Somerville Community Services

[2023] FWCFB 208

[2023] FWCFB 208 [Note: A copy of the zombie agreement to which this decision relates (AC320754) is available on our website.]

FAIR WORK COMMISSION

DECISION

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009

Sch. 3, Item 20A(4) - Application to extend default period for agreement-based transitional instruments

Somerville Community Services

(AG2023/3146)

Health and welfare services
DEPUTY PRESIDENT WRIGHT DEPUTY PRESIDENT ROBERTS      DEPUTY PRESIDENT SLEVIN	SYDNEY, 9 NOVEMBER 2023

Application to extend the default period for the Somerville Community Services Inc Employee Collective Agreement 2008.

1. Somerville Community Services Inc (Somerville) has applied, pursuant to item 20A(4) of Sch 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act2009 (Cth) (Transitional Act), to extend the default period for the Somerville Community Services Inc Employee Collective Agreement 2008 (Agreement). The Agreement was approved in accordance with s.170LT of the Workplace Relations Act 1996. It is an agreement-based transitional instrument to which item 20A applies.

1. Item 20A of Sch 3 to the Transitional Act provides for the automatic sunsetting of agreement-based transitional instruments by the end of the default period on 6 December 2023, subject to the capacity to apply to the Commission for an extension of that period for up to four years in prescribed circumstances. The agreements to which these provisions apply are known as zombie agreements. The main features of item 20A of Sch 3 are described in detail in the Full Bench decision in Suncoast Scaffold Pty Ltd[1] and we rely upon what is said in that decision.

1. Relevant to this matter, when an application is made under subitem (4) of item 20A of Sch 3 to the Transitional Act, the Commission is required under subitem (6) to extend the default period if the Commission is satisfied that subitem (7), (8) or (9) applies and it is otherwise appropriate in the circumstances to do so.

1. Somerville initially made application on the basis that subitems (7) and (9) apply and it is otherwise appropriate in the circumstances to extend the default period. In submissions filed on 22 September 2023, Somerville indicated that it was proceeding solely on the basis of subitem (7).

1. The Full Bench in ISS Health Services Pty Ltd[2] described the three requirements for subitem (7) to apply. The first is the requirement that the application is made at or after the ‘notification time’ for a proposed agreement as defined in s.173(2) of the Fair Work Act 2009 (FW Act). The second is that the proposed agreement must cover the same or substantially the same group of employees as the zombie agreement. The Full Bench stated that this could be established by comparing the notice of employee representational rights (NERR) for the proposed agreement to the coverage clause of the zombie agreement. The third is that bargaining for the proposed agreement is occurring.

1. Somerville is a disability services organisation providing accommodation and support services to participants under the NDIS in the Northern Territory. It has 403 employees comprising 113 full time, 86 part time and 204 casual employees.

1. On 6 September 2023, Somerville advised its employees that it had decided to initiate bargaining for a new enterprise agreement commencing on 11 September 2023 and issued a NERR. Somerville has provided the NERR to the Commission. The NERR refers to an enterprise agreement covering employees that are ‘defined in the Somerville Community Services Enterprise Agreement 2023-2026 to the exclusion of senior managers’. The group of employees that are proposed to be covered by the new enterprise agreement is not entirely clear on the face of the NERR. However, we are satisfied, based on Somerville’s correspondence to employees in relation to bargaining for a new agreement, and Somerville’s submissions in support of its application, that the proposed agreement covers the same or substantially the same group of employees as the zombie agreement. We are also satisfied that the application has been made at or after the notification time and that bargaining for the proposed agreement is occurring. We therefore find that subitem (7) applies to the application.

1. As subitem (7) is met, subitem 6(a) requires a consideration of whether it is otherwise appropriate in the circumstances to extend the default period. In ISS Health Services, the Full Bench considered it appropriate to do so where the parties sought time to negotiate a replacement agreement and are not simply seeking to extend an agreement for the maximum period for the sake of convenience.  The Full Bench also took into account that while the zombie agreement remained in place, the employees would be better off overall than if the modern award applied.

1. The Social, Community, Home Care and Disability Services Industry Award 2010 (the Award), is the modern award that covers the employees. Somerville is seeking an extension of the default period of the Agreement to allow sufficient time for enterprise bargaining to occur for a replacement agreement for a period of 12 months until 30 September 2024, or alternatively a shorter period of extension to 31 May 2024. Somerville submits that if the Award applies to employees at the end of the default period, this will cause considerable disruption, confusion and difficulty to the bargaining process. Further, there will be a significant impact upon the Somerville workforce, if the pay rates, terms, and conditions revert to the Award.

1. In this regard, Somerville submits that at the time the Agreement was made it provided for rates of pay 25% above the Australian Fair Pay and Classification (AFPC) Scale and that the rates of pay have been maintained to be 25% above the applicable ordinary rates of pay for classifications under the Award. The Agreement also provides 25 days of annual leave for all employees.

