Tomato Exchange Pty Ltd as trustee for the Tomato Exchange Unit Trust T/A Tomato Exchange Pty Ltd

[2017] FWC 1170

[2017] FWC 1170

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Tomato Exchange Pty Ltd as trustee for the Tomato Exchange Unit Trust T/A Tomato Exchange Pty Ltd
(AG2016/7274)

COMMISSIONER ROE MELBOURNE, 28 FEBRUARY 2017

Application for approval of the Costa Tomato Category Enterprise Agreement 2016.

[1] An application has been made for approval of an enterprise agreement known as the Costa Tomato Category Enterprise Agreement 2016 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act). It has been made by Tomato Exchange Pty Ltd as trustee for the Tomato Exchange Unit Trust T/A Tomato Exchange Pty Ltd (Costa). The Agreement is a single enterprise agreement. 519 employees will be covered by the Agreement. Of the 438 employees who voted 284 voted in favour of the Agreement.

[2] I am satisfied that all the requirements of the legislation for the approval of the Agreement are met except for concerns raised about the Better Off Overall Test (BOOT).

[3] There was considerable exchange concerning the BOOT. The relevant Awards are the Horticulture Award 2010 1, the Manufacturing and Associated Industries and Occupations Award 20102, and the Clerks Private Sector Award 20103. The Manufacturing and the Clerks awards are incorporated in respect to most matters. The Horticulture Award is not incorporated. There is no BOOT issue in respect to the maintenance and clerical employees who would otherwise be covered by the Manufacturing and Clerical Awards. Submissions were made by The Australian Workers’ Union (AWU) and the National Union of Workers (NUW) who were bargaining representatives for the Agreement in respect to the horticulture employees.

[4] In summary I consider the following matters relevant in respect to the BOOT for the horticulture employees.

Less Beneficial Terms	More Beneficial Terms
The agreement allows for ordinary hours up to 12 hours. Under the Horticulture Award 12 hour shifts require the approval of the relevant section. A majority vote for the agreement might reflect the overall views of the site but might over-ride the views of a particular section which would be protected under the Horticultural Award. (this is dealt with further below)	Part time and casual employees have a minimum shift payment of three hours which is not prescribed in Horticultural Award.
The Agreement provides that casual employees do not receive overtime. (this is dealt with further below)	Upon approval of the Agreement employee receive a 0.25% increase which results in rates at Level 1 which are four cents per hour above Horticultural Award and at Levels 2 – 5 which are five cents per hour above Horticultural Award. The Agreement also provides for subsequent wage increases.
The Agreement provides for payment upon termination within four working days whilst Horticultural Award provides for payment to be made on the day of termination.	Junior employees at 18 and 19 receive 100% rates whilst under Horticultural Award they receive discount rates. The F17 says that 26 out of the 519 employees covered by the Agreement are under the age of 21. It is not known if there are any employees at aged 18 or 19.
The requirements for progression between various classification Levels are more difficult for some employees than under Horticultural Award. (this is dealt with further below)	Leading hand allowances for those responsible for 10 or less employees are higher than Horticultural Award.
Overtime Meal allowance applies casual employees.
Employees working more than two hours after ordinary finish time are entitled to a 15 minute paid rest break.
Sunday work during the harvest period is paid at 200% whereas up to five hours can be worked at 150% during the harvest period under Horticultural Award.
Employees working 38 hours per week will have a total of 30 minutes rather than 10 minutes paid rest break per day. Those working less than 38 hours per week are entitled to the minimum 10 minutes as per Horticultural Award but may get more because they “…will be allowed paid rest breaks in accordance with the regular roster of the department concerned, unless otherwise agreed between the Company and the majority of impacted employees.”
TOIL provision in the agreement which provides that the default is payment not TOIL whilst Horticultural Award provides that the default is TOIL unless payment is requested.

[5] The employer suggested that some other matters were more beneficial but I am not satisfied that these matters are relevant to the BOOT. For example:

● They point to the provision for performance bonus but as this is not guaranteed, it is at the discretion of the employer and the performance bonus program “…does not form part of the Agreement”. I am not satisfied that this provision is relevant to the BOOT.

● They point to the fact that ordinary hours are defined as 38 per week in the Agreement whilst under Horticultural Award it is possible to average hours over four weeks. I am satisfied that the Agreement provision is equivalent to Horticultural Award for the purpose of the BOOT. The arrangement of ordinary hours that meets the circumstances of the business would be the same under the Agreement as under Horticultural Award.

