Thales Australia Limited

[2020] FWCA 4778

[2020] FWCA 4778

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Thales Australia Limited
(AG2020/1742)

THALES AUSTRALIA MARITIME ENTERPRISE AGREEMENT 2019

Manufacturing and associated industries
DEPUTY PRESIDENT MANSINI	MELBOURNE, 8 SEPTEMBER 2020

Application for approval of the Thales Australia Maritime Enterprise Agreement 2019.

[1] Thales Australia Limited has applied for approval of a single enterprise agreement known as the Thales Australia Maritime Enterprise Agreement 2019 (the Agreement) pursuant to s.185 of the Fair Work Act 2009 (Cth) (the Act).

[2] The Association of Professional Engineers, Scientists and Managers, Australia, (APESMA), the Electrical Energy and Services Division - NSW Divisional Branch of the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU), the "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) and the United Workers' Union (UWU), being bargaining representatives for the Agreement, each submitted declarations in relation to the application. The declarations of APESMA and the AMWU identified disagreement with the Applicant’s declaration in relation to the identified benefits and detriments relevant to the better off overall test.

[3] The Commission requested to be addressed about concerns regarding the form of the application and whether the Agreement passes the better off overall test. A conference was held, and further information was provided by the Applicant, APESMA and the AMWU in relation to these concerns. APESMA also filed a witness statement. The Applicant requested the matter be determined on the basis of the materials before the Commission which was not opposed by the bargaining representatives. 1 I address each matter in turn as follows.

Corrections to the application

[4] The Applicant sought to correct errors in the original application, by filing an amended application, declaration, Agreement page and Agreement signature page. In the circumstances, I am satisfied that those amendments should be allowed and that it is appropriate to do so pursuant to s.586 of the Act.

The National Employment Standards

[5] Noting clause 4.d of the Agreement, I am satisfied that the more beneficial entitlements of the National Employment Standards in the Act (NES) will prevail where there is an inconsistency between the Agreement and the NES.

The better off overall test assessment

[6] I must be satisfied that the Agreement passes the better off overall test (BOOT) in assessing whether it must be approved in accordance with the Act. 2

[7] An enterprise agreement passes the BOOT if the Commission is satisfied, as at the time the application is made, that each award covered employee and each prospective award covered employee for the enterprise agreement would be “better off overall” if the enterprise agreement applied, than if the modern award applied. 3

[8] The BOOT assessment necessarily requires the identification of the modern award(s) that cover an employee and would cover a prospective employee, in relation to work that the employee or prospective employee may perform under the Agreement. A modern award covers an employer or employee if the award is expressed to cover the employer or employee. A modern award covers an employee in relation to particular employment. 4 Whether a modern award covers an employer or employee in relation to particular employment depends on the objective meaning of the words used to define modern award coverage, bearing in mind the context in which those words appear and the purpose they are intended to serve.5

[9] Interpretive guidance on award coverage may also be drawn from the “principal purpose” or “substantial character” tests in relation to whether an employee is covered by a particular modern award, but only where necessary and/or appropriate. 6

[10] It is clear from the references to “each award covered employee” 7 and “each prospective award covered employee”8 in s.193(1) that every employee and prospective employee must be assessed as better off overall under the Agreement than if the relevant modern award applied to that employee or prospective employee, as at the test time.9 However, s.193(7) permits the Commission to be satisfied, in particular circumstances, that all employees and prospective employees in a class of employees or prospective employees will be better off if the enterprise agreement applied to that class than if the relevant modern award applied to that class.10

[11] The relevant modern awards as at the “test time” of 18 June 2020, are: the Manufacturing and Associated Industry and Occupations Award 2020; the Clerks – Private Sector Award 2020; and the Professional Employees Award 2010.

[12] The Commission was addressed about whether a modern award applies to the following classifications in the Agreement: Undergraduate; Middle Management – Professional stream (Level 1, Level 2 and Level 3). On the further information provided, I am not satisfied that these classifications are award covered.

[13] The Undergraduate classification in the Agreement covers engineering students who perform paid internships whilst completing, and who do not hold, a tertiary qualification. These roles are therefore are not covered by the Professional Employees Award 2010 nor is any other relevant award identified as applicable.

[14] The Middle Management – Professional stream classifications in the Agreement, and the work that those classifications may perform under the Agreement, are defined at Annex J by characteristics of the work, skills and attributes. These roles are required to have “high level” technical skills, cross-functional and/or considerable management experience; and are responsible for managing resources which may include plant, equipment and personnel. These Middle Management roles are plainly distinguishable from that of the Professional A and B classifications at Annex J of the Agreement, who work under general direction or under technical supervision and which, it is not disputed, align with the professional stream of the Professional Employees Award 2010 – Levels 3 or 4 and 2, respectively. A limited number of Middle Management – Professional stream duties under the Agreement appear to have at least a broad correlation to a Level 3 or Level 4 - Professional in the award. I was not addressed about the principle purpose or substantial character of the respective roles. Even if the award does cover the Middle Management roles, subject only to the annualised salary issue addressed below, there was no submission made that these roles are not better off overall under the Agreement. On the Commission’s assessment, Middle Management (Levels 1, 2 and 3) rates of pay are substantially greater under the Agreement, ranging between 38% to 42% higher when assessed against the highest possible award rate (Level 4 – Professional), and the Agreement confers a range of identified additional financial and non-financial benefits. Having regard to clause 4.d of the Agreement, I consider the reasonable additional hours provisions of the NES would take precedence to the extent that the exclusions at clause 7.2 of the Agreement may operate in a manner that are not “more generous” for Middle Management classifications. Put another way, clause 4.d, insofar as it effectively limits overtime hours, is a control on hours worked providing comfort as to any BOOT concern which might otherwise arise.

