Sigma Company Limited T/A Sigma Healthcare
[2018] FWC 299
•16 JANUARY 2018
| [2018] FWC 299 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
Sigma Company Limited T/A Sigma Healthcare
(AG2017/1795)
Pharmaceutical industry | |
DEPUTY PRESIDENT ASBURY | BRISBANE, 16 JANUARY 2018 |
Application for approval of the Sigma (Berrinba) Enterprise Agreement 2017 – Whether employees covered by the Agreement were fairly chosen – Whether Agreement was genuinely agreed – Whether Agreement passes the Better off Overall Test – Finding that requirements for approval of the Agreement are met with the exception of an outstanding BOOT issue – Applicant provided with opportunity to address BOOT issue.
OVERVIEW
[1] This Decision concerns an application by Sigma Company Limited t/a Sigma Healthcare (Sigma/Company) under s. 185 of the Fair Work Act 2009 (the Act) for approval of the Sigma (Berrinba) Enterprise Agreement 2017 (the Berrinba Agreement). The Berrinba Agreement is to cover a new distribution centre which has been constructed by Sigma at Berrinba in Queensland. The background to the present proceeding is that an earlier decision approving the Berrinba Agreement was the subject of an appeal by the National Union of Workers (NUW) on the grounds including that: the group of employees was not fairly chosen; the Berrinba Agreement was not genuinely agreed to; and that further and in the alternative, it did not pass the BOOT when compared to the Pharmaceutical Industry Award 2010 (the Award).
[2] The approval of the Berrinba Agreement was quashed by a Full Bench on appeal, on the ground that (unbeknownst to the member who initially approved the Berrinba Agreement) the NUW was a bargaining representative at a point during the negotiations, and was not served with the application for approval of the Berrinba Agreement by Sigma as required by Rule 41.1 and Schedule 1 (Form F16 of the RWC Rules). This resulted in the NUW not being heard in relation to the application for approval of the Berrinba Agreement. In those circumstances, it was not necessary for the Full Bench to deal with the other issues raised in the appeal. The matter was remitted to me to rehear the application for approval of the Berrinba Agreement. At the hearing the parties relied on witness statements filed in the appeal and a number of supplementary statements and the NUW ventilated all of the grounds upon which it asserted that the Berrinba Agreement should not be approved.
[3] In summary, in relation to whether the group of employees covered by the Berrinba Agreement was fairly chosen, the NUW contends that Sigma has deliberately manipulated the process of making the Berrinba Agreement by employing a small number of employees for the sole or primary purpose of negotiating and making the Berrinba Agreement and not for bona fide business reasons. The NUW also contends that Sigma has always intended that the Berrinba Agreement would cover a wider group of employees who are engaged at another site where Sigma operates in Queensland – the Mansfield site – and who were readily identifiable at the time the Berrinba Agreement was made. Further evidence of manipulation is said to be an inducement in the form of a $1,000 payment offered to employees who voted on the Berrinba Agreement payable after the Berrinba Agreement was approved by the Commission.
[4] In relation to the genuineness of the Berrinba Agreement, the NUW contends that a proper comparison between the Berrinba Agreement and the PharmaceuticalAward was not provided to employees and accordingly, they were not informed about the impact of the Berrinba Agreement on existing award conditions and as a result s. 180(5) of the Act was not complied with. These matters are also said to provide reasonable grounds for the Commission to believe that the Berrinba Agreement has not been genuinely agreed by employees. The NUW also contends that Sigma engaged in conduct with the objective of preventing the Union from being involved in the negotiation for the Berrinba Agreement. The NUW raised a number of further issues related to whether the Agreement passes the better off overall test (BOOT) as prescribed in s. 193 of the Act.
[5] Evidence for Sigma in support of the approval of the Berrinba Agreement was given by:
• Jacqueline Ann Meggs, Workplace Relations Manager; 1
• Nathan Jon Roylance, Distribution Centre Manager, Brisbane; 2
• Glen Stuart Sutcliffe, Distribution Centre Manager, Berrinba; 3
• Joshua Iser, Human Resources Manager; 4 and
• Daniel Murray, Principal Advisor, Workplace Relations, Australian Industry Group. 5
[6] Evidence for the NUW in opposition to the approval of the Berrinba Agreement was given by:
• Max Eric Verkaaik, former employee of Sigma; 6
• Paul McNicol, Organiser for the NUW; 7 and
• Imogen Alexandra Beynon, Lead Organiser General Branch of the NUW. 8
[7] All witnesses were available for cross-examination at the hearing. Their evidence and the submissions made by Sigma and the NUW are considered below.
SIGMA OPERATIONS IN QUEENSLAND AND THE MANSFIELD AGREEMENT
[8] Sigma operates a warehouse at 46 Dividend Street in Mansfield, Brisbane. According to Mr McNicol, there are approximately 130 pharmaceutical warehousing workers at the Mansfield site on any given day, depending on operational requirements. There have been a series of enterprise agreements that cover employees at Mansfield – most recently the Sigma (Queensland) Enterprise Agreement 2016 (the Mansfield Agreement). By virtue of clause 1.2, the Mansfield Agreement applies to Sigma Company Limited and to employees covered by the classifications in the Mansfield Agreement and working at the following sites:
• 46 Dividend Street Mansfield, Qld 4122; and
• 16 – 20 Bell Street Townsville, Qld 4810. 9
[9] In or around September 2014, Sigma purchased land at Berrinba in Queensland. At the time the land was purchased the Company’s Board had not approved a business case to build a new Distribution Facility Centre on the site. On or around 10 February 2016, Sigma’s Board approved the business case to proceed with the construction of the Berrinba Distribution Centre and this decision was communicated to employees at the Mansfield site on or around 11 February 2016. A broader Company-wide communication was also distributed around this time to all Company employees.
[10] Sigma initiated bargaining for the Mansfield Agreement on 6 October 2015. During the negotiations for the Mansfield Agreement, Sigma’s plans with respect to staffing the Berrinba site were in issue with the NUW and employees questioning whether the Mansfield employees would be transferred to Berrinba. A ballot of employees was held on 29 November 2016 and the Mansfield Agreement was made on that date. 10 The Mansfield Agreement was approved by the Commission on 19 January 2017 and operated from 26 January 2017.11 The nominal expiry date of the Mansfield Agreement is 31 March 2019. Clause 1.12 of the Mansfield Agreement is in the following terms:
“Employees under this Agreement who are offered and accept a transfer to work from the Company at Berrinba, Queensland will, during the nominal term of this Agreement, be afforded wages and conditions not less favourable to the employee than those of this Agreement.”
[11] According to Mr Iser, this clause was inserted into the Mansfield Agreement to conclude the negotiations and to deal with the possibility that some Mansfield employees, could “potentially, at some point in the future”, be offered employment at the Berrinba site. However, this was only a possibility and was yet to be determined as no decisions had been made regarding the operation of the Mansfield site.
[12] On 14 July 2017, when Mr Iser made his statement tendered in these proceedings, the Mansfield site was fully operational and Sigma requires all existing employees to work at that site to maintain service levels. Mr Iser maintains that at all times during the negotiations for the Mansfield Agreement it was made clear to the bargaining committee and the NUW that no decisions had been made regarding whether or not any employees from the Mansfield site would be offered employment at the Berrinba site. Sigma held numerous communication meetings with employees at the Mansfield site to update them on the progress of the negotiations. At no point did Sigma indicate that employees would be offered employment at the new Berrinba site.
[13] Under cross-examination, Mr Iser said that there was no intention to transfer team members from Mansfield to Berrinba and that the clause in the Mansfield Agreement dealing with this issue was inserted to reach agreement. Mr Iser agreed that the issue was discussed and the clause was inserted in the event that there was a transfer of a team member to the Berrinba site but maintained that no guarantees were given that this would occur.