[6] I consider that some of the matters listed as advantages or disadvantages are relatively minor and some of them only apply to restricted classes of employees. The matters of most significance in my view are:

● The conditions for progression between Levels. The overwhelming majority of employees are at Level 1 under the Agreement. If a proportion of those employees would be classified at Level 2 under Horticultural Award then this would be a significant disadvantage for those employees.

● The beneficial rest break provisions are also significant and would benefit employees if they work a full day, 7.6 hour shift, and provided that there are some full time workers regularly rostered in the department. The nature of the industry means that short shifts in the horticultural area are not particularly common.

● The minimum shift duration for part time and casual employees is of some significance for those employees. However, as noted earlier short shifts are not particularly common in the horticultural area except where there are interruptions to production.

● The Sunday penalty rate provision is also of some significance given that Sunday work is common in the industry.

[7] The AWU and NUW argue that the provision in the Agreement which excludes casual employees from overtime is a significant disadvantage. I am satisfied that Clause 10.4 of the Horticultural Award which provides that “…A casual employee’s ordinary hours of work are the lesser of an average of 38 hours per week or the hours required to be worked by the employer.” means that if a casual employee works more than an average of 38 hours per week those additional hours of work are not ordinary hours and are therefore overtime. The overtime provision, Clause 24, applies to employees generally and is not restricted to particular classes of employees and defines the additional payments applicable for overtime work. The provisions of Clause 22.1, ordinary hours of work and rostering, for day workers do not apply to casual employees and hence overtime does not apply to casuals on day work simply because they work outside of the spread of hours or work more than the specified number of hours in a day. The provisions of Clause 22.2, ordinary hours of work and rostering for shift workers, do apply to casuals. As a consequence shift work penalties do apply and overtime applies to shifts longer than eight hours.

[8] I am satisfied that the exclusion of casual employees from overtime is a disadvantage which must be taken into account. However, shift work is not common due to the nature of the industry where by necessity most work occurs during daylight hours. Further employers may be able to avoid overtime penalties for many casual employees as the period over which hours may be averaged is not limited or defined in the Horticulture Award. The disadvantage of excluding casual workers from overtime is offset, at least to some extent, by the provision of a 15 minute paid rest break for casuals when working more than two hours beyond rostered finish time and the provision of paid meal allowance in those circumstances.

[9] The most significant disadvantage is the more restrictive provisions for the progression of workers to higher classification Levels. Mr Phillips, HR Manager for Costa, gave evidence that of the 519 employees who will be covered by the Agreement 515 are employed subject to the Horticulture Award 2010. Of those employees approximately 350 are paid at Level 1, 100 are paid at Level 2, 30 are paid at Level 3, 30 are paid at Level 4 and 5 are paid at Level 5.

[10] The employees receive induction training upon commencement of about two hours for general induction and about one hour for induction in respect to the particular tasks. The employees then work under a buddy system for a day. The information is then supplemented by additional information concerning quality control issues from time to time.

[11] Horticultural Award provides at Clause 13 that “Employees will be classified in accordance with the classification descriptions contained in Schedule B—Classification Structure and Definitions, of this award”. The classification definitions within the Horticulture Award for Levels 1 and 2 are as follows:

B.1 Level 1

B.1.1 Level 1 employee means an employee classified in accordance with the following criteria:

B.1.2 General description
An employee at this Level:

● undertakes induction training which may include information on the enterprise, conditions of employment, introduction to supervisors and fellow workers, training and career opportunities, plant layout, work and documentation procedures, occupational health and safety, equal employment opportunity and quality control/assurance;
● performs routine duties essentially of a manual nature and to the Level of their training;
● exercises minimal judgment;
● works under direct supervision;
● is responsible for the quality of their own work;
● is a new employee; or is an existing employee performing work within this grade who is undertaking training so as to enable advancement to Level 2.

B.1.3 Indicative duties
Indicative of the duties an employee may perform at this Level are:

● performing general labouring duties;
● fruit or vegetable picking, thinning or pruning;
● operating small towing tractor engaged in transfer of produce bins and other containers during harvest;
● performing a range of housekeeping tasks in premises and grounds;
● sorting, packing or grading of produce where this requires the exercise of only minimal judgment;
● performing basic recording functions related to work performed at this Level;
● providing assistance within the scope of this Level to other employees as required;
● undertaking structured training so as to enable advancement to Level 2.

