The Australasian Meat Industry Employees Union v Swicker's Kingaroy Bacon Factory Pty Ltd
[2021] FWCFB 6042
•4 NOVEMBER 2021
| [2021] FWCFB 6042 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
The Australasian Meat Industry Employees Union
v
Swicker's Kingaroy Bacon Factory Pty Ltd
(C2021/4766)
VICE PRESIDENT HATCHER | SYDNEY, 4 NOVEMBER 2021 |
Appeal against decision [2021] FWCA 4498 of Deputy President Asbury at Brisbane on 26 July 2021 in matter number AG2021/5909.
Introduction
[1] The Australasian Meat Industry Employees Union (AMIEU) has appealed against a decision made by Deputy President Asbury on 26 July 2021 1 (decision) to approve the Swickers Kingaroy Bacon Factory Enterprise Agreement 20212(Agreement). Permission is required for the appeal. The AMIEU contended at first instance that the Agreement could not be approved because it did not satisfy the better off overall test (BOOT) requirement in s 186(2)(d) of the Fair Work Act 2009 (FW Act). This contention was directed at the stand down provision contained in clause 14 of the Agreement which, the AMIEU submitted, meant that employees covered by the Agreement would not be better off overall if the Agreement applied to them than if the relevant modern award, the Meat Industry Award 2020 (Award), applied to them. The Deputy President rejected this contention and separately published her reasons for this decision on 23 August 20213 (reasons). The AMIEU’s notice of appeal, as amended to take into account the Deputy President’s reasons, contains the following grounds of appeal:
1. The Deputy President erred in deciding [at paragraphs 32-33 (of the reasons)] that clause 14 of the Agreement was not a relevant consideration for the purposes of applying the Better Off Overall Test (BOOT).
2. In the alternative, the learned Deputy President erred in concluding that the Agreement passed the better off overall test and satisfied s 186(2)(d) of the Act, because the learned Deputy President failed to give due weight to the fact clause 14 of the Agreement permits the employer to stand down employees in a wider range of circumstances than permitted under s 524 of the Act.
3. The learned Deputy President erred in deciding [at paragraph 38] that the potential to include stand down provisions in employment contracts “…mitigates against the stand down provisions in the enterprise agreement being a BOOT issue.”
4. The learned Deputy President took into account an irrelevant consideration [at paragraph 39]; namely, the existence of stand down provisions in the Swickers Kingaroy Bacon Factory Enterprise Agreement 2016.
[2] Clause 2 of the Agreement provides that it covers Swicker’s Kingaroy Bacon Factory Pty Ltd (Swickers), employees of Swickers within the classifications in the Agreement, the Bacon Factories’ Union of Employees, Queensland (BFUE) and the AMIEU. Clause 14 of the Agreement provides:
14.1 The Employer may stand down Employees on any day or days or part of a day or days, without pay, where the Employee cannot be usefully employed because of something that happened relating to:
(a) Industrial action
(b) A breakdown of machinery or equipment for which the Employer cannot reasonably be held responsible; or
(c) A stoppage of work for any cause for which the Employer cannot reasonably be held responsible.
14.2 The following is a non-exhaustive list of the occurrences which may lead to an Employee being stood down:
(a) a failure in delivery of livestock, spares, consumables or packaging by reason of any circumstance beyond the control of the Employer;
(b) any break down of essential services, e.g., water, gas, electricity;
(c) an act of God;
(d) any break down of machinery;
(e) industrial action impacting on the business;
(f) a cessation of kill by direction of the DAWR;
(g) genuine case of a shortage of livestock;
(h) cancellation of a livestock sale;
(i) cancellation of operators (service kill) requirements;
14.3 Where a full time Employee has not been notified of the stand down prior to the start of the normal shift and the Employee attends for work, such Employee shall be provided with four (4) hours’ work or payment for four (4) hours.
14.4 Where a full time Employee has already commenced a shift and they are stood down, such Employee shall be paid for hours worked prior to stand down with a minimum of four (4) hours’ for the day.
14.5 Where an Employee is required to remain on the premises pending being requested to resume work, the Employee shall be paid for such time they are required to remain on the premises.
14.6 Where an Employee is stood down, the time not worked and not paid shall not be taken into consideration in the averaging of hours in a settlement period.
