United Security Enforcement Corp Pty Ltd
[2020] FWC 2264
•12 MAY 2020
| [2020] FWC 2264 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
United Security Enforcement Corp Pty Ltd
(AG2019/4172)
COMMISSIONER WILLIAMS | PERTH, 12 MAY 2020 |
Application for approval of the United Security Enforcement Corp Pty Ltd ABN 56 087 005 843 Enterprise Bargaining Agreement 2019.
[1] This decision concerns an application for approval of an enterprise agreement known as the United Security Enforcement Corp Pty Ltd ABN 56 087 005 843 Enterprise Bargaining Agreement 2019 (the Agreement).
[2] The application was made on 1 November 2019 pursuant to section 185 of the Fair Work Act 2009 (Cth) (the FW Act). It has been made by United Security and Enforcement Corp Pty Ltd (the Applicant). The Agreement is a single-enterprise agreement.
[3] The application was allocated to the Commission as currently constituted on the 7 November 2019.
[4] One of the general requirements, provided for in section 186 of the FW Act, which must be satisfied for the approval of an enterprise agreement, is that the agreement passes the better off overall test. 1
[5] Section 193 of the FW Act prescribes that an enterprise agreement passes the better off overall test (the BOOT) if the Commission 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] In this case the Applicant’s form F17 - Employers statutory declaration in support of an application for approval of an enterprise agreement (the Applicant’s statutory declaration) states the Applicant thinks the Agreement does not pass the BOOT but there are exceptional circumstances the Commission should consider when deciding whether approving the Agreement would not be contrary to the public interest.
[7] The Applicant’s statutory declaration calls up section 189 of the FW Act, set out below, which gives the Commission the discretionary power to approve an enterprise agreement if the only reason for the Commission not approving the enterprise agreement is that the Commission is not satisfied the agreement passes the BOOT and the Commission is satisfied that because of exceptional circumstances the approval of the enterprise agreement would not be contrary to the public interest.
“189 FWC may approve an enterprise agreement that does not pass better off overall test—public interest test
Application of this section
(1) This section applies if:
(a) the FWC is not required to approve an enterprise agreement under section 186; and
(b) the only reason for this is that the FWC is not satisfied that the agreement passes the better off overall test.
Approval of agreement if not contrary to the public interest
(2) The FWC may approve the agreement under this section if the FWC is satisfied that, because of exceptional circumstances, the approval of the agreement would not be contrary to the public interest.
Note: The FWC may approve an enterprise agreement under this section with undertakings (see section 190).
(3) An example of a case in which the FWC may be satisfied of the matter referred to in subsection (2) is where the agreement is part of a reasonable strategy to deal with a short term crisis in, and to assist in the revival of, the enterprise of an employer covered by the agreement.
Nominal expiry date
(4) The nominal expiry date of an enterprise agreement approved by the FWC under this section is the earlier of the following:
(a) the date specified in the agreement as the nominal expiry date of the agreement;
(b) 2 years after the day on which the FWC approved the agreement.”
[8] The Applicant’s statutory declaration explains the exceptional circumstances are as follows:
“The agreement is based on a current agreement(s) already operating. Very few operators in W.A. in particular, but also in other States can get work as they cannot compete with these agreements. The workers who are a party to this agreement also work for other operators and get paid less than the amount offered in this agreement. The bottom line for our company and these workers is if we are unable to secure this agreement, we will have no business, and the workers will have no work, or our current work will be obtained by one of the companies mentioned above, and the workers will be paid this rate or less anyway. The workers know the position fully and are happy to talk to Fair Work if contacted.”
[9] The Commission held a conference with the Applicant and their representative Mr Glenn Hutchinson (Mr Hutchinson) on 20 December 2019. At the conference, for information, the Commission provided the Applicant with a copy of a relevant prior decision of the Commission, The Andrew Crawford Group Pty Ltd T/A Crawford Security and Investigations (the Crawford Security Decision) 2, which concerned a similar application.
[10] Subsequently on 17 January 2020, the Applicant advised the Commission that they would like to continue with the application.
[11] Consequently, on 24 January 2020 the Commission issued a notice of listing for a hearing to be held on 19 February 2020.
[12] The Applicant in compliance with the Commission’s directions filed their materials in support of the application which included a number of supporting letters from the Applicant’s employees.
[13] At the hearing the Applicant was represented by Mr Hutchinson and Ms Shoana Scully, a Director of the Applicant.
Submissions
[14] The Applicant was first Registered on the 02/10/2009.3
[15] The Applicant works in the security industry, primarily crowd control. The Applicant also has contracts for static guards and mobile patrols. The Applicant is licensed to do cash in transit, though these only form a small part of its business.4
[16] The award covering the Applicant’s workers is the Security Services Industry Award 2010 [MA000016] (the Security Award).
[17] The Applicant lodged an application for approval of the Agreement on 1 November 2019 and the Agreement did not meet the requirements of the BOOT.
[18] The Agreement is for casual workers only.
[19] The rate being offered excludes all allowances, and penalties in relation to overtime hours, weekends and public holidays.
