TMSW Pty Ltd ATF the TMSW Unit Trust T/A Traffic Force

[2017] FWC 195

[2017] FWC 195

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement

TMSW Pty Ltd ATF the TMSW Unit Trust T/A Traffic Force
(AG2016/4233)

DEPUTY PRESIDENT BINET PERTH, 16 JANUARY 2017

Application for approval of the TMSW Pty Ltd Enterprise Agreement 2016.

[1] The Fair Work Commission (FWC) received an application (Application) by TMSW Pty Ltd ATF the TMSW Unit Trust T/A Traffic Force (Traffic Force) for the approval of the TMSW Pty Ltd Enterprise Agreement 2016 (Agreement) pursuant to section 185 of the Fair Work Act 2009 (FW Act).

[2] The Agreement is a single-enterprise agreement made pursuant to section 185 of the FW Act with a proposed nominal expiry date of June 2020. The Application was lodged on 12 August 2016.

[3] The Agreement applies to TMSW Pty Ltd and the employees who are employed in any classification listed in Schedule A of the Agreement (Employees).

[4] There are no employee organisations party to the Agreement.

[5] The Application was supported by a Form F17 Employer’s Statutory Declaration sworn by Ms Erin Studsor, Company Director of Traffic Force (Studsor Statutory Declaration).

[6] The Studsor Statutory Declaration was also supported by 10 attachments which included, among other things, a list of employee bargaining representatives, a copy of the notice of employee representational rights, letters to employees, consultation responses and a comparison table comparing the pay scale terms of the Agreement against the applicable modern award, being the Building and Construction General On-site Award 2010 (Award).

[7] Sections 186 and 187 of the FW Act outlines when the FWC must approve an enterprise agreement. Subsections 186(1) and (2) provide as follows:

“186 When the FWC must approve an enterprise agreement—general requirements

Basic rule

(1) If an application for the approval of an enterprise agreement is made under section 185, the FWC must approve the agreement under this section if the requirements set out in this section and section 187 are met.

Note: The FWC may approve an enterprise agreement under this section with undertakings (see section 190).

Requirements relating to the safety net etc.

(2) The FWC must be satisfied that:

(a) if the agreement is not a greenfields agreement—the agreement has been genuinely agreed to by the employees covered by the agreement; and

(b) if the agreement is a multi-enterprise agreement:

(i) the agreement has been genuinely agreed to by each employer covered by the agreement; and

(ii) no person coerced, or threatened to coerce, any of the employers to make the agreement; and

(c) the terms of the agreement do not contravene section 55 (which deals with the interaction between the National Employment Standards and enterprise agreements etc.); and

(d) the agreement passes the better off overall test.

Note 1: For when an enterprise agreement has been genuinely agreed to by employees, see section 188.

Note 2: The FWC may approve an enterprise agreement that does not pass the better off overall test if approval would not be contrary to the public interest (see section 189).

Note 3: The terms of an enterprise agreement may supplement the National Employment Standards (see paragraph 55(4)(b)).” (emphasis added)

[8] The circumstances in which an agreement will pass the BOOT are set out in section 193 of the FW Act, which provides as follows.

“193 Passing the better off overall test

When a non greenfields agreement passes the better off overall test

(1) An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.

FWC must disregard individual flexibility arrangement

(2) If, under the flexibility term in the relevant modern award, an individual flexibility arrangement has been agreed to by an award covered employee and his or her employer, the FWC must disregard the individual flexibility arrangement for the purposes of determining whether the agreement passes the better off overall test.

When a greenfields agreement passes the better off overall test

(3) A greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each prospective award covered employee for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.

Award covered employee

(4) An award covered employee for an enterprise agreement is an employee who:

(a) is covered by the agreement; and

(b) at the test time, is covered by a modern award (the relevant modern award) that:

(i) is in operation; and

(ii) covers the employee in relation to the work that he or she is to perform under the agreement; and

(iii) covers his or her employer.

