Sigma Company Limited T/A Sigma Healthcare

[2024] FWCA 2959

[2024] FWCA 2959

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.185 - Application for approval of a single-enterprise agreement

Sigma Company Limited T/A Sigma Healthcare

(AG2024/2363)

THE SIGMA (SA/NT) ENTERPRISE AGREEMENT 2024

Pharmaceutical industry
DEPUTY PRESIDENT SLEVIN	SYDNEY, 12 AUGUST 2024

Application for approval of the Sigma (SA/NT) Enterprise Agreement 2024

1. Sigma Company Limited T/A Sigma Healthcare has made an application for approval of an enterprise agreement known as the Sigma (SA/NT) Enterprise Agreement 2024 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act). The Agreement is a single enterprise agreement. The Commission must approve the Agreement if satisfied that the requirements in ss 186 and 187 are met.

1. Section 186(2)(d) requires the Commission to be satisfied that the agreement meets the better off overall test (BOOT). The test is found in s.193 of the Act and it is to be applied in accordance with s.193A.  Under s.193 the Commission must be satisfied, as at the time the application for approval was made, that each award covered employee, and each reasonably foreseeable employee, for the agreement would be better off overall if the agreement applied to the employee than the relevant modern award. Here the relevant award is the Pharmaceutical Industry Award 2020 (the Award). In applying the test, the Commission is required by s.193A to make a global assessment of whether each employee would be better off having regard to the terms of the agreement which would be more beneficial than the award and the terms which would be less beneficial. In making that assessment, the Commission may have regard to the patterns of work that are reasonably foreseeable at the time of the application.   

1. A number of BOOT concerns were raised with the applicant both by the Commission and the the Shop, Distributive and Allied Employees Association (SDA) which was a bargaining representative for the Agreement.

1. The base rates in the Agreement are around 11% to 22% above the Award. When the reductions in penalty rates in the Agreement are taken into account the total rates of pay are not as beneficial. The potential that employees may not actually be better off overall arises by reference to a number of factors.  First, in relation to the span of hours worked and associated overtime rates, clause 5.1 of the Agreement states that ordinary hours can be worked Monday to Sunday and provides no span of hours. The Award provides for ordinary hours of work Monday to Friday with a span of hours 7.45am – 5.15pm. This means the hours worked which may incur overtime penalties under the Award will incur those penalties under the Agreement. The applicant provided calculations based on the hours that the employees currently work and submits that the higher wage rates and loadings applicable under the Agreement result in the employees being better off overall. The applicant further clarified that they have been working these rosters for three years and do not foresee that they will change.

1. Similarly, the Agreement is silent on shift and weekend penalties, including for work performed on Saturday, and provides simply a penalty rate of 175% for work performed on Sunday. The span in clause 5.1.2 of the Agreement is Monday-Sunday. The Award provides for penalty rates on Saturdays of 150% for the first 2 hours and 200% thereafter and on Sundays of 200%. This, in combination with other reductions when compared to the Award, may leave employees worse off under the Agreement. The applicant’s response to this was in again that calculations based on current rosters provide a more beneficial outcome. I accept that the calculations show that employees are better off overall on the current rosters albeit not by a much lesser margin than the base rate increases suggest.

1. The applicant accepted that part-time and casual employees who only work on weekends might not be better off overall and provided an undertaking in relation to this. The effect of the undertaking is that in any pay period where this occurs the Applicant will conduct a reconciliation of rates against the award and make payment to ensure the affected employee is better off overall.

1. A concern raised by the SDA was that employees have less beneficial break entitlements under the Agreement as they need to work over 4 hours in a day for their first 10 minute paid rest break and over 7 hours a day for their second, whereas the Award allows two 10 minute paid rest breaks irrespective of hours worked. The applicant provided an undertaking to address this issue.

1. The SDA expressed the view that the undertakings do not resolve the BOOT concerns.  The SDA noted that the first undertaking only seeks to rectify pay for work on weekends but does not attempt to resolve other BOOT concerns that may result in less pay. I note that the applicant’s response to the BOOT concerns relies on the current patterns of work to establish that the Agreement meets the BOOT.  The first undertaking relates to the issue of weekend work by casual and part-time employees.  The SDA raises concern that the undertaking allows the applicant to underpay employees in one week only to reimburse them in the next which should not be permitted.

1. The applicant responded to the concern. I accept the applicant’s response which was to the effect that the reconciliation in the undertaking does not arise because an underpayment has occurred. The initial payment made will be permitted by the Agreement. The undertaking will require the applicant to assess whether the payment was adequate to cover the amount the employee would have been paid had the Award penalties applied. If it was not, a further payment becomes due under the Agreement in the following pay period. That payment will ensure the employee was better off overall for the earlier pay period.  Consequently, there is no underpayment, merely a process of reconciliation against the Award that may give rise to a further payment under the Agreement. I also note the first undertaking is directed at part-time and casual employees who only work weekends and so may not benefit in some weeks from the higher rates applicable on weekdays. 23 employees were covered by the Agreement at the time the application was made. There was one part-time employee and one casual employee which means it unlikely that implementing the undertaking would be onerous.

1. The SDA also raised concerns that the rostering arrangements may change as it anticipates the business will grow in the near future. I note that my satisfaction as to the BOOT is based on the pattern of work that applied at the time of the application. Should the pattern of work change an application may be made under s 227A for the BOOT to be reconsidered.

1. A copy of the undertakings provided in response to matters referred to above is attached in Annexure A. I am satisfied that the undertakings will not cause financial detriment to any employee covered by the Agreement and will not result in substantial changes to the Agreement. Pursuant to s.201(3), the undertakings are taken to be terms of the Agreement.

1. The Agreement does not cover all of the employees of the employer, however, taking into account the factors in sections 186(3) and (3A) I am satisfied that the group of employees was fairly chosen

1. Subject to the undertakings and the explanations provided by the applicant, including in relation to the patterns of work at the time the application was made, I am satisfied that each of the requirements of ss.186, 187 as are relevant to this application for approval have been met.   

1. The SDA being a bargaining representative for the Agreement, has given notice under s.183 of the Act that it wants the Agreement to cover it. In accordance with s.201(2) I note that the Agreement covers the organisation.

1. The Agreement was approved on 12 August 2024 and, in accordance with s.54, will operate from 19 August 2024. The nominal expiry date of the Agreement is 30 June 2027.

DEPUTY PRESIDENT

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Annexure A