Security Operational Service Pty Ltd

[2015] FWC 6374

[2015] FWC 6374

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Security Operational Service Pty Ltd
(AG2015/2371)

COMMISSIONER GREGORY MELBOURNE, 14 SEPTEMBER 2015

Application for approval of the Security Operational Service Pty. Ltd Employee Collective Agreement 2015.

[1] This application was made on 9 April 2015 by Mr Saeed Al-sayegh on behalf of Security Operational Services Pty Ltd seeking approval of the Security Operational Services Pty. Ltd Employee Collective Agreement 2015.

[2] The Employer’s Statutory Declaration provided in support of the Application indicates the proposed Agreement is intended to cover six existing employees, with three of those employees employed on a part-time basis and two engaged as casual employees.

[3] The Statutory Declaration also indicates the proposed Agreement contains some provisions that are more beneficial than those in the underlying reference instrument, being the Security Services Industry Award 2010. These are indicated to be the rates of pay contained in Part III of the proposed Agreement. The Statutory Declaration also indicates there are no terms in the Agreement that are less beneficial when compared with those in the underlying Award.

[4] The Commission subsequently wrote to Mr Al-sayegh on 4 May, after receiving the Application, to request a copy of the Notice of Employee Representational Rights given to employees, as this was not included with the application. Clarification was also sought about some apparent discrepancies in the voting process for approval of the Agreement. A response was received the following day which acknowledged the Application had mistakenly indicated the date on which the employees voted to accept the Agreement.

[5] The Commission subsequently forwarded further correspondence to the Applicant on 12 May seeking clarification about various aspects of the terms contained in the proposed Agreement. Reference was made to the following matters in this context.

• The Agreement does not make provision for a period in which ordinary hours are to be worked, and does not include the spread of ordinary hours contained in the Security Services Industry Award 2010.



• It does not provide for the additional penalty rate entitlements that apply in the Award for ordinary time work performed outside the Award spread of hours, being:

• Night – (6 p.m. – 6 a.m., Monday to Friday) – 21.7%,



• Permanent night – 30%,



• Saturday – 50%,



• Sunday – 100%,



• Public holidays – 150%.

• It does not contain provision for overtime penalty rate entitlements.



• It does not provide for any additional entitlements for part-time employees when they work beyond their previously agreed number of hours each week.



• It does not provide for any of the allowances contained in the Award.



• It does not contain any of the additional penalty rate entitlements in the Award that apply for ordinary time work performed on the weekends.

[6] The letter did acknowledge that the proposed Agreement contains wage rates that are in excess of those provided for in the Award. However, given the matters identified above it also indicated that it was difficult to conclude how employees, particularly those working outside of Monday to Friday/daytime hours, would be “better off overall” under the terms of the proposed Agreement. The Commission sought comment from the Applicant in response, and also requested that details of the actual rosters worked by employees be provided.

[7] The Applicant provided some details about its roster arrangements in response to this correspondence, however, the Commission decided to list the matter for hearing in order to seek clarification about various additional matters. Mr Chris Delaney from the Australian Security Industry Association Ltd appeared on behalf of Security Operational Services Pty Ltd.

[8] Mr Delaney submits the work carried out by the employees to be covered by the Agreement involves static guarding and gatehouse work at a single factory location. He also submits it primarily involved shifts on Monday – Friday during daytime hours, and weekend work is rarely, if ever, required. He also acknowledged the Agreement does not make provision for the allowances provided for in the Award, but submits they are generally not applicable, given the nature of the work performed.

[9] He also acknowledged the terms of the proposed Agreement provide for a single hourly rate for all hours worked, and do not contain additional overtime penalty rate entitlements when overtime is worked. However he submits overtime is only required to be worked on limited occasions, generally involving one occasion every two/three months, with around four hours being worked on each such occasion. He also acknowledged the Agreement does not provide for the same additional overtime entitlements for part-time employees as are contained in the Security Services Industry Award 2010.

[10] Part III of the Agreement sets out the rates of pay that are to apply. Two sets of rates are initially set out for “Full Time/Part Time employees.” The first scale of payments applies to full and part-time employees working “Monday to Sunday 24 hours including weekends and public holidays.” The second scale of payments applies to full and part-time employees working “Monday to Friday, Day and Night.”

[11] Mr Delaney acknowledged in his submissions that the first scale of payments for full and part-time employees would not satisfy the requirements of the “better off overall test.” Those rates in the Agreement are as follows:

Level 1 $24.78
Level 2 $25.47
Level 3 $25.90
Level 4 $26.34
Level 5 $27.17

[12] Mr Delaney proposed an undertaking could be provided that would replace those rates with the following new rates:

Level 1 $26.50
Level 2 $27.23
Level 3 $27.67
Level 4 $28.11
Level 5 $30.00.

[13] The remaining two wage scales in the Agreement are applicable to casual employees. The first of those applies to employees working “24 hour roster including weekends and public holidays.” The second is to apply to casual employees working “Monday through Friday, day and night.” Mr Delaney submits casual employees are only engaged on rare occasions at present. However, he again acknowledged the first table of rates for casual employees would be unlikely to satisfy the requirements of the better off overall test. Those rates in the Agreement are now as follows:

Level 1 $30.98
Level 2 $32.04
Level 3 $32.38
Level 4 $32.92
Level 5 $33.98.

[14] It was again submitted that an undertaking could be provided to replace those rates with the following new rates:

Level 1 $33.12
Level 2 $33.95
Level 3 $34.50
Level 4 $35.00
Level 5 $35.80

Consideration

[15] As indicated, the Commission has raised a number of issues to do with satisfaction with the requirements of the “better off overall” test in the context of this application. The proposed Agreement is essentially structured around what can be described as loaded wage rates, which are intended to be provided in place of a range of other entitlements that would apply under the underlying Security Services Industry Award 2010.