[20] The Applicant has seen a marked decline in their business turnover, profit and employees’ number.5
[21] It is submitted the decline is directly related to the following factors:
• Adverse economic indicators.6
• Agreements approved by the Commission that do not meet the requirements of the BOOT.7
• The carryover of Work Choices agreements into the Fair Work system that do not meet the BOOT.8
• Sham Contracting.9
• The use of overseas students by operators avoiding award, and statutory government requirements such as superannuation, PAYG, Payroll Tax, Long Service Leave and Workers Compensation.10
[22] The Applicant submits the current system as it stands creates an unlevel playing field, not allowing the Applicant to compete for contracts at a rate that allows it to pay its workers as required under the Security Award and make a fair return for the assets employed.
[23] The current system exposes the Applicant to the significant fines and penalties if it chooses to match the contract price of services to clients as it would be required to significantly underpay it workers in most cases.11
[24] It is further submitted the situation has also arisen because of the inconsistent decisions made by the Commission when approving enterprise bargaining agreements, which has in turn undermined the entitlements of the workers, and the commercial competitive ability of the Applicant.
[25] The employees who were a party to the Agreement are aware of the environment that the Applicant operates in and are prepared to be a party to the Agreement being submitted for approval. Four employees have submitted a statement to the Commission in support of the application.12
[26] The Applicant says any future employees will be supplied with a copy of the Agreement and are not forced to sign it or work for the company.
[27] The Applicant notes the Agreement is for a period of two years from the date of approval, not four years as applied to normal agreements.
[28] The Applicant readily acknowledges that Agreement does not meet the BOOT.
[29] The employees readily acknowledge that the Agreement does not meet the BOOT.
[30] The Applicant maintains that they will not be commercially viable in the near future (as remaining contracts come up for renewal) as they are no longer able to compete with entities that have agreements approved by the Commission that do not meet the BOOT but have been approved as if they have.13
[31] The Applicant relies on section 189(2) of the FW Act which allows the Commission to approve an enterprise agreement that does not pass the BOOT if it meets the public interest test.
[32] In relation to the public interest in the context of the FW Act the Applicant refers to the the Crawford Security Decision14 of Senior Deputy President O’Callaghan who expressed the following view at [12]:
“In my view, public interest considerations in the context of s.189 could involve deciding whether a term of an agreement sought to be approved under that provision, undermines or reduces entitlements in a modern award to the extent that members of the public whose employment is regulated by that award may have interests which are impacted by the approval of the agreement. It may also be the case that there is a public interest consideration in maintaining a level playing field among employees in a particular industry or sector. This is particularly so given that the Objects of the Act include at s.3(b):
“ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders.”
[33] The Applicant goes on to rely on a further definition of public interest offered in BlueScope Steel Limited T/A BlueScope Steel Limited Springhill Works v Mr Zaki Habak15where the Full Bench states:
“The application of the public interest test is a discretionary task involving a broad value judgment. The public interest may be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters.”
[34] The Applicant considers it is in the public interest to resolve the issue of fairness when applying the BOOT to agreements that have carried over from previous industrial relations systems, or even agreements that the Commission have approved since the implementation of the FW Act.
[35] It is submitted this is to be considered an issue of importance and general application.
[36] The Applicant’s and employees’ futures are dependent on the Applicant being commercially competitive. It simply goes without saying that if two services were offered, both of the same high standard, and one was at a substantially lesser cost than the other, then it is very likely that the entity providing the lesser cost service will supply the service.
[37] The Applicant submits it does require a broad value judgment.
[38] The Crawford Security Decision, it is submitted, at first instance manifests an injustice and is counter intuitive.
[39] The Applicant asks the Commission to take a broader view and refers to the Fair Work Bill 2008 second reading speech to the House of Representatives on 28 of November 2008.
[40] The Applicant refers to the comments of the Hon. Julia Gillard who states “[t]he bill being introduced today is based on the enduring principle of fairness while meeting the needs of the modern age. It balances the interests of employers and employees and balances the granting of rights with the imposition of responsibilities.”16 The paragraph continues on: “[t]he Bill delivers:
i. A fair and comprehensive safety net of minimum employment conditions that cannot be stripped away.
ii. A system that has at its heart bargaining in good faith at the enterprise level, as this is essential to maximise, workplace cooperation, improve productivity, and create rising national prosperity.
iii. Protections for unfair dismissals for all employees.
iv. Protection and hope for a better future for the low paid.
v. A balance between work and family life: and
vi. The right to be represented in the workplace.”
[41] The Applicant believes that the intent of the FW Act is not being met in this instance, and that the balancing of the interest of the employer and employee has failed. It could do nothing else but fail when there is such a disparity in the pay rates for the employee.
[42] The various agreements accompanying this application undermine and reduce entitlements in a modern award, to the extent that members of the public whose employment is regulated by that award are impacted by the approval of the agreements.
[43] Agreements, particularly the ones out of Western Australia are having a significant impact on the employees who rely on the security industry for employment. The Applicant points out security is specifically mentioned in the reading of the Fair Work Bill 2008 second reading speech as being low paid.17
[44] Those agreements, it is argued, also keep the true rates of service delivery low, forcing employers to risk getting caught by the Fair Work Ombudsman (FWO) for underpaying the Security Award rates, even though the rate paid may be well above rates in many of the approved or pre-Fair Work system agreements, and agreements already approved by the Commission. Being caught by the FWO, can lead to large back payments and significant fines. In many cases leading to financial hardship or even liquidation of a business, which comes at a significant personal cost to the employer, and employees. In normal circumstances back payments and fines would be considered an appropriate measure, but as the environment stands at the moment it can only be considered as unreasonable, unfair, and unjust.
