SRSW Pty Ltd T/A Stellar Recruitment
[2019] FWCA 8699
•23 DECEMBER 2019
| [2019] FWCA 8699 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
SRSW Pty Ltd T/A Stellar Recruitment
(AG2019/2117)
SRSW ENTERPRISE AGREEMENT 2019
Coal industry | |
COMMISSIONER SPENCER | BRISBANE, 23 DECEMBER 2019 |
Application for approval of the SRSW Enterprise Agreement 2019.
[1] An application has been made for approval of an enterprise agreement known as the SRSW Enterprise Agreement 2019 (the Agreement). The application was made pursuant to section 185 of the Fair Work Act 2009 (the Act). It has been made by SRSW Pty Ltd (the Applicant). The Agreement is a single enterprise agreement.
[2] The Union advanced concerns regarding the Agreement that included sections 186, 187 and 188 of the Act. The matters of contention between the parties are dealt with accordingly below, some of which have been dealt with by undertakings.
[3] This application has been the subject of a series of Directions for further information, a conference and a Hearing on Thursday, 19 December 2019. A summary of the agreed and outstanding issues were recorded in a table provided by the parties prior to the Hearing. At the time of the Hearing, further information was proposed. Subsequent to the Hearing, a further exchange of undertakings occurred. Those are attached to this decision.
National Employment Standards
[4] The Union raised a number of objections related to section 186(2)(c) of the Act. Section 186(2)(c) requires that an Agreement not contravene section 55 of the Act. The Union’s specific objections were in relation to annual leave and public holidays.
Clause 15.1 – Annual Leave
[5] The Union submitted that clause 15.1 of the Agreement is in contravention of section 55 of the Act. The Agreement states that unless otherwise agreed, employees are to provide 4 weeks’ notice of their intention to take annual leave. The Union asserted that this obligation is detrimental to the employees and contrary to section 88 of the National Employment Standards (NES) which provides:
“The employer must not unreasonably refuse to agree to a request by the employee to take paid annual leave”.
[6] It is the Union’s position that, as required by section 186(2)(c) of the Act, the Commission cannot be satisfied that clause 15.1 of the Agreement does not contravene section 55 of the Act
[7] In response to the Union’s position, the Applicant made reference to section 93(4) of the NES which provides:
“A modern award or enterprise agreement may include terms otherwise dealing with the taking of paid annual leave.”
[8] The Applicant stated that the Union’s objection relies upon section 88 of the NES which deals with “Taking Paid Annual Leave”. Further to this, the Applicant submitted that section 94(4) expressly permits terms, “otherwise dealing with the taking of paid annual leave” and contended that the provision of notice for the taking of annual leave is otherwise dealing with the taking of annual leave.
[9] In addition, the Applicant referred to section 55(3) of the Act which provides:
“The National Employment Standards have effect subject to terms included in a modern award or enterprise agreement as referred to in subsection (2).”
[10] Subsection 55(2) relevantly provides:
“(2) A modern award or enterprise agreement may include any terms that the award or agreement is expressly permitted to include:
(a) by a provision of Part 2-2 (which deals with the National Employment Standards); or
(b) by regulations made for the purposes of section 127.”
[11] Furthermore, the Applicant stated as section 93(4) is a provision of Part 2-2 of the Act which permits an Agreement to include terms dealing with paid annual leave, it submitted that section 88 is therefore subject to clause 15.1 of the Agreement by virtue of section 55(3) of the Act. As a result, clause 15.1 does not contravene section 55 and complies with section 186(2)(c) of the Act.
[12] The Applicant provided an alternative argument on the application of clause 15.1 of the Agreement. It submitted that the provision of 4 weeks’ notice to take annual leave is not detrimental in comparison to section 88(2) of the Act on the basis that it is not unreasonable to refuse to agree to a request for annual leave where such refusal is in accordance with the terms agreed to between employee and the employer in an enterprise agreement.
[13] Nonetheless, the Applicant provided the following undertaking for the purposes of clause 15.1:
“The Company will not unreasonably refuse to agree to a request by an employee for annual leave which is made within the 4 week notice period.”
[14] Accordingly, I consider this resolves this matter.
Public Holidays – Clause 10 & 15
[15] The Union contended that clauses 10.2.6, 10.3 and 15.8 of the Agreement would not allow the Commission to be satisfied, as required by section 186(2)(c) of the Act, as it contravenes section 55 of the Act. The Union argued that the clauses, as referred to above, permit the Applicant to require employee to work on a public holiday. Further to this, the Union submitted that the Applicant is also able to exclude the NES entitlement to, and requirements relating to, public holidays. In asserting their position, the Union referred to the decision in Construction, Forestry, Maritime, Mining and Energy Union v CSRP Pty Ltd, 1 stating that whilst clause 10.2.6 of the Agreement refers to the requirement to work being reasonable, it submitted that there is no limitation, explanation or guidance as to how the reasonableness of any such request will be determined. As a result, the Union argued that this is in contrast to the provision of s.114 of the Act.
[16] The Applicant submitted in response that clause 15.8 of the Agreement is a general clause which provides for the rostering of public holidays and does not specifically deal with the reasonableness of requests or refusals in relation to leave on public holidays. Further to this, the Applicant referred to clause 10.3 of the Agreement, stating it deals with the method of including public holiday penalty rates in the calculation of the flat hourly rate and does not specifically deal with the issue of reasonableness of requests or refusals.