14.7 Where a casual or part-time Employee is stood down after they commence work they shall be entitled to payment for the applicable minimum engagement period.
[3] The effect of clause 14 was modified by an undertaking accepted by the Deputy President that “For the purpose of clause 14.1(a), industrial action does not include industrial action organised or engaged in by the employer” (undertaking). Provisions in the same terms as clauses 14.1 and 14.2 have been contained in preceding enterprise agreements covering Swickers and its employees since 2012, and provisions in substantially similar terms since 2008.
[4] The Award does not contain a standdown provision applicable to full-time and part-time employees. Section 524(1) of the FW Act empowers employers to stand down employees as follows:
(1) An employer may, under this subsection, stand down an employee during a period in which the employee cannot usefully be employed because of one of the following circumstances:
(a) industrial action (other than industrial action organised or engaged in by the employer);
(b) a breakdown of machinery or equipment, if the employer cannot reasonably be held responsible for the breakdown;
(c) a stoppage of work for any cause for which the employer cannot reasonably be held responsible.
[5] However, section 524(2) provides that an employer cannot stand down an employee under s 524(1) if, relevantly, an enterprise agreement applies to the employer and the employee and the agreement provides for the employer to stand down the employee during a period if the employee cannot usefully be employed during that period because of a circumstance referred to in s 524(1). The relevant effect of s 524(2) in this case is that, while the Agreement is in effect, clause 14 operates in lieu of s 524(1) in respect of those to whom the Agreement applies.
The Deputy President’s reasons
[6] In her reasons, the Deputy President first considered whether clause 14 of the Agreement was relevant to her consideration concerning whether the Agreement passed the BOOT. The Deputy President accepted that an enterprise agreement can provide an employer with the right to stand down employees in a broader range of circumstances than are provided for in s 524 of the FW Act. 4 However, she said that the BOOT requires a comparison between the terms of a modern award as they would apply to each award-covered and prospective award-covered employee and the terms of the agreement which is to apply to those employees and that, for a right or benefit that is not a modern award term to be relevant to the BOOT, there “must be a direct connection between the modern award, the enterprise agreement and the right or benefit” so that the “enterprise agreement must operate on the award, or in relation to it, so that the right or benefit is affected by the enterprise agreement displacing the award”.5 In this case, the Deputy President did not accept that the Agreement operates on the Award such that employees are disadvantaged by the fact that the stand down provisions in s 524 do not apply to them, since the operation of s 524 is not dependent on whether an employee is or is not covered by an award. The non-application of s 524 to employees covered by the Award, the Deputy President concluded, is not because the Agreement operates on or in relation to the Award but because the Agreement provides for stand downs in the same circumstances as paragraphs (a)-(c) of s 524(1).6
[7] The Deputy President said in the alternative, if her view that clause 14 does not give rise to a BOOT issue was incorrect, she was satisfied that the Agreement passed the BOOT in any event, since the rates in the Agreement are between 7.41% and 52.61% above those in the Award, the Agreement provides for other benefits in excess of the Award including as to severance payments, rest pauses and superannuation, and clauses 14.3 and 14.4 provide for payments to employees for periods for which they would not be entitled to be paid under s 524 of the FW Act. 7 In relation to clause 14.1 specifically, the Deputy President said that, to the extent that the terms of the provision differ to those in s 524, the effect of the distinction is hypothetical and there was no specific submission as to how the distinction could impact on employees.8 Insofar as clause 14.1(a) is not limited to industrial action other than that organised or engaged in by the employer, this was mitigated by the requirement in clause 14.1(c) that the stoppage of work must be for a cause for which the employer cannot reasonably be held responsible and, in any event, the employer had provided the undertaking.9