[45] The Applicant submits this has also led to a large underground business, particularly with overseas students, which has forced further financial pressure on the Applicant and their employees.18
[46] It is in the public interest to maintain a level playing field among employers in the security industry, if this is done, then by consequence a level playing field will be maintained among employees.19
[47] The Applicant also relies on the second reading speech of the Fair Work (Transitional Provisions and Consequential Amendments) Bill 2009.20
[48] It refers to page 3 of that second reading speech which states:
“The Bill includes sensible and practical transition provisions for movement into the new system, and covers issues including:
Preservation of the existing workplace instruments and setting out how these interact with the new system, including the NES and modern awards.”
[49] The Applicant suggests that the intent in the second reading was that previous workplace instruments were to interact with the modern awards, not be separate from them.
[50] Page 5 of the same speech reads:
“Secondly the Bill provides for the application of National Employment Standards and Minimum Wages to all national employees from the 01 January 2010, including those covered by instruments before the commencement of the new system.”
[51] Further on page 6 it reads:
“In addition, the Bill will provide that employees must receive at least the minimum pay contained in a modern award from 01 January 2010.”
[52] The Applicant’s position is the above is clear in its intent that employees must receive at least the minimum “Pay” contained in a modern award, as distinct from the “Minimum Rate of Pay”, or the “Minimum Wages” as it is described in many awards.
[53] For instance, under the Security Award, if a Level 1 worker was to work 38 hours on the Minimum Wage of $832.20 per week, and let’s say the worker worked 3 hours @1.5 and 2 hours @2.0, in overtime then all up his wage would be $832.20 + $186.15 for the overtime. Therefore, under the requirements of the Security Award the “Minimum Pay” the worker should receive is a gross pay of $1018.35. The “Minimum Pay” is made up of ordinary time, and overtime, and it is paid at the minimum wage rate as described in clause 14.1 of the Security Award.
[54] The Applicant submits there is nowhere in the FW Act that says penalties and allowance do not apply to pre-Fair Work agreements.
[55] It is inconceivable that during the process of creating the FW Act that instruments prior (which can go back as far as 1991) were excluded to the extent that they could give one employer a competitive advantage over another for extended periods of time. To its greatest extent, from 1991 to 2020 is 29 years.
[56] It is the Applicant’s opinion that the FW Act has been wrongly interpreted, and that the minimum pays (i.e. the amount the worker receives) should have been adjusted through the transitional period, in the same manner as the increase in the casual loading, so that at the end of that 5-year period, the “Minimum Pay” would be the same as the relevant modern award.
[57] However, the Applicant submits if the legislation is completely messed up, and this chasm between competing entities has been created, then this has to be regarded as an “exceptional” circumstance, and it would not be contrary to the public interest, as a precedence and expectation has already been set by the failure of the legislation to protect workers (and employers) from the inequities the pre-Fair Work instruments, and instruments approved that do not meet the BOOT, would present.
[58] The failure of the system cannot be and should not be the reason why the Applicant’s business fails or is set up to fail.
[59] The Applicant refers to two agreements in particular in the form F16 Application provided with the Applicant’s lodgement; the first one being The National Security Services Australia Enterprise Agreement 2014 (the National Security Agreement).21 That agreement has a nominal expiry date of 11March 2019, and the other Labourplus Security Staff Agreement 2007 (the Labourplus Agreement)22, which has a nominal expiry date of March 2012.
[60] The Applicant says National Security Services Australia is a related entity to Labourplus. In relation to the Labourplus Agreement, a decision to terminate this agreement in the public interest was made on 24 December 2019 with the termination date being 1 July 2020. 23
[61] The likely scenario for this of course, is the workers that worked under the Labourplus Agreement will transfer to this new entity, and everything will operate normally as it has done in the past.
[62] Further evidence of the disparity the Applicant faces, is an agreement made by the Western Australian government through its Corporate Entity, The WA Sports Centre Trust t/a Venues West, and the Media, Entertainment and Arts Alliance, United Voice WA. On 26 March 2019, an agreement (the VenuesWest General Agreement 2019)24 was approved by the Western Australian Industrial Relations Commission (WAIRC) That agreement is a comprehensive agreement but was made to the exclusion of several “low paid” awards. VenuesWest is a government entity, all the awards below are State awards:
• Theatrical Employees Entertainment Sporting and Amusement Facilities (Western Australian Government) Award 1987;
• Miscellaneous Government Conditions and Allowances Award No A 4 of 1992;
• Restaurant, Tearooms and Catering Workers Award; and
• Cleaners and Caretakers (Government) Award 1975.
[63] Of particular interest to the Applicant in the VenuesWest General Agreement 2019 was the clause in relation to casuals.25
“13. 7 Casual Agreement
(a) Casual Employees shall receive a loading of 30% that shall apply in addition to the normal wage rate for all work performed. This loading will be in lieu of all leave, allowances, loadings, public holidays, and overtime rates which may apply to other Employees as specified within this Agreement.
(b) Casual Employees shall be employed for a minimum attendance of two hours except that:
(i) Employees required to take programs and/or fitness sessions may be paid the agreed rate for all work associated with the program or session and the minimum attendance provisions of this Agreement shall not apply.