[17] With respect to clause 10.2.6 of the Agreement, it provides:
“Where an employee is reasonably required to work on a rostered public holiday but does not attend without reasonable cause, they will be considered absent without leave and not entitled to payment.”
[18] The Applicant submitted that its wording is consistent with the terms in section 114 of the Act which also requires requests and refusals to work on public holidays to be reasonable. Further to this, the Applicant stated that under section 116 of the Act, the payment of public holidays if an employee is absent “in accordance with this division”. The Applicant submitted that an absence that is not in accordance with section 114(3) of the Act that a refusal to work a public holiday be reasonable is not in “in accordance with this division” and does not attract payment under section116.
[19] The Union made further submissions in reply to the Applicant’s submissions. The Applicant stated that clause 15.8 of the Agreement is a general clause providing for rostering of public holidays and is overridden by clause 10.2.6 which it is said by the by the Applicant to specifically address the issue of being required to work on a public holiday. The Union did not agree with this position. The Union maintained that clause 10.2.6 provides for the way in which public holidays are remunerated. The Union made reference to section114 of the Act and further asserted that a requirement to work on a public holiday does not accommodate a request which can be refused. The Union submitted that it is the language of obligation and stands contrary to the entitlement an employee has under the NES to be absent from work on a public holiday. The Union further stated that clause 15.8 of the Agreement contravenes the NES and precludes the Agreement being approved in its current form.
[20] This issued was considered at the Hearing. The applicant subsequently provided the following undertaking:
“The Company utilises rosters that incorporate work on public holidays. In these circumstances, where an employee refuses a request to work on a public holiday, any refusal will be in accordance with section 114 of the Fair Work Act 2009.”
[21] Section 114(4) of the Act provides the factors for considerations as to whether a refusal to work on a public holiday is reasonable. Accordingly, I consider the matter is resolved.
Better off Overall Test
[22] The Union raised a number of objections related to section 186(2)(d); the Better off Overall Test (BOOT). As per section 193 of the Act, the BOOT is applied on a global basis 2 and in the current circumstances comparing the Agreement with the Black Coal Mining Industry Award 2010 (the Award).
[23] A Full Bench of the Commission, in Duncan Hart v Coles Supermarkets Australia Pty Ltd and Bi-Lo Pty Limited T/A Coles and Bi Lo; Australasian Meat Industry Employees Union, The v Coles Supermarkets Australia Pty Ltd and Bi-Lo Pty Limited T/A Coles and Bi Lo 3, observed as follows, in relation to the BOOT:
“…Section 193(1) of the Act provides that an enterprise agreement passes the BOOT if the Commission is satisfied, at the test time, that each award covered employee, and each prospective award covered employee would be better off if the agreement covered the employee than if the relevant modern award covered the employee. In this case the relevant modern award is the General Retail Industry Award 2010 4 (the Award). It is well established that the test requires the identification of terms which are more beneficial for an employee, terms which are less beneficial for an employee, and an overall assessment of whether an employee would be better off under the agreement5.”6
[24] In applying the BOOT test, the consistent view of the Commission is that consideration is given to a comparison between the terms of the relevant award and the terms of the agreement 7.
[25] A provision of a proposed agreement that when considered alone, may be less beneficial than a corresponding provision in a relevant modern award, will not result in the proposed agreement failing the BOOT if there are other more beneficial provisions in the proposed agreement which offset the less beneficial provision such that employees are better of overall. It is well established that the BOOT is to be applied on a global basis rather than line by line.
[26] In order to properly apply the BOOT in the present case, it is necessary to construe the terms of the Black Coal Mining Industry Award 2010. The approach to the interpretation of Enterprise Agreements was extensively considered by a Full Bench of the Commission in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers Union (AMWU) v Berri Pty Limited (Berri): 8
“[114] The principles relevant to the task of construing a single enterprise agreement may be summarised as follows:
1. The construction of an enterprise agreement, like that of a statute or contract, begins with a consideration of the ordinary meaning of the relevant words. The resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose. Context might appear from:
(i) the text of the agreement viewed as a whole;
(ii) the disputed provision’s place and arrangement in the agreement;
(iii) the legislative context under which the agreement was made and in which it operates.
2. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.
3. The common intention of the parties is sought to be identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement, without regard to the subjective intentions or expectations of the parties.
4. The fact that the instrument being construed is an enterprise agreement made pursuant to Part 2-4 of the FW Act is itself an important contextual consideration. It may be inferred that such agreements are intended to establish binding obligations.
5. The FW Act does not speak in terms of the ‘parties’ to enterprise agreements made pursuant to Part 2-4 agreements, rather it refers to the persons and organisations who are ‘covered by’ such agreements. Relevantly s.172(2)(a) provides that an employer may make an enterprise agreement ‘with the employees who are employed at the time the agreement is made and who will be covered by the agreement’. Section 182(1) provides that an agreement is ‘made’ if the employees to be covered by the agreement ‘have been asked to approve the agreement and a majority of those employees who cast a valid vote approve the agreement’. This is so because an enterprise agreement is ‘made’ when a majority of the employees asked to approve the agreement cast a valid vote to approve the agreement.
6. Enterprise agreements are not instruments to which the Acts Interpretation Act 1901 (Cth) applies, however the modes of textual analysis developed in the general law may assist in the interpretation of enterprise agreements. An overly technical approach to interpretation should be avoided and consequently some general principles of statutory construction may have less force in the context of construing an enterprise agreement.
7. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or it is ambiguous or susceptible of more than one meaning.
8. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.
9. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.
10. If the language of the agreement is ambiguous or susceptible of more than one meaning then evidence of the surrounding circumstance will be admissible to aide the interpretation of the agreement.
11. The admissibility of evidence of the surrounding circumstances is limited to evidence tending to establish objective background facts which were known to both parties which inform and the subject matter of the agreement. Evidence of such objective facts is to be distinguished from evidence of the subjective intentions of the parties, such as statements and actions of the parties which are reflective of their actual intentions and expectations.
12. Evidence of objective background facts will include:
(i) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;
(ii) notorious facts of which knowledge is to be presumed; and
(iii) evidence of matters in common contemplation and constituting a common assumption.
13. The diversity of interests involved in the negotiation and making of enterprise agreements (see point 4 above) warrants the adoption of a cautious approach to the admission and reliance upon the evidence of prior negotiations and the positions advanced during the negotiation process. Evidence as to what the employees covered by the agreement were told (either during the course of the negotiations or pursuant to s.180(5) of the FW Act) may be of more assistance than evidence of the bargaining positions taken by the employer or a bargaining representative during the negotiation of the agreement.
14. Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or rewrite the provision in order to give effect to an externally derived conception of what the parties’ intention or purpose was.
15. In the industrial context it has been accepted that, in some circumstances, subsequent conduct may be relevant to the interpretation of an industrial instrument. But such post-agreement conduct must be such as to show that there has been a meeting of minds, a consensus. Post-agreement conduct which amounts to little more than the absence of a complaint or common inadvertence is insufficient to establish a common understanding.”
[27] The Union took issue with a number of the provisions of the proposed Agreement, when compared with the Award, and argued the Agreement did not pass the BOOT.
Clause 5.3 – Casual Employee
[28] The Union took objection to clause 5.3 which provides for the engagement of casual employees under the Agreement. The Union’s specific objection was that the Agreement did not provide a minimum engagement for casual employees. Under the Award, clause 10.4(b) provides casual employees with a minimum four hours payment on each engagement.
[29] Directions were issued on 3 July 2019 in relation to concerns the Commission identified after reviewing the material against the Act and the Award. In this, an undertaking was sought from the Applicant to ensure that the minimum engagement for casual employees aligned with the Award.
[30] The Applicant provided the following Undertaking in response on the 10 July 2019:
“3. For the purposes of Clause 5.3 of the Agreement, the following will apply:
A casual employee will receive a minimum 4 hours payment on each engagement.”
[31] The Union argued, with respect to clause 10.1(c) of the Award, than that an employer could only engage staff employees and not casual production and engineering employees under the Award.
[32] This issue was considered in The GO2 People Australia Pty Ltd: 9
“…In support of the assertion that the Agreement passes the BOOT, GO2 People referred to a Decision of a Full Bench of the Commission in CFMMEU v SESLS Industrial Pty Ltd 10 (SESLS Industrial Pty Ltd) which considered inter alia how an assessment of whether an enterprise agreement passed the BOOT should be made in circumstances where the relevant award was the Black Coal Award and the agreement provided for casual employment for employees in classifications who could not be employed on a casual basis under the Black Coal Award.
[29] It is apparent that the agreement under consideration in SESLS Industrial Pty Ltd had similarities to the Agreement in the present case – it incorporated the majority of provisions of the Black Coal Award; applied all relevant penalties and loadings; guaranteed that employees would receive 1% more than the remuneration they would have received under the Black Coal Award; provided for the employment of casual employees; and provided for a loading of 25% for casual employees in lieu of leave entitlements.
[30] The Full Bench in SESLS Industrial Pty Ltd concluded that for the purposes of the BOOT, the presence in the Black Coal Award of a 25% loading for casual staff employees is a matter which can be taken into account in considering the adequacy of the 25% loading in the Agreement for BOOT purposes. The Full Bench went on to conclude that there was no error in the decision of the Member of the Commission at first instance in the application of the BOOT or the decision to approve the Agreement. In reaching this conclusion the Full Bench said:
“[51] … the Agreement incorporates the Award, and guarantees that employees will receive 1% more than the remuneration they would have received under the Award. The casual engagement of production and engineering employees is not permitted under the [Black Coal] Award; it is permitted under the Agreement, but affords a 25% loading. In our view, the Commissioner’s conclusion that the Agreement satisfied the BOOT was not affected by appealable error.” 11
[33] Whilst it is recognised the current Agreement does not incorporate the Award, the similar comparison in this decision of the adequacy of the 25% causal loading against exhibits 3 and 4, which provide the casual calculations demonstrating the BOOT being met.
Clause 7 – Policies and Procedures Incorporations
[34] The Union raised a further objection to clause 7 of the Proposed Agreement, extract as follows:
“Employees are required to comply with all applicable Company policies and procedures, or any policies or procedures required by clients on site. These policies and procedures are not incorporated in, and do not form part of, this Agreement.”
[35] The Union argued that clause 6 incorporates by reference a number of policies and procedures binding to employees, and submitted that there was no equivalent provision in the Award. 12
[36] In response to the Union’s objection, the Applicant submitted that in accordance with section 50 of the Act, a term of an Agreement override policies to the extent of any inconsistencies. The Applicant submitted that the Union’s objection was irrelevant for the purposes of the BOOT.
[37] In further submissions dated 8 November 2019, the Union argued that clause 7 must be considered for the purposes of the BOOT, alleging that it created a one side, enforceable obligations on employees.