[8] The Deputy President also accepted that the fact that s 524 does not prevent an enterprise agreement or a contract of employment from providing for employees to be stood down in a wider range of circumstances than those in s 524(1) mitigates against the stand down provisions in the enterprise agreement being a BOOT issue. The Deputy President also noted that to refuse the Agreement would result in the employees covered by it being denied the benefits in the Agreement and being subject to the same stand down clause (in the preceding enterprise agreement). 10
AMIEU’s appeal submissions
[9] The AMIEU submitted in relation to its first ground of appeal that the application of the BOOT is not limited to the comparison of those agreements provisions which have direct equivalents or analogues in the relevant award; rather, it required an identification and comparison of all relevant terms which are either more or less beneficial for employees than the applicable award. Thus, it was submitted, the Commission has considered as relevant to the BOOT comparison exercise obligations imposed on employees that have no corresponding analogue in the relevant award including the consequent exposure to penalties for potential contravention of those obligations. Accordingly, the AMIEU submitted, if the terms of an enterprise agreement permit the deduction of wages via a stand down provision in circumstances where no such deduction would be permitted from the wages of an award-covered employee, that is relevant to the BOOT analysis. Clause 14 is such a clause because it dispenses with the requirement for a direct casual connection between the prescribed circumstances (in paragraphs (a)-(c)) and the absence of useful employment in its use of the words “…because of something that happened relating to…” the prescribed circumstances. It was submitted that this would allow, for instance, an employer confronted with a breakdown of machinery or an inability to obtain some of its expected livestock to close the plant for the day even though there is still work that could be usefully performed, because the decision to close the plant is “something that happened relating to” the prescribed circumstances despite the absence of a direct causal connection. The AMIEU submitted that this identified detriment had to be considered as part of the BOOT analysis.
[10] In relation to the second appeal ground, the AMIEU submitted that the Deputy President’s reference to the rates in the Agreement being between 7.41% and 52.61% above the Award is only true in respect of the base rates of pay and does not take into account shift workers, for whom there are not shift penalties in the Agreement (except for cleaners) but only a 30% loading for hours outside the spread of hours, which results in a much narrower margin of 1.5% above the Award. Further, it was submitted, the Deputy President’s reasons did not explain how the increased wage rates make an employee better of overall notwithstanding the breadth of the stand down clause. While the AMIEU acknowledged that clauses 14.3 and 14.4 provide for certain payments to be made for employees who are stood down at short notice, those benefits are contingent and it is not inevitable that such payments would be made in any stand down situation.
[11] The AMIEU submitted in relation to the third appeal ground that there was no evidence concerning whether the terms of the contracts of existing employees contained stand down provisions or, if so, in what circumstances, and there was therefore no basis for considering the hypothetical inclusion of terms in employees’ contracts when conducting the BOOT comparison exercise. As to the fourth appeal ground, the AMIEU submitted that the terms of an extant enterprise agreement are irrelevant to the BOOT.
[12] The AMIEU submitted that permission to appeal should be granted because the appeal raises a general question about how stand down clauses in agreements should be evaluated under the BOOT.
Consideration
[13] For the reasons which follow, we have decided to refuse permission to appeal. We accept clause 14 was relevant to the analysis of whether the Agreement passed the BOOT required by ss 186(2)(d) and s 193. A provision in an agreement does not need to have an equivalent in the comparator modern award in order to be taken into account under the BOOT. The test, as explicated in s 193(1), requires a comparison between the position if the relevant agreement applied to the employee and the position if the award applied, so that if any provision of an agreement entitles an employee to a benefit, or imposes upon the employee a detriment, which would not operate if the award applied because the award makes no such provision, then that must be weighed in the balance.