[14] According to Mr McNicol, the NUW sought that the Mansfield Agreement also cover the Berrinba Site and the Company strenuously denied this claim throughout the negotiations. The negotiations were lengthy and Mr McNicol said that this was due to a disagreement about clause 1.12 of the Mansfield Agreement which dealt with relocation to Berrinba and in relation to a lack of consultation with NUW members about the Berrinba Site. Mr McNicol described clause 1.12 of the Mansfield Agreement as a “drop dead clause” on the basis that employees who transferred to the Berrinba Site from the Mansfield Site would maintain their wages and conditions under the Mansfield Agreement until it reached its nominal expiry date. At that point, transferring employees would have their wages and conditions drop down to those at the Berrinba Site.
[15] Mr McNicol said that at the time there was no proposed agreement to cover the Berrinba Site so he and employees at the Mansfield site assumed that the wages and conditions would be less than those applicable at the Mansfield Site or even as low as the Award. Despite the NUW and the Company failing to reach a consensus on the issues related to the Berrinba site, the Mansfield Agreement was voted on by employees and accepted on 29 November 2016, after being voted down on two prior occasions.
[16] Mr McNicol also said that he became aware in late 2015 that the Company was building the Berrinba site and restarted a joint consultative committee at the Mansfield site with the intention of improving communication and providing the company with an opportunity to consult with members about the new site. Mr McNicol said that members at the Mansfield site were becoming increasingly anxious about the Berrinba site and how this would impact on their job security at the Mansfield site.
[17] On 9 September 2016 the NUW lodged a dispute with the Commission alleging that Sigma had failed to consult about the Berrinba site and the implementation of major change. It was agreed in proceedings in the Commission that a meeting would be held between the NUW and the Company on 13 October 2016. It was also agreed that the NUW would prepare a series of questions and send them to the Company a week prior to the meeting. Mr McNicol set out a series of questions prepared for the meeting relating to the Berrinba site seeking information about when it would open; whether Mansfield employees would transfer to it; roles and numbers of employees at the new site; whether Mansfield employees would be offered voluntary redundancy packages; and transition plans for retraining Mansfield employees.
[18] The meeting on 13 October 2016 did not take place due to various participants not being available and it was agreed that the matters relating to the Berrinba site would be discussed at a negotiation meeting for the Mansfield Agreement scheduled for 8 November 2016. Mr McNicol said that at that meeting, no further information was given regarding transition to the Berrinba site or its size and capacity and Sigma reiterated that no definite decisions had been made in relation to the operations of the Berrinba site. Mr McNicol said that he attended a further consultation meeting on 9 May 2017 along with three NUW Delegates. Representatives of Sigma reiterated that no definite decisions had been made in relation to the operations of the Berrinba site.
[19] In relation to the Berrinba site, Mr McNicol said in his statement dated 3 July 2017, that he has driven past it on a daily basis since 2016 as it is on the way from his home to the NUW Office in Milton, and his observations are that the outside structure of the building was still under construction and only recently completed. Mr McNicol also said in that statement that it is unlikely that the fit out of the inside of the building would have been complete at that time. Mr McNicol did not update his statement for the purpose of the present proceedings. Mr McNicol also said that in January 2016, Mr Iser told him that once operations had commenced at the Berrinba site, employees at the Mansfield site would be able to put forward expressions of interest to work at the Berrinba site and be considered by the Company.
[20] Mr Iser gave evidence about a number of Joint Consultative Committee meetings at the Mansfield site. Those meetings took place on 28 October 2016 and 9 May 2017. At the meetings members of the bargaining committee including Union delegates asked questions about the labour requirements of the Berrinba site. Mr Iser maintained that no decisions had been made in relation to these matters including whether employees from Mansfield would be offered employment at Berrinba. Mr McNicol attended the meeting on 9 May 2017 on behalf of the NUW. Mr Iser said that he told Mr McNicol in January 2016 that team members at Mansfield would be able to lodge an expression of interest in moving to Berrinba, much like what happens in the existing network when team members request to move to another site. Mr Iser said that he told Mr McNicol that each case would be determined on its own merits and based on the needs of the site at the time the application was lodged.
[21] Mr Iser said that he did not tell Mr McNicol that once operations had commenced at Berrinba employees at Mansfield would be able to put forward expressions of interest to work at the Berrinba site and be considered by the company and that he did not make this statement to employees at Mansfield. Mr Iser also said that there was no discussion in January 2016 about the Mansfield site closing and the Mansfield employees transferring to the Berrinba site but that he did make this statement at the end of negotiations.
[22] Mr Iser said that at the meeting of 8 November 2016, he reiterated the Company’s position that no definite decision had been made in relation to the Mansfield site, including whether employees at the Mansfield site would be offered employment at the Berrinba site. A further dispute was notified by the NUW in May 2017, and a conference was conducted by another member of the Commission. There is a disagreement about what eventuated at that conference, however, the NUW did not pursue the dispute as then notified.
THE EMPLOYMENT OF THE BERRINBA EMPLOYEES
[23] Following approval of the Sigma Board to proceed with the Berrinba site, a contractor Dematic Pty Ltd was engaged to set up and install automated processes at that site. In April 2017, Ms Meggs was informed by Mr Church, General Manager of Logistics for Sigma, that six employees were required for the Berrinba Site to assist with the installation and set up being undertaken by Dematic and to test and quality assess the processes.
[24] Ms Meggs said that in her discussions with Mr Church, she identified that the employees would be permanent full time employees who would work at the Berrinba site as Storepersons. Due to the automated processes at the Berrinba site, which is unlike any of Sigma’s other distribution centres, the employees would need to be skilled in multiple warehousing and distribution functions and have previous experience in working in a warehouse/distribution centre. In Sigma’s major distribution centres, employees commonly only work on one or two functions such as assembly; dispatch; decanting; put away; receiving etc. while at the Berrinba Site they would need to work in any or all of these functions. Sigma would therefore require a multi-skilled Storeperson able to move from function to function who possessed the ability to work on different functions throughout a single day.
[25] A labour hire company specialising in recruitment for the transport, warehouse and logistics industry was engaged and produced a short list of 10 potential candidates. Ms Meggs and Mr Roylance interviewed those candidates on 18 and 19 April 2017. Ms Meggs said that during the interview process she was looking for candidates with previous warehousing and stores experience who would be able to work in a multi-skilled and automated environment and who could work in multiple functions of warehousing and distribution operations. Following these interviews, offers of employment were made to four persons: Mr Rabah, Mr Lawrence, Mr Sila and Mr Andreotti, who commenced employment on 26 April 2017. Mr Verkaiik was also offered employment and commenced on 27 April 2017.
[26] Ms Meggs tendered the contents of an employment pack provided to each of those employees including: offer of employment and employment contract; Pharmaceutical Industry Award 2010, Fair Work Information Statement; and copies of Sigma’s Human Resources policies. Sigma recruited Mr Sutcliffe as Distribution Centre Manager for the Berrinba Site and he commenced employment with the Company on 8 May 2017.
[27] According to Ms Meggs, it has always been Sigma’s intention that the employees recruited for the Berrinba Site would be employed in permanent ongoing employment with the Company. Those employees would be required to assist with the set-up and testing of Sigma’s new automation processes and to train other employees when they started in the processes and new equipment. Ms Meggs rejects the assertions of the NUW that these employees were only engaged to make an agreement for the Berrinba Site and maintains that if this was Sigma’s intent, the Company could have engaged a small number of casual employees and terminated those employees after the setup and installation of the automation processes and the making of the enterprise agreement. In relation to the assertion made by the NUW that Sigma always intended that employees would transfer to the Berrinba site, Ms Meggs said that any decision in relation to the future of the Mansfield site would be made by the Company’s Board and no such decision has been made.
