VCPG Security Australia Pty Ltd
[2023] FWC 2470
•3 OCTOBER 2023
| [2023] FWC 2470 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.185—Enterprise agreement
VCPG Security Australia Pty Ltd
(AG2023/2840)
| DEPUTY PRESIDENT BELL | MELBOURNE, 3 OCTOBER 2023 |
Application for approval of the VCPG Security Australia Pty Ltd Enterprise Agreement 2023 – whether application genuinely agreed – application not genuinely agreed – application refused.
An application has been made for approval of an enterprise agreement known as the VCPG Security Australia Pty Ltd Enterprise Agreement 2023 (the Agreement). The application was made pursuant to s 185 of the Fair Work Act 2009 (the Act) by the employer VCPG Security Australia Pty Ltd. The Agreement is a single enterprise agreement.
The notification time for the Agreement under s 173(2) was (at its earliest)[1] 27 June 2023 and the Agreement was made on 18 August 2023. Accordingly, both the genuine agreement and the better off overall test (BOOT) requirements are those applying on and from 6 June 2023.[2]
The employer is in the business of providing security services for its clients. The Agreement covers employees of the employer working within the security industry in New South Wales and Victoria.
For reasons whose significance will become clear, I note that the application for approval of the Agreement was the second attempt for approval of an enterprise agreement by the employer. Prior to the current application, the employer and its employees had made an earlier enterprise agreement (“the first agreement”). The employer’s application for approval of the first agreement was allocated to me before it was withdrawn by the employer citing “there were errors found with the [wage] calculations”.
In summary, I am not satisfied that the Agreement was ‘genuinely agreed’ to by employees. In a number of instances, the wage rates specified in the current Agreement were lower than those set out in the first agreement. I am not satisfied that adequate explanation was given about these reductions in circumstances where I consider it was incumbent upon the employer to specifically identify them. There were other concerns I had about the Agreement, including for the BOOT, although I consider that these were satisfactorily addressed or are capable of being addressed. My reasons follow.
Background – the first application
It is necessary to set out various matters relating to the employer’s earlier application, as they are relevant to the current application for the Agreement.
For the first agreement, there was a notification time of 27 June 2023, which was established by the issuing of a ‘notice of employee representational rights’ (NERR) on that date. Some bargaining ensued and the employer requested its relevant employees approve a proposed enterprise agreement, which they did. According to the ‘Form F17B’ declaration subsequently lodged for the first agreement, of the 15 employees eligible to vote, 12 voted and all voted in favour on 19 July 2023.
The first agreement(application) was lodged for approval on 27 July 2023. After initial assessment by the Commission’s agreements team, it was allocated to me. It is not necessary to set out the full details of the first agreement. There were five classifications levels, being levels 1 – 5. Broadly, the first agreement provided for each classification level:
· ‘Flat rates of pay’ per roster: cl 11.
· Rates of pay for ordinary hours and rostering (distinct from the ‘flat rates’ provisions): cl 12 and 12.5.
· Other ‘Minimum Base Rates of Pay’: cl 13.3.
The ‘flat rate’ payment rates were based on particular days and times worked, as well as by hours worked in a week. For example, in the ‘flat rate’ provisions, there were rosters (and commensurate pay rates) for:
· Work on Monday to Fridays only, with the pay rate determined by whether a 38, 40 or 48 hour week was worked.
· Work on Mondays to Saturdays, with the pay rate again determined by whether a 38, 40 or 48 hour week was worked.
For the rates under cl 12.5, the first agreement specified precise nighttime penalty rates for all levels – where all work under cl 12.5 would occur after 6pm and before 6am – as broadly follows:
· Monday to Friday only,
· A permanent night Saturday rate,
· A permanent night Sunday rate, and
· A permanent night public holiday rate.
Clause 13.3 provided a base rate for both permanent employees and casual employees.
Based on the assessment by the Commission’s agreements team, a number of categories of work would marginally pass the BOOT while others passed it much more comfortably. Generally speaking, the ‘flat rate’ rosters passed the BOOT more strongly than the other rosters and base rates, although the 38-hour flat rate roster was more marginal for Monday to Friday work in particular.
For example, the following assessment was made for various ‘flat rate’ employees against the Security Services Industry Award 2020 (Award):
· Dayworkers (Monday-Friday only):
· The pay rates for employees on a 38-hour roster appear to be 1.37% - 1.79% above the Award.
· The pay rates for employees on a 40-hour roster appear to be 9.26% - 9.73% above the Award.
· The pay rates for employees on a 48-hour roster appear to be 51.38% - 52.01% above the Award.
