United Voice - Queensland Branch v MSS Security Pty Ltd
[2015] FWCFB 6923
•12 NOVEMBER 2015
| [2015] FWCFB 6923 [Note: Judicial review of this decision [QUD143/2015] pending.] |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
v
MSS Security Pty Ltd
(C2015/3752)
VICE PRESIDENT CATANZARITI | SYDNEY, 12 NOVEMBER 2015 |
Appeal against decision [2015] FWCA 1559 of Commissioner Gregory at Melbourne on 9 April 2015 in matter number AG2014/10202.
[1] This is an appeal by the Queensland Branch of United Voice (the Appellant) against a decision of Commissioner Gregory made on 9 April 2015 1 to approve the MSS Security Qld Enterprise Agreement 2014-2018 (the Agreement) in relation to an application made by MSS Security Pty Ltd (the Respondent) pursuant to s.185 of the Fair Work Act 2009 (the Act). The appeal necessarily deals with reasons for approving the Agreement given by the Commissioner in an earlier decision on 31 March 2015.2
[2] At the hearing, Mr Reed of counsel sought permission to appear for the Appellant and Mr Nguyen sought permission to appear for the Respondent. Given the complexity of the matter, and having regard to s.596 of the Act, permission was granted to both parties to be represented.
[3] A Full Bench may exercise its discretion to admit new evidence or take into account any other information or evidence on appeal pursuant to s.607(2) of the Act. The Appellant made an application under s.607(2) of the Act to admit further evidence, comprising the affidavit of David Shacht, an employee of the Respondent to whom the enterprise agreement applies. The Appellant contended that this additional evidence was not readily available prior to the filing of the Form 18, the evidence was highly probative and that if it had been available at first instance, there was a high probability that it would have yielded a different result.
[4] Counsel for the Respondent objected to the new evidence being admitted on the basis that the Appellant had not demonstrated that the evidence would lead to a different outcome, that it was credible or that it could not have been obtained at first instance. 3
[5] We did not allow the new evidence to be admitted. The material did not take the appeal any further and the material before us was sufficient for the conduct of the appeal.
Background
[6] The Appellant is appealing the Commissioner’s decision to approve the Agreementon 9 December 2014.
[7] The Appellant opposed the Agreement’s approval and provided a Statutory Declaration of Sharron Caddie, Assistant Branch Secretary (Declaration). The Declaration set out, in some detail, the grounds upon which the Appellant opposed the Agreement.
[8] On 18 February 2015 Commissioner Gregory heard the Appellant’s objections.
[9] On 31 March 2015 the Commissioner delivered his decision which effectively:
(a) rejected the Appellant’s objections to the approval of the Agreement; and
(b) decided that the Agreement would be approved subject to the Respondent providing undertakings regarding quarterly wage audits of employees who work overtime under clause 4.3.6 of the Agreement (Undertaking).
[10] On 2 April 2015, the Respondent filed the Undertaking.
[11] The Agreement was approved by the Commissioner on 9 April 2015 (the Decision).
[12] On 30 April 2015 the Appellant filed this appeal.
[13] The appeal focuses on the operation of clause 4.3.1 and 4.3.5 of the Agreement, particularly as to whether the Commission should have been satisfied that the operation of these clauses caused the Agreement to fail the better off overall test (the BOOT).
Legislative Framework
[14] Section 190 of the Act provides:
“FWC may approve an enterprise agreement with undertakings
Application of this section
(1) This section applies if:
(a) an application for the approval of an enterprise agreement has been made under section 185; and
(b) the FWC has a concern that the agreement does not meet the requirements set out in sections 186 and 187.
Approval of agreement with undertakings
(2) The FWC may approve the agreement under section 186 if the FWC is satisfied that an undertaking accepted by the FWC under subsection (3) of this section meets the concern.
Undertakings
(3) The FWC may only accept a written undertaking from one or more employers covered by the agreement if the FWC is satisfied that the effect of accepting the undertaking is not likely to:
(a) cause financial detriment to any employee covered by the agreement; or
(b) result in substantial changes to the agreement.
