Tassal Group Limited T/A De Costi Seafood

[2021] FWC 2679

[2021] FWC 2679

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Tassal Group Limited T/A De Costi Seafood
(AG2021/375)

DEPUTY PRESIDENT CROSS SYDNEY, 12 MAY 2021

Application for approval of the Tassal Lidcombe Processing Enterprise Agreement 2020.

[1] An application has been made for the approval of an enterprise agreement known as the Tassal Lidcombe Processing Enterprise Agreement 2020 (the Agreement). The application was made by Tassal Group Limited(the Applicant) pursuant to s.185 of the Fair Work Act 2009 (Cth) (the Act). The Agreement is a single-enterprise agreement.

[2] The Agreement will cover 296 employees of the Applicant. On 18 February 2021, a Form F16 Application for approval of the Agreement was made and filed together with a Form F17 Statutory Declaration.

[3] On 4 March 2021, the Australian Workers Union (the AWU), wrote to the Fair Work Commission (the Commission) enclosing a Form F18 Declaration.

[4] On 8 March 2021, the Commission wrote to the Applicant and the AWU regarding issues identified in the Agreement. Thereafter each of the Applicant and the AWU made various submissions regarding issues in contention.

[5] On 21 April 2021, the Applicant provided a draft undertaking to the Commission, and a final signed undertakings document on 11 May 2021 (the Undertakings). On 11 May 2021, the AWU advised that the Undertakings resolved all but one issue between the parties. The Undertakings are annexed to this decision and marked “Annexure A”.

[6] The only outstanding issue between the parties relates to what has been termed “Guaranteed Hours Employees” (GH Employees). Clause 10.6 of the Agreement provides:

“10.6 Guaranteed Hours Employment

(a) A Guaranteed Hours Employee is a permanent part-time employee whose ordinary hours of work may vary to meet operational requirements. A Guaranteed Hours Employee is ordinarily engaged to work the rostered work arrangements under which Full-Time Employees undertake but may be directed by Tassal in a particular week to work no less than 30 ordinary hours per week depending on operational needs (such as reduced processing demands).

(b) Other than as provided below, the terms and conditions of this Agreement shall apply to Guaranteed Hours Employees in the same manner as other permanent Employees:

(i) Guaranteed Hours Employees will work in accordance with the rostered work arrangements under which Full-Time Employees work however they can be changed in accordance with this Agreement.

(ii) As soon as reasonably practicable Tassal shall update Guaranteed Hours Employees in respect to actual or likely changes in operational requirements which will impact their ordinary hours from time-to-time.

(iii) If Tassal is reducing the hours of work on a shift for a Guaranteed Hours Employee who has already commenced work, the Employee will be given no less than 4 hours' notice.

(iv) If a Guaranteed Hours Employee is directed to work less than 38 hours per week, Tassal will aim, not guarantee, that if any additional hours become available, they will be offered to the Employee where appropriate.

(v) If a Guaranteed Hours works in excess or outside of the hours that were rostered for the Employee prior to the reduction of hours (in accordance with clause 10.6(a)) then overtime rates will apply.

(vi) A Guaranteed Hours Employee will be paid an additional loading of 5% of their Base Rate of Pay for all Ordinary Hours of Work undertaken to compensate for any potential changes in their ordinary hours per week.”

[7] The relevant Award regarding the work to be covered by the Agreement is the Seafood Processing Award 2020 (the Award). The Award does not contain a provision for GH Employees.

Applicant’s Submission

[8] The Applicant submitted that the GH Employee provisions in the Agreement effectively provided a variation on the part-time provisions provided in the Award and resulted in employees being better off than if they were covered by the part- time provisions in the Award because the Agreement provides:

(a) 30 hours minimum each week instead of 3;

(b) higher hourly rates;

(c) 5% more in wages than that provided to a part-time employee under the Agreement for the agreed upfront flexibility in hours worked;

(d) clarity in relation to rostering, in that GH Employee will work the same rosters as full-time employees;

(e) for a minimum shift length of no less than 4 hours if the employee has commenced working instead of 3 hours under the Award; and

(f) that, should any additional hours become available that the Applicant will provide these to the employee by agreement if the employee has not worked 38 hours ordinary hours.