[16] The application was not supported by additional evidence. However, the submissions provided by Mr Delaney indicate work carried out by the employees who would be covered by the proposed Agreement is primarily performed on weekdays, and between the hours of 8 a.m. and 6 p.m. However, on occasions work is also required to be performed at other times, and overtime is also worked on limited occasions.

[17] Mr Delaney indicated he had not been involved in the drafting or development of the Agreement and had only recently been asked to assist in providing advice and representation about the application. To his credit his submissions acknowledged, without prompting, that some of the rates proposed are not sufficient to satisfy the requirements of the “better off overall” test. As indicated, he accordingly proposed two scales of revised rates to replace those now contained in the proposed Agreement, which would be supported by undertakings from the Applicant, if this were acceptable to the Commission.

[18] If the Agreement is to be approved it is obviously required to satisfy the requirements of the better off overall test. If the Commission has concerns it does not pass the test then it may accept a written undertaking and approve the Agreement.

[19] Section 190 deals with the provision of undertakings in relation to enterprise agreements and provides as follows:

“Application of this section

(1) This section applies if:

(a) an application for the approval of an enterprise agreement has been made under section 185; and
(b) the FWC has a concern that the agreement does not meet the requirements set out in sections 186 and 187.

Approval of agreement with undertakings

(2) The FWC may approve the agreement under section 186 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 employee covered by the agreement; or

(b) result in substantial changes to the agreement.

FWC must seek views of bargaining representatives

(4) The FWC must not accept an undertaking under subsection (3) unless the FWC has sought the views of each person who the FWC knows is a bargaining representative for the agreement.

Signature requirements

(5) The undertaking must meet any requirements relating to the signing of undertakings that are prescribed by the regulations.” 1

[20] The test time for the purpose of assessing whether the Agreement passes the test is also the date on which the application for approval is made. The Agreement passes the test if the Commission is satisfied, as at the test time, that each Award covered employee, and each prospective Award covered employee, would be better off overall if the Agreement applied to the employees, rather than if the relevant modern Award applied to the employees.

[21] The application of the test is also not to be applied as a line by line analysis. Rather, it is a global test and requires identification of terms in the proposed Agreement which are more beneficial to the relevant employees when compared to the Modern Award, and those which are less beneficial, and then an overall assessment of whether each relevant employee would be better off under the Agreement.

[22] Having reviewed the terms and conditions contained in the Agreement compared with those in the underlying Security Services Industry Award 2010 I have concluded that the Agreement does not satisfy the requirements of the better off overall test. I have come to this conclusion having particular regard to work performed outside of Monday – Friday daytime hours, given the absence in the Agreement of any additional penalty rate entitlements. Given the Agreement also appears to predominantly cover employees engaged on a part-time basis I also note it does not contain the same overtime entitlements as provided for in the Award.

[23] I also note the acknowledgement by the Applicant’s representative about the existing shortcomings in the proposed Agreement vis-a-vis the requirements of the better off overall test, and the amended wage rates scales that have been proposed in response. I have considered whether it is appropriate to accept an undertaking that those rates should apply instead of those originally proposed.

[24] As indicated, the Applicant now proposes that two of the four wage rates scales in the Agreement be replaced in their entirety with a new set of rates. The proposed new rates are generally around 7% higher than the rates originally proposed, although in some cases they are slightly less than this amount, and in one case involved increases of around 10%. These are significant increases in terms of what was originally proposed.

[25] Clearly, there is no issue in terms of the requirements in the Act when considering whether to accept the proposed undertaking in that it is not likely to cause financial detriment to any employee covered by the Agreement. However, I am satisfied that there is an issue in terms of whether the undertaking will result in substantial changes to the Agreement. In this context I have had regard to other relevant decisions of the Commission that might assist in the determination of this matter. In the decision in Kore Construction Pty Ltd 2, handed down by Deputy President Gostencnik in March last year involving an application for approval of the Kore Construction Enterprise Agreement 2013, the Deputy President also considered whether it was appropriate to accent various undertakings being proposed. He concluded:

“I have given a great deal of consideration to whether the undertakings that are offered should be accepted. Clearly the undertakings are designed to ensure that the Agreement, when read with the undertakings, would pass the better off overall test. However when one examines the proposed undertakings in their entirety it is clear that, taken as a whole, the undertakings result in substantial changes to the Agreement. The undertakings do not merely propose minor alterations to the Agreement or clarify the operation of the Agreement. They involve changes to the wage rates attached to classifications in the Agreement, the inclusion of substantive new provisions into the Agreement, and the inclusion of substantive allowances not previously provided for in the Agreement. The proposed undertakings are therefore not accepted.” 3

[26] The undertakings proposed in this matter also involve significant changes to the scale of wage rates in the Agreement. Apart from proposing to replace a number of those rates they also proposed increases to the rates of around 7%, and in one case of 10%. For these reasons I am satisfied they go beyond what might be considered to be minor alterations that clarify or correct the intended operation of the Agreement. In addition, I am not satisfied these would be the only undertakings necessary to ensure that the requirements of the better off overall test are met.

[27] In conclusion, for the reasons indicated above I am not satisfied that the Agreement passes the better off overall test. I also consider that it is not appropriate to accept the undertakings now being proposed. Consequently, the application for approval of the Agreement is dismissed.

COMMISSIONER

Appearances:

Mr Chris Delaney of the Australian Security Industry Association Ltd appeared on behalf of the Applicant.

Hearing details:

2015.

Melbourne and Sydney (by telephone):

4 September.

 1   Fair Work Act 2009 (Cth) at s.190

 2   [2014] FWC 1955

 3   Ibid at [32]

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