(c) The contract of employment may be terminated by either party giving one hour's notice or payment in lieu of notice.
(d) After six months continuous service and on receipt of a written request from the casual employee, the status of casual employees who regularly work 10 or more hours a week shall be reviewed by the parties.”
[64] The Applicant attended a conference at the Commission on 20 December 2019. Accompanying the listing notice was the Crawford Security Decision. The Applicant concurs that both applications are similar in nature but disagree with Senior Deputy President O’Callaghan’s findings and decision.
[65] In particular:
“[24] The FW Act requires every member of the FWC to reach conclusions about the BOOT at the relevant test time. Those conclusions will generally consider each Commission member’s assessment of the information provided by the parties and the circumstances then applicable. Industry is, in my view, entitled to expect a significant degree of consistency, but there will be occasions when there are disparate conclusions relative to similar facts. Traditional hearing and appeal mechanisms are of only limited value in addressing disparate agreement findings in that, generally, the primary focus of the Applicant is on achieving approval of an agreement and there is often no party agitating for an alternative position.
…
[32] Consequently, if s.189(2) is applied so as to deliberately sanction an undermining of a modern award provision to facilitate commercial competition, it seems to me that approach is inconsistent with the function and objective of the modern award and must therefore be contrary to the public interest.”
[66] The Applicant again refers back to the Fair Work Bill 2008 second reading speech, by the Hon. Julia Gillard, which states: “The Bill being introduced today is based on the enduring principle of fairness while meeting the needs of the modern age. It balances the interests of employers and employees and balances the granting of rights with the imposition of responsibilities.”
[67] The principle of fairness includes the employer, not just the employee. The undermining of the modern award provisions has already occurred from the outset by the Commission not applying the law to pre-Fair Work instruments or alternatively if the Commission disagrees with the Applicant’s observations, then it can only be said that the system is not fair as intended. The unfairness then has been magnified by the fact the Commission has handed down further decisions that fly in the face of the Crawford Security Decision.
[68] The Applicant agrees that industry is entitled to expect a significant degree of consistency. It is fair to say that the Applicant’s application is consistent with past decisions. A further three agreements, all of a similar nature, and all approved after the Crawford Security Decision were included with this application.26
[69] The Applicant argues these agreements do not meet the BOOT but have been approved by the Commission. If the Applicant’s Agreement is not approved, the business is unlikely to survive, the workers will migrate to the security business that has the work, likely to be an agreement already approved by the Commission. The workers will be no worse off, as their rates of pay will not change, though they will not be the same as the Security Award because the Commission has allowed that to occur in one form or another.
[70] Further proof is offered by the approval of the VenuesWest General Agreement 2019. It is acknowledged that this is a WAIRC decision, but in the context of which we are talking, the rate of pay for the casual low paid industry workers would be $797.60 casualised at 130% ($27.28 per hour) from the 1 January 2020. Normal casualisation under the Western Australian industrial system is 20%.
[71] What that Applicant says is governments of all persuasions should not be trying to disadvantage the workers. If anyone was to agree to comply with a no disadvantage test or a BOOT, it is the government, as they are a party to the initial legislation. The union representing the workers in the VenuesWest General Agreement 2019 is the same union representing workers in the security industry and were a respondent to the decision to terminate the Labourplus Agreement. The current rate of pay for the workers under the Labourplus Agreement was $27.37. This is .09c per hour more than an agreement that was approved in March 2019 by the WAIRC. These agreements are comparable, and if you were to apply the same principle to the security Award, the casual rate (at 125%) is $27.3827 Furthermore, to demonstrate the unfairness of the Crawford Security Decision, the rates the applicant (Crawford Security and Investigations) were requesting in 2013 were $27 and $28 per hour. So here in 2020, a Western Australian government entity is paying a little over $27 per hour.
[72] In addition to that, the Applicant notes Crawford Security and Investigations went into liquidation on 30 July 2015. Given that in their submission to the Commission the company clearly explained it could not compete, this point, the Applicant says, was disregarded by SDP O’Callaghan.
[73] Furthermore, Crawford Security and Investigations had an agreement approved in 2014, with rates that could not be obtained in the real world. The Applicant asks how bad does it get before it becomes exceptional?
[74] In summary the Applicant says, an agreement that offers exactly the same methodology as a government agreement (the Labourplus Agreement), and offers a marginally higher rate, has been terminated by the Commission. The common thread in all this is the union, and the inconsistency of the system. On one hand they are respondents to terminate an agreement, and on the other they are parties to ensuring an agreement is approved with the same low rates, with the government for the same type of low paid jurisdiction.
[75] The Applicant seeks to highlight matters further, the VenuesWest General Agreement 2019 operates to the exclusion of several other awards, including the Theatrical Employees Entertainment, Sporting and Amusement Facilities (Western Australian Government) Award 1987 (AN160312). Within that award the following definitions apply to duties carried out at the VenuesWest venues.
“(10) Entertainment, Sporting and Amusement Events - shall mean and include any event to which a Public Audience is admitted to a facility controlled by the respondents.
(11) Fence Attendant - means an employee who performs Attendant duties as required to stop members of the public entering the racing track, playing arena or stage area.
(12) Gate Attendant - means an employee who performs Attendant duties as required on gates as nominated to control the flow of people, vehicles, animals or any other movements.