Prospective award covered employee

(5) A prospective award covered employee for an enterprise agreement is a person who, if he or she were an employee at the test time of an employer covered by the agreement:

(a) would be covered by the agreement; and

(b) would be covered by a modern award (the relevant modern award) that:

(i) is in operation; and

(ii) would cover the person in relation to the work that he or she would perform under the agreement; and

(iii) covers the employer.

Test time

(6) The test time is the time the application for approval of the agreement by the FWC was made under section 185.

FWC may assume employee better off overall in certain circumstances

(7) For the purposes of determining whether an enterprise agreement passes the better off overall test, if a class of employees to which a particular employee belongs would be better off if the agreement applied to that class than if the relevant modern award applied to that class, the FWC is entitled to assume, in the absence of evidence to the contrary, that the employee would be better off overall if the agreement applied to the employee.”

[9] The Reference Award for the purposes of the BOOT is the Building and Construction General On-site Award 2010.

[10] The test to be applied when determining if the BOOT is satisfied is:

“[41] The BOOT, as the name implies, requires an overall assessment to be made. This requires the identification of terms which are more beneficial for an employee, terms which are less beneficial and an overall assessment of whether an employee would be better off under the agreement. 1

[11] The application of the BOOT is a matter that involves the exercise of discretion and a degree of subjectivity or value judgement. 2

[12] Between the period 18 August 2016 and 11 October 2016 inclusive, two employees raised concerns relating to the voting process for the Agreement and the terms of the Agreement and objected to the FWC approving the Agreement (Employee Objections). One of the Employee Objections reported concerns in relation to the way hours of work are calculated in the Agreement when an employee is required to travel to the work site.

[13] On 10 October 2016, the FWC wrote to Traffic Force and raised various concerns in relation to the following issues in the Agreement:

● incomplete Form F17 signature page;
● incomplete Agreement signature page;
● unspecified Agreement nominal expiry date;
● concerns regarding the Agreement voting process; and
● concerns as to whether the Agreement passes the BOOT.

[14] On 14 October 2016, Traffic Force provided a response to the concerns raised in the 10 October 2016 email (First Response to FWC Concerns). In addition to its 14 October email response, Traffic Force provided the FWC with a letter in which it committed to making a series of undertakings in support of the Application, including revised rates of pay for night work (First Proposed Undertakings).

[15] On 7 November 2016, the FWC wrote to Traffic Force requesting more information in relation to the BOOT issues previously raised with it including:

● the extended span of ordinary hours;
● weekend penalty rates;
● payment comparisons for the BOOT for weekend and shift penalty rates;
● the undertaking regarding employees’ ordinary hours of work; and
● shift penalties.

[16] On 8 November 2016, Traffic Force provided a response to the concerns raised in the 7 November 2016 email (Second Response to FWC Concerns) which included a letter in which it committed to making a series of revised undertakings in support of the Application (Second Proposed Undertakings).

[17] On 7 December 2016, the FWC wrote to Traffic Force outlining outstanding concerns regarding travel time for employees working weekend shift work or engaged on distant work. The email included modelling clarifying the FWC’s concerns regarding the Award’s and Agreement’s terms in respect of employees working one Saturday shift per week with 2 hours travel time on the Saturday and an employee undertaking distant work on one 8 hour Saturday shift per week. These concerns were not suitably addressed or rectified in either the First or Second Proposed Undertakings provided by Traffic Force.

[18] On 12 December 2016, Traffic Force provided a response to the issues raised in the 7 November 2016 email (Third Response to FWC Concerns) which included a modelling comparison for various examples of work and travel hours in an attempt to demonstrate that the terms of the Agreement are better than the Award. The Third Response to FWC Concerns included a letter in which Traffic Force committed to making a series of revised undertakings in support of the Application, which included Traffic Force agreeing to remove the contradictory clause in the Agreement which had stated that where an employee is engaged on distant work, daily travel will not apply (Third Proposed Undertakings).

