Snass Group Pty Ltd T/A Guzman Y Gomez Whitfords

[2018] FWC 3719

[2018] FWC 3719

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Snass Group Pty Ltd T/A Guzman Y Gomez Whitfords
(AG2018/298)

COMMISSIONER LEE MELBOURNE, 6 JULY 2018

Application for approval of the Snass Group Pty Ltd - Enterprise Agreement 2017.

Introduction

[1] This decision concerns an application by Snass Group Pty Ltd T/A Guzman Y Gomez Whitfords (the Applicant) for approval of an enterprise agreement known as the Snass Group Pty Ltd - Enterprise Agreement 2017 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act) and relates to a single enterprise agreement.

[2] The primary activity of the Applicant is in the restaurant industry. Employees whose employment is covered by the Agreement perform a variety of work that is covered by the Restaurant Industry Award 2010. This is the relevant modern award for the purposes of the ‘better off overall test’ (BOOT) in s.193 of the Act.

[3] On 14 May 2018 the Fair Work Commission (the Commission) wrote to the Applicant raising a number of concerns in relation to the application for approval of the Agreement. Issues were raised with the Applicant in relation to forms and signature requirements, pre-approval requirements (including that the application was not lodged within 14 days after the Agreement was made), the National Employment Standards (NES) and the Better off Overall Test (BOOT).

[4] On 28 May 2018 the Applicant’s representative and employer bargaining representative, Mr Christopher Agnew, responded to the concerns raised and provided a number of proposed undertakings.

[5] The response provided and proposed undertakings did not resolve my concerns in relation to the application and on 6 June 2018 the Commission wrote to the Applicant raising a number of outstanding concerns. A response was requested by close of business Friday, 8 June 2018. No response was forthcoming. In light of the number of outstanding concerns, particularly in relation to the BOOT and that no response had been provided the matter was listed for Hearing, by Telephone on Monday, 18 June 2018.

[6] On Saturday, 16 June 2018 the Applicant’s representative filed a response to the email from the Commission dated 6 June 2018 which attached further revised undertakings. On Monday, 18 June 2018 the Commission sent correspondence to the Applicant’s representative with relevant modelling in relation to the BOOT prior to the hearing. The matter was heard before me on 18 June 2018. Mr Agnew appeared on behalf of the Applicant with Mr Shalen the Applicant’s Director.

[7] I note there were 54 days between the making of the Agreement and lodging of the application with the Commission. The Applicant’s representative submitted that the ballot was conducted in the busy Christmas period and this resulted in the Applicant being unable to provide them with information until after the Christmas break, that the Applicant was not aware of the 14 day period to file the application and it was difficult to get an authorised witness to properly witness the Employer’s statutory declaration over this period. It was submitted that given these factors the delay of this length is not unexpected and has caused no prejudice to the employees. During the hearing Mr Shalen confirmed that it was a busy time of year and it took him time to get the documentation to the Applicant’s representative. 1 Mr Agnew agreed that it was a large amount of time but that there did not seem to be any perceived prejudice to any of the parties to the Agreement as a consequence of the delay.2 Taking into account the submissions made by the Applicant in relation to late lodgement, in all the circumstances I consider it fair to extend the time for making the application to the date it was actually made pursuant to s.185(3)(b) of the Act.

Does the Agreement pass the BOOT?

[8] Before the Commission may approve an enterprise agreement, it must be satisfied that the Agreement passes the better off overall test (s.186(2)(d)).

[9] Section 193 of the Act is as follows:

“193 Passing the better off overall test

When a non greenfields agreement passes the better off overall test

(1) An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.

FWC must disregard individual flexibility arrangement

(2) If, under the flexibility term in the relevant modern award, an individual flexibility arrangement has been agreed to by an award covered employee and his or her employer, the FWC must disregard the individual flexibility arrangement for the purposes of determining whether the agreement passes the better off overall test.

When a greenfields agreement passes the better off overall test

(3) A greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each prospective award covered employee for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.

