Vibrant Services Pty Ltd T/A Vibrant Security Services

[2018] FWC 4488

[2018] FWC 4488

FAIR WORK COMMISSION

DECISION

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

Vibrant Services Pty Ltd T/A Vibrant Security Services
(AG2016/7981)

COMMISSIONER GREGORY MELBOURNE, 2 AUGUST 2018

Application for approval of the Vibrant Security Services Enterprise Agreement 2016.

Introduction

[1] An Application has been made for approval of an enterprise agreement known as the Vibrant Security Services Enterprise Agreement 2016 (“the Agreement”). The Application is made under s.185 of the Fair Work Act 2009 (Cth) (“the Act”) by Vibrant Services Pty Ltd T/A Vibrant Security Services (“Vibrant Security”). It is a single enterprise agreement.

[2] It is noted at the outset that the proposed Agreement contains a number of significant differences from the terms and conditions contained in the underlying Security Services Industry Award 2010 1 (“the Award”). In particular, it contains what are often described as “rolled up rates of pay.” These are set out in the so-called “work pattern definitions,”2 which each provide for a specific hourly rate to be paid for work performed at all times, depending on which of the five different work patterns an employee is rostered to work. These arrangements are obviously intended to apply in place of the traditional Award wage rate structure based around an ordinary time hourly rate of pay, with additional penalty rates applying for work performed outside of the ordinary time spread of hours.

[3] The proposed Agreement also contains a number of other provisions, which are different from those in the Award. These include those dealing with part-time work, hours of work more generally, and rostering. In addition, the Agreement does not contain specific provision for payment of allowances, but looks to deal with this entitlement by referring back to the Award.

[4] The Form F16 Application indicates there were no Union bargaining representatives involved in the Agreement making process. It also indicates there were no employee bargaining representatives either, and it can be presumed the Agreement was not a product of a process of bargaining and negotiation, but was instead developed by Vibrant Security and presented to its employees for their consideration and approval. However, this is not intended to imply any criticism of the structure of the proposed Agreement, or the processes involved in having it approved by a majority of the employees to be covered. It is now required to be assessed against the relevant statutory requirements.

[5] It can also be noted that there have been a number of exchanges over an extended period of time between the Commission and Vibrant Security, and its representative, about a range of matters to do with the proposed Agreement. In addition, on 2 March 2018 the Commission wrote to Vibrant Security advising that a Full Bench of the Commission had now been convened in what has become known as the “Loaded Rates Agreements” matter. As part of its deliberations, the Full Bench was considering various agreements, including two involving the security industry, which are similar in nature to the Agreement that is the subject of this application.

[6] The Commission accordingly advised the Applicant that it intended to defer dealing with the present Application until such time as the Full Bench had provided guidance and direction about the approach to be adopted in dealing with Agreements that contain these loaded rate arrangements. However, Vibrant Security continued to press to have the application dealt with, and it was therefore set down for hearing on 7 June 2018. However, on 28 June 2018 the Full Bench handed down its decision in the Loaded Rates Agreements matter, 3 and the Commission has accordingly had the benefit of being able to consider that decision in the context of this matter.

[7] Mr H. Lewis from Employee Relations Strategies was given permission to appear on behalf of Vibrant Security under s.596(2)(a) of the Act as the matter involved a degree of complexity and his involvement might enable it to be dealt with more efficiently. The proceedings were conducted by telephone and Mr Lewis appeared with Mr A. Amin, National Operations Manager with Vibrant Security. However, it was subsequently discovered that Mr Z. Khan, the Managing Director of Vibrant Security, was also present and he subsequently made brief submissions as well.

The Submissions and Evidence

[8] Vibrant Security did not seek to provide any evidence in support of the application, but did make some additional submissions. It also indicated that it had been waiting on the outcome of the Full Bench decision in the Loaded Rates matter, but did not have any further submissions that it wished to make at the outset. However, it was prepared to respond to any matters the Commission wished to raise.

[9] The Commission, firstly, sought further detail about the nature of the business, where it was located, and how many people were to be employed under the terms of the proposed Agreement. Vibrant Security indicated in response that it operates in Victoria, New South Wales and South Australia, and most of the work it performs involves work that is sub contracted to it by other security companies.

[10] It indicated in response to a question from the Commission that it had “close to a hundred” 4 employees, but it only had “about ten to twelve”5 ongoing permanent and part-time employees. The remaining employees were engaged, as required, and this primarily involved event work, which is generally carried out at the weekends and on public holidays. It also indicated that its existing employees were primarily working under roster pattern 1, and were typically performing rosters based around 9 a.m. to 5 p.m., Monday – Friday.