FWC must seek views of bargaining representatives
(3) The FWC must not accept an undertaking under subsection (3) unless the FWC has sought the views of each person who the FWC knows is a bargaining representative for the agreement.
Signature requirements
(5) The undertaking must meet any requirements relating to the signing of undertakings that are prescribed by the regulations.
[15] Section 192 of the Act provides:
“When the FWC may refuse to approve an enterprise agreement
(1) If an application for the approval of an enterprise agreement is made under section 185, the FWC may refuse to approve the agreement if the FWC considers that compliance with the terms of the agreement may result in:
(a) a person committing an offence against a law of the Commonwealth; or
(b) a person being liable to pay a pecuniary penalty in relation to a contravention of a law of the Commonwealth.
(2) Subsection (1) has effect despite sections 186 and 189 (which deal with the approval of enterprise agreements).
(3) If the FWC refuses to approve an enterprise agreement under this section, the FWC may refer the agreement to any person or body the FWC considers appropriate.
[16] Section 206 of the Act provides:
“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.
[17] Section 323 of the Act provides:
“Method and frequency of payment
(1) An employer must pay an employee amounts payable to the employee in relation to the performance of work:
(a) in full (except as provided by section 324); and
(b) in money by one, or a combination, of the methods referred to in subsection (2); and
(c) at least monthly.
Note 1: This subsection is a civil remedy provision (see Part 4-1).
Note 2: Amounts referred to in this subsection include the following if they become payable during a relevant period:
(a) incentive-based payments and bonuses;
(b) loadings;
(c) monetary allowances;
(d) overtime or penalty rates;
(e) leave payments.
(2) The methods are as follows:
(a) cash;
(b) cheque, money order, postal order or similar order, payable to the employee;
(c) the use of an electronic funds transfer system to credit an account held by the employee;
(d) a method authorised under a modern award or an enterprise agreement.
(3) Despite paragraph (1)(b), if a modern award or an enterprise agreement specifies a particular method by which the money must be paid, then the employer must pay the money by that method.
Note: This subsection is a civil remedy provision (see Part 4-1).
[18] Appeals brought pursuant to s.604 of the Act involve an appeal by way of re-hearing, and the Commission’s powers on appeal are exercisable only if there is error on the part of the primary decision-maker. 4 An appeal may only be made with the permission of the Fair Work Commission (the Commission); there is no right to appeal.
[19] Section 604 of the Act provides:
“604 Appeal of decisions
(1) A person who is aggrieved by a decision:
(a) made by the FWC (other than a decision of a Full Bench or the Minimum Wage Panel); or
(b) made by the General Manager (including a delegate of the General Manager) under the Registered Organisations Act;
may appeal the decision, with the permission of the FWC.
(2) Without limiting when the FWC may grant permission, the FWC must grant permission if the FWC is satisfied that it is in the public interest to do so.
Note: Subsection (2) does not apply in relation to an application for an unfair dismissal (see section 400).
(3) A person may appeal the decision by applying to the FWC.”
[20] If we are satisfied that it is in the public interest to do so, we must grant permission to appeal.
The Appeal
Appellant’s submissions
[21] The Appellant raised three main grounds of appeal as outlined in the Notice of Appeal and amplified in its written and oral submissions.