Award covered employee

(4) An award covered employee for an enterprise agreement is an employee who:

(a) is covered by the agreement; and

(b) at the test time, is covered by a modern award (the relevant modern award) that:

(i) is in operation; and

(ii) covers the employee in relation to the work that he or she is to perform under the agreement; and

(iii) covers his or her employer.

Prospective award covered employee

(5) A prospective award covered employee for an enterprise agreement is a person who, if he or she were an employee at the test time of an employer covered by the agreement:

(a) would be covered by the agreement; and

(b) would be covered by a modern award (the relevant modern award) that:

(i) is in operation; and

(ii) would cover the person in relation to the work that he or she would perform under the agreement; and

(iii) covers the employer.

Test time

(6) The test time is the time the application for approval of the agreement by the FWC was made under section 185.

FWC may assume employee better off overall in certain circumstances

(7) For the purposes of determining whether an enterprise agreement passes the better off overall test, if a class of employees to which a particular employee belongs would be better off if the agreement applied to that class than if the relevant modern award applied to that class, the FWC is entitled to assume, in the absence of evidence to the contrary, that the employee would be better off overall if the agreement applied to the employee.”

[10] Section 190 of the Act provides as follows:

“190 FWC may approve an enterprise agreement with undertakings

Application of this section

(1) This section applies if:

(a) an application for the approval of an enterprise agreement has been made under section 185; and

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

Approval of agreement with undertakings

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

Undertakings

(3) The FWC may only accept a written undertaking from one or more employers covered by the agreement if the FWC is satisfied that the effect of accepting the undertaking is not likely to:

(a) cause financial detriment to any employee covered by the agreement; or

(b) result in substantial changes to the agreement.

FWC must seek views of bargaining representatives

(4) The FWC must not accept an undertaking under subsection (3) unless the FWC has sought the views of each person who the FWC knows is a bargaining representative for the agreement.

Signature requirements

(5) The undertaking must meet any requirements relating to the signing of undertakings that are prescribed by the regulations.”

[11] As the Full Bench noted in Hart v Coles Supermarkets Australia Pty Ltd,³s.193 requires the Commission to be satisfied that a “consideration of all the benefits and detriments under the Agreement results in each employee and each prospective employee being better off overall under the Agreement compared to the Award”.⁴

[12] The Agreement is a comprehensive Agreement and does not incorporate the terms of the relevant award, being the Restaurant Industry Award 2010 (the Award) nor any other modern award.

[13] The Agreement does not provide various Award entitlements and contains a number of less beneficial terms when compared with the Award. The Agreement contains rates of pay that were between 11.93% - 12.60% (excluding apprentices) above the corresponding rates of pay in the Award which is more beneficial. An extensive list of BOOT concerns were raised with the Applicant as I was not satisfied that the rates of pay in the Agreement were high enough to compensate for the number of reductions in entitlements. The major less beneficial terms in the Agreement at test time included the following:

•  The Agreement does not offer shift penalties, weekend penalties, public holiday penalties, annual leave loading or a number of allowances. Clause 1.2 of the Agreement states that the hourly rates of pay are inclusive of any applicable Award weekend or public holiday penalties and allowances, as well as any entitlement to annual leave loading.

•  Clause 4.1.1(b) of the Agreement offers full-time employees a minimum engagement of 3 hours per shift. Clause 31.2(a) of the Award provides that a minimum of 6 hours may be worked on any one day.

•  Clauses 4.1.1(b) and 4.1.2(b) of the Agreement allow full-time and part-time employees to work up to 12 hours per shift. Clause 31.2(a) of the Award provides for a maximum of 11 and a half hours work on any one day.

•  Clauses 4.1.1(f) and 4.1.2(e) of the Agreement state that the minimum break between the end of one shift on a day and the commencement of another shift the following day must be 8 hours. Clause 31.2(d) of the Award states that an employee must be given a minimum break of 10 hours between the finish of ordinary hours of work on one day and the commencement of ordinary hours of work on the next day.

•  Clause 4.1.2(b) of the Agreement offers part time employees a minimum engagement of 2 hours per shift. Clause 12.5(b) of the Award states that a part-time employee must not be rostered to work for less than 3 hours in a day.