· Permanent night shift employees (Monday-Friday only):
· The pay rates for employees on a 38-hour roster appear to be 2.19% - 2.63% above the Award.
· The pay rates for employees on a 40-hour roster appear to be 7.23% - 7.70% above the Award.
· The pay rates for employees on a 48-hour roster appear to be 38.48% - 39.05% above the Award.
As noted from the above comparisons, the 48-hour week rosters on the flat rate were comfortably above Award.
For non-flat rate employees, the rates of pay for rosters under cl 12.5 of the first agreement was more marginal. Permanent night shift employees’ rates of pay under the Agreement for levels 1 – 5 ranged from 0.02% to 0.42% above the BOOT.
Similarly, the base rates of pay under cl 13.3 were very marginally above the BOOT, other than for a level 5 casual employee. For casuals, the rates were:
· Level 1 – 0.44% above the BOOT.
· Level 2 – 0.04% above the BOOT.
· Level 3 – 0.04% above the BOOT.
· Level 4 – 0.04% above the BOOT.
· Level 5 – 5.81% above the BOOT.
Through chambers, I raised a number of discrete issues about matters that raised potential BOOT concerns. Some resolution of those issues was made although, prior to all matters being finalised, the employer withdrew the application for approval. The application was withdrawn on 9 August 2023.
The current application
On 18 August 2023, the employer lodged a fresh application for the current Agreement, which was made on that day. According to the Form F17B lodged for the Agreement, 13 of the 15 eligible employees voted and all voted in favour.
The Form F17B stated, at question 22, that on 10 August 2023 employees were “Called to explain there were calculation errors found with the calculations [of the first agreement] and needed to update the Agreement” (emphasis added).
There were some differences to the pay rates and structure of the Agreement compared to the first agreement. A further assessment by the Commission’s agreements team also took place.
One difference in structure or layout between the first agreement and the Agreement was that the pay tables for ‘flat rate’ work was relocated from cl 11 to a standalone schedule in Schedule E of the Agreement.
On 30 August 2023, I corresponded with the employer through chambers about various concerns I had about the Agreement. The concerns were in two categories:
· Concerns about the BOOT.
· Concerns about pre-approval steps, and whether I could be satisfied that the Agreement was ‘genuinely agreed’.
The ‘genuine agreement’ concerns fell into two categories:
· The first was the employer’s reliance on the NERR - issued on 27 June 2023 for the first agreement – in respect of the current Agreement. No fresh NERR was issued.
· The second concerned the fact that a number of rates in the Agreement had changed (and had been reduced) when compared to the first agreement.
Examples of pay rates that had been reduced in the Agreement, when compared to the first agreement, were:
· The minimum base rate of pay per hour (cl 13.3) for level 5 casuals was reduced by $2.00 per hour from $36.69 to $34.69.
· For a 40-hour week (Mon – Fri only), the rates were reduced in the first agreement (cl 11.3) to the Agreement (Schedule E.2) as follows:
· level 1 - $27.62 to $26.23
· level 2 - $28.40 to $26.98
· level 3 - $28.88 to $27.44
· level 4 - $29.36 to $27.90
· level 5 - $30.31 to $28.80.
· For a 48-hour week (Mon – Fri only) working nights (permanent night rate, including a minimum $2.10 loading), the rates were reduced in the first agreement (cl 11.3) to the Agreement (Schedule E.2) as follows:
· level 1 - $45.50 (being $43.40 + $2.10) to $34.36
· level 2 - $46.80 (being $44.64 + $2.16) to $35.34
· level 3 - $47.58 (being $45.39 + $2.19) to $35.94
· level 4 - $48.38 (being $46.15 + $2.23) to $35.34
· level 5 - $49.94 (being $47.64 + $2.30) to $35.34.
The above reductions in rates were not the only examples.
BOOT concerns
The concerns about the BOOT were confined to a relatively narrow issue regarding the absence of annual leave loading, given that a number of rates were only very marginally above the BOOT. Undertakings were provided that included slightly higher hourly rates of pay, and I record that the final undertakings provided satisfy me in respect of the leave loading issue for the BOOT. It is unnecessary to say anything further about them.
Genuine agreement – NERR issue
The employer submitted, and I accept, it did not issue a fresh notice of employee representational rights for the Agreement because it was not aware it was required to do so. It understood that the NERR issued for the first agreement was sufficient.