[15] The Commission was also addressed about whether the annualised salary provision at clause 7.4 of the Agreement constitutes a detriment for classes of employees covered by the Agreement. The provision applies to all Administrative, Undergraduate, Graduate, Professional A & B, Middle Management and Manufacturing and Technical (Level 3 or above) employees covered by the Agreement (as defined therein), with some specific differences in relation to additional hours for Professional A and Middle Management Employees.

[16] Written undertakings directed at this concern were given in accordance with s.190 of the Act and are attached at Annexure A (Undertakings). APESMA submitted it does not have any concerns with the wording of the Undertakings but considers them inadequate because they do not address projects which from time to time may result in intensification of work to meet project deadlines which is not compensated until the end of a 12 month period; or the broader scope of roles than that to which the annualised salary provision in the Manufacturing and Associated Industry and Occupations Award 2020 applies. Although invited to do so, the other bargaining representatives did not express any further views following the Undertakings nor were the Undertakings opposed.

[17] I accept that an annualised salary provision, to the extent that it can alter entitlements or conditions of employees and prospective employees covered by a proposed enterprise agreement (if approved), is a relevant consideration for the purposes of the Commission’s BOOT assessment. It is at least conceivable that an annualised salary may be regarded as a relative detriment in certain circumstances. Indeed in this case, the absence of an annualised salary provision in the current Professional Employees Award 2010 and for certain classifications in the Manufacturing and Associated Industry and Occupations Award 2020 is a relevant consideration, to be weighed as a detriment in conducting the BOOT assessment. However it was not seriously pressed, and I see no basis to conclude, that this would of itself mean that the attributable detriment is fatal to approval. 11 Rather, in all of the circumstances of this case, I assess the detriment to be minor in this case.

[18] The Applicant has given Undertakings which adequately address the Commission’s concerns and matters raised by bargaining representatives. In relation to APESMA’s residual issues, I consider there are sufficient safeguards including that the employer is required to ensure that each employee is better off overall than if the annualised salary arrangement did not apply, an obligation to be met by comparison against the conditions of the Agreement which would otherwise have applied (not against the award). The rate of pay for each classification under the Agreement is substantially higher than the relevant reference instrument. Further, there are provisions for review and unilateral termination of an annualised salary arrangement. Clause 7.4 does not permit any person to be required to enter such arrangement unless they so choose, by genuine agreement (without coercion or duress). The provision is not intended to enable an employee entering such arrangement to be required to work “excessive hours” and, having regard to clause 4.d of the Agreement, I am satisfied that the NES and its provisions about “reasonable additional hours” will take precedence to the extent the Agreement may operate in a manner that is not “more generous”. Any arrangement made under clause 7.4 is required to be in writing and signed.

[19] I am satisfied that the Undertakings will not cause financial detriment to any employee covered by the Agreement and that the Undertakings will not result in substantial changes to the Agreement. Pursuant to s.201(3) of the Act, the Undertakings are taken to be terms of the Agreement.

[20] For completeness, I am satisfied on the materials before the Commission that all reasonable steps were taken to explain the terms and effect of the Agreement including the annualised salary provision and the subsequent provision of the Undertakings, which I have concluded address the Commission’s BOOT concerns under s.186(2)(d), do not alter that conclusion. 12

[21] To the extent that the Commission received evidence about recording of hours and overtime worked in practice, I note that this is ultimately a matter for enforcement and not a question for the approval process.

Conclusion – the Agreement is approved

[22] For the above reasons, based on the material contained in the amended application, further information provided on request of the Commission and the Undertakings, I am satisfied that each of the requirements of ss.186, 187, 188 and 190 as are relevant to this application for approval have been met.

[23] The APESMA, the CEPU, the AMWU and the UWU, being bargaining representatives for the Agreement, have respectively given notice under s.183 of the Act. In accordance with s.201(2), I note that the Agreement covers these organisations.

[24] The Agreement was approved on 8 September 2020 and, notwithstanding clause 8.a and in accordance with s.54, will operate from 15 September 2020. The nominal expiry date of the Agreement is 30 September 2022.

DEPUTY PRESIDENT

Annexure A

 1   Email from the Applicant to the Commission of 2 September 2020.

 2   Pursuant to s.186(2) of the Act, noting the BOOT is just one of the matters about which the Commission must be satisfied.

 3   ss.193(1) and (6) of the Act.

 4   s.48 of the Act.

 5   Transport Workers’ Union of Australia v Coles Supermarkets Australia Pty Ltd [2014] FCAFC 148 (Coles) at [22].

 6   Coles; Carpenter v Corona Manufacturing 122 IR 387 at [9]; Graham v Globus Medical Australia Pty Ltd[2016] FWCFB 5495; The Australasian Meat Industry Employees Union v Teys Australia Beenleigh Pty Ltd[2014] FWCFB 5643; Mitolo Group Pty Ltd v National Union of Workers[2015] FWCFB 2524.

 7   Defined at s.193(4) of the Act.

 8   Defined at s.193(5) of the Act.

 9   Solar Systems Pty Ltd [2012] FWAFB 6397 at [11]; Hart v Coles Supermarkets Australia Pty Ltd [2016] FWCFB 2887 at [6], [15]; SDAEA v Beechworth Bakery[2017] FWCFB 1664 at [11].

 10   Loaded Rates Agreements [2018] FWCFB 3610 at [102]-[103].

 11   Construction, Forestry, Maritime, Mining and Energy Union v SRSW Pty Ltd t/a Stellar Recruitment[2020] FWCFB 2052.

 12   Construction, Forestry, Maritime, Mining and Energy Union and others v Specialist People Pty Ltd [2019] FWCFB 7919 at [22]-[24].

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