Silk Contract Logistics Pty Ltd

[2018] FWC 3923

[2018] FWC 3923

FAIR WORK COMMISSION

DECISION

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

Silk Contract Logistics Pty Ltd
(AG2018/378)

COMMISSIONER CAMBRIDGE SYDNEY, 5 JULY 2018

Application for approval of the Silk Contract Logistics Pty Ltd Altona North/Laverton/Tullamarine Enterprise Agreement 2018.

[1] An application has been made for approval of an enterprise agreement known as the Silk Contract Logistics Pty Ltd Altona North/Laverton/Tullamarine Enterprise Agreement 2018 (the Agreement). The application was made pursuant to s. 185 of the Fair Work Act 2009 (the Act). The application has been made by Silk Contract Logistics Pty Ltd (the Employer or SCL). The Agreement is a single-enterprise agreement.

[2] The application was lodged with the Fair Work Commission (the Commission) at Melbourne on 6 February 2018. On 28 March 2018, the application was referred to the Commission as currently constituted. The application included a Statutory Declaration of Danielle Green made on behalf of the Employer and dated 5 February 2018 (the Declaration). The Declaration stated that the Agreement was made on 2 February 2018. Therefore the application was made within the 14 day lodgement time limit established by subsection 185 (3) (a) of the Act.

[3] The application for approval was listed for Hearing on 20 April 2018, at which time Ms D Green and Mr G Lerias appeared for the Employer, and Mr M Toner appeared for the National Union of Workers (NUW). During the proceedings held on 20 April, the Commission identified various issues relating to the contents of certain terms contained in the Agreement which required clarification.

[4] Ms Green provided some important clarifications during the Hearing. The Employer was invited to consider some residual issues raised by the Commission and to respond in writing. The Commission has received correspondence dated 14 June 2018, from the Employer, which included further material in support of the application including proposed undertakings.

[5] The further material in support of the application sought to address most, but not all, of the concerns that were identified during the proceedings held on 20 April. Unfortunately, the further material in support of the application failed to address a number of important concerns that were raised by the Commission during the Hearing held on 20 April 2018.

[6] For example, the Commission raised concern 1 about material contained in an appendix to the Declaration which introduced a potential issue going to whether the Commission could be satisfied that the Agreement had been genuinely agreed to by the relevant employees. This concern would not be addressed by the prospect that the employees would be provided with a further letter from the Employer clarifying that the Agreement was a stand-alone instrument and it did not incorporate the terms of the Storage Services and Wholesale Award 2010 (the Award). This concern related to what relevant employees may have understood at the time at which the Agreement was made and not what might subsequently be clarified.

[7] By way of a further example, the Commission also raised concern 2 about the absence in the Agreement of any penalty rate regime for work performed on a Saturday when compared with the prescription provided by clause 24.5 (a) of the Award. The further material in support of the application and the proposed undertakings have not properly addressed, inter alia, this particular concern.

[8] The Commission has carefully considered the further material in support of the application and the proposed undertakings. Certain aspects of the concerns raised by the Commission in the Hearing held on 20 April have been potentially addressed by the proposed undertakings. However, other concerns have not been satisfactorily addressed by either the further material provided in support of the application or the proposed undertakings. These concerns primarily relate to the requirement for the Commission to be satisfied that the Agreement would pass the Better Off Overall Test (BOOT) as required by subsection 186 (d) and s. 193 of the Act.

[9] The further material in support of the application and the proposed undertakings were embodied in the form of a letter dated 14 June 2018, from the Employer’s Director – Risk and Governance, Mr George Lerias. This letter included a number of proposed undertakings which were intermingled with statements that were made in respect to some of the concerns raised by the Commission during the hearing on 20 April. One statement that was included in the 14 June letter from the Employer dealt with a particular concern regarding application of the BOOT to casual employees covered by the Agreement. This particular statement was made in the following terms:

“10. With respect to clause 5.5 of the Agreement, SCL does not agree to increase the casual loading from 20% to 25%.”