[38] The Failure to comply with policies is a disciplinary issue only, and do not form part of the Agreement and do not a breach of the Agreement.
Clause 9.3 - Meal Breaks
[39] The Union took issue with clause 9.3 of the proposed Agreement, extract as follows:
“Employees will be entitled to a paid meal break of 30 minutes for shifts of 10 ½ hours or less and a second 30 minutes paid meal break for shifts longer than 10 ½ hours. Meals breaks are to be taken at a mutual convenient time to suit the needs of the operation.”
[40] Clause 24 of the Award states as follows:
“24. Meal breaks—rostered hours
24.1 An employee is entitled to a meal break of 30 minutes without deduction from pay for each five hours worked during rostered hours.
24.2 Subject to clause 24.3, an employee will not be required to work for more than five hours without a meal break.
24.3 Where the employer and employee agree that the employee will work for more than five hours without a break, then the employee will, unless otherwise agreed, be paid for any work beyond five hours at the applicable overtime rates until a meal break is taken.”
[41] The Union’s argument is that there is no provision for overtime payments after 5 hours work without a break under the Agreement (unless agreed otherwise), unlike the Award.
[42] The Union also argued that an employee would be entitled to a second paid break in a situation where an employee, who had a 10.5 hour shift, took a first paid break at for example 4 hours. Under the Agreement, such an employee would not be entitled to the second paid break.
[43] The Applicant submitted that the Agreement reflected the same number and duration of break provided under that Award, and the arrangement under the Agreement provided greater productivity consistent with section 171(a) of the Act. The Applicant further submitted that the overtime rates are not paid to employees working past 5 hours without a break is compensated for by payment of above Award pay rates in the Agreement. 13
[44] The Union alleged the Applicant “misstated” clause 24 of the Award, and argued that the Award provides that for each 5 hours worked, an employee has an entitlement to a meal break of 30 minutes. Accordingly, an employee working a 10 ½ shift will work two 5 hour periods, and therefore have an entitlement to two thirty minutes meal breaks. 14
[45] The Union further argued that clause 24.2 and 24.3 provide important protective provision around when meal break must be taken, and that the removal of these provisions and concomitant fatigue and safety consequences must be considered for the purposes of the BOOT. 15
[46] Further to this, the Applicant has provided the following undertaking:
“For shift lengths of 10½ hours or longer, 2 x 30 minute paid meal breaks will apply.”
[47] This resolves the matter as raised.
Clause 15.3.2 – Personal Leave
[48] The Union objected to clause 15.3 of the proposed Agreement which provides for personal leave. The Union argued that the proposed Agreement provided no provision that absences of less than half the ordinary hours of a shift will not lead to deductions from accruals, unlike the Award.
[49] Clause 15.3.2 of the proposed Agreement provides:
“Payment for approved leave will be at the employee’s Base Hourly Rate for the ordinary hours of the absence.”
[50] Clause 26.4 of the Award is extracted as bellows:
“Any personal leave taken must be deducted from the employee’s personal leave entitlement as follows:
(a) where the absence is for fewer than half the ordinary hours component of the shift, no deduction; or
(b) in all other cases, the full ordinary hour’s component of the shift will be deducted for each absence.”
[51] The Applicant argued that:
“The Award also provides that absences of more than half the ordinary hours of a shift will lead to the full ordinary hours of the shift being deducted, included those actually worked. The two components of the Award balance out and the Agreement’s hour for hour deductions is not less beneficial.” 16
[52] The Union did not accept the Applicant’s argument on the basis that “any need to be absent for more than half the ordinary hour component of a shift will almost certainly require an absence for the full ordinary hours component of the shift”. 17 No evidence was brought on this issue.
[53] The personal leave provisions do not undermine the BOOT to impede the approval of the Agreement. It is noted on a comparison, considering the application of the Agreement provision, the difference in the deductions of personal leave, for the different application as per clause 26 of the Award may, balance out. The matter has been in considered in comparison to the positive BOOT calculation.
Clause 8.4 – Redundancy
[54] The Union took issue with clause 8.4 of the proposed Agreement. Firstly, the Union argued that the Agreement does not provide the minimum payment of two ordinary weeks’ pay to an employee is retrenched, even if the employee has completed less than 12 months’ service, as provided under clause 14.4(b) of the Award. The Applicant submitted in response that “this is compensated for by payment of above Award pay rates in the Agreement”. 18 The Union argued again that the Agreement rates are marginally above the Award rates and are “already required to absorb Allowances that would otherwise be payable under the Award”.19
[55] Secondly, the Union noted that the Applicant stated in the Form F17 that the Agreement pays 3 weeks’ pay for each year of service without limitation, whereas the Award limits redundancy payment to 30 weeks’ pay. 20 The Union argued that whilst the Agreement does not limit redundancy to 30 weeks’ pay, there is no evidence that suggests that any employee will have that length of service. The Union’s evidence is that of Ms Melanie Mitchell. Ms Mitchell conducted a search of the Australian Investment and Securities Commission website for a company by the name of “SRSW Pty Ltd” at 8:38 am on 17 July 2019. The results of the search were that SRSW Pty Ltd was registered on 22 September 2014. The Union argued that any employee, who had been employed immediately upon registration and had continuous service, would not be entitled to more than 30 weeks’ pay upon being made redundancy until September 2015.
