Sunnyspot Packhouse Pty Ltd
[2024] FWCFB 2
•10 JANUARY 2024
| [2024] FWCFB 2 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 7, Item 30(4) - Application to extend default period for enterprise agreements made during the bridging period
Sunnyspot Packhouse Pty Ltd
(AG2023/3828)
| Agricultural industry | |
| DEPUTY PRESIDENT ROBERTS DEPUTY PRESIDENT SLEVIN COMMISSIONER CRAWFORD | SYDNEY, 10 JANUARY 2024 |
Application to extend the default period for Sunnyspot Packhouse Pty Ltd Enterprise Agreement 2009 – application dismissed
Introduction
Sunnyspot Packhouse Pty Ltd (Sunnyspot) has made an application under the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act) to extend the default period for the Sunnyspot Packhouse Pty Ltd Enterprise Agreement 2009 (Agreement). The application seeks to extend the default period to 6 December 2027.
The Transitional Act was amended by the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (SJBP Act) to provide for the automatic termination of all remaining transitional instruments. The Agreement is one such transitional instrument.
The application does not specify which schedule in the Transitional Act is relied upon to extend the default period. It initially appeared that the Agreement may not have been subject to the automatic sunsetting provisions in the Transitional Act given it was approved by Fair Work Australia on 2 August 2010. However, clause 2.1 of the Form F17 filed in support of the application for approval of the Agreement and dated 12 December 2009 states that the Agreement was “made” on 30 November 2009 which is during the “bridging period”.
“Bridging period” is defined in the following terms in Schedule 2 of the Transitional Act:
bridging period means the period:
(a) starting on the WR Act repeal day; and
(b) ending immediately before the FW (safety net provisions) commencement day.
The “WR Act repeal day” was 1 July 2009 and the “FW (safety net provisions) commencement day” was 1 January 2010. The “bridging period” is therefore 1 July 2009 to 31 December 2009. Since the Agreement was made during the bridging period, Sch 7 of the Transitional Act applies.
Subitem 30(1) of Sch 7 to the Transitional Act is in the following terms:
An enterprise agreement made during the bridging period ceases to operate at the end of the grace period for the agreement if the agreement has not already ceased to operate before that time.
Accordingly, the Agreement will cease to operate in accordance with subitem 30 of Sch 7 to the Transitional Act, unless the default period is extended in accordance with subitem 30(4) of Sch 7.
On 6 December 2023, we advised Sunnyspot that we were exercising our discretion under s.586 to amend the application to the effect that it is made pursuant to subitem 30(4) of Sch 7 to the Transitional Act.
Under subitem 30(6) of Sch 7, where an application is made under subitem 30(4) for the default period to be extended, the Commission must extend the default period for a period of no more than four years if either subitem (7) or (8) applies and it is otherwise appropriate in the circumstances to do so, or, it is reasonable in the circumstances to do so.
Sunnyspot has not suggested it is bargaining for a replacement enterprise agreement, which means subitem 30(7) of Sch 7 is not applicable. As a result, the default period for the Agreement can only be extended under subitem (6)(a) because subitem (8) applies and it is appropriate to do so, or if it is “reasonable in the circumstances to do so” in accordance with subitem (6)(b).
The grounds relied upon in Sunnyspot’s application refer to the nature of its farming operations, challenges it faces finding employees, and several superior conditions in the Agreement compared to the Horticulture Award 2020 (Award). Sunnyspot also filed a declaration from Ms. Jo-Anne Taylor (Packhouse Manager) which indicated the Agreement is simple and employees are content with the current arrangements. Ms Taylor also stated that the inferior terms in the Agreement compared to the Award have no practical impact given the hours worked by the affected employees.
Consideration
The first issue is whether subitem 30(8) of Sch 7 applies. Subitem (8) reads:
(8) This subitem applies if it is likely that, as at the time the application is made, the award covered employees for the agreement under subitem (9), viewed as a group, would be better off overall if the agreement applied to the employees than if the relevant modern award or awards referred to in that subitem applied to the employees.
Subitem (9) provides that award covered employees are the employees who are covered by the agreement and at the time of the application, are covered by one or more modern awards and are employed by an employer who is covered by the agreement and one or more modern awards. The Award is the relevant modern award for the purposes of these subitems.
We do not consider that at the relevant time, it is likely that the relevant Sunnyspot employees, viewed as a group, would be better off overall if the Agreement applied to them than they would be if the Award applied.
The Agreement contains only one classification, Level 1. The rate for this level in the Agreement is $14.31 per hour, although that rate could not be paid because it is below the base rate in the Award and s.206 of the Fair Work Act 2009 requires employers to pay at least the minimum base rate in an applicable modern award. Schedule A of the Agreement permits any employee in the horticulture industry to be classified at Level 1. In contrast, the Award contains five classifications with minimum rates ranging from $22.61 per hour to $26.18 per hour.
