Spring Dam Enterprises Pty Ltd
[2011] FWA 4596
•18 JULY 2011
[2011] FWA 4596 |
|
DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
Spring Dam Enterprises Pty Ltd
(AG2011/8112)
COMMISSIONER GOOLEY | MELBOURNE, 18 JULY 2011 |
Spring Dam Enterprise Agreement 2011.
[1] Spring Dam Enterprises Pty Ltd (the Applicant) applied on 21 April 2011 pursuant to section 185 of the Fair Work Act 2009 (FW Act) for approval of a single enterprise agreement (the Agreement).
[2] On 2 May 2011 I wrote to the Applicant’s bargaining representative and outlined a number of concerns I had with the Agreement:
“1. Part time employees conditions set out at clause 7.2 are significantly inferior to the conditions provided in the Fast Food Industry Award 2010 (the Award). Part time employees under the Award have a fixed pattern of work which can only be varied by agreement and all hours outside of agreed hours are paid at overtime rates.
2 The Award does not permit an employee to be moved locations without their consent.
3. The minimum call for part time and casual employees is 3 hours under the Award. The Agreement provides for an individual agreement which reduces the minimum call without requiring the employee to be better off.
4. There is no limit on the number of hours a salaried employee can be required to work.
5. The Agreement provides for a loading in lieu of annual leave and personal leave. I refer you to the decision of Deputy President Bartel [2010] FWA 9520.
6. Clauses 48 and 49 permit deductions from an employee’s wages without their consent.
7. It is not clear from the material provided that employees wage rates compensate for their loss of penalties. This will of course depend on the pattern of work of individual employees. I note you say that you have wage calculations which support the rates in the Agreement. Please provide those to my chambers.”
[3] On 27 May 2011 I caused to be forward to the Applicant’s representative a better off over all test assessment of the Agreement.
[4] On 27 May 2011 the Applicant’s representative provided the calculations which had been used to derive the minimum wage rates in the Agreement.
[5] On 30 May 2011 a hearing was conducted and Mr Chao Ni, a legal practitioner, appeared for the Applicant.
Better Off Overall Test
[6] The relevant modern award is the Fast Food Industry Award 2010 (the Award) and the Shop Employees (State) Award (NSW) is the relevant transitional instrument.
[7] The Applicant advised the Agreement provided for less beneficial entitlements as it provides a flat rate of pay for all hours worked and excludes meal allowances and annual leave loading.
[8] The Applicant advised that the more beneficial provisions were as follows:
1. the rates of pay were in excess of the rates in the Award;
2. employees can elect to cash out annual leave;
3. employees can elect to cash out personal leave;
4. employees can be paid an hourly rate which includes prepayment of annual leave and personal leave; and
5. employees can take leave without pay for the purpose of their studies.
[9] At the hearing Mr Ni submitted that the following clauses were more beneficial:
- clause 11.3 which provided for higher duties;
- clause 15.2(b) which provided that employees could not be rostered more than 7 consecutive days;
- clause 17.2 which provides for an unpaid meal break if the employee works between 5 and 7.5 hours; and
- part time trainees are paid as at level A.
[10] The Agreement provides that at the commencement of employment, the employer must nominate at the employer’s discretion 1whether an employee is paid in accordance with option A or option B.
[11] Option A provides for a flat rate of pay for all hours worked (excluding overtime). Option B provides for a wage rate for all hours worked Monday to Friday and a Saturday, Sunday and public holiday rate which includes a 25% loading. Both option A and B provide for a casual loading of 20%. In addition both option A and B provide that employees can be paid a loading in lieu of annual leave and personal leave.
[12] The Applicant has provided figures which show how the rates of pay were calculated. These calculations do not have regard to the pattern of work of particular classes of employees.
[13] The Agreement does not provide for any increase in the rates during the life of the Agreement unless the rate falls below the modern award rate.
[14] The Award has transitional provisions. Penalty rates are transitioning during the life of the Agreement as is the casual loading.
