Torrens Transit Services Pty Ltd

[2013] FWCA 8973

[2013] FWCA 8973

FAIR WORK COMMISSION

DECISION

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

Torrens Transit Services Pty Ltd
(AG2013/10610)

TORRENS TRANSIT SERVICES PTY LTD, TRANSPORT WORKERS UNION AND BUS DRIVERS ENTERPRISE AGREEMENT 2013

Passenger vehicle transport (non rail) industry
COMMISSIONER CARGILL	SYDNEY, 15 NOVEMBER 2013

Application for approval of the Torrens Transit Services Pty Ltd, Transport Workers Union and Bus Drivers Enterprise Agreement 2013.

[1] This decision concerns an application made under section 185 of the Fair Work Act 2009 (the Act) for the approval of a single enterprise agreement. The application has been made by Torrens Transit Services Pty Limited (Torrens). The title of the agreement is the Torrens Transit Services Pty Ltd, Transport Workers Union and Bus Drivers Enterprise Agreement 2013 (the Agreement).

[2] The application for approval is opposed by the Transport Workers’ Union of Australia (TWU). The TWU was a bargaining representative for the Agreement. The application, Form F16, also identifies six named individuals as bargaining representatives for the Agreement.

[3] The matter has been the subject of three telephone conferences. These occurred on 8 and 25 October and 1 November. At each of the conferences Torrens was represented by Ms E. Jenkin, solicitor. The TWU was represented by Mr E. Lawrie. Some of the individual bargaining representatives were also present during the conferences.

[4] Written submissions have been provided by both Torrens and the TWU. The parties have been given a copy of a synopsis and advice which I had requested to be provided by the Enterprise Agreements Unit within the Fair Work Commission (FWC). That material was based on a comparison of terms of the Agreement with those of the relevant award, the Passenger Vehicle Transportation Award 2010 (the PVT award).

[5] The parties were invited to provide further submissions addressing that advice. Torrens availed itself of that opportunity. In those further submissions Torrens requested that the matter be determined on the basis of the written material. In a telephone conversation with my Associate on 12 November Mr Lawrie indicated that the TWU did not wish to make any further submissions and he was content for the matter to be dealt with on the basis of the written material.

[6] The main thrust of the TWU’s objections is that the Agreement does not pass the Better Off Overall Test (the BOOT). Although the TWU initially raised some concerns about whether Torrens had properly engaged with its non-English speaking background employees and whether the Consultative Committee had been democratically elected, the union no longer presses those issues. There has been nothing raised to suggest that there is any concern about compliance with the procedural requirements of the Act. In this regard it should be noted that the statutory declaration in support of the application, Form F17, discloses that each of the requisite pre-approval steps in sections 180 and 181 was taken. It also discloses that a majority of employees who cast a valid vote in the ballot voted to approve the Agreement.

SUMBISSIONS OF THE TWU

[7] The TWU notes that it did not reach agreement with Torrens during the bargaining process and does not agree with the terms and conditions of the Agreement as they are inferior to those under the PVT Award. The union submits that the Agreement does not pass the BOOT and consequently the application should be dismissed.

[8] The TWU refers to the legislative provisions which relate to applications for the approval of enterprise agreements, particularly sections 186(2)(c) and (d), 189, 190 and 193. The union also refers to the decision of the Federal Court of Australia in Construction, Forestry, Mining and Energy Union v Deputy President Hamberger [2011] FCA 719 @ 91 and comments therein concerning the purpose of the BOOT. In addition, the TWU points to a decision concerning Canberra Building Services Pty Ltd Enterprise Agreement 2010. Although the citation provided was to the decision in [2010] FWA 1752, that decision relates to the requirements of section 181 of the Act. It would appear that the relevant decision is the one in [2011] FWA 318 which deals at length with the BOOT.

[9] The TWU notes that the BOOT is a global test requiring a balanced consideration of advantages and disadvantages to employees. It refers to the Full Bench decisions in Re:Armacell Australia Enterprise Agreement 2010[2010] FWAFB 9985 (Armacell) and Re: Solar Systems Pty Ltd Enterprise Agreement 2011 [2012] FWFB 6397 as setting out the required approach to applying the BOOT. The union submits that the proper approach is to identify the more beneficial entitlements under the Agreement, balance those against the identified disadvantages and reach an overall view.

[10] The TWU identifies several aspects of the Agreement which it says are less beneficial to employees than the PVT Award. The first concerns the ordinary hours of work. Clause 7 of the Agreement expands the ordinary hours of work for certain groups of employees from the Award provision of 38 per week to an average of 40 or 41 depending on the group. The union submits that this reduces the benefits for those employees by denying them overtime penalty rates for the hours worked between 38 and 40 or 41. It says that the provisions in the Agreement have a direct negative impact on the majority of the workforce who fall into these groups.

