Serco Sodexo Defence Services

[2013] FWCA 9760

[2013] FWCA 9760

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Serco Sodexo Defence Services
(AG2013/10591)

SERCO SODEXO DEFENCE SERVICES PTY LTD NEW SOUTH WALES SERVICES AGREEMENT 2012 (EXCLUDING SHOALHAVEN)

Miscellaneous
COMMISSIONER GREGORY	MELBOURNE, 20 DECEMBER 2013

Application for approval of the Serco Sodexo Defence Services Pty Ltd New South Wales Services Agreement 2012 (excluding Shoalhaven).

[1] Serco Sodexo Defence Services Pty Ltd (SSDS) have made application for approval of the Serco Sodexo Defence Services Pty Ltd New South Wales Services Agreement 2012 (excluding Shoalhaven). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act). The proposed Agreement is a single-enterprise agreement that covers more than 600 employees involved in providing various service lines including accommodation/clerical, domestic services, food and beverage, grounds, pool and recreation, security, stores and transport at various defence force locations in New South Wales.

[2] There are eight Modern Awards that cover the employees intended to be subject to the proposed Agreement as well as several other pre-reform awards. During the process of negotiation of the proposed Agreement thirty-six instruments appointing employee bargaining representatives were received by SSDS and four Unions were also involved as bargaining representatives on behalf of employees.

[3] The F18 declaration provided by United Voice, New South Wales Branch indicated support for approval of the Agreement and did not make reference to any grounds of objection to its content. However, the declarations received from the National Union of Workers, the Transport Workers’ Union of Australia and the Liquor, and Hospitality Division, United Voice NSW Branch each indicated they had grounds of objection about the content of the proposed agreement or the statutory declaration provided by SSDS in support of its approval.

[4] The matter was listed for hearing on 22 November 2013. Each of the Union bargaining representatives were involved in these proceedings, along with twenty-seven of the individual employee bargaining representatives variously located at the Singleton, Williamtown and Moorebank sites. A range of issues were raised by the Union bargaining representatives, in particular, in these proceedings and submissions provided in response by SSDS. It also requested further time to respond to matters raised by the National Union of Workers, in particular, which had not previously been foreshadowed and the Commission subsequently received further correspondence from SSDS on 29 November 2013 which responded to a number of these matters in more detail. I now turn to deal with various issues raised by the application, based both on my assessment of the proposed Agreement and issues raised by the bargaining representatives. These primarily concern whether it satisfies the requirements of the better off overall test.

The Term of the Agreement

[5] The Liquor and Hospitality Division of United Voice NSW Branch raise an issue about the proposed term of the Agreement. This issue arises in large part because of the time taken to first negotiate the Agreement and then have approved what is a detailed and expansive Agreement covering a broad range of operations and activities at various different locations. Clause 4 of the Agreement states it has a three-year term from the date of approval, meaning if approved now the nominal expiry date would be December 2016. However, the terms of the Agreement in clause 7 only provide for wage increases in either September/December 2012 and 1 December 2013 and 2014, meaning post December 2014 there is a period of 24 months with no provision for a wage increase.

[6] SSDS subsequently volunteered an undertaking on SSDS letterhead on 21 November 2013 providing that the nominal expiry date be 30 November 2015, instead of “... 3 years after its commencement”. 1 This confirmed an earlier undertaking made in the Employer’s F17 Declaration and later confirmed again by letter dated 18 December 2013. Any wage increases for 2015 and thereafter can accordingly be part of the negotiations for any new agreement. United Voice submits it is “happy to agree to a two-year term as long it's appropriate and it fits our members requirements.”2 The undertaking has been circulated to the Union and employee bargaining representatives and I am satisfied it does not cause any financial detriment to the employees proposed to be covered by the Agreement. It also aligns the term of the Agreement with the wage increases provided for during its life. To that extent I am also satisfied the undertaking does not result in a substantial change to the Agreement. The undertaking will accordingly be attached to and taken to be a term of the Agreement. A copy if also attached to this decision.

Deductions from Wages

[7] Sub clauses 10(a) “Uniforms and Personal Protective Equipment (PPE)” and 22(5)(a) “Termination by an Employee” of the proposed Agreement contain provision for potential deductions from wages. This could occur in the first instance if uniforms supplied to employees are not returned on termination and, secondly, if the requisite notice is not provided by an employee on termination of employment.

