Timberlink Australia Pty Ltd

[2019] FWCA 6184

[2019] FWCA 6184

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Timberlink Australia Pty Ltd
(AG2018/2146)

TIMBERLINK, CFMEU, AMWU & CEPU BELL BAY COLLECTIVE AGREEMENT 2018

Timber and paper products industry
DEPUTY PRESIDENT MANSINI	MELBOURNE, 12 SEPTEMBER 2019

Application for approval of the Timberlink, CFMEU, AMWU & CEPU Bell Bay Collective Agreement 2018.

[1] Timberlink Australia Pty Ltd (Timberlink) has applied for approval of a single enterprise agreement known as the Timberlink, CFMEU, AMWU & CEPU Bell Bay Collective Agreement 2018 (the Agreement), pursuant to s.185 of the Fair Work Act 2009 (the Act).

[2] The “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU), the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) and the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) were bargaining representatives of employees to be covered by, and involved in bargaining for, the Agreement.

[3] Since the application was filed, various concerns were raised by and with the Commission.

[4] Timberlink ultimately provided consolidated written undertakings to address concerns, in accordance with s.190 of the Act (Undertakings). A copy of the Undertakings is at Annexure A.

[5] Having considered all submissions, evidence, further information, other materials, Undertakings and views provided by the Applicant and the bargaining representatives, I have determined that the Agreement must be approved in accordance with the Act.

[6] The reasons for this decision follow.

The “better off overall test”

[7] I must be satisfied that the Agreement passes the “better off overall test” in assessing whether it must be approved in accordance with the Act.

[8] An enterprise agreement passes the better off overall test 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. 1

[9] The starting point is the identification of the relevant 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. In this case, the relevant modern awards are:

a) For maintenance employee classifications to be covered by the Agreement (the Maintenance Employees), both the Timber Industry Award 2010 (Timber Award) and the Manufacturing and Associated Industries and Occupations Award 2010 (Manufacturing Award); and
b) For all other classifications to be covered by the Agreement, the Timber Award.  2

[10] The application of the better off overall test then requires the identification of enterprise agreement terms which are more beneficial, and the terms which are less beneficial, and then an overall assessment is made as to whether employees would be better off overall under the agreement than the relevant award. 3 The difficulties that often arise in assessing contingent and non-financial terms is explained in Hart v Coles Supermarkets Australia Pty Ltd and others.4

[11] The assessment of the better off overall test will logically focus attention on matters that are objectively verifiable as relative benefits or detriments, including in particular the number of hours that employees can be required to work and the payments employees receive for doing so. The analysis inquires whether employees would be better off overall under the Agreement than under the relevant award, not better off on a line by line or itemised basis. It is plainly permissible under the Act to trade off or vary Award conditions in making an enterprise agreement. 5

[12] In the present case, the AMWU 6 contends that the Maintenance Employee classifications are not better off overall when assessed against the relevant award(s).7 There is no dispute that all other classes of employee and prospective employee are better off overall.

Are the Maintenance Employees better off overall?

[13] The AMWU agrees that the Maintenance Employee classifications receive a financial benefit in terms of the weekly base rates of pay under the Agreement. Indeed, it submitted that “based solely on a financial aspect” the Agreement would pass the better off overall test in relation to Maintenance Employees. 8

[14] However, the AMWU asked the Commission to consider as significant a non-financial detriment being the absence of classification definitions and structures in the Agreement. 9 It said this disadvantages maintenance tradespersons because they are not able to “avail themselves of the raft of Manufacturing Award clauses that support and give effect to reclassification based on competency.. ensuring as the nature of work and plant and equipment changes then so do the employee classifications”. The AMWU also said this detriment is not able to be ascribed a particular financial or monetary value. 10

[15] The concern is borne out in the context of a review of the classification structure in the Agreement, which is provided for at Schedule C of the Agreement. The AMWU argued this may be detrimental to Maintenance Employees in the absence of the classification definitions and the classification process in the Manufacturing Award because:

• a Maintenance Employee who is employed under the Agreement; and
• in a role in which they are assessed as not possessing the relevant qualifications or skills;

may, as a result of a review during the life of the Agreement, be reclassified to a lower classification and receive a lesser wage increase than would otherwise have been paid. 11

[16] In this respect, Timberlink submitted that any increase in employee classifications that may have occurred over time has meant that Maintenance Employees were not required to hold further qualifications or experience yet were afforded the benefit of higher pay rates. Under the Agreement those higher rates for Maintenance Employees are:

a) 16.5% to 51.77% more, if the Manufacturing Award applied; and
b) 9.8% to 12.6% more, if the Timber Award applied. 12

[17] And, in any event, the Agreement commits to maintain these higher base rates of pay (notwithstanding a lesser wage increase might be applied for “over classified” employees in certain limited circumstances).  13

[18] The concern was initially raised by the AMWU and the CEPU in bargaining for the Agreement 14 and appears to relate more to a concern about potential for reduction in conditions than a concern that any class of employee or prospective employee would fall foul of the better off overall test. Even if the AMWU’s submissions are accepted at their highest, then the absence of the suite of classification definitions and progression process in the Agreement may be considered a detriment of a non-financial kind. Whilst the value is difficult to quantify, there is nothing in the Agreement to preclude the application of the Agreement in a way that is consistent with the classification definitions and process in the Manufacturing Award. When balanced with the other conditions of the review at Schedule C, the impact of any such detriment is not considered significant. Nonetheless, for present purposes, I consider this a detriment to be weighed in conducting an overall BOOT assessment.

