13, when the actual rate is $20.41.

[21] Secom submits in response that its proposed daytime rosters will not fall outside of the Award 6 a.m. to 6 p.m. spread. It maintains that no employee will be required to commence work at 5 a.m., for example. It also makes reference to what it considers to be a “more relevant example” of a roster that will be worked. 12 This involves 12 hour shifts worked from 6 a.m. to 6 p.m. between Monday and Friday. In such a case overtime would be payable for hours in excess of 45 hours per week, with the loaded rate applying up to that point.

The Loaded Rate

[22] United Voice submits the proposed loaded rate of pay excludes weekend penalty rates. It also submits the part-time employment provisions potentially enable Secom to engage part-time employees to work only at the weekends, and thereby avoiding the weekend penalty rates which would otherwise be applicable.

[23] It continues to submit that on a proposed 45 hour roster the Agreement would result in a significant reduction in wages vis a vis the terms and conditions contained in the Security Services Industry Award 2010. This could arise, for example, in a situation where employees are only rostered to work over Thursday, Friday, Saturday and Sunday. United Voice estimates that at any of the five classification levels in the proposed Agreement employees would be more than $90 worse off per week if such a roster pattern was worked when the provisions applying in the Agreement are compared with those in the underlying Award.

[24] Secom, firstly, submits in response that there are only 7 part-time employees currently employed under the terms of the proposed Agreement, and none of those are engaged for the purpose of working on weekends only. It also submits that in the event part-time employees are employed in the future to work at weekends, which is not currently proposed in any event, they would be considered to be a shift worker by virtue of the fact that they are regularly working on a Sunday, and would therefore be entitled to additional penalty rates as a consequence.

[25] Secom also submits the hypothetical roster used as an example by United Voice, and involving a working week of 45 hours rostered over Thursday to Sunday, is not used by Secom. It also submits the actual 4 on/4 off rosters that it does utilise have been set out and explained in detail already. A further example of that roster pattern was attached to its written submission. As indicated in that example it involves a roster which operates over a sixteen week period, and includes an amount of overtime and some Saturday and Sunday rosters as part of that overall roster cycle. Secom continues to submit that the weekend and overtime rates that would apply under the Award to such rosters do not provide the same level of benefits as under the proposed Agreement when viewed across the totality of this 16 week roster period.

Permanent nights

[26] United Voice again submits the permanent night shift rosters proposed under the terms and conditions contained in the Agreement would leave employees at each classification level more than $100 worse off when compared to the those employees working the same rosters and employed under the terms and conditions contained in the Security Services Industry Award 2010. It also notes that a higher rate applies to night shifts worked on Saturday and Sunday under the Award.

[27] Secom again submits that the roster scenario highlighted by United Voice is not a roster pattern that it utilises. It submits instead that the rosters, which are now in place under the current Agreement, involve employees being rotated on a 4 on/4 off basis so that an employee working Thursday to Sunday in one fortnight then works on different days in the next rotation. This again is demonstrated in the sample roster provided in conjunction with its written submission. Secom continues to submit that no employee is rostered to work on every weekend and no employee works a regular Thursday to Sunday roster each week. The example provided, in fact, indicates that the rosters begin on a certain day in the week, with the next roster then commencing on the following day in the next week so that employees are continually being rostered to work on different days in each week.

Casual employees

[28] UnitedVoice submits casual employees are also detrimentally impacted under the terms of the proposed Agreement. It submits that this occurs because of their exclusion from an entitlement to overtime and weekend penalty rates. It submits by way of example that a casual employee could be rostered to work “14 consecutive 12 hour shifts and not be paid a cent of overtime.” 13

[29] Secom submits in response:

“The Applicant employs around 21 casual employees and denies that its casual employees would be directed to work 14 consecutive shifts. As per clause 4.1 of the Agreement, the maximum number of consecutive shifts for full-time or part-time employees is 10. The Applicant considers that this would also be standard practice for casual employees. Due to the fact that casuals work irregular shifts and days, it is not possible to accurately forecast the hours of work or estimate the wages over a roster cycle.

The Applicant has, however, assessed the hours of its casual employees over a period of 8 weeks from 22 September 2014 to 16 November 2014, and the average working hours are 24 hour per week (see attached casual hours spreadsheet). We note that an employee who works in excess of 4 consecutive Sundays in a roster cycle will be paid a loading of 200% according to clause 3.2.3 of the Agreement.” 14

[30] That sub clause states:

“Where an Employee works more than four consecutive Sundays on a roster cycle, the Employee will be paid for all work on consecutive Sundays in excess of four at the rate of 200% of the Employee’s Ordinary Rate of Pay.” 15

[31] Secom concludes by indicating:

“As has already been noted, the Objectors conclusions are based on assumptions and hypothetical scenarios rather than the Applicant’s working pattern and arrangements. When regard is had to these working patterns and arrangements it is clear that the Applicant’s employees are better off overall and it is not surprising that they have voted so overwhelmingly to approve the Agreement.” 16

Consideration

[32] I have given detailed consideration to this application. In doing so I have had the benefit of the various calculations and modelled scenarios that had been provided by both parties. The Commission has also carried out its own assessments in an endeavour to understand how the provisions contained in the Agreement will apply in practice, and what would apply if the employees were employed under the terms and conditions contained in the underlying Award, being the Security Services Industry Award 2010.