[22] First, the Appellant submitted that the appeal should be allowed and the approval of the Agreement set aside because the Commission erred in its satisfaction that the Agreement passed BOOT. In the Appellant’s submission, the operation of the overtime provisions in clause 4.3.1 and 4.3.5 would reduce the overall entitlements of some employees when compared with the entitlements under the relevant modern award, namely the Security Services Industry Award 2010 (Award). Specifically, the Appellant contends that clause 4.3.1 of the Agreement allows the Respondent to ‘roster’ employees to work more than 304 ordinary hours over an 8 week cycle (i.e. more than an average of 38 hours per week) without the payment of overtime. In support of its contention, the Appellant relied clause 4.3.1 of the Agreement which relevantly provides:
“…all time worked in excess of all ordinary daily hours of work prescribed by this agreement, or outside the employees usual commencing and ceasing times, shall be deemed overtime…Provided that overtime should not be payable until an employee works hours in excess of their rostered hours…”
[Emphasis added]
[23] The Appellant submitted that the Award should be construed in a way that restricts overtime being rostered on a Sunday. The Appellant contended that the Agreement does not pass the BOOT. Each employee and each prospective employee covered by the Award must be better off overall pursuant to s.193 of the Act. This is not the case in relation to this Agreement. The Commissioner erred in finding that the Agreement passed the BOOT.
[24] In addition, the Appellant submitted that clause 4.3.5 of the Agreement is a difficult provision to interpret and that its meaning did not emerge from the statutory declarations and submissions in the proceedings below. Clause 4.3.5 provides:
“4.3.5 Overtime Allocation
(a) Overtime in a 12-hour rotating roster cycle will generally be allocated to hours that fall on a Sunday: at the end of a Saturday night shift and a Sunday day shift.
(b) If, where overtime falls into a 12-hour roster cycle is different from above, clarification of where overtime falls will be made for all employees at the time of engagement in the roster.
(c) Employees who have overtime allocated into their roster will not be paid for the overtime component of the shift (whether a part of a shift or an entire shift) when on leave or otherwise absent from work.
1.3. Where overtime is allocated in other rosters:
1.3.1. Clarification of where overtime falls into the roster cycle will be made for the employee at the time of engagement in the roster.
1.3.2. Employees who have overtime allocated into their roster will not be paid for the overtime component of the shift (whether a part of a shift or an entire shift) when on leave or otherwise absent from work.”
[25] The appellant submitted that the effect of clause 4.3.5 of the Agreement is that, in circumstances of an 8 week continuing roster, employees who are intended to be paid the non-aggregate rate under the Agreement would be entitled to three less occasions of overtime per 8 week period than they would be entitled to under the Award. The Appellant submitted that clause 4.3.5 strikes at the heart of the employment contract by attempting to deny payment for hours worked on a particular day, and on this basis provides another reason why the Agreement does not pass the BOOT.
[26] The third ground of appeal related to the Undertaking provided to the Commission relating to the application of clause 4.3.6, which allows employees to be paid certain limited amounts of overtime at casual rates rather than the more beneficial overtime rates. The Undertaking provides for a quarterly audit of employees who have worked in excess of prescribed overtime hours and a catch up payment to those employees if their remuneration falls below that which is payable under the Award. The relevant text of the Undertaking is as follows:
“Undertakings 3 – payment
If an Audit shows that any employee referred to in undertaking 1 or 2 would have been paid more under the Security Award but for the operation of the EA, the Company will make the following payments to the employee(s):
● a payment of the difference between what the employee would have received under the Security Award and what the employee was paid under the EA; and
● such sum as is necessary to ensure that over the relevant quarter the employee will be paid more by the company than under the Award.
Such payments will be processed within 7 days of the end of the quarter than was Audited.”
[27] In the Appellant’s submission, the import of the Undertaking is that employees who are worse off as a result of the operation of clause 3.4.6 may have to wait up to 3 months to be properly remunerated for work performed. The Appellant submitted that the Commission erred in accepting the Undertaking provided by the Respondent in respect of cl. 4.3.6. of the Agreement because:
(a) in circumstances where employees receive further remuneration as a result of the quarterly audit, there will in most cases be a contravention of s. 323 of the Act which requires remuneration to be paid in full at least monthly. Section 323 of the Act is a civil remedy provision, exposing a contravener to a possible pecuniary penalty. As such, compliance with the Undertaking might result in the exposure of the Respondent to liability to a pecuniary penalty; and
(b) in light of that possible exposure, the Commission did not consider whether it should refuse to approve the Agreement pursuant to s. 192 of the Act;
(c) alternatively, the Commission should not have accepted the Undertaking because the acceptance was likely to cause financial detriment to employees covered by the Agreement and s.190(3)(a) of the Act prohibits the acceptance of an undertaking which is likely to cause financial detriment to the employee.”