[8] This issue was raised by the National Union of Workers, in particular. It submits such provisions are not found in the underpinning awards and could expose employees to obligations amounting to “thousands of dollars,” and “... leave a class of employees far worse off than they would have otherwise been were they employed under the underpinning award.” 3 It submits this issue could of itself result “...in this agreement falling well below what the underpinning award provides for.”4

[9] The National Union of Workers also referred to a decision of then Commissioner Gooley in Radploy Pty Ltd T/A Lake Imaging 5(Radploy). In that matter the proposed agreement could require an employee to enter into a deed to require reimbursement of “professional training or the employer meeting recruitment costs”6 if the employee resigns within a stipulated time period. The submissions from the employer indicated the training costs, in particular, “can be as high as $40,000.”7 Commissioner Gooley concluded:

“Despite the substantial increases provided for in the Agreement and the other benefits afforded employees under the Agreement, taking into account clause 22 and the other less beneficial provisions in the Agreement, I am unable to be satisfied that the Agreement provides that each award covered employee and each prospective award covered employee would be better off if the Agreement applied to the employee than if the Award applied to the employee.” 8

[10] The Transport Workers’ Union of Australia made submissions about this issue and suggested there were different considerations involved in the present matter compared to those in the decision referred to by the National Union of Workers. For example, training costs once incurred could not be avoided, whereas the potential deductions under the proposed Agreement could be avoided simply by an employee returning the uniforms or equipment or working out the requisite notice period.

[11] United Voice also submitted the ability for deductions to be made exists in “comparison instruments” in areas in which it is involved. In addition, any such deductions first require employee authorisation. It also noted that in Radploy the amounts of money involved were dramatically different from anything that might arise under the proposed Agreement under consideration in the present matter. In its further written response provided following the hearing in November SSDS also submits any deduction under clause 10 can only occur following execution of a further authorisation by an individual employee, and not simply as a result of approval of the proposed Agreement. It also submits that provisions like those found in sub clause 22.5 are found in many other Agreements approved by this Commission.

[12] I am satisfied that the circumstances that led Commissioner Gooley to reject the proposed agreement in Radploy are very different from those contemplated in the present matter, particularly given the potential size of any deductions that could result. I am also aware many Modern Awards, including the Clerks – Private Sector Award 2010 9 and the Hospitality (General) Award 2010,10 contain provisions which enable an employer to withhold monies due to an employee on termination in circumstances where the employee fails to give the required notice. I also note that in the case of sub clause 10(d) an employee is required to sign and accept a further agreement on the use of uniforms and personal protective equipment. Any deductions from the final wages due to an employee under sub clause 22.5 could also only be deducted following further employee authorisation. I am accordingly satisfied that these sub clauses do not act in the way suggested by the National Union of Workers to result in the proposed Agreement failing to meet the requirements of the better off overall test.

Part-time employment

[13] The National Union of Workers also made submissions about the provisions in sub clause 14.3 of the proposed Agreement. Two issues arise in this context. Under the proposed Agreement overtime entitlements for part-time employees become due after 38 hours have been worked. Secondly, the Agreement provides for the unilateral variation of part-time hours with 7 days notice being provided, whereas the underlying awards generally require mutual agreement for this to occur.

[14] SSDS indicates in its written response of 29 November that the proposed Agreement was negotiated to provide mutually agreed flexibility and benefits about part-time work. Firstly, a minimum entitlement of 15 hours per week is provided for part-time employees; a minimum hours entitlement not found in the relevant awards. There is also the ability for additional hours to be worked up to 38 hours each week without payment of overtime. Such arrangements are developed by agreement or by giving 7 days notice, when required. If 7 days notice is not provided, or the weekly hours exceed 38, then overtime entitlements apply. In addition, sub clause 14.3(e) indicates the intention is:

“You will be provided with a regular pattern of working hours via roster, including starting and finishing times. Changes in the pattern of working hours requested by either you or us must be in consultation.” 11

[15] In summary, the part-time provisions in the proposed Agreement do limit the entitlement to overtime payments compared to the relevant award entitlements. However, at the same time they provide a minimum weekly hours guarantee that is well in excess of any award entitlement.

Rosters

[16] United Voice submits clause 27 of the proposed Agreement allows for rosters to be changed on the basis of 7 days notice being provided, whereas the underlying award requires 14 days. It submits this impacts on planning for leisure time and the ability for employees to maintain an appropriate work/life balance. It also submits SSDS has not been able to demonstrate why it is not practicable to base rosters around the 14 day notice period. SSDS points to clause 30.2 of the Hospitality Industry (General) Award 2010 and submits it actually provides for rosters to be varied by mutual consent at any time, or otherwise by 7 days notice. Fourteen days is to be provided, where practicable. In its submission the sub clause in the proposed Agreement is not actually in conflict with clause 30 in the Award.

Broken shifts

[17] United Voice submits the Award provides a greater entitlement where split shifts worked and also provides for the rate to increase each year in conjunction with the Minimum Wage Review decisions handed down by the Minimum Wage Panel, whereas the Agreement contains a fixed rate only. SSDS submits in response there are small discrepancies between the Award and Agreement rates, but this is compensated for by the higher wage rates provided for in the proposed Agreement. It also submits sub clause 9.11 does in fact provide for the allowance to be increased by 3% each year.

Night shift

[18] United Voice submits that grades 1, 2 and 3 are impacted under the proposed Agreement, because night shift penalties are calculated on the basis of actual rates of pay, whereas under the award they are based on the “standard hourly rate” which is the level 4 classification. SSDS submits in response the difference is minimal and, in any case, is compensated for by the higher hourly rates provided under the proposed Agreement.