•  The Agreement does not appear to contain an overtime provision specifically for part-time employees. Clause 12.8(c) of the Award provides that part-time employees will be entitled to overtime for all time worked in excess of the employee’s rostered hours.

•  Clause 4.2.2 of the Agreement offers employees a Saturday overtime penalty of 150% for the first 2 hours and 200% thereafter. Clause 33.2(b) of the Award provides a Saturday overtime penalty of 175% for the first 2 hours and 200% thereafter.

•  Clause 4.2.2 of the Agreement offers a Sunday overtime penalty of 150% for the first 2 hours and 200% thereafter. Clause 33.2(c) of the Award provides a Sunday overtime penalty of 200% for all hours worked.

•  Clause 2.3 of the Agreement states that training conducted outside of an employees rostered hours will be paid at the ordinary rate of pay. It appears that under the Award employees undertaking training outside of rostered hours may be entitled to overtime.

•  Clause 4.4.1 of the Agreement states that employees are entitled to an unpaid meal break of 30 minutes if they work more than 6 consecutive hours in a shift. Clause 32.1 of the Award states that if an employee, including a casual employee, is required to work for five or more hours in a day the employee must be given an unpaid meal break of not less than 30 minutes.

•  Clause 4.4.2 of the Agreement states that the unpaid meal break will be taken at a time designated by the employer. Clause 32.1 of the Award provides that the break must be given no earlier than one hour after starting work and no later than six hours after starting work.

•  Clause 4.3.4 of the Agreement states that the roster may be changed on giving at least 3 days’ notice or such lesser period as mutually agreed. In the case of emergency, unforeseen operational contingency, absenteeism, or sickness the employer is required to give the employee no notice. Clause 31.6(b) of the Award states that the roster will be alterable by mutual consent at any time or by amendment of the roster on seven days’ notice. Where practicable, two weeks’ notice of rostered day or days off should be given provided that the days off may be changed by mutual consent or through sickness or other cause over which the employer has no control.

•  Clause 5.1.5 of the Agreement states that an employer may require an employee to take accrued annual leave where the employer has provided the employee at least 4 weeks’ notice in writing and where the employee has accrued more than 4 weeks annual leave. Clauses 35.4 and 35.5 of the Award provide that an employee has an excessive leave accrual if the employee has accrued more than 8 weeks’ paid annual leave (or 10 weeks’ paid annual leave for a shiftworker) and a direction by an employer must not require the employee to take a period of paid annual leave beginning less than 8 weeks, or more than 12 months, after the direction is given.

[14] The Applicant provided a significant number of undertakings on 28 May 2018 in an attempt to satisfy my concerns which included, among other things, an undertaking increasing the rates of pay for some classifications. However, the undertaking decreased the rates of pay for some casual classifications contrary to s.190(3)(a) of the Act. Excluding the casual classifications offered a decreased rate and apprentice rates of pay, the undertaking resulted in rates of pay between 12.30% - 16.69% above the corresponding Award. An undertaking was also provided which would have the effect of replacing clause 4.3.1 of the Agreement.

[15] Clause 4.3.1 of the Agreement as voted reads as follows:

“4.3.1 Rosters

The Employer will roster all Employees based on your initial availability, business needs, hours of operation, level of responsibility, skill level, holidays, and illness.”

[16] The undertaking (undertaking 2) proposed by the Applicant in relation to clause 4.3.1 reads as follows:

“That clause 4.3.1 of the Agreement will be treated of no effect, and the parties will instead observe and comply with the following new clause 4.3.1:

The Employer will roster all Employees based on their availability, business needs, hours of operation, level of responsibility, skill level, holidays and illness. Provided that the Employer will not roster staff more than 30% of their hours for a roster period on a weekend and 4 public holidays. Should an Employee work outside of this restriction they will be paid the relevant Award penalties plus 1%.”