B.2 Level 2 employee

B.2.1 Level 2 employee means an employee classified in accordance with the following criteria:
B.2.2 General description
An employee at this Level:

● has completed up to three months structured training so as to enable the performance of work within the scope of this Level;
● works under general supervision either individually or in a team environment;
● works with established routines, methods and procedures;
● performs a range of tasks involving the use of skills above and beyond those of Level 1 and to the Level of their training;
● exercises limited discretion;
● is responsible for the quality of their own work;
● receives training in occupational health and safety standards and practices relevant to the site;
● performs lower Level tasks as required without loss of pay unless re-engaged to perform tasks at predominantly a lower skill Level.

B.2.3 Indicative duties
Indicative of the duties an employee may perform at this Level are:

● performing a range of tasks involving the set up and operation of production and/or packaging or picking equipment, labelling and/or consumer picking equipment;
● repetition work on automatic, semi-automatic or single purpose machines or equipment;
● assembling/dismantling components using basic written, spoken and/or diagrammatic instructions in an assembly environment;
● irrigation, spraying or pruning under general supervision;
● sorting, packing and grading beyond the scope of Level 1 duties;
● maintaining simple records;
● using hand trolleys, pallet trucks or other mechanical or power driven lifting or handling devices not requiring a licence;
● operating tractors with engine capacity of up to 70 kW;
● general and routine product testing;
● providing assistance within the scope of this Level to other employees as required;
● assisting in the provision of on-the-job training in conjunction with supervisors, tradespersons or trainers;
● undertaking further training so as to enable advancement to Level 3.” 4

[12] There is nothing in Clause 13 or the definitions which allows an employer to restrict the number of positions available at Level 2 or to require that employees must apply for and be selected for positions prior to being reclassified to Level 2. The requirements for each Level in the Horticultural Award classification structure are in two parts. The first part, the general description, is mandatory whilst the second part, the indicative duties, is indicative. There is no requirement for an employee to be performing all of the indicative duties. The structure of the first two Levels of Horticultural Award is similar to that found in a number of other modern Awards where the lowest Level is paid equivalent to the minimum wage, including the Manufacturing Award. An employee can only be engaged at the first Level for a limited period of time whilst being inducted and trained.

[13] The Level 1 employee performs routine duties, exercises minimal judgment and works under direct supervision. A Level 1 employee “is a new employee; or is an existing employee performing work within this grade who is undertaking training so as to enable advancement to Level 2”. Whilst a Level 2 employee “has completed up to three months structured training so as to enable the performance of work within the scope of this Level”. Reading these two requirements together makes it clear that the training to enable advancement to Level 2 referred to in the definition of Level 1 cannot exceed “…up to three months structured training so as to enable the performance of work within the scope of this Level”. The requirement at Level 2 for “…the use of skills above and beyond those of Level 1” is not an onerous requirement when the definitions are considered in context. The skills at Level 1 are those of a new employee or an existing employee learning the basics under direct supervision.

[14] The difference is also illustrated by consideration of the indicative tasks. At Level 1 “sorting, packing or grading of produce where this requires the exercise of only minimal judgment” whilst at Level 2 the reference is to “sorting, packing and grading beyond the scope of Level 1 duties”. To perform sorting, packing or grading work competently without close supervision requires more than minimal judgement. Once an employee is sufficiently experienced at sorting, packing or grading so as to be able to exercise the judgement necessary to perform the work then they are performing at Level 2. Similarly once machinery is being utilised or spraying, pruning or irrigation are required under general supervision then the employee is performing at Level 2.

[15] In contrast the classification structure under the Agreement provides that:

“All positions….are “appointed positions” unless the General Description specifically indicates the opportunity for performance or service based progression to the next classification Level. “An appointed position is one which is specifically assigned to an employee by the Company. Progression to a higher Level will be subject to the employee being appointed by the Company.” 5

[16] The classification General Description does not provide for progression except based upon performance review. At Level 1 the requirement is that:

“Performance reviewed following 6 months FTE experience in role. Should performance consistently meet Level 1 expectations, employee should progress to Level 2. Employees remaining at this Level will be reviewed following each 3 months of FTE experience in the role.”

[17] At Level 2 the requirement is “Performance reviewed following 3 years FTE experience in the Glasshouse. Progression to Level 3 shall occur should performance meet L3 requirements.”

[18] Level 1 work includes “twisting, leafing, cluster pruning, picking, lowering”. It requires “general understanding of common crop issues”, “appropriate reporting requirements”, competent performance of all routine tasks, assistance to other employees in their primary discipline, and good understanding of an adherence to food safety and hygiene standards and safety responsibilities. This is significantly beyond the requirements for Level 1 in Horticultural Award. Competent performance of this work without direct supervision would be at least at Level 2 under Horticultural Award. The work specified involves the use of equipment and or machinery which falls within the scope of Level 2 once the employee is competent.