[28] Mr Roylance supported Ms Meggs’ evidence about the recruitment and hiring of Mr Rabah, Mr Lawrence, Mr Sila, Mr Adreotti and Mr Verkaaik (the Berrinba employees) and that the Berrinba employees were told in their interviews that they would be engaged as Storepersons and would be assisting in the setup, installation, commissioning and testing at the Berrinba site. According to Mr Roylance, the original handover date for the Berrinba site was 1 May 2017, but this was delayed due to the effect of Tropical Cyclone Debbie on the capacity for Enegex to connect electricity to the site. This delay also impacted on the fitout of the site and the installation of equipment. At the time that Mr Roylance prepared his statement in July 2017, the Berrinba employees were still commissioning and testing an integrated materials handling system.
[29] Mr Roylance said that from 26 April to 19 May 2017, he was working from a boardroom rented from FSG Australia, with the Berrinba employees. The boardroom was located at Parkinson, a suburb adjacent to Logan where the Berrinba site is located. This was due to the fact that the Berrinba site was not ready for handover to Sigma. Mr Roylance also said that all of the Berrinba employees were employed to work at the Berrinba site and the work they would be doing was critical to ensuring that the set up and automation processes at the site were functioning correctly. According to Mr Roylance, it is not possible to construct a new, highly automated site and commence operation from a certain date. There is set up and preparatory work that must be undertaken to ensure that the site is ready to operate. Mr Roylance disagreed with the assertion by the NUW that Sigma only engaged the Berrinba employees to make the Berrinba Agreement and maintained that the Berrinba employees were employed to assist in the set up and testing of the automated processes at the Berrinba site. From the date of the commencement of their employment, the Berrinba employees have been undertaking:
• Induction and on-boarding;
• Training in Sigma’s Human Resource policies and procedures, including but not limited to the Code of Conduct, Drug and Alcohol Policy, Social Media Policy, Attendance and Absenteeism Policy and Disciplinary Procedure Policy;
• Training in Sigma’s work health and safety policies and procedures, including but not limited to the Health and Safety Policy, Drugs and Alcohol Policy, Health and Safety Committees, Return to Work Policies and Procedures, First Aid Policy, Risk Management Policy and Hazard Identification and Reporting Policy;
• Training in Sigma’s standard operating procedures including but not limited to Standarding Operating Procedures regarding Replenishment, Product Recall Procedures, Cytotoxic Controlled Drugs, Waste Management and Quarantine Products; and
• Legislative requirements Sigma operates under including Community Service obligations regarding Pharmaceutical Benefits Scheme medications and the Code of Good Wholesaling Practices.
[30] In relation to Mr Verkaaik’s evidence that he was told that he was being employed for his forklift capabilities and that he would be working in a distribution warehouse receiving goods, Mr Roylance said that Mr Verkaaik was not employed solely for his forklift capabilities and while forklift operation was desirable, it was not the sole determining criteria Sigma was looking for in potential employees. All of the Berrinba employees, except Mr Lawrence, possess forklift experience. Mr Roylance agreed with Mr Verkaaik’s statement that he had not actually worked as a forklift driver receiving goods at the Berrinba site but said that Sigma cannot bring products to the site until it is licensed by the Queensland Department of Health to Sell Restricted and Controlled Drugs by Wholesale. Mr Roylance disputed Mr Verkaaik’s evidence that he regularly attended the boardroom from 7.00 am to 1.00 pm and said that the Berrinba employees finished work at 1.00 pm on occasions where he had to go to site for a particular reason or meet the builders or the technology provider. On other days the Berrinba employees were required to work till 3.00 pm or 3.15 pm. From 22 May 2017, the Berrinba employees were working at the Berrinba site.
[31] Mr Roylance also denied that he mentioned that some employees at Mansfield would be taking redundancies and others would be transferring to Berrinba. Mr Roylance recalled Mr Andreotti asking a question about the plan for the Mansfield site, and said that he responded to that question by stating that there had been no decision made regarding that site. At the point Mr Roylance made his statement in July 2017, no decision had been made in relation to the Mansfield site.
[32] Mr Sutcliffe said that when he commenced employment with Sigma, the five Berrinba employees had already been employed. Mr Sutcliffe was recruited by the same company that had recruited the Berrinba employees. When Mr Sutcliffe commenced employment he was working from the boardroom located at FSG Australia’s offices due to delays to the construction of the Berrinba site as a result of Cyclone Debbie. The cyclone also impacted on power being connected to the site, delaying the handover of the site from the builders to Sigma.
[33] Mr Sutcliffe has examined the CVs of the Berrinba employees and states that all have had previous experience working in storage/warehouse distribution operations and some have had extensive experience working in such operations. Mr Sutcliffe, along with the Berrinba employees, commenced working at the Berrinba site on 22 May 2017. Mr Sutcliffe is aware that the Berrinba employees were undertaking induction training, training in Sigma’s Standard Operating Procedures, Human Resource policies and procedures, work health and safety policies and procedures, internal processes and procedures and supplier engagement, cultural development and team building activities, while working from the boardroom between 26 April and 19 May 2017. Mr Sutcliffe assisted with and participated in some of the training.
[34] Mr Sutcliffe also disputed Mr Verkaaik’s evidence that he worked in the boardroom from 7.00 am until 1.00 pm each day and stated that while the Berrinba employees would finish work at 1.00 pm on some days on others they would finish at 3.00 pm or 3.15 pm and that finishing times varied each day. While working from the Berrinba site the finishing time has also varied from 1.00 pm to 3.00 pm each day. Mr Sutcliffe gave evidence about work that the Berrinba employees have been performing at the Berrinba site from 22 May 2017 including:
• Conducting workplace health and safety risk assessments including for emergency doors, ramp in receiving and working on bulk racking;
• Assisting with the set-up of automation processes;
• Testing equipment and processes to ensure that they are operating correctly and efficiently; and
• Undertaking cultural development and team bonding processes.
[35] From 14 to 16 June 2017, Mr Lawrence, Mr Andreotti and Mr Sutcliffe undertook training in Adelaide at Sigma’s Adelaide Distribution Centre, in relation to system processes. The Berrinba employees have also undertaken a first aid course and health and safety representative training. Mr Sutcliffe also outlined new automation processes and equipment at the Berrinba site including:
• A-frames;
• Goods to person (GTP) systems;
• Modular belts; and
• Robotic storage systems.
[36] The A-frames are an automated picking system that picks smaller products using robotics. The A-frame machines will pick 10,000 litres per hour. Employees will place products into slots for an automated process to pick product and their responsibility is to keep products stocked to ensure that the product is not depleted from the A-frame. The GTP system is a fully robotic system that allows an employee to stand at a work station and a tote of product is automatically brought to the work station for the employee to place the product from the tote into an order. A tote is a cardboard carton which comes in two sizes. The modular belts carry totes around the warehouse to an area where a product needs to be picked from. The robotic storage system stores orders for customers and delivers an order to the outbound areas for employees to load onto delivery vehicles.
[37] The Berrinba employees (other than Mr Verkaaik) are assisting the contract provider, Dematic Pty Ltd with the set up and testing of automated processes. The employees have also been undertaking cultural awareness and development training and activities, consistent with a “family-village” culture that Mr Sutcliffe is attempting to establish at Berrinba. This culture is based on Sigma being the family and the Berrinba site being the village. The village will have tribes which will compete with one another and individuals from each tribe will also compete with each other which will lead to an overall performance for the Berrinba Distribution Centre. Mr Sutcliffe has used this culture in previous positions.
[38] Mr Sutcliff also said that the Berrinba employees have been performing duties and tasks associated with the Position Description in their contracts of employment and the Berrinba Agreement. All of the activities that the employees have been engaged in at both the boardroom and the Berrinba site, are necessarily and critically important for the establishment of the Berrinba site. The site was expected to go live on 9 September 2017 and at this time it will be necessary for Sigma to oprate effectively and efficiently and meet the requirements of its customers and the Federal Government.