[11] However, casual employees would be taken on in the future when required for event work and any other work it was contracted to perform. The work associated with events often involved work performed at the weekends and on public holidays. The Commission then sought further information about how this form of work would fit within the roster patterns in the Agreement, given they did not appear to provide for shifts worked only at the weekends. Vibrant Security submitted in response that that one option in these circumstances would be to apply the relevant Award penalty rates.

[12] However, the Commission noted in this context that the Agreement states in the definitions clause that the provisions of the Agreement completely exclude those in the Award. However, Vibrant Security was now proposing that the Award conditions would have application in some circumstances.

[13] The Commission also indicated that it had other concerns about the terms and conditions in the proposed Agreement and referred, by way of example, to the part-time employment provisions and the roster arrangements, which effectively enable rosters to be changed with virtually no notice.

[14] Vibrant Security also indicated, in conclusion, that the Agreement was essentially being sought because in the circumstances that currently exist in the security industry it was very difficult to obtain sub-contracting work if the business did not have an enterprise agreement in place, and those businesses that are looking to sub-contract work out to other security companies are requiring that an enterprise agreement be in place before they are prepared to enter into such arrangements.

Consideration

[15] Section 186(1) of the Act requires the Commission, on application for approval of an enterprise agreement, to approve the Agreement “if the requirement set out in this section and section 187 are met.” 6 Section 186(2), firstly, requires that the Commission must be satisfied that “the Agreement has been genuinely agreed to by the employees covered by the Agreement,”7 and, secondly, that “the Agreement passes the better off overall test.”8

[16] Section 188 of the Act then deals with when employees can be said to have genuinely agreed to an enterprise agreement. It states:

“188 When employees have genuinely agreed to an enterprise Agreement

An enterprise agreement has been genuinely agreed to by the employees covered by the Agreement if the FWC is satisfied that:

(a) the employer, or each of the employers, covered by the agreement complied with the following provisions in relation to the agreement:

(i) sub sections 180(2),(3) and (5) (which deal with pre approval steps);

(ii) sub section 181(2) (which requires that employees not be requested to approve an enterprise agreement until 21 days after the last notice of employee representational rights is given); and

(b) the agreement was made in accordance with whichever of subsection 182(1) or (2) applies (those subsections deal with the making of different kinds of enterprise agreements by employee vote); and

(c) there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.” 9

[17] As indicated, s.186(2)(d) requires that the Commission must be satisfied that the Agreement passes the “better off overall test.” The requirements of the test are dealt with in s.193(1) in the following terms:

“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.” 10

[18] Section 193(6) also provides that the “test time” is the time the application for approval is made under s.185.

[19] It is well established that the application of the “better off overall” test requires the identification of terms and conditions in the proposed Agreement that are more beneficial for the employees, and those which are less beneficial, with an overall assessment then being made about whether the employees would be “better off overall” under the Agreement. It is also understoodthat the assessment must be carried out in a way that ensures each employee, and each prospective employee, would be “better off overall” under the Agreement. It is not sufficient for the Commission to simply be satisfied that a majority of the employees would be better off.

[20] Agreements which contain these loaded rate arrangements typically raise a range of issues in the context of the better off overall test assessment, and these considerations presumably had much to do with the President of the Commission referring various agreements containing loaded rates to a Full Bench of the Commission to consider how the better off overall test should be properly applied to them.

[21] As indicated, these types of agreements typically provide a range of issues to work through. Firstly, a comparison needs to be made between the “rolled up” arrangements and those that would typically apply under a traditional Award structure, where a base rate of pay is provided for, and additional penalty rates then apply for work performed outside of the ordinary time spread of hours, and at weekends and on public holidays. An important factor in terms of these considerations is to have an understanding about when the work is actually to be performed because this will often be critical in terms of making a comparison between the terms in the Agreement and those in the underlying Security Services Industry Award 2010.

[22] However, there are also other issues that need to be considered in terms of the arrangement that applies in this case, particularly those involving the work pattern definitions. For example, when an employee is first engaged under the terms of the proposed Agreement are they told whether they will work in accordance with one of the five work pattern definitions set out in the Agreement? How do the averaging arrangements work in practice? What happens when an employee’s hours of work change and they move from one roster pattern to another? What occurs if an employee is engaged on working hours that do not fit within one of the work patterns definitions, given there are no other rates provided for in the Agreement? Are casual employees to be employed on the same basis?

