Southern Cross Industrial Group Pty Ltd T/A Southern Cross Group
[2022] FWC 179
•27 JANUARY 2022
| [2022] FWC 179 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
Southern Cross Industrial Group Pty Ltd T/A Southern Cross Group
(AG2021/8052)
| COMMISSIONER WILSON | MELBOURNE, 27 JANUARY 2022 |
Application for approval of the Southern Cross Group Enterprise Agreement 2021
This decision determines an application filed by Southern Cross Industrial Group Pty Ltd T/A South Cross Group (the Applicant) on 26 October 2021 pursuant to s 185 of the Fair Work Act 2009 (the Act). The application seeks the approval of the Fair Work Commission (the Commission) of a single enterprise agreement to be known as the Southern Cross Group Enterprise Agreement 2021 (the Agreement). The Agreement covers “all employees of the company engaged in field service and operational roles, clerical and administration, but not including management level employees”.[1]
For the reasons detailed below I am not satisfied the better off overall test has been passed and the application for approval is dismissed.
BACKGROUND
Employees to be covered by the Agreement were issued with the last notice of representational rights on 14 November 2021.Voting for the approval of the Agreement commenced on 22 October 2021 and concluded on the same day. The time limits under s 181(2) of the Act are thereby satisfied. The Agreement is stated as covering 60 employees at the time of the vote, with 46 employees casting a valid vote and 25 voting to approve the Agreement. The application for approval of the Agreement was lodged on 26 October 2021, thereby satisfying s 185(3) of the Act.
Although the application form filed with the Commission on 26 October 2021 indicated that the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers’ Union (AMWU) was involved in the agreement making process, correspondence received from the AMWU on 23 November 2021 advised this was not the case. In its correspondence, the AMWU confirmed that they were an interested party in the matter on the basis that they had members employed by the Applicant and who performed work which would ordinarily be covered by the three relevant Awards specified in paragraph [4] below. The AMWU also stated it did not participate in negotiations for the proposed agreement and became aware of it shortly before the Applicant commenced the access period. AMWU further detailed that the union did not receive a copy of the proposed agreement until after the Applicant lodged the application with the Commission. Despite being given an opportunity to make submissions about the application for approval of the Agreement, the AMWU did not do so. There were no employee bargaining representatives involved in negotiations.
In the Employer's Declaration Form, the Form F17, Ms Kristin Dee, the HR and WHS Manager of the Applicant, identified the following Awards as the relevant reference instruments for the purposes of the Commission’s assessment of the ‘Better Off Overall Test’ (the BOOT) under ss 186(2)(d) and 193 of the Act:
Black Coal Mining Industry Award (the Black Coal Award)
Manufacturing and Associated Industries (the Manufacturing Award)
Clerks – Private Sector Award (the Clerks Award).
(Collectively the Awards)
In the form F17, Ms Dee declared that the Agreement did not contain any terms or conditions of employment less beneficial than the equivalent terms and conditions in the Awards, nor did it omit any entitlements provided for by the Awards. Ms Dee further attested that the Agreement allowing for the engagement of casual employees in positions in which employment is not currently permitted on a casual basis resulted in employees being ‘better off overall’ under the Agreement.
Ms Dee detailed that this alteration should be considered a net benefit to employees of the Applicant as it allowed employees ‘to maximise their earnings if they so choose’ in circumstances where many employees are working ‘seven days on and seven days off and have scant regard for the notion of annual leave as a result.’ She further submitted that employees of the Applicant ‘understand that as regular and systematic casual employees they have the same security of employment as full-time employees’ and, except in circumstances where a bank loan was being sought by an employee, overall employees of the Applicant preferred to ‘maximise their income’ through casual employment and did not seek to convert to full-time employment when offered the opportunity.[2]
The application for approval of the Agreement was received in my Chambers on 3 November 2021 from the Commission’s Enterprise Agreement Triage Team in Melbourne. I undertook a preliminary analysis of the application and communicated the results to the Applicant in correspondence dated 10 November 2021. The correspondence relevantly stated:
“The Commissioner is not satisfied at this time the statutory criteria for approval of the agreement have been met and invites the Applicant to provide its views on the subject. The Commissioner;
1. requires further information in order to form the view the Applicant complied with its obligations to take all reasonable steps to ensure the terms of the Agreement and the effects of those terms were explained to employees as required by the Act;
2. is not satisfied at this time that content of the Agreement is consistent with the National Employment Standards (NES) and other statutory provisions;
3. is not satisfied the better off overall test (BOOT) is passed.
Further details on these matters is set out below.
….
5. Explanation to employees
5. The Agreement appears to be the first to cover the Applicant and group of employees.
b. There is no clarity about the steps taken by the Applicant to provide employees with a copy of the text of the agreement and material incorporated by reference in the agreement and ensure employees had access to them throughout the access period. The declaration states “nil” steps were taken to provide these materials. If that is the case the agreement may not be able to be approved; however the statement appears to be an error. Clarification is needed.
2. Statutory consistency
5. The following clauses are not consistent with the NES;
5. Part VI(b)(1) provides that the employer may end the employment of an employee without notice if the employee’s conduct is clearly wrong, dangerous or unsuitable for their employment. The following undertaking should be given to remedy this problem;
“Southern Cross Industrial Group Pty Ltd undertakes that an employee will only be dismissed without notice under Part VI(b)(1) if they are dismissed for serious misconduct as defined in reg.1.07 of the Fair Work Regulations 2009.”
ii. Part (VI)(d)(3) provides that redundancy pay is not payable where the employer finds suitable alternative employment however the provision is not subject to an application to the Commission in accordance with s.120 of the Act. The following undertaking should be given to remedy this problem;
“Southern Cross Industrial Group Pty Ltd undertakes that Part (VI)(d)(3) dealing with the withholding of redundancy pay will be applied in such a manner as to first require an application to the Fair Work Commission under s.120 of the Fair Work Act 2009.”
iii. Parts V(b), V(c) and VI(a)(2) each provide for deductions of monies from final payments to a level which is inconsistent with the combination of ss.323 — 342. In that regard, s.323(1) refers to “amounts payable to the employee in relation to the performance of work” and s.324(1) permits deductions authorized by an enterprise agreement “from an amount payable to an employee in accordance with” s.323(1). The following undertaking should be given to remedy this problem;
“Southern Cross Industrial Group Pty Ltd undertakes that Parts V(b), V(c) and VI(a)(2) authorising deductions from an employee’s final will each be applied in such a manner as to permit deductions only from amounts payable to the employee in relation to the performance of work.”