[39] Mr Sutcliffe said that Mr Verkaaik’s employment was terminated on 7 June 2017, for conduct reasons. According to Mr Sutcliffe, Mr Verkaaik possesses an argumentative style and such an approach is not suitable from a team perspective, resulting in Mr Verkaaik not being a good fit for Sigma. Mr Sutcliffe also points to the fact that Mr Verkaaik makes no reference in his witness statement to the fact that from 22 May until the date his employment was terminated, he was performing work at the Berrinba site. Mr Roylance tendered a series of text message exchanges with Mr Verkaaik after the termination of his employment including a message in which Mr Verkaaik stated:
“All good, I’ve got some weird shit lined up. ... Glen was right at the end of the day, I can do that job but I’m meant for something else, but hey I like being an individual, I thrive on it, towing the line an echo chamber being all PC ain’t me…Just never thought I’d be fired for it. All the best guys.” 12
[40] Under cross-examination, Mr Sutcliffe accepted that on some days the employees worked from 7.00 am to 1.00 pm and that most full time warehouse employees work for longer periods each day. In relation to Mr Verkaaik’s evidence, Mr Sutcliffe disputed that he had told employees while working in the boardroom that some Mansfield employees would be taking redundancies and other employees would be transferring to Berrinba. Mr Sutcliffe said that he has no knowledge of what Sigma’s intentions regarding the Mansfield site are and he would not have had such a discussion with Mr Verkaaik.
[41] In relation to Mr Nicol’s evidence that the outside structure of the building appeared to indicate that it was still under construction on or around 28 June 2017, Mr Sutcliffe said that construction of the Berrinba site was completed in late May. The fit out of the site was 90% complete on 13 July 2017 when Mr Sutcliffe made his statement and the various automation processes were completed in June 2017, with the Berrinba employees (other than Mr Verkaaik) being instrumental in this process being completed.
[42] Mr Verkaaik gave evidence on behalf of the NUW. When Mr Verkaaik commenced working with Sigma on 27 April 2017, the Company was operating out of a rented boardroom at the offices of FSG Australia in Parkinson, Queensland. From commencement with Sigma until May 2017, Mr Verkaaik attended the board room daily from Monday to Friday between the hours of 7.00 am and 3.00 pm. Mr Verkaaik was employed as a full time employee and was paid $20 per hour. Four other employees attended the boardroom with Mr Verkaaik – Mr Rabah, Mr Lawrence, Mr Sila and Mr Andreotti. In the boardroom, Mr Roylance took Mr Verkaaik and the other employees through Standard Operating Procedures, health and safety and how Sigma’s computer system operated and other presentations. After approximately one week, Mr Sutcliffe joined the employees and Mr Roylance in the boardroom as Distribution Centre Manager for the Berrinba site.
[43] Mr Verkaaik said that he was dismissed by Sigma on or around 6 June 2017. During the time that Mr Verkaaik worked for Sigma he did not undertake any work that he was engaged to do, namely work as a forklift driver receiving goods at the Berrinba Site. Mr Verkaaik also said that at multiple times while he was working in the boardroom Mr Roylance and Mr Sutcliffe mentioned that some Mansfield employees would be taking redundancies and some would be transferring to the Berrinba Site.
[44] Under cross-examination, Mr Verkaaik agreed that in his previous employment he was not solely driving a forklift and was doing other warehousing and stores duties. Mr Verkaaik disagreed with the proposition that he was told in his interview for a position with Sigma that he would be engaged in the set-up, installation, commissioning and testing of equipment at the Berrinba site but said that “down the track” he was told this. Mr Verkaaik agreed that automation and the robotic storage and retrieval system was discussed at the interview and that he was told he would need to perform work across a number of functions including dispatch, storage and receiving. In response to the proposition that he was never told that he was being employed for his forklift capabilities, Mr Verkaaik said that he was not told this directly but was asked whether he had a forklift license. Further, Mr Verkaaik agreed that Ms Meggs never told him that he was employed only for the purpose of receiving goods at the Berrinba Site using a forklift.
[45] Mr Verkaaik agreed that Mr Sutcliffe provided training to Mr Verkaaik and other employees about Sigma policies and procedures, and that he had not previously worked for Sigma or a pharmaceutical Company and did not have an understanding about legislation under which such companies operate, or the temperatures and other controls relevant to the storage of drugs. Mr Verkaaik further agreed that during training he was told that the Berrinba site would be ready around 1 May and that this was delayed due to Cyclone Debbie, and later due to problems Energex had providing power to the site.
[46] Mr Verkaaik also agreed that he and the other employees who had attended at the boardroom had been trained in various human resource management, operational, legal obligations, community service obligations, codes of conduct for therapeutic goods, handling of drugs and medications and workplace health and safety policies of Sigma and that in the three weeks of training in the boardroom, the Berrinba employees were inducted as employees of Sigma. In response to the proposition that he was working at the Berrinba site from 22 May 2017, Mr Verkaaik said that he was attending the site from that time. Mr Verkaaik rejected the proposition that from 22 May 2017 until his dismissal he was checking the suitability of various products to ensure that they fitted in the A-frame slots and that they were stored in appropriate groupings. Mr Verkaaik said that there were no products on site for this to occur. Mr Verkaaik also rejected the proposition that he was assisting the contractor to test and commission machinery at the Berrinba site but agreed that this work was being undertaken by the contractor installing the equipment. Mr Verkaaik agreed that he was involved in cultural awareness training and choosing tribal names in readiness for when the Berrinba site came online.
[47] Mr Verkaaik agreed that between 22 May 2017 and his dismissal, he was undertaking health and safety risk assessments at the Berrinba site and a process of portfolio-making with photographs and choosing tribal names, in preparation for when the Berriba site came online.
[48] In relation to the termination of his employment, Mr Verkaaik agreed that he sent the text message to Mr Roylance and that the abbreviation P.C. was for the term “politically correct”. Mr Verkaaik further agreed that it may seem that the reason for his dismissal was that he did not fit in as a team member. 13
THE MAKING OF THE BERRINBA AGREEMENT
[49] Ms Meggs was directly involved in the negotiations for the Berrinba Agreement and gave evidence about meetings conducted on 26 April, 5 May and 9 May 2017. The meeting on 26 April 2017, was attended by Mr Andreotti, Mr Lawrence, Mr Rabha and Mr Sila. The Company was represented by Mr Roylance and Ms Meggs. At the meeting, Ms Meggs informed the employees that the Company wished to negotiate an enterprise agreement to apply to Storepersons as the Berrinba Site, gave each employee a Notice of Employee Representational Rights (NERR) and explained their right to appoint themselves. Ms Meggs also said that she told employees that if they were members of a Union, the Union would be their default bargaining representative unless they appointed someone else and explained the bargaining process including legislated time frames, the process of lodging an agreement with the Commission and how the Commission assesses and approves an enterprise agreement.
[50] Mr Verkaaik was provided with a copy of the NERR when he commenced employment on 27 April 2017. Mr Andreotti appointed himself as a bargaining representative and was also appointed by Mr Rabah. Mr Lawrence appointed the NUW and Mr Sila appointed himself. 14 There is no evidence that Mr Verkaaik appointed a bargaining representative or in relation to Mr Verkaaik’s membership of the NUW. Mr Roylance said that on observing that Mr Lawrence had appointed the NUW as his bargaining representative, he informed Mr Lawrence that he would tell him when the bargaining meetings would be held so that he could notify the NUW and get them to attend. Mr Roylance also said that on 3 May he informed the Berrinba employees that the next bargaining meeting would be held on 5 May and told Mr Lawrence that he should notify the NUW of the meeting time.