[9] The Applicant also submitted that there existed safeguards that apply to a part-time employee under the Award, and the majority of the safeguards included in the Award are maintained in the Agreement, together with the improvements provided. The Applicant submitted that an employee engaged as a GH Employee is better off overall than a part-time employee engaged under the terms and conditions of the Award:

Submissions of the AWU

[10] The AWU noted that it was not aware of any modern awards which include a category of GH Employee. The AWU submitted that GH employment represents a novel form of permanent employment not ordinarily found within the award system, and allows a unilateral, short-notice reduction in hours at the employer’s election. This feature can be contrasted with full-time employment, in which such a reduction does not relieve the employer of the obligation to pay 38 hours of wages, and part-time employment, in which a reduction in weekly hours is only permitted by agreement. In the absence of such agreement, the reduction does not relieve the employer of the obligation to pay wages for the employee’s agreed weekly hours.

[11] While the Applicant suggested the comparable Award-covered employee was a part-time employee, the AWU submitted the comparable classification in the Award was a full-time employee, because the ‘default’ roster for a GH Employee is 38 hours per week and a GH employee is “ordinarily engaged to work the rostered work arrangements” of a full-time employee. The only Award classification with a 38-hour roster is full-time employment.

[12] The AWU noted that a full-time employee under the Award had the security and certainty of payment for 38 hours per week. By contrast, a GH Employee can lose up to 8 hours of work (over 20% of their weekly earnings) at 4 hours’ notice. The trade-off for that uncertainty was a loading of 5% on their hourly rate. 5% of 30 hours equates to 1.5 hours in additional earnings (for a total of 31.5 hours’ pay). The AWU submitted that 1.5 hours’ additional pay and the minor wages premium relative to the Award was inadequate to offset the loss of earnings and job security.

[13] In the alternative, if the Commission accepted that the comparable category of work under the Award is part-time employment, the AWU submitted that the detriments still outweigh the benefits, because the employee:

(a) Loses the right to agree to a set number of hours in advance;

(b) Relinquishes the right that hours can only vary by agreement in writing (cl 10.3-10.4 of the Award); and

(c) Part-time employees engaged to work 30 hours per week would be entitled to overtime rates if they were directed to work an additional 8 hours. By contrast, the GH Employee receives no additional pay.

[14] The AWU noted that a five-member Full Bench of the Commission confirmed in Re Loaded Rates Agreements, 1 that “the lack of entitlement to overtime penalty rates for all work in excess of contracted hours” constitutes a “significant detriment.” While that case involved an enterprise agreement in the retail industry, the AWU submitted there is no reason why the same logic should not apply in the present case.

Applicant’s Reply Submission

[15] The Applicant submitted that the appropriate comparator under the Award for the purposes of the BOOT is not a full-time employee, because a GH Employee is not engaged to work an average of 38 ordinary hours per week. GH Employees are engaged to work within a span of hours per week that may vary between 38 hours as a starting point, down to 30 hours when required by operational needs. The effect is that they are engaged to work a minimum of 30 hours per week, on a regular pattern, but they agree in advance to work up to eight additional hours per week. Nonetheless, a GH Employee who works the same hours and roster as a full-time employee is better off financially than a full-time employee under the Award, because they receive an additional 5% loading, which equates to an additional 1.9 hours’ pay per week.

[16] In any scenario where a GH Employee is directed to work fewer than 36.2 hours per week, the employee will still be better off financially than a part-time employee engaged under the Award to work the same number of hours, by reason of the 5% loading. GH Employees have other benefits compared with a part-time employee under the Award, which outweigh the disadvantages of being a GH Employee, including:

(a) guaranteed 30 hours minimum per week, rather than three;

(b) a minimum shift length of four hours, rather than three; and

(c) the opportunity to work more than the guaranteed minimum number of hours, which part-time employees otherwise may not have the opportunity to do (because the Applicant would likely utilise casual employees to do that work).

[17] The Applicant submitted that there were four matters that limit the employer’s ability to direct the hours of work of GH Employees, and the uncertainty associated with guaranteed hours employment, being:

(a) The Applicant is only able to reduce the hours of a GH Employee below 38 hours per week where there is an operational requirement that needs to be met: cl 10.6(a);

(b) The Applicant is under an obligation to give notice to GH Employees as soon as reasonably practicable after the employer identified an actual or likely change in operational requirements that will impact the employees’ hours of work: cl 10.6(b)(ii);

(c) If the hours of a GH Employee are reduced below 38 hours per week, the employer is under an obligation to aim to offer to the employee any additional hours that become available: cl 10.6(b)(iv); and

(d) GH Employees are guaranteed a minimum of 30 hours’ per week work and four hours per shift (by virtue of the requirement for a minimum of four hours’ notice to reduce the length of a shift that has already commenced): cl 10.6 (b)(iii).