[19] To the extent that a potential financial detriment is identified, being a lesser pay increase for those employees who may (at a future date) have their role reclassified as a result of the review, the safeguards at Schedule C.2 of the Agreement are particularly relevant. As was properly accepted by the bargaining representatives, such detriment would not of itself result in any class of employee or prospective employee failing to pass the better off overall test assessment.

[20] On an analysis of the materials before the Commission it is apparent that the Agreement, when compared to the Manufacturing Award and the Timber Award, includes a range of more beneficial terms, and some less beneficial terms. When considered on an overall basis, including with regard to the Undertakings, I am satisfied that Maintenance Employee classifications are better off overall.

Are all other employees better off overall?

[21] For completeness, it is noted that the Agreement also provides for a higher weekly base rate of pay of between 8.2% to 18.2% for all other classes of employee and prospective employee as compared to the Timber Award.

[22] On an overall assessment of whether all other (non Maintenance) employees and prospective employees to be covered would be better off overall under the Agreement, including with regard to the more beneficial and the less beneficial terms in the Agreement and the Undertakings, I am satisfied that the Agreement passes the better off overall test. 15

Correction of an error

[23] The Applicant applied to correct a typographical error at clause 5 of the Agreement, to include the CEPU as covered by the Agreement in circumstances where it was a bargaining representative for the Agreement.

[24] The bargaining representatives did not oppose the correction. In the circumstances I am satisfied that the correction should be made and that it is appropriate to do so pursuant to s.586 of the Act.

Mandatory terms

[25] There was a concern that the dispute resolution procedure at clause 8.1 of the Agreement was not consistent with the requirements of s.186(6) of the Act, as it constrained employee choice of representation where there is a dispute arising under the National Employment Standards or the terms of the Agreement.

[26] The Applicant provided an undertaking to address this concern, which provides that clause 8.1 will be applied so that all employees (whether union members or not) will be allowed unqualified representation for the purposes of that clause.

Approval and Operation of the Agreement

[27] The CFMMEU consistently supported the proposed undertakings and, since the Undertakings were provided in final form, the bargaining representatives did not provide any further views or oppose the Undertakings. 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.

[28] For the above reasons, on the basis of the materials before the Commission and subject to 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.

[29] Each of the AMWU, the CEPU and the CFMMEU, have given notice under s.183 of the Act that they respectively want the Agreement to cover them. In accordance with s.201(2) I note that the Agreement covers these organisations.

[30] The Agreement was approved on 12 September 2019 and, in accordance with s.54, will operate from 19 September 2019. The nominal expiry date of the Agreement is 31 December 2020.

DEPUTY PRESIDENT

Annexure A

 1   ss.193(1) and (6) of the Act.

 2   See Timberlink Australia Pty Ltd [2019] FWC 5712.

 3   Re Armacell Australia Pty Ltd (2010) 202 IR 38 at [41].

 4   [2016] FWCFB 2887.

 5   BOC Limited [2019] FWCA 5544.

 6   In conference on 21 August 2019 the AMWU purported to enter an appearance on behalf of the CEPU and pressed this objection on behalf of both organisations. The CEPU did not subsequently file any materials or seek to be heard directly in relation to this issue.

 7   AMWU Submissions of 26 July 2019.

 8   AMWU Submissions of 2 September 2019.

 9   As provided at Schedule B.3 of the Manufacturing Award and clause 24.3 of the Manufacturing Award.

 10   AMWU Submissions of 2 September 2019.

 11   AMWU Submissions of 25 July 2019 and in conference on 21 August 2019.

 12   Timberlink Statutory Declaration of 28 August 2019 at Part 2, 2.2, on the basis that Maintenance Employees may be engaged as any of Levels 4 to 7 at Schedule A of the Agreement or C1 to C14 at Schedule D of the Agreement (see Timberlink Australia Pty Ltd [2019] FWC 5712).

 13   Timberlink Statutory Declaration of 28 August 2019 at Part 2, 2.2, noting also the range of safeguards for over classified employees at Schedule C.2 of the Agreement.

 14   Timberlink Statutory Declaration of 28 August 2019 at Part 3, 5.

 15   See Armacell Australia Pty Ltd and Others [2010] FWAFB 9985.

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