(13) Gate Keeper - means an employee who performs duties as for gate attendant with the added responsibility of collecting entrance fees.
…
(16) Parking Attendant - means an employee who directs vehicles where to park in a designated parking area.”
[76] The Applicant notes that the definitions of duties are duties currently carried out by crowd controllers.
[77] The Applicant says it is also interesting to note, that from the Labourplus termination decision 28 handed down on the 24 December 2019, it can be determined that the NPB P/L contract with VenuesWest concludes in December 2020.
[78] The Applicant suggests one could only be suspicious of the fact that those duties can now be brought in house under the VenuesWest General Agreement 2019, at a payrate slightly lower than the due to be terminated Labourplus Agreement.
[79] The Applicant argues if there was any entity that was capable of paying its workers the proper rate of pay, it is a company owned by the Western Australian government, that houses nearly all the premier sporting events in this state. Yet this entity is saying it cannot afford the award (albeit State) yet there is an expectation that small family owned companies such as the Applicant are to comply. If the Applicant does not comply the FWO is all too ready to come down on the company like a ton of bricks and ruin many lives and livelihoods into the bargain. Once again this goes against the original intent of the FW Act as it was presented in the second reading to parliament.
[80] In the Crawford Security Decision SDP O’Callaghan’s in his findings said “[i]ndustry is, in my view, entitled to expect a significant degree of consistency”. Yet, the Applicant submits there seems to be no consistency as after the Crawford Security Decision further decisions were handed down for agreements in the same industry.
[81] Many companies obtain labour through Labourplus. Now that the Labourplus Agreement is due to be terminated, these workers will simply start up through the National Security Agreement, which pays a marginally higher rate than the Labourplus Agreementand the VenuesWest General Agreement 2019. The companies that use this agreement also monopolise the security/events market in the metro area, making it impossible for companies like the Applicant to compete for business. It is not in the public interest to interfere with the free market to the extent that it suppresses competition. This is supported by a quote from ACCC Chairman Rod Sims in July 2018 29 who says “[w]e want everyone operating on an even playing field, with the opportunity of success or failure dependent on their merits, not artificial manipulation of the markets or any misleading of consumers”. The Applicant will be the loser, as the employee will simply obtain work with the companies that have been allowed to dominate because the system has allowed to proliferate by virtue of the transition for the pre-Work Choices systems to the Fair Work systems.
[82] The Applicant points out that it is not critical of Labourplus and the Labourplus Agreement, totally opposite as they are acting within the bounds of the law, and they are acting in exactly the same way as the Western Australian government and the union in the VenuesWest General Agreement 2019.
[83] The Applicant simply asks to be afforded the same opportunity.
[84] In conclusion the Applicant says the Fair Work Bill 2008 second reading speech emphasises the “enduring principle of fairness” and “balancing the interest of employers and employees.” SDP O’Callaghan of the Commission in the Crawford Security Decision expresses the need for a significant degree of consistency, yet there is none, as the same circumstances can apply, and different decisions given, as demonstrated by the different agreements referred to. Furthermore, the Western Australian State government’s own corporate entity and the union affiliates have agreed to a bundled casual rate to operate its own entities, which if the principles of the Crawford Security Decision were applied would not be approved.
[85] In the same case SDP O’Callaghan also expressed:
“[33]In reaching this conclusion I have also taken into account that if the Agreement is approved on the basis sought, it may form the foundation for other similar arguments by businesses seeking to remain competitive in this sector so as to substantially usurp the function of the modern award to set minimum employment conditions.”
[86] The Applicant submits refusing to approve something on the grounds that it may form the basis of similar arguments by business is not a reason to decline an application. This comment is like saying, well we know there is a major issue, we know the FW Act is deficient, we know the transition of pre-Fair Work instruments are problematic, and they will open up the floodgates. The Applicant says SDP O’Callaghan has erred in his judgement but is correct in respect of the fact that other businesses will use it as a basis of similar arguments. That’s the whole point, there are many businesses out there like the Applicant who are so confused by the inequities in the system they are breaching the system trying to compete and walking a tightrope of facing fines for breaches of the legislation. That is not fair nor in the spirit of the legislation. If the floodgates do open, and it comes to the attention of the unions and legislators, it is more likely a solution will be found.
[87] In the meantime, the Applicant wants to stay in business and be competitive, and the employees want to continue working with the Applicant. As the approval will only be for two years should the landscape change positively in that time then there is no reason a new agreement cannot be agreed upon at a later date.
The legislation
[88] The sections of the FW Act relevant to this particular application are set out below.
“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)).
Requirement that the group of employees covered by the agreement is fairly chosen
(3) The FWC must be satisfied that the group of employees covered by the agreement was fairly chosen.
(3A) If the agreement does not cover all of the employees of the employer or employers covered by the agreement, the FWC must, in deciding whether the group of employees covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.
Requirement that there be no unlawful terms
(4) The FWC must be satisfied that the agreement does not include any unlawful terms (see Subdivision D of this Division).
Requirement that there be no designated outworker terms
(4A) The FWC must be satisfied that the agreement does not include any designated outworker terms.
Requirement for a nominal expiry date etc.
(5) The FWC must be satisfied that:
(a) the agreement specifies a date as its nominal expiry date; and
(b) the date will not be more than 4 years after the day on which the FWC approves the agreement.