[17] On 6 June 2018 the Commission raised a number of concerns in relation to the proposed undertakings. A number of the undertakings had the effect of making changes to provisions in the Agreement which I had not raised a particular concern with, for example, the averaging of hours provisions. In any case, the undertakings did not satisfy my concern that employees would not be better off overall under the Agreement. Further, it was noted that I was concerned the rostering restriction proposed in the undertaking regarding clause 4.3.1 was potentially detrimental as it imposes a restriction on weekend and public holiday work not found in the Agreement voted on by employees and that this rostering restriction potentially amounts to substantial change to the Agreement (s.190(3) of the Act).

[18] On Saturday, 16 June 2018 the Applicant’s representative responded to the Commissions email dated 6 June 2018. In this correspondence, a number of undertakings were revised to address matters including where undertakings altered provisions in the Agreement which I had not raised a particular concern with and an amended undertaking to ensure the revised casual rates of pay were not below the rates of pay in the Agreement. As to the rostering restriction proposed in undertaking 2 and my concern that the undertaking may be detrimental or result in substantial change to the Agreement, the Applicant’s representative responded as follows:

“All the changes are of a significant financial benefit of [sic] the Employees and the changes do not result in ‘substantial changes to the Agreement’ being changes to 8 out of 109 sub-clauses and sub-sub-clauses of the Agreement and 3 out of 32 clauses have been amended. It is our view taking the ordinary and natural meaning of the word ‘substantial’ which we submit means ‘greater rather than less’ (see Dandy Power Equipment Pty Ltd v Mercury Marine Pty Ltd (1982) 44 ALR 173).”

[19] In response to my concern that the proposed undertaking to increase the rates of pay was insufficient to ensure employees are better off overall under the Agreement the Applicant’s representative responded as follows:

“Without understanding exactly what is the Commission’s basis in reaching this view it is difficult to respond to such an assertion, could the Commission please provide us with a copy of the modelling used to reach this view?”

[20] Prior to the Hearing on 18 June 2018 the Commission responded attaching the modelling as requested by the Applicant’s representative. Two models were provided. One with the rostering restriction proffered by the Applicant for an employee classified as a full-time introductory adult and one without the rostering restriction for an employee classified as a casual introductory adult. While the modelling showed that the rates were much closer once the proposed rostering restriction applied, the Agreement still failed the BOOT. If the restriction was not applied, as shown in the second model, the Agreement failed the BOOT by a substantial margin. A copy of the modelling is attached in Annexure A.

[21] At the hearing Mr Agnew appeared on behalf of the Applicant with Mr Shalen, the Applicant’s Director. Mr Shalen stated that he did not have any staff that worked the configuration of hours depicted in the models. 5 Mr Agnew submitted the models prepared by the Commission do not reflect what actually happens in the workplace. Mr Agnew accepted that it was possible under the terms of the Agreement for the hours modelled to be worked but that while it is possible, it does not happen.6 Similarly as to the second model provided dealing with a casual employee, Mr Agnew agreed that it was possible to roster an employee in the manner modelled but stated that there was no evidence that the Applicant was doing that.7

[22] The Applicant’s representative referred me to a 2011 decision of Commissioner Ryan in John Holland Pty Ltd 8 where it was said there were a significant number of undertakings given and the Commissioner did not seem to have significant issues with similar changes to hours of work.9

[23] In response to me raising a concern specifically in relation to part-time employees and in particular casual employees, and how the rostering restriction undertaking would substantially change the Agreement in respect to those employees, the Applicant’s representative said there were no casuals employees at the time the Agreement was made, though he did not know if that was still the situation. Further, he suggested that it would not be “untoward” to have another vote of the staff to “okay these amendments”. The Applicant’s representative was advised by me that I would not be engaging in that practice. 10

[24] The Applicant’s representative also said during the hearing that he indicated to the Applicant “at the outset of this process that he should be rostering staff along those lines so that 70 per cent of their hours Monday to Friday and 30 per cent on weekends”.¹¹ Mr Shalen claimed that he was presently rostering his staff “for the majority of (indistinct) work majority of hours upon a day, 60 to 80 per cent of the hours during Monday to Friday and the other 32 (indistinct) 10 to 12 hours on the weekends”. 12