[10] The Employer’s letter of 14 June then set out comparative tables which demonstrated that although a casual employee was receiving a 20% loading as opposed to the Award prescription of 25%, a higher base rate in the Agreement meant that the total rate was at least 3.11% higher than the Award. This outcome was identified 3 and recognised by the Commission during the Hearing on 20 April. However, this issue introduces a twofold concern which was also identified during the Hearing4 and which has not been addressed in the letter of 14 June.

[11] The loading of 25% paid to casual employees has been determined as the ratio that represents the appropriate recognition of the loss of various employment benefits that are not provided to casual employees. A casual loading of anything less than 25% does not properly recognise the loss of employment benefits that accompany casual employment. The failure to adequately recognise the loss of employment benefits associated with casual employment cannot be justified by reference to the actual outcome achieved because of a higher base rate used to apply a lower casual loading percentage. The appropriate ratio is lost, and the result essentially devalues the casual employment vis a vis the rate paid to full-time and part-time employees under the Agreement.

[12] Therefore, I reject the proposition that because a casual employee under the Agreement might obtain an actual hourly rate of pay that is numerically greater than if the relevant modern award applied to that casual employee, then that employee would be better off overall. In such circumstances, the casual employee under the Agreement has not had the loss of employment benefits associated with casual employment recognised in a manner commensurate with that of the modern award covered employee. The BOOT is not confined to arithmetic comparisons, but instead it includes a very wide range of factors, some of which are unable to be quantified but which nevertheless must be appropriately evaluated and balanced in order to provide for an overall outcome.

[13] In any event, the 3.11% differential for the level 1A classification is insufficient to satisfactorily compensate for other terms and conditions of the Agreement that are less beneficial than those contained in the Award. In particular, in circumstances where a casual was engaged at particular times that attract penalty rates under the Award and which are not found in the Agreement, the actual hourly rate would be significantly less under the Agreement than under the Award. For example, under the Agreement, a casual level 1A working from 6am, outside of the spread of hours stipulated in clause 22.2 (a) of the Award, would receive an hourly rate of $25.18 ($20.98 + 20%), while under the Award the casual hourly rate for that hour would be $36.62 ($19.53 + 25% x 1.5).

[14] Unfortunately, without any rectification of the various concerns raised by the Commission, the fact that many, but not all, rates in the Agreement may be higher than the Award rates will not provide for satisfaction of the BOOT. When other terms and conditions provided by the Award and which are not contained in the Agreement are contemplated, there is in certain instances, but not all cases, no capacity for satisfaction of the BOOT.

[15] The Commission has given consideration to providing the applicant with further Hearing and other opportunity as a means to further attempt to redress the various on-going concerns. Unfortunately the Employer’s letter of 14 June 2018, provided some very firm statements about particular matters that appeared to be uncontroversial during the Hearing. Further, upon reflection, the proposed undertakings or any subsequently developed permutation of these or other undertakings which could, on any objective contemplation, provide rectification of the concerns that have been identified, would result in substantial changes to the Agreement.

[16] Consequently, any objectively determined prognosis for the application would create a circumstance that offended subsection 190 (3) (b) of the Act.

[17] Therefore, in such circumstances, and in the interests of efficiency and avoidance of additional costs to the applicant, as the application is not capable of satisfying the relevant requirements of ss. 186, 187, 190 and 193 of the Act, the application must be dismissed.

COMMISSIONER

Appearances:

Ms D Green and Mr G Lerias of Silk Contract Logistics appeared for the employer.

Mr M Toner appeared for the National Union of Workers.

Hearing details:

2018.

Sydney:

April, 20.

Printed by authority of the Commonwealth Government Printer

<PR608661>

 1   Transcript @ PN12- PN14.

 2   Transcript @ PN71- PN77.

 3   Transcript @ PN19.

 4   Transcript @ PN95-PN104.