[28] The Appellant submitted that permission to appeal should be granted because a proper analysis of the overtime provisions of the Agreement reveals that a substantial injustice would be done to employees covered by the Agreement by reducing their remuneration from that otherwise payable pursuant to the Award. Further, the Appellant submitted that the Decision seems counter intuitive in that it approved an agreement containing a provision which purports to “allocate” overtime to a day on which that overtime may not have been worked.
Respondent’s submissions
[29] The Respondent submitted that the matters raised in this appeal do not enliven the public interest such as to warrant leave to appeal being granted for several reasons.
[30] Firstly, in the Respondent’s submission, the Appellant’s submission that the Agreement did not pass the BOOT because, under clause 4.3.1 the Respondent can ‘roster’ employees to work more than 304 ordinary hours over an 8 week cycle (i.e. more than an average 38 hours a week) without the payment of overtime, is an argument that was not raised before the Commissioner at first instance.
[31] In any event, on the proper construction of the Agreement (using the contextual approach), the Decision does not result in any reduction to the remuneration of employees when compared with the Award rates. The Appellant’s construction of clause 4.3.1 is incorrect as the Appellant has taken a narrow or pedantic approach to interpreting the Agreement. The approach favoured by the Courts and the Commission is one which takes into account the industrial realities of agreement making. 5 The Respondent submitted that clause 4.3.1 should be interpreted by taking into account the surrounding provisions of the Agreement.6 In particular, the Respondent highlighted clause 4.1.1 that specifically prevents the Respondent from rostering employees for more than an average of 38 ordinary hours per week:
“4.1 HOURS OF WORK
4.1.1 The ordinary hours of duty shall be worked in accordance with a roster set by the Employer in consultation with Employees and cannot exceed an average of 38 ordinary hours per week, average over the agreed duration of the roster. Hours in excess of 38 but not more than 40 per week may accrue towards a rostered day off rather than to be paid as overtime.”
[Emphasis added]
[32] Clause 4.1.1, when read together with clause 4.3.1, means that:
(a) the Respondent cannot roster employees for more than an average of 38 ordinary hours per week (i.e. more than 304 hours in an 8-week cycle);
(b) if an employee works more than average of their rostered 38 ordinary hours per week, then the employee is entitled to overtime payments as set out in clause 4.3.1 of the Agreement;
(c) an employee is entitled to overtime payments when the employee has worked in excess of their rostered ordinary hours or work, averaged over the 8 week cycle.
[33] Further, clauses identical to clause 4.3.1 and 4.1.1, existed in the previous agreement, namely the MSS Security Enterprise Agreement (Qld) 2011-2014. The Respondent submitted that it has at all times paid overtime in accordance with its interpretation set out in paragraph 32 above, and the Appellant has not previously taken issue with this interpretation or the operation of these clauses in the past. As such, the Respondent submitted that the Full Bench should refuse to adopt the interpretation proposed by the Appellant when such an interpretation has neither been applied nor insisted upon in the past. To accept the Appellant’s interpretation of clause 4.3.1 would be contrary to the industrial reality of the application of this clause and to the wording on its face, in the context of the whole of the Agreement.
[34] Secondly, the Respondent submitted that the Decision is not counter intuitive. It was decided in line with the decision of Commissioner Williams in Harland & Ors v MSS Security Pty Ltd 7 which determined that there was nothing in the Award that prohibits overtime being rostered on Sundays. The Respondent submitted that the ‘Sunday Overtime Argument’ was made before the Commissioner, who correctly rejected it.