[25] Subsequent to the hearing the Applicant filed revised undertakings and submissions in relation to the proposed undertakings. The Applicant’s revised undertakings were the same as previous undertakings provided, however, the rates were increased by 1.9% to account for the 1.81% variance in the Agreement rate and the Award rate in Model 1. The Applicant’s representative referred to undertaking 2 and submitted:

“Undertaking 2 is not intended to restrict or limit the number of hours an employee is to be rostered on or work on a weekend or on a given Saturday or Sunday on the contrary it is intended to solely address any concerns the Commission may have in relation in relation [sic] to the better off over [sic] test under section 193 of the FW Act (the better off overall test) by ensuring the maximum number of hours to be worked or rostered on, on a weekend before the Employees conditions revert back to the relevant Award penalties.”

[26] The Applicant also provided further submissions referring me to the Explanatory Memorandum to the Fair Work Bill 2008 (Explanatory Memorandum) for assistance in understanding the application of s.190 of the Act and two decisions of Deputy President Bull in Burger Urge 13 and Chocolate Vanilla Pty Ltd T/A Gelatissimo Kirribilli14 where it was submitted that rostering restrictions were accepted of similar effect to those proposed in this matter.

[27] There are a significant number of undertakings provided in this matter summarised as follows:

•  Undertaking 1: has the effect of replacing Clause 3.2.1 of the Agreement and adjusts the rates of pay;

•  Undertaking 2: has the effect of replacing Clause 4.3.1 of the Agreement and places a rostering restriction on staff for weekends and public holidays;

•  Undertaking 3: provides that the Abandonment of Employment clause at 6.2 will not be relied upon and treated as being of no effect;

•  Undertaking 4: has the effect of replacing Clause 4.1.1 – Hours of work – Full-time employees which adjusts the minimum and maximum hours worked per shift, deletes subclause 4.1.1(d) which provided ‘8 rostered days off per 4 week cycle’ and adjusts the minimum break between the end of one shift on a day and the commencement of another shift on the following day;

•  Undertaking 5: has the effect of replacing Clause 4.1.2 – Hours of work – Part-time employees and provides for overtime worked outside of the agreed pattern of hours, adjusts the minimum and maximum numbers of hours per shift and adjusts the minimum break between the end of one shift on a day and the commencement of another shift on the following day;

•  Undertaking 6 (numbered 4): has the effect of replacing Clause 4.2.2 – Overtime penalties and adjusts various overtime penalties;

•  Undertaking 7 (numbered 5): has the effect of replacing Clause 2.3 – Training and provides overtime rates are payable for training outside of rostered hours;

•  Undertaking 8 (numbered 6): has the effect of replacing Clause 4.3.4 - Change of Roster increasing 3 days’ notice to 7 days’ notice;

•  Undertaking 9 (numbered 7): has the effect of replacing Clause 4.4.1 – Meal Break providing an entitlement to an unpaid meal break if an employee works more than 5 hours instead of 6 hours and stipulating when a break must be taken; and

•  Undertaking 10 (numbered 8): has the effect of replacing Clause 5.1.5 and adjusts requirements for when an employer may require an employee to take annual leave by increasing 4 weeks to 8 weeks.

[28] A copy of the undertakings is attached in Annexure B.

Consideration

[29] The Commission cannot approve an enterprise agreement unless it has reached a state of satisfaction that every existing and prospective award covered employee to be covered by the enterprise agreement is better off overall under the proposed agreement.

[30] This Agreement contains a number of less beneficial terms than the Award or does not provide them at all. Offsetting those less beneficial terms is an increase in the rate of pay which is paid for all hours worked by employees, irrespective of the time or the days of the week. The particular establishment is open from 10:00 am to 10:00 pm Sunday to Thursday and from 8:00 am to 11:00 pm on Fridays and Saturdays. 15 At the time of the vote, the Agreement covered 30 employees, 28 of whom were part-time and 20 of whom were under 21 years of age.