3. Whether BOOT passed
5. The Commission is required to be 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 (s.193(1)).
b. The Commission is not presently satisfied the BOOT has been passed in respect of these matters;
5. The Black Coal Mining Industry Award 2010 does not provide for casual employment for Schedule A employees.
ii. The Agreement is silent on a number of overtime entitlements such as part-time overtime in excess of agreed hours, overtime for six or seven day roster employees under the Black Coal Mining Award, overtime rates for Manufacturing Award employees, overtime penalties for shiftworkers under the Clerks Award and contains no span of hours.
iii. It is unclear whether casual employees s receive the casual loading on a compounding basis for overtime which is an award feature.
iv. The Agreement is silent on certain shift penalties, and it is unclear whether otherwise applicable Award provisions would apply. Concerns are particularly raised about these matters;
5. Change of shift penalties for day shift employees under the Black Coal Mining Award (Cl 22.3).
2. Non-successive shift penalties for employees covered by the Manufacturing Award (Cl 33.2€).
3. Saturday penalties for shiftworkers (which are 150% as compared to the 125% provided for day workers) covered by the Clerks Award (Cl 31.1).
c. The Commission’s BOOT concerns arise since the differential between the wages payable under the otherwise applicable awards and the Agreement is very small, with the Commission’s assessment being as set out in the table below. Given the very small differential, the absence of an award benefit may mean an affected employee is not better off overall;
Black Coal Mining Industry Award 2010 (Black Coal Mining)
· Adult rates of pay are between 0.08% and 0.14% above Award rates.
· Casual rates of pay are between 0.02% and 0.13% above Award rates.
· Junior rates of pay are 0.14% above Award rates.
· Junior apprentice rates are between 0.14% above Award rates.
· Adult apprentice rates are between 0.10% and 0.12% above Award rates.
Manufacturing and Associated Industries and Occupations Award 2020 (Manufacturing Award)
· Adult rates of pay are between 0.43% and 2.80% above Award rates.
· Casual rates of pay are between 0.42% and 2.78% above Award rates.
· Junior rates of pay are between 2.66% and 2.73% above Award rates.
· Junior apprentice rates are between 0.58% and 0.86% above Award rates.
· Adult apprentice rates are between 0.86% and 1.51% above Award rates.
Clerks—Private Sector Award 2020 (Clerks Award)
· Adult rates of pay are between 0.51% and 0.65% above Award rates.
· Casual rates of pay are between 0.53% and 0.65% above Award rates.
· Junior rates of pay are between 0.49% and 0.55% above Award rates.
4. In the first instance the Commission seeks your advice as to why the BOOT is passed. In the alternative you may provide an “undertaking” which is a written instrument clarifying how the Agreement is instead to operate thus removing the Commission’s concern.”
The correspondence also contained a direction that that any submissions or materials which the Applicant wished to file in response to the concerns raised regarding approval be provided by 18 November 2021. The direction further detailed that, based on the materials returned, the Commission would then give further consideration to the application and how it should be progressed. The correspondence stated that if all matters were resolved to the Commission’s satisfaction the Agreement would be approved; however, if not all matters were resolved and either a hearing was sought, or one was otherwise considered necessary, a hearing would be listed on a date and time to be fixed. If a hearing was not requested or deemed necessary but issues regarding the approval of the Agreement were nonetheless unresolved the correspondence directed that the matter would be determined on the basis of written materials before the Commission.
In response to this correspondence, and in accordance with the directions of the Commission, on 15 November 2021 the Applicant lodged a corrected form F17, written submissions by the Applicant’s CEO, Mr Steven Schultze, undertakings, and a series of documents regarding the steps taken to ensure an adequate explanation of the proposed Agreement was given to affected employees in accordance with the Act.
The submissions, evidence and undertakings provided were sufficient to satisfy me that the issue initially raised in relation to the explanation of the Agreement to employees was based on an administrative error in the completion of the form F17. I was also satisfied by the undertakings provided resolved the issues of NES non-compliance.
However, I was not satisfied based on the submissions and undertakings provided that the issues raised in relation to satisfaction of the Better Off Overall Test could be considered similarly resolved. Due to this concern, on 23 November 2021, I issued correspondence to the parties indicating that based on the materials provided I was concerned that the proposed Agreement may not be capable of approval having regard to the statutory requirements for the making of an enterprise agreement. The issues I identified were that I was not satisfied the BOOT was passed and that the guarantees in the Agreement pointed to by the Applicant which state that its employees would be “better off overall” were “uncertain, ambiguous or merely aspirational” and insufficient to allow the BOOT to be passed. The Applicant was directed to file such further submissions or materials as it wished the Commission to consider in relation to the application and indicate whether it sought to be heard so that I might determine whether it was necessary to convene a hearing.
On 23 November 2021, my Chambers received correspondence from the AMWU in response to the directions outlined above indicating their interest in proceeding on the basis that its members employed by the Applicant perform work which would ordinarily be covered by the Manufacturing Award and the Black Coal Award. The AMWU further submitted that on the basis of the materials currently provided they did not consider the Agreement capable of approval for the reasons identified in my correspondence to the parties. After being given further time for it to consider its position, the AMWU sent a further email to my chambers on 8 December 2021 stating that it did not wish to be heard on the matter and was content for the matter to be decided on the papers.
On 7 December 2021 the Applicant provided further submissions in the form of a statement by Mr Craig Joy of Workplace Consulting. On 8 December 2021 the Applicant indicated to my Chambers that it did not wish to be heard in relation to the application and was content to have the matter decided on the papers.
Since there was no indication from anyone that they wished to be heard on the matter I advised, on 8 December 2021, that the matter would be decided based on the material already provided to the Commission.
Matter to be determined
As discussed above at [10]-[11], the single matter to be determined in this decision is whether the Commission is satisfied the Agreement passes the BOOT.
LEGISLATION
Section 186 sets out the general requirements for when the Commission must approve an enterprise agreement. The “basic rule” in this respect is set out in s 186(1) as follows:
Basic rule
(1)If an application for the approval of an enterprise agreement is made under subsection 182(4) or section 185, the FWC must approve the agreement under this section if the requirements set out in this section and section 187 are met.
Note: The FWC may approve an enterprise agreement under this section with undertakings (see section 190).
Section 186(2) relevantly provides:
Requirements relating to the safety net etc.
(2) The FWC must be satisfied that:
(a) if the agreement is not a greenfields agreement—the agreement has been genuinely agreed to by the employees covered by the agreement; and
(b) …
(c) …
(d) the agreement passes the better off overall test.
…
Note 2: The FWC may approve an enterprise agreement that does not pass the better off overall test if approval would not be contrary to the public interest (see section 189).
The requirements for passing the BOOT referred to in s 186(2)(d) are set out in s 193, which provides:
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 subsection 182(4) or 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.
Section 189 identifies the circumstances in which the Commission may approve an enterprise agreement that does not pass the BOOT:
189 FWC may approve an enterprise agreement that does not pass better off overall test--public interest test
Application of this section
(1) This section applies if:
(a) the FWC is not required to approve an enterprise agreement under section 186; and
(b) the only reason for this is that the FWC is not satisfied that the agreement passes the better off overall test.
Approval of agreement if not contrary to the public interest
(2) The FWC may approve the agreement under this section if the FWC is satisfied that, because of exceptional circumstances, the approval of the agreement would not be contrary to the public interest.
Note: The FWC may approve an enterprise agreement under this section with undertakings (see section 190).
