Sentinel Security Group

[2010] FWA 3250

[2010] FWA 3250

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement

Sentinel Security Group
(AG2009/14401)

COMMISSIONER LARKIN SYDNEY, 22 APRIL 2010

Application for approval of the Sentinel Security Group Enterprise Agreement 2009 – ss.186(6), no-disadvantage test – additional hours – preferred hours – undertakings provided – application refused.

[1] An application has been made for approval of an enterprise agreement known as the Sentinel Security Group Enterprise Agreement 2009 (the agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act). It has been made by First IR Consultancy Pty Ltd, bargaining representative, on behalf of Sentinel Security Group Pty Ltd, the employer. The agreement is a single-enterprise agreement.

[2] The agreement was made during the bridging period as defined in the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Act), accordingly, when considering whether to approve the agreement I have taken into account the provisions of Part 2–4 of Chapter 2 of the Act as modified by Schedule 7 of the Transitional Act.

[3] The application for approval of the agreement was heard on 27 January 2010. On that occasion the employer was represented by Mr D. Houlihan, First IR Consultancy Pty Ltd, as the bargaining representative.

[4] During proceedings I put to Mr Houlihan a number of concerns I held in relation to particular provisions of the agreement having regard to the legislative requirements for approval. Those issues were related to the requirements of ss.186(6) of the Act and the no-disadvantage test, being the relevant test during the bridging period.

[5] Subsection 186(6) of the Act requires Fair Work Australia to be satisfied that the agreement includes terms that provide for a procedure that requires or allows FWA or another independent person to settle disputes about matters arising under the agreement and which also allows for representation of employees. Clause 39 of the agreement, Settlement of Disputes, in its terms, appeared not to satisfy the requirements of s.186 (6) of the Act. In summary, clause 39 provided for employee representative by another employee and that the general manager’s decision, if referral to a private mediation provider did not resolve the dispute, would be final.

[6] In relation to the no-disadvantage test, during proceedings on 27 January 2010 the issues of concern were put to Mr Houlihan in detail. I will not elaborate upon those points in this decision as the transcript adequately reflects the issues. In summary, however, the issues concerned: ordinary hours of work, reasonable additional hours, payment for additional hours, preferred hours, rates of pay and penalties, allowances and annual leave provisions for shiftworkers. At the conclusion of the hearing Mr Houlihan sought leave to put further submissions on the points raised.

[7] Mr Houlihan filed further submissions on 15 February 2010. In what appeared to be a general submission in relation to the requirements of the no-disadvantage test, it was suggested that the test was to be applied to the work that is actually being performed at the relevant time. I do not accept that submission.

[8] In this particular matter, the work performed is security/concierge work and the agreement, at clause 3, states that the agreement applies to the employer and employees who perform work covered by the agreement. The duties performed by employees covered by the agreement, now and in the future, are outlined at clause 12, Classification Structure. The agreement provides for the employment of permanent and casual employees over a period of 24 hours, 7 days a week, now and into the future. It is not to the point that the employer’s operation is an existing business with existing employees working particular patterns of work. That is not the test. I acknowledge that currently there are two employees to be covered by the agreement performing concierge duties in office buildings. However, there is nothing in the agreement, nor should there be anything, that hinders the employer’s business from growing and changing depending upon future contracts and/or operational requirements of the business. I note that the agreement provides for the classification of security officer and that classification is required to hold a security license.

[9] The no-disadvantage test, as that test applies during the bridging period, concerns the Tribunal’s satisfaction that the agreement would not result, on balance, in a reduction in the employee’s overall terms and conditions of employment under the reference instrument. The relevant reference instrument is the Security Industry (State) Award, AN120497. That is the test that I will apply.

[10] The submissions filed on 15 February included comparative costing of work performed under the agreement to that of the reference instrument. The submission, in support of the argument that the agreement satisfied the requirements of the no-disadvantage test, relied upon the higher ordinary rate of pay for work performed on Monday to Friday, Saturday and Sunday, under the agreement to that of the reference instrument. It was submitted that this higher rate flowed through to paid leave and superannuation entitlements. It was further submitted that employees were not currently working 45 hours per week and, therefore, the higher base rate is even more advantageous.