[31] It is clear the terms of the Agreement as voted on allowed for the working of roster configurations that were contemplated in the modelling conducted by the Commission. The modelling indicated that the base rate of pay in the Agreement was not high enough to ensure that employees otherwise entitled to the Award penalty rates would be better off overall under the agreement. This is the case whether employees where full-time, part-time or casual. Therefore, the Agreement that was submitted for approval clearly did not pass the better off overall test. It is clear that the higher rates of pay in the Agreement are not high enough to compensate for the number of less beneficial terms in the Agreement. There do not appear to be any significant more beneficial terms in the Agreement that would ameliorate this concern.

[32] Numerous undertakings have been proffered to satisfy my concerns in relation to the BOOT. Most of these undertakings have the effect of reducing the less beneficial terms. The final undertakings provide for rates of pay for employees that are between 14.40% - 18.91% (excluding apprentices) above the corresponding rates of pay in the Award.

[33] The first significant point is that undertaking 2, which is extracted above at paragraph [16] will have the effect of substantially altering the Agreement from the one that was voted on by employees. I have taken into account the response of Mr Shalen during the hearing that the undertaking was consistent with current rostering patterns. 16 However, this response is not sufficient to satisfy me that this is the roster pattern worked by all employees. In any case, the pattern of work said to occur is not reflected at all in the terms of the Agreement voted on by the employees.

[34] I have considered the submission from the Applicant that the undertaking will not restrict hours on the weekend worked but rather ensure the maximum number of hours to be worked or rostered on a weekend before their conditions “revert back” to the relevant Award penalties. I have two concerns with this proposition.

[35] The first proposition relates to the likely effect of the undertaking. It is clear from the terms of the Agreement that was made that there is no limitation on the configuration of rosters and the number of hours that can be worked on particular days of the week such that, for example, an employee could work all of or the majority of their hours in a weekly roster cycle on a Saturday or Sunday or over both days. The concern I have is similar to that contemplated at Item 807 in the Explanatory Memorandum referred to by the Applicant. The Explanatory Memorandum uses an illustrative example and explains that the Commission could not satisfy a concern that employees who worked on Sundays would not be better off overall by accepting an undertaking that those employees would no longer be required to work on Sundays because “such an undertaking is likely to cause financial detriment to those employees as they would lose the opportunity to work on Sundays for penalty rates. This would change the nature of the agreement and may have affected the way the employees chose to vote on it”. 17

[36] In this case, the concern is similar; that weekend work is not sufficiently remunerated if a significant proportion of the hours worked are on the weekend. The undertaking proffered does not eliminate the ability to work on Sundays and Saturdays to deal with the concern but rather limits the amount of Sunday and Saturday work to 30% of the total hours of work they do in a week. This is a very different outcome to that provided in the Agreement that was made. For this reason I consider undertaking 2 would cause both financial detriment to employees covered by the Agreement and result in substantial changes to the Agreement. Therefore, pursuant to s.190(3) of the Act I cannot accept the undertaking.

[37] My second and related concern is that it is not at all clear how in practice the provision would operate. Firstly it is not clear at what point the requirement to pay Award penalties plus 1% applies. Taking an example, if an employee is not rostered in accordance with the undertaking and works 35% of their hours on a weekend, does that mean that they will be paid the Award penalties plus 1% on all hours worked during that weekly roster cycle or paid Award penalties plus 1% for only the additional hours on the weekend? Would the Award penalties be paid on the Agreement rate or on the Award rate of pay? While far from clear, it appears the latter is contemplated, otherwise there would be no need for the additional 1% proffered. If it is the latter this is an entirely different manner of calculating remuneration for the employees and is a substantial change in its own right.

[38] The Applicant referred me to a decision John Holland Pty Ltd 18 where it was said there were a significant number of undertakings given and Commissioner Ryan did not seem to have significant issues with similar changes to hours of work.19 The decision relates to the approval of a greenfields agreement in the building and construction industry. The Commissioner’s reasons deal with matters common to greenfields agreements as well as whether the Commission can accept undertakings to address concerns in relation to greenfields agreements. While it is clear from the decision that the Commissioner accepted a number of undertakings there is no clear reasoning in the decision as to why specific undertakings were sought and accepted. Having considered the decision of Commissioner Ryan I am not in a position to agree with the submission of the Applicant that he “didn’t seem to have significant issues with similar changes to hours of work” as contemplated in this matter.