[33] The submissions indicate that the Agreement was negotiated over an extended period. When finally put to a vote it was overwhelmingly supported by a majority of the employees who elected to participate in the vote. However, United Voice, which was a bargaining representative for the Agreement, has indicated its strong opposition to the Agreement being approved. Its submissions centre on two particular areas of concern. Firstly, the use of loaded wage rates in the Agreement, which include payments in respect of overtime and other penalties. Secondly, it has provided modelling of various rosters, which in its submission demonstrate that the proposed Agreement provisions, when compared with those contained in the Award, fail to satisfy the requirements of the “better off overall” test.

[34] Secom rejects these arguments. It refers, firstly, to the decision of Commissioner Asbury in Samphie Pty Ltd T/A Black Crow Organics 17 when she stated:

“Thus an agreement provision which considered alone may be less beneficial to an employee when compared with an equivalent provision in a relevant reference instrument, will not result in the agreement failing the no-disadvantage test, if there are other more beneficial provisions in the agreement, which on balance, offset the less beneficial provision. For example, an agreement which provides for employees to be paid a flat hourly rate for all hours worked, may not disadvantage those employees if the flat hourly rate is higher than the base rate in the relevant reference instrument. The payment of a loaded rate for all hours worked is an advantage that may offset the disadvantage associated with the entitlement of the employee under a reference instrument to be paid overtime rates for some hours worked. It may also be relevant for the purposes of the no-disadvantage test that a flat hourly rate feeds into leave entitlements under an agreement, so that those entitlements are paid in a way that is more beneficial than the terms of the relevant reference instrument.” 18

[35] It also submits that the proposed Agreement, and the way in which it is structured, is similar in its framework to the Agreement which currently covers the parties.

[36] Secom also submits in broad terms that in using examples to oppose the approval of the Agreement on the basis that it does not satisfy the requirements of the “better off overall” test United Voice has, firstly, chosen what might be described as “worst-case” examples to try and make its point. It also submits they are not accurate or relevant examples because they are not roster patterns that are put in place or utilised by Secom. It therefore submits that they give a totally misleading picture of the true position.

[37] Secom also notes that its assessments are based upon a full roster cycle over the 16 week period and comparisons based on a single week roster are inappropriate and misleading. It also notes that rosters are prepared and published well in advance, rather than being provided to employees on a week by week basis

[38] In dealing with this matter the Commission has proceeded, in accordance with the framework set down in the Act, on the basis of that an enterprise agreement passes the “better off overall” test if, at the test time, the Commission is satisfied that each Award covered employee, and prospective Award covered employee, will be better off overall under the Agreement compared to the applicable Modern Award. The test time is the point in time when the application for approval of the Agreement was made. The intention of the test is to establish whether the Agreement will, on balance, reduce the overall terms and conditions of employment of the employees that will be covered by it. It is a global test. Accordingly, when considering an application for approval, a judgement is required to be made about whether, taken as a whole, the totality of the benefits provided under the Agreement make up for any loss of Award conditions or entitlements.

[39] The relevant authorities have also established that the test is to be applied objectively, having regard to all of the relevant provisions of the Agreement and the underlying Award at the test time. The Commission is then required to be satisfied that the employees would be “better off overall”.

[40] As indicated, the Commission has endeavoured to develop its own understanding of how the terms and conditions in the proposed Agreement would apply in practice. It has also sought to gain an understanding about how those provisions compare with the terms and conditions contained in the Modern Award. The Agreement, firstly, proposes to cover full-time, part-time and casual employees working as Security Officers. The Modern Award, being the Security Services Industry Award 2010, has also been excluded by the terms and conditions contained in the Agreement.

[41] Under the terms of the Agreement full-time employees work an average of 38 ordinary hours per week over a roster cycle, with a minimum of 7.6 hours and a maximum of 12 hours per shift. A part-time employee will work 37 hours per week averaged over 8 weeks, with a minimum of 4 hours and a maximum of 12 hours per shift. The hours of work for a part-time employee are to be set out in the letter of offer at the commencement of employment. Casual employees work a minimum of 4 hours and a maximum of 12 hours per shift and are paid a loaded rate prescribed in clause 3.2.1.