[23] In addition, these arrangements obviously involve a degree of complexity, and the Commission’s assessment in terms of the better off overall test is based on the work pattern definitions being strictly applied in the manner stated. However, given the inherent complexities of these arrangements it is often difficult to be satisfied that they will indeed be applied correctly in practice.

[24] However, there are also some additional matters that arise when the terms and conditions in the Agreement are compared to the terms and conditions contained in the Security Services Industry Award 2010. Some of these important differences are as follows:

•  Rosters – the Award provides that rosters, once notified, may not be changed without the payment of overtime unless seven days’ notice has been given, unless the parties have otherwise agreed. 11 However, the Agreement provides for a different approach. It states in sub clause 4.3.3 that “Rosters will be drawn up and where practicable posted 3 days in advance of the commencement of the roster cycle.”12 Once posted they may then only be changed by mutual agreement. Therefore, Vibrant Security is required to post rosters three days in advance of the commencement of the roster cycle, where practicable. However, if it is deemed not practicable to comply with this obligation it can vary rosters without notice.

•  Part-time work – this ability to change rosters with little or no notice also needs to be considered in conjunction with the part-time work provisions in the Agreement. Under the Award part-time hours of work have to be agreed on by the employer and the employee in advance, and can then only be varied by agreement. When hours are worked in excess of those agreed, then overtime entitlements apply, unless there has been a further agreement to vary those hours. However, under the terms of the Agreement it appears the hours of a part-time employee can be varied without agreement. The only requirement is for any change to be made in advance of the release of the roster. Given that rosters can be varied with little or no notice this creates a far more flexible regime of part-time work than provided for by the Award. It is submitted that these provisions are designed to provide more flexibility in order to be better able to service client needs. The ability to be able to service client needs is not questioned. However, the Commission is also required to have regard to the relevant statutory requirements. In this context it appears that the flexible framework of part-time work provided for by the Agreement has more in common with casual work arrangements, and could operate to deny entitlements to overtime that would otherwise apply under the terms of the Award.

•  Annual leave – the Agreement includes the annual leave loading in the loaded wage rates. By contrast the Award provides in sub clause 24.6 for the payment to comprise the greater of either the amount the employee would have earned during the period of leave for working their normal hours, exclusive of overtime, had they not been on leave, or their ordinary time rate, together with any applicable allowances, plus a loading of 17.5%.

•  Allowances – The Agreement is also silent in regard to allowances, although Vibrant Security submits that an undertaking could be provided to the effect that some of the allowances provided for in the underlying Security Services Industry Award 2010 would be taken to be a term of the Agreement. However, this proposed undertaking again needs would need to be considered in the context of the existing terms in the Agreement which state at sub clause 1.3.3, “The provisions of this Agreement completely exclude the award.” 13

● Hours of work – without going to specific detail the Agreement generally contains more flexible conditions in regard to hours of work than the Award. For example, it allows for 12 hour shifts to be worked without the corresponding conditions that the Award requires to be in place before such shifts can be rostered.

[25] As indicated, Vibrant Security submits that the deficiencies in the Agreement concerning the rates of pay for casual employment can be remedied by an undertaking being provided to the effect that if casuals are employed then they will be engaged under the terms and conditions contained in the Security Services Industry Award 2010. This is clearly a significant consideration. In the first place, it is evident that if casuals are employed to only work a limited number of shifts predominantly at the weekends then they are clearly going to be worse off under the terms in the Agreement when compared to those in the Award. This is essentially because the work patterns definitions do not anticipate arrangements whereby shifts are only worked at the weekends. They have instead been established for full-time employees, and propose specific hourly rates which are based on an averaging arrangement of the hours being worked over various times of the week. However, if the only hours that are actually rostered are at the weekends then those averaging arrangements are going to mean the employees will inevitably be worse off under the terms contained in the Agreement, when compared to the Award, because under the Award they would have received penalty rates of time and a half and double time for that work at the weekends.

[26] The nature of the proposed undertaking also raises other significant issues. In the first place the Agreement states that it applies to the complete exclusion of the Award, and therefore an undertaking of the kind proposed by Vibrant Security would be a significant change to what was originally proposed when the Agreement was put to and voted on by the employees.