[51] A meeting was arranged for Friday 5 May 2017. The NUW did not attend. Ms Meggs said that she asked Mr Lawrence if the NUW was attending the meeting and whether he was happy for it to proceed without his nominated bargaining representative. Mr Lawrence indicated that he was happy for the meeting to proceed. Mr Roylance said that Mr Lawrence stated that it was really only the first meeting and he was happy to proceed. A draft agreement was provided to employees by Ms Meggs who went through the document clause by clause. Mr Andreotti raised a number of issues and employees were also given an opportunity to ask questions and informed that they should put forward any ideas or suggestions at the next meeting.
[52] A further meeting on 9 May 2017 was attended by Ms Meggs and Mr Sutcliffe who had commenced employment at that point. At that meeting, Mr Anderotti raised a number of issues with the proposed agreement and these were responded to with Mr Sutcliffe agreeing to include a meal allowance; two personal days sick leave for each employee per annum without a medical certificate and payment of annual leave loading. The Company put forward a wage offer and increased it when employees sought a higher amount. When employees sought a further increase to the wage offer, the Company offered a $1000 sign on payment and the offer was then accepted by employees.
[53] An in principle agreement having been reached, further BOOT analysis was performed and advice was received from the Australian Industry Group that the Berrinba Agreement passed the BOOT. On 10 May 2017, employees were given a final version of the Berrinba Agreement and an information letter with details of the access period; who employees could contact if they had questions; how and where they could access related documents; and how and when the vote would be conducted. Ms Meggs also gave a verbal presentation to the employees about the terms of the Berrinba Agreement and its impact on them. Mr Lawrence was absent on that day but received a copy of the information provided to other employees.
[54] On 12 May 2017 Ms Beynon of the NUW corresponded with Ms Meggs and sought a copy of the NERR provided to employees and a meeting with the Company prior to 18 May 2017. Ms Meggs provided a copy of the NERR and advised that she was available to meet with Ms Beynon on 18 May 2017. On 15 May 2017, Mr Lawrence approached Mr Sutcliffe and told him that he intended to withdraw from the NUW. Mr Sutcliffe told Mr Lawrence that he would probably have to put something in writing if he did not want the NUW to be involved in the negotiations of the Berrinba Agreement. Mr Sutcliffe conveyed this information to Ms Meggs who asked Mr Sutcliffe to confirm that Mr Lawrence was still intending to resign and whether he still wished the NUW to be his bargaining representative. Ms Meggs further advised Mr Sutcliffe that if Mr Lawrence wished to revoke his appointment of the NUW as his bargaining representative and appoint someone else, then he would need to do this in writing. Shortly thereafter, Ms Meggs received an email from Mr Sutcliffe with a notice of revocation by Mr Lawrence of his appointment of the NUW as his bargaining representative and a letter appointing himself as bargaining representative.
[55] After Mr Lawrence revoked the appointment of the NUW as his bargaining representative, Ms Meggs received an email from Ms Beynon requesting that the ballot in relation to the Berrinba Agreement be delayed and that Sigma hold an enterprise bargaining meeting with the NUW. The email further advised that the NUW would escalate the matter if Sigma did not agree to this request. 15 Ms Meggs responded to the email advising that the NUW was no longer a bargaining representative for the Berrinba Agreement and that on this basis the Company was not prepared to conduct an enterprise bargaining meeting with the NUW. Ms Meggs further informed Ms Beynon that the scheduled employee vote on the proposed agreement would be conducted on 19 May 2017.
[56] On Friday 19 May, a vote was held and all five employees approved the Berrinba Agreement. Ms Meggs said that the Berrinba Agreement was lodged with the Commission for approval. The application was not served on the NUW as the Company did not believe that this was required, on the basis that the NUW was no longer a bargaining representative for the Berrinba Agreement. Ms Meggs also said that the application for approval was visible on the Commission’s website under the Agreements in Progress section and that given the confirmation of the date provided to the Union, the progress of the Berrinba Agreement could have been checked.
[57] Under cross-examination, Ms Meggs agreed that the bargaining meetings started on the first day that Mr Lawrence, Mr Rabah, Mr Sila and Mr Andreotti started work – 26 April 2017 – and said that the four employees were informed that Sigma would be entering into negotiations and were issued with the NERR on that date. In re-examination, Ms Meggs confirmed that there were no negotiations on that date. Under cross-examination, Ms Meggs also agreed that after receiving Mr Lawrence’s notice of appointment of a bargaining representative, she did not contact the NUW or invite the Union to bargaining meetings, notwithstanding that she had previously been involved in negotiations with the Union. Ms Meggs disagreed with the proposition that she did not contact the NUW to make it difficult for the Union to participate in negotiations.
[58] Ms Meggs agreed that she told workers that the rates in the Berrinba Agreement would be comparable to other logistics operations. In response to the proposition that there were agreements at Metcash and IGA in Crestmead and at API Bundamba that provided higher rates, Ms Meggs said that there were also agreements that had lower rates. Ms Meggs also said that the rates in the Agreement were competitive in the Logan area and agreed that the employees were told during the negotiations that local agreements had lower rates or rates around $25 per hour.
[59] Mr Roylance attended bargaining meetings for the Berrinba Agreement on 26 April and 5 May 2017 and thereafter had no further involvement in the bargaining. When Mr Lawrence provided his form appointing a bargaining representative, Mr Roylance noted that he had appointed the NUW. Mr Roylance recalls that he told Mr Lawrence that when he knew when the bargaining meetings were to be held he would tell Mr Lawrence so that he could inform the NUW and get them to attend.
[60] A meeting scheduled for 3 May was cancelled at the request of Ms Meggs who was unable to attend and rescheduled for 5 May. Mr Roylance said that he informed employees of the new meeting date and told Mr Lawrence that he would need to let the NUW know of the new date. Mr Roylance confirmed that when the NUW did not attend the meeting of 5 May 2017, Mr Lawrence said that he was happy to proceed with the meeting. A draft agreement was circulated as a starting point but did not contain any wage increases. A further meeting was scheduled for 9 May 2017.
[61] Under cross-examination, Mr Roylance agreed that at the time the vote for the Berrinba Agreement was conducted, the employees were not employed at the Berrinba site, but were undertaking training in a boardroom hired for that purpose, that was off the site. Mr Roylance said that a site tour was conducted before the ballot.
[62] Mr Sutcliffe attended the enterprise bargaining meeting on 9 May 2017 and outlined the negotiations about wage rates in the Berrinba Agreement at that meeting. Mr Andreotti on behalf of the employees proposed $27.50 per hour with a 3% per annum increase for the life of the Berrinba Agreement based on the wage rates at another warehouse. Mr Sutcliffe on behalf of Sigma, rejected that offer and offered $25 per hour with an annual wage increase of 2% for the life of the Berrinba Agreement. The employees proposed $26 per hour. There were also discussions about a sign on bonus of $1000 should the Berrinba Agreement be approved by the Commission. During the meeting on 9 May in principle agreement was reached between the Berrinba employees and the Company.
[63] Ms Meggs indicated that she would prepare a final version of the Berrinba Agreement and would go through the terms with employees the following day. On 10 May 2017, Ms Meggs gave the employees an envelope containing a final version of the Berrinba Agreement and an information letter. Ms Meggs and Mr Sutcliffe then gave employees a presentation on the terms and conditions in the Berrinba Agreement. Ms Meggs also explained how the vote would take place and how the Berrinba Agreement would be lodged with the Commission and assessed. Mr Sutcliffe said that he did not remember employees asking questions other than in relation to when a vote would be held. Employees were advised by Ms Meggs that the vote would be held on Friday 19 May 2017.
[64] Mr Lawrence was absent from work on 10 May due to his partner giving birth on 9 May. On 11 May 2017, Mr Lawrence was provided with a copy of the Berrinba Agreement and information letter that the other employees had received. Mr Sutcliffe also explained the terms of the Berrinba Agreement to Mr Lawrence.
