Trojan Recruitment Group

[2015] FWCA 1118

[2015] FWCA 1118

FAIR WORK COMMISSION

DECISION

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

Trojan Recruitment Group
(AG2014/8989)

TROJAN WORKFORCE LABOUR SOLUTIONS AGREEMENT 2014

Miscellaneous
COMMISSIONER BULL	SYDNEY, 17 FEBRUARY 2015

Application for approval of a single-enterprise agreement, incorporation of modern awards, BOOT and genuinely agreed requirements.

[1] On 12 September 2014, an application was made by the Trojan Recruitment Group Pty Ltd for the approval of an enterprise agreement. The applicant is in the labour hire and recruitment industry.

[2] The Agreement is titled the Trojan Workforce Labour Solutions Agreement 2014 (the Agreement) and has a nominal expiry date of 17 August 2018. The Form F17 Employer’s Statutory Declaration completed by a Mr Peter Melki, the applicant’s Chief Executive Officer states at 2.2 that the Agreement will cover all employees engaged as casual labour hire employees to perform work at any Trojan Recruitment Group client site in Australia.

Employers to be covered by the Agreement

[3] Despite the F16 at 2.3 stating only one employer will be covered by the Agreement, at clause 3.1 of the Agreement the following companies are listed as being in the Trojan Recruitment Group and covered by the Agreement:

● Trojan Workforce No 4 Pty Ltd
● Industrial Services Parramatta Pty Ltd
● Industrial Services Alexandria Pty Ltd
● Industrial Services Wyong Pty Ltd
● Industrial Services Newcastle Pty Ltd
● Corus People Solutions Pty Ltd
● Workforce Staff Solutions Pty Ltd

[4] The applicant’s representative subsequently advised that the entities listed above are engaged in a joint venture or common enterprise and are related bodies corporate. 1

[5] Section 172(2) of the Fair Work Act 2009 (FW Act) provides that an employer, or two or more employers that are single interest employers, may make an enterprise agreement (a single-enterprise agreement). Section 172(5) states that two or more employers are single interest employers where certain criteria are met:

“Single interest employees

172(5) Two or more employers are single interest employers if:

(a) The employers are engaged in a joint venture or common enterprise; or

(b) The employers are related bodies corporate; or

(c) The employers are specified in a single interest employer authorisation that is in operation in relation to the proposed enterprise agreement concerned.”

[6] In respect of what is meant by a common enterprise, Mason J in Australian Softwood Forests Pty Ltd v Attorney-General (NSW); Ex Relatione Corporate Affairs Commission (1981) 2, at paragraph 133, stated:

“An enterprise may be described as common if it consists of two or more closely connected operations on the footing that one part is to be carried out by A and the other by B, each deriving a separate profit from what he does, even though there is no pooling or sharing of receipts of profits. It will be enough that the two operations constituting the enterprise contribute to the overall purpose that unites them. There is then an enterprise common to both participants and, accordingly, a common enterprise.”

[7] The employers engage casual employees in the labour hire industry. As such, I am satisfied that the employers are single interest employers pursuant to s.172(5)(a)(b) of the FW Act, in that they are employers engaged in a common enterprise and or are related bodies corporate.

BOOT

[8] It is noted that the following is stated in the Agreement in regard to casual employment:

“12.1 When you are on Assignment, you are always employed as a Casual Employee; a Casual Loading is paid as defined in the relevant modern award as noted in “Schedule A” of the Agreement. The loading is in lieu of most leave entitlements in accordance with the legislation.

14.1 Once you are on our Candidate Register, we work hard to match you with one of our Clients for an Assignment Opportunity.

15.3 Please note that on-hire employment suits certain people at certain periods of their working life; if you are seeking absolute certainty and guaranteed permanent employment right now then on-hire employment may not be suitable.

15.4 We do our best to make sure you are on an Assignment all the time but we cannot guarantee Assignments will always be available. For this reason, Casual Employment is the only form of employment we can enter into with an on-hire employee.”

[9] At 2.10 of the F17, it states that 1,006 employees will be covered by the Agreement of which 187 participated in the voting process, and of whom 178 voted in favour of making the Agreement.