[11] It was submitted that the agreement potentially allows for work to be performed 24 hours a day, 7 days a week. Under the agreement, it was submitted, employees working on weekends would receive at least the same if not a higher hourly rate than under the reference instrument. It was submitted that there were two “potential”shift loadings for ordinary time worked outside of the Monday to Friday span of 6am to 6pm under the reference instrument, being night span (normal) of 21.7% and night span (permanent night work) 30%. The submission outlined calculations of the dollar figure that would represent what payment employees would receive for work performed during the night and permanent night spans, on the basis of an assumption that an employee may work half their ordinary time as a shift worker and half as a day worker. The submission acknowledged, on the basis of these calculations, that there may be a potential disadvantage to an employee if they were permanent night shift workers. It was submitted that an undertaking could be accepted by the Tribunal on this point. No undertaking was provided.

[12] The agreement provides for a single rate of pay for 45 ordinary hours, which is comprised of 38 hours per week plus 7 additional hours. Subclause 13.1 of the agreement sets out the hourly rate of pay for ordinary or required hours, as follows:

Monday – Friday	Saturday	Sunday
Permanent	18.65 1	24.75	32.95
Security Guard	19.00	25.31	33.74
Security Officer
Casual
Security Guard	22.82	30.94	32.95
Security Officer	23.38	31.64	33.74

[13] On my calculations, the reference instrument 2 provides for the following entitlements for ordinary time work, night shift, permanent night shift, Saturday and Sunday ordinary time:

Basic hourly rate	21.7%	30%	50%	100%
Permanent
Grade 1	16.39	19.95	21.31	24.59	32.78
Grade 2	16.87	20.53	21.93	25.31	33.74
Casual
Grade 1	18.85	22.94	22.51	28.28	37.70
Grade 2	19.40	23.61	25.22	29.10	38.80

[14] I acknowledge that the agreement provides a higher hourly rate of pay to employees for basic ordinary time for hours worked on a 38 hour per week basis. On my calculations, I also acknowledge that the agreement’s 45 hours ordinary hours, if the extra 7 additional hours, at time and a half, are averaged over a roster period, is more beneficial to employees than the provisions of the reference instrument. However, the Sunday rate for a casual under the agreement is clearly less beneficial when compared to the reference instrument as are the night shift and permanent night shift loadings for permanent and casual employees. I can not assume that employees covered by the agreement will not work these hours to the extent that no-disadvantage would apply to them. The agreement does not provide for any mechanism that precludes any disadvantage to these employees. Further, the no-disadvantage test is not based on assumptions. An agreement, in my view, may satisfy the no-disadvantage test if a rate of pay, having regard to other provisions contained within the agreement, provides that an employee, on balance, will not be disadvantaged. However I am not satisfied, having regard to other provisions of the agreement and also the lack of any protective mechanism for employees covered by the agreement, that this agreement is such an agreement.

[15] The agreement provides for travelling allowances and the provision of uniforms. It was submitted that a number of allowances provided for by the reference instrument were not applicable to the employer’s operation, however, the employer would provide an undertaking in relation to leading hand, relieving officers, first aid, meal and broken shift/fares allowances. I will address these undertakings later in the decision.

[16] The agreement at clause 9, Additional Hours, provides that employees may be required to work reasonable additional hours in addition to ordinary hours. Ordinary hours under the agreement are 45 hours per week. The additional hours under the agreement are hours in excess of 45 hours per week. Under the agreement employees are entitled to time off in lieu of overtime. The time off in lieu must be taken within 13 weeks of the time worked, or a longer period if agreed, and if not taken payment is made at the rate provided for in subclause 13.6 of the agreement. It was submitted that the parties could agree to overtime/additional hours to be taken as time off in lieu and if not taken “it is paid out at a rate that is effectively the double time rate under the terms of the NAPSA and the APCS”. 3

[17] Subclause 13.6 of the agreement sets out the payment for additional hours as follows:

• Permanent employees are paid, per hour, $32.95 (Security Guard) and $33.74 (Security Officer) for additional hours worked.



• Casual employees are paid, per hour, $32.95 (Security Guard) and $33.74 (Security Officer) for additional hours worked.