For the NERR issue, the Full Bench in Appeal by Uniline Australia Limited [2016] FWCFB 4969 (Uniline) considered when bargaining concluded. The bench stated:
“[114] The Appellant also submitted that if an enterprise agreement was not approved by the Commission on the basis of failure to strictly comply with s.173(3), the parties would be at risk of having any subsequent proposed agreement rejected because the employer would have typically initiated or agreed to bargain months before and the timeframe in s.173(3) would be calculated from that earlier time.
[115] There is no substance to this submission. Once an application is made to the Commission, bargaining for the agreement has concluded albeit that the agreement might not be approved for a variety of reasons, including for example, that it does not pass the better off overall test. In that event, the employer could if it wished, initiate bargaining for a proposed agreement, the effect of which will be to trigger a notification time following which a valid Notice must be given.”
In short, a fresh NERR ought to have been – but was not - issued. The conclusions in Uniline also suggest that recourse to s 173(4) (which deals with occasions where a NERR was issued before the notification time in relation to “a proposed enterprise agreement”) are not available where bargaining for a proposed enterprise agreement has concluded and then bargaining for a new (and different) proposed enterprise agreement begins.
Section 188(1) of the Act requires the Commission to take into account statement of principles made under s 188B in determining whether it is satisfied that an enterprise agreement has been genuinely agreed to by the employees covered by the Agreement. The statement of principles was made under s 188B by the President of the Commission on 12 May 2023 (Statement of Principles on Genuine Agreement).
Paragraphs 1 - 3 of the Statement of Principles on Genuine Agreement address informing employees of bargaining for a proposed enterprise agreement and informing employees of their right to be represented by a bargaining representative, including the NERR.
Paragraphs 1 - 2 of the Statement of Principles on Genuine Agreement state:
“1. The employer should ensure that employees of the employer who will be covered by a proposed enterprise agreement and are employed at the notification time for the agreement (as defined in section 173(2) of the Fair Work Act) are informed:
(a) that the employer is bargaining for an enterprise agreement and of the proposed coverage of the agreement, and
(b) of the employees’ rights to be represented in bargaining for the agreement, including by an employee organisation or by another bargaining representative of their choice, and how to exercise those rights, at such a time and in such a manner that the employees have a reasonable opportunity to be represented in bargaining for the agreement.
2. Where section 173(1) of the Fair Work Act applies to the employer in relation to a proposed enterprise agreement, the employer will be taken to satisfy paragraph 1 if, subject to paragraph 3, the employer gives a notice of employee representational rights in accordance with sections 173 and 174.”
The first point to note that is that item 2 was not satisfied – because a fresh NERR was not issued – and therefore the employer cannot be “taken to satisfy” paragraph 1 of the Statement of Principles on Genuine Agreement.
However, if the failure to reissue a NERR was the only matter, I would nonetheless conclude that the Agreement was genuinely agreed taking into account the Statement of Principles on Genuine Agreement.
The circumstances in this matter involved a relatively small workforce which had just engaged in a process for making of the first agreement. The temporal gap between the first agreement and the employer notifying employees that renewed discussions were to commence was slight. Moreover, in a practical sense, issuing a fresh NERR could have involved little more than retrieving the first NERR from employees and then handing it back to them in materially identical form.
Additionally, the employer filed various witness statements by employees. While I have some reservations about aspects of those statements (which I discuss separately below), those statements and the employers’ own further submissions satisfy me that employees were factually aware that renewed discussions and bargaining was going to commence after the first agreement was withdrawn and that no employee was disadvantaged.
Regardless of the requirements of s 188(1), s 188(4) provides that the Commission “cannot” be satisfied that an agreement was genuinely agreed to unless ss 173 and 174 (which deal with giving notice of employee representational rights) was complied with. As indicated above, those sections were not complied with.
However, s 188(5) provides that certain “minor procedural or technical errors” might be disregarded if the Commission is satisfied that the employees were not likely to have been disadvantaged by the errors. Section 185(5) applies to the requirements of ss 173 or 174 (which deal with giving notice of employee representational rights).
I am satisfied that reliance on the NERR issued on 27 June 2023 (for bargaining now commencing on 10 August 2023) was a minor procedural error in circumstances when a fresh NERR ought to have been issued. For the reasons I have set out above, I am also satisfied that no employee was likely to have been disadvantaged by the error. The requirements of s 188(5) are met.
Genuine agreement – explanation of key changed terms
Question 22 of the ‘Form F17B’ declaration requires an employer to describe the steps taken to explain to the employees the terms of the enterprise agreement and the effect of those terms.