[10] In approving an enterprise agreement the Commission must be satisfied the requirements of the s.186 are met. Section 186(2)(d) provides that the Commission must be satisfied the enterprise agreement passes the better off overall test (BOOT). The nature of the BOOT is set out in s.193 of the FW Act. Section 193 provides that:

“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.

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 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, 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.”

[11] The application of the BOOT was considered in Re McDonald’s Australia Enterprise Agreement 2009 3. The Full Bench determined that the role of the Commission includes facilitating the making of enterprise agreements:

“[13] The appellants emphasised the facilitative aspects of these objectives. We agree that these objectives place the primary role for making enterprise agreements on the parties to those agreements and their representatives and that the role of Fair Work Australia (FWA) includes facilitating the making of enterprise agreements. In general we believe that the requirements for approval should be considered in a practical, non-technical manner and that reasonable efforts should be made to clarify matters with the parties and consider undertakings to clarify or remedy concerns to the extent that these may be available under s.190 of the Act.” 4

[12] In Armacell Australia Pty Ltd and Others 5a Full Bench of the Fair Work Commission said:

“The BOOT, as the name implies, requires an overall assessment to be made. This requires 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.”

[13] The relevant awards for the purposes of assessing whether the Agreement passes the BOOT are the modern awards incorporated into the Agreement. Clause 7.2 of the Agreement states that where there is any inconsistency between the incorporated modern awards and the Agreement the terms of the Agreement are to apply. Clause 7 reads as follows:

“7 Relationship to the modern awards and the National Employment Standards

7.1 This Agreement incorporates the terms of the modern awards listed in Schedule A as in force at the date this Agreement commenced operation and as amended from time to time and the National Employment Standards.

7.2 Where there is any inconsistency between the term in this Agreement and a term of the applicable modern award, the term in this agreement shall prevail to the extent of the inconsistency.”

[14] The Agreement itself does not contain any classifications or wage rates. At clause 11 Rates of Pay of the Agreement it states:

“11.1 Employees will be paid the applicable rate of pay for work performed for their classification as derived and defined in the relevant modern award listed in Schedule A.

11.2 The rate of pay will be increased in accordance with the national minimum wage order made in the annual wage review by the Fair Work Commission effective from 1 July each year for the duration of this Agreement.

[15] Against the list of modern awards in Schedule A is a column headed:

“Excluded Clauses, provided that minimum engagement rules are not intended to be excluded and therefore still apply.”

[16] There are a number of modern awards listed in Schedule A where the provisions relating to casuals are excluded.

[17] Under the column titled “Included Clauses”, a number of awards are listed as including a Trojan Flexibility Allowance of 1% of ordinary hours which is payable generally after a specified period of time. The period of time relates to when the modern award would otherwise provide a casual employee with the right to elect to become a permanent employee 6 or has a minimum period for the employment of casuals.7

[18] The applicant submitted that it is not commercially feasible to ever offer an on hire casual employee permanent employment. 8 This is accepted as an inherent feature of the labour hire industry.

[19] At 3.4 of the F17 it states that the provision of an additional 1% loading on ordinary hours paid where employees would otherwise be entitled to become full time or part time or have the right to choose to become full time/part time is a more beneficial term than exists under the relevant reference award for the purposes of the BOOT.

[20] In the applicant’s written submissions of 28 October 2014, it was submitted “that the absence of the right to request conversion is a matter which should be considered as neutral when assessing the BOOT”.

[21] Even accepting that a 1% loading paid to casual employees in lieu of the entitlement referred to above is more beneficial than the relevant award, the Agreement provides no benefit above the relevant reference award for casual employees not entitled to the 1% loading.

[22] On 7 October 2014 the Commission conducted a telephone conference with the Applicant and their representative for the Commission to understand how the Agreement could satisfy the various statutory approval requirements. At the end of the telephone conference the applicant was asked to provide further information on the coverage of the Agreement and how employees are better off overall, particularly where they do not receive the 1% casual conversion payment.

[23] On 28 October 2014 correspondence was received on behalf of the applicant from the Australian Industry Group which contained an undertaking in relation to the BOOT.