1. We note an equal remuneration order[3] (ERO) was made by the Commission in 2012 which covers employers in the Social, Community and Disability Services Industry (as defined in the order) and their employees in the classifications listed in Schedules B and C of the Award.[4] The ERO provides for employees to be paid the applicable minimum wage in clause 15 of the Award, and, in addition, a Final Equal Remuneration Payment, expressed as a percentage of the applicable minimum wage. Somerville has provided a document to the Commission specifying employee positions and headcount which indicates that its employees are classified under Schedule B of the Award and that many of these employees are classified as social and community services employee level 2 or level 3. The ERO requires level 2 employees to be paid 23% above the minimum rate in the Award and for level 3 employees to be paid 26% above the minimum rate in the Award.

1. As Somerville has not provided current pay rates to the Commission, it is unclear whether it is paying employees 25% above the applicable minimum wage in clause 15 of the Award or 25% above the rates of pay required by the ERO. In any event, the Agreement does not set the current rates of pay given its reference to the AFPC Scale which is now obsolete. In the circumstances, the rates of pay which Somerville provides to its employees are not determined by the Agreement so there is no basis for Somerville to suggest that these will change if the default period of the Agreement is not extended.

1. Somerville has provided an indicative timeline for the bargaining process which provides for seven meetings to take place between 6 October 2023 and 22 January 2024 and for negotiations to conclude and voting to occur in February 2024. The Australian Municipal, Administrative, Clerical and Services Union (ASU) and the United Workers’ Union (UWU), are representing employees in negotiations for a new agreement. No objections were received from either the ASU or the UWU in relation to the application.

1. In relation to Somerville’s submission that there will be a significant impact upon the workforce if their pay rates, terms, and conditions revert to the Award, we note that the Agreement does not make any provision for many of the conditions under the Award including allowances, shift penalties and minimum engagement periods. We also note that over half of the workforce is employed on a casual basis and there is no provision for a casual loading in the Agreement. In these circumstances, we believe it is unlikely that the workforce will be disadvantaged if the terms and conditions of their employment revert to the Award and in fact, they may be better off compared to the Agreement. This a matter which weighs against a finding that it is appropriate to extend the Agreement. On the other hand, we need to consider that Somerville and its employees are committed to negotiating a replacement agreement and that given the first bargaining meeting was scheduled to take place on 6 October 2023, these negotiations are unlikely to conclude by 6 December 2023.

1. Given that there are no objections on behalf of the employee representatives to the extension and that the parties have committed to a timeline which provides that bargaining will be progressed in a timely manner, we are satisfied, notwithstanding our reservations that  employees may be worse off under the Agreement compared to the Award, that it is appropriate in all of the circumstances to extend the default period for the Agreement. 

1. As we are satisfied that subitem 6(a) applies we are required to extend the default period. As the Full Bench observed in Suncoast Scaffolding Pty Ltd[5] the Commission has a discretion as to the length of the extension, subject to the limitation that the extension cannot be more than four years. The nature of the discretion is such that we are not bound to grant the period of extension sought in the application.[6]

1. In ISS Health Services Pty Ltd the Full Bench ordered an extension of 12 months in circumstances where subitem (7) applied. The Full Bench considered this sufficient time for a replacement agreement to be finalised in circumstances where there was some complexity in the bargaining including issues of contested scope. The Full Bench noted that should the parties require assistance to finalise an agreement then s.240 of the FW Act provides access to the Commission to resolve any disputes that arise. The Full Bench noted that the additional 12 months amounted to an 18-month period in which to conclude an agreement as the NERR in that matter had been issued in June 2023.

1. We note that the subject matter of the bargaining is not as complex as other matters that have been before the Commission where extensions of 12 months or more have been granted.[7] Somerville has provided an indicative timeline which is consistent with bargaining being relatively straightforward and that anticipates the conclusion of bargaining and voting occurring in February 2024. In all the circumstances, we believe that extending the Agreement for a four-month period should allow sufficient time for the parties to finalise a replacement enterprise agreement, taking into account the time required between voting and the agreement being approved by the Commission.

1. An order extending the default period for the Agreement by 4 months to 6 April 2024 will be published separately. The Agreement is published, in accordance with subitem (10A)(c), as an Annexure to this decision.

DEPUTY PRESIDENT

[1] [2023] FWCFB 105.

[2] [2023] FWCFB 122 at [4]

[3] PR 525485, 22 June 2012.

[4] See 4.1 of the Order.

[5] [2023] FWCFB 105 at [18]

[6] See Suncaost Scaffolding Pty Ltd id and Applications by APESMA [2023] FWCFB 137 at [31]

[7] See ISS Health Services Pty Ltd[2023] FWCFB 105 and Annecto Inc [2023] FWCFB 169

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