[11] A second detriment is said to arise from clause 7.22 of the Agreement which provides for a maximum 12.5 hour spread of hours in any one day whereas clause 21.3 of the Award provides that ordinary hours, exclusive of meal breaks, must not exceed 10 in a day. The union notes that unpaid meal breaks in the Award are between 30 - 60 minutes whereas the Agreement provides for such breaks to be between 40 - 70 minutes.

[12] The next area of concern to the union is that the Agreement does not contain the classification descriptors which are in the Award. The TWU submits that, as a result, employees are unable to identify their appropriate grade and cannot ascertain the commensurate level of entitlements. It submits that the grade of each employee is essentially at the discretion of Torrens.

[13] The fourth aspect of the Agreement identified by the TWU is that it excludes penalty rates for overtime, weekends and public holidays. The union notes that, under the Agreement, overtime is paid only when an employee works more than their quarterly total of 416, 494 or 533 hours. This contrasts with the PVT Award where employees are entitled to overtime payments for any hours in excess of ordinary hours each day or for any hours worked in excess of 38 hours per week.

[14] The TWU submits that employees also suffer a detriment from the fact that, under the Agreement, any overtime payments are based on an aggregate rate rather than the hourly rate for each employee.

[15] The next area of concern raised by the union is the absence from the Agreement of allowances for first aid, driving articulated buses and meals when working overtime. The TWU also identifies that the Agreement does not provide for the payment of annual leave loading or for the additional week of annual leave for shift workers who are regularly rostered to work on Sundays and public holidays.

[16] The TWU submits that the terms of the dispute settlement procedure in clause 16 of the Agreement are more onerous for employees than the relevant Award provisions. The procedure in the Agreement provides that an employee must raise their issues with three separate levels of management before being able to bring it to FWC. The union says that this hinders a process which is intended to provide expedient and efficient outcomes.

[17] The union submits that employees who are subject to these identified disadvantages would not be better off overall than if the PVT Award applied. It refers to the list of terms and conditions in the Agreement which Torrens identifies in its Form F17 as being more beneficial than the Award. The union provides an analysis of this list as an attachment to its submissions.

[18] The TWU contends that, although the base rate of pay in the Agreement is higher than the relevant Award rates, the non-financial matters such as the dispute settlement process are so fundamentally disadvantageous to employees that no other terms and conditions could possibly offset them. Overall the Agreement does not pass the BOOT. The union notes that Torrens has not suggested that section 189 of the Act is relevant.

SUBMISSIONS OF TORRENS

[19] Torrens submits that the Agreement passes the BOOT. It relies upon the material in its Form F17 as well as its written submissions. The first set of those submissions responds to the material in the TWU Form F18. Torrens also provided a spreadsheet showing the rosters worked by relevant employees and comparisons between the Award and Agreement rates for those rosters. The second set of submissions specifically addresses a concern about a possible conflict between the National Employment Standards (NES) and the maximum number of weekly hours in the Agreement.

[20] Torrens submits that the spreadsheet shows that the rates in the Agreement are more beneficial for employees when compared to the rates in the PVT Award. Torrens says that the calculations demonstrate that the aggregate pay rate in the Agreement includes components for a certain amount of overtime and penalties which are spread across all hours worked. Torrens also says that, if the drivers were paid under the Award, its total payment for one week would be $76,148.26. In contrast the payment it will be obliged to make for one week under the Agreement is $87,931.92.

[21] Torrens submits that the TWU has mistaken the maximum length of shifts under the Agreement and notes that a straight shift has a maximum length of 9 hours 15 minutes, a reduction of 15 minutes on the equivalent provision in the existing agreement.

[22] Torrens submits that the absence of classification descriptors from the Agreement is of little consequence as the drivers are all paid at a rate which is higher than the highest rate in the PVT Award.

[23] Torrens submits that the aggregate wage rates in the Agreement include amounts for the articulated bus and meal allowances and for annual leave loading. It says that drivers are not trained for or required to provide first aid so the first aid allowance under the PVT Award is not relevant.

[24] Torrens submits that it understands that the TWU has received advice that the drivers do not meet the criteria or definition of shift workers for the purpose of receiving an extra week of annual leave.

[25] Torrens submits that the dispute settlement procedure in the Agreement is designed to facilitate the early resolution of disputes at the workplace level. It submits that the procedure, which is unchanged from the existing agreement, has worked well and no employee is worse off from a financial point of view.

[26] Torrens submits that there is no conflict between the NES and clause 7.1 of the Agreement which provides for certain groups of employees to be rostered to work an average of 41 hours per week. Torrens refers to section 62(1) of the Act which states that an employer must not request or require a full-time employee to work more than 38 hours in a week unless the additional hours are reasonable. It notes that section 62(3) sets out the criteria to be used to determine whether the additional hours are reasonable.