[65] The ballot for approval of the Berrinba Agreement was held on 19 May 2017 and all five employees voted to approve it. The Berrinba Agreement was lodged with the Commission and employees were informed of this. Mr Sila, Mr Lawrence and Mr Andreotti were provided with copies of the lodgement documentation by Mr Roylance.
[66] Under cross-examination, Mr Sutcliffe agreed that he told employees during the negotiations for the Berrinba Agreement that their claim of $27.05 was very high for a highly automated dispatch warehouse and that was his experience when working at what is now the Metcash site at Crestmead. Mr Sutcliffe was not sure about rates at other sites that he was cross-examined about. In relation to the activities undertaken by employees when they were working at the Berrinba site after 22 May 2017, Mr Sutcliffe agreed that none of those activities were being undertaken when employees voted to approve the Berrinba Agreement.
[67] Mr Murray gave evidence that he was involved in drafting the Berrinba Agreement and is familiar with its contents. The Berrinba Agreement contains provision for one classification – a Multi-skilled Storeperson – with that classification being described in Appendix 1 of the Berrinba Agreement. Mr Murray contends that the Multi-skilled Storeperson classification in the Berrinba Agreement equates most closely with the Award classification for a Warehouse Distribution Worker Grade 2. Mr Murray’s view is that the Berrinba Agreement classification does not more appropriately equate with the Grade 3 Worker under the Award. Notwithstanding this view, Mr Murray carried out an analysis of the rates and conditions in the Berrinba Agreement compared to the Grade 2 and Grade 3 Award classifications under a range of scenarios and concluded that the Multi-skilled Storeperson under the Berrinba Agreement would be better off than under the Award in any of the scenarios considered whether classified at Grade 2 or Grade 3.
[68] Mr Verkaaik said that negotiations for the Berrinba Agreement began on or around 5 May 2017 when he and other employees met with Mr Sutcliffe, Mr Roylance and Ms Meggs. Ms Meggs gave the employees a copy of a draft of the Berrinba Agreement that had blank spaces including for the wage rates. This was the first time that Mr Verkaaik had seen the document. Ms Meggs asked employees to go outside and have a discussion about what they thought was fair. When employees proposed conditions that were similar to those applying at Mansfield - $28.00 per hour and a 3% yearly increase – Ms Meggs and Mr Sutcliffe told them that this was not sustainable and Sigma would not pay those amounts. Following discussions about the proposed Berrinba Agreement, Mr Sutcliffe offered a sign on bonus of $1000 payable once the Berrinba Agreement had been approved by the Commission. Mr Verkaaik also said that during the meeting on 5 May 2017, Ms Meggs and Mr Sutcliffe mentioned that what was being negotiated was over the Award, but did not mention the entitlements under the Award. Mr Verkaaik received a copy of the final Berrinba Agreement approximately one week before voting for it and voted for the Berrinba Agreement on 19 May 2017.
[69] Under cross-examination, Mr Verkaaik agreed that he was given a copy of the proposed Berrinba Agreement at the first negotiation meeting on 5 May 2017 and that Ms Meggs told the employees that once their feedback was received, the Company would be able to make an offer with respect to wages. Mr Verkaaik further agreed that Ms Meggs went through the draft agreement clause by clause and explained each clause and that she told employees it was important for them to read each clause. Ms Meggs also asked employees if they had any questions about the proposed agreement. Mr Verkaaik rejected the proposition that Ms Meggs provided a comparison of each clause with the Award.
[70] Mr Verkaaik agreed that Mr Andreotti had raised a number of issues including the need for meal and forklift allowances and the taking of personal leave without the need to supply a medical certificate. Further Mr Verkaaik agreed that Ms Meggs said that employees should put any claims forward and that these would be considered and responded to at the next meeting. Mr Verkaaik also agreed that Ms Meggs stated that there had been significant changes to the pharmaceutical industry and the pharmaceutical benefits scheme and that these changes had impacted on Sigma’s profits. Ms Meggs also stated that Sigma needed to balance a fair wage with the long term viability of the business and that the Berrinba Agreement was structured to meet those issues without adding significant cost to Sigma’s operations.
[71] Mr Verkaaik also agreed that at the meeting on 9 May 2017, Mr Andreotti raised further issues with the proposed Berrinba Agreement in relation to ordinary hours between midnight and 5.00 am; averaging of ordinary hours; meal allowance when overtime was worked; two days personal leave without a medical certificate; and annual leave loading. Sigma responded to those claims and offered a wage rate of $25 per hour with a 2% wage per annum increase over the life of the Berrinba Agreement and rejected a claim by employees for an hourly rate of $27.50 with a 3% per annum increase. Employees then sought $26 per hour before agreeing to the Company’s proposal.
[72] Further, Mr Verkaaik agreed that at a further meeting on 10 May 2017, attended by all employees except Mr Lawrence, Ms Meggs again provided an explanation of each clause in the Berrinba Agreement and encouraged employees to ask questions. Mr Lawrence did not attend because his partner was giving birth to their child. Ms Meggs also explained the ballot process and the process of lodging the Berrinba Agreement with the Commission for approval. The ballot was held on 19 May 2017 and Mr Verkaaik said that he voted in support of the Berrinba Agreement.
[73] Ms Beynon said that on Friday 12 May 2017, she contacted Ms Meggs by email to inform her that the NUW was a default bargaining representative in the negotiations for the Berrinba Agreement, for at least one of the Berrinba employees. Ms Beynon requested a copy of the Notice of Employee Representational Rights (NERR) issued by Sigma and that Sigma meet with the NUW prior to the following Thursday (18 May) to discuss the Berrinba Agreement. Ms Beynon did not receive a response to the email and sent a further email on 15 May requesting a response. On 15 May, Ms Meggs responded, forwarding a copy of the NERR to Ms Beynon and suggesting that a meeting be held on 18 May 2017 to discuss the Berrinba Agreement.
[74] At 9.27 am on 16 May 2017, Ms Beynon again emailed Ms Meggs requesting that a ballot for approval of the Berrinba Agreement be delayed and stating that if Sigma did not confirm agreement with this proposal by 12.00 pm on that date, the NUW would “escalate this matter”. Ms Meggs responded to this email informing Ms Beynon that Mr Lawrence had revoked his appointment of the NUW as his bargaining representative and appointed himself and that the NUW was no longer a bargaining representative for any employee who would be covered by the Berrinba Agreement. Ms Meggs went on to refuse the NUW’s request for a delay in the ballot for approval of the Berrinba Agreement and stated that the scheduled ballot would take place on 19 May 2017.
[75] In relation to the wage rates and wage increases in the Berrinba Agreement, Ms Beynon said that these are not comparable to those contained in the Mansfield Agreement. Ms Beynon also pointed to other warehouses in the area where higher rates are paid. Ms Beynon said that contrary to the evidence of Ms Meggs, the NUW was not informed that bargaining had commenced between Sigma and Mr Lawrence, who had at that time appointed the NUW as his bargaining representative. Accordingly, the NUW was not involved in the bargaining process for the Berrinba Agreement. Ms Beynon also said that the failure of Sigma to state in the Form F17 that the NUW was a bargaining representative for a period during the negotiations for the Agreement, meant that the Commission did not notify the NUW that the Berrinba Agreement had been lodged for approval and had the Union been notified, Ms Beynon would have taken steps to ensure that the NUW was involved in the approval process.
BOOT ISSUES
[76] In relation to BOOT issues, Ms Beynon said that the Agreement has only one classification – Multiskilled Storeperson – compared to the Award which has two classifications – Manufacturing Production Worker and Warehouse/distribution Worker – with four levels within each classification. The figures in the Checklist utilised when the Berrinba Agreement was initially approved, indicate that there is a percentage difference of 27.81% between the Award rate of $19.56 per hour for a Warehouse/Distribution Worker Grade 2 and the Berrinba Agreement rate of $25 per hour for a Multiskilled Storeperson. Ms Beynon also contended that classification for a Multiskilled Storeperson under the Berrinba Agreement should be compared with a Warehouse/Distribution Worker Grade 3 under the Award. When this comparison is made, the percentage difference in pay between the Award and the Berrinba Agreement is 24.19%.