[56] In regard to the BOOT question, I adopt the reasoning set out by the Full Bench in CFMMEU v SESLS Industrial Pty Ltd 21 (SESLS Industrial Pty Ltd). The Full Bench of the Commission considered inter alia how an assessment of whether an enterprise agreement passed the BOOT should be made in circumstances where the relevant award was the Black Coal Award and the agreement provided for casual employment for employees in classifications who could not be employed on a casual basis under the Black Coal Award. The Full Bench said:
“We recognise that the award provides for benefits that exceed those in the NES and that in important respects the conditions in question are those which do not apply to casual employees; leave, notice, termination and redundancy. However it is also the case that the award provides for casual employment of employees in staff classifications and that a casual loading of 25 per cent is provided. This does not necessarily mean that a 25 per cent loading would necessarily be appropriate as an award standard for production and engineering employees. As the Full Bench noted in the modern award review case referred to above, this is a question that needs to be resolved by reference to an appropriate evidentiary merit case. However, for the purposes of the BOOT we consider that in the presence or the presence in the award of a 25 per cent loading for casual staff employees is a matter which can be taken into account in considering the adequacy of the 25 per cent loading in the agreement for BOOT purposes.” 22
[57] The issue of casual employment and whether the Agreement passes the BOOT is a matter for consideration. I accept that consistent with the Decision of the Full Bench in the SESLS Industrial Pty Ltd, the Agreement passes the BOOT with respect to prospective casual employees. In this regard, as was the case in SESLS Industrial Pty Ltd, while casual employment is not permitted, a 25% loading applicable to employees, as set out in the aforementioned case authority was considered an acceptable loading. Further, the undertakings provided by the Applicant include a reconciliation process that respond to the BOOT concerns. Accordingly, I am satisfied that the Agreement also passes the BOOT in this regard.
Allowances
[58] The Union argued that unlike the Award, that provides for an extensive range of allowances, the Agreement includes no provisions for Allowances, except that industrial outer clothes will be supplied on an “as needed” basis under clause 14 of the Agreement.
[59] In response, the Applicant stated that employees were compensated for by payment of above Award pay rates in the Agreement.
[60] The Union rejected the Applicant’s argument in their submissions dated 8 November 2019, and argued that the above Award pay rates are marginal, ranging from between 6.25% to 7%. As noted above, the Award provides for an extensive range of allowances, including but not limited to; tool, meal, travel, first aid and confided spaces allowance. Modelling undertaken by the Union indicate that a shift worker who is required to work two hours of non-rostered overtime and does not have their normal means of transport available would be worse off under the Agreement. 23
[61] During the Hearing, the Applicant tendered two documents addressing the applicable wage rates in terms of the BOOT at test time and thereafter. Exhibit 1 provided a comparison table with the Award rates and Agreement rates at test time and was modelled off a full time Mineworker on a 7 day/night 12 hour roster. Based on the modelling at test time provided by the Applicant, the Mineworker was better off $8,369.71 annually compared to the Award. 24 Exhibit 2 provided the same comparison table, however using the Award rates as of 18 December 2019 for consideration. In this scenario, the Mineworker was better of $5,814.30 annually compared to the Award.25 Exhibits 3 and 4 provide the casual BOOT calcultions.
[62] Further, in relation to the BOOT, the Applicant provided a reconciliation process in undertaking 13, as attached.
Clause 10.3 – Flat Hourly Rate
[63] The Union took objection to clause 10.3 of the proposed Agreement.
[64] Clause 10.3 provides that the Applicant may pay employees a ‘flat-rate’ that includes all entitlements in the agreement. The Agreement does not provide the flat rates, and as such, the Commission was unable to determine whether the flat rates would make employees better or worse off. Directions were issued on 3 July 2019 in relation to concerns identified after reviewing the material against the Act and the Award. In this, further information was sought from the Applicant to clarify the Commission’s concerns.
[65] On 10 July 2019, the Applicant provided the following submissions in response:
• Clause 10.1 contains Base Hourly Rate that are higher than the Award;
• Clause 10.2 contains penalties to be applied to the Base Hours Rates for the working of overtime, weekends, shift work and public holidays, which are identical to the Award penalties; and
• Clause 10.3 provides that the Flat Hourly Rate is calculated by the Total Wage divided by the number of hours worked.
[66] Accordingly, the Applicant submitted that employees were better off overall.
[67] The Union argued that, notwithstanding the explanation provided, the Commission could not be satisfied that an employee who works on a flat hourly rate under the Agreement would receive as high remuneration as those on the rate provided by the Award.
[68] To provide clarity on the issue, the Union provided an example. It stated that the flat hourly rate may assume a particular number of public holidays will be worked over a 12 month period. However, an employee who works from Christmas to mid-February will work a disproportionally higher number of public holidays than the flat rate assumed in the Agreement. The Union submitted that an employee remunerated on the base rate would receive more money than an employee receiving the base rate. The Union, therefore, submitted that the flat rate will not satisfy the BOOT.