Requirement for a term about settling disputes
(6) The FWC must be satisfied that the agreement includes a term:
(a) that provides a procedure that requires or allows the FWC, or another person who is independent of the employers, employees or employee organisations covered by the agreement, to settle disputes:
(i) about any matters arising under the agreement; and
(ii) in relation to the National Employment Standards; and
(b) that allows for the representation of employees covered by the agreement for the purposes of that procedure.
Note 1: The FWC or a person must not settle a dispute about whether an employer had reasonable business grounds under subsection 65(5) or 76(4) (see subsections 739(2) and 740(2)).
Note 2: However, this does not prevent the FWC from dealing with a dispute relating to a term of an enterprise agreement that has the same (or substantially the same) effect as subsection 65(5) or 76(4)
187 When the FWC must approve an enterprise agreement—additional requirements
Additional requirements
(1) This section sets out additional requirements that must be met before the FWC approves an enterprise agreement under section 186.
Requirement that approval not be inconsistent with good faith bargaining etc.
(2) The FWC must be satisfied that approving the agreement would not be inconsistent with or undermine good faith bargaining by one or more bargaining representatives for a proposed enterprise agreement, or an enterprise agreement, in relation to which a scope order is in operation.
Requirement relating to notice of variation of agreement
(3) If a bargaining representative is required to vary the agreement as referred to in subsection 184(2), the FWC must be satisfied that the bargaining representative has complied with that subsection and subsection 184(3) (which deals with giving notice of the variation).
Requirements relating to particular kinds of employees
(4) The FWC must be satisfied as referred to in any provisions of Subdivision E of this Division that apply in relation to the agreement.
Note: Subdivision E of this Division deals with approval requirements relating to particular kinds of employees.
Requirements relating to greenfields agreements
(5) If the agreement is a greenfields agreement, the FWC must be satisfied that:
(a) the relevant employee organisations that will be covered by the agreement are (taken as a group) entitled to represent the industrial interests of a majority of the employees who will be covered by the agreement, in relation to work to be performed under the agreement; and
(b) it is in the public interest to approve the agreement.
…
189 FWC may approve an enterprise agreement that does not pass better off overall test—public interest test
Application of this section
(1) This section applies if:
(a) the FWC is not required to approve an enterprise agreement under section 186; and
(b) the only reason for this is that the FWC is not satisfied that the agreement passes the better off overall test.
Approval of agreement if not contrary to the public interest
(2) The FWC may approve the agreement under this section if the FWC is satisfied that, because of exceptional circumstances, the approval of the agreement would not be contrary to the public interest.
Note: The FWC may approve an enterprise agreement under this section with undertakings (see section 190).
(3) An example of a case in which the FWC may be satisfied of the matter referred to in subsection (2) is where the agreement is part of a reasonable strategy to deal with a short term crisis in, and to assist in the revival of, the enterprise of an employer covered by the agreement.
Nominal expiry date
(4) The nominal expiry date of an enterprise agreement approved by the FWC under this section is the earlier of the following:
(a) the date specified in the agreement as the nominal expiry date of the agreement;
(b) 2 years after the day on which the FWC approved the agreement.
…
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.”
Consideration
[89] The Agreement for which the Applicant seeks approval would apply to employees engaged as crowd controllers or security guards who would otherwise be employed under the Security Award.
[90] Clause 4 - Contract of Employment of the Agreement provides that employment under the Agreement will be of a casual nature. It further provides that for casual employees the Agreement is a standalone document and applies to the exclusion of any applicable award. Further the Agreement operates to exclude the application of overtime payments, shift payments, meal breaks and rest pauses, travel allowances and allowances that may have applied from the operation of any award in respect of casual employees.
[91] Clause 8 - Hours of Work provides that an employee’s ordinary hours will be a maximum of 38 per week and ordinary hours may be rostered at any time throughout the 24-hours of the day and on any seven days of the week.
[92] Clause 10 - Rates of Pay states the rates under the Agreement contain a casual loading of 25%. The clause states the rates of pay under the Agreement shall be maintained at or above the applicable minimum rates as specified in the relevant FWO Pay Guide and any adjustments to wage rates as a result of the Federal Minimum Wage Review each year.
[93] Schedule 2 - Remuneration provides for a gross hourly rate of pay of $27.38 for both a Crowd Controller and a Security Guard.
[94] This is the only rate of pay in the Agreement.
[95] This hourly rate for a casual employee is equivalent to the hourly rate for a casual Security Officer Level 1 under the Security Award. This hourly rate is less than the Security Award hourly rate for a casual Security Officer Level 2 or above.
[96] There are other Security Award provisions that are not provided for nor otherwise compensated for in the Agreement.
[97] It is not necessary for the purposes of this decision to make a detailed comparison between the Agreement terms and the Security Award terms.
[98] I agree with the Applicant’s view that the Agreement does not satisfy the BOOT.
[99] For the purposes of section 186(2) of the FW Act, I am not satisfied that the Agreement passes the BOOT.
[100] I will now consider the Applicant’s submissions that there are exceptional circumstances and because of these the approval of the Agreement would not be contrary to the public interest and so, notwithstanding the Agreement does not pass the BOOT the Commission may approve the Agreement under section 189.