[77] Ms Beynon also said that under the Award, an employee can progress to Grade 4 and also be entitled to higher duties payments. In a supplementary statement 16 Ms Beynon said that undertaking training of other employees is not contemplated in the classification definition for either a Warehouse/distribution worker Grade 2 or Grade 3 under the Award. Warehouse/distribution worker Grade 4 includes: “Ability to supervise and provide direction and guidance to other employees including the ability to assist in the provision of on-the-job training, induction, employee selection, safety and disciplinary procedures.” In relation to the statement of Mr Murray, the attached analysis does not compare a Multiskilled Storeperson under the Berrinba Agreement with a Warehouse/distribution worker Grade 4. Ms Beynon appended such a comparison to her supplementary witness statement.
[78] With respect to conditions in the Berrinba Agreement, Ms Beynon said that the Berrinba Agreement provides for less favourable conditions in relation to the following:
• Increased spread of hours and ordinary hours;
• Reduced shift penalty rates;
• Reduced weekend penalty rates;
• Working on a rostered day off;
• Reduced public holiday penalty rates;
• Overtime including reduced overtime penalty rates, daily calculation of overtime, voluntary overtime, and reduced conditions for part time employees;
• Part-time employee minimum hours;
• Meal allowance; and
• First aid allowance.
[79] In oral submissions for Sigma, Mr Merrell pointed to the fact that the calculations tendered by Ms Beynon did not make an adjustment for the fact that under the Award the spread for ordinary hours can be moved by one hour at either end per day without penalty.
CONSIDERATION
Was the group of employees fairly chosen?
[80] Section 186(3) of the Act requires that the Commission be satisfied that the group of employees covered by the Berrinba Agreement is “fairly chosen”. Deliberate manipulation of the agreement making processes under the Act might found a conclusion that a group of employees covered by an agreement is not fairly chosen. In CFMEU v John Holland Pty Ltd 17Buchanan J considered circumstances where the company entered into an enterprise agreement with all three employees it employed at a particular construction site. The agreement in that case covered future employees of the company, included job classifications in addition to those in which the three employees were employed and had the potential to apply throughout the entire state of Western Australia subject to the possibility of particular site agreements being made. In the leading judgment in that case, Buchanan J accepted that it was legally possible to make an enterprise agreement with as few as three employees. After noting that the consequence of making an agreement is that industrial action cannot be engaged in until its nominal expiry date, his Honour went on to observe that:
“Nevertheless, obviously questions may arise about the extent to which it is ‘fair’ for a very small group of employees to fix the terms and conditions of a larger group of employees who may be engaged during a period of years into the future.”
[81] His Honour also observed and that the reference in s. 186(3) and s. 186(3A) of the Act to the group of employees being fairly chosen must be a reference to a choice by the employer and that:
“There is no requirement that employees who vote on an agreement must have been in employment for any length of time and there is no requirement that they remain in employment after the Agreement is made. Presumably the presently employed members of such a group will act from self-interest, rather than from any particular concern for the interests of future employees. The potential for the manipulation of the Agreement making process is, accordingly, a real one.” 18
[82] The Court in that matter held that there was no suggestion of manipulation on the part of John Holland and that an important consideration in the determination of whether a group of employees was fairly chosen was the need to bring into account the business rationale for the choice as well as deal with any possibility of unfair exploitation. In that case it was not irrelevant to bear in mind that the agreement provided benefits and not detriments to those to whom it would apply. The Court also held that because of the impossibility of stating with precision what the coverage of an agreement may be in years to come, the size and composition of the future group is not relevant to the assessment posed for the Commission by s. 186(3) of the Act. 19
[83] In CEPU v Sustaining Works Pty Limited 20, a Full Bench of the Commission considered whether the “fairly chosen” requirement in s. 186(3) of the Act was met in circumstances where an employer made an agreement with five employees engaged in only one of a number of classifications provided for in the agreement. The facts in that case were that Sustaining Works was a subsidiary of Leightons, which had an agreement that could and would have covered the work had it been performed by Leightons and which contained higher rates. The Appellant Union in that case argued that the selection of a small number of employees to make the Sustaining Works Agreement undermined collective bargaining contrary to the policy and purpose of the Act; deprived future employees of the right to bargain; and was based on a business rationale whereby the company knew that it would be required to employ more employees and the agreement contained terms and conditions that were below the “market rates”.
[132] BOOT calculations were undertaken by Mr Daniel Murray of AiG on behalf of Sigma. Those calculations demonstrate that a Multiskilled Storeperson under the Berrinba Agreement would be better off overall when working ordinary hours from Sunday to Thursday, Tuesday to Saturday or Monday to Friday. Calculations for a Wednesday to Sunday roster where employees would work on both Saturday and Sunday were not provided.
[133] The afternoon and night shift work penalties under the Agreement are less than those under the Award and the range of hours which attract such penalties is less than the Award. Regardless of this I am generally satisfied that the higher base rate compensates employees for this reduction. Employees who work on public holidays under the Award are entitled to be paid for such work at the rate of 250%. Under the Agreement the public holiday rate is 200%. This results in an hourly rate under the Agreement of $50 for work on a public holiday compared to an hourly rate of $48.90 under the Award based on the grade 2 rate and $50.32 based on the grade 3 rate.
[134] The Berrinba Agreement contains the following provision at clause 5.3.5:
“5.3.5 Voluntary working of additional shifts or part-shifts
Full time employees may request the allocation of additional hours by way of a shift or part-shift on days on which they are not rostered to work ordinary hours. Where this is accepted by the Company the following conditions should apply:
(a) The request and acceptance shall be recorded in writing.
(b) Such additional hours when worked on a weekday shall be paid at the rate of time and a quarter of the ordinary time rate, and when worked on afternoon or night shift the rate shall be 125% of the applicable shift rate, for work performed within those hours which form the ordinary hours for those rostered on to that shift.
(c) Additional hours outside these boundaries, including additional hours on weekends, shall be paid at the applicable overtime rate.
(d) The employee working additional hours under this clause, within the boundaries of paragraph (b) shall have the same breaks as those employees for whom the shift is ordinary hours.
(e) Meal allowance will not apply to additional hours worked within the boundaries of paragraph (b).
(f) Any additional hours under this provision are subject to the requirement for a minimum 10 hour break between shifts.
(g) Approval of a request to work additional hours under this subclause is at the discretion of the Company. “
[135] It is well established in numerous decisions of the Commission, including Full Bench Decisions, that in applying the BOOT – and previously the no disadvantage test – consideration is given to the terms of the relevant award and the terms of the agreement. The award does not distinguish between hours worked on a voluntary basis and those directed by the employer and the analysis does not involve consideration of the wishes of employees or that they have volunteered to work at a particular time for ordinary rates. Similarly the comparison does not involve consideration of the fact that employees will not be offered overtime work if they do not agree to do that work at ordinary or reduced rates. 31
[136] Clause 5.3.5 of the Berrinba Agreement applies only to full time employees and to days where those employees would not be rostered to work. The period of work covered by the provision is a shift or part of a shift. Given that full time employees are rostered to work five in seven days and shifts of not more than ten ordinary hours, I have assumed that the maximum period of additional time that an employee could volunteer to work in any week would be twenty hours. I have also assumed that if an employee was normally rostered to work Monday to Friday, the voluntary hours could be worked on Saturdays and/or Sunday. The rate for those hours is 125%, a rate which is less than the Saturday and Sunday rates under the Award.
[137] In relation to part-time employees the Berrinba Agreement provides that:
“3.1.2 Part-time employment
(a) A part-time employee shall mean any employee employed for less than an average of 38 ordinary hours per week, on a regular and continuous basis.