[15] Part 4A of Schedule 7 of the Fair Work (Transitional Provisions & Consequential Amendments) Act 2009 provides for the application of the better off overall test if the Award contains transitional provisions. Relevantly it provides:
“(2) For the purpose of determining whether the enterprise agreement, or the enterprise agreement as proposed to be varied, passes the better off overall test, subsections 193(1) and (3) of the FW Act apply as if:
(a) FWA were required, at the test time under the relevant subsection, to compare the enterprise agreement, or the enterprise agreement as proposed to be varied, with:
(i) the relevant modern award as it operates at the test time; and
(ii) the relevant modern award as it operates on 31 July in each year in the transitional period until the nominal expiry date of the enterprise agreement, that would be the first day of the first full pay period for an employee covered by the enterprise agreement; and
(b) FWA were required to assume, at the test time, that the modern award will not be varied before the days mentioned in subparagraph (a)(ii).
(3) Subsections 193(1) and (3) of the FW Act also apply as if they provided that:
(a) if FWA carries out a comparison in accordance with subsection (2); and
(b) for 1 or more of the comparisons, FWA is not satisfied that each of the employees mentioned in subsection 193 (1) or (3) of the FW Act would be better off overall if the enterprise agreement applied to the employee than if the modern award applied to the employee;
the enterprise agreement, or the enterprise agreement as proposed to be varied, does not pass the better off overall test.”
[16] In assessing this Agreement regard was had to the transitional provisions of the Award as they will exist on the 1 July each year of the transition period.
[17] No submissions were made that the Agreement as filed satisfied the better off overall test.
[18] The higher rates of pay are said to compensate employees for the loss of penalty rates, leave loading and meal allowances. However over a 12 month period, a permanent sandwich artist working 38 hours per week who worked each Saturday and Sunday and six public holidays is paid less under the Agreement compared with the Award. This calculation assumes no work was performed after 9pm.
[19] Having regard to the more beneficial provisions and less beneficial provisions of the Agreement I am not satisfied that employees would be better off under the Agreement.
Undertakings
[20] Having found the Agreement does not pass the better off overall test section 190 of the FW Act provides that Fair Work Australia can accept undertakings provided the undertakings do not cause financial detriment to any employee covered by the agreement or result in substantial changes to the agreement.
[21] The Applicant proposed the following undertakings:
“The Applicant undertakes, in the application of the Agreement:
1. Part Time Employees
(a) That prior to the commencement of part time employment, the Employee shall be provided with a Letter of Engagement as defined under clause 3.7 of the Agreement, which sets out the regular pattern of work.
(b) That for part time Employees, Clause 3.7 of the Agreement shall be read as if the Letter of Engagement will include the following:
(i) The number of hours worked each day;
(ii) Which days of the week the Employee will work;
(iii) The actual starting and finishing times of each day;
(iv) That any variation will be in writing;
(v) That the minimum daily engagement is three hours, unless otherwise by agreement in accordance with Clause 15.4 of the Agreement; and
(vi) The times of taking and the duration of meal breaks.
(c) That clause 15 of the Agreement shall be read as if any proposed variation to the regular pattern of work of a part time Employee under the Agreement cannot be made otherwise by written agreement between the Employee and the Employer.
2. Transfer of Location of Work
That clause 13 of the Agreement shall be read as if any proposed re-location of an Employee from one location to another, either on a permanent or temporary basis, must be by written agreement between the Employee and the Employer.
3. Loaded Rates
That loaded rates of pay under Clause 32 of the Agreement will not be used.
4. Deductions
That written authorisation by the Employee must be provided to the Employer before any deductions can be made in accordance with clauses 49.1 and 49.3 of the Agreement.
5. Minimum Wage Rates
That the minimum casual wage rate for Restaurant Supervisors / Managers in the Minimum Wage Schedule Option B shall be $22.44 per hour.
6. Guarantee of Minimum Wages
(a) That the Employer will, at all times, pay Employees no less than the nominated Minimum Wage Rate Schedule in the Agreement, as adjusted by any minimum wage decision of Fair Work Australia, to ensure that the Wage Rates specified therein meet or exceed the minimum hourly rate of pay prescribed under the Fast Food Industry Award 2010; and
(b) The Wage Rates shall be adjusted on 31 July each year during the transitional period of the modern award until the nominal expiry date of the Agreement to ensure that all Employees receive no less take home pay than what they would have received had the Fast Food Industry Award 2010 applied to them with reference to Schedule A - Transitional Provisions of the Fast Food Industry Award, averaged over a 26 week period. This clause in no way allows for an Employee to receive an overall reduction in take home pay.”
[22] I am not however satisfied that even with the undertakings, the Agreement would pass the better off overall test.