(3) An example of a case in which the FWC may be satisfied of the matter referred to in subsection (2) is where the agreement is part of a reasonable strategy to deal with a short-term crisis in, and to assist in the revival of, the enterprise of an employer covered by the agreement.
Nominal expiry date
(4) The nominal expiry date of an enterprise agreement approved by the FWC under this section is the earlier of the following:
(a) the date specified in the agreement as the nominal expiry date of the agreement;
(b) 2 years after the day on which the FWC approved the agreement.
Section 190 sets out the circumstances in which an enterprise agreement may be approved with undertakings:
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 subsection 182(4) or 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.
SUBMISSIONS
The Commission’s BOOT concerns are those expressed to the Applicant in the initial concerns correspondence which may be summarised as a concern about the provisions for casual employment for employees presently engaged under Schedule A of the Black Coal Award; overtime entitlements and penalties; the payments to casual employees working overtime and the absence of certain shift penalties. The Commission’s wages analysis suggested these provisions may not be sufficiently offset by the rates of pay within the Agreement which provides the modest wages margins set out in the correspondence and above.
The Applicant’s submissions on these matters rely significantly on two terms in the Agreement as answering the concern and demonstrating the BOOT has been met (referred to as the Guarantees). The first “guarantee” is in Part I (Introduction and Processes) at subclause (d), and provides;
“d) Better off overall test Guarantee
· This Agreement provides a safety net approach of minimum levels of pay, penalty rates, loadings and overtime provisions. It is open to the employer to provide additional remuneration or bonuses etc at the employer's discretion, and the payment of such additional amounts to one employee shall not create an entitlement to payment to any other employee. The employer is not obliged to maintain or increase any over-award payment, nor does the payment of an over-award amount at some point create an obligation to pay that amount at some other point. Such payments will not permit any employee to pursue any additional claim during the life of this agreement, nor will employees pursue additional claims for any other reason during the life of this agreement.
· The agreement also provides other flexible options in relation to working arrangements, and each of these remains subject to a guarantee that under such arrangements, the employee must receive superior remuneration than would apply if that employee undertook the same work and was paid all award entitlements including overtime, penalty rates and other entitlements, under the agreement. This is a further guarantee that even if employed on arrangements such as a flat rate, employees will receive higher remuneration under this agreement than they would have received under an applicable Award. This guarantee applies during the entire life of the Enterprise Agreement, not merely at the Test time.
· If at any time during the employee's employment or following the conclusion of the employee's employment it is required to assess the employee's total remuneration during their employment against the remuneration they would have received under the applicable Award, all entitlements under that Award will be taken into account, including any notice, redundancy or other entitlements which would have applied under the Award. Should the Award entitlements total more than the remuneration paid to the employee under the terms of this Enterprise Agreement, the employee shall be paid an additional sum sufficient to exceed the total Award remuneration figure.
· For the avoidance of doubt, where some other clause provides that it may operate despite other provisions in the Enterprise Agreement, this guarantee clause will always prevail regardless.”
The second “guarantee” is in Part III (Conditions of Employment) at subclause (c) with the provision setting out the following
“c) Levels of work and rates of pay
· The pay rates applicable to Levels of work for adult employees and apprentices shall be in accordance with the following tables. Employees will be paid not less than the rates which correspond to the classification levels from the awards which would otherwise apply. Employees will be appointed to a particular level or designation, and will remain there unless otherwise appointed.
· The minimum weekly base rates for adult employees will rise by the amount of the National Wage Decision per year over the life of this agreement. In the event that this Enterprise Agreement is voted on or approved after June 2018, the rates in this Agreement will be adjusted to include the 2018 wage decision. For junior employees, Trainees and Apprentices the rate will rise in proportion to the adult increase.
· Employees shall be required to work for not less than three hours on each engagement, unless they have family or personal reasons whereby they elect to work a shorter period in agreement with the employer.
· The tables are provided to ensure that employees are better off than would have been the case were they engaged under the relevant award, and where an employee is engaged to undertake work which is not covered by the tables provided, then they are to be paid above the rate provided in the classification levels of an appropriate award, and their total remuneration must be superior to the total remuneration to which they would have been entitled under that award.”
Having had the Commission’s concerns with respect to the BOOT set out, the Applicant provided submissions on the subject as well as an undertaking intended to ameliorate the Commission’s concerns.
First, the Applicant’s CEO, Mr Schultze provided submissions on 15 November 2021 on the subject of whether the Agreement satisfied the BOOT which may be summarised thus;
· The BOOT must necessarily be passed as the Enterprise Agreement “provides higher base rates of pay than the Award, but then applies every allowance, loading, penalty and other entitlement”. This means that it is “mathematically impossible for it to produce a result for the employee which is anything other than superior to that which would have applied under the Award.”[3]
· The clauses within the Agreement which express an intention to guarantee an employee “superior remuneration”[4] to that which would apply under the Award are binding and enforceable and not merely “aspirational” in nature.[5]
· The ability to be engaged as a casual under the Agreement, which is not provided for under the Black Coal Award for Schedule A employees, is regarded by the Applicant and its employees as a benefit rather than a neutral or negative factor.
Second, the Applicant also provided submissions from a workplace consultant, Mr Craig Joy on 7 December 2021. In summary, Mr Joy submitted:
· Part I (d) and Part III (c) of the Agreement “are provided to summarise the actual effect of the Enterprise Agreement, rather than to create that effect”.[6]
· Separately from these clauses, under the proposed Agreement “employees are guaranteed higher base rates than those provided under any award and are guaranteed of receiving the benefit of any allowances, loadings, penalties etc on top of those higher base rates”.[7] Due to this, it is “not mathematically possible” for the Agreement not to pass the BOOT.[8] “The fact that the margin between the rates in the Enterprise Agreement, and those in the Awards is not great is irrelevant, because there is no intent or effect of removing any allowances, loadings or penalties through that margin. It would make no difference to the ability of the Enterprise Agreement to pass the Better Off Overall Test whether the margin was ten cents a week, or a thousand dollars a week. No award entitlements are exorcised and no reliance is required of the margin to absorb anything.”[9]
· Even if this is not accepted, the Guarantees should be accepted as binding and enforceable for the following reasons:
· Bluescope Steel (AIS) Pty Ltd v Australian Workers’ Union [2019] FCAFC 84 at [21] states that “There is nothing aspirational about an employer saying, in language that connotes obligation, that it will make superannuation contributions. Language capable of conveying obligation on the subject of how much employees will receive for their labour is unlikely to be intended as aspirational or non-binding.”
· Part I (d) and Part III (c) of the Agreement oblige the employer to ensure that any arrangement reached under the Agreement provides an employee with superior remuneration than they would have received under any applicable Award, that if any assessment of an employee’s remuneration results in the outcome that their entitlements under any relevant Award total more than the remuneration they have received under the Agreement then the employee shall be paid an additional sum to exceed the amount they would have received under the relevant Award, and if any employee is engaged to undertake work which is not covered by the tables provided in the Agreement they will receive a total remuneration which is superior to the total remuneration they would have received under the relevant Award.