[42] The Agreement incorporates pay for 7 hours of overtime and weekend penalties, where less than four consecutive Sundays are worked. If four or more consecutive Sundays are worked in a roster cycle then employees are to be paid a double time penalty for any hours worked on the fourth Sunday and thereafter. Part-time and full-time employees who work beyond these ordinary specified hours are to be paid overtime rates of time and a half for the first two hours and double time thereafter. All overtime, where 7 days notice is not provided for, is to be paid at double time. Casual employees do not have an entitlement to overtime.

[43] The Agreement provides for various hourly rates. A rate for full-time and part-time employees working from Monday to Friday. A loaded rate for those working Monday to Sunday, which is inclusive of shift penalties and weekend penalties when less than four Sundays are worked in the roster. A casual loaded rate and, finally, a permanent night rate for full-time and part-time employees.

[44] The assessments that have been carried out are based on the rosters that Secom submits are those utilised by it and they do appear to indicate that employees will be “better off overall” under the terms of the proposed Agreement, providing they continue to work to those roster patterns. It is also noted that leave entitlements and superannuation payments are to be based on the actual hours worked by employees, instead of the Award 38 hour week, which will also provide an additional benefit to the employees. At the same time the modelling also indicates that if existing roster patterns are not maintained, or if employees work additional hours beyond those rostered, then the situation could be different.

[45] I am also satisfied that there is no in principle objection to an Agreement being structured around the provision of loaded wage rates, which encompass other entitlements, and requires an assessment to be made over an extended roster pattern in order to gain an accurate impression about how those arrangements impact on the employees.

[46] However, as United Voice emphasises there is no guarantee that Secom will continue to roster employees in the same way, and different roster patterns or different start/finish times could mean the requirements of the “better off overall” test are no longer satisfied.

[47] I therefore propose to give further consideration to approving the Agreement if the Applicant agrees to provide certain undertakings that have been set out below. In proposing these undertakings I am satisfied that they will not cause financial detriment to any employee covered by the Agreement, or result in substantial changes to the agreement, if Secom agrees to provide them.

[48] In accordance with the requirements of s.190(4) of the Act copies of the proposed undertakings will also be provided to each person who the Commission understands is a bargaining representative for the Agreement.

[49] Secom now has 7 days from the date of this decision to consider whether it will provide these undertakings. The Act also requires that any views provided by the bargaining representatives be considered before undertakings are accepted and this will be done. Accordingly, in the event that the undertakings are provided I will then give further consideration to whether I will approve the Agreement. In the event that the undertakings are not forthcoming the application for approval of the Agreement will be dismissed.

[50] The proposed undertakings are as follows.

• Secom undertakes that the proportion of employees engaged at the different classification levels contained in the Agreement will remain close to their existing levels during the life of the Agreement.



• Secom undertakes that employees engaged on day work performed on Monday to Friday will only be rostered for ordinary time hours between 6 a.m. and 6 p.m.



• Secom undertakes that employees will continue to be rostered on roster patterns that continually rotate through different days of the week. No employee will be rostered to work on the same days in each week.



• Secom undertakes that casual employees will continue to be engaged in a similar manner and at similar times to what has occurred, by way of example, in the period from September 2014 to November 2014.

COMMISSIONER

Appearances:

Tim McDonald of Moray & Agnew appeared on behalf of the Applicant.

Stefan Russell-Uren appeared on behalf of United Voice.

Hearing details:

2014.

Melbourne, Canberra and Sydney by video:

24 November.

Final written submissions:

The Applicant provided written submissions on 24 November 2014.

United Voice provided written submissions on 26 November 2014.

The Applicant provided written submissions in reply on 3 December 2014.

 1   Letter from Mark Izzard to Commissioner Gregory dated 4 November 2014 at page 3

 2   Directions issued by Commissioner Gregory on 24 November 2014

 3   Final Submissions of United Voice dated 26 November 2014

 4   Secom Security Australia - Employee Enterprise Agreement 2014-2017 as submitted to the Commission for approval on 23 September 2014 at clause 1.3.3

 5   Letter from Moray & Agnew to Commissioner Gregory dated 3 December 2014 at para 5

 6   Ibid at para 7

 7   Above n.iii at para 15

 8   Above n.v at para 16

 9   Above n.iv at clause 3.2.2

 10   Ibid at 4.2.3

 11   Above n.iii at para 23

 12   Above n.v at para 23

 13   Above n.iii at para 35

 14   Above n.v at para 29-30

 15   Above n.iv at cl.3.2.3

 16   Above n.v at para 31

 17   [2010 ] FWAA 5060

 18   Ibid at [21]

Printed by authority of the Commonwealth Government Printer

<Price code C, PR559079>