[69] The Union also addressed an issue in relation to a roster than unevenly distributes shifts or call backs. The Union stated that employees whose employment changes or ceases at a particular point during the roster cycle may have been better off under the base rate. In presenting its argument the Union provided an example. It stated that an employee working an even time roster which provided for two weeks of night shifts followed by two weeks off and then two weeks of day shift, followed by two weeks off would be disadvantaged in comparison to the base rate if their employment ceased prior to the working the block of day shifts. The Union contended the disadvantage arises as a flat hourly rate would not compensate for the nights shifts worked. The Union further contended that the BOOT may be affected by the lack of clarity in clause 10.3 regarding the remuneration paid to employee on a flat hourly rate who are required to work un-rostered overtime or call backs. The Union submitted that the Commission cannot be satisfied on a flat rate for casual employees and cited the decision in Loaded Rates Decision to articulate its position. 26
[70] The Applicant in response provided a response to this issue, in the form of the reconciliation undertaking as follows:
“Where an employee is paid on the basis of a Flat Hourly Rate, and
a) is employed for less than a complete roster cycle, or
b) where they work more than the average number of public holidays built into the Flat Hourly Rate over a period of one year or the period of their employment where it is less than one year (together, the Period)
the Company will conduct a reconciliation to establish whether, for work performed under the Agreement in the Period, the employee's total wages were more than the wages the employee would have been paid for performing the same work at the same times on the same days if their wages were calculated by applying their Base Hourly Rate in clause 10. 1 of the Agreement to the penalty payments in clauses 10.2.1 to 10.2.6 of the Agreement (Base Hourly Rate Method).
If the employee's wages for the relevant Period are less than the employee would have been paid for performing the same work at the same times on the same days if their wages were calculated according to the Base Hourly Rate Method, the employee will be paid in the following pay period an amount to ensure that the employee receives as a minimum, the amount they would have received according to the Base Hourly Rate Method.”
Genuine Agreement
[71] Section 186 of the Act insofar as it relates to genuine agreement, provides as follows at subsection (2):
“186 When the FWC must approve an enterprise agreement – general requirements
(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) if the agreement is a multi-enterprise agreement:
(i) the agreement has been genuinely agreed to by each employer covered by the agreement; and
(ii) no person coerced, or threatened to coerce, any of the employers to make the agreement; and
(c) the terms of the agreement do not contravene section 55 (which deals with the interaction between the National Employment Standards and enterprise agreements etc.); and
(d) the agreement passes the better off overall test.
Note 1: For when an enterprise agreement has been genuinely agreed to by employees, see section 188.
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).
Note 3: The terms of an enterprise agreement may supplement the National Employment Standards (see paragraph 55(4)(b)).
Requirement that the group of employees covered by the agreement is fairly chosen
Note 2: However, this does not prevent the FWC from dealing with a dispute relating to a term of an enterprise agreement that has the same (or substantially the same) effect as subsection 65(5) or 76(4).”
[72] Section 188 of the Act defines when an agreement is genuinely agreed to as follows:
“188 When employees have genuinely agreed to an enterprise agreement
An enterprise agreement has been genuinely agreed to by the employees covered by the agreement if the FWC is satisfied that:
(a) the employer, or each of the employers, covered by the agreement complied with the following provisions in relation to the agreement:
(i) subsections 180(2), (3) and (5) (which deal with pre approval steps);
(ii) subsection 181(2) (which requires that employees not be requested to approve an enterprise agreement until 21 days after the last notice of employee representational rights is given); and
(b) the agreement was made in accordance with whichever of subsection 182(1) or (2) applies (those subsections deal with the making of different kinds of enterprise agreements by employee vote); and
(c) there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.”
[73] Relevantly in the present case, s. 180(5) provides:
“(5) The employer must take all reasonable steps to ensure that:
(a) the terms of the agreement, and the effect of those terms, are explained to the relevant employees; and
(b) the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.”
[74] In One Key Resources v CFMEU 27 (One Key) the Full Court of the Federal Court considered the legislative provisions relating to genuine agreement. The Court held that a bare statement by an employer that an explanation has been given is an inadequate foundation upon which to reach the required state of satisfaction. The Court said:28
“In order to reach the requisite state of satisfaction that s. 180(5) had been complied with, the Commission was required to consider the content of the explanation and the terms in which it was conveyed, having regard to all the circumstances and needs of the employees and the nature of the changes made by the Agreement.”
[75] The Court also said that:
“[115] The Commission was required to be satisfied that OKW had taken “all reasonable steps to ensure” that both the terms and the effect of the terms had been explained to the relevant employees as an element in the inquiry as to whether “genuine” agreement had been obtained from them. The agreed purpose of the obligation imposed on employers by s 180(5) is to enable the relevant employees to cast an informed vote: to know what it is they are being asked to agree to and to enable them to understand how wages and working conditions might be affected by voting in favour of the agreement.
[116] In order for the employer to comply with the obligation it must take into account the particular circumstances and needs of those employees, including their cultural and linguistic backgrounds, their youth, and the absence of a bargaining representative. That is made explicit in s 180(6). How could the Commission decide whether the steps the employer had taken were “all reasonable steps” unless it knew what the employees had been told before they cast their votes? Without knowing the terms in which the explanation had been conveyed how could the Commission form an opinion on the sufficiency of the explanation, particularly having regard to the considerations mentioned in s 180(6)? Ultimately, how could the Commission decide that a genuine agreement had been reached without having evidence upon which it could answer both these questions?”