· The language of the Guarantees should be accepted as binding and enforceable, and not merely aspirational, as they connote specific obligations upon the employer to ensure an employee is better off under any arrangement reached than they would have been when receiving all Award entitlements under any Award which would otherwise apply.
· This same “Better Off Overall Guarantee approach” has been used in numerous Enterprise Agreements under the current legislation, with a non-exhaustive list as follows: AG2011/43, AG2011/2653, AG2011/3764, AG2012/575, AG2012/12793, AG2013/10347, AG2013/12084, AG2013/12086, AG2013/1331, AG2014/790, AG2014/995, AG2014/1578, AG2014/8359, AG 2016/66, AG 2018/1133, AG 2018/3771, AG 2018/5421, AG 2019/2468, AG 2019/4226. No Agreements which have utilised this approach have been “the subject of a wage claim nor so much as an allegation that a single employee has been anything other than better off either.”[10]
In the course of its 15 November 2021 submissions the Applicant provided the following undertaking (Proposed Undertaking 4):
“4. Southern Cross Industrial Group Pty Ltd undertakes that it will apply the Provisions of Part I c) and Part I d) of the Enterprise Agreement which guarantee that at all times throughout the life of the Enterprise Agreement all employees covered by the Enterprise Agreement are guaranteed to be better off, whether paid under the base terms of the Enterprise Agreement, or whether paid under some other arrangement including a salary or flat rate arrangement, than they would have been had they remained covered by the relevant award. This guarantee also extends (Part III c)) to any employee who in fact would not have been covered by any Award, as referenced in the Enterprise Agreement, but is guaranteed to remain better off than they would have been under whichever other award would have covered them.”
CONSIDERATION
Consideration of an application for approval of an enterprise agreement requires me to be satisfied of a series of matters set out in ss 186–187 and if I am so satisfied the agreement must be approved. It is settled that “[t]his satisfaction involves the exercise of discretion, involving a degree of subjectivity or value judgement".[11]
It has been said about the exercise of discretionary power;
“[49] It is uncontroversial that the matters a decision-maker is bound to consider are determined by the construction of the statute conferring the discretionary power. Not every matter that is or might be relevant to the exercise of a discretionary power must be taken into account. In exercising a discretionary power under a statute, a decision maker will often times be bound to consider some matters and entitled to consider others. But error, on the ground of a failure to take into account a relevant consideration, will only be shown if a decision maker has not taken into account a matter the decision maker was bound to consider.”[12]
Determination of whether an agreement passes the better off overall test requires application of the matters set out in s 193, set out above. The BOOT may be passed through the provision of an undertaking under s 190. Additionally, an agreement may be approved if it does not pass the BOOT should the Commission be satisfied of the exceptional circumstances criterion referred to in s.189.
The matters within s 193 include;
· Consideration of whether the Commission “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” (s.193(1));
· The effects of award-based flexibility arrangements in operation are to be disregarded in assessing the BOOT with the Commission being unaware there may be any (s 193(2));
· The Commission’s examination of the BOOT is directed both to award covered employees employed at the test time as well as prospective award covered employees (ss 193(4) – (5));
· The “test time” is “the time the application for approval of the agreement by the FWC was made”, which in this matter was 26 October 2021 (s 193(6));
· A limited assumption may be made by the Commission about a class of employees being better off overall where evidence may not be available in the absence of evidence to the contrary (s 193(7)).
The High Court has held about consideration of the BOOT;
“Whether the Full Bench was satisfied that an employee was better off overall under the Agreement than under the award required an evaluative assessment after consideration of the provisions of the award and the Agreement that may have been more beneficial to employees and those that may have been less beneficial. This assessment is a matter of the kind which has been described in other contexts as:
“a question, not of principle or of positive findings of fact or law, but of proportion, of balance and relative emphasis, and of weighing different considerations. It involves an individual choice or discretion, as to which there may well be differences of opinion by different minds.””[13]
In Construction, Forestry, Mining and Energy Union v KAEFER Integrated Services Pty Ltd, [2017] FWCFB 5630 the Full Bench made the following findings about the BOOT;
“[9] It is well established that the test requires the identification of terms which are more beneficial for an employee, terms which are less beneficial, and an overall assessment of whether an employee would be better off under the agreement. [14] The overall assessment involves a global comparison.[15] However, it is clear from s 193(1) that this global comparison must be satisfied in relation to each award covered and prospective award covered employee.[16] The test is not directed at whether most employees or most classes of employees are better off.[17]” (endnotes in original)
Further, there is a rigour which must be applied to the consideration and, to the extent s 193(7) has relevance, an evaluative judgement will be required;
“[100] There are two well-established propositions concerning the application of the BOOT which may be derived from previous Full Bench decisions. The first, which is essentially a restatement of s 193(1), is that the BOOT requires a finding that each award covered employee and prospective employee would be better off under the agreement than under the relevant modern award.[18] The requirement that “each” such employee and prospective employee be better off overall is a rigorous one. The ordinary meaning of “each” is “every, of two or more considered individually or one by one”.14 Thus, every award covered employee or prospective employee must be better off overall, with the corollary that if any such employee is not better off overall, the relevant enterprise agreement does not pass the BOOT. Thus, in an agreement containing loaded rates in whole or partial substitution for award penalty rates, it is not sufficient that the majority of employees - even a very large majority - are better off overall if there are any employees at all who would not be better off overall.
[101] In the case of anything other than small employers, it would be an exhaustive task to examine the circumstances of each individual employee to reach a state of satisfaction that the BOOT is passed. Section 193(7) substantially relieves the Commission of this burden by permitting it to assume, if a class of employees to which a particular employee belongs would be better off under the agreement than under the relevant modern award, that the employees would be better off overall in the absence of evidence to the contrary. Paragraph 818 of the Explanatory Memorandum to the Fair Work Bill 2008 contains some information as to how this provision was envisaged to operate as follows (emphasis added):
“818. Although the better off overall test requires FWA to be satisfied that each award covered employee and each prospective award covered employee will be better off overall, it is intended that FWA will generally be able to apply the better off overall test to classes of employees. In the context of the approval of enterprise agreements, the better off overall test does not require FWA to enquire into each employee's individual circumstances.
Illustrative example
Moss Hardware and Garden Supplies Pty Ltd makes an enterprise agreement to cover approximately 1800 employees working at its national chain of retail garden and hardware supplies outlets. All of these employees are 'award covered employees'. The seven classifications under the agreement broadly correlate to seven classifications under the relevant modern award. Because there will be many employees within each classification under the agreement and the agreement affects each employee within a classification in the same way, FWA could group employees together when assessing the employees against the better off overall test. It is intended that FWA could assess a hypothetical employee in each of the classifications under the agreement against the relevant classification under the modern award.
If FWA were satisfied that the agreement affected each employee within the classification in the same way, and that the agreement passed the better off overall test for the hypothetical employee within the classification, FWA could be satisfied that the agreement passed the better off overall test for each award covered employee and prospective award covered employee within that classification.”