[27] Torrens submits that the case law establishes that contracting to work in excess of 38 hours per week does not of itself prevent approval of an agreement as long as the relevant NES safeguards are observed: ALDI Foods Pty Ltd v Transport Workers’ Union of Australia and another[2012] FWAFB 9398 at paragraph 41 (ALDI).

[28] Torrens provides references to several other agreements which have been approved by FWC and which provide for more than 38 ordinary hours each week. These include the existing agreement which applies to the relevant employees of Torrens. It notes that an important issue is whether employees are able to alter the arrangement of working more than 38 hours per week to meet a particular personal circumstance.

[29] Torrens submits that the Agreement permits employees to move to a part-time arrangement or to be engaged as an FT3 employee. An individual flexibility agreement could be utilised for a temporary change of circumstances.

[30] Torrens submits that the additional hours in the Agreement are reasonable and addresses the criteria in section 62(3). Firstly, it submits that the additional hours do not cause any risk to employee health and safety. The relevant group of employees already work an average of 41 hours per week under the existing enterprise agreement. Furthermore, these have been the standard hours in the business and the industry for many years. It has not experienced any significant injuries or propensity for injury due to employees working these hours. The relevant employees want to work these hours as it ensures them a higher weekly income. Shifts are constructed with health and safety considerations in mind including the Heavy Vehicle Driver Fatigue laws.

[31] Secondly, Torrens submits that the Agreement provides sufficient flexibility for employees to change their working arrangements to suit personal circumstances including family responsibilities. It submits that the present arrangements for these drivers are retained at their request.

[32] Thirdly, Torrens submits that the particular employees are well compensated for the additional hours. This is reflected in their higher hourly rate of pay which includes an overtime component. Torrens notes that all entitlements are based on this higher rate which is also paid while the employees are on leave. Superannuation contributions paid by Torrens are based on the higher rate.

[33] Fourthly, Torrens submits that the employees have been given ample notice of the requirement to work 41 hours per week. The arrangement has been in place for many years. Finally, Torrens submits that work in excess of 38 ordinary hours per week is not unusual in the public transport industry.

CONCLUSIONS

[34] Section 186 of the Act provides that FWC must approve an enterprise agreement if the requirements of the section and section 187 are met. Section 186(2) relevantly provides that FWC must be satisfied that the agreement has been genuinely agreed to by the employees covered by it, that its terms do not contravene section 55 and that the agreement passes the BOOT. I shall deal with each of these issues in turn.

[35] The issue of genuine agreement is dealt with in section 188. It requires FWC to be satisfied that the employer has complied with various procedural steps, that the vote of the employees has been conducted in accordance with, in this case, section 182(1) and that there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.

[36] Although the TWU had initially raised some issues about the bargaining process, it does not press those concerns. There is nothing before me to suggest that there has been any failing in relation to the procedural requirements of the legislation or the process or outcome of the ballot of employees. I do not consider that there are any other reasonable grounds for believing that the Agreement has not been genuinely agreed to by the employees. I am satisfied that the Agreement has been genuinely agreed to by the employees covered by it.

[37] The next issue to be considered is whether any of the terms of the Agreement contravene section 55 of the Act. Section 55 concerns the interaction between the NES and modern awards and enterprise agreements. It provides that such instruments must not exclude any provision of the NES. Subsection (4) permits the instruments to include terms that are ancillary or incidental to the operation of an entitlement under the NES and terms that supplement the NES provided that the effect of those terms is not detrimental to an employee when compared with the NES. Subsection (5) permits an enterprise agreement to include terms which have the same or substantially similar effect to provisions of the NES. Subsection (7) provides that, to the extent that a term of an award or agreement is permitted by subsections (4) or (5), the term does not contravene the section.

[38] In this matter the provision in the Agreement which could possibly contravene section 55 is the hours of work clause, clause 7, in particular the provision in clause 7.1 that full-time employees who were employed prior to 1 July 2010 will be rostered to work an average of 41 hours per week.

[39] As noted in the submissions of Torrens the relevant part of the NES is contained in section 62 of the Act. That relevantly provides:

“An employer must not request or require an employee to work more than the following number of hours in a week unless the additional hours are reasonable:

(a) for a full-time employee—38 hours; or

...

(2) The employee may refuse to work additional hours (beyond those referred to in paragraph (1)(a) or (b)) if they are unreasonable.