[35] Thirdly, in relation to the Undertaking for quarterly audits, this is a fresh argument that was not raised at first instance, so it is unsurprising that the Commissioner did not take it into account when considering whether or not the approval of the Agreement should be refused for the reasons contemplated in s. 192 of the Act. This ground of appeal should be rejected because:
(a) there may never be any underpayment which invokes the Undertaking as it is a mechanism by which to address any underpayments in the event they occur, instead of an employee having to pursue legal action to enforce s.206 of the Act and to recover any underpayments. Thus it is beneficial for the employees to have the Undertaking in the Agreement, rather than for employees to have to pursue separate legal action to recover underpayments;
(b) such undertakings are commonly accepted by the Commission to address potential underpayments that arise in the future but which do not exist at the time of approach;
(c) the Appellants argument effectively seeks to impose a pecuniary penalty in respect of s.206 where none was intended by the legislator. Section 323(1) requires employers to pay employees any amounts payable to the employees in relation to the performance of work in full (except for deductions authorised by employees), in money by one, or a combination, of the methods such as cash, cheque or electronics funds transfer at least monthly. The obligation on the Respondent is to pay the full amount as required by the Agreement and failure to pay in accordance with s. 323 can give rise to a civil penalty under Part 4-1 of the Act, whereas an underpayment of the modern Award base rate of pay by reason of the lower rate of the Agreement does not give rise to any penalty;
(d) it is not “compliance” with the Undertaking that may cause a potential breach of s.323 of the Act. If there is a breach of s. 323, it would occur before the audit for the respective quarter is conducted and any ‘top up’ payment is made. Hence, actions required of the Respondent in compliance with the Undertaking cannot cause a breach of s.323;
(e) the Undertaking says, in effect, that any ‘top up’ payment will be made within 7 days after the audit is completed. Therefore, ‘top up’ amounts are paid at least monthly when the entitlement to the payment crystallises at the end of the quarter audited.
[36] In general, the Respondent submitted that the Decision is a clear application of orthodox principles relating to the approval of an enterprise agreement. It does not raise any complex issues of importance or of application. Therefore, the Respondent submitted that the public interest has not been enlivened and permission to appeal should not be granted.
[37] In the alternative, the Respondent submitted that if the Full Bench does not accept the above arguments, the Full Bench should exercises its discretion not to reject the Agreement approval because the Respondent would suffer prejudice having afforded improved terms and conditions to its employees under the Agreement since its operating date 16 April 2015. It would cause much cost and inconvenience for the Respondent to negotiate a new agreement for 682 employees and there would be industrial disharmony if they had to ‘roll back’ improved wages paid to employees under an approved agreement. The balance of convenience favours the Agreement not being rejected. The Respondent also submitted during oral submissions at the hearing that the Respondent is prepared to give an undertaking for monthly audits.
Further submissions on CEPU & Anor v Main People Pty Ltd (Main People)
[38] Following the hearing, the Full Bench received correspondence from the Respondent drawing to the Full Bench’s attention the recent decision of the Full Bench in CEPU & Anor v Main People Pty Ltd 8 (Main People) in which the full bench considered, at [13] and [38] to [41], whether the undertaking provided by the respondent in those proceedings satisfied s.190(2) of the Act. The Respondent queried whether the parties should make any further submission in relation to Main People to provide assistance to the Commission in its consideration of appeal ground 3.
[39] The Full Bench invited the parties to make any further submissions they wished to make. Both parties filed written submissions on the application of Main People to the third ground of appeal.
[40] In Main People, the Deputy President had, at first instance, accepted an undertaking which relevantly contained the following terms:
“2. All Employees will be paid more under this Agreement than they would have been paid under the Metals Award if it applied to the work carried out by them from time to time.
…..
6. An Employee may request a reconciliation once a year or on termination to establish whether there is an amount which is required by this undertaking to be paid to them.”