[102] Section 193(7) is not prescriptive as to the nature of the classes of employees that might be selected for the purpose of applying the BOOT, so that the Commission has to make an evaluative judgment in that respect. However the selection of a class for the purpose of s 193(7) will only be of utility if, as the emphasised parts of the above extract from the Explanatory Memorandum explain, the enterprise agreement affects the members of the class in the same way such that there is likely to be a common BOOT outcome. The example used is a class consisting of employees in a common classification, but in the case of an agreement providing for loaded rates this class would likely not be suitable if the employees in the classification worked a variety of roster patterns some of which attracted penalty rates under the relevant modern award and some of which did not. Such a class would have to be further divided into subclasses based on common patterns of working hours, taking into account evening, weekend and/or overtime hours worked, in order to apply the BOOT to a loaded rate remuneration structure which incorporated compensation and supplanted modern award penalty rates which would otherwise be applicable. Thus the effective application of s 193(7) to existing employees would necessarily require an examination of existing roster patterns worked by various categories of employees as at the test time.
[103] Greater difficulty potentially arises with respect to the requirement to apply the BOOT to every prospective award covered employee. This requires consideration of the position of potential employees to whom the agreement might apply in the future, and thus necessarily involves a degree of conjecture. In the case of an agreement applying to a defined workplace or workplaces in a substantial and mature business - for example, a major supermarket chain - the degree of conjecture may be small because it is safe to assume that any future employees will be employed on a type of roster pattern already applied in the business to an existing class of employees. That is, the Commission will be in a position to make sensible predictions about the basis upon which prospective employees might be engaged. However the position will necessarily be different where the business is small and/or still in a developmental stage or the agreement for which approval is sought permits employees to be engaged in a wider range of classifications, work locations and/or roster patterns than the workforce existing as at the test time. In that situation the basis of employment of prospective employees will not readily be able to be extrapolated from the characteristics of any identifiable classes in the existing workforce.”[19] (endnote in original)
In the matter of CFMMEU and Others v OS ACPM Pty Ltd and OS MCAP Pty Ltd consideration was given to numerous issues, including that the Commission had limited information about remuneration, as well as a “BOOT promise” which was in this form;
“23.1 It is the intention that every Employee covered by this Agreement will be better off overall than if a relevant modern award applied to their employment.”[20]
The combination of these matters meant an inability to assess the BOOT, especially for casual employees, with the plurality of Vice President Hatcher and Deputy President Booth deciding on this subject;
“[65] The second fundamental BOOT error is that the Deputy President failed properly to consider the implications for the BOOT of the fact that neither of the Agreements specify an hourly or weekly rate of remuneration by which the BOOT could be assessed for circumstances other than the rosters for full-time employees specified in Schedule 1 of each Agreement. This deficiency in the Agreements had manifestations relevant to the BOOT in respect of full-time employment on rosters other than those specified in Schedule 1 of each of the Agreements, and casual employment, as contended by the unions. We explain this below.
[66] We have earlier identified that clause 9.5 and clause 2.1 of Schedule 1 of each of the Agreements confer on the employer the right to establish rostering patterns other than those specified in Schedule 1 for full-time employees. The Agreement contains no rate to allow the calculation of what remuneration would be payable on any alternative roster. Instead, clause 2.1 of Schedule 1 states that the remuneration for any alternative roster will be calculated “…using the same principles used to calculate the Annual Salary set out in this Agreement…”. As earlier stated, those principles are not set out or explained in either of the Agreements. Additionally, in their submissions dated 4 April 2019, OS MCAP and OS ACPM declined to disclose these principles to the Commission, saying in respect of both Agreements that “There is no obligation on the Applicant to disclose the methodology used to set the annualised salaries in Schedule 1”. The most that was disclosed was that to set the annualised salaries for a new roster for either of the Agreement, OS MCAP and OS ACPM would “…take into account the penalties and loadings contained in the Awards and would apply a greater base rate than specified in the Awards.”
[67] This statement could not permit any proper conclusion to be reached about whether the outcome would pass the BOOT, since to “take into account” the penalties and loadings in the awards is not the same thing as applying them. It is simply not appropriate for an applicant for the approval of an enterprise agreement to expect the Commission to conclude that the agreement passes the BOOT in circumstances where the minimum remuneration payable for working patterns expressly permitted by the agreement is incapable of identification. We do not overlook the fact that clause 2.1 of Schedule 1 of each of the Agreements states that the outcome produced by the application of the unspecified principles “will be greater than what would be paid to the Employee working that roster if any Award applied to them”, but that is incapable of verification by the Commission. Further, because the extent of the asserted remuneration advantage is not quantified or quantifiable, it cannot be balanced against any detrimental terms in the Agreement pursuant to the global assessment which the BOOT requires. Nothing is added by the “BOOT promise” in clause 23.1 which, as the Deputy President found, is not a substantive enforceable provision of the Agreements. In relation to the issue of remuneration under new rosters, the Deputy President said (at paragraph [126](b) of the reasons) that he rejected that new rosters could not properly be costed on the basis of the principles, but gave no explanation of how that could be done without the principles being disclosed. He took no action to require OS MCAP and OS ACPM to disclose those principles.