In the employer’s ‘Form F17B’ declaration filed for the Agreement, it referred to various explanations given for the first agreement in support of steps it took to explain the current Agreement. Specifically, on 30 June 2023 it emailed employees documents and held a meeting. On 11 July 2023, there was a further email and a ‘Question Bank’ document to deal with questions.
Noting that the application for the first agreement was withdrawn on 9 August 2023, the only explanation given to employees about the terms and effect of those terms of the Agreement listed in the Form F17B during the period after the first agreement was withdrawn occurred on 10 August 2023. The Form F17B states (at question 22) the explanation given to employees on 10 August 2023 was:
“Called to explain there were errors found with the calculations and needed to update the Agreement. Provided written document (in email) explaining the final changes to the Agreement. (see evidence 22.8)”
The reference to document “22.8” was to a document with that file name, lodged by the employer together with its Form F17B. That document did not explain any rate changes. For cl 11 of the Agreement (which now stated that the rates for ‘flat rate’ employees would be located in Schedule E of the Agreement), it simply referred to Schedule E. For the explanatory material in Schedule E, no discussion of the reduced rates was referred to. By way of example for Schedule E.2 (for which some rates were set out in paragraph [24] above), it simply stated:
“Flat Rates – Monday to Friday Roster
This clause confirms the flat rates of pay for a roster working Monday to Friday with options of 38 hours a week, 40 hours a week and 48 hours a week.
The maximum ordinary hours a day will be 12.” (original emphasis)
In correspondence from chambers, I raised concerns about explanations given to employees about the Agreement in light of apparent changes made to the first agreement - see paragraph [24] above. Correspondence from chambers was relevantly as follows:
“Section 180(5) of the Act provides that the employer must take all reasonable steps to ensure that the terms of the agreement, and the effect of those terms, are explained to the relevant employees, and that this explanation occur in an appropriate manner taking into account the particular circumstances and needs of the relevant employees. The responses to questions 22 and 24 of the Form F17B provide that, in regard to the current Agreement, on 10 August 2023 the Employer called & emailed all employees explaining further information on further change, and advising there were errors found with the calculations and it needed to update the Agreement. Provided with that email was a written document “explaining the final changes to the Agreement". A meeting was subsequently held on 15 August with all employees to follow up & confirm they understood the final changes to the employees (based on written communications sent 10 Aug 2023). The explanatory document notes, among other things, that the flat rates of pay have been updated depending on the roster type & moved to new Schedule E of Agreement. When comparing this version of the Agreement to the one previously made and lodged with the Commission, the flat rates of pay in the new Agreement appear to have been reduced. The Deputy President notes that this does not appear to have been set out in the explanatory document provided to employees and filed with the application for approval. To give just two examples:
a.Under the first agreement (i.e. the one made on 19 July 2023), the hourly rate for classification SO Level 1 Mon-Fri 40hr week (Day Shift) was $27.62. Under the new agreement, the hourly rate is $26.23.
b. Under the first agreement, the hourly rate for classification SO Level 1 Mon-Fri 48hr week (Day Shift) was $38.26. Under the new agreement, the hourly rate is $30.29.”
I received various submissions from the employer, as well as statements prepared for employees. I also listed the matter for a mention hearing, following which the employer filed further submissions. The following is not intended to be a comprehensive summary of all the material filed by the employer but attempts, at a high level only, to identify the salient matters for the purpose of explaining my reasons.
Part of the employer’s written submissions dated 6 September 2023 stated (my emphasis):
“15. We refer to point 9. above [explaining the NERR] where the Applicant contacted all employees by phone on 10 August 2023 to notify them of the reasons for withdrawal of the first application, relating to the administrative error in calculating the flat rates of pay and reinitiating bargaining again. We explained the minor updates to the previously agreed Agreement and notified we will send through the updated Agreement and documentation for the Access Period and Voting Notification again, which they agreed upon.
16. There were minor proposed changes for the employees to vote on the proposed Agreement. These changes were explained in a Zoom meeting on 15 August 2023, in accordance with the summary of explanations meeting minutes previously issued.
17. During the meeting, the Applicant and affected employees discussed the content of the proposed amendments and explained how this impacts them. Each proposed change by the Applicant was run through where we shared our screen and showed the previously agreed Agreement, with minor highlighted changes. A copy of Agreement that was shown to employees during the meeting on 15 August 2023 with highlighted changes is annexed hereto and marked “C”.
18. Also, during the meeting, in addition to showing employees the amended Agreement, we confirmed that there were no other changes made, and all terms remain the same as previously explained in June 2023. We asked employees if they would like us to send them the previous explanation of terms document and Question Bank, however they all confirmed they still have access to this and won't need it.”