The casual loading prescribed in clause 2.4.2 of the Agreement is 23%. The Award prescribes a higher casual loading of 25% in clause 11.2. Although Sunnyspot has indicated it actually pays a casual loading of 25%, that is not relevant to the comparison between the terms of the Agreement and the Award. The Agreement also does not contain a minimum engagement period for casual employees. Clause 11.3 of the Award prescribes a two-hour minimum engagement for casual employees. Sunnyspot has indicated many of its employees are engaged as casuals.
There is no span of ordinary hours in the Agreement and no shift work conditions. The Award contains detailed ordinary hours of work conditions in clause 13, including for casual employees, and contains shift work conditions in clause 13.3.
Although the overtime penalty rates in the Agreement are higher than the Award if the base rates in the Award are used for the penalty rate calculations, the Agreement allows employees to request to work additional hours at ordinary rates. The effect of this provision is that employees would not receive overtime entitlements when they request and work additional hours to increase their overall earnings. Although employees may request to work overtime at ordinary rates if the alternative is not working the additional hours, they would be better off if they were to receive overtime rates for working the additional hours as provided for in the Award.
Sunnyspot’s application identifies the following conditions in the Agreement as providing justification to extend the default period:
a.Redundancy.
b.Overtime rates for casuals.
c.Time off in lieu of overtime.
d.Wage adjustments.
e.Casual loading.
f.Additional public holiday.
g.Tree pruning/budding/grafting allowance.
We do not consider the superior conditions identified above are sufficient to outweigh the detrimental conditions in the Agreement. In addition, the Agreement conditions identified above are not all superior to the Award. The casual loading in the Agreement is less than the Award. The wage adjustment provisions in the Agreement are also inferior to the Award, given the lack of higher classification levels in the Agreement. Contrary to Sunnyspot’s submission, the employees will not lose Easter Saturday as a public holiday if the Agreement terminates because it is gazetted in Queensland and hence an entitlement under the National Employment Standards.[1] We consider the redundancy conditions in the Agreement to be of limited relevance in the overall assessment given the workforce is predominantly casual.
We do not consider Sunnyspot’s submissions to the effect that inferior conditions in the Agreement do not disadvantage employees because of its current working arrangements to be persuasive for the assessment required by subitem 30(8) of Sch 7. We cannot disregard inferior Agreement terms as part of our assessment on the basis that they are not currently being utilised.
After reviewing the terms of the Agreement and the Award, we have determined the relevant employees, viewed as a group, would not be better off under the Agreement than they would be if the Award applied. As a result, the default period for the Agreement cannot be extended under subitem 30(8) of Sch 7.
As subitem (30)(8) does not apply, we are not required to extend the default period pursuant to subitem(6)(a). We will now consider whether it is “reasonable in the circumstances” to extend the default period in accordance with subitem 30(6)(b) of Sch 7.
In Suncoast Scaffold Pty Ltd,[2] the Full Bench described the ‘reasonable’ criterion in item 20A(6)(b) of Sch 3 to the Transitional Act, which replicates the wording in subitem 30(6)(b) of Sch 7, in this way:
[17] Subitem (6)(b) of item 20A constitutes an independent pathway to the grant of an extension. The ‘reasonable’ criterion in the subitem should, in our view, be applied in accordance with the ordinary meaning of the word – that is, ‘agreeable to reason or sound judgment’. Reasonableness must be assessed by reference to the ‘circumstances’ of the case, that is, the relevant matters and conditions accompanying the case. Again, a broad evaluative judgment is required to be made.
We also consider the purpose of the provisions to be relevant to the broad evaluative judgment we are required to make. The explanatory memorandum expressed the purpose of the provisions relating to extending the default period in this way[3]:
Provision would be made for the FWC to (upon application) extend the default period to ensure the automatic sunsetting of zombie agreements does not operate harshly, including by leaving employees worse off.
Full Benches of the Commission have said a number of times that the purpose of the sunsetting arrangements introduced in the SJBP Act[4] is that zombie agreements are to be replaced by contemporary instruments made under the Fair Work Act 2009 (FWAct).
We are not satisfied that in the circumstances of this case it is reasonable to extend the default period for the Agreement. The Agreement does not contain contemporary terms and the employees covered by the Agreement would clearly be better off overall under the Award. We consider the Agreement is precisely the type of instrument that the SJBP Act was intended to address because its continued operation would disadvantage employees and the conditions are outdated.
As our decision is to refuse to extend the default period under subitem 30(6) of Sch 7 and our decision is made after the sunset date in the Transitional Act, subitem 30(10) provides that we must extend the default period to the day of this decision or specify a day that is not more than 14 days after the day of this decision. We have decided that to enable the parties to make the necessary administrative arrangements to give effect to the sunsetting of the Agreement the default period is extended to 24 January 2024.
The application is dismissed.
DEPUTY PRESIDENT
[1] Section 115(1)(b) of the Fair Work Act 2009.
[2] [2023] FWCFB 105.
[3] Explanatory Memorandum Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 at [670].
[4] See for example Quinn Transport Pty Ltd Enterprise Agreement 2009 [2023] FWCFB 195 at [23] and One HPA Certified Agreement 2004-2007 [2023] FWCFB 137, at [32].
Printed by authority of the Commonwealth Government Printer
<AE879600 PR770088>
0
0
0