[19] A review of the Third Response to FWC Concerns revealed that the issue raised with the Applicant in relation to travel time for employees working weekend shift work had been resolved and employees were better off under the Agreement’s terms and conditions than the Award’s. In relation to the concerns regarding travel time for employees engaged on distant work, it is unclear from the material provided to the FWC how regularly employees will be required to work hours that would attract this penalty. However, the concern is that if employees regularly undertake distant work and there are instances where this does not involve DIDO or FIFO work, employees may become worse off overall. A concern also continued to exist in relation to a lack of an undertaking from Traffic Force to give force to its submission that employees will be paid travel time for all work performed on the weekend in accordance with clause 3.8.3 of the Agreement.

[20] In light of this, on 20 December 2016, the FWC wrote to Traffic Force outlining these outstanding concerns regarding travel time for employees engaged on distant work and payment for travel time. Traffic Force was provided with modelling of a Level 1 or 2 Traffic Controller working an 8 hour distant work shift on a Saturday inclusive of 2 hours travel time over a 38 hour week, which demonstrated that if one included the living away from home and meal allowance, an employee would become $78.57 worse off per week under the Agreement as compared to the Award. Traffic Force were also requested to give force to its submission that employees will be paid travel time for all work performed on the weekend in accordance with clause 3.8.3 of the Agreement by providing an undertaking to this effect.

[21] On 27 December 2016, Traffic Force provided a response to the concerns raised in the 20 December 2016 email (Fourth Response to FWC Concerns) which included a letter in which Traffic Force committed to making a series of revised undertakings in support of the Application, including in respect of the FWC’s concerns regarding the travel time for employees engaged on distant work and the payment for travel time (Fourth Proposed Undertakings).

[22] Traffic Force submitted in the Fourth Response to FWC Concerns that clause 3.8 of the Agreement states that time spent travelling counts as time worked and is paid at the applicable weekend rates and that, as all the daily travel conditions are above Award conditions, the Agreement is better off overall and no undertaking is required to address the issue. However, subsequent modelling and calculations revealed that if an employee is required to work one 8 hour shift on a Saturday without a minimum payment of 2 hours travel time, the employee would become worse off overall.

[23] In light of the above, in a subsequent email from the FWC to Traffic Force on 4 January 2017, Traffic Force were advised of the FWC’s concerns relating to the fact that if an employee is required to work one 8 hour Saturday shift between the hours of 6am and 5pm, they will be worse off without travel time payable. Traffic Force was provided with the modelling comparing the terms of the Agreement with the Award which demonstrated, by way of example, that if an employee is required to work one 8 hour Saturday shift from 6am to 2pm with no travel time payable, they will become worse off by $41.16 per week.

Agreement Ordinary Rate	$20.58	Award Ordinary Rate	$20.58
Hours	Loading	weekly total	Hours	Loading	weekly total
Ordinary Hours	32	100%	$658.56	Ordinary Hours	32	100%	$658.56
Saturday (before noon)	6	150%	$185.22	Saturday (overtime)	2	150%	$61.74
Saturday (after noon)	2	200%	$82.32	Saturday (overtime)	6	200%	$246.96
Annual Leave	Yes	$60.16	Annual Leave	Yes	$60.16
Leave Loading	Yes	$10.53	Leave Loading	Yes	$10.53
Totals	40.00	Hrs	$996.78	Totals	40.00	Hrs	$1,037.94
Agreement Total Weekly Rate			$996.78
Award Total Weekly Rate			$1,037.94
Dollar / Actual Percentage Difference			-$41.16
			3.97%
Agreement Percentage Increase Required			4.13%

[24] Additionally, the FWC explained that, in certain circumstances, employees required to work one 8 hour shift on a Saturday with one hour travel time may become worse off overall. The below model demonstrates that an employee working one 8 hour Saturday shift between 6am and 2pm will become worse off by $30.87 per week. The FWC’s 4 January 2017 email raised the issue that if an employee is required to work one 8 hour Saturday shift (with one hour’s travel time payable) between the hours of 6am and 4pm, they would become worse off compared to the Award.