[101] Firstly, I accept that as the Applicant submits it has suffered a decline in its turnover, its profits and its employee numbers.
[102] I also accept as the Applicant submits this is due to a combination of factors including,
• that there are agreements approved under the Workplace Relations Act 1996 (the WR Act) (prior to the FW Act) which continue to operate but would not pass the BOOT if the test time was today.
• that there are agreements previously approved by the Commission under the FW Act which continue to operate but would not pass the BOOT if the test time was today.
• adverse economic circumstances.
[103] The first two factors I have referred to above are the real-world consequences of the legislative scheme for enterprise agreements established by the Parliament in the FW Act and the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Provisions Act).
[104] The explanatory memorandum for the Transitional Provisions Act explains that existing WR Act instruments specifically including all types of collective agreements will continue to apply to employers, employees and unions, where relevant. Collective agreements made under the previous legislation upon the FW Act coming into operation would be subject to the FW Act as if they were agreements made under the FW Act.
[105] In summary this legislative transitional scheme was that collective agreements made under the previous legislation, after 2009 when the current legislation commenced, continued to operate as if they had been made under the FW Act. As such these collective agreements made prior to 2009 continue to operate indefinitely, as is the case for any enterprise agreement made under the FW Act. In addition, as is the case for agreements made under the FW Act these pre-2009 collective agreements only cease to operate because they are replaced by a new enterprise agreement approved by the Commission, are terminated by agreement between the employer and a majority of employees or are terminated by the Commission on application by the employer or an employee.
[106] What these transitional provisions did was to recognise the existing rights and entitlements of employees, employers and unions as they were then prescribed in collective agreements and preserve these under the new, now current, FW Act.
[107] The practical effect of this, which now negatively impacts the Applicant, is that any collective agreement made prior to the current legislation which has neither been replaced by making a new enterprise agreement, nor been terminated by agreement between the employer and employees, nor been terminated by the Commission on application, continues to legally apply and will continue to do so as is the case for any enterprise agreement made under the FW Act.
[108] Consequently, collective agreements predating 2009 that have rates of pay which are now well below those provided under current modern awards continue to operate under the current legislation.
[109] The second factor about which the Applicant complains is a variant of the scheme of the current legislation that provides that enterprise agreements approved by the Commission under the FW Act continue in force indefinitely unless they are replaced by a newly approved agreement, terminated by agreement with the other parties or terminated by the Commission on application of one of the parties.
[110] This indefinite life of enterprise agreements, coupled with the fact that the BOOT is applied once only to an agreement at the time it is approved 30, has a similar potential outcome because an agreement registered for example in 2010 continues to operate notwithstanding it would not pass the BOOT compared to the applicable modern award rate that apply today.
[111] It is apparent however that the drafters of the FW Act were conscious of these potential issues. Section 206 of the FW Act addresses these issues in part and is set out below.
“206 Base rate of pay under an enterprise agreement must not be less than the modern award rate or the national minimum wage order rate etc.
If an employee is covered by a modern award that is in operation
(1) If:
(a) an enterprise agreement applies to an employee; and
(b) a modern award that is in operation covers the employee; the base rate of pay payable to the employee under the agreement (the agreement rate) must not be less than the base rate of pay that
would be payable to the employee under the modern award (the
award rate) if the modern award applied to the employee.
(2) If the agreement rate is less than the award rate, the agreement has effect in relation to the employee as if the agreement rate were equal to the award rate.
If an employer is required to pay an employee the national minimum wage etc.
(3) If:
(a) an enterprise agreement applies to an employee; and
(b) the employee is not covered by a modern award that is in operation; and
(c) a national minimum wage order would, but for the agreement
applying to the employee, require the employee’s employer
to pay the employee a base rate of pay (the employee’s order rate) that at least equals the national minimum wage, or a special national minimum wage, set by the order;
the base rate of pay payable to the employee under the enterprise agreement (the agreement rate) must not be less than the employee’s order rate.
(4) If the agreement rate is less than the employee’s order rate, the agreement has effect in relation to the employee as if the agreement rate were equal to the employee’s order rate.”
[112] What this section in effect does is require that where the enterprise agreement rate is less than the modern award rate the employee receives a rate equal to the award rate. But this is limited however, to the base rate of pay payable to the employee under the enterprise agreement.
[113] Base rate of pay is defined in section 16 of the FW Act as below.
“16 Meaning of base rate of pay
General meaning
(1) The base rate of pay of a national system employee is the rate of pay payable to the employee for his or her ordinary hours of work, but not including any of the following:
(a) incentive-based payments and bonuses;
(b) loadings;
(c) monetary allowances;
(d) overtime or penalty rates;
(e) any other separately identifiable amounts.
Meaning for pieceworkers in relation to entitlements under National Employment Standards
(2) Despite subsection (1), if one of the following paragraphs applies to a national system employee who is a pieceworker, the employee’s base rate of pay, in relation to entitlements under the National Employment Standards, is the base rate of pay referred to in that paragraph:
(a) a modern award applies to the employee and specifies the employee’s base rate of pay for the purposes of the National Employment Standards;
(b) an enterprise agreement applies to the employee and specifies the employee’s base rate of pay for the purposes of the National Employment Standards;
(c) the employee is an award/agreement free employee, and the regulations prescribe, or provide for the determination of, the employee’s base rate of pay for the purposes of the National Employment Standards.