[39] I also note that the Applicant has referred me to two decisions of Deputy President Bull in Burger Urge 20 and Chocolate Vanilla Pty Ltd T/A Gelatissimo Kirribilli21 where it is said similar provisions were accepted. I note in both decisions that the Deputy President has found that “the undertakings are not so substantial that if asked to vote again, the employees who voted would not approve the Agreement. I am therefore satisfied that the undertakings do not result in a substantial change to the Agreement, as per s.190(3)(b) of the Act”.22 I am not in a position to understand how the Deputy President formed the view as to what the outcome of a vote, if held, would be. I note that in this case, the Applicant suggested that the undertakings could be put to a vote of the employees. I would not entertain such a suggestion.

[40] The meaning of s.190(3) of the Act was considered in Construction, Forestry, Mining and Energy Union v KAEFER Integrated Services Pty Ltd, 23 where a Full Bench of the Commission said at paragraphs [40] – [41] :

“[40] In our view, simply increasing the quantum of various benefits will not ordinarily result in “substantial changes” for the purposes of s 190(3). It seems to us that the legislative concern is to avoid imposing on employees arrangements that they have not approved; employees are not likely to object to higher monetary amounts. The position might be more complex in relation to the reintroduction through undertakings of award-based benefits that were otherwise excluded by the agreement, if this were to have a significant bearing on working arrangements. However, this does not arise in the present matter.

[41] Section 190(3) does not permit undertakings that result in the wholesale reshaping of the agreement, such that it bears no resemblance to the pre-undertaking agreement that was approved by employees. In considering the application of s 190(3), each case will turn on its own circumstances…” (Emphasis added, references omitted)

[41] Having regard to the consideration above I am not able to accept undertaking 2 as proffered by the Applicant as it results in substantial changes to the Agreement. It would have the effect of imposing a limitation on the amount of work that employees can undertake on a weekend and public holidays. Pursuant to s.190(3) of the Act I cannot accept the undertaking. Even accepting all other undertakings proffered, for the reasons set out above I am not satisfied that every existing and prospective Award covered employee is better off overall under the Agreement.

[42] I note that even if I was to accept undertaking 2 (in combination with the other undertakings proffered) the outcome would result in full-time introductory adult employees being approximately 0.09% above the Award based on the scenario in Model 1 provided to the Applicant on 18 June 2018 and attached in Annexure A. This is unlikely to be sufficient to account for the various other less beneficial terms identified by the Applicant in the Form F17 that form part of the Agreement and have not been the subject of any particular undertaking. These include a number of Award entitlements not offered by the Agreement, including the job search entitlement at clause 16.3 of the Award, the provisions regarding transfer to lower paid duties at clause 17.2 of the Award, the entitlement at clause 32.4 of the Award and the provisions at clause 39 of the Award regarding deductions for breakages or cashiering underings. While these matters are either contingent benefits or not easily quantifiable, they are clearly benefits provided in the Award that are not provided in the Agreement. A rate of pay approximately 0.09% above the Award rate of pay is likely insufficient to allow satisfaction that employees are better off overall in those circumstances.

[43] There is no suggestion that exceptional circumstances exist as contemplated in s.189 of the Act and this is not a basis upon which the Agreement could be approved.

Conclusion

[44] I am not satisfied that the Agreement passes the better off overall test. I have provided an opportunity for the Applicant to provide undertakings to satisfy my concerns. I am of the view that undertaking 2 in relation to clause 4.3.1 of the Agreement, either separately or in combination with the other undertakings, would result in substantial changes to the Agreement and cause financial detriment to employees covered by the Agreement. The requirement for approval set out in s.186(2)(d) has therefore not been met.