Agreement Ordinary Rate	$20.58	Award Ordinary Rate	$20.58
Hours	Loading	weekly total	Hours	Loading	weekly total
Ordinary Hours	32	100%	$658.56	Ordinary Hours	32	100%	$658.56
Saturday (before noon)	6	150%	$185.22	Saturday (overtime)	2	150%	$61.74
Saturday (after noon)	2	200%	$82.32	Saturday (overtime)	6	200%	$246.96
Travel time	1	150%	$30.87	Travel time	1	100%	$20.58
Annual Leave	Yes	$60.16	Annual Leave	Yes	$60.16
Leave Loading	Yes	$10.53	Leave Loading	Yes	$10.53
Totals	41.00	Hrs	$1,027.65	Totals	41.00	Hrs	$1,058.52
Agreement Total Weekly Rate			$1,027.65
Award Total Weekly Rate			$1,058.52
Dollar / Actual Percentage Difference			-$30.87
			2.92%
Agreement Percentage Increase Required			3.00%

[25] Traffic Force was given an opportunity to consider whether it wished to file an undertaking to the effect that the Saturday overtime rate will be in accordance with the Award provisions, that is, 150% for the first 2 hours and 200% thereafter or, alternatively, an undertaking to the effect that employees will not work the detrimental hours. Either undertaking would ensure employees undertaking Saturday work with no travel time will receive rates of pay better than the Award and employees required to travel one hour will receive rates of pay above the Award as their travel time is payable in accordance with the weekend penalty rate rather than the ordinary time rate as the Award provides.

[26] On 9 January 2017, Traffic Force provided a response to the concerns raised in the FWC’s 4 January 2017 email (Fifth Response to FWC Concerns) in which Traffic Force proposed two options to address the FWC’s concerns. Traffic Force’s Option 1 appears to be the current position of the proposed Agreement, whereby employees are paid travel time at the applicable weekend rate and Saturday work is paid at 150% for all hours before 12noon and 200% thereafter. As noted above, if an employee is required to work one 8 hour shift on a Saturday without a minimum payment of 2 hours travel time, the employee would become worse off overall as the modelling indicates. Traffic Force’s Option 2 proposed to alter the Agreement to bring the travel payment and Saturday penalty in line with the Award. However, this will disadvantage employees who work one Saturday shift per week between 1 to 8 hours in duration with between 2-8 hours travel time who are better off overall under the proposed Agreement.

[27] It does not appear that either of the above proposed Options will fix the concerns of the FWC in respect of the BOOT.

Conclusions

[28] Despite Traffic Force being provided numerous opportunities to remedy the Agreement through the provision of undertakings in accordance with section 190 of the FW Act, Traffic Force has still failed to satisfy the FWC that the statutory obligations in respect of the BOOT have been met.

[29] In accordance with section 190(3) of the FW Act, the FWC may only accept undertakings if the FWC is satisfied that the effect of accepting the undertaking is not likely to cause financial detriment to any employee covered by the agreement or result in substantial changes to the agreement. Traffic Force have proposed numerous and significant changes to the Agreement via the undertakings proposed.

[30] For the reasons outlined above I am not satisfied that the Proposed Agreement passes the BOOT as required by section 186(2)(d) and/or that its deficiencies can be corrected by undertakings. Consequently, the Agreement is not approved.

DEPUTY PRESIDENT

 1   Armacell Australia Pty Ltd (2010) 202 IR 38.

 2   Aldi Foods Pty Ltd v Transport Workers Union of Australia (2012) 227 IR 120, 123-4.

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