Meaning for pieceworkers for the purpose of section 206
(3) The regulations may prescribe, or provide for the determination of, the base rate of pay, for the purpose of section 206, of an employee who is a pieceworker. If the regulations do so, the employee’s base rate of pay, for the purpose of that section, is as prescribed by, or determined in accordance with, the regulations.
Note: Section 206 deals with an employee’s base rate of pay under an
enterprise agreement.”
[114] The effect of not including loadings, allowances, overtime or penalty rates and other amounts in the base rate of pay in section 16 of the FW Act is that section 206 of the FW Act is limited to providing employees with a base rate of pay not less than the award but no similar protection for loadings or penalty rates.
[115] It is entirely inappropriate for the Commission, as at tribunal itself established by the legislation, to editorialise on the merits or lack thereof of the scheme of either the Transitional Provisional Act or the FW Act.
[116] Whilst the Commission does recognise the real-world consequences about which the Applicant quite reasonably now complains, this is however looking at the legislation through a lens of a particular set of circumstances in isolation, when the reality is the Transitional Provisions Act and the FW Act must deal with an endless range of different circumstances individual employers and employees find themselves in and multiple, often conflicting, public policy aims. Unfortunately, it is inevitable in some instances that the legislation is found wanting.
[117] Ultimately the difficulties the Applicant is experiencing in large part are a consequence of the design of the Transitional Provisions Act and the current FW Act. These provisions apply universally to all national systems employers and national systems employees and so their deficiency in this situation is not in my view exceptional circumstances.
[118] Similarly, businesses having to face adverse economic circumstances is unfortunately not exceptional given the vagaries of our economy and the variable fortunes of individual industries.
[119] Whilst I am sympathetic to the plight the Applicant faces and applaud their open and genuine attempt to deal with this cooperatively with their employees I am unable to find that in this case because of exceptional circumstances the approval of this Agreement, which does not pass the BOOT, would not be contrary to the public interest. Consequently, this enterprise agreement cannot be approved, and this application is dismissed.
Appearances:
G. Hutchinson and S. Scully on behalf of the Applicant.
Hearing details:
2020.
Perth:
February 19.
Printed by authority of the Commonwealth Government Printer
<PR718714>
1 Section 186(2)(d) of the FW Act.
2 [2013] FWC 5858].
3 Applicant’s Outline of Argument, Attachment 11 (ASIC Extract 12/02/2020).
4 Ibid., Attachment 12 (WA Police Licensing Current Licensed Companies, at page 8).
5 Ibid., Attachments 1 to 7 (USEC PL Extracts of Profit & Loss).
6 Ibid., Attachment 8 (WA Local Government Economic Briefing February 2019).
7 See The National Security Services Australia Enterprise Agreement 2014 [AE412875] and REDDAWN Australia Pty Ltd/Media Entertainment and Arts Alliance (Casual Employees) Enterprise Agreement 2013-2016 [AE400904].
8 See Labourplus Security Staff Agreement 2007 [AC305861].
9 Applicant’s Outline of Argument, Attachment 9 (Australian Industry Association Ltd Issue Paper 4 “Sham Sole Traders / Australian Business Numbers (ABN’s)”).
10 Ibid., Attachment 13 (Senate Enquiry Corporate Avoidance, at page 67).
11 Ibid., Attachment 15.
12 Ibid., Attachments 16 to 19.
13 See Protective Services 1 Pty Ltd (Casual Employees) Enterprise Agreement May 2014 [AE409542], MDG Services Pty Ltd (Casual Employees) Enterprise Agreement 2014 [AE411554], Meridian Services Enterprise Agreement 2014 [AE408985] and Australian Protective Services Pty Ltd (Casual Employees) Enterprise Agreement November 2013 [AE407198].
14 [2013] FWC 5858.
15 Bluescope Steel Limited T/A BlueScope Steel Limited Springhill Works v Mr Zaki Habak [2019] FWCFB 5702.
16 Fair Work Bill 2008, Second reading 28 November 2008 at page 11189.
17 Ibid., at page 11192.
18 Applicant’s Outline of Argument, Attachment 13 (Senate Enquiry Corporate Avoidance at page 68).
19 Ibid., Attachment 23 (Speech, “When and how to intervene in Markets”, Rod Sims Chairman ACCC 12 July 2018).
20 Ibid., Attachment 30.
21 The National Security Services Australia Enterprise Agreement 2014 [AE412875].
22 Labourplus Security Staff Agreement 2007 [AC305861].
23 [2019] FWCA 8696.
24 2019 WAIRC 00151.
25 Ibid., at clause 13.7.
26 See MDG Security Service Pty Ltd (Casual Employees) Enterprise Agreement 2014 [AE411554], Australian Protection Services Pty Ltd (Casual Employees) Enterprise Agreement November 2013 [AE407198] and Protective Services 1 Pty Ltd (Casual Employees) Enterprise Agreement May 2014 [AE409542].
27 See MA000016 Pay Guide dated 1 July 2019.
28 [2019] FWCA 8696.
29 Applicant’s Outline of Argument, Attachment 23 (Speech, “When and how to intervene in Markets”, Rod Sims Chairman ACCC 12 July 2018).
30 Section 193(6) of the FW Act.
0
3
0