[18] Even if there was some disadvantage associated with GH Employment, any such disadvantage is outweighed by the other aspects of the Agreement that are more beneficial for all employees compared with the Award.

Consideration

[19] Guaranteed hours employment does not exist under the Award. The appropriate comparator under the Award for assessment of whether GH Employees would be better off overall is the full-time employee classification under the Award. Clause 10.6(a) of the Agreement provides “… A Guaranteed Hours Employee is ordinarily engaged to work the rostered work arrangements under which Full-Time Employees undertake but may be directed by Tassal in a particular week to work no less than 30 ordinary hours per week depending on operational needs” (emphasis added). But for any reduction for “operational needs,” GH Employees work 38 hours per week.

[20] While Clause 10.6(a) of the Agreement commences with the sentence “[a] Guaranteed Hours Employee is a permanent part-time employee whose ordinary hours of work may vary to meet operational requirements,” it is clearthat GH Employees are not part-time employees as defined in the Award. Unlike GH Employees, part-time employees are engaged to work less than 38 hours a week, and are paid overtime for hours worked in excess of their agreed hours. That obligation to pay overtime is reinforced by the second undertaking provided by the Applicant (see Annexure A).

[21] Clause 10 of the Award provides:

“10. Part-time employees

10.1 A part-time employee:

(a) is engaged to work an average of less than 38 ordinary hours per week;

(b) has a regular pattern of hours; and

(c) receives, on a pro rata basis, pay and conditions under this award equivalent to those of full-time employees.

10.2 A part-time employee must be engaged for a minimum of 3 consecutive hours per shift. In order to meet their personal circumstances, a part-time employee may request and the employer may agree to an engagement for less than the minimum of 3 hours.

10.3 Before commencing part-time employment, the employee and the employer must agree in writing:

(a) on the hours to be worked by the employee, the days on which they will be worked and the commencing and finishing times for the work; and

(b) on the classification applying to the work to be performed in accordance with clause 12—Classifications.

10.4 The terms of the agreement in clause 10.3 may be varied by consent in writing.

10.5 The agreement under clause 10.3 or any variation to it under clause 10.4 must be retained by the employer and a copy of this agreement and any variation to it must be provided to the employee by the employer.

10.6 Except as otherwise provided in this award, a part-time employee must be paid for the hours agreed on in accordance with clauses 10.3 and 10.4.

10.7 A part-time employee who is required by the employer to work in excess of the hours agreed under clauses 10.3 and 10.4 must be paid overtime in accordance with clause 19—Overtime.

10.8 Where the part-time employee’s normal paid hours fall on a public holiday prescribed in the NES and work is not performed by the employee, such employee must not lose pay for the day. Where the part-time employee works on the public holiday, the part-time employee must be paid in accordance with clauses 20.2, 20.7 and 14.2.”

[22] I accept the submission of the AWU that employees engaged as GH Employees would not be better off overall under the Agreement. Full-time employees under the Award have the security and certainty of payment for 38 hours per week, whereas GH Employees can lose up to 8 hours of work per week at 4 hours’ notice. While it is correct to observe that GH Employees receive a loading of 5% on their hourly rate, I do not consider that loading is sufficient offset the potential unilateral loss of earnings and job security guaranteed to full-time employees under the Award.

[23] If I am incorrect, and part-time employment is the correct comparator, I still do not consider that GH Employees would be better off overall under the Agreement. A key feature of part-time employment is the prior agreement to hours, and overtime for work outside agreed hours absent agreement. The loss of that certainty of hours and overtime is a significant factor, that is not adequately compensated by the 5% loading on the hourly rate.

Conclusion

[24] For the reasons given above, I am not satisfied that the Agreement, as amended by the existing Undertakings (Annexure A), would result in the employees being better off overall, due to the existence of Clause 10.6 of the Agreement. Accordingly, I invite the Applicant to provide an undertaking that Clause 10.6 will not be utilised, to resolve my concern about employees not being better off overall.

[25] Subject to the provision of the Undertaking referred at paragraph [23] above, and the undertakings already provided, I would be satisfied that the relevant requirements of ss 186, 187, 188 and 190 of the Act concerning the application for approval have been met.

[26] It is appropriate that I provide the Applicant with an opportunity to provide the additional undertaking, and to allow the AWU to respond to such undertaking. Subject to consideration of those matters, I would intend to finally determine this application as a matter of urgency.

[27] The Applicant is directed to file, should it wish to do so, the identified additional undertaking by 4.00pm on 14 May 2021.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<PR729748>

ANNEXURE A

 1   [2018] FWCFB 3610 at [135].