[68] Casual hourly rates of pay are also not specified in the Agreements, making it difficult to ascertain whether the Agreements pass the BOOT in respect of casual employees (particularly those who work less than complete roster cycles). Clause 5.3 of each of the Agreements provides that casual employees are to paid “an additional loading of 25% of their hourly rate (calculated based on the Annual Salary for the applicable roster)”. This provision is ambiguous. Presumably the “applicable roster” is a reference to the rosters identified in Schedule 1 of each of the Agreements for which annual salaries are prescribed. However it is not clear whether the “hourly rate” to which the 25% loading is to be added is simply the specified salary divided by 52 and then divided again by the average number of weekly hours in the “applicable roster”, or whether it is derived from the unspecified “greater base rate” used in the principles upon which the salaries have been calculated.”[21] (underlining added)
The plurality was also obviously concerned about the absence of material upon which to assess the BOOT for part-time employees;
“[72] Although it was not specifically raised by the unions in their submissions, their contentions concerning the lack of any specification of an hourly rate for the BOOT assessment may also have implications for part-time employment under the Agreements. In respect of part-time employees, clause 5.2 of each of the Agreements simply provides: “Part time Employees will receive pro rata leave and other entitlements on the basis of a 35 ordinary hour week”. The basis upon which part-time employees are to be paid, either by reference to the rosters specified in Schedule 1 of each Agreement or on any other rosters, is nowhere clearly specified. We would not read the expression “other entitlements” in clause 5.2 as referable to remuneration, but even if it is to be read in this way, the relationship between pro-rata remuneration based on a 35-hour week and the annual salaries specified in Schedule 1 of each Agreement is entirely obscure. Further, beyond the requirement in clause 9.4 that the hours of employment of a part-time employee shall not exceed 35 per week, there is no specification of how the hours of work of a part-time employee are to be established. Presumably part-time employees are subject to clause 9.5, which empowers the employer unilaterally to set and to change start and finish times, shift and roster cycles, and the number of hours worked on each shift. By comparison, the Mining Award (in clause 10) requires that the employer inform the employee of their ordinary hours of work and starting and finishing times, with any hours worked in excess of this being paid at overtime rates, and the Black Coal Award (in clause 10.3) requires that a “regular pattern of work” with fixed days, hours and starting and finishing time be established for part-time employees upon engagement, with any variation to this requiring written agreement and any hours worked in excess of the fixed hours being paid at overtime rates. Having regard to these matters, the Deputy President’s decisions and reasons disclose no basis upon which he could have reached a state of satisfaction that the Agreements passed the BOOT in relation to part-time employees.”[22]
Deputy President Colman provided a separate decision in the above matter, noting his concerns developed on a narrower basis.[23] In respect of the critical issue of the BOOT, he found;
“[101] The BOOT is concerned with ensuring that employees covered by an enterprise agreement remain above the safety net. There would be nothing wrong with an agreement providing a rate of pay that is to be determined at the employer’s discretion, provided that in all cases it will exceed the award rate for the same work. However, the reliable margin by which the agreement rate exceeds the award rate will then be perilously narrow and of limited use in compensating for any other detriments in the agreement vis-à-vis the award.”[24]
This matter concerns whether the Commission is satisfied employees are better off overall. The Applicant, in response to the Commission’s concerns that the terms of the Agreement may not result in the BOOT being passed, relies on the Guarantees reproduced above. The first, within Part I (d), set out above, is stated somewhat broadly with operation not only in relation to the general operation of the Agreement’s terms, but also in the event flat rate pay arrangements are used. . The second, within Part III (c), relates to circumstances in which an employee performs work not covered by one of the Agreement’s rates of pay tables. It is said by the Applicant’s CEO, Steven Schultze, about these terms;
“The structure of the Enterprise Agreement is such that an employee must always receive a higher remuneration than under the Award.
Given that the Enterprise Agreement provides higher base rates of pay than the Award, but then applies every allowance, loading, penalty and other entitlement, it is mathematically impossible for it to produce a result for the employee which is anything other than superior to that which would have applied under the Award. To put it in mathematical terms, "(X+l) x 1.5" must always return a higher value than "X x l.5".
The only way that an employee could be paid less than would have applied under the Award, is if they are misclassified, or the wrong loadings, penalties etc are applied. This is not a fault or deficiency of the Enterprise Agreement, but would arise due to administrative error or something of that nature. In other words, it would result from the Enterprise Agreement being mis-applied, rather than the application of the terms of the Enterprise Agreement creating that issue. The same potentially occurs under any Award and both the Award and the Enterprise Agreement provide the means to address that issue.”
Mr Schultze;
· further submits about Proposed Undertaking 4 that it maintains “the benefit of the BOOT during the life of the Enterprise Agreement, which is a superior protection to that required under the Act, which only requires the BOOT to be achieved at the test time”.
· accepts the face of the Agreement provides lower Saturday shift penalties for employees presently covered by the Clerks Award, noting that his company does not engage clerical employees on weekend or shift work and that should it do so the problem would be addressed by Proposed Undertaking 4;
· notes all field employees are paid substantially above the actual award entitlements; since “if we were to offer employment based at minimum award entitlements, we would very shortly have no employees”;
· submits that casual employment for employees working under the Schedule A of the Black Coal Award is not a detraction but instead a motivating reason for many employees, arguing;
“The history of casual employment provisions in Awards demonstrates an evolution of the terms, starting as a simple calculation of the items immediately foregone by Casual employees, with an initial Casual Loading of 13%. Over the years that loading has grown, and grown, including, as noted in various commission decisions, the inclusion of a "dissuasion factor" intended to discourage employers from using casual engagements. The proponents of dissuading employers from using casual employment terms, have actually resulted in casual employment becoming more attractive to employees. Despite casual conversion clauses being in many awards since 2010, the incidence of employees seeking conversion has been negligible, and in those instances when it has been sought, it has typically been driven by a requirement to appease banks when loans are sought.
The inclusion of an additional factor is effectively a political intervention, not related to the entitlements to which a Casual employee is excluded. For the most part, fulltime employees' annual leave and sick leave entitlements equated to around 13% in addition to their base pay.”
The Agreement provides a set of terms and conditions some of which on the face of what is actually stated in the Agreement provide lower benefits than the reference Awards or provide for different things, such as the provision of casual employment for those otherwise covered by Schedule A of the Black Coal Award. The Applicant argues that such a conclusion on the face of the Agreement is not valid since, to the extent it may be said those matters alone do not leave employees better off overall, it would be an impossibility owing to the Guarantees and Proposed Undertaking 4.
The features of the Agreement which appear to be detrimental departures from the terms of the underpinning Awards include the following (which is not an exhaustive list):
· Part-time overtime in excess of agreed hours;
· Overtime for six- or seven-day roster employees under the Black Coal Award;
· Overtime rates for Manufacturing Award employees;
· Overtime penalties for shiftworkers under the Clerks Award;
· Specification as to span of hours;
· Clarity as to whether casual employees receive the casual loading on a compounding basis for overtime in alignment with the Award (clause 17.2);
· Change of shift penalties for day shift employees under the Black Coal Award (clause 22.3);
· Non-successive shift penalties for employees covered by the Manufacturing Award (clause 33.2(e)); and
· Saturday penalties for shiftworkers (which are 150% as compared to the 125% provided for day workers) covered by the Clerks Award (clause 31.1).
The combined effect of the Agreement as made together with Proposed Undertaking 4 leaves me with no certainty at all as to what a person covered by the Agreement would be paid. All that I can say with any precision is that no matter what an employee’s conditions of employment actually may be – for reason of the Guarantees and undertaking alone – the employee will always receive “superior remuneration than would apply if that employee undertook the same work and was paid all award entitlements including overtime, penalty rates and other entitlements, under the agreement”; that if work not included in the wage rate tables in the Agreement is actually performed the employee is “to be paid above the rate provided in the classification levels of an appropriate award, and their total remuneration must be superior to the total remuneration to which they would have been entitled under that award”; and finally that all employees “are guaranteed to be better off, whether paid under the base terms of the Enterprise Agreement, or whether paid under some other arrangement including a salary or flat rate arrangement, than they would have been had they remained covered by the relevant award”.
On the other hand, according to Mr Schultze the Guarantees and Proposed Undertaking 4 would have no work to do since employees are paid substantially above the actual award entitlements and by inference the Agreement; since “if we were to offer employment based at minimum award entitlements, we would very shortly have no employees”.