[76] The relevant principles applicable to s 180(5) were summarised in paragraphs [35]-[36] of the Full Bench decision in AWU v Rigforce Pty Ltd: 29
“…The nature of the requirement in s 180(5) was analysed in detail by the Federal Court (Flick J) in CFMEU v One Key Workforce Pty Ltd. 9 We adopt the summary of that analysis set out in CFMMEU v Ditchfield Mining Services Pty Limited,10 which reduced it to the following four propositions:
(1) whether an employer has complied with the obligation in s 180(5) depends on the circumstances of the case;
(2) the focus of the enquiry whether an employer has complied with s 180(5) is first on the steps taken to comply, and then to consider whether:
• the steps taken were reasonable in the circumstances; and
• these were all the reasonable steps that should have been taken in the circumstances;
(3) the object of the reasonable steps that are to be taken is to ensure that the terms of the agreement, and their effect, are explained to relevant employees in a manner that considers their particular circumstances and needs. This requires attention to the content of the explanation given; and
(4) an employer does not fall short of complying with the obligation in s 180(5) of the FW Act merely because an employee does not understand the explanation provided.
[36] Additionally, we also adopt the analysis of Gostencnik DP in BGC Contracting Pty Ltd 11 concerning the nature of a statutory obligation to take “all reasonable steps” as follows (footnote omitted):
“[43] A requirement or obligation to take “all reasonable steps” seems to me to require the identification of the steps a reasonable person would regard as reasonable in the circumstances that apply. Whether particular steps are reasonable will depend on the particular circumstances existing at the time the obligation arises. A requirement to take all reasonable steps does not extend to all steps that are reasonably open in some literal or theoretical sense…”
[77] In the Directions issued to the Applicant on 3 July 2019, further information was requested by the Commission relating to the method of distribution and the 40% voting participation.
[78] The main points of evidence concerning the agreement process are as follows:
• The notification time for bargaining for the Agreement was 6 February 2019. The F17 Statutory Declaration signed by Mr Paul Gardner as a General Manager for the Applicant states that all employees were given the notice of representational rights via email on 6 February 2019. 30
• Mr Gardner declared in the F17 Statutory Declaration that he provided employees on 11 February 2019 a draft Agreement, together with a table of changes explaining the difference to the SRSW Enterprise Agreement 2015. On 15 April 2019, a further draft Agreement was emailed to all employees, providing an update on the changes that had occurred as a result of negotiations with the Union. On 31 May 2019, a final Agreement was emailed to all employees. 31
• Mr Gardner declared in the F17 Statutory Declaration that an email was sent to all employees. Attached was a memo from the Chief Executive Officer outlining the voting details and a link to a video presentation by Mr Gardner which contained a slide outlining the voting details.
• Mr Gardner declared in the F17 Statutory Declaration that approximately 245 employees across 20 difference coal mining operations in Queensland and New South Wales were covered by the Agreement. 98 employees voted and 72 voted in favour of the Agreement.
• The employees who will be covered by the Agreement receive their payslip and other communications from the company by email on a regular basis.
[79] The central point advanced by the Union in relation to genuine agreement is that the Applicant did not take all reasonable steps to ensure that the Agreement and the effects of its terms were explained because explanation was provided through a video presentation. The Union submitted that the Applicant failed to take all reasonable steps to explain the terms of the Agreement. The Union noted that a video link may have been one reasonable step, particularly given that the Agreement covers many small groups of geographically dispersed employees. However, the Union submitted that while the geographic spread of employees may warrant digital communication, it did not discharge the Applicant from taking all reasonable steps to explain the Agreement and the effects of its term.
[80] The Union drew comparison with the explanation in this matter to the explanation in One Key 32 where Justice Flick found that an explanation in a text message was:33
“…Such an explanation, by itself, fell short of constituting “reasonable steps” for the purposes of s 180(5). Even if a contrary characterisation of the email were open, such an explanation certainly fell well short of taking “all” reasonable steps”.
[81] The Applicant distinguished the circumstances arising in this matter to that of the circumstances in One Key. The Applicant submitted that One Key involved three employees, two covered by the Award and one covered by the Building and Construction General On-Site Award 2010, whereas the proposed Agreement only covers employees in the black coal mining industry and was made with 245 employees who were all working in the black coal mining industry and were covered by an enterprise agreement at the time the Agreement was made.
[82] The Applicant submitted that the Agreement is a short, clear document written in plain English. Over a period of four months, the Applicant submitted that employees were invited to ask questions and raising comments about the terms of the Agreement and their effect, and regular communication, including updates of draft agreements and tables of changes explaining the effect of the terms of the Agreement, were provided to employees. Accordingly, the Applicant submitted that all reasonable steps were taken to explain the terms of the agreement and its effect to satisfy s.180(5).
[83] The Union further contended that the Commission cannot be satisfied that there were no other reasonable grounds for believing the Agreement has not been genuinely agreed to by the employee in accordance with s. 188(1)(c). A critical issue under s. 188(1)(c) is whether the agreement of the voting cohort of employees is capable of being described as having authenticity based upon a real and true understanding of the consequences of the proposed agreement. 34
[84] In response, the Applicant rejected the Union’s argument and submitted that the number of views the video presentation received is not indicative of the number of employees who may have been informed of the terms of the Agreement and their effect, as employees were in receipt of other reading material pertaining to the Agreement. The Applicant further submitted that the Applicant has no control over whether employees chose to view the video presentation, comparing it to a scenario where an employer also has no control on whether an employee sitting in a direct face to face presentation are paying attention.
[85] As the Decision of the Full Court of the Federal Court in One Key makes clear, in order for the Commission to determine whether the employees had genuinely agreed to the Agreement, I must consider whether the employee were likely to have understood its terms and effect.
Undertakings
[86] The Union objected to the number of undertakings, submitting that the number of undertakings to the Agreement, resulted in a substantial change to the Agreement within the meaning of s. 190(3)(b) of the Act.