…
(c) A part-time employee may be required to work in conjunction with or in addition to any rostered shift, on a voluntary basis, reasonable additional hours. Additional hours on weekdays up to 12 in any week shall be paid at the employee’s ordinary time hourly rate.
(d) Additional hours worked on weekdays by a part-time employee in excess of 12 in a week or additional hours worked on Saturdays, Sundays or Public Holidays shall be paid in accordance with clause 5.3 – Overtime, of this Agreement.”
[138] In contrast the Award provides that the employer and the part-time employee must agree in writing on a regular pattern of work specifying the hours worked each day, the days of the week to be worked and the starting and finishing times each day and that time worked in excess of such hours shall be paid for at overtime rates. Essentially, the Berrinba Agreement provides for part-time employees to volunteer to work up to 12 additional hours on weekdays for ordinary rates. Under the Award, such hours would be paid for at overtime rates and this is a detriment.
[139] Under the Award, meal allowance is payable to employees who work overtime for any period in excess of 1.5 hours after the usual ceasing times or after 5.45 pm. Under the Berrinba Agreement, meal allowance (albeit a higher allowance than provided for in the Award) is payable when an employee works overtime for two or more hours and is not payable where the employee was given 24 hours’ notice of the overtime being required to be worked.
[140] The Award provides for a mechanism to increase the first aid allowance while the Agreement does not. Further the Award provides rates for Trainees and employees who are eligible for a Supported Wage, and the Berrinba Agreement does not.
[141] On balance, I am not satisfied that the Berrinba Agreement passes the BOOT. I accept that the Agreement contains higher base rates and that regardless of whether the appropriate benchmark for assessing the BOOT is grade 2 or grade 3 under the Award, the higher rates would offset many of the matters dealt with above so that employees would be better off. I also accept that the detrimental effect of some of those matters is minimal. However, there are also a number of provisions in the Berrinba Agreement which could have a significantly detrimental effect compared to the Award, particularly when they are considered cumulatively with the minimally detrimental matters.
[142] There is nothing in the Berrinba Agreement to prevent Sigma from rostering a full time employee to work a five day roster from Wednesday to Sunday. I have undertaken that calculation and I am satisfied - assuming that an ordinary day is 7.6 hours – a Multiskilled Storeperson is marginally better off overall in terms of wages than if that employee was paid either the grade 2 or grade 3 rate under the Award. However, I am not satisfied that the margin above the Award for employees working both Saturdays and Sundays is sufficient to offset the reduction in the Award weekend penalty rates and the other matters identified above. As a result, I am of the view that a full time employee permanently rostered to work ordinary hours on Saturdays and Sundays could be worse off under the Agreement than the Award.
[143] I am also of the view that the voluntary hours provisions for full time employees could result in those employees not being better off overall under the Berrinba Agreement, in circumstances where those employees work their voluntary hours on Saturdays and Sundays or on Sundays. Similarly, I am unable to be satisfied that part-time employees would be better off overall if they work 12 voluntary hours during the week.
[144] I note that Sigma has offered a number of undertakings. These are as follows:
“1. In respect of clause 3.1.2(c) and (d) of the Agreement, all time worked in excess of a part-time employee’s ordinary contracted hours of work will be paid in accordance with clause 5.3 (Overtime) of the Agreement.
2a. Where there is a requirement under the Therapeutic Goods Administrator or applicable health and safety legislation, the Company will supply employees with any protective clothing or footwear required for their duties. If any employee is required to work in wet places, the Company will provide the employee with waterproof boots. The Company will clean any protective clothing or protective footwear an employee is required to wear as part of their duties at the Company’s expense. Any protective clothing or protective footwear supplied by the Company to employees remains property of the Company.
2b. Where 2(a) above is not applicable, the Company will provide an employee with safety footwear or reimburse the employee an amount up to $100.00 for the purchase of such safety footwear.
3. Schedule C of the Pharmaceutical Industry Award 2010 will be applied to any employee engaged as a trainee.
4. Schedule D of the Pharmaceutical Industry Award 2010 will be applied to any employee, who, because of the effects of a disability, is eligible for a supported wage under the Pharmaceutical Industry Award 2010.
5. In respect of the position description for a Multi-skilled Storeperson contained in Appendix One of the Agreement, any training required to be provided by such an employee will be limited to on-the-job training within the scope of the employee’s skills and competency.”
[145] Those undertakings were given following the hearing into approval of the Berrinba Agreement that I conducted and before the release of this Decision. The NUW has indicated that it agrees with the undertakings. I am satisfied that the undertakings address the outstanding issues other than the issue of full time employees who may be rostered to work ordinary hours on both Saturday and Sunday.
CONCLUSION
[146] For the reasons set out above, I am satisfied that the Berrinba Agreement has been genuinely agreed to by the employees covered by the Agreement. I am also satisfied that the group of employees covered by the Berrinba Agreement was fairly chosen. I am not satisfied that the Berrinba Agreement passes the BOOT with respect to full time employees in circumstances where they may be rostered to work ordinary hours on both Saturday and Sunday. I am satisfied that there are no other impediments to the Agreement being approved.
[147] I provide Sigma with a further opportunity to address the outstanding BOOT issue, and if the Company chooses to do so, offer a further undertaking. If a further undertaking is offered it should be provided to the bargaining representatives and the NUW for consideration. Sigma should provide any undertaking by close of business on Monday 22 January 2017. If a further undertaking is provided, the NUW is required to confirm its view in relation to such further undertaking by close of business two working days after the undertaking is provided.
[148] If I am satisfied that these requirements have been complied with and the undertaking adequately addresses the issue identified above, I will approve the Berrinba Agreement.
DEPUTY PRESIDENT
Appearances:
Mr J. Merrell of Counsel instructed by Mr S. Rinkevich of AiGroup for the Applicant.
Ms A. Economidis and Ms A. Thwaites on behalf of the NUW.
Hearing details:
Brisbane.
16 October.
2017.
1 Exhibit A1 – Witness Statement of Jacqueline Anne Meggs.
2 Exhibit A2 – Witness Statement of Nathan Jon Roylance.
3 Exhibit A3 – Witness Statement of Glen Stuart Sutcliffe.
4 Exhibit A4 – Witness Statement of Joshua Iser.
5 Exhibit A5 – Witness Statement of Daniel Murray.
6 Exhibit R1 – Witness Statement of Max Eric Verkaaik; Exhibit R2 – Supplementary Witness Statement of Max Eric Verkaaik.
7 Exhibit R3 – Witness Statement of Paul McNicol; Exhibit R4 – Supplementary Witness Statement of Paul McNicol.
8 Exhibit R5 – Witness Statement of Imogen Alexandra Beynon; Exhibit R6 – Supplementary Statement of Imogen Alexandra Beynon.
9 Refer clause 1.2.5.
10 Form F17 Employer’s statutory declaration in support of an application for approval of an enterprise agreement made by Mr Iser on 5 December 2016.
11 [2017] FWCA 424.
12 Exhibit A2 Annexure “NJR-5”.
13 Transcript PN748.
14 Exhibit A1 – Annexure “JAM-5”.
15 Exhibit A1 – Annexure “JAM-16”
16 Exhibit R6.
17 (2015) 228 FCR 297; 247 IR 55.
18 Ibid at 63.
19 Ibid at 64.
20 [2015] FWCFB 4422.
21 Ibid at [22].
22 Ibid at [25] – [26].
23 Ibid at [26] – [27].
24 [2015] FWCFB 4467.
25 Ibid at 33.
26 [2015] FWCFB 7272.
27 Ibid at [70].
28 [1999] FCA 847 at [121], [126-[127].
29 [2016] FWCFB at [22].
30 [2017] FCA 1266 at [41] – [47].
31 Bupa Care Services Pty Ltd [2010] FWCFB 2762; Mondex Group Pty Ltd [2015] FWC 1148.
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