Such statements are disingenuous, seriously avoiding or underestimating the task required to be undertaken by the Commission in assessment of the BOOT. If the Applicant’s reasoning about it’s the Guarantees and Proposed Undertaking 4 were to be accepted, it would be impossible, given the Applicant’s contentions about impossibility, to actually assess the BOOT, since any observable problem will be answered through reference to the guarantees and undertaking. Rather than the Commission conducting a “global test requiring consideration of advantages and disadvantages to award covered employees and prospective award covered employees of an agreement’s application compared to the application of a relevant modern award”,[25] it is being suggested I conduct no test at all.
Notably, the Agreement excludes the operation of underpinning Awards and the Guarantees given at Part I (d) and Part III (c) of the Agreement together with Proposed Undertaking 4 are not coupled with the conferral of precise entitlements on employees. Each of these terms point to unspecified clauses of unspecified Awards with there being a lack of detail as to how each would be activated, or in what circumstances. I take into account as well that the Agreement is selective in how it references each Award and that it explicitly does not incorporate any award by providing in Part I (c) that that the Agreement will “displace any other industrial instrument or provision including any Award unless specifically noted otherwise within this agreement”.
The Guarantees and Proposed Undertaking 4 are undoubtedly “uncertain, ambiguous or merely aspirational”[26] failing as substantive enforceable provisions of the Agreement.[27]
CFMMEU and Others v OS ACPM Pty Ltd and OS MCAP Pty Ltd[28] disavowed a “BOOT promise” term since the extent of an agreement’s asserted benefits could not be balanced against its detrimental terms as is required of the global BOOT assessment with the promise not being a substantive enforceable provision. CEPU v Main People[29] dealt with the acceptability of undertakings for the purposes of s 190. So far as is relevant to this matter, the latter case considered two particular undertakings; the first of which stated “All Employees will be paid more under this Agreement than they would have been paid under the Metals Award if it applied to the work carried out by them from time to time” and the second allowed an employee to request an annual reconciliation or on termination to establish whether there is an amount which is required by this undertaking to be paid to them.[30] In determining the impermissibility of the two undertakings, the Full Bench in CEPU v Main People made the following findings;
“[38] Second, we do not consider that paragraphs 2 and 6 of the undertaking, read together, are such as to have permitted satisfaction under s.190(2) that the concern that the Agreement did not pass the better off overall test had been met. In considering whether to accept an undertaking relevant to a better off overall test concern, it is necessary to analyse the undertaking to ensure that it is expressed in a way which allows it to be enforced as a term of the Agreement in accordance with s.191. An undertaking which is uncertain, ambiguous or merely aspirational such that it does not establish an enforceable entitlement for the purpose of s.191 is unlikely to meet a concern that an agreement does not pass the better off overall test.
[39] Paragraphs 2 and 6 are incapable of meeting the concern that the Agreement did not pass the better off overall test for the following reasons:
(1) Paragraph 2 is expressed in terms which make it unclear whether it is intended to give rise to an entitlement or is merely an assertion about the effect of the Agreement if approved.
(2) Even if paragraph 2 is read as if it is intended to create an entitlement, it is entirely unclear what the entitlement created by the paragraph is. To the extent that it purports to increase the rates of pay specified in the Agreement by an amount that would make employees better off than under the Metals Award, it is entirely unclear what the amount of that increase is or what the new rates of pay are to which the employees are entitled. In the event that an employee alleged a breach of the Agreement by Main People, it would be impossible for a claimant employee or a court with jurisdiction to enforce the Agreement to quantify how much, if anything, was owed to the employee. Paragraph 2 lacks sufficient certainty to constitute an enforceable entitlement.
(3) When read with paragraph 6, it is clear that to the extent that paragraph 2 purports to create a pay entitlement, it is an entitlement which is only payable annually and upon request. We reject the submission that the undertaking is to be read with the payment of wages provision in the Agreement itself, since paragraph 6 establishes a specific payment mechanism in respect of “an amount which is required by this undertaking to be paid ...”. Any entitlement to a wages top-up which is only payable on this basis cannot be considered more beneficial than the payment entitlements under the Metals Award, where the full rate must be paid by the employer in each pay period (specified as weekly or fortnightly).”[31]
This reasoning has application to the content of the present Agreement, including for disposition of Proposed Undertaking 4. The exclusion of the operation of underpinning Awards by the proposed Agreement in conjunction with the guarantee that unspecified entitlements from unspecified Awards will accrue to employees creates an impermissible level of uncertainty about the way the entitlements of employees under the Agreement should correctly be understood. It is not clear over what period the Guarantee is to be considered. Is it to be assessed for each pay period, with an employee’s remuneration being superior this fortnight but not last? Or is it monthly or annually? Equally it is not clear how an employee could assess whether their remuneration is actually superior or how they may seek rectification if they consider it not to be.
In SDAEA v Beechworth Bakery[32], the Full Bench considered the need for certainty in undertakings received in order to be satisfied the BOOT has been met. While the case deals principally with undertakings, the proposition may be drawn from its reasoning that in order to apply the global test of the BOOT the Commission must have certainty about the precise application and content of the obligations which a proposed Agreement confers upon the parties covered.
The Applicant relies on Bluescope Steel (AIS) Pty Ltd v AWU[33] to rebut the proposition that its Guarantees and Proposed Undertaking 4 are “uncertain, ambiguous or merely aspirational” and incapable of acceptance. Bluescope involved a question of the enforceability of three successive industrial instruments. The term of a 2006 Award pointed to Commonwealth superannuation legislation and prescribed “[t]his legislation, as varied from time to time, governs the superannuation rights and obligations of the parties”[34] with the Court finding the term did not contain a legal obligation to make contributions for superannuation or an acknowledgement of a requirement to make a contribution, with the text of the Award being “entirely free of any text connoting obligation. There is only a recognition that Commonwealth legislation governs the matter of superannuation”.[35] The Full Court though took a different view of terms within 2012 and 2015 Agreements, both of which referenced obligation;
“Clause 7, and in particular cl 7.2 of the 2012 and 2015 Agreements is, however, worded quite differently to cl 7 of the 2006 Award. The clause commences with words which are capable of being understood as words of undertaking and obligation: “The Company will make contributions …” It then proceeds to refer to another additional payment: “Additionally for [certain] employees … the Company will make contributions …” There was little argument but that this was an obligation undertaken. Why would not the similarly worded first sentence also be obligatory?”[36]
The judgement continued with the reasoning of aspiration and obligation to which the Applicant has referred;
“It can be accepted that different judges in different factual circumstances when examining contracts of employment and enterprise agreements, including whether or not the former incorporated the latter, have given different weight to factors such as the discernible intention of creation of legal relations, the mere acknowledgement of obligation elsewhere found, the place of aspirational commitment in some industrial instruments, and the like. To the extent that principle from other cases is of assistance in construing cl 7 of the 2012 and 2015 Agreements, I would respectfully adopt what White J said in National Tertiary Education Union v La Trobe University (2015) 254 IR 238 at [108]:
Although it may be a statement of the obvious, it is appropriate to keep in mind that the document which the Court is asked to construe is an enterprise agreement made pursuant to the regime in Pt 2-4 of the Fair Work Act 2009 (Cth) (the FW Act). It is in the very nature of these agreements that they are intended to establish binding obligations. The manner of making such agreements is subject to detailed prescription and their operation is contingent upon approval by the Fair Work Commission, the obtaining of which is itself a matter of detailed prescription. In my opinion, it is natural to suppose that parties engaging in this detailed process intend that the result should be a binding and enforceable agreement. To my mind, that is an important matter of context when approaching the construction of cl 74.