[19] Costa offered the following undertaking to address the concerns.

“No employee shall be disadvantaged under the Agreement in respect to classification progression by virtue of the performance timeframes set out in Schedule A of the Agreement. In particular, the performance review timeframes set out in Schedule A of the Agreement shall not be interpreted as “minimum service periods” for the purpose of restricting the ability of an employee to progress from one classification to the next. Progression from one classification Level to the next Level is based on the employee being able and required to work above and beyond the skills of the employee at the previous Level.

The performance review timeframes set out in Schedule A of the Agreement shall not restrict the ability of an employee to move from a Level 1 classification to a Level 2 classification if the employee has completed up to three months structured training.”

[20] In the proceedings Costa agreed to modify the last part of the first paragraph to read:

“Based on the employee being able to work and performing work above and beyond the skills of the employee at the previous Level.”

[21] I am satisfied that the undertaking as modified does remove some of the disadvantage of the Agreement classification progression when compared to Horticultural Award. However, the requirement that a Level 2 employee must be:

“Routinely achieving norm time and quality requirements of one discipline and achieving – or working towards achieving – requirements of at least one other discipline (i.e. twisting, leafing, cluster pruning, picking, lowering)” 6

remains a much higher barrier to progression than that under Horticultural Award. There is no requirement under Horticultural Award for a Level 2 employee to be working in more than one discipline. The Level 2 descriptor in the Agreement includes “…irrigation or spraying tasks under general supervision”. This indicative task is found at Level 2 of Horticultural Award and when combined with the other general requirements for a Level 2 employee is sufficient to be classified at Level 2 without any requirement to be working in more than one discipline.

[22] I am satisfied that notwithstanding the undertakings offered by Costa, there will be employees under the Agreement who will be classified at Level 1 who would be classified as Level 2 under Horticultural Award.

[23] I am satisfied that for those who work 38 hours per week the provision of an extra 20 minutes in paid rest breaks per day is a significant advantage. Employees will receive the same pay for 38 hours but have to actually work 20 minutes less during the time for the same pay. Because it is a non-monetary benefit which is being compared to a monetary benefit there is no exact mathematical formula which can be adopted. However, if a monetary value is given to the 20 minutes per day, the value is greater than the difference between Level 1 and Level 2 rates in Horticultural Award. In other words there is a reasonable argument that the disadvantage due to more difficult progression from Level 1 to Level 2 is adequately offset by the longer rest breaks for employees who work 38 hours per week. This will also be the case if a part time or casual employee who works less than 38 hours per week does so because they work normal 7.6 hour days but fewer days per week. This conclusion is based on the assumption that there are some 38 hour per week employees in each department such that the regular roster of the department concerned would include the extra 20 minutes paid breaks per day. I am satisfied that this is a reasonable assumption as it would be a restrictive and artificial limitation on the employer’s flexibility to arrange work without this.

[24] Hence the only employees who would not have the advantage of the additional 20 minutes per day paid rest breaks are those who work short shifts. The nature of the industry means that short shifts in the horticultural area are not particularly common. It is likely that the regular roster of the department concerned would include a proportion of the extra 20 minutes paid break on some shorter shifts. Those on shorter shifts also have the benefit of the three hour minimum shift payment which is not applicable under Horticultural Award.

[25] It is not possible to determine the issue of whether or not the Agreement satisfies the BOOT using mathematical modelling or calculations. There are a number of variables which have to be balanced. The principal factors which have to be balanced are as follows:

● My assessment that there will be some employees classified as Level 1 under the Agreement who would be classified as Level 2 under Horticultural Award. This is direct financial disadvantage. However, the disadvantage would not continue indefinitely as the Agreement, when considered with the undertakings, would provide for the employee to be eventually reclassified to Level 2.

● My assessment that almost all employees will be advantaged by the provision of additional paid rest breaks.

● The exclusion of casuals from overtime.

[26] I have also taken into account the other advantages and disadvantages referred to earlier and particularly to the minimum engagement periods, and the additional access to meal allowance and rest break when working beyond rostered times.

[27] I also consider that there may be some advantages in the Agreement classification structure. The requirements for work at the particular Levels are defined having regard to the particular work at the establishment and there is therefore greater clarity about the work and skills requirements. This may mean that some employees may have additional opportunities for advancement when compared to Horticultural Award. This advantage does not outweigh the disadvantage of the higher hurdle for progression from Level 1 to Level 2.