Overtime Entitlements

[19] United Voice submits overtime entitlements are triggered by various provisions in the Award, whereas under the proposed Agreement overtime is only triggered when work is performed outside of ordinary hours, and in the case of part-time employees after 38 hours have been worked. SSDS submits in response that clause 29 of the Agreement contains a broad provision which provides an entitlement to overtime being any “work performed outside the employee’s ordinary hours of work.” 12 It also notes this entitlement extends to all employees, including casuals, unlike clause 33 of the Award, which excludes casuals from having an overtime entitlement.

[20] United Voice also raised issues in the proceedings in the Commission concerning higher duties and meal breaks, but subsequently indicated in further correspondence it did not seek to press these matters, based on various explanations provided by SSDS both in the proceedings in the Commission and in subsequent correspondence.

Schedule 7

[21] The National Union of Workers also made reference to Schedule 7 of the proposed Agreement, which in clause 5 provides for annualised salary arrangements to apply for Security Officers. The clause provides for fortnightly salary payments calculated on a roster worked and averaged over a 12 month period. The National Union of Workers is concerned the potential exists for these rates to fall below what the Modern Award would provide for by way of the combined application of ordinary time rates, overtime, public holidays, weekend penalties and shift allowances, without any requirement for the annualised rates to be increased in such circumstances. In this context reference was made to a recent decision of Vice President Lawler in National Union of Workers v Serco Sodexo Defence Services Pty Ltd 13 which dealt with a dispute about security employees engaged on annualised salaries under a different agreement previously approved by the Tribunal. In that decision the Vice President determined:

“[23] In my view, on the proper construction of the Agreement, the parties intended clause 21.3.1 to facilitate the administrative and personal convenience associated with the payment of annualised salaries and did not intend it to effect a substantive change in the overall financial position that a security employee on an annualised salary would have been in if they had been paid in accordance with Item 3 of Schedule D, together with the loadings, penalties and allowances provided for in the balance of Schedule D, ‘calculated on the roster to be worked and averaged over a 12 month period’.” 14

[22] SSDS submits in response those proceedings involved consideration of different industrial instruments. It also referred to sub clause 7.5 of the proposed Agreement that contains provisions about wage adjustments when pay rates outlined in the wage schedules fall below the corresponding Modern Award rates. It also submits the actual rates to be paid to employees on annualised salary arrangements are set out in the Agreement schedules in full detail so the employees to be paid on the basis of those arrangements are able to be clear on what those rates are to be at the time they vote on the proposed Agreement.

[23] It is understood the annualised rates incorporate various penalty rate entitlements, however, I am satisfied they do provide entitlements that clearly exceed what the reference instrument would provide for. The reduced term of the proposed Agreement, with the revised nominal expiry date of 30 November 2015, also means it is much less likely the relevant Modern Award rates are going to be in advance at any stage of what is provided for in the “rolled up” annualised rates in the proposed Agreement. In any case, in the unlikely event this does appear to have occurred it would be open to a party to make application and submit the annualised rates should be adjusted in order to comply with the requirements of s.206 of the Fair Work Act 2009 (Cth). Whilst this option would be available I consider it unlikely that it will be required to be pursued.

[24] In summary, the terms of the proposed Agreement do contain conditions and entitlements that are, in some respects, different from those found in the relevant Modern Awards. However, they also contain conditions that are more beneficial. In this context I refer, for example, to the proposed wage rates, some allowances, the annual leave loyalty bonus, certain leave entitlements and the minimum guarantee of weekly part-time hours. The revised term of the Agreement also deals with the concerns about the wage increases provided for during its life. I am satisfied in conclusion that on balance the terms and conditions that have been negotiated by the parties to the Agreement do provide an outcome that satisfies the requirements of the better off overall test.

[25] I am also satisfied that each of the requirements of ss. 186, 187, 188 and 190 as are relevant to this application for approval have been met

[26] The National Union of Workers, United Voice New South Wales Branch, the Transport Workers’ Union of Australia and the Liquor and Hospitality Division, United Voice, NSW Branch being bargaining representatives for the Agreement have also given notice under s.183 of the Act they want the Agreement to cover them. In accordance with s.201(2) I note that the Agreement covers those organisations.

[27] The Agreement is approved and, in accordance with s.54 of the Act, will operate from 27 December 2013. The nominal expiry date of the Agreement is 30 November 2015.

COMMISSIONER

Attachment A:

 1   AE405845 at cl. 4

 2   Transcript at PN109

 3   Transcript at PN85

 4   Transcript at PN86

 5   [2011] FWA 39

 6   Ibid at [13]

 7   Ibid at [69]

 8   Ibid at [71]

 9   MA000002

 10   MA000009

 11   AE405845 at cl.14.3(e)

 12   Letter from Sonia La Penna to Commissioner Gregory, 21 November 2013, page 4

 13   [2013] FWC 7115

 14   Ibid at [23]

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<Price code J, AE405845  PR545626>