[14] However, in this case, the AMIEU has not advanced a plausible case on appeal that, even if any error is identified in the Deputy President’s consideration of clause 14 in her reasons, it could lead to the result that the Agreement does not pass the BOOT. There are two aspects of the AMIEU’s failure in this regard. First, the AMIEU has not advanced any persuasive case that the difference in wording between clause 14.1 of the Agreement and s 524(1) of the FW Act, even considered in isolation, amounts to a relevant detriment to employees to whom the Agreement applies. The hypothetical scenario advanced by the AMIEU in its submissions, referred to in paragraph [9] above, could not arise under clause 14.1 because it remains the case that a stand down of an employee can only occur where the employee “…cannot be usefully employed…”. Further, it remains the case that there must be a causal connection (“…because of…”) between the fact that the employee cannot usefully be employed and the circumstances identified in paragraphs (a)-(c). It may be that the addition of the words “…something that happened relating to…” has the effect of requiring a less direct casual connection, but it is difficult to conceive of any realistic scenario whereby this would make a difference. The illustrative list of occurrences that might lead to a stand down contained in clause 14.2 of the Agreement certainly does not suggest that the provision would have any unorthodox operation and, in respect of any stoppage of work, clause 14.1(c) maintains the requirement in s 524(1)(c) that it must be for a cause for which the employer cannot reasonably be held responsible. Finally, there is no basis for a sensible prediction to be made that Swickers might in the future use clause 14.1 in a way detrimental to employees in circumstances where a clause in identical terms has existed in predecessor enterprise agreements since 2012 and has never been utilised by Swickers. 11
[15] Second, the AMIEU has not attempted to demonstrate by any process of analysis that, even if clause 14.1 is detrimental in some respects compared to the position of employees if the Award applied, the Deputy President was wrong in concluding that the Agreement would in any event pass the BOOT. The AMIEU has criticised the Deputy President’s statement that the base rates of employees are 7.41%-52.61% above those in the Award on the basis that this does not take into account the absence of full shift loadings for shiftworkers, but there is no dispute that the remuneration of all current and prospective employees under the Agreement is in all circumstances superior to that applying under the Award. The AMIEU has not, by way of mathematical modelling or any other mode of analysis, attempted to persuade us that the higher remuneration provided by the Agreement taken together with the superior benefits in terms of severance payments, rest pauses and superannuation contributions as well as the benefits of clauses 14.3 and 14.4, as identified by the Deputy President, are outweighed by the supposed detriment of clause 14.1 for the purpose of the BOOT. The position here is similar to that considered by the Full Bench in SDAEA v Prouds Jewellers Pty Ltd. 12 In refusing to grant permission to appeal the approval of an enterprise agreement on BOOT grounds, the Full Bench in that case said:
“[20]We have decided to refuse permission to appeal, for the following reasons. First, the specific contentions raised in the SDA’s appeal concerning clause 28.5 and clauses 28.10-28.13 of the Award and the absence of equivalent provisions in the Agreement are intended to support the overall proposition that the Deputy President erred in finding that the Agreement, with the undertakings she accepted, passed the BOOT. However, the SDA’s appeal submissions did not include any analysis or modelling to demonstrate that, if their argument concerning the proper construction of these provisions of the Award is accepted, the result must be that the Agreement does not pass the BOOT. It may be accepted that, as the Deputy President observed in the interim decision, that the margin between the wages rates in the Agreement and those in the Award was ‘slim’, but that did not absolve the SDA of the need, as the appellant, to advance a persuasive argument that some identifiable segment of the workforce covered by the Agreement would not be better off under the Agreement under some plausible working scenario. In the absence of any such submission, there is no basis for us to be satisfied that the determination of the matters raised by the SDA might have any bearing upon the Deputy President’s decision to approve the Agreement.
[21] The approach taken by the SDA in this respect reflects the approach it took in the proceedings before the Deputy President whereby it did not positively contend that the Agreement did or did not pass the BOOT, but rather simply identified particular aspects of the Agreement which it said were detrimental compared to the Award and were therefore relevant to the BOOT assessment. While it was open to take that course at first instance, that is not a course which is likely to attract the grant of permission in appeal proceedings.”
[16] The contentions raised in the AMIEU’s third and fourth appeal grounds do not, even if accepted, vitiate the Deputy President’s conclusion that the Agreement passed the BOOT. We therefore do not see any purpose in granting permission to appeal in order to give them further consideration.
Conclusion
[17] Permission to appeal is refused.
VICE PRESIDENT
Appearances:
C Buckley on behalf of the appellant.
C Laird on behalf of the respondent.
S Vaughan on behalf of the BFEU.
Hearing details:
2021.
Sydney and Adelaide (via video-link):
20 October.
Printed by authority of the Commonwealth Government Printer
<PR735444>
1 [2021] FWCA 4498
2 AE512454
3 [2021] FWC 5033
4 Ibid at [27]
5 Ibid at [32]
6 Ibid at [33]
7 Ibid at [34]
8 Ibid at [35]
9 Ibid at [36]-[37]
10 Ibid at [38]-[39]
11 See Loaded Rates Agreements [2018] FWCFB 3610 at [115(6)]
12 [2020] FWCFB 4864
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