[28] Costa pointed to the decision of Commissioner Lee in approving the Coolibah Herbs Enterprise Agreement 2016 (Coolibah) 7. Unlike in the circumstances of this case there was no contradictor opposing the approval of the agreement. Costa submitted that the Coolibah agreement was approved notwithstanding that it excluded casuals from overtime and did not provide for automatic progression from Level 1 to Level 2.

[29] The Coolibah agreement was approved with undertakings. One of those undertakings was that “Overtime shall be payable for all hours worked by employees beyond the maximum daily hours and/or a part time employee’s agreed hours of work”. I am satisfied that overtime is therefore payable to casual employees who work more than the maximum daily hours under the Coolibah agreement. The classification structure is also different and in respect to Level 1 provides “Is a new employee; or is an existing employee performing work within this grade who is undertaking training so as to enable advancement to Level 2”. This is much closer to the requirement of Horticultural Award than the requirements in the Costa Agreement. The implication in the Coolibah agreement as with Horticultural Award is that employees cannot remain at Level 1 indefinitely. The Coolibah agreement does contain the provision for promotion that “If appropriate after twelve (12) months experience at Level 1 the employee could expect to advance to Level 2”. This is more restrictive than Horticultural Award.

[30] Considered overall I am satisfied that the BOOT is met in respect to full time employees. The advantages of the additional breaks adequately offsets the disadvantages in respect to classification progression. Considered overall I am satisfied that the BOOT is met in respect to part time employees. The advantages of the additional breaks for most part time employees, the minimum engagement period for the part time employees who might not be receiving the additional breaks, the additional break when working overtime, and better TOIL and Sunday provisions outweigh the disadvantages particularly in respect to progression through the classification structure. Considered overall I am not satisfied that the BOOT is met in respect to casual employees. The disadvantages associated with the prohibition on overtime when combined with the disadvantages associated with progression through the classification structure are not outweighed by the advantages associated with additional breaks for most casual employees and the other advantages identified.

[31] In order to ensure that the BOOT is met for casual employees it will be necessary to ensure that employees are guaranteed progression from Level 1 to Level 2 or to deal with the overtime issue.

[32] If the employer provides an additional suitable undertaking in respect to casuals overtime I would be satisfied that the BOOT is met. Alternatively if the employer provides an additional suitable undertaking in respect to guaranteed progression from Level 1 to Level 2 then I would be satisfied that the BOOT is met.

[33] A suitable undertaking in respect to overtime would be that:

“Notwithstanding Clause 25.2(e) overtime shall be payable to casual employees in circumstances where overtime would be payable under the Horticulture Award 2010.”

[34] A suitable undertaking in respect to progression would be that:

“All casual employees will be provided with access to work and training so that will have the opportunity to progress from Level 1 to Level 2 within the first three month period of employment.”

Conclusion

[35] I am satisfied that the problems with this Agreement can be cured by the provision of undertakings. I am satisfied that taken as a whole the undertakings required would not result in a substantial change to the agreement nor in financial detriment to any employee covered by the Agreement. All bargaining representatives were aware of the issues of concern and of the hearing of this matter. This was in part to ensure that I sought the views of the bargaining representatives about the matters of concern which may be the subject of undertakings. The NUW and the AWU actively participated in the hearing. I consider that this is sufficient in the circumstances of this case to ensure that the bargaining representatives have been consulted about the undertakings.

[36] I am satisfied that the other statutory requirements for the approval of the Agreement have been met.

[37] If undertakings as set out in this decision are provided by no later than 3 March 2017 the Agreement will be approved. If the undertakings are not provided then, for the reasons set out, the Agreement cannot be approved because the BOOT is not met and the application is dismissed.

COMMISSIONER

Appearances:

G. Robertson and K. Sheehan for the National Union of Workers.

M. Fagan and R. Walsh for The Australian Workers’ Union.

J. D’Abaco appearing for the Respondent.

Hearing details:

2016.

Melbourne and Sydney (via video):

February 24.

 1   Horticulture Award 2010 - MA000028.

 2   Manufacturing and Associated Industries and Occupations Award 2010 - M000010.

 3   Clerks Private Sector Award 2010 - MA000002.

 4   MA000028

 5   Costa Tomato Category Enterprise Agreement 2016 - Clause 12.

 6   Ibid Schedule A.

 7   ([2016] FWCA 7421)

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