[18] The overtime provisions contained within the reference instrument, for grade 1 and 2 classifications, provide for week day and Saturday overtime at a payment of time and one half for the first two hours and double time thereafter, Sunday is paid at double time and public holidays are paid at double and one half. On my calculations, the overtime provisions of the reference instruments would provide the following payments to an employee for working overtime (i.e. additional hours):

50%	100%	150%
Permanent
Grade 1	24.60	32.78	40.98
Grade 2	25.31	33.70	42.18
Casual
Grade 1	28.28	37.70	47.13
Grade 2	29.10	38.80	48.50

[19] An employee is clearly disadvantaged if he/she performs additional hours on a public holiday under the terms of the agreement. A casual employee is clearly disadvantaged if he/she works additional hours on a Saturday, after the first 2 hours of overtime and for additional hours worked on a Sunday and a public holiday.

[20] The submissions provided an analysis of earnings under the agreement when compared with the reference instrument. That analysis was based on a number of assumptions. The no-disadvantage test is not based on assumptions of what might or might not occur. The no-disadvantage test requires a comparison of the terms and conditions in the agreement against the terms and conditions of the reference instrument and an assessment of whether the agreement, on balance, would result in a reduction of the overall terms and conditions of employees to be covered by the agreement. The assumptions proposed by the submissions do not form part of the agreement.

[21] The public holiday provisions of the agreement, clause 16, provides for payment for work on a public holiday to be in accordance with clause 9, Additional Hours, of the agreement. Those rates are set out above. The reference instrument, at clause 24, provides a number of provisions in relation to public holidays, which include the application of the public holiday provisions to shiftworkers. The reference instrument requires that permanent and casual employees who work ordinary time or overtime on a public holiday are to be paid the rate of 150% in addition to the ordinary time rate for the classification. As can be seen from the above reference instrument calculations, employees would suffer a disadvantage in relation to payment for work performed on a public holiday. The submissions, in support of the argument that employees would not be disadvantaged, assumed that an employee would be required to work 4 public holidays. I can not assume that to be the case and the agreement has no term in support of the assumption.

[22] The agreement, at subclause 13.5, provides for a rate of pay where an employee enters into a preferred hours agreement in accordance with Appendix A to the agreement. If an employee elects to work preferred hours on a public holiday they are paid a loading of 150% on their respective rate in subclause 13.5. The rate of pay for preferred hours follows:

Monday – Friday	Saturday	Sunday
Permanent employees
Security Guard	$19.00	$19.00	$19.00
Security Officer	$20.00	$22.00	$22.00
Casual employees
Security Guard	$23.50	$23.50	$23.50
Security Officer	$24.00	$24.00	$24.00

[23] During proceedings and, in written submissions, Mr Houlihan put the following argument in relation to the preferred hours provision contained within the agreement:

“I’d prefer to put these in a full suite of written submissions, as a separate issue, but the nutshell of it is, effectively, that the tribunal is not necessarily required to turn its mind to a preferred hours arrangement so long as the preferred hours arrangement doesn’t undermine the operation of the agreement that may be in effect and that’s it (sic) not a matter that, necessarily, the tribunal should turn its mind to at the time of the certification hearing or the approval hearing in the tribunal as it is a matter that is explicitly provided for in terms of being an individual flexibility arrangement and that at all times the preferred hours clause that seeks to operate as an individual flexibility arrangement is required to pass the better off overall test. I will develop that and place that in written submissions to you.” 4

[24] Mr Houlihan’s written submissions on this point follow:

“With respect to the preferred hours provisions, we note that these provide an explicit form for the clause 4 individual flexibility arrangements, and that any employee entering into such an arrangement must receive the information and statements in relation to clause 4.

We note that the rates under the preferred hours arrangement are higher than the proposed Monday – Friday rate under the agreement. We note that currently, at the time that the NDT is to be conducted that the employer only has working hours for its employees that occur on a Monday – Friday basis. This means that the advantages to the employees described above is further increased if the employee works preferred hours on a Monday – Friday basis.” 5

[25] I do not accept the submissions. There is no basis for an argument that the tribunal is not required to turn its mind to this particular provision in the agreement, at the time of hearing an application to approve an agreement, on the basis that it involves an individual flexibility arrangement. Clause 4 of the agreement is a flexibility term. Subclause 4.6 states: “An example of the type of arrangement which can be entered into as part of this agreement is contained in Appendix A to this agreement, the preferred hours arrangements”.The remainder of the flexibility clause in the agreement appears to reflect the model clause and at subclause 4.2 it states: “The employer must ensure that the terms of the individual flexibility arrangement: …(c) result in the employee being better off overall than the employee would be if no arrangement was made”.This provision is not, in my view, an individual flexibility provision. A flexibility term in an agreement provides that an employer and an employee covered by the agreement may agree to make an individual flexibility arrangement that would vary the effect of the terms of the agreement. Appendix A does provide for an election by an employee of the times they would prefer to work on particular shifts and days, which cover Monday to Sunday and public holidays, however, the rate of pay for those times and shifts are set at a rate, in most cases, below the ordinary rate in the agreement and the reference instrument.