[24] The employers provided an undertaking that they will make an additional payment of $0.01c per hour to all employees’ hourly rate of pay contained in the awards incorporated into the Agreement. It was submitted that this will satisfy the BOOT. Although purely token in nature, the undertaking provides a benefit over and above the relevant reference awards.

[25] The Agreement’s dispute resolution procedure at clause 10 of the Agreement provides that if a complaint/dispute under the Agreement or in respect of the National Employment Standards is not resolved a party can seek the assistance of the Fair Work Commission by means of conciliation/or mediation but not arbitration. Where a modern award provides that a dispute may be resolved through arbitration this would appear to provide a term that is more beneficial for employees.

[26] The employer representative submitted at a Commission conference held on the 20 January 2014 that as the clause is agreed it cannot provide a disadvantage to employees. All agreements that come before the Commission for approval have been agreed between the parties, this cannot detract from a term or condition being less beneficial than the relevant reverence instrument.

Fairly Chosen

Section 186(3) of the Fair Work Act 2009 (the Act) provides that the Commission must be satisfied that the group of employees covered by the Agreement was fairly chosen.

[27] The employer’s statutory declaration states that the Agreement covers all employees engaged as casual labour hire to perform work at any Trojan Recruitment Group client site in Australia.

[28] Having employees vote on an Agreement covering classifications they are not employed in does not result in a failure of the requirement under s.186(3) of the Act for the employees covered by the Agreement to be “fairly chosen”. (See Cimeco Pty Ltd v Construction, Forestry, Mining and Energy Union and others 9and John Holland Pty Ltd v Construction, Forestry, Mining and Energy Union10)

[29] In Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia - Electrical, Energy and Services Division - Queensland Divisional Branch; "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)-Queensland Branch v Main People Pty Ltd 11 the Full Bench stated:

“[18]It is in the nature of the scheme established by the FW Act that (a majority of) the employees employed at the time an enterprise agreement is made can agree to terms and conditions of employment that will then bind future employees employed under the terms of that agreement. Nor is there anything in the FW Act to prevent employees voting to approve an agreement that will affect employees in classifications or geographic locations other than their own (unless a relevant scope order has been made).”

[30] All employees eligible to vote at the time were said by the applicant to have been provided with the opportunity to do so. The employees covered by the Agreement are organisationally distinct in that they are the applicant’s casual on-hire employees. On this basis, the group of employees covered by the Agreement was fairly chosen.

Genuinely Agreed

[31] In addition to the Commission being satisfied that the group of employees covered by an agreement was “fairly chosen” the Commission must be satisfied that the agreement was also “genuinely agreed to” by the employees covered by the agreement. These are separate and distinct tests.

[32] The genuine agreement requirement expressed at s.186(2) of the Act requires that an enterprise agreement must be “genuinely agreed” to by employees covered by the agreement. 12

[33] At Schedule A of the Agreement, the incorporated modern awards are listed and the preamble to the list states:

“This list of modern awards reflect those that currently apply and cover employees as defined in clause 3 of this Agreement and those that Trojan may apply in the foreseeable future. (My underline)

[34] Section 188 sets out a “non exhaustive” 13 list of the matters for the Commission to consider when determining whether an enterprise agreement has been “genuinely agreed” by employees covered by the agreement. Sub section 188(c) refers to there being “no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.”

[35] The Explanatory Memorandum to the Fair Work Bill 2008 (EM) states at Item 824:

“... Note that where an agreement covers a large number of classifications of employees in which no employees are actually engaged there may be a question as to whether the agreement has been genuinely agreed – see clause 188.”

[36] The fact that a large number of classifications of employees in industries in which no employees are actually engaged is incorporated into the Agreement must be given due weight having regard for all the relevant circumstances and would fall into the category of whether there are reasonable grounds for believing that the Agreement has not been genuinely agreed to by employees as per s.188(c).

[37] For example a situation where the employer wishes to have an agreement to cover airline pilots and currently employs only cleaners who vote on an enterprise agreement that covers cleaners and airline pilots may raise an issue as to whether the agreement was “genuinely agreed”. This subject was traversed in more detail in McMah Pty Ltd T/A Men at Work Labour Hire (AG2014/7537).