There is nothing aspirational about an employer saying, in language that connotes obligation, that it will make superannuation contributions. Language capable of conveying obligation on the subject of how much employees will receive for their labour is unlikely to be intended as aspirational or non-binding. The superannuation legislation gives no enforceable rights to employees. When they bargain for a form of words that connotes an obligation to pay it at a certain level, I see no reason whatsoever not to accept the words as binding and enforceable.”[37]
In this matter, the Guarantee terms give no precision at all, with Part I (d) stating only that an employee must receive remuneration above their unincorporated and unspecified award minimums and Part III (c) stating that work not covered by one of the Agreement’s classifications is to be paid in such a way as to be superior to the remuneration the person would have received working in an unspecified classification under an unincorporated and unspecified award. Proposed Undertaking 4 does not improve the situation to any great extent, and is again in unspecific language. These terms have not been drafted in accordance with the guidance given in Beechworth, as well as Loaded Rates[38] by avoiding “language that connotes obligation”.
The Applicant’s submissions regarding other enterprise agreements which have been approved with similar provisions as those in consideration in this matter are noted, however the submissions have little utility in this matter. The Applicant did no more than list the agreement numbers and assert that no wages claims have been made in relation to the approved agreements because of the “Better Off Overall Guarantee approach”. There is no evidence on these matters or the reasoning which led to approval of the agreements. Bearing in mind the statutory criteria which must be brought to bear in relation to this matter, set out in Part 2 – 4, as well as the facts and submissions of this matter, I place little weight on the Applicant’s submissions about the agreements referred to.
The Applicant submits that the inclusion within the Agreement of the ability to engage as casuals employees who fall under Schedule A of the Black Coal Award, and who would not otherwise be allowed to be engaged as casuals were they to remain covered by that Award, should be considered a net benefit accruing to these employees. While the views of employees may be taken into account in making the assessment of the BOOT there is no evidence on the subject.
In the alternative, this may well be a subject for which an assumption under s 193(7) could be made. That section allows the Commission to find the BOOT has been passed with an assumption to be made, with the section providing so far as is relevant;
“… 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.”
In this case the composition of the relevant class is not clear to me, other than all those covered by the Agreement. On the basis of the material submitted by the Applicant it is foreseeable that any person in any classification could be affected by the numerous changed conditions set out in the Agreement, and, given the imprecision about how the Applicant would then set the employee’s conditions, no meaningful analysis of those arrangements may be made.
Potentially in a narrower context than this Agreement, which does not limit casual employment to loaded rates arrangements, but with application nonetheless, the Full Bench in Loaded Rates cautioned about the need for understanding of the effects of the proposed agreement on employees within the class (albeit within the context of rates of pay incorporating penalty and other monetary benefits, which is a narrower proposition than in consideration this matter);
“… However the selection of class for the purpose of s 193(7) will only be of utility if the agreement affects the members of the class in the same way such that there is likely to be a common BOOT outcome. If the Commission is not satisfied on the evidence that an existing or prospective award covered employee is not better off overall, the Commission cannot approve the agreement, at least not without undertakings or in the confined circumstances set out in s 189”.[39]
On balance, I do not believe that the ability to be engaged as a casual under this Agreement is sufficient to consider it capable of passing the BOOT, in light of the detriments which otherwise accrue to employees under it and the minimal increase in wage rates.
For the reasons set out above, I am not satisfied that the BOOT is passed.
CONCLUSION
In conclusion, I decline to approve the Agreement since I am not satisfied the better off overall test has been passed. An Order[40] dismissing the application has been issued at the same time as this decision.
COMMISSIONER
On the papers
[1] The Agreement, Part 1 “Introduction and Processes” (a).
[2] F17, 6.
[3] Steven Schultze ‘Response to Issues’, [3].
[4] Southern Cross Group Enterprise Agreement 2021 Part I (d).
[5] Steven Schultze ‘Response to Issues’, [3].
[6] Joy, 5.
[7] Craig Joy ‘Information provided in support of the Application by Craig Joy, of Craig Joy Workplace Consulting’, [11].
[8] Ibid.
[9] Ibid, [22].
[10] Ibid, [20].
[11] ALDI Foods Pty Ltd v Transport Workers’ Union of Australia[2012] FWAFB 9398, (2012) 227 IR 120, [17]; see also Transport Workers' Union of Australia v Jarman Ace Pty Ltd T/A Ace Buses[2014] FWCFB 7097, [28].
[12] Construction, Forestry, Maritime, Mining and Energy Union v Karijini Rail Pty Limited[2021] FWCFB 4522.
[13] ALDI Foods Pty Limited v SDA [2017] HCA 53; (2017) 262 CLR 593, [99] citing British Fame (Owners) v Macgregor (Owners) [1943] AC 197, 201.
[14] AKN Pty Ltd t/a Aitkin Crane Services [2015] FWCFB 1833; Armacell Australia Pty Ltd [2010] FWAFB 9985.
[15] CFMEU v TR Construction Services Pty Ltd[2017] FWCFB 1928 at [20].
[16] Hart v Coles Supermarkets Australia Pty Ltd and Bi-Lo Pty Limited[2016] FWCFB 2887 at [33].
[17] CFMEU v SESLS Industrial Pty Ltd[2017] FWCFB 3659.
[18] Solar Systems Pty Ltd [2012] FWAFB 6397 at [11]; Hart v Coles Supermarkets Australia Pty Ltd [2016] FWCFB 2887 at [6], [15]; SDAEA v Beechworth Bakery [2017] FWCFB 1664 at [11].
[19] Loaded Rates Agreements [2018] FWCFB 3610.
[20] [2020] FWCFB 2434, [17].
[21] Ibid.
[22] Ibid.
[23] Ibid, [95].
[24] Ibid.
[25] SDAEA v Beechworth Bakery[2017] FWCFB 1664, [12].
[26] CEPU v Main People Pty Ltd [2015] FWCFB 4467, [38] – [39].
[27] CFMMEU and Others v OS ACPM Pty Ltd and OS MCAP Pty Ltd, [2020] FWCFB 2434, [67].
[28] Ibid,
[29] [2015] FWCFB 4467
[30] Ibid, [13].
[31] Ibid.
[32] [2017] FWCFB 1664, [42] – [46].
[33] [2019] FCAFC 84, 288 IR 145.
[34] Ibid, [9].
[35] Ibid, [13].
[36] Ibid, [18], per Allsop CJ.
[37] Ibid, [20] – [21].
[38] [2018] FWCFB 3610.
[39] [2018] FWCFB 3610, [115].
[40] PR737813.
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