[26] In relation to the remainder of the submission, I have already outlined my view of the application of the no-disadvantage test previously in this decision. It is not to the point that the employer, currently, has working hours for employees that occur on a Monday to Friday. The agreement provides for a 24 hour, 7 day a week operation and there is no mechanism in the agreement that would restrict an employee’s work cycle to a Monday to Friday roster.

[27] The written undertakings filed with the above submissions on 15 February 2010 were signed by Chris Pavlis, authorised officer of Sentinel Security Pty Ltd. The written undertakings stated:

“Undertakings in relations (sic) to wages and allowances

1. That the rate of pay for a Security Guard Concierge working Monday – Friday will be $18.65

2. That the terms of clause 12.3 of the NAPSA apply as a term of this agreement (leading hands)

3. That the terms of clause 12.4 of the NAPSA apply as a term of this agreement (relieving officers)

4. That the terms of clause 12.5 of the NAPSA apply as a term of this agreement (first aid)

5. That the terms of clause 12.8 of the NAPSA apply as a term of this agreement (overtime meal allowance)

6. That the terms of clause 12.9 of the NAPSA apply as a term of this agreement (Fares allowance)

Undertaking in relation to definitions

That the definition of ‘7 day shift worker’ contained in clause 7.3 of the NAPSA is taken as the definition of Shift Worker for the purposes of s.87(1)(b)(ii) of the Fair Work Act 2009.

Undertaking in relation to the Dispute Settling Procedure

1. That at all times, a party to the dispute maybe (sic) represented by a representative of their choice.

2. That following the decision of the General Manager in clause 39.2(b), if the dispute is not settled, any party may notify Fair Work Australia for conciliation.

3. In the event that conciliation is unsuccessful, the parties authorise Fair Work Australia to settle the matter by arbitration.

4. That the settlement of disputes procedure is available for any matter arising under this agreement and in relation to the National Employment Standards.”

[28] The above undertakings, in relation to the agreement’s dispute settling procedure, would provide to an employee a choice of representation, a procedure that would be available for any matter arising under the agreement and in relation to the NES and for Fair Work Australia to settle a dispute. The undertaking does not address the agreement provision at paragraph (c) of subclause 39.2 and whether or not this undertaking is intended to make void that agreement provision. That provision provided that if there was not a resolution the parties may agree to a private mediation provider and if not the Company’s decision on the matter was final. I can only assume that it is the intent of the above undertakings that paragraph (c) of subclause 39.2 would have no application.

[29] The employer has provided an undertaking in relation to the definition of a 7 day shiftworker. The agreement was silent in this regard. Further, the annual leave provisions of the agreement only provided for an entitlement to 4 weeks calculated on an employee’s ordinary rate of pay at the time the leave is taken. The reference instrument provides for a period of annual leave of 5 weeks for a shiftworker. The reference instrument also outlines the payment to be received by an employee on annual leave. That payment is based on ordinary time rate, plus any relevant allowances and 17½% or the ordinary rate, plus relevant allowances, with a consideration of relevant span rates that would have been payable if the employee had not been on annual leave.

[30] The undertaking seeks to include the definition of a 7 day shiftworker as found in the reference instrument at subclause 7.3, which reads: “Seven Day Shift Worker means an employee who is regularly rostered by their employer to work ordinary hours on Saturdays and/or Sundays”,for the purpose of paragraph (b)(ii) of subsection 87(1) of the Act. Subsection 87(1)(b)(ii) of the Act provides for 5 weeks of paid annual leave if an enterprise agreement applies to the employee and defines or describes the employee as a shiftworker for the purposes of the NES. The undertaking does not of itself set out the definition of a 7 day shift worker. Reference must be made to the reference instrument definition of a 7 day shiftworker. However, I am prepared to accept that the undertaking seeks to include that definition and to provide for 5 weeks annual leave if an employee is a 7 day shiftworker.