[23] The Agreement provides that employees can agree to work a minimum call of one hour. It was said that this was a beneficial clause as it provides employees, in particular school students, with the flexibility to work hours that they preferred.
[24] The FW Act provides for a mechanism to be included in agreements that permit an employer and employee to make an individual agreement. A fundamental feature of such individual agreements is that the individual agreement must leave the employee better off.
[25] Clause 15.4 of the Agreement provides that an employer and employee may agree a minimum call of one hour per shift. There is no requirement that the employee will be better off. I do not accept the submissions that this provision is a benefit to employees. This provision could see a junior employee attend for work and be paid $7.60 instead of the minimum amount of $22.81. Even if this were seen as a beneficial provision for an individual employee other employees would be at a disadvantage as they would not be offered work in circumstances where other employees were willing to work for a one hour minimum call.
[26] In Bupa Care Services Pty Ltd 2, in relation to preferred hours, Commissioner Smith said:
“[11] The clause is portrayed as being a benefit to employees. However, there is clear disadvantage when compared to the award because that person would have ordinarily received overtime for the hours worked. The benefit is said to derive from the fact that an employee will get work that they might not have otherwise been given. The no disadvantage is then said to arise from the fact that by picking the hours an employee wants to work, that is a benefit and the trade-off is that the work is performed at ordinary rates. This however is a subjective test. FWA is being asked to accept that a person believes they are better off because they get work at a rate below the safety net. The same could be said of a person who would offer for work at an amount below the minimum wage thereby giving themselves a cost and competitive edge against a person who wishes to relay upon the safety net. The concept could apply to public holidays and shift loadings. A good example may be a nurse who prefers night shift because of family responsibilities. In those circumstances it could also be argued that the act of volunteering eliminated the need for the loading.
[12] For the concept to be acceptable, it must rely upon the subjective belief of the employee rather than the objective testing of the award against the agreement.
[13] This is clearly an approach which undermines the standards fixed in awards and the basis for determining the no disadvantage test.”
[27] Commissioner Smith’s decision was upheld on appeal. 3 I adopt the reasoning of Commissioner Smith and conclude that it applies equally when assessing whether the Agreement passes the better off overall test. The reduction of the minimum call to one hour, even with the agreement of the employee, is a less beneficial provision.
[28] While Undertaking 1 reinstates the part time provisions from the Award, it does not provide that a part time employee who works outside of agreed hours is paid at overtime rates and the provision is therefore still less beneficial than the Award.
[29] My concerns about the rates of pay being insufficient to compensate employees for the loss of penalties, allowances and annual leave loadings are not sufficiently addressed by the undertakings. It is not clear how the rate in option A would be adjusted to take account of movements in the minimum rate in the Award. It is unclear how Undertaking 6 would actually apply. Further, the calculations provided to Fair Work Australia do not have regard to the pattern of hours worked by employees. For example there is nothing in the Agreement which would prevent an employee being rostered to work only on Saturday and Sunday, and hence under option A, being worse off under the Agreement compared with the Award.
[30] I do not consider that the provisions permitting the cashing out of annual leave and personal leave are more beneficial provisions. At most they are neutral. I further do not consider that the provision of study leave, which is unpaid leave entirely at the discretion of the employer, is a more beneficial provision. Again at most it is neutral.
[31] I do not consider the meal break provision is more beneficial. While the Award provides for one meal break if the employee works 5 hours but less than nine hours, the Award also provides that no employee can work more than 5 hours without a meal break. The provision which provides that the employee receives an unpaid meal break if the employee works between 5 and 7.5 hours is neither more nor less beneficial.
[32] The Applicant submitted that wage rates for trainees are more beneficial. There is no definition of trainees in the Agreement and unlike the Award there is no requirement that the trainees undertake a traineeship under a training contract as defined in the Award. While the rates under the Agreement are higher than the Award, again I am not satisfied that the rates sufficiently compensate trainees for the loss of penalties.
[33] Having had regard to the less beneficial provisions and the more beneficial provisions in the Agreement I am not satisfied even when having regard to the undertakings that the Agreement passes the better off overall test and I therefore dismiss the application for approval.
COMMISSIONER
Appearances:
Mr C Ni for the Applicant.
Hearing details:
2011.
Melbourne:
May 30.
1 See clause 23
2 [2010] FWA 16
3 [2010] FWAFB 2762
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