[45] For the reasons given I cannot approve the Agreement. The application to approve the Agreement is dismissed.

COMMISSIONER

Appearances:

C Agnew on behalf of the Applicant

Hearing details:

2018

Melbourne (Telephone Hearing):

18 June.

Final written submissions:

19 June 2018.

Printed by authority of the Commonwealth Government Printer

<PR608393>

ANNEXURE A

Model 1 – Full time introductory adult working 30% of their hours on Sunday and 4 public holidays per annum (7.6 hours per day)

Agreement Ordinary Rate	$20.94	Award Ordinary Rate	$18.29
Hours	Loading	weekly total	Hours	Loading	weekly total
Mon-Fri	26.01538	100%	$544.76	Mon-Fri	26.01538	100%	$475.82
Sunday	11.4	100%	$238.72	Sunday	11.4	150%	$312.76
Public Holiday	0.584615	100%	$12.24	Public Holiday	0.584615	225%	$24.06
Allowances	Amount	Value	Allowances	Amount	Value
Public Holiday penalty	0.5846	$5.00	$2.92	Allowance	$0.00
Annual Leave	Yes	$61.21	Annual Leave	Yes	$53.46
Leave Loading	No	$0.00	Leave Loading	Yes	$9.36
Totals	38.00	Hrs	$859.85	Totals	38.00	Hrs	$875.46
Agreement Total Weekly Rate			$859.85	Model Summary
Award Total Weekly Rate			$875.46
Dollar / Actual Percentage Difference			-$15.61	The Dollar / Actual Percentage Difference identifies the modelled difference between the agreement and the award in dollar terms and as a percentage.
			1.78%
Agreement Percentage Increase Required			1.81%	The Agreement Percentage Increase Required is the amount the agreement rate would need to be increased by to satisfy the BOOT under this modelling.

Model 2 – Casual introductory adult working 7.6 hours on Saturday and 7.6 hours on Sunday.

Agreement Ordinary Rate	$25.72	Award Ordinary Rate	$18.29
Hours	Loading	weekly total	Hours	Loading	weekly total
Saturday	7.6	100%	$195.47	Saturday	7.6	150%	$208.51
Sunday	7.6	100%	$195.47	Sunday	7.6	150%	$208.51
Allowances	Amount	Value	Allowances	Amount	Value
Annual Leave	No	$0.00	Annual Leave	No	$0.00
Leave Loading	No	$0.00	Leave Loading	No	$0.00
Totals	15.20	Hrs	$390.94	Totals	15.20	Hrs	$417.01
Agreement Total Weekly Rate			$390.94	Model Summary
Award Total Weekly Rate			$417.01
Dollar / Actual Percentage Difference			-$26.07	The Dollar / Actual Percentage Difference identifies the modelled difference between the agreement and the award in dollar terms and as a percentage.
			6.25%
Agreement Percentage Increase Required			6.67%	The Agreement Percentage Increase Required is the amount the agreement rate would need to be increased by to satisfy the BOOT under this modelling.

ANNEXURE B

 1   PN28

 2   PN30

3 Hart v Coles Supermarkets Australia Pty Ltd[2016] FWCFB 2887

4 [2016] FWCFB 2887 at [33]

 5   PN48 - PN63

 6   PN70

 7   PN89

 8   John Holland Pty Ltd [2011] FWAA 5724

 9   PN92

 10   PN95 – PN107

11 PN110

 12   PN117

 13   Burger Urge [2015] FWCA 5724

 14   Chocolate Vanilla Pty Ltd T/A Gelatissimo Kirribilli [2016] FWCA 2684

 15   PN137

 16   PN116 – PN117

 17   Explanatory Memorandum, Fair Work Bill 2008 807

 18   [2011] FWAA 5724

 19   PN92

 20   [2015] FWCA 5724

 21   [2016] FWCA 2684

 22   [2015] FWCA 5724 at [22] and [2016] FWCA 2684 at [29]

 23   Construction, Forestry, Mining and Energy Union v KAEFER Integrated Services Pty Ltd[2017] FWCFB 5630