[41] The Full Bench in Main People did not consider whether those terms of the undertaking have permitted satisfaction, pursuant to s.190(2), that the agreement did not pass the BOOT had been met. 9 The fatal flaws in the undertaking were identified as:10
(a) to the extent that paragraph 2 was intended to create an entitlement, it was entirely unclear as to the terms of the entitlement and, as the undertaking operated as a term of the agreement, it was a term incapable of being enforced in the event of an alleged breach as it would be impossible to quantify;
(b) when paragraph 2 was read with paragraph 6, any entitlement was only payable annually and on request, which could not be more beneficial than the payment of entitlements under the Award where the full rate was required to be paid either weekly or fortnightly.
[42] For those reasons, and others, the appeal in Main People was upheld and the application for approval of the agreement was remitted to the Commission to determine whether it could be approved if a reformulated undertaking was proffered. 11
[43] The Appellant submitted that the Undertaking offered to the Commission at first instance in the present matter, bears important similarities to the relevant undertakings in Main People, that the decision in Main People is persuasive and that the defects in the Undertaking in the present matter should provide a reason for allowing this appeal.
[44] The Appellant once again submitted that the Undertaking provide for a quarterly audit of employees being paid overtime rates pursuant to clause 4.3.6 of the Agreement at a less beneficial rate than applies under the Award. The Appellant submitted that those undertakings suffered from defects of the type identified in Main People for two reasons. Firstly, the second element of the Undertaking as to payment does not specify an amount which was be quantified and is therefore incapable of enforcement. Secondly, any payment of a wages top-up is only made quarterly and therefore cannot be considered more beneficial than the payment entitlements under the Award which requires wages to be paid either weekly or fortnightly. Or, those provided in s.323 of the Act, which requires an employer to pay an employee amounts payable to the employee in relation to the performance of work in full at least monthly. Therefore, the Appellant submitted that the relevant reasoning in Main People, as applied to the facts of the present case, with considerations of comity in mind, would be of considerable assistance to the Commission in the determination of the present appeal, which should be allowed.
[45] The Respondent submitted in reply that the original Undertaking referred to quarterly audits, but an offer was made to change the undertaking to monthly audits at the hearing on 7 July 2015. 12 The undertaking offered by the Respondent is now as follows and comprise three elements:
(a) The first element (Undertaking 1) requires the Respondent to conduct a monthly audit of the wages of employees:
(i) who work a 4-by-4 roster and who work overtime in accordance with sub-clause 4.3.6 of the Agreement; and
(ii) who work more than the specified number of overtime hours during that quarter.
(b) The second element (Undertaking 2) requires the Respondent to conduct a monthly audit of the wages of other employees:
(i) who do not work a 4-by-4 roster but who work overtime in accordance with sub-clause 4.3.6 of the Agreement; and
(ii) who work in excess of the specified number of overtime hours during that quarter.
(c) The third element (Undertaking 3) requires the Respondent to pay the relevant employees within 7 days of the end of the month that was audited:
(i) the difference between what they would have received under the Award and what they were paid under the Agreement; and
(ii) such sum as is necessary to ensure that the employees will be paid more than the Award over the relevant quarter.
[46] The Respondent submitted that there are significant differences in the these undertakings when compared to the undertakings given in Main People as follows:
(a) paragraph 2 of the undertaking in Main People is very broad and unclear as to what entitlements the undertaking relates to under the Metal Awards while Undertakings 1 and 2 of the present proceedings are very specific as to which entitlement the undertaking relates (i.e. overtime under clause 4.3.6 of the Agreement);
(b) unlike paragraph 6 of the undertaking in Main People, Undertaking 3 (as varied) in the present proceedings provides a clear method as to when the audit obligation arises and how payments made pursuant to clause 4.3.6 of the Agreement can be reconciled with the Award so as to enable a claimant employee or a court with jurisdiction to enforce the Agreement and to quantify how much is owed to the employee. Moreover the audit is to be conducted monthly upon an employee working beyond a specified period of overtime (rather than upon request) and to pay the employee any underpayments within 7 days of the end of the audited period.