[87] The Applicant, in response, submitted that the undertakings do not result in substantial changes to the Agreement, as a number are merely clarification of the Agreement or the NES or minor matters of definition or explanation, in response to matters raised by the Union.
[88] Relevantly, s. 190(3)(b) provides:
“190 FWC may approve an enterprise agreement with 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.
[89] In Re Hyatt Engineering Pty Ltd, 35it was stated:
“[30] The sense in which the word ‘substantial’ appears in s.190(3)(b) is in my view to describe changes to the agreement as result of undertakings offered where the changes are not ‘trivial or minimal’ or ‘ephemeral or nominal’.
[31] In this sense ‘substantial’ is not a quantitative term but a qualitative term. A number of trivial or minimal changes to the agreement may not constitute a substantial change to the agreement. However even a single change to a provision of the agreement where the change was not trivial or minimal would constitute a substantial change to the agreement.”
[90] Having considered the undertakings provided by the Applicant, and noting the nature of the undertakings, I am of the view the undertakings do not constitute a substantial change to the Agreement, but in some instances simply clarify the provision.
Conclusion
[91] In relation to the matter of genuine agreement, there is sufficient basis on the method and materials provided to employees to conclude that all reasonable steps were taken and a proper explanation of the terms of the Agreement and their effect was given to employees (particularly on the basis of the context of the manner in which employees normally communicate with the employer and based on their locations).
[92] The modelling undertaken by the Applicant, and provided in Exhibits 1 to 4, show percentages of the difference between the rate of pay under the Award and the Agreement. Based on these percentages, it is apparent that the Agreement provides for a higher rate of pay than that of the Award, satisfying that the Agreement passes the BOOT. In addition, the Applicant has provided a reconciliation undertaking, and in undertaking 10 that demonstrated the Agreement are always 3% above the rates of the Award.
[93] With regard to the NES, the Agreement clearly states that the Agreement does not exclude the NES or any provision of the NES which shall have effect in accordance with the Act.
[94] Subject to matters that have been addressed by way of undertakings, I am satisfied that each of the requirements of ss.186, 187 and 188 of the Act as are relevant to this application for approval have been met.
[95] As noted, pursuant to s.190(3), I have accepted undertakings from the employer. In accordance with ss.191(1) and 201(3) of the Act the undertakings are taken to be a term of the Agreement. A copy of the undertakings is attached in Appendix A and to the Agreement.
[96] The Agreement is approved and, in accordance with s.54 of the Act, will operate from 7 days after the approval of the Agreement. The nominal expiry date of the Agreement is 23 December 2023.
[97] I Order accordingly.
COMMISSIONER
Appendix A
1 [2017] FWCFB 2101, [41]-[47].
2 WorkPac Mining Pty Ltd [2016] FWC 251 at [106] – [107].
3 [2016] FWCFB 2887.
4 MA000004.
5 AKN Pty Ltd t/a Aitkin Crane Services [2015] FWCFB 1833; Armacell Australia Pty Ltd and others [2010] FWAFB 9985; National Tertiary Education Union v University of New South Wales [2011] FWAFB 5163; Solar Systems Pty Ltd [2012] FWAFB 6397.
6 [2016] FWCFB 2887 at [6]
7 Re MSA Security Officers Certified Agreement 2003 PR937654; BUPA Care Services Pty Ltd [2010] FWAFB 2762; Mondex Group Pty Ltd [2015] FWC 1148; Agri Labour Australia Pty Ltd [2015] FEC 5332; MP Resources Pty Ltd [2015] FWC 6820; Samphie Pty Ltd t/a Black Crow Organics [2010] FWAA5060; Top End Consulting Pty Ltd [2010] FWA 6442.
8 [2017] FWCFB 3005.
9 [2019] FWC 8505.
10 [2017] FWCFB 3659
11 Ibid at [51].
12 Submissions of the CFMMEU, dated 17 July 2019, paragraph 20.
13 Submissions of the Applicant, dated 4 November, page 2.
14 Submissions of the CFMMEU, dated 8 November 2019, page 5.
15 Ibid.
16 Submissions of the Applicant, dated 4 November, page 3.
17 Submissions of the CFMMEU, dated November 2019, page 5.
18 Submissions of the Applicant, dated 4 November, page 3.
19 Submissions of the CFMMEU, dated November 2019, page 8
20 Submissions of the CFMMEU, dated 17 July 2019, paragraph [33], and Form F17 Employer’s Statutory declaration in support of an application for approval of an enterprise agreement (other than a Greenfields agreement)Q3.3.
21 [2017] FWCFB 3659
22 Ibid, at [45].
23 Submissions of the CFMMEU, dated November 2019, page 6.
24 Exhibit 1.
25 Exhibit 2.
26 Loaded Rates Decision [2018] FWCFB 3610, [121].
27 [2018] FCAFC 77.
28 Ibid, at [112].
29 [2019] FWCFB 6960.
30 Form F17, Employer’s Statutory declaration in support of an application for approval of an enterprise agreement (other than a Greenfields agreement) Q.2.4.
31 Ibid, Q.2.5.
32 [2017] FAC 1266
33 Construction, Foresty, Mining and Energy Union v One Key Workforce Pty Ltd [2017] FAC 1266 [105]
34 CFMEU v AIRC (1998) FCR 317, [126] – [127].
35 [2011] FWA 3527.
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