(3) In determining whether additional hours are reasonable or unreasonable for the purposes of subsections (1) and (2), the following must be taken into account:

(a) any risk to employee health and safety from working the additional hours;

(b) the employee’s personal circumstances, including family responsibilities;

(c) the needs of the workplace or enterprise in which the employee is employed;

(d) whether the employee is entitled to receive overtime payments, penalty rates or other compensation for, or a level of remuneration that reflects an expectation of, working additional hours;

(e) any notice given by the employer of any request or requirement to work the additional hours;

(f) any notice given by the employee of his or her intention to refuse to work the additional hours;

(g) the usual patterns of work in the industry, or the part of an industry, in which the employee works;

(h) the nature of the employee’s role, and the employee’s level of responsibility;

(i) whether the additional hours are in accordance with averaging terms included under section 63 in a modern award or enterprise agreement that applies to the employee, or with an averaging arrangement agreed to by the employer and employee under section 64;

(j) any other relevant matter. ...”

[40] There is an obvious inconsistency between clause 7.1 of the Agreement and section 62(1) however, as the ALDI decision makes clear, that of itself is not an impediment to approval of the Agreement. The key issue is whether the employees to whom clause 7.1 applies are able to alter the arrangement to meet their particular personal circumstances.

[41] I am satisfied that the Agreement does contain suitable provisions for that purpose. Employees are able to move to different types of working arrangements either on a temporary or permanent basis. Furthermore, the dispute settlement procedure in the Agreement provides for arbitration by FWC in relation to any disputes arising out of the Agreement or the NES which would include any issue about whether working hours were reasonable in a particular circumstance. I am satisfied that the Agreement does not contravene section 55.

[42] The next issue is whether the Agreement passes the BOOT. The nature of the BOOT is set out in section 193 of the Act. That section relevantly provides that:

“(1) An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if 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.

...

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

(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, 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.”

[43] As identified in the Armacell decision, the BOOT is a global test which requires a balanced consideration of advantages and disadvantages for employees in the respective instruments and an overall assessment of whether the employees would be better off under the Agreement.

[44] It is clear that employees will suffer some disadvantages under the Agreement than would be the case if the PVT Award were to apply to them. Torrens concedes as much in its Form F17. The Agreement is less beneficial than the Award in terms of the ordinary hours of work for FT1 and, potentially, FT3 employees. They are required to work ordinary hours which are greater than those in the Award and overtime rates do not apply as they do in the Award. Furthermore, the overtime rate for weekdays is a flat rate as opposed to the Award which provides for double time after three hours. The Saturday overtime rates are also lower than those in the Award.

[45] The Agreement does not contain any penalty rate for working before 6 am or after 7 pm whereas the Award provides a 15% loading for employees required to work at those times. The Agreement does not contain any annual leave loading or meal or articulated bus allowances. I note that the first aid allowance appears to be irrelevant to the employees even if the Award applied. I am satisfied that the length of shifts under the Agreement do not exceed those under the Award.

[46] The rates of pay under the Agreement compensate for all of the disadvantages. The spreadsheet provided by Torrens demonstrates that the Agreement will produce a more favourable outcome for employees under each of the rosters than if the PVT Award was to apply. That outcome has been confirmed by the analysis undertaken by the Enterprise Agreements Unit referred to earlier.

[47] The TWU has identified the absence of classification descriptors in the Agreement as providing a less beneficial condition to employees. I note that the existing agreement also does not contain any descriptors. I agree that the absence of descriptors could be a disadvantage for employees in certain circumstances. However the classification levels in the Agreement, FT1, FT2, FT3 and PPT, are based upon the hours and rosters which are worked rather than on any differences in skills or duties. In this limited situation I am satisfied that the absence of descriptors in the Agreement does not impact upon employees to their disadvantage.

[48] The TWU also identifies the dispute settlement procedure in the Agreement as being less beneficial to employees than the procedure in the PVT award. The Award provides for discussion at the workplace between an employee and the relevant supervisor and then between the employee and more senior levels of management as appropriate.

[49] The Agreement requires that initial discussions be between an employee and the Depot Operations Manager. If that is unsuccessful the employee and their representative have discussions with the Operations Manager, who I assume is the next level of management. The employee may then choose to proceed through the union or the Consultative Committee, a representative of which holds discussions with the Area/General Manager.

[50] Although it could be said that the Agreement provides for an extra level of workplace discussion before a dispute is brought to FWC, I do not consider that it is less beneficial for employees.

[51] I have identified both benefits and disadvantages for employees under the Agreement. I am satisfied that on an overall assessment the benefits more than offset any disadvantage when compared with the PVT Award. As a consequence, I am satisfied that the Agreement passes the BOOT.

[52] I am satisfied that each of the requirements of sections 186, 187 and 188 of the Act as are relevant to this application have been met.

[53] The TWU has given notice under section 183 that it wants the Agreement to cover it. In accordance with section 201(2) I note that the Agreement covers the organisation.

[54] The Agreement is approved and in accordance with section 54, will operate from 22 November 2013. The nominal expiry date is four years from the date of approval.

COMMISSIONER

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