[47] The Respondent refuted the Appellant’s assertion that the method for assessing and paying a wage top-up as set out in the undertakings given by the Respondent cannot be considered more beneficial than the payment entitlements under the Award which requires wages to be paid either weekly or fortnightly. The Respondent submitted that the industrial reality is that certain entitlements (such as overtime) can only be determined and paid to employees after an effluxion of time – which can be excess of a weekly or fortnightly period.
[48] The Respondent submitted that in particular, clause 21.2 of the Award provides for ordinary hours of 38 hours per week, which could be averaged at the employer’s discretion over a roster cycle of up to 8 weeks (i.e. 304 hours in 8 weeks). Where an employee is on an 8 week roster cycle, their entitlement to overtime payments for working in excess of the average ordinary hours can only be determined at the end of the 8 week cycle (unless of course their rosters also make advance provision of overtime hours within the cycle). Ostensibly, the Award does not require an employer to assess and pay overtime on a weekly or fortnightly basis where the employer decides to implement a roster cycle in excess of two weeks. The assessment of overtime can occur over a roster cycle of up to 8 weeks – at the end of which any overtime that is worked during the cycle can be calculated and paid to employees. Likewise, s.323 of the Act cannot be construed as to require overtime to be assessed and paid monthly. It is only when the overtime entitlement crystallises that it becomes payable to the employee within the pay periods as specified by the Award and the Act. Under the Award, it may take up to 8 weeks for this to occur.
[49] The Respondent submitted that is had given an undertaking for monthly audits of overtime entitlements arising out of the application of clause 4.3.6 of the Agreement following the hearing. The Respondent submitted that this is more beneficial to employees than having to wait until the end of a period of up to 8 weeks for their entitlement to overtime to be assessed.
[50] The Respondent submitted that in the event that the Full Bench finds that the monthly undertaking proffered by the Respondent is less beneficial than the Award (which is denied), then the Full Bench should also consider the other terms and conditions in the Agreement which provide for more beneficial terms and conditions than the Award in determining whether the Agreement passes the BOOT. To this end, the Respondent noted Appendix 1 of the Form 17 Employer’s statutory declaration in support of application for approval of an enterprise agreement’ dated 8 December 2014 which lists the relevant terms and conditions which are more beneficial than the Award, including severance pay, delegate and training leave, wage rates (both aggregate and non-aggregate), meal allowance, training allowance and site allowance.
[51] In short, the Respondent submitted that the relevant reasoning and facts in Main People can clearly be distinguished when applied to the present appeal, and the Agreement along with the revised monthly undertaking given by the passes the BOOT.
Consideration
[52] The Fair Work Commission must grant permission to appeal if it is satisfied it is in the public interest to do so. 13 The test of assessing whether the public interest is enlivened is discretionary, involving a broad value judgement.14 In GlaxoSmithKline Australia Pty Ltd v Colin Makin,15 the Full Bench summarised the test for determining the public interest as follows:
“[26] Appeals have lain on the ground that it is in the public interest that leave should be granted in the predecessors to the Act for decades. It has not been considered useful or appropriate to define the concept in other than the most general terms and we do not intend to do so. The expression ‘in the public interest’, when used in a statute, classically imports a discretionary value judgment to be made to be made by reference to undefined factual matters, confined only by the objects of the legislation in question. [Comalco v O’Connor (1995) 131 AR 657 at p.681 per Wilcox CJ & Keely J, citing O’Sullivan v Farrer (1989) 168 CLR 210]
[27] Although the public interest might 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, it seems to us that none of those elements is present in this case.”
[53] Otherwise, the grounds for granting permission to appeal include that the decisions is attended with sufficient doubt to warrant its reconsideration or that substantial injustice may result if leave is refused. 16
[54] It is also important to note that the decision under appeal is of a discretionary nature. Usually, such a decision can only be successfully challenged on appeal if it is shown that the discretion was not exercised correctly. 17 It is not open to an appeal bench to substitute its view on the matters that fell for determination before the Commissioner in the absence of error of an appealable nature in the decision at first instance. As the High Court said in House v The King:18
“The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.”