Approximately 13 witness statements from employees were provided by the employer. Each statement was about 1 page or slightly over. Many parts of the respective statements were identical, which suggests that the employees were presented with a statement prepared by someone else and asked to sign it. That does not mean the employees did not agree to what was in the statement although I consider it would give them less force if there was a critical issue in question. However, it is unnecessary to deal with them on that basis.
For example, one statement refers to the meeting on 15 August 2023 and states:
“The company used a document that listed changes to help us understand what was different from our first decision. They also gave us extra information about the other changes.”
Another statement says:
“The company provided extra insight into the other modifications and utilised a document with tracked changes to demonstrate what was altered from our original agreement.”
I was provided spreadsheets by the employer but they compared the Agreement rates against the Award, and did not show changes from the first agreement. I was also provided a document called “Annexure C”, which is the document referred to in the employer’s submissions. Annexure C does not show any changes in tracked form. All it shows is some parts in yellow highlight where changes were made. It does not highlight all the changes. To give but one example, it did not highlight the reduction made to the level 5 base rate for casuals.
While the explanation required to be given in the context of s 180(5) and s 188(1) to employees focuses on the proposed agreement in question and the relevant award, in the present case the first agreement remained directly relevant. It was directly relevant because the employer expressly framed its discussions for the current agreement based on “errors” said to be in the first agreement. That context also included changes sought to be made after the first agreement had been validly made by a vote.
In those circumstances, I do not consider it sufficient to refer in general terms to “errors” for calculations. I consider it was necessary in this unusual situation for the employer to have expressly and explicitly identified, in writing, those changes.
In this respect, I have had regard in particular to paragraphs 10 and 12(c) of the Statement of Principles on Genuine Agreement. They are:
“10. Section 180(5) will generally not be satisfied if the employer makes an incorrect
representation or misleads employees (by words, action or otherwise) about a significant term of the proposed enterprise agreement or its effect.”
“12. Subject to paragraph 13, an employee may be provided with the explanation required by section 180(5): …
(c) orally, but the FWC may take into account whether there is a written
record or summary kept of the oral explanation, or …”
For paragraph 10 of the Statement of Principles on Genuine Agreement, it is important to recognise that there is no requirement for finding that incorrect representations were made deliberately or intentionally. To be clear, I find in this case that the employer was attempting to be transparent. Nonetheless, where discussions for the second agreement were being advanced by express reference to an earlier agreement, I consider it misleading in these circumstances to not identify with precision key terms such as a reduction in wage rates, particularly where there is no evidence before me indicating that employees were told that a number of rates had been reduced. Presenting the current Agreement on the basis that, except as highlighted, was the same as the first agreement was misleading because a number of unhighlighted terms had changed in material ways. In accordance with paragraph 10 of the Statement of Principles on Genuine Agreement, I also consider that the terms concerning wage rates are “significant” terms of the Agreement.
For paragraph 12(c) of the Statement of Principles on Genuine Agreement, I have taken account of the fact that the material provided to me does not include a written record or summary of the oral explanation given. While aspects of the material shown to the employees was in documentary form, that documentary material does not expressly disclose the reduction in rates in the Agreement made from the first agreement.
I have also had regard to the evident support by the employees of the Agreement. While that is a factor in favour of approving the Agreement it is not sufficient.
Conclusion
Having regard to the Statement of Principles on Genuine Agreement, I am not satisfied for the purpose of s 188(1) of the Act that the Agreement was genuinely agreed to by the employees covered by the Agreement.
In those circumstances, I order that the application is dismissed.
A final matter
While I have dismissed the application, I have noted above that the employees appear generally supportive of the employer and the current Agreement. Assuming that the employer intends to put the Agreement to a further vote of employees, I encourage the employer to start afresh with the NERR and to expressly identify in future bargaining any changes embodied in a proposed agreement when compared to either of the two enterprise agreements employees have now been asked to vote upon. I note in particular the rates in any future enterprise agreement are likely to include the rates included in the employer’s most recent undertakings. The employer’s explanation to the employees should be careful to include those rates.
DEPUTY PRESIDENT
Appearances:
P Ahluwahlia for the Applicant.
Hearing details:
2023
September 11
Video Hearing.
Final written submissions:
Applicant, 14 September 2023.
[1] There were errors regarding the issue of a notice of employee representational rights and the date it was issued, which I describe below.
[2] The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) made a number of changes to enterprise agreement approval processes in Part 2-4 of the Fair Work Act. Those changes broadly commenced operation on 6 June 2023, subject to various transitional arrangements which are not applicable to the present application.
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