[31] The undertaking does not address the payment for such leave, however, subclause 17.6 of the agreement provides for payment calculated on the employee’s ordinary rate of pay at the time the leave is taken, which it was submitted was a higher ordinary rate under the agreement and, therefore, if calculated on a per annum basis was a benefit to employees. The submission based these calculations on a 17½% loading and did not address any span loading and allowances, which may be relevant.

[32] The undertakings in relation to the allowances seek to incorporate a number of allowances contained within the reference instrument without setting out those provisions or the payment to be received by an employee if a particular allowance is relevant to that employee. Undertakings, as provided for pursuant to subsection 191(1) of the Act, are taken to be a term of the agreement. The terms of the above undertakings, in my view, would not provide to an employee any clarity of exactly what their entitlements under the agreement would be if the allowances were applicable to them.

[33] Section 190 provides that FWA may approve an agreement with undertakings. The section states:

“190 FWA may approve an enterprise agreement with undertakings

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) FWA has a concern that the agreement does not meet the requirements set out in sections 186 and 187.

Approval of agreement with undertakings

(2) FWA may approve the agreement under section 186 if FWA is satisfied that an undertaking accepted by FWA under subsection (3) of this section meets the concern.

Undertakings

(3) FWA may only accept a written undertaking from one or more employers covered by the agreement if FWA 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.

FWA must seek views of bargaining representatives

(4) FWA must not accept an undertaking under subsection (3) unless FWA has sought the views of each person who FWA 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.”

[34] The undertakings filed by the employer have not fully met the concerns I have raised in relation to the approval of the agreement associated with the no-disadvantage test (ss.186(2)(d)).While the undertakings addressed some issues raised they did not address other issues raised during the proceedings on 27 January 2010. Furthermore, as previously outlined in this decision, some undertakings were ambiguous. I am not satisfied that the effect of accepting those undertakings would not be likely to cause a financial detriment to any employee covered by the agreement.

[35] At the time of this decision and, after the above submissions were put, a Full Bench in Bupa Care Services Pty Ltd, P & A Securities Pty Ltd as trustee for the D’Agostino Family Trust T/as Michel’s Patisserie Murwillumbah and others 6(Bupa case) delivered its decision on the appeals lodged against a decision of Commissioner Smith and a decision of Commissioner McKenna. The Commissioners had refused to approve the agreements before them, which contained preferred hours provisions. I will not elaborate upon the decisions at first instance or the decision of the Full Bench in any detail. In summary, the Full Bench did not find error in Commissioner Smith’s application of the no-disadvantage test but found error in failing to consider a written undertaking from the employer. The Full Bench decision in relation to Commissioner McKenna’s decision also referred to a failure on the part of the Commissioner to give proper effect to the requirements in s.190 of the Act.

[36] I considered providing to Mr Houlihan the opportunity to put further material to me having regard to the Full Bench decision in the Bupa case, albeit in all probability he would be aware of the decision. There are two reasons why I decided not to take that course of action. First, I have outlined my concerns to the employer in relation to the no-disadvantage test and provided the employer with the opportunity to address those concerns. Written submissions were lodged on behalf of the employer and the employer provided the undertakings outlined above. Secondly, even if I were to provide to the employer a further opportunity to consider an undertaking in relation to the operation of the preferred hours provision in the agreement, it is my view, that, given the other areas of concern outlined in this decision, any further undertakings to address those concerns would result in substantial changes to the agreement.

[37] For the reasons I have given in this decision, I am not satisfied that the agreement passes the no-disadvantage test and therefore I decline to approve the agreement.

COMMISSIONER

Appearances:

Mr D Houlihan, First IR Consultancy Pty Ltd, for the applicant.

Hearing details:

Sydney:
2010.
January, 27.

Final written submissions:

2010.
February, 15.

 1   This figure in the agreement was $18.50. The employer provided an undertaking that figure should be $18.65. I will therefore use the increased rate in the table in those circumstances.

 2   The basic hourly rate for the reference instrument is found in the Pay Scale Summary, published 15 July 2008, by the Workplace Authority; casual loading under the reference instrument is 15%, the casual rate in the agreement incorporates a 25% casual loading.

 3   Written submissions filed 15 February 2010 at page 4, Overtime issues including TOIL.

 4   PN146.

 5   Written submissions filed on 15 February 2010 @ page 6, No-disadvantage test.

 6  [2010] FWAFB 2762.

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