[38] The Agreement initially incorporated the Commission’s 122 modern awards. The need for the employers to incorporate all the modern awards was explained on the following basis by the applicant:

“As noted in Conference, the Trojan business has traditionally provided on hire casuals in the blue collar industrial sectors. However, as with any labour hire company, Trojan is in the business of constantly seeking out commercial opportunities which are premised on diversifying its operations. In 2012, Trojan engaged casual employees in 21 different industries and in 2013 this had increased to 28 industries which has remained the case in 2014. ... The trend clearly indicates further diversification of its business model and constant business evolution. As part of the organisation’s strategic growth plan Trojan seeks to further diversify its operations and service offerings in untapped industries and seeks to double the size of the business over the next five years.” 14

[39] Reference was also made to the previous enterprise agreement which incorporated all modern awards.

[40] From the submissions of the applicant, it is clear is that the employees voting for the Agreement were employed in industries that do not cover the entire range of the 122 modern awards.

[41] On 22 December 2014, the Commission wrote to the applicant’s representative regarding the Agreement incorporating all 122 modern awards of the Commission and concern that the applicant did not employee labour which would currently cover all 122 modern awards.

[42] On 20 January 2015, a conference was conducted by the Commission in attempt to resolve issues relating to the coverage of the Agreement and the requirement for the Commission to be satisfied that the Agreement was genuinely agreed to.

[43] On 6 February 2015, an undertaking to reduce the list of modern awards incorporated into the Agreement as per Schedule A was received. Based on the undertaking to reduce the Agreement’s coverage, I am satisfied that the Agreement has been genuinely agreed to by the employees.

[44] At s.180(2) of the FW Act the employer is required to take all reasonable steps to ensure that during the access period employees who will be covered by the Agreement are given a copy of any material incorporated by reference in the Agreement. While there was no evidence that employees were directed to the incorporated modern awards, pursuant to the Full Bench decision in McDonald's Australia Pty Ltd v Shop, Distributive and Allied Employees’ Association 15, the modern awards are in the “public domain”, as such, the employers’ obligations are met.

Undertakings

[45] Where the Commission has a concern that an agreement does not meet the requirements set out in s.186 and s.187 of the FW Act including that the agreement does not pass the BOOT, s.190 provides the employer an opportunity to provide a written undertaking aimed at meeting those concerns see Re BUPA Care Services. 16

[46] The employers have provided an undertaking for an additional payment of $0.01c per hour to all employees hourly rate of pay contained in the awards incorporated into the Agreement and a further undertaking which reduced the Agreement’s coverage.

[47] The undertakings are not so substantial that if asked to vote again the employees who voted would not approve the Agreement. I am therefore satisfied that the undertakings do not result in a substantial change to the Agreement as per s.190(3)(b) of the Act.

[48] These undertakings are taken to be a term of the Agreement. A copy of the undertakings are attached at Annexure A.

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

[50] The Agreement is approved. In accordance with section 54(1), the Agreement will operate from 24 February 2015. The nominal expiry date of the Agreement is 17 August 2018.

COMMISSIONER

Annexure A

 1   Correspondence from Ai Group 28 October 2014

 2 148 CLR 121.

 3   [2010] FWAFB 4602.

 4   Re McDonald’s Australia Enterprise Agreement 2009[2010] FWAFB 4602 at [13].

 5   [2010] FWAFB 9985 at [41].

 6   Asphalt Industry Award 2010 at 10.4(e) provides for an election to full or part time employment after 6 months as a casual

 7   Dredging Industry Award 2010 at 10.4 casuals are employed for less than 4 weeks

 8   Applicant’s written submissions of 28 October 2014 at page 4

 9   [2012] FWAFB 2206 at para 38

 10 [2014] FCA 286. at paras 34, 37 and 40

 11   [2014] FWCFB 8429.

 12   Note 1 in s186(2) states that reference should be made to s.188 for the meaning of “genuinely agreed”.

 13   See Item 793 of the Fair Work Bill 2008 Explanatory Memorandum.

 14   Applicant’s written submissions of 28 October 2014

 15   [2010] FWAFB 4602

 16   BUPA Care Services v P & A Securities Pty Ltd as trustee for the D’Agostino Family Trust T/as Michel’s Patisserie Murwillumbah and others[2010] FWAFB 2762 at (49).

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