[27] This matter was also highlighted by the Full Bench in the “Loaded Rates Agreements” decision when it indicated at [128]:

“This conclusion is an example of the general difficulty which we earlier identified in establishing a loaded rate structure for casual employees which is capable of passing the BOOT.” 14

[28] The Applicant in the relevant matter before the Full Bench had also proposed an undertaking which would have provided for the relevant penalty rates in the Security Services Industry Award 2010 to apply when casual work was performed in the evenings, or at the weekend, or on public holidays. The Full Bench responded by stating at [130]:

“This undertaking, if accepted, would resolve the BOOT difficulty which we have identified. However such an undertaking may only be accepted if it meets the conditions specified in s 190(3) of the FW Act, namely that it is not likely to cause financial detriment to any employee covered by the agreement or result in substantial changes to the agreement. We do not consider that either condition is satisfied. It constitutes a fundamental change to the remuneration structure in the Allied Agreement and the JWT Agreement which was voted upon by their respective employees, in that it moves from a loaded rate structure to a more traditional base hourly rate and penalty rate structure. It may also leave some casual employees worse off. For example, for an employee who worked a rotating weekday/weeknight roster, but only worked a small proportion of hours outside day worker hours (6.00am to 6.00pm), the addition of the 21.7% night span penalty rate for that small proportion of hours would not compensate for the move from the rotating weekday/weeknight worker rate ($23.07 for Level 1) to the non-rotating day worker rate ($20.89 for Level 1). We therefore do not accept the undertakings proposed by Allied and JWT in this respect. As noted above, no undertaking was proposed by PSA in response to the Commission’s concern about this issue.” 15

[29] The Full Bench finally concluded that the agreement “…fails the BOOT with respect to casual employees not assigned to a specified work roster pattern.” 16

[30] Similar circumstances clearly exist in the present matter. The Employer’s F17 Statutory Declaration indicates there were eleven employees employed at the time the application was made, with four of those employees employed on a part-time basis and one employed on a casual basis. However, the submissions provided by Vibrant Security also indicate that at different times a significant number of additional casual employees could also be engaged by the business, primarily to do event work, which is often associated with work performed at the weekends and on public holidays. The undertaking that it now proposes in regard to casual employees is therefore, as the Full Bench identified, a fundamental change to the remuneration structure based around the loaded rates that was agreed to when the Agreement was put to the employees for approval. In accordance with the conclusions of the Full Bench I am therefore satisfied that the undertaking proposed by Vibrant Security cannot be accepted and the Agreement cannot be approved.

[31] In coming to this decision it is also emphasised that there are a number of other conditions in the Agreement which would leave employees worse off when compared to those in the underlying Award. In this context I refer, in particular, to the part-time work provisions, the change of roster arrangements, and the entitlements relating to split shifts, annual leave, and the payment of allowances. I am also unable to identify other conditions in the Agreement that are more beneficial and might act to offset these less beneficial provisions.

Conclusion

[32] The commercial pressures that require employers in the security industry to have enterprise agreements in place are acknowledged. It is also understood that it can often be a difficult industry to operate in, with tight margins and significant pressure being applied to sub – contractors to tender and engage at the lowest possible rates. This has been evidenced in a number of previous applications the Commission has dealt with involving employers in the security industry. However, in dealing with the present application the Commission is required to have regard to the relevant statutory requirements in the Fair Work Act 2009 (Cth).

[33] I am not satisfied, in conclusion, that it can be said that each employee to be covered by the proposed Agreement would be “better off overall” when the terms and conditions contained in the Agreement are compared to those in the Security Services Industry Award 2010. I am also not satisfied, based on the decision of the Full Bench in the Loaded Rates decision, that appropriate undertakings can be provided in all cases to remedy these shortcomings. It follows that the Agreement cannot be approved. The application must therefore be dismissed.

COMMISSIONER

Appearances:

H Lewis with A Amin and Z Khan for the Applicant.

Hearing details:

2018.

Melbourne:

June 7.

Printed by authority of the Commonwealth Government Printer

<PR609560>

 1   MA000016.

 2   Proposed Vibrant Security Services Enterprise Agreement 2016, cl 3.2.1(a).

 3   Loaded Rates in Agreements [2018] FWCFB 3610.

 4   Transcript, 7 June 2018, PN 30.

 5   Ibid, PN 36.

 6   Fair Work Act 2009 (Cth) s 186(1).

 7   Ibid s 186(2)(a).

 8   Ibid, s 186(2)(b).

 9   Ibid,s 188.

 10   Ibid, s 193.

 11   Security Services Industry Award 2010, cl21.12.

 12   Proposed Vibrant Security Services Enterprise Agreement 2016, cl 4.3.3.

 13   Ibid, cl 1.3.3.

 14   Loaded Rates in Agreements [2018] FWCFB 3610, [128].

 15   Ibid, [130].

 16   Ibid, [132].