[55] In determining this appeal Full Bench has read and considered all material filed by the parties including all submissions, correspondence and relevant authorities.
[56] The crux of the appeal is whether the Agreement prohibits or limits the number of ordinary hours in excess of 304 hours the Respondent can roster in an 8-week cycle. We note that the identical clause existed in the prior enterprise agreement and that, historically, overtime was paid to employees who worked over 304 hours in the 8-week rosters. It therefore does not appear to be a live issue when taking into account industrial reality and the wider context of the Agreement, for example clause 4.1.1.
[57] Also, undertakings before the Commission in applications such as these exist for the purpose of addressing any potential underpayments, and it is of benefit to the employees to have these undertakings in place rather than having employees obliged to pursue legal action to recovery any underpayments pursuant to s. 206 of the Act. Moreover, we note that it is desirable for audits to be conducted by employers, rather than obliging the employee to identify any underpayment of their entitlements. Such audits should be conducted in a short periods (such as a monthly, as was the case here) as long periods would not ensure satisfactory protection for employees.
[58] However, we have decided to grant permission to appeal because we consider the undertaking previously provided to the Commission to be inadequate. The quarterly audit period provided for is too long. The Respondent has agreed to change the audit from quarterly to monthly in the revised undertaking made after the appeal hearing. We are satisfied that this is a satisfactory undertaking.
[59] In relation to the submissions on Main People, we accept the position of the Respondent and agree that Main People should be distinguished from the present proceedings. The undertakings provided at the appeal before us are quite different to the undertakings in Main People. In reaching this conclusion, we do not depart from the reasoning in Main People. However, on the facts of this case, we are satisfied and find that the undertakings provided by the Respondent are sufficient to cure any potential deficiencies in the Agreement, and the employees are better off overall in any event taking into account the totality of the terms of the Agreement.
[60] In weighing all circumstances, the Commission needs to be satisfied that the prospects of actual underpayments and the need to benefit from the undertaking would be in reality very rare or non-existent. In all the circumstances, we are satisfied and find that this is the case in the present proceedings with the revised undertakings.
Conclusion
[61] We are satisfied that it is in the public interest to grant permission to appeal. Permission to appeal is granted and the appeal is allowed. The decision of Commissioner Gregory is set aside. The Agreement will be approved with the amended undertaking provided by the Respondent at the appeal in a separate decision issued by the Presiding Member of this Full Bench.
VICE PRESIDENT
Appearances:
R Reed of counsel with J Viring for the Appellant.
J Nguyen with M Stinson for the Respondent.
Hearing details:
7 July
2015
Brisbane.
1 [2015] FWCA 1559
2 [2015] FWC 2283
3 Power Projects International Pty Ltd v AMWU[2011] FWAFB 1327 at [12].
4 Coal and Allied v AIRC (2000) 203 CLR 194 at 203–4 per Gleeson CJ, Gaudron and Hayne JJ.
5 AMCOR Limited v CFMEU (2005) 222 CLR 241; The Australian Meat Industry Employees Union v Golden Cockerel Pty Limited[2014] FWCFB 7447
6 The Australian Meat Industry Employees Union v Golden Cockerel Pty Limited [2014] FWCFB 7447
7 [2013] FWC 8064
8 [2015] FWCFB 4467
9 [2015] FWCFB 4467 at [38]
10 [2015] FWCFB 4467 at [39]
11 [2015] FWCFB 4467 at [41].
12 See Transcripts of hearing on 7 July 2015 at PN87 – PN 107.
13 Fair Work Act 2009, s.604(2).
14 Esso Australia Pty Ltd v AMWU; CEPU; AWU[2015] FWCFB 210 at [6].
15 [2010] FWAFB 5343 at [27].
16 Esso Australia Pty Ltd v AMWU; CEPU; AWU[2015] FWCFB 210 at [7].
17 House v The King (1936) 55 CLR 499 at [504]-[505] per Dixon, Evatt and McTiernan JJ.
18 Ibid.
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